The DCIT, Circle-9, Surat V. Shri Jitendra A.GAruda, Surat

ITA 145/AHD/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9999 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital asset; Peak credit
• Section: 133(6); 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NO.145/AHD/2012 / ASSESSMENT YEAR : 2008-09 DCIT, CIRCLE-9, SURAT VS SHRI JITENDRA A. GARUDA, C/O. ASMI DYEING & PRINTING WORKS, RAM BAUG, A.K. ROAD, SURAT 395 006 PAN : AAWPG 3048 E / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI JAMES KURIAN, SR DR ASSESSEE BY : SHRI TUSHAR HEMANI, AR / DATE OF HEARING : 24/11/2016 / DATE OF PRONOUNCEMENT: 29/11/2016 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:- THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT DATED 26.09.2011 FOR ASSESSMENT YEAR 2008-09. 2. THE DEPARTMENT HAS TAKEN FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.45, 00,000/- MADE BY THE AO UNACCOUNTED INVESTMENT IN MUTUAL FUND. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO RS. 24,495/- INSTEAD OF RS.6,97,933/- MADE BY THE AO AS UNEXPLAINED INVESTM ENT U/S 69 OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3. THE FACTS OF THE CASE ARE THAT IN THIS CASE THE ASSESSEE HAS SOLD TWO PIECES OF LAND, DISCLOSING LONG TERM CAPITAL GAINS AT RS.5,71,881/-. DETAILS OF THE PROPERTIES HAVE BEEN GIVEN AS FOLLOWS:- ITA NO. 145/AHD/2012 DCIT VS. SHRI JITENDRA A. GARUDA AY : 2008-09 2 VILLAGE SARSANA, REVENUE SURVEY NO.63/ AGRICULTURE LAND SN DATE AND NO. OF REGISTRATION BLOCK NO. HISSA NO. AREA IN SQ MTR SALE AMOUNT INDEXED COST (PURCHASE 1995) LTCG 1 334/1.1.08 183 1 4654 7,36,000 44,119 5,71,881 2 12906/ 25.10.07 184 2 3136 4,46,000 48,021 4,46,978 10,18,859 AS PER AIR INFORMATION, THE ASSESSEE HAD INVESTED RS.45,00,000/- IN THE RELIANCE CAPITAL ASSET MANAGEMENT LTD AND JM FI NANCIAL ASSET MANAGEMENT PVT LTD AS FOLLOWS:- MUTUAL FUND SCHEME FOLIO NO. AMOUNT DATE BANK ACCOUNT RELIANCE RELIANCE NATURAL RESOURCES FUND- GROWTH PLAN 42677292126 2,50,000 25.02.08 BANK OF BARODA, CITYLIGHT BRANCH , SURAT 29490100006198 RELIANCE - DO - 42677292164 2,50,000 25.02.08 - DO - JM FINANCIAL JM CONTRA FUND GROWTH PLAN 7025376881 10,00,000 23.10.07 HDFC BANK, MOTWANI CHAMBER, MUMBAI 601850015703 JM FINANCIAL - DO - 7195556861 30,00,000 14.11.07 - DO - TOTAL 45,00,000 3.1 REGARDING THE INVESTMENT WITH RELIANCE MUTUAL F UND, THE ASSESSEE TRIED TO EXPLAIN THAT IT HAD ALREADY SHOWN AN INVES TMENT IN THE BALANCE- SHEET FILED ON RECORD AT RS.5,00,000/- IN THE NAME OF RELIANCE NATURAL RESOURCES AND THIS FACTS WAS VERIFIED BY THE AO. HO WEVER, THE AO FOUND THAT THE ASSESSEE HAD MADE THE DISCLOSED INVESTMENT VIDE CHEQUE NO.772478 ISSUED FROM THE ACCOUNT NO.02630100007110 HELD WITH THE BANK OF BARODA. THIS DISCLOSED BANK ACCOUNT IS NOT THE SAME AS THAT OBTAINED FROM THE RELIANCE MUTUAL FUND DURING THE ASSESSMENT PROCEEDI NGS U/S 133(6) OF THE I.T. ACT. THE AO HAS ALSO OBSERVED THAT RELIANCE MU TUAL FUND HAS STATED THAT THE ASSESSEE'S INVESTMENT HAS COME FROM BANK O F BARODA CITYLIGHT BRANCH AND ACCOUNT NO. 29490100006198 WHICH IS NOT REFLECTED IN THE BOOKS ITA NO. 145/AHD/2012 DCIT VS. SHRI JITENDRA A. GARUDA AY : 2008-09 3 OF ACCOUNTS OF THE ASSESSEE. AS BOTH THE BANK ACCOU NTS ARE DIFFERENT, THE AO HELD THAT THE BANK ACCOUNT NO. 29490100006198 WITH THE BANK OF BARODA AND THE INVESTMENT MADE IN RELIANCE MUTUAL FUND WERE BO TH UNACCOUNTED AND HE ACCORDINGLY ADDED THE AMOUNT AS UNEXPLAINED INVE STMENT U/S 69 OF THE I.T. ACT. 3.2 SIMILARLY THE ASSESSEE HAD NO EXPLANATION TO TH E INVESTMENT WITH JM FINANCIAL ASSET MANAGEMENT PVT LTD AT RS.40,00,000/ -. THE BANK ACCOUNT NO. 601850015703 HELD WITH HDFC BANK AT MOTWANI CHA MBER, FORT MUMBAI WHICH IS MENTIONED IN THE ACCOUNT STATEMENT OF THE JM MUTUAL FUND STATEMENT IS HELD TO BE UNACCOUNTED. THUS, THE AO O BSERVED THAT THE ENTIRE INVESTMENT WITH RELIANCE MUTUAL FUND AND JM FINANCI AL MUTUAL FUND WAS HELD TO BE UNACCOUNTED AND ACCORDINGLY ADDED BACK T O THE INCOME OF THE ASSESSEE. THE AO, THUS, MADE THE ADDITION OF RS.45 ,00,000/- ON ACCOUNT OF UNACCOUNTED INVESTMENT (MUTUAL FUND) U/S 69 OF THE ACT. 3.3 IN A SIMILAR WAY, THE FOLLOWING ADDITIONS WERE MADE BY AO ON ACCOUNT OF UNACCOUNTED INVESTMENT U/S 69 OF THE ACT :- (I) BANK OF BARODA, CITYLIGHT BRANCH, SURAT - RS.6,02 ,334/- BANK ACCOUNT 29490100006198 (II) SUTEX COOPERATIVE BANK, CITYLIGHT BRANCH - RS. 9 5,599/- BANK A/C NOS. 248013200180 & 248013200184 ------- -------------- RS.6,97,933/- ============= 4. AGGRIEVED BY THE ORDER OF LD. AO, THE ASSESSEE F ILED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- II) ADDITION OF RS. 45.00,000/- TOWARDS UNACCOUNTED INVESTMENT IN MUTUAL FUNDS AS UNEXPLAINED INVESTMENT : DURING THE YEAR IN QUESTION, THE APPELLANT RECEIVED RS.20.01 LAC AS AN ADVANCE PAYMENT AGAINST THE SALE OF HIS HOUSE. AND HE FURTHER RECEIVED AND AMOUNT OF RS.6.16 LAC AS SHARE FROM THE SALE OF LAN D AT A.K. ROAD. FURTHER, ITA NO. 145/AHD/2012 DCIT VS. SHRI JITENDRA A. GARUDA AY : 2008-09 4 AN AMOUNT OF RS.22 LAC WAS ADVANCED BY J.M. FINANCI AL PRODUCT PVT. LTD. AS LOAN TO THE APPELLANT. HENCE, IN TOTAL, THE APPELLA NT RECEIVED RS.48.17 LAC OUT OF WHICH, HE INVESTED RS.45 LAC IN MUTUAL FUND. HEN CE, THE SOURCE OF WHOLE OF INVESTMENT STANDS EXPLAINED. THE DETAILS OF ALL THESE TRANSACTIONS ARE EXPLAINED IN THE APPELLANT'S SUBMISSION. ACCORDINGL Y, THE ADDITION MADE ON THIS ACCOUNT IS HEREBY DELETED AND THE GROUND OF AP PEAL IS ALLOWED. III) ADDITION OF RS. 6,97,933/- (I.E. RS. 6,02,334 + RS. 95,599) AS UNEXPLAINED INVESTMENT: SO FAR AS THE ADDITION ON ACCOUNT OF DE POSIT MADE IN THE BANK A/C IN BANK OF BARODA, CITY LIGHT AND SUTEX CO-OP BANK LTD. IS CONCERNED, THE ASSESSEE HAS SUBMITTED THAT HE OFFERED 15 % OF THE UNEXPLAINED TRANSACTIONS OF RS.1,63,301/- DURING THE ASSESSMENT PROCEEDINGS AS PROFIT FROM RETAIL TRADING OF TEXTILE FABRICS DONE. HE HAS FURTHER SUB MITTED THAT EVEN IF THE HIGHEST PEAK BALANCE OF ALL THE MERGE BANK ACCOUNTS ! ARE CONSIDERED AFTER EXCLUDING OPENING BALANCE OF RS.1,70,043/-AS ON 01. 04,2007 AND DEPOSITS OF RS.9,30,500/- (RS.4,30,500 BEING OUT OF LOAN FROM L IC AND RS.5,00,000/- FROM THE SALE PROCEEDS OF LAND), THERE REMAINS NO A MOUNT WHICH SHOULD BE ADDED TO THE TOTAL TAXABLE INCOME. I AM INCLINED TO AGREE WITH EH APPELLANT'S SUBMISSION AND ACCORDINGLY THE A.O. IS DIRECTED TO RESTRICT THE ADDITION OF RS.24,495/- BEING 15% OF RS.1,63,301/- AS] OFFERED BY THE APPELLANT. ACCORDINGLY, THE GROUND OF APPEAL IS PARTLY ALLOWED . 5. AGAINST THE AFORESAID ORDER OF THE LD. CIT(A), T HE REVENUE IS NOW IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE TRANSACTIONS PERTAINED TO RS.45 LAKHS HAVE BEEN SHOWN IN THE BANK STATEMENTS WHICH IS EXHIBITED IN THE PAPER-BOOK FIL ED BY THE LD. COUNSEL FOR THE ASSESSEE. SO FAR AS THE LANDS IN QUESTION ARE C ONCERNED, THE LD. COUNSEL HAS FILED COPY OF THE SAATAKHAT FOR SALE OF LAND, A GAINST WHICH THE ASSESSEE RECEIVED TOKEN AMOUNT OF RS.20,01,000/-. OUT OF SU CH SALES PROCEEDS, AN AMOUNT OF RS.5,00,000/- HAS BEEN INVESTED IN RELIAN CE NATURAL RESOURCES FUND. MOREOVER, OUT OF SUCH TOKEN SUM RECEIVED THRO UGH SALE PROCEEDS, THE ASSESSEE HAD DRAWN THREE CHEQUES AGGREGATING TO RS. 18,00,000/- FOR INVESTMENT IN JM CONTRA FUND. WITH REGARD TO BALANC E SUM OF RS.22,00,000/-, A LOAN OF SUCH SUM WAS SANCTIONED B Y JM FINANCIAL PRODUCTS PVT LTD. THUS, IT WAS RIGHTLY HELD BY THE CIT(A) T HAT THE ASSESSEE WAS ITA NO. 145/AHD/2012 DCIT VS. SHRI JITENDRA A. GARUDA AY : 2008-09 5 HAVING SUFFICIENT FUNDS SO AS TO EXPLAIN INVESTMENT OF RS.45,00,000/- MADE IN MUTUAL FUNDS. WE, THEREFORE, DO NOT FIND ANY ER ROR OR INFIRMITY IN THE ORDER OF THE CIT(A) IN THIS REGARD. 6.1 WITH REGARD TO THE IMPUGNED ADDITION OF RS.6,97 ,933/- U/S 69 OF THE ACT, THE COPY OF THE RELEVANT BANK STATEMENTS WERE PROVIDED IN THE PAPER- BOOK FROM PAGE NO.5 TO 15. REGARDING THE ACCOUNT HELD WITH BANK OF BARODA, IT WAS EXPLAINED BY THE ASSESSEE THAT THE A SSESSEE HAS OPENED THIS ACCOUNT FOR THE PURPOSE OF CARRYING OUT TRANSACTION S PERTAINING TO RETAIL IN TEXTILE FABRICS AND THE AMOUNT WAS EXPLAINED BY THE ASSESSEE REPRESENTING THE RECEIPTS IN RESPECT OF RETAIL BUSINESS. WITH R EGARD TO THE TWO ACCOUNTS HELD WITH SUTEX BANK, ONE ACCOUNT HAS CERTAIN CREDI TS WITH RESPECT TO RETAIL BUSINESS CARRIED OUT BY THE ASSESSEE AND THE ASSESS EE HAS VOLUNTARILY OFFERED RS.24,495/- OUT OF THIS INCOME AS INCOME EARNED FRO M SUCH BUSINESS ESTIMATED @ 15% OF TOTAL UNEXPLAINED DEPOSITS OF RS .1,63,301/-. THE SECOND ACCOUNT HELD WITH SUTEX BANK PERTAINED TO ASSESSEE S MINOR SON. THEREFORE, IN OUR CONSIDERED OPINION, THE CIT(A) WAS RIGHT IN RESTRICTING THE ADDITION TO 15% OF TOTAL ADDITION OF RS.1,63,301/-. IT IS ALSO PERTINENT TO MENTION HERE THAT THE AO DID NOT FURNISH THE REMAND REPORT IN RE SPECT OF THESE CASES FOR THE REASONS BEST KNOWN TO HIM, THOUGH THE CIT(A) CA LLED FOR THE REMAND REPORT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES O F THE CASE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE L D. CIT(A), WHICH IS UPHELD AND THE GROUNDS OF REVENUES APPEAL ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 29 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (MAHAVIR PRASAD) JUDICIAL MEMBER AHMEDABAD; DATED 29/11/2016 *BT ITA NO. 145/AHD/2012 DCIT VS. SHRI JITENDRA A. GARUDA AY : 2008-09 6 / 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