ITO 26(1)(4), MUMBAI V. JAVED ABDUL HAMEED, MUMBAI

ITA 8166/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8801 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 17-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G KUTTY
• Assessee Lawyers: K R LAXMINARAYANAN
• Keywords: Unexplained cash credit; Unexplained expenditure; Salary income; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I , MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 8166/MUM/2010 ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER WARD-26(1)(4) AYURVEDIC COLLEGE BLDG. 9 TH FLOOR, CHARNI ROAD MUMBAI-400 002. VS. MR. JAVED AHMED ABDUL HAMEED 401, C, WING SAI APARTMENTS UMARWADI KHANCHER KURLA E) MUMBAI-99. PAN NO. AAWPS 4547 E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.G. KUTTY RESPONDENT BY : SHRI K.R. LAXMINARAYANAN DATE OF HEARING : 17.9.2012 DATE OF PRONOUNCEMENT : 26.9.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER DATED 21.9.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2007-08. THE REVENUE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GR OUNDS WHICH RELATE TO ADDITION ON ACCOUNT OF CREDIT CARD PAYMENT OF RS.10,29,846/- AND ADDITION OF RS.1,41,250/- ON ACCOUNT OF UNEXPLAINE D CASH CREDIT. 2. THE FIRST DISPUTE IS REGARDING ADDITION OF RS.10,29 ,846/- ON ACCOUNT OF CREDIT CARD PAYMENTS. THE AO NOTED FROM AIR INFORMATION ITA NO.8166/M/10 A.Y. 07-08 2 THAT THE ASSESSEE HAD MADE PAYMENT OF RS.10,29,846/- AGA INST CREDIT CARD BILLS OF ICICI BANK AND STANDARD CHARTERED BANK D URING ASSESSMENT YEAR 2007-08. THE AO THEREFORE, ASKED THE ASSESSE E TO FILE DETAILS WHICH WAS NOT DONE. THE AO THEREAFTER ASKE D THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNTS SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE. THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE INCLUDING THE DETAILS GIVEN NOTED THAT TOTAL INCOME O F THE ASSESSEE WAS RS.3,75,060/- OUT OF WHICH A SUM OF RS.1,00,225/- HAD B EEN INVESTED AND OUT OF BALANCE AMOUNT OF RS.2,74,835/- A SUM OF R S.2,15,600/- HAD BEEN WITHDRAWN IN CASH. FURTHER OPENING BALANCE IN THE BANK ACCOUNT OF THE ASSESSEE WAS RS.33,536/-. THE ASSESSEE HAD ALSO T AKEN LOANS OF RS.13.00 LACS DURING THE YEAR WHICH HAD ALSO BEE N REPAID DURING THE YEAR. THE ASSESSEE HAD ALSO MADE PAYMENT OF RS.2,20,767/- TO THE MOTILAL OSWAL SECURITIES. THUS, N O FUNDS WERE AVAILABLE FOR MAKING CREDIT CARD PAYMENTS. THE AO, THE REFORE, TREATED THE SUM OF RS.10,29,846/- AS UNEXPLAINED EXPENDITURE A ND ADDED TO THE TOTAL INCOME. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFORE CIT(A) THAT THE AO HAD NOT CONSIDERED THE FACT THAT THE PAYMENTS MADE FOR CREDIT CARD BILLS WERE INTER-LIN KED BETWEEN ONE CREDIT CARD TO ANOTHER CREDIT AND ASSESSEE WAS USING ONE BA NKS CREDIT CARD FACILITIES TO FUND OTHER CREDIT CARD BALANCES OUTSTAN DING AND MOST OF THE TRANSACTIONS WERE BETWEEN CREDIT CARDS AND SOURCE OF MONEY ITA NO.8166/M/10 A.Y. 07-08 3 WAS EXPLAINED. THE SUBMISSIONS BY ASSESSEE ALONG WITH DET AILS WERE REMANDED BY CIT(A) TO AO FOR EXAMINATION AND REPORT . THE AO IN THE REMAND REPORT DATED 27.8.2010 EXAMINED THE SUBMISSION OF THE ASSESSEE AND REPORTED THAT THE COPIES OF CREDIT CARD STATEME NTS OF VARIOUS BANK ALONG WITH COPIES OF BANK PASS-BOOKS HAD BE EN FILED BY ASSESSEE DURING THE REMAND PROCEEDINGS TO EXPLAIN THAT NE T PAYMENT DURING THE YEAR WAS ONLY RS.2,20,956/- WHICH WAS INDUCE D IN THE FULL CREDIT CARD PAYMENT OF RS.2,76,239/-. THE AO ALSO NOTED THE CLAIM OF THE ASSESSEE THAT BALANCE OUTSTANDING AMOUNT OF OTHER CRED IT CARD HAD BEEN PAID BY TAKING LOAN FROM CITI BANK IN NEXT FIN ANCIAL YEAR. AFTER CONSIDERING THE REMAND REPORT OF THE AO CIT(A) OBSERVE D THAT AO HAD DULY CONSIDERED THE VARIOUS DOCUMENTS SUBMITTED BY THE ASSESSEE AND VERIFIED THE CLAIM OF THE ASSESSEE. REGARDING TRANSFER O F MONEY FROM ONE CREDIT CARD TO THE OTHER CREDIT CARD, THE CIT(A) FO UND THE CLAIM OF THE ASSESSEE ACCEPTABLE AND VERIFIABLE. CIT(A) THEREFORE , DIRECTED THE AO TO DELETE THE ADDITION AGGRIEVED BY WHICH REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 2.1 BEFORE US, THE LD. AR SUBMITTED THAT THE MATTER H AD BEEN EXAMINED BY THE AO IN THE REMAND PROCEEDINGS AND THER E WERE NO ADVERSE FINDING GIVEN ON THE CLAIM OF THE ASSESSEE THAT T HE CREDIT CARD PAYMENTS WERE MOSTLY FROM TWO CREDIT CARD FACILITIES ENJO YED BY THE ASSESSEE FROM THE BANKS BOTH THROUGH INTER-CREDIT CARD PAY MENTS. IT ITA NO.8166/M/10 A.Y. 07-08 4 WAS POINTED OUT THAT THE ASSESSEE HAD FILED SUMMARY OF AL L TRANSACTIONS, THE BANK SUMMARY OF CANARA BANK ACCOUNT AND BANK SUMMARY OF CITI BANK ACCOUNT WHICH HAS BEEN PLACED AT PA GE-9, 11 AND 12 RESPECTIVELY. IT WAS CLEAR FROM SUMMARY OF TRANS ACTIONS THAT NET CREDIT CARD PAYMENT WAS ONLY RS.2,76,231/- CONSISTI NG OF RS.1,55,087/- ON ACCOUNT OF CITI BANK AND RS.1,19,442/ - ON ACCOUNT OF CANARA BANK. ALL THESE TRANSACTIONS DETAILS HAD BEEN GIV EN BEFORE AO AND NO DISCREPANCIES WERE POINTED OUT AND AO WAS SATIS FIED BY THE CLAIM. THEREFORE, NO ADDITION WAS REQUIRED TO BE MADE . THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND PLACED RELIANCE ON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. 2.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF RS.10,29,846/- AS UNEXPLAINED EXPENDITURE BY AO ON ACCO UNT OF CREDIT CARD PAYMENTS. THE AO HAD MADE THE ADDITIONS ON THE GR OUND THAT NO DETAILS WERE GIVEN. THE ASSESSEE HOWEVER SUBMITTED BEFOR E CIT(A) THAT THE ASSESSEE WAS HAVING TWO CREDIT CARD FACILITIES FRO M TWO DIFFERENT BANKS AND MONEY FROM ONE CREDIT CARD FACILITY HAD BEEN USED FOR MAKING PAYMENT OF CREDIT CARD DUE OF THE OTHER. THE TOTAL CREDIT CARD PAYMENT DURING THE YEAR WAS RS.2,76,239/- WHICH IN CLUDED THE PAYMENT OF RS.2,20,956/- IN THE CURRENT YEAR WHICH WE RE REFLECTED IN THE ACCOUNT. THE ASSESSEE FILED SUMMARY OF ALL TRANSACTIONS , SUMMARY ITA NO.8166/M/10 A.Y. 07-08 5 OF CITI BANK ACCOUNT AND SUMMARY OF CANARA BANK ACCOUNT TO EXPLAIN THE POINT WHICH WAS DULY EXAMINED BY AO IN THE REMAN D PROCEEDINGS. THE AO IN THE REMAND REPORT, A COPY OF WHICH HAS BEEN PLACED ON RECORD HAD NOT POINTED OUT ANY DISCREPANCY. THE TOTAL CR EDIT CARD PAYMENT OF RS.2,76,231.99 IS DULY REFLECTED IN THE SUM MARY OF TRANSACTIONS. THE LD. DR COULD ALSO NOT EXPLAIN AS TO HOW ADDITION OF RS.10,29,376/- COULD BE SUSTAINED WHEN THERE WERE INTER -CREDIT CARD TRANSACTIONS WHICH WERE DULY EXPLAINED AND ACTUAL CREDIT CARD PAYMENT WAS RS.2,76,231/- WHICH WAS DULY REFLECTED IN THE ACCOUNTS. THE AO HIMSELF IN THE REMAND REPORT WAS SATISFIED BY THE EXPL ANATION GIVEN WHICH IS CLEAR FROM THE LANGUAGE OF THE REMAND REPORT . WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN ALLOWING RELIEF TO THE ASSESSEE AND THE SAME IS, THEREFORE UPHELD. 3. THE SECOND DISPUTE IS REGARDING ADDITION OF RS.1,41,2 50/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE AO NOTED THAT TH ERE WAS CASH DEPOSIT OF RS.1,41,250/- IN CITI BANK ACCOUNT. THE AO T HEREFORE ASKED THE ASSESSEE TO FILE NECESSARY DETAILS WHICH WERE NOT DONE. THE AO, THEREAFTER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE A MOUNT SHOULD NOT BE ADDED TO THE TOTAL INCOME. THE ASSESSEE EXPLAINED THAT HE HAD MADE TOTAL CASH WITHDRAWAL OF RS.2,15,600/- FROM WHICH A SUM OF RS.1,41,250/- HAS BEEN RE-DEPOSITED ON CARIOUS DATES. TH E AO HOWEVER DID NOT ACCEPT THE EXPLANATION AND OBSERVED TH AT CASH ITA NO.8166/M/10 A.Y. 07-08 6 WITHDRAWALS HAD BEEN USED FOR HOUSEHOLD EXPENSES. IN APP EAL ASSESSEE SUBMITTED THAT THE AO HAD NOT TAKEN INTO ACCOUNT ALL WITHDRAWALS FROM VARIOUS BANKS MAINTAINED DURING THE Y EAR AND INTER LINKED CONNECTION BETWEEN DIFFERENT CREDIT CARDS OF THE ASSESSEE. MOST OF THE TRANSACTIONS WERE BETWEEN CREDIT CARDS THEMSELVES AN D SOURCES OF ALL PAYMENTS WERE FULLY EXPLAINED. IT WAS ALSO SUBMI TTED THAT THE ASSESSEE WAS WORKING WITH AIRPORT AUTHORITY OF INDIA AND HAD NO OTHER SOURCE OF INCOME EXCEPT RENTAL INCOME AND SALARY INCOME. IT WAS EXPLAINED THAT DEPOSITS IN DIFFERENT BANK ACCOUNTS WERE FROM WITHDRAWALS FROM OTHER BANK ACCOUNTS. CIT(A) THEREAFT ER REMANDED THE MATTER TO AO FOR FRESH EXAMINATION AND REPORT. IN THE REMAND REPORT DATED 27.8.2010, THE AO NOTED THAT EXPLANATI ON OF THE ASSESSEE THAT CASH WITHDRAWN FOR HOUSE REPAIRS HAD NOT BEEN UTIL IZED AND SAME WAS RE-DEPOSITED IN THE ATM. THE AO HOWEVER DID NOT A CCEPT THE EXPLANATION AS THERE WAS HUGE GAP BETWEEN CASH WITHDRA WAL AND DEPOSIT AND ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE CASH WITHDRAWAL WAS NOT UTILIZED. IN REPLY TO THE REMA ND REPORT, ASSESSEE SUBMITTED THAT IT WAS QUITE IMPOSSIBLE TO PROVE TH AT THE CASH WITHDRAWALS REMAINED UNUTILIZED. THE VERY FACT THAT CA SH WAS AVAILABLE SHOWED THAT THE SAME WAS NOT UNUTILIZED. IT WAS ALSO POI NTED OUT THAT THE ASSESSEE HAD SUBMITTED CASH FLOW STATEMENT WHICH HAD N OT BEEN REJECTED BY THE AO. CIT(A) AFTER CONSIDERING THE EXPLA NATION OF THE ITA NO.8166/M/10 A.Y. 07-08 7 ASSESSEE WAS SATISFIED THAT THERE WAS NO CASE FOR ANY ADDITIO N AS THE ASSESSEE WAS NOT HAVING OTHER SOURCES OF INCOME EXCEPT SALAR Y AND RENT. HE THEREFORE, DIRECTED THE AO TO DELETE THE ADD ITION AGGRIEVED BY WHICH ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.1 BEFORE US THE LD. AR REITERATED THE SUBMISSIONS MAD E BEFORE THE CIT(A) THAT THE ASSESSEE HAD BEEN DEPOSITING MONEY FROM DIFFERENT CREDIT CARD ACCOUNTS AND SOMETIMES MONEY WAS NOT UTILIZED A ND THE SAME WAS RE-DEPOSITED IN THE BANK ACCOUNT. THE ASSESSEE HAD FILED COPY OF THE CASH FLOW STATEMENT BEFORE AO WHICH HAD NOT BEEN REJECTED BY AO. A COPY OF THE SAME HAS BEEN PLACED AT P AGE-10 OF THE PAPER BOOK. THE LD. DR ON THE OTHER HAND PLACED RELI ANCE ON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. 3.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF RS.1,41,250/- ON ACCOUNT OF CASH DEPOSIT IN CITI BANK. T HE EXPLANATION OF THE ASSESSEE IS THAT ASSESSEE HAD WITHDRAWN MONEY FROM CA NARA BANK AND CITI BANK FROM TIME TO TIME SOME OF WHICH H AD BEEN RE- DEPOSITED IN THE BANK AS PURPOSE FOR WHICH MONEY HAD B EEN WITHDRAWN DID NOT MATERIALIZE. THE EXPLANATION HAD BEEN REJECTED BY AO ONLY ON THE GROUND THAT THERE WAS HUGE TIME GAP B ETWEEN WITHDRAWALS AND DEPOSIT IN THE BANK ACCOUNT. IN OUR VI EW NO ADDITION ITA NO.8166/M/10 A.Y. 07-08 8 ON THIS GROUND CAN BE JUSTIFIED PARTICULARLY WHEN THE M ONEY IS SHOWN AS AVAILABLE IN THE CASH FLOW STATEMENT COPY OF WHICH HAS BEEN GIVEN TO THE AO AND PLACED AT PAGE-10 OF THE PAPER BOOK. T HE AO HAS PRODUCED NO MATERIAL TO SHOW THAT AMOUNTS WITHDRAWN HA D BEEN UTILIZED BY THE ASSESSEE FOR SOME OTHER PURPOSE AND WERE NOT AVAILABLE FOR DEPOSIT. CLAIM OF THE ASSESSEE HAS THEREFORE TO BE ACCE PTED. A PERUSAL OF THE CASH FLOW STATEMENT SHOWS THAT TOTAL CASH IN CLUDING OPENING BALANCE, CASH WITHDRAWN FROM BANK AND RENT DE POSIT WAS RS.3,91,426/- OUT OF WHICH RS.1,920/- WAS DEPOSITED IN C ANARA BANK AND RS.1,41,250/- IN CITI BANK AND BALANCE WERE DRAWI NGS OF RS.2,44,500/- FOR PERSONAL PURPOSES. THE AO HAS GIVEN NO FINDING THAT THE DRAWINGS WERE INADEQUATE. UNDER THESE CIRCUMSTANCES, ADDITIONS MADE BY AO ARE NOT JUSTIFIED. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN DELETING THE ADDITION AND THE SAM E IS, THEREFORE UPHELD. 4. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.09.2012 SD/- SD/- (VIJAY PAL RAO ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 26.09.2012. JV. ITA NO.8166/M/10 A.Y. 07-08 9 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.