The ITO, Ward-5(3),, Surat v. Smt. Meghna A.Modi, Surat

ITA 1611/AHD/2011 | 2007-2008
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 161120514 RSA 2011
Assessee PAN AGBPM1875G
Bench Ahmedabad
Appeal Number ITA 1611/AHD/2011
Duration Of Justice 4 year(s) 1 month(s) 17 day(s)
Appellant The ITO, Ward-5(3),, Surat
Respondent Smt. Meghna A.Modi, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-07-2015
Date Of Final Hearing 27-07-2015
Next Hearing Date 27-07-2015
Assessment Year 2007-2008
Appeal Filed On 13-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE S/SHRI G. D. AGARWAL VP & S. S. GODARA JM. ITA NO.1611/AHD/2011 ASST. YEAR 2007-08 INCOME-TAX OFFICER WARD 5(3) SURAT VS SMT. MEGHNA A. MODI PROP. M/S NAGHMA TEXTILES 4/3503 ZAMPA BAZAR SURAT. (APPELLANT) (RESPONDENT) PA NO.AGBPM 1875G APPELLANT BY SHRI PRADEEP KUMAR MAJMUDAR SR.DR RESPONDENT BY SHRI MANISH J. SHAH AR DATE OF HEARING: 27.7.2015 DATE OF PRONOUNCEMENT: 31/7/2015 O R D E R PER S. S. GODARA JUDICIAL MEMBER. THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2001-02 ARISES FROM ORDER OF THE CIT(A)-IV SURAT DATED 03.02.2011 IN A PPEAL NO.CAS-IV/262/09-100 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME T AX ACT 1961 (IN SHORT THE ACT). 2. THE REVENUES SOLE SUBSTANTIVE GROUND CHALLENGES THE CIT(A)S ORDER RESTRICTING THE IMPUGNED ADDITION OF RS.56 66 052/- ADDED AS UNEXPLAINED INVESTMENT TO THE TUNE OF RS.9 02 519/- THEREBY GR ANTING RELIEF OF RS.47 63 533/- BY TREATING IT AS A CASE OF UNEXPLAINED CASH CREDIT . THE ASSESSING OFFICER NOTICED ITA NO._1611/AHD/2011 ASST. YEAR 2007-08 2 IN THE COURSE OF SCRUTINY THAT THE ASSESSEE HAD NOT DISCLOSED HER BANK ACCOUNT MAINTAINED WITH THE PRIME CO-OP. BANK KATARGAM GID C BRANCH SURAT. THE SAME CONTAINED INTEREST SUM OF RS. 11 436/- AS WELL AND CASH DEPOSIT OF MORE THAN RS.16 00 000/-. THE ASSESSING OFFICER IN ASSES SMENT ORDER DATED 24.12.2009 QUOTED SECTION 69 OF THE ACT AND TREATED THE ABOVE STATED BANK ACCOUNT AS UNEXPLAINED AND THE ENTIRE CREDIT THEREI N AS HER UNEXPLAINED INVESTMENTS. HE CONSIDERED OPENING BALANCE IN THE A BOVE STATED BANK ACCOUNT TO BE RS.30 28 571/-. A SUM OF RS.16 22 670/- WAS D EPOSITED IN CASH AND RS.40 43 382/- WAS CREDITED THROUGH CHEQUES. THERE WERE CERTAIN WITHDRAWALS AND DEPOSIT TRANSACTION AS WELL OF RS.7 00 000/- AN D RS.13.67 LAKHS. THE ASSESSING OFFICER COMPUTED A SUM OF RS. 6.67 LAKHS AS PEAK CREDIT. HE OBSERVED IN ASSESSMENT ORDER THAT THE ASSESSEES SOURCE OF I NCOME IN THE IMPUGNED ASSESSMENT YEAR WAS ONLY FROM OTHER SOURCES AN D ALSO THAT THERE WAS NO BUSINESS ACTIVITY AT HER BEHEST. HE ACCORDINGLY ADD ED TOTAL CREDITS IN CASH AS WELL AS CHEQUE OF RS.56 66 052/- AS ASSESSEES UNE XPLAINED INVESTMENT. 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS PA RTLY ACCEPTED HER CONTENTIONS AS UNDER : 2. THE ONLY GRIEVANCE OF THE APPELLANT IS AGAINST THE ADDITION OF RS.56 6 6 052/- MAD BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMEN T. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BY THE APP ELLANT THAT THEY MAINTAINED SAVING BANK ACCOUNT NO. 101571 AND ACCOUNT NO.61138 . WITH INDIAN OVERSEAS BANK SURAT. THE A.O. HAD A.I.R. INFORMATION THAT THE APP ELLANT HAD A SAVINGS BANK ACCOUNT WITH PRIME CO.OP. BANK LTD. KATARGAM G.I.D.C. BRA NCH SURAT IN WHICH CASH OF RS.14 00 000/- HAD BEEN DEPOSITED DURING THE YEAR. THE A.O. ALSO OBTAINED STATEMENT OF ACCOUNT U/S. 133(6) FROM PRIME CO.OP. BANK LTD. WHICH REVEALED THAT THE APPELLANT HAD EARNED INTEREST INCOME OF RS. 11 4367- FROM THI S ACCOUNT. THE INTEREST INCOME WAS ALSO NOT OFFERED IN THE RETURN OF INCOME. NO EX PLANATIONS WERE OFFERED IN ITA NO._1611/AHD/2011 ASST. YEAR 2007-08 3 RESPONSE TO SHOW CAUSE ISSUED BY THE A.O. THE A.O. MADE AN ANALYSES OF THE ENTRIES IN THE BANK ACCOUNT AND MADE THE FOLLOWING OBSERVAT IONS >\ 1) THAT UNEXPLAINED CASH OF RS.6 67 000/- HA D BEEN DEPOSITED IN THE BANK DURING THE PERIOD 3.04.2006 TO 2.05.2006. J 2) THE PEAK CREDIT IN THE BANK ACCOUNT WAS R S.3028571/- WHICH WAS THE OPENING BALANCE FOR THE PERIOD AND THE SAME AMOUNT WAS USED FOR CASH WITHDRAWAL THEN CASH DEPOSIT TRANSFER IN AND TRANSFER OUT. 3) IN ABSENCE OF ANY REPLY FROM THE ASSESSEE TOTAL CREDITS CASH AS WELL AS CHEQUE IN BANK ACCOUNT DURING THE PERIOD IS RS.56 66 052/- WHICH IS TREATED AS UNEXPLAINED. THE A.O. TREATED THE OPENING BALANCE AS UNEXPLAINED INVESTMENT AT THE BEGINNING OF THE YEAR BUT THE SAME WAS TELESCOPED W ITH TOTAL UNEXPLAINED CREDITS OF THE ACCOUNT AND ADDITION OF RS.56 66 052/- ONLY WAS MADE. 2.1. DURING THE COURSE OF APPEAL PROCEEDINGS IT WAS SUBMITTED THAT THE A. O. HAD ERRED IN MAKING THE ADDITION OF ENTIRE CREDITS IN T HE BANK ACCOUNT AS UNEXPLAINED INVESTMENT AS NO OPPORTUNITY WAS GIVEN TO THE ASSES SEE IN THE FORM OF SHOW CAUSE TO EXPLAIN THE BANK ACCOUNT. IT WAS EXPLAINED THAT SHO W CAUSE WAS ISSUED THROUGH ORDER SHEET ENTRY DATED 26.06.2009 ASKING THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE TO SHOW CAUSE WHY ALL CREDITS SHOULD NOT BE CONSIDERED AS UNEXPLAINED BUT NO FORMAL SHOW CAUSE WAS SERVED ON THE APPELLANT ASSESSEE. ON MERITS IT WAS SUBMITTED THAT :- '2.4) THE LEARNED A. O. HAS GROSSLY ERRED IN CALCUL ATING THE PEAK AMOUNT IN THE REFERRED CASE. THE LEARNED A.O. HAS MADE ADDITION O F RS.56 66 052/-AS FOLLOWS : RS. 16 22 052 TOTAL CASH DEPOSITED DURING THE YEAR & RS.40 43 382 TOTAL OF CREDITS OTHER THAN CASH DURIN G THE YEAR. HOWEVER IN OUR INSTANT CASE AS PER THE BANK STATEM ENT THE HIGHEST CREDIT AMOUNT WAS OPENING BALANCE ONLY I.E. RS.30 28 571 /- THROUGHO UT THE YEAR THE MAXIMUM CREDIT BALANCE HAS NEVER EXCEEDED THAT AMOUNT THUS THE MAX IMUM PEAK AMOUNT COMES TO THE EXTENT OF OPENING BALANCE [01.04.2007] RS.30 28 571 /- ONLY BUT IT HAS BEEN SETTLED LAW THAT THE OPENING BALANCE CANNOT TO TREATED AS P EAK AMOUNT OF THE YEAR SINCE IT PERTAINS TO PREVIOUS YEAR THEREFORE THE ADDITION H E INSTANT CASE CAN BE RESTRICTED TO THE MAXIMUM OFG.P. PERCENTAGE OF THE TOTAL CREDITS MADE AFTER THE PEAK AMOUNT WHICH WAS RS.40 43 382 AND RS.6 67 000/-FRESH CASH INTROD UCED [AS PER STATEMENT ENCLOSED] DURING THE YEAR. AND IF THE GP IS TAKEN THAT TOO TO THE MAXIMUM OF 5 % AS PER SEC 44AF. THEREFORE THE MAXIMUM ADDITION CAN MADE IN THE INST ANT CASE COMES TO RS.47 10 382/- @ 5% RS.2 35 519 ONLY. ITA NO._1611/AHD/2011 ASST. YEAR 2007-08 4 BUT IT WILL BE KIND TO BE NOTED THAT THE ASSESSEE H AS OFFERED SUOMOTO RS.6 67 000/- AS UNEXPLAINED CASH CREDIT/INVESTMENT U/S. 69 OF THE IT. ACT 1961 BEING THE FRESH INTRODUCTION OF CASH/CAPITAL DURING THE Y EAR TO BUY PEACE OF MIND AND AVOID ANY FURTHER LITIGATION. IN THE SAID MATTER RELIANCE HAS BEEN PLACED ON FOLL OWING JUDGMENTS: I C1T VIS. ISHWARDASSMUTHA (2004) 141 TAXMAN 555 (RAJ) 2. UPASANA HOSPITAL & NURSING HOME VS. CIT(1998) 229IT R 220 224 - 25(KER).' 3. I HAVE GONE THROUGH THE FACTS OF THE CASE THE OBSERVATIONS OF THE A.O. IN HIS ORDER AND SUBMISSIONS OF THE APPELLANT. THERE IS NO DENYI NG THE FACT THAT THE BANK ACCOUNT IN QUESTION WAS NOT DISCLOSED EITHER IN THE CURRENT YEAR OR IN PREVIOUS YEARS. THE CREDITS IN THE ACCOUNT THEREFORE HAVE TO BE CONSIDE RED FOR DETERMINATION OF UNEXPLAINED INVESTMENT OF THE APPELLANT. FROM THE B ANK STATEMENT IT IS SEEN THAT CASH HAS BOTH BEEN WITHDRAWN AND DEPOSITED. SIMILARLY T HERE ARE DEPOSITS BY TRANSFER AND PAYMENTS BY CHEQUE /TRANSFER. IN SUCH A SITUATION T HE PEAK OF CREDIT IN THE BANK ACCOUNT ALONGWITH ANY SHORTAGES ON CASH ACCOUNT IS REQUIRED TO BE CONSIDERED AS UNEXPLAINED INVESTMENT OF THE APPELLANT. THE PEAK C REDIT IN THE CASE OF THE UNDISCLOSED BANK ACCOUNT OF THE APPELLANT IS ALSO T HE OPENING CREDIT BALANCE ON 1.04.2006. THE PEAK THEREFORE PERTAINS TO THE PRECE DING YEAR AND CANNOT BE CONSIDERED AS UNEXPLAINED INVESTMENT IN THIS YEAR. THIS WILL HAVE TO BE CONSIDERED FOR A.Y. 2006-07. THE A.O. HAS POINTED OUT THAT THERE H AS BEEN CASH DEPOSIT IN EXCESS OF WITHDRAWALS DURING THE PERIOD UP TO 2.05.2006 AMOUN TING TO RS.6 67 0007-. THIS AMOUNT IS TO BE HELD AS UNEXPLAINED IN THE HANDS OF THE APPELLANT FOR THE YEAR. IN THEIR SUBMISSIONS THE APPELLANT HAS ALSO ACCEPTED THAT TH IS EXCESS FRESH INTRODUCTION IN CASH IS UNEXPLAINED. THE ADDITION ON ACCOUNT OF UNEXPLAI NED INVESTMENT FOR THE YEAR IS RS.6 67 000/-. THE ADDITION ON ACCOUNT OF PROFITS M ADE FROM THE TRANSACTION IN THE ACCOUNT WILL BE THE ADDITIONAL INCOME OF THE APPELL ANT AND THE APPELLANT HAS HIMSELF PROPOSED THIS TO BE COMPUTED @ 5% ON THE CREDITS IN THE A/C AFTER THE DATE OF PEAK. I THINK THIS COMPUTATION IS REASONABLE. THE ADDITIONA L INCOME ON TRANSACTIONS COMES TO RS. 2 35 519/-. THE ADDITION IS THEREFORE RESTRICTE D TO RS. 9 02 5197- (RS. 6 67 0007- + RS. 2 35 5197-). THE A.O. WILL BE FREE TO TAKE AC TION WHICH HE MAY DEEM FIT IN RESPECT OF EARLIER YEARS. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. RELEVANT FACTS OF THE CASE ALREADY STAND NARRATED. THE SAME ARE NOT REPEATED FOR THE SAKE OF BREVITY. THE REVENUE SEEKS TO RESTORE THE ENTIRE ADDITION OF RS.56 66 052/- CREDITED IN THE ASSESSEES UNDISCLOSED BANK ACCOUNT . THE CIT(A) HAS ADOPTED ITA NO._1611/AHD/2011 ASST. YEAR 2007-08 5 PEAK CREDIT ALONG WITH PROFITS @ 5% OF THE SUMS IN QUESTION TOTALLING TO RS.9 02 519/-. THE REVENUE DOES NOT FILE ANY EVIDEN CE ON RECORD DISPUTING THESE FIGURES OF PEAK CREDIT OF RS.6.67 LAKHS AS THE ASSE SSSING OFFICER HAD HIMSELF ARRIVED AT THE SAID FIGURES (SUPRA). ITS SOLE ARGUM ENT IS THAT ONCE THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY THERE IS NO EVIDENCE THAT THE AMOUNT DEBITED FROM HER BANK ACCOUNT WAS AVAILABLE FOR CRE DIT ENTRIES IN QUESTION. WE OBSERVE THAT THE SAME FORMS ALL THE MORE REASON TO INFER THAT THE AMOUNT DEBITED WAS NOT UTILISED ELSEWHERE ELSE THAN THE CREDIT ENT RIES IN QUESTION. THE REVENUE DOES NOT ADVANCE ANY OTHER ARGUMENT. WE UPHOLD THE CIT(A) S ORDER UNDER CHALLENGE AND REJECT THE REVENUE S SOLE SUBSTANTIV E GROUND. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/7/2015 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED 31/7 /2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR ITAT AHMEDABAD ITA NO._1611/AHD/2011 ASST. YEAR 2007-08 6 1. DATE OF DICTATION: 28/7/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 30/7/15 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 31/7/2015 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: