The ACIT, Central Circle-2(2), Ahmedabad V. Mohammed Mohsin Rajabali Dosani, Ahmedabad

ITSSA 252/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0159 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: THIS COMMON HAS CHALLENGE D OF
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER IT(SS)A NO.249, 251, 252 & 797/AHD/2010 A.YS.2003-04, 2005-06, 2006-07, 2007-08 ACIT, CENTRAL CIRCLE 2(2) AHMEDABAD. VS MOHAMMED MOHSIN RAJABALI DOSANI, 18A & 18B, 19, SAMIR VIHAR CO-OP. SOCIETY, B/H GUJARAT AGRO PETROL PUMP, JUAHAPURA, SARKHEJ GANDHINAGAR ROAD-AHMEDABAD. PAN: AEDPD 7627L (APPELLANT) (RESPONDENT) IT(SS)A NO.253, 254, 255 & 798/AHD/2010 A.YS.2002-03, 2005-06, 2006-07, 2007-08 ACIT, CENTRAL CIRCLE 2(2) AHMEDABAD. VS SALIMABBAS RAJABALI DOSANI, 19, SAMIRVIHAR CO-OP. SOCIETY, B/H GUJARAT AGRO PETROL PUMP, JUAHAPURA, AHMEDABAD. PAN: ABRPD 9598C (APPELLANT) (RESPONDENT) / // / DATE OF HEARING : 14/07/2014 / DATE OF PRONOUNCEMENT: 25/07/2014 / O R D E R PER BENCH ALL THESE APPEALS HAVE IDENTICAL FACTS; THEREFORE, CONSOLIDATED AND DECIDED BY THIS COMMON ORDER. REVENUE HAS CHALLENGE D THE ORDER OF REVENUE BY : SHRI SUBHASH BAINS, CIT- D.R., ASSESSEE(S) BY : SHRI TUSHAR P. HEMANI, A.R. IT(SS)A NO.249, 251, 252, 797 & 253, 254, 255 & 798 /AHD/2010 ACIT, AHMEDABAD VS. LATE SHRI MOHAMMED. MOHSIN RAJABALI DOSANI & SALIMABBAS RAJABALI DOSANI FOR A.YS. 2002-03 TO 2007-08 - 2 - LEARNED CIT(A)-III, AHMEDABAD, DATED 18.12.2009. TH E MAIN GROUND OF DELETION OF ADDITION PERTAINING TO DEPOSITS IN THE BANK ACCOUNTS STATED TO BE IN THE NAMES OF RELATIVES. 2. FACTS IN BRIEF AS EMERGED FROM THE ORDERS OF AO PASSED U/S.153A R.W.S. 143(3) ALL DATED 29.12.2008 WERE THAT A SEAR CH U/S.132 WAS CARRIED OUT IN THE GROUP CASES KNOWN AS DOSANI GROUP ON 4 TH AUGUST, 2006. THE NATURE OF BUSINESS WAS COAL TRADING AND THE ASS ESSEE IN INDIVIDUAL CAPACITY WAS HAVING SHARE INCOME FROM THE PARTNERSH IP FIRM. DURING THE COURSE OF SEARCH AT THE BUSINESS PREMISES OF M/S. B LACK DIAMOND TRADING CO. CERTAIN BANK PASS-BOOKS AND CHEQUE BOOKS WERE F OUND AND SEIZED. A STATEMENT OF ONE OF THE PARTNER, NAMELY, MOHAMMAD T OHSIN DOSANI WAS RECORDED WHEREIN HE HAS STATED THAT THOSE BANK ACCO UNTS BELONGED TO THEIR PATRONS WHO WERE STATED TO BE BASED IN FOREIGN COUN TRIES. THEY HAVE GIVEN THEIR BANK PASS-BOOKS AND CHEQUE BOOKS FOR TH E PURPOSE OF ISSUING CHEQUES FOR CHARITY. HOWEVER, THE AO WAS OF THE VIE W THAT THE BANK PASS BOOKS HAVE BEEN FOUND FROM THE CONTROL AND POSSESSI ON OF THE ASSESSEE, THEREFORE, THE ASSESSEE IS THE OWNER OF THE BANK PA SS-BOOKS. FURTHER, IT WAS ALSO REMARKED BY THE AO THAT THE PERSONS IN WHO SE NAMES THE BANK ACCOUNTS WERE FOUND HAD IN FACT LEFT INDIA FOR THE SEARCH OF JOB BEING FINANCIALLY UNSOUND AND THEY WERE NOT QUALIFIED PER SONS. THE AO HAS OPINED THAT THE FIRM WAS CONTROLLED BY TWO BROTHERS ; THEREFORE, OUT OF THE TOTAL PEAK DEPOSITS IN THOSE ACCOUNTS HE HAS TAXED 50% IN EACH HAND. FOR A.Y. 2001-02, THE AO HAS HELD AS UNDER: SR. NO. A/C NO NAME OF BANK & BRANCH NAME OF A/C. HOLDER AMOUNT 50% OF THE TOTAL AMOUNT DEPOSITED IT(SS)A NO.249, 251, 252, 797 & 253, 254, 255 & 798 /AHD/2010 ACIT, AHMEDABAD VS. LATE SHRI MOHAMMED. MOHSIN RAJABALI DOSANI & SALIMABBAS RAJABALI DOSANI FOR A.YS. 2002-03 TO 2007-08 - 3 - (RS.) 1 18318 CANARA BANK REVDI BAZAR, AHMEDABAD BHIMANI SAJJADALI BASHIR ALI 1915578 (PEAK AMOUNT.) 957789 3. LIKEWISE IN REST OF THE YEARS, THE AO HAS COMPUT ED THE PEAK DEPOSITS IN EACH BANK AND HALF OF THE AMOUNT WAS TA XED IN THE HANDS OF THE ASSESSEE AND REST OF THE AMOUNT WAS TAXED IN TH E HANDS OF HIS BROTHER. 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, YEAR-WISE DETAILS OF EACH BANK WITH THE RESPECTIVE PEAK AMOUNT WERE DISCUSSED AND THE ASSESSEE HAD SUBMITTED HIS VERSIO N AS UNDER: 5. BEFORE ME IT WAS SUBMITTED THAT THE BANK PASSBO OKS / CHEQUE BOOKS FOUND WITH THE ASSESSEE / HIS BROTHER, BELONGED TO CLOSE FRIENDS AND / OR CLOSE RELATIVES, WHO WERE ALL NRIS AND IN FACT, EXCEPT FO R TWO OF THEM, HELD UK AND CANADIAN CITIZENSHIP. THEY HAD DEPOSITED THEIR FUND S IN THEIR NRE BANK 'ACCOUNTS, FROM THEIR OWN INCOME, THROUGH BANKING C HANNELS, FROM ABROAD, DIRECTLY IN THE RELATED BANK ACCOUNT(S). THEY HAD G IVEN THEIR PASSBOOKS / CHEQUE BOOKS TO THE APPELLANT / HIS BROTHER FOR SAF E KEEPING AND TO ISSUE CHEQUES, MOSTLY FOR CHARITY IN INDIA AND FOR THEIR PERSONAL USE AT THE TIME OF THEIR ANNUAL VISIT TO INDIA. THE BANK ACCOUNTS WERE OPENED BY THESE INDIVIDUALS ONLY AND WERE OPERATED UNDER THEIR SIGN ATURES. NO POWER OF ATTORNEY HAD BEEN GIVEN TO THE APPELLANT / HIS BROT HER. THE AO HAD NOT ISSUED ANY SHOW CAUSE NOTICE BEFORE MAKING THE ADDITIONS, ELSE THESE FACTS COULD HAVE BEEN APPRAISED TO / ASCERTAINED BY HIM. THE AP PELLANT AND HIS BROTHER HAD NO CONNECTION WITH THE FUNDS IN BANK ACCOUNTS A ND ONLY ISSUED THEIR CHEQUES, ALREADY PRE-SIGNED BY THEM, ON THEIR INSTR UCTIONS. IT IS EVIDENT ALSO THAT ALL THESE BANK ACCOUNTS WERE NRJE A/CS IN WHIC H THE DEPOSIT COULD ONLY BE OF FOREIGN REMITTANCES OR FROM OTHER NRE/FCNR A/ C. THE INTEREST ON THIS ACCOUNTS WERE ALSO EXEMPTED. THE AO WITHOUT GOING I N TO THE DETAILS OR BRINGING ANY 'EVIDENCE ON RECORD, HAD WILDLY ALLEGE D THAT IT WAS THE APPELLANT / HIS BROTHER WHO HAD INTRODUCED THEIR UNACCOUNTED INCOME IN THESE BANK ACCOUNTS OF 'POOR AND GULLIBLE RELATIVES'. THE FACT S WERE TOTALLY, TO THE CONTRARY. THESE RELATIVES / CLOSE FRIENDS, LIVING A BROAD AND HAD GOT RICH ABROAD AND WERE NOW INTERESTED IN CHARITY FROM THEI R SUBSTANTIAL INCOME. THE SHRI MOHD. MOHSIN, HAD ALSO SPECIFIED THESE FACTS, IN HIS STATEMENT U/S.132(4) DATED 04/05-08-06, IN REPLY TO Q. NO. 8 & 9 AS UNDE R: 5. ANOTHER FACT HAS ALSO BEEN INFORMED TO LEARNED C IT(A) THAT A SUM OF RS.1.07 CRORE HAS ALREADY BEEN OFFERED IN THE HA NDS OF THE PARTNERSHIP IT(SS)A NO.249, 251, 252, 797 & 253, 254, 255 & 798 /AHD/2010 ACIT, AHMEDABAD VS. LATE SHRI MOHAMMED. MOHSIN RAJABALI DOSANI & SALIMABBAS RAJABALI DOSANI FOR A.YS. 2002-03 TO 2007-08 - 4 - FIRM M/S. BLACK DIAMOND TRADING COMPANY. FURTHER, I T WAS ALSO INFORMED THAT THE BANK ACCOUNTS WERE NRE ACCOUNTS; THEREFORE, THE DEPOSITS WERE MADE ONLY THROUGH FOREIGN INWARD PROC EDURE, I.E., FIT / FCNR. DETAILS OF THOSE BANKS HAVE BEEN FURNISHED BE FORE LEARNED CIT(A) AND IT WAS INFORMED THAT IN MOST OF THE ACCOUNTS NO T A SINGLE RUPEE WAS WITHDRAWN SINCE PAST FEW YEARS. AFTER CONSIDERING T HOSE FACTS LEARNED CIT(A) HAS HELD AS UNDER: 8. THE CONTENTIONS / DETAILS FILED AND ON RECORD W ERE CAREFULLY CONSIDERED. THE APPELLANT HAS FIELD COPIES OF THE CERTIFICATES OF THE CANARA BANK, BOMBAY MERC. CO. OP. BANK, WHICH SPECIFY THAT THESE WERE N RO/NRE ACCOUNTS AND HAVE ALSO DETAILED THE NATURE / SOURCE OF THE DEPOS ITS THEREIN. IT IS ALSO CERTIFIED THAT THE DEPOSITS IN THESE ACCOUNTS CAN B E MADE BY FOREIGN REMITTANCES / DRAFTS. SHRI MOHD. MOHSIN IN HIS STAT EMENT U/S. 132(4) HAD ALSO GIVEN DETAILS AND THE REASON FOR THE POSSESSION OF BANK PASSBOOKS / CHEQUE BOOKS. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECOR D TO THE CONTRARY AND TO REFUTE THE EXPLANATION / DETAILS, AS REPRODUCED IN PARA - 5 & 7 OF THIS ORDER. THE REMARK OF THE AO THAT THE ASSESSEE WAS MANIPULA TING BANK ACCOUNTS OF HIS POOR AND GULLIBLE RELATIVES' IS THEREFORE A CO NJECTURE. ADDITIONS MADE ON SUCH ISSUES HAVE NO SANCTITY / BASIS AND CANNOT BE SUSTAINED. THESE ADDITIONS ARE THEREFORE BE DELETED, IN RESPECT OF ALL THE AFO REMENTIONED ASSESSMENT YEARS IN APPEAL. THE RELATED GROUNDS OF THE APPEAL ARE TH EREFORE ALLOWED. 6. FROM THE SIDE OF THE REVENUE, LEARNED CIT-DR, MR . SUBHASH BAINS APPEARED AND PLEADED THAT IN VIEW OF THE PROV ISIONS OF SECTION 132(4A), THE STATEMENT OF BANK ACCOUNTS WERE RECOVE RED FROM THE POSSESSION OF THE ASSESSEE. THEREFORE, THE PRESUMPT ION IS THAT ALL THOSE BANK ACCOUNTS BELONGED TO THE ASSESSEE. THE ASSESSE E WAS IN CONTROL OF THOSE ACCOUNTS; HENCE, THE CREDIT ENTRIES IN THOSE ACCOUNTS WERE NOTHING BUT THE UNEXPLAINED MONEY OF THE ASSESSEE. HE HAS P LACED RELIANCE ON THE FINDINGS OF THE AO THAT THE PERSONS WERE NOT HAVING GOOD FINANCIAL STATUS IN INDIA; THEREFORE, LEFT THE COUNTRY FOR SEEKING J OB ABROAD. IN THAT SITUATION, IT WAS WRONG ON THE PART OF THE ASSESSEE TO MAKE A STORY THAT THE ACCOUNT WERE IN HIS POSSESSION TO DO CHARITY WORK O N THEIR BEHALF. IT(SS)A NO.249, 251, 252, 797 & 253, 254, 255 & 798 /AHD/2010 ACIT, AHMEDABAD VS. LATE SHRI MOHAMMED. MOHSIN RAJABALI DOSANI & SALIMABBAS RAJABALI DOSANI FOR A.YS. 2002-03 TO 2007-08 - 5 - 7. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LEARNE D AR, MR. TUSHAR P. HEMANI APPEARED AND SUPPORTED THE ORDER OF THE L EARNED CIT(A). HE HAS INFORMED THAT THE BANK HAS GIVEN CERTIFICATE TH AT THE ACCOUNTS IN QUESTION WERE AN NRE ACCOUNT AND ONLY THROUGH FOREI GN EXCHANGE THE AMOUNT WAS CREDITED. HE HAS ARGUED THAT THE REVENUE DEPARTMENT WAS UNABLE TO ESTABLISH THAT ANY BENEFIT WAS OBTAINED B Y THE ASSESSEE FROM THOSE ACCOUNTS. A STATEMENT WAS RECORDED BY THE ASS ESSEE AT THE TIME OF SEARCH AND THAT STATEMENT WAS TRUE AND CORRECT, WHE REIN HE HAS INFORMED THE REASON OF HAVING THOSE BANK ACCOUNTS AND THAT T HOSE BANK ACCOUNTS BELONGED TO ALL THOSE PERSONS IN WHOSE NAMES THE BA NK ACCOUNTS HAVE BEEN OPENED. THE FUNDS IN THOSE ACCOUNTS WERE FOR C HARITY PURPOSE ONLY, HE HAD STATED. THE ARGUMENT OF LEARNED AR WAS THAT A STATEMENT RECORDED U/S.132(4) IS HELD BY VARIOUS COURTS AS TRUE AND CO RRECT. FURTHER, HE HAS CONTENDED THAT IN AN NRE ACCOUNT NO INDIAN RUPEE CA N BE CREDITED BUT ONLY FOREIGN CURRENCY CAN BE DEPOSITED, THEREFORE, THE AMOUNTS DEPOSITED BELONGED TO THOSE PERSONS AND NOT TO THE ASSESSEE. THEREFORE, NO POWER OF ATTORNEY IN THE NAME OF THE ASSESSEE WAS FOUND SO A S TO PRESUME THAT THE ACCOUNT HOLDERS WERE THE BENAMI HOLDERS OF THE ASSE SSEE. 8. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE CAREFULLY PERUSED THE ORDER OF THE AUTHORITIES BELOW AND IN T HE LIGHT OF THE COMPILATION FILED BEFORE US. THE COMPILATION CONTAI NED THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SEARCH, THE SU MMARY OF THE NRE ACCOUNTS, THE NAMES AND ADDRESSES OF THE NRI HOLDIN G THE BANK ACCOUNTS, THEIR PASSPORT NUMBERS, THEIR RESPECTIVE DECLARATIO NS AND THEIR RELATIONSHIP WITH THE ASSESSEE. ON THE BASIS OF ALL THOSE EVIDENCES, ONE IT(SS)A NO.249, 251, 252, 797 & 253, 254, 255 & 798 /AHD/2010 ACIT, AHMEDABAD VS. LATE SHRI MOHAMMED. MOHSIN RAJABALI DOSANI & SALIMABBAS RAJABALI DOSANI FOR A.YS. 2002-03 TO 2007-08 - 6 - THING HAS EMERGED UNDISPUTEDLY THAT THE ACCOUNTS SE IZED AT THE TIME OF SEARCH WERE NRE ACCOUNTS. AS A MATTER OF FACT, A NO N-RESIDENT EXTERNAL ACCOUNT CAN BE FUNDED ONLY WITH FOREIGN CURRENCY IN WARD REMITTANCE THROUGH FCNR PROCEDURE. THE FOREIGN CURRENCY NON-RE SIDENT ACCOUNT FCNR CAN BE FUNDED THROUGH FOREIGN REMITTANCE INW ARD HELD BY NON- RESIDENT. SINCE INCEPTION WHEN THE RAID WAS CONDUCT ED, THE ASSESSEES STAND WAS THAT THE PURPOSE OF HAVING ALL THOSE ACCO UNTS WAS TO ISSUE PRE- SIGNED CHEQUES FOR CHARITY. IT WAS CATEGORICALLY ST ATED THAT THE ASSESSEE AND HIS BROTHER HAD NO CONNECTION WITH THOSE BANK A CCOUNTS; HENCE, THEY HAVE NOT DERIVED ANY BENEFITS FROM THOSE ACCOUNTS. WE HAVE NOTED THAT THE REVENUE DEPARTMENT HAS NOT ESTABLISHED ANY NEXU S OF THOSE ACCOUNTS WITH THE BUSINESS ACTIVITY OF THE ASSESSEE. THIS FA CT HAS ALSO NOT BEEN DENIED THAT THE ONLY FOREIGN REMITTANCE WAS PERMISS IBLE TO TRANSFER THE FUNDS IN NRE ACCOUNT. CONSIDERING THE TOTALITY OF T HE FACTS AND CIRCUMSTANCES OF THE CASE AND THE EVIDENCES PLACED ON RECORD AS WELL AS THE EXPLANATION OF THE ASSESSEE FURNISHED BEFORE TH E REVENUE AUTHORITIES, WE HEREBY HOLD THAT LEARNED CIT(A) WAS RIGHT IN HOL DING THAT THE ADDITION WAS MERELY ON A CONJECTURE THAT THE BANK ACCOUNTS B ELONGED TO POOR AND GULLIBLE RELATIVES OF THE ASSESSEE, WE THEREFORE U PHOLD THE DELETION AND DISMISS THE GROUNDS OF THE REVENUE IN RESPECT OF BO TH THE GROUP OF CASES FOR EACH YEAR. RESULTANTLY, GROUNDS ARE DISMISSED. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. SD/- SD/- (ANIL CHATURVEDI) (MUK UL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/07/2014 PRABHAT KR. KESARWANI, SR. P.S. IT(SS)A NO.249, 251, 252, 797 & 253, 254, 255 & 798 /AHD/2010 ACIT, AHMEDABAD VS. LATE SHRI MOHAMMED. MOHSIN RAJABALI DOSANI & SALIMABBAS RAJABALI DOSANI FOR A.YS. 2002-03 TO 2007-08 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD