Manish Mali, Bhilwara V. ITO, Ward-5, Bhilwara

ITA 372/JODH/2019

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8281 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-01-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AVDHESH SINGHVI
• Keywords: Gift; Salary income; Competent authority; Onus to prove
• Section: 147; 68; 148; 271(1)(c); 142(1); 69A; 139(1); 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No.372/Jodh/2019 Assessment Year: 2011-12 Manish Mali 31/306, Shivaji Mohalla, Nehru Road, Bhilwara. [PAN:AWCPM 2698A] (Appellant) Vs. ITO, Ward-5, Bhilwara. (Respondent) Appellant by Sh. Avdhesh Singhvi, C.A. Respondent by Ms. Nidhi Nair, Sr. DR Date of Hearing 22.01.2024 Date of Pronouncement 13.03.2024 ORDER Per:DR. S. Seethalakshmi, JM: This appeal filed by assessee is arising out of the order of the Learned Commissioner of Income Tax (Appeals), Ajmer dated 19.08.2019 [here in after “ld.CIT(A)”] for assessment year 2011-12, which in turn arise from the order dated 22.09.2018 passed under section 147/143(3) of the Income Tax Act, by the ITO, Ward-5, Bhilwara. 2. In this appeal, the assessee has raised following grounds: - I.T.A. No.372/Jodh/2019 Manish Mali 2 “ 1. On the facts and in the circumstances of the case and in law, the Hon’ble CIT(A) erred in confirming the addition of Rs. 14,72,754/- u/s 69A of the IT Act, 1961 as made by the Ld. AO.” 3. Brief fact of the case is that the assessee is an individual and filed income tax return under notice issued u/s 148 of the Act. Since, there were reasons to believe that there is escapement of income of Rs. 13,85,200/- according to the provisions of section 147 of the IT Act, 1961, and, therefore, after recording reasons and obtaining approval from the Competent Authority, Notice u/s 148 was issued on 26.03.2018 which was duly served on 26.03.2018. In compliance to the Notice issued u/s 148 of the Income-tax Act, 1961, e-return of income declaring total income of Rs. 60,000/- was filed on 31.10.2018. Notice u/s 143(2) of the Income-tax Act, 1961 was issued on 12.11.2018 and was duly served to the assessee. Notice u/s 142(1) along with questionnaire was issued on 25.10.2018, fixing the case for hearing on 31.10.2018. None attended nor any reply was filed. Notice u/s 142(1) was again issued on 12.11.2018 fixing the case for hearing on 19.11.2018. In response to the said Notice issued, Shri K.C. Tater, CA & AR of the assessee attended the hearing and filed part reply to the information required through above Notice. Notices u/s 142(1) was issued on 24.11.2018, 01.12.2018, 11.12.2018 & 17.12.2018 fixing the case for hearing on 26.11.2018, 04.12.2018, 31.12.2018 & 19.12.2018 respectively for submitting remaining information/details, but no compliance was made to the I.T.A. No.372/Jodh/2019 Manish Mali 3 above Notices by the assessee. Penalty proceedings u/s 271(1)(b) of the Act is being initiated separately for non-compliance of the above notices issued u/s 142(1) of the Act. During the year under consideration, the assessee has shown income under the head “ Income from Salary”. The assessee has also shown loss of Rs. (-)17,94,549/- under the head short term capital gain. While the ld. AO has made addition of Rs. 14,72,754/-, considering as the unexplained money under section 69A of the Income Tax Act. 4. Aggrieved from the order of the assessing officer, assessee preferred an appeal before the ld. CIT(A). A propos to the grounds of the appeal so raised the relevant finding of the ld. CIT(A) is reiterated here in below:- “ 4.3 I have gone through the assessment order, statement of facts, grounds of appeal, written submission, remand report and rejoinder carefully. It is seen that either during the course of assessment proceedings or appellate proceedings, the appellant had not been able to explain satisfactorily, the cash/ credits of Rs. 14,72,754/- appearing in his bank account. The appellant has tried to explain the source of cash deposit/ credit entries as out of past savings, gifts etc., but no documentary evidences has been furnished to prove the submission. The copy of balance sheet and capital account are self serving document which are not supported with any material. Therefore, the submission of the appellant is not found to be acceptable. Accordingly, the addition of Rs. 14,72,754/- made by the AO is hereby confirmed. 5.0 The 2nd ground of appeal is as under: "2. The said Income Tax Officer has further erred in initiating proceedings w/s 271B,271(1)(b) And 271(1)(c) of The IT. Act. There is no default of the assessee. The I.T.A. No.372/Jodh/2019 Manish Mali 4 assessee has made compliances of notices and not concealed any Income. Therefore, initiation of proceeding s u/s 271B, 271(1)(b) and 271(1)(c) is quite it legal and should be dropped." 5.1 No penalty u/s 271B, 271(1)(b) and 271(1)(c) has been levied by the AO. This ground of appeal is premature in nature, hence the ground is dismissed. 6.0 In the result, the appeal is dismissed.” 5. As the assessee not received any favour from the appeal filed before ld. CIT(A). The present appeal filed against the said order of the ld. ld. CIT(A) before this tribunal on the grounds as reiterated in para 2 above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below:- “1.1 The appellant is an individual, having salary income and income/loss from capital gain. For the year under consideration, the appellant has salary income of Rs. 60,000/- and Loss from commodity transactions to the tune of Rs. 17,94,549. Due to the heavy losses in commodity market transactions and salary income of Rs. 60,000/- which is below the basic exemption limit of Rs. 1,60,000 for AY 2011-12, the appellant did not file the income tax return u/s 139(1) of the income tax Act 1961. 1.2 Going forward, the income tax department has issued the notice u/s 148 of the income tax Act 1961 on 26.03.2018 based on the reasons to believe that there is escapement of income of Rs. 13,85,200/-. In response to the notice u/s 148 of the income tax Act 1961, the appellant has filed the income tax return vide acknowledgment no. 366342930311018 dated 31.10.2018 and same was processed under section 147/143(3) of the Act by the ITO Ward-5, Bhilwara determining the total income at Rs. 15,32,750/-. While passing the assessment order, the assessing officer made an addition of Rs. 14,72,754/-, consisting of Rs. 13,85,200 on account of cash deposits and credit entry of Rs. 87,554/- from Paras commo broking Private Limited, by treating the same as unexplained money u/s 69A of the income Tax Act 1961. I.T.A. No.372/Jodh/2019 Manish Mali 5 1.3 Being aggrieved from the assessment order passed under 147/143(3) of the income tax Act 1961, the appellant has preferred an appeal before the respondent and respondent rejected the appeal based on the finding that "appellant had not been able to explain satisfactorily, the cash/credits of Rs. 14,72,754/- appearing in his bank account. The appellant has tried to explain the source of cash deposit/credit entries as out of past savings, gifts etc. but no documentary evidences has been furnished to to prove prove the submission. The copy of balance sheet and capital account are self-serving document which are not supported with any material. Therefore, the submission of the appellant is not found to be acceptable. Accordingly, the addition of Rs. 14,72,754/-made by the AO is hereby confirmed". While rejecting the appeal of the appellant, the respondent and the assessing officer through his remand report has not brought out any material discrepancies on record that the copies of individual balance sheets & capital accounts from FY 2006-07, FY 2007-08, FY 2008-09, FY 2009-10, and FY 2010-11 were found to be fake or factually incorrect. Going forward, the appellant has provided the list of persons along with their PAN No. and address from whom the appellant has received the small amount of cash for depositing the cash in to his bank account. Without bringing any material discrepancies on the record, the respondent and the assessing officer through his remand report simply rejected the copies of individual balance sheets, capital accounts and list of persons from whom small amount of cash were received by the appellant. An Assessment based on mere conjectures, surmise, or suspicion or irrelevant and in admissible evidence & material, is invalid and bad in law. 1.4 Here it is pertinent to mention that for the year under consideration, the appellant has entered in to the commodity market transactions and incurred the loss of Rs. 17,94,549/-. The same has been shown under the head capital gain in the income tax return also and same has been acknowledged by the assessing officer in his order in para no. 6.3. Apart from the commodity market transactions, the appellant was having the salary income of Rs. 60,000/-. Other than salary income and his past savings in the form of Gold/Silver ornaments and cash/gifts received in his marriage, appellant does not have any other source of income. Since the appellant has incurred the losses in to the commodity market transactions beyond his capacity, he had no other option to left with to liquidate the gold and silver ornaments received in his marriage and of his close relatives and to recover the loans and advances given by him as mentioned in the individual balance sheet as at 15.12.2010 submitted before the respondent. 1.5 To repay the loss incurred in commodity market transactions, the appellant has liquidated the Gold and Silver Ornaments received in his marriage into the cash of Rs. 4,52,000 (20 Tola of Gold and 2 kg of Silver). The appellant recovered Rs. 6,95,000 from the Loans and advances given by him in cash. Apart from the above money he had Rs. 2,38,200 as his past savings like Gifts/money received in his marriage or with his wife. The appellant altogether deposited the cash totaling to Rs. 13,85,200 into his bank account and repaid the to the Paras Commo Broking Pvt Ltd for losses incurred. I.T.A. No.372/Jodh/2019 Manish Mali 6 1.6 Going Forward, here it is also pertinent to mention that the above facts of the case regarding source of cash deposits have been submitted before the respondent and respondent has not brought out any material on record which substantiate the fact that the documents like copies of individual balance sheets and capital account, list of persons from whom small amount of cash were received by the appellant has found to be fake or factually incorrect. Neither the respondent or assessing officer through his remand report has not disputed the cash balance of Rs. 14,00,423 on 15.12.2010. However, while making the assessment, the assessing officer invoked the Section 69A of the income Tax Act 1961, wherein the A.O. made the addition of Rs. 14,72,754/-, consisting of Rs. 13,85,200 on account of cash deposits and credit entry of Rs. 87,554/- from Paras commo broking Private Limited after final settlement of account. The source of cash deposits of Rs. 13,85,200 was explained as above during the assessment proceedings and first appellate proceedings. 1.7 At this outset, it is submitted that invoking of provisions of section 69A of the Income tax Act 1961, in the instant case is bad in law because provisions of section 69A states that "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. Whereas in the instant case, the appellant has submitted the copies of balance sheets copies of individual balance sheets & capital accounts from FY 2006-07, FY 2007-08, FY 2008-09, FY 2009-10, and FY 2010-11 and submitted the list of persons along with their PAN No. and address from whom the appellant has received the small amount of cash for depositing the cash in to his bank account. Since assessee has discharged his onus to prove the source of cash deposit in to bank account, the provisions of section 69A invoking in the instant case by the assessing officer is not justified and bad in the eyes of law. 1.8 Furthermore, In the case of SMT. TEENA BETHALA vs. INCOME TAX OFFICER (BANG-Trib.) :(2019) 72 TLC 314, the Hon'ble ITAT- Bangalore held in para no. 7.3.3 of its order which is reproduced as under: 7.3.3 On a reading of section 69A (supra), it is clear that the onus is upon the AO to find the assessee to be the owner of any money, bullion, jewellery or valuable article and such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, maintained by the assessee for any source of income. In these circumstances, the AO can resort to making an addition under section 69A of the Act only in respect of such monies/assets/articles or things which are not recorded in the assessee's books of account. In the case on hand, the cash deposits are recorded in the books of account and are reportedly made on the receipt from a creditor Further, the PAN and address of the creditor as well as I.T.A. No.372/Jodh/2019 Manish Mali 7 ledger account copies of the creditor in the assessee's books of account have also been field before the AO. In these circumstances, it is evident that the AO has not made out a case calling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Act could have been considered; but then that is not the case of the AO. The assessee, apart from raising several other grounds, has challenged the legality of the addition being made under section 69A of the Act. In support of the assessee's contentions, the learned AR placed reliance on the decision of the ITAT - Mumbai Bench in the case of DCIT Vs. Karthik Construction Co. in ITA No.2292/Mum/2016 dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of the Act cannot be made in respect of those assets/monies/entries which are recorded in the assessee's books of account. In my considered view, the aforesaid decision of the ITAT Mumbai Bench (supra) is squarely applicable to the facts of the case on hand, where the entries are recorded in the assessee's books of account. In this view of the matter, I am of the opinion that the addition of ? 6,30,000/- made under section 69A of the Act is bad in law in the facts and circumstances of the case on hand and therefore delete the addition of ? 6,30,000/- made thereunder. The AO is accordingly directed. 1.9 From the reading of the above Judgement, it is clear that as per section 69A of the Act, the onus is upon the assessing officer to prove that the appellant is to be the owner of any money, bullion, jewellery or valuable article and such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, maintained by the assessee for any source of income. Whereas in the instant case, the appellant has submitted the copies of balance sheets copies of individual balance sheets & capital accounts from FY 2006-07, FY 2007-08, FY 2008-09, FY 2009-10, and FY 2010-11 and submitted the list of persons along with their PAN No. and address from whom the appellant has received the small amount of cash for depositing the cash in to his bank account. By invoking the provisions of sections 69A of the Act, the addition made by the assessing officer and confirmed by the respondent is bad in the eyes of law. From the above-mentioned facts of the case and judgment of Hon'ble Bangalore ITAT, it is clearly evident that the appellant has submitted the source of cash deposited in the bank account and the addition of Rs. 14,72,754 made by the assessing officer and confirmed by the respondent by invoking the provisions of sections 69A of the Act, is not justified in the eyes of the law & hence be quashed at your end. PRAYER In view of the above, it is respectfully prayed that the Hon'ble Bench of the Income Tax Appellate Tribunal-Jodhpur may be pleased to:- 1. Quash the Ground no. 1 of the present appeal dismissed by the respondent. 2. Allow submission of additional documents and details at the time of hearing. 3. Grant a personal hearing and I.T.A. No.372/Jodh/2019 Manish Mali 8 4. Pass such other order or orders as may be deemed fir and proper in the facts and circumstances of the case.” 6. Per contra, the ld. DR relied upon the orders of the lower authorities and submitted that the assessee has not substantiated amount deposit in the bank account with evidence to the satisfaction of the lower authorities. 7. We have heard the rival contentions, perused the material placed on record and gone through the judicial precedent cited by both the parties to drive home their respective contentions. The Bench noted that in this case the ld. AO has made a sum of Rs. 14,72,754/- is added which is deposited of cash of the same amount in saving bank account No. 024601513817 maintained with ICICI Bank by the assessee. The ld. AO noted that since the assessee has failed to furnish explanation/supporting documents in respect of deposit of cash of Rs. 13,85,200/- on various dates and credit of amount of Rs. 87,554/- is total amount of Rs. 14,72,754/- as unexplained money u/s 69A of the Act. Against the said addition, the ld. AR of the assessee preferred an appeal before the ld. CIT(A) wherein the assessee submitted that the assessee got merit in the year 2004 and has received cash money from father-in-law at the time of marriage for an amount of Rs. 4.50 lacs ( Rs. 5lac approximately). The assessee also filed an affidavit submitted the fact that on account of loss incurred in the speculative transaction. He has also sold the jewellery received by him at the time of I.T.A. No.372/Jodh/2019 Manish Mali 9 marriage and various other subsequent functions. The content of the affidavit is filed which is reproduced as under:- “ I Manish Kumar Mali, Son of Ganesh Lal Mali aged 37 Years by occupation in business resident of 31/306, Shivaji Mohalla Nehru Road, Bhilwara-311001 do hereby solemnly affirm and declare on oath as follows: 1. That Present Affidavit is against my Income Tax Appeal no. 372/Jodh/2019 before the Hon'ble ITAT-Jodhpur for AY 2011-12. 2. That I had incurred losses of Rs. 17,94,549 in commodities market transactions in FY 2010-11. 3. That for repayment of losses incurred, I had sold the Gold & Silver Ornaments (200 Grams of Gold and 2 kg of Silver) received in my Marriage for an amount of Rs. 4,52,000/- in December 2010. 4. That no receipt of sale of Gold & Silver Ornaments (200 Grams of Gold and 2 kg of Silver) could be produced before the CIT(A) or A.O because the transaction of sale of Gold & Silver ornaments was done in 2010 and due to mental pressure for repayment of loss, receipt was lost and could not be made available with me during the First Appellate proceedings or assessment proceedings. That the Statement/declarations made in this affidavit in paras 1 to 4 are true to my knowledge” The ld. AR of the assessee in addition also submitted that he has also filed a detailed list of gift received at the time of marriage and therefore, considering that aspect of the matter and considering the financial crises/shortage of funds he has deposited the cash which is receipt of gold ornaments and the money lying on him supported by the list of gift received at the time of marriage. In light of the facts and circumstances of the case argued before us and considering the fact that the assessee recently been married and the cash deposit of Rs. I.T.A. No.372/Jodh/2019 Manish Mali 10 13,85,200/- and credit worth Rs. 14,72,754/- cannot be considered as income of the assessee. Considering all facts and arguments presented before us, we are of the considered view that the addition sustained by the lower authorities is not justified and the same is directed to be deleted. In the result, the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. (Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi) Accountant Member Judicial Member Dated 13/03/2024 Santosh (On Tour) Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order