Shri Dahyabhai M. Patel, Ahmedabad V. The Income Tax Officer, Ward-2, Bharuch

ITA 2283/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5810 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITA SURESH HARDASANI
• Keywords: Peak credit
• Section: 68

Judgement Text

,, IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD .., , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2283/AHD/2013 ( / ASSESSMENT YEAR : 2008-09) SHRI DAHYABHAI M. PATEL\ NR.SWAMI NARAYAN TEMPLE PATIDAR PUNCHWADI STREET ZADESHWAR ROAD OPP. GRAM PANCHAYAT, BHARUCH / VS. THE INCOME TAX OFFICER WARD-2 BHARUCH $ ./ ./ PAN/GIR NO. : AVRPP 2711 J ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : WRITTEN SUBMISSIONS ($'*) / RESPONDENT BY : SMT. ANITA SURESH HARDASANI, SR.DR +,*- / DATE OF HEARING 26/04/2017 ./0*- / DATE OF PRONOUNCEMENT 18/ 05/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, BARO DA [CIT(A) IN SHORT] DATED 23/05/2013 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER:- ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 2 - I. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN CONFIRMING ADDITION OF RS.11,00,000/- U/S.68 MADE BY THE ASSES SING OFFICER. IT IS SUBMITTED BY YOUR APPELLANT THAT SEC.68 DOES NOT APPLY TO FACTS OF THE CASE AND VARIOUS DEPOSITORS WERE KNOWN PERSON WHO HAD PROVED THE IDENTITY, THEIR CREDITWORTHINESS AND SOURCE OF INVESTMENT MADE BY THEM AND THEREFORE THE ENTIRE AD DITION BE DELETED. II. THE CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.2,15,400 AS OF ALLEGING IT TO BE INCOME FROM UNEXPLAINED SOURCE . YOUR APPELLANT IS AGRICULTURIST AND IN RETURN OF IN COME HE HAD DECLARED HIS NET AGRICULTURAL INCOME OF RS.2,15,400 /- WHICH WAS BACKED BY PROOF OF AGRICULTURAL ACTIVITIES WHICH OU GHT TO HAVE BEEN ACCEPTED AND TREATMENT TO SAME AS AGRICULTURA L INCOME OUGHT TO HAVE BEEN GIVEN. III. WITHOUT PREJUDICE TO ABOVE IT IS SUBMITTED TH AT THE PRINCIPAL OF PEAK CREDIT APPLIES AND ADDITION OF RS.11,00,000/ - U/S.68 OF THE ACT TO ADDITION OF RS.2,15,400/- AMOUNT OF DOUBLE A DDITION WHICH IS AGAINST PRINCIPAL OF ACCOUNTANCY AND THEREFORE P RINCIPAL OF TELESCOPING BE APPLIED AND ADDITION IF ANY LIABLE TO BE MADE BE REWORKED ACCORDINGLY. 3. FIRST GROUND RELATES TO ADDITION OF RS.11 LAKHS UNDER S.68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT'). RELEVANT FACTS CONCERNING THE ISSUE ARE THAT THE ASSESSEE IS A RETIRED TEACHER FROM BHARUCH SCHOOL, DRAWING PENSION OF ABOUT RS.6,500/- P.M. THE FINANCIAL INTELLIGENCE UNIT (FTU) FOUND THAT THE ASSESSEE MAD E PAYMENT OF RS.11 LAKHS TOWARDS SUBSCRIPTION OF POLICY OF KOTAK MAHIN DRA OLD MUTUAL LIFE ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 3 - INSURANCE LTD. ON A SINGLE DAY I.E. 24/01/2008 BY M ULTIPLE DEMAND DRAFTS AND CASH TRANSACTIONS EACH DENOMINATED FOR L ESS THAN RS.50,000/-. IT WAS THUS FOUND THAT SUCH HUGE PAYMENT IS NOT COM MENSURATE WITH THE SOURCE OF INCOME OF THE ASSESSEE. THE CASE WAS ACC ORDINGLY SELECTED FOR SCRUTINY. THE ASSESSEE CLAIMED BEFORE THE ASSESSIN G OFFICER (AO) THAT IT WAS AGRICULTURAL INCOME RANGING FROM RS.2 LAKHS TO RS.3 LAKHS PER ANNUM AND THE SOURCE OF INVESTMENT OF RS.11 LAKHS IS FROM THE ACCUMULATED CASHFROM THE AGRICULTURAL INCOME EARNED OVER THE YE ARS. THE ASSESSEE ALSO CLAIMED THAT A PART OF INVESTMENT IS FROM SALE OF OLD GOLD JEWELLERY OWNED BY THE ASSESSEE. THE AO FOUND THAT CLAIM OF SALE OF GOLD ORNAMENTS WAS FALSE SINCE THE JEWELLERY SHOP WHOSE ADDRESS WAS NOTED ON THE SALE VOUCHER WAS FOUND TO BE NON-EXISTENCE A T THE SAID ADDRESS. THE AO ALSO NOTED THAT MULTIPLE DDS AND CASH TRANSA CTIONS ON A SINGLE DAY EACH DENOMINATED FOR NOT LESS THAN RS.50,000/- REMAINS UNEXPLAINED. THE ONUS FOR PROVING THE SOURCE OF PAYMENT HAS NOT BEEN DISCHARGED. THE AO CONSEQUENTLY CONCLUDED THAT THE AFORESAID PA YMENT OF RS.11 LAKHS HAS BEEN MADE OUT OF UNEXPLAINED SOURCE OF IN COME AND ACCORDINGLY BROUGHT THE SAME TO TAX UNDER S.68 OF T HE ACT. 4. IN FIRST APPEAL, THE CIT(A) NOTED THAT IN SPITE OF REPEATED OPPORTUNITY, THE ASSESSEE DID NOT APPEAR FOR HEARIN G. THE APPEAL WAS ACCORDINGLY DISMISSED BY THE CIT(A) EX-PARTE . ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 4 - 5. AGGRIEVED THERETO, THE ASSESSEE IS IN SECOND AP PEAL BEFORE THE TRIBUNAL. 6. BEFORE THE TRIBUNAL ALSO, NONE APPEARED FOR THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIONS DATED 08/07/2016 WERE FILED AND THE RIGHT OF ORAL HEARING WAS WAIVED. ACCORDINGLY, THE MATTE R WAS PROCEEDED ON THE BASIS OF WRITTEN SUBMISSIONS OF THE ASSESSEE AN D REPLY OF THE REVENUE THEREON. 7. ON PERUSAL OF THE WRITTEN SUBMISSIONS, WE FIND T HAT THE ASSESSEE HAS BROADLY SOUGHT TO REITERATE THAT HE IS HOLDING AGRICULTURAL LAND AND AGRICULTURAL INCOME WAS GENERATED OVER A PERIOD OF TIME. THE ASSESSEE STRONGLY OBJECTED TO THE ORDER OF THE REVENUE ON TH E GROUND THAT SECTION 68 HAS NO APPLICATION IN THE FACTS OF THE CASE AS T HE ASSESSEE HAS SUBSCRIBED TO THE POLICY OF KOTAK MAHINDRA OLD MUTU AL LIFE INSURANCE LTD. ON THE GROUND THAT THE AFORESAID SUBSCRIPTION DOES NOT INVOLVE CREDIT ENTRY. ALSO, THE ASSESSEE IS NOT MAINTAINING ANY B OOKS OF ACCOUNTS. THE ASSESSEE FURTHER HARPED THAT THE AGRICULTURAL LAND WAS SUFFICIENT TO PRODUCE THE AMOUNT OF PREMIUM. THE ASSESSEE ACCOR DINGLY URGED FOR REVERSAL OF THE ACTION OF THE CIT(A). 8. THE LD.DR FOR THE REVENUE, ON THE OTHER HAND, RE LIED UPON THE ORDERS OF THE AO AND THE CIT(A). ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 5 - 9. ON CAREFUL CONSIDERATION OF THE WRITTEN SUBMISSI ONS MADE AND REPLY OF THE REVENUE THEREON, WE FIND NO MERIT IN T HE PLEA OF THE ASSESSEE. NO DOCUMENTARY EVIDENCES HAVE BEEN FURNI SHED EITHER BEFORE THE AO OR BEFORE THE CIT(A) TO CORROBORATE THE ASSE RTIONS MADE TOWARDS SOURCES OF PAYMENT. THE AVERMENTS MADE BEFORE THE AO ARE BALD AND WITHOUT ANY SUPPORTING MATERIAL. THE ASSESSEE IN S PITE OF REPEATED OPPORTUNITIES, SQUANDERED THE SAME TO DEFEND THE CA SE. EVEN BEFORE THE TRIBUNAL, NO CORROBORATIVE MATERIAL HAS BEEN PLACED ON RECORD TO PROVE THE SOURCE OF DEPOSITS. IN THE WRITTEN SUBMISSIONS , THE ASSESSEE HAS MAINLY HARPED THAT SECTION 68 OF THE ACT IS NOT APP LICABLE IN THE FACTS OF THE CASE AND THEREFORE ADDITION CANNOT BE SUSTAINED . WE ARE NOT IMPRESSED BY SUCH LINE OF ARGUMENT. A WRONG QUOTIN G OF SECTION PER SE WILL NOT VITIATE THE CONCLUSION TOWARDS UNDISCLOSED INCOME. AS LONG AS THE ASSESSING AUTHORITY HAS A REQUISITE POWER FOR P ARTICULAR ACT, INVOCATION OF WRONG SECTION IS NOT MATERIAL. THIS OBSERVATION IS SUPPORTED BY THE DECISION OF L.HAZARIMAL KUTHIALA VS. ITO 41 ITR 12( SC). IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE HARDLY HAS ANY INCO ME AT ITS DISPOSAL FOR MAKING SUCH HUGE INVESTMENT. THE THEORY PROPOUNDE D BY THE ASSESSEE THAT STAGGERING AMOUNT OF RS.11 LACS HAVE BEEN ACCU MULATED IN CASH OUT OF AGRICULTURAL PRODUCE OVER A PERIOD OF TIME IS I N ONE REALM OF FANTASTICAL EXPLANATION. IT IS HIGHLY UNPALATABLE TO AGREE TO SUCH PLEA THAT SUCH LARGE CASH FOR LONG ALLEGEDLY GENERATED FROM S ALE OF AGRICULTURAL PRODUCE WILL BE KEPT IN CASH WITHOUT PUTTING IT IN BANK ACCOUNT WHICH THE ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 6 - ASSESSEE IS DULY MAINTAINING AS A SCHOOL TEACHER. IT IS NOT SHOWN AS TO HOW MUCH AGRICULTURAL INCOME WAS PRODUCED AND ACCUM ULATED. THE OTHER EXPLANATION OF THE ASSESSEE THAT CERTAIN GOLD ORNAMENTS WERE ALSO SOLD WAS FOUND FALSE ON ENQUIRY BY THE AO. WE FAIL TO SEE THE RATIONALE FOR MAKING CASH DEPOSIT OF LESS THAN RS.50,000/- IN MULTIPLE TIMES AND ALSO BY WAY OF DDS ON THE SAME DAY INSTEAD OF MAKIN G A SINGLE PAYMENT OF THE AFORESAID AMOUNT. IT IS APPARENT THIS WAS D ONE IN AN ATTEMPT TO INVEST WITH ANONYMITY AND TO BY-PASS THE SURVEILLAN CE SYSTEM OF THE INCOME-TAX AGENCIES. THE CONDUCT OF THE ASSESSEE I S FAR FROM BEFITTING. THE PLEA RAISED BY THE ASSESSEE IS AN ARGUMENT OF D ESPAIR. IN THE TOTALITY OF THESE CIRCUMSTANCES, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. GROUND NO.1 IS DISMISSED. 10. THE SECOND GROUND RELATES TO ADDITION OF RS.2,1 5,400/- CLAIMED AS EXEMPT BY THE ASSESSEE ON THE GROUND THAT THE AFORE SAID INCOME REPRESENTS AGRICULTURAL INCOME. WE FIND THAT THE A SSESSEE HAS FAILED TO PRODUCE ANY CORROBORATIVE EVIDENCE OF AGRICULTURAL ACTIVITIES BEFORE ANY OF THE AUTHORITIES BELOW OR BEFORE US. IT IS FOR T HE ASSESSEE TO PROVE THAT IT HAS CARRIED OUT BASIC OPERATIONS ON THE AGRICULTURA L LAND AND GENERATED INCOME FROM AGRICULTURAL ACTIVITIES. BALD ASSERTIO NS MADE IN THIS REGARD CANNOT BE TAKEN AS SUFFICIENT. HOWEVER, WE NOTICE FROM ASSESSMENT ORDER THAT ASSESSEE HOLDS 69 HECTARES OF LAND. THU S, THE FACT OF EXISTENCE OF AGRICULTURE INCOME CANNOT BE OUTRIGHTLY REJECTED . WE ACCORDINGLY ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 7 - CONSIDER 50% OF RS.2,15,400/- AS DERIVED FROM AGRIC ULTURE RECEIPTS AND GRANT PART RELIEF. GROUND NO.2 IS ACCORDINGLY PAR TLY ALLOWED. 11. BY WAY OF GROUND NO.3, THE ASSESSEE SEEKS TO RA ISE ALTERNATIVE CONTENTION THAT PRINCIPLE OF PEAK CREDIT THEORY SHO ULD BE APPLIED AND BENEFIT OF TELESCOPING SHOULD BE GIVEN. HOWEVER, W HILE AGREEABLY SUCH BENEFITS ARE AVAILABLE TO THE ASSESSEE WHEN THE APP ROPRIATE CIRCUMSTANCES EXIST, WE FIND THAT THE ASSESSEE HAS FAILED TO SHOW EXISTENCE OF ANY SUCH CIRCUMSTANCES AND THE WORKING FOR AVAILING SUCH BEN EFIT. NO AVERMENTS HAVE BEEN MADE TO THIS EFFECT IN THE WRITTEN SUBMIS SIONS OR BEFORE THE LOWER AUTHORITIES. IN THE CIRCUMSTANCES, WE FIND N O MERIT IN THIS GROUND OF APPEAL. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED.. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/ 05/2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/ 05 /2017 4..+,.+../ T.C. NAIR, SR. PS ITA NO. 2283/AH D/2013 SHRI DAHYABHAI M. PATEL VS. ITO ASST.YEAR 2008-09 - 8 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-II, BARODA 5. 9:-+67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. <, / GUARD FILE. / BY ORDER, (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 16.5.17(DICTATION-PAD 17- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.5.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S . 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER