Shri Ismailbhai Savadibhai Hira, Ahmedabad V. The Dy. CIT, Central Circle-2(2), Ahmedabad

ITSSA 455/AHD/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3826 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 69; 132; 69A; 153C

Judgement Text

IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 1 of 10 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 Assessment Years: 2009-10, 2010-11, 2011-12 & 2014-15 respectively Shri Ismailbhai Savadibhai Hira, vs. Dy. Commissioner of Income Tax Emerald Residency-2, Central Circle – 2(2), 103, First Floor, Ahmedabad. Kandivad, Ellisbridge, Ahmedabad – 380 006. [PAN: ABGPH 0488 J] (Appellant) (Respondent) Appellant by : Shri Pritesh Shah, A.R. Respondent by : Shri Rajesh Kumar, CIT D.R. Date of hearing : 11.04.2022 Date of pronouncement : 24.06.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : These four appeals pertain to the same assessee, involve some common issues, are filed against different orders, all dated 17.10.2017, passed by the CIT(A)- 12, Ahmedabad for assessment years 2009-10, 2010-11, 2011-12 & 2014-15, and were heard together. As a matter of convenience, therefore, all these four appeals are being disposed of by way of this consolidated order. 2. The grounds of appeals raised by the assessee are as under : IT(SS)A No.454/Ahd/2017 - A.Y. 2009-10 1. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.1,05,338/- [Rs.1,00,000 + Rs.5,338/- (Rs.16,902-Rs.11,564/-)] as unexplained income under section 68 of Income Tax Act, 1961, such addition is requested to be deleted. IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 2 of 10 2. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.5,51,003/- (Rs.2,51,000 + Rs.3,00,000 + Rs.3/-) considering cash and clearing deposit as unexplained income under section 68 of Income Tax Act, 1961, such addition is requested to be deleted. 3. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.5,30,180/- as unexplained investment under section 69 of Income Tax Act, 1961, such addition is requested to be deleted.” IT(SS)A No.455/Ahd/2017 – A.Y. 2010-11 1. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.13,337/- as unexplained income, such addition is requested to be deleted. 2. The learned CIT(A) erred in law and on facts in confirming the addition of cash deposited to bank made by AO amounting to Rs.20,35,153/- as unexplained income under section 68 of Income Tax Act, 1961, such addition is requested to be deleted.” IT(SS)A No.456/Ahd/2017 – A.Y. 2011-12 1. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.53,756/- as unexplained income under section 68 of Income Tax Act, 1961, such addition is requested to be deleted. 2. The learned CIT(A) erred in law and on facts in confirming the addition of cash deposited to bank made by AO amounting to Rs.10,89,687/- as unexplained income under section 68 of the Income Tax Act, 1961, such addition is requested to be deleted. 3. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.2,000/- as unexplained investment under section 69 of Income Tax Act, 1961, such addition is requested to be deleted.” IT(SS)A No.457/Ahd/2017 – A.Y. 2014-15 1. The learned CIT(A) erred in law and on facts in confirming the addition made by AO amounting to Rs.8,290/- as unexplained income, such addition is requested to be deleted. IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 3 of 10 2. The learned CIT(A) erred in law and on facts in confirming the addition of cash deposited to bank made by AO amounting to Rs.5,50,246/- as unexplained income, such addition is requested to be deleted.” 3. We are taking up the appeal filed by the assessee for the Assessment Year 2009-10 i.e. IT(SS)A No.454/Ahd/2017 as the factual aspects and the issue raised by the assessee are similar in all the other years as well. A search operation under Section 132 of the Income Tax Act, 1961 was carried out in the case of Shri Vikas A. Shah on 03.01.2013 at his residence where certain incriminating materials /documents as per Annexure-X belonging to Shri Ismail S. Hira were found and seized. Subsequently, in response to notice under Section 153C the assessee filed the return of income for the A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15. The reasons for issue of notices were duly recorded by the Assessing Officer. The submissions made by the Ld. AR in response to notices under Section 142(2) and 152(1) were examined by the Assessing Officer and assessment was completed. The total income of the assessee was assessed as under :- Amount (Rs.) Total income as per return 45,055 Add: Addition u/s 68 of the I.T. Act on account of unexplained income (as per para 3 of the assessment order) 1,16,902 Addition u/s 68 of the IT Act on account of unexplained investment (as per para 4 of the assessment order) 5,51,003 Addition u/s 69 of the I.T. Act on account of unexplained investment (as per para 5 of the assessment order) 5,30,180 Assessed Income 12,43,140 Assessed income (rounded off) 12,43,140 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. Ld. AR during the course of hearing submitted that the assessee was a teacher and took voluntary retirement in 1992 and was receiving pension. Ld. A.R. submitted that the assessee did not maintain any books of account. Ld. AR further submitted that the assessee was associated with Shri Vikas A. Shah as working Director in M/s. Red Carpet Resorts Pvt. Ltd. which is now closed. The Ld. AR submitted that materials/documents found during the course of search from Shri Vikas A. Shah were IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 4 of 10 related to assessee’s business association in M/s. Red Carpet Resorts Pvt. Ltd. and, therefore, the same cannot be taken into account against the assessee as an individual. Thus, the Ld. AR submitted that the proceedings under Section 153C of the Act against the assessee was void and should be cancelled. 6. As regards ground no.1, the Ld. AR submitted that the Assessing Officer has seen the entry in the Bank of India Saving account and the statement dated 21.04.2008 clearly mentions credit of Rs.1,00,000/- by cheque and the same was added to the income of the assessee under Section 68 of the Act. Ld. AR submitted that the amount was receive through account payee banking channel and thus cannot be treated as cash credits. Without prejudice to the contentions, the Ld. AR further submitted that the Assessing Officer has applied Section 68 inspite of the fact that the assessment order does not reveal any maintenance of books of account and verification of the same by the Assessing Officer. When the Assessing Officer does not have proof about the maintenance of books of account, then any addition made under Section 68 of the Act becomes void ab initio. The Ld. AR relied upon the following decisions: i) Smt. Babbal Bhatia vs. ITO ITA No. 5430 to 5432/Del/2017 (Del. Tri.) order dated 08.06.2018 ii) ITO vs. Kamal Kumar Mishra 143 ITD 686 (Luk. Tri.) iii) Manasi Pitkar vs. ITO 160 ITD 605 (Mum. Tri.) iv) Mehul V. Vyas vs. ITO 164 ITD 296 (mum. Tri.) v) Madhu Rani vs. ACIT 10 ITR (T) 91 (Gau. Tri.) vi) Shanta Devi vs. CIT 171 ITR 532 (P & H HC) vii) ITO vs. Shri Om Prakash Sharma (ITA 2256/Del/2009) (Del. Tri.) Order dated 13.05.2011 viii) CIT vs. Bhaichand H. Gandhi 141 ITR 67 (Bom. HC) ix) DCIT vs. GSNR Rice Industries Pvt. Ltd. (ITA Nos. 2407 to 2411/CHNY/2019 order dated 09.06.2021 Chn. Tri.) 7. The Ld. DR submitted that the contentions of the Ld. AR that Section 68 is not properly invoked is not just and proper. The Ld. DR submitted that the addition is based on the tangible material and hence Section 68 was rightly invoked by the Assessing Officer and the addition made in that respect is sustainable in law. The Ld. IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 5 of 10 DR submitted that the Assessing Officer has rightly made addition under Section 68 of the Act and the contention of the assessee that since no books of account were maintained Section 68 of the Act will not be applicable is an absurd argument. 8. We have heard both the parties and perused the relevant material available on record. The assessee’s contentions commonly is related to the invocation of Section 50A of the Act which is not proper as per contentions of the Ld. A.R. From the perusal of the records it can be seen that the assessee is not maintaining any books of account and the material/documents which was seized from Shri Vikas A. Shah was related to M/s. Red Carpet Resorts Pvt. Ltd. for which the assessee was the Director. If we go by Statute of Section 68 of the Act, it clearly mentions that wherein any sum is found credited in the books of the assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory, in the opinion of the Assessing Officer, then the said sum so credited may be charged to income tax as the income of the assessee of that previous year. In assessee’s case no books were maintained as per the contentions of the assessee. In fact, the Assessing Officer has also not set out whether M/s. Red Carpet Resorts Pvt. Ltd. and its books of account were properly investigated or not in the light of search. But merely no books were maintained cannot dilute invocation of Section 68 addition. Therefore, the contention of the Ld. AR that Section 68 cannot be invoked when books were not maintained does not sustain. The case laws submitted by the Ld. AR also set out the same and will not support the case of the assessee. Thus, this contention of the Ld. AR is rejected. Second argument of the Ld. AR was that of the un-abetted assessments. It is pertinent to note that the return was filed on 31.08.2015 declaring total income at Rs. 45,055/- under Section 153C of the Act. It is pertinent to note that search action under Section 132 was carried out in the case of Shri Vikas A. Shah on 03.01.2013 at his residence. As per the Assessing Officer certain incriminating material/documents were found. Subsequent to this, notice u/s 153C r.w.s. 153A(1)(a) of the Act was issued to the assessee on 27.02.2015. Thus, this contentions of the Ld. AR fails because of the observations made by us hereinabove. Hence, we reject this submission as well. Now coming to the merit of the case. It is pertinent to note that the assesse filed confirmation from M/s. Red Carpet Resorts Pvt. Ltd. which was on record before the Assessing Officer as well as before the CIT(A). The Assessee also filed the bank statements as well as the trial IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 6 of 10 balance sheet of the said party and the said amounts and the transactions were duly reflected. These aspects were totally ignored by the Assessing Officer as well as the CIT(A) while making/confirming the addition. Therefore, we find that on merit assesse succeeds. Thus, ground no.1 is allowed. 9. As regards ground no.2, the Ld. AR submitted that the assessee’s Syndicate Bank Savings account clearly shows the three credit entries in which the cash of Rs.1,000/- and Rs.2,50,000/- was deposited and Rs.3,00,000/- was deposited through cheque. The Ld. AR submitted that the addition was made in respect of total cash deposited i.e. Rs.2,51,000/-. The Bank of India Passbook of the assessee was already available with the Assessing Officer which reveals that the cash withdrawal of Rs.1,00,000/- from Bank of India Account on 24.04.2008, the assessee withdrawn this amount and kept with him for the propose of utilising in social service, giving temporary personal loans to needy persons who belong to his community. The Ld. AR further submitted that the assessee was keeping contact with him and giving the same amount to small and finically weak persons for one week or 10 days or for some months and, thereafter, once the period is over the said persons return the money to the assessee. Thus, the amount was deposited to the Bank after certain period of time. The Ld AR submitted that the Assessing Officer failed to give credit of this amount from the addition expenses, the fact that the source was very clear. Without prejudice to the contentions, the Ld. AR submitted that the Assessing Officer applied Section 68 of the Act inspite of non-maintenance of books of account. 10. The Ld. DR further submitted that the expenses for claim of withdrawal after deposit of unexplained cheque for social purposes has not been properly established by the assessee and thus the CIT(A) has rightly directed the Assessing Officer to verify and allow the relief to the extent of amount stand explained and balance amount unexplained to be treated as income under Section 69A of the Act. Ld. DR further submitted that the cash deposit was made after a very long period and the explanation offered by the assessee was not supported by evidence and hence addition of Rs.5,51,003/- was properly confirmed by the CIT(A). The Ld. DR further relied upon the assessment order and the order of the CIT(A). IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 7 of 10 11. We have heard both the parties and perused all the relevant material available on record. From perusal of the records, it can be seen that the cash deposits were never supported by any evidence by the assessee before the Assessing Officer as well as before the CIT(A). The CIT(A) has rightly held that the expenses for claim of withdrawal after deposit of unexplained cheque for social purposes has not been properly established by the assessee and thus the CIT(A) has rightly directed the Assessing Officer to verify and allow the relief to the extent of amount stand explained and balance amount unexplained to be treated as income under Section 69A of the Act. There is no need to interfere with the findings of the CIT(A). Ground No. 2 is dismissed. 12. As regards ground no.3, the Ld. AR submitted that the Assessing Officer contended /observed that the copy of trial balance of M/s. Red Carpet Resorts Pvt. Ltd. wherein as per the liability of security loan, a sum of Rs.8,30,180/- was reflected against the name of the assessee out of which the Assessing Officer granted relief of Rs.3 ,00,000/- which was reflected in the Syndicate Bank Account statement of the assessee, making the payment through account payee cheque. The source of payment made to M/s. Red Carpet Resorts Pvt. Ltd. and the balance of Rs.5,30,180/- was added by the Assessing Officer to the total income of the assessee. Ld. AR further submitted that the assessee already denied in the Assessment Order that the assessee has not given any money to M/s. Red Carpet Resorts Pvt. Ltd. before 16.09.2008. The Ld. AR further submitted that M/s. Red Carpet Resorts Pvt. Ltd. was incorporated on 26.02.2008 as per the certificate of incorporation issued by Registrar of Companies. The Director’s report of M/s. Red Carpet Resorts Pvt. Ltd. shows the past year i.e. F.Y. 2008-09 audited Balance Sheet and Profit & Loss account of the Company M/s. Red Carpet Resorts Pvt. Ltd. also shows previous year figure i.e. F.Y. 2007-08. The Ld. A.R. submitted that the assessee has given Rs.3,00,000/- on 03.03.3009 to M/s. Red Carpet Resorts Pvt. Ltd. through account payee cheque from his Syndicate Bank Savings Bank account for which the Assessing Officer has already given relief. 13. The Ld. DR submitted that the confirmation of addition of Rs.5,30,180/-was properly made by the CIT(A) as there was no evidence given by the assessee as regards to money given to the Company M/s. Red Carpet Resorts Pvt. Ltd. in cheque IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 8 of 10 and in cash. The assessee being Director of the Company should have explained each and every entry in the seized papers. Thus, the Ld. DR submitted that the appeal of the assessee be dismissed. 14. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the CIT(A) has categorically mentioned in the order that the as contented by the assesse that the assessee has given loans to the Company i.e. M/s. Red Carpet Resorts Pvt. Ltd. in cheque and in cash. Therefore, the onus lies upon the assessee being Director of the Company and the assesse has to explain each and every entry in the seized papers. But the assessee has not been properly discharged this onus during the course of assessment proceedings. Thus, the addition was properly confirmed to the extent of Rs.5,30,180/-. There is no need to interfere with the findings of the CIT(A), hence ground no.3 of the assessee is dismissed. 15. As regards to assessee’s appeal pertaining to A.Y. 2010-11, ground no.1 is withdrawn by the assessee as the relief was granted by the CIT(A). Hence, ground no.1 is dismissed. 16. As regards ground no.2, during the year under consideration, the assessee in Syndicate Bank Savings Account deposited an amount of Rs.20,35,153/- by way of cash as well as cheque. The amount of Rs.7,91,000/- was withdrawn from the Syndicate Bank and the same was deposited in the Bank after withdrawal and keeping the same with him for a particular period in small segments. The Ld. AR during the hearing submitted that the cash withdrawal itself are the cash deposited to the same Bank. Here also, the contention of the Ld. AR was that no books of account were maintained and, therefore, Section 68 addition will not be applicable in assessee’s case. 17. The Ld. DR submitted that the contentions taken in A.Y. 2009-10 may be taken in this year as well. 18. We have heard both the parties and perused the relevant material available on record. The contention of the Ld. AR that Section 68 will not attract, since the books IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 9 of 10 were not maintained by the assessee, is rejected by us in A.Y. 2009-10. On merit, after perusing the records it is seen that the cash deposits were never explained by the assesse before the Assessing Officer. Thus, CIT(A) was right in confirming the said addition. Therefore, ground no.2 is dismissed. 19. As regards to assessee’s appeal pertaining to A.Y. 2011-12, ground no.1 is similar to ground no.1 of A.Y. 2009-10 and hence the same is allowed. 20. As regards to ground nos. 2 and 3, the same are identical to ground nos. 2 and 3 of A.Y. 2009-10 on merit as well. In this year also the onus was not properly discharged by the assessee related to cash deposits and the money given to the company by the assessee in capacity as Director. There is no need to interfere with the findings of the CIT(A). Hence ground nos. 2 and 3 are dismissed. 21. As regards to assessee’s appeal pertaining to A.Y. 2014-15, the Ld. AR submitted that the ground no.1 is identical to ground no.1 of A.Y. 2009-10. Thus ground no.1 for A.Y. 2014-15 is allowed. As regards to Ground No. 2, the same is identical to that of Ground No. 2 of A.Y. 2009-10 on merit as well as the assesse never explained the details of the cash deposits. The CIT(A) has given detailed findings and there is no need to interfere with the same. Ground No. 2 is dismissed. 22. In the result, IT(SS)A No.454/Ahd/2017 for A.Y. 2009-10, IT(SS)A No,.455/Ahd/2017 for A.Y. 2010-11, IT(SS)A No.456/Ahd/2017 for A.Y. 2011-12 and IT(SS)A No.457/Ahd/2017 for A.Y. 2014-15 are partly allowed. Order pronounced in the open Court on this 24 th day of June, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 24 th day of June, 2022 PBN/* IT(SS)A Nos.454, 455, 456 & 457/Ahd/2017 A.Ys. 2009-10, 2010-11, 2011-12 & 2014-15 Page 10 of 10 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad