Anil Vijaykumar Kotecha, Jalgaon V. Assistan Commissioner Of Income Tax Central Circle 1, Nashik, Nashik

ITSSA 40/PUN/2022

AI Insights

The case involves Anil Vijaykumar Kotecha, who appealed against the order of the CIT(A)-12, Pune, which confirmed an addition of Rs.15,40,560 to his income for the assessment year 2011-12. This addition was part of a larger addition of Rs.20,40,560 made by the Assessing Officer (AO) towards the opening capital of the assessee, assessed under 'Income from other sources'. The AO's addition was based on the discrepancy between the assessee's reported income in previous years and the opening capital reported for the year in question. The CIT(A) reduced the addition by Rs.5,00,000 after a remand report from the AO, but sustained the remaining addition. The Tribunal, after considering the assessee's income and reasonable withdrawals, accepted an additional Rs.5,00,000 as genuine capital, thus partly allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137744 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 02-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 26-05-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / IT(SS)A. No.40/PUN/2022 नधा रण वष / Assessment Year : 2011-12 Anil Vijaykumar Kotecha, 4, Teachers Colony, Ring Road, Jalgaon – 425 001 Maharashtra PAN : ANWPK3816B Vs. ACIT, Central-1, Nashik Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT(A)-12, Pune on 31-03-2022 in relation to the assessment year 2011-12. 2. The only issue pressed by the ld. AR is the confirmation of addition of Rs.15,40,560/- out of the addition made by the Assessing Officer (AO) towards opening capital at Rs.20,40,560/- 3. Briefly stated, the facts of the case are that a search and seizure action was taken on Kotecha group of cases of Jalgaon on Assessee by Shri Kishor B. Phadke Revenue by Shri Keyur Patel Date of hearing 03-04-2023 Date of pronouncement 10-04-2023 IT(SS)A No.40/PUN/2022 Anil Vijaykumar Kotecha 2 09-08-2011. As a part of this search action, the residential premises of the assessee was also searched. Based on that, notice u/s.153A of the Act was issued and the assessment for the year under consideration was finalized u/s.144 r.w.s.153A by making an addition, inter alia, of Rs.20,40,560/- towards opening capital shown by the assessee, which was assessed by the AO under the head ‘Income from other sources’. In reaching this conclusion about taxability of the opening capital, the AO noticed that the assessee had credited salary of Rs.4,20,000/- and certain other small amounts towards the interest and commission. He took note of the assessee’s gross total income from assessment years 2006-07 to 2009-10 totaling to Rs.6,72,198/- (Rs.1,08,300/- for the A.Y. 2006-07; Rs.1,33,904/- for the A.Y. 2007-08; Rs.1,19,000/- for the A.Y. 2008-09; Rs.3,10,994/- for the A.Y. 2009-10). Since the level of income was abysmally low during such years, the AO inferred that no income was left for carry forward so as to form opening balance of capital for the year under consideration. Addition for such an amount was made. The ld. CIT(A) called for a remand report from the AO. On the basis of such remand report and other connecting material, the ld. IT(SS)A No.40/PUN/2022 Anil Vijaykumar Kotecha 3 CIT(A) allowed relief of Rs.5.00 lakh and sustained the addition at Rs.15,40,560/-, against which the assessee has come up in appeal before the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. It can be seen from the income offered by the assessee for the A.Y. 2006-07 onwards, as recorded in the assessment order, that level of income shown is too low. Cash Flow statement has also been provided at page 24 of the paper book for the A.Yrs. 2006-07 to 2010-11. The opening capital for the F.Y. 2005-06 is shown at Rs.10,50,833/- which has gradually swelled to Rs.14,91,787/- as on 01-04-2009 and Rs.20,40,560/- as on 31-03-2010, which is opening capital for the year under consideration. Level of profits declared by the assessee and the corresponding withdrawals and payments towards LIC during such years do not inspire much confidence of savings so as to justify the level of opening capital claimed by the assessee to that extent. However, it is pertinent to note that the AO as well as the ld. CIT(A) considered the assessee’s profits for the assessment years 2006-07 to 2009-10 and on that basis the ld. CIT(A) allowed relief of Rs.5.00 lakh by treating such amount as IT(SS)A No.40/PUN/2022 Anil Vijaykumar Kotecha 4 genuine capital. The assessee’s income for the immediately preceding year 2010-11 returned at Rs.6,46,880/- has not been taken into consideration. Considering a reasonable amount of withdrawals, we accept the genuineness of the availability of capital from such profit as forming part of the opening capital by a further sum of Rs.5.00 lakh, making total opening capital accepted as genuine at Rs.10.00 lakh with the unexplained opening capital at Rs.10,40,560/-. The impugned order is modified to this extent. 5. In the result, the appeal is partly allowed. Order pronounced in the Open Court on 10 th April, 2023. Sd/- Sd/- ( S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 10 th April, 2023 सतीश IT(SS)A No.40/PUN/2022 Anil Vijaykumar Kotecha 5 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent 3. 4. 5. The Pr.CIT (Central), Nagpur DR, ITAT, ‘A’ Bench, Pune गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 03-04-2023 Sr.PS 2. Draft placed before author 10-04-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *