GEETA R. SARAF, MUMBAI V. ITO 10(3)(2), MUMBAI

ITA 389/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78718 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2014
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 03-04-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 14-01-2011
• Court: TRIBUNAL
• Department Lawyers: JKTLP DH LS SHRI KISHOR DHULE
• Keywords: Peak credit; Fair market value; Corroborative evidences; Valuation report
• Section: 147

Judgement Text

GEETA R. SARAF 1 VK;DJ VIHYH; VF/KDJ.K TH U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI JH JH JH JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH UJSUNZ DQEKJ FCYYS ;K UJSUNZ DQEKJ FCYYS;K UJSUNZ DQEKJ FCYYS;K UJSUNZ DQEKJ FCYYS;K] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER VK;DJ VIYH LA[;K /ITA NO.389/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 2005-06 GEETA R. SARAF D-602, VIKAS PARK, MITH CHOWKI, LINK ROAD, MALAD (W) MUMBAI 400062. VS. INCOME TAX OFFICER 24(1)(4) C-13, 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051. PAN: - AO DPS8606M APPELLANT RESPONDENT VK;DJ VIYH LA[;K /ITA NO.5486/MUM/2010 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 2006-07 GEETA R. SARAF D-602, VIKAS PARK, MITH CHOWKI, LINK ROAD, MALAD (W) MUMBAI 400062. VS. INCOME TAX OFFICER 24(1)(4) C-13, 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051. PAN: - AAADPS8606M APPELLANT RESPONDENT ASSESSEE BY/ FU/KKZFJRH DH VKSJ LS SHRI SUNIL NAHTA REVENUE BY/ JKTLP DH VKSJ LS SHRI KISHOR DHULE ORDER PER VIJAY PAL RAO, JM THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE TWO SEPARATE ORDERS OF CIT(A) DATED 9.11.2010 AND 26.3.2010 FOR THE A.Y. 2005-06 AND 2006- DATE OF HEARING 03.04.2014 DATE OF PRONOUNCEMENT 9 .04.2014 GEETA R. SARAF 2 07 RESPECTIVELY. FOR THE A.Y.2005-06, THE ASSESSEE HAS RAISED THE SOLITARY GROUND AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 11,80,900/- AS INCOE M FROM UNDISCLOSED SOURCES INSTEAD OF LONG TERM CAPITAL GAIN FROM SALE OF PROPERTY 2. THE ASSESSMENT WAS REOPENDED VIDE NOTICE U/S 14 8. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED RETURN OF INCOME ON 27.04.2009 DECLARING TOTAL INCOME OF RS. 1,58,787/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSEE EXPLAINED THE SOURCE OF TOTAL CASH DEPOSI T OF RS. 19,70,900/- IN THE SAVINGS BANK ACCOUNT AS TO THE EXTENT OF RS. 7,90,0 00/- OUT OF CASH WITHDRAWALS MADE FROM THE BANK PRIOR TO SUCH DEPOSI T AND BALANCE CASH DEPOSIT OF RS. 11,80,900/- FROM SALE PROCEEDS OF FLAT. THE ASSESSEE EXPLAINED THAT DURING THE YEAR THE ASSESSEE HAS DISPOSED OFF HER F LAT VIDE AGREEMENT DATED 28.06.2004 AGAINST THE TOTAL CONSIDERATION OF RS. 23,82,000/-. THOUGH THE SALE CONSIDERATION SHOWN IN THE AGREEMENT IS RS. 12,00,1 51/-. THUS THE ASSESSEE EXPLAINED THE SOURCE OF DEPOSIT IN THE BANK AS ON M ONEY RECEIVED AGAINST THE SALE OF FLAT. IN SUPPORT OF HER CLAIM THE ASSESSEE FILED VALUATION REPORT FOR FAIR MARKET VALUE OF PROPERT AT RS. 23,82,000/-. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT NO PROOF OR SUPPORTING EVIDENCE HAS BEEN FURNISHED IN RESPECT OF ASSESSEES CLAIM T HAT SHE HAS RECEIVED FURTHER SALE CONSIDERATION OF RS. 11,81,849/-. ACCORDINGLY THE AO TREATED THE CASH DEPOST OF RS. 11,80,900/- IN HER SAVINGS BANK ACCOU NT AS HER OWN INCOME FROM UNDISCLOSED SOURCE AND ASSESSED TO TAX ACCORDINGLY. 3. ON APPEAL, CIT(A) HAS CONFIRMED THE ACTION OF T HE AO. 4. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMI TTED THAT THE ASSESSEE IS A 64 YEARS OLD LADY HVING NO OTHER SOUCE OF INCOME. T HE CASH WAS DEPOSITED AS RECEIVED AGAINST THE SALE OF FLAT. IN SUPPORT OF HI S CONTENTION THE LD. AR HAS REFERRED THE BANK DTAILS AND SUBMITTED THAT THE CAS H WAS DEPOSITED AT THE SAME GEETA R. SARAF 3 TIME WHEN THE FLAT WAS SOLD BY THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE FAIR MARKET VALUE OF THE PROPERTY AT THE RELEVANT T IME HAS BEEN VALUED AT RS. 23,82,000/- BY THE REGISTERED VALUER. THE LD. AR HA S FURTHER SUBMITTED THAT IN THE VALUATION REPORT THE VALUATION OFFICER HAS TAKE N INTO CONSIDERATIN THE SALE INSTANCES IN THE SAME LOCALITY AS WELL AS READY REC KONER RATE PREVAILING IN THE AREA. THEREFORE, IN THE ABSENCE OF ANY DEFECT THE V ALUATION SHOWING THE FAIR MARKET VALUE OF THE FLAT SHOULD HAVE BEEN ACCEPTED BY THE AO. ALTERNATIVELY, HE HAS SUBMITTED THAT AT THE MOST THE SAID AMOUNT COUL D HAVE BEEN ASSESSED AS CAPITAL GAIN AFTER GIVING THE BENEFIT OF INDEXED CO ST. HE HAS FURTHER CONTENDED THAT THE AUTHORITIES BELOW HAVE IGNORED THE DOCUMEN T/EVIDENCE FILED BY THE ASSESSEEE AS WELL AS CIRCUMSTANTIAL EVIDENCE AND PR EVAILING PRACTICE IN THE LAND TRANSACTION INVOLVING CASH PAYMENT. IN SUPPORT OF H IS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISIONS. (I) COMMISSIONER OF INCOME TAX VS. INTEZAR ALI (ALLAHAB AD) (II) KUMAR K. CHHABRIA VS. ITO (ITA NO.5347/MUM/2008) (M UMBAI). 4. ON THE OTHER HAND LD. DR HAS HEAVILY RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM THAT THE DEPOSIT WAS MADE FROM THE SALE CONSIDERATION RECEIVED AGAINST THE FLAT. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO FAILED TO CORROLATE THE DEPOSIT MADE IN THE BANK AC COUNT AND THE TIME OF SALE OF FLAT. ALL DEPOSITS MADE IN THE BANK ACCOUNT ARE SU BSEQUENT TO THE SALE AGREEMENT WHEREAS IN CASE OF ON MONEY THE PAYMENT I S RECEIVED PRIOR TO THE REGISTRATION OF SALE DOCUMENTS. THUS THE CLAIM OF T HE ASSESSEE CANNOT BE ACCEPTED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GIVEN OUR SINCERE THOUGHT TO THE FACTS AND CIRCUMSTANCES OF THE CASE . THE AO HAS QUESTIONED THE CASH DEPOSIT MADE IN THE BANK ACCOUNT TO THE EXTENT OF RS. 11,80,900/- IN THE MONTH OF JULY, AUGUST AND OCTOBER 2004. THE ASSESSE E HAS EXPLAINED THE SOURCE OF CASH DEPOIST AS CASH CONSIDERATION RECEIV ED AGAINST THE SALE OF FLAT NO. GEETA R. SARAF 4 602, GAURISHANKAR BUILDING AT DADISHETH ROAD, MALAD -WEST, MUMBAI -400 064. IN SUPPORT OF HER CLAIM THE ASSESSEE HAS FILED THE VALUATION REPORT OF THE REGISTERED VALUER SHOWING THE FAIR MARKET VALUE OF THE FLAT AT RS. 23,82,000/-. IT IS PERTINENT TO NOTE THAT WHEN THIS DEPOSIT HAS BEE N MADE IN THE BANK ACCOUNT AND THE AO HAS NOTED THE SAME FROM THE BANK STATEME NTS OF THE ASSESSEE WHICH SHOWS BONAFIDE OF THE ASSESSEE AS NOT TO CONCEAL TH E SAID AMOUNT. FURTHER THE ASSESSEE HAS NO OTHER SOURCE OF INCOME EXCEPT THE R ENTAL INCOME. THEREFORE, IN THE ABSENCE OF ANY MATERIAL FACTS AND CIRCUMSTANCES BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE IS HAVING ANY OTHER SOURCE OF INC OME, THE EXPLANATION OF THE ASSESSEE CANNOT BE REJECTED SOLELY ON THE GROUND TH AT THE ASSESEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN RESPECT OF THE RECEIPT OF THE SAID AMOUNT IN CASH AGAINST THE SALE OF FLAT. IT WELL KNOWN FAC T AND PREVALENT PRACTICE IN THE TRANSACTION OF REAL ESTATE THAT ON MONEY CONSIDERA TION IS PAID AND RECEIVED BY THE PARTIES. THE AO HAS NOT DISPUTED THE FAIR MARKE T VALUE OF THE FLAT IN QUESTION AND EVEN NOT POINTED OUT ANY DEFECT IN THE VALUATIO N REPORT FILED BY THE ASSESSEE. EVEN OTHERWISE WHEN THE ASSESSEE IS NOT HAVING ANY OTHER SORUCE OF INCOME THEN THE EXPLANATION OF THE ASSESSEE CANNOT BE DOUBTED E XPLAINING THE SOURCE OF CASH DEPOSIT BEING CONSIDERATION AGAINST THE SALE OF FLA T. THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. INTEZAR ALI HAS OB SERVED THAT THERE WAS NO MATERIAL WHATSOEVER OR ANY CONSIDERATION WHICH COUL D HAVE SUGGESTED THAT THIS AMNOUNT WAS RECEIVED BY THE ASSESSEE FROM ANY OTHER SORUCE. SIMILARLY, IN THE CASE OF KUMAR K. CHABARIA VS. ITO, THE COORDINATE B ENCH OF THIS TRIBUNAL HAS ALSO TAKEN NOTE OF THE FACT THAT THERE WAS A COMMON PRACTICE OF UNACCOUNTED CASH IN THE REAL ESTATE TRANSACTIONS AND TO CURB TH E SAME LEGISTLATIVE MEASURES HAVE BEEN TAKEN. WE, THEREFORE, DO NOT FIND ANY REA SON TO DOUBT THE EXPLANATION GIVEN BY THE ASSESSEE PARTICULARLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEEE HAS NO OTHER SOURCE OF INCOME AN D THE DEPOSITS WERE MADE AROUND THE SAME TIME WHEN THE SALE TRANSACTION OF T HE FLAT TOOK PLACE. ACCORDINGLY WE DIRECT THE AO TO ACCEPT THE SOURCE O F DEPOSIT AS SALE CONSIDERATION OF THE FLAT IN QUESTION AND ASSESSEE THE SAME AS CAPITAL GAIN AFTER CONSIDERING THE INDEXED COSTS BENEFIT IF ANY. GEETA R. SARAF 5 6. FOR ASSESSMENT YEAR 2006-07 THE ASSESSEE HAS RA ISED FOLLOWING GROUNDS:- (I) ON THE FACTS AND CIRCUMSTANCES OF HE CASE THE LEARN ED CIT(A) ERRED IN CONFIRMING THE ADDTION OF RS. 13,05,000/- (II) ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNE D CIT(A) ERRED IN NOT CONSIDERING THE CLOSING CASH BALANCE ACCEPTED B Y THE AO OF RS. 12,91,000/- FOR A.Y. 2005-06 AS SOURCE OF CASH DEPO SIT IN BANK A/C FOR A.Y. 2006-07 (III) THE LEARNED CIT(A) ERRED IN PASSING ORDER WITHOUT C ALLING FOR REMAND REPORT FROM AO, SINCE AO HAD NO BENEFIT OF ORDER P ASSED U/S 143 R.W.S 147 OF THE ACT FOR A.Y. 2004-05 & A.Y. 2005-0 6 WHILE FRAMING ASSESSMENT FOR A.Y. 2006-07. 7. THE ISSSUE INVOLVED IN THE YEAR UNDER CONSIDERAT ION IS ALMOST IDENTICAL AS IN THE A.Y. 2005-06. THE AO MADE AN ADDITION TOWARD S THE CASH DEPOSIT IN THE BANK. 8. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSMENT FOR THE A.Y. 2006-07 WAS COMPLETED PRIOR TO THE REASSESSMENT FOR THE A.Y. 2005-06 AND THE AO HAS NOT CONSIDERED THE SOURCE OF CASH DEPOSIT WHICH WAS FOUND FOR THE A.Y. 2005-06 BEING SALE CON SIDERATIONG OF FLAT. FURTHER THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE C ASH WITHDRAWAL FROM THE BANK IN THE EARLIER YEAR SHOULD BE ACCEPTED AS SOUR CE OF THE CASH DEPOSITED IN THE BANK ACCOUNT FOR THE YEAR UNDER CONSIDERATION. THE AO HAS NOT GIVEN THE BENEFIT OF CASH WITHDRAWAL FROM THE BANK AS SOURCE OF CASH DEPOSITED AND MADE THE ADDITION OF THE TOTAL CASH DEPOSIT FOUND IN THE BANK ACCOUNT. FURTHER THE BENEFIT OF TELESCOPING SHOULD BE GIVEN TO THE ASSES SEE AND IN ANY CASE ONLY PEAK CREDIT CAN BE TAXED. 9. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON TH E ORDERS OF AUTHORITIES BELOW. 10. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULY PERUSAL OF THE RELEVANT REOCRD, AT THE OUTSET WE NOTE THAT THE ADD ITION MADE WITH RESPECT TO THE GEETA R. SARAF 6 BANK DEPOSITS FOR THE YEAR UNDER CONSIDERATION HAS A DIRECT CONNECTION WITH THE BANK DEPOSITS AND WITHDRAWAL IN THE EARLIER YEAR AS THERE WAS NO OTHER SOURCE OR APPLICATION OF MONEY BY THE ASSESSEE. ACCORDINGLY T HE MATTER IS SET ASIDE TO THE RECORD OF AO TO CONSIDER THE SAME IN VIEW OF OUR FI NDING IN THE A.Y. 2005-06. IN ANY CASE THE CLAIM OF PEAK CREDIT HAS TO BE CONSID ERED. 11. IN THE RESULT APPEAL OF THE ASSESSEE FOR A.Y. 2 005-06 IS PARTLY ALLOWED WHEREAS APPEAL OF THE ASSESSEE FOR A.Y. 2006-07 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 9 -04 -2014 SD/- SD/- ( N.K. BILLAIYA ) ( VIJAY PAL RAO ) ( ACCOUNTANT MEMBER / YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 09-04-2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI