ACIT, Bangalore V. Smt. bharathi Deepak Thakkar, Bangalore

ITA 1518/BANG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2265 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N KHINCHA
• Assessee Lawyers: A SUNDARARAJAN JT
• Keywords: Unexplained cash credit; Source of fund
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.1518/BANG/2012 ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(1), BANGALORE. VS. SMT. BHARATHI DEEPAK THAKKAR, 2 ND FLOOR, VISHWAGANDHI COMPLEX, G.P. STREET, BANGALORE 560 002. PAN : AAUPT 3037E APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, C.A. RESPONDENT BY : SHRI A. SUNDARARAJAN, JT.CIT(DR) DATE OF HEARING : 01.07.2013 DATE OF PRONOUNCEMENT : 12.07.2013 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED 21.08.2012 OF THE CIT(APPEALS)-I, BANGALORE RELATING TO ASSESSMEN T YEAR 2009-10. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO WHETHER THE CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.1 CRORE ITA NO.1518/BANG/2012 PAGE 2 OF 9 MADE BY THE AO TREATING THE CASH DEPOSITS MADE BY T HE ASSESSEE IN HER BANK ACCOUNT AS UNEXPLAINED CASH CREDIT AND ADDED A S INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SEC.68 OF TH E INCOME TAX ACT, 1961 (THE ACT). 3. THE ASSESSEE IS AN INDIVIDUAL. SHE IS ENGAGED I N THE BUSINESS OF ACTING AS DEALERS AND DISTRIBUTORS FOR GUTKA PAN MA SALA. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THERE WAS A CASH DEPOSIT OF RS.1 CRORE IN THE BANK ACCOUNT OF THE ASSESSEES PR OPRIETARY CONCERN, M/S. JALARAM ENTERPRISES. THIS SUM OF RS.1 CRORE WAS AL SO SHOWN IN THE BALANCE SHEET AS UNSECURED LOAN. THE AO CALLED UPO N THE ASSESSEE TO EXPLAIN THE SOURCE OF FUNDS FOR DEPOSIT OF THE AFOR ESAID CASH IN THE ASSESSEE'S BANK ACCOUNT. 4. THE ASSESSEE SUBMITTED THAT SHE OWNED A PROPERTY VIZ., FLAT NO.13, 3 RD FLOOR IN THE BUILDING KNOWN AS AUM REGENCY MEASU RING ABOUT 2500 SQ.FT. TOGETHER WITH EXCLUSIVE RIGHT TO 2037 SQ.FT. OF OPEN TERRACE GARDEN OVER THE 3 RD FLOOR, THE FLAT BEING SITUATED IN SOUTH END ROAD, BASAVANGUDI, BANGALORE (HEREINAFTER REFERRED TO AS THE PROPERTY ). THE ASSESSEE AGREED TO SELL THE PROPERTY TO ONE, M/S. HARI OM ENTERPRIS ES, REPRESENTED BY SHRI HARI OM GUPTA FOR A SALE CONSIDERATION OF RS.1,35,0 0,000 UNDER SALE AGREEMENT DATED 19.06.2008. THE PURCHASER HAD PAID A SUM OF RS.1 CRORE IN CASH AND THE SAME WAS DEPOSITED IN THE BANK ACCO UNT. THE SALE AGREEMENT AS REFERRED ABOVE COULD NOT MATERIALIZE S INCE THE PURCHASER ITA NO.1518/BANG/2012 PAGE 3 OF 9 M/S. HARI OM ENTERPRISES JAMMU COULD NOT FULFILL TH E COMMITMENT OF PAYMENT OF BALANCE SALE CONSIDERATION OF RS.35,00,0 00/- AND HENCE THE ADVANCE AMOUNT OF RS.1,00,00,000 WAS REPAID TO M/S. HARI OM ENTERPRISES AS UNDER:- DATE CHEQUE NO. BANK AMOUNT RS. 07/12/2010 345441 UNION BANK OF INDIA 10,00,000 07/12/2010 345442 UNION BANK OF INDIA 10,00,000 07/12/2010 345443 UNION BANK OF INDIA 10,00,000 07/12/2010 345444 UNION BANK OF INDIA 10,00,000 07/12/2010 345445 UNION BANK OF INDIA 10,00,000 10/12/2010 907012 KARNATAKA BANK LTD. 10,00,000 10/12/2010 907013 KARNATAKA BANK LTD. 10,00,000 10/12/2010 907014 KARNATAKA BANK LTD. 10,00,000 10/12/2010 907015 KARNATAKA BANK LTD. 10,00,000 10/12/2010 907016 KARNATAKA BANK LTD. 10,00,000 1,00,00,000 THE ASSESSEE THUS EXPLAINED THE CASH DEPOSITS IN HE R BANK ACCOUNT. 5. THE AO WAS HOWEVER OF THE VIEW THAT THE ASSESSE E HAD NOT GIVEN ANY INFORMATION REGARDING THE CREDITWORTHINESS OF H ARI OM ENTERPRISES. THE AO ALSO WAS OF THE VIEW THAT THE SUM OF RS.1 CR ORE RECEIVED FROM HARI OM ENTERPRISES WAS SHOWN AS UNSECURED LOAN IN THE B ALANCE SHEET OF M/S. JALARAM ENTERPRISES. ACCORDING TO THE AO, THE AMOU NT RECEIVED OUGHT TO HAVE BEEN REFLECTED IN THE INDIVIDUALS BALANCE SHE ET OF THE ASSESSEE AND NOT IN THE BALANCE SHEET RELATING TO HER PROPRIETAR Y BUSINESS BECAUSE THE ASSET WHICH WAS AGREED TO BE SOLD WAS SHOWN ONLY IN THE PERSONAL BALANCE SHEET OF THE ASSESSEE NOT IN THE BALANCE SHEET OF T HE PROPRIETARY BUSINESS ITA NO.1518/BANG/2012 PAGE 4 OF 9 M/S.JALARAM ENTERPRISES. THE AO WAS OF THE VIEW TH AT THE CASH DEPOSIT IN THE ASSESSEES BANK ACCOUNT WAS ASSESSEES OWN MONE Y. THE AO ALSO WAS OF THE VIEW THAT THE ACCEPTANCE OF THE SUM OF R S.1 CRORE BY CASH WAS IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT IN SHORT]. FINALLY THE AO MADE THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- UNDER THE CIRCUMSTANCES, THE ASSESSEES CONTENTION REGARDING RECEIPT OF ADVANCE FOR SALE OF PROPERTY APPEARS TO BE FALSE AND THE SALE DEED FURNISHED SEEMS TO BE FABRICATED. THEREF ORE, THE CASH DEPOSIT OF RS.1,00,00,000/- IS TREATED AS UNEXPLAIN ED CASH CREDIT U/S. 68 OF THE INCOME TAX ACT WHICH ACCORDINGLY IS CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE. THUS, THE AM OUNT OF RS.1,00,00,000/- IS ADDED BACK TO THE INCOME OF THE ASSESSEE. 6. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) DEL ETED THE ADDITION MADE BY THE AO HOLDING AS FOLLOWS:- I HAVE CAREFULLY CONSIDERED THE APPELLANTS SUBMIS SIONS AND PERUSED THE ASSESSMENT ORDER. THE APPELLANT IS AN INDIVIDUAL AND ASSESSED TO TAX IN THE SAME CAPACITY. THE APPELLAN T IS ALSO CARRYING BUSINESS AND MAINTAINS SEPARATE BOOKS OF A CCOUNT. IT IS THE CONTENTION OF THE AO THAT THE ADVANCE TAKEN FRO M M/S. HARI OM ENTERPRISES IS REFLECTED IN THE BOOKS OF ACCOUNT OF THE APPELLANTS BUSINESS RATHER THAN IN THE PERSONAL AC COUNT BOOKS. BUT IT IS IMMATERIAL WHETHER IT IS SHOWN IN THE PER SONAL BOOKS OR BUSINESS BOOKS AS THE ASSESSEE IS ASSESSED TO TAX F OR THE ENTIRE INCOME WHICH IS SHOWN IN ALL OF HIS ACCOUNTS. THUS THERE IS NO OVERALL EFFECT WHETHER IT IS IN THE PERSONAL BOOKS OR BUSINESS BOOKS. THE APPELLANT EXPLAINED THE NATURE OF TRANS ACTION, SUBMITTED A COPY OF THE AGREEMENT DATED 19/06/2008 CONTAINING THE IDENTITY OF THE PERSON OR OTHER DETAILS. THUS THE APPELLANT DISCHARGED HIS ONUS BY SUBMITTING ALL THE DETAILS. IN THE ABSENCE OF ANY EVIDENCE AGAINST THE APPELLANT TO PROVE THAT THE ADVANCE IS ITA NO.1518/BANG/2012 PAGE 5 OF 9 NOT GENUINE, NO ADDITION CAN BE MADE BASED ON TECHN ICAL OBJECTIONS RAISED BY THE AO. THEREFORE THE AO IS N OT JUSTIFIABLE IN MAKING THE ADDITION BASED ON PRESUMPTION WITHOUT ANY VALID EVIDENCE AND THE SUBMISSIONS OF THE APPELLANT IN TH IS REGARD ARE ACCEPTABLE. IN VIEW OF THIS, I AM OF THE OPINION T HAT THE ADDITION MADE U/S. 68 OF THE ACT CANNOT BE SUSTAINED AND, HE NCE, DELETED. 7. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR, WHO SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUBST ANTIATE THE CREDITWORTHINESS OF M/S. HARI OM ENTERPRISES. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE AO AND THE CIT(APPEALS) AND RELIED ON THE ORDER OF THE CIT(APPEALS). HE ALSO BROUGHT TO OUR NOTICE THE DE CISION OF THE ITAT BANGALORE BENCH IN THE CASE OF KEDARNATH SRIRAMULU KAVERIPATNAM V. ITO, ITA NO.961/BANG/2009 FOR THE A.Y. 2005-06, ORDER DATED 30.12.2009 , WHEREIN ON IDENTICAL FACTS, THIS TRIBUNAL TOOK THE VIEW THAT THE ADDITION MADE BY THE REVENUE AUTHORITIES CANNOT BE SUSTAINED. IN PARTICULAR, OUR ATTENTION WAS DRAWN TO THE OBSERVAT IONS OF THE TRIBUNAL WHICH WERE TO THE EFFECT THAT WHEN THE PARTICULARS OF AGREEMENT AND REFUND OF ADVANCE ARE FURNISHED BY THE ASSESSEE, THE AO SH OULD HAVE MADE ENQUIRIES FOR ASCERTAINING THE GENUINENESS OR OTHER WISE OF THE CLAIM OF THE ASSESSEE. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT THE AO INITIATED ITA NO.1518/BANG/2012 PAGE 6 OF 9 PENALTY PROCEEDINGS U/S. 271D OF THE ACT FOR VIOLAT IONS OF THE PROVISIONS OF SECTION 269SS OF THE ACT. ACCORDING TO HIM, THOSE PROVISIONS CAN BE INVOKED ONLY WHEN THE AO ACCEPTS THE GENUINENESS OF THE TRANSACTIONS. ACCORDING TO HIM THE ACTION OF THE AO IN INITIATING PENALTY PROCEEDINGS U/S. 271D OF THE ACT AND SIMULTANEOUSLY ALSO MAKING ADDI TION BY INVOKING PROVISIONS OF SECTION 68 ARE CONTRADICTORY. ACCORD ING TO HIM, THE ABOVE APPROACH OF THE REVENUE SHOWS THAT THE GENUINENESS OF THE TRANSACTION AND THE CAPACITY OF THE PURCHASER ARE NOT DISPUTED BY T HE REVENUE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE A RE OF THE VIEW THAT THE CASE MADE OUT BY THE AO THAT THE PROPERTY IN QU ESTION OUGHT TO HAVE BEEN SHOWN IN THE INDIVIDUAL BALANCE SHEET OF THE A SSESSEE AND NOT IN THE BALANCE SHEET OF HER PROPRIETRIX BUSINESS OF JALARA M ENTERPRISES CANNOT BE SUSTAINED. THE ASSESSEE IS AN INDIVIDUAL AND THE F ACT THAT THE RECEIPT OF ADVANCE ON SALE OF THE PROPERTY OR THE PROPERTY BEI NG SHOWN AS ASSET IN THE INDIVIDUAL BALANCE SHEET OR IN THE BALANCE SHEET OF PROPRIETRIX BUSINESS ARE ALL FACTS WHICH ARE IRRELEVANT. THE EVIDENCE ON RE CORD IN THE FORM OF AGREEMENT FOR SALE EVIDENCES THE FACT THAT A SUM OF RS.1 CRORE WAS PAID IN CASH BY HARI OM ENTERPRISES REPRESENTED BY HARI OM GUPTA. THE FACT THAT THIS AGREEMENT FOR SALE WAS LATER ON CANCELLED AND THE AMOUNT PAID AS ADVANCE BY THE PURCHASER WAS REPAID IN THE FORM OF DDS TO HARI OM ENTERPRISES IS EVIDENCED BY THE BANK STATEMENTS. T HESE FACTS ARE NOT DISPUTED BY THE AO. WITH REGARD TO THE INCOME TAX PARTICULARS OF HARI OM ENTERPRISES, THE ASSESSEE HAD DULY INFORMED THE AO THAT THE SAME HAS ITA NO.1518/BANG/2012 PAGE 7 OF 9 BEEN DEMANDED BY HER FROM HARI OM ENTERPRISES BUT N OT FURNISHED BY THE LATER. THE PARTICULARS OF HARI OM ENTERPRISES AND THE FACT THAT SUCH AN ENTITY EXISTS CANNOT BE DISPUTED AS THE REPAYMENT O F ADVANCE HAS BEEN MADE BY THE ASSESSEE THROUGH BANKING CHANNELS. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAD DISCHARGED HER PRIMARY ONUS. AS RIGHTLY HELD BY THE CIT(APPEALS), THERE IS NO EVIDE NCE ON RECORD TO SHOW THAT THE AMOUNT IN QUESTION WAS ASSESSEES OWN MONE Y WHICH WAS CLAIMED TO BE ADVANCE RECEIVED FROM A THIRD PARTY. BESIDES THE ABOVE, THE ACTION OF THE REVENUE AUTHORITIES IN INVOKING THE PROVISIONS OF SECTION 269SS R.W.S. 271D OF THE ACT ALSO GOES TO SHOW THAT THE REVENUE WAS CONVINCED ABOUT THE GENUINENESS OF THE AFORESAID ADVANCE RECEIVED B Y THE ASSESSEE, AS OTHERWISE, THOSE PROVISIONS COULD NOT BE INVOKED. ON IDENTICAL FACTS, THIS TRIBUNAL HAD TO DEAL WITH THE CLAIM OF THE ASSESSEE ON DISCHARGE OF ONUS OF ESTABLISHING GENUINENESS OF CASH CREDIT IN THE CASE OF KEDARNATH SRIRAMULU KAVERIPATNAM ( SUPRA) AND THE RELEVANT OBSERVATIONS OF THE TRIBUNAL WERE AS FOLLOWS:- 8. IN AN OVERALL CONSIDERATION OF THE FACTS AND C IRCUMSTANCES OF THE ISSUE, WE ARE OF THE UNANIMOUS VIEW THAT THE RE WAS AN AGREEMENT OF SALE ON 15.12.2003 WITH HAMPER VINCOM PVT.LTD. KOLKATTA FOR THE SALE OF THE ASSESSEES RESIDENTIAL PROPERTY FOR RS.2.3 CRORES, OUT OF WHICH, THE ASSESSEE HAD RECEI VED ADVANCES OF RS.1.15 CRORES AS DISCUSSED ABOVE. SINCE THERE W AS A BREACH OF AGREEMENT ENTERED INTO ON THE PART OF THE ASSESSEE, THE PURCHASERS VIDE THEIR LETTER DT.15.9.07 HAVE TERMINATED THE SA LE AGREEMENT AND THE ASSESSEE WAS REQUIRED TO REFUND THE ADVANCE S. THE ASSESSEE HAD REFUNDED THE ADVANCES TO THE PURCHASER S THROUGH ICICI BANK CHEQUES [JEWELS GARDEN]. WHEN ALL THE RE LEVANT ITA NO.1518/BANG/2012 PAGE 8 OF 9 PARTICULARS WERE IN THE POSSESSION OF THE AO, THE A O SHOULD HAVE ASCERTAINED THE GENUINENESS OR OTHERWISE OF THE CLA IM OF THE ASSESSEE BY MAKING AN ATTEMPT TO SOUND HER COUNTER- PART AT KOLKOTTA TO FIND OUT THE AUTHENTICITY OF THE ASSESS EES CLAIM. THUS, THE ASSESSEE HAD DISCHARGED HIS ONUS IN DISCL OSING THE NAME AND POSTAL ADDRESS OF THE BUYERS, THEIR TELEPHONE N UMBERS ETC. TO THE DEPARTMENT. THE AO SHOULD HAVE PROCURED THE PRE SENCE OF THE PURCHASER - PANKAJ SHAH - BY ISSUANCE OF SUMMON S AND RECORDED HIS STATEMENT BY HERSELF. IN A NUT-SHELL, THE DEPARTMENT HAS MISERABLY FAILED TO ENCASH THE VITAL INFORMATIO N/PARTICULARS AT ITS POSSESSION. 8.1. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE REVENUE HAD NOT BROUGHT ON RECORD WITH ANY DOCUMENTARY EVID ENCE TO SUBSTANTIATE THAT THE SO CALLED CASH CREDITS OF RS. 83.10 LAKHS WERE ORIGINATED FROM THE ASSESSEES UNEXPLAINED SOURCE W HICH ATTRACTED PROVISIONS OF S.68 OF THE ACT. THE ADDITION OF RS.8 3.10 LAKHS U/S 68 THE ACT IS NOT JUSTIFIED. IT IS ORDERED ACCORDIN GLY. 8.2 BEFORE PARTING WITH, WITH RESPECTS WE HAVE DULY PERUSED THE LAW REFERRED SUPRA ON WHICH THE REVENUE HAS PLA CED STRONG RELIANCE. IN THAT CASE, THE HIGHEST JUDICIARY OF T HE LAND, IN ITS WISDOM, HAD RULED THAT IF EXPLANATION OF THE ASSESSEE IS NOT FOUND SATISFACTORY BY THE ASSESSING OFFICER, ACTING REASONABLY, THERE IS A PRIMA FACIE EVIDENCE AGAINST ASSESSEE AN D IF ASSESSEE FAILS TO REBUT THE SAME, SUCH UN-REBUTTED EVIDENCE CAN HE USED AGAINST HIM .... 8.3. WITH DUE RESPECTS, WE WOULD LIKE TO POINT OUT THAT IN THE PRESENT CASE (I) THE AO HAD NOT BROUGHT ON RECORD T O SUBSTANTIATE THAT THERE WAS A PRIMA FACIE EVIDENCE AGAINST THE A SSESSEE; AND (II) THE ASSESSEE HAD DISCHARGED HIS ONUS IN FILING ALL RELEVANT INFORMATION AND DOCUMENTARY EVIDENCE IN HIS POSSESS ION AND THAT THE REVENUE HAD FAILED TO REFUTE THE CLAIM OF THE A SSESSEE WITH TANGIBLE EVIDENCE. THUS, IN OUR CONSIDERED VIEW, TH E RULING OF THE HONBLE APEX COURT DOESNT COME TO THE RESCUE OF TH E REVENUE. 11. CONSIDERING THE OVERALL CIRCUMSTANCES OF THE PR ESENT CASE, WE ARE OF THE VIEW THAT THERE ARE NO GROUNDS MADE OUT TO INTE RFERE WITH THE ORDER OF THE CIT(APPEALS). CONSEQUENTLY THE APPEAL BY THE R EVENUE IS DISMISSED. ITA NO.1518/BANG/2012 PAGE 9 OF 9 12. IN THE RESULT APPEAL BY THE REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JULY, 2013. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 12 TH JULY, 2013. D S/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.