ITO (Ward) 2(3), Panaji V. Sri Vinod Kumar Bhatia., Panaji

ITA 357/PAN/2013

• Counselvise Citation: 35724114 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 19-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR
• Assessee Lawyers: P Y VAIDYA
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NOS. 357&358/PNJ/2013 : (ASST. YEARS : 2006 - 07 & 2007 - 08) THE INCOME TAX OFFICER WARD 2(3), PANAJI (APPELLANT) VS. VINOD KUMAR BHATIA PROP : HOTEL LA V A L E NCIA, MORJIM BEACH, TEMBAWADA, MORJIM. PAN : AMLPB7914K (RESPONDENT) ASSESSEE BY : P.Y. VAIDYA , ADV. REVENUE BY : B. BARTHAKUR, DR DATE OF HEARING : 17/11/2014 DATE OF PRONOUNCEMENT : 06 / 0 1 /201 5 O R D E R PER P.K. BANSAL 1. BOTH THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF CIT(A) DT. 29.8.2013. IN A.Y 2006 - 07 THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 2) THE LD CIT(APPEALS) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE AS TO THE ENCASHMENT OF FOREIGN CURRENCY FROM FOREIGN CURRENCY DEALERS. OUT OF TOTAL CASH DEPOSITS OF RS.26,08,500/ - , ONLY RS.14,40,000/ - COULD BE PROVED WH ICH IS STATED TO BE THE MONEY TRANSFERRED FROM ASSESSEES FATHER SRI GURUCHARAN DAS BHATIA). THE ASSESSEE CLAIMED TO HAVE IN POSSESSION OF CERTIFICATES FROM FOREIGN CURRENCY DEALERS FOR ENCASHMENT OF US$. THE ASSESSEE ALSO AGREED TO THE FINALIZATION OF T AX LIABILITY AS PER LETTER DATED 7/12/2011 STATING THAT AS TO THE ABOVE DEPOSITS MADE BY ME, I HAVE GOT THE CERTIFICATES. HOWEVER, THE SAID CERTIFICATES ARE NOT TRACEABLE. ONCE I RECEIVE THE SAME, I WILL PRESENT THE SAME TO YOU. MEANTIME, YOU CAN FINAL ISE THE TAX LIABILITY IGNORING THE CERTIFICATES WHICH MAY BE SUBMITTED TO YOU IN DUE COURSE. THE LD. CIT(A) OUGHT NOT TO HAVE ACCEPTED THE ASSESSEES EXPLANATION THAT HE SOLD HIS BUSINESS IN FINLAND & HE DID NOT HAVE ANY INCOME IN INDIA WITHOUT CONSIDERI NG ANY EVIDENCE WHATSOEVER AND MERELY RELYING 2 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) THAT THE STATEMENT WAS RECORDED ON OATH DURING THE COURSE OF SURVEY. HENCE THE ADDITION OF RS.11,18,500/ - MAY BE CONFIRMED. WHEREAS IN A.Y 2007 - 08 THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS OF APP EAL : 2) THE LD CIT(APPEALS) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE AS TO THE BRINGING OF APPROX. US$ 25,196/ - TO INDIA FROM FINLAND WHICH IS EQUIVALENT TO RS.10,58,225/ - . THE LD. CIT(A) OUGHT NOT TO HAVE ACCEPTED THE ASSESSEES EXPLANATION THAT HE SOLD HIS BUSINESS IN FINLAND & HE DID NOT HAVE ANY INCOME IN INDIA WITHOUT CONSIDERING ANY EVIDENCE. HENCE THE ADDITION OF RS.10,58,225/ - MAY BE SUSTAINED. 3) THE LD CIT(APPEALS) FAILED TO APPRECIATE THE FACT THAT THE CREDIT - WORTHINESS OF LOAN CREDITOR SRI AMIT BHATIA (ELDER SON OF THE ASSESSEE) WHO GAVE LOAN TO THE ASSESSEE FROM HIS ICICI BANK A/C, COULD NOT BE ESTABLISHED BEYOND DOUBT. CREDIT - WORTHINESS BEING THE MAJOR INGREDIENT FOR ACCEPTING A LOAN TRANSACTION IS N OT SATISFIED, THOUGH THE IDENTITY & GENUINENESS IS PROVED. THE LD CIT(A) OUGHT NOT TO HAVE ACCEPTED THE CONTENTION OF SRI AMIT BHATIA THAT HE WAS DONG PART - TIME JOB IN FINLAND AND HELPING THE FAMILY BUSINESS WITHOUT ANY PROOF AND RELYING THAT THE STATEMEN T WAS RECORDED ON OATH. HENCE, THE ADDITION OF RS.6,02,500/ - MAY BE SUSTAINED. 4) THE LD CIT(APPEALS) FAILED TO APPRECIATE THE FACT THAT THE CREDIT - WORTHINESS OF LOAN CREDITOR SHRI ATUL KUMAR BHATIA (SECOND SON OF THE ASSESSEE) COULD NOT BE ESTABLISHED B EYOND DOUBT. HE WAS UNABLE TO EXPLAIN WHAT HE EARNED, HOW MUCH HE SAVED & HOW MUCH CURRENCY HE BROUGHT IN, IN WHICH BANK HE ENCASHED ETC. THE LD CIT(APPEALS) FAILED TO APPRECIATE THAT MERELY ROUTING AMOUNTS THROUGH BANKING CHANNELS WOULD NOT SUFFICE UNLE SS THE ORIGIN & SOURCES ARE EXPLAINED SATISFACTORILY. HENCE THE ADDITION OF RS.1,56,500/ - MAY BE SUSTAINED. 5) THE LD CIT(APPEALS) FAILED TO APPRECIATE THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE SUCH AS ORIGIN OF THE CHEQUES, BANK ON WHICH IT WAS DRAWN, SOURCES ETC., REGARDING ENCASHMENT OF TRAVELLERS CHEQUES TO THE EXTENT OF RS.5,40,000/ - . THE LD CIT(A) HOLDING THAT THE AO HAD NO CONTRADICTORY EVIDENCE TO DISPROV E ASSESSEES EXPLANATION, DELETED THE ADDITION, WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT DISCHARGED FULLY HIS ONUS OF PROVING THE ENCASHMENT OF TRAVELLERS CHEQUES TO THE EXTENT OF RS.5,40,000/ - . 2. IN A.Y 2006 - 07 WE NOTED THAT THE CIT(A) H AS SIMPLY DELETED THE ADDITION MADE BY THE AO AMOUNTING TO RS. 11,18,500/ - BY OBSERVING AS UNDER : 3 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) 4.1 THIS GROUND RELATES TO ADDITION OF RS.11,68,000/ - U/S 68 ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THIS ADDITION HAS TWO COMPONENTS, (I) RS.11,18,000/ - REGARDING WHICH ASSESSEE FURNISHED EXPLANATION AND RS. 50,000/ - ABOUT WHICH THE ASSESSEE REMAINED SILENT. 4.2 THE ADDITION OF RS. 11,18,000/ - IS ON THE SAME GROUNDS AS IS IN THE A.YR . 2007 - 08 AND THE SAME HAS BEEN DISCUSSED IN DETAILS IN THE APPELLATE ORDER FOR A.YR. 2007 - 08. I HAVE DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT. FOLLOWING MY OWN ORDER FOR A.YR. 2007 - 08 THE A.O IS DIRECTED TO DELETE THE ADDITION AMOUNTING TO RS.11,18 ,000/ - MADE U/S 68. BOTH THE PARTIES AGREED THAT SINCE THIS GROUND HAS ALSO ARISEN OUT OF ADDITION MADE FOR A.Y 2007 - 08, THEREFORE, THE APPEAL FOR A.Y 2007 - 08 BE DECIDED FIRST. ITA NO. 358/PNJ/2013 (A.Y 2007 - 08) : 3. GROUND NO. 1 IS GENERAL IN NATURE IN BOTH THE YEARS AND THEREFORE DOES NOT REQUIRE ANY ADJUDICATION. 4. GROUND NO. 2 IN A.Y 2007 - 08 RELATES TO DELETION OF THE ADDITION OF RS.10,58,225/ - . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, VINOD KUMAR BHATIA MIGRATED TO FINLAND IN THE YEA R 1975. HE WAS RUNNING READYMADE GARMENT FACTORY IN FINLAND. THE ASSESSEE AND HIS FAMILY CAME BACK TO INDIA AND INVESTED THE MONEY IN STARTING A BUSINESS AT GOA. HE STARTED CONSTRUCTION OF HOTEL LA VALENCIA AT MORJIM BEACH IN NORTH GOA. THE CONSTRUCTION WAS STARTED IN A.Y 2006 - 07 AND COMPLETED IN A.Y 2007 - 08. THE BUSINESS WAS STARTED IN NOVEMBER, 2006. A SURVEY WAS CONDUCTED IN THE HOTEL PREMISES OF THE ASSESSEE ON 12.2.2007. DURING THE COURSE OF THE SURVEY NO BOOKS OF ACCOUNTS WERE FOUND. THE ASSESS EE FILED BALANCE SHEET ALONGWITH THE RETURN OF INCOME FOR A.Y 2007 - 08. ON THE BASIS OF THE BALANCE SHEET THE FIXED ASSETS ACQUIRED BY THE ASSESSEE WERE TABULATED. ON THE BASIS OF THIS, THE AO NOTED AN INVESTMENT OF RS.35,14,967/ - DURING THE A.Y 2007 - 08. WHEN THE ASSESSEE WAS ASKED THE SOURCE, THE ASSESSEE EXPLAINED THAT HE HAD BEEN LIVING IN FINLAND SINCE 1975 4 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) AND CARRIED ON BUSINESS OF READYMADE GARMENTS AND GIFT ARTICLES IN HELSINKI. INVESTMENTS IN THE HOTEL BUSINESS IN GOA ARE OUT OF THE INCOME EARNE D FROM FINLAND. STATEMENT U/S 131 WAS RECORDED. VARIOUS QUESTIONS AND THE REPLY WHICH ARE RELEVANT ARE REPRODUCED AS UNDER : Q.NO.4 : WHAT IS THE TOTAL INVESTMENT MADE IN HOTEL BUSINESS? ANS. : TOTAL INVESTMENT MADE IN HOTEL BUSINESS IS TO THE EXTENT OF RS.52 LAKHS UPTO 31.03.2007. Q. NO. 5 : WHAT IS THE SOURCES OF FUNDS FOR THE ABOVE INVESTMENTS ? ANS. : THE MONEY HAS BEEN BROUGHT BY MY FAMILY FROM FINLAND TO THE EXTENT OF RS. 52 LAKH FROM FI NLAND, RS. 32 LAKHS FROM FINLAND, RS. 20 LAKHS FROM CENTRAL BANK ON 26.12.2006. Q.NO.6 : PLEASE LET ME KNOW THE MADE OF BRINGING THIS MONEY TO INDIA? ANS. : THESE AMOUNTS WERE BROUGHT TO INDIA BY TRANSFERS FROM BANKS. WHEN I WAS NOT ABLE TO COME TO INDIA MY FAMILY HAS BEEN BRINGING FROM TIME TO TIME. WE WERE ALLOWED TO BRING CASH UPTO US$10000 EACH TIME. REMAINING AMOUNTS WE WERE DEPOSITING THE MONEY TO NRO A/C IN ICICI BANK, DELHI (A/C NO. 000701084655). Q.NO.7 : WHEN A TRAVELER BRINGS CASH INTO INDIA, HE IS REQUIRED TO GIVE A DECLARATION TO THE CUSTOMS AUTHORITIES I.E. IN SHORT CALLED CDF (CURRENCY DECLARATION FORM). WHETHER ANY SUCH DECLARATION IS FURNISHED BY YOU? ANS. : AS PER THE INFORMATION GIVEN BY THE EMBASSY OF INDIA AT HELSINKI, FINLAND THAT THERE IS NO NEED TO FURNISH SUCH DECLARATION UPTO US$ 10000. ANY AMOUNT ABOVE THAT IS REQUIRED TO FURNISH WITH SUCH FORM (CDF). SINCE OUR AMOUNTS WERE ALWAYS LESS THAN US$10000, WE HAVE NEVER FURNISHED SUCH DECLARATION TO THE CUSTOMS, DEPARTMENTS. 5. THE AO NOTED THAT THE CASH DEPOSIT IN NRO ACCOUNT WITH ICICI BANK, NEW DELHI AND THE EXPLANATION GIVEN BY THE ASSESSEE AS UNDER : DATE AMOUNT (IN RS.) EXPLAINATION GIVEN BY THE ASSESSEE 1.05.2006 1,70,000 THE AMOUNT IS SHOWN AS LOAN FROM FATHER AND MOTHER. REFER TO NOTE 8 WHICH I WANT YOU TO TREAT AS CASH DEPOSITED IN NRO A/C. 5 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) 18.05.2006 45,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 29.05.2006 49,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 31.05.2006 49,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 08.06.2006 40,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 16.06.2006 30,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 15.07.2006 40,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 18.07.2006 45,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 24.07.2006 35,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 05.08.2006 40,000 THIS AMOUNT IS SHOWN AS LOAN FROM FATHER AND MOTHER. REFER TO NOTE 8 WHICH I WANT YOU TO TREAT AS CASH DEPOSITED IN NRO A/C. 24.08.2006 45,000 THIS AMOUNT IS TRANSFERRED FROM SYNDICATE BAN K CHEQUE NO. 746438 DEPOSITED 31.08.2006 49,500 THIS AMOUNT IS SHOWN AS LOAN FROM FATHER AND MOTHER. REFER TO NOTE 8 WHICH I WANT YOU TO TREAT AS CASH DEPOSITED IN NRO A/C 05.09.2006 49,500 THIS AMOUNT IS SHOWN AS LOAN FROM FATHER AND MOTHER. REFER TO NOTE 8 WHICH I WANT YOU TO TREAT AS CASH DEPOSITED IN NRO A/C 09.09.2006 49,000 THIS AMOUNT IS SHOWN AS LOAN FROM FATHER AND MOTHER. REFER TO NOTE 8 WHICH I WANT YOU TO TREAT AS CASH DEPOSITED IN NRO A/C 03.10.2006 45,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 29.12.2006 40,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 0 1.05.2006 49,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 3 1.08.2006 49,500 THIS AMOUNT IS CASH DEPOS ITED IN NRO A/C 05.09.2006 49,500 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 03.10.2006 45,000 THIS AMOUNT IS CASH DEPOSITED IN NRO A/C 09.10.2006 48,725 CHEQUE CREDITED AFTER DEDUCTING BANK CHARGES 29.12.2006 40,000 THIS AMOUNT IS CASH DEPOSITED IN NRO ACCOUNT TOTAL 11,03,225 THE AO NOTED THE ASSESSEES ARRIVAL DATE IN INDIA AND DEPARTURE DATE FROM INDIA AS UNDER : 6 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) ARRIVAL IN INDIA DEPARTURE FROM INDIA 08.02.2005 15.03.2005 28.04.2005 21.05.2005 15.06.2005 24.06.2005 30.08.2005 - THE AO CO - RELATED THE ASSESSEES ARRIVAL DATE IN INDIA WITH THE DATE OF THE DEPOSIT IN INDIA AND NOTED THAT THESE COULD NOT BE CO - RELATED. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE THAT IT IS ONLY THE REMAINDER AFTER SPENDING WHICH HAS BEEN DEPOSITED IN THE NRO ACCOUNT. IN THE AB SENCE OF ANY EVIDENCE BEING FURNISHED BY THE ASSESSEE FOR THE WITHDRAWAL OF THE AMOUNT FROM THE BANK IN FINLAND THE AO DID NOT ACCEPT THE VERSION OF THE ASSESSEE AND BY APPLYING RS. 42/ US $ THE AO CALCULATED THE EQUIVALENT INDIAN AMOUNT OF RS.10,58,225/ - AN D MADE THE ADDITION AS UNEXPLAINED CASH CREDIT. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A). CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : IN THIS CASE, THE ASSESSEE HAS EXPLAINED THE SOURCE OF HIS DEPOSIT, THAT HE SOLD HIS BUSINESS AND OTHER ASSETS IN FINLAND. THE A. O . HAS NOT DISPUTED THIS FACT. THE ASSESSEE HAD NO SOURCE OF I N COME IN INDIA, SO THERE WAS NO WAY, THE ASSESSEE COULD HAVE EARNED ANY UNACCOUNTED INCOME IN INDIA, WHICH WAS DEPOSITED IN BANK ACCOUNTS THERE IS NO AMBIGUITY IN ASSESS EES STATEMENT, RECORDED ON O ATH DURING THE COURSE OF SURVEY. THE ASSESSEE HAS ALSO NOT ADOPTED EVASIVE MEASU RES, WHILE GIVING HIS STATEMENT. THE A .O HAS ALSO NOT BROUGHT OUT ANY REASON STATING THAT WHAT ASSESSEE SAID IN HIS STATEMENT WAS NOT CORRECT . THE A .O IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, BECAUSE THE ASSESSEE HAD OTHER OPTIONS OF BRINGING IN FUNDS FROM FINLAND AS WELL A.O. HAS ALSO NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE ASSESSEE HAD SOME OTHER SOURCE OF INCOME IN INDIA. NO T EVEN AN IOTA OF AN EVIDENCE INDICATING GENERATION OF UNACCOUNTED INCOME WAS FOUND DURING THE COURSE OF SURVEY AT THE PREMISES OF THE ASSESSEE. THEREFORE, IN MY OPTION, THE A.O. HAS DERIVED THE CONCLUSION, NOT ON THE BASIS OF ANY EVIDENCE IN HIS POSSESSIO N, BUT ON THE BASIS OF GUESS - WORK AND SURMISES. IN VIEW OF THE FACTS OF THIS CASE AND STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY, IN MY OPTION CASH DEPOSITED AMOUNTING TO RS. 10,58,225/ - STANDS EXPLAINED AND A.O. IS DIRECTED TO DELETE T HI S ADDITION MADE U/S 68 OF THE I. T . ACT . THIS GROUND OF THE APPELLANT IS ALLOWED . 6. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. BEFORE US THE ASSESSEE HAS FILED FRESH EVIDENCE IN THE FORM OF BANK STATEMENT 7 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) SHOWING THAT THE ASSES SEE HAS DEPOSITED SALE PROCEEDS OF BUSINESS OF EURO 1,85,000 IN THE BANK NORDEA AND THE LAST INSTALMENT OF 26,851 EUROS WAS DEPOSITED ON 11.4.2007. IT WAS ALSO SUBMITTED BEFORE US THAT THE BANK STATEMENT SHOWS NAME OF THE ASSESSEES COMPANY AS OY KARHUSU ONTIE. THE LD. AR WAS FAIR ENOUGH TO SAY THAT THIS STATEMENT WAS NOT PRODUCED BEFORE THE AUTHORITIES BELOW. IT WAS ALSO SUBMITTED THAT THIS STATEMENT CONSISTS OF NOT ONLY THE DEPOSITS OUT OF THE SALE BUT ALSO THE TRANSFER OF THE MONEY FROM THE ACCOUNT O F OTHER FAMILY MEMBERS. THE LD. AR EVEN THOUGH SUBMITTED THIS BANK STATEMENT BUT HAS NOT GIVEN US ANY EQUIVALENT RUPEE SO THAT THE AMOUNT DEPOSITED BE THE ASSESSEE COULD BE CO - RELATED. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE P ARTIES SET ASIDE THE ORDER OF CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHOULD RE - EXAMINE THIS ISSUE AFRESH AFTER CONSIDERING THE EVIDENCE AS HAS BEEN FILED BY THE ASSESSEE BY WAY OF BANK STATEMENT DT. 10.3.2010 FOR THE PERIOD 1.4.2007 TO 30.4.2007 RELATING TO NORDEA BANK. IN CASE THE AO IS SATISFIED THAT THIS BANK STATEMENT CONSISTS OF SALE PROCEEDS OF ASSESSEES BUSINESS IN FINLAND OUT OF WHICH THE ASSESSEE HAS CLAIMED THAT HE HAS INVESTED FUNDS IN INDIA BY DEPOSI TING THOSE AMOUNTS IN HIS NRO ACCOUNT IN INDIA , THE ADDITION MAY BE DELETED. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 7. GROUND NO. 3 RELATES TO THE DELETION OF THE ADDITION OF RS.6,02,500/ - WHICH THE ASSESSEE RECEIVED AS LOAN FROM HIS ELDER SON, SHRI AMIT BHATIA. THE AO NOTED THAT SHRI AMIT BHATIA IN HIS STATEMENT STATED THAT HE HAS GIVEN LOAN OF RS. 7 LACS WHEREAS THE ACTUAL LOAN CREDITED AS PER THE BOOKS OF SHRI VINOD KUMAR BHATIA WAS RS.8,52,250/ - . IN VIEW OF THIS CONTRADICTORY STATEMEN T AND THE FACT THAT THERE ARE CASH DEPOSITS IN THE BANK STATEMENT OF THE ELDER SON OF THE ASSESSEE AMOUNTING TO RS.30,000/ - , RS. 49,000/ - , RS. 45,000/ - AND RS. 49,500/ - THE AO TREATED THE LOAN TO BE NON - GENUINE. WHEN THE MATTER WENT BEFORE CIT(A), CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 8 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) 8.2 WHAT HAS TO BE SEEN IN A LOAN TRANSACTION IS WHETHER THE IDENTITY OF THE LOAN CREDITOR IS ESTABLISHED, WHETHER TRANSACTION HAS BEEN GENUINE, AND THE CREDIT WORTHINESS OF THE LOAN CREDITOR. IN THIS CASE, THERE IS NO DOUBT ABOUT THE IDENTITY OF THE PERSON, THE LOAN HAS BEEN GIVEN THROUGH BANKING CHANNELS AND TH E REFORE, GENUINENESS OF THE TRANSACTION IS ALSO ESTABLISHED. NOW ONLY THING REMAINS, IS THE CREDIT - WORTHINESS OF THE C RE DITOR. HIS STATEMENT ON OATH WAS RECORDED. IN HIS STATEMENT HE EXPLAINED HIS SOURCE OF IN COME AS (I) PART TIME JOB IN F I NLAND, AND HELPING IN FAMILY BUSINESS. IN THIS CASE, MR. AMI T BHATIA HAS BEEN STAYING IN FINLAND SINCE CHILDHOOD AND IN HIS STATEMENT HE HAS EXPLAINED THE SOURCES AND CONFIRMED THE LOAN TRANSACTION. THE A.O. HAS NOT BEEN ABLE TO PROVE THAT STATEMENT GIVEN BY MR. AMITKUMAR BHATIA WAS FALSE. T H E ADDITION HAS BEEN MADE MERELY ON THE BASIS OF GUESS WORK AND SURMISES AND BUSINESS TO BE DELETED. THE A.O. IS DIRECT E D TO DELETE THE ADDITION OF RS.6,02,500/ - ACCORDINGLY. THIS GROUND OF THE APPELLANT IS ALLOWED. 8. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. SECTION 68 OF THE INCOME TAX ACT LAYS DOWN THE RULE OF EVIDENCE. IN VIEW OF THE PROVISIONS OF SEC. 68 THE ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY, CRE DIT - WORTHINESS OF THE PARTIES AND THE GENUINENESS TO THE TRANSACTION. IN THIS CASE, WE NOTED THAT THE LOAN HAS BEEN ADVANCED BY THE ELDER SON OF THE ASSESSEE WHOSE IDENTITY AND GENUINENESS OF THE TRANSACTION IS NOT UNDER DOUBT. THE ASSESSEE HAS EXPLAINED THE SOURCE OF HIS ELDER SON WHO WAS DOING PART - TIME JOB IN FINLAND AND HELPING FAMILY BUSINESS AND HE WAS STAYING IN FINLAND SINCE CHILDHOOD. HE EXPLAINED IN HIS STATEMENT ABOUT THE SOURCE BUT WE ALSO NOTED THAT THERE ARE CASH DEPOSITS IN THE ACCOUNT OF SHRI AMIT BHATIA TO THE EXTENT OF RS.30,000/ - , RS. 49,000/ - , RS. 45,000/ - AND RS. 49,500/ - AND OUT OF THIS, LOAN HAS BEEN ADVANCED TO THE ASSESSEE. THE SOURCE OF THESE CASH DEPOSITS IS NOT AVAILABLE AND EVEN THERE IS NO PLAUSIBLE EVIDENCE IN THIS REGARD . TO THAT EXTENT WE CONFIRM THE ADDITION OF RS.1,73,500/ - . THUS, THIS GROUND IS PARTLY ALLOWED. 9. GROUND NO. 4 RELATES TO DELETION OF THE ADDITION OF RS. 1,56,500/ - . FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE EXPLAINED THAT RS. 1,56,500/ - OUT OF AMOUNT DEPOSITED IN HIS BANK ACCOUNT IS LOAN FROM SHRI ATUL KUMAR BHATIA, SON OF THE ASSESSEE. THE AO RECORDED THE STATEMENT OF THE SON OF THE ASSESSEE AND 9 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) IT WAS NOTICED BY HIM THAT IN THE STATEMENT HE HAS STATED THAT HE HAS ADVANCED LOAN OF RS. 1.5 L ACS IN 2005 TO 2007 WHILE ACTUAL LOAN AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS RS.4,06,500/ - DURING THIS PERIOD AND REPAYMENT OF RS. 2.5 LACS. IT WAS ALSO NOTICED BY THE AO THAT SHRI ATUL KUMAR BHATIA DEPOSITED CASH OF RS. 49,000/ - , RS. 49,500/ - T O RS. 2,50,000/ - AND RS.48,000/ - ON VARIOUS DATES DURING THE IMPUGNED ASSESSMENT YEAR BY CLAIMING THAT THIS MONEY HAS BEEN BROUGHT BY HIM WHILE COMING FROM FINLAND. THE AO FOUND THAT THE DATE OF ARRIVAL OF SHRI ATUL KUMAR BHATIA IN INDIA DID NOT COINCIDE WITH THE DATE OF THE DEPOSIT. THE AO, THEREFORE, IN THE ABSENCE OF ANY CLINCHING EVIDENCE TOOK THE VIEW THAT THERE IS NO TRANSACTION BETWEEN THE ASSESSEE AND SHRI ATUL KUMAR BHATIA AND ADDED THE SUM OF RS. 1,56,500/ - AS UNEXPLAINED CASH CREDIT IN THE INCO ME OF THE ASSESSEE. WHEN THE MATTER WENT BEFORE CIT(A), CIT(A) DELETED THE ADDITION MERELY OBSERVED AS UNDER : FACTS OF THIS TRANSACTION IS IDENTICAL TO THAT OF AMITKUMAR BHATIA AND THEREFORE, AS IN AMITKUMAR BHATIAS CASE, THE A.O IS DIRECTED TO DELETE THE ADDITION OF RS.1,56,000/ - . 10. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. IN OUR OPINION, THE ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY, CREDIT WORTHINESS OF THE LOAN CREDITOR AND ALSO TO PROVE THE GENUINENESS OF THE TRANSACTION. WE NOTED THAT THE AO HAS RECORDED THE STATEMENT OF SHRI ATUL KUMAR BHATIA AND ALSO CAME TO THE CONCLUSION THAT CASH HAS BEEN DEPOSITED BY THE LOAN CREDI TOR, SON OF THE ASSESSEE, TO HIS BANK ACCOUNT IN INDIA CLAIMING THAT HE BROUGHT CASH INTO INDIA FROM FINLAND WHEN HE CAME TO INDIA. THE AO HAS VERIFIED THE DATE OF ARRIVAL OF THE SON OF THE ASSESSEE WHO HAS LOANED THE MONEY TO THE ASSESSEE AND FOUND THAT THE DATE S OF ARRIVAL ARE ENTIRELY DIFFERENT FROM THE DATES ON WHICH CASH HAS BEEN DEPOSITED BY THE LOAN CREDITOR I.E. SHRI ATUL KUMAR BHATIA, SON OF THE ASSESSEE IN HIS BANK ACCOUNT OUT OF WHICH THE LOAN HAS BEEN ADVANCED TO THE ASSESSEE. THE ONUS, IN 10 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) OUR OPINION, LIES ON THE ASSESSEE TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITOR. THE LD. AR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE CIT(A) BUT NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT ON RECORD TO DISP R OVE THE FINDING OF THE AO THAT THE DATES OF ARRIVAL OF THE LOAN CREDITOR IS DIFFERENT FROM THE DATES WHEN THE CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE LOAN CREDITOR. WE NOTED THAT THE CIT(A) WITHOUT VERIFYING AND DISPROVING THIS FINDING OF THE AO MERELY DELETED THE ADDITION. 11. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE CIT(A) WITH A DIRECTION THAT THE CIT(A) SHALL LOOK INTO THIS ISSUE AFRESH AND VERIFY WH ETHER THE DATES OF ARRIVAL OF ASSESSEES SON IN INDIA ARE DIFFERENT FROM THE DATES WHEN THE CASH HAS BEEN DEPOSITED AND WHETHER THE CASH HAS BEEN DEPOSITED IN THE ACCOUNT OF SHRI ATUL KUMAR BHATIA SUBSEQUENT TO THE DATE OF HIS ARRIVAL IN INDIA. IN CASE CI T(A) FINDS THAT THE AMOUNT HAS BEEN DEPOSITED SUBSEQUENT TO THE DATE OF ARRIVAL OF THE DEPONENT AND AMOUNT OF DEPOSIT CAN BE LINKED WITH THE ARRIVAL OF DEPONENT IN INDIA, THE ADDITION MAY BE DELETED AND NOT OTHERWISE. THUS, THIS GROUND IS ALLOWED FOR STAT ISTICAL PURPOSE. 12. G ROUND NO. 5 RELATES TO THE DELETION OF THE ADDITION OF RS. 5,40,000/ - WHICH ASSESSEE CLAIMED HE HAS DEPOSITED IN HIS BANK ACCOUNT AND OUT OF WHICH THE FOLLOWING AMOUNTS HAVE BEEN REALIZED AND CREDITED TO HIS BANK ACCOUNT NO. 00300150 8984 WITH ICICI BANK, MAPUSA. DATE DESCRIPTION AMOUNT 11 - 10 - 06 REALISED CH. 2875 RS. 1,00,000/ - 11 - 10 - 06 REALISED CH. 1638 RS. 1,80,000/ - 11 - 10 - 06 REALISED CH. 4516 RS. 1,10,000/ - 11 - 10 - 06 REALISED CH. 3411 RS. 1,00,000/ - 11 - 10 - 06 REALISED CH. 1521 RS. 50,000/ - TOTAL RS. 5,40,000/ - 11 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) THE AO ASKED ASSESSEE ABOUT THE SOURCE OF THE SAME. IN THE ABSENCE OF ANY EVIDENCE BEING PRODUCED BY THE ASSESSEE THAT THE SAID AMOUNTS REPRESENT THE REALIZATION OF THE TRAVELLERS CHEQUES, THE AO ADDED THE SAME AS THE INCOME OF THE ASSESSEE. WHEN THE MATTER WENT BEFORE CIT(A), CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : 10.2. IN THIS CASE, THE ASSESSEE HAD GIVEN WHATEVER EXPLANATION HE HAD. IF THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, FURTHER INVESTIGATION WAS OPEN TO HIM. THEY COULD HAVE WRITTEN TO THE BANK, IF HE REALLY WANTED TO KNOW THE SOURCE OF THESE CHEQUE PAYMENTS. IN MY OPINION, THE A.O. WAS NOT JUSTIFIED IN REJECTING THE EXPLANATION OF THE ASSESSEE WITHOUT H AVING ANY CONTRADICTORY EVIDENCE IN HIS POSSESSION. IN VIEW O F THE FACTS AND EXPLANATION OF THE ASSESSEE, THE A.O. IS DIRECTED TO DELETE THE ADDITION OF RS.5.40 LAKHS AND THIS G ROUND OF APPEAL OF THE APPELLANT IS ALLOWED . 13. WE HEARD THE RIVAL SUBMISSIONS AND CA REFULLY CONSIDERED THE SAME. IN OUR OPINION, IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, THE ONUS IS ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE THEREOF TO THE SATISFACTION OF THE AO. IN CASE HE FAILS TO DISCHARGE HIS ONUS, THE AO MAY CHARGE THE SAID SUM TO INCOME TAX AS INCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR. THE ASSESSEE NO DOUBT HAS SUBMITTED EXPLANATION ABOUT THE NATURE AND SOURCE OF THE DEPOSITS MADE IN HIS BANK ACCOUNT THAT IT REPRESENTS THE ENCASHMENT OF TRAVELLERS CHEQUES BUT HAS NOT SUBMITTED ANY EVIDENCE TO SUPPORT HIS VERSION. IN OUR OPINION, THE ONUS IS ON THE ASSESSEE TO SUBMIT THE NECESSARY EVIDENCE ALONGWITH THE EXPLANATION. INCOME TAX PROCEEDINGS ARE NOT CRIMINAL PROCEEDINGS WHERE ORAL STATEMENT OR EXPLANATION WITHOUT GIVING ANY EVIDENCE HA S AN EVIDENTIARY VALUE. IN INCOME TAX THE ONUS LIES ON THE ASSESSEE, IN CASE HE MAKES A CLAIM, TO ADDUCE THE EVIDENCE TO SUPPORT HIS EXPLANATION. WE DO NOT AGREE WITH CIT(A) THAT THE ONUS LIES O N THE AO TO WRITE TO THE BANK AND PROCURE THE EVIDENCE. IN CASE THE ASSESSEE WAS NOT HAVING THE EVIDENCE, THE ASSESSEE COULD HAVE VERY WELL ASKED THE AO TO VERIFY THE TRANSACTIONS WITH THE BANK; 12 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) WHETHER THE CREDIT GIVEN TO HIM IS OUT OF ENCASHMENT OF TRAV ELLERS CHEQUE OR NOT. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF CIT(A) WITH THE DIRECTION THAT CIT(A) SHALL RE - DECIDE THIS ISSUE IN ACCORDANCE WITH LAW AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY T O THE ASSESSEE TO ADDUCE EVIDENCE ON WHICH THE ASSESSEE MAY RELY. THUS, THIS GROUND STANDS ALLOWED FOR STATISTICAL PURPOSE. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE FOR A.Y 2007 - 08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 35 7 /PNJ/2013 (A.Y 200 6 - 0 7 ) : 15. THE ONLY ISSUE INVOLVED IN THE APPEAL FOR A.Y 2006 - 07 RELATES TO DELETION OF THE ADDITION OF RS. 11,18,500/ - . THE BRIEF FACTS OF THIS ADDITION ARE THAT THE ASSESSEE IS THE PROPRIETOR OF HOTEL LA VALENCIA, MORJIM BEACH, TEM BAWADA, MORJIM, GOA. THE AO NOTED THAT DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE MADE DEPOSIT OF RS. 26,08,500/ - ON DIFFERENT DATES WHICH CONSISTS OF RS. 14 LACS BY WAY OF TRANSFER FROM CENTRAL BANK AND RS. 50,000/ - AND RS.40,000/ - BY CHEQUE DEPOSITS. WHEN INQUIRE D , THE ASSESSEE SUBMITTED THAT SO FAR AS THE TRANSACTION S RELATING TO RS. 14 LACS (RS. 8 LACS + RS. 6 LACS ) WHICH RELATES TO THE TRANSFER FROM CENTRAL BANK AND RS. 40,000/ - DT. 28.3.2006 (WHICH HAS BEEN CREDITED THROUGH CHEQUE) ARE C ONCERNED, THEY RELATE TO THE MONEY TRANSFERRED FROM HIS FATHER, SHRI GURCHARAN DASS BHATIAS ACCOUNT FOR WHICH THE ASSESSEE ENCLOSED COPY OF THE ACCOUNTS OF HIS FATHER. IN RESPECT OF THE BALANCE AMOUNT OF RS. 11,18,500/ - , HE SUBMITTED THAT THE AMOUNT HAS BEEN ENCASHED BY HIM FROM VARIOUS FOREIGN CURRENCY DEALERS FOR WHICH GOT THE CERTIFICATES BUT THOSE CERTIFICATES ARE NOT TRACEABLE AND WHEN HE RECEIVES IT, HE WILL PRESENT THE SAME BEFORE THE AO. IN RESPECT OF THE SUM OF RS. 50,000/ - DEPOSITED THROUGH CHE QUE ON 18.10.2005 THE ASSESSEE COULD NOT GIVE ANY EXPLANATION. THE AO ALSO NOTED THAT THE ASSESSEE HAS MADE INVESTMENT OF RS. 20,93,108/ - DURING THE 13 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) FINANCIAL YEAR 2005 - 06. THE ASSESSEE SUBMITTED THAT WHILE RETURNING FROM FINLAND HE HAS BROUGHT CASH IN F OREIGN CURRENCY AND AFTER ENCASHING THE SAME, DEPOSITED THE SAME IN NRO ACCOUNT. THE AO WAS NOT SATISFIED, THEREFORE, HE MADE ADDITION OF RS. 11,18,500/ - AND RS. 50,000/ - . WHEN THE MATTER WENT BEFORE CIT(A), CIT(A) DELETED THE ADDITION BY OBSERVING AS UND ER : 4.1 THIS GRO UND RELATES TO ADDITION OF RS. 11,68,000/ - U/S 68 ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THIS ADDITION HAS TWO COMPONENTS, (I) RS. 11,18,000/ - REGARDING WHICH ASSESSEE FURNISHED EXPLANATION AND RS. 50,000/ - ABOUT WHICH THE ASSESSEE REMA INED SILENT . 4.2 THE ADDITION OF RS. 11,18,000/ - IS ON THE SAME GROUNDS AS IS IN THE A. YR. 2007 - 08 AND THE SAME HAS BEEN DISCUSSED IN DETAILS IN THE A P PELLATE ORDER FOR A. YR. 2007 - 08. I HAVE DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT. FOLLOWING MY OWN ORDER FOR A. YR. 2007 - 08, THE A.O IS DIRECTED TO DELETE THE ADDITION AMOUNTING TO RS.11,18,000/ - MADE U/S 68. 4.3 REGARDING BALANCE RS. 50,000/ - SINCE THE ASSESSEE DID NOT GIVE ANY EXPLANATION, THE ADDITION MADE BY THE A.O IS CONFIRMED. THE REVENUE HAS COME IN APPEAL BEFORE US IN RESPECT OF DELETION OF THE ADDITION OF RS. 11,18,500/ - . 16. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE CIT( A) HAS SIMPLY DELETED THE ADDITION ON THE BASIS OF THE A.Y 2007 - 08. IN OUR OPINION, EACH ASSESSMENT YEAR IS DIFFERENT. FACTS INVOLVED IN THIS YEAR RELATE TO THE CASH DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT WITH ICICI BANK, MAPUSA ON DIFFERENT DATES DURING FINANCIAL YEAR 2006 - 07 . WE NOTED THAT THE ADDITION WHICH HAS BEEN DELETED BY THE CIT(A) IN THE APPELLATE ORDER FOR A.Y 2007 - 08 RELATES TO A.Y 2007 - 08 THOUGH DETAIL DOES NOT RELATE TO A.Y 2006 - 07. DURING THE COURSE OF PROCEEDINGS FOR A.Y 2007 - 08 THE ASSESSEE HAS FILED COPY OF BANK STATEMENT DT. 10.3.2010 FOR THE PERIOD 1.4.2007 TO 30.4.2007 RELATING TO NORDEA BANK BUT NO COPY OF THE BANK STATEMENT WAS FILED FOR THE PERIOD RELEVANT TO THE IMPUGNED 14 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) ASSESSMENT YEAR. THE ASSESSEE IN THE IMPUGNED ASSE SSMENT YEAR RELIED BEFORE US ON PG. 28 - 32 OF THE PAPER BOOK WHICH CONSISTS OF COPY OF SALE DEED OF THE SALE OF PROPERTY IN FINLAND. THIS SALE DEED, WE NOTED, ALTHOUGH RELATES TO 1,85,000 EUROS BUT STATES THAT THE RESIDUAL TENURE IS TRANSFERRED TO THE PURC HASER ON 23.4.2007. THE SALE DEED DOES NOT SHOW THAT THE ASSESSEE HAS RECEIVED ANY MONEY DURING THE IMPUGNED ASSESSMENT YEAR. IT REFERS TO SALE BROCHURE DT. 14.3.2007, 16.6.2006, 2.4.2007. IF THE MONEY HAS ARISEN OUT OF SALE OF THE PROPERTY, THEN, THE S ALE DEED SHOULD RELATE TO THE IMPUGNED PERIOD. WE HAVE ALREADY SET ASIDE THE ORDER OF CIT(A) AND RESTORED THIS ISSUE TO THE FILE OF CIT(A) WITH THE DIRECTION THAT THIS GROUND BE DISPOSED OFF AFRESH AFTER APPRECIATING THE EVIDENCE RELATING TO THE IMPUGNED ASSESSMENT YEAR NOT RELATING TO A.Y 2007 - 08. EACH ASSESSMENT YEAR IS INDEPENDENT. THE DEPOSIT HAS BEEN MADE BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR AND, THEREFORE, THE SOURCE HAS TO BE EXPLAINED DURING THE IMPUGNED ASSESSMENT YEAR. THUS, THI S APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 17. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR A.Y 2006 - 07 IS ALLOWED FOR STATISTICAL PURPOSE WHEREAS THE APPEAL FOR A.Y 2007 - 08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 18. ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 /01/2015. S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI DATED : 0 6 /01/2015 *SSL* 15 ITA NOS. 357&358/PNJ/2013 (A.YS. : 2006 - 07 & 2007 - 08) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER