STALIN CHOCKKALINGAM PILLAI,VAPI vs. THE INCOME TAX OFFICER,VAPI WARD-3, VAPI

आयकर अपीलीय अिधकरण सूरत �ायपीठ, सूरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT �ी सी एम गग�, �ाियक सद� एवं �ी ओ पी मीना, लेखा सद� के सम� BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA Nos.856, 857 & 858/Ahd/2013/SRT िनधा�रण वष� / Assessment Years: 2004-05, 2005-06 & 2009-10 आयकर अपील सं. / ITA Nos.2838 & 2839/Ahd/2014/SRT िनधा�रण वष� / Assessment Years: 2004-05 & 2005-06 Shri Stalin Chockkalingam Pillai, Vs. Income Tax Officer, Flat No. F-102, Rajmoti Complex, Vapi Ward-3, Chharwada Road, Vapi. Vapi – 396 195. [PAN: AIPPP 1728 F] (अपीलाथ /Appellant) (!"थ /Respondent)

अपीलाथ� की ओर से/ Assessee by : A.Gopalakrishnan, C.A ��थ� की ओर से /Revenue by : Shri S.R. Meena, Sr. D.R सुनवाई की तारीख/Date of Hearing : 08-08-2018 घोषणा की तारीख /Date of : 15-10-2018 Pronouncement आदेश /ORDER PER C.M.GARG, JUDICIAL MEMBER: These five appeals have been filed by the Assessee against two separate orders of Commissioner of Income Tax (Appeals), Valsad (‘CIT(A)’ for short) dated 28.12.2012 & 20.08.2014 respectively for the Assessment Years (A.Ys) 2004-05, 2005-06 & 2009-10.

2 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai identical and similar. In the beginning of hearing, the ld. Assessee’s

Representative (AR) submitted that the assessee does not want to press

ground No.1 in both the appeals hence, the same is dismissed as not

pressed. For the sake of convenience and brevity, we take appeal for

AY 2004-05 as lead case and the remaining sole ground No.2 raised by

the assessee ITA No.856/Ahd/2013/SRT reads as follows:

“On appreciation of the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals) has erred in confirming the Learned Assessing Officer in making addition to the tune Rs. 70,000/- treating the same as unexplained cash credit u/s. 69A of the Act. The action of the Learned Commissioner of Income Tax (Appeals) is based on presumptions only, contrary to the facts of the case and law and deserves to be deleted.” 3. We have heard the arguments of both sides and carefully perused

the relevant material placed on the record of the Tribunal. The ld. AR

submitted that the ld. CIT(A) has erred in confirming the Learned

Assessing Officer in making addition to the tune Rs. 70,000/- treating the

same as unexplained cash credit u/s. 69A of the Act. The action of the

ld. CIT(A) is based on presumptions only, contrary to the facts of the

case and law and deserves to be deleted. The ld. AR also submitted that

the identical issue has been decided by ITAT, Ahmedabad ‘A’ bench

order dated 26.10.2016 for AY 2008-09 in ITA No.2187/Ahd/2015,

wherein para 10 the Tribunal allowed amount deposited by the assessee

in the form of cheques and remaining amount of cash net cash deposit,

opening balance in the bank account and amount of interest credited by

3 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai the Bank was taken for the purpose of taxation and addition has been

restricted to this extent only.

amount of Rs. 70,000/- in the revised return of income filed in response

to the notice u/s. 148 of the Act within prescribed time of six months from

the date of receipt of notice declaring income of Rs. 2,18,690/- including

an amount of Rs. 70,000/-. The ld. AR also submitted that for AY 2004-

05 there was no opening balance but the account was opened by

depositing RS. 10,000/- & Rs. 50,000/- were deposited in cash totaling

to Rs. 60,000/- out of which Rs. 50,000/- were transferred to Autosweep

for the purpose of business of the assessee. The ld. AR also submitted

that when the assessee in the return, which was filed within prescribed

time of six months from the date of receipt of notice u/s. 148 of the Act,

has offered Rs. 70,000/- suo moto then, any further addition would

amount to double addition and taxation therefore, impugned addition

may kindly be deleted.

submitted that there was cash deposits of Rs. 50,000/- in AY 2004-05

and of Rs. 9,29,275/- in AY 2005-06 therefore, the AO was right in

making addition and the same was rightly upheld by the ld. CIT(A).

However, he, in all fairness, did not controvert the fact that the Tribunal

4 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai has granted relief to the assessee by order dated 26.10.2016 in paras 7-

10, in assessee’s own case for AY 2008-09 on the identical issue

restricting the addition to the net amount of unexplained cash deposit,

opening balance and amount of interest credited by the bank. However,

he did not controvert the fact stated by the ld. AR that the assessee filed

return in response to notice u/s. 148 of the Act within prescribed time

limit.

view that from the copy of the factual position of six assessment years

from AY 2004-05 to 2009-10 including AY 2008-09, wherein the Tribunal

has decided the issue in favour of the assessee by holding that only net

amount of cash deposit, opening balance of bank account and interest

credited by the bank on the deposits has to be taken for addition and

addition has been restricted to this extent only. In the present AY 2004-

05, undisputedly the assessee opened account by way of depositing Rs.

10,000/- and thereafter entire period deposited cash amount of Rs.

50,000/- out of which Rs. 50,000/- were transferred to Autosweep.

These facts have not been controverted by the AO and ld. DR during

arguments before us. It is also not in dispute that the assessee in

response to notice u/s. 148 of the Act filed revised return within

prescribed time limit of six months from the date of receipt of notice and

5 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai suo moto declared Rs. 70,000/- for taxation which includes both the

amounts i.e., amount of cash of Rs. 10,000/- deposited at the time of

opening the bank account and subsequent deposit of Rs. 50,000/-. The

ld. DR has not disputed the fact that the original return assessee

declared income of Rs. 1,48,690/- and in the revised return by addition

Rs. 70,000/-, the assessee declared amount of Rs. 2,18,690/-. Hence,

keeping in view the order of Tribunal for AY 2008-09 dated 26.10.2016

and facts and circumstances of the case, we are of the considered

opinion that no further addition is required to be made to the returned

income of the assessee filed during the course of reassessment

proceedings u/s. 147/148 of the Act hence, we directed the AO to delete

the addition of Rs. 70,000/-. Accordingly, sole ground No.2 of the

assessee is allowed.

ITA No. 857/Ahd/2013/SRT for AY 2005-06: 7. Since, both the parties have agreed that except the amounts of

deposits, other facts of AY 2005-06 are identical to the facts and

circumstances of other four AYs including AY 2004-05 & 2008-09.

Therefore, both the parties reiterated their arguments advance during

the hearing of appeal of AY 2004-05. The ld. AR also submitted that in

AY 2005-06, the opening balance of bank account was Rs. 10,000/-

which is covered in the amount of Rs. 70,000/- suo moto declared by the

6 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai assessee for AY 2004-05 therefore, opening bank balance/amount

brought forward is self-explained. The ld. AR further submitted that

undisputedly for AY 2005-06 amount of cash deposit was Rs. 9,29,275/-

out of which cash withdrawals were Rs. 8,20,050/- and net cash deposit

comes to Rs. 1,09,225/- and amount of bank interest credited to this

account is Rs. 1,747/-. From para 7 to 10 of the Tribunal order dated

26.10.2016 for AY 2008-09, it is clearly discernable that the Tribunal has

upheld the findings of ld. CIT(A) that the amount of cheques has been

accepted by the AO then, the AO should have accepted the nature of

the cash deposit and the ld. First appellate authority concluded that the

amount explained by the assessee should be allowed and balance

amount along with opening balance and interest credited to the bank

account should be added to the income of the assessee.

for AY 2004-05 contended that AO was right in making addition on

account of cash deposits made by the assessee and the ld. CIT(A)

without any basis granted relief to the assessee therefore, impugned

order may kindly be set aside by restoring that of the AO. However, he

did not controvert the fact stated by the ld. AR that the return in

response to notice u/s. 148 of the Act was filed within prescribed time

limit.

7 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai 9. For AY 2005-06 undisputedly, the assessee filed return of income

showing income of “Rs. 1,03,988/- and in the return, which was filed

within prescribed time in response to notice u/s. 148 of the Act, the

assessee also offered income of Rs. 1,76,000/- and filed return of Rs.

2,80,790/- but the AO made addition of Rs. 9,29,275/- i.e., entire amount

of cash deposits. In view of Tribunal order for AY 2008-09, we are not

convinced with the logic adopted by the AO while disallowing entire

amount of cash deposits. In AY 2008-09, the ld. CIT(A) on the similar

facts and circumstances allowed amount of cash withdrawal of Rs.

21,18,710/- and cheques paid to the branch office/vehicle owner of Rs.

92,554/- total Rs. 22,11,264/- and remaining amount of unexplained

cash deposit of Rs. 6,70,788/- along with opening balance of bank

account of Rs. 1,52,116/- and interest credited by the bank of Rs.

2,261/- was also added to this amount and the addition was restricted to

Rs. 8,25,155/-. On being asked by the Bench, the ld. DR submitted that

the to the best of knowledge there is no appeal against the order of

Tribunal (supra) before the Hon'ble High Court hence, we safely

presume that the Department has accepted tribunal order for AY 2008-

09.

for AY 2008-09 to present AY 2005-06, we observe that the total cash

8 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai deposits are of Rs. 9,29,275/- and cash withdrawals are of Rs.

8,20,050/-and net cash deposit remains Rs. 1,09,225/- plus amount of

interest credited by the bank of Rs. 1,747/- and opening balance of bank

account Rs. 10,000/-. As we have noted above that the opening

balance is undisputedly amount brought forward from the AY 2004-05

and in this year the assessee has suo moto offered to tax Rs. 70,000/- in

the return of income which includes amount deposited by the assessee

while opening the bank account and the same is included in the amount

of Rs. 70,000/- which cannot be taken as unexplained income of the

assessee for taxation purposes. Therefore, total amount deserve to be

added is Rs. 1,09,225/- and Rs. 1,747/-. The assessee has already

shown additional income of Rs. 1,76,000/- for AY 2005-06 and has filed

revised return showing income of Rs. 2,80,790/- therefore, no further

addition is required to be made on account of cash deposits by the

assessee.

that the AO was not correct and justified in making addition of entire

amount of cash deposits during the period and the order of the Tribunal

dated 26.10.2016 supports the case of the assessee that no further

addition was required to be made in view of the revised return filed by

the assessee in response to notice u/s. 148 of the Act declaring addition

9 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai income of Rs. 1,76,000/-. Therefore, sole ground No.2 of the assessee

is allowed and AO is directed to delete the addition made for AY 2005-

06.

Penalty appeal of the assessee ITA Nos.2838 & 2839/Ahd/2014/SRT: 12. These appeals have been filed by the assessee challenging the

upholding of penalty by the ld. CIT(A) imposed by the AO u/s. 271(1)(c)

of the Act, on the strength additions made by the AO on account of cash

deposits made by the assessee to its bank accounts during the relevant

periods. We have heard the arguments of both sides and carefully

perused the relevant material placed on the record of the Tribunal.

quantum addition made by the assessee for both the AYs therefore,

penalty imposed by the AO and upheld by the ld. CIT(A) u/s. 271(1)(c) of

the Act cannot be held as sustainable and we direct the AO to delete the

same for the AYs. Accordingly, sole ground of the assessee for AYs

2004-05 & 2005-06 is also allowed.

ITA No. 858/Ahd/2013/SRT for AY 2009-10: 14. We have heard the arguments of both sides and carefully perused

the relevant material placed on the record of the Tribunal. The ld. AR as

well as the ld. DR reiterated the arguments advance by them for AY

2004-05 and submitted that all the facts for AY 2009-10, except the fact

10 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai of initiation of reassessment proceedings u/s. 147 of the Act and notice

u/s. 148 of the Act, other all facts and circumstances of the present AY

under consideration are identical and similar to the earlier assessment

years 2004-05 & 2005-06.

amount received from transporters was Rs. 23,58,157/- and amount of

cash deposit included therein was Rs. 16,66,564/- and after making

payment to the vehicle owners and bank charges of Rs. 2,557/- and

after adding miscellaneous income of Rs. 527/- and bank interest

credited by the bank of Rs. 1,968/- the remaining amount was Rs.

12,63,377/- and the assessee earned income of Rs. 10,97,245/- and in

the revised return of income offered to tax additional amount of Rs.

13,51,089/- which was submitted on 31.03.2011 offering to tax total

income of Rs. 16,46,876/- including amount of Rs. 2,95,775/- which was

shown in the original return of income. The ld. AR vehemently submitted

that when the assessee has shown and surrendered additional income

of Rs. 13,51,039/- for AY 2009-10, whereas net of cash deposit comes

to Rs. 12,63,377/- then, no further disallowance could have been made

validly to the income of the assessee shown in the revised return. The

ld. AR submitted that if any further addition is made then, that would

11 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai amount to double addition and double taxation which is also unjustified

and unreasonable on the part of the assessee.

26.10.2016 for AY 2008-09 (supra) paras 7-10 out of total deposits of

cash and cheques and by adding opening bank balance in the beginning

of year and amount of interest credited by the bank total of these three

amounts and after deducting the amount of cash withdrawals and

amount of payment made to the vehicle owners/branch office for the

purpose of business of the assessee. The remaining amount was to be

added to the income of the assessee and for this year AY 2008-09, the

assessee filed return of income showing income of Rs. 2,66,154/- and

therefore, addition was restricted by the Tribunal to Rs. 8,25,155/- but in

the present AY 2008-09 the assessee, in the revised return suo moto

offered an amount of Rs. 13,51,102/- which is higher than the net

amount of Rs. 12,63,377/- calculated as per directions of the Tribunal

order (supra).

account of cash deposits to the bank account of the assessee.

However, in all fairness, he accepted that on the identical facts and

circumstances, the Tribunal has granted part relief to the assessee for

AY 2008-09 by order dated 26.10.2016 (supra).

12 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai 18. On careful consideration of above rival submissions, we are of the

view that undisputedly, for AY 2009-10 the total amount of cash deposit

was Rs. 16,66,564/- and amount of cheque deposit was Rs. 6,91,563/-

in addition to these deposits the assessee also earned miscellaneous

income of Rs. 527/- and Rs. 1,968/- was credited as interest to the bank

account which comes to Rs. 23,60,622/- and after deducting an amount

of Rs. 12,60,820/-, which includes cash withdrawal of Rs. 9,50,150/- and

cheque/amount paid to the branch office/vehicle owners, and amount of

bank charges of Rs. 2,557/- the net amount of cash deposits comes to

Rs. 12,63,377/- and the assessee, in the revised return of income filed

within prescribed time limit, as already offered additional income of Rs.

13,51,039/- then, further addition of Rs. 16,64,564/- i.e., entire amount of

cash deposit is not justified and sustainable in view of the observations

and findings of the Tribunal in the order dated 26.10.2016 (supra).

These facts, apparent on the record, have not been controverted, in any

manner, by the ld. DR. We also inclined to hold that as undisputedly,

the assessee has already offered an amount of Rs. 13,51,039/- in the

revised return as additional income then, further addition on the same

issue of cash deposits would certainly amount to double addition and

double taxation on the same cash deposits which is not permissible and

justified in the light of order of coordinate bench of Tribunal for AY 2008-

13 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai 09 dated 26.10.2016 (supra) and as per mandate of provisions of the

Act. Therefore, addition made by the AO and upheld by the ld. CIT(A)

u/s. 69A of the Act is not sustainable and we demolish the same. It is

also pertinent to note that, the AO has made addition on the allegation of

cash deposits u/s. 69A of the Act but in our humble understanding of

provision of s. 69A of the Act the addition under this provision cannot be

made on the allegation and factum of cash deposits to the bank account

of transporter/assessee or any other business enterprise, who claim that

the amount is pertaining to the receipts/sale proceeds having nexus with

his business activities. Therefore, addition made by the AO and upheld

by the ld. CIT(A) also fails on this count. Accordingly, in view of

foregoing discussion and findings recorded in the earlier paragraphs of

this order, the sole ground of the assessee is allowed and AO is directed

to delete the addition.

14 ITA Nos.856, 857 &858/Ahd/2013/SRT (A.Ys: 2004-05, 2005-06 & 2009-10) ITA Nos.2838 & 2839/Ahd/2014/SRT (A.Y: 2004-05 & 2005-06) Shri Stalin Chockkalingam Pillai