Shri Chetan Dineshchandra Modi, Valsad V. The Income tax Officer,Ward-1, Valsad

ITA 1555/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63138 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 13-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: NONEWRITTEN SUBMISSION
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Peak credit

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A.NO.1555/AHD/2012 - ! ) ! ) ! ) ! )/ // / A.Y. 2004-05 2. ./ I.T.A.NO.1556/AHD/2012 - ! ) ! ) ! ) ! )/ // / A.Y. 2005-06 CHETAN DINESHCHANDRA MODI PROP.MODI FINANCIAL SERVICES 2, AVABAI COMPLEX 1 ST FLOOR HALAR ROAD VALSAD 396 001 ! ! ! ! / VS. THE ITO WARD-1 VALSAD * $% ./+, ./ PAN/GIR NO. : ABBPM 1667 M ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) ASSESSEE BY : -NONE-(WRITTEN SUBMISSION) REVENUE BY : SHRI T.SHANKAR, SR.D.R. !0 1 %/ // / DATE OF HEARING : 08/11/2012 23) 1 % / DATE OF PRONOUNCEMENT : 23.11.12 $4 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE PERTAI NING TO ASST.YEARS 2004-05 & 2005-06 RESPECTIVELY ARISING F ROM THE ORDERS OF THE LD.CIT(A)-VALSAD, GUJARAT BOTH IDENTICALLY DATE D 27.01.2012. 2. THESE TWO APPEALS WERE BELATEDLY FILED BY 59 DAY S. THE APPELLANT HAS MOVED PETITIONS REQUESTING FOR CONDONATION OF D ELAY. THE REASON FOR THE DELAY WAS STATED TO BE ILL-HEALTH OF THE ASSESS EES WIFE IN MAY-2012. ITA NOS.1555 & 1556/AHD/2 012 CHETAN DINESHCHANDRA MODI VS. ITO ASST.YEARS 2004-05 & 2005-06 - 2 - THE ASSESSEE HAS FILED THESE APPEALS ON 13.07.2012. CONSIDERING THE TOTALITY OF THE FACTS AND THE CIRCUMSTANCES AS STAT ED IN THE CONDONATION PETITION AS ALSO FOLLOWING THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF VIZ. COLLECTOR, LAND ACQUISIT ION VS. MST. KATIJI & ORS. REPORTED AS 62 CTR 23 (S.C.), WE HEREBY CONDO NE THE DELAY AND ADMIT THESE APPEALS TO DECIDE ON MERITS. [A] ITA NO.1555/AHD/2012 A.Y. 2004-05 3. THE ONLY SUBSTANTIVE GROUND IS GROUND NO.1; REPR ODUCED BELOW:- 1) THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF FIXE D DEPOSITS IN BANK TO THE TUNE OF ` 70,715/- MADE ON THE GROUND OF ALLEGED UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 3.1 FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 DATED 30-12-2010 WERE T HAT THE ASSESSEE IN INDIVIDUAL CAPACITY HAS MADE AN INVESTMENT IN FIXED DEPOSIT WITH BANK OF BARODA. AS REGARD TO F.D. OF RS.70,715/- BEARIN G FDR NO.30359 FOUND TO BE IN THE NAME OF MR.CHETAN MODI; CONSEQU ENCE UPON ON AN ENQUIRY MADE AN U/S.133(6) OF IT ACT BY THE AO, IT WAS NOTED THAT THE SAME WAS NOT SHOWN IN THE RETURN OF INCOME. IT WAS HELD BY THE AO THAT THE IMPUGNED INVESTMENT WAS UNEXPLAINED, HENCE BY I NVOKING THE PROVISIONS OF SECTION 68, IT WAS ADDED IN THE TAXAB LE INCOME OF THE ASSESSEE. 4. WHEN THE MATTER CARRIED BEFORE THE FIRST APPELLA TE AUTHORITY, LD.CIT(A) HAS AFFIRMED THE ACTION OF THE AO. ITA NOS.1555 & 1556/AHD/2 012 CHETAN DINESHCHANDRA MODI VS. ITO ASST.YEARS 2004-05 & 2005-06 - 3 - 5. ON THE DATE OF HEARING, FROM THE SIDE OF THE APP ELLANT, A WRITTEN SUBMISSION HAS BEEN PLACED ON RECORD. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.T.SANKAR APPEARED AND P LACED RELIANCE ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. ON PERUSING THE SUBMISSIONS, WE HAVE NOTED THAT THE SOURCE EXPLAINED BY THE ASSESSEE FOR THE IMPUGNED FDR WAS OUT OF THE MATURITY AMOUNT OF FEW OLD BANK FDRS. THE ASSESSEE HAS ALS O PLEADED BEFORE LD.CIT(A) THAT THE FDR AMOUNT IN QUESTION WAS NOT T HE DEPOSIT MADE IN THE BANK DURING THE YEAR UNDER CONSIDERATION. A S UPPORTING CERTIFICATE FROM THE BANK WAS STATED TO BE FURNISHED BEFORE THE REVENUE AUTHORITIES. MOREOVER, IT HAS ALSO BEEN EXPLAINED BY THE ASSESSE E THAT THE FDR IN QUESTION WAS NOT A NEW INVESTMENT BUT ONLY RENEWAL OF THE DEPOSITS WHICH HAVE MATURED FROM TIME TO TIME IN THE PAST. IN SUPPORT OF THIS EXPLANATION, A CERTIFICATE OF BANK OF BARODA IS ALS O PLACED ON RECORD. CONSIDERING THE EVIDENCES AS ALSO THE EXPLANATION O FFERED BY THE ASSESSEE. WE ARE OF THE CONSCIENTIOUS VIEW THAT THE REVENUE AUTHORITIES HAVE NOT JUDICIOUSLY APPRECIATED THE EVIDENCES PLAC ED BY THE ASSESSEE BEFORE THEM. THE RELEVANT CERTIFICATES ISSUED BY THE SAID BANK HAVE DEMONSTRATED THAT THE ASSESSEE HAS EXPLAINED THE SO URCE OF INVESTMENT AND THAT THE ACTION U/S.68 WAS NOT WARRANTED FOR TH E YEAR UNDER CONSIDERATION. WE THEREFORE REVERSE THE FINDINGS OF THE LD.CIT(A) AND ALLOW THIS GROUND OF THE ASSESSEE. [B] ITA NO.1556/AHD/2012 FOR A.Y. 2005-06 7. THE SUBSTANTIVE GROUND IS GROUND NO.1; REPRODUCE D BELOW:- ITA NOS.1555 & 1556/AHD/2 012 CHETAN DINESHCHANDRA MODI VS. ITO ASST.YEARS 2004-05 & 2005-06 - 4 - 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIO N ON ACCOUNT OF CREDIT ENTRIES IN THE BANK ACCOUNT TO TH E TUNE OF ` 3,60,000/- ON GROUND OF ALLEGED UNEXPLAINED CASH CR EDITS U/S.68 OF THE ACT. 7.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O HAS EXAMINED A BANK ACCOUNT MAINTAINED WITH INDUSIND BANK LTD. T HERE WERE CREDIT ENTRIES AGGREGATING TO RS.14,37,300/-. THE ASSESS EE HAS EXPLAINED THE SOURCE OF DEPOSIT IN RESPECT OF THOSE ENTRIES, HOWE VER, THERE WAS A BALANCE AMOUNT OF RS.3,60,000/- WHICH REMAINED UNEX PLAINED FOUND TO BE DEPOSITED IN CASH. THE EXPLANATION OF THE ASSE SSEE WAS THAT THE IMPUGNED UNEXPLAINED BALANCE CASH AMOUNT OF RS.3,60 ,000/- DEPOSITED IN THE BANK WAS THE EMI MONEY COLLECTED FROM VARIOU S CLIENTS FOR WHOM HE HAD ARRANGED CAR FINANCE LOAN. THE AO HAS NOT A PPRECIATED THOSE SUBMISSIONS AND FINALLY TAXED THE SAID AMOUNT AFTER ASSIGNING FOLLOWING REASONS:- AFTER GOING THROUGH THE SUBMISSION, THE ASSESSEE A RGUMENT AND EXPLANATION ARE NOT TOTALLY ACCEPTED BUT PARTLY EXP LANATION REGARDING PAYMENT OF RS.10,77,300/- ONE OF HIS CLIE NT BIREN CHAMPANERIA AND ASSESSEE HAS ACCEPTED SUCH AMT ON B EHALF OF HIS CLIENT AND PAID TO KOTAK MAHINDRA PRIMUS LTD IN SUP PORT TO THESE ARGUMENT HE SUBMITTED CLIENT STATEMENT OF ACCOUNT A ND ALSO AGREEMENT TO SAME AND INVOICE COPY WHICH WERE ACCEP TED. BUT, FOR THE AMOUNT OF RS.3,60,000/- DEPOSITED IN BANK A /C ASSESSEE EXPLAINED THAT THE SUCH AMOUNT WERE EMI PRODUCT OF VARIOUS CLIENT BUT HE IS NOT ABLE TO PRODUCE ANY EVIDENTIARY PROOF TO CONSIDER HIS ARGUMENT. HENCE, IT IS CONSIDER TO BE A NO EXPLANA TION HAS BEEN FURNISHED BY ASSESSEE AND IT IS HELD THAT THE PROVI SION OF 68 OF I.T.ACT IS CLEARLY APPLICABLE IN CASE OF ASSESSEE T HE AMOUNT TAKEN AS DEEMED TO BE INCOME UNDER SECTION 68 DOES NOT CL ASSIFY UNDER ANY HEAD OF INCOME AND ACCORDINGLY IT IS TREATED AS INCOME FROM UNDISCLOSED SOURCES. UNDER THIS CIRCUMSTANCES AND LOOKING TO THE ITA NOS.1555 & 1556/AHD/2 012 CHETAN DINESHCHANDRA MODI VS. ITO ASST.YEARS 2004-05 & 2005-06 - 5 - FACT OF THE CASE, THE SAME IS ADDED TO THE TOTAL IN COME OF THE ASSESSEE, ACCORDINGLY ADDITION OF RS.3,60,000/- IS MADE U/S.68 OF I.T. ACT 1961. 8. EVEN BEFORE THE CIT(A), THE ASSESSEE WAS UNABLE TO IMPROVE HIS CASE AND, THEREFORE, MADE AN ALTERNATE PLEA THAT TH E AO SHOULD HAVE TAXED ONLY THE PEAK-CREDIT AS APPEARED IN THE SAID ACCOU NT. ACCORDING TO LD.CIT(A), THE THEORY OF PEAK CREDIT WAS AGAINST TH E FACTS OF THE CASE BECAUSE THE SEVERAL CASH DEPOSITS WERE STATED TO BE THE EMI OF VARIOUS PARTIES. SINCE THOSE PARTIES WERE FOUND TO BE UNID ENTIFIABLE, THEREFORE THE EXPLANATION OF THE ASSESSEE WAS REJECTED AND THE AC TION OF THE AO WAS CONFIRMED. WE HAVE PERUSED THE WRITTEN SUBMISSION S OF THE ASSESSEE. WE HAVE ALSO HEARD LD.DR MR.T.SANKAR WHO HAS STRO NGLY SUPPORTED THE VIEW TAKEN BY LD.CIT(A). THE ASSESSEES ONLY EXPL ANATION WAS THAT THE AMOUNT IN QUESTION WAS THE COLLECTION OF EMI IN CAS H ON BEHALF OF KOTAK MAHENDRA LTD. THE ASSESSEE WAS STATED TO BE AN AGE NT OF KOTEK MAHENDRA LTD. THE ASSESSEE HAS GIVEN AN EXPLANATIO N THAT HIS CLIENTS HAVE OBTAINED CAR FINANCE FROM THE SAID FINANCE COM PANY AND, THEREFORE THE MONTHLY INSTALLMENTS AGAINST THE CAR FINANCE WAS COLLECTED BY THE ASSESSEE AND DEPOSITED IN THE BANK. HOWEVER , THE ASSESSEE HAS NOT DISCHARGED HIS PRIMARY ONUS BY SATISFACTORILY ESTAB LISHING THE SOURCE OF DEPOSIT SPECIALLY WHEN IT WAS FOUND THAT THOSE CLIE NTS WERE REMAINED UNIDENTIFIABLE. THOSE DEPOSITS HAVE DULY APPEAR ED IN THE BANK ACCOUNT, THEREFORE, THE PROVISIONS OF SECTION OF 68 WERE RIG HTLY INVOKED. DUE TO THIS REASON, WE ARE NOT CONVINCED WITH ONE OF THE A RGUMENT OF THE ASSESSEE THAT NO LEGAL ACTION WAS WARRANTED SINCE T HE IMPUGNED AMOUNT WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE A SSESSEE INSTEAD ITA NOS.1555 & 1556/AHD/2 012 CHETAN DINESHCHANDRA MODI VS. ITO ASST.YEARS 2004-05 & 2005-06 - 6 - REFLECTED IN THE BANK ACCOUNT. WE ARE ALSO NOT C ONVINCED THAT ONLY PEAK OF THE DEPOSITS WAS TO BE TAXED DUE TO THE REA SON THAT IT WAS NOT THE ROTATION OF DEPOSIT AND WITHDRAWAL IN CASH OF ASSES SEES OWN MONEY. THE ASSESSEE HAS CITED A DECISION OF HON'BLE APEX COUT IN THE CASE OF [1999]CIT VS. SMT. P.K. NOORJAHAN 237 ITR 570 (SC) BUT THAT DECISION SAYS THAT THE ITO HAS DISCRETION TO TAX UNEXPLAINED INVESTMENT IF THE EXPLANATION IS UNSATISFACTORY. IT WAS HELD THAT TH E ASSESSEE IS UNDER OBLIGATION TO SATISFACTORILY EXPLAIN THE SOURCE OF INVESTMENT. THE OTHER DECISION OF HON'BLE ITAT MUMBAI H BENCH IN THE CA SE OF BIREN V.SAVLA VS. ASST.CIT [2006] 100 TTJ 1006 (MUM.) HAS BEEN PRONOUNCED ON THE SPECIFIC FACTS OF THAT VERY CASE, HENCE THE CITATION IS MISPLACED. REST OF THE CASES HAVE ALSO BEEN PRONOUNCED ON THE SPECIFIC FACTS, HENCE DO NOT APPLY ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND. RESULTANTLY, WE HEREBY AFFIRM THE FINDINGS OF THE A UTHORITIES BELOW AND DISMISS THIS GROUND THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A .Y. 2004-05 IS ALLOWED, WHEREAS APPEAL OF THE ASSESSEE FOR A.Y. 20 05-06 IS DISMISSED. SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 11 /2012 5..!, .!../ T.C. NAIR, SR. PS ITA NOS.1555 & 1556/AHD/2 012 CHETAN DINESHCHANDRA MODI VS. ITO ASST.YEARS 2004-05 & 2005-06 - 7 - $4 1 .6 7$6) $4 1 .6 7$6) $4 1 .6 7$6) $4 1 .6 7$6)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 8 / CONCERNED CIT 4. 8() / THE CIT(A)-VALSAD 5. 6;< .! , , / DR, ITAT, AHMEDABAD 6. < =0 / GUARD FILE. $4! $4! $4! $4! / BY ORDER, /6 . //TRUE COPY// > >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER DATED.8.11.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12.11.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S23/11/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/11/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER