Sri. VIKAS UPPALKAR, MUMBAI V. ITO Wd. -25(2)(4), MUMBAI

ITA 7101/MUM/2006

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88592 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-02-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 28-12-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: REEPAL G TRAISHAWALA
• Keywords: Unexplained cash credit; Business income; Business expenditure; Reasonable cause; Reassessment proceedings
• Section: 143(3); 142(1); 27; 68

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH , ! , BEFORE S/SH. I P BANSAL,JUDICIAL ME MBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.7101/MUM/2006, ' ' ' ' # # # # / ASSESSMENT YEAR-1998-99 VIKASH UPPALKAR, FLAT NO. 302, 3RD FLOOR, GORAI PRASANNA CHS LTD., GORAI ROAD,BORIVALI(W),MUMBAI-91 PAN:AAAPU6597S VS ITO WARD 25(2)(4), MUMBAI. /. ITA NO.1735/MUM/2009, ' ' ' ' # # # # / ASSESSMENT YEAR-1998-99 VIKASH UPPALKAR, FLAT NO. 302, 3RD FLOOR, GORAI PRASANNA CHS LTD., GORAI ROAD,BORIVALI(W),MUMBAI-91 VS ITO WARD 25(2)(4), MUMBAI. /. ITA NO.6336/MUM/2007, ' ' ' ' # # # # / ASSESSMENT YEAR-2001-02 VIKASH UPPALKAR, FLAT NO. 302, 3RD FLOOR, GORAI PRASANNA CHS LTD., GORAI ROAD,BORIVALI(W),MUMBAI-91 VS ITO WARD 25(2)(4), MUMBAI. /. ITA NO.6337/MUM/2007, ' ' ' ' # # # # / ASSESSMENT YEAR-2002-03 VIKASH UPPALKAR, FLAT NO. 302, 3RD FLOOR, GORAI PRASANNA CHS LTD., GORAI ROAD,BORIVALI(W),MUMBAI-91 VS ITO WARD 25(2)(4), MUMBAI. ( $% / ASSESSEE) ( &'$% / RESPONDENT) '() '() '() '() * * * * /ASSESSEE BY :SHRI REEPAL G. TRAISHAWALA + * / REVENUE BY :SHRI PAWAN KUMAR BEERLA ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING :19 - 03 -2015 -.# + ), / DATE OF PRONOUNCEMENT : 19 -03-2015 ' ' ' ' , 1961 + ++ + 254 )1 ( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDERS OF THE CIT(A)-XXVI, MUMBAI, THE ASSESSEE HAS FILED VARIOUS GROUNDS OF APPEAL FOR THE ABOVE MENTIONED ASSESSMENT YEARS (AY S.). ITA NO. 7101/M/2006-AY.1998-99 : 1. IN LAW & IN THE FACTS AND IN THE CIRCUMSTANCES O F THE APPELLANT'S CASE, THE HON'BLE CIT(A) HAD ERRED IN CONFIRMING ADDITION OF RS. 24,39,446/- US 68 OF INCOME TAX ACT, 1961 ON THE GROUND THAT THE APPELLANT HAD FAILED TO EXPLAIN THE CREDITS IN HIS BANK STATEMENTS, EVEN WHEN THE APPELLANT HAD ALREADY SUBMITTED MONTH WISE BANK SUMMARY DURING TH E ASSESSMENT/APPELLANT PROCEEDINGS EXPLAINING CATEGORICALLY ALL THE CREDITS AND DEBITS IN HIS BANK STATEMENTS, WHICH MUST HAVE BEEN GIVEN CREDENCE TO BY THE LD. C.I.T. (A). 2 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR 2. IN LAW AND AS PER THE FACTS AND IN THE CIRCUMSTA NCES OF THE APPELLANT'S CASE, THE HON'BLE. CIT(A), MUST HAVE CONSIDERED THE FACT THAT THE CRED ITS IN THE BANK STATEMENTS CAN BE INTER ALIA AS A RESULT OF LOAN RECEIVED, CHEQUES DEPOSITED AND DI SHONORED, CASH WITHDRAWN AND RE DEPOSITED IN BANK, NORMAL SALE PROCEEDS ETC., WHICH WAS PROVED T O THE SATISFACTION OF THE LD. A.O. WHILE EXPLAINING THE DIFFERENCE BETWEEN THE REPORTED FIGU RE OF SALES IN THE ACCOUNTS (BASED ON THE AUDITED BOOKS) AND THE BOOKS PREPARED ON THE BASIS OF THE BANK STATEMENT. 3. THE HON'BLE. C.I.T-(A), HAD ERRONEOUSLY CONCLUDE D THAT AMOUNT WITHDRAWN I.E. RS. 1,800/- P.M. FOR HOUSEHOLD EXPENSES IS VERY LOW AND THAT TOO WIT HOUT ANY EVIDENCE TO THE CONTRARY ON RECORD EVEN AFTER AN EXPANSIVE INVESTIGATION. THIS CONCLUS ION IS THUS TOTALLY BASELESS, IRRELEVANT & AGAINST THE CLEAR APPRECIATION OF THE FACTS. 4. THE HON'BLE CIT (A) HAD ACTED IN GROSS NEGLIGENC E IN ESTABLISHING THAT, THE APPELLANT HAD DESTROYED HIS BOOKS OF ACCOUNTS WITH THE FEAR OF GE TTING CAUGHT, EVEN THOUGH THE APPELLANT HAD STATED THAT AFTER DISCONTINUATION OF BUSINESS & THE RE WAS NO NEED TO MAINTAIN BOOKS OF ACCOUNTS. FURTHER, THE HON'BLE CIT(A) ERRED IN SUSPECTING THA T THE APPELLANT HAD EITHER SUBMITTED FAKE DETAILS OR CONCEALED THE FACT THAT BOOKS OF ACCOUNT S HAVE BEEN PRESERVED, WHERE THE BOOKS OF ACCOUNTS HAD BEEN SUBJECTED TO AUDIT U/S 44AB OF TH E I.TAX ACT, 1961 AND SUCH AUDITED ACCOUNTS HAVE BEEN SUBMITTED ALONGWITH THE RETURN OF INCOME , FILED ORIGINALLY FOR PROVISIONS OF SECTION 139(1) OF THE INCOME TAX ACT, 1961. 5. THE APPELLANT CRAVES LEAVE, TO ADD, TO ALTER, TO AMEND, AND TO DELETE ANY OR ALL THE GROUNDS OF APPEAL ON, BEFORE OR DURING THE COURSE OF HEARING. ITA NO. 1735/M/2009,AY. 1998-99 1. THE ORDER LEVYING PENALTY OF RS. 10,60,250/- U/S 271 (1)(C ), ON THE BASIS OF POST DATED APPROVAL OF ADDL. C.I.T., IS AGAINST THE LAW, WHICH MANDATES FOR THE PRIOR APPROVAL OF ADDL. C.I.T. VIDE SECTION 274(2). HENCE, THE ORDER PASSED U/S 27 1 (1)(C) LEVYING PENALTY OF RS. 10,60,250/- IS VOID AB INITIO & DESERVES TO BE ANNULLED. THE HON'B LE CIT(A) HAD ERRED IN ACCEPTING THE SAME AS TYPOGRAPHICAL MISTAKE AND HOLDING THAT THE SAME CAN NOT MAKE THE PENALTY ORDER INVALID. 2. IN LAW AND AS PER THE FACTS AND IN THE CIRCUMSTA NCES OF THE APPELLANT'S CASE, THE HON'BLE CIT (A) HAD ERRED IN CONFIRMING THE ADDITION MADE BY TH E LD. A.O. AS THE LD. A.O. HAD PASSED THE ORDER IMPOSING PENALTY U/S 271(1)(C) OF RS.10,60,25 0/-, IN OVERWHELM, IN HASTE, WHICH WAS PREDETERMINED & PERHAPS WITHOUT APPRECIATION OF THE FACT THAT, THE APPELLANT WAS UNFORTUNATELY RESTRICTED BY REASONABLE CAUSE FOR NON SUBMISSION O F DETAILS AS CALLED FOR. THE LD. A.O. CONVENIENTLY OVERLOOKED THE ALL OUT EFFORTS OF THE APPELLANT IN RECASTING THE BOOKS OF ACCOUNTS ONLY IN ORDER TO SATISFY THE LD. A.O. THE APPELLANT HAD FURTHER EXPLAINED THE BASIS/PREMISES ADOPTED FOR RECASTED ACCOUNTS WHICH WAS NEVER DOUBTED/CONTE STED BY THE LD. A.O., INSTEAD WAS STATED TO BE NOT ACCEPTED WITHOUT PROVIDING THE REASON FOR TH E SAME. THE APPELLANT WAS THUS CAN NOT BE CONVICTED FOR GUILTY MIND & THE PENALTY LEVIED IN T HE ABSENCE OF THE APPRECIATION OF THE ABOVE STATED FACTS MUST BE DELETED. 3. IN LAW AND ON THE FACTS & IN THE CIRCUMSTANCES O F THE APPELLANT'S CASE, THE HON'BLE C.I.T.(A) HAD MISPLACED HIS RELIANCE ON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF UOI & ORS. VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 WHICH WAS RENDERED IN CONNECTION WITH THE CENTRAL EXCISE ACT WHICH IS INDIRECT TAX LAW AND DO ES NOT APPLY TO THE INCOME TAX ACT WHICH IS A DIRECT TAX LAW, INSTEAD IT WAS INCUMBENT ON THE PAR T OF THE HON'BLE C.I.T.(A) TO INFER FROM THE FACTS OF THE CASE, WHETHER THE APPELLANT HAD INDEED CONCE ALED THE INCOME OR FURNISH INACCURATE PARTICULARS/NO PARTICULARS? & WHETHER THE SAME WAS WITHOUT A REASONABLE CAUSE? THE HON'BLE 3 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR C.I.T.(A) FAILED TO APPRECIATE THE INTERLOCUTORY OF THE HON'BLE SUPREME COURT IN THE CASE RELIED UPON, WHERE IT WAS CATEGORICALLY STATED THAT THE LE VY OF PENALTY IS DEPENDENT ON THE CONSTRUCTION OF PARTICULAR SECTION LEVYING PENALTY, WORDINGS USE D AS WELL AS EXCEPTIONS PROVIDED FOR IN THAT VERY SECTION. THUS, THERE IS A CLEAR IGNORANCE OF T HE FACTS BY THE HON'BLE C.I.T.(A) WHILE CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C). 4. IN LAW AND ON THE FACTS & IN THE CIRCUMSTANCES O F THE APPELLANT'S CASE, THE HON'BLE C.I.T. (A) ERRED IN CONFIRMING THE ORDER OF THE A.O. U/S 271(1 )(C) IMPOSING THE PENALTY OF RS.1 0,60,250/- WITHOUT APPRECIATING THE FACTS OF THE CASE. THE HON 'BLE C.I.T.(A) ERRED IN INTERPRETING THE PROVISIONS OF SECTION 271 (1)(C) AS APPLICABLE TO T HE APPELLANT. 5. THE APPELLANT CRAVES LEAVE, TO ADD, TO ALTER, TO AMEND, AND TO DELETE ANY OR ALL THE GROUNDS ON APPEAL ON, BEFORE OR DURING THE COURSE OF HEARING. ITA NO. 6336/M/2007,AY 2001-02 1. IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, THE HON'BLE C.IT.(A) ERRED IN CONFIRMING ADDITION OF RS. 3,06,83,361/- U/S 68 OF THE INCOME TAX ACT, 1961, REPRESENTING CREDIT ENTRIES IN THE BANK ACCOUNTS IN SPITE OF THE FACT STATED BY THE APPELLANT THAT THESE REPRESENT 'SALES OF STAMPS'. THE HON'BLE C.I.T.(A) ERRED IN N OT ACCEPTING THAT, THERE CAN BE NO SALES WITHOUT THERE BE CORRESPONDING PURCHASE OF THE STAMPS. THUS , ADDITION IS WITHOUT ANY BASE AND NEEDS TO BE DELETED. 2. IN LAW & IN THE FACTS & CIRCUMSTANCES OF THE APP ELLANT'S CASE THE HON'BLE C.I.T(A) FAILED TO APPRECIATE THE FACT THAT THE ADDITION MADE BY THE L D A.O.IN THE A.Y. 1998/99 WAS ON ACCOUNT OF DIFFERENCE NOTED IN THE AMOUNTS DEPOSITED IN THE BA NK AS COMPARED TO THE AMOUNTS DISCLOSED IN ITS PROFIT & LOSS ACCOUNTS SUBMITTED. THE DEBIT SIDE RE PRESENTS THE PAYMENTS MADE FOR STAMPS PURCHASE & OTHER EXPENSES INCURRED WAS TAKEN AS COR RECT WHILE FINALIZING THE ASST. ORDER FOR A.Y. 1998/99 & NO ADDITION WAS MADE ON THAT COUNT. IN TH IS SCENARIO, THE ID. C.I.T(A) MUST HAD GIVEN CREDENCE TO THE NAMES APPEARING IN THE BANK ACCOUNT STATEMENT WHICH MATCHES WITH THE DETAILS SUPPLIED TO LD. A.O. & THE ADDL. DIRECTOR OF INCOME TAX (INV), UNIT III(1), MUMBAI, ON WHOSE REPORT ENTIRE PROCEEDINGS OF ASSESSMENT WAS UNDERTA KEN. THUS, THE DECISION OF THE HON'BLE C.IT(A), OF BEING AN IDENTICAL ISSUE AS THAT OF A.Y 1998/99 IS NOT IN CLEAR APPRECIATION OF THE FACTS OF THE CASE & THEREFORE MUST BE QUASHED. 3. IN LAW AND AS PER THE FACTS AND IN THE CIRCUMSTA NCES OF THE APPELLANT'S CASE, THE HON'BLE C.I.T. (A) ERRED IN NOT TAKING INTO ACCOUNT THE EVIDENCE P ROVIDED BY THE APPELLANT DURING THE CONJOINED APPELLATE PROCEEDINGS, IN CONNECTION WITH A.Y.2001/ 02, PROVING THE VALIDITY OF THE SALE TO LIC AND ALSO NOT TAKING INTO ACCOUNT THE LETTER ISSUED BY D EPUTY WORKS MANAGER GENUINE. HENCE, THE APPELLANT'S FACT OF SUPPLYING THE STAMPS TO THOSE C ONCERNS & RECEIPT OF MONEY FROM THEM STANDS PROVED. 4. THE APPELLANT CRAVES LEAVE, TO ADD, TO ALTER, TO AMEND, AND TO DELETE ANY OR ALL THE GROUNDS ON APPEAL ON, BEFORE OR DURING THE COURSE OF HEARING. ITA NO. 6337/M/2007,AY 2002-03 1. IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, THE HON'BLE C.IT.(A) ERRED IN CONFIRMING ADDITION OF RS. 99,03,945/- U/S 68 OF THE INCOME TAX ACT, 1961, REPRESENTING CREDIT ENTRIES IN THE BANK ACCOUNTS IN SPITE OF THE FACT S TATED BY THE APPELLANT THAT THESE REPRESENT 'SALES OF STAMPS'. THE HON'BLE C.I.T.(A) ERRED IN NOT ACCE PTING THAT, THERE CAN BE NO SALES WITHOUT THERE BE CORRESPONDING PURCHASE OF THE STAMPS. THUS, ADDI TION IS WITHOUT ANY BASE AND NEEDS TO BE DELETED. 4 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR 2. IN LAW & IN THE FACTS & CIRCUMSTANCES OF THE APP ELLANT'S CASE THE HON'BLE C.I.T(A) FAILED TO APPRECIATE THE FACT THAT THE ADDITION MADE BY THE L D A.O.IN THE A.Y. 1998/99 WAS ON ACCOUNT OF DIFFERENCE NOTED IN THE AMOUNTS DEPOSITED IN THE BA NK AS COMPARED TO THE AMOUNTS DISCLOSED IN ITS PROFIT & LOSS ACCOUNTS SUBMITTED. THE DEBIT SIDE RE PRESENTS THE PAYMENTS MADE FOR STAMPS PURCHASE & OTHER EXPENSES INCURRED WAS TAKEN AS COR RECT WHILE FINALIZING THE ASST. ORDER FOR A.Y. 1998/99 & NO ADDITION WAS MADE ON THAT COUNT. IN TH IS SCENARIO, THE ID. C.I.T(A) MUST HAD GIVEN CREDENCE TO THE NAMES APPEARING IN THE BANK ACCOUNT STATEMENT WHICH MATCHES WITH THE DETAILS SUPPLIED TO LD. A.O. & THE ADDL. DIRECTOR OF INCOME TAX (INV), UNIT III(1), MUMBAI, ON WHOSE REPORT ENTIRE PROCEEDINGS OF ASSESSMENT WAS UNDERTA KEN. THUS, THE DECISION OF THE HON'BLE C.IT(A), OF BEING AN IDENTICAL ISSUE AS THAT OF A.Y 1998/99 IS NOT IN CLEAR APPRECIATION OF THE FACTS OF THE CASE & THEREFORE MUST BE QUASHED. 3. IN LAW AND AS PER THE FACTS AND IN THE CIRCUMSTA NCES OF THE APPELLANT'S CASE, THE HON'BLE C.I.T. (A) ERRED IN NOT TAKING INTO ACCOUNT THE EVIDENCE P ROVIDED BY THE PROVING THE VALIDITY OF THE SALE TO LIC AND ALSO NOT TAKING INTO ACCOUNT THE LETTER ISSUED BY DEPUTY WORKS MANAGER STATING THAT THE INSURANCE STAMPS PROCURED FROM THE APPELLANT AR E GENUINE. HENCE, THE APPELLANT'S FACT OF SUPPLYING THE STAMPS TO THOSE CONCERNS & RECEIPT OF MONEY FROM THEM STANDS PROVED. 4. THE APPELLANT CRAVES LEAVE, TO ADD, TO ALTER, TO AMEND, AND TO DELETE ANY OR ALL THE GROUNDS ON APPEAL ON, BEFORE OR DURING THE COURSE OF HEARING. ITA NO. 7101/M/2006-AY.1998-99 : DURING THE COURSE OF HEARING,AUTHORISED REPRESENTAT IVE(AR)OF THE ASSESSEE DID NOT PRESS GROUND NOS. 2, 3 AND 4. HENCE SAME ARE TREATED AS DISMISSE D. 2. ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 29.10.1998 DECLARING TOTAL INCOME OF RS. 60,770/-.SUBSEQUENTLY NOTICE U/S.148 OF THE ACT WAS ISSUED ON 31.03.2005, AFTER RECORDING THE REASONS.THE ASSESSING OFFICER (AO) COMPLETED THE AS SESSMENT U/S 143(3) R.W.S. 147 ON 24.03. 2006,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 2,50,020/-. BEIEF FACTS OF THE CASE. 3. AS PER THE AO,THE CASE WAS INVESTIGATED BY THE DDIT , UNIT (III)(1) MUMBAI IN THE COURSE OF HIS INVESTIGATION INTO COUNTERFEIT STAMP RACKET RUN BY ABDUL KARIM TELGI (AKT)& ASSOCIATE.HE OBSERVED THAT THE ASSESSEE HAD NOT DISCLOSED 3 BANK ACCOUNTS RELEVANT FOR THE AY 2000-01 TO 2003.THE AO ISSUED NOTICE U/S 142(1) OF THE ACT AND REQUIRED THE ASSESSEE TO FILE CERTAIN DETAILS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,HE HELD THAT NO DETAILS WITH REGARD TO SALES AND PURCHASE ALONG WITH THE CASH BOOK AND BOOKS OF ACC OUNTS WERE SUBMITTED. AS PER THE AO HE IMPRESSED UPON THE AR AND THE ASSESSEE THAT THE BOO KS OF ACCOUNTS AND OTHER DETAILS WERE REQUIRED AND HAD TO BE PRODUCED TO SUPPORT THE RETU RN OF INCOME. BUT,THE ASSESSEE EXPRESSED HIS INABILITY TO MAKE AVAILABLE ANY DETAIL PERTAINING H IS BOOKS OF ACCOUNTS. THE AO FOUND THAT IN THE BANK ACCOUNT THERE WERE CREDIT OF RS. 1.74 CRORES, THAT IN THE P&L A/C THE GROSS SALES HAD BEEN SHOWN AT RS. 1.49 CRORES.CONSIDERING THESE FACTS TH E AO HELD THAT THE SALE HAD BEEN UNDERSTATED TO THE EXTENT OF RS. 24.39 LAKHS, THAT THE ASSESSEE HAD FILED CASH SUMMARY FOR THE YEAR WHEREIN RS.62.0 LAKHS HAD BEEN SHOWN DEPOSITED IN THE BANK ACCOUNT, THAT THE SOURCE OF CASH DEPOSIT WAS SHOWN TO THE SALE PROCEED OF STAMPS AND THE RE-DEPO SIT OF CASH DEPOSIT FROM BANK. WITH REGARD TO 5 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR THE MONTH WISE CASH AND FUND FLOW SUMMARY,FILED BY THE ASSESSEE,THE AO TEST-CHECKED THE CORRECTNESS OF SUCH STATEMENT BUT THE ASSESSEE EXPR ESSED HIS INABILITY TO RECONCILE THE SAME. THE AO HELD THAT RECEIPTS AMOUNTING TO RS. 24.39 LAKHS, IN THE BANK STATEMENT OF THE ASSESSEE WERE IN EXCESS OF THE DISCLOSED GROSS SALE.FINALLY, HE H ELD THAT THE ASSESSEE HAD FAILED TO PROVE THAT THE DEPOSITS OF RS. 24,39,446/- REPRESENTED TRADING REC EIPTS ALREADY SUBJECTED TO TAX, THAT THE SAID DEPOSITS HAD TO BE TREATED AS UNEXPLAINED CASH CRED IT U/S 68 OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS ARGUED THAT THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF VENDING STAMPS AS A GOVERNMENT APPROVED LICENCE STA MP VENDOR, THAT HE WOULD PURCHASE THE STAMPS FROM GENERAL STAMP OFFICE THROUGH PAYMENT BY WAY OF DEMAND DRAFT AND FROM OTHER VARIOUS LICENSED STAMP VENDORS, THAT ALL THE PURCHA SES WERE VIRTUALLY ON DAILY BASIS, THAT HE WAS SELLING INSURANCE STAMPS TO VARIOUS OFFICE OF LIC, THAT HE WAS RECEIVING PAYMENT BY WAY OF DEMAND DRAFTS,THAT HE WAS SELLING STAMPS TO OTHER L ICENSED STAMP VENDORS AND COSTUMERS AS CASH COUNTER SALES, THAT THE NET PROFIT AS A RESULT OF T HE PURCHASE AND SALE TRANSACTIONS WAS OFFERED FOR TAX AS BUSINESS INCOME.THE ASSESSEE RELIED UPON THE CASES OF KHANDELWAL CONSTRUCTION (227 ITR 900), DAVAMNIATHA (112 ITR 837), SHRI LEKHA BANERJI (49 ITR 112). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER,THE FAA HELD THAT THE CASH ACCOUNT AND THE SUMMARY OF DEBIT AND CREDIT EN TRIES FURNISHED BY THE ASSESSEE WERE NOT BASED ON BOOKS OF ACCOUNTS/BILLS OF PURCHASE AND SA LES OR VOUCHERS OF EXPENSES, THAT THE ASSESSEE HAD RELIED ON THE AUDIT REPORT, THAT THE AO HAD RIG HT TO VERIFY THE CORRECTNESS OF THE AUDIT REPORT, THAT THE BOOKS WERE NOT PRODUCED,THAT HE HAD MADE D EPOSIT OF RS. 23.49 LAKHS MORE IN CASH IN BANK ACCOUNTS THEN THE INCOME DISCLOSED IN RETURN,T HAT COUNTERFEIT STAMP RACKET RUN BY AKT AND HIS ASSOCIATE WAS KNOWN TO EVERYBODY, THE ASSESSEE WAS INVESTIGATED IN CONNECTION WITH TELGI RACKET,THAT THE ASSESSEE MUST HAVE DESTROYED HIS BO OKS OF ACCOUNTS WITH THE FEAR OF GETTING CAUGHT,THAT NO EVIDENCE IN THE SAKE OF PURCHASE INV OICE OR SALE RECEIPT WERE KEPT, THAT THE CASH FLOW STATEMENT WAS NOT BASED ON ANY EVIDENCE,THAT T HE SUBMISSION MADE BYHIM ABOUT LOANS WAS NOT ACCEPTED,THAT THERE WAS NO EVIDENCE THAT CASH D EPOSITED IN THE BANKS REPRESENTED THE CASH WITHDRAWN ON DIFFERENT OCCASIONS, THAT THE HOUSEHOL D WITHDRAWAL WAS SHOWN WAS VERY LOW, THAT THE CASH FLOW STATEMENT,PREPARED BY THE ASSESSEE,WA S BASED ON ASSUMPTION AND WITHOUT ANY EVIDENCE, THAT THE ASSESSEE HAD FAILED TO EXPLAIN T HE SOURCE OF CASH DEPOSIT IN BANK ACCOUNT IN EXCESS OF SALES. FINALLY, HE UPHELD THE ORDER OF TH E AO. 5. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)CONTENDE D THAT BEFORE THE AO AS WELL AS THE FAA IT WAS EXPLAINED THAT THERE ARE BOTH -CASH AND CHEQ UE SALES AND PURCHASES,THAT THE BUSINESS REQUIRED CASH PURCHASES AND CASH SALES,THAT THERE WERE REGULAR CASH WITHDRAWALS MADE FROM THE BANK,THAT CASH WAS DEPOSITED REGULARLY IN THE BANK ACCOUNT,THAT THE TOTAL CASH WITHDRAWALS FROM THE BANK ACCOUNT WERE RS.54,49,419/-,THAT TOTAL CAS H DEPOSITS WERE RS.61,20,290/-,THAT TOTAL CASH SALES WERE OF RS.38,29,730/-,THAT TOTAL CASH PURCHA SES WERE OF RS.29,30,666/-,THAT THE SOURCE OF CASH DEPOSITS WERE OUT OF CASH SALE OF STAMPS AND R EDEPOSIT OF CASH WITHDRAWN FROM THE BANK ACCOUNT,THAT THE ASSESSEE HAD ALSO TAKEN LOAN FROM THIRD PARTIES AGGREGATING TO RS.5,60,000/- BY 6 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR ACCOUNT PAYEE CHEQUE AND CREDITED IN THE BANK ACCOU NT,THAT WITHOUT CONSIDERING THOSE VITAL FACTS DIFFERENTIAL AMOUNT OF RS.24,39,446/- WAS PRESUMED TO BE UNEXPLAINED CASH DEPOSITED IN BANK ACCOUNT AND ADDITION WAS MADE,THAT DETAILS OF CASH EXPENSES AMOUNTING TO RS.93,42,662/- WAS NOT MADE AVAILABLE,THAT THE ASSESSEE HAD NOT INCURR ED ANY SUCH HUGE AMOUNT IN CASH AS EXPENSES,THAT NONE OF THE LOWER AUTHORITIES HAD TAK EN INTO CONSIDERATION THE DETAILS FILED BEFORE THEM SUCH AS BANK BOOK (RE-CASTED FROM BANK STATEME NT AND COPY OF BANK STATEMENT ALREADY WITH THE AO),CASH SUMMARY, BANK SUMMARY PREPARED ON THE BASIS OF THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT AND BANK STATEMENT,THAT THO SE DOCUMENTS CLEARLY SHOWED THAT THERE WERE REGULAR CASH WITHDRAWALS FROM BANK AS WELL AS CASH DEPOSITS,THAT THE GROSS COMMISSION RECEIVED FROM GOVERNMENT FOR PURCHASE OF STAMP AS A LICENCE HOLDER WAS 2% TO 3% DEPENDING UPON THE NATURE OF STAMP PURCHASED,THAT THE MAIN CLIENT OF T HE ASSESSEE TO WHOM STAMPS WERE SOLD WAS LIC OF INDIA,THAT THE STAMPS SOLD BY HIM TO LIC OF INDIA WERE NOT FOUND TO BE FORGED OR FAKE,THAT NO ACTION WAS TAKEN AGAINST THE ASSESSEE AND THERE WAS NO FIR AGAINST HIM,THAT HE USED TO BUY THE STAMPS AND STAMP PAPERS FROM THE AUTHORISED STA MP ISSUING AUTHORITIES (I.E. STATE GOVERNMENT) AND ALSO FROM OTHER AUTHORISED VENDORS IN MUMBAI,THAT DUE TO THE UNEARTHING OF THE RACKET OF STAMP SCAM, ALL THE VENDORS WERE INVESTIG ATED BY VARIOUS AGENCIES AND INCLUDING THE INCOME TAX DEPARTMENT,THAT ASSESSMENTS FOR THE ABOV E REFERRED THREE YEARS WERE REOPENED U/S.148 OF THE ACT,THAT IN NONE OF THE RE-ASSESSMENT ORDERS , THE AO HAD ANYWHERE HELD THAT THE ASSESSEE WAS ALSO INVOLVED IN STAMP SCAM OR IN ANY MANNER AS SOCIATED WITH AKT,THAT IN COURSE OF REASSESSMENT PROCEEDINGS THE ASSESSEE FILED LETTERS STATING THEREIN THAT HE HAD MAINTAINED BOOKS OF ACCOUNT AND THE SAME WERE ALSO TAX AUDITED,THAT DUE TO PASSAGE OF TIME AND HIS BONA FIDE BELIEF THAT HE WAS NOT REQUIRED TO RETAIN THE BOOKS OF ACC OUNT THE SAME WERE NOT RETAINED AND FEW SUPPORTING PAPERS WITH HIM WERE FILED BEFORE THE DD IT (INV.) IN THE YEAR 2004, THAT THOSE RECORDS KEPT WITH HIS CA ALSO GOT DESTROYED IN FLOOD OCCURR ED ON 26.07.2005,THAT BEFORE THE AO,HE HAD FILED BANK BOOK (RE-CASTED FROM BANK STATEMENT) CAS H SUMMARY AND BANK SUMMARY IN ORDER TO EXPLAIN THE RETURN OF INCOME FILED,THAT THE AO WITH OUT CONSIDERING THE EXPLANATIONS AND SUBMISSION OF THE ASSESSEE AND WITHOUT CONSIDERING THE ENTRIES IN THE RE-CASTED BANK BOOK AS ALSO THE BANK STATEMENT, MADE THE ADDITION OF RS.24,3944 6/-THAT THE AO OR THE FAA HAD NOT POINTED OUT IN PARTICULAR AS TO WHICH ENTRY REFLECTED IN TH E BANK ACCOUNT WAS UNEXPLAINED CASH CREDIT. DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO AND THE FAA WERE OF THE OPINION THAT THE ASSESSEE W AS A PART OF THE RACKET RUN BY AKT AND HIS ASSOCIATES.BUT,THEY HAVE NOT BROUGHT ON RECORD THE EVIDENCE PROVING THE ALLEGATION OF THE ASSESSEE BEING PART OF AKT SYNDICATE.IT HAS BEEN CL AIMED BEFORE US THAT THE ASSESSEE WAS NOT NAMED IN ANY OF THE FIR DEALING WITH FAKE STAMP PAP ER RACKET. THE FACT OF FILING OF FIR IN THE NAME OF THE ASSESSEE COULD HAVE BEEN EASILY VERIFIE D WITH THE POLICE AUTHORITIES. IN THESE CIRCUMSTANCES,IF HE WAS STAMP VENDOR DOING HIS NORM AL BUSINESS HIS CASE CANNOT BE CONNECTED WITH AKT TEAM.IT IS FOUND THAT WHILE MAKING THE ADD ITIONS THE AO HAD JUST CONSIDERED THE AMOUNTS APPEARING IN THE BANK STATEMENT BUT HE HAD NOT CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE IN THAT REGARD.THE ASSESSEE HAD CLAIMED TH AT HIS MAIN CLIENT WAS LIC OF INDIA. WE FIND 7 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR THAT NO ENQUIRY IN THIS REGARD WAS MADE WITH LIC BY THE AO. IT IS ALSO NOT KNOWN AS TO HOW THE AO HAD ARRIVED AT THE FIGURE OF THE EXPENDITURE,ALL EGEDLY INCURRED BY THE ASSESSEE,AMOUNTING TO RS. 93.24 LAKHS. IT IS ALSO A FACT THAT THE AUDITED ACCOUNTS WERE FILED BY THE ASSESSEE AND HE HAD NOT PRODUCED THE BOOKS OF ACCOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS CLAIMED THAT BOOKS WERE DESTROYED BECAUSE OF THE FLOOD. IT APPEARS THAT NO ENQUIRY WAS MADE IN THIS REGARD BY THE AO.WE ARE OF THE OPINION THAT THE MAT TER NEEDS FURTHER INVESTIGATION. THEREFORE, IN THE INTEREST OF JUSTICE,WE ARE REMITTING BACK THE M ATTER TO THE FILE OF THE AO FOR FRESH ADJUDICA - TION.HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUN ITY OF HEARING TO THE ASSESSEE. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED IN HIS F AVOUR, IN HIS PART. ITA/1735/MUM/2009-AY-1998-99 7. WHILE COMPLETING THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT,FOR THE YEAR UNDER APPEAL,THE AO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESS EE U/S. 271(1)(C) OF THE ACT. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,HE IMPOSED PENALTY O F RS. 10,60,250/-. THE FAA CONFIRMED THE ORDER OF THE AO,VIDE HIS ORDER DATED 30.12.2008. 8. WE HAVE RESTORED BACK THE QUANTUM APPEAL TO THE FIL E OF THE AO,WHILE DECIDING THE APPEAL FOR THE YEAR UNDER CONSIDERATION. AS A RESULT THE PENAL TY ORDER COULD NOT SURVIVE. THE AO WILL DECIDE THE ISSUE OF LEVYING/NON-LEVYING OF PENALTY AFTER P ASSING THE FRESH ORDER IN PURSUANCE OF OUR DIRECTIONS.EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA/6336/MUM/2007-AY-2001-02 9. THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 29.1 0.2001, DECLARING TOTAL INCOME OF RS.98,871/-. THE AO ISSUED A NOTICED U/S.148 OF THE ACT ON 01.09.2005,AFTER RECORDING THE REASON FOR REOPENING THE ASSESSMENT.IN THE REASON RECORDED FOR RE-OPENING THE AO REFERRED TO THE STATEMENTS OF THE ASSESSEE RECORDED BY THE THE DDIT UNIT (III)(1), MUMBAI WHEREIN THE ASSESSEE HAD ADMITTED THAT THREE BANK ACCOUNTS MAINTAINED BY HIM WERE NOT DISCLOSED TO THE DEPARTMENT. THE AO ISSUED SEVERAL NOTICES TO THE ASSESSEE,BUT,H E DID NOT APPEAR BEFORE THE AO.THE AO ISSUED A SUMMONS U/S.131 OF THE ACT AND DIRECTED TH E ASSESSEE TO APPEAR BEFORE HIM. HE RECORDED THE STATEMENT OF THE ASSESSEE ON 12.12.2006.AFTER R ECORDING THE STATEMENT OF THE ASSESSEE,THE AO HELD THAT THE TRANSACTIONS RECORDED IN THE BANKS AC COUNTS WERE NOT CONSIDERED BY THE ASSESSEE WHILE FILING THE RETURN FOR THE AY.UNDER APPEAL,THA T ON 12.12.2006 THE ASSESSEE MADE IT CLEAR THAT HE WAS UNABLE TO GIVE ANY DETAILS IN RESPECT OF THE TRANSACTIONS ENTERED INTO WHICH WERE APPEARING IN THE UNDISCLOSED BANK ACCOUNTS, THAT HE DECLINED TO GIVE ADDRESS OF THE PERSONS WHO ENCASED THE CHEQUE.IT WAS FOUND THAT THE TOTAL CREDIT IN THE BA NK ACCOUNTS WAS OF RS. 3,06,83,361/-. AS PER THE AO,THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING EVID ENCE ABOUT THE CREDIT AND DEBITS OF THE ACCOUNT,THAT THE ASSESSEE HAD NOT PRODUCED THE BASI S FOR HOLDING THAT THE MONEY WAS OUT OF THE TRANSACTIONS RELATED WITH PURCHASE AND SALE OF STAM PS. HE FINALLY HELD THAT THE RECEIPT OF RS. 3.06 CRORES APPEARING IN THE THREE BANK ACCOUNTS WAS UND ISCLOSED INCOME OF THE ASSESSEE. ACCEPTING THE ASSESSEES CONTENTIONS THAT THE DEPOSITS WERE B ANK ACCOUNT WERE THE BUSINESS RECEIPTS AND THE 8 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR WITHDRAWALS WERE BUSINESS EXPENSES, THE AO HELD THA T THE ASSESSEE WAS DUTY BOUND TO EXPLAIN THAT THE WITHDRAWALS FROM THE ACCOUNTS WERE FOR LEG ITIMATE BUSINESS EXPENDITURE AND SAME WERE INCURRED IN THE NORMAL COURSE OF BUSINESS.AS PER TH E AO,THE ASSESSEE HAD NOT SUBSTANTIATED HIS CLAIM.FINALLY,HE HELD THAT UNEXPLAINED CASH CREDIT, AMOUNTING TO RS.3.06 CRORES WAS TO BE TREATED BACK TO THE ASSESSEES TOTAL INCOME. 10. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRD AN APPEAL BEFORE THE FAA.FOLLOWING HIS ORDER FOR AY 1998-99, THE FAA UPHELD THE ORDER OF THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE.BEFORE US, THE AR CONTENDED THAT FACTS FOR THE YEAR UNDER APPEAL WERE DIFFERENT FROM THE FACTS FOR THE YEAR 1998-99, THAT THE AO HAD ADD ED THE TOTAL OF CREDIT ENTRIES OF THE BANK ACCOUNTS WITHOUT CONSIDERING THE PEAK OF THE AMOUNT S INVOLVED OR WITHOUT TAKING INTO CONSIDERATION THE EXPLANATION FILED BY THE ASSESSEE . 11. BEFORE US,THE AR STATED THAT THE AO HAD MADE THE AD DITIONS OF THE TOTAL OF THE CREDIT IN THE UNDISCLOSED BANK ACCOUNTS WHICH WERE MAINLY HIGH VA LUE CHEQUES/ DD RECEIVED FROM LIC AGAINST SALE OF STAMPS, THAT THE PAYMENT SIDE CLEAR LY SHOWED THE CHEQUES PAID TO VARIOUS STAMP VENDORS FOR SUPPLYING STAMPS AS ALSO PAY ORDER IN T HE NAME OF SUPERINTENDENT OF STAMPS FOR PURCHASE OF STAMPS,THAT HIS STATEMENT WAS ALSO RECO RDED WHEREIN HE CLEARLY STATED THAT THE ENTIRE CREDITS WAS NOT HIS INCOME AND DEDUCTION HAD TO BE GIVEN FOR PURCHASE OF STAMPS AND EXPENSES INCURRED,THAT THE AO WITHOUT CONSIDERING THE EXPLAN ATIONS AND WITHOUT VERIFYING THE RECORDS AND BANK STATEMENTS AND BANK SUMMARY PREPARED ADDED THE ENTIRE CREDITS APPEARING IN THE 3 BANK ACCOUNTS AS UNEXPLAINED CASH CREDITS U/S.68 OF THE ACT,THAT THE FAA CONFIRMED THE ADDITION BY FOLLOWING THE FAAS ORDER FOR THE AY.1998-99,THAT H UGE ADDITIONS WERE MADE IN HIS CASE BY TAKING INTO CONSIDERATION THE TOTAL OF ALL THE CRED IT ENTRIES APPEARING IN THE BANK STATEMENT DISREGARDING THE FACT THAT DEBIT ENTRIES ALSO NEEDE D TO CONSIDERED WHILE ARRIVING AT THE NET INCOME, THAT NO VERIFICATION OF ALL THOSE ACCOUNTING ENTRIE S WAS EVER DONE BY THE LOWER AUTHORITIES,THAT BOTH THE LOWER AUTHORITIES HAD FAILED TO EXAMINE AN D VERIFY THE DETAILS FILED BEFORE THEM.DR SUPPORTED THE ORDER OF THE FAA. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. IN OUR OPINION THE FACTS OF THE YEAR UNDER CONSIDERATION ARE DISTINGUI SHABLE FROM THE FACTS OF AY.1998-99. THE AO HAD NOT DEALT WITH THE UNDISCLOSED BANK ACCOUNTS WH ILE FRAMING THE ASSESSMENT FOR THE AY 1998- 99.IT IS ALSO A FACT THAT ASSESSEE HAD ADMITTED TO HAVE NOT DISCLOSED THE INCOME ELEMENT OF THE THREE BANK ACCOUNTS WHILE FILING THE RETURN OF INCO ME. BUT,IN OUR OPINION TO CONSIDER ALL THE CREDIT ENTRIES AS INCOME OF THE ASSESSEE WAS NOT JUSTIFIED .WE FIND THAT ASSESSEE HAD FURNISHED EXPLANATION BEFORE THE AO IN THIS REGARD,BUT, SAME WAS NOT CONSIDERED.IN OUR OPINION,FURTHER INVESTIGATION HAS TO BE MADE ABOUT THE CHEQUE ENTRI ES AS WELL AS THE CASH ENTRIES TO ARRIVE AT THE CORRECT FIGURE OF TAXABLE INCOME.IN THESE CIRCUMSTA NCES,WERE ARE OF THE OPINION,THAT IN THE INTEREST OF JUSTICE,MATTER SHOULD BE SENT BACK TO T HE FILE OF THE AO SO THAT THE ISSUE CAN BE LOOKED AT AND CAN BE DECIDED AFRESH.THE AO IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.EFFECTIVE GROUND OF APPEAL FILED BY TH E ASSESSEE IS DECIDED IN HIS FAVOUR, IN HIS PART. 9 ITA NOS. 7101/MUM/2006 & ORS. VIKASH UPPALKAR ITA/6337/MUM/2007-AY-2002-03 13. THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE MATT ER UNDER APPEAL ARE IDENTICAL TO THE FACTS OF THE PRECEDING ASSESSMENT YEAR-EXCEPT FOR THE DATES OF FILING OF RETURN/DATE OF COMPLETING THE ASSESSMENT AND THE AMOUNT INVOLVED. 14. WHILE DECIDING THE APPEAL FOR THE AY 2001-02, WE HA VE RESTORED THE MATTER BACK TO THE FILE OF THE AO. FOLLOWING THE ABOVE, THE AO IS DIRECTED TO PASS A FRESH ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION ALSO. HE WOULD AFFORD A REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE. EFFECTIVE GROUND OF APPEAL IS PARTLY ALLOWED IN FAV OUR OF THE ASSESSEE. AS A RESULT,THE APPEALS FILED BY ASSESSEE FOR ALL T HE THREE AYS. STAND PARTLY ALLOWED AND APPEAL FILED BY HIM FOR THE PENALTY IMPOSED U/S 271(1)(C)O F THE ACT IS ALLOWED FOR STATISTICAL PURPOSES. )1 '() 2 3 + / )'4 '..+ 6 0 )1 7 + ) 89 : ; 2 3 + / 271(1)(/) )/) / / ' + 3 A+ ;B C4 7 + ) 8D. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH,MARCH ,2015. 0 + -.# 6 E' 19 F,2015 . + / J SD/- SD/- ( /I P BANSAL) ( ! / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, E' /DATE:19.03.2015 SK 0 0 0 0 + ++ + &)K &)K &)K &)K L K#) L K#) L K#) L K#) / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ M N , 4. THE CONCERNED CIT / M N 5. DR F BENCH, ITAT, MUMBAI / KO/ &)' , , . . . 6. GUARD FILE/ / 'K) &) //TRUE COPY// 0' / BY ORDER, ; / 8 DY./ASST. REGISTRAR , /ITAT, MUMBAI.