Shri Chirag R. Bhavsar, Ahmedabad V. The Income Tax Officer, Ward-3(2), Ahmedabad

ITA 2711/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8878 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-01-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 20-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Opportunity of being heard; Peak credit; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 133(6); 143(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NO. 2711/AHD/2013 / ASSESSMENT YEAR : 2005-06 CHIRAG R. BHAVSAR, 800, THENGA WADO, RAIPUR, AHMEDABAD PAN : AETPB 3889 B VS THE INCOME-TAX OFFICER, WARD 3 (2), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVATIA, AR REVENUE BY : SHRI OM PRAKASH MEENA, SR DR / DATE OF HEARING : 23/01/2017 / DATE OF PRONOUNCEMENT: 20/03/2017 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, AHMEDABAD D ATED 17.09.2013, PASSED FOR ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- 1.1 THE ORDER PASSED U/S.250 ON 17.9.2013 FOR A.Y. 2005-06 BY CIT(A)-VI, ABAD, DISPOSING OF THE APPEAL EX-PARTE AND UPHOLDIN G THE ADDITION OF RS.16,55,000 AS UNEXPLAINED CASH DEPOSITS IN BANK A /C IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUST ICE. 1.2 THE CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN PASSING EX- PARTE ORDER WITHOUT ALLOWING REASONABLE OPPORTUNITY OF HEARING. THERE WAS A SUFFICIENT CAUSE FOR FAILURE TO COMPLY TO THE NOTIC E OF HEARING FIXED ON 12.9.13. 1.3 THE CIT(A) HAS GRIEVOUSLY FAILED TO APPRECIAT E THAT THE IMPUGNED ADDITION WAS MADE BY AO WITHOUT GIVING SUFFICIENT A ND SPECIFIC OPPORTUNITY TO THE APPELLANT AND WITHOUT FURNISHING THE ENTIRE EVIDENCE COLLECTED BY HIM WITH REGARD TO THE PURCHASES, INCLUDING STATEMENTS RECORDED. THE APPELLANT ITA NO. 2711/AHD/2013 CHIRAG R. BHAVSAR VS.ITO AY : 2005-06 2 SHOULD THEREFORE BE ALLOWED TO PRODUCE ADDITIONAL E VIDENCE DURING THE COURSE OF APPELLATE PROCEEDINGS AND SHOULD BE ADMITTED. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDI NG THE ADDITION OF RS.16,55,000 AS UNEXPLAINED CASH DEPOSITS. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDING THE ADDITI ON OF RS. 16,55,000 AS UNEXPLAINED CASH DEPOSITS. 3.1 THE CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT THE APPELLANT WAS A ENTRY PROVIDER. 3.2 THE CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDING TH E TRANSACTIONS OF PURCHASES AS NON GENUINE. 4.1 WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALT ERNATIVE, PRESUMING FOR THE SAKE OF ARGUMENT THAT THE APPELLANT WAS A ENTRY PROVIDER AND GIVEN GIFTS AS ALLEGED BY AO, THE ENTIRE CASH DEPOSITS IN BANK A/C COULD NOT BE HELD AS UNACCOUNTED INCOME OF THE APPELLANT AND CONSEQUENTL Y THE ADDITION OF RS.16,55,000 COULD NOT BE MADE IN HIS HANDS. 5.1 WITHOUT PREJUDICE TO THE ABOVE, THE ADDITION I N RESPECT OF CASH DEPOSITS SHOULD HAVE BEEN RESTRICTED TO THE PEAK CREDIT. 3. THE BRIEF FACTS OF THE CASE ARE THAT, FOR THE YE AR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 30.08.2005 D ECLARING TOTAL INCOME AT RS.89,661/-. THEREAFTER, THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY REOPENED U/S 147 AND NOTI CE U/S 148 WAS ISSUED AND SERVED, WHICH WAS DULY COMPLIED WITH BY THE ASS ESSEE. IN THIS CASE, INFORMATION WAS RECEIVED FROM ACIT, CENTRAL CIRCLE 1(3), AHMEDABAD THAT THE ASSESSEE HAS GIVEN GIFT TO DIRECTORS OF SALSAS AND LAMINATES GROUP AND THEIR RELATIVES. IT IS FURTHER NOTICED THAT THERE HAVE BEEN CASH DEPOSITS OF RS.16,55,000/- IN THE BANK A/C. NO.3052 OF GUJARAT MERCANTILE CO-OPERATIVE BANK LTD. IT IS FURTHER OBSERVED BY THE LD. CIT(A ) THAT THERE HAVE BEEN MANY CASH DEPOSITS IN THE BANK ACCOUNT WHICH RAISES SUSPICION THAT THE PERSONS ARE ENTRY PROVIDER. IN THE ABOVE BACKGROUND , THE REVENUE AUTHORITIES WERE OF THE OPINION THAT THE TRANSACTIO NS UNDER SUSPICION ARE ITA NO. 2711/AHD/2013 CHIRAG R. BHAVSAR VS.ITO AY : 2005-06 3 REQUIRED TO BE PROPERLY EXAMINED. ON THE BASIS OF W HICH, THE CASE WAS REOPENED U/S 147(A) OF THE ACT AND NOTICE U/S 148 O F THE ACT WAS ISSUED AFTER TAKING APPROVAL FROM JT. CIT, RANGE-3, AHMEDA BAD. DURING THE COURSE OF REASSESSMENT PROCEEDING, THE AR OF THE AS SESSEE WAS REQUESTED TO EXPLAIN THE SOURCE OF CASH DEPOSIT OF RS.16,55,000/ - IN THE AFORESAID BANK ACCOUNT AND THE AR OF THE ASSESSEE VIDE REPLY DATED 08.10.2012 SUBMITTED THE DETAILS OF PURCHASE LEDGER ACCOUNT ALONG WITH P URCHASE BILLS AND SALES REGISTER ACCOUNT ALONG WITH DUPLICATE COPY OF THE S ALES BILL. THEREFORE, FOR THE VERIFICATION OF GENUINENESS OF THE TRANSACTION, THE NOTICE U/S 133(6) WAS ISSUED TO THE PURCHASER AT THE ADDRESS MENTIONED IN THE PURCHASE BILL SUBMITTED BY THE ASSESSEE; HOWEVER, THE SAID NOTICE S WERE RETURNED BY THE POSTAL AUTHORITY WITH REMARK NOT KNOWN. SUBSEQUE NTLY, FURTHER INQUIRIES HAVE ALSO BEEN CONDUCTED THROUGH WARD INSPECTOR IN RESPECT OF SAMPRATI ENTERPRISE, SHIVAM ENTERPRISE AND SWAGAT AGENCY AND HE IN TURN REPORTED THAT NO SUCH PARITIES WERE AVAILABLE ON THE ADDRESS SPECIFIED. ON BEING INQUIRED BY THE INSPECTOR AND IN REPLY TO NOTICE U/ S 133(6), THE OWNER OF SHOP AT 176, CHETAN CLOTH MARKET, AHMEDABAD HAS REP LIED VIDE REPLY DATED 19.11.2012 AS UNDER :- I SATISHCHANDRA KRISHANKUMAR AGARWAL RECEIVED NOTI CE OF ABOVE REF. NO. ON MY PREMISES FROM YOUR REGARDING SHIVAM ENTERPRISE. I HAVE TO STATE THAT I AM OWNER OF SHOP NO.176, CHE TANCLOTH MARKET, NEAR SARANGPUR GATE, AHMEDABAD. I OR MY ANY FAMILY MEMB ER IS NOT CONCERNED WITH SHIVAM ENTERPRISE. SHIVAM ENTERPRISE DOES NOT EXIST ON ABOVE ADDRESS. I HAVE NO INFORMATION ABOUT SHIVAM ENTERPRISE & I HAVE NOT GIVEN HIM MY S HOP NO.176 ON RENT OR TO USE FOR ANY PURPOSE. (AS PER MY RECORDS FROM 01. 04.2002 TO ONWARDS0. 4. FURTHER, ASSESSEE WAS ASKED TO PRODUCE FOLLOWING PARTIES FOR VERIFICATION OF THE GENUINENESS OF THE TRANSACTION: - ITA NO. 2711/AHD/2013 CHIRAG R. BHAVSAR VS.ITO AY : 2005-06 4 I. SAMPRATI ENTERPRISE II. KURESH ANINASH III. AMRAPALI J. MODI IV. TRANSAL INK TRADING CO. V. SWAGAT AGENCY VI. HIMANSU P. VARIA VII. A.S. GOHIL VIII. SHIVAM ENTERPRISE BUT, ASSESSEE FAILED TO PRODUCE THE ABOVE PARTIES; HOWEVER, FILED A REPLY THAT THE NOTICE ISSUED U/S 133(6) HAVE BEEN R ETURNED BY THE POSTAL AUTHORITY DUE TO THE CHANGE IN THE BUSINESS ADDRESS OF PARTIES AS SEVEN YEAR PERIOD WAS A LONG PERIOD AND OWNERSHIP OF THE MOST OF PREMISES DID NOT BELONG TO PARTIES MENTIONED IN THE NOTICE. THEREFO RE, IN ORDER TO PROVE THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSEE HAS P RODUCED CONFIRMATION AND PAN NOS. OF THREE MAJOR PARTIES. THE ASSESSEE FURTHER STATED THAT ASSESSEE IS A SMALL CLOTH MERCHANT, ON WHICH VAT/SA LES TAX ARE NOT APPLICABLE; HENCE, THEY CANNOT PRODUCE THE VAT/SALE S TAX RETURN. HOWEVER, THE REPLY OF THE ASSESSEE IS NOT FOUND ACC EPTABLE TO THE ASSESSING OFFICER AND HE ACCORDINGLY MADE ADDITION OF RS.16,5 5,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT (A) WHO CONFIRMED THE ADDITION MADE BY THE LD. ASSESSING OFFICER. 6. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. 7. WE HAVE GONE THROUGH THE RECORD AND IMPUGNED ORD ERS PASSED BY THE AUTHORITIES BELOW. THE ASSESSEE STATED THAT TH E ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN CLOTH BUSINESS WITH MODEST TURNOVER. IT WAS CLAIMED BY ASSESSING OFFICER THAT, IN CONSEQUENCE TO THE INFOR MATION RECEIVED FROM ACIT, CENTRAL CIRCLE 1(3), AHMEDABAD, THE ASSESSEE HAD GIVEN GIFTS TO THE ITA NO. 2711/AHD/2013 CHIRAG R. BHAVSAR VS.ITO AY : 2005-06 5 DIRECTORS OF SALSAS AND LAMINATE GROUP AND THEIR RE LATIVES AND THE ASSESSEE HAD MADE CASH DEPOSITS OF RS.16,55,000/- IN HIS BAN K ACCOUNT WITH GUJARAT MERCANTILE CO-OPERATIVE BANK LTD. THEREFORE, NOTICE U/S 148 WAS ISSUED ON 28.03.2012 AND DURING THE COURSE OF RE-ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER VERIFIED THE SALES/PURCHASES BY I SSUING NOTICE U/S 133(6) ON THE PARTIES. ULTIMATELY, THE ASSESSING OFFICER C ALLED UPON THE ASSESSEE TO PRODUCE EIGHT PARTIES, OUT OF WHICH TWO WERE PRODUC ED AND THEIR STATEMENTS WERE RECORDED BY ASSESSING OFFICER BUT REMAINING PA RTIES COULD NOT BE PRODUCED FOR VARIOUS REASONS AS STATED IN ASSESSEE S REPLIES DT. 6-12-12 AND 12-12-12. THE ASSESSING OFFICER CONCLUDED IN HIS OR DER THAT THE STATEMENT OF TWO PARTIES, AS PRODUCED BY THE ASSESSEE, WHO CONFI RMED TO HAVE DONE THEIR BUSINESS WITH THE ASSESSEE WERE DISBELIEVED WHEREAS FOR REST OF THE PARTIES, THE TRANSACTIONS WERE NOT VERIFIABLE. THUS, THE ASS ESSING OFFICER TREATED THE ASSESSEE AS AN ENTRY PROVIDER AND THE ENTIRE CASH D EPOSITS IN SAID BANK A/C AS UNEXPLAINED. FURTHER, THE AR OF THE ASSESSEE ST ATED THAT THE ASSESSING OFFICER HAS FAILED TO APPRECIATE THAT WHEN TWO PART IES HAD CONFIRMED THE TRANSACTIONS WITH THE ASSESSEE, THE SAME COULD NOT BE REJECTED FOR PETTY REASONS LIKE UNSIGNED RETURN OF INCOME, PAN CARD ET C WHICH COULD HAVE BEEN GOT SIGNED FROM THEM BY ISSUING NOTICE OR MAKI NG CROSS VERIFICATION WITH THEIR CONCERNED ITO. FORM THE RECORD, IT IS CL EAR THAT THE ASSESSING OFFICER HAD NEITHER ISSUED DEFICIENCY NOTICE TO THE M/THE ASSESSEE NOR ISSUED ANY SHOW CAUSE ON THIS GROUND. THUS, NO OPPORTUNITY WAS ALLOWED TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM. AS FOR THE REST OF THE PARTIES THE ASSESSEE HAD ALREADY SUBMITTED REPLY MENTIONING HIS INABILIT Y TO PRODUCE THEM. THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THE SALES D ECLARED BY THE ASSESSEE, SO THE CORRESPONDING PURCHASES SHOULD HAVE BEEN ACCEPT ED. IN THE ALTERNATIVE, THE ASSESSEE SUBMITTED THAT, IF THE ASSESSING OFFIC ER HAD HELD THE ASSESSEE AS ENTRY PROVIDER, THE ENTIRE CASH DEPOSITS IN SAID BA NK A/C COULD NOT BELONG TO THE ASSESSEE. IT IS CONTRADICTION IN TERMS TO TREA T ENTRY PROVIDER AND OWNER ITA NO. 2711/AHD/2013 CHIRAG R. BHAVSAR VS.ITO AY : 2005-06 6 OF THE CASH DEPOSITS MADE IN BANK ACCOUNT. AFTER H EARING BOTH THE PARTIES AND THE RIVAL SUBMISSIONS, IN THE INTEREST OF JUSTI CE, WE SET ASIDE THE APPEAL AND REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSI NG OFFICER TO CHECK ENTRIES PERTAINING TO RS.16,55,000/- IN THE IMPUGNED BANK A CCOUNT AND TO SEE WHETHER THE ASSESSEE IS REALLY AN ENTRY PROVIDER OR NOT. NEEDLESS TO MENTION THAT THE ASSESSING OFFICER WILL ALLOW ADEQU ATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE RE-ADJUDICATING THIS MA TTER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 20 TH MARCH, 2017 AT AHMEDABAD. SD/- SD/- N.K. BILLAIYA (ACCOUNTANT MEMBER) MAHAVIR PRASAD (JUDICIAL MEMBER) AHMEDABAD; DATED 20/03/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD