A.C.I.T. CENTRAL CIRCLE 15 & 16, MUMBAI V. KIRAN H. SHAH, MUMBAI

ITA 4576/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70674 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Loose papers
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 4576/MUM/2012 (ASSESSMENT YEAR: 2008-09) ACIT, CENTRAL CIRCLE 15&16 SHRI KIRAN H. SHAH ROOM NO. 401, 4TH FLOOR 4/5, AMRUT TOWERS AAYAKAR BHAVAN, M.K. ROAD VS. 247 TELANG ROAD, MATUNGA MUMBAI 400020 MUMBAI 400019 PAN - AACPS0379N APPELLANT RESPONDENT APPELLANT BY: SHRI GANESH BARE RESPONDENT BY: SHRI PARESH SHAPARIA DATE OF HEARING: 12.08.2013 DATE OF PRONOUNCEMENT: 12.08.2013 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 04.04.2012 PASSED BY CIT(A)-39, MUMBAI AND IT PERTA INS TO A.Y. 2008-09. 2. THE FOLLOWING GROUND WAS URGED BY THE REVENUE: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-39 HAS ERRED IN DELETING THE ADDITION OF RS.1.18 CRORES ON THE BASIS OF THE ORDER OF THE HON'BLE ITAT WHICH HAS NOT REACHED FINALITY. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. THE ASSESSEE IS A TRANSPORTER AND COMMISSION AGENT. FOR THE YEAR UNDER CONSIDERATION IT DECLARED TOTAL INCOME OF ` 5,64,973/- AND AGRICULTURAL INCOME OF ` 1,397/-. THE RETURN WAS PROCESSED ACCORDINGLY. THER EAFTER IT WAS TAKEN UP FOR SCRUTINY WHEREIN THE AO OBSERVED THAT IN THE SEARCH AND SEIZURE ACTION CONDUCTED ON 22.09.2005 AT THE RESID ENTIAL PREMISES OF THE DIRECTORS/PARTNERS OF M/S. VIJAY GRIHANIRMAN PVT. L TD. AND ITS SISTER CONCERNS VARIOUS DOCUMENTS AND LOOSE PAPERS BELONGI NG TO THE ASSESSEE WERE FOUND. ASSESSEE WAS ONE OF THE DIRECTORS OF M/ S. MOTA CONSTRUCTION ITA NO. 4576/MUM/2012 SHRI KIRAN H. SHAH 2 PVT. LTD. WHICH IS ENGAGED IN CONSTRUCTION BUSINESS . CONSIDERING THE CIRCUMSTANCES THE REVISIONAL AUTHORITY SET ASIDE TH E ASSESSMENT ORDER UNDER SECTION 263 DATED 30.03.2010 ON THE GROUND TH AT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND DIRECTED THE AO TO PASS A DE NOVO ASSESSMENT ORDER. AS PER THE DIRECTI ONS THE ASSESSMENTS FOR ASSESSMENT YEARS 2000-01 TO 2006-07 WERE COMPLETED UNDER SECTION 143(3) R.W.S. 263 ON 28.12.2010 WHEREIN THE AO NOTICED THA T THE ASSESSEE CLAIMED TO HAVE OPENING BALANCE OF ` 2.33 CRORES AS ON 01.04.1999 WHICH IS DOUBTFUL AND HENCE HE BROUGHT TO TAX THE SAID AMOUNT IN A.Y. 2000-01. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEA RS 2000-01 TO 2006-07 ASSESSEE WAS CALLED UPON TO EXPLAIN THE CASH BALANC E OF ` 2.33 CRORES AND APPLICATION THEREOF FOR VARIOUS ACTIVITIES BY GIVIN G YEAR-WISE BREAK UP. THE ASSESSEE FURNISHED THE YEAR-WISE APPLICATION OF THE OPENING CASH BALANCE WHICH WAS ACCEPTED BY THE AO FOR A.Y. 2007-08 BUT I N RESPECT OF A.Y. 2000- 01 AN AMOUNT OF ` 2.33 CRORES WAS ADDED AS INCOME ON SUBSTANTIVE BASI S. ACCORDING TO THE AO THE CASH DEPOSITS IN THE BANK A CCOUNT FOR A.Y. 2008-09, THE YEAR UNDER CONSIDERATION, AMOUNTING TO ` 1.18 CRORES DESERVES TO BE ADDED UNDER THE HEAD INCOME FROM UNDISCLOSED SOURCE S ON PROTECTIVE BASIS. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS SHOWN BA LANCE, UNUTILISED IN THE FORM OF CASH AND DEBTORS, OF AN AMOUNT OF ` 29,74,000/- WHEREAS THE ASSESSEE HAS NOT SHOWN ANY DEBTORS WHICH ARE SHOWN OUTSTANDING TO THE EXTENT OF ` 29,74,000/-. THEREFORE, HE ASSUMED THAT THE AMOUNT OF ` 29,74,000/- HAS ALSO BEEN EXPENDED WHICH THE ASSESS EE HAS FAILED TO DISCLOSE. HE, THEREFORE, ADDED THE SAID AMOUNT TO A SSESSEES INCOME. 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE OPENING CASH BALANCE OF ` 2.33 CRORES HAS BEEN APPLIED FOR VARIOUS ACTIVITIES AND THIS HAS BEEN ACCEPTED BY THE ITAT IN THE ORDERS PASSED FOR ASSESSMENT YEARS 2000- 01 TO 2006-07. AS COULD BE NOTICED FROM PARA 5.3 OF THE ORDER PASSED BY THE CIT(A), THE CASE OF THE ASSESSEE IS THAT THE AO MAD E AN ADDITION ON PROTECTIVE BASIS ON ACCOUNT OF CASH DEPOSIT IN BANK ACCOUNT TO THE TUNE OF ` 1,18,70,000/- DURING THE YEAR UNDER CONSIDERATION O N THE REASON THAT THE CIT, CENTRAL-II, VIDE HIS ORDER UNDER SECTION 263, HAD SET ASIDE THE ORDER OF THE AO FOR ASSESSMENT YEARS 2000-01 TO 2006-07 TO V ERIFY THE AVAILABILITY OF ITA NO. 4576/MUM/2012 SHRI KIRAN H. SHAH 3 OPENING FUNDS OF ` 2.33 CRORES WHEREAS THE FACT REMAINS THAT THE ORDER PASSED UNDER SECTION 263 WAS APPEALED BEFORE THE IT AT, MUMBAI AND THE HON'BLE ITAT, MUMBAI, VIDE ITS ORDER DATED 30.12.20 11, QUASHED THE 263 PROCEEDINGS ON LAW AS WELL AS ON FACTS. THE ITAT HA S GIVEN A FINDING ON EACH COMPONENT OF ` 2.33 CRORES TO HOLD THAT THE ORDER PASSED BY THE AO ACCEPTING THE OPENING FUNDS OF ` 2.33 CRORES CANNOT BE CALLED ERRONEOUS OR PREJUDICI AL TO THE INTEREST OF REVENUE. IT WAS ALSO CONTENDED T HAT THE CASH DEPOSIT OF ` 1,18 CRORES IN THE BANK ACCOUNT DURING THE YEAR WAS UTILISED TO PAY THE TAXES ALONGWITH INTEREST ON THE INCOME OF ` 2.47 CRORES OFFERED TO TAX IN THIS YEAR. NO ADDITION COULD BE MADE TOWARDS UNDISCLOSED INCOME SINCE THE CASH DEPOSIT WAS OUT OF THE SAID CASH FLOW. IN OTHER WOR DS, THE CASH DEPOSIT IN THE BANK ACCOUNT WAS OUT OF DISCLOSED SOURCE WHICH WAS ACCEPTED. WITHOUT PREJUDICE, IT WAS ALSO SUBMITTED THAT OUT OF THE OP ENING FUNDS OF ` 2.33 CRORES THE ASSESSEE DEPOSITED CASH OF ` 44,50,000/- IN A.Y. 2007-08 AND THE SAID DEPOSIT OF CASH HAD BEEN ACCEPTED IN 143(3) PR OCEEDINGS AND EVEN ON THIS GROUND THE PROTECTIVE ADDITION OF ` 1,18 CRORES MADE IN THIS YEAR DESERVES TO BE DELETED. 5. THE LEARNED CIT(A) EXAMINED THE FACTS AND CIRCUMSTA NCES EXPLAINED BY THE ASSESSEE AND VIDE PARA 6 OF HIS ORDER NOTICE D THAT THE APPELLANTS CLAIM OF AVAILABILITY OF FUNDS AS ON 01.04.1999 HAS BEEN ACCEPTED BY THE ITAT AND HENCE THE SOURCE OF DEPOSITS IN THE BANK A CCOUNT IS PROVED IN WHICH EVENT THE ADDITION MADE IN THIS YEAR ON PROTE CTIVE BASIS DESERVES TO BE DELETED. SIMILARLY, WITH REGARD TO THE ADDITION OF ` 29,74,000/- THE LEARNED CIT(A) ADDRESSED THE ISSUE IN PARA 7 OF HIS ORDER T O COME TO A CONCLUSION THAT THERE IS NO CASE FOR MAKING AN ADDITION. 6. IT MAY BE NOTICED THAT THE REVENUE IS NOT IN APPEAL AGAINST THE DELETION ON ADDITION OF ` 29,74,000/-. WE ARE CONCERNED ONLY WITH THE ADDITION OF ` 1.18 CRORES. IT IS NOT THE CASE OF THE REVENUE THAT THE DEPOSITS MADE IN THIS YEAR ARE FROM UNDISCLOSED INCOME OF TH E ASSESSEE EARNED IN THE YEAR UNDER CONSIDERATION. THE LIMITED ISSUE IS THAT THE ASSESSEES CLAIM OF OPENING BALANCE OF ` 2.33 CRORES AS ON 01.04.1999 HAVING NOT BEEN ACCEPT ED, ITA NO. 4576/MUM/2012 SHRI KIRAN H. SHAH 4 THE DEPOSITS IN THIS YEAR DESERVE TO BE ADDED, AS C OULD BE NOTICED FROM THE GROUNDS URGED BEFORE US. 7. THE LEARNED D.R., AT THE TIME OF HEARING, COULD NOT PLACE ANY MATERIAL ON RECORD TO PERSUADE US TO COME TO A DIFFERENT FIN DING. SUBSEQUENT TO THE HEARING THE LEARNED D.R. FILED A LETTER DATED 12.08 .2013, AFTER VERIFICATION OF FACTS AND DISCUSSION WITH THE AO, THAT HE HAS NOTHI NG MORE TO STATE EXCEPT RELYING UPON THE ASSESSMENT ORDER. IN OTHER WORDS, THE REVENUE COULD NOT PLACE ANY MATERIAL TO CONTRADICT THE FINDINGS OF TH E LEARNED CIT(A). UNDER THIS CIRCUMSTANCE WE UPHOLD THE ORDER OF THE LEARNE D CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 12 TH AUGUST, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 39, MUMBAI 4. THE CIT CENTRAL-II, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.