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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Mahavir Prasad & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT Before: Shri Mahavir Prasad, Judicial Member and Shri Amarjit Singh, Accountant Member [Conducted through E-Court at Ahmedabad] ITA No. 57/Rjt/2013 Assessment Year 2006-07
Shri Jayendra Kanjibhai The ITO, Shah, Prop. Vaibhav Ward-3(1), Enterprise, C-30/1, M.P. Vs Jamnagar Shah Udhyog Nagar, Saru (Respondent) Section Road, Jamnagar PAN: AHPPS2315G (Appellant)
Revenue by: Shri P.R. Chauhan, Sr. D.R. Assessee by: Shri Dushyant Maharshi, A.R. Date of hearing : 31-07-2019 Date of pronouncement : 16-09-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2006-07, arises from order of the CIT(A), Jamnagar dated 28-01-2013, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following grounds of appeal:- “1. Ld. AO erred in law as well as in facts in reopening the assessment u/s. 147 of the I.T. Act without any tangible material. Ld. CIT (A) erred in law as well as confirming the action of AO.
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Ld. AO erred in law as well as on facts in making addition of Rs. 25,00,000/- and Ld. CIT(A) erred in law as well as on facts in confirming the addition u/s. 69 of the Act.” 3. The assessee has also raised additional ground of appeal as under:- “1. Learned AO has completed assessment without disposing of the objections raised by appellant during the course of assessment proceedings. Hence, re-opening proceedings u/s. 147 of the Act is liable to be quashed.’’
The fact in brief is that return of income declaring income of Rs. 80,150/- was filed on 19th July, 2016. The case was reopened u/s. 147 of the act after issuing of notice u/s. 148 of the act on 27th Jan, 2011. The assessee has not disclosed the amounts deposited in his bank account no. 56282004075/- maintained with State bank of Saurastra Branch, Jamnagar. The aforesaid bank account was maintained in the name of Vaibhav Enterprise, a proprietary concern of the assessee and the amount of Rs. 15 lacs deposited in the aforesaid account was not recorded in the books of account of the assessee. Therefore, the assessing officer has issued letter dated 2nd Sep, 2011 citing the detail of transaction appearing in the aforesaid bank account for explanation. The assesse has not responded to the aforesaid show cause notice issued by the assessing officer. The assessing officer has obtained the copy of bank statement from the SBI and noticed that assessee has also deposited cash of Rs. 5 lacs on 15th April, 2005 and cash of Rs. 5 lacs on 27th May, 2005 which was not disclosed in the books of account of the assessee. Subsequently, the another show cause notice dated 23rd Nov, 2011 was issued to the assessee to explain the unexplained investment of Rs. 25 lacs including the aforesaid cash deposit found in the bank account of the assessee. The assessing officer stated that copy of reason recorded was given to the assessee and SBI account same was inadvertently mentioned as 5628200425/- instead of correct no.
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56282004075/- due to typing mistake. The assessee has not made any compliance to the another show cause notice dated 12th December, 2011 issued by the assessing officer. Consequently, the assessing officer has made addition of Rs. 25 lacs of unexplained deposit appearing in the bank account of the assessee u/s. 69 of the act.
Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
We have heard the rival contentions and perused the material on record. The reason recorded for reopening the assessment was originated from the assessment proceedings in the case of Ramchand J. Nakhva for the same assessment year during which the three lenders of the assessee (who happened to the wife, daughter and son) have made confessional statement before the assessing officer that the sources of loan advancex by them have come from the cash given by Shri Subhash Nakhva and such cash was deposited in the account of the assessee before giving to the three family members of the asssesee for further giving the loan to Ramchand J. Nakhva. The three relatives of the assessee has explained the modus operandi that amount was deposited in the bank account held in the proprietary concern of the assessee M/s. Vaibhav Enterprises and subsequently, cheques were issued from the account in favour of the assessee’s three relatives as mentioned above from the deposit of these chques in the respect of accounts of three relatives of the assessee. Further cheques have been issued in favour of the Shri Ramchand J. Nakhav. The assessing officer has also supplied copy of reason recorded for reopening the assessment to the
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assessee in which the detailed reason covering the aforesaid modus operandi was incorporated. During the course of assessment proceedings in spite of giving a number of opportunities and issuing show cause notice the assessee has not made compliance till 9th 2011. The assessing officer has issued show cause notice dated 2nd Sep, 2011 vide which the complete modus operandi and particulars of bank account transaction in the SBI which was not recorded in the books of account of the assessee was narrated. The relevant part of show cause notice dated 2nd Sep, 2011 is reproduced as under:- "2. During the course of assessment proceedings, you were attended this office on 05/08/2011 and produced cash book & ledger for the F.Y.2005-06, In your case, on verification of Bank statement from, the State Bank of India, it is noticed that you have deposited Rs.1500000/- in bank A/c No. 56282004075 in State Bank of India M. P. Shah Ind. Esttife Branch Saru Section Road, Jamnagar during the F.Y. 2005-06. Subsequently, you have paid Rs.1500000/- to shri Subhashbhai by bearer cheque on various dates. However, on verification of books of account there was no such entry found. Summary of Bank Statement showing Cr/Dr. ofRs. 15,00000/-is as under:- Sr. Date Particulars Chq. Debit Credit Balance No 1. - Credit 300000/- 303171.14 Cr, 2. 24/08/05 Balance . - . 303171.14 Cr. 3. 24/08/05 Cash Cheque 337279 300000/- 3171.14 Cr. paid to Subhash 4. 18/10/05 Credit 296774 700000/- 5. 19/10/05 Cash cheque 337283 700000/- Paid to Subhash 6. 29/10/05 Credit 500000/- 7. 31/10/05 Cash Cheque 337284 sooooo/- 4571.14Cr. paid to Subhas
3 Further, on verification of appellate order No.CIT(A)/Jam/347/08-09 dated 22/12/2009 in the case of Ranchhod Jivabhal Nakhva it was found that he had claimed to have availed following unsecured loans during the AY 2006-07:-
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Sr. No. Name of the person from whom the loan Amount of loan accepted (Rs.) accepted 1 Smt Manjulaben J. Shah 400000 2 Shri Mital J. Shah 300000 3 Shri VaibhavJ. Shah 800000 TOTAL 1500000
During the course of assessment proceedings in the case of Shri Ranchhod Jivabhal Nakhva, the above depositors have confessed that they have given loans to the Shri Ranchhod Jivabhai Nakhva. The mode of giving these loans are that firstly, Shri Subhash Nakhva (son of Shri Ranchhod Jivabhai Nakhva and Power of Attorney 'Holder of Shri Ranchhod Jivabhai Nakhva's business) had given the cash; secondly the cash was deposited in the bank Account of M/s. Vaibhav Enterprise (a proprietary concern of Shri Jayendra Kanji Shah main belonging to the the depositor’s had issued the cheques in favour of Shri Ranchhtid Jivabhai Nakhva. By this way, unaccounted cash of Shri Ranchhod Jivabhai Nakhva were received back by him through cheques. The statements of these depositors indicated that Shri Jayendra Kanji Shah, proprietor M/s. Vaibhav Enterprise deposited cash amounting to Rs.15,00,000/- in its bank account and the source thereof is not disclosed. Further, from the return of income filed by Shri Jayendra KanfilShah, the said cash do not appear to have been offered for taxation.. In view of the above, discussion, deposition in bank account of Rs. 1500000/- is proposed to added in your total income u/s. 69 of the I.T. Act for the A.Y.2006-07. Your explanation/objection/clarification with the evidence should reached to the undersigned within seven days from the date of receipt of this notice. This letter may be treated as notice u/s 142(1) of the I.T. Act. In case of non-compliance, you shall be liable for penalty u/s 271(l)(b) of the Income Tax Act." However the assessee has not made any compliance. Subsequently, the assessing officer has issued another notice dated 23rd Nov, 2011 in which the further detail of depositing of cash to the amount of Rs. 10 lacs in the account of the assessee with the SBI was detected which was not recorded in the books of account of the assessee. The relevant part of this notice is also reproduced as under:- “Please refer to this office letter-cum-notice u/s 142(1) dated 02/09/2011 (copy enclosed) and letter dated 08/11/2011 duly served to you by RPAD. In this letter you were given opportunity to explain you case. However, you have so far not complied to the above referred letters / notices. 2. From the verification of bank account obtained from the SBI of your account No. 56282004025 (copy enclosed for ready reference), It is revealed that further following cash deposit have been appeared in the bank statement which is not reflected in your books of account as per copy of bank account filed during the course of hearing. You are therefore requested to please explain source of this deposit and reason for not disclosing in your account. You are also requested to
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explain that corresponding entries of transfer amount to other parties. Details of bank transaction is as under: (Copy is enclosed) Sr. Date Particular Amount Remarks No. 1. 15/04/2005 Financial 5,00,000/- Cosh Deposit 2. 15/04/2005 Financial -3,00,000/- to sb 3. 15/04/2005 Financial -2,00,000/- to sb 4. 27/04/2005 financial 5,00,000/- Cash Deposit 5. 27/04/2005 Financial -200000/- CD TO SB 6. 27/04/2005 Financial -3,00,000/- CD TO SB
In view of the above records, if you fail to explain the above deposit, I propose to add further of Rs. 10,00,000/- (Rs. 5,00,000/- dated 27/04/2005 & Rs. 5,00,000/- dated 15/04/2005) as undisclosed investment not recorded in the books of account u/s 69 of the I.T. Act.(In addition to Rs. 15,00,000/-. Hence total unexplained investment of Rs. 25,00,000/- u/s 69 of the I.T. Act for the A. Y.2006-07, your explanation/objection/clarification with the evidence should receached to the undersigned within three days from the date of receipt of this notice for the above said addition. This letter may be treated as notice u/s 142(1) of the I.T.Act. In case of non-compliance, you shall be liable for penalty u/s 271(1)(b) of the Income Tax Act."
At the fag end of the year on 9th December, 2011, the assessee has stated that he was having objection to the reopening of assessment u/s. 148 simply stating that assessing officer has no reason to reopen his case stating that he was not having any bank account with the SBI. With the assistance of ld. representatives, we have gone through the material on record and do not find any force in the contention of the assessee as assessing officer supplied copy of reason recorded to the assessee at the initial stage as on 31st Feb, 2011 and thereafter the assessing officer has issued a number of show cause notices as cited above vide which the complete detail of unaccounted transaction and modus operandi adopted by the assessee which was not reflected in the books of account maintained by the assessee was explained. The objection of the assessee that he was not having bank account no.
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56282004025 with the SBI was also have no relevancy as vide letter dated 12th December, 2011, the assessing officer has explained that it was explained that the SBI account no. 56282004025 was inadvertently mentioned as Rs. 56282004025/- instead of correct No. 56282004075 due to typing mistake. Considering the aforesaid facts and supporting material, we do not find any substance in the ground of appeal of the assessee that there was any error in the reopening assessment u/s. 147 of the act and the additional ground by not disposing the objection of the assessee. In the light of the above, we do not find any substance in the appeal of the assessee, therefore, this ground of appeal of the assessee is rejected.
In respect of ground of appeal against making addition of Rs. 25 lacs u/s. 69 of the act, it is noticed that in spite of giving a number of notices to the assessee as referred above in this order, the assessee has failed to contradict the facts and finding relating to unexplained deposit detected in his saving bank account Rs. 56282004075/- which was not recorded in his books of account. It is noticed that in spite of giving a number of opportunities and show cause notices the assessee has not explained the entries and cash deposit in his bank account with relevant supporting material, therefore, we do not find any infirmity in the finding of ld. CIT(A) which are reproduced as under:- “8. During the assessment proceedings the Assessing Officer, issued a show cause letter to the appellant in response to which, the appellant furnished a reply on 09-12-2011 which has been reproduced by the AO in his order on / page 4 & 5 of the order. In the said reply the appellant has categorically stated that "I am not aware who Mr. Subhash Nakhva is and I have not paid any money to Mr. Subhash Nakhva." It shows that on the one hand the appellant himself states that he does not know Shri Subhash Nakhva while on the other hand his AR is emphasizing on the fact that the appellant has received the cash from Shri Subhash Nakhva and therefore the addition and reopening in the hands of appellant is invalid. The appellant did not make any effort to substantiate the source of cash receipts in his Bank account and also failed to explain as to why the credit entries and cash receipts reflected in his bank account were not entered in the books of
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account maintained in due course of his business. I find that despite adequate opportunities given by the AO, the assesses has not been able to explain credit entries of deposits made in his bank account with evidence and the explanation given by him vide written reply dtd. 09-12-2011 was the contradictory in nature without confronting the issue with evidence so as to prove his innocence. The assessee has not made any effort before the AO to rebut the findings made by the AO with regard to the deposits made in the Bank A/c which are not entered in his books. The assessee has shied away from discharging his primary onus to explain the deposits in his Bank account. In the case of CIT Vs. K. Chinnathamban (SC) 292 ITR 682, where the facts were mostly similar with the facts of the present appellant, and the ITAT had directed in favour of linking the cash 'deposits made in the Bank account of Shri Chinnathamban with the accounts of another Firm on whose behalf the cash deposits were allegedly made in his accounts, the apex court held that the onus of proving the source of deposit primarily rested on the person in whose name the deposit appeared, otherwise it is unexplained income u/s. 69 in the hands of that person. Under the circumstances, as the assessee has failed to prove the source of the deposits in his bank account, I cannot persuade myself to accept the contention of the appellant that the additions were erroneously made by the AO. Hence the appellant's appeal on both the grounds is bound to fail and therefore, are dismissed and addition of Rs. 25,00,000/- made by the AO u/s. 69 of the I.T. Act is sustained.”
After considering facts and finding of ld. CIT(A) as reported above, it is clear that assessee has failed to explain the unaccounted deposit in his bank account maintained with the SBI, therefore, we do not find any substance in the appeal of the assesseee and the same is dismissed.
In the result, the appeal of the assssee is dismissed.
Order pronounced in the open court on 16-09-2019
Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 16/09/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad
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Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot