ITO, BIKANER V. Shri Manish Mundhra, BIKANER

ITA 339/JODH/2013

• Counselvise Citation: 33923314 RSA 2013
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Unexplained investment; Capital asset; Business income; Income from undisclosed sources; Source of fund; Cost of acquisition; Fair market value; Valuation report; Revised return
• Section: 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 339/JU/2013 A.Y: 2009-10 THE INCOME-TAX OFFICER VS. SHRI MANISH MUNDHRA WARD 1(3) DR. DHANPAT RAI MARG BIKANER NAYA SAHAR, BIKANER PAN NO. AGNPM 5550 A (APPELLANT) (RESPONDENT) ASSESSEE BY : WRITTEN SUBMISSIONS DEPARTMENT BY : SHRI N.A. JOSHI - DR DATE OF HEARING : 12.11.2013 DATE OF PRONOUNCEMENT : 29.11.2013 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL BY THE REVENUE FOR A.Y. 2009-10 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) BIKANE R, DATED 5.3.2013. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DERIVED INCOME FROM INTEREST AND OTHER SOU RCES. ON THE BASIS OF AN AIR INFORMATION IT WAS NOTICED T HAT DURING THE RELEVANT YEAR THE ASSESSEE HAD DEPOSITED CASH AMOUNTS IN HIS ICICI BANK ACCOUNT TOTALING TO RS.24,98,000/-. THE A.O. WANTED THE ASSESSEE TO FU RNISH THE SOURCE OF THIS CASH DEPOSIT, BUT THE ASSESSEE SURRENDERED A SUM OF RS.15,43,841/- VIA HIS WRITTEN SUBMISSION DATED 28.12.2011. THIS LETTER OF SURREN DER READS AS UNDER :- THE ASSESSEE IS HAVING PAN AND FILING RETURN OF IN COME SINCE A.Y. 2000-01. DURING THE YEAR THE ASSESSEE HA S UNDERTAKEN DEALING IN SHARES. THE DEALING UNDERTAKE N WAS THE BUSINESS OF THE ASSESSEE. HE SUFFERED LOSS IN T HE SAID BUSINESS. A COPY OF THE FINANCIAL STATEMENT VIZ BAL ANCE SHEET, PROFIT & LOSS ACCOUNT, PROPRIETORS CAPITAL A CCOUNT AND QUANTITATIVE TALLY ARE BEING ENCLOSED. THERE HAS BEEN SOME INADVERTENT MISTAKE IN FILING O F RETURN, WHICH RESULTED IN SKIPPING OF THE BUSINESS INCOME. A RE-CASTED AND REVISED COMPUTATION OF TOTAL INCOME IS BEING SUBMITTED FOR YOUR KIND PERUSAL. THE ASSESSEE DURING THE COURSE OF BUSINESS RECEIVED DEPOSITS IN CASH FO R THE FURTHERANCE OF BUSINESS. THE AMOUNT SHOWN UNDER THE HEAD SUNDRY CREDITOR AMOUNTING TO RS,15,43,841.05 REPRESENT SUCH DEPOSITS. IN SHORT NOTICE DETAILED INFORMATION FROM THE PERSONS INVOLVED CANNOT BE GATHERED. THEREFORE, \ IN ORDER TO BUY PEACE AND AV OID 3 VEXED LITIGATION WITH THE DEPARTMENT SUCH DEPOSITS ARE BEING SURRENDERED VOLUNTARILY SUBJECT TO THE CONDIT ION THAT THE DEPARTMENT WILL NOT INITIATE PENALTY PROCE EDING. HOWEVER, THE ASSESSEE REQUEST YOU TO SET OFF THE LO SS IN SHARE ACCOUNT WITH THE SURRENDERED INCOME. 2.1 HOWEVER, AFTER CONSIDERING THE WRITTEN SUBMISSI ON AND THE RECASTED AND REVISED COMPUTATION OF INCOME OF THE ASSESSEE, THE A.O. HAS MADE THE FOLLOWING OBSERVATI ON:- I) ON PERUSAL OF BANK STATEMENT OF THE ASSESSEE, I T WAS FOUND THAT THE OPENING BALANCE AS ON 01.04.2008 WAS RS.2,63,860/- DURING THE YEAR, ASSESSEE HAS DEPOSIT ED A SUM OF RS.24,98,000/- IN CASH AND HAS MADE WITHDRAW ALS IN CASH OF RS.8,000/-ONLY. IT IS WORTHWHILE TO MENT ION HERE THAT THE ASSESSEE MADE ALL THE PAYMENT THROUGH CHEQ UE OR DEMAND DRAFT TO THE CONCERNED PERSONS. THUS, THE ASSESSEE DEPOSITED A SUM OF RS.24,98,000/- IN CASH FROM HIS UNDISCLOSED SOURCES OF INCOME IN HIS ACCOUNT. I N THIS CONNECTION, THE ASSESSEE STATED THAT A SUM OF RS.4,55,000/- WAS TAKEN UNSECURED LOANS FROM HER MO THER IN THE PRECEDING YEARS, COPY OF CONFIRMATION FILED AND HE HAS ALREADY DECLARED INCOME FROM OTHER SOURCES OF RS.1,39,255/- UNDER THE HEAD 'OTHERS', WHICH MAY BE CONSIDERED ACCORDINGLY. HOWEVER, IN REGARD, HE HAS SURRENDERED AN ADDITIONAL INCOME OF RS.15,43,841/- VOLUNTARILY FOR TAX UNDER THE HEAD SUNDRY CREDITORS IN ORDER TO BUY PEACE AND AVOID VEXED LITIGATION WITH THE DEPARTMENT. IT IS IMPORTANT TO NOTE HERE THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF SUNDRY CREDITORS I.E. NAME , ADDRESS OF THE PERSON AND LOAN AMOUNT ETC. THE ASSE SSEE HAS ALSO FAILED TO FURNISH THE DOCUMENTARY EVIDENCE REGARDING NEW CASH CREDITOR NAMELY SMT. ALKA MUNDHR A 4 AND RUCHIKA MUNDHARA. CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE , THE UNDISCLOSED INVESTMENT IN SOURCE OF BANK ACCOUN T WORKS OUT AS UNDER:- A. CASH DEPOSIT IN BANK RS.24,98,000/ - B. LESS:- I) UNSECURED LOANS CONSIDERED RS.4,55,000/- II) INCOME AS DECLARED IN THE RS.1,39,255/- RS.5,94 ,255/- RETURN OF INCOME C. UNEXPLAINED INVESTMENT RS.19,03,7457- THUS, THE ASSESSEE HAS FAILED TO FURNISH THE SOUR CE OF DEPOSIT IN BANK ACCOUNT OF A SUM OF RS.19,03,745 /-, WHICH IS HEREBY ADDED TO THE INCOME OF THE ASSESSEE TREATING AS UNEXPLAINED INVESTMENT MADE BY HIM DURI NG THE YEAR UNDER CONSIDERATION. 2.2 AGAINST THE ABOVE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CLAIMED IN HIS P&L AC COUNT A LOSS OF RS.10,04,861/- ON ACCOUNT OF SHARE-TRANSACT ION AND HAS PLEADED THAT A SET-OFF OF THIS LOSS MAY BE ALLO WED AGAINST THE SURRENDER INCOME OF RS.15,43,841/-. BU T, THE A.O. DID NOT ALLOW THIS FRESH CLAIM IN THE LIGHT OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF G OETZE (INDIA) LIMITED, 284 ITR 323 (S.C.). THE A.O. HAS ASSESSED TOTAL INCOME OF THE ASSESSEE AS UNDER :- 5 1. INCOME AS PER RETURN 1,42,460/- 2. ADD:- ADDITION ON ACCOUNT OF UNDISCLOSED 19,03,745/- INVESTMENT AS DISCUSSED ABOVE. 3. TAXABLE INCOME 20,46,205/- 4. R/O. 20,46,210/- 2.3 AGGRIEVED, THE ASSESSEE WENT IN FIRST APPEAL AN D LD. CIT(A) HAS GIVEN PART RELIEF. HE HAS ALLOWED :- (I) SET-OFF OF SHARE-TRADING LOSS AMOUNTING TO RS.10,04,861/- (II) ALLOWED CASH CREDIT OF RS.36,000/- AS GENUINE AND HAS (III) ALLOWED RELIEF OF RS.3,50,000/- HOLDING THAT CASH TO THAT EXTENT WAS AVAILABLE FOR DEPOSIT IN THE BANK. 2.4 AGAINST THE ABOVE RELIEF GIVEN, THE REVENUE HAS FILED THIS APPEAL. 3. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: 6 I) DIRECTING TO ALLOW SET OFF OF SHARE TRADING LOS S AMOUNTING TO RS. 10,04,861/- II) ALLOWING CASH CREDIT OF RS. 36,600/- AS GENUIN E III) ALLOWING RELIEF OF RS. 3,50,000/- IN THE LIGH T OF FACTUM OF THE CASE AS CASH WAS AVAILABLE FOR DEPOSITING INTO THE BANK IN THE YEAR. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE AT THE T IME OF HEARING OF THE APPEAL. HOWEVER, A WRITTEN SUBMI SSION (W.S.) HAS BEEN FURNISHED ON RECORD WITH A REQUEST THAT THE APPEAL MAYBE DECIDED AFTER CONSIDERING THE SAME . HENCE, WE ARE DECIDING THIS APPEAL ON MERITS AFTER HEARING THE LD. D.R. AND CAREFULLY PERUSING THE RELEVANT MA TERIAL ON RECORD INCLUDING THE WRITTEN SUBMISSION OF THE A SSESSEE. 5. REGARDING THE FIRST GROUND OF APPEAL, WE HAVE FO UND THAT DURING THE COURSE OF ASSESSMENT PROCEEDING, FINANCI AL STATEMENT VIZ BALANCE SHEET, PROFIT & LOSS A/C, PROPRIETOR'S CAPI TAL A/C AND QUANTITATIVE TALLY WERE SUBMITTED WITH A REQUEST TO MODIFY THE COMPUTATION OF TOTAL INCOME. A RECASTED COMPUTATION OF TOTAL 7 INCOME WAS ALSO FURNISHED. THE ASSESSEE FURNISHED T HE SAID DOCUMENTS AND RELIED ON THE DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF MAHESHWARI AGRO V. UNION OF INDIA 346 I TR 375 (RAJ.) IN WHICH IT WAS HELD THAT POWERS OF APPELLATE AUTHORIT IES ARE INDISPUTABLY CONCURRENT AND COEXTENSIVE WITH THOSE OF ASSESSING AUTHORITIES BUT WIDER AND SUPERIOR IN NATURE. THE AO REJECTED THE CLAIM OF ASSESSEE BY STATING THAT SINCE THE ASSESSE E HAS MADE ALL THE DEPOSITS IN CASH FROM UNDISCLOSED SOURCES, THEREFOR E, THE SAID LOSS MAY NOT BE SET OFF ACCORDINGLY AS THE ASSESSEE HAS NOT DECLARED ANY BUSINESS INCOME AT THE TIME OF FILLING OF RETURN. F URTHERMORE, ANY DEDUCTION/CLAIM, WHICH WERE NOT CLAIMED AT THE TIME OF FILLING OF RETURN, CAN BE CLAIMED ONLY BY FILLING 'REVISED RET URN' IN DUE TIME. AS IN THE CASE OF GOETZE (INDIA) LTD. 284 ITR 323 ( SC), IT WAS HELD THAT NO NEW CLAIM OF DEDUCTION/ALLOWANCE CAN BE MAD E BY MAKING SIMPLE APPLICATION/SUBMISSION DURING THE ASSESSMENT PROCEEDINGS. THE NEW CLAIM CAN BE MADE BY FILLING THE REVISED RE TURN SUBJECT TO THE CONDITIONS OF SECTION 139(5) OF THE I.T. ACT, 1 961. THE AO RELIED ON THE SUPREME COURT DECISION IN THE CASE OF GOETZE (INDIA) LIMITED TO CONTEND THAT THE TAXPAYER CANNOT MAKE A CLAIM FO R DEDUCTION OTHER THAN BY FILING A REVISED RETURN. HOWEVER, THE BOMBAY HIGH 8 COURT IN THE CASE OF C1T V. PRUTHI BROKERS & SHAREH OLDERS PVT LTD. [ITA NO. 3908 OF 2010) AFTER DISCUSSING THE SUPREME COURT DECISION IN THE CASE OF GOETZE (INDIA) LIMITED HELD THAT IF A CLAIM IS NOT MADE BEFORE THE AO, IT CAN BE MADE BEFORE THE APPEL LATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTH ORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED. THE BOMBAY H IGH COURT ALSO OBSERVED THAT THE SUPREME COURT HAD MADE IT CLEAR T HAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE APPELLATE AUTHORITIES TO ENTERTAIN AND ALLOW ADDITIONAL CLAIM . THE AO HAS NOT SUGGESTED OR ESTABLISHED THAT THE OMISSION WAS DELI BERATE, MALA- FIDE, ETC. THUS THE BOMBAY HIGH COURT CATEGORICALLY HELD EVEN THOUGH THE DEDUCTION WAS NOT CLAIMED IN THE TAX RET URN, THE TAX PAYER IS ENTITLED TO CLAIM THE SAME BEFORE THE APPE LLANT AUTHORITIES. THE ITAT IN CASE OF MRS. GOPAL V. ITO 139 TTJ 308 W HILE DISTINGUISHING THE RULING OF GOETZE INDIA LTD V. CI T HELD THAT WHEN THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DING CLAIMED THE COST OF ACQUISITION OF THE CAPITAL ASSETS AS PE R THE VALUATION REPORT STATING THE FMV AS ON 1/04/1981, THE AO SHOU LD HAVE 9 ENTERTAINED THE SAID CLAIM EVEN WITHOUT REVISED RET URN AS HE CHOOSE TO MODIFY CAPITAL GAIN WORKING CLAIM. IT WAS HELD I N THE CASE OF BALMUKUND ACHARYA V. DY. CIT (2009) 176 TAXMAN 316 (BOM.) THAT THE AUTHORITIES UNDER THE ACT ARE UNDER AN OBLIGATI ON TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS P ROVIDED UNDER THE ACT. IF ANY ASSESSEE, UNDER A MISTAKE, MISCONCE PTION OR ON NOT BEING PROPERLY INSTRUCTED, IS OVER ASSESSED, THE AU THORITIES UNDER THE ACT ARE REQUIRED TO ASSIST HIM AND ENSURE THAT ONLY DUE LEGITIMATE TAXES ARE COLLECTED. IF A PARTICULAR LEV Y IS NOT PERMITTED UNDER THE ACT, TAX CANNOT BE LEVIED BY APPLYING THE DOCTRINE OF ESTOPPELS. ACQUIESCENCE CANNOT TAKE AWAY FROM A PAR TY THE RELIEF THAT HE IS ENTITLED TO WHERE THE TAX IS LEVIED OR C OLLECTED WITHOUT AUTHORITY OF LAW. IN THE CASE OF JUTE CORPORATION I NDIA LIMITED 187 ITR 688 (SC) IT WAS FURTHER HELD THAT A TAXPAYER IS ENTITLED TO RAISE NEW GROUNDS/MAKE ADDITIONAL CLAIMS (A) IF THE GROUN D SO RAISED 'COULD NOT HAVE BEEN RAISED AT THAT PARTICULAR STAG E WHEN THE RETURN WAS FILED OR WHEN THE ASSESSMENT ORDER WAS MADE, OR (B) IF THE GROUND BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIR CUMSTANCES OR LAW. ACCORDINGLY, THE HIGH COURT HELD THAT THE WORD S 'COULD NOT HAVE BEEN RAISED, THEREFORE, CANNOT BE READ STRICTLY. TH EREFORE, THE 10 APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOU NT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS W HICH WERE AVAILABLE WHEN THE RETURN WAS FILED. THE CONTENTION S OF ASSESSEE ALSO FIND FORCE FROM THE JUDGMENT PRONOUNCED IN CAS E OF NTPC V. CIT 229 ITR 383 (SC) AND ACIT V. GURJARGRAVURERS P LTD [1978] 111 ITR 1 (SC). IN VIEW OF ABOVE LEGAL POSITION, SET-O FF OF LOSS CAN BE ALLOWED AS CLAIMED FOR. THE DECISIONS OF HONBLE A PEX COURT IN THE CASE OF RAJPAL MILL (P) LTD. VS. CIT, 115 ITR 777 ( S.C.) AND THAT OF CIT VS. VIRMANI INDUSTRIES PVT. LTD, 216 ITR 607 (S .C.) SUPPORT OUR ABOVE FINDING. ACCORDINGLY, WE DISMISS GROUND NO.( I) OF REVENUES APPEAL AND CONFIRM THE FINDING OF LD. CIT(A). 6. THE FACTS OF GROUND NO.(II) OF THIS APPEAL ARE T HAT THE CASH CREDIT OF RS.36,000/- TAKEN FROM HIS WIFE SMT. ALKA MUNDHRA AND SMT. RUCHIKA MUNDHRA RS.18,000/- EACH WAS TREATED A S NON- GENUINE. THE LD. CIT(A) HAS ACCEPTED THEM TO BE EX PLAINED. THE LD. D.R. HAS REITERATED THE REASONS GIVEN BY THE A. O. 6.1 AFTER HEARING BOTH THE SIDES, WE ARE CONVINCED THAT BOTH THE 11 CREDITORS ARE IDENTIFIED, BOTH OF THEM SEPARATELY A SSESSED TO TAX AND THEIR PANS WERE SUPPLIED. THEY HAVE CONFIRMED T HEIR RESPECTIVE CREDITS. THEREFORE, WE HAVE TO CONFIRM THE IMPUGNE D DELETION. HENCE, WE DISMISS GROUND NO.(II) 7. THE FACTS OF GROUND NO.(III) OF REVENUES APPEAL ARE THAT IN FACT THE ASSESSEE HAS CLAIMED THAT A SUM OF RS.8,64 ,723/- WAS AN OPENING BALANCE AS ON 01.04.2008 AS HIS CAPITAL. T HE ASSESSEE WAS ASSESSED TO TAX W.E.F. A.Y. 2000-01. OUT OF THIS O PENING BALANCE OF CAPITAL, THE ASSESSEE HAS CLAIMED TO HAVE DEPOSITED A SUM OF RS.3,67,354/- IN HIS BANK ACCOUNT. THE A.O. REJECT ED THIS CLAIM BUT LD. CIT(A) HAS ALLOWED A FIGURE OF RS.3,50,000/-, I NSTEAD. AGAINST THIS, THE REVENUE IS IN APPEAL. 7.1 AFTER HEARING BOTH THE SIDES, WE ARE IN AGREEME NT WITH THE FINDING OF LD. CITA. THE A.O. HAS NOT GIVEN A FIND ING THAT THE ASSESSEE DID NOT HAVE A CAPITAL OF RS.8,64,723/- AS ON 01.04.2008. HE HAS NOT DISPUTED THE CASH WITHDRAWAL OF RS.3,67, 354/- BY THE ASSESSEE DURING THE RELEVANT YEAR. THERE IS NO EVI DENCE ON RECORD TO SUGGEST THAT THIS WITHDRAWAL AMOUNT HAD BEEN SPE NT BY THE 12 ASSESSEE SOMEWHERE ELSE. THEREFORE, IN THIS SCENARI O, THERE COULD BE NO HESITATION IN ACCEPTING THE CONTENTION OF THE ASSESSEE WHO IS THE MASTER OF HIS AFFAIRS. ACCORDINGLY, WE DO NOT FIND ANY FALLACY IN THE IMPUGNED FINDING AND WE CONFIRM THE SAME. THIS FINDING RESULTS IN THE DISMISSAL OF GROUND NO.(III) OF REVENUES AP PEAL. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29 TH NOVEMBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH NOVEMBER, 2013 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR