Shri. Budden Sab, Shimoga V. ITO, Shimoga

ITA 353/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0698 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-10-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: K KIRAN KUMAR
• Keywords: Unexplained cash credit; Unexplained investment; Principle of natural justice; Peak credit; Additional evidence
• Section: 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.353/BANG/2009 ASSESSMENT YEAR : 2005-06 SRI BUDDEN SAB, S/O. KHALLANDER SAB, TADASA VILLAGE, DONABAGATTA POST. BHADRAVATHI TALUK. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 3, SHIMOGA. : RESPONDENT APPELLANT BY : SHRI K. KIRAN KUMAR RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE LD .CIT (A), HUBLI FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED TEN GROUNDS, OUT OF WHIC H, GROUND NOS.1, 2 AND 10 ARE GENERAL IN NATURE AND NOT VERY SPECIFIC AND THEREFORE, THERE ARE DISMISSED AS NON-CONSEQUENTIAL. IN THE REMAINING GROUNDS, THE CRUXES OF THE ISSUES ARE REFORMULATED IN CONCISE MANNERS WHIC H ARE LISTED OUT AS UNDER: ITA NO.353/B/09 PAGE 2 OF 7 (I) THE AO WAS NOT JUSTIFIED THE ENTIRE BANK TRANSACTIO NS DURING THE F.Y AS INCOME OF THE ASSESSEE; & (II) THE CIT(A) HAS ERRED IN TREATING THE ENTIRE DEPOSIT S AS UNEXPLAINED AND CONFIRMED THE ADDITION MADE BY THE AO. 3. ON A PERUSAL OF THE RECORDS, IT WAS SEEN THAT TH ERE WAS A CONSIDERABLE DELAY IN PREFERRING THIS APPEAL. THE ASSESSEE, IN HIS AFFIDAVIT DATED: 21/5/2009, HAS SUBMITTED THAT THERE WAS A TY POGRAPHICAL ERROR CREPT IN AT COL.9 OF FORM NO.36 THAT THE DATE OF COMMUNIC ATION OF APPELLATE ORDER WAS MENTIONED AS 17.1.2009 INSTEAD OF 17.2.2009 , THAT THE ASSESSEE RESIDING IN A REMOTE VILLAGE AND HIS TAX CONSULTANT RESIDES AT FAR OFF BHADRAVATI AND PRE-OCCUPIED WITH HIS PROFESSION, TH ERE WAS A DELAY IN FILING THE APPEAL. IT WAS FURTHER, SUBMITTED THAT THE DEL AY WAS NOT INTENTIONAL AND BEYOND HIS REACH WHICH MAY BE CONDONED. 3.1. AFTER CONSIDERING THE FACTS AND CIRCUMSTAN CES UNDER WHICH THE ASSESSEE WAS PREVENTED BY A REASONABLE CASE, THE DE LAY IN PREFERRING THIS APPEAL WAS CONDONED AND THE SAME WAS ADMITTED FOR A DJUDICATION. 4. BEFORE GOING TO THE ISSUE, WE WOULD LIKE TO POINT OUT THAT THIS APPEAL WAS, INITIALLY, DISMISSED BY THE HONBLE TRI BUNAL ON 3/7/2009 ON THE SOLE GROUND THAT THERE WAS NO REPRESENTATION ON THE DATE OF HEARING, IN SPITE OF SERVICE OF NOTICE. HOWEVER, THE HONBLE T RIBUNAL, VIDE ITS ORDER DATED: 21/8/2009, WAS PLEASED TO RECALL ITS EARLIER ORDER DATED: 3/7/2009 AND RESTORE THE APPEAL AFTER CONSIDERING THE ASSE SSEES MISC. PETITION DT:4/8/2009 ACCOMPANIED BY AN AFFIDAVIT WHEREIN IT WAS EXPLAINED THE REASON FOR NON-REPRESENTATION OF THE CASE WHEN IT W AS CALLED FOR HEARING ON ITA NO.353/B/09 PAGE 3 OF 7 3.7.2009. THUS, THE RESTORED APPEAL WAS DIRECTED T O BE TAKEN ON RECORD FOR ADJUDICATION. 5. LET US NOW PROCEED TO DEAL THE ISSUE ON HA ND. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE AN INDIVIDUAL W AS DEALING IN THE FERTILIZER BUSINESS IN THE NAME OF M/S.AFROZE TRADERS. BY ISS UANCE OF NOTICE U/S 142(1) DATED 3/10/2007, THE ASSESSEE WAS REQUIRED T O FURNISH A ROI FOR THE AY IN DISPUTE, BY 23/10/2007. DUE TO NON-COMPLIANC E OF THE SAID NOTICE, A SHOW-CASE NOTICE DT.21.11.07 WAS SLAPPED ON THE ASS ESSEE BY THE AO TO EXPLAIN THE SOURCE FOR CASH CREDITS OF RS.10.14 LAK HS IN HIS S.B. ACCOUNT MAINTAINED WITH S.B.M., BHADRAVATI. AS THERE WAS N O RESPONSE, THE AO WENT AHEAD WITH THE COMPLETION OF THE ASSESSMENT U/ S 144 OF THE ACT, IN TREATING THE ENTIRE CASH CREDITS OF RS.10.14 LAKHS AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 6. AGGRIEVED, THE ASSESSEE TOOK UP THE IS SUE BEFORE THE LD. CIT (A) FOR REDRESS. AFTER CONSIDERING THE BRIEF CONTENTION OF THE ASSESSEE, THE REASONING OF THE LD.CIT(A) WAS THAT 5. I HAVE GONE THROUGH THE SUBMISSION THAT AR HAS FILED ONE RCF STATEMENT AND ONE BANK STATEMENT BUT NAME OF THE BA NK IS NOT WRITTEN ON THE SAME, MOREOVER NONE OF THE TRANSACTI ONS ARE MATCHING WITH CREDITS IN THE BANK DATE-WISE. IT ALS O SEEN THAT APART FROM SBM, APPELLANT HAS TRANSACTION WITH SBI, SHIMO GA WHICH ARE NOT DECLARED BY HIM. THEREFORE, THE AO IS ONCE AGA IN DIRECTED TO CALL INFORMATION BOTH FROM SBM, BHADRAVATI AND SBI, SHIMOGA IN NAME OF M/S.AFROZE TRADERS AND OBTAIN FROM OTHER BA NKS ALSO TO ASSESS THE CORRECT INCOME NOT AT 2.5% BUT AT 8% SIN CE NO BOOKS OF ACCOUNTS ARE MAINTAINED BY APPELLANT. 5.1. IN RESPECT OF DEPOSITS IN SBM, BHADRAVATI ARE NOT EXPLAINED SATISFACTORILY WITH PROOFS THEREFORE, THE SAME IS T REATED AS UNEXPLAINED INVESTMENTS AND ADDITION IS CONFIRMED. ITA NO.353/B/09 PAGE 4 OF 7 7. DISILLUSIONED, THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, THE LD. A R HAD FURNI SHED THE FOLLOWING DOCUMENTS/EVIDENCE: (I) ADDITIONAL GROUNDS WITH A PLEA TO ADMIT THE SAM E TO RENDER JUSTICE: - THE BEST JUDGMENT ORDER PASSED BY THE AO WAS ARBITR ARY AS THE AO FAILED TO APPLY TO DOCTRINE OF PEAK CREDIT - THE CIT(A) ERRED IN GIVING DIRECTIONS TO THE AO AT THE TIME OF PASSING THE ORDER - THE CIT(A) WAS NOT EMPOWERED TO REMAND BACK THE CA SE TO AO (II) MEMORANDUM OF ADDITIONAL EVIDENCE: - CASH BOOK OF THE APPELLANT FOR THE YEAR 1.4.2004 TO 31.3.05 - PURCHASE STATEMENT FOR THE YEAR 2004-05 - TRADING ACCOUNT FOR THE YEAR 2004-05 - PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31.3.20 05 - BALANCE SHEET AS ON 31.3.2005 - CASH ACCOUNT SUMMARY FOR THE YEAR 2004-05 - BANK ACCOUNT SUMMARY FOR THE YEAR 2004-05 7.1. TO BUTTRESS HIS ARGUMENTS; THE LD. A R SUBMITTED IN CONCLUSION THAT (I) THE AO HAD CONCLUDED THE ASSESSMENT PROCEEDINGS IN A HURRIED MANNER WITHOUT GIVING PROPER OPPORTUNITY TO THE ASS ESSEE; (II) THE AO WAS NOT JUSTIFIED IN TREATING THE ENTIRE BAN K TRANSACTION AS INCOME OF THE ASSESSEE; (III) THE AO WOULD HAVE TAKEN THE PEAK CASH CREDITS AND C ONCLUDED THE ASSESSMENT; AND (IV) SINCE THE AO HAD NOT ESTABLISHED THE SOURCE OF INCO ME, HE WOULD HAVE ESTIMATED THE INCOME ON THE PURCHASES MADE BY ADOPTING THE PREVAILING MARGIN OF PROFIT IN FERTILIZER BUSINESS. ITA NO.353/B/09 PAGE 5 OF 7 7.2. ON THE OTHER HAND, THE LD. D R WAS OF THE FIRM VIEW THAT THE AO WAS LEFT WITH NO ALTERNATIVE EXCEPT TO CONCLUDE THE ASSESSMENT WITH THE AVAILABLE MATERIAL ON RECORD COUPLED WITH NON-COOPE RATION ATTITUDE ON THE PART OF THE ASSESSEE. IT WAS, THEREFORE, PLEADED T HAT THE ORDER OF THE AO BE SUSTAINED AS ASSESSEE HAS NO VALID GROUND TO AGITAT E. 8. WE HAVE DULY CONSIDERED THE RIVAL SUB MISSIONS AND ALSO RELEVANT RECORDS. WE ADDRESS TO THE LD. A.RS ARGUMENTS PO INT BY POINT: (I) NO PROPER OPPORTUNITY WAS AFFORDED BY THE AO : AS A MATTER OF FACT, THE ASSESSEE WAS AT FAULT FOR NON-COMPLIAN CE OF (I) NOTICE U/S 142(1) DATED: 3/10/07 TO FURNISH A ROI; (II) NO N-COMPLIANCE OF SHOW-CAUSE NOTICE DT.21/11/2007. AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE, THE AO HAD WAITED TILL 31/12/2007 AND THEN CONCLUDED THE ASSESSMENT ON THE MATERIAL AVAIL ABLE ON RECORD; (II) TREATING THE BANK TRANSACTION AS INCOME : IN THE ABSENCE OF ANY DETAILS AND ALSO NON-COOPERATION ATTITUDE ON TH E PART OF THE ASSESSEE, THE AO WAS LEFT WITH NO ALTERNATIVE EXCEP T TO GO AHEAD WITH THE INFORMATION AT HIS DISPOSAL; (III) TO ESTIMATE THE INCOME ON PURCHASES OF FERTILIZER : WITH NO DETAILS, SUCH AS, THE NATURE OF BUSINESS BEING CARR IED ON BY THE ASSESSEE, HOW COULD BE FAIR ON THE PART OF THE ASSE SSEE TO EXPECT THE AO TO ESTIMATE THE INCOME ON THE PURCHASES MADE BY ADOPTING THE PREVAILING MARGIN OF PROFIT IN FERTILIZER BUSIN ESS; (IV) HOW COULD THE AO BE EXPECTED TO TAKE PEAK CASH CRED ITS AND CONCLUDE THE ASSESSMENT IN THE ABSENCE OF ANY ASSIS TANCE FROM THE ASSESSEES SIDE SUCH AS, THE NATURE OF BUSINESS, VO LUME OF BUSINESS CONDUCTED DURING THE YEAR ETC.? (V) OF COURSE, THE LD. CIT (A) HAD OVERSTEPPED, PERHAPS , BY OVERSIGHT, IN DIRECTING THE AO TO LOOK INTO THE ISS UE AFRESH. THE POWER OF THE CIT(A) IN REMITTING BACK AN ISSUE TO THE AO FOR FRESH LOOK HAS SINCE BEEN DISPENSED WITH BY THE FINANCE A CT, 2001 W.E.F. 1.6.2001. ITA NO.353/B/09 PAGE 6 OF 7 8.1. TURNING BACK TO THE ADDITIONAL EVIDENCES PRODU CED DURING THE COURSE OF HEARING, WE ARE OF THE CONSIDERED VIEW THAT THES E VITAL EVIDENCES WERE NOT MADE AVAILABLE EITHER DURING THE COURSE OF ASSE SSMENT PROCEEDING OR BEFORE THE FIRST APPELLATE AUTHORITY. IN THE INTER EST OF NATURAL JUSTICE AND FAIR PLAY, WE ARE OF THE UNANIMOUS VIEW THAT THIS ISSUE SHOULD BE RESTORED ON THE FILE OF THE AO WITH DIRECTIONS TO LOOK INTO THE GAMUT OF THE ISSUE AFRESH IN A COMPREHENSIVE MANNER AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IN THE MEANWHILE, THE ASS ESSEE, THROUGH HIS A.R, IS DIRECTED TO FURNISH ALL RELEVANT PARTICULA RS, EVIDENCES WITH DOCUMENTARY PROOF AT HIS POSSESSION BEFORE THE AO W HICH WOULD FACILITATE HIM TO LOOK INTO THE ASSESSEES VERSION AND TO CONC LUDE THE PROCEEDINGS EXPEDITIOUSLY. IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, THE ASSESSEES APPEA L IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF NOVEMBER, 2009. SD/- SD/- (GEORGE GEORGE K.) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 13 TH NOVEMBER, 2009. DS/- ITA NO.353/B/09 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.