Shri Manhar Namdeo Bhardwaj, Surat V. The Income tax Officer,Ward-9(3), Surat

ITA 336/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9098 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 03-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR VAKIL
• Assessee Lawyers: K N BHATT
• Keywords: Additional evidence; Corroborative evidences; Tax effect
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO.336/AHD/2014 (ASSESSMENT YEAR:2005-06) MANHAR NAMDEO BHARDWAJ C/O. AMRESH UPADHYAY TAX ADVOCATES, 2 ND FLOOR, MAHALAXMI COMPLEX, NEXT TO BHARAT PETROLEUM PUMP, SURAT-NAVSARI ROAD, UDHNA, SURAT 394210 APPELLANT VS. ITO, WARD 9(3), SURAT RESPONDENT PAN: ACKPB2580N /BY ASSESSEE : SHRI K. N. BHATT, A.R. /BY REVENUE : SHRI SAMIR VAKIL, SR. D.R. /DATE OF HEARING : 23.02.2017 /DATE OF PRONOUNCEMENT : 27.02.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005-06 ARISES AGAINST THE CIT(A)-V, SURATS EX PARTE ORDER DATED 14.12.2012, PASSED IN APPEAL NO. CAS-V/31/2010-11 , UPHOLDING ASSESSING OFFICERS AC TION IMPOSING PENALTY ITA NO. 336/AHD/2014 (MANHAR NAMDEO BHARDWAJ VS, IT O) A.Y. 2005-06 - 2 - OF RS.3,57,918/-/- VIDE ORDER DATED 27.04.2010, IN PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. WE COME TO RELEVANT FACTS. THIS ASSESSEE MADE C ASH DEPOSITS OF RS.11LACS IN HIS BANK ACCOUNT MAINTAINED WITH BANK OF BARODA, KHAND BAZAR BRANCH, SURAT. THE ASSESSING OFFICER TREATED THE S AME AS UNEXPLAINED DEPOSITS U/S.68 OF THE ACT TO MAKE THE QUANTUM ADDI TION IN QUESTION IN ASSESSMENT ORDER DATED 20.12.2007. HE FURTHER INIT IATED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING BOTH FURNISHING OF INA CCURATE PARTICULARS AS WELL AS CONCEALMENT OF INCOME. THE CIT(A) CONFIRMED THE SAID ADDITION IN ORDER DATED 24.11.2008. THE ASSESSEE PREFERRED ITA NO.22 9/AHD/2009 BEFORE THIS TRIBUNAL. A CO-ORDINATE BENCH IN ITS ORDER DATED 3 0.12.2011 UPHELD THE SAID QUANTUM ADDITION BY OBSERVING AS UNDER: 2 THE BRIEF FACTS AS EMANATING FROM THE ORDER OF T HE AO ARE THAT THE AO OBSERVED THAT ON COMPARING THE BALANCE SHEET OF PR ECEDING PREVIOUS YEAR WITH THAT OF THE CURRENT YEAR IT WAS FOUND THAT THE AMOU NT SHOWN AS PAID AGAINST PURCHASE OF IMMOVABLE PROPERTY WAS NOT APPEARING IN THE BALANCE SHEET OF THE CURRENT YEAR. AS ALSO THERE WAS NO CORRESPONDING IN CREASE IN IMMOVABLE PROPERTY MEANING THEREBY THAT SUCH AMOUNT WAS RECEIVED BACK. ON FURTHER VERIFICATION OF THE BOOKS OF ACCOUNT IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED BACK THIS AMOUNT IN CASH AND THAT THE SAME WERE DEPOSITED IN BANK OF BARODA KHAND BAZAR BRANCH. IN THIS REGARD THE ASSESSEE WAS ASKED TO PRODUCE TH E CONFIRMATIONS FROM THE PARTIES WHO HAD PURPORTEDLY RETURNED SUCH AMOUNT. H OWEVER ON THE APPOINTED DAY NO BODY APPEARED AND THEREFORE A SHOW CAUSE NOTICE WAS ISSUED TO PRODUCE THE PARTIES AND THEIR CONFIRMATIONS IN THIS REGARD. IN RESPONSE TO WHICH THE ASSESSEE HAD SUBMITTED THAT SUM OF RS. 1,00,000/- WAS RECEIV ED FROM ONE OF THE RELATIVE AS LOAN, THE AMOUNT WAS THEN WITHDRAWN FROM THE BANK B UT THE TRANSACTIONS WAS NOT RECORDED IN THE BOOKS DUE TO INADVERTENT ERROR. ACC ORDING TO THE ASSESSEE THIS TRANSACTION WOULD NOT HAVE ANY EFFECT ON PROFIT OF THE ASSESSEE. FURTHER ACCORDING TO THE ASSESSEE IT HAD RECEIVED BACK HIS FUNDS PAID FOR PURCHASE OF PROPERTIES ON CANCELLATION OF SUCH DEAL AND THE SAME WAS DEPOSITE D IN THE BANK ACCOUNT HOWEVER THOSE PROPERTIES WERE LATER PURCHASED FROM THE SAME PARTIES FROM WHOM THE AMOUNT WAS RECEIVED ON CANCELLATION OF DEAL. IT WAS THUS SUBMITTED THAT CASH DEPOSIT WAS MADE OUT OF OPENING CASH BALANCE OF RS. 575674/-AND FROM REFUND OF ADVANCES RECEIVED FROM THE PARTIES TO WHOM ADVANCES WERE PAID AGAINST PURCHASE OF PROPERTIES. ACCORDING TO THE ASSESSEE ONLY SUM O F RS.2,25,000/- WAS RECEIVED BACK AGAINST CANCELLATION OF SUCH DEAL AND ALL OTHE R AMOUNT WERE DEPOSITED EITHER OUT OF CASH WITHDRAWN FROM THE BANK OR FROM OPENING CASH BAJANCE AVAILABLE WITH ITA NO. 336/AHD/2014 (MANHAR NAMDEO BHARDWAJ VS, IT O) A.Y. 2005-06 - 3 - THE ASSESSEE. THE ASSESSEE HAD GIVEN SUCH DETAILS W HICH IS REPRODUCED BY THE AO ON PAGE NO. 5 OF THE ORDER. 3 HOWEVER ACCORDING TO THE AO THE ASSESSEE'S PLEA W AS NOT ACCEPTABLE. SINCE THE ASSESSEE HAD NEITHER PRODUCED THE CONFIRMATIONS NOR HAD PRODUCED THE PARTY WITH RESPECT TO RECEIPT OF RS.1.00 LAC. FURTHER THE ASSESSEE HAD FAILED TO EXPLAIN CREDIT ENTRY IN RESPECT OF CHEQUE RECEIVED THROUGH CLEARING AND DEPOSITED IN BANK ON 18.5.2004 AMOUNTING TO RS.2,00,000/-AND THEREFOR E ACCORDING TO THE AO THE ASSESSEE'S BOOKS OF ACCOUNT WERE UNRELIABLE AND COU LD NOT BE ACCEPTED. AS REGARD CASH DEPOSIT OF RS.8,00,000/- IT WAS NOTICED THAT A SSESSEE HAD MADE ENTRIES IN THE NAME OF THREE PERSONS FROM WHOM IT WAS SHOWN TO HAV E RECEIVED CASH IN ALL AMOUNTING TO RS.7,70,101/- THE DETAILS OF SUCH PERS ONS IS GIVEN IN CLAUSE (B) ON PAGE 7 OF THE ORDER. FURTHER THE AO ALSO OBSERVED C ERTAIN CASH CREDITS FOR AN AMOUNT LESS THAN RS.20000/- IN VARIOUS NAMES. THE A SSESSEE WAS ASKED TO PRODUCE THOSE PARTIES AND THEIR CONFIRMATIONS WHICH THE ASS ESSEE HAD FAILED TO DO SO. DESPITE SUCH INITIAL SUBMISSION ALREADY MADE LATER, THE ASSESSEE HAD EXPLAINED SUCH AMOUNT OF DEPOSIT AS PARTLY FROM CASH BALANCE AND PARTLY FROM REFUND OF ADVANCE RECEIVED ON CANCELLATION OF SUCH PURCHASE C ONTRACT. THUS ACCORDING TO THE AO THE ASSESSEE HAD MADE DIFFERENT STATEMENTS AT DI FFERENT TIMES AND HENCE THE SAME COULD NOT BE RELIED UPON. THUS CONSIDERING THE SE FACTS THE AO MADE AN ADDITION OF RS.11,00,000/- BEING AMOUNT OF CASH LOA N PURPORTED TO HAVE BEEN RECEIVED FROM RELATIVES AND NOT ENTERED IN THE BOOK S, RS.2,00,000/- BEING AMOUNT OF CHEQUE RECEIVED AND DEPOSITED IN BANK FOR WHICH NO EXPLANATION WAS FURNISHED AND SUM OF RS.8,00,000/- BEING CASH DEPOSITED IN BA NK FOR WHICH NO PROPER REPLY WAS RECEIVED FROM THE ASSESSEE. 4 THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO. 5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. AS REGARDS LOAN OF RS.1,00,000/- FROM THE RELATIVE, TH E ASSESSEE HAS NOT SUBMITTED ANY CONFIRMATION. THE ASSESSEE HAS NOT ENTERED THE TRAN SACTIONS IN HIS BOOKS OF ACCOUNT. THE EXPLANATION THAT THE TRANSACTIONS WILL NOT HAVE ANY TAX EFFECT, CANNOT BE TREATED AS COGENT EXPLANATION. SIMILARLY, THE AS SESSEE'S ACCOUNT HAS BEEN CREDITED WITH RS.2,00,000/- BY CLEARING ON 18-05-20 04. THE ASSESSEE HAS NOT SUBMITTED ANY EXPLANATION WITH REGARD TO SOURCE OF SUCH CREDIT WITH SUPPORTING EVIDENCE. THE EXPLANATION BEFORE THE LEARNED CIT(A) THAT THE SAID AMOUNT IS THE RETURN OF MONEY IS WITHOUT ANY SUPPORTING DOCUMENT. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY NOT ACCEPTED THE EXPLANATION GIV EN BEFORE HIM, SINCE THE ASSESSEE HAS NOT SUBMITTED ANY CONFIRMATION OR ANY OTHER ADDITIONAL EVIDENCE UNDER THE INCOME TAX RULES. 6 AS REGARDS CASH DEPOSITS OF RS.8,00,000/- IN THE BANK ACCOUNT, THE ASSESSEE HAS MADE ENTRIES IN THE NAMES OF FOLLOWING PERSONS: - SHRI VASHANTBHAI MOTIRAM PATEL RS. 70,000/- DR. VIKASH KANADE RS.5,00,101/- SMT. SIMABEN SANJAYBHAI NERKAR RS.2,00,000/- ---------------- RS.7,70,101/- ITA NO. 336/AHD/2014 (MANHAR NAMDEO BHARDWAJ VS, IT O) A.Y. 2005-06 - 4 - SIMILARLY, THE ASSESSEE HAD ENTERED CERTAIN CASH LO ANS WHICH ARE BELOW RS.20,000/- IN THE NAMES OF VARIOUS PERSONS. ON SHOW CAUSE GIVE N, THE ASSESSEE NEITHER PRODUCED ANY CONFIRMATION FROM SUCH PARTIES NOR THE SAID PARTIES WERE PRODUCED FOR VERIFICATION. DURING THE YEAR, THE ASSESSEE HAS PURCHASED THREE MORE PROPERTIES AMOUNTING TO RS.7,54,000/-. THEREFORE, THE ASSESSEE 'S EXPLANATION WHICH IS CONTRARY TO THE EXPLANATION ON 7-12-2007 THAT AVAIL ABILITY OF CASH AS ON 1-4-2004 OF RS.5,75,000/- AND RS.2,25,000/- FROM CANCELLATIO N MONEY RECEIVED, HAS NOT BEEN ACCEPTED BY THE AO. THE LEARNED CIT(A) HAS RIGHTLY OBSERVED THAT THE ASSESSEE HAS BEEN CHANGING THE STAND TO MEET HIS OWN MEANS REGAR DING THE CASH DEPOSITS AND PURCHASE OF PROPERTIES. THE AFFIDAVIT OF ONE OF THE PERSONS FROM WHOM THE ASSESSEE CLAIMS THE ADVANCES TO HAVE BEEN RECEIVED BACK, CAN NOT BE ACCEPTED, HAS RIGHTLY BEEN OBSERVED BY THE LEARNED CIT(A) THAT THE ASSESS EE HAD LATER RE-PURCHASED THE SAME PROPERTIES FOR WHICH DEALS HAVE BEEN STATED TO HAVE BEEN CANCELLED. THERE IS NOTHING BROUGHT ON RECORD TO SHOW BY THE ASSESSEE A S TO HOW SAID DR. KANADE HAD PAID CASH ON VARIOUS DATES AND THEREFORE, IN THE AB SENCE OF ANY SUCH MATERIAL, THE CREDIBILITY OF SUCH EVIDENCE CANNOT BE ACCEPTED. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE AO. 3. THE ASSESSING OFFICER APPEARS TO HAVE TAKEN UP T HE IMPUGNED PENALTY PROCEEDINGS IN THE MEAN TIME. HE HEAVILY RELIED UP ON THE ABOVE QUANTUM PROCEEDINGS DEVELOPMENT TO TREAT THE ABOVESTATED SE CTION 68 ADDITION AS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INC OME AS WELL AS CONCEALMENT OF INCOME TO IMPOSE THE IMPUGNED PENALTY OF RS.3,57 ,918/- AS UPHELD IN COURSE OF THE LOWER APPELLATE PROCEEDINGS FINALIZED BY AN EX PARTE ORDER. 4. WE HAVE HEARD BOTH SIDES REITERATING THEIR RESPE CTIVE STANDS. WE STRAIGHTWAY PROCEED TO DEAL WITH LD. CIT(A)S EX PA RTE ORDER IN PARA 4 PAGE 3 TO HAVE ISSUED HEARING NOTICES ON 18.09.2012, 15.10 .2012, 14.11.2012 AS WELL AS THE LAST ONE DATED 14.12.2012 BY WAY OF A FINAL SHOW CAUSE NOTICE. HE THEREAFTER PROCEEDED EX PARTE AGAINST THE ASSESSEE. IT IS THUS CLEAR THAT THERE IS NOT EVEN A SINGLE REMARK IN THE LOWER APPELLATE ORD ER THAT THE ASSESSEE HAD EVER BEEN SERVED FOR THE ABOVE LOWER APPELLATE HEAR INGS. OUR OBSERVATIONS FURTHER DRAW SUPPORT FROM THE FACT THAT THE ASSESSE E RECEIVED COPY OF THE LOWER APPELLATE ORDER ON 10.01.2014 WHEREAS THE ORD ER ITSELF STOOD PASSED ON 14.12.2012 I.E. AFTER A TIME PERIOD OF MORE THAN ON E YEAR. WE ACCORDINGLY ARE ITA NO. 336/AHD/2014 (MANHAR NAMDEO BHARDWAJ VS, IT O) A.Y. 2005-06 - 5 - OF THE OPINION THAT THE ASSESSEE DESERVES EFFECTIVE OPPORTUNITY OF HEARING BEFORE THE CIT(A). WE ACCORDINGLY DIRECT HIM TO RE -CONSIDER ASSESSEES APPEAL AFRESH AS PER LAW. IT SHALL BE ASSESSEES D UTY TO APPEAR BEFORE LD. CIT(A) WITHIN TWO MONTHS OF OBTAINING COPY OF THE I NSTANT ORDER. 5. THIS ASSESSEES APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. [PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF FEBRUARY, 2017.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/02/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0