Sivaji M Nikam, Khurda V. ITO, Khurda

ITA 307/CTK/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52388 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2011
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Principle of natural justice; Corroborative evidences
• Section: 69

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 30 7/CTK/2011 (ASSESSMENT YEAR 2007 - 08) SIVAJI M.NIKAM, AT MARKET LANE,P.O.KHURDA, DIST. KHURDA PAN ABYPN 7505 J VERSUS INCOM E - TAX OFFICER, KHURDA WWARD,KHURDA. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.NAIK/R.RKAR, ARS FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 12.08.2011 DATE OF PRONOUNCEMENT : 25.08.2011 ORDER SHRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED CITA) DT. 31.3.2011 FOR THE ASSESSMENT YEAR 2007 - 08 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. 1. FOR THAT THE ORDER DATED 31.03.2011 AS PASSED IN I.T. APPEAL NOO252/09 - 10 BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)II, BHUBANESWAR HEREINAFTER REFERRED TO AS THE LEARNED CIT(A) IS NOT JUST AND LEGAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. FO R THAT THE LEARNED CIT(A) WITHOUT AFFORDING REASONABLE OPPORTUNITY SHOULD NOT HAVE DISMISSED THE APPEAL IN LIMINE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 3. FOR THAT THE LEARNED ASSESSING OFFICER IS ERRED IN FACT AS WELL AS LAW IN MAKING ADDITIO N OF RS.6,91,000/ - U/S.69 OF THE I.T.ACT, 1961 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 4. FOR THAT THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED TO MAKE ADDITION OF 37,975 AS INCOME FROM UNDISCLOSED SOURCES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 5. FOR THAT THE ORDER OF THE LEARNED CIT(A) IS OTHERWISE BAD IN LAW AND LIABLE TO BE QUASHED ON THE ABOVE GROUNDS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE RESPECTIVE APPEALS AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOT H THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE FILED RETURN ITA NO.307/CTK/2011 2 OF INCOME ON 31.3.2009 DECLARING TOTAL INCOME OF 1,85,727 AS INCOME FROM BUSINESS PROFESSION AND AGRICULTURE INCOME OF 58,240. THERE WAS A SURVEY CONDUCTED U/S.133A ON 7.3.2007 IN THE BUSINESS PREMISES OF M/S.SAJJAN JEWELLERS, NAYAGARH AND M/S.SUMITRA JEWELLERS, KHURDA OF WHICH THE ASSESSEE IS PROPR IETOR AND PARTNER RESPECTIVELY. HENCE, RETURN FILED BY THE ASSESSEE WAS TAKEN FOR SCRUTINY BY THE ASSESSING OFFICER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE APPEARED THROUGH ITS AUTHORISED REPRESENTATIVE FROM TIME TO TIME AND FURNISHED TH E DETAILS CALLED FOR TOGETHER WITH DOCUMENTARY EVIDENCE WHICH WERE DULY VERIFIED BY THE ASSESSING OFFICER. BUT AFTER THE HEARING, THE AO HAS PASSED THE ASSESSMENT ORDER U/S.143(3) DETERMINING THE TAXABLE INCOME AT 9,12,774 BY MAKING ADDITION OF 6,91,000 U/S.69 AND 37,975 AS UNDISCLOSED INCOME. AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A) AND IS UNSUCCESSFUL. HENCE, THE PRESENT APPEAL IS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE WAS FOUND TO HAVE PAID PRINCIPAL AND INTEREST AMOUNTING TORS.6,91,000 TOWARDS THE LOAN BORROWED BY IT OF 30 LAKHS DURING THE FINANCIAL YEAR 2005 - 06. AS THE ASSESSEE IS NOT ABLE TO FURNISH THE REQUIRED DETAILS TO EXPLAIN THIS AMOUNT, THE ASSESSING OFFICER HAS ADDED THIS AMOUNT OF 6,91,000 U/S.69 OF THE INCOME - TAX ACT,1961 AS UNEXPLAINED INVESTMENT. APART FROM THAT THE ASSESSING OFFICER HAS ADDED A SUM OF 3 7,975 AS THE ASSESSEE IS NOT ABLE TO FURNISH ANY SUPPORTING EVIDENCE FOR THIS AMOUNT RECEIVED BY HIM. UNDISPUTEDLY, THE ASSESSING OFFICER AGREED THAT THE ASSESSEE HAS BORROWED LOAN OF 30 LAKHS DURING THE FINANCIAL YEAR 2005 - 06 AND IT DISCHARGED 6,91,00 0 TOWARDS THE PRINCIPAL AND INTEREST OUT OF THAT BORROWED AMOUNT. SO, SUCH PAYMENT WILL NEVER FALL WITHIN THE AMBIT OF SECTION 69 WHICH SAYS ABOUT THE UNEXPLAINED INVESTMENT. APART FROM THAT THE ITA NO.307/CTK/2011 3 ASSESSEE IS DOING BUSINESS IN THE NAME AND STYLE OF M/S.SAJJA N JEWELLERS, NAYAGARH BEING A PROPRIETORSHIP CONCERN, WHERE HE HAS SHOWN SALES OF 12,20,487 ON WHICH HE DECLARED PROFIT OF 11.4% BEING 1,40,047.52 AND THE ASSESSEE HAS SHOWN INCOME FROM AGRICULTURE AT 92,500. BESIDES THE ASSESSEE HAS ALSO HAVING SALARY AND INTEREST AMOUNTING TO 1,13,191 FROM THE PARTNERSHIP FIRM M/S.SUMITRA JEWE LLERS, KHURDA . THEREFORE ALL THESE INCOMES DISCLOSED WILL CATEGORICALLY LEAD TO SHOW THAT THE ASSESSEE IS HAVING SUFFICIENT FUNDS TO PAY THE AMOUNT OF 6,91,000 TOWARDS PRINCIPAL AND INTEREST AGAINST LOAN BORROWED BY THE ASSESSEE. THEREFORE, THE ADDITION OF 6,91,000 IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. HE FURTHER SUBMITTED THAT ON VERIFICATION THE AO FOUND THAT THE RECEIPTS OF 37,975 ARE RELATED TO THE FINANCIAL YEAR 2005 - 06 AS THEY WERE ISSUE DON 1.11.2005. THEREFORE, THEY ARE NOT RELATING TO THE PR ESENT ATY UNDER CONSIDERATION. THEREFORE, THE ADDITION OF 37,975 AS INCOME FROM UNDISCLOSED SOURCES DOES NOT STAND FOR LEGAL SCRUTINY. BUT HOWEVER, FIND THAT THE ASSESSING OFFICER HAS MADE THE ADDITION AS THE ASSESSEE IS NOT ABLE TO FURNISH THE REQUIRED DETAILS IN SUPPORT OF ITS CLAIM. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THIS IS JUST TO RESTORE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ISSUES STRICTLY FLOWING THE PRINCIPLES OF NATURAL JUSTICE AND PASS NECESSARY CONSE QUENTIAL ORDER AS PER LAW. WITH THIS DIRECTION, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 25.08.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.307/CTK/2011 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SIVAJI M.NIKAM, AT MARK ET LANE,P.O.KHURDA, DIST. KHURDA 2. THE RESPONDENT: INCOME - TAX OFFICER, KHURDA WWARD,KHURDA. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.