HEMANI DEEPAK PATEL,MUMBAI vs. ITO 19(3(2), MUMBAI

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ITA 5790/MUM/2014Status: DisposedITAT Mumbai15 July 2016AY 2005-065 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the primary evidence, the firm's books of account, were missing and not produced by the assessee. However, it also noted that if the assessee could provide documentary evidence of the firm's bank account suspension and payments made to suppliers from her account, her case could be substantially proved.

What were the facts?

The assessee's appeal contested an addition of Rs. 15.40 lacs on account of unexplained cash deposits in her bank account. The assessee claimed these deposits were on behalf of her firm, M/s. Tulsi Enterprises, due to a temporary suspension of the firm's bank account.

What were the issues?

Whether the cash deposits in the assessee's bank account were sufficiently explained as being on behalf of her firm, and if the absence of the firm's books of account precluded such an explanation.

Which sections of the Income-tax Act were involved?

Section 68,Section 69,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI SANJAY ARORA, AM & SHRI AMARJEET SINGH, JM

For Appellant: Shri Nihar H. Mehta, Shri Satyanarayana Raju
For Respondent: Shri Satyanarayana Raju

O R D E R Per Sanjay Arora, A. M.: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-30, Mumbai (‘CIT(A)’ for short) dated 27.6.2014, dismissing the Assessee’s appeal contesting its assessment u/s.143(3) r/w s. 147 of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2005-06 vide order dated 01.3.2013.

2.

The assessee not pressing her Ground # 1 (qua reopening of assessment u/s. 148 of the Act), the only issue arising in this appeal is the addition u/s. 68/69 in the sum of Rs.15.40 lacs on account of unexplained cash deposits made in her bank

1.

(A.Y. 2005-06) Hemani Deepak Patel vs. ITO account (saving bank account No.1001/2565 with Punjab and Maharashtra Co- operative Bank) during the relevant year by the assessee. The Revenue, on information of cash deposits of Rs.15,40,470/- in the assessee’s bank account, questioned her in the matter in the assessment proceedings. The assessee, vide letter dated 7.1.2013, explained that she is a partner in M/s. Tulsi Enterprises, which is in the business of distribution of foods products for companies such as Kellogg’s India Ltd., MTR Foods and Amul. On account of financial difficulties, the said firm could not repay the bank loan instalments, leading to a suspension of operations of it’s bank account with Punjab and Maharashtra Cooperative Bank. The said firm opened a new bank account with the same bank in the assessee’s name, and which was accordingly used during the period of suspension by the firm for depositing the cash collected from its customers, and which credit was utilized for making payments to the creditor, i.e., Kellogg’s India Ltd., effected per cheques. The Assessing Officer (A.O.) examined the firm’s bank account for the financial year 2004-05, to find 5 to 10 transactions of deposits and withdrawals on practically every working day of the year. The assessee’s contention with regard to suspension thereof could not thus be accepted. Further, while total deposits in the said bank account were for Rs.6,06,62,258/-, the total turnover for the period as per its’ accounts was at Rs.6,24,29,754/-. The assessee, in first appeal, filed a reconciliation, and on that basis explained the obtaining difference of Rs.15,89,902/- as primarily on account of the firm’s cash collection through the assessee’s bank account (i.e., Rs.15,40,470/-): (Amt. in Rs.) Particulars Remarks a) Opening Debtors as on 1.4.2004 2325156 b) Add: Sales made during 1.4.04 to 31.3.05 62429754 c) Less: Closing Debtors as on 31.3.2005 2502750 d) Amount collected from debtors during the 6,22,52,160 [(a)+(b)-(c)] period 01.4.2004 to 31.3.2005

(A.Y. 2005-06) Hemani Deepak Patel vs. ITO e) Less: Deposits in the firm/s bank a/c 6,06,62,258 f) Difference (representing lower receipt in the 15,89,902 [(d) – (e)] firm’s bank account)

The same did not find favour with the ld. CIT(A) as the firm’s cash book, wherein cash collection would be accounted for in the first place, was not furnished. There was, further, no documentary proof to evidence that the cash deposits in the assessee’s bank account belonged to the firm (M/s. Tulsi Enterprises), duly accounted for in its’ books, so that a mere filing of a letter from the firm stating that the cash deposits in the appellant’s bank account were on account of its’ transactions, could not be accepted, i.e., in the absence of its’ accounts.

3.

We have heard the parties, and perused the material on record. Books of account of M/s. Tulsi Enterprises, which constitute the primary evidence in this case, are, quizzically, missing. We observe no explanation furnished at any stage qua their non-production. The same, where so, would clearly show that if the cash deposits in the assessee’s bank account had any nexus with the firm’s cash collection, in which case the same would stand to be credited to the assessee’s account therewith and, further, debited in respect of the cheques issued there-from to the firm’s creditors, as Kellogs, Amul, etc. The ld. AR, on being questioned by the Bench in the matter, submitted that the books of account of the firm, since dissolved (as stated, in the year 2007), could not be furnished as they were in the possession of the Accountant. We are unable to appreciate this – which, on its face, appears specious. Why, firstly, should the same be with him and, even so, why could not the same be recalled? Rather, why should he continue to retain them for so long, more so when they are required by the firm, whose property they are. So, however, where the assessee is able to establish the suspension of the firm’s bank account, which is stated (before us) to be for a period of one week during November, 2004 (over which period only would, in that case, the cash credits appear

(A.Y. 2005-06) Hemani Deepak Patel vs. ITO in the assessee’s bank account – and, correspondingly, not in the firm’s bank account) and, further, of the cheques issued from the assessee’s account to the firm’s suppliers (for the amount of the cash deposits, or nearly so), with documentary evidence, the assessee’s case would in our view stand substantially proved. The absence of any deposits in the firm’s bank account during the period of suspension would lend credence to the assessee’s case. A letter from the firm’s bank with regard to suspension, specifying the period, as well as, similarly, copy of the firm’s account in the books of the creditor/s, specifying the cheques credited in its bank account, would substantiate the assessee’s case, demonstrating if payments, as stated, have been made thereto by the assessee while drawing cheques on her bank account. Further, the near matching, per the reconciliation provided, of the difference, i.e., of the cash deposits in the assessee’s bank account and the gap between the firm’s collection and the deposits in it’s bank account, also justify the assessee’s case. An explanation for the difference of Rs.49,432/- (Rs.15,89,902 – Rs.15,40,470), though not a part of the impugned sum, would also have corroborative value. In view of the foregoing discussion, we restore the issue back to the file of the AO to provide the assessee an opportunity to substantiate and prove her case, and decide in accordance with law, issuing definite findings of fact. We decide accordingly.

4.

In the result, the appeal is allowed for statistical purposes. प�रणामतः �नधा�रती क� अपील सां�यक�य उ�दे�य के �लए �वीकृत क� जाती है । Order pronounced in the open court on July 15, 2016 Sd/- Sd/- (Amarjeet Singh) (Sanjay Arora) �या�यक सद�य / Judicial Member लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 15.07.2016 व.�न.स./SRL, Sr. PS

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