DCIT, Circle-5(1), Bhubaneswar V. Sri Satyakam Mohanty, Bhubaneswar

ITA 376/CTK/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5330 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-05-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 27-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: MIHIR KUMAR SAHU
• Keywords: Salary income
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO . 376 /CTK/201 7 ( / ASSESSMENT YEAR : 20 1 3 - 20 1 4 ) DCIT, CIRCLE - 5(1), BHUBANESWAR VS. SHRI SATYAKAM MOHANTY, FLAT NO.N.4/213, IRC VILLAGE, NAYAPALLI, BHUBANESWAR - 751015 ./ ./ PAN/GIR NO. : A ERPM 5723 P ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI D.K.PRADHAN , DR /AS SESSEE BY : SHRI MIHIR KUMAR SAHU, AR / DATE OF HEARING : 1 4 / 0 5 /201 8 / DATE OF PRONOUNCEMENT 16 / 05 /201 8 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : TH E REVENUE HAS FILED THIS APPEAL AGAINST T HE ORDER OF CIT(A) - 2 , BHUBANESWAR, DATED 21.06.2017 , PASSED IN I.T.APPEAL NO. 0026 / 2016 - 1 7 , U/S.143(3)/250 OF THE I.T.ACT FOR THE ASSESSMENT YEAR 201 3 - 201 4 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.56,79,495/ - MADE BY THE AO TOWARDS DISALLOWANCE OF BOGUS LIABILITY, MISCONSTRUING FACTS OF THE CASE WHEN THE OUTSTANDING LIABILITY IS NOTHING BUT AN OVERDRAFT L IMIT JUST LIKE A PRE - SANCTIONED LOAN WHICH CAN AVAILED AT THE TIME OF NEED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN HOLDING THAT OVERDRAFT LIMIT CAN ALSO BE OUTSTANDING LIABILIT IES WHEN NO INTEREST HAS BEEN CHARGED BY THE HSBC BANK ON THE IMPUGNED OVERDRAFT LIMIT PARTICULARLY WHEN THE OUTSTANDING LIABILITIES HAS BEEN CLEARED BY THE ASSESSEE DURING THE PREVIOUS YEAR LEAVING A CREDIT BALANCE OF RS.71,592/ - . ITA NO. 376 /201 7 2 3. ON THE FACTS AND I N THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.71,592/ - MADE BY THE AO TOWARDS UNDISCLOSED CREDIT BALANCE AVAILABLE IN THE SMART HOME LOAN ACCOUNT, BASING ON THE ABOVE CONCLUSION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS.40,459/ - MADE BY THE AO DISALLOWING THE CLUB MEMBERSHIP FEES SINCE IT HAS NO NEXUS WITH THE BUSINESS. 5. TH E APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM SALARY AS WELL AS INCOME FROM CONSULTANCY FEES FROM MULTI - NATIONAL COMPANIES AND FILED THE RETURN OF INCOME ELECTRONICALLY ON 30.09.2013 FOR THE ASSESSMENT YEAR 201 3 - 1 4 WITH TOTAL INCOME AT RS. 38,36,050/ - AND THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CA SS AND NOTICE U/S.143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE. IN COMPLIANCE THE LD. AR OF THE ASSESSEE APPEARED AND SUBMITTED THE RELEVANT DETAILS. THE AO CONSIDERED THE SUBMISSIONS AND THE FINANCIAL STATEMENTS OF THE ASSESSEE AND FOUND THAT THE ASSESSEE HAS DISCLOSED THE OUTSTANDING LIABILITY OF RS.56,79,495/ - TOWARDS HSBC HOUSING LOAN IN ITS BALANCE SHEET. THE AO MADE ENQUIRY FROM THE BANK ON THE LIABILITY OF ASSESSEE AND ACCORDING TO THE AO THE OVERDRAFT LIABILITY CA NNOT BE THE ACTUAL LIABILITY AND THE ASSESSEE HAS DISCLOSED A BOGUS LIABILITY AND DEALT ON THIS DISPUTED ISSUE AT PAGES 3 TO 9 OF THE ORDER AND MADE ADDITION OF RS.56,79,495/ - . SIMILARLY THE AO HAS MADE ADDITION ON ACCOUNT OF UNDISCLOSED CREDIT BALANCE IN THE SMART HOME LOAN ACCOUNT OF RS.71,592/ - ITA NO. 376 /201 7 3 FURTHER, T HE AO MADE DISALLOWANCE OF CLUB MEMBERSHIP FEE OF RS.40,459/ - AND ASSESSE D THE INCOME OF RS.96,17,600/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DATED 28.03.2016. 4. ON APPEAL BEFORE THE CIT(A), LD. AR ARG UED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. ON THE FIRST DISPUTED ISSUE THE CIT(A) FOUND THAT THE ADDITION MADE BY THE AO IS SUPPORTED WITH PROPER EVIDENCE AND THE ASSESSEE HAS FILED BA NK STATEMENT OF HSBC BANK AS WELL AS BANKS CONFI RMATION, WHEREAS THE CIT(A) IS OF THE OPINION THAT THE SAID AMOUNT IS HOUSING LOAN LIABILITY OF THE ASSESSEE AND THAT CANNOT BE DOUBTED AND DELETED THE ADDITION . SIMILARLY, THE CIT(A) ALSO DELETED THE ADDITION IN RESPECT OF UNDISCLOSED CREDIT BALANCE IN T HE SMART HOME LOAN ACCOUNT OF R S.71,592/ - AND ALSO THE ADDITION MADE ON ACCOUNT OF CLUB MEMBERSHIP OF RS.40,459/ - AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL. 6 . LD. DR RELIED ON THE ORDER OF AO AND SUBMITTED THAT THE AO HAS MADE THE DISALLOWANCE AFTER MAKING PROPER ENQUIR IES FROM THE BANK AND TH ESE FACT HAS NOT BEEN CONSIDERED BY THE CIT(A). 7 CONTRA, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED ALL THE RELEVANT DETAILS AS AND WHEN REQUIRED BY THE AO AND CONSIDERING THE SAME, THE LD. CIT(A) HAS DELETED THE ADDITIONS AND SUPPORTED THE ORDER OF CIT(A). 8 . WE HAVE HEARD RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. WE FIND THAT ON THE FIRST DIS PUTED ISSUE THE OBSERVATION OF THE AO ITA NO. 376 /201 7 4 THAT OVERDRAFT LIMIT CANNOT BE ACTUAL LIABILITY AND THE SAME IS BOGUS LIABILITY, HOWEVER, LD. CIT(A) CONSIDER ED THE BANK STATEMENT WITH THE HSBC BANK AS WELL AS BANKS CONFIRMATION WHICH WERE FILED BEFORE THE AO . THE LD . CIT(A) HAS ALSO CONSIDERED THE SUBMISSION AND EVIDENCE AND DELETED THE ADDITION. SIMILARLY, IN RESPECT OF UNDISCLOSED CREDIT BALANCE IN THE SMART HOME LOAN ACCOUNT, THE CIT(A) WAS IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT DOES NOT REFLECT INCOME OF THE ASSESSEE AND IT IS ONLY A CREDIT BALANCE IN THE BANK AND THE CLUB EXPENSES AND DELETED THE ADDITION . THE OBSERVATIONS OF THE CIT(A) AT PAGE 3 OF THE ORDER ARE AS UNDER : - 3. GROUND NO.1&2: 3,1 IN THESE GROUNDS THE APPELLANT HAS CHAL LENGED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 46,79,495/ - . IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAD SHOWN OUTSTANDING LIABILITY OF RS. 56,79,495/ - TOWARDS HSBC HOUSING LOAN. THE ASSESSING OFFICER MADE ENQUIRY WITH THE BANK. IN ITIALLY, THE BANK - REPORTED ALTOGETHER A DIFFERENT LIABILITY AGAINST THE APPELLANT. ON FURTHER ENQUIRY, THE BANK CLARIFIED THAT IT HAD GIVEN DETAILS OF LIABILITY OF SOME OTHER PERSON AND NOT OF THE APPELLANT AND THE BANK FURNISHED THE CORRECT STATEMENT TO T HE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER NOTICED THAT THE BANK IS SHOWING THE AMOUNT OF RS. 56,79,495/ - AS OVERDRAFT LIMIT. IT IS THE ARGUMENT OF THE AO THAT OVERDRAFT LIMIT CANNOT BE ACTUAL LIABILITY AND THEREFORE IT IS A BOGUS LIABILITY. DURI NG THE COURSE OF APPEAL PROCEEDINGS THE APPELLANT HAS FILED BANK STATEMENT WITH THE HSBC BANK AS WELL AS BANKS CONFIRMATION, WHICH WERE FILED BEFORE THE ASSESSING OFFICER. IT IS CLEARLY SEEN THAT THE AMOUNT OF RS. 56,79,495/ - IS HOUSING LOAN LIABILITY OF T HE APPELLANT WHICH HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. CONSIDERING THESE ASPECTS, EXPLANATION OF THE APPELLANT IS ACCEPTED AND THE ADDITION OF RS. 56,70,495/ - IS ORDERED TO BE DELETED. THE GROUNDS OF APPEAL ARE ALLOWED. 4. GROUND NO.3: IN TH IS GROUND THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.71,592/ - BEING THE CREDIT BALANCE. THE APPELLANT HAS STATED THAT THIS AMOUNT DOES NOT REFLECT INCOME OF THE APPELLANT AND IT IS ONLY A CREDIT BALANCE IN THE BANK. I AGRE E WITH CONTENTION OF THE APPELLANT AND THE ADDITION OF RS. 71,592/ - IS ORDERED TO BE DELETED. ITA NO. 376 /201 7 5 5. GROUND NO.4: IN THIS GROUND THE APPELLANT HAS CHALLENGED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 40,459/ - ON ACCOUNT OF CLUB FEES - PAID BY THE APPE LLANT. DURING THE APPEAL PROCEEDINGS THE APPELLANT HAS STATED THAT THE EXPENDITURE IS REQUIRED FOR ARRANGING BUSINESS DEALS. I FIND THAT THE APPELLANT HAS NOT ESTABLISHED ANY CONNECTION BETWEEN INCURRING THE EXPENDITURE AND THE BUSINESS DEALS. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 40,459/ - IS ORDERED TO BE DELETED. 9 . LD. DR COULD NOT BRING OUT ANY NEW FACTS /MATERIALS TO CONTROVERT THE FINDINGS OF THE CIT(A) AND WE CONSIDERING THE OVERALL ASPECTS AND CIRCUMSTANCES OF THE CASE , DO NOT SEE ANY GOOD REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND ACCORDINGLY, WE UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF REVENUE. 1 0 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . O RDER PRONOU NCED IN THE OPEN COURT ON 16 / 05 / 20 1 8 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 16 / 05 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - DCIT, CIRCLE - 5(1), BHUBANESWAR 2. / THE RESPONDENT - SHRI SATYAKAM MOHANTY, FLAT NO.N.4/213, IRC VILLAGE, NAYAPALLI, BHUBANESWAR - 751015 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//