MANOJ KUMAR M. PARAKH, NAVI MUMBAI V. ITO 22(3)(2), MUMBAI

ITA 1784/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3733 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Peak credit
• Section: 68; 154

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI . , ! '# $ $ $ $ %&. .$. ', ( '#, ) BEFORE SHRI B. RAMAKOTAIAH, AM AND DR. S.T.M. PAVAL AN, JM ITA NO. 1784/MUM/2012 : ASST.YEAR 2008-2009 SHRI MANOJ KUMAR M. PARAKH H-234/235 APMC MARKET SECTOR-19, VASHI NAVI MUMBAI- 400 705 PAN : ABXPP1649J ' ' ' ' / VS. I.T.O. 22(3)(2), MUMBAI. ( +, / // / APPELLANT) ( -.+, / RESPONDENT) +, / // / 0 0 0 0 /APPELLANT BY : MS. RITIKA AGARWAL -.+, / // / 0 0 0 0 /RESPONDENT BY : SHRI MOHIT JAIN ' / 1! : 08.04.2013 DATE OF HEARING : 08 .04.2013 23 / 1! 08.05.2013 DATE OF PRONOUNCEMENT : 08.05.2013 ' 4 ' 4 ' 4 ' 4 / O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE RS OF THE CIT(A)-33 MUMBAI DATED 22.02.2012. THE ASSESSEE HAS RAISED NU MBER OF GROUNDS ON TWO ISSUES AND IN THE COURSE OF APPELLATE PROCEEDIN GS FILED CONCISE GROUNDS OF APPEAL WHICH ARE AS UNDER:- 1. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN HOLDING THAT THE BANK ACCOUNT NO. 443 HELD BY THE APPELLANT IN WARAN A SAHAKARI BANK LTD. IS UNDISCLOSED. ITA NO. 1784 /MUM/2012. MANOJ KUMAR M. PARAKH 2 2. BECAUSE, THE CIT(A) HAS ERRED IN REJECTING THE A PPELLANTS CONTENTION THAT THE DEPOSITS IN THE A/C NO. 443 HAS BEEN MADE OUT O F WITHDRAWALS FROM THE SAME ACCOUNT AS WELL AS REALIZATION OF OLD DEBTS AND CAS H HELD IN HAND. 3. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADOPTING THE PEAK THEORY FOR THE PURPOSE OF MAKING AN ADDITION TO THE RETURNED INCOME OF THE APPELLANT AND ERRONEOUSLY WORKING OUT A PEAK OF RS. 16,56,000/- 4. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ENHANCING THE INCOME OF THE APPELLANT BY ADDING RS.1,21,21,600/- ON ACCOUNT OF SALE OF LAND AS INCOME FROM OTHER SOURCES EVEN THOUGH THE LAND IN Q UESTION HAD NEITHER BEEN PURCHASED NOR SOLD IN THE IMPUGNED ASSESSMENT YEAR. 5. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADDITION OF RS.1,21,21,600/- ON ACCOUNT OF SALE OF LAND IGNO RING THAT THE LAND HAD ACTUALLY BEEN SOLE ON 15/10/2011 PERTAINING TO AY 2012-13. 2. BRIEFLY STATED, ASSESSEE IS A COMMISSION AGENT OF ONION & POTATO DIVISION OF APMC MARKET AND ALSO INVOLVED IN REAL E STATE TRANSACTIONS. THE RETURN OF INCOME DECLARING PROFIT OF RS.2,05,00 0/- WAS FILED FOR THE AY 2008-09. THE ASSESSING OFFICER HAD COME TO KNOW ABOUT THE CASH DEPOSITS MADE IN THE BANK ACCOUNT NO. 443 HELD WITH WARNA SAHAKARI BANK LTD., VASHI. TREATING THE SAME AS UNDISCLOSED BANK ACCOUNT, THE ASSESSING OFFICER MADE AN ADDITION OF RS.57,69,000/ - AS AN UNEXPLAINED CASH CREDIT UNDER SECTION 68. IN APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) AFTER ISSUING ENHANCEMENT NOTICE AND MAKING INQUIRIES ABOUT VARIOUS TRANSACTIONS, REDUCED THE PEAK CREDIT TO AN AMOUNT OF RS.16,56,000/- AS ON 26.12.2007. THE LD. CIT(A) ALS O TREATED THE ADDITION MADE UNDER SECTION 68 AS ONE THAT OF SECTION 69. FU RTHER SINCE THE ASSESSEE HAS REAL ESTATE TRANSACTIONS, THE SAME WERE ALSO IN QUIRED AS PART OF DEPOSIT VERIFICATION. LD. CIT(A), HOLDING THAT ASSESSEE IS ONLY A BROKER IN PURCHASE OF AGRICULTURAL LAND AND CONSEQUENT SALE THEREOF, BROUGHT AN AMOUNT OF RS.121,21,600/- AS INCOME OF THE YEAR, TH EREBY ENHANCING THE ITA NO. 1784 /MUM/2012. MANOJ KUMAR M. PARAKH 3 INCOME. AGAINST THIS ORDER OF THE CIT(A), THE ASSE SSEE FILED APPEAL BEFORE US. 3. THE LD.COUNSEL REFERRED TO THE FACTS OF THE CASE , THE PAPER BOOK FILED IN THIS REGARD CONTAINING PAGES 103 THEREIN S UBMITTED THAT THE LD. CIT(A) NOT ONLY ERRED IN ENHANCING THE INCOME BUT A LSO WRONGLY DETERMINED THE PEAK CREDIT. REFERRING TO THE RECTIF ICATION PETITION FILED BEFORE THE CIT(A) DATED 16.03.2012, IT WAS SUBMITTE D THAT THE LD. CIT(A) GAVE DIFFERENT AMOUNTS IN THE VARIOUS NOTICES ISSUE D AND ULTIMATELY ARRIVED AT THE PEAK CREDIT OF RS.16,56,000/- AS ON 26.12.20 07 WHICH INCLUDED THE HIGHEST CREDIT IN WHICH AN AMOUNT OF RS.15,00,000/- WAS TRANSFERRED FROM ANOTHER SAVING BANKS ACCOUNT. IT WAS SUBMITTED THAT CALCULATION OF PEAK IS WHOLLY ERRONEOUS. HAVING ACCEPTED THE CREDITS OF MS SHWETA PATEL WHO IS A CO-OWNER, THE WORKING OF THE PEAK CREDIT ITSELF I S NOT CORRECT AND ASSESSEE WAS ABLE TO EXPLAIN ALL THE CREDITS IN THE BANK ACCOUNT AND REFERRED TO PAGE 82 IN THE PAPER BOOK (WHICH WAS EX HIBIT III) BEFORE THE CIT(A) ALONG WITH COPY OF THE BANK ACCOUNT PLACED I N PAGES 76 ONWARDS. FURTHER WITH REFERENCE TO THE ENHANCEMENT, IT WAS S UBMITTED THAT THE LD.CIT(A) WRONGLY UNDERSTOOD THE MARATHI LANGUAGE D OCUMENTS WHILE HOLDING THAT ASSESSEE IS NOT A OWNER OF THAT AGRICU LTURAL LAND. IT WAS SUBMITTED THAT ASSESSEE ALONG THE MS. SHWETA PATEL PURCHASED LAND INSURVEY NO. 59 ADMEASURING 86 GUNTAS FOR AN AMOUNT OF RS. 8,60,000/- FROM MR. BHIVA LAXMAN MAHESKAR AND OTHERS AND THIS PROPERTY WAS REGISTERED BY VIRTUE OF PURCHASE DEED EXECUTED ON 3 0.07.2008 IN THE NEXT ASSESSMENT YEAR. IT WAS FURTHER SUBMITTED THAT EVEN THOUGH THE ASSESSEES NAME WAS ENTERED IN THE 7/12 EXTRACT OF THE SAID SU RVEY NUMBER, THESE DOCUMENTS WERE IGNORED BY THE LD. CIT(A) WHILE HOLD ING THAT ASSESSEE ITA NO. 1784 /MUM/2012. MANOJ KUMAR M. PARAKH 4 WAS NOT OWNER OF THE LAND BUT A BROKER. IT WAS FURT HER SUBMITTED THAT THIS PROPERTY WAS ORIGINALLY ENTERED INTO AN AGREEMENT O F SALE WITH ONE MR. PRADEEP BHIKHAJI PORTE OF M/S ALEXANDRIA PROPERTY P VT. LTD. ON 08.02.2008 FOR RS.1.28 CRORE, OUT OF WHICH ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 56,00,000/- AS ADVANCE. HOWEVER, AS THE CHEQUE ISSUED LATER ON BY THE SAID PORTE WAS BOUNCED, THE TRANSAC TION DID NOT MATERIALIZE AND FURTHER THE SALE OF PROPERTY WAS SUBJECT TO VA RIOUS PERMISSIONS AND CLAUSES OF THE AGREEMENT. IT WAS FURTHER SUBMITTED THAT THIS PROPERTY WAS ULTIMATELY SOLD VIDE A SALE DEED DATED 15.10.2011 T O ONE M/S CHADDHA GROUP AND ASSESSEE WAS OFFERED THE INCOME OFFERING THE SAME IN AY 2010-11, THEREFORE CIT APPEALS WAS WRONG IN CONSIDE RING THE INCOME AS BROKERAGE INCOME WHILE ENHANCING THE SAME. 4. THE LD. DR, HOWEVER, RELIED ON THE ORDERS OF THE AUTHORITIES. 5. WE HAVE CONSIDERED THE ISSUE. WE ARE UNAB LE TO AGREE WITH THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE ORDE RS OF THE CIT(A). ASSESSEE HAS BEEN FILING RETURNS OF THE COMMISSION INCOME IN VARIOUS YEARS AND HAS BEEN ENCLOSING VARIOUS STATEMENTS OF ACCOUNTS TO THE RETURNS FILED IN EARLIER YEARS. JUST BECAUSE THE ASSESSEE H AS CLAIMED BENEFIT OF PROVISIONS OF SEC.44AD IN SOME YEARS AS NO ACCOUN TS CASE, IT DOES NOT MEAN THAT THE ASSESSEES TRANSACTIONS ARE OUTSIDE T HE PURVIEW OF STATEMENTS ALREADY FILED. SINCE THE ASSESSEES TRANSACTIONS IN THE SAME BANK WERE REFLECTED IN EARLIER YEARS, ASSESSING OFFICERS FIND ING THAT THE TRANSACTIONS IN WARNA SAHAKARI BANK LTD. IS UNACCOUNTED CANNOT BE ACCEPTED. HOWEVER, HE HAS POWER TO INQUIRE THE NATURE OF THE DEPOSITS IN THE BANK ACCOUNT. THE ASSESSEE WAS EXPLAINING THAT SOME OF THE CASH DEPOSITS WERE RECOVERIES OF OUTSTANDING AMOUNTS AND SOME TRA NSACTIONS WERE FROM ITA NO. 1784 /MUM/2012. MANOJ KUMAR M. PARAKH 5 THE CO-PURCHASER AS WELL AS ADVANCE FROM THE SALE A GREEMENT HOLDER. EVEN THOUGH THE SAID EXPLANATION WAS GIVEN BY THE ASSESS EE NEITHER THE ASSESSING OFFICER NOR THE CIT(A) APPLIED THEIR MIND IN EXAMINING TRUTHFULNESS OF THE TRANSACTIONS. AS SEEN FROM THE SHOW CAUSE NOTICES ISSUED BY THE CIT(A) EVEN THE PEAK CREDIT WORKING V ARIED FROM THE SHOW CAUSE NOTICE TO THE FINAL AMOUNT DETERMINED . HOW THIS AMOUNT HAS BEEN ARRIVED AT COULD NOT BE VERIFIED BY US. AS SEEN FR OM THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE ON THE ISSUE OF A RRIVING AT THE PEAK CREDIT, THERE SEEMS TO BE AN ERROR COMMITTED BY THE CIT(A) IN ARRIVING THAT FIGURE. 6. ANOTHER ISSUE WHICH THE LD. CIT(A) HAS CONSIDERED F OR ENHANCEMENT IS AN ISSUE OF PURCHASE AND SALE OF LAN D. AS PART OF EXPLANATION FOR VARIOUS DEPOSITS IN THE BANK ACCOUN T, ASSESSEE FURNISHED VARIOUS DOCUMENTS BEFORE THE CIT(A). THOSE DOCUMENT S ARE IN LOCAL LANGUAGE MARATHI. EVEN BEFORE US THOSE MARATHI DOCU MENTS WERE ONLY FILED, WITHOUT ANY ENGLISH TRANSLATION. BE THAT AS IT MAY, AS SEEN FROM THE DOCUMENTS AND THE SUBMISSIONS, THERE IS NO DOUBT A BOUT THE ERROR COMMITTED BY THE LD CIT(A) IN ENHANCING THE INCOME. FIRST OF ALL THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ON THE LAND TRANSACTIONS. SECOND, THE ASSESSEE DID ENTER INTO THE AGREEMENT F OR PURCHASE OF LAND ON 20.08.2007 FOR A VALUE OF RS. 8,60,000/- THERE SEEM S TO BE SOME TRANSACTIONS WITH ONE MS. SHWETA PATEL WHICH WERE N OT EXAMINED BY THE AO AT ALL. ON RECORD, THERE WAS EVIDENCE OF PURCHAS E OF THE SAID PROPERTY BY THE ASSESSEE ALONG WITH CO-OWNER ON 30.07.2008. THERE WAS AN AGREEMENT OF SALE DURING THE YEAR AND SOME AMOUNTS HAVE BEEN RECEIVED. SOME OF THEM WERE DEPOSITED IN MS. SHWETAS ACCOUNT AS EXPLAINED BY ITA NO. 1784 /MUM/2012. MANOJ KUMAR M. PARAKH 6 THE ASSESSEE. HOWEVER, THE SALE DID NOT MATERIALIZE AND IT WAS ULTIMATELY SOLD TO A THIRD PARTY IN A LATER ASSESSMENT YEAR. T HEREFORE THE LD. CIT(A) ACTION IN ENHANCING THE INCOME FOR THE YEAR AS CONS IDERATION FO BROKERAGE BUSINESS IS NOT BORNE OUT BY FACTS. THE SAME WAS RE ITERATED BY THE ASSESSEE IN HIS PETITION UNDER SECTION 154 BEFORE THE LD. CI T(A) WHICH IS SEEMS TO BE PENDING. 7. ON EXAMINING THE DOCUMENTS PLACED ON RECORD, WE WERE NOT IN AGREEMENT WITH THE ENHANCEMENT SO MADE BY THE LD. C IT(A) AS THE SALE DID NOT TAKES PLACE IN THIS YEAR AND THE ASSESSEE H AS NOT ACTED AS A BROKER, TWO OF THE FINDINGS GIVEN BY THE LD. CIT(A) THUS AR E ERRONEOUS. HOWEVER WE ALSO CANNOT IGNORE THE TRANSACTIONS WHICH HAPPEN ED DURING THE YEAR FOR PURCHASE OF PROPERTY AND VARIOUS RECEIPTS. THERE ARE SUBSTANTIAL CASH WITHDRAWALS/ TRANSFERS ALSO FROM THE ASSESSEE ACCOU NT AND MS SWETHA ACCOUNT, MORE THAN THE COST OF LAND STATED. SINCE THE ASSESSING OFFICER STARTED THE INQUIRY PROCESS ON THE BASIS OF CREDITS IN THE BANK ACCOUNT AND LD. CIT(A) ALSO PARTLY CONFIRMED THE SAME, EVEN THO UGH ARRIVED AT THE INCORRECT AMOUNT, IN THE INTEREST OF JUSTICE WE SE T-ASIDE THE ORDERS OF THE CIT(A) AND ALSO OF THE AO AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CREDITS AND DEBITS IN THE BANK ACCOUNT ALONG WITH THE NATURE OF AMOUNTS TRANSACTED IN THE SAID ACCOUNT. ASSESSING OFFICER IS FREE TO INQUIRE THE TRANSACTIONS WITH MS . SHWETA PATEL AND FLOW OF FUNDS AS EXPLAINED BY THE ASSESSEE BEFORE THE LD . CIT(A) AND TO ARRIVE AT ANY UNEXPLAINED CREDITS IN THE ACCOUNT. AO IS DI RECTED TO EXAMINE AFRESH ALL THE ISSUES WITHOUT PREJUDICE TO THE FIND INGS OF LD. CIT(A) WITH WHICH WE ARE NOT IN AGREEMENT. THEREFORE, WHILE DEL ETING THE ENHANCEMENT SO MADE BY THE CIT(A), WE RESTORE THE I SSUE OF EXAMINING ITA NO. 1784 /MUM/2012. MANOJ KUMAR M. PARAKH 7 THE CREDITS IN THE BANK ACCOUNT ALONG WITH THE TRAN SACTIONS OF LAND PURCHASE TO THE FILE OF THE AO TO DECIDE ACCORDINGL Y. WITH THESE DIRECTIONS, THE GROUNDS NO. 4 & 5 RAISED ARE CONSID ERED ALLOWED AND GROUNDS NO. 1 TO 3 ARE CONSIDERED ALLOWED FOR STATI STICAL PURPOSES. 8. IN THE RESULT, APPEAL ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 .05.2013. ' 4 / 23 ! 5 6''7 08.05.2013 / 8 SD/- SD/- ( DR. S.T.M. PAVALAN) ( B.RAMAKOTAIAH) ( '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI, 6'' DATED 08/05/2013 . (' . . / ASHISH PS ' 4 ' 4 ' 4 ' 4 / // / -(19: -(19: -(19: -(19: ; :31 ; :31 ; :31 ; :31 / COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. < ( ) / THE CIT(A)-33, MUMBAI 4. < / CIT 22, MUMBAI 5. :=8 -(1(' , , / DR, ITAT, MUMBAI B 6. 8% > / GUARD FILE. ' 4' ' 4' ' 4' ' 4' / BY ORDER, .:1 -(1 //TRUE COPY// ? ?? ? / @ @ @ @ A A A A (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI