ITO, Bangalore V. Shri. G. Muniraju, Bangalore

ITA 1183/BANG/2011

• Counselvise Citation: 118321114 RSA 2011
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 01-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 40A(3); 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 1183 /BANG/20 11 (ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER, WARD 8(3), BANGALORE. VS. SHRI G. MUNIRAJU, NO.402, 3 RD MAIN, 6THCROSS, 1 ST STAGE, 2 ND PHASE, MANJUNATHANAGAR, BANGALORE. PAN AEMPM5350H APPELLANT RESPONDENT. C.O. NO.15/BANG/2012 (IN ITA NO.1183/BANG/2011 ( BY ASSESSEE ) APPELLANT BY : SMT. SUSAN THOMAS JOSE. RESPONDENT/CROSS OBJECTOR BY : SHRI V.SRINIVASAN. DATE OF HEARING : 20.11.2012. DATE OF PRONOUNCEMENT : 10.12.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, BANGALORE DATED 23.9.2011 FOR ASSESSMENT YEAR 2006-07. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, AN INDIVIDUAL CARRYING ON THE BUS INESS OF RUNNING A BAR AND RESTAURANT, FILED HIS RETURN OF INCOME FOR ASSESSME NT YEAR 2006-07 ON 22.11.2006 2 ITA NO.1183/BANG/2011 & C.O. NO.15/BANG/2012 DECLARING TAXABLE INCOME OF RS.5,25,980. THE RETUR N WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS 'THE ACT') ON 1.6.2007 AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY BY ISSU E OF NOTICE UNDER SECTION 143(2) OF THE ACT ON 6.8.2007. IN THE COURSE OF ASSESSMENT PROCE EDINGS THE ASSESSING OFFICER CALLED FOR THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS. THE ASSESSEE PRODUCED ONY THE VOUCHERS FOR OTHER EXPENSES, SALARY AND PURCHASE REGISTER, B UT DID NOT PRODUCE THE CASH BOOK OR BANK STATEMENTS / PASS BOOKS FOR VERIFICATION. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY AN ORDER UNDER SECTION 143(3) OF THE ACT ON 30.12.2008 DETERMINING THE ASSESSEE'S INCOME AT RS.32,43,658, AFTER MAKING A D ISALLOWANCE OFRS.27.17,678 IN RESPECT OF CASH PAYMENTS IN EXCESS OFRS.20,000 MADE FOR PUR CHASE OF LIQUOR BY CONSIDERING THE INFORMATION IN FORM NO.27D FILED ALONG WITH THE RET URN OF INCOME, WHICH ALSO FORMS ANNEXURE TO THE ORDER OF ASSESSMENT. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2006-07 DT.30.12.2008, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (APPEALS). THE LEARNED CIT (APPEALS) DISPOSED THE ASSESSEE'S APPEAL ALLOWING T HE ASSESSEE PARTIAL RELIEF OF RS.17,17,677 BY HOLDING THAT THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT BE RESTRICTED TO RS.10 LAKHS HOLDING AS UNDER IN PARA 5 OF HIS ORDER :- 5. AFTER CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT IT WILL BE JUST AND FAIR IF THE ADDITION MADE BY THE ASSESSING OFFICER IS RESTRICTED TO THE EXTENT OF RS .10 LAKHS AND THE APPELLANT GETS A RELIEF OF RS.17,17,677 AND THE APPEAL IS PAR TLY ALLOWED. 3 ITA NO.1183/BANG/2011 & C.O. NO.15/BANG/2012 3.0 AGGRIEVED WITH THE ORDER OF THE CIT (APPEALS), REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS. 3.1 THE GROUNDS OF APPEAL RAISED BY REVENUE ARE AS UNDER : 1. THE ORDER OF THE CIT (APPEALS) IS NOT ACCEPTA BLE DUE TO THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THA T THE CASH PAYMENTS DID NOT EXCEED RS.20,000 AT ONE TIME, INSPITE OF SUFFIC IENT OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER. 2. THE CIT (APPEALS) S ACTION RESTRICTING THE DIS ALLOWANCE MADE UNDER SECTION 40A(3) TO RS.10 LAKHS AS AGAINST RS.27,17,677 IS NO T ACCEPTABLE AS IT IS OPPOSED TO FACTS OF THE CASE AND LEGAL PROVISIONS. 3. THE CIT (APPEALS)S ORDER IS NOT ACCEPTABLE, AS IT IS BASED ON MERE SUBMISSIONS MADE IN THE COURSE OF APPEAL PROCEEDING S WITHOUT THE PRODUCTION OF ANY DOCUMENTARY EVIDENCE. 4. THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY E VIDENCE AT THE STAGE OF ASSESSMENT PROCEEDINGS TO REFUTE THE FINDINGS OF TH E ASSESSING OFFICER AND THE LEARNED CIT (APPEALS) HAS FAILED TO TAKE NOTE O F THIS FACT. 5. THE APPELLANT CRAVES FOR PERMISSION TO ADD OR D ELETE THE GROUNDS OF APPEAL AT THE TIME OF HEARING THE CASE. 3.2 THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED CIT (APPEALS), BANGALORE HAS ERRED IN LAW AS WELL AS ON THE FACT SOF THE CASE BY CONFIRMING AN ADDITION OF RS.17,17, 677 OUT OF THE TOTAL ADDITION OF RS. 27,17,677, BY PARTLY DELETING ONLY RS.10,00, 000, FROM THE TAXABLE INCOME. 2. THE APPELLANT IS WRONG IN STATING THAT THE ORDE R OF THE LEARNED CIT (APPEALS) IS NOT ACCEPTABLE. THE RESPONDENT HAS PR ODUCED ALL THE RELEVANT BOOKS OF ACCOUNTS, LIKE CASH BOOK, LEDGER, PURCHASE AND SALES REGISTERS, AND BANK ACCOUNTS TO PROVE THE CORRECTNESS AND COMPLETE NESS OF THE BOOKS AND INCOME DECLARED IN THE RETURN OF INCOME. THE LEARNED ASSESSING OFFICER HAS CLEARLY STAT ED IN THE ORIGINAL ORDER THAT, THE RESPONDENT HAS PRODUCED ALL VOUCHERS FOR THE E XPENSES, SALARY AND PURCHASE REGISTER. HOWEVER, EVEN THOUGH THE RESPO NDENT ON24.12.2008, PLEADED FOR SOME TIME TO PRODUCE THE OTHER DOCUMENT S LIKE CASH BOOK, AND BANK PASS BOOK, LEARNED ASSESSING OFFICER HAS REJECTED T HE REQUEST AND HURRIDLY PASSED THE ORDER ON 30.12.2008, SINCE IT WAS TIME B ARRING. THEREFORE, THE LEARNED ASSESSING OFFICER HAS DEPRIVED THE RESPOND ENT A REASONABLE OPPORTUNITY TO FURNISH ALL THE DOCUMENTS IN SUPPORT OF THE RETURN OF INCOME, 4 ITA NO.1183/BANG/2011 & C.O. NO.15/BANG/2012 WHICH WAS IN HIS POSSESSION, WHICH CLEARLY PROVES T HAT CASH PAYMENTS DID NOT EXCEED RS.20,000 AT ONE TIME. 3. THE LEARNED CIT (APPEALS) HAS RIGHTLY CONCLUDED INHIS ORDER THAT THE SELLERS ISSUED CONSOLIDATED STATEMENT STOCK-IN-TRA DE FORM 27D FOR DIFFERENT PERIODS VARYING FROM ONE MONTH TO SIX MONTHS. HE HAS CONSIDERED OUR QUOTING VARIOUS COURT JUDGMENTS IN OUR GROUNDS OF APPEAL AN D CONCLUDED THAT COURTS HAS HELD THAT STATUTORY LIMIT UNDER SECTION 40A(3) WAS APPLICABLE TO PAYMENTS MADE TO A PARTY AT ONE TIME AND NOT TO THE AGGREGAT E OF THE PAYMENTS MADE TO A PARTY IN THE COURSE OF THE DAY OR DURING A PERIOD OF TIME AS RECORDED IN THE CASH BOOK OR AS MENTIONED IN FORM 27D. 4. THE APPELLANTS CONTENTION THAT CIT (APPEALS)S ORDER AS NOT ACCEPTABLE, AS IT IS BASED ON SUBMISSIONS MADE IN THE COURSE OF AP PEAL PROCEEDINGS WITHOUT THE PRODUCTION OF ANY DOCUMENTARY EVIDENCE, IS TOTALLY WRONG DUE TO THE FACT THAT, A) SINCE THE RESPONDENT HAS PRODUCED ALL THE RELEVA NT DOCUMENTS BEFORE THE ASSESSING OFFICER, AND HE HAS RELIED ON THE STATEME NT MADE BY THE ASSESSING OFFICER IN THE ORDER, AND B) CIT (APPEALS), HAS NEITHER NOT THOUGHT IT FIT TO CALL FOR ANY FRESH RECORDS, NOR SOUGHT FOR ANY FRESH DOCUMENTS TO BE PRODUCED B Y THE RESPONDENT. HOWEVER, THE RESPONDENT WAS IN THE POSSESSION AND P REPARED TO SUBMIT ANY DOCUMENTS, WHEN IT IS CALLED FOR. SINCE THE CIT (A PPEALS) HAS SATISFIED WITH OUR CONTENTION OF OUR GROUNDS, IT IS WRONG TO STATE THAT HE HAS NOT VERIFIED ANY DOCUMENTARY EVIDENCE. 5. THE RESPONDENT HAS PRODUCED ALL VOUCHERS FOR T HE EXPENSES, SALARY AND PURCHASE REGISTER. HOWEVER, EVEN THOUGH THE RESPON DENT ON24.12.2008, PLEADED FOR SOME TIME TO PRODUCE THE OTHER DOCUMENT S LIKE CASH BOOK, AND BANK PASS BOOK. LEARNED ASSESSING OFFICER HAS REJECTED THE REQUEST AND HORRIDLY PASSED THE ORDER ON 30.12.2008, SINCE IT WAS TIME BARRING. THEREFORE, THE LEARNED ASSESSING OFFICER HAS DEPRIVED THE RESPONDE NT A REASONABLE OPPORTUNITY TO FURNISH ALL THE DOCUMENTS IN SUPPORT OF THE RETURN OF INCOME. 6. THEREFORE, IN VIEW OF THE FACTS OF THE CASE AN D GROUNDS OF APPEAL URGED BEFORE THE CIT (APPEALS), AND THE ABOVE MENTIONED C ROSS OBJECTIONS, IT IS PRAYED THAT THE APPEAL PREFERRED BY THE INCOME TAX OFFICER, WARD 8(3), BE SET ASIDE, AND THE CROSS OBJECTIONS OF THE RESPONDE NT CONSIDERED FAVOURABLY, IN THE INTEREST OF JUSTICE. 5 ITA NO.1183/BANG/2011 & C.O. NO.15/BANG/2012 4.1 WHILE REITERATING THE ARGUMENTS RAISED IN THE G ROUNDS, IT WAS CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE LEARNE D CIT (APPEALS) WAS NOT JUSTIFIED IN PASSING THE APPELLATE ORDER IN THE MANNER HE DID, W ITHOUT ADDRESSING THE ISSUE OF WHETHER OR NOT THERE WAS A VIOLATION OF THE PROVISIONS OF S ECTION 40A(3) OF THE ACT. SHE SUBMITTED THAT THE ASSESSEE HAD FAILED TO PRODUCE THE CASH B OOK AND BANK STATEMENTS FOR VERIFICATION AS WAS REQUIRED BY THE ASSESSING OFFIC ER, LEAVING THE ASSESSING OFFICER WITH NO OTHER OPTION BUT TO MAKE THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT RELYING ON INFORMATION AVAILABLE WITH HIM. SHE CONTENDED THAT A PERUSAL OF THE ORDER OF THE LEARNED CIT (APPEALS) SHOWS THAT THE LEARNED CIT (APPEALS) HAS NOT GIVEN ANY FINDING WHATSOEVER ON THIS ISSUE BUT HAS SIMPLY ALLOWED THE ASSESSEE R ELIEF OF RS. 17,17,677 WITHOUT ASSIGNING ANY REASON FOR HIS ACTION. THE LEARNED DEPARTMENTA L REPRESENTATIVE PLEADED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF T HE LEARNED CIT (APPEALS) REQUIRES TO BE SET ASIDE. 4.2 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATI VE ALSO SUBMITTED THAT THE ORDER OF THE LEARNED CIT (APPEALS) SUFFERED FROM A SERIOU S BUT BASIC ERROR IN THAT THE LEARNED CIT (APPEALS) HAD FAILED TO DECIDE THE ISSUE IN APP EAL VIZ. WHETHER THERE WAS ANY VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. HE SUBMITTED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO EXAMINE THIS ISSUE AFRESH AS THE ASSESSEE HAD PRODUCED THE DETAILS OF PAYMENTS MADE FOR PURCHASE OF LIQUOR BEFORE THE LEA RNED CIT (APPEALS). 5.0 WE HAVE HEARD BOTH PARTIES AND AFTER CAREFUL PERUSAL AND CONSIDERATION OF THE MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THE LEARNED CIT (APPEALS) HAS NOT 6 ITA NO.1183/BANG/2011 & C.O. NO.15/BANG/2012 CONSIDERED THE ISSUE IN APPEAL AT ALL. THE LEARNED CIT (APPEALS) WAS CALLED UPON TO DECIDE IF THERE WAS ANY VIOLATION OF THE PROVISIONS OF SEC TION 40A(3) OF THE ACT. HOWEVER, WE FIND THAT WITHOUT GIVING ANY FINDING IN THE MATTER OR ASSIGNING ANY REASON OR BASIS WHATSOEVER PROCEEDED TO ALLOW RELIEF OF RS.17,17,67 7 TO THE ASSESSEE AND SUSTAINED / RESTRICTED THE DISALLOWANCE UNDER SECTION 40A(3) TO THE EXTENT OF RS.10 LAKHS. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T THE ORDER OF THE LEARNED CIT (APPEALS) CANNOT BE SUSTAINED AND THE SAME REQUIRES TO BE SET ASIDE AS PRAYED FOR BY BOTH THE LEARNED DEPARTMENTAL REPRESENTATIVE AND LEARNED AUTHORISED REPRESENTATIVE. CONSIDERING THE FACT THAT THE ISSUE ON HAND HAS NO T BEEN EXAMINED BY THE AUTHORITIES BELOW IN THE CORRECT PERSPECTIVE, WE FEEL THAT THE ENDS OF JUSTICE WOULD BE SERVED IF THE MATTER IS REMITTED TO THE FILE OF THE ASSESSING OFF ICER WITH DIRECTIONS TO EXAMINE THE PAYMENTS MADE BY THE ASSESSEE TO ASCERTAIN WHETHER THERE IS ANY VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND TO DECI DE THE ISSUE RELATING TO DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT, IF ANY, IN ACCORD ANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 4. IN THE RESULT, THE APPEAL OF REVENUE AND THE CR OSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.2012. SD/- SD/- (N.V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE, DATED: 10.12.2012. *REDDY GP