Shri Prakashbhai Dahyabhai Babariya, Ahmedabad V. The Income Tax Officer, Ward-1(1), Bhavnagar

ITA 456/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5890 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES KURIAN HEARING CONCLUDED
• Assessee Lawyers: B R POPAT
• Keywords: Unexplained investment
• Section: 143(3); 69

Judgement Text

ITA NO.456/AHD/2016 ASSESSMENT YEAR: 2009-10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NO.456/AHD/2016 ASSESSMENT YEAR: 2009-10 PRAKASHBHAI DAHYABHAI BABARIYA ..................APPELLANT C/O. B.R. POPAT & CO., CHARTERED ACCOUNTANTS 326, GALAXY MALL, ABOVE BANK OF INDIA, OPP. JHANSI KI RANI BRTS BUS STOP, SATELLITE ROAD, AHMEDABAD 380 015. [PAN : AIYPB 2335 D] VS. INCOME TAX OFFICER, WARD 1(1), BHAVNAGAR. ............................RESPONDENT APPEARANCES BY B.R. POPAT FOR THE APPELLANT JAMES KURIAN FOR THE RESPONDENT HEARING CONCLUDED ON: 24.01.2018 ORDER PRONOUNCED ON : 21.03.2018 O R D E R PER PRAMOD KUMAR, AM: 1. THIS APPEAL FILED BY THE ASSESSEE APPELLANT IS D IRECTED AGAINST ORDER DATED 21.12.2015, PASSED BY THE LEARNED CIT(A), IN THE MA TTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (THE ACT HEREIN AFTER), FOR THE ASSESSMENT YEAR 2009-10. 2. GRIEVANCE RAISED BY THE ASSESSEE IS AS FOLLOWS : - 1. THE LEARNED CIT(A)-6, AHMEDABAD HAS ERRED IN LA W AND ON FACTS IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.10,25,000/- BY TREATING THE SAME AS UNEXPLAINED INVESTMENT UNDER SECTION 69 B OF THE ACT. ITA NO.456/AHD/2016 ASSESSMENT YEAR: 2009-10 PAGE 2 OF 3 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER MADE THE IMPUGNED ADDITION OF RS.10,25,000/- BY OBSERVING AS FOLLOWS :- 8. IT IS FURTHER SEEN FROM THE RECORDS THAT AS PER THE ANNUAL INFORMATION RETURN FURNISHED BY THE KOTAK MAHINDRA INVESTMENTS LTD. U/S.285BA OF THE ACT, THE ASSESSEE HAS MADE INVESTMENT OF RS.10,25,000/- IN BONDS/DEBENTURE OF KOTAK MAHINDRA INVESTMENTS LIMITED DURING THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUESTED TO FURNISH SOURCE WITH DOCUMENTARY EVIDENCE OF THE SAME. HOWE VER, THE ASSESSEE DID NOT FURNISH THE SAME. HENCE, A SHOW CAUSE VIDE THIS OF FICE LETTER DARED 21.11.2011 WAS ISSUED AND SERVED UPON THE ASSESSEE AS TO WHY T HE INVESTMENT OF RS.10,25,000/- SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT U/.S.69B OF THE INCOME-TAX ACT, 1961 AND ADDED TO TOTAL INCOME. 8.1 THE ASSESSEE FURNISHED REPLY OF THE SAME VIDE H IS SUBMISSION DATED 08.11.2011 AND 28.11.2011. THE REPLY OF THE ASSESS EE IS CONSIDERED. ON CAREFUL CONSIDERATION OF THE SAME, IT IS SEEN THAT THERE IS NO SUBSTANCE IN IT. IT IS ALSO NOT SUPPORTED BY ANY COGENT DOCUMENTARY EVIDEN CE. IT IS CONTENDED BY THE ASSESSEE THAT SOURCE OF THE INVESTMENT OF RS.10,25, 000/- IN THE ABOVE BOND DEBENTURE OF KOTAK MAHINDRA INVESTMENT LIMITED IS F ROM THE INTEREST FREE UNSECURED LOANS TAKEN FROM SHRI GIRISHBHAI D BABARI YA, HIS BROTHER AND SMT. PUSHPABEN PRAKASHBHAI, HIS WIFE. IN THIS REGARD, I T IS OBSERVED THAT A LAY MAN WOULD THINK OF MAKING AN INVESTMENT ONLY WHEN HE IS HAVING SPARE MONEY. HE WOULD NEVER THINK OF INVESTMENT IF HE DOES NOT HAVE HIS OWN FUND. IN THE CASE OF ASSESSEE, IT IS CLAIMED BY THE ASSESSEE THAT HIS BR OTHER GAVE HIM INTEREST FREE LOAN OF RS.7,00,000/- FOR THE PURPOSE OF MAKING INV ESTMENT IN THE ABOVE BONDS/DEBENTURES. MEANING THEREBY THAT SHRI GIRISH BHAI D BABARIYA, THE BROTHER OF ASSESSEE, INSTEAD OF MAKING INVESTMENT OUT OF HI S OWN SPARE MONEY IN HIS OWN NAME AND EARNING SOMETHING OUT OF IT, HE PARTED WITH THOSE RS.7 LACS AND LOST NOT ONLY THE INTEREST ON HIS SPARE MONEY BUT A LSO, THE DIVIDEND ON THE SUCH INVESTMENT IN BOND/DEBENTURE. NO PRUDENT PERSON WO ULD DO LIKE THIS. 8.2 WITHOUT PREJUDICE TO THE ABOVE, AS DISCUSSED AB OVE, THE CREDITWORTHINESS AND COMPETENCY OF BOTH THE DEPOSITORS ARE NOT ESTAB LISHED BY THE ASSESSEE. HENCE, ABOVE INVESTMENT OF RS.10,25,000/- MADE IN B ONDS/DEBENTURE OF KOTAK MAHINDRA INVESTMENTS LIMITED DURING THE YEAR UNDER CONSIDERATION REMAIN UNEXPLAINED. ACCORDINGLY, THE SAID INVESTMENT OF R S.10,25,000/- IS TREATED AS UNEXPLAINED INVESTMENT U/S.69B OF THE INCOME-TAX AC T, 1961. THUS, AN AMOUNT OF RS.10,25,000/- IS ADDED TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 IS INITIA TED ON THIS ISSUE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. ITA NO.456/AHD/2016 ASSESSMENT YEAR: 2009-10 PAGE 3 OF 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 6. WE HAVE NOTED THAT THE INVESTMENTS IN KOTAK MAHI NDRA INVESTMENT LIMITEDS DEBENTURE ARE MADE OUT OF LOANS FROM SHRI GIRISHBHA I BABARIYA, BROTHER OF THE ASSESSEE (RS.7,00,000/-) AND SMT. PUSHPABEN BABARIYA, WIFE O F THE ASSESSEE (RS.2,35,000/-) AND CREDIT BALANCE IN ASSESSEES OVERDRAFT ACCOUNT. BOTH THE LENDERS ARE ASSESSED TO TAX AND THEIR ASSESSMENT DETAILS ARE ON RECORD. TH E EXISTENCE OF THESE PERSONS IS NOT IN DOUBT AND THEY ARE RELATED TO THE ASSESSEE. UNDER THESE CIRCUMSTANCES, INVESTMENTS MADE OUT OF THESE FUNDS CANNOT, BY ANY STRETCH OF L OGIC, BE TREATED AS UNEXPLAINED INVESTMENTS. AS REGARDS ANY ISSUES ABOUT SOURCES O F INCOME OF THESE PERSONS, THE SAME CAN BE, GIVEN THE CIRCUMSTANCES OF THIS CASE A ND OUR PRIMA FACIE SATISFACTION WITH THE BONAFIDES, CAN ONLY BE ADDRESSED IN THEIR RESPE CTIVE ASSESSMENTS. IN ANY EVENT, HAVING PERUSED THE MATERIAL ON RECORD, WE ARE SATIS FIED PRIMA FACIE ABOUT THE GENUINENESS AS WELL. IN THE LIGHT OF THESE DISCUSS IONS AND BEARING IN MIND ENTIRETY OF THE CASE, WE DELETE THE IMPUGNED ADDITIONS. THE AS SESSEE GETS THE RELIEF ACCORDINGLY. 7. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERM S INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF MARCH, 2018. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) DATED: 21 ST MARCH, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD