Shri Jayesh Champaklal Ghael, Surat V. The Income tax Officer,Ward-3(3), Surat

ITA 720/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1318 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: ANIL K SHAH
• Keywords: Unexplained cash credit
• Section: 143(3); 6; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER JAYESH CHAMPAKLAL GHAEL, C - 11, TIRUPATI NAGAR SOCIETY, B/H RAJHANS CINEMA, DUMAS ROAD, SURT - 395007, PAN: ABZPG2693M (APPELLANT) VS THE ITO, WARD - 3(3), SURAT (RESPONDENT) DEEPIKA JAYESH GHAEL, C - 11, TIRUPATI NAGAR SOCIETY, B/H RAJHANS CINEMA, DUMAS ROAD, SURT - 395007, PAN: AEDPG1644K (APPELLANT) VS THE ITO, WARD - 3(3), SURAT (RESPONDENT) REVENUE BY : S H RI P.L. KUREEL , SR. D . R. ASSESSEE BY: S H RI ANIL K. SHAH , A.R. DATE OF HEARING : 11 - 05 - 2 016 DATE OF PRONOUNCEMENT : 29 - 06 - 2 016 I T A NO S. 720 / A HD/20 11 A SSESSMENT YEAR 200 6 - 07 ITA NO S. 721 /AHD/20 11 AS SESSMENT YEAR 200 6 - 07 I.T.A NO S. 720 & 721 /AHD/20 11 A.Y. 2006 - 07 PAGE NO JAYESH CHAMPAKLAL GHAEL & DEEPIKA JAYESH GHAEL VS. ITO 2 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE TWO DIFFERENT ASSESSEES HAVE INSTITUTED THE INSTANT SEPARATE APPEAL FOR A.Y. 2006 - 07 AGAINST SEPARATE ORDER OF THE CIT(A) - II, SURAT; BOTH DATED 21 - 12 - 2010 IN CASE APPEAL NO S. CAS - II/502/08 - 09/20 7 AND CAS - II/503/08 - 09/207 T HEREBY AFFIRMING ASSESSING OFFICER S ACTION IN MAKING UNEXPLAINED CASH CREDIT ADDITION S OF RS. 5,76,250/ - AND RS. 13,11,310/ - ; RESPECTIVELY , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2 . BOTH PARTIES STATE AT THE OUTSET THAT THESE TWO APPEALS RAISE IDENTICAL ISSUE EMANATING FROM SAME FACTUAL BACKDROP. WE TREAT ITA 720/AHD/2011 FILED BY SHRI JAYESH CHAMPAK GHAEL AS THE LEAD CASE ACCORDINGLY. 3 . THIS ASSESSEE IS A RETAILER IN UTENSIL B USINESS. HE FILED RETURN ON 06 - 07 - 2006 STATING INCOME OF RS. 91,173/ - . THE SAME WAS PROCESSED. THE ASSESSING OFFICER NOTICED IN SCRUTINY THAT THE ASSESSEE IDBI ACCOUNT HAD SEEN CASH DEPOSITS OF RS. 10,51,250/ - IN THE RELEVANT PREVIOUS YEAR. HE SOUGHT TO KNOW ABOUT THE SOURCE THEREOF. THE ASSESSEE INTER ALIA PLEADED THAT ITS IDBI ACCOUNT INDEED SAW THE IMPUGNED DEPOSITS, HE HAD FILED LAST RETURN OF INCOME IN ASSESSMENT YEAR 2000 - 01 SINCE THERE WAS NO TAXABLE INCOME IN THE INTERVENING ASSESSMENT YEAR S , ENCLOSED COPIES OF ACKNOWLEDGMENTS, I.T.A NO S. 720 & 721 /AHD/20 11 A.Y. 2006 - 07 PAGE NO JAYESH CHAMPAKLAL GHAEL & DEEPIKA JAYESH GHAEL VS. ITO 3 BALANCE SHEET, PROFIT AND LOSS ACCOUNT ETC . OF THE IMPUGNED ASSESSMENT YEAR AS WELL IN THE INTERVENING ONES. THE ASSESSEE FURTHER STATED THAT EACH AND EVERY CASH DEPOSIT INSTANCE FORMED PART OF THE CORRESPONDING ENTRY I N THE CASH BOOK. THE ASSESSING OFFICER DID NOT ACCEPT THE SAME. HE OBSERVED IN ASSESSMENT ORDER DATED 26 - 12 - 2008 THAT THE ASSESSEE HAD NOT FILED RETURN SINCE VERY MANY ASSESSMENT YEARS. HE HAD OPENING CASH BALANCE FIGURE OF RS. 5,09,460/ - WHICH COULD NO T BE TERMED AS AN AUTHENTIC ONE IN ABSENCE OF ANY THIRD PARTY EVIDENCE. THE ASSESSING OFFICER WAS OF TH E VIEW THAT ASSESSEE S TRADING ACCOUNT, PROFIT AND LOSS ACCOUNTS AND BALANCE SHEET OF THE ABOVE STATED INTERVENING ASSESSMENT YEAR DID NOT HAVE ANY SANC TITY WITHOUT A RETURN OF INCOME BEING FILED IN ANY OF THE ASSESSMENT YEAR. HE FURTHER REJECTED ASSESSEE S CASH BALANCE BY OPINING THAT HE HAD AVAILED BANK OF BARODA LOAN AND CHOSE NOT TO REPAY THE SAME DESPITE HAVING AMPLE CASH. THE ASSESSING OFFICER ACC EPTED ASSESSEE S LIMITED CONTENTION THAT HE HAD SOLD HIS SHOP FOR RS. 4.75 LACS. IN THE RELEVANT PREVIOUS YEAR AND ADDED THE BALANCE FIGURE OF RS. 5,76,250/ - IN TH E ABOVE STATED REGULAR ASSESSMENT. 4 . THE CIT(A) UPHOLDS ASSESSING OFFICER S ACTION AS FO LLOWS: - 4. DECISION: 4.1. I HAVE DULY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER IN THE REMAND REPORT REPRODUCED ABOVE AND THE APPELLANT'S REPLY VIDE LETTER DTD. 28.9.2010 AND FIND THAT THE APPELLANT HAS ONLY REITERATED THE SUBMISSION MADE DURING TH E COURSE OF ASSESSMENT PROCEEDINGS WHICH HAS BEEN COMPREHENSIVELY DEALT WITH BY THE ASSESSING OFFICER IN PARA 6 & 7 OF THE ASSESSMENT ORDER. THE CASE WAS REMANDED TO THE ASSESSING OFFICER TO EXAMINE THE ORIGIN OF SOURCE OF CASH DEPOSITS APPEARING IN THE BA NK ACCOUNT, AS A LSO OF OPENING CASH I.T.A NO S. 720 & 721 /AHD/20 11 A.Y. 2006 - 07 PAGE NO JAYESH CHAMPAKLAL GHAEL & DEEPIKA JAYESH GHAEL VS. ITO 4 BALANCE OF RS. 5,09,460/ - WHICH INDICATED THAT THE APPELLANT HAD ENGAGED IN SOME BUSINESS OR OTHER TRANSACTIONS WHICH HAD RESULTED IN SUCH GENERATION OF CASH. TH E ASSESSING OFFICER, IN PARA 2(1) OF THE REMAND REPORT H AS REPORTED THAT THE APP ELLANT ARGUED THAT HE HAD RAISED A CASH CREDIT LOAN OF RS. 10 LACS FROM BANK OF BARODA AGAINST STOCK IN TRADE DURING THE YEAR, 2002 AND, AS HE WAS HAVING DUES TOWARDS BANK, POST DATED CHEQUES WERE ISSUED TO THE BANK FOR ONE TIME SET TLEMENT AND HE HAD DEPOSITED THE CASH IN THE BANK A/C. TO CLEAR THE CHEQUES, HOWEVER, HIS CLAIM THAT HE WAS HAVING OPENING BALANCE OF RS. 5,09,460/ - HAS NOT BEEN SUPPORTED BY ANY DOCUMENTARY EVIDENCE, DESPITE OPPORTUNITY GIVEN TO HIM DURING THE COURSE OF R EMAND PROCEEDINGS AND HE HAS FAILED TO SUBSTANTIATE HIS CLAIM OF SUCH HUGE OPENING BALANCE. THE FINDINGS GIVEN BY THE ASSESSING OFFICER IN THE SUBSEQUENT PARAS ARE SELF EXPLANATORY IN NATURE AND CLEARLY EXPLAIN THAT THE APPELLANT HAS NOT FILED ANY RETURN O F INCOME SINCE A.Y. 2002 - 03 AND IT IS ONLY IN THE RETURN OF INCOME FILED FOR THE A.Y.20 06 - 07, OPENING CASH BALANCE OF RS. 5,09,460/ - HAS BEEN SHOWN, THE SOURCE OF WHICH HAS NOT BEEN EXPLAINED AT ALL. AS FOR THE EXPLANATION SUBMITTED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS, IN REGARD TO THE SOURCE OF THE ABOVE CASH, THE SAME IS FOUND TO BE CIRCUMLOCUTORY AND VAGUE. IT IS ALSO NOT SUPPORTED BY ANY EVIDENCE TO SHOW THAT THE SAID AMOUNT IS EARNINGS OR CASH OF THE EARLIER YEARS. IN RE SPECT OF THE BALANCE AMOUNT OF RS. 66,790/ - (RS. 5,76,250/ - - RS. 5,09,460/ - ), THE ASSESSING OFFICER HAS GIVEN HIS FINDINGS VIDE PARA 2(1) TO (IV) AND PARA 2(V) OF HIS REPORT, WHERE HE HAS STATED TH AT OUT OF THE CASH DEPOSITS OF RS. 10,51,250/ - , THE APPELLANT HAS EXPL AINED THE SOURCE OF DEPOSIT OF RS. 4,75,000/ - ON LY AND THE REMAINING AMOUNT OF RS. 5,76,250/ - HAS NOT BEEN EXPLAINED AT ALL. THE APPELLANT HAS ALSO NOT FURNISHED ANY EVIDENCE REGARDING THE SOURCE OF THE ABOVE AMOUNT OF RS. 66,790/ - . IN THE SAID EVENT, I UPHOLD THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF A/C. OF THE APPELLANT AND BRINGING TO TAX UNEXPLAINED CASH CREDITS OF RS. 5,76,250/ - U/S 68 OF THE ACT. THE ADDITION MADE BY THE ASSESSING OFFICER IS, THEREFORE, CONFIRMED. ACCORDINGLY, BOTH GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE DISMISSED. 5 . WE HAVE RIVAL CONTENTIONS. BOTH THE LEARNED REPRESENTATIVES VEHEMENTLY ARGUE AGAINST AND IN SUPPORT OF THE IMPUGNED ADDITIONS. THERE IS NO DISPUTE THAT ASSESSEE S IDBI ACCOUNT DO HAVE CASH DEPOSIT OF RS. 10,51, 250/ - . BOTH THE LOWER AUTHORITIES ACCEPT SOURCE I.T.A NO S. 720 & 721 /AHD/20 11 A.Y. 2006 - 07 PAGE NO JAYESH CHAMPAKLAL GHAEL & DEEPIKA JAYESH GHAEL VS. ITO 5 THEREOF TO THE TUNE OF RS. 4.75 LACS ONLY AS TO HAVE COME FROM SALE OF SHOP THEREBY ADDING THE REMAINING SUM IN QUESTION OF RS. 5,76,250/ - . THE ASSESSEE HAS NOT FILED HIS RETURN OF INC OME IN THE PRECEDING FOUR ASSESSMENT YEARS ON THE GROUND THAT HIS TAXABLE INCOME DID NOT EXCEED THE THRESHOLD LIMIT. IT HAS COME ON RECORD THAT HE HAS DULY FILED PROFIT AND LOSS ACCOUNT, CAPITAL ACCOUNT AND BALANCE SHEET ALONG WITH CASH FLOW STATEMENT OF ALL THESE FOUR ASSESSMENT YEARS IN SUPPORT OF THE OPENING CASH BALANCE AMOUNTING TO R S. 5,09,460/ - AS ON 01 - 04 - 2005. THE ASSESSING OFFICER DOUBTS AUTHENTICITY OF ALL THESE DOCUMENTS SOLELY ON THE GROUND THAT THERE IS NO CORRESPONDING RETURN OF INCOME IN T HE RELEVANT ASSESSMENT YEAR. THER E IS NO OTHER MATERIAL ON RECORD DISCUSSED IN REJECTING THE SAID DOCUMENTS. WE DISAGREE WITH THIS APPROACH ADOPTED IN PARA 6(A) OF THE ASSESSMENT ORDER AS SECTION 145(3) OF THE ACT DOES NOT STIPULATE NON FILING OF RETURN TO FORM AS TH E SOLE REASON OF REJECTION OF BOOKS. WE ACCEPT ASSESSEE S CONTENTIONS ON THIS SCORE ALONE TO AGREE WITH HIS OPENING CASH BALANCE OF R S. 5,09,460/ - AS ON 01 - 04 - 2005. WE COME TO REMAINING SUM OF RS. 66,790/ - . IT EMANATES FROM THE CASE FILE T HAT ASSESSE HAS DECLARED TRADING PROFIT OF RS. 81,464/ - @ 8.5% OF THE TURN OVER. OUR OPINION IS THAT THE SAME FORMS THE SOURCE OF THE REMAINING CASH SUM DEPOSITED BY APPLYING TELESCOPING FORMULA. WE ACCORDINGLY CONCLUDE THAT BOTH THE LOWER AUTHORITIES HAV E ERRED IN MAKING SECTION 68 ADDITION OF R S. 5,76,250/ - . THE SAME STANDS DELETED. ITA 720/AHD/2011 IS ALLOWED. I.T.A NO S. 720 & 721 /AHD/20 11 A.Y. 2006 - 07 PAGE NO JAYESH CHAMPAKLAL GHAEL & DEEPIKA JAYESH GHAEL VS. ITO 6 6. WE COME TO ITA 721/AHD/2011. THE ASSESSEE HEREIN CHALLENGES ID ENTICAL SECTION 68 ADDITION OF RS . 13,11,310/ - QUA CASH DEPOSITS OF RS. 1 6,49,950/ - IN HDFC BANK ACCOUNT AND RS. 2,33,500/ - IN ICICI BANK. THE ASSESSING OFFICER HAS MADE ADDITION QUA OPENING BALANCE OF RS. 9,41,180/ - AS ON 01 - 04 - 2005 AND OPENING STOCK OF RS. 3,70,130/ - IN ASSESSEE S HANDS AS AFFIRMED IN THE LOWER APPELLATE PRO CEEDINGS. WE FIND THAT THE ASSESSING AUTHORITY HAS ADOPTED THE SAME REASON IN PARA 6(A) AS IN CASE OF THE FORMER ASSESSEE. WE REFER TO OUR DISCUSSION HEREINABOVE AND DELETE THE IMPUGNED ADDITION . THIS APPEAL ITA 721/AHD/2011 IS ALSO ALLOWED. 7. BOTH TH ESE ASSESSEES SUCCEED IN THEIR RESPECTIVE APPEALS. ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 06 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /06 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,