ITO WD 20(2)(1), MUMBAI V. DHANWANTI S. SHAH, MUMBAI

ITA 5154/MUM/2012

• Counselvise Citation: 515419914 RSA 2012
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DEVANG K SHAH
• Keywords: Unexplained investment; Peak credit
• Section: 133(6); 68; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./I.T.A. NO.5154/MUM/2012 ( ! ' # / ASSESSMENT YEARS : 2008-09) INCOME TAX OFFICER, WARD 20(2)(1), PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 / VS. MS. DHANWANTI S SHAH, 219, GHANSHYAM PATIL BLDG, DAWWOD BAUG LANE, J P ROAD, ANDHERI (W), MUMBAI-400058. ( $% / APPELLANT) .. ( &'$% / RESPONDENT) $ ./ ( ./PAN/GIR NO. : AAMPS3738F $% ) / APPELLANT BY : SHRI DURGA DUTT &'$% * ) /RESPONDENT BY : SHRI DEVANG K SHAH + , * - . / DATE OF HEARING : 16.7.2014 /0#' * - . /DATE OF PRONOUNCEMENT : 28.8.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 15.6.2012 PASSED BY LD CIT(A)-31, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2008-09. 2. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY THE RE VENUE ARE AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN FACTS AND LAW TO CO NSIDER THE PEAK CREDIT IN THE ACCOUNT AS UNDISCLOSED CASH CREDIT U /S 68 OF THE INCOME TAX ACT, 1961 AS AGAINST THE TOTAL CREDIT IN THE SAID A CCOUNT AS HELD BY THE AO AFTER HAVING HELD THAT THE ASSESSEE FAILED TO SUBS TANTIATE THE CLAIM THAT CASH DEPOSITS IN THE BANK ACCOUNT HAVE BEEN PARTLY MADE FROM THE WITHDRAWAL OF THE SAME ACCOUNT; 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ASSESSEE HAVING FAILED TO DISCHARGE THE ONUS OF EXP LAINING THE SOURCE OF INVESTMENTS MADE IN SHARE PURCHASE, THE LD. CIT(A ) ERRED IN DELETING RS.30,72,971/- AS AGAINST RS.45,58,634/- I.T.A. NO.5154/MUM/2012 2 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION D ECLARING TOTAL INCOME OF RS.1,63,439/-. THE SAID RETURN OF INCOME WAS TAKEN UP FOR SCRUTINY. FROM THE AIR INFORMATION, THE AO NOTICED THAT THE ASSESSEE H AS DEPOSITED A SUM OF RS.26,38,754/- IN THE BANK ACCOUNTS MAINTAINED WITH THE KOTAK MAHINDRA BANK LTD. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOUR CE OF THE DEPOSITS FOUND IN THE ABOVE SAID BANK ACCOUNTS. SINCE THE ASSESSEE D ID NOT FURNISH ANY DETAIL OR EXPLANATION, THE AO ASSESSED THE AGGREGATE AMOUNT O F DEPOSITS AMOUNTING TO RS.26,38,754/- AS INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT, 1961 (THE ACT). FURTHER, AS PER AIR INFORMATION, IT W AS NOTICED BY THE AO THAT THE ASSESSEE HAD INDULGED IN SHARE TRANSACTIONS IN BOM BAY STOCK EXCHANGE (BSE) ON VARIOUS DATES. THE AO ISSUED NOTICES U/S 133(6) OF THE ACT TO SHARE BROKERS VIZ M/S HDFC SECURITIES LTD AND M/S RALIGARE SECURI TIES LTD. CALLING FOR DETAILS RELATING TO SHARE TRANSACTIONS OF THE ASSESSEE. HO WEVER, NEITHER SHARE BROKERS NOR THE ASSESSEE FURNISHED ANY DETAIL IN RESPECT OF SHARE TRANSACTIONS AND HENCE, THE AO ASSESSED THE AGGREGATE AMOUNT OF RS.45,58,63 4/- RELATING TO THE SHARE TRANSACTIONS AS THE INCOME OF THE ASSESSEE UNDER T HE HEAD UNEXPLAINED INVESTMENT. 4. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE ORDER PASSED BY THE AO. DURING THE COURSE OF APPELLATE P ROCEEDINGS, THE ASSESSEE FURNISHED CERTAIN DETAILS RELATING TO THE BANK DEPO SITS AND SHARE TRANSACTIONS. THE LD. CIT(A) CALLED UPON THE REMAND REPORT FROM T HE AO. AFTER HEARING THE ASSESSEE, AFTER CONSIDERING REMAND REPORT OF THE A O AND THE REPLY FILED BY THE ASSESSEE, THE LD. CIT(A) HELD THAT THE PEAK CASH BA LANCE OF RS.13,68,828/- FOUND I.T.A. NO.5154/MUM/2012 3 IN THE BANK ACCOUNT IS TO BE ASSESSED AS UNACCOUNTE D INCOME OF THE ASSESSEE U/S 69 OF THE ACT. HOWEVER, THE LD CIT(A) DIREC TED THE AO TO VERIFY THE PEAK CREDIT WORKING FURNISHED BY THE ASSESSEE. 5. WITH REGARD TO THE SHARE TRANSACTIONS, THAT THE LD. CIT(A) NOTICED THAT THE ASSESSEE COULD NOT EXPLAIN THE PAYMENTS MADE TOWARD S PURCHASES OF SHARES TO THE TUNE OF RS.12,29,609/-. FURTHER, THE LD. CIT( A) NOTICED THAT THE ASSESSEE HAS EARNED CAPITAL GAIN OF RS.2,72,425/- OUT OF TH E SHARE TRANSACTIONS. IT WAS ALSO NOTICED THAT THE ASSESSEE HAD ALSO EARNED INTE REST INCOME OF RS.2,101/- ON THE ACCOUNT MAINTAINED WITH M/S RALIGARE SECURITIE S LTD. ACCORDINGLY, THE LD. CIT(A) DIRECTED THE AO TO ASSESSEE THE ABOVE SAID T HREE ITEMS AGGREGATING TO RS.14,85,663/- AS INCOME OF THE ASSESSEE, AS AGAINS T THE ADDITION OF RS.45,53,684/- MADE BY THE AO. ACCORDINGLY, THE AP PEAL FILED BY THE ASSESSEE WAS PARTLY ALLOWED BY THE LD. CIT(A). THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN GRANTING PARTIAL RELIEF TO TH E ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE FIRST ISSUE RELATES TO THE ASSESSMENT OF DEPOSITS M ADE IN THE BANKS ACCOUNT OF THE ASSESSEE. AS AGAINST THE ADDITION OF RS.26,38, 754/- MADE BY THE AO, THE LD. CIT(A) HAS SUSTAINED THE ADDITION TO THE TUNE OF R S.13,68,828/-, WHICH WAS ARRIVED BY WORKING OUT THE PEAK CREDIT BALANCE OF BOTH THE BANK ACCOUNTS. ACCORDING TO LD CIT(A), THE ABOVE SAID SUM OF RS.13 ,68,828/- IS THE PEAK BALANCE ARRIVED AT ON 19.7.2007. IN THE PAPER BOOK , THE ASSESSEE HAS FILED SUMMARY OF DAY-TO-DAY ACCOUNTS OF CASH TRANSACTIONS CARRIED WITH THE BOTH THE BANK ACCOUNTS MAINTAINED WITH KOTAK MAHINDRA BANK A CCOUNTS. WE NOTICE THAT THE ASSESSEE HAS DEPOSITED ODD AMOUNTS LIKE RS.612 /-, 1,260/- AND RS,2,710/- I.T.A. NO.5154/MUM/2012 4 ETC., AND ALSO DEPOSITED ROUND SUMS LIKE RS.1,00,00 0/-, RS.10,000/- RS.2,000/- ETC., ON VARIOUS DATES. CASH WITHDRAWALS HAVE BEEN MADE MOSTLY IN ROUND SUMS. ACCORDING TO THE ASSESSEE CASH WITHDRAWALS MADE ON AN EARLIER OCCASION WAS ALSO UTILIZED TO MAKE DEPOSITS ON THE SUBSEQUENT DA TES. IN OUR VIEW, THE SAID EXPLANATION MAY HOLD GOOD IN RESPECT OF DEPOSITS MA DE IN ROUND SUMS ONLY. IN RESPECT OF DEPOSITS MADE IN ODD FIGURES, THE SAID E XPLANATION MAY NOT BE APPLICABLE, SINCE THE SAME IS AGAINST NORMAL HUMAN CONDUCT. HENCE, IN OUR VIEW, THE ASSESSEE HAS TO EXPLAIN THE DEPOSITS MADE IN ODD FIGURES, FAILING WHICH THE SAME IS LIABLE TO BE ASSESSED TO TAX. FROM THE SUMMARY OF CASH TRANSACTIONS, WE OURSELVES WORKED OUT THE DEPOSITS MADE IN THE ROUND FIGURES OF RS.2000/- AND ABOVE FOR THE PERIOD STARTED FROM 01. 8.2007 TO 25.3.2008, I.E., THE PERIOD STARTING FROM FIRST MAJOR WITHDRAWAL. DATE AMOUNT IN R S. 1 2 .9.2007 16 , 0 00 1.9.2007 2 , 00 , 000 24.10.2007 3 , 000 5.12.2007 20,000 12.12.2007 16,000 24.12.2007 4 , 000 (2000+2000) 11.01.2008 3 , 00 , 000 16.01.2008 1,75,000 24.1.2008 31,000 25.1.2008 1,00,000 5.2.2008 15 , 000 7.2.2008 14 , 000 7.2.2008 5 , 000 27.2.2008 2 , 000 27.2.2008 1 , 00 , 000 11.3.2008 15 , 000 18.3.2008 60 , 000 25.3.2008 25 , 000 8.9.2007 9 , 000 22.8.2007 2 , 000 10.8.2007 6 , 000 TOTAL 11,18,000 I.T.A. NO.5154/MUM/2012 5 THE CASH WITHDRAWALS MADE BY THE ASSESSEE FROM 13.6 .2007 TO 25.3.2008 WORKS OUT TO ABOUT RS.14,00,000/-. ON COMPARISON OF BOTH THE AMOUNTS AND IN THE ABSENCE OF ANY OTHER MATERIAL, WE ARE OF THE VIEW T HAT THE ASSESSEE SHOULD, OUT OF CASH WITHDRAWALS OF ABOUT RS.14,00,000/-, HAVE UTILIZED A SUM OF RS.11,18,000/- ONLY FOR MAKING RE-DEPOSITS IN THE BANKS ACCOUNT. HOWEVER, OUR COMPUTATION, REFERRED ABOVE, NEEDS TO BE VERIFI ED BY BOTH THE PARTIES. IN OUR VIEW, THE ASSESSEE MAY BE GIVEN SET OFF OF AGGR EGATE AMOUNT OF DEPOSITS MADE AT A SUM OF RS.2,000/- AND ABOVE DURING THE PE RIOD MENTIONED ABOVE AGAINST THE CASH DEPOSIT OF RS.26,38,404/-. THE A O IS DIRECTED TO VERIFY THE ABOVE SAID COMPUTATION ALONG WITH THE ASSESSEE AND GIVE SET OFF OF THE AMOUNT AS ARRIVED AT BY BOTH, IF THE ABOVE SAID FIGURE OF RS.11,18,000/- IS FOUND TO BE ERRONEOUS. SINCE THE REMAINING AMOUNTS OF DEPOSITS AFTER GIVING SUCH SET OFF REMAIN UNEXPLAINED, WE SUSTAIN THE SAME. ACCORDINGL Y, WE MODIFY THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO SUSTAIN THE ADDITI ON OF BALANCE AMOUNT AFTER GIVING SET OFF OF THE DEPOSIT OF RS.11,18,000/- OR SUCH OTHER SUM THAT MAY BE ARRIVED AT BY THE AO. 7. THE NEXT ISSUE RELATES TO THE ADDITION RELATING TO THE SHARE TRANSACTIONS CARRIED OUT BY THE ASSESSEE. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE AO HAS MADE AN ADDITION OF RS.45,58,634/- AS PER THE TABLE SHOWN IN THE ASSESSMENT ORDER. HOWEVER, OUT OF THE TRANSACT IONS NOTED BY THE AO, THE TRANSACTION ENTERED ON 14.9.2007 AMOUNTING TO RS.7, 80,319/- ONLY PERTAINS TO PURCHASE OF SHARES AND REMAINING AMOUNTS PERTAIN TO SALE OF SHARES. ACCORDINGLY, THE LD. AR SUBMITTED, THE AO WAS NOT C ORRECT IN TREATING THE SALE CONSIDERATION ALSO AS UNEXPLAINED INVESTMENT. FROM THE ORDER PASSED BY LD. I.T.A. NO.5154/MUM/2012 6 CIT(A), WE NOTICE THAT THE FIRST APPELLATE AUTHORI TY HAS CONSIDERED THE ASSESSEES ACCOUNT AS APPEARING IN THE BOOKS OF THE SHARE BROKER, M/S RALIGARE SECURITIES LTD AND HAS NOTICED THAT THE ASSESSEE HA S PAID A SUM OF RS.12,29,609/- TO THE SHARE BROKER FOR PURCHASE OF SHARES. SINCE THE ASSESSEE COULD NOT EXPLAIN SOURCE FOR MAKING PAYMENTS OF THE ABOVE SAID AMOUNT, THE LD. CIT(A) HAS TREATED THE SAME AS UNEXPLAINED INVESTME NT. THE REMAINING TRANSACTIONS WERE RELATED TO SHARE TRANSACTIONS OF PURCHASE AND SALE CARRIED ON BY THE ASSESSEE. THE LD CIT(A) HAS NOTICED THAT TH E ASSESSEE HAS REALIZED A SUM OF PROFIT OF RS.2,72,425/- OUT OF SHARE TRADING . ACCORDINGLY, THE LD. CIT(A) HAS DIRECTED THE AO TO ASSESS ABOVE AMOUNT AS SHOR T TERM CAPITAL GAIN. IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO RECEIV ED A SUM OF RS.2101/- FROM THE SHARE BROKER AS INTEREST AND REWARD AMOUNT. TH E LD CIT(A) HAS DIRECTED THAT THE SAME TO BE ASSESSED. THOUGH WE NOTICE TH AT THE LD. CIT(A) HAS TAKEN A CONSCIOUS DECISION AFTER ANALYZING THE SHARE TRANSA CTIONS CARRIED OUT BY THE ASSESSEE AND WE NOTICE THAT THE REVENUE COULD NOT F IND ANY DEFECT WITH THE SAID ANALYSIS MADE BY THE LD. CIT(A). UNDER THESE CIRCU MSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 28TH AUG , 2014. /0#' + 1 2 3 28TH AUG, 2014 0 * , 4 SD SD ( /SANJAY GARG) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + , MUMBAI: 28TH AUG,2014. . . ./ SRL , SR. PS I.T.A. NO.5154/MUM/2012 7 ! ' / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &'$% / THE RESPONDENT. 3. + 6- ( ) / THE CIT(A)- CONCERNED 4. + 6- / CIT CONCERNED 5. 78 &-9! , . 9! ' , + , / DR, ITAT, MUMBAI CONCERNED 6. : , / GUARD FILE. ; + / BY ORDER, TRUE COPY < (ASSTT. REGISTRAR) . 9! ' , + , /ITAT, MUMBAI