Dr. Rustom Sorab Wadia, Pune V. Addl. CIT, Range-5, Pune, Pune

ITA 1451/PUN/2009

• Counselvise Citation: 145124514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Assessee Lawyers: MRS DEEPA KHARE
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 1451/PN/09 (ASSTT. YEAR: 2005-06) DR RUSTOM S WADIA, .. APPELLANT PILLO VILA, 28 YASHWATNAGAR, RANGE HILLS RD, OPP,GANESHKHIND RD, PUNE 411 004 PAN AAGPW7198F VS. ADDL. COMMISSIONER OF INCOME-TAX, .. RESPONDENT RANGE- 5, PUNE APPELLANT BY: MRS DEEPA KHARE RESPONDENT BY: SHRI S K AMBASTHA DATE OF HEARING : 17.10.2011 DATE OF PRONOUNCEMENT : 23.11.2011 ORDER PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, PUNE DATED 25 .3.2009, WHICH IN TURN, HAS ARISEN FROM THE ORDER OF THE ASSESSING OFFICER DATED 1 2.12.2007 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SH ORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS T HAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF INCOME AS UNEXPLAINED INCOME OF RS 1,20,708/- UNDER SECTION 68 OF THE ACT. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A CONSULTI NG PHYSICIAN AND NEUROLOGIST DERIVING PROFESSIONAL INCOME FROM HIS PRACTICE IN RUBY HALL CLINIC AS WELL AS A SMALL COMPONENT OF PRIVATE PRACTICE. IN THE CAPITAL ACCOUNT FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE HAD SHOWN CAPIT AL INTRODUCTION OF RS 1,08,986/- WITH THE NARRATION CAPITAL INTRODUCTION ( ORIENTAL BANK RS 1,08,986). 2 FROM THE SCHEDULES FILED ALONG WITH THE BALANCE SHEET, T HE ASSESSING OFFICER NOTICED THAT THE BANK ACCOUNT OF ORIENTAL BANK FROM WHICH SUCH CAPITAL HAS BEEN INTRODUCED, DID NOT FIGURE IN THE LIST OF BANK ACCOUN TS MENTIONED IN THE SCHEDULES TO THE BALANCE SHEET NOR ANY INTEREST CREDITED IN SUCH BANK ACCOUNT WAS OFFERED TO TAX. ON VERIFICATION OF THE ENTRIES IN THE AFORESA ID BANK ACCOUNTS, THE ASSESSING OFFICER OBSERVED THAT THERE WERE ONLY FOLLOWIN G TWO MAJOR CREDITS IN THE BANK ACCOUNT: (A) CREDIT OF RS 65,985/- ON 14.11.2000; AND, (B) CREDIT OF RS 40,000/- ON 23.4.2004. 4. AS REGARDS THE FIRST CREDIT OF RS 65,985/- MADE ON 1 4.11.200, THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE THAT THE SAID CREDIT REPRESENTED DIVIDEND RECEIVED IN FINANCIAL YEAR 2000-0 1 RELEVANT TO ASSESSMENT YEAR 2001-02 FROM HINDUSTAN LEVER LTD. AS THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM WITH ANY DETAILS OR EVIDENCE. AS REGARDS THE OTHER CREDIT OF RS 40,000/- ON 23.4.2004, IT WAS THE EXPLANATION OF THE ASSESSEE T HAT THE SAID CREDIT REPRESENTED MATURITY PROCEEDS OF ICICI BONDS PURCHASED IN FEBRUARY 2001 WHICH MATURED AROUND 1.4.2004. ON VERIFICATION OF THE DETA ILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THE EXPLANATION OF T HE ASSESSEE TO BE DEVOID OF MERIT. ACCORDING TO THE ASSESSING OFFICER, THE INTEREST CREDIT ENTRIES AS APPEARING IN THE ABOVE-STATED BANK ACCOUNT STATEMENT PE RTAINING TO THE SAVING BANK ACCOUNT INTEREST, INTEREST FROM FD PURCHASED OUT OF T HE SAVING BANK ACCOUNT PROCEEDS AND INTEREST ON THE ICICI BONDS (FEBRUA RY 2001 SERIES) WAS NOT OFFERED FOR TAXATION FROM YEAR TO YEAR BY THE A SSESSEE. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER HELD THAT THE CREDIT OF RS 1,08,986 /- IN THE ASSESSEES CAPITAL ACCOUNT, ORIGINATING FROM ITS BANK ACCOUNT WITH ORIENTAL BANK OF COMMERCE WAS UNEXPLAINED. HOWEVER, HE ADDED AN AMOUNT OF RS 1,20,708/- TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT UNDE R SECTION 68 OF THE ACT, BECAUSE AS PER THE ASSESSING OFFICER THE CORRECT AMOUNT CR EDITED TO CAPITAL ACCOUNT BY WAY OF INTRODUCTION OF PROCEEDS OF THE ORIE NTAL BANK ACCOUNT INTO THE 3 ASSESSEES BOOKS WAS RS 1,18,284/-, WHICH WAS THE BANK ACCOUNT BA LANCE JUST BEFORE INTRODUCTION OF THE SAID ACCOUNT IN THE ASSESSEES BOOKS ON 22.2.2005 THROUGH TRANSFER OF PROCEEDS TO HIS DISCLOSED ACCOUNT IN U .T.I. BANK AND THE FURTHER AMOUNT OF RS 2,424/- BEING INTEREST CREDITED I N THE ACCOUNT AFTER 22.2.2005 HAS ALSO NOT BEEN OFFERED TO TAX. 5. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (AP PEALS), THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE ASSESSING OFF ICER AND FURTHER SUBMITTED THAT IT WAS VERY CLEAR FROM THE BANK STATEMENT S AS WELL AS BOOKS OF ACCOUNT MAINTAINED BY HIM THAT THERE WAS NO UNEXPLAINE D CASH CREDIT AND THE CREDIT ENTRY OF RS 1,08,986/- WAS MADE ONLY TO RECTIFY THE MISTAKE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS FURTHER CONTENDED THAT THE PROVISIONS OF SECTION 68 WERE ATTRACTED WHEN THE ASSESSEE OFFERED NO EXPLANAT ION ABOUT THE CREDIT ENTRY OR THE EXPLANATION OFFERED WAS NOT SATISFACTORY IN THE OPINION OF THE ASSESSING OFFICER. RELYING UPON THE JUDGMENT OF THE HON BLE BOMBAY HIGH CURT IN THE CASE OF CIT V. B H GANDHI 141 ITR 67 (BOM), I T WAS SUBMITTED THAT SINCE THE ASSESSEE HAD PRODUCED ALL DOCUMENTARY EVIDENCE ABOUT THE CREDIT ENTRY AND OFFERED EXPLANATION ABOUT THE SAME, PROVISIONS OF SECTIO N 68 WERE NOT APPLICABLE AND, THEREFORE, THE ADDITION WAS NOT SUSTAINABLE. HOW EVER, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS NOT SATISFIED WITH THE SUBMISSIO NS OF THE ASSESSEE AND HELD THAT THE ASSESSEE FAILED TO SATISFACTORILY EXPLAI N THE CREDIT ENTRY ON ACCOUNT OF CAPITAL INTRODUCTION AND, THEREFORE, THE ASSESSING OF FICER WAS JUSTIFIED IN MAKING ADDITION OF RS 1,20,708/- TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. STILL AGGRIEVED, T HE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS M ADE A LIMITED PLEA TO THE EFFECT THAT THE ASSESSEE IS IN A POSITION TO EXPLA IN THE AMOUNT OF RS 40,000/- CREDITED ON 23.4.2004 IN THE IMPUGNED BANK A CCOUNT ON ACCOUNT OF THE MATURITY PROCEEDS OF ICICI BONDS. IT HAS BEEN CANVASSED T HAT THE SAID BONDS 4 WERE ACQUIRED IN AN EARLIER PERIOD OUT OF DECLARED FU NDS AND, THEREFORE, THE IMPUGNED CREDIT ON MATURITY CANNOT BE TAKEN TO BE UNEX PLAINED. IN SO FAR AS THE REST OF THE ADDITION AS UNEXPLAINED CREDIT IS CONCERNED, THE ASSESSEE HAS NOT MADE ANY CREDIBLE SUBMISSIONS. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, WHILE NOT SERIOUSLY DISPUTING THE LIMITED PLEA OF THE ASSESSEE, HOW EVER, POINTED OUT THAT THE LOWER AUTHORITIES HAVE CLEARLY ESTABLISHED THAT THERE WAS NO MATERIAL IN SUPPORT OF THE POSITION CANVASSED BY THE ASSESSEE. 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS, IN OUR VIEW, THE MATTER IS REMANDED TO THE ASSESSING OFFICER TO THE LIMITED EXTEN T OF EXAMINING THE EXPLANATION OF THE ASSESSEE IN RELATION TO THE CREDIT O F RS 40,000/- FOUND CREDITED IN THE BANK ACCOUNT ON 23.4.2004. THE ASSESSING OFFICER SHAL L CONSIDER THE EXPLANATION FURNISHED BY THE ASSESSEE SO AS TO EXAMINE WH ETHER THE SAME CAN BE TREATED AS UNEXPLAINED CREDIT OR NOT. THE ASSESSING OF FICER SHALL CONSIDER THE EXPLANATION FURNISHED AND THEREAFTER ADJUDICATE ON T HIS ASPECT AFRESH. IN SO FAR AS THE BALANCE OF THE ADDITION IS CONCERNED, THE SAME IS HE REBY SUSTAINED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THE 23 RD DAY OF NOVEMBER, 2011. SD/- SD/- (I C SUDHIR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEM BER PUNE, DATED: 23 RD NOVEMBER, 2011 B COPY TO:- 1) APPELLANT 2) RESPONDENT 3) THE CIT (A)-III, PUNE 4) CIT-III, PUN E 5) DR, A BENCH, ITAT, PUNE. 6) GUARD FILE TRUE COPY BY ORDER SR. PS, I.T.A.T., PUNE 5