Lingaraj Basavaneppa Kunnur , Dharawad V. Income Tax Officer Ward-1(2), Hubli

ITA 1792/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5629 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMAL ANAND
• Assessee Lawyers: P DINESHA
• Keywords: Opportunity of being heard
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1792 / BANG/2017 ASSESSMENT YEAR : 20 08 - 09 SHRI LINGARAJ BASAVANEPPA KUNNUR, KAVERI BAR AND RESTAURANT, BUS STAND, KUNDGOL, DHARAWAD, KARNATAKA 581 113. PAN: ATFPK 7840Q VS. THE INCOME TAX OFFICER, WARD 1 (2), HUBLI. APPELLANT RESPONDENT APPELLANT BY : SHRI P. DINESHA, ADVOCATE RESPONDENT BY : SHRI VIMAL ANAND, ADDL. CIT (DR) DATE OF HEARING : 1 9 .01.2018 DATE OF PRONOUNCEMENT : 24 . 0 1 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT(A), HUBLI DATED 03.07.2017 FOR ASSESSMENT YEAR 2008-09. 2. THE REVISED GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER. 1. THE AUTHORITIES BELOW HAVE GROSSLY ERRED IN NOT PROPERLY APPRECIATING THE FACTS VIS--VIS THE EXPLANATION OF FERED BY THE APPELLANT WITH SUPPORTING LEDGER, HENCE THE ADDITIO N MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS BAD AND LIABLE TO BE DELETED. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT WHEN T HE SOURCE WAS TRACED TO THE FIRM NAMELY KAVERI BAR &RESTAURANT, S . 69 HAD NO ROLE MORE SO, WHEN CLEARLY THE SAID FIRM HAD CONFIRMED T HE INVESTMENT. 3. WITHOUT PREJUDICE, THE CIT(A) OUGHT TO HAVE APPR ECIATED THAT THE AO HAVING FOUND THAT THE APPELLANT HAD OPENED FDS B Y WITHDRAWING FROM BANK ACCOUNT, NO FURTHER EXPLANATION WAS REQUI RED AS TO ITS SOURCE. 4. WITHOUT PREJUDICE, BOTH THE AUTHORITIES BELOW GR OSSLY ERRED IN NOT APPRECIATING THAT THE APPELLANT HAD PYGMY DEPOSITS; WITHDRAWN AND ITA NO.1792/BANG/2017 PAGE 2 OF 4 REDEPOSITED ALL IN THE BANK ACCOUNT DULY DOCUMENTED AND HENCE BOTH THE ADDITIONS UNDER S. 69 & S.68 WERE BAD AND UNSUS TAINABLE. 3. IT IS SUBMITTED BY LD. AR OF THE ASSESSEE THAT I SSUE IN DISPUTE IS REGARDING THE ADDITION OF RS. 6,42,249/-. HE SUBMITTED THAT IT I S NOTED BY THE AO IN THE ASSESSMENT ORDER IN PARA NO. 3 THAT AS PER THE STAT EMENT OF ACCOUNT FURNISHED BY THE BANK AUTHORITIES, IT IS SEEN THAT ON 12.10.2 007, TWO AMOUNTS ARE CREDITED TO THE EXTENT OF RS. 541,815/- AND RS. 1,00,434/- T OTALING TO RS. 6,42,249/- REALIZED ON MATURITY OF PIGMY DEPOSITS. HE SUBMITT ED COPY OF BANK STATEMENT OF THESE TWO PIGMY DEPOSITS AMOUNTS IN ACCOUNT NOS. 89 28 AND 8829. HE SUBMITTED THAT IN THE PIGMY DEPOSIT ACCOUNT NO. 892 8, TOTAL DEPOSIT UP TO 12.10.2007 WAS RS. 5,41,815/- INCLUDING INTEREST FO R THE PRESENT YEAR OF RS. 9,515/- BUT THE DEPOSIT UP TO 31.03.2007 WAS RS. 3, 84,300/-. HE SUBMITTED THAT AT LEAST TO THE EXTENT OF DEPOSIT UP TO 31.03.2007, NO ADDITION CAN BE MADE IN THE PRESENT YEAR EVEN IF THE ASSESSEES EXPLANATION FOR SOURCE IS NOT ACCEPTED. SIMILARLY, HE POINTED OUT THAT IN THE SECOND PIGMY ACCOUNT NO. 8829, TOTAL DEPOSIT UP TO 12.10.2007 IS RS. 1,00,434/- INCLUDIN G INTEREST FOR THE PRESENT YEAR OF RS. 3,974/- BUT THE DEPOSIT UP TO 31.03.200 7 WAS RS. 77,960/- AND THEREFORE, NO ADDITION CAN BE MADE IN THE PRESENT Y EAR IN RESPECT OF DEPOSIT UP TO 31.03.2007 EVEN IF IT IS HELD THAT THE EXPLANATI ON OF THE ASSESSEE REGARDING THE SOURCE OF DEPOSIT IS NOT ACCEPTABLE. REGARDING THE DEPOSIT IN THE PRESENT YEAR AND INTEREST CREDITED BY THE BANK IN THE PRESE NT YEAR, HE SUBMITTED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO FOR F RESH DECISION AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THIS REGARD BECAUSE AS PER THE PRESENT ASSESSMENT ORDER, NO QUESTION WAS ASKED REG ARDING THE SOURCE OF DEPOSIT IN PIGMY BANK ACCOUNT AND THEREFORE, THE IS SUE SHOULD BE RESTORED BACK FOR FRESH DECISION IN THE INTEREST OF JUSTICE. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT IN PARA NO. 5 OF THE ORDER OF CIT(A), IT IS NOTED THAT REGARDING THE SOURCE OF CA SH DEPOSIT, THE EXPLANATION WAS SUBMITTED THAT THE ASSESSEE WHO WAS MANAGING M/ S. KAVERI BAR & RESTAURANT, WAS WITHDRAWING CASH FROM THE BOOKS OF THE SAID CONCERN ON A DAY TO DAY BASIS AND DEPOSITED THE SAME IN PIGMY DEPOSI T ACCOUNT IN HIS NAME. ITA NO.1792/BANG/2017 PAGE 3 OF 4 THIS EXPLANATION WAS REJECTED BY CIT(A) ON THIS BAS IS THAT IF THIS IS CORRECT THEN THE FDS SHOULD HAVE BEEN APPEARING IN THE ASSET SID E OF BALANCE SHEET OF M/S. KAVERI BAR & RESTAURANT. IN MY CONSIDERED OPINION, IN THE FACTS OF THE PRESENT CASE, THIS MATTER SHOULD GO BACK TO THE FILE OF AO FOR FRESH DECISION AFTER EXAMINING THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF DEPOSIT IN PIGMY BANK ACCOUNTS. AT THE SAME TIME, I HOLD THAT TO THE EXTENT OF DEPOSIT MADE IN THOSE TWO PIGMY DEPOSIT ACCOUNTS UP TO 31.0 3.2007, NO ADDITION CAN BE MADE IN THE PRESENT YEAR EVEN IF IT IS HELD THAT THE SOURCES OF SUCH DEPOSITS IN PIGMY BANK ACCOUNT IS NOT ACCEPTABLE BECAUSE IN THAT EVENT ALSO, THE ADDITION CAN BE MADE IN THE YEAR OF DEPOSIT AND NOT IN THE PRESENT YEAR. HENCE, TO THAT EXTENT, THE ADDITION IS DELETED. 5. REGARDING THE CASH DEPOSIT IN PIGMY DEPOSIT ACCO UNTS IN THE PRESENT, I RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISIO N AFTER CALLING FOR THE EXPLANATION FROM THE ASSESSEE REGARDING THE SOURCE OF DEPOSITS AND AFTER DECIDING THAT ISSUE BY WAY OF A SPEAKING AND REASON ED ORDER AS TO HOW AND WHY THE EXPLANATION OF THE ASSESSEE IS NOT ACCEPTAB LE. IN RESPECT OF THE INTEREST CREDITED BY BANK IN THE PRESENT YEAR, IF I T IS FOUND THAT THE MONEY BELONG TO THE ASSESSEE THEN THE ADDITION TO THE EXTENT OF INTEREST SHOULD DEFINITELY BE MADE IN THE PRESENT YEAR BUT IF IT IS FOUND AND ACC EPTED THAT THE MONEY BELONGS TO A DIFFERENT PERSON I.E. M/S. KAVERI BAR & RESTAU RANT THEN NO ADDITION CAN BE MADE ON ACCOUNT OF INTEREST ALSO IN THE HANDS OF TH E PRESENT ASSESSEE. THE AO SHOULD PASS NECESSARY ORDER AS PER LAW IN THE LI GHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS 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 24 TH JANUARY, 2018. /MS/ ITA NO.1792/BANG/2017 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.