ITO 25(3)(2), MUMBAI V. JAYESH V. DAMANIA, MUMBAI

ITA 1947/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8611 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 25-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Unexplained investment; Revised return; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NOS. 1947 & 1948/MUM/2010 (ASSESSMENT YEARS: 2003-04 & 2004-05) INCOME TAX OFFICER - 25(3)(2) SHRI JAYESH V. DAMANI A C-11, PRATYAKSHA KAR BHAVAN A/606, CRYSTAL AVENUE BANDRA-KURLA COMPLEX VS. THAKUR VILLAGE, KANDIVALI (E) BANDRA (E), MUMBAI 400051 MUMBAI 400101 PAN - AAGPD 8969 H APPELLANT RESPONDENT APPELLANT BY: SHRI S.K. SINGH RESPONDENT BY: SHRI VIJAY KOTHARI O R D E R PER T.R. SOOD, A.M. THESE APPEALS ARE BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) XXXV, MUMBAI DATED 16.12.2009 FOR ASSESSMENT YEARS 2003-0 4 & 2004-05. 2. THROUGH BOTH THESE APPEALS THE REVENUE HAS CHALLENG ED THE ORDER OF THE CIT(A) FOR DELETING THE ADDITION AMOUNTING TO ` 52,62,108/- AND ` 46,62,419/- FOR THE RESPECTIVE ASSESSMENT YEARS, WH ICH WAS MADE BY THE A.O. ON ACCOUNT OF DEPOSITS MADE IN THE ORIENTAL BA NK OF COMMERCE. 3. IN FACT THE ASSESSMENTS FOR PREVIOUS YEARS WERE REO PENED BECAUSE DURING A.Y. 2005-06 IT WAS NOTICED THAT ASSESSEE HA D MADE HUGE DEPOSITS IN ITS ACCOUNT WITH THE ORIENTAL BANK OF COMMERCE. DUR ING THE REASSESSMENT PROCEEDINGS IT WAS MAINLY SUBMITTED THAT THE ASSESS EE WAS FILING HIS RETURNS FOR THE LAST 18 YEARS. HIS FATHER, WHO EXPIRED IN 2 005, WAS WORKING AS A TAILOR AND HAD HANDED OVER HIS LIFE TIME SAVINGS TO HIM IN CASH WHICH ALONGWITH ASSESSEES OWN SAVINGS WERE DEPOSITED IN THE ORIENTAL BANK OF COMMERCE. IT WAS POINTED OUT THAT IN VARIOUS YEARS CASH HAS BEEN DEPOSITED AS WELL AS WITHDRAWN AND IT WAS BASICALLY ROTATION OF THE SAME CASH AND THERE IS NO UNACCOUNTED DEPOSITS. HOWEVER, THE A.O. WAS OF THE VIEW THAT A PERSON WHO WAS DEALING WITH SUCH HUGE CASH WAS REQU IRED TO MAINTAIN SOME ITA NOS. 1947&1948/MUM/2010 SHRI JAYESH V. DAMANIA 2 KIND OF ACCOUNT OR AT LEAST KUCHHA CHITTA OR REGIST ER AND NO SUCH RECORD HAS BEEN MAINTAINED. NO EVIDENCE HAS BEEN GIVEN FOR THE FACT THAT SOME OF THE CASH WAS GIVEN BY ASSESSEES FATHER. NO INDIVIDUAL EXPLANATION FOR THE DEPOSITS HAS BEEN MADE AND AFTER RELYING ON THE FOL LOWING DECISIONS THE A.O. MADE AN ADDITION AMOUNTING TO ` 52,62,108/- IN A.Y. 2003-04: - I. LAKHMICHAND BAIJNATH VS. CIT (1959) 35 ITR 416 (SC) II. ROSHAN DI HATTI VS. CIT (1977) 107 ITR 938 (SC) III. CIT VS. DEVI PRASAD VISHWANATH PRASAD (1969) 72 ITR 194 (SC) IV. CIT VS. R.S. RATHORE (1995) 212 ITR 390 (RAJ) 4. ON APPEAL IT WAS MAINLY SUBMITTED THAT THE ASSESSEE HAS RECEIVED A SUM OF ` 5 LAKHS FROM HIS FATHER AT THE TIME OF HIS DEATH. T HIS MONEY ALONGWITH ASSESSEES OWN MONEY WAS DEPOSITED IN THE BANK. ASSESSEE HAS ALSO FILED REVISED RETURNS EXPLAINING EACH AND EVER Y ENTRY IN SUCH REVISED RETURNS. IT WAS FURTHER POINTED OUT THAT SOME OF TH E MONEY WAS RECEIVED BY WAY OF REDEMPTION OF CERTAIN MUTUAL FUNDS AND SALE PROCEEDS OF CERTAIN SHARES, WHICH WERE MADE OUT OF THE SAVINGS OR WITHD RAWALS FROM THE ACCOUNTS AND OF DIVIDENDS, INTEREST, CAPITAL GAINS, ETC. HAVE ALSO BEEN ACCOUNTED FOR IN THE REVISED RETURN. THE LEARNED CI T(A) FOUND FORCE IN THE SUBMISSIONS AND HE OBSERVED THAT IN A.Y. 2002-03 TH E A.O. HAS HIMSELF ACCEPTED THE REVISED RETURN WHEREIN THE DEPOSITS OF ` 5 LAKHS WAS MADE AND NO ADDITION HAS BEEN MADE. THEN HE EXTRACTED THE CO PIES OF THE BANK ACCOUNT AND OBSERVED THAT BASICALLY IT IS ROTATION OF THE SAME MONEY AND THEREFORE DOES NOT CALL FOR ANY ADDITION. THE LEARN ED CIT(A) HAS FURTHER OBSERVED AS UNDER: - FROM THE SUMMARY OF TRANSACTIONS GIVEN IN THE ANNE XURE, IT MAY BE SEEN THAT THE APPELLANT HAD MANY TRANSACTIONS EVEN IN A.Y. 2002-03 ITSELF REGARDING LOANS, MATURITY OF TERM DEPOSITS A ND RECEIPT FROM SHARE BROKER. THE APPELLANT ALSO FILED CORRESPONDIN G DETAILS REGARDING CONFIRMATION FOR LOANS, THE PAYMENT/RECEIPT FROM SH ARE BROKERS AND EXPLAINED THAT INCOME FROM SHARE TRANSACTIONS WAS A LREADY CONSIDERED AS INCOME IN THE HANDS OF THE APPELLANT IN THE REVISED RETURN. THE A.O. AFTER EXAMINING THE ABOVE HAS ACCE PTED THE REVISED RETURN FILED FOR A.Y. 2002-03. IT IS FURTHER SEEN T HAT ONLY THE SAME MONEY IS ROTATED AGAIN AND AGAIN IN THE SUBSEQUENT YEARS AND WHEN NO ADDITION WAS MADE IN A.Y. 2002-03, ADDITION CANT O BE MADE IN THE SUBSEQUENT YEARS AS THE RECEIPT FROM SHARE BROKERS AND MATURITY OF TERM DEPOSITS IS ONLY ROTATED IN THE SUBSEQUENT YEA RS. IT IS TRUE THAT ITA NOS. 1947&1948/MUM/2010 SHRI JAYESH V. DAMANIA 3 THERE IS NO RECEIPT OF MATURITY PROCEEDS OF BIRLA I NVESTMENT AND INVESTMENT IN BIRLA MUTUAL FUND IN A.Y. 2002-2003 B UT THE APPELLANT FILED THE STATEMENT OF BIRLA MUTUAL FUND EVIDENCING THE RECEIPT OF MATURITY PROCEEDS AND INVESTMENT IN BIRLA MUTUAL FU ND FOR BOTH THE YEARS AS PER LETTER DATED 28.11.2008 IN ITEM NO. 2 AS PER ANNEXURE 14 AND THE A.O. HAS NOT DISPUTED THE SAME IN THE AS SESSMENT ORDER. FURTHER IT IS SEEN FROM THE PERUSAL OF CASH SUMMARY FILED FOR A. YRS. 2002-03, 2003-04 & 2004-05 THAT IT WAS STATED WITH THE OPENING CASH BALANCE OF RS.5,86,619/- AND MINIMUM CASH BALA NCE IN A.Y. 2003-04 WAS RS.1,47,419/- AND IF THE A.O. HAD NOT A CCEPTED THE CLAIM OF RECEIPT OF ` 5 LAKHS FROM THE APPELLANTS FATHER, HE WOULD HAVE MADE ADDITION TO THE EXTENT OF SHORTAGE OF RS.82,58 1/- (RS.5,00,000 - RS.4,17,419/-) BUT THE SAME WAS NOT MADE. IT IS TRU E THAT THE MINIMUM CASH BALANCE REACHED RS.1,06,240/- ON 28.10 ,2002 AND RS. NIL FOR A.Y. 2004-2005 ON 01.06.2004. IN CASE T HE A.O. HAS NOT ACCEPTED THE CLAIM OF RS.5,00,000/- RECEIVED FROM H IS FATHER, A SUM OF RS.3,11,179 (RS.4,17,419 RS.1,06,240) FOR A.Y. 20 03-2004 AND RS.1,06,240/- FOR A.Y. 2004-05 COULD HAVE BEEN ADDE D AS UNEXPLAINED INVESTMENT OF CASH DEPOSITS IN THE BANK ACCOUNT. BUT WHEN NO ADDITION IS MADE IN A.Y. 2002-03 BY ACCEPTI NG THE CLAIM OF RECEIPT OF RS.5 LACS FROM THE APPELLANTS FATHER, N O ADDITION COULD BE MADE IN THE SUBSEQUENT YEARS AS THE APPELLANT IS AB LE TO EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNT WITH THE HELP OF RS.5,00,000/- RECEIVED FROM HIS FATHER. IN THE CIRCUMSTANCES, I F IND THAT THE ADDITION MADE BY THE A.O. BY TREATING THE ENTIRE DEPOSITS IN THE BANK ACCOUNT AS INCOME OF THE APPELLANT IS TOTALLY INCORRECT AND THE SAME IS DELETED. 2.4. HOWEVER IT IS SEEN THAT THE APPELLANT HAS FILE D REVISED RETURNS IN WHICH THE INCOME ADMITTED WAS LESS THAN THE INCO ME ADMITTED IN THE ORIGINAL RETURNS ON ACCOUNT OF THE FACT THAT TH E APPELLANT SUSTAINED LOSS IN SHARE TRANSACTIONS WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURNS. BUT THE REASSESSMENT PROCEEDINGS ARE ONLY FOR THE BENEFIT OF REVENUE WHICH CANNOT BE USED BY THE ASSE SSEE TO REDUCE THE INCOME ALREADY RETURNED. I, THEREFORE, DIRECT T HE A.O. TO ACCEPT THE INCOME ADMITTED IN THE ORIGINAL RETURNS. 5. BEFORE US THE LEARNED D.R. SUBMITTED THAT THE ASSES SEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT AND NOTHING WAS PRO DUCED BEFORE THE A.O. REGARDING THE SOURCE THE CASH DEPOSITS. ONCE THE CA SH WAS DEPOSITED THE BURDEN WAS ON THE ASSESSEE TO DISCLOSE THE SOURCE, WHICH HAS NOT BEEN DISCHARGED. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE FURTHER SUBMI TTED THAT AFTER THE ASSESSMENT WAS REOPENED THE ASSESSEE HIMSELF FILED THE REVISED RETURNS AND WHATEVER ENTRIES WERE THERE WERE DECLARED IN THE RE VISED RETURN IN THE FORM ITA NOS. 1947&1948/MUM/2010 SHRI JAYESH V. DAMANIA 4 OF DIVIDEND, CAPITAL GAINS, ETC. HE SUBMITTED THAT THE A.O. HAS HIMSELF ACCEPTED THE RETURN FOR A.Y. 2002-03 IN WHICH INITI AL DEPOSIT WAS MADE AND PERUSAL OF THE SUMMARY OF BANK ACCOUNT WOULD CLEARL Y SHOW THAT LATER ON IT IS ONLY ROTATION OF MONEY AND THEREFORE THE MONEY W HICH WAS DRAWN AT THE EARLIER POINT OF TIME HAS BEEN DEPOSITED AT A LATTE R POINT OF TIME AND NO SEPARATE SOURCE IS REQUIRED TO BE PROVED. HE ALSO S UBMITTED THAT ASSESSEE IS BASICALLY A PART-TIME ACCOUNTANT AND IS NOT RUNNING ANY BUSINESS AND ACCORDINGLY WAS NOT REQUIRED TO MAINTAIN ANY BOOKS OF ACCOUNT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY AND FIND FORCE IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSE SSEE. ASSESSEE IS STATED TO BE ONLY A PART-TIME ACCOUNTANT AND IS NOT REQUIR ED TO MAINTAIN ANY BOOKS OF ACCOUNT. EVEN AS PER SECTION 44AA ONLY PROFESSIO NALS LIKE ADVOCATES, ENGINEERS, ARCHITECTS, CHARTERED ACCOUNTANTS, INTER IOR DECORATORS OR ANY OTHER PROFESSIONALS NOTIFIED BY THE BOARD WERE REQU IRED TO MAINTAIN BOOKS. IN ANY CASE THE A.O. HAS HIMSELF ACCEPTED THE REVIS ED RETURN FOR A.Y. 2002- 03 WHEREIN INITIAL DEPOSIT OF ABOUT ` 5 LAKHS WAS MADE IN THE ORIENTAL BANK OF COMMERCE ACCOUNT. A PERUSAL OF CIT(A)S ORDER, W HEREIN HE HAS EXTRACTED THE SUMMARY OF ACCOUNTS CLEARLY SHOWS THAT LATER ON MONEY HAS BEEN FIRST DRAWN AND THEN REDEPOSITED IN THE BANK AND THEREFOR E IT IS A MERE CASE OF ROTATION OF SAME MONEY. IN FACT BEFORE THE A.O., VI DE LETTER DATED 01.12.2008, IT WAS CLEARLY STATED AS UNDER: - 3. AS PER THE CASH ACCOUNT ENCLOSED YOU WILL OBSER VE THAT DURING A.Y. 2002-03 THE AMOUNT OF CASH DEPOSITED IN THE BA NK ACCOUNT WAS RS.11,43,679/- AND THE AMOUNT OF CASH WITHDRAWN WAS RS.12,71,800/-. SIMILARLY FOR A.Y. 2003-04 THE AMOU NT OF CASH DEPOSITED IN THE BANK ACCOUNT WAS RS.10,55,800/- AN D THE AMOUNT OF CASH WITHDRAWN WAS RS.5,97,060 AND FOR A.Y. 2004 -05 THE AMOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT WAS RS .8,33,350/- AND THE AMOUNT OF CASH WITHDRAWN WAS RS.9,67,685/-. FROM THIS YOU WILL OBSERVE THAT OUT OF THE 3 YEARS, I HAD WIT HDRAWN MORE CASH FROM THE BANK THAN WAS DEPOSITED. FOR A.Y. 2002-03 THE EXCESS WITHDRAWN WAS RS.1,38,121 AND FOR A.Y. 2004-05 THE EXCESS WITHDRAWN WAS RS.1,34,335/-. FOR A.Y. 2003-04 AFTER CONSIDERING THE EXCESS CASH WITHDRAWN DURING A.Y. 2002-03, THE EXCESS DEPOSITED WAS ONLY RS.3,30,619/-. THIS CASH WAS FOR M MY ACCUMULATED SAVINGS AND THE AMOUNT RECEIVED FROM MY FATHER AS STATED ABOVE. ITA NOS. 1947&1948/MUM/2010 SHRI JAYESH V. DAMANIA 5 8. FROM THE ABOVE IT IS CLEAR THAT IN THE RESPECTIVE Y EARS CASH DEPOSITS AND WITHDRAWALS WERE ALMOST SAME. FURTHER, OTHER EN TRIES IN OTHER BANK ACCOUNTS IN RESPECT OF SHARE DEALING ETC. HAVE ALSO BEEN ACCEPTED BY THE A.O. HIMSELF. IN THIS BACKGROUND WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HAS CORRECTLY DELETED THE ADDITION AND THEREFORE WE CON FIRM HIS ORDERS. 9. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH FEBRUARY 2011. SD/- SD/- (D.K. AGARWAL) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 4 TH FEBRUARY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXXV, MUMBAI 4. THE CIT XXV, MUMBAI CITY 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.