ITO, Bangalore V. Sri. K.S. Shashidhar, Bangalore

ITA 1018/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51383 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 19-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI N.K.SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.924(BANG)/2010 (ASSESSMENT YEAR: 2006-07) SHRI K.S.SHASHIDHAR, ADVOCATE, NO.9, I CROSS, KEMPANNA BLOCK, SESHADRIPURAM MAIN ROAD, BANGALORE-56020. PAN: ATRPS9819D VS. APPELLANT INCOME-TAX OFFICER, WARD-5(1), BANGALORE. RESPONDENT AND ITA NO.1018(BANG)/2010 (ASSESSMENT YEAR: 2006-07) (BY THE DEPARTMENT) ASSESSEE BY: SHRI R.CHANDRASHEKAR. REVENUEBY : SHRI P.H.NARGUNDKAR. DATE OF HEARING: 01-12-2011. DATE OF PRONOUNCEMENT: 16-12-2011 O R D E R PER GEORGE GEORGE, K, JM: THESE CROSS APPEALS ARE DIRECTED AGAINST THE CIT(A) S ORDER DATED 15-3-2010. THE RELEVANT ASSESSMENT YEAR IS 2006- 07. SINCE COMMON ISSUES ARE RAISED IN THESE APPEAL S, THEY ARE HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA 924 & 1018(BANG)/2010 PAGE 2 OF 9 2. IN THE ASSESSEES APPEAL (ITA NO.924(BANG)/2010) , THE ISSUE RAISED IS WHETHER THE CIT(A) IS JUSTIFIED IN SUSTAINING ADDITION OF ` .12,67,000/- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE LIABLE TO TAX U/S 69 OF THE IT ACT. IN TH E REVENUES APPEAL (ITA NO.1018(BANG)/2010), THE GROUND RAISED IS WHETHER THE CIT(A) IS JUSTIFIED IN DIRECTING THE AO TO DELETE AN AMOUNT OF ` .15,45,200 OUT OF THE TOTAL ADDITION OF ` .28,12,200/. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSE SSEE IS AN INDIVIDUAL. THE ASSESSEE IS AN ADVOCATE BY PROF ESSION. FOR THE CONCERNED ASSESSMENT YEAR RETURN OF INCOME WAS FILED ON 29-6-2006 DECLARING INCOME OF ` .3,28,100/-. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO NOTICED THAT THERE W ERE CASH DEPOSITS IN THE BANK. ACCORDING TO THE AO, HE HAD I SSUED A PROPOSITION LETTER CALLING FOR OBJECTIONS IF ANY FO R ADDITION OF ` .13,94,483/-. SUBSEQUENTLY THE AO GOING THROUGH THE BANK ACCOUNTS OF THE ASSESSEE NOTICED THAT THE ASSESSEE HAD MADE A TOTAL DEPOSIT OF ` .31,88,700/- DURING THE PREVIOUS YEAR RELEVANT TO THE CONCERNED ASSESSMENT YEAR. THE DETAILS OF D EPOSITS MADE ARE AS FOLLOWS: CASH DEPOSIT MADE INTO ING VYSYA BANK 13,89,10 7/- CASH DEPOSITS MADE INTO CORPORATION BANK 17,99,59 3/- ------------ 31,88,700/- ====== THE ASSESSEE WAS ASKED TO PRODUCE PROOF WITH REFERE NCE TO SOURCE OF THESE DEPOSITS. IT WAS THE CLAIM OF THE A SSESSEE THAT ITA 924 & 1018(BANG)/2010 PAGE 3 OF 9 THE AMOUNTS WERE ADVANCED TO HIS BROTHER SHRI PRAKA SH S.KARMADI AMOUNTING TO ` .10,67,000/- AND HIS BROTHER HAD RETURNED AN AMOUNT OF ` .6,52,000/-. THE AMOUNTS RETURNED BY HIS BROTHER WERE DEPOSITED IN ABOVE MENTIONED BANKS . IT WAS SUBMITTED THAT THE WITHDRAWALS FROM THE BANK WERE L ATER RE- DEPOSITED. IT WAS FURTHER SUBMITTED THAT THE WITHDR AWALS FROM ING VYSYA BANK WERE DEPOSITED IN CORPORATION BANK A ND VICE VERSA. THE AO, HOWEVER, REJECTED THE CONTENTIONS/SUBMISSI ONS RAISED BY THE ASSESSEE AND HE OBSERVED THAT THE ASS ESSEE HAS NO EVIDENCE TO PROVE THAT THE AMOUNTS DEPOSITED WER E RECEIVED ONLY FROM HIS BROTHER. HE FURTHER OBSERVED THAT THE CLAIM OF THE ASSESSEE THAT MONIES WITHDRAWN FROM BANK WERE LATER RE- DEPOSITED IS BASELESS. THE AO ALSO OBSERVED THAT TH E CHEQUES WERE ISSUED BY ASSESSEE TO SHRI N.T.URS, SHRI D.MAGAJI AND THERE IS NOTHING ON RECORD/EVIDENCE TO SUGGEST THAT AMOUNTS HAVE BEEN RECEIVED BACK TO LINK THE PUMPING OF MONE Y INTO THE BANK ACCOUNTS. AFTER MAKING THE ABOVE OBSERVATIONS , THE AO HELD THAT THE ASSESSEE HAS NO EXPLANATION FOR THE S OURCE IN RESPECT OF DEPOSITS MADE AMOUNTING TO ` .31,88,700/- AND ACCORDINGLY BROUGHT TO TAX ` .28,12,200 AFTER GIVING CREDIT FOR A SUM OF ` .3,76,500 BEING DIFFERENCE BETWEEN THE PROFESSIONAL FEES OF ` .5,99,941/- AND 2,23,441 COVERED BY FORM 16A. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS SUBMIT TED BEFORE THE ITA 924 & 1018(BANG)/2010 PAGE 4 OF 9 FIRST APPELLATE AUTHORITY THAT THE AOS PROPOSITION LETTER PROPOSING TO MAKE ADDITION OF ` .13,94,483/- WAS NEITHER SERVED ON THE ASSESSEE NOR ON HIS COUNSEL. HOWEVER, THE AS SESSMENT WAS COMPLETED DETERMINING THE TOTAL INCOME AT ` .31,46,823/- HOLDING THAT THERE IS AN UNEXPLAINED CASH DEPOSITS IN THE BANKS TO THE TUNE OF ` .28,12,200 AS AGAINST ` .13,94,483 ALLEGED TO BE PROPOSED. WHILE CONCLUDING THE ASSESSMENT, THE AO H AS NOT CONSIDERED THE SUM OF ` .6,52,000 RECEIVED FROM HIS BROTHER P.S.KARMADI, THOUGH CONFIRMATION LETTER WAS FILED A ND SHRI KARMADI IS ASSESSED TO TAX. THE WITHDRAWALS FROM TH E BANKS HAS TOTALLY IGNORED. THE CASH BOOK IS TOTALLY IGNORED. THE MONEYS WHICH WERE PAID AND RETURNED TO THE ASSESSEE WHICH WERE PART OF WITHDRAWALS FROM BANK HAS TREATED AS NOT AVAILAB LE FOR RE- DEPOSIT. EACH ONE OF THE DEPOSIT WAS EXPLAINED. THE MONEYS WITHDRAWN FRO ING VYSYA BANK TO DEPOSIT IN CORPORAT ION BANK AND VICE VERSA ARE IGNORED BY THE AO WITHOUT ANY RE ASONS. 4. THE CIT(A), AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, DELETED THE ADDITION MADE U/S 68 FOR A SU M OF ` .17,99,593 HOLDING CASH DEPOSITS MADE WITH CORPORAT ION BANK ARE CLEARLY EXPLAINED AND NO ADDITION IS CALLED FOR . THE CIT(A), AFTER EXAMINING THE ACCOUNT OF CORPORATION BANK NOT ICED THAT THERE ARE BOTH CASH AS WELL AS CHEQUE DEPOSITS. THE CIT(A) HELD CASH DEPOSITS WAS ON ACCOUNT OF REPAYMENT MADE BY N .T.URS IT WAS FURTHER HELD, THIS ACCOUNT WITH CORPORATION BAN K WAS DISCLOSED AND PROFESSION FEES WAS DEPOSITED IN THAT ACCOUNT. ITA 924 & 1018(BANG)/2010 PAGE 5 OF 9 FOR THESE REASONS, THE ADDITION MADE ON ACCOUNT OF CASH DEPOSITS MADE WITH CORPORATION BANK WAS DELETED. T URNING HIS ATTENTION TO CASH DEPOSITS WITH ING VYSYA BANK, THE CIT(A) NOTICED THAT THE AMOUNTS WERE TRANSFERRED TO HIS BR OTHERS ACCOUNT AGGREGATING TO ` .12,67,000/-. IT WAS FURTHER NOTICED THAT THE AMOUNT SO TRANSFERRED TO ASSESSEES BROTHE RS ACCOUNT WAS FURTHER TRANSFERRED TO SHRI DINESH TATPATI. TH E CONFIRMATION ISSUED BY HIS BROTHER WITH REGARD TO R EPAYMENT WAS ALSO EXAMINED AND IT WAS NOTICED THAT THERE WAS A CONTRADICTION WITH REGARD TO THE ACTUAL TRANSACTION AS REVEALED IN THE BANK ACCOUNT. FOR THESE REASONS, THE CIT(A) CONFIRMED THE ADDITION OF ` .12,67,000/- AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. THE RELEVANT FINDING OF THE CIT(A) FRO M PARA 3.10 TO 3.13 READS AS FOLLOWS: 3.10 I HAVE GONE THROUGH THE COPY OF THE BANK STATEMENT BEARING NO.201110038873 OF ING VYSYA BANK, HIGH COURT BUILDING BRANCH, DR. AMBEDKAR VEEDI, BANGALORE AND OBSERVED THAT, DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, CASH DEPOSITS WERE MADE INTO THE ACCOUNT TO THE EXTENT OF ` .12,31,150/-. IN TURN, THE AMOUNT WAS TRANSFERRED TO THE BANK ACCOUNT BEARING NO.14101027347 AT ING VYSYA BANK AT KVV SANGHA BUILDING, 1 ST FLOOR, AZAD PARK ROAD, DHARWAR OPERATED IN THE ACCOUNT NO.201110038873 WAS TRANSFERRED TO THE ACCOUNT NO.14101027347 ON THE FOLLOWING DATES: DATE AMOUNT REMARKS 16/5/2005 2,00,000 IN TURN, THE AMOUNT WAS PAID TO DINESH TATPATI ON 16/5/2005 28/6/2005 2,92,000 IN TURN AN AMOUNT OF ` .2,91,000 WAS PAID TO SHRI DINESH TATPATI ON 30/6/2005 ITA 924 & 1018(BANG)/2010 PAGE 6 OF 9 24/10/2005 2,90,000 IN TURN AN AMOUNT OF ` .2,89,000 WAS PAID TO SHRI DINESH TATPATI ON 25/10/2005 27/11/2005 2,91,000 IN TURN AN AMOUNT OF ` .2,91,000 WAS PAID TO SHRI DINESH TATPATI ON 30/11/2005 6/1/2006 1,94,000 IN TURN AN AMOUNT OF ` .1,94,000 WAS PAID TO SHRI DINESH TATPATI ON 6/1/2006 3.11 FURTHER, IT IS ALSO OBSERVED THAT THE MAJOR AMOUNT WAS CREDITED INTO THE ACCOUNT NO. 14101027347 STANDING IN THE NAME OF SHRI PRAKASH S.KALAMADI BEING TRANSFER FROM THE APPELLANTS ACCOUNT I.E. NO.201110038873, WHICH INDICATES THAT THE AFORESAID ACCOUNT IS NOTHING BUT CONDUIT OF UNDISCLOSED INVESTMENT OF THE APPELLANT. 3.12 A PERUSAL OF THE CONFIRMATION OF THE ACCOUNT S FROM HIS BROTHER REVEALS THAT TILL 28/6/2005 AN AMOUNT OF ` .6,47,000 HAS BEEN PAID BY THE APPELLANT TO HIS BROTHER (SHRI P.S.KALAMADI) AND AGAINST THE SAME TILL 5/10/2005 HE HAS RECEIVED BACK AN AMOUNT OF ` .7,42,000/- WHICH IS IN EXCESS OF ` .90,000/-. HOWEVER, AS NARRATED ABOVE, THE AMOUNT WAS PAID TO ONE SHRI DINESH TATPATI FROM THE ACCOUNT OF HIS BROTHER THAT THE AMOUNT WAS RECEIVED FROM SHRI TATPATI AND IN TURN REPAID TO THE APPELLANT. THUS THE CONFIRMATION FILED BY HIS BROTHER CONTRADICTS THE ACTUAL TRANSACTION AS REVEALED IN THE BANK ACCOUNTS . VIDE THE REMAND REPORT DATED 21/8/2009, THE AO OBSERVED THAT THE APPELLANT HAS DISCLOSED ONLY ONE BANK ACCOUNT TO THE DEPARTMENT I.E. CORPORATION BANK AND THE ACCOUNT HELD AT ING VYSYA BANK HAS NOT BEEN DISCLOSED TO THE DEPARTMENT. 3.13 THEREFORE, THE CASH DEPOSITED IN THE ACCOUNT NO.201110038873 REMAINS UNEXPLAINED. HENCE THE ADDITION OF ` .12,67,000 IS CONFIRMED AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. ITA 924 & 1018(BANG)/2010 PAGE 7 OF 9 5. THE ASSESSEE, BEING AGGRIEVED BY THE SUSTENANCE OF ADDITION AMOUNTING TO ` .12,67,000/- IS IN APPEAL BEFORE US. WHEREAS THE REVENUE, BEING AGGRIEVED BY THE DELETIO N OF ADDITION AMOUNTING TO ` .15,45,200/-, HAS FILED THE APPEAL BEARING NO.1018/BANG/2010. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME-T AX AUTHORITIES. THE LEARNED DEPARTMENTAL REPRESENTATI VE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE AO. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CIT(A) SUSTAINED ADDITION O F ` .12,67,000/- WHILE EXAMINING ASSESSEES BANK ACCOUN T MAINTAINED WITH ING VYSYA BANK, WHEREAS A SUM OF ` .15,45,200/- HAS BEEN DELETED WHILE EXAMINING THE A SSESSEES BANK ACCOUNT WITH CORPORATION BANK. THE ADDITION OF ` .12,67,000 HAS BEEN SUSTAINED BY THE FIRST APPELLAT E AUTHORITY NOTICING THAT THE AMOUNTS WERE TRANSFERRED FROM THE ASSESSEE TO HIS BROTHERS ING VYSYA BANK ACCOUNT. THE AMOUNTS IN TURN WERE TRANSFERRED TO SHRI DINESH TATPATI. PRIOR TO THE TRANSFER OF MONEY FROM ASSESSEES ACCOUNT TO HIS BROTHERS ACCO UNT ON VARIOUS DATES, IT WAS NOTICED THAT THERE WAS CASH D EPOSITS. IN THE INSTANT CASE, WE ARE OF THE VIEW THAT THERE HAS BEEN NO PROPER EXAMINATION DONE, NAMELY WHETHER THESE CASH DEPOSITS CAN BE LINKED TO WITHDRAWALS FROM THE CORPORATION B ANK ACCOUNT OR WHETHER IT IS REPAYMENT OF MONEY WHICH THE ASSES SEE HAD GIVEN TO HIS BROTHER AND OTHERS. THE CIT(A)S OBSE RVATION AT ITA 924 & 1018(BANG)/2010 PAGE 8 OF 9 PARA.3.12 OF HIS IMPUGNED ORDER THAT THERE ARE NO ENTRIES IN THE ACCOUNT OF ASSESSEES BROTHER THAT THE AMOUNT W AS RECEIVED FROM SHRI DINESH TATPADI AND IN TURN REPAID TO THE APPELLANT IS NOT RELEVANT TO THE ISSUE ON HAND. THE TRANSACTI ON BETWEEN THE ASSESSEES BROTHER AND DINESH TATPADI IS IMMATE RIAL AS REGARDS THE CASH DEPOSITS IN THE ASSESSEES BANK AC COUNTS. SINCE IT IS THE ASSESSEES CASE THAT MONEYS WITHDRA WN FROM ING VYSYA BANK TO DEPOSIT IN CORPORATION BANK AND VICE VERSA ARE IGNORED BY THE IT AUTHORITIES, THE ENTIRE MATTER NE EDS A PROPER EXAMINATION. BOTH THE BANK ACCOUNTS MAINTAINED BY ASSESSEE NEEDS TO BE VERIFIED. THEREFORE, BOTH THE ASSESSEE S AND REVENUES APPEAL ARE RESTORED TO THE FILES OF THE A O. HE SHALL CALL FOR THE SOURCE OF EACH OF THE CASH DEPOSITS AN D ACCORDINGLY CONCLUDE WHETHER THE ADDITION IS WARRANTED. THE MAT TER SHALL BE DISPOSED AS EXPEDITIOUSLY AS POSSIBLE AFTER AFFORDI NG A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, THE ASSESSEES APPEAL AS WELL AS THE REVENUES APPEAL ARE ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER,2011 SD/- SD/- (N.K. SAINI) ACCOUNTANT MEMBER (GEORGE GEORGE K) JUDICIAL MEMBER PLACE: BANGALORE DATE: 16 TH DECEMBER,,2011 EKS ITA 924 & 1018(BANG)/2010 PAGE 9 OF 9 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE