Shri Natwarlal Hargovinddas Gohel, Bhavnagar V. The Income tax Officer,Ward-1(3), Bhavnagar

ITA 2736/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1897 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: B R POPAT
• Keywords: Set aside
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 2/12/2009 DRAFTED ON: 2/12/20 09 ITA NO.2736/AHD/2009 ASSESSMENT YEAR : 2007-2008 NATWARLAL HARGOVINDDAS GOHEL 10, AMARDEEP SOCIETY, NEAR VARAL HOUSE, WAGHAWADI ROAD, BHAVNAGAR. VS. THE INCOME TAX OFFICER, WARD 1(3), BHAVNAGAR. PAN/GIR NO. : ACQPG7138P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI B.R.POPAT A.R RESPONDENT BY: SHRI GOVIND SINGHAL SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD.CIT- VI, AHMEDABAD, DATED 18.09.2009. 2. THE SOLE GROUND IS TAKEN BY THE ASSESSEE READS A S UNDER: 1. THE LEARNED CIT-VI AHMEDABAD ERRED IN LAW AS WE LL AS ON FACTS IN PASSING THE ORDER UNDER SECTION 263. HE HAS DONE TH IS WITHOUT HAVING REGARD TO THE FACTS OF THE CASE AND THE APPL ICABLE PROVISIONS OF LAW. HE HAS ALSO NOT APPRECIATED THAT THE TWIN CONDITIONS OF THE ORDER REQUIRED TO BE ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE WERE CLEARLY NOT SATISFI ED. 3. THE LEARNED CIT-VI AHMEDABAD, OBSERVED AS UNDER: - THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2007- 08 WAS PASSED U/S. 143(3) OF THE I.T. ACT 1961 BY THE ITO, WARD-1 (3), BHAVNAGAR ON 08.09.2009, DETERMINING THE TOTAL INCOME AT RS. 1,4 7,500/-. 2. ON A CAREFUL EXAMINATION OF THE ASSESSMENT ORDER AND THE RECORDS, IT APPEARED THAT THE SAID ASSESSMENT ORDER PASSED BY T HE ITO, WARD-1 (3), BHAVNAGAR IS ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE ITA NO .2736/AHD/2009 M/S.NATWARLAL HARGOVINDDAS GOHEL ASST.YEAR -2007-2008 - 2 - REVENUE WITHIN THE MEANING OF THE PROVISIONS OF SEC TION 263 OF THE ACT. ACTION U/S. 263 OF THE ACT WAS THEREFORE PROPOSED T O BE TAKEN AND SHOW CAUSE NOTICE DATED 03.08.2009 WAS ISSUED TO THE ASS ESSEE FIXING THE DATE OF COMPLIANCE ON 19.08.2009. AN EXTRACT FROM THE SA ID SHOW CAUSE NOTICE IS REPRODUCED AS UNDER:- . '2. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. AN EXAMINATION OF THE RECORD SHOWS THAT THE AO DID NOT ASCERTAIN THE REAS ONS FOR SELECTION OF CASE FOR SCRUTINY UNDER CASS, WHILE COMPLETING THE SAID ASSESSMENT. THE REASONS FOR SELECTION OF CASE FOR SCRUTINY UNDER CA SS WAS THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.23,37,650/- IN SA VINGS ACCOUNT WITH HDFC BANK, WAGHAWADI ROAD, BHAVNAGAR. IT HOWEVER AP PEARS THAT WHILE COMPLETING THE SAID ASSESSMENT, THE SOURCE OF THE S AID CASH DEPOSITED WAS NOT VERIFIED BY THE AO. ' 2.1 IN RESPONSE TO THE SAID NOTICE, SHRI B.R. POPAT AR ATTENDED ON BEHALF OF THE ASSESSEE ON 17.09.2009 AND SUBMITTED WRITTEN REPLY DATED 16.09.2009. THE ASSESSEE'S AR WAS HEARD IN SUPPORT OF THE VARIOUS SUBMISSIONS MADE. THE VARIOUS SUBMISSIONS MADE BY T HE ASSESSEE'S AR IN THE WRITTEN REPLY AS WELL AS DURING THE COURSE O F HEARINGS HAVE BEEN CAREFULLY CONSIDERED. 2.2 IT HAS BEEN SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED IN THIS CASE AS TH E ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTE REST OF REVENUE. HE HAS RELIED ON CERTAIN JUDICIAL DECISIONS IN SUPPORT OF THE SAME. IT HAS BEEN FURTHER SUBMITTED IN THE SAID WRITTEN REPLY THAT TH E SUBMISSION MADE IN THE SHOW-CAUSE NOTICE REGARDING THE AO NOT HAVING V ERIFIED THE SOURCE OF THE CASH AGGREGATING TO RS.23,37,650/- DEPOSITED IN THE SAVINGS BANK ACCOUNT MAINTAINED WITH HDFC BANK IS NOT CORRECT. I N THIS REGARD, HE HAS RELIED ON THE REPLY DATED 28.08.2008 FILED BEFORE T HE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ACCORDING TO WHIC H, COMPLETE SET OF BOOKS OF ACCOUNTS ALONG WITH ALL THE BILLS AND VOUC HERS WERE PRODUCED BEFORE THE AO AT THE TIME OF HEARING OF THE CASE. I T HAS ACCORDINGLY BEEN CLAIMED THAT SINCE THE AO WAS SATISFIED WITH THE CO RRECTNESS OF THE SAME, HE HAD NO REASON TO DRAW ANY ADVERSE INFERENCE IN T HIS REGARD. IT HAS FURTHER BEEN CLAIMED THAT ALL THE TRANSACTIONS ROUT ED THROUGH THE BANK ACCOUNT MAINTAINED WITH HDFC BANK WERE DULY RECORDE D IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND AUDITED BY THE CHARTERED ACCOUNTANT TO HIS FULL SATISFACTION AND THE SAME WE RE ALSO VERIFIED BY THE AO AT THE TIME OF THE SCRUTINY OF THE CASE. THE ASS ESSEE HAS THEREFORE REQUESTED FOR DROPPING OF PROPOSED ACTION U/S. 263 OF THE ACT. ITA NO .2736/AHD/2009 M/S.NATWARLAL HARGOVINDDAS GOHEL ASST.YEAR -2007-2008 - 3 - 3. THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE HAV E BEEN CAREFULLY CONSIDERED AND ARE NOT FOUND ACCEPTABLE. THE MAIN T HRUST OF THE ASSESSEE'S ARGUMENT IS THAT SINCE THE AUDITED BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS WERE PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT CANNOT BE SAID THAT T HE SOURCE OF THE SAID CASH OF RS.23,37,650/- DEPOSITED IN THE SAVINGS BAN K ACCOUNT WITH HDFC BANK WAS NOT VERIFIED BY THE AO. IN THIS REGARD, IT IS NOTICED FROM THE COPY OF THE SAID SAVINGS ACCOUNT WITH HDFC BANK PRO DUCED BY THE ASSESSEE'S AR DURING THE COURSE OF HEARING BEFORE T HE UNDERSIGNED THAT CASH DEPOSITS OF CONSIDERABLE AMOUNTS, WHICH IN SOM E CASES EVEN EXCEED RS.1 LAC, HAVE BEEN MADE IN THE SAID BANK AC COUNT ON VARIOUS DATES. THE AO WAS EXPECTED TO VERIFY THE SOURCE OF THE SAID CASH DEPOSITS. THE ASSESSEE HAS CLAIMED IN THE SAID WRIT TEN REPLY DATED 16.09.2009 THAT THESE CASH DEPOSITS WERE ON ACCOUNT OF CASH RECEIVED FROM THE VARIOUS CLIENTS ON SALE OF SHARES. THE AO SHOULD HAVE VERIFIED THE SAID CASH DEPOSITS WITH REGARD TO THE COPIES OF ACCOUNTS OF THE VARIOUS CLIENTS AND IN CASE OF ANY DOUBT DIRECT CRO SS VERIFICATION SHOULD HAVE BEEN CARRIED OUT. SINCE THE AUDITORS IN ANNEXU RE-1 OF THE 'NOTES ON ACCOUNTS' HAVE ALSO STATED THAT THE PARTIES' BALANC ES, ETC. ARE UNCONFIRMED AND THE AUDITORS HAVE ONLY RELIED ON TH E' CERTIFICATE GIVEN BY THE PROPRIETOR IN THIS REGARD, IT WAS ALL THE MO RE NECESSARY ON THE PART OF THE ASSESSING OFFICER TO HAVE CARRIED OUT NECESS ARY INQUIRIES INTO THE SOURCE OF THE SAID CASH CREDITS. RECORDS HOWEVER SH OW THAT NO SUCH INQUIRIES WERE CARRIED OUT BY THE AO AND THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE WERE ACCEPTED WITHOUT NECE SSARY VERIFICATION. THERE IS ABSOLUTELY NOTHING ON THE RECORD TO INDICA TE THAT THE AO MADE ANY INQUIRY WHATSOEVER ON THE SAID ISSUE OF CASH DE POSITS OF RS.23,37,650/- IN THE BANK ACCOUNT OF THE ASSESSEE WITH HDFC BANK. 4. IN VIEW OF THE ABOVE, IT IS HELD THAT THE SAID A SSESSMENT ORDER PASSED BY THE AO WITHOUT CARRYING OUT NECESSARY INQUIRIES ON THE ABOVE MENTIONED ISSUE AND WITHOUT PROPER APPLICATION OF M IND IN ALL PERSPECTIVE ON THE SAID ISSUE IS ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE WITHIN THE MEANING OF PROV ISIONS OF SECTION 263 OF THE I.T. ACT, .1961. THE SAID ASSESSMENT ORDER I S ACCORDINGLY SET ASIDE ON THE LIMITED ISSUE OF VERIFICATION OF THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND IS RESTORED TO THE FILE OF THE A.O. THE AO IS DIRECTED TO FRAME THE ASSESSMENT AFRESH AS PE R LAW, AFTER GIVING DUE OPPORTUNITY OF BEING HEAD TO THE ASSESSEE IN TH E MATTER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 1 43(3) ON 8.09.2008. THE ITA NO .2736/AHD/2009 M/S.NATWARLAL HARGOVINDDAS GOHEL ASST.YEAR -2007-2008 - 4 - CIT ON VERIFICATION OF RECORDS OBSERVED THAT ASSESS EE HAS DEPOSITED IN CASH RS.23,37,650/- IN HIS SAVINGS BANK ACCOUNT MAINTAIN ED WITH HDFC BANK. HE OBSERVED THAT THE LEARNED ASSESSING OFFICER COMPLET ED THE ASSESSMENT WITHOUT VERIFYING THE ABOVE CASH DEPOSITS IN THE BA NK. HE THEREFORE, CONSIDERED THE ORDER PASSED BY THE LEARNED ASSESSIN G OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT SET ASIDE THE ORDER OF THE LEARNED ASSESSING OFFICER ON THE LIMITED ISSUE OF VERIFICATION OF SOURCE OF CASH DEPOSITS IN THE SAID BANK ACCOUNT AND THEREAFTER TO REFRAME THE ASSESSMENT AS PER LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. BEFORE US, THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE CIT . WE FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE LEARNED ASSESSING OFFICER CONSIDERED AND APPLIED HIS MIND T O THE CASH DEPOSITS MADE IN THE ASSESSEES SAVINGS BANK ACCOUNT AND AFTER SU CH EXERCISE ACCEPTED THE SAID DEPOSITS BEING SATISFIED WITH THE SOURCE OF TH E SAID DEPOSITS. THE ASSESSEE CLAIMED TO HAVE PRODUCED AUDITED BOOKS OF ACCOUNT AT THE TIME OF THE ASSESSMENT HEARING BUT COULD NOT PRODUCE ANY MA TERIAL IN SUPPORT OF THE SAID CLAIM. NOWHERE IN THE ASSESSMENT ORDER, THE LE ARNED ASSESSING OFFICER HAS STATED ANYTHING ABOUT THE PRODUCTION OF BOOKS O F ACCOUNT BEFORE HIM. THE ASSESSEE HAS NOT EVEN FILED COPY OF ORDER SHEET BEF ORE US. THE ASSESSEE HAS ALSO NOT FURNISHED ANY MATERIAL ABOUT THE TURNOVER SECURED BY HIM IN HIS BUSINESS DURING THE YEAR. NO MATERIAL WAS PRODUCED BEFORE US BY THE ASSESSEE TO SHOW THAT TRANSACTION OF CASH WAS REGULAR FEATUR E IN THE LINE OF BUSINESS IN WHICH IT IS ENGAGED. IN ABSENCE OF ANY SUCH MATERIA L, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT TO TH E EFFECT THAT THE ACCEPTANCE OF CASH DEPOSITS OF RS.23, 37,650/- IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE BY THE LEARNED ASSESSING OFFICER WITHOUT INQUIR Y AND APPLICATION OF MIND IN THE ORDER OF ASSESSMENT PASSED BY THE LEARNED AS SESSING OFFICER IS ITA NO .2736/AHD/2009 M/S.NATWARLAL HARGOVINDDAS GOHEL ASST.YEAR -2007-2008 - 5 - ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. WE THEREFORE, DISMISS THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED AT THE CLOSE OF THE HEARING IN THE PRESENCE OF THE PARTIES IN THE COURT ON 02/12/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 02/12/2009 PREPARED AND COMPARED BY : PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD