Income Tax Appellate Tribunal - Mumbai
Dcit 3(3)(1), Mumbai vs Late Shir Kantilal Virchand Shah ... on 12 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"H" BENCH, MUMBAI
BEFORE HON'BLE SHRI B. R. BASKARAN, AM &
HON'BLE SH. SANDEEP GOSAIN, JM
आयकरअपीलसं./ I.T.A. No. 7017/Mum/2016
(निर्धारणवर्ा / Assessment Year: 2006-07)
DCIT-3(3)(1),
Late Shri Kantilal
Room No. 609, 6th floor,
Virchand Shah,
Aayakar Bhavan, M. K.
(Through legal heir Shri
Road, Mumbai-400 020. बिधम/ Jason K. Shah)
Vs. C/o- Gill & Co. Pvt. Ltd.
2nd floor, NTC House, N.
M. Marg, Ballard.
Mumbai-400001
स्थायीले खासं ./ जीआइआरसं ./ PAN No. ABHPS7038L
(अपीलाथी/Appellant) : (प्रत्यथी / Respondent)
And
आयकरअपीलसं./ I.T.A. No. 6957/Mum/2016
(निर्धारणवर्ा / Assessment Year: 2006-07)
&
आयकरअपीलसं./ I.T.A. No. 2441/Mum/2018
(निर्धारणवर्ा / Assessment Year: 2007-08)
Late Shri Kantilal
DCIT-3(3)(1),
Virchand Shah,
Room No. 609, 6th floor,
(Through legal heir Shri बिधम/ Aayakar Bhavan, M. K.
Jason K. Shah) Vs. Road, Mumbai-400 020.
C/o- Gill & Co. Pvt. Ltd.
2nd floor, NTC House, N.
M. Marg, Ballard.
Mumbai-400001
(अपीलाथी/Appellant) : (प्रत्यथी / Respondent)
And
ITA No. 7017, 6957, 7016 & 7015/Mum/2016
& ITA No. 2441/Mum/2018
Late Shri Kantilal Virchand Shah &
M/s Gill & Co. Pvt. Ltd.
आयकरअपीलसं./ I.T.A. No. 7016 & 7015/Mum/2016
(निर्धारणवर्ा / Assessment Year: 2006-07 & 2007-08)
DCIT-3(3)(1),
M/s Gill & Co. Pvt. Ltd.
Room No. 609, 6th floor, बिधम/
2nd floor, NTC House, N.
Aayakar Bhavan, M. K. Vs. M. Marg, Ballard.
Road, Mumbai-400 020.
Mumbai-400001
स्थायीले खासं ./ जीआइआरसं ./ PAN No. AAACG3743M
(अपीलाथी/Appellant) : (प्रत्यथी / Respondent)
अपीलाथीकीओरसे / Appellant by : Shri Rajore Satish
Chandra, DR
प्रत्यथीकीओरसे/Respondentby : Shri Vijay Mehta &
Shri Harsh Bhatia, AR
सुनवाईकीतारीख/
: 18.10.2018
Date of Hearing
घोषणाकीतारीख /
: 12/12/2018
Date of Pronouncement
आदे श / O R D E R
Per Sandeep Gosain, Judicial Member:
The present five Appeals have been filed by the revenue as well as assessee against the order of Commissioner of Income Tax (Appeals)-8, Mumbai, dated 25.08.16 and 26.08.16 for A.Y. 2006-07 and 2007-08 respectively.
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ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
2. Since the issues raised in these five appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed of by this consolidated order.
3. The brief facts which are common in all the appeals leads to the factual position that Late Kantilal V Shah was a deceased individual. Shri Jason K. Shah is the legal heir of Late Kantilal V Shah. The said deceased Late Kantilal V. Shah was also the Managing Director of M/s Gill & Co Pvt. Ltd during AY 2006- 07 and AY 2007-08.
In respect of both the Assessees i.e. Late Kantilal V. Shah and M/s Gill & Co. Pvt. Ltd, the case was re-opened on account of information received from the French Tax Authorities regarding existence of certain Bank Accounts with HSBC Bank, Geneva. As per the revenue, Late Kantilal V. Shah had opened 2 accounts in HSBC Bank, Geneva. One of the account was in the joint name of his wife, Shah Zena Irene and the other account was opened in the name of M/s. Gill & Co Pvt. Ltd.
According to the revenue, the information was received from the French Tax Authorities under the Double Tax Avoidance Treaty to the department of Income Tax with regard to 3 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
deposits in the above mentioned two accounts in HSBC Bank, Geneva. However, the legal heir of Shri Kantilal V. Shah was not provided with any of the documents. In response to the order of re-opening, the legal heir Shri Jeson Shah also informed that he had himself given "consent waiver form" to the HSBC Bank, but he had not been provided any Bank Account document either by the Department or by HSBC Bank.
4. During the DIT(Inv) proceedings, Shri Jason Shah gathered limited information of the Bank Account balances for the period October 2006 to February 2007 and according to that, the peak credit in the Account of Late Shri Kantilal V. Shah and his wife jointly was as under:
Month Credit balance (USD)
October 2006 $ 46,025.95
November 2006 $1,35,201.74
December 2006 $2,06,459.32
January 2007 $ 2,05,492.60
February 2007 $2,16,613.18 (Peak)
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ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
5 Further, the peak credit in the Account of M/s Gill & Co Pvt. Ltd. was as under:
Month Credit balance (USD) October 2006 $1,16,649.77 November 2006 $ 1,19,107.24 December 2006 $ 1,19,079.34 January 2007 $ 1,19,591.98 February 2007 $ 1,19,710.29 (Peak)
6. From the above tables, the maximum peak credit in the case of Late Kantilal V. Shah and M/s Gill & Co Pvt. Ltd. was USD 2,16,613.18 and 1,19,710.29 respectively totaling to USD 3,36,323.47. According to the assessee, to avoid litigation and to buy peace, Shri Jason Shah disclosed a higher amount of USD 3,52,200 and offered an additional income of INR 1,65,00,000/- (USD 3,52,200 at the maximum exchange rate of INR 46.83 amounting to INR 1,64,93,526 rounded off) in the hands of Late Shri Kantilal V. Shah for AY 2007-08.
7. During the assessment proceedings, the AO received detailed information on peak credits of the two Assessee's Bank 5 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
Accounts for the period November 2005 to February 2007 through "base notes" from the French Tax Authorities, the additions of the following amounts were done by the AO:
Assessee AY Amount (in Amount (in INR)
USD)
Late Kantilal V Shah 2006-07 1,84,081.27 82,10,025
(substantive (substantive basis)
basis) 76,14,691
1,70,732.98 (protective basis)
(protective basis)
Late Kantilal V Shah 2007-08 3,52,200 1,65,00,000
Gill & Co Pvt. Ltd. 2006-07 1,70,732.98 76,14,691
(substantive (substantive basis)
basis)
Gill & Co Pvt. Ltd. 2007-08 44,353.84 19,29,392
Total effective 9,22,101.07 3,42,54,108
additions
8. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, partly allowed the appeal of the assessee.
9. Against the order of Ld. CIT(A), both the assessee as well as department have filed their respective appeals. First of all we are dealing with the appeal filed by the revenue bearing ITA No. 6 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
7017/Mum/2016 for AY 2006-07 on the grounds mentioned herein below:-
"1. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in confirming the addition of only $ 84,487.09 (Rs. 37,68,124/-) for A.Y. 2006-07 though unexplained credits in the bank accounts of the assessee were $ 1,84,081.27 (Rs. 1,58,52,716/-) and the unexplained cash credit for the A. Y. 2006-07 should be assessed to tax for A. Y. 2006- 07 only.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 76,1'4,691'/- made by the AO on protective basis in the hands of the assessee on account of peak credit in the foreign bank account held with HSBC Pvt. Ltd., Geneva."
3. The appellant prays that the order of CIT (A) on the above ground be set aside and that of the Assessing Officer be restored.
4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 7
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Ground No. 1 & 2
10. These ground raised by the revenue are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in confirming the addition of only $ 84,487.09 (Rs. 37,68,124/-) for A.Y. 2006-07 though unexplained credits in the bank accounts of the assessee were $ 1,84,081.27 (Rs. 1,58,52,716/-) and the unexplained cash credit for the A. Y. 2006-07 should be assessed to tax for A. Y. 2006-07 and also challenging the order of Ld. CIT(A) in deleting the additions of Rs. 76,14,691/- on protective basis, therefore we thought it fit to dispose of the same by this common order.
11. We have heard counsels for both the parties at length and we have also perused the material placed on record, judgment cited by both the parties, written synopsis as well as the orders passed by revenue authorities.
As per the facts, the summary of Bank Accounts held in the joint account of Shri Kantilal V. Shah and Mrs. Zena Irene Shah are reproduced below:-
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(Currency in USD) AY 2006-07 Month Deposits Withdrawals Balance November, 2005 - - 1,28,449.36 December, 2005 79.70 - 1,28,529.06 January, 2006 1,442.28 - 1,29,971.34 February, 2006 - 12,417.66 1,17,553.68 March, 2006 (Peak) 1,84,081.27
12. From the above table, we noticed that the peak credit for AY 2006-07 was USD 1,84,081.27. The Ld. CIT (A) had allowed the Assessee's request of offering this peak in AY 2007-
08. It was submitted by Ld. AR that if this peak amount of USD 1,84,081.27 is to be taxed in AY 2006-07, then in that eventuality, the Assessee should be allowed credit for the taxes it had paid for AY 2007-08.
13. We noticed that as per the case of revenue, the information was received from the French Tax Authorities under the Double Tax Avoidance Treaty, but no evidence was provided to the legal 9 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
heir by the revenue. The legal heir of Shri Kantilal V. Shah, Shri Jason Shah had also given "consent waiver form" to the HSBC Bank but he had not been provided any documents either by the Department or by HSBC Bank.
14. Shri Jason Shah offered the additional income on the basis of the limited Bank Account information disclosed to him during DIT (Investigation) proceedings accordingly, he offered the peak credit of USD 3,52,200. Accordingly, Shri Jason Shah offered an additional income of INR 1,65,00,0007-(USD 3,52,200 at the maximum exchange rate of INR 46.83 amounting to INR 1,64,93,526 rounded off) in the hands of Late Shri Kantilal V. Shah for AY 2007-08.
15. It is an undisputed fact that even though Shri Kantilal V. Shah is no more, but then also, the legal heir had paid the taxes due thereon. The assessee submitted that the credit for the taxes paid for AY 2007-08 in the hands of Late Kantilal V Shah should also be given in AY 2006-07. In this respect, assessee also relied upon the order of the Hon'ble Mumbai ITAT [ITA No. 4252/Mum/2017] in the case of Estate of late Shri Vrajlal 10 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
Chandulal Mehta. The relevant part of the decision is reproduced below:
"57. The next ground urged by the assessee relates to the claim for credit of tax of Rs.52,44,128/- paid by the assessee in AY 2012-13 in respect of income now offered in AY2007-08.
58. We have noticed earlier that the assessee, "Estate of Late Vrajlal C Mehta", offered entire income pertaining to bank account standing in the name of Yeel Investment Inc in the assessment year 2012-13, as the proceeds were received during the relevant financial year. On the basis of subsequent developments, the assessee chose to offer part of income already offered in AY 2012-13 in AY 2006-07 and 2007-08. Accordingly it filed revised return of income for the above said three years. Since the assessee had already paid the relevant tax in A Y 2012- 13 and since part of income pertaining to that tax was shifted to AY 2007-08, the assessee sought credit of proportionate tax in AY 2007-08. The said claim was rejected by the AO as well as Ld CIT(A).
59. We heard both the parties on this issue. The Ld A.R submitted that the assessee has offered income in AY 2012-13, since the said income was received for the first time in India in that year only. The assessee has 11 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
also paid the tax thereon. Subsequently, upon considering the views taken by the Revenue and also to avoid protracted litigation, the assessee has chose to offer part of that income in AY 2006-07 and 2007-08 making corresponding reduction in the income offered in A Y 2012-13. The Ld A.R submitted that the CBDT has issued a Circular No. 14 (XL-35) dated 11.04.1955, wherein the tax authorities are advised to guide the assessees and it is further reiterated that the revenue should not take advantage of an assessee's ignorance to collect more tax out of him than is legitimately due from him. The Ld A.R also placed reliance on the decision rendered by Hon'ble Gujarat High Court in the case of Naresh Bhavani Shah (HUF) vs. CIT (396ITR 589), wherein it is held that there was no dearth of power with the department to grant credit of tax deducted at source in a genuine case.
60. The Ld D.R, on the contrary, submitted that there is no provision under the Act to give credit for the tax paid in A Y 2012-13 in A Y 2007-08.
61. This ground of the assessee pertains to the returns of income filed by "Estate of late Vrajlal C Mehta". We notice that the assessee has placed reliance on the Circular issued by CBDT and the decision rendered by Hon'ble Gujarat High Court in the case of Naresh Bhavani Shah (HUF) (supra). Considering the peculiar 12 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
circumstances of the case, we are of the view that there is merit in the claim of the assessee. As per the provisions of sec. 5 of the Act, income received in India is taxable in the year of receipt. Hence the assessee appears to have offered the income in AY 2012-13. However, when the revenue chose to assess the income on accrual basis, the assessee has accepted the same and has accordingly filed revised returns of income, though they were beyond the prescribed time. No information was placed before us about the fate of those return of income and revised return of income filed for AY 2012-13 by Estate of late Vrajlal C Mehta. Since we have quashed the assessment order passed in the name of Shri Anoop Mehta, legal heir of late Shri Vrajlal C Mehta, the return of income as well as revised returns of income filed by Estate of late Vrajlal C Mehta shall remain intact. Hence this issue shall really arise only when the revenue is acting on those returns. Hence, at that point of time, the revenue may consider the claim of the assessee liberally in accordance with the decision rendered by Hon'ble Gujarat High Court in the case of Naresh Bhavani Shah (HUF) (supra)."
16. The facts of the present case are squarely covered by the above decision as the taxes due have been paid by the legal heir. Now, the only issue is of the year for which credit of taxes 13 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
should be given. In this respect, we rely upon the decision of the Hon'ble Delhi High Court in the case of M/s. Vishnu Industrial Gases Private Limited [ITR No. 229/1988], the relevant extract of which is as under:
"2. A perusal of the question referred indicates that the dispute is only about the year of taxability and not the amount which is to be taxed.
3. In a decision rendered about 50 years ago, the Bombay High Court, speaking through Chief Justice Tendolkar in Commissioner of Income Tax, Delhi, Ajmer, Rajasthan and Madhya Pradesh vs. Nagri Mills Co. Ltd. [1958] 33 ITR 681 observed as follows:-
"We have often wondered why the Income tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, 14 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other."
4. The situation does not seem to have changed over the last fifty years and the Revenue continues to agitate the question whether tax is leviable in a particular year or in some other year. This is hardly a question that should require us to exercise our minds particularly since there is no doubt that the tax has been paid and the rate of tax remains the same for both the assessment years."
17. Considering the above decision, the rate of taxes are the same for both the years, hence there is no loss to the Revenue and no prejudice would be caused to the Revenue if the credit of the taxes paid for AY 2007-08 is given in AY 2006-07. Therefore we ordered accordingly and upheld the order of Ld. CIT(A).
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18. Now as far as the issue of chargeability of tax in the hands of which assessee is concerned, in this respect, we have heard the parties and perused the records. As per the facts, all the bank accounts were operated by Shri Kantilal V. Shah. As the Director of Gill & Co Pvt. Ltd. i.e. Shri Jayant Bhogilal Shah had stated on oath, in the course of statement recorded u/s 131 of the Act on 06.01.2015, that none of the Directors were aware of existence of any account in HSBC, Geneva, in name of Gill & Co Pvt. Ltd. Even no power of attorney had been given by any of the Directors to anyone for opening the account in HSBC, Geneva. No Board Resolution had been passed by Gill & Co Pvt. Ltd. authorizing Shri Kantilal V. Shah for opening and operating the account in the name of Gill & Co Pvt. Ltd. In such circumstances, it was submitted that if any account in the name of Gill & Co Pvt. Ltd. which was opened in 2000 and operated then no Director of Gill & Co Pvt. Ltd. (other than Shri Kantilal V. Shah) was involved in opening and operations of the impugned account in the name of Gill & Co Pvt. Ltd, which was for the personal benefit of Shri Kantilal V. Shah only. The said Kantilal V. Shah could have clarified as to why account in the name of Gill & Co Pvt. Ltd. was opened and what was the 16 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
modus-operandi of the operation of this account (deposits & withdrawal).
19. We have perused the statements recorded by AO and from the statement of Shri Jayant Shah, Director of Gill & Co Pvt. Ltd., it is clear that the Directors were not aware of any of the Bank Accounts in Geneva. This observation is recorded by the AO in para 4.3 of his Order. Since all the Bank Accounts were managed by Late Kantilal V. Shah, the undisclosed income needs to be taxed in his hands only.
20. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these grounds raised by the revenue stands dismissed.
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Ground No. 3 and 4
21. Both the grounds raised by the revenue are general in nature and therefore needs no specific adjudication.
22. In the net result, the appeal filed by the revenue stands dismissed.
23. Now we take up assessee's appeal in ITA No. 6957/M/2016 for A.Y. 2006-07 on the grounds mentioned herein below:-
1. The Id. CIT(A) erred in confirming the addition to the extent of US $ 84,487.09, without taking into account the fact that the amount is not to be taxed for A.Y. 2006-07.
2. The Ld. CIT(A) erred in law & facts in confirming the order of the Assessing Officer (A.O.) for addition of US $ 84,487.09 for A.Y. 2006-07 even when the CIT(A) came to the conclusion that deposits in both the accounts in HSBC, Geneva, i.e. one jointly with wife 18 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
Smt. Zena Irene Shah and other account in the name of Gill & Co. Pvt. Ltd., belonged to the Late Kantilal V. Shah and peak credit of both these accounts having been already offered to tax.
3. Without prejudice to above, the Ld CIT (A) failed to appreciate the fact that an amount of US $ 48,955.08 has been withdrawn during AY 2006-07 from one account & out of this withdrawn amount US $ 44,353.84 has been re-deposited in the same account in A Y 2007-08 within a short span of time i. e. out of income brought to tax in AY 2006-07. The Ld. CIT (A) has erred in confirming the amount of deposit (i.e. US $ 44,353.84) as additional amount brought in the same account.
4. The appellant craves leave to add, amend, alter and/or delete any of the grounds of appeal before or during the course of appeal.
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Ground No. 1 & 2
24. Since these grounds raised by the assessee are identical with the grounds raised by the revenue in their appeal bearing ITA No. 7017/Mum/16 in ground no. 1 & 2, ttherefore following our own decision in ITA No. 1920/Mum/17, we apply the same findings in the present appeal in order to maintain judicial consistency which is applicable mutatis mutandis in the present case.
Ground No. 3
25. This ground raised by the assessee relates to challenging the order of Ld.CIT (A) in appreciating the fact that an amount of US $ 48,955.08 has been withdrawn during AY 2006-07 from one account & out of this withdrawn amount US $ 44,353.84 has been re-deposited in the same account in A Y 2007-08 within a short span of time i. e. out of income brought to tax in AY 2006-
07. It was also challenged that Ld. CIT (A) has erred in confirming the amount of deposit (i.e. US $ 44,353.84) as additional amount brought in the same account. 20
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26. We have heard counsels for both the parties at length and we have also perused the material placed on record, judgment cited by both the parties, written synopsis as well as the orders passed by revenue authorities. As per the facts, the information was received by the AO in the form of base note. The summary of deposits and withdrawals in the joint bank of Account of Late Kantilal V. Shah and his wife is reproduced below:-
(Currency in USD) AY 2006-07 Month Deposits Withdrawals Balance November, 2005 - - 1,28,449.36 December, 2005 79.70 - 1,28,529.06 January, 2006 1,442.28 - 1,29,971.34 February, 2006 - 12,417.66 1,17,553.68 March, 2006 (Peak) 1,84,081.27 (Currency in USD) AY 2007-08 Month Deposits Withdrawals Balance April, 2006 4,470.34 - 1,88,551.61 May, 2006 - 839.18 1,87,712.43 21 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
June, 2006 - 616.89 1,87,095.54 July, 2006 - 3,860.39 1,83,235.15 August, 2006 872.51 - 1,84,107.66 September, 2006 - 10,561.27 1,73,546.39 October, 2006 3,225.72 - 1,76,772.11 November, 2006 44,828.39 - (Peak) 2,21,600.50 December, 2006 - 15,141.18 2,06,459.32 January, 2007 - 966.70 2,05,492.62 February, 2007 11,120.56 - 2,16,613.18
27. From the above tables, it is is observed that the peak credit for AY 2006-07 was USD 1,84,081.27. Further, for AY 2007-08, the peak credit was USD 2,21,600.50. We are of the view that the entire peak credit of AY 2007-08 cannot be taxed as it will result into double taxation since a part of the same has already been taxed in AY 2006-07. Therefore, after taking the benefit of peak credit taxed in AY 2006-07, only the incremental accretion in the peak credit of USD 37,519.23 (2,21,600.50 -1,84,081.27) can be taxed in AY 2007-08. Thus, in this way, the addition for AY 22 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
2007-08 is restricted to the additional peak credit of USD 37,519.23 and accordingly, this ground stands partly allowed. Ground No. 4
28. This grounds raised by the assessee is general in nature, thus requires no specific adjudication.
29. In the net result the appeal filed by the assessee stand partly allowed with no order as to cost.
30. Now we take up assessee's appeal bearing ITA No. 2441/M/2018 for Ay 2007-08.
31. At the very outset, it has been brought to our noticed that there is a delay of 539 days in filing the present appeal. We have heard the counsels for both the parties on this application. After perusal of the reason for the delay, we find that there are genuine reasons for the delay which has been narrated in the application for condonation of delay. The extract of the reasons are mentioned below:-
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ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
"The Chartered Accountants who are looking after the tax matters of the appellant believed that since the CIT(A) in his order for AY 2007-08 held that both years i.e. AY 2006-07 and AY 2007-08 are to be considered together and that the shortfall of assessed income should be taxed in AY 2006-07 against which the assessee is already in appeal before Honour, there was no requirement to file appeal to the Hon'ble I TAT against order of the CIT(A) for AY 2007-08. On 11.04.2018 the Chartered Accountant had forwarded the appeal related papers for A. Y 2006-07 to the counsel, who is handling the matters of the assessee before the Hon'ble Tribunal. After holding a conference with the counsel on 13.04.2018, the counsel suggested that an appeal is required to be filed for A. Y 2007-08 even at this belated stage with a prayer for condonation of delay of 539 days. It is in these circumstances that the appellant is filing the captioned appeal on 19.04.2018 with the assistance of the said counsel. It is submitted that the appellant has filed the 24 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
appeal for A. Y 2006-07 on time and this is the first instance of such delay in filing appeal. It is also submitted that the delay in filing the captioned appeal was not due to any mala fide or deliberate intention on the part of the applicant and, therefore, it is a fit case for its condonation. An affidavit of the appellant and the Chartered Accountant, in support of the statements made in this application, is enclosed and marked as Annexure A."
32. After taking into consideration, the submission of the parties and also the principles laid down by the Apex Court in condoning the delay, we hold that the assessee had sufficient cause for not filing the appeal within time. Therefore considering the decision of High Courts as well as Coordinate Benches, we condone the delay in filing the appeal and proceed to decide the appeal on merits.
Ground No. 1 & 2
33. These grounds raised by the assessee are inter connected and inter related and relates to challenging the order of Ld. CIT(A) erred in confirming the addition and not allowing the 25 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
credit of the additions, therefore we thought it fit to dispose of the same by this common order.
34. After considering the submissions made by both the parties, we are of the view that since we have already decided the identical issue in assessee's own case for AY 2006-07, therefore our finding on the said ground are applicable to this ground of present appeal. Resultantly, these grounds raised by the assessee stands allowed.
Ground No. 3
35. This ground raised by the assessee relates to challenging the order of Ld CIT (A) in appreciating that according to the peak theory, only incremental accretion in the bank accounts of Gill & Co and Late Shri Kantilal V Shah should be taxed in the hands of the assessee.
36. After considering the submissions made by both the parties, we are of the view that since we have already decided the identical issue in assessee's own case in ITA No. 6957/Mum/16 for AY 2006-07, therefore our finding on the said ground is 26 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
applicable to this ground of present appeal. Resultantly, this ground raised by the assessee stands allowed. Ground No. 4
37. This ground raised by the assessee is general in nature, thus requires no specific adjudication.
38. In the net result, the appeal filed by the stands partly allowed with no order as to cost.
ITA No. 7016 /Mum/2016 for AY 2006-07 filed by the Department.
39. Now we take up department's appeal bearing ITA No. 7016/Mum/2016 for AY 2006-07. In this appeal, ground no. 1, 2 & 4 raised by the department are identical with the grounds raised in ITA No. 7017/Mum/16 for AY 2006-07 filed by the revenue. Therefore, following our own decision in ITA No. 7017/Mum/16, we apply the same findings in these grounds in order to maintain judicial consistency which is applicable mutatis mutandis in the present case. Therefore ground No. 1, 2 & 4 stands dismissed.
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ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
40. As far as ground no. 3 raised by the department is concerned, in this respect, we have perused the summary of deposits and withdrawals in the account of M/s Gill and Co. Pvt. Ltd and from the same, we notice that the Peak Credit for AY 2006-07 was USD 1,70,732.98 with respect to AY 2007-08, the AO made additions of USD 44,353.84 which is equal to the total of the deposits made during the aforesaid year. The AO failed to consider the facts that the deposits made in AY 2007-08 were from the withdrawal of AY 2006-07. As per records, the deposits in AY 2007-08 were only USD 44,353.84 whereas withdrawal in AY 2006-07 was USD 48,955.08. Thus in this way the withdrawal was much higher. Thus no amounts needs to be taxed for AY 2007-08. Resultantly, this ground raised by the revenue stands dismissed. The other ground no. 5 & 6 are general in nature, thus requires no specific adjudication. ITA No. 7015/Mum/2016 for AY 2007-08 filed by the Department.
41. Now we take up department's appeal bearing ITA No. 7015/Mum/2016 for AY 2007-08. Since we have already decided the similar grounds of appeal in ITA No. 7017/Mum/2016 for 28 ITA No. 7017, 6957, 7016 & 7015/Mum/2016 & ITA No. 2441/Mum/2018 Late Shri Kantilal Virchand Shah & M/s Gill & Co. Pvt. Ltd.
AY 2006-07 on merits. Therefore, following our own decision in ITA No. 7017/Mum/16, we apply the same findings in the present appeal in order to maintain judicial consistency which is applicable mutatis mutandis in the present case.
42. In the net result, all the three appeals filed by the revenue stands dismissed and both the appeals filed by the assessee stands partly allowed with no order as to cost. Order pronounced in the open court on 12t h December, 2018.
Sd/- Sd/- (B. R. Baskaran) (Sandeep Gosain)
ले खासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनां कDated : 12.12.2018 Sr.PS. Dhananjay आदे शकीप्रनिनिनिअग्रे नर्ि/Copy of the Order forwarded to :
1. अपीलाथी/ The Appellant
2. प्रत्यथी/ The Respondent
3. आयकरआयुक्त(अपील) / The CIT(A)
4. आयकरआयुक्त/ CIT- concerned
5. यवभागीयप्रयतयनयध, आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, Mumbai
6. गार्ड फाईल / Guard File आदे शधिुसधर/ BY ORDER, .उि/सहधयकिं जीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai 29