Shri Upendrabhai M.Patel, Nadiad V. The ACIT.,Cent.Circle-2, Baroda

ITA 1286/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9218 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-01-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA WITH SHRI G M THAKOR
• Keywords: Opportunity of being heard; Peak credit; Additional evidence
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1286/AHD/2011 / ASSESSMENT YEAR : 2002-03 UPENDRABHAI M. PATEL, AKSHAY BUILDERS, SHIVASHRY COMPLEX, NADIAD PAN : ADDPP 2640 R VS ACIT, CENTRAL CIRCLE 2, BARODA / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PM MEHTA WITH SHRI GM THAKOR, AR REVENUE BY : SHRI ASHISH POPHARE, DR DATE OF HEARING : 12 /01/2017 DATE OF PRONOUNCEMENT IN COURT : 17/02/20 17 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV, AH MEDABAD DATED 23.02.2011 FOR ASSESSMENT YEAR 2002-2003. 2. ALL OTHER GROUNDS ARE NOT PRESSED EXCEPT GROUND NO.3 WHICH READS AS UNDER:- IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE AP PELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS.7,73,705/- ON THE GROUND OF UNEXPLAINED CASH DEPOSITS RECEIVED DURING THE YEAR. HE OUGHT TO HAVE DELETED ENTIRE ADDITION MADE BY AO. 3. THE BRIEF FACTS ARE CONSEQUENT TO SEARCH ON SH RI RAMESHBHAI BABUBHAI SHAH DATED 03.04.2008, THE ASSESSEES ASSE SSMENT WAS FRAMED U/S 143 R.W.S. 147 OF THE INCOME-TAX ACT, 1961 VIDE ORD ER DATED 19.11.2009, IN WHICH HUGE ADDITIONS WERE MADE WHICH WERE REDUCED B Y THE LD. CIT(A) BY FOLLOWING OBSERVATIONS:- 4.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. COUNSEL AS WELL AS THE FACTS OF THE CASE. THE ASSESSING OFFICER HAD NO T GIVEN ANY REASON AS TO HOW THE OPENING CASH BALANCE OF RS.12,45,110/- AS O N 01.04.2001 IS THE INCOME OF THE YEAR UNDER CONSIDERATION. IN THE CASH IN HAND ACCOUNT OF THE SAME TRIAL BALANCE, AS REFERRED TO ABOVE, THE OPENI NG CASH AS ON 01.04.2001 WAS FOR RS. 12,45,110/-. THE CASH RECEIPTS DURING T HE YEAR WERE FOR SMC-ITA NO. 1286/AHD/2011 UPENDRABHAI M. PATEL VS. ACIT AY :2002-03 2 RS.7,73,705/-. THE EXPENSES/WITHDRAWALS DURING THE YEAR WERE FOR RS.10,82,112/- AND THE CLOSING BALANCE OF CASH AS O N 31.03.2002 WAS FOR RS. 9,36,7037-. THE OPENING CASH BALANCE AS ON 01.04.20 01 FOR RS. 12,45,110/- WAS THE CLOSING CASH BALANCE AS ON 31.03.2002. THE CLOSING CASH BALANCE AS ON 31.03.2001 CANNOT BE CONSIDERED AS INCOME BY ANY STRETCH OF IMAGINATION WHETHER IT IS DISCLOSED TO THE DEPARTMENT OR NOT. T HEREFORE, THE ADDITION OF RS.12,45,110/- WAS NOT WARRANTED AND THE SAME IS HE REBY DELETED. AS REGARDS THE ADDITION OF RS.7,73,705/-, NO EXPLANATION WAS G IVEN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. NO PLAUSIBLE EXPLANATION WAS GIVEN DURING THE COURSE OF APPELLATE PROCEEDINGS AS IS EVIDENT FROM THE SUBMISSION OF THE LD. COUNSEL REPRODUCED IN PARA-4.1 ABOVE. HOWEVER, DURI NG FURTHER HEARING, IT WAS CONTENDED THAT CERTAIN RECEIPTS ARE RECEIVED BA CK FROM THE PAYMENT MADE EARLIER. SUCH RECEIPTS WERE STATED TO BE FOR RS. 5. 11 LAKHS. HOWEVER, THE LD. COUNSEL COULD NOT ESTABLISH AS TO WHOM AND FOR WHAT PURPOSE, THE PAYMENTS WERE MADE AND WHY THE SAME WERE RECEIVED BACK. IN A BSENCE OF EVIDENCE, THE BENEFIT OF CASH RECEIPTS OF RS.5.11 LAKHS FROM THE EARLIER PAYMENTS IS NOT ACCEPTABLE AND SUCH CONTENTION RAISED IS REJECTED. AS PER THE CASH ACCOUNT IN THE ABOVE REFERRED TRIAL BALANCE, THE APPELLANT HAD INTRODUCED CASH OF RS.7,73,705/-. THE APPELLANT HAD NOT EXPLAINED ANY SOURCE OF SUCH CASH RECEIPT. IN ABSENCE OF SATISFACTORY EXPLANATION REG ARDING THE SOURCE OF CASH RECEIPTS, THE SAME WAS RIGHTLY BEEN ADDED TO THE IN COME OF THE ASSESSEE AS UNEXPLAINED CASH RECEIPTS AND THE SAME IS SUSTAINED . THUS, OUT OF THE ADDITION OF RS.20,18,815/-, THE ADDITION OF RS. 12, 45,110/- IS DELETED AND THE ADDITION OF RS.7,73,705/- IS CONFIRMED. THE THIRD G ROUND OF APPEAL IS ACCORDINGLY PARTLY ALLOWED. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR THE AMOUNT RETAINED BY LD. CIT(A). 5. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE S TATEMENT OF FACTS-CUM- SYNOPSIS FILED ALONG WITH THE MEMORANDUM AND CONTEN DS THAT THE ADDITION IN QUESTION HAS BEEN MADE ONLY ON THE BASIS OF LAPT OP OF A THIRD PARTY. FOLLOWING RELEVANT SUBMISSIONS HAVE BEEN MADE:- IT MUST ALSO BE APPRECIATED THAT INSOFAR AS THE AS SESSEE IS CONCERNED, IN HIS INDIVIDUAL CAPACITY HE NEVER CARRIED OUT ANY CONSID ERATION ON REAL ESTATE BUSINESS. THE ASSESSEE AND HIS FAMILY MEMBERS ARE PARTNERS IN SOME FIRMS WHO ARE ENGAGED IN REAL ESTATE BUSINESS. IT HAS BE EN UNIFORM AND CONSTANT CLAIM OF THESE FIRMS THAT THE INCOME ARISING FROM A PARTICULAR PROJECT IS REQUIRED TO BE BOOKED IN THE YEAR IN WHICH THAT PRO JECT IS SUBSTANTIALLY COMPLETED AND SALES HAVE TAKEN PLACE. TILL THEN THE AMOUNTS RECEIVED ARE ONLY ADVANCES AGAINST BOOKINGS. THEREFORE, WITHOUT PREJU DICE TO THE GENERALITY OF THE SUBMISSIONS, EVEN IF ANY RECEIPTS ARE INDICATED IN THE LAPTOP, THE SAME CANNOT BE SAID TO BE IN THE NATURE OF INCOME CHARGE ABLE TO TAX DURING THE SMC-ITA NO. 1286/AHD/2011 UPENDRABHAI M. PATEL VS. ACIT AY :2002-03 3 PRESENT ASSESSMENT YEAR. FURTHER THE ONLY SOURCE OF INCOME OF THE ASSESSEE ALONG WITH OTHER MEMBERS OF HIS FAMILY IS SHARE OF PROFIT FROM PARTNERSHIP FIRMS AND ACCORDINGLY ONCE THE INCOME BROUGHT TO TH E CHARGE OF TAX IN THE CASE OF FIRM AND THE ASSESSEE AND OTHER MEMBERS OF THE FAMILY RECEIVED THEIR SHARE OF PROFIT, SUCH SHARE OF PROFIT CANNOT BE BRO UGHT TO THE CHARGE OF TAX IN THE HANDS OF THE PARTNERS IN TERMS OF PROVISIONS RE LATING TO TAXATION OF INCOME FROM FIRMS EFFECTIVE FROM 1991-92. 5.1 THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEN DS THAT A CASH FLOW STATEMENT WAS FILED BEFORE THE LD. CIT(A), BUT THE SAME HAS NOT BEEN CONSIDERED AT ALL. IF THE SAME IS CONSIDERED, THE P EAK ADDITION WILL REMAIN RESTRICTED TO RS.2,07,952/- AND THE WORKING OF PEAK BALANCE IS ALSO PLACED ON RECORD. AS A MATTER OF ABUNDANT CAUTION, THE LD. C OUNSEL FOR THE ASSESSEE URGED FOR THE ADMISSION OF ADDITIONAL EVIDENCE WHIC H IS OPPOSED BY THE LD.DR. 6. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE ADDITIONAL EVIDENCE IN THE FORM OF WORKING OF PEAK CASH CREDIT IS ADMITTED AS ADDITIONAL EVIDENCE. IT IS SETTLED LAW THAT WHEN T HE ADDITION IS PROPOSED TO BE MADE ON THE BASIS OF CREDIT AND DEBIT ENTRIES, T HEN AFTER DUE VERIFICATION, WHAT CAN BE ADDED IS THE PEAK CASH CREDIT. SINCE TH E PEAK WORKING OF THE ASSESSEE HAS NOT BEEN VERIFIED, THE ASSESSEES GROU ND IS SET ASIDE AND RESTORED BACK TO THE FILE OF THE LD. ASSESSING OFFI CER TO CONSIDER WORKING OF PEAK CASH CREDIT AND DECIDE THE ISSUE AFRESH AFTER ALLOWING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. THE ASSESSEE S APPEAL IS ACCORDING ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 17/02/2017 *BIJU T., SR. PS SMC-ITA NO. 1286/AHD/2011 UPENDRABHAI M. PATEL VS. ACIT AY :2002-03 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD