SEJAL JAYESH VORA, MUMBAI V. ITO 24(3)(3), MUMBAI

ITA 6258/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0150 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 05-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard; Peak credit
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO. 6258 / M/ 20 16 ( / ASSESSMENT YEAR: 20 11 - 12 ) SEJAL JAYESH VORA B - 37 SHREE DHANWANTI CHSL, OFF AAREY RD, MUMBAI - / VS. ITO 24(3)(3) 5 TH FLOOR,C - 11,PRATYAKSHAKAR BHAVAN BKC BANDRA EAST MUMBAI PIN:400051 ./ ./ PAN/GIR NO. : AFGPV 7008 C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 05.07 .2017 / DATE OF PRONOUNCEMENT : 29 . 08 .2017 / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 28.07.2016 PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS) - 42 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2011 - 12 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. (A) THE FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE U/S 69A OF THE INCOME TAX ACT, 1961 IN A SUM OF ASSESSEE BY: SHRI SANJAY R. PARIKH DEPARTMENT BY: SHRI RAM TIWARI (SR.AR) SEJAL JAYESH VORA 2 RS. 41,93,900 (WRONGLY TAKEN BY THE A.O AT RS. 41,93,100). THIS SUM OF RS . 41,93,900 COMPRISES RS. 22,08,800/ - AND RS 19,85,100. (B) THE C.I.T (A) FAILED TO APPRECIATE THE FACTS OF THE APPELLANT'S CASE THAT THE APPELLANT AND HER HUSBAND (JAYESH K. VORA) HAVE BEEN MAINTAINING THE FOLLOWING BANK ACCOUNTS WITH THE THANE JANATA SAHAKARI BANK LTD IN ITS GOREGAON (EAST) BRANCH. IN THE NA ME OF THE APPELLANT (MRS. SEJAL J. VORA) S.B. ACCOUNT NUMBER 706; IN THIS ACCOUNT THE GROSS CASH DEPOSITS FOR THE YEAR ENDED 31 - 3 - 2011 AMOUNTED TO RS 22,08,800. II. S.B ACCOUNT NUMBER 601; THIS ACCOUNT IS IN THE JOINT NAMES OF THE APPELLANT AND HER HUSBAN D (JAYESH K VORA) AND THE GROSS TOTAL OF CASH DEPOSITS IN THE YEAR ENDED 31 - 3 - 2011 AMOUNTED TO RS. 1,14,000. IT IS NECESSARY TO NOTE HERE THAT THE FIRST NAME APPEARING IN THIS ACCOUNT IS THAT OF THE APPELLANT. IN THE NAME OF JAYESH K VORA A. S.B ACCOUNT NU MBER 603: THIS IS THE SAVING ACCOUNT OF THE JAYESH K. VORA (APPELLANTS HUSBAND). B. S.B ACCOUNT NUMBER 704: THIS ACCOUNT IS IN THE JOINT NAMES OF JAYESH K VORA AND THE APPELLANT. THE GROSS CASH DEPOSITS IN THIS ACCOUNT FOR THE YEAR ENDED 31 - 3 - 2011 AMOUNTED TO RS.19,85,100. IT IS TO BE NOTED HERE THAT THE FIRST NAME APPEARING IN THIS JOINT ACCOUNT IS THAT OF JAYESH K VORA. C. CURRENT ACCOUNT NO.23/CD/238: THIS ACCOUNT IS IN THE NAME OF SEJAL TRADING CORPORATION WHICH IS THE PROPRIETARY CONCERN OF JAYESH K VO RA. (C) THE FIRST APPELLATE AUTHORITY ERRED IN CONSIDERING TOGETHER THE GROSS TOTAL CASH DEPOSITS APPEARING IN THE ACCOUNTS MENTIONED AT (I) AND (B) ABOVE AND SUSTAINING THE ADDITION OF RS. 41,93,900 MADE BY THE A.O, THOUGH THE APPELLANT'S HUSBAND (JAYESH K VORA) IS SEPARATELY ASSESSED TO INCOME TAX UNDER PAN ABUPV1167G AND HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNT. (D) THE FIRST APPELLATE AUTHORITY SHOULD HAVE CONSIDERED THE CASH DEPOSITS APPEARING ONLY IN S.B ACCOUNT NUMBER 706 MENTIONED AT (I ) ABOVE. 2. THE C.I.T (A) OUGHT TO HAVE SEEN THAT S.B ACCOUNT NUMBER 706 HELD BY THE APPELLANT WITH THANE JANATA SAHAKARI BANK LTD WHICH IS A RUNNING ACCOUNT IN WHICH THERE ARE SEVERAL CASH DEPOSITS AS ALSO CASH WITHDRAWALS AND SHOULD HAVE THEREFORE RESTRI CTED THE ADDITION TO RS. 15,87,800 REPRESENTING THE PEAK OF THE CASH DEPOSITS. 3. (A) THE FIRST APPELLATE AUTHORITY SHOULD NOT HAVE ENHANCED THE ASSESSMENT MADE BY THE A.O, BY A SUM OF RS.14,96,950 SEJAL JAYESH VORA 3 REPRESENTING THE DIFFERENCE BETWEEN THE AMOUNTS MENTIONED IN THE LOAN CONFIRMATION LETTERS FURNISHED BY JAYESH K. VORA AND THE BALANCES APPEARING IN THE NAME OF )AYESH K. VORA IN THE STATEMENTS SUBMITTED BY THE APPELLANT TO THE A.O. -------- WHILE THE STATEMENT FURNISHED BY THE APPELLANT SHOWED JAYESH K. VORA AS A CREDITOR OF THE APPELLANT IN A SUM OF RS 13,42,831.51, THE CONFIRMATION LETTER ISSUED BY THE CREDITOR SHOWED THAT HE HAD TO PAY 1,54,118.49 TO THE APPELLANT. THE FIRST APPELLATE AUTHORITY THEREFORE ADDED A SUM OF RS 14,96,950 {RS.13,42,831.51 + RS. 1,54,1 18.49} U/S 68 OF THE INCOME TAX ACT, 1961. (B) THE C.I.T (A) FAILED TO NOTICE THAT THE A.O IN HIS LETTER DT 28 - 2 - 2014 ADDRESSED TO THE APPELLANT AND REFERRED TO ON PAGE 5 OF THE ASSESSMENT ORDER CLEARLY STATES THAT ON AN OVERALL PERUSAL OF THE DOCUMENTS FU RNISHED BY THE APPELLANT TO THE A.O. IT APPEARED THAT NO PROPER BOOKS OF ACCOUNT ARE MAINTAINED BY THE APPELLANT. SIMILARLY , THE FIRST APPELLATE AUTHORITY IN THE LAST PARAGRAPH OF PAGE 15 OF HIS ORDER HELD THAT THE APPELLANT'S BOOKS OF ACCOUNT WERE CONCOCT ED AND BOGUS. AFTER HOLDING THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT ARE CONCOCTED AND BOGUS, THE FIRST APPELLATE AUTHORITY IS NOT CORRECT IN ENHANCING THE ASSESSMENT BY A SUM OF RS 14,96,950 U/S 68 OF THE INCOME TAX ACT, 1961 BY RELYING ON TH E SAID BOOKS OF ACCOUNT. (C) THE FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN MAKING THIS ENHANCEMENT OF RS 14,96,950 AS A SEPARATE ADDITION IS ALREADY MADE ON THE BASIS OF THE CASH DEPOSITS FOUND IN THE S.B ACCOUNT NUMBER 706 OF THE APPELLANT, AS IT WAS FOUND BY THE A.O AND C.I.T (A) THAT THE BOOKS MAINTAINED ARE BOGUS. (D) WITHOUT PREJUDICE TO THE GROUNDS MENTIONED AT 3(B) AND 3(C) ABOVE AS THE ADDITION IS MADE U/S 68 OF THE INCOME TAX ACT, THE C.I.T (A) SHOULD HAVE RESTRICTED THE ENHANCEMENT TO THE UNEX PLAINED CREDITS APPEARING IN THE ACCOUNT OF JAYESH K VORA IN THE BOOKS OF ACCOUNT OF THE APPELLANT AND FORMING PART OF RS.13,42,891.51/ - , EXCLUDING THOSE LOANS WHICH ARE CONFIRMED BY THE CREDITOR (APPELLANT'S HUSBAND). THE APPELLANT CRAVES LEAVE TO ADD TO, MODIFY, VARY OR DELETE ANY OF THE ABOVE GROUNDS BEFORE OR AT THE TIME OF HEARING OF THE ABOVE APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETUR N OF INCOME ON 31 . 03 .20 12 DECLARING TOTAL INCOME TO THE TUNE OF SEJAL JAYESH VORA 4 RS.3,87,698/ - . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS . N OTICE U/S 143(2) OF THE ACT DATED 28.09.2012 WA S ISSUED AND DULY SERVED UPON THE ASSESSEE ON 29.09.2012. THEREAFTER, NOTICE U/S 142(1) OF THE I.T. ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSESSEE. THEREAFTER, O N ACCOUNT OF CHANGE OF CHARGE , THE NOTICE U/S 142(1) OF THE ACT WAS AGAIN ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE DID NOT EXPLAIN THE CASH DEPOSIT OF RS.22,08,800/ - AND DEPOSIT RS.19,85,100/ - THEREFORE, THE SAID AMOUNT TO THE TUNE OF RS.41,93,10 0/ - WAS TREATED UNDISCLOSED INCOME AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE ALSO SURRENDERED THE INTEREST OF INCOME OF THE RS.3,47,174/ - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.46 , 39 , 960/ - . FEELING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE THEREFORE THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 : - 4 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWANCE TO THE TUNE OF RS. 41,93,100/ - U/S 69A OF THE I.T. ACT, 1961. THE ASSESSEE WAS HAVING TWO SBI A/C . NOS. 706 & 601 . T HE DEPOSIT IN THE SBI ACCOUNT N. 706 AS ON 31.03.2011 WAS TO THE TUNE OF RS.22,08,800/ - WHEREAS THE DEPOSIT IN THE SBI ACCOUNT 60 1 UP TO DATE OF 31.03.2011 WAS TO THE TUNE OF RS.1,14,000/ - . HOWEVER, THIS ACCOUNT WAS ALLEGED TO BE JOINT ACCOUNT OF THE ASSESSEE WITH HER HUSBAND . JAYESH K VORA WAS ALSO HAVING JOINT ACCOUNT NO 601 SBI ( HUSBAND SEJAL JAYESH VORA 5 OF THE ASSESSEE) AND SBI ACCOUNT NO. 704 IN WHICH THE AMOUNT WAS DEPOSITED UP TO 31.03.2011 TO THE TUNE OF RS.19,85,100/ - . HOWEVER, THIS ACCOUNT HAS ALSO BEEN ALLEGED TO BE THE NAME OF BOTH THE ASSESSEE AS WELL AS HER HUSBAND . . JAYES K VOR A WAS ALSO HAVING ACCOUNT NO. 23/CD/238 WITH THE NAME OF SEJAL TRADING CORPORATION PROPRIETARY CONCERN OF JAYESH K VORA. THE CONTENTION OF THE ASSESSEES IS THAT THE ASSESSEE WAS HAVING ACCOUNT NO. 706 IN WHICH THE CASH DEPOSIT WAS FOUND TO THE TUNE OF RS 22,08,800/ - AS ON 31.03.2011 AND THE ACCOUNT NO. 601 WAS WITH THE JOINT NAME OF THE ASSESSEE AND HER HUSBAND IN WHICH THE AMOUNT TO THE TUNE OF RS.19,85,100/ - WAS FOUND AND THE SAID AMOUNT HAD BEEN ASSESSED IN THE RETURN OF HER HUSBAND OF THE ASSESSEE JAYESH K VORA. THEREF ORE, THE SAID AMOUNT IS NOT LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE IN ACCORDANCE WITH LAW. IT IS ALSO ARGUED THAT THE ACCOUNT NO.706 BELONGS TO THE ASSESSEES IN WHICH THERE WAS A WITHDRAWAL AND DEPOSIT THEREFORE PEAK CREDIT IS LIABLE TO BE TAKEN INTO CONSIDERATION IN VIEW OF THE LAW SETTLED IN COMMISSIONS CIT(A) VS. SARAF TRADING COMPANY 2015 376 ITR 534 ALLAHABAD HIGH COURT AND ACIT VS. CENTURY TEXTILES & INDUSTRIES LTD. 2015 153 ITD 453 ITAT MUMBAI BENCH . HOWEVER, ON THE OTHER HAND THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. WE HAVE HEARD THE ARGUMENT ADVANCED LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSE SSEE WAS HAVING THE ACCOUNT NO.706 IN WHICH THE AMOUNT OF RS. 22,08,800/ - WAS DEPOSITED UP TO THE END OF THE YEAR I.E., SEJAL JAYESH VORA 6 ON 31.03.2011. THE ASSESSEE CLAIMED THE SBI ACCOUNT NO. 704 AS JOINT WITH HER HUSBAND JAYESH K VORA IN WHICH AN AMOUNT OF RS. 19,85,100/ - WAS DEPOSITED UP TO 31.03.2011. THE CONTENTION OF THE ASSESSEE IS THAT THE AMO UNT OF RS.19,85,100/ - LIES AT SB I ACCOUNT NO. 704 HAS BEEN ASSESSED IN THE HAND OF HER HUSBAND JAYESH K VORA. IN SUCH CIRCUMSTANCES THE SAME IS NOT LIABLE TO BE ADDED IN THE INCO ME OF THE ASSESSEE .IT WOULD BE THE DOUBLE TAXATION . NO DOUBT, THE VERIFICATION IS REQUIRED TO BE DONE IN CONNECTION WITH THE ASSESSING OF THE INCOME OF JOINT ACCOUNT TO THE TUNE OF RS.19,85,100/ - WITH THE JAYESH K VORA. IN THIS REGARD, WE OBSERVED THAT TH E NECESSARY VERIFICATION IS REQUIRED TO BE DONE AT THE END OF AO TO JUSTIFY THE CLAIM IF, ANY RAISED BY THE ASSESSEE WHETHER THIS INCOME HAS BEEN ASSESSED AT THE END OF HER HUSBAND JAYESH K VORA OR NOT. IF, THIS AMOUNT HAS BEEN ASSESSED WITH THE JAYESH K VORA, I N THE SAID CIRCUMSTANCES, THE SAID AMOUNT IS NOT LIABLE TO BE ADDED WITH THE INCOME OF THE ASSESSEE. WE DIRECT ACCORDINGLY. THE OTHER CONTENTION OF THE ASSESSEE IS THAT HE WAS HAVING THE SBI ACCOUNT NO.706 IN WHICH THERE WAS A DEPOSIT AND WITHDRAWA L AND THE TOTAL DEPOSIT UP TO THE YEAR ENDED ON 31.03.20111 WAS AMOUNTING OF RS. 22,08,800/ - . T HE COPY OF THE SAID ACCOUNT IS LIES AT PAGE 14 TO 15 OF THE PAPER BOOK IN WHICH THERE ARE NUMBER OF WITHDRAWAL AND DEPOSIT AND THE TOTAL DEPOSIT WAS TO THE TUNE O F RS.22,85,800/ - . THE BIG AMOUNT OF DEPOSIT IS TO THE TUNE OF RS. 15,67,800/ - . IN VIEW OF THE LAW SETTLED IN CIT(A) VS. SARAF TRADING COMPANY 2015 376 ITR 534 ALLAHABAD HIGH COURT AND SEJAL JAYESH VORA 7 ACIT VS. CENTURY TEXTILES & INDUSTRIES LTD. 2015 153 ITD 453 ITAT MUMBAI BENCH . WE ARE OF THE VIEW THAT THE PEAK AMOUNT IS LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE SPECIFICALLY IN THE CIRCUMSTANCES WHEN THERE IS A NUMBER OF WITHDRAWAL AND DEPOSIT. SINCE, WE ARE RESTORING THE MATTERS CONTROVERSY BEFORE THE AO THEREFO RE, THE AO IS DIRECTED TO ASSESS THE INCOME OF THE ASSESSEE IN VIEW OF THE OBSERVATION MADE ABOVE . WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESORTED THE MATTER TO THE FILE OF THE AO FOR FURTHER ADJUDICATION IN VIEW OF THE ABOVE SAID OBSERVATI ON. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.3 : - 5 . ISSUE NO. 3 IS IN CONNE CTION WITH THE ADDITION OF ENHANCEMENT OF THE ASSESSMENT BY THE CIT(A) TO THE TUNE OF RS. 14,96,950/ - .I N BRIEF SAID ADDITION WAS NOT MADE BY THE ASSESSING OFFICER. IN APPEAL BEFORE THE CIT(A), THE CIT(A) RAISED THE ADDITION TO THE TUNE OF RS. 14,96,950/ - . THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT LIES IN THEIR BANK ACCOUNT HAS ALREADY BEEN ASSESSED THEREFORE THE SAID AMOUNT I S NOT LIABLE TO BE ASSESSED AT THE END OF ASSESSEE IN ACCORDANCE WITH LAW. MOREOVER, WE OBSERVED THAT THE PEAK AMOUNT HAS ALREADY TAKEN INTO CONSIDERATION AND FURTHER RAISING THE ADDITION DOES NOT SEEMS JUSTIFIABLE. ON APPRAISAL OF THE BALANCE - SHEET OF THE ASSESSEE , IT WAS OBSERVED THAT THE ASSESSEE HAS DECLARED SHRI JAYESH K SEJAL JAYESH VORA 8 VORA AS HER UNSECURED LOAN CREDITOR OF RS. 13,42,831.51 PAISE. H OWEVER, THE ASSESSEE PRODUCED THE CONFIRMATION FROM THIS UNSECURING LOAN CREDITOR. IN FIRST CONFIRMATION OF THE LOAN CRED ITOR HAS BEEN DECLARED AS M/S. SE JAL B VORA CORPORATION PROPRIETARY CONCERN AND IN THIS CONFIRMATION THERE IS ONLY ON SECURE OF TRANSACTION OF RS.30,00,000 AND NO CLOSING BALANCE WAS DECLARED . T HE SECOND CONFIRMATION IS IN THE NAME OF SHRI JAYESH K VORA . T HE LOAN CREDITOR HAS A DEBIT BALANCE OF RS.1 ,54,118/ - PAISE. THUS INSTEAD OF DECLARING SHRI JAYESH K VORA AS SUNDRY DEBTOR FOR RS.1,54,118.49/ - PAISE, THE ASSESSEE HAS DECLARED HIM AS A UNSECURED LOAN CREDITOR FOR RS.13,42,83.51/ - PAISE . THIS DIFFERENCE TO THE TUNE OF RS. 14,96,950/ - WAS ASSESSED AS UNEXPLAINED UNDOUBTEDLY, THIS ADDITION WAS NOT MADE BY THE AO . WE ARE OF THE VIEW THAT THE SAID LOAN TRANSACTIONS ARE REQUIRED TO BE EXAMINED AT THE END OF THE AO BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE AS SESSEE . W HILE RAISING THE ADDITION BY THE CIT(A) NO OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE, THER EFORE WE ARE OF THE VIEW THAT AN OPPORTUNITY BEING HEARD IS REQUIRED TO BE GIVEN TO THE ASSESSEE BEFORE THE ADDITION U/S 68 OF THE ACT TO THE TUNE OF RS. 14,96,650/ - IN ACCORDANCE WITH LAW. THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO VERIFY THE SAID TRANSACTION IN ACCORDANCE WITH LAW A FTER GIVING AN OPPORTUNITY BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THIS ISS UE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. SEJAL JAYESH VORA 9 6 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE ORDER PRONOUNCED IN THE OPEN COURT ON 29.08. 2017 SD/ - SD/ - ( R.C. SHARMA) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 29.08 . 201 7 V.P. SINGH / 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. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI DATE INITIALS 1. DRAFT DICTATED ON: ( 07.07.2017 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 07.07.2017 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: