Ms Medicare Products Private Limited , Bangalore V. Income Tax Officer Ward-4(1)(3), Bangalore

ITA 1427/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4715 (ITAT-BANGALORE)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDER SALANIK JT BENGALURU
• Keywords: Income from undisclosed sources
• Section: 69C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO. 1427/BANG/2018 ASSESSMENT YEAR : 2001 - 02 MEDICARE PRODUCTS PRIVATE LTD., NO.512, PRESTIGE CENTRE POINT, EDWARD ROAD, BENGALURU 560 052. PAN: AABCM 1640E VS. THE INCOME TAX OFFICER, WARD 4(1)(3), BENGALURU. APP ELLANT RESPONDENT APP ELLANT BY : SHRI BHARATH L., CA RESPONDENT BY : SHRI INDER SALANIK , JT.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 28 .05.201 8 DATE OF PRONOUNCEMENT : 01.06. 2018 O R D E R THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 28.02.2018 OF THE CIT(APPEALS)-IV, BANGALORE RELATING TO ASSES SMENT YEAR 2001-02. 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN DE ALING IN MEDICAL PRODUCTS. FOR THE AY 2001-02 THE ASSESSEE FILED A RETURN OF INCOME ON 30.10.2001 DECLARING A LOSS OF RS.7,761 FROM BUSINE SS. THE ORDER OF ASSESSMENT IS SILENT AS TO WHAT WAS THE FATE OF THI S RETURN OF INCOME FILED BY THE ASSESSEE. 3. ON 28.03.2008 THE AO ISSUED A NOTICE U/S. 148 OF THE INCOME-TAX ACT, 1961 [THE ACT]. THE REASONS FOR ISSUING NOT ICE U/S. 148 WAS THAT THE AO RECEIVED INFORMATION FROM THE DIRECTOR OF INVEST IGATION (INV.), NEW DELHI ITA NO. 1427/BANG/2018 PAGE 2 OF 7 [THE DIT] THAT THE ASSESSEE HAS RECEIVED AN AMOUN T OF RS.10 LAKHS FROM M/S. CHARM INVESTMENTS PVT. LTD. [CIPL] ON 08.03. 2001 BY DEMAND DRAFT DRAWN ON FEDERAL BANK, KAROL BAGH, NEW DELHI. ACCO RDING TO THE INFORMATION, THE RECEIPT BY THE ASSESSEE THROUGH BA NK WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE HAS RECEIVED M ONEY THROUGH BANKING CHANNELS AFTER PAYING UNACCOUNTED CASH TO T HE PERSON PROVIDING ACCOMMODATION ENTRY. 4. IN RESPONSE TO NOTICE U/S. 148, THE ASSESSEE FIL ED A LETTER DATED 12.05.1008 REQUESTING THE AO TO TREAT THE RETURN FI LED BY IT ON 30.10.2001 AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S. 14 8 OF THE ACT. 5. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT, BANK STATEMENT, ETC. THE ORDE R OF ASSESSMENT SAYS THAT THE ASSESSEE PRODUCED BOOKS OF ACCOUNT BUT DID NOT PRODUCE THE BANK STATEMENT. THEREAFTER, THE AO HAS OBSERVED THAT TH OUGH THE ASSESSEE HAS DENIED HAVING DONE ANY TRANSACTION WITH CIPL, THE I NFORMATION RECEIVED THROUGH DIT CLEARLY ESTABLISHED THAT THE ASSESSEE P AID CASH OF RS.10 LAKHS TO CIPL AND OBTAINED A DD IN RETURN. THE AO HAS FU RTHER OBSERVED IN THE ASSESSMENT ORDER THAT SINCE ASSESSEE WAS UNABLE TO PRODUCE THE BANK PARTICULARS, THERE CAN BE ONLY ONE CONCLUSION THAT ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE TRANSACTION. BY SO OBSERVING, THE AO ADDED A SUM OF RS.10 LAKHS TO THE INCOME RETURNED BY THE ASSESSEE. 6. BEFORE THE CIT(APPEALS), THE ASSESSEE REITERATED ITS STAND THAT THERE WAS NO TRANSACTION OF RECEIPT OF MONEY FROM CIPL, N EW DELHI DURING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE POINTED OUT B EFORE THE CIT(APPEALS) THAT ASSESSEE HAD PRODUCED BANK PASSBOOK OF SBI, WH ERE IT HAD BANK ACCOUNT AND THIS WAS THE ONLY BANK ACCOUNT THAT THE ASSESSEE HAD DURING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE POINTED O UT THAT THERE WAS NO CREDIT ENTRY OF RECEIPT OF RS.10 LAKHS FROM CIPL. THE ASSESSEE FILED AN AFFIDAVIT BEFORE THE CIT(A) POINTING OUT THAT THE O BSERVATION IN THE ORDER OF ITA NO. 1427/BANG/2018 PAGE 3 OF 7 ASSESSMENT THAT ASSESSEE DID NOT PRODUCE BANK PASSB OOK AND OTHER DETAILS IS INCORRECT AND THAT ASSESSEE HAS DULY PRO DUCED THE BANK PASSBOOK BEFORE THE ASSESSING OFFICER. A COPY OF T HE PASSBOOK IS AT PAGE 23 OF THE ASSESSEES PAPERBOOK AND THE AFFIDAVIT FI LED BY THE ASSESSEE IN THE PROCEEDINGS BEFORE THE CIT(APPEALS) IS AT PAGE 24 OF ASSESSEES PAPERBOOK. THE CIT(APPEALS) CALLED FOR A REMAND RE PORT FROM THE AO ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT (A). IN THE REMAND REPORT, THE AO HAS ADMITTED THE FACT THAT BANK STAT EMENT DOES NOT REFLECT THE TRANSACTION OF RECEIPT OF MONEY FROM CIPL. THE AO, HOWEVER, EXPRESSED THE VIEW THAT THE INFORMATION PROVIDED BY THE DIT(INV.) CLEARLY REFERRED TO A DD DRAWN ON FEDERAL BANK, KAROL BAGH BRANCH, THAT INFORMATION OF DIT(INV.) CANNOT BE FALSE. THE FOLL OWING WERE THE RELEVANT OBSERVATIONS OF THE AO IN THE REMAND REPORT IN THIS REGARD:- 3. I HAVE EXAMINED THE SUBMISSIONS MADE BY THE A SSESSEE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) AND ALSO RESUBMITTED BEFORE THIS OFFICE. THOUGH THE STA TE BANK OF INDIA ACCOUNT DOES NOT SHOW ANY SUCH HIGH VALUE TRA NSACTION, IT CANNOT BE SAID THAT THE DD DRAWN WAS NOT ENCASHED. HENCE, AT THIS POINT OF TIME, DUE TO LAPSE OF TIME I.E. 15 YE ARS, SINCE THE TRANSACTION TOOK PLACE AND SINCE THE TRANSACTION IS NOT VERIFIABLE, IT IS FELT JUSTIFIABLE TO RELY UPON THE INFORMATION RECEIVED FROM THE DIT(INV), NEW DELHI. THE DIT(INV) HAS CLEARLY STATE D THAT THIS AMOUNT OF RS.10 LAKHS FROM M/S.CHARM INVESTMENTS PV T. LTD WAS RECEIVED BY THE ASSESSEE ON 8.3.2001 BY WAY OF DD D RAWN ON FEDERAL BANK, KAROL BAGH, NEW DELHI. UNLESS THERE W AS CLEAR AND UNAMBIGUOUS AND SUBSTANTIAL EVIDENCE AVAILABLE WITH THE DIT(INV), NEW DELHI, HE WOULD NOT HAVE REFERRED THE MATTER TO THE ASSESSING OFFICER FOR NECESSARY FURTHER ACTION TO BRING THIS UNACCOUNTED MONEY TO TAX. IN VIEW OF THE ABOVE FACT S AND CIRCUMSTANCES, I FULLY SUPPORT THE STAND TAKEN BY T HE ASSESSING OFFICER AND AGREE WITH THE ADDITION MADE TO THE EXT ENT OF RS.10,00,000/- TREATING THE UNACCOUNTED CASH AS UNE XPLAINED INCOME OF THE ASSESSEE. HENCE, IT IS REQUESTED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) MAY KINDLY UPHO LD THE ADDITION MADE BY THE AO. ITA NO. 1427/BANG/2018 PAGE 4 OF 7 7. THE ASSESSEE IN REPLY TO THE REMAND REPORT FILED BY THE AO POINTED OUT THAT IN THE LIGHT OF THE ADMISSION BY THE AO IN THE REMAND REPORT THAT COPY OF ASSESSEES BANK ACCOUNT WITH SBI WAS FILED WITH THE AO AND HAS ALSO FURTHER ADMITTED THAT THE ASSESSEES BANK ACCO UNT DOES NOT REFLECT THE TRANSACTION OF RECEIPT OF MONEY FROM CIPL BY DD. TH E ASSESSEE POINTED OUT THAT THE FURTHER ALLEGATION OF THE AO IN REMAND REPORT THAT ASSESSEE COULD HAVE ENCASHED THE DD IS PURELY BASED ON SURMI SES. THE ASSESSEE ALSO POINTED OUT THAT REPORT OF THE DDIT(INV.), NEW DELHI IS THE ONLY BASIS FOR MAKING THE IMPUGNED ADDITION AND SINCE THERE IS NO CORROBORATIVE EVIDENCE TO SHOW RECEIPT OF MONEY BY THE ASSESSEE F ROM CIPL, THE ADDITION MADE DESERVES TO BE DELETED. 8. THE CIT(APPEALS) ON CONSIDERATION OF THE ABOVE S UBMISSIONS CAME TO THE CONCLUSION THAT THE ADDITION MADE BY THE AO HAS TO BE CONFIRMED. HE WAS OF THE VIEW THAT THE DDITS REPORT CANNOT BE FALSE AND THEREFORE THERE IS NOTHING WRONG IN THE IMPUGNED ADDITION BAS ED ON THE SAID REPORT. THE CIT(A) HAS FURTHER OBSERVED THAT THE ASSESSEE DID NOT GIVE A COMPLETE LIST OF BANK ACCOUNTS OPERATED BY IT DURIN G THE RELEVANT PREVIOUS YEAR. HE WAS OF THE VIEW THAT THERE WAS A S TRONG PROBABILITY THAT ASSESSEE WOULD HAVE UTILIZED ANY OF THE DORMANT OR WITH-HELD BANK ACCOUNTS FOR THE PURPOSE OF ENCASHING THE DD OF RS. 10 LAKHS RECEIVED FROM CIPL. HE DID NOT GIVE ANY FINDING REGARDING T HE CORRECTNESS OF CLAIM OF AO THAT ASSESSEE DID NOT PRODUCE THE BANK ACCOUN T HELD BY THE ASSESSEE BEFORE THE AO. HE ALSO OBSERVED THAT ASSE SSEE HAS NOT CONCLUSIVELY ESTABLISHED HIS NON-INVOLVEMENT IN THE IMPUGNED TRANSACTION. FOR ALL THE ABOVE REASONS, THE CIT(APPEALS) CONFIRM ED THE ADDITION MADE BY THE AO. 9. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THOUGH THE ASSESSEE HAS RAISED GROUNDS CHALLENGING THE VALIDITY OF INITIATION OF P ROCEEDINGS U/S. 147 OF THE ITA NO. 1427/BANG/2018 PAGE 5 OF 7 ACT, THE SAME WERE NOT PRESSED AND THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 10. AS FAR AS CHALLENGE TO THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(APPEALS) OF RS.10 LAKHS IS CONCERNED, TH E LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BE FORE THE CIT(APPEALS). THE LD. DR RELIED ON THE ORDER OF CI T(APPEALS). 11. I HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. IT IS CLEAR FROM A PERUSAL OF THE ORDER OF THE AO AND CIT(APPEALS) AS WELL AS REMAND REPORT OF THE AO FILED BEFORE THE CIT(APPEAL S) THAT THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE REVENUE AUTHORITI ES TO THE EFFECT THAT ASSESSEE RECEIVED A SUM OF RS.10 LAKHS BY DD FROM C IPL. THE QUESTION WHETHER IT IS AN ACCOMMODATION ENTRY IN LIEU OF CAS H (UNACCOUNTED CASH) GIVEN BY THE ASSESSEE TO AN ENTRY OPERATOR HAS ALSO NOT BEEN ESTABLISHED BY THE AO. IT IS CLEAR FROM THE AFFIDAVIT FILED BY THE ASSESSEE BEFORE THE CIT(A) WHICH HAS NOT BEEN DENIED BY THE AO IN HIS R EMAND REPORT THAT THE ASSESSEE FILED DETAILS OF HIS BANK ACCOUNT BEFORE T HE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. THE CI T(A) HAS ALSO NOT GIVEN ANY FINDING THAT ASSESSEE HAS NOT FILED THE B ANK ACCOUNT BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS. THE FACT REMAINS THAT IN THE ONLY BANK ACCOUNT HELD BY THE ASSESSEE, THERE WAS NO RECEIPT OF SUM OF RS.10 LAKHS BY DD DRAWN ON FEDERAL BANK, KAROL BAGH, NEW DELHI. THE ADDITION APPEARS TO HAVE BEEN MADE PURELY ON THE BASIS OF RE PORT OF DIT(INV), NEW DELHI. NEITHER THE AO NOR THE CIT(APPEALS) HAS BRO UGHT ON RECORD THE FACTS WHICH SHOW THAT ASSESSEE RECEIVED A SUM OF RS.10 LA KHS FROM CIPL. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE VERY BASIS OF THE ADDITION MADE BY THE REVENUE AUTHORITIES CANNOT BE SUSTAINED . THE CONDITION PRECEDENT FOR APPLICABILITY OF ANY OF THE PROVISION S OF SECTION 68, 69, 69A, 69B, 69C OF THE ACT ARE NOT SATISFIED IN THE PRESEN T CASE. IN THE GIVEN FACTS AND CIRCUMSTANCES, I AM OF THE VIEW THAT THE ADDITI ON MADE BY THE AO AND ITA NO. 1427/BANG/2018 PAGE 6 OF 7 CONFIRMED BY THE CIT(APPEALS) CANNOT BE SUSTAINED A ND THE SAME DESERVES TO BE DELETED. 12. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO SUBMI TTED BEFORE US THAT THE ASSESSEE WAS NOT CONFRONTED WITH THE MATERIAL B ASED ON WHICH THE REVENUE AUTHORITIES MADE THE IMPUGNED ADDITION. IN THIS REGARD, OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM V CIT (1980) 4 TAXMAN 29 (SC) . IN THE AFORESAID CASE, ADDITION WAS MADE ON ACCOUNT OF INC OME EARNED FROM UNDISCLOSED SOURCES. THE BASIS OF SUCH ADDITION WAS LETTERS FROM BANK MANAGER WHICH WAS NOT CONFRONTED TO THE ASSESSEE. THE HONBLE SUPREME COURT HELD THAT THE AMOUNT REMITTED IN THE BANK ACC OUNT CANNOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES AND THAT THE BUR DEN OF PROOF LAY ON THE DEPARTMENT TO SHOW THAT REMITTED AMOUNT BELONGED TO THE ASSESSEE BY BRINING PROPER EVIDENCE. THE AFORESAID DECISION SU PPORTS THE PLEA OF THE ASSESSEE IN THE PRESENT CASE. DECISIONS WERE ALSO CITED BEFORE US FOR THE PROPOSITION THAT UNCORROBORATED REPORT OF THE DIT(I NV), NEW DELHI CANNOT FORM THE BASIS FOR MAKING THE IMPUGNED ADDITION. I DO NOT WISH TO MAKE A REFERENCE TO ALL THOSE DECISIONS, AS I HAVE UPHELD THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED ADDITION IN THE PRESENT CASE IS NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. FOR THE REASONS STA TED ABOVE, I DIRECT THE AO TO DELETE THE ADDITION OF RS.10 LAKHS. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 1 ST DAY OF JUNE, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 1 ST JUNE, 2018. / D ESAI S MURTHY / ITA NO. 1427/BANG/2018 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.