KAJAL A SHAH, MUMBAI V. ITO 22(1)(3), MUMBAI

ITA 1266/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3645 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 14-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R SINGH
• Keywords: Reopening of assessment; Recovery proceedings; Peak credit; Reason to believe
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTAN T MEMBER ITA NO. : 1266 /MUM/20 1 3 (ASSESSMENT YEAR: 200 4 - 05 ) SMT KAJOL A SHAH , KAILASH DHARA CHS, PLOT NO.353/23, FLAT NO.7, 2 ND FLOOR, R B MEHTA MARG, 60 FT ROAD, GHATKOPAR (EAST), MUMBAI - 400 077 .: PAN: AA ZPS 3092 H VS IT O - 22 (1 ) (3) , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI S R SINGH /DATE OF HEARING : 27 - 0 4 - 201 6 / DATE OF PRONOUNCEMENT : 20 - 0 5 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : THE AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATE D 1 0.0 1 .201 3 , PASSED BY CIT(A) - 33 , MUMBAI , FOR THE QUANTUM OF ASSE SSMENT PASSED UNDER SECTION 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 2004 - 05 , VIDE WHICH FOLLOWING GROUNDS HAVE BEEN RAISED: - 1. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE ORDER OF THE AO AND IGNORING THE FACT THAT THE ORDER IS ILLEG AL, INVALID AND HAS BEEN PASSED WITHOUT APPLICATION OF MIND. 2. BECAUSE, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE VALIDITY OF REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT IGNORING THE FACTS THAT: SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 2 ( I ) APPELLANTS OBJECTION LETTER DATED 14.12.11 WAS ON RECORD AND ( II ) REASONS RECORDED WERE ERRONEOUS AND INCOMPLETE. WITHOUT PREJUDICE, 3. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT IN CALCULATING THE PEAK AMOUNTING TO RS.5,02,000/ - IN THE HANDS OF THE APPELLANT JOINTLY WITH HER LATE FATHER SHRI ARVI ND SHAH. (I) THE IMPUGNED BANK ACCOUNT WAS HELD BY THE APPELLANT JOINTLY WITH HER LATE FATHER SHRI ARVIND SHAH. (II) THE IMPUGNED BANK ACCOUNT HAS BENEFICIALLY OWNED AND MANAGED BY LATER SHRI ARVIND SHAH. 4. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW IN F AILING TO FOLLOW HER OWN ORDER IN THE CASE OF SHRI ARVIND SHAH FOR THE AY 2007 - 08 WHEREIN SHE HAD CONSIDERED THE IMPUGNED BANK ACCOUNT IN HIS HANDS. 5. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW IN FAILING TO CONSIDER THAT THE AO HIMSELF HAD CONSIDERED THE I MPUGNED BANK ACCOUNT IN THE HANDS OF LATE SHRI ARVIND SHAH WHILE PASSING THE ASSESSMENT ORDER FOR AY 2007 - 08 ON 14.12.2009. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE, DESPITE SERVICE OF NOTICE. ACCORDINGLY, THE CASE IS BEING DECIDED ON THE BASIS OF MATERIAL ON RECORD BEFORE US. 3. THE BRIEF FACTS AS CULLED OUT FROM THE ASSESSMENT ORDER ARE THAT, THE ASSESSEE IS AN INDIVIDUAL WHO HAS FILED HIS RETURN OF INCOME AT RS.84,000/ - ON 29.06.2004. LATER ON, THE ASSESSEES CASE WAS REOPENED ON THE G ROUND THAT SHE HAD DEPOSITED CASH IN AXIS BANK A/C. FOR WHICH THERE WAS NO EXPLANATION. BASED ON THIS INFORMATION, THE ASSESSEES CASE WAS REOPENED UNDER SECTION 14 7. I N RESPONSE TO THE SAID NOTICE U/S 148, THE ASSESSEE DID NOT FURNISH ANY EXPLANATION ALBE IT REQUESTED TO KEEP THE ASSESSMENT PROCEEDINGS IN ABEYANCE. THE LD. AO PROVIDED THE PHOTO - COPY OF THE REASONS RECORDED TO THE ASSESSEE, WHICH WAS SENT THROUGH P OST, HOWEVER, THE SAME TOO REMAINED UN - COMPLIED WITH. LATER ON SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 3 ALSO, REASONS RECORDED WERE AGAIN SENT, WHICH WAS SERVED THROUGH ITI, HOWEVER, IN RESPONSE TO THE SAID NOTICE ALSO, NO OBJECTIONS W E RE FILED . A LL THESE FACTS HA S BEEN NOTED BY THE AO, IN PARA 1 TO 3 OF THE ASSESSMENT ORDER. LATER ON ALSO , VARIOUS NOTICES WERE ISSUE D TO THE ASSESSEE T O FURNISH THE EXPLANATION, HOWEVER, NO PROPER COMPLIANCE WAS MADE. LATER ON, VIDE LETTER DATED 15.12.2011, THE ASSESSEE HAD SUBMITTED AS UNDER: - 1. DURING THE COURSE OF APPELLATE PROCEEDINGS FOR AY 2007 - 08 IN MY CASE, I HAVE ALREADY STATED THAT THE SAVIN GS BANK ACCOUNT WITH AXIS BANK AS REFERRED IN MY LETTER IS THE BENEFICIALLY OWNED BY MY FATHER, LATE SHRI ARVIND SHAH. HE WAS ALSO THE JOINT HOLDER OF THIS ACCOUNT AND MANAGED IT COMPLETELY. THE OWNERSHIP OF THIS ACCOUNT NOW VESTS IN MY MOTHER SMT. MEENAKS HI A SHAH LEGAL HIRESS OF LAT SHRI ARVIND SHAH, WHO HAD OFFERED FOR TAXATION BEFORE LD. CIT(A) - 33, MUMBAI THE CONSOLIDATED PEAK WORKING WHICH COVERS 45 BANK ACCOUNTS INCLUDING THE IMPUGNED BANK ACCOUNT. 2. THIS CONTENTION WAS DULY ACCEPTED BY THE LD. CIT(A ) WHO ASSESSED THE INCOME OF LATE SHRI ARVIND SHAH AFTER CONSIDERING THE PEAK OF ALL BANK ACCOUNTS IN WHICH HE WAS A JOINT HOLDER, INCLUDING THE IMPUGNED BANK ACCOUNT. THIS ORDER IS DATED 21.03.2011 WHEREAS THE REASONS FOR REOPENING WERE RECORDED ON 29.03. 2011 WHICH IS A LATER DATE. MOREOVER TO THE BEST OF MY KNOWLEDGE, THE DEPARTMENT HAS NOT APPEALED AGAINST THE ORDER OF CIT(A) FOR AY 2007 - 08 AS AFOREMENTIONED WHICH HAS THUS ATTAINED FINALITY. THUS, THE AO OUGHT TO HAVE APPLIED HIS MIND BEFORE REOPENING MY ASSESSMENT AND GIVEN DUE REGARD TO THE FINDINGS OF THE CIT(A) ON THIS ISSUE. UNFORTUNATELY, EVEN THE ADDL. CIT RANGE 22 (1) WHO HAS ACCORDED APPROVAL TO THIS REOPENING HAS FAILED TO CONSIDER THE ORDER OF THE CIT(A) RESULTING IN MISAPPLICATION OF MIND. TH US, IT IS SUBMITTED THAT THE REOPENING IS BAD IN LAW. SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 4 3. TO CONCLUDE, IT IS REITERATED THAT THE IMPUGNED BANK ACCOUNT BELONGED TO LATER SHRI ARVIND SHAH ALONE, WHICH FACT HAS BEEN ACCEPTED IN THE APPELLATE PROCEEDINGS AS BOTH OUR INDIVIDUAL CASES. THUS THE REOPENING IS BAD IN LAW AND OUGHT TO BE QUASHED. 4. IT IS ALSO MENTIONED THAT SINCE YOUR LETTER WAS RECEIVED BY ME ON 5.12.11 ITSELF, WHICH WAS THE DATE OF COMPLIANCE, IT TOOK ME SOME TIME TO CONSULT MY LEGAL COUNSEL. HENCE THE DELAY IN FILING MAY KINDLY CONDONED. IT IS REQUESTED THAT IF YOUR GOODSELF STILL WISHES TO PROCEED WITH THE ASSESSMENT, AN OPPORTUNITY TO MAKE SUBMISSIONS ON MERIT MAY KINDLY BE GRANTED TO ME OR MAY AUTHORIZED REPRESENTATIVE. SMT. MEENAKSHI A SHAH. A TRUE COPY OF POWE R OF ATTORNEY ISSUED TO HER IS ATTACHED ALONG WITH. 4 . AS REGARDS THE VALIDITY OF REOPENING UNDER SECTION 147, THE AO DISPOSED OFF THE MATTER IN THE FOLLOWING MANNER: - THE AO REOPENED THE ASSESSMENT UNDER SECTION 147 AFTER RECORDING THE REASONS FOR THE SAME. IT IS STATED IN THE REASONS RECORDED THAT DURING THE COURSE OF RECOVERY PROCEEDINGS FOR AY 2007 - 08, THE BANK ACCOUNTS OF THE ASSESSEE HAVE BEEN OBTAINED FROM UTI AND AXIS BANK. ON PERUSAL OF THE BANK ACCOUNT WITH AXIS BANK, IT WAS FOU ND THAT THERE ARE CASH DEPOSITS AMOUNTING TO RS.12,26,393/ - DURING THE F.Y. 2003 - 04. IT WAS ALSO FOUND FROM THE RECORDS THAT THIS BANK ACCOUNT WAS NOT REFLECTED IN THE BALANCE SHEET FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME FOR A.Y. 2004 - 05. SI NCE THIS BANK ACCOUNT WAS APPARENTLY NOT DISCLOSED IN THE BALANCE SHEET AND THERE ARE CASH DEPOSITS AMOUNTING TO RS.12,26,393/ - , THE AO REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. CONSEQUENTLY, NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE, AFTER OBTAINING NECESSARY APPROVAL FROM THE ADDL. CIT RANGE 22(1), MUMBAI. SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 5 FROM THE ABOVE FACTS, IT CAN BE SEEN THAT THERE WAS SUFFICIENT REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR AY 2004 - 05. THEREFORE, TH E ASSESSMENT WAS RIGHTLY REOPENED UNDER SECTION 147 OF THE ACT. FURTHER, THE DEPARTMENT HAS FILED SECOND APPEAL BEFORE THE ITAT AGAINST THE ORDER PASSED BY CIT(A) - 33, MUMBAI. IN VIEW OF THESE FACTS, THE ASSESSEES OBJECTION TO THE REOPENING OF ASSESSMENT I S REJECTED. THIS FACT WAS COMMUNICATED TO THE ASSESSEE VIDE THIS OFFICE LETTER DATED 20.12.2011. 5 . IN S O FAR AS RELIANCE PLACED ON CIT(A)S DECISION FOR THE AY 2007 - 08 BY THE ASSESSEE, THE AO DID NOT ACCEPT THE SAID CONTENTION ON THE GROUND THAT SECOND APPEAL HAS BEEN FILED BEFORE THE ITAT, ACCORDINGLY, HE TREATED THE ENTIRE DEPOSIT OF RS.26,12,501/ - AS UNDISCLOSED INCOME OF THE ASSESSEE. THE LD. CIT(A), O N THE ISSUE OF VALIDITY OF REOPENING , REJECTED THE SAID GROUND IN THE FOLLOWING MANNER: - I HAVE GO NE THROUGH THE SAME. I HAVE CONSIDERED THE FACTS BROUGHT ON RECORD BY THE AO, SUBMISSION MADE BY THE APPELLANT AND VARIOUS DOCUMENTS FILED BY THE APPELLANT AS MENTIONED ABOVE ALREADY. AS REGARDS RE - OPENING OF THE CASE, APPELLANT HAS NOT NEGATED THE FACT TH AT THE SAID BANK ACCOUNT WAS HELD JOINTLY BY THE APPELLANT IN HER NAME WITH HER FATHER SHRI ARVIND SHAH, DURING THE PERIOD RELEVANT TO AY 2004 - 05, THE ONE IN INSTANT APPEAL. THE APPELLANT HAS ALSO NOT DISPUTED THE FACT BROUGHT ON RECORD BY AO THAT THIS ACC OUNT WAS NOT DISCLOSED IN HER BALANCE SHEET. IN VIEW OF THIS, THE AO RECORDED THE REASONS, A COPY OF WHICH HAS ALSO BEEN PROVIDED DURING THE ASSESSMENT PROCEEDINGS TO THE ASSESSEE AND ASKED THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THESE DEPOSITS. I T IS ALSO NOTEWORTHY THAT THE ASSESSEE DID NOT FURNISH ANY OBJECTION TO RE - OPENING OF THE ASSESSMENT DURING THE ASSESSMENT PROCEEDINGS. IN VIEW OF THESE FACTS, I AM OF THE SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 6 CONSIDERED VIEW THAT NOW THE APPELLANT CANNOT RAISE ISSUE OF RE - OPENING WHICH SHE IS DOING ACTUALLY FOR THE SAKE OF RAISING AN OBJECTION ONLY. HAVING FOUND THE FACTS AND REASONING FOR REOPENING VALID AND RELEVANT, THE AO WAS DULY BOUND TO RE - OPEN THE ASSESSMENT AND HENCE RE - OPENING MADE UNDER SECTION 147 OF THE ACT IS UPHELD. THE GROUND N O.2 IS DISMISSED. 6 . ON MERITS, THE LD. CIT(A), RELYING UPON THE ORDER IN THE CASE OF LATE SHRI ARVIND SHAH L/H MEENAKSHI SHAH/ KAJOL A SHAH AND APPELLATE ORDER PASSED IN CASE OF ARVIND A SHAH FOR THE ASSESSMENT YEAR 2007 - 08 AND 2004 - 05, DIRECTED TH E AO TO EXAMINE AND WORK OUT THE PEAK AND TO MAKE THE ADDITION ONLY ON THE PEAK AMOUNT . THE FINDING OF THE CIT(A) IN THIS REGARD READS AS UNDER: - FINALLY, THE APPELLANT HAS PLEADED THAT INCOME OF THE APPELLANT SHOULD HAVE BEEN TAKEN BY CALCULATING PEAK O F VARIOUS DEPOSITS AND WITHDRAWALS IN HER ACCOUNT. THE APPELLANT HAS FURNISHED A COPY OF STATEMENT OF ACCOUNT OF NO.029010100080404 SHOWING TRANSACTIONS FROM 03.04.2003 TO 31.03.2004 ONLY. I HAVE GONE THROUGH THE SAME AND NOTED THAT PEAK OF RS.5,02,000/ - I S APPEARING ON 24.02.2003 AND HENCE I AM OF THE VIEW THAT THIS AMOUNT SHOULD BE TAXED BEING THE PEAK AMOUNT FOR THE F.Y. 2004 - 04 IN THE HANDS OF APPELLANT. ACCORDINGLY, AO IS DIRECTED TO CHECK THE CORRECTNESS OF THIS PEAK AMOUNT IN THE BANK ACCOUNT STATEME NT AND IF FOUND CORRECT, TO TAX ACCORDINGLY THE PEAK AMOUNT IN HER HANDS FOR AY 2004 - 05. THE GROUND NO.5 IS TREATED ALLOWED. 7 . AFTER CONSIDERING RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS, WE FIND THAT SO FAR AS THE GROUND RELATING TO VALIDITY OF REO PENING IS CONCERNED , NOTHING HAS BEEN BROUGHT ON RECORD TO CHALLENGE THE SAID FINDING OF THE CIT(A) , AS THE CASE WAS REOPENED ON THE BASIS OF DEFINITE INFORMATION WHICH WAS BASED ON ASSESSMENT PROCEEDINGS OF 2007 - 08 , WHEREIN SIMILAR UNEXPLAINED SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 7 CASH DEPOSI T WAS MADE IN TH AT YEAR ALSO . T H US, AO HAD REASONABLE GROUND TO ENTERTAIN REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT AND ACCORDINGLY, WE AFFIRM THE FINDING OF THE CIT(A) ON THIS ISSUE . THUS, GROUND NO.1 & 2 ARE DISMISSED. 7. ON MERITS ALSO, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDING OF THE CIT(A), BECAUSE I T WAS ASSESSEES OWN CONTENTION BEFORE THE CIT(A) THAT, ADDITIONS SHOULD BE RESTRICTED TO THE PEAK CREDIT OF THE AMOUNT IN THE BANK STATEMENT. SUCH A DIRECTIO N APPEARS TO BE CORRECT WITHOUT ANY ADVERSE MATERIAL OR CONTRARY EXPLANATION GIVEN BEFORE US. ACCORDINGLY, THE ORDER OF THE CIT(A) IS AFFIRMED AND THE GROUNDS RAISED BY THE ASSESSEE STANDS DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH M AY , 2016 . SD/ - SD/ - ( ) ( ) ( RAMIT KOCHAR ) ( AMIT SHUKLA ) ACCO UNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 20 TH MAY , 2016 . / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 33 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX - 22 , MUMBAI . 5 ) , , / THE D.R. A BENCH, MUMBAI. SMT KAJOL A SHAH ITA NO. 1266 /MUM/2013 8 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS