SMT. CHANDADEVI K RATHI, Thane V. ITO WARD 18(1)(3), Mumbai

ITA 5547/MUM/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9571 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 25-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside; Capital Gains
• Section: 69; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 5547/MUM/2019 Assessment Year: 2014-15 Smt. Chandadevi K. Rathi, B/502, Kailash Mansarovar, Temba Road, Bhayandar (W), Thane-401 101. Vs. ITO Ward-18(1)(3), Room No. 203, 2 nd floor, Earnest House, Nariman Point, Mumbai-400021. PAN No. ACZPR 2750 F Appellant Respondent Assessee by : Ms. Dinkle Hariya Revenue by : Mr. Ajeya Kumar Ojha, DR Date of Hearing : 30/06/2022 Date of pronouncement : 07/07/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated 20.06.2019 passed by the Ld. Commissioner of Income- tax (Appeals)-53, Mumbai [in short ‘the Ld. CIT(A)’], for assessment year 2014-15, raising following grounds: 1. NATURAL JUSTICE 1.1 The Learned Commissioner of Income Mumbai, ['"Id.CIT (A)"] adequate opportunity of the appellate order. 1.2 It is submitted that, in the facts and the circumstances of the case, and in law, illegal, as: (i)The same is framed in breach of the principl and (ii)The same is passed without application of mind to the facts and the submissions brought on record by the Appellant. WITHOUT PREJUDICE TO THE ABOVE 2. UNEXPLAINED INVESTMENT U/S. 69 2.1 The Ld. CIT (A) erred in confirming the action of the A.0. in making addition, 22,52,600/-, u/s. 69 of the Act on cash deposits in the 2.2 It is submitted that in the facts and the circumstances of the case, and in law, 2.3 Without prejudice to the above, assuming admitting - that some NATURAL JUSTICE The Learned Commissioner of Income - tax (Appeals) Mumbai, ['"Id.CIT (A)"] erred in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the appellate order. It is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed be held as bad and )The same is framed in breach of the principles of natural justice; )The same is passed without application of mind to the facts and submissions brought on record by the Appellant. WITHOUT PREJUDICE TO THE ABOVE LAINED INVESTMENT U/S. 69 [₹ 14,98,995/- The Ld. CIT (A) erred in confirming the action of the A.0. in making addition, to the extent of Rs. 14,98,995/- out of Rs. , u/s. 69 of the Act on account of alleged unexplained cash deposits in the bank. It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. Without prejudice to the above, assuming - that some addition was called for, it is submitted that Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 2 tax (Appeals) - 53, erred in not granting proper, sufficient and being heard to the Appellant while framing It is submitted that, in the facts and the circumstances of the d as bad and es of natural justice; )The same is passed without application of mind to the facts and 14,98,995/-] The Ld. CIT (A) erred in confirming the action of the A.0. in out of Rs. account of alleged unexplained It is submitted that in the facts and the circumstances of the - but not addition was called for, it is submitted that the computation of the addition excessive and not in accordance with the law. 2. The brief facts of the case view of cash deposits, the Ld. Assessing Officer made addition of ₹22,52,600/- to the returned income 14.12.2016 in terms of section 143(3) of the Income (in short ‘the Act’). On further appeal, the Ld. disallowance. The relevant finding of the Ld. CIT(A) is reproduced under: “4.1. The only ground of appeal is in respect of the addition made of Rs.22,52,600/ account treated by the AO as unexplained. The case was selected for limited scrutiny in respect of large cash deposited in t bank account. The assessee was asked to furnish the details of all the bank accounts maintained by her and to furnish copy of bank statement, bank book and cash book for AY 2013 All the details called for were not furnished. Further, the assessee had 5 bank accounts, bank statement of only 1 bank account i.e. Corporation Bank A/c No.130011 was furnished. This bank statement notice u/s.133(6) was Branch, Mumbai to confirm tation of the addition made by the A.O. is arbitrary, excessive and not in accordance with the law. of the case are that in the case of the assessee in view of cash deposits, the Ld. Assessing Officer made addition of to the returned income vide his order dated 14.12.2016 in terms of section 143(3) of the Income (in short ‘the Act’). On further appeal, the Ld. CIT(A) upheld the relevant finding of the Ld. CIT(A) is reproduced The only ground of appeal is in respect of the addition made of Rs.22,52,600/- in respect of cash deposited in bank account treated by the AO as unexplained. The case was selected for limited scrutiny in respect of large cash deposited in t bank account. The assessee was asked to furnish the details of all the bank accounts maintained by her and to furnish copy of bank statement, bank book and cash book for AY 2013-14 & 2014 All the details called for were not furnished. Further, even though the assessee had 5 bank accounts, bank statement of only 1 bank i.e. Corporation Bank A/c No.130011 was furnished. This bank statement did not have any cash deposit reflected. Hence, notice u/s.133(6) was issued to the Corporation Bank, Yogi Nagar Branch, Mumbai to confirm whether any cash deposit of Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 3 made by the A.O. is arbitrary, are that in the case of the assessee in view of cash deposits, the Ld. Assessing Officer made addition of his order dated 14.12.2016 in terms of section 143(3) of the Income-tax Act, 1961 CIT(A) upheld the relevant finding of the Ld. CIT(A) is reproduced as The only ground of appeal is in respect of the addition in respect of cash deposited in bank account treated by the AO as unexplained. The case was selected for limited scrutiny in respect of large cash deposited in the same bank account. The assessee was asked to furnish the details of all the bank accounts maintained by her and to furnish copy of bank 14 & 2014-15. even though the assessee had 5 bank accounts, bank statement of only 1 bank i.e. Corporation Bank A/c No.130011 was furnished. This did not have any cash deposit reflected. Hence, , Yogi Nagar whether any cash deposit of Rs.13,60,500/- Corporation Bank informed in reply that the assessee had bank a/c No.064800101015067 in which cash deposit of Rs.13,60,500/- notice was issued to the assessee to explain the source of cash deposit in her bank of bank statement of the Corporation B and account maintained with Bank of Baroda, The bank account with Bank of Baroda was not disclosed balance sheet filed by the assessee. The assessee did not file the copy of bank stat Based on the bank position in respect of cash deposit As regards the source of deposit, the assessee submitted that the cash deposits are on account of outstanding amount cash balance. No cash book, whom money was received was the assessee had shown rent income of home made products of Rs.1,28,860/ deposits of Rs.2,27,786/ - was appearing in the assessee's bank account. Corporation Bank informed in reply that the assessee had bank a/c No.064800101015067 in which cash deposit of - have been made. In this backdrop, a show cause issued to the assessee to explain the source of cash deposit in her bank account. The assessee then submitted the copy of bank statement of the earlier not disclosed bank a/c with Corporation Bank, account maintained with SBI Borivali Branch and account maintained with Bank of Baroda, Shimpoli Branch. The bank account with Bank of Baroda was not disclosed balance sheet filed by the assessee. The assessee did not file the of bank statement of ICICI Bank and Sangli Coop. Bank. Based on the bank statements furnished by the assessee, the position in respect of cash deposit was as follows : As regards the source of deposit, the assessee submitted that the deposits are on account of recovery of advance given, outstanding amount receivables, rent of shop and accumulated cash balance. No cash book, bank book, name of the parties from whom money was received was furnished. The AO observed that the assessee had shown rent income of Rs.96,000/-, income from home made products of Rs.1,28,860/- and interest from bank deposits of Rs.2,27,786/-. In view of the persistent lack Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 4 bank account. Corporation Bank informed in reply that the assessee had another bank a/c No.064800101015067 in which cash deposit of have been made. In this backdrop, a show cause issued to the assessee to explain the source of cash account. The assessee then submitted the copy earlier not disclosed bank a/c with with SBI Borivali Branch Shimpoli Branch. The bank account with Bank of Baroda was not disclosed in the balance sheet filed by the assessee. The assessee did not file the ement of ICICI Bank and Sangli Coop. Bank. statements furnished by the assessee, the As regards the source of deposit, the assessee submitted that the recovery of advance given, receivables, rent of shop and accumulated bank book, name of the parties from furnished. The AO observed that , income from interest from bank . In view of the persistent lack of cooperation and furnishing of details called for, the AO concluded that the cash deposit in the bank account of Rs.22 treated as unexplained and addition was, 4.2. In the appellate proceedings, it was submitted that the appellant is carrying out business of homemade products. The cash deposits of Rs.22,52,600 was explained as out of cash ba of Rs.735,605/ refund of advances Rs. 7,07,000/ 19,62.105/- The balance sheet and P & L account and balance sheet of 31.3.2013 was filed. It was noted that hand as on 31.3.2014 as per the Balance Sheet filed is Rs. 68,145/ The sales as per the P & L account is only Rs. 5.72 lakhs on which profit of Rs. 1.28 lakhs is shown. The returned income is Rs. 218,530/- and no tax as on 31.3.2013 was Rs.7,53,605/ 4.3. The learned AR was asked to file (i) copy of bank statements of all the bank accounts held by the appellant, file copy of return of income, computation of income, balance sheet, capital a/c and receipts & trading a/c for AY 2010 (ii) Statement of receipt & payment of cash for AY 2014 indicating the source of credit. (iii) Index Il and purchase agreement & Index Il and Sale agreement for the flat sold during the (iv) Source of purchase of the flat was also called for. cooperation and furnishing of details called for, the AO concluded cash deposit in the bank account of Rs.22,52,600/ unexplained and addition was, made accordingly 4.2. In the appellate proceedings, it was submitted that the carrying out business of homemade products. The cash deposits of Rs.22,52,600 was explained as out of cash ba of Rs.735,605/-, amount collected from debtors, Rs. 519,500 and refund of advances Rs. 7,07,000/ - which totaled up to Rs. The balance sheet and P & L account for AY 2014 and balance sheet of 31.3.2013 was filed. It was noted that hand as on 31.3.2014 as per the Balance Sheet filed is Rs. 68,145/ The sales as per the P & L account is only Rs. 5.72 lakhs on which Rs. 1.28 lakhs is shown. The returned income is Rs. and no tax is payable. It was claimed that cash on hand as on 31.3.2013 was Rs.7,53,605/-. The learned AR was asked to file copy of bank statements of all the bank accounts held by the appellant, file copy of return of income, computation of income, balance sheet, capital a/c and receipts & payments account and trading a/c for AY 2010-11 to 2014-15. Statement of receipt & payment of cash for AY 2014-15 clearly indicating the source of credit. Index Il and purchase agreement & Index Il and Sale for the flat sold during the year. Source of purchase of the flat was also called for. Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 5 cooperation and furnishing of details called for, the AO concluded ,52,600/- was made accordingly. 4.2. In the appellate proceedings, it was submitted that the carrying out business of homemade products. The cash deposits of Rs.22,52,600 was explained as out of cash balance collected from debtors, Rs. 519,500 and which totaled up to Rs. for AY 2014-15 and balance sheet of 31.3.2013 was filed. It was noted that cash on hand as on 31.3.2014 as per the Balance Sheet filed is Rs. 68,145/- The sales as per the P & L account is only Rs. 5.72 lakhs on which Rs. 1.28 lakhs is shown. The returned income is Rs. sh on hand copy of bank statements of all the bank accounts held by the appellant, file copy of return of income, computation of income, payments account and 15 clearly Index Il and purchase agreement & Index Il and Sale (v) Purchase agreement of the new property and also statement of investment of capital gains. This was called for in the hearing held on 08 4.4. From further details filed it was note was Rs.186,610 for AY 2010 179850 for AY was payable in any of limit. The appellant had hardly any Sheet for each of the year was filed. It is not Sheet was filed with the returns of income or whether prepared only at the time or after the assessment. No P & L account was filed. The cash book was a su date wise details and no name of persons/parties to allow for verification. In many balance sheet. There was reduction Rs.15.16 lakhs as on 31.3.2011 to Rs. 7.64 lakh but no capital gains or loss shown in the return for AY in all the returns show a pattern of capital build up with utilization of basic exemption limit and no taxes payable. Hence appellant was asked to file P & L account for detailed cash book/statement for AY 2014 same was not filed. 4.5. There are no details filed of debtors and advances claimed to be returned and the same remains unverified. In any case the volume of trade debtors and advances. Purchase agreement of the new property and also statement of investment of capital gains. This was called for in the hearing held on 08-05-2019. 4.4. From further details filed it was noted that Return of income was Rs.186,610 for AY 2010-11, Rs. 108,868 for AY 2011 179850 for AY 2012-13 and Rs. 194,390 for AY 2013-14. No tax was payable in any of these years as income was below taxable limit. The appellant had hardly any income in these years. Balance Sheet for each of the year was filed. It is not clear whether Balance Sheet was filed with the returns of income or whether they were prepared only at the time or after the assessment. No P & L account was filed. The cash book was a summarized one with no details and no name of persons/parties to allow for verification. In many years gifts were claimed reflected in the balance sheet. There was reduction of investment in shares of Rs.15.16 lakhs as on 31.3.2011 to Rs. 7.64 lakhs as on 31.3.2012 but no capital gains or loss shown in the return for AY 2012 in all the returns show a pattern of capital build up with utilization of basic exemption limit and no taxes payable. Hence was asked to file P & L account for each of the AY and book/statement for AY 2014-15 for verification. The same was not filed. 4.5. There are no details filed of debtors and advances claimed to returned and the same remains unverified. In any case the volume of trade in home made products do not support such large debtors and advances. The balance sheet as on 31.3.2013 shows Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 6 Purchase agreement of the new property and also statement of d that Return of income 11, Rs. 108,868 for AY 2011-12, Rs. 14. No tax these years as income was below taxable these years. Balance clear whether Balance they were prepared only at the time or after the assessment. No P & L mmarized one with no details and no name of persons/parties to allow for years gifts were claimed reflected in the of investment in shares of as on 31.3.2012 2012-13. All in all the returns show a pattern of capital build up with utilization of basic exemption limit and no taxes payable. Hence each of the AY and 15 for verification. The 4.5. There are no details filed of debtors and advances claimed to returned and the same remains unverified. In any case the e made products do not support such large The balance sheet as on 31.3.2013 shows cash on hand of Rs.7,53,605/ large cash balance on hand was built up drawings or business. not at one go but later and spread out over the year. This certainly doubtful. At best this can be considered as the source of cash deposits in bank. The addition is sustained at Rs.14,98,995/ The grounds of 3. We have heard rival submissions of the parties on the issue dispute and perused the relevant material on record. 3.1 Before us, the assessee has filed an application for additional evidence containing copy of confirmation their PAN cards. The Ld. counsel of the assessee submitted that the cash deposit was out of the realization of the opening amount of the debtors and income earned during the year under consideration. The Ld. counsel of the assess matter is restored back to the Ld. CIT(A) or the Assessing Officer, the assessee would cash on hand of Rs.7,53,605/- There is no explanation as to why large cash balance on hand was built up disproportionate to drawings or business. Further why the same was deposited in bank not at one go but later and spread out over the year. This certainly doubtful. At best this can be considered as the source of deposits in bank. The addition is sustained at Rs.14,98,995/ grounds of appeal are partly allowed.” We have heard rival submissions of the parties on the issue dispute and perused the relevant material on record. Before us, the assessee has filed an application for additional evidence containing copy of confirmation of the debtors along with their PAN cards. The Ld. counsel of the assessee submitted that the cash deposit was out of the realization of the opening amount of the debtors and income earned during the year under consideration. The Ld. counsel of the assessee gave an undertaking that if the matter is restored back to the Ld. CIT(A) or the Assessing Officer, co-operate and produce all the parties Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 7 There is no explanation as to why disproportionate to deposited in bank not at one go but later and spread out over the year. This is certainly doubtful. At best this can be considered as the source of deposits in bank. The addition is sustained at Rs.14,98,995/-. We have heard rival submissions of the parties on the issue-in- dispute and perused the relevant material on record. Before us, the assessee has filed an application for additional of the debtors along with their PAN cards. The Ld. counsel of the assessee submitted that the cash deposit was out of the realization of the opening amount of the debtors and income earned during the year under consideration. undertaking that if the matter is restored back to the Ld. CIT(A) or the Assessing Officer, all the parties i.e. debtors before the authorities for confirmation of the realization of the amount from them 3.2 We find that core issue in the dispute is deposits are out of recovery of advance given/ amount/accumulated cash balance etc. application for admitting the additional evidence has submitted that evidence could not be furnished before the Ld. CIT(A) collected after the proceeding before the Ld. CIT(A) same may be admitted. 3.3 Though the confirmation from the debtors hav subsequent to the order of Ld. CIT(A) but s determination of issue of debtors realized in the year under consideration. facts and circumstances of the case a justice, we admit the additional evidence in the form of before the authorities for confirmation of the realization of the amount from them. We find that core issue in the dispute is whether ut of recovery of advance given/ accumulated cash balance etc. or not. The assessee in her admitting the additional evidence has submitted that evidence could not be furnished before the Ld. CIT(A) collected after the proceeding before the Ld. CIT(A) same may be admitted. Though the confirmation from the debtors have been collected o the order of Ld. CIT(A) but same are crucial to the determination of issue-in-dispute whether the cash deposits are out of debtors realized in the year under consideration. facts and circumstances of the case and interest of the substantial justice, we admit the additional evidence in the form of Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 8 before the authorities for confirmation of the realization of whether the cash ut of recovery of advance given/outstanding The assessee in her admitting the additional evidence has submitted that evidence could not be furnished before the Ld. CIT(A) on same were collected after the proceeding before the Ld. CIT(A) and therefore e been collected me are crucial to the dispute whether the cash deposits are out of debtors realized in the year under consideration. In view of the nd interest of the substantial justice, we admit the additional evidence in the form of confirmations of the debtors and their PAN cards filed as additional evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of the Ld. CIT(A) on the issue matter is restored back to the light of the additional evidence filed by the assessee mention that both the assessee and Assessing Officer afforded adequate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for statistical purposes. 4. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 07/07/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- confirmations of the debtors and their PAN cards filed as additional evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of n the issue-in-dispute is accordingly set aside and matter is restored back to the Ld. CIT(A) for deciding afresh, light of the additional evidence filed by the assessee. mention that both the assessee and Assessing Officer ate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for statistical purposes. In the result, the appeal filed by the assessee is allowed for ounced in the Court on 07/07/2022. Sd/- SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 9 confirmations of the debtors and their PAN cards filed as additional evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of ispute is accordingly set aside and Ld. CIT(A) for deciding afresh, in the It is needless to mention that both the assessee and Assessing Officer shall be ate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for statistical purposes. In the result, the appeal filed by the assessee is allowed for OM PRAKASH KANT) MEMBER 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, (Sr. Private Secretary ITAT, Mumbai Smt. Chandadevi K. Rathi ITA No. 5547/M/2019 10 Sr. Private Secretary) ITAT, Mumbai