MANOJ CHANDULAL AGARWAL, MUMBAI V. ITO WD 14(1)(2), MUMBAI

ITA 27/MUM/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9443 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N PADMANABAND R
• Keywords: Source of fund; Onus to prove
• Section: 133(6); 131; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. 27/MUM/2014 (A.Y.2010-11) SHRI MANOJ CHANDULAL AGARWAL 15/17, MATKA GALLI, VITTHALWADI, KALBADEVI ROAD MUMBAI-400 002. GIR NO./PAN : AABPA 9170 A (APPELLANT ) VS. THE INCOME TAX OFFICER WARD-14(1)(2), 2 ND FLOOR EARNEST HOUSE, NARIMAN POINT MUMBAI-400 021. (RESPONDENT) APPELLANT BY : SHRI VIVEK AGARWAL RESPONDENT BY : SHRI N . PADMANABAN-DR DATE OF HEARING : 16/02/2015 DATE OF PRONOUNCEMENT : 1 6/02/2015 ORDER PER CHANDRA POOJARI, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 21/10/2013. THE ONLY ISSUE IN THIS APPEAL IS WITH R EGARD TO ADDITION OF RS.40.00 LACS MADE UNDER SECTION 68 OF THE INCOME TAX ACT. 2. FACTS OF THE CASE AS NARRATED BY AO ARE THAT DUR ING THE YEAR THE ASSESSEE DEPOSITED A SUM AGGREGATING TO RS.40,00,000/- ON VA RIOUS DATES IN HIS ICICI BANK ACCOUNT. THE ASSESSEE CLAIMED THAT THE SAID CASH DE POSIT WAS MADE BY ONE MR. RAJANISH KUMAR JAIN STAYING IN MATHURA IN HIS BANK ACCOUNT, TO WHOM THE ASSESSEE HAD GIVEN ADVANCE OF RS.50,00,000/- LAST YEAR FOR PURCH ASE OF RESIDENTIAL PREMISES IN THE LOCALITY OF JUHU (ANDHERI). AFTER MAKING THE ADVANC E, WHEN THE ASSESSEE ASKED THE PARTY FOR PERFORMANCE OF THE CONTRACT FOR THE PURCH ASE OF PROPERTY, THE PARTY TURNED HOSTILE AND DID NOT PERFORM THE DEAL AND THE DEAL D ID NOT MATERIALIZE. THE PARTY WAS 2 ITA NO.27/M/1 4 ASKED TO RECONCILE AFTER RETURNING THE SAID AMOUNT. HOWEVER, IN THE REPAYMENT PARTY GAVE 3 CHEQUES AMOUNTING TO RS.25.00 LACS. RS.14.00 LACS AND RS.11.00 LACS. THE ASSESSEE DEPOSITED THE CHEQUE OF RS.25.00 LACS ON 1 7.08.2009, WHICH WAS BOUNCED ON 22.08.2009, DUE TO INSUFFICIENCY OF FUNDS. AFTER RE PEATED REMINDERS, THE PARTY DEPOSITED CASH AGGREGATING TO RS.40,00,000/- ON VARIOUS DATES I.E. 26.08.2009 (RS.9.00 LACS) CASH ON 27.08.2009 (RS.8.00 LACS) 28.08.2009 (RS.8.00 LA CS), 21.01.2010 (RS.5.00 LACS), 25.01.2010 (RS.8.00 LCAS) AND 28.01.2010 (RS.2.00 L ACS). CONSEQUENTLY THE CHEQUE OF RS.14,00,000/- WAS RETUR NED BACK TO THE PARTY, AND THE REMAINING CHEQUE OF RS.11,00,000/- WAS STILL HELD A S SECURITY AGAINST BALANCE PAYMENT OF DUE FROM THE PARTY. THE ASSESSEE SUBMITTED THAT HE WAS CONTINUOUSLY FOLLOWING UP WITH THE PARTY FOR RECOVERY OF THE MONEY. THE ASSES SEE SUBMITTED THAT WHEN ASKED FOR CONFIRMATION FOR THE ABOVE TRANSACTION WITH THE PAR TY MR. RAJNISH KUMAR JAIN, THE PARTY HAD DECLINED TO GIVE THE SAME. HOWEVER, THE ASSESSE E SUBMITTED THE PAN AND ADDRESS OF THE PARTY. THE ASSESSEE ALSO SUBMITTED THE BANK STATEMENT SHOWING PAYMENT OF RS.50,00,000/- TO THE PARTY, COPY OF BOUNCED CHEQUE OF RS.25,00,000/- ,COPY OF CHEQUE OF RS.14,00,000/- RETURNED TO PARTY, COPY OF CHEQUE OF RS.11,00,000/- HELD AS SECURITY, ICICI BANK CONFIRMATION REGARDING DEPOSIT OF CASH A GGREGATING TO RS.40,00,000/- . TO ASCERTAIN THE VERACITY OF CASH DEPOSITS, NOTICE UND ER SECTION 133(6) WAS ISSUED TO RAJNISH KUMAR JAIN AT THE ADDRESS GIVEN BY THE ASSE SSEE. IN REPLY, FIRST THE REQUEST WAS RECEIVED IN TAPAL FOR EXTENDING THE DATE FOR FURNIS HING REQUISITE INFORMATION, AND THEREAFTER A LETTER SIGNED BY ONE MR. IMRAN ON BEHA LF OF SAID PARTY WAS RECEIVED. IT WAS STATED IN THE LETTER THAT HE HAD RECEIVED RS. 40.0 0 LACS FROM THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE AS ADVANCE AGAINST PURCHASE OF AGRICULTURAL LAND AND THE LAND BELONGED TO FARMER, WHICH WERE RETAINED BY FARMER W ERE RECEIVED BY HIM IN CASH ON VARIOUS DATES AND THE SAME WERE DEPOSITED IN BANK A CCOUNT OF THE ASSESSEE. HOWEVER, NO COPY OF RETURN OF INCOME FILED BY RAJNISH KUMAR JAIN WAS ENCLOSED, THOUGH SPECIFICALLY ASKED FOR. FURTHER THE SIGNATURE APPEA RING ON THE SAID LETTER DID NOT MATCH WITH THE SIGNATURE OF SHRI RASJNISH KUMAR JAIN AS A PPEARING ON THE CHEQUES ISSUED BY HIM TO THE ASSESSEE . THUS, IT WAS APPARENT THAT TH E INSTANT LETTER WAS SIGNED BY SOME OTHER PERSON PRETENDING TO BE SHRI RAJNISH KUMAR JA IN. THE STATEMENTS MADE BY THE 3 ITA NO.27/M/1 4 ASSESSEE AND SHRI RAJNISH KUMAR JAIN AS TO THE PURC HASE OF RESIDENTIAL PREMISES IN JUHU (ANDHERI)/ AGRICULTURAL LAND WERE FOUND CONTRADICTO RY LEADING TO SUSPICION ABOUT THE GENUINENESS OF THE SAID TRANSACTION AND CASH DEPOSI TS IN THE SAVING BANK ACCOUNT OF THE ASSESSEE . THEREFORE, IN ORDER TO VERIFY THE GENUI NENESS OF CASH DEPOSITS AND TO ESTABLISH THE IDENTITY OF SHRI RAJNISH KUMAR JAIN, SUMMON UNDER SECTION 131 WAS ISSUED TO HIM TO APPEAR ON A GIVEN DATE AND TIME TO WHICH THE SAID PARTY DID NOT COMPLY WITH. SUBSEQUENTLY, A REMINDER WAS ISSUED TO HIM AS FINA L OPPORTUNITY TO APPEAR ON A GIVEN DATE AND TIME, BUT AGAIN HE FAILED TO ATTEND. THE A R OF THE ASSESSEE WAS APPRAISED OF THE VARIOUS DISCREPANCIES OBSERVED IN SUBMISSIONS M ADE BY HIM AND THE LETTER RECEIVED IN RESPONSE TO NOTICE UNDER SECTION 133(6) TO RAJNI SH KUMAR JAIN. IN RESPONSE, HE SUBMITTED THAT THE SAID PARTY HAD CONFIRMED THE CAS H DEPOSITED BY HIM WHICH PROVED THE IDENTITY OF THE PERSON IN EXISTENCE AND FURTHER , THE SUMMONS GOT SERVED TO THE PARTY ITSELF PROVED THE PARTYS IDENTITY. THE AO FR AMED AN OPINION THAT THE ASSESSEE CATEGORICALLY FAILED TO PROVE THE (I) GENUINENESS O F THE TRANSACTION WITH SHRI RAJNISH KUMAR JAIN, (II) NEXUS BETWEEN THE TRANSACTION OF L OAN GIVEN BY ASSESSEE IN FEB-MAR, 2006 AND CASH DEPOSIT OF RS.40,00,000/- MADE IN HIS BANK ACCOUNT IN AUG. 2009 AND 2010 AND (III) IDENTITY OF SHRI RAJNISH KUMAR JAIN. MERE FURNISHING OF CERTAIN DOCUMENTS AND SERVICE OF NOTICES AND SUMMONS AT THE GIVEN ADD RESS DO NOT ESTABLISH THE GENUINENESS OF THE TRANSACTION AND IDENTITY OF THE PERSON. HIS NON-COMPLIANCE WITH THE STATUTORY NOTICES ITSELF PROVED THAT THE WHOLE TRAN SACTION WAS SHAM AND WAS A COLORABLE DEVICE ADOPTED TO EVADE TAX ON CASH DEPOSITS AGGREG ATING TO RS.40,00,000/-. THE PRIMARY ONUS WAS ON THE ASSESSEE TO ESTABLISH THE C ASH CREDITS, WHICH HE FAILED TO DISCHARGE. THE AO RELIED UPON VARIOUS CASE LAWS ON THE SUBJECT. THE FINAL CONCLUSIONS REACHED BY AO ARE REPRODUCED BELOW:- (A) THAT THE BURDEN TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS WAS ON THE ASSESSEE AND THE ASSESSEE FAILED TO PROVE THE SAME. (B) THE CASH CREDIT IS NOT SATISFACTORILY EXPLAINED BY THE ASSESSEE AND HENCE IT IS JUSTIFIED TO TREAT IT AS INCOME FROM UNDISCLOSED S OURCES. (C) THE ASSESSEE HAS TO ESTABLISH THAT THE AMOUNT W AS ACTUALLY GIVEN BY THE PERSON CONCERNED FROM UNEXPLAINED SOURCES, WHICH HE FAILE D TO DO SO. ONCE THE 4 ITA NO.27/M/1 4 EXPLANATION IS NOT SUPPORTED BY A DOCUMENTARY OR OT HER EVIDENCE, THEN THE DEEMING FICTION CREATED BY SECTION 68 CAN BE INVOKED. (D) THE IDENTITY OF THE PERSON WHO DEPOSITED THE AM OUNT IN CASH HAD NOT BEEN ESTABLISHED. (E) THE SOURCES OF INCOME OR FUNDS AND THE EXPLANAT ION OF THE TRANSACTION HAS NOT BEEN ESTABLISHED. (F) THE ASSESSEE HAS NOT OFFERED ANY PLAUSIBLE EXPL ANATION ABOUT THE NATURE AND SOURCE THEREOF AND THE EXPLANATION OFFERED BY THE A SSESSEE ARE NOT SATISFACTORY AND NOT SUPPOSED BY ANY AUTHENTIC EVIDENCES. 2.1 THEREFORE, THE CASH DEPOSITS AGGREGATING TO RS .40,00,000/- IS ASSESSEES SAVING BANK ACCOUNT WAS BROUGHT TO TAX AS UNEXPLAIN ED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. 3. ON APPEAL CIT(A) OBSERVED THAT THERE EXISTS CON TROVERSY IN THE SUBMISSION MADE BY THE ASSESSEE AND THE PURPORTED SUBMISSIONS MADE BY SHRI RAJNISH KUMAR JAIN IN RESPECT TO STATUTORY NOTICE UNDER SECTION 1 33(6) AND 131 OF THE INCOME TAX ACT AS REGARDED BY AO IN ITS ASSESSMENT ORDER. ACCO RDING TO THE LD. CIT(A) THE IDENTITY OF THE PARTIES AND GENUINENESS OF THE TRAN SACTION WAS NOT PROVED. THUS HE OBSERVED THAT THERE IS NO NEXUS BETWEEN CASH DEPOSI TED IN ASSESSEES BANK ACCOUNT WITH THE LOAN EARLIER GIVEN BY HIM TO SHRI RAJNISH KUMAR JAIN. THUS, UNSATISFIED WITH THE EXPLANATION OF THE ASSESSEE HE CONFIRMED THE A DDITION OF RS.40.00 LACS UNDER SECTION 68 OF THE ACT. 4. AGAIN THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH PARTIES, PERUSED THE MATERIA L AVAILABLE ON RECORD. THE LD. AR REITERATED THE SUBMISSIONS, WHAT HE HAD MADE BEFORE THE LOWER AUTHORITIES. THE LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES . THE MAIN PLEA OF THE ASSESSEE BEFORE US IS THAT ORIGINALLY THE ASSESSEE ADVANCE A SUM OF RS.50.00 LACS TO SHRI RAJNISH KUMAR JAIN FOR PURCHASE OF PROPERTY, AND IT WAS NOT MATERIALIZED. LATER SHRI RAJNISH KUMAR JAIN GAVE THREE CHEQUES TO THE ASSESS EE NAMELY FOR RS.25,00,000/- , RS.14,00,000/- AND RS.11,00,000/- RESPECTIVELY. HE DEPOSITED A CHEQUE OF RS.25.00 5 ITA NO.27/M/1 4 LACS INTO HIS BANK ACCOUNT, WHICH RETURNED FROM THE BANK DUE TO INSUFFICIENCY OF FUNDS. CONSEQUENT TO THIS, SHRI RAJNISH KUMAR JAIN DEPOSITED RS.40.00 LACS TO THE ASSESSEE BANK ACCOUNT ON VARIOUS DATES AND THESE AR E GENUINE BUSINESS TRANSACTION AND ASSESSEE RECEIVED ONLY ASSESSEES OWN MONEY BA CK AFTER DISHONOR OF THE CHEQUE ISSUED BY SHRI RAJNISH KUMAR JAIN. HOWEVER, THERE IS NO PROPER CONFIRMATION FROM SHRI RAJNISH KUMAR JAIN. FURTHER THERE IS NO I DENTIFICATION OF SHRI RAJNISH KUMAR JAIN BY FURNISHING HIS RETURN OF INCOME WITH PAN. AS SUCH, AT THIS STAGE WE ARE NOT IN A POSITION TO EXPRESS ANY OPINION ON GEN UINENESS OF THE TRANSACTION SO AS TO SAY WHETHER THE ASSESSEES OWN MONEY WHICH WAS G IVEN TO SHRI RAJNISH KUMAR JAIN WAS RETURNED BACK BY WAY OF CASH DEPOSIT INTO ASSESSEES BANK ACCOUNT. IN OUR OPINION THE BURDEN CAST UPON THE ASSESSEE WAS NOT F ULLY DISCHARGED. IN THE CIRCUMSTANCES IT IS APPROPRIATE TO REMIT ENTIRE IS SUE TO THE FILE OF THE AO WITH DIRECTION TO THE ASSESSEE TO FURNISH ALL INFORMATIO N SO AS TO PROVE THE IDENTITY AND CAPACITY OF THE PARTIES AND GENUINENESS OF THE TRAN SACTION. WITH THIS OBSERVATION WE REMIT THE DISPUTED ISSUE TO THE FILE OF AO FOR RECO NSIDERATION. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16/02/2015 !' # $%& 16/02/ 2015 ! ' SD/- SD/- ( . . / I.P. BANSAL) ( /CHANDRA POOJARI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; $% DATED 16/02/ 2015 . % . ./JV, SR. PS 6 ITA NO.27/M/1 4 )*+ )*+ )*+ )*+ ,+'* ,+'* ,+'* ,+'* / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. )/-. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. +1' )*% , , / DR, ITAT, MUMBAI 6. '2 3 / GUARD FILE. % % % % / BY ORDER, /+* )* //TRUE COPY// 4 44 4 / 5 5 5 5 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI