Aditya Satish Parakh, Nashik V. Assistant Commissioner of Income-tax,

ITA 322/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3362 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-08-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Corroborative evidences
• Section: 143(3); 131; 132

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.322/PUN/2016 / ASSESSMENT YEAR : 2011-12 ADITYA SATISH PARAKH, ADITYA, 2 & 3, BEHIND ADITYA PETROL PUMP, IBP RESIDENTIAL COLONY, SAVARKAR COLONY, GANGAPUR ROAD, NASHIK. PAN : ALIPP3411B. . / APPELLANT V/S THE ASST. C OMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK. . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE. REVENUE BY : SHRI AVADESH KUMAR. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS) 12, PUNE DATED 03.1 2.2015 FOR THE ASSESSMENT YEAR 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE HAVING INCOME FROM BUSINESS, CAPITAL GAINS AND OTHER SOURCES. ASSESSEE ELEC TRONICALLY FILED HIS ORIGINAL RETURN OF INCOME FOR A.Y. 2011-12 ON 30.09.2011 DECLARING TOTAL INCOME OF RS.5,85,936/-. A SEARCH AND SEIZURE ACT ION U/S 132 / DATE OF HEARING : 11.01.2019 / DATE OF PRONOUNCEMENT: 19.02.2019 2 ITA NO.322/PUN/2016 OF THE ACT WAS CONDUCTED IN ASHOKA GROUP OF CASES ON 2 0.04.2010. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE A SSESSMENT WAS FRAMED U/S 143(3) R.W.S. 153(B) OF THE ACT VIDE ORDER DT.21 .03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.26,85,936/- AN D AGRICULTURAL INCOME OF RS.65,640/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORD ER DT.03.12.2015 (IN APPEAL NO.PN/CIT(A)-12/497/2014-15) GRAN TED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FO LLOWING GROUNDS : 1. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING T HE ADDITION OF RS.17.50 LAKHS, ON ACCOUNT OF CASH DEPOSITS IN ICIC I BANK ACCOUNT, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE MATT ER AND EVIDENCES ON RECORD. THEREFORE, IT IS PRAYED TO CANCEL THE ADDI TION MADE OF RS.17.50 LAKHS. 2. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING TH E ADDITION OF RS.2.50 LAKHS, ON ACCOUNT OF PAYMENT OF STAMP DUTY & REGIST RATION FEES, BY DISBELIEVING THE EXPLANATION OFFERED BY APPELLANT A ND THE EVIDENCES ON RECORD. THEREFORE, IT IS PRAYED TO CANCEL THE ADDI TION MADE OF RS.2.50 LAKHS. 3. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGE THER. 4. AO HAS NOTED THAT DURING THE SEARCH AND SEIZURE AC TION ON 20.04.2010 AT THE RESIDENCE OF THE ASSESSEE, TWO CASH VO UCHERS DATED 05.04.2010 IN THE NAMES OF SHRI SACHIN C. GANDHI AND MRS. M EERA S. GANDHI WERE SEIZED. THE VOUCHERS WERE IN RESPECT OF ADV ANCE PAID FOR LAND AT GAT NO.2/6 AND G.NO.2/3/2 OF MAUJE GANGAVOHARE, TAL & DISTRICT, NASHIK. STATEMENT OF SHRI SATISH D. PARAKH U/S 1 32(4) OF THE ACT WAS RECORDED ON 20.04.2010 WHEREIN IN RESPECT OF THO SE TWO CASH VOUCHERS, IT WAS STATED THAT IT WERE WITH RESPECT TO CA SH RECEIPTS OF RS.10 LAKHS EACH PAID TO SHRI SACHIN C. GANDHI AND MRS. MEE RA S. 3 ITA NO.322/PUN/2016 GANDHI AS ADVANCE PAYMENT AGAINST THE PURCHASE OF THE IR LAND SITUATED AT NASHIK. A STATEMENT OF THE ASSESSEE WAS RECORDED U /S 132(4) OF THE ACT ON 17.05.2010 WHEREIN HE WAS ASKED ABOUT THE DETAILS OF PAYMENTS MADE BY HIM TO SHRI SACHIN C. GANDHI AND MRS. MEERA S. G ANDHI FOR THE PURCHASE OF LAND. ASSESSEE SUBMITTED THAT HE MADE PAYMENT OF RS.40 LAKHS BY CHEQUES OF ICICI BANK FOR PURCHASING THE LAND. THE SOURCE OF WHICH WAS STATED TO BE OUT OF AMOUNTS TAKEN FROM HIS FATHER AND FROM HIS OWN SAVINGS. IT WAS FURTHER STATED BY THE ASSESSEE THAT HE MADE CASH PAYMENT OF RS.20 LAKHS ON 05.04.2010 WHICH W AS RECEIVED BACK WHEN THE FINAL PAYMENT WAS MADE BY CHEQUE . AO NOTED THAT PURCHASE DEED FOR THE LAND WHICH WAS EXECUTED ON 17.04.2010 SHOWED THE PAYMENT OF RS.20 LAKH EACH BY WAY OF CHEQUES BUT THE ALLEGED CASH PAYMENT OF RS.20 LAKH MADE BY ASSESSEE WAS NOT REFLEC TED IN THE PURCHASE DEED. THE SUBMISSION OF THE ASSESSEE THAT RS.20 LAKHS THAT WAS PAID BY HIM IN CASH TO MR. SACHIN GANDHI & MRS. MEERA GANDHI WAS SUBSEQUENTLY REFUNDED BACK TO THE ASSESS EE ON RECEIPT OF FULL AGREED CONSIDERATION OF RS. 40 LACS BY CHEQUE AND OUT OF THE CASH REFUNDED AMOUNT OF RS.20 LACS AFTER RETAINING RS.2.50 LACS FO R STAMP DUTY, THE BALANCE CASH AMOUNT OF RS.17.50 LACS WAS DEPOS ITED WITH HIS ICICI BANK ACCOUNT WAS NOT FOUND ACCEPTABLE TO THE AO . AO CONCLUDED THAT ASSESSEE HAS FAILED TO PROVE HIS CLAIM THAT THE AM OUNT OF RS. 20 LAKHS WAS REFUNDED BY THE VENDORS SHRI SACHIN C. GANDHI AND MRS. MEERA S. GANDHI. AO THEREFORE HELD THAT ASSESSEE HAS FAILED TO PROVE THE SOURCE OF CASH DEPOSITS OF RS.17.50 LAKHS DEPOSITED IN HIS ICICI BANK ACCOUNT AND HE ACCORDINGLY TREATED THE CASH DEP OSITS OF RS.17.50 LACS AS UNEXPLAINED CASH CREDIT. THE AMOUNT OF RS.2.5 LA KHS, OUT OF RS.20 LAKHS RECEIVED BACK FROM GANDHIS, WHICH WAS STATED TO HAVE SPENT ON STAMP DUTY, REGISTRATION FEE AND OTHER CHARGE S WERE ALSO NOT 4 ITA NO.322/PUN/2016 FOUND ACCEPTABLE TO THE AO. HE HELD THAT THE SOURCE OF EXPENDITURE OF RS.2.5 LAKHS AS STAMP DUTY HAD REMAINED AS UNEXPLAINED AN D ADDED IT AS UNPROVED EXPENDITURE. AGGRIEVED BY THE ORDER OF A O, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO BY OBSERVING AS UNDER :- 4.5 CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, T HE EXPLANATION OF STOP GAP ARRANGEMENT AND THE THEORY THAT GANDHIS RETURNE D BACK THE CASH ON 16.4.2010 IS ONLY AN AFTERTHOUGHT. THE FACTUM OF CA SH RE T URNED B A CK WA S NEITHER RECORDED ON THE CASH VOUCHER NOR CASH VOUCH ER WAS CAN C ELLED. THERE WAS NO EVIDENCE FOUND DURING THE SEARCH TO SU PPORT THE CASE THAT CASH WAS RETURNED BACK BY THE GANDHIS. STATEMENTS O F THE APPELLANT AND MR. GANDHI WERE RECORDED AFTER THE GAP OF - ABOUT ONE MONTH HENCE NOT AS CREDIBLE AS THE STATE M ENT OF . SHRI SATISH PARAKH RECORDED U/S 132(4) ON THE DATE OF SEARCH. MOREOVER, MR. SACHIN GANDHI AND APPELLANT BOTH WERE PARTY TO THE UNACCOUNTED TRANSACTION AND WERE NOT EXPECTED TO STATE THE TRUTH WHICH GOES AGAINST ' BOTH OF THEM. APPELLANT CLAIRNED THAT GANDHIS WERE INSISTING ON PAYMENT BY OF DDS WH ICH WERE ALREADY DRAWN ON 5.4.2010 IN FAVOUR GANDHIS HENCE CANCELLAT ION OF THE DDS AND THEREAFTER WITHDRAWAL OF CASH FROM BANK IS BEYOND C OMPREHENSION. THEREFORE, IT IS HELD THAT CASH PAID OF RS 20 LAKHS THROUGH THE VOUCHERS SEIZED DURING THE SEARCH WERE THE PAYMENT OVER AND ABOVE THE RECORDED VALUE OF THE TRANSACTIONS AT RS 40 LAKHS AND AMOUNT IN CASH WAS NEVER RETURNED BY GANDHIS. THEREFORE, SOURCE OF CASH DEPO SITED OF RS 17,50,000 IN THE BANK ACCOUNT OF THE APPELLANT AND THE EXPENDITURE OF RS 2,50,000 ON STAMPS AND OTHER EXPENDITURE REMAINS UN EXPLAINED. I UPHOLD BOTH THE ADDITIONS MADE BY THE AO AND THE GR OUNDS RAISED BY THE APPELLANT ARE DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT AT THE TIME OF SEARCH AND SEIZURE ACTION ON 20.04.2010 AT THE RESIDENCE OF ASSESSEE , TWO CASH VOUCHERS DT.05.04.2010 EVIDENCING CASH PAYMENT OF RS.10 LA KHS EACH TO MR. SACHIN GANDHI AND MRS. MEERA GANDHI FOR PURCH ASE OF LAND AT NASHIK WERE FOUND. HE SUBMITTED THAT SINCE THE AFORESAID CASH PAYMENTS DID NOT APPEAR IN THE FINAL SALE DEED, A DOUBT ABOUT IT BEING ON-MONEY WAS EXPRESSED. ASSESSEE EXPLAINED THE SOUR CE FOR SUCH CASH PAYMENT TO BE WITHDRAWN FROM HIS ICICI BANK ACCO UNT. IT WAS 5 ITA NO.322/PUN/2016 FURTHER SUBMITTED THAT THE CASH PAYMENTS MADE WERE RE FUNDED BY THE VENDORS AFTER RECEIPT OF CHEQUE PAYMENTS WHICH WAS NOT ED IN THE FINAL SALE DEED AND IN SUPPORT OF REFUND OF RS.20 LACS IT WAS POINTED OUT THA T OUT OF THE CASH REFUND OF RS.20 LACS AFTER RETAINING CASH OF RS.2.50 LACS FOR STAMP DUTY, REGISTRATION FEE AND OTHER CHARGES, THE B ALANCE AMOUNT OF RS.17.50 LACS WAS DEPOSITED IN THE BANK ACCOUNT. IN TH E ABSENCE OF SOURCE FOR CASH DEPOSIT OF RS.17.50 LAKHS IN HIS ICICI BANK ACCOUNT AND RETAINING CASH OF RS.2.50 LAKHS FOR PAYMENT OF STAMP DU TY, REGISTRATION FEE AND OTHER CHARGES, THE ADDITION OF THE AFO RESAID AMOUNTS WERE MADE AS UNEXPLAINED CASH CREDIT AND U NPROVED EXPENDITURE RESPECTIVELY. HE SUBMITTED THAT INITIALLY TH E TRANSACTION FOR PURCHASE OF AGRICULTURAL LAND WAS FINALIZED BETWEEN HIS FAT HER AND MR. SACHIN GANDHI & MRS. MEERA GANDHI AND ACCORDING TO THE TERMS OF THE TRANSACTION, MR. & MRS. GANDHI WERE TO BE PAID TO RS.1 0 LAKHS EACH BY DEMAND DRAFT AS EARNEST MONEY DEPOSIT ON 05.04.2010 AND ACCORDINGLY TO HONOUR THE COMMITMENT, TWO DEMAND DRAFTS OF RS.10 LAKHS EACH WERE PURCHASED FROM ICICI BANK IN FAVOUR OF MR. & MRS. GANDHI BY MR. SATISH PARAKH. HOWEVER, IT WAS SUBSEQUENT LY REALIZED THAT DUE TO CERTAIN PRACTICAL PROBLEMS, IT WAS NOT POSSIBLE TO PURCHASE THE LAND IN THE NAME OF SATISH PARAKH. ACCORDINGLY, THE P ROPOSAL TO BUY THE LAND IN THE NAME OF SATISH PARAKH WAS DROPPED AT 11 TH HOUR AND IT WAS DECIDED TO PURCHASE THE LAND IN THE NAME OF T HE ASSESSEE. HOWEVER, SINCE THE COMMITMENT WAS MADE TO MR. & MRS. GAN DHI REGARDING THE PAYMENT OF RS.10 LACS ON 05.04.2010, IT HAD B ECOME NECESSARY TO MAKE PAYMENT AND BY THE TIME, IT WAS TOO LATE TO GET A FRESH DEMAND DRAFT FROM BANK AND THEREFORE UNDER SUCH CIRCUMSTANCES, ASSESSEE WAS LEFT WITH NO ALTERNATIVE BUT T O WITHDRAW CASH FROM HIS ICICI BANK ACCOUNT AND CARRY TO MUMBAI AND HAND IT 6 ITA NO.322/PUN/2016 OVER THE SAME TO MR. & MRS. GANDHI. HE FURTHER SUBMITT ED THAT ON THE ASSURANCE THAT THE PAYMENT OF CASH FOR THE PURCHASE O F LAND WAS AS A STOP GAP ARRANGEMENT AND SUBSEQUENTLY PAYMENTS WOULD BE MADE BY DEMAND DRAFTS AT THE TIME OF REGISTRATION OF MR. & M RS. GANDHI ACCEPTED THE CASH. THEREAFTER, ON 16.04.2010 MR. & MRS. GA NDHI CAME TO NASHIK FOR EXECUTION OF PURCHASE DEED AND AFTER REACH ING NASHIK, THEY RETURNED CASH OF RS.10 LAC EACH TO ASSESSEE. ASSE SSEE AFTER RETAINING RS.2,50,000/- FOR INCURRING OF EXPENDITURE TOWARDS STAMP DUTY, REGISTRATION FEES ETC., BALANCE AMOUNT OF RS.17,50,000 /- WAS IMMEDIATELY DEPOSITED IN HIS ICICI BANK ACCOUNT. IN SUP PORT OF HIS CONTENTION, LD.A.R. POINTED TO THE STATEMENT OF ASSESSEE THAT WAS RECORDED U/S 132(4) OF THE ACT WHICH WAS REPRODUCED IN P AGE 7 OF ORDER OF LD.CIT(A), WHEREIN ASSESSEE HAD STATED THE SOUR CE OF PAYMENT OF RS.20 LAKHS TO BE WITHDRAWN FROM HIS ICICI BANK ACCOUN T AND IT WAS ALSO SUBMITTED THAT THE AMOUNT OF CASH OF RS. 20 LACS WA S PAID ON 05.04.2010 BUT IT WAS RECEIVED BACK AND FINALLY THE PAYME NTS WERE MADE BY CHEQUES. HE ALSO POINTED TO THE STATEMENT WHE REIN ASSESSEE HAD SUBMITTED THAT SINCE ASSESSEE DID NOT HAVE TIME TO MAKE THE DEMAND DRAFT FOR THE PAYMENT, HE MADE THE PAYMENT IN C ASH AFTER WITHDRAWING IT FROM HIS ICICI BANK ACCOUNT. LATER ON, MR. AND MRS. GANDHI ON RECEIPT OF THE FULL AGREED CONSIDERATION OF RS.40 LACS THRU CHEQUE, THE ASSESSEE WAS REFUNDED THE CASH. IN SUPPO RT OF ASSESSEES SUBMISSION OF THE AMOUNT BEING WITHDRAWN FROM HIS ICICI BA NK ACCOUNT, LD.A.R. POINTED TO THE BANK STATEMENT OF ASSESS EE WHICH IS PLACED AT PAGE 15 OF THE PAPER BOOK. HE ALSO POINTED T O THE STATEMENT OF MR. SACHIN C. GANDHI WHICH WAS RECORDED U/S 131 OF T HE ACT ON 17.05.2010 WHEREIN HE HAS ACKNOWLEDGED THE RECEIPT OF A MOUNT TO BE REFUNDABLE DEPOSIT. FURTHER, IN SUPPORT OF HIS CONTENTION O F DEPOSITING 7 ITA NO.322/PUN/2016 THE CASH BACK AFTER RETAINING CASH OF RS.2,50,000/-, HE A GAIN POINTED TO THE ASSESSEES BANK STATEMENT MAINTAINED WITH ICIC I BANK, WHICH IS PLACED AT PAGE 15 OF THE PAPER BOOK. HE THEREFORE SUB MITTED THAT SINCE ASSESSEE HAS EXPLAINED THE SOURCE OF CASH, NO ADDIT ION IS CALLED FOR IN THE PRESENT CASE. LD.D.R. ON THE OTHER HAND, SUPPO RTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO ADDITION OF RS.17,50,000/- AND RS.2,50,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT OF ASSESSEE AND UNPROVE D EXPENDITURE ON ACCOUNT OF STAMP DUTY, REGISTRATION FEE ETC., RESPECTIV ELY. IT IS NOT IN DISPUTE THAT DURING THE COURSE OF SEARCH, TWO CASH VOUC HERS DATED 05.04.2010 IN THE NAME OF MR. SACHIN GANDHI & MRS. MEERA GA NDHI FOR PAYMENT OF RS.10 LAKHS EACH WERE FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE, WHICH WERE TOWARDS THE PURCHASE OF LAND AT NASHIK. IT IS A FACT THAT DURING THE COURSE OF SEARCH, STATEMENT O F ASSESSEE WAS RECORDED WHEREIN THE SOURCE OF PAYMENT OF RS.20 LAKHS WAS STATE D TO BE WITHDRAWAL OF THE AMOUNT FROM HIS ICICI BANK ACCOUNT. WE FIND THAT THE CONTENTION OF THE ASSESSEE OF HAVING TAKEN A DEMAND DRAFT FROM THE BANK, GETTING IT CANCELLED AND WITHDRAWING OF CASH FROM THE BANK IS REFLECTED IN HIS BANK ACCOUNT WITH ICICI BANK. WE FURTH ER FIND THAT IN THE STATEMENT OF SHRI SACHIN C. GANDHI, HAD ALSO ACCEPTE D THE PAYMENT OF CASH TO BE A STOP GAP ARRANGEMENT AND REFU NDABLE ON RECEIPT OF THE AGREED AMOUNT BY WAY OF CHEQUE. FURTHER , THE SUBMISSIONS OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALS E ON THE BASIS OF ANY CORROBORATIVE EVIDENCES. CONSIDERING THE TOTALITY OF THE FACTS, MORE SO WHEN THE ASSESSEE IN THE STATEMENT RECORDED AT THE TIME OF SEARCH HAD EXPLAINED THE SOURCE OF WITHDRAWAL OF CASH FRO M HIS BANK 8 ITA NO.322/PUN/2016 ACCOUNT AND SUBSEQUENTLY, THE DEPOSITING OF RS.17,50,000/- IN HIS BANK ACCOUNT COUPLED WITH THE CONFIRMATIONS OF MR. AND MR S. GANDHI, WE ARE OF THE VIEW THAT ASSESSEE HAS FULLY EXPLAINED THE SOURCE OF CASH DEPOSITS. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THA T NO ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT AND UNPROVED EXPENDITURE ON ACCOUNT OF STAMP DUTY CAN BE MADE IN THE PRESENT CASE. WE THEREFORE DIRECT ITS DELETION. THUS, THE GROUNDS OF THE AS SESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 19 TH DAY OF FEBRUARY, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 19 TH FEBRUARY, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-12, PUNE. PR. CIT, CENTRAL, NAGPUR. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.