Sri. Kushalraj Gulecha, Bangalore V. Deputy Commissioner Of Income Tax, Circle- 5(2)(1), Bangalore

ITA 288/BANG/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0746 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-06-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 03-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: G S PRASHANTH
• Keywords: Unexplained expenditure
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.288/BANG/2020 ASSESSMENT YEAR: 2011-12 SHRI KUSHALRAJ GULECHA, NO.54, K.G ROAD, K.R CIRCLE, BENGALURU-560 009. PAN NO : ACCPG 6043 M VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-5(2)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI G.S PRASHANTH, C.A RESPONDENT BY : SHRI PRIYADARSHI MISHRA, ADDL. CIT (DR) DATE OF HEARING : 24.06.2021 DATE OF PRONOUNCEMENT : 15.07.2021 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER: PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGA INST ORDER DATED 30/12/2019 PASSED BY THE LD.CIT(A)-5, BANGALORE FOR ASSESSMENT YEAR 2011-12 ON FOLLOWING GROUNDS OF APP EAL ON FOLLOWING GROUNDS OF APPEAL: PAGE 2 OF 9 ITA NO.288/BANG/2020 PAGE 3 OF 9 ITA NO.288/BANG/2020 PAGE 4 OF 9 ITA NO.288/BANG/2020 BRIEF FACTS OF THE CASE ARE AS UNDER: 2. THE ASSESSEE FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 29/09/2011 DECLARING TOTAL INCOME OF RS.30,66,980/-. THE LD.AO COMPLETED THE SCRUTINY AS SESSMENT UNDER SECTION 143(3) OF THE ACT, ON 28/01/2014, ACC EPTING THE RETURNED INCOME. SUBSEQUENTLY, THE CASE WAS REOPENE D ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WI NG, AND THE LD.AO COMPLETED THE REASSESSMENT UNDER SECTION 143( 3) READ WITH SECTION 147 BY MAKING AN ADDITION OF RS.20,00, 000/- AS UNEXPLAINED EXPENDITURE. 2.1 AGAINST THE ASSESSMENT ORDER PASSED, ASSESSEE F ILED APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) CONFIRMED THE O RDER PASSED BY THE LD.AO BY OBSERVING AS UNDER: 7.2. THE ISSUE ON MERITS PERTAINS TO THE DETECTION OF DOCUMENTARY DETAILS REGARDING ALLEGED CASH PAYMENT / DONATION O F RS. 20 LAKHS TO M/S JUDUTT KUSHAL SURI KHADHAR GACHHA PEDHI TRUST, DURING THE YEAR UNDER CONSIDERATION. THE DEPARTMENTAL INVESTIGATION WING CONDUCTED A SURVEY OPERATION AT AHMADABAD IN THE CASE OF M/S KA LAVATI FINANCE, PAGE 5 OF 9 ITA NO.288/BANG/2020 WHEREIN IT WAS FOUND THAT THE APPELLANT, HAD PAID C ASH DONATION OF RS. 20 LAKHS TO THE ABOVE CITED ENTITY NAMELY M/S JUDUT T KUSHAL SURI KHADHAR GACHHA PEDHI TRUST. THE AG HAS EXTRACTED A PROPERLY TYPED DONATION-LIST OF THE IMPUGNED DONATIONS, WHICH CLEA RLY REFLECTED THE ASSESSEE'S CASH DONATION OF RS. 20 LAKHS. THE AO HAS RECORDED A SPECIFIC FINDING THAT, UPON V ERIFICATION IT CAME TO HIS NOTICE THAT THE AMOUNT OF RS. 20 LAKHS PERTAINE D TO THE APPELLANT AND THAT THE TELEPHONE NUMBER (9844066064) AND THE ADDR ESS OF THE ASSESSEE AVAILABLE ON THE SAID DOCUMENT, INDEED PER TAINED TO THE ASSESSEE. IN LIGHT OF THESE FACTS, IT IS AMPLY CLEA R THAT THE CASH AMOUNTS IN QUESTION RELATE TO THE ASSESSEE IN QUESTION. IT IS ALSO PLACED ON RECORD BY THE AG THAT, THE DIRECTORS OF THE FIRM M/S KALAV ATI FINANCE. MR. DEEPCHAND BAFNA AND MR. ASHOK BAFNA WERE THE FOUNDI NG MEMBERS OF THE TRUST ALONGWITH THE ASSESSEE. THE APPELLANT'S F LAT-DENIAL OF THE TRANSACTION AT THE ASSESSMENT OR THE PRESENT APPELL ATE STAGE CANNOT BE SUMMARILY ACCEPTED, AND THE DOCUMENTARY EVIDENCES P LACED ON RECORD CANNOT BE REJECTED MERELY BECAUSE THERE IS NO BOOK- TRAIL AVAILABLE. THE ASSESSEE'S BLAND ARGUMENT IS THAT, THE IMPUGNED CAS H TRANSACTIONS (APPEARING IN LOOSE SHEETS) HAVE NOT BEEN CORROBORA TED BY ENTRIES IN ANY BOOKS OF ACCOUNT. IT IS PLAIN LOGIC THAT, THE VERY PURPOSE OF THE IMPUGNED CASH TRANSACTIONS IS APPARENTLY SUCH AS WOULD NOT F ORM PART OF ANY REGULAR BOOKS OF ACCOUNT. THEREFORE THE APPLICATION OF THIS SUM (SHOWN TO BE A DONATION) REPRESENTS EXPENDITURE OF AN UNEXPLA INED NATURE. THE APPELLANT ON THE CONTRARY HAS FAILED TO SUBSTANTIVE LY REFUTE THE AO'S FINDINGS THAT THE TELEPHONE NUMBERS; ADDRESS AND CO MMON DIRECTORSHIP OF THE APPELLANT IN THE CONCERNED ENTITY, GIVES DEF INITIVE CREDENCE TO THE CONCLUSION THAT, THERE WAS A LIVE AND APPARENT NEXU S ESTABLISHED IN RESPECT OF THE IMPUGNED TRANSACTION. IN THE GIVEN F ACTS & CIRCUMSTANCES, THERE IS A VALID ASSUMPTION ON BASIS OF AVAILABLE D OCUMENTARY EVIDENCE THAT CASH PAYMENT OF RS. 20 LAKHS WAS INDEED MADE. HOWEVER, SINCE THE NATURE OF EXPENDITURE AND ITS APPLICATION IS NO T SUFFICIENTLY EXPLAINED BY THE APPELLANT, FOR REASONS BEST KNOWN TO HIM, TH E AO'S ACTION OF TREATING THE SAME AS UNEXPLAINED EXPENDITURE CANNOT BE SET- ASIDE. 3. AGGRIEVED BY THE ORDER PASSED BY THE LD.CIT(A) A SSESSEE IS IN APPEAL BEFORE US. 3.1 THE LD.AR SUBMITTED THAT, ASSESSEE IS ONE OF TH E TRUSTEE OF THE TRUST NAMED, SHRI JINDUTT KUSHALSURI KHARTAR G ACHHA PEDHI. HE SUBMITTED THAT ASSESSEE HAD CONTRIBUTED A SUM OF RS.11,111/- TOWARDS CORPUS FUND OF THE SAID TRUST DURING THE PAGE 6 OF 9 ITA NO.288/BANG/2020 FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CO NSIDERATION. THE LD.AR SUBMITTED THAT, DURING THE COURSE OF SURV EY AT M/SKALAVATHI FINANCE BY THE INVESTIGATION WING AT A HMEDABAD, IT WAS FOUND THAT ASSESSEE PAID CASH DONATION OF RS.20 LACS TOWARDS TRUST NAMED JINDUTT KUSHALSURI KHARTAR GAC HHA PEDHI. THE LD.AO OBSERVED BASED ON THE INFORMATIO N RECEIVED FROM THE INVESTIGATION WING THAT, THE DIRECTORS OF M/S.KALAVATHI FINANCE WERE MEMBERS OF THE TRUST. THE LD.AO OBSER VED THAT, LIST WAS FOUND FROM THE PREMISES OF M/S.KALAVATHI F INANCE, STATING DONATIONS RECEIVED IN THE NAME OF THE TRUST . HE OBSERVED THAT THE NAME OF ASSESSEE WAS MENTIONED IN THE ALL EGED LIST HAVING PAID A SUM OF RS.20 LACS AS DONATION TO THE SAID TRUST DURING FINANCIAL YEAR 2010-11. 3.2 THE LD.AR SUBMITTED THAT, THE LD.AO BASED ON SU CH INFORMATION CAME TO THE CONCLUSION THAT, INCOME ES CAPED ASSESSMENT IN THE HANDS OF ASSESSEE AMOUNTING TO RS . 20 LACS. 3.3 THE LD.AR SUBMITTED THAT, THE LD.AO RELIED ON I NFORMATION FOR WHICH THERE WAS NO CORROBORATING EVIDENCE AND T HEREFORE THE ADDITION MADE IN THE HANDS OF ASSESSEE IS BAD IN LA W. HE SUBMITTED THAT ASSESSEE FILED LETTER DATED 21/12/20 18 BEFORE THE LD. AO AND DENYING THE PAYMENT OF RS.20 LAKHS HAVIN G MADE TO THE TRUST. THE SAID LETTER IS PLACED AT PAGE 45-46 OF PAPER BOOK. LD.AR SUBMITTED THAT, THE LD.AO HAD SUMMONED THE TR UST VIDE NOTICE DATED 13/11/2018. IN RESPONSE TO THE SAID NO TICE THE TRUST ALSO DENIED HAVING RECEIVED ANY PAYMENT OF RS.20 LA KHS FROM THE ASSESSEE. PAGE 7 OF 9 ITA NO.288/BANG/2020 3.4 THE LD.AR THUS SUBMITTED THAT, THE LD.AO WITHOU T CARRYING OUT ANY FURTHER VERIFICATION OF FACTS MADE ADDITION IN THE HANDS OF ASSESSEE AS UNEXPLAINED EXPENDITURE. 4. ON THE CONTRARY THE LD.SR.DR SUBMITTED THAT THE LIST FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S KALAVATHY FINANCE CONTAINED THE NAME OF ASSESSEE WITH ALL THE DETAILS LIKE ADDRESS, MOBILE NUMBER ETC., WHICH WERE CORRECT. HE RELIED ON THE ORDERS PASSED BY AUTHORITIES BELOW TO SUPPORT T HE ADDITION IN THE HANDS OF ASSESSEE. 5. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SID ES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 5.1 WE NOTE THAT THE SAID AMOUNT ALLEGED TO HAVE BE EN PAID BY ASSESSEE IN CASH TO THE SAID TRUST IS NOT CORROBORA TED BY ANY OTHER EVIDENCES BY THE LD.AO. THE DEPARTMENT HAS NO T BEEN ABLE TO FALSIFY THE CORRECTNESS OF THE LETTER/CONFIRMATI ON FILED BY THE ASSESSEE AND THE TRUST, DENYING ANY PAYMENT HAVING MADE/RECEIVED. UNDER SUCH CIRCUMSTANCES SUCH ADDITI ON MADE BY THE LD.AO CANNOT BE SUSTAINED. 5.2 WE ARE THEREFORE UNABLE TO AGREE WITH THE ADDIT ION HAVING CONFIRMED BY THE LD.CIT(A). WE DIRECT LD.AO TO DELE TE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE IN THE HANDS OF ASSESSEE. ACCORDINGLY GROUND NO. 4 RAISED BY ASSESSEE STANDS ALLOWED. 6. GROUND NO.5 IS CONSEQUENTIAL IN NATURE AND THEREFORE NEED NOT REQUIRE ANY ADJUDICATION. PAGE 8 OF 9 ITA NO.288/BANG/2020 6.1 AS WE HAVE CONSIDERED THE ISSUE ON MERITS, WE A RE NOT ADJUDICATING THE LEGAL ISSUE RAISED BY ASSESSEE IN GROUND 2-3 AS IT HAS BECOME ACADEMIC AT THIS STAGE. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 15 TH JULY, 2021 SD/- SD/- (CHANDRA POOJARI ) ACCOUNTANT MEMBER (BEENA PILLAI) JUDICIAL MEMBER BANGALORE, DATED 15 TH JULY, 2021. VMS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. PAGE 9 OF 9 ITA NO.288/BANG/2020 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -7-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -7-2021 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -7-2021 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -7-2021 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -7-2021 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -7-2021 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -7-2021 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS