COL AMARJIT D. NAGI, MUMBAI V. ASST CIT CIR 20, MUMBAI

ITA 2841/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9823 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Assessee Lawyers: D A SHETTY
• Keywords: Unexplained cash credit; Business income
• Section: 143(3); 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2841/MUM/2014, (A.Y. 2008-09) ITA NO.2842/MUM/2014, (A.Y. 2009-10) COL.AMARJIT D. NAGI, 5A, SANGAM BUILDING, NEAR HDFC BANK, JUHU VERSOVA LINK ROAD, ANDHERI (WEST), MUMBAI 400 053 PAN :AAMPN 1956A ...... APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-20, AAYKAR BHAVAN,M.K.ROAD, MUMBAI -400 020 ..... RESPONDENT APPELLANTS BY : SHRI D.A.SHETTY RESPONDENT BY : SHRI R.P.MEENA DATE OF HEARING : 12/02/2018 DATE OF PRONOUNCEMENT : 23/03/2018 ORDER PER G.S.PANNU,A.M: THESE TWO APPEALS HAVE BEEN PREFERRED BY THE ASSESS EE PERTAINING TO ASSESSMENT YEARS 2008-09 AND 2009-10 AND AS THEY INVOLVE CERTAIN COMMON ISSUES, THEY HAVE BEEN CLUBBED AND HEARD TOG ETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 ITA NO.2841/MUM/2014, (A.Y. 2008-09 & 2009-10 ) 2. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE AP PEALS STAND ON SIMILAR FOOTING, THE APPEAL OF THE ASSESSEE FOR ASS ESSMENT YEAR 2008-09 IS TAKEN AS THE LEAD CASE. THIS APPEALS IS DIRECTED A GAINST AN ORDER PASSED BY CIT(A)-39, MUMBAI DATED 24/01/2014, WHICH IN TURN A RISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30/12/2010. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING, ARGUMENTS HAVE BEEN MADE BY THE REPRESENTA TIVE OF THE ASSESSEE ONLY WITH RESPECT TO GROUNDS OF APPEAL NO.4 IN THE MEMO OF APPEAL, WHICH READS AS UNDER:- 4. THE LD. CIT(APPEALS) DISMISSED THE CLAIM OF THE ASSESSEE WITH RESPECT TO CREDIT OF RS.43,29,789/- IN THE BANK STATEMENT OF T HE ASSESSEE AS ALL THE INFORMATION WAS DISCLOSED TO THE EXTENT POSSIBLE. 3. NOTABLY, ASSESSEE IS AN INDIVIDUAL WHO IS A MEMB ER OF ONE NAGI GROUP, WHICH WAS COVERED UNDER THE SEARCH ACTION UN DER SECTION.132(1) OF THE ACT AND AS A CONSEQUENCE, THE IMPUGNED ASSES SMENT HAS BEEN MADE UNDER SECTION. 143(3) R.W.S. 153A OF THE ACT. NOTABLY, ASSESSEE IS AN INDIVIDUAL, WHO IS A RETIRED DEFENCE PERSONNEL AND RECEIVES PENSION. DURING THE YEAR THE TOTAL INCOME DECLARED BY THE AS SESSEE COMPRISED OF INCOME UNDER THE HEAD SALARIES, BUSINESS INCOME FR OM PROPRIETARY CONCERN, M/S. SAI SOHAM AND INCOME FROM OTHER SOURC ES INCLUDING INTEREST ON FDRS WITH BANK. IN THE CONTEXT OF DISP UTE BEFORE US, THE RELEVANT DISCUSSION IS CONTAINED IN PARA-6 OF THE ASSESSMENT ORDER. AS PER THE DISCUSSION THEREIN, THE ASSESSING OFFICER NOTED CREDITS OF RS.46,79,798/- APPEARING IN THE BANK ACCOUNTS AND I N THE ABSENCE OF ANY EXPLANATION, THE SAID AMOUNT WAS TREATED AS UNEXPLA INED CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. 3 ITA NO.2841/MUM/2014, (A.Y. 2008-09 & 2009-10 ) 4. BEFORE CIT(A) ASSESSEE MADE DETAILED SUBMISSIONS AND POINTED OUT THAT THE IMPUGNED SUM COMPRISED OF TWO AMOUNTS NAME LY RS.39,42,415/- REFLECTING CREDIT ENTRIES IN CURRENT ACCOUNT NO.102 2880880 IN THE NAME OF M/S. SAI SOHAM AND RS.7,37,383/- REFLECTING CREDI T ENTRIES IN AN OVERDRAFT ACCOUNT NO.3037766. WITH REGARD TO THE CREDITS APP EARING IN THE CURRENT ACCOUNT OF THE PROPRIETARY CONCERN M/S. SAI SOHAM, ASSESSEE ASSERTED THAT THE SAME HAS ALREADY BEEN DECLARED IN RETURN O F INCOME AND THE RESPECTIVE PROFIT AND LOSS ACCOUNT AND BALANCE SHEE T OF THE PROPRIETARY CONCERN WAS FILED. WITH REGARD TO THE CREDITS IN T HE OVERDRAFT ACCOUNT, ASSESSEE EXPLAINED THAT THE SAME CONSISTED OF REFUN D OF DEPOSIT EARLIER GIVEN TO THE LAND LORD OF RS.3,00,000/- AND A TRANS FER OF RS.3,50,000/- FROM THE PROPRIETARY CONCERN. THE BALANCE OF RS.87,383/ - WAS PAINTING HIRE RECEIVED FROM DHL, WHICH WAS DULY ACCOUNTED IN THE RETURN OF INCOME FILED BY ASSESSEES SPOUSE MRS. CHANDRA NAGI AND IN SUPPORT COPY OF HER RETURN OF INCOME WAS FURNISHED. FOR ALL THE SAID R EASONS, ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER WRONGLY TREATED THE CREDIT OF RS.46,79,798/- IN THE BANK ACCOUNT AS UNEXPLAINED CREDIT UNDER SEC TION. 68 OF THE ACT. 4.1 WE FIND THAT THE CIT(A) ACCEPTED THE EXPLANATIO N OF THE ASSESSEE ONLY WITH RESPECT TO A SUM OF RS.3,50,000/- TRANSFE RRED FROM THE PROPRIETARY CONCERN AND UPHELD THE BALANCE ADDITION OF RS.43,29,789/-. AGAINST SUCH A DECISION ASSESSEE IS IN FURTHER APPE AL BEFORE US. 5. BEFORE US THE LD. REPRESENTATIVE FOR THE ASSESS EE HAS REFERRED TO THE WRITTEN SUBMISSIONS PLACED IN THE PAPER BOOK TO POINT OUT THAT THE IMPUGNED ADDITION SUSTAINED BY THE CIT(A) WAS WRONG AND IN FACT NONE OF THE AMOUNTS COULD BE TREATED AS UNEXPLAINED. 4 ITA NO.2841/MUM/2014, (A.Y. 2008-09 & 2009-10 ) 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE FIND THAT SO FAR AS THE AMOUNT OF RS.39,42,415/- CREDITED IN TH E CURRENT ACCOUNT OF THE PROPRIETARY CONCERN IS CONCERNED, THE ASSESSEE HAD EXPLAINED THAT THE SAME FEATURED IN THE BALANCE SHEET AND THE PROFIT & LOSS ACCOUNT OF THE PROPRIETARY CONCERN AND THAT IT PERTAINS TO THE BUS INESS RECEIPTS. THE CIT(A) DID NOT ACCEPT THE EXPLANATION ON THE GROUND THAT THE SALES CREDITED IN THE PROPRIETARY CONCERN DURING THE YEAR WAS ONLY RS.19,28,164/- AND THE DEBTORS IN ITS BALANCE SHEET STOOD AT RS.3,45,696/- AND, THEREFORE, ACCORDING TO HIM THE RECEIPTS OF RS .39,43,415/- WERE NOT APPROPRIATELY EXPLAINED. IN OUR VIEW, THE CIT(A) H AS NOT APPRECIATED THE EXPLANATION FURNISHED BY THE ASSESSEE IN ITS PROPER PERSPECTIVE. IN THIS CONTEXT, WE ARE TEMPTED TO REPRODUCE HEREAFTER THE RELEVANT EXPLANATION OF THE ASSESSEE, FORMING PART OF THE WRITTEN SUBMIS SIONS, WHICH IS AS UNDER:- SAI SOHAM IS A PROPRIETARY CONCERN OF MR. AMARJIT NAGI AND BUSINESS WAS CARRIED UNDER THE ABOVE SAID NAME. THE DEPOSITS INTO THE ACCOUNT PER TAINS TO THE AMOUNT RECEIVED FROM THE CUSTOMERS. THE DETAILS OF RECEIPTS ARE SHOWN IN AN NEXURE-1. THE LEARNED ASSESSING OFFICER ERRED IN ADDING THE ENTIRE AMOUNT AS INCOME U/S 68 OF THE INCOME TAX ACT,1961. SUNDRY DEBTORS OPENING BALANCE RS.20,93,273 AS ON 31.03.20007 (AS PER BALANCE SHEET 31.03.2007) ADD: SALES DURING THE YEAR RS.19,2 8,164/--AS PER PROFIT AND LOSS ACCOUNT 31.03.2008 CONTRACT RECEIPTS RS . 1,87,649/- - AS PER PROFIT AND LOSS ACCOUNT 31.0 3.2008 SALES TAX/OTHER CHARGES RS.1,08, 025/- TOTAL RS.43,17,111/- LESS: RECEIVED DURING THE YEAR RS.39,42,415/ - - SCH 2A LESS: TDS RS. 29,000/- BALANCE AS ON 31.03.2008 RS.3,45,696 /-- AS PER BALANCE SHEET 31.03.2008 THE SUM OF RS.39,42,415/- CREDITED IN THE CURRENT A CCOUNT OF THE PROPRIETARY CONCERN OF M/S SAI SOHAM PERTAINS TO RECEIPT AGAINST SALES/RECEIVABLES . IT HAS BEEN FURTHER EXPLAINED THAT CURRENT ACCOUNT NO 10128880880 PERTAINS TO SAI SOHAM, WHICH ACCOUNT HAS ALREADY BEEN DECLARED BY 5 ITA NO.2841/MUM/2014, (A.Y. 2008-09 & 2009-10 ) THE ASSESSEE IN THE RETURN AND COPY OF BALANCE SHEE T AND PROFIT AND LOSS HAVE BEEN FILED IN THE NAME OF SAI SOHAM. FROM THE ABOVE IT IS QUITE CLEAR THAT THE SOURCE OF THE CREDITS IN THE BANK ACCOUNT OF RS.39,42,415/- ARE THE BUSINESS RECEIPT S. SO HOWEVER, WE FIND THAT THE SAID ASPECT INVOLVES FACTUAL APPRECIATION AND, THEREFORE, WE DEEM IT FIT AND PROPER TO DIRECT THE ASSESSING OFFICER T O VERIFY THE EXPLANATION AND, THEREAFTER, PASS AN ORDER AFRESH LIMITED TO TH IS ASPECT. EVEN WITH REGARD TO THE BALANCE OF CREDIT OF RS.3,87,383/- RE FLECTING IN THE OVERDRAFT ACCOUNT, THE MATTER IS ALSO REMANDED BACK TO THE FI LE OF ASSESSING OFFICER FOR APPROPRIATE VERIFICATION, INASMUCH AS, ASSESSEE HAS DULY EXPLAINED THAT THE SUM OF RS.87,383/- HAS ALREADY BEEN EXPLAINED I N THE RETURN OF INCOME OF HIS SPOUSE AND THE BALANCE OF RS.3,00,000/- IS A REFUND OF A DEPOSIT EARLIER GIVEN TO THE LANDLORD. NEEDLESS TO MENTION , THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY O F BEING HEARD AND ONLY THEREAFTER, PASS AN ORDER AFRESH ON THE AFORESAID ASPECT AS PER LAW. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSM ENT YEAR 2008-09 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN SO FAR AS THE APPEAL FOR ASSESSMENT YEAR 2009 -10 IS CONCERNED, THE FIRST ISSUE RAISED THEREIN IS ALSO SIMILAR TO T HAT CONSIDERED BY US IN ASSESSMENT YEAR 2008-09 ON ACCOUNT OF CREDIT RS.4, 98,516/- FOUND IN THE BANK ACCOUNT OF THE ASSESSEE. ON THIS ASPECT ALSO FOR THE REASONS NOTED IN THE EARLIER YEAR, THE SAME IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PASSING AN ORDER AFRESH AFTER HEARING T HE ASSESSEE, AS PER LAW. 8. THE ONLY OTHER ISSUE REMAINING IN THE APPEAL FOR ASSESSMENT YEAR 2009-10 IS AN ADHOC DISALLOWANCE OF RS.1,00,000/- S USTAINED BY THE CIT(A) OUT OF EXPENSES CLAIMED. NOTABLY, THE ASSESSING OF FICER HAD DISALLOWED 6 ITA NO.2841/MUM/2014, (A.Y. 2008-09 & 2009-10 ) 25% OF THE TOTAL EXPENSES OF RS.15,40,124/- DEBITED TO THE P&L ACCOUNT ON AN ADHOC BASIS CITING ABSENCE OF COMPLETE DOCUME NTARY EVIDENCE. 8.1 THE CIT(A) IN PARA-6 OF HIS ORDER RECORDS THAT ALL THE EXPENSES CLAIMED HAVE BEEN DULY RECORDED IN THE BOOKS OF ACC OUNT MAINTAINED BY IT, PAYMENT IN RESPECT OF MOST OF THE EXPENSES HAVE BEE N MADE THROUGH CHEQUES DEBITED IN ITS BANK ACCOUNT AND THE EXPENSE S RELATED TO THE BUSINESS CARRIED ON. IT IS NOT THE CASE OF THE A.O THAT THE EXPENSES ARE NOT GENUINE OR ARE NOT RELATED TO THE BUSINESS CARRIED ON. INSPITE OF THE AFORESAID FINDING THE CIT(A), THE CIT(A) PROCEEDED TO RETAIN AN ADDITION OF RS.1,00,000/- IN AN ADHOC MANNER AND DELETED THE BA LANCE OF RS.2,85,031/-. AGAINST SUCH SUSTENANCE OF ADHOC AD DITION, THE ASSESSEE IS IN APPEAL BEFORE US. 8.2 IN OUR CONSIDERED OPINION, HAVING REGARD TO THE AFORESAID FINDING OF THE CIT(A), NO ADHOC ADDITION IS SUSTAINABLE, THERE FORE, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICE R TO DELETE THE ENTIRE ADDITION OF RS.3,85,031/-. 9. IN THE RESULT, CAPTIONED APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2018. SD/- SD/- (PAWAN SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 23/03/2018 VM , SR. PS 7 ITA NO.2841/MUM/2014, (A.Y. 2008-09 & 2009-10 ) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI