SAMEER KALE, MUMBAI V. DCIT CEN CIR 32, MUMBAI

ITA 786/MUM/2011

• Counselvise Citation: 78619914 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2001-2002
• Appeal Filed On: 28-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VERMA
• Assessee Lawyers: R C JAIN
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure
• Section: 147; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA NO. 786/MUM./2011 (ASSESSMENT YEAR : 2001-02 ) MR. SAMEER KALE 8, NANDDEEP, KAILASHPURI GOVIND NAGAR, MALAD (EAST) MUMBAI 400 097 PAN AAQPK8907Q .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE32, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. R.C. JAIN REVENUE BY : MR. PRA VIN VERMA DATE OF HEARING 16.03.2012 DATE OF ORDER 25.04.2012 O R D E R PER BENCH THE PRESENT APPEAL PREFERRED BY THE ASSESSEE, IS DI RECTED AGAINST THE IMPUGNED ORDER DATED 20 TH DECEMBER 2010, PASSED BY THE COMMISSIONER (APPEALS)XXXXI, MUMBAI, FOR ASSESSMENT YEAR 2001-0 2. 2. THE RETURN OF INCOME, IN THIS CASE, WAS ORIGINALLY FILED ON 8 TH MARCH 2002, DECLARING INCOME OF ` 1,45,500. THE CASE WAS RE-OPENED UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ), BY ISSUING NOTICE ON 13 TH MARCH 2000, IN VIEW OF CERTAIN MATERIAL FOUND DURI NG THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED IN THE KALE GROUP OF ENTITIES. THE MR. SAMEER KALE 2 ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SE CTION 143(3) R/W SECTION 147 OF THE ACT ON 29 TH DECEMBER 2008, COMPUTING INCOME AT ` 41,85,930. 3. THE COMMISSIONER (APPEALS) GRANTED PART RELIEF. BEI NG AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE LEARNED COUNSEL, MR. R.C. JAIN, R EPRESENTING THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIV E, MR. PRAVIN VERMA, REPRESENTING THE REVENUE. 5. GROUND NO.1, IS AN ADDITION MADE ON THE BASIS OF BA LANCE SHEET AS ON 31 ST MARCH 2000. 6. AFTER HEARING BOTH THE PARTIES, WE FIND THAT SIMILA R ISSUE HAS BEEN DECIDED BY US WHILE DISPOSING OFF OTHER APPEALS IN KALE GROUP OF ENTITIES, WHEREIN WE HAVE HELD THAT THE OPENING BALANCES APPE ARING IN THE BALANCE SHEET OF A PARTICULAR YEAR CANNOT BE TREATED AS INC OME OF THAT PARTICULAR YEAR UNLESS THE REVENUE ADDUCES EVIDENCE IN SUPPORT OF T HE SAME. IF THE OPENING BALANCE SHEET IS HELD TO BE FALSE, THEN, LOGICALLY, THE ADDITIONS CANNOT BE MADE BASED ON THAT BALANCE SHEET. UNLESS AN ASSET I S ACQUIRED DURING THE YEAR, NO ADDITION CAN BE MADE UNDER SECTION 69, IN THIS YEAR ON THE GROUND THAT THE SOURCES ARE NOT EXPLAINED. THE TRANSACTION S AND FIGURES APPEARING IN THE OPENING BALANCE SHEET PERTAIN TO PREVIOUS YEARS AND THEY CANNOT BE ADDED IN THE CURRENT YEAR AS INCOME. CONSEQUENTLY, THE ADDITION MADE IS HEREBY DELETED AND THE GROUND RAISED BY THE ASSESSE E IS ALLOWED. 7. GROUND NO.2, IS AN ADDITION MADE ON ACCOUNT OF UNEX PLAINED CASH OF ` 4,62,550, BEING THE AMOUNT MENTIONED AS OPENING CAS H IN HAND. 8. AFTER HEARING BOTH THE PARTIES, WE FIND THAT SIMILA R ISSUE HAS BEEN DECIDED BY US IN ITA NO.787/MUM./2011, MRS. SARITA N. KALE, WHEREIN VIDE PARA-9/PAGE-3, WE HAVE HELD AS FOLLOWS:- 9. AFTER HEARING BOTH THE PARTIES, WE FIND THAT WH EN THE BALANCE SHEET IS NOT BELIEVED, NO ADDITION CAN BE MADE. THE CASE OF THE ASSESSING OFFICER IS THAT NO SUCH CASH BALANCE EXIS TS AT THE END OF THE MR. SAMEER KALE 3 PREVIOUS YEAR. WHEN IT IS SO, WE DO NOT KNOW AS TO HOW IT CAN BE TREATED AS INCOME. AT BEST, IT CAN BE SAID THAT THE ASSESSEE HAS NO OPENING BALANCE OF CASH AND, HENCE, IT CANNOT BE US ED AS A SOURCE FOR ACQUISITION OF ANY ASSETS OR FOR INCURRING AN EXPEN DITURE. TELESCOPING CAN BE DENIED ON THE GROUND THAT NO OPENING CASH BA LANCE EXISTS. THUS, THIS GROUND IS ALLOWED. 9. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DELETE T HE ADDITION AND ALLOW THE GROUND RAISED BY THE ASSESSEE. THE ASSESS EE, AT BEST, CAN BE DENIED TELESCOPING OF THIS AMOUNT BY EXPLAINING FUT URE INVESTMENTS OR EXPENDITURE. IN ANY EVENT, CASH SEIZED AS ON THE DA TE OF SEARCH HAS BEEN BROUGHT TO TAX AND THERE IS NO LOGIC IN THE SUBJECT ING OPENING CASH BALANCES TO TAX AS UNEXPLAINED INCOME. THUS, GROUND NO.2, IS ALLOWED. 10. GROUND NO.3, IS ON THE ADDITION ON ACCOUNT OF UNEXP LAINED CASH CREDIT IN THE BANK ACCOUNT OF THE ASSESSEE. 11. THE ASSESSEE HAD RECEIVED ` 75,000 AND ` 1,25,000, FROM MR. BHAKUL AND MR. ASHWIN VERMA, WHICH WERE DEPOSITED IN THE B ANK ON 2 ND NOVEMBER 2000. THE ADDITION WAS MADE ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED ANY CONFIRMATION. THE ASSESSEE FILED EXPL ANATION STATING THAT THESE TWO PERSONS HAD REQUESTED THE ASSESSEE TO ACT AS IN TER-MEDIARY FOR SETTING UP OF A FAST FOOD CENTRE AT MUMBAI AIRPORT AND THE CONFIRMATION WERE SUBMITTED. 12. A FURTHER DEPOSIT OF ` 1,21,000, WAS MADE ON 10 TH FEBRUARY 2001, AND THE ASSESSEE CLAIMS THAT THE SAME REPRESENTS CONSID ERATION OF SALE OF OLD CAR. NO EVIDENCE WAS PRODUCED. 13. AFTER HEARING RIVAL CONTENTIONS, WE UPHOLD THE ADDI TIONS MADE ON THESE TWO COUNTS AS THE ASSESSEE HAS NOT DISCHARGED THE P RIMARY ONUS THAT LAY ON IT TO EXPLAIN THE ENTRIES WHEN THE ASSESSEE CLAIMS THAT THE AMOUNT IS SALE PROCEEDS OF A CAR SOLD, EVIDENCE OUGHT TO HAVE PROD UCED TO SUPPORT HIS CASE THAT HE ACTUALLY OWNED THE CAR. THUS, THIS GROUND I S DISMISSED. 14. GROUND NO.4, IS AN ADDITION ON ACCOUNT OF JOINT PUR CHASE OF PROPERTY AT SAIBABA NAGAR, BORIVALI. MR. SAMEER KALE 4 15. AFTER HEARING BOTH THE PARTIES, WE FIND THAT SIMILA R ISSUE HAS BEEN DECIDED BY US IN ITA NO.787/MUM./2011, MRS. SARITA N. KALE, WHEREIN VIDE PARA-14/PAGE-5, WE HAVE HELD AS FOLLOWS:- 14. GROUND NO.6, IS AN ADDITION OF THE VALUE OF LA ND AT SAIBABA NAGAR, BORIVALI, WHICH IS JOINTLY OWNED BY OTHER FA MILY MEMBERS. THIS ADDITION IS ALSO MADE BASED ON A CLOSING BALANCE SH EET AS ON 31 ST MARCH 2000. THE EVIDENCE PRODUCED BY THE ASSESSEE P ROVES THAT THE ASSET IN QUESTION WAS, IN FACT, ACQUIRED IN A PREVI OUS YEAR WHICH INCLUDES AGREEMENT DATED 10 TH DECEMBER 1989. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE WAS ABLE TO SU BSTANTIATE HER CLAIM WITH THE HELP OF DOCUMENTARY EVIDENCE THAT TH E ASSETS WERE ACQUIRED IN AN EARLIER YEAR. ON THIS FACTUAL MATRIX , WE FIND THAT THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ADDI TION FOR THE REASON THAT THE INVESTMENT DOES NOT PERTAIN TO THE YEAR OF ACCOUNT. IN ALL THESE CASES, THE ASSETS APPEARING IN THE BALANC E SHEET AS ON 31 ST MARCH 2000, THE ASSESSING OFFICER HAS NO IOTA OF EV IDENCE TO HOLD THAT ANY INVESTMENT OR EXPENDITURE WAS MADE BETWEEN THE PERIOD FROM 1 ST APRIL 2000 TO 31 ST MARCH 2001. ON THE CONTRARY, THE ASSESSEE HAS PRODUCED EVIDENCE WHICH ARE NOT CONTROVERTED BY THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICE R HAS ACCEPTED THE FACT THAT THE ASSESSEE HAD SUBSTANTIATED ITS CLAIM THAT NO INVESTMENT OR EXPENDITURE WAS INCURRED DURING THE FINANCIAL YE AR 2000-01. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINI ON THAT THE ENTIRE ADDITIONS HAVE BEEN MADE AND CONFIRMED BY THE COMMI SSIONER (APPEALS) ON SURMISES AND CONJECTURES AND IN AN ARB ITRARY MANNER WITHOUT AN IOTA OF EVIDENCE. THUS, THE ASSESSEE HAS TO NECESSARILY SUCCEED. CONSEQUENTLY, THIS GROUND IS ALLOWED. 16. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE DELETE T HE ADDITION AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 17. GROUND NO.5, IS AN ADDITION OF UNEXPLAINED CASH CRE DIT OF ` 1,75,000, STANDING IN THE NAME OF M.S. ENTERPRISES, APPEARING IN THE LIABILITY SIDE OF THE BALANCE SHEET OF THE PROPRIETARY CONCERN M/S. K .K. DEVELOPERS, FOR WANT OF CONFIRMATION. 18. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE CO MMISSIONER (APPEALS) CONFIRMED THE ADDITION BY HOLDING THAT NO CONFIRMATION WAS FILED. THE COMMISSIONER (APPEALS) WAS FACTUALLY WRONG. THE ASSESSEE, IN FACT, FILED A CONFIRMATION LETTER A COPY OF WHICH IS PLACED AT PAGE-42 OF THE ASSESSEES PAPER BOOK. IN VIEW OF THIS CONFIRMATION, WE ALLOW THIS GROUND AND DELETE THE ADDITION. MR. SAMEER KALE 5 19. GROUND NO.6, IS AGAINST THE ADDITION OF UNEXPLAINED CASH CREDIT IN THE NAME OF M/S. SANIA FILMS. 20. THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION ON ACCOU NT OF EXPENDITURE INCURRED FOR WHICH AMOUNTS WERE PAYABLE TO THE SAID CREDITORS AND WHICH WERE OUTSTANDING AT THE YEAR END. PAYMENTS OF THESE CREDITORS WERE MADE IN THE SUBSEQUENT YEARS. ON THESE FACTUAL MATRIX, WE D ELETE THE ADDITION AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 21. GROUND NO.7, IS AGAINST CONFIRMATION OF ADDITION ON LOANS AND ADVANCES OF ` 2,51,000. 22. THIS ADDITION IS BASED ON THE FIGURES APPEARING IN THE BALANCE SHEET AS ON 31 ST MARCH 2000. THERE IS NO MATERIAL TO HOLD THAT THE ADVANCES WERE MADE DURING THE YEAR. THE EXPLANATION GIVEN BY THE ASSESSEE HAS NOT BEEN CONTROVERTED WITH EVIDENCE. UNDER THESE CIRCUMSTANC ES, THIS ADDITION IS DELETED AND THE GROUND RAISED BY THE ASSESSEE IS AL LOWED. 23. GROUND NO.8, IS AGAINST UNACCOUNTED INVESTMENT IN K .K. BUILDERS, AMOUNTING TO ` 3,00,000. 24. THIS IS ALSO AN OPENING BALANCE APPEARING IN THE BA LANCE SHEET AS ON 31 ST MARCH 2000. FOR THE REASONS GIVEN BY US WHILE DELE TING SIMILAR ADDITIONS MADE ON THE BASIS OF OPENING BALANCE SHEET, WE DELE TE THIS ADDITION AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 25. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL 2012 SD/- SATBEER SINGH GODARA JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH APRIL 2012 MR. SAMEER KALE 6 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, G BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI SELF DRAFTED DATE INITIAL 1. DRAFT DICTATED ON 20.4.2012 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 20.4.2012 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 20.4.2012 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 20.4.2012 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 20.4.2012 SR.PS 6. DATE OF PRONOUNCEMENT 25.4.2012 SR.PS 7. FILE SENT TO THE BENCH CLERK 25.4.2012 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER