Shri Harish Nanubhai Tharnariwala, Surat V. The Income tax Officer,Ward-5(2), Surat

ITA 958/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9083 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO.958/AHD/2013 (ASSESSMENT YEAR:2008-09) HARESH NANUBHAI THARNARIWALA 40, NEELAM SOCIETY, OPP. S.V.R. ICHCHHANATH, DUMAS ROAD, SURAT 395009 APPELLANT VS. ITO, WARD-5(2), SURAT RES PONDENT & ITA NO.1263/AHD/2013 WITH C.O. NO.169/AHD/2013 (ASSESSMENT YEAR:2008-09) INCOME-TAX OFFICER, WARD-5(2), SURAT APPELLANT VS. SHRI HARESH NANUBHAI THARNARIWALA 40, NEELAM SOCIETY, OPP. S.V.R. ICHCHHANATH, DUMAS ROAD, SURAT 395009 RESPONDENT/CROSS OBJECTOR PAN: AAMPT5784C /BY ASSESSEE : SHRI KAMLESH BHATT, A.R. /BY REVENUE : SHRI JAMES KURIAN, SR. D.R. ITA NOS. 958 & 1263/AHD/2013 WITH C.O. NO.169/AHD/1 3 (HARESH N. THARNARIWALA VS. ITO) A.Y. 2008-09 - 2 - /DATE OF HEARING : 10.01.2017 /DATE OF PRONOUNCEMENT : 27.02.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE ASSESSEES AND REVENUES CROSS APPEALS ALONGW ITH FORMERS CROSS OBJECTION THERETO FOR ASSESSMENT YEAR 2008-09 , ARISE AGAINST THE CIT(A)-I, SURATS ORDER DATED 11.02.2013, PASSED IN APPEAL NO. CAS- I/TFR.5.126/271/12-13, IN PROCEEDINGS U/S. 143(3) O F THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH SIDES. CASE FILE PERUSED. 2. WE COME TO ASSESSEES APPEAL ITA NO.958/AHD/2013 FIRST RAISING SOLE SUBSTANTIVE GROUND CHALLENGING CORRECTNESS OF SECTI ON 69A ADDITION OF UNEXPLAINED MONEY OF RS.24,08,001/- MADE BY THE ASS ESSING OFFICER IN ASSESSMENT ORDER DATED 24.12.2010 AS RESTRICTED TO RS.15,34,000/- IN COURSE OF THE LOWER APPELLATE PROCEEDINGS. 3. THE ASSESSEE INDIVIDUAL IS ENGAGED IN GOLDSMITH BUSINESS ON LABOUR BASIS. HE MADE CASH DEPOSITS IN QUESTION OF RS.24, 08,001/- ON VARIOUS OCCASIONS IN THE RELEVANT PREVIOUS YEAR. THE ASSES SING OFFICER SOUGHT TO KNOW SOURCE THEREOF. THE ASSESSEES CASE WAS TO HA VE DEPOSITED THE ABOVE STATED CASH SUMS FROM SALE OF GOLD/DIAMOND JEWELLER Y ITEMS AS INHERITED FROM HIS FATHER BY WAY OF A WILL. THE ASSESSING OFFICER DECLINED THE ABOVE EXPLANATION ON THE GROUND THAT THE SAID WILL WAS NO T ACCEPTABLE IN ABSENCE OF NAMES AND ADDRESSES OF PURCHASERS ALONG WITH QUALIT Y AND QUANTITY-WISE DETAILS, PREVAILING MARKET RATE AND OTHER PARTICULA RS. ITA NOS. 958 & 1263/AHD/2013 WITH C.O. NO.169/AHD/1 3 (HARESH N. THARNARIWALA VS. ITO) A.Y. 2008-09 - 3 - 4. THE CIT(A) HOWEVER RESTRICTS THE IMPUGNED ADDITI ON TO RS.15.34LACS AS FOLLOWS: 12 THIS GROUND RELATES TO AN ADDITION OF RS 24,08, 001/- BEING THE TOTAL DEPOSITS IN UNDISCLOSED BANK ACCOUNT OF THE APP ELLANT. THE APPELLANT CLAIMED THAT HIS FATHER LATE SHRI NANUHAI R THARNARIWA LA HAD EXECUTED A WILL ON 05.11.1990, CONSEQUENT TO WHICH, SOME IMMOVEABLE PR OPERTY, JEWELLERY, SAVING BANK ACCOUNT BALANCES, AND FIXED DEPOSITS WERE RE CEIVED BY THE APPELLANT. THE SAID WILL HAS BEEN EXECUTED ON PLAIN PAPER AND APPARENTLY, N OT IN NOTARIZED . THE APPELLANT CLAIMED THAT OUT OF THE JEWELLERY REC EIVED, HE SOLD SOME JEWELLERY IN ASSTT YEAR 2007-08 AND 2008-09 AS WELL. THE SALE PR OCEEDS OF THE SAME ARE CLAIMED TO HAVE BEEN DEPOSITED IN UNDISCLOSED BANK ACCOUNT IN THE FORM OF CASH AND PAY ORDERS. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE APPELLANT. THE ASSESSING OFFICER ALSO REJECTED THE ACCEPTANCE OF T HE WILL ON THE GROUND THAT IT IS NOT NOTARIZED AND CERTAIN ALTERATIONS WERE MADE AFT ER MANY YEARS. THE APPELLANT CLAIMED THAT ON THE BASIS OF SAID WILL ONE PROPERTY I.E. URVASI APARTMENT NO. 1 WAS TRANSFERRED IN THE NAME OF APPELLANT LONG BACK, FOR WHICH, A CONSENT LETTER DATED 09. 09. 2002 BY THE OTHER LEGAL HEIRS OF APP ELLANT'S FATHER WAS FILED WITH THE REGISTRAR AUTHORITY. THE SAID CONSENT LETTER IS ON STAMP PAPER DT 05. 09.2002. IN THIS BACKGROUND, THE APPELLANT STATED THAT THE WILL CANNOT BE FALSE WILL. THE APPELLANT EXPLAINED THE SOURCE OF DEPOSITS IN THE S AID BANK ACCOUNT AS UNDER :- OPENING BALANCE RS 697505 SALE PROCEEDS OF JEWELLERY BY PAY ORDER RS 400400 DIVIDEND RS. 3999 INTEREST ON S B ACCOUNT RS 20924 CASH DEPOSITED IN BANK RS 1425000 RECD FROM SUSHIL FINANCE RS. 215060 REFUND OF APPLICATION MONEY OUT OF FCH ISSUE RS 73440 REFUND OUT OF APPLICATION MONEY -ISSUE OF RELIANCE POWER LIMITED RS 179310 WRONG REFUND BY KARVY LTD RS 89870 TOTAL RS 3105508 12.1 IN RESPECT OF CASH DEPOSITED IN THE BANK ACCOU NT, THE APPELLANT FILED A SUMMARY OF CASH BOOK AS UNDER :- 1 OPENING BALANCE RS 5,79,878/- 2 CASH WITHDRAWALS RS 2,91,000/- 3 CASH SALES OF JEWELLERY RS 8,25,000/- 4 JOB WORK RECEIPTS RS 3,93,476/- TOTAL 20,89,354/- ITA NOS. 958 & 1263/AHD/2013 WITH C.O. NO.169/AHD/1 3 (HARESH N. THARNARIWALA VS. ITO) A.Y. 2008-09 - 4 - 12.2 THE UTILIZATION OF CASH HAS BEEN EXPLAINED BY THE A PPELLANT AS UNDER :- 1 CASH DEPOSITED IN S B A/C NO. 57057 RS 14,25,000 2 WITHDRAWALS RS 56,000 3 CASH DEPOSITED IN BANK OF BARODA A/C NO. 10528 RS. 1,50,000 4 EXPENSES RS. 2,20,973 TOTAL RS 18,51,973 12.3 THE APPELLANTS CONTENTION HAS BEEN EXAMINED. THE APPELLANT DOES NOT HAVE ANY DETAILS OF JEWELLERY CLAIMED TO HAVE BEEN SOLD BY HIM. THERE ARE NO DETAILS OF CUSTOMERS, NO BILLS, NO DESCRIPTION , EVEN THE SO C ALLED WILL RELIED UPON BY THE APPELLANT DOES NOT GIVE THE DESCRIPTION OF JEWELLER Y. THE APPELLANT*S RELIANCE ON THE WEALTH TAX RETURN OF APPELLANTS FATHER FOR ASS TT YEAR 1992-93 CANNOT BE ACCEPTED AS THE APPELLANT 'S FATHER DIED ALMOST NIN E YEARS AFTER 31 ST MARCH 1992. 12.4 THERE IS NO EVIDENCE THAT THE ENTIRE JEWELLERY REFLECTED IN THE SAID WEALTH TAX RETURN WAS RETAINED BY HIM HIS DEATH. EVEN IF F OR A MOMENT IT IS PRESUMED THAT SUCH JEWELLY DID EXIST ON THE DATE OF HIS DEMISE AN D PASSED ON TO THE APPELLANT, THERE IS NO EVIDENCE THAT IT CONTINUED IN THE HANDS OF THE APPELLANT FOR SEVEN YE]ARS AND WAS SOLD ONLY IN ASSESSMENT YEAR 2008-09. 12.5 IN ABSENCE OF ANY EVIDENCE, REGARDING THE SAME , APPELLANT'S CLAIM OF RECEIVING SALE PROCEEDS OF JEWELLERY AND ITS DEPOSI T IN THE BANK ACCOUNT CANNOT BE ACCEPTED IRRESPECTIVE OF THE PAYMENT OF RS 4, 00, 4 00/- CLAIMED BY THE APPELLANT HAVE BEEN RECEIVED BY PAY ORDERS AS NO DETAILS OF S UCH PAY ORDERS HAVE BEEN FURNISHED. CONSEQUENTLY, THE DEPOSIT BY WAY OF PAY ORDERS OF RS 4, 04, 000/- AND CASH DEPOSITS IN BANK OF RS. 14, 25, 000/- ARE TREA TED AS ' UNEXPLAINED DEPOSITS' IN THE BANK ACCOUNT. HOWEVER, THE APPELLANT HAD WITHDR AWN CASH TO THE EXTENT OF RS. 2, 91,0007- PRIOR TO THE FIRST DEPOSIT IN ASSTT YEA R 2008-09. THEREFORE, BENEFIT OF ROTATION OF FUNDS OR TELESCOPING S GRANTED TO THE A PPELLANT TO THAT EXTENT AND THE ADDITION MADE \S RESTRICTED TO RS. 15,34,400/- ( RS . 14,25,000 + RS 4, 00, 400/- - RS. 2,91,000/-) AGAINST THE ADDITION MADE OF RS. 24,08,001/-. CONSEQUENTLY, THE GROUND NO.2 IS PARTLY ALLOWED IN FAVOUR OF THE APPELLANT. 5. HEARD BOTH SIDES. LEARNED COUNSEL REPRESENTING ASSESSEE REITERATES HIS STAND ADOPTED THROUGHOUT THAT THE IMPUGNED CASH DEP OSITS OF RS.15.34LACS REPRESENT SALE PRICE OF THE GOLD AND DIAMOND JEWELL ERY ITEMS AS INHERITED FROM HIS LATE FATHER BY WAY OF A WILL. HE STRESSES THE POINT THAT HIS FATHER HAD DECLARED THE VERY JEWELLERY ITEM IN WEALTH TAX RETU RN AS WELL. WE FIND NO FORCE IN THIS ARGUMENT AS THE INSTANT PLEA ADMITTED LY DOES NOT RAISE AN ISSUE OF JEWELLERY ITEMS IN QUESTION SINCE WE ARE CONCERNED WITH ASSESSEES SOURCE OF CASH DEPOSITS ONLY. IT IS AN ADMITTED FACT THAT TH E ASSESSEE HAS NOT FILED A ITA NOS. 958 & 1263/AHD/2013 WITH C.O. NO.169/AHD/1 3 (HARESH N. THARNARIWALA VS. ITO) A.Y. 2008-09 - 5 - SINGLE DETAIL AT ALL QUA THE SO CALLED PURCHASERS O F JWELLERY IN QUESTION. LEARNED DEPARTMENTAL REPRESENTATIVE SEEKS TO INVITE OUR ATTENTION TO THE FACT THAT THE ASSESSEES BANK ACCOUNT HAS SEEN VARIOUS C ASH DEPOSITS INSTANCES NOT CONTAINING THE RELEVANT DETAILS EVEN RELEVANT TO A SINGLE OCCASION. WE THUS FIND NO REASON TO INTERFERE WITH THE LEARNED CIT(A) S CONCLUSION HEREINABOVE IN RESTRICTING THE IMPUGNED ADDITION OF UNEXPLAINED MONEY FROM RS. 24,08,001/- TO RS.15.34 LACS. THE ASSESSEES SOLE SUBSTANTIVE GROUND AS WELL AS APPEAL ITA NO.958/AHD/2013 FAILS ACCORDINGLY. 6. WE NOW COME TO REVENUES APPEAL ITA NO.1263/AHD/ 2013 SEEKING TO REVIVE UNEXPLAINED INVESTMENT ADDITION OF RS.37,93, 213/- AS MADE BY THE ASSESSING OFFICER AND DELETED IN COURSE OF THE LOWE R APPELLATE PROCEEDINGS AS UNDER: 10 AS PER THE APPELLANT'S SUBMISSION, THE OPENING BALANCE IN THE ACCOUNT OF M/S SUSHIL FINANCE SERVICES PVT LIMITED WAS RS 25, 600/-. SHARES OF RS. 37, 67,613/- WERE PURCHASED DURING THE YEAR. ! THE TOTA L OF THESE COMES TO RS. 37,93,213/-. THE ASSESSING OFFICER HAS ADDED THIS A MOUNT. THE APPELLANT CLAIMED THAT HE SOLD SHARES WORTH RS. 20, 58, 8237- DURING THE YEAR AND THEREFORE, THE NET PAYABLE AMOUNT TO THE BROKER CAME TO RS. 17, 34, 39 0/-. (RS. 37, 93, 213 - RS. 20, 58,823/-) ONLY. RS. 10,0007- CONTINUED AS CLOSING B ALANCE IN THE ACCOUNT OF BROKER. 10.1 AS PER THE APPELLANT, BOTH THE PURCHASE AND SA LES WERE MADE THROUGH M/S SUSHIL FINANCE SERVICES PVT LTD AND PAYMENT WAS MAD E ONLY FOR THE NET AMOUNT AND NOT GROSS AMOUNT OF PURCHASES. THE SALE PROCEED S IN RESPECT OF SHARES WERE CREDITED BY M/S SUSHIL FINANCE SERVICES PVT LTD IN THE LEDGER ACCOUNT OF THE APPELLANT WHILE, THE REMAINING PAYMENT WAS MADE BY CHEQUE FROM THE SAME BANK ACCOUNT IN SURAT PEOPLES CO - OPERATIVE BANK LTD W HOSE TOTAL DEPOSITS HAVE BEEN SEPARATED ADDED BY THE ASSESSING OFFICER AT RS.24,0 8,001/-. ALL THESE DETAILS AND EXPLANATIONS ARE CLAIMED TO HAVE BEEN FURNISHED BEF ORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM O N THE GROUND THAT THIS BANK ACCOUNT WAS NEVER DISCLOSED IN THE REGULAR BOOKS OF , ACCOUNT. 10.2 THE REASONING OF THE ASSESSING OFFICER AND THE CONTENTION OF THE APPELLANT HAVE BEEN EXAMINED. THE APPELLANT HAD TWO ACCOUNTS WITH M/S SUSHIL FINANCE SERVICES PVT LTD ONE IN HIS NAME AND ANOTHER IN THE NAME OF HIS WIFE SMT. KETKIBEN H THARJIARIWALA. THE GROSS PURCHASE OF SHARES INCLU DING OPENING BALANCE IN THE NAME OF APPELLANT WERE OF RS. 37,93,213/- WHILE, IN THE NAME OF HIS WIFE ', THE GROSS PURCHASES WERE AT RS 5, 58, 160/-. THE SET OFF OF S ALES AGAINST THE SAME WAS RS 20, 58, 823/- IN THE CASE OF THE APPELLANT AND RS 5,59, 180/- IN THE CASE OF APPELLANTS WIFE. THE ASSESSING OFFICER IN PARA 6.1 OF T HE ASSESSMENT ORDER HELD THAT THE ITA NOS. 958 & 1263/AHD/2013 WITH C.O. NO.169/AHD/1 3 (HARESH N. THARNARIWALA VS. ITO) A.Y. 2008-09 - 6 - APPELLANTS WIFE HAS NO OTHER SOURCE OF INCOME AND THE 'SHARES PURCHASED IN BOTH THE ACCOUNTS ARE UNEXPLAINED INVESTMENT OF THE A PPELLANT. HOWEVER, THE ASSESSING OFFICER FINALLY ADDED A SUM OF RS.37,93, 213/- ONLY. I.E. THE GROSS PURCHASE OF RS 5, 58,1607- IN THE NAME HIS WIFE WAS NOT ADDED. THIS LEADS TO AN INTERPRETATION THAT THE ASSESSING OFFICER ACCEPTED THE SALES SET OFF, IN THE HANDS OF WIFE TO THE EXTENT OF RS. 5,59,180/- AGAINST THE PU RCHASE MADE IN THE NAME OF WIFE. 10.3 HOWEVER, IN THE CASE OF SHARE PURCHASED IN APPELLAN TS OWN NAME, THE SALE SET OFF OF RS. 20, 58, 823/- HAS NOT BEEN GIVEN. THIS I S A CONTRADICTION IN THE ASSESSMENT ORDER. 10.4 IT IS A FACT THAT THE APPELLANT HAS BEEN MAKIN G BOTH PURCHASE AND SALE THROUGH M/S SUSHIL FINANCE SECURITIES P LTD AND THE SALES W ERE DIRECTLY CREDITED IN THE LEDGER ACCOUNT OF THE APPELLANT. THEREFORE, THE SET OFF OF SALE PROCEEDS IS TO BE GIVEN MOREOVER, THE NET PAYMENT HAS ALSO BEEN MADE BY CHEQUE FROM THE SAME BANK ACCOUNT, IN THE SURAT PEOPLE CO - OP BANK LTD WHOSE TOTAL DEPOSITS HAS BEEN ADDED BY THE ASSESSING OFFICER. THEREFORE, THERE IS NO RATIONALE OF MAKING THIS ADDITION OF RS 37,93,213/-. CONSEQUENTLY, THE ADDIT ION MADE BY THE ASSESSING OFFICER OF RS 37,93,213/- IS DELETED. IT IS IN THIS FACTUAL BACKDROP THAT THE REVENUE HA S RAISED INSTANT SUBSTANTIVE GROUND AND THE ASSESSEE HAS PREFERRED C ROSS OBJECTION SUPPORTING THE CIT(A)S CONCLUSION UNDER CHALLENGE. 7. WE HAVE HEARD RIVAL SUBMISSIONS. IT HAS COME ON RECORD THAT THE ASSESSEE HAS CARRIED OUT HIS SHARE TRANSACTIONS THR OUGH M/S. SUSHIL FINANCE SECURITIES PVT. LTD. AND ALSO THAT HE HAS SOLD HIS INVESTMENT AND CREDITED THE SAME TO HIS LEDGER ACCOUNT DIRECTLY. THE REVENUE F URTHER FAILS TO DISPUTE THE FACT THAT THE ASSESSEE HAS MADE CHEQUE PAYMENTS FRO M HIS CO-OPERATIVE BANK ACCOUNT WHOSE DEPOSITS STOOD ADDED FORMING SUBJECT MATTER OF ADJUDICATION IN HIS CROSS APPEAL DECIDED HEREINABOVE. IT CAN THUS BE CONCLUDED THAT THE ASSESSEES CASH DEPOSITS/CREDITS ADDED U/S.68 OF TH E ACT AS WELL AS THE OPENING BALANCE OF THE SAID ACCOUNT FORM SOURCE OF HIS IMPUGNED INVESTMENTS. WE ACCORDINGLY DO NOT SEE ANY REASON TO INTERFERE IN THE CIT(A)S CONCLUSION DELETING THE IMPUGNED ADDITION ON ACCOUNT OF REVENUES FAILURE TO REBUT THE SAME. ITS SOLE SUBS TANTIVE GROUND AS WELL AS MAIN APPEAL ITA NO.1263/AHD/2013 FAILS. THIS RENDE RS ASSESSEES CROSS ITA NOS. 958 & 1263/AHD/2013 WITH C.O. NO.169/AHD/1 3 (HARESH N. THARNARIWALA VS. ITO) A.Y. 2008-09 - 7 - OBJECTION (SUPRA) SUPPORTIVE OF CIT(A)S ORDER AS T O HAVE BEEN RENDERED INFRUCTUOUS. 8. THE ASSESSEE AS WELL AS REVENUE FAIL IN THEIR RE SPECTIVE CROSS APPEALS. THE SAME ARE DISMISSED. ASSESSEES CROSS OBJECTION NO.169/AHD/2013 IS DISMISSED SINCE RENDERED INFRUCTUOUS. [PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF FEBRUARY, 2017.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 27/02/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0