Ashokkumar Sadanand Rai, Surat V. Dy..CIT,Circle 2(3), Surat

ITA 90/SRT/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2961 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Keywords: Unexplained expenditure
• Section: 69C; 72; 13; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRIPAWAN SINGH, JM &DR. A.L.SAINI, AM ./ITA NO.90/SRT/2019 ( / ASSESSMENT YEARS: (2014-15) (VIRTUAL COURT HEARING) ASHOKKUMAR SADANAND RAI, C-16, ANUPAM BUNGLOW, NR. THOMAS SCHOOL, NEW CITY LIGHT ROAD, SURAT-395017. VS. THE DCIT, CIRCLE-2(3), ROOM NO.612, AAYAKAR BHAWAN, MAJURA GATE, SURAT-395001. ./ ./ PAN/GIR NO.: ACEPR0529B (ASSESSEE) (RESPONDENT) ASSESSEE BY :SHRI RAJESH UPADHYAY, AR REVENUE BY :MS ANUPAMA SINGLA, SR. DR / DATE OF HEARING : 07/10/2021 /DATE OF PRONOUNCEMENT : 25 /10/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR (AY) 2014-15, IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, SURAT [IN SHORT THE LD. CIT(A)] IN APPEAL NO. CIT(A), SURAT-1/11822/2016-17 DATED 31.12.2018, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER (AO) U/S143(3)OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], DATED 28.12.2016. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS TO CONFIRM ADDITION OF RS.17,21,255/- U/S 69C OF THE IT ACT MADE BY THE DY CIT IGNORING THE FACT THAT THE ASSESSEE HAS ALREADY SHOWN PURCHASES OF SHARE IN HIS RETURN OF INCOME FOR AY.2014-15. HE FURTHER ERRED IN NOT CONSIDERING THE ASSESSEES SUBMISSION MADE IN APPEAL AS WELL AS IN ASSESSMENT PROCEEDINGS AND IN REMAND PROCEEDINGS. 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS TO CONFIRM AOS ADDITION OF RS.17,21,255/- BY OVERLOOKING THE FACT THAT THE BOOKS OF A/C OF THE ASSESSEE ARE ACCEPTED AND PROVISIONS OF SECTION 145(3) WAS NOT INVOKED BY THE AO. PAGE | 2 ITA NO.90/SRT/2019 ASSESSMENT YEAR. 2014-15 ASHOKKUMARSADANAND RAI 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE BEFORE US IS AN INDIVIDUAL. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF SHARES AND SECURITIES. HE HAS ALSO DERIVED INCOME FROM PARTNERSHIP FIRM AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF COMPUTATION OF INCOME, AUDIT REPORT, DETAILS OF CLOSING STOCK OF SHARES, STATEMENT OF DEMAT ACCOUNT WITH HDFC AND OTHER DOCUMENTS, IT WAS OBSERVED BY ASSESSING OFFICER THAT ASSESSEE IS A TRADER IN SHARES AND SECURITIES.AS PER THE AUDITED ACCOUNTS, STOCK OF SHARES HAS BEEN SHOWN. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO SUBMIT DETAILS OF SHARE TRANSACTIONS. IN RESPONSE, THE ASSESSEE SUBMITTED A DEMAT TRANSACTION STATEMENT OF HDFC WHICH SHOWS SOME 3 TO 4 SCRIPS AS CLOSING BALANCE. THE ASSESSING OFFICER NOTED THAT ASSESSEE COULD NOT SUBMIT THE COMPLETE DETAILS. THEREFORE, ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD MADE TRANSACTIONS, IN SHARES WHICH THE ASSESSEE HAD NOT PROPERLY DISCLOSED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, A SUM OF RS.17,21, 255/- WASCONSIDERED AS UNEXPLAINED EXPENDITURE U/S69C OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.AGGRIEVED, THE ISSUE WAS TAKEN UP BEFORE THE FIRST APPELLATE AUTHORITY FOR RELIEF. AFTER CONSIDERING THE ASSESSEE`S SUBMISSION, LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. 5.SHRI RAJESH UPADHYAY, LEARNED COUNSEL FOR THE ASSESSEE, BEGINS BY POINTING OUT THAT LEARNED CIT(A) AS WELL AS ASSESSING OFFICER HAS HEAVILY RELIED UPON AN AUDIT REPORT DATED 29/09/2014, WHICH IS PLACED AT PAGE NO. 80 TO 93 OF PAPER BOOK. AS OPENING AND CLOSING BALANCE OF SHARES AS ON 31/03/2013 AND 31/03/2014 HAVE BEEN REPORTED AT RS.35,71,128/- IN BALANCE SHEET AS WELL AS INPROFIT AND LOSS ACCOUNT AT PAGE NO. 84 AND 85. THE ASSESSING OFFICER HELD THAT PURCHASES OF RS.17,21,255/- WAS UNEXPLAINED DUE TO WANT OF SOURCE. THE LD COUNSEL POINTED OUT THAT IT WAS EXPLAINED TO THE AO AND CIT(A) THAT THE ASSESSEE WAS IN NEED OF AUDIT REPORT IN THE MONTH OF SEPTEMBER 2014 FOR SOME PURPOSES. AT THAT TIME, DEMAT ACCOUNT WITH HDFC BANK LTD, WAS AVAILABLE. SO, TRANSACTIONS OF THE SAID DEMAT ACCOUNT WAS CONSIDERED. HOWEVER, DEMAT ACCOUNT WITH ISE SECURITIES WAS PAGE | 3 ITA NO.90/SRT/2019 ASSESSMENT YEAR. 2014-15 ASHOKKUMARSADANAND RAI AVAILABLE THEREAFTER ON 27/11/2014. SO, TRANSACTIONS WITH THE SAID DEMAT ACCOUNT COULD NOT CONSIDER IN AUDITOR'S REPORT DATED 29/09/2014. HOWEVER, IT WAS DULY CONSIDERED IN AUDITOR'S REPORT DATED 29/11/2014. BOTH REPORTS ALONG WITH A CERTIFICATE FROM ANOTHER CA SHRI MRUNAL JINAWALA AND COMPANY HAVE BEEN PLACED ON RECORD OF THE CIT(A) AS WELL AS ASSESSING OFFICER.THE ASSESSING OFFICER HAS ALSO EXAMINED BOTH DOCUMENTS DURING REMAND PROCEEDINGS. NO DISCREPANCY WAS POINTED OUT EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(A), THEREFORE ADDITION MAY BE DELETED. 6.ON THE OTHER HAND,MS. ANUPAMA SINGLA, SR. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7.WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. WE HAVE GONE THROUGH ASSESSMENT ORDER, REMAND REPORT AND COUNTER OF AR TO REMAND REPORT DURING APPELLATE PROCEEDINGS AND SUBMISSIONS OF LD COUNSEL FOR THE ASSESSEE AND NOTICED THAT THERE IS NO MISMATCH IN ACCOUNTS. THE LD COUNSEL EXPLAINED THE CAUSES OF DIFFERENCE. WE NOTE THAT ASSESSEE HAS RAISED TWO GROUNDS, BOTH ARE INTERCONNECTED AND RELATE TO ADDITION OF RS.17,21,255/-MADE U/S 69C OF THE ACT IN RESPECT OF PURCHASE OF SHARES.THE AO HAS STATED RELEVANT FACTS AS WELL AS HIS FINDINGS AT PARA NO. 4 TO 4.4 AT PAGE NO. 2 AND 3 OF HIS ASSESSMENT ORDER. AT PARA NO. 4.4,ASSESSING OFFICER CONCLUDED THAT: 'THE ASSESSEE HAD NOT SUBMITTED ANY DETAILS WITH REGARD TO PURCHASE OF SHARES. THE SOURCE OF PAYMENT MADE TOWARDS PURCHASES IS ALSO NOT SUBMITTED. THUS, PURCHASE OF RS.17,21,255/- REMAINS UNEXPLAINED. THEREFORE A SUM OF RS.17,21,255/- IS CONSIDERED AS UNEXPLAINED U/S 69C OF THE ACT AND ADDED TO THE TOTAL INCOME. 8. ON APPEAL,LD. C1T(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. WE FIND MERIT IN THE SUBMISSIONS MADE BY LD COUNSEL. THE LEARNED COUNSEL POINTED OUT THAT ASSESSING OFFICER HASHEAVILY RELIED UPON AN AUDIT REPORT DATED 29/09/2014, WHICH IS PLACED AT PAGE NO. 80 TO PAGE | 4 ITA NO.90/SRT/2019 ASSESSMENT YEAR. 2014-15 ASHOKKUMARSADANAND RAI 93 OF PAPER BOOK. AS OPENING AND CLOSING BALANCE OF SHARES AS ON 31/03/2013 AND 31/03/2014 HAVE BEEN REPORTED AT RS.35,71,128/- IN BALANCE SHEET AS WELL AS INPROFIT AND LOSS ACCOUNT WHICH ARE PLACED AT PAGE NO. 84 AND 85 OF PAPER BOOK. THE ASSESSING OFFICER HELD THAT PURCHASES OF RS.17,21,255/- WAS UNEXPLAINED DUE TO WANT OF SOURCE. THE LD COUNSEL POINTED OUT THAT IT WAS EXPLAINED TO THE AO AND CIT(A) THAT THE ASSESSEE WAS IN NEED OF AUDIT REPORT IN THE MONTH OF SEPTEMBER 2014 FOR SOME PURPOSES. AT THAT TIME, DEMAT ACCOUNT WITH HDFC BANK LTD, WAS AVAILABLE. SO, TRANSACTIONS OF THE SAID DEMAT ACCOUNT WAS CONSIDERED. HOWEVER, DEMAT ACCOUNT WITH ISE SECURITIES WAS AVAILABLE THEREAFTER ON 27/11/2014. SO, TRANSACTIONS WITH THE SAID DEMAT ACCOUNT COULD NOT CONSIDER IN AUDITOR'S REPORT DATED 29/09/2014. HOWEVER, IT WAS DULY CONSIDERED IN AUDITOR'S REPORT DATED 29/11/2014. BOTH REPORTS ALONG WITH A CERTIFICATE FROM ANOTHER CA SHRI MRUNAL JINAWALA AND COMPANY HAVE BEEN PLACED ON RECORD OF THE CIT(A) AS WELL AS ASSESSING OFFICER.THE ASSESSING OFFICER HAS ALSO EXAMINED BOTH DOCUMENTS DURING REMAND PROCEEDINGS. NO DISCREPANCY WAS POINTED OUT EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(A). 9.LEARNED COUNSEL TOOK US THROUGH PAGE NO. 72 TO PAGE NO. 76 OF THE PAPER BOOK. IT IS A COPY OF DEMAT ACCOUNT WITH ISE SECURITIES AND SERVICES LTD. IN THIS DOCUMENT, TRANSACTIONS WITH SHARES ARE APPEARING. ALL TRANSACTIONS ARE THROUGH DEBIT AND CREDIT ON THE BASIS OF NORMAL TRADE BILLS EXCEPT A TRANSACTION OF RS.12,101.11DATED 30/12/2013 WHICH IS A CHEQUE ENTRY. ON PAGE NO. 91 OF PAPER BOOK, WHICH IS A PORTION OF SCHEDULES OF AUDIT REPORT DATED 29/09/2014. A LAST ITEM ON PAGE NO. 91 OF PAPER BOOK, IS A BALANCE WITH ISE SECURITIES AND SERVICES LTD. THE SAME IS REPORTED AT RS.904/- AS ON 31 03.2013. THE SAID BALANCE COUPLED WITH A CHEQUE ENTRY DATED 30/12/2013 AT RS.12,101.11, THE TOTAL COMES TO RS.13,005.11( RS.12,101.11+904), WHICH IS AVAILABLE BEING A BALANCE AS ON 31/03/2014. THE SAID FACT PROVES THAT EXPLANATION GIVEN BY THE ASSESSEE IS SATISFACTORY AND ACCEPTABLE.APART FROM AUDITOR'S REPORT, ASSESSEE HAS ALSO FILLED ANNUAL FINANCIAL STATEMENTS FROM HIS BOOKS OF ACCOUNT, VIDE PAGE NO. 42 TO 44 OF PAPER BOOK. FURTHER, COPY OF FULL ITR IS PLACED AT PAGE NO. 8 TO 36 OF THE PAPER PAGE | 5 ITA NO.90/SRT/2019 ASSESSMENT YEAR. 2014-15 ASHOKKUMARSADANAND RAI BOOK. AT PAGE NOS. 9 AND 10 OF PAPER BOOKTHERE IS BALANCE SHEET IN ITR WHICH IS FULLY TALLIED WITH PAGE NO. 42AND 44 OF PAPER BOOK WHICH IS A BALANCE SHEET AS PER BOOKS. LIKEWISE, AT PAGE NO. 10 TO PAGE NO. 13 OF PAPER BOOK THERE ARE PROFIT AND LOSS ACCOUNT IN ITR WHICH ALSO GETS TALLIED WITH PAGE NO. 42 OF PAPER BOOK,WHICH IS A PROFIT AND LOSS ACCOUNT FROM BOOKS OF ACCOUNT. THUS, LD COUNSEL POINTED OUT THAT ASSESSEE HAS ALREADY SHOWN PURCHASES OF SHARES IN HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2014-15. 10. WE NOTE THAT NEITHER THE ASSESSING OFFICER NOR THE LD CIT(A) HAS INVOKED PROVISIONS OF SECTION 145(3) OF THE ACT.WE NOTE THAT ASSESSING OFFICER HAS NOT DISCUSSED ANY OF THESE DOCUMENTS AND EVIDENCES IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS NOT MADE ANY ADVERSE FINDING IN ANY OF THESE DOCUMENTS, EVEN THOUGH ALL THE DETAILS WERE FURNISHED BY THE ASSESSEE BEFORE HIM. THE ASSESSING OFFICER OUGHT TO HAVE EXAMINED ALL THESE DETAILS AND REFUTED / REJECTED THEM, WITH A COGENT ADVERSE FINDINGS AND DISCERNABLE LINE OF REASONING, IN ORDER TO ARRIVE AT A CONCLUSION. ON THE CONTRARY, THE ASSESSING OFFICER HAS JUST BRUSHED ASIDE THESE EVIDENCES AND DOCUMENTS, SUBMITTED BY ASSESSEE, WITHOUT EVEN A WORD ON WHY THEY ARE NOT ACCEPTABLE. IT IS A WELL SETTLED LAW THAT WHEN AN ASSESSEE HAS ALL THE POSSIBLE EVIDENCE IN SUPPORT OF ITS CLAIM, THEY CANNOT BE BRUSHED ASIDE BASED ON SURMISES.HENCE WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSING OFFICER IN ANY MANNER AND HENCE THE ADDITION OF RS.17,21,255/- SO MADE, IS DELETED. HENCE THESE TWO GROUNDS OF THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED ON 25/10/2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER LWJR /SURAT/ / DATE:25/10/2021 SAMANTA