Shri Tillumal J. Manghnani, Nashik V. ITO,Ward 1(3), Nashik, Nashik

ITA 196/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7604 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1993-1994
• Appeal Filed On: 09-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 196/PN/2009 (ASSESSMENT YEAR: 1993-94) SHRI TILLUMAL J. MANGHNANI, VIJAY MAHAL, GANDHARVA NAGARI, .. APPELLANT NASHIK ROAD, NASHIK PAN AAZPM5566E VS. INCOME-TAX OFFICER .. RESPOND ENT WARD-1(3), NASHIK APPELLANT BY: SHRI MUKND G KOKIL RESPONDENT B Y: MR. HEMANT KUMAR LEUVA ORDER PER G.S. PANNU, A.M .: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NASHIK DATE D 12.12.2008 WHICH, IN TURN, HAS ARISEN FROM ORDER DATED 26.12.2006 PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) READ WITH SECTION 254 OF THE I NCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 1993-94. 2. THE SOLITARY GROUND RAISED BY THE ASSESSEE IN TH E APPEAL RELATES TO THE ADDITION OF RS 1,70,783/- MADE ON ACCOUNT OF CASH F OUND DURING THE SEARCH. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN IN DIVIDUAL ENGAGED IN THE BUSINESS OF SWEET-MART THROUGH ITS PROPRIETORSHIP C ONCERN M/S VIJAY SWEETS. THE IMPUGNED ASSESSMENT HAS BEEN COMPLETED BY THE A SSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 254 OF THE A CT IN VIEW OF THE ORDER OF THE TRIBUNAL DATED 27.7.2005 DIRECTING THE ASSESSIN G OFFICER TO RE-EXAMINE THE ITA NO 196/PN/09 SHRI TILLUMAL J MANGHNANI, NASHIK 2 ISSUE RELATING TO THE ADDITION OF RS 1,70,783/-, BE ING THE CASH FOUND DURING THE SEARCH. THERE WAS A SEARCH ACTION UNDER SECTION 132 (1) OF THE ACT ON 28.07.1992 AT THE RESIDENTIAL AS WELL AS BUSINESS P REMISES OF THE ASSESSEE, AND HIS ASSOCIATES AND FAMILY MEMBERS. DURING THE C OURSE OF SEARCH, CASH AMOUNTING TO RS 1,70,783/- WAS FOUND AT THE RESIDEN CE OF THE ASSESSEE. ON BEING ASKED TO EXPLAIN THE SAID CASH FOUND, THE ASS ESSEE EXPLAINED THAT THE CASH WAS DRAWN FROM M/S H. V. BUILDERS, A PARTNERSH IP FIRM BY ONE SHRI HARISH T. MANGHNANI (SON OF THE ASSESSEE) IN HIS CAPACITY AS A PARTNER. SHRI HARISH T. MANGHNANI HAD WITHDRAWN A TOTAL SUM OF RS 12,00,000 /- FROM THE SAID FIRM AND, AS A TRADITION OF ANY INDIAN FAMILY, THE UNSPE NT AMOUNT OF RS 1,70,783/- WAS KEPT WITH THE ASSESSEE, HE BEING THE SENIOR MO ST MEMBER OF THE FAMILY. AS THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO S UBSTANTIATE HIS CONTENTION THAT THE CASH FOUND AT THE TIME OF SEARC H WAS THE BALANCE LYING WITH HIM OUT OF THE MONEY RECEIVED FROM THE PARTNERSHIP FIRM M/S H.V. BUILDERS, THE ASSESSING OFFICER RE-CONFIRMED THE ADDITION OF RS 1 ,70,783/- ON ACCOUNT OF UNEXPLAINED CASH, AS MADE IN THE ORIGINAL ASSESSMEN T. 3. IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), IT WAS MAINLY CONTENDED BY THE ASSESSEE THAT THE CASH FOUN D WITH HIM OF RS 1,70,783/- WAS OUT OF THE UNDISCLOSED INCOME OFFERE D TO TAX OF RS 24,00,000/- IN THE CASE OF M/S H. V. BUILDERS AND HENCE THE SAM E COULD NOT BE TAXED AGAIN IN HIS HANDS. THE COMMISSIONER OF INCOME-TAX (APPE ALS) ON PERUSAL OF FINANCIAL STATEMENTS PREPARED AND FILED BY THE ASSE SSEE FOR THE IMPUGNED ASSESSMENT YEAR SUCH AS PROFIT & LOSS ACCOUNT, BALA NCE SHEET AND PARTNERS CAPITAL ACCOUNTS IN THE CASE OF M/S H.V. BUILDERS, NOTICED THAT THE SAID UNDISCLOSED INCOME OF RS 24,00,000/- WAS CREDITED T O THE PROFIT & LOSS ACCOUNT AND THE SAME, THEREFORE, WAS CONSIDERED IN THE BALANCE SHEET AND PARTNERS CAPITAL ACCOUNT. AS SUCH, THE SAID INCOME WAS NOT AVAILABLE FOR UTILIZATION BY THE ASSESSEE. FURTHER, ON PERUSAL OF THE CAPITAL ACCOUNTS OF THE ITA NO 196/PN/09 SHRI TILLUMAL J MANGHNANI, NASHIK 3 PARTNERS, THE COMMISSIONER OF INCOME-TAX (APPEALS) NOTICED THAT THE WITHDRAWAL BY THE HUF AS WELL AS SHRI HARISH T. MAN GHNANI WAS NIL AND WITHDRAWAL BY SHRI DEVCHAND T. MANGHNANI WAS ONLY R S 18,000/-. ON THESE FACTS, THE COMMISSIONER OF INCOME-TAX (APPEALS) CAM E TO THE CONCLUSION THAT THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT OF R S 1,70,783/- WAS OUT OF THE UNDISCLOSED INCOME OFFERED TO TAX OF RS 24,00,000/- IN THE CASE OF M/S H.V. BUILDERS WAS INCORRECT, PARTICULARLY IN VIEW OF THE PROFIT & LOSS ACCOUNT, BALANCE SHEET AND PARTNERS CAPITAL ACCOUNTS PREPAR ED AND FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1993-94. THE COMM ISSIONER OF INCOME-TAX (APPEALS) ACCORDINGLY CONFIRMED THE ADDITION OF RS 1,70,783/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH. STILL AGGRIE VED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE ADDITION OF RS 1,70,783/- MADE ON ACCOUNT OF CASH FOUND DURING THE COURSE OF SEARCH. IT WAS POINTED OUT THAT AS PER THE ORDER OF THE TRIBUNAL I N ITA NO 984/PN/94 DATED 27.7.2005, THE AFORESAID ISSUE WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION AND PASSING AN ORDER AFR ESH. THE CLAIM OF THE ASSESSEE WAS THAT THE CASH OF RS 1,70,783/- FOUND D URING THE COURSE OF SEARCH WAS NOT SEPARATELY ASSESSABLE, BECAUSE THE S AME FORMED PART OF THE DISCLOSURE MADE IN THE HANDS OF THE FIRM M/S H.V. B UILDERS, THE SONS OF THE APPELLANT AND APPELLANT HIMSELF AMOUNTING TO RS 12, 00,000/-, RS 87,000/- EACH AND RS 2,86,000/- RESPECTIVELY. IN THIS CONNEC TION, OUR ATTENTION WAS INVITED TO A CHART SHOWING THE DISCLOSURES MADE IN THE HANDS OF THE AFORESAID ENTITIES, WHICH HAS BEEN PLACED IN THE PAPER BOOK. ACCORDING TO THE LEARNED COUNSEL, THE AFORESAID POSITION HAS NOT BEEN PROPER LY APPRECIATED BY THE LOWER AUTHORITIES AND, THEREFORE, THE ASSESSEE IS E NTITLED TO THE AFORESAID RELIEF. ITA NO 196/PN/09 SHRI TILLUMAL J MANGHNANI, NASHIK 4 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS REFERRED TO THE FOLLOWING DISCUSSION MADE IN THE OR DER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN ORDER TO JUSTIFY THE STAND OF THE REVENUE: 5. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R OF THE AO, THE SUBMISSIONS OF THE APPELLANT AND THE RELEVANT FACTS AND MATERIA L AVAILABLE ON THE RECORD. THE AO POINTED OUT THAT DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD RAISED THE CONTENTION THAT AN AMOUNT O F RS 1,00,000/- WAS WITHDRAWN BY SHRI HARISH FROM M/S H V BUILDERS WHERE HE WAS A PARTNER AND BALANCE AMOUNT OF RS 70,783/- REPRESENTS CASH BELONGING TO M/S H V BU ILDERS WHICH WAS HELD BY HIM. THE AO FURTHER POINTED OUT THAT NOW THE APPELLANT H AS TAKEN ALTOGETHER DIFFERENT PLEA THAT THE ADDITIONAL INCOME OF RS 24,00,000/- DECLA RED BY THE FIRM M/S H V BUILDERS IS AVAILABLE WITH MANGHNANI FAMILY TO THE EXTENT OF 50 %, I.E. RS 12,00,000/-. ON VERIFICATION OF THE RECORDS, IT IS NOTICED THAT THE CONTENTION OF THE AO IS FACTUALLY CORRECT. 5.1 THE MAIN CONTENTION OF THE APPELLANT IS THAT TH E CASH FOUND WITH HIM OF RS 1,70,783/- IS OUT OF THE UNDISCLOSED INCOME OFFERED TO TAX OF RS 24,00,000/- IN THE CASE OF M/S H V BUILDERS AND HENCE THE SAME CANNOT BE TAXED AGAIN IN HIS HANDS. HOWEVER ON PERUSAL OF FINANCIAL STATEMENTS PREPARED AND FILED BY THE APPELLANT FOR THE AY 93-94 SUCH AS PROFIT & LOSS ACCOUNT, BALANCE SHE ET AND PARTNERS CAPITAL ACCOUNTS IN THE CASE OF M/S H.V. BUILDERS IT IS NOT ICED THAT THE SAID UNDISCLOSED INCOME OF RS 24,00,000/- IS CREDITED TO THE PROFIT & LOSS ACCOUNT AND THE SAME IS THEREFORE CONSIDERED IN THE BALANCE SHEET AND PARTN ERS CAPITAL ACCOUNT. THE SAID INCOME IS NOT THEREFORE AVAILABLE FOR UTILIZATION. FURTHER, FROM THE CAPITAL ACCOUNTS OF THE PARTNERS IT IS NOTICED THAT THE WITHDRAWAL BY T HE HUF AS WELL AS SHRI HARISH T. MANGHNANI IS NIL AND WITHDRAWAL BY SHRI DEVCHAND T MANGHNANI IS ONLY RS 18000/-. THUS, THE CONTENTION OF THE APPELLANT THAT THE AMOU NT OF RS 1,70,783/- WAS OUT OF THE UNDISCLOSED INCOME OFFERED TO TAX OF RS 24,00,000/- IN THE CASE OF M/S H.V. BUILDERS IS INCORRECT, PARTICULARLY IN VIEW OF THE PROFIT & LOS S ACCOUNT, BALANCE SHEET AND PARTNERS CAPITAL ACCOUNTS PREPARED AND FILED BY THE APPELLAN T FOR THE F.Y 1992-93 RELEVANT TO THE AY 1993-94. COPIES OF THE SAME ARE ENCLOSED AND FORM PART OF THIS APPELLATE ORDER. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE CASH FOUND AT THE APPELLANTS RESIDENCE OF RS 1,70,783/- WAS NOT OUT OF THE AMOU NT OFFERED TO TAX THE FIRM M/S H V BUILDERS AMOUNTING TO RS 24,00,000/-.THE ADDITION O F RS 1,70,783/- IS THEREFORE CONFIRMED AND THE APPEAL IS DISMISSED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. IN THIS CASE, THE SUM AND SUBSTANCE OF THE CASE MADE OUT BY THE REVEN UE IS THAT THE PLEA OF THE ASSESSEE IS NOT WELL SUBSTANTIATED. IN TERMS OF THE DISCUSSION MADE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARAGRAPH 5 .1 OF HIS ORDER, WHICH WE HAVE REPRODUCED IN EARLIER PORTION OF THIS ORDER, I T IS CLEARLY EMERGING THAT THERE IS NO MATERIAL ON RECORD TO PROVE THE NEXUS BETWEEN THE AMOUNT OF CASH IN QUESTION AND THE UNDISCLOSED INCOME OFFERED IN THE HANDS OF THE FIRM M/S H.V. BUILDERS OR THE OTHER ENTITIES REFERRED TO BY THE A SSESSEE. MOREOVER, THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT AT THE TIME OF ASSESSMENT PROCEEDINGS AND ALSO THEREAFTER IN THE APPELLATE PR OCEEDINGS, WHICH ITA NO 196/PN/09 SHRI TILLUMAL J MANGHNANI, NASHIK 5 CULMINATED IN THE ORDER OF THE TRIBUNAL DATED 27.7. 2005 (SUPRA), ASSESSEE HAD RAISED NO SUCH PLEA. CONSIDERING THE ENTIRETY OF CI RCUMSTANCES, IN OUR CONSIDERED OPINION, THE ASSESSEE HAS TO FAIL IN THE PRESENT PLEA. WE, THEREFORE, AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) BY DISMISSING THE PLEA OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 11TH FEBRUARY, 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE, DATED: 11TH FEBRUARY, 2011 COPY TO:- 1) SHRI TILLUMAL J. MANGNANI, NASHIK 2) THE ITO WD-1(3) NASHIK 3) THE CIT (A)-I NASHIK 4) THE CIT-I, NASHIK 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T.A.T., PUNE. BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE B