Thimmaiah Hanumaiah, Ramanagara V. The Income Tax Officer, Ward- 1, Ramanagaram

ITA 116/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7195 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-08-2020
• Assessment Year: 2016-2017
• Appeal Filed On: 24-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Keywords: Peak credit; Additional evidence
• Section: 69A

Judgement Text

ITA NO.116/BANG/2020 THIMMAIAH HANUMAIAH, RAMANAGARA IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUTANT MEMBER ITA NO.116/BANG/2020 ASSESSMENT YEAR: 2016-17 THIMMAIAH HANUMAIAH VYAVASAYA SEVA SHAKARA SANGHA NIYAMITA KAILANCHA RAMANAGARA-562 159 PAN NO : AAUPH4747H VS. THE INCOME TAX OFFICER WARD-1 RAMANAGAR APPELLANT RESPONDENT APPELLANT BY : N O N E RESPONDENT BY : SHRI PRIYADARSHI MISHRA, D.R. DATE OF HEARING : 31.08.2020 DATE OF PRONOUNCEMENT : 02.09.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 27.11.2019 PASSED BY LD CIT(A)-3, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2016-17. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN REJECTING ADDITIONAL EVIDENCES FILE D BY THE ASSESSEE AND CONSEQUENTLY CONFIRMING THE ADDITION OF RS.55,3 5,742/- RELATING TO UNEXPLAINED DEPOSITS MADE BY THE AO U/S 69A OF T HE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE, EVE N THOUGH THE ADJOURNMENT WAS GRANTED ON THE EARLIER OCCASION AT THE SPECIFIC ITA NO.116/BANG/2020 THIMMAIAH HANUMAIAH, RAMANAGARA PAGE 3 OF 6 4. THE AO EXAMINED THE CASH BOOK OF THE SOCIETY A ND NOTICED THAT THE ABOVE SAID EXPLANATIONS ARE NOT SUBSTANTIATED B Y THE ENTRIES MADE IN THE CASH BOOK, I.E., AS PER CASH BOOK LOANS WERE DISBURSED ON THE VERY SAME DAY, WHEN THE AMOUNTS WERE WITHDRA WN FROM THE CURRENT ACCOUNT OF THE SOCIETY AND ALSO THE REPAYME NTS RECEIVED FROM THE BORROWERS WERE DEPOSITED INTO THE CURRENT ACCOU NT OF THE SOCIETY. THE CASH BOOK DID NOT SHOW ANY COLLECTION OF LOAN A MOUNTS IN ADVANCE OR LOAN AMOUNTS REMAINING UNDISBURSED. EVE N THOUGH THE AO EXAMINED THE PAST PRESIDENTS OF THE SOCIETY, THE Y MERELY REITERATED THE SUBMISSIONS MADE IN THE CONFIRMATION LETTER AND COULD NOT PRODUCE ANY MATERIAL TO SUPPORT THEIR CLAIM. ACCORDINGLY, THE AO PROPOSED TO ASSESS A SUM OF RS.78,14,205/- AS IN COME OF THE ASSESSEE. HENCE THE ASSESSEE FILED A PETITION BEFO RE THE LD ADDL. CIT U/S 144A OF THE ACT, WHO DIRECTED THE AO TO COMPUTE THE QUANTUM OF ADDITION AFTER HEARING THE ASSESSEE. BEFORE THE AO, THE ASSESSEE REITERATED THAT THE CASH DEPOSITS WERE MADE OUT OF SOCIETYS FUNDS ONLY IN HIS FIDUCIARY CAPACITY AND THEY DO NOT BELO NG TO HIM. IN THE ALTERNATIVE, IT WAS PRAYED THAT THE PEAK CREDIT BAL ANCE MAY BE ADDED. THE AO ACCEPTED THE ALTERNATIVE PRAYER. HOWEVER, W HILE WORKING OUT PEAK CREDIT, THE ASSESSING OFFICER GAVE CREDIT FOR DEPOSITS MADE WITHIN TWO MONTHS FROM THE DATE OF EARLIER WITHDRAWAL. AC CORDINGLY, HE WORKED OUT THE ADDITION AT RS.55,35,742/- AND ASSES SED THE SAME U/S 69A OF THE ACT BY APPLYING SPECIAL RATES PRESCR IBED U/S 115BBE OF THE ACT. 5. BEFORE LD CIT(A), THE ASSESSEE REITERATED HI S SUBMISSIONS MADE BEFORE THE AO. BESIDES THE ABOVE, THE ASSESSEE ALS O FILED ADDITIONAL EVIDENCES IN THE FORM OF CONFIRMATION LETTERS OBTAI NED FROM SOME OF THE MEMBERS OF THE SOCIETY (BORROWERS). HENCE THE LD CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN THE REMAND REP ORT, THE AO REPORTED THAT THE EXPLANATIONS GIVEN BY THE ASSESSE E ARE NOT CORROBORATED WITH THE ENTRIES AVAILABLE IN THE CASH BOOK OF THE SOCIETY ITA NO.116/BANG/2020 THIMMAIAH HANUMAIAH, RAMANAGARA PAGE 5 OF 6 BOOK OF THE SOCIETY, IN OUR VIEW, HAS BEEN MADE WIT HOUT PROPERLY UNDERSTANDING THE MODUS OPERANDI EXPLAINED BY THE A SSESSEE. 9. WE NOTICE THAT THE ASSESSEE HAS SUBSTANTIAT ED HIS EXPLANATIONS BY FURNISHING CONFIRMATION LETTERS FROM TWO OF THE PAST PRESIDENTS OF THE SOCIETY. SUBSEQUENTLY, BEFORE LD CIT(A), THE A SSESSEE HAS FURNISHED CONFIRMATION LETTERS FROM SOME OF THE MEM BER BORROWERS ALSO. EVEN THOUGH THE LD CIT(A) HAS CALLED FOR A R EMAND REPORT FROM THE AO ON THE ADDITIONAL EVIDENCES, YET HE DID NOT ADMIT THEM FINALLY. 10. IN OUR CONSIDERED VIEW, THE LETTERS FURNISH ED BY THE TWO PAST PRESIDENTS AND ALSO THE LETTERS GIVEN BY MEMBER BOR ROWERS ASSUME GREAT SIGNIFICANCE IN THE FACTS OF THE PRESENT CASE , SINCE THEY SUPPORT THE MODUS OPERANDI EXPLAINED BY THE ASSESSEE. ACCO RDING TO THE ASSESSEE, HE HAS USED HIS BANK ACCOUNT TO TEMPORARI LY PARK THE FUNDS BELONGING TO THE SOCIETY/MEMBERS, ON BEHALF O F THE SOCIETY/MEMBERS, IN ORDER TO ADHERE THE DUE DATES O F REPAYMENT AND/OR TO ACCOMMODATE BORROWERS. HENCE, IN OUR CON SIDERED VIEW, THE VERACITY OF THE EXPLANATIONS GIVEN BY THE ASSES SEE NEEDS TO BE EXAMINED. FOR THAT PURPOSE AND ALSO, IN THE INTERE ST OF SUBSTANTIAL JUSTICE, WE ARE OF THE VIEW THAT THE ADDITIONAL EVI DENCES FURNISHED BY THE ASSESSEE NEED TO BE ADMITTED. ACCORDINGLY WE A DMIT THEM. 11. WE ARE OF THE VIEW THAT THE ADDITIONAL EVIDE NCES AND ALSO THE CONFIRMATION LETTERS GIVEN BY TWO OF THE PAST PRESI DENTS REQUIRE FRESH EXAMINATION BY EXAMINING THE VERACITY OF MODUS OPER ANDI EXPLAINED BY THE ASSESSEE. HENCE WHAT IS REQUIRED TO BE EXAM INED IS THE VERACITY OF THE MODUS OPERANDI AND ALSO WHETHER THE DEPOSITS MADE BY THE ASSESSEE REALLY REPRESENT FUNDS BELONGING TO THE SOCIETY/MEMBERS OR NOT. THESE ASPECTS CAN BE EXAMI NED BY CONSIDERING THE ADDITIONAL EVIDENCES, EXAMINING THE MEMBER/BORROWERS, IF REQUIRED, COLLECTING THE DETAI LS OF MEMBERS FROM WHOM FUNDS WERE RECEIVED, CORROBORATING THE WI THDRAWALS WITH THE ENTRIES MADE IN THE BOOKS OF SOCIETY ETC.