Ajay Kumar Mahapatra, Kolkata V. Income Tax Officer, Ward-51(1), Kolkata, Kolkata

ITA 2670/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4209 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-11-2013
• Court: TRIBUNAL
• Department Lawyers: SHRISALLONGYADEN
• Assessee Lawyers: SHRISUBASH AGARWALADV
• Keywords: Unexplained cash credit
• Section: 143(3); 69; 263

Judgement Text

1 ITA NO. 2670/KOL/2013 A.Y. 07-08 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATAA BENCH, KOLKATA BEFORE SHRIS.S.VISWANETHRA RAVI, HONBLE JUDICIAL MEMBER AND DR.A.L. SAINI, HONBLE ACCOUNTANT MEMBER ITA NO. 2670/KOL/2013 (ASST. YEAR: 2007-08) AJAY KUMAR MAHAPATRA EE-82, FLAT NO.9, SALT LAKE CITY KOLKATA-700 091 VS. ITO, WARD-51(4), UTTARAPAN COMPLEX, ULTADANGA, MANICKTALA CIVIC CENTRE, KOLKATA-700054 PAN NO. AEZPM0434K (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRISUBASH AGARWALADV. DEPARTMENT BY :SHRISALLONGYADEN, ADDL. CIT-DR DATE OF HEARING : 08/11/2016. DATE OF PRONOUNCEMENT 25/11/2016. O R D E R PERDR. ARJUN LAL SAINI, A. M. THE CAPTION APPEAL FILED BY THE ASSESSEE PERTAININ G TO ASSESSMENT YEAR (AY) 2007-08, IS DIRECTED AGAINST THE ORDER PA SSED BY COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA IN APPEAL NO.66/XXXII/12-13/51(4)/KOL,DATED 06.08.2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY ASSESSING OFFICER U/S. 14 3(3)/263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 31. 12.2012. 2. THE BRIEF FACTS QUA THE ASSESSEE ARE THAT THE ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 31.12.2009 ON A TOTAL INCOME OF 29,88,250/-.AFTER COMPLETION OF ASSESSMENT U/S. 143(3) OF THE ACT, THE LD. CIT KOLKATA-XVIIVIDE ITS ORDER U/S. 263 DAT ED 20.02.2012, SET 2 ITA NO. 2670/KOL/2013 A.Y. 07-08 ASIDE THEASSESSMENTANDDIRECTED THE ASSESSING OFFICE R TO DO THE ASSESSMENT AFRESH AS PER LAW AFTER CARRIED OUT NECE SSARY VERIFICATION IN RESPECT OF CASH DEPOSIT OF 3,05,000/- MADE DURING THE PERIOD FROM 05.07.2006 TO 14.08.2006 IN THE BANK ACCOUNT OF ASS ESSEE WITH HDFC BANK. THE AO MADE THE ADDITION BY OBSERVING THE FOL LOWING:- 1) IN COURSE OF HEARING ON 12.11.2012 THE ASSESSEE WAS REQUESTED TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN HIS SAVINGS BANK ACC OUNT WITH HDFC BANK. IN REPLY TO THE ABOVE QUERY THE ASSESSEE SIMPLY STATED THAT CASH WAS WITHDRAWN FROM THE BANK ACCOUNT OF M/S SPAK ENTERPRISES PVT. LTD. IN WHICH THE ASSESSEE IS A DIRECTOR AND DEPOSITED IN HIS PERSONAL BANK AC COUNT. THE ASSESSEE ALSO FURNISHED A WRITTEN SUBMISSION EXPLAINING THE ABOVE ISSUE. THE EXPLANATION OF THE ASSESSEE IS AS UNDER:- I WOULD LIKE TO SUBMIT THE STATEMENTS OF MY BUSINE SS ACCOUNT MAINTAINED IN THE NAME AND STYLE OF SPAK ENTERPRISE S PVT. LTD. HAVING ACCOUNTS IN SEVERAL BANKS MAINLY THAT IN UNITED BAN K OF INDIA, OVERSEAS BRANCH, KOLKATA (BEARING CURRENT DEPOSIT A/C NO. 57 56), ICICI BANK LTD., 20, R.N MUKHERJEE ROAD AND STANDARD CHARTERED BANK, 19, N.S.ROAD, WHERE FROM THE CASH HAS BEEN WITHDRAWN FOR PAYMENT TO THE FARMERS OR MANDI (MARKET) BROKERS FOR PROCUREMENT OF RICE, DAL , VEGETABLES, ONION AND OTHER AGRICULTURAL ITEMS, WHICH WE WERE EXPORTI NG TO MAINLY BANGLADESH. DUE TO MY SICKNESS AND ABSENCE FROM ACTIVE BUSINESS DEALS, MY STAFF MEMBERS OUT OF IGNORANCE AND SOMETIMES OUT OF NEGLI GENCE ON THEIR PART HAVE UTILISED THE CURRENT ACCOUNT OF THE COMPA NY AND MY PERSONAL ACCOUNT FOR BUSINESS PURPOSE. AS HDFC BANK IS A NEW GENERATION PRIVATE BANK AND THEY HAD ALL INDIA FUND TRANSFER & NET TRA NSFER FACILITY, MOST OF MY BUSINESS PAYMENTS ARE MADE THROUGH MY PERSONAL A CCOUNT BY MY STAFF MEMBERS & MANAGER, WHOM I GAVE A POWER OF ATT ORNEY ALSO. CONSIDERING THE ABOVE THE ASSESSEE WAS ASKED TO FUR NISH THE BOOKS OF ACCOUNT OF M/S SPAK ENTERPRISES PVT. LTD. THE ASSESSEE FAIL ED TO PRODUCE THE BOOKS OF ACCOUNT OF M/S SPAK ENTERPRISES PVT. LTD. THE ASSES SEE EXPRESSED HIS INABILITY TO FURNISH THE BOOKS OF ACCOUNT. AGAIN, THE EXPLANA TION AS FILED BY THE ASSESSEE IS NOT ACCEPTED, BECAUSE IT IS HARDLY ACCEPTABLE TH AT DUE TO IGNORANCE AND SOMETIMES OUT OF NEGLIGENCE OF THE STAFF MEMBERS OF THE COMPANY HAVE UTILISED THE PERSONAL BANK ACCOUNT OF THE ASSESSEE FOR BUSIN ESS PURPOSE. IN HIS SUBMISSION THE ASSESSEE STATED THAT CASH HAS BEEN W ITHDRAWN FROM THE COMPANYS BANK ACCOUNT FOR PAYMENT TO THE FARMERS O R MANDI (MARKET) BROKERS FOR PROCUREMENT OF RICE, DAL, VEGETABLES, ONION AND OTHER AGRICULTURAL ITEMS. HERE THE ASSESSEE STATED IN HIS SUBMISSION DT. 14.1 2.2012 THAT CASH HAS BEEN WITHDRAWN FROM THE COMPANYS BANK ACCOUNT AND DEPOS ITED INTO HIS PERSONAL ACCOUNT. IN VIEW OF THE ABOVE, IT IS FOUND THAT THE ASSESSEE TRIED TO JUSTIFY HIS CLAIM BY OFFERING DIFFERENT VIEWS IN HIS SUBMISSION . MOREOVER, THE ASSESSEE COULD NOT JUSTIFY HIS CLAIM BY PRODUCING DOCUMENTAR Y EVIDENCES IN RELATION TO THE SOURCE OF CASH DEPOSITS OF RS.31,31,800/- DURIN G THE F.Y 22006-07. HENCE, IT IS CLEAR THAT THE ENTIRE MONEY WAS IN THE POSSESSIONS OF THE ASSESSEE. THE ASSESSEE WAS NOT DISCLOSING THE TRUE PICTURE OF HOW HE CAME INTO POSSESSION OF SUCH HUGE AMOUNT OF MONEY. SINCE, THE ENTIRE AMOUNT WAS DEPOSITED IN ASSESSEES ACCOUNT AND THE ASSESSEE WA S NOT PREPARED TO DISCLOSE THE SOURCE OF ITS RECEIPT. IT WAS FOR THE ASSESSEE, TO PROVE THAT THE MONEY DOES NOT BELONG TO HIM. 3 ITA NO. 2670/KOL/2013 A.Y. 07-08 THEREFORE, IT CAN BE CONCLUDED THAT THE CASH DEPOSI TED IN HDFC BANK FOR THE FY 2006-07 IS THE ASSESSEES UNEXPLAINED MONEY. {M.SUN DARAM VS. ASSISTANT COMMISSIONER OF INCOME TAX [2006] 287 ITR 145 (MAD) }.THEREFORE, THE SUM SO CREDITED IS CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THE FY 2006-07 RELEVANT TO THE AY 2007-08. CONSIDERING THE ABOVE, RS.31,31,800/- IS ADDED WITH THE TOTAL INCOME OF THE ASSESSEE AS UNEX PLAINED MONEY U/S 69 OF THE I.T.ACT,1961 3 . AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICER , ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A) WHO HAS CONFIRMED THE O RDER PASSED BY THE ASSESSING OFFICER OBSERVING THE FOLLOWING:- THE ASSESSEE FILED A COPY OF HIS BANK ACCOUNT WITH HDFC BANK, STEPHEN HOUSE (BBD BAG) BRANCH AND IT IS SEEN THAT BETWEEN 05/07/ 2006 TO 14/08/2006, THE FOLLOWING CASH DEPOSITS HAVE BEEN MADE:- 05.07.2006 .... RS.1,70,000/- 07.08.2006 .... RS. 50,000/- 14.08.2006 .... RS. 85,000/- RS.3,05,000/- THESE SUMS HAVE BEEN TRANSFERRED OUT BY CHEQUE TO O THER BANK ACCOUNTS OR TO ENTITIES LIKE INDIA BULLS PVT. LTD. DECISIONS: AFTER CAREFULLY CONSIDERING THE FACTS OF THE CASE, IT IS HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE NATURE AND SOURCE OF THE CASH DEPOSIT OF RS.3,05,000/-. THE ADDITION DESERVES TO BE SO SUSTA INED FOR A NUMBER OF REASONS:- (1) THE ASSESSEE DID NOT FILE ANY COPY OF BANK STATEMEN T OF THE COMPANY M/S SPAK ENTERPRISES (P) LTD FOR THE PERIOD 05.07.2 000 TO 14.03.2006. (2) THE ASSESSEE HAS NOT EVEN ALLUDED TO ANY POSSIBLE D ATES WHEN THE SUMS WERE WITHDRAWN FROM ANY OTHER SOURCE. (3) EVEN FOR THE REST OF THE PERIOD, THE ASSESSEE COULD FILE BANK ACCOUNT STATEMENT OF M/S SPAK ENTERPRISE (P) LTD AS UNDER: (I) A/C NO CD/5756 WITH UBI, OVERSEAS BRANCH FOR TH E PERIOD 07.09.2006 TO 10.10.2006. (II) A/C NO. CA-000605011874 WITH ICICI BANK FOR TH E PERIOD 01.11.2006 TO 31.12.2006, AND FOR THE PERIOD 01.03.2007 TO 31.03. 2007 ONLY. EVEN WHEN THESE WERE CHECKED TO FIND WHETHER THE SAME CAN SEE MINGLY SUGGEST THAT THE CLAIM OF THE ASSESSEE DURING ORIGINAL ASSESSMENT PR OCEEDINGS COULD BE TRUE AND THE ENTRIES OF CASH WITHDRAWAL WERE SOUGHT TO BE CO MPARED TO ENTRIES OF CASH DEPOSITS IN THE ASSESSEES HDFC BANK ACCOUNT STATEM ENT [THOUGH IT IS NOT A SUBJECT MATTER OF THE PRESENT APPEAL] THE CLAIM OF THE ASSESSEE CANNOT BE VERIFIED AT ALL. THERE ARE NO SIMPLE TRANSACTION OF TO & FRO BETWEEN THE COMPANY & PERSONAL BANK ACCOUNTS. (III) THE CLAIM OF THE ASSESSEE THAT CASH IS WITHDR AWN FROM THE COMPANYS ACCOUNT AND BY MISTAKE DEPOSITED IN HIS SB ACCOUNT ON THE SAME DATE AND LATER ON REVERSED IS NOT OBSERVED ANYWHERE AND IS HELD NO T CORRECT AT ALL. 4 ITA NO. 2670/KOL/2013 A.Y. 07-08 (4) BEFORE THE ASSESSING OFFICER,THE ASSESSEE HAD F ILED A LETTER DT. 12.11.2012 WHERE THE ASSESSEE HAD CLAIMED THAT THE CASH AMOUNT ING TO RS.3,05,000/- WAS DEPOSITED IN HIS BANK BY SOME SENIOR EXECUTIVE OF T HE COMPANY AND THIS COULD BE BEST EXPLAINED BY SUCH SENIOR EXECUTIVE, WHO ISN OT TRACEABLE. THIS EXPLANATION IS ONLYFIT TO BE REJECTED. (4) THE FACT THAT THERE ARE NO BOOKS OF ACCOUNT OF THE SO CALLED COMPANY HAS NOT BEEN REBUTTED AT ALL DURING APPELLATE PROCEEDIN GS ALSO. IN VIEW OF THE ABOVE THE GROUND OF APPEAL IN RESPEC T OF THE ADDITION OF RS.3,05,000/- IS DISMISSED. 4. NOT BEING SATISFIED WITH THE ORDER OF THE LD CIT (A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL: 1) THAT THEHON`BLECIT(A) WAS WRONG IN CONFORMING T HE ASSESSING OFFICER`S ORDER REGARDING THE ADDITION AS UN-EXPLAI NED CASH CREDIT THE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE ASSESSEE. THAT IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS. 31,31,800/- ON ACCOUNT OF UN-EXPLAINED CASH CREDIT IN THE BANK ACC OUNT ARE WRONG, ILLEGAL AND BASIS AND THE ADDITIONS SO MADE SHOULD BE REVERSED. 2) THAT THE APPELLATE ORDER, AS PASSED IS AGAINST T HE FACTS AND BAD IN LAW. 3) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER FU RTHER GROUND (S) OF APPEAL BEFORE OR AT THE TIME OF HEARING. 4.1 LD. AUTHORIZED REPRESENTATIVE (AR) APPEARED FOR THE ASSESSEE HAS SUBMITTED THAT ASSESSEE WAS NOT KEEPING WELL AND WA S OUT OF KOLKATA DUE TO HIS SICKNESS, THE BANKING TRANSACTIONS WERE DONE BY THE STAFF MEMBER.THE SAID AMOUNTS WERE WITHDRAWN TO MAKE PAYM ENT TO SELLERS WHO WERE AGRICULTURISTS. THE AMOUNT WITHDRAWN FROM ONE OF THE CURRENT ACCOUNTS OF ASSESSEE-COMPANY, THE UNUTILIZED AMOUNT S WERE TO BE DEPOSITED BACK.HOWEVER, THE STAFF MEMBERS BEING IGN ORANT AND SAMI LITERATE, DID NOT DIFFERENTIATE BETWEEN ACCOUNTS OF THE DIRECTOR AND THAT OF THE ASSESSEE-COMPANY, THINKING BOTH ACCOUNTS BEL ONGED TO MR. AJAY KR. MAHAPATRA AND HENCE, THEY DEPOSITED THE AMOUNT IN THE BANK A/C OF THE ASSESSEE. THIS IGNORANCE LEAD TO THE DEPOSIT IN THE PRESENT ACCOUNT 5 ITA NO. 2670/KOL/2013 A.Y. 07-08 OF THE ASSESSEE. HOWEVER, THE SAME ACCOUNT WAS PERS ONAL A/C OF THE COMPANY, HENCE, THE AMOUNT DEPOSITED CANNOT BE TREA TED AS UNEXPLAINED CASH CREDIT. THE ASSESSING OFFICER WHEN PASSING HIS ORDER HAS MENTIONED THAT ASSESSEE COULD NOT SHOW THE SOUR CE OF SUCH DEPOSITS, HOWEVER, VIDE LETTER OF THE ASSESSEE DATE D 07.12.2012, THE ASSESSEE HAS EXPLAINED THE SAME AND SUBMITTED THE B ANK STATEMENT OF THE COMPANY. THE LD. AR FURTHER STATED THAT ASSESSI NG OFFICER DID NOT GIVE SUFFICIENT OPPORTUNITY TO EXPLAIN THE FIGURE O F 3,05000/-. LD. AR ALSO POINTED OUT THAT CASH AMOUNTING TO 3,05000/- WAS DEPOSITED IN HIS BANK BY SOME EXECUTIVES OF THE COMPANY AND THIS COULD BE BEST EXPLAIN BY THESE EXECUTIVES, WHO ARE NOT TRACEABLE. THE LD. AR FOR THE ASSESSEE REQUESTED US TO REMIT THE MATTER BACK TO T HE FILE OF ASSESSING OFFICER TO EXAMINE THE CASH DEPOSIT OF 3,05,000/- AFRESH. 4.2. ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMARILY RELIED ON THE ORDER PASSED BY ASSESSING OFFICER AND THE STAND TAKEN BY AO WHICH WE HAVE ALREADY NOTED IN THE EARLIER PART OF THIS O RDER, AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 4.3. HAVING HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THIS I SSUE, THAT THERE IS MERIT IN THE SUBMISSION OF THE ASSESSEE, AS PROPOSI TION CANVASSED BY LD. AR OF THE ASSESSEE ARE SUPPORTED BY THE FACTS N ARRATED ABOVE.THE LD. AR EXPLAINED BEFORE US, THAT AO DID NOT GIVE SU FFICIENT OPPORTUNITY TO EXPLAIN THE CASH DEPOSIT IN BANK OF 3.05 LAKH AND SAID CASH WAS DEPOSITED BY HIS STAFF MEMBER/EXECUTIVE STAFF WHO W AS NOT TRACEABLE AT THE TIME OF ASSESSMENT PROCEEDINGS. HE ALSO POINTED OUT THAT CASH DEPOSITED AMOUNTING TO 3.05 LAKH HAS NOT BEEN PRO PERLY EXAMINED BY AO. THEREFORE, CONSIDERING THE ABOVE FACTUAL POSITI ON, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. THEREFORE, WE REMIT THE CASE BACK TO THE FILE OF TH E AO TO EXAMINE CASH DEPOSIT OF 3.05 LAKH AFRESH.THE LD AR FOR THE ASS ESSEE, DURING THE 6 ITA NO. 2670/KOL/2013 A.Y. 07-08 COURSE OF HEARING REQUESTED THE BENCH NOT TO ADJUDI CATE THE ORIGINAL ADDITION MADE BY THE ASSESSING OFFICER, U/S 143(3) OF THE ACT AT RS.28,26,800/-. THEREFORE, THE ASSESSEE IS NOT IN APPEAL BEFORE US AGAINST THE ORIGINAL ADDITION MADE BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT AT 28,26,800/-. THEREFORE, BY THIS ORDE R, WE ARE NOT DIRECTING THE AO TO EXAMINE THE ORIGINAL ADDITION M ADE AT 28,26,800/-. WE DIRECT THE AO TO EXAMINE ONLY 3.05 LAKH AFRESH AFTER TAKING INTO ACCOUNT THE EVIDENCE AND EXPLANATION, IF ANY, SUBMI TTED BY ASSESSEE. 4.4. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 25/11/2016. SD/- SD/- (S.S.VISWANETHRA RAVI) (A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 NOVEMBER, 2016. DKP.SR.PS/- / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-AJAY KR. MAHAPATRA, EE-182, FLAT NO.9, S ALT LAKE CITY KOLKATA- 91 2. /RESPONDENT-ITO WARD-51(4), UTTARAPAN COMPLEX, ULTA DANGA, MANICK- TOLA CIVIC CENTRE, KOLKATA-54 3. / CONCERNED CIT 4. - / CIT (A) 5. ! ''#,%& / DR, ITAT, KOLKATA 6. !)*+, / GUARD FILE. BY ORDER/ , / % &,