YOGESH R. MEHTA, MUMBAI V. ITO WD 6(2)-4, MUMBAI

ITA 123/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71546 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.123/MUM/2011 ( / ASSESSMENT YEAR: 2006 - 2007 ) YOGESH R MEHTA, 11,NARENDRA ESTATE, OPP. KUMAR STADIUM, SENAPATI MARG, DADAR, MUMBAI 400 028. / VS. ITO - WD 6(2) - 4, MUMBAI. ./ PAN : AAGPM 6712 M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DHARMESH SHAH / RESPONDENT BY : SHRI MANJUNATH KARKIHALLI, DR / DATE OF HEARING : 30.10.2013 / DATE OF PRONOUNCEMENT : 06.11 .2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 6.1.2011 IS AGAINST THE ORDER OF CIT (A) - 12, MUMBAI DATED 15.10.2010 FOR THE AY 2006 - 2007. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER U/S 250 OF THE ACT DATED 5.10.2010. 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE ACT WAS BAD IN LAW AND INVALI D. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN TREATING THE INCOME FROM HOUSE PROPERTY ON ESTIMATION BASIS AMOUNTING TO RS. 36,000/ - . 4. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS CONFIRMING THE ADDITION OF RS. 17,61,900/ - ON ACCOUNT OF UNEXPLAINE D CASH CREDIT U/S 68 OF THE ACT. 5. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN DISALLOWING THE COMMISSION EXPENSES CLAIMED BY THE APPELLANT AMOUNTING TO RS. 40,262/ - . 2. AT THE OUTSET, LD COUNSEL MENTIONED THAT GROUND NO.1 AND 2 ARE NOT PRESSED. AFTER HEARING BOTH THE PARTIES, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 2 REGARDING GROUND NO.3, LD COUNSEL MENTIONED THAT CONSIDERING THE SMALLNESS OF THE AMOUNT, THE TRIBU NAL MAY DECIDE THE ISSUE ON MERITS. IN THIS REGARD, LD DR HAS NOTHING TO CONTRIBUTE EXCEPT RELYING HEAVILY ON THE ORDER OF THE CIT (A). THIS GROUND IS AGAINST THE AOS DECISION IN ESTIMATING THE HOUSE PROPERTY INCOME AT RS. 36,000/ - ON ESTIMATION BASI S. IN THIS REGARD, ASSESSEES OBJECTION IS THAT THE SAID ESTIMATION IS ON THE HIGHER SIDE OF IT. OTHERWISE, THIS GROUND WAS NOT PRESSED SERIOUSLY BY THE ASSESSEE EITHER BEFORE THE CIT (A) OR BEFORE US. IN THIS REGARD, WE HAVE PERUSED THE RELEVANT PARA 4 OF THE IMPUGNED ORDER AND FIND THAT THE SAME IS REASONABLY DECIDED BY THE CIT (A) AND NO INTERFERENCE IS CALLED FOR. THE BALANCE OF THE GROUNDS LEFT FOR OUR ADJUDICATION ARE GROUND NO.4 AND 5. 3. GROUND NO.4 RELATES TO THE ADDITION OF RS. 17,61,900/ - U/S 68 OF THE INCOME TAX ACT, 1961. RELEVANT FACTS IN THIS REGARD ARE BRIEFLY NARRATED IN PARA 5 OF THE IMPUGNED ORDER. BRIEFLY STATED, ASSESSEE OWNS A SAVINGS BANK ACCOUNT BEARING THE NO.12441 WITH INDIAN OVERSEAS BANK AND REFLECTS CASH CREDIT TOTALING TO RS. 17,61,900/ - . AO MADE ENQUIRIES INTO THE SOURCE OF THESE CREDITS AND FOUND THAT THE ASSESSEE BORROWED THESE AMOUNTS FROM HIS IN - LAWS AND FILED CONFIRMATION LETTERS. WHEN THE ENQUIRIES WERE EXTENDED TO THE SAID IN - LAWS NAMELY JASUBHAI D. GANDHI, FATHER - IN - LAW (RS.8,65,000/ - ) AND MADHUKANTA J. GANDHI, MOTHER - IN - LAW (RS. 9,97,000/ - ), AO NOTED THAT THESE IN - LAWS ARE NOT INCOME TAX ASSESSEES. WHEN THE SOURCES (GANDHIS) WERE EX AMINED, IT WAS NOTICED THAT THE SOURCES OF THE LOANS ARE OUT OF SALE OF JEWELLER Y . TO SUPPORT THE LOANS GIVEN TO THE ASSESSEE, THE IN - LAWS HAVE FILED COPIES OF THE BILLS EVIDENCING THE SALE OF JEWELLERY TO M/S. PRERAK GEMS , COPIES OF WHICH ARE FILED BEFORE US IN THE FORM OF PAPER BOOK. WHEN THE ENQUIRIES WERE FURTHER EXTENDED TO M /S. PRERAK GEMS, ASSESSEE RECEIVED A LETTER FROM M/S. PRERAK GEMS DATED 4.11.2009 AND THE CONTENTS OF THE SAID LETTER READ AS UNDER: PLEASE REFER TO YOUR LETTER DATED 12.10.2009, IN WHICH YOU HAVE DIRECTED TO SUBMIT THE DETAILS OF TRANSACTION WITH MADHUKA NT J. GANDHI, A/23, SATELLITE CENTER, PREMCHAND NAGAR ROAD, VASTRAPUR, AHMEDABD AND FROM JASHUBHAI GANDHI (ADDRESS SAME) DURING THE FINANCIAL YEAR 2005 - 2006. IN THIS CONNECTION, WE SUBMIT THAT AS PER OUR RECORD, WE HAVE NOT CARRIED OUT ANY TYPE OF TRANSACTION WITH ABOVE MENTIONED PARTIES . 4. THUS, M/S. PRERAK GEMS DENIED HAVING ANY TRANSACTION WITH THE GANDHIS. HOWEVER, AFTER A GAP OF A MONTH I.E., 7.12.2009, M/S. PRERAK GEMS FILED A NOTHER LETTER 3 DATED 3.12.2009 CONFIRMING THE PURCHASE OF JEWELLE RY BY THEM AND THE CASH PAYMENTS WERE MADE TO THE GANDHIS, WHICH IS THE SOURCE OF INCOME FOR THE CASH CREDITS FOUND IN THE AFORESAID SB ACCOUNT OF THE ASSESSEE. HOWEVER, THE AO DID NOT ACCEPT THE SUBSEQUENT LETTE R FOR THE REASONS THAT THEY SUFFER FROM MANY INCONSISTENCIES AND DISCREPANCIES. DETAILS ARE GIVEN IN PARA 5.3 OF THE ORDER OF THE CIT (A) / AO TOO. HE ACCORDINGLY, MADE AN ADDITION OF RS. 17,61,000/ - . MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST AP PELLATE AUTHORITY, ASSESSEE MADE VARIOUS SUBMISSIONS AND EVIDENCES TO DEMONSTRATE THAT THE TRANSACTIONS ARE GENUINE AND THE ADDITIONS ARE UNCALLED FOR. AFTER CONSIDERING THE SAME, CIT (A) REMANDED THE EVIDENCES TO THE FILES OF THE AO , AS PER THE PROCEDURE , AND THE COPY OF THE REMAND REPORT WAS MADE AVAILABLE TO THE ASSESSEE FOR COMMENTS, IF ANY . COUNTERING THE AOS ALLEGATION ABOUT THE GENUINENESS OF THE IMPUGNED TRANSACTIONS, ASSESSEE REPLIED VIDE ITS LETTER DATED 3.3.2010, THE CONTENTS OF WHICH ARE DIS CUSSED IN PAGE 9 TO 12 OF THE IMPUGNED ORDER. ON CONSIDERING THE REMAND REPORT OF THE AO AND THE REPLIES OF THE ASSESSEE, CIT (A) REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE CONSIDERING THE DISCREPANCIES FOUND ON THE DOCUMENTS FURNISHED BY THE ASSESSEE . HE HAS PROVIDED DETAILED DISCUSSION AND ANALYSIS BEFORE CONCLUDING AND CONFIRMING THE SAID ADDITIONS MADE BY THE AO. AGGRIEVED WITH THE SAID ORDER OF THE CIT (A), THE PRESENT APPEAL IS FILED BY THE ASSESSEE. 6. DURING THE PROCEEDINGS BEFORE THE US, LD COUNSEL STATED THAT IT IS A CASE OF EXAMINING THE SOURCES OF THE SOURCE , WHICH IS NOT PERMITTED IN LAW. HOWEVER, HE MENTIONED THAT THE IMPUGNED ADDITION U/S 68 OF THE ACT, INVOLVES THE TRANSACTIONS OF AMONG THE RE LATIVES AND NOT THIRD PARTIES . HOWEVER, HE FAIRLY SUBMITTED THAT THE LOAN CREDITORS ARE NOT ASSESSED TO TAX. IN ADDITION , LD COUNSEL MENTIONED THAT ON MERITS , A S SESSEE IS ENTITLED TO RELIEF. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO VARIOUS PA GES OF THE PAPER BOOK AND THE LETTERS ISSUED BY M/S. PRERAK GEMS WITH ITS ANNEXURES AND MENTIONED THAT THE DISCREPANCIES ARE EXPLAINABLE. FOR EXAMPLE, REFERRING TO THE ABSENCE OF CHRONOLOGY OF TRANSACT IONS AND JUMPING OF THE DATES , LD COUNSEL MENTIONED TH AT M/S. PRERAK GEMS MAINTAINED SEPARATE LIST F OR JEWELLERY, GOLD, SILVER ETC AND THEREFORE, THERE IS NO DISCREPANCY ON THE PAPERS FILED BY M/S. PRERAK GEMS. 4 7. ON THE OTHER HAND, LD DR RELIED HEAVILY ON THE ORDER OF THE AO AND MENTIONED THAT IT IS THE CA SE OF THE CASH CREDIT U/S 68 OF THE ACT 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US. IT IS ALSO AN UNDISPUTED FACT THAT THE ALLEGED CREDITORS ARE NOT SUBJECT TO T AX AND T HEY ARE NOT BORNE ON THE INCOME TAX FILES. FURTHER, WE HAVE ALSO PERUSED THE CONTENTS OF PARA 5.3 OF THE IMPUGNED ORDER AND FOUND THAT THE SAID PARA IS RELEVANT AND IT IS REQUIRED TO BE EXTRACTED HERE FOR THE SAKE OF COMPLETENESS OF THE PRESENT ORDER AND THE SAME READS AS UNDER: 5.3. I HAVE CAREFULLY CONSIDERED THE ABOVE ISSUE AND I FIND THAT THE CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED. AS RIGHTLY POINTED OUT BY THE AO IN THE REMAND REPORT, THE APPELLANT HAS BROUGHT NOTHING ON RECORD TO PROVE THAT THE SUM IN QUESTION HAD BEEN RECEIVED BY THE APPELLANT FROM HIS FATHER IN LAW AND MOTHER - IN - LAW AGAINST PURCHASE OF THE APPELLANTS FLAT. THOUGH THE APPELLANT HAS CLAIMED THAT THE SAID AMOUNT HAD BEEN RAISED BY HIS IN - LAWS ON SALE OF THEIR PERSONNEL JEWELLER Y, IT IS SEEN THAT THE AOS ENQUIRY HAD DEARLY REVEALED THAT THERE WAS NO VERIFICATION OF THE SAID SALE. IN FACT THE CONCERN M/S. PRERAK GEMS HAD CLEARLY STATED THAT AS PER THEIR RECORDS, THEY HAD NOT CARRIED OUT ANY TYPE OF TRANSACTION WITH THE IN - LAWS OF THE APPELLANT. THIS STATEMENT HAD BEEN GIVEN BY THE CONCERN ON THE ENQUIRY MADE BY THE AO UNDER SECTION 133(6) OF THE INCOME TAX A CT. IT I S ALSO SEEN FROM THE STATEMENT SUBMITTED BY THE APPELLANT ON 03/03/2010 THAT IT IS ONLY AFTER THE LAW APPROACHED THE JEWELLER THAT THE JEWELLER ISSUED CLARIFICATORY LETTER STATING THAT AN ERROR HAD BEEN COMMITTED BY THEM. IT WAS SUBMITTED BY THE JEWELER THAT THE EARLIER REPLY HAD BEEN GIVEN BY THE ACCOUNTANT WITHOUT PROPERLY VERIFYING THE RECORDS. HOWEVER, IT HAS NOT BEE N EXPLAINED IN THE SAID LETTER AS TO HOW IT HAD BEEN STATED IN THE FIRST LETTER IN VERY CLEAR TERMS THAT AS PER RECORDS NO TRANSACTION HAD BEEN CARRIED OUT WITH THE ABOVE MENTIONED PARTIES. IT IS LOGICAL TO PRESUME THAT WHILE SENDING THE 1ST REPLY IN RESPO NSE TO NOTICE UNDER SECTION 133 (6) OF THE INCOME TAX ACT VIDE WHICH A DETAILED QUESTIONNAIRE WAS FORWARDED, THE CONCERN WOULD HAVE CHECKED ITS RECORDS INCLUDING THE PURCHASE REGISTER AND SEND A REPLY. STATING NOW THAT THE PURCHASES STOOD RECORDED IN THE BOOKS OF ACCOUNTS CLEARLY INDICATE THAT EITHER THE BOOKS OF ACCOUNTS OF THE FIRM ARE NOT PROPERLY MAINTAINED AND THEREFORE, UNRELIABLE OR THAT THE FIRM HAS CHANGED ITS STANCE AFTER BEING APPROACHED BY THE APPELLANT AND HIS FATHER - IN - LAW. THE EXTRACTS OF TH E PURCHASE REGISTER SUBMITTED BY THE SAID CONCERN AS EVIDENCE WHEN PERUSED TO SHOW THAT THE NAME OF SHRI JD GANDHI AND MRS MJ GANDHI APPEAR IN THE SAID REGISTER AS SELLERS IN THE VARIOUS MONTHS CONCERNED NOT IN THE CHRONOLOGICAL FORM LIKE OTHER SELLERS AS THEY SHOULD HAVE BUT AT THE END OF THE MONTH IRRESPECTIVE OF THE DATE THE SAID PURCHASE HAS BEEN MADE. AS COMPARED TO THE OTHER PURCHASES MADE IT IS SEEN THAT AGAINST THE ABOVE MENTIONED PERSONS ONLY THE WEIGHT OF THE GOLD SOLD HAS BEEN RECORDED WITHOUT AN Y VALUE BEING ATTACHED TO IT. A CURSORY EXAMINATION OF THE SAID PAGES CLEARLY REVEALS THAT THESE NAMES SEEM TO BE AN AFTERTHOUGHT IN THE SAID REGISTER FOR EXAMPLE THE CONCERN PRERAK GEMS HAS RECORDED PURCHASES FOR THE MONTH OF MARCH 2006 IN A VERY CHRONOLO GICAL ORDER I.E. DATE WISE. HOWEVER, THE NAME OF MRS MJ GANDHI APPEARS AT THE TAIL END OF THE SAID PURCHASE PAGE RECORDING OF PURCHASE MADE FROM HER AS ON 14/3/06. THIS PURCHASE IS A SUSPECT AS IT IS SEEN THAT FOR THE REST OF THE PURCHASES MADE FROM 1/3/06 TO 29/3/06 THE CONCERN HAS RECORDED THE SAME DATE WISE IN CHRONOLOGICAL MANNER. THE APPELLANT HAS ALSO NOT BEEN ABLE TO PROVIDE ANY PROOF OF A RETURN OF INCOME FILED BY THE ABOVE 2 PERSONS WHEREIN CAPITAL GAINS ON THE SALE OF JEWELLERY HAS BEEN DECLARED T O PROVE THAT THERE INDEED WAS A SALE. IN VIEW OF THESE DISCREPANCIES I FIND THAT THE CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED. FURTHER I FIND THAT NO CO - RELATION CAN BE PROVIDED BY THE APPELLANT VIS - - VIS THE 5 SAID SALE OF JEWELLERY AND THE DEPOSIT OF CASH IN HIS BANK ACCOUNT. FOR EXAMPLE THERE IS A DEPOSIT OF RS. 30,100/ - IN HIS BANK ACCOUNT ON 7/5/2005 WHICH CANNOT BE RELATED TO ANY OF THE SO - CALLED SALES MADE BY HIS FATHER - IN - LAW ORDER OR HIS MOTHER - IN LAW. SIMILARLY THERE ARE OTHER DEPOSITS WHICH A LSO DO NOT CO - RELATE WITH THE SALES MADE. THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THIS DISCREPANCY THAT WAS POINTED OUT. NO RECONCILIATION STATEMENT HAS BEEN SUBMITTED. IT WAS ALSO NOT EXPLAINED WHY FUNDS WERE RECEIVED N A PIECE MEAL MANNER ESPECIALLY W HEN THE CLAIM WAS THAT IT WAS AGAINST SALE OF IMMOVABLE PROPERTY. IN VIEW OF THIS, I AM NOT INCLINED TO IN TERFERE WITH THE ORDER OF THE AO ON THIS ISSUE THE ADDITION MADE IS THEREFORE CONFIRMED . 9. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE DEC ISION TAKE BY THE CIT (A ) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.4 RAISED BY THE ASSESSEE IS DISMISSED. 10. GROUND NO.5 RELATES TO THE GENUINENESS OF THE PAYMENTS OF THE COMMISSION AMOUNTING TO RS. 40,262/ - . RELEVANT FACTS AND THE DECISION OF THE CIT (A) IS GIVEN IN PARA 7 OF THE IMPUGNED ORDER. DURING THE PROCEEDINGS BEF ORE US, LD COUNSEL DID NOT FILE THE DET AILS OF SERVICES RENDERED BY SHRI R.R. SHAH, WHO IS THE ALLEGED RECIPIENT OF THE IMPUGNED COMMISSION OF RS. 40,262/ - . IN THIS REGARD, W E FIND IT RELEVANT TO REPRODUCED THE SAID PARA 7 OF THE IMPUGNED ORDER WHICH READS AS UNDER. 7. THE NEXT GROUND OF APPE AL IS IN RESPECT OF DISALLOWANCE OF COMMISSION EXPENSE OF RS. 40,262/ - MADE BY THE AO THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAD NOT FURNISHED THE NAME AND ADDRESS OF THE PARTIES TO WHOM THE SAID COMMISSION HAD BEEN PAID. IN THE ABSENCE OF DETAILS THE COMMISSION PAYMENT CLAIMED HAD BEE N DISALLOWED. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS STATED THAT HE HAS PAID COMMISSION OF RS. 40,262/ - TO ONE SHRI R.R. SHAH . HE HAS ALSO FILED A COPY OF RETURN OF THE SAID PERSON AND A STATEMENT OF TOTAL INCOME OF THE SAID PERSON. IN THE REMAND REPORT THAT HAS BEEN FORWARDED BY THE AO, I FIND THAT THE AO HAS STATED THAT THE APPELLANT HAS NOT FILED OR PRODUCED ANY NEW EVIDENCE TO PROVE THE GENUINENESS OF THE COMMISSION PAID. TO THIS EXTENT I AM IN AGREEMENT WITH THE FINDINGS OF THE A O. I FIND THAT THE APPELLANT HAS NOT SUBMITTED ANY DETAILS REGARDING THE COMMISSION PAID, THE REASON FOR IT, THE CONFIRMATION OF THE PARTY RECEIVING THE COMMISSION ETCETERA, IN VIEW OF THIS, I AM NOT INCLINED TO INTERFERE WITH THE ORDER OF THE AO ON THIS I SSUE THE ADDITION MADE IS THEREFORE CONFIRMED . 11. LD COUNSEL FAILED TO ENLIST THE DETAILS OF THE SERVICES RENDERED BY SHRI SHAH, TO BECOME ENTITLED FOR THE SAID COMMISSION. CONSIDERING THE ABOVE , WE ARE OF THE OPINION THAT THE DECISION TAKEN BY THE CIT ( A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.5 IS DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 6 T H NOVEMBER, 2013. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 06 .11 .2013 6 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI