S R Rajendra Kumar, Bangalore V. Income tax Officer, Ward 4(4), Bangalore

ITA 1092/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95275 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T V SUBRAMANYA BHAT
• Section: 68; 69

Judgement Text

ITA.1092/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.1092/BANG/2014 (ASSESSMENT YEAR : 2008-09) SHRI. S. R. RAJENDRA KUMAR, NO.389, 5 TH MAIN BANASHANKARI III STAGE, HANUMANTHANAGAR, BANGALORE 560 050 ..APPELLANT PAN : ADEPR5363A V. INCOME-TAX OFFICER, WARD 4(4), BANGALORE ..RESPONDENT ASSESSEE BY : SHRI. T. V. SUBRAMANYA BHAT, CA REVENUE BY : SHRI. KALEEMULLA KHAN, ADDL. CIT HEARD ON : 21.09.2015 PRONOUNCED ON : 30.09.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL, GRIEVANCE OF ASSESSEE IS THAT CIT (A) SUSTAINED PART OF THE ADDITIONS MADE BY THE AO FOR CREDITS IN BANK ACCOUN T. 02. FACTS APROPOS ARE THAT ASSESSEE HAD FILED HIS R ETURN FOR IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF RS.1,85,060/-. ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE INCOME-TAX ACT, 1961 ( THE ACT IN SHORT), AFTER MAKING AN ADDITION OF RS.1,08,000/-. PROCEEDINGS U /S.263 OF THE ACT WERE ITA.1092/BANG/2014 PAGE - 2 INITIATED BY THE CIT FOR A REASON THAT ASSESSEES B ANK ACCOUNT WITH KARUR VYSYA BANK WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT. PU RSUANT TO ORDER U/S.263 OF THE ACT, ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCES O F CREDITS IN VARIOUS BANK ACCOUNTS HELD BY IT. THERE WERE TOTAL DEPOSITS OF RS.17,48,674/- IN ASSESSEES THE BANK ACCOUNT OVER VARIOUS DATES. ASSESSEES RE PLY IN THIS REGARD WAS AS UNDER : ............ DURING THE FINANCIAL YEAR 2007-08, I HAD A INCOME FROM BUSINESS FROM IRON & STEEL UNDER THE NAME M/S. LOHIT WIRES & STEELS AND I GOT THE VAT REGISTRATION IN THE MONTH OF NOVEMBER, 2007. AND ALSO YOU HAVE ASKED US TO EXPLAIN ABOUT CHEQUES DEPOSITS & CASH WITHDRAWALS AT THE KARUR VYSYA BANK LTD, ISRO LAYOU T BRANCH, OUR NATURE OF BUSINESS OF DEALER IN IRON & STEEL BUSINE SS IN RETAIL. IN THIS REGARD, I HEREBY INFORM YOU THAT PRIOR TO V AT REGISTRATION, I USE TO PURCHASE THE MATERIALS FROM MARKET AREAS AND THE SAME HAS BEEN SUPPLIED TO VARIOUS CUSTOMERS, IN TURN THEY IS SUED CHEQUES IN MY INDIVIDUAL NAME THE SAME HAS BEEN DEPOSITED IN T HE SAID BANK. SINCE I DONT HAVE THE CURRENT ACCOUNT. AND ALSO N OTE IN THE STEEL BUSINESS THIS IS NORMAL PRACTICE. I DONT HAVE THE DETAILS OF CHEQUES DEPOSITS FROM WHOM WE HAVE RECEIVED, AND NOT MAINTA INED THE CHALLAN BOOKS AND MAJOR WITHDRAWALS THROUGH CASH ON LY. ........ AO OBSERVED THAT ASSESSEE COULD NOT PRODUCE ANY DOC UMENTARY EVIDENCE TO SUBSTANTIATE ITS REPLY. HE TOOK RECOURSE TO SECTIO N 68 OF THE ACT AND MADE A DISALLOWANCE OF RS.17,48,674/-. 03. IN ITS APPEAL BEFORE THE CIT (A) ARGUMENT OF TH E ASSESSEE WAS THAT DURING THE PERIOD 31.04.2007 TO 15.10.2007 HE HAD NO REGIS TRATION FROM COMMERCIAL TAX DEPARTMENT. AS PER THE ASSESSEE, CURRENT ACCOU NT COULD NOT BE OPENED ITA.1092/BANG/2014 PAGE - 3 WITHOUT SUCH REGISTRATION. SINCE BUSINESS HAD ALRE ADY STARTED CHEQUES ISSUED BY VARIOUS PARTIES ON SALE OF STEEL MATERIALS WAS WITH THE ASSESSEE, AND SUCH CHEQUES WERE DEPOSITED INTO THE SB ACCOUNT. ACCORD ING TO THE ASSESSEE THE WITHDRAWN MONEY THEREFORE WAS UTILISED FOR BUYING G OODS FOR TRADING. ASSESSEE ALSO TOOK AN ARGUMENT THAT SECTION 68 OF THE ACT WO ULD BE ATTRACTED ONLY WHEN THERE IS A CREDIT ENTRY IN THE BOOKS OF ACCOUNT. A S PER THE ASSESSEE, CREDITS BEING FOUND IN THE PASS BOOK AND NOT IN THE BOOKS OF ACCO UNT, SECTION 68 OF THE ACT, COULD NOT BE ATTRACTED. 04. CIT (A) WAS PARTIALLY APPRECIATIVE OF THE ABOVE CONTENTIONS. ACCORDING TO HIM, SOME EVIDENCE COULD BE PRODUCED BY THE ASSE SSEE TO SHOW THAT THE CREDITS IN THE BANK ACCOUNT REPRESENTED SALE PROCEE DS OF IRON AND STEEL MATERIAL. HE HELD THAT ASSESSEE WAS ENTITLED FOR RELIEF OF 60 % OF THE ADDITION OF RS.17,48,674/-. THUS OUT OF THE TOTAL ADDITION OF RS.17,48,674/-, CIT (A) CONFIRMED RS.6,99,470/- AND DELETED THE BALANCE. 05. NOW BEFORE US, LD. AR SUBMITTED THAT SECTION 68 COULD NOT BE ATTRACTED SINCE THE CREDITS IN THE BANK PASS BOOK WERE NEVER A PART OF BOOKS OF ACCOUNT OF THE ASSESSEE. AS PER THE LD. AR PASS BOOKS CANNOT BE CONSIDERED AS BOOKS OF ACCOUNT AND HENCE SECTION 68 COULD NOT BE ATTRACTED . RELIANCE WAS PLACED ON JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHANTA DEVI V. CIT (171 ITR 532) AND THAT OF HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT V. BHAICHAND H. GANDHI (141 ITR 67). 06. PER CONTRA, LD. DR STRONGLY SUPPORTED THE ORDER OF LOWER AUTHORITIES. ITA.1092/BANG/2014 PAGE - 4 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. SOLE GROUND TAKEN BY THE ASSESSEE IS THAT SECTION 68 WOULD NOT BE ATTRACTED SINCE BANK PASS BOOK COULD BE CONSIDERED AS BOOKS OF ACCOUNT MAINTA INED BY AN ASSESSEE. NO DOUBT IN THE JUDGMENT OF HONBLE MUMBAI HIGH COURT IN THE CASE OF BHAICHAND H. GANDHI (SUPRA), AS WELL AS THAT OF HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF SHANTA DEVI (SUPRA), IT HAS BEEN HELD T HAT SECTION 68 OF THE ACT WOULD BE ATTRACTED ONLY WHEN AN AMOUNT IS CREDITED IN THE BOOKS OF THE ASSESSEE. PASSBOOKS ARE MAINTAINED BY THE BANK AND CANNOT BE CONSIDERED AS BOOKS OF THE ASSESSEE. HOWEVER IN THE CASE BEFORE US, THERE IS NO DISPUTE THAT ASSESSEE WAS NOT ABLE TO GIVE ANY REASONABLE EXPLANATION FOR THE CREDITS IN THE BANK ACCOUNT. JUST BECAUSE THE AO MENTIONED SECTION 68 OF THE ACT FOR MAKING THE ADDITION WOULD NOT, IN OUR OPINION, ABSOLVE THE ASSESSEE FRO M ITS DUTY TO EXPLAIN THE SOURCE OF THE DEPOSITS. WHEN MONEY IS DEPOSITED IN A BANK ACCOUNT, IT IS CERTAINLY AN INVESTMENT MADE AND WHEN INVESTMENTS A RE NOT RECORDED IN THE BOOKS OF ACCOUNT AND WHERE ASSESSEE HAS NOT OFFERED ANY PLAUSIBLE EXPLANATION, IN OUR OPINION EVEN IF SECTION 68 OF THE ACT CANNOT BE APPLIED, SECTION 69 WILL AUTOMATICALLY COME INTO PLAY. JUST BECAUSE AO MENT IONED SECTION 68 IN THE ASSESSMENT ORDER, IT WOULD NOT MEAN THAT ASSESSEE C AN GO SCOT-FREE WITHOUT EXPLAINING THE SOURCE OF INVESTMENTS. SECTION 69 O F THE ACT CLEARLY STATES THAT INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT ON WHICH NO GOOD EXPLANATION WAS OFFERED ON THE NATURE AND SOURCE, COULD BE TREATED AS INCOME OF THE ASSESSEE. IN SUCH CIRCUMSTANCES WE ARE OF THE OPINION THAT AO WAS JUSTIFIED IN MAKING ADDITION AND THE CIT (A) HAD GIVEN MORE T HAN CONSIDERABLE RELIEF TO ITA.1092/BANG/2014 PAGE - 5 THE ASSESSEE BY SUSTAINING THE ADDITION TO THE EXTE NT OF ONLY 40%. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT( A). 08. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH DAY OF S EPTEMBER, 2015. SD/- SD/- (N. V. VASUDEVAN) (ABRAHAM P GEO RGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR