Namita Ankit Parikh, Hyderabad, Hyderabad V. ACIT, Circle-12(1), Hyderabad, Hyderabad

ITA 698/HYD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8750 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-11-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Unexplained investment; Gift; Corroborative evidences
• Section: 148

Judgement Text

ITA NOS 697 AND 698 OF 2017 DARSHAN AND NAMITHA ANKIT PARIKH HYDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.697/HYD/2017 ASSESSMENT YEAR: 2007-08 SHRI DARSHAN PARIKH, HYDERABAD PAN:AIOPP5429N VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 12(1) HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.698/HYD/2017 ASSESSMENT YEAR: 2007-08 SMT. NAMITA ANKIT PARIKH, HYDERABAD PAN:ACJPN2826Q VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 12(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD REVENUE BY : SRI ANIL SANT, DR DATE OF HEARING: 04/11/2019 DATE OF PRONOUNCEMENT: 17/01/2020 ORDER BOTH ARE THE APPEALS OF THE RESPECTIVE ASSESSEES FO R THE A.Y 2007-08 AGAINST THE SEPARATE ORDERS OF THE CIT (A)-I, HYDERABAD, DATED, 26.12.2016. 2. BRIEF FACTS OF THE CASE ARE THAT BOTH THE ASSESS EES ARE CLOSELY RELATED AND FILED THEIR RESPECTIVE RETURNS OF INCOME FOR THE A.Y 2007-08. BASED ON THE INFORMATION THAT BOTH THE ASSESSEES HAVE MADE INVESTMENT IN M/S. PARIKH FABRICS (P) LTD AND AS THE SAME WAS NOT REFLECTED IN THEIR ORIGINAL RETURNS OF INCOME, THE CASES WERE REOPENED BY ISSUANCE OF A NOTICE U/S 148 TO VERIFY THE SOURCES OF THE INVESTMENTS. THE AO NOTICED THAT M/S . PARIKH ITA NOS 697 AND 698 OF 2017 DARSHAN AND NAMITHA ANKIT PARIKH HYDERABAD. PAGE 2 OF 5 FABRICS (P) LTD WAS LAUNCHED AS A CLOSELY HELD COMP ANY BY THE MEMBERS OF PARIKH FAMILY, IN WHICH BOTH THE ASSESSE ES WERE ALSO SHAREHOLDERS AND EMPLOYEES. THE ASSESSEE, SRI DARSH AN PARIKH SUBMITTED THE STATEMENT OF AFFAIRS AS ON 31.03.2007 ALONG WITH A NOTE ON THE SOURCES OF INVESTMENTS MADE IN M/S. PAR IKH FABRICS (P) LTD AND COPY OF THE BANK A/C STATEMENTS IN PROO F OF THE SAME. THE ASSESSEE ALSO FURNISHED LEDGER EXTRACT OF M/S. PARIKH FABRICS (P) LTD AND ALSO SUBMITTED PROOF FOR THE CLAIM OF 8 0C DEDUCTION. THE ASSESSEE WAS ALSO ASKED TO SUBMIT THE STATEMENT OF AFFAIRS AND NOTE ON GIFTS RECEIVED BY THE ASSESSEE DURING T HE YEAR. THE ASSESSEE SUBMITTED THE SAME. THEREAFTER, THE ASSESS EE WAS DIRECTED TO EXPLAIN THE SOURCE OF INVESTMENTS WITH SUPPORTING EVIDENCE SUCH AS THE AMOUNT OF RS.4.00 LAKHS RECEIV ED FROM M/S. PARIKH FABRICS (P) LTD; LOANS AND ADVANCES OF RS.2, 25,602/-, AN AMOUNT OF RS.3,25,000/- FROM CASH AND BANK BALANCES . 3. IN THE CASE OF SMT. NAMITA ANKIT PARIKH, SHE EXP LAINED THE SOURCES OF INVESTMENT AS RS.4.00 LAKHS DIRECTLY TRANSFERRED FROM M/S. PARIKH FABRICS (P) LTD; AND LOANS AND ADV ANCES RECEIVED BACK OF RS.4.00 LAKHS; AND RS.1,50,000/- F ROM CASH AND BANK BALANCES. THE RESPECTIVE ASSESSEES FILED THEIR REPLIES TO THE SHOW CAUSE NOTICES OF THE AO. THE AO, HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION AND HELD THAT THE SUM OF RS.4.00 LAKHS AS WAS ALLEGEDLY TRANSFERRED FROM M/S. PARIKH FABRI CS (P) LTD BY WAY OF JOURNAL ENTRY, IS NOTHING BUT AN ACCOMMODATI ON ENTRY. AS REGARDS THE LOANS AND ADVANCES RECEIVED BY THE ASSE SSEES, THE AO HAS HELD THAT THE ASSESSEE HAS NOT PRODUCED ANY DET AILS OF RELEVANT BANK STATEMENTS IN SUPPORT OF THEIR CONTEN TIONS. HE HELD THAT THE ASSESSEES BEING EMPLOYEES WITH MEAGRE INCO ME COULD NOT HAVE ADVANCED SUCH HUGE AMOUNTS OF LOANS. THUS, HE DID NOT ITA NOS 697 AND 698 OF 2017 DARSHAN AND NAMITHA ANKIT PARIKH HYDERABAD. PAGE 3 OF 5 ACCEPT THE CREDITWORTHINESS OF THE ASSESSEES TO MAK E SUCH INVESTMENTS. AS REGARDS THE CASH AND BANK BALANCES ALSO, HE HELD THAT THE ASSESSEES DID NOT HAVE CREDITWORTHINESS TO HAVE BANK AND CASH BALANCES TO THAT EXTENT. HE, THEREFORE, BR OUGHT THE UNEXPLAINED INVESTMENTS MADE BY THE RESPECTIVE ASSE SSEES IN M/S. PARIKH FABRICS (P) LTD TO TAX. AGGRIEVED, THE RESPECTIVE ASSESSEES PREFERRED APPEALS BEFORE THE CIT (A), WHO CONFIRMED THE ORDERS OF THE AO AND THE ASSESSEES ARE IN FURTHER A PPEALS BEFORE THE TRIBUNAL. THE ASSESSEE SHRI DARSHAN PARIKH HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT (A) IS NOT JUSTIFIED IN REJECTI NG THE APPELLANTS CONTENTION THAT THE INITIATION OF PROCE EDINGS U/S 147, IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS NOT VALID. 2. THE LEARNED CIT (A) IS NOT JUSTIFIED IN THE FAC TS AND CIRCUMSTANCES OF THE CASE, IN CONFIRMING THE ADDITI ON OF RS.9,50,000 AS UNEXPLAINED INVESTMENTS. 3. THE APPELLANT RESERVES HER RIGHT TO ADD, ALTER O R DELETE ANY OF THE GROUNDS DURING THE COURSE OF HEARING . 5. THE ASSESSEE, SMT. NAMITA ANKIT PARIKH ALSO RAIS ED SAME GROUNDS EXCEPT FOR THE CHANGE IN THE QUANTUM. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY THE RESPECTIVE ASSESSEES BEFORE THE AUTHORITIES BELOW, WHILE THE LEARNED DR SUPPORTED T HE ORDERS OF THE AUTHORITIES BELOW. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAD REFERRE D TO THE PAPER BOOK FILED BY THE ASSESSEE IN THE CASE OF EACH OF THE ASSESSEES AND PARTICULARLY TO THE GENERAL LEDGER OF M/S. PARIKH FABRICS (P) LTD. IN THE CASE OF SHRI DARSHAN PARIKH , HE SUBMITTED THAT EXCEPT FOR A SUM OF RS.1,25,000/- DEPOSITED ON 5.10.2006, ITA NOS 697 AND 698 OF 2017 DARSHAN AND NAMITHA ANKIT PARIKH HYDERABAD. PAGE 4 OF 5 THERE IS NO SUM WHICH HAS BEEN INTRODUCED BY THE AS SESSEE AS FRESH CAPITAL. SIMILAR SUBMISSIONS WERE MADE IN THE CASE OF SMT. NAMITA ANIKT PARIKH AS WELL. I FIND THAT THE GENERA L LEDGER FOR THE PERIOD 1.4.2006 TO 31.3.2007 DEMONSTRATES THE INVES TMENTS MADE BY THE ASSESSEE INTO THE CAPITAL A/C OF M/S. PARIKH FABRICS (P) LTD AND IT IS SEEN THEREFROM THAT THE ASSESSEE HAS RECE IVED SALARY FROM M/S. PARIKH FABRICS (P) LTD WHICH HAS BEEN CRE DITED TO THE ASSESSEES A/C AND FROM SUCH AMOUNT, THE ASSESSEE H AS TRANSFERRED THE FUND TO THE FIRM AS HER CAPITAL. TH E AO HAS DOUBTED THE SERVICES RENDERED BY THE ASSESSEES TO T HE FIRM. HOWEVER, I AM OF THE OPINION THAT THE AO COULD HAVE VERIFIED WITH THE COMPANY AS TO THE NATURE OF THE SERVICES RENDER ED BY THE RESPECTIVE ASSESSEES. SINCE THERE IS NO EVIDENCE OF ANY DISALLOWANCE OF SALARY PAID TO THE EMPLOYEES IN THE HANDS OF THE COMPANY M/S. PARIKH FABRICS (P) LTD, I AM INCLINED TO ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE WITH REGARD TO THE SOURCES OF THE INVESTMENT. FURTHER, FROM THE BANK A/C COPY OF THE ASSESSEE WITH BANK OF INDIA, I FIND THAT THE SUM OF RS.4.00 LAKHS WAS PAID TO THE ASSESSEE BY THE COMPANY WHICH WAS RETURNED B Y THE ASSESSEE AND THEREFORE, IT IS NOT THE CASE OF ANY I NVESTMENT OF CAPITAL. EVEN WITH REGARD TO THE SUM OF RS.1,25,000 /- I FIND THAT THE ASSESSEE HAD THE BALANCE OF RS.2,25,602/- FROM WHICH HE HAS MADE THE PAYMENT TO THE M/S. PARIKH FABRICS (P) LTD . SIMILARLY, IN THE CASE OF SMT. NAMITA ANKIT PARIKH ALSO, THERE AR E CREDITS TO THE CAPITAL A/C FROM THE PAYMENT OF SALARY MADE TO THE ASSESSEE BY M/S. PARIKH FABRICS (P) LTD. WHEN THE SALARY PAYMEN T TO THE EMPLOYEES IS NOT DOUBTED IN THE HANDS OF THE EMPLOY ER COMPANY, THE SAME CANNOT BE DOUBTED IN THE HANDS OF THE EMPL OYEES. IN VIEW OF THE SAME, I AM INCLINED TO DELETE THE ADDIT IONS MADE BY THE AO AND CONFIRMED BY THE CIT (A). ITA NOS 697 AND 698 OF 2017 DARSHAN AND NAMITHA ANKIT PARIKH HYDERABAD. PAGE 5 OF 5 8. AS REGARDS THE ASSESSEES GROUNDS ON THE INITIAT ION OF PROCEEDINGS U/S 147, SINCE THE APPEALS ARE BEING AL LOWED ON MERITS, I AM NOT INCLINED TO ADJUDICATE THIS GROUND AS IT WOULD ONLY BE AN ACADEMIC EXERCISE AT THIS STAGE. ACCORDI NGLY, GROUND NO.1 IS REJECTED AND GROUND NO.2 IS ALLOWED. IN VIE W OF THE SAME, THE ASSESSEES APPEALS ARE TREATED AS PARTLY ALLOWED . 9. IN THE RESULT, APPEALS ARE TREATED AS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON17TH JANUARY, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 17 TH JANUARY, 2020. VINODAN/SPS COPY TO: 1 SHRI DARSHAN PARIKH & SMT.NAMITA ANKIT PARIKH C/O CH. PARTHASARATHY & CO. 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD 500020 2 ACIT, CENTRAL CIRCLE 12(1) AAYAKAR BHAVAN, BASHEE RBAGH, HYDERABAD 3 CIT (A)-I HYDERABAD 4 PR. CIT I HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER