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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI RAVISH SOOD, JM
सुनवाई की तायीख / : 07.12.2017 Date of Hearing घोषणा की तायीख / : 14.02.2018 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)-22, Mumbai, dated 30.06.2014, 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 10.12.2010. The assessee P a g e | 2 Abid Shiraz Merchant Vs. ITO 19(2)(1) assailing the order passed by the CIT(A) had raised before us the following grounds of appeal:- “1 Under the facts and circumstances of the case, the Ld. Assessing officer has erred in not accepting the gift of Rs. 5,00,000/- received by the appellant, while making the addition of Rs. 6,00,000/- as unexplained cash credits u/s 68 of the Income Tax Act.
2. Under the facts and circumstances of the case, the Ld. Assessing officer has not justified in making addition to the extent of Rs. 14,33,500/- as cash credit u/s 68 of the Income Tax act, instead of taking the peak of Rs. 6,55,350/-.
3. The appellant craves leave for any addition, deletion and amendments in ground of appeal, till the disposal of the appeal.”
2. Briefly stated, the facts of the case are that the assessee had filed his return of income for A.Y. 2008-09 on 31.07.2008, declaring total income of Rs. 3,66,724/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was thereafter taken up for scrutiny assessment under Sec. 143(2).
3. The information received by the A.O from ITS/AIS generated in CASS, revealed that the assessee had made cash deposits aggregating to Rs. 37,53,500/-in his bank account with Development Co-operative Bank, Branch : Prabhadevi and Branch : Santacruz (E). That on a query by the A.O it was submitted by the assessee that cash of Rs. 23,20,000/- was deposited by him in his saving bank account No. 8578 with DCB Bank, Branch : Santacruz (E) during the year under consideration, source of which was the cash withdrawals made from the said bank account itself. That as the information available with the A.O as regards the cash deposit of Rs. 37,53,500/- did not tally with the amount of cash deposits of Rs. 23,20,000/- which was admitted by the assessee to have been deposited in his aforesaid bank account, therefore, the assessee was once again called upon by the A.O to furnish his submission/explanation in respect of the cash P a g e | 3 Abid Shiraz Merchant Vs. ITO 19(2)(1) deposits. The assessee again restricted his reply as regards the cash deposits of Rs. 23,20,000/- that was made by him in his saving bank account No. 2610100008578 with DCB Bank, Branch : Santacruz (East). The A.O observed that the assessee not only failed to furnish the bank details in respect of the bank account No. 02610100035662 held by him with DCB Bank, Santacruz, but rather with the intent to mislead the department got a letter issued from the bank to the effect that the assessee had only made a cash deposit of Rs. 23,20,000/- in his saving bank account No. 02610100008578 with the bank. The A.O observed that a perusal of the contents of the letter revealed that the same was issued by the bank at the request of the assessee. The A.O in the backdrop of the aforesaid facts held a conviction that the assessee had resorted to the aforesaid exercise in order to impress upon him that he was holding only one bank account No. 02610100008578 with DCB Bank, Branch : Santacruz (E), in which cash of Rs. 23,20,000/- was deposited by him during the year under consideration. The A.O on the basis of his aforesaid observations was of the view that the assessee had tried his level best to conceal the particulars of his another bank account No. 02610100035662 with DCB bank in which cash of Rs. 14,33,500/- was deposited by him during the year. The A.O in order to verify the veracity of the information made available by the assessee issued a notice under Sec. 133(6) to the Manager of the Head Office of Development Credit Bank, Prabhadevi, Mumbai. That in compliance to the aforesaid notice the bank furnished with the A.O the copy of the bank statements along with the account opening forms of both the accounts of the assessee, viz. (i) Bank A/c No. 02610100035662 wherein the assessee Sh. Abid S. Merchant was the first account holder and Arshad Aziz Bhimani was the second account holder; and (ii) Bank A/c No. 026100008578 wherein the assessee Sh. Abid S. Merchant was the first account P a g e | 4 Abid Shiraz Merchant Vs. ITO 19(2)(1) holder and Farida S. Merchant was the second account holder. The A.O observed that a perusal of the copy of statement of the bank account No. 02610100035662 revealed that the assessee had deposited cash aggregating to Rs. 14,33,500/- in the said bank account during the year under consideration. The A.O on the basis of the information available before him, observed that the assessee had at all stages refrained from making a mention about his aforesaid saving bank account No. 02610100035662 with DCB Bank and the cash deposit of Rs. 14,33,500/- made in the same.
The assessee on being confronted with the cash deposits of Rs. 23,20,000/- in his SB A/c No. 02610100008578 with DCB Bank, Branch: Santacruz (E), submitted that the same was by way of redeposit of cash which was withdrawn from the said bank account. The assessee submitted before the A.O that as his father and uncle were both suffering from multiple medical problems, viz. heart problem, blood pressure and diabetes, therefore, in order to meet out the hospitalization and surgery cost he had withdrawn cash of Rs. 3 to 4 lacs several times during the year, which however to the extent the same remained unutilised was re-deposited from time to time in the bank account. The assessee in order to drive home his claim as regards the illness of his father and uncle, placed on record the medical record of the said respective persons. The A.O on a perusal of the SB A/c No. 02610100008578 of the assessee with DCB Bank, observed that while for the assessee had made cash deposit of Rs. 23,20,000/-, however, the cash withdrawals available to explain the re-deposit of the amount from the said bank account was only to the extent of Rs. 17,70,000/- during the year. The A.O observed that while for during the period 05.06.2007 to 23.10.2007 the cash withdrawals were to the extent of Rs. 8,20,000/-, but however, the cash deposits P a g e | 5 Abid Shiraz Merchant Vs. ITO 19(2)(1) made in the bank account aggregated to Rs. 10,20,000/-. The A.O on the basis of his aforesaid observations concluded that the assessee had made an unexplained cash deposit of Rs. 2,00,000/- upto 23.10.2007. It was further observed by the A.O that the assessee had during the period 30.10.2007 to 10.12.2007 made cash withdrawals of Rs. 8,00,000/-,however, the cash deposits aggregated to Rs. 12,00,000/-, which thus revealed unexplained cash deposit of Rs. 4,00,000/- upto 10.12.2007. The A.O buying the explanation of the assessee that the cash withdrawn from the bank account was re- deposited during the year, observed that still an unexplained cash deposit to the tune of Rs. 6,00,000/- emerged there from. The A.O being of the view that the assesses contention that cash was withdrawn for the treatment of his relatives was baseless and nothing better than an afterthought, therefore, declined to accept the same. The A.O on the basis of his aforesaid observations concluded that the cash deposits of Rs. 6,00,000/- in SB A/c No. 02610100008578 with DCB Bank could safely be held to be unexplained cash credits in the hands of the assessee.
That as regards the cash deposits of Rs. 14,33,500/- in the SB A/c No. 02610100035662 of the assessee with DCB Bank, it was observed by the A.O that the assessee right from the very inception had never disclosed the aforesaid bank account and had deliberately concealed the particulars as regards the same. The A.O observed that not only the assessee had withheld the information as regards the aforesaid bank account, but rather, had tried his level best to impress upon the A.O that he was holding only SB A/c No. 02610100008578 with DCB Bank, Branch Santacruz (E). The A.O on the basis of his aforesaid observations concluded that the cash deposits of Rs. P a g e | 6 Abid Shiraz Merchant Vs. ITO 19(2)(1) 14,33,500/- made by the assessee in his aforesaid bank account were out of his undisclosed sources of income.
The A.O on the basis of his aforesaid observations made an addition of Rs. 20,33,500/- in respect of the aforesaid bank accounts of the assessee, viz. (i) addition in respect of cash deposits of Rs. 6,00,000/- in SB A/c No. 02610100008578 with DCB Bank; and (ii) cash deposit of Rs. 14,33,500/- in the undisclosed SB A/c No. 02610100035662 with DCB Bank, as unexplained cash credits in the hands of the assessee.
The assessee during the course of the assessment proceedings placed on record a letter dated 18.10.2010, as per which it was claimed that he had received a gift of Rs. 5,00,000/- from his aunt Mrs. Anis Jariwala. The assessee supported his aforesaid claim on the basis of a photocopy of fax message dated 18.10.2010, which was stated to have been received from his aforesaid aunt Mrs. Anis Jariwala. That a perusal of the Fax message revealed that it was claimed by Mrs. Anis Jariwala that shewas giving the gift of Rs. 5,00,000/- to the assessee Mr. Abid Merchant for the medical treatment of her brothers, viz. Shiraz Merchant and Shaukat Merchant. The A.O observed that in the said declaration of the gift there was no mention of certain material aspects, viz. the date on which the gift was made, the mode of gift or the fact that the gift was irrevocable. The A.O on the basis of the aforesaid material defects directed the assessee to clarify the same. The assessee vide his letter dated 08.11.2010 placed on record a copy of confirmation of account from his aunt Mrs. Anis Jariwala, as per which cash of Rs. 2,00,000/- and Rs. 3,00,000/- was received by the assessee from her on 03.10.2007 and 26.11.2007. However, the A.O observed that the P a g e | 7 Abid Shiraz Merchant Vs. ITO 19(2)(1) assessee had failed to place on record the copy of bank account of his aunt Mrs. Anis Jariwala, i.e. the donor, failing which the genuineness of the gift transaction could not be proved. The A.O further observed that the mode of gift (whether received through cash or cheque) was also not found mentioned in the photocopy of the fax message. It was further observed by the A.O that while for the fax message referred to only one single amount of gift of Rs. 5,00,000/-, however, in the copy of account confirmation which was placed on record by the assessee on 08.11.2010 it was stated that two cash entries of Rs. 2,00,000/- on 03.10.2007 and another of Rs. 3,00,000/- on 26.11.2007 was received as gift by the assessee from his aunt. The A.O in the backdrop of the aforesaid facts observed that the claim of gift so raised by the assessee was nothing but an afterthought to explain the unexplained cash deposits appearing in the aforesaid bank accounts of the assessee with DCB Bank. The A.O thus not persuaded to accept the genuineness of the gift transaction, as claimed by the assessee, rejected the same. However, as the additions in respect of the cash deposits in the bank accounts had separately been made in the hands of the assessee, therefore, no separate addition as regards the same was made.
Aggrieved, the assessee carried the matter in appeal before CIT(A). The assessee submitted before the CIT(A) that the bank account No. 02610100035662 with DCB Bank, Prabhadevi Branch belong to Mr. Arshad Aziz Bemani who was a relative and friend of the assessee, and the same did not belong to him. It was submitted by the assessee that the account was jointly held only for the sake of convenience. However, the said explanation of the assessee did not find favour with the CIT(A). The CIT(A) observed that a perusal of the copy of the account opening form which was furnished by the bank in P a g e | 8 Abid Shiraz Merchant Vs. ITO 19(2)(1) response to notice u/s 133(6), revealed that the assessee was the first account holder in both of the bank accounts held with DCB Bank. The CIT(A) observed that Sh. Arshad Aziz was only the second account holder in respect of the account maintained with DCB Bank, Prabhadevi Branch. The CIT(A) observed that the explanation offered by the assessee that Sh. Arshad Aziz who had shifted to U.K along with his family had came back to India in the F.Y. 2006-07 and wanted to start retail business for which the account No. 02610100035662 was opened with DCB Bank, Prabhadevi Branch, was an unsubstantiated claim of the assessee, which not found to be supported by any evidence, thus, could not be accepted. The CIT(A) was also not persuaded to accept the claim of the assessee that the deposits and withdrawals in the bank account No. 02610100035662 with DCB Bank, Branch Prabhadevi were made by Mr. Arshad Aziz, for the reason that no supporting evidence such as copy of the counterfoil of the challans for making deposits and the copies of the cheques/withdrawal slips supporting the said fact was placed on record by the assessee. The ‘Affidavit’ of Sh. Arshad Aziz, dated 17.04.2012 which was filed by the assessee during the course of the appellate proceedings, i.e. after a period of 1½ years from the culmination of the assessment proceedings, was also declined by the CIT(A) to be admitted as an additional evidence, as the assessee had failed to come forth with a reasonable cause for not submitting the same before the A.O. The CIT(A) being of the view that the assessee had not placed on record any corroborating evidence such as copy of purchase bills, sales invoice etc. which could go to prove that Sh. Arshad Aziz was actually engaged in a retail trading business, therefore, refused to accept the said claim of the assessee. Rather, the CIT(A) observed that now when Mr. Arshad Aziz was a resident of U.K, therefore, it was beyond comprehension that as to how he could have P a g e | 9 Abid Shiraz Merchant Vs. ITO 19(2)(1) withdrawn and deposited cash in the aforesaid bank account maintained in India. The CIT(A) further observed that the assessee had also not placed on record the copy of the passport of Mr. Arshad Aziz which could go to prove that he was available in India to withdraw cash and deposit the same in the aforesaid bank account on the said specific dates. The CIT(A) on the basis of his aforesaid observations upheld the addition of Rs. 14,33,500/- made by the A.O in the hands of the assessee.
That as regards the addition of Rs. 6,00,000/- made by the A.O in respect of the unexplained cash deposits in the saving bank account No. 02610100008578, the CIT(A) at the very outset accepted the claim of the assessee that the A.O while working out the total cash withdrawals at Rs. 17.70 lac had failed to consider the cash withdrawal of Rs. 50,000/- made on 12.11.2007 from the aforesaid bank account. The CIT(A) accepted the aforesaid claim of the assessee and observed that in the backdrop of the total cash withdrawals of Rs. 18,20,000/- made by the assessee from his said bank account, the exact difference between the cash withdrawals and the cash deposits in the aforesaid bank account remained at Rs. 5,00,000/-. However, the explanation of the assessee that the amount of Rs. 5,00,000/- was received as cash gift from his aunt Mrs. Anis Jariwala, did not find favour with the CIT(A). The CIT(A) observed that the material placed on record by the assessee in his attempt to substantiate the genuineness of the gift transaction suffered from certain material defects, viz. (i) the confirmation letter of the donor which was placed on record by the assessee was undated; (ii) there was no mention of the mode of gift; and (iii) that despite a specific query by the A.O the assessee had failed to place on record any supporting evidence such as bank passbook of Mrs. Anis Jariwala which could substantiate the veracity P a g e | 10 Abid Shiraz Merchant Vs. ITO 19(2)(1) of the gift transaction. The CIT(A) observed that the claim of the assessee that he had received a gift of Rs. 5,00,000/- from his aunt Mrs. Anis Jariwala was clearly an afterthought. It was observed by the CIT(A) that had the assessee been in receipt of the aforesaid gift, then the same would have been reflected in his capital account in the balance sheet. The CIT(A) was also not persuaded to accept the claim of the assessee that by mistake the gift was wrongly shown as a loan. The CIT(A) held a conviction that the assessee on being cornered with a deficit cash in the backdrop of the cash deposited in his bank accounts with DCB Bank, had thus tried to explain the same by way of receipt of gift from Mrs. Anis Jariwala. The CIT(A) fortifying his aforesaid view observed that if the claim of the assessee was to be accepted that the amount was received as a gift from his aunt Mrs. Anis Jariwala for the medical treatment of her brothers, viz. Shiraz Merchant and Shaukat Merchant, then it was beyond comprehension that now when the said amounts were not utilized for the purpose of the emergency medical needs, then what prevented the assessee from depositing the entire cash of Rs. 2,00,000/- on 03.10.2007 itself, instead of depositing Rs. 1,20,000/- on the same day and depositing another Rs. 1,00,000/- on 23.10.2007. The CIT(A) observed that a perusal of the bank account of the assessee revealed that as a huge sum was available in the bank account of the assessee, therefore, there was no reason for him to have taken another amount of Rs. 3,00,000/- as cash gift from his aunt Mrs. Anis Jariwala on 26.11.2007. Rather, the copy of account of DCB Bank revealed that the cash balance as on 26.11.2007 in the bank account of the assessee was to the extent of Rs. 10,44,335/-, which thus clearly ruled out any occasion for receiving of a gift by him on an emergency basis. The CIT(A) was further of the view that now when the donor Mrs. Anis Jariwala had intended to financially assist her brothers for P a g e | 11 Abid Shiraz Merchant Vs. ITO 19(2)(1) meeting out their emergency medical needs, therefore, it was beyond comprehension as to what stopped her from providing such financial assistance directly to them, rather than routing the same through her nephew i.e. the assessee. The CIT(A) on the basis of his aforesaid observations concluded that not only the assessee had failed to discharge the onus as was so cast upon him to prove the genuineness of the gift transaction, but rather, going by the circumstantial evidence and human probability, it could safely be concluded that the claim of the assessee of having received a gift from his aunt Mrs. Anis Jariwala was nothing better than a bogus claim that was raised in order to wriggle out of the cash deficit to explain the cash deposits in his bank accounts with DCB Bank, as had emerged during the course of the assessment proceedings. The CIT(A) on the basis of his aforesaid conviction upheld the addition of Rs. 6,00,000/- in the hands of the assessee.
The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The Learned Authorized Representative (for short ‘A.R’) for the assessee at the very outset submitted that the CIT(A) after taking cognizance of the failure on the part of the A.O to consider the cash withdrawal of Rs. 50,000/- while working out the total cash withdrawals from the aforesaid bank account, had thus allowed a relief of Rs. 50,000/- in respect of the addition of Rs. 6,00,000/- made by the A.O on account of unexplained cash deposits in the bank account No. 02610100008578 with DCB Bank. The Ld. A.R further submitted that the CIT(A) had erred in not accepting the gift of Rs. 5,00,000/- which was received by the assessee from his aunt Mrs. Anis Jariwala. It was further averred by the Ld. A.R that the CIT(A) had failed to restrict the addition in respect of the cash deposits made in the SB A/c No. 02610100035662 with P a g e | 12 Abid Shiraz Merchant Vs. ITO 19(2)(1) DCB Bank to the extent of the peak cash credit of Rs. 6,55,350/- and had wrongly upheld the entire addition of Rs. 14,33,500/-. Per Contra, the Learned Departmental Representative (for short ‘D.R’) relied on the orders of the lower authorities.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present case had been sought to adjudicate two issues, viz. (i) that as to whether the CIT(A) was right in not accepting the gift of Rs. 5,00,000/- which was claimed by the assessee to have been received from his aunt Mrs. Anis Jariwala; and (ii) that whether the A.O was justified in making an addition of the unexplained cash deposits of Rs. 14,33,500/- in the bank account No. 02610100035662 of the assessee with DCB Bank, and not restricting the addition to the peak cash credit of Rs. 6,55,350/-. We first advert to the issue as regards the amount of Rs. 5,00,000/- which was claimed by the assessee to have been received from his aunt Mrs. Anis Jariwala. We find that it is claimed by the assessee that he had received a gift of Rs. 5,00,000/- from his aunt Mrs. Anis Jariwala by way of a financial assistance to facilitate meeting out the expenses involved in the medical treatment of her brothers, viz. Shiraz Merchant and Shaukat Merchant. We find that the CIT(A) had rightly observed that the documents which were placed on record by the assessee in his attempt to substantiate the genuineness of the gift transaction, as claimed by him, suffered from certain material defects, viz. (i) the confirmation letter of the donor which was placed on record by the assessee was undated; (ii) there was no mention of the mode of gift; and (iii) that despite a specific query by the A.O the assessee had failed to place on record any supporting evidence such as bank passbook of the donor which could P a g e | 13 Abid Shiraz Merchant Vs. ITO 19(2)(1) substantiate the veracity of the gift transaction. We find ourselves to be in agreement with the view taken by the CIT(A) that if the claim of the assessee was to be accepted that he had received the amount as a gift from his aunt Mrs. Anis Jariwala to provide for the funds required for the medical treatment of her brothers, viz. Shiraz Mserchant and Shaukat Merchant, then it was beyond comprehension that now when the said amounts were not utilized for the purpose of their emergency medical needs, what prevented the assessee from depositing the entire cash of Rs. 2,00,000/- on 03.10.2007 itself, instead of depositing Rs. 1,20,000/- on the same day and depositing another Rs. 1,00,000/- on 23.10.2007. We are further persuaded to be in agreement with the CIT(A) that as sufficient amount was available in the bank account of the assessee, therefore, there was no reason for him to have taken another amount of Rs. 3,00,000/- as cash gift from his aunt Mrs. Anis Jariwala on 26.11.2007. Rather, the copy of account of DCB Bank revealed that the balance available as on 26.11.2007 in the bank account of the assessee was to the extent of Rs. 10,44,335/-, which thus clearly ruled out any occasion for taking a gift on an emergency basis by the assessee. We are also of the view that now when the donor Mrs. Anis Jariwala had intended to financially assist her brothers for meeting out their emergency medical needs, therefore, there was no reason for not providing such financial assistance directly to them, and that too by cheques, rather than routing the same through her nephew, i.e. the assessee. We are of the considered view that the documentary evidence placed on record by the assessee in his attempt to substantiate the genuineness of the gift transaction under consideration does not inspire any confidence. We are rather of a strong conviction that in the backdrop of the facts emerging from the records, it can safely be concluded that the assessee had not only failed to discharge the onus as stood cast upon him, but rather, a P a g e | 14 Abid Shiraz Merchant Vs. ITO 19(2)(1) perusal of the facts clearly reveals that the explanation tendered by him was clearly a result of an afterthought to wriggle out of the unexplained cash deposits in his bank accounts with DCB Bank. We thus finding ourselves to be in agreement with the view taken by the CIT(A) that as the assessee had absolutely failed to discharge the onus as regards proving the genuineness and veracity of the gift transaction under consideration, therefore, uphold the view of the CIT(A) that the assessee had raised a bogus claim of having received a gift of Rs. 5,00,000/- from his aunt Mrs. Anis Jariwala. We thus uphold the order of the CIT(A) to the said extent, in terms of our aforesaid observations. The Ground of Appeal No. 1 is dismissed in terms of our aforesaid observations.
We now advert to the contention of the assessee that the A.O had erred in making an addition of the entire cash deposits of Rs. 14,33,500/- made by the assessee during the year under consideration in his SB A/c No. 0261010003562 with DCB Bank, instead of restricting the same to the peak credit of Rs. 6,55,350/-. We find that though the said plea was raised by the assessee before the CIT(A) for the very first time, however, the same was turned down by him for the reason that no evidence was placed on record by the assessee to prove that the cash withdrawn was re-deposited by him in the same bank account. We find that nothing had either been placed on record, nor averred before us by the Ld. A.R which could persuade us to conclude that the said observations of the CIT(A) were either perverse or incorrect. Still further, the assessee had not placed on record any material even before us which could persuade us to conclude that the amount withdrawn from the bank account could safely be held to have been re-deposited, as a result whereof the addition in the hands of the assessee could safely be restricted to the P a g e | 15 Abid Shiraz Merchant Vs. ITO 19(2)(1) extent of the peak cash credit. We are of the considered view that merely raising of a claim that an addition in respect of the cash deposits in the bank account was liable to be restricted after telescoping the cash deposits/withdrawals in the said bank account cannot be summarily accepted, unless the assessee is able to substantiate on the basis of irrefutable evidence that the amounts withdrawn were thereafter parked by way of re-deposit in the bank account. We thus in the backdrop of our aforesaid observations are unable to find ourselves to be in agreement with the claim raised by the assessee that the addition in respect of the cash deposits of Rs. 14,33,500/- in his SB A/c No. 0261010003562 was liable to be restricted to the extent of the peak credit of Rs. 6,55,350/-. We thus uphold the order of the CIT(A) and sustain the addition of Rs. 14,33,500/- made by him in the hands of the assessee. The Ground of Appeal No. 2 is dismissed. The Ground of Appeal No.3 raised by the assessee being general is dismissed as not pressed.
The appeal filed by the assessee is dismissed.