Mr. Haren Kantilal Mistry, Vadodara V. The Income Tax Officer, Ward-2(3), Vadodara

MA 165/AHD/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5300 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V I MEHTA
• Keywords: Unexplained investment
• Section: 143(3); 147; 69; 148

Judgement Text

, ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER MISC. APPLICATIONS NOS. 165 & 166/AHD/2016 (ARISING OUT OF I.T.A. NOS. 2664 & 2665/AHD/2014) & I.T.A. NOS. 2664 & 2665/AHD/2014 ( / ASSESSMENT YEAR : 2006-07 & 2007-08 ) MR. HAREN KANTILAL MISTRY, 401, PRANAM COMPLEX, URMI DINESH MILL ROAD, VADODARA / VS. INCOME TAX OFFICER, WARD 2(3), VADODARA ./ ./ PAN/GIR NO. : AAUPM 0021 B ( ! ' / APPELLANT ) .. ( #' / RESPONDENT ) ! ' $ / APPELLANT BY : SHRI SURESH THAKKAR, AR #' % $ / RESPONDENT BY : SHRI V. I. MEHTA, ADDL. CIT. & ' ( % ) * / DATE OF HEARING 23/03/2017 +,-. % ) * / DATE OF PRONOUNCEMENT 31/03/2017 / / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE TWO MISC APPLICATIONS NOS. 165 & 166/AHD/2 016 (ARISING OUT OF ITA NOS. 2664 & 2665/AHD/2014) HAVE BEEN FIL ED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER O F INCOME TAX(APPEALS)-II, BARODA, DATED 30/06/2014 FOR THE A SSESSMENT YEARS MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 2 - (AY) 2006-07 & 2007-08 AND FOLLOWING GROUNDS OF APP EALS HAVE BEEN TAKEN: I) THAT THE APPLICANT HAD FILED APPEALS FOR ASST. YEAR S 2006-07 AND 2007-08 ON 30.09.2014. II) THAT THE HEARING OF THE ABOVE APPEALS WAS FOR THE FIRST TIME FIXED ON 26.08.2015 BEFORE 'SMC' BENCH, AHMEDABAD. THE AU THORIZED REPRESENTATIVE OF THE APPELLANT HAD VIDE LETTER DTD . 24.08.2015 HAD REQUESTED TO CONSOLIDATE THE ABOVE APPEALS WITH THE APPEAL FILED BY THE APPELLANT FOR THE ASST. YEAR 2010-11 O N THE GROUND THAT THE ISSUE HAD ROOTS IN THE APPEAL FOR ASST. YE AR 2010-11 (APPEAL NO. ITA/1144/AHD/2015). III) THAT THE SECOND NOTICE OF HEARING DTD. 23.10. 2015 FIXING HEARING ON 11.12.2015 WAS RECEIVED BY THE APPELLANT. IN RES PONSE, THE APPELLANT'S AUTHORIZED REPRESENTATIVE VIDE LETTER D TD. 08.12.2015, HAD SOUGHT AN ADJOURNMENT OF HEARING REQUESTING TO CONSOLIDATE ABOVE APPEALS WITH APPEAL FOR ASST. YEAR 2010-11. III) THAT THE ADJOURNMENT OF HEARING WAS ANNOUNCED IN TH E COURT ON 07.01.2016. THIS ADJOURNMENT WAS NOT COMMUNICATED / RECEIVED BY THE APPELLANT AS HE WAS ABSENT. THE APPELLANT WA S UNDER IMPRESSION THAT THE APPEALS WILL BE CONSOLIDATED AN D WILL BE HEARD TOGETHER. IV) THAT THE APPELLANT HAS RECEIVED APPELLATE ORDER DTD . 05.02.2016 DISMISSING BOTH THE APPEALS IN LIMINE. V) THAT THE APPELLANT STATES THAT THERE WAS NO MALAFID E INTENTION NOT TO APPEAR BEFORE THE HONBLE TRIBUNAL OR TO DISREGA RD NOTICES ISSUED BY THE OFFICE OF THE HONBLE ITAT. 2. WE HAVE HEARD BOTH THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDER OF THE CO-ORDINATING BENCH. HONBLE MEMBER PA SSED THE ORDER BY MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 3 - APPLYING CIT VS. MULTIPLAN INDIA (PVT.) LTD., 38 IT D 320 (DELHI), AND DISMISSED THE APPEAL OF THE ASSESSEE IN LIMINE. 3. IN THE INTEREST OF THE JUSTICE WE RECALL THE ORD ER DTD. 05/02/2016. 4. IN THE RESULT, BOTH THE MISC. APPLICATIONS NOS.1 65 &166/AHD/2016 OF THE APPELLANT HAVE BEEN ALLOWED. 5. NOW WE TAKE UP THE FOLLOWING GROUNDS OF APPEALS IN ITA NOS. 2664 & 2665/AHD/2014 FOR A.Y. 2006-07 & 2007-08: I). ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS)-II, VADODARA IS NOT JUSTIFIED BOTH IN LAW IN TREATING THE GROUND AS GENERAL IN NATURE AND NOT ADJUDICATIN G THE ABOVE GROUND. THE GROUND NEEDS TO BE ADJUDICATED AND THE NOTICE ISSUED U/S 148 REQUIRES TO BE CANCELLED BEING BAD I N LAW. IT IS PRAYED THAT THE GROUND NEEDS TO BE ADJUDICATE D AND THE NOTICE ISSUED U/S 148 REQUIRES TO BE CANCELLED. THE REASSESSMENT MADE U/S 143(3) R.W.S. U/S 147 OF THE ACT BE CANCEL LED. II). ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(APPEALS)-II IS NOT JUSTIFIED BOTH IN LAW AND ON FACTS IN CONFIRMING THE STAND TAKEN BY THE LEARNED AO AND TH EREBY TREATING CASH CREDIT A/C NO. 118 WITH COMMERCIAL CO -OPERATIVE BANK LTD. AS BELONGING TO MR. H.K. MISTRY (INDIVIDU AL) INSTEAD OF TREATING THE SAME AS BELONGING TO H.K. MISTRY(HUF). IT IS PRAYED THAT THE CASH CREDIT A/C NO. 118 WITH COMMERCIAL CO- OPERATIVE BANK LTD. BE HELD AS BELONGING TO MR. H.K . MISTRY (HUF) INSTEAD OF TREATING THE SAME AS BELONGING TO H.K. MISTRY (INDIVIDUAL). MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 4 - III). ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS)-II IS NOT JUSTIFIED BOTH IN LAW AND ON FACTS IN UPHOLDING CASH DEPOSIT OF RS. 1,85,800/-(FOR A.Y. 2006-07) & RS. 59,600/- (FOR A.Y.2007-08) IN THE CASH CREDIT A /C NO. 118 WITH COMMERCIAL CO-OPERATIVE BANK LTD. AS UNACCOUNTED IN VESTMENT U/S 69 OF THE IT ACT OF THE APPELLANT. IT IS PRAYED THAT THE AMOUNT OF RS. 1,85,800/- (FOR A.Y. 2006-07) & RS. 59,600/-(FOR A.Y. 2007-08) BE NOT TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE IT ACT., WHICH IS RECEIVE D FROM DARSHAN TRADERS AND THE AMOUNT OF RS. 1,85,800/-(FOR A.Y. 2 006-07) & RS. 59,600/-(FOR A.Y. 2007-08) BE HELD AS PROPERLY EXPLAINED. 6. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2010-11, THROUGH ENQUIRIES IT WAS GATH ERED BY THE INCOME- TAX DEPARTMENT THAT DURING THE PERIOD 01/04/2009 TO 31/03/2010, THE ASSESSEE HAD DEPOSITED TOTAL CASH OF RS. 13,08,670/ - IN HIS ACCOUNT NO.118 WITH THE COMMERCIAL CO-OPERATIVE BANK LIMITE D, WINDSOR PLAZA, ALKAPURI BRANCH, BARODA. THEREAFTER, NOTICE U/S. 14 2(1) DTD. 29/10/2012, THE ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY HIS ACCOUNT NO.118 WITH THE COMMERCIAL CO-OPERATIVE BANK LIMITED SHOULD NOT BE TREATED AS AN UNACCOUNTED BANK ACCOUNT. HE WAS ALSO REQUESTED TO EXPLAIN THE SOURCE TO TOTAL CASH DEPOSITS OF RS. 13,08,670/- ON THE AC COUNT NO. 118 WITH THE COMMERCIAL CO-OPERATIVE BANK LIMITED. MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 5 - 7. IN RESPONSE TO THE ABOVE QUARRY, ASSESSEE REPLIE D THAT ACCOUNT NO.118 WITH THE COMMERCIAL CO-OPERATIVE BANK LIMITE D WAS OF HIS HUF AND TOTAL CASH DEPOSITS OF RS.13,08,670/- WERE MADE IN THE SAID ACCOUNT BY HIS HUF NOT BY HIM IN HIS INDIVIDUAL CAPACITY. A N AFFIDAVIT STATING THAT THE ACCOUNT NO.118 WITH THE COMMERCIAL CO-OPER ATIVE BANK LIMITED; BELONGS TO H.K. MISTRY (HUF) WAS ALSO SUBM ITTED BY THE ASSESSEE. 8. THEREAFTER A NOTICE U/S. 148 WAS ISSUED ON 28/03 /2013 AND SERVED UPON THE ASSESSEE WITH DETAIL AND THE ASSESSEE REIT ERATED THAT ACCOUNT NO.118 BELONGS TO HIS HUF. BEFORE PROCEEDING FURTHE R, IT WAS NECESSARY TO MENTION HERE THAT AS ON DATE THE ASSESSEES HUF DOES NOT HAVE ANY PAN AND IT HAS NO SOURCE OF INCOME EITHER THEREFORE AND AS STATED EARLIER THE ENQUIRIES HAVE PROVED THAT ACCOUNT NO.118 WITH THE COMMERCIAL CO- OPERATIVE BANK LIMITED IN ASSESSEES UNDISCLOSED BA NK THEREFORE THE CONTENTION OF ASSESSEE WAS NOT TENABLE IN THE EYES OF THE AO AND LEARNED AO HELD THAT AMOUNT OF RS. 1,85,800/- REMAINS UNEXP LAINED. UNDER THE CIRCUMSTANCES, AN ADDITION OF RS. 1,85,800/- IS MAD E TO THE ASSESSEES INCOME U/S. 69 OF THE INCOME-TAX ACT, 1961. 9. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, IT WAS DISCOVERED BY THE INCOME-TAX DEPARTMENT THAT ASSESSEE HAD ANOT HER SAVING BANK ACCOUNT NO. 2440 WITH PRAGATI SAHAKARI BANK LTD., M ANUBHAI TOWER, SAYAJIGUNJ, BARODA AND THE SAID BANK ACCOUNT WAS AL SO AN UNDISCLOSED MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 6 - BANK AND HE HAD EARNED INTEREST OF RS. 432 ON THAT ACCOUNT AND AN ADDITION OF RS.432 WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 10. IN HIS COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN TO HAVE EARNED PROFIT OF RS.95,1 09/-. ASSESSEE STATED THAT CLAIM OF VARIOUS EXPENSES OF RS.2,28,964/- INC LUDING THAT OF PURCHASES, THE ASSESSEE DID NOT PRODUCE ANY EVIDENC E/PROOF THEREOF. IN SUPPORT OF HIS CONTENTION, IT IS FOR THIS REASON TH AT 20% OUT OF TOTAL EXPENSES OF RS.2,28,964/- WAS MADE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND FINALLY LEARNED AO ADDED TOTAL INCOME OF RS.3,23,730/- 11. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 12. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IM PUGNED ORDER AND HEARD THE RIVAL SUBMISSION GROUND U/S. 148 AND THE RE-ASSESSMENT MADE U/S. 143 R.W.S. 147 OF THE INCOME-TAX ACT HAVE NOT BEEN PRESSED BY THE ASSESSEE. SO FAR AS GROUND RELATED TO ACCOUNT NO.11 8 WITH THE COMMERCIAL CO-OPERATIVE BANK. IT WAS SUBMITTED BY T HE ASSESSEE REPRESENTATIVE THAT THE CREDIT IN THE C.C. ACCOUNT NO.118 STATED OF RS.4,83,382/- WHICH IS NOT THE CORRECT FIGURE. THIS FIGURE INCLUDES OPENING BALANCE OF RS.3,22,328/- AS ON 01/04/2006. THIS AMOUNT HAS TO BE EXCLUDED FROM THE CREDITS MADE DURING THE YEAR. THE CORRECT FIGURE OF DEPOSIT IS RS. 1,61,054/-. MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 7 - 13. ASSESSEE ALSO STATED THAT BEFORE THE AUTHORITIE S BELOW THE APPELLANT HAS GIVEN DETAILED SUBMISSION ON THE ABOVE GROUND W ITH REGARD TO ACCOUNT NO.118 WITH COMMERCIAL CO-OPERATIVE BANK LT D. AS UNACCOUNTED BANK ACCOUNT IS NOT BELONGING TO THE AP PELLANT. 14. APPELLANT REPRESENTATIVE FURTHER SUBMITTED THAT THE KARTA OF HUF MR. H.K. MISTRY HAD TAKEN LOAN FROM COMMERCIAL CO-O PERATIVE BANK LTD., ALKAPURI BRANCH, VADODARA IN THE YEAR 2000. T HE ABOVE CASH CREDIT FACILITY WAS OBTAINED BY THE HUF TO HELP ONE OF THE NUMBER OF HUF SMT. ALKABEN H. MISTRY, PROP. OF DARSHAN TRADERS. SMT. A LKABEN MISTRY HAD NO BANK ACCOUNT IN HER NAME. THEREFORE, THE PAYMENT S WERE MADE FROM THE ABOVE ACCOUNT AND PROCEEDS OUT OF SALE WERE DEP OSITED IN THE SAME ACCOUNT. 15. WE HAVE GONE THROUGH THE IMPUGNED ORDER, PAPER BOOK UNDER RULE 18(6) AND HEARD RIVAL SUBMISSION. IN SUPPORT OF THE CONTENTION AN AFFIDAVIT WAS ALSO FILED BY THE H.K. MISTRY (HUF) A ND HE FURTHER STATED THAT BEFORE THE PREFIX M/S. WAS NEVER ATTACHED TO THE ACCOUNT. IN IS ONLY IN CASE OF HUF OR FIRM SUCH PROFIT IS ATTACHED TO T HE ACCOUNT. 16. IN THE BANK THE KARTA HAD GIVEN HIS PAN NUMBER TO OPEN THE ACCOUNT AS THE HUF HAD NO PERMANENT ACCOUNT NUMBER AT THAT TIME. MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 8 - 17. LEARNED AR STATED THAT M/S. H.K. MISTRY(HUF) HA VE NEVER CLAIMED DEDUCTION OF INTEREST ON THE CASH CREDIT AC COUNT. 18. AT THE TIME OF OPENING OF HUF ACCOUNT APPELLANT OBTAINED CASH CREDIT FACILITY IN THE NAME OF M/S. H.K. MISTRY AND COPY OF CERTIFICATE FROM BANK DTD. 30/06/2014 SANCTIONING CASH CREDIT L OAN ACCOUNT NO. 118 BELONGING M/S. H.K. MISTRY HAS STATED BY THE BANK. 19. SO FAR AS GROUND RELATED TO TOTAL CASH OF RS.1, 85,800/- IS CONCERNED. IT WAS SUBMITTED BY THE LEARNED AR. ASSE SSEE HAD EXPLAINED THE SOURCE OF NATURE OF CREDIT ENTRIES/DEPOSITS MAD E IN THE BANK ACCOUNT. IT WAS SUBMITTED THAT THE AMOUNTS WERE RECEIVED BY WAY OF CHEQUES AND CASH FROM DARSHAN TRADERS, PROP. ALKA MISTRY. 20. FURTHER STATED THAT THE CHEQUES AND CASH AMOUNT S RECEIVED FROM DARSHAN TRADERS IN THE ASSESSMENT YEAR 2010-11 HAVE BEEN PARTLY ACCEPTED AS GENUINE AMOUNTS. THEREFORE THERE WAS NO REASON FOR THE AUTHORITIES BELOW. DARSHAN TRADERS OUGHT TO HAVE BE EN ACCEPTED BY THE GENUINE SOURCE OF DEPOSIT IN THIS A.Y. WE SET ASIDE THE ORDER OF LD. CIT. 21. IN VIEW OF THE FOREGOING OBSERVATIONS, WE ALLOW THE BOTH THE APPEALS (ITA NO. 2664 & 2665/AHD/2014) OF THE ASSES SEE. MA NOS. 165&166/AHD/16(ARISING OUT OF ITA NO. 2664 & 2665/AHD/14)& ITA NO. 2664 & 2665/AHD/14 M/S. HAREN KANTILAL MISTRY VS. ITO - 9 - 22. IN THE RESULT, APPEALS FILED BY THE ASSESSEE AR E ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31/03/2017 SD/- SD/- IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K ( ) ( ) ( PRADIP KUMAR KEDIA ) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/03/2017 PRITI YADAV, SR. PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. ! ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 234) & 5) / CONCERNED CIT 4. & 5) ( !) / THE CIT(A)-II, BARODA. 5. 67 8 )'34 , !* 34. , 2 / DR, ITAT, AHMEDABAD 6. 8 9 : ( / GUARD FILE. % & / BY ORDER, # 6!) ) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY