ITO 23(2)(2), MUMBAI V. RAJESH V. PAREKH HUF, MUMBAI

ITA 6041/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62426 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 09-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM & SHRI N K BILLAIYA , AM ITA NO. 6041/MUM/2010 (ASSESSMENT YEAR 2007-08 ) THE INCOME TAX OFFICER WARD 23(2)(2), MUMBAI VS RAJESH V PAREKH HUF 15 MANUSMRUTI 46 RRT ROAD, MULUND (W) MUMBAI 80 (APPELLANT ) (RESPONDENT) PAN NO. AAGHM2350B ASSESSEE BY NONE REVENUE BY SHRI C G K NAIR DT.OF HEARING 9 TH MAY 2012 DT OF PRONOUNCEMENT 16 TH ,MAY 2012 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 14.5.2010 OF THE COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASS ESSMENT YEAR 2007-08. 2 THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE I S AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DIRECTING TO DELETE THE AMOUNT OF ` 10,36,000/- OUT OF ` 10,95,180/- CASH DEPOSIT MADE BY THE ASSESSEE IN THE BANK. THE ASSES SEE HAS NEVER SUBMITTED ANY PROOF OR EVIDENCE AT THE TIME OF SCRUTINY. THE A SSESSEE HAS DURING THE COURSE OF ASSESSMENT STATED IN THE STATEMENT RECORDE D ON OATH THAT HE WAS OWNING THE LIABILITY OF SUCH DEPOSIT. 3 NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSE E WHEN THIS APPEAL WAS CALLED FOR HEARING DESPITE NOTICE OF HEARING WAS DU LY SERVED ON 26.4.2012 ON THE ASSESSEE. THE LD DR HAS FILED THE ACKNOWLEDGEMENT C OPY DULY SIGNED BY THE RAJESH V PAREKH HUF ITA NO. 6041/MUM/2010 2 ASSESSEE ON RECORD. ACCORDINGLY, IN VIEW OF THESE F ACTS, WE PROPOSE TO HEAR AND DISPOSE OFF THIS APPEAL EXPARTE. 4 WE HAVE HEARD THE LD DR AND CONSIDERED THE RELEVA NT MATERIAL ON RECORD. THE LD DR HAS SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FAILED TO PRODUCE THE REQUISITE INFORMATION, DETAIL S AND RECORDS TO SUBSTANTIATE THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE; WHEREAS THE ASSESSEE HAS PRODUCED ADDITIONAL EVIDENCES BEFORE T HE COMMISSIONER OF INCOME TAX(APPEALS). THE COMMISSIONER OF INCOME TAX (APPE ALS) WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER HAS CONSIDERED THE ADDITIONAL EVIDENCE AND ALLOWED THE CLAIM OF THE ASSESSEE. THUS, THE LD DR HAS SUBMITTED THAT THE EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) REQUIRED TO BE VERIFIED BY THE ASSESSING OFFICER; T HEREFORE, THE SAME MAY BE REMANDED TO THE RECORDS OF THE ASSESSING OFFICER. 4.1 AFTER CONSIDERING THE SUBMISSIONS OF THE LD DR AND PERUSAL OF THE RECORDS, WE NOTE THAT A S PER THE AIR INFORMATION, THE ASSESSING OFFICER FO UND THAT A CASH OF `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