Alka Ramdas Darade, Nashik V. Income-tax Officer,

ITA 1507/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9170 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-03-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.1507/PUN/2016 / ASSESSMENT YEAR : 2008-09 SMT. ALKA RAMDAS DARADE, A/P. BABHULGAON, TALUKA YEOLA, DISTRICT NASHIK 423 401 PAN : AFDPD6723K . /APPELLANT VS. INCOME-TAX OFFICER, WARD-4, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI S.N. PURANIK / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 15.03.2018 / DATE OF PRONOUNCEMENT: 23.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-2, PUNE, DATED 22-02-2016 FOR THE ASSESSMENT YEAR 2008- 09. AO PASSED THE ORDER U/S.147 R.W.S. 143(3) OF THE ACT ON 15-02-2013. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. COMMISSIONER (APPEALS) HAS ERRED IN CONFIRMING OP ENING CAPITAL BALANCE OF RS.16,58,835.00. SAME MAY PLEASE BE DELE TED. 2. WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, LOWER AU THORITIES HAVE ERRED IN TAXING OPENING BALANCE OF CAPITAL REPRESENTED AS SETS ACQUIRED BEFORE 31-03-2007. SAME MAY PLEASE BE DELETED. 3. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 4. APPELLANT PRAYS FOR CANCELLATION OF INTEREST CHA RGED. 5. APPELLANT PRAYS TO ADD, ALTER, AMEND, CLARIFY, M ODIFY, TAKE ADDITIONAL GROUND/S AND/OR WITHDRAW THE GROUNDS DURING APPELLA TE PROCEEDING. 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF COUNTRY LIQUOR IN SHRIRAM PUR, DIST. AHMEDNAGAR. THE ASSESSEE FILED TWO RETURNS OF INCOME (1) T O THE ITO, MALEGAON INCLUDING HER INCOME EARNED AT YERWALA AND (2) ANO THER RETURN IS FILED AT AHMEDNAGAR FOR HER INCOME EARNED AT SHRIRAMPUR. ASSESSMENTS WERE COMPLETED INDEPENDENTLY BY BOTH THE ITOS. SUBSEQ UENTLY, NOTICE U/S.148 WAS ISSUED BY THE ITO, AHMEDNAGAR FOR THE A.Y. 20 08-09 FOR TAXING THE BALANCES IN CAPITAL ACCOUNT. IN REPLY, ASSESS EE FILED THE RETURN OF INCOME CLUBBING ALL THE STREAMS OF INCOME FROM ALL SOURCES . AT THE END OF THE RE-ASSESSMENT PROCEEDINGS, AO DETERMINED THE ASS ESSED INCOME AT RS.20,83,760/-. APART FROM MINOR ADDITIONS, THE AO MADE A M AJOR ADDITION OF RS.16,58,835/- ON ACCOUNT OF FICTITIOUS CREDIT IN CAPITAL BALANCE (PARA 17 OF THE RE-ASSESSMENT ORDER). THIS AMOUNT CONST ITUTES THE OPENING BALANCE AS PER THE BALANCE SHEET SUBMITTED WITH RETURN OF INCOME FILED AT MALEGAON. THE SAID AMOUNT CONSTITUTES THE CLOSING BALANCE AS ON 31-03-2007. AO ADDED THE SAME AS UNEXPLAINED INVESTM ENT IGNORING THE FACT THAT THE SAME IS BASICALLY A CLOSING BALAN CE AS ON 31-03- 2007. HOWEVER, THE AO ALLEGED THAT ASSESSEE NEVER FILED T HE BALANCE SHEET ALONG WITH RESPECTIVE RETURNS OF INCOME IN GENERAL AND FOR THE ASSESSMENT YEARS PRIOR TO A.Y. 2008-09 IN PARTICULAR. FOR THE SAKE O F COMPLETENESS, PARA NO.17 IS EXTRACTED HERE AS UNDER : 17. IN VIEW OF THE AFORESAID FACTS AND DISCUSSION OF THE CASE, THE ASSESSEE HAS NEVER FILED BALANCE-SHEET WITH RESPECTIVE RETUR N OF INCOME WHICH ARE NOT FILED PRIOR TO A.Y. 2008-09 AND AS SUCH THE ASSESSE ES ATTEMPT TO ADOPT CAPITAL BALANCE SO AS TO EXPLAIN THE INVESTMENT IS NOT AT ALL ACCEPTABLE AS THE FACT REMAINED THAT THE BALANCES NOW ADOPTED IN THE BALANCE-SHEET BEING NOT DISCLOSED TO THE DEPARTMENT ARE TOTALLY UNACCOUNTED AND EVEN NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE FOR ITS EXISTENCE ON A PARTICULAR RELEVANT DATES. ACCORDINGLY, FOR THE PURPOSE OF ACCEPTANCE OF CAPIT AL BALANCE, AT MOST, CREDIT FOR THE INCOME DISCLOSED IN THE RESPECTIVE YEARS IS ONLY AVAILABLE TO THE ASSESSEE. SINCE THE ASSESSEE HAS NOT FILED ANY RET URNS OF INCOME PRIOR TO THE A.Y. 2008-09 QUESTION OF INCOME DISCLOSED FOR EARLI ER YEAR DOES NOT ARISE. AS SUCH, AS AGAINST THE OPENING BALANCE ADOPTED AS ON 01-04-2007 AT RS.16,58,835/-, NO CREDIT IS AVAILABLE TO THE ASSES SEE. THUS, THERE IS DEFICIENCY OF RS.16,58,835/- AND IT IS BY THIS AMOU NT, THERE IS A FICTITIOUS CREDIT IN ADOPTING THE CAPITAL BALANCE. THE SAME H AS ESCAPED THE 3 ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT AND IS THEREFORE, BROUGHT TO TAX ACCORDINGLY. ON BEING SATISFIED, TH E PENAL PROCEEDINGS U/S.271(1)(C) ARE INITIATED ON THIS ACCOUNT FOR FUR NISHING INACCURATE PARTICULARS OF INCOME. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE SAID ADDITIO N WAS AGITATED ON THE GROUND THAT THE SAME AMOUNT CONSTITUT ES AN OPENING BALANCE WHICH IS CLOSING BALANCE OF THE PREVIOUS YEAR. A CCORDING TO ASSESSEE, SUCH ADDITIONS ARE UNSUSTAINABLE IN LAW. ON CON SIDERING THE SUBMISSION OF THE ASSESSEE, CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE ON THIS ISSUE AND CONFIRMED THE ADDITION AS PER THE DISCUSSION GIVEN IN PARA NO.5.2 OF HIS ORDER AND THE SAME READS AS UNDER : 5.2 I HAVE CONSIDERED THE FACTS MENTIONED IN THE A SSESSMENT ORDER AS WELL AS SUBMISSION MADE ON BEHALF OF THE APPELLANT. IT IS A FACT THAT THE APPELLANT HAS NEVER FILED ANY BALANCE SHEET PRIOR TO THE PRES ENT ASSESSMENT YEAR. IN SUCH A SCENARIO, IT IS IMPERATIVE ON THE PART OF TH E APPELLANT TO EXPLAIN WITH DOCUMENTARY EVIDENCES REFLECTING SOURCE OF OPENING CAPITAL. JUST MAKING SUBMISSION THAT THE SAME WAS ACQUIRED OUT OF AGRICU LTURAL INCOME, DOES NOT HOLD ANY MERIT. THE BOOKS OF ACCOUNT OF THE APPELL ANT ALSO DOES NOT REFLECT ANY SUCH OPENING BALANCE, WHICH WERE IMPOUNDED BY T HE ASSESSING OFFICER. THE APPELLANT HAS FAILED TO JUSTIFY THE SOURCES OF ACCUMULATION OF OPENING BALANCE OF RS.16,58,835/- AND THEREFORE THE ASSESSI NG OFFICER HAS RIGHTLY ADDED THIS AMOUNT AS UNEXPLAINED CREDIT. HONBLE C ALCUTTA HIGH COURT IN THE CASE OF DURGA KAMAL RICE MILLS VS. CIT (260 ITR 260) HAS HELD THAT THE DIFFERENCE BETWEEN CLOSING BALANCE IN THE CAPITAL A CCOUNT AND OPENING BALANCE IN THE FOLLOWING YEARS WAS ASSESSABLE AS UN EXPLAINED MONEY IN ABSENCE OF SATISFACTORY EXPLANATION BY THE ASSESSEE .. THE ADDITION OF RS.16,58,835/- IS ACCORDINGLY CONFIRMED. GROUND OF APPEAL NO.2 FAILS. 5. BEFORE US, LD. AR FOR THE ASSESSEE FILED A PAPER BOOK E NCLOSING THE COPIES OF THE ACKNOWLEDGEMENTS OF ORIGINAL RETURNS OF INCOME FILED BY THE ASSESSEE BEFORE THE INCOME-TAX AUTHORITIES. HE ALSO ENCLO SED THE CAPITAL ACCOUNTS FOR VARIOUS YEARS STARTING FROM 1999-2000 TO 2 006-07. RELYING ON THE SAID DOCUMENTS, LD. AR FOR THE ASSESSEE SUBMITTED T HAT THE COPIES OF THE RETURNS AS WELL AS THE FINANCIAL STATEMENTS SUPPORTS THE ASSESSEES CLAIM OF GENUINE SOURCE OF INCOME FOR THE OPENING CAPITAL BA LANCE OF RS.16,58,835/- AS ON 01-04-2007. THIS AMOUNT CONSTITUTES ACCUMULATED CAPITAL OF THE ASSESSEE FROM A.Y. 1994-95 ONWARDS. HOWEVE R, THESE PAPER BOOKS DO NOT CONTAIN THE REQUISITE CERTIFICATION TO SUPP ORT THAT THE SAME 4 WERE FILED BEFORE THE LOWER AUTHORITIES EITHER AT THE TIME OF RE-ASSESSMENT PROCEEDINGS OR FIRST APPELLATE PROCEEDINGS. FAIRLY SUBMITT ING THAT THIS ISSUE MAY BE REMANDED TO THE FILE OF AO FOR FRESH ROUND OF EXAMINATION OF EVIDENCES, LD. AR FOR THE ASSESSEE PRAYED FOR ADMITTING TH ESE PAPERS AND FORWARD THE SAME TO THE AO FOR FRESH ASSESSMENT AS PER THE RULES . 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE, ON THIS P RELIMINARY ISSUE OF ADMITTING THESE PAPERS RELATING TO THE COPIES OF THE RE TURNS AS WELL AS FINANCIAL STATEMENTS FOR VARIOUS YEARS VEHEMENTLY OPPOSED TO THE SAME AND RELIED ON THE RE-ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A). 7. WE HEARD BOTH THE PARTIES ON THIS PRELIMINARY ISSUE OF ADMITTING OF THE SAID PAPERS AND REMANDING TO THE FILE OF AO CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE. AS SUCH, THERE IS NO DISPUTE ON THE FA CT OF FILING TWO RETURNS BY THE ASSESSEE DECLARING TWO STREAMS OF INCOME AT TWO DIFFERENT LOCATIONS. WE FIND THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE APPEAL RELATES TO ADDITION OF RS.16,58,835/- WHICH AS PER THE ASSE SSEE IS AN OPENING BALANCE IN THE CAPITAL ACCOUNT OF THE ASSESSEE. W E HAVE ALSO EXAMINED THE ORDERS OF THE AO AND THE CIT(A) AND FIND THA T THERE IS A CATEGORICAL OBSERVATION OF THE OFFICERS THAT THE BALANCE SH EET OF EARLIER YEARS WERE NEVER FILED BY THE ASSESSEE PRIOR TO THE A.Y. 2008-0 9. FROM THAT POINT OF VIEW, THE DOCUMENTS FILED BEFORE US CONSTITUTES ADDITIONAL EVIDENCES. AS SEEN FROM THE PAPER BOOK FILED BEFORE US, THERE ARE ACKNO WLEDGMENTS FOR RETURNS OF INCOME EVIDENCING THE FILING OF THE RETURNS FOR V ARIOUS ASSESSMENT YEARS, I.E. 1999-2000 TO 2006-07 (PAGES 22 T O 46 OF THE PAPER BOOK). THERE ARE CAPITAL ACCOUNTS OF THE ASSESSEE FOR ALL THESE YEARS WHICH REFLECTS AND SUPPORT THE ACCUMULATION OF CAPITAL THAT GAV E RISE TO THE FIGURE OF RS.16,58,835/- AS ON 01-04-2007 THEY WERE NOT FILED BY THE ASSESSEE BEFORE THE AO/CIT(A). 5 IN OUR VIEW, THERE IS SOME INFORMATION GAP BETWEEN THE OFFIC ERS OF THE DEPARTMENT AND THE ASSESSEE QUA THE CAPITAL ACCOUNT O F THE ASSESSEE FOR VARIOUS ASSESSMENT YEARS. IN OUR VIEW, THERE IS NEED FO R EXAMINING THE SAID ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE BEFORE US. IT IS IN THE INTEREST OF JUSTICE THAT ALL SUCH EVIDENCES SHOULD BE ADMITTED AND REMANDED TO THE FILE OF AO. AO SHALL EXAMINE THE SAME AND MAKE A FR ESH ASSESSMENT AS PER LAW AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, WE ORDER. THUS, THE GROUNDS RAIS ED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 23 RD MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, PUNE 4. / THE CIT-2, PUNE 5. , , / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE