Smt. Geetaben N.Kapadia, Surat V. The ACIT.,Cent.Circle-4, Surat

ITSSA 157/AHD/2011

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2855 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-01-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 22-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Peak credit; Deemed to accrue or arise in india; Revised return
• Section: 133A; 153A; 69; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.(SS)A NO.157/AHD/2011 FOR A.Y.2003-04 ./ I.T.(SS)A NO.158/AHD/2011 FOR A.Y.2004-05 SMT. GEETABEN N. KAPADIA 3/1810, GHAMLAWAD, SHERI NO.1, GHAMLAWAD, SURAT. / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT ./ ./ PAN/GIR NO. : AAUPK 4396 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. SAMPATH, A.R. / RESPONDENT BY : SHRI SANJAY AGRAWAL, CIT, D.R. / DATE OF HEARING 09/01/2017 / DATE OF PRONOUNCEMENT 18/01/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, AHMEDABAD, DATED 13/12/2010 FOR THE ASSESSMENT YEAR (AY) 2003-04 & 2004-05. 2. FIRST WE TAKE UP THE ASSESSEES APPEAL IN IT(SS) APPEAL NO.157/AHD/2011 FOR THE A.Y.2003-04. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- (I). THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-II HAS ERRED IN- IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 2 - - CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.64,013/- MADE IN BANK ACCOUNT OF THE APPELLANT. - CONFIRMING THE WRONG ADDITION MADE BY AO ON ACCOUNT OF PEAK BALANCE IN THE SAID BANK ACCOUNT INSTEAD OF MAKING ADDITION OF INCREMENTAL PEAK BALANCES/ NEW ADDITIONS MADE IN THE BANK ACCOUNT AND WHICH HAS RESULTED INTO DOUBLE ADDITION OF THE AMOUNT ALREADY TAXED BY HIM. - NOT DIRECTING THE LEARNED AO TO TAX THE GROSS PROFIT ON UNACCOUNTED SALES RECEIPTS DEPOSITED IN THE BANK ACCOUNT. (II). THAT ON THE FACTS AND CIRCUMSTANCES THE CIT(A)-II HAS ERRED IN SUSTAINING THE ACT OF THE AO OF NOT DOING TELESCOPING IN THE APPELLANTS CASE- - OF THE DISCREPANCY IF ANY REMAINING UNIDENTIFIED IN THE HANDS OF SHRI NAGINBHAI KAPADIA AND / OR SHRI ASHOKBHAI JARIWALA AS CATEGORICALLY MENTIONED BY THEM IN NOTES FILED WITH THEIR REVISED RETURN U/S. 153A STATING THAT- - THE CONDITIONAL DISCLOSER MADE THEREIN IS A FIRST HAND APPROXIMATION WHICH MAY VARY WITHIN THE OVERALL AMOUNT DECLARED AT THE TIME OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS AND - THE AMOUNT OF CONDITIONAL DISCLOSURE REMAINING SPECIFICALLY UNIDENTIFIED MAY BE TELESCOPED AGAINST ANY ADDITION OR DISALLOWANCE OF ANY EXPENSES OR DEDUCTION OR OTHERWISE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS IN THE HANDS OF FAMILY MEMBERS OR ANY GROUP CONCERNS FOR THE PERIOD COVERED UNDER THE NOTICE ISSUED U/S.153A/153C OF THE ACT. (III). THAT THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO BE DIRECTED TO CARRY OUT APPEAL EFFECTS CONSEQUENT TO THE PRESENT APPEAL ALSO IN THE CASE OF SHRI ASHOKBHAI JARIWALA AND SHRI NAGINBHAI KAPADIA ON THE MATTER BEING FINALLY SETTLED. 3. NOW WE TAKE UP THE ASSESSEES APPEAL IN IT(SS) APPEAL NO.158/AHD/2011 FOR THE A.Y.2004-05. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- (I ). THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-II HAS ERRED IN- IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 3 - - CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.67,110/- MADE IN BANK ACCOUNT OF THE APPELLANT. - CONFIRMING THE WRONG ADDITION MADE BY AO ON ACCOUNT OF PEAK BALANCE IN THE SAID BANK ACCOUNT INSTEAD OF MAKING ADDITION OF INCREMENTAL PEAK BALANCES/ NEW ADDITIONS MADE IN THE BANK ACCOUNT AND WHICH HAS RESULTED INTO DOUBLE ADDITION OF THE AMOUNT ALREADY TAXED BY HIM. - NOT DIRECTING THE LEARNED AO TO TAX THE GROSS PROFIT ON UNACCOUNTED SALES RECEIPTS DEPOSITED IN THE BANK ACCOUNT. (II). THAT ON THE FACTS AND CIRCUMSTANCES THE CIT(A)-II HAS ERRED IN SUSTAINING THE ACT OF THE AO OF NOT DOING TELESCOPING IN THE APPELLANTS CASE- - OF THE DISCREPANCY IF ANY REMAINING UNIDENTIFIED IN THE HANDS OF SHRI NAGINBHAI KAPADIA AND / OR SHRI ASHOKBHAI JARIWALA AS CATEGORICALLY MENTIONED BY THEM IN NOTES FILED WITH THEIR REVISED RETURN U/S. 153A STATING THAT- - THE CONDITIONAL DISCLOSER MADE THEREIN IS A FIRST HAND APPROXIMATION WHICH MAY VARY WITHIN THE OVERALL AMOUNT DECLARED AT THE TIME OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS AND - THE AMOUNT OF CONDITIONAL DISCLOSURE REMAINING SPECIFICALLY UNIDENTIFIED MAY BE TELESCOPED AGAINST ANY ADDITION OR DISALLOWANCE OF ANY EXPENSES OR DEDUCTION OR OTHERWISE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS IN THE HANDS OF FAMILY MEMBERS OR ANY GROUP CONCERNS FOR THE PERIOD COVERED UNDER THE NOTICE ISSUED U/S.153A/153C OF THE ACT. (III). THAT THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO BE DIRECTED TO CARRY OUT APPEAL EFFECTS CONSEQUENT TO THE PRESENT APPEAL ALSO IN THE CASE OF SHRI ASHOKBHAI JARIWALA AND SHRI NAGINBHAI KAPADIA ON THE MATTER BEING FINALLY SETTLED. 4. THE FACTS OF THE CASE ARE THE ASSESSEE FIRM IS ONE OF THE CONCERNS OF T.N. KAPADIA (TNK) GROUP COMPRISING OF TWO FAMILIES, VIZ. THE KAPADIA AND JARIWALAS, ENGAGED IN BUSINESS OF MANUFACTURE, TRADING AND ON 14/12/2005 AT THE RESIDENTIAL PREMISES OF THE SH. NAGINDAN T. KAPADIA AND SH. ASHOK H. JARIWALA OF TNK GROUP AND SURVEY ACTION U/S. 133A IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 4 - WERE CONDUCTED AT BUSINESS PREMISES OF THE ASSESSEE GROUP ON THE SAME DATE. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AT THE RESIDENTIAL PREMISES OF SH. NAGINDAS T. KAPADIA AND SH. ASHOK H. JARIWALA, BOOKS OF ACCOUNTS/DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED AND THEIR AFTER A NOTICE U/S.153C OF THE I.T. ACT, WAS ISSUED AND WHICH WAS SERVED, WHICH IS PRESSED AS UNDER. ..THE BANK ACCOUNTS WITH NOS. 0041-097733-020, 0041-093100-001, 0041- 097708-051 AND 0041-097680-020 HAD NOT BEEN REFLECTED IN THE RETURN OF INCOME AND THE ACCOMPANIED BALANCE SHEET FOR ANY OF THE RELEVANT A.Y. ALSO THAT THE INTEREST FROM THE BANK ACCOUNT WAS NOT BEEN OFFERED IN THE COMPUTATION OF INCOME DURING THE RELEVANT A.Y.S OF HOLDING THE ACCOUNTS, WHICH ESTABLISHED THAT THE ACCOUNT WAS HELD IN AN UNDISCLOSED MANNER, AND INCOME THEREFROM AND INVESTMENT WERE CONCEALED. THEREFORE, IT IS EVIDENT THAT THE ACCOUNT HAS BEEN MAINTAINED AND OPERATED IN AN UNDISCLOSED MANNER AND THE TRANSACTIONS AND INVESTMENTS THERE IN HAVE NOT BEEN DISCLOSED OR EXPLAINED BEFORE THE DEPARTMENT. FURTHER, THE EXPLANATION TO SECTION 139 MANDATES THAT IN THE CASE OF A PROPRIETARY BUSINESS OR PROFESSION, RETURN OF INCOME MUST BE ACCOMPANIES BY THE PERSONAL ACCOUNT OF THE PROPRIETOR. THEREFORE, THE IMPUGNED BANK ACCOUNTS HAVE NOT BEEN DISCLOSED IN THE RETURN OF INCOME AND THE INTEREST THEREON HAS NOT BEEN OFFERED TO TAX, IT IS EVIDENT THAT THE BANK ACCOUNT HAS BEEN MAINTAINED AND OPERATED IN A CONCEALED MANNER. FURTHER, KINDLY NOTE THAT THERE HAS BEEN FAILURE TO EXPLAIN THE INVESTMENT MADE IN THIS BANK ACCOUNT IN RESPONSE TO NOTICE U/S 142(1), DATED 21.09.2007. THE DETAILS OF THE INVESTMENT MADE IN THESE BANK ACCOUNTS ARE AS UNDER:- A/C NO. F.Y. PEAK BALANCE INCREMENTAL BANK 0041-097733-020 2005-06 1001000 1001000 0041-093100-001 2002-03 64,013 64,013 2003-04 131123 67,110 2004-05 133036 1,913 2005-06 202067 69,031 0041-097708-051 2005-06 553587 553587 IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 5 - 0041-097680-020 2005-06 501000 501000 YEAR-WISE SUMMARY A.Y. PEAK BALANCE AGG. INCREMENTAL PEAK 2003-04 64,013 64,013 2004-05 131123 67,110 2005-06 133036 1,913 2006-07 2055587 20,55,587 THUS, IT IS EVIDENT THAT, APART FROM OTHER YEARS, SUMS OF RS.20,55,587/- OR F.Y. 2005-06, A.Y. 2006-07 HAVE BEEN INVESTED IN AN UNACCOUNTED MANNER. FURTHER, THERE HAS BEEN COMPLETE SILENCE AS REGARDS TO THIS ISSUE AND SOURCE OF SUCH INVESTMENT IN THE REPLY SUBMITTED BY YOU IN RESPONSE TO NOTICE U/S.142(1), DATED 21.09.2007. HENCE, THESE PEAK CREDIT INVESTMENTS ARE AMOUNTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND HENCE ARE LIABLE TO BE DEEMED TO BE THE INCOME FOR RELEVANT FINANCIAL YEARS U/S 69 OF THE INCOME-TAX ACT 1961. SECTION 69 OF THE INCOME-TAX ACT, 1961 PROVIDES THE FOLLOWING: ..WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY , THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. THUS, THE AGGREGATE OF INCREMENTAL PEAK CREDIT AMOUNTS ARE ADDED U/S.69 OF THE INCOME-TAX ACT, 1961 AS UNEXPLAINED INVESTMENT. THEREFORE, THE PEAK AMOUNT IS LIABLE TO BE TREATED AS DEEMED INCOME U/S.69 OF THE INCOME TAX ACT, 1961 FOR THE RELEVANT ASSESSMENT YEARS. IN THIS CASE, THE REQUIREMENTS OF THE PROVISIONS OF SECTION 69 ARE CLEARLY SATISFIED. THEREFORE, YOU ARE REQUESTED TO EXPLAIN AND SHOW CAUSE ON 24.12.2007 AT 12:00 P.M. WHY SUM OF RS.64,013/- FOR A.Y. 2003-04, RS.67,110/- FOR A.Y. 2004-05, RS.1,913/- FOR A.Y.2005-06, AND RS.20,57,654/- FOR A.Y.2006-07, SHOULD NOT BE TREATED AS YOUR TAXABLE INCOME. THERE WAS REPLY TO THE ABOVE-SAID SHOW-CAUSE NOTICE BY THE ASSESSEE BY WAY OF EXPLANATION SUBMITTED THROUGH LETTER NO. NIL, DATED 27.12.2007. THE RELEVANT PORTION OF THE REPLY IS AS UNDER: IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 6 - YOUR HONOUR HAD ASKED ME TO SHOW CAUSE WHY AGG. INCREMENTAL PEAK OF VARIOUS BANK ACCOUNTS SHOULD NOT BE TREATED AS TAXABLE INCOME IN ABSENCE OF DETAILS OF TRANSACTIONS WHICH HAD TAKEN PLACE IN THE SAID BANK ACCOUNT AND IN THIS REGARD, I WOULD LIKE TO SUBMIT HEREWITH AS ANNEXURE-13, THE COMPLETE DETAILS OF ADDITION MADE TO FOLLOWING BANK ACCOUNTS AS ASKED BY YOUR HONOUR WITH DOCUMENTARY EVIDENCES OF THE SAME: 1. BANK ACCOUNT NO. 0041-097733-020 WITH CENTURIAN BANK 2. BANK ACCOUNT NO. 0041-093100-001 WITH CENTURIAN BANK 3. BANK ACCOUNT NO. 0041-097708-051 WITH CENTURIAN BANK 4. BANK ACCOUNT NO. 0041-097680-020 WITH CENTURIAN BANK ON GOING THROUGH THE SAME, YOUR HONOUR WILL APPRECIATE THAT THE NATURE AND SOURCES OF ADDITION STAND FULLY EXPLAINED AND IT IS NOT IN THE FORM OF UNACCOUNTED SALES WHOSE INCREMENTAL PEAK BE ADDED AS TAXABLE INCOME AND HENCE YOUR HONOUR MAY FEEL JUSTIFY IN NOT ADDING THE SAME AS UNEXPLAINED INVESTMENT. 5. DURING THE COURSE OF SEARCH AT THE RESIDENTIAL AND BUSINESS PREMISES OF SH. NAGINDAS T. KAPADIA, EVIDENCE OF EXISTENCE AND POSSESSION OF BANK ACCOUNTS, DESCRIBED AS ANNEXURE-B TO PUNCHANAMA DATED 14 TH DEC, 2005, WERE FOUND. THESE DOCUMENTS INDICATED AND EVIDENCED A BANK ACCOUNT WHICH WAS OPERATED BY THE ASSESSEE IN UNACCOUNTED MANNER. THE DETAILS OF THIS BANK ACCOUNT WITH ACCOUNT NAME, HOLDING BANK AND THEIR INVOLVED BRANCH IS AS PER THE FOLLOWING TABLE: ACCOUNT NO. F.Y. PEAK BALANCE 0041-097733-020 2005-06 101000 0041-093100-001 2002-03 64,013 2003-04 131123 2004-05 133036 2005-06 202067 0041-097708-051 2005-06 553587 0041-097680-020 2005-06 501000 IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 7 - 6. DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS, IT HAS BEEN DISCOVERED THAT THE ABOVE BANK ACCOUNTS HAVE NOT BEEN REFLECTED IN THE RETURN OF INCOME AND THE ACCOMPANYING BALANCE SHEET OF THE ASSESSEE. ALSO THAT, THE INTEREST FROM THE BANK ACCOUNTS HAVE NOT BEEN OFFERED IN THE COMPUTATION OF INCOME. THUS, IT IS CLEARLY AND CATEGORICALLY ESTABLISHED THAT THE ACCOUNT WAS HELD IN AN UNDISCLOSED MANNER, AND INCOME THERE FORM AND INVESTMENT THEREIN WERE CONCEALED. THE BANK ACCOUNTS WERE NOT DISCLOSED TO THE DEPARTMENT. IN THE ABSENCE OF SEARCH & SEIZURE OPERATIONS, THIS BANK ACCOUNT WOULD NOT HAVE COME INTO LIGHT AND THE ASSESSEE WOULD HAVE SURREPTITIOUSLY HELD HER UNEXPLAINED INVESTMENT IN THE BANK ACCOUNT. AWAY FROM THE SCRUTINY OF THE DEPARTMENT. BANK ACCOUNT WAS PRODUCED ANYWHERE ON THE REGULAR RETURN OF INCOME, THE INTENTION OF THE ASSESSEE WAS TO MAINTAIN AND OPERATE THIS ACCOUNT IN A CONCEALED MANNER. ALSO THAT, THE TRANSACTIONS AND INVESTMENTS THERE IN HAVE NOT BEEN DISCLOSED OR EXPLAINED BEFORE THE DEPARTMENTS. 7. ON THE BASIS OF THE ABOVE ACCOUNTS A TOTAL INCOME OF RS.2,30,110/- WAS ADDED TO THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 AND FOR ASSESSMENT YEAR 2004-05 INCOME WAS ASSESSED RS.3,24,000/- 8. AGAINST THESE TWO ASSESSMENT YEARS ASSESSEE FILED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO DISMISSED THE APPEALS OF THE ASSESSEE. IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 8 - 9. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND PAPER BOOK FILED BY THE ASSESSEE AND SYNOPSIS FILED BY THE LD. D.R., IN SECTION 69 LAYS DOWN 2 CONDITIONS FOR TREATING THE INVESTMENT IN UNDISCLOSED BANK ACCOUNTS AS UNEXPLAINED: A. THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. B. IN OUR CONSIDERED OPINION THE EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENT OFFERED BY ASSESSEE IS NOT TENABLE IN THE EYES OF LAW. BOTH OF THESE TWO CONDITIONS ARE SATISFIED IN THE INSTANT CASE AS DISCUSSED ABOVE. IN THE INSTANT CASE, THE FUNDS INVESTED IN THE BANK ACCOUNTS IS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE EXPLANATION OFFERED BY THE ASSESSEE, IN CONSIDERED OPINION, IS NOT SATISFACTORY. 10. THEREFORE, IN VIEW OF THE FOREGOING OBSERVED, WE NOT INCLINED TO INTERFERE IN THE ORDER OF THE LD.CIT(A) AS SAME HAS BEEN PASSED AS PER LAW. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/01/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/01/2017 IT(SS)A NO.157&158/AHD/2011 SMT. GEETABEN N. KAPADIA VS.ACIT ASST.YEAR 2003-04 & 2004-05 - 9 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-II, AHMEDABAD. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY