ACIT, Bangalore V. Shri. Kalyana Sundharam Suryaprakash, Bangalore

ITA 263/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9521 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA SHRI D S VIVEK
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Additional evidence; Capital Gains
• Section: 143(2); 144

Judgement Text

ITA NO.263/B/09 CO NO.17/B/09 1 IN THE INCOME TAX APPEL LATE TRIBUNAL, BANGALORE BENCH B BEFORE N.L KALRA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.263/BAN G/2009 (ASSESSME NT YEAR 2005-06) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-14(1), BANGALORE. . APPELLANT VS. SHRI KALYANA SUNDARAM SURYAPRAKASH, 581, 10 TH CROSS, 2 ND MAIN, 3 RD PHASE, J.P NAGAR, BANGALORE-560 078. . RESPONDENT CO NO.17/BANG/2009 (BY ASSESSE E) REVENUE BY : SMT. V.S SREELEKHA ASSESSEE BY : SHRI D.S VIVEK O R D E R PER GEORGE GEORGE K, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE AND CROSS-OBJECTI ON FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LEAR NED COMMISSIONER OF INCOME-TAX (APPEALS) - V, BANGALORE DATED 06.01. 2009. THE ASSESSMENT YEAR CONCERNED IS 2005-06. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : ITA NO.263/B/09 CO NO.17/B/09 2 (I) THE CIT(A) HAS ERRED IN NOT ADHERING TO THE PRI NCIPLE OF NATURAL JUSTICE. (II) THE CIT(A) HAS ERRED IN NOT FOLLOWING RULE 46A (RELATED TO THE ADDITIONAL EVIDENCE) OF THE INCOME- TAX RULES. (III) THE CIT(A) HAS FAILED TO DIFFERENTIATE BETWE EN THE CASS CASE AND AIR CASE AND BLINDLY BELIEVED IN WHAT THE ASSESSEES REPRESENTATIVE HAS STATED. (IV) THE CIT(A) HAS FAILED TO UNDERSTAND WHY RECTIF ICATION APPLICATION WAS REJECTED. (V) THE CIT(A) IS WRONG IN SAYING THAT THE PRINCIPL E OF NATURAL JUSTICE WAS NOT FOLLOWED. 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL. FOR THE CONCERNED ASSESSMENT YEAR 2005-06 ASSESSEE FILED RETURN OF INCOME ON 16- 12-2005 WITH ACIT-14(1). THE ASSESSEE ALONG WITH THE RETURN OF INCOME HAD FILED DETAILED COMPUTATION OF TOTAL INCOME, AS PER WHICH, THE INCOME FROM VARIOUS SOURCES WERE RS.23,79,163/- AND INCOME EXEM PT U/S 10 OF THE ACT AMOUNTED TO RS.1,53,31,975/-. THE ASSESSMENT U /S 144 WAS COMPLETED ON 26.12.2007. THE REASON FOR BEST JUDGM ENT ASSESSMENT U/S 144, ACCORDING TO AO WAS ASSESSEE DID NOT RESPO ND TO NOTICE U/S 143(2). IN THE ASSESSMENT COMPLETED ON 26-12-07 AN ADDITION OF RS.70,42,525/- WAS MADE RESULTING IN AN ADDITIONAL DEMANDS OF TAX OF RS.33,22,890/-. THE ADDITION OF RS.70,42,525/- WAS MADE BY THE AO, STATING, THE AMOUNT REPRESENTS, CREDITS FOUND IN TH E ASSESSEES BANK ACCOUNT, WHICH WERE NOT EXPLAINED. ITA NO.263/B/09 CO NO.17/B/09 3 4. THE ASSESSEE ON RECEIPT OF BEST JUDGMENT ASSESSM ENT, RAISING ADDITIONAL DEMAND OF RS.33,22,890/-, FILED RECTIFI CATION APPLICATION BEFORE ACIT, WARD-14(1) ON 7-2-2008. IN THE RECTI FICATION APPLICATION ASSESSEE STATED NOTICES U/S 143(2) WERE NEVER RECEI VED BY THE ASSESSEE AND BEST JUDGMENT IS NOT WARRANTED. FURTH ER, IT WAS STATED IN THE RECTIFICATION APPLICATION THAT ALL DETAILS WERE FURNISHED ALONG WITH THE RETURN OF INCOME AND ASSESSMENT COMPLETED WITHOUT C ONSIDERING THE SAME IS MISTAKE APPARENT FROM RECORD AND HENCE, THE RECTIFICATION APPLICATION. THE ASSESSEES RECTIFICATION APPLICAT ION WAS REJECTED IN MAY, 2008. THEREAFTER, THE ASSESSEE FILED APPEAL BE FORE THE LEARNED CIT(A). 5. THE LEARNED CIT(A) HELD THAT AO COMPLETED THE AS SESSMENT U/S 144 IS WITHOUT SERVICE OF NOTICE U/S 143(2) AND ISS UE OF LETTER AS REQUIRED U/S 144(1)(C). ON FACTS, LEARNED CIT(A) H ELD THAT ASSESSEE DESERVE TO GET RELIEF AS THE ADDITION MADE ON PRETE XT OF NOT DISCLOSING THE INCOME IS NOT TRUE AS PER THE DETAILS AND EVIDE NCES ATTACHED ALONG WITH RETURN OF INCOME. FOR THE DETAILED REASONING MENTIONED IN PARA 7 TO 8 OF HIS ORDER, LEARNED CIT(A) ALLOWED THE APPEA L OF THE ASSESSEE. 6. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LEARNED DR STATED LEARNED CIT(A) HAS ERRED IN NOT F OLLOWING RULE 46A OF THE INCOME-TAX RULES. SHE FURTHER ARGUED THAT L EARNED CIT(A) IS WRONG IN SAYING THE PRINCIPLES OF NATURAL JUSTICE W AS NOT FOLLOWED. THE ITA NO.263/B/09 CO NO.17/B/09 4 LEARNED DR STATED RECTIFICATION APPLICATION WAS REJ ECTED, SINCE RECTIFICATION COULD NOT DONE ON 144 ORDER. 7. THE LEARNED AR ON THE OTHER HAND FILED WRITTEN S UBMISSION ON 3.7.09. THE CRUX OF THE SAME ARE AS FOLLOWS : I) NOTICE U/S 143(2) IS NOT SERVED AND HENCE ASSESSMENT U/S 144 COMPLETED ON 26.12.2007 IS BAD. II) ORDER PASSED U/S 144 WITHOUT SERVICE OF NOTICE AS PER 1 ST PROVISO TO SECTION 144(1) AND NOT GIVING AN OPPORTUNITY OF BEING HEARD. III) THE LEARNED CIT(A) HAS NOT RELIED ON ANY ADDIT IONAL DOCUMENT FOR DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. MOREOVER, RECONCILIATION AND MUTUAL FUNDS STATEMENTS PROVIDED WERE AT THE REQUEST OF LEARNED CIT(A). 8. WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE M ATERIAL ON RECORD. IN THE INSTANT CASE, WE FIND AO HAS NOT CO RRELATED THE BANK TRANSACTIONS AS PER THE BANK STATEMENTS AVAILABLE W ITH HER WITH THE DETAILS AND WORKINGS ATTACHED ALONG WITH THE RETURN OF INCOME. THE ASSESSEE IN COMPUTATION STATEMENT ATTACHED ALONG WI TH THE RETURN OF INCOME HAD DECLARED EXEMPT INCOME U/S 10 OF ACT AMO UNTING TO RS.1,53,31,975/-. THE BREAK UP OF EXEMPTED INCOME ARE AS FOLLOWS : ITA NO.263/B/09 CO NO.17/B/09 5 A) RS.98,98,236/- LONG-TERM CAPITAL GAINS ON REDEMP TION OF MUTUAL FUNDS B) RS.59,750/- INTEREST FROM TAX FREE BONDS. C) RS.53,73,988/- DIVIDEND INCOME FROM INDIAN COMPANIES. 8.1 THE ABOVE AMOUNT OF RS.1,53,31,975/- WOULD HAVE RESULTED IN HUGE CREDITS TO THE BANK ACCOUNT. THE AO COULD HAV E ATTEMPTED TO CO- RELATE THE CREDITS WITH THE STATEMENTS ATTACHED WIT H THE RETURN OF INCOME. HOWEVER, THE AO WITHOUT MAKING SUCH AN ATT EMPT, ADDED RS.70,42,525/- AS INCOME. 8.2 THE LEARNED CIT(A) HAS CATEGORICALLY FOUND THAT INVESTMENTS IN MUTUAL FUNDS AND BANK DEPOSIT ARE OUT OF DISCLOSED SOURCES. IN OTHER WORDS, INVESTMENTS ARE SATISFACTORILY EXPLAINED AND RECORDED. THE LEARNED CIT(A)S FINDING WITH REGARD TO EXPLANATION OF INVESTMENTS ARE FROM PARA 7.1 TO 7.4 OF HIS ORDER. WE HAVE ALSO PE RUSED THE RETURN OF INCOME AND THE COMPUTATION STATEMENT FILED ALONG WI TH RETURN, WHEREIN HE HAS DISCLOSED EXEMPTED INCOME OF RS.1,53,31,975/ - U/S10 OF THE ACT. WE HAVE ALSO SEEN THE RECONCILIATION BETWEEN THE BANK STATEMENT, AIR AND MUTUAL FUNDS. WE FIND LEARNED C IT(A)S CONCLUSION IS CORRECT AND LEARNED DR HAS NOT BEEN ABLE TO DISP EL THE FINDING/CONCLUSION ARRIVED BY THE LEARNED CIT(A). 8.3 NOW THE FURTHER QUESTION IS WHETHER THESE IS A VIOLATION OF MANDATE OF RULE 46 OF THE INCOME-TAX RULES. IN TH IS CONNECTION, WE ITA NO.263/B/09 CO NO.17/B/09 6 ARE OF THE VIEW THAT THE DOCUMENTS WHICH WERE PROVI DED TO LEARNED CIT(A) WAS ONLY A RECONCILIATION BETWEEN THE BANK S TATEMENT, AIR REPORT AND MUTUAL FUNDS AND NOT PRODUCTION OF ADDIT IONAL EVIDENCE. IN OTHER WORDS, IT IS ONLY EXPLANATION OF THE MATERIAL , WHICH IS ALREADY ON RECORD. AS PER THE ASSESSMENT ORDER, BANK STATEMEN T AND THE AIR INFORMATION WERE AVAILABLE WITH THE AO. THE ASSESS EE HAS ONLY SHOWN LINKING OF THE BANK TRANSACTION WITH THE AIR INFORM ATION. THIS DOES NOT AMOUNT TO PRODUCTION OF ADDITIONAL EVIDENCES AS ENV ISAGED BY THE AO. THIS DOES NOT IN ANY CASE CONSTITUTE FRESH EVIDENCE IN SUPPORT OF THE ORDER PASSED BY THE LEARNED CIT(A). THE LEARNED CI T(A) IN HIS ORDER IN PARA 7.4 HAS CLEARLY STATED THUS : ON THE FACTS OF CASE, THE APPELLANT DESERVES TO GET RELIEF AS THE ADDITIONS MADE ON THE PRETEXT OF NOT DISCLOSING THE INCOME IS NOT TRUE AND CORRECT AS PE R THE DETAILS AND EVIDENCES ATTACHED ALONG WITH THE RETUR N OF INCOME. THE DEPARTMENT HAS ALL THE DETAILS AND THE SAME WERE SUPPORTED BY THE BANK STATEMENTS ETC. THIS CLEARLY SHOWS THAT THE LEARNED CIT(A) HAS NOT RELIED UPON ANY ADDITIONAL DOCUMENTS/EVIDENCE SUBMITTED BY THE ASSE SSEE BUT HAS ARRIVED AT HIS FINDING/CONCLUSION BASED ON THE DOCU MENTS WHICH INCLUDE DETAILED TAX COMPUTATION, CAPITAL GAIN CALCULATION, AIR INFORMATION, BANK STATEMENT ETC. WHICH WAS ALREADY AVAILABLE WIT H THE AO. HENCE RULE 46A(3) IS NOT VIOLATED IN THE INSTANT CASE. ITA NO.263/B/09 CO NO.17/B/09 7 8.4 MOREOVER, ON PERUSING THE GROUND OF APPEAL AND AOS VIEW ON THE LEARNED CIT(A)S ORDER, WE FIND, THE MERITS OF THE CASE HAS NOT BEEN DISPUTED BY THE AO. SHE HAS ONLY RAISED ISSUE ON T ECHNICALITIES, WHICH WE ALREADY FOUND, IS WITHOUT ANY BASIS, SINCE LEARN ED CIT(A) HAS NOT RELIED ON ANY FRESH EVIDENCE FOR DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. FOR THE AFORESAID REASON, WE HOLD THE OR DER OF THE LEARNED CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. CO NO.17/BANG/2009 9. THIS CROSS-OBJECTION FILED BY THE ASSESSEE CONTA INS NINE GROUNDS. ON PERUSAL OF THE GROUNDS RAISED, WE FIND ESSENTIALLY THEY ARE IN SUPPORT OF THE LEARNED CIT(A)S ORDER. SINC E, WE HAVE DISMISSED THE REVENUES APPEAL AND HAVE UPHELD THE ORDER OF T HE LEARNED CIT(A), THE GROUNDS RAISED IN THE CROSS-OBJECTION ARE DISMI SSED AS INFRUCTUOUS. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS- OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28TH AUG, 2009. (N.L KALRA) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 28/08/09 VMS. ITA NO.263/B/09 CO NO.17/B/09 8 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. BY ORDER ASST. REGISTRAR, ITAT, BANGAL ORE.