HEMANI DEEPAK PATEL, MUMBAI V. ITO 19(3(2), MUMBAI

ITA 5790/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2710 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 24-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYANARAYANA RAJU
• Assessee Lawyers: NIHAR H MEHTA
• Keywords: Reopening of assessment
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SANJAY ARORA , A M AND SHRI AMARJEET SINGH , J M ./ I.T.A. NO. 5790/MUM/2014 ( / ASSESSMENT YEAR: 2005 - 06 ) HEMANI DEEPAK PATEL 159 - B, LALITA SADAN, S. V. ROAD, BANDRA (W), MUMBAI - 400 050 / VS. ITO - 19(3)(2), ROOM NO. 306, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400 012 ./ ./ PAN/GIR NO. AAFPP 3864 L ( / APPELLANT ) : ( / RESPONDE NT ) / APPELLANT BY : SHRI NIHAR H. MEHTA / RESPONDENT BY : SHRI SATYANARAYANA RAJU / DATE OF HEARING : 29.6.2016 / DATE OF PRONOUNCEMENT : 15 .7.2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 30 , MUMBAI (CIT(A) FOR SHORT) DATED 27.6.2014 , DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2005 - 06 VIDE ORDER DATED 01.3.2013. 2. THE ASSESSEE NOT PRESSING HER G ROUND # 1 ( QUA REOPENING OF ASSESSMENT U/S . 148 OF THE ACT), T HE ONLY ISSUE ARISING IN THIS APPEAL IS THE A DDITION U/S. 68 /69 IN THE SUM OF RS.15.40 LACS ON ACCOUNT OF UNE XPLAINED CASH DEPOSITS MADE IN HER BANK 2 ITA NO. 5790/MUM/2014 (A.Y. 2005 - 06) HEMANI DEEPAK PATEL VS. ITO ACCOUNT (SAVING BANK ACCOUNT NO.1001/2565 WITH PUNJAB AND MAHARASHTRA CO - OPERATIVE BANK ) DURING THE RELEVANT YEAR BY THE ASSESSEE. THE R EVENUE , ON INFOR MATION OF CA SH DEPOSITS OF RS.15,40,470/ - IN THE ASSESSEES BANK ACCOUNT, QUESTION ED HER IN THE MATTER IN THE ASSESSMENT PROCEEDINGS. THE ASSESSEE , VIDE LETTER DATED 7.1.2013 , EXPLAINED THAT SHE IS A PARTNER IN M/S . TULSI ENTERPRISES, WHICH IS IN THE BUSIN ESS OF DISTRIBUTION OF F OODS PRODUCTS FOR COMPANIES SUCH AS KELLOGGS INDIA LTD ., MTR FOODS AND AMUL. ON ACCOUNT OF FINANCIAL DIFFICULTIES, THE SAID FIRM COULD NOT REPA Y THE BANK LOAN INSTALMENTS, LEADING TO A SUSPENSION OF OPERATION S OF ITS BANK ACCOUN T WITH PUNJAB AND MAHARASHTRA COOPERATIVE BANK . THE SAID FIRM OPENED A NEW BANK ACCOUNT WITH THE SAME BANK IN THE ASSESSEES NAME, AND WHICH WAS ACCORDINGLY USED DURING THE PERIOD OF SUSPENSION BY THE FIRM FOR DEPOSITING THE CASH COLLECTED FROM ITS CUSTOME RS, AND WHICH CREDIT WAS UTILIZED FOR MAKING PAYMENT S TO THE CREDITOR, I.E ., KELLOGGS INDIA LTD ., EFFECTED PER CHEQUE S . THE ASSESSING OFFICER (A.O.) EXAMINED THE FIRMS BANK ACCOUNT FOR THE FINANCIAL YEAR 2004 - 05 , TO FIND 5 TO 10 TRANSACTIONS OF DEPOSITS AND WITHDRAWALS ON PRACTICALLY EVERY WORKING DAY OF T HE YEAR. THE ASSESSEE S CONTENTION WITH REGARD TO SUSPENSION THERE O F COULD NOT THUS BE ACC EPTED. FU RTHER, WHILE TOTAL DEPOSITS IN THE SAID BANK ACCOUNT WERE F OR RS.6,06,62,258/ - , THE TOTAL TURNOVER FOR T HE PERIOD AS PER ITS ACCOUNT S WAS AT RS.6,24,29,754/ - . THE ASSESSEE , IN FIRST APPEAL, FIL ED A RECONCIL IATION , AND ON TH AT BASIS EXPLAINED THE OBTAINING DIFFERENCE OF RS.15 , 8 9 , 9 0 2 / - AS PRIMARILY ON ACCOUNT OF THE FIRMS CASH COLLECTION THROUGH THE AS SESS EE S BANK ACCOUNT ( I.E., RS.15,40,470/ - ): (AMT. IN RS.) PARTICULARS REMARKS A) OPENING DEBTORS AS ON 1.4.2004 2325156 B) ADD: SALES MADE DURING 1.4.04 TO 31.3.05 62429754 C) LESS: CLOSING DEBTORS AS ON 31.3.2005 2502750 D) AMOUNT COLLECTED FROM DEBTORS DURING THE PERIOD 01.4.2004 TO 31.3.2005 6,22,52,160 [(A)+(B) - (C)] 3 ITA NO. 5790/MUM/2014 (A.Y. 2005 - 06) HEMANI DEEPAK PATEL VS. ITO E) LESS: DEPOSITS IN THE FIRM/S BANK A/C 6,06,62,258 F) DIFFERENCE (REPRESENTING LOWER RECEIPT IN THE FIRMS BANK ACCOUNT) 15,89,902 [(D) (E)] THE SAME DID NOT FIND FAVOUR WITH THE LD. CIT(A) AS THE FIRM S CASH BOOK, WHEREIN CASH COLLECTION WOULD BE ACCOUNTED FOR IN THE FIRST PLACE, WAS NOT FURNISHE D. THERE WAS , FURTHER , NO DOCUMENTARY PROOF TO EVIDENCE THAT THE CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT BELONG ED TO THE FIRM (M/S . TULSI ENTERPRISES) , DULY ACCOUNTED FOR IN ITS BOOKS, SO THAT A MERE FILING OF A LETTER FROM THE FIRM STATING THAT THE CASH DEPOSITS IN THE APPELLANTS BANK ACCOUNT W ERE ON ACCOUNT OF ITS TRANSACTIONS, COULD NOT BE ACCEPTED , I.E., IN THE ABSENCE OF ITS ACCOUNT S . 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. BOOKS OF ACCOUNT OF M/S . TULSI ENTERPRISES , WHICH CONSTITUTE THE PRIMARY EVIDENCE IN THIS CASE, ARE , QUIZZICALLY, MISSING. WE OBSERVE NO EXPLANATION FURNISHED AT ANY STAGE QUA THEIR NON - PRODUCTION. THE SAME, WHERE SO, WOULD CLEARLY SHOW THAT IF THE CASH DEPOSITS IN THE ASSESSE E S BANK ACCOUNT HAD ANY NEXUS WITH THE FIRMS CASH COLLECTION, IN WHICH CASE THE SAME WOULD STAND TO BE CREDITED TO THE A SSESSEES ACCOUNT THEREWITH AND , FURTHER, DEBITED IN RESPECT OF THE CHEQUES ISSUED THERE - FROM TO THE FIRM S CREDITORS , AS KELLOGS, AMUL, ETC. THE LD. AR, O N BEING QUESTIONED BY THE BENCH IN THE MATTER , SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE FIRM, SINCE DISSOLVED ( AS STATED, IN THE YEAR 2007) , COULD NOT BE FURNISHED AS THEY WERE IN THE POSSESSION OF THE A CCOUNTANT. WE ARE UNABLE TO APPRECIATE TH IS WHICH , ON I T S FACE , APPEARS SPECIOUS . WHY, F IRSTLY, SHOULD THE SAME BE WITH HIM AND, EVEN SO, WHY COULD NOT THE SAME BE RECALLED ? RATHER, WHY SHOULD HE CONTINUE TO RETAIN THEM FOR SO LONG, MORE SO WHEN THEY ARE REQUIRED BY THE FIRM, WHOS E PROPERTY T HEY ARE . SO , HOWEVER, WHERE THE ASSESSEE IS ABLE TO ESTABLISH THE SUSPENSION OF THE FIRMS BANK ACCOUNT, WHICH IS STATED (BEFORE US) TO BE FOR A PERIOD OF ONE WEEK DURING NOVEMBER, 2004 ( OVER WHICH PERIOD ONLY WOULD , IN THAT CASE, THE CASH CREDIT S APPEAR 4 ITA NO. 5790/MUM/2014 (A.Y. 2005 - 06) HEMANI DEEPAK PATEL VS. ITO IN THE ASSES SEES BANK ACCOUNT AND , CORRESPONDINGLY, NOT IN THE FIRMS BANK ACCOUNT) AND, FURTHER , OF THE CHEQUES ISSUED FROM THE ASSESSEES ACCOUNT TO THE FIRMS SUPPLIERS ( FOR THE AMOUNT OF THE CASH DEPOSITS , OR NEAR LY SO), WITH DOCUMENTARY EVIDENCE, THE ASSESSEE S CASE WOULD IN OUR VIEW STAND SUBSTANTIALLY PROVED. THE ABSENCE OF ANY DEPOSITS IN THE FIRMS BANK ACCOUNT DURING THE PERIOD OF SUSPENSION WOULD LE N D CREDENCE TO THE ASSESSEES CASE. A LETTER FROM THE FIRM S BANK WITH REGARD TO SUSPENSION, SPECIFYING THE PERIOD , AS WELL AS , SIMILARLY, COPY OF THE FIRM S ACCOUNT I N THE BOOKS OF THE CREDITOR /S , SPECIFYING THE CHEQUES CREDITED IN I T S BANK ACCOUNT , WOULD SUBSTANTIATE THE ASSESSEES CASE, DEMONSTRATING IF PAYMENT S, AS STATED , HAVE BEEN MADE THERETO BY THE ASSE SSEE WHILE DRAWING CHEQUES ON HE R BANK ACCOUNT. FURTHER, THE NEAR MATCHING , PER THE RECONCILIATION PROVIDED , OF THE DIFFERENCE , I.E., OF THE CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT AND THE GAP BETWEEN THE FIRMS COLLECTION AND THE DEPOSITS IN ITS BAN K ACCOUNT , ALSO JUSTIF Y T HE ASSESSEES CASE . AN E XPLANATION FOR THE DIFFERENCE OF RS. 49,432 / - (RS.15, 8 9, 9 02 RS. 15,40,470) , THOUGH NOT A PART OF THE IMPUGNED SUM, WOULD ALSO HAVE CORROBORATIVE VALUE . IN V IEW OF THE FOREGOING DISCUSSION, WE RESTORE THE I SSUE BAC K TO THE FILE OF THE AO TO PROVIDE THE ASSESSEE AN OPPORTUNITY TO SUBSTANTIATE AND PROVE HER CASE , AND DECIDE IN ACCORDANCE WITH LAW, ISSUING DEFINITE FINDINGS OF FACT . WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 15 , 201 6 SD/ - SD/ - ( AMARJEET SINGH) (SANJAY ARORA) / J UDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 15 . 07 .201 6 . . ./ SRL , SR. PS 5 ITA NO. 5790/MUM/2014 (A.Y. 2005 - 06) HEMANI DEEPAK PATEL VS. ITO / COPY OF THE ORDER FORWARDED TO : 1. / TH E APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI