MAHENDRA CHINTAMAN PITKAR, THANE V. ITO 1(2), THANE

ITA 4224/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3716 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 4223/MUM/2015 (ASSESSMENT YEAR : 2011-12) SMT. MANASI MAHENDRA PITKAR, 2-A, 18, RAMKRISHNA CHS LTD., CHERY HOSPITAL, OFF EASTERN EXPRESS- HIGHWAY, SERVICE RD., THANE 400 604 ...... APPELLANT PAN: APHPP5322A VS. THE INCOME TAX OFFICER 1(2), THANE 1(2). .... RESPONDENT ITA NO. 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) SHRI. MAHENDRA CHINTAMAN PITKAR, 2-A, 18, RAMKRISHNA CHS LTD., CHERY HOSPITAL, OFF EASTERN EXPRESS- HIGHWAY, SERVICE RD., THANE 400 604 ...... APPELLANT PAN: APHPP5322A APPELLANTS BY : SHRI DEVENDRA JAIN RESPONDENT BY : SHRI A.K.KARDAM DATE OF HEARING : 15/07/2016 DATE OF PRONOUNCEMENT : 12/08/2016 ORDER THE CAPTIONED ARE TWO APPEALS PERTAINING TO ASSESSM ENT YEAR 2011-12, PREFERRED BY HUSBAND AND WIFE. IN BOTH T HE APPEALS THE DISPUTE IS COMMON, WHICH REVOLVES AROUND TREATING C ASH DEPOSITS MADE IN THE JOINT BANK ACCOUNT TO THE EXTENT OF RS.27,36 ,500/- AS UNEXPLAINED CASH CREDITS WITHIN THE MEANING OF SECT ION 68 OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). 2 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) 2. IN THE CASE OF THE HUSBAND, I.E. SHRI MAHENDRA C HINTAMAN PITKAR, THE AMOUNT HAS BEEN ASSESSED ON SUBSTANTIVE BASIS, WHILE IN THE HANDS OF THE WIFE I.E. MANASI MAHENDRA PITKAR, THE SAME H AS BEEN ASSESSED ON PROTECTIVE BASIS. IN VIEW OF THE AFORESAID, THE AP PEAL IN THE CASE OF SHRI MAHENDRA CHINTAMAN PITKAR VIDE ITA NO.4224/MUM/201 5 IS TAKEN AS THE LEAD CASE IN ORDER TO APPRECIATE THE CONTROVERS Y. ITA NO.4224/MUM/2015 3. THIS APPEAL PERTAINING TO ASSESSMENT YEAR 2010- 11 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-1, THANE DATED 2 9/05/2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSIN G OFFICER UNDER SECTION 143(3) OF THE ACT DATED 28/03/2014. IN T HIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION UN DER SECTION. 68 MADE BY THE LD. A.O IN RESPECT OF CASH DEPOSITS ONL Y TO THE EXTENT OF RS.27,36,500/- AS AGAINST THE CLAIM OF APPELLANT TH AT ENTIRE ADDITION OF RS.29,53,500/- MAY PLEASE BE DELETED. THE SAID ADDITION WAS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THE APPEL LANT AND ON PROTECTIVE BASIS IN THE HANDS OF APPELLANTS WIFE I .E. SMT. MANASI MAHENDRA PITKAR. 4. AT THE TIME OF HEARING, LD. REPRESENTATIVE FOR T HE ASSESSEE POINTED OUT THAT ASSESSEE HAS RAISED AN ADDITIONAL GROUND OF APPEAL, WHICH READS AS UNDER:- THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDI TION MADE BY THE A.O UNDER SECTION. 68 IN RESPECT OF CASH DEPOSITS I N THE BANK ACCOUNT DISREGARDING THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF BHAICHAND GANDHI [1983-(141)ITR -0067-BOM} IN WHICH IT IS HELD THAT, 3 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE COULD NOT BE REGARDED AS A BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. 4.1 IT IS SOUGHT TO BE POINTED OUT THAT THE ADDITIO NAL GROUND OF APPEAL INVOLVES A LEGAL ISSUE, FOR WHICH THE RELEV ANT FACTS ARE ALREADY ON RECORD AND, THEREFORE, IT SHOULD BE ADMITTED FO R ADJUDICATION. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT OPPOSED THE PLEA FOR ADMISSION OF THE AFORESAID ADDITIONAL GROUND. 5. I FIND THAT THE ADDITIONAL GROUND OF APPEAL PREF ERRED BY THE ASSESSEE IS BASED ON A LEGAL POSITION ENUNCIATED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BHAICHAND GANDHI (SUPRA) AND IT INVOLVES A PURE POINT OF LAW FOR WHICH THE NECESSARY FACTS ARE ALREADY ON RECORD. THEREFORE, THE ADDITIONAL GROUND OF APPEAL DESERVES TO ADMITTED IN THE LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD., VS. CIT, 229 I TR 383(SC). ACCORDINGLY, AT THE TIME OF HEARING, IT WAS POINTED OUT THAT THE ADDITIONAL GROUND OF APPEAL IS BEING ADMITTED FOR A DJUDICATION. AS A CONSEQUENCE, BOTH THE SIDES HAVE BEEN HEARD ON MERI TS OF THE ADDITIONAL GROUND OF APPEAL ALSO. 6. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APP ELLANT IS AN INDIVIDUAL, WHO WAS EMPLOYED WITH THE MUNICIPAL CO RPORATION OF GREATER MUMBAI. THE ASSESSING OFFICER NOTED THAT D URING THE YEAR UNDER CONSIDERATION CASH WAS DEPOSITED ON VARIO US DATES TOTALLING TO RS.29,53,500/- IN THE JOINT BANK ACCOUNT HELD WI TH HIS WIFE IN THANE JANATA SAHAKARI BANK. ON BEING ASKED TO EXPLAIN THE NATURE AND 4 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) SOURCE OF SUCH DEPOSITS, ASSESSEE POINTED OUT THAT THE AMOUNTS WERE RECEIVED FROM HIS FATHER, FATHER-IN-LAW, SON AND VA RIOUS OTHER RELATIVES & FRIENDS THAT SUCH AMOUNTS WERE IN-TURN USED FOR THE TREATMENT OF HIS WIFE. IT WAS EXPLAINED THAT ASSESSEES WIFE WAS BE DRIDDEN AND SUFFERING FROM THE DISEASE OF MULTIPLE SCLEROSIS, WHICH REQ UIRED A COSTLY MEDICAL TREATMENT. IT WAS FURTHER EXPLAINED THAT THE MEDI CINES REQUIRED WERE BEING IMPORTED AND FOR THAT PURPOSE PAYMENTS BY CHE QUES WERE MADE TO THE DEALER, WHO WAS HAVING IMPORT LICENCE. IT W AS POINTED OUT THAT THE MONTHLY EXPENDITURE ON THIS COUNT WAS NEARLY RS . 2.50 LACS I.E. RS.30.00 LACS A YEAR. THE ASSESSEE BEING A SALARI ED EMPLOYEE WITH LIMITED RESOURCES, THE SAID AMOUNTS WERE RECEIVED F ROM FAMILY MEMBERS, RELATIVES AND FRIENDS FOR THE PURPOSE OF T HE MEDICAL TREATMENT OF HIS WIFE. THE ASSESSING OFFICER HAS N OT ACCEPTED THE EXPLANATION FURNISHED BY THE ASSESSEE AND INSTEAD T REATED THE AMOUNT OF CASH DEPOSITS OF RS.29,53,500/- AS UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. BEFORE CIT(A), A SSESSEE REITERATED SIMILAR SUBMISSIONS AND ALSO REFERRED TO THE CASH W ITHDRAWALS MADE BY HIS FATHER, FATHER-IN-LAW AND SON TO EXPLAIN THE PO RTION OF THE CASH DEPOSITS. THE BALANCE WAS ALSO EXPLAINED AS HAVING BEEN RECEIVED FROM FRIENDS AND RELATIVES. THE CIT(A) GAVE RELIEF OF R S.2,70,000/- WITH RESPECT TO THE WITHDRAWALS FOUND IN THE BANK ACCOUN T OF ASSESSEES FATHER AND ACCORDINGLY, HE CONFIRMED THE BALANCE O F THE ADDITION OF RS.27,36,500/- AS AN UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. AGAINST SUCH AN ADDITION, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) 7. BEFORE ME, THE FIRST AND FOREMOST PLEA OF THE A SSESSEE IS THAT THE EXPLANATION OF THE ASSESSEE HAS BEEN UNJUSTLY REJEC TED IN AS MUCH AS THE SAID FACT-SITUATION IS UNASSAILABLE . IN SUPPO RT, AN AFFIDAVIT OF THE ASSESSEE AVERRING THE REASONS FOR THE IMPUGNED CASH DEPOSITS HAS ALSO BEEN FURNISHED AT THE TIME OF HEARING, THE RELEVANT CONTENTS OF WHICH ARE AS UNDER:- 1. I WAS WORKING AS DEPUTY CHIEF ENGINEER WITH MU NICIPAL CORPORATION OF GREATER MUMBAI AND RETIRED IN THE YE AR 2014. 2. DURING THE FINANCIAL YEAR 2010-11, I HAD DEPOSI TED CASH OF RS.29,53,500/- IN THE JOINT ACCOUNT OF MYSELF AND M Y WIFE HELD WITH THANE JANATA SAHAKARI BANK. 3. MY WIFE IS UNDERGOING TREATMENT OF MULTIPLE SCLE ROSIS. 'MULTIPLE SCLEROSIS' IS A LONG- LASTING DISEASE WHICH AFFECTS ONE'S BRAIN, SPINAL CORD, AND THE OPTIC NERVES IN ONE'S EYES IT CAUSES PROBLEMS WITH VISION, BALANCE, MUSCLE CONTROL, AND OTHER BASIC BO DY FUNCTIONS. IT IS A VERY RARE KIND OF DISEASE. 4. SHE IS BEDRIDDEN FOR LAST MANY YEARS. THE TREAT MENT INVOLVES A SUBSTANTIAL MEDICAL EXPENDITURE. THE MEDICINES TO T HE ABOVE DISEASE ARE PURCHASED FROM OUTSIDE INDIA WHICH ARE VERY COS TLY. THE INJECTION WHICH IS TO BE TAKEN DAILY COSTS AROUND RS 6000/-. ALL THESE MEDICINES REQUIRE REFRIGERATION AT A PARTICULAR TEM PERATURE. KANTILAL CHHAGANLAL SEC. PVT. LTD IS HAVING IMPORT LICENCE W HICH PROVIDES MEDICINES THROUGH TIME & TEMPERATURE COURIER. THE M ONTHLY EXPENDITURE IS NEARLY RS. 2.5 LAKHS LE RS. 30 LAKHS A YEAR. 5. I AM ATTACHING HEREWITH THE PHOTOGRAPHS FROM WH ICH ONE CAN HAVE AN IDEA ABOUT HER ILLNESS. 6. I WAS A SALARIED EMPLOYEE HAVING TAXABLE INCOME OF RS. 7 ,48,290/- AND HAD NO OTHER SOURCE OF INCOME. HENCE, I HAD TO TAKE THE FUNDS FROM PARENTS, IN-LAWS, OTHER RELATIVES AN D ALSO FROM FRIENDS AND COLLEAGUES. 7. THERE WERE NUMEROUS RELATIVES, FRIENDS AND WELL WISHERS WHO WERE HELPING OUR FAMILY BY GIVING SMALL CONTRIBUTIO NS ON HUMANITARIAN GROUNDS. SINCE THE PAYMENT FOR MEDICIN ES TO KANTILAL CHHAGANLAL SEC. PVT. LTD WAS REQUIRED TO BE MADE BY CHEQUE, IT BECAME INEVITABLE FOR ME TO KEEP THE FUNDS READY IN ONE SINGLE 6 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) ACCOUNT TO KEEP THE TRACK OF THE PAYMENTS. HENCE. T HE AMOUNTS WERE WITHDRAWN FROM THE BANK ACCOUNTS RELATIVES AND THE SAME WERE DEPOSITED IN THE SAID JOINT ACCOUNT TO AVOID T HE DELAY. 8. IN THE INCOME TAX ASSESSMENT FOR THE SAID YEAR, THE ASSESSING OFFICER MADE THE ADDITION ON THE GROUND THAT I COU LD NOT PROVE THE GENUINENESS OF THE TRANSACTIONS. IT IS NOT FEASIBLE FOR ME TO PROVE THE SAME WITH DOCUMENTARY EVIDENCE AS I HAD TAKEN S MALL AMOUNTS FROM VARIOUS RELATIVES AND THAT TOO ON MANY OCCASIO NS. 7.1 IN SUPPORT OF THE AFFIDAVIT, A REFERENCE HAS AL SO BEEN MADE TO THE PAPER BOOK FILED, WHEREIN IS PLACED THE COPIES OF P APERS RELATING TO THE TREATMENT OF MULTIPLE SCLEROSIS DISEASE OF ASSES SEES WIFE. LD. REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT TH AT ALL THE PAYMENTS MADE FOR PURCHASE OF MEDICINES ARE BY WAY OF ACCO UNT PAYEE CHEQUES AND THE SAME IS EVIDENT FROM THE COPY OF THE BANK STATEMENT ITSELF, WHICH HAS ALSO BEEN PLACED IN THE PAPER BOOK FILED BEFORE ME. APART FROM REITERATING THE EXPLANATION RENDERED BEFORE TH E LOWER AUTHORITIES, THE LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE INVOKING OF SECTION 68 OF THE ACT, IN THE PRESE NT CASE IS NOT JUSTIFIED IN VIEW OF THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF BHAICHAND GANDHI (SUPRA). THEREFORE, IT IS CONT ENDED THAT THE ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT IS NOT JUSTIFIED AT ALL. 8. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS DEFENDED THE ORDER OF THE CIT(A) BY POINTING OUT TH AT THE EXPLANATION OF THE ASSESSEE OF HAVING RECEIVED MONEY FROM RELATIVE S AND FRIENDS IS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE AND, THER EFORE, THE SAME HAS BEEN RIGHTLY REJECTED. IN THIS MANNER, THE ORDER O F THE CIT(A) IS SOUGHT TO BE DEFENDED. 7 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) 9. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. IN THE PRESENT CASE THE ADDITION HAS BEEN MADE BY THE INCOME TAX A UTHORITIES BY TREATING THE CASH DEPOSITS IN THE BANK ACCOUNT AS A N UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT . THE LEGAL POINT RAISED BY THE ASSESSEE IS TO THE EFFECT THAT THE BA NK PASS BOOK IS NOT AN ACCOUNT BOOK MAINTAINED BY THE ASSESSEE SO AS TO FA LL WITHIN THE AMBIT OF SECTION 68 OF THE ACT. UNDER SECTION 68 OF THE ACT, IT IS ONLY WHEN AN AMOUNT IS FOUND CREDITED IN THE ACCOUNT BOOKS OF TH E ASSESSEE FOR ANY PREVIOUS YEAR THAT THE DEEMING PROVISIONS OF SECTIO N 68 OF THE ACT WOULD APPLY IN THE CIRCUMSTANCES MENTIONED THEREIN. NOTABLY, SECTION 68 OF THE ACT WOULD COME INTO PLAY ONLY IN A SITUAT ION WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE .............. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI BHAICHAND GA NDHI (SUPRA)HAS APPROVED THE PROPOSITION THAT A BANK PASS BOOK MAIN TAINED BY THE BANK CANNOT BE REGARDED AS A BOOK OF THE ASSESSEE FOR T HE PURPOSES OF SECTION 68 OF THE ACT . FACTUALLY SPEAKING, IN THE PRESENT CASE, ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND SECTION 68 OF THE ACT HAS BEEN INVOKED BY THE ASSESSING OFFICER ONLY ON THE BASIS OF THE BANK PASS BOOK. THE INVOKING OF SECTION 68 OF THE ACT H AS TO FAIL BECAUSE AS PER THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRI BHAICHAND GANDHI(SUPRA), THE BANK PASS BOOK OR BANK STATEMENT CANNOT BE CONSTRUED TO BE A BOOK MAINTAINED BY THE ASSESSEE FOR ANY PREVIOUS YEAR AS UNDERSTOOD FOR THE PURPOSES OF SEC TION 68 OF THE ACT. THEREFORE, ON THIS ACCOUNT ITSELF, THE IMPUGNED ADD ITION DESERVES TO BE DELETED. I HOLD SO. 8 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) 9.1 EVEN OTHERWISE, I FIND THAT THE EXPLANATION REN DERED BY THE ASSESSEE HAS BEEN MERELY DISBELIEVED WITHOUT ESTABL ISHING ANY CREDIBLE INFIRMITY OR FALLACY IN THE SAME. OSTENSIBLY, THE CIRCUMSTANCES IN WHICH THE CASH DEPOSITS HAVE BEEN MADE AND THE PURPOSE FO R WHICH SUCH MONIES HAVE BEEN UTILIZED IS EMERGING FROM RECORD A ND IN ANY CASE, THERE IS NO MATERIAL FOUND BY THE ASSESSING OFFICER TO DIS-PROVE THE SAME. OF COURSE, THE ASSESSEE COULD NOT PRODUCE AN Y FORMAL CORROBORATIVE EVIDENCE OF HAVING RECEIVED RESPECTIV E AMOUNTS FROM FRIENDS AND RELATIVES, SO HOWEVER, IT IS TO BE APP RECIATED THAT SECTION 68 IS A RULE OF EVIDENCE; AND, THE ASSESSING OFFICER I S EXPECTED TO CONSIDER THE EXPLANATION RENDERED IN THE CONTEXT OF THE CIRC UMSTANCES OF EACH CASE. BE THAT AS IT MAY, SINCE I HAVE ALREADY HELD THAT THE ADDITION IS UNSUSTAINABLE FOLLOWING THE RATIO OF THE JUDGMENT IN THE CASE OF SHRI BHAICHAND GANDHI (SUPRA), I DO NOT DEAL WITH THE IN STANT ASPECT ANY FURTHER. IN THE RESULT, THE ORDER OF THE CIT(A) I S SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N OF RS.27,36,500/- MADE UNDER SECTION. 68 OF THE ACT . 9.2 RESULTANTLY, APPEAL OF THE ASSESSEE IN ITA N O.4224/MUM/2015 IS ALLOWED. 10. THE OTHER APPEAL BY SMT. MANASI MAHENDRA PITKAR IS DIRECTED AGAINST THE ORDER OF CIT(A) -1, MUMBAI DATED 29/05/ 2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFF ICER UNDER SECTION 143(3) OF THE ACT DATED 28/03/2014. 10.1 IN THIS CASE, THE ADDITION HAS BEEN MADE BY T HE ASSESSING OFFICER ON PROTECTIVE BASIS, WHEREAS THE SAME ADDITION DEAL T WITH BY ME IN THE 9 ITA NO. 4223& 4224/MUM/2015 (ASSESSMENT YEAR : 2011-12) EARLIER APPEAL HAD BEEN MADE ON SUBSTANTIVE BASIS. SINCE THE ADDITION HAS BEEN FOUND TO BE UNSUSTAINABLE ON ACCOUNT OF IN APPLICABILITY OF SECTION 68 IN THE CASE OF SHRI.MAHENDRA CHINTAMAN PITKAR(SUPRA) IN THE EARLIER PARAS, THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE INSTANT ASSESSEE IS ALSO HELD TO BE UNSUSTAINABLE. I HOLD SO. 11. RESULTANTLY, THE CAPTIONED APPEALS ARE ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 12/08/2016 SD/- (G.S. PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 12/08/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI