Ranjit Kumar Setua, Purba Medinipur V. ITO, Ward - 4, Haldia, Haldia

ITA 1540/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9390 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 25-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 05-08-2010
• Court: TRIBUNAL
• Department Lawyers: K K TRIPATHI
• Assessee Lawyers: MANOOJ TIWARY
• Keywords: Unexplained investment; Income from undisclosed sources; Opportunity of being heard; Competent authority
• Section: 69

Judgement Text

1 , SMC , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- SMC , KOLKATA [ . .. . . .. . , , , , ] BEFORE SHRI C.D. RAO, ACCOUNTANT MEMBER / ITA NO. 1540 (KOL) OF 2010 !' #$ / ASSESSMENT YEAR 2005-06 RANJIT KUMAR SETUA , PANSKURA. (PAN-BAHPS4504FS INCOME-TAX OFFICER, WARD - 4, HALDIA. ('( / APPELLANT ) - ! - - VERSUS - (+,'(/ RESPONDENT ) '( - . / FOR THE APPELLANT: / SRI MANOOJ TIWARY +,'( - . / FOR THE RESPONDENT: / SRI K.K.TRIPATHI / / ORDER ( . .. . . .. . ), (C.D. RAO), ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE OR DER DATED 30.04.2010 OF LD. C.I.T.(A)-XXXIII, KOLKATA PERTAINING TO ASSESSMENT YEAR 2005-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1) FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITIONS MADE BY THE ASSESSING OFFICER, WARD-4/HALDIA AND CONFINUED BY T HE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII/KOLKATA ARE PERVERSE, R ATHER AGAINST EVIDENCE AND MATERIAL ON RECORD AND WITHOUT AN IOTA OF MATERIAL OR EVIDENCE TO SUPPORT AND SUSTAIN THE SAME. 2) FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.3,51,360/- (RUPEES THREE LAC FIFTY ONE THOUSAND THREE HUNDRED SIXTY ONLY) MADE BY ASSESSING OFFICER, WARD-4/HALDIA AND CONFIRMED B Y THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII/ KOLKATA ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BUILDING IS PERVERSE, INEQUITABLE AND CAPRICIOUS AN D MADE ON MERE SUSPICION AND CONJECTURES AND OUGHT TO BE SET ASIDE IN ENTIRETY. 3) FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS. 42,510/- (RUPEES FORTY TWO THOUSAND FIVE HUNDRED TE N ONLY ) MADE BY ASSESSING OFFICER, WARD-4/HALDIA AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII / KOLKATA BY TREATING AGRICULTURAL INCOME AS INCOME FROM UNDISCLOSED SOURCES IS PERVERSE, INEQUITABLE AND CA PRICIOUS AND MADE ON MERE SUSPICION AND CONJECTURES AND OUGHT TO BE SET ASIDE IN ENTIRETY. 2 4) FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITIONS MADE BY ASSESSING OFFICER, WARD-4/ HALDIA AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII/ KOLKATA ARE OTHERWISE BAD IN LAW, DEVOID OF ANY LOGIC AND WHOLLY UNSUSTAINABLE. 2. THE ASSESSEE DERIVES INCOME FROM COMMISSION, IN TEREST AND AGRICULTURE. THE ASSESSEE FOR THE FIRST TIME HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOWING INCOME OF RS.94,954/- AND THE SAID RETURN WAS ACCOMPANIED BY BALANCE SHEET AND INCOME STATEMENT FOR THE FINANCIA L YEARS 1993-94 TO 2004-05, ALTHOUGH HE HAS BEEN ASSESSED FOR HIS AGRICULTURAL INCOME IN EARLIER YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE AND HIS A/R APPEARED, BUT COULD NOT PRODUCE BOOKS OF ACCOUNT ETC. IN SUPPORT OF THE RET URN AS, ACCORDING TO THE ASSESSEE, THE SAME WERE DESTROYED IN DEVASTATING FLOOD IN HIS ARE A DURING JULY, 2007. THE A.O. PASSED EX PARTE ASSESSMENT ORDER U/S. 144 ASSESSING THE TOTAL INCOM E OF RS.4,88,824/- AND THEREBY MAMADE THE FOLLOWING ADDITIONS TO THE INCOM E OF THE ASSESSEE :- (A) AGRICULTURAL INCOME AS INCOME UNDISCLO SED SOURCES RS. 42,510/- (B) UNEXPLAINED INVESTMENT IN HOUSE PROPERT Y RS.3,51,360/- 3. IN THE REGARD TO THE ADDITION OF RS.42,510/- MA DE BY THE A.O. AS UNEXPLAINED INCOME, THE FACTS ARE THAT THE ASSESSEE HAD SHOWN I N HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION A SUM OF RS.42,510/- AS HIS AGR ICULTURAL INCOME. AS THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF SUCH A GRICULTURAL INCOME, THE A.O. HAD REJECTED THE CLAIM AND ADDED THE SAID SUM IN THE AS SESSEES TOTAL INCOME AS INCOME FROM UNDISCLOSED SOURCE. THE MATTER WENT TO THE LD. C.I .T.(A) BEFORE WHOM THE ASSESSEE FILED COPY OF LAND HOLDING CERTIFICATE OF ABOUT 30 DECIMA L OF LAND (1 BIGHA) WHICH HAS RESULTED IN ACCRUAL OF AGRICULTURAL INCOME. IT WAS ALSO STAT ED BY THE ASSESSEE THAT THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE FOR THE EARLIER YEARS, I.E. A.Y. 1994-95 TO 2004-05, HAS BEEN ACCEPTED BY THE DEPARTMENT AND HENCE THE INCOM E FROM THE SAME LAND FOR THE YEAR UNDER APPEAL SHOULD ALSO BE ACCEPTED. THE MATTER RE MANDED TO THE A.O. THE A.O. DEPUTED AN INSPECTOR WHO REPORTED THAT THE LAND HOL DING OF THE ASSESSEE WAS ONLY FOR 10 DECIMAL AND SUCH LAND CAN BE USED ONLY FOR PADDY CU LTIVATION. THE INSPECTOR ESTIMATED INCOME FROM SUCH LAND AT RS.5,000/-. ACCORDING TO THE LD. C.I.T.(A), THE ASSESSEE DID 3 NOT RAISE ANY SPECIFIC OBJECTION ABOUT INSPECTORS REPORT. HE, THEREFORE, UPHELD THE A.O.S ACTION IN TREATING THE AGRICULTURAL INCOME O F RS.42,510/- CLAIMED BY THE ASSESSEE AS HIS INCOME FROM UNDISCLOSED SOURCES. 4. REGARDING THE OTHER ADDITION OF RS.3,51,360/- M ADE BY THE A.O. AS UNEXPLAINED INVESTMENT IN PROPERTY, THE FACTS ARE THAT THE ASSE SSEE COULD NOT PRODUCE HIS BOOKS OF ACCOUNTS OF EARLIER YEARS ON THE BASIS OF WHICH STA TEMENT OF ACCOUNTS FOR THOSE YEARS HAD BEEN PREPARED, SHOWING CASH-IN-HAND OF RS.2,13,939/ - AND SUNDRY DEBTORS OF RS.1,37,421/-, WHICH WAS CLAIMED BY THE ASSESSEE AS HIS OPENING ASSETS AND SOURCE OF INVESTMENT IN THE BUILDING. IN ABSENCE OF BOOKS OF ACCOUNTS FOR EARLIER YEARS, THE A.O. CONSIDERED THE INVESTMENT OF RS.3,51,360/- AS UNEXP LAINED AND THUS ADDED THE SAME TO THE TOTAL INCOME AS UNEXPLAINED INVESTMENT. 4. BEFORE THE LD. C.I.T.(A), THE ASSESSEE PRODUCED A CHART SHOWING ASSETS, LIABILITY, INCOME DERIVED FROM EARLIER YEARS AND ALSO BALANCE SHEETS FOR THE PERIOD 1993-94 TO 2003-04 TO JUSTIFY HIS INVESTMENT IN THE HOUSE PROP ERTY DURING THE YEAR UNDER APPEAL. IN RESPECT OF AGRICULTURAL INCOME, THE LD. C.I.T.(A) B ASING ON THE INSPECTORS REPORT ESTIMATED THE SAME AT RS.5,000/- FOR THE YEAR UNDER CONSIDERATION AND THUS HELD THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE FOR EAR LIER YEARS TO BE NOT CORRECT. HE ALSO HELD THAT THE ASSESSEE HAD NO CAPITAL AND SUNDRY DE BTORS AS CLAIMED BY HIM IN ABSENCE OF ANY EVIDENCE. THE ADDITION OF RS.3,51,360/- MADE BY THE A.O. WAS, THEREFORE, UPHELD. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE ASSE SSEE INHERITED MORE OR LESS 1 BIGHA (10 DCML.) OF AGRICULTURAL LAND AT PANSKURA, PURBA MEDI NIPUR IN MOUZA MICHAGRAM, J.L. NO. 74, DAG NO.563/2. IN SUPPORT OF SUCH CLAIM, THE AS SESSEE FILED AT PAGES 8 & 9 OF THE PAPER BOOK LAND RECORDS SHOWING AREA OF 10 DCML. HE FURTHER SUBMITTED THAT THE ASSESSEE ALSO DID SHARE CROPPING ON OTHERS LAND WHICH FACT W AS TOTALLY IGNORED BY THE AUTHORITIES BELOW. THE ACTION OF THE AUTHORITIES BELOW IN DISB ELIEVING THIS FACTUAL POSITION WAS ARBITRARY AND BASED ON SUSPICION AND THE ADDITION M ADE ON ACCOUNT OF AGRICULTURAL INCOME SHOULD BE DELETED. IN RESPECT OF OTHER ADDI TION OF RS.3,51,360/- MADE AS UNEXPLAINED INVESTMENT, THE LD. COUNSEL SUBMITTED T HAT IN TERMS OF SEC. 69 OF THE ACT, THE ASSESSEE HAS DISCHARGED HIS ONUS AND THE DEPARTMENT HAS FAILED TO PROVE OTHERWISE BY 4 BRINGING ON RECORD ANY EVIDENCE. HE FURTHER SUBMITT ED THAT LIST OF DEBTORS WERE MADE AVAILABLE TO THE DEPARTMENT AND THE AUTHORITIES BEL OW WITHOUT TAKING ANY RECOURSE U/S. 131 OR 133 OF THE ACT HAVE DISBELIEVED THE INVESTME NT ON SUSPICION. HE HAS FILED DETAILS OF SUNDRY DEBTORS FOR THE YEAR ENDED 31/3/2004 AT P AGES 10 TO 24 OF THE PAPER BOOK. IN SUPPORT OF HIS SUBMISSION, THE LD. COUNSEL RELIED O N THE DECISIONS IN THE CASES OF USHAKANT N. PATEL VS. CIT [282 ITR 553 (GUJ)] AND C IT VS. MOTHER INDIA REFRIGERATION INDS. P. LTD. [155 ITR 711 (SC)]. HE FURTHER SUBMI TTED THAT THE ASSESSEE HAD INCURRED TOTAL EXPENDITURE OF RS.4,04,270/- ON CONSTRUCTION OF BUILDING, OUT OF WHICH SUM OF RS.68,588/- REMAINED DUE FOR PAYMENT AND DULY REFLE CTED IN THE BALANCE SHEET AS AT 31/3/2005. COPY OF STATEMENT OF ACCOUNTS FOR THE YE AR ENDED 31/3/2005 HAS ALSO BEEN FILED AT PAGES 25 TO 28 OF THE PAPER BOOK. THEREFOR E, ACCORDING TO THE LEARNED COUNSEL, THE ACTUAL EXPENDITURE ON CONSTRUCTION (NET INVESTM ENT) DURING THE YEAR UNDER APPEAL WAS TO THE EXTENT OF RS.3,35,682/- [RS.4,04,270 R S.68,588] AND THE SOURCE OF SUCH INVESTMENT WAS AS UNDER :- A) CASH BALANCE AVAILABLE ON 01/4/2004 RS.2, 13,939 B) RECOVERY FROM SUNDRY DEBTORS OUT OF DEBT OF R S.1,37,421 RS. 92,632 C) CASH-IN-HAND OUT OF TOTAL INCOME OF RS.1,49,4 64 RS. 29,111 TOTAL RS.3,35,682 THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMIT TED THAT THE ADDITION SUSTAINED BY THE LD. C.I.T.(A) SHOULD BE DELETED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE ME. IN THIS CASE, THE ASSES SMENT WAS MADE EX PARTE U/S. 144 OF THE ACT. IN MY CONSIDERED VIEW, WHEN THE ASSESSEE C OMES UP WITH THE FACTS IN SUPPORT OF HIS CLAIM, IT IS FOR THE A.O. TO ADJUDICATE ON THE SAME AND HIS DISCRETION SHOULD BE JUDICIOUS IN NATURE. THE ASSESSEE HAS EXPLAINED THE SOURCE OF RS.2,13,939/- BEING CLOSING CASH-IN-HAND OF THE ASSESSMENT YEAR 2004-05 AND SUNDRY DEBTORS TO THE EXTENT OF RS.1,37,421/- AND CLAIMED THESE TWO AMOUNTS AS HIS OPENING ASSET FOR THE YEAR UNDER CONSIDERATION. THE STATEMENT OF THE ASSESSEE THAT H IS BOOKS OF ACCOUNTS OF EARLIER YEARS 5 HAVE BEEN DESTROYED IN FLOOD IN JULY, 2007 HAS NOT BEEN DISPUTED BY THE DEPARTMENT. THE ASSESSEE HAS FILED BALANCE SHEETS AND STATEMENT OF INCOME OF EARLIER YEARS. HE HAS ALSO STATED THAT HIS AGRICULTURAL INCOME FOR THE AS SESSMENT YEARS 1994-05 TO 2004-05 HAS BEEN ACCEPTED BY THE DEPARTMENT AS NO FURTHER PROCE EDING HAS BEEN INITIATED BY THE DEPARTMENT IN THIS REGARD. IN HIS SUBMISSION, THE L D. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE ACTUAL INVESTMENT DURING THE YEAR UNDER AP PEAL TOWARDS CONSTRUCTION OF BUILDING WAS TO THE EXTENT OF RS.3,35,682/- AND NOT RS.4,04, 270/-, BECAUSE PAYMENT DUE ON ACCOUNT OF MATERIALS & LABOUR CHARGES WAS FOR RS.68 ,588/-. THE SOURCE OF THE SAID INVESTMENT HAS ALSO BEEN SHOWN AS OPENING CASH BALA NCE OF RS.2,13,939/-, PART RECOVERY OF SUNDRY DEBTS OF RS.92,632/- OUT OF RS.1,37,421/- AND CASH-IN-HAND OF RS.29,111/- OUT OF HIS INCOME FOR THE YEAR, WHICH HAVE ALREADY BEEN MENTIONED ABOVE. IT IS FURTHER OBSERVED THAT ALTHOUGH THE ASSESSEE SUBMITTED LIST OF SUNDRY DEBTORS, BUT THE DEPARTMENT HAS NOT PROCEEDED FURTHER BY WAY OF ISSUING NOTICES U/S. 131 OR U/S. 136 TO KNOW THE CORRECT STATUS OF THE DEBT. THE REVENUE AUTHORITIES HAVE NOT ADJUDICATED THE ISSUE IN PROPER PERSPECTIVE AND THEY HAVE ONLY ALLEGED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE FOR EARLIER YEARS WERE NOT PRODUCED, IN SPITE OF THE ST ATEMENT THAT HIS BOOKS OF ACCOUNT WERE DAMAGED/DESTROYED IN DEVASTATING FLOOD OCCURRED IN THE YEAR 2007. IT IS OBSERVED THAT THE REVENUE AUTHORITIES HAVE NOT CONSIDERED THE ISS UE IN PROPER PERSPECTIVE WHICH, IN MY CONSIDERED OPINION, REQUIRES FURTHER ADJUDICATION. 7. THE DEPARTMENT HAS ALSO OBJECTED TO THE INCOME SHOWN BY THE ASSESSEE OUT OF HIS AGRICULTURAL INCOME. THE A.O. HAS TREATED THE ENTIR E AGRICULTURAL INCOME IN THE SUM OF RS.42,510/- SHOWN IN THE YEAR UNDER APPEAL AS ASSES SEES UNDISCLOSED INCOME, ALLEGING THAT THE ASSESSEE HAD NOT OFFERED ANY EVIDENCE OR D ETAIL IN SUPPORT OF SUCH INCOME. IT IS OBSERVED THAT IN THE APPELLATE PROCEEDINGS BEFORE T HE LD. C.I.T.(A), THE ASSESSEE FILED LAND HOLDING CERTIFICATE OF 30 DCML. OF LAND AND CL AIMED CULTIVATION ON SUCH LAND, APART FROM OTHERS LAND, WHICH HAS RESULTED IN AGRICULTUR AL INCOME. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE AGRICULTURAL INCOME SHOWN B Y THE ASSESSEE DURING ASSESSMENT YEARS 1994-95 TO 2004-05 HAS BEEN DISPUTED BY THE D EPARTMENT. IN HIS REMAND REPORT, THE A.O. HAS STATED THAT VERIFICATION HAD BEEN MADE THROUGH INSPECTOR, WHO REPORTED THAT THE ASSESSEE POSSESSED ONLY 10 DCML. OF LAND WHICH CAN PRODUCE PADDY TO THE EXTENT OF 6 RS.5,000/- ONLY. THE WHOLE CONCEPT OF THE AUTHORITI ES BELOW IS LYING ON THE REPORT OF THE INSPECTOR WHICH, IN MY VIEW, IS NOT CORRECT ACTION ON THEIR PART. WHETHER THE LAND IS FIT FOR CULTIVATION OF CAULIFLOWER OR AT MOST INCOME OF RS.5,000/- CAN BE EARNED BY CULTIVATING SUCH LAND IS NOT A MATTER TO BE ADJUDIC ATED BY AN INSPECTOR OF THE INCOME-TAX DEPARTMENT, WHO IS NOT AN EXPERT IN THIS FIELD. FU RTHER, INSPECTOR WAS DEPUTED DURING REMAND PROCEEDING FOR MAKING ENQUIRIES. IT IS A SE TTLED LAW THAT INSPECTORS REPORT OF A SUBSEQUENT DATE IN RESPECT OF INCOME OF EARLIER YEA RS CANNOT FORM THE BASIS FOR ARRIVING AT A CONCLUSIVE DECISION. THEREFORE, CONSIDERING T HE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IN MY CONSIDERED VIEW, T HE MATTER REQUIRES PROPER VERIFICATION BY THE COMPETENT AUTHORITY, WHO CAN GI VE A PROPER JUDGMENT AS TO WHETHER THE LAND CAN YIELD CAULIFLOWER AS CLAIMED BY THE AS SESSEE OR NOT AND WHETHER THE ASSESSEE WAS HOLDING THE LAND AS CLAIMED BY HIM. 8. IN VIEW OF THE DISCUSSIONS ABOVE AND ON THE FAC TS & CIRCUMSTANCES OF THE CASE, IT WOULD MEET THE ENDS OF JUSTICE IF THE AFORESAID TWO ISSUES ARE SET ASIDE FOR READJUDICATION. I, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMAND THE MATTER TO THE FILE OF A.O., WHO IS DIRECTED TO READ JUDICATE THE MATTER AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TO ALLOW THE ASSESSEE TO FURNISH ANY FURTHER EVIDENCE, IF ANY, IN SUPPORT OF HIS CLA IMS AND IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 0 / 1 2 1! 3 04 THIS ORDER IS PRONOUNCED IN OPEN COURT ON 25/1/2011 . SD/- ( . .. . . .. . ) (C.D.RAO) , ACCOUNTANT MEMBER ( (( ( ) )) ) DATE: 25 -01-2011 7 / ITA NO. 1540 (KOL) OF 2010 / - + 5 65#7- COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT : RANJIT KUMAR SETUA, VILL. BAHARGRAM, PO PANSKURA R.S., PURBA MEDINIPUR, PIN-721 152 2 +,'( / THE RESPONDENT : I.T.O., WARD-2, HALDIA. 3. /! () : THE CIT(A) - XXXIII, KOLKATA. 4. /!/ THE CIT, KOL- 5 . ; 3 + ! / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 . GUARD FILE . ,5 + / TRUE COPY, /!1/ BY ORDER, (DKP) < = / DY/ASSTT. REGISTRAR .