ITO WD 2(1), KALYAN V. GHANSHYAMDAS H BAJAJ, AMBERNATH

ITA 593/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87882 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 15-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Court: TRIBUNAL
• Department Lawyers: VEVEK BATRA
• Assessee Lawyers: DR P DANIAL SHRI SUNIL MAHIJA
• Keywords: Income from undisclosed sources; Source of fund
• Section: 68

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 593/M/2012 ( / ASSESSMENT YEAR : 2008 - 2009 ) ITO WARD 2(1), 2 ND FLOOR, RANI MANSION, MURABAD ROAD, KALYAN (W), MUMBAI 421301. / VS. GHANSHYAMDAS H. BAJAJ, SATRAMDAS GASES P LTD., R - 56 TTC, INDUSTRIAL AREA, RABALE, NAVI MUMBAI. ./ PAN : AAGFR9160C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VEVEK BATRA, DR / RESPONDENT BY : DR. P. DANIAL, SHRI SUNIL MAHIJA / DATE OF HEARING : 16.12.2014 / DATE OF PRONOUNCEMENT : 23 .01.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 30.1.2012 IS AGAINST THE ORDER OF THE CIT (A) - II, THANE DATED 20.10.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. ASSESSEE RAISED 4 GROUNDS IN THIS APPEAL AND THEY REVOLVE AROUND THE ADDITION OF RS. 35 LAKHS U/S 68 OF THE ACT. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FOR THE FIRST TIME FIELD THE RETURN OF INCOME IN INDIA DECLARING THE TOTAL INCOME OF RS. 1,86,240/ - . ASSESSING OFFICER RECEIVED AIR INFORMATION WHICH INCLUDES THE DEPOSITING OF CASH EXCEEDING THE LIMIT OF RS. 10 LAKHS IN HIS BANK ACCOUNT. IN THE SCRUTINY ASSESSMENT, ASSESSING OFFICER ANALYZED THE CAPITAL ACCOUNT AND FOUND A CREDIT OF RS. 35 LAKHS. FROM THE BANK ACCOUNT (WITH CORPORATION BANK, ULHASNGAR - 3 BRANCH) OF THE ASSESSEE ASSESSING OFFI CER NOTICED THE CASH DEPOSIT OF RS. 25,05,000/ - . ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE CALLING FOR THE SOURCE OF DEPOSITS. IN REPLY, ASSESSEE SUBMITTED THAT HE IS A MIGRANT FROM WEST PAKISTAN ARRIVED INDIA IN JULY, 2007. HE REPORTED THAT A SUM OF RS . 35 LAKHS CASH WAS BROUGHT AND DECLARED THE SAME TO INCOME TAX AUTHORITIES IN SEPTEMBER, 2007. ASSESSEE HAD AN AGRICULTURAL LAND AT 2 WEST PAKISTAN AND THE SALE OF THE SAME WAS THE SOURCE OF THE SAID FUNDS. ASSESSING OFFICER ISSUED FURTHER NOTICED CALLING FOR SPECIFIC DETAILS WITH REGARD TO THE SOURCE OF FUNDS, DOCUMENTS RELATING TO THE SALE OF THE AGRICULTURAL LAND, DECLARING OF THE SAID CASH TO THE IT AUTHORITIES WHILE ENTERING INTO INDIA, THE DETAILS OF CONVERSION OF PAKISTAN CURRENCY TO INDIAN CURRENCY ON ARRIVAL TO INDIA AND THE FACTS ABOUT THE PERMANENT RESIDENCY IN INDIA AND THE ASSESSING OFFICER PROPOSED TO INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT. IN REPLY, ASSESSEE SUBMITTED THAT THE AGRICULTURAL LAND OWNED BY HIM WAS SOLD FOR A SUM OF RS. 37 ,08,000/ - AND RS. 35 LAKHS WAS BROUGHT INTO INDIA. HE RELIED ON THE CIRCULAR NO.5, DATED 20.02.1969 WHICH PERMITS THE ASSESSEE TO BRING IN CASH AT THE TIME OF HIS MIGRATION FROM PAKISTAN TO INDIA. HE ALSO MENTIONED THAT THE DEPARTMENT HAS NO NEED TO CO NDUCT ENQUIRY INTO THE SOURCE OF SUCH FUNDS. ASSESSEE ALSO SUBMITTED AGREEMENT TO SALE OF THE LANDS. IN ADDITION, HE ALSO FURNISHED THE COPIES OF THE PASS PORT AND VISA DETAILS ETC. ON EXAMINING THE ABOVE, ASSESSING OFFICER NOTICED THAT THE SALE AGREEME NT IS UNREGISTERED AND THERE IS NO CONVEYANCE DEED OF THE IMPUGNED LANDS SAID TO HAVE BEEN SOLD BY THE ASSESSEE IN PAKISTAN. REGARDING THE MIGRATION ALSO ASSESSING OFFICER HELD THAT ASSESSEE IS STILL A PAKISTAN CITIZEN AND THE MIGRATION IS NOT COMPLETE. THE CUSTOMS AUTHORITIES REGARDING THE DECLARATION AND THE CONVERSION OF THE PAKISTAN CURRENCY INTO INDIAN CURRENCY ALSO HELD AGAINST THE ASSESSEE. ASSESSING OFFICER HELD THAT THE ASSESSEES CLAIM OF BRINGING IN CASH OF RS. 35 LAKHS INTO INDIA ON 19.7.2007 IS NOT CORRECT. FURTHER, HE MENTIONED THAT THE SAID CBDT CIRCULAR PERMITS ONLY UP TO THE LIMIT OF RS. 50,000/ - AND NOT RS. 35 LAKHS WHICH IS THE CASE HERE. THE FACTS ABOUT THE NON - RECEIPT OF FULL AMO U NT OF RS. 37,08,000/ - WAS ALSO MENTIONED IN THE ASSES SMENT ORDER IN PARA 11. THUS, ASSESSING OFFICER IS OF THE OPINION THAT THE SOURCE OF THE SAID RS. 35 LAKHS IS THE SALE TRANSACTION OF LAND AT PAKISTAN WAS HELD AS A FABRICATED STORY AND THEREFORE, THE ASSESS E E FAILED TO PROVE THE GENUINENESS AND CORRECTNE SS OF THE CLAIM. HE ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND MADE ADDITION OF RS. 35 LAKHS. AGGRIEVED WITH THE ABOVE DECISION OF THE ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE FURNISHED THE BANK ACCOUNT DETAILS OF THE ASSESSEE IN WEST PAKISTAN AND MENTIONED 3 THAT THE ASSESSEE HAS A SAVINGS BANK ACCOUNT NO.1000056/2 WITH UNITED BANK LIMITED OF PAKISTAN AND IT HA S CREDITS OF RS. 51,50,000 / - DURING THE RELEVANT PERIOD. THE FACT ABOUT THE WITHDRAWAL OF RS. 50,000/ - CASH ON 17.7.2007, TWO DAYS BEFORE THE MIGRATION TO INDIA WAS ALSO DEMONSTRATED WITH EVIDENCES. ASSESSEE ENTERED INTO INDIA ON 19.7.2007, THE FACT ABOU T THE SALE OF LAND IN PAKISTAN TO THE EXTENT OF RS. 37.08 LAKHS WAS ALSO DEMONSTRATED. FURTHER, PARA 4.3 OF THE CIT (A)S ORDER RECORDS THE FACTS ABOUT THE SON OF THE ASSESSEE ( MR. JAYPRAKASH GHANSHAMDAS BAJAJ) ON THE SIMILAR FACTUAL CIRCUMSTANCES THE CL AIM OF BRINGING IN CASH OF RS. 5 LAKHS WAS ACCEPTED BY THE REVENUE. ASSESSEE FILED A COPY OF THE ORDER OF THE CIT (A), PUNE IN THE CASE OF HIS SON AND THE SAME IS PLACED IN THE PAPER BOOK TOO. ASSESSEE ALSO FILED ORDER OF THE ITAT, DELHI IN THE CASE OF S HRI JEOMAL VS. ITO (22 TTJ 524). FURTHER, THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF S.R. LAXMAN VS. CIT (186 ITR 453) WAS ALSO RELIED UPON BY THE ASSESSEE. IN THE SAID CASES, THE EXISTENCE OF CREDIT BALANCE AS EVIDENT FROM THE BANK ACCO UNT OF THE ASSESSEE WAS CONSIDERED AS EXPLAINABLE SOURCE OF INCOME FOR THE CASH DEPOSITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN INDIA. CIT (A) CONSIDERED THE ABOVE FACTS OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS ON THE TOPIC AND HELD THE ASSESSING OFFICER HAS NOT PROVED THAT THE ASSESSEE HAS OTHER SOURCES OF INCOME IN INDIA BEFORE TAXING THE SAME U/S 68 OF THE ACT. THEREFORE, AS PER THE DISCUSSION GIVEN IN PARA 4.15 OF HIS ORDER, CIT (A) GRANTED RELIEF. AGGRIEVED WITH THE ABOVE ORDER OF THE CIT ( A), REVENUE IS IN APPEAL BEFORE US. 4. DURING THE PROCEEDINGS BEFORE US, LD DR HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND LD COUNSEL FOR THE ASSESSEE RELIED ON THE CONCLUSIONS DRAWN BY THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON APPRECIATION OF THE FACTS, WE FIND THE ASSESSEE WAS UNDOUBTEDLY A CITI ZEN OF WEST PAKISTAN AND OWNS AGRICULTURAL LAND AND THUS THE IDENTITY IS UNDISPUTED. THE FACTS ABOUT THE OWNERSHIP AND SALE OF LAND WERE ALSO EVIDENCED. THERE MAY BE SOME ISSUES RELATING TO FILING OF 4 FINAL CONVEYANCE DEED. ASSESSING OFFICER HAS NOT BROU GHT ANY ADVERSE INFORMATION TO SUPPORT THAT THE SUM OF RS. 37.08 LAKHS WAS NOT RECEIVED BY THE ASSESSEE. EVENTUALLY, THE SAVINGS BANK ACCOUNT WITH UNITED BANK LIMITED OF PAKISTAN SUPPORTS THE CLAIM OF THE ASSESSEE. THE TIMING OF CREDIT OF AMOUNT INTO THE BANK ACCOUNT WAS EVIDENT FROM THE ENTRIES RECORDED FROM 1.1.2007 ONWARDS. THE FACT OF WITHDRAWAL OF RS. 50 LAKHS FROM THE SAID BANK ACCOUNT ON 17.7.2007 WAS ALSO UNDISPUTED. ASSESSEE ENTERED INTO INDIAN TERRITORY ON 19.7.2007. ASSESSEES FAILURE S TO DE CLARE THE SAME TO THE CUSTOMS AUTHORITIES OR OTHER EVIDENCES IN SUPPORT OF THE CONVERSION OF THE SAID PAKISTAN CURRENCY TO INDIAN CURRENCY ARE OBVIOUS . THERE IS NO INFORMATION TO SUGGEST THAT ASSESSEE HAS DONE SOME BUSINESS ACTIVITIES BEFORE SEPTEMBER, 20 07 FOR EARNING OF SUCH HUGE AMOUNT OF CASH OF RS. 35 LAKHS AND FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT SUCCESSFULLY . IGNORING THE PROCEDURAL INFIRMITIES, WE ARE OF THE OPINION THAT THE FINDING OF THE CIT (A) GIVEN IN PARA 4.15 OF HIS ORDER AP PEARS REASONABLE. WE HAVE ALSO CONSIDERED THE REVENUES DECISION IN THE CASE OF ASSESSEES SON WHEREIN UNDER THE SIMILAR FACTS AND CIRCUMSTANCES THE SUM OF RS. 5 LAKHS WAS DEPOSITED IN THE BANK ACCOUNT IN INDIA AND REPORTED TO THE INCOME TAX AUTHORITIES A ND THE SAME WAS ACCEPTED BY THE REVENUE. THE DECISION OF THE ITAT, DELHI IN THE CASE OF SHRI JEOMAL VS. ITO (SUPRA) IS RELEVANT AND THE TRIBUNAL GRATED RELIEF TO THE ASSESSEE RELYING ON THE ENTRIES IN THE BANK ACCOUNT AND THE CONFIRMATION FROM THE BANK AU THORITIES OF PAKISTAN BANKS. THE RELEVANT HELD PORTION IN THE CASE OF SHRI JEOMAL VS. ITO (SUPRA) IS REPRODUCED AS UNDER: THE CERTIFICATE ISSUED BY THE UNITED BANK LTD OF PAKISTAN SATISFACTORY EXPLAIN THE SOURCE OF THE SUM WHICH HAD BEEN BROUGHT BY THE A SSESSEE FROM PAKISTAN BY HIM WHEN HE MIGRATED T INDIA AND WHICH HAD BEEN DEPOSITED BY HIM WITH THE BANK OF BARODA. THE ASSESSEE HAD WITHIN 60 DAYS OF HIS ARRIVAL IN INDIA DULY INFORMED THE ITO THAT HE HAD MIGRATED TO INDIA IN ORDER TO SETTLE DOWN IN INDIA AND THAT HE H A D BROUGHT A CERTAIN SUM WITH HIM FOR WHICH THE NECESSARY BANK DOCUMENTS WERE ALSO WITH HIM. IN THESE CIRCUMSTANCES, THE EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF THE DEPOSIT COULD NOT HAVE BEEN DISBELIEVED. FROM THE COPIES OF THE ASSESSMENT ORDERS MADE BY THE PAKISTAN AUTHORITIES, IT DOES APPEAR THAT THE ASSESSEE WAS DOING BUSINESS IN PAKISTAN AND DERIVING A TAXABLE INCOME. IF AS A RESULT OF HIS BUSINESS ACTIVITIES IN PAKISTAN, THE APPELLANT WAS ABLE TO MADE THE SUM WHICH WAS BRO UGHT TO INDIA AND WHICH FACTS STOOD DULY SUPPORTED BY THE CERTIFICATES OF THE BANK ISSUED UNDER ITS SEAL, THE ITO HAD NO JUSTIFICATION IN ASSESSING THE SUM DEPOSITED BY THE ASSESSEE WITH THE BANK OF BARODA AS HIS INCOME FROM UNDISCLOSED SOURCES. 7. FOR TH E SAKE OF COMPLETENESS OF THIS ORDER, THE DECISION OF THE CIT (A) GIVEN IN PARA 4.15 OF HIS ORDER ARE EXTRACTED AS UNDER: 5 4.15. IN VIEW OF THE FACTS AND CIRCUMSTANCES EXPLAINED ABOVE, IN MY CONSIDERED OPINION, THE APPELLANT HAS SATISFACTORILY EXPLAINED AN D PLACED ON RECORD THE EVIDENCE REGARDING THE SUFFICIENCY OF FUNDS AVAILABLE WITH HIM IN PAKISTAN WHEN HE MIGRATED FROM THAT COUNTRY TO PERMANENTLY SETTLE DOWN IN INDIA. THE SAME WAS DECLARED TO THE JURISDICTIONAL INCOME TAX OFFICER WITHIN THE STIPULATED TIME, WHO DID NOT QUESTION THE VALIDITY OF SUCH A DECLARATION INDICATING CLEARLY THAT THE SAME WAS ACCEPTED BY THE DEPARTMENT. CONSIDERING THAT APPELLANT HAS FULFILLED THE CONDITIONS AS LAID DOWN IN CIRCULAR NO.5, DATED 20.2.1969 OF THE CBDT AND THE ASSES SING OFFICER HAS NOT BEEN ABLE TO PLACE ANY EVIDENCE TO RECORD THAT WHATEVER IS STATED BY THE APPELLANT ISNT TRUE, THE FACTS AND ARGUMENTS PLACED ON RECORD BY THE APPELLANT CANNOT BE DISBELIEVED. IN VIEW OF THE SAME, THE ACTION OF THE ASSESSING OFFICER T REATING THE AMOUNT OF RS. 36 LAKHS BROUGHT INTO INDIA, AFTER PERMANENTLY MIGRATING FROM WEST PAKISTAN, AS UNDISCLOSED INCOME FOR THE YEAR UNDER CONSIDERATION IS NOT JUSTIFIED AND HENCE THE ADDITION MADE ON THIS ACCOUNT IS DELETED. 8. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED I N THE OPEN COURT ON 2 3 R D JANUARY, 2015. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 3 .1.2015 . . ./ OKK , SR. PS / 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