ITO 24(3)(4), MUMBAI v. THOMAS PAUL ALMEIDA, MUMBAI

ITA 858/MUM/2010 | 2006-2007
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 85819914 RSA 2010
Assessee PAN AFLPA4555L
Bench Mumbai
Appeal Number ITA 858/MUM/2010
Duration Of Justice 1 year(s) 5 month(s) 18 day(s)
Appellant ITO 24(3)(4), MUMBAI
Respondent THOMAS PAUL ALMEIDA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 22-07-2011
Date Of Final Hearing 19-07-2011
Next Hearing Date 19-07-2011
Assessment Year 2006-2007
Appeal Filed On 04-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.S. SYAL A.M. AND SHRI V. DURGA RAO J.M. ITA NO. 858/MUM/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER-24(3)(4) . APPELLANT R.NO. 706 C-11 7 TH FLOOR BKC BANDRA(E) MUMBAI - 51 VS. THOMAS PAUL ALMEDIA RESPONDENT B/1-25 MAHESH NAGAR SV ROAD GOREGAON (W) MUMBAI 400 062. (PAN AFLPA4555L) APPELLANT BY : MR. G.P. TRIVEDI REVENUE BY : MR. SANDESH DESAI ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-34 MUMBAI PASSED ON 26/11/2009 FOR THE ASS ESSMENT YEAR 2006-07 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT(A) ERRED IN DIRECTING THE AO TO MAKE ADDITIONS OF PEAK AMOUNTS ONLY RATHER THAN AGGREGATING ALL DEPOSITS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT(A) FAILED TO APPRECIATE THE FACT THAT BEFORE AP PLYING PEAK THEORY WITH RESPECT TO ANY UNDISCLOSED ACCOUNT WHET HER IT IS BANK ACCOUNT OR ANY OTHER ACCOUNT IT IS TO BE PROVED BY THE ASSESSEE THAT SOURCE OF SUBSEQUENT DEPOSITS IN THE SAID ACCO UNT IS THE EARLIER WITHDRAWAL. 2. BRIEFLY STATED THE FACTS ARE THAT THE AO NOTICED THAT ASSESSEE HAD DEPOSITED CASH OF RS. 36 70 000/- IN SAVINGS BA NK ACCOUNT NO. 8065 AT THE SHAMRAO VITHAL CO-OP BANK LTD. GOREGAO N (WEST) BRANCH MUMBAI. IN THE SAME ACCOUNT ASSESSEE HAD A LSO DEPOSITED CHEQUES TO THE TUNE OF RS. 18 26 974/-.THE TOTAL DE POSIT IN BANK A/C WAS RS. 54 96 974/-. ON BEING ASKED BY THE AO TO EX PLAIN THE SOURCE ITA NO. 858/M/2010 THOMAS PAUL ALMEIDA 2 OF CASH DEPOSITS AND CHEQUE DEPOSITS IN THE AFORES AID BANK ACCOUNT NO SATISFACTORY EXPLANATION WAS FILED BY THE ASSESS EE. THEREFORE THE AO ISSUED A SHOW CAUSE NOTICE AS TO WHY NOT THE ENT IRE CASH SHOULD BE ADDED U/S 68 OF THE ACT AS UNEXPLAINED CASH CRED IT. IN REPLY IT WAS EXPLAINED BEFORE THE AO THAT CASH DEPOSIT WAS R S. 32 65 643/- IN THAT BANK ACCOUNT AND THERE WERE CASH WITHDRAWALS O F RS. 33 89 950/- AND THE DIFFERENCE OF RS. 1 24 307/- WA S LOAN FROM VARIOUS PERSONS. REGARDING CHEQUE IT WAS EXPLAINED THESE WERE DEPOSITED BY THE FATHER OF THE ASSESSEE FROM HIS CL OTH BUSINESS AND HIS INCOME IS BELOW TAXABLE. IT WAS FURTHER EXPLAIN ED THAT SIMULTANEOUSLY DEPOSITS AND WITHDRAWALS IN THE BANK WERE MADE WITH THE INTENTION TO AVAIL THE BANK LOANS. THE EXPLANAT ION WAS NOT ACCEPTED BY THE AO ON THE GROUND THAT THE ASSESSEE HAD DEPOSITED CASH WITH MALAFIDE INTENTION AND THE SOURCE OF WHIC H WAS ALSO NOT EXPLAINED AND ASSESSEE HAD EVADED TAX AND MISLED TH E REVENUE. IN THE ABSENCE OF ANY EVIDENCE AND CLARITY IN THE SUBMISSI ONS MADE BY THE AASSESSEE THE AO ADDED AN AMOUNT OF RS. 36 70 000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ALSO TAXED RS. 18 26 974/- AS UNDISCLOSED BUSINESS INCOME. AGGRIEV ED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 3. BEFORE THE CIT(A) THE ASSESSEE FILED WRITTEN SU BMISSION DT. 16/10/09 ALONG WITH PAPER BOOK AND OTHER SUBMISSION S DATED 20/11/09. IT WAS STATED THAT THE HE WAS IN NEED OF MONEY FOR BUSINESS PURPOSE THEREFORE HE WAS SUGGESTED TO SH OW MORE TRANSACTIONS IN THE BANK. ACCORDINGLY CASH WAS DEP OSITED AND WITHDRAWN TIME AND AGAIN IN THE BANK ACCOUNT FOR SH OWING MORE TRANSACTION AND HE WAS NOT AWARE OF THE AIR INFORMA TION REFERRED BY THE AO. IT WAS ALSO SUBMITTED THAT CHEQUES OF RS. 1 8 26 974/- WERE DEPOSITED BY HIS FATHER FROM HIS BUSINESS BECAUSE H E WAS NOT HAVING ANY OTHER BANK ACCOUNT. THE ASSESSEE STATED THAT HE HAD DONE SOME SHARE BUSINESS THROUGH SHAMRAO VITTHAL CO-OP BANK L TD. AND THE SHARES WERE PURCHASED AND SOLD FREQUENTLY AND TO TH IS EFFECT FILED A ITA NO. 858/M/2010 THOMAS PAUL ALMEIDA 3 STATEMENT SHOWING PURCHASE AND SALE OF SHARES AND A RGUED THAT NOMINAL AMOUNT WAS INVESTED IN SHARES AND THE ROTAT ION WAS MADE FROM THAT AMOUNT. IT WAS ALSO STATED THAT THE SALE PROCEEDS OF SHARES WERE ALSO DEPOSITED IN THE SAME BANK ACCOUNT. HE FI LED WORKING OF PEAK FOR THE BANK ACCOUNT IN QUESTION CONSIDERING A LL CASH AND CHEQUE TRANSACTIONS. ACCORDING TO THE ASSESSEE PEA K AMOUNT OF THIS BANK ACCOUNT COMES TO RS. 3 45 374/- WHICH SHOULD BE ADDED TO INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) HELD AS UND ER:- 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E FINDINGS OF THE AO AND SUBMISSIONS OF THE APPELLANT BEFORE THE AO AS WELL AS IN APPELLATE PROCEEDING. I FIND FORCE IN THE SUBMIS SIONS OF THE APPELLANT THAT CASH WAS ROTATED IN THE BANK ACCOUNT TO SHOW MORE TRANSACTIONS WITH AN INTENTION TO AVAIL LOAN F ACILITIES. AFTER CONSIDERING THE EXPLANATION OF THE APPELLANT I AM OF THE VIEW THAT IN SUCH CIRCUMSTANCE ONLY PEAK AMOUNT SHOULD HAVE BEEN ADDED BY THE AO AND ADDITION OF ENTIRE CASH DEPOSIT U/S 68 IS NOT JUSTIFIED BECAUSE THE SAME MONEY WAS ROTATED IN SEVERAL TIMES. SIMILARLY INITIAL INVESTMENT IN SHARE BUSIN ESS NEEDS TO BE TAXED KEEPING IN VIEW THE TURNOVER IN SHARES. SIMIL ARLY PEAK AMOUNT SHOULD BE TAXED REGARDING BUSINESS CLAIMED O F HIS FATHER INSTEAD OF MAKING ADDITION OF THE ENTIRE CHEQUES RE CEIVED FROM THE PURCHASERS. THEREFORE AO IS DIRECTED TO VERIFY THE CORRECTNESS OF THE PEAK WORKED OUT BY THE APPELLANT AND HE HIMS ELF SHOULD WORK OUT THE PEAK IN VIEW OF THE AFORESAID DISCUSSI ON AND ADDITION OF ONLY PEAK AMOUNT SHOULD BE RETAINED AND BALANCE AMOUNT OF ADDITIONS SHOULD BE DELETED. THIS VIEW IS SUPPORTED BY THE DECISIONS OF RAJKOT ITAT IN THE CASE OF ITO VS. MAHESH KUMAR JAYANTILAL VOHRA 2SOT 96 (RAJ) AND MV MATHEW VS. IT O 54 TTJ 353 (COCHIN). 4. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL. 5. THE LEARNED DR BESIDES STRONGLY RELYING UPON THE ORDER OF AO SUBMITTED THAT THE CIT(A) FAILED TO APPRECIATE THE FACT THAT BEFORE APPLYING PEAK THEORY WITH RESPECT TO ANY UNDISCLOSE D ACCOUNT WHETHER IT IS BANK ACCOUNT OR ANY OTHER ACCOUNT IT IS TO BE PROVED BY THE ASSESSEE THAT SOURCE OF SUBSEQUENT DEPOSITS IN THE SAID ACCOUNT IS THE EARLIER WITHDRAWAL. THEREFORE HE PLEADED THAT THE ORDER OF THE CIT(A) IS SET ASIDE AND THAT OF THE AO BE RESTORED. ITA NO. 858/M/2010 THOMAS PAUL ALMEIDA 4 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE RELIED UPON THE ORDER OF CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. THE AO MADE THE ADDITION U/S 68 ON THE GROUNDS THAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCE OF T HE DEPOSITS IN THE BANK AND THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM. THE CIT(A) HELD THAT I FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE THAT CASH WAS ROTATED IN THE BANK ACCOUNT TO SHOW MORE TRANSACTIONS WITH AN INTENTION TO AVAIL LOAN FACILI TIES. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE I AM OF THE VIEW T HAT IN SUCH CIRCUMSTANCE ONLY PEAK AMOUNT SHOULD HAVE BEEN ADD ED BY THE AO AND ADDITION OF ENTIRE CASH DEPOSIT U/S 68 IS NOT J USTIFIED BECAUSE THE SAME MONEY WAS ROTATED IN SEVERAL TIMES.. THE CIT(A) FURTHER HELD THAT INITIAL INVESTMENT IN SHARE BUSINESS NEEDS TO BE TA XED KEEPING IN VIEW THE TURNOVER IN SHARES. SIMILARLY PEAK AMOUNT SHOULD BE TAXED REGARDING BUSINESS CLAIMED OF HIS FATHER INSTEAD OF MAKING ADDITION OF THE ENTIRE CHEQUES RECEIVED FROM THE PURCHASERS. THE CASE OF THE ASSESSEE WAS THAT THE ASSESSEE HAS DEPOSITED THE AM OUNT AND WITHDRAWN THE SAME AND ALSO DEPOSITED CHEQUES IN JO INT ACCOUNT OF THE ASSESSEE AND HIS FATHER. THE ASSESSEE HAS EXPLA INED BEFORE THE AO THAT THE SOURCE OF HIS DEPOSITS IN THE BANK ACCOUNT WAS FROM THE PARTNERSHIP FIRM AND THE SAME WAS SUBSEQUENTLY WIT HDRAWN BY HIM. AS REGARDS CHEQUES DEPOSITED IN THE BANK ACCOUNT JO INTLY HELD BY THE ASSESSEE AND HIS FATHER IT WAS EXPLAINED BEFORE TH E AO THAT HIS FATHER IS ENGAGED IN THE CLOTH BUSINESS AND CHEQUES RECEIV ED BY HIS FATHER DEPOSITED IN THE JOINT ACCOUNT. THE AO WITHOUT EXAMINING THE EXPLANATION OF THE ASSESSEE WITH OUT ANY BASIS AND ON SUSPICION INVOKED SECTION 68 OF THE ACT. NOTHING BROUGHT ON R ECORD BY THE AO TO SUBSTANTIATE HIS ACTION THAT THE REFUNDS WITHDRAWN BY THE ASSESSEE FROM BANK ACCOUNT HAS BEEN USED FOR OTHER PURPOSES OR INVESTED THE SAME ELSEWHERE. IN VIEW OF THE ABOVE AND AFTER CONS IDERING THE FACTS OF ITA NO. 858/M/2010 THOMAS PAUL ALMEIDA 5 THE CASE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THEREFORE THE SAME IS HEREBY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JULY 2011. SD/- SD/- (R.S. SYAL) (V. DUR GA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 22 ND JULY 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE E BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI.