ITO 10(1)(1), MUMBAI V. SHAILESH C CHOKSI, MUMBAI

ITA 6275/MUM/2011

• Counselvise Citation: 627519914 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D H SHAH
• Keywords: Unexplained investment; Earning of tax free income
• Section: 143(3); 69

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI .. , !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM !./ I.T.A. NO. 6275 /MUM/2011 ( )( , $-, )( , $-, )( , $-, )( , $-, / / / / ASSESSMENT YEAR : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX 10(1), 455, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI 400 020. ( ( ( ( / VS. MR. SHAILESH C. CHOKSI, 6/A, SHANTI NAGAR INDL. AREA, VAKOLA PIPE LINE, VAKOLA, SANTACRUZ (E), MUMBAI 400 055. #. !./ PAN : AABCS 7890 Q ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) APPELLANT BY SHRI SHISHIR SRIVASTAVA RESPONDENT BY : SHRI D.H. SHAH ! ($ 2 / // / DATE OF HEARING : 22-08-2013 34- 2 / DATE OF PRONOUNCEMENT : 11-10-2013 [ '5 / O R D E R PER P.M. JAGTAP, A.M . : .. , !'# THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) 21, MUMBAI DATED 7-6-2011 ON THE FOLLOWING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY T HE AO ON ACCOUNT OF INTEREST INCOME ON FD OF RS. 11,51,683/- IGNORING T HE FACT THAT THERE WAS BANK ACCOUNT IN HDFC BANK IN THE NAME OF THE AS SESSEE WHICH WAS CONFIRMED BY THE BANK. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED DIVIDEND INCOME IGNORING THE FACT THAT THERE WAS BANK ACCOUNT IN THE NAME OF THE ASSESSEE. ITA 6275/M/11 2 (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF BANK DEPOSIT U/S. 69 OF THE ACT AS UNEXP LAINED INVESTMENT OF RS. 90 LAKHS IGNORING THE FACT THAT THERE WAS A BANK ACCOUNT IN THE NAME OF THE ASSESSEE. (IV) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) O N THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28-7-200 8 DECLARING TOTAL INCOME OF RS. 13,64,175/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE A.O. THAT THERE WAS A BANK ACCOUNT MAI NTAINED IN THE INDIVIDUAL NAME OF THE ASSESSEE IN THE HDFC BANK BEARING A/C N O. 00791050011074. IT WAS ALSO FOUND BY HIM THAT INVESTMENT IN BANK DE POSITS OF RS. 90 LACS WAS MADE BY THE ASSESSEE FROM THE SAID ACCOUNT AND INTE REST OF RS. 9,59,016/- WAS RECEIVED ON THE SAID DEPOSIT. HE FURTHER FOUND THAT DIVIDEND INCOME OF RS. 12,88,440/- WAS CREDITED IN THE SAID ACCOUNT. I T WAS ALSO NOTICED BY THE A.O. THAT INTEREST OF RS. 1,92,667/- WAS CREDITED I N THE SAID BANK ACCOUNT. SINCE THE SAID INVESTMENT MADE IN THE BANK DEPOSIT AS WELL AS DIVIDEND AND INTEREST INCOME CREDITED IN THE SAID ACCOUNT WAS NO T OFFERED TO TAX BY THE ASSESSEE, THE A.O. REQUIRED THE ASSESSEE TO OFFER H IS EXPLANATION IN THE MATTER. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE RELEVANT BANK ACCOUNT MAINTAINED IN HIS INDIVIDUAL NAME WITH H DFC BANK WAS ACTUALLY BELONGING TO HIS HUF I.E. SHAILESH C. CHOKSI HUF AN D THE INVESTMENT MADE IN THE BANK DEPOSITS OUT OF THE S.B.I. ACCOUNT AS WELL AS INTEREST AND DIVIDEND INCOME CREDITED THEREIN BELONGING TO THE SAID HUF W AS DULY REFLECTED IN THE RETURN OF INCOME OF THE SAID HUF. ON ENQUIRY MADE DIRECTLY FROM THE BANK, THE A.O., HOWEVER, FOUND THAT THE RELEVANT BANK ACC OUNT WAS MAINTAINED IN THE INDIVIDUAL NAME OF THE ASSESSEE AND THERE WAS N O INDICATION THAT THE SAID ACCOUNT WAS BELONGING TO HUF. HE ALSO FOUND THAT E VEN THE RELEVANT TDS CERTIFICATE ISSUED BY THE BANK IN RESPECT OF INTERE ST RECEIVED ON FD WAS IN THE INDIVIDUAL NAME OF THE ASSESSEE. HE THEREFORE TREA TED THE INVESTMENT OF RS. ITA 6275/M/11 3 90 LACS FD MADE IN THE BANK AS UNEXPLAINED INVESTME NT OF THE ASSESSEE AND ADDED THE SAID AMOUNT TO THE TOTAL INCOME OF THE AS SESSEE. SIMILARLY, THE INTEREST INCOME OF RS. 11,51,683/- AND DIVIDEND INC OME OF RS. 12,88,440/- WAS TREATED BY THE A.O. AS UNDISCLOSED INCOME OF TH E ASSESSEE AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN TH E ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 VIDE AN ORDE R DATED 28-12-2010. 3. AGAINST THE ORDER PASSED BY THE A.O., AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) DISPUTING THE ADDITI ON MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE BANK FDS A S WELL AS ON ACCOUNT OF INTEREST AND DIVIDEND INCOME. BEFORE THE LD. CIT(A) , IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE HUF WAS IN EXISTENC E SINCE 1980 HAVING ITS OWN SOURCE OF INCOME FROM INTEREST AND CAPITAL GAIN S. IT WAS SUBMITTED THAT THE SAID HUF WAS ALSO HAVING SAVING BANK ACCOUNT NO . 00791050011074 OPENED IN THE NAME OF THE ASSESSEE IN THE CAPACITY OF KARTA WITH HDFC BANK AND THE INVESTMENT OF RS. 90 LACS IN THE FDS W AS MADE FROM HUF OWN FUNDS LYING IN THE SAID BANK ACCOUNT. IT WAS SUBMI TTED THAT THE ASSESSEE WAS MAINTAINING A SEPARATE BANK ACCOUNT NO. 00791050010 746 IN HIS INDIVIDUAL CAPACITY WITH THE SAME BRANCH OF THE HDFC BANK AND THE SAID BANK ACCOUNT WAS SHOWN REGULARLY IN THE BALANCE SHEET OF THE ASS ESSEE. IT WAS SUBMITTED THAT SINCE THE BANK ACCOUNT OF HUF SEPARATELY MAINT AINED WITH HDFC BANK WAS IN THE NAME OF THE ASSESSEE AS KARTA OF THE S AID HUF, TDS CERTIFICATES FOR INTEREST WERE ALSO ISSUED BY THE SAID BANK IN T HE INDIVIDUAL NAME OF THE ASSESSEE. IT WAS CONTENDED THAT THE SAID BANK ACCO UNT AS WELL AS INVESTMENT MADE OUT OF THE SAID ACCOUNT AS WELL AS INTEREST IN COME AND DIVIDEND INCOME CREDITED THEREIN, HOWEVER, WAS BELONGING TO THE HUF AND THE SAID INVESTMENT AS WELL AS THE INCOME WAS DULY DECLARED/DISCLOSED B Y THE HUF IN HIS RETURN OF INCOME. THE COPIES OF RELEVANT BALANCE SHEET AND IN COME TAX RETURN OF THE HUF WERE ALSO FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) IN SUPPORT OF THIS STAND OF THE ASSESSEE. AFTER CONSIDERING THE SUBMIS SION MADE BY THE ASSESSEE ITA 6275/M/11 4 AND THE DOCUMENTARY EVIDENCE FILED IN SUPPORT, THE LD. CIT(A) ACCEPTED THE STAND OF THE ASSESSEE THAT THE BANK A/C NO. 0079105 0011074 MAINTAINED IN THE INDIVIDUAL NAME OF THE ASSESSEE WITH HDFC BANK WAS ACTUALLY BELONGING TO THE HUF AND THE INTEREST INCOME AND DIVIDEND INC OME CREDITED THEREIN WAS ALSO BELONGING TO THAT HUF WHICH WAS DULY OFFERED T O TAX IN THE HANDS OF THE HUF. HE ALSO ACCEPTED THE STAND OF THE ASSESSEE TH AT THE INVESTMENT OF RS. 90 LACS MADE IN THE BANK FD OUT OF THE SAID BANK AC COUNT WAS MADE OUT HUF OWN FUNDS AND THE INTEREST THEREON THUS WAS THE INC OME OF THE HUF WHICH WAS DULY OFFERED TO TAX IN ITS HANDS. THE RELEVANT OBSERVATIONS/FINDINGS RECORDED BY THE LD CIT(A) IN THIS REGARD IN HIS IMP UGNED ORDER ARE REPRODUCED HEREUNDER:- 2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE. THE A.O. NOTICED THAT THERE WAS BANK ACCOUNT NO.00791050011074 IN TH E HDFC BANK LTD. THE BANK INFORMED TO THE A.O. THAT THIS ACCOUN T WAS IN THE NAME OF INDIVIDUAL SHRI SHAILESH C. CHOKSHI, THE APPELL ANT AND THAT NO ANY OTHER ACCOUNT WAS MAINTAINED IN THEIR BANK IN THE N AME OF HUF. DURING ASSESSMENT PROCEEDINGS, THE APPELLANT EXPLAI NED TO THE A.O. THAT THIS AMOUNT NO.0079 1050011074 THOUGH WAS IN T HE NAME OF APPELLANT, BUT WAS BELONGING TO HUF AND SAID BANK A CCOUNT WAS MAINTAINED IN HIS NAME AS KARTA OF HUF. THE A.O. DID NOT AGREE WITH APPELLANTS CONTENTION THAT THIS BANK ACCOUNT WAS B ELONGING TO APPELLANT AS CONFIRMED BY BANK. THE A.O. ALSO NOTIC ED THAT THERE WERE CERTAIN FIXED DEPOSITS IN THIS BANK NO.007910500110 74 ON WHICH BANK PAID INTEREST AND THE TDS CERTIFICATE WAS ISSUED BY THE BANK IN THE NAME OF APPELLANT. SOLELY BASED ON THE PRESUMPTION THAT THIS BANK ACCOUNT WAS BELONGING TO THE APPELLANT, THE A.O. MA DE FOLLOWING ADDITIONS/ DISALLOWANCES: (I) INTEREST OF RS.11,51683/- ON F.D APPEARING THIS BANK ACCOUNT NO. 00791050011074 (GROUND NO.1) (II) UNDISCLOSED INCOME BEING DIVIDEND OF RS. 1288, 440/- FOUND CREDITED IN THIS BANK ACCOUNT NO.007010500110 74 (GROUND NO.2) (III) UNEXPLAINED INVESTMENT AT RS. 90 LAKHS U/S.69 BEING THE FIXED DEPOSIT OF RS. 90 LAKHS MADE FROM THIS HANK A CCOUNT NO. OO791050011074 (GROUND NO.3). ITA 6275/M/11 5 THE MAIN QUESTION FOR CONSIDERATION IS AS TO WHETHE R THE BANK ACCOUNT NO.007910500L 1074 IN THE HDFC BANK WAS BELONGING T O THE APPELLANT OR TO HIS HUF. DURING APPELLATE PROCEEDINGS, THE AP PELLANT FOILED STATEMENT OF TOTAL INCOME (ENCLOSED WITH RETURN OF INCOME) AND BALANCE SHEET FROM AY 2005-06 TO 2008-09 IN RESPECT OF SHRI SHAILESH C. CHOKSI, HUF. IN THE SAID BALANCE SHEETS, THE HDFC S B ACCOUNT NO.00791050011074 AND CENTRAL BANK OF INDIA, SB ACC OUNT NO. 8124 WERE SHOWN AS CURRENT ASSETS OF THE HUF. - IN THE COMPUTATION OF INCOME OF A.Y. 2008-O9 OF HUF , THE INTEREST INCOME OF RS.11,51,683/- (TDS OF RS. 1,07,401/-) WA S OFFERED TO TAX. IN THE SAID COMPUTATION, THE DIVIDEND INCOME OF RS. L2 ,88,440/- WAS ALSO SHOWN AS EXEMPT INCOME OF HUF. THE APPELLANT ALSO FILED STATEMENT OF TOTAL INCOME AND BALANCE SHEET OF HIS INDIVIDUAL CAPACITY FROM A.Y.2005-06 TO 2008-09 IN WHICH APPELLANTS BANK NO. WITH FIDFC BANK LTD. WAS SHOWN AS 00791050010746 AND ACCOUNTS WITH OTHER BANK. THE APPELLANT HAD ALSO FILED COPIES OF ASSESSMENT O RDER FROM A.Y.2005- 06 TO 2007-08 IN RESPECT OF HIS INDIVIDUAL CAPACITY /STATUS AND ALSO THAT OF HUF FOR A.Y.2005-06 AND 2006-07. IN THE SAID ASS ESSMENT ORDERS, NO ADDITIONS/DISALLOWANCE WAS MADE BY A.O. ON THE BASI S OF HDFC BANK ACCOUNT NO.00791050011074. THUS THE APPELLANT HAD PROVED THAT THE HDFC BANK AC COUNT NO.00791050011074 WAS BELONGING TO THE HUF. THE DEP ARTMENT ALSO ACCEPTED THIS FACT IN ASSESSMENT ORDERS OF EARLIER YEARS BY NOT MAKING ADDITION/DISALLOWANCE ON THE BASIS OF THIS BANK ACC OUNT. THE APPELLANT HAD ALSO PROVED THAT THE INTEREST INCOME (ON ACCOUN T OF FD MADE OUT FROM THIS BANK ACCOUNT) AND DIVIDEND INCOME HAD BEE N OFFERED TO TAX ION THE RETURNS OF HUF. THE APPELLANT HAS ALSO ARGU ED THAT THIS FACT WAS ALSO DULY EXPLAINED TO THE A.O. THAT THIS HDFC BANK ACCOUNT NO. 00791050011074 WAS BELONGING TO THE HUF. THE A,O. HAD. ALSO RELIED ON THE HDFC BANK REPLY TH AT THIS ACCOUNT NO.00791050011074 WAS IN THE NAME OF APPELLANT AND NOT IN THE NAME OF HUF. THE APPELLANT HAS SATISFACTORILY EXPLAINED THIS ISSUE BY EXPLAINING THAT THE BANK ACCOUNT WAS OPENED IN HIS NAME AS KARTA OF HUF AND NOT IN HIS INDIVIDUAL CAPACITY. APPELLANTS ARGUMENT HAS FORCE SINCE THE SAID BANK ACCOUNT WAS DULY BEING REFLECTE D IN THE RETURN OF INCOME OF HUF. THE HUF WAS IN EXISTENCE SINCE 1980 HAVING ITS SEPARATE SOURCE OF INCOME. THE HDFC BANK ISSUED TDS CERTIFICATE DTD. 13.04.200 8 IN THE NAME OF APPELLANT SHOWING PAYMENT/CREDIT OF DIFFERENT AMOUN T ON ACCOUNT OF INTEREST ON FIXED DEPOSIT. SINCE THE ACCOUNT NO. 00 791050011074 (BELONGING TO HUF) AND ACCOUNT NO.00791050010746 (B ELONGING TO ITA 6275/M/11 6 APPELLANT) BOTH WERE IN HDFC BANK AND IN THE NAME O F APPELLANT, THEREFORE, THE HDFC BANK ISSUED A SINGLE/CONSOLIDAT ED TDS CERTIFICATE. HOWEVER, THE INTEREST INCOME SHOWN IN TDS CERTIFICA TE WAS OFFERED TO TAX IN INDIVIDUAL, AS WELL AS HUF HANDS AS APPLICAB LE. THE LD. CIT(A) THUS DELETED THE ADDITION MADE BY TH E A.O. ON ACCOUNT OF INVESTMENT IN BANK DEPOSIT MADE OUT OF THE BANK ACC OUNT NO. 00791050011074 AS WELL AS INTEREST AND DIVIDEND INC OME CREDITED THEREIN HOLDING THAT THE SAME WAS ACTUALLY BELONGING TO THE HUF AND NOT THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) , THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. D.R. HAS MAI NLY RELIED ON THE ORDER OF THE A.O. IN SUPPORT OF THE REVENUES CASE AND SUBMI TTED THAT THE ENQUIRY MADE BY THE A.O. FROM THE CONCERNED BANK AS WELL AS THE RELEVANT TDS CERTIFICATE ISSUED FOR THE BANK INTEREST CLEARLY RE VEALED THAT THE RELEVANT BANK ACCOUNT MAINTAINED WITH HDFC BANK WAS BELONGING TO THE ASSESSEE IN HIS INDIVIDUALS CAPACITY AND, THEREFORE, THE INVESTMENT MADE IN FDS FROM THE SAID ACCOUNT AS WELL AS INTEREST AND DIVIDEND INCOME CRE DITED THEREIN WAS BELONGING TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS FILED THE RELEVANT BALANCE SHEETS AS WELL AS COMPUTATION OF TOTAL INCOME OF THE ASSESSEE AS WELL AS THE HUF FOR THE Y EAR UNDER CONSIDERATION AS WELL AS FOR THE IMMEDIATELY PRECEDING THREE YEARS A T PAGE 1 TO 27 OF HIS PAPER BOOK AND A PERUSAL OF THE SAME SHOWS THAT THE RELEV ANT BANK ACCOUNT NO. 00791050011074 WITH HDFC BANK WAS BELONGING TO THE HUF AS REFLECTED IN THE BALANCE SHEET OF THE SAID HUF. THIS DOCUMENTAR Y EVIDENCE ALSO CLEARLY SHOWS THAT THE AMOUNTS CREDITED IN THE SAID BANK AC COUNT WERE BELONGING TO THE HUF AND THE INVESTMENT IN BANK DEPOSITS OF RS. 90 LACS WAS MADE OUT OF THE FUNDS OF THE HUF. SIMILARLY, THE INTEREST ON SU CH FDS AS WELL AS THE DIVIDEND INCOME CREDITED IN THE RELEVANT BANK ACCOU NT WAS BELONGING TO THE HUF AND THE SAME WAS DULY OFFERED TO TAX IN THE RET URN OF INCOME FILED BY THE ITA 6275/M/11 7 HUF. AS RIGHTLY HELD BY THE LD. CIT(A) ON THE BASIS OF THIS DOCUMENTARY EVIDENCE, THE RELEVANT BANK ACCOUNT THUS WAS MAINTA INED IN THE INDIVIDUAL NAME AS KARTA OF THE SAID HUF AND THE ACTION OF T HE A.O. IN TREATING THE SAID BANK ACCOUNT AS WELL AS INVESTMENT MADE FROM T HE SAID BANK ACCOUNT AS WELL AS INCOME CREDITED THEREIN AS THE INCOME OF TH E ASSESSEE MERELY GOING BY THE TITLE OF THE ACCOUNT WAS TOTALLY UNFOUNDED WHEN IT WAS SATISFACTORILY ESTABLISHED BY THE ASSESSEE THAT THE SAME WAS BELON GING TO HUF AND WAS DULY DISCLOSED/DECLARED IN THE RETURNS OF INCOME AN D BALANCE SHEETS OF THE HUF NOT ONLY FOR THE YEAR UNDER CONSIDERATION BUT E VEN IN THE EARLIER YEARS. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED OR DER OF THE LD. CIT(A) DELETING THE ADDITION MADE BY THE A.O. ON THIS ISSU E AND UPHOLDING THE SAME, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2013. . '5 2 34- 6'(7 11-10-2013 4 2 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 6'( DATED 11-10-2013 $.)(.!./ RK , SR. PS ITA 6275/M/11 8 '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. ; () / THE CIT(A)21, MUMBAI. 4. ; / CIT MC -X, MUMBAI 5. 9$> 0))( , , / DR, ITAT, MUMBAI E BENCH 6. %, ? / GUARD FILE. '5(! '5(! '5(! '5(! / BY ORDER, !19 0) //TRUE COPY// @ @ @ @/ // /!A !A !A !A ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI