RAMSHANKAR B. KABRA, HUF,MUMBAI vs. INCOME TAX OFFICER-31(3)(1), MUMBAI

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ITA 6058/MUM/2017Status: DisposedITAT Mumbai21 May 2019AY 2009-106 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the assessee might have saved a substantial amount from past incomes and could have kept it in cash. Therefore, a reasonable estimate for addition was made, reducing the addition from the AO's figure.

What were the facts?

The assessee, an HUF, deposited a significant amount of cash into its bank account. The Assessing Officer (AO) treated this as undisclosed income after allowing set off for income declared in the return. The CIT(A) upheld the addition and also enhanced the income.

What were the issues?

Whether the cash deposits in the bank account were sufficiently explained by the assessee, and if not, what is the appropriate addition to be made.

Which sections of the Income-tax Act were involved?

Section 69A,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

For Appellant: Shri Nitesh Joshi, AR

आयकर अपीलीय अधिकरण “SMC” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI श्री महावीर स ुंह, न्याययक दस्य एवुं श्री एन. के. प्रिान लेखा दस्य के मक्ष । BEFORE SRI MAHAVIR SINGH, JM AND SRI NK PRADHAN, AM Aayakr ApIla saM./ (inaQa-arNa baYa- / Assessment Year 2009-10) M/s Ramshankar B Kabra, The Income Tax Officer HUF, Tower No.4, 31(3)(1) Flat No. 401, Rusotomjee Bandra Kurla Complex, Vs. Ozone, Off. Goregaon Mulund Bandra (East) Link Road, Goregaon (West) Mumbai Mumbai-400 062 .. (p`%yaqaaI- / Respondent) (ApIlaaqaI- / Appellant) स्थायी लेखा सं./PAN No. AAKHR0502G अपीलाथी की ओर से / Appellant by : Shri Nitesh Joshi, AR प्रत्यथी की ओर से / Respondent by : Shri Chaitanya Anjaria, DR सुनवाई की तारीख / Date of hearing: 13-05-2019 घोषणा की तारीख / Date of pronouncement : 21-05-2019 AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:

This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-42, Mumbai [in short CIT(A)], in appeal No. CIT(A)-42/IT-159/2013-14, dated 28.06.2017. The Assessment was framed by the Income Tax Officer, Ward-24(3)(4), Mumbai (in short ITO/ AO) for AY 2009-10 vide order dated 29.11.2013 2 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2. The only issue in this appeal of assessee is against the order of CIT(A) upholding the addition made by the AO of ₹ 10,01,419/- and also enhancing the income to the extent of ₹ 1,53,581/-, which was set off by the AO as returned income. For this assessee has raised the following two grounds: - “1. The learned Comm. of Income Tax (Appeals)- 42, Mumbai (Addl. Charge), hereinafter referred to as the "CIT(Appeals)", erred in dismissing grounds of appeal nos.1, 2, 3 and 4 and consequently holding that the addition of Rs.10,01,419/- as made by the Assessing Officer to be unaccounted money of the assessee and the same is directed to be brought to tax under section 69A of the IT Act whereas the Assessing Officer has made the addition of the same amount by treating the same as unexplained investment under section 69 of the IT Act.

Your appellant submits that, on the facts and in the circumstances of it's case, no addition is required to be made u/s 69A or u/s 69 of the IT Act.

2.

The Learned CIT(Appeals) erred in directing the Assessing Officer to add to the total income an amount of Rs.1,53,581/-, offered for tax as income by the appellant in its return of income and accepted by the Assessing Officer.

Your appellant submits that, on the facts and in the circumstances of it's case, the enhancement of 3 taxable income as made by the learned CIT(Appeals) is patently incorrect and uncalled.”

3.

Briefly stated facts are that the assessee is a HUF and filed its return income on 01.02.2010 declaring total income at ₹ 1,53,581/-. The brief reason of reopening of assessment in this case was that during the FY 2008-09 relevant to this AY 2009-10, the assessee has made cash deposit of ₹ 11.55 lacs in his saving bank account on various occasions. The AO require the assessee to explain the source of cash deposit. The assess HUF explained that this deposits is out of the rental income, agricultural income etc. The assessee explain this source of cash deposit in the bank account as under: - Sr. Date Amount Dr/Cr Narration No. 1. 5.8.2008 3000 Cr Accounting opened with cash savings 2. 6.8.2008 7,50,000 Cr Saving deposited in account while opening the bank account as there was no bank account held earlier in the name of assessee. 3. 11.8.2008 2,000 Cr Cash received from Misc. Scrap sold and thereafter deposited in bank 4. 18.10.2008 3,00,000 Cr. Agricultural income and rent received 5. 11.11.2008 1,00,000 Cr. Agricultural income and rent received.

4.

According to AO, the assessee could not prove the source of cash deposits in the bank account and hence, he treated this cash deposit as undisclosed income of the assessee amounting to ₹ 11,55,000/- but after allowing set off of income disclosed under the head income from house property and income from other sources at ₹ 1,53,581/-, made addition of balance amount of Rs. 10,01,419/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) apart from the amount added by the AO, also enhanced the income which is allowed by the AO set off being declared as income in the return of income. Aggrieved, now assessee is in second appeal before Tribunal.

4 5. We have heard rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the assessee HUF and Shri Ramshankar Bimraj Kabra, Karta of the HUFand other family members who were residing at village Shobhapur, Hoshangaboad, Madhya Pradesh and they shifted to Mumbai, during the previous year relevant to the year under assessment. The learned Counsel for the assessee explained the above deposits and said that the assessee open its bank account with a meagre amount of ₹ 3 lacs on 05.08.2008 at Mumbai. According to the learned Counsel for the assessee, the assessee travelled to Mumbai with a cash of ₹ 7.50 lacs. It was explained that this cash was generated out of the agricultural income, rental income and income from other sources of the past years. The learned Counsel for the assessee first of all drew our attention to page 15 and 16 wherein assessee has enclosed the copy of acknowledgement of the return of income for AY 2005-06 filed on 12.03.2006 along with computation of income, wherein total income is declared is ₹ 66,000/- on account of rent and under agricultural income of ₹ 85,000/- which comes to ₹1,51,000/-. Similarly, the learned Counsel for the assessee also drew our attention to assessee’s paper book at page 17 and 18, wherein the return of income for AY 2007-08 is enclosed which was filed by assessee on 31.03.2008. The income declared in the return income for AY 2007-08 was ₹ 1,20,000/- from income from house property and ₹ 29,000/- from income from other sources and ₹ 90,000/- from agricultural income i.e. the total comes to Rs. 2,39,000/-. Similarly, in AY 2008-09, the income from house property is ₹ 1,08,000/-, the income from other sources to ₹ 30,120 and net agricultural income is ₹ 92,000/-. This total income comes to ₹2,30,120/- of these returns were filed to prior to the issuance of notice under section 148 of the Act, which was filed on 01.02.2010. It was claimed by the learned Counsel for the assessee that the assessee was having substantial cash from savings 5 but because being agriculturist and uneducated person, he was not having any bank account in rural area, where they were residing.

6.

We have noted that the factual aspect and noted that the assessee might have saved a sum of ₹ 6 to 7 lacs from the past incomes, which he might kept in cash as claimed. In our view, a reasonable estimate can be made for making addition. Hence, we feel that the net income on account of unexplained deposit can be assessed at ₹ 5 lacs because the assessee is able to prove that the assessee might earned ₹ 6 to 7 lacs from its returns of income for earlier years. Even, we consider the agricultural income and rent received which the assessee might have contributed to the part on household expenditure. Entirety in facts, we estimate the income in this year at ₹ 5 lacs and we direct the AO accordingly. The appeal of assessee is partly allowed.

7.

In the result, the appeal assessee is partly allowed.

Order pronounced in the open court on 21.05.2019. (एन. के. प्रधान/ NK PRADHAN) (महावीर ससंह /MAHAVIR SINGH) (लेखा सदस्य / ACCOUNTANT MEMBER) (न्याययक सदस्य/ JUDICIAL MEMBER) मुंबई, ददनांक/ Mumbai, Dated: 21.05.2019. दीप रकार, व.यनजी धिव / Sudip Sarkar, Sr.PS

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