ITO WD 19(3)(4), MUMBAI V. GAURAWDEEP S. BATRA, MUMBAI

ITA 7938/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75690 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 24-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIJANAB JAVED AKHTAR
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Unexplained cash credit; Income from undisclosed sources
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA N O . 7938 /MUM/2011 A SS ESSMENT Y EAR : 200 6 - 2007 ITO WARD 19(3)(1), 3 RD FLOOR, PIRAMAL CHAMBER, R. NO.307, LALBAUG, MUMBAI - 400 0 1 2 VS. SHRI GAURAWDEEP S. BATRA 593, A/7, 3 RD FLOOR, CHINAR 21 ST ROAD, TPS III, BANDRA (W), MUMBAI 400 050 PAN : ABZPB2174Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI/JANAB JAVED AKHTAR, D.R. RESPONDENT BY : SHRI SANJIV M. SHAH, A.R. DATE OF HEARING : 10 .02.2014 DATE OF PRONOUNCEMENT : 05 .03 .2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFER R ED BY THE R EVENUE AGAINST THE ORDER OF THE CIT(A) DATED 5 .9.2011 . 2. THE SOLE ISSUE RAISED BY THE R EVENUE VIDE ITS GROUNDS OF APPEAL IS REGARDING THE DELETION OF ADDITION OF RS. 13 , 37 , 532/ - BY THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A) ] WHICH WAS MADE BY THE ASSESS ING OFFICER AS UNEXPLAINED CASH CREDIT U/S.68 OF THE I NCOME TAX ACT (HEREINAFTER REFERRED TO AS THE ACT) , 1961. 3. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS AO ) OBSERVED THAT THERE WERE CASH DEPOSITS OF RS. 13,31,232/ - DURING THE YEAR IN THE BANK ACCOUNT OF THE ITA NO. 7938/MUM/2011 SHRI GAURAWDEEP S. BATRA 2 ASSESSEE. THE ASSESSEE EXPLAINED THAT CASH LOAN OF RS.3,48,250/ - WERE RECEIVED FROM 31 PARTIES AND BALANCE CASH DEPOSIT WAS FROM THE EARLIER CASH WITHDRAWN FROM BANK ACCOUNT. CONFIRMATIONS FROM ALL 31 PARTIES WERE FILED BY ASSESSEE BEFORE THE AO. THE AO OBSERVED THAT THERE MUST BE A REASON FOR THE ASSESSEE TO WITHDRAW AND DEPOSIT CASH FREQUENTLY IN HIS BANK ACCOUNT EVEN WHEN THERE WAS SUFFICIENT CASH IN HAND. THE APPE L LANT WI THDREW AMOUNTS RANGING FROM RS. 1000/ - TO RS. 100,000/ - IN MORE THAN 75 INSTANCES FROM HIS BANK ACCOUNT. THE AO THEREFORE CONCLUDED THAT ASSESSEE WITHDREW MONEY FROM HIS BANK ACCOUNT FOR HIS PERSONAL EXPENSES AND MONEY DEPOSITED WAS HIS UNACCOUNTED INCOME AND THEREFORE ADDED RS. 13,3 1,232/ - TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSESS E E HAD SET - UP IN FEBRUARY 2004, A PARTNERSHIP FIRM M / S REEL TO LIFE PICTURES (HEREINAFTER CALLED 'RTLP') FOR PRODUCING A FEATURE FILM. THIS PROJECT WAS TO BE FUNDED BY PARTNERS' CAPITAL, TRADE ADVANCES, SUNDRY CREDITS, ONG OING EARNINGS AND A LOAN OF RS. 30 LAKHS FROM GLOBAL HOUSING FINANCE CORPORATION LIMITED. , M UMBAI (HEREINAFTER CALLED AS GHFC ) VIDE AGREEMENT DATED 30.04.2004. TOWARD REPAYMENT OF GHFC LOA N, 36 POST DATED CHEQUES OF RS. 1,08.458/ - EACH WERE DEPOSITED WITH GHFC. TO HONOUR THOSE CHEQUES, THE FUNDS WERE REGULARLY TRANSFERRED FROM THE ASSESSEES BANK ACCOUNT TO RTLP. THE FILM PROJECT COMMENCED IN APRIL 2004 AND WAS SHELVED BY MAY 2004. THE ASS ES SEE INVESTED AN AMOUNT OF RS. 55,84,256/ - IN THE FIRM RTLP AS PER BALANCE SHEET AS ON 31.03.2006, OUT OF WHICH AN AMOUNT OF RS.34,80,200/ - WAS CONTRIBUTED DURING THE PERIOD 01 - 04 - 2005 TO 31 - 03 - 2006. THE CURRENT EARNINGS OF THE ASSESSEE AT THAT TIME WERE NOT SUFFICIENT FOR THE FINANCIAL OBLIGATION OF RS.34,80,2001 - AND THEREFORE LOANS WERE RAISED AG A INST L.I.C. POLICY, PERSONAL LOAN AND MORTGAGE LOAN ETC. HOWEVER, IN THE MEANTIME, TO MEET DAY - T O - DAY FINANCIAL COMMITMENTS, EMI S TOWARDS REPAYMENT OF LOANS AND TO HONOUR POST D ATED CHEQUES ISSUED TO LENDERS AND CREDITORS TO AVOID HARASSMENT AND THREATS, THE ITA NO. 7938/MUM/2011 SHRI GAURAWDEEP S. BATRA 3 ASSESSEE HAD TO BORROW SMALL AMOUNTS OF LOANS TEMPORARILY FROM TIME TO TIME ON SEVERAL OCCASIONS TO MEET IMMEDIATE SHORTFALL OF BALANCE IN THE BANK AND HENCE IN CA SH. THE LOANS ARE LESS THAN RS. 20000/ - EACH. THE ASSESSEE BORROWED SUCH SMALL CASH LOANS FROM RELATIVES, NEIGHBOURS, FRIENDS, COLLEAGUES AND PARTNERS. SUCH SMALL LOANS RECEIVED IN CASH WERE REPAID OUT OF CASH - IN - HAND WHENEVER POSSIBLE. THE ASSESS E E ALSO SUBMITTED THE SUMMARY OF THE UTILIZATION OF CASH IN HAND TOWARDS CASH REPAYMENT OF LOAN AMOUNTS. THE LD. CIT(A) AFTER HEARING THE ASSESSE E AND GOING THROUGH THE RECORDS WAS SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE THAT THE LOANS WERE RECEIVE D AND REPAID IN CASH. ALL THE CONFIRMATIONS HAD BEEN FILED BY THE ASSESSEE BEFORE THE A O AND ACCEPTED BY HIM. THE A O HAD ACCEPTED THE IDE NTITY, GENUINENESS AND CREDIT WORTHINESS OF THE LENDERS. HE FURTHER OBSERVED THAT THERE WERE MINOR DISCREPANCIES REGARDI NG THE NARRATIONS IN A FEW CASES WHICH HAD BEEN EXPLAINED BY THE ASSESSEE DUE TO OVERSIGHT AND FATIGUE. THE LOANS WERE REPAID ALSO AND WERE NOT OUTSTANDING AT THE END OF THE YEAR WHICH PROVED THAT THE TRANSACTIONS WERE GENUINE. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, BANK BOOK, STATEMENT OF FRIENDL Y LOANS IN CASH, STATEMENTS OF BANK ACCOUNTS, STATEMENT OF CASH DEPOSITED AND WITHDRAWN DURING THE YEAR, SUMMARY OF CASH TRANSACTIONS, CONFIRMATION OF FRIENDLY LOANS AND CASH BOOK WERE FURNISHED TO THE AO. B REAKUP OF PERSONAL WITHDRAWALS OF RS.10,40,369/ - FROM CASH - IN - HAND AND WITHDRAWALS OF RS.17,97,996/ - FROM THE BANK ACCOUNT WAS ALSO SUBMITTED. THE ASSESSE E HAD EXPLAINED THAT OUT OF RS. 17,97,996/ - WITHDRAWN FROM THE BANK DURING THE YEAR, AN AMOUNT OF RS.13 ,31 ,232/ - HAD BEEN DEPOSITED IN THE BANK . THE CASH SUMMARY SUBMITTED DURING THE ASSESSMENT PROCEEDINGS PROVED SOURCE OF CASH - IN - HAND FROM OPENING CASH BALANCE. HE THEREFORE CONCLUDED THAT THE ASSESSEE HAD SUCESSFULLY EXPLAINED THE DETAILS OF EACH AND EVE RY CASH DEPOSIT MADE INTO THE BANK ACCOUNT TOGETHER WITH SOURCE OF CASH DEPOSITED, AND UTILIZATION OF THE CASH DEPOSITS. ALL THE ITA NO. 7938/MUM/2011 SHRI GAURAWDEEP S. BATRA 4 DEPOSITS IN THE BANK ACCOUNT WERE COR RELATED WITH EITHER EARLIER WITHDRAWAL FROM THE BANK AND/OR LOANS RECEIVED DURING THE YEA R . THEREFORE, HE DIRECTED THE A O TO DELETE THE ADDITION OF RS.13,37,532/ - MADE U/S 68 OF THE ACT. AGGR IE VED FROM THE ORDER OF THE CIT(A), THE R EVENUE IS THUS IN APPEAL BEFORE US. ON THE OTHER HAND THE LD. DR HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHOR ITIES. 5. WE HAVE CONSIDERED THE RESPECTIVE SUBMISSIONS OF THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORD. THE A SSESSEE HAS GIVEN THE DETAILED STATEMENT OF WITHDRAWALS AND DEPOSITS IN HIS BANK ACCOUNT. THE ASSESSEE HAS EXPLAINED THAT THE SAID DEPOSIT S WERE MADE OUT OF THE CASH IN HAND FROM EARLIER WITHDRAWALS AS WELL LOANS AND ADVANCES ETC. AS MENTIONED ABOVE. EVEN THE ASSESSEE HAS ALSO EXPLAINED THE NECESSITY AND REQUIREMENT OF MAKIN G SUCH TRANSACTIONS. THE DELHI BENCH OF THE TRI BUNAL IN THE CASE OF MOONGIPA I NVESTMENT LTD. VS. ITO HAS OBSERVED THAT WHEN THE DEPOSITS IN THE BANK ACCOUNTS ARE MADE FROM THE CASH BALANCE AVAILABLE TO THE ASSESSEE IN ITS BOOKS OF ACCOUNTS, ADDITION UNDER SECTION 68 CAN NOT BE MADE IRRESPECTIVE OF THE TIME BETWEEN THE E ARLIER WITHDRAWAL FROM THE BANK AND SUCH DEPOSITS. IN THE CASE IN HAND ALSO, THE ASSESSEE HAS ESTABLI SHED THE COR RELATION BETWEEN THE ENTRIES OF WITHDRAW A LS AND THAT OF DEPOSITS. MERELY BECAUSE THE NUMBER OF TRANSACTIONS WAS MORE, THAT ITSELF IS NOT SUFFI CIENT TO HOLD THAT THE SAME HAS ARISEN OUT OF THE UNDISCLOSED INCOME OF THE ASSESSEE ESPECIALLY WHEN THE ASSESSEE HAS EXPLAINED THE REASONS AND REQUIREMENTS OF MAKING SUCH TRANSACTIONS FURTHER CORROBORATED WITH BOOKS OF ACCOUNTS, BANK STATEMENTS AND OTHER RELEVANT DOCUMENTS. THE LD. CIT(A) HAS THOROUGHLY EXAMINED AND DISCUSSED THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS PASSED A WELL REASONED ORDER DELETING THE ADDITIONS MADE BY THE AO U/S 68 OF THE ACT. WE DO NOT FIND ANY INFIRMITY OF THE ORDER OF THE CIT(A) AND THE SAME IS HEREBY UPHELD. ITA NO. 7938/MUM/2011 SHRI GAURAWDEEP S. BATRA 5 6. IN THE RESULT , THE APPEAL OF THE R EVENUE IS HEREBY DISMISSED. PRONONCED IN THE OPEN COURT ON 05 .03.2014 SD/ - SD/ - ( R.C. S HARMA ) ( SANJAY GARG ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 05 TH MARCH , 2014 KISHORE COPY FORWARDED TO : 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE C.I.T. CONCERNED MUMBAI 4 . THE CIT (A) CONCERNED MUMBAI 5 . THE DR, C - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI