ITO 24(3)-4, MUMBAI V. RENUKA AJAY MARU, MUMBAI

ITA 3192/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7706 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-03-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 21-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Additional evidence
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3192/MUM/2011 ASSESSMENT YEAR: 2002-03 ITO 24(3)(4) V SMT. RENUKA AJAY MARU R. NO. 706 C-11, B-1201, ANMOL CHS LTD. S.V. R D. BANDRA KURLA COMPLEX, GOREGAON WEST MUMBAI 400051 MUMBAI - 400062 (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PURUSHOTTAM KUMAR, DR RESPONDENT BY: SHRI K. GOPAL, AR DATE OF HEARING : 06/12 /2016 & 24/03/2017 DATE OF PRONOUNCEMENT: 29/03/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2002-03. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 34, MUMBAI AND ARISES OUT OF ORDER U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER:- I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT(A) ERRED IN DELETING AN AMOUNT OF RS. 15,37,273/- DEPOSITED BY WAY OF CASH AND CHEQUE IN BHARAT CO-OPERATIVE BANK A/C. NO. 1331 HOLDING TH AT THE A/C BELONGS TO ASSESSEES HUSBAND SHRI AJAY P. MAROO AND HE IS A SE PARATE ASSESSEE, WITHOUT CONSIDERING THE FACT THAT THE BANK ACCOUNT IN QUESTION IS SHOWN BY THE ASSESSEE IN HER BALANCE SHEET FILED ALONG WITH T HE RETURN OF INCOME, THEREFORE, THE BURDEN LIES ON THE ASSESSEE TO PROVE THAT THE ENTRIES IN THIS ITA NO. 3192/MUM/2011 2 AMOUNT DO NOT BELONG TO HER, WHICH SHE HAD FAILED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDI NGS. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,61,100/- DEPOSITED BY THE ASSESSEE IN HER BANK ACCOUNT NO. 3826 WITH NKGSB BANK HOLDING THAT T HE ASSESSEES HUSBAND HIMSELF CONFIRMED THE LOAN TRANSACTION AND EVE N ON MERITS NONE OF THE ENTRIES IN THE BANK ACCOUNTS WARRANTED ANY ADDITIO N IN FORM OF UNEXPLAINED CASH CREDITS, WITHOUT VERIFYING THE SUPP ORTING DOCUMENTARY EVIDENCES AND WITHOUT CONSIDERING THAT THIS AMOUNT AL SO INCLUDES THE LOAN TAKEN FROM PARTIES OTHER THAN ASSESSEES HUSBAND ALL OWED THE FULL RELIEF TO THE ASSESSEE. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,37,310/- MADE O N ACCOUNT OF CASH SALES OF WEDDING CARDS BY ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTIONS OF RULE 46A OF I.T. RULES 1961. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS. 1 5,80,900/- SHOWN AS GIFT RECEIVED BY THE ASSESSEE IN HER CAPITAL ACCOUNT , WITHOUT PROOF OF CREDITWORTHINESS OF DONOR AND GENUINENESS OF TRANSACT IONS. V. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS. 26,60,900/- ON ACCOUN T OF UNSECURED LOANS BY ACCEPTING THE AFFIDAVITS FILED BY THE ASSESSEE IN CONTRAVENTION OF RULE 46A OF I.T. RULES, 1962, WITHOUT REMANDING THE ISSUE BA CK TO THE A.O. FOR VERIFICATION. 3. THE 1 ST GROUND OF APPEAL RELATES TO THE ADDITION OF RS. 15,37,273/- MADE BY THE ASSESSING OFFICER (AO) ON P ROTECTIVE BASIS AS UNEXPLAINED CASH CREDIT IN RESPECT OF TRANSACTION M ADE IN THE BANK ACCOUNT OF THE ASSESSEES HUSBAND. IN A NUTSHELL, T HE FACTS ARE THAT THE AO MADE AN ADDITION OF RS. 15,37,273/- TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED CREDIT IN BANK A CCOUNT NO. 1331 ON PROTECTIVE BASIS, AS SHE COULD NOT SUBSTANTIAT E HER CLAIM THAT THE DEPOSITS REALLY BELONG TO HER HUSBAND. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF THE AO BEFORE THE LEARNED CIT( A). WE FIND THAT ITA NO. 3192/MUM/2011 3 THE LEARNED CIT(A) OBSERVED THAT THERE WAS NO DISPU TE THAT THE IMPUGNED S.B. ACCOUNT NO. 1331 THOUGH A JOINT ACCOU NT BELONGED TO THE ASSESSEES HUSBAND, SHRI AJAY P. MAROO AND HE H AD OWNED THIS ACCOUNT. THE LEARNED CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE HUSBAND OF THE ASSESSEE IS A DISTINCT ASSESSEE AND EVEN IF THE ENTRIES IN HIS ACCOUNT REMAINED UNEXPLAINED, NO ADD ITION COULD BE MADE ON THE BASIS OF THE SAME IN THE HANDS OF THE A SSESSEE. 3.1 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LEARNED CIT(A). ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE ORDER OF THE AO. 3.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE AO HAS MADE AN ADDITION OF RS. 15,37,273/- TO THE INCOME OF THE ASSESSEE IN RESPECT OF CREDITS IN BANK ACCOUNT NUMBER 1331 ON PROTECTIVE BASIS. THE LEARNED CIT( A) HAS FOUND THAT THE SAID BANK ACCOUNT, THOUGH A JOINT ACCOUNT, BELONGS TO THE ASSESSEES HUSBAND SHRI AJAY P. MAROO AND HE HAS OW NED THIS ACCOUNT. AS THE ADDITION WAS MADE BY THE AO IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS AND AS THE LEARNED CIT(A) HAS ARRI VED AT A CONCLUSIVE FINDING THAT THE ACCOUNTS BELONGS TO THE HUSBAND OF THE ASSESSEE, THE ADDITION OF RS. 15,37,273/- MADE BY THE AO IS DELET ED. THUS THE 1 ST GROUND OF APPEAL FILED BY THE REVENUE IS DISMISSED. 4. THE 2 ND GROUND RELATES TO THE ADDITION OF RS. 1,61,100/- A S UNEXPLAINED CASH CREDIT IN RESPECT OF DEPOSITS MADE IN NKGSB BANK ACCOUNT NUMBER 3826. THE AO MADE AN ADDITION OF RS. 91,100/- (CHEQUES DEPOSITED FROM SHRI AJAY P. MAROO), RS. 50 ,000/- FROM ITA NO. 3192/MUM/2011 4 MANOJ SABO, RS. 10,000/- FROM SURESH MAROO AND RS. 10,000/- AS CONSULTANCY FOR WEDDING CARDS, AS THE ASSESSEE FAIL ED TO FURNISH ANY DOCUMENTARY EVIDENCE BEFORE THE AO. THE LEARNED CIT (A) HELD THAT THE AO HAD NOT FOUND ANY DISCREPANCY IN THE BOOKS O F ACCOUNTS OF THE ASSESSEE VIS-A-VIS THE IMPUGNED BANK ACCOUNT NO. 3826. THE SAID BANK ACCOUNT WAS A DISCLOSED ONE. THEREFORE, THE LEARNED CIT(A) DELETED THE ADDITION OF RS. 1,61,100/- MADE BY THE AO AS UN EXPLAINED CASH CREDIT. 4.1 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LEARNED CIT(A). ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE ORDER OF THE AO. 4.2 WE FIND MERIT IN THE ORDER OF THE LEARNED CIT(A ) THAT THE AO HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE VIS-A-VIS THE IMPUGNED BANK ACCOUNT NO. 3826. THE LEARNED CI T(A) DELETED THE ADDITION OF RS. 1,61,100/- MADE BY THE AO SINCE THE BANK ACCOUNT WAS DISCLOSED BY THE ASSESSEE. WE UPHOLD TH E ORDER OF THE LEARNED CIT(A) AND DISMISS THE 2 ND GROUND OF APPEAL FILED BY THE REVENUE. 5. THE 3 RD GROUND OF APPEAL RELATES TO THE ADDITION OF RS. 2,37,310/- MADE BY THE AO AS UNEXPLAINED CASH CREDI T IN RESPECT OF TRANSACTION OF SALE OF WEDDING CARDS CONSIDERING TH E SAME AS NON- GENUINE. THE AO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS ISSUED NOTICES U/S 131 TO VARIOUS PARTIES. HE FOUND THAT M/S. PORWAL CREATIVE VISION PVT. LTD., M/S REMCO CARD MANUFACTU RING, M/S ANITA ART PRINTERS AND M/S JAIN PAPER AGENCY HAVE STATED THAT THEY HAD NOT ITA NO. 3192/MUM/2011 5 CARRIED OUT ANY TRANSACTION WITH THE ASSESSEE. THER EFORE, HE MADE AN ADDITION OF RS. 2,37,310/- AS UNEXPLAINED CASH CRED IT. THE LEARNED CIT(A) OBSERVED THAT SINCE THE BUSINESS WAS DONE BY THE ASSESSEE IN THE NAME OF M/S. AJAY CARDS, CONFUSION AROSE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS THE AO INQUIRED ABOUT THE TRANSACTIONS WITH THE ASSESSEE AND NOT THE TRANSACTIONS OF THE P ARTIES WITH M/S. AJAY CARDS. M/S. AJAY CARDS BEING A PROPRIETORY CON CERN OF THE ASSESSEE AND NOTHING ADVERSE HAVING BEEN FOUND, THE LEARNED CIT(A) DELETED THE ADDITION OF RS. 2,37,310/- MADE BY THE AO. 5.1 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LEARNED CIT(A). ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE ORDER OF THE AO. 5.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE LEARNED CIT(A) HAS ARRIVED AT A FINDING THAT THE CONCERNED PARTIES HAVE NEVER SAID THAT THEY HAVE NOT DONE ANY TRANSACTION WITH THE PROPRIETARY CONCERN M /S. AJAY CARDS, GOREGOAN (WEST), MUMBAI ON WHICH THE BILLS WERE RAI SED BY THEM. THE LEARNED CIT(A) HAS TAKEN INTO ACCOUNT THE CONTE NTION OF THE ASSESSEE THAT SINCE THE BUSINESS WAS DONE IN THE NA ME OF M/S. AJAY CARDS, THE CONFUSION AROSE DURING THE COURSE OF ASS ESSMENT PROCEEDINGS BECAUSE THE AO ASKED THE TRANSACTIONS W ITH SMT. RENUKA MAROO AND HE HAD NOT ENQUIRED ABOUT THE TRANSACTION S OF THE PARTIES WITH M/S AJAY CARDS. IT IS FOUND THAT THE ABOVE CLA RIFICATION LIKE HAVING TRANSACTIONS OF THE PARTIES WITH M/S. AJAY C ARDS WAS NOT FILED BEFORE THE AO. IN VIEW OF THE ABOVE, THE ORDER OF T HE LEARNED CIT(A) IN RESPECT OF GROUND NO. 3 OF THIS APPEAL IS SET ASIDE AND THE SAME IS ITA NO. 3192/MUM/2011 6 RESTORED BACK TO THE FILE OF THE AO FOR MAKING AN A SSESSMENT AS PER THE PROVISIONS OF THE ACT AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECT ED TO FILE THE RELEVANT DETAILS BEFORE THE AO. THUS THE 3 RD GROUND OF APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 6. THE 4 TH GROUND OF APPEAL RELATES TO THE ADDITION OF RS. 15,80,950/- MADE BY THE AO AS GIFTS FOR THE A.Y. 20 01-02. THE A.O. FOUND THAT THE ASSESSEE HAD SHOWN RECEIPT OF GIFT O F RS. 15,80,950/- BUT THERE WAS NO MENTION ABOUT THE RECEIPT OF SUCH GIFTS IN THE BALANCE SHEET. IN VIEW OF THE ABOVE, HE MADE AN ADD ITION OF THE ABOVE SUM OF RS. 15,80,950/-. THE LEARNED CIT(A) OBSERVED THAT THE SAID GIFTS WERE MADE AND EFFECTED IN THE F.Y. 2000-01 RE LEVANT TO THE A.Y. 2001-02. SIMPLY BECAUSE THESE GIFTS WERE INCLUDED I N THE CAPITAL ACCOUNT OF A.Y. 2002-03 WITHOUT TAKING INTO ACCOUNT IN THE BALANCE SHEET OF A.Y. 2001-02 WOULD NOT MAKE THE IMPUGNED G IFTS PERTAIN TO A.Y. 2002-03. THERE WAS ALSO NO ADVERSE MATERIAL AV AILABLE ON RECORD. THE LEARNED CIT(A) THUS CAME TO A FINDING THAT NO A DVERSE INFERENCE COULD BE DRAWN SIMPLY BECAUSE IT WAS NOT DISCLOSED IN THE CAPITAL ACCOUNT AND BALANCE SHEET OF THE A.Y. 2001-02 AND H AD NOT BEEN BROUGHT FORWARD FROM THERE TO A.Y. 2002-03 BUT DIRE CTLY MADE IN THE CAPITAL ACCOUNT AND BALANCE SHEET FOR THE A.Y. 2002 -03. THEREFORE HE DELETED THE ADDITION OF RS. 15,80,950/- MADE BY THE AO. 6.1 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LEARNED CIT(A). ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE ORDER OF THE A.O. ITA NO. 3192/MUM/2011 7 6.2 WE FIND THAT THE LEARNED CIT(A) HAS RIGHTLY COM E TO A FINDING THAT THE IMPUGNED GIFTS WERE MADE AND EFFECTED IN T HE F.Y. 2000-01 RELEVANT TO THE A.Y. 2001-02 AND NOT IN A.Y. 2002-0 3 AND SIMPLY BECAUSE THESE GIFTS WERE INCLUDED IN THE CAPITAL AC COUNT IN A.Y. 2002- 03 WITHOUT TAKING INTO ACCOUNT IN THE BALANCE SHEET OF THE A.Y. 2001- 02 WOULD NOT MAKE THE IMPUGNED GIFTS PERTAIN TO A.Y . 2002-03. THEREFORE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A ) ON THE ABOVE ISSUE AND DISMISS THE GROUND NO. 4 OF THE APPEAL FI LED BY THE REVENUE. 7. THE 5 TH GROUND OF APPEAL PERTAINS TO THE ADDITION OF RS. 26,60,900/- SHOWN AS UNSECURED LOAN IN THE BALANCE SHEET THAT HAS BEEN CARRIED FORWARD. THE AO MADE AN ADDITION OF TH E ABOVE SUM AS HE FOUND THAT NONE OF THE LOAN WAS RECEIVED EITHER IN THE CASH BOOK OR IN THE BANK BOOK. THE LEARNED CIT(A) FOUND THAT THE LOANS WERE RECEIVED IN EARLIER YEARS AND THEREFORE HE DELETED THE ADDITION OF RS. 26,60,900/- MADE BY THE AO. 7.1 BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LEARNED CIT(A). ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE ORDER OF THE AO. 7.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE AO HAS CATEGORICALLY MENTIO NED AT PARA 6.3 OF THE ASSESSMENT ORDER THAT THE AFFIDAVIT FILED BY TH E ASSESSEE DID NOT CONTAIN THE BASIC DETAILS LIKE FULL NAME AND ADDRES S OF THE LOAN PARTY, PAN, MODE OF RECEIPT OF LOAN (I.E. BY WAY OF CASH / CHEQUE), IDENTIFY AND CREDITWORTHINESS OF THE PERSON FROM WHOM SUCH L OAN HAS BEEN ACCEPTED NAMELY COPY OF BANK STATEMENT, COPY OF RET URN OF SUCH LOAN ITA NO. 3192/MUM/2011 8 PARTY, ETC. THE HON'BLE SUPREME COURT HAS LAID DOWN IN KALEKHAN MOHAMMED HANIF VS. CIT 50 ITR 1 (SC) THAT THE ONUS IS ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CASH C REDITS, WHETHER THEY STAND IN THE ASSESSEES ACCOUNT OR IN THE ACCO UNT OF A THIRD PARTY. IT IS WELL SETTLED THAT IN ORDER TO DISCHARGE THE O NUS, THE ASSESSEE MUST PROVE THE FOLLOWING: (I) THE IDENTITY OF THE CREDITOR, (II) THE CAPACITY OF THE CREDITOR TO ADVANCE MONEY; AND (III) THE GENUINENESS OF THE TRANSACTION. WE FIND THAT IN THE INSTANT CASE THE ASSESSEE HAS N OT DISCHARGED THE ONUS BEFORE THE AO. IN VIEW OF THE ABOVE, THE ORDER OF THE LEARNED CIT(A) IN RESPECT OF GROUND NO. 5 OF THIS APPEAL IS SET ASIDE AND THE SAME IS RESTORED BACK TO THE FILE OF THE AO FOR MAK ING AN ASSESSMENT AS PER THE PROVISIONS OF THE ACT AFTER GIVING A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIR ECTED TO FILE THE RELEVANT DETAILS BEFORE THE AO. THUS THE 5 TH GROUND OF APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2017 SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 29/03/2017 BISWAJIT, SR. P.S. ITA NO. 3192/MUM/2011 9 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