SEEMA N. KOTHARI, MUMBAI V. ITO WD 25(2)(3), MUMBAI

ITA 1271/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49499 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Keywords: Unexplained cash credit; Onus to prove
• Section: 144; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RA O, J.M. ITA NO. 1271/MUM/2009 ASSESSMENT YEAR: 2005-06 SEEMA N KOTHARI, APPELLANT 28, GYAN NAGAR, OPP. DIAMOND TALKIES, BORIVALI (W), MUMBAI 400 092. VS. INCOME TAX OFFICER-25(2)(3), RESPONDENT MUMBAI APPELLANT BY : MR. VIJAY MEHTA RESPONDENT BY : MR. C.G.K. NAIR ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-XXV, MUMBAI, PASSED ON 21/11/2008 FOR THE AS SESSMENT YEAR 2005-06. WHEREIN THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF RS. 1,38,95,119/- U/S 68 OF THE ACT, 1961 IN RESPECT OF TOTAL DEPOSITS MADE IN CORPORATION BANK. THE SAME SHOULD BE DELETE D IN FULL. (B) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT NILESH KOTHARI, HUSBAND OF THE APPELLANT HAS FILED AN AFFI DAVIT THAT ALL THE TRANSACTIONS DONE IN THE BANK ARE ADJUSTMENT EN TRIES DONE BY HIM AND APPELLANT IS UNAWARE OF THE SAME. HENCE THE SAME SHOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE. (C) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT IN THE CASE OF NILESH KOTHARI , ALL SUCH TRANSACTIONS ARE HAWALA TRANSACTIONS AND INCOME ON SUCH TRANSACTIONS IS ESTIMATED @ 7% OF THE TRANSACTION. HENCE, THE SAME SHOULD BE TAKEN INTO CONSIDERATION. ITA NO. 1271/M/2009 SEEMA N. KOTHARI 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSSE SSEE FILED HER RETURN OF INCOME ON 31 ST MARCH, 2007 DECLARING TOTAL INCOME AT RS. 57,010/- AND THE RETURN WAS ACCOMPANIED BY STATEMEN T OF TOTAL INCOME, BALANCE SHEET AND OTHER ENCLOSURES. THE CAS E WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICES U/S 143(2)/142(1) DATE D 23/10/07 WAS ISSUED AND SERVED ON THE ASSESSEE ON 27/10/07 FIXIN G THE HEARING ON 05/11/07, BUT NOBODY ATTENDED ON THE SAID DATE. THE AO NOTICED THERE WAS AN INFORMATION FROM AIR REGARDING CASH DE POSIT OF RS. 87,34,000/- IN AN ACCOUNT HELD BY THE ASSESSEE WITH CORPORATION BANK, FORT, MUMBAI. ON VERIFICATION OF THE STATEMEN T OBTAINED FROM THE CORPORATION BANK, IT WAS NOTICED THAT THE SAID BANK ACCUNT WITH CORPORATION BANK VIDE A/C NO. SB/01/023483 WAS NOT DISCLOSED Y THE ASSESSEE IN HER BALANCE SHEET FOR THE YEAR ENDED 31 ST MARCH, 2005 AND IT WAS ALSO NOTICED THAT THERE IS TOTAL DEPOSITS OF RS. 1,56,30,119/- IN THE ACCOUNTS DURING THE PREVIOUS YEAR ENDED ON 31 ST MARCH, 2005. SINCE THE ASSESSEE HAD FAILED TO COMPLY WITH THE NO TICE ISSUED U/S 143(2)/142(1) INSPITE OF SUFFICIENT OPPORTUNITY, A FINAL SHOW-CAUSE NOTICE DATED 14/12/07 WAS ISSUED AND DULY SERVED ON THE ASSESSEE ON 17/12/07 FOR FILING OF OBJECTION FOR COMPLETION OF ASSESSMENT U/S 144 OF THE ACT. ON 17/12/07, THE AR OF THE ASSESSEE ATT ENDED AND FILED TWO LOAN CONFIRMATIONS, HOWEVER, THE ASSESSEE NEITH ER FILED ANY EXPLANATION NOR GIVEN ANY DETAILS CALLED FOR. SINCE THE ASSESSEE FAILED TO COMPLY WITH THE NOTICES ISSUED U/S 143(2) AND 14 2(1), THE AO PROCEEDED TO FINALISE THE ASSESSMENT AS UNDER: 3. IT COULD BE SEEN FROM THE RETURN OF INCOME THAT ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM CAPITAL GAIN AND OT HER SOURCES. ON THE BASIS OF STATEMENT OF TOTAL INCOME ATTACHED WIT H THE RETURN, THE ASSESSEE HAD SHOWN A LONG TERM CAPITAL GAIN OF RS. 1,92,452/- WHICH WAS CLAIMED AS EXEMPT U/S 10, SHORT TERM CAPITAL GA IN OF RS. 43,608/- AND INCOME FROM OTHER SOURCE OF RS. 13,406/- ONLY D URING THE YEAR UNDER CONSIDERATION. THE AO NOTED AS PER INFORMATIO N AVAILABLE FROM THE AIR, THE ASSESSEES TOTAL DEPOSITS DURING THE Y EAR AMOUNTED TO RS. ITA NO. 1271/M/2009 SEEMA N. KOTHARI 3 1,56,30,119/- AND SINCE THE ASSESSEE HAD NOT EXPLAI NED THE NATURE OF DEPOSITS, THE EXACT SOURCE OF SUCH DEPOSITS COULD N OT BE ASCERTAINED. IT WAS FURTHER NOTED THAT EVEN IN BALANCE SHEET AS ON 31/03/05, THE ASSESSEE HAD NOT DISCLOSED HER SAID BANK ACCOUNTS W ITH THE CORPORATION BANK. THE AO HELD THAT BURDEN IS ON THE ASSESSEE TO PROVE THE SOURCE OF RECEIPT AS THE LAW IS WELL SETT LED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED IS ON THE ASSESSEE. WHERE THE NATURE AND SOURCE OF A R ECEIPT, WHETHER IT BE OF MONEY OR THE PROPERTY, CANNOT BE SATISFACTORI LY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE. SINCE THE ASS ESSEE HAD NOT DISCHARGED ONUS TO PROVE THE SOURCE OF RECEIPT, THE AO TREATED THE CREDITS APPEARING IN THE BANK ACCOUNTS AMOUNTING TO RS. 1,56,30,119/- AS UNEXPLAINED CASH CREDITS OF THE AS SESSEE U/S 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF T HE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE LEARNED AR OF THE ASSESSE E STATED THAT THOUGH THE HUGE CASH AND CHEQUE ENTRIES WERE FOUND DEPOSITED IN THE JOINT NAME OF ASSESSEE AND HER HUSBAND, THE TRANSAC TIONS WERE DONE BY HER HUSBAND. TO THIS EFFECT, THE HUSBAND OF ASSE ESSEE, MR. NILESH KOTHARI FILED AN AFFIDAVIT. ON BEING ASKED TO FILE NAMES, ADDRESSES AND CONFIRMATIONS OF PARTIES TO WHOM ALLEGED ACCOMMODAT ION ENTRIES WERE GIVEN BUT ALL OF THEM REFUSED TO GIVEN ANY SUCH DET AILS. EVEN CIT(A) ASKED THE ASSESSEE TO PROVE THAT THE TRANSACTIONS I N UNDISCLOSED BANK ACCOUNT WERE DONE BY HER HUSBAND IN STEAD OF THE AS SESSEE HERSELF, HOWEVER, NOTHING WAS FILED BEFORE THE CIT(A). THE C IT(A) EXTRACTED THE BANK ACCOUNT WHEREIN CASH IS FOUND DEPOSITED SINCE 12/05/2004 AT PAGE 6 & 7 OF HIS ORDER. THE CIT(A) AFTER CONSIDERI NG THE FACTS OF THE CASE FOLLOWING THE SPECIAL BENCH DECISION OF ITAT I N THE CASE OF MANOJ AGARWAL VS. DCIT, 113 ITD 377, CONFIRMED THE ADDITI ON U/S 69/69B OF THE ACT INSTEAD OF U/S 68 TO THE EXTENT OF RS. 1,38 ,95,119/- GIVING A ITA NO. 1271/M/2009 SEEMA N. KOTHARI 4 RELIEF OF RS. 17,35,000/-. STILL AGGRIEVED THE ASSE SSEE IS IN APPEAL BEFORE THE ITAT. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THOUGH HUGE CASH AND CHEQUE ENTRIES WERE FOUND DEPOSITED IN THE JOINT NAME OF THE ASSESSEE AND HUSBAND OF THE A SSESSEE, THE TRANSACTIONS ARE DONE BY THE HUSBAND OF THE ASSESSE E. TO THIS EFFECT, THE ASSESSEES MR. NILESH KOTHARI ATTENDED AND FILE D AFFIDAVIT AND THE CONTENTS OF THE AFFIDAVIT WERE REPRODUCED BY THE CI T(A) IN HIS ORDER AT PAGE 5 OF HIS ORDER, THE SAME EXTRACTED BELOW:- 1. NILESH KOTHARI, AGE 42, RESIDING AT 28, GYAN NAG AR, I.T. ROAD, OPP. DIAMOND CINEMA, BORIVALI (WEST), MUMBAI 400 092 DO HEREBY STATE AND AFFIRM ON SOLEMN AFFIRMATION AS UN DER: 1. I HAVE A BANK ACCOUNT NUMBER 23483 WITH CORPORAT ION BANK FOR BRANCH, WHICH IS A JOINT ACCOUNT WITH MY WIFE S MT. SEEMA NILESH KOTHARI. 2. I STATE AND CONFIRM THAT ALL THE TRANSACTIONS IN THE ABOVE ACCOUNT ARE MY ADJUSTMENT ENTRIES FOR THE ASSESSMEN T YEAR 2005- 06 WHICH NOT SHOWN IN THE BOOKS OF ACCOUNT. 3. I FURTHER STATE THAT MY WIFE IS UNAWARE OF THE E NTRIES IN THE BANK ACCOUNT AND I AM SOLELY LIABLE AND RESPONSIBLE FOR THE SAME. WHATEVER STATED HEREINABOVE IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE AND INFORMATION. NILESH KOTHARI DEPONENT 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSMENT OF MR. NILESH KOTHARI, HUSBAND OF THE AS SESSEE FOR AY 2005-06 WAS COMPLETED BY THE ITO-26(2), MUMBAI ON 3 1/12/2007 AGAINST WHICH APPEAL WAS FILED BEFORE THE CIT(A)-XX IX, MUMBAI. THEREFORE, THE LEARNED COUNSEL HAS SUBMITTED THAT S INCE THE CASE OF THE ASSESSEES HUSBAND IS PENDING WITH THE CIT(A), THE CASE OF THE UNDER CONSIDERATION MAY BE REMITTED BACK TO THE FIL E OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ASSESSES CA SE ON THE OUT COME OF ASSESSEES HUSBAND CASE, WHICH IS PENDING BEFORE THE CIT(A). ITA NO. 1271/M/2009 SEEMA N. KOTHARI 5 7. AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSING THE MATERIAL ON RECORD, IT IS OBSERVED THA T THAT THOUGH HUGE AMOUNT OF CASH AND CHEQUE ENTRIES FOUND IN THE JOIN T ACCOUNT MAINTAINED BY THE ASSESSEE AND HER HUSBAND, THE ADM ISSION OF THE ASSESSEE IS THAT SHE IS NOT AWARE OF SUCH TRANSACTI ONS AS THE TRANSACTIONS WERE DONE BY HER HUSBAND MR. NILESH KO THARI. IN THIS REGARD, THE HUSBAND OF THE ASSESSEE FILED AN AFFIDA VIT STATING THAT ALL THE TRANSACTIONS IN THE ACCOUNT ARE DONE BY HIM AND SAME ARE NOT SHOWN IN THE BOOKS OF ACCOUNT. SINCE THE APPEAL OF THE HUSBAND OF ASSESSEE IS PENDING FOR DISPOSAL BEFORE THE CIT(A), WE DEEM IT FIT AND PROPER TO REMIT THE FILE BACK TO THE CIT(A) WITH A DIRECTION TO DECIDE THE APPEAL OF THE ASSESSEE DEPENDING UPON THE OUTC OME OF THE CASE OF ASSESSEES HUSBAND, WHICH IS PENDING BEFORE THE CIT (A), AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN THE MATTER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURG A RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 15 TH JULY, 2011 KV ITA NO. 1271/M/2009 SEEMA N. KOTHARI 6 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, E BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 23/05/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 24/05/11 /13/7/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER