The ITO, Ward-6(1), Surat V. Smt. Anisha Nailesh Natali, Surat

ITA 2895/AHD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2102 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Unexplained investment; Transactions in derivatives; Additional evidence; Futures and options
• Section: 69

Judgement Text

ITA NO 2895/ AHD/2011 . A.Y. 20 08-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 2895/AHD/2011 (ASSESSMENT YEAR: 2008-09 THE I.T.O WARD-6(1), ROOM NO. 614, 6 TH FLOOR AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) VS. SMT. ANISHA NAILESH NATALI, 6/1057,GOLE SHERI, GALEMANDI,SURAT-395003 (RESPONDENT) PAN:- AAVPN0102F APPELLANT BY : SHRI T. SANKAR SR. D.R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 16-4-2013 DATE OF PRONOUNCEMENT : 10 -05-2013 PER SHRI ANIL CHATURVEDI,A.M. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LD. CIT (A)- IV, SURAT DATED 28-07-2011 FOR THE ASSESSMENT YEAR 2008-09. ON THE DATE DATE OF HEARING NONE APPEARED ON BEHALF OF RESPONDENT. WE THEREFORE, PROCEED TO DECIDE THE MATTER EX PARTE QUA THE ASSESSEE, ON THE BASIS OF MATERIAL ON RECORD. ITA NO 2895/ AHD/2011 . A.Y. 20 08-09 2 1. THE FACTS AS CULLED OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE AS UNDER. 2. ASSESSEE IS AN INDIVIDUAL WHO FILED HER WRITTEN OF INCOME ON 23.03.2009 DECLARING TOTAL INCOME OF RS. 1,38,313/- . THE CASE WAS SELECTED FOR SCRUTINY AND, THEREAFTER THE ASSES SMENT WAS FRAMED UNDER SECTION 143 (3) VIDE ORDER DATED 23.1 2.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 36,95,760/- . AGGRIEVED BY THE AFORESAID ORDER OF ASSESSING OFFICER, ASSESS EE CARRIED THE MATTER BEFORE CIT(A). CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT RECEIVED FROM A. O. GRANTED PARTIAL TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT (A), THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELET ING THE ADDITION OF RS. 31,55,612/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE UNACCOUNTED BANK ACCOUNT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O . NOTICED THAT ASSESSEE WAS HAVING TWO BANK ACCOUNTS WITH SURAT PE OPLE CO- OPERATIVE BANK LIMITED BUT THE ASSESSEE HAD DISCLOS ED ONLY ONE ACCOUNT IN HER RETURN OF INCOME. THE OTHER ACCOUNT BEARING NO. 3219 (NEW ACCOUNT NO. 104121073508) WAS NOT DISCLOS ED IN THE RETURN OF INCOME. HE FURTHER NOTICED THAT ASSESSEE HAD MADE TOTAL DEPOSITS IN THE SAID BANK ACCOUNT OF RS. 35,57,450 WHICH INCLUDED RS. 14,58,000/- BY WAY OF CASH. THE ASSESSEE WAS AS KED TO ITA NO 2895/ AHD/2011 . A.Y. 20 08-09 3 EXPLAIN THE SOURCE OF DEPOSITS IN THE UNEXPLAINED B ANK ACCOUNT. IN THE ABSENCE OF SATISFACTORY EXPLANATION ABOUT THE S OURCE OF CREDIT ENTRIES APPEARING IN THE UNACCOUNTED BANK ACCOUNT, AO CONCLUDED THAT THE ACCOUNT WAS NOT USED FOR TRADING ACTIVITIES OF THE ASSESSEE AND WAS USED FOR THE PURPOSE OF INVEST MENTS ONLY. HE ACCORDINGLY CONSIDERED THE AGGREGATE AMOUNT OF C REDITS OF RS. 35,57,450/- AS UNEXPLAINED MONEY UNDER SECTION 69 OF THE ACT AND ADDED IT TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED BY THE AFORESAID ORDER OF ASSESSING OF FICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE COMMENTS OF THE A.O. IN THE REMAND REPORT GRANTED PARTIAL RELIEF TO THE ASSES SEE BY HOLDING AS UNDER:- 9. I HAVE GONE THROUGH THE FACTS OF THE CASE, ASS ESSMENT ORDER, SUBMISSIONS OF THE APPELLANT, EVIDENCES FILED, REMA ND REPORT AND COUNTER COMMENTS TO THE REMAND REPORT. IT WOULD BE IN THE FITNESS OF THINGS TO MENTION HERE THAT THE UNDISCLOSED BANK ACCOUNT WAS ORIGINALLY CONSIDERED IN THE ASSESSMENT_MADE FOR A. Y. 2007-08, I.E. THE IMMEDIATELY PRECEDING PREVIOUS YEAR. IN TH E ASSESSMENT OF THAT YEAR, THE A.O. HAD MADE SIMILAR ADDITIONS, I.E . ALL CREDITS IN THE ACCOUNT WERE CONSIDERED AS INCOME. IN APPEAL FOR TH AT YEAR, THE APPELLANT PREPARED ITS ACCOUNTS SEPARATELY FOR THE TRANSACTIONS REFLECTED IN THE UNDISCLOSED BANK ACCOUNT ON THE BA SIS OF SUPPORTINGS IN THE FORM OF ACCOUNT/BILLS FOR SALE/P URCHASE OF SHARES ISSUED BY THE BROKER. IT WAS ARGUED THAT THE ENTIRE DEPOSITS IN THE BANK ACCOUNT CANNOT BE TREATED AS INCOME OF THE APP ELLANT AS IT INCLUDED REFUNDS RECEIVED ON UNSUCCESSFUL SHARE APP LICATIONS, REFUNDS FROM BROKERS AND RE-DEPOSIT OF CASH WITHTHD RAWN FROM THE SAME BANK. IT WAS SUBMITTED THAT THE INCOME ARISING FROM THE TRANSACTIONS IN THE ACCOUNT AND ANY UNEXPLAINED INT RODUCTIONS OF CAPITAL BY THE APPELLANT SHOULD BE SUBJECTED TO TAX . THE SAID EVIDENCES BEING ADDITIONAL EVIDENCES WERE FORWARDED TO THE A.O. ITA NO 2895/ AHD/2011 . A.Y. 20 08-09 4 WHO AFTER VERIFICATION FOUND THE BOOKS PREPARED TO BE IN ORDER. IN MY DECISION FOR THAT YEAR, ON THE BASIS OF EVIDENCE S FILED AND AFTER CONSIDERING THE REMAND REPORT, HELD THAT ONLY INCOM E ARISING FROM TRANSACTIONS AND UNEXPLAINED INTRODUCTIONS OF MONEY WAS REQUIRED TO BE TAXED AS THIS WOULD BE THE INCOME ARISING TO THE APPELLANT FROM TRANSACTIONS IN THE UNDISCLOSED BANK ACCOUNT. I FIND THAT FOR THIS YEAR THE SITUATION IS IDENTICAL, EXCEPT THAT T HE ACCOUNTS PREPARED HAD BEEN PROVIDED TO THE A.O. IN THE ASSES SMENT PROCEEDINGS ITSELF. THEREFORE, IN PRINCIPLE, IT IS HELD THAT ONLY THE INCOME ARISING OUT OF THE TRANSACTIONS IN THE UNDIS CLOSED BANK ACCOUNT AND UNEXPLAINED CAPITAL INTRODUCTIONS WERE REQUIRED TO BE TAXED. 10. SINCE IN THE ASSESSMENT ORDER THERE WAS NO MEN TION OF THE ACCOUNTS BEING SUBMITTED CORRECTNESS, THE EVIDENCES SUBMITTED IN THE FORM OF BOOKS PREPARED, AND RELATED CAPITAL ACC OUNT, P&L ACCOUNT AND BALANCE SHEET WERE SENT TO THE A.O. IN REMAND TO VERIFY THE CORRECTNESS OF THE SAME. THE OBJECTIONS RAISED BY THE A.O. AND THE COUNTER COMMENTS OF THE APPELLANT HAVE BEEN MENTIONED EARLIER IN THIS ORDER. AS REGARDS CASH DE POSITED OF RS. 5,500/- ON 30. 07.2007 IS CONCERNED, THE EXPLANATIO N OF THE APPELLANT IS REQUIRED TO BE ACCEPTED. THE EXPLANATI ON OF THE APPELLANT REGARDING CASH WITHDRAWAL OF RS.20,000/- ON 22.02.2008 AND RS.35.000/- ON 23.02.2008 IS HOWEVER NOT ACCEPT ABLE AS IT HAS BEEN ACCEPTED BY THE APPELLANT THAT THE ACTUAL UTILIZATION OF THE WITHDRAWAL, WHICH COULD ALSO BE PERSONAL EXPENS E, WAS NOT KNOWN TO HIM AND THEREFORE HE HAD CONSIDERED IT AS BALANCE ON HAND AT THE END OF THE YEAR. THE BALANCE OF CASH MA Y ACTUALLY NOT BE AVAILABLE AND THE BALANCE SHEET PREPARED TO THI S EXTENT WOULD NOT TALLY. THE SAID BALANCE ON HAND TO THE EXTENT O F RS. 55,000/- IS CONSIDERED AS UNEXPLAINED. AS REGARDS EXPENSES ARE CONCERNED THESE ARE AVAILABLE IN THE BROKER NOTES/BANK STATEM ENTS, EXCEPT CONSULTING FEES EXPENSES OF RS 6,000/-, MISCELLANEO US EXPENSES OF RS. 26/-. THE EXPENSES CLAIMED TO THE EXTENT OF RS. 6,026//- IS HELD AS INADMISSIBLE. IT IS FURTHER HELD THAT THE R EMAINING EXPENSES OF RS.23,358/-(DEMAT, INSURANCE, SERVICE TAX STAMP DUTY, TRANSACTION CHARGES, BANK CHARGES) WOULD BE REQUIRE D TO BE APPORTIONED BETWEEN INCOME AND INVESTMENTS SHOWN IN THE BALANCE SHEET. AS A RULE OF THUMB IT IS CONSIDERED THAT THE ADMISSIBLE PORTION OF EXPENSES IS RS. 15,000/-. TH E CONTENTION OF ITA NO 2895/ AHD/2011 . A.Y. 20 08-09 5 THE APPELLANT THAT PROFIT/LOSS EARNED ON TRANSACTIO NS THROUGH THE BANK ACCOUNT BUT IN THE NAME OF NAILESH NATALI SHOU LD BE CONSIDERED AS INCOME OF THE APPELLANT IS REQUIRED T O BE ACCEPTED AS FUNDS FOR SUCH TRANSACTIONS AND THE BENEFICIARY OF SUCH TRANSACTIONS IS THE APPELLANT. THE CLAIM OF THE APP ELLANT THAT THE LOSS IN FUTURES AND OPTIONS OF RS.63,7587/- SHOULD BE CONSIDERED FOR SET OFF AGAINST ITS INCOME FOR THE YEAR IS REQU IRED TO BE ALLOWED IN TERMS OF SECTION 71(1) & (2) R.VV.S. 43(5). 11. ON THE BASIS OF THE DISCUSSION ABOVE, THE INCOME ON ACCOUNT OF TRANSACTIONS IN THE UNDISCLOSED BANK ACC OUNT WILL BE AS UNDER :- I) SHORT TERM CAPITAL GAIN RS. 2,41,401/- II) ON ACCOUNT OF NEGATIVE CASH BALANCE RS. 4,47,0 00/- III) COMMISSION INCOME RS. 34,904/- IV) BANK INTEREST RS. 781/- V) INTEREST ON FD RS. 1,510/- VI) ON ACCOUNT OF CASH WITHDRAWAL (UNEXPLAINED AS DISCUSSED ABOVE) RS. 55,000/- TOTAL.. RS. 7,80,596/- LESS: ADMISSIBLE EXPENSES R S. 15,000/- SET OFF OF LOSS ON F&O RS. 363758/- NET IN COME ON ACCOUNT OF TRANSACTIONS RS. 4,01,838/- IN UNDISCLOSED BANK ACCOUNT. 12. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER T HE AMOUNT OF RS. 4,01,838/- AS INCOME OF THE APPELLANT FOR THE YEAR FROM TRANSACTIONS IN THE UNDISCLOSED BANK ACCOUNT. THE A PPELLANT GETS RELIEF ACCORDINGLY. 5. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. D.R. SUPPORTED THE ORDER OF A SSESSING OFFICER. ITA NO 2895/ AHD/2011 . A.Y. 20 08-09 6 7. WE HAVE HEARD THE LEARNED D.R. AND PERUSED THE M ATERIAL ON RECORD. WE FIND THAT CIT(A) AFTER ANALYZING THE DET AILS SUBMITTED BY THE ASSESSEE AND AFTER CONSIDERING THE REMAND REPOR T AND AFTER DETAILED DISCUSSION HAD CONCLUDED THAT THE INCOME TO THE EXTENT OF RS.4,01,838/- TO BE THE INCOME OF THE ASSESSEE BEIN G FROM THE TRANSACTIONS IN THE UNDISCLOSED BANK ACCOUNT. BEFOR E US, THE LEARNED D.R. COULD NOT CONTROVERT THE FINDINGS OF C IT(A) NOR COULD BRING ANY CONTRARY MATERIAL ON RECORD IN ITS SUPPOR T. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A ) AND THUS DISMISS THIS GROUND OF REVENUE. 8. THUS THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 05 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY AHMEDABAD. RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDA BAD