KENETH SERRAO, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-21(2), MUMBAI

ITA 5415/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4991 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 22-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V C JAIN
• Keywords: Unexplained investment; Unexplained expenditure; Salary income; Additional evidence
• Section: 147

Judgement Text

P A G E | 1 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.5415 /MUM/2017 (ASSESSMENT YEAR: 2010 - 11 ) SHRI KENNETH SERRAO 56, MAKER CHAMBER VI, NARIMAN POINT, MUMBAI - 400021. VS. A.C.I.T - 21(2) MUMBAI. PAN AWUPS8086Q ( APPELLANT ) ( RESPONDENT ) APPELLANT BY: SHRI V.C. JAIN, A .R RESPONDENT BY: SHRI MANOJ KUMAR SINGH, D .R DATE OF HEARING: 22 .01.2019 DATE OF PRONOUNCEMENT: 25 .01.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 33, MUMBAI, DATED 16.12.2015 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.144 R.W.S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT), DATED 24.03.2015 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. O N THE FACTS, IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS [LD. C.I.T. (A)] HAS ERRED IN NOT CONSIDERING THE FACT THAT THE LEARNED ASSESSING OFFICER [LD A . O] HAD MADE ADDITIONS AND DISALLOWANCES WITHOUT CONSIDE RING THE FACT THAT PAYMENT OF CREDIT CARDS AND INVESTMENT IN MUTUAL FUNDS & TIME DEPOSITS WERE MADE OUT OF SALARY INCOME AND INTEREST INCOME ALREADY SUBJECTED TO TAX BY HIM. P A G E | 2 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) 2. THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT IN REPLY TO HIS REMAND REPORT THE LD. AO HAD FAILED TO GIVE SOURCE OF PAYMENT OF CREDIT CARDS AND INVESTMENT IN MUTUAL FUNDS & TIME DEPOSITS AND ALSO THE APPELLANT WAS NOT CONFRONTED WITH THE REMAND REPORT OF T HE LD. AO , WITH A SPECIFIC MENTION ABOUT SOURCE OF PAYMENT OF CREDIT CARDS AND INVESTMENT IN MUTUAL FUNDS & TIME DEPOSITS. 3. THE LD. CIT(A) HAS ERRED IN UPHOLDING FOLLOWI NG ADDITIONS MADE BY THE LD. AO : - A. PAYMENT OF CREDIT CARD TRANSACTIONS OF RS.7,27,273/ - B. PURCHASE OF MUTUAL FUNDS OF RS. 10,00,000/ - C. INVESTMENT IN TIME DEPOSITS OF RS. 7,00,000/ - WITHOUT ASCERTAINING THE SOURCE OF THESE PAYMENTS AND INVESTMENTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE, CHANGE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL WHICH ARE INDEPENDENT & WITHOUT PREJUDICE TO EACH OTHER. 2 . BRIEFLY STATED, ON THE BASIS OF INFORMATION RETRIEVED FROM THE ITD SYSTEM OF THE DEPARTMENT IT WAS GATHERED BY THE A.O THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS IN RECEIPT OF CERTAIN INCOME S AND HAD ALSO MADE INVESTMENTS/EXPENDITURES, AS UNDER : PARTICULARS OF INCOME/EXPENDITURE/INVESTMENTS AMOUNT CREDIT CARD EXPENDITURE RS. 7,27,273/ - PURCHASE OF MUTUAL FUND OF EDELWEISS MUTUAL FUND RS.10,00,000/ - INVESTMENT IN TIME DEPOSITS RS. 7,00,000/ - SALARY INCOME RS.60,00,000/ - INTEREST OTHER THAN INTEREST ON SECURITIES RS. 1,93,794/ - OBSERVING THAT THE ASSESSEE HAD NOT FILED ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION VIZ. A.Y 2010 - 11, THE A.O REOPENED HIS CASE UNDER SEC. 147 OF THE I.T. ACT. HOWEVER, AS THE ASSESSEE NEITHER FILED HIS RETURN OF INCOME IN COMPLIANCE TO NOTICE ISSUED TO HIM UNDER SEC.148 NOR FURNISH ED THE REQUISITE DETAILS AS WERE CALLED FOR BY THE A.O, THEREFORE, THE LATTER BEING LEFT WITH NO OPTION COMPLETED THE ASSESSMENT TO THE BEST OF HIS JUDGMENT UNDER SEC.144 R.W.S. 147, DATED 24.03.2015. THE A.O ASSESSED THE INCOME OF THE ASSESSEE ON THE BASIS OF THE INFORMATION AS WAS RETRIEVED BY HIM FROM THE ITD SYSTEM OF THE DEPARTMENT VIZ. (I) UNEXPLAINED EXPENDITURE IN RESPECT OF A CREDIT CARD TRANSACTIONS: RS.7,27,273/ - ; (II) UNEXPLAINED INVESTMENTS MADE TOWARDS PURCHASE OF EDELWSEISS MUTUAL FUND: RS.10 LAC; (III) P A G E | 3 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) UNEXPLAINED INVE STMENT MADE TOWARDS PURCHASE OF TIME DEPOSITS : RS.7 LAC; (IV) UNDISCLOSED SALARY INCOME: RS.60,00,004/ - ; AND (V) UNDISCLOSED INTEREST INCOME : RS.1,93,794/ - . ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O ASSESSED THE INCOME OF THE ASSESSEE AT RS.86,2 1,070/ - . 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IN THE COURSE OF THE HEARING OF THE APPEAL THE ASSESSEE PLACED ON RECORD THE COPIES OF HIS VARIOUS BANK ACCOUNTS BY WAY OF AN ADDITIONAL EVIDENCE ALONG WITH AN AFFIDAVIT UNDER RULE 46A OF THE INCOME TAX RULES, 1962. THE CIT(A) FORWARDED THE AFORESAID DOCUMENTS TO THE A.O AND CALLED FOR A REMAND REPORT. SUBSEQUENTLY, THE CIT(A) AFTER PERUSING THE REMAND REPORT RECEIVED FROM THE A.O AND THE DETAILS/INFORMATION FILED BY THE ASSESSEE , OBSERVED THAT THE LATTER HAD ADMITTED THAT THE SALARY AND INTEREST INCOME RECEIVED BY HIM DURING THE YEAR UNDER CONSIDERATION WAS LIABLE TO BE TAXED. ON THE BASIS OF THE AFORESAID ADMISSION OF THE ASSESSEE THE CIT(A) CONFIRMED THE ADDITION IN RE SPECT OF SALARY INCOME OF RS.60 LAC AND INTEREST INCOME OF RS.1,93,794/ - MADE BY THE A.O. INSOFAR, THE REMAINING ADDITIONS MADE BY THE A.O VIZ. (I) UNEXPLAINED EXPENDITURE IN RESPECT OF CREDIT CARD TRANSACTIONS: RS.7,27,273/ - ; (II) UNEXPLAINED INVESTMENTS TOWARDS PURCHASE OF EDELWSEISS MUTUAL FUND: RS. 10 LAC; AND (III) UNEXPLAINED INVESTMENTS TOWARDS PURCHASE OF TIME DEPOSIT: RS.7 LAC WERE CONCERNED, IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE HAD FAILED TO DEMONSTRATE BEFORE HIM AS TO HOW THE AFOREMEN TIONED ADDITIONS MADE BY THE A.O WERE INCORRECT OR UNJUSTIFIED. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE ADDITIONS MADE BY THE ASSESSEE IN RESPECT OF THE AFOREMENTIONED UNEXPLAINED EXPENDITURE/INVESTMENTS WAS ALSO CONFIRMED BY THE CIT(A) . P A G E | 4 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) 4. THE ASS ESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE EXPENDITURE TOWARDS CREDI T CARD TRANSACTIONS (RS.7,27,273/ - ) AND THE INVESTMENTS MADE TOWARDS PURCHASE OF EDELWSIESS MUTUAL FUND (RS.10 LAC) AND INVESTMENT MADE IN TIME DEPOSITS (RS.7 LAC) WERE MADE BY THE ASSESSEE FROM HIS BANK ACCOUNT S WHERE THE SALARY INCOME AND THE INTEREST IN COME STOOD PARKED /CREDITED . IN SUM AND SUBSTANCE, IT WAS THE CLAIM OF THE LD. A.R. THAT NOW WHEN THE SALARY RECEIVED BY THE ASSESSEE ALONG WITH THE INTEREST INCOME HAD BEEN BROUGHT TO TAX BY THE A.O, THEREFORE, THERE WAS NO OCCASION FOR HIM TO HAVE MADE SE PARATE ADDITIONS IN RESPECT OF INVESTMENTS/EXPENDITURES MADE FROM THE AFOREMENTIONED INCOME S WHICH HAD ALREADY BEEN BROUGHT TO TAX . THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CLAIM TOOK US THROUGH THE VARIOUS BANK ACCOUNTS OF THE ASSESSEE FORMING PART O F HIS P APER BOOK (FOR SHORT APB) VIZ. (I) BANK ACCOUNT 000401699656 WITH ICICI BANK LTD.; (II) BANK ACCOUNT 037601506835 WITH ICICI BANK LTD. ; AND (III) BANK ACCOUNT NO. 09580060000933 WITH KOTAK MAHINDRA BANK LTD. APART THEREFROM, THE ASSESSEE HAD PLA CED ON RECORD A CONSOLIDATED BANK SUMMARY WHEREIN THE SOURCE OF THE CREDITS ALONGWITH THE WITHDRAWALS MADE FROM THE AFOREMENTIONED RESPECTIVE BANK ACCOUNTS ARE MENTIONED. IT WAS THE CLAIM OF THE LD. A.R THAT NOW WHEN THE INCOME OF THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION HAS BEEN BROUGHT TO TAX, HENCE THE INVESTMENTS AND EXPENDITURES INCURRED OUT OF THE SAID INCOME COULD NOT BE SEPARATELY TAXED. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED B THE LD. D.R THAT AS THE ASSESSEE HAD FAILED TO COME FORTH WITH THE SOURCE OF P A G E | 5 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) THE AFORESAID INVESTMENTS/EXPENSES THAT WERE MA DE BY HIM DURING THE YEAR UNDER CONSIDERATION, THEREFORE, THE A.O HAD RIGHTLY ADDED THE SAME WHILE FRAMING THE ASSESSMENT. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL A VAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE DESPITE BEING IN RECEIPT OF SALARY INCOME OF RS.60 LAC AND INTEREST INCOME OF RS.1,93,794/ - HAD FAILED TO FILE HIS RETURN OF INCOME. INSOFAR, THE TAXATION OF THE SALARY INCOME AND THE INTEREST INCOME IS CONCERNE D , THE SAME IS NOT DISPUTED BY THE ASSESSEE BEFORE US. WE FIND THAT IT IS THE CLAIM OF THE ASSESSEE THAT THE AFORESAID INVESTMENTS/EXPENDITURES VIZ. (I) EXPENDITURE INCURRED IN RESPECT OF CREDIT CARD TRANSACTION S : RS.7,27,273/ - ; (II) INVESTMENTS MADE TOWAR DS PURCHASE OF EDELWSEISS MUTUAL FUND: RS.10 LAC; AND (III) INVESTMENTS MADE TOWARDS PURCHASE OF TIME DEPOSIT: RS.7 LAC WERE INCURRED/ MADE BY THE ASSESSEE DURING THE YEAR FROM HIS AFOREMENTIONED BANK ACCOUNTS VIZ. (I) BANK ACCOUNT 000401699656 WITH ICICI BANK LTD.; (II) BANK ACCOUNT 037601506835 WITH ICICI BANK LTD.; AND (III) BANK ACCOUNT NO. 09580060000933 WITH KOTAK MAHINDRA BANK LTD. IT IS AVERRED BY THE LD. A.R THAT AS THE CREDITS IN THE AFOREMENTIONED BANK ACCOUNT PRIMARILY COMPRISED OFF THE SALARY AND THE INTEREST INCOME WHICH HAD ALREADY BROUGHT TO TAX BY THE A.O, THEREFORE, THE AFOREMENTIONED INVESTMENTS MADE AND EXPENDITURE INCURRED BY THE ASSESSEE FROM HIS SAID BANK ACCOUNTS COULD NOT BE SEPARATELY BROUGHT TO TAX . 7. I N OUR CONSIDERED VIEW THER E IS SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT ONCE THE INCOME HAD BEEN BROUGHT TO TAX IN THE HANDS OF AN ASSESSEE, THEREAFTER THE INVESTMENTS/EXPENDITURE MADE OUT OF SUCH INCOME COULD NOT BE SEPARATELY BROUGHT TO TAX, FAILING WHICH THE SAME WOULD LEAD TO DOUBLE TAXATION IN THE HANDS OF P A G E | 6 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) THE ASSESSEE. HOWEVER, AS THE C LAIM OF THE LD. A.R THAT THE AFOREMENTIONED INVESTMENTS MADE AND THE EXPENDITURE INCURRED BY THE ASSESSEE IS SOURCED OUT OF HIS SALARY AND INTEREST INCOME WHICH HAD ALREADY BEEN BROUGHT TO TAX HA S NOT BEEN PROVED TO THE HILT ON THE BASIS OF CLINCHING EVIDENCE, AND THUS THE SAME CANNOT BE ACCEPTED AT THE VERY FACE OF IT. WE THUS ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES T O BE REVISITED BY THE A.O. IN TERMS OF OUR AFORESAID OBSERVATIONS WE RESTORE THE MATTER TO THE FILE OF THE A.O, WHO SHALL IN THE COURSE OF THE SET ASIDE PROCEEDINGS VERIFY THE VERACITY OF THE AFORESAID CLAIM OF THE LD. A.R THAT THE INVESTMENTS MADE BY THE ASSESSEE TOWARDS PURCHASE OF MUTUAL FUNDS/TIME DEPOSITS AND EXPENDITURE INCURRED IN RESPECT OF CREDIT CARD TRANSACTIONS DURING THE YEAR WERE SOURCED OUT OF HIS DULY EXPLAINED INCOMES AS STOOD CREDITED IN HIS AFOREMENTIONED BANK ACCOUNT S. APART THEREFROM, T HE A.O SHALL REMAIN AT A LIBERTY TO MAKE NECESSARY ENQUIRIES AS REGARDS THE SOURCE S OF THE CREDIT S APPEARING IN THE AFOREMENTIONED BANK ACCOUNTS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . 8 . THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER P RONOUNCED IN THE OPEN COURT ON 25 . 01.2019 SD/ - SD/ - (RAMIT KOCHAR) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 25. 01.2019 PS. ROHIT P A G E | 7 ITA NO. 5415/MUM/2017 A.Y. 2010 - 11 SHRI KENNETH SERRAO VS. ACIT - 21(2) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT . REGISTRAR) , / ITAT, MUMBAI .