Satish Dhaneshan Kollara, Raigad V. Income-tax Officer,

ITA 343/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5275 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-04-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Corroborative evidences
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.343/PUN/2015 / ASSESSMENT YEAR : 2011-12 SATISH DHANESHAN KOLLARA, FLAT NO.2, BUILDING NO.5, SHAKTI CO-OP HSG, SOCIETY LIMITED, KHOPOLI DIST. RAIGAD 410203. PAN : AGOPD8039Q. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD-4, PANVEL. . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI VIVEK AGARWAL. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, THANE DT.21.01 .2015 FOR THE ASSESSMENT YEAR 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN T HE BUSINESS OF RE-SELLING OF COMPUTERS AND ITS PERIPHERALS UND ER THE NAME AND STYLE OF M/S. AMSATCOM TECHNICS. ASSESSEE ELEC TRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 2011-12 ON 18.12.2011 DECLA RING / DATE OF HEARING : 11.04.2018 / DATE OF PRONOUNCEMENT: 06.07.2018 2 TOTAL INCOME OF RS.11,59,304/-. THE CASE WAS SELECTED FOR S CRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE A CT VIDE ORDER DT.21.01.2014 AND THE TOTAL INCOME WAS DETERMINED AT RS.52,61,220/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CA RRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.18.02.2014 (IN APPE AL NO.495/THN/2013-14) GRANTED PARTIAL RELIEF TO THE ASSESSEE . AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE APPELLATE AUTHORITY ERRED BY CONFIRMING THE ADDITION OF CASH DEPOSIT IN THE BANK ON VARIOUS DATES AMOUNTING TO R S.13, 61,000 / - , AS UNEXPLAINED DEPOSITS. THE CASH DEPOSIT IN THE BANK ARE MADE OUT OF CASH IN HAND AS PER CASH BOOK MAINTAINED BY THE APP ELLANT, UNDER MERCANTILE SYSTEM OF ACCOUNTING AS SAME ARE CONTRA ENTRIES. THEREFORE SAME CAN NOT BE TREATED AS UNEXPLAINED DEPOSITS IGN ORING THE FACT OF THE CASE OR WITHOUT SUBSTANTIATING SUCH ADDITION. F URTHER, CASH BOOK OF THE ASSESSEE WAS ALSO PROVIDED TO THE ASSESSING OFF ICER AS WELL AS TO THE FIRST APPELLATE AUTHORITY FOR THEIR REFERENCE. THEREFORE THE HYPOTHETICAL ADDITION TO SALES RS.1361000 / - NEEDS TO BE SET ASIDE. 2. THE APPELLATE AUTHORITY ERRED BY ADDING RS.20,72 ,543 / - AS LONG TERM CAPITAL GAIN ON SALES OF LAND IN PLACE OF RS.7 ,88,877 / - AS PER RETURN OF INCOME FILED BY THE APPELLANT . THE LEGITIMATE EXPENSES INCURRED BY THE APPELLANT RS.2,83,666 / -(INDEXED VALUE OF ACTUAL EXPENSES RS.250000 / -) AND RS.1000000/- PAID FOR VACATING THE LAND WAS DISALLOWED EVEN AFTER PROVIDING DOCUMENTARY SUP PORTING. THEREFORE THE ORIGINAL AMOUNT OF CAPITAL GAIN RS.7, 88,877/- NEEDS TO BE REINSTATED INSTEAD OF THE CAPITAL GAIN OFRS.20,72,5 43 / -. 3. THE CASE FILE REVEALS THAT IN THE PAST THE HEARING OF T HE CASE WAS ADJOURNED ON THE REQUEST OF THE ASSESSEE. IT IS S EEN THAT THE NOTICE FOR THE PRESENT HEARING WAS ISSUED TO THE ASSESS EE ON 28.11.2017. ON THE DATE OF PRESENT HEARING NONE APPEA RED. WE, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD AND AFTER HEARING THE LD.D.R. 4. FIRST GROUND IS WITH RESPECT TO ADDITION OF RS.13,61,000/- AS UNEXPLAINED DEPOSITS. 3 4.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT ASSESSEE HAD DEPOSITED CASH AGGREGATING TO RS.13,76,000 /- IN HIS BANK ACCOUNT (THE DETAILS OF WHICH ARE LISTED AT PAGE 2 OF THE ASSESSMENT ORDER). AO WAS NOT SATISFIED WITH THE EXPLANAT ION OF THE ASSESSEE THAT THE DEPOSITS WERE MADE OUT OF CASH WITHD RAWALS FROM THE BANKS DURING THE PERIOD FROM 19.04.2010 TO 21.03.2011. HE THEREAFTER TREATED RS.13,76,000/- BEING THE CASH DEPOSITS IN BANK AS AN UNEXPLAINED INVESTMENTS AND MADE ITS ADDITION. AGG RIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.C IT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPHELD T HE ORDER OF AO BY OBSERVING AS UNDER : 4.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E AIR OF THE APPELLAN T HAS SUBMITTED A DETAILED WRITTEN SUBMISSION VIDE LE TTER DT. 16 . 12.2014 . THE RELEVANT PORTION OF THE SAME IS REPRODUCED AS UNDER :- 'ON THE VARIOUS DATES AS PER DETAILS GIVEN BELOW TH E APPELLANT HAS WITHDRAWN THE CASH FROM HIS BANK ACCOUNTS WHICH HAS BEEN RE-DEPOSITED AS AND WHEN NECESSARY, IN TO THE BANK. THEREFORE, THE AMOUNT DEPOSITED OR WITHDRAWN FROM T HE BANK IS IN THE NATURE OF CONTRA ENTRY AND DOES NOT SUBST ANTIATE OR INDICATES ANY UNACCOUNTED SALES OR SERVICES PAYMENT . THEREFORE THE ID. OFFICER HAS ERRED BY ADDING THE C ASH DEPOSITED IN BANK AS UNACCOUNTED SALES. DETAILS OF CASH WITHDRAWN FROM BANK AND DEPOSITED IN THE BANK ARE A S UNDER:- DATE ON WHICH CASH IS WITHDRAWN/ DEPOSITED FROM/IN BANK NAME OF THE BANK CHEQUE NO. AMOUNT WITHDRAWN (RS.) AMOUNT DEPOSITED IN BANK (RS.) 19/04/2010 BANK OF INDIA 000105 62500/ - - 26/04/2010 BANK OF INDIA ATM 10000/ - - 12/05/2010 BANK OF INDIA ATM 5000/ - - 03/06/2010 PUNJAB & SINDH BANK 706034 192500/ - - 02/09/2010 BANK OF INDIA ATM 10000/ - - 02/09/2010 BANK OF INDIA ATM 5000/ - - 03/09/2010 BANK OF INDIA ATM 10000/ - - 03/09/2010 BANK OF INDIA ATM 5000/ - 06/09/2010 BANK OF INDIA - 06/09/2010 BANK OF INDIA ATM 10000/ - 19/10/2010 BANK OF INDIA ATM 10000/ - 02/11/2010 DRAWINGS NA 50000/ - 11/11/2010 DRAWINGS NA 100000/ - 100000/ - 24/11/2010 BANK OF INDIA 000121 30000/ - 02/12/2010 PUNJAB & SINDH BANK 706035 25000/ - 4 21/1/2010 BANK OF INDIA NA - 11000/ - 02/02/2011 BANK OF INDIA NA - 1000000/ - 04/02/2011 BANK OF INDIA NA - 9000000/ - 14/02/2011 BANK OF INDIA 000132 285000/ - - 01/03/2011 BANK OF INDIA CASH 5000/ - - 01/03/2011 BANK OF INDIA CASH 5000/ - - 21/03/2011 DRAWINGS NA 2000000/ - 2000000/ - TOTAL 1020000/- 1376000/- 4. 3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E APPELLANT, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE, THEREFORE, I PROCEED TO DECIDE THE APPEAL OF THE APPELLANT. FROM THE ABOVE CHART, IT CAN BE SEEN THAT THE APPEL LANT HAS NOT EXPLAINED THE SOURCE OF CASH DEPOSITS VIS-A-VIS CAS H WITHDRAWALS FROM BANKS AS CLAIMED BY THE APPELLANT AND THE REAS ONS ARE AS BELOW: I)THE CASH WITHDRAWALS AND RE-DEPOSITS IN THE BANK AS CLAIMED BY THE APPELLANT CANNOT BE ACCEPTED AS THE TIME GAP BE TWEEN WITHDRAWALS AND DEPOSITS DO NOT JUSTIFY. II) DURING THE APPELLATE PROCEEDINGS, THE APPELLANT WAS ASKED TO EXPLAIN THE REASONS AND PURPOSE FOR CASH WITHDRAWAL S AS THE WITHDRAWALS WERE MADE FROM 19.04.2010 TO 21.03.2011 . IF THE CASH WITHDRAWALS ARE FOR BUSINESS OR FOR PERSONAL PURPOS ES, THE APPELLANT REQUIRE TO EXPLAIN, BUT THE APPELLANT FAILED TO DO. THEREFORE, OUT OF TOTAL ADDITION OF RS.13,76,000/-, AN AMOUNT OF RS.13,61,000/- IS ADDED TO THE TOTAL INCOME OF THE APPELLANT AS UNEXPLAINED DEPOSITS WHEREAS A SUM OF RS.15,000/- D EPOSITED ON 06.09.2010 IS ALLOWED TO THE APPELLANT AS EXPLAINED AS THERE WERE CORRESPONDING WITHDRAWALS. AS A RESULT, THE APPEAL ON THIS GROUND OF THE APPELLANT IS PARTLY ALLOWED AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.D.R. SUBMITTED THAT ASSESSEE HAS NOT EX PLAINED THE SOURCE OF CASH AND THEREFORE, AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION. 6. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD.CIT(A) HAS NOTED THAT ASSESSEE W AS ASKED TO EXPLAIN THE CASH WITHDRAWALS AND THE RE-DEPOSITS AS CLAIM ED BY THE ASSESSEE AND THE REASONS AND PURPOSE FOR CASH WITHDR AWALS. HE HAS NOTED THAT ASSESSEE HAS FAILED TO SATISFACTORILY EXP LAIN THE SAME. BEFORE US, NO MATERIAL HAS BEEN PLACED BY THE ASSESSEE TO CONTROVERT 5 THE FINDINGS OF LD.CIT(A). IN SUCH A SITUATION, WE FIND NO REAS ON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THE GROUND OF THE ASSESSEE IS DISMISSED. 7. SECOND GROUND IS WITH RESPECT TO ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS. 7.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT DURING THE YEAR ASSESSEE HAD SOLD TWO PIECES OF LAND AT PLOT NOS.7 AND 8 AT VILLAGE KATRANG, TAL. KHALAPUR, DISTRICT RAIGAD FOR A TOTAL CONSIDERATION OF RS.31 LAKHS. IT WAS ALSO NOTICED THAT WHILE COMPUTING THE CAPITAL GAINS, ASSESSEE HAS REDUCED RS.10,2 7,745/- TOWARDS ACQUISITION INDEX COST AND RS.12,83,666/- TOWARDS IMPROVEMENT INDEX COST AND WORKED OUT NET TAXABLE CAP ITAL GAINS AT RS.7,88,877/-. THE ASSESSEE WAS ASKED TO FURNISH THE DE TAILS OF EXPENDITURE INCURRED AND THE IMPROVEMENTS MADE. ASSESS EE INTER- ALIA SUBMITTED THAT COST OF IMPROVEMENT INCLUDED COMMISSION PAID FOR GETTING BUYER, CHARGES PAID FOR LEVELING THE LAND, CHARGE S PAID FOR FENCING THE LAND AND EXPENSES INCURRED TO REMOVE THE UN AUTHORIZED ENCROACHMENTS FOR WHICH HE HAD INCURRED RS.12,50,000/- AN D THE INDEXED COST WORKED OUT TO RS.12,83,666/-. THE ASSESSEE WAS ASKED TO PRODUCE THE SUPPORTING DOCUMENTS FOR THE AFORESAID E XPENSES. IN THE ABSENCE OF SATISFACTORY EXPLANATION FROM ASSESSEE, AO DISALLOWED THE EXPENSES OF RS.10 LAKHS PAID FOR REMOVING UNAUTHORISED ENCROACHMENT AND RS.2,50,000/- TOWARDS COST OF IMPROVEME NT AND THEREAFTER DETERMINED THE NET TAXABLE CAPITAL GAINS AT RS.20,72,543/- AS AGAINST RS.7,88,877/- WORKED OUT BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO ASSESSEE CARRIE D THE MATTER 6 BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPHELD THE ORDER OF AO BY OBSERVING AS UNDER : 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF 'THE APPELLANT, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE, THEREFORE, I PROCEED TO DECIDE THE APPEAL. 6.5 THE AO HAS NOT ALLOWED THE DEDUCTION WHILE COMP UTING THE CAPITAL GAINS REGARDING PAYMENT OF RS.10,00,000/-- TO MRS.S.MANISH SHAH FOR REMOVING UNAUTHORIZED ENCROACHMENT AND HAN DING PEACEFUL POSSESSION OF LAND AT THE TIME OF SALE AND ANOTHER AMOUNT OF RS.2,50,000/- TOWARDS COST OF IMPROVEMENT, HENCE, T HE TOTAL ADDITION WORKS OUT TO RS.(10,00,000/- + 2,50,000)= RS.12,50, 000/-. (I) AS FAR AS PAYMENT OF RS.10,00,000/- IS CONCERNE D THE APPELLANT HAS NOT PRODUCED ANY EVIDENCE WHATSOEVER THAT THE P ROPERTY ON SALE WAS IN DISPUTE NEITHER POLICE COMPLAINT WAS FILED N OR A CASE IS FILED IN THE COURT OF LAW AS THE PAYMENT IS MORE THAN 30% OF THE SALE PRICE (RS.31,00,000/-), THEREFORE, EVEN THOUGH IT WAS PAI D BY CHEQUES, THE SAME CANNOT BE ALLOWED AS THE ONUS LIES ON THE APPE LLANT TO PROVE THAT HE HAD INCURRED SUCH EXPENSES OUT OF EXIGENCY. (II) AS PER COMPUTATION OF CAPITAL GAIN IS CONCERNE D, NO ILLEGAL PAYMENT IS AN ALLOWABLE DEDUCTION, AND THEREFORE, S ECTION 48 OF THE I. TAX ACT HAS DEARLY LAID DOWN WHAT EXPENSES ARE D EDUCTIBLE, THEREFORE, ILLEGAL EXPENSES WITHOUT ANY SUPPORTING EVIDENCE IS NOT ALLOWABLE. (III) THE AMOUNT SPENT OF RS.2,50,000/- ON IMPROVEM ENT OF LAND IS ALSO NOT JUSTIFIABLE AS THE PROPERTY WAS A LANDED P ROPERTY, WHICH DOES NOT REQUIRE ANY IMPROVEMENT IN REAL PRACTICAL SENSE, THEREFORE, THE ALLOWANCE OF THESE EXPENSES IS NOT JUSTIFIABLE. THE ASSESSING OFFICER HAS DEALT AND DISCUSSED IN THE ASSESSMENT O RDER, WHICH JUSTIFY THE DISALLOWANCE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 8. BEFORE US, LD.D.R. SUPPORTED THE ORDER OF LOWER AUTHORITIES. 9. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD.CIT(A) WHILE UPHOLDING THE ADDITION H AS NOTED THAT WITH RESPECT TO THE AMOUNT OF RS.10 LAKH TH AT IS STATED BY THE ASSESSEE TO HAVE BEEN SPENT TO REMOVE THE UNATH ORISED ENCROACHMENTS AND HANDOVER THE PEACEFUL POSSESSION OF LAND, NO EVIDENCE WAS PRODUCED BY THE ASSESSEE TO DEMONSTRATE THAT 7 PROPERTY ON SALE WAS ON DISPUTE OR ANY OTHER EVIDENCE. SIMILARLY, WITH RESPECT TO RS.2,50,000/- BEING THE EXPENSES INCURRED FOR IMPROVEMENT COST OF LAND, HE UPHELD THE ORDER OF AO. BEFO RE US, NO MATERIAL HAS BEEN PLACED BY THE ASSESSEE TO CONTROVERT THE FINDINGS OF LD.CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH T HE ORDER OF LD.CIT(A). THUS, THE GROUND OF THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED ON 06 TH DAY OF JULY, 2018. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 06 TH JULY, 2018. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(APPEALS), THANE. CIT-2, THANE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.