Shiddhesh Shripad Mitkar, Pune V. Income-tax Officer,

ITA 743/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1156 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: S N DOSHI
• Section: 68

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 743 /PN/201 5 / ASSESSME NT YEAR : 20 1 1 - 1 2 SHIDDHESH SHRIPAD MITKAR, 1009, SHRIPAD MODEL COLONY, SHIVAJI NAGAR, PUNE 4110 16 . / APPELLANT PAN: A BIPM1182E VS. THE INCOME TAX OFFICER , WARD 8 ( 3 ), PUNE . / RESPONDENT / APPELLA NT BY : SHRI S.N. DOSHI / RESPONDENT BY : SHRI P.L. KUREEL, ADDL.CIT / DATE OF HEARING : 25 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 05 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED B Y THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) , PUNE - 6, DATED 2 3 . 0 3 .20 1 5 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 1 43(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED CONCISE GROUNDS OF APPEAL , W HICH READ AS UNDER : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.29,50,000/ - DISREGARDING THE PROPOSITION MADE TO THE EFFECT THAT THE SAID ADDITION AT THE BEST BE OF THE PEAK DEPOSIT IN THE BA NK. ITA NO. 743 /PN/20 1 5 SHIDDHESH SHRIPAD MITKAR 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN MAKING ENHANCEMENT OF RS.9,55,000/ - BY VIOLATING THE CBDT INSTRUCTION DATED 08.10.2010 AS IS APPLICABLE TO THE AIR CASES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND WITHOUT PREJUDICE TO GROUND NO.2, LD. CIT(A) HAS ERRED IN MAKING THE ADDITION OF RS.9,55,000/ - BY REFERRING TO THE CHEQUES ENTRIES FOUND IN THE BANK STATEMENT DISREGARDING THE CLARIFICATION FURNISHED TO THE EFFECT THAT THE SAID AMOUNT IS PAID BY ONE MS. SHALINI ASHVIN. 3. THE FIRST ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST THE ADDITION OF RS.29,50,000/ - IN RESPECT OF CASH DEPOSITS IN THE BANK ACCOUNT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DEC LARING TOTAL INCOME OF RS.11,567/ - . THE ASSESSEE WAS A PROPRIETOR OF M/S. GIRIJA ASSOCIATES, WHICH IN TURN, WAS ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD UNDERTAKEN SCHEME OF RESIDENTIAL PROPERTI ES AT CHAKAN AND THE SAID PROJECT WAS NOT COMPLETED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE CLAIMED THAT IT WAS FOLLOWING PROJECT COMPLETION METHOD AND AS SUCH, NO INCOME WAS OFFERED SINCE THE PROJECT WAS IN PROGRESS AND NOT COMPLETED. THE ASSE SSING OFFICER RECEIVED AIR INFORMATION THAT THE ASSESSEE HAD MADE CASH DEPOSITS OF RS.29,50,000/ - IN HIS SAVINGS BANK ACCOUNT WITH AXIS BANK, CHAKAN BRANCH. FURTHER, AIR INFORMATION ALSO REPORTED THAT THE ASSESSEE HAD MADE CASH DEPOSITS AGGREGATING OR MOR E WITH A BANKING COMPANY OF RS.2 LAKHS ON ANY ONE DAY AND THE AGGREGATE OF SUCH DEPOSIT MADE DURING THE YEAR CAME TO RS.17 LAKHS. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SAID CREDITS IN THE BANK ACCOUNT. THE ASSESSEE IN REPLY EXPLAINED THAT OUT O F RS.17 LAKHS ON ACCOUNT OF DEPOSIT OF MORE THAN RS.2 LAKHS ON ANY ONE DAY, SUM OF RS.14 LAKHS WAS INCLUDED IN THE TOTAL AMOUNT OF CASH DEPOSIT OF RS.29,50,000/ - . AS FAR AS THE BALANCE OF RS.3 LAKHS MADE ON 13.10.2013, THE ASSESSEE EXPLAINED THAT THE SAME WAS MADE IN THE CURRENT ACCOUNT WITH AXIS BANK, BHOSARI BRANCH ITA NO. 743 /PN/20 1 5 SHIDDHESH SHRIPAD MITKAR 3 AND NOT IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE. THE SAID DEPOSIT OF RS.3 LAKHS WAS OUT OF ADVANCES RECEIVED FROM CUSTOMERS, WHICH WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. ACCORDING TO HIM, SOURCES OF CASH DEPOSIT OF RS.29,50,000/ - WERE TO BE LOOKED INTO. THE ASSESSEE FURTHER EXPLAINED THAT THE SOURCES OF SAID CASH DEPOSITS WERE OUT OF CASH WITHDRAWALS MADE ON VARIOUS DATES . IN THIS REGARD, THE COPY OF BANK STATEMENT WAS FILED. HOWEV ER, THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF ASSESSEE SINCE THE WITHDRAWALS ON VARIOUS DATES WERE OF VARYING AMOUNT FROM RS.1,000/ - TO RS.25,000/ - , WHEREAS THE CASH DEPOSITS WERE MADE ON VARIOUS DATES IN LAKHS. THE ASSESSING OFFICER ALSO NO TED THAT THE TOTAL CASH WITHDRAWALS BEFORE CASH DEPOSITS WERE LESS THAN THE AMOUNT OF DEPOSITS. IN VIEW THEREOF, THE CONCLUSION OF THE ASSESSING OFFICER IN THIS REGARD WAS THAT THE CASH WITHDRAWALS MADE ON VARIOUS DATES IN SMALL AMOUNTS MIGHT HAVE BEEN US ED FOR PERSONAL EXPENSES OR HOUSEHOLD EXPENSES OR SOME OTHER EXPENSES. IN VIEW THEREOF, THE ASSESSING OFFICER TREATED SUM OF RS.29,50,000/ - AS UNEXPLAINED AND ADDED THE SAME UNDER SECTION 68 OF THE ACT. ANOTHER AMOUNT OF RS.5,823/ - WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. THE AGRICULTURAL INCOME OF RS.1,22,400/ - DECLARED BY THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER. 5. THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS NOTED THAT IN THE SAID BANK ACCOUNT WITH THE AXIS BANK, THERE WERE C ERTAIN OTHER CREDITS PARTICULARLY IN THE NAME OF ONE MS. SHALINI ASHWIN, WHICH ACCORDING TO HIM , APPEARED DOUBTFUL AND HENCE, REMAND REPORT WAS OBTAINED FROM THE ASSESSING OFFICER IN THIS REGARD. FURTHER, THE ASSESSEE WAS ISSUED AN ENHANCEMENT NOTICE UNDE R SECTION 251(2) OF THE ACT. AFTER CONSIDERING THE EXPLANATION OF ASSESSEE, THE CIT(A) REJECTED THE EXPLANATION OF ASSESSEE THAT CASH DEPOSITS IN THE BANK ACCOUNT ON THE FIRST GROUND THAT THE WITHDRAWALS WERE IN SMALL ITA NO. 743 /PN/20 1 5 SHIDDHESH SHRIPAD MITKAR 4 AMOUNT RANGING FROM RS.1,000/ - TO RS. 25,000/ - WHEREAS THE CASH DEPOSITS IN THE BANK WERE HUGE EXCEEDING RS.1 LAKH. FURTHER, THE SAID CASH WITHDRAWALS WERE MADE THROUGH ATM AND SAME WERE DEPOSITED IN THE BANK ACCOUNT ON A LATER DATE, WAS THE CLAIM OF ASSESSEE. IN VIEW THEREOF, THE ADDITION M ADE BY THE ASSESSING OFFICER AT RS.29,50,000/ - WAS UPHELD. 6. WITH REGARD TO THE AMOUNTS RECEIVED THROUGH ATM TRANSFER OF RS.4,55,000/ - AND DEPOSIT OF RS.5 LAKHS ON 10.03.2011, THE ASSESSEE CLAIMED THAT THE SAME WERE FRIENDLY LOANS FROM MS. SHALINI ASHW IN BUT SINCE THE IDENTITY OF THE TRANSFEROR COULD NOT BE SUBSTANTIATED AND SINCE CREDIT TRANSFERS THROUGH ATM FROM MS. SHALINI ASHWIN, THE ASSESSEE MADE WITHDRAWALS AT REGULAR INTERVALS FROM HIS BANK ACCOUNT, THE CLAIM OF THE ASSESSEE OF RECEIVING FRIENDLY LOANS WAS NOT ACCEPTED AND THE ASSESSING OFFICER WAS DIRECTED TO MAKE FURTHER ADDITION OF RS.9,55,000/ - . BEFORE THE CIT(A), THE ASSESSEE MADE A PLEA OF ALLOWING THE BENEFIT OF CASH WITHDRAWALS , WHICH WAS REJECTED. THE SECOND PLEA OF THE ASSESSEE FOR SET OFF OF AGRICULTURAL INCOME OF RS.1,22,400/ - WAS ALSO NOT ACCEPTED. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE FIRST ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.1 BEFORE THE TRIBUNAL IS AGAINST THE ADDITION OF RS.29,50,000/ - . BY WA Y OF GROUNDS OF APPEAL NO.2 AND 3, THE ASSESSEE HAS RAISED THE ISSUE OF ENHANCEMENT AT RS.9,55,000/ - . 9. FIRST, I SHALL TAKE UP THE ADDITION OF RS.29,50,000/ - . THE CASE OF ASSESSEE WAS THAT OUT OF THE SAME BANK ACCOUNT, THERE WERE REGULAR CASH WITHDRAWAL S AND THE SAME WERE RE - DEPOSITED IN THE BANK ACCOUNT AND A REQUEST ITA NO. 743 /PN/20 1 5 SHIDDHESH SHRIPAD MITKAR 5 WAS MADE FOR THE ADDITION ON ACCOUNT OF PEAK OF THE DEPOSITS, WHICH AS PER THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WORKS TO RS.10,07,200/ - . HE FURTHER PLEADED THAT THE AGRIC ULTURAL INCOME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AT RS.1,22,400/ - AND THE CREDIT FOR THE SAME SHOULD ALSO BE ALLOWED AND ONLY THE BALANCE AMOUNT, IF ANY, IS TO BE ADDED IN THE HANDS OF ASSESSEE. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR T HE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 11. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, I FIND MERIT IN THE CLAIM OF ASSESSEE THAT WHILE MAKING ADDITION ON ACCOUNT OF CASH D EPOSITS IN THE BANK ACCOUNT, CREDIT FOR CASH WITHDRAWALS MADE BY THE ASSESSEE SHOULD BE GIVEN. HOWEVER, THE SAID CREDIT CAN BE ALLOWED TO THE ASSESSEE ONLY AFTER EXCLUDING THE AMOUNTS REQUIRED FOR MEETING ALLOWED TO THE ASSESSEE ONLY AFTER EXCLUDING THE AMOUNTS REQUIRED FOR MEETING THE HOUSEHOLD EXPENSES AND OTHER PERSONAL EXPENSES . THE ASSESSING OFFICER AND CIT(A) HAVE TIME AND GAIN POINTED OUT THAT THE ASSESSEE HAD WITHDRAWN SMALL AMOUNTS RANGING BETWEEN RS.1,000/ - TO RS.25,000/ - AND ON THE OTHER HAND, HAD DEPOSITED CASH RANGING FROM RS.1 LAKH AND ABOVE. THE CLAIM OF THE ASSESSE E BEFORE THE CIT(A) WAS THAT ON MANY OCCASIONS EVEN RS.50,000/ - WAS WITHDRAWN. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, I DEEM IT FIT TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL VERIFY THE CLAIM OF ASSESSEE AND AFTER EXCLUDING THE AMOUNT REQUIRED FOR HOUSEHOLD EXPENSES AND PERSONAL EXPENSES, CREDIT FOR THE BALANCE CASH WITHDRAWALS MADE BY THE ASSESSEE SHOULD BE ALLOWED AND ONLY PEAK OF THE DEPOSITS AFTER WITHDRAWALS SHOULD BE ADDED IN THE HANDS OF AS SESSEE UNDER SECTION 68 OF THE ACT. FURTHER, CREDIT OF AGRICULTURAL INCOME (NET) SHOULD ALSO BE ALLOWED, AS THE SAID AMOUNT IS AVAILABLE WITH THE ASSESSEE. THE REASONABLE ITA NO. 743 /PN/20 1 5 SHIDDHESH SHRIPAD MITKAR 6 OPPORTUNITY OF HEARING SHALL BE PROVIDED TO THE ASSESSEE WHILE DECIDING THE ISSUE. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED FOR STATISTICAL PURPOSES. 12. NOW, COMING TO THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY THE ASSESSEE AGAINST THE ADDITION OF RS.9,55,000/ - BY THE CIT(A). 13. THE SAID ADDITION WAS MADE BY THE CIT(A) AFTER GIVING AN ENHANCEMENT NOTICE TO THE ASSESSEE. THE CIT(A) WHILE GOING THROUGH THE DEPOSITS IN AXIS BANK NOTED THAT THERE WERE CHEQUE DEPOSITS IN THE BANK ACCOUNT AND SOME OF THE TRANSFERS FROM MS. SHALINI ASHWIN. THE ASSESSEE WAS ASKED T O EXPLAIN THE SAME, BUT THE EXPLANATION OF ASSESSEE WAS NOT ACCEPTED. THE FIRST OBJECTION RAISED BY THE ASSESSEE IS THAT THE CASE OF ASSESSEE WAS PICKED UP BECAUSE OF AIR INFORMATION W ITH REGARD TO CASH DEPOSITS IN SAVINGS BANK ACCOUNT WITH AXIS BANK. TH EREAFTER, AS PER CBDT INSTRUCTION DATED 08.09.2010, NO FURTHER BANK. TH EREAFTER, AS PER CBDT INSTRUCTION DATED 08.09.2010, NO FURTHER ADDITION COULD BE MADE IN THE HANDS OF ASSESSEE AS IT HAS BEEN DIRECTED BY THE CBDT THAT SCRUTINY OF SUCH CASES WOULD BE LIMITED ONLY TO THE ASPECTS OF INFORMATION RECEIVED THROUGH AIR. IN CAS E, IF ANY CASE IS TAKEN UP FOR WIDER SCRUTINY, THE SAME HAS TO BE WITH THE APPROVAL OF ADMINISTRATIVE COMMISSIONER, WHERE IT IS FEL T THAT APART FROM THE AIR INFORMATION, THERE IS POTENTIAL ESCAPEMENT OF INCOME MORE THAN RS.10 LAKHS. ADMITTEDLY, THE CASE O F THE ASSESSEE WAS PICKED UP ON ACCOUNT OF AIR INFORMATION IN RESPECT OF CASH DEPOSITS IN THE AXIS BANK. NO INFORMATION WAS RECEIVED IN RESPECT OF CHEQUE DEPOSITS IN THE SAID SAVINGS BANK ACCOUNT. IN THE ABSENCE OF THE SAME, WHERE THE SCRUTINY IN THE CAS E OF ASSESSEE WAS BASED ON AIR INFORMATION, THE CIT(A) HAS EXCEEDED IN EXERCISING HIS JURISDICTION OF ENHANCEMENT IN SUCH CASES. IN CASE ANY WIDER SCRUTINY HAD TO BE CARRIED OUT, THEN THE ASSESSING OFFICER HAD TO SEEK APPROVAL FROM THE CONCERNED CIT. HOW EVER, IN THE ABSENCE OF THE SAME, ITA NO. 743 /PN/20 1 5 SHIDDHESH SHRIPAD MITKAR 7 THE CIT(A) HAS NO POWER OF ENHANCEMENT. FURTHER , THE CBDT CIRCULAR DATED 08.09.2010 PROVIDES THAT SUCH WIDER SCRUTINY WITH THE APPROVAL OF ADMINISTRATIVE COMMISSIONER CAN BE TAKEN UP WHERE THERE IS POTENTIAL ESCAPEMENT OF INCOME OF MORE THAN RS.10 LAKHS. HOWEVER, IN THE PRESENT CASE, THE ADDITION HAS BEEN MADE TO THE EXTENT OF RS.9,55,000/ - ONLY WHICH IS NOT MERITED AND THE SAME IS DELETED . IN VIEW THEREOF, THE MERITS OF ISSUE RAISED BY THE ASSESSEE AGAINST THE ADDITION OF RS.9,55,000/ - IS NOT ADDRESSED. ACCORDINGLY, THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 14 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 5 TH DAY OF AUGUST , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 5 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , PUNE - 6 ; 4. / THE PR. CIT - 5 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE