Yogesh Vinaychandra Parekh, JUNAGADH V. The Jt. CIT, Range-1, JUNAGADH

ITA 162/RJT/2016

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8592 (ITAT-RAJKOT)
• Duration Of Justice: 7 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 06-02-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Peak credit; Set aside
• Section: 131; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The A.C.I.T., Junagadh Circle, Junagadh Vs Shri Yogeshkumar Vinaychandra Parekh, Near- Shri Ram Temple Gai Chogan, Mangarol PAN No: AJYPP0682J Shri Yogeshkumar Vinaychandra Parekh, Near- Shri Ram Temple Gai Chogan, Mangarol PAN No: AJYPP0682J (Appellant) Vs The A.C.I.T., Junagadh Circle, Junagadh (Respondent) Revenue Represented: Shri Shramdeep Sinha, CIT-DR Assessee Represented: Shri Samir Jani, A.R. Date of hearing : 07-02-2024 Date of pronouncement : 21-02-2024 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These cross appeals are filed by the Revenue and the Assessee as against the appellate order dated 26.02.2016 passed by the Commissioner of Income Tax (Appeals)-2, Rajkot arising out of the assessment order passed under section 143(3) of the Income ITA No. 142 & 162/Rjt/2016 Assessment Year: 2010-11 I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 2 Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2010-11. 2. The Grounds of Appeal raised by the Revenue are as follows:- 1. On the facts and circumstances of the case and in law, the id. CIT(A) has erred in deleting the addition of Rs.2,52,10,390/- out of addition made at Rs.2,66,60,390/- made on account of investment in bank accounts made out of income from undisclosed sources. 2. On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.32,82,600/- made on account of investment in flat out of income from undisclosed sources. 3. On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.5,33,27,400/- made on account of investment in gold future contracts out of income from undisclosed sources. 4. Any other ground that the revenue may raise before or during hearing proceedings before the Hon'ble I.T.A.T. 5. On the facts of the case and in law, the learned CIT(A) ought to have upheld the assessment order of the A.Ο. 6. It is, therefore, prayed that the order of the CIT(A) may be set aside and that the A.O. be restored to the above extent. 3. The Grounds of Appeal raised by the Assessee are as follows:- 1. Hon. Commissioner Appeal -2 Rajkot has not adjusted peak amount calculated14,50,000/- against the declared income of Rs.1 crore in income tax return. This tantamount to duplication of addition and the same is prayed for deletion. 2. Your appellant reserves it right to add, amend, alter or modify any grounds of appeal before the time of hearing. 4. The brief facts of the case is that the assessee is a Partner in share sub broking firm and also Partner in Jewelers firm. Due to high value transaction in his bank account wherein the assessee in the business of trading of commodity exchange, local customers were depositing cash for their requirement of trading on commodity I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 3 exchange. When the assessee was interrogated by ADIT by issuing summons, the assessee agreed to buy piece admitted Rs.1 Crore as the undisclosed income. The Assessing Officer found that the Current Accounts in ICICI Bank, Junagadh and Dena Bank, Mangrol wherein the deposits of Rs.2.60 crores and Rs. 6.56 lakhs both totaling to Rs.2.66 crores was not explained properly added as the undisclosed income. 4.1. Similarly, the assessee purchased a flat for Rs.60 lakhs and paid stamp duty of Rs.2,82,600/- alongwith one Shri Ramesh L. Tanna (unrelated party). On issuing summons to Shri Ramesh L. Tanna, there was no response from him. Therefore the Assessing Officer made an addition of Rs.32,82,600/- and also added as the unexplained income of the assessee. The assessee made transactions in Gold Futures Contracts in MCX exchange amounting to Rs.5,33,27,400/- in 37 transactions. The source of the payments has not been explained by the assessee. Therefore the said amount of Rs.5.33 crores as added as the undisclosed income of the assessee and demanded tax thereon. 5. Aggrieved against the same, the assessee filed appeal before Commissioner of Income Tax (Appeals). The Ld. CIT(A) after calling for a Remand Report and confined the addition on undisclosed source of income in the bank accounts by granting the benefit of Peak credit to Rs.14,50,000/-. The Ld. CIT(A) also deleted the addition of Rs.32,82,600/- that the additions were made only on presumption and assumption without verification of factual evidences produced by the assessee. The Ld. CIT(A) found that the I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 4 assessee made initial investment of Rs.60,00,000/- with Money Market, Baroda as margin money in the Financial Year 2008-09. It is found that MCX has not confirmed for any such huge investment, in its reply to the ACIT regarding the addition of Rs.5.33 crores. The assessee also filed an Affidavit dated 23.02.2013 during the course of assessment proceedings confirming the facts which was not considered by the Assessing Officer. Therefore Ld. CIT(A) deleted the above addition made in the hands of the assessee. 6. The Ld. CIT-DR Shri Shramdeep Sinha appearing for the Revenue submitted that the assessee did not come forward to discharge the onus casted upon him during the assessment proceedings and till the date, before this Tribunal also the assessee has not fully discharged the onus by explaining the investments in the bank accounts out of the income from undisclosed sources. In the Remand Report, the Assessing Officer specified that the facts suggests that the result of Investigation Wing of the Department that the assessee has accepted about guiding transaction in seven different bank accounts. Thus the A.O. concluded that the assessee’s own money has been routed through layering in the bank accounts located in ICICI Bank, Junagadh and Dena Bank, Mangrol. In the above circumstances, Ld. CIT(A) is not correct in applying peak credit of cash deposits and restricting the addition to Rs.14,50,000/- as the income of the assessee and relied upon the following case laws: (a) Sudhir Kumar Sharma (HUF) V/s CIT (2016) 69 taxmann.com 219 (SC) I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 5 (b) Ravinder Kumar V/s ITO (2020) 118 taxmann.com 166 (Delhi) (c) Nemi Chand Kothari V/s CIT (2004) 136 taxmann.com 213 (Gauhati) (d) Arunkumar J. Muchhala V/s CIT (2017) 85 taxmann.com 306 (Bombay) (e) CIT V/s DK Garg (2017) 84 taxmann.com 257 (Delhi) (f) CIT V/s Vijay Agricultural Industries (2007) 294 ITR 610 (Allahabad) (g) Bhaiyalalshyam Behari V/s CIT (2005) 276 ITR 38 (Allahabad) (h) Roshan Di Hatti V/s CIT (1992) 2 SCC 378 6.1. Thus the Ld. CIT-DR pleaded that the addition made by the Assessing Officer is liable to be restored. 7. Per contra, Ld. Counsel Shri Samir Jani appearing for the assessee submitted that a statement u/s. 131 of the Act was recorded on 04.02.2010 wherein he was questioned as who operated the list of seven bank accounts. In reply, the assessee stated that all such accounts were operated on his advice and suggestions to the respective persons. The assessee further submitted that Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra names appeared in the seven entities. Their respective Assessing Officers while making assessments u/s. 143(3) r.w.s. 144A and 147 made an addition of Rs.1,43,50,000/- and Rs.1,34,47,200/- respectively in their hands, amounting to Rs.2,77,97,200/-. Against the reassessment orders the respective assessee appeals are still pending before Ld. CIT(A), I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 6 NFAC. Thus the addition made of Rs. 2,66,60,390 will make double addition on the very same transactions in all the assessees case, which is not permissible in law. As the appeals filed by Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra are pending in Faceless Appeal presently before NFAC, this issue may be set aside back to the file of Ld. CIT(A) along with the pending appeals, thereby correct assessment of additions to be made in the hands of the respective assessee. 7.1. The Ld. CIT-DR has no objection in setting aside this issue back to the file of Ld. CIT(A), NFAC along with the other appeals pending before NFAC and also undertaken that necessary appeal details will be furnished from the NFAC portal for disposal of the present appeal. 8. Taking note of rival submissions, this issue is set aside to the file of Ld. CIT(A), NFAC, Delhi to take a final call along with the pending appeals in the case of the Shri Amarbhai Bijalbhai Shamra and Shri Varjangbhai Meshurbhai Shamra. Thus the grounds of appeal raised by the Revenue is allowed for statistical purpose. 9. Regarding Ground No. 2 namely deleting the addition of Rs.32,82,600/- made on account of investment in flat in the name of Shri Ramesh L. Tanna. The Ld. CIT(A) observed from the bank statement of Shri Ramesh L. Tanna, respective sale consideration was transferred from his account without any cash deposits by the assessee and also Shri Ramesh L. Tanna was able to prove the source of investment in purchase of the above flat and Revenue I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 7 records carry both parties name. Therefore the Ld. CIT(A) deleted the addition made by the A.O. based on presumption and assumption, without verification of factual evidences and also against the provision of law. We do not find any infirmity in the order passed by the Ld. CIT(A) and the findings arrived was not distinguished by the Revenue with necessary evidence. Thus this ground no. 2 raised by the Revenue is devoid of merits and the same is hereby dismissed. 10. Regarding Ground no. 3 deleting the addition of Rs.5,33,27,400/- made on account of investment in gold future contracts. The findings of the Ld. CIT(A) on this issue is as follows: “....5.3.2 The Assessing Officer has made inquires with MCX and Money Market and the fact which has transpired from the replies from both the ends was that the appellant had made an initial investment of Rs.6,00,000/- with Money Market, Baroda as margin money in the F.Y. 2008-09. It is seen that the MCX has also not confirmed for any such huge investment, in its reply to the ACIT regarding the addition made. The appellant had filed an affidavit dated 23/03/2013 during the course of assessment proceedings confirming the above facts. The assessing officer has neither considered this affidavit during the course of assessment proceedings nor in the remand report proceeding 5.3.3 In the totality of factual matrix and in absence of any clinching evidence to prove the investment of Rs.5,33,37,400/- in future gold contract and MCX Money Market, I hold that no addition could be made for A.Y.2010-11, the year relevant under appeal. Therefore, the addition of Rs.5,33,27,400/- stands deleted. Thus, this ground of appeal is allowed.” 11. The Ld. CIT-DR submitted that during the course of assessment proceedings, the assessee could not establish that the details received from MCX are not correct. Therefore the matter requires further enquiry and this issue may also be set aside to the file of the Assessing Officer for verification. I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 8 12. We have given our thoughtful consideration and also perused the materials available on record. The method of trading in MCX Ltd. is one have to deposit/invest, the amount of quantity traded and to settle the contract periodically at the end of the contract credit or debit of difference is made in the account of the respective party. The assessee in this case has not disputed the settlement amount is the amount not invested by the assessee. However the copy of the ledger account provided by MCX Ltd on 25.02.2013 has never been given to the assessee for his rebuttal. Whereas the trading made by the assessee, resulted in a loss of Rs.80,368/-. Further the Revenue could not place on record any contra findings or evidences as recorded by the Ld. CIT(A). Therefore the findings arrived by Ld. CIT(A) does not require any interference and the grounds raised by the Revenue is hereby dismissed. 13. In the result, the appeal filed by the Revenue is partly allowed. 14. Consequently the solitary issue raised by the assessee in ITA No. 162/Rjt/2016 namely adjusted peak credit amount of Rs.14,50,000/- is to be set off against the disclosed income of Rs.1 crore in the Return of Income. This issue is already set aside to the file of Ld. CIT(A) for fresh adjudication in ITA No. 142/Rjt/2016 vide Paragraph 8 of this order. Consequently the ground raised by the Assessee is also partly allowed. I.T.A Nos. 142 & 162/Rjt/2016 A.Y. 2010-11 Page No ACIT Vs. Shri Yogeshkumar Vinaychandra Parekh 9 15. In the result, the appeals filed by the Revenue and the Assessee are hereby partly allowed. Order pronounced in the open court on 21-02-2024 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 21/02/2024 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट