Shri Hitesh G.Somani, Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 919/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62923 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 26-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: S N SOPARKAR
• Section: 148

Judgement Text

ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR.SHRAWAT JM & SHRI ANIL CHATUR VEDI A.M.) I.T.A. NO.399/AHD/2009 & 919 /AHD/2012. (ASSESSMENT YEAR: 2005-06 ) SHRI HITESH SOMANI 8 SEVAK NAGAR, BEHIND GAUTAM NAGAR, RACE COURCE CIRCLE, VADODARA. (APPELLANT) VS. INCOME TAX OFFICER, WARD 2(2), AAYAKAR BHAVAN, NEAR RACE COURSE CIRCLE, BARODA. (RESPONDENT) PAN: ALUPS5813L APPELLANT BY : SHRI S.N. SOPARKAR, SR. ADVO CATE. RESPONDENT BY : SHRI RAJ MEHRA, SR.D.R. ( )/ ORDER DATE OF HEARING : 14-6-2012 DATE OF PRONOUNCEMENT : 31-8-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE ORDER OF CIT (A)-II, BARODA DATED 21-11-2008 AND DATED 24-2-2012 FOR THE ASSESSMENT YEAR 2005-06. 2. THE FACTS ARE THAT THE ASSESSEE IS A PARTNER IN AMBAVAT DEVELOPERS AND USHA ENGINEERING WORKS AND EARNING INCOME FROM SHARE OF PROFIT. THE ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 2 ASSESSEE FILED HIS RETURN OF INCOME ON 31-8-2005 DE CLARING TOTAL INCOME AT RS.1,20,611/-. THE CASE WAS REOPENED BY ISSUING NOT ICE U/S. 148 ON 18-12- 2006. ASSESSEE VIDE HIS LETTER DATED 15-3-2007 SUBM ITTED THAT THE ORIGINAL RETURN FILED BY HIM MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. 3. THE A.O. OBSERVED THAT ASSESSEE HAD DEPOSITED RS .13,95,000/- BY CASH IN HIS SAVING BANK ACCOUNT. THE ASSESSEE HAD A LSO RECEIVED A LOAN OF RS.30,50,000/- FROM RIDDHI INVESTMENT & PROPERTIES PVT LTD. THE ASSESSEE WAS ASKED TO FURNISH EVIDENCE IN RESPECT OF THE CAS H DEPOSIT AND THE LOAN. THE ASSESSEE SUBMITTED THAT CASH WAS RECEIVED FROM M/S. MADHAV VIDHARBH ESTATE PVT. LTD., HAVING ITS OFFICE AT NAG PUR. THE ASSESSEE FURNISHED THE CONFIRMATIONS FROM BOTH THE PARTIES,. TO VERIFY THE GENUINENESS OF THE CONFIRMATION, THE A.O. ISSUED LE TTER U/S. 133(6). THE LETTER WAS RETURNED UN-SERVED WITH THE REMARK LEFT . THE ASSESSEE WAS DIRECTED TO PRODUCE THE PARTIES. SINCE THE ASSESSEE COULD NOT PRODUCE THE PARTIES, THE A.O. TREATED THE AMOUNT RECEIVED AS UN EXPLAINED CASH CREDIT AND ADDED IT TO THE INCOME. 4. AGGRIEVED BY THE DECISION OF THE A.O. THE ASSESS EE PREFERRED APPEAL BEFORE THE CIT (A). CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: 2.4. IN APPEAL SHRI MIHIR H. SHAH, C.A. AND SHRI G OVIND SOMANI BROTHER OF THE APPELLANT ATTENDED AND FILED WRITTEN SUBMISSIONS AND DISCUSSED THE CASE. WITH REGARD TO THE CASH DEPOSIT OF RS.13,95,000/- THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE AM OUNT WAS RECEIVED AS AN ADVANCE ON 4-12-2004 AGAINST AGREEME NT TO SELL OF ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 3 PROPERTY OWNED BY THE ASSESSEE IN BARODA. SINCE THE DEAL DID NOT MATERIALIZE THE AMOUNT HAD TO BE RETURNED TO M/S. M ADHAV VIDHARBH ESTATE PVT. LTD. REGARDING DEPOSIT OF RS.30,50,000/ - THE LD. A.R. SUBMITTED THAT THIS AMOUNT WAS ALSO RECEIVED AS AN AS ADVANCE AGAINST SALE OF PROPERTY TO M/S. RIDDHI INVESTMENTS & PROPERTIES PVT. LTD. THE DEAL FOR THE SALE OF THIS PROPERTY WAS FIN ALIZED AT RS.31,00,000/-. RS.30.50 LACS WAS PAID AT THE TIME OF AGREEMENT TO SALE WAS MADE, WHEREAS RS.50,000/- WAS RECEIVED ONL Y ON 28-12- 2006. SINCE ASSESSEE HAD RECEIVED THE FULL PAYMENT AS MENTION ED IN THE AGREEMENT TO SELL HE ISSUED AN IRREVOCABLE P OWER OF ATTORNEY IN FAVOUR OF M/S. RIDDHI INVESTMENTS & PROPERTIES PVT. LTD. IN SUPPORT OF THE SUBMISSIONS, THE AUTHORIZED REPRESENTATIVE FILE D COPIES OF BANAKHAT AND ALSO COPIES OF ACCOUNTS HELD BY M/S. M ADHAV VIDHARBH ESTATE PVT. LTD. AND M/S.RIDDHI INVESTMENTS PVT. LT D. WITH THE STATE BANK OF TRAVANCORE. 2.5. THE PERUSAL OF THE BANK ACCOUNT SHOWS THAT IN BOTH THE CASES CASH IS FOUND TO HAVE BEEN TRANSFERRED ON THE SAME DATE AS THE PAYMENTS HAVE BEEN MADE TO THE ASSESSEE. THOUGH THE A.R. SUBMITTED COPY OF THE BANK ACCOUNTS HE FAILED TO EX PLAIN THE SOURCE OF THESE ENTRIES. IN FACT FOR BOTH THE M/S. RIDDHI INVESTMENTS & PROPERTIES PVT. LTD., AND M/S. MADHAV VIDHARBH ESTA TE PVT. LTD. FUNDS HAVE BEEN TRANSFERRED FROM THE SAME ACCOUNT I.E. 02 5085 ON THE DATES OF PAYMENT MADE TO THE APPELLANT. 2.6. BEFORE THE A.O. THE APPELLANT HAS SUBMITTED TH AT RS.30,50,000/- WAS AN UNSECURED LOAN. THIS STAND IS NOT IN CONSENS US WITH THE SUBMISSION BEING MADE IN APPELLATE PROCEEDINGS THAT THE AMOUNT REPRESENTS ADVANCED ON SALE OF PROPERTY. 2.7. THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH T HE IDENTITY, THE CREDITWORTHINESS OF THE PARTY AND THE GENUINENESS O F THE TRANSACTION. THE APPELLANT DOES NOT DENY THAT THE DIRECTOR OF M/ S.RIDDHI INVESTMENTS & PROPERTIES PVT. LTD. IS A FAMILY MEMB ER. A PERUSAL OF THE BANK ACCOUNTS OF M/S. MADHAV VIDHARBH ESTATE PV T. LTD., AND M/S. RIDDHI INVESTMENTS & PROPERTIES PVT. LTD. SHOW S THAT CASH WAS DEPOSITED FROM A COMMON ACCOUNT. SINCE THE DIRECTOR IS A FAMILY MEMBER OF M/S. RIDDHI INVESTMENTS & PROPERTIES PVT. LTD. IT CANBE CONCLUDED THAT M/S.MADHAV VIDHARBH ESTATE PVT. LTD. , IS ALSO A FAMILY ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 4 CONCERN. HOWEVER, THE APPELLANT HAS NOT SUBMITTED A NY EVIDENCE TO SUPPORT THE FACT THAT THE TRANSACTIONS ARE GENUINE. A COPY OF HITESH G. SOMANIS ACCOUNT IN CENTURION BANK LTD. HAS BEEN FILED. IT SHOWS A NIL OPENING BALANCE. ON 4-12-2004 THREE CASH DEPO SITS ARE SEEN OF RS.5,000/-,RS.13,95,000/- AND RS.40,000/- RESPECTIV ELY. ON 12-12- 2004 THERE IS A WITHDRAWAL OF RS.5,000/- BY SHRI HI TESH SOMANI AND TWO WITHDRAWALS BY M/S. MADHAV VIDHARBH ESTATE PVT. LTD., OF RS.5,00,000/- EACH TOTALING RS.10 LACS. THERE IS NO EXPLANATION OF WHY MONEY WAS RETURNED BY CHEQUE WITHIN 6 DAYS OF H AVING BEEN RECEIVED IN CASH. IT IS ALSO IN COMPLETE CONTRADICT ION TO THE COPY OF CANCELLATION AGREEMENT DATED 2-04-2005, CLAIMING CA NCELLATION OF BANAKHAT DATED 4-12-2004. IT IS PRESUMED THAT IF TH E AGREEMENT TO SELL DOES NOT MATERIALIZE, THE ADVANCE IF GENUINE W OULD BE RETURNED AFTER THE CANCELLATION AGREEMENT. FURTHER, A PAPER FILED BY THE APPELLANT CONFIRMING HIS ACCOUNTS IN THE BOOKS OF M /S. MADHAV VIDARBH ESTATE PVT. LTD. SHOWS THAT THE ASSESSEE HA S INVESTED IN 3000 EQUITY SHARES OF M/S. MADHAV VIDHARBH ESTATE P VT. LTD. THE CONFIRMATION HAS BEEN SIGNED BY MS. GEETABEN AS DIR ECTOR OF THE COMPANY. HOWEVER, THE CONFIRMATION DOES NOT CONTAIN THE CURRENT ADDRESS, PAN OR ANY INFORMATION ABOUT WHERE M/S. MA DHAV VIDHARBH ESTATE PVT. LTD. FILES ITS RETURN OF INCOME. FURTHE R, BOTH M/S. MADHAV VIDHARBH ESTATE PVT.LTD. AND M/S. RIDDHI INVESTMENT S & PROPERTIES PVT. LTD., HAVE RECEIVED FUNDS FROM A/C. NO.02585 A ND ON THE SAME DAY MONEY IS GIVEN TO THE ASSESSEE. THE ASSESSEE IN TURN HAS PROMPTLY ON THE SAME DAY ITSELF TRANSFERRED THESE F UNDS TO DIFFERENT ACCOUNTS. NO EXPLANATION IS OFFERED FOR THESE TRANS ACTIONS. ALL THESE TRANSACTIONS POINT TO A MECHANISM ADOPTED BY THE AS SESSEE TO INTRODUCE FUNDS INTO VARIOUS ACCOUNTS. 2.8. IN VIEW OF THE FACT THAT THE SOURCE OF CASH D EPOSIT OF RS.13,95,000/- AND THE GENUINENESS OF THE TRANSACTI ON WITH M/S. RIDDHI INVESTMENTS & PROPERTIES PVT. LTD. HAS NOT B EEN ESTABLISHED, THE A.O. WAS JUSTIFIED IN MAKING THE ADDITION OF RS .13,95,000/- AND RS.30,50,000/-. THE SAME IS THEREFORE CONFIRMED. 5. AGGRIEVED BY THE ACTION OF CIT (A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 5 6. BEFORE US, THE LD. A.R. SUBMITTED THAT THE ASSES SEE HAD ENTERED INTO AN AGREEMENT ON 4-12-2004 WITH MADHAV VIDHARBH ESTA TE PVT. LTD., TO SELL A PROPERTY FOR RS. 15 LACS AND FOR WHICH THE PURCHA SER HAD PAID ADVANCE OF RS.13,95,000/- IN CASH TO ASSESSEE. (THE COPY OF TH E AGREEMENT AND THE ENGLISH TRANSLATION WAS FURNISHED AT PAGE NOS. 84 - 88 AND 129 -131 RESPECTIVELY OF THE PAPER BOOK). THE PURCHASER WAS TO USE THE PREMISES AS OFFICE AND GUEST HOUSE. THE SOCIETY DID NOT GRANT P ERMISSION TO THE PURCHASER OF THE PREMISES TO USE THE PREMISES AS OF FICE AND GUEST HOUSE AND HENCE DENIED THE NOC. ACCORDINGLY THE DEAL WAS CANCELLED ON 2-4- 2005 BY ENTERING INTO A CANCELLATION AGREEMENT. (TH E COPY OF THE AGREEMENT AND THE ENGLISH TRANSACTION WAS AT PAGE N OS.89-91 AND 132- 133 RESPECTIVELY OF THE PAPER BOOK). THE LD. A.R. F URNISHED THE COPY OF THE CONFIRMATION OF MADHAV VIDHARBH ESTATE PVT. LTD., ( PAGE 69 OF THE PAPER BOOK), ITS PAN NUMBER (PAGE 70 OF THE PAPER BOOK), THE COPY OF ACKNOWLEDGEMENT OF FILING OF RETURN OF INCOME FOR A .Y. 2005-06(PAGE 71 OF PAPER BOOK). 7. WITH RESPECT TO DEPOSIT OF RS.30,50,000/- FROM R IDDHI SIDDHI PVT. LTD., THE LD. A. R. SUBMITTED THAT IT REPRESENTS THE AMOU NT RECEIVED AS ADVANCE AGAINST SALE OF PROPERTY TO RIDDHI SIDDHI PVT. LTD. , THE DEAL FOR SALE OF THE PROPERTY WAS FINALIZED FOR RS.31,00,000/-. RS.30.50 LACS WAS PAID AT THE TIME OF AGREEMENT TO SALE WAS MADE AND RS.50,000/- WAS RECEIVED ONLY ON 28-12-2006. SINCE THE ASSESSEE HAD RECEIVED THE FUL L PAYMENT AS MENTIONED IN THE AGREEMENT TO SELL, HE HAD ISSUED A N IRREVOCABLE POWER OF ATTORNEY IN FAVOUR OF RIDDHI SIDDHI PVT LTD. IN SUP PORT OF THE SUBMISSIONS, THE LD. A.R., SUBMITTED COPIES OF BANAKHAT, COPY OF THE CONFIRMATION (PAGE ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 6 66 OF THE PAPER BOOK), ITS PAN NUMBER (PAGE 67 OF T HE PAPER BOOK), THE COPY OF ACKNOWLEDGEMENT OF FILING OF RETURN OF INCO ME FOR A.Y. 2005-06 (PAGE 68 OF THE PAPER BOOK). IT WAS THUS SUBMITTED BY THE LD. A.R. THAT THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN BY PROVI NG THE IDENTITY, THE GENUINENESS OF THE TRANSACTION BY FURNISHING THE CO PY OF THE AGREEMENT, PAN NUMBER AND ACKNOWLEDGED COPY OF THE RETURN OF I NCOME AND THEREFORE NO ADDITION CAN BE MADE. THE ASSESSEE ALS O RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA (2012) 21 TAXMANN.COM.159 (GUJ.). HE PLACED ON RECORD THE COPY OF THE DECISION. 8. ON THE OTHER HAND THE LD. D.R. SUBMITTED THAT TH E ASSESSEE DID NOT PRODUCE THE PARTY FOR EXAMINATION. HE THUS SUPPORTE D THE ORDER OF THE A.O. AND CIT (A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS IN THE PRESENT CASE AR E THAT THE ASSESSEE HAD RECEIVED ADVANCE FROM MADHAV VIDHARBH ESTATE PVT. L TD., FOR SALE OF PROPERTY. THE DEAL COULD NOT MATERIALIZE DUE TO THE FACT THAT THE SOCIETY DID NOT GIVE NOC FOR TRANSFER OF PROPERTY AS THE PURCHA SER INTENDED TO USE THE PROPERTY FOR COMMERCIAL PURPOSES. ACCORDINGLY THE D EAL WAS CANCELLED AND THE MONEY RETURNED. THE ASSESSEE HAD FURNISHED THE COPY OF THE SALES AGREEMENT, COPY OF THE CANCELLATION AGREEMENT, COPY OF PAN NUMBER OF THE INTENDING PURCHASER, COPY OF THE ACKNOWLEDGEMENT OF RETURN OF INCOME OF THE INTENDING PURCHASER. IN CASE OF DEPOSIT FROM RI DDHI SIDDHI PVT. LTD., THE ASSESSEE HAS SUBMITTED THE COPIES OF THE BANAKHAT, COPY OF CONFIRMATION ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 7 FROM THE PARTY, COPY OF THE ACKNOWLEDGEMENT OF RETU RN OF INCOME, COPY OF PAN NUMBER. THE AFORESAID FACTS HAVE NOT BEEN CONTR OVERTED BY THE REVENUE NOR HAS IT PROVED THAT THE DOCUMENTS SUBMIT TED BY THE ASSESSEE. ARE NOT GENUINE. BY FURNISHING THE AFORESAID DOCUME NTS, THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN CAST ON IT U/S.68. 10. IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAV A,(SUPRA) THE HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER:- ONCE THE ASSESSEE HAS ESTABLISHED THAT HE HAS TAK EN MONEY FROM THE LENDERS WHO ALL ARE INCOME TAX ASSESSEE WHOSE P AN HAVE BEEN DISCLOSED, THE INITIAL BURDEN U/S.68 WAS DISCHARGED . ONCE THE A.O. GETS HOLD OF THE PAN OF THE LENDERS, IT WAS HIS DUT Y TO ASCERTAIN FROM THE A.O. OF THOSE LENDERS WHETHER IN THEIR RESPECTI VE RETURNS THEY HAD SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAD FUR THER SHOWN THOSE AMOUNT OF OF MONEY HAD BEEN LENT TO THE ASSES SEE. IF BEFORE VERIFYING SUCH FACTS FROM THE A.O. OF THE LENDERS O F THE ASSESSEE, THE A.O. DECIDES TO EXAMINE THE LENDERS AND ASKS THE AS SESSEE TO FURTHER PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE T RANSACTION, THE A.O. DOES NOT FOLLOW THE PRINCIPLE LAID DOWN U/S. 6 8. 11. IN VIEW OF THE AFORESAID FACTS AND RESPECTFULLY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT WE ARE OF THE VIEW THAT IN THE FACTS OF THE PRESENT CASE, SINCE THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN CAST ON IT, THE ADDITION MADE U/S. 68 IS UNCALLED FOR. WE A CCORDINGLY DELETE THE ADDITION. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO.919/AHD/2012 ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 8 13. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE PENALTY LEVIED ON THE ADDITION MADE U/S.68. 14. SINCE THE ADDITION MADE U/S.68 HAS BEEN DELETED VIDE APPEAL NO.399/AHD/2009 HEREINABOVE OF THE ASSESSEE, THE PE NALTY ON SUCH ADDITION DOES NOT SURVIVE. WE ACCORDINGLY DIRECT TH E DELETION OF THE PENALTY U/S. 271(1)(C) OF THE ACT. 15. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 31 - 8 - 201 2. SD/- SD/- (MUKUL KUMAR SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTAN T MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-II, BARODA 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA.399/AHD /2009 & 919/AHD/2012 A.YR..2005- 06 9 1.DATE OF DICTATION 9 - 8 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 22 / 8 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 28 - 8 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 31 - 8 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 31 - 8 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 3 1 - 8 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..