The ITO, Ward-2(4), Bhavnagar V. Shri Sajjadali Ramzanali Lakhani, Mahuva

ITA 2165/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80269 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO.2165/AHD/2010 A.Y.2007-08 ITO, WARD-2(4), BHAVNAGAR. VS SHRI SAJJADALI RAMZANALI LAKHANI, C/O PRIYA AGENCY, GOL BAZAR, MAHUVA. PAN: ACOPL 3808P (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ROOPCHAND, SR.D.R., ASSESSEE(S) BY : SHRI TUSHAR HEMANI, AR / // / DATE OF HEARING : 04/08/2014 / DATE OF PRONOUNCEMENT: 8/08/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM AN ORDER OF THE LD. CIT(APPEALS)-XX, AHMEDABAD, DATED 08/03/2010. G ROUNDS RAISED ARE HEREBY DECIDED AS FOLLOWS: 1. THE LD. C1T(A)-XX, AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS,8,46,000/- MADE BY THE AO ON ACC OUNT OF UNEXPLAINED CASH DEPOSITS IN 1DB1 BANK AND DELETING ADDITION ON ACCO UNT OF UNEXPLAINED OPENING CAPITAL BALANCE OF RS.5,52,994/-, WITHOUT P ROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECOR D BY THE A.O. 1.2 IN DOING SO, THE LD, CIT(A) HAS ERRED IN LAW A ND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE HAD FAILED TO PRODUC E ANY SUPPORTING EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS REGARDI NG THE SOURCE OF CASH DEPOSIT OF RS.8,46,000/- IN THE BOOKS OF ACCOUNTS A ND THE AFFIDAVITS FILED BY THE ASSESSEE BEFORE AS THE CIT(APPEAL) WERE ONLY SELF SERVING STATEMENTS. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 31.12.2009 WERE THAT THE AS SESSEE IN INDIVIDUAL ITA NO.2165/AHD/2010 THE ITO WARD-2(4), BHAVNAGAR VS. SHRI SAJJADALI RAM ZANALI LAKHANI, MAHUVA FOR A.Y. 2007-08 - 2 - CAPACITY IS STATED TO BE IN THE BUSINESS OF SHARES AND SECURITY TRANSACTION. IT WAS NOTED BY THE AO THAT AS PER THE LEDGER ACCOU NT OF IDBI BANK SUBMITTED BY THE ASSESSEE THE CASH DEPOSITED IN THE SAID BANK SHOWN AT RS.4,66,000/-, HOWEVER, AS PER THE STATEMENT OBTAIN ED FROM IDBI BANK, THE AMOUNT DEPOSITED DURING THE YEAR AMOUNTED TO RS .13,12,000/-, THERE WAS A DISCREPANCY OF RS.8,46,000/-. AS PER THE AO, THE EXPLANATION WAS NOT SATISFACTORY; HENCE, THE IMPUGNED DIFFERENCE OF RS.8,46,000/- WAS TAXED IN THE HANDS OF THE ASSESSEE. 3. BEFORE LEARNED CIT(A), IT WAS INFORMED THAT THE ASSESSEE IS IN THE SAID BUSINESS ALONG WITH HIS TWO BROTHERS AND THE I MPUGNED AMOUNT WAS DEPOSITED BY THEM IN THE SAID BANK WHICH WAS JOINTL Y OPERATED BY ALL THE THREE BROTHERS. THE EXPLANATION OF THE ASSESSEE WAS AS UNDER: THE APPELLANT WAS ENGAGED IN THE BUSINESS OF SECUR ITY AND SHARE TRANSACTION I.E. SUBSCRIBING NEW SHARE APPLICATION AND PURCHASE S AND SALES OF SHARES WITH HIS TWO BROTHERS NAMELY MOHSIN RAMJANALI LAKHANI AN D ALTAR RAMJANALI LAKHANI. THE APPELLANT FURTHER SUBMITS THAT AS STAT ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT IDBI BANK ACCOUNT WAS O PENED IN THE JOINT NAME OF HIS TWO BROTHERS FOR RUNNING THE BUSINESS OF SHA RES AND SECURITIES. THE APPELLANT HAS SUBMITTED THE DETAILS OF CASH DEP OSITED OF RS.13,12,000/- IN THE IDBI BANK ACCOUNT DURING THE COURSE OF ASSESSME NT PROCEEDINGS AND SUCH DETAILS FURNISHED TO THE A. O. ARE AS UNDER : - (1) RS. 4,65,000/- SAJJADALI (APPELLANT) (2) RS. 4,62,000/-MOHSIN (BROTHER) (3) RS. 3,85,000/- ALTAF (BROTHER) THE APPELLANT FURTHER SUBMIT THAT SEPARATE CASH ACC OUNT OF EACH BROTHER HAVE BEEN MAINTAINED AND PRODUCED TO THE ASSESSING OFFIC ER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAVE ALSO FIL E THREE AFFIDAVITS IN RESPECT OF THE AMOUNT RECEIVED BY EACH BROTHER ON T HE DEATH OF FATHER IN YEAR 1995. THE MAIN BUSINESS OF THE APPELLANTS FATHER W ERE PURCHASING AND SELLING OF PEPPERMINT, BISCUIT ETC IN THE NAME OF PRIYA AGE NCY AND THE SAME BUSINESS WAS CARRIED OUT BY THE APPELLANT AFTER THE DEATH OF HIS FATHER. THE INCOME OF THE APPELLANT'S FATHER AND THE APPELLANT WERE BELOW TAXABLE LIMIT THEREFORE THE RETURNS OF INCOME OF THE PAST YEARS WERE NOT FILED BY THE APPELLANT AS WELL AS HIS FATHER. THE APPELLANT AND HIS TWO BROTHERS HAVE GOT RS.2,50,000/- EACH ON THE DEATH OF THE FATHER IN YEAR 1995 AS STATED IN T HE AFFIDAVIT FILED HEREWITH . ITA NO.2165/AHD/2010 THE ITO WARD-2(4), BHAVNAGAR VS. SHRI SAJJADALI RAM ZANALI LAKHANI, MAHUVA FOR A.Y. 2007-08 - 3 - 4. IN ADDITION TO ABOVE, THE ASSESSEE HAS ALSO INFO RMED THAT THE BROTHERS OF THE ASSESSEE WERE ASSESSED TO TAX AND T HE RETURN OF INCOME FOR A.Y.2007-08 WAS FILED, XEROX COPIES WERE FURNISHED. ON CONSIDERING THOSE FACTS AND EVIDENCES, LEARNED CIT(A) HAS HELD AS UNDER: 4.4 IN VIEW OF THE FACTS STATED BY THE APPELLANT ALONG WITH HIS TWO BROTHERS IN THE AFFIDAVITS FURNISHED BEFORE ME, IT IS CLEAR THAT THE BANK ACCOUNT NO. 071104000163873 OF IDBI BANK IS A JOINED BANK ACCOU NT OF APPELLANT ALONGWITH HIS TWO BROTHERS. BEFORE ME, THE APPELLAN T FURNISHED DETAILS OF CASH DEPOSITED BY THE APPELLANT AND HIS TWO BROTHERS INT O THE ABOVE BANK ACCOUNT. DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD DEPOSITED RS.4,65,000/- IN CASH, HIS BROTHER MOHSIN RAMJANALI LAKHANI HAD DEPOSITED RS.4,62,000/- IN CASH AND HIS BROTHER ALTAF RAMJANA LI LAKHANI HAD DEPOSITED RS.3,85,000/- IN CASH AND THUS TOTALING TO RS.13,12 ,000/- HAD BEEN DEPOSITED IN CASH BY ALL THE THREE BROTHERS. THE APPELLANT HA D PRODUCED ALL THE EVIDENCE IN RESPECT OF EACH CASH DEPOSITS MADE BY THE APPELL ANT AND HIS TWO BROTHERS. ALL OF THEM MAINTAIN CASH BOOK, LEDGER, BANK BOOK O N REGULAR BASIS. ALL THE ENTRIES OF DEPOSITS APPEARING IN THE BANK ACCOUNT A RE RELATABLE TO RELEVANT CASH BOOKS AND BANK BOOKS. IT IS ALSO FOUND THAT A. O. HAS ACCEPTED ALL ENTRIES RELATING TO THE APPELLANT AS EXPLAINED AND MADE ADD ITION OF ALL ENTRIES RELATED, TO HIS TWO BROTHERS IN HIS HANDS WITHOUT PROPERLY A PPRECIATING THE FACTS THAT ALL ENTRIES ARE EXPLAINED AND ARE RELATABLE TO RELE VANT CASH BOOKS MAINTAINED BY HIS BROTHERS. AS SUCH THE A.O. HAS NOT COME WITH ANY CONCRETE REASON OR BASIS WHILE MAKING THE ADDITION OF RS.8,46,000/-. I N VIEW OF THE AFOREMENTIONED CIRCUMSTANCES, I AM OF THE OPINION T HAT THE CASH DEPOSITS MADE BY THE TWO BOTHERS OF THE APPELLANT IN IDBI BA NK STANDS EXPLAINED. HENCE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MA KING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT. THEREFORE, IN SUCH FAC TS AND CIRCUMSTANCES, I DIRECT THE ASSESSING OFFICER TO DELETED THE ADDITIO N MADE BY HIM AT RS. 8,46,000/-. THIS GROUND OF APPEAL IS ALLOWED. 5. WITH THESE BRIEF FACTUAL BACKGROUNDS, WE HAVE HE ARD BOTH THE SIDES. BEFORE US, LEARNED AR HAS PLACED A COMPILATI ON, WHICH CONTAINS BANK STATEMENT OF IDBI BANK. AS PER THE SAID STATEM ENT, IT IS APPARENT THAT THE ACCOUNT IS IN THE NAME OF THREE BROTHERS. FACTS OF THE CASE HAVE ALSO REVEALED THAT ALL THE BROTHERS HAVE BEEN FILIN G RETURNS INDEPENDENTLY. DUE TO THIS REASON, THEY HAVE INDEPENDENTLY DISCLOS ED THEIR RESPECTIVE DEPOSITS IN THE BANK ACCOUNTS MAINTAINED BY THEM. L EARNED CIT(A) HAS GIVEN A FINDING ON FACTS THAT THE BROTHERS ARE MAIN TAINING CASH BOOK, LEDGER, BANK DETAILS ON REGULAR BASIS RESPECTIVELY. WE ARE, THEREFORE, OF ITA NO.2165/AHD/2010 THE ITO WARD-2(4), BHAVNAGAR VS. SHRI SAJJADALI RAM ZANALI LAKHANI, MAHUVA FOR A.Y. 2007-08 - 4 - THE VIEW THAT IN THE ABSENCE OF ANY CONTRARY EVIDEN CE FROM THE SIDE OF THE REVENUE DEPARTMENT, THE FINDING ON FACTS GIVEN BY L EARNED CIT(A) IS REQUIRED TO BE AFFIRMED. WE HOLD ACCORDINGLY. THIS GROUND OF THE REVENUE IS, THEREFORE, DISMISSED. 6. GROUND NO.1.3 IS REPRODUCED BELOW: 1.3 IN DOING SO, THE LD. C1T(A) HAS ERRED IN L AW AND ON FACTS IN DELETING THE ADDITION OF RS.5,52,994/- MADE ON ACCOUNT OF UN EXPLAINED OPENING CAPITAL U/S. 69A OF THE I.T, ACT, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY DETAILS PROVING THE GENUINENESS OF T HE SAID CAPITAL AND HE HAS ALSO NOT FILED ANY RETURN FOR THE PREVIOUS YEAR NOR SUBMITTED ANY ACCOUNTS TO PROVE THAT HE HAD ANY TAXABLE INCOME. 7. THE OBSERVATION OF THE AO WAS THAT THE ASSESSEE HAD SHOWN AN OPENING CAPITAL FOR A.Y.2007-08, THE YEAR UNDER CON SIDERATION, AS PER THE BALANCE-SHEET AT RS.5,52,994/-. IT WAS ALSO NOTED B Y THE AO THAT FOR A.Y.2006-07 NO RETURN WAS FILED BY THE ASSESSEE. IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION, THE IMPUGNED AMOUNT WAS T AXED BY INVOKING THE PROVISIONS OF SECTION 69A OF IT ACT. 8. WHEN THE MATTER WAS CARRIED BEFORE LEARNED CIT(A ), THE EXPLANATION OF THE ASSESSEE WAS AS UNDER: 'THE APPELLANT IS HAVING A SMALL SHOP IN THE NAME O F PRIYA AGENCY AT GOL BAZAR, MAHUVA DOING THE BUSINESS OF SELLING CHOCOLA TE, PIPER, BISCUITS AND CONFESSIONARY ITEMS, THE APPELLANT'S FATHER WAS EXP IRED IN YEAR 1995 AND EACH BROTHER HAVE GOT RS.2,50,000/- AND FROM 1996 THE AP PELLANT HAS CARRIED OUT THE FATHER'S BUSINESS IN THE SAME NAME, THE INCOME AS NOT TAXABLE THEREFORE DURING THIS PERIOD THE APPELLANT HAS NOT FILED ANY RETURN OF INCOME. THE BOOKS OF ACCOUNTS SUCH AS CASH BOOK, BANK BOOK AND LEDGER HAVE BEEN MAINTAINED BY THE APPELLANT OF THE PAST YEARS. THIS FACT WERE SUBMITTED IN THE AFFIDAVIT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ID. A.O. HAS NOT CONSIDERED THE AFFIDAVIT AND ADDITION OF RS. 5,52,9 947- IS MADE ON ACCOUNT OF OPENING CAPITAL BALANCE. THE OPENING CAPITAL BALANCE IS NOT THE INCOME OF TH E CURRENT YEAR THEREFORE THE ASSESSING OFFICER HAS WRONGLY ADDED IN THE INCO ME OF THE CURRENT YEAR IS NOT CORRECT. ITA NO.2165/AHD/2010 THE ITO WARD-2(4), BHAVNAGAR VS. SHRI SAJJADALI RAM ZANALI LAKHANI, MAHUVA FOR A.Y. 2007-08 - 5 - 8.1 ON EXAMINATION OF FACTS, LEARNED CIT(A) HAS GRA NTED RELIEF AS UNDER: 5.2 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A. R. OF THE APPELLANT AND OBSERVATIONS OF THE ASSESSING OFFICER IN THE AS SESSMENT ORDER. I HAVE ALSO GONE THROUGH THE AFFIDAVIT PRODUCED BEFORE THE A.O. AND BEFORE ME BY THE A.R. OF THE APPELLANT. I AM INCLINED TO ACCEPT THE CONTE NTIONS PUT FORTH BY THE A. R. OF THE APPELLANT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS TO BE MENTIONED THAT CLOSING BALANCE OF THE PREVIOUS YEAR CAN NOT BE TREATED AS INCOME OF THE CURRENT YEAR. IN THE INSTANT CASE AS IT COULD BE SEEN FROM THE AFFIDAVIT FILED BY THE APPELLANT THAT HE HAS NOT FI LED RETURN OF INCOME FOR A.Y. 2006-07 AS HE WAS HAVING NO TAXABLE INCOME. HOWEVER , THE APPELLANT INHERITED AN AMOUNT OF RS.2,50,000/- FROM HIS FATHE R IN 1995 AND CARRIED OUT HIS FATHER'S BUSINESS SUBSEQUENTLY. IN THESE CIRCUM STANCES, HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, HISTORY OF HIS ACTIVITIES AS NARRATED IN THE AFFIDAVIT SOLEMNLY AFFIRMING THE ABOVE FACTS AN D CIRCUMSTANTIAL PROBABILITIES, I AM OF THE VIEW THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION ON ACCOUNT OF UNEXPLAINED OPENING C APITAL BALANCE OF RS. 5,52,994/-. THEREFORE, THE A. O. IS DIRECTED TO DEL ETE THE ADDITION MADE BY HIM. THIS GROUNDS OF APPEAL IS, THEREFORE, ALLOWED. 8.2 WE HAVE HEARD BOTH THE SIDES. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., MR. ROOP CHAND APPEARED AND PLACED RELIANCE ON THE ORDER OF THE AO. ON THE OTHER HAND, FROM THE SIDE O F THE RESPONDENT, LEARNED AR, MR. TUSHAR HEMANI HAS PLEADED THAT THE QUESTION OF TAXING OPENING BALANCE OF CAPITAL ACCOUNT AS INCOME OF THE CURRENT YEAR WAS DECIDED BY HONBLE ITAT DELHI BENCH IN THE CASE OF JAGTAR SINGH, 69 ITD 147, WHEREIN IT WAS HELD THAT THE REVENUE AUTHO RITIES HAD WRONGLY BROUGHT THE OPENING BALANCE UNDER TAX AS UNEXPLAINE D INCOME. CONSIDERING THE ARGUMENT OF BOTH THE SIDES AND THE AFFIDAVIT FILED BY THE ASSESSEE BEFORE LEARNED CIT(A) AND THE MANNER IN WH ICH THE ACCOUNTS HAVE BEEN MAINTAINED, WE FIND NO FALLACY IN THE FIN DINGS GIVEN BY LEARNED CIT(A) ON FACTS AS WELL AS ON LAW, SPECIALLY WHEN T HERE IS NO CONTRARY MATERIAL FROM THE SIDE OF THE REVENUE AND DISMISS T HIS GROUND OF THE REVENUE. ITA NO.2165/AHD/2010 THE ITO WARD-2(4), BHAVNAGAR VS. SHRI SAJJADALI RAM ZANALI LAKHANI, MAHUVA FOR A.Y. 2007-08 - 6 - 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 8/08/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD