Smt. B. Sreelatha, V. DCIT,

ITA 1771/BANG/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9285 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 68

Judgement Text

ITA.1771/BANG/2013 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.1771/BANG/2013 (ASSESSMENT YEAR : 2008-09) SMT. B. SREELATHA, W/O. B. V. SREENIVASA REDDY, OPP. TAJ BAR & RESTAURANT, WELCOME GATE, BHUVANAGIRI COLONY, BELLARY .. APPELLANT PAN : BDLPS7641N V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1 (3), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. SURESH MUTHUKRISHNAN, CA REVENUE BY : SHRI. VIJAY KUMAR N, ADDL. CIT HEARD ON : 14.09.2016 PRONOUNCED ON : 04.11.2016 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT (A), MYSURU, DT.12.07.2013, FOR THE ASSESSMENT YEAR 2008 -09. 02. THE ASSESSEE, AN INDIVIDUAL, HAVING INCOME FROM TRANSPORT CONTRACT BUSINESS & AS A PARTNER OF A FIRM KNOWN AS SVR MINE RALS AND SRI MINERALS, CONSEQUENT TO SEARCH & SEIZURE OPERATION AT HER RES IDENCE FILED A RETURN, ELECTRONICALLY ADMITTING A TOTAL INCOME AT RS.1,25, 14,330/- WHICH INCLUDED ITA.1771/BANG/2013 PAGE - 2 RS.1,00,00,000/-, INCOME DECLARED UNDER INCOME TAX SEARCH . DURING THE ASSESSMENT , THE AO FOUND THAT THE ASSESSEE HAS INT RODUCED CASH OF RS.2,63,000/- BETWEEN 01.4.2007 & 21.4.2007 AND A C ASH LOANS OF RS.8,60,000/, ON A SINGLE DAY IE ON 01.5.2007, FR OM 35 PERSONS RANGING BETWEEN RS.19,000/-& 19,500/- PER PERSON WHICH WERE SQUARED UP ON 31.03.2007(SIC SHOULD BE 31.03.2008). SINCE SHE COU LD NOT SATISFACTORILY EXPLAIN THE NATURE, SOURCE AND GENUINENESS ETC OF T HESE CREDITS TO HIM, THE AO ADDED THEM AS UNEXPLAINED & UNACCOUNTED INCOME, RES PECTIVELY. AGGRIEVED, SHE FILED AN APPEAL BEFORE THE CIT(A) AND HE CONFIR MED THOSE ADDITIONS. THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUN DS OF APPEAL. ITA.1771/BANG/2013 PAGE - 3 03. WE HEARD THE RIVAL SUBMISSIONS. SINCE THE ASSES SEE FILED THE RETURN ON HER OWN, PAID THE SELF ASSESSMENT TAXES ETC, THE ISSUE BOILS DOWN TO THE ABOVE TWO ADDITIONS WHICH ARE COVERED IN THE APPEAL GROUND NOS 4, 5 & 6 ONLY. THE AO DEALT THEM AS UNDER : ANALYSIS OF CASH BOOK A. CASH CREDITS: ON A SCRUTINY OF THE CASH BOOK PRODUCED IT IS SEEN THAT CASH OF RS.2,63,000/- HAS BEEN INTRODU CED BETWEEN 01/04/2007 TO 21/04/2007. THE ASSESSEE HAS NOT FURN ISHED ANY EXPLANATION WITH REGARD TO SUCH CASH CREDITS APPEAR ING. IN THE ABSENCE OF SATISFACTORY EXPLANATION, CONSIDERING TH E FACT THAT SHE HAD NO INCOME HER OWN FOR EARLIER YEARS AND THA T THE CASH CREDITS APPEARING IN HER BANK ACCOUNTS AND ASSESSED FOR EARLIER YEARS HAVE BEEN UTILISED FOR OTHER PURPOSES AS PER THE ENTRIES APPEARING IN THE BANK ACCOUNTS, I AM TO HOLD THAT T HE CASH CREDITS TO THE EXTENT OF RS.2,63,000/- ARE UNEXPLAI NED AND SUBJECTED TO TAX U/S 68 OF THE ACT. B. SQUARED UP CASH LOANS : IN THE CASH BOOK ON 01/05/2007 THE ASSESSEE HAS INTRODUCED CASH LOANS O F RS.19,000 TO 19,500/- FROM 35 PERSONS AGGREGATING T O RS.8,60,000/-. SUCH CASH LOANS SHOWN AT A FIGURE OF RS.20,000/-, ON EACH OCCASION , HAS BEEN SQUARED UP AS ON 31/03/2007 AND THEREFORE DO NOT APPEAR IN THE ACCOUNTS . AGAINST THE CASH CREDIT, ONLY THE NAME OF THE PERSON IS SHOWN WITHOUT HAVING A SEPARATE LEDGER FO R EACH TRANSACTION. HOWEVER, A LEDGER ACCOUNT UNDER THE H EADING LOANS IS OPENED ON 01/05/2007 FOR A SUM OF RS.8,60, 000/- WHICH IS SQUARED UP BEFORE MARCH 2007(SIC SHOULD BE 2008). AT THE TIME OF HEARING, THE ASSESSEE WAS UNABLE TO FURNISH THE NAMES AND ADDRESS OF THE PARTIES AND ALSO WAS N OT ABLE TO ESTABLISH THE GENUINENESS OF THE CASH LOAN TRANSACT ION AND THE CREDITWORTHINESS OF THE PARTIES. EACH CASH LOAN OF LESS THAN RS.20,000/- INTRODUCED ON ONE DAY SHOWS THAT THE ASSESSEE TO OVERCOME THE PROVISIONS OF SECTION 269S S HAS BROUGHT IN CASH OF RS.8,60,000/- IN THE NAMES OF VA RIOUS PERSONS AND SQUARED UP SUCH LOANS AT THE END OF THE YEAR SO THAT SUCH TRANSACTIONS WILL NOT COME TO LIGHT IN TH E FORM OF LOANS IN THE FINANCIAL STATEMENTS. IT IS ONLY WHEN THE CASH BOOK IS VERIFIED SUCH ENTRIES ARE NOTICED. THEREFORE, I HOLD THAT SUCH CASH LOANS INTRODUCED REPRESENT ASSESSEE'S UNACCOUN TED INCOME AND BRING IT TO TAX U/S 68 OF THE ACT. ITA.1771/BANG/2013 PAGE - 4 FURTHER THE AO ALSO HELD IN HIS ORDER THAT THE ASSE SSEE HAS FILED AN AUDITED BALANCE SHEET WHEREIN UNDER AS SETS, UNDER THE SUB HEAD GOLD, JEWELLERY AND OTHER ASSET S SHE HAS SHOWN AN AMOUNT OF RS.1,04,00,000/- WHICH IS MATCHED BY THE AMOUNT OF RS.1 CRORE CREDITED TO HER CAPITAL ACCOUNT WITH THE NARRATION INCOME DECLARED UNDER INCOME TAX SEARCH-GOLD AND JEWLLERY. FROM THIS , IT IS EVIDENT THAT THE CLOSING CAPITAL SHOWN AT RS.1,54,7 3,456/- AS ON 31/03/2008 HAS BEEN ARRIVED AT AFTER CONSIDER ING THE DISCLOSURE OF RS.1 CR MADE. SINCE, THE ASSESSEE HAS CONSIDERED SUCH DISCLOSURE OF RS.1 CR IN HER BOOKS OF ACCOUNT UNDER THE HEAD GOLD, JEWELLERY AND OTHER AS SETS, GOT SUCH BOOKS AUDITED FROM A CHARTERED ACCOUNTANT, OBTAINED AN AUDIT REPORT AND FILED SUBSEQUENTLY, SH E CANNOT NOW ACCOUNT UNDER THE HEADING LOANS IS OPENED ON 01/05/ 2007 FOR A SUM OF RS. 8,60,000/- WHICH IS SQUARED UP BEF ORE MARCH 2007(SIC, SHOULD BE 2008). 04. THIS BEING SO, THE ASSESSEE PLEADED THAT SINCE SHE HAS OFFERED AN INCOME OF RS.1,00,00,000/-, VOLUNTARILY AT THE TIME OF SEARCH AND SEIZURE OPERATIONS, ALTHOUGH SHE DID NOT HAVE ANY OTHER WOR THWHILE ASSETS SHE HAS HONOURED IT BY FILING THE RETURN ETC AND HENC E THESE ADDITIONS MAY BE TELESCOPED. IN THIS REGARD RELIED ON THE RATIO REP ORTED IN CIT V K S M GURUSWAMY NADAR & SONS IN 149 ITR 127 MADRAS. WE HA VE CONSIDERED THE ASSESSEES ABOVE PLEA AND THE AOS ABOVE VIEW. THE AO FOUND THAT THE CASH OF RS.2,63,000/- HAS BEEN INTRODUCED BETWEEN 0 1/04/2007 & 21/04/2007 AND THE CASH LOANS OF RS.19,000 TO 19,50 0/- FROM 35 PERSONS AGGREGATING TO RS.8,60,000/- WAS INTRODUCED ON 01/0 5/2007 WHICH HAS BEEN SQUARED UP AS ON 31/03/2007 (SIC, SHOULD BE 31.03.2008) AND THEREFORE DO NOT APPEAR IN THE ACCO UNTS . THE SEARCH AND SEIZURE OPERATIONS HAPPENED ON 26.10.200 7 AND THE ASSESSEE VOLUNTARILY DECLARED RS. 1 CRORE AS UNDISC LOSED INCOME ON ITA.1771/BANG/2013 PAGE - 5 23.11.2007. SINCE THE AO HAS NOT POINTED OUT ANY OT HER UNDISCLOSED INCOME OTHER THAN THE IMPUGNED CREDITS, THE CREDITS WHICH APPEARED IN THE BOOKS BEFORE THE SEARCH AND SEIZURE OPERATIONS AND SQUARED THEREAFTER HAVE TO BE REGARDED AS PART AND PARCEL O F THE UNDISCLOSED INCOME OF RS.1 CRORE VOLUNTARILY OFFERED BY THE ASS ESSEE AND HENCE WE DIRECT THE AO TO DELETE THE IMPUGNED ADDITIONS. 05. IN THE RESULT, THE APPEAL GROUND NOS 4, 5 & 6 A RE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DAY OF NOVEMBER, 2016. SD/- SD/- (VIJAY PAL RAO) (S. JAYARAMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR