Shri.B.R.Nanjunda Prasad, Bangalore V. Income Tax Officer, Bangalore

ITA 286/BANG/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8455 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Salary income; Assessment record; Set aside
• 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 NO. 286/BANG/2017 ASSESSMENT YEAR : 2009-10 SHRI B.R. NANJUNDA PRASAD, NO. 675, BNR HOUSE, VYSYA BANK COLONY, ARAKERE, SHANTHINIKETHAN, BANNERGHATTA ROAD, BANGALORE 560 076. PAN: AAUPP 5367P VS. THE INCOME TAX OFFICER, WARD 15(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI B.S. BALACHANDRAN, ADVOCATE RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT (DR) DATE OF HEARING : 21.03.2017 DATE OF PRONOUNCEMENT : 31 .03.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 13.01.2017 OF CIT(A) FOR THE ASSESSMENT YEAR 2009-10. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 286/BANG/2017 PAGE 2 OF 10 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF THE ASSESSE E IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO HAS ERRED IN MAKING AN ADDITION OF RS. 20,76,000/- ON ACCOUNT OF DEPOSITS IN BANK. TH E ASSESSEE IS AN INDIVIDUAL AND EMPLOYED IN ING VYSYA BANK. THE ASS ESSEE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 29.07.2009. THE SCRUTINY ASSESSMENT U/S. 143(3) WAS COMPLETED ON 11 .10.2010 WHEREIN THE AO MADE AN ADDITION OF RS. 5,051/-. CONSEQUENTLY T HE COMMISSIONER OF ITA NO. 286/BANG/2017 PAGE 3 OF 10 INCOME TAX ON EXAMINATION OF ASSESSMENT RECORD NOTI CED THAT THE AO HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCES OF CASH DEPOSIT OF RS. 20,76,000/- IN THE BANK WITHOUT ANY MATERIAL EVIDENCES. ACCORDINGLY, THE COMMISSIONER ISSUED A SHOW CAUSE N OTICE U/S. 263 ON 01.11.2012 IN RESPONSE, THE ASSESSEE FURNISHED HIS REPLY. THE ASSESSMENT ORDER WAS SET ASIDE WITH THE DIRECTION TO THE AO TO COMPLETE THE ASSESSMENT AFRESH VIDE REVISION ORDER DATED 21.01.2 013. THE AO HAS COMPLETED THE ASSESSMENT IN PURSUANT TO THE ORDER P ASSED U/S. 263 ON 28.03.2014 WHEREBY THE AO MADE AN ADDITION OF SUCH AMOUNT OF RS. 20,76,000/-. AGGRIEVED BY THE ACTION OF THE AO THE ASSESSEE FILED BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESS EE HAS SUBMITTED THAT THE CIT(A) WHILE PASSING THE REVISION ORDER U/S. 26 3 SET ASIDE THE ASSESSMENT ON THE REASON THAT THE ASSESSEE WAS UNAB LE TO FILE THE CONFIRMATION LETTERS FROM HIS MOTHER, BROTHER AND S ISTER IN RESPECT OF CASH DEPOSIT OF RS. 20,76,000/- IN BANK. THE LD. COUNSE L HAS POINTED OUT THAT IN THE SET ASIDE PROCEEDINGS THE ASSESSEE REPRODUCE D THE CONFIRMATION FROM ALL THREE PERSONS AND ALSO PRODUCED THESE PERS ONS BEFORE THE AO FOR EXAMINATION HOWEVER THE AO HAS NOT EXAMINED THESE P ARTIES AND MADE AN ADDITION BY CITING THE REASON THAT THESE PARTIES HA VE NOT APPEARED BEFORE ITA NO. 286/BANG/2017 PAGE 4 OF 10 THE AO. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE INCOME TAX DETAILS, FULL PARTICULARS OF ADDRESS AND IDENTITY AS WELL AS THE CREDIT WORTHINESS OF THE PARTIES BY SHO WING THE SOURCES OF THE AMOUNT THEREFORE, THE ASSESSEE HAS DISCHARGED ITS O NUS TO PROVE THE IDENTITY, CREDIT WORTHINESS AS WELL AS GENUINENESS OF THE TRANSACTIONS. HE HAS REFERRED TO THE PARA 4.1(C) OF THE ASSESSMENT O RDER AND SUBMITTED THAT THE AO HAS NOT DISPUTED THE CREDIT WORTHINESS OF TH ESE PARTIES BUT HAS QUESTIONED THE PAYMENT IN CASH INSTEAD OF THROUGH B ANKING CHANNEL. THE AO HAS NOT DISPUTED THE SOURCES THAT THESE THREE PA RTIES HAVE THE SALES RECEIPT AGAINST THE PROPERTY SOLD. THUS IT IS PROV ED THAT ALL THREE BROTHERS HAVE INDIVIDUAL FUNDS IN THEIR BANK ACCOUNTS TO GIV E THE ASSESSEE INTEREST FREE LOAN. THE LD. AR HAS POINTED OUT THAT THIS AM OUNT WAS DEPOSITED IN BANK DUE TO THE REASON THAT THE SON OF THE ASSESSEE WAS GOING ABROAD FOR HIGHER EDUCATION AND IT WAS REQUIRED TO SHOW THE LI QUID FUND IN THE BANK OF THE ASSESSEE. THUS THIS AMOUNT WAS DEPOSITED IN THE BANK IN ORDER TO SHOW THE SUFFICIENT LIQUID FUND WITH THE ASSESSEE T O MEET THE EXPENSES TOWARDS EDUCATION AND STAY ABROAD. HE HAS CONTENTE D THAT THE LAW REQUIRES THE IDENTITY OF CREDITORS AND THEIR CREDIT WORTHINESS TO BE PROVED WHICH HAS BEEN PROVED BY THE ASSESSEE WITH NUMBER O F THE RELEVANT RECORD INCLUDING THE CONFIRMATION. ITA NO. 286/BANG/2017 PAGE 5 OF 10 4. ALTERNATIVELY, THE LD. AR HAS CONTENTED THAT SINCE THE ASSESSEE IS ONLY A SALARIED EMPLOYEE AND DOES NOT MAINTAIN ANY BOOKS O F ACCOUNTS THEREFORE THE DEPOSIT IN BANK CANNOT BE TREATED AS CASH CREDI T IN THE BOOKS FOR THE PURPOSE OF SECTION 68 AND THEREFORE THE ADDITION MA DE U/S. 68 IS NOT SUSTAINABLE. 5. ON THE OTHER HAND, THE LD. DR HAS CONTENTED THAT TH E COMMISSIONER IN THE REVISION ORDER HAS DIRECTED THE AO TO COMPLETE THE ASSESSMENT AFRESH AND THEREFORE NO SPECIFIC DIRECTION WAS GIVEN. HE HAS FURTHER CONTENTED THAT DESPITE THE BANK BALANCES WITH THE CREDITORS THE AM OUNT WAS PAID IN CASH TO THE ASSESSEE WHICH IS NOT A PLAUSIBLE EXPLANATIO N. HE HAS FURTHER CONTENTED THE ASSESSEE HAS ALSO CHANGED ITS STAND B EFORE THE CIT(A) WHAT HE TOOK IT BEFORE THE AO. HE HAS POINTED OUT THAT THE ASSESSEE HAS EXPLAINED THE SOURCES OF FUND WITH THE CREDITORS AS SALE PROCEEDS OF PROPERTY WHEREAS BEFORE THE CIT(A) THE ASSESSEE HAS EXPLAINED THE SOURCES AS SALE OF GOLD. HE HAS RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE COMMISSIONER IN THE REVISION ORDER PAS SED U/S. 263 DATED 21.01.2013 SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTIONS TO COMPLETE THE ASSESSMENT AFRESH BY CONSIDERING THE FACTS AS D ISCUSSED BY THE ITA NO. 286/BANG/2017 PAGE 6 OF 10 COMMISSIONER IN THE SAID ORDER. THE RELEVANT PART OF 263 ORDER IS AS UNDER. A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 1.11.2012. IN RESPONSE TO THE NOTICE, THE ASSESSEE SRI B R NANJUNDA PRASAD ALONG WITH HIS AUTHORISED REPRESENT ATIVE SRI G S RAJARAM, ITP APPEARED ON THE DATES MENTIONED AB OVE AND THE CASE WAS HEARD. HE HAS ALSO FILED WRITTEN SUBM ISSIONS REGARDING THE SOURCES OF CASH DEPOSITS OF RS. 20.76 LAKHS INTO HIS BANK ACCOUNT. IN HIS WRITTEN SUBMISSIONS HE HA S REITERATED THAT HIS THREE BROTHERS WHO ARE ALL EMPLOYED IN BAN KS AND HIS WIFE WHO IS ALSO WORKING IN SYNDICATE BANK, SINCE 2 8 YEARS HAVE GIVEN HIM CASH OUT OF THEIR SALARY INCOME WHIC H HAS ALREADY SUFFERED TAX, IN ORDER TO HELP HIS SON TO P URSUE HIS HIGHER STUDIES ABROAD. HOWEVER, THE ASSESSEE WAS U NABLE TO FURNISH ANY EVIDENCE IN THIS REGARD, EXCEPT PRODUCI NG THE COPY OF THE RETURN OF INCOME FILED BY HIS BROTHERS. AS MENTIONED BY THE ASSESSEE HIS FAMILY MEMBERS MAY BE ASSESSED TO TAX. BUT THERE IS NO CONFIRMATION FROM ANY ONE OF THEM THAT THEY GAVE MONEY TO THE ASSESSEE. IN VIEW OF THE ABOVE SUBMIS SIONS, THE ASSESSMENT ORDER OF THE ASSESSING OFFICER IS SETASI DE WITH A DIRECTION TO COMPLETE THE ASSESSMENT AFRESH BY CONS IDERING THE ABOVE FACTS AND AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. THE EXPLANATION OF THE ASSESSEE WAS CONSIDERED BY T HE COMMISSIONER THAT THE ASSESSEE AS WELL AS HIS THREE BROTHERS WHO ARE ALL EMPLOYED IN BANK AND HIS WIFE WHO IS ALSO WORKING IN SYNDICATE BANK SINCE 28 YEARS HAVE GIVEN CASH OUT OF THEIR SALARY INCOME WHICH HAS ALR EADY SUFFERED TAX. THIS AMOUNT WAS GIVEN TO THE ASSESSEE IN ORDER TO H ELP HIS SON TO PURSUE HIGHER STUDIES IN ABROAD. THE COMMISSIONER HAS FUR THER OBSERVED THAT THE ASSESSEE WAS UNABLE TO FURNISH ANY EVIDENCE IN THIS REGARD EXCEPT PRODUCING THE COPY OF THE RETURN OF INCOME FILED BY HIS BROTHERS. THUS IT IS CLEAR THAT THE IDENTITY OF THESE CREDITORS WERE NOT IN DISPUTE AS THE ITA NO. 286/BANG/2017 PAGE 7 OF 10 ASSESSEE PRODUCED THE RETURN OF INCOME FILED BY THE SE CREDITORS WHO ARE THE FAMILY MEMBERS OF THE ASSESSEE. THE COMMISSION ER HAS SET ASIDE THE ORDER WITH THE SPECIFIC OBSERVATION THAT THERE IS N O CONFIRMATION FROM ANY OF THEM THAT THEY GAVE THE MONEY TO THE ASSESSEE. THUS, THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITORS WAS NOT AT ALL D OUBTED BY THE COMMISSIONER WHILE PASSING THE REVISED ORDER U/S. 2 63. IT IS PERTINENT TO NOTE THAT THE AO IN THE ORIGINAL ASSESSMENT ACCEPTE D THE EXPLANATION REGARDING THE SOURCES OF DEPOSIT OF CASH IN THE BAN K ACCOUNT. THE COMMISSIONER INVOKED THE PROVISION OF SECTION 263 O NLY ON THE GROUND THAT THE AO HAS ACCEPTED THE EXPLANATION WITHOUT AN Y MATERIAL. WHILE PASSING THE REVISION ORDER THE ONLY INFIRMITY POINT ED OUT BY THE COMMISSIONER IN THE CLAIM OF THE ASSESSEE IS NON-FU RNISHING OF CONFIRMATION FROM THE CREDITORS. IN THE SET ASIDE PROCEEDINGS, THE ASSESSEE UNDISPUTEDLY FURNISHED THE CONFIRMATION FR OM THESE CREDITORS WHO ARE THE FAMILY MEMBERS OF THE ASSESSEE. FURTHE R NEITHER THE AO NOR THE CIT(A) HAS DISPUTED THAT ALL THESE CREDITORS AR E EMPLOYED IN BANKS AND FURTHER THEY ALSO RECEIVED SALE PROCEEDS OF PRO PERTY AND HAVING SUFFICIENT BALANCE IN THEIR RESPECTIVE BANK ACCOUNT S. THE AO HAS REJECTED THE EXPLANATION MAINLY ON TWO COUNTS FIRSTLY DESPIT E THE SUFFICIENT BALANCE IN THE BANK THERE WAS NO JUSTIFICATION FOR GIVING T HE MONEY IN CASH AND SECONDLY THE ASSESSEE FAILED TO PRODUCE THESE CREDI TORS FOR EXAMINATION ITA NO. 286/BANG/2017 PAGE 8 OF 10 DESPITE THE SUMMONS ISSUED BY THE AO. ON CAREFUL P ERUSAL OF THE ASSESSMENT ORDER IT IS NOTED THAT THE AO STATED TO HAVE ISSUED THE SUMMONS TO THE CREDITORS ON 28.10.2013 ASKING THEM TO APPEAR ON 05.11.2013 TO GIVE EVIDENCES. FURTHER, AS PER THE DETAILS RECORDED BY THE AO IN COLUMN 9 OF THE PARTICULARS OF ASSESSMENT ORD ER THERE WAS NO HEARING AFTER 14.08.2013 AND PARTICULARLY THERE WAS NO DATE OF HEARING ON 05.11.2013 WHICH GOES TO SUPPORT THE SUBMISSIONS OF THE ASSESSEE THAT THE CREDITORS APPEAR BEFORE THE AO BUT THE AO DID NOT E XAMINE THEM. THE STATEMENT OF THE AO IN THE ASSESSMENT ORDER THAT TH ESE CREDITORS WERE SUMMONED TO APPEAR ON 05.11.2013 IS CONTRARY TO THE DETAILS OF THE DATES OF HEARING RECORDED BY THE AO IN THE MEMO OF THE PA RTIES. THEREFORE, WHEN THE ASSESSEE HAS ESTABLISHED THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITORS BY PRODUCING THE RETURN OF INCOME AS WELL AS THE BANK DETAILS AND ALSO PROVED THE GENUINENESS OF TRANSACTION BY P RODUCING THE CONFIRMATION OF ALL THE CREDITORS WHICH WAS THE ONL Y OBJECTION OF THE COMMISSIONER WHILE PASSING THE REVISION ORDER U/S. 263 THEN THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. 8. THE CIT(A) WHILE CONFIRMING THE ADDITION HAS ALSO N OT DISPUTED THE IDENTITY BUT HAS MISCONDUCTED HIMSELF BY CONSIDERIN G ONLY THE INCOME DECLARED BY THESE CREDITORS IN THE RETURN OF INCOME . IT IS PERTINENT TO NOTE ITA NO. 286/BANG/2017 PAGE 9 OF 10 THAT THERE IS NO DIRECT CONNECTION OF INCOME DECLAR ED IN THE RETURN OF INCOME AND THE AMOUNT BALANCE IN THE BANK ACCOUNT. ONCE THE SOURCE OF CREDIT WAS PROVED BY SHOWING THE AMOUNT IN THE HAND S OF THE CREDITORS WHICH IS MUCH MORE THAN THE AMOUNT PAID TO THE ASSE SSEE THEN IGNORING THE AVAILABILITY OF FUND WITH THE CREDITORS BY THE CIT(A) IS NOT JUSTIFIED. FURTHER ONCE THE CREDITORS ARE ALL INCOME TAX ASSES SEES AND HAVE CONFIRMED THE TRANSACTION IN QUESTION THEN EVEN IF THE TAXING AUTHORITY ARE OF THE VIEW THAT THE CREDITORS HAVE NOT BEEN ABLE T O SHOW THE SOURCE OF SUCH CREDIT IT IS ONLY THE MATTER TO BE CONSIDERED IN THE RESPECTIVE ASSESSMENT OF THE CREDITORS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE ADDITION MADE BY THE AUTHORITIES BELOW IS NOT JUSTIFIED AND THE SAME IS DELETED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MARCH, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 31 ST MARCH, 2017. / MS/ ITA NO. 286/BANG/2017 PAGE 10 OF 10 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.