ACIT, Bangalore V. Sri. S. Venkatesh, Bangalore

ITA 353/BANG/2012

• Counselvise Citation: 35321114 RSA 2012
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDAR RAJAN JT
• Assessee Lawyers: C RAMESH
• Keywords: Income from undisclosed sources; Source of fund
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.353/BANG/2012 ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(1), BANGALORE. VS. SHRI S. VENKATESH, NO.66, 4 TH N BLOCK, RAJAJINAGAR, BANGALORE 560 027. PAN: ACXPV 2931L APPELLANT RESPONDENT APPELLANT BY : SHRI A. SUNDAR RAJAN, JT.CIT(DR) RESPONDENT BY : SHRI C. RAMESH, C.A. DATE OF HEARING : 29.10.2012 DATE OF PRONOUNCEMENT : 31.10.2012 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORD ER DATED 14.12.2011 OF THE CIT(APPEALS)-I, BANGALORE RELATIN G TO ASSESSMENT YEAR 2008-09. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL BY THE REVENUE IS AS TO WHETHER THE CIT(APPEALS) WAS JUSTI FIED IN DELETING AN ITA NO. 353/BANG/12 PAGE 2 OF 4 ADDITION OF Q 17,85,930 MADE BY THE AO ON THE GROUND THAT THE AS SESSEE DISCHARGED LOANS OUTSTANDING BY MAKING PAYMENT FROM UNDISCLOSED SOURCES OF INCOME AND WHICH SUM WAS ADDED AS UNEXPL AINED INCOME OF THE ASSESSEE BY THE AO. THE MATERIAL FACTS IN THI S REGARD ARE AS FOLLOWS. 3. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF TRADING IN LIQUOR, BESIDES RUNNING A LODGE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD S HOWN THE FOLLOWING OUTSTANDING LOANS:- (A) SITE ADVANCE RS.4,81,700 (B) SMT. NAGACHANDRA RS.2,00,000 (C) OTHER LOANS RS.1,04,230 (D) MR. DEVENDRAPPA RS.7,50,000 (E) MR. MUDDALINGESWARA RS.2,50,000 4. THE ASSESSING OFFICER CALLED UPON THE ASSESSEE T O EXPLAIN THE NATURE OF THE AFORESAID OUTSTANDING LIABILITIES. T HE ASSESSEE EXPLAINED THAT THESE WERE VERY OLD LIABILITIES. ACCORDING TO THE AO, THE ASSESSEE FAILED TO FURNISH CONFIRMATION OF THE LOAN FROM THE CREDITORS AND THEREFORE THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE AF ORESAID LIABILITIES FROM UNEXPLAINED SOURCE OF INCOME. THE AO THEREFORE MA DE AN ADDITION OF Q 17,85,930. 5. BEFORE THE CIT(APPEALS), THE ASSESSEE POINTED OU T THAT THE AFORESAID LIABILITIES WERE STILL OUTSTANDING AND TH AT THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE AO TO SHOW THAT THE ASSESS EE DISCHARGED THE AFORESAID LIABILITIES BY MAKING PAYMENT. THE ASSES SEE FURTHER POINTED OUT THAT THE LIABILITIES APPEARING IN THE BOOKS PERTAIN ED TO THE YEARS WHICH WERE EARLIER TO THE PREVIOUS YEAR AND THAT THE PROVISION S OF SECTION 68 WILL APPLY ITA NO. 353/BANG/12 PAGE 3 OF 4 ONLY TO CREDITS AVAILED DURING THE PREVIOUS YEAR. THE ASSESSEE FURTHER SUBMITTED THAT IN THE ABSENCE OF ANY EVIDENCE THAT THERE WAS A WAIVER OF THESE LIABILITIES OR THAT THE ASSESSEE ACTUALLY DIS CHARGED THESE LIABILITIES, THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. 6. THE LD. CIT(APPEALS) ACCEPTED THE PLEA OF THE AS SESSEE AND HE HELD AS FOLLOWS:- 15. I HAVE CONSIDERED THE ABOVE. I SEE REASON, MER IT AND STRENGTH IN THE ARGUMENTS OF THE A.R. THE A.O. HAS NOT BROUGHT ON RECORD ANY FACT AS TO THE DISCHARGING OF LIABILI TY BY THE APPELLANT. AT LEAST, LETTERS COULD HAVE BEEN SERVED ON THE PERSONS AGAINST WHOM THE LIABILITY WAS STANDING TO VERIFY T HE VERACITY OF THE LIABILITY, ITS NATURE AND THE OUTSTANDING IF AN Y. IT IS THE A.O. WHO IS ASSERTING THAT THE LIABILITY HAS BEEN DISCHA RGED. HENCE THE ONUS IS ON THE A.O. TO PROVE SUCH ASSERTION. IN TH E ABSENCE OF ANY MATERIAL TO JUSTIFY THE ASSERTION, I HAVE NO OTHER GO BUT TO DELETE THE ADDITION AND ALLOW THE GROUNDS OF APPEAL. 7. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. THE LD. DR SUBMITTED THAT THE ASSESSEE DID NOT ESTA BLISH THAT THE LIABILITIES WERE REALLY OUTSTANDING AND THEREFORE THE ACTION OF THE AO IN MAKING THE ADDITION WAS JUSTIFIED. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND ARE OF THE VIEW THAT THE SAME CANNOT BE ACCEPTED. ADMITTEDLY, THE LIABILITIES IN QUESTION WERE OLD OUTSTANDING AND DID NOT PERTAIN T O THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09. THE PROVISIONS OF SECTIO N 68 WERE THEREFORE NOT ATTRACTED. IN ANY EVENT, THESE LIABILITIES HAVE BE EN ACCEPTED IN THE YEAR IN WHICH THEY WERE SHOWN AS LIABILITIES IN THE BOOKS O F ACCOUNTS. FURTHER, ITA NO. 353/BANG/12 PAGE 4 OF 4 THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THESE L IABILITIES WERE DISCHARGED BY PAYMENT. THE ASSESSEE CONTINUES TO R ECOGNIZE THE OUTSTANDING LIABILITY OF THESE PARTIES IN THE BOOKS OF ACCOUNT. IN SUCH CIRCUMSTANCES, THERE IS NEITHER WAIVER OF LOAN BY T HE CREDITORS NOR DISCHARGE OF THE LOAN BY PAYMENT. IN THE CIRCUMSTA NCES, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE IMPUGNED AD DITION ON THE BASIS OF HIS SURMISE THAT THE ASSESSEE DISCHARGED THESE LIABILIT IES BY MAKING PAYMENT FROM UNDISCLOSED SOURCE OF INCOME. IN OUR VIEW, TH E LD. CIT(APPEALS) WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT THE ADDI TION MADE BY THE AO CANNOT BE SUSTAINED. WE THEREFORE CONFIRM THE ORDE R OF THE LD. CIT(APPEALS) AND DISMISS THE APPEAL BY THE REVENUE. 10. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF OCTOBER, 2012. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 31 ST OCTOBER , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.