Income Tax Appellate Tribunal - Mumbai
Adarsh Hegde, Mumbai vs Acit Cen Cir 44, Mumbai on 9 August, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL "A", BENCH MUMBAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER IT A No.1839/Mum/2016 (Assessment Year :2010-11) Adarsh Hegde Vs. DCIT,Central Circle-8(1) th 5 Floor Room No.656, 6 t h Floor Diamond Square Aaykar Bha wan CST Road, Kalina M.K.Road Santacruz (East) Mumbai-400 020 Mumbai-400 098 PAN/GIR No.AABPH5562P Appellant) .. Respondent) Assessee by B.B.Jhaveri Revenue by Anadi Varma Date of Hearing 25/07/2019 Date of Pronouncement 09/08/2019 आदेश / O R D E R PER G.MANJUNATHA (A.M):
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-38, Mumbai, dated 28/03/2014 and it pertains to the Assessment Year 2010-11.
2. The assessee has raised the following grounds of appeal:-
i) The Commissioner (Appeals) erred in confirming the addition of Rs.
18 lacs being the cash found in the course of search at the residence of the assessee even though in the course of search while recording the statement of the assesses, it was explained that the said cash was belonging to his co-brother, Shri Sanath Kumar Shetty and Shri Sanath Kumar Shetty over telephone at that time accepted that me said cash belonged to him and subsequently filed the affidavit in support thereof.
2ITA No.1839/Mum/2016
Adarsh Hegde
ii) The Commissioner (Appeals) erred in observing that the assessee could not produce the bus ticket of Mr, Prasad Shetty, Engineer and employee of Shri Sanath Kumar Shetty, who had travelled from Mangalore to Bombay with cash and the same was delivered at the residence of the assessee.
iii) The Commissioner (Appeals) erred in confirming the addition of Rs.
18 lacs on the ground that the assessee failed to establish the claim with regard to the alleged transaction of the property deal as the assessee has not produced confirmation letter from the party concerned or any other evidence to prove his claim.
iv) The Commissioner (Appeals) failed to appreciate that at the first available opportunity b the course of me search, the assessee had explained and proved that the cash found at his residence is belonging to Shri Sanath Kumar Shetty and who had accepted ownership of the same over telephone before the officer of me Investigation Wing and hence, the addition ought not to have been made to the income of the assessee, more so when the entries in respect of the said cash were recorded in the books of Shri Sanath Kumar Shetty.
v) The order of the Commissioner (Appeals) confirming the addition of Rs.l8 lacs is bad in laws and without jurisdiction.
vi) Your appellant craves leave to add it to, alter, amend or delete any of the foregoing grounds of appeal.
3. At the outset, the Ld. Counsel, for the assessee submitted that there is a delay of 655 days in filing present appeal before the ITAT, for which necessary application has been filed for condonation of delay along with affidavit explaining reasons for such delay. The Ld. AR, further submitted that the assessee could not filed appeal within the prescribed time limit provided under the Act, for reasons beyond his control, due to the fact that the order of the Ld. CIT(A) dated 28/03/2014 was served to the residence of the assessee, which was unnoticed, because of negligence of an employee who was working 3 ITA No.1839/Mum/2016 Adarsh Hegde at residence. The Ld. AR, further submitted that when the Ld. AO issued show cause notice for levy of penalty u/s 271AAA of the Act ,on 07/03/2016, it was came to the knowledge of the assesee that the CIT(A) has disposed off the appeal on 28/03/2014. The assessee immediately after came to know that the appeal has been disposed by the Ld. CIT(A), obtained copy of appellate order from office of the CIT(A) on 21/03/2016 and thereafter, appeal has been filed on 28/03/2016. The delay in filing appeal is due to the mistake of an employee. Therefore, there is no deliberate intention not to file appeal within the time allowed under the Act and hence, in interest of justice, the delay in filing appeal may be condoned and the appeal may be disposed-off on merits. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of Collector of land acquisition vs Ms. Katiji & Ors. 167 ITR 471. The assessee has also relied upon the decision of ITAT, Mumbai, in the case of M/s. Lahoti overseas Ltd. vs DCIT in ITA.No. 3786/Mum/2012.
4. The Ld. DR, on the other hand, strongly opposing condonation application filed by the assessee submitted that reason given for not filing appeal within the due date prescribed under the Act, does not come under reasonable cause, therefore, the condonation application filed by the assessee should not be entertained. The Ld. 4 ITA No.1839/Mum/2016 Adarsh Hegde DR, further submitted that although, the assesee claims to have not noticed communication of order from the office of the CIT(A), but such arguments is not based on any documentary evidences. Therefore, mere filing an affidavit explaining reasons could not sufficient enough to explain huge delay of 655 days. Therefore, there is no reason to condone delay in appeal filed by the assesee. In this regard, he relied upon by the decision of ITAT, Pune Bench in the case of DCIT vs Veena Industries Limited (120 ITD 481).
5. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We have carefully considered reasons given for not filing appeal within the due date provided under the Act, and found that the reasons given by the assessee that he could not noticed service of order from the office of the CIT(A) due to mistake of assessee working at residence appears to be reasonable and comes within the meaning of reasonable cause, as provided u/s 273B of the I.T.Act, 1961. We further noted that ordinarily, a litigant does not stand to benefit by filing an appeal late, rather it creates undue hardship to the litigant, because of tax demand. Therefore, when the appellant gives reasons, for not filing the appeal within the due date prescribed under that and such reasons are supported by necessary sworn 5 ITA No.1839/Mum/2016 Adarsh Hegde affidavit, then merely for the reason of no supporting evidences, the contents of affidavit cannot be ignored. Further refusing to condoned delay can result in merotious matter being thrown out the very threshold and cause of justice being defeated. As against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. No doubt, it is the duty of the appellant to explain every day delay with reasonable cause. When, the assesse has explained delay in filing appeal with reasonable cause, then the appellate authorities are bound to condoned the delay in filing of appeal, because when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other sides cannot claim to have vested right in injustice being done, because of non condonation of delay. This legal proposition is supported by the decision of Hon'ble Supreme Court in the case of Collector of land of acquisition vs Mst Katiji (supra). Further, the Hon'ble Supreme Court in the case of N. Balakrishnan vs. M. Krishnamuthy (1998) 7 SSC 123 held that Rule of limitation are not meant to destroy the right of parties, they are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. Therefore, considering the facts and circumstances of this case and also by following the case laws 6 ITA No.1839/Mum/2016 Adarsh Hegde discussed hereinabove, we are of the considered view that there is a reasonable cause for not filing appeal within the time limit provided under the Act, and hence, the delay in filing of appeal is condoned and appeal filed by the assessee is admitted for hearing.
6. The brief facts of the case are that a search and seizure action u/s 132 of the I.T.Act, 1961 was carried out on 10/07/2009, in the case of Allcargo Group of Companies and the directors, accordingly search was carried out at the residence of the assesee. During which a sum of Rs. 18 Lacs in cash was found. In the course of search, the assessee explained that said sum of Rs. 18 Lacs was belonging to his brother in law, namely Shri Sanath Kumar Shetty. During the course of search, in order to ascertain correctness of claim of the assessee, the concerned authorized officer had telephonic conversation with the shri Sanath Kumar Shetty obtained confirmation from him that cash of Rs. 18 Lacs found at the residence of assessee belongs to him. The assessee also had filed affidavit of Mr.Sanath Kumar Shetty dated 30/07/2009, before the Asst. DIT(Inv.) unit 2(1), Mumbai, which stated that cash found in the residence of the assessee is belong to the assessee. Consequent to search, the case was taken up for scrutiny. During the course of assessment proceedings, the Ld. AO, on the basis of statement 7 ITA No.1839/Mum/2016 Adarsh Hegde recorded from the assessee, during the course of search coupled with further enquiries conducted during assessment proceedings came to the conclusion that although, assessee claims that cash seized from his residence belongs to his brother in law shri Sanath Kumar Shetty, but, on perusal of statements given by the parties along with evidences, it is noticed that there is major discrepancy between the stand taken at the time of search and reasons given in the affidavit of Shri Sanath Kumar Shetty . Therefore, he opined that the assessee has failed to prove with necessary evidences that cash found in his residence is belongs to Sanath kumar Shetty and accordingly, made additions of Rs. 18 Lacs, as unaccounted money of the assessee u/s 69A of the I.T.Act, 1961.
7. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee reiterated his submissions made before the AO to argue that it was the stand of the assessee right from the date of search till completion of assessment that cash found in his residence is belongs to M/s. S.K.S. Group, a partnership firm, where his brother in law Sanath kumar Shetty is a partner. The assessee, further stated that it has furnished necessary evidences before the AO, however, the AO disregarded all evidences filed by the assesee only 8 ITA No.1839/Mum/2016 Adarsh Hegde for the reason that he could not filed travel details of employee of M/s S.K.S. group , Shri Prasad Shetty from Mangalore to Mumbai. The Ld. CIT(A) after considering relevant submissions of the assessee and also taken note of provision of section 132(4A) held that as per the provision of section 132(4A), a presumption always that any cash or unaccounted money found in the possession of the assessee, that such money or unaccounted asset belongs to the person from whose custody, it was seized, until such presumption was rebutted with necessary evidences. In this case, although the assessee claims that cash found during the course of search belongs to his brother in law Shri Sanath Kumar Shetty, but such claim was not supported by necessary evidences. Therefore, he opined that there is no error in the findings recorded by the AO and accordingly, sustained additions made towards unexplained money being cash found during the course of search amounting to Rs. 18 Lacs u/s 69A of the I.T.Act, 1961. The relevant findings of the Ld. CIT(A) are as under:-
7.0 The facts of the case, the stand taken by the AO in the assessment order and the contentions of the appellant during the assessment proceedings as well as during the appeal proceedings have been carefully considered.
7.1 The above facts indicate that the appellant has not fully explained the source of the cash seized. The presumption u/s 132(4A) of the Act is that the cash belongs to the person from whose custody it was seized until rebutted otherwise. In this case it is stated by the appellant that the cash belongs to M/s SKS Group in which Shri Sanath Kumar Shetty, co-9 ITA No.1839/Mum/2016
Adarsh Hegde borther of the appellant is a partner and in support of such assertion affidavit of Shri Sanath Kumar Shetty was filed. As pointed out by the AO in the assessment order, there are contradictions between what was stated by the appellant at the time of search after his telephonic conversation with Shri Sanath Kumar Shetty and the affidavit later filed by Shri Sanath Kumar Shetty. During the course of search it was stated that shri Prasad Shetty employee of M/s SKS Group was directed by Shri Sanath Kumar Shetty to meet the buyer and collect the money and deliver it in the residence of the appellant where as in the affidavit it is stated that the books cash available in the books of account of M/s SKS group was sent to Mumbai for giving token advance for acquisition of immovable property in Mumbai and since the deal did not materialize the appellant was requested to hold the cash till shri Sanath Kumar Shetty comes to Mumbai. In the both the statements the appellant failed to establish his claim with regard to the alleged transaction or the property deal. The appellant must have produced confirmation letter from the parties concerned or any other evidence to prove his claim. Mere statement or affidavit which is not supported by evidence cannot be accepted.
7.2 Further, the bus ticket evidencing the proof for travel of Shri Prasad Shetty from Mangalore to Mumbai has also not been produced. If the said travel was true, the appellant could have at least obtained the confirmation from the travel agency proving the travel on the date. The source of income for the partners of M/s SKS group is stated to be agricultural income which also requires further verification. The appellant also did not furnish any document in support of the agricultural income for the partners of the firm. If the cash is available in the books of account of M/s SKS Group what prevented it from issuing cheque in place of cash. There is no need to carry such huge cash by person for such long distance which has also not been proved. Cash transactions are suspicious and the same has not been proved. The appellants submission that the AO has accepted the ownership of the cash as that of Shri Sanath Kumar Shetty and therefore he cannot add the same as the undisclosed income of the appellant is contrary to the facts. The AO has never accepted that the cash belongs shri Sanath kumar Shetty and it is very clearly mentioned in the assessment order that the cash belongs to the appellant and since he failed to establish the source properly the cash was brought to tax as the undisclosed income of the appellant. In view of the above, i hereby hold that the appellant failed to explain the source properly and therefore and therefore, the additions made by the A.O treating the unexplained cash of Rs. 18,00,000/- as income of the appellant is hereby confirmed.
In the result, the appeal is hereby dismissed.
8. The Ld.AR for the assessee, at the time of hearing, submitted that the Ld. CIT(A) was erred in confirmed additions made by the AO 10 ITA No.1839/Mum/2016 Adarsh Hegde towards cash found during the course of search u/s 69A of the I.T.Act, 1961, even though, the assessee has filed completed details, in respect of cash and also necessary evidences, including confirmations from S.K.S. Group along with affidavit of Shri Sanath Kumar Shetty, where he had categorically admitted that cash found in the premises of assessee belongs to him and such cash has been kept in his residence for the purpose of making investment in immovable property. The Ld. AR, further submitted that it is not a case of the AO that the assessee has admitted cash found during the course of search as his undisclosed income in statement recorded u/s. 132(4) and subsequently, retracted from his statement. In this case, the assessee right from the date of search to the date of assessment categorically explained that cash found from his residence belongs to Shri Sanath kumar Shetty and the same has been substantiated with necessary evidences. The Ld. AO as well as the Ld. CIT(A) were ignored complete evidences filed by the assessee and made additions only on the basis of non production of travel details of employee of Shri Sanath Kumar Shetty.
9. The Ld. DR, on the other hand, strongly supporting order of the Ld.CIT(A) submitted that when any cash, jewellery or other valuable articles is found in the possession or control of any person in the 11 ITA No.1839/Mum/2016 Adarsh Hegde course of search, it is presumed that such money, bullion or other documents belongs to such person, unless such person proves that money or other assets found in the possession is not belongs to him. The Ld. DR further submitted that provision of section 292C is very clear, as per which, unless the assessee demonstrate with evidences that such assets found in his possession are not belongings to him, it is presumed that assets or other books of accounts found in his possession is belongs him and contents of such books of accounts is correct. The Ld. DR further referring to provision of section 110 of the Indian Evidence Act, 1872 submitted that burden of proof as to ownership is lies on the assesse, and the question is whether, any person is owner of anything of which, he is shown to be in possession, the burden of proving that he is not the owner is on the person who affirms that he is not the owner. In this case, although the assessee claims to have filed necessary evidences to prove that cash found during the course of search belongs to his brother in law, but to justify his stand, no evidence has been filed including travel details of Mr.Prasad Shetty, who is claims to have bring money from Mangalore to Mumbai. The Ld. CIT(A) after appraising all facts rightly came to the conclusion that the AO was right in making additions towards cash found during the course 12 ITA No.1839/Mum/2016 Adarsh Hegde of search u/s. 69A of the I.T.Act, 1961, and his order should be upheld.
10. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO has made additions towards cash found during the course of search from the residence of assessee for Rs. 18 Lacs, on the ground that the assessee fails to substantiate its claim that such cash was belongs to his brother in law Mr.Sanath Kumar Shetty. The Ld. AO has given his own reasons to come to the conclusion that although, assessee claims that the money was brought from Mangalore to Mumbai for the purpose of investment in immovable property, but no evidence has been filed including travel details of Mr. Prasad Shetty, who claims to have delivered said amount to the assesee at his residence for safe custody. It is the claim of the assessee that cash found during the course of search was belongs to his M/s. S.K.S. Group a partnership firm where, his brother in law Mr. Sanath Kumar Shetty was one of the partner. The assessee had also explained reasons for keeping said cash in his premises. As per the assessee, Mr.Sanath Kumar Shetty sent a sum of Rs. 18 Lacs through his employee Mr. Prasad Shetty for the purpose of investment in immovable property in Mumbai and such cash has 13 ITA No.1839/Mum/2016 Adarsh Hegde been kept in his residence for safe custody. This fact has been supported by necessary evidences including confirmations from Mr. Santh Kumar Shetty along with sworn affidavit dated 30/07/2009, where he had categorically admitted to have delivered cash to the assessee in Mumbai.
11. Having heard and considered material on record, we find that the assessee has taken one stand, right from beginning from the date of search to till date of assessment that cash found during the course of search in his residence belongs to Mr. Sanath Kumar Shetty. We, further noted that the assessee has substantiated its claim by filing confirmation along with affidavit of Mr. Sanath Kumar Shetty. These facts were not disputed by the AO, as well as the Ld. CIT(A). The AO made additions towards cash found during the course of search only on the ground that although, assessee claims that cash found in his residence belongs to Mr. Sanath Kumar Shetty, but there is a major discrepancy between the stand taken, at the time of search, while recording statement u/s 132(4) and at the time of filing of affidavit of Mr.Sanath Kumar Shetty. No doubt there is difference in explanations offered by the assessee , at the time of search, in respect of cash found in his premises, as per which cash belongs to Mr. Sanath kumar Shetty, however said cash has been 14 ITA No.1839/Mum/2016 Adarsh Hegde collected from one of the buyer from Mumbai and kept in his residence. Whereas, at the time of confirmation filed along with affidavit, it was explained that said cash has been brought from Mangalore through one of his employee Shri Prasad Shetty for the purpose of purchase of immovable property in Mumbai and the same has been handover to the assessee for safe keeping. On perusal of statement recorded , during the course of search and contents of affidavit filed by Mr.Sanath Kumar Shetty, we find that there is no difference in stand taken by the assessee, in respect of said cash. The assessee all along claims that said cash belongs to his brother in law Shri. Sanath kumar Shetty and this fact was even confirmed by his brother in law Mr. Sanath kumar Shetty. Therefore, we are of the considered view that merely for the reason that there is a difference in statement given at the time of search and statement given in sworn affidavit regarding source of cash in the hands of Mr. Sanath Kumar Shetty, no adverse inference could be drawn against the assessee that said cash belongs to the assessee and assessee is unable to explain source of cash found during the course of search. We further noted that it is not a case of the AO that there is a difference between statement given during the course of search and explanation furnished during the course of assessment proceedings. The assessee has right from the date of search to till 15 ITA No.1839/Mum/2016 Adarsh Hegde date of assessment had taken one stand, in respect of cash found from his residence. Therefore, we are considered view that the Ld.AO, as well as Ld.CIT(A) erred in sustained additions towards cash found, during the course of search u/s 69A of the I.T.Act, 1961. Hence, we set aside order of the Ld. CIT(A) and direct the AO to delete the additions made towards cash found during the course of search as unexplained money u/s 69A of the I.T.Act, 1961.
12. In the result, appeal filed by the assesse is allowed.
Order pronounced in the open court on this 09/08/2019 Sd/- Sd/-
(RAM LAL NEGI) (G. MANJUNATHA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 09/08/2019
Thirumalesh Sr.PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
DR, ITAT, Mumbai
5. BY ORDER,
6. Guard file.
स यािपत ित //True Copy//
(Asstt. Registrar)
ITAT, Mumbai