Safiul Mallick, Kolkata V. ACIT, Circle-27,Haldia, Purba Medinipur

ITA 1408/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1818 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M TAUHEED
• Keywords: Unexplained investment; Gift; Peak credit
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH KOLKATA BEFORE SHRI S.S. GODARA, JM & DR. A.L.SAINI, AM ITA NO.1408/KOL/2016 (A.Y: 2008-09) SAFIUL MALLICK , C/O S.S.LOHIA & CO., 27, BRABOURNE ROAD, 7 TH FLOOR, ROOM NO.711, KOLKATA-700001. VS. A.C.I.T., CIRCLE-27, HALDIA BASUDEVPUR, P.O.KHANJANCHAK, HALDIA PURBA MEDINIPUR-721 602. ./ ./PAN/GIR NO. : AKMPM 2983 J ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SHRI SUBASH AGARWAL, ADVOCATE REVENUE BY : SHRI S.M. TAUHEED, ADDL. CIT / DATE OF HEARING : 06/06/2018 /DATE OF PRONOUNCEMENT: 05/09/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2008-09, IS DIRECTED AGAINST THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, KOLKATA IN APPEAL NO.264/CIT(A)-7/CIR.-27/15-16 DATED 28.04.2016 WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT), DATED 14.03.2013. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS :- 1. THAT THE LD. CIT (APPEALS) GROSSLY ERRED IN ENHANCING THE ADDITION OF RS. 70,00,000/- TO RS. 70,54,599/- TAKING PEAK CREDIT BALANCE OF THE BANK. 2. THAT THE CIT (APPEALS) WAS WRONG IN ADDING RS. 70,54,599/- TO THE TOTAL INCOME AS PEAK CREDIT BALANCE WHEN SEPARATE ADDITION WAS ALREADY MADE IN THE ASSESSMENT FOR TRANSACTIONS IN THE BANK ACCOUNT AND APPELLANT ACCEPTED SAID ADDITION. 3. THAT LD. CIT (APPEALS) ACTED ARBITRARILY IN REJECTING THE APPELLANT'S EXPLANATION REGARDING SOURCES OF FDR OF RS. 70,00,000/- WHICH WAS MADE OUT OF WITHDRAWALS FROM THE BANK ITSELF AND THEREFORE NOT LIABLE TO BE ADDED U/S 69 OF THE LT. ACT, 1961. SAFIUL MALLICK ITA NO.1408/KOL/2016 A.Y: 2008-09 2 4. THAT WHEN SOURCES OF INVESTMENT OF RS. 70,00,000/- IN THE FDR IS DISCERNABLE FROM THE BANK STATEMENT ITSELF, NO SEPARATE ADDITION WAS REQUIRED TO TREAT THE SAID INVESTMENT AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 5. THAT THE ADDITION OF RS. 70,54,599/- MADE BY LD. CIT (APPEALS) BY ENHANCEMENT IS WHOLLY ARBITRARY, UNJUSTIFIED AND UNWARRANTED TO THE FACTS OF THE CASE AND THEREFORE LIABLE TO BE DELETED IN FULL. 6. THAT I CRAVE LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ARE AS FOLLOWS :- 1. WITHOUT PREJUDICE TO THE GROUNDS RAISE IN THE MEMORANDUM OF APPEAL, TELESCOPING BENEFIT OF THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF THE ADDITIONAL INCOME OF RS. 6,29,829/-, RS. 6,66,719/- AND RS. 5,15,085/- TOTALING TO RS. 18,11,631/- BEING UNDISCLOSED G.P. RELATING TO A.Y.S: 2008- 09, 2007-08 AND 2006-07 RESPECTIVELY BE ALLOWED AGAINST THE ADDITION OF RS. 70,54,599/- MADE BY HIM IN THE INSTANT YEAR ON ACCOUNT OF PEAK CREDIT OF THE UNDISCLOSED BANK ACCOUNT. 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE MADE A FIXED DEPOSIT TO THE TUNE OF RS.70,00,000/- ON WHICH INTEREST HAS ALSO BEEN ACCRUED DURING THE FINANCIAL YEAR 2007-08 TO THE TUNE OF RS.2,13,661/-. THE DETAILS OF FIXED DEPOSIT DATE-WISE ARE AS FOLLOWS :- INVESTMENT TYPE F.D. A/C NO. DATE OF INVESTMENT PRINCIPAL F.D. 402806 08.10.2007 RS.10,00,000 F.D. 402807 08.10.2007 RS.10,00,000 F.D. 402808 08.10.2007 RS.10,00,000 F.D. 402809 08.10.2007 RS.10,00,000 F.D. 402810 08.10.2007 RS.10,00,000 F.D. 402811 08.10.2007 RS.10,00,000 F.D. 402812 08.10.2007 RS.10,00,000 TOTAL RS.70,00,000 4. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE REPLIED THAT INVESTMENTS OF RS70,00,000/- IN SEVERAL FIXED DEPOSIT CERTIFICATES WHICH WERE UNDISCLOSED BY THE ASSESSEE MADE FROM HIS PERSONAL SAVINGS GATHERED BY SALE OF GOLD, SAVINGS FROM WITHDRAWAL AND GIFT FROM HIS FATHER AND FATHER-IN-LAW. THE ASSESSEE SUBMITTED THAT HE CAME FROM A FINANCIALLY STRONG FAMILY FROM BOTH END. THEREFORE LARGE AMOUNT SAFIUL MALLICK ITA NO.1408/KOL/2016 A.Y: 2008-09 3 OF GIFT AND SELLING OF HIS INHERITED PROPERTY IN THE VILLAGE WAS UTILIZED TO MAKE THE FIXED DEPOSITS AND SINCE IT WAS HIS PERSONAL ASSET THEREFORE HE DID NOT DISCLOSE IN HIS BUSINESS BALANCE SHEET AND THE ASSESSEE SUBMITTED BEFORE THE AO THAT INTEREST ON FIXED DEPOSIT TO THE TUNE OF RS.2,13,661/- MAY BE CONSIDERED AS ADDITIONAL INCOME. HOWEVER, THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE AND NOTED THAT THE ASSESSEE TRIED TO EXPLAIN THE SOURCES OF PRINCIPAL INVESTMENT IN FIXED DEPOSIT AS RECEIVED AS GIFT FROM HIS FATHER AND FATHER-IN-LAW, SALE OF INHERITED PROPERTY, GIFT RECEIVED FOR EACH OCCASIONS AND IT WAS HIS PERSONAL ACCUMULATED ASSET OVER THE YEARS. THE AO NOTED THAT EXPLANATION OF THE ASSESSEE COULD NOT BE ACCEPTED, AS BECAUSE THE INTEREST PORTION OF THE CAPITAL INVESTED WAS ALSO NOT SHOWN IN HIS COMPUTATION OF INCOME AND THE ASSESSEE ALSO COULD NOT GIVE ANY EVIDENCE IN RESPECT OF HIS EXPLANATION. THEREFORE THE PRINCIPAL AMOUNT INVESTED IN FIXED DEPOSIT TO THE TUNE OF RS.70,00,000/- WAS ADDED U/S 69 OF THE ACT AS UNDISCLOSED AMOUNT. THE AO ALSO ADDED THE INTEREST ACCRUED ON THE FIXED DEPOSIT TO THE TUNE OF RS.2,13,661/- AS ASSESSEES INCOME FROM OTHER SOURCES. 5. AGGRIEVED BY THE STAND TAKEN BY THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS ENHANCED THE ADDITION MADE BY THE AO OBSERVING THE FOLLOWINGS: 3.0 I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND DO NOT FIND FORCE IN THE ARGUMENT. THE CONTENTION OF THE APPELLANT WAS THAT THE DEPOSITS WERE SOURCED FROM OVERDRAFT ACCOUNT, OUT OF THE CASH WITHDRAWALS ON 09.07.2007. THE APPELLANT ALSO SUBMITTED COPY OF THE BANK ACCOUNT AND LETTER FROM THE SAID BANK. ON VERIFICATION OF THE OVERDRAFT ACCOUNT OF THE APPELLANT FOR THE PERIOD FROM 01.04.2007 TO 31.03.2008 THERE WAS A PEAK CREDIT BALANCE OF RS.70,54,599/- ON 09.07.2007 WHICH WAS NOT DISCLOSED BY THE APPELLANT. THE APPELLANT IS HAVING THE CURRENT ACCOUNT WITH THE MUGBERIA CENTRAL CO-OP BANK LTD. BEARING NO'.91033004200118 (LATER RENUMBERED AS 91033004616533), BHAGWANPUR BRANCH. THE SAID ACCOUNT WAS NOT DISCLOSED IN THE INCOME TAX RETURN. THE APPELLANT HAS MADE SEVERAL CASH DEPOSITS IN THE CURRENT ACCOUNT TO THE TUNE OF RS.3,45,09,072/- ON VARIOUS DATES. THE APPELLANT HAS 'FREQUENTLY MADE CASH DEPOSITS AND CASH WITHDRAWALS IN THE, CITED CURRENT ACCOUNT. THE APPELLANT FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS AND THE DESTINATION OF CASH WITHDRAWALS. IN THE CURRENT ACCOUNT THERE WAS A PEAK BALANCE OF RS.70,54,599/- ON 09.07.2007 AND THE FDS OF RS.70,00,000/- WAS MADE OUT OF THE CASH WITHDRAWALS FROM THE SAID CURRENT ACCOUNT ON 09.07.2007. INITIALLY THE APPELLANT EXPLAINED BEFORE THE AO THAT THE SOURCE OF THE FDS WERE OUT OF THE SALE OF GOLD, GIFT RECEIVED FROM FATHER SAFIUL MALLICK ITA NO.1408/KOL/2016 A.Y: 2008-09 4 AND PERSONAL SAVINGS BUT NO EVIDENCE WAS FURNISHED AT THE TIME OF ASSESSMENT OR DURING THE APPEAL. AS PER THE DETAILS GIVEN IN THIS PARAGRAPH THE FDS WERE MADE OUT OF THE PEAK CREDIT BALANCE AS ON 09.07.2007 AND THE APPELLANT COULD NOT EXPLAIN THE SOURCE OF CASH DEPOSITS AND THE SOURCE FOR THE PEAK CREDIT BALANCE AS ON 09.07.2007. NO OTHER EVIDENCE WAS FURNISHED BY THE APPELLANT. THEREFORE, THE SOURCE OF THE PEAK CREDIT BALANCE OF RS.70,54,599/- (INCLUDING OF FDS OF RS.70,00,000/-) REMAINED UNEXPLAINED. SINCE THE ASSESSMENT RESULTS INTO ENHANCEMENT, I DIRECTED THE AIR OF THE APPELLANT TO EXPLAIN THE 'SOURCE OF THE PEAK CREDIT LYING IN THE BANK ACCOUNT BEARING NO. 91033004200118 WITH MUGBERIA CENTRAL CO-OP. BANK LTD. THE A/R OF THE APPELLANT STATED THAT THERE IS NO EXPLANATION FOR THE SOURCE. THEREFORE,- THE AMOUNT OF RS.70,54,599/- REQUIRED TO BE BROUGHT TO TAX INSTEAD OF THE ADDITION OF RS.70,00,000/- MADE-BY THE AO. ACCORDINGLY, THE ADDITION MADE BY THE AO IS ENHANCED TO THE AMOUNT OF RS.70,54,599/- INSTEAD OF RS.70,00,000/- THIS GROUND OF APPEAL IS DISMISSED AND THE ADDITION IS ENHANCED. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT IN THE INITIAL MEMORANDUM OF GROUNDS OF APPEAL FILED BY THE ASSESSEE, HE DID NOT MENTION THE GROUNDS RELATING TO TELESCOPING BENEFIT OF THE ADDITION MADE BY THE AO. THEREFORE THE ASSESSEE HAS RAISED THE ADDITIONAL GROUND IN RESPECT OF TELESCOPING BENEFIT OF THE ADDITIONS MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A). FOR THAT THE ASSESSEE HAS RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS S. NELLIAPPAN 66 ITR 722 (SC) WHEREIN IT WAS HELD AS FOLLOWS :- IN HEARING AN APPEAL THE TRIBUNAL MAY GIVE LEAVE TO THE ASSESSEE TO URGE GROUNDS NOT SET FORTH IN THE MEMORANDUM OF APPEAL AND IN DECIDING THE APPEAL THE TRIBUNAL IS NOT RESTRICTED TO THE GROUNDS SET FORTH IN THE MEMORANDUM OF APPEAL OR TAKEN BY LEAVE OF THE TRIBUNAL. THE TRIBUNAL WAS, THEREFORE, COMPETENT TO ALLOW THE ASSESSEES TO RAISE THE CONTENTION RELATING TO THE CASH CREDITS WHICH WAS NOT MADE THE SUBJECT MATTER OF A GROUND IN THE MEMORANDUM OF APPEAL. IT COULD NOT BE SAID THAT IN ACCEPTING THE CONTENTION OF THE ASSESSEES THAT THE CASH CREDITS REPRESENTED INCOME FROM THE BUSINESS WITHHELD FROM THE BOOKS, THE TRIBUNAL MADE OUT A NEW CASE INCONSISTENT WITH THE ASSESSEE'S OWN PLEA. IN ANY EVENT THE TRIBUNAL WAS NOT PRECLUDED FROM ADJUSTING THE TAX LIABILITY OF THE ASSESSEE IN THE LIGHT OF ITS FINDINGS MERELY BECAUSE THE FINDINGS WERE INCONSISTENT WITH THE CASE PLEADED BY THE ASSESSEES. IT IS TRUE THAT THERE WAS NO DIRECT EVIDENCE OF ANY CONNECTION BETWEEN THE CASH CREDIT ENTRIES AND THE INCOME WITHHELD FROM THE BOOKS OF ACCOUNT BY THE ASSESSEES. BUT IF THE TRIBUNAL INFERRED THAT THERE WAS A CONNECTION BETWEEN THE PROFITS WITHHELD FROM THE BOOKS AND THE CASH CREDIT ENTRIES, IT COULD NOT SAFIUL MALLICK ITA NO.1408/KOL/2016 A.Y: 2008-09 5 BE SAID THAT THE CONCLUSION WAS BASED UPON SPECULATION. THE QUESTION SOUGHT TO BE RAISED BY REVENUE WAS, PURELY ONE OF FACT AND COULD NOT BE REFERRED UNDER SECTION 66 OF 1922 ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT SINCE THE AO MADE THE ADDITION IN RESPECT OF AMOUNT DEPOSITED IN THE CURRENT ACCOUNT @ 1.97% THEREFORE HE REQUESTED TO MAKE THE GROSS PROFIT ADDITION IN RESPECT OF THE UNDISCLOSED FIXED DEPOSIT TO THE TUNE OF RS.70,00,000/-. SINCE THIS UNDISCLOSED INVESTMENT IN FIXED DEPOSIT WERE MADE BY THE ASSESSEE AFTER WITHDRAWING FROM THE CURRENT ACCOUNT THEREFORE THE GROSS PROFIT ADDITION SHOULD BE SUSTAINED INSTEAD OF DISALLOWING THE ENTIRE SUM U/S 69 OF THE ACT. 8. HOWEVER, THE LD. DR FOR THE REVENUE SUBMITTED BEFORE US THAT FIXED DEPOSIT WORTH OF RS.70,00,000/- MADE BY THE ASSESSEE OUT OF HIS PAST SAVINGS, GIFT ETC IT SHOULD NOT BE LINKED WITH THE CURRENT ACCOUNT, AND HE DEFENDED THE ORDER PASSED BY THE AO. 9. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE PRAYED BEFORE THE BENCH THAT TELESCOPING BENEFIT OF THE ADDITIONS MADE BY THE AO ON ACCOUNT OF ADDITIONAL INCOME TO THE TUNE OF RS.6,29,829/-, RS.6,66,719 AND RS.5,15,085/- TOTALING TO RS.18,11,631/-; BEING UNDISCLOSED GROSS PROFIT RELATING TO A.Y.2008- 09, 2007-08 AND 2006-07 RESPECTIVELY MAY BE ALLOWED AGAINST THE ADDITION OF RS.70,54,599/- MADE BY HIM IN THE INSTANT YEAR ON ACCOUNT OF PEAK CREDIT OF THE UNDISCLOSED BANK ACCOUNT. 9.1. SO FAR AS THE ADDITION U/S 69 OF THE ACT IS CONCERNED THE ASSESSEE HAS SUBMITTED THAT RS.70,54,599/- WHICH IS MADE BY THE AO ON ACCOUNT OF PEAK CREDIT, WHICH THE ASSESSEE SUBMITTED THAT THE SEPARATE ADDITION WAS ALREADY MADE IN THE ASSESSMENT FOR TRANSACTION IN THE BANK ACCOUNT AND THE ASSESSEE ACCEPTED THE SAID ADDITION. SO FAR AS THIS SOURCE OF FIXED DEPOSIT OF RS.70,00,000/- IS CONCERNED WE ARE OF THE VIEW THAT THE ASSESSEE HIMSELF ADMITTED THAT THESE FIXED DEPOSITS WERE MADE OUT OF HIS PERSONAL SAVINGS, GIFTS AND INHERITED PROPERTIES. SAFIUL MALLICK ITA NO.1408/KOL/2016 A.Y: 2008-09 6 THEREFORE IT CANNOT BE SAID THAT THESE TRANSACTIONS RELATE TO FIXED DEPOSIT AS PART OF HIS REGULAR BUSINESS TRANSACTION. 9.2. THE LD. AR INVITES OUR ATTENTION TO THE ASSESSEES ADDITIONAL GROUND RAISED IN THE APPEAL IN THE NATURE OF AN ALTERNATIVE PLEA THAT THE AO HAS HIMSELF ADDED GROSS PROFITS OF RS.6,29,829/-, RS.6,66,719/- AND RS.5,15,085/- IN ASSESSMENT YEARS 2008-09, 2007-08, 2006-07 RESPECTIVELY TO THE IMPUGNED ASSESSMENT YEARS. HIS PLEA THEREFORE IS THAT BOTH THE LOWER AUTHORITIES OUGHT TO HAVE APPLIED TELESCOPING AS PER LAW WHILE CONSIDERING THE CORRECTNESS OF THE IMPUGNED ADDITION AMOUNTING TO RS.70,54,599/- IN THE SUBJECT MATTER OF THE INSTANT APPEAL. THE LD. DR FAILED TO DISPUTE THIS CLINCHING FACT THAT THE SAID INCOME IS IN NO WAY CONSIDERED IN ASSESSEES HAND OR IN OTHER HAND. WE, THEREFORE, REMIT THE INSTANT ISSUE BACK TO THE FILE OF THE AO TO CARRY OUT NECESSARY EXERCISE. IT IS MADE CLEAR THAT THE CONSEQUENT ADJUDICATION SHALL EXAMINE THE ISSUE OF TELESCOPING ONLY. NO OTHER REMAND HAS BEEN RAISED AT THE ASSESSEES BEHEST DURING THE COURSE OF HEARING BEFORE US CHALLENGING THE CORRECTNESS OF THE IMPUGNED ADDITION. 10. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 05/09/2018. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED: 05/09/2018 RG, SPS SAFIUL MALLICK ITA NO.1408/KOL/2016 A.Y: 2008-09 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- SAFIUL MALLICK 2. / THE RESPONDENT.- A.C.I.T., CIRCLE-27, HALDIA. 3. ( ) / THE CIT(A)-7, KOLKATA. 4. / CIT-9, KOLKATA. 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE. //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA .