ABHIMANYU SEMLANI, MUMBAI V. ITO 25(1)(2), MUMBAI

ITA 3399/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100865 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift
• Section: 68

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , ACCOUNTANT MEMBER ./ I.T.A. NO . 3399 / MUM/20 1 4 ( / ASSESSMENT YEA R : 200 9 - 10 ) SHRI ABH IMANYU SEMLANI, 105, STANLEY REGENCY, BEVERLY PARK, NEAR CINEMAX THEATER, MIRA ROAD (E), MUMBAI - 401107 / VS. INCOME TAX OFFICER, 2 5 ( 1 )( 2 ), ROOM NO.204, C - 11, PRATYAKASHYA KAR BHAVAN, BKC - BANDRA, MUMBAI - 400051 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AWPPS3455C / APPELLANT S BY SHRI PARESH SHAPARIA / RSPONDENT BY SHRI K P R R MURTY / DATE OF HEARING : 5 . 8 . 201 5 / DATE OF PRONOUNCEMENT: 26 . 8. 201 5 / O R D E R P ER B ENCH : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 11 - 02 - 2014 PASSED BY LD CIT(A) - 35, MUMBAI FOR ASSESSMENT YEAR 2009 - 10, WHEREIN HE HAS CONFIRMED THE ADDITION OF RS.12,77,000/ - RELATING TO BANK DEPOSITS MADE BY THE ASSESSING OFFICER. 2. THE FACTS RELATING TO THE ISSUE ARE THAT THE AO NOTICED THAT THE ASSESSEE HAD MADE CASH DEPOSITS AGGREGATING TO RS.12,77,000/ - IN HIS SAVINGS BANK ACCOUNT MAINTAINED WITH AXIS BANK LTD. WHEN ASKED TO ITA NO. 3399 /M/2014 2 EXPLAIN THE SOURCES, THE ASSESSEE FURNISHED FOLLOWING CASH FLOW STATEMENT: - CASH IN HAND B/FD FROM THE PRECEDING YEAR 5,35,914 ADD: - WITHDRAWALS FROM BANK UPTO FEB 2009 6,89,800 WITHDRAWALS FR OM BANK IN MARCH 2009 92,000 --------------- 13,17,714 LESS: - DRAWINGS DURING THE YEAR 29,400 DEPOSITS UPTO FEB 2009 12,77,000 DEPOSITS IN MARCH 2009 NIL -------------- 13,06,400 ----------------- CASH IN HAND C/FD 11,314 ========= THE ASSESSEE SUBMITTED THAT HE HAD WITHDRAWN CASH FROM SAVINGS BANK ACCOUNT OVER A PERIOD OF TWO YEARS WITH AN INTENTION TO ACQUIRE A FLAT FOR HIMSELF WITHOUT THE KNOWLEDGE OF HIS PARENTS. THE AO NOTICED THAT THE BANK ACCOUNT STANDS IN THE JOINT NAME OF ASSESSEE AND HIS FATHER AND HENCE HE REJECTED THE EXPLA NATIONS OF THE ASSESSEE. ACCORDINGLY HE ASSESSED THE ENTIRE CASH DEPOSIT OF RS.12,77,000/ - AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. THE LD CIT(A) ALSO CONFIRMED THE SAME. 3. THE LD A.R INVITED OUR ATTENTION TO THE COPY OF INCOME TAX RETU RN FILED FOR AY 2008 - 09 AND SUBMITTED THAT THE CASH BALANCE OF RS.5,35,914/ - DECLARED THEREIN HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS USED THE OPENING CASH BALANCE AVAILABLE WITH HIM ALONG WITH THE WITHDRAWAL S FOR MAKING DEPOSITS. HE SUBMITTED THAT THERE WAS NO DEFICIT CASH BALANCE AS PER CASH FLOW STATEMENT AND ITA NO. 3399 /M/2014 3 HENCE THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ASSESSMENT OF ENTIRE AMOUNT OF RS.12,77,000/ - AS INCOME OF THE ASSESSEE. 4. ON THE CONT RARY, THE LD D.R SUBMITTED THAT THE CLAIM OF AVAILABILITY OF OPENING CASH BALANCE IS DISPROPORTIONATE TO THE INCOME DECLARED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS BUILT UP THE CASH BALANCE BY SHOWING GIFT RECEIPTS AND HENCE HIS STATE MENT OF ACCOUNTS IS NOT RELIABLE. HE FURTHER SUBMITTED THAT THERE IS NO CORRELATION BETWEEN THE WITHDRAWALS AND DEPOSITS AND HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.12,77,000/ - MADE BY THE AO. 5. I HEARD THE PARTIES AND PER USED THE RECORD. I VERIFIED THE COPY OF RETURN OF INCOME FILED BY THE ASSESSEE FOR AY 2008 - 09 AND NOTICE THAT THE ASSESSEE HAS DECLARED CLOSING CASH BALANCE AS ON 31.3.2008 OF RS.5,35,914/ - . THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR AY 2008 - 09 ON 1 1.11.2008 AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HENCE AT THIS STAGE, IN MY VIEW, IT MAY NOT BE PROPER FOR THE ASSESSING OFFICER TO DISBELIEVE THE CLAIM OF AVAILABILITY OF CASH BALANCE AS ON 1.4.2009. THE CLAIM OF RECEIPT OF GIFTS IN TH E YEARS RELEVANT TO AY 2008 - 09 AND AY 2009 - 10 HAS NOT BEEN SUSPECTED BY THE ASSESSING OFFICER AND HENCE HE DID NOT MAKE ANY ADDITION OF THE SAME U/S 68 OF THE ACT EVEN IN THE SCRUTINY ASSESSMENT MADE FOR ASSESSMENT YEAR 2009 - 10. HENCE BOTH THESE CONTENTIO NS OF LD D.R ARE LIABLE TO BE REJECTED. 6. THE ASSESSEES CLAIM IS THAT HE HAS USED THE OPENING CASH BALANCE AS WELL AS THE WITHDRAWALS MADE FROM THE BANK ON AN EARLIER OCCASION TO MAKE DEPOSITS ON THE SUBSEQUENT DATES. IT WAS SUBMITTED BY THE ASSESS EE THAT THE AMOUNTS WERE WITHDRAWN IN ORDER TO PURCHASE LAND IN HIS OWN NAME. HOWEVER, AS OBSERVED BY THE TAX AUTHORITIES, THE ASSESSEE COULD ITA NO. 3399 /M/2014 4 NOT SUBSTANTIATE THE SAID CLAIM EXCEPT BY GIVING AN AFFIDAVIT. IF THE ASSESSEE HAD GIVEN THE DETAILS OF LAND IDE NTIFIED BY HIM, THE COST OF LAND, THE SCHEDULE OF PAYMENT PLANNED ETC., HIS SUBMISSIONS COULD HAVE BEEN ACCEPTED. HENCE I AM OF THE VIEW THAT THE TAX AUTHORITIES HAVE RIGHTLY REJECTED THE SAID EXPLANATIONS OF THE ASSESSEE. 7. AT THE SAME TIME, I AM OF THE VIEW THAT THE CLAIM OF THE ASSESSEE THAT HE HAD USED OPENING CASH BALANCE AS WELL AS EARLIER WITHDRAWALS FOR MAKING DEPOSITS SUBSEQUENTLY COULD NOT BE ALTOGETHER REJECTED. ANOTHER POSSIBILITY IS THAT THE ASSESSEE MUST HAVE CARRIED OUT SOME BUSINES S ACTIVITY AND THE DEPOSITS AND WITHDRAWALS MAY REPRESENT HIS BUSINESS TRANSACTION. I HAVE ATTEMPTED TO ANALYSE THE CASH FLOW STATEMENT AS UNDER: - OPENING CASH BALANCE 5,35,914 WITHDRAWALS FROM 1.4.08 TO 30.11.08 2,84,800 ---------------- 8,20,714 LESS: - DEPOSITS FROM 1.4.08 TO 30.11.08 7,53,000 DRAWINGS FROM APRIL TO NOVEMBER 20,000 ------------- 7,73,000 ----------------- 47,714 ADD: - WITHDRAWALS IN DEC. 2008 3,05,000 ------------------ 3,52,714 LESS: - DRAWINGS FOR DEC. 2008 2,500 --------------- CASH BALANCE AS ON 31.12.2008 3,50,214 LESS: - CASH DEPOSIT ON 10.01.2009 5,00,000 ------------- CASH DEFICIT AS ON 10.01.2009 1,49,786 ======= ITA NO. 3399 /M/2014 5 THUS, I NOTIC E THAT THERE IS A CASH DEFICIT OF ABOUT RS.1,50,000/ - AS ON 10.01.2009 AS PER THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE. I NOTICE THAT THE ASSESSEE DID NOT CONSIDER THE CURRENT YEARS INCOME IN THE CASH FLOW STATEMENT. 8. IF I CONSIDER THE CASH DEPOSITS AS REPRESENTING BUSINESS TRANSACTIONS, THEN THE PROFIT NEEDS TO BE ESTIMATED. IF I TAKE THE RATE OF PROFIT AT 10%, THEN THE PROFIT NEEDS TO BE ESTIMATED AT RS.1,27,700/ - . 9. HENCE, ON A CONSPECTUS OF THE MATTER, I AM OF THE VIEW THAT THE TA X AUTHORITIES ARE NOT JUSTIFIED IN ASSESSING THE ENTIRE AMOUNT OF DEPOSITS AS INCOME OF THE ASSESSEE. IN MY VIEW, SOME INCOME NEEDS TO BE ESTIMATED IN RESPECT OF THE DEPOSITS MADE IN THE BANK ACCOUNT. IN MY VIEW, THE INCOME MAY BE ESTIMATED BETWEEN RS.1,2 7,700/ - AND RS.1,50,000/ - . ACCORDINGLY, IN MY VIEW, THIS ISSUE WOULD MEET THE ENDS OF JUSTICE, IF THE INCOME FROM THE BANK TRANSACTIONS IS ESTIMATED AT RS.1,40,000/ - . I ORDER ACCORDINGLY. IN VIEW OF THE ABOVE, I SET ASIDE THE ORDER OF LD CIT(A) AND DIRE CT THE ASSESSING OFFICER TO ESTIMATE THE INCOME FROM BANK TRANSACTIONS AT RS.1,40,000/ - AND ASSESS THE SAME. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 26TH AUGUST 2 015. 26TH AUGUST, 2015 SD ( B.R. BASKARAN) ACCOUNTANT MEMBER MUMBAI: 26 TH AUG , 2015 . . . ./ SRL , SR. PS ITA NO. 3399 /M/2014 6 / COPY OF THE ORDER FORWARDED TO : 1 . / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (A SSTT. REGISTRAR) , /ITAT, MUMBAI