Raminder Singh, Siliguri V. ITO, Ward - 2(2), Siliguri, Siliguri

ITA 1334/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48076 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 28-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V A RAJU
• Assessee Lawyers: M P THARD
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 143(3); 68; 6; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] # # # # / I.T.A NO. 1334/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR : 2005-06 RAMINDER SINGH VS INCOME-TAX OFFICER, WD-2(2), SILIGURI (PAN-AINPS 7401 G) ()* /APPELLANT ) (+,)*/ RESPONDENT ) FOR THE APPELLANT: SHRI M. P. THARD FOR THE RESPONDENT: SHRI V. A. RAJU !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ): THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A), SILIGURI IN APPEAL NO.113/CIT(A)/SLG/07-08 DATED 13.05.2010. THE ASSES SMENT WAS FRAMED BY ITO, WD- 2(2), SILIGURI U/S. 144 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005- 06 VIDE HIS ORDER DATED 28.12.2007. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKIN G ASSESSMENT U/S. 144 OF THE ACT. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT ASSESSEE IS UNABLE TO MAINTAIN DETAILS OF PERSONS FROM WHOM HE HAS RECEIV ED BROKERAGE OF PROPERTY AND IS NOT SUPPORTED BY ANY EVIDENCE ON THIS ISSUE. HENCE, ASS ESSING OFFICER HAS RIGHTLY MADE ASSESSMENT U/S. 144 OF THE ACT. AS THE ASSESSEE HIM SELF ADMITTED THE POSITION, WE DISMISS THIS ISSUE OF ASSESSEES APPEAL. 3. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING ACTION OF ASSESSING OFFICER IN DENYING S ET OFF OF UNABSORBED DEPRECIATION AGAINST CURRENT YEARS INCOME. FOR THIS, THE ASSES SEE HAS RAISED THE FOLLOWING GROUND NO.2: 2 ITA 1334/K/201 0 RAMINDER SINGH A.Y. 05-06 2. FOR THAT IN THE CIRCUMSTANCES AND ON THE FACTS OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. DENYING TO SET OFF THE UNABSORBED DEPRECIATION AGAINST THE CURRENT YEARS INCOME DETERMINED AND CO MPUTED BY THE LD. A.O. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE DERIVES INCOME FROM HOUSE PROPE RTY, CRANE PLYING, BROKERAGE PROPERTY DEALINGS (WHICH IS NOT SUPPORTED BY ANY EV IDENCE) BUT DISCLOSED IN THE RETURN OF INCOME AS DALALI INCOME FROM PROPERTY AND ALSO BU SINESS INCOME FROM CINEMA HALL KNOWN AS PAYAL THEATRE. THE ASSESSEE IS MAINTAIN ING BOOKS OF ACCOUNT FOR HIS CINEMA BUSINESS. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME AT RS.15,24,916/- AND CLAIMED UNABSORBED DEPRECIATION AT RS.15,24,916 /- RESULTING TOTAL INCOME AT NIL. THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT REGARDIN G CINEMA BUSINESS AND ALL DOCUMENTS, DETAILS OF EXPENDITURE, BUT THE ASSESSEE COULD NOT PRODUCE ANY DETAILS IN RESPECT OF BROKERAGE RECEIVED IN PROPERTY BUSINESS AND ASSESSEE ADMITTED THAT HE DOES NOT REMEMBER ANY SUCH PERSON FROM WHOM PROPERTY BRO KERAGE RECEIVED AND EVEN DOES NOT REMEMBER THE ADDRESSES. AS THE ASSESSEE COULD NOT PRODUCE THE DETAILS, THE ASSESSING OFFICER TREATED THIS INCOME FROM PROPERTY BROKERAGE AS INCOME FROM UNEXPLAINED SOURCES AMOUNTING TO RS.12 LACS AND DIS ALLOWED UNABSORBED DEPRECIATION TO BE SET OFF AGAINST THIS INCOME. FOR THIS, ASSESSIN G OFFICER HAS RECORDED HIS FINDINGS AND THE RELEVANT FINDINGS ARE AS UNDER: SINCE THE ASSESSEE NEITHER COULD PROOF THE GENUINE NESS OF THE INCOME EARNED NOR HE COULD SATISFACTORILY OFFERED EXPLANATION REGARDING THE SOURCE, I THEREFORE, CONSIDER THE AMOUNT OF RS. 12 LAKH RECEIVED BY THE ASSESSEE AS I NCOME FROM THE UNEXPLAINED SOURCE. SUCH TREATMENT FINDS SUPPORT FROM HONBLE GUJARAT H IGH COURT JUDGMENT IN THE CASE OF FAKIR MOHAMMED HAJI HASSAN VS. CIT 247 ITR 290 (GUJ ). SINCE NO WORKING DETAILS OF SUCH CARRY FORWARD IS GIVEN, OTHERWISE ALSO, THE UN ABSORBED DEPRECIATION LOSS IS NOT ALLOWED TO BE SET OFF AGAINST THE CURRENT YEAR INCO ME. HENCE, THE SET OFF OF UNABSORBED DEPRECIATION OF EARLIER YEARS MADE BY THE ASSESSEE WITH THE INCOME OF THE ABOVE UNDISCLOSED SOURCE IS THUS DISALLOWED. 5. THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSE SSING OFFICER BY FOLLOWING THE CASE LAW OF HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHAMMED HAJI HASSAN VS. CIT (2001) 247 ITR 290 (GUJ). AGGRIEVED, NOW A SSESSEE IS IN APPEAL BEFORE US. 6. WE FIND FROM THE ASSESSMENT ORDER THAT ASSESSING OFFICER HAS NOT ALLOWED SET OFF OF UNABSORBED DEPRECIATION AND FOR THIS THE ASSESSE E HAS FILED DETAILS IN COMPUTATION OF INCOME AND THE RELEVANT CLAIM OF THE ASSESSEE READS AS UNDER: TOTAL UNABSORBED DEPRECIATION 3 ITA 1334/K/201 0 RAMINDER SINGH A.Y. 05-06 BALANCE F/F 2,815,595.00 ADD: THIS YEAR DEPR. AS PER CHART BELOW 419,67 0.00 3,235,265.00 LESS: SET OFF THIS YEAR TO THE EXTENT OF AVAILABLE PROFIT 1,524,916.00 BAL. C/F TO NEXT YEAR AS UNABSORBED DEPRECIATION 1,710,349.00 THE ASSESSEE DEMONSTRATED BEFORE US THAT EVEN THE P ROOF REGARDING THE CLAIM OF UNABSORBED DEPRECIATION BEING ALLOWED FOR LAST 2/3 YEARS IN THE RETURNS OF INCOME AS WERE FILED BEFORE ASSESSING OFFICER BUT HE FAILED T O VERIFY THE SAME. THE ASSESSEES COUNSEL STATED THAT FIRST OF ALL, ASSESSING OFFICER HAS NOT MADE THIS ADDITION UNDER ANY HEAD OF INCOME AND HE SHOULD HAVE ASSESSED THE SAME UNDER ONE OF THE HEADS OF INCOME AS PROVIDED IN SECTION 14 OF THE ACT. HE REFERRED TO SECTION 14 OF THE ACT AND THE RELEVANT EXTRACT AS PRODUCED BEFORE US READS AS UND ER: SAVE AS OTHERWISE PROVIDED BY THIS ACT, ALL INCOME SHALL, FOR THE PURPOSES OF CHARGE OF INCOME-TAX AND COMPUTATION OF TOTAL INCOME, BE CLAS SIFIED UNDER THE FOLLOWING HEADS OF INCOME: A - SALARIES B - INTEREST ON SECURITIES (OMITTED BY THE F.A 1988, W.E.F. 1.4.1989) C - INCOME FROM HOUSE PROPERTY D - PROFITS AND GAINS OF BUSINESS OR PROFESSION E - CAPITAL GAINS F - INCOME FROM OTHER SOURCES THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE CO MPUTATION PROVISION CONSTITUTES AN INTEGRATED CODE. WHERE EVER COMPUTATION PROVISIONS ARE NOT APPLIED, INCOME CANNOT BE CHARGED UNDER THE ACT. ACCORDINGLY, HE STATED THAT LET THE ASSESSING OFFICER, FIRST OF ALL, DETERMINE THE HEAD OF INCOME AND ASSESS THE INCOME BY TAKING CONSEQUENTIAL MEASURES I.E. ALLOWING UNABSORBED DEPRECIATION AFTER VERIFIC ATION OF CLAIM. LD. COUNSEL FOR THE ASSESSEE DISTINGUISHED THE CASE LAW OF HONBLE GUJA RAT HIGH COURT IN THE CASE OF FAKIR MOHAMMED HAJI HASSAN (SUPRA) AND RELIED ON THE FOLL OWING CASE LAWS: I) CIT VS B. C. SRINIVASA SETTY (1981) 128 ITR 294 (SC), II) CHINTAN N. PARIKH & VATSAL N. PARIKH VS CIT (20 02) 253 ITR 564 (SC), III) NALINIKANT AMBALAL MODY VS CIT (1966) 61ITR 42 8 (SC). WE FIND THAT IN THE CASE OF B. C. SRINIVASA SETTY, THE HONBLE APEX COURT HELD THAT THE CHARGING SECTION AND THE COMPUTATION PROVISIONS TOG ETHER CONSTITUTE AN INTEGRATED CODE. WHEN THERE IS A CASE TO WHICH THE COMPUTATION PROVI SIONS CANNOT APPLY AT ALL, IT IS EVIDENT THAT SUCH A CASE WAS NOT INTENDED TO FALL W ITHIN THE CHARGING SECTION. FURTHER, IN 4 ITA 1334/K/201 0 RAMINDER SINGH A.Y. 05-06 THE CASE OF CHINTAN N. PARIKH & VATSAL N. PARIKH, T HE HONBLE SUPREME COURT HAS HELD THAT CHARGING SECTION AND THE COMPUTATION PROVISION S TOGETHER CONSTITUTE AN INTEGRATED CODE, WHEN THERE IS A CASE TO WHICH THE COMPUTATIO N PROVISIONS CANNOT APPLY AT ALL, IT IS EVIDENT THAT SUCH A CASE WAS NOT INTENDED TO FALL W ITHIN THE CHARGING SECTION. AND FURTHER MORE IN THE CASE OF NALINIKANT AMBALAL MODY, HONBL E SUPREME COURT HAS HELD THAT INCOME HAS TO BE BROUGHT UNDER ONE OF THE HEADS IN SECTION 6 AND CAN BE CHARGED TO TAX ONLY IF IT IS SO CHARGEABLE UNDER THE COMPUTING SEC TION CORRESPONDING TO THAT HEAD. INCOME WHICH COMES UNDER THE FOURTH HEAD, THAT IS, PROFESSIONAL INCOME CAN BE BROUGHT TO TAX ONLY IF IT CAN BE SO DONE UNDER THE RULES OF COMPUTATION LAID DOWN IN SECTION 10. IF IT CANNOT BE SO BROUGHT TO TAX, IT CANNOT BE BROUGH T UNDER THE RESIDUAL HEAD INCOME FROM OTHER SOURCES AND IT WILL ESCAPE TAXATION EVEN IF IT BE INCLUDED IN THE TOTAL INCOME UNDER SECTION 4. IN THE PRESENT CASE WE FIND THAT LD. DR STATED THAT ASSESSING OFFICER HAS ASSESSED INCOME RIGHTLY UNDER UNEXPLAINED SOURCES B Y INVOKING PROVISIONS OF SECTION 68 OF THE ACT. HE STATED THAT CIT(A) AS WELL AS ASSES SING OFFICER HAS RIGHTLY ASSESSED THE INCOME UNDER UNEXPLAINED SOURCES BY PLACING RELIANC E ON THE CASE OF HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHAMMED HAJI HASSA N VS. CIT 247 ITR 290 (GUJ). IN VIEW OF THE REASON THAT THE ASSESSEES CLAIM WAS NO T SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND HE CLEARLY ADMITTED THAT HE HAS NO DOC UMENTARY EVIDENCE FOR HIS CLAIM OF THIS BUSINESS INCOME BEING BROKERAGE FROM PROPERTY. 7. WE FIND FROM THE ABOVE FACTS OF THE CASE THAT TH E ASSESSING OFFICER HAS NOT ASSESSED INCOME OF THE ASSESSEE UNDER ANY OF THE HE ADS I.E. THE INCOME DECLARED ON ACCOUNT OF BROKERAGE EARNED FROM PROPERTY DEALINGS. IN THAT EVENTUALITY THE A.O. HAS TO ASSESS THE INCOME UNDER THE APPROPRIATE HEAD AND CO NSEQUENT DEDUCTIONS OR RELIEFS HAS TO BE GIVEN. IN THE PRESENT CASE, WE SET ASIDE THIS I SSUE TO THE FILE OF THE AO FIRST DETERMINE THE NATURE OF INCOME FALLING UNDER ANY OF THE ABOVE HEADS AND CONSEQUENTIAL DEDUCTIONS SHOULD BE ALLOWED. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO. 8. THE NEXT TWO INTER-CONNECTED ISSUES RAISED BY W AY OF GROUND NOS. 3 AND 4 IS AS REGARDS TO CONFIRMING THE ADDITION OF RS.5,58,977/- RELATES TO DEPOSITS IN BANK ACCOUNT MAINTAINED WITH HDFC AND ALSO CONFIRMING THE ADDITI ON OF RS. 2 LAKH ADVANCED BY THE ASSESSEE TO HIS WIFE SMT. TARA DEVI SINGH FROM THE SAME BANK ACCOUNT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NOS.3 AND 4: 5 ITA 1334/K/201 0 RAMINDER SINGH A.Y. 05-06 3) FOR THAT IN THE CIRCUMSTANCES AND ON THE FACTS OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,00,000/- M ADE BY THE LD. A.O., WHICH WAS ADVANCED BY THE APPELLANT TO HIS WIFE SMT. TARA DEV I SINGH, SUPPORTED BY BANK STATEMENT DULY DISCLOSED IN STATEMENT FILED ALONG WITH RETURN . 4) FOR THAT IN THE CIRCUMSTANCES AND ON THE FACTS O F THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.5,58,977/- R ELATED TO THE DEPOSIT IN BANK A/C WHICH WERE EXPLAINED IN WRITTEN SUBMISSION FILED BEFORE H IM (CIT(A). 9. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE RETURN O F INCOME FOR ASSESSMENT YEAR 2006- 07 THAT ASSESSEE IS MAINTAINING A BANK ACCOUNT IN H DFC BEARING ACCOUNT NO.1511070034373. THE ASSESSING OFFICER NOTED THAT THERE WAS NO BANK ACCOUNT FOUND TO BE MAINTAINED BY THE ASSESSEE DURING THE YEAR UN DER CONSIDERATION BUT ACTUALLY THERE IS A BANK ACCOUNT AND HE REQUIRED THE ASSESSEE TO EXPL AIN THE DEPOSITS MADE FOR AN AMOUNT OF RS.5,58,977/-. THE ASSESSING OFFICER ALSO REQUI RED THE ASSESSEE TO EXPLAIN WHY THIS ACCOUNT IS NOT DISCLOSED IN THE RETURN OF INCOME. THE ASSESSING OFFICER FINALLY ADDED THIS AMOUNT AS UNDISCLOSED INCOME IN THE HAND OF TH E ASSESSEE, AS HE IS UNABLE TO EXPLAIN THE SOURCES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND HE ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED, NO W ASSESSEE IS IN APPEAL BEFORE US. 10. WE FIND FROM THE ARGUMENT OF THE LD. COUNSEL FO R THE ASSESSEE AND ALSO FROM THE ASSESSMENT ORDER THAT THIS ACCOUNT WAS OPENED ON 19 .9.2002 AND FROM THE ACCOUNTS HE PROVED THAT THIS BANK ACCOUNT IS DISCLOSED IN THE S TATEMENT OF ACCOUNTS AND BANK ACCOUNT IS DISCLOSED ON ASSET SIDE OF THE BALANCE SHEET OF THE ASSESSEE, HAVING BANK BALANCE AS ON 31.3.2005 AT RS.3934.25. HE STATED THAT THE ENTIRE PREMISE OF THE ASSESSING OFFICER IS WRONG THAT THIS ACCOUNT IS A DISCLOSED ACCOUNT, BUT HE ADMITTED THE FACT THAT THE AMOUNT DEPOSITED OR TRANSACTIONS ENTERED, THE ASSESSEE COU LD NOT EXPLAIN THE SOURCE OF DEPOSITS. HE STATED THAT AS FAR AS THE ACTION OF THE ASSESSIN G OFFICER IN TREATING THESE DEPOSITS AS UNEXPLAINED, HE AGREED FOR THE SAME. AS FAR AS THE ISSUE OF ADVANCE TO ASSESSEES WIFE FOR AN AMOUNT OF RS.2 LAKH ADDED BY ASSESSING OFFIC ER, HE STATED THAT THIS AMOUNT OF RS.2 LAKH WAS ADVANCED TO ASSESSEES WIFE OUT OF DE POSITS MADE OF RS.5,58,977/- IN THE SAID ACCOUNT AND THIS ADVANCE IS BY WAY OF ACCOUNT PAYEE CHEQUE TO THE ASSESSEES WIFE. ACCORDINGLY, HE URGED THE BENCH TO DIRECT THE ASSES SING OFFICER NOT TO ADD THIS AMOUNT OF RS.2 LAKH. ON THE OTHER HAND, THE LD. DR STATED THAT NO DOUBT THIS BANK ACCOUNT IS DISCLOSED BUT ASSESSEE CLEARLY ADMITTED THAT THE TR ANSACTIONS ARE UNEXPLAINED AND THE 6 ITA 1334/K/201 0 RAMINDER SINGH A.Y. 05-06 ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION. H E ALSO AGREED THAT THE ADVANCE OF RS.2 LAKH BY THE ASSESSEE TO HIS WIFE CAN BE VERIFIED BY ASSESSING OFFICER AND ASSESSING OFFICER WILL ALLOW CONSEQUENTLY. WE FIND FROM THE ARGUMENT AND ADMISSION BY THE LD. COUNSEL FOR THE ASSESSEE THAT THESE DEPOSITS OR TRA NSACTIONS AMOUNTING TO RS.5,58,977/- IN HDFC BANK ACCOUNT WAS UNEXPLAINED, HENCE THERE R EMAINS NO ISSUE EXCEPT THE FACT THAT THE ACCOUNT WAS OPENED ON 19.9.2002 AND DISCLO SED IN THE STATEMENT OF ACCOUNTS FILED ALONGWITH THE RETURN OF INCOME OF THE ASSESSE E. WE ARE OF THE VIEW THAT THIS ADDITION IS SUSTAINED IN VIEW OF THE CLEAR ADMISSIO N OF THE ASSESSEES COUNSEL BUT AS REGARDS TO ANOTHER ADDITION OF RS.2 LAKH BEING ADVA NCE OF RS.2 LAKH FROM ASSESSEE TO HIS WIFE IS OUT OF WITHDRAWAL MADE FROM THE HDFC BANK A CCOUNT OUT OF DEPOSIT OF RS.5,58,977/-. THIS FACT CAN BE VERIFIED BY ASSESS ING OFFICER AND IN CASE THIS AMOUNT OF RS. 2 LAKH IS ADVANCED OUT OF THESE DEPOSITS OF RS. 5,58,977/-, THE ADDITION CANNOT BE MADE RESULTING INTO DOUBLE ADDITION. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE ABOVE DIRECTION. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 12. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.4.2 011 SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 21ST DAY OF APRIL, 2011 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SHRI RAMINDER SINGH, PROP. OF PAYAL THEATER, SEVOKE ROAD, SILIGURI 734 001. 2 +,)* / RESPONDENT ITO, WARD-2(2), SILIGURI. 3 . -$ ( )/ THE CIT(A), SILIGURI 4. 5. -$ / CIT SILIGURI 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$>/ BY ORDER, 1 /ASSTT. REGISTRAR .