Income Tax Appellate Tribunal - Mumbai
Samson Perinchery Paul, Mumbai vs Assessee on 6 December, 2013
`आयकर अपील य अ धकरण "E " यायपीठ मब
ंु ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
ी पी.एम. जगताप, लेखा सद य एवं ववेक वमा;
या यक सद य के सम ।
BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, JM
आयकर अपील सं./I.T.A. No.7343 /Mum/2012
( नधारण वष /
Assessment Year : 2002-2003
आयकर अपील सं./I.T.A. No.4631 /Mum/2013
( नधारण वष / Assessment Year : 2009-2010
Shri Samson P. Paul, बनाम/ Asstt. Commissioner of
Phanaswadi Building, Income Tax - Central
Vs.
91E, Ist Floor, Circle - 17 & 28,
16, Kilowadi, Aayakar Bhavan,
Sitaram Podar Marg, M.K. Road,
Mumbai - 400 002. New Marine Lines,
Mumbai - 20.
थायी ले खा सं . /PAN : ACWPPO166C
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by Shri Rajiv Khandelwal &
Shri Neelkanth Khandelwal
Department by : Shri Girijadayal
ु वाई क तार ख / Date of Hearing
सन : 10-10-2013
घोषणा क तार ख /Date of Pronouncement : 06-12-2013
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आदे श / O R D E R
PER P.M. JAGTAP, A.M. :
पी.एम. जगताप, लेखा सद य These two appeals filed by the assessee against two separate orders passed by the ld. CIT(A) -39, Mumbai dated 16-10-2012 and 14-02-2013 for assessment years 2002-03 & 2009-10 are heard together and are being disposed of by this single consolidated order.
2 ITA 7343/M/12 & 4631/M/13
2. First, we shall take up the appeal of the assessee for A.Y. 2002-03 being ITA No. 7343/Mum/2012 wherein he has disputed various additions made by the A.O. and sustained by the ld. CIT(A).
3. The relevant facts of the case giving rise to this appeal are that the assessee carrying on the business of dealing in garments as commission agent, filed his return of income originally on 8-8-2002 declaring total income of Rs. 88,780/-. The said return was originally accepted by the A.O. u/s 143(1) of the Income Tax Act, 1961. Subsequently, the assessment was reopened by the A.O. and notice u/s 148 of the Act was issued by him to the assessee on 26-03-2009 after recording the following reasons:-
"In this case; the search and seizure action was conducted on 18.12.2008 which was completed on 19.01.2009. During the course of search proceedings the assessee's authorized representative has submitted accounts in Tally to the Directorate of Investigation as per which the income for A. Y. 2002-03 works out to Rs. 58,82,186/-. Copy of the said P & L A/c extracted from the accounts in Tally has been forwarded to this office. Vide letter No. DDIT(Inv.)-VIlI(1)Samson P. Perinchery/2008-09 dated 09.03.2009.
I have perused the P & L A/c of the assessee, verified the case records and found that the assessee has filed the return of income for A. Y. 2002-03 on 08-08-2002 declaring total income of Rs. 88,7801-. The scrutiny assessment for A.Y. 2002-03 has not been completed u/s. 143(3) of the I. T. Act, 1961. Further, the A.Y. 2002-03 is not covered under the provisions of Section 153A of the Acr.
In view of the above, I have reason to believe that the income chargeable to tax to the extent of Rs. 57,93,406/- has escaped assessment for the A.Y. 2002-03 within the meaning of Section 147 of the I. T. Act."
In response to the notice issued u/s 148 of the Act, the assessee filed return of income on 27-04-2009 declaring total income of Rs. 11,55,394/-. During the course of assessment proceedings, the break up of the income of Rs. 58,82,186/- declared during the course of search was given by the assessee as under:-
3 ITA 7343/M/12 & 4631/M/13 Particulars Amount (Rs) Amount (Rs.) Income submitted as per 58,82,186 Tally Less Refund of 32,17,396 investments made in Prabhudas Leeladhar and Motilal Oswal Less: Income of Annamma 13,11,295 Paul (Mother) Less: Income of Shirley 1,98,101 Pail (sister) Income declared in the 11,55,394 return of income When the assessee was called upon by the A.O. to explain the amount of Rs.
32,17,396 claimed to be received as refund of investments made in Prabhudas, it was submitted by the assessee that the investments were made through Prabhudas Leeladhar (stock broker) in the financial year 1998-99 which was refunded to the assessee and re-invested in Motilal Oswal (stock broker) in financial year 1999-2000. It was claimed that the said amount was again refunded to the assessee by Motilal Oswal in financial year 2001-02. This explanation of the assessee regarding refund of investments made earlier in Prabhudas Leeladhar (stock broker) was not found acceptable by the A.O. in the absence of any documentary evidence produced by the assessee to show the investments claimed to be made in the earlier years. He, therefore, treated the amount of Rs. 32,17,396/- as undisclosed income of the assessee and added the same to the total income of the assessee.
4. As regards the income of Rs.13,11,295/- and Rs. 1,98,101/- claimed to be belonging to his mother Smt. Annamma Paul and sister Shirley Paul respectively, the assessee filed copies of their bank accounts to support and substantiate his stand. The deposits appearing in the said accounts were also explained by the assessee as interest, dividend, pension and receipts from relatives staying abroad. As regards the interest, dividend and pension claimed to be received by Smt. Annamma Paul, the A.O. accepted the 4 ITA 7343/M/12 & 4631/M/13 explanation of the assessee. As regards the balance amount of Rs. 12,84,026/-, he however did not accept the explanation of the assessee as regards the deposits found to be made in the account of Smt. Annamma Paul and since the said lady was not assessed to tax, he treated the said amount as undisclosed income of the assessee. Accordingly, addition of Rs. 12,84,026/- was made by the A.O. to the total income of the assessee on this count. Similarly, the deposits found to be made in cash in the bank account of assessee's sister Shirly Paul to the extent of Rs. 1,98,000/- was held to be unexplained by the A.O. and treating the same as assessee's undisclosed income, addition of Rs. 1,98,000/- was made by him to the total income of the assessee. In the capital account, opening balance of Rs. 10,03,686/- was shown by the assessee and since no books of account were maintained by the assessee and there was no documentary evidence to support and substantiate the claim of the assessee for the opening balance of Rs. 10,03,686/-, the amount of opning balance of Rs. 10,03,686/- was added by the A.O. to the total income of the assessee as his undisclosed income. In his capital account, the assessee had also shown contribution of Rs. 27,50,000/- and Rs. 2 lacs received from his mother Smt. Annamma Paul and sister Shirley Paul respectively. As the said amounts were received by the assessee from the bank account of Smt. Annamma Paul and Shirley Paul and the deposits made in the said accounts were treated by him as unexplained, the claim of the assessee of having received of contribution of Rs. 29,50,000/- from his mother and sister was not accepted by the A.O. Since the addition of Rs. 14,82,026/- was already made by him to the total income of the assessee on account of deposits found to be made in the bank account of Smt. Annamma Paul and Shirley Paul treating the same as undisclosed income of the assessee, the balance amount of Rs. 14,67,974/- was also added by him to the total income of the assessee treating the same as his undisclosed income.
5 ITA 7343/M/12 & 4631/M/13
5. The various additions made by the A.O. to his total income were disputed by the assessee in the appeal filed before the ld. CIT(A) and keeping in view the additional evidence filed by the assessee in the form of confirmations from Motilal Oswal etc., which was duly verified and accepted by the A.O. in the remand report, the ld. CIT(A) held that the refund of investment of Rs. 32,17,396/- claimed to be made by the assessee was duly explained/established to the extent of Rs. 30,01,049/-. Accordingly, the addition made on this issue by the A.O. was restricted by him to Rs. 2,16,347/-. The other additions made by the A.O., however, were confirmed by the ld. CIT(A) mainly for the same reasons as given by the A.O. in the assessment order. Aggrieved by the order of the ld. CIT(A), the assessee has preferred this appeal before the Tribunal on the following grounds:-
"1. On the issue of addition of Rs.2,14.347/- (refund of investment) On the facts and in law:
1.1] The Learned CIT (A) erred in confirming addition of Rs.2,16,347/-
being refund of investment, not appreciating the fact that the same is fully explained as the same was received from mother of the appellant, whose bank account was also submitted.
2. On the issue, of cash deposit in the name of mother.
On the facts and in law:
2.1] The Learned CIT (A) has erred in confirming the addition of Rs.12,84,026/- on account of cash deposit in the bank account of the mother, not appreciating the fact that the appellant had no control on the bank account of the mother.
2.2] The Learned CIT (A) erred in observing that section 68 casts burden on the appellant to explain the deposit in the bank of mother where he has no control over the same.
3. On the issue of cash deposit in account of the sister. On the facts and in law:
3.11 The Learned CIT (A) has erred in confirming the addition of Rs. 1,98,000/- on account of cash deposit in the bank account of the sister, not appreciating the fact that the appellant had no control on the bank account of the mother.
3.2] The Learned CIT (A) erred in observing that section 68 casts burden on the appellant to explain the deposit in the bank of sister where he has no control over the same.
6 ITA 7343/M/12 & 4631/M/13
4. On the issue of opening cash balance On the facts and in law:
4.1 The Learned CIT (A) erred in confirming the addition of Rs.1O,03,686/- on account of the opening balance without appreciating the fact that the same can not be brought to tax during the year under consideration.
5. On the issue of contribution from relatives:
On the facts and in law:_
5.1] The learned CIT(A) erred in addition of Rs. 14,67,974/- on account of contribution from mother and sister without appreciating the fact that the investment was made by the respective relatives from their own bank accounts.
6. We have heard the arguments of both the sides and also perused the relevant material available on record. As regards the issue raised in ground No. 1 relating to the addition of Rs. 32,17,396/- made by the A.O. on account of refund of investments which has been sustained by the ld. CIT(A) to the extent of Rs. 2,16,347/-, it is observed that the claim of the assessee of having received the refund of investment made in the earlier year was not accepted by the A.O. mainly due to the failure of the assessee to produce any documentary evidence to establish the investments made in the earlier year. Before the ld. CIT(A), the assessee however filed such evidence and after getting the same verified by the A.O., who accepted it in the remand report, the ld. CIT(A) held that the claim of the assessee on this count was duly established to the extent of Rs. 30,01,049/-. He accordingly allowed relief to the assessee to that extent and sustained the addition only to the extent of Rs. 2,16,347/-. At the time of hearing before us, the ld. counsel for the assessee has not been able to offer any satisfactory explanation in respect of this amount of Rs. 2,16,347/- claimed to be refund of investment by the assessee. In our opinion, the ld. CIT(A) has already taken a reasonable stand on this issue giving substantial relief to the assessee to the extent his claim for refund of investment was duly established on evidence and no further relief, in our opinion, is warranted on this ossue in the absence of any 7 ITA 7343/M/12 & 4631/M/13 evidence brought on record by the assessee to explain the balance amount of Rs. 2,16,347/- which is rightly treated by the ld. CIT(A) as unexplained. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(A) on this issue and uphold the same dismissing ground No. 1 of assessee's appeal.
7. As regards ground No. 2 & 3 relating to the additions made by the A.O. to the total income of the assessee on account of the deposits found to be made in the bank accounts of his mother and sister treating the same as undisclosed income of the assessee, we find merit in the contention of the ld. counsel for the assessee that the credits in the bank accounts of said persons, who are separate entity, cannot be treated as undisclosed income of the assessee even if no satisfactory explanation in respect of the said credits is offered unless the said accounts are found to be the benami accounts of the assessee. In this regard, it is observed that no such case was made out even by the A.O. that the bank accounts of Smt. Annamma Paul and Shirley Paul were the benami accounts of the assessee. On the other hand, the explanation of the assessee as regards some credits in the said accounts representing interest, dividend and pension belonging to the said ladies was accepted by the A.O. thereby accepting that the said bank accounts were belonging to the concerned two ladies. In these circumstances, we are unable to understand how the deposits made in the said bank account could be treated as undisclosed income of the assessee and even the A.O. in his assessment order has not given any such basis/justification to treat the deposits found to be made in the bank accounts of his mother and sister as undisclosed income of the assessee. We, therefore, delete the addition made by the A.O. on this issue and allow ground No. 2 & 3 of assessee's appeal.
8. As regards the issue raised in ground No. 4 relating to the addition of Rs. 10,03,686/- made to the total income of the assessee on account of opening balance capital account, it is observed that the claim of the assessee 8 ITA 7343/M/12 & 4631/M/13 for opening balance in the capital account of the assessee was not accepted by the A.O. in the absence of any books of account or other documentary evidence produced by the assessee. However, there was no basis or justification given by the A.O. for treating the said opening balance as undisclosed income of the assessee for the year under consideration. As rightly contended by the ld. counsel for the assessee, when the balance of Rs. 10,03,686/- was appearing in the capital account of the assessee as opening balance as on 1-4-2001, the addition for the same even if treated as unexplained, could be made in the earlier year and not in the year under consideration unless it is established that the same represented income of the assessee for the year under consideration. We, therefore, delete the addition made to the total income of the assessee on this issue and allow ground No. 4 of assessee's appeal.
9. As regards the issue raised in ground No. 5 relating to the contribution received by the assessee to his capital account from mother and sister which is treated as unexplained to the extent of Rs. 14,67,974/-, it is observed that the contribution was received by the assessee through banking channel from the bank accounts of his mother and sister. The deposits found to be made in the said bank accounts were also explained by the assessee. The A.O., however, did not accept the said explanation and made the addition to the total income of the assessee treating the contribution received from his mother and sister as unexplained. As rightly contended by the ld. counsel for the assessee, the immediate source of contribution to his capital account was explained by the assessee as the amounts received from his mother and sister through banking channel. The A.O., however, treated the said contribution as unexplained for the reason that the assessee failed to establish the source of source which, in our opinion, is not permissible. Moreover, as submitted by the ld. counsel for the assessee, the mother of the assessee had expired on 26-6-2003 and it was therefore impossible for the assessee or anybody to 9 ITA 7343/M/12 & 4631/M/13 explain the source of funds given to the assessee in the hands of the said lady after a period of 7-8 years from her death. We, therefore, hold that the addition made by the A.O. and confirmed by the ld. CIT(A) on this issue is not sustainable and deleting the same, we allow ground No. 5 of assessee's appeal.
10. Now, we shall take up the appeal of the assessee for A.Y. 2009-10 being ITA No. 4631/Mum/2013 which is directed against the order of ld. CIT(A)- 39, Mumbai dated 14-02-2013 whereby he confirmed the following additions made by the A.O. :-
A. Expenditure on foreign tour - Rs. 3,50,000/-
B. Household expenses - Rs. 70,000/-
C. Unexplained money - Rs. 7,63,000/-
D. Addition under section 69 - Rs. 67,46,251/-
=============
Total - Rs. 79,29,251/-
11. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the appeal filed by the assessee challenging the additions by the A.O. was dismissed by the ld. CIT(A) by his impugned order passed ex parte for non-prosecution holding that the conduct of the assessee in seeking the adjustment again and again was sufficient to show that he was not interested in prosecuting this appeal. As submitted by the ld. counsel for the assessee, the adjournments were sought by the assessee for sufficient cause and this position is clear from the fact that on the last date of hearing fixed before the ld. CIT(A) on 13-2-2013, the adjournment was sought on the ground that the wife of the authorized representative of the assessee had to undergo a surgery. Moreover, as submitted by the ld. counsel for the assessee, the assessee is very much interested in getting his appeal challenging the additions made by the A.O. to be disposed of on merit and has also shown his willingness to argue the 10 ITA 7343/M/12 & 4631/M/13 matter on merit before us. The ld. D.R., however, has contended that the ld. CIT(A) having not decided the appeal of the assessee on merit, the matter may be remitted to the ld. CIT(A) for disposing of the appeal of the assessee on merit. We agree with this contention of the ld. D.R. Accordingly, the matter is remitted to the file of the ld. CIT(A) for deciding the appeal of the assessee involving the issue of additions made by the A.O. on merit after giving one more opportunity of being heard to the assessee. The assessee is also directed to extend all the possible cooperation in order to enable the ld. CIT(A) to dispose of the appeal expeditiously.
12. In the result, appeal of the assessee for A.Y. 2002-03 is partly allowed and appeal of the assessee for A.Y. 2009-10 is treated as allowed for statistical purpose.
Order pronounced in the open court on 6th December, 2013 .
आदे श क घोषणा खल
ु े यायालय म दनांकः 06-12-2013 को क गई ।
Sd/- sd/-
(VIVEK VARMA) (P.M. JAGTAP)
या यक सद य JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक Dated 06-12-2013.
[
व. न.स./ RK , Sr. PS
11 ITA 7343/M/12 & 4631/M/13
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A)--39, Mumbai.
4. आयकर आयु त / CIT -II, Mumbai
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai E Bench
6. गाड फाईल / Guard file.
ु ार/ BY ORDER,
आदे शानस
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai