ITO 33(3)(1), MUMBAI V. RATANLAL B. GANDHI, MUMBAI

ITA 4094/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2285 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 24-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RATANLAL B GANDHI
• Assessee Lawyers: RAM TIWARI SR
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Income from undisclosed sources
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.4094/M/2015 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER- 33(3)(1), 3 RD FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 VS. SHRI RATANLAL B. GANDHI, PLOT NO.43, SHOP NO.2, YOGANA CHS SECTOR-2, CHARKOP, KANDIVALI (W), MUMBAI 400 067 PAN: AACPG5776F (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAM TIWARI, SR. A.R. REVENUE BY : SHRI RATANLAL B. GANDHI, D.R. DATE OF HEARING : 29.08.2017 DATE OF PRONOUNCEMENT : 26.10.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 25.03.2015 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2006-07. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E HAS INVESTED IN A FLAT CHARKOP FOR RS.10,97,110/-. IN SUPPORT OF T HE SAME, THE ASSESSEE HAS FURNISHED COPY OF HOUSING LOAN CERTIFI CATE WITH NEW INDIA CO-OP BANK LTD. IN WHICH THE LOAN AMOUNT WAS SHOWN AT RS.7,81,448/-. HOWEVER, IN RESPECT OF THE REMAININ G AMOUNT OF ITA NO.4094/M/2015 SHRI RATANLAL B. GANDHI 2 RS.3,15,662/-, ASSESSEE HAS STATED THAT IT IS BY WA Y OF SAVINGS FOR WHICH HE HAS FAILED TO FURNISH ANY KIND OF DOCUMENT ARY EVIDENCES. THEREFORE, INVESTMENT OF RS.3,15,662/- IS TREATED A S UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: GROUND NO.2 A) UNEXPLAINED INVESTMENTS IN FLAT THE APPELLANT HAS MADE PAYMENTS TO THE SELLER BY AC COUNT PAYEE CHEQUES, DETAILS, OF WHICH ARE PLACED ON RECORD. AS REGARDS CASH PAYMENT OF RS.47,110/-, THE SAME IS FOR STAMP DUTY AND REGISTRATION AND IS COVERED BY T HE WITHDRAWALS MADE BY THE APPELLANT FROM HIS BANK ACCOUNT. THIS SUB-GROUND IS THEREFORE ALLOWED. B) ADHOC DISALLOWANCE OF EXPENSES THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY DETAIL OF THE VARIOUS EXPENSES INCURRED ALONGWITH ANY DOCUMENTARY EVIDENCE. IN THE ABSENCE OF ANY SUCH DETAILS ON RECORD, I AM OF THE VIEW THAT THE AO IS JUSTIFIED IN MAKING A N ADHOC DISALLOWANCE OF 50% OF THE EXPENDITURE CLAIMED. THIS SUB-GROUND IS THEREFORE D ISMISSED. C) CREDITS IN BANK BEFORE THE AO, THE APPELLANT HAS SUBMITTED THE MODE IN WHICH HE CARRIES ON HIS BUSINESS AND ALSO EXPLAINED HOW MONIES ARE RECE IVED FROM FRIENDS AND RELATIVES AS UNSECURED LOANS WHICH ARE USED FOR PAY MENTS FOR GIVING SECURITY TO SELLER OF THE PROPERTY. THE UNSECURED LOANS ARE SUPPORTED BY CONFIRMATIONS AND LEDGERS. OTHER CREDITS INCLUDE CA SH DEPOSITS SUPPORTED BY CORRESPONDING CASH WITHDRAWALS, LOAN FROM BANK/NBFC SUPPORTED BY LEDGERS AND BROKERAGE INCOME. THE BROKERAGE INCOME IS SEPAR ATELY OFFERED AS BUSINESS INCOME BY THE APPELLANT. I HAVE CAREFULLY REVIEWED THE SUBMISSION OF THE APPELLANT. IT IS A FACT THAT THE BALANCE SHEET OF THE APPELLANT HAS NOT REFLECTED THE LOANS TAKEN. IT IS ALSO ON RECORD THA T ALL THE CREDITS IN THE BANK STATEMENT STAND EXPLAINED. I AM INCLINED TO GIVE TH E ASSESSEE THE BENEFIT OF A DEFECTIVE BALANCE SHEET MADE BY PROFESSIONALS ON WHOM HE RELI ED. IN VIEW OF THE ABOVE FINDINGS I RULE IN FAVOUR OF THE ASSESSEE AND ALLOW THIS SUB-GROUND OF APPEAL. GROUND NO.3 IT IS NOTICED FROM THE RECORDS AVAILABLE BEFORE ME THAT THE RETURNED TOTAL INCOME OF THE APPELLANT WAS RS.1,37,010/-. I DIRECT THE AO TO CONSIDER THE CORRECT RETURNED TOTAL INCOME WHILE GIVING EFFECT T O THE APPEAL ORDER. THIS GROUND OF APPEAL IS ALLOWED ON TECHNICAL GROUND. GROUND NO.5 ITA NO.4094/M/2015 SHRI RATANLAL B. GANDHI 3 THIS GROUND CONCERNS THE LEVY OF INTEREST U/S 234B, 234C AND 234D OF THE INCOME TAX ACT, 1961. THE LEVY OF INTEREST UNDER THE SAID SECTIONS ARE CONSEQUENTIAL AND REQUIRES NO ADJUDICATION. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. CIT(A) HAS VERIFIED THE REMAND REPORT AND DELET ED THE ADDITION ON THE GROUND THAT THIS INVESTMENT IS REFLECTED IN BALANCE SHEET AND DEFECTIVE PROFIT & LOSS ACCOUNT PREPARED BY THE ASS ESSEE. THEREFORE, OUR INTERFERENCE IS NOT REQUIRED. 5. THE SECOND ISSUE RELATES TO UNEXPLAINED CREDITS OF RS.55,03,000/- IN BANK ACCOUNT WHICH WAS TREATED BY THE AO AS UNDISCLOSED INCOME FROM UNDISCLOSED SOURCES. THE A O HAS MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS IN THE A SSESSEES BANK ACCOUNT WITH NEW INDIA CO-OP BANK LTD. AND AO HAS TAKEN THE CONTENTION THAT THIS IS A BUSINESS INCOME, THEREFOR E, IT MAY BE TREATED AS BUSINESS INCOME. 6. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS CONSIDERED THE SAME AND PARTLY ALLOWED BY OBSERVING AS UNDER: GROUND NO.2 B) UNEXPLAINED INVESTMENTS IN FLAT THE APPELLANT HAS MADE PAYMENTS TO THE SELLER BY AC COUNT PAYEE CHEQUES, DETAILS, OF WHICH ARE PLACED ON RECORD. AS REGARDS CASH PAYM ENT OF RS.47,110/-, THE SAME IS FOR STAMP DUTY AND REGISTRATION AND IS COVE RED BY THE WITHDRAWALS MADE BY THE APPELLANT FROM HIS BANK ACCOUNT. THIS SUB-GROUN D IS THEREFORE ALLOWED. B) ADHOC DISALLOWANCE OF EXPENSES THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY DETAIL OF THE VARIOUS EXPENSES INCURRED ALONGWITH ANY DOCUMENTARY EVIDENCE. IN THE ABSENCE OF ANY SUCH DETAILS ON ITA NO.4094/M/2015 SHRI RATANLAL B. GANDHI 4 RECORD, I AM OF THE VIEW THAT THE AO IS JUSTIFIED I N MAKING AN ADHOC DISALLOWANCE OF 50% OF THE EXPENDITURE CLAIMED. THIS SUB-GROUND IS THEREFORE DISMISSED. C) CREDITS IN BANK BEFORE THE AO, THE APPELLANT HAS SUBMITTED THE MODE IN WHICH HE CARRIES ON HIS BUSINESS AND ALSO EXPLAINED HOW MONIES ARE R ECEIVED FROM FRIENDS AND RELATIVES AS UNSECURED LOANS WHICH ARE USED FOR PAYMENTS FOR GIVING SECURITY TO SELLER OF THE PROPERTY. THE UNSECURED L OANS ARE SUPPORTED BY CONFIRMATIONS AND LEDGERS. OTHER CREDITS INCLUDE CA SH DEPOSITS SUPPORTED BY CORRESPONDING CASH WITHDRAWALS, LOAN FROM BANK/NBFC SUPPORTED BY LEDGERS AND BROKERAGE INCOME. THE BROKERAGE INCOME IS SEPARATELY OFFERED AS BUSINESS INCOME BY THE APPELLANT. I HAVE CAREFULLY REVIEWED THE SUBMISSION OF THE APPELLANT. IT IS A FACT THAT THE BALANCE SHEET OF THE APPELLANT HAS NOT REFLECTED THE LOANS TAKEN. IT IS ALSO ON RECORD THAT ALL THE CREDITS IN THE BANK STATEMENT STAND EXPLAINED. I AM INCLINED TO GIVE THE ASSESSEE THE BENEFIT OF A DEFECTIVE BALANCE SHEET MADE BY PR OFESSIONALS ON WHOM HE RELIED. IN VIEW OF THE ABOVE FINDINGS I RULE IN FAVOUR OF T HE ASSESSEE AND ALLOW THIS SUB-GROUND OF APPEAL. GROUND NO.3 IT IS NOTICED FROM THE RECORDS AVAILABLE BEFORE ME THAT THE RETURNED TOTAL INCOME OF THE APPELLANT WAS RS.1,37,010/-. I DIRECT THE AO TO CONSIDER THE CORRECT RETURNED TOTAL INCOME WHILE GIVING EFFECT T O THE APPEAL ORDER. THIS GROUND OF APPEAL IS ALLOWED ON TECHNICAL GROUND. GROUND NO.5 THIS GROUND CONCERNS THE LEVY OF INTEREST U/S 234B, 234C AND 234D OF THE INCOME TAX ACT, 1961. THE LEVY OF INTEREST UNDER T HE SAID SECTIONS ARE CONSEQUENTIAL AND REQUIRES NO ADJUDICATION. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 6. THE LD. D.R. COULD NOT BRING ANY EVIDENCE CONTRA RY TO THE FINDING OF THE LD. CIT(A). THEREFORE, WE ENDORSE T HE ACTION OF THE LD. CIT(A). 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 26.10.2017. SD/- SD/- ( N.K. PRADHAN ) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 26.10.2017. * KISHORE, SR. P.S. ITA NO.4094/M/2015 SHRI RATANLAL B. GANDHI 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.