Shri Nathalal H. Parmar, Surat V. The Dy.CIT, Circle-8, Surat

ITA 921/AHD/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4739 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS ANUPAMA SINGLA
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india; Additional evidence
• Section: 133(6); 251; 43; 68

Judgement Text

NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 1 OF 8 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH - SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUTANT MEMBER . . /. I.T.A NO.921/AHD/2015 / ASSESSMENT YEAR:2008-09 SHRI NATHALAL H. PARMAR, 301, YOGI PARK, PLOT NO. 95, KANTESHWAR SOCIETY NO.3, KATARGAM, SURAT 395006 [PAN: AMBPP 9631 P] VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -8, SURAT. APPELLANT / RESPONDENT /ASSESSEE BY SHRI MEHUL SHAH - CA /REVENUE BY MRS. ANUPAMA SINGLA - SR.D.R. / DATE OF HEARING: 13.12.2019 /PRONOUNCEMENT ON 04 .02.2020 /O R D E R PER O. P. MEENA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, SURAT (IN SHORT THE CIT (A)) DATED 12.12.2015 PERTAINING TO ASSESSMENT YEAR 2008-09, WHICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) DATED 29.12.2010 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE8, SURAT (IN SHORT THE AO). 2. GROUND NO.1: IS AGAINST CONFIRMING OF ADDITION OF RS.4,95,000/- UNDER SECTION 68 OF THE ACT. 3. THE ASSESSEE HAS FAILED TO FURNISH THE NAME AND ADDRESS, PAN, CONFIRMATION, ACKNOWLEDGEMENT OF RETURN OF INCOME, AND BANK STATEMENT NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 2 OF 8 IN RESPECT OF FIVE PERSONS NAMELY SHRI RANJITBHAI PARMAR (RS. 3 LAC), PARTH KANUBHAI GHEDIYA (RS.1LAC), SHRI KANTIBHAI G GHEDIYA (RS.25,000), SHRI HITESHBHAI K GHEDIYA (RS.45,000) AND SHRI SUDHIRBHAI P MADHWANI (RS.25,000) AGGREGATING TO RS.4,95,000/-. IN VIEW OF THIS MATTER, THESE LOANS WERE TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 4. BEING DISSATISFIED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). IT WAS SUBMITTED THAT THE DETAILS COULD NOT BE SUBMITTED BEFORE THE AO AS THE ASSESSEE COULD NOT ESTABLISH CONTACT WITH AFORESAID FIVE PERSONS. THEREFORE, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME, AND COPY OF BANK PASSBOOK IN THE CASE OF SHRI PARTHKUMAR K. GHEDIYA FROM WHICH LOAN OF RS.1 LAC WAS FILED BEFORE LD.CIT(A). WITH REGARD TO LOAN OF RS.3 LAC TAKEN FOR SHRI RANJITBHAI PARMAR, WHO IS A NON-RESIDENT, FROM WHOM THE SAID LOAN WAS TAKEN THROUGH BANKING CHANNEL. THEREFORE, THE MATTER WAS REMANDED TO THE AO. THE AO REPORTED THAT NO CONFIRMATION FROM SHRI PARTHKUMAR GHEDIYA AND SHRI RANJIT PARMAR WAS FILED. THEREFORE, LD.CIT(A) HAS ASKED THE ASSESSEE WHETHER THE LOAN WERE REPAID DURING YEAR OR THEREAFTER, BUT IT WAS SUBMITTED THAT THE ASSESSEE IS NOT IN POSITION TO SUBMIT THIS DETAIL. IN VIEW OF THESE FACTS, THE ADDITION MADE BY THE AO WAS CONFIRMED. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT WITH REFERENCE TO LOAN OF RS. 1 LACS FROM PARTH K GHEDIYA, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME WAS FILED WITH COPY OF BANK PASSBOOK REFLECTING WITHDRAWAL OF ENTRY OF LOAN GIVEN TO THE ASSESSEE. FURTHER, THE LOAN OF RS. 3 LAC PERTAINS TO LOAN NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 3 OF 8 TAKEN THROUGH BANKING CHANNEL FROM A WELL-ESTABLISHED NON-RESIDENT. HENCE, CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO. 6. PER CONTRA, THE LD. SR. D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. IT WAS CONTENDED THAT NO CONFIRMATION WAS FILED. THEREFORE, LD.CIT (A) UPHELD THEN ACTION OF THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN RESPECT OF LOAN OF RS. 1 LAKH FROM SHRI PARTH KUMAR GHEDIYA, THE ASSESSEE HAS FILED ACKNOWLEDGEMENT OF RETURN OF INCOME AND COPY OF BANK PASS BOOK. THEREFORE, THE ASSESSEE HAS DISCHARGED HIS ONUS UNDER SECTION 68 OF THE ACT. SIMILARLY, THE LOAN OF RS.3 LAKH WAS TAKEN FROM NON-RESIDENT THROUGH BANKING CHANNEL. HENCE, FOR THIS LOAN THE ONUS HAS BEEN DISCHARGED. THEREFORE, GENUINENESS OF THE SAME CANNOT BE DOUBTED, ACCORDINGLY, ADDITION OF RS. 4 LAKH IS DELETED AND BALANCE ADDITION IS SUSTAINED. THIS GROUND OF APPEAL IS THEREFORE, PARTLY ALLOWED. 8. GROUND NO.2 IS AGAINST CONFIRMATION OF ADDITION OF RS.14,75,000/- AS DEEMED INCOME UNDER SECTION 68 OF THE ACT. 9. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE HAS FILED BANK STATEMENT OF AKHAND ANAND CO- OPERATIVE BANK LTD., WHICH REFLECTED CASH DEPOSITS OF RS.14,75,000/-. THE ASSESSEE SUBMITTED THAT DEPOSITS ARE OUT OF UNSECURED LOAN TAKEN FROM VARIOUS PERSONS IN THE COURSE OF BUSINESS, WHICH ARE LESS THAN RS.20,000/- NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 4 OF 8 AND DEPOSITED IN THE BANK ACCOUNT. THE ASSESSEE IS ENGAGED DALALI BUSINESS OF DIAMOND. HOWEVER, THE ASSESSEE DID NOT FILE THE NAME AND ADDRESS, PAN, CONFIRMATION, ACKNOWLEDGEMENT OF RETURN OF INCOME AND COPY OF BANK STATEMENT FROM THE LENDERS. IN VIEW OF THESE FACTS, THE AO TREATED THE CASH DEPOSITS AS UNDISCLOSED INCOME U/S. 68 OF THE ACT. 10. BEING, AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). IT WAS SUBMITTED THAT CASH DEPOSITS OF RS.14,81,650/- INCLUDED THEREIN DALALI INCOME OF RS.1,01,850/- AND BALANCE CASH DEPOSITS OF RS.13,79,800/- AS CASH LOAN FROM VARIOUS PERSONS RESIDING IN VILLAGES. IT WAS FURTHER CLAIMED THAT THE AMOUNT WAS RECEIVED FOR INVESTMENT, AS THEY WANTED TO DO TRADING IN SHARES THROUGH THE APPELLANT. SOME DOCUMENTS RELATING TO IDENTITY, AND CONFIRMATION FROM SOME PERSONS WAS ALSO FILED, WHEREIN, IT WAS CONTENDED THAT THE AMOUNT GIVEN IS OUT OF THEIR AGRICULTURAL INCOME. IN REMAND REPORT, THE AO REPORTED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE CLAIM OF RECEIPT OF CASH FROM THESE PERSONS. IN COUNTER COMMENT TO REMAND REPORT; THE ASSESSEE HAS REITERATED THE SAME FACTS. HOWEVER, THE LD.CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE REGARDING THE DALALI INCOME OF RS.1,01,850/- FROM DIAMOND BUSINESS AND RETURNED INCOME OF RS.1,20,534/-. THUS, AFTER ALLOWING, THE SET OF THE SAME CONFIRMED THE BALANCE ADDITION OF RS.13,79,800/-. 11. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THIS TRIBUNAL. THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS OBTAINED FUNDS FROM NEAR RELATIVES RESIDING IN VILLAGES WHO HAVE NO ACCESS OF SHARE TRADING. THIS NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 5 OF 8 FACT IS EVIDENT FROM PERUSAL OF PROFIT AND LOSS ACCOUNT OF THE ASSESSEE PLACED AT PAPER BOOK PAGE NUMBER 16, WHICH WAS FILED BEFORE THE LD.CIT(A). THE ASSESSEE HAS CARRIED OUT TRADING IN SHARES AND SHOWN INCOME FROM GAINS IN PROFIT AND LOSS ACCOUNT. THIS PROFIT AND LOSS ACCOUNT CONTAINS THAT ENTRIES ON ACCOUNT OF GAINS/LOSS ON SHARES/F&Q ACTIVITIES. THEREFORE, TO EXPLORE THE AVENUE OF INCOME IN THE SHARE MARKET, THE VILLAGERS HAVE GIVEN CASH TO THE ASSESSEE TO INVEST IN SHARES AND OVER DRAFT TRADING ON THEIR BEHALF. CONFIRMATION FROM VARIOUS PARTIES, ACKNOWLEDGEMENT OF RETURN OF INCOME, PAN, IDENTITY PROOF, ELECTRICITY BILL CLEARLY PROVED THEIR IDENTITY, IN THIS REGARD. THE SHARE ONLY SMALL AMOUNT OF THE 18,000 TO RS.19,000/- HAS BEEN RECEIVED FROM THESE PERSONS. THEREFORE, THEIR CAPACITY TO GIVE SUCH A SMALL AMOUNT CANNOT BE DOUBTED. FURTHER, MOST OF THE PARTIES ARE AGRICULTURIST AND HAVE THE SOURCE OF AGRICULTURAL INCOME ONLY; HENCE, THE COPY OF RETURN OF INCOME CANNOT BE FILED IN THEIR CASE. IT WAS FURTHER CONTENDED THAT THE AMOUNTS RECEIVED DURING THE YEAR HAS BEEN REPAID DURING THE FINANCIAL YEAR ITSELF. HENCE, THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED. THE LEARNED COUNSEL HAS ALSO PLACED RELIANCE ON THE FOLLOWING CASE LAWS IN SUPPORT OF HIS CONTENTION I.E. CIT V. CHANAKYA DEVELOPERS [2014] 43 TAXMANN.COM 91 (GUJARAT), BHAVESH KHUSHAL THAKKAR V. ITO WD-6[I.T.A.NO. 1460/AHD/2015 (AHMEDABAD-TRIB)] CIT V. AYACHI CHANDRA SHEKHAR V. DCIT [2013] 42TXCM 251 (GUJARAT), CIT V. TIRUPATI CONSTRUCTION CO. [2015] 55 TAXMAN 308 (GUJARAT), ANURANDHATI ANILKUMAR AGARWAL V. DCIT [2018] I.T.A.NO. 2911/AHD/2016 SURAT-TRIB]. NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 6 OF 8 12. PER CONTRA , THE LD. DR RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PERUSAL OF DETAILS OF CASH DEPOSITS TAKEN BY THE ASSESSEE FROM VARIOUS PERSONS SHOWS THAT SAME ARE BELOW RS. 19,000, WHICH HAVE ALSO BEEN REPAID DURING THE YEAR BY THE ASSESSEE. THE AO HAS DENIED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NO DETAILS WERE FILED BEFORE HIM. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS, IN ORDER TO PROVE THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSEE HAS FILED DETAILS OF THESE PERSONS GIVING THEIR IDENTITY NAME AND ADDRESS PAN. IT HAS BEEN FURTHER CONTENDED THAT THESE PERSONS WERE RESIDING IN VILLAGES AND HAVE NO FACILITY OF TRADING IN SHARES. THEREFORE, IN ORDER TO EARN SOME INCOME FROM SHARE ACTIVITY, THESE PERSONS HAVE GIVEN A SMALL AMOUNT IN CASH TO THE ASSESSEE TO TRADE IN SHARES ON THEIR BEHALF. THE ASSESSEE HAS BEEN TRADING IN SHARES AS IS EVIDENT FROM THE PROFIT AND LOSS ACCOUNT PLACED IN THE PAPER BOOK AND WAS FILED BEFORE THE AUTHORITIES BELOW. WE OBSERVED THAT THE ASSESSEE HAS FURNISHED DETAILS OF THEIR IDENTITY IN SHAPE OF VOTER ID CARD, ELECTRICITY BILL, 7/12 EXTRACT OF AGRICULTURAL LAND HOLDING AND PAN. THEREFORE, IF THE AO WANTED TO DISBELIEVE THE IDENTITY, CREDIT-WORTHINESS AND GENUINENESS OF TRANSACTION OF CASH DEPOSITORS WITH THE ASSESSEE, THE AOS COULD HAVE CARRIED OUT MORE ENQUIRY BY EXAMINING THESE PERSONS TO ESTABLISH WHETHER THEY HAVE GIVEN CASH TO THE ASSESSEE FOR CARRYING OUT SHARE TRADING ON THEIR BEHALF OR NOT . THE LEARNED SR. D.R. CONTENDED THAT IDENTITY PROOF GIVEN BY THE ASSESSEE AMOUNTS TO ADDITIONAL EVIDENCE. NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 7 OF 8 HOWEVER, WE FIND THAT SUCH EVIDENCES WERE SUBMITTED BEFORE LD. CIT(A), ON WHICH A REMAND REPORT WAS DULY CALLED FOR FROM THE AO. HENCE, THESE EVIDENCES CANNOT BE TREATED AS ADDITIONAL EVIDENCES AS CLAIMED BY THE REVENUE. WE FURTHER FIND SUPPORT FROM THE DECISION OF HONOURABLE GUJARAT HIGH COURT IN THE CASE OF CIT V. CHANAKYA DEVELOPERS [2014] 43 TAXMANN.COM 91 (GUJARAT) WHEREIN IT WAS HELD IN ORDER TO PROVE GENUINENESS OF TRANSACTION, RELATING TO RECEIPT OF BOOKING AMOUNT OF FLATS, SUPPLIED ADDRESS AND PAN OF CONCERNED PERSONS, IT HAD DISCHARGED ITS PRIMARY ONUS AND THEREFORE, AO COULD NOT MAKE ADDITION OF SAID AMOUNT TO ASSESSEE`S TAXABLE INCOME WITHOUT MAKING PROPER ENQUIRIES UNDER SECTION 133(6) OF THE ACT. REVERING BACK TO THE PRESENT CASE, THE ASSESSEE HAS FILED NAME AND ADDRESS, PAN, ELECTRICITY BILL, 7/12 EXTRACT, CONFIRMATION. THEREFORE, NO ADDITION COULD BE MADE IN THE LIGHT OF RATIO OF ABOVE DECISION WITHOUT MAKING PROPER FURTHER, ENQUIRIES. CONSIDERING THESE FACTS, WE ALLOW THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04-02-2020. SD/- SD/- (SANDEEP GOSAIN) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 4 TH FEBRUARY, 2020/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/ GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT NATHALAL H. PARMAR V. DCIT-CIRCLE-8, SURAT /I.T.A.NO. 921/AHD/2015/A.Y. 08-09 PAGE 8 OF 8