The ITO, Ward-2(3), Surat V. Shri Nareshchandra Venilal Tamakuwala, Surat

ITA 1619/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0984 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K MADHUSUDHAN
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1619/AHD/2012 / ASSESSMENT YEAR : 2008-09 INCOME-TAX OFFICER, WARD 2(3), SURAT VS NARESHCHANDRA VENILAL TAMAKUWALA, 3-570, SHASHIKANT BROTHERS, ZAMPA BAZAR, SURAT PAN : ABUPT 4375 J / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI K. MADHUSUDHAN, SR DR ASSESSEE BY : SHRI R.N. VEPARI, AR / DATE OF HEARING : 25/07/2016 / DATE OF PRONOUNCEMENT: 28/07/2016 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT DATED 31.05.2012 FOR ASSESSMENT YEAR 2008-09. 2. THE SOLITARY GROUND RAISED BY THE REVENUE READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.62,29,809/- TO RS.78,799/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ABL E TO EXPLAIN EACH AND EVERY CREDIT IN THE BANK ACCOUNT OR TO CORRELATE WITHDRAW ALS WITH DEPOSITS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN MANGO P ULP OF HUMPA BRAND IN THE NAME AND STYLE OF M/S. MAHALAXMI DISTRIBUTORS. FOR THE YEAR UNDER CONSIDERATION, HE FILED HIS RETURN OF INCOME ON 28. 09.2008, DECLARING TOTAL INCOME AT RS.3,81,426/-. THEREAFTER, ASSESSMENT U/ S 143(3) OF THE INCOME- ITA NO. 1619/AHD/2012 ITO VS. NARESHCHANDRA VENILAL TAMAKUWALA AY : 2008-09 2 TAX ACT (HEREINAFTER REFERRED TO AS ACT) WAS FRAM ED ON 30.12.2010 DETERMINING TOTAL INCOME AT RS.66,11,228/- AFTER MA KING ADDITION OF RS.62,29,802/- ON ACCOUNT OF UNEXPLAINED DEPOSITS I N THE SAVINGS BANK ACCOUNT. THE RELEVANT OBSERVATIONS OF THE LD. ASSE SSING OFFICER ARE AS UNDER:- 7. IN THE ABSENCE OF ANY EXPLANATION IN RESPECT O F EACH AND EVERY CREDIT IN THE BANK ACCOUNT OR TO CORRELATE WITHDRAWALS WITH D EPOSITS, THERE IS NO WAY OTHER THAN TO TREAT THE ENTIRE CREDITS IN THE BANK AS UNEXPLAINED CREDITS IN THE BANK. AT THE MOST THE CREDITS CAN BE GIVEN FOR CASH WITHDRAWALS MADE FIRST AND DEPOSITED LATER ON IN THE BANK ACCOUNT. THE AS SESSEE HAS MADE WITHDRAWALS OF RS.32,00,000/- FROM THE SAME BANK BE FORE MAKING ANY DEPOSIT IN THE BANK BY CASH. THE TOTAL DEPOSITS BY CASH IN BANK COMES TO RS.19,94,500/- AND IT CAN BE SAID THAT THE SAME ARE MADE OUT OF CASH WITHDRAWALS ALREADY MADE EARLIER. ON THE BASIS OF DISCUSSION ABOVE THE ADDITION OF RS.62,29,802/- (RS.82,24,302 RS.19,94 ,500) IS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A) WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HAS GI VEN PARTIAL RELIEF TO THE ASSESSEE BY FOLLOWING OBSERVATIONS:- 8. THE APPELLANT DURING THE COURSE OF APPELLATE P ROCEEDINGS EXPLAINED THAT THE ASSESSING OFFICER HAS ACCEPTED THE EXPLANATION R EGARDING CASH DEPOSITS, BUT HAS MADE ADDITION FOR DEPOSITS OTHER THAN CASH DEPOSITS, WITHOUT APPRECIATING THE FACT THAT MOST OF THE DEPOSITS WER E ON ACCOUNT OF AUTO SWEEP FACILITY OF THE BANK OF BARODA. BESIDES, INT EREST AMOUNT ON SUCH FDS, THE REMAINING THREE DEPOSITS ARE RECEIPTS KRISHNA T AMAKUWALA. 8.1 THE CONTENTION OF THE APPELLANT HAS BEEN EXAMI NED. THE APPELLANT IS AN INDIVIDUAL AND HAS CASH WITHDRAWALS FROM BANK ACCOU NT UNDER REFERENCE AND ALSO FROM THE FIRMS IN WHICH APPELLANT IS A PARTNER /PROPRIETOR. THE CASH DEPOSITS HAVE BEEN ACCEPTED AS EXPLAINED BY THE AO I N THE ASSESSMENT ORDER PASSED. 8.2 AS REGARDS, DEPOSITS OTHER THAN CASH, MOST OF T HE DEPOSITS ARE ON ACCOUNT OF AUTO SWEEP FACILITY. AS PER THE AUTO SWEEP F ACILITY, WHENEVER THE BANK BALANCE IN SAVING BANK ACCOUNT EXCEEDS A PARTICULAR AMOUNT, EXCESS AMOUNT ITA NO. 1619/AHD/2012 ITO VS. NARESHCHANDRA VENILAL TAMAKUWALA AY : 2008-09 3 IS TRANSFERRED TO FD ACCOUNT AND WHENEVER THE CHEQU E IS ISSUED OR THE AMOUNT IS WITHDRAWN, THE SAID FD AUTOMATICALLY BREA KS. THE SOURCES OF RECEIPT FROM AUTO SWEEP ACCOUNT IS THE SAVINGS BA NK ACCOUNT ITSELF AND THE ADDITION MADE BY THE AO IS WITHOUT APPRECIATING THIS FACT. THEREFORE, THE ADDITION IS DELETED SUBJECT TO FINDINGS IN PARA 8.3 . 8.3 THE SAVINGS BANK ACCOUNT BANK OF BARODA, PARLE POINT BRANCH ALSO HAS DEPOSITS BY WAY OF INTEREST ON FDS ETC. THIS INTER EST CREDIT HAS NOT BEEN OFFERED FOR TAX AS ADMITTED BY THE APPELLANT VIDE O RDER SHEET ENTRY DATED 30.05.2012. AS PER APPELLANTS SUBMISSION FILED ON 31.05.2012, THE TOTAL INTEREST AMOUNT COMES TO RS.78,799/-. THEREFORE, T HE ADDITION MADE BY THE AO AT RS.62,29,802/- IS SUSTAINED ONLY TO THE EXTENT OF RS.78,799/-. THE ASSESSING OFFICER SHOULD HOWEVER, VERIFY THE INTERES T AMOUNT IN THE SAVING BANK A/C BEFORE GIVING APPEAL EFFECT TO THIS APPELL ATE ORDER. 4.1 THE LD. CIT(A) HAS ALSO HELD THAT AS FAR AS THE APPEAL FOR THE AY 2008- 09 IS CONCERNED, NO ADDITION CAN BE MADE IN RESPECT OF DEPOSIT OR INTEREST CREDITS IN AY 2007-08. 5. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT( A), THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E ORDER OF THE ASSESSING OFFICER AND CONTENDED THAT THE ASSESSEE H AS FAILED TO EXPLAIN THE SOURCE OF THE DEPOSITS MADE DURING THE YEAR UNDER C ONSIDERATION AS THE AUTO SWEEP FACILITY REQUIRES THE SUFFICIENT FUNDS TO GET IT CONVERTED THE AMOUNT INTO FDS. HE FURTHER CONTENDED THAT THE ASS ESSEE HAS ALSO FAILED TO EXPLAIN THE ORIGIN OF THE GENERATING POINT OF CREDI T AS TO FROM WHICH ACCOUNT THE MONEY IS BEING CREDITED/TRANSFERRED AND ALSO NO T EXPLAINED AS TO WHERE THE MONEY IS INVESTED/TRANSFERRED IMMEDIATELY AFTER ITS CREDITS. THEREFORE, IN THE ABSENCE OF ANY EXPLANATION IN RESPECT OF EAC H AND EVERY CREDIT IN THE BANK ACCOUNT OR ITS WITHDRAWAL, THE ADDITION HAS BE EN RIGHTLY MADE BY THE ASSESSING OFFICER, WHICH SHOULD BE UPHELD. RELIAN CE IS PLACED ON THE ITA NO. 1619/AHD/2012 ITO VS. NARESHCHANDRA VENILAL TAMAKUWALA AY : 2008-09 4 DECISION OF HONBLE SUPREME COURT IN THE CASE OF SR EELEKHA BANERJEE VS. CIT, REPORTED IN 49 ITR 112. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUPPORTED THE ORDER OF THE CIT(A). WHEN THE LD. COUNSEL FOR THE ASSESSEE WAS ASKED ABOUT THE APPLICABILITY OF PEAK OF THE CREDIT IN THIS C ASE RELATING TO LARGE NUMBER OF UNEXPLAINED CREDIT AND DEBIT ENTRIES, HE STATED THAT ASSESSMENT ON THE SAME ISSUES MADE U/S 143(3) R.W.S. 147 FOR THE AY 2 007-08 IS PENDING FOR ADJUDICATION BEFORE THE LD. CIT(A) AS THE DEBITS AN D CREDITS WERE ORIGINATED IN THE EARLIER YEARS AND NOT IN THE ASSESSMENT YEAR 2007-08. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR THAT THE ASS ESSEE COULD NOT SATISFACTORILY EXPLAIN THE NATURE OF CREDITS APPEAR ING IN THE BANK STATEMENTS. THE CREDIT AND DEBIT TRANSACTIONS ARE MADE EITHER B Y CASH DEPOSITS OR SWEEP TRANSFER AND WITHDRAWALS ARE ALSO MADE EITHER BY WA Y OF CASH OR SWEEP TRANSFER FOR ALMOST THE SAME AMOUNT, LEAVING NEGLIG IBLE BALANCE ON ANY GIVEN DAY. REGARDING APPLICABILITY OF THE PEAK CRE DIT THEORY, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT DEBIT AND CRED IT TRANSACTIONS WERE ORIGINATED IN THE EARLIER YEAR. HE FURTHER STATED THAT THE ASSESSMENT OF EARLIER YEAR MADE ON THE SAME ISSUE PERTAINING TO A Y 2007-08 U/S 143(3) R.W.S. 147 BY THE LD. ASSESSING OFFICER IS PENDING FOR ADJUDICATION BEFORE THE LD. CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED BACK TO THE FILE O F CIT(A) WITH THE DIRECTION TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW, TAKING INTO CONSIDERATION OF ADJUDICATION OF PENDING ASSESSMENT U/S 143(3) R.W.S . 147 MADE IN THIS CASE BY THE ASSESSING OFFICER ON THE SAME ISSUE AND PASS A SPEAKING ORDER EXPLAINING EACH AND EVERY CREDIT IN THE BANK ACCOUN T, AFTER PROVIDING DUE ITA NO. 1619/AHD/2012 ITO VS. NARESHCHANDRA VENILAL TAMAKUWALA AY : 2008-09 5 OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. SIN CE THE MATTER IS RESTORED BACK TO THE FILE OF CIT(A) ON PRELIMINARY ISSUE, WE ARE REFRAINING TO COMMENT ON MERIT OF THE ISSUE AT HAND. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 28 TH JULY, 2016 AT AHMEDABAD. SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER AHMEDABAD; DATED 28/07/2016 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD