M/s. Biswanath Rice Mill , Bankura V. ITO, Ward - 3(4) , Bankura

ITA 2440/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2761 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 22-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL CIT SR DR REVEN
• Assessee Lawyers: D K SEN
• Keywords: Unexplained investment; Set aside
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT, KZ] I.T.A. NO. 2440/KOL/2018 ASSESSMENT YEAR: 2006-07 M/S. BISWANATH RICE MILL...................................................................APPELLANT VILL & P.O. TALDANGRA, DIST. BANKURA 722 152. [PAN: AAGFB 2235 C] ITO, WARD 3(4), BANKURA.................................RESPONDENT BILASH BHAWAN, CHANDMARIDANGA, BANKURA 722 101. APPEARANCES BY: SHRI D.K. SEN, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI P.K. MONDAL, ADDL. CIT, SR. DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : APRIL 02, 2019 DATE OF PRONOUNCING THE ORDER : JUNE 07, 2019 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), DURGAPUR DATED 22.06.2018 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS. 5,00,000/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF FIXED DEPOSIT FOUND TO BE MADE BY THE ASSESSEE WITH BANK OF INDIA. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY OF 57 DAYS ON THE PART OF THE ASSESSEE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, AN APPLICATION IS FILED BY THE ASSESSEE SEEKING CONDONATION OF THE SAID DELAY AND KEEPING IN VIEW THE REASONS GIVEN THEREIN, I AM SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR THE DELAY OF 57 DAYS ON THE PART OF THE ASSESSEE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. EVEN THE LEARNED DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD. THE SAID DELAY IS ACCORDINGLY CONDONED AND THIS APPEAL OF THE ASSESSEE IS BEING DISPOSED OF ON MERIT. 2 I.T.A. NO. 2440/KOL/2018 ASSESSMENT YEAR: 2006-07 M/S. BISWANATH RICE MILL 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF RUNNING A RICE MILL. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 30.10.2006 DECLARING A TOTAL INCOME OF RS. 60,462/-. THE SAID RETURN WAS INITIALLY PROCESSED BY THE AO U/S 143(1). THEREAFTER, THE AO FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10 THAT AN INVESTMENT OF RS. 5,00,000/- WAS MADE BY THE ASSESSEE IN FIXED DEPOSIT WITH BANK OF INDIA, RATANPUR BRANCH ON 27.09.2005, BUT THE SAME WAS NOT REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE FILED WITH THE RETURN OF INCOME. HE, THEREFORE, REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND ISSUED A NOTICE U/S 148 ON 30.12.2011 AFTER RECORDING THE REASONS. IN REPLY, A LETTER WAS FILED BY THE ASSESSEE STATING THAT THE RETURN OF INCOME ORIGINALLY FILED BY IT ON 30.10.2006 MAY BE TREATED AS RETURN FILED IN COMPLIANCE TO THE NOTICE ISSUED U/S 148. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE AO TO OFFER ITS EXPLANATION AS REGARDS THE NON-REFLECTION OF INVESTMENT OF RS. 5,00,000/- MADE IN THE FIXED DEPOSIT WITH BANK OF INDIA. THE ASSESSEE HOWEVER COULD NOT OFFER ANY EXPLANATION IN THIS REGARD AND THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE GAVE HIS NO OBJECTION TO THE AO FOR MAKING THE ADDITION OF RS. 5,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT FOUND TO BE MADE IN FIXED DEPOSIT WITH BANK OF INDIA. ACCORDINGLY ADDITION OF RS. 5,00,000/- WAS MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED U/S 147/143(3) OF THE ACT VIDE AN ORDER DATED 07.03.2013. 4. AGAINST THE ORDER PASSED BY THE AO U/S 147/143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A). DURING THE 3 I.T.A. NO. 2440/KOL/2018 ASSESSMENT YEAR: 2006-07 M/S. BISWANATH RICE MILL COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), IT WAS EXPLAINED BY THE ASSESSEE THAT THE AMOUNT OF RS. 5,00,000/- WAS INVESTED IN FIXED DEPOSIT WITH BANK OF INDIA FROM THE CASH WITHDRAWAL OF RS. 5,00,000/-MADE FROM HIS BANK ACCOUNT BY ONE OF THE PARTNERS SHRI ASWINI KUMAR ROY. IT WAS EXPLAINED THAT SHRI ASWINI KUMAR ROY HAD WITHDRAWN A SUM OF RS. 5,00,000/- IN CASH FROM THE SAVINGS BANK ACCOUNT WITH BANK OF INDIA, RATANPUR BRANCH ON 27.09.2005 AND THE SAME WAS INVESTED IN FIXED DEPOSIT WITH THE SAME BANK ON THE SAME DAY. IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THE SAID AMOUNT GIVEN BY THE PARTNER WAS LOAN AND THE ASSESSEE FIRM HAD NOT DISCLOSED THE ASSET AS WELL AS THE LIABILITY OF EQUAL AMOUNT. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(A) AND THE ADDITION OF RS. 5,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED DEPOSIT FOUND TO BE MADE BY THE ASSESSEE IN FIXED DEPOSIT WITH BANK WAS CONFIRMED BY HIM FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER: I. ANY ASSET IN BALANCE SHEET ALSO HAS AN EQUIVALENT AMOUNT OF LIABILITY. GOING BY THE APPELLANT, IF AN AMOUNT OF ASSET AND LIABILITY NEUTRALIZED EACH OTHER, ONE NEED NOT DECLARE IT IN THE BALANCE SHEET. THIS CERTAINLY IS NOT AN ACCEPTABLE POSITION OF LAW AND ADDITIONS ARE ALWAYS MADE IF ANY LIABILITY OR ANY ASSET HAS NOT BEEN DISCLOSED BY THE APPELLANT. WHAT WOULD THE APPELLANT SAY, IF ONE WERE TO ASK, SINCE IN THE BALANCE SHEET ALL ASSETS ARE EQUAL TO ALL LIABILITIES, WOULD THE APPELLANT SAY THAT ONE NEED NOT DRAW UP A BALANCE SHEET FOR DISCLOSING THE ASSETS AND LIABILITIES? II. IF THE APPELLANTS LOGIC IS ACCEPTED IT WOULD THEN MEAN THAT SINCE THE LOAN FROM PARTNER WAS UNDISCLOSED, LATER, ON REPAYMENT OF THAT LOAN COULD ALSO BE MADE BY UNDISCLOSED SOURCE. IN OTHER WORDS, FOR A SUPPRESSION OF ASSET AND LIABILITY IN NE INSTANT, THE APPELLANT WOULD FURTHER SUPPRESS AN EQUIVALENT AMOUNT ON REPAYMENT OF LOAN. THE ARGUMENT OF THE APPELLANT CREATES SCOPE FOR FURTHER SUPPRESSING OF INCOME AND THEREFORE IS NOT ACCEPTABLE. 4 I.T.A. NO. 2440/KOL/2018 ASSESSMENT YEAR: 2006-07 M/S. BISWANATH RICE MILL AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHEN THE SOURCE OF INVESTMENT MADE IN FIXED DEPOSIT WITH BANK AMOUNTING TO RS. 5,00,000/- WAS EXPLAINED BY THE ASSESSEE AS CASH WITHDRAWAL FROM THE BANK ACCOUNT OF ONE OF ITS PARTNERS SHRI ASWINI KUMAR ROY MADE FROM THE SAME BANK ON THE SAME DAY AND IT WAS NOT DISPUTED BY THE LD. CIT(A), THERE WAS NO JUSTIFICATION ON THE PART OF THE LD. CIT(A) TO STILL CONFIRM THE ADDITION OF RS. 5,00,000/- MADE BY THE AO FOR THE REASONS WHICH WERE TOTALLY IRRELEVANT. HOWEVER AS RIGHTLY POINTED OUT BY THE LEARNED DR, THE SAID SOURCE EXPLAINED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS NEVER EXPLAINED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON THE OTHER HAND, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAD GIVEN HIS NO OBJECTION TO THE AO FOR MAKING THE ADDITION OF RS. 5,00,000/- BY TREATING THE INVESTMENT IN BANK DEPOSIT AS UNEXPLAINED AND KEEPING IN VIEW THE SAME, THE AO NEVER GOT AN OPPORTUNITY TO VERIFY THE SOURCE EXPLAINED BY THE ASSESSEE IN THE FORM OF LOAN TAKEN BY THE ASSESSEE FROM ONE OF ITS PARTNERS. SINCE THE SAID LOAN REPRESENTED CASH CREDIT, I AM OF THE VIEW THAT THIS MATTER SHOULD GO BACK TO THE AO FOR GIVING THE ASSESSEE AN OPPORTUNITY TO EXPLAIN THE SAID SOURCE IN TERMS OF SECTION 68 WHICH CAST A PRIMARY ONUS ON THE ASSESSEE TO ESTABLISH THE IDENTITY AND CAPACITY OF THE CONCERNED CREDITOR AS WELL AS THE GENUINENESS OF THE RELEVANT TRANSACTION. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE 5 I.T.A. NO. 2440/KOL/2018 ASSESSMENT YEAR: 2006-07 M/S. BISWANATH RICE MILL AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE, 2019. SD/- (P.M. JAGTAP) VICE PRESIDENT DATED: 07/06/2019 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. M/S. BISWANATH RICE MILL, VILL. & P.O. TALDANGRA, DIST. BANKURA-722 152. 2. ITO, WARD 3(4), BANKURA, BILASH BHAWAN, CHANDMARIDANGA, BANKURA 722 101. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA