ACIT - 22(1), MUMBAI V. DILAWAR SINGH ARORA, MUMBAI

ITA 6471/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9106 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 04-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA SR AR
• Assessee Lawyers: PRASAR BAPAT
• Keywords: Unexplained cash credit; Rule 8D; Set aside
• Section: 143(3); 14A; 80IA; 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRIMAHAVIR SINGH, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6471/MUM/2016 ASSESSMENT YEAR: 2012-13 ACIT 22(1) ROOM NO.322, 3 RD FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI-400012 VS. DILAWARSINGH ARORA 16, GOLF LINK, ARORA HOUSE UNION PARK, KHAR (W) MUMBAI-400 052 PAN AADPA6270F (APPELLANT) RESPONDENT) & ITA NO.6517/MUM/2016 ASSESSMENT YEAR: 2012-13 DILAWARSINGH ARORA 16, GOLF LINK, ARORA HOUSE UNION PARK, KHAR (W) MUMBAI-400 052 PAN AADPA6270F VS. ACIT 22(1) ROOM NO.322, 3 RD FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI-400012 (APPELLANT) RESPONDENT) APPELLANTS BY : CHAITANYA ANJARIA, SR. AR, CIT RESPONDENT BY : PRASAR BAPAT DATE OF HEARING : 14.11.2018 DATE OF PRONOUNCEMENT : 1 3 .12.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR [AY] 20 12-13 CHALLENGING THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-34 [CI T(A)], MUMBAI, APPEAL NO.CIT(A)-34/ACIT 22(1)/IT-574/14-15 DATED 02/08/2016.THE ASSESSMENT FOR ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 2 IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONE R OF INCOME TAX OFFICER- 22(1),MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 25/03/2015. THE GROUNDS OF THE ASSESSEE ARE AS UNDER: - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE AO OF ADDITION MADE U/S 68 OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT), OF RS.8,12,000, ON THE GROUND THAT HUGE CASH SURPLUS W AS KEPT IDLE WAS UNEXPLAINED, WITHOUT APPRECIATING THE CONTENTIONS O F THE APPELLANT. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F AO OF DISALLOWING DONATION MADE U/S 35AC OF THE ACT, OF RS.31,000 WIT HOUT APPRECIATING THE CONTENTIONS OF THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE AO OF DISALLOWANCE MADE U/S 14A OF ACT OF RS.54,401 WITHO UT APPRECIATING THE CONTENTIONS OF THE APPELLANT. 4. WITHOUT PREJUDICE TO OUR CONTENTION AS PER GROUND N O.3 SUBMITTED ALONG WITH FORM NO. 36 THAT NO DISALLOWANCE UNDER SECTION 14A IS CALLED FOR OF RS.54,401/- AS AN ALTERNATE GROUND, BASED ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DEDUCTION UNDER SECTION 80-IA BE INCREASED BY RS.50,933 BEING THE CORRESPONDING INCREASE IN PROFI TS DERIVED BY UNIT NO.1 AND UNIT NO.2 2. THE ISSUE RAISED IN THE FIRST GROUND OF APPEAL I S AGAINST THE CONFIRMATION OF ADDITION OF RS.8,12,000/- BY LD. CIT(A) AS MADE BY THE AO U/S 68 OF THE INCOME-TAX ACT, 1961 IN RESPECT OF CASH SURPLUS WHICH REMAINED UNEXPLAINED WHEREAS IN THE REVENUES APPEAL, THE ORDER OF CIT(A) HAS BEEN CHAL LENGED ON THE GROUND OF WRONGFUL DELETION OF RS. 2,09,62,113/- BY CIT(A) HAS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT . THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED F ROM THE AIR THAT ASSESSEE HAS DEPOSITED A SUM OF RS.8,12,000/- ON 27/03/2012 IN HIS HDFC BANK ACCOUNT AND ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 3 ACCORDINGLY ASKED TO FILE THE DETAILS EXPLAINING T HE SOURCE THEREOF WHICH WAS REPLIED BY THE ASSESSEE ON 14/08/2014 SUBMITTING THAT SAID DEPOSIT WAS MADE IN THE HDFC BANK ACCOUNT OUT OF CASH IN HAND. THE AO, REJECTIN G THE CONTENTIONS OF THE ASSESSEE, ADDED THE SAME TO THE INCOME OF THE ASSE SSEE U/S 68 OF THE ACT. SIMILARLY, THE AO OBSERVED THAT THERE IS DIFFERENC E BETWEEN THE REPLIES AND SUBMISSIONS OF THE ASSESSEE DATED 14/08/2014 AND 24 ./11/2014. AS PER THE WRITTEN SUBMISSIONS OF THE ASSESSEE THE OPENING AND CLOSIN G BALANCE FOR FINANCIAL YEAR 2011-12 WERE RS. 9,28,36,697.18/- AND RS. 9,77,79,1 76.22/- WHEREAS OPENING AND CLOSING BALANCES OF THE PERSONAL CAPITAL ACCOUNT AS PER SUBMISSIONS DATED 24/11/2014 WERE RS.11,37,95,810/- AND RS.11,87,41 ,289/- RESPECTIVELY. THUS ACCORDINGLY, THE AO OBSERVED THAT THERE IS A DIFFER ENCE OF RS.2,09,62,113/- IN THE CAPITAL BALANCE AS SUBMITTED THAT IN TWO REPLIES OF THE ASSESSEE DATED 14/08/2014 AND 24/11/2014. IN ABSENCE OF ANY PLAUSIBLE EXPLAN ATION OF THE ASSESSEE , THE AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 6 8 OF THE ACT AS UNEXPLAINED CASH CREDIT. 3. IN THE APPELLATE PROCEEDINGS LD.CIT(A) PARTLY AL LOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION OF RS.2,09,62,11 3/- AND CONFIRMING THE ADDITION OF RS.8,12,000/- BY HOLDING IN OBSERVING AS UNDER: - 6.3 ON CAREFUL VERIFICATION OF THE BALANCE SHEET A S WELL AS CASH BOOK IN THE PERSONAL CAPACITY AS WELL AS IN THE NAME OF M/S DEE DEE ENTERPRISES, IT IS CLEAR THAT THE CONTENTION OF THE APPELLANT IS CORR ECT TO THE EXTENT DEPOSIT OF CASH OF RS.8,12,000/- IN HIS PERSONAL CASH BOOK IS CONCERNED. HOWEVER, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. AR THAT THIS CASH BALANCE REPRESENTS HIS PAST SAVINGS WHICH IS BROUGHT IN THE BOOKS ON 2 7/03/2012. THE ARGUMENT THAT THE APPELLANT WAS SUFFERING FROM HEALTH PROBLE MS, HENCE REQUIRED BALANCE IN HIS BANK ACCOUNT, AT ALL TIMES, TO MEET ANY HEALTH EMERGENCIES IS NOT SUPPORTED BY ANY EVIDENCES. IT IS FURTHER ARGUE D THAT HE HAD DEPOSITED ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 4 THE SURPLUS CASH (OUT OF PAST WITHDRAWALS) LYING WI TH HIM INTO HIS PERSONAL BANK ACCOUNT ON MARCH 27, 2012. HOWEVER, TWO THINGS COULD NOT BE EXPLAINED DURING THE APPELLATE PROCEEDINGS. FIRSTLY , WHY SUCH A HUGE AMOUNT OF SURPLUS CASH WAS KEPT IDLE CLAIMED TO BE GENERAT ED OUT OF PAST SAVINGS. IT WAS ALSO NOT CLARIFIED WHETHER THE APPELLANTS HEAL TH PROBLEMS REQUIRED CASH OR BANK BALANCE. WHETHER THE MEDICAL EMERGENCY EXIS TED AT THE TIME OF DEPOSIT OF HUGE CASH CLAIMED TO BE LYING WITH HIM B UT NOT REQUIRED. IF BANK BALANCE WAS REQUIRED IN SUCH EMERGENCY SITUATION, A S TO WHY IT WAS KEPT IN IDLE CASH. 6.4 LOOKING TO THE OVERALL FACTS AND CIRCUMSTANCE S OF THE ISSUE, I AM OF THE OPINION THAT THE APPELLANT HAS FAILED TO EXPLAIN TH E SOURCE OF SURPLUS CASH OF RS.8,12,000/-. THUS, THE ADDITION OF RS.8,12,000/- MADE U/S. 68 DESERVES TO BE CONFIRMED. 6.5 APART FROM THAT, THE ASSESSING OFFICER HAS ALSO MADE ADDITION OF RS.2,09,62,113/- U/S. 68 OF THE I.T.ACT TREATING IT AS UNEXPLAINED CASH CREDIT. THE ADDITION IS MADE SINCE AS PER THE COPY OF PERSO NAL CAPITAL ACCOUNT OF THE APPELLANT FOR F.Y. 2011-12 FILED ON 14/08/2014, THE OPENING BALANCE WAS RS.9.28 CRORES AND THE CLOSING BALANCE WAS RS.9.77 CRORES. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT AS PER THE SUBMISSIO NS OF THE APPELLANT DATED 24/11/2014, THE OPENING AND CLOSING CASH BALANCES I N THE PERSONAL CAPITAL ACCOUNT WERE SHOWN AT RS.11.37 CRORES AND RS.11.87 CRORES RESPECTIVELY. ON SEEING TWO BALANCE SHEETS, THE A.O. TREATED THE DIF FERENCE OF RS.2.09 CRORES AS UNEXPLAINED CASH CREDIT. THE AO, WHILE MAKING TH E ADDITION HAS ALSO REMARKED IN THE ASSESSMENT ORDER THAT NO SUITABLE E XPLANATION WAS RECEIVED FROM THE ASSESSEE. 6.6 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AR SUBMITTED THAT THESE FIGURES ARE NOT RELATED WITH CASH CREDIT AT A LL. AS EXPLAINED, THE DIFFERENCE HAS ARISEN SINCE THE BALANCE SHEET OF M/ S DEE DEE ENTERPRISES, THE PROPRIETARY CONCERN OF THE APPELLANT, WAS COMPARED WITH THE CONSOLIDATED BALANCE SHEET OF THE APPELLANT HAVING PERSONAL CAPI TAL ACCOUNT OF THE APPELLANT AS WELL AS THAT OF HIS PROPRIETARY CONCER N M/S. DEE DEE ENTERPRISES. IT IS OBSERVED THAT AS ON 31/03/2012, THE PERSONAL CAPITAL OF THE APPELLANT WAS RS.9.77 CRORE, AS SUBMITTED TO THE AO ON 14/08/ 2014 THE CONSOLIDATED BALANCE SHEET OF THE APPELLANT WAS SUBMITTED (ANNEX URE-2 OF THE ASSESSMENT ORDER) WHERE CAPITAL OF M/S. DEE DEE ENTERPRISES WA S ALSO INCORPORATED MAKING THE FIGURE OF RS.11.87 CRORES. A COMPARISON OF THE TWO RESULTED INTO THE SAID ADDITION. IT WAS INCUMBENT ON THE AO TO SE EK PROPER EXPLANATION FROM THE APPELLANT BEFORE RESORTING TO THE IMPUGNED ADDITION WHEN TWO BALANCE SHEETS OF THE SAME PERIOD WERE RECEIVED FRO M THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. THE DIFFERENCE HAS ARIS EN AS A RESULT OF IGNORING BALANCING FIGURES OF CAPITAL BALANCES OF THE APPELL ANT AS ON 01/04/2012. 6.7 FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT THE IMPUGNED ADDITION WAS MADE DUE TO COMPARISON OF TWO DIFFERENT BALANCE SHE ETS OF THE APPELLANT FOR THE SAME PERIOD ONE RELATED TO HIS PROPRIETARY CONC ERN AND THE OTHER, THE ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 5 CONSOLIDATED BALANCE SHEET. IT IS CLEAR THAT BEFORE MAKING THE ADDITIONS, THE ASSESSING OFFICER DIDNT MAKE FURTHER VERIFICATION OF THE BOOKS OF ACCOUNTS OR ASKED FOR NECESSARY EXPLANATION FROM THE APPELLANT. CONSIDERING THE ABOVE, IN MY CONSIDERED OPINION, THERE IS NO OCCASION FOR THE IMPUGNED ADDITION OF RS.2,09,62,113/-. THE ASSESSING OFFICER IS ACCORDIN GLY DIRECTED TO DELETE THE ADDITION OF RS.2,09,62,113/- MADE U/S 68 OF THE I.T .ACT. THEREFORE, THE GROUND OF APPEAL NO.2 IS PARTLY ALLOWED. 4. AFTER HEARING THE RIVAL PARTIES AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT LD. CIT(A) HAS DELETED THE ADDITIONS IN RESPEC T OF RS.2,09,62,113/- BY RECORDING A FINDING THAT THE SAID DIFFERENCE HAS ARISEN DUE T O MIS-APPRECIATION OF FACTS BY THE AO AS THE AO HAS WRONGLY COMPARED THE BALANCE SHEET OF PROPRIETARY CONCERN OF THE ASSESSEE M/S.DEE DEE ENTERPRISES WITH THE CO NSOLIDATED BALANCE SHEET OF THE ASSESSEE HAVING PERSONAL ACCOUNT OF THE APPELLANT A S WELL AS THE PROPRIETARY CONCERN AND ALSO NOTED THAT THE SAID DIFFERENCE H AS ARISEN AS A RESULT OF IGNORING THE OPENING BALANCES OF THE CAPITAL ACCOUNT OF THE APPELLANT AS ON 01/04/2012 AND THUS DELETED THE ADDITIONS WHICH IS OUR OPINION IS CORRECT AND DOES NOT CALL FOR ANY INTERFERENCE FROM OUR SIDE. ACCORDINGLY, THE APPEAL OF THE REVENUE ON THIS GROUND CHALLENGING THE DELETION OF RS.2,09,62,113/- IS DIS MISSED. ON THE OTHER HAND , THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO.1 OF THI S APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.8,12,000/-. WE FIND THAT THE SAID AMOUNT WAS DEPOSITED BY THE ASSESSEE OUT OF THE ACCUMULATION O F CASH AS PER THE CASH BOOK PLACED BEFORE US WHICH WAS ALSO FILED BEFORE THE LO WER AUTHORITIES AND THUS IN OUR OPINION THE SOURCE STANDS EXPLAINED. DURING THE COU RSE OF HEARING THE LD. AR EXPLAINED THE SAID TRANSACTIONS BY REFERRING TO THE CASH BOOK OF THE ASSESSEE FOR THE F.Y. 2011-12 IN WHICH THERE APPEAR AN ENTRY ON 27/ 03/2012 AS REGARDS DEPOSIT OUT ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 6 OF CASH BALANCE INTO THE HDFC BANK ACCOUNT. WE HA VE ALSO OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE FOR A.Y. 2011-12 THAT THE ASSESSEE IS A PERSON OF MEANS AND HAVING SUFFICIENT FUND AVAILABLE. MOREOV ER, THE PERUSAL OF CASH BOOK OF THE ASSESSEE REVEALS THAT THE ASSESSEE HAS SUFFICIE NT CASH BALANCE TO DEPOSIT THE SUM OF RS.8,12,000/- IN TO THE HDFC BANK ACCOUNT. W E ARE THEREFORE NOT IN AGREEMENT WITH THE CONCLUSION OF THE CIT(A) ON THI S ISSUE AND ACCORDINGLY SET ASIDE OF THE SAID ORDER OF LD. CIT(A) ON THIS ISSUE. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. IN THE RESULT THE GROUND NO.1 OF THE ASSES SEE IS ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. 5. THE SECOND ISSUE RAISED BY THE ASSESSEE IS AGAIN ST THE CONFIRMATION OF THE DISALLOWANCE OF RS.31,000/- U/S 35AC OF THE ACT. TH E FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF OPERATING WI NDMILLS AND IS DERIVING INCOME THERE FROM. THE AO DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS NOTED FROM IN THE COMPUTATION OF INCOME THAT ASSESSEE HAS CLAIMED DEDUCTION U/S 80-IA OF THE ACT QUA THE PROFITS FROM SALE OF ELECTRICITY FROM WINDMILLS THEREBY RESULTING INTO DOUBLE DEDUCTION OF RS. 31,000/- . ACCORDINGLY RS.3 1,000/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSE. THE LD. CIT(A) ALSO UPHELD THE ADDITION IN THE APPELLATE PROCEEDING. AFTER HEARING BOTH THE PART IES AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT BOTH THE AUTHORITI ES BELOW DEALT WITH THE ISSUE IN A VERY CRYPTIC MANNER WITHOUT GIVING A DETAILED FINDI NGS. IN OUR OPINION, THE ISSUE NEEDS TO BE RESTORED TO THE AO SO THAT IT COULD B E EXAMINED IN DETAILS AND FOR PASSING SPEAKING ORDER AFTER AFFORDING THE ASSESSE E OF THE ASSESSEE A REASONABLE ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 7 OPPORTUNITY. ACCORDINGLY, WE SET ASIDE THE ISSUE TO FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME AS PER FACTS AND LAW. 6. THE OTHER GROUND OF THE ASSESSEE IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.54,401/-AS MADE BY THE AO U/S14A OF THE ACT. THE FACTS IN BRIEF ARE THAT THE ASSESSEE- HAS EARNED RS.1,16,926/- BY WAY OF DIVID END AND RS.2,38,504/- ON A/C OF INTEREST ON PF BUT DID NOT MAKE ANY DISALLOWANCE OF EXPENSES ATTRIBUTABLE THERETO. THE AO WORKED OUT THE DISALLOWANCE BY APPLYING RULE 8D THEREBY CALCULATING THE DISALLOWANCE AT RS.54,404/- BEING @ 0.50% OF AVERAG E INVESTMENTS WHICH WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY IN THE A PPELLATE PROCEEDING. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT EVEN IF THE EXPENSES ARE THE DISALLOWED U/S 14A RULE 8D TO THE EXTENT OF RS.54,4 01/- , THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IA OF THE INCOME-TAX ACT, IN RESPEC T OF THE ENHANCED PROFIT RESULTING FROM THE DISALLOWANCE U/S 14A OF THE ACT BY THE AO. AFTER EXAMINING THE FACTS BEFORE US AND AFTER PERUSING THE ORDERS OF AU THORITIES BELOW, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S 80IA OF THE INCOME TAX ACT IN RESPECT OF FOR THE ENHANCED PROFIT RESULTING FRO M THE DISALLOWANCE U/S 14A OF THE ACT. THE AO IS DIRECTED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES WHEREAS APPEAL OF THE REVENUE IS DISMISSED . ITA NOS.6471& 6517/MUM/2016 DILWARSINGH ARORA 8 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 13 TH DECEMBER, 2018. SD/- SD/- (MAHAVIR SINGH) (RAJE SH KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED : 13 TH DECEMBER, 2018 * TIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI