ITO 1(1)(1), MUMBAI V. PRAMOD RAM NAGPAL, MUMBAI

ITA 5443/MUM/2012

• Counselvise Citation: 544319914 RSA 2012
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 29-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PERMANAND J
• Assessee Lawyers: BALDEV IDNANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI , ,, , ! ! ! ! !!! !!! !!! !!!' '' ' # # # # BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. : 5443/MUM/2012 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER -1(1)-(1), ROOM NO. 534/579, AAYAKAR BHAVAN, M K ROAD, MUMBAI -400 020 VS SHRI PRAMOD RAM NAGPAL, MEGHJI BHAVAN, GROUND FLOOR, METRO CINEMA ROAD, DHOBI TALAO, MUMBAI -400 020 .: PAN: AAHPN 2577 Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PERMANAND J RESPONDENT BY : SHRI BALDEV IDNANI /DATE OF HEARING : 08-12-2014 / DATE OF PRONOUNCEMENT : 21-01-2015 ORDER !!! !!! !!! !!! , , , , $ $$ $ PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) -1, MUMBAI, DATED 20.06.2012M WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT IS RIGHT IN DELETING THE DISALLOWANCE OF RS. 1,61,064/- MADE U/S 40(A)(IA) O F THE I.T. ACT? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT IS RIGHT IN DELETING THE AD DITION OF RS. 12,88,000/- MADE U/S 69 OF THE I.T. ACT TOWARDS UNACCOUNTED CASH DEPOSITS? THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR WITHDRA W THE AFORESAID GROUNDS OF APPEAL. SHRI PRAMOD RAM NAGPAL ITA 5443/M/2012 2 2. GROUND NO. 1 PERTAINS TO DISALLOWANCE OF RS. 1,61,064/- U/S 40(A)(IA). 3. THE AO DISALLOWED THE PAYMENT MADE TO CITY BANK, HOLDING THAT, CITI BANK IS A FOREIGN BANK OPERATING IN INDIA THROUGH ITS INDIAN ENTITY AND THUS ANY PAYMENT MADE TO CITI BANK SHALL ATTRACT SECTION 195 AND THEREFORE, TAX SHOULD HAVE BEEN DEDUCTED AT SOURCE. 4. THE ASSESSEE APPROACHED THE CIT(A), BEFORE WHOM HE REITERATED HIS SUBMISSIONS MADE BEFORE THE AO. 5. THE CIT(A) WHILE ADJUDICATING THE ISSUE HELD, IN APPEAL IT IS SUBMITTED THAT APPELLANT VIDE LETTER DT. 03-12-2010, HAS EXPLAINED THAT CITY BANK IS ASSESSED TO TAX IN CHENNAI, INDIA, AND HAS BEEN ALLOTTED PAN AND TAN NUMBER AND THEREFORE IT IS OUTSIDE THE AMBIT OF TDS PROVISIONS. 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT, ASSESSMENT ORDER AND FACTS OF THE CASE. IT IS AN ADMITTED FACT THAT THE INTEREST OF RS.1,61,064/- WAS PAID BY THE APPELLANT TO CITY BANK. THE APPELLANT BEING AN INDIVIDUAL AND THE PAYEE BEING BANKING COMPANY COVERED BY BAKING REGULATION ACT, 1949, IN TERMS OF SECTION 194A IT WAS NOT REQUIRED TO DEDUCT TDS ON INTEREST PAID AND IS THUS OUTSIDE THE PURVIEW OF SECTION 40(A)(IA). GROUND NO.3 IS ALLOWED/ 6. THE CIT(A), THEREFORE, DELETED THE DISALLOWANCE. 7. AGAINST THIS DISALLOWANCE, THE DEPARTMENT IS IN APPEAL BEFORE THE ITAT. 8. BEFORE US, THE DR SUPPORTED THE ORDER OF THE REVENU E AUTHORITIES, WHEREAS THE AR SUPPORTED THE ORDER OF THE CIT(A). 9. WE HAVE HEARD THE ARGUMENTS AND HAVE PURSUED THE ORDERS OF THE REVENUE AUTHORITIES. IN OUR OPINION, THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A), BECAUSE, THE CIT(A) HAS CATEGORICALLY HELD THAT SINCE THE CITI BANK IS COVERED BY BANKING SHRI PRAMOD RAM NAGPAL ITA 5443/M/2012 3 REGULATIONS ACT, 1949, THE PAYMENT OF INTEREST SHALL BE TRE ATED AS PAYMENT TO ANY BANK, WHICH IS COVERED BY THE BANKING REGULATION ACT, 1949. THE FACT THAT THE SAID BANK HAS BEE N ALLOTTED PAN, TAN AND BEING ASSESSED UNDER THE INDIA INC OME TAX ACT, 1961 AT CHENNAI, THERE IS NO SCOPE OF TAKING AN Y OTHER VIEW. IN ANY CASE, SECTION 195 TALKS ABOUT THE PAYMENT M ADE TO A NON-RESIDENT, NOT BEING A COMPANY OR TO A FOREIGN C OMPANY, AND INTEREST . 10. IN PROVISION ITSELF EXCLUDES THE PAYEE HERE, I.E. CITI BANK , WHICH IS A RESIDENT AS PER THE INDIAN TAX REGIME. 11. WE, THEREFORE, SUSTAIN THE ORDER OF THE CIT(A) AND RE JECT THE GROUND AS TAKEN BY THE DEPARTMENT. 12. GROUND NO. 1 IS THEREFORE, REJECTED. 13. GROUND NO. 2 PERTAINS TO ADDITION OF RS. 12,88,000/- U/S 69. 14. IN THE ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THERE ARE DEPOSITS IN A CURRENT ACCOUNT MAINTAINED WITH OBC, WH ICH AGGREGATED TO RS. 12,88,000/-. THE ASSESSEE EXPLAINED THA T IN THE CONDUCT OF SHARES TRADING BUSINESS, HE HAD SUFFICIENT C ASH BALANCE, WITHDRAWN FROM OTHER BANKS AND DEPOSITED IN OBC. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AND HE LD THAT SINCE NO BOOKS OF ACCOUNT HAD BEEN PRODUCED AND OVER THAT THE ASSESSEE COULD NOT EXPLAIN THE REASON FOR HAVING TO WITHD RAW CASH AND DEPOSITING IT, EVEN IF CASH WAS AVAILABLE. HE, THEREF ORE, ADDED RS. 12,88,000/- TO THE INCOME OF THE ASSESSEE. 15. THE ASSESSEE APPROACHED THE CIT(A) BEFORE WHOM, THE ASSESSEE REITERATED HIS SUBMISSIONS AND WHICH HE HAS REPRODUCED IN HIS ORDER. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HELD, SHRI PRAMOD RAM NAGPAL ITA 5443/M/2012 4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT, ASSESSMENT ORDER AND FACTS OF THE CASE. IT IS NOTED FROM THE BANK ACCOUNT OF THE ORIENTAL BANK OF COMMERCE AND ALSO FROM THE CASH BOOK THAT THE CASH DEPOSITS OF RS. 12,88,000/- ON VARIOUS DATES IN ORI ENTAL BANK OF COMMERCE HAS ARISEN OUT OF WITHDRAWALS FROM CITY BANK ICICI BANK, THE OPENING CASH IN HAND ON VARIOUS DATES. THIS FACT IS ALSO EVIDENT FROM THE D ETAILED CHART PREPARED AND INCLUDED AT PAGE 5 & 6 OF THE ASSESSMENT ORDER. I AM NOT IN AGREEMENT WITH THE A. O. THAT IN SPITE OF EXCESS CASH AVAILABLE IN HAND, THE APPELLANT HAS WITHDRAWN CASH FROM ONE BANK OR THE OTHER AND THEREFORE DEPOSITS IN OBC BANK ARE UNEXPLAINED. THE APPELLANT HAS SHOWN THAT THERE ARE MULTIPLE TRANSACTIONS OF DEPOSITS AND WITHDRAWALS A ND THAT SOURCES OF THESE TRANSACTIONS ARE EXPLAINED. T HE ADDITION BY A.O. MERELY ON THE BASIS OF AIR INFORMA TION IS NOT WELL FOUNDED AND THE SAME IS DIRECTED TO BE DELETED. 16. AGAINST THIS ORDER, THE DEPARTMENT IS NOW BEFORE THE ITAT. 17. AT THE TIME OF HEARING, THE AR SUBMITTED THAT SIMILAR GROUND WAS TAKEN BY THE DEPARTMENT IN ASSESSEES OWN CASE IN ITA NO. 1196/MUM/2013, IN ASSESSMENT YEAR 2009-10, WHEREIN, THE ITAT HELD, WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER U SED THE FINDING GIVEN IN THE IMPUGNED ORDER. THE ASSESS EE ADMITTEDLY IS ENGAGED IN THE BUSINESS OF SHARE TRAD ING. DURING THE COURSE OF SUCH BUSINESS, THE ASSESSEE HA S BEEN DEPOSITING THE MONEY IN THE BANK ACCOUNT AND A LSO MAKING REGULAR WITHDRAWALS. THE LD. CIT(A) HAS VERI FIED THE BOOKS OF ACCOUNT AND ALSO THE CASH BOOK MAINTAI NED BY THE ASSESSEE. IN THE CASH BOOK THE ASSESSEE HAS RECORDED AVAILABILITY OF CASH -IN-HAND ON DAY TO DA Y BASIS AND ALSO THE DEPOSITS MADE IN THE BANK ACCOUN T, FROM TIME TO TIME. THE RECONCILIATION OF CASH-IN-HA ND AND DEPOSITS MADE IN THE BANK ACCOUNT AS SUBMITTED BEFO RE THE LD.CIT(A) ARE AS UNDER: SR. NO. DATE AMT. DEPOSITED IN RS. REMARK CASH BALANCE C/F 1 01.04.07 OPENING CASH IN HAND CIH 7,52,175/- 2 07.04.07 5,000 OUT OF CIH OF RS.8,82,175/- BAL C/F 8,81,675/- 3 17.04.07 2,00,000 OUT OF CIH OF RS.8,81,675/- BAL C/F 6,81,675/- 4 18.04.07 35,000 OUT OF CIH OF RS.6,81,675/- BAL C/F 6,46,675/- 5 12.06.07 6,000 OUT OF CIH OF RS.10,12,306/- BAL C/F 10,06,306/- 6 23.06.07 3,000 OUT OF CIH OF RS.10,11,306/- BAL C/F 10,08,306/- 7 10.10.07 2,50,000 OUT OF CIH OF RS.10,00,806/- BAL C/F SHRI PRAMOD RAM NAGPAL ITA 5443/M/2012 5 7,50,806/- 8 11.10.07 3,00,000 OUT OF CIH OF RS.7,50,806/- BAL C/F 4,50,806/- 9 09.01.08 2,50,000 OUT OF CIH OF RS.4, 84,806/- BAL C/F 2,34,806/- 10 07.03.08 1,50,000 OUT OF CIH OF RS.2,89,231/- BAL C/F 1,39,231/- 11 14.03.08 20,000 OUT OF CIH OF RS. 1,69,231/- BAL C/F. 1,49,231/- 12 25.03.08 64,000 OUT OF CIH OF RS.1,47,231/- BAL C/F 83,231/- 12 28.03.08 10,000 OUT OF CIH OF RS.1,13,231/- BAL C/F 1,03,231/- TOTAL 12,88,500 FROM THE ABOVE, IT IS QUITE EVIDENT THAT THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT IS OUT OF CASH-IN-HAND AS REFLECTED IN THE CASH BOOK OF THE ASSESSEE. THUS WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS RE CORDED BY THE LD.CIT(A), AND ACCORDINGLY THE SAME ARE AFFI RMED. IN THE RESULT THE GROUND NO. 1 AS RAISED BY THE REV ENUE STAND DISMISSED. 18. THE AR, THEREFORE, SUBMITTED THAT SINCE THE ISSUE IS COVERED IN THE ASSESSEES OWN CASE, NO DIFFERENT VIEW SHO ULD BE TAKEN. 19. THE DR PLACED RELIANCE ON THE ORDER OF THE AO. 20. WE HAVE HEARD THE PARTIES AND HAVE PURSUED THE M ATERIAL ON RECORD AND THE ORDERS OF THE REVENUE AUTHORITIES AN D THE ORDER OF THE ITAT. 21. SINCE, THE COORDINATE BENCH HAS TAKEN A VIEW ON THE IDENTICAL FACTS, WE DO NOT FIND ANY REASON TO DEVIATE OURSE LVES EITHER FROM THE ORDER OF THE ITAT OR THE ORDER OF THE C IT(A) ON THE ISSUE, AS IMPUGNED BEFORE US. 22. WE, THEREFORE, SUSTAIN THE ORDER OF THE CIT(A), CONSEQUENTIALLY REJECTING THE GROUND AS RAISED BY THE DEPARTMENT. 23. GROUND NO. 2 IS THEREFORE, REJECTED. SHRI PRAMOD RAM NAGPAL ITA 5443/M/2012 6 24. IN THE RESULT, THE APPEAL AS FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2015. SD/- SD/- ( ) ( !!! !!! !!! !!! ) (R C SHARMA) ( VIVEK VARMA ) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 21 ST JANUARY, 2015 #/ COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT(A) -1, MUMBAI. 4) THE CIT-1, MUMBAI/CIT - 1, MUMBAI. 5) $%& ###' , ( #' , ) * / THE D.R. C BENCH, MUMBAI. 6) &+, - COPY TO GUARD FILE. (./ / BY ORDER / / TRUE COPY / / 0 / 1 2 ( #' , ) * DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN, SR.PS