ITO WD 4(2), THANE V. MANGAL KANTILAL CHALALIYA, THANE

ITA 5173/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8716 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHIKESH A PUROHIT
• Keywords: Unexplained cash credit; Unexplained investment; Opportunity of being heard; Corroborative evidences; Assessment record; Revised return
• Section: 69; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI B. R. MITTAL, JM AND SHRI B. R. JAIN, A M ITA NO.5173/MUM/2011 ASSESSMENT YEAR: 2007-08 INCOME - TAX OFFICER, WARD 4(2), 2 ND FLOOR, QURESHI MANSION, GOKHALE ROAD, NAUPADA, THANE (W) 400 602 VS. SHRI MANGAL KANTILAL CHALALIYA, 14, SIDDHARTH APARTMENT, JAIN MANDIR ROAD, VIRAR (WEST), THANE-401 303 PAN NO : ACWPC 6750 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MOHIT JAIN RESPONDENT BY : SHRI SHIKESH A. PUROHIT DATE OF HEARING : 0 3 .10.2012 DATE OF PRONOUNCEMENT : 12.10.2012 ORDER PER B. R. JAIN, A.M. : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 28.02.2011 OF LD. CIT(A)-II, THANE RAISES THE FOLLOWING GROUNDS I N APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE HON'BLE CIT(A)-II, THANE ERRED IN DELETING THE ADDITION OF `. 15,94,935/- MADE U/S.68 OF THE INCOME TAX ACT, 1961 BEING UNEXPLAINED CASH DEPOSITS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HON'BLE CIT(A)-II, THANE ERRED IN DELETING THE ADDITION OF `. 4,83,000/- MADE U/S.69 OF THE INCOME TAX ACT, 1961 BEING UNEXPLAINED INVESTMENT IN SHARES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A)-II, THANE FAILED TO APPRECI ATE THAT THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE WAS INVALID AS THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE WAS A BELATED RETURN. ITA NO : 5173/MUM/2011 SHRI MANGAL KANTILAL CHALALIYA 2 2. IN THE FIRST GROUND IN APPEAL BRIEFLY THE FACTS ARE THAT THE ASSESSEE IS IN THE BUSINESS OF STITCHING AND TRADING OF SHAR ES AND HAS SHOWN TOTAL RECEIPTS OF ` .3.12 LAKHS ON WHICH NET PROFIT OF `. 2,13,000/- HAS BEEN DISCLOSED AFTER CLAIMING VARIOUS EXPENSES. THE RET URN HAS BEEN FILED DECLARING A INCOME OF `. 1,16,125/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEPOSITED THE CASH TO THE TUNE OF `. 15,94,935/- IN HIS BANK ACCOUNT. THE ASSESSEE, HOWEVER, DID NOT FILE ANY DOCUMENTARY / SUPPORTING EVIDENCE IN RESPECT OF THE CASH DEPOSITS DESPITE OPPORTUNITY HAVING BEEN A FFORDED. THE ASSESSING OFFICER, THEREFORE, TREATED THE ENTIRE AM OUNT OF `. 15,94,935/- AS UNEXPLAINED CASH CREDIT AND MADE THE ADDITION U/S.6 8 OF THE ACT. 3. THE LD. CIT(A) CALLED FOR THE ASSESSMENT RECORD IN ORDER TO VERIFY THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THAT HE HA D REVISED HIS ACCOUNTS AND ALSO FILED A REVISED RETURN, BUT THE ASSESSING OFFICER DID NOT CONSIDER THE SAME. FROM THE ASSESSMENT RECORD, THE LD. CIT( A) FOUND THAT ALL THE DETAILS THAT WERE FURNISHED BY THE ASSESSEE BEFORE HIM WERE ALSO AVAILABLE ON THE ASSESSMENT RECORD. THE CASH DEPOSITS IN THE AXIS BANK ACCOUNT OF THE APPELLANT ARE ALL WITHDRAWALS EITHER FROM SAVIN G BANK ACCOUNT NO. 19867 MAINTAINED WITH VASAI VIKAS SAHAKARI BANK OR FROM HIS CASH BOOK MAINTAINED FROM ALL HIS BUSINESS AND COMMISSION TRA NSACTIONS. HE GAVE CERTAIN INSTANCES THAT ON THE DATE OF DEPOSITS OF C ASH IN THE AXIS BANK ACCOUNT THERE WERE CORRESPONDING WITHDRAWALS EITHER FROM CASH BOOK OR ITA NO : 5173/MUM/2011 SHRI MANGAL KANTILAL CHALALIYA 3 WITH VASAI VIKAS SAHAKARI BANK AND SIMILAR IS THE C ASE WITH THE OTHER CASH DEPOSITS, THE SOURCE OF WHICH IS FROM DIFFEREN T CASH AMOUNTS AVAILABLE IN THE CASH BOOK ON THOSE DATES. ALSO TH ERE ARE CERTAIN CASH DEPOSIT ENTRIES WHICH ARE FIRST WITHDRAWN FROM THE BANK ACCOUNTS AND RE- DEPOSITED IN THE BANK ACCOUNT AFTER SOMETIME, WHILE SOME OF THE CASH DEPOSITS REPRESENT THE COMMISSION AND BUSINESS INCO ME, WHICH HAS BEEN EARNED MOSTLY IN CASH BY THE APPELLANT AS HIS BUSIN ESS INCOME. IN THIS VIEW OF THE MATTER, HE WAS OF THE VIEW THAT THE CAS H IS NOT FROM OUTSIDE BUT FROM HIS BOOKS OF ACCOUNT AND BANK ACCOUNTS OF THE APPELLANT. THE ASSESSING OFFICER, HOWEVER, DID NOT CARRY OUT ANY E XERCISE FOR VERIFICATION OF THESE FACTS. SINCE THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON HIM REGARDING THE SOURCE OF CASH DEPOSITS IN HIS BANK A CCOUNT AND WHICH WAS DULY SUPPORTED BY THE DOCUMENTARY EVIDENCES, THE AD DITION AMOUNTING TO `. 15,94,934/- MADE U/S.68 OF THE ACT STOOD DELETED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE (DR) WHI LE ASSAILING THE IMPUGNED ORDER CONTENDS THAT THE REVISED RETURN FIL ED BY THE ASSESSEE ALONG WITH THE REVISED ACCOUNTS WERE ACCOMPANIED WI TH THE NON-EST RETURN AS THE ORIGINAL RETURN FILED BY THE ASSESSEE WAS A BELATED RETURN. THE ASSESSING OFFICER, THEREFORE, WAS JUSTIFIED IN NOT CONSIDERING THE NON- EST RETURN FOR THE ASSESSMENT PURPOSES. THE APPELL ANT ALSO DID NOT ASSIGN ANY REASON AS TO HOW AND WHY THE ACCOUNTS HAVE BEEN REVISED AND ALSO WHY THE REVISED RETURN WAS FILED BY HIM. HE BROUGH T NO MATERIAL TO ITA NO : 5173/MUM/2011 SHRI MANGAL KANTILAL CHALALIYA 4 EXPLAIN THE SOURCE OR NATURE OF CREDITS APPEARING I N HIS BANK ACCOUNT. THE LD. CIT(A) HIMSELF DID NOT CALL FOR THE BOOKS O F ACCOUNT FOR VERIFICATION OF THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSE E BUT DELETED THE ADDITION MERELY ON THE BASIS OF SUMMARY OF ANNUAL S TATEMENT OF CASH AVAILABILITY FILED BY THE ASSESSEE BEFORE HIM. THE LD. CIT(A) THUS HAS ERRED IN DELETING THE ADDITIONS. 5. ON THE OTHER HAND, THE ASSESSEES COUNSEL CONTEN DS THAT THE LD. CIT(A) HAS PASSED A REASONED ORDER AFTER CONSIDERIN G THE DOCUMENTS THAT WERE AVAILABLE ON ASSESSMENT RECORD. NO NEW MATERI AL HAS BEEN PLACED ON HIS FILE. THE LD. CIT(A) HAS FOUND THAT ALL THE DEPOSITS MADE IN THE BANK ACCOUNT WERE AVAILABLE WITH THE ASSESSEE OUT O F THE WITHDRAWALS MADE ON THE SAME DATE FROM ANOTHER SAVING BANK ACCO UNT WITH VASAI VIKAS SAHAKARI BANK OR FROM THE CASH BOOK, THE COPY OF WHICH IS AVAILABLE ON RECORD. THERE WAS NO OUTSIDE SOURCE AV AILABLE WITH THE ASSESSEE NOR FOUND BY THE ASSESSING AUTHORITY FROM WHERE IT COULD BE SAID THAT THE CASH HAS COME AND DEPOSITED WITH THE AXIS BANK ACCOUNT OF THE ASSESSEE. HE, THEREFORE, FULLY RELIED ON THE D ECISION TAKEN BY THE LD. CIT(A). THERE BEING NO ERROR IN THE DECISION, THE GROUND RAISED BY THE REVENUE NEEDS TO BE REJECTED. 6. WE HAVE HEARD PARTIES WITH REFERENCE TO THE MATE RIAL ON RECORD. THE PAPER BOOK LAID ON TRIBUNALS RECORD REVEALS THAT TH E ASSESSEES ORIGINAL RETURN OF INCOME IS A BELATED RETURN AND SUBSEQUENT RETURN FILED BY HIM ITA NO : 5173/MUM/2011 SHRI MANGAL KANTILAL CHALALIYA 5 COULD NOT BE TAKEN AS VALIDLY REVISED RETURN WITHIN THE MEANING OF SECTION 139 OF THE I. T. ACT. THE ASSESSEE HAS ALSO NOT ST ATED ANY REASONS AS TO WHY AND IN WHAT CIRCUMSTANCES THE ACCOUNTS SUBMITTE D WITH THE ORIGINAL RETURN ARE NOT CORRECT. IN THE REVISED ACCOUNTS LA ID ON RECORD THE REASONS FOR MAKING SUCH REVISION HAVE ALSO NOT BEEN ASCRIBE D THERETO. NEITHER THE ASSESSING AUTHORITY NOR THE LD. CIT(A) HIMSELF HAS CALLED FOR THE BOOKS OF ACCOUNT AND EXAMINED THE CORRECTNESS OF SUCH REVISE D ACCOUNTS LAID ON THEIR RECORD. THE ASSESSEE IS NOT SHOWN TO HAVE MA DE ANY RECONCILIATION OF THE DIFFERENCE IN ORIGINAL ACCOUNTS AND REVISED ACCOUNTS. HE ALSO HAS NOT EXPLAINED EACH AND EVERY CREDIT IN HIS BANK ACC OUNT BUT HAS RELIED ON THE ANNUAL SUMMARY OF CASH WHICH WAS MADE AS A BASI S OF ALLOWING RELIEF BY THE LD. CIT(A). THE ADDITION U/S.68 FOR `. 15,94,934/- HAS BEEN MADE ON ACCOUNT OF DEPOSITS MADE IN CASH AND APPEARING I N THE BANK ACCOUNT OF THE ASSESSEE WITHOUT RECORDING A FINDING BY EITH ER OF THE AUTHORITIES AS TO WHETHER THE ASSESSEE HAS MAINTAINED BOOKS OF ACC OUNT AND CREDIT IS APPEARING IN SUCH BOOKS OF ACCOUNT WHOSE NATURE AND SOURCE HAS NOT BEEN EXPLAINED TO THE SATISFACTION OF THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER AND SINCE FACTUAL VERIFICATION WITH RESP ECT TO EACH DEPOSITS HAS NOT BEEN CARRIED OUT THOUGH THE ASSESSEE CLAIMS TO HAVE MAINTAINED THE BOOKS OF ACCOUNT BUT NOT PRODUCED BEFORE US ALSO, W E CONSIDER IT REASONABLE TO SET ASIDE THE DECISION AND REMIT THE MATTER BACK TO THE ASSESSING AUTHORITY SO THAT THE FACTUAL FINDINGS AR E MADE AND A DECISION ITA NO : 5173/MUM/2011 SHRI MANGAL KANTILAL CHALALIYA 6 TAKEN IN ACCORDANCE WITH LAW AFTER PROVIDING REASON ABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE SECOND GROUND IN APPEAL BY THE REVENUE AN AMOUNT OF `. 4,83,000/- HAS BEEN TREATED AS UNEXPLAINED INVESTME NT IN SHARES AS THE ASSESSEE FAILED TO PRODUCE THE DOCUMENTARY EVIDENCE IN RESPECT OF SUCH INVESTMENTS MADE BY HIM. 8. THE LD. CIT(A) HOWEVER, FOUND THAT THE SAID INVE STMENT IS DULY RECORDED IN THE REVISED ACCOUNTS OF THE ASSESSEE AS CLOSING BALANCE OF `. 4,80,592/- AS ON 31.03.2007, WHILE THE DIFFERENCE O F `. 3,228/- IS DUE TO THE VALUE OF THE STOCK AS SHOWN BY THE BROKER DUE T O BROKERS COMMISSION. 9. HEARD PARTIES WITH REFERENCE TO THE MATERIAL ON RECORD. THE INVESTMENT IN SHARES WAS NOT REFLECTED IN THE BALAN CE SHEET FILED WITH THE ORIGINAL RETURN OF INCOME. SECTION 69 OF THE ACT EN VISAGES ADDITION AS INCOME FROM OTHER SOURCES ONLY IN A CASE WHERE IN T HE FINANCIAL YEAR IMMEDIATELY PRECEDING ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENT WHICH ARE NOT RECORDED IN THE BOOKS OF A CCOUNT, IF ANY, MAINTAINED BY HIM AND ASSESSEE OFFERS NO EXPLANATIO N ABOUT THE NATURE AND SOURCE OF SUCH INVESTMENT OR THAT THE EXPLANATI ON OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFA CTORILY. THUS ADDITION COULD BE MADE FOR THOSE INVESTMENTS WHICH ARE NOT F OUND RECORDED IN THE BOOKS OF ACCOUNT AND NATURE AND SOURCE THEREOF IS N OT EXPLAINED. IN THE ITA NO : 5173/MUM/2011 SHRI MANGAL KANTILAL CHALALIYA 7 PRESENT CASE IN APPEAL AS HAS ALSO BEEN FOUND IN TH E EARLIER GROUND IN APPEAL, BOTH THE AUTHORITIES BELOW HAVE NOT RECORDE D THE FINDING THAT THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNT NOR TH EY HAVE VERIFIED SUCH BOOKS OF ACCOUNT BEFORE COMING TO ANY CONCLUSION EV EN THOUGH THE ASSESSEE CLAIMED TO HAVE MAINTAINED SUCH BOOKS OF A CCOUNT BUT NOT PRODUCED BEFORE US IN APPEAL. IN THIS VIEW OF THE MATTER, WE CONSIDER IT REASONABLE TO SET ASIDE THE ORDER AND REMIT THE MAT TER BACK TO THE ASSESSING OFFICER FOR MAKING THE FACTUAL VERIFICATI ON AND COME TO THE CONCLUSION AFRESH IN ACCORDANCE WITH LAW AFTER PROV IDING REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. 10. IN THE RESULT, THE APPEAL BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.2012. SD/- SD/- - ( B. R. MITTAL ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 12.10.2012. COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI