Dy. Commissioner of Income Tax, Circle-1(2), Baroda V. Shri Shailesh C Patel, Baroda

ITA 3112/AHD/2014

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5513 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 24-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Income from undisclosed sources; Earning of tax free income; TDS; Set aside
• Section: 43B; 40(a)(ia); 194C; 201(1); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.3112/AHD/2014 (ASSESSMENT YEAR : 2010-11) THE DY.COMMISSIONER OF INCOME TAX CIRCLE-1(2) BARODA 390 007 VS. SHRI SHAILESH C. PATEL B-3, SAHYOG VATIKA REFINERY ROAD GORWA, BARODA [PAN NO.AGUPP 7018 H] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : LALIT P. JAIN, |SR.DR RESPONDENT BY : MS.URVASHI SHODHAN, AR DATE OF HEARING : 13/08/2018 DATE OF PRONOUNCEMENT : 02 /11/2018 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVE NUE BEFORE US AGAINST THE ORDER DATED 05.08.2014 PASSED BY THE COMMISSIONER OF INC OME TAX(APPEALS)-II, BARODA [LD.CIT(A) IN SHORT] FOR ASSESSMENT YEAR (AY) 2010 -11 ARISING OUT OF THE ORDER PASSED BY THE ITO, WARD-2(6), BARODA DATED 18.03.2 013. GROUND NO.1 2. DURING THE ASSESSMENT PROCEEDINGS, IT WAS COME T O THE KNOWLEDGE OF THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAS MADE CERTAI N PAYMENTS TO VARIOUS AGENTS/CONTRACTORS, SUB-CONTRACTORS. HOWEVER, NO T DS HAS BEEN DEDUCTED THEREBY THE ASSESSEE NOT COMPLIED WITH THE PROVISION OF SECTION 194C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') FOR PAYMENT AMOUNTING TO RS.88,24,500/- AND RS.13,60,240/-. THE LD. ASSESSING OFFICER, THEREFO RE, INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DISALLOWED THE SAID AMOUNT. - 2 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 3. IN FACT, THE ASSESSEE RELIED UPON THE DECISION P ASSED BY THE SPECIAL BENCH OF ITAT IN THE CASE OF M/S MERILYN SHIPPING AND TRANSPORTS VS ACIT IN ITA NO.477/VIZ/2008 AND ARGUED THAT THE PROVISIONS OF SECTION 40(A)(IA) IS APPLICABLE ONLY ON AMOUNT PAYABLE AS AT 31 ST MARCH AND NOT ON THE ENTIRE AMOUNT. 4. ON THE CONTRARY, THE LD. ASSESSING OFFICER RELIE D UPON THE DECISION IN THE CASE OF MATRIX GLASS & STRUCTURES PVT.LTD. IN ITA NO.658 (K OL) OF 2010 AND ULTIMATELY ADDED THE ENTIRE AMOUNT OF RS.88,24,500/- AND RS.13,60,24 0/- TO THE TOTAL INCOME OF THE ASSESSEE. 5. IN APPEAL, THE LD.CIT(A) RELYING UPON THE ORDER PASSED BY THE RAJKOT BENCH, ITAT IN THE CASE OF GUJARAT PIPAVAV PORT LTD. 40 TA XMANN.COM 174 SET ASIDE THE ISSUE TO THE FILE OF LD. ASSESSING OFFICER FOR FURTHER VERIF ICATION OF THE MATTER WITH CERTAIN OBSERVATION. HENCE, THE INSTANT APPEAL BEFORE US. 6. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LD.REPRESENTATIVE OF THE REVENUE ARGUED BEFORE US THAT THE LD.CIT(A) WRONGLY APPLIED THE JUDGEMENT PASSED BY THE ITAT RAJKOT BENCH IN THE MATTER OF GUJARAT PIPAVAV PORT LTD. (SUPRA). ON THE CONTRARY, THE LD.AR RELIED UPON THE ORDER P ASSED BY FIRST APPELLATE AUTHORITY. HE FURTHER PRAYED FOR THE DISMISSAL OF THE INSTANT APPEAL PREFERRED BY REVENUE. 7. HEARD THE RESPECTIVE PARTIES. PERUSED THE RELEV ANT MATERIALS AVAILABLE ON RECORD. WE FIND THAT WHILE SETTING ASIDE THE ORDER PASSED B Y THE LD. ASSESSING OFFICER, THE LD.CIT(A) EXAMINED THE ISSUE BROADLY IN THE MANNER AS FOLLOWS:- - 3 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE AUTHORI ZED REPRESENTATIVE AND THE FACTS OF THE CASE. HERE, THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT IT IS TRUE THAT THE TAX DEDUCTION AT SOURCE FROM AMOUNT PAID TO CONTRACTORS WAS NOT MADE BY THE APPELLANT. SIMULTANEOUSLY, IT IS ALSO SUBMITTED THAT THE CONTRACTEES HAVE FILED THE RETURN OF INCOME AND PAID THE DUE TAXES AFTER INCLUDING THE AMOUNT RECEIVED FROM THE APPELLANT. T HE AUTHORIZED REPRESENTATIVE HAS ALSO DRAWN MY ATTENTION TO THE AMENDMENT MADE IN THE FIR ST PROVISO OF SECTION 201(1) W.E.F 01/07/2012. THE AUTHORIZED REPRESENTATIVE HAS ALSO SUBMITTED THAT RAJKOT BENCH OF THE ITAT, IN THE CASE OF GUJARAT PIPAVAV PORT LTD 40 TAXMANN.COM 174 HAS HELD THAT THE SAID AMENDMENT IS APPLICABLE TO PENDING CASES THROUGH IT IS AMENDED W ITH EFFECT FROM 01.07.2012. HONOURABLE ITAT'S OBSERVATIONS ARE AS UNDER: 'IN ORDER TO ADDRESS SUCH ISSUES AND ENSURE UNIFORM ITY, SIMPLICITY AND OBJECTIVITY IN MATTERS AS THOSE BEFORE US, THE IDS PROVISIONS HAVE SINCE BEEN RATIONALISED. A PROVISO (I.E., FIRST PROVISO) HAS BEEN INSERTED IN SUBSECTION (1) OF SECTION 201 WITH EFFECT FROM 01.07.2012 ACCORDING TO WHICH ANY PERSON, WHO IS REQUIRED TO DEDUCT TAX AT SOURCE OUT OF ANY SUM PAID TO A RESIDENT OR CREDITED TO HIS ACCOUNT BUT FAILS TO DEDUCT THE WHO LE OR ANY PART OF SUCH TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII OF THE INCOME-TAX AC T, SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT PAY EE (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION!39; (II) HAS TAKEN INTO ACCOUNT SUCH AMOUNT FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (HI) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON RESPONSIBLE FOR DEDUCTING TAX AT SOU RCE FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED, WH ICH, ACCORDING TO RULE 31ACB OF THE INCOME-TAX RULES, SHALL BE FURNISHED IN FORM NO. 26 A. THE AFORESAID PROVISO RELAXES THE RIGOURS OF CONSEQUENCES FLOWING FROM NON/SHORT-DEDUCTION OF TAX AT SOURCE IF THE CONDITIONS STIPULATED BY THE SAID PROVISO ARE FULFILLED. 17. THERE IS NO DISPUTE THAT THE SAID PROVISO HAS BEEN INSERTED IN SUBSECTION (1) OF SECTION 201 WITH EFFECT FROM 1.7.2012. AMENDMENTS ON EXACTLY SI MILAR LINES HAVE BEEN CARRIED OUT IN SECTION 206C OF THE INCOME-TAX ACT BY INSERTING A PROVISO T O SUB-SECTION (6A) THEREOF WITH EFFECT FROM 1.7.2012. THE NEED FOR SUCH AMENDMENT HAS BEEN EXPL AINED IN THE EXPLANATORY NOTES TO THE FINANCE BILL 2012 AS UNDER: 'E. RATIONALIZATION OF TAX DEDUCTION AT SOURCE (TDS ) AND TAX COLLECTION AT SOURCE (TCS) PROVISIONS IN ORDER TO PROVIDE CLARITY REGARDING DISCHARGE OF TAX LIABILITY BY THE RESIDENT PAYEE ON PAYMENT OF ANY SUM RECEIVED BY HIM WITHOUT DEDUCTION OF TAX , IT IS PROPOSED TO AMEND SECTION 201 TO PROVIDE THAT THE PAYER WHO FAILS TO DEDUCT THE WHOL E OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT PAYEE SHALL NOT BE DEEMED TO BE AN AS SESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT PAYEE - (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 13 9; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOM E IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLAR ED BY HIM IN SUCH RETURN OF INCOME, AND THE PAYER FURNISHES A CERTIFICATE TO THIS E FFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED. - 4 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 THE DATE OF PAYMENT OF TAXES BY THE RESIDENT PAYEE SHALL BE DEEMED TO BE THE DATE ON WHICH RETURN HAS BEEN FURNISHED BY THE PAYEE. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE THE PAYER FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT AND IS NOT DE EMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY TH E SUCH RESIDENT, THE INTEREST UNDER SECTION 201(1 A)(I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH RESIDENT PAY EE. AMENDMENTS ON SIMILAR LINES ARE ALSO PROPOSED TO BE MADE IN THE PROVISIONS OF SECTION 206C RELATING TO TCS FOR CLARIFYING THE DEEMED DATE OF D ISCHARGE OF TAX LIABILITY BY THE BUYER OR LICENSEE OR LESSEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST JULY, 20 12.' 18. FIRST PROVISO INSERTED IN SUB-SECTION (1) OF SE CTION 201 SEEKS TO ACHIEVE THREE-FOLD OBJECTIVES. ONE, IT SEEKS TO (1) ENSURE THAT THERE IS NO LOSS T O THE REVENUE, I.E., (I) THE RESIDENT PAYEE HAS FURNISHED HIS RETURN OF INCOME U/S 139, (II) THE RE SIDENT PAYEE HAS TAKEN INTO ACCOUNT SUCH SUM ON WHICH TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE FOR COMPUTING INCOME IN SUCH RETURN OF INCOME, (HI) THE RESIDENT PAYEE HAS PAID THE TAX DU E ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, (IV) THE PAYER, I.E., THE PERSON RESPONSIBLE FOR DEDUCTING THE TAX AT SOURCE, HAS FURNISHED A CERTIFICATE IN FORM NO. 26A CONFIRMING THE AFORESAID; (2) RATIONALIZE THE PROVISIONS RELATING TO DEDUCTION OF TAX AT SOURCE; (3) PROVIDE RELIEF TO THE DEDUCTORS OF TAX AT SOURCE FROM THE CONSEQUENCES OF NON/SHORT DEDUCTION OF TAX AT S OURCE AND TO THAT EXTENT IT IS A BENEFICIAL PROVISION. IN THE FORESAID BACKGROUND, THE ISSUE TH AT ARISES FOR CONSIDERATION IS WHETHER THE FIRST PROVISO TO SECTION 201(1) IS APPLICABLE TO PENDING MATTERS ALSO NOTWITHSTANDING THE FACT THAT IT HAS BEEN MADE EFFECTIVE FROM 1.7.2012. 19 . IN CIT V. CHANDULALVENICHAND[1994] 209 ITR 7/73 TAX MAN 349 (GUJ), THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS WHETHER THE F IRST PROVISO INSERTED IN SECTION 43B WITH EFFECT FROM 1.4.1988, WHICH TOO WAS INTENDED TO BE A BENEFICIAL PROVISION, WOULD APPLY RETROSPECTIVELY. THE HON'BLE HIGH COURT HAS HELD: ' ONCE IT IS HELD THAT THE PROVISO IS INSERTED AS A REMEDIAL AND CURATIVE MEASURE FOR REMOVING THE DI FFICULTIES FACED BY THE TAXPAYERS BECAUSE OF INADVERTENT MISTAKE OR OMISSION WHICH HAS CREPT IN DRAFTING SECTION 43B, IT WOULD BE JUST AND PROPER TO HOLD THAT IT WOULD RELATE BACK TO THE DAT E WHEN SECTION 43B WAS INTRODUCED.' THE AFORESAID JUDGMENT OF THE HON'BLE JURISDICTIONAL HI GH COURT HAS BEEN APPROVED BY THE HON'BLE SUPREME COURT IN ALLIED MOTORS (P.) LTD. V. CIT [19 97] 224 ITR 677/91 TAXMAN 205. KEEPING IN VIEW THE FACT THAT THE FIRST PROVISO TO SUB-SECT ION (1) OF SECTION 201 NOT ONLY SEEKS TO RATIONALIZE THE PROVISIONS RELATING TO DEDUCTION OF TAX AT SOURCE BUT IS ALSO BENEFICIAL IN NATURE IN THAT IT SEEKS TO PROVIDE RELIEF TO THE DEDUCTORS OF TAX AT SOURCE FROM THE CONSEQUENCES FLOWING FROM NON/SHORT DEDUCTION OF TAX AT SOURCE AFTER ENS URING THAT THE INTEREST OF THE REVENUE IS WELL PROTECTED, WE HAVE NO HESITATION TO HOLD THAT THE S AID PROVISO WOULD APPLY RETROSPECTIVELY AND THEREFORE TO BOTH THE ASSESSMENT YEARS UNDER APPEAL . ALL THE ISSUES UNDER APPEAL, EXCEPT THE ONE RAISED IN GROUND NO.1.1 TAKEN BY THE ASSESSEE IN BO TH THE APPEALS, HAVE NOT BEEN EXAMINED BY THE AO/CIT(A) IN THE LIGHT OF THE REQUIREMENTS OF F IRST PROVISO TO SECTION 201(1), WHICH, AS HELD BY US, IS RETROSPECTIVELY APPLICABLE. WE THEREFORE CONSIDER IT APPROPRIATE TO RESTORE THEM TO THE - 5 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 FILE OF THE AO FOR CONSIDERATION AND DECISION. WE D IRECT THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH RELEVANT DOCUMENTS AS STIPULATED BY THE FIRST PROVISO TO SUBSECTION (1) OF SECTION 201 WITHIN TWO MONTHS OF THE DATE ON WHICH THIS ORDER IS PRONOUNCED UPON WHICH THE AO SHALL EXAMINE THE CLAIM OF THE ASSESSEE IN T HE LIGHT OF THE SAID PROVISIONS AND PASS APPROPRIATE ORDER ACCORDINGLY IN CONFORMITY WITH LA W AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL NOT BE TREATED AS ASSESSEE IN DEFAULT IN CASE THE AO IS SATISFIED, AFTER DUE VERIFICATION, THAT THE CONDITI ONS STIPULATED BY THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201 HAVE BEEN FULFILLED BY THE ASSES SEE BUT IN THAT SITUATION ALSO THE ASSESSEE SHALL BE LIABLE TO PAY INTEREST U/S 201(1A) AT THE PRESCR IBED RATE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE U/S 1941 TO THE DATE OF FURNISHING OF RE TURN OF INCOME BY THE PAYEE. ALL GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN BOTH APPEALS, EXCEP T GROUND NO.1.1 TAKEN BY THE ASSESSEE IN BOTH THE APPEALS, AND THE ISSUES RAISED IN THE APPE ALS FILED BY THE REVENUE THUS STAND RESTORED TO THE FILE OF THE AO FOR PASSING A FRESH ORDER AS PER DIRECTIONS EARLIER GIVEN BY US'. FOLLOWING THE ABOVE OBSERVATION OF THE ITAT, RAJKOT BENCH, I DIRECT THE [ASSESSING OFFICER TO VERIFY THE CONTENTION OF THE APPELLANT T HAT THE IMPUGNED AMOUNTS HAVE BEEN REFLECTED BY THE CONTRACTEES IN THEIR RETURNS OF INCOME AND D UE TAXES HAVE BEEN PAID BY THEM. AFTER DUE VERIFICATION AND COMPLIANCE OF PROCEDURES STATED IN THE AMENDED PROVISIONS AND IN ACCORDANCE WITH THE DECISION OF GUJARAT PIPAVAV PORT LTD. (SUPRA). THE ASSESSING OFFICER WILL PROVIDE CONSEQUENTIAL RELIEF TO THE APPELLANT IN RESPECT OF ADDITIONS MADE BY THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTION 40(A)(IA). THIS GROUND IS TREATED AS ALLOWED ONLY FOR STATISTICAL PURPOSE. 8. WE FIND THAT THE RATIO OF THE JUDGEMENT PASSED B Y THE ITAT RAJKOT BENCH HAS BEEN RIGHTLY APPLIED BY THE LD.CIT(A) WHILE REMITTI NG THE MATTER TO THE FILE OF THE LD. ASSESSING OFFICER FOR VERIFICATION OF THE MATTER AS TO WHETHER THE IMPUGNED AMOUNT IS AT ALL REFLECTING IN THE RETURNS OF INCOME OF THE CONT RACTEES AND WHETHER THEY HAVE AT ALL PAID DUE TAXES THEREON. NEITHER THERE IS ANY INFIRMITY FOUND IN THE OBSERVATION MADE BY THE LD. CIT(A) THAT IN THE EVENT THE ABOVE CONTENTION I S VERIFIED IN FAVOUR OF ASSESSEE CONSEQUENTIAL RELIEF WOULD BE GIVEN. 9. IN THAT VIEW OF THE MATTER, WE WOULD NOT LIKE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THE GROUND OF APPEAL PREFERR ED BY THE REVENUE IS DISMISSED. GROUND NO.2 10. THE ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND ERECTION OF CIVIL INFRASTRUCTURE PROJECT WORK ELECTRONICALLY FILED HI S RETURN OF INCOME FOR AY 2010-11 ON - 6 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 31.08.2010 DECLARING TOTAL INCOME OF RS.12,54,713/- . UPON SCRUTINY, NOTICE U/S.143(2) OF THE ACT DATED 13.09.2011 WAS ISSUED FOLLOWED BY THE NOTICE U/S.142(1) DATED 15.02.2012 ALONG WITH DETAILED QUESTIONNAIRE. THE AUDITED BAL ANCE-SHEET AND AUDITED COPIES OF P&L ACCOUNT HAS BEEN SUBMITTED BY THE ASSESSEE DURING T HE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS NOTICED BY THE LD. ASSESSING OFFICER FROM ANNEXURE-A FORMING TAX AUDIT REPORT IN FORM NO.3CD FOR THE YEAR ENDED ON 31.3.2010 THAT THE FATHER OF THE ASSESSEE HAS GIVEN A LOAN TO THE TUNE OF RS.21,45,0 00/- TO THE ASSESSEE. SUBSEQUENTLY, IT WAS ALSO FOUND THAT THE SAID FUND WAS TRANSFERRED F ROM ASSESSEES OWN ACCOUNT FROM INDIAN OVERSEAS BANK IN SB A/C.NO.19024 WHICH HAS N OT BEEN DISCLOSED BY THE ASSESSEE UPON WHICH A SHOW-CAUSE NOTICE WAS ISSUED, IN REPLY WHEREOF THE ASSESSEE SUBMITTED THE FOLLOWING: 'IT IS SUBMITTED THAT AS STATED ABOVE, THERE IS SAVINGS BANK ACCOUNT WITH INDIAN OVERSEAS BANK OF THE ASSESSEE. THE SAME BEING PERSONAL ACCOUNT, W AS NOT INCORPORATED IN THE BALANCE SHEET PREPARED FOR BUSINESS. ASSESSEE HAS CARRIED OUT TRA NSACTIONS OF BUSINESS IN BANK OF BARODA ACCOUNT. WE ARE SUBMITTING HEREWITH COPY OF BANK STATEMENT O F INDIAN OVERSEAS BANK ACCOUNT NO.19024 ALONG WITH EXPLANATION OF EACH ENTRY REFLECTED IN T HE BANK STATEMENT. WE ARE ALSO SUBMITTING HEREWITH REVISED COMPUTATION OF INCOME INCORPORATIN G ALL THE INCOME CREDITED IN INDIA OVERSEAS BANK ACCOUNT NO 19024 WHICH REMAINED TO BE CONSIDER ED WHILE PREPARING COMPUTATION OF INCOME. ON PERUSAL OF THE BANK STATEMENT AND COMPUTATION OF INCOME SUBMITTED, IT WILL BE NOTICED THAT FOLLOWING ADDITIONAL INCOME WAS EARNED BY EARNED BY ASSESSEE. SR.NO. DESCRIPTION OF INCOME AMOUNT OF INCOME REMARKS 1. SAVINGS BAND INTEREST OF INDIAN OVERSEAS BANK 3970/- CONSIDERED IN REVISED COMPUTATION OF INCOME 2. INTEREST ON FD WITH SARDAR SAROVAR NARMADA NIGAM 1,07,011/- CONSIDERED IN REVISED COMPUTATION OF INCOME - 7 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 3. LONG TERM CAPITAL GAIN ON MUTUAL FUNDS 2,77,680/- THE SAID MUTUAL FUNDS ARE LONG TERM AND SECURITY TRANSACTION TAX IS PAID ON THE SAME. HENCE, EXEMPT U/S.10(38) OF THE INCOME TAX ACT. COPY OF STATEMENTS OF MUTUAL FUND IS SUBMITTED FOR YOUR PERUSAL. COPY OF PURCHASE OF REDEMPTION STATEMENT IS SUBMITTED HEREWITH. 4. DIVIDEND INCOME 30,605/- EXEMPT INCOME 5. RECURRING DEPOSIT WITH POST OFFICE 1,28,900/- CONSIDERED IN REVISED COMPUTATION OF INCOME 6 IDBI FLEXI BOND 623/- ASSESSEE HAS RECEIVED REDEMPTION OF FLEXI BOND OF RS.30,000/- TOGETHER WITH INTEREST INCOME OF RS.623/-. INTEREST INCOME IS CONSIDERED IN REVISED COMPUTATION OF INCOME. 7. SAVINGS BANK INTEREST OF BANK OF BARODA ACCOUNT NO.01880100017072 3,450/- CONSIDERED IN REVISED COMPUTATION OF INCOME. 8. SAVINGS BANK INTEREST OF BANK OF BARODA ACCOUNT NO. 01880100017331 83/- CONSIDERED IN REVISED COMPUTATION OF INCOME. REGARDING THE OBSERVATION OF LOAN OF RS.21,45,000/- GIVEN BY THE ASSESSEE'S FATHER TO THE ASSESSEE, IT IS SUBMITTED THAT WE SUBMITTING HEREWI TH COPY OF LEDGER ACCOUNT OF SHRI CHHITUBHAI V. PATEL ALONG WITH THE FOLLOWING BANK STATEMENTS. A. INDIAN OVERSEAS BANK - SAVINGS BANK ACCOUNT BO 19024. B. BANK OF BARODA- SAVINGS BANK ACCOUNT NO. 01880 100017072 C. BANK OF BARODA- SAVINGS BANK ACCOUNT NO. 01880 100017331- JOINTLY WITH KALPESH C PATEL AND VILSU KALPESH PATEL (BROTHER AND BROTHER' S WIFE). ON VERIFICATION OF THE LEDGER ACCOUNT, IT WILL BE N OTICED THAT THERE IS CREDIT BALANCE OF RS.9,80,000/-. AS AGAINST THIS ASSESSEE HAS REPAI D THE LOAN AMOUNTING TO RS.77,00,000/- IN THE MONTH OF JULY AND AUGUST. THUS, NOW, ASSESSEE HAS G IVEN LOAN BY RS.7,20,000/- TO HIS FATHER. AS AGAINST THIS, ASSESSEE HAD TRANSFERRED RS.11,45, 000/- FROM HIS PERSONAL ACCOUNT WITH INDIAN OVERSEAS BANK TO BANK OF BARODA ACCOUNT. STATEMENT OF BOTH THE BANK IS SUBMITTED AND THE - 8 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 ENTRIES SHOWING THESE AMOUNTS ARE HIGHLIGHTED FOR Y OUR READY REFERENCE. THUS, THE LOAN WAS EFFECTIVELY REPAID BY ASSESSEE AND CREDITED TO HIS FATHER'S ACCOUNT. NOW, WITH THESE REPAYMENT, MR. CHHITUBHAI V. PATEL' S ACCOUNT IS SHOWING CREDIT BALANCE OF RS.4,25,000/-. EFFECTIVELY, AS STATED ABOVE, RS.1 1,45,000/- WERE TRANSFERRED BY ASSESSEE FROM HIS INDIAN OVERSEAS BANK ACCOUNT AND HENCE THE CRED IT BALANCE OF RS. 4,25,000/- IS OUT OF THE AMOUNT TRANSFERRED BY ASSESSEE ONLY. THUS, SOURCE O F RS. 4,25,000/- IS ASSESSEE'S OWN SAVINGS BANK ACCOUNT. ALL THE CREDIT ENTRIES IN THE BANK AC COUNT WITH INDIAN OVERSEAS BANK ARE EXPLAINED AND WHEREVER INCOME IS CREDITED, THE SAME IS INCORPORATED IN THE REVISED COMPUTATION SUBMITTED HEREWITH. THEN, ASSESSEE TRANSFERRED RS.10,00,000/- TO HIS JO INT SAVINGS BANK ACCOUNT WITH HIS AND BROTHER'S WIFE IN BANK OF BARODA ON 1 ST FEBRUARY 2010 AND RECEIVED BACK ON 26 TH FEBRUARY 2010. COPY OF BANK STATEMENT HIGHLIGHTING BOTH T HE ENTRIES IS SUBMITTED HEREWITH. THUS, THE ENTIRE AMOUNT OFRS.21,45,000/- CREDITED IN THE LEDG ER ACCOUNT OF MR. CHHITUBHAI V PATEL IS EXPLAINED WITH REFERENCE TO IDENTITY, SOURCE AND C REDITWORTHINESS. ON VERIFICATION OF THE BANK OF BARODA SAVINGS BANK ACCOUNT NO.01880100017331 IT WILL BE NOTICED THAT THERE IS A CREDIT ENTRY OF RS.7,28,900 /- ON 0.108.2009. THE SAME IS NO ACCOUNT OF MATURITY OF POST OFFICE RECURRING DEPOSIT ACCOUNT O F MR. KALPESH C.PATEL BROTHER OF ASSESSEE. COPY OF CERTIFICATE ISSUED BY THE POST MASTER IS SU BMITTED HEREWITH. THUS, THIS MONEY BELONG TO BROTHER OF ASSESSEE. SINCE ASSESSEE IS MAINTAINING JOINT ACCOUNT WITH HIS BROTHER, THIS CHEQUE WAS DEPOSITED IN THIS ACCOUNT AND THE FUND IS USED BY HIM. 11. SINCE THE ASSESSEE FAILED TO GIVE SOME EXPLANA TION REGARDING TRANSACTION MADE WITH MARWADI SHARES LTD. AS REVEALED FROM THE SAID REPLY FILED BY THE ASSESSEE THE ASSESSEE WAS CONFRONTED WITH THE SAID ACCOUNT BUT H E DENIED THE SAME IN ITS ENTIRETY. THE EXPLANATION WAS NOT FOUND TO BE SATISFACTORY BY THE LD.AO AND HE ACCEPTED THE SAME AS AN AFTER-THOUGHT IN THE ABSENCE OF ANY COGENT EVIDE NCE TO THAT EFFECT. ACCORDING TO HIM, THE IDENTITY THOUGH PROVED BUT THE CREDITWORTHINESS OF THE PERSON WHO HAD EXTENDED THE UNSECURED LOAN TO THE EXTENT OF RS.21,45,000/- IS N OT GENUINE; THE LD. AO FURTHER OBSERVED THAT THE ASSESSEE HIMSELF HAS ROUTED HIS UNACCOUNTED INCOME THROUGH HIS FATHER AND RECEIVED BACK AS UNSECURED LOAN. THE MODUS OPE RANDI AS SO ADOPTED BY THE ASSESSEE WAS NOT ACCEPTABLE ON THE FACTS THAT THE MONEY EMAN ATES FROM THE ASSESSEE ONLY AND NOT FROM HIS FATHER. ENTIRE AMOUNT THUS ADDED TO THE T OTAL INCOME OF THE ASSESSEE WHEREUPON APPEAL WAS PREFERRED WHO IN TURN ALLOWED THE APPEAL BY DELETING THE SAID ADDITION. - 9 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 12. AT THE TIME OF HEARING OF THE INSTANT APPEAL, T HE LD. DR RELIED UPON THE ORDER PASSED BY THE LD.AO. ON THE CONTRARY, THE LD.AR SU BMITTED BEFORE US THAT SINCE THE ACCOUNT MAINTAINED WITH THE INDIAN OVERSEAS BANK IS NOT A BUSINESS ACCOUNT OF THE ASSESSEE THE SAME WAS NOT REFLECTED IN THE FINANCI AL STATEMENT PREPARED FOR BUSINESS CARRIED OUT BY THE ASSESSEE. HE FURTHER SUBMITTED BEFORE US THAT ALL THE BANK ACCOUNTS FROM WHERE THE TRANSFERS WERE CARRIED OUT WERE DULY SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER FOR VERIFICATION. THE CHAIN OF T RANSACTION MADE THROUGH JOINT ACCOUNTS MAINTAINED WITH THE FAMILY MEMBERS WERE ALSO BEEN P LACED BEFORE THE LD. ASSESSING OFFICER WHO FAILED TO RENDER CONSIDERATION UPON TH E SAME IN ITS PROPER PERSPECTIVE. TAKING INTO THE CONSIDERATION THE ENTIRE ASPECTS OF THE MATTER, THE FIRST APPELLATE AUTHORITY ALLOWED THE APPEAL BY DELETING THE ADDITI ON WHICH IS JUST AND PROPER AS SUBMITTED BY THE LD.AR BEFORE US. 13. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEV ANT MATERIALS AVAILABLE ON RECORD. WE FIND WHILE DEALING WITH THE ISSUE THE LD.CIT(A) OBSERVED AS UNDER:- 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. REGARDING THE N ONDISCLOSURE OF BANK ACCOUNT OF APPELLANT WITH INDIAN OVERSEAS BANK A/C NO. 19024, IT WAS SUB MITTED THAT SINCE IT IS NOT A BUSINESS ACCOUNT MAINTAINED BY APPELLANT, IT WAS NOT REFLECT ED IN THE FINANCIAL STATEMENT PREPARED FOR THE BUSINESS CARRIED ON BY THE APPELLANT. THE ARGUMENT OF THE APPELLANT IS CONSIDERED AND FOUND TO BE REASONABLE. FURTHER, ALL THE AMOUNTS AGGREGATING RS.21,45,000/- ARE TRANSFERRED FROM BANK ACCOUNTS. THERE IS NO DISPUTE THAT ALL THE BANK ACC OUNTS FROM WHERE THE TRANSFERS ARE CARRIED OUT WERE SUBMITTED BY THE APPELLANT BEFORE THE ASSESSIN G OFFICER FOR VERIFICATION. REGARDING FOLLOWING FIVE CREDITS AGGREGATING RS.11,45,000/-, APPELLANT HAD SUBMITTED THAT THIS HAS BEEN TRANSFERRED FROM ASSESSEE'S OWN SAVING BANK ACCOUNT NO. 19024 WITH INDIAN OVERSEAS BANK BUT THE ACCOUNTANT HAS CREDITED THE SAME IN THE NAME OF ASSESSEE'S FATHER CHHITUBHAI V PATEL. SR. NO. DATE AMOUNT 01. 09.12.2009 RS.2,50,000/- - 10 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 02. 01.01.2010 RS.2,70,000/- 03. 05.01.2010 RS.2,00,000/- 04. 09.01.2010 RS.3,75,000/- 05. 15.01.2010 RS. 50,000/- TOTAL RS. 11,45,000/- IT IS CONTENDED BY THE LD. AUTHORIZED REPRESENTATIV E OF THE ASSESSEE THAT THAT THIS FACT WAS ALSO SUBMITTED TO THE ASSESSING OFFICER. REGARD ING CREDIT AMOUNT AT SR. NO 6 OF RS.10,00,000/-, IT WAS SUBMITTED THAT THIS WAS TRAN SFERRED FROM JOINT ACCOUNT WITH BANK OF BARODA, SAVING BANK ACCOUNT NO. 01880100017331 WITH HIS BROTHER KALPESH AND KALPESH'S WIFE MS VILSU. HERE IT IS CONTENTED THAT THE APPELL ANT HAS FIRST GIVEN LOAN OF RS.10,00,000/- BY TRANSFERRING IN JOINT ACCOUNT STATED ABOVE TO MAKE PAYMENT TO M/S. MARWADI FINANCE LTD. AND THEN AFTER RECEIVING BACK RS.10,70,000/- FROM M/S. MARWADI FINANCE LTD., THE LOAN OF RS.10,00,000/- WAS REPAID THROUGH TRANSFER ENTRY TO APPELLANT'S BUSINESS ACCOUNT. THUS, IT WAS ARGUED THAT THE AMOUNT CREDITED ON 26 TH FEBRUARY2010 IN THE BOOKS OF APPELLANT IS NOT ON ACCOUNT OF ACCEPTANCE OF THE LOAN BUT IT IS A CASE OF REPAYMENT OF LOAN GIVEN BY APPELLANT AND IT WAS SUBMITTED THAT THE PROVISIONS OF SECTIONS 68 DO NOT APPLY AS FAR AS CREDIT ENTRY OF RS.10,00,000/- IS CONCERNED. APPELLANT HAD SUBMITTE D BANK STATEMENT OF INDIAN OVERSEAS BANK FOR THE YEAR UNDER CONSIDERATION BEFORE THE ASSESSI NG OFFICER VIDE HIS SUBMISSION DATED 18.02.2013, A COPY OF WHICH IS ALSO PLACED BEFORE M E FOR VERIFICATION. APPELLANT HAS ALSO SUBMITTED BANK STATEMENT OF THIS ACCOUNT FOR EARLIE R YEARS BEFORE ME TOGETHER WITH BANK BOOK FOR BOTH THE YEARS TO PROVIDE EXPLANATION FOR ALL THE E NTRIES IN THE SAID BANK ACCOUNT FROM WHERE THE AMOUNTS WERE TRANSFERRED. ON VERIFICATION OF THE SA ME, IT WAS NOTICED THAT BARRING ONE DEPOSIT OF RS.5,000/-, ALL THE CREDIT ENTRIES ARE RECEIVED THR OUGH CHEQUES IN CLEARING FOR VARIOUS TRANSACTIONS. THE NATURE OF TRANSACTIONS CARRIED OU T IN THE BANK ACCOUNT AND THE SIZE OF TRANSACTION JUSTIFIES THAT THE ASSESSEE HAS MEANS T O HAVE THIS MUCH FUND. WHEN AUTHORIZED REPRESENTATIVE WAS CONFRONTED WITH A QUESTION THAT WHY THE AMOUNTS BELONGING TO APPELLANT AND HIS BROTHER WERE ROUTED THROUGH HIS FATHER'S LEDGER ACCOUNT, AR SUBMITTED THAT THE MISTAKE OF ACCOUNTANT WHILE WRITING BOOKS OF ACCOUNT OF THE AP PELLANT OF PASSING ENTRIES IN THE LEDGER ACCOUNT OF APPELLANT'S FATHER WHERE AMOUNTS WAS GIV EN BY APPELLANT HIMSELF. IT WAS SUBMITTED THAT IN SUBSTANCE THE SOURCE AND CREDITWORTHINESS O F THE APPELLANT IS EXPLAINED AND FOR WRONG ACCOUNTING ENTRIES APPELLANT SHOULD NOT BE PENALIZE D BY MAKING ADDITION U/S 68. AS STATED ABOVE, I AGREE WITH THE APPELLANT'S ARGUMENT THAT AS FAR A S THE AMOUNT OF RS.11,45,000/-IS CONCERNED, THE INGREDIENTS OF PROVISION OF 68 ARE SUBSTANTIATE D WITH THE BANK STATEMENT AND REGARDING RS.10,00,000/- CREDIT ENTRY, I HOLD THAT IT IS A CA SE OF REPAYMENT OF LOAN GIVEN BY THE APPELLANT TOGETHER WITH EXPLANATION ABOUT THE SOURCE OF THE F UND INVOLVED. IN VIEW OF THE ABOVE I HOLD THAT - 11 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 THE ADDITION MADE U/S 68 REQUIRES TO BE DELETED AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE OF RS.21,45,000/-. 14. WE HAVE CONSIDERED THE REPLY FURNISHED BY THE A SSESSEE IN SUPPORT OF HIS CLAIM WHICH SEEMS TO BE PROPER AND WE FURTHER FIND THAT T HE EXPLANATION SO GIVEN BY THE ASSESSEE AS ALSO REITERATED BY THE LD. AR BEFORE US HAS DULY BEEN CONSIDERED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE. WE FIND NO INFIR MITY IN THE OBSERVATION MADE BY THE AUTHORITIES BELOW WHICH CALLS FOR ANY INTERFERENCE. IN THAT VIEW OF THE MATTER, WE FIND NO MERIT IN THE ISSUE RAISED BY THE REVENUE BEFORE US. HENCE, THIS GROUND OF APPEAL PREFERRED BY THE REVENUE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02 /11/2018 SD/- SD/- (AMARJIT SINGH) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/ 11 /2018 .., . ../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-II, BARODA 5. !'# , $ , / DR, ITAT, AHMEDABAD 6. #() *+ / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, AHMEDABAD - 12 - ITA NO.3112/AHD/2014 DCIT VS. SHRI SHAILESH C. PATEL ASST.YEAR 2010-11 1. DATE OF DICTATION .. 31.10.18 (DICTATION-PAD 7 +PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER