Sri Rabindramohan Sahoo, Kendrapada V. ITO, Cuttack

ITA 132/CTK/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0818 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-01-2011
• Assessment Year: 1981-1982
• Appeal Filed On: 19-03-2009
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: P R MOHANTYS ASWAT ACHARYA
• Keywords: Unexplained investment; Search and seizure; Corroborative evidences
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK () BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 132 AND 133/CTK/2009 / ASSESSMENT YEAR S 1981 - 82 AND 1985 - 86 SRI RABINDRA MOHAN SAHOO, AT/P.O.BADAHAT, KNDRAPADA PAN: ADQPS 4145 R - - - VERSUS - INCOME - TAX OFFICER, WARD 1 (2), CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.R.MOHANTY/S ASWAT ACHARYA, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THESE APPEALS BY THE ASSESSEE AGITAT E THE ORDERS OF THE LEARNED CIT(A) WHO HAS CONFIRMED THE ADDITIONS SO MADE UNDER THE PROVISIONS OF SECTIONS 147/148/143(3)/254 AS HAVING BEEN DEALT WITH BY THE TRIBUNAL ON AN EARLIER OCCASION WHEN THE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE IN THE PRESENT CASE, DERIVES INCOME, AS A PARTNER OF M/S BHASKAR TALKIES (CINE COMP LEX), M/S R.M. SAHOO & PARTNERS (DEALING IN POTATO, PESTICIDE, AND OTHER AGRICULTURAL PRODUCT). FOLLOWING A SEARCH AND SEIZURE OPERATION ON 20.06.1988, THE ASSESSMENT WAS REOPENED ON 18.03.1992, I.E., ALMOST AFTER 10 YEARS, ON THE INFERENCE THAT THE CASH D EPOSITED, IN THE ACCOU NT OF SRI PRAMOD KUMAR SAHOO HAD ESCAPED ASSESSMENT, IN THE HAND OF THE PRESENT ASSESSEE. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED U/S. 143(3)/147 OF THE INCOME TAX ACT MAKING, THE ONLY ADDITION, ON ACCOUNT OF UNEXPLAINED INVESTMENT, IN SHAPE OF CREDIT STANDING, IN THE BANK ACCOUNT, IN THE NAME OF A I.T.A.NO. 132 AND 133/CTK/2009 2 ALTOGETHER DIFFERENT PERSON, SRI PRAMOD KUMAR SAHOO, U/S. 69 OF THE I.T. ACT, FOR RS. 1,50,000/ - AND 5,20,000 FOR THE ASSESSMENT YEAR 1985 - 86 . IN THE PARTNERSHIP FIRM M/S R.M. SAHOO & PA RTNERS, SRI DAMODAR SAHOO, THE ELDER BROTHER OF PRAMOD KUMAR SAHOO HAPPENS TO BE ONE OF THE PARTNER AND THE SAID SRI DAMODAR SAHOO AND PRAMOD KUMAR SAHOO (BOTH NEPHEW S OF THE PRESENT APPELLANT) WERE RESIDING WITH THEIR UNCLE, SINCE THEIR CHILDHOOD AND SINC E THEN, HAD STARTED TO LEARN THE BUSINESS PRUDENCY BY ACTIVELY PARTICIPATING IN THE BUSINESS OF THE APPELLANT. AS THEY GREW OLDER, SRI PRAMOD KUMAR SAHOO STARTED HIS OWN BUSINESS HAVING SEPARATE SHOP, WHEREAS HIS ELDER BROTHER CONTINUED TO BE A PARTNER OF M/S R.M. SAHOO & PARTNER, MANAGING THE SAID BUSINESS. ALL THE FAMILY MEMBERS ARE IN THE SAME BUSINESS DEALING WITH POTATO, ONIONS, PESTICIDE, CEMENT, CLOTHES ON WHOLESALE BASIS AND MUTUALLY CO - EXISTED AS A JOINT FAMILY. FOR THE PURPOSE OF HIS OWN BUSINESS, SRI PRAMOD KUMAR SAHOO, OPENED AN ACCOUNT WITH UNITED BANK OF INDIA, BALADEV JEW MANDIR BRANCH, KENDRAPARA BEA RING A/C NO.SB - 184, WHERE HE MADE CASH DEPOSIT OF RS.1,50,000/ - , WHICH THE LD. A.O. INFERRED AS THE UNEXPLAINED INVESTMENT MADE BY THE PRESENT AS SESSEE ON THE GROUND THAT THE PASS BOOK WAS FOUND, IN THE RESIDENCE OF SRI RABINDRA MOHAN SAHOO, THE ASSESSEE. WHEN IT IS A UNDISPUTED FACT ACCEPTED BOTH BY THE DEPARTMENT, AS WELL AS THE ASSESSEE THAT SRI PRAMOD KUMAR SAHOO STAYS WITH HIS UNCLE (THE ASSES SEE) IN THE SAME BUILDING AND STARTED HIS OWN BUSINESS WITH THE GUIDANCE OF HIS UNCLE, HIS ELDER BROTHER SI DAMODAR SAHOO, AS WELL AS UTILIZING HIS OWN EXPERIENCE IN THIS LINE. IN COURSE OF ASSESSMENT, SRI PRAMOD KUMAR SAHOO WAS SUMMONED TO EXPLAIN THE CRE DIT STANDING IN HIS NAME IN THE BANK ACCOUNT , ACCORDINGLY HE APPEARED BEFORE THE LD. A.O. ON 16.03.1994 AND A STATEMENT WAS RECORDED FROM HIM, WHERE HE ADMITTED THAT THE AFORESAID BANK ACCOUNT WAS BEING OPERATED BY HIM SOLELY AND ALL THE TRANSACTIONS I.T.A.NO. 132 AND 133/CTK/2009 3 EITH ER DEPOSIT OR WITHDRAWALS WERE DONE BY HIM WITH HIS FULL KNOWLEDGE AND ACCORDING TO HIM SRI RABINDRA MOHAN SAHOO HAS NO CONNECTION WITH HIM EITHER IN CONNECTION WITH BUSINESS AFFAIRS OR IN BANKING TRANSACTION. AS AGAINST THE ORIGINAL ASSESSMENT, THE APPELL ANT CARRIED THE MATTER, IN APPEAL, BEFORE THE LD. C.I.T.(A), AND FURTHER BEFORE THE ITAT, CUTTACK BENCH, CUTTACK. THE ITAT, AF TER GOING THROUGH THE ORDER OF F ORUM BELOW, RESTORED THE MATTER TO THE LD. A.O. THE LD. A.O. COMPLETED THE ASSESSMENT PURSUANCE T O THE DIRECTION OF THE ITAT, U/S 143(3) / 147 / 254 VERBATIM, REPRODUCING THE SAME AS HAD BEEN DONE BY HIS PREDECESSOR, IN THE ORIGINAL ASSESSMENT. THUS, AGGRIEVED WITH SUCH ORDER, THE APPELLANT PREFERRED APPEAL BEFORE THE LD. CIT(A), CUTTACK, ORISSA. IN COURSE OF HEARING BEFORE THE LD. CJ.T.(A), THE APPELLANT ELABORATELY EXPLAINED THAT THE ASSESSMENT AS COMPLETED BY THE LD. A.O. IS VOID AB INITIO AND INFRUC TUOUS AS THE CASE WAS REOPENED AFTER ALMOST 10 YEARS WITH THE APPROVAL OF THE LD. DCIT AND FURTHER THE LD. A.O. DOES NOT HAVE IN HIS POSSESSION ANY MATERIAL RELATING TO THE ASSESSEE - APPELLANT, RATHER HE REOPENED THE CASE HEAVILY RELYING ON THE BANK STATEMENT OF A ALTOGETHER A DIFFERENT PERSON AND FURTHER THE ASSESSEE - APPELLANT HAS CITED FEW CASE LAWS TO FURTHERING HIS CAUSE THAT NO REOPENING IS POSSIBLE ON PRESUMPTION AND THE VERY INITIATION OF PROCEEDINGS UNDER 148 IS BARRED BY LIMITATION, BUT THE LD. CIT(A) SIMPLY IGNORED THE LEGAL PROVISIONS AND CONFIRMED THE INVALID ASSESSMENT MADE BY THE ASSESSEE. I T IS AGAINST SUCH ORDER OF THE LEARNED CIT(A) THAT THE ASSESSEE HAS FILED THE PRESENT APPEALS HERE BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BANK STATEMENTS WHICH HAVE BEEN CATEGORICALLY FOUND IN THE FORM OF A PASS BOO K DURING THE SEARCH CARRIED OUT IN THE CASE OF THE ASSESSEE APPELLANT, THE AS SESSEES UNCLE, THE ASSESSEE HAD BEEN REPEATEDLY SUBMITTING THAT UNDER I.T.A.NO. 132 AND 133/CTK/2009 4 THE PROVISIONS OF SECTION 132(4) AS BELONGING TO THE ASSESSEE APPELLANT IS NOT THE DOCUMENTED PASS BOOK IN SCRIBING THE OPERATION OF THE ACCOUNT AND THE FUNDS ROUTED IN THE PASS BOOK BELONG ING TO SHRI PRAMOD KUMAR. THE DEPARTMENT HAS, THEREFORE, REPEATEDLY HELD THAT BECAUSE THE ACCOUNT HOLDER HAS NOT BEEN ABLE TO EXPLAIN THE DEBITS AND CREDITS IN THE BANK PASS BOOK OUGHT TO BE CONSIDERED FOR TAXATION IN THE HANDS OF THE ASSESSEE APPELLANT WHO IS NOT REMOTELY ESTABLISHED TO BE IN CONTROL OR POSSESSION OF THE SAID SUM LYING IN THE BANK ACCOUNT OR THE TRANS ACTIONS OF PURCHASES AND SALES ARE AN ENTIRELY DIFFERENT BU SINESS TRANSACTIONS FROM THE ONES THE LEARNED ASSESSING OFFICER HAS OBSERVED . IN SUPPORT OF HIS CONTENTION, HE SUBMITTED THE BANK STATEMENT WHICH WAS FOUND AT THE TIME OF SEARCH WHICH NOTING OF THE BANK ENTRIES WOULD ITSELF CREATE A DOUBT WHETHER COULD BE THE AMOUNT BE TAXED IN THE HANDS OF THE ASSESSEE APPELLANT WHOSE ONLY FAULT, IF ANY, IS THAT HE IS THE UNCLE OF THE BANK ACCOUNT HOLDER SHRI PRAMOD KUMAR. THE CREDIT OF CASH DEPOSITED IN THE ACCOUNT BY SHRI PRAMOD KUMAR WAS WITHDRAWN BY HIM FOR HIS PERSONA L USE AFTER A WEEK IN CASH, THEREFORE, SQUARES OFF THE PURPORTED INCOME, IF ANY, IN S O FAR AS THE ASSESSING OFFICER WA S APPRISED OF THE FACT THAT THE MONEY WAS LYING WITH THE BANK AND NOT WITH THE ASSESSEE. SIMILARLY IN THE ASSESSMENT YEAR 1985 - 96, THE AMO UNT OF CASH WAS ONLY 1,20,000 WHEN A TRANSFER ENTRY OF 4 LAKHS WAS SQUARED OFF BY THE BANK ITSELF BY RE - TRANSFERRING THE AMOUNT AFTER A GAP OF WEEK WHICH CLEARLY INDICATES THAT IT WAS NOT IN THE HANDS OF THE ASSESSEE APPELLANT BEFORE THE AUTHORITIES BELO W TO BE CONSIDERED AS TAXABLE UNDER THE PROVISIONS OF SECTION 69A. HE SUBMITTED THAT THE EXERCISE OF DETERMINING THE INCOME IN THE HANDS OF THE ASSESSEE WAS LOST SIGHT OF INSPITE OF THE DIRECTION OF THE TRIBUNAL WHEN THE ASSESSING OFFICER PASSED COPYING TH E ORIGINAL ASSESSMENT ORDER WHICH WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY IN THE FIRST INNING. THE LEARNED CIT(A) I.T.A.NO. 132 AND 133/CTK/2009 5 RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WHEN THE TRIBUNAL INDICATED THAT MERE FINDING OF A BANK PASS BOOK DO ES NOT INDICATE CONTROL OF THE FUNDS IN THE BANK IN THE HANDS OF THE PERSON WHO COULD UTILIZE SUCH AMOUNTS AFTER HAVING WITHDRAWN THE SAME ON THE BASIS OF INSTRUCTION OF THE ACCOUNT HOLDER. THE LEARNED CIT(A) THEREAFTER CONSIDERED THE ASSESSEES AGITATION BEFORE IT BY REPRODUCING THE VARIOUS INTERPRETATION OF LAW AND CONSIDERED IT AS AN EXERCISE IN UNDERSTANDING THE INTER SE RELATION OF THE EXTENDED FAMILY WHEN ON ACCOUNT OF PRESUMPTION AND ASSUMPTIONS TELESCOPED HIS FINDING TALLYING WITH THAT OF THE ASSESS ING OFFICER. THE LEARNED COUNSEL VEHEMENTLY ARGUED THAT THE ASSESSING OFFICER TILL THE LAST INSISTED UPON SEEKING EXPLANATION FROM THE ASSESSEE ABOUT THE DOCUMENT AND INFORMATION WHICH ALONE WAS ONLY A BANK PASS BOOK FOUND WITH THE ASSESSEE BUT HAVING NO C ONTROL OR VALUE IN MONEY TERMS AS PROVIDED IN SECTION 132(4A). HE ALSO DID NOT EVEN TR Y TO MAKE A PROTECTIVE ASSESSMENT IN THE HANDS OF THE SHRI PRAMOD KUMAR SAHO O INSPITE OF HAVING CATEGORICAL FINDING TO THIS SCORE FROM THE LEARNED CIT(A) AND THE TRIBUNAL . THEREFORE, THE LEARNED COUNSEL SUBMITTED THAT IT WAS ENTIRELY AN ONE - SIDED VIEW THRUST UPON THE ASSESSEE WITHOUT ANY CORROBORATIVE EVIDENCE BY THE ASSESSING OFFICER WHETHER ANY SUCH EFFORT COULD HAVE BEEN MADE BY THE ASSESSING OFFICER TO TRACE WHETHER TH IS INCOME COULD BE TAXED IN THE HANDS OF THE ASSESSEE OTHER THAN THE ACCOUNT HOLDER. A TRANSFER ENTRY BY BANK LEAVES FOOT PRINTS WHICH HAS TO BE VERIFIED BY THE ASSESSING OFFICER TO CONFIRM INCOME IN THE HANDS OF THE ASSESSEE AND NOT THE ACCOUNT HOLDER. T HEREFORE, HE PRAYED THAT BOTH THE ADDITIONS DO NOT STAND THE BONAFIDE OF TO BE TAXED IN THE HANDS OF THE ASSESSEE WHEN NO CORRESPONDING EVIDENCES HAVE BEEN ESTABLISHED THAT W OULD RELATE IT TO BE TAXED ONLY IN THE HANDS OF THE ASSESSEE. I.T.A.NO. 132 AND 133/CTK/2009 6 4. THE LEARNED DR OP POSED THE CONTENTION OF THE LEARNED COUNSEL AND SUBMITTED THAT THE BANK STATEMENT OR A PASS BOOK BECOMES A DOCUMENT BELONGING TO ANOTHER PERSON BUT IN THE CONTROL OF THE ASSESSE WAS TO BE EXPLAINED BY THE ASSESSEE IN ITS ENTIRETY. IT WAS THE ASSESSEE WHO OUGHT TO HAVE EXPLAINED THE CORRESPONDING CORROBORATIVE EVIDENCES, IF ANY, WHICH EVEN AFTER REPEATED QUERY WAS NOT RENDERED TO THE AUTHORITIES. HE, THEREFORE, SUBMITTED THAT THE ONLY COURSE OPEN TO THE AUTHORITY BELOW WAS TO HOLD THAT THE MONEY BELONGED TO THE ASSESSEE AND WAS BROUGHT TO TAX UNDER THE PROVISIONS OF SECTION 69A WAS THEREFORE RIGHTLY CONFIRMED BY THE LEARNE D CIT(A) WHICH HE FULLY SUPPORTED FOR HIS PART OF SUBMISSIONS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSED THE MATERIAL AVAILA BLE ON RECORD AND WE ARE OF THE CONSIDERED VIEW THAT SUFFICIENT TIME HAS ELAPSED AND ALSO THE ISSUE HAS BEEN DEALT WITH BY THE FIRST AND SECOND APPELLATE AUTHORITIES EARLIER WHEN TIME AVAILABLE TO THE AUTHORITIES INSISTING ON BRINGING TO TAX THE AMOUNT OWN ED AND DEALT BY ANOTHER PERSON IS SOUGHT TO BE TAXED IN THE HANDS OF THE ASSESSEE BEFORE US WHEN THE VERY FACT THAT THE EVIDENCE IS GLARING ON THE FACE OF THE DOCUMENT OF CASH BEING DEPOSITED BY ANOTHER PERSON WHICH THE TRIBUNAL IN ITS WISDOM EARLIER HAD R ESTORED THE MATTER TO THE ASSESSING OFFICER FOR CONSIDERATION AFRESH. A BANK ACCOUNT HOLDER DEPOSITS MONEY AND WI THDRAWALS THE SAME CANNOT BE HELD AS TAXABLE SINGLE HANDEDLY WHEN THE ASSESSING AUTHORITY OUGHT TO HAVE CONSIDERED THE DEBITS ALONG WITH THE WI THDRAWS FOR THE PURPOSE OF IDENTIFYING THE INCOME IN THE HANDS OF THE ASSESSEE OF HAVING CONTROL ON THE SAME DOCUMENT BEING A BANK STATEMENT. THE LEARNED DR HAS NOT BEEN ABLE TO DEMONSTRATE WHETHER EFFORT WAS MADE TO BRING TO RECORD THE AVAILABILITY OF CAS H OR INCOME IN THE HANDS OF THE ASSESSEE BEFORE US INSPITE OF HAVING FOUND THAT THE BANK PASS BOOK OF SHRI PRAMOD KUMAR SAHOO WAS FOUND AT THE TIME OF SEARCH WHEN A I.T.A.NO. 132 AND 133/CTK/2009 7 SPECIFIC REOPENING OF THE ASSESSMENT U/SS.147/148 OUGHT TO HAVE INSCRIBED THE INCOME HAVING ESCAPED ASSESSMENT WHICH PERIOD HAD ALREADY ELAPSED IN THE CASE OF THE ACCOUNT HOLDER. THEREFORE, THIS CLEARLY INDICATES THAT THE ASSESSING OFFICER SOUGHT THAT EXPLANATION FROM THE ASSESSEE BEFORE US FOR TRANSACTIONS CARRIED OUT BY A PERSON WHO WAS THE AC COUNT HOLDER AND COULD ONLY INDICATE THE TRANSACTIONS CARRIED WHEN THE MONEY WAS WITHDRAWN BY SELF - CHEQUES. THE ENTRY FOR THE ASSESSMENT YEAR 1985 - 86 ALSO INCORPORATES A TRANSFER ENTRY OF 4 LAKHS BY THE BANK WHICH COULD BE DOCUMENTED AND WOULD HAVE CLARIF IED THE INSTANCE THAT THE ASSESSE COULD NOT BE HELD AS HOLDING THE SAME TO BE TAXED AS INCOME UNDER THE PROVISIONS OF SECTION 132(4A). THE LEARNED COUNSEL HAS PROPOSED THAT THE ADDITION HAS BEEN CONFIRMED U/S.69A THEREFORE IMMEDIATELY TAKES CARE OF THE WIT HDRAWAL AFTER A WEEK FOR BOTH THE AMOUNTS APPEARS TO BE THE ENTRIES WHICH RULE OUT ANY POSSIBILITY OF INCOME GENERATED IN THE HANDS OF SHRI RABINDRA MOHAN SAHOO IN SO FAR AS IT WAS NOT SHRI RABINDRA MOHAN SAHOO WHO WANTED TO TAKE BACK HIS MON EY HAS NEITHER BEEN ESTABLISHED BY THE ASSESSING OFFICER OR THE LEARNED CIT(A) WHETHER COVERS HIS INCOME TAXED AFTER SEARCH . BOTH THE AUTHORITIES HAVE, THEREFORE, PROCEEDED ON PRESUMPTION AND ASSUMPTIONS WHICH WE ARE INCLINED TO DISAGREE IN SO FAR AS THE FACTS RELATE EN TIRELY TO A DIFFERENT SCHEME WHICH LATER OUGHT TO HAVE BEEN VERIFIED BY THE ASSESSING AUTHORITIES ON SUBSTANTIVE BASIS. 6. KEEPING IN VIEW THE ENTIRE FACTS, WE ARE OF THE BELIEVE THAT THE SAID SUM COULD NOT BE TAXED IN THE HANDS OF TH E ASSESSEE APPELLANT BEFORE US UNDER ANY CIRCUMSTANCES. THE OTHER GROUNDS RAISED BY THE ASSESSEE APPELLATE ARE NOT PRESSED AND THEREFORE, DISMISSED AS NOT PRESSED. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF 1,50,000 AND 5,20,000 IN THE ASSESSMENT YEAR 1981 - 92 AND 1985 - 86 RESPECTIVELY. I.T.A.NO. 132 AND 133/CTK/2009 8 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 21 ST JANUARY, 2011 S D/ - S D/ - ( . . . ), ( K.S.S.PRASAD RAO), JUDICIAL MEMBER (. . ), , (K.K.GUPTA), ACCOUNTANT MEMBER. () DATE: 21 ST JANUARY, 2011 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : SRI RABINDRA MOHAN SAHOO, AT/P.O.BADAHAT, KNDRAPADA 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1(2), CUTTACK. 3. / THE CIT, 4. ()/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.