M/s Royal Queen Bar & Resturant, Bapatla V. THE ITO, BAPATLA, Bapatla

ITA 346/VIZ/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9541 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARISH KUMAR I
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: Unexplained investment

Judgement Text

ITA NO.346 OF 2012 ROYAL QUEEN BAR & RESTSAURANT BA PATALA PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 346/VIZAG/2012 ASSESSMENT YEAR: 2008-09 ROYAL QUEEN BAR & RESTAURANT, D.NO.10-1-39 RATHAM BAZAR, BAPATLA ITO BAPATLA (APPELLANT) PAN NO: AAIFR 4377 B VS. (RESPONDENT) ASSESSEE BY: SHRI C. SUBRAMANYAM, CA DEPARTMENT BY: SHRI SARISH KUMAR, I. DR DATE OF HEARING: 25/02/2015 DATE OF PRONOUNCEMENT: 03/03/2015 ORDER PER SAKTIJIT DEY. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 23.01.2012 PASSED BY THE LEARNED CIT (A) GUNTUR FOR ASSESSMENT YEAR 2008-09. 2. THERE IS A DELAY OF TWO DAYS IN FILING OF THE AP PEAL. AFTER CONSIDERING THE CAUSE OF DELAY AS MADE OUT IN THE PETITION FOR CONDONATION OF DELAY, WE ARE INCLINED TO CONDONE THE DELAY AND ADMIT THE APP EAL FOR HEARING ON MERITS. 3. THE ASSESSEE HAS RAISED IN TOTAL FIVE GROUNDS. A T THE OUTSET THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, HE WIL L NOT BE PRESSING GROUND NUMBERS 1, 3, 4 & 5. ACCORDINGLY THESE GROUN DS ARE DISMISSED AS NOT RAISED. THE ONLY SURVIVING ISSUE AS RAISED IN G ROUND NO.2 IS IN RELATION TO ADDITION OF AN AMOUNT OF RS.1,14,708 UNDER SECTION 69B. ITA NO.346 OF 2012 ROYAL QUEEN BAR & RESTSAURANT BA PATALA PAGE 2 OF 5 4. BRIEFLY STATED, ASSESSEE A PARTNERSHIP FIRM IS C ARRYING ON BUSINESS IN PURCHASE AND SALE OF INDIAN MADE FOREIGN LIQUOR. FO R THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF I NCOME ON 29.09.2008 DECLARING INCOME OF RS.1,02,952/-. DURING THE SCRUT INY ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ON VERIFICATION OF T HE BOOKS OF ACCOUNT NOTICED THAT IN THE DAY BOOK MAINTAINED FOR THE REL EVANT FINANCIAL YEAR THE CASH BALANCE AVAILABLE WITH THE ASSESSEE ON 26.6.20 07 WAS RS.1,80,292, WHEREAS ON 27.6.2007 AS PER THE DAY BOOK THE ASSESS EE HAS MADE AN INVESTMENT OF RS.2,95,000/- TOWARDS FIXED DEPOSIT I N INDIAN BANK. ASSESSING OFFICER, THEREFORE, WAS OF THE VIEW THAT WHEN THE A SSESSEE WAS NOT HAVING THE REQUIRED CASH AVAILABLE TO MAKE THE DEPOSIT OF RS.2,95,000/-, THE EXCESS AMOUNT OF RS.1,14,708 HAS TO BE TREATED AS UNEXPLAI NED INVESTMENT OF THE ASSESSEE IN TERMS OF SEC 69B OF THE ACT. THOUGH, TH E ASSESSEE STATED BEFORE THE ASSESSING OFFICER THAT THE TRANSACTION FOR THE AMOUNT OF RS.2,95,000 RELATES TO SHRI VADLAMUDI SUBBA RAO, ONE OF THE PAR TNER OF THE FIRM AND DUE TO A MISTAKE COMMITTED BY THE ACCOUNTANT THE AMOUNT WAS WRONGLY ENTERED IN THE BOOKS OF ACCOUNT, BUT THE ASSESSING OFFICER REJECTED SUCH EXPLANATION OF THE ASSESSEE BY OBSERVING THAT TILL THE DATE OF PASSING OF THE ASSESSMENT ORDER THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF ITS CLAIM THAT THE TRANSACTION RELATED TO THE PARTNER AND NOT THE FIRM. ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT EVEN PRO DUCE COPY OF THE FIXED DEPOSIT STATED TO HAVE BEEN MADE IN THE NAME OF THE PARTNER, NOR PRODUCED ANY EVIDENCE LIKE INCOME TAX RETURNS OR FINANCIAL S TATEMENTS OF THE PARTNER FOR THE RELEVANT FINANCIAL YEAR TO SUBSTANTIATE ITS CLAIM. ACCORDINGLY ASSESSING OFFICER MADE THE ADDITION OF RS.1,14,708. 5. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFE RRED APPEAL BEFORE THE LEARNED CIT (A). LEARNED CIT (A) ALSO CONFIRMED THE ADDITION WITH THE FOLLOWING OBSERVATIONS: 5.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY TH E APPELLANT, GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND HEARD THE AUTHORISED REPRESENTATIVE IN PERSON. THER E IS NO ITA NO.346 OF 2012 ROYAL QUEEN BAR & RESTSAURANT BA PATALA PAGE 3 OF 5 DISPUTE ON THE OBSERVATION OF THE ASSESSING OFFICER THAT IN THE DAY BOOK ON 26.06.2007 THE CASH BALANCE STOOD AT RS.1,80,292 WHEREAS ON THE NEXT DAY OF 27.06.2007 T HERE IS A TRANSACTION OF RS.2,95,000, APPEARING AS FIXED DEP OSIT IN INDIAN BANK. THUS THERE WAS AN EXCESS EXPENDITURE OF RS.1,14,708 (RS.2,95,000 MINUS RS.1,80,292), AN INV ESTMENT IN THE BOOKS OF THE FIRM, WHICH IS NOT EXPLAINED. G IVING THE EXPLANATION, THE AUTHORISED REPRESENTATIVE SUBMITTE D THAT ONE OF THE PARTNERS OF THE APPELLANT FIRM SRI V. SUBBA RAO HAS MADE A CASH DEPOSIT OF RS.2,95,000 ON 27.6.2007 INT O HIS PERSONAL SAVINGS BANK ACCOUNT NO.523870265 WITH IND IAN BANK AND TRANSFERRED RS.2,67,500 TO MAKE IT A FIXED DEPOSIT. IF THE FD MADE WAS FOR RS.2,67,500 AS TO HOW RS.2,95,0 00 WAS APPEARING IN THE FIRMS BOOKS IS NOT COMPREHENDIBLE . AT NO POINT OF TIME THE AUTHORISED REPRESENTATIVE HAS PRO DUCED THE DETAILS OF THE FD. FOR THESE REASONS, THE EXPLANATI ON OF THE AUTHORISED REPRESENTATIVE IS NOT ACCEPTED AND THE A CTION OF THE ASSESSING OFFICER IS SUSTAINED. 6. THE LEARNED AUTHORISED REPRESENTATIVE MORE OR LE SS REITERATED THE SUBMISSIONS MADE BEFORE THE DEPARTMENTAL AUTHORITIE S. IT WAS CONTENDED THAT THE TRANSACTION RELATING TO INVESTMENT OF RS.2 ,95,000 AS FIXED DEPOSIT IN INDIAN BANK ACTUALLY RELATES TO THE PARTNER AND NOT THE FIRM. AS A RESULT OF AN ERROR COMMITTED BY THE ACCOUNTANT, THE TRANSACTI ON RELATING TO THE PARTNER WAS WRONGLY ENTERED INTO THE BOOKS OF ACCOU NT OF THE FIRM. THE LEARNED AUTHORISED REPRESENTATIVE INVITING OUR ATTE NTION TO THE BANK STATEMENT OF THE PARTNER, SHRI V. SUBBA RAO SUBMIT TED BEFORE US THAT THE ENTRIES IN THE BANK ACCOUNT WILL CLEARLY ESTABLISH THAT THE ENTRIES MADE ON 27.06.2007 IN THE DAY BOOK IN RESPECT OF AMOUNTS OF RS.2,95,000 AND RS.2,67,500 ACTUALLY RELATE TO THE PARTNER AND NOT THE FIRM. THUS, IT WAS SUBMITTED, NO ADDITION CAN BE MADE AS IN REALITY TH ERE IS NO INVESTMENT MADE BY THE ASSESSEE OUT OF BOOKS. ALTERNATIVELY, T HE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, IF AT ALL THE AMOUNT IS T REATED AS UNEXPLAINED INVESTMENT, THE SAME SHOULD BE CONSIDERED FOR TELES COPING. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND SUBMITTED BEFORE US THAT THE ASSESSEE THOUGH WAS AF FORDED REASONABLE OPPORTUNITY BOTH BY THE ASSESSING OFFICER AS WELL A S THE CIT (A), HE DID NOT ITA NO.346 OF 2012 ROYAL QUEEN BAR & RESTSAURANT BA PATALA PAGE 4 OF 5 PRODUCE ANY EVIDENCE WORTH ITS NAME TO SUBSTANTIATE ITS CLAIM THAT THE ENTRIES IN THE DAY BOOK ON 27.6.2007 ACTUALLY RELAT E TO THE PARTNER AND NOT THE FIRM. THEREFORE, IN ABSENCE OF ANY CREDIBLE EVI DENCE, THE ADDITION MADE IS JUSTIFIED. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. ON A PERUSAL OF THE MATERIALS ON RECORD IT IS CLEAR THAT THE DISPUTE IS WITH REGARD TO THE ENTRIES MADE IN THE DAY BOOK ON 27.6.2007. A S CAN BE SEEN FROM PAGE 39 OF THE DAY BOOK REFERRED TO BY THE ASSESSIN G OFFICER, A COPY OF WHICH IS AT PAGE 3 OF THE PAPER BOOK, ON 26.6.2007 THERE IS A CLOSING BALANCE OF RS.1,80,292, WHEREAS ON 27.6.2007 I.E. T HE VERY NEXT DAY, A AMOUNT OF RS.2,95,000 HAS BEEN SHOWN AS OUTGOING TO INDIAN BANK ACCOUNT. THEREFORE, THE QUESTION IS WHEN THERE WAS A CLOSING BALANCE OF RS.1,80,292 ON 26.6.2007, HOW THE ASSESSEE COULD MA KE THE INVESTMENT OF RS.2,95,000 ON 27.6.2007. ASSESSEE HAS EXPLAINED IT BY STATING THAT THE ENTRIES ON 27.6.07 AS APPEARING IN THE DAY BOOK ACT UALLY RELATE TO THE PARTNER SHRI V. SUBBA RAO AND NOT THE ASSESSEE FIRM WHICH HAS BEEN WRONGLY ENTERED IN THE DAY BOOK BY THE ACCOUNTANT. ASSESSEE HAS TRIED TO SUBSTANTIATE SUCH CLAIM BY REFERRING TO THE BANK ST ATEMENT OF THE PARTNER SHRI V. SUBBA RAO. ON A PERUSAL OF THE BANK STATEME NT OF SHRI V. SUBBA RAO IN THE INDIAN BANK, COPY OF WHICH IS PLACED AT PAGE 5 OF THE PAPER BOOK, SIMILAR ENTRIES AS APPEARING IN THE DAY BOOK ON 27. 6.2007 IS ALSO FOUND TO BE APPEARING IN THE BANK ACCOUNT. THOUGH THE LEARNE D AUTHORISED REPRESENTATIVE CLAIMED THAT THE AFORESAID BANK STAT EMENT WAS SUBMITTED BEFORE THE LEARNED CIT (A). IN COURSE OF HEARING, H OWEVER, ON A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED CIT(A), WE ARE NO T SURE WHETHER THE BANK STATEMENT WAS AT ALL BROUGHT TO THE NOTICE OF THE CIT (A) AS HE HAS NOT MADE ANY OBSERVATION WITH REGARD TO THE SAME. ON TH E CONTRARY, THE LEARNED CIT (A) HAS OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM. IN THE AFORESAI D FACTS AND CIRCUMSTANCES TO ENABLE THE ASSESSEE TO PROVE ITS CLAIM, WE ARE I NCLINED TO GIVE ONE MORE ITA NO.346 OF 2012 ROYAL QUEEN BAR & RESTSAURANT BA PATALA PAGE 5 OF 5 OPPORTUNITY TO THE ASSESSEE TO PROVE THE FACT THAT THE ENTRIES IN THE DAY BOOK AS APPEARING ON 27.6.2007 ACTUALLY RELATE TO T HE PARTNER AND NOT TO THE FIRM BY PRODUCING NECESSARY EVIDENCE. ACCORDIN GLY WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECID ING THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN CASE ASSESSEES CLAIM IS NOT ACCEPTED, THE ASSESSING OFFICER MAY CONSIDER THE ALTERNATIVE CLAIM RAISED BY THE ASSESSEE WITH REGARD TO TELESCOPING O F SUCH INCOME. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 03 RD MARCH, 2015. SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 3 RD MARCH, 2015 PVV/SPS CAMP: VISAKHAPATNAM, COPY TO 1 ROYAL QUEEN BAR & RESTAURANT, D.NO.10-1-39 RATHAM BAZAR, BAPATALA 2 INCOME TAX OFFICER, BAPATALA 3 THE CIT (A) GUNTUR 4 THE CIT GUNTUR 5 DEPARTMENTAL REPRESENTATIVE, ITAT VISAKHAPATNAM 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM