Shri Harshad Maganbhai Patel, Ahmedabad V. The Income Tax Officer, (Intl. Taxn.)-1, Ahmedabad

ITA 293/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9826 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment; Principle of natural justice; Peak credit; Deemed to accrue or arise in india
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER HARSHAD MAGAMBHAI PATEL, 20, ANAND BUNGLOW, OPP. AKSHAT BUNGLOWS, NR. GULAB TOWER, AHMEDABAD - 380054 PAN: AASPP1620M (APPELLANT) VS THE ITO (INTL. TAXN.). - 1, 2 ND FLOOR, NAVJIVAN BUILDING, B/H GUJ. VIDYAPI TH, OFF ASHRAM ROAD, AHMEDABAD - 14 (RESPONDENT) SHARDABEN HARSHAD PATEL, 20, ANAND BUNGLOW, OPP. AKSHAT BUNGLOWS, NR. GULAB TOWER, AHMEDABAD - 380054 PAN: AAYPP4307M (APP ELLANT) VS THE ITO (INTL. TAXN.). - 1, 2 ND FLOOR, NAVJIVAN BUILDING, B/H GUJ. VIDYAPITH, OFF ASHRAM ROAD, AHMEDABAD - 14 (RESPONDENT) REVENUE BY : S H RI NARENDRA SINGH , SR. D . R. ASSESSEE BY: S H RI S.N. DIVETIA , A.R. I T A NO . 1443 & 292 - 94 / A HD /20 15 A SSESSMENT YEAR 200 5 - 06 TO 2008 - 09 ITA NO. 1444 & 295 - 97 /AHD/20 15 ASSESSMENT YEAR 200 5 - 06 TO 2008 - 09 I.T.A NO S . 1443 - 44 & 292 - 97 /AHD/20 15 A.Y. 200 5 - 06 TO 2008 - 09 PAGE NO HARSHAD MAGAMBHAI PATEL VS. ITO(INTL. TAXN.) & SHARDABEN HARSHAD PATEL VS. ITO (INTL. TAXN.) 2 DATE OF HEARING : 13 - 01 - 2 016 DATE OF PRONOUNCEMENT : 19 - 01 - 2 016 / ORDER P ER BENCH : - THIS IS A BATCH OF EIGHT APPEALS. THESE TWO DIFFEREN T ASSESSEES NAMELY HARSHAD MAGAM BHAI P ATEL AND SHARDABEN HARSHAD PATEL HAVE FILED FOUR APPEALS EACH FOR ASSESSMENT YEAR 2005 - 06 TO 2008 - 09 BEARING ITA NOS. 1443, 292 - 294/AHD/2015 AND 1444, 295 - 297/AHD/2015 , AGAINST DIFFERENT ORDERS OF CIT(A) - 13, AHMEDABAD DATED 23 - 03 - 2015 TO 14 - 11 - 2014 AND 23 - 03 - 2015 TO 14 - 11 - 2014 ; RESPECTIVELY. THE RELEVANT PROCEEDINGS ARE U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT IN BOTH SETS OF APPEALS . 2. BOTH PARTIES POINT OUT AT THE OUTSET THAT ALL THESE EIGHT APPEALS RAISE THE FOLLOWING ID ENTICAL GROUNDS : - 1.1 THE ORDER PASSED U/S.250 ON 23.03.2015 FOR A.Y.2005 - 06 BY CIT(A) - 13, A'BAD UPHOLDING THE ADDITION OF RS.25,56,060/ - AS UNEXPLAINED INVESTMENT IN BANK ACCOUNT IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT T HE CASH DEPOSITS AGGREGATING TO RS.25,56,060/ - IN BANK ACCOUNT WAS UNEXPLAINED INVESTMENT U/S.69B, THOUGH THE APPELLANT HAD DISCLOSED INCOME IN ACCORDANCE WITH SECTION 44AF OF THE ACT, BEING THE CREDIT ENTRIES AS TURNOVER OF THE BUSINESS. I.T.A NO S . 1443 - 44 & 292 - 97 /AHD/20 15 A.Y. 200 5 - 06 TO 2008 - 09 PAGE NO HARSHAD MAGAMBHAI PATEL VS. ITO(INTL. TAXN.) & SHARDABEN HARSHAD PATEL VS. ITO (INTL. TAXN.) 3 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE ID. AO HAS GRIEVOUSLY ERRED IN UPHOLDING THAT THE CASH DEPOSITS AGGREGATING TO RS.25,56,060/ - IN BANK ACCOUNT WAS UNEXPLAINED INVESTMENT U/S.69B, THOUGH THE APPELLANT HAD DISCLOSED INCOME IN ACCORD ANCE WITH SECTION 44AF OF THE ACT, BEING THE CREDIT ENTRIES AS TURNOVER OF THE BUSINESS. 2.3 THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN REJECTING THE CLAIM OF THE APPELLANT OF HAVING CARRIED ON RETAIL TRADE AND INCOME OFFERED U/S.44AF. 3.1 THE ID. CIT(A ) HAS GRIEVOUSLY ERRED IN HOLDING THAT IN ABSENCE OF DETAIL SUBMISSION GIVEN IN RESPECT OF REOPENING U/S. 147, THE GROUND OF APPEAL RELATING TO ITS VALIDITY WAS TO BE REJECTED. 3.2 WITHOUT PREJUDICE TO THE ABOVE, THE ID. CIT(A) OUGHT NOT TO HAVE HELD THE ENTIRE CASH DEPOSITS OF RS. 25, 56 , 060 AS UNEXPLAINED BUT RESTRICTED THE SAME TO THE PEAK CREDIT. THE ASSESSEES STRONGLY ARGUE FOR ACCEPTANCE OF ALL OF THEIR GROUNDS IN THE BEGINNING. THEREAFTER, THEY SUBMIT THAT GROUNDS NO. 1.1 TO 3.1 RAISED IN ALL CASES BE DISMISSED AS NOT PRESSED IN VIEW OF SMALLNESS OF THE AMOUNTS INVOLVED THERE IN. LEARNED AUTHORIZED REPRESE NT AT IVE ALSO MAKES NECESSARY ENDORSEMENT IN THIS REGARD IN LEAD APPEALS ITAS 1443 AND 1444/AHD/2015 RESPECTIVELY IN CASE OF BOTH ASSESSEES. THE REVENUE IS FAIR ENOUGH IN NOT RAISING ANY OBJECTION . WE ACCEPT ASSESSEE S PRAYER. GROUNDS NO. 1.1 TO 3.1 RAISED IN ALL APPEALS ARE DISMISSED AS NOT PRESSED FOR THE SMALLNESS OF THE AMOUNTS INVOLVED. 3. THIS LEAVES US WITH THE SOLITARY ISSUE OF PEA K CREDIT VIS - - VIS THE ENTIRE CASH CREDIT ADDITION OF RS. 25,56,060/ - AS UNEXPLAINED I.T.A NO S . 1443 - 44 & 292 - 97 /AHD/20 15 A.Y. 200 5 - 06 TO 2008 - 09 PAGE NO HARSHAD MAGAMBHAI PATEL VS. ITO(INTL. TAXN.) & SHARDABEN HARSHAD PATEL VS. ITO (INTL. TAXN.) 4 MADE IN THE COURSE OF RE - ASSESSMENT FRAMED ON 30 TH MARCH, 201 3 AS AFFIRMED IN THE LOWER APPEL L A TE ORDER PERTAINING TO ASSESSMENT YEAR 2005 - 06 SUBJECT MATTER OF ADJUDICATIO N IN ITA 1443/AHD/2015 TREATED AS THE LEAD CASE. 4. IT IS TO BE SEEN THAT A LEARNED CO - ORDINATE BENCH SEEMS TO HAVE RAISED A QUERY AS TO WHETHER THE ASSESSEE WAS A NON - RESIDENT AS STATED IN PARA 3 OF THE ASSESSING OFFICER S ORDER. THE ASSESSEE FILES A COPY OF HIS PASS - PORT ALONG WITH A CANADIAN VISA ISSUED ON 06 - 05 - 2008. LEARNED AUTHORIZED REPRESENTATIVE SUBMITS THAT THE ASSESSEE WAS VERY MUCH A RESIDENT UPTO 31 - 03 - 2008. THE REVENUE FAILS TO REBUT THIS FACTUAL POSITION. WE ACCORDINGLY HOLD THAT THE A SSESSEE WAS A RESIDENT INDIAN UPTO THE LAST IMPUGNED ASSESSMENT YEAR 2008 - 09. 5. WE COME TO MERITS OF THE CASH CREDIT ISSUE. THE ASSESSEE APPEARS TO HAVE FILED HIS ORIGINAL RETURN ON 28 - 06 - 2005 ADMITTING INCOME OF RS. 1,35,110/ - . THE ASSESSING OFFICER T HEREAFTER ISSUED SECTION 148 NOTICE DATED 29 - 03 - 2012 BY FORMING REASONS TO BELIEVE ESCAPEMENT OF HIS ASSESSABLE INCOME. THE ASSESSEE IN RESPONSE THERETO FILED HIS RETURN ON 17 - 01 - 2013. THIS TIME HE INCREASED HIS INCOME TO RS. 2,03,210/ - . THE ASSESSING O FFICER TOOK UP SCRUTINY. HE INTER ALIA NOTICED ASSESSEE S VARIOUS BANK ACCOUNTS COMPRISING OF CREDIT ENTRIES THEREIN IN THE FORM OF TRANSFER FROM SOME OTHER BANK ACCOUNTS , CREDIT ENTRIES IN THE FORMS OF CASH DEPOSITS AND CLEARING ETC. HE SOUGHT TO EXAMIN E DETAILS THEREOF. THE ASSESSEE SUBMITTED I.T.A NO S . 1443 - 44 & 292 - 97 /AHD/20 15 A.Y. 200 5 - 06 TO 2008 - 09 PAGE NO HARSHAD MAGAMBHAI PATEL VS. ITO(INTL. TAXN.) & SHARDABEN HARSHAD PATEL VS. ITO (INTL. TAXN.) 5 THAT THE IMPUGNED CASH IN HIS VARIOUS BANK ACCOUNTS RELATED TO HIS RETAILS TRADE BUSINESS/ COLLECTION THEREOF, AMOUNT RECEIVABLES OF RETAIL TRADE RECOVERED SUBSEQUENTLY . THE ASSESSING OFFICER OBSERVED THAT IDENTI TY OF THE CREDITORS IN QUESTION ALONG WITH THE NECESSARY PARTICULARS WAS NOWHERE FORTHCOMING. HE OPINED THAT PLEA OF HOLDING AN NRO ACCOUNT WAS ALSO WITHOUT ANY JUSTIFICATION SINCE NOT LINKED UP TO THE SAME. HE OBSERVED IN THE END THAT THE ASSESSEE HAD F AILED TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF HIS CASH DEPOSITS. THIS MADE THE ASSESSING OFFICER TO INVOKE SECTION 69B OF THE ACT AND TREAT THE IMPUGNED CASH DEPOSITS IN BANK OF RS. 25,56,061/ - AS ASSESSEE S DEEMED INCOME . 6. THE ASSESSE E PREFERRED APPEAL. HE PLEADED IN THE COURSE OF LOWER APPELLATE PROCEEDING THAT THE ASSESSING OFFICER OUGHT TO HAVE ADDED ONLY INCREMENTAL PEAK CREDIT INSTEAD OF ENTIRE CASH DEPOSITS. THE CIT(A) OBSERVES THAT THE SAME CANNOT BE ACCEPTED IN ABSENCE OF ANY SUBMISSION IN THIS REGARD DURING REASSESSMENT OR LOWER APPELLATE PROCEEDINGS. THIS LEAVES THE ASSESSEE AGGRIEVED. 7. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. WE REITERATE THAT THE SOLE ISSUE AGITATED BEFORE US IS THAT OF PEAK CREDIT VIS - - VIS ASSESSEE S CASH DEPOSIT AMOUNTING TO RS. 25,56,060/ - (SUP RA). THERE IS NO DISPUTE THAT TH E ASSESSING OFFICER HAS ADDED THE ENTIRE AMOUNT. WE NOTICE FROM HIS SCRUTINY NOTICE DATED 21 ST OF MARCH, 2013 THAT THE ASSESSEE IS STATED TO HAVE MAINTAINING VAR IOUS BANK ACCOUNTS. THE ASSESSING OFFICER ALREADY SOUGHT EXPLANATION I.T.A NO S . 1443 - 44 & 292 - 97 /AHD/20 15 A.Y. 200 5 - 06 TO 2008 - 09 PAGE NO HARSHAD MAGAMBHAI PATEL VS. ITO(INTL. TAXN.) & SHARDABEN HARSHAD PATEL VS. ITO (INTL. TAXN.) 6 QUA CREDIT ENTRIES IN CASH DEPOSITS, CLEARING AND INTER - ACCOUNT TRANSFERS (SUPRA). WE OBSERVE IN THESE FACTS THAT THE ASSESSING OFFICER AS WELL AS CIT(A \ ) ARE IN POSSESSION OF ALL THE R ELEVANT BANK STATEMENTS PERTAINING TO THE ACCOUNTING PERIOD IN QUESTION. THE ASSESSEE NO DOUBT DID NOT RAISE THIS PEAK CREDIT PLEA BEFORE THE ASSESSING OFFICER AS EVIDENT FROM HIS ORDER DATED 30 - 03 - 2013. WE FIND THAT A SPECIFIC GROUND NO. 3.2 WAS RAISED BEFORE THE CIT(A). THERE CAN HARDLY BE ANY DISPUTE THAT THE CIT(A) ENJOYS POWER CO - TERMINUS TO THAT OF THE ASSESSING OFFICER. HOWEVER, HE DID NO T ADVERT TO ASSESSEE S GROUND ON MERITS DESPITE THE FACT THAT THE SAME WAS NOWHERE EXPRESSLY GIVEN UP IN THE COURSE OF L OWER APPELLATE PROCEEDINGS . BE THAT AS IT MAY, WE ARE OF THE VIEW THAT THE ASSESSEE HAS ALREADY PLACED ON RECORD ALL OF HIS BANK STATEMENTS RELEVANT TO THE ISSUE ON RECORD. WE ACCORDINGLY ARE OF THE OPINION THAT THIS ISSUE OF PEAK CREDIT A DDITION NEEDS TO BE DECIDED BY THE ASSESSING OFFICER AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING. WE ORDER ACCORDINGLY. THE ASSESSEE SHALL BE ENTITLE D TO PLACE ON RECORD ALL NECESSARY MATERIAL QUA THIS ISSUE. THIS GROUND IS ACCORDINGLY RE MITTED BACK TO THE ASSESSING OFFICER. ITA 1443/AHD/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. SAME ORDER TO FOLLOW IN ITA 292 - 294/AHD/2015 AS WELL AS IN CASES OF S MT. SHARDABEN HARSHADBHAI PATEL S CASES ITA NO. 1444, 295 TO 297/AHD/2015. I.T.A NO S . 1443 - 44 & 292 - 97 /AHD/20 15 A.Y. 200 5 - 06 TO 2008 - 09 PAGE NO HARSHAD MAGAMBHAI PATEL VS. ITO(INTL. TAXN.) & SHARDABEN HARSHAD PATEL VS. ITO (INTL. TAXN.) 7 9. AL L THESE EIGHT APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 19 - 01 - 201 6 SD/ - SD/ - ( MANISH BORAD ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDA BAD : DATED 1 9 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,