Shri Sanjay Kumar Bucha, Ahmedabad V. The Income tax Officer,Ward-1(2), Surat

ITA 1897/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85561 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: K H SHAH
• Keywords: Business income; Deemed to accrue or arise in india
• Section: 133(6); 69

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO. 1897/AHD/2011 / ASSESSMENT YEAR: 2008-09 SHRI SANJAY KUMAR BUCHA C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX C.G. ROAD, NAVRANGPURA, AHMEDABAD. PAN: ABQPB 9320 F VS ITO, WARD-1(2) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE(S) BY : SHRI K.H. SHAH REVENUE BY : SHRI ROOPCHAND , SR.DR / DATE OF HEARING : 28/01/2015 / DATE OF PRONOUNCEMENT: 06/02/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS)-I, AHMEDABAD DATED 8.6.2011. 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL IS AS U NDER: 1. IN NOT APPRECIATING THE FACT THAT THOUGHT HE OR DER WAS STATED TO BE PASSED ON 31.12.2010, BUT SERVED BY INORDINATE D ELAY ON 6.1.2011, AND AS SUCH, IT IS PRESUMED THAT THE ORDER IS NOT S ERVED WITHIN TIME LIMIT I.E. ON OR BEFORE 31.12.2010. SO THE WHOLE PROCEED INGS UNDER SEC.143(3) IS ITSELF BAD IN LAW, VIOD AB IGNITION, ILLEGAL AND LIABLE TO BE QUASHED. 3. AT THE TIME OF HEARING, NO ARGUMENTS WERE MADE B Y THE AR OF THE ASSESSEE, HENCE, THIS GROUND OF THE APPEAL OF THE A SSESSEE IS DISMISSED. ITA NO.1897/AHD/2011 2 4. IN THE GROUND NO.2 TO 8 OF THE APPEAL, THE GRIEV ANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.37.75 LAKHS MADE BY THE AO ON ACCOUNT OF DEPOSITS MADE IN UNDISCLOSED BANK ACCOUNT WITH PRIME CO- OP. BANK LTD. (PCBL) WITHOUT ALLOWING SET OFF OF LO SS OF RS.56,99,495/- MADE IN PURCHASE OF SALE OF SHARES AND FUTURE OPTION. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBSE RVED THAT IT WAS KNOWN THROUGH AIR INFORMATION THAT THE ASSESSEE HELD A BA NK ACCOUNT WITH PCBL, MAIN BRANCH, KHATODRA, SURAT BEARING BANK ACCOUNT N O.10011001005255, WHEREIN THE ASSESSEE HAD DEPOSITED CASH TOTALING TO RS.37.75 LAKHS DURING THE YEAR UNDER CONSIDERATION. IN THE RETURN OF INCOME FILED, THE DETAILS OF BANK ACCOUNT, NAME, ACCOUNT NUMBER WERE NOT REFLECTED. THEREFORE, A LETTER UNDER SECTION 133(6) OF THE ACT WAS ISSUED TO THE BANK ON 30.9.2010 ASKING TO FURNISH DETAILS INCLUDING THE BANK STATEMENT OF THE ACCOUNT HELD BY THE ASSESSEE. ON PERUSAL OF THE BANK STATEMENT, THE AO OBSERVED THAT THE ASSESSEE HAD DEPOSITED A SUM OF RS.37.75 LAKHS IN C ASH. IN REPLY TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE SOURC E OF FUNDS WAS FROM FRIENDS, RELATIVES AND MONEY LENDERS, BUT THE ASSES SEE COULD NOT FILE ANY CONFIRMATION OR DETAILS FOR THE SAME. THE ASSESSEE SUBMITTED THAT IN THE SAME BANK ACCOUNT, THERE WERE TRANSACTIONS OF BUSINESS C ARRIED ON BY THE ASSESSEE OF SHARES AND FUTURE OPTIONS WHEREIN THE ASSESSEE H AS INCURRED LOSS OF RS.56,99,495/-. 6. THE ASSESSEE REQUESTED FOR COMPUTING THE INCOME OF THE ASSESSEE FROM THE SAID UNDISCLOSED BANK ACCOUNT AFTER CONSIDERING THE SAID LOSS. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE AMOUNT DEPOSITED IN CASH IN THE SAID BANK ACCOUNT WAS NOTHING BUT U NDISCLOSED INCOME OF THE ASSESSEE EARNED DURING THE YEAR UNDER CONSIDERATION , AND WHICH IS NOT REFLECTED IN HIS AUDIT REPORT OR RETURN OF INCOME. HE ALSO HELD THAT MERELY CLAIMING THE LOSS AMOUNT AND THAT FOR THE ACTIVITY AND BANK ACCOUNT, WHICH IS OUT OF BOOKS, AND NOT REVEALING THE MONEY IN THE FO RM OF CASH DEPOSIT AMOUNTING TO RS.37.75 LAKHS IS NOT ACCEPTABLE IN AB SENCE OF ANY MATERIAL EVIDENCE PRODUCED BY THE ASSESSEE. ACCORDINGLY, HE ADDED RS.37.75 LAKHS AS DEEMED INCOME OF THE ASSESSEE UNDER SECTION 69A OF THE ACT. ITA NO.1897/AHD/2011 3 7. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION FOR T HE SAME REASONS. 8. BEFORE US, THE AR OF THE ASSESSEE SUBMITTED THAT OUT OF THE INCOME DETERMINED UNDER SECTION 69A OF THE ACT, THE LOSS S UFFERED BY THE ASSESSEE IN THE BUSINESS OF SHARES AND FUTURE OPTIONS SHOULD BE ALLOWED DEDUCTION TO THE ASSESSEE, AND FOR THIS, HE PLACED RELIANCE ON THE D ECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHILPA DY EING & PRINTING MILLS P. LTD., (2013) 39 TAXMANN.COM 3 (GUJ) WHEREIN IT WAS HELD T HAT THE ACT DOES NOT ENVISAGE TAXING OF ANY INCOME UNDER THE HEAD NOT SP ECIFIED IN SECTION 14 OF THE ACT. WHERE AN UNDISCLOSED INCOME WAS DETERMINE D UNDER SECTION 69 OF THE ACT, AND ALSO LOSS IS DETERMINED, THE SAME SHOU LD BE SET OFF AGAINST THE INCOME DETERMINED UNDER ANY OTHER HEAD OF INCOME, I N VIEW OF PROVISION OF SECTION 71 OF THE ACT. 9. ON THE OTHER HAND, THE DR RELIED ON THE ORDERS O F THE LOWER AUTHORITIES. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACT OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AO FOUND THAT THE ASSESSEE HAS MAINTAINED A BANK ACCOUNT WITH PCB L BEARING BANK ACCOUNT NO.10011001005255, WHICH WAS NOT DISCLOSED TO THE D EPARTMENT. BY ISSUING A LETTER UNDER SECTION 133(6) OF THE ACT, THE AO OB TAINED BANK STATEMENT FROM THE SAID BANK ACCOUNT, WHERE FROM, HE FOUND THAT TH E ASSESSEE HAD DEPOSITED RS.37.75 LAKHS IN CASH. WHEN REQUIRED TO EXPLAIN T HE SOURCE, THE ASSESSEE SUBMITTED THAT THE AMOUNTS WERE RECEIVED FROM FRIEN DS, RELATIVES AND MONEY LENDERS, BUT THE ASSESSEE COULD NOT SUBMIT CONFIRMA TION AND THEIR BANK DETAILS. THE ASSESSEE ALSO SUBMITTED THAT HE WAS CARRYING ON BUSINESS IN SHARES AND FUTURE OPTIONS THROUGH THE SAID UNDISCLOSED BANK AC COUNT, AND THESE TRANSACTIONS WERE ALSO NOT DISCLOSED IN ITS REGULAR LY MAINTAINED BOOKS OF ACCOUNTS AND THAT IT HAD INCURRED LOSS FROM THIS BU SINESS OF RS.56,99,495/- AND CLAIMED THAT FROM THE INCOME OF RS.37.75 LAKHS COMPUTED UNDER SECTION 69A, THE LOSS OF RS.56,99,495/- SHOULD BE DEDUCTED TO DETERMINE THE INCOME OF THE ASSESSEE. THE AO DID NOT ACCEPT THE SUBMISS IONS OF THE ASSESSEE, BECAUSE, THE ASSESSEE FAILED TO PRODUCE ANY MATERIA L OR EVIDENCE BEFORE HIM, ITA NO.1897/AHD/2011 4 AND ADDED RS.37.75 LAKHS AS DEEMED INCOME OF THE AS SESSEE UNDER SECTION 69A OF THE ACT. 11. ON APPEAL, THE CIT(A) CONFIRMED THE SAME. 12. BEFORE US, THE AR OF THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, AND THE DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 13. WE FIND THAT THE AR FAILED TO FURNISH ANY EVIDE NCE IN SUPPORT OF SOURCE OF DEPOSITS MADE IN THE SAID BANK ACCOUNT AS WELL A S FAILED TO FURNISH ANY EVIDENCE TO SHOW THAT THE ASSESSEE WAS ACTUALLY CAR RYING ON SOME BUSINESS IN SHARES AND FUTURE OPTIONS, IN WHICH, IT SUFFERED AN Y LOSS. THEREFORE, IN OUR VIEW, LOWER AUTHORITIES WERE JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. 14. FURTHER, WE FIND THAT THE COPY OF THE STATEMENT OF ACCOUNT OF BANK IN QUESTION WAS FILED BY THE ASSESSEE BEFORE US. A PER USAL OF THE SAME SHOWS THAT DEPOSIT OF RS.37.75 LAKHS WAS NOT MADE IN THE SAID BANK ACCOUNT AT A TIME, BUT, THE SAME AMOUNT REPRESENTS THE AGGREGATE AMOUNT OF DEPOSIT, WHICH WAS MADE IN THE SAID BANK ACCOUNT DURING PREV IOUS YEAR. A PERUSAL OF THE BANK ACCOUNT SHOWS THAT THERE WERE REGULAR WITH DRAWALS FROM THE SAID BANK ACCOUNT ITSELF. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW WHY THE WITHDRAWALS MADE FROM THE SAME BANK ACCOUNT COULD NOT HAVE BEEN AVAILABLE WITH ASSESSEE FOR MAKING SUBSEQ UENT DEPOSITS IN THE BANK ACCOUNT. IN ABOVE FACTS, IN OUR CONSIDERED VIEW, A DOPTION OF ENTIRE AGGREGATE DEPOSITS DURING THE YEAR OF RS.37.75 LAKHS AS INCOM E, BY IGNORING THE WITHDRAWALS, WAS NOT JUSTIFIED. WE FIND THAT THE P EAK DEPOSITS IN THE SAID BANK WAS RS.12,31,169.88 ON 17.1.2008. FURTHER, THE FRE QUENCY OF DEPOSIT AND WITHDRAWAL INDICATES THAT THE ASSESSEE WAS CARRYING ON CERTAIN UNDISCLOSED DEPOSITS. THEREFORE, IT WOULD BE REASONABLE TO EST IMATE THE SAID BUSINESS INCOME, AND ALSO TO TREAT THE SAME AS BUSINESS INCO ME OF THE ASSESSEE. WE, THEREFORE, ESTIMATE THE ASSESSEES PROFIT FROM SUCH BUSINESS AT THE RATE OF 5% OF RS.37.75 LAKHS, WHICH COMES TO RS.1,88,750/-. T HEREFORE, IN OUR CONSIDERED OPINION, IT WOULD BE JUST AND FAIR TO TR EAT RS.14,19,919.88 (RS.12,31,169.88 PLUS RS.1,88,750/-) AS INCOME OF T HE ASSESSEE IN RESPECT OF THE BANK ACCOUNT IN QUESTION. WE, THEREFORE, DELET E THE ADDITION TO THE EXTENT ITA NO.1897/AHD/2011 5 OF RS.23,55,080.12 (RS.37,75,000/- MINUS RS.14,19,9 19.88) AND CONFIRM THE ADDITION TO THE EXTENT OF RS.14,19,919.88, ACCORDIN GLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, 6 TH OF FEBRUARY, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 06/02/2015