Smt. Nagina Banu, Nadia V. ITO, Ward-3, Murshidabad, Murshidabad

ITA 2123/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1579 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-06-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 143(3); 147; 68

Judgement Text

IN THE INCOME TAX APPELL ATE TRIBUNAL KOLKATA BENCH, KOLKATA (BENCH D) BEFORE SHRI ABY. T. VARKEY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A. NO.2123/KOL/20 14 ASSESSMENT YEAR 2004-05 ORDER PER M. BALAGANESH , AM THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XXXII, KOLKA TA ( IN SHORT THE CIT(A)) VIDE APPEAL NO.292/XXXII/2013-14/WD-3/MSD /R&T/KOL DATED 19.08.2014. ASSESSMENT YEAR FRAMED U/S 143 READ WIT H SECTION 147 OF THE INCOME TAX ACT 1961 (HEREINAFTER AS THE SAID ACT) DATED 28.08.2008 FOR THE A.Y 2004-05 BY THE INCOME TAX OFFICER, WARD-3, MURSHIDABAD (IN SHORT THE LD. A.O). SMT. NAGINA BANU [PAN : AFSPB4649F] -VS- I.T.O. WARD 3, MURSHIDABAD (APPELLANT) (RESPONDENT) FOR THE APPELLANT SHRI K. M. ROY & P. S. GUPTA, ADV OCATE FOR THE RESPONDENT SHRI G. H. SEMA, ADDL. CIT DATE OF HEARING 07..06.2017 DATE OF PRONOUNCEMENT 07.07.2017 2 I.T.A. NO.2123/KOL/2014 ASSESSMENT YEAR 2004-05 SMT.NAGINA BANU 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE BY THE LD. A.O TOWARDS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT IN THE SUM OF RS.6,20,515/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE, AN INDIVIDUAL, STARTED A NEW BUSINESS OF MANUFACTURING AND TRADING IN PLASTIC GR ANULES DURING THE FINANCIAL YEAR 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05. SHE FI LED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 02.03.2005 DISCLOSIN G TOTAL INCOME OF RS.65,000/- AND THE SAME WAS PROCESSED U/S 143(1) OF THE ACT ON 30.03.2005. SUBSEQUENTLY, THE PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED A ND ASSESSMENT WAS REOPENED FOR THE A.Y 2004-05. IN THE ASSESSMENT PROCEEDINGS, THE LD. A.O OBSERVED THAT ASSESSEE HAD DISCLOSED CAPITAL BALANCE AS ON 31.03. 2004 AT RS.2,45,488/- WHEREAS THE SAID CAPITAL BALANCE AS ON 1 ST APRIL, 2004 WAS REFLECTED IN THE BOOKS AT RS.8,66,003/-. THE ASSESSEE WAS CALLED UPON TO EXPL AIN THE DIFFERENCE IN CAPITAL ACCOUNT IN THE SUM OF RS.6,20,515/-. THE ASSESSEE W AS ONLY TAKING ADJOURNMENTS FROM TIME TO TIME AND DID NOT RECONCILE THE SAID DI FFERENCE BEFORE THE LD. A.O. ACCORDINGLY, THE LD. A.O PROCEEDED TO COMPLETE THE ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT BY TREATING THE SAID DI FFERENCE OF RS.6,20,515/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. BEFORE T HE LD. CIT(A) THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE. THE LD. CIT (A) OBSERVED IN THIS ORDER AS BELOW: UNDER THE ABOVE CIRCUMSTANCES, THE SUM OF RS.6,20,5 15/-, WHICH IS THE DIFFERENCE BETWEEN THE CLOSING CAPITAL OF RS.2,45,4 88/- AS ON 31.03.2004 AND RS.8,66,003/- WHICH IS THE OPENING CAPITAL AS O N 01.04.04 HAS TO BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE AC T. THE ONLY DISPUTE COULD BE OF THE RELEVANT ASSESSMENT YEAR OF TAXATION. IF THE ASSESSEE COULD HAVE ADDUCED EVIDENCE BEFORE THE AO THAT THE ADDITIONAL FUNDS HAD INDEED BEEN OBTAINED ONLY AFTER 01.04.04, THE ADDITION SHOULD H AVE BEEN MADE IN A.Y 3 I.T.A. NO.2123/KOL/2014 ASSESSMENT YEAR 2004-05 SMT.NAGINA BANU 2005-06 ONLY BUT UNTIL THE ASSESSEE ADDUCES SUCH A PROOF, THE AO CANNOT TAKE A CHANCE. BY NOT COMMITTING HERSELF TO SUCH A STAND THE ASSESSEE COULD SUBSEQUENTLY PRODUCE CASH LOAN RECEIPT FOR THIS SUM DATED ANY DATE IN F.Y 2003-04 AND CLAIM THAT THE ADDITION IN A.Y 2005-06 WAS WRONGLY MADE. IT IS ALSO TO BE KEPT IN MIND THAT AT PRESENT THE ADDITIO NS CANNOT BE MADE AFRESH IN A DIFFERENT YEAR BECAUSE OF ELAPSE OF TIME PRESC RIBED U/S 149 OF THE ACT. BY NOT PRODUCING THE ABOVE DETAILS, IT IS HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HER GROUNDS OF APPEAL TAKEN AB OVE. THEREFORE THE GROUNDS OF APPEAL ARE DISMISSED. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE APPEAL ORDER OF THE LD. C.I.T(APPEALS)-XXXII, KOLKATA WAS NOT FAIR AND PROPER AND ON THE OTHER HAND IT WAS MADE CONTRARY TO LAW, SOUN D AND ADEQUATE PRINCIPLES. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. C.I.T(APPEALS) WAS NOT AT ALL JUSTIFIED IN CONFIRMI NG THE ADDITION OF RS.6,20,515.00 & HE SHOULD HAVE CONSIDERED ALL THE GROUNDS OF APPEAL AND ALSO THE WRITTEN SUBMISSION AS WELL AS THE STATEMEN T OF FACTS SUBMITTED BY THE APPELLANT AS AGAINST THE ASSESSMENT ORDER OF TH E LD. A.O AND THE REASONS ADDUCED IN CONFIRMING THE ADDITIONS ARE NOT AT ALL CONVINCING AND AS SUCH THE SAME IS LIABLE TO BE DELETED. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. C.I.T(APPEALS) OUGHT TO HAVE VERIFIED THE CASE RECO RDS OF THE APPELLANT FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 BEFORE CON FIRMING THE ADDITION. 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. C.I.T(APPEALS) SHOULD HAVE CONSIDERED THAT THE INVE STMENT OF RS.6,20,515.00 WAS MADE ON AND AFTER 01.04.2004 AND DURING THE PERIOD 01.04.2004 TO 31.03.2005 WHICH IS RELEVANT TO THE A SST. YR. 2005-06 AND AS SUCH THE INVESTMENT OF RS.6,20,515.00 IN ADDITION T O THE CLOSING CAPITAL BALANCE OF 31.03.2004 FOR RS.2,45,488.00 IS RELATED TO THE ASSESSMENT YEAR 2005-06 AND SO THE SUM OF RS.6,20,515.00 IS LIABLE FOR TAXATION FOR THE ASSESSMENT YEAR 2005-06 AS PER BOOKS OF ACCOUNTS AN D AUDITED BALANCE SHEET. 4 I.T.A. NO.2123/KOL/2014 ASSESSMENT YEAR 2004-05 SMT.NAGINA BANU 5. FOR THAT BOTH THE LD. C.I.T (APPEALS) AND THE LD . I.T.O ERRED BOTH IN POINTS OF LAW AND ON FACTS. 6. FOR THAT THE HUMBLE APPELLANT CRAVES LEAVE TO TA KE ADDITIONAL GROUNDS& AMEND GROUNDS AT THE TIME OF HEARING. 5. THE LD. A.O ARGUED THAT THE REVENUE ERRED IN INV OKING THE PROVISIONS OF SECTION 68 OF THE ACT FOR MAKING THE SAID ADDITION. HE STAT ED THAT THE EXTRA AMOUNT OF RS.6,20,515/- (BEING THE DIFFERENCE) WAS ADMITTEDLY FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ONLY ON 01.04.2004 WHICH F ALLS IN F.Y 2004-05 RELEVANT TO A.Y 2005-06. BUT THE ADDITION U/S 68 OF THE ACT HAS BEEN MADE BY THE LD. A.O FOR A.Y 2004-05 IN WHICH YEAR, NO AMOUNT OF RS.6,20,515 /- WAS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE. HENCE THE PROVISIONS OF SECT ION 68 COULD NOT BE MADE APPLICABLE FOR A.Y 2004-05. IN RESPONSE TO THIS, TH E LD. DR ARGUED THAT NO EVIDENCE HAS BEEN SUBMITTED BY THE ASSESSEE AND NO RECONCILIATION WAS EVEN ATTEMPTED BY THE ASSESSEE TO EXPLAIN THE DIFFERENCE OF RS.6,20,515/- AND ACCORDINGLY HE RELIED ON THE ORDER OF THE LOWER AUT HORITIES. 6. WE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITER ATED FOR THE SAKE OF BREVITY. WE FIND THAT THE ADDITION HAS BEEN MADE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT FOR A.Y 2004-05 IN THE INSTANT CASE. FOR THE SAKE OF CONVENIENCE, THE PROVISIONS OF SECTION 68 ARE REPRODUCED BELOW: CASH CREDITS. 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERE D BY HIM IS NOT, IN THE OPINION OF THE [ASSESSING] OFFICER, SATISFACTORY, T HE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 5 I.T.A. NO.2123/KOL/2014 ASSESSMENT YEAR 2004-05 SMT.NAGINA BANU 7. FROM THE BARE READING OF THE AFORESAID PROVISION , IT WOULD BE CLEAR THAT UNLESS A PARTICULAR AMOUNT HAS BEEN FOUND CREDITED IN THE BO OKS OF ACCOUNTS OF THE ASSESSEE FOR WHICH NO SATISFACTORY EXPLANATION HAS BEEN GIVE N BY THE ASSESSEE, ONLY THEN THE PROVISIONS OF SECTION 68 OF THE ACT COULD BE INVOKE D. ADMITTEDLY, IN THE INSTANT CASE, THE DIFFERENCE OF RS.6,20,515/- IN THE CAPITA L ACCOUNT WAS FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ONLY ON 01.04 .2004 WHICH FALLS IN A.Y 2005- 06. HENCE, THERE IS NO CASE MADE OUT BY THE REVENUE FOR TAXING THE DIFFERENCE IN CAPITAL ACCOUNT AMOUNTING TO RS.6,20,515/- AS UNEXP LAINED CASH CREDIT U/S 68 OF THE ACT IN A.Y 2004-05 (I.E. THE YEAR UNDER APPEAL) . HENCE WE HAVE NO HESITATION IN DIRECTING THE LD. A.O TO DELETE THE ADDITION MAD E U/S 68 OF THE ACT FOR THE A.Y 2004-05. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 07.07.2017 SD/- SD/- [ABY. T. VARKEY] [M. BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.07.2017 {RS SPS} COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE SMT. NAGINA BANU, C/O. P. S GUPTA(ADVOCATE), 100, BANK LANE, HATAR PARA, P.O.-KRISHNAGAR, NADIA, PIN-74110 1. 2. REVENUE/RESPONDENT-I.T.O. WARD 3, MURSHIDABAD 3. CIT(A)- KOLKATA 4. CIT , KOLKATA 6 I.T.A. NO.2123/KOL/2014 ASSESSMENT YEAR 2004-05 SMT.NAGINA BANU 5. CIT(DR), KOLKATA BENCHES, KOLKATA TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE, DDO, KOLKATA BENCHES, KOLKATA.