Shri Dilipkumar Chandulal Shah, Ahmedabad V. The Income tax Officer,Ward-2, Anand

ITSSA 250/AHD/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 3097 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 07-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Unexplained investment; Gift; Business income; Income from undisclosed sources; Source of fund; Reassessment proceedings
• Section: 68; 69

Judgement Text

IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.(SS) A. NO.250/AHD/2012 (ASST. YE AR: 2002-03) SHRI DILIPKUMAR C.SHAH PROP. OF TRANSMECH PRODUCTS 142-A, GIDC ESTATE, V.V. NAGAR, ANAND 388121 (APPELLANT) VS. INCOME TAX OFFICER, WARD-2, STATION ROAD, ANAND. (RESPONDENT) PAN: ACDPC 3737 B APPELLANT BY : MR.ANIL R. SHAH RESPONDENT BY : MR. S.K. GUPTA, CIT (DR) ( )/ ORDER DATE OF HEARING : 9 - 7 -2012 DATE OF PRONOUNCEMENT : 5 -10-2012 PER: SHRI ANIL CHATURVEDI, A.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT (A)- IV, BARODA DATED 10-2-2012 FOR THE ASSESSMENT YEAR 2002-03. 2. THE ASSESSEE HAS RAISED GROUNDS OF APPEAL IN TWO PARTS (I) ON LEGALITY AND (II) ON MERITS. IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 2 3. GROUNDS MENTIONED IN PART-I I.E. ON LEGALITY ARE NOT PRESSED AND THEREFORE, NOT ADJUDICATED. GROUNDS IN PART-II ARE ON MERITS AND ARE AS UNDER:- (1) IT IS SUBMITTED BY YOUR APPELLANT THAT DURING COURSE OF ASSESSMENT PROCEEDING BEFORE ITO DURING PROCEEDINGS TO GIVE EFFECT TO THE ORDER U/S. 254 OF THE ACT AND ALSO BEFORE LD . CIT (A) HAD FILED FULL FACTS AND FIGURES AND EVIDENCE IN SUPPORT OF C LAIM THAT CONSTRUCTION OF HOUSE PROPERTY RS.1,05,000/- AND DE POSIT OF RS.22,000/- WAS FULLY EXPLAINED AND WAS NOT LIABLE TO BE ADDED. IT WAS FURTHER SUBMITTED THAT RS.22,000/- WAS NOT L IABLE TO BE ADDED AS CASH CREDIT AND THAT SEC. 68/69 DOES NOT APPLY T O THE FACTS OF THE CASE. (2) IT IS SUBMITTED THAT YOUR APPELLANT HAD BALANCE AVAILABLE AT OPENING OF THE YEAR AND HAD EARNING OF THE YEAR AVA ILABLE FOR CASH DEPOSIT WHICH HAS BEEN UTILIZED AND THEREFORE THE A BOVE ADDITION IS NOT LIABLE TO BE ADDED. (3) IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANC ES INVESTMENT IN HOUSE PROPERTY OF RS.1,05,000/- AND RS.22,000/- AS DEPOSIT IN BANK BEING DULY EXPLAINED AND SUPPORTED BY EVIDENCE BE D ELETED. 4. ASSESSEE IS A PROPRIETOR OF TRANSMECH PRODUCT AN D FILED RETURN OF INCOME ON 1-8-2001 DECLARING TOTAL INCOME OF RS.41, 930/-. THEREAFTER A SEARCH WAS CARRIED OUT IN THE CASE OF OSWAL GROUP O F CASES AND IN THE CASE OF ASSESSEE ON 19-1-2006.DURING THE COURSE OF SEARC H IT WAS NOTICED THAT ASSESSEE PURCHASED A RESIDENTIAL PROPERTY FOR WHICH PAYMENT OF RS.3.55 LACS WAS MADE TILL OCTOBER, 2001 AND CASH DEPOSIT O F RS.22,000/- WAS MADE IN THE ASSESSEES BANK ACCOUNT. SINCE THE ASSE SSEE COULD NOT EXPLAIN THE SOURCE OF INVESTMENT IN HOUSE PROPERTY AND CASH DEPOSITS, THE A.O. CONCLUDED THAT THE INVESTMENT IN HOUSE PROPERT Y TO THE TUNE OF RS.2.05 IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 3 LACS AND CASH DEPOSITS OF RS.22,000/- AS UNDISCLOSE D INCOME OF THE ASSESSEE AND ACCORDINGLY AN ADDITION OF RS.2.27 LAC S WAS MADE ON ACCOUNT OF UNDISCLOSED SOURCES OF INCOME. BEING AGG RIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) VIDE ORD ER DATED 4-11-2008 CONFIRMED THE ADDITION MADE BY A.O. THEREAFTER THE ASSESSEE PREFERRED APPEAL BEFORE ITAT. ITAT VIDE ORDER DATED 3-7-2009 (ITA. NO.1116 & 1117) SET ASIDE THE ISSUES TO THE FILE OF A.O. FOR CONSID ERING THE EVIDENCES FILED IN RESPECT OF AMOUNT CREDITED IN BANK AND FOR PURCHASE OF RESIDENTIAL PROPERTY. 5. PURSUANT TO THE DIRECTIONS OF ITAT, NOTICE WAS ISSUED BY A.O. TO ASSESSEE TO FURNISH THE NECESSARY EVIDENCES. WITH R EGARD TO THE CASH DEPOSIT OF RS.22,000/- THE ASSESSEE DID NOT OFFER A NY EXPLANATION AND ACCORDING TO THE A.O., THE ASSESSEE DID NOT OBJECT TO THE MAKING OF ADDITION. THE A.O. THUS ADDED RS.22,000/- AS INCOME OF THE ASSESSEE. WITH RESPECT TO INVESTMENT IN HOUSE PROPERTY, THE ASSESS EE INTERALIA SUBMITTED THAT THE TOTAL COST OF THE FLAT WAS RS.3.55 LACS. T HE ASSESSEE PAID RS.1.55 LACS OUT OF THE RECEIPTS FROM INSURANCE CLAIM, RS.1 LAC WAS PAID WAS OUT OF THE CASH DEPOSITS. THE CASH DEPOSIT OF RS.1 LAC WAS ALREADY ADDED U/S. 69 TO THE ASSESSEES INCOME FOR A.Y. 2001-02. HE THUS SUBMITTED THAT THE ADDITION ON ACCOUNT OF PURCHASE OF HOUSE PROPERTY C AN ONLY BE MADE TO THE EXTENT OF RS.1,05,000/-.SINCE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE FOR RS.1,05,000/- AND ACCORDING TO THE A.O. SINCE THE A SSESSEE DID NOT OBJECT TO THE ADDITION, RS.1,05,000/- WAS ADDED TO THE ASS ESSEES INCOME U/S. 69 AS UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. THUS T OTAL ADDITION OF RS.1,27,000/-(RS.22,000+ RS.1,05,000) WAS MADE. AGG RIEVED BY THE ACTION OF A.O., THE ASSESSEE CARRIED THE MATTER BEFORE CIT (A). CIT (A) VIDE HIS IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 4 ORDER DATED 10-2-2012 CONFIRMED THE ADDITION MADE B Y THE A.O. BY HOLDING AS UNDER:- 6. THE APPELLANT HAS RAISED CERTAIN GROUNDS OF APPE AL ON MERITS OF THE CASE. AS PER THE APPELLANT, THE A.O. HAS ERRED IN BOTH IN LAW AND IN FACT IN MAKING ADDITION OF RS.1,05,000/- AS UNEX PLAINED INVESTMENT IN HOUSE PROPERTY DESPITE THE FACT THAT HE HAD OBJE CTED TO SUCH ADDITION. THE APPELLANT HAS SUBMITTED THAT THE SOUR CE OF INVESTMENT IN HOUSE PROPERTY WAS DULY EXPLAINED AND THE INVESTMEN T HAS BEEN MADE FROM SAVINGS AND SECTION 68/69 DOES NOT APPLY AND, THEREFORE, THE ADDITION OUGHT TO HAVE BEEN DELETED. IT IS FURT HER SUBMITTED BY THE APPELLANT THAT ADDITION OF RS.22,000/- AS UNEXPLAIN ED CASH CREDIT IS STRONGLY OBJECTED BOTH ON POINT OF LAW AND FACT AND THIS AMOUNT OF RS.22,000/- WAS DULY EXPLAINED AND THE PART OF SAVI NGS. WITHOUT PREJUDICE TO THIS, THE APPELLANT HAS FURTHER SUBMIT TED THAT THE SAID ADDITION OF RS.22,000/- WAS REQUIRED TO BE DELETED ON PRINCIPLE OF TELESCOPING SINCE THE ALLEGED ADDITION ON EXPLAIN ED INVESTMENT IN HOUSE PROPERTY AND THIS CASH CREDIT AMOUNT TO DOUBL E ADDITION WHICH IS AGAINST PRINCIPLE OF LAW AND JUSTICE. THE APPELL ANT HAS STATED IN HIS ABOVE SUBMISSION THAT HE HAD ENCLOSED A CHART SHOWI NG INCOME EARNED BY HIM FROM A.Y. 2000-01 TO A.Y. 2002-03 WHI CH SHOWS FOR THAT A.Y. 2002-03 BY WAY OF BUSINESS INCOME INCLUDI NG INCOME FOR A.Y. 2001-02 HE HAD RS.74,651/- AS OPENING BALANCE AND ALSO INCOME OF ASSESSMENT YEAR OF RS.61,369/- FREELY AVA ILABLE AFTER MEETING EXPENSES. THUS AS PER THE APPELLANT HE UTIL IZED TO PAY RS.1,05,000/- FOR PURCHASE OF FLAT AND DEPOSIT OF R S.22,000/- IN THE BANK. BUT THIS ENTIRE SUBMISSION OF THE APPELLANT I S NOT SUPPORTED BY DOCUMENTARY PROOF. THE APPELLANT HAS SHOWN TO HAVE EARNED INCOME BY WAY OF BUSINESS INCLUDING INCOME FOR A.Y. 2001-0 2. EVEN IF IT IS CONSIDERED THAT APPELLANT HAD EARNED BUSINESS INCOM E OF RS.41,931/- DURING THE YEAR UNDER CONSIDERATION, THEN ALSO IT I S DIFFICULT TO ACCEPT THAT APPELLANT WAS ABLE TO MAKE INVESTMENT IN HOUSE PROPERTY TO THE EXTENT OF RS.1,05,000/- AND TO DEPOSIT AN AMOUNT OF RS.22,000/- IN THE BANK. AGAIN AS PER THE A.O. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE APPELLANT VIDE ORDER SHEET ENTRY D ATED 11-11-2010 HAS BEEN ASKED TO EXPLAIN AS TO WHY THE PAYMENT OF RS.1.05 LAKHS SHOULD NOT BE ADDED TO THE TOTAL INCOME TREATING TH E SAME AS UNEXPLAINED INVESTMENT IN HOUSE PROPERTY. AS PER TH E A.O. THE APPELLANT IN THIS REGARD DID NOT OBJECT FOR MAKING SUCH ADDITION. THE IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 5 IMPORTANT ASPECT TO BE CONSIDERED IS THAT THE APPEL LANT HAS NOT BEEN ABLE TO BRING MATERIALS ON RECORD WHICH COULD SUBST ANTIATE HIS CLAIM THAT THE INVESTMENT OF RS.1,05,000/- AS MADE IN THE BANK WERE OUT OF HIS DISCLOSED AND EXPLAINED INCOME. IN MY OPINION, THE APPELLANT WAS NOT HAVING SUFFICIENT FUNDS IN HANDS WHICH WERE DIS CLOSED BY HIM AND OUT OF THE SAME ABOVE TWO INVESTMENTS WERE MADE. CO NSIDERING THIS FACT I HOLD THAT THE A.O. HAS CORRECTLY MADE ADDITI ON OF RS.1,05,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPE RTY AND ANOTHER ADDITION OF RS.22,000/- ON ACCOUNT OF UNEXPLAINED C ASH CREDIT AND, THEREFORE, THESE TWO ADDITIONS ARE CONFIRMED. 6.1. CONSIDERING ALL THE ABOVE FACT, I HOLD THAT TH E A.O. HAS CORRECTLY MADE ADDITION OF RS.1,05,000/- TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE PROPERTY OUT OF UNDISCLOSED SOURCE OF INCOME. AGAIN THE A.O. HAS AL SO MADE ADDITION OF RS 22,000/- TO THE TOTAL INCOME OF THE APPELLANT BEING CASH CREDITS IN THE BANK ACCOUNT OUT OF UNDISCLOSED SOURCE OF IN COME. AT THIS PLACE IT MAY BE MENTIONED THAT THE APPELLANT HAS RA ISED AN ISSUE THAT THE DEPOSIT IN BANK DOES NOT ATTRACT PROVISIONS OF SECTION 68 OF THE I.T. ACT IN VIEW OF ACCEPTED PRINCIPLE OF ACCOUNTAN CY AND VARIOUS JUDICIAL PRONOUNCEMENTS. IN THIS REGARD IT MAY BE M ENTIONED THAT THE A.O. HAS NOT MADE ADDITION OF RS.22,000/- U/S. 68 O F THE I.T. ACT. THE A.O. HAS MADE THIS ADDITION OF RS.22,000/- TO THE T OTAL INCOME OF THE APPELLANT BEING THE SAME AS CASH DEPOSIT IN THE BAN K ACCOUNT OUT OF UNDISCLOSED SOURCES OF INCOME. IN VIEW OF THIS THE ISSUE RAISED BY THE APPELLANT IS NOT ACCEPTABLE. AGAINST THE APPELLANT HAS PLEADED THAT THE SAID ADDITION OF RS.22,000/- IS REQUIRED TO BE DELETED ON PRINCIPLE OF TELESCOPING SINCE THE ALLEGED ADDITION OF UNEX PLAINED INVESTMENT IN HOUSE PROPERTY AND THIS CASH CREDIT AMOUNTS TO D OUBLE ADDITION WHICH IS AGAINST THE PRINCIPLE OF LAW AND JUSTICE. BUT IN MY OPINION, THE INVESTMENT IN HOUSE PROPERTY AND THE DEPOSIT IN THE BANK ACCOUNT ARE TWO DIFFERENT ASPECT. THE APPELLANT HAS NOT BEEN AB LE TO PROVE THAT THE INVESTMENT IN HOUSE PROPERTY WAS MADE OUT OF AB OVE DEPOSIT OF RS.22,000/- ALSO AS DEPOSITED IN THE BANK. THE ABOV E TWO ISSUES ARE NOT FOUND TO BE RELATED WITH EACH OTHER AND BOTH TH ESE TWO ISSUES ARE REQUIRED TO BE CONSIDERED SEPARATELY FOR MAKING ADD ITIONS. IN VIEW OF THIS THE GROUND OF APPEAL OF THE APPELLANT WITH REG ARD TO GRANTING OF BENEFIT OF TELESCOPING IS HEREBY DISMISSED. IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 6 6. AGGRIEVED BY THE ACTION OF CIT (A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US THE LD. A.R. SUBMITTED A CHART DEPICTI NG TOTAL FUNDS AVAILABLE WITH THE ASSESSEE. FROM THE CHART THE LD. A.R. POINTED OUT THAT HE WAS HAVING ACCUMULATED BALANCE OF APPROXIMATELY RS. 74,000/- AND HAD EARNED INCOME OF RS.41,930/- AND THUS THE TOTAL FUN DS AVAILABLE WERE TO THE EXTENT OF RS.1,16,581/-.THE OPENING BALANCE CONSIST ED OF GIFTS ETC., RECEIVED BY HIM IN THE EARLIER YEARS. HE THUS URGED THAT IT WAS HAVING ENOUGH ACCUMULATED SAVINGS TO MAKE THE PAYMENT AND THEREFORE NO ADDITION WAS CALLED FOR. THE LD. D. R. SUPPORTED TH E ORDER OF THE A.O. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE CHART FURNISHED AND PLACED ON RECO RD IT IS SEEN THAT THE TOTAL FUNDS AVAILABLE WITH THE ASSESSEE WAS TO THE EXTENT OF RS.1,16,581/- AND THE ADDITIONS MADE BY THE A.O. WAS TO THE EXTEN T OF RS.1,27,000/-. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD IN PAST RE CEIVED SMALL GIFTS ETC., WE ARE OF THE VIEW THAT THE ADDITION OF RS.1,27,000 /- SEEMS TO BE ON HIGHER SIDE. IN VIEW OF THE TOTALITY OF FACTS, WE ARE OF T HE VIEW THAT IN THE PRESENT CASE, A DISALLOWANCE NEEDS TO BE ESTIMATED. IN THE PRESENT CASE SINCE THE ASSESSEE HAD TOTAL FUNDS OF RS.1,16,581/- AT THE EN D OF THE YEAR, THE DISALLOWANCE BE ESTIMATED AND RESTRICTED TO RS.35,0 00/- INSTEAD OF RS.1,27,000/- MADE BY THE A.O. THUS THE APPEAL OF T HE ASSESSEE IS PARTLY ALLOWED. IT(SS) A . NO.250/AHD/2012 ASST YEA R 2002- 03. . 7 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 5 - 10- 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) IV, BARODA. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD 1.DATE OF DICTATION 3 - 9 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 4,5,7,25 / 9 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER