Arun Kumar Sahoo, Jagatsinghpur V. ITO, Ward-1, Paradeep

ITA 29/CTK/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4209 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 03-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUVENDU DUTTA
• Assessee Lawyers: TAPAN KUMAR DASH
• Keywords: Unexplained cash credit; Unexplained investment; Corroborative evidences
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.29 /CTK/2016 ASSESSMENT YEAR : 2011 - 2012 ARUN KUMAR SAHOO, TALAPADA RAHAMA, JAGATSINGHPUR. VS. ITO, WARD - 1, PARADEEP. PAN/GIR NO. CBWPS 1934 G (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI TAPAN KUMAR DASH, AR REVENUE BY : SHRI SUVENDU DUTTA , DR DATE OF HEARING : 23 /11 / 2016 DATE OF PRONOUNCEMENT : 23 /11 / 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 30.11.2015 , FOR THE ASSESSMENT YEAR 2011 - 2012 . 2. GROUND NOS.1 ,2 & 4 OF THE APPEAL READ AS UNDER: 1 . THAT THE CLOSING BALANCE FOR THE PREVIOUS YEAR SHOWN IN THE ASSESSEE'S BANK PASS BOOK BUT NOT SHOWN IN THE BOOKS MAINTAINED BY THE ASSESSEE FOR THAT YEAR, DOES NOT FALL WITHIN THE AMBIT OF SECTION 68 AND AS SUCH THE SUM SO CREDITED IS NOT CHARGEABLE TO TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ACCORDINGLY, THE PROVISIONS OF SEC.68 OF THE ACT WILL NOT APPLY TO THE DEPOSITS, HOWEVER, THE ASSESSEE HAS EXPLAINED THE 2 ITA NO.29/CTK/2016 ASSESSMENT YEAR :2011 - 2012 DEPOSITS SATISFACTORILY IN VIEW OF THE GIVEN FACTS AND CIRCUMSTANCES. 2. THAT THE BANK PASS BOOK SUPPLIED BY THE BANK TO ITS CONSTITUENT IS ONLY A COPY OF THE CONSTITUENT'S ACCOUNT IN THE BOOKS MAINTAIN BY THE BANK. HENCE, THE PASS BOOK SUPPLIED BY THE BANK TO THE ASSESSEE CANNOT BE REGARDED AS THE BOOK OF THE ASSESSEE, THAT IS, A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. 4. THAT CLOSING BALANCE OF THE PREVIOUS YEAR INCLUDES THE OPENING BALANCES WHICH CAN NOT BE THE INCOME OF THE SAID YEAR. 3. AT THE TIME OF HEARING, LD A.R OF THE ASSESSEE SUBMITTED THAT HE IS NO T PRESSING THESE GROUNDS OF APPEAL AND ALSO MADE AN ENDORSEMENT TO THIS EFFECT TO THE GROUNDS OF APPEAL APPENDED TO FORM NO.36 OF THE APPEAL MEMO FILED BEFORE THE TRIBUNAL. HENCE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.3 OF THE APPEAL RE ADS AS UNDER: THAT MR PRASAN KUMAR SAHOO BROTHER OF ARUN KUMAR SAHOO HAS TRANSFERRED RS 500000/ - FROM HIS PERSONAL ACCOUNT TO MAKE NECESSARY INCIDENTAL EXPENSES TO START A NEW COLD DRINKS BUSINESS WHICH HAS BEEN CONFIRMED BY THE MANGER U CO BANK RAHAMA .& MR PRASANNA KUMAR SAHOO IS FILING ITS RETURN REGULARLY. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED FROM THE AIR INFORMATION THAT THERE WERE CASH DEPOSITS MADE IN THE SIX SAVIN GS BANK ACCOUNT OF THE ASSESSEE. OUT OF THESE ACCOUNTS, THE CLOSING BALANCE OF THREE ACCOUNTS HAVE BEEN SHOWN IN THE 3 ITA NO.29/CTK/2016 ASSESSMENT YEAR :2011 - 2012 BALANCE SHEET AND THE CLOSING BALANCE MENTIONED IN THREE ACCOUNTS NAMELY AXIS BANK, PA RADEEP, UCO BANK, RAHAMA AND SBL,PARADEEP TOTALING TO RS.6,44,143/ - WERE NOT SHOWN IN THE BALANCE SHEET OF THE ASSESSEE AS CLOSING BALANCE. THE ASSESSEE SUBMITTED THAT OUT OF CLOSING BALANCE OF RS.5,28,058/ - WITH UCO BANK, RAHAMA AN AMOUNT OF RS.5,00,000/ - WAS TRANSFERRED ON 26.03.11 FROM THE BANK ACCOUNT OF SHRI PRASAN A KUMAR SAHOO AS DEPOSITS TO START A NEW COLD DRINKS DISTRIBUTORSHIP BUSINESS JOINTLY. ON VERIFICATION , THE ASSESSING OFFICER FOUND THAT THERE HAS BEEN NO MENTION OF THIS AMOUNT IN THE BALANCE SHEET EITHER AS SUNDRY CREDITORS OR ANYWHERE AS DEPOSIT/ADVANCE. SINCE THE BANK CLOSING BALANCE HAS NOT BEEN SH OWN IN THE BALANCE SHEET THE ASSESSING OFFICER TREATED THE CLOSING BALANCE OF THREE BANK ACCOUNTS OF RS.6,44,143/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 6. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7. BEFORE ME, LD A.R. OF THE ASSESSEE SUBMIT TED THAT SIMPLY BECAUSE ONE ASSET AND ITS CORRESPONDING LIABILITY BOTH ARE NOT REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE DOES NOT EMPOWER THE ASSESSING OFFICER TO TREAT THE AMOUNT OF ASSET AS INCOME AND IGNORE THE CORRESPONDING LIABILITY OF THE ASSESS EE. HE POINTED OUT FROM THE PAGE NO.15 OF THE PB WHICH CONTAINS THE LOAN ACCOUNT OF MR PRASANNA KUMAR SAHOO WITH UCO BANK, RAHMA, WHICH 4 ITA NO.29/CTK/2016 ASSESSMENT YEAR :2011 - 2012 SHOWS THAT RS.5,00,000/ - WAS WITHDRAWN ON 26.3.2011 FROM THE SAID BANK ACCOUNT. HE ALSO DREW MY ATTENTION TO THE BANK ACCOUNT OF THE ASSESSEE IN QUESTION, WHICH SHOWS THAT ON THE VERY SAME DATE EXACTLY THE SAME AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT. HE CONTENDS THAT THE ABOVE MATERIALS WERE PLACE D BEFORE THE LOWER AUTHORITIES AND IT WAS EXPLAINED TO THEM THAT THE ASSE SSEE ALONGWITH HIS BROTHER PRASANNA KUMAR SAHOO INTENDED TO START THE BUSINESS DEALING IN COLD DRINKS IN PARTNERSHIP AND THE AMOUNT WAS GIVEN BY SAID SHRI PRASANNA KUMAR SAHOO AS H IS PART O F INITIAL CAPITAL CONTRIBUTION. THUS, AS THE SOURCE WAS PROPERLY EXP LAINED AND THE GENUINENESS OF THE SAME IS NOT IN DOUBT, THE ADDITION OF RS.5 LAKH WAS UNSUSTAINABLE. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 9. I FIND THAT AS PER PROVISIONS OF SECTION 69 OF THE ACT, WHEN AN INVESTMENT I S NOT RECORDED IN THE BOOKS OF ACCOUNT OF AN ASSESSEE THEN THE ACT CONFERS POWER ON THE ASSESSING OFFICER TO ASK THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT AND ONLY WHEN NO EXPLANATION ABOUT THE SOURCE IS GIVEN BY THE ASSESSEE OR THE EXPLANATION GIVE N IS FOUND TO BE UNSATISFACTORY, THEN THE ASSESSING OFFICER CAN TREAT SUCH UNEXPLAINED INVESTMENT AS INCOME OF THE FINANCIAL YEAR IN WHICH SUCH INVESTMENT WAS MADE BY THE ASSESSEE. THUS, THE LOWER AUTHORITIES ERRED IN TREATING THE ENTIRE AMOUNT INVESTED AS INCOME OF THE ASSESSEE MERELY ON THE GROUND THAT THE SAID INVESTMENT WAS 5 ITA NO.29/CTK/2016 ASSESSMENT YEAR :2011 - 2012 NOT REFLECTED IN THE BALANCE SHEET. IN THE INSTANT CASE, I FIND THAT OUT OF RS.6,44,143/ - , THE ASSESSEE OFFERED EXPLANATION IN RESPECT OF RS.5 LAKHS WITH SUPPORTING EVIDENCE, WH ICH WAS NOT FOUND TO BE UNSATISFACTORY BY THE ASSESSING OFFICER. THEREFORE, IN MY CONSIDERED OPINION, THE ADDITION TO THE EXTENT OF R S.5 LAKH IS CLEARLY UNSUSTAINABLE. IN RE S PECT OF BALANCE AMOUNT OF R S.1,44,143/ - , I FIND THAT NO SATISFACTORY EXPLANATION COULD BE GIVEN BY THE ASSESSEE. I, THEREFORE, MODIFY THE ORDERS OF LOWER AUTHORITIES AND CONFIRM THE ADDITION TO THE EXTENT OF RS.1,44, 14 3/ - ONLY AND DELETE RS.5,00,000/ - AND PARTLY ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE . 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 23 / 11 /2016 IN THE PRESENCE OF PARTIES. S D / - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 23 /11 /2016 B.K.PARIDA, SPS 6 ITA NO.29/CTK/2016 ASSESSMENT YEAR :2011 - 2012 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : ARUN KUMAR SAHOO, TALAPADA RAHAMA, JAGATSINGHPUR 2. THE RESPONDENT. ITO, WARD - 1, PARADEEP 3. THE CIT(A) , CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//