PANKAJ KALYANI, MUMBAI V. ITO 19(2)(4), MUMBAI

ITA 1960/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2016 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 21-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-03-2014
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: S M BANDI
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Opportunity of being heard; Additional evidence
• Section: 68; 69; 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.1960/MUM/2014 ASSESSMENT YEAR: 2008-09 PANKAJ KALYANI, 21, NANI BUNGLOW, CHAPPEL LANE, SANTACRUZ (WEST), MUMBAI-400054 / VS. INCOME TAX OFFICER - 19(2)(4), PRATYAKSHKAR BHAVAN, BAND KURLA COMPLEX, MUMBAI-400051 ( !' # /ASSESSEE) ( $ / REVENUE) P.A. NO. AGYPK9838N !' # / ASSESSEE BY SHRI S.M. BANDI $ / REVENUE BY MS. BEENA SANTOSH- DR % $& ' # ( / DATE OF HEARING : 21/11/2016 ' # ( / DATE OF ORDER: 21/11/2016 PANKAJ KALYANI ITA NO.1960/MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 27/12/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE FIRST GROUND RAISED PERTAINS TO SUPPRESSION OF NET PROFIT AMOUNTING TO RS.1,89,990/-. 2. THE CRUX OF ARGUMENT ADVANCED BY SHRI S. M. BANDI, LD. COUNSEL FOR THE ASSESSEE, IS THAT THE LD . COMMISSIONER OF INCOME TAX (APPEAL) DID NOT APPRECI ATE THE FACTS IN PROPER PROSPECTIVE AS THERE IS REDUCTION IN NET PROFIT DESPITE SALES INCREASED TO RS.89,50,140/- FROM RS.43,98,330/- FROM THE PRECEDING YEARS. IT WAS CO NTENDED THAT DECLINE IN THE NET PROFIT PERCENTAGE IS DUE TO FALL IN THE GROSS PROFIT RATE FROM 31.83% TO 16.67%. ON THE OT HER HAND, THE LD. DR, MS. BEENA SANTOSH, STRONGLY DEFENDED TH E ADDITION SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) BY EXPLAINING THAT THE ASSESSEE DID NOT FURNISH NECESS ARY DETAILS BEFORE THE LD. ASSESSING OFFICER AND HE WAS CONSTRA INED TO FRAME THE ASSESSMENT U/S 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) DUE TO NON-COOPERATION FROM T HE ASSESSEE AND FURTHER THE LD. COMMISSIONER OF INCOME TAX (APP EAL) TOOK A JUSTIFIED VIEW. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE, IS A PROPRIETOR OF M/S RANGO LI PANKAJ KALYANI ITA NO.1960/MUM/2014 3 ENTERPRISES, ENGAGED IN THE BUSINESS OF TRADING IN CERAMIC TILES, FILED ITS RETURN ELECTRONICALLY DECLARING IN COME OF RS.2,79,476/- ON 29/09/2008. THE CASE OF THE ASSES SEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICES U/S 143(2 ) AND 142(1), ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPO N THE ASSESSEE. IN SPITE OF REPEATED OPPORTUNITIES, THE ASSESSEE DID NOT FURNISH THE COMPLETE DETAILS EXCEPT THE AUDIT R EPORT, THEREFORE, THE ASSESSING OFFICER COMPLETED THE ASSE SSMENT U/S 144 OF THE ACT. THE ASSESSEE SHOWED TOTAL SALES AT RS.89,50,140/-, DECLARING NET PROFIT OF RS.4,73,215 /-, WHICH COMES TO 5.29% OF THE SALES. IN THE PRECEDING YEAR, THE ASSESSEE DECLARED NET PROFIT OF 7.42%. THE LD. ASSE SSING OFFICER OBSERVED THAT THE TOTAL SALES, DURING THE RELEVANT PERIOD INCREASED MORE THAN 100%, WHEREAS, THERE WAS DECREA SE IN THE NET PROFIT FOR WHICH NO EXPLANATION WAS FURNISH ED BY THE ASSESSEE. IN THE ABSENCE OF SUCH EXPLANATION, THE A SSESSING OFFICER ESTIMATED THE NET PROFIT AT 10%, RESULTING INTO ADDITION OF RS.4,21,799/-. THE ASSESSEE PREFERRED APPEAL BEF ORE THE LD. FIRST APPELLATE AUTHORITY, WHEREIN, CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REMAND REPORT WAS SOUG HT FROM THE ASSESSING OFFICER, EVEN ON ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. THE LD. ASSESSING OFFICER VIDE LETTER DA TED 06/03/2013, SEND THE REMAND REPORTS AND THE REASON FOR MAKING THE ADDITION. THE COMMENTS FROM THE ASSESSEE WERE ALSO SOUGHT ON THE REMAND REPORT SENT BY THE ASSESS EE. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) CONSIDERING THE TOTALITY OF FACTS, FOUND THAT IN ASSESSMENT YEAR 20 07-08, THE PANKAJ KALYANI ITA NO.1960/MUM/2014 4 NET PROFIT WAS DECLARED AT 7.41% AS AGAINST THE PRO FIT OF 5.29%. ON THE BASIS OF DIFFERENCE OF THE TWO ASSESS MENT YEARS, THE ADDITION WAS RESTRICTED TO RS.1,89,990/-. THE A SSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE DID NOT FURNISH THE NECESSARY DETAILS/ PLAUSIBLE EXPLANATION FOR FALL OF NET PROFIT RATE FROM 7.41% (ASSESSMENT YEAR 2007-08) TO 5.29% IN THE YEAR UNDER CONSIDERAT ION. EVEN OTHERWISE, THERE IS NO CORRESPONDING ENTRIES IN THE TOTAL EXPENSES. IN PRINCIPLE, WE ARE IN AGREEMENT WITH TH E CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (A PPEAL), WHICH IS BASED UPON FACTUAL MATRIX. HOWEVER, CONSI DERING THE TOTALITY OF FACTS AND BY TAKING A LENIENT VIEW, WE UPHELD THE ADDITION TO THE EXTENT OF RS.1,39,990/- AGAINST RS. 1,89,990/-, SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEAL), THUS, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED . 3. THE NEXT GROUND PERTAINS TO ADDITION OF RS.6 LA KH MADE/SUSTAINED ON ACCOUNT OF UNSECURED LOANS. THE C RUX OF ARGUMENT ON BEHALF OF THE ASSESSEE THAT CASH LOAN W AS RECEIVED FROM THE WIFE OF THE ASSESSEE, FOR WHICH C ONFIRMATION WERE FILED BY THE ASSESSEE. IT WAS EXPLAINED THAT O RIGINALLY, THE LD. ASSESSING OFFICER ADDED RS.18.64 LAKHS, WHICH W AS PANKAJ KALYANI ITA NO.1960/MUM/2014 5 REDUCED TO RS.6 LAKH BY THE LD. COMMISSIONER OF INC OME TAX (APPEAL). ON THE OTHER HAND, THE LD. DR, STRONGLY DEFENDED THE ADDITION BY PLACING RELIANCE UPON THE CONCLUSION DR AWN IN THE IMPUGNED ORDER. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THERE WAS AN AIR INFORMATION THAT THE ASSE SSEE HAS MADE CASH DEPOSIT OF RS.15,60,000/- IN HIS SAVING B ANK ACCOUNT MAINTAINED WITH SARSAWAT COOPERATIVE BANK. AS PER THE REVENUE, NO DETAILS IN RESPECT TO THE CASH DEPO SIT BY FURNISHED BY THE ASSESSEE. IN THE ABSENCE OF NECESS ARY DETAILS, THAT TOO AFTER PROVIDING DUE OPPORTUNITY TO THE ASS ESSEE, THE LD. ASSESSING OFFICER MADE ADDITION U/S 68 OF THE A CT. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (A PPEAL), THE FACTUAL MATRIX WAS CONSIDERED AND THE ADDITION WAS REDUCED TO THE RS. 6 LAKHS. THE ASSESSEE IS IN FURT HER APPEAL BEFORE THIS TRIBUNAL. WE FIND THAT FROM THE AUDIT REPORT, FILED BY THE A SSESSEE, IT WAS OBSERVED THAT UNSECURED LOANS INCREASED TO RS.39,04,000/- FROM RS.20,40,000/-, DURING THE RELE VANT PERIOD. IN THE ABSENCE OF ANY EXPLANATION, DETAILS, THE LD. ASSESSING OFFICER ADDED THE DIFFERENTIAL AMOUNT OF RS.18,64,000/- TO THE TOTAL INCOME OF THE ASSESSEE, TREATING THE SAME UNEXPLAINED CASH CREDIT. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), IT WAS EXPLAIN ED THAT PANKAJ KALYANI ITA NO.1960/MUM/2014 6 THE ASSESSEE RECEIVED FRESH UNSECURED LOANS FROM DI FFERENT PERSONS, WHICH IS SUMMARIZED HEREUNDER:- SL. NO. NAME OF THE PERSON/PARTY AMOUNT (IN RS.) 1. SHRI PANKAJ KALYANI, SAVINGS ACCOUNT 11,04,000 2. MS. NETRA KALYANI SAVING ACCOUNT 1,15,000 3. MS. AASHA KALYANI SAVINGS ACCOUNT 45,000 4. THIRD PARTY 6,00,000 TOTAL 18,64,000 IT IS NOTED THAT IN THE ABSENCE OF CONFIRMATION, TH E LD. ASSESSING OFFICER ADDED THE AMOUNT OF RS.18,64,000/ - AS UNEXPLAINED CASH CREDIT. THE ASSESSEE FILED CONFIR MATION, FOR THE FIRST TIME, BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THEREFORE, THIS ADDITIONAL EVIDENCE WAS R EMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR HIS C OMMENTS, WHICH WERE FURNISHED VIDE LETTER OF THE ASSESSING O FFICER DATED 06/03/2013. THE REMAND REPORT IS REPRODUCED AT PAGE -5 ONWARDS OF THE IMPUGNED ORDER. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) EXAMINED THE SOURCE/GENUINENESS OF THE LOANS AND FOUND THAT EXCEPT RS.6 LAKH, THE REMAININ G AMOUNT WAS EXPLAINED BY THE ASSESSEE, THEREFORE, TO THIS E XTENT THE ADDITION WAS RETAINED. THERE IS UNCONTROVERTED FIND ING IN PARA-22 OF THE IMPUGNED ORDER THAT THE ASSESSEE COU LD NOT PROOF THE SOURCE, NATURE AND GENUINENESS OF THE TRA NSACTION AMOUNTING TO RS.6 LAKH SHOWN TO HAVE BEEN RECEIVED, THEREFORE, THE ADDITION TO THIS EXTENT WAS CONFIRME D. BEFORE THIS TRIBUNAL ALSO, THE ASSESSEE NEITHER CONTROVERT ED THE PANKAJ KALYANI ITA NO.1960/MUM/2014 7 FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPE AL) NOR PRODUCED ANY EVIDENCE TO EXPLAIN THE GENUINENESS OF THE AMOUNT, THEREFORE, WE FIND NO INFIRMITY IN THE CONC LUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), ON THE ISSUE UNDER HAND, THEREFORE, THIS GROUND OF THE ASSESSEE IS HAVING NO MERIT, CONSEQUENTLY, THE STAND TAKEN BY THE FIRS T APPELLATE AUTHORITY IS AFFIRMED. 4. THE LAST GROUND RAISED BY THE ASSESSEE IS WITH RESPECT TO RELIEF ON ACCOUNT OF INVESTMENT IN SHARE S AMOUNTING TO RS.23,32,428/-. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE SUFFERED LOSS OF RS.31,242/- ON THE TRANSACTIONS IN SHARES AND THE I NVESTMENT WAS MADE THROUGH BANKING CHANNEL. OUR ATTENTION WAS INVITED TO PAGE-40 OF THE PAPER BOOK. ON THE OTHER HAND, TH E LD. DR, STRONGLY DEFENDED THE ADDITION BY CONTENDING THAT T HE SOURCE OF INVESTMENT BY THE ASSESSEE WAS NOT EXPLAINED. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT DURING ASSESSMENT PROCEEDINGS, IN SPITE OF OPPORTUNITIES PROVIDED TO THE ASSESSEE, NECESSARY D ETAILS WITH RESPECT TO SHARE TRANSACTIONS AMOUNTING TO RS.1,07, 46,790/- WERE NOT FURNISHED BY THE ASSESSEE, THEREFORE, HE T REATED THE IMPUGNED AMOUNT AS UNEXPLAINED INVESTMENT AND ADDED TO THE TOTAL INCOME. BEFORE THE LD. COMMISSIONER OF IN COME TAX (APPEAL), THE ACTION OF THE ASSESSING OFFICER WAS O PPOSED BY CLAIMING THAT THE ASSESSEE SUFFERED LOSS OF RS.31,2 42/-, PANKAJ KALYANI ITA NO.1960/MUM/2014 8 THEREFORE, THERE IS NO QUESTION OF ANY UNEXPLAINED INCOME ON ACCOUNT OF THE SHARE TRANSACTIONS. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE ASSESSEE P LACED ON RECORD THE DETAILS OF SHARE TRANSACTIONS ALONG WITH BROKERS NOTE. SINCE, THIS WAS ADDITIONAL EVIDENCE, FILED F OR THE FIRST TIME, BEFORE THE LD. COMMISSIONER OF INCOME TAX (AP PEAL), IT WAS FORWARDED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION. THE LD. ASSESSING OFFICER COMMENTED U PON THE TRANSACTIONS AND AFTER ANALYZING THE SAME. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) TOOK PEAK CREDI T ON ACCOUNT OF THESE INVESTMENTS AT RS.23,32,428/-, WHI CH WAS TAKEN AS MAXIMUM INVESTMENT MADE DURING THE YEAR UN DER CONSIDERATION AND THIS PEAK AMOUNT WAS DIRECTED TO BE ADDED BACK TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED I NVESTMENT U/S 69 OF THE ACT. WE ARE OF THE VIEW THAT THE CON CLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL ) IS NOT FULLY SUBSTANTIATED AS THE MATERIAL FACTS HAVE BEEN IGNORED. FIRSTLY, THE ASSESSEE HAS TO EXPLAIN THE SOURCE OF THE INVESTED AMOUNT IN SHARES AND IF IT IS FOUND TO BE EXPLAINAB LE THEN THERE IS NO QUESTION OF TAKING THE PEAK AMOUNT AS A DDITION, BECAUSE THE ASSESSEE HAS SUFFERED A LOSS. TOTALITY OF FACTS REQUIRES THAT THE LD. ASSESSING OFFICER IS TO SATIS FY HIMSELF WITH RESPECT TO THE SOURCE OF THE INVESTED AMOUNT, GENUI NENESS OF THE SHARE TRANSACTIONS AND THEN TO DECIDE IN ACCORD ANCE WITH LAW. THE ASSESSEE IS DIRECTED TO EXPLAIN THE SAME, FOR WHICH DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE A SSESSEE. EVEN OTHERWISE, THE MANDATE OF THE CONSTITUTION OF INDIA IS TO PANKAJ KALYANI ITA NO.1960/MUM/2014 9 LEVY AND COLLECT DUE TAXES. THIS GROUND OF THE ASSE SSEE, IS THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 21/11/2016. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % & MUMBAI; * DATED : 21/11/2016 F{X~{T? P.S / +$ %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 0./ / THE RESPONDENT. 3. 1 1 % 2# ( ,- ) / THE CIT, MUMBAI. 4. 1 1 % 2# / CIT(A)- , MUMBAI 5. 4$5 # , 1 ,-( , 6 , % & / DR, ITAT, MUMBAI 6. 7! 8& / GUARD FILE. / BY ORDER, 04-# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI,