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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S.Viswanethra Ravi
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
These cross-appeals are heard together and disposed of by this common order as directed against the common order of Commissioner of Income Tax (Appeals)-18, Kolkata dated 11.01.2016. Assessment was framed by ITO Ward-26(3), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 31.12.2010 for assessment year 2007-08. 2. ITA No.411/Kol/2016 [assessee’s appeal], in this appeal various grounds have been raised and out of which ground No.4 was not pressed
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 2 therefore, same is dismissed as not pressed. Grounds No.1 & 9 are of general nature and do not require separate adjudication. Remaining grounds raised by assessee are under:- “2) That on the facts and in the circumstances of the case, the Ld. C.IT.(A) has erred in upholding the aggregate addition of Rs.7,32,372/- (Rs.4,41,000 + Rs.1,61,372 + Rs.1,30,000) in the garb of unexplained credit entries in ICICI Bank A/e. in spite of the fact that loans taken from Central Bank & HDFC Bank for purchasing flat were deposited with ICICI Bank and duly corroborated by the respective entries by the banks.
3) That the Ld. A.O. grossly erred in upholding the additions of Rs.3,00,000/- & Rs. 10,00,000/- found credited in ICICI Bank Alc. on the purported ground of changed stand of the assessee for receipt of sale consideration of shares from Anand Rathi Securities and thereafter from Navratan without considering the fact that Navratan is the current account name of Anand Rathi Securities.
5) That on the facts and in the circumstances of the case, the Ld. C.I.T.(A) was wrong in upholding the additions of Rs.3,14,492/- and Rs.90,650/- found credited in ICICI Bank & Karnataka Bank respectively as assessee's unexplained income by rejecting the assessee's explanation that the same represented reimbursement from employer towards credit card expenses, where he was working as Associate Vice President.
6) That on the facts and in the circumstances of the case, the Ld. C.IT.(A) was wrong in rejecting the assessee's explanation and thereby upholding the aggregate cash deposits of Rs.l,73,004/- on different dates ranging between Rs.3,000/- & Rs.55,004/- in Karnataka Bank, ICICI Bank & Central Bank Loan A/c., as assessee's unexplained income.
7a) That on the facts and in the circumstances of the case, the Ld. C.I.T.(A) erred in confirming the action of the Ld. A.O. in having added back the cash deposits in Kamataka Bank on 29.10.2007 & 30.10.2007, aggregating to Rs. 60,00,000/-. as assessee's unexplained income on the alleged ground of assessee's failure to discharge the onus of producing Smt. Pumima Ghosh & Smt. Putul Ghosh, residing at Dehradun, for examination.
(b) That the Ld. C.IT.(A) erred on the facts of the case in having treated the cash deposit of Rs.60 lacs in the bank account as the unexplained money of the assessee when he himself on the same set of facts/evidences has accepted identity, creditworthiness and
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 3 genuineness of the cheque deposit of Rs.40 lacs in the assessee's bank account by the said two ladies.
(c) That the Ld. C.IT.(A) erred in not appreciating that the cash deposited by the two ladies in the assessee's bank account and its utilization in investment with Religare Securities Ltd. on the behalf were duly recorded in the bank statement, transactions were passed through Den accounts of both the ladies and the assessee and depositing of cash towards investment was duly confirmed in Affidavit by the owners of the cash.”
Further, assessee also submitted additional grounds, which are reproduced below:- “(1) That, on the facts and circumstances of the case and in law, the Ld. A.O erred in having treated the revised return filed u/s. 139(5) of the Act as invalid and the Ld. CIT(A) misdirected himself in upholding the said illegal action of the A.O on the alleged ground that condition precedent for a valid revised return had not been fully complied.
(2) That, the Ld. revenue authorities have erred in treating the salary income for April’07 to July’07 aggregating to Rs.2,18,461/- received from M/s Indiabulls Securities Ltd and declared in the revised return as assessee’ concealed income in spite of the fact that during assessment proceeding the assessee offered the said salary income for assessment, which was omitted to declare in the original regular return for non-availability of Form No.6 from the employer and TDS was also reflected in 26AS form for the same financial year.
(3) That, the Ld. revenue authorities grossly erred in taking the credit card payments of Rs.5,28,600/- as per AIR data and sustained addition of Rs.1,68,688/- without providing break-up of the same to the assessee in spite of the fact that as per credit card bills issued by the banks, such payments were amounted to Rs.3,98,203/- only and hence the resultant difference of Rs.1,30,397/- [Rs.5,28,600 – Rs.3,98,203] may be deleted as excess addition made.
(4) That, the Ld. revenue authorities further erred in having made addition of Rs.1,60,000/- found credited in the assessee’s Karnataka Bank Account in spite of the fact that the aforesaid credit represented housing loan from ICICI Bank and deposited to Karnataka Bank and sanction letter of granting loan and evidence of payment thereof were furnished during assessment proceedings.”
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 4 Shri S.K.Tulsiyan, L’d Authorized Representative appeared on behalf of assessee and Shri Sallong Yaden, L’d Departmental Representative appeared on behalf of Revenue. 3. The first issue raised in the ground is as regards that Ld CIT(A) erred in confirming the action of Assessing Officer by sustaining the addition of ₹7,32,372/- as unexplained cash credit.
Facts in brief are that assessee in the present case is an individual and has earned income under the head “salary and other sources” for the year under consideration. During the year, assessee was employed to different organizations namely – M/s Religare Securities Ltd. (MRSL for short) and M/s Indiabulls Securities Ltd. (MISL for short) for part of the year. The assessee joined with MRSL with effect from 28.08.2007 after resigning from MISL. The assessee for the year under consideration filed its return of income declaring total income of ₹4,74,520/-. Subsequently, assessee filed revised return on 31.03.2019 showing gross total income of ₹6,66,558/-.
Assessee is maintaining several bank accounts, wherein huge cash was also deposited. During the course of assessment proceeding, AO sought clarification about the deposits in his several bank accounts but assessee failed to give any satisfactory reply. Accordingly, AO has made addition of ₹ 7,32,372/- to the total income of assessee.
Aggrieved, assessee preferred an appeal before L’d CIT(A) who upheld the action of AO by observing as under:- “ii. Three entries of Rs.4,41,000/-, Rs.1,61,372/- and Rs.1,30,000/- were claimed as housing loans from bank for flat at Merlin Complex. In another submission assessee has claimed that housing loan was taken from Central Bank. Verification by the AO revealed that loan from Central Bank was taken for some other purpose. Thus a doubt has been created regarding the nature of the entries mentioned here. In the counter comments, assessee has accepted that he cannot explain the source of Rs.4,41,000/-. Hence, addition of Rs.4,41,000/- is sustained. Other two entries have been explained as loan amounts for flat in marlin
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 5 Complex. Attempt has been made to link these two to the payment for flat in Merlin Complex. These two amounts were credited in the ICICI account on 24/10/2007 and 30/07/2007. Payments for Merlin flat were made on 29/10/2007 and 6/11/2007 respectively of amounts Rs.1,60,000/- and Rs.1,54,492/-. Although two payments have been made for the flat but this does not explain the credit entries in the account of the assessee. From HDFC bank many other amounts are also being credited in the ICICI a/c of the assessee. Assessee has also not been able to produce any supporting evidence regarding loan from HDFC bank. Under the circumstances the explanation of the assessee is not acceptable. And addition of Rs.1,61,372/- and R.1,30,000/- are sustained.”
Being aggrieved by this order of L’d CIT(A) assessee came in second appeal before us.
Before us L’d AR filed written submission which is running pages from 1 to 15 and two sets of paper books comprising of pages from 1 to 98, and 1 to 62 (list of documents) respectively. The ld. AR stated that three credit entries as appearing in assessee’s bank a/c of ₹4,41,000/-,₹ 1,61,372/- and Rs.1.30 lakhs on dated, 505,10.2007, 24.10.2007 and 30.10.2007 respectively were housing loan from the bank. He drew our attention on pages 1 to 4 of the paper book where the details of such loan taken from HDFC bank along with certificate dated 23.04.2016 of HDFC bank was placed. On the other hand, Ld. DR vehemently relied on the order of Authorities Below.
We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that three entries were reflecting in the bank statement of assessee but he failed to justify at the time of assessment proceeding regarding their sources. Accordingly, AO made the addition and subsequently same was sustained by L’d CIT(A). However, Ld. AR before us has duly explained that these entries were nothing but for housing loan availed from HDFC bank. Now the question before us arise so as to whether the unexplained credit entries in the bank statement as discussed aforesaid are liable to be taxed under the income tax Act. From the
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 6 facts of the case, we find that assessee failed to produce his supporting evidence for the credit entries which were reflecting in assessee’s bank statement. Therefore, the addition was made and sustained by L’d CIT(A). In rejoinder, Ld. DR fairly conceded that the entries are housing loan from HDFC bank. However these supporting documents were not produced at the time of assessment and appellate stage due to some unavoidable circumstances. Now, assessee has produced the same in support of these credit entries with the justification that these are the housing loan which was taken by assessee. Therefore same cannot be regarded as unexplained cash credit. We find force in the argument advanced by L’d AR. However we are not interested in sending back the matter to the AO to avoid further litigation for the year under consideration. As all the entries have been conceded by the ld. DR, and considering the facts in totality of the case, we are inclined to reverse the order of Authorities Below as the addition made by them is not sustainable in law. Hence, ground raised by assessee is allowed.
Next issue raised by assessee in this appeal is that L’d CIT(A) erred in confirming the action of AO by sustaining the addition of ₹ 13 lakhs as unexplained cash credit.
During the course of assessment proceedings, assessee could not provide documentary evidence in support of certain credit entries which were reflecting in the bank statement of assessee. The AO accordingly treated them as unexplained cash credit and added to the total income of assessee.
Aggrieved, assessee preferred an appeal before L’d CIT(A) who upheld the action of AO by observing as under:- “iii. In the ICICI bank account credit entries of Rs.3,00,000/- and Rs.10,00,000/- are visible on 29.11.2007 and 11.12.2007 respectively. Initially these were claimed as refund of share application money from Anand Rathi Securities. However these entries have come from Navratan Capital. AO has raised other doubts also about the explanation of the assessee. In the counter comments se has explained that Navratan is the current account name of
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 7 Anand Rathi Securities and these amounts have now been explained as sale proceed of shares. Explanation of the assessee cannot be accepted, as assessee has been changing stand regarding real nature of these credits. Moreover, no details have been provided regarding purchase and sale of shares and who was the owner of these shares. Hence addition in respect of unexplained credit entry of Rs.13,00,000/- is sustained.”
Being aggrieved by this order of L’d CIT(A) assessee came in second appeal before us. 11. Before us Ld AR submitted that assessee initially filed the details before Ld. CIT(A) about both the two credit entries as appearing in his ICICI Bank account of ₹ 3 lakh and ₹ 10 lakh on 19.11.2007 and 11.12.2007 respectively i.e. these were received from M/s Anand Rathi Securities as a result of sale. But later on assessee submitted that the amounts were received from M/s Navratan Capital & securities Ltd. and this fact was treated by Ld. CIT(A) as changing of stand. Furthermore, the details of purchase and sale as well as the ownership of such shares could not be provided which lead him to sustain the addition. Ld. AR stated that assessee reiterated the aforesaid amounts were received from M/s Navratan Capital & Securities Ld as is evidenced from the name appearing in the bank statement of ICICI Bank for which assessee enclosed certificate from M/s Navaratan capital &Securities Ltd. mentioning that the such payments were effected out of the available balance with them to the assessee as could be seen at page 5 of the paper book and said certificate also makes it ample clear that the assessee was the owner of such shares. It is pertinent to mention that M/s Navaratan Capital & Securities Ltd is a sister concern of M/s Anand Rathi Securities. On the other hand, L’d DR vehemently relied on the order of Authorities Below.
We have heard rival parties and perused the materials available on record. From the foregoing discussion, we find that there were credit entries of ₹ 3 lakhs and ₹ 10 lakhs respectively which were reflecting in the bank statement of assessee but the assessee could not reply satisfactorily. Therefore, AO made the addition and later same was sustained by Ld. CIT(A).
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 8 Now the question before us arise so as to whether the unexplained cash received from the sale of share amounts to undisclosed income of assessee. From the submission of Ld. AR, we find that it was the transactions of share sale & purchase from M/s Navratan Capital & Securities Ltd.- a sister concern of M/s Anand Rathi Securities for which assessee failed to produce supporting evidence with regard to said transactions. Therefore, the addition was made by Assessing Officer, however, on the submission of AR, we find that assessee received said cash against sale of shares in this regard, Ld. counsel for assessee produced sufficient documents in support of assessee’s claim which are placed on page 5 of the paper book. Considering the facts and circumstance, in our considered view, the addition sustained by Authorities Below is not warranted and we reverse the order of Authorities Below. Ground raised by assessee is allowed.
Next issue raised by assessee is that L’d CIT(A) erred in confirming the action of AO by sustaining the additions of ₹ 3,14,492/- and ₹ 90,650/- on account of unexplained income of assessee.
During the course of assessment proceeding, AO found that a sum of ₹3,14,492/- was credited in ICICI Bank and further a sum of ₹90,650/- was credited in Karnataka Bank but assessee failed to provide any documentary evidence in support of such entries which were found in assessee’s bank statement. Accordingly, AO made the addition to the total income of assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who upheld the action of AO by observing as under:- “v. There is a credit entry of Rs.3,14,492/- on 7/01/2007 in the ICICI bank and Rs.90,650/- in the Karnataka bank account. Assessee has claimed it as credit card reimbursement from his employer M/s Religare Securities, as he was working a Associate Vice President and he had to incur various expenses through credit card. AO has not accepted assessee’s claim because no supporting evidences have been provided. In the counter comments also assessee has not been able to justify these credit entries. In the appeal proceedings also no supporting evidences have been furnished. Under the
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 9 circumstances addition in respect of these two unexplained credit entries, amounting to Rs.4,04,142/- is sustained.”
Being aggrieved by this order of L’d CIT(A) assessee came in second appeal before us.
Before us L’d AR submitted that credit entry as appearing in assessee’s ICICI Bank account of Rs.3,14,492/- on 07.01.2008 was reimbursed through credit card from assessee’s employer M/s Religare Securities but assessee could not produce supporting evidences thereof, as such the addition was sustained by Ld. CIT(A). He further submitted that said amount was received from his employer M/s Religare Securities and the certificate dated 21.04.2016 issued by bank concern could be seen at page 6 of the paper book. Another credit entry as appeared in assessee’s Karnataka Bank account of Rs.90,500/- on 19.11.2007 was housing loan from ICICI bank as would be evident from disbursal of loan by ICICI bank already stated in ground no. 2 and it could be seen at page no. 2 of the paper book. On the other hand, Ld. DR vehemently relied on the order of Authorities Below.
We have heard rival contention of both the parties and perused the materials available on record. From the foregoing discussion, we find that the addition was confirmed as assessee failed to produce the documentary evidence in support of credit entries reflecting in its bank statement. However, these entries before us were duly explained with supporting evidences which are placed on record in the form of paper book. Accordingly, we are inclined to reverse the order of Authorities Below. AO is directed accordingly. Assessee’s ground is allowed.
Next issue raised by assessee is that Ld. CIT(A) erred in confirming the action of AO by sustaining the addition of ₹ 1,73,004/- on account of cash deposit in Karnataka Bank, ICICI Bank and Central Bank.
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 10 19. During the year, assessee has made certain cash deposits in those banks, which he filed to justify on the basis of evidence. Therefore, AO disallowed the same and added back to the total income of assessee as unexplained income.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who has confirmed the action of AO by observing as under:- “Assessee has not been able to satisfactorily explain the source of these deposits. Some of these are explained as withdrawal from banks and ATM. However, cash flow statement and other circumstantial evidenced do not support assessee’s contention. Hence addition of Rs.1,73,000/- is sustained.”
Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us.
Before us Ld. AR submitted that Ld. CIT(A) sustained the addition of cash deposits aggregating to Rs.1,73,004/- in the various bank accounts of the assessee since the assessee could not satisfactorily explain his source of such deposits made during the appellate stage but the details of such cash were found deposited in banks are as under:- Date Amount Karnataka Bank ICICI Bank Central Bank 02.05.2007 18,000 - - 18,000 - - 28.05.2007 24,000 - - 24,000 - - 01.08.2007 6,800 - - - - 6,800 30.08.2007 6,000 - - - - 6,000 04.10.2007 8,000 - - - - 8,000 12.10.2007 12,000 - - 12,000 - - 26.10.2007 3,000 - - 3,000 - - 04.12.2007 11,000 - - -- 11,000 02.01.2008 47,000 47,000/- -- -- 12.02.2008 14,000 14,000/- -- -- 10.03.2008 15,000 - - - - 15,000 Total 1,64,800 61,000 57,000 (*)46,800
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 11 He further stated that as per Central Bank statement, total cash deposit was to the tune of ₹ 46,800/- whereas the Department has erroneously taken the same at ₹ 55,004/- so Ld. AR prayed that assessee should get relief of ₹8,204/-. Ld. AR further stated that a cash flow statement is enclosed which would indicate that the assessee has more than enough cash, out of withdrawals from banks, to make such deposits so unexplained cash money was deposited in the said bank accounts of the assessee as alleged by the Department and such addition sustained by Ld. CIT(A) on this score deserves to be deleted. On the other hand, Ld. DR vehemently relied on the order of Authorities Below.
We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that Authorities Below has made the addition on account of cash deposited in the banks as assessee failed to justify the entries of cash deposit in his banks accounts. However, we find that AO made the addition and subsequently confirmed by Ld. CIT(A) without considering the withdrawals that assessee has made from its respective bank accounts. If we compare with the withdrawal of cash deposits, it is found that the withdrawn are more than the amount of cash deposits. Accordingly, we find lot of force in the argument advanced by Ld. AR. In rejoinder, Ld DR has not brought on record contrary to the argument placed before us by Ld AR. Therefore, in our considered view, we are inclined to reverse the order of Authorities Below. AO is directed accordingly. Ground of assessee is allowed.
Next issue raised by assessee is that Ld. CIT(A) erred in confirming the action of AO by sustaining the addition for an amount of ₹60 lakh as unexplained income u/s. 68 of the Act.
During the year, assessee has received cheque of ₹ 40 lakh and cash 24. of ₹ 60 lakh in his bank account. On query by AO about such source of money
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 12 deposited in his bank account, assessee submitted that the said money was received from his clients namely (i) Smt. Purnima Ghosh and (ii) Smt. Putul Ghosh of Deradhun for the purpose of making investment in M/s Religare Securities Ltd. The assessee submitted that the said amount was received in Karnataka Bank on 29.10.2007 and 30.10.2007 respectively which were transferred to M/s Religare Securities Ltd. on 01.11.2007. The assessee in support of his claim also furnished the address and PAN of the said persons from whom money was received. The assessee also submitted that Smt. Pratima Ghosh and Smt. Putul Ghosh sold their property which was located in Kolkata. The assessee submitted the details of property sold. However, the AO disregarded the plea taken by assessee and made the addition of ₹ 1 crore to the total income of assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who granted partly relief to the assessee by observing as under:- “AO has made an addition of Rs.60,61,000/- on account of unexplained cash deposits in the bank account of the assessee. In the discussion only addition of Rs.60,00,000/- is proposed but in the computation Rs.60,61,000/- has been mentioned inadvertently, Rs.60,00,000/- has been claimed to have been received from Smt. Pratima Ghosh and Ms Putul Ghosh, it was claimed that they had received this amount for sale of their property, mentioned above. However, sale deed mentions only Rs.40,00,000/-as sale consideration. During assessment proceedings assessment claimed to have submitted confirmation from these two ladies. AO has pointed out many flaws in this confirmation. These have been prepared on a plain sheet of paper, supposedly written by Ms Putul Ghosh and Smt Prtima Ghosh has also put her signature on it. Source of this amount in their hands is not explained. Another major lacunae in this declaration is the date when money has been given to assessee. This declaration mentions that assessee has been given Rs.1,00,00,001/- for investment on 25/10/2007 for a period of 15 days. But nothing is mentioned about the source of this money in their hands. Even it is not mentioned whether this amount is given in cash or through cheque or part cash part cheque. Even if it is assumed that this total comprises of Rs.40,00,000/- by cheque and Rs.60,00,000/- by cash, these ladies received the amount by cheque on a subsequent date. Moreover, this could not be independently verified by the AO as the address mentioned in the affidavit was not correct. Even assessee failed to provide any other address on which the two persons could be contracted or the confirmation from the buyer of the property regarding cash transactions of Rs.60,00,000/- Situation remains the same even during remand stage. This disallowance was made primarily on the ground that these two ladies did not have
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 13 Rs.60,00,000/- in cash at their disposal. So they could not have given this amount to the assessee. No supporting evidence has been produced by the as even at remand stage or during appeal proceedings. Hence contention of the assessee is not acceptable and addition of Rs.60,00,000/- on account of unexplained cash deposit in the bank account of the assessee is confirmed.”
Ld. CIT(A) has given relief to assessee for an amount of ₹ 40 lakh which was deposited in assessee’s bank account by way of cheque. Against the deletion of this amount Revenue came in appeal for granting relief to assessee and for balance amount of ₹ 60 lakh assessee came in appeal before also.
We take up Revenue’s grounds No. 2 and 3 in ITA No.963/Kol.2016 which are reproduced below:- “2. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.40,00,000/- allegedly shown received from Smt. Putul Ghosh and Smt. Pratima Ghosh without credit worthiness of these two ladies and genuineness of transaction being proved. 3. The ld. CIT(A) has erred in law, relying on the sale documents of a property to satisfy himself about the source of deposit of Rs.40,00,000/- as explained by the assessee without appreciating that it was additional evidence and should have been admitted only as per provision of Rule 46A of IT Rules, 1962.”
The grounds raised by the assessee and Revenue are on the same issue therefore the same are clubbed together for adjudication and the sake of convenience.
Before us Ld. AR submitted that so far addition sustained by Ld. CIT(A) of ₹ 60 lakh is concerned, facts are that Karnataka bank a/c maintained by assessee where two cash deposits of ₹ 9 lakh and ₹ 51 lakhs (total Rs.60 lakhs) on 29.10.2007 and 30.10.2007 were made respectively. He further submitted that there was a deposit of ₹ 40 lakh on 02.11.2007 by cheque received from Smt. Putul Ghosh and Smt. Pratima Ghosh of Dehradun for which there is no dispute and in this regard a copy of bank statement of Karnataka bank is already enclosed at pages 09 to 13 of the paper book. He stated that entire sum of ₹ 1 crore was received from the said two ladies for
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 14 investment in securities through M/s Religare Securities Ltd., where at the relevant time, the assessee was employed as associate vice president and for this reason a verbal request / approach from both the ladies, the cash and cheque amounts both were kept temporarily in the bank account of the assessee for investments as the ladies did not have any Demat Account at the relevant point of time. The amounts received from the said ladies were thus kept deposited for about 2 months in the appellant's bank account. The appellant giving honour to the approach/request of the aforesaid ladies, in turn, purchased different securities on various dates in his own name and kept the same in his Dernat A/c. till 29/12/2007, that is up to the period a Demat A/c. No.12447646 was opened by Smt. Pratima Ghosh Copy of the said Demat Account of the appellant could be seen at pages 24 to 27 of the Paper Book. The above factual position gets fortified from the confirmation dated 29/12/2007 issued by M/s. Religare Securities Ltd. to Smt. Pratima Ghosh, acknowledging receipt of stock value of Rs.95.40 lakhs in her Demat A/c. No. 12447646 . Copy of the said Demat Account of Srnt. Pratirna Ghosh could be seen at page 28 of the Paper Book. Furthermore, the appellant also in a sworn Affidavit before the Ld. Metropolitan Magistrate, 8th Court, Kolkata explained the events of the transactions with Smt. Putal Ghosh & Smt. Pratima Ghosh. Copy of the said Affidavit of the appellant could be seen at pages 29 to 31 of the Paper Book. In support of the above cash and cheque deposits in the appellant's bank account maintained with Karnataka Bank, the assessee filed before the Ld. Revenue authorities xerox copies of the following documentary evidences, which are as well being filed before this Hon'ble Tribunal : (a) A hand-written confirmation of payment of Rs.1,00,00,001/- dated 25.10.2007, duly signed by Smt. Putul Ghosh & Smt. Pratirna Ghosh. (Page-32 of the Paper Book). (b) Pan Cards of Smt. Putul Ghosh & Smt. Pratirna Ghosh. (Pages-33 & 34 of the Paper Book).
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 15 (c) Bank Account of Smt. Putul Ghosh with Axis Bank evidencing cheque payment. (Pages-35 & 36 of the Paper Book). (d) Contract Notes on different dates issued by M/s. Religare Securities Ltd. in favour of Smt. Pratirna Ghosh (Code No.PG3133) at her Dehradun address evidencing sales of some scrips transferred by the appellant to her Demat & Trading A/c. No. PG3133 (Pages 37 to 65 of the Paper Book). (e) Demat Account of the appellant maintained with M/s. Anand Rathi Securities Ltd., evidencing transfer of Securities to the Demat A/c. No. 12447646 of Smt. Pratima Ghosh (already enclosed at Pages 24 to 27 of the Paper Book). (f) Confirmation dated 29/12/2007 issued by M/s. Religare Securities Ltd. to Smt. Pratima Ghosh, acknowledging receipt of stock value of Rs.95.40 lakhs in her Demat A/c. No. 12447646. (Page 66 of the Paper Book). (g) Affidavit duly sworn on 22/12/2010 by the appellant before the Ld. Metropolitan Magistrate, 8th Court, Kolkata explaining the events of the transactions with Smt. Putal Ghosh & Smt. Pratima Ghosh (Already enclosed at pages-Ifs to 20 of the paper book).
The Ld. C.I.T.(A) accepted the facts of the case and genuineness of the deposit of Rs.40 lakhs by cheque in the appellant's bank account by the said two ladies for the purpose of their investments in securities for the reasons that as per Sale Deed, they had received the said amount as sale consideration of their property. He, however, disbelieved the cash payments of Rs.60 lakhs by the said ladies towards investment on the premise that in the declaration made by the ladies confirming payment of Rs.1 crore to the appellant towards investment in their names, there was no mention about the source of that money in their hands. Secondly, due to incorrect address provided in the affidavit of the appellant, source of the money in the hands of the ladies could not be verified by the A.O. According to him further, the
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 16 appellant failed to provide any other address of the ladies. The aforesaid observation of the Ld. C.I.T.(A) was factually incorrect, inasmuch as in the Affidavit dated 22/12/2010 duly submitted to the Ld. revenue authorities, vide point No.8, the appellant had provided two addresses of Dehradun as were known/available to him, one as recorded in the Demat A/c. with M/s. Religare Securities Ltd. i.e. Villa No.5, Rajpur Road Enclave, Vill-Dhoran Khas, Pargana-Parwadoom, Dehradun-248 001 and the other one at 101, Savarkar Marg, Subhas Nagar, Chandramoni Chowk, Clementown, Dehradun-248001. It is further pertinent to mention here that Smt. Putul Ghosh vide her letter dated 15/12/2010 in response to summon u/s. 131 of the Act had again confirmed her giving sum of Rs.40 lakhs by cheque and further cash sum of Rs.60 lakhs to the appellant, aggregating to Rs. 1 crore, and explaining the source thereof with a copy forwarded to the appellant duly received through Speed Post No.EW776134987 IN. Copy of the said letter of Smt. Putul Ghosh along with Speed Post Envelop addressing the appellant could be seen at pages 67 to 69 of the Paper Book. For better appreciation, the relevant portion of the said letter is reproduced below: "2) I and my mother Smt. Pratima Ghosh has sold our portions of house at Convent Road, Kolkata-14 to Mr. Bhavesh Majumder in the month of October, 2007. The total consideration that we received from Mr. Bhavesh Majumder as sale proceeds from the above property is Rs. 10000000 (Rupees one crore only). 3) We gave this amount to Mr. Chhandak Chakraborty for the investment in Religare Securities Ltd. through a cheque amount of Rs.40 lakhs bearing no.82272 on the Axis Bank Ltd., Kolkata and cash of Rs. 60 lakhs on 25th October, 2007 on good faith. 4) That Mr. Chhandak Chakraborty had purchased shares on behalf of my mother Mrs. Pratima Ghosh through the account no. PG3133 of Religare Securities Ltd., Kolkata. "
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 17 The Ld. A.O. on page-5 of his assessment order has, however, alleged that the copy of the said letter of Smt. Putul Ghosh was submitted by the assessee and no reply was received in his office direct from the said lady. On such hypothesis, he doubted the veracity of paying the entire sum of Rs. 1 crore to the appellant and the Ld. CIT(A) upheld the addition to the extent of cash payment of Rs.60 lakhs. It is pertinent to mention here that the assessee vide his letter dated 11/04/2016 to the ITO, Ward- 51(4), Kolkata has already applied for certified copies of order sheets including issuance of notice, if any, to the ladies and replies received from them, which are yet to be received. Before the Ld. CIT(A), the assessee had objected to the invocation of provisions of Sec. 68 of the Act by the A.O. inasmuch as he being a salaried employee is not required to maintain any books of account and hence is outside the ambit of provisions of sec. 68 of the Act. The submissions made by the assessee were duly incorporated on pages 6 & 7 of the appellate order. The Ld. CIT(A) has not dealt with the said legally settled position and upheld the addition to the extent of cash sum of Rs.60 lakhs on mere surmises and conjectures. On the above facts and circumstances of the case, it is humbly submitted as under:- (a) That the assessee, being a salaried person having an average income of Rs. 6 lacs, has no resources of his own to finance and to deposit cash of Rs.60 lacs into his bank account. (b) That the transfer of the securities for Rs.95,40,000/- on 29.12.2007, held by the appellant in his Demat Account to the Demat A/c. of Smt. Pratima Ghosh demonstrates that she was the real owner of the securities which were purchased out of Rs.l,00,00,001/- advanced to the assessee and duly confirmed by her. That the assessee has no resources to make such a high volume of gift of Securities of Rs. 95.40 lakhs to a non-relative. (c) That the Ld. CIT(A) was not justified in upholding the addition of Rs.60 lacs out of Rs. 1 crore received from the ladies in spite of the fact that appellant by adducing all possible evidences during 'assessment as
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 18 well as appellate proceedings established that the said money of cheque amount of Rs 40 lakhs and cash sum of Rs.60 lakhs both belong to the ladies. (d) That the Ld. A.O. on his whims and fancies disregarded the reply from Smt. Putul Ghosh dated 15/12/2010 in response to 131 notice on the suspicion that the letter was not received in his office direct from the lady, but the copy of the same was provided by the appellant. As stated above, Smt. Putul Ghosh sent her reply to the AO with a copy to the appellant for his information and the appellant as a mark of cooperation with the department had submitted a copy of the said letter, which was forwarded to him by the said lady. Therefore, the entire deliberation by the Ld. revenue authorities was based on untrue and unfounded facts. That other facts related to the transaction and evidences thereof, which were not before the Ld. Revenue authorities, are being brought before this Hon'ble Tribunal for better appreciation on the issue : i. That on the death of Amal Ghosh, the survivors namely Pratima Ghosh (wife) and Putul Ghosh (Daughter) filed a suit being No.TS 86/1973 before 9th Sub Judge, Alipore claiming 3/7th share in the property situated at 24, Convent Road, Kolkata 700014 which was decreed on 28.02.1981. ii. That though the Indenture of sale dated 26.10.2007 made between Pratima Ghosh and M/s. Janakalyan Land & Housing Development Pvt. Ltd. and another Indenture of sale dated 26.10.2007 made between Putul Ghosh and M/s. Janakalyan Land & Housing Development Pvt. Ltd. both registered on 10.12.2010 with deed value of Rs. 20 lacs each with the Registrar but the stamp value for the property was severally determined at Rs.41,78,544/- and Rs.41,70,600/-, aggregating to Rs. 83,49,144/- on the date of registration and differential stamp duty of Rs. 5,84,480/- and registration fees of Rs. 92,024/- was determined. Copies of assessment of market value for the said property determined by
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 19 Directorate of Registration & Stamp Revenue, Govt. of W.B. could be seen at pages 70 to 75 of the Paper Book. iii. That in order to enhance their undivided interest in the property at 24,Convent Road, Kolkata 700014 as determined in TS 86/1973 by the 9th Sub Judge, Alipore, Smt. Pratima Ghosh & Ors. filed a fresh suit being FA 128 /1981 before Hon'bIe Calcutta High Court. The appeal was allowed on 29.07.2003 by Justice G.C.Dey and dismissed the suit. In the said appeal the value of the property was shown about Rs.1.20 crores. The certified copy of the order, though applied by the appellant is yet to be received as could be seen at pages 76 of the Paper Book. iv. That against order of dismissal passed by Calcutta High Court in case no. FA128/1981, both Pratima Ghosh and Putul Ghosh preferred an appeal before Hon'ble Supreme Court being appeal no. 8098 of 2004. SC allowed appeal on 27.04.2007 and set aside order of Calcutta High Court and ultimately maintained the order passed by 9th Sub Judge, Alipore. v. That the value of the property of Rs.1.20 crores as shown in the said appeal filed before Calcutta High Court proves beyond doubt the actual sale value of the property. In view of the above facts and evidences referred hereinbefore, it is established beyond any doubt that both the ladies had, in fact, given cash sum of Rs. 60 lacs to the assessee for the sole purpose of their investment in shares through M/s. Religare Securities Ltd., wherein at the relevant time the assessee was employed as Associate Vice- President (Priority Client Group). It is also established that initially the investments were made in the name of the assessee as the ladies did not have any Demat A/c. As soon as they opened a Demat A/c., the shares were transferred in their Demat A/c. from the assessee's Demat Account. In regard to the source of Rs. 1 crore admittedly given by the ladies to the assessee which was comprised of Rs 40 lacs by cheques and the remaining of Rs.60 lacs by cash, the Ld. CIT(A) has accepted the cheque amount. The source of the cash sum of Rs.60 lacs has
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 20 also been established by the ladies and the evidences thereof have been annexed with this submission. Therefore, the identity, creditworthiness and genuineness of the investment made by the ladies have been fully explained and established. That being so the addition of Rs.60 lacs in the hands of the assessee as unexplained income being uncalled for is liable to be deleted.
On the other hand, Ld. DR submitted that there is no evidence with regard to deposit of cash amount of ₹60 lakh that it was received from the aforesaid two ladies against the sale of their property. The documents with regard to sale of property placed on record are not showing that a huge amount was received after selling of property. Ld. DR further supported the order of lower authorities for the addition of ₹ 60 lakh and for the deletion made by Ld. CIT(A) he has supported the order of AO.
We have heard the rival contentions and perused the materials available on record. From the foregoing discussion, we find that assessee has deposited a sum of ₹ 1 crore in his bank account which he claim to have received from two aforesaid ladies as discussed above. However, the AO disregarded of the contention of assessee and make the addition of the entire amount. We find that in appellate stage Ld CIT(A) deleted a sum of addition of ₹ 40 lakh on the ground that money was received through banking channel and confirmed the addition of ₹ 60 lakh on the ground that it was received in the form of cash. After careful analysis, we find that the property in question was sold by aforesaid two ladies as evident from the order of Hon'ble jurisdictional High Court in the FA No. 128 of 1981 and subsequently preferred an appeal before Hon'ble Supreme Court in Civil Appeal No. 8098 of 2004. From the above facts, it is clear that it is not in doubt and in dispute that the property was sold by both the ladies. The dispute relates whether the cash of Rs. 1 crore was given by the aforesaid ladies. In the instant case, the assessee has submitted duly sworn affidavit about the receipt of money from the aforesaid ladies. In turn, the ladies have also accepted the same and
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 21 provided her confirmation. At the same time, we cannot ignore the fact the entire amount was returned back to the lady by way of transferring the investment in her Demat account and through cheque as well along with the profit. The facts that the entire received by the assessee was returned back are not in doubt. In this connection, we also find support from the judgments of various Hon’ble Courts where the issue was decided in favour of assessee. The Hon’ble Supreme Court in the case of CIT Vs. Orissa Corporation (P) Ltd. 159 ITR 78 has held as under :
“Sec. 68 of 1961 Act was introduced for the first time in the Act. There was no provision in 1922 Act corresponding to this section. The section only gives statutory recognition to the principle that cash credits which are not satisfactorily explained might be assessed as income. The cash credit might be assessed either as business profits or as income from other sources. It is not in all cases that by mere rejection of the explanation of the assessee, the character of a particular receipt as income could be said to have been established; but where the circumstances of the rejection were such that the only proper inference was that the receipt must be treated as income in the hands of the assessee, there is no reason why the assessing authority should not draw such an inference. Such an inference is an inference of fact and not of law. The assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the allowed loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises. It cannot, therefore, be said that any question of law arose in these cases. The High Court was, therefore, right in refusing to refer the questions sought for.
In view of the above cited case law in the case of Orissa Corporation (P) Ltd (supra) we are inclined to reverse the order of authorities below with regard to the addition of Rs. 60 lacs. Similarly we do not find any reason to interfere in the order of ld. CIT(A) for deleting the addition of Rs. 40 lacs.
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 22 30. In the result the Assessee ground is allowed and that of Revenue ground No. 2 & 3 are dismissed.
Coming to additional ground no. 1 & 2 raised by assessee is that ld. CIT(A) erred in confirming the order of AO by treating the revised return filed under section 139(5) of the Act as invalid and consequently holding that salary income of Rs. 2,18,461/- from India bulls Securities limited is concealed income.
The assessee filed its original income tax return on dated 30.7.2008 declaring income inter alia salary income from Religare Securities Ltd. which was processed under section 143(1) of the Act on dated 10.06.2009. Thereafter assessee filed revised return of income on dated 31.3.2010 showing the salary income which was received from India Bulls securities Ltd for the period beginning from April 2007 and ending July 7. However, the said revised return was treated as invalid by the AO and consequently the income declared in the revised return was treated as concealed income of the assessee.
Aggrieved, assessee preferred an appeal to Ld CIT(A) whereas assessee submitted that processing of return under section 143(1) of the Act is not an assessment order under section 143(3) or 144 of the Act. The assessee is entitled to file revised return as per section 139(5) of the Act before the completion of assessment under section 143(3)/144 of the Act. However the ld. CIT(A) disregarded the claim of the assessee by observing as under : “… It is seen that original return was field on 30/07/2008. This was processed u/s. 143(1) on 10/06/2009 and selected for scrutiny. Notices u/s 143(2) and 142(1) were issued and served on the assessee. It was after a long gap that assessee revised his return on 31/03/2010. Hence it is evident that return was revised long after issue of notice u/s. 143(2) and 142(1). Thus it appears that assessee has not revised the return voluntarily but under the fear of being exposed about concealment of income. In fact AO has mentioned that during hearing on 13/03/2008, the undisclosed salary was detected. Hence,
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 23 condition precedent for a validity of a revised return have not been fully complied. Hence action of the AO is upheld.”
Being aggrieved by the order of learned CIT(A) assessee is in appeal before us.
Before us ld. AR submitted that the salary income from Indisbulls Securities Limited was not shown in the return of income as the assessee did not get Form 16 from his previous employer at the relevant time. The assessee immediately on receipt of Form 16 from the employer filed its revised return of income on dated 31.3.2010 before the completion of assessment. It is pertinent to mention here that the employer (Indisbulls Securities Ltd. had already deducted TDS on the said salary income of Rs.2,16,664/- during FY 2007-08 relevant to AY 2008-09 which was also duly reflected in 26AS Form for the said Financial Year and tax effect was given accordingly. However, in the computation part of the assessment order AO has wrongly taken the figure at Rs.2,18,461/- as against Rs.2,16,664/- mentioned at page-3 of the impugned assessment order, resulting in extra addition of Rs.1,797/-. The said discrepancy on record was brought to the notice of Ld. CIT(A) who did not consider the same. And Ld. AO treated the said revised return as invalid. On the other hand the ld. DR vehemently supported the order of the lower authorities.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we find that the issue is already covered in favour of assessee by the judgments of various Hon’ble Courts. In this connection we find the support from the following judgments.
In the case of ACIT vs. Rajesh Javeri Stock Brokers (P) Ltd. 291 ITR 500 (SC), in which it was held that intimation u/s. 143(1) although deemed to notice u/s. 156 cannot be taken as assessment order. According to the
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 24 decision of Hon’ble jurisdictional High Court in the case of Tata Metaliks Ltd. vs. CIT (2014) 368 ITR 643 (Cal), a revised return can always be filed as long as it is within the time permitted for the same before an assessment is made. An intervening intimation does not bar such right since the intimation is not an assessment. For better appreciation, the relevant observation of Hon’ble Calcutta High Court following the decision of Hon’ble Supreme Court in the case of Rajesh Javeri Stock Brokers (P) Ltd. (supra is reproduced below:- “Held, allowing the appeal, that the provisions of section 143 of the Income- tax Act, 1961, contemplate an assessment without prejudice to the provisions of sub-section (2) of the section whereunder the Assessing Officer shall, if he considers sit necessary, serve on the assessee a notice requiring him, on a date to be specified therein, to attend his office or to produce or cause to be produced there, an evidence on which the as may rely in support of the return and after taking into account all relevant materials the Assessing Officer shall by an order in writing make an assessment. Thus, the provision for assessment to be made for the purpose of issuance of an intimation, under section 143(1) reserving the authority of the Assessing Officer to resort to the provisions under sub-section (2) thereof could not be said to be completion of assessment and, therefore, limit the time otherwise available to file revised return. Therefore, the Tribunal was not justified in law in holding that the issue of the intimation under section 143(1) of for the assessment year 1999-2000 on August 8, 2000, amounted to completion of assessment within the meaning of section 139(5). The assessee was entitled to file a revised return for the am year 1999-2000.”[emphasis given]”
Further he relied on the decision of Hon’ble Gujarat High Court in the case of CIT vs Himgiri Foods Ltd. (2011) 333 ITR 508 (Guj), revised return can be filed after Intimation u/s. 143(1) and the AO must amend such intimation on the basis of revised return. The relevant observation is as under: “Section 143(1B) of the Income-tax Act, 1961 mandates that if after the issuance of an intimation, a revised return is furnished by an assessee under sub-section (5) of section 139 it is incumbent upon the Assessing Officer to process the revised return and amend the intimation issued under section 143(1)(a) on the basis of the revised return. The validity of the return filed under section 139(5) of the Act cannot be gone into, if the revised return is filed within the prescribed period of lima6ation. An intimation under section 143(1)(a) of the Act cannot be equated with an assessment framed under section 143(3) of the Act and the Assessing Officer cannot refuse to process the revised return and modify the intimation in accordance with section 143(1B) of the Act.”[emphasis supplied]
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 25 36. In the instant case the assessee has filed the revised return within the due date as specified under section 139(5) of the Act and before the completion of assessment. The return was processed under section 143(1) of the Act on dated 10/06/2009 and thereafter the case was selected for scrutiny under section 143(2) of the Act. However there is no doubt about the facts that the revised return was filed before the completion of the assessment and within the time allowed under section 139(5). Accordingly we direct the lower authorities to treat the revised return as valid return and income shown therein should not be treated as concealed income. Accordingly the claim made by the assessee in the revised return should be admitted. We reverse the orders of the authorities below after having reliance in the aforesaid judgments. Hence, the additional grounds No. 1 and 2 of assessee is allowed.
The 2nd issue raised by assessee in additional ground no. 3 is that ld. 37. CIT(A) erred in confirming the order of the AO by sustaining the addition of Rs. 1,68,688/-.
The assessee has made the payment of Rs. 5,28,600/- towards the credit card payment which was explained as reimbursement of official expenses. However, the assessee failed to justify the same from the evidence that these payments represent the reimbursement of the expenses. Accordingly, AO disallowed the claim of the assessee and added to the total income of the assessee.
Aggrieved, assessee preferred an appeal to ld. CIT(A) who has allowed the appeal in part in favour of assessee by observing as under : “….However, AO has total all payments towards credit card expenses and pointed out that only Rs.3,59,932/- has been paid from bank account. In the counter comments assessee has accepted that discrepancy and agreed that addition of Rs.1,68,688/- may be sustained. Accordingly addition of Rs.1,68,688/- (out of total addition of Rs.8,43,000/-) only is sustained.”
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 26 Being aggrieved by the order of ld. CIT(A) the assessee is in appeal before us.
The ld. AR before us submitted that assessee has paid to ICICI Bank of Rs,3,12,212.50 which was maintained throughout the year and assessee further paid Rs.26,800/- to Deutsche Bank, which was maintained for the first two months i.e. April and May, 2007. Ld. AR further submitted that second bill of Deutsche bank showed an outstanding of Rs.59,190.75 for which the assessee holds no bill but assessee made payments of Rs.3,12,212.50 + Rs.26,800/- + Rs.59,190.75 = Rs.3,98,203.25 as against Rs.5,28,600/- allegedly shown by the revenue authorities. He further submitted that details of the credit card payment for the two banks along with their bills could be seen at pages No. 84 to 98 of the paper book and assessee is entitled to relief of Rs.1,30,396.75 out of the amount of Rs.1,68,668/- sustained by Ld. CIT(A)
On the other hand the ld. DR vehemently supported the order of the lower authorities. 41. We have heard the rival parties and perused the materials available on record. At the outset we find that the additions were made on the basis of AIR information by the lower authorities. At the time of hearing the assessee failed to reconcile the payment for the credit card. Therefore, we do not find any reason to interfere in the order of ld. CIT(A). Hence this additional ground of the assessee is dismissed.
The last issue raised by the assessee in additional ground No. 4 is that the ld. CIT(A) erred in confirming the order of AO by sustaining the disallowance of Rs. 1.60 lakh on account of credit entry found in the bank statement of the assessee as unexplained income.
At the outset, we find that the above entry is representing the amount of housing loan taken from the ICICI Bank. The necessary details along with loan
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 27 statement are placed on page 2 of the paper book. At this stage, ld. DR has not brought anything contrary to the documents filed by the assessee. Therefore we are inclined to reverse the order of the authorities below. Hence this additional ground of appeal of the assessee is allowed.
Now coming to the Revenue’s appeal ITA 963/kol/2016 44. Revenue has raised various grounds of its appeal. Out of which ground No.2 and 3 have already been clubbed up and decided with assessee’s appeal in para 26 and 27 of this order. The remaining grounds are reproduced below:- “1. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.7,80,000/-- ignoring the fact that the source of the deposit of these money in his ICICI bank could not be proved by the assessee and he also wrongly relied on the explanation of the assessee and hold that the deposit in bank account is clearly visible from money trail without discussing the details of money trial. 4. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition made on the account of unaccounted investment of Rs.67,75,850/- and Rs.25,09,600/- by holding that such investments have been made through bank accounts of the assessee, whose credit entries have been extensively examined and suitable additions have been made and hence, amount to double addition but before drawing such conclusion, no opportunity was given to the AO to explain by confronting with his such conclusion and also many additions on account of credit entries were deleted.”
The first issue raised by Revenue is that ld. CIT(A) erred in deleting the addition made by AO for Rs. 7.80 lakh on account investment from undisclosed sources.
The AO made the addition of Rs. 7.80 lakh on the basis of AIR as the assessee failed to justify the source of such investment.
Aggrieved, assessee preferred an appeal to ld. CIT(A) whereas assessee submitted that the investment was made from the funds available in
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 28 Karnataka bank on dated 18-9-2007 and considering the same ld. CIT(A) deleted the addition made by the AO by observing as under:- “i. Deposit of Rs.7,80,000/- in the ICICI Bank account was claimed by assessee as return of share application money from Anand Rathi Securities. AO has mentioned that ITS details showed investment of Rs.7,80,000/-. Assessee explained the source of investment as debit from his Karnataka bank account on 18.09.2007. Hence AO has raised a question in the remand report that if this amount was paid from the bank account for making investments then how the same can be claimed as refund of share application money in another account. In the counter comments assessee has justified the same as receipt on account of sale proceeds of shares. And this amount has been credited in ICICI Bank account on 4/10/2007. Assessee’s explanation is acceptable in this regard because the money trial is clearly visible in bank statement. Under the circumstances, addition of Rs.7,80,000/- is deleted.”
Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us.
Before us Ld. DR vehemently supported the order of AO whereas Ld. AR relied on the order of Ld. CIT(A)
We have heard rival contentions and perused the materials available on record. At the outset, we find that the investment was made by assessee out of its disclosed bank account i.e. Karnataka Bank on 18.09.2007. Therefore, we conclude that the investment was made from the disclosed sources, hence, this ground of Revenue’s appeal is dismissed.
The last issue raised by Revenue is that Ld. CIT(A) erred in deleting the addition made on account of unaccounted investment of Rs.67,75,850/- and Rs.25,09,600/-.
The assessee during the year has made investment in mutual fund / MIP fund. On question by the AO about the source of such investment, assessee submitted that he is working as Associate Vice-president in Religare Securities Ltd., and many clients have given money for making investment which was deposited in the bank account of assessee for the purpose of
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 29 investment on behalf of the clients. All these investments were made through banking channel and subsequently were transferred in the respective demat accounts of the clients. However, AO disregarded the plea of assessee by observing that notices were issued to the clients of assessee u/s 131 of the Act were returned back as ‘not known / not residing at this place’. Accordingly, AO disallowed the same and added to the total income of assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition by observing as under:- “As per the ITS information assessee had invested Rs.67,75,850/- in mutual fund and Rs.25,09,600/- in shares. This was explained as investment on behalf of his clients, Smt Pratima Ghosh and Ms Putul Ghosh. As these persons could not be examined for lack of correct address, AO treated these as unexplained investments and made addition of Rs.67,75,850- for unexplained investment in mutual fund and Rs.24,49,600/- for unexplained investment in shares. I have carefully considered the facts of the case. Whether these investments are of assessee’s own or on behalf of other persons may be debatable. But all these investments have been made through bank account of the assessee whose credit entries have been extensively examined and suitable additions have been made. Hence making additions on the investment side would amount to double addition. Hence additions of Rs.67,75,850/- and Rs.25,09,600/- are deleted.”
Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us.
Before us both parties relied on the orders of authorities below as favourable to them.
We have heard rival parties and perused the materials available on record. At the outset, we have already seen that the assessee received a sum of Rs.1 crore from his clients for the purpose of making investment. The assessee deposited that said money deposited in his bank account and thereafter made the investment on behalf of his clients. Finally, the investment made by assessee on behalf of his clients were transferred in the respective demat a/c of the clients. All the investment were made through banking channel as
ITA No.411 & 963/Kol/2016 A.Y.2008-09 Sh. Chhandak Chakraborty v. ITO Wd-51(4), Kol. Page 30 evident from the bank statement of assessee. In our considered view, assessee has satisfied that all the investment were made from the disclosed bank a/c and accordingly there remains no scope for making any addition on account of unexplained investment, the assessee has explained all the source of deposits in his bank a/c. therefore, the outflow from such bank a/c towards investment cannot be held as unexplained investment. Taking the consistent view, in the order of Ld. CIT(A) we find no reason to interfere in the order of Ld. CIT(A). We hold accordingly. This ground of Revenue’s appeal is dismissed.
In the result, appeal of assessee stands partly allowed and that of Revenue is dismissed. Order pronounced in open court on 24/08/2016 Sd/- Sd/- (S.S.Viswanethra Ravi) (Waseem Ahmed) Judicial Member Accountant Member *Dkp �दनांकः- 24/08/2016 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. आवेदक/Assessee-Sri Chhandak Chakraborty, AJ-167, Maya Manjuri, Sector-II Salk Lake, Kolkata-700 091 2. राज�व/Revenue-ITO, Ward-51(4), Uttarapan Complex, Ultadanga, Maniktala Civic Centre, Sch.VII/M, Kolkata-700 054 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड� फाइल / Guard file.
By order/आदेश से, /True Copy/ उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, कोलकाता