ITO 22(2)-1, NAVI MUMBAI V. LALIT SHYAM TEKCHANDANI, MUMBAI

ITA 5243/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59876 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-02-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Business income; Income from undisclosed sources; Peak credit; Revised return
• Section: 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI. N.V. VASUDEVAN (J.M.) AND SHRI. N.K. B ILLAIYA (A.M.) ITA NO.7/MUM/2010 (AY: 2006-07) ITA NO.5241/MUM/2010 (AY: 2002-03) ITA NO.5242/MUM/2010 (AY: 2003-04) ITA NO.5243/MUM/2010 (AY: 2004-05) ITA NO.5244/MUM/2010 (AY: 2005-06) INCOME TAX OFFICER 22(2)-1, R.NO.419, 4 TH FLOOR, TOWER NO.6, RLY STATION COMPLEX, VASHI, NAVI MUMBAI 400 705. VS. LALIT SHYAM TEKCHANDANI, 8A-4, BASANT PARK, R.C. MARG, CHEMBUR MUMBAI 400 071. PAN : AABPT2057R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. C.G.K. NAIR RESPONDENT BY : SHRI. SUBODH RATNAPARKHI DATE OF HEARING :29.2.2012 DATE OF PRONOUNCEMENT :14-3-2012 O R D E R PER N.K. BILLAIYA, A.M. ALL THESE APPEALS PERTAINING TO ONE ASSESSEE FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-33, MUMBAI FOR THE ASSESSMENT YEARS 2002-03, 2003- 04, 2004-05, 2005-06 & 2006-07. SINCE THE ISSUES IN VOLVED IN THESE APPEALS ARE IDENTICAL, WE HAVE HEARD THESE APPEALS TOGETHER AND , THEREFORE, WE FIND IT CONVENIENT TO DISPOSE OF THESE BY WAY OF CONSOLIDATED ORDER FO R THE SAKE OF CONVENIENCE. 2. TO DECIDE THESE APPEALS WE REFER TO THE FACTS OF THE CASE IN ITA NO.07/M/2010 (AY 2006-07). 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN INDIVIDUAL AND HIS NATURE OF BUSINESS IS CIVIL CONTRACTOR AND ARCHITEC T. FOR THE YEAR UNDER CONSIDERATION 2 ASSESSEE FILED RETURN OF INCOME ON 30.10.2006 DECLA RING TOTAL INCOME OF RS.9,76,236/- ALONG WITH AUDIT REPORT AS REQUIRED U/S 44AB IN FOR M NO.3CB & 3CD AND ALONG WITH STATEMENT OF INCOME, PROFIT & LOSS A/C, BALANCE SHE ET WITH ANNEXURE. RETURN WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NO TICES U/S 143(2) AND 142(1) WAS SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS LEARNED AO FOUND THAT ASSESSEE IS MAINTAINING BANK ACCOUNTS IN JANKALYAN SAHAKARI BANK LTD AND AMERICAN EXPRESS BANK. 4. LEARNED AO ISSUED NOTICE U/S 133(6) OF THE INCOM E-TAX ACT TO AMERICAN EXPRESS BANK IN WHICH COPY OF BANK STATEMENT AND TRANSACTIO N MADE IN MUTUAL FUNDS WERE CALLED FOR. AFTER RECEIVING THE COPY OF BANK STATE MENT THE ASSESSING OFFICER CONFRONTED THE BANK STATEMENT TO THE ASSESSEE ASKING HIM TO EX PLAIN THE TRANSACTIONS REFLECTED IN THE BANK STATEMENT. WHEN CONFRONTED WITH THE BANK STATEMENT ASSESSEE FILED REVISED RETURN OF INCOME ON 12.11.2008 DECLARING INCOME OF RS. 19,97,446/-. THE ASSESSEE ALSO SUBMITTED A LETTER OF EVEN DATE STATING THE RE ASON FOR FILING THE REVISED RETURN. THE CONTENT OF THE SAID LETTER IS INCORPORATED IN T HE ASSESSMENT ORDER AT PAGE NO.4, PARA NO.4 CLAUSE-III. 5. SUBSEQUENT TO THIS ASSESSEE ALSO FILED ANOTHER L ETTER ON 14.11.2008 STATING THAT HE IS HAVING ONE MORE ACCOUNT IN JANKALYAN SAHAKARI BANK. CONTENTS OF THIS LETTER ARE EXHIBITED AT PAGE NO.5, PARA NO.5 OF THE ASSESSMENT ORDER. ASSESSEE FURTHER SUBMITTED BEFORE THE AO THAT HE IS MAKING DISCLOSUR E WITH GOOD FAITH TO COOPERATE WITH ANY ENQUIRY AND REQUESTED THE LEARNED AO FOR EXONER ATING HIM FROM THE PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DISCLOSED THE INCOME FROM THE DEPOSIT IN THE AMERICAN EXPRESS BANK IN 3 THE REVISED RETURN @ 40% OF THE DEPOSIT. FURTHER A SSESSEE HAS ALSO DISCLOSED THE INCOME ON THE DEPOSIT MADE IN THE JANAKALYAN SAHAKA RI BANK LTD., @ 40%. 6. LEARNED ASSESSING OFFICER DID NOT AGREE WITH ASS ESSEES CALCULATION OF 40% OF THE DEPOSIT AS INCOME. THE OBSERVATIONS OF THE LEA RNED AO ARE EXHIBITED AT PAGE NO. 7, PARA NO. 8 OF THE ASSESSMENT ORDER. 7. SINCE THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE SUBMISSION OF THE ASSESSEE HE MADE THE ADDITION OF THE ENTIRE DEPOSIT IN THE AMERICAN EXPRESS BANK AMOUNTING TO RS. 25,05,868/- AND NET DEPOSIT MADE IN THE JANKALYAN BANK AT RS. 27,06,253/- AGGREGATING RS. 52,12,121/- AND TREATED AS INCOME FROM UNDISCLOSED SOURCES. 8. ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT (A) A GAINST THE ORDER OF THE ASSESSING OFFICER AND ASSAILED THE ORDER OF THE AO BEFORE THE LD. CIT (A) CLAIMING THAT THE ENTIRE DISCLOSED BANK DEPOSITS OF RS. 52,12,121 /- WAS NOT WARRANTED BY FACTS AND IN LAW AND PRAYED BEFORE THE LD. CIT (A) THAT IT MA Y BE SUITABLY REDUCED. 9. BEFORE THE LD. CIT (A) THE ASSESSEE REITERATED T HE WRITTEN SUBMISSIONS MADE BEFORE THE LD. CIT (A) WHICH IS EXHIBITED AT PAGE N O.3, PARA NO. 2.5 OF THE LD. CIT (A)S ORDER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE LD. CIT (A) CONCLUDED THAT KEEPING IN VIEW THE TOTALITY OF THE CASE AND THE RECORD OF THE APPELLANT FOR THE PREVIOUS YEAR AND ALSO THAT FOR ANY INCOME THERE HAS TO BE AN EXPENDITURE AND THEREFORE HE RESTRICTED THE ADDITIONS MADE BY THE A O TO THE EXTENT OF 50% AS UNDISCLOSED INCOME OF THE ASSESSEE. 10. AGGRIEVED BY THIS DECISION OF THE LD. CIT (A), REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 4 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS ERRED IN RESTRICTING THE ADDITION M ADE BY THE AO OF RS. 52,12,121/- TO 50% INSTEAD OF 100% WITHOUT APPRECIA TING THE FACT THAT THE DEPOSITS WERE MADE IN UNACCOUNTED BANKS ACCOUNT S NOT DISCLOSED TO THE DEPARTMENT AND THE AO RIGHTLY DISALLOWED THE AM OUNT OF RS. 52,12,121/- BEING INCOME FROM UNDISCLOSED SOURCES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LA W, THE LD. CIT (A) FAILED TO APPRECIATE THAT THE ASSESSEE NEITHER PROD UCED ANY EVIDENCE TO SHOW THE DEPOSITS AS BUSINESS RECEIPTS NOT COULD ES TABLISH ANY NEXUS BETWEEN THE SAID DEPOSITS AND HIS BUSINESS DURING A SSESSMENT PROCEEDINGS. 11. LEARNED DR RELYING UPON THE ASSESSMENT ORDER SU BMITTED THAT THE ASSESSEE AT NO STAGE COULD SUBSTANTIATE THAT THE DEPOSITS MADE IN THE TWO BANK ACCOUNTS NAMELY AMERICAN EXPRESS BANK AND JANKALYAN SAHAKARI BANK L TD., COULD BE OUT OF HIS BUSINESS. THE LD. DR FURTHER SUBMITTED THAT THE AS SESSEE SHOULD NOT GET THE BENEFIT OF 50% IN THE UNDISCLOSED INCOME AS ALLOWED BY THE LD. CIT (A) AND SUBMITTED THAT ORDER OF THE LD. CIT (A) IS AGAINST THE FACTS OF TH E CASE AND DESERVES TO BE REVERSED. LEARNED AR SUBMITTED A CHART CONTAINING PEAK BALANC E WORKING FROM 1.4.2001 TO 31.3.2006 FOR BOTH THE BANK ACCOUNTS AND CLAIMED TH AT ADDITION IF ANY SHOULD BE RESTRICTED TO THE PEAK CREDIT IN THESE TWO BANK ACC OUNTS. TO SUBSTANTIATE HIS CLAIM LEARNED AR RELIED UPON THE FOLLOWING JUDGMENTS. 1. CIT VS. ISHWARDASS MUTHA (2004) 270 ITR 597 (RAJ ) 2. ITO VS. MAHESHKUMAR JAYANTILAL VORA (2004) 3 SOT 96 (RAJKOT) 3. M.V. MATHEW VS. ITO (1993) 46 TTJ (COCH) 353 4. SURENDRA M. KHANDHAR VS. ACIT (2001) 76 ITD 121 (MUMBAI) 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMI TTEDLY IT IS THE PRIMARY DUTY OF THE ASSESSEE TO EXPLAIN THE SOURCE OF THE RECEIPTS. AS IN THE PRESENT CASE THE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM THAT THE DEPOSITS IN THE ALLEGED BANK ACCOUNTS WERE FROM HIS BUSINESS FURTHER THE ASSESSEE ALSO COULD N OT EXPLAIN THE NATURE OF TRANSACTION 5 REFLECTED IN THESE TWO BANK ACCOUNTS. IT IS CLEAR THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS CAST UPON HIM. HOWEVER, THE DEPOSITS IN T HE BANK ACCOUNT ARE THE RECEIPTS IN THE COURSE OF BUSINESS OF CIVIL CONTRACTOR AND T HIS FACT HAS NOT BEEN DISPUTED BY THE AO. THEREFORE, THE ENTIRE DEPOSIT IN THE BANK ACCO UNT CANNOT BE TREATED AS THE INCOME OF THE ASSESSEE. THE PEAK OF THE DEPOSITS I N THE BANK ACCOUNTS WERE MUCH LESS THAN WHAT WAS OFFERED BY THE ASSESSEE INCOME I N RESPECT OF THE DEPOSITS IN THE BANK ACCOUNT AT 40% OF THE DEPOSITS IN THE BANK ACC OUNT. THE LD. CIT (A) HAS CONSIDERED ALL THESE FACTS AND RESTRICTED THE ADDIT ION TO 50% OF THE ENTIRE DEPOSIT IN THE BANK ACCOUNTS. WE DO NOT FIND ANY INFIRMITY OR ERROR WITH THE ORDER OF THE LD. CIT (A). THEREFORE, THE ORDER OF THE LD. CIT (A) IS CO NFIRMED AND APPEAL OF THE REVENUE IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . 14. SINCE GROUND NO. 1 & 2 RAISED IN ITA NOS.5241 T O 5244/M/2010 (AYS 2002-03 TO 2005-06) IS MATERIALLY IDENTICAL TO THE GROUND N O. 1 & 2 RAISED IN ITA NO.07/M/2010 (AY 2006-07) EXCEPT THE QUANTUM OF ADDITION MADE TH EREIN, FOLLOWING THE CONCLUSIONS DRAWN IN ITA NO. 7/M/2010, (SUPRA), WE DISMISS THE GROUND NO. 1 & 2 RAISED IN ALL THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF MARCH, 2012. SD/- SD/- (N.V. VASUDEVAN) (N.K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 14-3-2012 AT :MUMBAI OKK 6 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR A BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI