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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2007-08. The appeal is directed against the order of the Commissioner (Appeals) – 35, Mumbai and arises out of the order u/s 143(3) of the Income Tax Act, 1961 (the ‘Act’).
The ground of appeal filed by the assessee reads as under:-
1. The learned Commissioner of Income Tax (Appeal) – 35 erred in law and in facts in passing the order u/s 250 of the Act, which is illegal and bad in law.
2. The learned Commissioner of Income Tax (Appeal) further erred in confirming the additions of Rs. 15,00,000/- made by the Assessing Officer on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961.
The assessee filed his return of income for the A.Y. 2007-08 declaring total income of Rs. 97,430/-. During the course of assessment proceedings, the Assessing Officer (AO) found from the AIR information that the assessee has made cash deposits on various dates to the tune of Rs. 15,40,500/- in his savings bank account with the Bharat Co-operative Bank (Mumbai) Ltd., Mumbai. As per page 3- 4 of the assessment order, the AO had given the assessee the following opportunities to explain his case:
(i) Order sheet noting of this office dated 24.08.2009. (ii) Order sheet noting of this office dated 31.08.2009. (iii) Assessee’s case re-fixed for hearing to 23.09.2009 considering the request for adjournment made by his AR vide their letter dated 15.09.2009. (iv) This office letter / notice u/s 142(1) of the I.T. Act 1961, dated 03.11.2009. (v) Vide this office order sheet noting dated 12.11.2009 (vi) This office show cause letter / notice u/s 142(1) of the I.T. Act 1961 dated 17.11.2009.
As the assessee failed to furnish any kind of explanation with regard to the above cash deposits, even though he was given six opportunities to explain, the AO concluded that the cash deposits made by the assessee in his bank account with Bharat Co-operative Bank Ltd. to the tune of Rs. 15,40,500/- are nothing but his income from undisclosed sources. Therefore, the AO made an addition of Rs. 15,40,500/- as unexplained cash credit u/s 68 of the Act.
Aggrieved by the order of the AO the assessee filed an appeal before the learned CIT(A). We find that the learned CIT(A) in his appellate order dated 20th July, 2010 held as under:
“3. Cash Deposits Rs. 15,40,500/- 3.1 The A.O. noticed that the appellant made cash deposits on various dates to the extent of Rs. 15,40,500/- in his savings bank account with Bharat Co-operative Bank Ltd. The appellant could not explain source of cash deposits even though he was granted adequate opportunities. The A.O. treated the same as unexplained credit u/s 68 of the I.T. Act, 1961. 3.2 At the time of hearing the representative did not press this issue and signed in the order sheet to this effect. Accordingly, this ground is treated as withdrawn and dismissed.”
Before us, the learned counsel of the assessee filed a paper book containing (i) Facts of case and written submission (ii) Computation of total income along with final accounts statement (iii) Copy of bank statement reflecting the amount paid & received from broker (iv) Letter dated 22nd January, 2015 filed with the Hon'ble ITAT requesting for admitting the additional evidence under Rule 29 of the I.T. Rules submitting affidavits from the farmers from whom the loans in cash have been taken including the English translation of the same. It is stated that the true copies of the originals were filed before the AO as well as CIT(A), except for papers stated at Sl. No. 4.
5.1 The learned counsel of the assessee has filed an application under Rule 29 of the ITAT rules 1963 stating that new evidences could not be produced before the lower authorities for the reason that the same were not in existence at the time when the impugned assessment as well as the CIT(A)’s order was passed. It is stated that these evidences are intricately connected and relevant to the appeal to be heard by the Tribunal and therefore requested that the same be permitted to be adduced during the course of hearing proceedings under Rule 29 of the ITAT rules 1963. Along with it the assessee has filed affidavits from 20 persons. All the affidavits are worded in the same language. One is produced below for reference: AFFIDAVIT “I am Mogaram son of Bhabutaramji Devasi, resident of Ramaniya, Tahshil- Siwana, Barmer – District, (Rajasthan) by taking an oath I state that: i. This is that I am a farmer my revenue is 53,000/- per year. This is my farm’s revenue and I have no bank accounts. I have not disclosed my revenue any where nor I have hidden it. ii. That is that I have given Rs. 92,000/- to Shri Rajaram Borana. As Rajaram Borana belongs to my village, I have given the money of Rs. 92,000/- to him. iii. This is that I had given the advance money of Rs. 92,000/- dated 01.03.2007 to Shri Rajaram Borana, for investing in the share market. Rajaram Borana told me that he will double the money that is he will give me approximately Rs. 1,84,000/-. But Rajaram Borana suffered a heavy loss in the share market. He did not return the money to me. He has made me suffer a loss of Rs. 92,000/-. iv. This is that I request Shri Rajaram Borana to return my full amount of Rs. 92,000/- at the earliest. Date:-
Note: I Mogaram son of Bhabutaramji Devasi do hereby declare that above affidavit is true to the best of my knowledge and belief. God help me. Closing Date:”
The learned counsel of the assessee relied on the decision in 5.2 Nirmala L. Mehta vs. A Balasubramaniam (2004) 269 ITR 1 (Bom); SteelFab Engineering Corpn. (India) vs. ACIT (ITA No. 494/Mum/2006) ( ITAT ‘E’ Bench, Mumbai); ANS Law Associates vs. ACIT (ITA No. 5181/M/2012)(ITAT ‘A’ Bench, Mumbai); DCIT vs. Reliance Broadcast Network Ltd. (ITA No. 3531/M/2013) (ITAT ‘D’ Bench, Mumbai); Kroner Investments Ltd. vs. DCIT (ITA No. 5125/M/2013) (ITAT ‘A’ Bench, Mumbai) and Arati Raman vs. DCIT (ITA No. 245/Bang/2012) (ITAT ‘C’ Bench, Bangalore).
On the other hand, the learned DR relied on the order of the learned CIT(A).
We have heard the rival submissions and perused the relevant material on record. We begin with the decisions relied on by the learned counsel of the assessee.
In the case of Nirmala L. Mehta (supra), it has been held that (i) merely because the assessee offered the prize money won in the lottery of the Sikkim Government to tax under the Income-tax Act 1961, that would not take away her right to contend that the prize money was not chargeable and assessable to tax under the Income- tax Act in the revisional jurisdiction and (ii) that the prize money won by the assessee from the lottery of the Government of Sikkim could have been charged to tax only in accordance with the then existing Income-tax laws in the State of Sikkim and could not be charged to tax under the Income-tax Act, 1961.
In SteelFab Engineering Corpn. (India) (supra), the following has been held:
“27. It is quite a settled proposition that any claim for deduction under Income Tax Act are dependent upon the conditions laid down under the provisions of the Act and there are requisite formalities which are required to be done as per the law. Once these conditions are fulfilled, the assessee is entitled for statutory deduction or claim to which he is entitled to. Mere consent or acquiescence by the assessee cannot take away the otherwise a legitimate claim to which he is entitled to. It is an admitted position of law that an admission or acquiescence cannot be a foundation for assessment where the income is returned under erroneous impression or misconception of law. It is otherwise open to the assessee to demonstrate and satisfy the authorities concerned that his particular income was not taxable or claim for deduction is otherwise lawfully allowable to him. The decision of Mumbai Bench in the case of Shankar R. Mhatre, reported in 117 ITD 241 (Mum.), wherein the ratio and principle laid down by the Hon’ble Bombay High Court in the case of Nirmala L. Mehta Vs. CIT, reported in 269 ITR (I) (Bom.), was referred and relied upon clearly clinches the issue that acquiescence cannot take away from an assessee, the relief which he is entitled to when the tax is levied or calculated without authority of law. If in law, an item is not taxable, no amount of admission can be made taxable. In view of the said principle, we hold that even though the assessee has surrendered its claim before the Assessing Officer, the same can be challenged on merits if it has a strong case for such a claim based on facts and material on record and conditions relevant for claiming such deduction stands fulfilled.” In ANS Law Associates (supra), representatives of both the parties agreed before the Tribunal that the issue of addition of Rs. 4,49,440/- on account of AIR information be restored to the file of the AO for consideration afresh. Accordingly, the Tribunal restored that issue to the file of AO to consider the reply of the assessee as well as confirmation from Allied Digital Services Ltd. vis-a-vis the AIR information and decide the issue in accordance with law.
In Reliance Broadcast Network Ltd. (supra), the revenue was in appeal before the Tribunal stating that the learned CIT(A) erred in deleting the addition made by the AO on account of disallowance of Rs. 16.61 crores u/s 40(a)(ia) of the Act without appreciating the fact that the provisions of section 40(a)(ia) are mandatory and reversals of the provisions made in subsequent year is immaterial for invoking provisions of section 40(a)(ia) of the Act.
In Kroner Investments Ltd. (supra), the addition has been made solely on the basis of AIR information. As the learned representatives of both the parties agreed before the Tribunal that the issue be restored to the file of the AO for consideration afresh, the Tribunal restored that issue to the file of AO to consider the reply of the assessee as well as confirmation from Allied Digital Services Ltd. vis- a-vis the AIR information and decide the issue in accordance with law.
In Arati Raman (supra), the issue related to the addition of Rs. 21,00,000/- made by the AO to the income of the assessee as per the information contained in AIR. The Tribunal held :
“On 13.09.2012, the SEBI has issued a Circular in which it has carved out an exception to the above rule by permitting cash transactions in mutual fund per financial year at Rs. 20,000/-. The above being the applicable regulation, there is every reason to doubt the veracity of the AIR, based on which the revenue authorities have made the impugned addition. In light of the aforesaid discussion, we are of the view that the impugned addition made by the AO and sustained by the CIT(A) deserves to be deleted. There is no material to show that the assessee made investments, in such circumstances the question of offering a satisfactory explanation by the assessee does not arise for consideration. The revenue authorities have proceeded on a wrong premise in making the impugned addition. We therefore, direct the addition sustained by the Ld. CIT(A) be deleted. The appeal of the assessee is accordingly allowed.”
7.1 In Padmasundra Rao vs. State of TN 255 ITR 147 (SC), it has been held that reliance should not be placed on a decision without discussing how the factual situation fits in with the factual situation of the decision on which reliance is placed. Also it was held in the above decision that circumstantial flexibility, e.g. one additional or different fact, may make a world of difference between conclusions in two cases.
7.2 As stated here-in-above, the assessee failed to file any explanation before the AO even though six opportunities were given to him. The affidavits which have been filed before the Tribunal with a request to admit them as additional evidence could have been filed by the assessee before the AO or the learned CIT(A). Sequence of events may be narrated below: (i) The assessee filed his return of income for the A.Y. 2007- 08 on 28.03.2008 declaring total income at Rs. 97,430/-. The AO issued notice u/s 143(2) of the Act dated 23.09.2008 and served it on the assessee. The AO gave six opportunities to the assessee to file explanation, if any. The first opportunity was on 24.08.2009. The last opportunity was on 17.11.2009. The AO completed the assessment u/s 143(3) on 18.12.2009. (ii) The learned CIT(A) passed the appellate order on 20.07.2010 and dismissed the appeal filed by the assessee as the AR of the assessee did not press the ground in respect of cash deposits of Rs. 15,40,500/- and signed in the order sheet to that effect. (iii) The assessee has filed affidavits before the Tribunal on 22.01.2015. We find that four affidavits are dated 30.10.2007. This was brought to the attention of the learned counsel during the course of hearing before us.
A perusal of the assessment order passed by the AO and the 7.3 appellate order by the learned CIT(A) indicates that nothing prevented the assessee to file the said affidavits before them. On pure facts, the case of the assessee is distinguishable from the case laws relied on by the learned counsel.
7.4 To recapitulate the facts, the learned counsel of the assessee has stated that the affidavits from the farmers from whom loans in cash have been taken be admitted as additional evidence. Now the question arises what prevented the assessee to file the said affidavits before the AO who gave him six opportunities as delineated here-in- above at para 3 to explain his case. We find that four affidavits are dated 30.10.2007. The assessee could have filed those affidavits before the AO during the course of any one of the opportunities afforded by him. He failed to file the same before the AO. Also the assessee did not press the issue of cash deposits of Rs. 15,40,500/- before the learned CIT(A) and signed in the order sheet to this effect. Accordingly, the learned CIT(A) treated the appeal as withdrawn and dismissed the same.
8 The mere fact that the evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission at the appellate stage especially when the evidence was available to the party at the initial stage and was not produced by him It has been held so in Velji Deoraj & Co. vs. CIT (1968) 68 ITR 708, 713-14 (Bom); Keshav Mills Ltd. vs. CIT (1965) 56 ITR 365,381 (SC); Swastik Oil Mills Ltd. vs. H.B. Munshi (1968) 21 STC 383 (SC) and State of Andhra Pradesh vs. Hyderabad Asbestos Cement Production Ltd. (1994) 94 STC 410, 417-18 (SC) . The assessees who are guilty of remissness and gross negligence are not entitled to indulgence being shown to adduce additional evidence in second appeal.
In view of the above reasons, the appeal is dismissed. 9
Order pronounced in the open Court on 19/04/2017