Shri.Durgoji Jagadeesh, Harihar V. The Income Tax Officer Ward-1(3), Davangere

ITA 1787/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7927 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-07-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISRA
• Keywords: Set aside
• Section: 143(3); 142(1); 250; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 1787 /BANG/2018 (ASSESSMENT YEAR: 20 0 8 - 0 9) SHRI DURGOJI JAGADEESH, NO.264, NE AR SSK KALYANA MANTAPA, HARIHAR 577 601 .APPELLANT PAN ACPPJ 3082J VS. INCOME TAX OFFICER , WARD 1(3), DAVANGERE. RESPONDENT. ASSESSEE BY: NONE. REVENUE BY: SHRI PRIYADARSHI MISRA, JCIT (D.R) DATE OF HEARING : 27.07.2020. DATE OF PRONOUNCEMENT : 07 .08 .20 20. O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS) , DAVANGERE PASSED U/S 144 R.W.S .263 AND U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT) . 2 ITA NO. 1787/BANG/2018 AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ADJOURNMENT PETITION WAS FILED. CONSID ERING THE MATE RIAL ON RECORD AND THE SUBMISSIONS OF LD.DR , THE APPEAL WAS HEARD. . 2. THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL : 3. THE BRIEF FACTS OF THE CASE ARE THAT , T HE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINE SS OF RETAIL LIQUOR TRADE. EARLIER THE ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3) OF THE ACT WITH THE TOTAL INCOME OF RS.4 , 84,630 / - VIDE ORDER D T.27 .03.2013. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX DAVANGERE HAS 3 ITA NO. 1787/BANG/2018 PASSE D REVISION ORDER UNDER SEC TI ON 263 OF THE ACT DT.11.3.2014 , DIRECTING THE ASSESSING OFFICER TO REDO THE AS SESSMENT WITH THE OBSERVATIONS THAT (I) WITHDRAWALS ARE MADE BY THE ASSESSEE FOR RENOVA TION OF RESIDENTIAL BUILDING, BUT THE ASSESSEE INSTEAD OF DEBITING TO T HE CAPITAL ACCOUNT , HAS DEBITED TO PURCHASE ACCOUNT OF KSBCL , WHICH RESULTED IN EXCESS OF ASSETS OVER LIABILITIES AND SAME HAS TO BE ADDED TO THE RETURNED INCOME (II) F URTHER BALANCE OF RS.4,720 / - IN THE B ANK ACCOUNT OF ASSESSEE IN STATE BANK OF MYSORE, KUMARAPATNAM BRANCH W AS NOT TAKEN TO THE BALANCE SHEET. THEREFORE, T H E ASSESSING OFFICER HAS ISSUED NOTICE UNDER S ECTION 142(1) OF THE ACT , BUT THERE WAS NO RESPONSE FROM THE ASSESSEE IN SPITE OF PROVIDING SEVERAL OPPORT UNITIES. HENCE THE ASSESSING OFFICER HAS MADE AN ADDITION O F RS.5,36,598 / - AND ALSO AN AMOUNT OF RS.4,720 / - IS NOT DISCLOSED IN THE BALANCE SHEET AND ASSESSED THE TOTAL INCOME OF RS.10,25,948 / - AND PASSED THE ASSESSMENT ORDER UNDER SECTION 144 R.W.S . 263 OF THE ACT DT.27.3.2015. AGGRIEVED BY THE ORDER, THE ASSES SEE HAS FILED AN APPEAL WITH THE CIT (APPEALS) , WHEREAS THE CIT (APPEALS) HAS CONSIDERED THE GROUNDS OF APPEAL , STATEMENT OF FACTS AND SUBMISSIONS OF THE ASSESSEE AND FIND THAT HONBLE COMMISSIONER OF I NCOME TAX DAVANGERE IN THE REVISION PROCEEDINGS OBSER VED THAT THERE IS A DIFFERENCE OF RS5,36,598/ - BETWEEN PAYMENTS MADE TO KSBCL IN THE ASSESSEE BOOKS OF ACCOUNT COMPARED TO KSBCL LEDGER . T HE ASSESSEE HAS MADE WITHDRAWALS FOR RENOVATION OF RESIDENTIAL BUILDING, BUT INSTEAD OF DEBITING TO THE CAPITAL ACCOUNT , THE ACCOUNTANT OF 4 ITA NO. 1787/BANG/2018 THE ASSESSEE HAS DEBITED T O PURCHASE ACCOUNT OF KSBCL, IF SUCH DRAWINGS ARE REDUCED FROM CAPITAL ACCOUNT, THERE WOULD BE EXCESS OF ASSETS OVER LIABILITIES OF EQUAL AMOUNT AND HAS TO BE ADDED TO THE TOTAL INCOME. THE CIT(A) FOUND THAT THE ASSESSEE IS APPLYING NEW T HOUGHT TO THE DISPUTED ISSUE AND CONCURRED WITH THE ACTION OF THE ASSESSING OFFICER AND DISMISSED THE ASSESSEE'S APP EAL. AGGRIEVED BY THE CIT (APPEALS) ORDER , THE A SSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIM E OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE, HENCE CONSIDERED THE MATERIAL ON RECORD . THE ASSESSEE HAS MADE WITHDRAWALS FOR RENOVATION OF RESIDENTIAL BUILDING, BUT INSTEAD OF DEBITING TO THE CAPITAL ACCOUNT, THE ACCOUNTANT HAS DEBITED TO PURCHASE ACCOUNT OF KSBCL. HENCE THERE IS A DIFFERENCE OF RS5,36,598/ - BETWEEN PAYMENTS MADE TO KSBCL IN THE ASSESSEE BOOKS OF ACCOUNT COMPARED TO KSBCL LEDGER. FURTHER, T HE CONTENTIONS OF THE ASSESSEE AS PER THE GRO UNDS OF APPEAL ARE THAT, DUE TO MISTAKE OF THE A CCOUNTANT ERRONEOUSLY DEBITED TO KSBCL ACCOUNT INSTEAD OF DRAWINGS ACCOUNT , THERE WILL BE NO BEARING ON THE INCOME OF THE ASSESSEE. THE LD.DR SUPPORTED THE ORDERS OF CIT (APPEALS). 5. WE HEARD THE LDDR AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, T HE SOLE DISPUTE BEING ADDITION OF RS.5,36,598 / - , WHERE THE ASSESSEE HAS UTILIZED THE FUNDS FOR RENOVATION OF RESIDENTIAL BUILDING, B UT THE AC COUNTANT OF THE ASSESSEE HAS DEBITED TO KSBCL ACCOUNT INSTEAD OF DRAWINGS ACCOUNT AND IT IS MISTAKE OF 5 ITA NO. 1787/BANG/2018 A CCOUNTANT I N PA SSING THE ENTRIES IN THE BOOKS O F ACCOUNTS AND THERE IS NO DISPUTE ON THE GENUINES OF WITHDRAWALS . WE FIND IN THE CIT (A) ORDER AT PAGE 4 PARA 7(A) LINE 12, THE OBSERVATIONS THAT IF DRAWINGS ARE REDUCED FROM CAPITAL ACCOUNT THERE WILL BE EXCESS OF ASSET S OV ER LIABILITIES OF EQUAL AMOUNT AND SAME HAS TO BE ADDED TO THE TOTAL INCOME, BUT THE ACCOUNTING IS A D OUBLE ENTRY SYSTEM, WHEREAS THE CAPITAL ACCOUNT AND KSBCL ACCOUNT ARE DISCLOSED IN LIABILITIES SIDE OF BALANCE SHEET , AND BY PASSING RECTIFYING ENTRIE S DEBITING TO CAPITAL AND CREDITING TO KSBCL ACCOUNT, THERE SHALL NOT BE ANY EXC ESS OF ASSETS OVER LIABILITIES. THEREFORE, THE MISTAKE COMMITTED BY THE ACCOUNTANT IN PASSING ENTRIES CAN BE MODIFIED BY PASSING THE RECTIFICATION ENTRIES AND T HERE IS NO INCOM E ELEMENT ARISES DUE TO MISTAKE F OR MAKING ADDITION. ACCORDI NGLY, WE SET ASIDE THE ORDER OF THE CIT (APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASS ESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - ( B.R. B ASKARAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07.08 . 20 20 . *REDDY GP 6 ITA NO. 1787/BANG/2018 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE