Yeshwanth Kumar, Bangalore V. ITO, Bangalore

ITA 1178/BANG/2011

• Counselvise Citation: 117821114 RSA 2011
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDAR RAJAN
• Assessee Lawyers: H GANPATLAL KAWAD
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SMT. P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1 178/BANG/2011 (ASST. YEAR - 2007-08) SHRI YESHWANTH KUMAR, PROP: MEDISALES ASSOCIATES, SUBHODH BHAVAN, #13/1 2 ND K.B TEMPLE STREET, B ANGALORE-560 053. . APPELLANT PAN ABLPK 3083 H. VS. THE INCOME-TAX OFFICER, WARD-1(3), BANGALORE. . RESPONDENT APPELLANT BY : SHRI H GANPATLAL KAWAD, C.A RESPONDENT BY : SHRI A SUNDAR RAJAN, JCIT DATE OF HEARING : 10-10-2012 DATE OF PRONOUNCEMENT : 26-10-2012 O R D E R PER P MADHAVI DEVI, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE ITA NO.1178/B/11 2 COMMISSIONER OF INCOME-TAX - (APPEALS) I AT BANGALO RE DATED 22.09.2011. THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO OF RS.1,30,000/- AS INCOME FROM OTHER SOURCES WITHOUT APPRECIATING T HAT THE CAPITAL INTRODUCTION OF RS.1,30,0000/- IS OUT OF CASH BALAN CE SHOWN IN THE PERSONAL BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2 006. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND IS EARNING INCOME AS A COMMISSION AGENT. THE A SSESSEE IS ALSO EARNING INCOME BY WAY OF SALARY. THE ASSESSEE IS T HE PROPRIETOR OF M/S MEDISALES ASSOCIATES AND IS DERIVING COMMISSION ON THE CONSIGNMENT SALES APART FROM REGULAR SALES. THE A SSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 25.3.2008 ADMITTING A TOTAL INCOME OF RS.9,68,850/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSEE WAS ASKED TO P RODUCE THE BOOKS OF ACCOUNT, BANK STATEMENT, CONFIRMATION FROM MAJOR CREDITORS, COPIES OF SALE DEED, RENT AGREEMENTS, AGREEMENTS RELATED T O CONSIGNMENT, INVENTORY OF STOCK, COPY OF VAT RETURN ETC. AND THE ASSESSEE HAS ITA NO.1178/B/11 3 PRODUCED/FILED THE SAME. DURING THE COURSE OF ASSE SSMENT PROCEEDING, THE AO OBSERVED THAT THE ASSESSEE HAS INTRODUCED CA PITAL OF RS.1,30,000/- AND THE SOURCE WAS SHOWN AS CASH BRO UGHT IN FROM PERSONAL BOOKS. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE AND THE ASSESSEE EXPLAINED THE SAME BY WAY OF FURNISHING C OPIES OF PERSONAL BALANCE SHEET AS ON 31.3.2006 AND 31.3.2007. AFTER OBSERVING THAT THE ASSESSEE HAD CASH BALANCE OF RS.L,32,297/- AS ON 31 .3.2007 AND PERSONAL DRAWINGS OF THE ASSESSEE AT RS.46,344/-, THE AO HELD THAT THERE IS NO BANK ACCOUNT IN THE PERSONAL BALANCE SH EET AND THE OTHER ASSETS CONTINUED TO REMAIN WITHOUT ANY WITHDRAWALS. HE OBSERVED THAT THE ASSESSEE HAS ARRIVED AT THE BALANCE BY REVERSE WORKING AND THERE EXISTS NO SOURCE FOR EITHER THE DRAWING OR THE CAPI TAL INTRODUCTION. HE THUS TREATED THE CAPITAL INTRODUCTION OF RS.1,30,00 0/- AS INCOME FROM OTHER SOURCE AND LEVIED TAX ACCORDINGLY. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) WHO CONFIRMED THE ADDITION MADE BY THE AO HOLDING T HAT NO COPY OF THE BANK ACCOUNT HAS BEEN FURNISHED TO DEMONSTRATE THAT THE SALARY HAS BEEN DEPOSITED THEREIN AND THAT WAS WITHDRAWN FOR THE PURPOSE OF INVESTMENT IN M/S MEDISALES ASSOCIATES. ITA NO.1178/B/11 4 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE H GANAPAT K AWAD, WHILE REITERATING THE ASSESSEES SUBMISSIONS BEFORE THE A UTHORITIES BELOW SUBMITTED THAT THE ASSESSEE HAS RECEIVED SALARY WH ICH IS EVIDENT FROM THE INCOME-TAX RETURN FILED FOR THE ASSESSMENT YEAR 2004-05 ONWARDS. HE HAS DRAWN OUR ATTENTION TO THE CAPITAL ACCOUNT O F THE ASSESSEE, WHEREIN THE SALARY RECEIVED OF RS.84,000/- AS ON 3. 13.2005 IS EVIDENCED AT PAGE 5, WHICH IS THE STATEMENT OF TOTA L INCOME AND ALSO THE SALARY RECEIVED FROM MEDI TRADE DEBITED IS SHOW N AS RS.84,000/- SIMILARLY HE HAS DRAWN OUR ATTENTION TO PAGE 7 OF T HE PAPER BOOK WHICH IS BALANCE SHEET AS ON 31.3.2005 TO DEMONSTRA TE THAT THE ASSESSEE HAD CASH IN HAND OF RS.1,32,297/- AND RS.1 ,300,00/- HAS BEEN INTRODUCED AS CAPITAL IN THE ASSESSEES PROPRIETOR BUSINESS. HE SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE FAIL ED TO APPRECIATE THE CONTENTION OF THE ASSESSEE IN PROPER PERSPECTIVE AN D THEY ERRONEOUSLY HELD THAT THE CLAIM OF THE ASSESEE IS UNSUBSTANTIAT ED AND THAT THE CAPITAL INTRODUCTION IS NOTHING BUT INCOME FROM OT HER SOURCES. 7. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE CIT(A) AND AO. ITA NO.1178/B/11 5 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THEIR RIVAL CONTENTIONS, WE FIND THAT THE ASSESSEE HAS BEEN REC EIVING SALARY FROM M/S MEDISALES ASSOCIATES AND HAS BEEN OFFERING THE SAME FOR TAX FROM THE ASSESSMENT YEAR 2004-05 ONWARDS. THEREFORE, TH E ASSEESEES RECEIPT OF SALARY CANNOT BE DOUBTED. FROM THE CASH ACCOUNT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07, WE FIND T HAT IT HAS OPENING BALANCE OF RS.62,541/-. THE SALARY OF RS.19,756/- AND AMOUNT DRAWN FROM MEDISALES ASSOCIATES OF RS.49,000/- AND AFTER REDUCING RS.99,000/- FROM THE ABOVE AS TRANSFER EXPENSES, T HE ASSESSEE IS STILL LEFT WITH A BALANCE OF RS.1,32,297/- AS SEEN FROM C ASH ACCOUNT FOR THE ASSESSMENT YEAR 2007-08. THE OPENING BALANCE IS 1,3 2,297/- AND AFTER REDUCING 1,30,000/- THERE FROM AS DEPOSIT TO M/S MO DISALES ASSOCIATES, THE CASH IN HAND IS RS.2,297/-. THE ON LY GROUND ON WHICH BOTH THE AO AS WELL AS THE CIT(A) HAVE DISBELIEVED THE ASSESSEES CLAIM OF SALARY IS THAT THE ASSESSEE HAS NOT FURNIS HED THE BANK ACCOUNT IN WHICH THE SALARY HAS BEEN DEPOSITED. WE ARE NOT ABLE TO APPRECIATE THIS FINDING OF THE CIT(A) FOR THE REASON THAT THER E IS NO HARD AND FAST RULE THAT THE SALARY SHOULD BE DEPOSITED IN THE BAN K ACCOUNT ONLY. AS LONG AS ASSESSEES EARNING OF INCOME BY WAY OF SALA RY IS NOT DISPUTED, THEN THE SOURCE FOR INTRODUCTION OF CAPITAL FROM T HE SALARY ACCOUNT ALSO CANNOT BE DISPUTED, AS LONG AS THE ASSESSEE HA S BEEN ABLE TO PROVE ITA NO.1178/B/11 6 THAT THE ASSESSEE HAS CASH IN HAND OF RS.1,30,000/- . FROM THE EVIDENCE REFERRED TO ABOVE, WE ARE SATISFIED THAT T HE ASSESSEE HAD THE CASH IN HAND FOR THE INTRODUCTION OF THE CAPITAL AN D, THEREFORE, THE ASSESSEES APPEAL IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCT, 2012. SD/- SD/- (JASON P BOAZ) (MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE, DATED : 26/10/2012 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETA RY, ITAT, BANGALORE.