Sevantilal V. Shah, Mumbai vs Assessee

Sevantilal V. Shah, ITO-24(2)(2), 207, C Wing, Manish Kunj, बनाम Aaykar Bhavan, बनाम/ Ramchandra Lane, Malad (W), Mumbai Mumbai-400064 Vs. (िनधा[ǐरती /Assessee) (राजःव /Revenue) P.A. No.AAPPS3130B

िनधा[ǐरती कȧ ओर से / Assessee by) Shri Harshad Shah (son of the assessee) राजःव कȧ ओर से / Revenue by : Shri Neil Philip-DR

सुनवाई कȧ तारȣख / 12/01/2015 Date of Hearing :

घोषणा कȧ तारȣख / 13/01/2015 Date of ORDER: आदे श / O R D E R

PER JOGINDER SINGH (Judicial Member):

The assessee is aggrieved by the impugned order dated 08/02/2011 of the ld. First Appellate Authority, Mumbai, The assessee has raised the following grounds:-

1.1 The learned Commissioner of Income tax (Appeals) - 34, Mumbai ("Id. CIT (A)"], erred in confirming the order passed by the assessing Officer under section 143 (3) of the Act, which was passed in breach of the natural justice.

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1.2 While doing so, the Id. CIT (A) failed to appreciate that:

(i) the assessment was framed by the A.O without providing effective and sufficient opportunity of being heard to the Appellant; and

(ii) the order so passed by the A.O. in breach of principle of natural justice was liable to held bad in law.

1.3 It is submitted that in the facts and the circumstances of the case and in law, the order passed was liable to be held as bad in law. WITHOUT PREJUDICE TO THE ABOVE:

2.1 The Id. CIT (A) erred in confirming the action of the AO in making addition of Rs. 21,OO,OOO/-, being the deposits in bank accounts, as income of the Appellant from undisclosed sources. 2.2 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.

3.The Appellant craves leave to add to, alter, delete or modify all or any of the above grounds at the time of hearing.

2. At the time of hearing, son of the assessee, Shri Harshad Shah, personally appeared and requested for adjournment on the grounds stated therein. We note that the appeal of the assessee was filed on 27/04/2011 and was posted for hearing for 22/02/2012. On that day, the appeal was adjourned at the request of the assessee. On 17/05/2012, again at the request of the assessee was adjourned and final opportunity was granted to the assessee. On 29/08/2012, again the assessee sought adjournment and the appeal was adjourned to 31/12/2012. On that date also, at the request of the assessee, the appeal was adjourned to 09/01/2013. Again, at the request of the assessee, the appeal was adjourned to 16/07/2013 by providing last opportunity to the assessee. Surprisingly, on 16/07/2013, again at the request of the assessee, the appeal was adjourned to 23/12/2013. Today, on 12/01/2015, the assessee again requested for adjournment. Keeping in view, the totality of facts, narrated hereinabove, the son of the assessee was asked that no further adjournment shall be granted and if he or Authorised Representative is interested to argue the appeal further two days 3 Sevantilal V. Shah

time can be granted. Shri Harshad Shah contended that he wants longer time and not ready to argue the appeal today or after two days as suggested by the Bench. In view of these facts, it seems that the assessee is not interested to pursue its appeal, consequently, we have no option but to reject the application for adjournment, filed by the assessee..

2.1. We have heard, Shri Neil Philip, ld. DR, who broadly defended the conclusion arrived at in the assessment order as well as in the impugned order by inviting our attention to para 4.1 (page-2) and para 4.5 (page-5) of the assessment order. Strong plea was raised that the source of cash was not explained by the assessee in spite of providing opportunity right from assessment stage.

2.2. We have considered the submissions put-forth by ld. DR and on the reasoning contained in para -2 (supra) of this order, we have no option but to proceed to dispose off the appeal of the assessee on the basis of material available on record. The facts, in brief, are that the assessee derives income from consultancy charges and interest income etc, declared total income of Rs.67,677/- in his return filed on 02/11/2007. Pursuant to notice, issued the assessee personally attended the proceedings. It was found by the Assessing Officer that there was cash deposit of Rs.10,84,000/- in Axis Bank, and Rs.10,50,000/- in Mumbai District Central Cooperative Bank, Malad Branch. The assessee was asked to produce the copy of bank statements and details of sources of the cash deposited in the aforesaid accounts along with supporting documentary evidences. The assessee, in response, personally attended the proceedings and submitted the statement of Bank Accounts from which it was noticed that the 4 Sevantilal V. Shah

cash deposited was received to be claimed from one Shri D.S. Shah and immediately on the same day the deposits were transferred to Shri D.S.Shah in the form of cheque. The details are summarized as under:-

Sr. Date Amount Amount Name of Bank Remarks No. Deposited withdrawn

1. 17.10.2006 5,50,000 5,50,000 The Mumbai Cash received from District D.S.Shah and paid Central Co-op. to D.S.Shah Bank

2. 29.03.2007 5,00,000 5,00,000 -do- -do-

3. 28.06.2006 3,699 Axis Bank Received from K.C.Shah

4. 30.06.2006 3,000, -do- Received from Ramsh A. Shah

5. 13.07.2006 3,740 -do- Received from K.C.Shah

6. 13.10.2006 3,000 -do- Cash deposited

7. 17.10.2006 5,50,000 5,50,000 -do- Cash received from and paid to D.S. Shah

8. 20.10.2006 2,000 -do- Received from R.A. Shah from previous advance

9. 30.10.2006 5,000 -do- Cash deposited from NSC matured

10. 14.11.2006 11,000 -do- Cash deposited from NSC matured

11. 29.10.2007 5,000 -do- NSC matured

12. 06.03.2007 10,000 -do- NSC maturity of H.S.Shah(Son)

13. 15.03.2007 11,261 -do- Received against old receivable

14. 29.03.2007 5,00,000 5,00,000 -do- Received from and paid to D.S. Shah

From the above, it was found by the Assessing Officer that the transactions which are more than Rs.5,00,000/- were received in cash from the D.S.Shah and immediately/same day on receipt, it was withdrawn/cheque was issued to Shri D.S.Shah. The assessee was asked to file loan confirmations, address of parties, PAN, copy of bank statement, return filed by them evidencing cash loan received/given. The assessee attended the proceedings and produced loan confirmation from

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Shri Prashant Shah (whose name was not appearing in the bank statement) and loan confirmation from Shri Dharmesh S. Shah with copy of bank statement. On verification of the balance sheet, it was found that the assessee debited balance on account of Shri Dharmesh S. Shah at Rs.15,50,000/- and Rs.5,50,000/- in Prashant Shah. It was asked why the cash was received and not reflected in loan confirmation and also why the cash was immediately given by way of cheque? It was also asked as to why the provisions of section 269SS of the Act should not be invoked for accepting cash above prescribe limit. The assessee was asked to file reply on 11/11/2009. The assessee on that date neither appeared nor filed any reply. However, one taxation consultant filed a letter along with certain details. At this stage, the assessee changed its stand as earlier it was claimed to be cash loan and later claiming that it was a cash saving from financial year 1983-84 to 2006-07 from the salary earned from different companies where he worked as Manager and M/s Swan Mills Ltd. where he worked as senior officer in accounts and finance. The assessee also claimed that it was a saving of last 24 years. This stand of the assessee was found unacceptable on the plea that the assessee was working as a senior officer in accounts and finance for the last 24 years and all of sudden he deposited cash in financial year 2006-07. Further it was noticed by the Assessing Officer, from the accounts of the assessee, that assessee was investing in FDs and NSCs to get interest income. In the absence of proper explanation/clarification, the cash deposit of Rs.21,00,000/-, by following the decision from the Hon'ble Apex Court in McDowell and Company vs CTO 154 ITR 149, the deposit was treated from undisclosed sources and added to the total income of the assessee.

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2.3. On appeal, before the ld. Commissioner of Income tax (Appeals), the stand of the Assessing Officer was affirmed against which the assessee is in further appeal before this Tribunal. The relevant portion from the impugned order is reproduced hereunder:-

"I have gone through the contents of the impugned order as

well as arguments & submissions of the ld. AR of the appellant along with material available on record. I do not find any force in the arguments & submissions of Ld. Authorized Representative on the issue. The Assessing Officer has categorically given a finding of fact that the appellant tried to explain away that the cash receipts were cash loans from S/shri D.S. Shah & Prashant Shah and later on through affidavit stated that all the cash deposits in the bank were from the salaries received by him last 24 years. No prudent assessee who had earlier worked even as a branch manager in a bank and Manager Finance & Accounts, would manage his own financial affairs in such a way that he does not have exact explanation for the cash deposits in his bank accounts like in the present case. In may considered opinion, the Assessing Officer has rightly rejected the explanation during the course of assessment proceedings as not been the plausible bona fide explanation on the issue. Moreover, the explanation submitted during the appellate proceedings also is without any documentary support to generate a believe that the cash deposits are from his savings of past years out of the fund that suffered taxation at due time. Accordingly, the impugned addition is upheld for 'unexplained cash credit" and the appeal fails on all the grounds."

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If the observation made in the assessment order leading to addition in the total income, conclusion drawn in the impugned order, assertions made by ld. DR and the material available on record, if kept in juxtaposition and analyzed, uncontrovertedly the assessee had been taking different stand at different stages. Before the Assessing Officer, the assessee claimed that he took cash deposit from one Shri D.S. Shah. It is noted that immediately on receipt of cash, the amount was returned through cheque and secondly before the ld. Commissioner of Income tax (Appeals), the assessee took another stand that the cash was deposited in the bank out of the savings of about last 24 years. The assessee worked as manager in various organization that too in accounts, therefore, it is unbelievable that a person who himself had been manager accounts will keep cash for 24 years and suddenly after such a gap will deposit in the bank account. It is also noted that the explanation furnished by the assessee was found unconvincing by the ld. Assessing Officer as well as by the ld. Commissioner of Income tax (Appeals). Before this Tribunal also, as mentioned earlier, the assessee constantly had been seeking adjournment since 22/02/2012 and even on the hearing before this Bench on 12/01/2015 neither any explanation was furnished nor argued the case and simply tried to delay the proceedings by further seeking adjournment. As mentioned earlier, on a proposal by the Bench, whether the assessee is ready to argue after two days, the son of the assessee flatly refused to argue and insisted for adjournment only. It seems that the assessee has nothing to explain. It is also noted that the assessee had been earning from consultancy charges and interest income. It is not the case that the assessee is an illiterate person. In the absence of any 8 Sevantilal V. Shah

explanation, we find no infirmity in the conclusion drawn by the Authorities below. The order of the ld. Commissioner of Income tax (Appeals) is, therefore, affirmed.

Finally, the appeal of assessee is dismissed.

This Order was pronounced in the open court in the presence of ld. DR and Shri Harshad Shah, son of the assessee, at the conclusion of the hearing on 12/01/2015.

आदे श कȧ घोषणा Ǒदनांकः 12/01/2015 को कȧ गई ।

Sd/- Sd/- (Sanjay Arora) (Joginder Singh) लेखा सदःय / ACCOUNTANT MEMBER Ûयाियक सदःय / JUDICIAL MEMBER मुंबई Mumbai; Ǒदनांक Dated : 13/01/2015 f{x~{tÜ? P.S/.िन.स. आदे श कȧ ूितिलǒप अमेǒषत/Copy षत of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. ू×यथȸ / The Respondent. 3. आयकर आयुƠ(अपील) / The CIT, Mumbai. 4. आयकर आयुƠ / CIT(A)- , Mumbai

5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड[ फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स×याǒपत ूित //True Copy//

उप/ उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण, मुब ं ई / ITAT, Mumbai