Smt. Sujatha, Sri. K N Prafulla Kumar and Ms. K.N. Ranjitha Legal Representatives of Late Sri. R. Nagendra Swamy, Chamarajanagara V. The Income Tax Officer, Ward- 1, Chamarajanagara

ITA 2468/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2099 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained cash credit; Opportunity of being heard; Competent authority; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH, BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.2468/BANG/2019: ASST.YEAR 2010-2011 SMT.SUJATHA SRI K.N.PRAFULLA KUMAR AND MS.K.N.RANJITHA, LEGAL REPRESENTATIVES OF LATE SRI.R.NAGENDRA SWAMY, KUDERU MAIN ROAD, KUDERU CHAMARAJANAGARA. PAN : AJPPS2123Q. VS. THE INCOME TAX OFFICER WARD 1 CHAMARAJANAGARA. (APPELLANT) (RESPONDENT) APPELLANT BY: SRI.V.SRINIVASAN, ADVOCATE RESPONDENT BY: DR.GANESH R.GHALE, STANDING COUNCIL FOR DR DATE OF HEARING : 25.02.2020 DATE OF PRONOUNCEMENT : 27.4.2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A) DATED 27.09.2019. THE RELEVANT ASSESSMENT YEAR IS 2010-2011. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, W EIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) IS NOT JUSTIFIED IN PASSING T HE APPELLATE ORDER IN THE NAME OF THE DECEASED APPELLA NT, EVEN AFTER IT WAS BROUGHT TO THE NOTICE THAT THE APPELLA NT HAD PASSED AWAY VIDE LETTERS DATED 08.06.2018 AND 15.05 .2019 OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT A ND ACCORDINGLY, THE IMPUGNED ORDER PASSED BY THE LEARN ED CIT(A) DESERVES TO BE CANCELLED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.5,87,801/ - IN RESPECT OF SUNDRY CREDITORS ON THE GROUND THAT THE APPELLAN T HAD NOT ITA NO.2468/BANG/2019 SMT.SUJATHA. 2 FILED CONFIRMATION OF BALANCE FROM THESE SUNDRY CRE DITORS WITHOUT APPRECIATING THAT THE APPELLANT HAD FILED S TATEMENT OF ACCOUNT FROM 2 CREDITORS VIZ., M/S.ZUARI CEMENTS OF RS.1,42,649/- AND M/S.NAGARJUNA FERTILIZERS OF RS.3 3,930/- BESIDES FILING OTHER EVIDENCE IN RESPECT OF THE BAL ANCE CREDITORS OF RS.4,11,222/- UNDER THE FACTS AND IN THE CIRCUMS TANCES OF THE APPELLANTS CASE. 4. THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.16,78,500/- BEING THE ALLEGED AGGREG ATE CASH DEPOSITS MADE IN THE SAVINGS BANK ACCOUNT OF THE AP PELLANT WITHOUT APPRECIATING THAT THE DETAILS OF THESE CASH DEPOSITS WERE NEVER MADE KNOWN TO THE APPELLANT AND THAT THE APPELLANT HAD FILED HIS BANK STATEMENTS AND EXPLAIN ED THE CASH DEPOSITS MADE THEREIN OUT OF ANTERIOR WITHDRAW ALS MADE FROM THE SAME BANK ACCOUNT UNDER THE FACTS AND IN T HE CIRCUMSTANCES OF THE APPELLANTS CASE. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT H UMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RE NDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTI NG THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITU TION FEES AS PART OF THE COSTS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A RETAIL DEALER IN FERTILIZER, WHO FILED RETURN OF INCOME FO R THE ASSESSMENT YEAR 2010-2011 ON 24.09.2010, ADMITTING TOTAL INCOME AT RS.2,59,260. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT DETERMINING TOTAL INCOME AT RS.25,25,561, AFTER MAKING ADDITION OF RS.22,66,301 . THE BIFURCATION OF THE ADDITION IS (I) CASH DEPOSIT W AS OF RS.16,78,500, AND (II) FOR NON-FURNISHING THE DETAI LS OF SUNDRY CREDITORS OF RS.5,87,801. THE ASSESSING OFFICER PAS SED ORDER U/S 143(3) OF THE ACT ON 31.01.2013 RESULTING A DEM AND OF RS.8,98,191. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OF FICER, BY OBSERVING AS UNDER: - ITA NO.2468/BANG/2019 SMT.SUJATHA. 3 4. IN THE ASSESSMENT ORDER THE AO HAS STATED THAT, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION FROM THE CREDITOR S AMOUNTING TO RS. 5,87,801/-. THE ASSESSEE HAS FURNISHED STATE MENT COPY FROM M/S.ZUARI INDUSTRIES LTD AND NAGARJUNA GROUP F OR RS. 1,42,649/- AND 33,930/- RESPECTIVELY. IT WAS NOT AC CEPTED SINCE THE COPY OF THE STATEMENT DID NOT CONTAIN DAT E AND SEAL OR SIGNATURE OF THE COMPETENT AUTHORITY. THE ASSESS EE COULD NOT FURNISH CONFIRMATION FOR THE BALANCE AMOUNT OF RS.4,11,222/-HENCE, IN THE ABSENCE OF PROPER CONFIR MATION OF THE ABOVE ENTIRE AMOUNT SHOWN UNDER SUNDRY CREDITOR S IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. FUR THER, AS PRE THE ITS DATA THE ASSESSEE HAS MADE CASH DEPOSIT OF RS. 16,78,500/- TO SB ETC, DURING THE COURSE OF HEARING THE ASSESSEE AND HIS A/R WAS ASKED TO FURNISH THE DETAI LS FOR THE CASH DEPOSIT, NEITHER THE ASSESSEE NOR HIS AIR HAD PRODUCED ANY DETAILS OR FURNISHED ANY EXPLANATION, HENCE THE ENTIRE TRANSACTION MENTIONED IN THE ITS DATA IS BROUGHT TO TAX AS UNEXPLAINED CASH CREDIT U/S 68. EVEN DURING THE COU RSE OF APPEAL PROCEEDINGS THE APPELLANT COULD NOT SUBSTANT IATE AND FURNISH ANY EVIDENCE AND THEREFORE THE ADDITION MAD E BY THE AO IS HEREBY UPHELD. 4. AGAINST THE ABOVE ORDERS OF THE INCOME TAX AUTHO RITIES, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. AT T HE OUTSET, THE LEARNED AR SUBMITTED THAT DESPITE INTIMATING TH E CIT(A) THAT SRI.NAGENDRA SWAMY, IN WHOSE CASE THE APPEAL W AS FILED BEFORE THE CIT(A), EXPIRED ON 16.10.2017, VIDE ASSE SSEES LETTER DATED 12 TH APRIL, 2018. HOWEVER, THE CIT(A) PASSED THE IMPUGNED ORDER ON 27.09.2019, ONLY IN THE NAME OF SRI.NAGENDRA SWAMY, WITHOUT BRINGING ON RECORD THE LEGAL HEIRS ON RECORD. ACCORDING TO THE LEARNED AR, THE O RDER OF THE CIT(A) TO BE SET ASIDE WITH A DIRECTION TO PASS FRE SH ORDER IN THE NAME OF THE LEGAL HEIRS AFTER BRINGING THEM ON RECORD. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT RAISE ANY SERIOUS OBJECTION TO THE ARGUMENT OF THE LEARNE D AR. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ITA NO.2468/BANG/2019 SMT.SUJATHA. 4 MATERIAL ON RECORD. IN THE PRESENT CASE, THE ASSESS EE ADMITTEDLY INFORMED THE CIT(A) VIDE LETTER DATED 12 TH APRIL, 2018 AND ALSO ANOTHER LETTER DATED 08 TH JUNE, 2018, THAT SRI.R.NAGENDRA SWAMY,EXPIRED AND ALSO ENCLOSED THE DEATH CERTIFICATE OF SRI.R.NAGENDRA SWAMY, TO THIS EFFECT . HOWEVER, THE CIT(A) PASSED THE IMPUGNED ORDER IN THE NAME OF SRI.R.NAGENDRA SWAMY ONLY. AT THIS POINT, I REFER P ROVISIONS OF SECTION 2(7) OF THE I.T.ACT. FROM THE READING OF TH E ABOVE SECTION, IT IS APPARENT THAT ASSESSEE MEANS A PER SON BY WHOM ANY TAX OR ANY OTHER SUM OF MONEY IS PAYABLE U NDER THIS ACT, AND ALSO INCLUDES EVEN EVERY PERSON WHO I S DEEMED TO BE AN ASSESSEE UNDER ANY PROVISIONS OF THE INCOME-T AX ACT. THE PERSON IS DEFINED IN SECTION 2, SUB-SECTION (31 ) WHICH INCLUDES AN INDIVIDUAL. INDIVIDUAL MEANS A SINGLE HUMAN BEING DISTINCT FROM A GROUP OF HUMAN BEINGS. NOW TH E QUESTION ARISES WHETHER THE PERSON WHO HAS ALREADY EXPIRED, CAN BE REGARDED TO BE A HUMAN BEING SO AS TO FALL W ITHIN THE DEFINITION OF INDIVIDUAL. IN THE PRESENT CASE, TH E CIT(A) HAS PASSED THE IMPUGNED ORDER NOT IN THE NAME OF THE LE GAL HEIRS, BUT IN THE NAME OF AN INDIVIDUAL, WHO HAS ALREADY E XPIRED ON 16.20.2017. THEREFORE, IT CANNOT BE SAID THAT THE A SSESSEE, AN INDIVIDUAL IS IN EXISTENCE IN THE NAME OF SRI.R.NAG ENDRA SWAMY, IN WHOSE NAME THE ORDER WAS PASSED. IN MY OP INION, AN ORDER PASSED IN THE NAME OF A DEAD PERSON, CANNO T BE REGARDED AS A VALID ORDER AS HE CANNOT BE A PERSON TO BE AN ASSESSEE. IN CONSEQUENT THEREOF, IT CANNOT BE REGAR DED TO HAVE BEEN PASSED AN ORDER IN THE NAME OF THE ASSESSEE. U NDER SEC.2(7) OF THE I.T.ACT, HIS LEGAL REPRESENTATIVES BEING DIFFERENT ITA NO.2468/BANG/2019 SMT.SUJATHA. 5 HUMAN BEINGS FROM SRI.R.NAGENDRA SWAMYAND THEY ARE DEEMED TO BE THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 159 OF THE I.T.ACT. SECTION 159(1) OF THE I.T.ACT S TRESSED THAT WHEN A PERSON DIES, HIS LEGAL REPRESENTATIVES SHALL BE LIABLE TO PAY ANY SUM THE DECEASED WOULD HAVE BEEN LIABLE TO PAY IF HE HAD NOT DIED, IN THE LIKE MANNER AND TO THE SAME EX TENT AS THE DECEASED. SIMILARLY, SECTION 159(2) ALSO EMPOWERS T HE ASSESSING OFFICER TO TAKE THE PROCEEDINGS AGAINST T HE LEGAL REPRESENTATIVES THAT HE WOULD HAVE TAKEN AGAINST TH E DECEASED HAD HE SURVIVED. SECTION 159(2) NOWHERE AUTHORIZES THE ASSESSING OFFICER TO TAKE THE PROCEEDINGS AGAINST T HE INDIVIDUAL WHO HAS ALREADY EXPIRED, THAT IS WHY THE LEGAL REPRESENTATIVES, U/S 2(7) ARE REGARDED TO BE ASSESS EE. IT EMANATES THAT THE ASSESSEE IN THE CASE OF A DECEASE D PERSON WILL BE THE PERSON WHO ARE REGARDED AS THE LEGAL HE IRS OF THE DECEASED AS THEY CAN BE REGARDED AS A HUMAN BEING. IN VIEW OF THIS, A PERSON WHO HAS ALREADY EXPIRED CANNOT BE RE GARDED TO BE A HUMAN BEING AS ON THE DATE WHEN THE ORDER WAS PASSED. ONLY THE LEGAL HEIRS CAN BE REGARDED AS ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 2(7) OF THE I.T.ACT. SECTION 159 ALSO EMPHASIZES THAT THE ORDER PASSED IN THE NAME OF A D EAD PERSON, IS NOT A VALID ORDER. ACCORDINGLY, I SET AS IDE THE ORDER OF THE CIT(A), WHICH IS PASSED IN THE NAME OF A DEA D PERSON, AND DIRECT HIM TO BRING ON RECORD THE NAME OF LEGAL HEIR AND DECIDE THE ISSUE AFRESH AFTER AFFORDING A REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE (LEGAL H EIR). 7. SINCE I HAVE SET ASIDE ORDER OF THE CIT(A) ON TH E LEGAL ISSUE RAISED BY THE ASSESSEE, AT THIS STAGE, I AM R EFRAIN FROM ITA NO.2468/BANG/2019 SMT.SUJATHA. 6 ADJUDICATING OTHER GROUNDS RAISED BY THE ASSESSEE I N RESPECT OF THE ADDITIONS MADE BY THE ASSESSING OFFICER AND SUS TAINED BY THE CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2020. SD/- ( CHANDRA POOJARI ) ACCOUNTANT MEMBER BANGALORE ; DATED : 27 TH APRIL, 2020. DEVADAS G* COPY TO: 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A)-MYSORE. 4. THE PR.CIT-MYSORE. 5. THE DR, ITAT, BENGALURU. 6. GUARD FILE. ASST.REGISTRAR/ITAT, BANGALORE