Shri Vipulkumar Vasantbhai Shah, Bhavnagar V. The Income tax Officer,Ward-1(3), Bhavnagar

ITA 771/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9572 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Salary income; Opportunity of being heard
• Section: 80C; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.771/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) VIPUL KUMAR VASANTBHAI SHAH BHAVNAGAR. / VS. ITO, WARD-1(3), BHAVNAGAR. ./ ./ PAN/GIR NO. : AHUPS 1067 L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : MS. VIJAY RANJAN WITH MS. IRA KAPOOR, A.R. / RESPONDENT BY : SHRI PRASOON KABRA, SR.D.R. / DATE OF HEARING 20/12/2016 / DATE OF PRONOUNCEMENT 04/01/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABAD, DATED 25/01/2012 FOR THE ASSESSMENT YEAR (AY) 2008-09 AND FOLLOWING GROUNDS HAVE BEEN TAKEN:- (I) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.3,55,000/- OUT OF TOTAL ADDITION OF RS.27,55,000/- MADE IN THE ASSESSMENT ORDER AND NOT ACCEPTING THE EXPLANATION BEFORE HIM THAT THIS AMOUNT REPRESENTS THE FUND RECEIVED FROM APPELLANTS MOTHER-IN-LAW SMT. SAVITABEN GOSALIYA. (II) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THE LD.CIT(A) HAS ERRED IN GIVING DIRECTIONS FOR MAKING THE ADDITION TO THE APPELLANTS TOTAL INCOME ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON SALE OF ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 2 - SHARES BY THE APPELLANTS FAMILY MEMBERS TO THE EXTENT OF RS.9,82,615/- HE OUGHT TO HAVE APPRECIATED THAT EACH OF SUCH FAMILY MEMBERS WAS ADULT AND WAS HAVING THEIR SEPARATE INCOME ALSO AND AS SUCH THERE WAS NO JUSTIFICATION FOR HOLDING THAT THE CAPITAL GAIN RELATING TO THOSE FAMILY MEMBERS WAS TO BE TAXED IN THE HANDS OF THE APPELLANT. THE ADDITION ON THIS ACCOUNT MADE BY THE CIT(A) DESERVES TO BE DELETED. (III) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THE LD.CIT(A) HAS ERRED IN NOT DELETING THE INTEREST LEVIED U/S.234B. 2. THE FACTS OF THE CASE ARE THAT THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICES WERE ISSUED AND LEGAL NOTICES WERE ISSUED TO THE ASSESSEE AND THEY WERE DULY COMPLIED AND DETAIL FURNISHED WITH THE RETURN OF INCOME/INFORMATION/DOCUMENTS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE SCRUTINIZED. THE POINTS MENTIONED BELOW EMERGED FOR CONSIDERATION/DISCUSSION/DISALLOWANCE. ASSESSEE HAS DEPOSITED TOTAL RS.2950000/- IN HIS IDBI BANK ACCOUNT BEARING NO.071104000026965 DURING THE YEAR UNDER CONSIDERATION. REGARDING THIS ASSESSEE HAS FILED HIS REPLY DT. NIL. HE HAS STATED THAT HE HAS DEPOSIT THE ABOVE MENTION AMOUNT AS UNDER:- 1.0 (LATE) SMT. SAVITABEN GOSALIYA (MOTHER IN LAW) RS. 355000/- 2.0 SHRI RUSHABH V. SHAH (SON) RS. 690000/- 3.0 SMT. LATTABEN V. SHAH (MOTHER) RS. 745000/- 4.0 SMT. RITABEN V. SHAH (WIFE) RS. 965000/- RS. 2755000/- 3. ASSESSEE HAS ALSO FILED CONFIRMATION IN THIS REGARDS BY THE WAY OF AFFIDAVITS ALONG WITH PHOTO COPY OF BANK PASSBOOKS OF FROM RUSHBH V. SHAH, LATTABEN V. SHAH, RITABEN V. SHAH. ASSESSEE ALSO FILED AFFIDEVITE OF SHRI NITINBHAI M. GOSALIYA AND ATULBHAI M. GOSALIYA (BROTHER IN LAW OF THE ASSESSEE AND SON OF LATE SMT. SAVITABEN GOSALIYA) ALONG WITH PHOTO COPY OF 7/12 8-A AND PROOF OF SALE PROCEED OF AGRI. PRODUCTS. HE ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 3 - HAS ALSO FILED CASH FLOW STATEMENT AND OTHER CHARTS BUT SAME WAS NOT ACCEPTABLE AND ABOVE MENTIONED AMOUNT IS ADDED IN THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT 1961 AS UNEXPLAINED CASH CREDIT. ISSUE NOTICE U/S 271(1)(C) OF I.T. ACT 1961 FOR CONCEALING THE PARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. 4.BANK INTEREST IT IS SEEN FROM THE RETURN OF INCOME FURNISHED FOR A.Y. 2008-09 THAT THE ASSESSEE HAS NOT OFFERED ANY INCOME UNDER THE HEAD OF OTHER INCOME. IT HAS COME TO NOTICE THAT ASSESSEE HAS EARNED INTEREST OF RS.1205 IN IDBI BANK AND RS.2166 FROM HDFC BANK. TOTAL RS.3371/- IS ADDED IN THE TOTAL INCOME OF THE ASSESSEE ISSUE NOTICE U/S271(1)(C) OF I.T. ACT, 1961 FOR CONCEALING THE PARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. ADDITION OF RS.3,371/- 5. CASH DEPOSITED IN HDFC BANK OF RS.1,25,000/- IT HAS COME TO NOTICE THAT ASSESSEE HAS DEPOSITED RS.1,25,000/- IN HDFC BANK ON 6/11/2007 EXPLANATION IS SOUGHT FROM THE ASSESSEE IN HIS LETTER DT. NIL HE HAS REPLY THAT THE SAME WAS OUT OF HIS OWN FUND WHICH WAS NOT ACCEPTABLE AND ADDED IN THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT AS UNEXPLAINED CASH CREDIT. ISSUE NOTICE U/S. 271(1)(C) OF IT ACT 1961 FOR CONCEALING THE PARTICULARS OF HIS INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. ADDITION OF RS. 1,25,000/- 6. SUBJECT TO THE ABOVE REMARKS, AND ON THE BASIS OF DETAILS MADE AVAILABLE ON RECORDS, SUBMISSIONS AND ARGUMENTS PUT FORTH DURING THE ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 4 - COURSE OF ASSESSMENT PROCEEDINGS, AND AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TAXABLE INCOME OF THE ASSESSEE IS DETERMINED AS UNDER:- (I) SALARY INCOME RS. 2,36,256/- (II) ADD: AS DISCUCESS IN PARA 5.1 RS. 27,55,000/- (III) ADD: AS DISCUCESS IN PARA 5.2 RS. 3,371/- (IV) ADD: AS DISCUCESS IN PARA 5.3 RS. 1,25,000/- GROSS TOTAL INOCME RS. 31,19,627/- (V) LESS: DEDUCTION U/S 80C RS. 1,00,000/- NET ASSESSED INCOME RS. 30,19,627/- I.E. RS. 30,19,630/- 7. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A) THAT ASSESSMENT AS WELL AS ASSESSMENT PROCEEDINGS, IT WAS CONTENDED THAT RS.3.55 LAKHS WAS RECEIVED BY THE APPELLANT FROM HIS MOTHER-IN-LAW LATE SMT. SAVITABEN GOSALIYA AND WAS DEPOSITED IN THE BANK. IN THIS CONNECTION, IT IS SEEN THAT IN THE IMMEDIATELY PRECEDING A.Y. SIMILAR EXPLANATION WAS OFFERED AS UNDER: NO EVIDENCE EXCEPT 7/12 EXTRACT IS FURNISHED. AS SEEN FROM 7/12 EXTRACT FURNISHED, SHE OWNED 7.32 HECTARES OF AGRICULTURAL LAND. THE REASONING GIVEN BY THE AO (AT PARA-7(2) AND 7(9) OF THE ASSESSMENT ORDER WHILE REJECTING THIS EXPLANATION) IS RE-PRODUCED BELOW: 'THE ASSESSEE'S MOTHER-IN-LAW EXPIRED ON 28-05-2008. THERE ARE 6 PERSONS (I.E. TWO BROTHER + 4 SISTER OF IN THE MOTHER IN LAW FAMILY) ARE AS A KHATEDAR IN 7/12 ACCOUNT. ONE OF THEM IS THE ASSESSEE WIFE AS KHATEDAR. THE ASSESSEE HAS NOT PRODUCED IN SUPPORTS SALES BILL AND RECEIPT CASH IN THE HANDS OF MOTHER-IN-LAW. THEREFORE, THE RECEIPT IN THE HANDS OF ASSESSEE CONSIDERED IS UNEXPLAINED CASH CREDIT. ' AO'S FINDINGS ARE UNEXCEPTIONABLE. I AGREE WITH THE AO'S FINDINGS AND HOLD THAT THIS AMOUNT IS UNEXPLAINED. ' 8. DURING THE ASSESSMENT PROCEEDINGS, CASH FLOW STATEMENT WAS FURNISHED TO THE AO. THE APPELLANT USED TO MAKE APPLICATIONS IN IPOS IN ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 5 - HIS OWN NAME AND IN THE NAMES OF HIS MOTHER, WIFE AND SON. REMITTANCES WERE MADE TOWARDS SHARE-APPLICATION MONEY FROM THE BANK-ACCOUNT WITH IDBI BANK; IF THE SHARES ARE ALLOTTED THEY WILL BE IN RESPECTIVE NAMES; IF SHARES ARE NOT ALLOTTED, REFUNDS WILL BE CREDITED IN THE BANK ACCOUNTS OF RESPECTIVE PERSONS; IF THE SHARES ALLOTTED ARE SOLD LATER, SALE-PROCEEDS WILL BE CREDITED IN THE RESPECTIVE ACCOUNTS; FUNDS DRAWN FROM THESE ACCOUNTS WITH STATE BANK OF SAURASHTRA AND BOTAD MERCANTILE CO-OP.BANK LTD. WERE BEING DRAWN IN CASH AND DEPOSITED IN APPELLANT'S BANK ACCOUNT WITH IDBI BANK. AS SEEN FROM THE CASH FLOW STATEMENT FURNISHED, APPELLANT IS APPARENTLY ENTITLED TO THE BENEFIT OF TELESCOPING. HOWEVER, IT IS SEEN THAT IN THE CASH FLOW STATEMENT AS ON 27-12-2007, THERE WAS NEGATIVE CASH- BALANCE OF RS.3.35 LAKHS. HENCE, ADDITION TO THE EXTENT OF SAID SUM WAS ALSO UPHELD. 9. DURING PROCEEDING BEFORE THE LD.CIT(A) APPELLANT CONTENDED THAT THOUGH HIS OWN MONEY WAS INVESTED IN SHARES IN THE NAMES OF FAMILY MEMBERS, THE INCOME ARISING CANNOT BE ASSESSED IN HIS HANDS. THIS CONTENTION IS DISMISSED AS DEVOID OF MERITS. HE ALSO FURNISHED THE WORKING OF SHORT-TERM CAPITAL GAINS AS DETAILED BELOW:- STATEMENT OF GAIN/LOSS ON SALE OF DELIVERY PERIOD FROM : 01/04/2007 TO 31/03/2008 STOCK PURCHASE SALES GAIN LOSS DATE QTY. RATE AMOUNT DATE QTY. RATE AMOUNT LONG TERM SHORT TERM LONG TERM SHORT TERM TOTAL 3,929 9,30,562.49 2,153 4,83,638.25 0.00 1,08,948.80 0.00 0.00 TOTAL SALES : 4,83,638.25 TOTAL OPENING : 0.00 ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 6 - TOTAL PURCHASE : 9,30,562.49 LONG TERM GAIN : 0.00 SHORT TERM GAIN : 1,08,948.80 LONG TERM LOSS : 0.00 SHORT TERM LOSS : 5,55,873.04 AT THE END OF YEAR ###TRANSACTION HAS BEEN IGNORED IN TOTAL AS IT FALLS OUTSIDE FINANCIAL YEAR. 10. THE CONTENTION OF THE ASSESSEE WAS THAT THE NET SHORT TERM CAPITAL GAIN WORKED OUT TO RS.10,71,940/-, WHICH EXPLAINED PARTLY THE CASH DEPOSITS MADE IN THE BANK ACCOUNT AND AO WAS DIRECTED TO VERIFY THE WORKING SHORT TERM CAPITAL GAIN AND DELETED THE ADDITION MADE U/S. 68 TO THE EXTENT OF SHORT TERM CAPITAL GAIN. THE SAID AMOUNT SHALL BE ASSESSED UNDER THE HEAD SHORT TERM CAPITAL GAINS AS SUCH. IN THIS CONNECTION, IT IS PERTINENT TO MENTION THAT AS MENTIONED AT PARA-4.7 OF THIS ORDER AND THE APPELLANT DID NOT RAISE ANY OBJECTION TO THE SAID NOTICE OF ENHANCEMENT. 11. TO SUM UP, ADDITION MADE U/S.68 TO THE EXTENT OF RS.6.9 LAKHS (RS. 3.55 LAKHS ALLEGEDLY RECEIVED FROM THE MOTHER-IN-LAW + NEGATIVE CASH BALANCE OF RS.3.35 LAKHS APPEARING IN THE CASH FLOW STATEMENT) STANDS CONFIRMED; BALANCE ADDITION U/S.68 STANDS DELETED. AN AMOUNT OF RS. 10,71 , 940/- WILL BE ASSESSED AS SHORT TERM CAPITAL GAIN. 'THE A.O. HAS STATED THAT CASH OF RS.L,25,000/- WAS DEPOSITED IN THE APPELLANT'S BANK ACCOUNT WITH HDFC ON 6-11-2007. THE APPELLANT HAD EXPLAINED THAT THE AMOUNT WAS DEPOSITED FROM OUT OF THE APPELLANT'S OWN FUND WHICH IS FROM WITHDRAWALS AS EXPLAINED ABOVE AND/OR PAST SAVINGS. THE LEARNED A.O. HAS HOWEVER NOT ACCEPTED THE SAME STATING THAT THE EXPLANATION GIVEN IS NOT ACCEPTABLE AND THE ADDITION IS TO BE MADE U/S.68 OF THE INCOME-TAX ACT. ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 7 - 12. AO HAS STATED THAT THERE IS ANOTHER ADDITION OF RS.1,25,000/- ON ACCOUNT OF CASH DEPOSITED IN THE APPELLANTS BANK ACCOUNT WITH HDFC ON 06/11/2007. THIS PAYMENT IS ALSO CONSIDERED IN THE CASH BOOK AGAINST THE AMOUNT RECEIVED FROM FAMILY MEMBERS WHICH IS SEPARATELY CONSIDERED AS PART OF RS. 27.55/- LAKH. HENCE IT IS SUBMITTED THAT THE SAID AMOUNT OF RS.1,25,000/- MAY PLEASE BE CONSIDERED AS DULY EXPLAINED. 13. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND LD.AR STATED THAT HE WAS NOT PROPERLY HEARD BY THE AUTHORITIES BELOW AND WHATEVER DOCUMENTS SHE SUBMITTED BEFORE THE LOWER AUTHORITIES WERE IN NOT DULY CONSIDERED AND IN SUPPORT OF HIS CONTENTION HE FILED AFFIDAVIT OF RUSHABH VIPULBHAI SHAH AND HIS BANK PASSBOOK. (II) AFFIDAVIT OF LATABEN VASANTBHAI SHAH(MOTHER) ALONG WITH BANK PASS BOOK. (III) AFFIDAVIT OF RITABEN VIPULBHAI SHAH (WIFE) ALONG WITH A COPY OF PASSBOOK. (IV) AFFIDAVIT OF SHRI NITINBHAI M GOSALIYA (BROTHER IN LAW) AND ATULBHAI M GOSALIYA (BROTHER IN LAW) ETC. (V) COPY OF CHART GIVEN TO THE ASSESSING OFFICER REGARDING APPLICATION OF PUBLIC ISSUE OF SHARES. (VI) COPY OF CASH BOOK OF VIPULBHAI VASANTBHAI SHAH AND IN A.Y. 2007-08 HONBLE ITAT HAD SET ASIDE THE ORDER AND MATTER WAS REMEDIED BACK TO THE AO AND AO ACCEPTED THE CONTENTION OF ASSESSEE AT PAPER BOOK PAGE NO. 2 AND 3 AND EVIDENCE WERE ALSO SUBMITTED AND LD.AR STATED THAT CIT(A) HAS ACCEPTED THAT MONEY CAME FROM SALE OF SHARES OF RELATIVES AND IN RESPECT OF HIS CONTENTION HIS SUBMISSION OF EVIDENCE AT THIS STAGE AFFIDAVIT AND SEVERAL OTHER DOCUMENTS HAVE BEEN FILED IN SUPPORT OF CONTENTION OF THE APPELLANT. THEREFORE, WE ARE REMAND THIS MATTER BACK TO THE FILE OF THE ITA NO.771/AHD/2012 VIPULKUMAR VASANTBHAI SHAH. VS.ITO ASST.YEAR 2008-09 - 8 - ASSESSING OFFICER TO VERIFY THE ALL DOCUMENTS AND CLAIM OF THE ASSESSEE AND DECIDE THE MATTER DE NOVO AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 14. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 04/01/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 04/01/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-XX, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY