Sri. Syed Ahmed Emtiyaz, Bangalore V. ITO, Bangalore

ITA 134/BANG/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1494 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P DINESH

Judgement Text

ITA.134/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH, BANGALORE BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER SINGLE MEMBER CASE I.T.A NO.134/BANG/2015 (ASSESSMENT YEAR : 2006-07) SHRI. SYED AHMED EMTIYAZ, NO.30, 1 ST FLOOR, BDA SHOPPING COMPLEX, HSR LAYOUT, BANGALORE 560 034 .. APPELLANT PAN : AADPI3680H V. INCOME-TAX OFFICER, WARD 7(3), BANGALORE .. RESPONDENT ASSESSEE BY : SHRI. P. DINESH, ADVOCATE REVENUE BY : SHRI. SUNIL R. V. AGARWALA, JCIT HEARD ON : 07.10.2015 PRONOUNCED ON : 09.10.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE IT HAS RAISED SEVEN GROUNDS OF WHICH GROUNDS 1 AND 7 ARE GENERAL NEEDING NO ADJUDICATION . GROUND 6 IS CONSEQUENTIAL SINCE IT ASSAILS LEVY OF INTEREST U/S .234B AND 234C OF THE INCOME- TAX ACT, 1961 (THE ACT IN SHORT) AND THIS ALSO DO ES NOT NEED ANY SPECIFIC ADJUDICATION. ITA.134/BANG/2015 PAGE - 2 02. VIDE ITS GROUND NUMBER 2, ASSESSEE IS AGGRIEVED THAT A CREDIT OF RS.3,00,000/- IN THE NAME OF SHRI. GOVINDA REDDY WA S DISALLOWED BY THE AO AND SUCH DISALLOWANCE WAS CONFIRMED BY THE CIT (A). 03. FACTS APROPOS ARE THAT ASSESSEE, A SELLER OF SE COND HAND VEHICLES, HAD FILED RETURN OF INCOME DECLARING INCOME OF RS.3,51, 250/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS REQUIRED TO PR ODUCE BOOKS OF ACCOUNT, DETAILS REGARDING CLOSING STOCK, CONFIRMATION FOR C REDITORS AND DETAILS OF CONSTRUCTION OF HOUSE. AS PER THE AO ASSESSEES AR HAD APPEARED BEFORE HIM 15.10.2007 AND PRODUCED THESE DETAILS. HOWEVER, TH E AO ALSO OBSERVED THAT ASSESSEE COULD NOT FURNISH CONFIRMATION FOR A SUM O F RS.3 LAKHS SHOWN AS PAYABLE TO ONE SHRI. GOVINDA REDDY. ASSESSEE EXPLA INED THAT THE NAME OF THE CREDITOR WAS MISSPELT IN THE BALANCE SHEET FILED AL ONG WITH THE RETURN, AND THE CORRECT NAME WAS GOVINDAPPA. AS PER THE ASSESSEE, HE HAD PURCHASED SITE BEARING NO.29 & 30 AT MADEENA NAGAR, FROM SHRI. GOV INDAPPA AND A SUM OF RS.3 LAKHS WAS DUE ON THE SAID PURCHASE TO SHRI. GO VINDAPPA. ASSESSEE ALSO MENTIONED THAT THE OUTSTANDING AMOUNT STOOD TO BE P AID DURING THE FINANCIAL YEAR 2006-07. ADDRESS OF SHRI. GOVINDAPPA WAS ALSO FURNISHED BY THE ASSESSEE. AO ISSUED A SUMMONS U/S.131 OF THE ACT, BUT IT SEE MS THERE WAS NO RESPONSE. AO WAS OF THE OPINION THAT ASSESSEE COULD NOT PRODU CE SUFFICIENT EVIDENCE TO ITA.134/BANG/2015 PAGE - 3 SUBSTANTIATE THE CLAIM OF LIABILITY OF RS.3 LAKHS T O SHRI. GOVINDAPPA. AN ADDITION WAS MADE. 04. ASSESSEES APPEAL BEFORE THE CIT (A) DID NOT ME ET WITH ANY SUCCESS. AS PER THE CIT (A), ASSESSEE COULD NOT PROVE THE BALAN CE SHOWN IN THE ACCOUNT OF SHRI. GOVINDAPPA DESPITE SUFFICIENT OPPORTUNITY BEI NG GIVEN. 05. NOW BEFORE US, LD. AR SUBMITTED THAT THE AMOUNT WAS A CREDIT BALANCE CARRIED FORWARD FROM THE PRECEDING YEAR. RELYING O N THE STATEMENT OF AFFAIRS OF THE ASSESSEE AS ON 31.03.2005, PLACED AT PAPER BOOK PAGES 8 TO 10, LD. AR SUBMITTED THAT THE SUM OF RS.3 LAKHS WAS SHOWN AS P AYABLE TO SHRI. GOVINDA REDDY IN THE SAID STATEMENT. AS PER THE LD. AR, IT WAS THE VERY SAME AMOUNT THAT APPEARED IN THE LIABILITY SIDE OF THE STATEMEN T OF AFFAIRS AS ON 31.03.2006 FILED ALONG WITH THE RETURN FOR THE IMPUGNED ASSESS MENT YEAR. THUS ACCORDING TO HIM, THE BALANCE WAS ONLY A CARRY FORWARD OF EAR LIER BALANCE AND ADDITION OUGHT NOT HAVE BEEN MADE DURING THE IMPUGNED ASSESS MENT YEAR. 06. PER CONTRA, LD. DR STRONGLY SUPPORTED THE ORDER S OF AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE COULD NOT PROVE THE CREDIT. AS PER THE LD. DR WHEN ASSESSEE FAILED TO GIVE ANY EVIDENCE REGARDING THE GENUINENESS OF THE CREDIT, A CESSATION OF LIABILITY COULD BE PRESUMED. IN HIS O PINION, THE ADDITION FELL WITHIN THE AMBIT OF SECTION.41(1) OF THE ACT. RELIANCE WA S PLACED ON THE DECISION OF ITA.134/BANG/2015 PAGE - 4 COORDINATE BENCH OF MUMBAI TRIBUNAL IN INCOME-TAX D EPARTMENT V.SHAILESH D. SHAH [ ITA.7012/MUM/2010, DT.11.12.2013]. 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. WHAT WE FIND IS THAT A CREDIT OF RS.3 LAKHS APPEARS BOTH IN THE STATEMENT OF AFFAIRS AS ON 31.03.2005 AS WELL AS AS ON 31.03.2006 IN THE NAME OF SHRI. GOVINDA REDDY. THESE STATEMENT OF AFFAIRS WERE FILED ALONG WITH TH E RETURNS OF INCOME FOR A. YS.2005-06 AND 2006-07. AMOUNT REMAINING THE SAME, IF AT ALL IT HAD TO BE ADDED AS UNPROVED CREDIT, IT OUGHT TO HAVE BEEN DON E IN THE YEAR IN WHICH ASSESSEE HAD RECEIVED THE CREDIT. THERE IS NO CASE FOR THE REVENUE THAT ANY AMOUNT WHAT SO EVER WAS RECEIVED EITHER FROM SHRI. GOVINDA REDDY OR SHRI. GOVINDAPPA DURING THE YEAR. AS TO THE DECISION OF COORDINATE BENCH IN THE CASE OF SHAILESH D. SHAH (SUPRA), ASSESSEE CONCERNED HA D FAILED TO GIVE ANY EVIDENCE REGARDING THE GENUINENESS OF CREDIT, IDENT ITY OF CREDITORS OR PAYMENT OF LIABILITY. IN THE CASE BEFORE US, ASSESSEE HAD GIV EN FULL PARTICULARS OF THE CREDITOR AND ALSO GAVE EXPLANATION AS TO HOW THE CREDIT HAS COME INTO THE BOOKS OF THE ASSESSEE. IN THE CIRCUMSTANCES, WE ARE OF THE OPIN ION THAT THE ADDITION FOR THE AMOUNT OF RS.3 LAKHS MADE DURING THE IMPUGNED ASSES SMENT YEAR WAS UNCALLED FOR. SUCH ADDITION STANDS DELETED. GROUND 2 OF TH E ASSESSEE STANDS ALLOWED. ITA.134/BANG/2015 PAGE - 5 08. VIDE ITS GROUNDS 3 TO 5 GRIEVANCE RAISED BY THE ASSESSEE IS THAT A SUM OF RS.7,50,000/- SHOWN AS A LIABILITY IN ITS STATEMENT OF AFFAIRS WAS DISALLOWED BY THE AO, AND SUCH DISALLOWANCE WAS CONFIRMED BY THE CIT (A). 09. FACTS APROPOS ARE THAT ASSESSEE HAD IN ITS STAT EMENT OF AFFAIRS AS ON 31.03.2006 SHOWN HOUSE LEASE AMOUNT OF RS.7,50,00 0/- AS A LIABILITY. EXPLANATION OF THE ASSESSEE WAS THAT THE SAID AMOUN T WAS RECEIVED FROM ONE SHRI. MOHAMMED SARSHAD FOR LEASE OF A RESIDENTIAL B UILDING OWNED BY THE ASSESSEE, LOCATED IN HSR LAYOUT, BANGALORE. AS PER THE ASSESSEE, THIS AMOUNT WAS RECEIVED FROM SHRI. MOHAMMED SARSHAD, BY WAY OF CHEQUE NOS.349851 FOR RS.5,50,000/- AND NO.349853 FOR RS.1,50,000/-, BOTH OF WHICH WERE DATED 26.03.2005. AS PER THE ASSESSEE, BALANCE SUM OF RS .50,000/- WAS RECEIVED IN CASH ON THE VERY SAME DAY. AO ON EXAMINATION OF BO OKS OF ACCOUNT PRODUCED BY THE ASSESSEE WAS OF THE OPINION THAT SUM OF RS.7 ,50,000/- WAS NOT REFLECTED THEREIN. AS PER THE ASSESSEE THE CHEQUES ISSUED BY THE PARTY WERE BEARER CHEQUES AND CASH WAS DIRECTLY DRAWN FROM THE BANK. AO WAS OF THE OPINION THAT THE SUM OF RS.7,50,000/- SHOWN AS DUE ON ACCOU NT OF HOUSE LEASE AMOUNT WAS NOT PROVED. HE TREATED IT AS UNEXPLAINED AND M ADE AN ADDITION. ASSESSEES APPEAL BEFORE THE CIT (A) ON THIS ISSUE ALSO DID NO T MEET WITH ANY SUCCESS. THOUGH IT HAD PRODUCED A RECEIPT FOR RETURN OF THE AMOUNT OF SHRI. MOHAMMED SARSHAD, CIT (A) WAS OF THE OPINION THAT THE RECEIP TS ISSUED BY SHRI. ITA.134/BANG/2015 PAGE - 6 MOHAMMED SARSHAD HAD MENTIONED PAYMENT OF RENT OF R S.12,000/- PER MONTH FOR THE HOUSE PROPERTY WHICH WAS NEVER SHOWN BY THE ASSESSEE IN HIS RETURN / BOOKS OF ACCOUNT. CIT (A) WAS OF THE OPINION THAT CLAIM OF THE ASSESSEE FOR RECEIPT OF RS.7,50,000/- AS HOUSE LEASE AMOUNT CO ULD NOT BE BELIEVED. 10. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DER OF LOWER AUTHORITIES SUBMITTED THAT RS.7,50,000/- WAS ALSO A CARRIED FOR WARD BALANCE FROM THE PRECEDING YEAR. PLACING RELIANCE ON A LEASE AGREEM ENT DT.26.03.2005 ENTERED WITH SHRI. MOHAMMED SARSHAD, LD. AR SUBMITTED THAT PAYMENT OF RS.5,50,000/- AND RS.1,50,000/- BY CHEQUES AND RS.5 0,000/- BY CASH WAS CLEARLY MENTIONED IN SUCH LEASE AGREEMENT. AS PER THE LD. AR FOR NO REASON THE LEASE-AGREEMENT WAS DISBELIEVED. LD. AR SUBMITTED THAT ASSESSEE HAD PROVED THE GENUINENESS OF THE CREDIT AND ALSO PRODUCED THE CONFIRMATION IN THE NATURE OF THE LEASE AGREEMENT. THUS ACCORDING TO HIM, ADD ITION MADE BY LOWER AUTHORITIES WAS INCORRECT. 11. PER CONTRA, LD. DR STRONGLY SUPPORTED THE ORDER S OF LOWER AUTHORITIES. ACCORDING TO HIM, LEASE AGREEMENT DT.26.03.2005 COU LD NOT BE BELIEVED AS A SOURCE FOR RS.7,50,000/- SHOWN IN THE STATEMENT OF AFFAIRS AS ON 31.03.2005 AND 31.03.2006 FOR THE REASON THAT ONE OF THE CHEQUES G IVEN BY SHRI. MOHAMMED SARSHAD WAS DUE FOR PAYMENT ONLY IN F. Y. 2005-06. ITA.134/BANG/2015 PAGE - 7 12. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IN SUPPORT OF THE HOUSE LEASE AMOUNT OF RS.7,50,000/- SHOWN BY THE ASSESSEE IN ITS STATEMENT OF AFFAIRS AS ON 31.03.2006 AS A LIABILIT Y, ASSESSEE IS RELYING ON AN AGREEMENT OF LEASE DT.26.03.2005. PARA 3 OF THE LE ASE AGREEMENT IS REPRODUCED HEREUNDER : 3. DEPOSIT OF LEASE AMOUNT THE LESSEE HAS PAID THE AMOUNT OF RS.7,50,000/- (SE VEN LAKHS FIFTY THOUSAND ONLY) AS FOLLOWS : 1) RS.5,50,000/- (RUPEES FIVE LAKHS FIFTY THOUSAND ONL Y) BY WAY OF CHEQUE BEARING NO.349851, DATED.26.03.2005. DRAW N ON HSBC BANK, M. G. ROAD BRANCH, BANGALORE. 2) RS.1,50,000/- )RUPEES ONE LAKH, FIFTY THOUSAND ONLY ) BY WAY OF POST DATED CHEQUE BEARING NO.349853, DATED.25.04 .2005, DRAWN ON HSBC BANK, M. G. ROAD BRANCH, BANGALORE. 3) BALANCE AMOUNT OF RS.50,000/- (RUPEES FIFTY THOUSAN D ONLY) BY WAY OF CASH. DATED 26.03.2005. AND WILL BE REFUNDED TO THE LESSEE UPON EFFLEX OF T HE DURATION OF LEASE AND HANDING OVER VACANT POSSESSION OF THE HOU SE. THE LESSOR SHALL HAVE THE RIGHT TO ADJUST THIS DEPOSIT AGAINST , ELECTRICITY WATER AND MAINTENANCE CHARGES IF ANY. IT IS CLEAR THAT ONE OF THE CHEQUES FOR RS.1,50,000 /- WAS DATED.25.04.2005. IF THAT BE SO, HOUSE LEASE AMOUNT THAT OUGHT HAVE BEEN THERE IN THE STATEMENT OF AFFAIRS AS ON 31.03.2005 WAS RS.6 LAKHS AND NOT RS. 7,50,000/-. AO HAD CLEARLY GIVEN A FINDING THAT ASSESSEE WAS UNABLE TO SHOW EN TRIES IN ITS BOOKS OF ACCOUNT ITA.134/BANG/2015 PAGE - 8 FOR RECEIPT OF SUCH AMOUNTS. CLOSING CASH AND BANK BALANCE AS ON 31.03.2005 CAME ONLY TO RS.44,499/- AND HENCE EVIDENTLY DID NO T INCLUDE THE POST DATED CHEQUE OF RS.1,50,000/-. THUS THE VERSION OF THE A SSESSEE THAT WHOLE OF THE AMOUNT REPRESENTED RECEIPT FROM SHRI. MOHAMMED SARS HAD AS LEASE ADVANCE CANNOT BE BELIEVED. HOWEVER AT THE SAME TIME, WE F IND THAT THE SUM OF RS.7,50,000/- WHICH APPEARS IN STATEMENT OF AFFAIRS AS ON 31.03.2006 IS THE VERY SAME AMOUNT THAT APPEARED IN THE STATEMENT OF AFFAI RS AS ON 31.03.2005 ALSO AND THE ADDITION HAD ITS GENESIS FROM THIS ENTRY. IN O UR OPINION, A SUM OF RS.6 LAKHS OUT OF RS.7,50,000/- STANDS EXPLAINED BY THE ASSESS EE AS PART OF THE OPENING BALANCE. HOWEVER, THE BALANCE SUM OF RS.1,50,000/- WHICH ASSESSEE RECEIVED DURING THE RELEVANT PREVIOUS YEAR BEING NOT REFLECT ED IN ITS BOOKS OF ACCOUNT COULD NOT BE CONSIDERED AS THE SOURCE FOR EXPLAININ G RS.7,50,000/- SHOWN AS DUES IN ITS STATEMENT OF AFFAIRS AS ON 31.03.2006. IN THE CIRCUMSTANCES WE ARE OF THE OPINION THAT ASSESSEE SHOULD BE GIVEN A RELIEF OF RS.6 LAKHS FOR THE SUMS RECEIVED BY HIM DURING THE PRECEDING PREVIOUS YEAR. ACCORDINGLY WE RESTRICT THE ADDITION TO A SUM OF RS.1,50,000/-. ADDITION T O THE EXTENT OF RS.6 LAKHS IS DELETED. ORDERED ACCORDINGLY. GROUNDS 3 TO 5 OF T HE ASSESSEE ARE TREATED AS PARTLY ALLOWED. ITA.134/BANG/2015 PAGE - 9 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DAY OF O CTOBER, 2015. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR