Shri Rajesh Kabaria, Baroda V. The Income tax Officer,Ward-2(4), Baroda

ITA 2072/AHD/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6888 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 15-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.2072/AHD/2007 A. Y.: 2003-04 SHRI RAJESH KABARIA, PROP. RAJ CONSTRUCTION, A-208, HEMDEEP TOWER, FATEHGUNJ, SURAT VS THE INCOME TAX OFFICER, WARD 2 (4), BARODA PA NO. ADKPK 5501 M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. J. SHAH, AR RESPONDENT BY SHRI R. K. DHANISTA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , BARODA DATED 23 RD FEBRUARY, 2007 FOR ASSESSMENT YEAR 2003-04. 2. THIS APPEAL WAS EARLIER DISMISSED IN DEFAULT WHI CH WAS RECALLED BY ALLOWING MISC. APPLICATION OF THE ASSESSEE. ACCO RDINGLY, THE APPEAL WAS FIXED FOR HEARING ON MERITS. 3. ON GROUND NO.1, THE ASSESSEE CHALLENGED THE ADDI TION OF RS.23,850/- BEING AMOUNT INCURRED BY THE ASSESSEE I N FOREIGN CURRENCY OUT OF UNEXPLAINED SOURCES. IT WAS NOTICED BY THE AO THAT AN INCRIMINATING DOCUMENT SHOWING PAYMENT OF 900NZ $ W AS IMPOUNDED DURING THE COURSE OF SURVEY ON 23-09-2003. THE ASSE SSEES CONTENTION THAT THE AFORESAID EXPENDITURE WAS INCUR RED OUT OF FUNDS GIVEN BY HIS RELATIVE DURING HIS STAY AT NEW ZEALAN D WAS NEGATED BY ITA NO.2072/AHD/2007 SHRI RAJESH KABARIA VS ITO W 2(4), BARODA 2 THE AO IN THE ABSENCE OF ANY CONFIRMATION FROM SUCH RELATIVE. SAME CONTENTIONS WERE RAISED BEFORE THE LEARNED CIT(A) A ND IT WAS ALSO CONTENDED THAT THIS ADDITION MAY BE TELESCOPED AGAI NST THE ADDITION MADE ON ESTIMATING THE NET PROFIT. THE LEARNED CIT( A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE NO CONFIRMAT ION FROM THE RELATIVE HAS BEEN FILED AND THE PAYMENT MADE BY THE ASSESSEE REMAINED UNEXPLAINED. THE AO ALSO DISALLOWED THE CL AIM OF TELESCOPING BECAUSE THE ASSESSEE HAS FAILED TO ADDU CE ANY EVIDENCE ESTABLISHING ANY CONNECTION BETWEEN THE EXPENDITURE AND THE ADDITION MADE IN EARLIER YEAR. THE APPEAL OF THE AS SESSEE WAS ACCORDINGLY DISMISSED. 4. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT F IND ANY MERIT IN THE APPEAL OF THE ASSESSEE ON THIS GROUND. THE LEAR NED COUNSEL FOR THE ASSESSEE WAS NOT ABLE TO POINT OUT ANY INFIRMIT Y IN THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO EXPLAIN THE ADDITION. HE HA S RATHER PRACTICALLY CONCEDED THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE EXPENDITURE THROUGH ANY EVIDENCE. THIS GROUND O F APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. 5. ON GROUND NO.2, THE ASSESSEE CHALLENGED THE ADDI TION OF RS.3,50,000/- BEING AMOUNT UTILIZED BY THE ASSESSEE IN DEPOSITION IN THE SAVINGS BANK ACCOUNT NO.293 WITH DENA BANK, SUR AT OUT OF UNEXPLAINED SOURCES. THE AO NOTED THAT AMOUNTS TOTA LING TO RS.3,50,000/- HAD BEEN DEPOSITED IN THE SAVINGS BAN K ACCOUNT WHICH WAS HELD IN THE JOINT NAME OF THE ASSESSEE AND HIS SISTER. THE ITA NO.2072/AHD/2007 SHRI RAJESH KABARIA VS ITO W 2(4), BARODA 3 ASSESSEES CONTENTION THAT THE AFORESAID BANK ACCOU NT BELONGS TO HIS SISTER HAVING INDEPENDENT SOURCES OF INCOME WAS REJ ECTED BY THE AO IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. BENEFIT OF TELESCOPING AGAINST INTANGIBLE ADDITIONS MADE IN THE EARLIER YE ARS WAS ALSO DENIED IN THE ABSENCE OF NEXUS BETWEEN THE TWO. IT WAS CON TENDED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEES SISTER AND H ER FAMILY MEMBERS OWN AGRICULTURAL LAND IN EXCESS OF 100 ACRES AND TH E INCOME OF MORE THAN RS.10,00,000/- IS EARNED PER ANNUM FROM SUCH A GRICULTURAL PRODUCTS. EVIDENCE OF LANDHOLDING WAS FURNISHED BEF ORE THE LEARNED CIT(A).ALTERNATIVELY, IT WAS CONTENDED THAT TELESCO PING OF THE ADDITIONS MAY BE ALLOWED AGAINST INTANGIBLE ADDITIO NS MADE IN THE EARLIER YEAR. THE LEARNED CIT(A) HOWEVER, DID NOT A CCEPT THE CONTENTION OF THE ASSESSEE BECAUSE NO EVIDENCE OF I NCOME GENERATING FROM AGRICULTURAL LAND WAS FILED. NO EVI DENCE WAS PRODUCED THAT THE AMOUNT DEPOSITED IN THE AFORESAID BANK ACCOUNT BELONG TO ASSESSEES SISTER OR THAT HIS SISTER EARN ED AGRICULTURAL INCOME. NO TELESCOPING BENEFIT WAS ALLOWED BECAUSE THE ASSESSEE COULD NOT PROVE NEXUS BETWEEN THE DEPOSITS AND THE INTANGIBLE PROFIT EARNED IN THE EARLIER YEAR. ADDITION WAS ACCORDINGL Y CONFIRMED AND THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSE D. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IT WAS JOINT ACCOUNT IN THE NAME OF THE ASSESSEE AND HIS S ISTER AND REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUT HORITIES BELOW AND FURTHER SUBMITTED THAT TELESCOPING BENEFIT MAY BE GIVEN TO THE GROSS PROFIT ADDITION MADE IN THIS YEAR ON WHICH NO GROUND IS RAISED. HE HAS FURTHER SUBMITTED THAT SINCE IT IS A JOINT A CCOUNT IN THE NAME OF ITA NO.2072/AHD/2007 SHRI RAJESH KABARIA VS ITO W 2(4), BARODA 4 THE ASSESSEE AND HIS SISTER, THEREFORE, ADDITION MA Y BE RESTRICTED TO 50%. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NO BENEFIT CAN BE GIVEN TO THE ASSESSEE ON ANY COUNT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE BANK ACCOUNT WITH DENA BANK IN QUESTION INVENTORISED DURING THE COURSE OF SURVEY W AS FOUND TO BE OPENED JOINTLY IN THE NAME OF THE ASSESSEE AND HIS SISTER NILABEN B. KABARIA. THE AMOUNTS WERE FOUND TO BE DEPOSITED IN THE AFORESAID ACCOUNT IN A SUM OF RS.3,50,000/- ON DIFFERENT DATE S. THE ASSESSEE EXPLAINED BEFORE THE AO THAT THE SAID BANK ACCOUNT BELONG TO HIS SISTER HAVING INDEPENDENT SOURCE OF INCOME BUT SUCH CONTENTION WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. BEFORE T HE LEARNED CIT(A), FURTHER CONTENTION WAS RAISED THAT THE SIST ER OF THE ASSESSEE AND HER FAMILY MEMBERS OWNED AGRICULTURAL LAND AND OUT OF THE AGRICULTURAL INCOME THE DEPOSITS HAVE BEEN MADE FOR WHICH ALSO NO EVIDENCE WAS FILED BEFORE THE LEARNED CIT(A) OF EAR NING ANY AGRICULTURAL INCOME BY THE SISTER OF THE ASSESSEE A ND HER FAMILY MEMBERS. WE FIND FROM THE COPY OF THE BANK ACCOUNT FILED ON RECORD THAT NAME OF THE ASSESSEE IS FIRST PERSON AND THE N AME OF THE ASSESSEES SISTER BEARS IN THE SECOND PERSON IN THE BANK ACCOUNT. SINCE THE ASSESSEES NAME IS FIRST IN THE BANK ACCO UNT WHICH IS OPERATED BY HIM, THEREFORE, IT HAS TO BE PRESUMED I N ORDINARY COURSE OF BUSINESS THAT THE ASSESSEE IS THE BENEFICIARY OF THE SAID BANK ACCOUNT AND BURDEN IS VERY HEAVY UPON THE ASSESSEE TO PROVE THAT HE IS NOT HOLDER OF THE SAID BANK ACCOUNT. THE ASSESSE E HAS HOWEVER, ITA NO.2072/AHD/2007 SHRI RAJESH KABARIA VS ITO W 2(4), BARODA 5 FAILED TO PRODUCE ANY EVIDENCE BEFORE THE AUTHORITI ES BELOW. IT WAS MERELY CONTENDED THAT THE SAID BANK ACCOUNT BELONG TO THE SISTER OF THE ASSESSEE BUT NO MATERIAL OR ANY EVIDENCE WAS FI LED IN SUPPORT OF THE SAME. IT IS NOT A CASE OF THE ASSESSEE THAT THA T ACCOUNT WAS OPENED BY STRANGER, THEREFORE, THE ASSESSEE WAS UNA BLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE CONTENTION BUT IT WA S A JOINT ACCOUNT BY THE ASSESSEE WITH HIS SISTER. THEREFORE, THERE SHOU LD NOT HAVE BEEN ANY DIFFICULTY OF THE ASSESSEE IN PRODUCING CONFIRM ATION AND OTHER EVIDENCES TO PROVE THAT THE ACCOUNT WAS IN FACT HEL D BY HIS SISTER AND THE AMOUNT DEPOSITED THEREIN BELONGED TO THE SISTER OF THE ASSESSEE. SINCE THE BURDEN UPON THE ASSESSEE IS NOT DISCHARGE D TO EXPLAIN THE SOURCE OF THE DEPOSIT IN THE BANK ACCOUNT WHICH WAS FOUND DURING THE COURSE OF SURVEY, THE AUTHORITIES BELOW WERE JUSTIF IED IN DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE. NO BENEFIT OF 50% OF THE DEPOSIT COULD BE GIVEN IN FAVOUR OF THE ASSESSEE. A S REGARDS TELESCOPING BENEFIT, NO BENEFIT COULD BE GIVEN TO T HE ASSESSEE BECAUSE THE ASSESSEE FAILED TO PROVE ANY NEXUS BETW EEN THE UNEXPLAINED BANK DEPOSIT AND THE INTANGIBLE PROFITS OF THE EARLIER YEAR. FURTHER, NO BENEFIT OF GP ADDITION MADE IN THE ASS ESSMENT YEAR UNDER APPEAL CAN BE GIVEN BECAUSE IT IS SETTLED LAW THAT BOTH THE ADDITIONS SIMULTANEOUSLY COULD BE MADE ON ACCOUNT O F UNEXPLAINED CASH CREDIT AS WELL AS THE PROFIT ESTIMATED ON REJE CTION OF THE BOOKS OF ACCOUNTS. THE HONBLE SUPREME COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF VS CIT 50 ITR 1 HELD AS UNDER: HELD, THAT THE AMOUNTS OF THE CASH CREDITS COULD BE ASSESSED TO TAX AS INCOME FROM UNDISCLOSED SOURCES IN ADDITION TO THE BUSINESS INCOME COMPUTED ITA NO.2072/AHD/2007 SHRI RAJESH KABARIA VS ITO W 2(4), BARODA 6 BY ESTIMATE. THE TAXING AUTHORITIES WERE NOT PRECLUDED FROM TREATING THE AMOUNTS OF CREDIT ENTRI ES AS INCOME FROM UNDISCLOSED SOURCES SIMPLY BECAUSE THE ENTRIES APPEARED IN THE BOOKS OF A BUSINESS WHOSE INCOME THEY HAD PREVIOUSLY COMPUTED ON A PERCENTAGE BASIS 7.1 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS DEVI PRASAD VISHWANATH PRASAD 72 ITR 194 HELD AS UNDER: THERE IS NOTHING WHICH PREVENTS THE INCOME- TAX OFFICER IN AN APPROPRIATE CASE IN TAXING BOTH T HE CASH CREDIT, THE NATURE AND SOURCE OF WHICH IS NOT SATISFACTORILY EXPLAINED, AND THE BUSINESS INCOME ESTIMATED BY HIM UNDER SECTION 13 OF THE INDIAN INCOME-TAX ACT, 1922, AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE AS UNRELIABLE. 8. CONSIDERING THE ABOVE DISCUSSIONS, WE DO NOT FIN D ANY MERIT IN THE APPEAL OF THE ASSESSEE ON THIS GROUND. THE SAME IS ACCORDINGLY DISMISSED. 9. NO OTHER POINT IS ARGUED OR PRESSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-04-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 08-04-2011 LAKSHMIKANT/- ITA NO.2072/AHD/2007 SHRI RAJESH KABARIA VS ITO W 2(4), BARODA 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD