Income Tax Officer, Ward-1(3) (4), Surat V. Shri Vikesh Jayantilal Mandviwala, Surat

ITA 29/SRT/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2319 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-01-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH; ANUPAMA SINGLA
• Keywords: Unexplained cash credit; Corroborative evidences; Set aside
• Section: 147; 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A.L.SAINI, AM आयकरअपील सं./ITA No.29/SRT/2017 (िनधाŊरणवषŊ / Assessment Year: (2008-09) ᮧ᭜याᭃेप/Cross Objection No.08/SRT/2021 (a/o ITA No.29/SRT/2017) (Virtual Court Hearing) Income Tax Officer, Ward-1(3)(4), Room No.206, Anvil Business Centre, Nr. Adajan B.R.T.S. Surat-395009, Vs. Shri Vikeash Jayantilal Mandviwala, Sy.No. 159/2,Plot No.18, Vibha Winner Raw House, Panas Village, Atwalines, Surat-394220 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: ACSPG 6187 G (Appellant ) (Respondent)/ co-objector Assessee by : Shri Rasesh Shah, C.A Respondent by : Ms. Anupama Singla, Sr-DR सुनवाई की तारीख/ Date of Hearing : 13/01/2022 घोषणा की तारीख/Date of Pronouncement : 06/04/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue and Cross Objection (CO) filed the by Assessee pertaining to assessment year 2008-09, are directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-2 Surat [‘CIT(A)’ for short], dated 05.05.2017, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide, order dated 28.03.2016. 2.Grounds of appeal raised by the Revenue are as follows:- “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.31,60,000/- in respect of unexplained cash deposits without appreciating the fact that the assessee has not submitted supporting evidences for cash deposits. Page | 2 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala 2.Whether on the facts and circumstances of the facts and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,97,49,999/- in respect of unsecured loan without appreciating the fact that the assessee has not proved the genuineness and creditworthiness of the same. 3. On the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the assessing officer. 4. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of assessing officer may be restored to the above extent.” 3. Ground No.1 raised by the Revenue relates to addition of Rs.31.60 lakh in respect of unexplained cash credits. 4.Succinct facts are that during the assessment proceedings, the assessing officer observed that assessee has deposited cash amounting to Rs.31.60 lakh in his Centurion Bank of Punjab Ltd on 31.03.2008. Therefore, assessing officer issued notice to the assessee and asked the assessee to explain the source of cash deposited in such bank account. In response to the notice, the assessee submitted that he has filed his return of income for A.Y. 2008-09 on 03.08.2009, vide acknowledgement No.0301004021, declaring total income of Rs.2,29,680/-. The assessing officer noted that assessee neither submitted the details of his business nor submitted bank statement. Therefore, after recording the reasons on 19.03.2015 and after getting due approval, notice u/s 148 of the Act, was issued on 20.03.2015, which was served upon the assessee. 5. In response to notice under section 148 of the Act, the assessee submitted before the assessing officer that return of income filed on 03.08.2009, may be treated as return of income filed in pursuance of notice u/s 148 of the Act. The copy of reason recorded was provided to the assessee on 18.08.2015. 6. Thereafter, during the assessment proceedings, the assessee submitted the details of the cash deposited in bank account as follows: Page | 3 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala “The assessee has deposited cash amounting Rs.31,60,000/- in Centurian Bank of Punjab out of the following sources:- Cash sales of colour chemicals Rs.10,65,845/- Cash sales-Rushabhhh Textiles Rs.16,03,560/- Other cash turnover Rs. 7,55,400/- Rs.34,24,805/- The above figures are duly reflected in ROI & books of account of the assessee” 7. However, the assessing officer rejected the contention of the assessee and held that no evidence of cash sales of colour chemicals, cash sales-Rushabh Textiles and other cash turnover was submitted by the assessee. Therefore, assessing officer considered the cash deposits of Rs.31,60,000/- as unexplained and added to the same to the income of assessee for the year under consideration. 8.Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition. Aggrieved, by the order of the ld CIT(A), the Revenue is in appeal before us. 9. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. On the other hand, ld Counsel for the assessee defended the order passed by the learned CIT(A). We note that assessee had deposited cash of Rs.31,60,000/- in his account in Centurion Bank of Punjab Ltd during the year, therefore the case of the assessee was reopened u/s 147 of the Act. The assessing officer held that assessee could Page | 4 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala not submit any reasonable explanation in respect of cash deposits during the assessment proceedings and no evidence of cash sales of color chemicals, sales of Rishabh Textiles, and other cash turnover etc., was submitted and therefore he made an addition of Rs.3160000/-. 10. We note that during the assessment proceedings, it was submitted by the assessee that cash sales of color chemicals of Rs.10,65,845/-; cash sales of Rishabh Textiles of Rs.16,02,560/- and other cash turnover of Rs.7,55,400/- was duly reflected in the return of income. One of the observations of the assessing officer in his reasons recorded was that assessee has not disclosed his bank account in his return of income. However, we note that bank account with the Centurion Bank of Punjab Ltd. is a disclosed bank account which is reflected in the books of account of the assessee and the return of income since its inception. Therefore, the presumption of the assessing officer that bank account was never disclosed, was wrong. In fact, the assessee had deposited cash of Rs.31,60,000/- in his bank account out of his sales receipts of Rs.34,24,805/- during the year and the income was offered for tax under section 44AF of the Act. The turnover of Rs.34,24,805/-is reflected in the return of income filed by the assessee and against the said cash turnover, the assessee deposited cash of Rs.31,60,000/- in his bank account. Therefore, we note that bank account was disclosed in the return of income and the cash deposits was out of the cash sales duly reflected in the return of income and books of account. The assessing officer had not brought out any facts on record to counter the contention of the assessee that the cash sales shown in the return of income is not genuine. It is not a case of undisclosed bank account. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made by the assessing officer, has been rightly deleted by ld CIT(A). Page | 5 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala Therefore, we confirm the findings of ld CIT(A) and dismiss the appeal of the Revenue. 11. Ground No.2 raised by the Revenue relates to addition of Rs.1,97,49,999/-. 12. Brief facts qua the issue are that during the course of assessment proceedings, the Assessing Officer observed that assessee has shown the following outstanding unsecured loans: Unsecured loan A.Y. 2007-08 Unsecured loan A.Y.2008-09 Ajay Mishra 40000 Ajay Mishra 40000 Bhupendra C Popat 20000000 Bhupendra C Popat 20000000 Shaniyal Dyg. & Ptg. M 58001 Shaniyal Dyg.&Ptg. M 58001 Shaniyal Industries 40294 Shaniyal Indstries 40294 Total 20138294 Total 20138294 All the above referred loans were old loans which were also appearing in the balance sheet for the year under consideration. The assessee was asked to furnish the details, like confirmations, return of income, current address of unsecured loan parties etc, (of all unsecured loan parties), appearing in his balance sheet. 13. In response, the assessee furnished details on 19.10.2015, before the Assessing Officer. Apart from this, it was also submitted before the assessing officer that no unsecured loans were received by the assessee during the year. Besides, assessee also submitted before assessing officer, the Ledger Account of all unsecured loans. Page | 6 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala 14. However, Assessing Officer rejected the contention of the assessee and added the difference amount of Rs.1,97,49,999/- as income from undisclosed sources. 15. On appeal, ld CIT(A) deleted the addition. Aggrieved by the order of Ld. CIT(A) the Revenue is in appeal before us. 16. Ms. Anupama Singla, Learned DR for the Revenue pleads that Assessing Officer issued a show cause notice to the assessee on 08.03.2016. The assessee was asked to submit confirmation in respect of all unsecured loan parties, current address of all unsecured loan parties and copies of ROI for AYs 2007-08 and 2008-09 since the loans were old as observed from balance sheet given by the assessee for the A.Y 2007-08. This enquiry was made to ascertain whether the unsecured loan parties reflected in the balance sheet are actually in existence or not. In reply filed by the assessee on 23.03.2016, he simply submitted ledgers in respect of unsecured loan parties therefore, assessee has not proved the creditworthiness and genuineness of these loan parties. 17. On the other hand, ld Counsel for the assessee submitted that no new loans have been taken by the assessee during the year, therefore, ld CIT(A) has rightly deleted the addition. 18. We have heard both the parties. We note that these disputed Loan parties are coming in the Balance Sheet, as an opening balance from the previous year. We note that total unsecured loans as per the balance sheet from the four persons was of Rs.2,01,38,294/- and this amount was old loan which was duly reflected in the balance sheet for AY 2007-08 also, and no new loans have been taken by the assessee during the year. The assessing officer Page | 7 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala himself in the assessment order has reproduced the unsecured loans in the Balance Sheet for AY 2007-08 and AY 2008-09 which clearly shows that all the loan amount from the four persons of Rs.2,01,38,294/- was old loan which was duly reflected in AY 2007-08 and no new loan have been taken during the relevant assessment year. The assessing officer, on what basis has made this addition, is not known. The facts show that the loans from the four persons have been duly reflected in the AY 2007-08 itself and no new loans have been taken during the year. Hence the basis for the addition of treating the unsecured loans, which is old loan, is erroneous and therefore we note that there is no infirmity in the order of ld CIT(A) in deleting the aforesaid addition. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 19. In the Cross Objection No.08/SRT/2021, the assessee has challenged the reopening of the assessment under section 147 of the Act. Since we have already upheld the order of Ld. CIT(A) giving relief to the assessee on both the grounds, therefore, adjudication of cross objection becomes infructuous, hence does not require adjudication. 20. In the result, appeal of the Revenue is dismissed and that of assessee’s Cross Objection is dismissed as infructuous. Order pronounced in the open court on 06/04/2022 by placing the result on the notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 06/04/2022 Dkp Outsourcing Sr.P.S. Page | 8 ITA No.29/SRT/2017 & CO 8/SRT/2021 A.Y. 2008-09 Sh. Vikeash J. Mandviwala Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat rue copy/