KAMLESH V. DUBEY, MUMBAI V. ITO WD 23(1)(1), MUMBAI

ITA 462/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9313 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: VALLABHDAS D PARMAR
• Keywords: Unexplained investment
• Section: 69C; 143(3); 142(1); 6

Judgement Text

1 ITA 462/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO. 462/MUM/2015 (ASSESSMENT YEAR 2009-10) SHREE KAMLESH V DUBE 910/3/8, NEW HANUMAN NAGAR SOCIETY, NEAR HANUMAN MANDIR, HANUMAN NAGAR-A, PARLE SITE, VIKROLI (WEST), MUMBAI 400 079 PAN : AFXPD1004M VS ITO, WD.23(1)(1), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI VALLABHDAS D PARMAR RESPONDENT BY SHRI RAJESH KUMAR YADAV DATE OF HEARING 01-08-2017 DATE OF PRONOUNCEMENT 20-09-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)- 33, MUMBAI DATED 01-05-2014 AND IT PERTAINS TO ASSE SSMENT YEAR 2009-10. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS 631260/- OUT OF TOTAL ADDITION OF RS 32,58,130/- AS UNEXPLAINED INVESTMENT IN FLAT . 2) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LD. CIT(A) ERRED IN CONFIRMING ADDITION3,49,355/REPRESE NTING DIFFERENCE IN 2 ITA 462/MUM/2015 NET PROFITS OF TWO DIFFERENT P& L ACCOUNT FOR THE S AME PERIOD US 69A AND 69C. 3) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LD. CIT(A) ERRED IN CONFIRMING ADDITION OR RS 8,14,904 WHICH REPRESENTS DIFFERENCE IN CASH ON HANDS AS PER CASH BOOK AND CA SH ON HAND AS PER BALANCE SHEET US 69A AS UNEXPLAINED CASH ON HAND. 4) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW T HE LD. CIT(A) ERRED IN CONFIRMING ADDITIONS US 69B AND 69 OF RS 4,50,000/- REPRESENTING PREMATURE WITHDRAWALS OF FDR AS UNEXPL AINED INVESTMENTS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME FOR AY 2009-10 ON 15-10-2010 DECLARING TOTAL INCOME AT RS.4,64,226. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AN D 142(1) WERE ISSUED. IN RESPONSE TO NOTICES, AUTHORIZED REPRESENTATIVE OF T HE ASSESSEE APPEARED AND FURNISHED THE DETAILS AS CALLED FOR. ASSESSMENT WA S COMPLETED U/S 143(3) ON 29-12-2011 DETERMINING THE TOTAL INCOME AT RS.80,88 ,270 INTERALIA MAKING ADDITIONS TOWARDS INVESTMENT IN PURCHASE OF FLAT U/ S 69B, DIFFERENCE IN NET PROFIT FROM P&L ACCOUNT FILED BEFORE AO U/S 69A & 6 9C, DIFFERENCE IN CASH IN HAND AS PER CASH BOOK AND CASH IN HAND AS PER BALAN CE-SHEET, DIFFERENCE IN FIXED DEPOSITS, DIFFERENCE IN SECURITY DEPOSIT AND DIFFERENCE IN TURNOVER. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREFERR ED APPEAL BEFORE THE CIT(A) AND FILED ELABORATE WRITTEN SUBMISSIONS CHAL LENGING ALL ADDITIONS MADE BY THE AO. THE CIT(A), FOR THE REASONS RECORDED IN HIS ORDER DATED 01-05-2014 PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE WHEREIN HE CONFIRMED ADDITIONS OF 3 ITA 462/MUM/2015 RS.6,31,260 OUT OF TOTAL ADDITIONS MADE BY THE AO O F RS.32,58,130 TOWARDS INVESTMENT IN FLAT. THE CIT(A) CONFIRMED ADDITIONS MADE BY THE AO TOWARDS DIFFERENCE IN NET PROFIT AS PER TWO P&L ACCOUNTS FI LED BY THE ASSESSEE AND DIFFERENCE IN CASH BALANCE AS PER CASH BOOK AND CAS H BALANCE AS PER BALANCE- SHEET. THE CIT(A) FURTHER UPHELD ADDITIONS MADE BY THE AO TOWARDS UNEXPLAINED FIXED DEPOSIT IN BANK ACCOUNT; HOWEVER, DELETED ADDITIONS MADE BY THE AO TOWARDS LEASE DEPOSITS AND SET ASIDE THE ISSUE OF ADDITION MADE TOWARDS DIFFERENCE IN TURNOVER AND SERVICE TAX PAI D U/S 69C OF THE INCOME-TAX ACT, 1961. AGGRIEVED BY THE ORDER OF C IT(A) ASSES SEE IS IN APPEAL BEFORE US. 4. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IS ADDITION OF RS.6,31,2650 TOWARDS INVESTMENT IN FLAT. THE ASSES SEE HAS PURCHASED A FLAT FOR RS.58,61,490. THE INVESTMENT HAS BEEN MADE IN THRE E FINANCIAL YEARS. DURING THE FINANCIAL YEAR RELEVANT TO AY 2009-10 ASSESSEE HAS MADE TOTAL PAYMENT OF RS.25,05,440. THE SOURCE FOR THE ABOVE PAYMENT IS SHOWN OUT OF LOANS FROM ICICI BANK OF RSA.18,74,180 AND REMAINING AMOUNT OF RS.6 LAKHS HAS BEEN PAID BY CHEQUE OF HDFC BANK CURRENT ACCOUNT BY CHEQUE NO .362408 DATED 03-04- 2008. THE REGISTRATION EXPENSES OF RS.31,260 HAS B EEN PAID IN CASH. THE AO MADE ADDITION BY TAKING INTO ACCOUNT THE TOTAL INVE STMENT MADE IN FLAT AFTER ALLOWING CREDIT FOR LOAN BORROWED FROM ICICI BANK O F RS.26,20,000. ACCORDING TO THE AO, THE ASSESSEE HAS NOT PROVED THE SOURCE F OR BALANCE INVESTMENT. THE 4 ITA 462/MUM/2015 CIT(A) HAS ALLOWED RELIEF OF RS.18,74,180 OUT OF TO TAL ADDITIONS MADE BY THE AO OF RS.32,58,130. INSOFAR AS REMAINING AMOUNT OF RS .6,31,260, THE ASSESSEE HAS FAILED TO PRODUCE ANY COGENT EVIDENCE WITH REGARD T O THE SOURCES FOR SUCH INVESTMENTS. THE ASSESSEE CLAIMS THAT THE PAYMENT OF RS.6 LAKHS FROM HDFC BANK CURRENT ACCOUNT HAS BEEN MADE OUT OF LOAN PROC EEDS RECEIVED FROM ICICI BANK LTD. THE ASSESSEE FURTHER CONTENDED THAT THE BANK HAS RELEASED AN AMOUNT OF RS.7,45,820 WHICH WAS CREDITED TO HDFC BA NK ACCOUNT OUT OF WHICH RS.6 LAKHS HAS BEEN PAID TO THE BUILDER. THE ASSES SEE HAS FILED PAPER BOOK EXPLAINING THE SOURCES FOR INVESTMENT OF RS.6 LAKHS . 5. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATERIAL S ON RECORD, WE FIND THAT THE AO HAS MADE ADDITIONS TOWARDS INVESTMENT I N FLAT BY TAKING INTO ACCOUNT THE TOTAL INVESTMENT IN FLAT EXCLUDING AMOU NT RECEIVED FROM ICICI BANK LTD. THE AO HAS NOT EXAMINED THE INVESTMENT MADE B Y THE ASSESSEE WITH REFERENCE TO YEAR OF INVESTMENT TO ASCERTAIN WHETHE R THE SAID AMOUNT HAS BEEN MADE IN THE FINANCIAL YEAR RELEVANT TO AY 2009 -10. THE CIT(A) ALSO CONFIRMED ADDITIONS MADE BY THE AO WITHOUT HAVING R ECOURSE TO THE EXPLANATION WITH REGARD TO THE SOURCE OF INVESTMENT . THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE RE-EXAMINED BY THE AO IN THE LIGHT OF EXPLANATION OF THE ASSESSEE WITH REGARD TO THE SOUR CES OF INVESTMENT. HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DI RECT HIM TO EXAMINE THE 5 ITA 462/MUM/2015 SOURCE OF INVESTMENT MORE PARTICULARLY WITH REFEREN CE TO YEAR OF INVESTMENT. HENCE, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 6. THE NEXT ISSUE WHICH CAME UP FOR OUR CONSIDERATION IS ADDITION MADE BY THE AO TOWARDS DIFFERENCE IN NET PROFIT AS PER TWO P&L ACCOUNTS FILED BEFORE THE AO AND ADDITIONS IN RESPECT OF DIFFERENCE IN CA SH BALANCE AS PER CASH BOOK AND CASH BALANCE AS PER BALANCE SHEET. THE AO HAS MADE THESE TWO ADDITIONS BASED ON THE TWO SETS OF P&L ACCOUNTS FILED BEFORE AO. ACCORDING TO THE AO, ASSESSEE HAS FAILED TO EXPLAIN THE DIFFERENCE IN NE T PROFIT SHOWN IN TWO P&L ACCOUNTS. ASSESSEE CLAIMS THAT HIS STAFF HAS FILED DRAFT P&L ACCOUNT WHICH SHOWS A NET PROFIT OF ONE FIGURE WHEREAS FINAL P&L ACCOUNT FILED BEFORE AO IS IN CONFORMITY WITH THE RETURN OF INCOME FILED BY THE A SSESSEE. HOWEVER, THE AO HAS FAILED TO EXAMINE THE P&L ACCOUNT FILED BY THE ASSESSEE WITH REFERENCE TO BOOKS OF ACCOUNT. THE AO HAS MADE ADDITION MERELY ON THE BASIS OF DRAFT PAPERS FILED BY THE EMPLOYEES. THEREFORE, REQUESTED TO SET ASIDE THE ISSUE TO THE AO TO EXPLAIN THE DIFFERENCE BETWEEN TWO P&L AC COUNTS. AS REGARDS DIFFERENCE IN CASH BALANCES, THE ASSESSEE CONTENDS THAT HE HAD EXPLAINED CASH BALANCE AS PER BALANCE-SHEET FILED BEFORE AO. HOWE VER, THE AO HAS IGNORED THE RECONCILIATION FILED AND MADE ADDITIONS SIMPLY ON THE BASIS OF CASH BOOK AND BALANCE-SHEET FILED AT THE TIME OF ASSESSMENT P ROCEEDINGS. 7. HAVING HEARD BOTH THE SIDES WE FIND MERITS IN THE A RGUMENT OF THE 6 ITA 462/MUM/2015 ASSESSEE FOR THE REASON THAT THE AO HAS MADE THESE TWO ADDITIONS BASED ON THE DOCUMENTS SUBMITTED AT THE TIME OF ASSESSMENT P ROCEEDINGS WITHOUT BRINGING OUT ANY FACTS WITH REGARD TO THE FINANCIAL STATEMENTS AND BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO NEVER POINTED OUT ANY DIFFERENCE IN BOOKS OF ACCOUNT. HE MADE ADDITIONS ONLY ON THE BASIS OF PA PERS FILED AT THE TIME OF ASSESSMENT IGNORING THE RECONCILIATION FILED BY THE ASSESSEE EXPLAINING DIFFERENCE. THEREFORE, WE SET ASIDE THE ISSUES TO THE FILE OF THE AO TO CONSIDER AFRESH, AFTER AFFORDING AN OPPORTUNITY TO THE ASSES SEE. 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATION I S ADDITION TOWARDS PREMATURE WITHDRAWALS OF FDRS AS UNEXPLAINED INVEST MENTS U/S 69B. THE AO MADE ADDITION OF RS.4,50,000 TOWARDS PREMATURE FDRS AS UNEXPLAINED INVESTMENTS ON THE GROUND THAT THE SAID FDRS IS NOT INCLUDED IN THE BOOKS OF ACCOUNT. THE ASSESSEE CONTENDS THAT HE HAD PREPARE D BOOKS OF ACCOUNT FOR HIS BUSINESS. HOWEVER, FDR IN BANK IS A PERSONAL ASSET FOR WHICH A CASH FLOW STATEMENT HAS BEEN PREPARED EXPLAINING THE SOURCES OF INVESTMENT. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE FOR THE REASO N THAT THE AO HAS MADE ADDITIONS TOWARDS FDRS SIMPLY ON THE BASIS OF NOT D ISCLOSING FDRS IN THE BOOKS OF ACCOUNT WITHOUT EXAMINING THE CLAIM OF THE ASSES SEE WITH REGARD TO THE SOURCES AND NATURE OF INVESTMENT. THE ASSESSEE HAS FILED PAPER BOOK EXPLAINING THE SOURCE FOR INVESTMENT IN FDRS. THER EFORE, WE ARE OF THE VIEW 7 ITA 462/MUM/2015 THAT THE ISSUE NEEDS TO BE RE-EXAMINED BY THE AO IN THE LIGHT OF THE EXPLANATION OF THE ASSESSEE; HENCE, WE SET ASIDE TH E ISSUE TO THE FILE OF THE AO AND DIRECT HIM TO CONSIDER THE ISSUE AFRESH AFTER A FFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED, FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA ) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 20 TH SEPTEMBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI