Shri Mehulkumar Bhikhabhai Patel, Gandhinagar V. The Income Tax Officer, Ward-3, Gandhinagar

ITA 3439/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94898 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Section: 68

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.3439/AHD/2014 / ASSTT.YEAR: 2008-2009] MEHULKUMAR BHIKHABHAI PATEL A/12, GOVERDHAN NAGAR SATI-NO-VADO, MANSA DIST: GANDHINAGAR PAN : APHPP 6065 N VS ITO, WARD - 3 GANDHINAGAR. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI ANIL KSHATRIYA, AR REVENUE BY : SHRI NARENDRA SINGH, SR.DR / DATE OF HEARING : 30/09/2015 / DATE OF PRONOUNCEMENT: 11/12/2015 *+/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF THE LD.CIT(A), GANDHINAGAR DATED 13.2.2012 PASSED FOR T HE ASSTT.YEAR 2008-09. 2. IT EMERGES OUT FROM THE RECORD THAT THIS APPEAL WAS PRESENTED BEFORE THE TRIBUNAL ON 22.12.2014, WHEREAS, THE IMP UGNED ORDER WAS PASSED BY THE LD.CIT(A) ON 13.2.2012. THE REGISTRY HAS POINTED THAT THE APPEAL IS TIME BARRED BY 915 DAYS AND THE ASSES SEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY. IN THE AFFID AVIT FILED ALONG WITH THE APPLICATION, IT HAS BEEN DEPOSED BY THE ASSESSEE TH AT THE IMPUGNED ORDER DATED 13.2.2012 WAS NEVER COMMUNICATED TO THE ASSESSEE. IT MIGHT HAVE BEEN COMMUNICATED TO THE PREVIOUS COUNSE L, WHO ITA NO.3439/AHD/2014 2 PROSECUTED THE APPEAL BEFORE THE CIT(A). THE ASSES SEE CAME TO KNOW ABOUT THE DISPOSAL OF HIS APPEAL WHEN HE RECEIVED N OTICE DATED 11.11.2014 SERVED UPON HIM ON 17.11.2014 FROM LD.CI T(A)-XV, AHMEDABAD PERTAINING TO A HEARING IN THE APPEAL ARI SEN OUT OF THE PENALTY PROCEEDINGS IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE ENQUIRED ABOUT THE STATUS OF HIS QUANTUM A PPEAL AND ONLY THEREON CAME TO KNOW ABOUT THE DISPOSAL OF HIS APPE AL. THE ASSESSEE APPLIED FOR CERTIFIED COPY OF THE ORDER AND IMMEDIA TELY FILED THE APPEAL BEFORE THE TRIBUNAL ON 22.12.2014 WITHOUT THERE BEI NG ANY FURTHER DELAY. THUS, THE ASSESSEE HAS CONTENDED THAT THERE IS NO DELAY IN FILING OF THE APPEAL, AS SUCH, AND IF ANY DELAY HAS OCCURR ED, THEN, IT WAS FOR THE NEGLIGENCE OF HIS COUNSEL, SHRI V.P. PATEL WHO NEVER COMMUNICATED TO HIM ABOUT THE ORDER PASSED BY THE LD.CIT(A) ON H IS QUANTUM APPEAL. THE ADVOCATE OF THE ASSESSEE HAS ADMITTED HIS NEGLI GENCE OF NOT COMMUNICATING THE RESULT OF THE APPEAL AND THE ORDE R. HE HAS ALSO FILED HIS AFFIDAVIT. ON THE STRENGTH OF THIS DOCUMENT, A PRAYER WAS MADE BY THE ASSESSEE TO CONDONE THE DELAY. IN ORDER TO ASC ERTAIN THE CLAIM OF THE ASSESSEE THAT THE IMPUGNED ORDER WAS NOT SERVED UPON THE ASSESSEE, CASE RECORD AND REPORT FROM THE OFFICE OF THE CIT(A) IS CALLED FOR. THE LD.CIT(A), GANDHINAGAR HAS WRITTEN A LETT ER TO THE JOINT COMMISSIONER, AHMEDABAD WHO HAS BEEN REPRESENTING T HE CASE OF THE DEPARTMENT BEFORE ITAT. COPIES OF THE DISPATCH REG ISTER AND THE ORDER SHEET ENTRIES HAVE ALSO BEEN ANNEXED WITH THIS LETT ER. THIS LETTER READS AS UNDER: TO, THE JT. COMMISSIONER OF INCOME-TAX ITAT-2(2) AHMEDABAD. SUB: ITA NO.3439/A/2014-MEHULKUMAR BHIKHABHAI PA TEL, GANDHINAGAR REF: YOUR OFFICE LETTER NO. JCIT(ITAT) 2(2) VB' B ENCH/15-16 DATED 25/6/2015 ITA NO.3439/AHD/2014 3 IN REFERENCE TO THE ABOVE, THE POINTWISE INFORMATIO N IS AS UNDER: 1. ON VERIFICATION OF THE TAPAL REGISTER, IT IS SE EN THAT THE ORDER WAS SERVED TO THE APPELLANT AT MEHSANA ADDRESS AND IT W ?S-DESPATCHED THROUGH SPEED POST. 2. THE ORDER WAS FINALIZED BY MY PREDECESSOR ON 13/ 2/2012 AND ON FURTHER PERUSAL OF THE ORDER IT IS NOTICED THAT SHR I V. P. PATEL, ADVOCATE ATTENDED ON 8/8/2011 AND 12/1/2012 AND LASTLY THE A PPEAL WAS ADJOURNED TO 7/2/2012 AND ON THAT DAY NO ONE ATTEND ED. FROM FORM NO.35 IT IS SEEN THAT APPELLANT HAS SHOWN THE ADDRE SS AT A-2, GOVARDHAN NAGAR, SATI NO VAD, AT MANSA, DIST. GANDH INAGAR AND IN THE LAST COLUMN OF FORM NO.35 I.E. ADDRESS TO WHICH NOT ICES MAY BE SENT TO THE APPELLANT THE ADDRESS IS SHOWN AS V. P. PATEL & CO (ADVOCATE), A- 102, AKSHARDHAM, UNDERBRIDGE, SHAHIBAUG, AHMEDABAD- 4. FURTHER, NO EVIDENCE IS FOUND ON RECORD AS TO WHY T HIS ADDRESS OF THE APPELLANT WAS CHANGED BY MY PREDECESSOR IN THE APPE LLANT ORDER. IT IS PRESUMED THAT THIS MAY BE GIVEN BY THE AR OF THE A PPELLANT SHRI V.P. PATEL DURING THE COURSE OF APPELLATE PROCEEDINGS OT HERWISE, NO REASON IS FOUND FOR THE CHANGE OF ADDRESS FROM GANDHINAGAR TO MEHSANA. IT IS ALSO A POINT TO BE MENTIONED HERE THAT APPELL ANT VIDE APPLICATION DATED 24/11/2014 ALONG WITH A CHALLAN OF RS,200/- R EQUESTED FOR A CERTIFIED COPY OF THE ORDER WHICH WAS DULY PROVIDED TO THE APPELLANT. A COPY OF THE APPEAL FOLDER INCLUDING COPY OF ORDERSH EET IS ENCLOSED FOR FURTHER NECESSARY ACTION. END: AS ABOVE. SD/- SHANKER LAI MEENA COMMISSIONER OF INCOME-TAX (APPEALS), GANDHINAGAR 3. WE FIND THAT IN FORM NO.35 THE ASSESSEE HAS GIVE N HIS ADDRESS AS UNDER: NAME AND ADDRESS OF THE APPELLANT SHRI MEHULKUMAR B HIKHABHAI PATEL 1-2, GOVERDHAN NAGAR, SATI NO VAD, AT-MANSA, DIST. GANDHINAGAR. ADDRESS TOW HICH NOTICES MAY BE SENT TO THE APPELLANT. V.P. PATEL & CO. ADVOCATE), P-25626364, ~2728, A-102, AKSHARDAHM, UNDERBRIDGE, SHAHIBAUG, ABAD-4. ITA NO.3439/AHD/2014 4 4. COPY OF THE POSTAL ACKNOWLEDGEMENT HAS ALSO BEEN PLACED ON RECORD. THE ORDER WAS ISSUED TO THE ASSESSEE ON TH E ADDRESS VIZ. SHRI MEHULKUMAR B. PATEL, 25, PRABHU NAGAR SOCIETY, URBA N BANK ROAD, MEHSANA. THE LD.COMMISSIONER IN HIS LETTER DATED 9 .7.2015 HAS OBSERVED THAT IT IS NOT ASCERTAINABLE HOW THIS ADDR ESS OF THE ASSESSEE GOT CHANGED IN THE ORDER OF THE CIT(A). IT MIGHT H AVE BEEN COMMUNICATED BY THE ASSESSEE, BUT IN FORM NO.35, WH ERE THE NOTICE WAS TO BE COMMUNICATED IS ALTOGETHER DIFFERENT. ON DUE CONSIDERATION OF THESE FACTS AND CIRCUMSTANCES, WE FIND THAT THERE I S SOME COMMUNICATION GAP IN THE SERVICE OF IMPUGNED ORDER UPON THE ASSESSEE. IN THE TITLE OF THE IMPUGNED ORDER, ADDR ESS OF THE ASSESSEE IS BEING MENTIONED AS SHRI MEHULKUMAR B. PATEL, 25, P RABHU NAGAR SOCIETY, URBAN BANK ROAD, MEHSANA WHEREAS IN THE F ORM APPENDED WITH THE APPEAL, THE ASSESSEE HAS GIVEN HIS ADDRESS AS A/12, GOVERDHAN NAGAR, SATI-NO-VADO AT MANSA, DIST. GANDH INAGAR WHICH IS A DIFFERENT ADDRESS. IN THE ASSESSMENT ORDER, ADDR ESS OF THE ASSESSEE IS ALSO OF DISTRICT GANDHINAGAR. THUS, EITHER THE RE MIGHT HAVE BEEN SOME REQUESTS AT THE END OF THE ASSESSEE TO CHANGE THE ADDRESS FOR COMMUNICATION OR UNDER SOME MISCONCEPTION IN THE OR DER OF THE CIT(A), ADDRESS HAS BEEN CHANGED. ONE FACT IS CLEAR THAT N O ASSESSEE WOULD MAKE THE APPEAL TIME BARRED INTENTIONALLY BECAUSE T HE APPEAL HAS BEEN DISMISSED BY THE LD.CIT(A) AND THE DEMAND RAISED BY THE AO HAS BEEN CONFIRMED. BY MAKING THE APPEAL BARRED NO FRUITFUL PURPOSE WILL BE SERVED, RATHER, IT WILL GO AGAINST THE INTEREST OF THE ASSESSEE. THEREFORE, WE CONDONE THE DELAY AND PROCEED TO DECI DE THE APPEAL ON MERIT. 5. ON MERIT, THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL, BUT ITS GRIEVANCE REVOLVES AROUND TWO ISSUES WHEREBY HE HAS CHALLENGED CONFIRMATION OF ADDITION OF RS.17,55,000/- AND ADDE D BY THE AO WITH ITA NO.3439/AHD/2014 5 THE AID OF SECTION 68 AND ADDITION OF RS.2,92,500/- ON ACCOUNT OF LOANS AND ADVANCES. 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 23.03.2010 DECLARING TOTAL INCOME AT RS.1 ,03,380/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 19.8. 2010. THE LD.AO ISSUED A SHOW CAUSE NOTICE ON 6.12.2010 INVITING EX PLANATION OF THE ASSESSEE ABOUT THE CASH DEPOSIT OF RS.22,82,850/- I N HIS BANK ACCOUNT WITH ICICI BANK DURING THE ACCOUNTING PERIOD RELEVA NT TO THE ASSESSMENT YEAR. IN RESPONSE TO THE QUERY OF THE AO, IT WAS CONTENDED BY THE ASSESSEE VIDE LETTER DATED 21.1.20 10 THAT HE HAD ENTERED INTO SHARE TRANSACTIONS, WHERE HE HAS SUFFE RED LOSS AND HE HAD TO MAKE PAYMENT TO SUB-BROKER SAM GLOBAL SECURITI ES LTD. THEREFORE, HE HAD TAKEN LOAN FROM DIFFERENT PERSONS AND MADE P AYMENTS. THE ASSESSEE HAS SUBMITTED LIST OF 90 PERSONS, FROM WHO M HE HAS ALLEGED RECEIPT OF RS.19,500/- EACH. THE LD.AO HAS REJECT ED THE EXPLANATION OF THE ASSESSEE AND MADE BOTH ADDITIONS BY OBSERVING A S UNDER: TO KNOW THE CREDITABILITY OF DEPOSITORS RANDOMLY 6 PERSONS WERE CALLED FOR AND THEIR STATEMENT WERE RECORDED. IN THE STATEMENT THEY HAVE-REPORTED .THAT THE AMOUNT OF RS.19,500/- HAS BEEN GIVEN TO THE ASSESSEE IN CASH. HOWEVER, IT IS PERTINENT TO NOTE THAT DEPOSITOR'S SIGNATURE IN THE CONFIRMATIO N GIVEN AND THE SIGNATURE OBTAINED DURING / THE COURSE OF RECORDING STATEMENT DOES NOT TALLY IN SOME CASES. THIS CLEARLY PROVES T HAT THE PERSON WHO HAS SIGNED THIS CONFIRMATION LETTER PERSONS WHO HAS ATTENDED THE OFFICE OF THE UNDERSIGNED MIGHT SAME. SIMPLY, S UBMISSION OF FURNISHING OF CONFIRMATION LETTER IS NOT DOCUMENTAR Y PROOF OF ADVANCE MADE. IT IS SEEN THAT IN NONE OF THE CASES, THE ASSESSEE HAS FURNISHED PROOF REGARDING FURNISHING OF RETURN OF INCOME BY ANY OF THE DEPOSITOR. 9. THE ASSEESSEE HAS CREATED A BEAUTIFUL STORY TO E XPLAIN THE INVESTMENT ETC. I HAVE CAREFULLY GONE THROUGH THE A FORESAID REPLY. IT IS PRACTICALLY IMPOSSIBLE TO BELIEVE WHATEVER HA S BEEN STATED IN THE SAID LETTER. A PERSON HAVING VERY NEGLIGIBLE RE TURN INCOME HAS ENTERED INTO TRANSACTIONS OF LAKHS OF RUPEES IS NOT BELIEVABLE AT ITA NO.3439/AHD/2014 6 ALL. THE CASH FLOW STATEMENT HAS BEEN PREPARED AFTE R THOUGHT AND DOES NOT GIVE CLEAR AND TRUE PICTURE OF CASH DEPOSI TED IN DANK. AS SUCH, I DON'T AGREE WITH THE SUBMISSIONS MADE BY TH E ASSESSEE IN LETTER DATED 'NIL'. THE EXPLANATION FURNISHED BY TH E ASSESSEE IS NOT CONVINCING AT ALL. ACCORDINGLY CASH DEPOSIT IS TREATED AS UN- EXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE I. T. ACT. 1961 AND SUM SO CREDITED BE CHARGED TO INCOME TAX FOR PREVIOUS YEAR 1.4.2007 TO 31.3.2008. (ADDITION OF RS. 17,55,000) ISSUE NOTICE U/S. 271(L)(C) OF I.T.ACT FOR CONCEALI NG OR FURNISHING INACCURATE PARTICULAR OF INCOME. 10. IT IS PERTINENT TO -NOTE THAT THE ASSESSEE HAS GIVEN ADVANCE OF RS.2,92,500/- WHICH HAVE BEEN RECEIVED BACK. IT IS SURPRISE TO NOTE THAT ASSESSEE HAS NO INCOME LIABLE TO TAX AND HOW AND FROM WHAT -SOURCE HE HAS GIVEN ADVANCE OF RS.2,92,500/-. THE SAME IS ADDED IN THE TOTAL INCOME OF THE ASSESSEE. (ADDITION OF RS.2,92,500/-) 7. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE H AS FILED LIST OF CREDITORS ALONGWITH THEIR COMPLETE ADDRESSES AND IN ORDER TO PROVE THEIR IDENTITY, THEIR COPY OF PASSPORT, DRIVING LICENCE A ND PERMANENT ACCOUNT NUMBERS WITH THE INCOME TAX DEPARTMENT WERE PRODUCE D. THE PERSONS WHO APPEARED BEFORE THE AO WERE HAVING THEIR DRIVIN G LICENSES ALONG WITH THEM. THEY HAVE CONFIRMED THE TRANSACTION IN FAVOUR OF THE ASSESSEE. THE LD.AO HAS REJECTED THE EXPLANATION O F THE ASSESSEE SIMPLY FOR THE REASONS THAT SIGNATURES ON THE CONFI RMATION AS WELL AS PUT AT THE END OF THE STATEMENT BEFORE THE AO DID N OT TALLY. ACCORDING THE LD.COUNSEL FOR THE ASSESSEE, THE LD.AO WAS NOT A HAND-WRITING EXPERT, MORE SO, WHEN THE CREDITORS APPEARED ALONG WITH THEIR ID-PROOFS, IT IS NOT PROPER AT THE END OF THE AO TO MERELY DIS BELIEVE THEIR IDENTITY WITHOUT VERIFICATION. THE STATEMENT WAS ALSO RECOR DED BY THE STAFF MEMBER IN FILL-IN-BLANKS PROFORMA . NO SERIOUS GROSS-EXAMINATION WAS BEING MADE BY THE AO, BECAUSE, THE LD.AO WAS SHORT OF TIME. ITA NO.3439/AHD/2014 7 8. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE AO. 9. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF T HE AO SATISFACTORY, THEN THE SUM SO CREDITED IN THE ACCOUNTS MAY BE TRE ATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE HONBLE G UJARAT HIGH COURT IN THE CASE OF CIT VS. RAJSHIBHAI MERAMANBHAI ODEDARA, 35 TAXMANN.COM 603 (GUJ) HAS HELD THAT WHEN CERTAIN CASH CREDITS A RE FOUND IN BANK ACCOUNT, BUT NOT SHOWN IN THE BOOKS OF ACCOUNTS, TH EY CAN BE SUBJECT MATTER OF INQUIRY FOR ADDITION UNDER SECTION 68 OF THE ACT. NOW QUESTION IS WHETHER THE ASSESSEE HAS DISCHARGED HIS ONUS ABO UT THE NATURE AND SOURCE OF DEPOSITS IN THE BANK ACCOUNT. THE ASSESS EE HAS ALLEGED THAT HE TOOK LOAN FROM A LARGE NUMBER OF PERSONS WHO HAV E CONFIRMED THE ADVANCEMENT OF LOAN. THE AO HAS CALLED UPON ONLY S IX-SEVEN PERSONS FOR TEST-CHECK BASIS. SHE HAS RECORDED STATEMENTS OF SIX PERSONS. SHE HAS NOT POINTED ANY LACUNA IN THEIR STATEMENT OR SHE COULD NOT DIG OUT ANY CIRCUMSTANTIAL EVIDENCE POINTING OUT ABOUT THE INCAPACITY OF THOSE PERSONS WHO ADVANCED MONEY. THE REASONS ASSIGNED B Y THE AO THAT SOME OF THE PERSONS SIGNATURES DID NOT TALLY WITH THE SIGNATURES ON THE CONFIRMATIONS. TO OUR MIND, THIS CANNOT BE REASON SOLELY FOR REJECTING AN EXPLANATION OF THE ASSESSEE. THIS CAN BE A SUSP ICION TO PROBE THE ISSUE FURTHER. BUT THE LD.AO DID NOT MAKE FURTHER INQUIRY. BECAUSE INQUIRY WAS STARTED AT FAG END OF THE DECEMBER I.E. THE NOTICE WAS ISSUED ON 6.12.2010. THE ASSESSEE GAVE REPLY ON 21 .12.2010 AND THE ASSESSMENT ORDER WAS TO BE PASSED BEFORE 31.12.2010 . DUE TO THE PAUCITY OF TIME, THELD.AO HAS JUST POINTED OUT A LA ME EXCUSE OF NOT BELIEVING THE EXPLANATION OF THE ASSESSEE. MORE SO , IN SUBSEQUENT YEARS ITA NO.3439/AHD/2014 8 THESE AMOUNTS WERE REPAID BY THE ASSESSEE AS ALLEGE D BY LD.COUNSELF FOR THE ASSESSEE. 10. SIMILAR CIRCUMSTANCES ARE WITH REGARD TO SECOND GROUND. NO REASON HAS BEEN ASSIGNED FOR DISBELIEVING THE VERSI ON PUTFORTH BY THE ASSESSEE. IN VIEW OF THE ABOVE, WE ALLOW THE APPEA L OF THE ASSESSEE AND DELETE ADDITIONS. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER