Shri Amrish Balvanbhai Pandya, Ahmedabad V. The Income tax Officer,Ward-10(1), Ahmedabad

ITA 3413/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51072 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Corroborative evidences
• Section: 143(3); 234B; 6

Judgement Text

, , . .. . . .. . , , , , ! !! ! . .. .'# !'# '# !'# '# !'# '# !'# , $ $ $ $ % % % % IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE HONBLE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHAN ALANKAMONY, A.M.) ! !! ! . ITA NO. 3413/AHD./2009 : # &' - 2006-2007 AMRISH BALVANTBHAI PANDYA, ABAD VS- ITO, WA RD-10(1), ABAD (PAN : AFAPP 2623M) ( () /APPELLANT) ( *() /RESPONDENT ) () + , / APPELLANT BY : SHRI VIJAY RANJAN, A.R. *() + , / RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR.D.R. -#. + /$ / DATE OF HEARING : 21/10/2011 0'& + /$ / DATE OF PRONOUNCEMENT : 29/12/2011 1 1 1 1 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AH MEDABAD IN APPEAL NO.CIT(A)XVI/ITO.WD.10(1)/0242/2008-09 DATED 30.01.2008 FOR THE ASSESSMENT YEAR 2006-2007 PASSED UNDER SECTION 250 R.W.S. 143(3) OF THE I.T. ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) ERRED IN CONFIRMING ADDITION OF RS.1,44,630/- B EING DEPOSITS MADE IN S.B.A/C NO.4081 WITH BANK OF BARODA; 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) ERRED IN CONFIRMING ADDITION OF RS.2,17,700/- U /S 68 OF THE ACT WHICH PERTAINS DEPOSITS MADE IN ACCOUNT WITH HD FC BANK AND AXIS BANKS LIMITED; ITA NO. 3413-AHD-09 2 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) ERRED IN CONFIRMING ADDITION OF RS.4,75,450 OUT OF TOTAL AMOUNT OF RS.5,74,542/- CONSIDERED AS UNEXPLAINED SUSPENSE CREDIT ENTRY IN PERSONAL CAPITAL ACCOUNT; 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) ERRED IN CONFIRMING ADDITION OF RS.1,00,000/- AS UNEXPLAINED CASH DEPOSIT; 5) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT (A) HAS GROSSLY ERRED IN REJE CTING THE ASSESSEES CONTENTION THAT IT WAS NOT AT ALL A FIT CASE FOR LEVY OF INTEREST U/S 234A,234B AND 234C OF THE I.T. ACT EVE N ON MERITS. 6) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DU RING THE COURSE OF HEARING OF THE APPEAL. 2.1. GROUND NO.6 BEING GENERAL AND NO SPECIFIC ISSUE INVOLVED, IT DOESNT SURVIVE FOR ADJUDICATION. GROUND NO.5 IS NOT MAINTAINABLE AS CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE. THE ISSUES RAISED IN THE REMAINING GROUNDS ARE ADJUDICATED CHRONOLOGICALLY IN FOLLOWING PARAGR APHS: 3. THE FACTS OF THE ISSUES, BRIEFLY, ARE THAT THE A SSESSEE, AN INDIVIDUAL AND PROPRIETOR OF ADITYA GLASS, IS ENGAGED IN THE B USINESS OF TRADING, MANUFACTURING AND MOULDING OF GLASSES. BOOKS OF AC COUNTS ARE BEING MAINTAINED IN THE PROPRIETARY CONCERN OF ADITYA GLA SS. THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN THE ABSENC E OF MAINTENANCE OF PERSONAL BOOKS OF ACCOUNT, REQUIRED THE ASSESSEE TO PREPARE THE BALANCE SHEET AND CAPITAL ACCOUNT TO ASCERTAIN THE SOURCE OF CAPITAL INTRODUCED BY THE ASSESSEE IN HIS PROPRIETARY CONCE RN. IN LIEU OF INCONSISTENCY IN FURNISHING THE DETAILS AND ALSO TH E ATTITUDE OF THE ASSESSEE IN CHANGING HIS STAND QUITE OFTEN WHILE FU RNISHING CERTAIN INFORMATION, IT WAS OBSERVED BY THE AO THAT THE ASS ESSEE WAS NOT ABLE TO ITA NO. 3413-AHD-09 3 FURNISH THE SOURCES FOR DEPOSITS MADE IN HIS ACCOUN TS IN BANK OF BARODA (A/C NO.3726), H.D.F.C (A/C NO.7931) AND STANDARD C HARTERED BANK (A/C NO.7625). IN THE ABSENCE OF COMPLETE DETAILS WITH REGARD TO THE SOURCES OF BANK DEPOSITS AND THE CAPITAL ACCOUNT, T HE AO, FOR THE REASONS RECORDED IN HER IMPUGNED ORDER UNDER CONSID ERATION, MADE ADDITIONS UNDER VARIOUS HEADS. 4. THE ASSESSEE TOOK UP THE ISSUES BEFORE THE LD. C IT (A) FOR RELIEF. AFTER CAREFUL CONSIDERATION OF THE ASSESSEES CONTE NTIONS AND PERUSAL OF THE ASSESSMENT ORDER, THE LD. CIT (A) HAD PARTLY AL LOWED THE ASSESSEES APPEAL. THE ISSUES RAISED BY THE ASSESSEE ARE DEAL T WITH AS UNDER: GROUND NO. 1. ADDITION OF RS. 1,44,630/- OUT OF R S.2,73,967/- U/S 69 OF THE ACT: 4.1 THE AO NOTICED THAT THE S.B.A/C NO.4081 WITH B ANK OF BARODA WAS JOINTLY MAINTAINED BY THE ASSESSEE WITH ONE SHRI PR ADIP SEVAK AND THE ASSESSEE. AS SRI PRADIP SEVAK BEING A NRI RESIDING AT LONDON, THE ACCOUNT WAS BEING OPERATED BY THE ASSESSEE. ACCORD ING TO THE AO, THERE WAS AN OPENING BALANCE OF RS.1,29,337/- (SIC) RS.1,14,337/- AND FURTHER DEPOSIT OF RS.1,44,630/- WAS MADE DURING TH E YEAR WHICH INCLUDED INTEREST CREDIT OF RS.4,630/-. IN THE ABS ENCE OF PROPER EVIDENCE, THE AO MADE AN ADDITION OF RS.2,73,967/- WHICH INCL UDED THE O.B OF RS.1.29 LAKHS. 4.2 REFUTING THE AOS STAND, THE ASSESSEE CONTENDED BEFORE THE CIT (A) THAT SINCE SHRI PRADEEP SEVAK IS A RESIDENT OF LONDON AND THE ASSESSEES NAME WAS ADDED AS SECOND SIGNATORY ONLY FOR OPERATION OF THE ACCOUNT WHICH CANNOT BE CONSTRUED THAT THE SAID ACCOUNT BELONGING TO HIM. IT WAS, FURTHER, CONTENDED THAT THE AO ERR ED IN MAKING THE ADDITION OF THE ENTIRE AMOUNT OF RS.2.73 LAKHS WHIC H INCLUDED THE O.B OF ITA NO. 3413-AHD-09 4 RS.1.14 LAKHS AS THE SAID AMOUNT OF RS.1,14,337/- W AS THE CLOSING BALANCE OF LAST YEAR CARRIED FORWARD AS O.B OF THE CURRENT YEAR IN THE S.B.A/C AND, HENCE, SUCH BALANCE CANNOT BE TREATED AS INCOME OF THE CURRENT YEAR. WITH REGARD TO CASH DEPOSIT OF RS.1 LAKH ON 14.5.2005, IT WAS CONTENDED THAT SRI PRADIP SEVAK USUALLY VISITS INDIA ONCE IN A YEAR AND DURING HIS STAY HE USED TO GIVE SOME MONEY TO THE APPELLANT WHICH HAD RESULTED INTO ACCUMULATION OF SUCH MONEY, OUT O F WHICH, THE ASSESSEE HAD DEPOSITED RS.1 LAKH IN HIS ACCOUNT ON BEHALF OF SHRI SEVAK. SINCE THE SAID AMOUNT BELONGED TO SHRI SEVA K WHICH WAS DEPOSITED IN HIS ACCOUNT, THE SAME, IT WAS ARGUED, CANNOT BE CONSTRUED AS INCOME OF THE ASSESSEE. IN RESPECT OF RS.40,000/ - CREDITED BY FOUR ACCOUNT PAYEE CHEQUES, IT WAS ARGUED THAT THE SAME CANNOT BE TREATED AS UNEXPLAINED INVESTMENTS SINCE THE SAID TRANSACTI ONS WERE THROUGH BANKING CHANNELS. 4.3 THE OBSERVATION OF THE LD. CIT (A) WAS THAT IT WAS NOT IN DISPUTE THAT O.B. OF RS.1,14,337/- NOT PERTAINED TO THE AY UNDER CONSIDERATION. HOWEVER, NO PROPER EXPLANATION WAS FORTHCOMING IN R ESPECT OF RS.1,44,630/-. SINCE THE APPELLANT WAS ONE OF THE JOINT HOLDERS OF THE ACCOUNT AND THE ACCOUNT WAS BEING OPERATED BY HIM, HE TENDS TO EXPLAIN THE SOURCE OF SUCH DEPOSITS. SINCE THE APPELLANT W AS NOT ADVANCING ANY PROOF EITHER THE CASH OF RS.1 LAKH DEPOSITED ALLEGE D TO BE ON SHRI PRADIP SEVAKS BEHALF OR THE SOURCE OF PROOF OF CHEQUE DEP OSITS OF RS.40,000/-, THE CIT (A) TOOK A VIEW THAT RS.1,44,630/- WHICH IN CLUDED INTEREST CREDIT OF RS.4630/- WAS UNACCOUNTED INCOME OF THE APPELLAN T FOR THE AY UNDER CONSIDERATION. ACCORDINGLY, HE RESTRICTED THE ADDI TION TO THE EXTENT OF RS.1,44,630/- . 4.4 DURING THE COURSE OF HEARING BEFORE US, THE LD. A R HAD REITERATED MORE OR LESS WHAT WAS DEPICTED BEFORE THE LD. CIT ( A). IT WAS, FURTHER, ITA NO. 3413-AHD-09 5 AVERRED THAT SINCE THE NAME OF THE ASSESSEE WAS INC LUDED AS SECOND HOLDER FOR THE SAKE OF OPERATIONAL CONVENIENCE, IT CANNOT BE SAID TO BE THE ACCOUNT BELONGING TO THE ASSESSEE AND HE COULD NOT BE FORCED TO EXPLAIN THE SOURCES OF DEPOSITS MADE DURING THE YEA R. 4.5 THE LD. D R PRESENT WAS HEARD. HE VEHEMENTLY A RGUED THAT IT WAS UPTO THE ASSESSEE TO ESTABLISH THAT THE AMOUNT BELO NGED TO THE JOINT S.B. A/C. HOLDER N.R.I AND PRAYED THAT THE ORDER OF TH E LD. CIT(A) MAY BE CONFIRMED. 4.5 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND ALSO CLOSELY PERUSED THE RELEVANT CASE RECORDS. AT THE OUTSET, WE WOULD LIKE TO REITERATE THAT THE ASSESSEES CLAIM THAT (I) THE SAVINGS BANK A/C NO.4081 IS IN THE NAME OF MR. PRADIP SEVAK AND THE ASSESSEE IS ONLY A SECOND SIGNATORY OF THE ACCOUNT AND THAT (II) THE ASSESSEES NAME WAS INCLUDED AS 2 ND HOLDER FOR THE SAKE OF OPERATIONAL CONVENIENCE ETC ., DO NOT HOLD WATER SINCE THE BANKING RULES DO NOT PERMI T A PERSON TO OPEN AN ACCOUNT IN HIS NAME AND TO INCLUDE ANOTHER PERS ON AS A SECOND SIGNATORY OF THE ACCOUNT ONLY TO FACILITATE THE OPE RATION OF SUCH ACCOUNT. AS PER THE GUIDELINES OF THE RESERVE BANK OF INDIA, THE SAVINGS BANK ACCOUNT IS TO BE OPERATED ONLY BY A SINGLE PERSON OR JOINTLY IF THE ACCOUNT WERE IN THE NAMES OF MORE THAN ONE PERSON. EVIDENT LY, WHILE OPENING THE S.B. ACCOUNT IN THE BANK OF BARODA BY SHRI PRAD EEP SEVAK AS WELL AS THE ASSESSEE HAVE DECLARED IN THE APPLICATION F OR OPENING THE ACCOUNT (FORM NO.31 A) UNDER THEIR SIGNATURES THEY HAVE PROCLAIMED THAT WE ALSO DECLARE THAT THE ACCOUNT WILL BE OPERATED UPON AND THE BALANCE WILL BE PAYABLE TO EITHER OR SURVIVOR . (COURTESY: ANNEXURE C TO THE ASST. ORDER). THUS, THIS ACCOU NT WAS, IN FACT, OPENED JOINTLY ON 15.1.1998 ITSELF. THIS AMPLY EMPHASIS AN D BELIE THE ASSESSEES CLAIM THAT HIS NAME WAS ADDED ONLY AS SECOND SIGNAT ORY AND SO ON AND ITA NO. 3413-AHD-09 6 SO FORTH. THE LD. A R HAD NOT COME UP WITH ANY DIS CREET EVIDENCE TO REBUT THE STAND OF THE AUTHORITIES BELOW AND AS RIG HTLY POINTED OUT BY THE LD. CIT (A) THAT THE ASSESSEE WAS ONE OF THE JOINT HOLDERS OF THE ACCOUNT AND, THUS, HE WAS REQUIRED TO EXPLAIN THE SOURCE OF DEPOSITS MADE DURING THE YEAR UNDER CONSIDERATION. SINCE THERE HAS BEEN NO PLAUSIBLE PROOF FOR THE CASH DEPOSIT OF RS.1 LAKH ON 14.5.005 AND D EPOSIT BY CHEQUE ON 22.6.05 OF RS.40,000/- , WE AGREE WITH THE FINDING OF THE LD. CIT (A) IN TOTO. GROUND NO. II - ADDITION OF RS.2,17,700/- OUT OF R S.2,32,700/- U/S 68 OF THE ACT: 5. THERE WERE ENTRIES OF CASH DEPOSITS OF RS.2,32,7 00/- APPEARING IN THE THREE BANK ACCOUNTS OF THE ASSESSEE, THE SOURCE OF WHICH WAS CLAIMED TO BE THE VARIOUS ADVANCES RECEIVED BY M/S .ADITYA GLASS FROM ITS CUSTOMERS. THIS THEORY OF THE ASSESSEE WAS TUR NED DOWN BY THE AO ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO FURNI SH EVEN THE COMPLETE ADDRESSES OF SUCH DEPOSITORS OR THEIR CONF IRMATIONS AND, ACCORDINGLY, MADE THE ADDITION OF RS.2.32 LAKHS. 5.1 DURING THE COURSE APPELLATE PROCEEDINGS TOO THE SAME CONTENTION WAS PORTRAYED BESIDES PRODUCING PAYING-IN-SLIP OF BANK BOOK DEPICTING THE SAID AMOUNTS WERE RECEIVED FROM CELLISTIL ENGG. , BANGALORE, ENSTIN EQUIPMENT , BARODA, SHRI KRISHNA INDUSTRIES, KOCHI, MARTIN REFRIGERATION, BANGALORE AND RS.15,000/- FROM LIC IN RESPECT OF M ONEY BACK POLICY ETC., 5.2 BRUSHING ASIDE THE ASSESSEES CLAIM, THE LD. CI T (A) WENT ON TO OBSERVE THAT EXCEPT FOR A COPY OF PAY IN SLIP, THE ASSESSEE WAS NOT ABLE TO FURNISH ANY EVIDENCE EVEN THE ADDRESSES OF SUCH PARTIES OR ANY PROOF SHOWING THAT THE GOODS WERE DELIVERED TO THEM IN TH E SUBSEQUENT YEAR OR ITA NO. 3413-AHD-09 7 THE AMOUNTS HAVE BEEN RETURNED TO THEM ETC., HE, T HEREFORE, RESTRICTED THE ADDITION TO THE EXTENT OF RS.2,17,700/- ONLY AN D ALLOWED A RELIEF OF RS.15,000/- BEING THE AMOUNT RECEIVED FROM LIC IN R ESPECT TO MONEY BACK POLICY. 5.3 DURING THE COURSE OF HEARING BEFORE US, IT WA S CONTENDED THAT ALL THOSE ADVANCES WERE RECEIVED BY THE ASSESSEE THROUG H ACCOUNT PAYEE CHEQUES FROM HIS CLIENTS, HAVING BUSINESS CONNECTIO N WITH HIM AND IT WAS THE PRACTICE TO TAKE DEPOSITS FROM THE SAID PARTIES FOR MOULD AND THE SAME REFUNDABLE ON COMPLETION OF BENDING JOB OR AFT ER THE ACCOUNTS WERE SETTLED. IT WAS FURTHER CONTENDED THAT ALL THESE W ERE BUSINESS DEPOSITS RECEIVED DURING THE YEAR; THAT THE ENTIRE DEPOSITS HAVE DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE AND, THEREFORE, THE AU THORITIES BELOW WERE NOT JUSTIFIED IN HOLDING THAT SUCH AMOUNTS WERE UNE XPLAINED DEPOSITS ATTRACTING THE PROVISIONS OF S.68 OF THE ACT. 5.4 WE HAVE DULY CONSIDERED THE RIVAL SUBMISSION. AT THE OUTSET, HOWEVER, WE WOULD LIKE TO POINT OUT, AS RIGHTLY HIG HLIGHTED BY THE LD. CIT (A), THAT EXCEPT PRODUCING COPIES OF PAYING-IN-SLI PS, THE ASSESSEE WAS NOT ABLE TO FURNISH ANY EVIDENCE, SUCH AS THE ADDR ESSES OF THE PARTIES FROM WHOM THE ADVANCES HAVE BEEN ALLEGEDLY RECEIVED OR ANY EVIDENCE SHOWING THAT THE GOODS WERE DELIVERED TO THEM EVEN IN THE SUBSEQUENT YEAR OR THE AMOUNTS HAVE BEEN RETURNED TO THEM ETC. IN THE ABSENCE OF SUCH VITAL EVIDENCES, WE ARE INCLINED TO AGREE WITH THE LD. CIT (A)S FINDINGS IN TOTO AND, ACCORDINGLY, SUSTAIN THE ADDI TION RESTRICTED BY THE LD. CIT(A) AT RS.2,17,700/- IT IS ORDERED ACCORDINGLY. GROUND NO. III. ADDITION OF RS.4,75,450/- AS UNEXP LAINED SUSPENSE CREDIT ENTRY : ITA NO. 3413-AHD-09 8 6. THERE WAS AN UNEXPLAINED CREDIT ENTRY IN THE CAP ITAL ACCOUNT OF THE ASSESSEE IN THE FORM OF SUSPENSE ACCOUNT. ON BEI NG QUERIED, THE ASSESSEE PREPARED A CAPITAL ACCOUNT, ACCORDING TO W HICH, THE SUSPENSE ACCOUNT OF RS.5,75,452/- WAS CREDITED IN THE CAPITA L ACCOUNT. THE CLOSING BALANCE OF THE CAPITAL WAS RS.9,70,293/- AN D THE TOTAL OF THIS ACCOUNT COMES TO RS.20,52,959/-. WHEN THE AO HAD S PECIFICALLY ASKED THE ASSESSEE TO EXPLAIN THE ENTRIES IN SUSPENSE ACC OUNT OF RS.5.75 LAKHS, THE ASSESSEE CAME UP WITH A CHART SHOWING TH E BREAK UP OF SUSPENSE ACCOUNT. FOR APPRECIATION OF FACTS, THE C HART IS EXTRACTED AS UNDER: PARTICULARS AMOUNT (RS) REMARKS BIRLA SUNLIFE MUTUAL FUND 45,000 INVESTED ON 27.4.04 COPY FILED H.D.F.C. MUTUAL FUND 50,000 INVESTED ON 27.4.04 COPY FILED RELIANCE CAPITAL MUTUAL FUND 50,000 INVESTED ON 27.4.04 COPY FILED TATA MUTUAL FUND 50,000 INVESTED ON 27.4.04 COPY FILED TEMPLETON MUTUAL FUND 50,000 INVESTED ON 27.4.04 COPY FILED CASH ON HAND 1,05,250 BANK ACCOUNTS: STANDARD CHARTERED BANK 24,334 ACCOUNT STATEMENT FILED HDFC BANK 96,068 ACCOUNT STATEMENT FILED AXIS BANK 4,800 ACCOUNT STATEMENT FILED DIFF. ON ACCOUNT OF BAL. OF CAPITAL A/C AS ON 1.4.2005 4,75,452 DIVIDEND FROM HDFC MUTUAL FUND 96,494 IT IS TAX FREE INCOME DIVIDEND MISC. 3,508 T IS TAX FREE INCOME DIFF. ARISING DURING THE YEAR 1,00,002 ITA NO. 3413-AHD-09 9 HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES CONTE NTIONS FOR THE REASONS RECORDED IN HER IMPUGNED ORDER WHICH IS UND ER CHALLENGE. 6.1 BEFORE THE LD. CIT (A) TOO, A SIMILAR CONTENTI ON WAS PUT-FORTH IN THE SHAPE OF A CHART. IT WAS, FURTHER, CONTENDED THAT IN FACT THE ACTUAL DIFFERENCE ON ACCOUNT OF SUSPENSE ACCOUNT SHOULD HA VE BEEN RS.1,00,002/- AS SHOWN IN THE CHART. THE BALANCE D IFFERENCE OF RS.4,72,452/- PERTAINS TO DIFFERENCE ON ACCOUNT OF BALANCE OF HIS CAPITAL ACCOUNT AS ON 1.4.2005. IT WAS ARGUED THAT THE ACT UAL DIFFERENCE ARISING DURING THE YEAR IN THE SUSPENSE ACCOUNT SHOULD BE R S.1,00,002/- ONLY AND THE BALANCE ADDITION SHOULD BE DELETED. 6.2 AFTER ANALYZING THE CHART, THE LD. AR WAS RE QUIRED BY THE CIT (A) TO PREPARE A CAPITAL ACCOUNT AS ON 31.3.2005 TO PROVE THAT THE SUSPENSE ACCOUNT AS ON 1.4.2005 IN THE CAPITAL ACCOUNT WAS T O THE EXTENT OF RS.5,75,452/- AND THAT IN THE CAPITAL AS ON 31.3.20 05 THE INVESTMENTS WERE INCLUDED BY THE APPELLANT. HOWEVER, THE LD. A R, ACCORDING TO THE LD. CIT (A), HAD FAILED TO SUPPORT HIS CONTENTION THAT THE DIFFERENCE OF RS.5,75,452/- WAS MAINLY ON ACCOUNT OF DIFFERENCE A S ON 1.4.2005. NEITHER THE CAPITAL ACCOUNT NOR THE SUSPENSE ACCOUN T FOR THE FY 2004-05 WAS FORTH-COMING, THE LD. CIT (A) HAD REFUSED TO TA KE COGNIZANCE OF THE ASSESSEES CONTENTION IN THIS REGARD. HAD THE ASSE SSEE PROVED THAT THE INVESTMENTS MADE DURING THE FY 2004-05 AS PER THE C HART WERE PART OF HIS CAPITAL ACCOUNT AS ON 31.3.2005, THE ASSESSEES CONTENTIONS COMMAND MERITS. ACCORDING TO THE LD. CIT (A), IT WA S NOT CLEAR WHETHER THE SUSPENSE ACCOUNT WAS ON ACCOUNT OF THE ABOVE ME NTIONED ENTRIES OR NOT. THE ASSESSEE HAD RECEIVED DIVIDEND OF RS.96,4 94/- FROM HDFC MUTUAL FUND AND OTHER MISC. DIVIDEND INCOME OF RS.3 508, AGGREGATING TO RS.1,00,002/- DURING THE YEAR. EVEN THOUGH THIS AM OUNT IS PART OF THE ITA NO. 3413-AHD-09 10 CAPITAL ACCOUNT OF THE ASSESSEE, IT CANNOT BE TAXAB LE IN THE AY 2006-07. IN VIEW OF THE ABOVE, THE LD. CIT (A) HAD OBSERVED THUS: 7.2 .IN OTHER WORDS, THE AMOUNT OF RS.94,494 + RS.3508 = RS.1,00,002/- APPEARING IN THE SUSPENSE A CCOUNT SHOULD NOT BE CONSIDERED FOR THE PURPOSE OF ADDITIO N BY THE ASSESSING OFFICER, IF THE ASSESSEE CAN PROVE THAT T HIS AMOUNT HAS BEEN DEPOSITED IN THE ABOVE MENTIONED THREE BANK AC COUNTS. IF THE ASSESSEE PROVES BEFORE THE ASSESSING OFFICER TH AT THE DIVIDEND INCOME FROM HDFC MUTUAL FUND AND OTHER DIV IDEND IS DULY DEPOSITED IN THE ABOVE MENTIONED THREE BANK AC COUNTS, THEN HE (SIC) SHE IS DIRECTED TO DELETE THE ADDITIO N OF RS.1,00,002/- OUT OF TOTAL ADDITION OF RS.5,75,452/ -. IF HOWEVER THE APPELLANT FAILS TO PROVE THAT THESE AMOUNTS ARE DEPOSITED IN THE ABOVE MENTIONED BANK ACCOUNTS THEN THE ADDITION OF RS.5,75,452/- WOULD STAND CONFIRMED. . 6.3 IT WAS CONTENDED DURING THE COURSE OF HEARING T HAT THE LD. CIT (A) HAD FAILED TO APPRECIATE THAT THE ENTIRE INVESTMENT S IN MUTUAL FUNDS WHICH WERE MADE IN THE EARLIER YEARS, THAT HOWEVER WHILE PREPARING CAPITAL ACCOUNT ALONG WITH PERSONAL BALANCE SHEET, THE ASSE SSEE HAD INADVERTENTLY NOT CONSIDERED SUCH INVESTMENTS ALONG WITH OPENING BANK BALANCES AND CASH BALANCES AND, HENCE, THE SAME REP RESENT AS SUSPENSE ENTRY IN THE CAPITAL. IT WAS FURTHER CONT ENDED THAT THE RECONCILIATION OF SUCH SUSPENSE ENTRIES WERE DULY E XPLAINED WITH SUPPORTING EVIDENCES BEFORE THE LD. CIT (A) WHO HAD , ACCORDING TO THE ASSESSEE, NOT TAKEN COGNIZANCE OF WHILE DECIDING TH E ISSUE. IT WAS, THEREFORE, PLEADED THAT THE FINDING OF THE LD. CIT (A) REQUIRES TO BE REVERSED. 6.4 WE HAVE DULY CONSIDERED THE LD. A RS SUBMISSIO N AS WELL AS PERUSED THE CHART DETAILING THE RECONCILIATION OF S USPENSE ENTRIES IN ORIGINAL CAPITAL ACCOUNT AND ALSO ACCOUNT STATEMEN TS OF RESPECTIVE COMPANIES AUTHENTICATING THE TRANSACTION/INVESTMENT S ON MUTUAL FUNDS AS ON 27.4.2004 WHICH HAVE BEEN ENCLOSED AT PAGE NO S. 41, 42, 43, 44 ITA NO. 3413-AHD-09 11 AND 45 OF THE PAPER BOOK. FROM THE ABOVE, IT APPEAR S THAT THE INVESTMENTS WERE MADE IN VARIOUS MUTUAL FUNDS IN TH E MONTH OF APRIL, 2004 I.E., PRIOR TO THE ASSESSMENT YEAR UNDER DISPU TE. HOWEVER, THE ASSESSEE HAD FAILED TO FURNISH THE CAPITAL ACCOUNT AS ON 31.3.2005 TO PROVE THAT THE SUSPENSE ACCOUNT AS ON 1.4.2005 IN T HE CAPITAL ACCOUNT WAS TO THE EXTENT OF RS.5.75 LAKHS AND THAT IN THE CAPITAL AS ON 31.3.2005 THE ABOVE MENTIONED INVESTMENTS WERE INCLUDED AS RE QUIRED BY THE LD. CIT(A) WHICH PROMPTED THE FIRST APPELLATE AUTHORITY TO REJECT THE ASSESSEES CLAIM. IN VIEW OF THE ABOVE AND ALSO TH E FACT THAT THE ASSESSEES CLAIM FOR HAVING INVESTED IN MUTUAL FUND S WAY BACK IN APRIL, 2004 HAS NOT BEEN VERIFIED BY THE AO W.R.T EVIDENC ES PRODUCED NOW BEFORE THIS BENCH, WE ARE OF THE CONSIDERED VIEW TH AT IT REQUIRES PROPER VERIFICATION AT THE AOS LEVEL AND, ACCORDINGLY, TH IS ISSUE IS REMITTED BACK TO THE FILE OF THE LD. A.O WITH SPECIFIC DIRECTION TO LOOK INTO THE MATTER AFRESH WITH REFERENCE TO THE DOCUMENTARY EVIDENCES, CAPITAL ACCOUNT AS ON 31.3.2005 (TO PROVE THAT THE SUSPENSE ACCOUNT AS ON 1.4.2005 IN THE CAPITAL ACCOUNT WAS TO THE EXTENT OF RS.5.75 LAKHS AND IN THE CAPITAL AS ON 31.3.2005 THE SAID INVESTMENTS WERE ALSO INCLUDE D) WHICH SHALL BE FURNISHED BY THE ASSESSEE AND TO TAKE APPROPRIATE A CTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AT THAT RELEVANT PER IOD, OF COURSE, AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE OF BEING H EARD. THE AO SHALL, HOWEVER, KEEP IN VIEW THE FINDINGS OF THE LD. CIT ( A) WHILE DECIDING THE ISSUE. IT IS ORDERED ACCORDINGLY. GROUND NO. IV. ADDITION OF RS.1,00,000/- AS UNEXPLA INED CASH CREDIT : 7. THE LD. AO IN HER IMPUGNED ORDER OBSERVED THAT T HE ASSESSEE HAD MADE CASH DEPOSIT OF RS. 1 LAKH IN HIS PERSONAL BAN K ACCOUNT WITH STANDARD CHARTERED BANK. ON BEING QUERIED FOR THE S OURCE, IT WAS ITA NO. 3413-AHD-09 12 EXPLAINED THAT THE SOURCE OF THIS CASH OF RS.1 LAKH WAS OUT OF O.B OF CASH ON HAND AT RS.1,05,250/-. ON BEING ASKED TO P RODUCE THE BOOKS OF ACCOUNT OF F.YS 2003-04 AND 2004-05 TO JUSTIFY THE CLAIM THAT THE CASH OF RS.1.05,250/- WAS AS PER THE BOOKS OF ACCOUNT OF AY 2005-06, THE ASSESSEE HAD CHOSEN NOT TO PRODUCE THE SAME WITH A PLEA THAT THE DATA IN THE COMPUTER HAD BEEN WIPED OUT DUE TO VIRUS. T HE AO, HOWEVER, HELD THAT THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND THE PROOF OF THE CASH BALANCE OF RS.1,05,250/- AS O N 31.3.2005 WAS ELUSIVE, AN ADDITION OF RS.1 LAKH WAS MADE ON THIS SCORE. 7.1 THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. C IT (A), WHO HAS OBSERVED THUS: 8 BEFORE ME ALSO THE SAME CONTENTION WAS REPEATED BY THE AUTHORIZED REPRESENT. SINCE WHILE ADJUDICATING THE GROUND REGARDING SUSPENSE ACCOUNT ENTRY OF RS.5,75,452/-, I HAVE HELD THAT IN THE ABSENCE OF ANY EVIDENCE REGARDING THE C APITAL AS ON 31.3.2005, THE ENTRY OF CASH IN HAND OF RS.1,05,250 /- CANNOT BE ACCEPTED. FOLLOWING THE SAME ARGUMENT FOR THIS GRO UND ALSO, IT CANNOT BE HELD THAT THE CASH DEPOSITED ON 3.8.2005 WAS OUT OF OPENING CASH BALANCE. BEFORE ME ALSO, NO BOOKS OF ACCOUNTS WERE PRODUCED NOR ANY EVIDENCE SHOWING THAT THE AMO UNT OF RS. 1 LAC IS OUT OF THE OPENING CASH IN HAND OF RS.1,05 ,250/- WAS PRODUCED. IN ABSENCE OF ANY PROOF, THE ADDITION OF RS.1 LAC MADE BY THE ASSESSING OFFICER IS SUSTAINED. 7.2 DURING THE COURSE OF HEARING BEFORE US, IT WAS ARGUED BY THE LD. A.R. THAT THE LD. CIT (A) HAD FAILED TO APPRECIATE THAT THE CASH DEPOSITS MADE BY HIM WAS OUT OF OPENING CASH BALANCE OF RS.1 ,05,250/- AND THE DETAILS OF THE SAME WERE FURNISHED BEFORE THE AO. EVEN OTHERWISE, IT WAS SUBMITTED THAT THE LD.CIT (A) HAD CONFIRMED THE OPENING CASH BALANCE AS WELL AS APPLICATION OF SUCH AMOUNT IN TH E HANDS OF ASSESSEE WHICH WAS NOTHING BUT DOUBLE TAXATION OF SAME AMOUN T IN HIS HANDS AND, THEREFORE, PLEADED THAT THE ADDITION OF RS.1 LAKH D ESERVES TO BE DELETED. ITA NO. 3413-AHD-09 13 7.3 WE HAVE DULY CONSIDERED THE RIVAL SUBMISSION AN D PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAD CO NTENDED BEFORE THE AO VIDE HIS LETTER DATED 12.12.2008 THAT HE HAD ISS UED CHEQUE TO ADITYA GLASS OF RS.1 LAKH ON 8.8.2005 OUT OF BALANCE IN S. B.A/C AVAILABLE BY DEPOSIT OF CASH OF RS.1 LAKH ON 3.8.2008 (SIC) 3.8.2005 OUT OF HIS PERSONAL ACCOUNT. HE HAD FILED PERSONAL CASH BOOK FOR 1.4.2005 TO 31.3.2006 SHOWING O.B. OF RS.1,05,250/- AND SHOWING WITHDRAWAL OF RS.1 LAKH DEPOSIT IN STANDARD CHARTERED BANK [SOURC E: PARA 5.12.1 OF ASST. ORDER]. WHEN THE ASSESSEE WAS ASKED BY THE A O TO PRODUCE DOCUMENTARY EVIDENCE TO PROVE THAT THE OPENING BALA NCE OF CASH AS ON 1.4.2005 WAS RS.1,05,250/-, HE CAME UP WITH A REPLY DT.18.12.2008 THAT FOR EARLIER YEARS BOOKS OF ACCOUNTS FOR THE FY 200 3-04 AND 2004-05 THE DATE FROM THE COMPUTER ARE WIPED OFF DUE TO VIRUS I N COMPUTER. THE SAME REPLY WAS ORCHESTRATED BEFORE THE LD. CIT (A) TOO. CONSIDERING THE ASSESSEES RESPONSE, THE LD. CIT (A) HAS OBSERVED T HUS: SINCE WHILE ADJUDICATING THE GROUND REGARDING SUSPENSE ACCOUNT ENTRY OF RS.5,75,452/-, I HAVE HELD THAT IN THE ABSENCE OF A NY EVIDENCE REGARDING THE CAPITAL AS ON 31.3.2005, THE ENTRY OF CASH IN H AND OF RS.1,05,250/- CANNOT BE ACCEPTED. FOLLOWING THE SAME ARGUMENT FO R THIS GROUND ALSO, IT CANNOT BE HELD THAT THE CASH DEPOSITED ON 3.8.20 05 WAS OUT OF OPENING CASH BALANCE. HOWEVER, THERE IS A FORCE IN THE ARGUMENT OF THE ASSESSEE SINCE THE CIT (A) HAD CONFIRMED THE OPENIN G BALANCE [RS.1,05,250/-] AS WELL AS THE ADDITION OF RS.1 LAK H OUT OF ALLEGED OPENING CASH BALANCE OF RS.1,05,250/- IN HIS HANDS LEADS TO DOUBLE TAXATION OF THE SAME AMOUNT. HOWEVER, THE ISSUE OF ADDITION OF RS.4.75,450/- HAS SINCE BEEN REMITTED BACK TO THE FILE OF THE LD. AO FOR FRESH CONSIDERATION [GROUND NO.3 SUPRA ] WHICH HAS A BEARING IN THE PRESENT GROUND ALSO, W E ARE OF THE FIRM VIEW THAT IT IS DESIRABLE TO REMIT BACK THIS ISSUE ALSO FOR FRESH CONSIDERATION BY THE AO. WHILE DECIDING THE ISSUE, THE LD. AO SHALL ITA NO. 3413-AHD-09 14 ENSURE THAT THE OPENING CASH BALANCE OF RS.1,05,250 /- DOESNT SUFFER FOR TAXATION TWICE AT THE HANDS OF THE ASSESSEE. IT I S ORDERED ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 2 1 + 0'& 3#!' 29 / 12 /2011 ' 4 + . 5 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 29/12/2011 1 1 1 1 + ++ + */6 */6 */6 */6 76&/' 76&/' 76&/' 76&/' - 1. () 2. *() 3. !! / -8 4. -8 - - 5. 69 */# , , 5 6. :2 1 , ; / !< , 5 TALUKDAR/ SR. P.S .