R. Muniraju, Bangalore V. ITO, Bangalore

ITA 1246/BANG/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8676 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Keywords: Business income
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.1246(BNG.)/2013 (ASSESSMENT YEAR : 2005-0 6) SHRI MUNIRAJ (HUF), NO.10/3,13 TH MAIN, I CROSS, HAL II STAGE, BANGALORE-560 008 PAN NO.AAICS0944E/NA-196 APPELLANT VS THE INCOME-TAX OFFICER, WARD-7(3), BANGALORE RESPONDENT ASSESSEE BY : SHRI RAGHAVENDRA CHAKRAV ARTHY, CA REVENUE BY : SHRI P. DHIVAHAR, JCIT DATE OF HEARING : 21-0 1-2015 DATE OF PRONOUNCEMENT : 06-02-2015 O R D E R PER SHRI ABRAHAM P GEORGE, AM; IN THIS APPEAL FILED BY THE ASSESSEE ITS GRIEVANCE IS THAT AN ADDITION OF RS.12 LAKHS MADE BY THE AO UNDER SECTION 68 OF T HE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS CONFIRMED BY THE LEARN ED CIT(A). 2. ASSESSEE, AN HUF HAD FILED ITS RETURN DECLARIN G AN INCOME OF RS.1,79,850/-. INCOME DECLARED WAS INTEREST RECEI VED ON MONEY LENT BY THE ASSESSEE TO SOME PERSONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FURNISHED DETAILS OF THE PERS ON TO WHOM IT HAD LENT 2 ITA NO.1246B)/13 MONEY. ASSESSEE, IT SEEMS ALSO STATED THAT NO BOO KS OF ACCOUNT WERE MAINTAINED. FROM THE BANK ACCOUNT IN THE NAME OF T HE ASSESSEE WITH INDIRANAGAR BRANCH OF CORPORATION BANK, ASSESSING O FFICER NOTED THAT THERE WAS CASH DEPOSITS OF RS.3,00,000/- ON 23-11-2 009 AND RS.9,00,000/- ON 12-01-2005. HE SOUGHT EXPLANATION FOR THE SOURCE FROM THE ASSESSEE. ASSESSEE VIDE HIS LETTER DATED 20-12 -2007 STATED AS UNDER; WITH REFERENCE TO THE ABOVE, I WOULD LIKE TO INFO RM THAT I HAVE DEPOSITED RS.3,00,000/- ON 23-11-2004 AND RS.9,00,000/- ON 12-01-2005 RESPECTIVELY. I HAVE SUBMITTED BANK STATEMENT AND REMARKS AND CASH BOOK FOR YOUR RECORDS. I HAVE DEPOSITED RS.3,00,000/-ON 23- 11-2004 FROM MY CASH WITHDRAWN FROM BANK AND CASH ON HAND ON THAT DATE I HAVE TAKEN MONEY OF RS.50,000/- FROM MAHABALESHWAR, ADVOCATE, M/S MGC & CO. AND HE WAS ASKING MONEY BACK IMMEDIATELY. HENCE I DONT HAVE ANY CHOICE OF GETTING MONEY REPA Y THE SAME TO HIM AND I COLLECTED THE MONEY WHICH I W AS LENT TO VARIOUS PERSONS AND THAT MONEY WAS LENT TO VARIOUS PERSONS AND THAT MONEY I WAS DEPOSITED IN T HE BANK AND CLEARED THE LOAN WHICH I WAS TAKEN FROM MAHABALESHWAR. THE DETAILS OF SOURCES OF MONEY DEPOSITED AND WITHDRAWN WAS ALREADY EXPLAINED IN TH E CASH BOOK WHICH WAS ALREADY WITH YOU. 3 ITA NO.1246B)/13 THE DETAILS EXPLANATION AND EVIDENCE FOR DEPOSITIN G THE ABOVE MONEY INTO THE BANK HAS BEEN ENCLOSED. THE CONFIRMATION OF ACCOUNTS HERE I LENT MONEY HAS BEEN ENCLOSED 3. HOWEVER, THE AO DID NOT ACCEPT THE ABOVE REPLY AND GAVE THE FOLLOWING REASONS AS TO WHY HE WAS NOT SATISFIE D WITH IT. I) ARGUMENT THAT ACCUMULATED CASH WAS DEPOSITED COU LD NOT BE ACCEPTED. II) NO VALID PROOF FOR THE SOURCE OF THE CASH DEPOS ITS WERE FURNISHED HE THEREFORE, MADE AN ADDITION OF RS.12.00 LAKHS UN DER SECTION 68 OF THE ACT. 4. IN ITS APPEAL BEFORE THE CIT(A), ASSESSEE TOOK THE FOLLOWING ARGUMENTS. I) SOURCE OF CASH WERE RECEIPT FROM DEBTORS TO WHO M ASSESSEE HAD EARLIER ADVANCED LOAN, ELEVEN CONFIRMATIONS WER E FILED. II) CASH BOOK PRODUCED REFLECTED ACCUMULATION OF C ASH BALANCE, OUT OF WHICH THE DEPOSITS WERE MADE. 4 ITA NO.1246B)/13 5. HOWEVER, THE CIT(A) WAS NOT IMPRESSED WITH THE ABOVE. ACCORDING TO HIM, I) THE CONFIRMATIONS FILED BY THE ASSESSEE DID NOT HAVE COMPLETE PARTICULARS AND SIGNATURES THEREIN WERE FR OM ILLITERATE PERSONS. II) ASSESSEE HAD MADE PETTY WITHDRAWALS FROM HIS B ANK ACCOUNT, EVEN WHEN IT HAD SUBSTANTIAL CASH WITH IT, WHICH WAS ILLOGICAL. III) THE FLOW OF WITHDRAWALS FROM BANK WERE SUCH T HAT IDLE FUNDS REMAINED WITH THE ASSESEE, WHICH NO PRUDENT B USINESS PERSON WOULD HAVE DONE. ESPECIALLY SO, SINCE ASSESSEE WAS IN MONEY- LENDING BUSINESS. HE THUS, CONFIRMED THE ADDITION. 6. NOW BEFORE US THE LEARNED AR , REFERRING TO PB PAGES 2 TO 5 SUBMITTED THAT THE CASH BOOK PREPARED AND PRODUCED BY THE ASSESSEE AT THE BEHEST OF THE AO, CLEARLY SHOWED TH AT THERE WAS SUFFICIENT CASH BALANCE WITH THE ASSESSEE TO MAKE T HE DEPOSITS. ACCORDING TO HIM CONFIRMATION FROM SHRI ABDUL RAHE EM FOR RS.45,000/- RECEIVED ON 10-01-2005, FROM SHRI ANIL KUMAR SINGH FOR RS.50,000/- RECEIVED ON 29-09-2004, FROM SMT. G EETHA FOR RS.20,000/- RECEIVED ON 03-01-2005, FROM GURU KAMAL FOR FOR RS.95,000/- RECEIVED ON 12-08-2004 AND RS.27,50 0/- RECEIVED 5 ITA NO.1246B)/13 ON 30-09-2004, FROM SHRI IMMANUAL PRAKASH FOR RS.93 ,500/- RECEIVED ON 03-09-2004, FROM SMT MANJU FOR RS.25,00 0/- RECEIVED ON 05-09-2004 AND ANOTHER RS.25,000/- RECEIVED ON 1 0-01-2005, FROM SHRI PANDIAN FOR RS.60,000/- RECEIVED ON 01-09 -2004 AND RS.9,750/- O 31-10-2004, FROM SHRI PRANESH FOR RS.1 ,00,000/- RECEIVED ON 10-12-2004 ND RS.24,000/- ON 01-01-2005 FROM M/S RAHUL AIRFREIGHT FOR RS.25,000/- RECEIVED ON 30-12 -2004, FROM RAJAJANNA FOR RS.10,000/- RECEIVED ON 13-08-2004, F ROM SHRI RAMANA FOR RS.15,000/- RECEIVED ON 23-11-2004 FROM SHRI SHEKAR FOR RS.75,000/- RECEIVED ON 30-07-2004 AND RS.66,20 0/- RECEIVED ON 15-12-2004, FROM SHRI SHIVARATHRI FOR RS.93,000/ - RECEIVED ON 31-12-2004, FROM SHRI SRIDHAR FOR RS.75,000/- RECEI VED ON 10-01- 2005 AND FROM SHRI VINOD FOR RS.50,000/- RECEIVED O N 03-07-2004, WERE ALL ON RECORD (PB PAGES 22 TO 36). IN ANY CAS E ACCORDING TO HIM, WHEN NO BOOKS WERE MAINTAINED SECTION 68 COULD NOT BE INVOKED. ACCORDING TO THE LEARNED AR, BANK PASS-B OOK COULD NEVER BE CONSTRUED AS BOOKS MAINTAINED BY THE ASSESSEE. RELIANCE WAS PLACED ON A DECISION OF HONBLE GUWAHATI HIGH COURT IN THE CASE OF ANAND RAM RAITANI VS CIT 223 ITR 544. 6 ITA NO.1246B)/13 7. PER CONTRA, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WHAT WE FIND IS THAT, ASSESSEE HAD I NDEED PRODUCED A CASH BOOK BEFORE THE AO. IN FACT VARIOUS CONFIRMA TION OBTAINED BY THE ASSESSEE FROM ITS DEBTORS, REFLECTING REPAYMENT IN CASH BY THEM PLACED AT PB PAGES 22 TO 36 ARE NOTHING BUT THE LED GER PAGES OF THESE DEBTORS IN ASSESSEES BOOKS. MAY BE ITS TRUE THAT CASH BOOK WAS PREPARED AT THE BEHEST OF THE AO. HOWEVER, IT REMAINS A FACT THAT THE CASH BOOK WAS BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. COPY OF THIS CASH BOOK HAS BEEN PLACE D BEFORE US AT PB PAGES 2 TO 5 AND BANK BOOK AT PAGE 6 TO 10. HE NCE, ASSESSSEES STATEMENT BEFORE THE AO THAT IT HAD NOT MAINTAINED CASH BOOK AS CONTRARY TO WHAT WAS ON RECORDS. 9. ONCE ASSESSEE PRODUCED A CASH BOOK, THE ONUS WA S ON THE ASSESSEE TO PROVE THE ENTRIES THEREIN. IF IT WAS UNABLE TO DO SO, AO COULD CERTAINLY INVOKE SECTION 68, EVEN OTHERWISE A O CAN INVOKE SECTION 69, IF SOURCE OF INVESTMENT IS NOT PROPERLY EXPLAINED. ASSESSEE CANNOT WRIGGLE OUT OF ITS OBLIGATION UNDER LAW, BY CITING A 7 ITA NO.1246B)/13 REASON THAT BOOKS OF ACCOUNTS WERE PREPARED UNDER T HE INSTRUCTION OF THE AO. NO DOUBT, ASSESSEE HAD RETURNED ITS IN TEREST INCOME UNDER THE HEAD OTHER SOURCES. BUT APPLICATION O F SECTION 68 AND SECTION 69 ARE NOT RESTRICTED TO BUSINESS INCOME. I T CAN ENCOMPASS ANY TYPE OF INCOME, AS THE FACTS MAY CALL FOR. 10. NEVERTHELESS, WE FIND THAT CONFIRMATION FILED BY THE ASSESSEE AT PAGES 22 TO 36, DID CARRY THE ADDRESS O F THE PERSONS FROM WHOM IT HAD RECEIVED CASH. NONE OF THESE PERSO NS WERE EXAMINED BY THE LOWER AUTHORITIES. FURTHER, ACCUM ULATION OF CASH IN CASH-BOOK PERSE CANNOT BE A REASON FOR DISBELIEV ING THE SOURCE OF A DEPOSIT IN BANK. AN ASSESSEE MIGHT HAVE MYRIAD O F REASON FOR WITHDRAWING CASH FROM BANK OR KEEPING CASH WITH HIM . UNLESS THE DISTANCE OF TIME IS SUCH AS TO MAKE IT UNBELIEVABLE , IN OUR OPINION EXPLANATION OF SOURCE SHOULD NOT BE BRUSHED ASIDE. WE ARE THEREFORE, OF THE OPINION, THAT RULES OF JUSTICE RE QUIRE A VERIFICATION OF THE CONFIRMATION FILED BY THE ASSESSEE, PLACED AT P B 22 TO 36 BY THE AO, BY ISSUING PROPER SUMMONS. IF THE PARTIES DO N OT ATTEND THE SUMMONS ON IF THE ASSESSEE FAILS TO PRODUCE THEM, A O CAN TAKE AN ADVERSE VIEW AND MAKE AN ADDITION. FOR THE LIMITED PURPOSE OF THIS VERIFICATION, WE SET ASIDE THE ORDERS OF THE AUTHOR ITIES BELOW AND 8 ITA NO.1246B)/13 REMIT THE ISSUE OF ADDITION OF RS.12.00 LAKHS BACK TO THE FILE OF THE AO. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 6 TH FEBRUARY, 2015. SD/- SD/ - (N.V.VASUDEVAN) (ABRAHAM P GEORGE) JUD I CIAL MEMER ACCOUNTANT MEMBER BANGALORE: D A T E D : 06-02-2015 AM COPY TO : APPELLANT RESPONDENT CIT(A)-IV, BANGALORE. CIT DR, ITAT, BANGALORE. GUARD FILE (1+1) ASST. REGISTRAR ITAT, BANGALORE