Dr.K.Balaraman, Bangalore V. Income Tax Officer, Bangalore

ITA 25/BANG/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8475 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NOS. 24 & 25/BANG/2017 ASSESSMENT YEARS : 2007-08 & 2008-09 DR. K. BALARAMAN, NO. 559, RMV II STAGE, NEW BEL ROAD, BANGALORE 560 094. PAN: ACQPB 4519F VS. THE INCOME TAX OFFICER, WARD 6[3][2], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI V. NARENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT (DR) DATE OF HEARING : 21.03.2017 DATE OF PRONOUNCEMENT : 24.03.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF CIT(A) BOTH DATED 08.09.2016 FOR THE ASSE SSMENT YEARS 2007-08 AND 2008-09. THE ASSESSEE HAS RAISED THE COMMON GROUND S IN THESE APPEALS EXCEPT THE DIFFERENCE OF QUANTUM OF ADDITION / DISALLOWANC E. THE GROUNDS RAISED FOR THE ASSESSMENT YEAR 2007-08 ARE REPRODUCED AS UNDER . ITA NOS. 24 & 25/BANG/2017 PAGE 2 OF 12 ITA NOS. 24 & 25/BANG/2017 PAGE 3 OF 12 ITA NOS. 24 & 25/BANG/2017 PAGE 4 OF 12 2. GROUND NOS. 1 TO 3 AS WELL AS ADDITIONAL GROUNDS AR E REGARDING VALIDITY OF REASSESSMENT. AT THE TIME OF HEARING THE LD. AR OF THE ASSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROU ND NOS. 1 TO 3 AND ADDITIONAL GROUNDS AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DR HAS RAISED NO OBJECTION IN GROUND NOS. 1 TO 3 ARE DISMISSED AS NOT PRESSED. ACCORDINGLY, GROUND NOS. 1 TO 3 AS WELL A S ADDITIONAL GROUNDS OF THE ASSESSEES APPEAL ARE DISMISSED BEING NOT PR ESSED. ITA NOS. 24 & 25/BANG/2017 PAGE 5 OF 12 3. GROUND NO. 4 IS GENERAL IN NATURE AND DOES NOT REQU IRE ANY SPECIFIC ADJUDICATION. 4. GROUND NO. 5 IS REGARDING THE ADDITION MADE BY THE AO OF RS. 24,320/- ON ACCOUNT OF HORTICULTURE INCOME. THE ASSESSING O FFICER WHILE COMPLETING THE ASSESSMENT HAS MADE AN ADDITION OF R S. 24,320/- ON ESTIMATED BASIS AS INCOME FROM M/S. INDIAN HORTICUL TURE CONSULTANCY. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 5. I HAVE HEARD THE LD. AR AS WELL AS THE LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE AO HAS NOT DISCUSSED IN TH E ASSESSMENT ORDER EITHER ANY FACTS OR MATERIAL AS TO HOW THIS INCOME OF RS. 4 LAKHS WAS ESTIMATED BY THE AO AS AGAINST THE INCOME DECLARED BY THE ASSESSEE AT RS. 3,75,680/-. IT IS PERTINENT TO NOTE THAT EXCEP T THE ONE SENTENCE IN THE COMPUTATION OF INCOME THE AO HAS NOT GIVEN ANY REAS ON OR DISCUSSED ANY SURROUNDING CIRCUMSTANCES WHICH HAD LED TO HIM TO ESTIMATE AND ENHANCE THE INCOME BY RS. 24,320/-. IN THE ABSENCE OF ANY ADVERSE OR INCRIMINATING EVIDENCE OR FACTS DETECTED BY THE AO TO SUPPORT THIS ADDITION, THE ACTION OF THE AO IS ARBITRARY AND UNJ USTIFIED. ACCORDINGLY THIS ADDITION OF RS. 24,320/- IS DELETED. ITA NOS. 24 & 25/BANG/2017 PAGE 6 OF 12 6. GROUND NO. 6 IS REGARDING THE ADDITION IN RESPECT O F THE INCOME FROM KALYANA MAHAL. THE AO HAS ESTIMATED THE INCOME FRO M KALYANA MAHAL AT RS. 44,164/- AND FURTHER ENHANCED THE INCOME AT ESTIMATED BASIS TO RS. 50,000/- AND THEREAFTER THE AO HAS MADE AN ADDI TION BY CLUBBING THE TWO AMOUNTS I.E. RS. 44,164/- + RS. 50,000/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NO T SUCCEED. 7. BEFORE THE TRIBUNAL, THE LD. AR HAS SUBMITTED THAT THE AO HAS PASSED A CRYPTIC ARBITRARY ORDER WITHOUT DISCUSSING ANYTHING AND THEREBY MADE AN ADDITION OF RS. 94,164/- TO THE INCOME OF THE ASSES SEE ON ESTIMATE BASIS. THUS HE HAS CONTENTED THAT IN THE ABSENCE OF ANY MA TERIAL TO SUPPORT SUCH ESTIMATION OF INCOME THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. ON THE OTHER HAND, THE LD. DR HAS RELIED UPON THE ORDE R OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CASE WAS DISCUSSED WIT H THE AR OF THE ASSESSEE AND THEREAFTER THE AO ESTIMATED THE INCOME OF THE ASSESSEE. 8. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSMENT ORDER IS A N ON-SPEAKING ORDER WHEREIN THE AO HAS JUST GIVEN THE AMOUNTS OF ADDITI ON IN THE FINAL COMPUTATION OF INCOME WITHOUT DISCUSSING ANY MATERI AL OR FACT. IT IS MANIFEST FROM THE ASSESSMENT ORDER THAT THE ASSESSM ENT WAS FRAMED BY ITA NOS. 24 & 25/BANG/2017 PAGE 7 OF 12 THE AO IN A CRYPTIC MANNER AND THE ADDITION IN QUES TION WAS MERE AN ESTIMATION OF THE AO WITHOUT ANY BASIS. IT IS ALSO NOT DISCUSSED BY THE AO AS WHAT IS THE BASIS OF SUCH ESTIMATION OF INCOM E OF THE ASSESSEE. THUS IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE AO HAS NOT BROUGHT ON RECORD ANY FACT OR MATERIAL TO J USTIFY HIS ACTION OF ESTIMATION OF INCOME, THE ADDITION MADE BY THE AO I S NOT SUSTAINABLE AND THE SAME IS DELETED. 9. GROUND NOS. 7 & 8 REGARDING DISALLOWANCE OF EXPENDI TURE TO THE EXTENT OF RS. 3 LAKHS. THE AO HAS MADE DISALLOWANCE OF RS. 3 LAKHS ON ACCOUNT OF EXPENDITURE CLAIM IN THE PROFIT & LOSS ACCOUNT I N THE ABSENCE OF VOUCHERS. THE ASSESSEE CHALLENGED THE ACTION OF TH E AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 10. BEFORE THE TRIBUNAL, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE DISALLOWANCE OF THIS AMOUNT HAS BEEN MADE BY THE AO ON ADHOC BASIS WITHOUT DISCUSSING THE REASONS AND ONLY ONE WORD HA S BEEN MENTIONED AS REASON OF DISALLOWANCE. THE AO HAS NOT POINTED OUT ANY PARTICULAR ITEM OF EXPENDITURE FOR WHICH THE ASSESSEE HAS NOT PRODU CED THE VOUCHERS. HE HAS REFERRED TO THE NOTICE ISSUED BY THE AO ASKING THE DETAILS FOR THE ASSESSMENT YEAR 2008-09 AND SUBMITTED THAT THE ASSE SSEE HAS DULY REPLIED ITA NOS. 24 & 25/BANG/2017 PAGE 8 OF 12 THE SAID NOTICE BY GIVING ALL THE DETAILS AS REQUIR ED BY THE AO. THUS, THE LD. AR HAS SUBMITTED THAT THE AO HAS MADE A DISALLO WANCE IN ARBITRARY MANNER WITHOUT EVEN AFFORDING AN OPPORTUNITY TO THE ASSESSEE. HENCE, THE LD. AR HAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO IS NOT SUSTAINABLE AND THE SAME MAY BE DELETED. 11. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE DID NOT PRODUCE THE VOUCHERS IN RESPECT OF THE EXPENDITURE BOOKED IN THE PROFIT & LOSS ACCOUNT. THEREFORE THERE IS FAILURE ON THE PA RT OF THE ASSESSEE TO DISCHARGE ITS ONUS OF PROVING THE CLAIM OF EXPENDIT URE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE AO HAS PASSED THE ASSES SMENT ORDER DATED 28.03.2012 U/S. 143(3) R.W.S. 147 WHICH IS A NON-SP EAKING ORDER. IT IS APPROPRIATE TO REPRODUCE THE ASSESSMENT ORDER AS UN DER. ITA NOS. 24 & 25/BANG/2017 PAGE 9 OF 12 ITA NOS. 24 & 25/BANG/2017 PAGE 10 OF 12 13. AS IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE A O HAS NOT CONDUCTED ANY ENQUIRY OR INVESTIGATION BUT HAS COMPLETED THE ASSESSMENT IN A ITA NOS. 24 & 25/BANG/2017 PAGE 11 OF 12 SUMMARY MANNER WHICH IS A HIGHLY ARBITRARY AND CRYP TIC IN NATURE. EXCEPT THE ONE SENTENCE WRITTEN BY THE AO REGARDING THE DISALLOWANCE OF EXPENDITURE AS IN THE ABSENCE OF VOUCHER THE AO H AS EVEN NOT DISCUSSED THE NATURE OF EXPENDITURE AND THE ENQUIRY CONDUCTED BY THE AO BEFORE MAKING SUCH DISALLOWANCE. IT IS ALSO PERTINENT TO NOTE THAT IN RESPONSE TO THE NOTICE U/S. 148 THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN FILED BY THE ASSESSEE ON 05.02.2009 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. THEREFORE, THERE IS NO RELEVANCY OF THE DELAY IN FILING THE ORIGINAL RETURN WHEN IT WAS FILED PRIOR TO THE NOTI CE ISSUED U/S. 148 AND THE ASSESSEE HAS DULY STATED THAT THE SAID RETURN MAY B E TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE U/S. 148. THEREFORE, THE OBSERVATION OF THE AO THAT THE RETURN WAS FILED BELATEDLY IS NOT AT ALL R ELEVANT IN FRAMING THE ASSESSMENT U/S. 143(3) R.W.S. 147. THE AO HAS EVEN NOT MENTIONED THAT THE ASSESSEE WAS ASKED TO SUBMIT THE VOUCHERS AND F URTHER WHICH OFF THE EXPENDITURE BOOKED IN THE PROFIT & LOSS ACCOUNT WAS DOUBTED BY THE AO. THUS IT IS APPARENT FROM THE ASSESSMENT ORDER THAT THE AO HAS ACTED IN HIGHLY ARBITRARY MANNER AND WITHOUT CONDUCTING THE NECESSARY ENQUIRY AND INVESTIGATION. THEREFORE, THE DISALLOWANCE MAD E BY THE AO IS NOT SUSTAINABLE IN LAW AND ACCORDINGLY DELETED. ITA NOS. 24 & 25/BANG/2017 PAGE 12 OF 12 14. FOR THE ASSESSMENT YEAR 2008-09, IDENTICAL ADDITION S WERE MADE BY THE AO. THEREFORE IN VIEW THE FINDING OF THESE ISSUES FOR THE ASSESSMENT YEAR 2007-08, THE ADDITIONS / DISALLOWANCES MADE BY THE AO ARE DELETED. AS REGARDS THE ISSUE OF VALIDITY OF REASSESSMENT, THE ASSESSEE HAS NOT PRESSED THESE GROUNDS FOR THE ASSESSMENT YEAR 2008-09 ALSO. ACCORDINGLY, THE SAME ARE DISMISSED BEING NOT PRESSED. 15. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PARTL Y ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF MARCH, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 24 TH MARCH, 2017. / MS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.