M. Rangaswamy, V. ITO,

ITA 1189/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95260 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Non compliance; Condonation of delay
• Section: 143(3); 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.118 9/BANG/2013 (ASST. YEAR 2006-2007) SHRI M RANGASWAMY, M/S SWAMY SERVICE STATION, 19 TH KM, TUMKUR ROAD, BANGALORE. . APPELLANT PAN ABAPM5136G VS. THE INCOME-TAX OFFICER, WARD-6(3), BANGALORE. . RESPONDENT APPELLANT BY : SHRI V SRINIVASAN, CA RESPONDENT BY : SHRI SUNIL KUMAR AGARWALA, JCIT DATE OF HEARING : 16-9-2015 DATE OF PRONOUNCEMENT : 24-9-2015 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL) III, BANGALOR E DATED 31/5/2013 FOR ASST. YEAR 2006-07. ITA NO.1189/B/13 2 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: 3. THE ASSESSEE, AN INDIVIDUAL ENGAGED IN THE BUSIN ESS OF RUNNING A PETROL BUNK IN THE NAME AND STYLE OF M/S SWAMI SE RVICE STATION, FILED HIS RETURN OF INCOME FOR THE ASST. YEAR 2006- 07 ON 27/10/2006 DECLARING TOTAL INCOME OF RS.1,85,219/-. THE RETUR N WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON EX AMINATION OF THE ASSESSEES CASH BOOK OBSERVED THAT THE ASSESSEE HAD INTRODUCED CASH AMOUNTING TO RS.31,00,000/- IN HIS CAPITAL ACCOUNT ON 5/4/2005 AND REQUIRED THE ASSESSEE TO EXPLAIN THE SOURCE THEREOF . SINCE NO EXPLANATION WAS FORTHCOMING, THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT AND B ROUGHT THE SAME TO TAX IN THE ASSESSEES HANDS. THE ASSESSMENT WAS CO NCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 28/11/2008, WHER EIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.32,85,219/- AS AG AINST THE RETURNED INCOME OF RS.1,85,219/-, IN VIEW OF THE ADDITION OF RS.31,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE A CT. ITA NO.1189/B/13 3 2.2 AGGRIEVED BY THE ORDER OF THE ASSESSMENT FOR AS ST. YEAR 2006-07 DATED 28/11/2008, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)- III, BANGALORE, ACCOMPANIED BY A CONDONATION PETITI ON SINCE THIS APPEAL WAS FILED BELATEDLY BY 146 DAYS. THE LEARNE D CIT(A) IN THE IMPUGNED ORDER HAS RECORDED THAT THE ASSESSEE WAS A FFORDED HEARINGS ON THE 18 DIFFERENT DATES, (THE DATES ARE LISTED OU T ON PAGE 1 OF THE ORDER) TO WHICH THERE WERE EIGHT REQUESTS FOR ADJOU RNMENTS AND NO LESS THAN TEN OCCASIONS WHEN THE ASSESSEE DID NOT ATTEND THE HEARINGS. IN THESE CIRCUMSTANCES THE LEARNED CIT(A) DISMISSED TH E APPEAL VIDE ORDER DATED 31/5/2013; BOTH FOR INORDINATE DELAY IN FILING THE APPEAL AND ALSO ON MERITS; RECORDING THAT THE ASSESSEE HAD FAILED TO DISCHARGE HIS ONUS OF DEFENDING HIS CASE WITH EVIDENCES AND P ROOF, HOLDING AS UNDER AT PARA 2 AND 3 THEREOF:- 2. I HAVE TO NOTE THAT THE DELAY IN FILING THE AP PEAL IS OF 146 DAYS. THE CASE WAS FIXED FOR HEARING ON VARIOU S DATES WHERE THE REPRESENTATIVES SOUGHT ADJOURNMENTS FROM TIME TO TIME. THE RECORD SHOWN THAT THERE HAD BEEN EIGHT R EQUESTS FOR ADJOURNMENTS CLAIMING THAT THE DETAILS ARE BEIN G PREPARED APART FROM NO LESS THAN TEN NON COMPLIANCE S. THE FIXATIONS ARE GOING FROM 13-9-2010. THE LATEST NON - COMPLIANCES OF A CONSECUTIVE NATURE ARE TOWARDS HEA RINGS FIXED ON 20-2-2013, 19-3-2013, 3-4-2013 AND 30-5-20 13. ITA NO.1189/B/13 4 YET, I ALSO NOTE THAT THE DETAILS OF THE ADDITION M ADE AS WELL AS THE PROOF OF JUSTIFICATION FOR DELAY WERE CALLED FOR AS EARLY AS 10-1-2012. 3. IN THE FACE OF THE CONTINUING NON-COMPLIANCES ON THE PART OF THE APPELLANT, I AM NOT ABLE TO ADJUDICATE UPON THE GROUNDS RAISED CLAIMING THE ENTRY OF RS.31,00,000/- INTO THE CASH BOOK ON 5-4-2005 TO BE OUT OF EXPLAINED SOURCE S. THE CLAIM OF THE AMOUNT HAVING BEEN ACCUMULATED OUT OF FUNDS IN THE APPELLANTS HUF REMAINS UNSUBSTANTIATED IN T HE COURSE OF THE APPELLATE PROCEEDINGS IN SPITE OF MOR E THAN ADEQUATE OPPORTUNITIES HAVING BEEN GIVEN. I THERE FORE HAVE TO RELUCTANTLY COME TO THE CONCLUSION THAT THE APPE LLANT HAS FAILED TO DISCHARGE ITS ONUS OF DEFENDING HIS CASE WITH EVIDENCES AND PROOF [BOTH ON MERITS AND IN THE CONT EXT OF THE INORDINATE DELAY IN FILING THE APPEAL] AND, THE REFORE, I PROCEED TO DISMISS THE APPEAL UNDER THESE CIRCUMSTA NCES. 3. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A)-III , BANGALORE DATED 31/5/2013 FOR THAT YEAR 2006-07, THE ASSESSE E IS IN APPEAL RAISING THE FOLLOWING GROUNDS: I. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, W EIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1189/B/13 5 II. THE LEARNED CIT(A) IS NOT JUSTIFIED IN REFUSIN G TO CONDONE THE DELAY IN FILLING THE APPEAL ON THE GROU ND THAT THE APPELLANT HAS NOT SUBSTANTIATED HIS CASE ON MER ITS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT S CASE. III. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED C IT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.31,0 0,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. IV. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HONBLE CCIT/DG THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S 234A AND 234B OF THE ACT, W HICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANTS CASE DESERVES TO BE CANCELLED. V. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT H UMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RE NDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTI NG THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITU TION FEES AS PART OF THE COSTS. 4. THE GROUNDS AT SNO. 1 AND 5 BEING GENERAL IN NATURE, AND NOT BEING URGED BEFORE US, ARE DISMISSED AS INFRUCTUOUS . 5. IN GROUND AT SNO.5 , THE ASSESSEE HAS DENIED HIMSELF LIABLE TO BE CHARGED INTEREST U/S 234A AND 234B OF THE ACT. THE CHARGING OF ITA NO.1189/B/13 6 INTEREST IS CONSEQUENTIAL AND MANDATORY AND THE ASS ESSING OFFICER HAS NO DISCRETION IN THE MATTER. THIS PROPOSITION HAS BEEN UPHELD BY THE HONBLE APEX COURT IN THE CASE OF ANJUM GHASWALLA & OTHERS IN 252 ITR 1 (SC) AND WE, THEREFORE UPHOLD THE ACTION OF T HE ASSESSING OFFICER IN CHARGING THE ASSESSEE THE SAID INTEREST. THE ASSESSING OFFICER, IS HOWEVER, DIRECTED TO RE-COMPUTE THE INT EREST CHARGEABLE U/S 234A AND 234B OF THE ACT, IF ANY, WHILE GIVING EFFE CT TO THIS ORDER. 6.1 GROUND AT SNO.2 AND 3 ARE THEREFORE, THE ONLY EFFECTIVE GROUNDS IN THIS APPEAL WHEREIN THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ADDITION OF RS.31,00,000/- MADE BY THE ASSESSIN G OFFICER IN RESPECT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE AC T. ACCORDING TO THE LEARNED AR FOR THE ASSESSEE, THE ASSESSEE HAS BROUG HT IN CAPITAL INTO THE BUSINESS OF RUNNING THE PETROL BANK FROM OUT OF HIS PAST SAVINGS AND THE FUNDS OF THE ASSESSEES HUF ON VARIOUS DATE S DURING THE YEAR AND THAT THE SAME WAS ALSO ENTIRELY WITHDRAWN BY TH E ASSESSEE DURING THE YEAR. HOWEVER, BEFORE THE ASSESSING OFFICER, I T WAS SHOWN THAT THE ENTIRE FUNDS WAS BROUGHT IN ON A SINGLE DAY IE. 5/4/2005. IT IS SUBMITTED THAT IT WAS IN THESE CIRCUMSTANCES THE AD DITION WAS MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO FURNISH EVIDENCE/DETAILS TO ESTABLISH THE ITA NO.1189/B/13 7 GENUINENESS OF THE CASH CREDIT. THE LEARNED AR FIL ED AN AFFIDAVIT DATED 14/7/2014 ALONG WITH ADDITIONAL EVIDENCES IN THE FORM OF LEDGER ACCOUNTS IN THE BOOKS OF ASSESSEE AND THE ASSESSEE S HUF IN SUPPORT OF THE SOURCE FOR ADDITIONAL CAPITAL AND PRAYED THA T THE ASSESSEE BE GIVEN ANOTHER OPPORTUNITY BEFORE THE ASSESSING OFFI CER TO EXPLAIN THE SOURCES FOR THE AMOUNT OF RS.31,00,000/- SOUGHT TO BE INTRODUCED AS CAPITAL. 6.2 PER CONTRA, THE LEARNED DR FOR REVENUE SUPPORTE D THE IMPUGNED ORDER OF THE LEARNED CIT(A), SUBMITTING TH AT THE ASSESSEE WAS AFFORDED ADEQUATE OPPORTUNITY TO PRESENT ITS CA SE ON THE ISSUE IN APPEAL BOTH BEFORE THE ASSESSING OFFICER AND THE LE ARNED CIT(A). THE LEARNED DR CONTENDED THAT THE PLEA FOR A FRESH OPPO RTUNITY TO THE ASSESSEE TO REPRESENT ITS CASE AT THIS STAGE WAS NO T JUSTIFIED. THE LEARNED DR ALSO PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH OF THE ITAT, BANGALORE IN THE CASE OF ANUPAM KOTHARI IN ITA NO.837/BANG/2012 DATED 5/9/2014 AND SUBMITTED THAT THE ASSESSEES PLEA FOR ADMISSION OF ADDITIONAL EVIDENCE SHOULD NO T BE ENTERTAINED SINCE THE REQUIREMENT OF RULE 29 OF THE ITAT RULES ARE NOT SATISFIED. ITA NO.1189/B/13 8 6.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. FROM A PERUSAL OF THE IMPUGNED ORDER WE FIND THAT THE LEARNED CIT(A) HAS DISMISSED THE APPEAL BOTH ON MERITS OF THE GROUNDS RAISED; THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS OF PROVING THE CREDITS WITH EVIDENCE AND T HAT THE REASONS FOR SEEKING CONDONATION OF DELAY WERE NOT ACCEPTABLE. ON AN APPRECIATION OF THE MATERIAL ON RECORD WE FEEL THAT THE LEARNED CIT(A) OUGHT NOT TO HAVE REJECTED THE APPEAL OF THE ASSESS EE ON THE QUESTION OF DELAY OF 146 DAYS IN FILING THE APPEAL. THE AS SESSEE HAS SUBMITTED THAT THE DELAY OF 146 DAYS WAS DUE TO THE ADVICE OF ITS COUNSEL TO ACCEPT THE ASSESSMENT TO ESCAPE PENAL CONSEQUENCES. HOWEVER, WHEN PENALTY CAME TO BE LEVIED, THE ASSESSEE ON THE ADVI CE OF ITS PRESENT COUNSEL, WAS ADVISED TO FILE AN APPEAL IMMEDIATELY. AS PER THE EXPLANATION FURNISHED, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SHOWN SUFFICIENT CAUSE FOR CONDONATION OF THE DELAY OF 14 6 DAYS IN FILLING OF THE APPEAL BEFORE THE LEARNED CIT(A). HAVING REFER RED TO THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF M ST KATIJI AND OTHERS REPORTED IN 167 ITR 471, WE ARE INCLINED TO HOLD THAT THE ORDER OF THE LEARNED CIT(A) ON THE ISSUE OF CONDONATION O F DELAY REQUIRES TO BE VACATED AND HOLD ACCORDINGLY. ITA NO.1189/B/13 9 6.3.2 ON THE MERITS OF THE CASE, WE DECLINE TO EXPR ESS ANY OPINION ON THE ADDITIONAL EVIDENCE PUT FORTH BY THE ASSESSEE A T THIS STAGE AS WE ARE CONFINING OURSELVES TO THE PRAYER OF THE ASSESSEE F OR ANOTHER OPPORTUNITY TO PLEAD HIS CASE BEFORE THE ASSESSING OFFICER. WE ARE INCLINED TO ALLOW THE ASSESSEE ANOTHER OPPORTUNITY ONLY BECAUSE THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LEARNED CIT(A) DUE TO THE LACK OF EVIDENCE PUT FORT H BY THE ASSESSEE. THE PURPOSE OF ASSESSMENT IS TO DETERMINE THE CORRE CT INCOME OF THE ASSESSEE AND WE ARE OF THE VIEW THAT THE ASSESSEE H AS REALIZED HIS ERRORS AND HAS ATTEMPTED TO FILE ADDITIONAL EVIDENC E BEFORE US IN AN ATTEMPT TO SHOW THAT HE HAD SUFFICIENT SOURCES TO E XPLAIN THE CAPITAL INTRODUCED IN THE YEAR UNDER CONSIDERATION. IN THI S VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE ASSESSEE MUST BE AFF ORDED AN OPPORTUNITY TO ESTABLISH THE SAME AND NOT REJECT TH E SAID RECOURSE ON THE GROUND THAT THE ASSESSEE DID NOT APPEAR BEFORE THE LEARNED CIT(A) EARLIER. WE, THEREFORE, IN THE INTEREST OF EQUITY AND JUSTICE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MAT TER TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER AFRESH THE MATTER REL ATING TO THE ADDITION OF RS.31,00,000/- U/S 68 OF THE ACT, AFTER AFFORDIN G THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. WE ARE NOT PA SSING ANY ORDER ON THE ADMISSION OF ADDITIONAL EVIDENCE PUT FORTH BY T HE ASSESSEE IN TERMS ITA NO.1189/B/13 10 OF RULE 29. HOWEVER, LIBERTY IS GIVEN TO THE ASSES SEE TO PRODUCE BEFORE THE ASSESSING OFFICER MATERIAL/DETAILS/EVIDE NCE IN SUPPORT OF THE CLAIM OF GENUINENESS OF THE CASH CREDIT. THE A SSESSING OFFICER SHALL ALSO BE AT LIBERTY TO EXAMINE THE MATTER AFRE SH, GATHER SUCH EVIDENCE, CAUSE ANY ENQUIRY TO BE MADE, ETC. IN ORD ER TO VERIFY THE VERACITY OF THE ASSESSEES CLAIM AND TO THEREAFTER DECIDE THE MATTER IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE ASSESSEES APPEAL FOR THE ASS T. YEAR 2006-07 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH SEPT, 2015. SD/- SD/- (VIJAYPAL RAO) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER VMS. BANGALORE DATED : 24/9/2015 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.