ITO WD 3(3), THANE V. PRAVIN T SAWANT, THANE

ITA 3540/MUM/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0871 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMAND J
• Assessee Lawyers: R C JAIN
• Keywords: Accommodation entries
• Section: 143(3); 68; 148; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , , BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO.3540/MUM/2012 / ASSESSMENT YEAR 2005-06 THE ITO, WARD -3(3), 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN, DIST. THANE. / VS. SHRI PRAVIN T. SAWANT, B-62, S.P. BHAGAT SOCIETY, KOPAR ROAD, DOMBIVALI WEST. ! ./ ./ PAN/GIR NO. :ANTPS 3885K ( !# / APPELLANT ) .. ( $%!# / RESPONDENT ) C.O.NO.108/MUM/2013 (ARISING OUT OF ITA NO.3540/MUM/2012, A.Y.2005-06) SHRI PRAVIN T. SAWANT, B-62, S.P. BHAGAT SOCIETY, KOPAR ROAD, DOMBIVALI WEST. / VS. THE ITO, WARD -3(3), 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN, DIST. THANE. ! ./ ./ PAN/GIR NO. :ANTPS 3885K CROSS OBJECTOR .. APPELLANT IN APPEAL REVENUE BY SHRI PREMANDJ. ASSESSEE BY SHRI R.C. JAIN ' ( / DATE OF HEARING : 17/6/2015 ' ( / DATE OF PRONOUNCEMENT : 31/07/2015 / O R D E R PER G.S.PANNU, A.M: THE CAPTIONED APPEAL FILED BY THE REVENUE AND CRO SS OBJECTION FILED BY THE ASSESSEE ARE ARISING OUT OF AN ORDER PASSED BY LD. CIT(A)-1, THANE DATED 23/02/2012 FOR ASSESSMENT YEAR 2005-06 WITH REFERENCE TO THE ASSESSMENT ORDER . / ITA NO.3540/M/2012&CO108/M/13 / ASSESSMENT YEAR 2005-06 2 DATED 27.12.2010 PASSED IN TERMS OF SECTION 144 R.W .S. 147 OF THE INCOME TAX ACT, 1961(THE ACT). 2. FIRST, WE MAY TAKE UP THE APPEAL OF THE REVENUE WHEREIN THE GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETIN G THE ADDITION OF RS.52,85,430/- MADE BY THE AO UNDER SECTION 68 OF T HE ACT ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS AND INSTEAD HOLDING THA T ASSESSEE WAS MERELY A NAME LENDER EARNING NOMINAL COMMISSION INCOME. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT IN AN ASS ESSMENT FINALIZED UNDER SECTION 144 R.W.S. 147 OF THE ACT ON 27/12/2010 TH E AO TREATED THE CASH DEPOSITS MADE IN THE BANK ACCOUNT MAINTAINED WITH ICICI BANK BY THE ASSESSEE AS UNEXPLAINED. NOTABLY, THE SAID BANK AC COUNT WAS OPERATED BY THE ASSESSEE IN THE NAME OF HIS PROPRIETARY CONCERN M/ S. ARYAN ELECTRONICS. THUS, HE MADE AN ADDITION OF RS.52,85,430/- BY INVOKING S ECTION 68 OF THE ACT. 4. IN APPEAL BEFORE LD. CIT(A), ASSESSEE CONTENDE D THAT THE FACTS AND CIRCUMSTANCES OF THE CASE DID NOT MERIT AN ADDITIO N UNDER SECTION 68 OF THE ACT; AND, IT WAS CONTENDED THAT THE ADDITION BE RESTRICTED ONLY TO THE EXTENT OF COMMISSION EARNED BY HIM AS IMPUGNED DEPOSITS WERE MERELY RECEIVED IN THE COURSE OF GIVING ACCOMMODATION ENTRIES. THE LD. CI T(A) FOUND MERIT IN THE PLEA OF THE ASSESSEE AND DISAGREED WITH THE AO ON THE AS PECT OF INVOKING SECTION 68 OF THE ACT AND INSTEAD HE HELD THAT ASSESSEE WAS M ERELY A NAME LENDER AND ESTIMATED THE INCOME FROM SUCH NAME LENDING @0.50% OF THE TOTAL DEPOSIT IN THE BANK ACCOUNT. AGGRIEVED WITH SUCH DECISION, RE VENUE IS IN APPEAL BEFORE US. 5. AFTER HAVING HEARD THE RIVAL COUNSELS IN THE AB OVE BACKGROUND IT IS FOUND THAT IN A.Y 2006-07 SIMILAR SITUATION AROSE IN THE CASE OF THE ASSESSEE; AND, BEFORE THE AO, ASSESSEE CONTENDED THAT HE WAS ONLY A NAME LENDER . / ITA NO.3540/M/2012&CO108/M/13 / ASSESSMENT YEAR 2005-06 3 WHEREBY HE USED TO DEPOSIT MONIES RECEIVED FROM VAR IOUS BENEFICIARIES IN HIS BANK, AND IN TURN ISSUED CHEQUES IN FAVOUR OF SUCH BENEFICIARIES AND HE WAS EARNING COMMISSION @ 0.2%. THE AO FINALIZED THE AS SESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 14/12/2011 FOR ASSE SSMENT YEAR 2006-07, WHEREBY HE ACCEPTED THE POSITION OF THE ASSESSEE TH AT HE WAS MERELY A NAME LENDER EARNING COMMISSION INCOME. SO HOWEVER, THE AO DIFFERED WITH THE ESTIMATION OF COMMISSION INCOME AND INSTEAD OF 0.20 % DECLARED BY THE ASSESSEE HE ESTIMATED THE INCOME FROM NAME LENDIN G AT 0.50% OF THE TOTAL DEPOSITS. AT THE TIME OF HEARING BEFORE US IT WAS THE COMMON GROUND BETWEEN THE PARTIES THAT THE ASSESSMENT ORDER DATED 14/12/2 011 (SUPRA) PERTAINING TO ASSESSMENT YEAR 2006-07 CONTINUES TO HOLD THE FIELD . IN THIS BACKGROUND IN OUR VIEW LD. CIT(A) MADE NO MISTAKE IN ACCEPTING T HE POSITION OF THE ASSESSEE THAT HE WAS MERELY A NAME LENDER AND THEREFORE, THE ENTIRE CASH DEPOSITS FOUND IN HIS BANK ACCOUNT COULD NOT BE ASSESSED IN HIS H ANDS. INSTEAD LD. CIT(A) HAS ESTIMATED THE INCOME FROM THE NAME LENDING ACT IVITY AT 0.50% OF THE TOTAL DEPOSITS IN THE BANK ACCOUNT, WHICH IS PARI-MATERIA TO THE ACTION OF THE AO IN A.Y.2006-07 VIDE ORDER DATED 14/12/2011 (SUPRA). PE RTINENTLY, THE MODUS OPERANDI OF THE ASSESSEE TO EARN COMMISSION ON GIVI NG ACCOMMODATION ENTRIES STANDS ACCEPTED BY THE DEPARTMENT IN VIEW OF THE AS SESSMENT ORDER 2006-07 DATED 14/12/2011(SUPRA). 5.1 IN VIEW OF THE AFORESAID DISCUSSION WE FIND NO REASON TO INTERFERE WITH THE ULTIMATE CONCLUSION OF LD. CIT(A) WHICH WE HEREBY A FFIRM. THUS, THE REVENUE FAIL IN ITS APPEAL. 6. IN SO FAR AS THE CROSS OBJECTION BY THE ASSESSEE IS CONCERNED, THE SAME SEEKS TO CHALLENGE THE VALIDITY OF THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. . / ITA NO.3540/M/2012&CO108/M/13 / ASSESSMENT YEAR 2005-06 4 6.1 SINCE THE APPEAL OF THE REVENUE HAS BEEN DISMIS SED, THE GRIEVANCE OF THE ASSESSEE IN ITS CROSS OBJECTION IS RENDERED ACADEMI C AS THE NECESSARY RELIEF HAS ALREADY BEEN ALLOWED TO THE ASSESSEE. THUS, THE CR OSS OBJECTION RAISED BY THE ASSESSEE IS NOT ADJUDICATED FOR THE PRESENT AND IS TREATED AS INFRUCTUOUS. 7. RESULTANTLY, THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/2015 ' - ./ 31/07/2015 ' SD/- SD/- ( / AMIT SHUKLA ) ( . . / G.S.PANNU ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; . DATED 31/07/2015 ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. 34 $56 , ( 56 , / DR, ITAT, MUMBAI 6. 7 / GUARD FILE. / BY ORDER, %3 $ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS