IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM ITA No. 936 to 939/JP/15 Assessment Year : 2008-09 to 2011-12 ACIT, Central Circle, Ajmer Shri Manish Gupta, Vs. Behind Bus Stand Madanganj, Kishangarh PAN No. AEDPG 2855 Appellant Respondent ITA No. 952 to 955/JP/15 Assessment Year : 2008-09 to 2011-12 ACIT, Central Circle, Ajmer Shri Govind Narain Vs. Madanganj, Kishanarh PAN No. AUFPS 0340E Appellant Respondent ITA No. 948 to 951/JP/15 Assessment Year : 2008-09 to 2011-12 ACIT, Central Circle, Ajmer Shri Vasudev Somani, Vs. Madanganj, PAN No. AXTPS 5462 J Appellant Respondent Assessee by : Shri Nikilesh Kataria (CA) Revenue by : Shri R.S. Dagur (Addl.CIT) Date of Hearing : 22.07.2016 Date of Pronouncement : 21/10/2016. ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer ORDER PER SHRI VIKRAM SINGH YADAV, A.M. All these appeals have been filed by Revenue against order of ld CIT(A) where facts and circumstances of case and grounds of appeal are common. same were heard together and disposed off by this consolidated order. In case of ACIT vs. Shri Manish Gupta (ITA No. 936/JP/15), Revenue has taken following grounds of appeal: (i) Whether on facts and in circumstances of case CIT(A) was right in modifying G.P. addition made by AO on transaction facilitated by assessee by holding that only net omission income of Rs. 225/- per Rs. 1 lac could be taxed on bank deposits taken by AO as turnover without giving any specific findings on all owner of deposits made in bank accounts. (ii) Whether on facts and in circumstances of case, CIT(A) was right in not appreciating facts that assessee has not furnished names and addresses of all depositors and beneficiaries to whom payments were made and in absence of details, it was not provided by assessee that he was providing facility of bringing unrecorded sales proceeds of any sellers through his bank accounts and therefore in this situation, there was no other option except to hold that deposits in bank accounts are nothing but assessee s own trading receipts/sale proceeds and withdrawals were for corresponding purchases and expenses. (iii)(a) Whether on facts and in circumstances of case CIT(A) was right in not appreciating facts that in this case it was established by AO that assessee was engaged in business of marble trading and deposits in bank accounts represent sale proceeds. (b) AO has rightly applied rate on gross profit of trading business of marble considering amount of deposits in his bank accounts as trading receipts being unrecorded sales in her hands. 2 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer 2. In this case, issue under consideration relates to cash deposits in bank accounts maintained by assessee. AO has held these receipts as receipts from business of marble trading and ld CIT(A) has held that these receipts belong to marble traders and assessee who has facilitated these receipts should be brought to tax in terms of his commission income. 2.1 It is noted that similar facts and circumstances of case and grounds of appeal have been taken by Revenue in other cases. This Bench has already examined similar issue in case of Smt. Kusum Devi Vijayvargiya and others. During course of hearing, both parties have agreed that arguments and contentions raised in cases of Smt. Kusum Devi Vijayvargiya and others shall apply equally in cases presently before us. 2.3 Having considered submission of rival parties, decision in case of Smt. Kusum Devi Vijayvargiya and others shall apply equally in instant cases. 2.4 relevant findings in case of Smt. Kusumdevi Vijayvargiya & others (ITA No. 942/JP/15 & others) dated 20.10.2016 contained in para 2.3 to 2.14 which are reproduced as under: 2.3 We have heard rival contentions and perused material available on record. issue under consideration relates to cash deposits amounting to Rs.11,37,60,458 made in six bank accounts maintained by assessee. AO has held these receipts as receipts from business of marble trading and ld CIT(A) has held that these receipts belong to marble traders and assessee who has facilitated these receipts should be brought to tax in terms of 3 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer her commission income. Undisputedly, these bank accounts are opened in name of assessee and operated by assessee herself with assistance of her husband. stand of assessee is that she is not carrying on any business in nature of marble trading as alleged by AO. She has further stated that all these bank accounts were used by various marble traders operating in and around Kishangarh to bring cash against their unrecorded sales made to various parties from all over India. assessee further submitted that cash deposited by various parties was subsequently withdrawn and handed over to marble traders to whom said money belong. assessee submitted that for activity of facilitating receipt of cash in her bank accounts and, subsequent withdrawal and handing over cash to marble traders, she used to get commission from said marble traders. Here it is relevant to note that entire transactions in various bank accounts in terms of monitoring cash deposits as well as subsequent withdrawal and handing over cash has been carried out by assessee herself with assistance of her husband to whom she has authorised and not by marble traders. Here it is also relevant to note that AO has also stated in his order about said market practice in business of marble trading where there is large scale under invoicing and under billing of sales. ld. AO has stated that generally, for obtaining sale consideration of actual transaction from buyers located outside hometown or throughout India, traders obtain part amount through cheques and for balance amount, they have been using their confidants (facility providers). confidents are having multiple bank accounts either in their name or in names of their family members or concern/forms. Their bank account numbers are intimated to buyers who deposit balance amount which is actually on-money, in bank 4 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer account of confidants. buyers deposit amount below Rs. 50,000/- to avoid mentioning PAN on pay-in-slips. After receipt of amount in bank account, confidants i.e, facility providers withdraw amount of on- money and hand over to beneficiaries i.e. sellers. AO has therefore, given his prima facie finding that assessee is found prima facie engaged in providing facility to bring cash payments of marble traders by allowing them to use her bank account which is in conformity with prevailing market practice in this region. 2.4 said prima facie finding by AO is on basis of statement of asseseee and her husband which have been recorded during course of survey. With view to arrive at definitive finding and to corroborate said statements given by assessee in terms of acting as facility providers, AO has asked assessee specific questions during course of assessment proceedings whereby assessee was asked to provide party-wise details of deposits made in all bank accounts as well as names and addresses of all beneficiaries/marble traders to whom cash was withdrawn and handed over by assessee. 2.5 In compliance, assessee has stated that details of marble traders alongwith addresses were furnished to Investigation wing who has carried out survey, recorded her and her husband s statement and also obtained various exercise book, diaries and loose papers. On perusal of statement of assessee s husband which was recorded during course of survey and placed on record, we find that in response to various questions such as question No. 11,14,15,16 & 19 which are raised in context of various exercise book, diaries and loose papers found during course of survey, assessee s husband has stated that all these documents contained data in terms of names and addresses of various parties who have deposited money in her various 5 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer bank accounts and also details of various marble traders/beneficiaries to whom that money belongs. 2.6 Here fundamental question that arises for consideration is where cash has been found deposited in bank accounts maintained by assessee, onus to prove that cash belongs to assessee or to someone else lies on whom- on assessee or on Revenue. In this regard, we refer to decision of Hon ble Supreme Court in case of Chuharmal vs CIT (1988) 172 ITR 0250 wherein Hon ble Supreme Court has laid down following proposition in law: High Court in its order noted that raiding party by virtue of search entered into bedroom of assessee on 12th May, 1973, and seized watches. panchnama was prepared. Department found that assessee was owner. Sec. 110 of Evidence Act is material in this respect and High Court relied on same which stipulates that when question is whether any person is owner of any-thing of which he is shown to be in possession, onus of proving that he is not owner is on person who affirms that he is not owner. In other words, it follows from well-settled principle of law that normally, unless contrary is established, title always follows possession. In facts of this case, indubitably, possession of wrist- watches was found with petitioner. petitioner did not adduce any evidence, far less discharge onus of proving that wrist-watches in question did not belong to petitioner. Hence, High Court held, and in our opinion rightly, that value of wrist-watches is income of assessee. In this connection, reference may be made to views expressed by Justice Tulzapurkar, as his Lordship then was, of Bombay High Court in case of J.S. Parkar vs. V.B. Palekar (1974) 94 ITR 616 (Bom) : TC42R.1775, where, on difference of opinion between Justice Deshpande and Justice 6 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer Mukhi, Justice Tulzapurkar agreed with Justice Deshpande and held on question whether evidence established that petitioner was owner of gold seized, though there was no direct evidence placed before taxing authorities to prove that petitioner had actually invested moneys for purchasing gold in question, inference of ownership of gold in petitioner in that case rested upon circumstantial evidence. There also gold was seized from motor launch belonging to petitioner in that case. There, contention was raised that provision in s. 110 of Evidence Act where person was found in possession of anything, onus of proving that he was not owner was on person who affirmed that he was not owner, was incorrect and inapplicable to taxation proceedings. This contention was rejected. High Court of Bombay held that what was meant by saying that Evidence Act did not apply to proceedings under Act was that rigour of rules of evidence contained in Evidence Act was not applicable but that did not mean that when taxing authorities were desirous of invoking principles of Act in proceedings before them, they were prevented from doing so. Secondly, all that s. 110 of Evidence Act does is that it embodies salutary principle of common law jurisprudence which could be attracted to set of circumstances that satisfy its conditions. (Emphasis supplied ) 2.7 In light of above, it is crystal clear that where cash is found in possession of assessee by virtue of deposits in her bank accounts maintained and operated by her, onus is on assessee to discharge burden that cash doesn t belong to her and belong to marble traders. Further, assessee has to adduce necessary evidence to substantiate her claim. 7 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer 2.8 next question that arises for consideration is whether in instant case, assessee has discharged her onus in terms of explaining nature and source of deposits and withdrawals in various bank accounts throughout year. assessee has stated in her statement recorded during course of survey that she has given particulars of depositors and beneficiaries to investigation wing. Admittedly, assessee was therefore having knowledge and access to information/data in terms of various depositers and beneficiaries. assessee could have submitted said information/data to AO during course of assessment proceedings. There is nothing on record to suggest that assessee was not having access to said information or was prevented by sufficient cause from sharing these information with AO. It is not plea of assessee all these documents were seized during course of survey and she was not having access to all these documents which were admittedly maintained by her while transacting through her bank accounts. In our view it is for assessee in whose bank accounts money has been found deposited to explain nature and source of such deposits and it is in respect of every such transaction, assessee has to provide necessary explanation to AO. Similarly, claim of asseseee that money was withdrawn and given to various beneficiaries has to be explained for each of transactions and necessary linkage/nexus has to be established by assessee. same is in conformity with proposition of law laid down by Hon ble Rajasthan High Court in case of R.S. Rathore 212 ITR 350 (Raj.). In that case, even though decision were rendered in context of section 68, to our mind same is equally relevant for facts under consideration even though assessee has not maintained books of accounts and AO has not invoked section 68 specifically in instant case. Hon ble High Court has observed as under: 8 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer Sec. 68 refers to cash credits which are found in books of assessee. If explanation offered by assessee is not satisfactory, then sum so credited may be charged to income-tax as income of assessee in previous year. burden, therefore, is on assessee to explain satisfactorily with regard to amounts which have been credited in books of account by assessee. source and nature of receipt has to be proved by assessee, and if he fails to prove satisfactorily source and nature of amount received, assessing authority is entitled to draw inference that receipt is assessable income of assessee. Tribunal has cast doubts with regard to investments and has even observed that some of them are not even genuine. duty was cast on Tribunal to have either remitted matter to CIT(A) or to assessing authority to find out correct position. There may be number of creditors of similar nature, but assessee has to discharge his burden in respect of all of them. burden was to be discharged by assessee and all creditors were not produced, their addresses were not given and cogent reasons were given by ITO. When Tribunal was of view that some of investments were not genuine it should not have upheld order of CIT(A) and proper course was to set aside order of CIT(A) with direction to either allow such amounts for which assessee has been able to prove satisfactorily investment or to give him opportunity to prove such unexplained investments. observations of Tribunal makes it clear that Tribunal itself was in doubt about correctness of its own conclusion when it observed that some of cash credits were not genuine. Thus, finding recorded by Tribunal that some of cash credits were not genuine vitiates order passed by it. burden to be discharged by assessee has not been discharged and order of CIT(A) could have been confirmed only if Tribunal was satisfied that 9 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer all investments were satisfactorily explained. Tribunal itself was not in position to feel satisfied with regard to explanation submitted and observed that some of investments were not genuine. It was not justified on part of Tribunal in such case to uphold order of CIT(A). While explaining various credits and investments, it may be possible that assessee may be successful in explaining some of them, but that does not by itself mean that entire investments have to be considered as explained. Even lapse of time or inability of assessee would not make unexplained investment explained one. It is each and individual entry on which mind has to be applied by taxing authority when explanation is offered by assessee. If no explanation has been offered in respect of particular entry, taxing authority will be justified in coming to conclusion that said investment is unexplained. It is not totality of credit entries which are to be allowed or to be disallowed. This work has to be done on basis of explanation offered for different entries and if explanation of assessee is acceptable on basis of evidence produced before taxing authority, Tribunal can come to conclusion that such investment is fully explained. In these circumstances, Tribunal was not justified in confirming order of CIT(A) and there is contradiction in its decision in holding that all investments cannot be treated as unexplained though some of them are certainly not genuine. matter is remitted back to Tribunal to consider each individual investment for which explanation has been given. If Tribunal is satisfied with explanation submitted by assessee, then investment to that extent has to be allowed and entire sum cannot be allowed in general. (Emphasis supplied) 2.9 In our view, merely by making statement before Assessing officer that details of depositors and beneficiaries were submitted to 10 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer investigation wing, onus cast on assessee is not discharged. It is for assessee to explain each and every entry of deposit and withdrawal in bank accounts and corroborate it with details mentioned in notebooks and other loose papers found during course of survey. There is nothing on record to suggest that any such explanation and reconciliation of various transactions were submitted either during course of survey or during assessment proceedings or even during appellate proceedings. Once said exercise has been undertaken and examined, question of looking at circumstantial evidences or theory of probability as to whether assessee has necessary infrastructure to undertake marble trading can be looked at. Where transaction details are available, same should take precedence over circumstantial evidence. Assessing officer thereafter has to apply his discretion and see whether he is comfortable with explanation of assessee or not and then take final view in matter. 2.10 Having said that, we are also intrigued by inaction on part of Revenue and in particular AO whereby he has failed to consider details of depositors and beneficiaries as claimed to be submitted by assessee during course of survey. Ideally, AO should have confronted assessee with details found during survey and sought explanation regarding various deposits and withdrawals in respect of various bank accounts maintained by assessee, details in respect of which has been obtained by AO by issuing notices calling for information from various banks. It seems to us that reason for inaction on part of AO is account of AO not having necessary records of survey maintained by Investigation Wing. There thus seems to be clear lack of co-ordination between Investigation wing and Assessing Officer handling assessment. We do not see justifiable reason especially where case of assessee alongwith 11 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer other similar assesses were centralized before single assessing authority, why survey records cannot be shared with said authority so that efforts initiated through survey can lead to logical conclusion by arriving at appropriate assessment in hands of right persons. fact is that huge cash has been found deposited in bank accounts maintained by assessee and it is assessee s plea that money does not belong to her and it belongs to some other beneficiaries. money therefore belongs to someone who should be brought to tax as per law where plea of asssessee is accepted. 2.11 Now looking at order of ld CIT(A), we find that even ld CIT(A) has merely gone through survey reports and statements recorded during course of survey. However, as we have noted above, with view to arrive at definitive finding, there is necessity to corroborate said statements given by assessee in terms of acting as facility providers. And for that, information relating to party-wise details of deposits made in all bank accounts as well as names and addresses of all beneficiaries/marble traders to whom cash was withdrawn and handed over by assessee is required to be examined. It is for assessee to explain each and every entry of deposit and withdrawal in bank accounts and corroborate it with details mentioned in notebooks and other loose papers found during course of survey and necessary linkage/nexus has to be established by assessee. There is nothing on record to suggest that any such explanation and reconciliation of various transactions were submitted during appellate proceedings or examined by ld CIT(A). 2.12 In our view, matter requires deeper and coordinated examination by authorities at higher level to bring correct facts on record which 12 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer should conclusively establish that either assessee is owner of money found deposited in her bank accounts as claimed by AO or assessee is merely facilitator and earns commission income as claimed by assessee. Accordingly, we set-aside matter to file of ld CIT(A) to examine matter afresh with following directions: (1) assessee shall provide all requisite details in terms of names and address and other requisite particulars of depositors as well as of beneficiaries; (2) assessee has to explain nature and source of transactions in terms of deposits and establish necessary linkage between deposits and subsequent withdrawals to various individual beneficiaries; (3) ld CIT(A) shall call for records maintained by Investigation Wing in respect of survey proceedings and confront same to assessee to provide her suitable opportunity; (4) beneficiaries to be confronted with details submitted by asssessee and call for their confirmation and/or personal appearances and/or coordinate with their respective CITs/Assessing officers; and (5) Needles to say, both parties shall be provided suitable opportunity and they shall equally cooperate and shall submit necessary explanation/information/documents as available and required by ld CIT(A). 2.13 With above directions, we set-aside matter to file of ld CIT(A) for fresh examination and appeal of Revenue is allowed for statistical purposes. 2.15 In light of above, following decision of this Bench taken in case of Smt. Kusumdevi Vijayvargiya & others (supra), our observations and decision in 13 ITA No. 936 to 939/JP/15 Shri Manish Gupta vs. ACIT, CC, Ajmer ITA No. 936/JP/15 & others shall apply mutatis-mutandis to these appeals as well. appeals filed by Revenue in all these cases are thus allowed for statistical purposes. Order pronounced in open court on 21/10/2016. Sd/- Sd/- (KUL BHARAT) (VIKRAM SINGH YADAV) Judicial Member Accountant Member Jaipur Dated:- 21/ 10/2016 Pillai Copy of order forwarded to: s 1. Appellant- ACIT, Central Circle, Ajmer 2. Respondent- Shri Manish Gupta & others, Kishangarh 3. CIT (Central), Jaipur 4. CIT(A)-II, Udaipur 5. DR, ITAT, Jaipur 6.Guard File (ITA No.936 to 939/JP/2015) By order, Assistant. Registrar. 14 ACIT, Central Circle, Ajmer v. Manish Gupta