ACIT 20(2), MUMBAI V. PRAVEEN KUMAR (INDIVIDUAL), MUMBAI

ITA 2791/MUM/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62542 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-06-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: SATISH MODI
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 2; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.2791/MUM/2009 ASSESSMENT YEAR 2000-01 ITA NO.2792/MUM/2009 ASSESSMENT YEAR 2002-03 ITA NO.2793/MUM/2009 ASSESSMENT YEAR 2004-05 THE ASST. COMMISSIONER OF INCOME TAX 20(2), 612, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. VS. PRAVEEN KUMAR (INDIVIDUAL) C/002, RISHIKESH BUILDING, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI-400 058. PAN: ABAPA 2027 N (APPELLANT ) (RESPONDENT) REVENUE BY : SHRI A.C. TEJPAL, DR ASSESSEE BY : SHRI SATISH MODI DATE OF HEARING : 07-06-2012 DATE OF PRONOUNCEMENT : 20-06-2012 ORDER PER BENCH IDENTICAL EIGHT GROUNDS OF APPEAL (FOR THE ASSESSME NT YEARS 2000-01, 2002-03 AND 2004-05) WERE FILED BY THE ASS ESSING OFFICER (AO) AGAINST THE ORDER DT. 23-01-2009 OF THE CIT(A) -XX, MUMBAI. GROUNDS OF APPEAL READ AS UNDER : I. THE LEARNED CIT(A) HAS ERRED IN FACTS AND IN LA W AND IN THE CIRCUMSTANCES OF THE CASE IN DIRECTING TO ASSESS TH E INCOME GENERATED THROUGH SALE OF SHARES UNDER THE HEAD CA PITAL GAIN AND ALLOW THE VARIOUS DEDUCTION/EXEMPTION ON THE SA ME AS PER ITA NOS.2791, 2792, 2793/M/2009 PRAVEEN KUMAR (INDIVIDUAL) 2 PROVISIONS OF THE ACT AS AGAINST THE ADDITIONS MADE BY THE AO AS UNEXPLAINED CASH CREDITS U/S.68 OF THE ACT. II. THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO D ELETE THE ADDITION IN RESPECT OF HOUSEHOLD WITHDRAWAL. III. THE LEARNED CIT(A) HAS ERRED IN FACTS AND IN LAW AND IN CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE F ACTS THAT ENTIRE TRANSACTION GIVING RISE TO CAPITAL GAIN ARE MERELY AN ACCOMMODATION ROUTE, THROUGH WHICH THE UNACCOUNTED MONEY OF THE ASSESSEE HAS CONVERTED INTO ACCOUNTED MONEY IN THE GRAB OF LONG TERM CAPITAL GAIN ARISING ON ACCOUNT OF PURCHA SES AND SALE OF SHARES. IV. THE LEARNED CIT(A) HAS ERRED IN FACTS AND IN L AW AND IN CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE S UPREME COURT DECISION IN THE FOLLOWING CASES MACDOWELLS AND COMPANY LTD VS CTO 154 ITR 148, CIT VS. SRI MEENAKSHI MILLS LTD. 63 ITR 609, CIT VS DUR GAPRASAD MORE 82 ITR 540 AND JUGGILAL KAMAPAT VS CIT 73 IT R 702 (SC) V. THE LEARNED CIT(A) HAS ERRED IN HOLDING THE DET AILS FILED BEFORE THE A.O. PROVED THE GENUINENESS OF THE TRANSACTION WITHOUT VERIFYING THE DETAILS HIMSELF AS THERE IS NO FINDIN G IN HIS ORDER THAT THE DETAILS FILED WERE DULY VERIFIED BY HIM AN D FOUND TO BE CORRECT. VI. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATI NG THE FACT THAT AFTER VERIFICATION AND FROM COPY OF INVOICES OF EXP ENDITURE FOUND FROM THE PREMISES OF THE ASSESSEE, IT IS QUITE CLEA R THAT THE ASSESSEE IS HAVING A LAVISH LIFE STYLE AND HOUSEHOL D DRAWING SHOWN BY THE ASSESSEE WERE INCREDIBLY LOW. VII. THE ASSESSEE PRAYS THAT THE ORDER OF THE CIT (APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RE STORED. VIII. THE ASSESSEE CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESS ARY. THOUGH THERE ARE EIGHT GROUNDS OF APPEAL IN THE APPEAL MEMOS, YET MAIN GROUND ARE ONLY TWO- FIRST IS ABOUT DELETI ON OF ADDITION MADE BY THE AO U/S. 68 OF THE INCOME-TAX ACT,1961 (ACT) AND THE SECOND ONE IS ABOUT LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES . 2. AS PER BRIEF FACTS OF THE CASE, A SEARCH AND SEIZUR E ACTION U/S. 132 (1) OF THE ACT WAS CARRIED OUT ON 01.09. 2 005 IN THE GROUP CASES OF DILBAGH RAJ ARORA BASED AT KANPUR, MUMBAI AND DELHI. THE ITA NOS.2791, 2792, 2793/M/2009 PRAVEEN KUMAR (INDIVIDUAL) 3 ASSESSEE, ONE OF THE MEMBERS OF THE SAID GROUP, IS RESIDING AT MUMBAI. DURING THE SEARCH PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE GROUP-CONSISTING OF SHRI DILBAGH RAI AROR A, HIS SONS S/SHRI SOM ARORA, ARUNKUMAR ARORA, PRAVEEN KUMAR ARORA NIR MAL ARORA, THEIR FAMILY MEMBERS AND HUFS.-HAD SHOWN LONG TERM CAPITAL GAIN (LTCG) IN THEIR RESPECTIVE RETURNS ON SALE OF SHARE S OF VARIOUS LISTED COMPANIES THAT WAS SET OFF AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS OF EARLIER YEARS. IN THE ASSESSMENT ORDERS PAS SED U/S 153A OF THE ACT, THE AO HELD THAT SHARE TRANSACTIONS MENTIONED ABOVE WERE SHAM/ ARRANGED TRANSACTIONS AND THAT THE ENTIRE SALE PROC EEDS RECORDED IN BOOKS OF ACCOUNTS OF THE ASSESSEE GROUP, INCLUDING THE ASSESSEE, REPRESENTED UNEXPLAINED CASH CREDITS. PARTICULARS OF RETURNED INCOME AND ASSESSED INCOME U/S 153A OF THE ACT, IN RESPECT OF THE ASSESSEE ARE AS UNDER : AY RETURNED INCOME ASSESSED INCOME 2000-01 17.44 LAKHS 73.71 LAKHS 2002-03 1.54 CRORES 1.81 CRORES 2004-05 1.67CRORES 2.06 CRORES 2.1. AS MENTIONED EARLIER, DURING THE ASSESSMENT PROCEED INGS AO MADE ADDITION TO THE INCOME OF ASSESSEE ON TWO ACCOUNTS-FIRST ON ACCOUNT OF SALE PROCEED OF EQUITY SHARES OF VARIOUS COMPANIES AND SECOND ON ACCOUNT OF LOW HOUSEHOLD DRAWINGS. THE YE AR-WISE DETAILS OF ADDITIONS MADE BY THE AO ARE AS UNDER : AY A DDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT A DDITION ON ACCOUNT OF LOW WITHDRAWALS TOTAL 2000-01 53.63 LAKHS 2.3 LAKHS 55.93 LAKHS 2002-03 1.56 CRORES 4 LAKHS 1.60 CRORES 2004-05 1.09 CRORES 1.1 LAKHS 1.10 CRORES 2.2. AS FAR AS ISSUE OF LONG TERM CAPITAL GAINS IS CONCE RNED, IT IS FOUND THAT AO HAS MADE ADDITION U/S. 68 OF THE ACT TO THE TUNE OF RS. 53.63 LAKHS RS.1.56 CRORES AND RS.1.09 CRORES FOR THE ASSESSMENT YEARS 2000-01 , 2002-03 AND 2004-05 RESPECTIVELY. AS IN THE CASE OF SMT. POOJA ARORA, WIFE OF THE ASSESSEE, AO HELD THAT THE TRANSACTIONS OF LONG TERM CAPITAL GAINS ON ALLEGED SALE OF SHARES WERE FICTITIOUS AND THAT ENTIRE SALE PROCEEDS RECEIVED O N SALE OF SHARES WAS TO BE TAXED AS THE INCOME OF THE ASSESSEE FROM UNDI SCLOSED SOURCES. ASSESSEE PREFERRED AN APPEAL AGAINST THE SAID ORDER . FIRST APPELLATE AUTHORITY (FAA) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE ORDERS OF THE CIT(A)-I, KANPUR AND ITAT LUCKNOW . WHILE DECIDING THE APPEAL OF THE WIFE OF THE ASSESSEE, SMT. POOJA ARORA (ITANO.2788/MUM/2009AY 2004-05 AND ITA NO.2790/MUM/ 2009 AY 2006-07) WE HAVE DISCUSSED THE ORDER OF THE FAA IN PARAGRAPH S 2.3. ITA NOS.2791, 2792, 2793/M/2009 PRAVEEN KUMAR (INDIVIDUAL) 4 AND 2.3.1. OF OUR SAID ORDER. AFTER CONSIDERING THE ARGUMENTS OF THE AO AND THE FAA AND AFTER PERUSING THE ORDERS OF THE A BENCH, LUCKNOW IN THE CASES OF MEMBERS OF ARORA GROUP, WE HAVE HELD THAT ORDER OF THE FAA IN DELETING THE ADDITION MADE U/S. 68 NEEDS NO INTERFERENCE. WE FIND THAT ORDERS PASSED BY THE AO AND FAA FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ARE SAME AS IN THE CASE OF SMT. POOJA ARORA (SUPRA). ONLY DIFFERENCE IS THE FIGURE S OF ADDITIONS MADE BY THE AO AND AY IN WHICH SAID ADDITIONS WERE MADE. 2.3. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) AND AUT HORISED REPRESENTATIVE (AR) MADE SIMILAR SUBMISSION AS IN T HE CASE OF SMT. POOJA ARORA. FOLLOWING THE SAID ORDER OF SMT. POOJA ARORA (SUPRA) WE UPHOLD THE ORDER OF THE FAA. GROUNDS OF APPEAL NOS. 1 AND 3 TO 5 OF TH E AO FOR ALL THE THREE ASSESSMENT YEARS STAND DISMISSED. 3. NEXT GROUNDS OF APPEAL ARE ABOUT LOW WITHDRAWALS BY THE ASSESSEE FOR HIS HOUSE-HOLD EXPENSES AS STATED EARL IER (PARA2.1) AO HAS MADE ADDITION TO THE INCOME OF THE ASSESSEE TO THE TUNE OF RS.2,30,000/-, RS.4,00,000/- AND RS.1,10,000/- AND FOR THE ASSESSMENT YEARS 2000-01, 2002-03 AND 2004-05 RESPE CTIVELY.FAA WHILE DISPOSING THE APPEAL FILED BY THE ASSESSEE, I N THIS REGARD, FOUND THAT FOLLOWING WAS THE WITHDRAWAL BY THE ASSESSEE, HIS WIFE AND HUF FOR THE ASSESSMENT YEARS CONCERNED. A.Y. DRAWINGS BY ASSESSEE DRAWINGS BY POOJA ARORA DRAWINGS BY PRAVEEN KUMAR ARORA (HUF.) TOTAL 20 2000 -01 2,58,438/- 2,40,000/- -- 4,98,438/- 2002-03 1,98,899/- 1,70,000/- -- 3,68,899/- 2004-05 6,11,250/- 3,60,878/- 60,348/- 10,32,476/- TOTAL 10,68,587/- 7,70,878/- 60,348/- 18,99,813/- 3.1. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBM ISSIONS OF THE AR OF THE ASSESSEE, HE HELD THAT THE DRAWINGS S HOWN BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2000-01 TO 2002-03 WERE ON LOWER SIDE. HE RESTRICTED THE ADDITION TO RS. 1,00,000/- EACH FOR THE ASSESSMENT YEARS 2000-01 AND 2002-03 AS AGAINST RS. 2.3 LAKHS AND RS. 4.6 LAKHS RESPECTIVELY. FOR THE ASSESSMENT YEA R 2001-02, HE UPHELD THE ENTIRE ADDITION OF RS. 44,183/-. THUS, THE ADDITION TO THE EXTENT OF RS. 2.44 LAKHS WAS UPHELD BY THE FAA. HE HELD THAT BALANCE ADDITIONS MADE IN ALL THE ASSESSMENT YEARS SHOULD B E DELETED AS DRAWING SHOWN BY THE ASSESSEE WERE ADEQUATE. 3.2. FROM THE ORDER OF THE FAA IT IS CLEAR THAT HE HAS T AKEN A REASONABLE STAND. WE FIND THAT FOR THREE ASSESSMENT YEARS, HE HAS ITA NOS.2791, 2792, 2793/M/2009 PRAVEEN KUMAR (INDIVIDUAL) 5 UPHELD THE PART/ FULL ADDITIONS MADE BY THE AO. CON SIDERING THE TABLE AT PARAGRAPH 3 AND THE FINDINGS OF THE FAA, WE ARE OF THE OPINION THAT HIS ORDER DOES NOT SUFFER FROM ANY INFIRMITY. UPHOLDING THE ORDER OF THE FAA, WE DISMISS THE GRO UND NOS. 2 AND 6. AS A RESULT, APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2012. SD/- SD/- (D.K. AGARWAL) (RAJENDRA) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI, DATE 20 TH JUNE, 2012 TNMM COPY TO: 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI