Anil Kumar Manak Bohara , Jaipur vs Department Of Income Tax

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 790/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2009-10. The Income Tax Officer, cuke Shri Anil Kumar Manak Bohara Ward 4(2), Vs. E-344B, VKI Area, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ACTPM 0682 M vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Smt. Neena Jeph (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri R.S. Jajoo (Advocate)

lquokbZ dh rkjh[k@ Date of Hearing : 10.06.2015. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 24/7/2015.

vkns'k@ ORDER

PER SHRI T.R. MEENA, A.M.

This is an appeal filed by the Revenue emanating from the order of ld. CIT

(A)-II, Jaipur dated 20.07.2012 for the A.Y. 2009-10. The grounds raised in the appeal

are as under :-

" On the facts and in the circumstances of the case and in law the ld. CIT (Appeals) has erred in

1) deleting addition of Rs. 4,77,882/- made by the AO on account of unexplained cash deposits in the garb of sale of shares despite the fact that assessee failed to submit any evidence before AO in support of his contention and evidences produced before CIT (A) were never submitted before AO.

2 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

2) deleting addition of Rs. 6,09,978/- made by the AO on account of undisclosed income of the assessee without appreciating the fact that during the course of assessment proceedings, the assessee could not produce even a single documentary evidence in support of his claim of Vayada business/speculation transaction.

3) deleting addition of Rs. 1,70,000/- made by the AO on account of unexplained cash balance in personal balance sheet without appreciating the fact that assessee could not explain the basis for adopting opening cash balance.

2. The first ground in revenue's appeal is against deleting the addition of Rs.

4,77,882/- made by the AO on account of unexplained cash deposit. The assessee is in

the business of manufacturing and trading of cast iron and rubber rings, nut bolt etc.

filed return of income on 29.09.2009 at Rs. 4,95,520/-. The case was scrutinized under

section 143(3) of the IT Act. The AO observed that the assessee had deposited Rs.

20,09,600/- in SB Account with Bank of Baroda (A/c No. 1286) and Rs. 30,52,500/- in

SB Account with HDFC Bank (A/c No. 111959) in cash. The AO gave reasonable

opportunity of being heard to the assessee on this issue and asked to explain the

source of cash. It was submitted before him that the assessee was engaged in the

business of share transaction and incurred heavy loss and taken loans in his individual

capacity from various banks and also from private persons. On scrutiny of the cash

book, the AO found that some deposits in cash were reflected in cash book which were

received on account of sale of shares, are as under :

10.04.2008 Rs. 1,00,000/-

26.02.2009 Rs. 3,00,000/-

20.03.2009 Rs. 77,882/-

Total : Rs. 4,77,882/-

3 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

____________ The AO doubted that share transactions cannot be carried out in cash and asked the

assessee to explain how transactions in cash were made in share trading. The assessee

failed to explain the same. Therefore, he made addition of Rs. 4,77,882/-.

3. Being aggrieved by the order of AO, assessee carried the matter before ld. CIT

(A) who had allowed the appeal by observing as under :-

" 3.1. I have duly considered the submissions of the appellant. The appellant is engaged in the business of manufacturing and trading of cast iron, rubber rings, nuts & bolts etc. During the year under reference, he had started business odf trading in shares along with Vayada transactions (speculation business). The AO noticed that the appellant had deposited cash of Rs. 20,09,600/- in savings account with Bank of Baroda and cash of Rs. 30,52,500/- in the account with HDFC Bank. The AO directed the assessee to explain the source of cash deposits. In response, the assessee explained that cash deposited out of transactions in shares. The AO also examined the cash book for the year under reference and cash deposits of Rs. 45,84,218/- were treated as explained. However, the AO was not convinced with the arguments of the assessee that he had received cash of Rs. 4,77,882/- on account of sale of shares. Therefore he made the impugned addition. I have perused the documents filed by the appellant. It is seen that the shares purchased from M/s. Hem Securities Ltd and Eureka Stock & Shares Broking Services Ltd were sold through counter client ID for Rs. 1,86,794/- to Sh. Nand Lal Fogat (PAN-AAIPF 6194J), Sh Omkar Gupta (PAN-AGEPG 7684C) and Sh Dilip Kumar Katta (PAN-AEOPK 7576A). Similarly wife of the appellant i.e. Smt. Rita Manak Bohra had also sold her shares purchased from M/s. Hem Securities Ltd through counter client ID for Rs. 3,33,843/- to Smt. Vimla Devi (PAN-AWUPD 8748F) and Smt. Chandra Kanta Katta (PAN-AGBPKI 7233Q). It is also not in dispute 4 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

that shares of Mudra Port, Reliance Capital, Idea Cellular Ltd, Fortis Healthcare Ltd, ICICI Bank, Power Grid and ICRA Ltd sold through counter client ID were not shown in the closing stock by the appellant or his wife. All the counter clients were assessed to tax and had also filed confirmations for having paid cash to the appellant and his wife. Further the counsel of appellant has also filed inter-depository instructions issued by the concerned brokers i.e. Eureka Stock & Share Broking Services Ltd. and M/s. Hem Securities Ltd. to transfer the shares from De-Mat Account of the assessee and his wife to target client IDs. In view of these inter- depository instructions, it is clear that the AO had erroneously held that shares were not transferred/sold. The market was continuously falling down and Sensex was also crashing. In these circumstances, the appellant was forced to sell his shares and cash so received was deposited in the bank accounts to make repayments for loans taken from Bank of Baroda and HDFC Bank. I therefore direct the AO to delete the addition of Rs. 4,77,882/- made by him. This ground of appeal is allowed."

4. Now the revenue is before us. The ld. D/R vehemently argued that the

assessee had not submitted a piece of evidence before the AO. However, the ld. CIT

(A) has accepted the additional evidence even without any remand report calling from

the AO. Therefore, the ld. CIT (A) was not justified in deleting the addition made by the

AO and requested that the order may be set aside to the AO.

4.1. At the outset, the ld. A/R of the assessee reiterated the arguments as made

before ld. CIT (A) and submitted that these shares were disclosed in the Balance Sheet

for A.Y. 2009-10 and same has been sold on 31.03.2009 at Rs. 2,71,740/-. Another

sale of shares for Rs. 29,74,012/- was made on 31.03.2008, the sale proceeds of which 5 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

were available with the assessee and deposited in Bank of Baroda and HDFC Bank

accounts. The AO had verified the cash book and checked entries in the bank account

and accepted that these cash deposits were out of the sale proceeds of shares. But he

was not convinced with the explanation for Rs. 4,77,882/-. Therefore, he made the

addition of the same amount.

5. We have heard rival contentions and perused the material on record. The

assessee had not submitted any evidence before the AO but before the ld. CIT (A) he

filed all the evidences for which ld. CIT (A) has not called for remand report from the

AO on the submissions and evidences submitted before him. Therefore, as a principle of

natural justice, this aspect is required to be set aside to the AO. The assessee is

directed to produce all the evidences before the AO to decide the set aside proceedings.

6. The second ground of appeal is against deleting the addition of Rs. 6,09,978/-

made by the AO on account of undisclosed income of the assessee from Vayda

speculation transactions. The AO observed that the assessee had maintained besides

two bank accounts mentioned in the preceding paras, one more bank account with

State Bank of Bikaner & Jaipur (SBBJ) no. 27718 wherein also numbers of cash credit

entries were appearing. This bank account had not been disclosed in the Balance Sheet

by the assessee. Therefore, he treated this bank account as undisclosed bank account.

The assessee submitted before the AO that this bank account has been disclosed in

individual balance sheet which was not acceptable by the AO as same has not been

disclosed along with the return and also entries of Bank account had not been

explained by the assessee. The assessee again claimed that this cash deposits were 6 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

out of share transactions but no documentary evidence had been submitted before the

AO in support of his claim. The AO held that all the transactions in three bank accounts

are undisclosed transactions of the assessee. The details of credit entries are as under

:-

Bank of Baroda (Total credit entries) Rs. 38,67,166/-

HDFC Bank (Total credit entries ) Rs. 47,39,446/- SBBJ (Total credit entries) Rs. 15,59,691/- -------------------- Rs. 1,01,66,303/- --------------------

Thus total credit entries in all the three bank accounts were Rs. 1,01,66,303/- on which

NP 6% was applied. Accordingly he made addition of Rs. 6,09,978/- as undisclosed

business income of the assessee.

7. Being aggrieved by the order of AO, assessee carried the matter before ld. CIT

(A) who allowed the appeal of the assessee by observing as under :-

" 4.1. I have duly considered the submissions of the appellant. The appellant had started the transactions in Vyada speculation since 19.10.2003. At that time, the commodity market was stable. However in the year under reference, it had fallen down. Since all the transactions Vayda business were duly recorded in cash book and ledger, the AO as not justified in holding that the said business was not disclosed to the department. Further the AO had taken credit entries of Rs. 1,01,66,303/- in the alleged bank accounts as undisclosed turnover however he did not accord any cognizance to the fact that there were debit entries of Rs. 1,07,31,469/- in these bank accounts and there was closing debit balance of Rs. 5,65,166/- as on 31.03.2009 in the bank accounts with Bank of Baroda, HDFC Bank and SBBJ. The counsel of appellant has filed copy of 7 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

ledger account for speculation business (MCX) and it is noticed that there was profit of Rs. 8,99,487/- and loss of Rs. 24,79,211/- in the transactions of MCX Futures. The appellant had received an amount of Rs. 70,000/- and paid an amount of Rs. 10,57,385/- for these transactions which were duly recorded in the ledger. In support of the same, the copy of ledger account and sauda summary report for MCDX by M/s. Angel Commodities Broking Pvt. Ltd and M/s. Finlease Pvt. Ltd were also filed. On the contrary, the AO had ignored the entries in the books of account and estimated profit @ 6% on the credits of Rs. 1,01,66,303/- without any basis of material on record. Therefore the addition made by the AO was based on surmises and conjectures. I accordingly direct the AO to delete the addition of Rs. 6,09,978/- made by him. This ground of appeal is allowed."

8. Now the revenue is before us. The ld. D/R again challenged the order of ld. CIT

(A) that the ld. CIT (A) has accepted the evidences without calling for remand report

from the AO. Therefore, order of ld. CIT (A) deserves to be set aside to the AO. He,

particularly has drawn our attention to ld. CIT (A)'s finding that the assessee supports

his claim with the help of copy of ledger account and sauda summary report for MCDX

reports of M/s. Angel Commodities Broking Pvt. Ltd. and M/s. Finlease Pvt. Ltd. were

also filed. Therefore, this issue also required to be set aside to the AO.

8.1. At the outset, the ld. A/R of the assessee reiterated the argument made before

ld. CIT (A) and argued that all the transactions routed through these three bank

accounts are from share speculation and vayda business which have been reflected in

the cash book, ledger maintained by the assessee. The assessee has submitted copy of 8 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

bills in support of his claim received from M/s. Angel Commodities Broking Pvt. Ltd. and

M/s. Finlease Pvt. Ltd. which were ignored by AO. There was a vayda loss at Rs.

10,16,843/- in place of 6% income as estimated by the AO at Rs. 6,09,978/-.

9. We have heard rival contentions and perused the material on record. The

assessee had not brought on record any evidence that the evidences submitted before

ld. CIT (A) were also submitted before the AO during the course of assessment

proceedings. Therefore, in the interest of justice and fair play, we are of the considered

view that the matter is required to be set aside to the AO. The AO is also directed to

give reasonable opportunity of being heard to the assessee and the assessee is directed

to produce all the evidences before the AO to decide the set aside proceedings.

Accordingly this ground is set aside to the file of AO.

10. Third ground of appeal is against deleting addition of Rs. 1,70,000/-. The AO

made observation that the assessee has shown opening cash balance at Rs. 2,95,312/-

in Balance Sheet submitted before him. The AO asked the assessee to explain the

opening cash balance with evidence. The assessee submitted that he had continuously

shown cash balance in the balance sheet since last 3-4 years, but the AO verified from

the record and found that assessee had never enclosed any balance sheet with the

return. Therefore, the assessee was asked to justify the cash available with him. After

considering assessee's reply, he held that Rs. 1,70,000/- is unexplained cash of the

assessee and same was added to the income of the assessee.

11. Being aggrieved by the order of AO, assessee carried the matter before ld. CIT

(A) who had allowed the appeal by observing as under :-

9

ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

" 5.1. I have duly considered the submissions of the appellant. The AO had made the impugned addition as the assessee had not filed copy of personal capital account with the return of income. The copies of capital account were submitted during the course of assessment proceedings and the AO treated the same as fabricated documents. However at the same time, the AO held that opening cash balance of Rs. 1,25,312/- was justified instead of Rs. 2,95,312/- declared by the assessee. Considering the totality of facts and circumstances, the AO had contradicted his own stand by allowing opening cash balance of Rs. 1,25,312/- for which no documents were filed with the return of income. Before me, the counsel of appellant has filed copies of personal balance sheet for last three assessment years. It is seen that the appellant had declared cash in hand of Rs. 1,90,500/- as on 31.03.2006, cash in hand of Rs. 2,22,977/- as on 31.03.2007 and cash in hand of Rs. 2,95,312/- as on 31.03.2008. In these circumstances, the addition made by the AO has no legs to stand and same cannot be sustained. I therefore direct the AO to delete the addition of Rs. 1,70,000/- made by the AO. This ground of appeal is allowed."

12. Now the revenue is before us. The ld. D/R vehemently supported the order of AO

and argued that on what basis the ld. CIT (A) has accepted the evidence in the form of

copy of capital account which were never enclosed along with the return. Therefore, in

the interest of justice, this issue may be set aside to the AO for reconsideration.

12.1. At the outset, the ld. A/R of the assessee argued that assessee was in the

business of speculation/vayda from assessment year 1995-96. For the A.Y 1995-96 he

furnished separate balance sheet for M/s. Govind Metal Works, a proprietary business. 10

ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

As per this Balance Sheet, for A.Y. 2006-07 the opening cash balance was Rs.

1,25,312/- and closing balance was Rs. 1,90,500/-. In A.Y. 2007-08 the closing balance

was at Rs. 2,22,977/- and in A.Y. 2008-09 it was Rs. 2,95,312/-. As per Balance Sheet,

the opening cash as on 1.4.2008 was at Rs. 2,95,312/-. The AO has also accepted

partly opening cash balance at Rs. 1,25,312/- but not accepted the cash balance as on

1.4.2008 at Rs. 2,95,312/-. The AO had verified each and every entry of cash book.

He even made an addition of Rs. 1,70,000/- which was without any basis.

13. We have heard rival contentions and perused the material on record. As all the

three issues are inter-linked with cash deposits and shown either in the books or in the

bank accounts, the assessee had submitted additional evidences before the ld. CIT (A)

which were not submitted before AO. Therefore, in the interest of justice, we set aside

this issue also to the AO. The assessee is directed to co-operate with the AO and

produce required evidences for disposal of set aside proceeding to the AO. Accordingly,

revenue's appeal is set aside.

14. In the result, appeal of the revenue is allowed for statistical purposes.

Order pronounced in the open court on 24.07.2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 24/7/ 2015 Das/ 11 ITA NO. 790/JP/2012 A.Y. 2009-10. ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- ITO Ward 4(2), Jaipur.

2. izR;FkhZ@ The Respondent- Shri Anil Kumar Manak Bohara, Jaipur.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 790/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar 12 ITA NO. 790/JP/2012 A.Y. 2009-10.

ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.

Sl. No. Date Initial 1 Date of dictation 2 Date on which the typed draft is placed before the Dictating Member ............ Other Member............ 3 Date on which the approved draft comes to the Sr.P.S./P.S 4 Date on which the fair order is placed before the Dictating Member for pronouncement 5 Date on which the fair order comes back to the Sr.P.S./P.S. 6 Date on which the file goes to the Bench Clerk 7 Date on which the file goes to the Head Clerk 8 The date on which the file goes to the Assistant Registrar for signature on the order 9 Date of Dispatch of the Order 13 ITA NO. 790/JP/2012 A.Y. 2009-10. ITO vs. Shri Anil Kumar Manak Bohara, Jaipur.