SHRI PARESH LAXMINARAYAN RATHI, Akola V. ITO, WARD-3, Akola

ITA 530/NAG/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4515 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Assessee Lawyers: PRAKASH NANWANI

Judgement Text

1 ITA NOS. 530 TO 534/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO S . 530 & 531 /NAG/2014. ASSESSMENT YEAR : 2009 - 10 & 2010 - 11 . SHRI PARESH LAXMINARAYAN RATHI, THE INCOME - TAX OFFICER, AKOLA. VS. WARD - 3, AKOLA. PAN AGMPR5511M. APPELLANT. RESPONDENT. I.T.A. NO S .53 2 & 533 /NAG /2014. ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11. SHRI LAXMINARAYAN JAINARAYAN RATHI, THE INCOME - TAX OFFICER, AKOLA. VS. WARD - 3, AKOLA. PAN ABDPR97301 APPELLANT. RESPONDENT. I.T.A. NO.53 4 /NAG/2014. ASSESSMENT YEAR : 2010 - 11. SHRI JATIN LAXMINARAYAN RATHI, THE INCOME - TAX OFFICER, AKOLA. VS. WARD - 3, AKOLA. PAN ACIPR1208F. APPELLANT. RESPONDENT. APPELLANT BY : SHRI PRAKASH NANWANI. RESPONDENT BY : SMT . AGNES P. THOMAS. DATE OF HEARING : 19 - 09 - 2016 DATE OF PRONOUNCEMENT : 20 TH SEPT., 2016 O R D E R THESE ARE APPEALS BY THREE ASSESSEES AGAINST THE RESPECTIVE ORDERS OF LEARNED CIT(APPEALS). SINCE THE ISSUES ARE COMMON AND CONNECTED AND THE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 530 TO 534/NAG/2014 2 . THE COMMON I SSUE RAISED IN THESE APPEALS PERTAINS TO THE ADDITION OF FOLLOWING AMOUNTS AS UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE : ITA NO. NAME OF ASSESSEE ASSTT. YEAR ADDITION MADE 530/NAG/2014 SHRI PARESH RATHI 2009 - 10 RS.12,87,000/ - 531/NAG/2014 SHRI PARESH RATHI 2010 - 11 RS.24,11,594/ - 532/NAG/2014 SHRI LAXMINARAYAN RATHI 2009 - 10 RS.17,25,000/ - 533/NAG/2014 SHRI LAXMINARAYAN RATHI 2010 - 11 RS.25,81,395/ - 534/NAG/2014 SHRI JATIN RATHI. 2010 - 11 RS.28,77,450/ - 3. SINCE THE FACTS ARE IDENTICAL I AM ADJUDICATING THE ISSUE WITH FACTS AND FIGURES OF ITA NO. 530/NAG/2014. 4. IN THESE CASES DURING THE SCRUTINY PROCEEDINGS IT WAS FOUND THAT THE CASH DEPOSITS WERE MADE IN THE BANK ACCOUNTS. IN EXPLANATION THEREOF THE ASSESSEE STATED THAT SOME DEPOSITS ARE MADE BY M/S ASAHI INFRASTRUCTURE & PROJECT LTD. WHERE THE ASSESSEE IS A DIRECTOR, PART OF THE DEPOSITS WERE SAID TO BE UNSECURED LOANS OBTAINED FROM PARTIES AND REST WERE WITHDRAWALS FROM ONE BANK OR ANOTHER. THE ASSESSEE ALSO CONFIRMED THE UNSECURED LOANS. THE ASSESSEE FURTHER EXPLAINED AS UNDER : THE ASSESSEE IS A DIRECTOR OF M/S ASAHI INFRASTRUCTURE & PROJECT LTD. THE M/S ASAHI INFRASTRUCTURE & PROJECT LTD. HAS TAKEN THE PROJECT OF DEVELOPING OF A SMALL HOUSING SCHEME (INDIRA AAWAS YOJNA) OF GOVT. OF INDIA AT VARIOUS CITIES IN MAHARASHTRA. THE PROJECT IS IMPL EMENTED BY THE LOCAL MUNICIPAL COUNCIL IN VARIOUS CITIES FOR E.G. UMRED, NARKHED, HINGOLI ETC. THIS DEVELOPMENT PROJECT OF IS A SUB CONTRACT UNDERTAKEN BY M/S ASAHI INFRASTRUCTURE & PROJECT LTD. THE ASSESSEE BEING DIRECTOR OF COMPANY IS LOOKING AFTER THE DEVELOPMENT AND ERECTION OF THE PROJECT & HAS TO MOVE AROUND VARIOUS CITIES WERE THE PROJECTS UNDERTAKEN BY THE M/S ASAHI INFRASTRUCTURE & PROJECT LTD. THE COMPANY M/S ASAHI 3 ITA NOS. 530 TO 534/NAG/2014 INFRASTRUCTURE & PROJECT LTD. HAS TO MAKE CASH PAYMENT OF THE LABOUR AND ALSO FOR OTHER MISCELLANEOUS WORK FOR WHICH THE COMPANY IS DEPOSITING CASH IN THE BANK ACCOUNTS OF THE ASSESSEE WHO IS ALSO A DIRECTOR AND ALSO LOOKING AFTER OVERALL DEVELOPMENT OF THE PROJECTS IN THE DIFFERENT CITIES. THE AMOUNT WHENEVER DEPOSITED IN BANK ACCOUNTS OF THE ASSESSEE IS DEBITED BY THE COMPANY UNDER THE VARIOUS HEADS OF EXPENSES. HOWEVER, THE AO DID NOT ACCEPT THIS EXPLANATION AND HELD AS UNDER : IN THIS CONNECTION ASSESSEE WAS ASKED TO SUBSTANTIATE HIS POINTS OF CASH DEPOSITED BY COMPANY IN THE ACCO UNT OF ASSESSEE WITH THE HELP OF BANK STATEMENT OF ASAHI INFRASTRUCTURE & PROJECT LTD. THE ASSESSEE SUBMITTED BANK STATEMENT OF ASAHI INFRASTRUCTURE & PROJECT LTD. AND TRIED TO PROVE HIS POINT. HOWEVER BANK STATEMENT OF ASAHI INFRASTRUCTURE & PROJECT L TD. DOES NOT SUBSTANTIATE / PROVE THE DATE WISE CASH DEPOSITED IN THE ACCOUNT OF ASSESSEE. THE ENTRY OF WITHDRAWAL FROM COMPANY AND ENTRY OF CASH DEPOSITS IN THE BANK ACCOUNT OF ASSESSEE DOES NOT MATCH WITH EACH OTHER. THE AUTHORISED REPRESENTATIVE OF ASSE SSEE FAILED TO ESTABLISH THAT THE CASH DEPOSITED IN THE A/C OF ASSESSEE ARE ACTUALLY CAME FROM THE ACCOUNT OF ASAHI INFRASTRUCTURE AND PROJECTS LTD. ASSESSEES CONTENTION THAT ASAHI INFRASTRUCTURE AND PROJECTS LTD. I S ENGAGED IN DEVELOPMENT AND ERECTION OF THE PROJECT AND THE COMPANY HAS TO MAKE CASH PAYMENT OF THE LABOUR AND ALSO FOR OTHER MISCELLANEOUS WORK FOR WHICH THE COMPANY IS DEPOSITING CASH IN THE BANK ACCOUNTS OF THE ASSESSEE, IS ALSO FOUND UNTENABLE. BECAUSE OF COMPANY UNDERTAKES SUCH PROJECTS IN PARTICULAR CITY LOCALITY, COMPANY CAN OPEN A BANK A/C FOR THE PURPOSE OF ITS EXPENSES. THEREFORE ASSESSEES CONTENTION THAT M/S ASAHI INFRASTRUCTURE AND PROJECTS LTD. HAS DEPOSITED CASH IN THE ACCOUNT OF ASSESSEE ARE REJECTED. 5. UPON ASSESSEES APPEAL, L EARNEE CIT(APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE HOLDING AS UNDER : 5.1 THE CONTENTION RAISED BY THE APPELLANT, AS DISCUSSED IN PARA 5 ABOVE, DO NOT CARRY MUCH SUBSTANCE IN THE SENSE FIRSTLY; THAT THE APPELLANT IS NOT OBLIGED TO INCUR ANY EXPEN DITURE OUT OF HIS OWN BANK ACCOUNTS WHEN THE ACCOMPLISHMENT OF THE PROJECT WORK, AS SUCH HAS BEEN ASSIGNED TO THE COMPANY BY THE GOVT. OF INDIA FOR WHICH ALSO APPARENTLY THE AR HAS NOT ADDUCED ANY SORT OF EVIDENCE EITHER DURING THE ASSESSMENT PROCEEDINGS O R DURING THE APPELLATE PROCEEDINGS. SECONDLY; THE TRANSACTIONS OF CASH DEPOSITS IN THE BANK ACCOUNTS OF THE APPELLANT HAVE NEITHER BEEN EXPLAINED NOR CO - RELATED WITH THE ENTRIES OF CASH WITHDRAWALS BY THE APPELLANT FROM THE ACCOUNT OF THE COMPANY AND THE 4 ITA NOS. 530 TO 534/NAG/2014 WITHDRAWALS FROM HIS OWN ACCOUNTS. THIRDLY; THE CONTENTION OF THE AR THAT THE DEPOSITS ARE MADE OUT OF WITHDRAWALS FROM THE BANK ACCOUNTS OF THE APPELLANT DO NOT CONCLUSIVELY PROVE THAT SUCH WITHDRAWALS HAVE BEEN UTILIZED BY THE APPELLANT FOR FURTHER DEPOS ITS IN HIS OWN BANK ACCOUNTS MORE PARTICULARLY, WHEN THE AR HIMSELF HAS ARGUED THAT THE AMOUNTS OF SUCH WITHDRAWALS HAVE BEEN UTILIZED BY THE APPELLANT TOWARDS THE PAYMENT OF LABOUR AND MATERIAL FOR THE PROJECT WORK TO BE ACCOMPLISHED BY THE COMPANY IN RES PECT OF THE PROJECT CLAIMED TO HAVE BEEN AWARDED TO IT BY THE GOVT. OF INDIA AND THAT BEING THE CASE, THERE IS NO SCOPE OF SUCH DEPOSITS TO HAVE BEEN MADE OUT OF CASH WITHDRAWALS BY THE APPELLANT. THEREFORE, THERE EXISTS AN INHERENT CONTRADICTION IN THE CO NTENTIONS RAISED BY THE APPELLANT. LASTLY; FOR THE PURPOSE OF INCURRING THE EXPENDITURE FOR THE PROJECT WORK UNDERTAKEN BY THE COMPANY , OBVIOUSLY THERE IS NO NEED OF TRANSFERRING THE MONEY FROM THE ACCOUNT OF THE COMPANY TO THE ACCOUNT OF OF ITS DIRECTOR A ND AS SUCH THE CASH CAN BE WITHDRAWN DIRECTLY FOM THE ACCOUNT OF THE COMPANY TO MEET SUCH EXPENDITURE FOR THE WORK UNDERTAKEN BY THE COMPANY. NOW A DAYS THE BANKING FACILITIES LIKE ATM, AND BANK BRANCHES ARE SPREAD IN RURAL AREAS ALSO. THEREFORE, IT WAS NO T VERY DIFFICULT TO WITHDRAWN CASH FROM THE BANK ACCOUNT OF THE COMPANY TO MEET THE EXPENSES TO BE INCURRED BY THE COMPANY ITSELF RATHER THAN ROUTING SUCH EXPENDITURE THROUGH THE BANK ACCOUNT OF THE DIRECTOR. 5.2 COMING TO THE ISSUE OF HAND LOANS, THE AR H AS CONTENDED THAT THE APPELLANT HAD TAKEN TEMPORARY CASH LOANS AGGREGATING TO RS.1,65,500/ - . THE AR OF THE APPELLANT IN THIS REGARD HAS ALSO ENCLOSED THE COPIES OF THE CONFIRMATION LETTERS FROM THESE PARTIES. IT IS PERUSED FROM THE CONFIRMATION LETTERS THA T, THE HAND LOANS ARE CLAIMED TO HAVE BEEN TAKEN FROM 9 DIFFERENT PARTIES AND THE AMOUNT IN EACH CASE IS RS.20,000/ - OR BELOW. IT IS PECULIAR TO NOTE THAT THE AMOUNT OF HAND LOAN TAKEN IN CASH IS CLAIMED TO HAVE BEEN DEPOSITED IN HIS BANK ACCOUNTS BY THE APPELLANT. BUT THE FACT REMAINS THAT THE CASH LOAN ALLEGEDLY BORROWED BY THE APPELLANT AND CLAIMED TO HAVE BEEN UTILIZED FOR CASH DEPOSITS USED FOR THE PURPOSE OF BUSINESS OF THE COMPANY BY THE APPELLANT HAVE NOT BEEN EXPLAINED. 5.3 IT CLEARLY TRANSPIRES F ROM THE ABOVE FACTS THAT THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS CAST ON HIM TO EXPLAIN AND CO - RELATE THE ENTRIES OF CASH DEPOSIT IN HIS BANK ACCOUNTS WITH THE CASH WITHDRAWALS AND TRANSACTIONS WITH THE COMPANY. I, THEREFORE, DECLINE TO INTERFERE WI TH THE ORDER OF THE AO. HENCE, THESE GROUNDS ARE DISMISSED. 6. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE AO HAS NOT PROPE RLY RECONCILED THE CASH 5 ITA NOS. 530 TO 534/NAG/2014 AVAILABILITY OF THE COMPANY, NAMELY, M/S ASAHI INFRASTRUCTURE AND PROJECTS LTD. WITH THE DEPOSITS IN ASSESSEES BANK ACCOUNT. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE AO HAS ONLY TRIED TO IDENTIFY THE BANK WITHDRAWALS F ROM THE SAID COMPANYS BANK ACCOUNT AND TRIED TO MA TCH THE DEPOSIT ON THE SAME DAY IN THE ASSESSEES INDIVIDUAL BANK ACCOUNTS. HE SUBMITTED THAT THE ASSESSEE BEING A COMPANY THERE WAS SUFFICIENT CASH BALANCE AVAILABLE AND THE SAME WERE UTILIZED FOR DEPOSITING IN ASSESSEES BANK ACCOUNTS. HE SUBMITTED THAT THOUGH THE ASSESSEE HAD SUBMITTED THE NECESSARY CASH BOOKS, NO RECONCILIATION IN THIS REGARD HAD BEEN DONE. LEARNED COUNSEL FURTHER SUBMITTED THAT THE AO HAS IGNORED CASH WITHDRAWAL FROM BANK ACCOUNTS OF THE ASSESSEE AND PROCEEDED TO MA TCH CASH DEPOSITS WHICH IS UNJUSTIFIED. LEARNED COUNSEL FURTHER SUBMITTED THAT SIMILAR DEPOSITS WERE ALSO MADE IN ASSESSEES BANK ACCOUNT IN EARLIER F INANCIAL YEAR WHICH WERE ACCEPTED BY THE REVENUE. LEARNED COUNSEL FURTHER PLACED RELIANCE ON SEVERAL CASE LAWS FOR THE PROPOSITION THAT IF THE ASSESSEE HAS MADE SUFFICIENT DRAWINGS FROM BANK ACCOUNTS AND THERE IS NO EVIDENCE OF EXPENDITURE/INVESTMENT , TH E DEPOSIT OF A PART OF THE WITHDRAWALS INTO THE BANK ACCOUNT AGAIN MAY NOT BE DOUBTED. LEARNED COUNSEL FURTHER SUBMITTED THAT THERE IS NO ISSUE OF CASH LOAN IN THESE APPEALS. 8. PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. SH E S UBMITTED THAT THE WITHDRAWALS FROM M/S ASAHI INFRASTRUCTURE AND PROJECTS LTD. S BANK ACCOUNT COULD NOT BE CO - RELATE D BY THE AO INTO THE DEPOSITS OF ASSESSEES BANK ACCOUNT. HENCE HE SUBMITTED THAT THE ORDERS OF THE AUTHORITIES BELOW SHOULD BE UPHELD. 9. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. I FIND THAT CASH DEPOSITS IN ASSESSEES BANK ACCOUNTS HAVE BEEN FOUND BY THE REVENUE. IN EXPLANATION OF THESE DEPOSITS THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS A DIRECTOR OF M/S ASAHI INFRASTRUCTURE AND PROJECTS LTD. THE SAID COMPANY HAS TAKEN UP INFRASTRUCTURE PROJECTS (INDIRA AWAS YOJNA) IN DIFFERENT 6 ITA NOS. 530 TO 534/NAG/2014 PARTS OF MAHARASHTRA FOR MAKING PROJECTS. IN THIS REGARD ASSESSEES DIRECTORS HAVE TAKEN MONEY FROM THE COMPANY AND DEPOSITED IN THEIR INDIVIDUAL BANK ACCOUNTS TO FACILITATE EASY PAYMENT OF LABOURS AND ANOTHER ON SITE. IN THIS REGARD REVENUES CONTENTION IS THAT BANK WITHDRAWALS FROM M/S ASAHI INFRASTRUCTURE AND PROJECTS LTD. COULD NOT BE DIRECTLY CO - RELATED TO THE INDIVIDUAL DEPOS ITS IN BANK ACCOUNT OF THE ASSESSEE. FURTHER MORE REVENUE HAS ALLEGED THAT IN THESE TIMES OF ATM AND AVAILABLE BANKING FACILITY, THERE IS NO JUSTIFICATION OF DEPOSIT OF MONEY IN INDIVIDUAL DIRECTOR ACCOUNT FOR CASH EXPENDITURE . 10. IN THIS REGARD IT IS THE ASSESSEES CONTENTION THAT TH ERE WERE CASH DRAWINGS AND BALANCE AVAILABLE IN THE CASH BOOK OF M/S ASAHI INFRASTRUCTURE AND PROJECTS LTD. AND THE SAME WERE UTILIZE D FOR GIVING CASH TO THE ASSESSEE WHO ARE THE DIRECTORS AND THE SA ME WERE DEPOSITED IN THE BANK ACCOUNTS. I FIND THAT THIS ASPECT HAS NOT BEEN EXAMINED BY THE AO. FINDING ON THE VERACITY OF THIS CLAIM OF THE ASSESSEE IS ESSENTIAL . FURTHER THE CLAIM THAT THE DIRECTOR INCURRED EXPENDITURE ON BEHALF OF THE COMPANY CAN ALSO BE CHECKED BY EXAMINING THE CONCERNED ENTRIES AND ADJUSTMENT IN THE COMPANYS BOOKS. HENCE I REMIT THIS ISSUE TO THE FILE OF THE AO TO EXAMINE THE CASH AVAILABILITY IN THE SAID COMPANYS BANK ACCOUNT AND THE SUBSEQUENT ADJUSTMENTS AS EXPENDITURE IN CO MPANYS BOOKS. 1 1 . AS REGARDS T H E ISSUE OF WITHDRAWAL FROM BANK ACCOUNT EARLIER AND SUBSEQUENT DEPOSIT IN THE BANK ACCOUNTS, LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON SEVERAL CASE LAWS FROM THE TRIBUNAL DECISIONS. I FIND THAT IN THESE CASE L AWS IT HAS BEEN HELD THAT IF THERE ARE ADEQUATE AND SUFFICIENT CASH WITHDRAWALS FROM BANK AND NO EVIDENCE IS FOUND FOR THEIR UTILIZATION FOR PERSONAL EXPENDITURE OR INVESTMENT, THE SAME MAY BE ACCEPTED AS REDEPOSIT IN THE BANK ACCOUNTS. I FIND THAT THIS AS PECT NEEDS EXAMINATION OF THE CASH FLOW STATEMENT OF THE ASSESSEE. LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT HE HAS SUBMITTED THAT THE CASH FLOW STATEMENT S WERE FURNISHED BEFORE THE 7 ITA NOS. 530 TO 534/NAG/2014 AUTHORITIES BELOW BUT THE SAME REMAINED TO BE EXAMINED BY THE AUTHORITIES BELOW. I FIND THAT IN THE LIGHT OF THE TRIBUNAL DECISIONS REFERRED BY THE LEARNED COUNSEL OF THE ASSESSEE, THIS ASPECT NEEDS PROPER EXAMINATION. HENCE THE AO IS DIRECTED TO EXAMINE THE BANK WITHDRAWA LS AND THE UTILIZATION OF CASH BY THE ASSESSEE AFTER PROPER EXAMINATION OF BOOKS AND CASH FLOW STATEMENT. THEREAFTER THE AO SHOULD DECIDE THE ISSUE AS PER LAW. 1 2 . IN THE RESULT, THESE APPEALS BY THE ASSESSEES STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF SEPT., 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 20 TH SEPT., 2016. COPY FORWARDED TO : 1. SHRI PARESH LAXMINARAYAN RATHI, 2. SHRI LAXMINARAYAN JAINARAYAN RATHI 3. SHRI JATIN LAXMINARAYAN RATHI, RADHAKUNJ, GANGANAGAR, AKOLA. 4. I.T.O., WARD - 3, AKOLA. 5. C.I.T. - I, NAGPUR. 6. CIT(APPEALS), - I, NAGPUR. 7. D.R., ITAT, NAGPUR. 8. GUARD FILE TRUE COPY BY ORDE R ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.