Commissioner of Income Tax-II vs Shailesh Rasiklal Mehta

D.A. Mehta, J.—The appellant-revenue has proposed the following two questions:

[A] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 2,55,685 made u/s 68 and as confirmed by the CIT(A)?

[B] Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 30,00,000 made in respect of unaccounted investment and as confirmed by the CIT(A)?

The assessment year in question is 2003-04. The Assessing Officer made addition of Rs. 2,55,685 and in relation to this the appellant has stated as under:

The assessee had deposited cash of Rs. 58,500 on 8-4-2002 without having cash balance on hand and further deposited a sum of Rs. 5,50,000 on 1-8-2002, whereas cash on hand was only Rs. 3,52,815. Since the assessee could not furnished details regarding the source of these cash deposits, an amount of Rs. 2,55,685 (Rs. 58,500 + Rs. 1,97,185) was added to the total income of the assessee.

Admittedly, the aforesaid addition was made on the basis of rejection of books of account for the earlier assessment year viz., assessment year 2002-03 by stating that closing balance as on 31-3-2002 was not acceptable.

The assessee carried the matter in appeal before Commissioner (Appeals) who sustained the addition based on his own order for earlier assessment year i.e., assessment year 2002-03. When the matter was carried further before the Tribunal the appeal of the assessee was allowed by the Tribunal for the reasons recorded in paragraph Nos. 31 and 31.1 of the impugned order dated 4-5-2007.

In relation to the second question the Assessing Officer made addition of Rs. 30 lakhs which was deposited with J.B. Upadhyay, with whom the assessee had financial transactions. In relation to this the appellant has stated as under:

[E] The next issue pertains to addition of Rs. 30,00,000, being withdrawal in cash on 29-3-2003. A perusal of the bank statement of the assessee shows that a sum of Rs. 30,00,000 had been withdrawn by bearer cheque on 29-3-2003. Examination of the instrument showed that the bearer cheque had been encashed by one Shri Manubhai Bhavsar, who in his statement recorded on 17-3-2006, admitted that the bearer cheque had been encashed by him and handed over to the Manager of M/s. Jayshanker B. Upadhyay. The Assessing Officer treated the same as unaccounted investment made with M/s. Jayshankar B. Upadhyay and added the same as assessee''s income from undisclosed sources u/s 69.

The assessee did not succeed in appeal before Commissioner (Appeals) and carried the matter further before the Tribunal. The Tribunal has allowed the appeal of the assessee on this count as recorded in paragraph No. 32 of the impugned order.

Heard learned Standing Counsel for the appellant. She was not in a position to point out that the earlier order of the Tribunal viz., order for assessment year 2002-03 has been modified in any manner. It was submitted that once the Assessing Officer and Commissioner (Appeals) had not accepted the books of account of the assessee for the preceding year availability of cash in hands of the assessee during the previous year under consideration could not have been considered by the Tribunal.

In relation to the second ground it was submitted that the addition was made as unexplained investment u/s 69 of the Act by the Assessing Officer and the Explanation tendered by the assessee were not found acceptable. Therefore, the Tribunal ought not to have interfered with the order made by the Assessing Officer as confirmed by Commissioner (Appeals).

In relation to the first question it is an admitted fact that there was no evidence to disbelieve or disprove the fact that sufficient cash was available in the cash book on the two dates for making the deposits and there was no reason found by the Tribunal for disbelieving the books of account maintained by the assessee as narrated in paragraph No. 31.1 of the impugned order.

These are pure findings of fact recorded after appreciation of evidence and do not give rise to any question of law, much less a substantial question of law.

Insofar as the second addition of Rs. 30 lakhs is concerned the findings of the Tribunal read as under:

Coming to the addition of Rs. 30 lakhs, we are of the opinion that the Assessing Officer having accepted the factum of withdrawal of cash of Rs. 30 lakhs from assessee''s bank account, by said Shri Manubhai Bhavsar, who had stated to have deposited the same with M/s. J.B. Upadhyay, then how the deposit of Rs. 30 lakhs by the assessee with M/s. J.B. Upadhyay could be considered as unexplained as beyond anybody''s understanding. If the Assessing Officer was relying on the testimonials of ''Mandali'', then instead of giving a finding that deposits of Rs. 30 lakhs with J.B. Upadhyay was unexplained should have given a finding that cash of Rs. 30 lakhs shown by the assessee in its books of account as a result of this withdrawal was not available, but this is not the revenue''s case. Even otherwise, the revenue''s case being that cash of Rs. 30 lakhs was withdrawn from the assessee''s account by Shri Manubhai Bhavsar and was deposited with M/s. J.B. Upadhyay, then revenue''s stand that deposit of Rs. 30 lakhs with M/s. J.B. Upadhyay was unexplained cannot be sustained. The addition is therefore, deleted.

Thus it is apparent that there is no dispute about the amount of Rs. 30 lakhs having been withdrawn in cash from the Bank Account of the assessee by Shri Manubhai Bhavsar who has stated that the same was deposited with J.B. Upadhya.

In this factual scenario the Tribunal was justified in coming to the conclusion that there was no question of treating the deposit in question as unexplained and no addition was warranted.

In the result, in absence of any legal infirmity in the impugned order of Tribunal the appeal is dismissed as none of the questions, as proposed or otherwise, can be termed to be questions of law, much less substantial questions of law.