SHAMA AKIL SARANG, MUMBAI V. ITO 13(3)(4),

ITA 1567/MUM/2015

• Counselvise Citation: 156719914 RSA 2015
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Source of fund; Condonation of delay
• Section: 68; 69; 69C

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (ACCOUNTANT MEMBER . . , ./ I.T.A. NO .1567 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 0 5 - 06 ) M/S SHAMA AKIL SARANG 34 ABU BAKAR MANZIL, NISHAN PADA ROAD, DO N GRI, MUMBAI - 400003 / VS. INCOME TAX OFFICER, 13 ( 3 )( 4 ), NOW 17(3)(3), MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AOGPS8450J / APPELLANT BY NONE / RSPONDENT BY SHRI K P R R MURTY / DATE OF HEARING : 4 .8 . 201 5 / DATE OF PRONOUNCEMENT : 4 . 8. 201 5 / O R D E R PER B ENCH: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 1.10. 2013 PASSED BY THE LD. CIT(A) - 24, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 200 5 - 06 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY REGISTERED POST ACKNOWLEDGMENT ON TWO OCCASIONS. HENCE, I PROCEED TO DISPOSE OF THE APPEAL EX - PARTE, WITHOUT THE PRESENCE OF ASSESSEE. ITA NO. 1567 / MUM/20 1 5 2 3. APPEAL IS BARRED BY LIMITATION BY 378 DAYS. THE ASSESSEE H AS FILED AN AFFIDAVIT REQUESTING THE BENCH TO CONDONE THE DELAY. THE AFFIDAVIT READS AS UNDER: I SHAMA AKIL SARANG WOULD LIKE TO STATE THAT I AM HAVING SERIOUS HEALTH PROBLEMS (I NCLUDING FREQUENT HOSPITALIZATIONS) AND UNDER THE INFLUENCE OF HEAVY MEDI CATIONS, MAJORITY OF THE TIMES I AM ON BED REST SINCE AUGUST 2013 . I RECEIVED ORDER OF CIT(A) - 24 , MUMBAI SOME WHERE AROUND 15TH JANUARY 2014 BUT I JUST RECEIVED THE ENVELOPE CONTAINING THE ORDER BUT WAS NOT IN A P OSITION TO OPEN AND READ THE SAME DUE TO AB OVE REASON. EVEN TILL DATE I AM IN THE SAME S I TUATION AND JUST LAST WEEK ONLY OPENED THE ENVELOPE AND FORWARDED THE SAME TO MY AR ADVOCATE SANJAYKUMAR A THAKKAR. FURTHER ON 24 TH AUGUST, 2014 MY HUSBAND PASSED AWAY DUE TO WHICH I WAS NOT IN A GOOD STATE OF MIN D . DUE TO ABOVE REASONS I WAS NOT IN A CONDITION TO FILE THE APPEAL WITHIN PRESCRIBED TIME. SO I HEREBY APPLY FOR CONDONATION OF DELAY IN FILING THE APPEAL . 4. I HEARD THE LD. DR ON THIS PRELIMINARY ISSUE OF DELAY . HAVING REGARD TO THE SUBMISSIO NS MADE IN THE AFFIDAVIT , I AM OF THE VIEW THAT THERE IS SUFFICIENT CAUSE IN FILING THE APPEAL BELATEDLY. ACCORDINGLY, I CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING . 5. THE ONLY ISSUE CONTESTED IN THIS APPEAL IS WITH REGARD TO ADDITION OF RS.2,0 3,269 / - CONFIRMED BY THE LD. CIT(A). 6. I HEARD THE LD. DR AND PERUSED THE RECORD. I NOTICE THAT THE TRIBUNAL , ON AN EARLIER OCCASION, HA S CONSIDERED THE APPEAL OF THE ASSESSEE FOR THE VERY SAME ASSESSMENT YEAR WITH REGARD TO THE ADDITION OF RS.5,06,6 21/ - CONFIRMED BY THE LD. CIT(A) . AFTER HEARING THE PARTIES THE TRIBUNAL, VIDE ORDER DATED 20.8.2010 PASSED IN ITA NO.2443/M/2009 , HAS RESTORED THE MATTER TO THE FILE OF THE AO FOR FRESH EXAMINATION OF THE SAME. THE ADDITION OF RS.5,06,621/ - RELATED TO UNEXPLAINED INVESTMENT ASSESSED U/S 69 OF THE ACT. IN THE SET ASIDE PROCEEDINGS, THE AO AGAIN CONFIRMED THE ADDITION OF RS.5,06,621/ - . THE SAID UNEXPLAINED INVESTMENT ITA NO. 1567 / MUM/20 1 5 3 WAS RELATED TO FLAT PURCHASED BY THE ASSESSEE ALONG WITH HER DAUGHTER ASMA A SARANG AND ALSO SAID EXPENDITURE INCURRED BY THE ASSESSEE. 7 . IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) EXAMINED THE BOOKS OF ACCOUNT AND BANK ACCOUNT OF THE ASSESSEE AND ACCORDINGLY CAME TO THE CONCLUSION THAT THE ASSESSEE HAS EXPLAINED THE SOURCE S TO THE EXT ENT OF RS.3 ,03,352/. AFTER GIVING CREDIT F OR THE SAME, THE LD.CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.2 , 03,269/ - . THE RELEVANT OBSERVATIONS MADE BY THE LD. CIT(A) ARE EXTRACTED BELOW: 4.1.8 ASSESSEE HAS CLAIMED THAT SHE IS RUNNING A BEAUT Y PARLOUR BUSINESS AND APPEARS TO HAVE MAINTAINED ACCOUNTS ON CASH SYSTEM OF ACCOUNTING AND THEREFORE, CASH RECEIPTS AND PAYMENTS REFLECTED IN THE BANK ACCOUNT/S AND CASH RECEIPTS AND PAYMENTS NOT REFLECTED IN THE BANK ACCOUNT/S WILL FORM THE BASIS OF THE DETERMINATION OF ASSESSEE'S CORRECT INCOME. IT APPEARS FROM THE ANALYSIS OF THE DEBITS TO THE P&L ACCOUNT, CAPITAL ACCOUNT AND OTHER PAYMENTS REFLECTED IN THE RETURN OF INCOME AND ACCRETION TO ASSETS ACCOUNT THAT ASSESSEE HAD INCURRED EXPENDITURE OF RS. 94 ,152/ - ON BUYING MATERIALS, AND OTHER ITEMS, MADE PAYMENT OF RS. 32,372/ - TO LIC AND HAD WITHDRAWN, RS. 24,000/ - AND HAD INVESTED RS.10,000/ - (U/S.80CCCO AND RS. 5,000/ - (88C) DURING THE YEAR WHEREAS TOTA L W I THDRAWALS FROM THE BANK ACCOUNT AFTER EXCLUDING RS. 2,35,000/ - (2,00,000/ - TOWARDS PAYMENT TO ANIK AND RS. 35,000/ - TOWARDS PAYMENT TO CITI BANK) CAME TO RS. 73,155/ - (3,08,155 - 2,35,000) ONLY, THUS LEAVING A GAP OF UNEXPLAINED EXPENDITURE OF RS.77,369/ - (1,50,524 - 73,155) IN CASH AND RS. 15,000/ - (10,0 00+5,000) IN INVESTMENTS BY THE ASSESSEE. SIMILARLY, TOTAL DEPOSITS DURING ENTIRE FINANCIAL YEAR IN BANK ACCOUNT WERE RS.3,35,000/ - WHEREAS TOTAL RECEIPTS FROM THE BUSINESS OF RUNNING A BEAUTY PARLOUR WERE RS. 2,24,100/ - ONLY THUS LEAVING A GAP UNEXPLAINED DEPOSITS OF RS. 1,10,900/ - (3,35,000 - 2,24,100) IN RESPECT OF THE SOURCE FUNDS. IT MAY BE NOTED HERE THAT THE UNEXPLAINED EXPENDITURE OF RS.77,369/ - AND UNEXPLAINED INVESTMENTS/EXPENDITURE OF RS. 15,000/ - WERE MADE FROM FUNDS OUTSIDE THE BANKING SYSTEM WHEREAS THE UNEXPLAINED DEPOSITS WERE MADE IN THE BANK ACCOUNTS AND THEREFORE, THE UNEXPLAINED EXPENDITURE/INVESTMENTS TOTALLING RS. 92,3,69/ - (77,369+15000) HAVE NO CORRELATION AND HAVE TO BE CONSIDERED INDEPENDENTLY OF EACH OTHER . ITA NO. 1567 / MUM/20 1 5 4 4.1.9 ALL THESE ISSUE S, EXCEPT THE SET ASIDE ISSUE OF VERIFICATION OF SOURCE OF FUNDS OF RS. 5,06,621/ - , STAND CONCLUSIVELY ADJUDICATED BY !TAT, MUMBAI IN ITS ORDER DATED 20/10/2010 AND THEREFORE, THESE ISSUES STAND SETTLED AND CANNOT BE ADJUDICATED IN THIS APPEAL. ASSESSEE HA S ALSO RAISED ISSUES AT ITEM NUMBERS (A) TO (N) OF PARAGRAPH MARKED 'CONTENTION OF THE ASSESSEE' AND THE MAIN SUBSTANTIVE ISSUES ARE DISCUSSED IN THE FOLLOWING PARAGRAPHS: 4.1.10 ISSUES REGARDING CIT(A) INVOKING SECTION 69 INSTEAD OF SECTION 68 AND ISSUE OF NOTICE ON 11/09/2007 BY THE ASSESSING OFFICER FOR THE ORIGINAL ASSESSMENT MADE VIDE ORDER DATED 14/11/2007 STAND SETTLED BY THE ORDER OF THE ITAT, MUMBAI DATED 20/10/2010 AND EVEN OTHERWISE THESE ISSUES DO NOT ARISE FROM THE ASSESSMENT ORDER DATED 14/1 1/2011 AND THEREFORE, THESE SUBMISSIONS ARE NOT RELEVANT AND DISMISSED. ASSESSEE'S CONTENTION THAT ASSESSEE AND HER DAUGHTER ARE TWO JOINT OWNERS OF THE PROPERTY AND ARE SEPARATELY ASSESSED TO TAX AND THEREFORE, THE SOURCE OF ENTIRE FUNDS OF RS. 5,06,621/ - SHOULD NOT BE CONSIDERED IN ASSESSEE'S CASE ONLY BUT SEPARATELY, IS ACCEPTED AND THIS ORDER HAS COVERED ONLY THE CASH CREDITS, UNEXPLAINED INVESTMENTS AND UNEXPLAINED EXPENDITURE WITH REFERENCE TO THE P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET AS WE LL AS ENTRIES IN THE PASSBOOK OF THE ASSESSEE ONLY AND ARRIVED AT THE CONCLUSIONS AND THEREFORE, ASSESSEE'S GRIEVANCE STRANDS REDRESSED ON THIS ISSUE. IT HAS ALSO BEEN CONTENDED THAT ASSESSEE BELONGS TO MUSLIM COMMUNITY AND ACCORDING TO SHARIAT LAW APPLIC ABLE TO HER, SHE IS NOT SUPPOSED TO EARN INTEREST FROM ANY PERSON INCLUDING BANK AND SHE HAD KEPT HER EARNINGS IN THE FORM OF CASH WHICH WAS DULY DEPOSITED AT THE TIME OF PURCHASE OF PROPERTY. BE THAT AS IT MAY, ASSESSEE WAS NOT PREVENTED FROM OPENING A C URRENT ACCOUNT WITH A BANK ON WHICH ASSESSEE WO ULD NOT HAVE EARNED ANY INTEREST, BUT THAT WAS NOT DONE. MOREOVER, SUDDEN DEPOSITS OF RS. 2,20,000/ - BY ASSESSEE WITHIN A PERIOD OF 11 DAYS STARTING FROM 14/09/2004 AND ENDING W ITH 2 4/09/2004 DEFINITELY PROVES THE UNEXPLAINED NATURE OF CASH DE POSITS WHICH WAS NOT RELATED TO ANY BUSINESS BUT FROM SOME UNEXPLAINED SOURCE. M O REOVER, THESE DEPOSITS WERE MADE IMMEDIATELY BEFORE THE ISSUE OF CHEQUES FOR EITHER PAYMENT TO BUILDER OR FOR MEETING EXPENSES/PAYMENT TOWARD S ELECTRICITY, TELEPHONE, INSURANCE PAYMENTS, ETC. AND CLEARLY SHOWS THAT AS AND WHEN ASSESSEE NEEDED TO MAKE PAYMENTS TOWARDS THE COST OF FLAT AND/OR TOWARDS OTHER EXPENSES, SHE DECIDED TO DEPOSIT CASH IN HER ACCOUNTS. THUS, ALL THESE SUBMISSIONS MADE BY THE ASSESSEE'S CA ITA NO. 1567 / MUM/20 1 5 5 ARE IRRELEVANT AND DISMISSED . 4.1.11 IN THIS REGARD, DEPOSITS MADE IN BANK ACCOUNT OF THE ASSESSEE'S DAUGHTER ASMA A. SARANG AND ENTRIES IN P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET FOR FINANCIAL YEAR WERE ALSO EXAMINED CRITICALLY AND IT APPEARS THAT ASSESSEE'S DAUGHTER ASMA A. SARANG HAS ALSO MADE DEPOSITS IN CASH IN SIMILAR FASHION IMMEDIATELY BEFORE PAYMENTS/DEBITS IN HER BANK ACCOUNT THROUGH OUT THE YEAR AND ALSO CLAIMED TO HAVE CARRIED ON SIMILAR BUSINESS OF RUNNING A BEAUTY P ARLOUR AND ALSO FILED HER RETURN OF INCOME ON THE SAME DATE. PRIMA FACIE, IT APPEARS THAT THE CASH DEPOSITS MADE IN THE BANK ACCOUNT OF ASSESSEE'S DAUGHTER ASMA A. SARANG AND E NTRIES IN P&L ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET FOR FINANCIAL YEAR RELE VANT TO A.Y. 2005 - 06 ARE HELD TO BE THE PROPERTY OF ASSESSEE'S DAUGHTER AND THEREFORE, THESE HAVE BEEN EXCLUDED WHILE DECIDING ASSESSEE'S APPEAL. IT IS A SEPARATE CASE BY ITSELF AND THESE CASH DEPOSITS REQUIRE TO BE EXAMINED AFRESH BY THE ASSESSING OFFICE R IN ASSESSEE'S DAUGHTER'S CASE. 4.1.12 THEREFORE, ASSESSEE HAS FAILED TO PROVIDE EXPLANATION FOR THE SOURCES OF UNEXPLAINED EXPENDITURE/INVESTMENTS/DEPOSITS IN BANK ACCOUNT TOTALLING RS. 2,03,269/ - (92,369 + 1,10,900) U/S 69, 69B AND 69C OF IT ACT, 1961 OF I T. ACT, 1961 AND THEREFORE, THE ADDITIONS OF R S. 2,03,269/ - ARE FULLY JUSTIFIED IN ASSESSEE S CASE AND THE BALANCE ADDITIONS OF RS.3,03,352/ - (5,06,621 - 2,03,269) ARE HERBY DELETED. IN NUTSHELL, ASSESSEE'S APPEAL IS PARTLY ALLOWED. 8. ON CAREFUL PE RUSAL OF THE ORDER OF LD. CIT(A) I FIND THAT THE FIRST APPELLATE AUTHORITY HAS EXAMINED THE ISSUE IN A PROPER PERSPECTIVE BY DULY CONSIDERING T HE BANK STATEMENT AND BOOKS OF ACCOUNT AND HENCE, I FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). ACCORDINGLY, I DISMISS THE APPEAL FILED BY THE ASSESSEE. PRONOUNCED ACCORDINGLY ON 4TH AUGUST 2015. 4 TH AUGUST, 2015 SD ( . . / B.R. BASKARAN) / ACCOUNTANT MEMBER MUMBAI: 4TH AUG , 2015 . ITA NO. 1567 / MUM/20 1 5 6 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CO NCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI