Narottam Dayalji Rana, Nashik V. Assisant Commissioner of Income-tax,

ITA 943/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9360 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Keywords: Unexplained investment; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.943/PUN/2016 / ASSESSMENT YEAR : 2010-11 NAROTTAM DAYALJI RANA, FLAT NO.8, PRABHA APARTMENT, MALVIYA CHOWK, PANCHAVATI, NASHIK 422 003 PAN : AAOPR4453N . /APPELLANT VS. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : MS. NIRUPAMA KOTRU, CIT-DR / DATE OF HEARING : 07.02.2018 / DATE OF PRONOUNCEMENT: 09.02.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-12, PUNE DATED 05-02-2016 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER : THE LD. CIT(A) ERRED IN RETAINING THE ENTIRE ADDIT ION OF RS.6,65,420/- ON ACCOUNT OF CASH FOUND AT LOCKER NO.376 WITH JANALAXMI CO.OP. B ANK LTD. NASHIK DURING THE COURSE OF SEARCH ON 26-04-2010 AS APPELLANTS INCOM E FROM UNDISCLOSED SOURCES. THEREFORE, IT IS PRAYED TO CANCEL THE ADDITION MADE OF RS.6,65,420/-. 3. BACKGROUND FACTS OF THIS CASE AND THE GROUND INC LUDE THAT THE ASSESSEE IS A RETIRED EMPLOYEE WORKING WITH ASHOKA GROUP OF CASES . DURING THE SEARCH AND SEIZURE ACTION ON THE SAID GROUP ON 20-04-2010, ASS ESSEE WAS ALSO COVERED. THE SEARCH ACTION LED TO THE DISCOVERY OF LOCKERS NO. 3 76 AND 189 IN THE COOPERATIVE BANK AT NASHIK. THESE LOCKERS ARE OWNED BY THE ASS ESSEE AND HIS WIFE SMT. NILIMA ITA NO.943/PUN/2016 NAROTTAM DAYALJI RANA 2 NAROTTAM RANA. ON OPENING THE LOCKER NO.376 HELD I N THE NAME OF THE ASSESSEE, THERE WAS DISCOVERY OF CASH OF RS.6,65,420/-. REVE NUE SEIZED THE CASH OF RS.6 LAKHS. FURTHER, ON OPENING THE OTHER LOCKER NO.189 HELD JOINTLY BY THE ASSESSEE AND HIS WIFE, THERE WAS CASH DISCOVERY OF RS.7,60,230/- . THERE WAS DISCOVERY OF JEWELLERY ALSO IN THAT LOCKER. AO MADE ADDITION OF THE SAID CASH IN HER ASSESSMENT. SUBSEQUENTLY, THE ASSESSMENT IN THE CASE OF HIS WIF E SMT. NILIMA NAROTTAM RANA BECAME FINAL AND THE TRIBUNAL DELETED THE ADDITION OF SAID CASH SEIZURE OF RS.7,60,230/-. THE APPEAL ITA NO.959/PUN/2016 FOR THE A.Y. 2010-11 ORDER DATED 04-05-2017 IS RELEVANT AND THE RELEVANT OPERATIONAL PARA NO.5 OF THE ORDER IS RELEVANT. THE SAVINGS CENTRIC EXPLANATION WITH REG ARD TO THE SOURCE OF THE SAID CASH WAS ACCEPTED BY THE TRIBUNAL RELYING ON THE CORROBO RATIVE STATEMENTS FILED BY THE ASSESSEE INVOLVING HER DAUGHTER-IN-LAW. IN THE BAC KGROUND FACTS OF THE ABOVE, WE SHALL NOW GO TO THE PRESENT ISSUE AND THE CASH SEIZ ED FROM THE LOCKER NO.376. RS.6,65,420/- WAS FOUND IN THE SAID LOCKER. IN THE ASSESSMENTS, AO MADE ADDITION OF ENTIRE CASH FOUND IN THE SAID LOCKER. CIT(A) CO NFIRMED THE SAME. 4. COMING TO THE FILE DETAILS REGARDING THE ADDITIO N OF RS.6,65,420/-, ASSESSEE EXPLAINED THE SOURCE OF THE SAID CASH AS THE CASH W ITHDRAWAL FROM THE BANK ACCOUNTS OF HIS WIFE, ASSESSEES SON AND DAUGHTER-I N-LAW FROM TIME TO TIME. PARA NO.10 OF THE ASSESSMENT ORDER CONTAINS THE DETAILS. AO DID NOT ACCEPT THE SAID EXPLANATION AND PROCEEDED TO MAKE THE ADDITION. 5. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSE SSEE SUBMITTED THAT THE SOURCE OF THIS CASH SEIZURE FROM THE BANK LOCKER IS EXPLAINED BY THE CASH WITHDRAWN BY THE SELF AND THE FAMILY MEMBERS. HIS FAMILY INC LUDES WIFE, SON AND DAUGHTER-IN- LAW. THERE WAS DISCUSSION ABOUT THE WAY THE ASSESS EE DEMONSTRATED THE SOURCE AND MENTIONED THE SUPPLY OF THE INCOME-TAX PARTICUL ARS OF THESE FAMILY MEMBERS. THERE WAS A DETAILED DISCUSSION ABOUT THE TOTAL INC OME OF THE FAMILY MEMBERS, CASH ITA NO.943/PUN/2016 NAROTTAM DAYALJI RANA 3 WITHDRAWALS AND THE CHART GIVEN IN PARA NO.3 ON PAG E 16 OF THE ORDER OF CIT(A) SUPPORTS THE SAME. EVENTUALLY, CIT(A) REJECTED THE ASSESSEES EXPLANATION AND IT IS THE FINDING OF CIT(A) THAT THE CASH FOUND IN THE LO CKER IS TO BE HELD AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. CONTENTS OF RELEVANT O PERATIONAL PARA AS GIVEN IN PAGES NOS. 15/16 OF THE ORDER OF CIT(A) ARE EXTRACT ED HERE AS UNDER : 3.4 . . . . . . . . . . . . . . . . . . . . IT CAN BE SEEN FROM THE ABOVE TABLE THAT DURING AY 2 005-06, ALL FAMILY MEMBERS TOGETHER HAD WITHDRAWAL OF ONLY RS 1,03,022 AND ALSO CLAIMED ACCUMULATED CASH AVAILABLE OUT OF PRE-MARRIAGE SAVI NGS OF THE DAUGHTER-IN-LAW OF RS 2,50,000. MARRIAGE ALSO TOOK PLACE DURING THI S PERIOD AND NO SEPARATE MARRIAGE EXPENDITURE WAS BOOKED BY THE FAMILY, THER EFORE THERE WAS NO POSSIBILITY OF ANY SAVINGS OUT OF HIS TOTAL CASH OF RS 3,53,022 CLAIMED AS AVAILABLE WITH THE FAMILY. SIMILARLY, TOTAL CASH WI THDRAWALS DURING AY 2006-07 TO AY 2010-11 WERE RS 2,49,632, RS 4,01,019, RS 3,0 0,272, RS 3,98,289 AND RS 4,31,497 RESPECTIVELY. CONSIDERING THE FAMILY OF 4 ADULT MEMBERS EVEN THE HIGHEST TOTAL WITHDRAWAL DURING AY 2010-11 WAS LESS THAN RS 36,000 PER MONTH. THEREFORE, AO WAS RIGHT IN HOLDING THAT APPELLANT AND HIS FAMILY COULD NOT HAVE SAVED ANY CASH WHICH WAS FOUND IN THE LOCK ER. SEARCH DID NOT TAKE PLACE AT THE RESIDENCE OF THE APPELLANT THEREFORE A MOUNT OF CASH AND OTHER HOUSEHOLD ASSETS AT HOME COULD NOT BE ASCERTAINED. IN THIS MANNER, APPELLANT FAILED TO EXPLAIN THE SOURCES OF CASH FOUND IN THE LOCKER. DURING THE SEARCH, APPELLANT ADMITTED INCOME OF RS 4,00,000 FOR AY UNDE R CONSIDERATION AND OF RS 2,00,000 FOR AY 2011-12 OUT OF THE CASH FOUND IN THE LOCKER. HOWEVER, IN THE RETURN FILED AFTER THE SEARCH, THE ADMISSION WA S NOT ADHERED TO. SINCE THE LOCKER WAS LAST OPERATED ON 3.2.2010 THEREFORE CASH FOUND IN THE LOCKER OF RS 6,65,420 IS HELD AS UNEXPLAINED INVESTMENT OF THE A PPELLANT FOR THE YEAR UNDER CONSIDERATION. ADDITION MADE BY THE AO IS UPHELD AND THE GROUNDS RAISED BY THE APPELLANT ARE HEREBY DISMISSED. 6. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPE AL BEFORE US WITH THE SOLITARY GROUND EXTRACTED ABOVE. 7. LD. COUNSEL FOR THE ASSESSEE EXPLAINED FACTS ABO UT THE RETIREMENT OF THE ASSESSEE, RE-EMPLOYMENT WITH ASHOKA GROUP. FURTHER , LD. COUNSEL BROUGHT OUR ATTENTION TO THE FACT THAT THE TOTAL CASH WITHDRAWA LS SINCE A.YRS. 2005-06 TO 2010- 11 IS UNDISPUTEDLY IN THE RANGE OF ABOUT RS.18 LAKH S. BEFORE US, LD. DR FOR THE REVENUE HAS NOT DISPUTED THIS FACT. 8. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORD ERS OF THE AO/CIT(A) DUTIFULLY. ITA NO.943/PUN/2016 NAROTTAM DAYALJI RANA 4 9. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE OF SUSTAINABILITY OF ADDITION OF RS.6,65,420/-, THE CASH FOUND IN THE LOCKER DURING THE SEARCH ACTION. ON GOING THROUGH THE FACTS, WE FIND IT IS A CASE WHERE ASSES SEE IS NOT WITHOUT ANY EXPLANATION THAT REVOLVES AROUND THE SAVINGS OF THE SELF AND THE OTHER FAMILY MEMBERS. ASSESSEE FILED EVIDENCES RELATING TO THE INCOME-TAX PARTICULARS OF HIS FAMILY MEMBERS. HIS FAMILY INCLUDES WIFE, SON AND THE DAUGHTER-IN-LAW. THE GROSS CASH WITHDRAWALS OF THE FAMILY MEMBERS FROM THEIR R ESPECTIVE BANK ACCOUNTS WORK OUT TO AROUND RS.18 LAKHS OVER THE YEARS. DETAILS OF CASH WITHDRAWAL ARE TABULATED AND THERE IS NO DISPUTE ABOUT THE CASH WITHDRAWALS OF THE FAMILY MEMBERS. THE GROSS OF CASH WITHDRAWALS IS MUCH HIGHER THAN THE C ASH FOUND IN THE LOCKER DURING THE SEARCH ACTION. AO DISMISSED THE EXPLANATION OF THE ASSESSEE SUMMARILY STATING THAT THE SAME IS NOT GOOD ENOUGH FOR MEETING THE HO ME NEEDS. THESE CLAIMS HAVE NOT BEEN DISPROVED WITH ANY INCRIMINATING DETAILS B Y THE REVENUE AUTHORITIES WHILE REJECTING THE EXPLANATION OF THE ASSESSEE. THEREFO RE, THERE EXISTS SOME EXPLANATION OF THE ASSESSEE WHICH IS NOT PROVED UNSUSTAINABLE B Y ANY DIRECT EVIDENCE. CONSIDERING THE OVERALL FACTS OF THE CASE AND THE E XPLANATION OF THE ASSESSEE ETC. WE FIND RESTRICTING THE DISALLOWANCE TO RS.1,65,420 /- SHOULD MEET THE ENDS OF JUSTICE. AO IS DIRECTED TO ADD ONLY THE SAID SUM O F RS.1,65,420/- AS UNEXPLAINED INVESTMENT ON ESTIMATION BASIS. CONSEQUENTLY, THE ASSESSEE GETS THE RELIEF OF RS.5 LAKHS. ACCORDINGLY, THE SOLITARY GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 09 TH DAY OF FEBRUARY, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 09 TH FEBRUARY, 2018. SATISH ITA NO.943/PUN/2016 NAROTTAM DAYALJI RANA 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A ) - 12 , PUNE 4. / THE CIT - 12 , PUNE 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE