RAJIV J. MODI, MUMBAI V. I.T.O. 19(2)(2), MUMBAI

ITA 7754/MUM/2012

• Counselvise Citation: 775419914 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 27-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: DHIRENDRA SHAH
• Keywords: Gift; Opportunity of being heard; Additional evidence
• Section: 68; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.7754/MUM/2012 ( / ASSESSMENT YEAR :2007-08) SHRI RAJIV J MODI, 702, PALM GROVE CHS LTD., 45,EAST AVENUE ROAD, SANTACRUZ(W), MUMBAI-400054 / VS. INCOME TAX OFFICER 19(2)(2), 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, LALBAUG, MUMBAI-400012 ( / APPELLANT) .. ( !' / RESPONDENT) ./ $% ./ PAN/GIRNO.:ACPM6594N & / APPELLANT BY : SHRI DHIRENDRA SHAH !' ' & /RESPONDENT BY : SHRI NEIL PHILIP ( ) ' * + / DATE OF HEARING : 27.10.2014 ,- ' * + /DATE OF PRONOUNCEMENT : 29.10.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 5.9.2012 PASSED BY LD. CIT(A)-35, MUMBAI AND IT RE LATES TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.22,82,000/- MADE BY AO AS UNEX PLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961 (THE ACT). 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE LD. COUNSEL FOR THE ASSESSEE FIRST SUBMITTED THAT THE AO WAS WRONG IN LAW IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT AS THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF I.T.A. NO.7754/MUM/2012 2 ACCOUNT AND THE PROVISIONS OF SECTION 68 IS APPLIC ABLE ONLY IF CASH CREDIT IS FOUND IN THE BOOKS OF ACCOUNT. HOWEVER, WE DO NOT FIND AN Y MERIT IN THE SAID SUBMISSION, AS IT IS AGAINST THE DECISION RENDERED BY THE FIVE MEMBER SPECIAL BENCH OF INCOME TAX APPELLATE TRIBUNAL IN THE CAS E OF MANOJ AGGARWAL VS. DCIT REPORTED IN (2008) 113 ITD 377(DEL). IN THE CASE BEFORE THE LARGER BENCH OF SPECIAL BENCH, THE DEPOSITS FOUND IN BANK ACCOUN TS WERE ASSESSED U/S 68 OF THE ACT. ACCORDING TO THE ASSESSEE THEREIN, THE PR OVISIONS OF SEC. 68 CAN BE INVOKED ONLY IF THE CASH CREDITS ARE FOUND IN THE B OOKS OF ACCOUNT. THE ASSESSEE THEREIN DID NOT MAINTAIN BOOKS OF ACCOUNT AND ACCOR DINGLY, IT WAS CONTENDED THAT THE AO WAS NOT RIGHT IN LAW IN INVOKING THE PROVISI ONS OF SEC. 68 OF THE ACT FOR MAKING ADDITION RELATING TO UNEXPLAINED BANK DEPOSI TS. THE SAID CONTENTIONS DID NOT FIND FAVOUR WITH THE SPECIAL BENCH OF THE TRIBU NAL. FOR THE SAKE OF CONVENIENCE, THE RELEVANT OBSERVATIONS/DECISION GIV EN BY THE SPECIAL BENCH AT PARA 26 OF ITS ORDER ARE EXTRACTED BELOW:- THE ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE BE FORE US WAS THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT A ND THE DEPOSITS WERE FOUND ONLY IN THE ASSESSEES BANK STATEMENT WHICH C ANNOT BE CONSIDERED AS THE BOOKS OF ACCOUNT OF THE ASSESSEE AND, THEREF ORE, S. 68 WAS NOT APPLICABLE. OUR ATTENTION WAS DRAWN TO THE CONFIRMA TION LETTERS PLACED AT PP. 159 AND 160 OF THE PAPER BOOK. WE ARE HOWEVER U NABLE TO ACCEPT THE ARGUMENT. THOUGH S. 68 OF THE ACT MAY NOT BE STRICT LY APPLICABLE SINCE THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT A ND THE BANK STATEMENT CANNOT BE CONSIDERED AS THE ASSESSEES BO OKS OF ACCOUNT, ON THE BASIS OF THE JUDGMENT OF THE SUPREME COURT IN T HE CASE OF A. GOVINDARAJULU MUDALIAR VS. CIT (1958) 34 ITR 807 (S C) , IT IS THE ONUS OF THE ASSESSEE TO EXPLAIN THE CASH RECEIVED BY HIM AN D IF THERE IS NO EXPLANATION OR ACCEPTABLE EVIDENCE TO PROVE THE NATURE AND SOURCE OF THE RECEIPT, THE AMOUNT MAY BE ADDED AS T HE ASSESSEES INCOME ON GENERAL PRINCIPLES AND IT IS NOT NECESSAR Y TO INVOKE S. 68, NOR IS IT NECESSARY FOR THE IT AUTHORITIES TO P OINT OUT THE SOURCE OF THE MONIES RECEIVED. EVEN IF S. 68 IS NOT APPLICABLE, THE CASH DEPOSIT IN THE BANK CAN BE ASKED TO BE EXPLAIN ED BY THE ASSESSEE UNDER S. 69 OR S. 69B OF THE ACT. NO DOUBT THE ASSESSEE HAD TRIED TO FILE ADDITIONAL EVIDENCE BEFORE THE CIT(A) IN THE FORM OF CONFIRMATION LETTERS AND IT RETURNS BUT THESE WERE NOT ADMITTED BY THE CIT(A) AND NO REASONS HAVE BEEN SHOWN BEFORE US AS TO WHY THEY SHOULD HAVE BEEN ADMITTED. IN THE ABSENCE OF ANY CLINCHING EVIDENCE TO SHOW THE NATURE AND SOURCE OF THE MONIES DEPOSITED INTO THE BANK ACCOUNT WHICH BELONGS TO THE ASSESSEE, THE AO WAS JUSTIFIED IN AD DING THE AMOUNT OF RS. 15 LACS AS THE ASSESSEES UNEXPLAINED INCOME. WE CO NFIRM THE ADDITION AND DISMISS THE GROUND. I.T.A. NO.7754/MUM/2012 3 IT CAN BE SEEN THAT THE UNEXPLAINED RECEIPTS/INVEST MENTS/EXPENDITURE ETC., AS PER THE VIEW EXPRESSED BY THE LARGER BENCH OF THE S PECIAL BENCH OF THE TRIBUNAL, CAN BE ASSESSED AS THE INCOME OF THE ASSESSEE ON GE NERAL PRINCIPLES, IF THE ASSESSEE HAS FAILED TO OFFER SATISFACTORY EXPLANATI ON. IT WAS FURTHER HELD THAT THE SAID INCOME, IF NOT ASSESSABLE UNDER ONE SECTION CA N BE ASSESSED BY INVOKING APPLICABLE SECTION. ACCORDINGLY, IN OUR VIEW, MERE MENTIONING OR INVOKING OF WRONG SECTION FOR ASSESSING A PARTICULAR ITEM OF IN COME MAY NOT VITIATE THE ASSESSMENT PROCEEDINGS, IF THE AO HAD OTHERWISE ASS UMED JURISDICTION FOR ASSESSING THE INCOME OF THE ASSESSEE IN A LEGALLY P ERMISSIBLE MANNER. ACCORDINGLY, WE REJECT THE SAID CONTENTION URGED BY THE LD. AR. 4. WITH REGARD TO THE MERITS OF THE CASE, THE LD. A R SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE ORDER OF AO W ITHOUT GIVING ANY REASON. IN THIS REGARD, THE LD. AR INVITED OUR ATTENTION TO TH E OPERATIVE PORTION OR THE ORDER PASSED BY THE LD. CIT(A) WHICH READS AS UNDER : 5.2 KEEPING IN VIEW OF THE ABOVE FACTS BROUGHT ON RECORD BY THE AO AND THE APPELLANTS FAILURE TO EXPLAIN THE VARIOUS ASPECTS OF CASH CREDIT WHICH HE APPELLANT HAS CLAIMED AS GIFT, THE APPELLA NTS CONTENTION CANNOT BE ACCEPTED ON GOING THROUGH THE ABOVE FINDINGS WE FIND MERIT T HAT THE LD CIT(A) DID NOT FURNISH ANY REASON TO SUPPORT HIS DECISION. IN THIS REGARD, WE FEEL IT PERTINENT TO EXTRACT BELOW THE PROVISIONS OF SECTION 250(6) OF T HE ACT: 250 (6) THE ORDER OF THE [COMMISSIONER (APPEALS)] DISPO SING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION IN THE INSTANT CASE, THE LD. CIT(A) HAS PASSED A C RYPTIC ORDER WITHOUT GIVING ANY REASON FOR DECISION. AS PER THE PROVISIONS OF SECT ION 250(6) OF THE ACT, THE ORDER PASSED BY THE LD. CIT(A) SHOULD STATE POINT OF DET ERMINATION, DECISION THEREON AND THE REASONS FOR THE DECISION. HENCE, THE IMPUGN ED ORDER PASSED BY THE LD. CIT(A), IN OUR VIEW, DEFEAT THE PROVISIONS OF SECT ION 250(6) OF THE ACT. THERE SHOULD NOT BE ANY DISPUTE THAT THE REASONS CONSTITU TE THE SOUL AND THE HEART OF ANY JUDICIAL ORDER. ACCORDINGLY, WE SET ASIDE THE O RDER OF LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH BY DULY CONSIDERING THE WRITTEN SUBMISSIONS, PAPER BOOK ETC ., IF ANY, FILED BY THE I.T.A. NO.7754/MUM/2012 4 ASSESSEE AND PASS A SPEAKING ORDER AFTER GIVING APP ROPRIATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN CO URT ON 29TH OCT, 2014 . ,- ( . /0 1 2 29TH OCT, 2014 - ' 3) 4 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER / ( ) MUMBAI: OCT,2014. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ( 6* ( ) / THE CIT(A)- CONCERNED 4. ( 6* / CIT CONCERNED 5. 6. 78 3 !*9 , + 9 , / ( ) / DR, ITAT, MUMBAI CONCERNED 3 : ) / GUARD FILE. ; ( / BY ORDER, TRUE COPY < $ (ASSTT. REGISTRAR) + 9 , / ( ) /ITAT, MUMBAI