Anand Kumar Modi, Jharsuguda V. ITO, Jharsuguda

ITA 289/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4374 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2011
• Court: TRIBUNAL
• Assessee Lawyers: G D MODI; S N PADHEE ARS
• Section: 142(1); 148

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 289/CTK/2011 (ASSESSMENT YEAR 2005 - 06) SRI ANAND KUMAR MODI, S/O.SRI PRAMOD KUMAR MODI, SARBAHAL,JHARSUGUDA PAN: ALJPM 6431 F VERSUS THE INCOME - TAX OFFICER, JHARSUGUDA. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.D.MODI AND SHRI S.N.PADHEE, ARS FOR THE RESPONDENT NONE ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : T HIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE ADDITION OF RS.10,00,000 COMPUTED BY THE ASSESSING OFFICER U/S.143(3)/147. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE A SSESSEES I. T. RETURN FOR THE FINANCIAL YEAR 2004 - 05 RELEVANT TO THE ASSESSMENT YEAR 2005 - 06 FILED ON DATED 3 1.03.06 WAS PROCESSED U/S 143(1) ON DATED 30.06.2006. ASSESSEES CASE FOR THE ABOVE MENTIONED ASSESSMENT YEAR WAS REOPENED AS PER NOTICE U/S 148 DATED 16.11.2006 ON THE BASIS OF ANNUAL INFORMATION RETURN DATA U/S 285BA OF THE I. T. ACT, 1961. WITHOUT MAKING ANY FURTHER ENQUIRY, THE LEARNED ASSESSING OFFICER, MERELY ON THE BASIS OF AIR DATA, RE - OPENED THE ASSESSEES CASE ALLEGING CERTAIN INVESTMENT HAS BEEN MADE BY HIM THAT WAS NOT REFLECTED IN HIS RETURN OF INCOME. THE ASSESSEE OBJECTED TO THE REASONS FOR RE - OPENING OF THE CASE MERELY ON THE AIR DATA AND ALSO PRAYED FOR PROVIDING OF DETAILS OF SO CALLED INVESTMENT SO AS TO EFFECTIVELY COMPLY WITH TH E NOTICE U/S 148. THE LEARNED ASSESSING OFFICER WITHOUT PASSING ANY ORDER ON THE OBJECTIONS RAISED BY THE ASSESSEE, ISSUED NOTICES U/S 142(1) AND L43(2) ON DATED 14.06.2006 AND PROCEEDED WITH THE ASSESSMENT. THE ASSESSEE DECIDED TO ASSIST IN THE ASSESSMENT PROCEEDINGS AND COMPLIED WITH ALL THE QUERIES OF THE ITA NO.289/CTK/2011 2 LEARNED ASSESSING OFFICER BY WRITTEN SUBMISSIONS, PROVIDING CASH FLOW STATEMENT ETC., EXPLAINING IN DETAILS TO THE SOURCE OF THE CASH DEPOSIT IN THE SAVINGS BANK ACCOUNT. IT WAS ALSO STATED THAT THE CAS H DEPOSITS OF RS.10 LAKHS DURING THE YEAR, THERE WERE ALSO WITHDRAWALS DURING THE YEAR AGGREGATING TO RS.10 LAKHS IN THE SAVINGS BANK ACCOUNT. THESE WERE PART OF NORMAL BUSINESS TRANSACTION AND WERE NOT OF THE NATURE OF INVESTMENT. UNFORTUNATELY, WITHOUT C ROSS EXAMINING AND LINKING THE RECORDS AVAILABLE WITH THE I.T.DEPARTMENT, WITHOUT DELIBERATING UPON THE WRITTEN SUBMISSION OF THE ASSESSEE AND NECESSARY ENQUIRY, ENTIRE CASH DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE DURING THE WHOLE FINANCIAL YEAR 2004 - 05 TOTALING RS.10LAKHS HAS BEEN TREATED AS UNEXPLAINED MONEY U/S.69A OF THE I.T.ACT,1961 AND IT WAS ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO CONFIRMED THE SAME AND HENCE, THE ASSESSEE HAS COME UP IN THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE ASSESSMENT AS MADE BY THE ASSESSING OFFICER ON A TOTAL INCOME OF RS. 10 ,92,274/ - AS AGAINST THE RETURNED INCOME OF RS.92,274/ - IS ARBITRARY, UNCALLED FOR AND HENCE BAD IN LAW. THE LEARNED CIT(A) ERRED IN CONFIRMING THE UNEXPLAINED MONEY U/S.69A OF THE ACT AS COMPUTED BY THE ASSESSING OFFICER AT RS.10,00,000. HE SUBMITTED THA T THE LEARNED CIT(A) WRONGLY HELD THAT THE NEW EXPLANATION SUBMITTED AT THE APPELLATE STAGE IS BECAUSE THE ENTRIES MENTIONED IN THE CASH FLOW STATEMENT MAY BE DIFFICULT ON THE PART OF THE APPELLANT TO PROVE AND ESTABLISH. THE LEARNED CIT(A) ERRED IN HOLDIN G THAT THE A.O. WAS RIGHT IN PLACING RELIANCE ON THE CASH FLOW STATEMENT SUBMITTED AT THE ASSESSMENT STAGE EVEN THOUGH THE A.O. IN HIS ORDER MENTION ED THAT THE ASSESSEE HAS FIL ED WRITTEN SUBMISSION WHICH HAS NO BASIS AT ALL. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT, THE LEARNED CIT (A), WRONGLY HELD THAT THE AO IN REMAND REPORT WAS RIGHT IN REJECTING THE NEW EXPLANATION SUBMITTED BY THE ITA NO.289/CTK/2011 3 APPELLANT AT THE APPELLATE PROCEEDING WITHOUT VERIFYING THE BALANCE SHEET, PROFIT & LOSS A CC OUNT AND PARTNERS CAPITAL A/C , WHICH CLEARLY SHOWS THAT THE ASSESSEE HAS WITHDRAW N RS. 10,00,000/ - FROM FIRM M/S MAA SAMALESWARI FUEL INDUSTRIES AND AS SUCH HE FURTHER ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS RIGHT IN REJECTING THE SOURCE OF CAS H DEPOSIT OF RS.10,00,000 BY SIMPLY STATING THAT THE ASSESSEE HAS NOT FILED ANY SATISFACTORY EXPLANATION WITHOUT EXAMINING THE FACTS SUPPORTED BY DOCUMENTS. THE LEARNED AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE SAID AMOUNT OF RS.10,00,000 WAS WITHDRA WN IN CASH, DEPOSITED IN THE BANK AND PAID TO THREE LOAN CREDITORS NAMELY SRI SACHEM KUMAR AGARWAL, SAJAN KUMAR AGARWAL AND SHRI RAJENDRA PRASAD SINGH AND INSUPPORT HE PRODUCED COPY OF CASH BOOK OF THEPARTNERSHIP FIRM M/S.MAA SAMALESHWARI FUEL INDUSTRIES O K, LEDGER ACCOUNT OF ANANDA KUMAR MODI (ASSESSEE) IN THE ACCOUNT OF THE PARTNERSHIP FIRM, RELEVANT PASS BOOK, CONFIRMATION OF THE PAYEES ALONGWITH THEIR AFFIDAVITS, ACKNOWLEDGEMENT OF RETURN FILED BY THE PARTNERSHIP FIRM AND COMPUTATION OF INCOME AND ALSO THE CAPITAL ACCOUNT OF PARTNERS. ON THE BASIS, THE LEARNED AR OF THE ASSESSEE PRAYED FOR DELETION OF THE SAID ADDITION OF RS.10,00,000 . 4. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND PERUSED THE PAPER BOOK FILED IN SUPPORT OF HIS CONTENTION WHICH INTERALIA INCLUDE THE LEDGER COPY OF AND BANK ACCOUNT OF THE ASSESSEE WHO HAS WITHDRAWN A SUM OF RS.10,00,000 WHEN THE CAPITAL BALANCE IN HIS ACCOUNT WAS AT RS.10,48,947 ON HAVING RECEIVED THE SALARY AND REMUNERATION FROM THE FIRM FOR THE ASSESSMENT YEAR 2005 - 06.THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INCOME TAX RETURN WAS FILED AND BEING BELOW TAXABLE LIMIT WAS NOT ACTED UPON BY THE ASSESSING OFFICER. FOR THIS PROPOSITION HE HAS FILED THE COPY OF ACKNOWLEDGEMENT RECEIP T DT.31.3.2006. WE ALSO PERUSED THE BANK PASS BOOK WHEN THE PURPORTED MISTAKE IN THE CASH FLOW STATEMENT COULD BE STATED TO BE DEVOID OF GENUINE ERROR COMMITTED BY THE ASSESSEE INSOFAR AS THE ASSESSEE WAS PROCEEDING TO DISTRIBUTE THE SUM OF RS.10,00,000 ON LY ITA NO.289/CTK/2011 4 AFTER OBTAINING THE SUM OF RS.10,00,000 FROM THE FIRM COULD NOT BE SAID TO HAVE BEEN PAID FROM NEGATIVE BALANCE EITHER IN THE BANK OR IN HIS OWN PERSONAL ACCOUNT THEREFORE LEADS TO THE FINDING THAT THE REPAYMENT OF LOAN COULD NOT BE CONSIDERED TO HAVE S ATISFIED ALL THE CRITERIA FROM A NEGATIVE BALANCE. HE WOULD HAVE INSIST ED ON PAYMENT, IF THAT BE SO, THE ASSESSING OFFICER THEREFORE MADE AN ERROR IN FINDING OF FACT AND CORRELATING THE SAME. THE LEARNED CIT(A) COMPOUNDED THE ISSUE BY REQUIRING THE ASSESSE E TO EXPLAIN WHETHER THE GENUINE MISTAKE OCCURRED WHEN OTHERWISE THE ASSESSEE FULLY EXPLAINED THE FACT THAT THE AMOUNT WAS AVAILABLE WITH THE FIRM OUT OF WHICH HE MADE WITHDRAWALS BY REDUCING HIS CAPITAL ACCOUNT WAS DEPOSITED IN THE BANK FOR ISSUE OF ACCOU NT PAYEE CHEQUES TO THE LOAN CREDITORS. THE BANK WOULD HONOUR CHEQUES ONLY WHEN THE ASSESSEE HAS SUFFICIENT BALANCE THEREIN. THEREFORE, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE CASH FLOW STATEMENT INCLUDED ONLY A SUM OF RS.1,80,000 WAS NOT A GENUINE CL ERICAL MISTAKE. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT DEPOSIT OF CASH BY WITHDRAWAL FROM THE PARTNERSHIP IS REQUIRED TO BE CONSIDERED BY THE ASSESSING OFFICER ON CALLING FOR INFORMATION AVAILABLE TO IT ON THE BASIS OF RETURN FILED BY THE ASSESSEE IN HIS JURISDICTION. IF SO REQUIRED, HE MAY SEEK ASSISTANCE FROM THE ASSESSEE AND DELETE THE ADDITION OF RS.10,00,00 0 AFTER VERIFYING THE UNDISPUTED FACTS AS HAVE BEEN BROUGHT ON RECORD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN OPEN COURT ON DT. 23 RD JUNE, 2011 S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 23 RD JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.289/CTK/2011 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SRI ANAND KUMAR MODI, S/O.SRI PRAMOD KUMAR MODI, SARBAHAL,JHARSUGUDA 2. THE RESPONDENT: THE INCOME - TAX OFFICER, JHARSUGUDA 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY , BY ORDER, SENIOR PRIVATE SECRETARY.