PAWAN KUMAR R MODI, MUMBAI V. ITO WD 3(2), THANE

ITA 2345/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1424 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJUKTA CHOW DHURY; P K PARIDA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI G S PANNU, AM, & SHRI SAKTIJIT DEY, JM ITA NO. 2345/MUM/2014 ASSESSMENT YEAR 2009-10 SHRI PAWAN KUMAR R MODI 1D CHIRAG APARTMENT HAZARI DARGAH ROAD, WAGLE ESTATE,THANE (W), MUMBAI 400 604 PAN AFMPM7433A VS. ITO WARD 3(2) THANE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P K PARIDA & SMT. SANJUKTA CHOWDHURY RESPONDENT BY : SHRI SAURABH KUMAR RAI DATE OF HEARING : 22 .03.2017 DATE OF PRONOUNCEMENT : 05.04 .2017 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THE AFORESAID APPEAL BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 4.12.2013 OF THE LEARNED CIT(A)- I, THANE, FO R ASSESSMENT YEAR 2009-10. 2. GROUND NO.1 IS IN RELATION TO CONFIRMATION OF TH E ADDITION OF AN AMOUNT OF RS.2,50,000/- U/S. 69A OF THE ACT. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND DEPOSITS MADE BY THE ASSESSEE IN A BANK ACCOUNT TO THE TUNE OF RS .36,92,600/-. AFTER ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 2 CALLING FOR EXPLANATION OF THE ASSESSEE WITH REGARD TO THE SOURCE OF SUCH DEPOSIT, THE AO MADE ADDITION OF RS.16,92,600/- U/S . 69A OF THE ACT. THOUGH THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFO RE THE CIT(A), THE LEARNED CIT(A) WHILE DECIDING THE APPEAL OF THE ASSESSEE SU STAINED THE ADDITION TO THE EXTENT OF RS.2,50,000/- WHILE DELETING THE BALA NCE AMOUNT. 4. THE LEARNED AR SUBMITTED BEFORE US THAT TWO PART IES VIZ. M/S.RAJESH TRADING COMPANY AND M/S. SAROJ STEEL TRADERS WERE H AVING SOME DISPUTE BETWEEN THEM. HE SUBMITTED, THE ASSESSEE WAS ACTIN G AS MEDIATOR TO SETTLE THE DISPUTE BETWEEN THE PARTIES. HE SUBMITTED, THE ASSESSEE RECEIVED AN AMOUNT OF RS.2,50,000/- FROM M/S. SAROJ STEEL TRADE RS ON BEHALF OF M/S. RAJESH TRADING COMPANY TOWARDS SETTLEMENT OF DISPUT E. HE SUBMITTED THAT THE ENTIRE AMOUNT WAS RECEIVED IN CHEQUE AND THE AS SESSEE HAD REPAID THE MONEY TO THE CONCERNED PARTY ALSO IN CHEQUE. TO SU BSTANTIATE SUCH FACT, HE DREW OUR ATTENTION TO THE BANK STATEMENT, COPY OF W HICH IS AT PAGE 10 OF THE PAPER-BOOK. HE THEREFORE, SUBMITTED THAT THE ADDIT ION MADE SHOULD BE DELETED. 5. THE LEARNED DR RELIED UPON THE OBSERVATIONS OF T HE DEPARTMENTAL AUTHORITIES. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIAL ON RECORD. ON A PERUSAL OF THE BANK STATE MENTS OF THE ASSESSEE, A ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 3 COPY OF WHICH IS AT PAGE 10 OF THE PAPER-BOOK, WE H AVE NOTICED THAT THE ASSESSEE IN FEBRUARY, 2009 HAS RECEIVED AN AMOUNT O F RS.2,50,000 IN THREE DIFFERENT CHEQUES AND HAS ALSO REMITTED THE AMOUNT TO RAJESH TRADING COMPANY IN THREE SEPARATE CHEQUES. THUS, IT IS EVI DENT FROM THE BANK STATEMENT THAT THE AMOUNT OF RS.2,50,000/- WAS RECE IVED BY THE ASSESSEE ON BEHALF OF M/S. RAJESH TRADING COMPANY. THAT BEING THE CASE, THE AMOUNT IN QUESTION CANNOT BE TREATED AS UNEXPLAINED MONEY OF THE ASSESSEE. ACCORDINGLY, THE ADDITION MADE IS DELETED. 7. IN GROUND NO.2, ASSESSEE HAS CHALLENGED ADDITION OF RS.20 LACS U/S. 69A OF THE ACT. 8. BRIEFLY, FACTS ARE, ASSESSEE IS AN INDIVIDUAL CA RRYING ON LEGAL PROFESSION. BESIDES, HIS PROFESSIONAL ACTIVITY, THE ASSESSEE IS ALSO ENGAGED IN TRADING IN SHARES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, T HE AO ON THE BASIS OF INFORMATION AVAILABLE ON RECORD FOUND THAT THE ASSE SSEE WAS MAINTAINING A SAVING BANK ACCOUNT IN KONKAN MERCANTILE CO-OP BANK LTD., RABODI BRANCH, THANE (W), JOINTLY WITH TWO OTHER PERSONS. ON VERI FYING THE BANK STATEMENT, HE FOUND THAT CASH DEPOSITS OF RS.20 LACS WAS MADE IN THE SAID ACCOUNT DURING THE RELEVANT PREVIOUS YEAR, WHICH HAS NEITHE R BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT NOR SHOWN IN THE BALANCE SHEET . HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEP OSIT IN THE SAID BANK ACCOUNT. AS ALLEGED BY THE AO, INSPITE OF ADEQUAT E OPPORTUNITY BEING GIVEN, ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 4 THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION REGA RDING THE SOURCE OF CASH DEPOSITS. THE AO THEREFORE, CONCLUDED THAT THE CAS H DEPOSITS OF RS.20 LACS HAS TO BE TREATED AS UNEXPLAINED MONEY IN TERMS OF SECTION 69A OF THE ACT AND ADDED IT BACK TO THE INCOME OF THE ASSESSEE. T HE ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT(A). 9. IN THE COURSE OF HEARING BEFORE THE FIRST APPELL ATE AUTHORITY TO EXPLAIN THE SOURCE OF DEPOSITS OF RS.20 LACS TO THE JOINT S B A/C., THE ASSESSEE SUBMITTED THAT THE SAID AMOUNT WAS RECEIVED FROM HI S UNCLE TOWARDS LOAN. IN SUPPORT OF SAID CONTENTION, THE ASSESSEE PRODUCED C ONFIRMATION LETTER SUPPORTED BY AFFIDAVIT FROM HIS UNCLE. FURTHER, EX PLAINING THE CREDIT WORTHINESS OF THE CREDITOR, THE ASSESSEE SUBMITTED THAT THE SAID AMOUNT WAS ADVANCED TO THE ASSESSEE OUT OF SALE PROCEEDS OF AG RICULTURAL LAND AVAILABLE WITH HIS UNCLE. IN SUPPORT OF HIS CONTENTIONS, ASSE SSEE ALSO PRODUCED COPIES OF SALE AGREEMENT. SINCE THE AFORESAID DOCUMENTARY EVIDENCES WERE PRODUCED FOR THE FIRST TIME BEFORE THE CIT(A) AS AD DITIONAL EVIDENCE, HE CALLED FOR A REMAND REPORT AND AFTER EXAMINING THE SAME, H E HELD THAT THE ASSESSEES CLAIM THAT HE HAS RECEIVED AN AMOUNT OF RS.20 LACS AS LOAN FROM HIS UNCLE IS NOT BELIEVABLE. HE OBSERVED, WHILE TH E ASSESSEE HAS DEPOSITED RS.20 LACS CLAIMED TO HAVE BEEN RECEIVED FROM HIS U NCLE IN THE MONTH OF JUNE 2008, THE SALE OF AGRICULTURAL LAND FROM WHICH ASSE SSEES UNCLE CLAIMED TO HAVE SOURCED THE LOAN ADVANCE WERE EXECUTED IN MAY 2009. THE LEARNED ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 5 CIT(A), THEREFORE, WAS OF THE VIEW THAT PRIOR TO TH E DATE OF SALE OF AGRICULTURAL LAND, ASSESSEES UNCLE COULD NOT HAVE GOT THE MONEY TO ADVANCE AS LOAN. HE, THEREFORE, OPINED THAT THE EXPLANATION OF THE ASSES SEE THAT HE RECEIVED THE AMOUNT FROM HIS UNCLE IS ONLY AN AFTER-THOUGHT HENC E, NOT BELIEVABLE. ACCORDINGLY, HE CONFIRMED THE ADDITION OF RS.20 LAC S U/S. 69A. 10. THE LEARNED AR REITERATING THE STAND TAKEN BEFO RE THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE ASSESSEE HAS NOT ONL Y EXPLAINED THE SOURCE OF CASH DEPOSIT BY FURNISHING REQUISITE EXPLANATION BU T ALSO SUPPORTED IT WITH EVIDENCE IN THE FORM OF CONFIRMATION LETTER AND AFF IDAVIT OF THE CREDITOR. HE HAS ALSO EXPLAINED SOURCE OF SOURCE BY FURNISHING T HE SALE AGREEMENT OF AGRICULTURAL LAND FROM WHICH HIS UNCLE GOT MONEY TO ADVANCE LOAN TO THE ASSESSEE. THE LEARNED AR SUBMITTED, IN ANY CASE OF THE MATTER, THE AO HAS PROCEEDED TO ASSESS THE AMOUNT AS UNEXPLAINED MONEY U/S. 69A OF THE ACT. HE SUBMITTED THAT IN NO CASE, PROVISIONS OF SECTION 69A ARE ATTRACTED. HE SUBMITTED THAT THE ENTRIES RELATING TO RECEIPT OF R S. 20 LACS ARE NOT ONLY RECORDED IN THE BOOKS OF ACCOUNT AND FORMS PART OF THE BALANCE SHEET BUT THE ASSESSEE IN COURSE OF ASSESSMENT PROCEEDINGS HA S ALSO EXPLAINED THE SOURCE OF SUCH DEPOSIT. THEREFORE, IT CANNOT BE TR EATED AS UNEXPLAINED MONEY U/S. 69A OF THE ACT. THE LEARNED AR SUBMITTE D THAT EVEN OTHERWISE ALSO, THE ASSESSEE HAS NOT ONLY EXPLAINED THE SOURC E OF RS. 20 LACS DEPOSITED IN THE BANK ACCOUNT BY FURNISHING CONFIRMATION OF T HE PERSON, WHO ADVANCED ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 6 THE LOAN TO THE ASSESSEE BUT HAS ALSO FURNISHED AN AFFIDAVIT OF THE CONCERNED PERSON. THAT BEING THE CASE, WITHOUT MAKING ANY IN VESTIGATION AND INQUIRY TO CONTROVERT THE CLAIM OF THE ASSESSEE AND WITHOUT BR INGING ANY MATERIAL ON RECORD, THE AO CANNOT MAKE THE ADDITION. 11. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E DECISION OF THE DEPARTMENTAL AUTHORITIES AND SUBMITTED THAT ASSESSE ES CLAIM THAT THE AMOUNT OF RS. 20 LACS WAS RECEIVED FROM HIS UNCLE IS NOT B ELIEVABLE CONSIDERING THE FACT THAT AS PER SALE AGREEMENT, AGRICULTURAL LAND FROM THE SALE OF WHICH THE ASSESSEES UNCLE CLAIMED TO HAVE ADVANCED LOAN HAPP ENED IN MARCH 2009, WHEREAS, THE ASSESSEE HAS DEPOSITED THE AMOUNT IN J UNE 2008. THEREFORE, THE ASSESSEES UNCLE DID NOT HAVE OSTENSIBLE SOURCE FOR ADVANCING THE LOAN. HE SUBMITTED, EVEN AS PER THE SALE AGREEMENT SUBMIT TED BY THE ASSESSEE THE TOTAL SALE PROCEEDS IS MUCH LESS THAN THE AMOUNT OF RS. 20 LACS CLAIMED TO HAVE BEEN ADVANCED BY ASSESSEES UNCLE. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD. UNDISPUTED FACTS ARE, DEPOSIT OF RS. 20 LACS WAS FOUND TO HAVE BEEN MADE IN SB ACCOUNT JOINTLY HELD BY THE AS SESSEE WITH TWO OTHER PERSONS. WHILE EXPLAINING THE SOURCE OF SUCH DEPOS IT THE ASSESSEE HAD STATED THAT HE RECEIVED THE AMOUNT AS LOAN FROM HIS UNCLE SHRI KAILASHCHAND MODI AND HE SUBSTANTIATED SUCH CLAIM BY FURNISHING CONFI RMATION SUPPORTED BY AFFIDAVIT FROM SHRI KAILASHCHAND MODI AND HE ALSO E XPLAINED THE SOURCE FROM ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 7 WHICH HIS UNCLE HAD ADVANCED SUCH AMOUNT BY PRODUCI NG COPIES OF THE SALE AGREEMENT FOR SALE OF AGRICULTURAL LAND. THOUGH, T HESE DOCUMENTS WERE PRODUCED BY WAY OF ADDITIONAL EVIDENCE BEFORE THE F IRST APPELLATE AUTHORITY AND WERE ALSO EXAMINED BY THE AO ON REMAND, THE DEP ARTMENTAL AUTHORITIES HAVE REFUSED TO ACCEPT THE CLAIM OF THE ASSESSEE. IT IS FURTHER RELEVANT TO NOTE THAT THE AO HAS MADE THE ADDITION BY TREATING THE AMOUNT OF RS. 20 LACS AS UNEXPLAINED MONEY U/S. 69A. THEREFORE, AT THE O UTSET, WE NEED TO EXAMINE WHETHER PROVISIONS OF SECTION 69A ARE AT AL L ATTRACTED. ON A BARE READING OF SECTION 69A OF THE ACT, IT IS NOTICED TH AT IN A CASE WHERE THE ASSESSEE IS FOUND TO BE OWNER OF MONEY, BULLION, JE WELLERY ETC., WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT MAINTAINE D BY HIM AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH MONEY, BULLION, JEWELLERY ETC., TO THE SATISFACTION OF THE AO, THEN IT WILL BE TREATED AS UNEXPLAINED MONEY OF THE ASSESSEE U/S. 69A OF THE A CT. HOWEVER, IN THE PRESENT CASE, THE AMOUNT OF RS.20 LACS WAS FOUND IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE, FURTHER, IT IS THE CLAIM O F THE ASSESSEE THAT SAID AMOUNT HAS ALSO BEEN RECORDED IN THE BOOKS OF ACCOU NT. THIS CLAIM OF THE ASSESSEE APPEARS TO BE CORRECT, AS ON PERUSAL OF TH E BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2009, A COPY OF WHICH IS AT PA GE 5 OF THE PAPER-BOOK, IT APPEARS THAT THE AMOUNT OF RS. 20 LACS HAS BEEN SHO WN AS UNSECURED LOAN FROM SHRI KAILASHCHAND MODI. MOREOVER, THERE IS NO DISPUTE THAT THE SOURCE ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 8 OF SUCH MONEY IS EXPLAINED FROM THE BANK ACCOUNT OF THE ASSESSEE. IN THE AFORESAID VIEW OF THE MATTER, THE AMOUNT OF RS. 20 LACS CANNOT BE TREATED AS UNEXPLAINED MONEY U/S. 69A OF THE ACT. IN THE WORS T CASE, THE AO COULD HAVE CONSIDERED THE AMOUNT AS UNEXPLAINED CASH CRED IT U/S. 68 OF THE ACT. EVEN ASSUMING THAT IT IS AN UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT, IT IS NECESSARY TO EXAMINE WHETHER AT ALL IT CAN BE TREAT ED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THERE IS NO DISPUTE THA T ASSESSEE HAS EXPLAINED THE SOURCE OF SUCH CASH DEPOSIT IN HIS BANK ACCOUNT TO HAVE COME FROM THE LOAN ADVANCED BY HIS UNCLE SHRI KAILASHCHAND MODI. IT I S ALSO A FACT ON RECORD, BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAD SUBMITTED CONFIRMATION LETTER AS WELL AS AFFIDAVIT OF SHRI KAILASHCHAND MO DI, WHO HAPPENS TO BE HIS UNCLE, STATING THAT HE HAD ADVANCED AMOUNT OF RS.20 LACS AS LOAN. TO PROVE THE SOURCE OF RS.20 LACS AT THE HANDS OF SHRI KAILA SHCHAND MODI, ASSESSEE HAS PRODUCED THE SALE AGREEMENT FOR SALE OF AGRICULTURA L LAND. AS IT APPEARS FROM RECORD ON THE FACE OF SUCH EVIDENCE PRODUCED BY THE ASSESSEE, THE AO HAS NOT CONDUCTED ANY ENQUIRY TO ASCERTAIN THE CREDIT W ORTHINESS OF SHRI KAILASHCHAND MODI. MERELY ON PRESUMPTION AND SURMI SES, THE DEPARTMENTAL AUTHORITIES HAVE DISCARDED THE CLAIM OF THE ASSESSE E. MERELY BECAUSE THE SALE AGREEMENTS ARE SUBSEQUENT TO THE DATE OF ADVAN CEMENT OF LOAN, IT CANNOT BE PRESUMED THAT THE CREDITOR HAD NO CREDIT WORTHINESS TO ADVANCE THE AMOUNT. IN ANY CASE OF THE MATTER, THE ASSESSE E HAS NOT ONLY EXPLAINED ITA NO 2345/MUM//2014 SHRI PAWAN KUMAR R MODI 9 THE SOURCE OF DEPOSIT BUT ALSO SUBSTANTIATED IT BY PRODUCING THE CONFIRMATION LETTER FROM THE CREDITOR SUPPORTED BY AN AFFIDAVIT. IF THE DEPARTMENT DISBELIEVES THE CLAIM OF THE ASSESSEE, IT MUST NOT ONLY MAKE ENQUIRY BUT ALSO BRING MATERIAL ON RECORD TO DISPROVE THE CLAIM OF T HE ASSESSEE. IN THE ABSENCE OF ANY SUCH ENQUIRY AND MATERIAL BROUGHT ON RECORD, THE CLAIM OF THE ASSESSEE CANNOT BE REJECTED / DISBELIEVED ON MERE P RESUMPTION AND SURMISES. IN VIEW OF THE AFORESAID, WE HOLD THAT T HE ADDITION OF RS.20 LACS U/S. 69A IS NOT SUSTAINABLE. ACCORDINGLY, WE DELET E THE SAME. THUS, GROUND NO.2 IS ALLOWED. 13. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DAY OF APRIL 2017. SD/- SD/- (G S PANNU) (SAKT IJIT DEY) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI; DATED : 5 TH APRIL, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A),THANE . 4. THE CIT 5. DR, C BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI