Zaheer Abdulhamid Mulani, Pune V. Income-tax Officer, Pune

ITA 862/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1656 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: K SRINIVASAN
• Keywords: Gift; Salary income; Principle of natural justice; Additional evidence; Agreed addition; Condonation of delay; Revised return
• Section: 143(3); 68

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, P UNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVE DI, AM . / ITA NO. 862/PUN/2017 / ASSESSMENT YEAR : 2011-12 ZAHEER ABDULHAMID MULANI FLAT NO. 604, D WING, GAGAN AVENUE, OPP. SAI SERVICE STATION, KONDHWA (KURD), PUNE- 411 048. PAN : AIVPM7557R ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 7(2), PUNE. / RESPONDENT APPELLANT BY : SHRI K. SRINIVASAN RESPONDENT BY : SHRI PANKAJ GARG / DATE OF HEARING : 16.08.2018 / DATE OF PRONOUNCEMENT : 31.08.2018 / ORDER PER SUSHMA CHOWLA, JM THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PUNE-5, DATED 30.11.2016 REL ATING TO ASSESSMENT YEAR 2011- 12 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2 ITA NO.862/PUN/2017 A.Y.2011-12 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ASSE SSING OFFICER ERRED IN INVOKING PROVISIONS OF SEC. 68 OF THE IT ACT, 1961 TO THE DEPOSITS IN THE BANK ACCOUNT (IN THE NAME OF THE APPELLANT AND HIS WIFE) IGNORING HON. HIGH COURTS DECISIONS ON THE SUBJECT AND CIT(APPEALS) ERRED IN CONFIRMING SUCH ADDITION AND THE SAME MAY BE DELETED AS BAD IN LAW AND QUASH ED. 2. WITHOUT PREJUDICE TO THE ABOVE THE ASSESSING OFFICE R AND THE CIT APPEALS HAVE ERRED IN MAKING AND CONFIRMING RESPECTIVELY TH E ADDITION U/S.68 OF THE ACT, IN RESPECT OF BANK DEPOSITS FROM RELATIVES WHE N CLEAR EVIDENCES WERE BEFORE THEM RELATING TO SUCH DEPOSITS. 3. THE ASSESSING OFFICER HAS MERELY MADE AN ADDITIO NS ON ACCOUNT OF ALLEGED AGREEMENT WHEN THE SAME IS CONTRARY TO THE JUDICIAL PRONOUNCEMENTS AND CIT(APPEAL) HAS IGNORED EVIDENCES AND REMAND REPORT BEFORE HER VIOLATING THE PRINCIPLES OF NATURAL JUSTICE AND THEIR ACTION MAY BE HELD AS BAD IN LAW AND QUASHED OR ANY OTHER APPROPRIATE ORDERS PASSED TO G IVE RELIEF AS CONSIDERED FIT IN THE CIRCUMSTANCES OF THE CASE. 4. APPELLANT CRAVES LEAVE TO ADD/ ALTER/AMEND ANY G ROUNDS OF APPEAL AND PRODUCE ADDITIONAL EVIDENCE AT THE TIME OF HEARING. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAIN ST THE ADDITION MADE UNDER SECTION 68 OF THE ACT. 4. BRIEFLY IN THE FACTS OF THE CASE, THE ASSESSEE H AD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,33,385/-. THE CASE O F THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSEE HAD RECEIVED SALA RY FROM THREE CONCERNS. HOWEVER, ASSESSEE HAD DECLARED THE SALARY RECEIVED FROM ONLY ONE CONCERN IN THE RETURN OF INCOME. WHEN FACTS WERE BROUGHT TO THE NO TICE OF THE ASSESSEE, HE AGREED TO FURNISH REVISED RETURN OF INCOME AND PAID TAXES THEREON. THE TOTAL SALARY OF RS.6,26,374/- WAS ADDED TO THE RETURNED INCOME OF T HE ASSESSEE AS INCOME FROM SALARY AND PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS AND CONCEALING THE INCOME. F URTHER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEPOSITED CASH OF RS. 32,50,000/- WITH PUNJAB NATIONAL BANK ON VARIOUS DATES. THE ASSESSEE WAS ASKED TO E XPLAIN THE SOURCE OF CASH DEPOSITS WITH EVIDENCES AND THE BANK ACCOUNTS. THE ASSESSEE SUBMITTED THAT IT HAD RECEIVED THE SAID AMOUNT FROM RELATIVES AND PARTLY FROM THE PREVIOUS SAVINGS I.E. 3 ITA NO.862/PUN/2017 A.Y.2011-12 RS.7,00,000/-. THE ASSESSEE WAS ASKED TO FURNISH TH E DETAILS OF RELATIVES WHO HAD GIVEN GIFT AND ALSO TO ESTABLISH SAVING OF RS.7,00, 000/-. THE ASSESSEE WAS UNABLE TO FURNISH EVIDENCES IN RESPECT OF THE SAME AND VIDE OFFICE ORDER SHEET ENTRY DATED 07.02.2014, THE ASSESSEE AND AUTHORIZED REPRESENTAT IVE AGREED FOR ADDITION OF RS.32,50,000/-. THE SAID SUM WAS ADDED AS UNEXPLAIN ED CASH DEPOSIT UNDER SECTION 68 OF THE ACT. PENALTY PROCEEDINGS UNDER SECTION 2 71(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS AND CONCEALIN G THE INCOME. 5. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF A SSESSING OFFICER BEFORE THE CIT(A) AFTER DELAY OF 22 MONTHS AND 2 DAYS. HE EXPL AINED THE REASONS FOR DELAY IN FILING THE APPEAL LATE BEFORE THE CIT(A) WHICH ARE INCORPORATED AT PAGE 2 TO 4 OF THE APPELLATE ORDER. THE ASSESSEE POINTED OUT THAT HE WAS ADVISED THAT NO APPEAL COULD BE FILED AGAINST THE ASSESSMENT ORDER AS HE HAD ADM ITTED TO THE ADDITION. BUT THE SAID ADDITIONS WERE SUBJECT TO NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT WOULD BE LEVIED. HOWEVER, AFTER THE CHARGE WAS TAKEN OVER BY ANOTHER ASSESSING OFFICER, HE LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE A CT AND THUS, THE ASSESSEE WAS CONSTRAINT TO SEEK ADVICE FROM ANOTHER CONSULTANT W HO ADVISED HIM TO FILE APPEAL. THE CIT(A) CONDONED THE DELAY IN FILING THE APPEAL LATE. HOWEVER, IN RESPECT OF EXPLANATION OF THE ASSESSEE OF HAVING RECEIVED MONE Y FROM HIS RELATIVES ON OCCASION OF MARRIAGE OR GIFT OR LOAN, ACCUMULATED SAVINGS, T HE ASSESSEE FILED EXPLANATION AND AFFIDAVIT AS ADDITIONAL EVIDENCE BEFORE THE CIT(A). THE SAID ADDITIONAL EVIDENCE WAS SENT TO THE ASSESSING OFFICER FOR REMAND REPORT. TH E ASSESSING OFFICER IN REMAND PROCEEDINGS ISSUED SUMMONS TO THE FOUR PERSONS AND ALSO TO THE ASSESSEE, WHOSE STATEMENT WERE RECORDED ON OATH AND WERE CROSS EXAM INED. THE ASSESSING OFFICER DID NOT COMMENT ON THE RESULT OF THIS ENQUIRY BUT S TRESSED THAT THE ASSESSEE HAD AGREED FOR ADDITION IN THE ABSENCE OF EVIDENCE. THE CIT(A) VIDE PARA 5.9 OBSERVED THAT SINCE THE ASSESSEE HAD AGREED TO THE ADDITION THEN THE SAME COULD NOT BE 4 ITA NO.862/PUN/2017 A.Y.2011-12 BRUSHED ASIDE. THEREFORE, EXPLANATION OF THE ASSESS EE WAS REJECTED AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C IT(A) BEFORE US. 7. THE LD. AR FOR THE ASSESSEE STRESSED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD AGREED TO THE ADDITIO N SUBJECT TO NO PENALTY BEING LEVIED UNDER SECTION 271(1)(C) OF THE ACT. BUT PEN ALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE AND THEREAFTER, THE ASSESSEE F ILED APPEAL, AFFIDAVIT OF RELATIVES AND ALSO PRODUCED THEM. OUR ATTENTION WAS DRAWN TO THE REMAND REPORT AT PAGE 40 TO 43 OF THE PAPER BOOK. HOWEVER, THE ASSESSING OFFICE R FAILED TO COME TO ANY CONCLUSION. HE FURTHER POINTED OUT THAT THE ASSESSI NG OFFICER IN THE REMAND REPORT, HOWEVER, STATED THAT THE AFFIDAVIT SUBMITTED BY THE ASSESSEE MAY BE CONSIDERED BY THE CIT(A). BUT THE CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE, DURING ASSESSMENT PROCEE DINGS, HAD AGREED TO THE AFORESAID ADDITION. 8. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RESSED THAT SINCE THE ASSESSEE HAD AGREED TO THE AFORESAID ADDITION, HENC E THE SAME MERITS TO BE UPHELD. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THERE WAS CASH DEPOSIT IN THE BANK AC COUNT OF THE ASSESSEE, WHICH HE CLAIMED TO HAVE RECEIVED FROM HIS RELATIVES AS UNDE R : 1. FROM MOTHER-IN-LAW RS.12,00,000/- AS GIFT 2. FROM ACCUMULATED SAVINGS RS.7,00,000/- 3. FROM FATHER RS.1,50, 000/- ON OCCASION OF MARRIAGE 4. FROM SISTER IN LAW RS.12,00,000/- 5 ITA NO.862/PUN/2017 A.Y.2011-12 10. THE SAID CASH TOTALING RS.32,50,000/- WAS DEPOS ITED IN PUNJAB NATIONAL BANK. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS, AGREED TO THE ADDITION AS COMPLETE EVIDENCES WERE NOT AVAILABLE WITH THE A SSESSEE. THE AGREED ADDITION WAS MADE SUBJECT TO THE CONDITION THAT NO PENALTY P ROCEEDINGS WOULD BE INITIATED UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, SUCCES SOR ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASS ESSEE THEREON I.E. AFTER DELAY OF 22 MONTHS 2 DAYS FILED THE APPEAL BEFORE CIT(A) AND AL SO MADE REQUEST FOR CONDONATION OF DELAY IN FILING THE APPEAL LATE BEFORE CIT(A). H E IN HIS PETITION POINTED OUT THAT THE ADDITION WAS MADE SUBJECT TO NO PENALTY BEING LEVIE D. HOWEVER, SINCE PENALTY FOR FURNISHING INACCURATE PARTICULARS AND CONCEALING TH E INCOME WAS LEVIED, HE IS AGITATING THE ADDITION. 11. THE FIRST ISSUE WHICH ARISES IS WHETHER THE AS SESSEE CAN AGITATE THE ADDITION, IF HE HAD AGREED TO THE SAME DURING ASSESSMENT PROC EEDINGS. THE ASSESSEE HAD RECEIVED THE LOAN/ GIFT FROM HIS RELATIVES AND NOT FROM ANY OUTSIDE PARTY. THE ASSESSEE HAD BEEN ABLE TO FURNISH AFFIDAVIT OF THE SAID RELATIVES BEFORE THE CIT(A), WHO CONFIRMED THE SAME BEFORE ASSESSING OFFICER. I N THE REMAND PROCEEDINGS, THE SAID RELATIVES WERE PRODUCED BY THE ASSESSEE, THEIR STATEMENTS WERE RECORDED AND THEY WERE ALSO CROSS EXAMINED. NO DISCREPANCY HAS B EEN POINTED BY THE ASSESSING OFFICER IN THE SAID STATEMENTS RECORDED. IN SUCH C IRCUMSTANCES, WHERE INITIALLY THE ASSESSEE HAD AGREED TO THE ADDITION BECAUSE OF LACK OF EVIDENCES, REASONS FOR WHICH WAS CERTAIN FAMILY DISPUTES AND ONCE THE EVIDENCES WERE AVAILABLE WITH THE ASSESSEE AND ALSO BECAUSE THE EXPLANATION OF THE ASSESSEE HA D NOT BEEN ACCEPTED IN ENTIRETY, THE ASSESSEE IS AT LIBERTY TO RAISE THE ISSUE BEFOR E THE CIT(A). ACCORDINGLY, WE ARE OF THE VIEW THAT IN VIEW OF THE PRINCIPLE OF NATURAL J USTICE, THE PERSON CANNOT BE CONDEMNED ON HIS ADMISSION OF ADDITION, WHICH WAS M ADE FOR LACK OF AVAILABILITY OF EVIDENCE. ONCE THE EVIDENCES WERE AVAILABLE WITH TH E ASSESSEE AND THEY HAVE BEEN PROPERLY EXAMINED BY THE ASSESSING OFFICER IN THE R EMAND PROCEEDINGS, THEN IT WAS 6 ITA NO.862/PUN/2017 A.Y.2011-12 INCUMBENT UPON THE CIT(A) TO ADJUDICATE THE ISSUE O N MERITS AND NOT DISMISS THE SAME ON THE GROUND THAT THE ASSESSEE HAD AGREED TO THE ADDITION. THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF EACH CASE SHOULD BE KEPT IN MIND BEFORE REJECTING THE CLAIM OF THE ASSESSEE. 12. A PERUSAL OF THE REMAND REPORT AT PAGE 40 TO 4 2 AND PAGE 43 REVEALS THAT THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS HAD ISS UED SUMMONS TO THE PERSONS AND THEIR AFFIDAVIT WERE FILED, THEY WERE CROSS EX AMINED AND THEIR STATEMENT WERE RECORDED ON OATH AND THE SAME WERE FORWARDED TO TH E CIT(A) WHO HAS FAILED TO TAKE COGNIZANCE OF THE SAME. THE ASSESSEE BEFORE US, HAD FILED SAID EVIDENCES I.E. AFFIDAVIT OF THE PERSONS, THEIR STATEMENT WHICH WER E RECORDED AT PAGE 20 TO 39 OF THE PAPER BOOK. IN THE TOTALITY OF THE EVIDENCES AVAILA BLE WITH THE ASSESSEE, STATEMENTS OF THE PERSONS RECORDED AND THEIR CROSS EXAMINATION IN WHICH NO DISPARITY HAS BEEN FOUND OR DETECTED, THEN EXPLANATION OFFERED BY TH E ASSESSEE MERITS TO BE ACCEPTED IN TOTO. ACCORDINGLY, WE HOLD THAT THERE IS NO MERI T IN MAKING ADDITION ON THIS COUNT IN THE HANDS OF THE ASSESSEE. 13. BEFORE PARTING, WE MAY ALSO NOTE THE FACT THA T THE ADDITION UNDER SECTION 68 OF THE ACT HAS BEEN MADE IN THE HANDS OF THE ASSESS EE BECAUSE OF CASH DEPOSIT IN THE BANK ACCOUNT I.E. SAVINGS ACCOUNT MAINTAINED BY THE ASSESSEE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BHAICHAND GANDHI REPORTED 141 ITR 67/30 TAXMANN.COM 20 HAS APPROVED THE PROPOSITION THAT A BANK PASS BOOK MAINTAINED BY THE BANK CANNOT BE REGARDED AS A BOOK OF THE ASSESS EE FOR THE PURPOSES OF SECTION 68 OF THE ACT. APPLYING THE SAID PRINCIPLE, THE MUM BAI BENCH OF THE TRIBUNAL IN THE CASE OF SMT. MANASI MAHENDRA PITKAR VS. ITO, IN ITA NOS.4223 & 4224 (MUM.) OF 2015 ORDER DATED 12 TH AUGUST, 2016 HAD HELD THAT WHERE THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND SECTION 68 HAD BEEN INVOKED BY THE ASSESSING OFFICER ONLY ON THE BASIS OF THE BANK PASS BOOK ; T HE INVOKING OF SECTION 68 HAS TO FAIL 7 ITA NO.862/PUN/2017 A.Y.2011-12 BECAUSE THE BANK PASS BOOK OR BANK STATEMENT CANNOT BE CONSTRUED TO BE A BOOK MAINTAINED BY THE ASSESSEE FOR ANY PREVIOUS YEAR AS UNDERSTOOD FOR THE PURPOSES OF SECTION 68. APPLYING THE SAID PRINCIPLE ALSO TO TH E FACTS OF THE PRESENT CASE, WE HOLD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE A SSESSEE UNDER SECTION 68 OF THE ACT ON ACCOUNT OF CASH DEPOSIT IN SAVING ACCOUNT. THUS, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON THIS 31ST DAY OF AUGUST, 2018. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) /ACCOUNTANT MEMBER /JUDICIAL MEMBER / PUNE; ! / DATED : 31 ST AUGUST, 2018 SB ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS), PUNE-5, PUNE. 4. THE PR. CIT, PUNE-4, PUNE. 5. '#$ %& , ' %& , - ()* , / DR, ITAT, SMC BENCH, PUNE. 6. $+, -. / GUARD FILE. // TRUE COPY // '/ / BY ORDER, 0 %* /PRIVATE SECRETARY ' %& , / ITAT, PUNE.