Sri M N Sharanarthi , Bangalore V. The Income TAx Officer Ward-7(2)(4), Bangalore

ITA 1575/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7172 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 19-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - C BENCH : BANGALORE BEFORESHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1575/BANG/2017 ASSESSMENT YEAR : 20 1 0 - 11 SHRI M.N. SHARANARTHI, FLAT NO. D-102, 2 ND MAIN, ADARSH GARDEN, 47 TH CROSS, 8 TH BLOCK, JAYANAGAR, BANGALORE 560 082. PAN: ATMPS 5471J VS. THE INCOME TAX OFFICER, WARD 7 [2] [4], BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI V. SRINIVASAN, ADVOCATE REVENUE BY : SHRI M. RAJASEKHAR, ADDL. CIT (DR) DATE OF HEARING : 29 . 1 1 .201 7 DATE OF PRONOUNCEMENT : 01 .1 2 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THIS IS DI RECTED AGAINST THE ORDER OF CIT(A)-7, BANGALORE DATED 30.05.2017 FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1.THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVI DENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2.THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS. 7,25,000/- OUT OF THE ORIGINAL ADDITION OF R S.9,65,000/- MADE BY THE LEARNED A.O. BY DENYING THE EXEMPTION C LAIMED U/S. 10[1] OF THE ACT IN RESPECT OF THE AGRICULTURA L RECEIPTS OF THE APPELLANT UNDER THE FACTS AND IN THE CIRCUMSTAN CES OF THE APPELLANT'S CASE. 2.1 THE LEARNED CIT[A] FAILED TO APPRECIATE THAT TH E JOINT FAMILY OF THE APPELLANT WAS THE OWNER IN CULTIVATION OF SU BSTANTIAL AGRICULTURAL LAND AND THE AGRICULTURAL INCOME OF TH E APPELLANT'S ITA NO. 1575/BANG/2017 PAGE 2 OF 5 JOINT FAMILY WAS BEING DEPOSITED BY THE APPELLANT I N HIS INDIVIDUAL CAPACITY, WHICH EXTENT OF AGRICULTURAL I NCOME CLAIMED AS PERTAINING TO THE JOINT FAMILY OF THE APPELLANT WAS HIGHLY REASONABLE AND COMMENSURATE WITH THE AGRICULTURAL H OLDING OF THE JOINT FAMILY OF THE APPELLANT UNDER THE FACTS A ND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3.THE LEARNED CIT[A] IS NOT JUSTIFIED IN SUSTAINING AN ADDITION OF RS. 3,22,192/- OUT OF THE ORIGINAL ADDITION OF R S.6,53,300/- AS THE UNEXPLAINED INVESTMENT BEING THE PEAK CASH C REDIT IN THE TWO BANK ACCOUNTS OF THE APPELLANT UNDER THE FA CTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 4.WITHOUT PREJUDICE TO THE ABOVE, THE IMPUGNED ADDI TIONS MADE ARE HIGHLY EXCESSIVE AND LIABLE TO BE REDUCED SUBSTANTI ALLY. 5.WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WIT H THE HON'BLE CCIT/DG, THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S. 234-B OF THE ACT, WHICH UNDER THE FAC TS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND THE LEVY DESERVES TO BE CANCELLED. 6.FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE A PPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES A S PART OF THE COSTS. 3. REGARDING GROUND NO. 2, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT OUT OF TOTAL AMOUNT RECEIVED BY ASSESSEE ON ACCOUNT OF AGRICULTU RE PRODUCE OF RS. 9.65 LAKHS, AN AMOUNT OF RS. 7.25 LAKHS WAS RECEIVED BY WAY OF CHEQUES. HE FURTHER SUBMITTED THAT AS PER PARA NO. 6.2 OF HIS O RDER, CIT (A) HAS HELD THAT THE ASSESSEE WAS UNABLE TO PRODUCE EITHER THE DOCUMENTA RY EVIDENCE OR THE CORROBORATIVE EVIDENCE TO MANIFEST THAT THESE AMOUN TS RECEIVED BY THE ASSESSEE BY WAY OF CHEQUES WERE RECEIVED IN LIEU OF AGRICULTURAL PRODUCE. HE SUBMITTED THAT IF IN THE INTEREST OF JUSTICE, ONE M ORE OPPORTUNITY IS PROVIDED TO ASSESSEE, HE UNDERTAKES THAT THE ASSESSEE WILL PROD UCE THE CONCERNED PERSON FROM WHOM THE CHEQUES WERE RECEIVED AND ALL THE REQ UIRED DETAILS AND EVIDENCES WILL ALSO BE PRODUCED IN SUPPORT OF ASSES SEES CLAIM. THE LD. DR OF REVENUE SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS P ROVIDED BY AO AND CIT (A) AND THEREFORE, NO FURTHER OPPORTUNITY SHOULD BE PRO VIDED. ITA NO. 1575/BANG/2017 PAGE 3 OF 5 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE DETAILS OF BANK ACCOUNT ARE VERY MUCH NOTED BY THE AO IN THE ASSESSMENT ORD ER IN WHICH THE CHEQUES WHICH ARE CLAIMED TO BE ON ACCOUNT OF SALE OF AGRIC ULTURAL PRODUCE WERE DEPOSITED IN HDFC BANK ACCOUNT NO. 08751930000808 A ND SYNDICATE BANK ACCOUNT NO. 04252010052884. WHEN THE DETAILS OF BA NK ACCOUNTS WERE AVAILABLE WITH THE AO, THE AO MIGHT HAVE MADE ENQUI RY FROM THE BANK TO FIND OUT THE NAME AND OTHER DETAILS OF THE PERSON FROM W HOM THESE CHEQUES WERE RECEIVED. IT IS NOT IN DISPUTE THAT THE CHEQUES WE RE DEPOSITED IN THESE TWO BANK ACCOUNTS OF THE ASSESSEE. THIS IS TRUE THAT THE DE TAILS OF PERSON FROM WHOM THE CHEQUES WERE RECEIVED WERE NOT PROVIDED BY THE ASSE SSEE BEFORE THE AO AND CIT (A) AND THEREFORE, THE AO AND CIT (A) COULD NOT EXAMINE THE PERSON IN QUESTION TO FIND OUT THE TRUTH. UNDER THESE FACTS AND IN THE INTEREST OF JUSTICE, I FEEL IT PROPER TO RESTORE BACK THIS MATTER TO THE F ILE OF AO FOR FRESH DECISION. HENCE I SET ASIDE THE ORDER OF CIT (A) ON THIS ISSU E AND RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION IN THE LIGHT O F ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO AS SESSEE. I WANT TO MAKE IT CLEAR THAT THE LD. AR OF ASSESSEE HAS GIVEN AN UNDE RTAKING THAT IF THE ISSUE IS RESTORED BACK TO THE FILE OF AO / CIT (A), THE ASSE SSEE WILL PRODUCE THE ISSUER OF CHEQUE ALONG WITH OTHER REQUIRED EVIDENCES IN SUPPO RT OF THE CLAIM OF THE ASSESSEE AND THE DEPARTMENT CAN EXAMINE HIM AND THE EVIDENCES TO FIND OUT THE TRUTH. ACCORDINGLY GROUND NO. 2 OF THE ASSESSE ES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5. REGARDING GROUND NO. 3, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT ON PAGES 99 TO 104 OF PAPER BOOK IS THE COPY OF CASH BOOK FO R THE PRESENT YEAR AND AS PER THE SAME, IT CAN BE SEEN THAT THE OPENING BALAN CE OF CASH IS RS. 7,03,639.93/- BUT THE AO HAS DISREGARDED THE SAME. HE ALSO SUBMITTED THAT EVEN AFTER DISREGARDING THE OPENING BALANCE, THE WO RKING OF AO IN RESPECT OF PEAK CASH DEPOSIT IS NOT PROPER FOR SEVERAL REASONS . HE SUBMITTED THAT THE AO HAS WORKED OUT THE PEAK WORKING FOR EACH BANK SEPAR ATELY WHILE IT SHOULD HAVE BEEN DONE IN A COMBINED MANNER. IT IS ALSO SUBMITT ED THAT THE AO HAS NOT CONSIDERED THE RECEIPT ON ACCOUNT OF RENT AND AGRIC ULTURAL INCOME AND THEREFORE, FOR THIS REASON ALSO, THE WORKING OF PEAK IS DEFECT IVE. AT THIS JUNCTURE, IT WAS ITA NO. 1575/BANG/2017 PAGE 4 OF 5 POINTED OUT BY THE BENCH THAT AS PER THE STATEMENT OF FACTS AVAILABLE ON PAGE NO. 30 OF THE APPEAL MEMO, THERE IS DRAWINGS SHOWN OF RS. 8,49,170/- IN THE PRESENT YEAR AND THERE IS REPAYMENT OF CAR LOAN FRO M ICICI BANK ALSO BECAUSE THE BALANCE OF SUCH LOAN AS ON 31.03.2009 WAS RS. 2 ,13,570/- AND THE SAME AS ON 31.03.2010 IS RS. 71,190/-. THE BENCH WANTED TO KNOW AS TO WHETHER THE REPAYMENT OF CAR LOAN WAS BY CASH OR CHEQUE. THE L D. AR OF ASSESSEE SUBMITTED THAT THIS MATTER MAY ALSO BE RESTORED BAC K TO THE FILE OF AO FOR FRESH DECISION AND DURING THOSE PROCEEDINGS, THE AO CAN E XAMINE ALL THESE ASPECTS. THE LD. DR OF REVENUE SUBMITTED THAT ENOUGH OPPORTU NITY WAS PROVIDED BY THE AO AND CIT(A) TO THE ASSESSEE AND THEREFORE, NO FUR THER OPPORTUNITY SHOULD BE PROVIDED. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT IN PARA 2.3 OF ASSESSMENT ORDER, THE AO HAS PRODUCED THE STATEMENT OF FACTS O F THE ASSESSEE AS ON 31.03.2009 AND 31.03.2010 AND AS PER THE SAME, THER E WAS CLOSING CASH BALANCE OF RS. 7,03,640/- AS ON 31.03.2009 AND THER E WAS CAR LOAN FROM ICICI BANK OF RS. 2,13,570/- ON THAT DATE AND ON THE ASSE T ASIDE AS ON 31.03.2009 CAR WAS SHOWN AT RS. 6.30 LAKHS. IN THE STATEMENT OF FACTS AS ON 31.03.2010, THE CAR LOAN FROM ICICI BANK HAS GONE DOWN TO RS. 7 1,190/- AND THERE IS DRAWINGS OF RS. 8,49,170/-. IT IS ALSO SEEN THAT O N THE ASSET SIDE, THE VALUE OF CAR HAS GONE UP TO RS. 11.55 LAKHS AS ON 31.03.2010 AND THE CAR LOAN HAS GONE DOWN AND THIS MEANS THAT A NEW CAR WAS PURCHAS ED BUT WHETHER THIS PURCHASE OF NEW CAR WAS OUT OF CASH PAYMENT OR CHEQ UE PAYMENT, IS NOT KNOWN AND AS PER THE PEAK WORKING DONE BY THE AO (W HICH IS AVAILABLE ALONG WITH THE ASSESSMENT ORDER) ALSO, THERE IS NO INDICA TION ON THIS ASPECT. IT IS SEEN THAT FOR BOTH THE BANK ACCOUNTS I.E. WITH SYNDICATE BANK AND HDFC BANK, PEAK WORKING HAS BEEN DONE SEPARATELY. IN FACT, WE ARE CONCERNED WITH EXCESS CASH DEPOSIT AND THEREFORE, THIS PEAK WORKING SHOULD HAV E BEEN DONE FOR BOTH THE BANK ACCOUNTS JOINTLY. IT IS ALSO TO BE SEEN THAT REGARDING OTHER RECEIPTS SUCH AS RENTAL INCOME AND AGRICULTURAL INCOME, THE ASSESSEE HAS TO ESTABLISH AS TO HOW MUCH WAS RECEIVED BY WAY OF CASH AND HOW MUCH BY WA Y OF CHEQUE AND HOW MUCH OF EXPENSES FOR EARNING THESE INCOMES WERE IN CASH. IN FACT, NET CASH GENERATED FROM THESE ACTIVITIES IN EACH MONTH HAS T O BE WORKED OUT AND ITA NO. 1575/BANG/2017 PAGE 5 OF 5 CONSIDERED IN PEAK WORKING. SIMILARLY FOR THE REPAY MENT OF CAR LOAN FROM ICICI BANK AND PURCHASE OF NEW CAR ALSO, IT SHOULD BE SEE N AS TO HOW MUCH IS SPENT IN CASH AND HOW MUCH IN CHEQUE ON ACCOUNT OF REPAYM ENT OF CAR LOAN AND PURCHASE OF CAR AND THE CASH SPENT FOR THESE PURPOS ES SHOULD ALSO BE CONSIDERED FOR WORKING OUT THE PEAK. HENCE, I SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE ALSO AND RESTORE THIS MATTER ALSO BACK T O THE FILE OF AO FOR FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PRO VIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. GROUND NO. 3 IS ALSO ALLO WED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 01 ST DECEMBER, 2017. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.