ITO WD 13(1)(2), MUMBAI V. CELLPLUS TELECOMES, MUMBAI

ITA 957/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1495 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: J V CHHABRIA
• Keywords: Income from undisclosed sources; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.957/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER-13(1)(2) AAYAKAR BHAVAN 4 TH FLOOR, ROOM NO.419 M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. CELLPLUS TELECOMES 6A/6C,HASAM BUILDING, 107 E MOHAMMEDALI ROAD, MUMBAI-400 003. ..( RESPONDENT ) P.A. NO. (AADFC 3540 Q) APPELLANT BY : SHRI VIRENDRA OJHA RESPONDENT BY : SHRI J. V. CHHABRIA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 29.12.2008 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM IS ENGAGED AS DEALER OF SIM CARD, RECHARGE CARDS, MOBILE HAN D-SET AND FRANCHISEE GALLERY OF THE BPL. THE RETURN WAS FILED D ECLARING AN INCOME OF RS.5,90,065/-. DURING THE COURSE OF ASSESSMENT PROCEEDI NG IT WAS ITA NO.957/M/09 A.Y:05-06 2 INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE MADE CASH DEPOSITS OF RS.12,25,000/- ON 15.3.2005 IN HIS BANK ACCOUNT. WHEN ASKED IT WAS EXPLAINED BY THE ASSESSEE THAT (EXTRACT ED FROM PAGE 2 OF THE ASSESSMENT ORDER): DURING THE YEAR, PARTNERS HAS WITHDRAWN FROM FIRMS RS.12,05,000/- (AS PER THEIR CAPITAL A/C.) DURING T HE YEAR. THEY HAD BROUGHT BACK THE CAPITAL IN THE MON TH OF MARCH, 2005. WE HEREWITH SUBMIT THE CASH SUMMARY A ND PARTNERS LEDGER ACCOUNT WITH FIRM FOR YOUR REFERENC E. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSE SSEE HAS TRIED TO EXPLAIN THAT THESE PARTNERS WITHDREW CASH FROM THE BANK FROM MAY TO FEBRUARY ON VARIOUS DATES AS REFLECTED IN THE LE DGER ACCOUNT. THEY MAINTAIN THIS CASH WITH THEM AND SUDDENLY ON THE 15.03.2005 ALL OF THEM BROUGHT IN THE CASH BACK IN THE FIRM, WHAT WAS THE SPECIAL AND AUSPICIOUS OF THIS PARTICULAR DATE IS THAT ALL THE THREE PARTNERS BROUGHT IN CASH ON THE SAME DAY. IT IS ALSO EQUALLY IMPORTANT TO PLACE ON RECORD THAT THE CAPITAL ACCOUNTS ANNEXED TO THE BALANCE SHEET ALONG WITH THE RETURN OF INCOME DO NOT REFLECT THESE TRANSACT IONS EITHER INTRODUCTION OR WITHDRAWAL. TAKING INTO CONSIDERATI ON ALL THESE FACTS THIS IS NOTHING BUT AN ATTEMPT MADE BY THE ASSESSEE THROU GH CONCOCTED AND FABRICATED DOCUMENTS TO EXPLAIN THE AMOUNT OF CASH DEPOSITED IN THE BANK AND ACCORDINGLY HE TREATED THE SA ID DEPOSITS OF RS.12,25,000/- AS UNEXPLAINED DEPOSITS UNDER THE PROVI SIONS OF SECTION ITA NO.957/M/09 A.Y:05-06 3 68 OF THE INCOME TAX ACT, 1961 (THE ACT) AND CONSIDERED IT FOR ASSESSMENT AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER AFTER MAKING SOME OTHER DISALLOWANCES COMP LETED THE ASSESSMENT AT AN INCOME OF RS.21,23,070/- VIDE ORDER DATED 31.12.2007 PASSED U/S. 143(3) OF THE ACT. ON APPEAL, T HE LD. CIT(A) AFTER CONSIDERING BANK STATEMENT, COPIES OF CASH BOOK ENTR IES OF THE PARTNERS, CONFIRMATION LETTERS FROM THE PARTNERS, PA NO . AND RETURN OF INCOME AND BALANCE SHEETS OF THE PARTNERS WHILE OBSERVING THAT AS PER PROVISIONS OF SECTION 68, THE APPELLANT HAS SUCCESSFULLY CLAIM ED AND PROVED THAT THE AMOUNT WAS RECEIVED FROM THE PARTNERS AND HAS ALSO PROVED THAT THE PARTNERS WERE HAVING SUFFICIENT FUND S WITH THEM WHICH WERE ALSO ON ACCOUNT OF WITHDRAWAL MADE FROM CAPITAL A CCOUNT OF THE FIRM, THE APPELLANT FIRM HAS PROVED THE SOURCE OF CASH D EPOSITS IN THE BANK ACCOUNT, HELD THAT THERE IS NO CASE FOR MAKING ADDI TION U/S.68 OF THE ACT AND HENCE, HE DELETED THE ADDITION MADE BY TH E ASSESSING OFFICER . 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DE LETION OF ADDITION BY THE LD. CIT(A) MADE BY THE ASSESSING OFFICER U/S.68 O F THE ACT. 4. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FOR THE REASONS AS DISCUSSED IN THE ASSESSMENT ORDER, THE LD. CIT(A) WAS NOT JU STIFIED IN ITA NO.957/M/09 A.Y:05-06 4 DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S .68 OF THE ACT. HE THEREFORE, SUBMITS THAT THE ADDITION MADE BY THE ASSE SSING OFFICER BE RESTORED. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE ASSESSING OFFICER AND THE LD. CIT(A) FURTHER SUBMITS THAT IN VIE W OF THE COPY OF CASHBOOK ENTRIES, COPY OF CAPITAL ACCOUNT, COPY OF BALANCE SHEET OF ALL THE THREE PARTNERS APPEARING AT PAGE 1 TO 11 OF THE ASSESSEE'S PAPER BOOK SHOWING THAT THE AMOUNT OF RS.12,25,000/- WAS DEP OSITED OUT OF THE EARLIER WITHDRAWALS FROM THE FIRM, THEREFORE, TH E LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . HE FURTHER SUBMITS THAT THE HOUSEHOLD EXPENSES ARE DULY S HOWN SEPARATELY IN THE COPY OF RESPECTIVE CAPITAL ACCOUNT OF T HE PARTNERS APPEARING AT PAGE -7, 9 AND 11 OF THE ASSESSEE'S PAPER B OOK. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT (A) IN DELETING THE ADDITION BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTIO N 68 OF THE ACT READS AS UNDER: 68. CASH CREDITS.--WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOU S YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERE D BY ITA NO.957/M/09 A.Y:05-06 5 HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER , SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ACCORDING TO THIS SECTION, ANY SUM FOUND CREDITED IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR A PREVIOUS YEAR MAY BE CHARGED TO INCOME- TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, I F -- (I) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE OF SOURCES OF SUCH SUM, OR (II) THE EXPLANATION OFFERED BY HIM IS, IN THE OPI NION OF THE ASSESSING OFFICER, NOT SATISFACTORY. 7. IN THE CASE BEFORE US WE FIND THAT IN RESPONSE TO THE ASSESSING OFFICERS LETTER THE ASSESSEE VIDE LETTER DATED 17.12.200 7 EXPLAINED THAT DURING THE YEAR, PARTNERS HAS WITHDRAWN FROM FIRMS RS.12,05,000/- (AS PER THEIR CAPITAL A/C.) DURING THE YEAR. THEY HAD BROUGHT BACK THE CAPITAL IN THE MONTH OF MARCH, 2005. WE HEREWITH SUBMIT THE CASH SUMMARY AND PARTNERS LEDGER ACCOUNT WITH F IRM FOR YOUR REFERENCE. APART FROM THIS THE ASSESSEE HAS ALSO FI LED SUPPORTING MATERIAL IN THE FORM OF COPY OF CASH BOOK ENTRIES, COPY OF CAPITAL ACCOUNT, COPY OF BALANCE SHEET OF ALL THE THREE PARTNERS SHOWING THAT THE AMOUNT OF RS.12,25,000/- WAS DEPOSITED IN THE FIRM S BANK ACCOUNT ON 15.3.2005 OUT OF THE EARLIER WITHDRAWALS OF RS.12 ,05,000/- MADE BY THEM DURING THE YEAR FROM THE FIRMS ACCOUNT. THE CHAR T SHOWING THE ITA NO.957/M/09 A.Y:05-06 6 WITHDRAWAL FROM THE FIRM AND DEPOSITS MADE WITH THE FIRM IS AS UNDER :- NAME OF PARTNERS WITHDRAWAL FROM THE FIRM DEPOSITED WITH THE FIRM TOTAL DATE AMOUNT DATE AMOUNT AMOUNT SAYED SOHRAB HAJI RUSTOM 19.06.2004 100000.00 15.03.2005 100000.00 29.10.2004 50000.00 15.03.2005 50000.00 16.11.2004 50000.00 15.03.2005 60000.00 30.11.2004 60000.00 15.03.2005 50000.00 15.12.2004 100000.00 15.03.2005 100000.00 28.05.2005 50000.00 15.03.2005 50000.00 -------------------- ------------------ 410000.00 410000.00 410000.00 -------------------- ------------------ SAYED RIYAZ ABDUL AZIZ 25.05.2004 130000.00 15.03.2005 130000.00 24.08.2004 100000.00 15.03.2005 100000.00 16.11.2004 100000.00 15.03.2005 100000.00 14.02.2005 65000.00 15.03.2005 65000.00 -------------------- ------------------ 395000.00 395000.00 395000.00 -------------------- ------------------ NADEEM A. HEERA 03.05.2004 100000.00 15.03.2005 100000.00 28.07.2004 100000.00 15.03.2005 100000.00 16.11.2004 100000.00 15.03.2005 100000.00 13.01.2005 100000.00 15.03.2005 100000.00 -------------------- ------------------ 400000.00 400000.00 400000.00 -------------------- ------------------ ----------------- 1205000.00 ----------------- FROM THE ABOVE CHART IT IS CLEAR THAT THE AMOUNT OF RS. 12,05,000/- WAS DEPOSITED BY THE THREE PARTNERS OF THE FIRM IN THE F IRMS BANK ACCOUNT ON 15.3.2005 OUT OF THE EARLIER WITHDRAWALS MADE BY THEM DURING THE YEAR. IT IS NOT THE CASE OF THE REVENUE THAT NO SUCH WI THDRAWALS WERE MADE BY THE ABOVE PARTNERS OF THE FIRM OR THE WITHDR AWALS MADE BY THEM WERE UTILISED BY THE PARTNERS OF THE FIRM OTHER THAN THE DEPOSITS MADE IN THE BANK ACCOUNT ON 15.3.2005. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE RELEVANT ENTRIES RECORDED IN THE CASH BOOK ARE FOUND ITA NO.957/M/09 A.Y:05-06 7 TO BE FALSE OR UNTRUE. MERELY BECAUSE THERE IS A TIME GAP OF FEW MONTHS DOES NOT MEAN THAT THE DEPOSITS MADE BY THE PART NERS OF THE FIRM ARE NOT GENUINE OR THE PARTNERS HAVE NO CAPACITY TO DEPOSIT RS.12,05,000/- IN THE BANK ACCOUNT OF THE FIRM. IN F ACT, THERE WAS NO FURTHER NEED ON THE PART OF THE ASSESSEE TO PROVE THE D EPOSITS. THE ONUS WAS ON THE REVENUE TO DISPROVE THE SAME WHICH HAS NO T BEEN DISCHARGED. IN THIS VIEW OF THE MATTER WE ARE OF THE VIEW THAT THE ASSESSEE NOT ONLY DISCHARGED THE ONUS PLACED UPON HIM U/S.6 8 OF THE ACT IN ORDER TO PROVE THE SOURCE OF MONEY OF RS.12,05 ,000/- INTRODUCED IN THE BANK ACCOUNT BUT ALSO ADDUCED POSITIVE EVIDENCE/NEXUS REQUIRED FOR THE PURPOSE. THIS VIEW A LSO FINDS SUPPORT FROM THE DECISION IN ADDITIONAL CIT VS. MOHAN ENGINEER ING CO. (1985) 151 ITR 571(PAT.) WHEREIN IT HAS BEEN HELD (PAGE-582 ) :- IN THE PRESENT CASE, THE TRIBUNAL FOUND, AS A MATT ER OF FACT, AS FOLLOWS : ' THE DEPOSIT OF RS. 62,500 WAS WITHDRAWN BETWEEN NOVEMBER 28, 1961, TO FEBRUARY 6, 1963. THE DEPOSITS IN THE NAME OF MR. SUREKA CAME BETWEEN APR IL 26, 1963, AND SEPTEMBER 2, 1963. ' THE TRIBUNAL HAS FURTHER FOUND THAT THIS AMOUNT OF RS.62,500 FOUND IN THE NAME OF RAJ KUMAR JAIN AND COMPANY WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE IN THE PREVIOUS YEAR AND HAD BELONGED TO T HE ASSESSEE. THUS, IN MY OPINION, THE ASSESSEE ADDUCED SATISFACTORY EVIDENCE FULLY LINKED WITH RS. 62,500 BELONGING TO THE ASSESSEE WHICH WAS TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE IN THE PREVIOUS YEAR AND THIS BEING A MATTER OF RECORD WITH THE DEPARTME NT, THE TRIBUNAL BEING SATISFIED WITH REGARD TO THE WIT HDRAWAL ITA NO.957/M/09 A.Y:05-06 8 AND DEPOSIT BETWEEN THE DATES AS MENTIONED ABOVE, POSITIVELY CAME TO THE FINDING THAT THE DEPOSIT CAM E OUT OF THE FUND WITHDRAWN IN THE IMMEDIATELY PRECEDING YEAR AND THE ALTERNATIVE PLEA OF THE ASSESSEE WAS, ON VERIFICATION OF THE RECORDS WITH THE DEPARTMENT, HE LD TO BE A GENUINE PLEA AND THE TRIBUNAL DELETED THE ADDI TION. THUS, I HOLD THAT THE ASSESSEE NOT ONLY DISCHARGED THE ONUS PLACED UPON HIM UNDER S. 68 OF THE ACT IN ORDE R TO PROVE THE SOURCE OF MONEY INTRODUCED IN THE ACCOUNT BUT ALSO ADDUCED POSITIVE EVIDENCE REQUIRED FOR THE PUR POSE I FURTHER HOLD THAT THE ASSESSEE, IN LAW WAS NOT DEBA RRED FROM TAKING AN ALTERNATIVE PLEA EVEN THOUGH THE ASS ESSEE HAD FAILED TO PROVE THE PLEA INITIALLY TAKEN BY HIM AND I FURTHER HOLD THAT, IN THE PRESENT CASE, THERE WAS P OSITIVE EVIDENCE IN SUPPORT OF THE ALTERNATIVE PLEA TAKEN B Y THE ASSESSEE AND NO LINK IS MISSING AS SUBMITTED BY THE SENIOR STANDING COUNSEL FOR THE DEPARTMENT. IN MY OPINION, THE TRIBUNAL HAVING BELIEVED THE ASSESSEE'S ALTERNATIVE PLEA (WHICH WAS A PURE QUEST ION OF FACT), THERE WAS AN END OF THE MATTER IN SO FAR AS THAT FACT WAS CONCERNED AND THE FINDING OF THE TRIBUNAL BEING BASED UPON A STATEMENT WHICH WAS GOOD MATERIAL ON WHICH IT COULD BE BASED, NO QUESTION OF LAW REALLY AROSE. THUS, IN VIEW OF WHAT I HAVE HELD ABOVE, I HOLD THA T, ON THE FACTS AND IN THE CIRCUMSTANCES OF THIS CASE, TH E ORDER OF THE APPELLATE TRIBUNAL DELETING FROM THE ASSESSE E'S INCOME THE AMOUNT OF RS. 28,000 FOUND CREDITED IN T HE NAME OF THE DURGA PRASAD SUREKA IN THE ACCOUNT BOOK S OF THE ASSESSEE WAS CORRECT IN LAW AND IN ACCORDANCE W ITH THE PROVISIONS UNDER S. 68 OF THE 1961 ACT. 8. HOWEVER, IN THE ABSENCE OF ANY MATERIAL TO SHOW THE SOURCE OF DEPOSIT OF BALANCE AMOUNT OF RS.20,000/- WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING EVEN THE ADD ITION OF RS.20,000/-. ACCORDINGLY THE ORDER PASSED BY THE LD. CI T(A) ALLOWING RELIEF UP TO RS.12,05,000/- IS UPHELD AND FOR THE BAL ANCE AMOUNT OF RS.20,000/- THE ORDER PASSED BY THE LD. CIT(A) TO THAT EXTENT, IS REVERSED. IN OTHER WORDS, OUT OF THE ADDITION OF RS. 12,25,000/- THE ITA NO.957/M/09 A.Y:05-06 9 ADDITION OF RS.20,000/- IS UPHELD. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, PARTLY ALLOWED. 9. IN THE RESULT REVENUES APPEAL STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE,2010 SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.6. 2010. JV. COPYTO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.