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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI G.S.PANNU, AM & SHRI RAVISH SOOD, JM
सुनवाई की तायीख/ : 20.03.2018 Date of Hearing घोषणा की तायीख / : 23.03.2018 Date of Pronouncement आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-17, Mumbai, dated 04.10.2013, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short „Act‟) dated 31.12.2009 for A.Y 2005- 06. The assessee had assailed the order of the CIT(A) before us by raising the following grounds of appeal:-
P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) “1. The Learned Income Tax Officer 17(1)1 Mumbai erred in the adding of unexplained cash credit u/s.68 of Income Tax Act Rs.6,84,000/- and C.I.T (Appeal) erred in confirming the addition.
The Learned Income Tax Officer 17(1)1 Mumbai erred and assess the total income Rs.6,86,010/- order u/s.143 of Income Tax Act.1961.
3. The Learned Income Tax Officer 17(1) 1, Mumbai has not gone through the facts and the circumstances of the case properly.
The Learned Income Tax Officer has to go through the facts while adding the addition cash credit of Rs.6,84,000/-(and C.I.T.(Appeal) erred in conforming the same.
That the Appellant prays that order of the C.I.T (Appeal) VII Mumbai confirming the additions and the order of I.T.O. 17(1)(1) Mumbai to be cancelled in TOTO on the above grounds.
The Income Tax Officer Ward No.17(1) 1 and the Ld. C.I.T(Appeal)-17 Mumbai erred in not going through the facts and circumstances and confirming the addition of Rs.6,86,010/-being unexplained cash credit under Sec.68 of Rs.6,84,000/- and interest of Rs.2,010/-.
The Ld. Income Tax Officer Ward No.17(1)(1) and the Ld. C.I.T(Appeal) 17 and not taken into consideration of Agriculture and the Deaf and Dumb physical disability as a result of Appellant dependent upon the family and relatives for a livelihood.
The Ld. Income Tax Officer and the Ld. C.I.T (Appeal) 17 has erred in not accepting that the credit entry was in the earlier year and therefore the same should be deleted in TOTO.
9. Reliance is placed on various Tribunals, High Courts and Supreme Court decision wherein it has been decide d that the A.O i.e. Assessing Officer should make proper enquiry and it is only then that the addition can be sustained in which the Ld. A.O has not done and the Ld. CIT (Appeal) has confirmed the addition.
The Ld. Income Tax Officer and the Ld.CIT (Appeal) has not anywhere stated that the Appellant had grossly failed to produce any material evidence and has not denied the genuineness of the transaction and therefore the addition should be deleted in TOTO.
11. That the Appellant craves leave to amend, alter or add a new ground of Appeal
which may be necessary at any time before the hearing.
2. Briefly stated, the facts of the case are that the A.O on the basis of certain AIR information issued a notice under Sec. 142(1), dated 07.09.2007, calling upon the assessee to file his return of income for A.Y 2005-06. The assessee in compliance to the aforesaid notice filed his return of income on 12.02.2008, declaring total income of Rs.2,010/-. Thereafter, a notice under Sec.148 dated 23.03.2009 was issued and served on the assessee calling upon him to file his return of income declaring the correct income for A.Y 2005-06. The assessee P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) submitted before the A.O that his return of income filed in compliance to notice under Sec. 142(1) on 12.02.2008 may be treated as the return of income filed in response to the notice issued under Sec.
Subsequently, the A.O issued a notice under Sec. 142(1), dated 20.07.2009 calling upon the assessee to furnish certain specific information in respect of his income and the investments made during the year under consideration.
The issue involved in the present case lies in a narrow compass. The A.O on the basis of the AIR information gathered that the assessee has purchased an immovable property during the year, viz. A.Y 2005- 06 for a total consideration of Rs.40,00,000/-. The assessee on being called upon to furnish documentary evidence in respect of the source of investment made in the acquisition of the property, submitted that he along with three other persons, viz. (i). Mr. Asif Ksam Supariwala; (ii). Mrs Khadija Usman Patel; and (iii).Mr. Salim Usman Patel, each having equally ¼ share, had purchased a Flat No. 202 on the 2nd floor of Sarkar Tower-III, Mazagaon, Mumbai for a total consideration of Rs. 40,00,000/-. The assessee explaining the source of his share of investment of Rs.10,00,000/- made towards the purchase of the aforesaid property submitted that he had initially out of his agriculture income made a cash payment of Rs.4,00,000/-. The assessee in order to substantiate his aforesaid claim also placed on record the copies of the extract of the register in Form 7 and 12 as a proof of ownership of agricultural land by him. As regards the source of the balance investment, it was submitted by the assessee that one of the joint co-owner, viz. Mr. Aasif Supariwala who was a non- resident indian had paid an amount of Rs. 4 lac on his behalf to the builder, viz. Sarkar Builders. The assessee in order to fortify his aforesaid claim furnished with the A.O a copy of letter dated P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) 30.12.2009 from Mr. Aasif Supariwala, Dubai, UAE wherein the latter had stated that he had paid an amount of Rs.4,00,000/- on behalf of the assessee to the builder, viz. M/s Sarkar Builders. The assessee in order to remove any scope of doubt as regards his aforesaid claim, furnished with the A.O vide his letter dated 30.12.2009 documentary evidence substantiating the remittance made by Mr. Aasif Supariwala from Dubai. The A.O while framing the assessment observed that in the bank account of the assessee held with State bank of India amount of Rs. 6,84,000/- was deposited in cash during the year under consideration. The assessee on a query by the A.O as regards the source of the cash deposit submitted that the same was sourced from the funds generated from the sale of agricultural produce. However, the A.O not finding favour with the aforesaid claim of the assessee as regards the source of the cash deposits aggregating to Rs.6,84,000/- in his bank account on various dates during the year, held the same as an unexplained cash credit in the hands of the assessee under Sec. 68 of the Act. The A.O on the basis of his aforesaid deliberations treating the amount of Rs.6,84,000/- as an unexplained cash credit under Sec. 68 assessed his income at Rs.6,86,010/-.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee explaining the source of the cash deposit of Rs. 6,84,000/- in his bank account submitted that the same was comprised of a loan of Rs. 4 lac received from Mr. Asif Supariwala, while for the an amount of Rs. 2,85,000/- was received by him from his mother Mrs. Khatija Usman Patel. The CIT(A) during the course of the appellate proceedings after perusing the submissions filed by the assessee before him called for a remand report from the A.O. The A.O in his remand report submitted that though during the course of the proceedings a letter was issued to the assessee and also information P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) under Sec. 133(6) was called from Mrs. Khatija Usman Patel in respect of the unsecured loans, but however, no reply was received from the assessee. The A.O in his remand report observed that as not only the identity and creditworthiness of the party from whom loan was received was not proved, but rather, the fact that the assessee had not shown any agricultural income in his return of income filed for the year under consideration thus proved to the hilt that the assessee had no agricultural land in possession. The A.O further submitted in his report that during the course of the assessment proceedings the assessee on being called upon to explain the source of his share of investment of Rs.10,00,000/- made in purchase of the property, viz. Flat no. 202 on the 2nfd floor of Sarkar Tower-III, Mazagaon, Mumbai, had claimed that he had received an unsecured loan of Rs.4 lac from Mr. Aasif Supariwala, Rs.2 lacs as unsecured loan from M/s Sarkar builders and Rs.4 lac was invested from his own sources. The A.O observed that during the course of the assessment proceedings the assessee could not furnish a plausible explanation as regards the source of cash deposits of Rs.6,84,000/- in his bank account with State Bank of India. The A.O observed that during the course of the appellate proceedings the assessee in his attempt to explain the source of Rs.6,84,000/- deposited in his bank account, had placed on record additional evidence as per which it was claimed that the same comprised of a loans received from Mr. Aasif Supariwala and Mrs. Khatija Usman Patel of Rs.4,00,000/- and Rs. 2,85,000/-, respectively. The A.O rebutting the aforesaid claim of the assessee submitted in his remand report that as the amount of Rs.4,00,000/- was earlier claimed by the assessee during the course of the assessment proceedings to have been directly paid by Mr. Aasif Supariwala on his behalf to the builders, viz. Sarkar builders towards his share of investment made in Flat No. 202 on the second floor of P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) Sarkar Tower-III, Mazagaon, Mumbai, therefore, the claim to the contrary raised by the assessee during the course of the appellate proceedings that the said amount of Rs. 4 lac received from Mr. Asif Supariwala was part of the cash deposit of Rs.6,84,000/- made in his bank account during the year under consideration could not be accepted. The A.O further observed in his remand report that the claim of the assessee that he had raised a loan of Rs.2,85,000/- from his mother, viz. Mrs. Khatija Usman Patel also could not be accepted, for the reason that the identity of the person from whom the aforesaid loan was claimed by the assessee to have been raised had not been established. The A.O further rebutting the claim of the assessee that he was an agriculturist, observed that as neither the ownership of an agricultural land was revealed from the balance sheet of the assessee, nor any documentary evidence had been placed on record in respect of agricultural sale proceeds and expenses incurred in the course of carrying out such agricultural activities, therefore, it could safely be concluded that the assessee did not possess any agricultural land.
4. That during the course of the appellate proceedings it was submitted by the assessee before the CIT(A) that he was an agriculturist and was purely receiving his income from agricultural activities and had no other source of income. It was brought to the notice of the CIT(A) that the assessee who was deaf and dumb had no other source of income except from agricultural activities and was totally dependant on his family and relatives for his livelihood. It was submitted before the CIT(A) that the amount of Rs.6,84,000/- which was deposited in his bank account was as a matter of fact amounts received as loans from the relatives and the name of the assessee was stated in the purchase agreement only for the sake of convenience, as the assessee was absolutely dependant on his aforesaid relatives.
P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) 5. The CIT(A) after deliberating on the contentions raised by the assessee before him was however not persuaded to be in agreement with the contentions of the assessee. The CIT(A) held a conviction that now when the assessee while explaining the source of investment of Rs.10,00,000/- made towards his share in the aforesaid property, viz. Flat No. 202 on the second floor, Sarkar Tower-III, Mazagaon, Mumbai, had stated that Mr. Asif Supariwala had made payment of Rs.4,00,000/- directly to the builder on his behalf, therefore, the explanation of the assessee that the cash deposit of Rs.6,84,000/- in his bank account during the year under consideration comprised of the loan of Rs.4,00,000/- received from Asif Supariwala clearly militated against his earlier claim and thus could not be accepted. The CIT(A) further observed that the claim of the assessee that he had received an amount of Rs.2,85,000/-from his mother Mrs. Khatija Usman Patel also could not be accepted, for the reason that as she was an 82 years old lady, therefore, she would not be in a position to earn income from which the aforesaid amounts could have been advanced to the assessee. The CIT(A) on the basis of his aforesaid deliberations not finding favour with the explanation tendered by the assessee, dismissed the appeal.
6. The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short „A.R‟) for the assessee at the very outset submitted that the addition of Rs.6,84,000/- made by the A.O under Sec. 68 in respect of cash deposits in the bank account of the assessee could not be sustained in the eyes of law. The ld. A.R sought to canvass that as a „bank account‟ could not be construed as the „books‟ of the assessee, therefore, an addition in respect of a cash deposit in the said bank account, san any such correlating credit found in the P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) books of the assessee could not be made under Sec.68 of the Act. It was submitted by the ld. A.R that as the addition in the hands of the assessee was not based on a credit entry appearing in the books of accounts of the assessee, but rather, only on the basis of a cash deposit in his bank account, therefore, the addition made in his hands under Sec. 68 could not be sustained and was liable to be vacated on the said count itself. The ld. A.R in support of his aforesaid contention relied on the orders of the coordinate benches of the Tribunal in the case of Mehul V. Vyas Vs. I.T.O-23(2)(3), Mumbai (2017) 164 ITD 296 (Mum) and the order of the “SMC” bench, Mumbai in the case of Smt. Mansi Mahindra Pitkar Vs. I.T.O. 1(2), Thane (2016) 160 ITD 605 (Mum). The ld. A.R further adverting to the merits of the case submitted that now when it remained as a matter of fact that the assessee who was deaf and dumb and was totally dependent for his livelihood on his family and relatives had no other source of income except for income from agricultural activities, therefore, the lower authorities had gravely erred in treating the cash deposit in the bank account as his undisclosed income for the year under consideration. It was the contention of the ld. A.R that the lower authorities without dislodging or disproving the claim of the assessee that he was absolutely dependant on his family members for his livelihood, had however on the basis of whimsical observations drawn adverse inferences in his hands and most arbitrarily made an addition of Rs. 6,84,000/- as the unexplained income of the assessee. Per contra, the ld. Departmental Representative (for short „D.R‟) relied on the orders of the lower authorities.
7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We shall first deal with the objection raised by P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) the Id. A.R as regards the addition of Rs.6,84,000/- made by the A.O under Section 68 in respect of the cash deposit in the bank account of the assessee. We find substantial force in the contention of the ld. A.R that an addition under Section 68 can only be made where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee either offers no explanation about the nature and source as regards the same or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. We find that even in the course of the appellate proceedings the CIT(A) after recording his observations at length in respect of the scope and gamut of Sec. 68 had thereafter sustained the addition made by the A.O under the aforesaid statutory provision, as such. The ld. D.R could not point out any perversity as regards the contention advanced by the ld. A.R before us that the addition made under Sec. 68 being beyond the purview of the said statutory provision could not be sustained in the eyes of law. That before adverting further, we herein reproduce the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under: - “Cash Credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] officer, satisfactory, the sum so credited may be charged.; to income-tax as the income of the assessee of that previous year..................”
That a bare perusal of the aforesaid deeming section reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for making of an P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) addition under Section 68 presupposes a credit of the aforesaid amount in the books of an assessee maintained for the previous year. We not being oblivious of the settled position of law that a statutory provision has to be strictly construed and interpreted as per its plain literal interpretation and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature, thus, confining ourselves within the realm of our jurisdiction, construe the scope and gamut of the aforesaid statutory provision by according a plain meaning to the language used in Sec.
We are of the considered view that a credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books of the assessee‟ for the very reason that the „bank account‟ cannot be held to be the 'books of the assessee‟. Though it remains as a matter of fact that the „bank account‟ of an assessee is the account of the assessee with the bank or in other words the account of the assessee in the books of the bank, but however, the same in no way can be held to be the „books of the assessee‟. We have given a thoughtful consideration to the scope and gamut of the aforesaid statutory provision, viz. Sec. 68 and are of the considered view that an addition made in respect of a cash deposit in the 'bank account' of an assessee, in the absence of the same found credited in the books of the assessee maintained for the previous year, cannot be brought to tax by invoking the provisions of Section 68. That our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Commissioner of Income-tax Vs. Bhaichand N. Gandhi (1983) 141 ITR 67 (Bom), wherein the Hon'ble High Court had observed as under: - “As the Tribunal has pointed out, it is fairly well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of the debtor and creditor P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) and not of trustee and beneficiary. Applying this principle, the pass book supplied by the bank to its constituent is only a copy of the constituent's account in the books maintained by the bank. It is not as if the pass book is maintained by the bank as the agent of the constituent, nor can it be said that the pass book is maintained by the bank under the instructions of the constituent. In view of this, the Tribunal was, with respect, justified in holding that the pass book supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee, that is, a book maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived.” We further find that the reliance placed by the ld. A.R before us on the order of a coordinate bench of the Tribunal, viz. ITAT, Mumbai bench „B‟ in the case of Mehul V. Vyas Vs. I.T.O 23(2)(3), Mumbai (2017) 164 ITD 296 (Mum) and the order of a “SMC” bench of the ITAT, Mumbai in the case of Smt. Mansi Mahindra Pitkar Vs. I.T.O 1(2), Thane (2016) 160 ITD 605 (Mum) to support her contention that the cash deposits in the bank account cannot be construed as an unexplained cash credit within the meaning of Sec. 68 in a case where the assessee is not maintaining any books of account, is found to be well placed and squarely covers the issue under consideration before us. We further find that a similar view had also been arrived at by a „Third member‟ decision of the Tribunal in the case of Smt. Madhu Raitani Vs. Asst. CIT [2011] 10 taxmann.com 206/45 SOT 231 (Guj) (TM) as well as by a coordinate bench of the Tribunal in the case of ITO Vs. Kamal Kumar Mishra [2013] 33 taxmann.com 610/143 ITD 686 (Lucknow- Trib). Thus, in the backdrop of the aforesaid facts of the case read in light of the settled position of law, we are of the considered view that the addition made by the A.O in respect of the cash deposit of Rs.6,84,000/-(supra) in the bank account of the assessee by invoking Section 68 has to fail for the very reason that as per the judgment of the Hon‟ble Bombay High Court in the case of Bhaichand N. Gandhi (supra), a P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) bank pass book or bank statement cannot be considered to be a 'book' maintained by the assessee for any previous year, as understood for the purpose of Section 68 of the Act. Therefore, on this count itself the impugned addition Rs. 6,84,000/- deserves to be deleted.
Alternatively, we have further deliberated on the contentions advanced by the ld. A.R on merits to support her contention that no addition even otherwise in the backdrop of the facts of the case was called for in the hands of the assessee. We may herein observe that the contention raised before the lower authorities as well as before us by the ld. A.R that the assessee being a deaf and dumb person was absolutely dependent on his family and except for income from agricultural activities had no other source of income, had not been dislodged or disproved by the revenue till date. We further find that now when the assessee during the course of the assessment proceedings had placed on record copies of the extract of the register in Form 7 and 12 as a proof of ownership of agricultural land by him, therefore, the lower authorities merely on the basis of premature observations could not have summarily rejected the said claim of the assessee without placing on record any documentary evidence which could have proved to the contrary. We further find that though the CIT(A) had declined to accept the claim of the assessee that he had received an amount of Rs.2,85,000/- from his mother Mrs. Khatija Usman Patel, for the reason that keeping in view the fact that she was an old lady of 82 years of age, therefore, she could not be expected to have earned income from which the aforesaid amount could have been given to the assessee, but however, without dislodging or disproving the claim of the assessee that he being a deaf and dumb person who was totally dependent for his livelihood on his family and relatives and P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) had no other source of income except for agriculture income, had however hushed through the matter and without dislodging the explanation of the assessee as regards the source of the cash deposit of Rs. 6,84,000/- in his bank account, had assessed the same as his undisclosed income. We though are not oblivious of the fact that onus is cast upon an assessee to explain the nature and source of an investment made by him to the satisfaction of the A.O, but however, as observed by the Hon’ble Supreme Court in the case of CIT Vs. P.K. Noorjahan (1999) 237 ITR 570 (SC) the legislature in all its wisdom had conferred a discretion with the A.O in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee, and the A.O is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The Hon‟ble Apex Court had observed that as to whether the source of the investment should be treated as income or not has to be considered in the light of the facts of each case. In other words, the discretion is conferred on the A.O to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case. We may herein observe that in the backdrop of the aforesaid judgment of the Hon‟ble Supreme Court, now when in the case before us the assessee is a deaf and dumb person having no source of income except for income from agricultural activities and is totally dependent on his relatives for his livelihood, therefore, despite the fact that the explanation of the assessee that the source of the cash deposit was out of his sole source of income from agricultural activities or the amounts received from his relatives (which had been accepted by the relatives) might not have found favour with the A.O, but however, it P a g e | Mr. Latif Ebrahim Patel Vs. I.T.O-17(1)(1) could safely be concluded that he could not had earned an amount of Rs. 6,84,000/- during the year under consideration. We thus are of a strong conviction that in the backdrop of the facts of the case the addition of Rs. 6,84,000/- even otherwise also could not have been validly made in the hands of the assessee. We thus not persuaded to subscribe to the aforesaid addition of Rs. 6,84,000/- in the hands of the assessee on merits, therefore, direct the deletion of the same on the said count also.
10. We thus in terms of our aforesaid observations set aside the order of the CIT(A) and quash the addition of Rs.6,84,000/- made in the hands of the assessee.
The appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 23.03.2018