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Income Tax Appellate Tribunal, MUMBAI BENCHES “D” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, AM
This is an appeal filed by the revenue. The relevant assessment year is 2002-03. The appeal is directed against the order of the Commissioner (Appeals) – 34, Mumbai and arises out of order u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the “Act”).
The grounds of appeal filed by the revenue read as under:-
i. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting an amount of Rs. 15,37,273/- deposited by way of cash and cheque in Bharat Co-operative Bank A/c. No. 1331 holding that the a/c belongs to assessee’s husband Shri Ajay P. Maroo and he is a separate assessee, without considering the fact that the bank account in question is shown by the assessee in her balance sheet filed along with the return of income, therefore, the burden lies on the assessee to prove that the entries in this amount do not belong to her, which she had failed during the course of assessment proceedings as well as appellate proceedings. ii. On the facts and in the circumstances of the case and in law, ld. CIT(A) erred in deleting the addition of Rs. 1,61,100/- deposited by the assessee in her bank account No. 3826 with NKGSB bank holding that the assessee’s husband himself confirmed the loan transaction and even on merits none of the entries in the bank accounts warranted any addition in form of unexplained cash credits, without verifying the supporting documentary evidences and without considering that this amount also includes the loan taken from parties other than assessee’s husband allowed the full relief to the assessee. iii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,37,310/- made on account of cash sales of wedding cards by admitting additional evidences in contraventions of rule 46A of I.T. Rules 1961. iv. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs. 15,80,900/- shown as gift received by the assessee in her capital account, without proof of creditworthiness of donor and genuineness of transactions. v. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition of Rs. 26,60,900/- on account of unsecured loans by accepting the affidavits filed by the assessee in contravention of rule 46A of I.T. Rules, 1962, without remanding the issue back to the A.O. for verification.
The 1st ground of appeal relates to the addition of Rs. 15,37,273/- made by the Assessing Officer (AO) on protective basis as unexplained cash credit in respect of transaction made in the bank account of the assessee’s husband. In a nutshell, the facts are that the AO made an addition of Rs. 15,37,273/- to the total income of the assessee on account of unexplained credit in Bank Account No. 1331 on “protective basis”, as she could not substantiate her claim that the deposits really belong to her husband. The assessee filed an appeal against the order of the AO before the learned CIT(A). We find that the learned CIT(A) observed that there was no dispute that the impugned S.B. Account No. 1331 though a joint account belonged to the assessee’s husband, Shri Ajay P. Maroo and he had owned this account. The learned CIT(A) deleted the addition on the ground that the husband of the assessee is a distinct assessee and even if the entries in his account remained unexplained, no addition could be made on the basis of the same in the hands of the assessee.
3.1 Before us, the learned counsel of the assessee relies on the order of the learned CIT(A). On the other hand, the learned DR supports the order of the AO.
3.2 We have heard the rival submissions and perused the relevant material on record. The AO has made an addition of Rs. 15,37,273/- to the income of the assessee in respect of credits in bank account number 1331 on “protective basis”. The learned CIT(A) has found that the said bank account, though a joint account, belongs to the assessee’s husband Shri Ajay P. Maroo and he has owned this account. As the addition was made by the AO in the hands of the assessee on protective basis and as the learned CIT(A) has arrived at a conclusive finding that the accounts belongs to the husband of the assessee, the addition of Rs. 15,37,273/- made by the AO is deleted. Thus the 1st ground of appeal filed by the revenue is dismissed.
4. The 2nd ground relates to the addition of Rs. 1,61,100/- as unexplained cash credit in respect of deposits made in NKGSB bank account number 3826. The AO made an addition of Rs. 91,100/- (Cheques deposited from Shri Ajay P. Maroo), Rs. 50,000/- from Manoj Sabo, Rs. 10,000/- from Suresh Maroo and Rs. 10,000/- as consultancy for wedding cards, as the assessee failed to furnish any documentary evidence before the AO. The learned CIT(A) held that the AO had not found any discrepancy in the books of accounts of the assessee vis-a-vis the impugned bank account No. 3826. The said bank account was a disclosed one. Therefore, the learned CIT(A) deleted the addition of Rs. 1,61,100/- made by the AO as unexplained cash credit.
4.1 Before us, the learned counsel of the assessee relies on the order of the learned CIT(A). On the other hand, the learned DR supports the order of the AO.
4.2 We find merit in the order of the learned CIT(A) that the AO has not found any discrepancy in the books of accounts of the assessee vis-a-vis the impugned Bank Account No. 3826. The learned CIT(A) deleted the addition of Rs. 1,61,100/- made by the AO since the bank account was disclosed by the assessee. We uphold the order of the learned CIT(A) and dismiss the 2nd ground of appeal filed by the revenue.
The 3rd ground of appeal relates to the addition of Rs. 2,37,310/- made by the AO as unexplained cash credit in respect of transaction of sale of wedding cards considering the same as non- genuine. The AO during the course of assessment proceedings issued notices u/s 131 to various parties. He found that M/s. Porwal Creative Vision Pvt. Ltd., M/s Remco Card Manufacturing, M/s Anita Art Printers and M/s Jain Paper Agency have stated that they had not carried out any transaction with the assessee. Therefore, he made an addition of Rs. 2,37,310/- as unexplained cash credit. The learned CIT(A) observed that since the business was done by the assessee in the name of M/s. Ajay Cards, confusion arose during the course of assessment proceedings as the AO inquired about the transactions with the assessee and not the transactions of the parties with M/s. Ajay Cards. M/s. Ajay Cards being a proprietory concern of the assessee and nothing adverse having been found, the learned CIT(A) deleted the addition of Rs. 2,37,310/- made by the AO.
5.1 Before us, the learned counsel of the assessee relies on the order of the learned CIT(A). On the other hand, the learned DR supports the order of the AO.
5.2 We have heard the rival submissions and perused the relevant material on record. We find that the learned CIT(A) has arrived at a finding that the concerned parties have never said that they have not done any transaction with the proprietary concern M/s. Ajay Cards, Goregoan (West), Mumbai on which the bills were raised by them. The learned CIT(A) has taken into account the contention of the assessee that since the business was done in the name of M/s. Ajay Cards, the confusion arose during the course of assessment proceedings because the AO asked the transactions with Smt. Renuka Maroo and he had not enquired about the transactions of the parties with M/s Ajay Cards. It is found that the above clarification like having transactions of the parties with M/s. Ajay Cards was not filed before the AO. In view of the above, the order of the learned CIT(A) in respect of ground No. 3 of this appeal is set aside and the same is restored back to the file of the AO for making an assessment as per the provisions of the Act after giving a reasonable opportunity of being heard to the assessee. The assessee is directed to file the relevant details before the AO. Thus the 3rd ground of appeal filed by the revenue is allowed for statistical purpose.
The 4th ground of appeal relates to the addition of Rs. 15,80,950/- made by the AO as gifts for the A.Y. 2001-02. The A.O. found that the assessee had shown receipt of gift of Rs. 15,80,950/- but there was no mention about the receipt of such gifts in the balance sheet. In view of the above, he made an addition of the above sum of Rs. 15,80,950/-. The learned CIT(A) observed that the said gifts were made and effected in the F.Y. 2000-01 relevant to the A.Y. 2001-02. Simply because these gifts were included in the capital account of A.Y. 2002-03 without taking into account in the balance sheet of A.Y. 2001-02 would not make the impugned gifts pertain to A.Y. 2002-03. There was also no adverse material available on record. The learned CIT(A) thus came to a finding that no adverse inference could be drawn simply because it was not disclosed in the capital account and balance sheet of the A.Y. 2001-02 and had not been brought forward from there to A.Y. 2002-03 but directly made in the capital account and balance sheet for the A.Y. 2002-03. Therefore he deleted the addition of Rs. 15,80,950/- made by the AO.
6.1 Before us, the learned counsel of the assessee relies on the order of the learned CIT(A). On the other hand, the learned DR supports the order of the A.O.
6.2 We find that the learned CIT(A) has rightly come to a finding that the impugned gifts were made and effected in the F.Y. 2000-01 relevant to the A.Y. 2001-02 and not in A.Y. 2002-03 and simply because these gifts were included in the capital account in A.Y. 2002- 03 without taking into account in the balance sheet of the A.Y. 2001- 02 would not make the impugned gifts pertain to A.Y. 2002-03. Therefore, we uphold the order of the learned CIT(A) on the above issue and dismiss the ground No. 4 of the appeal filed by the revenue.
The 5th ground of appeal pertains to the addition of Rs. 26,60,900/- shown as unsecured loan in the balance sheet that has been carried forward. The AO made an addition of the above sum as he found that none of the loan was received either in the cash book or in the bank book. The learned CIT(A) found that the loans were received in earlier years and therefore he deleted the addition of Rs. 26,60,900/- made by the AO.
7.1 Before us, the learned counsel of the assessee relies on the order of the learned CIT(A). On the other hand, the learned DR supports the order of the AO.
7.2 We have heard the rival submissions and perused the relevant material on record. The AO has categorically mentioned at para 6.3 of the assessment order that the affidavit filed by the assessee did not contain the basic details like full name and address of the loan party, PAN, mode of receipt of loan (i.e. by way of cash / cheque), identify and creditworthiness of the person from whom such loan has been accepted namely copy of bank statement, copy of return of such loan party, etc. The Hon'ble Supreme Court has laid down in Kalekhan Mohammed Hanif vs. CIT 50 ITR 1 (SC) that the onus is on the assessee to explain the nature and source of cash credits, whether they stand in the assessee’s account or in the account of a third party. It is well settled that in order to discharge the onus, the assessee must prove the following: (i) the identity of the creditor, (ii) the capacity of the creditor to advance money; and (iii) the genuineness of the transaction.
We find that in the instant case the assessee has not discharged the onus before the AO. In view of the above, the order of the learned CIT(A) in respect of ground No. 5 of this appeal is set aside and the same is restored back to the file of the AO for making an assessment as per the provisions of the Act after giving a reasonable opportunity of being heard to the assessee. The assessee is directed to file the relevant details before the AO. Thus the 5th ground of appeal filed by the revenue is allowed for statistical purposes.
In the result, the appeal is partly allowed.