Sri. C. N. Babu, Ramanagara V. Income Tax Officer, Ward- 1, Ramanagara

ITA 1823/BANG/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6857 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 21-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 69; 148; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.1823/Bang/2019 Assessment Year : 2008-09 Shri. C. N. Babu, Prop: Hotel Chirag, B. M. Road, Bidadi, Ramanagaram Taluk – 562 109. PAN : AJXPB 4497 N Vs.ITO, Ward – 1, Ramanagara. APPELLANTRESPONDENT Assessee by:None Revenue by :Shri.K. R. Narayana, Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing:14.09.2022 Date of Pronouncement:14.09.2022 O R D E R Per N. V. Vasudevan, Vice President This is an appeal by the Assessee against the order dated 21.3.2019 of the CIT(A)-3, Bengaluru, relating to AY 2008-09. 2. In this appeal, the Assessee has challenged the order of the CIT(A) whereby the CIT(A) imposed penalty u/s.271(1)(c) of the Income Tax Act, 1961 (Act) on the Assessee in respect of an addition of Rs.45,91,254/- made by the CIT(A) in exercise of his powers of enhancement u/s.251 of the Act. 3. The facts and circumstances under which the CIT(A) enhanced income of the Assessee and imposed penalty are that the AO made an ITA No.1823/Bang/2019 Page 2 of 4 addition of Rs.9 lacs to the total income of the Assessee on account of unexplained cash deposited in a Bank Account with Kotak Mahindra Bank. In the appeal against the order of the AO making the aforesaid addition, the assessee explained the source of cash deposit of Rs.9 lakhs in his Kotak Mahindra Bank before CIT(A) by relying on the withdrawn of cash from a bank account with Canara Bank bearing No.22065 and the copy of the said bank account statement was given as Annexure 5 to the written submission of the assessee dated 12.08.2013 filed before the CIT(A). The CIT(A) while examining the aforesaid source noticed that assessee was the first account holder of aforesaid Canara Bank A/c and this account has not been disclosed by him in his return of income. He also noticed that there were the following cash deposits in the aforesaid account of the assessee. DateParticularsAmount of Deposits (Rs.) 17.05.201 7 Cash 5,000/- 13.06.201 7 Cash 3,65,000/- 18.06.200 7 Cash 50.000/- 18.06.200 7 Cash 2.50,000/- 29.06.200 7 Cash 4,50,000/- 02.07.200 7 Cash 2.00.000/- 16.07.200 7 Cash 31.00,000/- 10.09.200 7 NNND 3374 Closed 8.700/- 14.11.200 7 Cash 5.000/- 30.11.200 7 5670 5.670/- 1 12.12.2007GL 17921 60.000/- 08.01.200 8 NNND 3517 Closed 72,694 29.01.200 8 Cash 10.000/- 15.02.200 8 Cash 7.500/- 26.03.200 8 Cash 1690/- Total45,91,254/- 4. The CIT(A), in exercise of his power of enhancement under section 251 of the Act, was of the view that cash deposits in the aforesaid Canara Bank Ac/ should also be added to the total income of the assessee as undisclosed income under section 69 of the Act because the assessee failed ITA No.1823/Bang/2019 Page 3 of 4 to give a satisfactory explanation with regard to source of funds out of the aforesaid cash deposits were made. 5. The Assessee filed appeal before the Tribunal against the action of the CIT(A) in enhancing the assessment in exercise of his powers u/s.251 of the Act in Shri. C. N. Babu, Prop: Hotel Chirag Vs. ITO, Ward – 1, Ramanagara, in ITA No. 356/Bang/2019 for AY 2008-09. The Tribunal by its order dated 16.08.202 held that powers under Section 251 are wide but cannot go to the extent of displacing powers under Section 147, 148 and 263. The Tribunal held that cash deposit in Canara bank account was never subject matter of assessment or considered by Revenue and details of said bank account were provided by the Assessee before the CIT(A) as otherwise there is no occasion for CIT(A) to have known the existence of said account. The Tribunal held that subject matter of consideration by the CIT(A) in exercise of powers of enhancement cannot include incidental or collateral examination of any matter in process of assessment and there must be something in the assessment order to show that Revenue applied its mind in the particular subject matter or particular source of income with a view of its taxability and in the present case, there has been no incidental or collateral examination of Canara Bank account was done by the AO and therefore the CIT(A) erred in exercising its power of enhancement under Section 251 of the Act. The Tribunal in support of its conclusions relied on decisions of Hon’ble Supreme Court in the case of CIT Vs. Shapoorji Pallonji Mistry 44 ITR 891 and CIT Vs. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 (SC) and distinguished the decision of the Hon’ble Supreme Court in the case of CIT Vs. Nirbheram Daluram 224 ITR 610 (SC) by placing reliance of decision of Hon’ble Delhi High Court CIT Vs. Sardari Lal & Co. 251 ITA No.1823/Bang/2019 Page 4 of 4 ITR 864 (Delhi) and Hon’ble Kerala High Court in the case of CIT Vs. B.P. Sharafudin 252 Taxman 326 (Ker). The addition made by the CIT(A) in exercise of his powers of enhancement u/s.251 of the Act was accordingly deleted by the Tribunal. 6. Since the very addition on the basis on which penalty was imposed on the Assessee has been deleted, the levy of penalty u/s.271(1)(c) of the Act cannot be sustained and the same is directed to be deleted. 7. In the result, the appeal of the Assessee is allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (PADMAVATHY S) (N. V. VASUDEVAN) Accountant Member Vice-President Bangalore, Dated: 14.09.2022. /NS/* Copy to: 1.Appellants2.Respondent 3.CIT4.CIT(A) 5.DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.