Smt . Kamini Verma, Faizabad V. Income Tax Officer-I, Faizabad

CO 81/LKW/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8380 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: M P MISRA; SHAILENDRA MISRA
• Keywords: Business income; Reason to believe
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI J SUDHAKAR REDDY , ACCOUNTANT MEMBER ITA NO. 281/LKW/2012 ASSESSMENT YEAR: 2006 - 07 INCOME - TAX OFFICER - I FAIZABAD V. SMT. KAMINI V ERMA 5/17/82A, SHAKTI NGAR COLONY DEVKALI ROAD, FAIZABAD PAN: ADJPV8231E (APPELLANT) (RESPONDENT) C.O. NO.81/LKW/2012 [ARISING OUT OF ITA NO. 281/LKW/2012] ASSESSMENT YEAR: 2006 - 07 SMT. KAMINI VERMA 5/17/82A, SHAKTI NGAR COLONY DEVKALI ROAD, FAIZ ABAD V. INCOME - TAX OFFICER - I FAIZABAD PAN: ADJPV8231E ( CROSS - OBJECTOR ) (RESPONDENT) DEPARTMENT BY: SHRI. ALOK MITRA, D.R. ASSESSEE BY: S/SHRI. M. P. MISRA & SHAILENDRA MISRA, ADVOCATES DATE OF HEARING: 15.03.13 DATE OF PRONOUNCEMENT: 22.03.13 O R D E R PER J. SUDHAKAR R EDDY : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - I, LUCKNOW DATED 15.3.2012 FOR ASSESSMENT YEAR 2006 - 07. THE ASSESSEE HAS FILED CROSS OBJECTION. : - 2 - : 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL. THE ASSESSING OFFICER AT PARAS 1 AND 2 OF HIS ORDER DATED 5.11.2008 HAS BROUGHT OUT THE FACTS, WHICH ARE EXTRACTED BELOW FOR READY REFERENCE: - IN THIS CASE, CERTAIN ENQUIRIES WERE CONDUCTED BY THE INVESTIGATION WING, ALLAHABAD IN THE CASE OF SRI S.P. VERMA THE HUSBAND OF ASSESSEE. DURING THE COURSE OF ENQUIRY, CERTAIN PAPERS WERE FILED BY SRI S. P. VERMA WHICH HAVE BEEN SENT TO THE UNDERSIGNED BY THE DY. DIRECTOR OF INCOME TAX (INVESTIGATION) ALLAHABAD AND A DETAILED REPORT A S PER LET TER F. NO. DDI (INV.)/ ALLD/TEP - Y/S.P. VERMA 07 - 08/3250, DATED 1 2 - 03 - 08 PLACED ON RECORD. ON GOING THROUGH THESE PAPERS IT HAS BEEN NOTICED THAT THE ASSESSEE IS RESIDING AT '5/11/82 A, SHAKTI NAGAR COLONY, FAIZABAD.' SHE HAS FILED HER INCOME TAX RETURN FOR A.Y. 2001 - 02 AT FAIZABAD IN WARD - I ON 31 - 07 - 2001 VIDE ACKNOWLEDGEMENT SLIP NO.04532 AND RETURNS FOR A.Y. 2002 - 03 AND 2003 - 04 IN WARD - II,_FAIZABAD AND SUBSEQUENT RETURNS OF A.Y. 2004 - 05 TO 20 06 - 07 AT J AUNPU R FOR THE REASON BEST KNOW N TO THE ASSESSEE. IT SH OWS THAT THE ASSESSEE HAS B EEN FILING HER INCOME TAX RETURNS HERE AND THERE SO THAT THE GENUINENESS OF SO CALLED BUSINESS/ PROFESSIONAL ACTIVITIES OF THE ASSESSEE COULD NOT BE ASCERTAINED BY THE DEPARTMENT ON ENQUIRY IF NEEDED. DISCREET ENQUIRIES MADE INIT IALLY BY THE INVESTIGATION WING, ALLAHABAD INDICATED THAT SHE WAS JUST A HOUSEWIFE. SHE HAS BEEN FILING HER INCOME TAX RETURNS SHOWING BUSINESS INCOME JUST TO BUILD UP HER CAPITAL IN ORDER TO EXPLAIN VARIOUS INVESTMENTS BY HER FAMILY MEMBERS. RETURNS FOR A .Y. 2004 - 05 TO 2006 - 07 WERE ALSO FILED BY HER HUSBAND MR. S. P. VERMA AT JAUNPUR DESPITE HER POSTING BEING AT FAIZABAD IN U.P. JAL NIGAM. APPARENTLY IT APPEARS IT WAS DONE TO : - 3 - : INSURE THAT THE FINANCIAL TRANSACTIONS DO NOT GET NOTICED AT FAIZABAD. 3 . THE ASSE SSING OFFICER PASSED THE ORDER UNDER SECTION 147 READ WITH SECTION 144(I) OF THE ACT ASSESSING THE TOTAL INCOME AT ` 39,81,078. ON APPEAL, THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION ON THE GROUND THAT AN AMOUNT OF ` 34,18,238 WAS THE OPENING CAPITAL BALANCE AS ON 1.4.2005. 4 . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: - 1. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.34,18,238 / - MADE ON ACCOUNT OF UNEXPLAINED CAPITAL SHOWN AS ON 01/04/2005 FOR WANT OF PROOF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS FAILED TO PROVE THE BUSINESS ACTIVITIES CARRIED ON BY HER AND ALSO INCOME EARNING CAPACITY. 2. THAT ON MERIT OF THE CASE THE ORDER OF THE CIT(A) - I, LUCKNOW MAY BE SET - ASIDE AND THE ORDER O F THE ASSESSING OFFICER MAY BE RESTORED. 5 . THE ASSESSEE FILED CROSS OBJECTION ON THE FOLLOWING GROUNDS: - 1. THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN FAILING TO QUASH THE IMPUGNED ASSESSMENT ORDER, WHICH WAS PAS SED UNDER SECTION 147 /143(I) OF THE I. T. ACT, 1961, BY THE ID. A.O. WHO HAS WRONGLY ASSUMED JURISDICTION U/S SECTION 147 OF THE I. T. ACT, 1961, ON THE BAS IS OF SUSPICION AND PRESUMPTION , EVEN WITHOUT QUANTIFYING THE INCOME CHARGEABLE TO TAX WHICH HE HAD REASON TO BELIEVE THAT ESCAPED ASSESSMENT. : - 4 - : 2, THAT THE ASSESSEE (CROSS OBJECTOR) APPELLANT CRAVES PERMISSION FOR AMENDING THE AFORESAID GROUND OF CROSS - OBJECTION AND / OR RAISING FRESH GROUND OF CROSS - OBJECTION. 6 . WE HAVE HEARD SHRI. ALOK MITRA, LD. D.R . ON BEHALF OF THE REVENUE AND S/SHRI. M. P. MISRA AND SHAILENDRA MISRA, ADVOCATES ON BEHALF OF THE ASSESSEE. 7 . ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. THE ASSESSEE H AS FILED RETURNS FOR ASSESSMENT YEAR 2002 - 03 AND 2003 - 04. ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) OF THE ACT. IN THE REMAND REPORT DATED 18.2.2010, THE INCOME - TAX OFFICER - I, FAIZABAD AT PAGE 2 STATED AS FOLLOWS: - II) UNEXPLAINED CAPITAL SHOWN AS ON 1.4.2005 AMOUNTING TO RS.34,18,238/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS ADOPTED NON COOPERATIVE ATTITUDE. THUS THE A.O HAS COMPLETED EX - PARTE ASSESSMENT BY MAKING ADDITION ON ACCOUNT OF CAPITAL BALANCE SHOWN AS ON 1.4.2005 A T RS.34,18,238/ - . THE PAPER BOOK FURNISHED BEFORE YOUR GOODSELF INCLUDES COPY OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) FOR ASSESSMENT YEAR 2003 - 04 IN HER CASE WHEREIN OPENING CAPITAL BALANCE SHOWN BY THE ASSESSEE AT RS.30,91,160/ - HAS BEEN TREATED AS EXPLAINED AS OLD BALANCE. IN HIS REPLY THE ASSESSEE HAS CLAIMED THAT SHE IS BEING ASSESSED TO TAX SINCE LAST MANY YEARS AS SUCH OPENING CAPITAL BALANCE CANNOT BE TREATED AS UNEXPLAINED FOR THE YEAR UNDER CONSIDERATION AND LIABLE TO BE DELETED IN THE LI GHT OF THE : - 5 - : ASSESSMENT ORDER PASSED FOR ASSESSMENT YEAR 2003 - 04 WHERE HER CAPITAL BALANCE TILL THEN HAS BEEN TREATED AS EXPLAINED. I HAVE GONE THROUGH THE PAPER BOOK AND CASE RECORDS OF THE ASSESSEE AND FOUND THAT THE ASSESSMENT FOR THE YEAR UNDER CONSIDER ATION WAS COMPLETED ON 18.8.2009. THE OPENING CAPITAL BALANCE TREATED AS EXPLAINED, WAS NOT BEFORE THE ASSESSING OFFICER WHILE ORDER FOR THE YEAR UNDER CONSIDERATION WAS PASSED EX - PARTE AND ADDITION OF RS.34,18,238/ - WAS MADE TREATING UNEXPLAINED CAPITAL BALANCE. THUS ADDITION MADE BY THE ASSESSING OFFICER IS LIABLE TO BE SUSTAINED. 8 . A PERUSAL OF THE REMAND REPORT SHOWS THAT THE ASSESSING OFFICER IS SUPPORTING THE ADDITION, MERELY ON THE GROUND THAT THE PAPERS WERE BROUGHT BEFORE THE ASSESSING OFFICER AT THE TIME OF PASSING THE ASSESSMENT ORDER. IN OUR CONSIDERED VIEW THIS ASSERTION IS DEVOID OF MERIT. 9 . IN THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 18.8.2009 FOR ASSESSMENT YEAR 2002 - 03 , AT PAGE THE ASSESSING OFFICER STATED AS FOLLOWS: - 2. OPENING BALANCE OF CAPITAL RS.31,17,289/ - : - O N A PERUSAL OF BALANCE SHEET AS ON 31.03.2002, IT IS FOUND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PAINTS IN THE NAME AND STYLE OF 'AKASH PAINT HOUSE' . THE OPENING BALANCE OF RS.31,17 ,289 / - STATED TO HAVE BEEN TAKEN FROM THE PAST YEAR. THE ASSESSEE HAS GIVEN PROOF OF INCOME AND SHE HAS ALSO FILED THE COPY OF HER RETURN OF INCOME FOR THE A.Y.2001 - 02 SHOWING INCOME OF RS.81,590 / - IN WHICH THE CLOSING BALANCE WAS SHOWN RS.31,17,289/ - . HE NCE NO INTERFERENCE IS NEEDED IN THIS MATTER BEING OLD BALANCE : - 6 - : 10 . KEEPING IN VIEW THESE EVIDENCES, WE UPHOLD THE FOLLOWING FINDINGS OF THE LD. CIT(A): - 7. THE NEXT ISSUE IN DISPUTE PERTAINS TO THE ADDITION OF RS. 34,18,238/ - WHICH THE AO MADE BY TREATI NG THE CAPITAL AS ON 01.04.2005 AS UNEXPLAINED. THE APPELLANT CONTENDED THAT THE CAPITAL BALANCE COULD NOT BE TREATED AS UNEXPLAINED SINCE THE APPELLANT WAS ASSESSED TO TAX FOR MANY YEARS AND THE OPENING BALANCE IN THE CAPITAL ACCOUNT WAS NOTHING BUT THE C LOSING BALANCE OF THE PRECEDING YEAR AS BROUGHT FORWARD. THE APPELLANT CONTENDS THAT THE CAPITAL BALANCE COMPRISES HER 'STRIDHAN' WHICH SHE INVESTED AS INITIAL CAPITAL AT THE COMMENCEMENT OF THE BUSINESS AND THE SAVINGS OUT OF INCOME EARNED/ ACCRETION O VER THE YEARS. IT IS SEEN THAT IN THE APPELLANT'S CASE THE ASSESSMENT FOR THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 WERE COMPLETED IN THE APPELLANT'S CASE ON 18.08.2009 U/S 143(3) OF THE I.T. ACT. IT IS FURTHER SEEN THAT IN THE ORDER PASSED FOR THE A.Y. 2 002 - 03, THE AO (ON PAGE 4 OF THE ORDER) OBSERVES THE OPENING BALANCE OF RS. 31,17,289 / - IS STATED TO HAVE BEEN TAKEN FROM THE P AST YEAR. THE ASSESSEE HAS GIVEN PROOF OF INCOME AND SHE HAS ALSO FILED THE COPY OF THE RETURN OF INCOME FOR THE A.Y . 2001 - 02 SH OWING INCOME OF RS. 81,590 / - IN WHICH THE CLOSING BALANCE WAS SHOWN RS. 31,17,289 / - . HENCE NO INTERFERENCE IS NEEDED IN THIS M ATTER BEING OLD BALANCE'. SIMILARLY IN THE ORDER PASSED FOR T HE A.Y. 2003 - 04, IT IS OBSERVED BY THE AO ( ON PAGE 3 OF THE ORDER) T HAT THE OPENING BALANCE OF CAPITAL OF RS. 30,91,166 / - IS STATED TO HAVE BEEN TAKEN FROM THE PAST YEARS. THE ASSESSEE HAS GIVEN PROOF OF INCOME AND SHE HAS ALSO FILED THE COPY OF HER RETURN OF INCOME FOR THE A.Y. 2001 - 02....IN WHICH THE CLOSING BALANCE W AS SHOWN RS. 30,91,166 / - . HENCE NO INTERFERENCE IS NEEDED IN THIS MATTER BEING OLD BALANCE.' IT WILL THUS TO BE SEEN THAT THE CAPITAL BALANCE OF RS. 30,91,166/ - HAS BEEN ACCEPTED UP TO 31 . 03 . 2003. : - 7 - : FURTHER, ACCRETION TO CAPITAL IN THE SUBSEQUENT YEARS AND UP TO THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION ARE BORNE BY ACCOUNTS. I, THEREFORE, DO NOT FIND ANY MERIT IN THE AO'S ACTION IN TREATING THE CAPITAL BALANCE OF RS.34,18,238 AS UNEXPLAINED. THE ADDITION IS DIRECTED TO BE DELETED. 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 12 . COMING TO THE CROSS OBJECTION, THE SAME IS DISMISSED AS NOT PRESSED. 13 . IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22. 3.2013. SD/ - SD/ - [SUNIL KUMAR YADAV] [ J SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.3.2013 JJ: 1903 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR