Shri Aumdevsinh P.Gohil, Bhavnagar V. The Income tax Officer,Ward-2(3), Bhavnagar

ITA 3463/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85795 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Source of fund; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M & SHRI ANIL CHA TURVEDI, A.M.) I.T. A. NO. 3463 /AHD/2010 (ASSESSM ENT YEAR: 2007-08) SHRI AUMDEVSINH P. GOHIL, DARBARGADH, VILLAGE VARTEJ, DIST: BHAVNAGAR. V/S THE I.T.O., WARD 2(3), BHAVNAGAR (APPELLANT) (RESPONDENT) PAN: AENPG6469E APPELLANT BY : SHRI TUSHAR P. HEMANI, A.R . RESPONDENT BY : SHRI NIMESH YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 11-03-2015 DATE OF PRONOUNCEMENT : 20 -03-2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-XX, AHMEDABAD DATED 12.10.2010 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN THE BUSINESS OF PLYING OF TRUCKS ON HIRE. ASSESSEE FILED ITS RETURN OF INC OME FOR A.Y. 2007-08 ON 24.07.2007 DECLARING TOTAL INCOME AT RS. 42,000/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ITA NO 3463 /AHD/2010 . A.Y. 2007-0 8 2 ORDER DATED 18.12.2009 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 12,14,780/-. AGGRIEVED BY THE ORDER OF A.O., ASSES SEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 12.10.2010 D ISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF L D. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUNDS;- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.11,50,000/- BEING ALLEGED UNEXPLAINE D CASH DEPOSITED IN BANK ACCOUNT. 2. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.21,000/- BEING INCOME EARNED FROM PL YING AND HIRING OF THE TRUCK U/S 44AE OF THE ACT. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.1,780/- BEING BANK INTEREST INCOME. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS W ITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIO NS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BR EACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 4. BEFORE US, AT THE OUTSET LD. A.R. SUBMITTED THAT HE DID NOT WISH TO PRESS GROUND NO. 2 & 3 AND THEREFORE THE SAME ARE DISMISS ED AS NOT PRESSED. GROUND NO. 1 IS WITH RESPECT TO ADDITION OF RS. 11, 50,000/-. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON THE BASIS OF AIR INFORMATION RECEIVED BY THE A.O. A.O NOTICED THAT A SSESSEE WAS HAVING A BANK ACCOUNT WITH STATE BANK OF INDIA, VARTEJ BRANC H AND ASSESSEE HAD DEPOSITED 11,50,000/- IN CASH IN THE AFORESAID ACCO UNT. THE ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE SOURCE OF DEPOSITS IN TH E AFORESAID ACCOUNT BEFORE A.O, IT WAS INTERALIA SUBMITTED THAT THE BANK ACCOU NT PERTAINED TO THAT OF PARTNERSHIP FIRM NAMED AUMDEVSINH PATHUBHA GOHIL A ND MANAHARSINH PATUBHA GOHIL IN WHICH THEIR HUF ARE PARTNERS, JOI NT ACCOUNT HOLDERS WERE THE KARTA OF HUF REPRESENTING THE FIRM AS PARTNER. IT WAS FURTHER SUBMITTED THAT IT WAS UNDER THE BONA FIDE BELIEF THAT SINCE T HE PURPOSE OF THE FIRM WAS ITA NO 3463 /AHD/2010 . A.Y. 2007-0 8 3 TO DO AGRICULTURE BUSINESS AND THEREFORE IT WAS NOT NECESSARY TO TAKE A PAN NUMBER. THE SUBMISSIONS OF THE ASSESSEE WAS NOT FOU ND ACCEPTABLE TO THE A.O IN VIEW OF THE FACT THAT THE FORM USED FOR OPEN ING THE ACCOUNT WAS THAT MEANT FOR INDIVIDUALS AND ASSESSEE HAD SUBMITTED HIS PAN NUMBER AND THE SAVING BANK ACCOUNT WAS OPENED IN THE JOINT NAMES O F SHRI AUMDEVSING PATHUBHA GOHIL JOINTLY WITH MANHERSING PATHUBHAI GO HIL. HE THEREFORE CONSIDERED THE DEPOSITS OF 11,50,000/- IN CASH IN T HE SAVING BANK ACCOUNT AS TO BE UNDISCLOSED INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE UPHELD THE ORDER OF A.O BY HOLDING AS UNDER:- 3.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER CAREFU LLY AS ALSO THE SUBMISSIONS MADE BY THE AR OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT HAS BEEN U NABLE TO EXPLAIN WHY THE ACCOUNT OF THE FIRM WAS OP ENED IN THE NAME OF INDIVIDUALS. THE BANKING REGULATION ACT PROHIBITS OPENING OF SAVINGS BANK ACCOUNT BY FI RMS. IN THIS CASE SINCE THE BANK ACCOUNT ALLEGEDLY WAS O PENED IN VIOLATION TO BANKING REGULATION THAT BY TH E ALLEGED FIRM. ONLY ON THE BASIS OF THE MERE FACT TH AT THE PARTNERS OF THE FIRM PASSED RESOLUTION, THE AUTHENTICITY OF WHICH IS QUESTIONABLE, IT CANNOT BE HELD THAT THE ACCOUNT BELONGED TO THE FIRM. IT IS NOT UNDERSTOOD WHY THE HUF OF THE APPELLANT WOULD HAVE SUCH LARGE AMOUNTS IN CASH WHEN THE APPELLANT WHO IS KARTA OF THE HUF HAS TWO BANK ACCOUNTS. IT IS BE YOND HUMAN PROBABILITY THAT THE PERSONS WHO JOIN UP AS A FIRM WANT TO OPEN A SAVINGS BANK ACCOUNT IN VIOLA TION OF BANKING REGULATIONS ONLY WITH A VIEW TO EAR N INTEREST ON THE BALANCE IN THE BANK ACCOUNT WOULD B E KEEPING LARGE AMOUNTS OF CASH IDLE AT HOME DESPIT E THEIR KARTA HAVING BANK ACCOUNTS. 3.3(I) IT IS ALSO SEEN THAT THE APPELLANT HAD TRIED TO EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNT B Y SAYING THAT THE SAME IS DEPOSITED BY THE PARTNERS OF THE F IRM AS CAPITAL INTRODUCED. THE EXAMINATION OF THE D ETAILS FILED SHOWS THAT THE CASH HAS NOT BEEN DEPOSITED BY THE PARTNERS AT ONE POINT OF TIME. IT HAS BEEN DEP OSITED ON SEVERAL OCCASIONS. IT IS NOT UNDERSTOOD WHY THE PARTNERS KEPT SUCH LARGE AMOUNTS OF CASH WHEN BANK ACCOUNTS ARE AVAILABLE TO THE KARTA OF HUF AS WELL AS TO THE OTHER MEMBERS OF THE HUF. IN THE CASE OF SUMATI DAYAL V. CIT REPORTED IN 214 ITR 801, THE SUPREME COURT HAS HELD THAT PREPONDERANCE OF PROBABILITY HAS TO BE CONSIDERED I N ORDER TO ASCERTAIN WHETHER THE CLAIMS MADE ARE GENUINE OR NOT. IN THAT CASE THE SUPREME COURT HELD THE BURDEN TO PROVE THAT THE AMOUNTS CREDITED IN TH E ACCOUNTS DID NOT REPRESENT INCOME. THE ASSESSEE I N THAT CASE HAD CLAIMED THAT SHE HAD THE DEPOSITS IN THE ACCOUNTS REPRESENTED WINNING FROM HORSE RACING. THE SUPREME COURT HELD THAT IT WAS BEYOND HUMAN PROBABI LITY THAT A PERSON WOULD CONTINUOUSLY BET ON WINNIN G HORSES ONLY. IN THE CASE OF THE DURGA PRASAD MORE VS. CIT REPORT ED IN 82 ITR 540 THE HON'BLE SUPREME COURT HELD THA T WHEN THE A ARGUED THAT THE PROPERTY HAD BEEN PURC HASED BY HIM AS A TRUSTEE OF THE TRUST CREATED BY H IS WIFE AND THE SUM OF RS.2 LAKHS WHICH WAS HER STRIDH AN HAD BEEN LYING WITH HIS FATHER-IN-LAW IN CASH WA S THE SOURCE OF FUNDS FOR THE TRUST, THE SAME WAS NOT ACC EPTABLE OBSERVING THAT 'SCIENCE HAS NOT YET INVENTED ANY TO TEST THE RELI ABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE T EST OF HUMAN PROBABILITIES. HUMAN MINDS MAY DIFFER AS T O THE RELIABILITY OF A PIECE OF EVIDENCE. BUT IN TH AT SPHERE, THE DECISION OF THE FINAL FINDING AUTHORITY IS MADE CONCLUSIVE BY LAW' 3.3(II)IT IS ALSO SEEN THAT SMALL AMOUNTS OF RS.19, 500/- HAVE BEEN INTRODUCED ON SEVERAL OCCASIONS STA TING THAT THE SAID AMOUNT WAS CASH LOAN RECEIVED FROM FA RMERS AND RELATIVES. NO DETAILS OF SALE OF CROPS ET C., WAS FURNISHED. THE CAPITAL ACCOUNT OF ALL THE PARTN ERS THE SIMILAR SHOWING CASH DEPOSITS OF SIMILAR AMOUNTS. ITA NO 3463 /AHD/2010 . A.Y. 2007-0 8 4 IT IS SEEN THAT THE PERMANENT ACCOUNT NUMBER OF AL LEGED FIRM AND THE RETURNS FILED CASE OF THE FIRM ARE ALL AFTER THE FACT THAT THE UNACCOUNTED DEPOSIT S IN THE BANK ACCOUNT WAS PROPOSED TO BE ADDED TO T HE APPELLANT'S INCOME, WAS CONVEYED BY THE ASSESSING O FFICER TO THE APPELLANT. IT IS ALSO SEEN THAT NO EVIDENCE IN SUPPORT OF THE AGRICULTURE INCOME HAS BEEN FURNISHED APART FROM COPIES OF THE EXTRACTS OF 7/12 OF THE LANDS OWNED B Y CERTAIN INDIVIDUALS. IT IS ALSO SEEN THAT MOST OF THE LANDS DO NOT HAVE ANY FACILITY FOR IRRIGATION. NO DETAILS OF SALES OF CROP HAVE BEEN FURNISHED BY THE APPELL ANT. 3.3(III) IN VIEW OF THE ABOVE, IT BECOMES CLEAR THA T THE CONTENTION OF THE APPELLANT THAT THE ACCOUNT DID NOT BELONG TO HIM BUT BELONGED TO A FIRM IN WHICH THE H UF OF THE APPELLANT AS WELL AS HIS RELATIVES WERE PARTNERS IS NOT CORRECT. ALL THE EVIDENCES CREATED ARE ALSO AFTER THE SHOW CAUSE NOTICE WAS ISSUED BY THE AO TO THE APPELLANT INDICATING THAT HE PROPOSED TO MAK E THE ADDITION OF RS. 11,50,000/- TO THE INCOME OF THE APPELLANT. IT IS ALSO CLEAR THAT THE AMOUNT BELONGS TO THE APPELLANT AND IS PROBABLY TO BE ASSESSED IN HIS HANDS. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT THE ACCOUNT WAS H ELD IN THE NAME OF THE ASSESSEE AND HIS BROTHER AND THEY WERE HOLDING THE ACCOUNT IN REPRESENTATIVE CAPACITY AS PARTNERS OF THE FIRM WHICH HAD 6 PARTNE RS BEING KARTA OF THE RESPECTIVE HUFS AND WAS CONSTITUTED WITH THE OBJECT IVE OF DOING AGRICULTURAL ACTIVITIES, BUYING AND SELLING OF LANDS ETC. HE THE REFORE SUBMITTED THAT CONSIDERING THE FACTS IN TOTALITY THAT NO ADDITION WITH RESPECT TO CASH DEPOSITS IN THE BANKING ACCOUNT OF THE FIRM BE MADE IN THE H ANDS OF THE ASSESSEE. WITHOUT PREJUDICE TO THE AFORESAID, THE LD. A.R. FU RTHER SUBMITTED THAT NO ADDITION COULD HAVE BEEN MADE MERELY ON THE BASIS O F DEPOSITS SIDE OF THE ACCOUNT AND WITHOUT HAVING REGARD TO THE CORRESPOND ING WITHDRAWALS. HE THEREFORE SUBMITTED THAT THE TELESCOPING EFFECT OF THE DEPOSITS AND WITHDRAWALS BE GIVEN. HE FURTHER POINTED TO THE COP Y OF THE BANK ACCOUNT AS APPEARING IN HIS BOOKS AND PLACED AT PAGE 20 TO 23 OF THE PAPER BOOK AND FROM THE AFORESAID STATEMENT, HE POINTED THAT THE A SSESSEE HAS WITHDRAWN THE CASH AND THE SAME HAVE ALSO BEEN DEPOSITED SUBSEQUE NTLY AND THUS THE ITA NO 3463 /AHD/2010 . A.Y. 2007-0 8 5 SOURCE OF DEPOSITS OF THE CASH IS THE WITHDRAWALS M ADE BY THE ASSESSEE. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A .O & LD. CIT(A) 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE CONFIRMING THE ADDITION MADE BY THE A.O HAS NOTED THAT ASSESSEE COULD NOT EXPLAIN AS TO WHY THE ACCOUNT IN THE NAME OF THE FIRM WAS OPENED IN THE NAME OF INDIVIDUALS WHEN THE SAME IS PROHIBITED BY BANKING REGULATION ACT. HE HAS FURTHER NOTED THA T THE DEPOSITS IN THE BANK STATED TO BE OF PARTNERS HAVE NOT BEEN DEPOSIT ED BY THE PARTNERS NOT AT ONE POINT OF TIME BUT HAVE BEEN DEPOSITED ON SEVERA L OCCASIONS AND FURTHER SMALL AMOUNTS OF RS. 19,500/- HAVE BEEN INTRODUCED ON SEVERAL OCCASIONS AND IT WAS STATED TO HAVE BEEN CASH LOAN RECEIVED F ROM FARMERS AND RELATIVES BUT NO DETAILS OF SALE OF CROP ETC WAS FURNISHED. HE HAS FURTHER NOTED THAT IN SUPPORT OF THE AGRICULTURAL INCOME, THE EXTRACT OF 7/12 OF THE LAND HAVE ALSO NOT BEEN FURNISHED AND THAT MOST OF THE LAND DO NOT HAVE ANY FACILITY FOR IRRIGATION. IN VIEW OF THE AFORESAID FACTS AND WHIC H COULD NOT BE CONTROVERTED BY ASSESSEE BY PLACING ANY CONTRARY MATERIAL ON REC ORD, WE FIND THAT THE ADDITION WAS RIGHTLY MADE BY THE A.O. AS FAR AS ASS ESSEES SUBMISSION OF GRANTING TELESCOPING EFFECT IS CONCERNED, ON THE PE RUSAL OF THE BANK ACCOUNT SUBMITTED BY THE ASSESSEE, IT IS SEEN THAT DURING T HE PERIOD BETWEEN 20.11.2006 TO 19.02.2007 THERE ARE ONLY CASH DEPOSI TS AND THE WITHDRAWAL OF RS. 5.5 LACS IN CASH HAS BEEN MADE ON 19.02.2007. S UBSEQUENTLY, IN THE MONTH OF MARCH 2007, I.E. AFTER THE DATE OF WITHDRA WAL THE AGGREGATE CASH DEPOSITED IS OF RS. 1,50,000/-. CONSIDERING THE SUB MISSION OF THE ASSESSEE ABOUT THE TELESCOPING OF THE WITHDRAWALS AND IN THE ABSENCE OF ANY CONTRARY MATERIAL, WE FIND THAT THE DEPOSITS OF RS. 1,50,000 /- COULD ONLY BE CONSIDERED TO BE OUT OF THE WITHDRAWALS MADE. WE THEREFORE DIR ECT THAT RS. 1,50,000/- BE ITA NO 3463 /AHD/2010 . A.Y. 2007-0 8 6 CONSIDERED TO BE OUT OF WITHDRAWALS AND THEREFORE B E TELESCOPED TO THE ADDITION MADE BY THE A.O. WE THUS DIRECT ACCORDINGL Y. IN THE RESULT, THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 03 - 2015. SD/- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD