Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Shri Amit Shukla, & Shri Ashwani Taneja
आदेश / O R D E R Per Ashwani Taneja (Accountant Member): This appeal has been filed by the Assessee against order of Ld. Commissioner of Income Tax(Appeals), Mumbai-II (in short ‘CIT(A)’}, dated 30.06.2014 passed against assessment order u/s 143(3), dated 15.12.2011 for Assessment Year 2009- 10 on the following Grounds: “Being aggrieved by the order passed by the learned 2 Zahir Aziz Shaikh Commissioner of Income Tax (Appeals) - II, Thane, (hereinafter CIT(A) YOUI appellant submits, among others, following grounds of appeal for your sympathetic consideration :- 1) On the facts of the case and in law, CIT(A) erred in confirming and not quashing the assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 144 of the Act whereby the Assessing Officer had made addition of Rs. 14,92.294 invoking provisions of section 68 of the I.T. Act 1961. On the facts of the case and in law, CIT(A) erred in 2) exceeding his jurisdiction in invoking powers of enhancement and making addition of Rs. 38,83900/- u/s 69/ 69A of the I.T. Act 1961.”
2. During the course of hearing, none appeared on behalf of the assessee. Shri Prakash Mane Ld. DR was present on behalf of the Revenue. It is noted that none has appeared on behalf of the assessee earlier on many occasions, despite the fact that notices were duly issued and served on the address mentioned in the appeal memo on all the occasions. It appears that assessee is not interested in representing this appeal. Under these circumstances, we have no other option but to decide this appeal on merits ex-parte qua the assessee.
3. In Ground No.1 the assessee has challenged the action of Ld. CIT(A) in confirming the addition made by the AO of Rs.14,92,294/- and in Ground No.2 he has challenged the action of Ld. CIT(A) in making enhancement of income by making addition of Rs.38,83,900/- u/s. 69/69A of the Act. 3.1. During the course of hearing it was noted by the AO that assessee was running a fast food and juice centre under the name & style of M/s. KGN Fast Food & Juice Corner at Virar, Mumbai, it was further noted by the AO that the assessee had deposited cash of Rs.24,94,300/- in saving bank account 3 Zahir Aziz Shaikh maintained with Bassein Catholic Co-op. Bank Ltd., Vasai and Rs.13,89,600/- in saving bank account with Saraswat Co- operative Bank Ltd, Kalyan, Mumbai. Accordingly, the assessee was asked by the AO to explain the source of cash deposits in the bank account vide his letters dt. 7.7.2011 and 19.9.2011. However, no compliance was made although the notices were duly served, as is observed in the assessment order. Under these circumstances, the AO proceeded to complete the assessment u/s.
144. In order to verify the correctness of the cash deposits, the AO issued notices u/s 133(6) to the concerned banks who had furnished the bank statements. On perusal of the bank statements, the AO noticed that the peak balances were Rs. 5,83,569/- and Rs. 9,08,725/- in Bank A/c. with Saraswat Co-operative Bank Ltd. and Bassein Catholic Co-op. Bank Ltd., respectively. Since the assessee was unable to explain the source of cash deposits in these bank accounts, the AO treated the peak credits of both the accounts totaling to Rs. 14,92,294/- as unexplained cash deposits u/s 68 and made the addition, accordingly. 3.2. Being aggrieved, the assessee filed appeal before the Ld. CIT(A). In the appellate proceedings, it was submitted that in anticipation of the diversification of business, the assessee accepted deposits from various clients and deposited the same in the bank accounts. But, since the business could not be started, the deposits were refunded subsequently. The assessee also furnished a summary of cash deposited in both 4 Zahir Aziz Shaikh the bank accounts and made further submissions along with letter dt. 21.08.2013 enclosing therewith certain additional evidences and request for admission of the same under Rule 46A. It was noted by the Ld. CIT(A) that summary of the bank deposit and withdrawn through cheques reveals that assessee had invested Rs.7,42,562/- in various schemes of the bank, Mutual Funds and Insurance Corporations. Further, the copies of Power of Attorney dt. 28.07.2008 and 13.11.2008 for development of land were filed and it was claimed by the assessee that assessee had received cash from various persons on account of deposit and the same was refunded to them but no confirmation was filed along with reply. It was further noted by the Ld. CIT(A) that since the written submissions of the assessee contained fresh evidences in respect of the sources of cash deposits in the bank accounts, these were forwarded to the AO for cross verification/inquiries and submissions. It is noted from the perusal of the order of the Ld. CIT(A) that AO had carried out and examined during the remand proceedings and thereafter, he submitted his remand report dated 5.09.2013 forwarded through the Jt. CIT, vide her letter08.10.2013. The relevant portion of the remand report is reduced as under: “On going through the records, it is seen that the case was selected for scrutiny under CASS for verification of cash deposits of Rs.38,83,900 in Bassain Catholic Co-op. Bank and of Rs. 13,89,600 in Saraswat Co-op. Bank. It is seen that before finalizing the ex parte assessment, my predecessor had given opportunities to the appellant as on 07-07-2011, 19-09-2011, 20-10-2011 and 01-12- 2011, but there was no attendance whatsoever on the part of the assessee nor any AR representing the 5 Zahir Aziz Shaikh appellant. Under these circumstances, the AO had to pass an ex parte assessment u/s 143(3) r.w,s. 144 of the IT.Act,1961 on the basis of information available on record. The AC) had called for extract of account from both the banks u/s 133(6.) of the I.T.Act,1961 on the basis of which he has worked out the peak between deposits and withdrawals by treating the same as unexplained cash deposits u/s 68 of the I.T.Act,1961,which he had to do only because of absence of details and non attendance on the part of the appellant or his representative. Before the AO neither the appellant explained source of cash deposits nor the AR could explain the nature of these deposits. It is also not clear as to why the appellant did not claim before the AO that these deposits were made out of advances against the so called flat bookings by various parties. It is also worthwhile to note here that the appellants business is of Juice Centre and Fast Food which is completely in cash. Now before the Ld. C. I. T. (Appeal)-II, Thane, the appellant has taken completely new stand that these cash deposits were advances received by him against the booking of fiats from various persons. It is submitted that the appellant has filed only one return earlier for A. Y.2008-09 wherein he has returned total income of Rs. 1,58,900 only. As directed I have given him an opportunity of being heard on 0509-2013 and recorded his statement on a point which is enclosed for your honour's ready reference. The appellant's claim is that, he had tried to venture into business of land development and construction activity by purchasing/procuring land through Power of Attorney" documents from Adivasi land owners, but due to failure to get the scheme sanction/authorized, he had to give up the idea. However, the copy of notorized power of attorney and plans submitted before this office, however, does not explain the so called purchase of land from the Adivasi land owners. The first copy of Power of Attorney dated 28-07-2008 indicates the name of appellant as giver to one Shn Sabir Musabhai 6 Zahir Aziz Shaikh Kaularikar and the second one dtd. 13-10-2008 indicates the names of other land owners as giver to the said person Shri Sabir Plusabhai Kaularikar. Therefore, these do not prove the purchase of land by the appellant. On the basis of written submission forwarded to this office, the appellant was asked to explain the entries appearing in the copy of pass book about the deposits of the amounts received from prospective customers and its repayment through the same banks. Further with a view to cross verify the statement of the appellant that certain amounts as per ledger accounts brought on record have been received by him against the booking of flats and later its repayments to the depositors, the appellant was asked to produce at least 5 such persons who had given him the said deposits. Accordingly, following person were produced, whose statements to this effect have also been recorded. Sr. Name PAN No. Dt. Of No. generation 1. Shri Sameer Abdul Samad Shaikh CCYPS4451F 31.12.2008 2. Shri Sandeep Pandurang Chavan AQBPC7254P 28.12.2010 3. Shri Hemant Ravindranath Rane BAZPR1150G 22.04.2011 4. Shri Mukesh Singh Negi ALVPN7086P 18.11.2010 5. Shri Bismilla Sardar Khan BRIPK 1334B 14.07.2010 With a view to cross verify the admission and genuineness of such advances by the aforesaid persons and their claim of filing their returns of income with the concerned wards, the available records through the AST system were verified. It/s noticed that none of these persons have ever filed their returns of income. Though all of them are having their PAN but all these have been acquired after 2009-10 except one of Mr. Sameer Shaikh. Thus, in absence of any return of income or even PAS or processing of returns for any earlier assessment year, exact source of income v/s a vis their financial ability to advance such amounts to the appellant could not be ascertained and the credibility of these persons has remained to be doubtful in absence of returns of income.
7 Zahir Aziz Shaikh Therefore, the cash entries the pass book are not substantiated by the appellant. As regards the claim of repayment, these could also not be substantiated since they are either cash or bearer cheques. The issue of admissibility of fresh evidence, however, may please be decided on merit, if approved.” 3.3. Thus, on the perusal of the above, it is noted that after carrying out detailed examination and evidences submitted by the assessee. It was held by the AO that the assessee was not in a position of substantiate the source of cash deposited in the bank account. Under these circumstances, it was felt by the Ld. CIT(A) that addition made by the AO on the basis of peak credit in the bank account was not sufficient in as much as the entire cash deposits remain unexplained and therefore, entire amount deposited in the bank account should be added u/s 69/69A, instead of u/s 68 made by the AO. It was further noted by the Ld. CIT(A) that confirmation letters filed by the assessee of the depositors/creditors was not proper. Under these circumstances, he issued enhancement notice to the assessee with following observations: “3.4 On going through the details and other material submitted by the appellant, it was noticed that the appellant after depositing the cash in the hank accounts has utilized the same for investments in various forms and hence, there was no question of assessing only peak credit. Accordingly, a notice u/s. 251(2) was issued on 7/3/2014 requiring the appellant to explain as to why the income had not enhanced. For the sake of convenience and better understanding of the issue, the contents of the notice u/s. 251(2) are reproduced as under:- '2. On careful examination of the details furnished by you, during the course of appellate proceedings, it is noticed that you have deposited cash in Bank A/c with Bassin Co-operative Bank Ltd. at Rs.24,94,3001- 8 Zahir Aziz Shaikh and you have claimed receipt of cash from various persons list of which has been filed a/ongwith written reply dt. 21/0812013, Similar claim has been made for cash deposited at Rs.13,89,6001- in Saraswat Co-operative Bank Ltd. You have also claimed cash deposit by yourself in both the accounts respectively at Rs.3,09,284/- and Rs, 7,14,600/-. However, your income is Rs.3,01,284/-only as per P/L A/c and hence such huge cash deposits from your own sources is not possible. Please explain? 3. Please note that your claim of receipt of cash from various persons has to be substantiated by fit/rig confirmation, proof of identity and source of such cash. Moreover,, you have not shown such persons as creditor in your Balance Sheet as on 31/0312009. Therefore, same does not appear to be genuine. Thus, you may please now prove the same. Also furnish details of repayment of such receipts of cash giving name & address, date, mode of payment and documentary evidence thereof. On perusal of charts prepared by you for 4. utilization of cash receipts deposited in Bank A/c’s, it is noticed that you have made payments to various parties by cheques and hence the purpose of such payment has to be explained in each & every case duly supported by the documentary evidence. You are also required to furnish complete details of repayment received from such parties duly supported by the documentary evidence. It is also notice that you have claimed cash 5. deposits of Rs-3,09,5001- in Bassin Co-op. Bank and Rs.7, 14,600/- in Saraswat Co-op. Bank by Juice Centre. Please explain with documentary evidence as to whether juice centre has got income of Rs. 10,24,100/- i.e. equal to the cash deposits. In view of the above, in case of the 6. unsatisfactory explanation, your income will he enhanced on account of unexplained deposits converted into unexplained investments in Advances and Mutual Funds/deposits with Banks & LIC. The investments with HSBC, Money//ne, Cholamandalam, Barklays Finance, ING Vysya, 9 Zahir Aziz Shaikh KMBL, ICICI, GE Money, and ICICI Bank along with LIC are Rs. 7,42,5621- during the year under consideration. Therefore, explain as to why your income be not enhanced u/s 251(2) of the Act. Date of compliance is 19103114 at 11.00 A.M. 3.4. It is further noted from the perusal of the order of the Ld. CIT(A) that no response was given by the assessee of the aforesaid notice. Under these circumstances, Ld. CIT(A) analysed entire facts and circumstances of the case and found it appropriate to enhance the addition made by the AO with following observations: 4. I have carefully considered the facts on record, submissions of the Id. A.Rs. and the remand report of the A.O. On perusal of the copy of bank accounts and also the details submitted, it is noticed that the appellant has deposited cash in the bank accounts as detailed below: I. Bassein Catholic Co-op. Bank Ltd. Rs. 24,94,300/- ii. Saraswat Co-operative Bank Ltd. Rs. 1389,600/- Total: Rs. 38,83,900/- The above quantum of the cash deposited in the bank accounts is not disputed by the appellant. Since the total amount of the cash deposited was Rs. 38,83,900/-, the observations of the A.O. regarding total cash deposit in a single bank account with Bassein Catholic Co-op. Bank Ltd. Rs. 38,83,900/- are not correct. The A.O. has incorrectly first added the figure of cash deposit at Rs. 13,89,600/- with the cash deposits in Bassein Catholic Co-op. Bank Ltd. at Rs. 24,94,300/- resulting into a total of Rs. 38,83,900/- arid again considered the same figure of cash deposits at Rs. 13,89,600/- in the bank account with Saraswat Co-operative Bank Ltd. Therefore, the observations of the A.O. in this regard need to be modified and he is directed, accordingly to take the total cash deposited in both the Bank Accounts at Rs. 38,83,900/- only.
10 Zahir Aziz Shaikh 4.1. On perusal of the bank statements, it is noticed that the appellant has utilized the cash deposited in the bank accounts by making the payments through cheques for following purposes:- I) Advances to various : Rs.27,75,012/- II) Investment in Mutual Funds/ deposits with Banks, LIC, HSBC, Moneyline, Cholamandalam, Barklays Finace, ING, Vysya, KMBL, ICICI, GE Money, etc. :Rs.7,42,562/- III) Personal Expenses Rs.28,426/- iv) Cash balance Claimed Rs.3,37,900/- Thus, from the above details, it is clear that the cash deposited in the bank accounts has been utilized for various investments and there was cash no withdrawals for repayment of the so called advances received for purchase of flats, No cash withdrawal was made which can he treated as recycle for further deposits in the bank accounts. 4.1.1. On perusal of the summary of the cash deposits submitted during the course of appellate proceedings, it is noticed that the appellant has claimed sources of the above cash deposits in the bank account as detailed below:- I. From own sources i.e. from Juice Centre.: Rs. 10,24,100/- II. So called advances from various persons for purchase of flats. Rs. 28,59,016/- In respect of the cash deposits from the Juice Centre being a proprietary concern of the appellant, I find from the Profit & Loss A/c. that the appellant has disclosed total sales of Rs. 9,26,808/- during the year under consideration resulting into a net profit of Rs. 3,01,284/-. Thus, it is clear that the availability of cash with the appellant from his own business cannot be more than Rs. 3,01,284/-. It may also be noted that the appellant has to incur expenses for household etc. and hence, there was hardly any availability of cash for investment in the bank accounts particularly when the appellant has claimed investments at Rs. 1,00,000/- during the year under consideration eligible u/s. 80C. Under these 11 Zahir Aziz Shaikh circumstances, there would not be any availability of cash for depositing the same in the bank accounts. Thus, the source of cash deposits in the bank accounts in the name of Juice Centre of Rs. 10,24,100/- remained totally unexplained. 4.1.2. In respect of the balance amount of cash of Rs. 28,59,016/-, the appellant has claimed to have received advances for purchase of the flats fr-orn him in a project likely to be developed subsequently from various persons. This claim of accepting advances from various persons for purchase of flats to be constructed by the appellant was not made before the A.O. Thus, it is clear that the appellant has concocted a story of receiving advances in order to explain the source of cash deposited in bank account which has been utilized for various investments. During the course of appellate proceedings, the appellant was required to furnish confirmatory letters, proof of identity and proof of source of cash received from so called prospective buyers of the flats. The appellant could only furnish the confirmations on plain paper in respect of the following parties. Shri Bismilla Sardar Khan : Rs. 2,90,000/- i. Shri Sandeep Pandurnq Chavan : Rs. 1,46,300/- ii. Shri Mukesh Singh Neqi Rs. 2,15,000/- iii. Shri Hemant Ravi nclranath Rane: Rs. 2,80,000/ iv. V. Shri Sameer Abdul Samad Shaikh Rs. 9,45,000/- During the course of remand proceedings, the A.O. examined the above confirmations and also the persons u/s.
Copies of the statements recorded by the A.O. have been enclosed along with the remand report. The summary of the statements recorded is as under: - i. Shri Bismifla Sardar Khan:- He has claimed having carried out the business of fabrication and welding works filling Income Tax return in ITO, Ward 4(1), Thane. He has stated that he had given Rs.3,00,000/- to Shri. Zahir Aziz Shaikh, the appellant, for purchase of flat out of business income and personal savings. He, however, failed to furnish any documentary evidences to explain the source of the cash of Rs.3,00,000/- with the help of 12 Zahir Aziz Shaikh documentary evidences. No details of the income disclosed in the return of income and also the Balance Sheet, etc. have been furnished. The amount is also not matching as the appellant has claimed Rs. 2,90,000/- only instead of Rs. 3,00,000/-. The A.O. has also reported that the PAN was acquired on in A.Y. 2009-10 and there is no evidence to ascertain financial capacity in earlier years. ii. Shri Sandeep Pandurang Chavan: He is working as driver with a builder and his family consisted of three members. He has claimed filing of return of income with ITO, Ward 4(3), Thane. He has also stated that he had advanced a sum of Rs. 1,50,000/- to the appellant for purchase of the flat. However, he has failed to furnish any documentary evidences to prove the income disclosed in the return of income and also the source of cash advance given to the appellant. Copy of the Balance Sheet has also not been filed. It is also noticed that the appellant has claimed only Rs. 1,46,300/- from him as against Rs. 1,50,000/-. The A.O. has also reported that the PAN was acquired on in A.Y. 2009-10 and there is no evidence to ascertain financial capacity in earlier years. Shri Mukesh Singh Neqi:- It is claimed that iv . he is engaged in the business of supply, repair and maintenance of hardware of computers. His family consisted of 5 members. it is claimed that he has filed return of income with ITO, Ward 4(4), Thane. It is stated that he has advanced Rs. 2,00,00011- to the appellant in cash for purchase of the flat. It is also noticed that the appellant has claimed Rs. 2,15,000/- from him as against Rs.2,00,000/-. The A.O. has also reported that the PAN was acquired on in A.Y. 200910 and there is no evidence to ascertain financial capacity in earlier years. Shri Hemant Ravindranath Rane He is v . working as a Travel Agent & Tourist Operator and his family consisted of five members. He has claimed filing of return of income with ITO, Ward 4(3.), Thane. He has also stated that he had advanced a sum of Rs.3,00,000/- in cash to the appellant for purchase of the flat. However, he has failed to furnish any 13 Zahir Aziz Shaikh documentary evidences to prove the income disclosed in the return of income and also the source of cash advance given to the appellant. Copy of the Balance Sheet has also not been filed. It is also noticed that the appellant has claimed Only Rs. 2,80,000/- from him as against Rs. 3,00,000/-. The A.O. has also reported that the PAN was acquired on in A.Y. 2009- 10 and there is no evidence to ascertain financial capacity in earlier years. vi. Shri. Sameer Abdul Samad Shaikh:- No evidence has been filed either before me or before the A.O. to prove the genuineness of transaction and financial capacity. 4.1.3 From the above, it is clear that the appellant has failed to prove the genuineness of the advances received and sources of such advances with documentary evidences. Even the amounts stated by the above mentioned person’s cud not match with the amounts of the advances claimed by the appellant. It is also noticed that the appellant has not acquired any land for construction of flats. In fact, he is engaged in the business of Fast Food & Juice Centre at a very small scale and has no experience as well as capacity to carry out the development and construction. The appellant has filed merely copies of Power or Attorney cit. 28/07/2008 & 13/11/2008 given by Shri. Soma Rama Ghatal and his wife Smt. Shevanti Soma Ghatal. The perusal of the Power Attorney reveals that even the survey No. and area of land is not mentioned therein. Thus, it is clear that the so-celled Power of Attorney is merely a format of the Power of Attorney which has never been implemented. It is also noticed that most of the cash deposits in the bank accounts were even prior to the date of such Power of Attorney. Under these circumstances, it is clear that the appellant has concocted a story of land development and construction business and receiving o advances just to explain the source of unaccounted money deposited by him in the Bank A/c. Under these circumstances, I am of the considered view that the appellant has failed to explain the source of cash 14 Zahir Aziz Shaikh deposits in both the hank accounts under consideration amounting to Rs. 38,83,900/-. Since the cash so deposited has been utilized for making various investments as detailed above, the source of investments remained unexplained and accordingly, the addition to the extent of Rs. 38,83,900/- requires to be made u/s. 69/69A instead of u/s. 68 made by the A.O. and hence, addition to the extent of Rs. 38,83,900/- is directed to he made as against Rs. 14,92,294/- made by the A.O. resulting into an enhancement of income by Rs. 23,91,606/. 4.2 It is noticed that the A.O. has provided various opportunities of being heard during the course of assessment proceedings, but there was no compliance from the appellant. During the course of appellate proceedings also, the appellant has been provided various opportunities of being heard to substantiate the sources of cash deposits in the bank accounts. Accordingly, the principles of natural justice have been followed and in the absence of compliance, the order made by the A.O. u/s. 144 deserves to be sustained and accordingly, the same is sustained.” 3.5. During the course of hearing before us nothing has been brought to negate detailed factual findings recorded by the Ld. CIT(A). It is noted that Ld. CIT(A) has brought out various contradictions, gaps and loopholes in the confirmation and other evidences filed by the assessee to establish the source of cash received from the aforesaid persons. It was submitted by the Ld. DR that it is a clear case whether the assessee has introduced, its unaccounted income in the form of cash deposits into bank account. In absence of anything brought before us to negate the factual findings and analysis made by Ld. CIT(A), we do not find any reason to make any interference in the order of Ld. CIT(A). The findings recorded 15 Zahir Aziz Shaikh by the Ld. CIT(A) are based upon the proper analysis and detailed reasoning and no perversity could be noted by us in the order of the Ld. CIT(A). Under these circumstances, we uphold the order passed by the Ld. CIT(A) and dismiss the grounds raised
by the assessee. 4. In the result, the appeal filed by the assessee is dismissed. Order was pronounced in the open court at the conclusion of the hearing.