DCIT CC 1, MUMBAI V. AMI SUNIL KOTHARI, MUMBAI

ITA 6081/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71978 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 05-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Section: 92C; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE SHRI D.MANMOHAN, VP JM AND SHRI SANJAY ARORA, AM !' # I.T.A. NO.6081/MUM/2012 ( / ASSESSMENT YEAR: 2004-05) ASST. CIT, CENTRAL CIRCLE -1, R.NO.902, 9 TH FLOOR, OLD CGO BLDG. ANNEXE, M.K. ROAD, MUMBAI - 400 020 # VS. AMI SUNIL KOTHARI 21, SPRING FIELD, 2 ND FLOOR, 19, V.G. ROAD, GAMDEVI, GRANT ROAD (W), MUMBAI 400 007 $#'%' ./PAN/GIR NO. ACVPK 1674R ( $& /APPELLANT ) : ( '($& / RESPONDENT ) $&) / APPELLANT BY : SHRI S.J. SINGH '($&*) / RESPONDENT BY : SHRI ANANT. N. PAI + ,*-. / DATE OF HEARING : 05.12.2013 /01*-. / DATE OF PRONOUNCEMENT : 18.12.2013 '2# O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-36, MUMBAI (CIT(A) FOR SH ORT) DATED 02.07.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR TH E ASSESSMENT YEAR (A.Y.) 2004-05 VIDE ORDER DATED 30.12.2011. 2 ITA NO. 6081/MUM/2012(A.Y.2004-05) ASST. CIT V. AMI SUNIL KOTHARI 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE R EVENUE, IT WAS SUBMITTED BY THE LEARNED DR THAT THE IMPUGNED ADDITION WAS MADE BY T HE ASSESSING OFFICER (A.O.) IN VIEW OF THE ASSESSEE DECLINING OWNERSHIP OF THE COMPACT DISK (CD) FOUND AND SEIZED FROM THE ASSESSEE IN PURSUANCE OF SEARCH AT HER PREMISES ON 28.07.2009, SO THAT THERE WAS NO EXPLANATION ON MERITS BEFORE HIM. THE SAID CD CONTA INS THE ASSESSEES ACCOUNTS. THE BALANCE-SHEET AS PROJECTED THEREBY REFLECTS A DIFFE RENCE OF RS.18,07,116/- BETWEEN THE VALUE OF ASSETS AND LIABILITIES. THE SAME STANDS, A CCORDINGLY, ADJUSTED THROUGH AN ACCOUNT TITLED DIFFERENCE IN OPENING BALANCE. SIMILARLY, THERE APPEARS A SUSPENSE ACCOUNT IN THE ASSESSEES TRIAL BALANCE AS ON 31.03.2004 (PB PAGE7 ). THE ENTRIES IN THE SAID ACCOUNT AGGREGATE TO RS.18,59,023/-. THIS EXPLAINS THE TWO ADDITIONS EFFECTED IN THEIR RESPECT BY THE A.O. IN ASSESSMENT; THE ASSESSEE, AS AFORE-SAID , DECLINING OWNERSHIP OR RELATION OF THE SAME WITH ITS ACCOUNTS. BEFORE THE LD. CIT(A), HOWE VER, THE ASSESSEE NOT ONLY ADMITTED TO THE ACCOUNTS BEING HERS, BUT ALSO EXPLAINED THE S AID ENTRIES, AND WHICH BEING FOUND SATISFACTORY, WAS ACCEPTED BY THE FIRST APPELLATE A UTHORITY, DELETING THE ADDITIONS. NO OPPORTUNITY FOR VERIFICATION OR REBUTTAL OF THE ASS ESEES CASE WAS PROVIDED BY HIM TO THE A.O., SO THAT THERE HAS BEEN A TOTAL DENIAL OF JUST ICE TO THE REVENUE AS WELL AS NON- ADHERENCE TO THE ESTABLISHED PROCEDURE IN THIS REGA RD. IN FACT, NO EXPLANATION FOR THE VOLTE- FACE BY HER HAS BEEN FURNISHED BY THE ASSESSEE BEFORE T HE LD. CIT(A). THE LD. AR, ON THE OTHER HAND, WOULD SUBMIT THAT AL L THAT WAS MEANT BY THE ASSESSEE BY STATING THAT THE ACCOUNTS AS REFLECTED IN THE SEIZED CD DID NOT PERTAIN TO HER IS THAT THE SAME HAD NO BEARING ON HER INCOME. THAT AP ART, THE ASSESSEE FILED AN EXPLANATION BEFORE LD. CIT(A), WHO, FINDING THE ASSESSEES CASE MERITORIOUS, HAD ALLOWED ITS APPEAL. HE WOULD THEN GO ON TO EXPLAIN AS TO HOW THE ENTRIE S AS REFLECTED IN THE SEIZED CD, BEARING THE TRIAL BALANCE FOR THE CURRENT AND SIX P RECEDING YEARS, COULD NOT, EVEN ASSUMING THEM TO BE CORRECT AND FORMING PART OF THE ASSESSEE S ACCOUNTS, LEAD TO ANY ADDITION TO THE ASSESSEES INCOME FOR THE CURRENT YEAR, SO THAT THE REVENUES CASE WAS MISCONCEIVED. 3. WE HAVE HEARD THE PARTIES, AND PERUSED MATERIAL ON RECORD. 3 ITA NO. 6081/MUM/2012(A.Y.2004-05) ASST. CIT V. AMI SUNIL KOTHARI 3.1 AT THE OUTSET, WE MAY CLARIFY THAT WITHOUT DOUB T THERE HAS BEEN NO FURNISHING OF ANY EXPLANATION TO THE AO, BEFORE WHOM THE ASSESSEE S CASE WAS ONE OF COMPLETE DENIAL ( REFER PARAS 6 AND 7 OF THE ASSESSEES LETTER DATED NIL FILED BEFORE THE AO ON 16.12.2011/ PB PAGES 15-20), WHICH BEARS NO AMBIGUITY. IT STAND S CLEARLY STATED THEREIN THAT THE SEIZED ACCOUNTS ARE NOT HER ACCOUNTS, AND WERE IN FACT CRE ATED ONLY FOR THE PURPOSE OF EXAMINING THE INTERVIEWEES FOR THE APPOINTMENT OF AN ACCOUNTA NT. NOT ONLY THE ASSESSEES SUBSEQUENT CONDUCT DISPROVES THE SAME, THE ASSESSEE IS BARRED FROM ASSUMING SUCH A STAND IN VIEW OF THE EXPRESS PROVISION OF SECTION 2 92C OF THE ACT. THE ONUS WAS SQUARELY ON THE ASSESSEE TO SHOW AS TO HOW THE SEIZED ACCOUN TS DID NOT PERTAIN TO HER. WE SHALL THEREFORE; THE GROSS BREACH OF RULE 46A OF THE INCO ME TAX RULES 1962 (THE RULES) BEING PATENT, ACCEPT THE ASSESSEES CASE ONLY IF AND TO T HE EXTENT THE SAID ENTRIES, EVER ASSUMING THE TRUTH THEREOF, COULD NOT LEAD TO ANY ADDITION, AS CONTENDED BY THE LD. AR BEFORE US, SO THAT THE REVENUE HAS NO CASE, I.E., IS MISCONCEIVED , EITHER ON FACTS OR IN LAW OR ON BOTH. ANY DEFICIENCY IN THE ASSESSEES CASE WOULD, ON THE OTHER HAND, WARRANT A REMISSION BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR VERIFICA TION AND A DECISION ON MERITS. 3.2 WE SHALL TAKE UP EACH OF THE ITEMS SEPARATELY: A. DIFFERENCE IN OPENING BALANCE - RS.18,07,116/- AS AFORE-NOTED, THE SAID CREDIT BALANCE REPRESENTS THE DIFFERENCE BETWEEN THE BOOK VALUE OF ASSETS AND LIABILITIES (INCLUDING THE BALANCE IN THE CAPITAL ACCOUNT). THE SAID FIGURE, AS THE LD. AR WOULD SHOW US, OUTSTANDS NOT ONLY AS ON 01.04.2003; THE TRIAL BALANCE (AS ON 31/3/2004) DETAILING TRANSACTIONS FOR THE F.Y. 2003 -04 (PB PAGE 7), BUT FROM AN EARLIER DATE; THE SAME IN FACT APPEARING IN ALL THE TRIAL B ALANCES FOR THE PRECEDING YEARS, ALSO FOUND ON THE CD, I.E., UP TO THE TRIAL BALANCE FOR PERIOD 01.04.1997 TO 31.03.1998 (PB PAGE 1). THE SAID DIFFERENCE THUS OUTSTANDS EVEN SI NCE PRIOR TO 01.04.1997. THERE IS ACCORDINGLY NO QUESTION OF ANY ADDITION ON ITS ACCO UNT. THE ASSESSEES EXPLANATION IS UNEXCEPTIONAL AND ADMITS OF NO TWO VIEWS. WE ACCORD INGLY FIND NO INFIRMITY IN ITS DELETION BY THE LD. CIT(A). WE DECIDE ACCORDINGLY. 4 ITA NO. 6081/MUM/2012(A.Y.2004-05) ASST. CIT V. AMI SUNIL KOTHARI B. SUSPENSE ACCOUNT RS. 18,59,023/- : THIS ACCOUNT, CLASSIFIED IN THE TRIAL BALANCE UNDER THE GROUP ACCOUNT DEBTORS, COMPRISES OF THR EE COMPONENTS, EACH OF WHICH STANDS ADDED, AND WHICH SHALL THEREFORE BE CONSIDERED BY U S SEPARATELY: (I) OPENING BALANCE (RS.6,09,023/-) : THE SAME IS THE OPENING BALANCE (DEBIT) AS ON 01.04.2003. CLEARLY, THEREFORE, THERE IS NO QUESTIO N OF IT BEING THE ASSESSEES INCOME FOR THE CURRENT YEAR. THE SAME COULD EITHER REPRESENT A N EXPENSE/S OR ASSET/S BROUGHT FORWARD FROM AN EARLIER PERIOD, BEING OUTSTANDING SINCE SOM E TIME IN F.Y. 2001-02 (REFER PB PAGES 1-7). THE AMOUNT IN FACT CONSISTS OF AN OPENING BAL ANCE OF RS.90,977/- (CREDIT) AS ON 01.04.2001 (PB PAGE 5). EVEN SO, THE SAME CANNOT, I N ANY MANNER, BE CONSIDERED AS A PART OF THE ASSESSEES INCOME FOR THE CURRENT YEAR. WE D ECIDE ACCORDINGLY. (II) RS.10 LAKHS : IT STANDS EXPLAINED THAT THE DEBIT TO THE SUSPENS E ACCOUNT FOR THIS AMOUNT IN FACT REPRESENTS INVESTMENT IN HDFC RELIEF BONDS. THE SAME HAS SINCE BEEN RECTIFIED IN ACCOUNTS AND CORRECTLY REPRESENTED PER THE BALANCE-SHEET AS ON 31.03.2004, ALSO SUBMITTED BEFORE THE AO (PB PG. 12). THE COPY OF THE SAVINGS BANK ACCOUNT WAS ALSO PRODUCED BY THE LD. AR TO EXHIBIT THE FLOW OF FUNDS , THE SOURCE OF WHICH HAS BEEN EXPLAINED TO BE WITHDRAWAL OF THE PROFITS FROM A PA RTNERSHIP FIRM IN WHICH THE ASSESSEE IS A PARTNER (PB PAGE 13). THE LD. DR WOULD OBJECT, ST ATING THAT NO SUCH EXPLANATION OR COPY OF BANK ACCOUNT WAS FURNISHED BEFORE THE AO. THAT M AY WELL BE TRUE. WE, HOWEVER, FIND NO BASIS IN THE REVENUES STAND. THE AMOUNT IS PER A DEBIT ENTRY/S, THE SOURCE/S OF WHICH IS ALREADY REFLECTED IN THE ACCOUNTS. AS SUCH, EVEN CONSIDERING THAT THE PROOF OF THE SAME BEING INVESTED IN HDFC BONDS WAS NOT BEFORE THE AO, THE SAME COULD NOT REPRESENT INCOME, BEING ONLY AN OUTGO, NO CREDIT FOR WHICH ST ANDS CLAIMED BY THE ASSESSEE. THE REVENUE HAS NO CASE. WE, THEREFORE, CONFIRM THE DEL ETION OF THE SAID AMOUNT. (III) RS.2,50,000/-: THE SAID AMOUNT, CREDITED TO THE SUSPENSE ACCOUNT DURING THE YEAR, HAS BEEN EXPLAINED AS RECEIVED FROM A PARTNERSHIP F IRM BY THE ASSESSEE. THERE BEING NO MATERIAL ON RECORD WHICH BEARS THIS OUT, WITH THERE BEING NO EXPLANATION QUA THE SAME BEFORE THE AO, EVEN AS OBSERVED DURING HEARING, WE RESTORE THIS ASPECT OF THE MATTER FOR 5 ITA NO. 6081/MUM/2012(A.Y.2004-05) ASST. CIT V. AMI SUNIL KOTHARI VERIFICATION BACK TO THE FILE OF THE AO, WHO SHALL EXAMINE THE ASSESSEES EXPLANATION ON MERITS AND DECIDE PER A SPEAKING ORDER. WE DECIDE A CCORDINGLY. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 18, 2013 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER + 3, MUMBAI; 4 DATED : 18.12.2013 5# A.K.PATEL, PS ! ' #$%& ' &$ # COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. '' + 6- 7 8 / THE CIT(A) 4. '' + 6- / CIT CONCERNED 5. 9:'5-5;! '.;!1 + 3, / DR, ITAT, MUMBAI 6. :<=, # GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , + 3, / ITAT, MUMBAI