HARESH N SHAH, MUMBAI V. ITO 24(1)(1), MUMBAI

ITA 7494/MUM/2012

• Counselvise Citation: 749419914 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 02-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Recovery proceedings
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) HARESH N. SHAH, 4, AASHIRWAD, 21,HAKTESH SOCIETY, 6 TH NORTH SOURTH ROAD, JUHU SCHEME, MUMBAI 400 056. VS. ITO WARD 24(1)(1), C-13/, 6 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, MUMBAI 400 051 PAN/GIR NO. : ACOPS3182P ( APPELLANT ) .. ( RESPONDENT ) APPEL LANT BY SHRI DHIREN P. TALATI RESPONDENT BY SHRI SUNIL KUMAR SINGH DATE OF HEARING : 08/06/2015 DATE OF PRONOUNCEMENT : /08/2015 O R D E R PER G.S.PANNU, A.M: THE CAPTIONED APPEAL IS PREFERRED BY THE ASSESSEE A ND IT IS DIRECTED AGAINST THE IMPUGNED APPELLATE ORDER DA TED 25/09/2012 PASSED BY CIT(A)-34, MUMBAI PERTAINING T O THE ASSESSMENT YEAR 2008-09, WITH REFERENCE TO ASSESSME NT ORDER ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 2 DATED 28/12/2010 PASSED IN TERMS OF SECTION 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. IN THIS APPEAL, THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE CIT(A) IN SUSTAINING AN ADDITION OF RS.19,39,790/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE IS AN INDIVIDUAL, WHOSE MAJOR SOURCE OF INCOME IS BY WAY OF SALARIES FROM TWO PARTNERSHIP FIRMS WHERE ASSESSEE IS PARTNE R. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE F ILED A RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.4,0 7,550/-, WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT. THE ASSE SSING OFFICER NOTICED THAT ASSESSEE WAS MAINTAINING SAV ING BANK ACCOUNT WITH THREE BANKS, NAMELY, ICICI BANK, HSBC BANK AND THE BANK OF INDIA. IT WAS NOTICED BY THE ASSESS ING OFFICER THAT ASSESSEE HAD DEPOSITED CASH TO THE TUNE OF RS.19,39,790/- IN THE THREE BANK ACCOUNTS. ASSESS ING OFFICER ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 3 TREATED THE CASH DEPOSITS IN THE THREE BANKS ACCOUN TS, TOTALING TO RS.19,39,790/-, AS UNEXPLAINED FOR THE REASON TH AT NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. THE CIT (A) NOTICED THAT ASSESSEE HAD FILED A LETTER DATED 28/12/2010 E XPLAINING THE DETAILS CALLED FOR BY THE ASSESSING OFFICER BUT THE SAME WAS FOUND TO HAVE BEEN RECEIVED ON 30/12/2010 BY THE AS SESSING OFFICER AFTER COMPLETION OF ASSESSMENT. THE CIT(A) NOTED THE CONTENTION OF THE ASSESSEE, WHICH WAS TO THE EFFECT THAT THE CASH WITHDRAWN FROM THE ABOVE THREE BANKS WAS RED EPOSITED INTO THE BANK ACCOUNTS AND, HENCE, THE SOURCE OF CA SH DEPOSITS STOOD EXPLAINED. THE CIT(A) ANALYZED THE AFORESAID EXPLANATION OF THE ASSESSEE AND REJECTED THE SAME O N THE TEST OF HUMAN PROBABILITIES, AS ACCORDING TO HIM, NO PE RSON WOULD WITHDRAW CASH FROM ONE ACCOUNT ONLY FOR THE PURPOS E OF REDEPOSITING IT INTO ANOTHER ACCOUNT. ACCORDINGLY, HE SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICE R. AGAINST THE SUSTENANCE OF ADDITION OF RS.19,39,790/- UNDER SECTION 68 OF THE ACT, ASSESSEE IS IN FURTHER APPEAL BEFORE US . ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 4 4. BEFORE US, LD. REPRESENTATIVE OF THE ASSESSEE CO NTENDED THAT THE SUMMARY OF CASH WITHDRAWALS AND DEPOSITS I N THE THREE BANK ACCOUNTS TABULATED BY THE ASSESSEE CLEAR LY ESTABLISHED THAT THE ASSESSEE HAD REQUISITE AMOUNT OF CASH AT THE TIME WHEN CASH DEPOSITS WERE MADE. 5. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HA ND, HAS RELIED UPON THE ORDER OF LOWER AUTHORITIES IN OPPOS ING THE PLEA OF THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PAPER BOOK FILED BEFORE US, ASSESSEE HAS FURNIS HED THE CASH FLOW STATEMENT OF EACH OF THE THREE BANK ACCOU NTS, WHICH INTER-ALIA, SHOWS THE AMOUNT OF CASH WITHDRAWN AT V ARIOUS DATES. ON THE SAID BASIS, IT IS CANVASSED THAT ASS ESSEE HAS FIRST WITHDRAWN FROM EITHER OF THE THREE SAVING BAN K ACCOUNTS AND THEN RE-DEPOSITED THE SAME IN EITHER OF THE T HREE SAVING BANK ACCOUNTS AND ON THIS BASIS THE SOURCE OF CASH DEPOSITS ARE SOUGHT TO BE EXPLAINED. THE FACTUAL ASSERTIONS MADE BY ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 5 THE ASSESSEE ARE BORNE OUT OF THE CASH FLOW STATEME NT FURNISHED BY THE ASSESSEE AND WE FIND THAT EVEN THE CIT(A) HAS NOT DISPUTED SUCH A FACTUAL MATRIX. SO HOWEVER, TH E PLEA OF THE ASSESSEE HAS BEEN REJECTED ON THE GROUND THAT N O PERSON WOULD FIRST WITHDRAW CASH ONLY FOR THE PURPOSE OF R E-DEPOSITING IT INTO ANOTHER ACCOUNT. 6.1 AT THE TIME OF HEARING, LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THE PURPOSE BEHIND THE WITHDR AWALS OF CASH MADE FROM THE BANK AND RE-DEPOSIT INTO THE BA NK ON DIFFERENT DATES. IN THIS CONTEXT, LD. REPRESENTAT IVE FOR THE ASSESSEE HAS REFERRED TO PAGE-7 OF THE PAPER BOOK, WHEREIN HE HAS PLACED A NOTE EXPLAINING THE CIRCUMSTANCES UNDE R WHICH ASSESSEE WAS REGULARLY WITHDRAWING THE CASH AND RE- DEPOSITING IT INTO BANK ACCOUNTS, WHENEVER IT WAS REQUIRED. I T HAS BEEN EXPLAINED THAT THE BUSINESS OF THE ASSESSEE WAS UND ER A STRAIN BECAUSE HIS MAIN FAMILY CONCERN NAMELY, M/S. TOTO PACKAGING PVT. LTD., OWNING A MANUFACTURING UNIT AT VASAI MUMBAI, WAS FLOODED AND HAD MADE LOSSES. IT HAS BEEN POINTED OUT THAT SOMEWHERE IN JUNE 2005, AS A RESUL T OF FLOODS ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 6 THE FACTORY HAD TO BE COMPLETELY CLOSED DOWN. THIS LEAD TO THE LENDING BANKS FORECLOSING THE LOAN ACCOUNT AND INIT IATION OF STRINGENT RECOVERY PROCEEDINGS AGAINST THE CONCERN, M/S. TOTO PACKAGING PVT. LTD., WHERE ASSESSEE IS A PRINCIPAL SHAREHOLDER. THE ASSESSEE EXPLAINED THAT HE WAS RUNNING HIS FAMI LY BUSINESS ALONE AND DURING SUCH PERIOD THERE WERE FA MILY RESPONSIBILITIES AND HE WAS FACING ACUTE SHORTAGE O F LIQUID FUNDS, AS THE BUSINESS WAS ALMOST STANDSTILL. THER E WAS A THREAT OF BANK ATTACHMENT OF THE PERSONAL ACCOUNTS ALSO FOR ENFORCING RECOVERY OF LOANS. THEREFORE, ASSESSSEE U SED TO WITHDRAW WHATEVER FUNDS WERE AVAILABLE IN THE BANK ACCOUNTS AND KEPT THE CASH IN HAND FOR RUNNING THE HOUSEHOLD EXPENDITURE, ETC. AND THE CASH WAS PUT BACK INTO THE BANK ACCOUNT, AS AND WHEN IT WAS REQUIRED TO CLEAR ANY CHEQUES IN ORDER TO MEET LIABILITIES ON ACCOUNT OF CREDIT C ARD PAYMENTS, ETC. IT HAS BEEN CONTENDED BY THE APPELLANT THAT B ECAUSE OF THE AFORESAID SCHEME OF THINGS, THERE WAS A BUILDU P OF CASH IN HAND AND THE BANK BALANCES REMAINED MINIMAL. TH E AFORESAID EXPLANATION SUPPORTS THE CASH FLOW STATEM ENT ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 7 FURNISHED BY THE ASSESSEE, WHICH DOES REFLECT CON TINUOUS WITHDRAWALS AND DEPOSIT OF CASH IMMEDIATELY BEFOR E CHEQUES WERE ISSUED BY THE ASSESSEE FOR PAYMENT TOWARDS CRE DIT CARD LIABILITIES, ETC. 6.2 IN OUR CONSIDERED OPINION, THERE IS NO MATERIAL BROUGHT OUT BY THE REVENUE TO DOUBT THE BONAFIDES OF EXPLAN ATION FURNISHED BY THE ASSESSEE WITH REGARD TO THE BUILD- UP OF CASH IN HAND AND THE DEPOSITS IN THE BANK ACCOUNT AS AND WHEN ASSESSEE REQUIRED CERTAIN CHEQUES TO BE CLEARED IN THE BANK. MOREOVER, FACTUALLY SPEAKING, WHENEVER THE IMPUGNED DEPOSITS WERE MADE BY THE ASSESSEE, THERE WAS A POSITIVE BAL ANCE OF CASH IN HAND. THERE DOES NOT APPEAR TO BE ANY NEG ATIVE BALANCE IN THE CASH FLOW STATEMENT. CONSIDERING TH E ENTIRETY OF CIRCUMSTANCES AND THE EXPLANATION FURNISHED BY T HE ASSESSEE, WHOSE BONAFIDES ARE NOT DOUBTED, WE DEE M IT FIT AND PROPER TO HOLD THAT THE IMPUGNED CASH DEPOSITS IN THE BANK ACCOUNT CANNOT BE CONSTRUED AS UNEXPLAINED WIT HIN THE MEANING OF SECTION 68 OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ITA NO.7494/MUM/12 (ASSESSMENT YEAR 2008-09) 8 ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER T O DELETE THE ADDITION OF RS.19,39,790/-. 7. THE ONLY OTHER GROUND RAISED BY THE ASSESSEE IS TO THE EFFECT THAT THE ASSESSMENT ORDER PASSED BY THE ASSE SSING OFFICER IS BARRED BY LIMITATION. SINCE ASSESSEE HAS BEEN ALLOWED THE RELIEF ON MERITS, THE SAID GROUND OF AP PEAL IS RENDERED ACADEMIC IN NATURE AND IS NOT BEING ADJUDI CATED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/08/2015 SD/- SD/- (SANJAY GARG) ( G.S.PANNU) JUDICIALMEMBER ACCOUNTANT MEMBER MUMBAI; DATED 19/08/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GU ARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT, MUMBAI