ISHAQ HABIB BALWA, MUMBAI V. ITO 13(3)(2), MUMBAI

ITA 2365/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75641 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 18-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: D C JAIN
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI D KARUNAKARA RAO, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2365/MUM/2012 : ASST.YEAR 2008-09 SHRI ISHAQ HABIB BALWA, C/O GOOD LUCK RESTAURANT, S V P ROAD, PRADHAN BLDG., MUMBAI- 400 009 PAN ADIPB0249D VS. THE ITO 13(3)(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D C JAIN RESPONDENT BY : SHRI O P SINGH DATE OF HEARING : 18.02.2014 DATE OF PRONOUNCEM ENT : 21.02.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER OF THE CIT(A) DATED 27.02.2012 PERTAINING TO A.Y. 2008-09. THE GROUNDS OF APPEAL READ AS UNDER: 1)UNDER THE FACTS, LAW AND CIRCUMSTANCES THE LEARN ED C.LT. (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 1 1,79,000/- MADE BY THE LEARNED ASSESSING OFFICER STATING UNEXP LAINED CASH DEPOSITS IN THE BANK ACCOUNT. 2)UNDER THE FACTS LAW AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERREDIN CONFIRMING THE ADDITION OF RS. 56 ,213/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF DEEM ED RENT INCOME FROM THE PROPERTY AT AHMEDABAD. ITA NO.: 2365/MUM/2012 ASSESSMENT YEAR: 2008-09 2 3)THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER, D ELETE THE GROUND/S OF APPEAL AT OR BEFORE THE HEARING OF APPE AL. 2. THE FACTS OF THE CASE ARE THAT DURING THE YEAR, THE ASSESSEE HAD DEPOSITED AN AMOUNT OF RS.11,79,000/- ON VARIOUS DA TES IN CASH IN HIS BANK ACCOUNT WITH M/S. DEVELOPMENT CREDIT BANK, MUMBAI, SINCE, THE ASSESSEE WAS NOT ABLE TO SATISFACTORILY EXPLAIN THE SOURCE O F THIS CASH DEPOSIT, THE ASSESSING OFFICER TREATED THE SAID DEPOSITS OF RS. 11,79,000/- AS THE UNEXPLAINED INCOME OF THE ASSESSEE FOR THE YEAR. 3. THE LEARNED CIT(A) CONFIRMED THE ADDITIONS SO M ADE BY THE AO. BEFORE US, THE LEARNED REPRESENTATIVE OF THE ASSESS EE HAS SUBMITTED THAT THE ASSESSEE IS A MATERIAL SUPPLIER TO THE RESTAURANTS WHICH REQUIRE FREQUENT CASH BALANCES TO MEET THE PURCHASES/REQUIREMENT OF THE R ESTAURANTS. THE ASSESSEE HAS A BANKING ACCOUNT WITH DEVELOPMENT CREDIT BANK, THE CASH IS WITHDRAWN AS WELL AS CASH DEPOSITED DURING THE YEAR. THE LEAR NED ASSESSING OFFICER HAS MADE THE ADDITION OF RS.11,79,000/- BEING THE CASH DEPOSITS DURING THE YEAR, WITHOUT TAKING INTO ACCOUNT THE CASH WITHDRAWALS AN D REDEPOSIT IN THE BANK ACCOUNT. HE HAS ALSO DRAWN OUR ATTENTION TO THE BAN K ACCOUNT STATEMENT. 4. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UP ON THE FINDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RESPECTIVE SUBMISSIONS O F THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORD. THE ASSESSE E HAS GIVEN THE DATE-WISE STATEMENT OF WITHDRAWALS AND DEPOSITS IN THE SAID B ANK ACCOUNT. IT CAN BE OBSERVED THAT ON THREE DAYS I.E. ON 18/04/2007, 19/ 04/2007 AND 30/04/2007, THE ASSESSEE HAD WITHDRAWN AMOUNTS OF RS.3,00,00/-, RS.5,00,000/- AND RS.15,500/-, WHICH IS FOLLOWED BY THE DEPOSITS ON 2 8/06/07 AND 19/07/2007 OF RS. 1 LAKH EACH. THE ASSESSEE HAS EXPLAINED THA T THE SAID DEPOSITS WERE MADE OUT OF THE CASH IN HAND FROM EARLIER WITHDRAWA LS. EVEN THE ASSESSEE HAS ITA NO.: 2365/MUM/2012 ASSESSMENT YEAR: 2008-09 3 ALSO EXPLAINED THAT IT IS THE REQUIREMENT OF THE NA TURE OF HIS BUSINESS TO HAVE CASH IN HAND. THE DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF MOONGIPA INVESTMENT LTD. VS. ITO 70 DTR 132 HAS OBSERVED TH AT WHEN THE DEPOSITS IN THE BANK ACCOUNTS ARE MADE FROM THE CASH BALANCE AV AILABLE TO THE ASSESSEE IN ITS BOOKS OF ACCOUNTS, ADDITION UNDER SECTION 68 CA NNOT BE MADE IRRESPECTIVE OF THE TIME BETWEEN THE EARLIER WITHDRAWAL FROM THE BANK AND SUCH DEPOSITS. IN THE CASE IN HAND ALSO, THE ASSESSEE HAS ESTABLIS HED THE CO RELATION BETWEEN THE ENTRIES OF WITHDRAWALS AND THAT OF DEPOSITS. ME RELY BECAUSE THERE WAS A GAP OF ABOUT 20 DAYS IN SOME OF THE TRANSACTION, TH AT ITSELF IS NOT SUFFICIENT TO HOLD THAT THE SAME HAS ARISEN OUT OF THE UNDISCLOSE D INCOME OF THE ASSESSEE ESPECIALLY WHEN THE ASSESSEE HAS EXPLAINED THE REAS ON THAT IT IS THE REQUIREMENT OF THE NATURE OF HIS BUSINESS TO KEEP C ASH IN HAND. SUCH DEPOSITS AND WITHDRAWALS HAVE ALSO BEEN MADE BY THE ASSESSEE DURING THE A.Y. 2007- 08 AND THE AO HAS ACCEPTED THE SAME EXPLANATION GIV EN BY THE ASSESSEE. IN VIEW OF OUR ABOVE OBSERVATIONS, THIS GROUND OF APPE AL IS ACCORDINGLY ALLOWED. 3. IN THE NEXT GROUND OF APPEAL, THE ASSESSEE HAS OBJECTED TO THE CONFIRMATION OF ADDITION OF RS. 56,213/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE FACTS OF THE CASE ARE THAT FROM THE BALANCE SHEET OF THE ASSESSEE, IT WAS NOTICED BY THE AO THAT THE ASSESSE E OWNED ONE HOUSE PROPERTY AT AHMEDABAD OTHER THAN THE SELF OCCUPIED PROPERTY. HOWEVER, THE ASSESSEE HAD NOT OFFERED ANY INCOME FROM THE SAID P ROPERTY, NEITHER HAD HE PROVIDED ANY MUNICIPAL RATABLE VALUE FOR THE SAID P ROPERTY. HE, THEREFORE, RELIED ON THE DECISION OF THE HONBLE ALLAHABAD HIG H COURT IN THE CASE OF RADHADEVI DALMIA REPORTED IN 125 1TR 134 WHEREIN, THE HONBLE HIGH COURT UPHELD THE DETERMINATION OF ANNUAL LETTING VALUE AS A PERCENTAGE OF THE INVESTMENT. IN THE SAID CASE, THE ANNUAL LETTING VA LUE WAS TAKEN AT 7% OF THE INVESTMENT. THE AO WHILE RELYING UPON THE SAID AUTH ORITY ADOPTED THE SAME ITA NO.: 2365/MUM/2012 ASSESSMENT YEAR: 2008-09 4 AT 12% OF THE COST OF THE SAID PROPERTY. THE CIT(A) UPHELD THE ORDER OF THE AO. 4. BEFORE US, THE LEARNED AR HAS SUBMITTED THAT IN THE DECISION RELIED ON BY THE AO, THE RATE APPLIED WAS 7% AND THE SAME RATE BE ADOPTED IN THE CASE OF THE ASSESSEE ALSO. HE HAS FURTHER SUBMITTED THAT THE REALIZABLE RENT FROM THE PROPERTIES IN AHMEDABAD WAS NOT ATTRACTIVE AND THE PROPERTIES WERE LYING VACANT. IN VIEW OF THE SUBMISSIONS, IN OUR VI EW, THE RATE OF 7% AS ADOPTED BY THE HONBLE HIGH COURT IN THE CASE RELIE D UPON BY THE AO WILL BE JUST AND PROPER. HENCE, THE AO IS DIRECTED TO ADOPT THE RATE OF 7% INSTEAD OF 12 % OF THE INVESTMENT. THIS GROUND IS PARTLY ALLOW ED. 4. GROUND NO. 3 IS GENERAL IN NATURE AND, HENCE DOE S NOT REQUIRE ADJUDICATION. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY 2014 SD/- SD/- (D KARUNAKARA RAO) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 21 ST FEBRUARY, 2014 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. THE CIT (A) CONCERNED MUMBAI 5. THE DR, I - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI