Shakil Zakaria Menon, Baroda V. The ACIT, Circle- 1(2), Baroda

ITSSA 393/AHD/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3624 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income
• Section: 143(3); 153A

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM AND SHRI PRADIP KUMAR KEDIA, AM SL NO. IT(SS) NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 393/AHD/2014 2005-06 SHAKIL ZAKARIA MENON,201, SHERN CHAMBERS HATHI KHANA, BARODA-390006 PAN: ADWPM5196N THE ACIT CIRCLE- 1(2), BARODA 2. 394/AHD/2014 2006-07 -DO- (ASSESSEE) -DO- (REVENUE) 3. 395/AHD/2014 2007-08 -DO- (ASSESSEE) -DO- (REVENUE) 4. 396/AHD/2014 2008-09 -DO- (ASSESSEE) -DO- (REVENUE) 5. 397/AHD/2014 2010-11 -DO- (ASSESSEE) -DO- (REVENUE) 6. 296/AHD/2015 2005-06 -DO- (ASSESSEE) -DO- (REVENUE) 7. 297/AHD/2015 2006-07 -DO- (ASSESSEE) -DO- (REVENUE) 8. 298/AHD/2015 2007-08 -DO- (ASSESSEE) -DO- (REVENUE) 9. 299/AHD/2015 2008-09 -DO- (ASSESSEE) -DO- (REVENUE) 10. 300/AHD/2015 2010-11 -DO- (ASSESSEE) -DO- (REVENUE) 11. ITA NO. 3280/AHD/2014 2011-12 -DO- (ASSESSEE) -DO- (REVENUE) 12. ITA NO. 3640/AHD/2015 2011-12 -DO- (ASSESSEE) -DO- (REVENUE) / APPELLANT BY: SHRI SURENDRA MODIANI, A.R. / RESPONDENT BY: SHRI ABANA M. AGRAWAL, SR. D.R / DATE OF HEARING 31/01/2018 /DATE OF PRONOUNCEMENT 12 /02/2018 IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 2 / O R D E R PER BENCH THE CAPTAINED APPEALS HAVE BEEN FILED BY THE ASSE SSEE AGAINST THE RESPECTIVE APPELLATE ORDERS OF THE CIT(A) ARISING I N THE ASSESSMENT FRAMED UNDER SECTION 153A R.W.S. 143(3) AND PENALTY IMPOSE D BY THE A.O UNDER SECTION 271(1)(C) OF THE ACT CONCERNING VARIOUS ASS ESSMENTS YEARS LISTED ABOVE. 2. ALL THE APPEALS ARE STATED TO BE INTER CONNECTED AND INVOLVING SIMILAR ISSUES SPANNING OVER VARIOUS ASSESSMENT YEARS IN AP PEAL AS CAPTAINED. THEREFORE, ALL THE APPEALS HAVE BEEN HEARD TOGETHER AND BEING DISPOSED OFF BY COMMON ORDER. 3. WE SHALL FIRST TAKE UP APPEAL OF THE ASSESSEE IN IT(SS) NO. 393/AHD/2014 CONCERNING ASSESSMENT YEAR 2005-06 AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-1 BARODA (C IT(A) IN SHORT) DATED 16.09.2014 ARISING IN THE ASSESSMENT ORDER PA SSED UNDER SECTION 153A R.W.S. 143(3) OF THE ACT. 3.1 IN ITS APPEAL, THE ASSESSEE HAS RAISED TO FOLD GRIEVANCES NAMELY (I) ADDITION OF RS. 14,779/- ON ACCOUNT OF HOUSE HOLD E XPENSES AND (II) ADDITION OF RS. 2,47,972/- TOWARDS PAYMENT ON PURCH ASE OF SHARES ALLEGEDLY FROM UNDISCLOSED SOURCES. IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 3 3.2 WHEN THE MATTER WAS CALLED FOR HEARING THE LD. AUTHORISED REPRESENTATIVE ASSAILED THE ACTION OF THE AO FOR AD DITIONS MADE ON BOTH THE COUNTS. AS REGARDS ADDITION OF RS. 14,779/- ON ACCOUNT OF HOUSE HOLD EXPENSES FROM UNDISCLOSED SOURCES, THE LD. AUTHORIS ED REPRESENTATIVE SUBMITTED THAT THE HOUSE HOLD EXPENSES OF RS. 1,20, 000/- HAS BEEN INCURRED OUT OF SALARY INCOME OF RS. 1,05,221/- AND PAST SAV INGS. AS REGARDS ADDITION OF RS. 2,47,972/- TOWARDS PURCHASE OF SHARES FROM U NDISCLOSED SOURCES. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE INTER ALIA PURCHASED 57688 NO. SHARES OF LIBERTY PHOSPHET LTD. WHICH IS A CONNECTED COMPANY @ 4.30 PER SHARE APPROXIMATELY. THE SHARES WERE DEL IVERED TO THE ASSESSEE IN ITS DEMAT ACCOUNT ON 30.03.2005. THE SOURCE OF S UCH PURCHASE IS OUT OF BORROWED FUNDS OF RS. 12,62,929/- RECEIVED FROM A L ENDER AT A LATER DATE ON 18.06.2005. THE LD. AUTHORISED REPRESENTATIVE SUBMI TTED THAT WHILE THE PURCHASE WAS CARRIED OUT IN FINANCIAL YEAR 2004-05 THE PAYMENT WAS MADE IN FINANCIAL YEAR 2005-06, AND THEREFORE THE CIT(A) HAS WRONGLY APPRECIATED THE FACTS AND WRONGLY OBSERVED THAT THE PAYMENT WAS MADE AFTER NINE YEARS WHICH IS NOT TRUE AND A MISAPPRECI ATION OF FACTS. THE SOURCE OF PURCHASE THUS CANNOT BE LABELED AS OUT OF UNDISC LOSED SOURCES. 3.3 THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF THE CIT(A). 3.4 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN SO FAR AS ADDIT ION ON ACCOUNT OF HOUSE HOLD EXPENSES ARE CONCERNED, THE AO HAS TREATED THE DIFFERENTIAL BETWEEN IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 4 THE SALARY INCOME AND HOUSE HOLD EXPENSES TO BE THE EXPENSES OUT OF UNDISCLOSED SOURCES. WE DO NOT FIND ANY FACT ON REC ORD TO DISPROVE THE CASE OF THE REVENUE. THE ONUS WAS ON THE ASSESSEE TO EST ABLISH THE SOURCE OF THE EXPENSES. THE ASSESSEE, ON THE ONE HAND, IS SHOWING MEAGER INCOME AND CLAIMING THE ENTIRE SALARY INCOME MEETING OUT HOUSE HOLD EXPENSES AND, ON THE OTHER HAND, ACQUIRE THE LARGE QUANTITY OF SHARE S ETC. IT IS ALSO NOT KNOW, AS TO WHAT IS THE EXACT INFLOW OF SALARY DURING THE YEAR. IN THESE CIRCUMSTANCES, WE DO NOT SEE ANY GOOD REASON TO INT ERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. 3.5 IN THE RESULT GROUND NO. 1 OF ASSESSEE APPEAL I S DISMISSED. 3.6. AS REGARDS SECOND GRIEVANCE OF THE ASSESSEE, W E FIND SOME MERIT IN THE ARGUMENTS ON BEHALF OF THE ASSESSEE. THE SHARES RECEIVED IN THE DEMAT ACCOUNT TOWARDS PURCHASE WILL NOT AUTOMATICALLY GIV E AN INFERENCE THAT PAYMENT THEREOF HAS BEEN NECESSARILY MADE PRIOR TO SUCH PURCHASE. IN THE ABSENCE OF ANYTHING TO THE CONTRARY, IT IS OPEN TO THE ASSESSEE TO CLAIM THAT PAYMENT HAS BEEN MADE LATER TO THE SELLER (CONNECTE D COMPANY) FOR ACQUISITION OF SHARES. IT IS NOTICED THAT CIT(A) HA S CONFIRMED THE ACTION OF THE AO ON THE WRONG PREMISE THAT THE PAYMENT HAS BE EN MADE AFTER A GAP OF NINE YEARS. THE ASSESSEE HAS DISLODGED THIS APPR ECIATION OF FACT AS ERRONEOUS. THE GAP BETWEEN THE PURCHASE AND PAYMENT IS NOT SIGNIFICANT AS INCORRECTLY MADE OUT BY THE CIT(A). IN THESE CIRCUM STANCES, THE PLEA OF THE ASSESSEE THAT PAYMENT TOWARDS PURCHASE HAVE BEEN MA DE OUT OF BORROWED FUNDS OBTAINED SUBSEQUENTLY CANNOT BE BRUSHED ASIDE . THE BENEFIT OF DOUBT IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 5 DESERVES TO GO IN FAVOUR OF THE ASSESSEE. IN THE RE SULT THE ASSESSEE SUCCEEDS IN SEEKING RELIEF TOWARDS ADDITION OF UNDISCLOSED I NCOME OF RS. 2,47,972/-. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IN IT(SS) NO. 393/AHD/2014 IS PARTLY ALLOWED. 5. WE SHALL NOW TURN TO APPEAL IN IT(SS) NO. 394/AH D/2014 RELEVANT A.Y. 2006-07. THE ASSESSEE HAS RAISED TWO FOLD GRIE VANCES (I) ADDITION OF RS. 39,223/- ON ACCOUNT OF HOUSE HOLD EXPENSES AND (II) ADDITION OF RS. 1,45,000/- BEING CASH DEPOSITS IN BANK ALLEGEDLY OU T OF UNDISCLOSED SOURCES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE ISSUE S INVOLVED AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MAT ERIAL PLACED BEFORE US. THE CLAIM OF THE ASSESSEE THAT IT HAS MAINTAINED TW O DIFFERENT BANK ACCOUNTS AND SALARY RECEIVED IN ONE BANK ACCOUNT WA S WITHDRAWN AND RE- DEPOSITED IN OTHER BANK ACCOUNTS. IT WAS THUS CLAIM ED THAT THE CASH DEPOSITS ALLEGED TO BE FROM UNDISCLOSED SOURCES IS UNTRUE. T HE ASSESSEE HAS FILED SOME DOCUMENTS TO ESTABLISH THE INTER CONNECTION BE TWEEN THE CASH WITHDRAWAL FROM ONE BANK ACCOUNT AND RE-DEPOSIT IN OTHER BANK ACCOUNTS. THE PLEA OF THE ASSESSEE REQUIRES FACTUAL VERIFICAT ION. WE ARE UNABLE TO APPRECIATE THE FACTS EITHER WAY IN THE ABSENCE OF C OMPLETE WORKING IN THIS REGARD. THEREFORE, WE CONSIDER IT JUST AND EXPEDIEN T TO RESTORE BOTH THE ISSUES BACK TO THE FILE OF THE AO FOR RE-EXAMINATIO N OF FACTUAL ASPECTS DE NOVO IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THE ASSES SEE SHALL BE GRANTED REASONABLE OPPORTUNITY TO EXPLAIN THE SOURCE OF CAS H DEPOSITS AS WELL AS IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 6 CORRECTNESS OF SOURCE OF HOUSE HOLD EXPENSES. ACCOR DINGLY, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. BOTH THE SIDES FAIRLY AGREED THAT APPEAL IN IT(S S) NO. 395/AHD/2014 (A.Y. 2007-08), IT(SS) NO. 396/AHD/2014 (A.Y. 2008- 09), & IT(SS) NO. 397/AHD/2014 (A.Y. 2010-11) & ITA NO. 3280/AHD/2014 (A.Y.) 2011-12) INVOLVES ADDITIONS IN THE SIMILAR BACKDROP. THEREFO RE, IN PARITY, WE CONSIDER IT EXPEDIENT TO SET ASIDE THE ORDER OF TH E CIT(A) IN LINE WITH OUR FINDINGS IN IT(SS) NO. 394/AHD/2014 (A.Y. 2006-07) AND RESTORE THE ISSUE BACK TO THE FILE OF A.O FOR RE-DETERMINATION OF ISS UE INVOLVED AFTER ANALYSIS & VERIFICATION OF FACTS. WHILE DOING SO, PROPER OPP ORTUNITY IS EXPECTED TO BE GIVEN TO THE ASSESSEE. 8. IN THE RESULT APPEAL IN IT(SS) NO. 394/AHD/2014 ,395/AHD/2014,396/AHD/2014, 397/AHD/2014 & 3280/AHD /2014 ARE ALLOWED FOR STATISTICAL PURPOSES. 9. NOW WE SHALL TURN TO IT(SS) NO. 297/AHD/2015, 29 8/AHD/2015, 299/AHD/2015, 300/AHD/2015 & ITA NO. 3640/AHD/2015 CAPTAINED ABOVE. ALL THESE APPEALS CONCERN IMPOSITION OF PENALTY UND ER SECTION 271(1)(C) OF THE ACT AS A CONSEQUENT OF QUANTUM ASSESSMENTS FRA MED AS APPEALS AGAINST IN VARIOUS ASSESSMENT YEARS (SUPRA). SINCE THE QUANTUM APPEAL RELATING TO ASSESSMENT YEARS 2006-07,2007-08,2008-09,2010-11 & 2011-12 HAVE BEEN SET ASIDE FOR DE NOVO ADJUDICATION AT THE END OF THE A.O, THE CONSEQUENT IAL PENALTY FLOWING FROM THE QUANTUM ORDER REQUIRES TO BE DELETED. HOWEVER, IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 7 THE A.O SHALL HAVE THE LIBERTY TO CONSIDER IMPOSITI ON OF PENALTY UNDER SECTION 271(1)(C) AFRESH IN ACCORDANCE WITH LAW CON SEQUENT UPON THE QUANTUM ORDER TO BE RE-FRAMED AS PER THE DIRECTIONS NOTED ABOVE. 10. THEREFORE APPEAL IN IT(SS) NO. 297/AHD/2015, 29 8/AHD/2015, 299/AHD/2015, 300/AHD/2015 & ITA NO. 3640/AHD/2015 ARE ALLOWED FOR STATISTICAL PURPOSES. 11. THIS LEAVES US WITH PENALTY APPEAL IN IT(SS) NO . 296/AHD/2015 RELEVANT TO A.Y 2005-06. THE PENALTY HAS BEEN IMPOS ED AS A CONSEQUENCE OF ADDITION TOWARDS HOUSE HOLD EXPENSES ALLEGEDLY O UT OF UNDISCLOSED SOURCES AND TOWARDS PAYMENT ON ACCOUNT OF PURCHASE OF SHARES ASSUMED TO BE OUT OF UNDISCLOSED SOURCES. IN SO FAR AS THE ADD ITION ON ACCOUNT OF HOUSE HOLD EXPENSES, WE FIND THAT THE ADDITION MADE IS ES TIMATED AND VERY SMALL DOES NOT CALL FOR STRICTER PENALTY FOR SUCH ADDITIO N. AS REGARDS ADDITION ON ACCOUNT OF UNDISCLOSED SOURCES TOWARDS PURCHASE OF SHARES, THE QUANTUM ADDITION ITSELF HAS BEEN DELETED AND THEREFORE THE PENALTY DOES NOT SURVIVE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IN IT(SS) NO. 296/AHD/2015 IS ALLOWED. 13. IN THE COMBINED RESULT, (I) IT(SS) NO. 393/AHD/ 2014 IS PARTLY ALLOWED. (II) IT(SS) NOS. 394,395,396,397/AHD/2014 ARE ALLOWED FOR STATISTICAL PURPOSES. (III) IT(SS) NO. 296/AHD/2015 IS ALLOWED. (IV) IT(SS) IT(SS) NO.393 TO 397/AHD/14, 296 TO 300/AHD/2015 & 3280/AHD/14, 3640/AHD/15 SHAKIL ZAKARIA MENON VS. ACIT CIRCLE-1(2) A.YRS. 2005-06,2007-08,2008-09, 2010-11 & 2011-12 - 8 NOS. 297,298,299,300/AHD/2015 & ITA NOS 3280/AHD/2 014, 3640/AHD/2015 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 12/02/ 2018 AT AH MEDABAD. SD/- SD/ (RAJPAL YADAV) JUDICIAL MEMBER MUKUL (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER DATED, 12/02/2018 / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #!' / THE RESPONDENT. 3. $%% & ' / CONCERNED CIT 4. & ' ( ) / THE CIT(A)- 5. *+, - , , /DR,ITAT, AHMEDABAD. 6. ,/0 12 / GUARD FILE. - & $ / BY ORDER, $ %3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD