The ITO, Ward-1(2), RAJKOT-GUJARAT V. Shri Ranchhodbhai D. Chavda, RAJKOT-GUJARAT

ITA 915/RJT/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5298 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI
• Assessee Lawyers: KALPESH DOSHIC A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. .. .. BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. S RIVASTAVA AM ITA NO. 915/RJT/2010 / ASSESSMENT YEAR 2004-05. THE INCOME-TAX OFFICER, WARD-1 (2), RAJKOT. ( / APPELLANT) SHRI RANCHHODBHAI D. CHAVDA MATRU CHHAYA, 1-SAHAKAR SOCIETY, RAJKOT. PAN : ABWPC8274H. / RESPONDENT C.O.NO. 59/RJT/2011. / ASSESSMENT YEAR 2004-05. SHRI RANCHHODBHAI D. CHAVDA MATRU CHHAYA, 1-SAHAKAR SOCIETY, RAJKOT. PAN : ABWPC8274H. ( / APPELLANT) THE INCOME-TAX OFFICER, WARD-1 (2), RAJKOT. / RESPONDENT ! '# / REVENUE BY DR. JAYANT B. JHAVERI, DR $% ! '# / ASSESSEE BY SHRI KALPESH DOSHI, CA ' & ' %( / DATE OF HEARING 11-09-2013 ) %( / DATE OF PRONOUNCEMENT 02-12-2013 / ORDER .. , / T. K. SHARMA, J. M. : THIS APPEAL BY THE REVENUE AND CROSS OBJECTIONS BY THE ASSESSEE ARE AGAINST T HE ORDER DATED 18-03-2010 OF LD. CIT (A)-I, RAJKOT FOR THE ASSESSMENT YEARS 2 004-05. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN TRADING ALL KIND OF TYRES AND TUBES. FOR THE ASSESS MENT YEARS UNDER APPEAL, HE FILED THE RETURN OF INCOME ON 25-10-2004 DECLARING TOTAL INCOME OF RS.1,67,644/-. THE AO FRAMED THE ASSESSMENT U/S.147 OF THE I.T. AC T, 1961 ON 24-12-2008. IN THIS ASSESSMENT ORDER, AO MADE ADDITION ON ACCOUNT OF INVESTMENT IN SHARES OF OF RS.5,00,000/- IN KENSTAR I. & T.P. LTD., ADDITIO N OF BROUGHT FORWARD CAPITAL OF RS.10,48,797/- AND ADDITION IN RESPECT OF CASH DEPO SITS OF RS.14,06,000/- AS AGAINST THE DECLARED INCOME OF RS.1,67,644/-. ITA 915-2010 & CO 59-2011 2 3. ON APPEAL, IN THE IMPUGNED ORDER THE LD. CIT (A) DELETED THE ADDITION OF RS.5,00,000/- WHICH WAS MADE BY AO IN RESPECT OF IN VESTMENT IN KENSTAR INVESTMENT & TRADING PVT. LTD. ON THE GROUND THAT A O HIMSELF TREATED VARIOUS CASH DEPOSIT AS UNEXPLAINED. IN SUCH A SITUATION, T HIS RESULTED IN DOUBLE ADDITION BECAUSE IF THE DEPOSITS ARE EXPLAINED, THEN ALSO TH IS INVESTMENT BECAME UNEXPLAINED AND IF THE DEPOSITS IN SAVINGS BANK ACC OUNT ARE UNEXPLAINED, THEN THIS AMOUNT TO DOUBLE ADDITION. OUT OF SECOND ADDI TION OF RS.14,06,000/-, THE LD. CIT (A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 5,25,000/- AND DELETED REMAINING ADDITION. WHILE DELETING THE REMAINING AD DITION OF RS.9,81,000/-, THE LD. CIT (A) HELD THAT ENTRIES OF RS.1,90,000/- ON 16-03 -2004 AND RS.4,00,000/- ON 30-03-2004 ARE TRANSFER ENTRIES WHICH HAVE BEEN REV ERSED BY BANK ON 02-04- 2004. FOR THE REMAINING ENTRIES, THE LD. CIT (A) HE LD THAT THE SAME ARE EXPLAINED AS THE DEPOSITS ARE ON ACCOUNT OF SALE OF TRUCK AND SALE OF AGRICULTURE PRODUCES. FINALLY, THE LD. CIT (A) DELETED THE BROUGHT FORWAR D CAPITAL OF RS.10,48,797/- HOLDING THAT CAPITAL STOOD EXPLAINED. AGGRIEVED WITH THE ORDER OF LD. CIT (A), THE REVEN UE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUND:- THE LD. CIT (A)-I, HAS ERRED IN LAW AND ON FACT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF UNEXPLAINED INVEST MENT IN KENSTAR OF RS.5,00,000/- AND ADDITION ON ACCOUNT OF UNEXPLAINE D OPENING CAPITAL OF RS.10,48,797/- AND UNEXPLAINED CASH DEPOSIT IN BANK OF RS.8,81,000/-. 4. AGGRIEVED WITH CONFIRMING THE ADDITION TO THE EX TENT OF RS.5,25,000/- OUT OF TOTAL ADDITION OF RS.14,06,000/-, THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIONS. THE ONLY GROUND RAISED IN THE CROSS OBJ ECTIONS IS AS UNDER:- THAT, THE LEARNED CIT (A) HAS WRONGLY CONFIRMED THE ADDITION OF UNEXPLAINED DEPOSITS IN BANK OF RS.5,25,000/-. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF R EVENUE DR. JAYANT B. JHAVERI, DR APPEARED AND CONTENDED THAT BEFORE THE AO ASSESSEE FAILED TO PROVE NEXUS THAT INVESTMENT OF RS.5,00,000/- IN SHA RES OF KENSTAR INVESTMENT & TRADING PVT. LTD. WAS MADE FROM THE SAME SAVING BAN K ACCOUNT FROM WHICH AO MADE ADDITION OF RS.14,06,000/- THEREFORE MATTER BE REMANDED TO THE FILE OF AO. WITH REGARD THE DELETION OF CASH DEPOSIT TO THE EXT ENT OF RS.9,81,000/-, THE LD. DR ITA 915-2010 & CO 59-2011 3 POINTED OUT THAT THE VARIOUS DOCUMENTS SUBMITTED BE FORE THE LD. CIT (A) ARE REQUIRED TO BE SCRUTINIZED AT THE END OF THE AO THE REFORE THIS MATTER ALSO BE RESTORED TO THE FILE OF AO. FINALLY, WITH REGARD TO BROUGHT FORWARD CAPITAL OF RS.10,48,797/-, COUNSEL OF THE ASSESSEE SUBMITTED T HAT IN EARLIER FEW YEARS THE ASSESSEE WAS SHOWING THE ESTIMATED INCOME U/S.44AE OF THE I.T. ACT THEREFORE, OPENING BALANCE WAS NOT VERIFIABLE AND ADDITION WAS RIGHTLY MADE BY AO. AS AGAINST THIS, COUNSEL OF THE ASSESSEE IN RESPECT OF RELIEF ALLOWED VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT (A0). THE COUNSEL OF THE ASSESSEE POINTED OUT THAT AO CALLED THE REMAND REPORT FROM THE AO AND COMMENT S OF THE ASSESSEE THEREON WHICH ARE REPRODUCED BY LD. CIT (A) IN THE IMPUGNED ORDER AND THEREAFTER, AFTER CRITICALLY EXAMINING ALL THE SUPP ORTING DOCUMENTS, THE LD. CIT (A) ALLOWED THE RELIEF TO THE ASSESSEE WHICH MAY BE UPH ELD IN RESPECT OF ALL THE THREE ADDITIONS. FURTHER, IN RESPECT OF HIS CROSS-OBJECTI ONS, COUNSEL OF THE ASSESSEE SUBMITTED THAT THERE IS NO JUSTIFICATION FOR UPHOLD ING THE ADDITION IN RESPECT OF UNEXPLAINED DEPOSIT IN BANK ACCOUNT OF RS.5,25,000/ - AS FROM THE PERUSAL OF COUNTER COMMENT OF THE ASSESSEE ON REMAND REPORT OF AO, EACH AND EVERY DEPOSIT IN BANK ACCOUNT STOOD FULLY EXPLAINED. 6. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE MADE INVESTMENT OF RS.5,00,000/- IN SHARES OF KENSTAR INVESTMENT & TRA DING PVT. LTD. FROM HIS BANK ACCOUNT WHEREIN ASSESSEE DEPOSITED VARIOUS AMOUNTS AND THE AO HIMSELF TREATED VARIOUS CASH DEPOSITS AS UNEXPLAINED. THIS FACT IS DULY STATED BY LD. CIT (A) IN PARA-4.7 OF HIS ORDER. NO MATERIAL IS PLACED BY LD. DR TO DISPROVE THE SAME. WE ARE THEREFORE OF THE VIEW THAT LD. CIT (A) HAS C OMMITTED NO ERROR IN DELETING THE ADDITION OF RS.5,00,000/- IN RESPECT OF INVESTM ENT IN SHARES OF KENSTAR INVESTMENT & TRADING PVT. LTD. GROUND NO.1 OF REVEN UES APPEAL IS DISMISSED. 7. WITH REGARD TO RELIEF OF RS.9,81,000/- OUT OF TO TAL ADDITION OF RS.14,06,000/- ALLOWED BY LD. CIT (A) WHICH IS CONTESTED BY REVENU E AND ADDITION TO THE EXTENT OF RS.5,25,000/- CONFIRMED BY LD. CIT (A) WHICH IS CONTESTED BY THE ASSESSEE IN CROSS-OBJECTION, WE FOUND THAT LD. CIT (A) HAS GIVE N COGENT REASON AFTER ITA 915-2010 & CO 59-2011 4 EXAMINING EACH AND EVERY ENTRY, EXPLANATION AND EVI DENCE PLACE BEFORE HIM THEREFORE, VIEW TAKEN BY LD. CIT (A) IN THIS REGARD BE UPHELD AND CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 8. IN RESPECT OF UNEXPLAINED OPENING CAPITAL OF RS. 10,48,797/-, IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT YEAR 1995-96 THE ASS ESSEE FILED THE RETURN OF INCOME ALONG WITH BALANCE SHEET AND WAS HAVING CAPI TAL UNDER TWO HEADS I.E. CAPITAL ACCOUNT AND AGRICULTURE CAPITAL ACCOUNT WHI CH WAS AROUND RS.10,16,000/- IN THE ASSESSMENT YEAR 1995-96. IN THE REMAINING NI NE YEARS ASSESSEE FILED RETURN U/S.44AE AND INCREASE IN CAPITAL IS NOMINAL I.E. RS.10,48,000/-. THIS INDICATES THAT THERE IS AN INCREASE OF CAPITAL BY O NLY RS.32,000/-. IN THESE CIRCUMSTANCES, WE ARE ALSO CONVINCED THAT OPENING B ALANCE STOOD EXPLAINED AND THE LD. CIT (A) IS LEGALLY AND FACTUALLY CORRECT IN DELETING THE ADDITION. 9. RESULTANTLY, THE APPEAL OF THE REVENUE AND CROSS -OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. 10. THIS ORDER IS PRONOUNCED IN OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD/- SD/- ( *.#. , % D. K. SRIVASTAVA ) ( .#. -. / T. K. SHARMA) #( '/ / ACCOUNTANT MEMBER '/ /JUDICIAL MEMBER /#- 0/1/ ORDER DATE 02-12-2013. /RAJKOT NVA/- !'# $%'& / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- THE INCOME-TAX OFFICER, WARD-1 (2), RAJ KOT. 2. / RESPONDENT-. SHRI RANCHHODBHAI D. CHAVDA, MATRU CHHAYA, 1-SAHAKAR SOCIETY, RAJKOT. 3. '151 % & 6% / CONCERNED CIT-I, RAJKOT. 4. & 6%- / CIT (A)-I, RAJKOT. 5. :;< % , , / DR, ITAT, RAJKOT 6. <* >? / GUARD FILE. /#- '# / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT