ATULKUMAR RAJKUMAR AGARWAL, NAVI MUMBAI V. ITO 10(3)(4), MUMBAI

ITA 7374/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2228 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: M P CHHAJED
• Keywords: Unexplained cash credit; Assessment record
• Section: 142(1); 68

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SANJAY ARORA , A M ./ I.T.A. NO. 7374/MUM/2014 ( / ASSES SMENT YEAR: 2008 - 09 ) ATULKUMAR RAJKUMAR AGARWAL 203, RAJKAR BHAVAN, SECTOR 17, VASHI, NAVI MUMBAI - 400 703 / VS. ITO - 10(3)(4), MUMBAI ./ ./ PAN/GIR NO. AANPA 3025 A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. P. CHHAJED / RESPONDENT BY : SHRI B. S. BIST / DATE OF HEARING : 17.11.2015 / DATE OF PRONOUNCEMENT : 27 .11.2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 22 , MUMBAI (CIT(A) FOR SHORT) DATED 01.09.2014 , DISMISSING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (T HE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2008 - 09 VIDE ORDER DATED 27.12.2010. 2. PER GROUND 1, REPRODUCED AS UNDER, THE ASSESSEE RAISES THE ISSUE OF THE ORDER U/S.143 (3) WITHOUT ISSUE OF NOTICE U/S.143(2) AND, THUS, THE IMPUGNED ASSESSMENT , A S BAD IN LAW: 2 ITA NO. 7374/MUM/2014 (A.Y. 2008 - 09) ATULKUMAR RAJKUMAR AGARWAL VS. ITO 1. THE LEARNED ASSESSING OFFICER ERRED IN PASSING THE ORDER U/S.143(3) WITHOUT ISSUANCE OF PROPER NOTICE U/S. 143(2) AND THEREOF THE ORDER PASSED U/S. 143(3), IS BAD IN LAW AND NEEDS TO BE SET ASIDE. THOUGH THE WORD S USED IN THE G ROUND ARE: WITHOUT ISSUANCE OF PROPER NOTICE U/S. 143(2) . ., THE LD. AUTHORIZED REPRESENTATIVE (AR) , THE ASSESSEES COUNSEL, ON ENQUIRY, WOULD CONTEND NON - ISSUE OF NOTICE U/S. 143(2) , SO THAT BY IMPLICATION NO NOTICE THERE - UNDER STOOD ISSUED. AS FOR THE BASIS OF THI S CLAIM ; NO SUCH OBJECTION HAVING BEEN RAISED BEFORE EITHER THE ASSESSING AUTHORITY OR THE FIRST APPELLATE AUTHORITY , HE WOULD DRAW ATTENTION TO THE ASSESSMENT ORDER, WHICH STATES OF NOTICE U/S. 143(2) BEING ISSUED ON 08.5.2009 (REFER PARA 1 OF THE ASSESSM ENT ORDER). HOW COULD THIS BE A VALID NOTICE WHEN THE RETURN OF INCOME ITSELF WAS FURNISHED ONLY ON 09.7.2009, HE A SSEVERATED . THE DATE OF THE NOTICE, AS IT WOULD APPEAR, IS A TYPING MISTAKE. TO ASCERTAIN THE FACTS, THEREFORE, THE ASSESSMENT RECORD WAS CAL LED FOR VIDE O RDER SHEET ENTRY DATED 03.11.201 5 . THE SAME WAS DULY PR ODUCED BY THE LD. DEPARTMENTAL REPRESENTATIVE (DR) ON THE NEXT DA TE OF HEARING, I.E., 17.11.201 5. T HE SAME REVEALED NOTICE U/S. 143(2) DATED 08.09.2010 BY SANGEETA GO KHALE , ITO - 10(3)(4), MUMBAI , THE ASSESSING OFFICER (A.O.) . THIS WAS SHOWED TO THE LD. A UTHORIZED REPRESENTATIVE (A R ) , WITH IN FACT THERE BEING A NOTICE U/S.143(2) EVEN PRIOR THERETO, ON 17.08.2010, I.E., THE VERY SAME DATES ON WHICH NOTICE S U/S. 142(1) STAND ISSUED AND SERVED ON THE ASSESSEE (REFER PG. 1 OF THE ASSESSMENT ORDER). HE DID NOT RAISE ANY OBJECTION. ACCORDINGLY, THE ASSESSEES CHALLENGE VIDE ITS G ROUND 1 FAILS. 3. GROUND NO. 2, WHICH RAISES THE ISSUE OF THE A.O. NOT FOLLOWING THE CBDT INSTRUCTION DATED 08.09.2010, WAS NOT PR ESSED AT THE TIME OF HEARING NOR, ACCORDINGLY , RESPONDED TO BY THE REVENUE , AND IS ACCORDINGLY DISMISSED AS NOT PRESSED. 4. THE LAST AND THE THIRD GROUND CHALLENGES THE ADDITION IN THE SUM OF RS.5,25,000/ - TOWARD UNEXPLAINED CASH DEPOSIT S IN THE A SSESSEES , A SALARIED PERSON, BANK ACCOUNT WITH THE BOMBAY MERCANTILE BANK, VASHI, NAVI MUMBAI, AS: 3 ITA NO. 7374/MUM/2014 (A.Y. 2008 - 09) ATULKUMAR RAJKUMAR AGARWAL VS. ITO - RS.5,00,000/ - ON 12.06.2007 - RS. 25,000/ - ON 28.01.2008 THE SAME WAS NOT FOUND SATISFACTORILY EXPLAINED, I.E., AS TO ITS NATURE AND SOURCE , AND ACCORDIN GLY ADDED TO INCOME AND , FURTHER , CONFIRMED BY THE LD. CIT(A) FOR THE SAME REASON. 5 . BEFORE ME , THE ASSESSEES PRINCIPAL PLEA WAS THAT IN - AS - MUCH AS HE IS NOT RUNNING ANY BUSINESS OR PROFESSION, HE D OES NOT MAINTAIN ANY BOOKS OF ACCOUNT, SO THAT NO ADDIT ION U/S.68, AS EFFECTED, COULD BE MADE. FURTHER, ON THE MERITS OF THE ADDITION, I.E., ON THE FACTUAL ASPECT, IT WAS SUBMITTED THAT THE ASSESSEE HAD CASH WITHDRAWAL OF RS.7.93 LACS AND RS.2.20 LACS FOR THE FINANCIAL YEAR S 2005 - 06 AND 2006 - 07 RESPECTIVELY, W HICH WOULD JUSTIFY A N OPENING CASH IN HAND OF R S.3.50 LACS. THE BALANCE RS.1.5 LACS IS BY WAY OF TEMPORARY LOANS FROM FRIENDS AND RELATIVES, FROM WHOM CONFIRMATIONS STANDS SUBMITTED. THE CASH DEPOSIT ON 28.1.2008 (OF RS.25,000/ - ) IS FROM THE CASH WITHDRAWA L FROM THE BANK DURING THE CURRENT YEAR. 6 . THE PARTIES HAVE BEEN HEARD, AND THE MATERIAL ON RECORD PERUSED. WITH REGARD TO THE LEGAL OBJECTION OF SECTION 68 BEING NOT APPLICABLE IN - AS - MUCH AS THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT, THE ARGUM ENT IS MISCONCEIVED. AS EXPLAINED DURING HEARING ITSELF, THE ADDITION IS TOWARD UNEXPLAINED CASH DEPOSIT IN HIS BANK ACCOUNT DURING THE YEAR. THE SAME WOULD FALL U/SS. 69/69A AS THE CASH DEPOSIT IN HIS ACCOUNT IMP LIES, FIRSTLY, UNEXPLAINED CASH - I N - HAND (TO THAT EXTENT) AND , TWO, THE BANK ACCOUNT ITSELF QUALIFIES TO BE MON EY AND , IN ANY CASE , INVESTMENT. AS EXPLAINED IN CIT VS. J AUHARIMAL GO E L [ 2005 ] 147 TAXMAN 448 (ALL) , THE TWO, I.E., THE UNEXPLAINED CREDIT AND UNEXPLAINED MONE Y ONLY REPRESENT T W O DIFFERENT ASPECTS OF THE SAME TRANSACTION, THOUGH REFERABLE TO THE SEPARATE PROVISIONS OF THE ACT. WHERE THE BOOKS OF ACCOUNT ARE MAINTAINED, IT IS THE NATURE AND SOURCE OF A CREDIT ENTRY APPEARING THEREIN THAT IS REQUIRED TO BE EXPLAINED U/S.68. ON THE OTHER HAND, WHERE NOT 4 ITA NO. 7374/MUM/2014 (A.Y. 2008 - 09) ATULKUMAR RAJKUMAR AGARWAL VS. ITO MAIN TAINED, IT IS THE CORRESPONDING DEBIT, AS IN THE FORM OF CASH - IN - HAND (SAY), AS BANK DEPOSIT IN THE PRESENT CASE, WHICH WOULD NEED TO BE SIMILARLY EXPLAINED. WHY, ONE MAY NOT MAINTAIN BOOKS OF ACCOUNT EVEN WHERE ENGAGED IN BUSINESS OR PROFESSION ? NOT MAINT AINING OF BOOKS OF ACCOUNT, THUS, WOULD BE OF NO ASSISTANCE TO THE ASSESSEE. IT IS EVEN OTHERWISE TRITE LAW THAT THE EXERCISE OF A POWER WOULD BE REFERABLE TO A JURISDICTION WHICH CONFERRED VALID ITY UPON IT AND NOT TO A JURISDICTION UNDER WHICH IT WOULD BE NUGATORY (REFER: L. HAZARIMAL KUTHIALA VS. ITO [1961] 41 ITR 12 (SC)). AS LONG AS, THEREFORE, THE ACTION OF THE A.O. HAS THE SANCTION OF LAW , IT COULD MATTER LITTLE IF HE DOES NOT REFER TO THE APPROPRIATE PROVISION ; THE PROVISIONS OF SECTION 68 AND SECTIO NS 69/69A BEING EVEN OTHERWISE COGNATE PROVISIONS . THE ASSESSEE S PRINCIPAL CONTENTION ON MERITS IS OF THE SAME BEING DEPOSITED FROM CASH - IN - HAND. THE SAME HAS NOT BEEN ACCEPTED BY THE REVENUE AS , IN THAT CASE, THERE WAS NO NEED FOR HIM TO BORROW FURTHER CASH FROM FRIENDS AND RELATIVES. FURTHER, CONFIRMATION/S ITSELF WOULD NOT PROVE A CREDIT , AND THERE IS NO SUBSTANTIATION OF THE CAPACITY OF THE CREDITORS. ADMITTEDLY, NO BOOKS OF ACCOUNT ARE MAINTAINED. THE ASSESSEE HAS NOWHERE SUBMITTED A CASH FLOW STATEM ENT FOR THE RELEVANT YEARS. THE CASH - IN - HAND WOULD, THEREFORE, HAVE TO BE JUSTIFIED IN TERMS OF THE CASH WITHDRAWAL FROM THE BANK (OR ANY OTHER SOURCE), AND ITS UTILIZATION. WHAT, ONE MAY ASK, A S DOES THE REVENUE, IS THE PURPOSE OF CASH ACCUMULATION ? TRUE, THE CASH WITHDRAWAL OF NEARLY RS.8 LACS DURING FINANCIAL YEAR 2005 - 06 COULD LEAD TO CASH - IN - HAND. BUT, THEN, NOBODY WOULD WITHDRAW CASH ONLY TO MAINTAIN CASH - IN - HAND , AND CONTINUE DOING SO IN - AS - MUCH AS IT STANDS BUILT - UP OVER TIME . EVEN ASSUMING THE SAME WAS WITHDRAWN FOR S O ME PURPOSE, WHICH REMAINS UN SPECIFIED , AND WHICH DID NOT MATERIALIZE, ONE WOULD REDEPOSIT CASH IN BANK OR ADJUST IT AGAINST THE FUTURE REQUIREMENT OF CA S H . THIS IS IN FACT ALSO INFERABLE FROM TH E DRASTIC DECREASE IN THE CASH WITHDRAWAL FOR THE FOLLOWING YEAR, WITH THAT FOR F . Y. 2006 - 07 BEING AT RS.2.20 LACS, I.E., NEARLY 1/4 TH OF THAT WITHDRAWN DURING THE IMMEDIATELY PRECEDING YEAR , WITH THAT FROM 01.4.2007 TO 12.6.2007 BEING AT RS.40,000/ - ONLY . FURTHER, THOUGH DATE - WISE CASH WITHDRAWA L IS NOT 5 ITA NO. 7374/MUM/2014 (A.Y. 2008 - 09) ATULKUMAR RAJKUMAR AGARWAL VS. ITO AVAILABLE , IT IS CLEAR THAT CASH WAS WITHDRAWN AT RS.2.20 LACS FOR THE FOLLOWING YEAR (F . Y. 2006 - 07) , AND ALSO FOR THE CURRENT YEAR , IMPLYING UTILIZATION OF THE CASH - IN - HAND , IF ANY, AVAILABLE . THE ASSESSEE HAS NOT SPECIFIED THE CASH REQUIRED FOR HOUS E - HOLD AND/OR PERSONAL PURPOSE S, AS WELL AS TOWARD INVESTMENT S , IF ANY, MADE FROM F . Y . 2005 - 06 ONWARDS, TO HAVE ANY PURPOSEFUL ASSESSMENT OF THE CASH WITH HIM IN JUNE, 200 7 AND JANUARY, 2008, WHEREAT EXCESS CASH OF RS.3.50 LACS AND RS.0.25 LACS IS STAT ED TO BE AVAILABLE. FURTHER STILL, THERE IS NO EXPLANATION FOR CASH RECEIVED FROM FRIENDS AND RELATIVES WHEN THE ASSESSEE HIMSELF HAS SURPLUS CASH OF RS.3.50 LACS. IT IS STATED THAT THE SAME IS TO COVER THE SHORT - FALL TO HONOUR A CHEQUE OF RS.5 LAC, WHICH THOUGH DID NOT MATERIALIZE. HOWEVER, NO DETAILS OF THIS PAYMENT/INVESTMENT ARE PROVIDED - TO WHOM WAS THE CHEQUE ISSUED /TO BE ISSUED, AND FOR WHAT PURPOSE. THEN , AGAIN , WHY WAS THE AMOUNT NOT REFUNDED BACK WHEN THE TRANSACTION DID NOT MATERIALIZE ? W HY, FO R ALL WE KNOW , THE AMOUNT IS OUTSTANDING FOR PAYMENT EVEN TO DATE SO MUCH FOR THE TEMPORARY LOANS . AS REGARDS THE CASH DEPOSIT OF RS.25,00 0/ - , THE SAME HAS BEEN EXPLAINE D AS SOURCED FROM TH E CASH WITHDRAWAL DURING THE CURRENT YEAR. THE SAME ONLY IMPLIES A REDUCTION IN THE CASH WITHDRAWAL FOR THE YEAR BY RS.25,000/ - . THE LEAST THAT THE ASSESSEE IS THEREFORE REQUIRED TO STATE IS THE CASH WITHDRAWAL FOR THE YEAR, I.E., UPTO 27.1.2008. THE CASH WITHDRAWAL FOR THE YEAR HAS ALREADY BEEN OBSERVED TO BE LOWER FOR T HE INITIAL MONTHS, SUGGESTING ABSORPTION OF THE SURPLUS CASH, IF ANY, AND IN ANY CASE ONLY TO MEET THE DAY - TO - DAY REQUIREMENTS. I HAVE ALREADY OBSERVED OF NO CASE BEING MADE OUT WITH REFERENCE TO THE DATE - WISE WITHDRAWAL OR BY WAY OF CASH FLOW STATEMENT, S PECIFYING THE CASH REQUIREMENT FOR MAINTENANCE PURPOSES AND/OR INVESTMENTS, IF ANY. THE ASSESSEES EXPLANATION AND, THUS, CASE , AS WOULD BE APPARENT FROM THE FOREGOING, IS WHOLLY UNSUBSTANTIATED AND UNPROVED. ACCORDINGLY , THE ACTION OF THE REVENUE IN BRI NGING TO TAX A SUM OF RS.5.25 LACS IS CONFIRMED. I DECIDE ACCORDINGLY. 6 ITA NO. 7374/MUM/2014 (A.Y. 2008 - 09) ATULKUMAR RAJKUMAR AGARWAL VS. ITO 6 . IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 27 , 201 5 SD/ - (S ANJAY ARORA) / A CCOUNTANT MEMBER MUMBAI ; DATED : 27 . 11 .201 5 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI