Shri Manishkumar Sureshchandra Patel, Surat V. The Income Tax Officer, Ward-6(3), Surat

ITA 38/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 1995 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Opportunity of being heard; Additional evidence
• Section: 68

Judgement Text

MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 1 OF 9 , , INCOM TAX APPELLATE TRIBUNAL-SURAT-BENCH-SURAT . . , . . , BEFORE C .M. GARG, JUDICIAL MEMBER AND O. P. MEENA, ACCOUNTANT MEMBER . . ./ I .T.A NO.38/AHD/2016/SRT / ASSESSMENT YEAR:2009-10 SHRI MANISHKUMAR S . PATEL, RUVA VARAD, BARDOLI, DISTRICT-SURAT PAN:AKNPP 1013B V. INCOME TAX OFFICER, WARD-6(3) SURAT APPELLANT /RESPONDENT ASSESSEE BY SHRI RASESH SHAH, CA REVENUE BY SHRI DILIP KUMAR, SR. D.R. DATE OF HEARING 09.10.2018 DATE OF PRONOUNCEMENT 02.11.2018 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1; SURAT [IN SHORT CIT (A)] DATED 02.12.2015 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUND NO. 1 IS AGAINST THE CONFIRMATION OF ADDITION OF RS. 14, 10,768 OUT OF TOTAL ADDITION OF RS. 16, 25,768 MADE UNDER SECTION 68 OF THE ACT. MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 2 OF 9 3. BRIEF FACTS ARE THAT THE AO NOTICED THAT THE ASSESSEE HAS CREDITS OF RS. 37,35,768 IN HIS BANK ACCOUNT WHICH INTER-ALIA INCLUDED CASH DEPOSITS OF RS.22,30,000. THE AO REQUIRED THE ASSESSEE TO EXPLAIN SOURCE OF DEPOSITS AND FURNISH CONFIRMATION OF CREDITORS OF THE DEPOSITS. HOWEVER, THE AO COULD NOT PRODUCE TWO WITNESS AND FURNISH CONFIRMATION FROM 17 DEPOSITORS FOR THE TOTAL AMOUNT OF RS. 21,10,000 ONLY AS AGAINST RS. 37,35,768. ACCORDINGLY, THE AO MADE ADDITION OF RS. 16,25,768 [ 37,35,768- 21,10,000] INCLUDING CHEQUE AMOUNT OF RS. 15,05,768 DEPOSITED IN SAID BANK ACCOUNT. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE UNDER RULE 46A IN FORM OF CONFIRMATION LETTERS, WHICH WERE SENT TO THE ASSESSEE THE AO FOR REMAND REPORT. HOWEVER, THE AO HAS OBJECTED TO ADMISSION OF ADDITIONAL EVIDENCE ON THE GROUND THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS GIVEN NAME OF 16 PERSONS BUT NOW THE ASSESSEE HAS FURNISHED LIST OF 39 PERSONS SHOWING CASH DEPOSITS OF BELOW RS. 20,000. FURTHER, THE ASSESSEE HAS NOT PRODUCED THESE PERSONS FOR EXAMINATION. THE CIT (A) OBSERVED THAT THE AO HAS ACCEPTED GENUINENESS OF TRANSACTION OF RS. 20,000 FROM SHRI PARDIP P. PATEL, WHICH IS FOUND, REFLECTED IN RESPECTIVE BANK ACCOUNT. MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 3 OF 9 FURTHER, THE AO HAS STATED THAT RS. 95,000 AND RS. 1,00,000 RECEIVED BY CHEQUE WAS RECEIVED FROM BANK ACCOUNT WITH OBC OF SHRI PRAKASH KAPADIA. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE CIT (A) DELETED THE ADDITION OF RS. 2,15,000 [ 20,000+ 1,95,000] AND CONFIRMED THE REMAINING ADDITION OF RS. 14,10,768. 5. BEING DISSATISFIED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MADE SMALL BORROWINGS FROM VARIOUS PARTIES FOR THE PURPOSE OF HIS SOCIAL REQUIREMENT AND NOT FOR THE PURPOSE OF BUSINESS. THE ASSESSEE WAS TRYING TO GET VISA FOR HIMSELF AND HIS WIFE FOR MEDICAL TREATMENT OF HIS WIFE AND FOR THAT REASON ALL THE TRANSACTION WERE MADE IN HIS BANK ACCOUNT WITH THE HELP OF VARIOUS CLOSE RELATIVES OF THE ASSESSEE WHO WERE AGRICULTURIST LIKE THE ASSESSEE. THE TRANSACTION WERE VERY LOW BETWEEN RS. 10,000 TO RS. 20,000. THE ASSESSEE HAS TRIED HIS BEST TO PRODUCE THE DEPOSITORS AS MANY AS POSSIBLE. IN THE REST OF CASES, THE ASSESSEE HAS FILED THEIR CONFIRMATION LETTERS ALONG WITH THEIR ADDRESSES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED COPIES OF VARIOUS MEDICAL REPORTS OF HIS WIFE TREATMENT. THE DETAILS OF CONFIRMATION LETTER IS PLACED AT PAPER BOOK PAGE NO. 34 TO 72. THE LIST OF PERSON WHOSE CONFIRMATION LETTER MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 4 OF 9 OBTAINED IS PLACED AT PAPER BOOK PAGE NO. 33. COPY OF BANK STATEMENT OF HDFC ALSO FILED AT PAGE NO. 73 TO 79. HOWEVER, CIT (A) HAS NOT ACCEPTED THE SAME ON THE GROUND OF SOME DISCREPANCIES THEREIN. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE AO HAS MADE ADDITION UNDER SECTION 68 OF THE ACT. HOWEVER, NO ADDITION OF BANK DEPOSITS CAN BE MADE UNDER SECTION 68 OF THE ACT. AS HELD IN THE CASE OF MEHUL V. VYAS V. ITO [2017] 164 ITD 295 (MUMBAI) WHICH LAID DOWN THAT THE AO DISBELIEVE THE EXPLANATION OF THE ASSESSEE IN RESPECT OF NATURE OF SOURCE OF CASH DEPOSITS IN BANK ACCOUNT WITHOUT ESTABLISHING ANY CREDIBLE INFIRMITY. LEARNED COUNSEL FURTHER, RELIED ON THE DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. BHAICHAND H. GANDHI [1983] 141 ITR 67 (BOMBAY) WHEREIN THEIR LORDSHIPS LAID DOWN THAT WHERE CASH CREDIT FOUND IN BANK PASSBOOK, NOT IN CASH BOOK MAINTAINED BY THE ASSESSEE WOULD NOT BE INCLUDIBLE UNDER SECTION 68 OF THE ACT, AS THE BANK PASSBOOK SUPPLIED BY THE BANK TO THE ASSESSEE IS NOT A BOOK MAINTAINED BY THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. SR. D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 5 OF 9 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS FURNISHED NAME AND ADDRESS OF PERSONS IN RESPECT OF BANK DEPOSITS OF RS. 15,55,000 AS PER LIST PLACED AT PAPER BOOK PAGE NO. 33. THE PERUSAL OF LIST SHOWS THAT THESE ARE SMALL AMOUNTS OF WHICH ADDRESSES HAS BEEN DULY GIVEN THEREIN. THE ASSESSEE HAS ALSO FILED COUNTER CONFIRMATION LETTER, WHICH ARE PLACED AT PAPER BOOK PAGE NO. 34 TO 72. HOWEVER, THE CIT (A) HAS DISBELIEVED THE SAME AS THE ASSESSEE COULD NOT PRODUCE THESE PERSONS BEFORE THE AO. THE COPY OF BANK STATEMENT IS ALSO FILED WHICH IS APPEARING AT PAPER BOOK PAGE NO. 73 TO 78. IT IS VIVID FROM BANK STATEMENT THAT THESE ARE SMALL AMOUNT OF RANGING BETWEEN RS. 10,000 TO 20,000 DEPOSITS IN BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS. IN SUCH SITUATION, THE EXPLANATION OF THE ASSESSEE THAT HE WAS REQUIRED THE FUND FOR TREATMENT OF HIS WIFE FOR WHICH HE WAS TRYING TO OBTAIN VISA. THE ASSESSEE BEING AN AGRICULTURIST WAS ALSO RUNNING A SMALL MOBILE REPAIR SHOP. THUS, CIRCUMSTANTIAL EVIDENCE SHOWS THAT THE EXPLANATION OFFERED BY THE ASSESSEE COULD NOT BE DISBELIEVED IN ABSENCE OF ANY COGENT REASON. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE IN THE CASE OF DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 6 OF 9 BHAICHAND H. GANDHI [1983] 141 ITR 67 (BOMBAY) WHEREIN IT WAS HELD THAT NO ADDITION COULD BE MADE UNDER SECTION 68 OF THE ACT. THE HON`BLE HIGH COURT HELD AS UNDER: WHEN MONEYS ARE DEPOSITED IN A BANK, THE RELATIONSHIP THAT IS CONSTITUTED BETWEEN THE HANKER AND THE CUSTOMER IS ONE OF DEBTOR AND CREDITOR AND NOT A TRUSTEE AND BENEFICIARY. APPLYING THIS PRINCIPLE, THE PASS BOOK SUPPLIED BY THE BANK TO ITS CONSTITUENT IS ONLY A COPY OF THE CONSTITUENT'S ACCOUNT IN THE BOOKS MAINTAINED BY THE BANK. IT IS NOT AS IF THE PASS BOOK IS MAINTAINED BY THE BANK AS AN AGENT OF THE CONSTITUENT, NOR CAN IT BE SAID THAT THE PASS BOOK IS MAINTAINED BY THE BANK UNDER THE INSTRUCTIONS OF THE CONSTITUENT. IN VIEW OF THIS, THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE CANNOT BE REGARDED AS A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. ACCORDINGLY, THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT A CASH CREDIT FOR THE PREVIOUS YEAR SHOWN IN THE ASSESSEE'S BANK PASS BOOK ISSUED TO HIM BY THE BANK BUT NOT SHOWN IN THE CASH BOOK MAINTAINED BY HIM FOR THAT YEAR, DOES NOT FALL WITHIN THE AMBIT OF SECTION 68. 8. THEREFORE, NO ADDITION UNDER SECTION 68 COULD BE MADE OF DEPOSIT IN BANK PASSBOOK WHICH IS NOT PART OF REGULAR CASH BOOK MAINTAINED BY THE ASSESSEE, IN THE LIGHT OF RATIO AS LAID DOWN BY THE HON`BLE HIGH COURT OF BOMBAY AND THE FACTS OF THE CASE WE ARE THEREFORE, OF THE CONSIDERED OPINION THAT THE CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION ON ACCOUNT OF SMALL AMOUNT OF DEPOSITS AS APPEARING IN BANK ACCOUNT. THEREFORE, ON CAREFUL CONSIDERATION OF FACTS THAT CONFIRMATION LETTER WERE DULY FILED AND SOME OF THE MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 7 OF 9 DEPOSITORS HAVE APPEARED AND NAME AND ADDRESS OF THE SAME WAS PROVIDED AND MONEY WAS BORROWED FOR MEDICAL TREATMENT OF WIFE OF THE ASSESSEE OF WHICH RELEVANT EVIDENCE IS FILED. IN SUCH SITUATION, THE ADDITION OF RS. 14,10,768 UPHELD BY THE CIT (A) IS THEREFORE, DELETED. THIS GROUND IS THEREFORE, ALLOWED. 9. GROUND NO. 2 RELATES TO CONFIRMING ADDITION OF RS. 2,98,600 MADE ON ACCOUNT OF UNDISCLOSED INVESTMENTS. 10. SUCCINCT FACTS ARE THAT THE CIB INFORMATION REFLECTED THAT THE ASSESSEE HAS MADE INVESTMENT OF RS.1,08,600 AND RS.1,50,00 IN SHARES AND RS. 20,000 PAID TOWARDS INSURANCE PREMIUM, WHICH WERE NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS HENCE, THE AO TREATED THE SAME AS UNDISCLOSED INVESTMENT. 11. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). HOWEVER, LD. CIT (A) HAS UPHELD THE ADDITION SO MADE ON THE GROUND THAT THE AO HAS ALREADY ALLOWED NUMBER OF OPPORTUNITY OF BEING HEARD BUT THE ASSESSEE HAS FAILED TO EXPLAIN THE SAME HENCE, ADDITION SO MADE WAS CONFIRMED. 12. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NEVER ENTERED INTO ANY SHARE TRANSACTION WORTH RS. MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 8 OF 9 2,78,000. THE LD.AO SIMPLY MADE ADDITION BASED ON CIB INFORMATION WITHOUT PROVIDING ANY DETAILS TO THE ASSESSEE. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS CLEARLY DENIED THE TO HAVE MADE ANY INVESTMENT IN SHARES AND HE HAD ONLY PAID INSURANCE PREMIUM TO RELIANCE LIFE INSURANCE COMPANY WORTH RS. 20,000 OUT OF HIS OWN WITHDRAWAL FROM CAPITAL ACCOUNT AND ALSO FROM THE AGRICULTURAL INCOME OF THE FAMILY. THEREFORE, LD. CIT (A) OUGHT TO HAVE THE APPEAL OF THE ASSESSEE. IT WAS THEREFORE, URGED UPON US TO DELETE THE ADDITION SO SUSTAINED. 13. PER CONTRA, THE LD. SR. D.R. RELIED ON THE CIT (A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AO HAS NOT PROVIDED THE DETAILS OF INVESTMENT MADE IN THE NAME OF THE ASSESSEE IN SHARES TO REBUT THE SAME. THE AO SIMPLY RELIED ON CIB INFORMATION BUT DID NOT GIVE DETAILS AND EVIDENCE TO SHOW THAT THE ASSESSEE HAS MADE ANY INVESTMENT. IN SUCH SITUATION, NO ADDITION CAN BE MADE WHEN THE EVIDENCE CLAIMED TO BE IN POSSESSION OF THE REVENUE WITHOUT CONFRONTING THE SAME WITH THE ASSESSEE. THE ASSESSEE HAS CLEARLY DENIED MAKING ANY INVESTMENT IN SHARES. THE PERUSAL OF ASSESSMENT ORDER ALSO SHOWS THAT THERE IS NO DETAILS OF INVESTMENT OF SHARES ON MANISH S. PATEL V. ITO 6(3) SURAT /I.T.A. NO.38/AHD/2016/A.Y.09-10 PAGE 9 OF 9 WHICH THE AO HAS MADE ADDITION. IN VIEW OF THIS, THE ADDITION OF RS.2,78,000 IS THEREFORE, DELETED. SIMILARLY, THE SOURCE OF INSURANCE PREMIUM OF RS. 20,000 IS CLAIMED TO BE OUT OF CAPITAL ACCOUNT AND AGRICULTURAL INCOME FROM FAMILY MEMBERS. THEREFORE, THE EXPLANATION IN THIS REGARD IS ACCEPTABLE, HENCE, THIS ADDITION IS ALSO DELETED. ACCORDINGLY, THIS GROUNDS OF APPEAL IS ACCORDINGLY, ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 16. PRONOUNCED IN THE OPEN COURT ON 02.11.2018. SD/- SD/- ( . . /C.M. GARG) ( . . /O.P.MEENA) SURAT DATED: 02 NOVEMBER 2018.OPM / COPY OF THE ORDER IS FORWARDED TO : 1. 2. 3. ( ), 4. PR. CIT 5. , , / 6. . BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT