The ITO, Ward-1, Bharuch V. Shri Manoj Indravadan Chokshi, Bharuch

ITA 674/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67724 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Income from undisclosed sources; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI G.C.GUPTA , VICE PRESIDENT AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 674/AHD/2013 ASSESSMENT YEAR :2009-10 INCOME-TAX OFFICER, WARD-1, BHARUCH V/S . MANOJ INDRAVADAN CHOKSI 35, BG TRADE CENTRE PANCHBATTI, BHARUCH PAN NO. A BRPC2141E (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI P. L. KUREEL, SR. D.R. /BY RESPONDENT NONE /DATE OF HEARING 16.09.2013 /DATE OF PRONOUNCEMENT 27.09.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-VI, BARODA, DATED 31.12.20 12 FOR ASSESSMENT YEAR 2009-10. THE SOLE GROUND OF APPEAL IS AGAINST REST RICTING THE ADDITION TO RS.7,95,160/- FROM RS.39,70,500/- ON THE BASIS OF P EAK CREDIT. 2. THE A.O. OBSERVED THAT AS PER AIR INFORMATION AV AILABLE WITH HIM THE ASSESSEE DEPOSITED CASH OF RS.10,00,000/- IN THE AX IS BANK ACCOUNT NO. 55014. THE ASSESSEE WAS, THEREFORE, ASKED TO FURNI SH COPIES OF BANK STATEMENTS ALONGWITH EXPLANATION ON EACH OF THE CRE DIT ENTRIES. THE ASSESSEE FURNISHED COPIES OF VARIOUS BANK ACCOUNT ALONGWITH CASH BOOK FOR THE RELEVANT PERIOD IN SUPPORT OF CASH DEPOSITED IN THE BANK STA TEMENT BEFORE THE A.O. ITA NO. 674/AHD/2013 A.Y. 09-10 PAGE 2 THE BANK ACCOUNTS WERE JOINTLY HELD WITH HIS WIFE, MRS. SHILPA CHOKSI. THE ASSESSEES EXPLANATION FOR SOURCES OF CASH DEPOSIT WAS THAT THE CASH WAS WITHDRAWN FROM THE BANK AND THE SAME WAS RE-DEPOSIT ED IN DUE COURSE. THE ASSESSEE ALSO HAD TAKEN LOAN FROM M/S. POONAMCHAND DEVCHAND SHROFF , JUST TO ADD CASH BALANCE IN THE ALLEGED CASH BOOK. THE ASSESSEE WAS IN THE BUSINESS OF LAND BROKING. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD OF THIS ISSUE FOR EXPLAINING THE SOURCE OF CA SH DEPOSITED IN THIS BANK ACCOUNT. ON VERIFICATION OF CASH BOOK PRESENTED BE FORE HIM, IT WAS OBSERVED BY THE A.O. THAT CASH WITHDRAWAL FROM THE BANK WAS SHOWN TO HAD BEEN DEPOSITED IN THE BANK ACCOUNT ON DIFFERENT DATES DU RING THE ENTIRE YEAR. THE A.O. OBSERVED THAT THERE IS NO PURPOSE OF CASH WITH DRAWING AND RE-DEPOSITING IN THE BANK. IT WAS HELD BY THE A.O. THAT CASH WIT HDRAWN FROM THE BANK WAS USED FOR OTHER PURPOSES AND CASH BALANCES SHOWN IN THE CASH BOOKS IS ARTIFICIAL. THE A.O. ALSO HELD AFTER VERIFICATION OF BANK STATEMENT VARIOUS PERSONS HAD BEEN UTILIZED FOR WITHDRAWALS OF THIS CASH, WHICH ARE OTHER THAN THE ASSESSEE HAS EMPLOYEES. HE FURTHER RELIED IN C ASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) & SREELEKHA BANERJEE (1 963) 49 ITR 112 (SC), HELD AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF TH E ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHARGED TO INCOM E-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACT ORY. IN SUCH A CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSE E, VIZ., THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT IT THE SAID EVID ENCE BEING ITA NO. 674/AHD/2013 A.Y. 09-10 PAGE 3 UNREBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. THE A.O. MADE ADDITION OF RS.39,70,500/- AS UNEXPLA INED CASH DEPOSITED IN THE BANK ACCOUNT. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A). THE CIT(A) HAS RESTRICTE D THE AMOUNT OF RS.39,70,500 TO RS.7,95,160/- BY OBSERVING AS UNDE R: 4. I HAVE CONSIDERED THE FACTS OF THE CASE, FINDIN GS OF THE AO AND WRITTEN SUBMISSION MADE BY THE APPELLANT. THE UNDISPUTED FACTS ARE THAT THE APPELLANT HAS WI THDRAWN AND DEPOSITED CASH. IT IS ALSO A FACT THAT THE APPELLA NT HAS WITHDRAWN CASH INSPITE OF SUFFICIENT CASH BALANCE AVAILABLE W ITH HIM. AS FAR AS CASH BOOK IS CONCERNED THERE IS NO NEGATIVE CASH BA LANCE OBSERVED. THE APPELLANT IS ALSO FURNISHED EXPLANATION WITH RE GARD TO THE REQUIREMENT OF CASH IN HIS LINE OF BUSINESS. THE AO'S CASE RESTS ON THE ISSUE THAT THOUGH SUFFIC IENT CASH BALANCE WAS AVAILABLE WITH THE APPELLANT BUT HE KEP T ON WITHDRAWING MONEY FROM THE BANK ACCOUNTS AND DURING THE COURSE OF PROCEEDINGS HE DID NOT EXPLAIN SATISFACTORILY THE R EQUIREMENT OF SUCH WITHDRAWALS. THEREFORE, CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES, THE A O CONCLUDED THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT GENU INE. TO THAT, ASSESSEE'S CONTENTION IS THAT THERE IS NO REQUIREME NT UNDER THE LAW WITH REGARD TO THE LIMIT OF CASH CARRIED FROM DAY T O DAY AND ALSO THERE IS NO REQUIREMENT WITH REGARD TO THE REASONS FOR CA RRYING SUCH CASH BALANCES. ACCORDING TO HIM ONCE THE SOURCE OF DEPOS IT IS EXPLAINED SUBSEQUENT WITHDRAWAL IS NOT REQUIRED TO BE EXPLAIN ED. THERE CAN BE ITA NO. 674/AHD/2013 A.Y. 09-10 PAGE 4 AN ADDITION ON ACCOUNT OF SOURCE THERE COULD NOT BE ADDITION OF WITHDRAWALS FROM EXPLAINED SOURCES. NO DOUBT THERE IS NO LIMIT OF CASH BALANCE PRESCRIB ED IN THE ACT OR RULES AND SECONDLY THE AO CANNOT DICTATE TO THE APPELLANT AS TO HOW TO CONDUCT BUSINESS. HOWEVER, THE QUESTION I S NOT WITH REGARD TO THE RIGHTS OF THE APPELLANT BUT IT IS CONCERNING THE FAIRNESS AND TRUTHFULNESS OF THE ACCOUNTS MAINTAINED AS WELL AS HOW FAIRLY THE BUSINESS IS BEING CONDUCTED. THE AO IS NOT OFF THE MARK WHEN HE ENQUIRES ABOUT THE INTENTION OF WITHDRAWING MONEY W HEN SUFFICIENT CASH IS AVAILABLE. AND IF THE PLAUSIBLE AND SATISFA CTORY EXPLANATION IS NOT FORTHCOMING THEN THE FINANCIAL TRANSACTION APPE AR SUSPICIOUS. THE ONLY EXPLANATION AVAILABLE FOR WITHDRAWING CASH IN SPITE OF CASH BALANCE IS AVAILABLE IS THAT I) THE CASH HAS BEEN INVESTED IN UNACCOU NTED ACTIVITIES, INCOME WHICH IS NOT OFFERED. OR II) THERE IS REALLY NO CASH BALANCE AVAILABLE WITH THE ASSESSEE AS SHOWN IN THE CASH BOOK. THESE ARGUMENTS HAVE NOT BEEN DEMOLISHED BY THE APP ELLANT THEREFORE, QUESTION STILL REMAINS UNANSWERED. NO R EPLY TO THE ABOVE QUERRIES WILL LEAD TO ONLY ONE CONCLUSION AND THAT IS THE AFFAIRS OF THE APPELLANT ARE OPAQUE AND SUSPICIOUS. ON THE OTHER H AND, AO'S ACTION OF MAKING ADDITION ON ACCOUNTS OF ALL DEPOSI TS MADE IN THE BANK ACCOUNTS OF THE APPELLANT IS WITHOUT ANY JUSTI FICATION AND BORDERING TO THE POINT OF HIGH PITCH ASSESSMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WEL L AS BEFORE THE UNDERSIGNED THE APPELLANT HAS PRODUCED CASH BOOK SHOWING DAILY CASH BALANCES. FROM THIS STATEMENT IT IS OBSERVED THAT APPELLANT WAS HAVING MAXIMUM CASH BALANCE OF RS.7,9 5,165/- ON ITA NO. 674/AHD/2013 A.Y. 09-10 PAGE 5 26/08/2008. CONSIDERING THAT WHATEVER INCOME THE APPELLANT EARNED IS BEING PLOUGHED BACK INTO HIS BUSINESS AND HE COULD HAVE AT THE MOST EARNED INCOME TO THE EXTENT OF THE MAXI MUM CASH BALANCE AS PER HIS CASH BOOK, ACCORDINGLY MAXIMUM A DDITION IS RESTRICTED TO THE PEAK OF CASH BALANCE DURING THE Y EAR. UNDER THE CIRCUMSTANCES, ADDITION OF RS.7,95,160/- ON ACCOUNT OF UNACCOUNTED INCOME IS BEING CONFIRMED AND THE ASSES SEE GETS RELIEF RS. 31,75, 604/-. THIS GROUND OF APPEAL IS PARTLY A LLOWED. 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEHE MENTLY ARGUED THAT THE APPELLANT USED WHATEVER CASH WITHDRAWAL FROM THE BA NK FOR OTHER PURPOSES, HE HAD NOT ESTABLISHED DIRECT LINKAGE BETWEEN CASH WIT HDRAWN AND CASH DEPOSIT. THEREFORE, A.O. WAS RIGHT TO MAKE THE ADDITION OF R S.39,70,500/-. NO ONE APPEARS FROM THE ASSESSEE SIDE. THEREFORE, WE DECI DE THIS CASE ON THE BASIS OF FACTS AVAILABLE IN THE FILE. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE HAD PRODUCED CASH BOOK AND COPY OF THE BAN K ACCOUNT. THE APPELLANT SUBMITTED BEFORE THE A.O. THAT CASH WITHD RAWAL FROM THE BANK WAS RE-DEPOSITED IN THE BANK ACCOUNT. THE A.O. DID NOT FIND ANY DISCREPANCY BETWEEN CASH WITHDRAWAL FROM THE BANK AND CASH AVAI LABLE IN THE CASH BOOK ON A PARTICULAR DATE. THE APPELLANT HAD NOT CLAIME D ANY EXPENDITURE ON ACCOUNT OF INTEREST PAYMENT. THE APPELLANT HAD FIL ED THE CONFIRMATION OF THE PERSONS FROM WHOM LOANS WERE GIVEN. THE APPELLANT NEITHER PAID INTEREST NOR EARNED ANY INCOME ON ACCOUNT OF INTEREST ON ADVANCE . THIS ASPECT HAS NOT BEEN DOUBTED BY THE A.O. THERE IS NO LIMIT IN CASH WITHDRAWING AND RE- DEPOSITING IN THE BANK ACCOUNT. THE ASSESSEE HAS O FFERED A PLAUSIBLE AND ITA NO. 674/AHD/2013 A.Y. 09-10 PAGE 6 SATISFACTORY EXPLANATION BEFORE THE A.O. FOR EACH F INANCIAL TRANSACTION. HE HAD NOT BROUGHT ON RECORD ANY EVIDENCE WHICH PROVES THA T CASH WITHDRAWAL HAD BEEN INVESTED SOMEWHERE ELSE AND CASH BALANCE IN TH E CASH BOOK IS ARTIFICIAL. THUS, WE CONFIRM THE ORDER OF THE CIT(A). 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 27.09.2013 SD/- SD/- (G.C.GUPTA) (T.R. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;