LIYAKAT IBRAHIM SHAIKH, MUMBAI V. ITO 24(3)(3), MUMBAI

ITA 2659/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0578 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 12-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS N HEMLATHA
• Assessee Lawyers: SURESHKUMAR K N
• Keywords: Unexplained cash credit; Opportunity of being heard; Peak credit
• Section: 68

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 2659/MUM/2017 ( / ASSESSMENT YEAR: 2011 - 12 ) LIYAKAT IBRAHIM SHAIKH 296/2353, MOTILAL NAGAR NO. 2, M. G. ROAD, GOREGAON (W), MUMBAI - 400 090 / VS. ITO - 24(3)(3), MUMBAI ./ ./ PAN/GIR NO. AAZPS 0334 E ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SURESHKUMAR K. N. / RESPONDENT BY : MRS. N. HEMLATHA / DATE OF HEARING : 30.11.2017 / DATE OF PRONOUNCEMENT : 07.02 .2018 / O R D E R PER S HAMIM YAHYA , A. M.: THIS A PPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.11.2016 AND PERTAINS TO THE A SSESSMENT YEAR 2011 - 12. 2. THE GROUNDS OF APPEAL READ AS UNDER: 2 ITA NO. 2659/MUM/2017 (A.Y. 2011 - 12) LIYAKAT IBRAHIM SHAIKH VS. ITO 1. IN THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER HA S ERRED IN LEVYING A TAX OF RS. 10,52,010 / - ON ASSESSED INCOME AT RS.30,97,265/ - BY ADDING CASH DEPOSITS OF RS.23,95,265 / - AGAINST DECLARED INCOME AT RS.7,01,910/ - BY THE ASSESSEE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE AO'S ACTION ASSESSING THE INCOME AT RS.30,97,265/ - AGAINST THE DECLARED INCOME AT RS.7,01,910/ - BY THE ASSESSEE. 3. REASONS GIVEN BY LD CIT(A) FOR CONFIRMING AO' S ACTION OF TAKING THE INCOME AT RS.30,97,175 / - AS AGAINST INCOME DISCLOSED BY THE ASSESSEE AT RS.7,01,910 / - ARE INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN PR OFESSION OF I NCOME TAX AND SALES TAX CONSULTANT. DURING THE PREVIOUS YEAR CONCERNED THE ASSESSEE HAD DECLARED TOTAL RECEIPTS OF RS.24,55,480 / - AND THE NET PROFIT OF RS.8,01,910 / - . THE ASSESSING OFFICER NOTED FROM THE AIR INFORMATION THAT THE ASSESSEE HAS D EPOSITED LARGE SUMS OF CASH IN HIS SAVINGS BANK ACCOUNT WITH M / S MOGAVEERA CO - OP BANK LTD. THE ASSESSING OFFICER REPEATEDLY DIRECTED THE ASSESSEE TO EXPLAIN THE SOURCE OF THIS CASH. THE ASSESSING OFFICER ALSO NOTED THAT THE TOTAL CREDITS IN THE BANK ACCOUN T OF THE ASSESSEE WERE TO THE TUNE OF RS.48,19,995 / - (CASH + CHEQUE) WHICH IS RS.23,95,265 / - MORE THAN THE TOTAL RECEIPTS DECLARED BY THE ASSESSEE. IN VIEW OF THE NON - COMPLIANCE TO THE SHOW CAUSE GIVEN BY THE ASSESSING OFFICER , THE ASSESSING OFFICER HELD T HAT THE SURPLUS OF RS.23,95,265 / - IS NOT EXPLAINED. THE ASSESSING OFFICER, ACCORDINGLY, HELD THAT THE CASH DEPOSITS IN THE BANK ACCOUNT TOTALING RS. 19,40,000/ - REPRESENTS THE UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT AND THE BALANCE OF RS.23,95, 265/ - MINUS RS.19,40,000 / - I.E. RS.4,55,265 / - WAS 3 ITA NO. 2659/MUM/2017 (A.Y. 2011 - 12) LIYAKAT IBRAHIM SHAIKH VS. ITO ALSO TREATED TO BE UNEXPLAINED. IN ALL THE ASSESSING OFFICER MADE AN ADDITION OF RS .23,95,265/ - ON THIS ACCOUNT. 4. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT F URTHER DURING THE APPELLATE PROCEEDINGS THE ASSESSEE WAS DIRECTED TO PRODUCE HIS BOOKS OF ACCOUNT AND CASH BOOK BUT THE ASSESSEE DID NOT HAVE THE SAME READY WITH HIM. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSEE HAD NOT MAINTAINED A NY LEDGER OF THE PARTIES FROM WHOM HE RECEIVED CONSULTANCY PAYMENTS. THAT NO BILL BOOKS ARE MAINTAINED. THAT I N THE APPELLATE PROCEEDINGS THE ASSESSEE HAS GIVEN DISJOINTED ARGUMENTS AND AFTER REPEAT ED QUERIES GIVEN ON ORDER SHEET, THE ASSESSEE HAS NOT ATTE NDED THE LAST PROCEEDINGS ALSO. HENCE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT T HE A PPELLATE ORDER IS PASSED ON THE BASIS OF THE FACTS AVAILABLE ON RECORD. THE SOLE GROUNDS OF APPEAL IS HEREUNDER TREATED AS ONE ORIENTED T OWARDS THE ADDIT ION OF RS. 23 , 95 ,265/ - AS UNEXPLAINED CASH CREDITS BY THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ADJUDICATED AS UNDER: 4.4 IN THE APPELLATE PROCEEDINGS THE ASSESSEE CLAIMED THAT IN HIS BANK STATEMENT A SUM OF RS.5,00,000/ - WAS DEPO SITED IN CASH ON 24/05/2010 AND THE SAME AMOUNT WAS DRAWN BY THE ASSESSEE ON 25/05/2010. THE ASSESSEE CLAIMED THAT THIS AMOUNT SHOULD BE TREATED AS A CONTRA FIGURE AND SHOULD NOT BE CONSIDERED FOR THE ADDITION. THIS CONTENTION OF THE ASSESSEE IS UNACCEPTAB LE. IT WOULD HAVE BEEN POSSIBLE TO ACCEPT IT IF THE AMOUNT WAS WITHDRAWN EARLIER AND DEPOSITED LATER IN CASH. IN THE PRESENT CASE THE ONUS WAS ON THE ASSESSEE HAS TO PROVE THE SOURCE OF THE INITIAL DEPOSIT AND ONLY THEN NO ADDITION CAN BE MADE IF THE SAME IS WITHDRAWN IN CASH ALSO. THE ASSESSEE HAS NOT GIVEN ANY PEAK CREDIT CALCULATIONS AND HAS NOT EXPLAINED AS TO WHETHER THIS AMOUNT WAS DULY REFLECTED 4 ITA NO. 2659/MUM/2017 (A.Y. 2011 - 12) LIYAKAT IBRAHIM SHAIKH VS. ITO IN HIS BOOKS. AS MENTIONED ABOVE, DESPITE CALLING FOR THE BOOKS OF ACCOUNT AND CASH BOOK VIDE ORDER SHEET DATED 28/09/2016 AND ON 31/10/2016, THE ASSESSEE HAS NOT PRODUCED THE SAME AND HENCE THIS CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED AS SUCH. 4.5 THE ASSESSEE HAS ALSO CLA IMED THAT DEPOSITS TOTALING RS. 12 , 65,041/ - HAD BEEN RECEIVED BY HIM AS UNSECURED LOAN S FROM HIS WIFE MS SHARADA SHAIKH (RS.6,31,500/ - ), FROM ONE SHRI HAMID SHAIKH (RS.1,00,000/ - ) AND FR OM ONE SHRI FARUKH SHAIKH (RS. 5,33,500/ - ). THESE AMOUNTS ARE NOT RECEIVED IN ONE GO BUT THERE ARE SEVERAL ENTRIES CLUBBED TOGETHER BY THE ASSESSEE TO ARRIVE AT THE CONSOLIDATED FIGURE OF UNSECURED LOANS AS CLAIMED ABOVE. THE ASSESSEE WAS DIRECTED TO PRODUCE THE BANK STATEMENT OF THE LOAN CREDITORS AND THEIR INCOME TAX PARTICULARS. THE ASSESSEE CLAIMED THAT MS SHARADA SHAIKH IS ALSO AN INCOME TAX CONSULTANT AN D SHE IS FILING HER RETURN OF INCOME SEPARATELY. THE ASSESSEE FILED A COPY OF HER BANK STATEMENT BUT IT WAS NOTED THAT THIS ACCOUNT STATEMENT OF M/S MOGAVEERA CO - OPERATIVE BANK LTD IS ALSO IN THE NAME OF THE ASSESSEE HIMSELF. THE ASSESSEE CLAIMED THAT THIS ACCOUNT WAS JOINTLY HELD WITH HIS WIFE AND THE TRANSACTIONS BELONG TO HIS WIFE ONLY. THE ASSESSEE ALSO FILED A SIMPLE CONFIRMATION FROM HIS WIFE MENTIONING THAT SHE HAD GIVEN A SUM OF RS.7,25,053/ - TO THE ASSESSEE DURING THE FY 2010 - 2011. THIS FIGURE IS D IFFERENT FROM THE EARLIER FIGURE GIVEN BY THE ASSESSEE AND NO DATE - WISE DETAILS HAVE BEEN FILED. THE ASSESSEE WAS DIRECTED IN WRITING TO PROVE THE CREDITWORTHINESS OF HIS LOAN CREDITORS BUT THERE HAS BEEN NO RESPONSE. IN VIEW OF THESE FACTS THE CLAIM OF UN SECURED LOAN FROM MS SHARADA SHAIKH IS HELD NOT VERIFIABLE. SIMILARLY IN THE CASE OF SHRI HAMID SHAIKH THE ASSESSEE WAS NOT ABLE TO FILE ANY PROOF OF THE CREDITWORTHINESS OF THIS CREDITOR AND DID NOT PRODUCE THE BANK STATEMENT OF THIS CREDITOR. IT IS ALSO SEEN THAT THIS CREDITOR HAD FILED A RETURN OF INCOME FOR AY 2011 - 1 2 DECLARING TOTAL INCOME OF RS. 1,61,661 / - ONLY AND THERE WAS NO REASON FOR HIM TO ADVANCE A SUM OF RS.1,00,000/ - TO THE ASSESSEE DURING THIS YEAR. IN THE CASE OF SHRI FARUKH SHAIKH IT WAS NO TED THAT FIRSTLY THE DATE - WISE DETAILS OF LOAN AMOUNTS TAKEN DO NOT TALLY WITH HIS BANK STATEMENT AND SECONDLY THERE WERE SUBSTANTIAL CASH DEPOSITS IN THE BANK ACCOUNT OF SHRI FARUKH SHEIKH BEFORE TRANSFER OF THE SUMS TO THE ASSESSEE. THERE WAS NO EXPLANAT ION FOR THE SAME. AS A RESULT THE CLAIM OF ASSESSEE THAT THE UNSECURED LOANS ARE EXPLAINED OR THAT THE EXPLANATION IS SATISFACTORY IS NOT BORNE OUT MORESO BECAUSE THE ASSESSEE DID NOT PRODUCE HIS BOOKS OF ACCOUNTS. IT IS ALSO RELEVANT TO NOTE THAT THE ASSE SSEE CLAIMS TO CHARGE A SUBSTANTIAL AMOUNT FROM HIS CLIENTS FOR BOOK WRITING (AS PER A BLAND LIST GIVEN) BUT APPARENTLY THE ASSESSEE NEVER WROTE HIS OWN BOOKS OF ACCOUNT EVEN THOUGH IT IS ALLUDED TO IN THE ASSESSMENT ORDER. 4.6 THE ASSESSEE HAS ALSO CLAI MED THAT THAT THERE WERE CERTAIN DEPOSIT BY CHEQUE WHICH WERE DISHONOURED ON SUBSEQUENT DATES AND TO THAT EXTENT NO 5 ITA NO. 2659/MUM/2017 (A.Y. 2011 - 12) LIYAKAT IBRAHIM SHAIKH VS. ITO ADDITION SHOULD HAVE BEEN MADE IN HIS CASE. THE DETAILS OF THE DISHONOURED CHEQUES WERE GIVEN AS UNDER: DATE AMOUNT (IN RS) 08/06/2010 50, 000 18/08/2010 10,000 23/08/2010 10,000 12/10/2010 10,000 23/11/2010 5800 30/08/2010 1625 31/12/2010 5000 TOTAL 92,425 THE CONTENTION OF THE ASSESSEE HAS BEEN VERIFIED FROM THE BANK STATEMENT AND THE ADDITION OF RS. 99,425/ - IS DELETED. 4.7 THE A SSESSEE HAS ALSO CLAIMED THAT THE CASH DEPOSITS OF RS.2,90,000/ - AND RS.2,20,000/ - IN THE BANK ACCOUNT ON 25/05/2010 AND 28/05/2010 RESPECTIVELY ARE COVERED BY THE PROFESSIONAL INCOME EARNED BY HIM TILL THAT POINT OF TIME. IT IS HOWEVER SEEN THAT THE ASSES SEE HAS NOT ARGUED HIS CASE PROPERLY AND THE FIRST DEPOSIT OF RS.2,90,000/ - HAS BEEN MADE ON THE SAME DAY WHEN THERE WAS A WITHDRAWAL OF RS.5,00,000/ - IN CASH BY THE ASSESSEE AS ALREADY DISCUSSED ABOVE. SINCE NO ALLOWANCE HAS BEEN GIVEN FOR THE CASH WITHDR AWAL EARLIER, THIS AMOUNT IS HELD TO BE TH E SOURCE OF THIS DEPOSIT OF RS. 2,90,000 / - . SIMILARLY THE SUBSEQUENT CASH DEPOSIT OF RS. 2,20,000 / - ON 28/05/2010 IS ALSO COVERED FOR RS.2,10,000/ - BY THE REMAINING AMOUNT OF RS. 5,00,000 / - . THEREFORE FEE ASSESSEE IS ALLOWED THE RELIEF OF RS.5,00,000 / - . 4.8 AS THE ASSESSEE HAS NOT MADE ANY OTHER SUBMISSION WHICH CAN BE VERIFIED FROM THE LIMITED DOCUMENTS ON FILE, THE OTHER ADDITIONS ARE CONFIRMED. AS A RESULT OF THE ABOVE, THE ADDITION OF RS.23,95,265 / - MADE BY TH E A O IS REDUCED BY A SUM OF RS. 5,92,425 / - AN D THE REMAINING ADDITION OF RS. 18,02,840 / - IS CONFIRMED. IN A MODIFICATION TO THE ORDER OF THE ASSESSING OFFICER, THE ADDITION IS CONFIRMED UNDER SECTION 69A OF THE ACT INSTEAD OF UNDER SECTION 68 OF THE ACT. 5 . AG AINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT ADDITION IN THIS CASE HAS BEEN MADE ON THE BASIS OF INFORMATION RECEIVED REGARDING DEPOSITS IN 6 ITA NO. 2659/MUM/2017 (A.Y. 2011 - 12) LIYAKAT IBRAHIM SHAIKH VS. ITO ASSESSEE'S BANK ACCOUNT. ASSEESSEE'S VARIOUS SUBMISSIONS HAVE BEEN CONSIDERED BY THE LEARNED CIT - A IN HIS ORDER. HOWEVER ON SEVERAL PLACES LEARNED CIT - A HAS NOTED THAT HE IS MAKING THE ADDITION BECAUSE OF LACK OF PROPER EXPLANATION FROM THE ASSESSE E . THIS IS CONTRADICTORY WITH TH E SUBMISSIONS NOTED BY THE LEARNED CIT - A HIMSELF. FURTHERMORE , I NOTE THAT THE ASSESSING OFFICER HAS MADE THE ADDITION UNDER SECTION 68 OF THE IT ACT. HOWEVER , LEARNED CIT - A HAS MODIFIED TH E ORDER AND UPHELD THE ADDITION UNDER SECTION 69A OF THE I NCOME T AX A CT. IN THIS SCENARIO IT WAS INCUMBENT UPON THE LEARNED CIT - A WHO GIVE PROPER NOTICE AN D OPPORTUNITY TO THE ASSESSEE REGARDING THE INTENTION TO MODIFY THE SECTION UNDER WHICH THE ADDITION WAS PROPOSED. IN THESE CIRCUMSTANCES , IN MY CONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE INTEREST OF JUSTICE WILL BE SERVED IF THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 7. IN THE RESULT , THIS APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 07.02.2018 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 07.02.2018 . . ./ ROSHANI , SR. PS 7 ITA NO. 2659/MUM/2017 (A.Y. 2011 - 12) LIYAKAT IBRAHIM SHAIKH VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI