ITO Ward 1 (1), Nagpur V. Smt., vanita Manish Chairwala, Nagpur

ITA 85/NAG/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75933 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KAME
• Assessee Lawyers: K K THAKKAR
• Keywords: Unexplained cash credit; Corroborative evidences

Judgement Text

- -- - IN THE INCOME TAX APPELLATE TRIBUNAL-E-BENCH, NAGPU R ( ! '#$ $ % '$ / THROUGH VIDEO CONFERENCE AT MUMBAI) '& ' '& ' '& ' '& ' ( (( (. .. . . .. . , ,, ,%+ %+ %+ %+ ' '' ' ,$-. ,$-. ,$-. ,$-., ,, ,$ $$ $. .. .' '' '. . . . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ' ./ ITA NO.85/NAG/2010 & & & & /& /& /& /& / ASSESSMENT YEAR 2006-07 ITO, WARD-1(1), 5 TH FLOOR, MECL BUILDING, SEMINERY HILLS, NAGPUR VS. VANITA DINDAYAL SURI NEAR RAMKRISHNA MATH, DHANTOLI, NAGPUR PAN: ABCPC3967D ( 01 / // / APPELLANT ) ( 3401 / RESPONDENT ) REVENUE BY : NARENDRA KAME ASSESSEE BY : K.K.THAKKAR ' 56 / DATE OF HEARING : 20 - 01 -201 4 7!/ 56 /DATE OF PRONOUNCEMENT : 24- 01 -201 4 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) )$ $$ $ -5&5 -5&5 -5&5 -5&5 ?$@ ?$@ ?$@ ?$@ ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM - -- -$ '?A $ '?A $ '?A $ '?A, ,, ,,$-. $ ' ,$-. $ ' ,$-. $ ' ,$-. $ ' : CHALLENGING THE ORDER DATED 05.03.2010 OF THE CIT(A )-I,NAGPUR,ASSESSING OFFICER(AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HEN THE NATURE OF BUSINESS, NATURE OF TRANSACTIONS,IDENTITY OF THE DEBTORS OR ANY OTHER D IRECT OR INDIRECT EVIDENCE WITH REGARD TO BUSINESS ACTIVITY OR RECOVERY FROM DEBTORS IS NOT FORTHCOMIN G FROM THE ASSESSEE, THE CIT(A) OUGHT NOT TO HAVE ACCEPTED THE EXPLANATION AS THE SOURCE OF DEPO SITS OF 30.60 LACS AND DELETED THE ADDITION MADE BY THE AO. 2. THE CIT(A) SHOULD HAVE RELIED ON THE POSITIVE EVIDE NCE AVAILABLE ON FILE WHICH DISPROVED THE CLAIM OF ASSESSEE ON EXISTENCE OF DEBTORS AND RECOVERY FR OM THEM TO UPHOLD THE ADDITION MADE BY THE A.O. RATHER THAN RELY UPON ASSESSEES INCREDIBLE SE LF SERVING STATEMENTS. 3. THE CIT(A) ERRED IN NOT EXAMINING THE CASE THOROUGH LY AND ALSO IN ACCEPTING ASSESSEES STAND WITHOUT BRINGING ON RECORD EVEN A SINGLE PIECE OF E VIDENCE WITH REGARD TO THE SOURCE OF CASH OF RS. 30.60 LACS AND THE NATURE OF BUSINESS ACTIVITY. 4. CIT(A) OUGHT TO HAVE RELIED ON 310 ITR (AT) 99 AND EXAMINED THE VERACITY OF THE CLAIM THAT RS. 20 LACS OF CASH DISCLOSED UNDER VDIS CLAIM IN 1997 WAS AVAILABLE WITH ASSESSEE BEFORE ACCEPTING THE SOURCE OF CAPITAL. 5. CIT(A) OUGHT TO HAVE REALIZED THAT THE CASH FLOW ST ATEMENT/CAPITAL ACCOUNT FILED BY THE ASSESSEE LACK CREDIBILITY SINCE NO SUPPORTING EVIDENCE WHATS OEVER WAS PRODUCED BY THE ASSESSEE AT ANY STATE. 6. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE BALAN CE SHEET AS ON 31.03.2003 FILED BY THE ASSESSEE IN THE APPELLANT PROCEEDINGS FOR A.YR 2006 -07 WAS NOT SUPPORTED BY ANY EVIDENCE AND THE SAME IS DRAWN UP TO EXPLAIN THE CASH DEPOSITS IN A. YR. 2006-07 AND HENCE IT IS LIABLE FOR REJECTION. 7. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT A SSESSEE COULD NOT SUPPORT HER VERSION OF BUSINESS DONE IN EARLIER YEARS AND HER CLAIM THAT B USINESS WAS DONE IN GREY MARKET IS ONLY A SELF 2 ITA NO. 85/NAGPUR/2010 VANITA DINDAYAL SURI SERVING STATEMENT MADE TO AVOID TAX. 8. ANY SUCH OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. ASSESSEE,AN INDIVIDUAL FILED HER RETURN OF INCOME O N 31.07.2006 DECLARING INCOME OF RS.1,44,890/-. AO FINALISED THE ASSESSMENT ON 31.12 .2008 ,U/S.143(3) OF THE ACT,DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.18,82,790/-/ FIRST GROUND OF APPEAL IS ABOUT DELETION OF ADDITIO N OF RS.15,61,500/-TOWARDS THE CASH DEPOSITS.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE WAS MAINTAINING BANK ACCOUNTS WITH CENTRAL BANK OF INDIA(A/C.NO.18701)AN D BANK OF INDIA (CD A/C. NO. 337),THAT THE ASSESSEE HAD DEPOSITED CASH IN BANKS ACCOUNTS DURIN G THE PERIOD 01-04-2005 TO 31-03-2006.HE DIRECTED THE ASSESSEE OFFER EXPLAIN IN THIS REGARD. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DATED 16-12-2008 AND 31-12-2008,AO HELD THAT THE EXPLANATIONS OFFERED BY THE ASSESSEE WAS N OT CONVINCING,THAT THE ASSESSEE COULD NOT EXPLAIN THE AVAILABILITY OF CASH AS PER CASH BOOK ON VARIOUS DATES,THAT THE ASSESSEE HAD NOT MAINTAINED BOOKS OF ACCOUNT FOR THE EARLIER ASSESSMENT YEAR, I.E.,AY 2005-06,THAT INCOME FOR THAT YEAR WAS DECLA RED AS PER THE PROVISIONS OF SECTION 44AF OF THE ACT,THAT THE QUESTION OF REMAINING ANY DEBTORS OUTSTANDING DID NOT ARISE,THAT THE LIST OF DEBTORS,WORTH OF RS.30,60,800/-,PRODUCED BY THE ASS ESSEE DID NOT CONTAIN COMPLETE ADDRESSES OF THE DEBTORS,THAT THE ASSESSEE AVOIDED VERIFICATION OF GENUINENESS OF THOSE DEBTORS WHO HAVE BEEN ALLEGEDLY WIPED OFF DURING THE PREVIOUS YEAR.FINALL Y,HE HELD THAT THE CASH DEPOSITED;IN BANK OF INDIA, CD A/C NO.337 AND CENTRAL BANK OF INDIA, A/C NO.18701 TO THE TUNE OF RS.22,81, 000/- ;WAS THE UNEXPLAINED CASH CREDITS OF THE ASSESSEE.H OWEVER,TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSEE HAS SOLD THREE CARS DURING THE YEAR UN DER CONSIDERATION FOR RS.7,19,500/-,AO ADDED BACK RS.15, 61, 500/-,U/S.68 OF THE ACT,TO THE INCO ME RETURNED BY THE ASSESSEE. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).BEFORE THE FAA THE ASSESSEE MADE ELABORATE SUBMISSIONS.HE CALLED FOR R EMAND REPORT FROM THE AO.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPO RT OF THE AO,HE HELD THAT THE ASSESSEE HAD DEPOSITED CASH IN CENTRAL BANK OF INDIA RS,23,60,00 0/- AND AT BANK OF INDIA RS.7,07,000/- TOTALING RS. 30,67,000/- AS AGAINST THE SUM STATED BY THE AO OF RS. 22,81,000/-, THAT THE SUM HAD BEEN DEPOSITED FROM THE REALISATION PART OF SUNDRY DEBTO RS,RESALE OF VEHICLES AND PPF WITHDRAWAL , THAT THE FUND FLOW STATEMENT FOR THE FY 2005-06 WAS SUBM ITTED BY THE ASSESSEE ON 15-12-2009,THAT THE DETAILS OF DEPOSITED AMOUNTS COULD BE VERIFIED THRO UGH BANK STATEMENTS AND CASH BOOKS AND BANK BOOK OF THE ASSESSEE,THAT THERE WAS SUFFICIENT CASH IN HAND ON THE DAY OF DEPOSIT CASH IN BANK BY THE ASSESSEE IN HER BANK ACCOUNTS,THAT THE CONTENTI ON OF THE ASSESSEE WAS CORRECT,THAT THERE WAS REALISATION OF CASH FROM THE DEBTORS WHICH WERE REC EIVABLE AS ON 31-03-2005(RS.30,60,000/)-,THAT FUNDS WERE ALSO AVAILABLE FROM SALE PROCEEDS OF CAR S (RS.7,19, 000/-) AND WITHDRAWALS FROM PPF ACCOUNT(RS.2,77,000/-).HE VERIFIED THE FUND/CASH FL OW STATEMENT WHICH WERE FILED BY THE ASSESSEE IN THE CONTEXT OF FUND AVAILABLE BY WAY CASH REALIS ATION FROM SUNDRY DEBTORS, FROM SALES OF CAR AND WITHDRAWALS FROM PPF ACCOUNT.HE FOUND THAT THE ASSE SSEE HAD CAPITAL OF RS. 28,26,211.89 AS ON 31-03-2006.HE FURTHER HELD THAT ON ACCOUNT OF VDIS DECLARATION BY HER SHE HAD A STRONG CAPITAL BASE,THAT SHE HAD DECLARED RS.20,00,000/- IN CASH A S EMERGED FROM THE VDIS CERTIFICATE DTD.12-09- 1997 ISSUED BY THE CIT,VIDARBHA, NAGPUR,THAT THE CA PITAL SUBSEQUENTLY PLIED TO HER BUSINESS,THAT THE ASSESSEE WAS DOING BUSINESS OF FANCY ITEMS AND ARTIFICIAL JEWELLERY AND MAINLY PROCURING PURCHASE FROM THE GREY MARKETS OF MUMBAI,WHERE ALL TRANSACTIONS WERE CARRIED OUT ON PERSON TO PERSON BASIS AND ALL TRANSACTIONS WERE ON CASH BASI S, THAT IN AY 2004-05 THE PURCHASES MADE BY THE ASSESSEE WERE OF RS.33,21,358/- AND SALES WERE OF RS.17, 95,065/-,THAT IN THE AY 2005-06 THE TURNOVER WAS OF RS.15,12,710/- , THAT IN THAT YEAR THE CLOSING STOCK WAS SHOWN AS NIL,THAT THE ENTIRE CLOSING STOCK WAS SHOWN AS SUNDRY DEBTORS OF RS.30, 60,800/-,THAT FORM THE SUNDRY DEBTORS RECOVERIES HAD BEEN MADE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION,THAT THE ASSESSEE HAD 3 ITA NO. 85/NAGPUR/2010 VANITA DINDAYAL SURI FILED CASH FLOW STATEMENT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET TO EXPLAIN THE ABOVE FUND AVAILABILITY. FAA,FINALLY HELD THAT THE CASH DEPOSI TS IN THE BANK ACCOUNTS HAD COME OUT OF THE EXPLAINED SOURCES,THAT THE ADDITION OF RS. 15,61,50 0/- MADE BY THE AO ON ACCOUNT OF CASH DEPOSIT IN THE BANK ACCOUNTS WAS UNWARRANTED.AS A RESULT,HE DELETED THE ADDITION MADE BY THE AO. 4. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT SUFFICIENT CASH WAS NOT AVAILABLE WITH THE ASSESSEE,THAT SHE HAD NOT PROVED THAT CASH WAS RECEIVED FROM THE DEBTORS. AUTHORISED REPRESENTATIVE(AR) SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT CASH BALANCE ON THE DATES OF DEPOSITS,THAT THE ASSESSEE HAD GIVEN A TABLE REFLEC TING DATE, AMOUNT DEPOSITED IN BANK OF INDIA ON VARIOUS DATES TOGETHER WITH OPENING AND CLOSING CAS H IN HAND AS PER CASH BOOK, THAT THE ASSESSEE HAD ALSO FILED A COPY OF BALANCE SHEET AS ON 31-03- 2005 TOGETHER WITH ENCLOSURES REFLECTING SUNDRY DEBTORS AND OTHER DEBIT BALANCES,THAT THE AS SESSEE HAD DEPOSITED A SUM OF RS.22.81 LAKHS OUT OF THE AMOUNT REALISED FROM THE AMOUNT RECEIVAB LE FROM VARIOUS PARTIES,THAT TOTAL RECEIVABLE BY THE ASSESSEE WAS OF RS. 30.60 LAKHS,THAT SHE HAD AL SO FILED HER BALANCE SHEET FOR AY 2003-04 WITH HER RETURN OF INCOME ON 25-07-2003 SHOWING CAPITAL OF RS.40,63,084.60/-,THAT SHE WAS REGULAR ASSESSEE OF THE DEPARTMENT FROM AY 1984-85. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.UNDISPUTED FACTS OF THE CASE UNDER CONSIDERATION ARE THAT THE ASSESSEE HAD DEPOSITED RS.30.67 LAKHS IN THE TWO BANK ACCOUNTS MAINTAINED BY HER,THAT THE AO HELD THAT AS SESSEE HAD DEPOSITED RS.22.81 LAKHS, THAT AO MADE AN ADDITION OF RS.15.61 LAKHS,U/S.68 OF THE AC T TO THE INCOME OF THE ASSESSEE. WE FIND THAT FACTUM OF MAKING DECLARATION OF 20 LAKHS CASH UNDER VDIS IS NOT CHALLENGED BY THE AO,THAT AO HAD ADMITTED THAT THE ASSESSEE HAD SOLD HER CARS,TH AT HE DID NOT GIVE CREDIT FOR PPF A/C.WITHDRAWALS MADE BY THE ASSESSEE.IT IS ALSO AN ESTABLISHED AND UNCONTROVERTED FACT THAT ASSESSEE WAS CARRYING ON BUSINESS DURING THE EARLIER ASSESSMENT YEARS AND RETURNS OF INCOME WERE ALSO FILED BY HER.IT IS FOUND THAT SHE HAD SHOWN THE CLOSING STOCK IN THE I MMEDIATE PRECEDING YEAR AT RS.NIL.IN THESE CIRCUMSTANCES, FAA HELD THAT THE ASSESSEE HAD SHOWN SUNDRY DEBTORS OF RS.30.60 LAKHS.WE FIND THAT THE FAA HAD DECIDED THE ISSUE AFTER GOING THRO UGH THE CASH FLOW STATEMENT, PROFIT AND LOSS ACCOUNTS AND BALANCE SHEETS OF THE ASSESSEE.IN OUR OPINION,IF AFTER CONSIDERING THE FINANCIAL STATEMENTS OF THE ASSESSEE,FAA HAD ARRIVED AT A FIN AL DECISION AND HAD GIVEN A CATEGORICAL FINDING OF FACT THEN HIS ORDER SHOULD NOT BE DISTURBED.THER EFORE,CONFIRMING HIS ORDERS,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL OF THE AO STANDS DISMISSED. B 5C &B5 6 D ?E ,F ,5 G . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. ?$@ 7!/ $ - 24 , 6 , 2014 ! . SD/- SD/- (H.L.KARWA/ ( (( (. .. . . .. . ) ( ,$-. ,$-. ,$-. ,$-. / RAJENDRA) PRESIDENT/ %+ $ $ $ $ '?A '?A '?A '?A /ACCOUNTANT MEMBER / MUMBAI, ? / DATE: 24.01.2014 SK ?$@ ?$@ ?$@ ?$@ 35 35 35 35 H$ H$ H$ H$/5 /5/5 /5 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 01 2. RESPONDENT / 3401 3. THE CONCERNED CIT(A)/ 'I J , 4. THE CONCERNED CIT / 'I J 5. DR ITAT,NAGPUR BENCH/ K 35 , . . - . - . 4 ITA NO. 85/NAGPUR/2010 VANITA DINDAYAL SURI 6. GUARD FILE/ & L . '45 35 //TRUE COPY// ?$@ ' / BY ORDER, M / ' , DY./ASST. REGISTRAR , /ITAT, MUMBAI.