Income Tax Appellate Tribunal - Ahmedabad
Smt. Hirvaben U.Shah,, Ahmedabad vs The Income Tax Officer,Ward-11(1),, ... on 3 December, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, AHMEDABAD
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BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER
And SMT MADHUMITA ROY, JUDICIAL MEMBER
आयकर अपील सं./I.T.A.No. 1474/Ahd/2014
( नधा रण वष / Assessment Year : 2008-09)
Smt. Hirvaben U. Shah, बनाम/ ITO,
7, Adishwar Flats, Vs. Ward-11(1),
Vishwakunj Char Rasta, Ahmedabad.
Narayan Nagar Road, Paldi,
Ahmedabad - 380 007
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AOAPS 1431 D
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से/ Appellant by : Ms. Urvashi Sodhan, A.R.
यथ क ओर से/Respondent by: Shri Mudit Nagpal, Sr.D.R.
ु वाई क तार ख/
सन Date of Heari ng 27/09/2018
घोषणा क तार ख /Date of Pronounce ment 03/12/2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)-XVI, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)- XVI/ITO/Wd.11(1)/126/12-13 dated 07.03.2014 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961(here-in-after referred to as "the Act") dated 24.12.2010 relevant to Assessment Year (AY) 2008-09.
ITA No.1474/Ahd/2014Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -2-
2. The grounds of appeal raised by the assessee are as under:-
"1. Ld.. CIT (A) erred in law and on facts in hold.ing that the appellant failed to prove that disputed bank account was in joint name of the appellant and her sister Gitaben alias/Ritaben P Shah since AO clearly brought on record that person by the name of Ritaben did not exist. Ld.. CIT (A) ought not to have made factually wrong observation since no such conclusion is drawn by AO in assessment order. It be so held now.
2. Ld.. CIT (A) further erred in law and on facts in observing that the appellant created a bogy of death of Ritaben knowing fully well that the appellant is not in the position to produce Ritaben her being dead. Ld.. CIT (A) ought to have refrained from making such baseless allegations. It be so held now.
3. Ld.. CIT (A) erred in law and on facts in confirming addition made by AO ignoring confirmation of the depositors substantiated with revenue records to prove genuineness and capacity of the lendeRs. Ld..CIT (A) ought to have deleted addition of amount borrowed for purchase of property since source of funds is explained by appellant with evidence. It be so held now.
4. Ld.. CIT (A) erred in law and on facts in treating documents submitted in support of the claim that appellant deposited cash withdrawn for purchase of a shop that did not materialize as additional evidence since originally no such claim was before AO. Ld.. CIT (A) factually erred in not appreciating that appellant did claim re deposit of withdrawn money before AO (Para 5) submitting documents in Gujarati to substantiate claim before ld.. CIT(A) though not dealt with by both the authorities. Ld.. CIT (A) ought to have accepted and adjudicated the claim of the appellant. It be so held now.
5. Ld.. CIT (A) erred in law and on facts in directing AO to verify and provide relief of Rs. 33,000/- from original bank account when Id. CIT (A) in first round already confirmed actual figure of cash deposit at Rs. 15,59,800/- and not Rs. 15,92,800/- as added by AO. Ld.. CIT (A) ought to have deleted the addition in toto or alternatively restricted addition to correct amount. It be so held now.
6. Levy of interest u/s 234A/234B/234C of the Act is not justified.ITA No.1474/Ahd/2014
Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -3-
7. Initiation of penalty u/s 271(1)(c) of the Act is not justified.
The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal."
3. The only issue raised by the assessee in this appeal is that ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of Rs. 15,59,800/- on account of deposits of cash in the saving bank account.
4. Briefly stated facts are that the assessee in the present case is an individual and deriving her income under the head salary and from agriculture activities.
4.1 The assessee is maintaining a bank account with ING Vysya Bank jointly with her sister. The assessee in the year under consideration has deposited a sum of Rs. 15,92,800/- in her bank account. On a question by the AO about the source of cash deposit in the bank, the assessee replied that she is maintaining the impugned bank account along with her sister who is expired. As such, this account was operated by her. The assessee in support of his claim also filed the copy of death certificate of her sister.
4.2 The assessee also submitted that she had taken loan in cash from certain farmers which was deposited in the bank account.
ITA No.1474/Ahd/2014Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -4- 4.3 The assessee also submitted that on certain occasions the money was withdrawn from the bank which was subsequently deposited again in the bank.
However, the AO disregarded the contention of the assessee by observing that the name of the sister of the assessee in the bank statement is Ritaben P. Shah whereas in the death certificate the name is appearing as Gitaben Shah. Therefore the AO disbelieved the death certificate filed by the assessee.
4.4 The AO also observed that the parties from whom the assessee has taken the loan had filed the details of the land held by them. However, there was no documentary evidence supporting the creditworthiness of the parties who have given loan to the assessee. In view of the above, the AO treated the amount deposited in the Bank Account of Rs. 15,92,800/- as undisclosed income and added to the total income of the assessee.
5. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld. CIT(A) submitted that the bank account was operated by her sister Ritaben P. Shah alias Gitaben P. Shah who has expired now. Therefore, it was very difficult to collect the necessary information about the source of the deposit of cash in the said bank account.
ITA No.1474/Ahd/2014Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -5- 5.1 The assessee also submitted that she had deposited cash of Rs. 15,59,800/- but the AO inadvertently has taken the deposit of cash of Rs. 15,92,800/-.
5.2 The assessee further explained the source of cash deposited in the bank account in the manner as detailed under:
"The total cash deposition in the above noted saving bank account aggregating to Rs. 15,59,800/- contains following sources. 1 Rs. 64,100/- Out of cash on hand available with your appellant in the form of saving of earlier year.
2 Rs. 476000/- Out of cash withdrawn from the bank including receipt on sale of shop.
3 Rs. 300000/- Out of borrowings from small borroweRs. 4 Rs. 500000/- Out of cash withdrawn from bank in October, 2007 5 Rs. 219700/- Out of borrowing from small borroweRs.
Rs. Total
15,59,800/-
a. Now, taking up the individual head of sources as mentioned
herein above, in respect of very first source of Rs. 64,100/-, it may be noted that, I am a salaried person earning salary of Rs. 7500/- per month and I am also hold.ing huge agricultural land received from heritance from my parents in Village Jhejhara, Nr. Viramgam and I receive agricultural income of around Rs. 1.5 lacs to Rs. 2 lacs per annum and therefore, I hold. regular cash on hand of around Rs. 1 lacs and out of this cash, I have deposited cash of Rs. 64,100/- during the period from April, 2007 to June, 2007 which please note, b. Taking up the second source of Rs. 4.76 lacs it may be noted that I have sold. my shop at Nobles Commercial Centre, Ashram Road, Ahmedabad for Rs. 6,25,000/- on 14-07-2007 and I have ITA No.1474/Ahd/2014 Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -6- received payment thereof by single cheque and therefrom, I have withdrawn cash of Rs. 4.76 in installments lacs and the same is redeposited back in bank in installments as per my necessity. A copy of the sale deed is enclosed herewith for your ready reference, c. I had an intention to purchase another shop and therefore, I had borrowed a sum of.Rs. 3,00,000/- from small depositors in Sept. 2007. The same cash was deposited in bank on 26-09- 2007 against which, a cheque of Rs. 1.00 lac was paid to the seller party on 28th September, 2007 as an advance towards purchase of shop.
d. Whereas in respect of cash deposition of Rs. 5.00 lacs, it may be noted that I had sufficient bank balance as on 30-09-2007 amounting to more than Rs. 6.00 lacs and there from, a sum of Rs. 5.00 lacs was withdrawn in cash on 01-10-2007 to get the demand draft for payment towards purchase of shop but, unfortunately, since, your appellant being sick, the transaction remained incomplete and therefore again, the said cash was redeposited in bank on 25-10-2007. It may further be noted that the said payment of Rs. 5.00 lacs was made on 25-10-2007 towards the purchase of shop.
e. Further, a sum of Rs. 219700/- was deposited in bank between 1-12-07 to 29-12-07 out of borrowings from small borrowers and! had paid a sum of Rs. 2.00 lacs towards the purchase of shop which please note. Confirmations in respect of the depositors have already been filed alongwith their identity, ability and capacity to give loans which are submitted to the learned assessing officer which again are submitted herewith for your ready reference.
Accordingly, your appellant had tried to explain each and every entry alongwith proper sources of fund and their relative evidences but, unfortunately, the learned assessing officer has ignored all the evidences in a summary manner and has added a sum of Rs. 1592800/- under the head unexplained cash credit u/s.68 of the I.T. Act 1961."ITA No.1474/Ahd/2014
Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -7- 5.3 The assessee also submitted that the AO had obtained a statement from two parties who have given loan to the assessee, but these statements were not provided to the assessee for her rebuttal despite repeated request.
5.4 The assessee also submitted that these farmers mainly carried out agriculture activity and they do not maintain any bank account as agriculture income is not chargeable to tax. Therefore, they have not even taken the PAN from the Income Tax Department.
5.5 The assessee further submitted that the loan taken from the farmers should not be doubted as they hold the agriculture land as evident in the form of 7/12 extracts and Gram Panchayat Certificate.
5.6 The ld. CIT(A) after considering the submission of the assessee deleted the addition made by the AO in part by observing as under:
2. I have carefully considered the facts of the case in the light of submissions made by the appellant, the arguments taken by the assessing officer & material available on records. The arguments of the appellant appears to be far from convincing and acceptable when tested on touchstone of available evidences.
Rejecting the hypothesis of the appellant, that the account was jointly held by the appellant with her sister Ritaben, who has since expired the AO has clearly brought upon records that Ritaben does not exists. The AO has indicated that the appellant had produced death certificate of Gitaben and that therefore there is no veracity in the appellants statement. The appellant ITA No.1474/Ahd/2014 Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -8- on its part has not able to prove with any verifiable evidence that Ritaben & Ritaben are same persons. Without prejudice, the argument taken by the appellant is that part of the cash deposit pertains to small loans received from a small depositors and sale of some shop. The confirmation of small depositors filed by the appellant has been examined. It transpires from that all the depositors have given small loans to Ritaben. The appellant has thus created a bogy of death of Ritaben fully knowing that she cannot be produce now on the strength of her being dead. The appellant has argued that the money was taken from small depositors so as to purchase some shops and property. It is pertinent to note that whereas the deposits from small lenders, in cash, were taken by the said Ritaben, the shops were purchased in the name of Hirvaben i.e. the appellant- Now, to justify source of cash deposits the same is said to be taken by Ritaben, deposited in the bank account and is utilized by the appellant tot purchase some property, Now if Ritaben was recipient of the cash loan for the reported purpose of buying a property, then the property ought to have been bought by Ritaben atleast jointly, if not exclusively. Consequently, it is held that there is no justification for the borrowings of Rs. 5,19,700/- reportedly made from some small depositoRs. This without prejudice to the fact that the impugned confirmations of said depositors do not conclusively established their creditworthiness as well as the genuineness of the transaction, Creditworthiness of a person to advance loan or deposit to some other person, is to be construed as his / her capacity to make such loan or deposit from surplus resources. There is no evidence on records, to establish a sound creditworthiness of the depositor concerned. This without prejudice to the fact that the date of loan and the date of cash deposit are not evenly matching. Similarly, on one hand the appellant says that the proceeds in the bank account are related to Ritaben whereas on the other hand, the appellant submits that they are linked to sale of a property which was hitherto owned by appellant. This without prejudice to the theory propounded by the appellant that she sold. a property, received proceeds by cheque, withdrew the amounts in installments over a period of time and then again deposited the ITA No.1474/Ahd/2014 Shri Hirvaben U. Shah vs ITO A.Y. 2008-09 -9- said withdrawals into the bank accounts. This again without prejudice to the fact that no contention of linkage between cash deposits with receipts of any sale of shop was made before the A O and since the same is made now for the first time cannot be accepted. It is a trite law that an appellant is not permitted to raise any claim or an evidence which was not available for computation before the trial court which in this case is the A 0. there is nothing on records to indicate that the appellant has made any application for admission of any additional evidence under Rule 46A. Thus, the argument of the appellant in respect of justification of cash deposits of Rs. 4,76,000/- being linked to any sale of shop by any view of the matter cannot be accepted, In view of the decisions made in the preceding paragraphs, it is held that the appellant has not been able to establish the genuineness of cash deposit of Rs. 15,92,800/- in her bank account and therefore the action of the AO in making addition u/s.68 is a legally correct action. It is pertinent to point out at this stage that the appellant has Rs. 15,59,800/- and not Rs. 15,92,800/- and that to the extent an excess deduction of Rs. 33,000/- was made in this case. The A O is accordingly directed to verify from the original bank account available with him and in case the actual amount of cash deposit is Rs. 15,59.800/- then to provide relief to the appellant of Rs. 33,000/-. To the extent ground of appeal No.1 is partly allowed.
4.0 The second ground of appeal is regarding initiation of penalty cannot be a ground for grievance as the same is premature, The assessee will get enough opportunity before the A.O. at the time of penalty proceedings. Hence this ground of appeal is dismissed"
Being aggrieved by the order of ld. CIT(A) assessee is in appeal before us.
6. The ld. AR before us filed a paper book running from pages 1-71 and reiterated the submissions as made before the ld. CIT(A).ITA No.1474/Ahd/2014
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6.1 The ld. AR drew our attention on the confirmations from the parties from whom the assessee has obtained loan which are placed on pages 27-69 of the Paper Book.
6.2 The ld. AR also filed the copy of the cash book justifying the availability of cash in her hands which was deposited in the bank account. The copy of the cash book and a chart showing details of cash deposit and withdrawals is placed on pages 20-26 of the Paper Book.
7. On the other hand, ld. DR vehemently supported the order of Authorities below.
8. We have heard the rival contentions and perused the materials available on record. In the instant case, the issue relates to the cash deposited by the assessee in her saving bank account. As per the authorities below, the source of cash deposit was not explained therefore the same was treated as unexplained income of the assessee.
8.1 It is a fact on record that the assessee maintained the bank account along with her sister. Thus, the account is a joint bank account. The AO has taken the matter under scrutiny on the basis of AIR information for the deposit of cash in the said bank account but the notice u/s 143(2) was issued only to the assessee. The fact of the joint bank account was not doubted by the authorities below. In our considered view, the AO erred ITA No.1474/Ahd/2014 Shri Hirvaben U. Shah vs ITO A.Y. 2008-09
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in issuing the notice u/s 143(2) of the Act only to the assessee and not to the sister of the assessee who is the joint account holder in the bank account. It is because once the bank account belongs to two persons then both the parties operating the bank account should have been enquired for the source of cash deposit.
8.2 The assessee before the authorities below claimed that her sister Gitaben has expired who was joint account holder but the claim of the assessee was rejected merely on the ground that the name of the sister of the assessee in the bank statement and death certificate is different. In our considered view once the AO has doubted about the veracity of the document filed by the assessee, then the onus lies on the AO to carry out necessary investigation to find out the truth. The argument of the assessee was rejected merely on the ground that there is a mismatch in the name of the sister of the assessee in the bank account as well as in the death certificate. However, in our considered view this cannot be a conclusive reason to reject the claim of the assessee. The AO was empowered to verify the facts by issuing notice u/s 131/133(6) of the Act which he failed to exercise.
8.3 There is also no doubt that this is the second round of appeal before the ITAT. On earlier occasions, the ITAT in this case bearing ITA No.801/Ahd/2012 has restored the matter to the file of ld. CIT(A) for fresh adjudication in accordance with the provision of law and after ITA No.1474/Ahd/2014 Shri Hirvaben U. Shah vs ITO A.Y. 2008-09
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providing a reasonable opportunity to the assessee vide order dated 08.06.2012. The relevant extract of the order is reproduced below:
"6. After hearing both the parties and perusing the record, we find that in Paragraph-1 of his order ld.. CIT(A) has mentioned that written submissions were filed by the assessee which were placed on record but no further opportunity was given by the assessee to further explain his case before rejecting all the evidences filed by assessee along with the written submissions containing 65 pages. The amounts to violation of principle of natural justice and therefore, we feel that metter be sent for fresh adjudication by ld..CIT(A) after taking into the consideration the written submissions and providing adequate opportunity of being heard to the assessee. We hold. accordingly."
8.4 The ITAT has recorded the finding that there was a breach of the principle of natural justice. Therefore, the matter was sent back to the ld. CIT(A) for fresh adjudication. In the original appellate proceedings before the ld. CIT(A) assessee has filed the details for the sale of shops to justify the source of cash deposit. However, the ld. CIT(A) did not admit the claim of the assessee on the ground that there was no application filed by the assessee for the admission of additional evidence under rule 46A of Income Tax Rule. In our considered view, even assuming that the additional evidence filed by the assessee were not accompanied with the application for the admission of the same then also the ld. CIT(A) should have directed the assessee to rectify the mistake. It is because there was a very clear-cut direction by the ITAT in its order to consider the evidence filed by the assessee.
ITA No.1474/Ahd/2014Shri Hirvaben U. Shah vs ITO A.Y. 2008-09
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8.5 The ld. AR also claimed that there was cash deposit in the bank account out of the cash withdrawals. The ld. AR in support of his claim also filed a reconciliation statement which is placed on Page 20-22 of paper book. The ld. DR has not brought any defect in the reconciliation filed by the assessee.
8.6 We also note that there was a clear violation of the principle of natural justice as the AO has not provided the copy of the statement obtained u/s 131 of the Act from the parties who have given loans to the assessee. It is the settled law that any document which is used against the assessee, a fair opportunity for the rebuttal should have been provided. The assessee has furnished all the confirmation from the parties from whom the loan was taken but the AO has not issued notice to all of them to verify the veracity of the confirmation filed by them.
In the light of above discussion and after considering the facts in totality, we hold that the submissions filed by the assessee to justify the source of cash deposited in the bank account were not rejected based on cogent reasons. Therefore, we are inclined to set aside the order of ld. CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.
ITA No.1474/Ahd/2014Shri Hirvaben U. Shah vs ITO A.Y. 2008-09
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9. In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 03/12/2018
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(MADHUMITA ROY) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 03/12/2018
Priti Yadav, Sr.PS
आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं'धत आयकर आयु)त / Concerned CIT
4. आयकर आय)
ु त(अपील) / The CIT(A)-XIV, Ahmedabad.
5. ,वभागीय /त/न'ध, आयकर अपील य अ'धकरण, अहमदाबाद / DR, ITAT, Ahmedabad.
6. गाड4 फाईल / Guard file.
आदे शानुसार/BY ORDER, स या,पत /त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation ...17/10/2018 (PAGE-7)
2. Date on which the typed draft is placed before the Dictating Member : .. 12/11/2018
3. Other Member...........
4. Date on which the approved draft comes to the Sr.P.S./P.S...15/11/2018
5. Date on which the fair order is placed before the Dictating Member for pronouncement..............
6. Date on which the fair order comes back to the Sr.P.S./P.S......
7. Date on which the file goes to the Bench Clerk.........
8. Date on which the file goes to the Head Clerk...
9. The date on which the file goes to the Assistant Registrar for signature on the order............
10. Date of Despatch of the Order..................