Jaswant Singh, Howrah V. ITO, Ward-48(3), Kolkata, Kolkata

ITA 1775/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0493 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MIRAN D SHAH
• Keywords: Unexplained cash credit; Reason to believe; Ignorance of law
• Section: 131; 68

Judgement Text

1 ITA NO. 1775/KOL/2016 JASWANT SINGH, AY 2010-11 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 1775/KOL/2016 ASSESSMENT YEAR: 2010-11 JASWANT SINGH (PAN: BTHPS8209J) VS. INCOME-TAX OFFICER, WD-48(3), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 19.07.2018 DATE OF PRONOUNCEMENT 14.09.2018 FOR THE APPELLANT SHRI MIRAN D. SHAH, FCA FOR THE RESPONDENT SHRI SALLONG YADEN, ADDL. CIT, S R. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF LD. CIT(A)-14, KOLKATA DATED 17.12.2015 FOR AY 2010-11. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF ASSESS EE IS AGAINST THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.3,86,49,700/- U/S. 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINESS UNDER THE TRADE NAME AND STYLE OF M/S. HEMRAJ DISTRIBUTOR S. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATION THAT HE RE CEIVED CASH DEPOSIT OF RS.3,38,60,700/- IN HIS SAVINGS BANK ACCOUNT WITH ICICI BANK LTD. AND F URTHER CIB INFORMATION THAT THE ASSESSEE HAD MADE AN INVESTMENT OF RS.47,89,000/- I N THE NAME OF HIS PROPRIETORSHIP 2 ITA NO. 1775/KOL/2016 JASWANT SINGH, AY 2010-11 CONCERN M/S. HEMRAJ DISTRIBUTORS. THE ASSESSEE WA S ASKED TO EXPLAIN THE SOURCE OF INVESTMENT OF THE MONEY DEPOSITED IN BANKS EITHER I N THE NAME OF HIMSELF OR IN THE CAPACITY OF BEING THE PROPRIETOR OF M/S. HEMRAJ DISTRIBUTORS . THE ASSESSEE FILED AN AFFIDAVIT DATED 03.10.2012 WHEREIN HE ASSERTED THAT ALL SORTS OF ACTIVITIES IN WHATEVER NAMED MAY BE CA LLED HAS BEEN MADE EITHER WITH THE INCOME TAX DEPTT OR W ITH ANY OTHER FINANCIAL INSTITUTION HAS BEEN MADE WITHOUT MY CONSENT AND EVEN A LITTLE BIT I KNOW ABOUT . HOWEVER, ACCORDING TO AO, ON 14.03.2013 AS PER RECORDED STATEMENT EXECUTE D U/S. 131 OF THE ACT THE ASSESSEE CLEARLY ADMITTED THE FACT THAT ALL SORTS OF SIGNATURES ARE MADE BY ME EVERY WHERE WHICH AT PRESENT LIES AT YOUR END OR IN FUTURE IT MAY LIES W ITH YOU AND I ALSO LIKE TO ADD THAT THE SIGNATURE THAT I DO AND DID AS FOUND IN ICICI BANK EITHER IN THE ACCOUNT OPENING FORM OR ANY WHERE ELSE WAS MADE BY ME . SO, ACCORDING TO AO, THOUGH THE ASSESSEE INITIA LLY DECLARED THAT WHAT ALL HAPPENED (CASH DEPOSIT IN BA NK ACCOUNT) WAS WITHOUT HIS KNOWLEDGE AND BELIEF, HOWEVER, SINCE LATER THE ASSESSEE HIMSE LF AGREED BEFORE HIM THAT ALL TRANSACTIONS HAPPENED WITH HIS KNOWLEDGE AND ADMITTED BEFORE HIM THE SIGNATURE AS HIS OWN, MADE THE AO BELIEVE THAT THE ASSESSEE HAS MADE INVESTMENT OF RS.3,86,49,700/- OUT OF HIS UNDISCLOSED SOURCE AND CONSEQUENTLY HE INVOKED THE PROVISION OF SEC. 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDIT AND ADDED THE SAME TO THE I NCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. AGGRIEV ED, ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT BASED ON AIR AND CIB INFORMATIO N, THE ASSESSEES RETURN WAS SELECTED FOR SCRUTINY AND THE AO AFTER TAKING NOTE THAT RS.3 ,86,49,700/- HAS BEEN DEPOSITED IN HIS ACCOUNTS, THE AO ISSUED NOTICE TO 11 PERSONS. HOWE VER, WE NOTE THAT THE ASSESSEE FOR THE QUESTIONS ASKED BY THE AO WHICH HAS BEEN RECORDED B Y HIM ON OATH U/S. 131 OF THE ACT, HAS CATEGORICALLY STATED THAT HE WAS AN EMPLOYEE OF A P ROPRIETORSHIP CONCERN OF MR. MANISH AGARWAL AND WAS DRAWING A MEAGRE SALARY OF RS.5000/ - PER MONTH AND ON HIS (MANISH AGARWAL) INSTRUCTION HAS OPENED A BANK ACCOUNTS IN THE NAME OF M/S. HEMRAJ DISTRIBUTORS AND ANOTHER IN THE NAME OF M/S. R. P. TRADERS AND H AS DEPOSITED CASH AND WITHDRAWN/ TRANSFERRED THE SAME SIMULTANEOUSLY. SO WHEN THE AM OUNT WAS DEPOSITED IN THE BANK IT WAS 3 ITA NO. 1775/KOL/2016 JASWANT SINGH, AY 2010-11 IMMEDIATELY THEREAFTER TRANSFERRED TO OTHER ACCOUNT S. TO CORROBORATE HIS (ASSESSEES) CONTENTION, THE STATEMENT OF A COLLEAGUES I.E. SHR I RAKESH KUMAR GUPTA WHO WAS WORKING ALONG WITH HIM HAS BEEN ALSO RECORDED BY THE AO U/S . 131 OF THE ACT WHICH WE HAVE PERUSED. THOUGH IN THE AOS ORDER, THE AO STATES T HAT HE HAD ISSUED NOTICES TO 11 PERSONS, BUT WE NOTE THE STATEMENTS OF SHRI MANISH AGARWAL A ND SHRI VIKASH AGARWAL WHO WERE THE EMPLOYER OF THE ASSESSEE AND WHO MADE HIM UNDERGO T HE MODUS OPERANDI I.E. (OPENING OF BANK ACCOUNTS, DEPOSIT OF CASH AND SIMULTANEOUS WIT HDRAWAL/TRANSFER OF THE AMOUNT) HAS NOT TAKEN PLACE. AS PER THE AOS ORDER WE NOTE THAT ON LY THE NAME OF ASSESSEES COLLEAGUE AND A PERSON ACQUAINTED BY THE ASSESSEE WHEN HE WENT TO T HE BANK HAS BEEN RECORDED (I.E. MUKUND KUMAR JHA AND AJAY KR. GOYAL AND ICICI BANK OFFICER S STATEMENT HAS BEEN ONLY RECORDED). NO SERIOUS EFFORTS TO TRACE SHRI MANISH AGARWAL AND SHRI VIKASH AGARWAL WHO THE ASSESSEE AND HIS COLLEAGUE ALLEGES TO BE THE MASTER MIND IN THE WHOLE OPERATIONS OF OPENING BANK ACCOUNT, DEPOSIT AND WITHDRAWAL/TRANSFER OF CASH/AM OUNT IS NOT FOUND TO HAVE TAKEN PLACE. THE AO HAS BUILT THE ALLEGATION AGAINST THE ASSESSE E ON THE STRENGTH OF SOME SELECTED PORTION OF THE STATEMENT OF ASSESSEE RECORDED U/S. 131 OF T HE ACT AND IS SILENT ON THE FACTS LIKE ASSESSEE WAS AN EMPLOYEE AND ONLY RECEIVED RS.5000/ - PER MONTH AND ON THE BEHEST OF SHRI MANISH AGARWAL HE OPENED BANK ACCOUNT AND THE CASH WAS COLLECTED FROM VARIOUS PERSONS ON INSTRUCTION OF THE SAID EMPLOYER AND AS PER THEI R INSTRUCTION ONLY THEY DEPOSITED AND WITHDRAWN/TRANSFERRED THE AMOUNT HAS NOT BEEN MENTI ONED ANYWHERE IN THE AOS ORDER, WHICH ACTION/OMISSION DOES NOT BEHOVES WELL WITH A QUASI JUDICIAL AUTHORITY LIKE THE AO WHILE DISCHARGING HIS DUTY AS AN ASSESSMENT OFFICER TO ASSESS THE TRUE INCOME OF THE ASSESSEE. THE AO OUGHT TO BE FAIR AND JUST IN HIS APPROACH AN D CONDUCT. IN THIS CASE THE AO THOUGH HAS RECORDED THE STATEMENT OF ASSESSEE AND HIS COLL EAGUE AND EVEN THOUGH WAS AWARE OF THE FACT THAT ASSESSEE WAS AN EMPLOYEE WHO DRAWS ONLY R S.5000/- HAS SADDLED THE ENTIRE CASH DEPOSIT IN HIS BANK ACCOUNT AS HIS INCOME WHICH ACT ION OF AO CANNOT BE COUNTENANCED IN THE LIGHT OF THE FACTS DISCUSSED ABOVE. THE AO HA S NOT ENQUIRED INTO THE VERACITY OF THE STATEMENT OF ASSESSEE. THE AO HAD THE MACHINERY AT HIS DISPOSAL TO EXPOSE THE FALSITY IF ANY IN THE STATEMENT OF ASSESSEE. SIMPLY PICKING OUT C ERTAIN CONTRADICTIONS IN THE STATEMENT OF ASSESSEE THE AO CANNOT MAKE A FINDING OF FACT THAT THE CASH DEPOSITED IN THE BANK ACCOUNT IS 4 ITA NO. 1775/KOL/2016 JASWANT SINGH, AY 2010-11 ASSESSEES UNDISCLOSED INCOME. AND THAT TOO WE NOT E FROM THE PERUSAL OF THE STATEMENT OF ASSESSEE, THE CONTRADICTION WAS ONLY IN RESPECT TO FACT OF HIS OPENING OF BANK ACCOUNT AND NOTHING MORE THAN THAT. EVEN IF FOR ARGUMENT SAKE, WE AGREE WITH THE AO THAT THE BANK ACCOUNT WAS OPENED BY THE ASSESSEE, THE FACT OF HIM EMPLOYED FOR RS. 5000/- PER MONTH WITH SHRI MANISH AGARWAL, WHICH FACT HAS BEEN CORRO BORATED BY ANOTHER EMPLOYEE (RAKESH KUMAR GUPTA) AND WHICH FACT HAS NOT BEEN FOUND TO BE FALSE BY THE AO AFTER ENQUIRY GOES AGAINST THE COMMON SENSE , LOGIC AND HUMAN PROBABIL ITY THAT A PERSON WHO IS EMPLOYED FOR A MEAGRE SALARY OF RS.5000/- PER MONTH HAS AN UNDIS CLOSED INCOME OF MORE THAN RS. 3 CRORE. THE AO FAILED TO ENQUIRE INTO THE MODUS OPERANDI AS STATED BY THE ASSESSEE AND HIS COLLEAGUE BEFORE HIM U/S. 131 OF THE ACT. THE LD. AR BROUGHT TO OUR NOTICE THE RTI REPLY OF THE DEPARTMENT, WHEREIN THE ASSESSEE HAS SOUGHT CER TAIN DOCUMENTS IN RESPECT TO THIS CASE. FROM THE DOCUMENTS THUS RECEIVED, WE NOTE FROM A PE RUSAL OF THE BANK ACCOUNT DETAILS THAT CASH DEPOSITED IN THE ACCOUNT WAS DULY WITHDRAWN/TR ANSFERRED TO WHICH SUGGEST THAT THE ASSESSEES ACCOUNT WAS USED ONLY TO DEPOSIT AND TRA NSFER MONEY TO SOME OTHER ACCOUNTS WHO MAY BE THE BENEFICIARY OR IT MAY GO IN CIRCULATION AND ULTIMATELY IT WILL GO INTO THE HANDS OF ULTIMATE BENEFICIARY WHO SHOULD BE TAXED AND NOT TH E ASSESSEE, WHOSE ACCOUNT WAS USED AS PASS ON PLATFORM TO FACILITATE DEPOSIT AND TRANSFER OF MONEY. IN ANY CASE, IF THE AO HAS REASON TO BELIEVE THAT CASH DEPOSITED IN HIS ACCOUN T IS HIS UNDISCLOSED INCOME THEN HE OUGHT TO HAVE MADE SOME FIELD ENQUIRY TO AT LEAST EXPOSE ANY FALSITY IN HIS STATEMENT THAT HE WAS ONLY EMPLOYED FOR RS. 5000/- FOR THAT PURPOSE IF TH E AO GETS INFORMATION THAT ASSESSEES LIFE STYLE IS NOT IN CONFORMITY WITH THAT OF A PERSON WH O IS HAVING AN INCOME OF RS.5000/- PER MONTH AND THAT HE OWNS IMMOVABLE PROPERTY ETC, WHIC H ACTION AO DID NOT CARRY OUT. NO EFFORT TO TRACE OUT THE REAL BENEFICIARY HAS BEEN U NDERTAKEN BY THE AO/LD.CIT(A). ACCORDING TO THE LD. CIT(A), THE ASSESSEE HIMSELF A PPEARED BEFORE HIM AND WAS CONVERSANT WITH THE NUANCES OF LAW WHICH, ACCORDING TO LD. CIT (A), CANNOT BE THAT OF A PERSON WITH A MEAGRE SALARY. WE CANNOT ACCEPT SUCH ASSUMPTION OF FACTS. KNOWLEDGE OF LAW OR IGNORANCE OF LAW OF AN ASSESSEE CANNOT BE THE YARDSTICK TO AS SUME THAT A PERSON IS WEALTHY OR NOT AND THE LD. CIT(A) WHEN MAKING A FINDING OF FACT HAS TO DO IT BASED ON MATERIAL/EVIDENCES. RATHER, WE NOTE THE WHOLE ADDITION IS SADDLED UPON THE ASSESSEE ON SURMISES AND 5 ITA NO. 1775/KOL/2016 JASWANT SINGH, AY 2010-11 CONJECTURES. IT IS NOT THE CASE OF THE AO/LD. CIT( A) THAT THE AVERMENTS MADE BY THE ASSESSEE HAS BEEN FOUND TO BE FALSE AND CONCOCTED. WE NOTE FROM THE DETAILS OF THE BANK ACCOUNT OF THE ASSESSEE SHOWS THAT CASH WAS DEPOSIT ED AND WITHIN FEW DAYS HAS BEEN TRANSFERRED TO THE ACCOUNT OF PRITAM TRANSPORT, PRI ME CONSULTANCY, RAJ PHOTO SHOP, S. R. INDUSTRIES ETC. AND THE ASSESSEES BANK ACCOUNT BAL ANCE WAS A MEAGRE AMOUNT OF RS. 781/- AS ON 30.03.2010. OTHER THAN THE AIR REPORT IN RESPEC T OF THE BANK ACCOUNT OF THE ASSESSEE WHICH SHOWS DEPOSIT OF RS. 3,86,49,700/-, THERE IS NO MATERIAL TO SUGGEST/SUPPORT THE AOS ALLEGATION OF RS.47,89,000/- AS INVESTMENT IN M/S. HEMRAJ DISTRIBUTORS AND AO HAS NOT MADE ANY ADDITION ON THAT ACCOUNT. THE BANK DETAIL S OF THE ASSESSEE AS PROVIDED BY THE DEPARTMENT TO RTI QUERY, SHOWS THAT CASH DEPOSITED WAS TRANSFERRED WITHIN FEW DAYS AND THE ASSESSEES BALANCE WAS NIL AS ON 18.05.2010 OR ME AGRE AMOUNT OF RS. 781/- AS ON 30.03.2010. THE STATUS OF THE ASSESSEE AS AN EMPLO YEE OF SHRI MANISH AGARWL HAS BEEN CORROBORATED BY HIS COLLEAGUE SHRI RAKESH KUMAR GUP TA AND THAT THE ASSESSEE WAS AN EMPLOYEE DRAWING A SALARY OF RS. 5000/- PER MONTH A ND, THEREFORE, HAS ACTED AS PER THE INSTRUCTION OF HIS EMPLOYER AND SINCE WE NOTE THAT THERE IS NO BALANCE IN HIS BANK ACCOUNTS WORTH MENTIONING ONLY POINTS TO ONE DIRECTION THAT IS THE CASH DEPOSITED IN HIS ACCOUNT CANNOT BE THE INCOME OF THE ASSESSEE FROM HIS UNDIS CLOSED SOURCE. THE ASSESSEE HAS BEEN MIS-UTILIZED BY HIS EMPLOYER TO ROUTE THE CASH THRO UGH HIS BANK ACCOUNT. IN SUCH A SCENARIO, RATHER THAN FINDING OUT THE REAL BENEFICIARY IN THE WHOLE MODUS OPERANDI, THE AO FAILED TO COLLECT ANY MATERIAL OR AT LEAST COULD NOT EXPOSE A NY FALSITY IN THE AVERMENTS SUBMITTED BY THE ASSESSEE U/S. 131 OF THE ACT. IN SUCH CIRCUMST ANCES MAKING HUGE ADDITION IN ASSESSEES HAND OF THE ENTIRE DEPOSIT OF CASH IN HIS BANK ACCO UNT WHICH ADMITTEDLY HAS GOT OUT OF HIS BANK ACCOUNT TO SOME OTHER BENEFICIARY OR LAYERS TH ROUGH WHICH THE REAL BENEFICIARY GETS THE ULTIMATE BENEFIT CANNOT BE COUNTENANCED AND NOT ONL Y THAT THE DEPARTMENT WILL NOT BE ABLE TO RECOVER THE TAX ALSO FROM PERSON OF NO MEANS. ONLY IF THE REAL BENEFICIARY IS TRACED OUT THE DEPARTMENT WILL BE ABLE TO RECOVER THE TAX DUE TO THE STATE. SO BY MAKING ADDITIONS IN WRONG HANDS FROM WHOM TAX CANNOT BE RECOVERED, HELP ONLY THE ULTIMATE BENEFICIARY AND NOT EVEN THE DEPARTMENT. SO TAKING INTO CONSIDERATION T HE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, FOR THE INTEREST OF JUSTICE AND FAIR-PLAY, WE ARE INCLINED TO DELETE THE ADDITION AS ORDERED 6 ITA NO. 1775/KOL/2016 JASWANT SINGH, AY 2010-11 BY THE AO/LD. CIT(A). HOWEVER, THE ASSESSEES BANK ACCOUNT SINCE USED FOR DEPOSIT AND TRANSFER OF CASH IS AN ACTIVITY FOR WHICH A COMMISS ION OF 0.1% NEEDS TO BE COMPUTED AS THE INCOME OF THE ASSESSEE AND THE INCOME ON WHICH THE ASSESSEE HAS TO BE ASSESSED TO TAX. WITH THE AFORESAID DIRECTION, WE PARTIALLY ALLOW TH E APPEAL OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14TH SEP TEMBER, 2018. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14TH SEPTEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI JASWANT SINGH, 21, N. S. ROAD, LILUAH, HOWRAH-711204. 2 RESPONDENT ITO, WARD-48(3), KOLKATA 3. 4. 5. CIT(A)-14, KOLKATA. ITO, WD-48(3), KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY