Asstt.Commissioner of Income Tax Central Circle, Akola V. Shri Atmaram P Bharani, Amaravati

ITA 383/NAG/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93403 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Unexplained investment; Unexplained expenditure; Source of fund

Judgement Text

1 ITA NO. 383/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. N O.383/NAG/2012 ASSESSMENT YEAR : 2006-07. ASSTT. COMMISSIONER OF INCOME-TAX, SHRI ATMARAM P. BHARANI, CENTRAL CIRCLE, AMRAVATI. V/S. RALLIES PLOT, AMRAVATI. PAN AAUPB0383K APPELLANT RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : SH RI K.P. DEWANI. DATE OF HEARING : 13-05-2015 DATE OF PRONOUNCEMENT : 22 ND MAY, 2015 O R D E R PER SHRI SHAMIM YAHYA, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LEARNED CIT(APPEALS)-I, NAGPUR DATED 09-08-2012 AND PERTAIN S TO ASSESSMENT YEAR 2006- 07. 2. THE ISSUE RAISED IS THAT THE LEARNED CIT(APPEALS ) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE /INVESTMENT AT ` .25,88,136/-. 2 ITA NO. 383/NAG/2013 3. THE BRIEF FACTS ARE THAT IN THIS REGARD THE ADDI TION OF ` .25,88,136/- IS MADE BY THE ASSESSING OFFICER ON UNEXPLAINED INVESTMENT AS WORKED OUT BY THE ASSESSING OFFICER AND DISCUSSED IN PARA 6 OF THE AS SESSMENT ORDER. THIS COMPRISES INVESTMENT ON CONSTRUCTION OF RESIDENTIAL HOUSE AND PERSONAL EXPENSES TOGETHER AT ` .9,80,593/- AND THE AMOUNT OF ` .45,91,932/- ON PRAKASH HEIGHTS TOTALING ` .55,72,525/- ( ` .45,91,932/- + ` .9,80,593/-.). AS AGAINST THIS,, ACCORDING TO THE AO , THE AVAILABLE FUND FOUND WITH THE ASSESSEE IS AT ` .29,84,389/- AND AS SUCH THE DIFFERENCE OF ` .25,48,136/- ( ` . 55,72,525/- MINUS ` . 29,84,389) IS TREATED AS UNEXPLAINED INVESTMENT AND ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. 4. UPON ASSESSEES APPEAL IN THIS REGARD, LEARNED C IT(APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. HE NOTED THE FOLLOWING DETAILS/CHART SUBMITTED BY THE ASSESSEE : ASSETS AS ON 31.03.2005 INVESTMENT IN F.Y. 05-06 AS PER A/C INVESTMENT IN FY 05-06 AS PER A.O. RESIDENTIAL HOUSE AND PERSONAL EXPENSES 35,09,298/- 11,19,3911, 22,020 9,80,593/- PRAKASH HEIGHTS 24,57,000/- 40,21,162/- 45,91,932/- TOTAL 52,62,573 55,72,525 THEREAFTER THE LEARNED CIT(APPEALS) DELETED THE ADD ITION HOLDING AS UNDER : FROM THE ABOVE CHART, IT IS SEEN THAT THE INVEST MENT IN RESIDENTIAL HOUSE & PERSONAL WITHDRAWALS AS PER THE FINANCIAL STATEMENT IS ` .12,41,411 (I.E. ` .11,19,391/- + ` .1,22,020/-) WHEREAS THE AO HAS TAKEN ` .9,80,593/-. 3 ITA NO. 383/NAG/2013 IN RESPECT OF PRAKASH HEIGHTS, AS PER THE ASSESSEE , IT IS ` .40,21,162/- AND AS PER THE AO , IT IS ` .45,91,832/-. IN PRAKASH HEIGHTS, THE INVESTMENT SH OWN BY THE ASSESSEE IS AT ` .40,21,162/- BECAUSE THE AMOUNT OF ` .5,70,000/- DATED 24.06.05 AND 02.09.05 ARE CONSIDERED IN PEAK CHART. IT IS ALSO FACT THAT THE ASSESSEE WAS DIRECTED BY THE AO TO PREPA RE AND SUBMIT THE FINANCIAL STATEMENTS BUT THE AO HAS NOT CONSIDERED THESE STATEMENTS. IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPO RT, NOTHING HAS BEEN POINTED OUT TO SHOW ANY MISTAKE OR DEFICIENCY IN T HE FINANCIAL STATEMENT PREPARED BY THE ASSESSEE. THE ASSESSEE FILED THE C OPIES OF SUCH FINANCIAL STATEMENTS FROM THE FINANCIAL YEARS 1999-00 TO FY 2006-07 ON RECORD. IT IS ALSO FACT THAT THERE IS ONLY ONE BUSINESS ESTABLIS HMENT IN THE NAME OF PRAKASH SAREES WHEREIN THE APPELLANT ALONG WITH HI S OTHER FAMILY MEMBERS ARE ENGAGED. THE PRAKASH HEIGHTS IS ALSO A COMMON BUILDING OF THE APPELLANT AND THE OTHER FAMILY MEMBERS. THE AO TO TALLY IGNORED THE FACT THAT THE INVESTMENT IN PRAKASH HEIGHTS IS ALSO PAR TIALLY MADE FROM THE AVAILABLE CASH OF M/S PRAKASH SAREES . ON THE BASI S OF THE CHART OF CASH BALANCE AVAILABLE WITH PRAKASH SAREES ON RECORD, W HICH SHOWS THAT THERE IS ADEQUATE CASH BALANCE WITH M/S PRAKASH SAREES. IT IS ALSO SEEN THAT EVEN AT THE TIME OF SEARCH, THE CASH BALANCE AS PER BOOKS WAS ` .37,15,261/- AND ACTUAL CASH FOUND WAS ` .2,52,950/- AND THIS FACT HAS BEEN MENTIONED BY THE AO IN PARA 6 OF THE ASSESSMENT ORDER. THE AMOUNT MAY BE DASTI AND GIVEN IN DASTI IS NOT MORE THAN ` .2,00,000/- AND THAT AMOUNT MAY BE DASTI AS STATED BY THE ASSESSEE. THUS THE BALANCE CASH AVAI LABLE FOR UTILIZATION IN THE CONSTRUCTION AND ACCORDINGLY THE ASSESSEE HAS SHOW N THE AMOUNT OF ` .19,00,000/- OUT OF CASH OF PRAKASH SAREES UTILIZED FOR CONSTRUCTION OF PRAKASH HEIGHTS. THIS FACT IS ALSO SUPPORTED BY TH E STATEMENT RECORDED AT THE TIME OF SEARCH . IT IS ALSO NECESSARY TO APPRECIATE THAT SHRI PRAK ASH BHARANI DURING HIS STATEMENT RECORDED AT THE TIME OF SEARCH ON 19.07. 06 IN RESPONSE TO QUESTION NO.6 HAS STATED AS FOLLOWS:- THE CASH BALANCE OF PRAKASH SAREES AND PRAKASH H EIGHTS AS REPORTED BY IS ABOUT 36 LACS. HOWEVER DURING THE COURSE OF SEARCH ` .2,95,000/- WAS FOUND FROM YOUR RESIDENCE AND SHOP. PLEASE E XPLAIN WHERE THE BALANCE CASH HAS GONE INTO. 4 ITA NO. 383/NAG/2013 PART OF THE CASH HAS BEEN SPENT TOWARDS THE CONST . AND SOME PART IN THE CONST. OF HOUSE OF SHRI ATAM BHARANI AND THE BALANCE EXPENDITURE IS YET TO BE ACCOUNTED FOR. THUS THE CATEGORICAL STATEMENT MADE AT THE TIME O F SEARCH CLEARLY SUPPORTS THE STAND TAKEN BY THE APPELLANT. IN VIEW OF THE ABOVE, I DO NOT FIND ANY MERIT IN THE CONTENTION OF THE AO THAT TH E CASH OF ` .34,62,311/- OF THE REGULAR BOOKS OF M/S PRAKASH SAREES WAS NOT AV AILABLE WITH THE ASSESSEE FOR MAKING INVESTMENT IN PRAKASH HEIGHTS. IF THE UTIULIZATION OF THE AVAILABLE CASH BALANCE IS CONSIDERED, THEN THERE R EMAINS NO UNEXPLAINED INVESTMENT IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES , I FIND NO MERIT IN THE ADDITION MADE BY THE AO SINCE THE ASSESSEE HAS SATISFACTORILY EXPLAINED THE SOURCE OF INVESTMENT/EXPENDITURE. THE ADDITION OF ` .25,88,136/- IS HEREBY DELETED. 5. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BE FORE US. 6. LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESS ING OFFICER. 7. PER CONTRA, LEARNED COUNSEL OF THE ASSESSEE SUBM ITTED THAT THE ASSESSEE HAD CLEARLY DEMONSTRATED THAT THERE WAS SUFFICIENT RESOURCES AVAILABLE FOR THE SAID INVESTMENT. HE SUBMITTED THAT THE REVISED FINANCIAL STATEMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER WHICH WAS COMPLIED FRO M FAMILY BOOK AND NO DEFECT OR MISTAKE WAS FOUND BY THE ASSESSING OFFICER. THAT SHRI PRAKASH IN THE COURSE OF SEARCH HAD STATED THAT PART OF DEFICIT CASH OF ` .32,62,311/- OF M/S PRAKASH SAREES WAS UTILIZED FOR CONSTRUCTION OF HOUSE. IN THESE CI RCUMSTANCES, LEARNED COUNSEL SUBMITTED THAT THE CIT(APPEALS) HAS CORRECTLY GRANT ED RELIEF FOR AVAILABILITY OF FUNDS IN THE REGULAR BOOKS OF ACCOUNT AND FAMILY BO OK. LEARNED COUNSEL PUT ANOTHER LIMB OF ARGUMENT THAT ALL THE CREDIT ENTRIE S IN THE FAMILY DIARY HAS BEEN 5 ITA NO. 383/NAG/2013 CONSIDERED FOR THE COMPUTATION OF INCOME IN THE HAN DS OF VARIOUS MEMBERS OF THE GROUP, EXPENDITURE RECORD IN THE SAME DIARY CAN NOT AGAIN BE PICKED UP FOR ADDITION. 8. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ASS ESSEE HAD SUBMITTED FINANCIAL STATEMENT COMPILED FROM THE FAMILY BOOK. NO DEFECT IN THE SAME WAS FOUND BY THE ASSESSING OFFICER. THIS STATEMENT DULY SHOWED THE SOURCE OF FUNDS ADEQUATELY FOR THE EXPENDITURE IN THE FORM OF INVES TMENTS. FURTHER MORE, IT IS ALSO NOTED THAT CASH BALANCE AT THE TIME OF SEARCH AS PE R BOOKS WAS ` .37,15,261/- AND THE ACTUAL CASH FOUND WAS ` .2,52,950/-. THIS CASH WAS ALSO AVAILABLE FOR INVESTMENT AND THE SAME HAS BEEN CORRECTLY APPRECIA TED BY THE LEARNED CIT(APPEALS). HENCE WHEN THE FINANCIAL STATEMENT SU BMITTED BY THE ASSESSEE ON THE BASIS OF THE SEIZED DIARY AND REGULAR BOOKS SHO WED SUFFICIENT RESOURCES, THERE IS NO REASON WHY THIS ADDITION BY THE ASSESSING OFF ICER NEEDS TO BE SUSTAINED. SINCE THE ASSESSEE HAD AVAILABLE RESOURCES FOR INVE STMENT, THIS ADDITION HAS RIGHTLY BEEN DELETED BY THE LEARNED CIT(APPEALS). S INCE WE ALREADY UPHELD THE ORDER OF LEARNED CIT(APPEALS), WE FIND THAT THE ANO THER LIMB OF ARGUMENT OF LEARNED COUNSEL OF THE ASSESSEE THAT WHEN ALL THE C REDIT ENTRIES IN THE DIARY SEIZED HAS BEEN CONSIDERED FOR COMPUTATION OF INCOME IN TH E HANDS OF VARIOUS MEMBERS OF THE GROUP, THE ADDITION AGAIN ON THE BASIS OF TH E DEBITS/EXPENDITURE RECORDED IN THE SAME DIARY IS NOT JUSTIFIED. WE FIND THAT SIN CE WE HAVE ALREADY UPHELD THE ORDER OF LEARNED CIT(APPEALS) THAT THERE WERE ADEQU ATE RESOURCES FOR THE INVESTMENT, ADJUDICATING UPON THIS LIMB OF ARGUMENT IS ONLY OF ACADEMIC INTEREST. HENCE WE ARE NOT ENGAGING INTO THE SAME. 6 ITA NO. 383/NAG/2013 9. IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2015. SD/- S D/- (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMBER. ACCOUNTANT MEMBER NAGPUR, DATED: 22 ND MAY, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER ASSISTANT REGISTRAR, I TAT, NAGPUR WAKODE