Shri Kunal Janakkumar Bhojak, Bhavnagar V. The Income Tax Officer, Ward-1(4), Bhavnagar

ITA 771/AHD/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9370 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N R GOEL
• Assessee Lawyers: KAILASH SHAH
• Keywords: Unexplained cash credit; Set aside
• Section: 271(1)(c); 143(3); 201; 131; 68

Judgement Text

ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH ES (SMC) , AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 771 / AHD /20 18 ASSESSMENT YEAR: 2008 - 09 SHRI K UNAL JANAK KUMAR BHOJAK PLOT NO.206/C KAILASH MANSAROVAR NEAR DR. BALANI HOSPITAL SANSKAR MANDAL BHAVNAGAR - 364 002 / VS. ITO WARD - 1(4) BHAVNAGAR ( APPELLANT ) ( REVENUE ) P.A. NO. AKMPB8892R APPELLANT BY SHRI KAILASH SHAH, A.R. RESPONDENT BY SHRI N.R. GOEL, SR. D.R. DATE OF HEARING: 19 . 0 9 .201 9 DATE OF PRONOUNCEMENT : 19 . 0 9 .201 9 / O R D E R PER KUL BHARAT , J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A) - 6 DATED 23.2.2018 PERTAINING TO THE ASSESSMENT YEAR 2008 - 09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR 2 THE LD. CIT(A) - 6 AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN: 1. CONFIRMING THE ACTION OF THE A.O. IN LEVYING THE PENALTY OF RS.7,55,429/ - UNDER SECTION 271(1)(C) OF THE ACT, FOR THE REASONS AS STATED IN THE BODY OF THE ORDER; AND 2. WITHOUT PREJUDICE, IN CONFIRMING THE PENALTY LEVIED BY THE A.O. UNDER SECTION 271(1)(C) DESPITE THE UNDERLYING PENALTY ORDER HAVING BEEN PASSED BEYOND THE TIME PERMITTED UNDER THE PROVISO TO SECTION 275(1)(A) OF THE ACT. 2. THE ONLY EFFECTIVE GROUND IS AGAINST CONFIRMING THE PENALTY OF RS.7, 55,429/ - . FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT ) WAS FRAMED VIDE ORDER DATED 31.12.2010. THE A.O. WHILE FRAMING THE ASSESSMENT MADE ADDITION IN RESPECT OF UNEXPLAINED CASH CREDIT OF RS.13,19,960/ - IN RESPECT OF THE CASH DEPOSITED IN THE ICICI BANK ACCOUNT NO.027201507137 AND A CASH TOTALING RS.10,15,100/ - IN ICICI BANK ACCOUNT NO. 027201505515. TH E A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. SUBSEQUENTLY, A PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED VIDE ORDER DATED ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR 3 12. 9 .2017. THEREBY THE A.O. LEVIED A PENALTY OF RS.7,55,429/ - IN RESPECT OF THE ADDITION MADE OF RS.23,35,06 0/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. AGGRIEVED AGAINST THIS, ASSESSEE IS IN PRESENT APPEAL. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.251/AHD/2014 DATED 18.06. 201 9 IN THE ASSESSEE S OWN CASE HAS SET ASIDE THE ISSUE OF ADDITION TO THE FILE OF THE A.O. FOR DECIDING THE ISSUE AFRESH. THEREFORE, HE SUBMITTED THAT THE PENALTY SO IMPOSED WOULD NOT BE SURVIVED. 4. PER CONTRA, LD. D.R. SUPPORTED THE ORDERS OF THE AUTHORI TIES BELOW. 5. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I FIND THAT THE DIVISION BENCH OF THE ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR 4 TRIBUNAL IN ITA NO.251/AHD/2014 (SUPRA) IN THE CASE OF THE ASSESSEE HA S SET ASIDE THE ADDITIONS AND RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR DECIDING AFRESH BY OBSERVING AS UNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE HAS FILED PAPER BOOK CONTAINING THE DETAIL OF WRITTEN SUBMISSION FILED BEFORE THE LD. CIT(A). THE ASSESSEE SUBMITTED THAT HE WAS EMPLOYED AS CLERK WITH GUJARAT STATE ROADWAYS CORPORATION AND HE HAD BEEN IN RECEIPT OF MEAGER INCOME AND THERE WAS NO OTHER SOURCE OF INCOME. REGARDING SOURCE OF CASH DEPOSIT, IT IS STATED THAT SUCH CASH HAS BEEN DEPOSITED BY HIS SON NAMELY SHRI KUNAL JANAKBHAI BHOJAK AND STATED THAT SIMILAR ISSUE OF CASH DEPOSIT WAS ALSO FOUND IN THE BANK ACCOUNT OF KUNAL JANAKBHAI BHOJAK. THE ASSESSEE HAS EXPLAINED THAT HIS BANK ACCOUNT WAS USED BY HIS SON EMPLOYED WITH KOTAK MAHINDRA BANK LTD. IT IS FURTHER EXPLAINED THAT HIS SON WAS ON ADHOC P OSTING AND IN ORDER TO MEET HIS TARGET FIXED BY THE MANAGEMENT FROM TIME TO TIME HIS SON HAS MOBILIZED FUNDS FROM VARIOUS CUSTOMERS TO INVEST IN THE MUTUAL FUND, INSURANCE POLICIES ETC. THEREFORE, TO ACHIEVE THE TARGET, HIS SON HAS APPROACHED VARIOUS PER SONS WHO WERE DERIVING AGRICULTURAL INCOME BUT NOT HAVING BANK ACCOUNT TO MAKE INVESTMENT IN THE MUTUAL FUND AND INSURANCE POLICIES. THE ASSESSEE HAS STATED THAT HIS SON HAS APPROACHED HIM FOR USING HIS BANK ACCOUNT FOR THE PURPOSE OF DEPOSITING THE CASH COLLECTED FROM VARIOUS PERSONS TO OBTAIN INSURANCE POLICIES IN THEIR NAMES FOR ISSUING OF DD/CHEQUE FOR THE PURPOSE OF INVESTMENT IN THE NAME OF THIRD PARTIES. THE ASSESSEE HAS ALSO SUBMITTED THAT OUT OF CASH DEPOSIT OF RS. 10,32,000/ - CHEQUES/DD ISSUED F OR THE PURPOSE OF INVESTMENT IN THE NAMES OF THIRD PARTIES AND THE ASSESSEE NEVER HAD ANY DIRECT OR INDIRECT CONNECTION WITH THE BENEFICIARIES OF SUCH INVESTMENT. IN THE LIGHT OF THE ABOVE FACTS, WE CONSIDER THERE WAS EXCEPTIONAL CIRCUMSTANCES AS ELABOR ATED ABOVE WHICH DEMONSTRATE THAT ASSESSEE WAS AN EMPLOYEE AND WAS NOT CARRYING ON ANY BUSINESS ACTIVITY AND THEREFORE NO BOOKS OF ACCOUNTS WERE MAINTAINED. ASSESSEE S DURING THE COURSE OF HIS EMPLOYMENT HAS PERSUADED VARIOUS INVESTORS FOR PARKING FUNDS IN THE MUTUAL FUNDS AND INSURANCE POLICIES ETC. SUCH INVESTORS WERE PREDOMINANTLY DERIVING AGRICULTURAL INCOME AND THEY WERE NOT HAVING ANY BANK ACCOUNT THEREFORE THE CASH RECEIVED FROM SUCH INVESTORS WAS ROUTED THROUGH THE ACCOUNT OF THE ASSESSEE AND OUT OF SUCH CASH ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR 5 DEPOSIT DD/CHEQUES WERE ISSUED FOR PURCHASING INSURANCE POLICIES IN THE NAME OF SUCH INVESTORS. IT WAS ALSO STATED THAT ASSESSEE WAS NOT HAVING ANY RELATION WITH THOSE INVESTORS EXCEPT PROVIDING THEM SPECIAL SERVICES UNDER THE ABOVE MENTIONE D ARRANGEMENT. IN VIEW OF THE ABOVE FACTS, THE ASSESSEE HAS CONTENDED THAT THE OWNER OF THE CASH DEPOSITED IN THE BANK ACCOUNT WAS THIRD PARTIES UNDER WHOSE NAME EVENTUALLY THE INVESTMENT WAS MADE AND THE SAME CONTINUED TO BE IN THEIR NAMES ONLY AND THE A SSESSEE WAS HAVING NO CONNECTION WHATSOEVER WITH SUCH INVESTMENT. IT IS ALSO SUBMITTED BY THE ASSESSEE THAT ASSESSEE HAS EARNED ONLY SMALL COMMISSION BY ALLOWING SUCH ARRANGEMENT IN WHICH CASH RECEIVED FROM HIS CLIENTS WAS FIRST DEPOSITED IN HIS BANK ACCO UNT AND IN HIS FATHER S BANK ACCOUNT AND THE ASSESSEE HAS ALSO PROVIDED PARTICULARS OF THE BENEFICIARIES WITH THEIR PRESENT ADDRESSES AND THE CORRESPONDING COMMISSIONS EARNED BY THE SON OF THE ASSESSEE WHICH IS REPRODUCED AS UNDER: - NAME AND ADDRESS OF THE INVESTOR DATE AND AMOUNT OF INVESTMENT NAME OF THE SCHEME IN WHICH THE AMOUNT WAS INVESTED CORRESPOND ING COMMISSION ALLOWED TO SHRI KUNAL BHOJAK (IN RS.) MR. L.J. JADEJA 161, MARKETING YARD CHITRA, 1 BHAVNAGAR. 08 - 01 - 2008 1 .5 LAC KOTAK LIFE INSURANCE RETIREMENT PLAN 4500.00 MR. ANIL B. JOSHI SABSKARMANDAL, NEAR BHAGLIGATE CROSS ROAD, PLOT NO.2260, BHAVNAGAR 08 - 01 - 2008 1.00 LAC KOTAK LIFE INSURANCE RETIREMENT PLAN 3000.00 MR. ANIL B. JOSHI SANSKARMANDAL , NEAR BHAGLIGATE CROSS ROAD, PLOT NO.C - 2260, BHAVNAGAR 09 - 01 - 2008 65000.00 KOTAK LIFE INSURANCE CHILD PLAN 1950.00 MR. M. H. LAKHANI JOGIVADTAKI, SISHUVIHARE, PLOT NO. G - 3896, BHAVNAGAR. 15 - 01 - 2008 1.70 LAC KOTAK LIFE INSURANCE RETIREMENT PLAN 5100.00 ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR 6 MISS C.K. BHOJAK KAILASHMANSAROVARE BUNGLOWS, PLOT NO.2063, SANSKARMANDAL, BHAVNAGAR 08 - 01 - 2008 5.47 LAC KOTAK SMART ADVANTAGE PLAN 0.00 (POLICY NOT ISSUED DUE TO MEDICAL PROBLEM) IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE CONSIDER THAT THE ASSESSING OFFICER MUST EXAMINE THE ABOVE MENTIONED INVESTORS BY ISSUING OF SUMMONS U/S. 131 OF THE ACT AND ALSO CONDUCT INQUIRIES FROM THE BANK AND THE ENTITIES WHERE THE AMOUNT RECEIVED FROM THE INVESTORS WAS INVESTED I N MUTUAL FUND AND IN INSURING POLICIES TO PROVE THE CORRECTNESS OF THE TRANSACTIONS. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AS DIRECTED ABOVE AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. LD. D.R. COULD NOT CONTROVERT THIS FACT. I THEREFORE , SET ASIDE THE PENALTY ORDER AND DIRECT THE A.O. TO DELETE THIS PENALTY. HOWEVER, THE A.O. WOULD BE AT LIBE RTY TO INITIATE PENALTY PROCEEDINGS WHEN THE ASSESSMENT IS BEING FRAMED DE - NOVO. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.771/AHD/2018 FOR THE A.Y. 2008 - 09 IS ALLOWED IN THE TERMS INDICTED ABOVE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 . 0 9 .2019 . SD/ - (KUL BHARAT) JUDICIALMEMBER AHMEDABAD ; DATED : 19 / 0 9 /201 9 VG/SPS ITA NO.771/AHD/2018 SHRI KUNAL JANAK KUMAR BHOJAK, BHAVNAGAR 7 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUARD FILE. BY ORDER ASSISTANT REGISTRAR , AHMEDABAD