YOGESH BRAMAMBHATT, MUMBAI V. ITO WD 25(2)(2), MUMBAI

ITA 903/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6228 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 10-02-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G GURUSMAY
• Assessee Lawyers: JAYESH DESAI
• Keywords: Unexplained cash credit; Business income; Non compliance
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI S.V. MEHROTRA (AM) AND SMT. ASHA VIJAYARA GHAVAN (JM) ITA NO.903/MUM/2009 ASSESSMENT YEAR- 2005-06 SHRI YOGESH BRAMABHATT, C-109, MANEK NAGAR, M.G. ROAD, KANDIVALI(W), MUMBAI-400 067 PAN-AACPB 9710G THE ITO, WARD 25(2)(2), MUMBAUI (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI JAYESH DESAI RESPONDENT BY: SHRI G. GURUSMAY O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 28.11.2008 PASSED BY THE LD. CIT(A)- XXV FOR THE ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS THAT T HE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF UNEXPLAINED CASH CRED IT OF RS 16,72,269/- OUT OF TOTAL ADDITION OF RS. 38,90,496/- MADE BY LD . A.O. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D THE RETURN OF INCOME ON 28 TH MARCH 2006 DECLARING A TOTAL INCOME AT RS 1,60,96 0/- THE RETURN WAS ACCOMPANIED BY STATEMENT OF TOTAL IN COME, TRADING AND PROFIT AND LOSS ACCOUNT BALANCE SHEET AND OTHER ENC LOSURES. THE CASE WAS SELECTED FOR SCRUTINY THROUGH COMPUTER ASSISTED SCR UTINY SELECTION (CASS). ACCORDINGLY, NOTICE UNDER SEC. 143(2) DATED 11.08.2006 WAS ISSUED AND SERVED ON THE ASSESSEE ON 22.8.2006. NO BODY ATTENDED IN RESPONSE TO THE SAME. THEREAFTER A NOTICE U/S 142(1 ) DATED 5.9.2006 ITA NO. 9030/M/09 2 ALONG WITH QUESTIONNAIRE WAS ISSUED AND SERVED ON T HE ASSESSEE FIXING THE HEARING ON 18.9.2006 AT 11.00 AM. AGAIN NOBODY ATTENDED ON THE DATE OF APPOINTMENT NOR FILED ANY DETAILS CALLED FO R. 4. IN THIS CASE, INFORMATION HAD BEEN RECEIVED FROM AIR REGARDING CASH DEPOSIT OF RS 10,60,000/- IN THE ACCOUNT HELD BY THE ASSESSEE WITH THE BHARAT CO-OP. BANK (MUMBAI) LTD. ON VERIFICATIO N OF THE BANK STATEMENT OBTAINED FROM THE BHARAT O-OP. BANK, KAND IVALI (W) BRANCH, IT WAS NOTICED THAT THE ASSESSEE HAD MADE DEPOSITS TO THE TUNE OF RS 38,90,496/- IN THE ACCOUNT DURING THE PREVIOUS YE AR ENDED ON 31 ST MARCH 200. ONCE AGAIN BY LETTERS DATED 6.12.2007 T HE AO REQUIRED THE ASSESSEE TO ATTEND THIS OFFICE ON 14.12.2007 AT 11. 00. AM AND EXPLAIN THE NATURE AND SOURCE OF THESE DEPOSITS. A SUMMONS UND ER SEC. 131 OF THE IT ACT DATED 16.12.2007 WAS ALSO ISSUED TO THE ASSE SSEE FOR PROMPT COMPLIANCE. NOBODY ATTENDED ON THE DATE OF APPOINT MENT. HENCE, ANOTHER LETTER DATED 14.12.2007 WAS ISSUED AND SERV ED ON THE ASSESSEE ON 17.12.2007 REQUIRING THE ASSESSEE TO ATTEND THE OFFICE ON 20.12.2007 AT 11.00. AM. IT WAS SPECIFICALLY INFORMED TO THE A SSESSEE THAT IN CASE OF NON COMPLIANCE THE DEPOSITS APPEARING IN THIS BANK ACCOUNT SHALL BE TAXED AS AN INCOME FROM UNEXPLAINED CASH CREDIT/ UN DISCLOSED SOURCES. HERE AGAIN, NOBODY ATTENDED NOR FILED ANY EXPLANATI ON. 5. THE AO THEREFORE FELT THAT THE ASSESSEE IN SPITE OF SEVERAL OPPORTUNITIES, FAILED TO FURNISH THE PARTICULARS AN D EXPLAIN THE SOURCE OF DEPOSITS MADE IN THE BANK AND THEREFORE TREATED THE ENTIRE DEPOSIT OF AMOUNTING TO RS.38,90,496/- WITH BHARAT CO-OP. BANK LTD., KANDIVALI (W) BRANCH AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE I.T. ACT, BROUGHT THE SAME TO TAX. 6. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD. CIT(A). IT COULD BE SEEN FROM THE RETURN OF INCOME THAT ASSESS EE WAS AN INDIVIDUAL DERIVING INCOME FROM HIS PROPRIETARY CONCERN M/S V YOM ENTERPRISES. ON ITA NO. 9030/M/09 3 THE BASIS OF PROFIT AND LOSS ACCOUNT ATTACHED WITH THE RETURN, THE ASSESSEE HAD SHOWN A NET PROFIT OF RS 42,399/- ON A TOTAL SALES OF RS 19,72,377/- DURING THE YEAR UNDER CONSIDERATION. BE SIDES THE ASSESSEE HAD SHOWN INCOME FROM SHORT TERM CAPITAL GAIN OF R S. 1,35,000/- AND INCOME FROM OTHER SOURCES OF RS. 90,286/- BUT AS PE R THE INFORMATION AVAILABLE FROM THE AIR AND BANK STATEMENTS OBTAINED FROM THE BHARAT CO-OP. BANK, THE TOTAL DEPOSITS OF THE ASSESSEE DUR ING THE YEAR AMOUNTED TO RS.38,90,496/-. SINCE THE ASSESSEE NEITHER ATTEN DED NOR EXPLAINED THE NATURE OF DEPOSITS, THE EXACT SOURCE OF SUCH DEPOSI TS COULD NOT BE ASCERTAINED. EVEN IN HIS BALANCE SHEET AS AT 31.3.2 005, THE ASSESSEE HAD NOT DISCLOSED THE SAID BANK ACCOUNT HELD BY HIM WIT H BHARAT CO-OP. BANK. THEREFORE, THE AMOUNTS DEPOSITED IN THIS UND ISCLOSED BANK ACCOUNTS COULD BE FROM A SOURCE WHICH WAS NOT DISCL OSED TO THE DEPARTMENT. BEFORE THE LD.CIT(A) THE ASSESSEE EXPLA INED THE SOURCE FOR DEPOSITS MADE WITH THE BANK. 7. LOAN FROM FRIENDS RS. 6,00,000/- THE ASSESSEE CLAIMED THAT LOAN OF RS 6 LACS IS OBTA INED FROM HIS FRIEND, MS. SWETA GAGLANI. THE ENTRY IS THROUGH CH EQUE. WHEN THE ASSESSEE WAS ASKED TO FILE IDENTITY AND CREDIT WORT HINESS OF ALLEGED DEPOSITOR, COUNSEL OF ASSESSEE CONFESSED THAT THE A LLEGED DEPOSITOR IS NEITHER ASSESSED TO TAX NOR HAS PAN. AS THE ASSESS EE FAILED TO PROVE CREDITWORTHINESS OF THE ALLEGED DEPOSITOR, ENTRY OF RS. 6 LACS IN UNDISCLOSED BANK ACCOUNT OF ASSESSEE IS TREATED UNE XPLAINED. HENCE ADDITION OF RS. 6 LACS IS CONFIRMED. 8. OTHER LOAN RS 1,75,500/- : IN THIS REGARD COMMEN TS OF ITO 25 (2) (2) IN PARA 15 OF REMAND REPORT ARE REPRODUCED AS U NDER: THE REPRESENTATIVE OF THE ASSESSEE VIDE HIS LETTER DATED 17.11.2008 HAS STATED THAT HE HAS TAKEN LOAN OF RS. 35,500/- A ND RS. 1,00,000/- FROM VARANI ENTERPRISES AND J.K. TRADERS ON 23.11.2 004 & 2.12.2004 ITA NO. 9030/M/09 4 RESPECTIVELY AND PRODUCED LOAN CONFIRMATION LETTERS FROM THE CONCERNED PARTIES. THE SAME UNSECURED LOANS HAVE BEEN REFLECT ED IN THE BANK STATEMENT OF THE BHARAT CO-OP. BANK (MUMBAI) LTD., BEARING S.B.A/C 101/3371 OF THE ASSESSEE/ THE BALANCE RS. 40,000/- OUT OF RS. 1,75,000/- IS THE CAPITAL WITHDRAWALS FROM PROPRIET ARY CONCERN OF THE ASSESSEE, VYOM ENTERPRISES A-504, LANCELOT, S.V. RO AD, BORIVALI, MUMBAI 92. IN SUPPORT OF HIS CONTENTION, HE HAS SHO WN THE ENTRIES IN THE BANK STATEMENT AT PAGE NO. 5 A/C. NO. 3371 OF T HE BHARAT CO-OP. BANK (MUMBAI) LTD KANDIVALI (W) BRANCH, MUMBAI. THE SAME IS VERIFIED FROM THE BANK STATEMENT OF THE ASSESSEE. HOWEVER, H E IS UNABLE TO PRODUCE THE COPY OF THE CAPITAL ACCOUNT OF THE VYOM ENTERPRISES THE PROPRIETARY CONCERN OF THE ASSESSEE. LOOKING TO THE COMMENTS OF A.O., CIT(A) HELD THAT L OAN OF RS. 1,35,500/- (RS.35,500 +1,00,000/-) IS TREATED EXPLA INED. HOWEVER, LOAN OF RS 40,000/- STATED TO BE FROM VYOM ENTERPRISES I S TREATED UNEXPLAINED. THUS ADDITION WAS OF RS 40,000/- OUT OF RS 1,75,000/- WAS CONFIRMED BY CIT(A).. 9. MOTILAL OSWAL RS 2,50,000/- ASSESSEE CLAIMED THAT HE RECEIVED SALE CONSIDERATIO N OUT OF SALE OF SHARES OF RS 2,50,000/- WHICH IS DIRECTLY DEPOSITE D IN THE BANK ACCOUNT. COMMENTS OF AO ON THIS ISSUE MENTIONED IN THE REMAN D REPORT ARE REPRODUCED AS UNDER: SHRI CHANDREH DAVE, C.A. HAS REPORTED THAT THE ASSE SSEE HAS RECEIVED RS 2,50,000/- VIDE CHEQUE NO. 263967 ON 8.10.2004 T OWARDS SALE OF SHARES OF BAJAJ HINDUSTAN WHICH IS REFLECTED IN THE BANK STATEMENT OF THE BHARAT CO- OP. BANK (MUMBAI) LTD ON PAGE NO.4. THE ABOVE SHARES WERE SOLD THROUGH SAGAR CONSULTANCY WHICH IS SUB BROKER OF MOTILAL OSWAL, A SHARE BROKER COMPANY. HE STATED THAT BROKE R SHRI MOTILAL OSWAL IS NOT TRACEABLE AS HIS OFFICE HAS BEEN CLOSE D. THEREFORE, HE IS UNABLE TO PRODUCE THE BROKERS BILLS, HE HAS STATED THAT THE CONCEPT OF DMAT A/C WAS NOT OBLIGATORY FOR THAT PERIOD. THE ASSESSEE VIDE HIS LETTER DATED 17.11.2008, HAS SUBMITTED THE WORKING OF THE SHORT TERM CAPITAL GAINS, WHICH IS REPRODUCED AS UNDER: I, YOGESH J. BRAHAMBHATT KINDLY SUBMIT HEREWIT H A DETAIL OF CAPITAL GAIN MADE BY ME DURING THE YEAR 2004-05 FOR YOUR CONFIRMATION AS BELOW: PURCHASE OF 1673 OF BAJAJ HINDUSTAN ITA NO. 9030/M/09 5 IN MAY 2004 @ 124/- TOTAL RS 2,07,452/- SPLIT OF THE SHARES IN JULY 2004 IN 3364 NOS. SOLD ON 6.10.2004 3346 NOS. @ 74.71 TOTAL SALE VALUE R S. 2,49,979.66 TOTAL SHORT TERM CAPITAL GAIN MADE RS. 42,527.66 SO HEREWITH I KINDLY REQUEST TO CONSIDER THE SAME: HOWEVER, IT HAS BEEN OBSERVED THAT IN THE RETURN OF INCOME FOR THE AY 2005-06 THE ASSESSEE HAS OFFERED SHORT TERM CAPIT AL GAIN OF RS 1,35,000/- WHEREAS THE CORRECT TAXABLE SHORT TERM G AINS, IS RS.42,527/- AS PER ASSESSEES REPRESENTATIVES LETTER. 10. THE LD. CIT(A) AFTER GOING THROUGH THE SUBMISSI ONS GIVEN BY THE COUNSEL OF THE ASSESSEE AT THE TIME OF REMAND REPOR T PROCEEDINGS BEFORE THE ITO FOUND THAT THE SUBMISSIONS GIVEN BY HIM DO NOT PERTAIN TO THE ENTRIES IN UNDISCLOSED BANK ACCOUNT. NEITHER SHARE S WORTH RS 2,07,452/- WERE BROUGHT FROM BANK ACCOUNT IN MAY, 2 004 (AS NO SUCH CHEQUE IS FOUND ISSUED FROM UNDISCLOSED BANK ACCOU NT) NOR CHEQUE OF SALE CONSIDERATION OF RS 2,49,979/- IS FOUND DEPOSI TED IN UNDISCLOSED BANK ACCOUNT. THE CHEQUE IS OF ROUND FIGURE OF RS 2 ,50,000/- IN UNDISCLOSED BANK ACCOUNT WHICH IS NOT ISSUED BY MOT ILAL OSWAL. THE DETAILS GIVEN BY THE ASSESSEE TO ITO RELATES TO SAL E OF TRANSACTIONS ALREADY DISCLOSED IN DISCLOSED BANK ACCOUNT AND NOT OF THE TRANSACTIONS RELATED TO UNDISCLOSED BANK ACCOUNT. HENCE, ENTRY OF RS 2,5 0,000/- IS TREATED UNEXPLAINED. IN VIEW OF ABOVE, THE LD.CIT(A) CONFI RMED THE ADDITION OF RS,2,50,000/- . 10. CASH DEPOSITS OF RS. 10,70,524/- ASSESSEE HAS MADE CASH DEPOSIT OF RS. 10.70,524/- O N VARIOUS DATES IN THE BANK ACCOUNT. THE ASSESSEE ALSO MADE CASH WI THDRAWAL OF RS 3,18,000/- ON VARIOUS DATES. IT IS CONTENDED BY TH E LD. COUNSEL OF ITA NO. 9030/M/09 6 ASSESSEE THAT CASH WITHDRAWAL FROM UNDISCLOSED BANK ACCOUNT SHOULD BE TREATED AS RE-DEPOSITED IN THE SAME BANK ACCOUNT O N VARIOUS DATES. THIS PLEA OF ASSESSEE WAS ACCEPTED BY THE LD.CIT(A) , IN VIEW OF DECISION OF ITAT IN THE CASE OF SURENDRA M. KHANDAR VS. ACIT 76 ITD 121, THUS CASH DEPOSIT OF RS. 7,52,523/- (RS. 10,70,524 3,1 8,000). IS TREATED AS UNEXPLAINED AND ADDITION TO THE EXTENT OF ABOVE IS CONFIRMED. 11. TO SUM UP, THE LD. CIT(A) CONFIRMED THE FOLLOW ING ADDITIONS: 1. CHEQUE ENTRY RS. 6,0 0,000 2. CHEQUE ENTRY RS. 40,000 3. CHEQUE ENTRY RS. 2,5 0,000 4. INTEREST FROM R.D. RS. 2 8,699 5. DIVIDEND AND INTEREST RS. 1 ,046 6. UNEXPLAINED CASH RS. 7,52, 524 ___________________ TOTAL RS. 16,72,269 ___________________ THUS, OUT OF TOTAL ADDITION OF RS 38,90,496/-, ADDI TION OF RS. 16,72,269/- WAS CONFIRMED BY THE LD. CIT(A) AND ASSESSEE GOT RE LIEF OF RS 22,13,227/- (RS. 38,90,496 RS. 16,72,269). 12. AGGRIEVED , THE ASSESSEE PREFERRED AN APPEAL B EFORE US. 13. WE HEARD BOTH THE PARTIES. WE FIND THAT THE CON CLUSIONS OF THE LD. CIT(A) ARE REASONABLE AND BASED ON THE APPRAISAL OF THE FACTS AND EVIDENCES FURNISHED BY THE ASSESSEE. TO BEGIN WITH THE ENTIRE DEPOSITS AMOUNTING TO RS.38,90,496/- WITH BHARAT CO-OP. BANK LTD., KANDIVALI (W) BRANCH WAS NOT REFLECTED IN BOOKS. THEREFORE TH E SOURCE OF THESE DEPOSITS HAVE NOT ALSO BEEN RECORDED IN THE BOOKS. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 16,72,269/- AS UNEXPL AINED. THE LOAN OF RS 6,00,000/- FROM MS. SWETA GAGLANI WAS NOT ACCEPTED BECAUSE THE CREDITWORTHINESS OF THE CREDITOR WAS NOT ESTABLISHE D. SHE IS NOT ASSESSED TO TAX. IN THE CIRCUMSTANCES. THE LD. CIT(A) RIGHT LY REJECTED THE SOURCE ITA NO. 9030/M/09 7 OF THIS LOAN AND ADDED THE SUM OF RS. 6,00,000/- AS UNEXPLAINED INCOME OF THE ASSESSEE. NOTHING WAS SUBMITTED BEFORE US TO PERSUADE US TO TAKE A DIFFERENT VIEW. SUFFICIENT OPPORTUNITIES HAD BEEN GIVEN TO THE ASSESSEE TO ESTABLISH THE SOURCE OF THE DEPOSITS IN THE BANK . IN THE CIRCUMSTANCES WE CONCUR WITH THE LD. CIT(A) IN HIS DECISION CONFI RMING RS. 6 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. AS REGARDS THE CAPITAL GAINS OF RS. 2,50,000/-, AS THE LD. CIT(A) RIGHTLY POINTED OUT, THE AMOUNT REPRESENTS CAPITAL GAINS INCLUDED IN THE BOOKS OF ACCOUNT. HEN CE IT CANNOT BE TAKEN AS A SOURCE TO EXPLAIN THE DEPOSITS MADE IN THE BAN K WHICH WAS NOT PART OF THE ENTRIES IN THE BOOKS. WE CONCUR WITH THE DEC ISION OF CIT(A) REJECTING THE EXPLANATION FOR RS. 2,50,000/-. AS RE GARDS LOAN OF RS. 40,000/- WE FIND THAT THE ASSESSEE HAS EXPLAINED IT BEING FROM VYOM ENTERPRISES, HIS PROPRIETARY CONCERN. AS NO SUCH EN TRIES HAVE BEEN SHOWN TO HAVE BEEN MADE IN THE ACCOUNTS OF THE PROP RIETARY CONCERN, THIS AMOUNT WAS ALSO RIGHTLY TAKEN FOR COMPUTING TH E UNDISCLOSED INCOME. 14. AS REGARDS THE CASH DEPOSITS OF RS. 10.70,524/- MADE ON VARIOUS DATES IN THE BANK ACCOUNT, THE LD.CIT(A) HAS ACCEPT ED THE AMOUNT OF RS 3,18,000/- BEING CASH WITHDRAWN ON VARIOUS DATES, A S SOURCE OF DEPOSITS. ACCORDINGLY, HE HAS DELETED RS. 3,18,000/ - AND SUSTAINED THE BALANCE CASH DEPOSIT OF RS. 7,52,523/- (RS. 10,70,5 24 3,18,000). THERE WAS NO ADDITIONAL ARGUMENTS ON THIS ACCOUNT AND HEN CE WE CONFIRM THE ADDITION OF RS. 7,52,523/- OUT OF THE CASH DEPOSITS AS UNEXPLAINED INCOME. THE BALANCE AMOUNTS OF RS. 28,699/- AND RS. 1,046/- REPRESENTS INCOME WHICH HAVE NOT BEEN ACCOUNTED. H ENCE THEY HAVE BEEN RIGHTLY ADDED. 15. IN THE RESULT WE CONFIRM THE ADDITION OF RS. RS . 16,72,269 SUSTAINED BY THE LD. CIT(A) AS UNDISCLOSED INCOME, OUT OF THE TOTAL ITA NO. 9030/M/09 8 DEPOSITS OF RS.38,90,496/- WITH BHARAT CO-OP. BANK LTD., KANDIVALI (W) BRANCH. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF NOVEMBER, 2010 SD/- SD/- (S.V. MEHROTRA) (ASHA VIJAYARAGHA VAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH NOVEMBER, 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 9030/M/09 9 DATE INITIALS 1 DRAFT DICTATED ON: 24.11.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 24.11.2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______