Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “B” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Ramlal Negi (JM)
The assessee has filed this appeal challenging the revision order dated 26.3.2014 passed by learned CIT-21, Mumbai and it relates to A.Y. 2009-10.
The assessee is challenging the validity of revision order passed by learned CIT.
The assessment in the hands of the assessee for the year under consideration was completed by the Assessing Officer on 13.12.2011 u/s. 143(3) of the Act. Subsequently, the CIT revised the assessment order u/s 263 of the Act with the following observations:-
"On verification of the records, it has been observed that though the cash balance as on 31.03.2008 was Rs.20,262/-, the opening cash balance shown for the period 01.04.2008 to 31.03.2009 is Rs.12,72,745/-. It is also seen that the total cash withdrawal during the same period are only Rs.4,89,9401- where as the total cash deposit amounts to Rs.22,96,337/-
2 Manojkumar Shreeprakash Gupta accordingly, the source of cash deposits needs to be verified.
Further, the assessee has acquired immovable property for a total consideration of Rs.34,68,600/- jointly with his wife Smt. Vandana Gupta in Ghaziabad. The source of investment of 50% share of Smt. Vandana Gupta and the investment Rs.11,00,000/- by the assessee during the financial year relevant to AY 2008-09 needs to be verified".
In response to the same the assessee made following submissions along with relevant documents:- 'With reference to your notice dated 15-01-2014 u/s 263 of the I.T. Act 1961 initiating proceedings for revision of the assessment order dt. 13-12- 2011 passed by the Income Tax officer, Ward 21-3 (3) (A.0) as erroneous so as to be prejudicial to the interests of the revenue for the reasons stated therein, I seek your leave to explain point by point the factual and correct position below:
OPENING BALANCE 1.1 The first ground on which the assessment is sought to be held erroneous is: (a) “Though the cash Balance oil 1.03.2008 was Rs. 20,268 Opening Cash Balance shown by you for the period 01.04.2008 to 31.03.2009 is Rs. 12,72,745” (b) “That the total cash withdrawals during the same period are only Rs.4,89,940 whereas total Cash deposits amount to Rs.22,96,337.
1.2 Only source of my income is my proprietory concern SPG & Co. Hence I file return of income disclosing income from my proprietory concern SPG & Co along with the audited P & L A/c, Balance Sheet, and Capital account appearing in the books of SPG & Co. Cash Balance shown in the balance sheet of SPG & Co as on 31/ 03/ 2008 is Rs 20,268 (Copy enclosed vide annexure-1). 1.3 This cash balance of Rs 20,268 pertaining to SPG & Co is different from the cash balance of Rs 12,72,245 is appearing in my personal balance sheet as on 31/3/2008 ( Copy enclosed vide Annex-2 ). It will be kindly appreciated that under the elementary principles of book-keeping, business transactions are recorded separately in the books of the business and personal transactions are recorded separately. In fact all cash receipts from or payments to the proprietor are shown in his capital account in the books of the business. Accordingly the it will be kindly seen that the two balances viz Rs 20,263 with SPG & Co and Rs.12,72,745 in my personal books are different and separate in nature and scope. 1.4 In response to an AIR query, I had explained all these facts to the A.0 and explained the opening cash balance of Rs 12,72,245 with the help of copies of the returns of income filed by me for past 10 years( Copies Enclosed vide Annex-3). Summary of the same is given below:
3 Manojkumar Shreeprakash Gupta
Prev. Year Asst. year Income 1994-95 1995-96 32186 1995-96 1996-97 35840 1996-97 1997-98 38168 1997-98 1998-99 38942 1998-99 1999-2000 45848 1999-2000 2000-01 49801 2000-01 2001-02 115293 2001-02 2002-03 105700 2002-03 2003-04 149979 2003-04 2004-05 179441 2004-05 2005-06 301929 2005-06 2006-07 471129 2006-07 2007-08 687584 2007-08 2008-09 631212 Total ` 2883051 The A.O. perused, verified the information and documents and accepted the same and as such the assessment order suffers from no infirmity and there is no error in the assessment order.
2 CASH DEPOSITS
The second reason for the proposed revision is for verification of cash deposits of Rs 22,96,337. These deposits were explained in detail to the to the A.O. by my letter dated of 25-11-2011 and a detailed cash summary was provided explaining therein the source of deposit being the opening cash balance of Rs 1272745 and overlapping cash deposits because of transactions with different banks viz the ICICI Bank, Bank of India and Janakalyan Sahakari Bank due to cash withdrawn from one bank and deposited into another bank. The Cash Summary In personal books for the year 1-04-2008 to 31.03.2009 is given below :-
Cash as on 1.4.2008 1272745 Add cash withdrawn from Bank of India 500000 ICICI Bank 503460 Jankalyan Bank 15000 Sundries 16945 1035405 2308150 Less cash deposits Bank of India 1100000 ICICI Bank 1077125 Jankalyan Bank 120000 2297125 Closing balance 11025 3 The A.O. in his assessment order considered the opening balances, our explanations and accepted the same. The A.0 correctly observed: "Regarding Cash Deposit, it is stated that "it is the opening balance of the earlier years along with cash [Balance] which is 4 Manojkumar Shreeprakash Gupta redeposited in bank". Hence the A.0 has considered the information and there is no error in his considered opinion.
4 PURCHASE OF IMMOVABLE PROPERTY
4.1 The Next second ground for the proposed revision is in respect of purchase of an "immovable property for a total consideration of Rs 34,68,600 jointly with wife Smt.Vandana Gupta in Ghaziabad. The source of investment for 50% share of Smt. Vandana Gupta and the investment of Rs 11,00,000 ---- during the financial year relevant to A. Y. 2008-09--" Thus , as per the show cause notice , the error in the assessment is non- verification of: a) The source of investment for 50% share of Smt. Vandana Gupta and the investment of Rs 11,00,000 during the financial year relevant to b) A. Y. 2008-09 4.2 I had purchased a residential house in Ghaziabad jointly with wife Vandana Gupta for Rs.32,02,500. Stamp duty and other expenses amounted to Rs.2,66,100. Thus the total cost of the house property was Rs 34,68,600 to be contributed equally by both the joint owners viz me and my wife each contributing Rs 17,34,300 ( Copy of Agreement enclosed vide Annexure -4). 4.3 Since Vandana Gupta is independently assessed for her income under the PAN ANJPG3909Q, it is her liability to pay her share of contribution Rs 17,34,300 4.4 The position in respect of the house is as follows : Rs Agreement Value 32,02,500 Stamp duty 2,56,000 Registration Fees 10,100 Total Cost 34,68, 6 0 0 Share of joint owners (50%) 1 7 , 3 4 , 3 0 0 Amounts paid by me 20,32, 500 A. Y 2008-09 11,00,000 A. Y 2009-10 9,32,500 2,98,200 Excess recoverable from Vandana
Amount is also duly shown in my personal balance sheet.
4.5 I explained the position to A.O explaining that payment of 9,32,000 made during the current year and was covered in cash and bank summary. Hence the, question remains about verification of Rs 11,00,000 paid during the A. Y. 2008-09. I had a loan facility form Janakalyan Sahkari Bank, which was utilized for making payment. The cheque was issued from the ICICI from the money transferred from Janakalyan Sahkari Bank as would be seen from the bank certificate and the copy of the account statement and the receipts of the builder already submitted on record -(copy enclosed vide Annexure -5 ). 4.6 The A.O. verified the agreements, supporting evidence like summaries of bank accounts , copy of the acknowledgement of the return filed by Vandana Gupta and accepted the contentions as 5 Manojkumar Shreeprakash Gupta would appear from his following observation : "Assessee vide his letter date 25-11-2011 stated that he has purchased Residential Property at Ghaziabad for a total consideration of Rs 38,00,000/- with joint name of his wife Snit Vandana Gupta (PAN No ANJPG3909Q. The assessee has paid Rs. 11,00,000/- during the assessment year 2008-09 A's 9,32,500 during the assessment year 2009-10' 4.7 It is, therefore submitted that the A.O. while making assessment of MY income for A Y 2009-10 had sought, got and verified all the relevant books, documents, records and information and passed a well- considered order dated 13-12-2011 , hence it is respectfully submitted that there is no error or prejudice caused to the interest of the revenues and accordingly the revision proceedings initiated under section 263 of the I.T. Act, 1961 may kindly be dropped" .
The Ld CIT was not convinced with the explanations of the assessee. The Ld CIT took the view that the assessing officer has accepted the explanations with regard to the opening cash balance without verification. He also took the view that the assessee could not have redeposited the cash withdrawan from the banks. With regard to the investment made in the purchase of flat, the Ld CIT took the view that the AO did not examine the sources of the assessee’s wife, even though she was assessed to tax. Accordingly he took the view that the assessment order is erroneous and prejudicial to the interests of the revenue. Accordingly he set aside the assessment order and directed him to decide the issues afresh, after due verification.
We heard the rival contentions and perused the record. Before going into the merits of the issue, we would like to discuss about the legal position with regard to the power of Learned CIT to invoke revision proceedings under section 263 of the Act. The scope of revision proceedings initiated under section 263 of the Act was considered by Hon'ble Bombay High Court, in the case of Grasim Industries Ltd. V CIT (321 ITR 92) by taking into account the law laid down by the Hon'ble Supreme Court. The relevant observations are extracted below: “Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be “erroneous in so far as it is 6 Manojkumar Shreeprakash Gupta
prejudicial to the interests of the Revenue”. This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision “cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer” and “it is only when an order is erroneous that the section will be attracted”. The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression “prejudicial to the interests of the Revenue”, the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) :
“The phrase ‘prejudicial to the interests of the Revenue’ has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law.”
The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282.”
We shall now analyse the facts prevailing in the instant case and apply the legal principles laid down in the above said case by Hon’ble Bombay High Court and Hon’ble Supreme Court. We notice that the assessing officer has taken up the case of the assessee for scrutiny upon receipt of AIR information about the cash deposits made into the bank account of the assessee as well as the proper purchased by him. Hence the during the course of assessment proceedings, the AO has asked specific queries with regard to the above said items. The assessee, vide his letter dated 25-11-2011, has furnished his replies. The copy of the reply letter is placed at pages 8 to 12 of the paper book. A perusal of the same would show that the assessee has explained the 7 Manojkumar Shreeprakash Gupta details and sources for purchase of properties as well as the opening balance of cash. At page 18 of the paper book, the assessee has also furnished the personal Capital account and Personal Balance Sheet. We notice that the Personal Balance Sheet discloses a cash balance of Rs.12,72,745/- as on 31.3.2008. At page 14 of the paper book, the assessee has furnished the Balance Sheet of M/s SPG & Co. as on 31.3.2008, which shows a cash balance of Rs.20,262/-.
We notice that the Ld CIT has compared the cash balance available in the books of SPG & Co., as on 31.3.2008 with the opening balance of Personal books as on 1.4.2009. Hence, we find merit in the submissions of the assessee that both the cash balances could not be compared and the Ld CIT has misdirected himself in comparing both of the same. The cash balance shown in the books of SPG & CO. shall be carried forward to the next year in the accounts of business. Similarly, the cash balance shown in the personal book shall be carried forward to the next year in the personal books only. Hence the first reasoning given by Ld CIT, in our view, is without proper appreciation of the facts available on record.
With regard to the cash deposits found in the bank account, the assessee has explained to the AO that he has been maintaining accounts with different banks and hence there has been overlapping of deposits. The relevant replies are available at page 11 of the paper book. The assessee has submitted the said overlapping was necessitated in connection with the purchase of property at Gaziabad. The assessee has also given the details of assessed income of past 14 years along with copy of income tax return acknowledgement and also copies of bank accounts.
With regard to the purchase of property, the assessee has given the PAN details of his spouse Smt. Vandana Gupta and has stated that the property was purchased in joint name. The assessee has stated that his share in the property is 50%. He has further stated that a sum of Rs.11.00 lakhs was paid in the immediately preceding year. The assessee has also furnished cash flow statement, copies of bank statement of all banks. He has also stated that the payment for purchase of property was given through bank accounts. Thus, we notice that the assessee has specifically explained that 8 Manojkumar Shreeprakash Gupta his share in the property was 50% and has also explained the sources for making investment.
Thus, we notice that the assessee has given proper explanations to the assessing officer with regard to the impugned queries. The assessing officer has also discussed about the submissions made by the assessee in the assessment order and has accepted the same. Hence, the AO did not make any addition with regard to these items.
We have noticed that the assessment order could not be termed as erroneous, when the assessing officer has passed the same by making proper enquiries and taking a plausible view of the matters. In the instant case, we have noticed that the assessing officer has raised specific queries on the issues considered by Ld CIT and the assessee has also furnished replies along with documentary evidences. We further notice that the payment of Rs.11.00 lakhs was made in the immediately preceding year and hence the same would fall outside the scope of the assessment of the year under consideration. Hence, the same shall be outside the scope of the present revision order.
Under these set of facts, we are of the view that the assessing officer has taken possible view in respect of all the issues and hence the impugned assessment order cannot be termed as erroneous so far as it is prejudicial to the interests of the revenue. Accordingly, we set aside the revision order passed by the Ld CIT.
In the result, the appeal filed by the assessee is allowed.
Order has been pronounced in the Court on 20.7.2016