SHILPESH P. SINGHI, MUMBAI V. ITO 20 (3)(3), MUMBAI

ITA 6586/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6034 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M JAIN SHRI V VINODKUMAR
• Keywords: Unexplained cash credit; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI C.N. PRASAD , JM & SHRI M.BALAGANESH, AM ITA NO. 6586 /MUM/201 9 ( ASSESSMENT YEAR : 2008 - 09) SHRI SHILPESH P. SINGHI 1402, ARIHANT TOWER T.B. KADAM MARG BYCULLA MAHARASHTRA 400 02 7 VS. INCOME TAX OFFICER 20(3)(3) MUMBAI INCOME TAX DEPARTMENT 6 TH FLOOR, PIRAMAL CHAMBERS LALBAUG, MUMBAI PAN/GIR NO. AXCPS7697C (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI P.M. JAIN REVENUE BY SHRI V. VINODKUMAR DATE OF HEARING 05 / 02 /2020 DATE OF PRONOUNCEMENT 14 / 02 /2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 6586/MUM/2019 FOR A.Y. 2008 - 09 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 32, MUMBAI IN APPEAL NO. CIT(A) - 32/IT - 14 9/20(3)(3)/2016 - 17 DATED 28/08/2018 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 17/03/2016 BY THE LD. INCOME TAX OFFICER 20(3)(3), MUMBAI (HEREINAFT ER REFERRED TO AS LD. AO). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US. ITA NO .6586/MUM/2019 SH I P LESH P SINGHI 2 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN PASSING THE VAGUE ORDER: - A) ALLOWING THE ASSESSEE'S APPEAL AND B) CON FIRMING THE ADDITION BY THE ITO. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT (A) ERRED IN REVIEWING THE ORDER IN CORRIGENDUM, WHICH HE HAS NO POWER UNDER THE LAW.. 3 . ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.13,93,000/ - . 4 . THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 5 . YOUR APPELLANT PRAYS THAT ADDITION MADE BY THE LEARNED ITO AND CONFIRMED BY THE LEARNED C I T (A) MAY PLEASE BE DELETED. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS AN INDIVIDUAL AND HAD FILED HIS RETURN OF INCOME FOR THE A.Y.2008 - 09 ON 31/03/2009 DECLAR ING TOTAL INCOME OF RS .93,197/ - THE LD. AO FOUND THAT ASSESSEE HAD DEPOSITED CASH IN INDIAN OVERSEAS BANK IN THE SUM OF RS.13,93,000/ - DURING THE FY 2007 - 08 RELEVANT TO A.Y.2008 - 09. SINCE THE SAID TRANSACTION WAS OBTAINED THROUGH AIR INFORMATION BY THE LD. AO AND SINCE THE SAID TRANSACTION COULD NOT BE VERIFIED FROM THE RETURN OF INCOME FILED, THE LD. AO RESORTED TO ISSUE NOTICE U/S.148 OF THE ACT WHICH WAS DULY SERVED ON THE ASSESSEE WITHIN TIME. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT WERE A LSO DULY FURNISHED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE VIDE LETTER DATED 24/08/2015 RESPONDED THAT THE RETURN OF INCOME ALREADY FILED ON 31/03/2009 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DEPOSITS MADE IN INDIAN OVERSEAS BANK TOTALLING TO RS.13,93,000/ - . THE ASSESSEE VIDE LETTER DATED 16/02/2016 SUBMITTED THAT HE HAD RECEIVED INCOME FROM SALARY AND INTEREST AND THERE WAS MEAG RE LOSS OF RS.1,936/ - PURSUANT TO CARRYING ON CLOTH BUSINESS ON WHOLESALE BASIS DURING THE F.Y.2007 - 08 RELEVANT TO A.Y.2008 - 09, AND THAT THE SAID LOSS WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. IN THE SAID LETTER , IT WAS ITA NO .6586/MUM/2019 SH I P LESH P SINGHI 3 ALSO EXPLAINED THAT THE CASH DEPOSITS MADE IN BANK ACCOUNT REPRESENT SALE PROCEEDS RECEIVED IN CASH FROM THE CLOTH BUSINESS. THE ASSESSEE HAD ALSO EXPLAINED THAT AFTER THE DEPOSIT OF CASH IN THE SAID BANK ACCOUNT, CHEQUES WERE ISSUED FOR PURCHASE OF CLOTHES FROM THE VERY SAME BANK ACCOUNT. WE FIND THAT THE LD. AO HAD NOT DISPUTED THE SAID OUTFLOW OF FUNDS BY WAY OF CHEQUE PAYMENTS MADE TOWARDS PURCHASES. THE ASSESSEE HAD GIVEN THE DETAILS OF PURCHASE OF GOODS MADE IN THE SUM OF RS.11,39,870/ - FROM THE VARIOUS PARTIES AS UNDER: - 1 . ADVANCE FINE STICK RS. 665000/ - 2 . B B TEXTILES RS. 50400/ - 3 . RAJASTHAN FABRICS RS. 176470/ - 4 . VIDHI MEHTA RS. 10,8000/ - 5 . D AMITKUMAR RS. 140000/ - ================ RS.1139870/ - ================ 3.1. THE ASSESSEE STATED THAT PAYMENTS W ERE MADE BY ACCOUNT PAYEE CHEQUES TO THE AFORESAID SUPPLIERS OF GOODS. THE GOODS WERE SOLD TO MANY HAWKERS ON CASH BASIS. IT WAS ALSO SUBMITTED THAT THE YEAR UNDER CONSIDERATION WAS THE FIRST YEAR TO CARRY ON BUSINESS BY THE ASSESSEE AFTER HIS OFFICE HOURS . WE FIND THAT THE LD. AO DISREGARDED THE AFORESAID CONTENTIONS OF THE ASSESSEE AND MADE ADDITION OF RS.13,93,000/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. 3.2. WE FIND IN THE INSTANT CASE , THE LD. CIT(A) HAD PASSED TWO ORDERS, ON E ORDER IN FAVOUR O F THE ASSESSEE VIDE ORDER DATED 28/08/2018 AND ANOTHER CORRIGENDUM ORDER DATED 27/09/2019 IN FAVOUR OF THE REVENUE. WE FIND THAT ASSESSEE HAD SUBMITTED HIS PERSONAL BALANCE SHEET WHICH ITA NO .6586/MUM/2019 SH I P LESH P SINGHI 4 INCLUDES THE TRANSACTIONS OF HIS BUSINESS AS WELL AS THE PERSONAL TRANS ACTIONS IN THE FORM OF SALARY INCOME AND INTEREST INCOME. FROM THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31/03/2009, WE FIND THAT THE ASSESSEE HAD MADE SALES OF RS.14,25,000/ - AND HAD MADE PURCHASES OF RS.11,39,870/ - AND HAD ALSO MADE B ANK LOAN RE PAYM ENT OF RS.1,71,495/ - AND INTEREST PAYMENT TO BANK OF RS.91,309 AMONG OTHER EXPENSES. THESE TRANSACTIONS GO TO PROVE THAT ASSESSEE WAS INDEED CARRYING ON BUSINESS (WHICH IS STATED TO BE CLOTH BUSINESS) DURING THE YEAR UNDER CONSIDERATION AND HENCE, THE CON TENTION OF THE REVENUE THAT NO BUSINESS AT ALL WAS CARRIED ON BY THE ASSESSEE DESERVES TO BE DISMISSED. FROM THE BALANCE SHEET OF THE ASSESSEE ALSO WE FIND THAT ASSESSEE HAD MADE PAYMENTS OF RS.6 LAKHS TO SANGHVI TEXTILE INDUSTRIES AND RS.2 LAKHS TO RAJAST HAN SAREE CENTRE AS DEPOSIT. THIS GOES TO PROVE THAT ASSESSEE WAS INDEED CARRYING ON TEXTILE BUSINESS DURING THE YEAR UNDER CONSIDERATION. HENCE, THE FACT OF CARRYING ON CLOTH BUSINESS BY THE ASSESSEE DURING TH E YEAR COULD NOT BE DIS PUTED . MERELY BECAUSE THE ASSESSEE HAD NOT CLAIMED THE LOSS OF RS.1,936/ - UNDER THE HEAD BUSINESS IN HIS RETURN OF INCOME, THE BASIC FACT OF CARRYING ON OF BUSINESS PER SE CANNOT BE DIS PUTED . WE FIND THAT THE ASSESSEE HAD DULY EXPLAINED THE CASH DEPOSIT S OF RS.13,93,000/ - IN BANK ACCOUNT TO HAVE BEEN MADE OUT OF SALE PROCEEDS TOTALLING TO RS. 14 ,25,000/ - AND AFTER MEETING CERTAIN EXPENSES IN CASH, ASSESSEE IS FINALLY LEFT WITH CASH BALANCE OF RS.19,500/ - AS ON 31/03/2008 WHICH IS EVIDENT FROM THE BALANCE SHEET AND PROFIT AND LO SS ACCOUNT ENCLOSED IN PAPER BOOK BEFORE US. W ITHOUT GOING INTO THE ASPECT OF LD. CIT(A) P ASSING TWO ORDERS IN THE INSTAN T CASE, THAT IS ONE IN FAVOUR OF THE ASSESSEE AND ONE AGAINST THE ASSESSEE , WE HOLD THAT ASSESSEE DESERVES TO BE GIVE N RELIEF IN THE I NSTANT CASE ON MERITS AND ACCORDINGLY , DIRECT THE LD. AO TO DELETE THE ADDITION MADE IN THE SUM OF RS.13,93,000/ - U/S.68 OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO .6586/MUM/2019 SH I P LESH P SINGHI 5 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 1 4 / 02 /2020 SD/ - ( C.N. PRASAD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 14 / 02 / 2020 KARUNA , SR.PS COP Y OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//