ITO 33(2)(2), MUMBAI V. KANITLAL V. PARMAR, MUMBAI

ITA 3381/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5031 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N AVNEET KUMAR ARORA
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 3381 /MUM/20 1 7 (ASSESSMENT YEAR 20 11 - 12 ) ITO - 33(2)(2) ROOM NO. 609 C - 12, PRATAYKSH KAR BHAVAN, BKC, BANDRA(E) MUMBAI - 400 051. VS. SHRI KANTILAL V. PARMAR A - 304, SILVER TOWER THAKUR COMPLEX KANDIWALI (EAST) MUMBAI - 400 101. PAN : AGIPP1667Q ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI NAVNEET KUMAR ARORA DEPARTMENT BY SHRI ANOOP HIWASE DATE OF HEARING 09 . 10 . 201 8 DATE O F PRONOUNCEMENT 09 . 10 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.2.2017 PASSED BY THE LEARNED CIT(A) - MUMBAI AND IT RELATES TO A.Y. 2011 - 12. THE REVENUE IS AGGRIEVED BY THE DEC ISION RENDERED BY THE LEARNED CIT(A) ON FOLLOWING ISSUES : - (A) UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT ` 50,87,155/ - . (B) UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF M/S. LAXMI GRANITE ` 7,13,450/ - . (C) CASH CREDIT FROM M/S. SHANTI DEVELOPERS ` 5 LAKHS (D) CASH CREDIT FROM SHRI PRATIK JAIN ` 15 LAKHS 2. W E HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN MARBLE AND GRANITE UNDER THE NAME OF M/S. MAA AMBIKA GRANITES. THE ASSESSEE FILED ITS RE TURN OF INCOME DECLARING A TOTAL INCOME OF ` 4,63,494/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF ALL BANK ACCOUNTS MAINTAINED BY HIM. THE ASSESSEE FURNISHED DETAILS OF SAVINGS BANK ACCOUNT SHRI KANTILAL V. PARMAR 2 AND CURRENT ACCOUNT MAINTAINED WITH IDBI. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEPOSITED ` 40.53 LAKHS IN AGGREGATE IN HIS SAVINGS BANK ACCOUNT AND ` 13.01 LAKHS IN AGGREGATE IN HIS CURRENT ACCOUNT. THE ASSESSING OFFICER FURTHER NOTICED THA T T HE ASSESSEE IS DOING RETAIL BUSINESS AND HE HAS DECLARED SALES OF ` 10.36 LAKHS ONLY. HENCE THE DEPOSITS FOUND IN THE BANK ACCOUNT WERE DISPROPORTIONATE TO THE SALES DECLARED BY THE ASSESSEE . WHEN QUESTIONED ABOUT THE SOURCES OF DEPOSITS , THE ASSESSEE D ID NOT GIVE SATISFACTORY EXPLANATION S. H ENCE, THE ASSESSING OFFICER ASSESSED AGGREGATE AMOUNT OF CASH DEPOSITS OF ` 53.55 LAKHS AS INCOME OF THE ASSESSEE. 3. THE ASSESSING OFFICER ALSO RECEIVED AIR INFORMATION TO THE EFFECT THAT THE ASSESSEE IS ALSO MA INTAINING A BANK ACCOUNT WITH IDBI IN THE NAME OF LAXMI GRANITES. IT WAS NOTICED THAT THE ASSESSEE HAS DEPOSITED ` 7.51 LAKHS BY WAY OF CASH. WHEN QUESTIONED ABOUT THE SAME , THE ASSESSEE EXPLAINED THAT THE BANK ACCOUNT IN THE NAME OF LAXMI GRANITES WAS OPE RATED BY A PERSON NAMED MR. MANISH V ORA AND HE HAS DIED TWO YEARS AGO. SINCE THE ASSESSEE DID NOT FURNISH COP IES OF BANK STATEMENT AND ALSO DID NOT EXPLAIN SOURCES OF CASH DEPOSITS OF ` 7.51 LAKHS, THE ASSESSING OFFICER ASSESSED THE SAME AS INCOME OF THE A SSESSEE. 4 . IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) TOOK THE VIEW THAT THE DEPOSITS MAY REPRESENT SALE PROCEEDS OF THE ASSESSEE AND HENCE THE AO SHOULD HAVE ASSESSED ONLY THE PROFIT ELEMENT INVOLVED THEREIN. THE LD CIT(A) TOOK THE PROFIT RATE @ 5% AND ACCORDINGLY SUSTAINED ADDITION TO THE EXTENT OF 5% OF ` 53.55 LAKHS AS WELL ` 7.51 LAKHS. ACCORDINGLY, THE LEARNED CIT(A) GRANTED MAJOR RELIEF TO THE ASSESSEE IN RESPECT OF ABOVE SAID TWO ADDITIONS. 5 . FROM THE BANK ACCOUNTS, THE ASSESSING OFFIC ER NOTICED THAT THE ASSESSEE HAS PAID A CHEQUE OF ` 5 LAKHS ON 29.9.2010 TO M/S. SHANTI ENTERPRISE AND RECEIVED ` 5 LAKHS FROM SHANTI DEVELOPERS ON 6.10.2010. THE ASSESSEE CLAIMED THAT THE PAYMENT AND RECEIPT HAS BEEN SQUARED OFF . HOWEVER, THE ASSESSING OF FICER NOTICED THAT BOTH THE PARTIES WER E DIFFERENT. THE ASSESSEE COULD NOT FURNISH ANY DOCUMENT TO SHOW THAT BOTH CONCERNS , VIZ., SHANTI ENTERPRISE AND SHRI KANTILAL V. PARMAR 3 SHANTI DEVELOPERS BELONG TO SAME PARTY. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE AMOUNT OF ` 5 LAK HS AS UNEXPLAINED CASH CREDIT. 6 . THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HAS RECEIVED ` 15 LAKHS FROM PRATIK JAIN ON 8.7.2010 AND REPAID THE SAME ON 12.7.2010. S INCE THE ASSESSEE DID NOT PROVE THE CASH CREDIT TO HIS SATISFACTION , THE ASSESS ING OFFICER ASSESSED THE SAME AS INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT. 7 . IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) DELETED BOTH ADDITIONS ON THE GROUND THAT BOTH RECEIPTS AND PAYMENTS WERE REFLECTED IN THE BANK ACCOUNT. AGGRIEVED BY THE ORDER PASSED BY THE LEARNED CIT(A) THE REVENUE HAS FILED THIS APPEAL BEFORE US. 8 . THE LEARNED DR SUBMITTED THAT THE ASSESSEE DECLARED A TURNOVER OF ` 10.36 LAKHS ONLY AND HENCE CASH DEPOSIT OF ` 53.55 LAKHS CANNOT BE TAKEN AS GENERATED FROM SALES. TH US THE ASSESSEE HAS FAILED TO EXPLAIN SOURCES THEREOF. LEARNED DR FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS APPLIED PROVISIONS OF SECTION 44AF TO THE ABOVE SAID DEPOSIT AND ACCORDINGLY ADOPTED 5% OF THE DEPOSIT AS INCOME OF THE ASSESSEE. LEARNED DR SUB MITTED THAT PROVISIONS OF SECTIO N 44AF CAN BE APPL IED ONLY IN TH OSE CASE S, WHERE TURNOVER I S LESS THAN 40 LAKHS. ACCORDINGLY, LEARNED DR CONTENDED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN TREATING THE DEPOSITS AS SALES TURNOVER OF THE ASSESSEE. HE SU BMITTED THAT THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE TO SHOW THAT THE DEPOSITS REPRESENT HIS SALES TURNOVER. WITH REGARD TO THE ADDITION OF ` 7.51 LAKHS RELATING TO THE BANK ACCOUNT MAINTAINED IN THE NAME OF LAXMI GRANITE, LEARNED DR SUBMITTED THAT THE LE ARNED CIT(A) WAS NOT JUSTIFIED IN TREATING THE AMOUNT AS SALES OF THE ASSESSEE. WITH REGARD TO CASH CREDIT OF ` 5 LAKHS AND ` 15 LAKHS, LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS TO PROVE IDENTITY AND CREDITWORTHINESS OF THE PARTI ES. 9 . ON THE CONTRARY, LEARNED AR SUBMITTED THAT THE ASSESSEE HAS BEEN MAKING DEPOSITS AND WITHDRAWING AMOUNTS BY WAY OF CASH. HE SUBMITTED THAT SHRI KANTILAL V. PARMAR 4 THE ASSESSING OFFICER HAS NOT GIVEN CREDIT FOR THE CASH WITHDRAWALS MADE BY THE ASSESSEE. LEARNED AR SUBMI TTED THAT THE ASSESSEE IS DEALING WITH CUSTOMERS WHO ARE COMING FROM RURAL AREA S, WHO DEAL MOSTLY IN CASH . HENCE THERE WERE CASH TRANSACTIONS OF DEPOSITS AND WITHDRAWALS. ACCORDINGLY, HE SUBMITTED THAT THE ASSESSING OFFICER SHOULD HAVE GIVEN CREDIT FOR THE CASH WITHDRAWALS. HE SUBMITTED THAT NET CASH DEPOSITS WILL BE IN THE RANGE OF ` 7 LAKHS ONLY. IN RESPECT OF CHEQUE DEPOSITS, THE LEARNED AR SUBMITTED THAT THERE ARE MANY CONTRA ENTRIES DUE TO DISHONOR OF CHEQUES. WITH REGARD TO BANK ACCOUNT MAINTAINED WITH LAXMI GRANITE, THE LEARNED AR SUBMITTED THAT THE SAME WAS OPERATED BY MR. MANISH VORA, WHO HAS SINCE DIED. WITH REGARD TO CASH CREDIT S , THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS FROM THE CONCERN ED PARTIES AND THE T RANSACTIONS HAVE BEEN CARRIED THROUGH BANK ACCOUNTS. 10 . WHEN IT WAS POINTED OUT TO LEARNED AR THAT THE LEARNED CIT(A) HAS ADOPTED DIFFERENT APPROACH IN DECIDING THIS ISSUE, WHEREAS IT IS BEING CONTENDED BEFORE THE TRIBUNAL IN A DIFFERENT MANNER. IT WAS ALSO POINTED OUT THAT THE SALES TURNOVER REPORTED BY THE ASSESSEE DO NOT JUSTIFY THE VIEW TAKEN BY THE LD CIT(A). THE ARGUMENT OF LD A.R IS ALSO DIFFERENT FROM THE METHODOLOGY FOLLOWED BY LD CIT(A). FURTHER, IT WAS POINTED OUT THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT TO PROVE THE CREDITWORTHINESS OF THE PARTIES IN RESPECT OF CREDITS. AT THIS STAGE, LEARNED AR SUBMITTED THAT THE ASSESSEE MAY BE PROVIDED WITH AN OPPORTUNITY TO EXPLAIN THE ENTRIES FOUND IN THE BANK ACCOUNT AS WELL TO PROVE CASH CRED IT TO THE SATISFACTION OF THE ASSESSING OFFICER. LEARNED DR DID NOT OBJECT TO THE PLEA PUT FORTH BY LEARNED AR. 11 . HAVING REGARD TO THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT, IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE MAY BE PROVIDED WITH ONE MORE OPPORTUNITY TO PRESENT HIS CASE IN RESPECT OF ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND SHRI KANTILAL V. PARMAR 5 RESTORE ALL THE ISSUES TO THE FILE OF THE ASS ESSING OFFICER FOR EXAMINING THEM AFRESH , AFTER AFF ORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 12 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 09 . 10 .201 8 . SD/ - SD/ - (SANDEEP GOSAIN ) ( B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 09 / 10 / 20 1 8 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// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI