ACIT CIR 1, THANE V. MANJU DEVI DAGA, MUMBAI

ITA 2049/MUM/2010

• Counselvise Citation: 204919914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 31-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: MAHESH R AJORA
• Keywords: Unexplained investment
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND R.K.PANDA (A.M ) ITA NO.2049 AND 2050/MUM/2010 (ASSESSMENT YEAR: 2005-06) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, VARDAAN BUILDING, LOWER GROUND FLOOR, WAGLE INDUSTRIAL ESTATE, MIDC, THANE. SMT.MANJU DEVI DAGA, C-44, GURU NANAK CHS, KOPRI COLONY, THANE (E). PAN: APKPD4359J APPELLANT V/S RESPONDENT APPELLANT BY : SHRI A.K.N AYAK RESPONDENT BY : SHRI MAHESH R AJORA. O R D E R PER D.K.AGARWAL (JM) THE APPEAL IN ITA NO.2050/MUM/2010 PREFERRED BY T HE REVENUE IS DIRECTED AGAINST THE QUANTUM ORDER DATED 24.11.2009 PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX (A) FOR THE ASSESSMENT YEAR 2005-06 AND THE APPEAL IN ITA NO.2049/MUM/2010 PREFERRED BY THE REVENUE IS DI RECTED AGAINST THE ORDER DATED 30.11.2009 PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX (A) IN PARTLY ALLOWING T HE PENALTY IMPOSED BY THE AO UNDER SECTION 271 (1)(C ) OF THE INCOME TAX ACT, 1961 (THE ACT). SINCE FACTS ARE I DENTICAL AND ISSUES INVOLVED ARE INTERCONNECTED, BOTH THESE APPEALS ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 2 ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVEYANCE. ITA NO.2050/MUM/2010 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL DID NOT FILE HER RETURN OF INCOME AS SHE HAD NOT TAXABLE INCOME. AS PER THE INFORMATION RECEIVED F ROM THE TRANSACTIONS REPORTED IN ANNUAL INFORMATION RETUR N (AIR) FURNISHED UNDER SECTION 285BA OF THE ACT, THE AO O BSERVED THAT THE ASSESSEE MADE CASH DEPOSITS OF RS.1,22,60 ,000/- IN HER SAVINGS BANK ACCOUNT NO.25012 MAINTAINED WITH CANARA BANK, KOPRI COLONY BRANCH, THANE FROM 1.7.2004 TO 31.3.2005. THE AO ISSUED NOTICE UNDER SECTION 142 (1) TO THE ASSESSEE CALLING FOR THE RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2005-06 AND TO FURNISH THE SOURC ES OF DEPOSITS IN THE BANK ACCOUNT. IN THE ABSENCE OF ANY RESPONSE BY THE ASSESSEE, THE AO PROCEEDED TO COMP LETE THE ASSESSMENT EX-PARTE AND ADDED BACK THE ENTIRE SAVINGS IN THE BANK ACCOUNT OF THE ASSESSEE AMOUNTING TO RS.1,22,60,000/- AND UNEXPLAINED INVESTMENT ASSESSE D AS INCOME FROM OTHER SOURCES AND COMPLETED THE ASSE SSMENT ON THE SAME INCOME OF RS.1,22,60,000/- VIDE ORDER DATED 28.12.2007 PASSED UNDER SECTION 144 OF THE ACT. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (A) EXAMINED THE ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 3 BANK ACCOUNT OF THE ASSESSEE AND OBSERVED IN PARAGR APH 5.6 OF THE ORDER AS UNDER : 5.6 THE TREND OF THE ALL THE DEPOSITS AND WITHDRAW ALS IN THE ABOVE SAVINGS ACCOUNT IS THE SAME FROM THE BEGINNING OF THE BANK ACCOUNT I.E. 01.07.2004 TILL THE AND OF THE YEAR I.E.31.03.2005. THE ABOVE BANK ACCOUNT STARTS WITH BALANCE B/F OF RS.3,813/- AS ON 01.07. 2004 AND THEREAFTER THERE IS CONTINUES TREND OF CASH DEP OSITS ON A PARTICULAR DAY AND THE WITHDRAWAL OF AMOUNT. THE AMOUNT IS DEPOSITED IN CASH ON A PARTICULAR DAY AND ON THE VERY NEXT DAY CHEQUE IS ISSUED IN THE NAME OF T HE COMPANY/PERSON FROM WHOM THE MONEY IS ALLEGED TO HA VE BEEN RECEIVED IN CASH. THE CLOSE ANALYSIS OF THE DEPOSITS AND WITHDRAWALS IN THE SAID ACCOUNT MAKES IT VERY CLEAR THAT THE MONEY DOES NOT BELONG TO THE APPELLANT. THE MONEY IS BEING MADE AVAILABLE BY THI RD PARTIES WHO ARE THE BENEFICIARIES AND ROUTED THROUG H THIS ACCOUNT OF THE APPELLANT TO CHANGE ITS COLOUR I.E. TO USE THE ACCOUNT TO TURN THE UNACCOUNTED CASH MONEY INTO ACCOUNTED ONE AFTER ISSUE OF THE CHEQUES FOR THE SA ME AMOUNT. MOST OF THESE CHEQUES HAVE BEEN ISSUED TO M /S NEHA TEXTILES AND ANOTHER CA A/C NO.13091. THE APPELLANT HAS CATEGORICALLY STATED THAT THE ENTIRE MONEY WAS RECEIVED IN CASH BY HER HUSBAND SHRI PANNA LA L DAGA FROM THE PERSONS/COMPANIES TO WHOM THE CHEQUES WERE ISSUED. SHRI PANNA LAL DAGA, THE HUSBAND OF THE APPELLANT HAS ALSO STATED THE SAME DURING THE APPE LLATE PROCEEDINGS. FROM THE SCRUTINY OF THE TRANSACTIONS OF THE APPELLANT, IT IS CLEAR THAT THIS IS A TYPICAL C ASE OF BOGUS ENTRY OPERATORS, WHEREBY THE BANK ACCOUNT OF SOME UNKNOWN PERSON IS USED AS A CHANNEL TO ISSUE THE CHEQUE BY DEPOSIT OF CASH AMOUNTS IN THE SAME BANK. THE INTERESTED PARTIES APPROACH THE HOLDER OF SUCH BANK ACCOUNT, HANDS OVER THE CASH AND IN TURN IN LIEU OF SMALL COMMISSION, GETS THE CHEQUE FROM THE ACCOUNT HOLDER OF THE SAME AMOUNT. THIS PRACTICE IS VERY COMMON IN BI G INDUSTRIAL CITIES/TOWN TO CHANGE THE COLOR OF THE M ONEY FROM BLACK TO WHITE. IN SUCH CASE WE NEED TO APPLY THE HUMAN REASONING TO UNDERSTAND THE NATURE OF TRANSACTIONS. THE LEARNED COMMISSIONER OF INCOME TAX (A) AFTER AP PLYING THE RATIO OF THE DECISIONS IN SUMITI DAYAL V/S COMM ISSIONER ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 4 OF INCOME TAX (1995) 214 ITR 801 (SC) AND SMT.PANNA DEVI CHOWDHARY V/S CIT (1994)208 ITR 849 (BOM) HAS HELD VIDE PARAGRAPHS 5.10 OF HIS ORDER AS UNDER : 5.10 ON THE BASIS OF FACTS MENTIONED ABOVE AND BY APPLYING THE TEST OF HUMAN PROBABILITIES, I INT END TO AGREE WITH SUBMISSIONS OF THE APPELLANT IN VIEW OF THE SAME HELD THAT THE ENTIRE CASH DEPOSITS AMOUNTING T O RS.1,22,60,000/- IN HER SB A/C NO.25012 MAINTAINED WITH CANARA BANK, KOPRI COLONY BRANCH, THANE CANN OT BE TREATED AS INCOME OF THE APPELLANT. FURTHER, PL ACING THE BELIEF ON THE CONTENTS OF THE AFFIDAVIT OF APPE LLANT, IT CAN BE INFERRED THAT THE APPELLANT HAS EARNED ONLY THE COMMISSION WHICH GENERALLY IN THIS KIND OF BUSINE SS RANGES BETWEEN 1% TO 3%. BASED ON THE ABOVE FINDIN GS, IT WOULD BE FAIR TO APPLY THE COMMISSION RATE OF 3% AND WORK OUT THE INCOME OF THE APPELLANT FOR THE YEAR U NDER CONSIDERATION. THE AO IS DIRECTED TO WORK OUT THE I NCOME OF THE APPELLANT AS MENTIONED ABOVE AND TAX IT ACCORDINGLY 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE REVENUE IS I N APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DELE TION OF ADDITION MADE BY THE AO IN VIOLATION OF RULE 46A O F THE INCOME TAX RULES, 1962(THE RULES). 4. AT THE TIME OF HEARING, THE LEARNED D.R.SUPPORTS THE ORDER OF THE AO. 5. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE O F THE ASSESSEE AFTER FILING THE APPLICATION FOR ADJOURNME NT OF THE CASE SUBMITS THAT HE IS NOT PRESSING THE SAME. HE FURTHER SUBMITS THAT IN VIEW OF THE REASONS GIVEN BY THE LE ARNED ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 5 COMMISSIONER OF INCOME TAX (A), THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) BE UPHELD. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD, WE FIND THAT THE LEARNED COMMISSIONER OF INCOME TAX (A ) HAS EXAMINED THE BANK ACCOUNT AND DETAILS WHICH WERE AL SO AVAILABLE BEFORE THE AO AS THE AO ON THE BASIS OF T HE SAME HAS WORKED OUT THE TOTAL CREDITS OF RS.1,22,60,000/ - AND ADDED THE ENTIRE CREDITS OF THE SAID BANK ACCOUNT IN THE INCOME OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TAX (A) AFTER EXAMINING THE SAID BANK ACCO UNT AND LOOKING TO THE TREND OF THE CASH DEPOSITS ON A PAR TICULAR DAY AND THE WITHDRAWAL OF AMOUNT FROM THE BANK ACCOUNT OBSERVED THAT THE ENTIRE CASH DEPOSITS OF RS.1,22, 60,000/- CANNOT BE TREATED AS INCOME OF THE APPELLANT. THE L EARNED COMMISSIONER OF INCOME TAX (A) AFTER CONSIDERING T HE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE FURTHER OBSERVED THAT IT CANNOT BE INFERRED THAT THE APPE LLANT HAS EARNED ONLY THE COMMISSION WHICH GENERALLY IN THIS KIND OF BUSINESS RANGES BETWEEN 1% TO 3%. BASED ON THE AB OVE, HE DIRECTED THE AO TO WORK OUT THE COMMISSION INCOM E OF THE APPELLANT @ 3% OF THE TOTAL AMOUNT DEPOSITED IN THE BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION I.E. AS SESSMENT YEAR 2005-06. ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 6 7. IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE AGAINST THE FINDINGS OF THE L EARNED COMMISSIONER OF INCOME TAX (A), WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX (A) IN DIRECTING THE AO TO WORK OUT THE INCOME OF THE APPELLANT AFTER APPLYING THE COMMISSION AT THE RATE OF 3% O F THE TOTAL AMOUNT DEPOSITED IN THE BANK ACCOUNT FOR THE YEAR U NDER CONSIDERATION AND TAX THE SAME ACCORDINGLY. THE GRO UNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. ITA NO.2049/MUM/2010 8. THE AO, IN THE ABSENCE OF ANY EXPLANATION BY TH E ASSESSEE ON THE BASIS OF ASSESSMENT COMPLETED AT A N INCOME OF RS.1,22,60,000/- HAS IMPOSED THE PENALTY OF RS.40,97,544/- UNDER SECTION 271(1)(C ) OF THE ACT VIDE ORDER DATED 30.6.2008. ON APPEAL, THE LEARNED COMMISSION ER OF INCOME TAX (A) IN VIEW OF THE ORDER PASSED IN THE Q UANTUM APPEAL WHEREBY HE DIRECTED THE AO TO WORK OUT THE COMMISSION INCOME OF THE ASSESSEE AT THE RATE OF 3 % OF THE TOTAL AMOUNT DEPOSITED IN THE BANK ACCOUNT DURING T HE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2005-06 AN D HELD THAT THE PENALTY IMPOSED AT THE RATE OF 100% ON T HE COMMISSION INCOME DETERMINED AS PER APPELLATE ORDER IS CONFIRMED AND ACCORDINGLY PARTLY ALLOWED THE APPEA L. ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 7 9. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE REVENUE IS I N APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE PART LY DELETION OF PENALTY IMPOSED BY THE AO UNDER SECTION 271(1)( C ) OF THE ACT IN VIOLATION OF THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. 10. AT THE TIME OF HEARING BOTH THE PARTIES HAVE A GREED THAT IN VIEW OF THE PLEA TAKEN IN THE QUANTUM APPEA L, THE IMPUGNED APPEAL BE DECIDED ACCORDINGLY. 11. AFTER HEARING RIVAL PARTIES AND PERUSING THE MA TERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF OUR FIN DINGS RECORDED IN REVENUES APPEAL IN PARAGRAPHS 6 AND 7 OF THIS ORDER, WE ARE OF THE VIEW THAT THE LEARNED COMMISSI ONER OF INCOME TAX (A) WAS FULLY JUSTIFIED IN DIRECTING T HE AO TO WORK OUT THE PENALTY AT THE RATE OF 100% ON THE CO MMISSION INCOME DETERMINED AS A RESULT OF THE ORDER PASSED B Y HIM IN THE QUANTUM APPEAL AND ACCORDINGLY WE DECLINE TO IN TERFERE IN THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) ON THIS ACCOUNT. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. ITA NO.2050 AND 2049/MUM/2010 (ASSESSMENT YEAR: 2005-06) 8 12. IN THE RESULT, REVENUES APPEALS STAND DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF I.E. ON 31ST MAY 2011. SD SD (R.K.PANDA) ( D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 31ST MAY, 2011 SRL:31511 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI