Haresh R. Majethia, Mumbai vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER & SHRI SANJAY GARG, J.M. आयकर अपील सं./I.T.A. No. 3772/Mum/2011 ( नधा रण वष / Assess ment Year : 2008-09 DCIT, Ce ntral Circl e - 2, बनाम/ Shri Hare sh R. Maj e thia, Old CGO Bldg., Anne xe , Vs. 1803, 18 t h floor, 9 t h floor, M.K. Ro ad, Tride v Towe r, Mumbai - 20. Bhakti M arg , Mulund (W), Mumbai - 400 080. थायी ले खा सं . /PAN : AEQPM 5542 P (अपीलाथ /Appellant) .. ( यथ / Respondent)

या ेप सं/C.O. No. 192/Mum/2011 Arising out of ITA No. 3772/Mum/2011 Assessment year 2008-09 Shri Hare sh R. Maj e thia, बनाम/ DCIT, Ce ntral Circl e - 2, 1803, 18 t h floor, Old CGO Bldg., Anne xe , Vs. Tride v Towe r, 9 t h floor, M.K. Ro ad, Bhakti M arg , Mumbai - 20. Mulund (W), Mumbai - 400 080.

Cross Obj ector .. ( यथ / Respondent)

आयकर अपील सं./I.T.A. No.2220 /Mum/2011 ( नधा रण वष / Assessment Year : 2009-10 Shri Hare sh R. Maj e thia, बनाम/ DCIT, Ce ntral Circl e - 2, 1803, 18 t h floor, Old CGO Bldg., Anne xe , Vs. Tride v Towe r, 9 t h floor, M.K. Ro ad, Bhakti M arg , Mumbai - 20. Mulund (W), Mumbai - 400 080. थायी ले खा सं . /PAN AEQPM 5542 P (अपीलाथ /Appellant) .. ( यथ / Respondent) 2 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

आयकर अपील सं./I.T.A. No.3773/Mum/2011 ( नधा रण वष / Assess ment Year : 2009-10 DCIT, Ce ntral Circl e - 2, बनाम/ Shri Hare sh R. Maj e thia, Old CGO Bldg., Anne xe , 1803, 18 t h floor, Vs. 9 t h floor, M.K. Ro ad, Tride v Towe r, Mumbai - 20. Bhakti M arg , Mulund (W), Mumbai - 400 080. थायी ले खा सं . /PAN : AEQPM 5542 P (अपीलाथ /Appellant) .. ( यथ / Respondent)

Assessee by Mrs. Ritika Agarwal Department by Smt. Parminder

ु वाई क7 तार9ख / Date of Hearing सन : 10-02-2015 घोषणा क7 तार9ख /Date of Pronouncement : 10-04-2015 [

आदे श / O R D E R PER R.C. SHARMA, A.M. :

These cross appeals are filed by the assessee and the Revenue and also C.O. filed by the assessee against the order of ld. CIT(A), Mumbai for assessment years 2008-09 and 2009-10.

ITA No. 2220/Mum/2011 for A.Y. 2009-10 (assessee's appeal). 2. This is an appeal filed by the assessee against the order of ld. CIT(A) - 36, Mumbai dated 21-02-2011 wherein the assessee is aggrieved for the confirming the addition of Rs. 6,72,358/- made by the A.O. u/s 69A of the Income Tax Act, 1961 out of cash found during the search and also confirming the addition of Rs. 8,12,945/- made u/s 69-A of the Act on account of value of jewellery found during the search. The assessee is also aggrieved for making adhoc disallowance of 10% of motor car expenses as personal expense.

3 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

3. Rival contentions have been heard and record perused. There was a search and seizure at assessee's residential premises. During search, cash of Rs. 13,02,240/- was found. It was explained by the assessee that the house was occupied by his father, mother, brother and un-married sister and himself. The cash was stated to be belongs to his brother and mother and they had owned in the statement recorded at the time of search. However, the A.O. allowed Rs. 4,50,000/- declared by him out of cash found. The cash belonging to the assessee's mother was not accepted and the same added to the assessee's income. By the impugned order, the ld. CIT(A) confirmed the action of A.O. with regard to the addition of Rs. 6,72,358/-.

4. We have considered the rival contention and found that following statement of Mrs. Jashodaben Ravji Majethia, mother of the assessee was recorded during search u/s 132 of the Act:-

"Q. 4: Please confirm that cash of Rs. 13,02,240/- has been found at your premises at 1803, 18th floor, Trides Tower, Bhakti Marg, Mulund (W)_ Mumbai

- 80 during the course of search u/s 132 of the I.T. Act, 1961 on 07.01.2009. Please explain the sources of the same.

Ans: Yes. I confirm that cash of Rs. 13,02,240/- has been found from my residence 1803, 18th floor, Trides Tower, Bhakti Marg, Mulund (W)_ Mumbai - 80 during the course of search u/s 132 of the I.T. Act, 1961 on 7-1-2009. Out of the above cash Rs. 8,50,000/- belongs to me and my daughter named Ms Bhanuben Ravji Majethia and balance amount of Rs. 4,50,000/- belongs to my son Shr Lilladhar Ravji Majethia. The above cash of Rs. 8,50,000/- belonging to us are our savings for a period of over 25 years. Sir, moreover, 1 would like to add that my daughter who is aged 50 years and unmarried and I have saved the money keeping in mind for her future. My Husband is also aged 85-87 years and therefore looking to our old age and my daughter's condition, we have saved whatever is possible from our side. "Since these savings are made over a period of 20-25 years from my husband's income as well as my son's income which they themselves do not know, so I am not in a position to show any proof I would once again like to say that all these amounts received are from my savings only."

4 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

5. We have considered rival contentions and gone through the orders of authorities below. We found that during search statement of assessee's mother Smt. Jashodaben Ravji Majethia from whose possession cash was found, was recorded. In the statement Smt. Jashodaben Ravji Majethia stated the source of cash of Rs. 8,50,000/- out of savings for a period of over 25 years. Since the daughter of Smt. Jashodaben Ravji Majethia Miss Banuben Ravji Majethia, aged 50 years was un-married, money was saved keeping in mind for her future of un-married daughter. As per the statement, husband of the assessee is also aged 85-87 years and therefore looking to the old age and her daughter's condition being un-married, the amount was saved for a period of last 20-25 years from her husband as well as from son's income. The explanation given by Smt. Jashodaben Ravji Majethia during the course of search was not found to be in-correct. Accordingly we do not find any merit in the additions made in the hands of the assessee.

6. In respect of addition of Rs. 8,12,945/- made on account of jewellery, we found that the jewellery was found in the cupboard of the mother kept in her room. During the course of preliminary statement itself the mother and sister of the assessee had owned the jewellery and explained the source of the same. The jewellery found is ladies jewellery and hence it cannot belong to the assessee. Further the assessee is a bachelor and hence no addition can be made in the hands of the assessee. The statement of Mrs. Jashodaben Ravji Majethia was recorded on January 7, 2009 during the course of search. Out of the same, question No. 3 and its reply is mentioned hereunder:-

"Q. 3: Please confirm regarding jewellery/silver/diamond as per valuation report of Shri Ganpatlal M Jain (Govt. approved valuer) of Rs.16,57,3401- found at the time of search on 07.01.2009 at the premises at 1803, 19h floor, Tridev, Tower, Bhakti Marg, Mulund (W), Mumbai -80 and explain the source thereof?

5 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

Ans: Yes. I am confirming the above said value of Rs. 16,57,340/- of jewellery/silver/diamond jewellery has been found from my residence at 1803, 18th floor, Tridev Tower, Bhakti Marg, Mulund (W), Mumbai - 80 during the course of search conducted on 07.01.2009, total Gold jewellery found from my premises is 1.386900 kg and diamond jecwellery of Rs.30,100/- and silver utensils of 2 kg. I have five members in my family including my Husband Shri Ravji Valji Majethia aged (85-87 yrs), my two sons named (1) Shri Liladhar Ravji Majethia aged 44 years (2) Shri Haresh Ravji Majethia aged 40 years and one daughter names Ms Bhanuben Ravji Majethia aged 50 yrs. I received jewellery on different occasions such as marriage, birth IOJ children and other ceremonies: I had already stated in my preliminary statement that I have received 50 tolas on marriage (i.e., 500 gms) and 25 tolas (i.e., 250 gms) on the occasion of children's birth and 20 tolas (i.e., 200 gms) on other occasions. Similarly, my daughter has also explained in preliminary statement that she has two sets of 8 tolas each i.e.,160 gms. Moreover it is evident from the jewellery found at my premise that whole of it consist of old jewellery and noting is new. Therefore, it is quite clear that the same is, out of savings of myself and my family members for a long time and gifts received on different occasions.

Moreover the total quantity of jewellery found is very less. Therefore, request you to release the same.

The above statement shows that the jewellery is only out of gifts and never purchased."

7. In view of the above discussion, there is no merit in adding the jewellery in the hands of assessee.

8. The A.O. also made addition u/s 68 of the Act in respect of creditors in the A.Y. 2009-10, which was deleted by the ld. CIT(A) after having following observation:-

"I have carefully perused the submissions of the appellant and the order of the A.O. It is a fact that in the regular 'assessment the same Sundry Creditors, were accepted by the department, During the course of search, no evidence relating to such Sundry Creditors were found by the department. All the transactions are by "A/c payee" cheques. All the parties have PAN, are regularly filing returns and both the entries regarding the issue as well -as the receipt of the loan is reflected in their regular bank account as well as the bank account of the appellant. There is no cash deposit before the issue of loan and these loans have been repaid. In these circumstances, just because the replies were not sent by creditor directly but through the assessee 6 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

cannot be a ground for making disallowance. The, appellant had relied upon the following case laws:

Addition u/s 68 Roshan Di Hatti vs. CIT (1977) 107 Explanation and material ITR 938 (SC) furnished by assessee cannot be Hon Jehangir Gheesta vs. CIT rejected arbitrarily, unreasonably (1961) 41 ITR 135 (SC) and without any material to the contrary.

Orient Trading Co. Ltd. vs CIT Assessee need not prove source of (1963) 49 ITR 723 (Bom) source. Once confirmation, CIT vs. Orissa Corpn. P. Ltd (1986) address, PAN given, onus shifts 159 ITR 78 (SC) on department.

CIT, Vs Daulat Ram Rawatmull Unless contrary material outweighs the material and (1973) 87 ITR 349 (SC).

evidence supplied by the assessee Bedi & Co. (P) Ltd. Vs CIT (1983) is brought on record contrary 144 ITR 352 (Kam) view cannot be taken by AO.

Jalan Timber Vs. CIT (223 ITR 11) (Gau) Sona Electric Co Vs CIT (152 ITR 507 (Del).

Bhagwati Prasad Mishra V s CIT Rejection of legitimate explanation (1959 35 ITR 97 (Ori) of assessee by ignoring to consider important K.S. Kannan Kunhi Vs CIT (1969) piece of evidence is an error in 72 ITR 757(Ker) law. A.O. must being positive evidence on record proving explanation not valid.

Sri Ram Jhabarmull (Kalimpong) Explanation of the assessee can Ltd. (1967) 64 ITR 314 be rejected only with positive Akbeall Eusufaliy Vs CIT (1966) 60 evidence falsifying assessee's explanation.

CIT' vs. U.M. Shah (90 ITR (396) If the creditors having received (Born) the summons did not present DCIT vs. Rohini Builders (2002) themselves before the A.O., it was 256 ITR 360 (Guj) held that assessee could not be Pragati Construction Co V s blamed for the same. ITA 60 ITD 201 (Del. Trib) Nemichand Kothari Vs CIT (2003) Once assessee establishes that he 265 ITR 254 (Gau) received amount by account payee cheque, the assessee has proved creditworthiness of lender.

Seth Textiles Vs ITA (2003) 80 TTJ Addition u/ s. 68 could not be (Mum Trib) 329 Pravin Colour Co. made as A.O. had not conducted vs. ITA (1977) Taxation 48(6)-155 any inquiry and also the assessee (bom) had furnished all relevant details, 7 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

confirmations, details of cheques and affidavits etc. Veer Metals Vs CIT (1995) 51 TTJ Where amounts received by (Del) Trib 132 account payee cheques, DCIT vs. Anil Kumar confirmed, interest paid and thus (1997) 58 TTJ (Del.Trib) 340 deducted, PAN nos. and balance sheet filed, no addition can be made else it tantamount to converting" good proof" to "no proof'.

CIT vs. Bhawani Oil Mills P. Ltd. "One creditor having appeared in (2011) 49 DTR (Raj. 212 (Hc) response to the notice given by the A.O and confirmed the loan while the remaining creditors having filed their confirmations supported by affidavits, and the Tribunal having accepted the genuineness of the cash credits after evaluating the said confirmations, the matter does not raise any substantial question of law, so as to justify inference.

CIT vs. Computer Force (2011) 48 Assessee having made payments DTR (Ahd) (Trib) 298 to the creditors in the subsequent years which is corroborated by the ledger accounts, additions in respect of such credits cannot be made"

In view of the above, I do not see any merit in sustaining the addition which deserves to be deleted. It has recently been held in the case of CIT vs. Computer Force (2011) 48 DR (Ahd) (Trib) 298 that if the receipt and repayment of the loan is corroborated by the ledger accounts and bank entries, additions in respect of such credits cannot be made. In view of the above, the addition made by the A.O. of the sundry creditors and the interest thereon is deleted and the grounds of the appeal of the appellant are allowed."

9. Similar addition made on account of creditors in the A.Y. 2008-09 were deleted by the ld. CIT(A). Following the same reasoning given above in the A.Y. 2009-10, we do not find any reason to interfere in the order of ld. CIT(A) deleting the addition made on account of creditors.

8 ITA 3772/M/11, ITA C.O. 192/M/11,, ITA 2220/M/11, ITA 3773/M/11

10. In the result, appeal of assessee in ITA No. 2220/Mum/2011 for the A.Y. 2009-10 is allowed, whereas appeal of the Revenue in ITA No. 3772/Mum/2011 for A.Y. 2008-09 and in ITA No. 3773/Mum/2011 for A.Y. 2009-10 are dismissed. The C.O. filed by the assessee for A.Y. 2008-0 is also dismissed. ,

Order pronounced in the open court on 10th April, 2015.

आदे श क7 घोषणा खल ु े @यायालय मB Cदनांकः 10-04-2015 को क7 गई ।

Sd/- sd/- (SANJAY GARG) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER मुंबई Mumbai; Cदनांक Dated 10-04-2015 [ व.Oन.स./ RK , Sr. PS

आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयुPत(अपील) / The CIT(A) -Concerned, Mumbai

4. आयकर आयुPत / CIT - Concerned,, Mumbai

5. Sवभागीय OतOनUध, आयकर अपील9य अUधकरण, मुंबई / DR, ITAT, Mumbai H Bench

6. गाडY फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

स याSपत Oत //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai