SHRI GIRISHKUMAR RAMNIKLAL DOSHI,SURENDRANAGAR V. THE INCOME TAX OFFICER, WARD-2, SURENDRANAGAR

ITA 297/RJT/2017

AI Insights

The case involves Shri Girishkumar Ramniklal Doshi, who appealed against the order of the CIT(A) confirming the addition of Rs. 1,68,77,783 to his income as unexplained investment for the assessment year 2011-12. The addition was initially made by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961, based on the introduction of new capital in the assessee's business without satisfactory explanation of its source. The assessee argued that the funds were received from his NRI brother and returned by two private limited companies, Kahan Exim Pvt. Ltd. and Moneycare Fin. & Leasing Pvt. Ltd. However, the Assessing Officer and CIT(A) found discrepancies in the assessee's explanations and lack of supporting evidence in the books of accounts, leading to the dismissal of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473098 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV; LD.
• Assessee Lawyers: MIHIR GANDHI; LD
• Keywords: Corroborative evidences; Unexplained investment; Gift; Source of fund
• Section: 143(3); 142(1); 143(2); 143(1); 69

Judgement Text

" Page | 1 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.297/RJT/2017 (Ǔनधा[रण वष[ / Assessment Year: (2011-12) (Hybrid Hearing) Shri Girishkumar Ramniklal Doshi B-601, Retreat, Near Shyamal Cross Road, Satellite, Ahmedabad - 380015 Vs. Income Tax Officer Ward-2, Surendranagar èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABLPD2297E (Assessee) (Respondent) Assessee by : Shri Mihir Gandhi, Ld. AR Respondent by : Shri Abhimanyu Singh Yadav, Ld. Sr.DR Date of Hearing : 01/10/2024 Date of Pronouncement : 01/01/2025 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2011-12, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-7, Ahmedabad [in short ‘Ld. CIT(A)’], dated 15.01.2016, which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘assessing officer’) u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 31.03.2014. 2. The grounds of appeal raised by the assessee are as follows: Page | 2 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO “1. That on the facts and circumstance of the case, the CIT(A) has grossed erred sustaining the addition as made by the Income Tax Officer Ward-2, Surendranagar of Rs.1,68,77,783/- on account of unexplained investment u/s. 69 of the Income Tax Act. 2. That on the facts and circumstance of the case, the learned assessing officer has grossly erred in making impugned addition under Section 69 of the Act without appreciating the fact that no actual investments were made for the subject year under consideration by the appellant. 3. The appellant craves to add. amend, alter, substitute, modify any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.” 3. The appeal filed by the assessee, for Assessment Year 2011-12, is barred by limitation by 469 days. The assessee has moved a petition requesting the Bench to condone the delay. 4.Learned Counsel for the assessee, argued that assessee’s mental health condition were deteriorated and, therefore, he got admitted in the Hospital for a long time and ultimately the assessee died on 12.12.2018. In the family, there was uncertainty and anxiety environment, therefore, appeal could not be filed on time. Hence, the Ld. Counsel for the assessee submitted that the delay in filing the appeal may be condoned and the assessee’s appeal may be admitted. 5.On the other hand, Learned DR for the Revenue submitted that if the assessee was not mentally fit and healthy, then a guardian should have been appointed for such mental incapacity person. However, no guardian for the assessee, who was mentally incapacity was appointed on time, and ultimately the assessee died on 12.12.2018. Therefore, the Ld. DR contended that the assessee has failed to explain sufficient cause and hence, the delay should not be condoned. Page | 3 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO 6. We have heard both the parties on this preliminary issue and noted that the assessee was hospitalized from 28.04.2017 to 23.05.2017 and thereafter, the assessee was also admitted to Intensive Care Unit (ICU) for some weeks and then ultimately, the assessee had died on 12.12.2018. The Ld. Counsel for the assessee has submitted the relevant medical papers and the death certificate of the assessee, before the Bench. We find that the circumstances narrated in the affidavit for condonation of delay, have clearly explained the sufficient cause. A perusal of the affidavit gives us an impression of existence of mitigating circumstances to enable us to exercise our discretion in favour of the assessee. We are of the considered opinion that in the interest of justice, the delay deserves to be condoned. We, accordingly, condone the delay. 7. So far merits of the case are concerned, the relevant material facts of the assessee`s case, are as follows. The assessee had filed his return of income for assessment year (A.Y.) 2011-12, on 20.09.2011, declaring total income at Rs. NIL. The return of income, was processed u/s 143(1) of the Act. Later on, the assessee`s case was taken up for scrutiny assessment and notice u/s 143(2) of the Act, was issued on 27/09/2012 and duly served upon the assessee, on 28/09/2012. Subsequently, notice u/s 142(1) of the Act, along with questionnaire was issued on 17/06/2013 and duly served upon the assessee. During the assessment year, under consideration, the assessee has engaged in the business of trading/processing activity of tea (leaves), cotton (bales) and consignment agent. 8.During the assessment proceedings, it was noticed by the assessing officer, from capital account furnished during the assessment proceedings Page | 4 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO that the assessee has introduced new capital of Rs. 1,69,18,800/-, in the business. Therefore, source of new capital were called for by the assessing officer, vide notice dated 05/02/2014 of assessing officer. 9.In response to the notice, the assessee has furnished his reply, vide letter dated 24/02/2014, which is reproduced as under: \"We received our credit balance in Kahan Exim Pvt. Ltd. of Rs.64,77,778/- and money care Fin. & Leasing P. Ltd. Rs. 1,04,0000/-, So above both total amount received 1,68,77,773/-, transfer to capital account and other one of 28,500/ amount we received from LIC of India. So, capital introduced in year 2010-11.\" 10. After verification of assessee's reply and previous case records, the assessing officer noticed that there was no debtors have been shown in the Name of Kahan Exim Pvt. Ltd and Moneycare Fin. & Leasing P. Ltd. during the previous year, that is, Financial Year, (F.Y.) 2009-10. Therefore, the assessee was asked vide order sheet entry dated 25/02/2014 & 24/03/2014, as to why capital introduced of Rs. 1,69,18,800/- should not be added to total income of the assessee. 11. In response to the above, the assessee has changed his previous reply and furnished written submission before the assessing officer on 18/03/2014, the same is reproduced as under: “With reference to above I wish to clarify the fact about addition in my capital account in M/s. Doshi Dhirajlal Nanchand where I am proprietor. During financial year 2010-11, I deposited following amount in M/s Doshi Dhirajlal Nanchand by cheque. Date Payment (In Rs.) 16/03/2011 21,00,000/- 17/03/2011 54,00,000/- 18/03/2011 43,75,000/- 24/03/2011 25,00,000/- 29/03/2011 24,00,000/- 31/03/2011 1,00,000/- Page | 5 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO The above amounts were transferred by me from savings bank account. The source of fund in Saving Account was already explained previously i.e.I received Rs. 1,68,77,783/- from my brother Neetish R Doshi who was NRI and he transferred fund from his NRE- A/C in the FY 2008-09 and from that I gave to Kahan Exim Private Limited and Monecare finance and leasing Ltd as deposit. Thereafter, Kahan Exim Pvt. Ltd. and Moneycare finance and leasing Ltd returned these amount on following dates in my saving bank A/c Date Rs. Concern’s Name PAN 16/03/2011 21,00,000 Kahan exim Pvt. Ltd AAACK2367B 17/03/2011 54,00,000/- Moneycare fin and lea Ltd AAAGM3714C 17/03/2011 43,77,783 Kahan Exim Pvt. Ltd. AAАСК2367B 23/03/2011 25,00,000 Moneycare fin. and lea. Ltd. AAAGM3714C 28/03/2011 24,00,000 Moneycare fin. and lea. Ltd AAAGM3714C 30/03/2011 1,00,000 Moneycare fin. and lea. Ltd. AAAGM3714C From the above I deposited Rs. 1,68,75,000/- in M/s Doshi Dhirajlal Nanchand, where I am proprietor As per accounting principal when a proprietor brings fund in proprietorship concern via savings accounts one must credit capital account even that fund he might have borrowed in his personal capacity.\" 12. However, assessing officer did not accept the above reply of the assessee, on account of following reasons: (i) The assessee has stated that he has received capital of Rs.1,68,77,783/- from his credit balance in the case of Kahan Exim Ltd. and Moneycare Fin. & Leasing Pvt. Ltd. but after verification of pervious year case records it is noticed that there was no debtors balance in the name of Kahan Exim Ltd. and Moneycare Fin. & Leasing Pvt. Ltd. in his audited books of accounts during the previous year i.e. F.Y.2009-10. Page | 6 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO (ii) The assessee has stated that the said capital was received from his saving bank account, vide SB A/c oriental Bank of Commerce and Kotak Mahindra Bank A/c and the said amount was deposited by Kahan Exim Pvt. Ltd and Money Care Fin, and lea. Ltd. However, the assessee has not shown the said account in his books of account and the said amount claimed as deposited by Kahan Exim Pvt. ltd, and Money Care Fin. and lea. Ltd have also not been reflected as debtors in his books of accounts maintained in pervious year i.e. AY. 2009-10. (iii) The assessee has stated that Rs.1.6877,783/-, received from his brother, Neetish R Doshi, who was NRI and he transferred fund from his NRE A/C in F.Y. 2008-09 and from that assessee gave to Kahan Exim Private Limited and Moneycare finance and leasing ltd, as deposit. However, verification of saving bank account's statement of the assessee and his brother it reveals that the assessed has received the said amount on 31/03/2009 in his saving bank account from Bank account of Shri Neetish R Doshi, the assessee has given Rs.1,04,000/-, to Moneycare finainace and leasing ltd and Rs 64,77,783/-to Kahan Exim Pvt. Ltd, on the same date, that is, 31.03.2009. (iv)Further, it is noticed that there was NIL balance before 31/03/2009 of the Bank account of Shri Neetish R Doshi. However, Rs.1,66,77,783/- was deposited on 31/03/2009 by Shri Neetish R Doshi in the bank account of assessee receiving Rs. 1,04,00,000/- from Moneycare finance & leasing Itd and Rs.64,77,783/- from Kahan Exim Private Limited on 31/03/2009 and on the same date, the assessee has given Rs. 1,04,00,000/- to Moneycare finance & leasing Itd and Rs.64,77,783/- to Kahan Exim Private Limited but the said transaction has not reflected in books of accounts maintained for Financial Year ( F.Y.)2008-09. Page | 7 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO 13.Based on the above facts, the assessing officer was of the view that the source of new capital introduced of Rs. 1,68,77,783/- could not be explained by the assessee. Therefore, new capital introduced of Rs.1,68,77,783/- was treated as unexplained investment u/s 69 of the Act and added to the total income of the assessee. 14. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the learner, CIT A, who has confirmed the action of the assessing officer. The ld. CIT(A) held that assessing officer has narrated the facts and reached on a conclusion that there was NIL balance before 31/03/2009 of the Bank account of Shri Neetish R Doshi. However, amount of Rs.1,66,77,783/- was deposited on 31/03/2009 by Shri Neetish R Doshi in the bank account of assessee receiving Rs. 1,04,00,000/- from Moneycare finance & leasing Itd and Rs.64,77,783/- from Kahan Exim Private Limited on 31/03/2009 and on the same date, the assessee has given Rs. 1,04,00,000/- to Moneycare finance & leasing Itd and Rs.64,77,783/- to Kahan Exim Private Limited but the said transaction has not reflected in books of accounts maintained for Financial Year ( F.Y.)2008-09, therefore, ld CIT (A) confirmed the addition made by the assessing officer. 15. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. 16.Learned Counsel for the assessee, argued that assessing officer, has not considered the events of the transactions and the accounting entries mentioned in books of accounts of the respective entities. The Ld. Counsel also stated that the Ld. CIT(A) also failed to consider the Page | 8 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO explanation of the assessee in right perspective. Therefore, the addition made by the assessing officer may be deleted. 17. On the other hand, Ld. DR for the Revenue submitted that the assessee has introduced new capital to the tune of Rs.1,69,18,800/-, and in assessee’s case once the loan was given by brother and then the loan was taken back by the brother, with the help of the Private Limited Company. Therefore, Ld. DR pointed out that both the entities, where the unaccounted transactions were routed, were Private Limited Companies and a Private Limited Company cannot give a gift to another Private Limited Company and, hence, the transaction done by the assessee is an unaccounted money of the assessee. Therefore, the assessing officer was justified in making the addition and, hence, the Ld. DR for the Revenue contended that the addition made by the assessing officer may be sustained. 18. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. The Ld. Counsel for the assessee, submitted before us that neither the assessing officer nor the CIT(A) has appreciated the facts of the assessee`s case and accounting entries involved in the transaction. The ld. Counsel for the assessee submitted that assessee has raised the following ground No.2 before the Tribunal, wherein it is specially mentioned that facts were not appreciated by the lower authorities in right perspective, the said ground No.2 reads as follows: Page | 9 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO “That on the facts and circumstance of the case, the learned assessing officer has grossly erred in making impugned addition under Section 69 of the Act without appreciating the fact that no actual investments were made for the subject year under consideration by the appellant. 19. We note that the assessee has received capital of Rs.1,68,77,783/- from his credit balance in the case of Kahan Exim Ltd. and Moneycare Fin. & Leasing Pvt. Ltd. but after verification of pervious year case records it is noticed that there was no debtors balance in the name of Kahan Exim Ltd. and Moneycare Fin. & Leasing Pvt. Ltd. in his audited books of accounts during the previous year i.e. F.Y.2009-10.The assessee has stated that the said capital was received from his saving bank account, vide SB A/c oriental Bank of Commerce and Kotak Mahindra Bank A/c and the said amount was deposited by Kahan Exim Pvt. Ltd and Money Care Fin, and lea. Ltd. However, the assessee has not shown the said account in his books of account and the said amount claimed as deposited by Kahan Exim Pvt. ltd, and Money Care Fin. and lea. Ltd have also not been reflected as debtors in his books of accounts maintained in pervious year i.e. AY. 2009-10. The assessee has stated that Rs.1,68,77,783/-, received from his brother, Neetish R Doshi, who was NRI and he transferred fund from his NRE A/C in F.Y. 2008-09 and from that assessee gave to Kahan Exim Private Limited and Moneycare finance and leasing ltd, as deposit. However, verification of saving bank account's statement of the assessee and his brother it reveals that the assessee has received the said amount on 31/03/2009 in his saving bank account from Bank account of Shri Neetish R Doshi, the assessee has given Rs.1,04,000/-, to Moneycare finainace and leasing ltd and Rs 64,77,783/- to Kahan Exim Pvt. Ltd, on the same date, that is, 31.03.2009. It was noticed by the assessing officer that there was NIL balance before Page | 10 ITA No. 297/RJT/2017 / AY.2011-12 Shri Girishkumar Ramniklal Doshi vs. ITO 31/03/2009 of the Bank account of Shri Neetish R Doshi. However, Rs.1,66,77,783/- was deposited on 31/03/2009 by Shri Neetish R Doshi in the bank account of assessee receiving Rs.1,04,00,000/- from Moneycare finance & leasing Itd and Rs.64,77,783/- from Kahan Exim Private Limited on 31/03/2009 and on the same date, the assessee has given Rs. 1,04,00,000/- to Moneycare finance & leasing Itd and Rs.64,77,783/- to Kahan Exim Private Limited but the said transaction has not reflected in books of accounts maintained for Financial Year ( F.Y.)2008-09. We find that the above facts and evidences were examined by the assessing officer as well as by the ld. CIT(A), during the appellate proceedings. Therefore, based on this factual position, narrated above, the addition of Rs. 1,68,77,783/-, should be sustained in the hands of the assessee, as the assessee, has himself could not explain the transaction, with supporting evidences. Hence, this appeal deserves to be dismissed by upholding the order passed by the CIT(A) and it is dismissed. 20.In the result, the appeal of the assessee is dismissed. Order is pronounced in the open court on 01 /01/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 01/01/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "