The ITO, Ward-9(2), Surat V. Shri Kishorbhai Chhotalal Parmar, Surat

ITA 1469/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9669 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S B VAIDYA
• Keywords: Unexplained cash credit; Unexplained investment; Source of fund; Corroborative evidences; Reason to believe
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1469/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER WARD-9(2) SURAT / VS. SHRI KISHORBHAI CHHOTALAL PARMAR C/O.PARMAR BOOT HOUSE 11/215 BHAGALTALAV, SURAT ./ ./ PAN/GIR NO. : ADQPP 1400 Q ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI NIMESH YADAV, SR.DR $% # '& / RESPONDENT BY : SHRI S.B. VAIDYA, AR ()'* / DATE OF HEARING 06/04/2015 +,-.'* / DATE OF PRONOUNCEMENT 17/04/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT (CIT(A) IN SHORT) DATED 17/01/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 2 - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 27,96,075/- MADE BY THE A.O. U/S.69 OF THE ACT DESPITE THE FACT THAT ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE CREDITS MADE IN THE FOUR UNDISCLOSED BANK ACCOUNTS. 2. 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. 27,96,075/- MADE BY THE A.O. U/S.69 OF THE ACT AFTER ACCEPTING THE P LEA OF THE ASSESSEE THAT CASH DEPOSITS MADE IN THESE FOUR UNDISCLOSED A CCOUNTS WERE MADE FROM THE CASH WITHDRAWN FROM THESE ACCOUNTS ON EARLIER OCCASIONS DESPITE THE FACT THAT THERE WAS SUFFICIEN T CASH AVAILABLE WITH THE ASSESSEE AS PER THE CASH BOOK AND ASSESSEE FAILED TO FURNISH ANY COGENT REASON FOR THE WITHDRAWALS. 3. 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. 27,96,075/- MADE BY THE A.O. U/S.69 OF THE ACT AFTER ACCEPTING THE P LEA OF THE ASSESSEE THAT AN AMOUNT OF RS.6,47,847/- WAS THE LOAN AMOUNT TAKE FROM FOUR FRIENDS/RELATIVES DESPITE THE FACT THAT THESE LOANS WERE NOT REFLECTED IN THE BALANCE SHEETS OF THE LENDERS. FURTHER THE ASSESSEE FAILED TO PROVE THE GENUINENESS AND THE CREDIT WORTHINESS OF THESE TRANSACTIONS. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CI T(A) BE SET ASIDE AND THE ASSESSING OFFICERS ORDER BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 24/12/2009. WHILE FRAMING THE ASSESSMENT, TH E ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.38,95,184/- ON AC COUNT OF UNEXPLAINED CASH CREDIT/BANK DEPOSIT AND INVESTMENT IN VARIOUS SECURITIES BY THE ASSESSEE FROM UNDISCLOSED BANK ACCOUNTS BY INVOKING THE PROVISIONS OF ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 3 - SECTION 69 OF THE IT ACT. AGAINST THIS, ASSESSEE F ILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE ADDITION TO THE EXTENT OF RS.10,99,1 09/-. THE LD.CIT(A) FURTHER DIRECTED THE AO TO RE-EXAMINE THE CASE FROM THE ANGLE OF REOPENING THE OF AY 2006-07 IN ORDER TO BRING TH E OPENING CASH BALANCE OF RS.10 LACS AND OPENING BANK BALANCE IN T HESE BANK ACCOUNTS OF RS.2,07,231/- UNDER THE PURVIEW OF TAXATION. AGG RIEVED BY THE ORDER OF THE LD.CIT(A), THE REVE4NUE IS IN APPEAL BEFORE US. 3. GROUNDS NOS.1 TO 3 ARE INTER-CONNECTION AND, THE REFORE, THE SAME IS DECIDED TOGETHER. THE LD.SR.DR SHRI NIMESH YADAV V EHEMENTLY ARGUED THAT THE LD.CIT(A) FAILED TO APPRECIATE THE FACT TH AT THE ASSESSEE HAD NOT DISCLOSED THE BANK ACCOUNT. HE DREW OUR ATTENTION TOWARDS THE STATEMENT OF FACTS, WHEREIN THE BANK ACCOUNTS ARE MENTIONED. HE MADE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS. HE SUBMITT ED THAT THE LD.CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT THERE IS NO ERROR INTO THE ORDER OF THE LD.CIT(A). HE SUBMI TTED THAT THE AO FAILED TO TAKE NOTE OF THE FACT THAT THE SAID ACCOUNTS WER E HELD IN JOINT-NAMES WITH RELATIVES AND THE DEPOSITS IN THE SAID ACCOUNT S COMPRISED MAINLY OF LOANS FROM FRIENDS AND RELATIVES, CASH DEPOSITS, RE DEMPTION OF MUTUAL ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 4 - FUND AND INTEREST INCOME. THE ASSESSEE HAD ALSO SU BMITTED LOAN CONFIRMATIONS AS WELL AS DETAILS OF MUTUAL FUND RED EEMED DURING THE YEAR. HOWEVER, THE AO DID NOT CONSIDER THE SUBMISSION OF THE ASSESSEE. HE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSEE HAD SUBMITTED VIDE LETTER DATED 17/12/2009 THAT A P ART OF CASH DEPOSIT IN DIFFERENT BANK ACCOUNTS WAS MADE OUT OF CASH ON HAN D GENERATED BY WAY OF WITHDRAWALS OF EARLIER YEARS AS REFLECTED IN OPE NING BALANCE AND BY WAY OF WITHDRAWALS OF CASH BALANCE FROM DIFFERENT B ANK ACCOUNTS IN CURRENT YEAR. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE ACCOUNTS WERE HELD JOINTLY WITH OTHER RELATIVES. THE AMOUN T SO CREDITED INTO THE ACCOUNT THE ACCOUNTS GENERATED FROM CASH ON HAND, P AST SAVINGS AND LOAN RECEIVED FROM FRIENDS AND RELATIVES. HE SUBMITTED THAT THE AMOUNT ALSO COMPRISED OF THE MATURITY AMOUNT OF THE MUTUAL FUND S. WE FIND THAT THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS DECIDED THIS ISSUE BY OBSERVING AS UNDER:- IT IS SEEN FROM THE DETAILS SUBMITTED THAT THE APP ELLANT HAD MADE CASH WITHDRAWALS FROM ALL THESE FOUR ACCOUNTS TO TH E TUNE OF RS. 14,78,000/= (SUPRA) AND THEREFORE A SUBSTANTIAL CAS H BALANCE WAS LYING IN THE HANDS OF THE APPELLANT WHICH WERE REAPPLIED FOR DEPOSITION OF CASH IN THESE BANK ACCOUNTS. MOREOVER, AS PER THE C ASH BOOK OF THE ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 5 - CURRENT YEAR AS WELL AS EARLIER YEAR SUBMITTED BEFO RE ME, IT IS OBSERVED THAT THERE WAS AN OPENING CASH BALANCE OF RS. 10,00 ,000/= WHICH MUST HAVE BEEN USED FOR DEPOSITION IN BANK ACCOUNT. IT I S ALSO OBSERVED FROM THE CURRENT YEAR'S CASH BOOK THAT THERE WAS A NEGAT IVE CASH BALANCE OF RS.5,37,000/= ON 30-11-2006 WHICH WAS THE PEAK AMOU NT OF NEGATIVE BALANCE SUGGESTING THE UNEXPLAINED CASH DEPOSIT. SI NCE A SUBSTANTIAL CASH WAS WITHDRAWN DURING THE EARLIER YEAR, THERE I S A REASON TO BELIEVE THAT THE SAME COULD HAVE BEEN ON HAND WITH THE APPE LLANT WHICH MIGHT HAVE BEEN APPLIED BY WAY OF DEPOSITION IN THE CURRE NT YEAR. HOWEVER, THE FACT REMAINS THAT ALL THESE ACCOUNTS WERE OPERA TED IN EARLIER YEAR ALSO AND THEREFORE, WHEN THE CONTENTION OF THE APPE LLANT ABOUT CASH ON HAND IS TO BE ACCEPTED, THEN IT IS ALSO REQUIRED TO REOPEN THE ASSESSMENT OF THE EARLIER YEAR I.E. A.Y. 2006-07. IN SHORT, IT CAN BE CONCLUDED THAT THE APPELLANT HA S SATISFACTORILY EXPLAINED THE SOURCE TO THE TUNE OF RS.10,00,000/= BEING THE OPENING CASH BALANCE AND REAPPLICATION OF RS.14,78,000/ = BEING WITHDRAWALS OF CURRENT YEAR. HOWEVER, THE NEGATIVE BAL ANCE OF RS.5,37,000/= IN CURRENT YEAR'S CASH BOOK REMAINS UNEXPLAINE D AND THEREFORE, THAT MUST BE TREATED AS UNEXPLAINED INVESTMENT IN FORM OF CASH DEPOSIT. ALSO, THERE WAS AN OPENING BALANCE OF RS. 2,07,231/ = IN AGGREGATE IN THESE BANK ACCOUNTS WHICH CANNOT BE TREATED AS UNEX PLAINED INVESTMENT OF THE CURRENT YEAR. REGARDING LOAN TRANSACTIONS IN THE IMPUGNED BANK AC COUNT, IT IS OBSERVED THAT THE APPELLANT HAD OBTAINED LOANS FROM THE UNDER MENTIONED PARTIES. A. CHANDAN PARMAR RS. 2,79,450/= B. BHUDERJI MITHAL RS. 88,690/ = C. HANSABEN PARMAR RS. 2,09,707/= D. JAYSHREE PARMAR RS. 70,000/= ------------------- RS. 6,47,847/= ========= ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 6 - DURING ASSESSMENT PROCEEDINGS, THE APPELLANT HAD SU BMITTED CONFIRMATION LETTERS OF THESE PARTIES ALONGWITH THE IR BANK PASS BOOKS. IT IS ALSO OBSERVED THAT THE DEPOSITOR VIZ. JAYSHREE P ARMAR WAS ASSESSED WITH THE SAME AO WHERE ADDITION IN RESPECT OF SUCH BANK ACCOUNT WAS MADE IN HER CASE AND THE SAID PERSON HAD GIVEN THE LOAN TO THE APPELLANT FROM THE SAID BANK ACCOUNT ONLY. IN RESPE CT OF OTHER LOANS, THE APPELLANT HAD SUBMITTED THE CONFIRMATIONS AS WELL A S THEIR PASS BOOKS FROM WHERE THE LOANS WERE GIVEN TO THE APPELLANT AN D THE AO DID NOT GIVE ANY REBUTTAL AGAINST THESE LOANS EXCEPT THAT T HEIR NAMES WERE NOT APPEARING IN THE BALANCE SHEET OF THE APPELLANT. HO WEVER, SINCE THESE BANK ACCOUNTS WERE NOT SHOWN BY THE APPELLANT, OBVI OUSLY, THEIR NAMES COULD NOT BE REFLECTED IN THE ACCOUNTS FILED ALONGW ITH THE RETURN OF INCOME. THE AO DID NOT GIVE ANY SPECIFIC REBUTTAL A GAINST THESE LOANS. THEREFORE, WHEN THE SOURCE OF FUNDS CREDITED IN THE IMPUGNED BANK ACCOUNT WAS EXPLAINED WITH EVIDENCE, THERE WAS NO J USTIFICATION IN TREATING THE SAME AS THE INCOME OF THE APPELLANT. CONSIDERING THE ABOVE DISCUSSION, IT CAN BE CONCLUD ED THAT OUT OF THE TOTAL DEPOSIT OF RS. 38,95,184/=, CERTAIN SOURC ES WERE EXPLAINED BY THE APPELLANT AND THEREFORE, THE ULTIMATE POSITION OF THE SUSTAINED ADDITION IS WORKED OUT AS UNDER: RS. RS. ADDITION AS PER ASSESSMENT ORDER 38,95,184 LESS : DEPOSITS STANDS EXPLAINED AND NOT TREATED AS INCOME A. OPENING CASH BALANCE, SUBJECT TO FURTHER DIRECTION HEREINAFTER 10,00,000 B. CASH WITHDRAWALS DURING THE YEAR REAPPLIED FOR DEPOSITION 14,78,000 C. LOANS FROM FRIENDS AND RELATIVES 6,47,847 ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 7 - D. OPENING BANK BALANCE IN THE IMPUGNED BANK ACCOUNTS, SUBJECT TO FURTHER DIRECTION HEREINAFTER 2.07.231 33,33,078 5,62,109 ADD : NEGATIVE BALANCE FOUND IN CASH BOOK ON 30-11-2006 5,37,000 TOTAL ADDITION SUSTAINED 10,99,109 4.1. THERE IS NO DISPUTE WITH REGARD TO THE FACT TH E ACCOUNT NOS.9427,61506, 61175 & 61095 WITH THE SURAT PEOPLE S CO-OPERATIVE BANK LTD., BHGATALAO BRANCH, SURAT, WERE NOT DISCLO SED BY THE ASSESSEE TO THE INCOME TAX DEPARTMENT WHILE FILING THE RETUR N. THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THESE ACCOUNTS WAS TH AT THE ACCOUNTS WERE JOINTLY HELD WITH OTHER PERSONS AND THE AMOUNT CRED ITED THEREIN WAS OUT OF THE SAVINGS, LOAN AND MATURITY OF MUTUAL FUNDS. IN OUR CONSIDERED VIEW, IF ANY, CREDIT ENTRIES FOUND IN THE ACCOUNTS OF THE ASSESSEE, IT IS INCUMBENT UPON HIM TO EXPLAIN THE SOURCE OF SUCH CR EDIT. IN THE PRESENT CASE, THE ASSESSEE HAS MERELY MADE A SWEEPING STATE MENT THAT THESE AMOUNTS WERE OUT OF LOANS FROM FRIENDS AND RELATIVE S, CASH DEPOSITS, INTEREST INCOME AND FROM MATURITY OF MUTUAL FUNDS. THE ASSESSEE ALSO FURNISHED CERTAIN CONFIRMATIONS FROM JAYSHREEBEN PA RMAR, CHANDAN PARMAR, HANSABEN PARMAR AND BHUDARJI MITHAL. HOWEV ER, THE ASSESSEE HAS NOT FURNISHED THE PROOF OF CREDITWORTHINESS OF SUCH CREDITORS. ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 8 - THEREFORE, THE LD.CIT(A) WAS NOT JUSTIFIED IN DELET ING THE ADDITION OF RS.6,47,847/- BEING THE LOAN RECEIVED FROM FRIENDS AND RELATIVES WITHOUT ANY SUPPORTING EVIDENCES OF THE CREDITWORTHINESS OF SUCH CREDITORS. FURTHER, THE LD.CIT(A) OBSERVED THAT THERE WAS AN O PENING CASH BALANCE OF RS.10 LACS WHICH HE PRESUMED THAT AMOUNT MIGHT H AVE BEEN USED FOR DEPOSITING IN THE BANK ACCOUNT. BEFORE US, THE ASS ESSEE COULD NOT POINT OUT AS TO WHETHER THE AMOUNT OF RS.10 LACS SHOWN AS CASH ON HAND RELATED TO THE ACCOUNT DECLARED BY THE ASSESSEE. THESE ACC OUNTS ARE NOT THE RECORDED ACCOUNTS. THE ASSESSEE WAS REQUIRED TO DE MONSTRATE WITH EVIDENCE AS TO HOW THIS CASH WAS GENERATED. THEREF ORE, WE CANNOT AFFIRM THE ORDER OF THE LD.CIT(A), SAME IS HEREBY SET ASID E. THE LD.CIT(A) OUGHT TO HAVE PASSED A SPEAKING ORDER IN RESPECT OF GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF DEPOSITORS. I T IS ALSO NOT CLEAR WHETHER THE TRANSACTIONS IN QUESTION HAD BEEN REFLE CTED BY OTHER PERSONS OR NOT IN THEIR RESPECTIVE BOOKS OF ACCOUNTS. AND ALSO WHETHER SUCH TRANSACTIONS WERE REFLECTED IN THEIR RESPECTIVE INC OME-TAX RETURNS OF THE PARTIES, IF NOT WHAT ACTION HAS BEEN TAKEN IN THEIR HANDS. UNDER THESE FACTS, WE RESTORE THIS ISSUE BACK TO THE FILE OF LD .CIT(A) FOR DECISION AFRESH IN THE LIGHT OF OUR OBSERVATION MADE HEREINB EFORE. THUS, GROUND NOS.1 TO 3 OF REVENUES APPEAL ARE ALLOWED FOR STA TISTICAL PURPOSES. 5. GROUND NO.4 IS GENERAL IN NATURE REQUIRE NO INDE PENDENT ADJUDICATION. ITA NO.1469/AHD /2011 ITO VS. SHRI KISHORBHAI CHHOTALAL PARMAR ASST.YEAR 2007-08 - 9 - 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 17 TH DAY OF APRIL, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17/ 04 /2015 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-V, SURAT 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 09.4.15 (DICTATION-PAD 11 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..15.4.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.17.4.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.4.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER