DCIT, CIR-5(2), KOLKATA, Kolkata V. Shri Raja Ram Yadav, Kolkata

ITA 392/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0589 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU CITSRDR
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Unexplained investment; Business income

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 392 / KOL / 2016 ASSESSMENT YEAR :2011-12 DCIT CIRCLE-5(2), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 8 TH FLOOR, KOLKATA 69 V/S . SHRI RAJA RAMYADAV 285, R.B.C. ROAD, KOLKATA-28 [ PAN NO.AALPY 7848 K ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DAVID Z CHAWNGTHU, ADDL. CIT-SR-DR /BY RESPONDENT SHRI MIRAJ D SHAH, AR /DATE OF HEARING 09-11-2017 /DATE OF PRONOUNCEMENT 15-12-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 04.12.2015 PERTAINING TO ASSESSMENT YEAR 2011-12. REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF UNEXPLAINED INVESTMENT OF RS.1,15,91,080/- THOUGH THE SAME IS N OT REFLECTED UNDER THE HEAD INVESTMENT OF THE ASSESSEE IN HIS BALANCE SHEET AND THE ASSESSEE FAILED TO OFFER ANY PLAUSIBLE EXPLANATION REGARDING THE SAID INVESTMENT. THE ONUS TO SUBSTANTIATE ITS CLAIM LIES WITH ASSESSEE, WHICH THE ASSESSEE FAILED TO JUSTIFY. 2. THAT THE LD. CIT(A) HAS ERRED IN TREATING THE IN VESTMENT UNDER THE HEAD OTHER CURRENT ASSET THOUGH THE MEANING OF OTHER CURRENT ASSET DOES NOT INCLUDE INVESTMENT. ITA NO.392/KOL/2016 A.Y. 2011-12 DCIT CIR-5(2), KOL. VS. SH R.RAM YADAV PAGE 2 3. THAT THEE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF UNEXPLAINED INCOME OF RS.5,83,565/- THOUGH AS PENALTY THE NATUR E OF INCOME, IT COMES UNDER THE PURVIEW OF INCOME FROM OTHER SOURC ES, IN WHICH IT HAS NOT BEEN SHOWN. THE INTEREST FROM BANK UNDER NO CIRCUMSTANCES IS BUSINESS INCOME OF THE ASSESSEE SINCE THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF MONEY LENDING OR NON BANKING FINANC IAL ACTIVITIES. 4. THAT YOUR PETITIONER DOTH HEREBY CRAVES LEAVE OF FURNISHING ADDITIONAL GROUNDS AND / DELETION OR MODIFICATIONS OF ANY OF T HE GROUNDS SET FORTH ABOVE, ON OR BEFORE THE FINAL DATE OF HEARING OF TH IS APPEAL PETITION. 2. FIRST ISSUE RAISED BY REVENUE IN GROUND NO. 1 & 2 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER FOR 1,15 91,080/- ON ACCOUNT OF UNDISCLOSED INVESTMENT U/S. 69B OF T HE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS AN IND IVIDUAL AND ENGAGED IN BUSINESS OF INDIAN MADE FOREIGN LIQUOR, TRADING OF MARBLE AND CONSTRUCTION BUSINESS. THE ASSESSEE WAS RUNNING HIS BUSINESS UND ER THREE PROPRIETORSHIP CONCERNS NAMELY, M/S UNITED TRADING CO, M/S UNITED MARBLE AND M/S UNITED CONSTRUCTION. THE ASSESSEE IN HIS BALANCE SHEET HAS SHOWN FOLLOWING INVESTMENTS:- M/S UNITED TRADING CO FIXED DEPOSIT WITH HDFC RS. 1,12,58,913/- FIXED DEPOSIT WITH BANK OF BARODA RS. 2,00,000 /- ACCRUED INTEREST ON FD RS. 6,601/- RS.1,1 4,65,514/- M/S UNITED CONSTRUCTION DEPOSITS WITH NSC RS. 1,15,566/- DEPOSITS WITH SAHARA INDIA RS. 10,000/- RELIANCE RS. 98,000/- RS. 2,23,566/- TOTAL INVESTMENT RS.1,16,89,080/- HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDING S, AO OBSERVED THAT THE AMOUNT OF INVESTMENT SHOWN BY ASSESSEE IN HIS INCOM E TAX RETURN IS OF 98,000.00 ONLY. THUS, THE DIFFERENCE OF 1,15,91,080/- (11689080 98,000) WAS OBSERVED WHICH ASSESSEE FAILED TO EXPLAIN ON TH E BASIS OF ANY ITA NO.392/KOL/2016 A.Y. 2011-12 DCIT CIR-5(2), KOL. VS. SH R.RAM YADAV PAGE 3 DOCUMENTARY EVIDENCE. THEREFORE, AO TREATED THE SAM E AS UNDISCLOSED INVESTMENT U/S. 69B OF THE ACT AND ADDED TO THE TOT AL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE AMOUN T OF INVESTMENT WAS SHOWN IN COLUMN NO. IV OF THE I.T RETURN I.E. OTHER CURRENT ASSET FOR 1,42,11,080/- THEREFORE THERE IS NO DIFFERENCE BETW EEN THE AMOUNT OF INVESTMENT SHOWN BY THE ASSESSEE IN HIS AUDITED FIN ANCIAL STATEMENT VIS--VIS IN THE INCOME TAX RETURN. LD. CIT(A) AFTER CONSIDER ING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITION MADE BY AO OB OBSERVI NG A UNDER:- 2.2 I HAVE DULY CONSIDERED THE SUBMISSION OF THE A SSESSEE AND VERIFIED THE RETURN IN ITR-4 AND THE AUDITED BALANC E SHEETS AND THE CONTENTION OF THE ASSESSEE IS FOUND CORRECT IN ITR- 4, THE ASSESSEE HAS SHOWN INVESTMENT OF RS.98,000/- IN COLUMN 2C(PART A-BS), PERTAINS TO INVESTMENT IN THE SHARES OF RELIANCE. THE ASSESSEE HAS ALSO SHOWN OTHER CURRENT ASSETS OF RS.1,42,11,080/- IN COLUMN 3IV (PART A-BS) OF THE ITR-4, WHICH INCLUDED (I) FIXED DEPOSITS WITH H DFC OF RS.1,12,58,913/- (II) FIXED DEPOSIT WITH BANK OF BA RODA OF RS.2,00,000/-, (III) ACCRUED INTEREST ON FDS OF RS.6,601/- [ALL TH ESE ENTRIES ARE SHOWN IN THE AUDITED BALANCE SHEET OF THE PROPRIETARY CONCER N M/S UNITED TRADING CO.], AND (IV) DEPOSITS WITH NSC OF RS.1,15,566/-, (II) DEPOSITS WITH SAHARA INDIA OF RS.10,000/-[BOTH ENTRIES ARE REFLEC TED IN THE BALANCE SHEET OF ANOTHER PROPRIETRY CONCERN M/S UNITED CONS TRUCTION]. IN FACT, THE AO HIMSELF ACCEPTED THAT ALL THESE ENTRIES WE R EFLECTED IN THE BALANCE SHEET OF TWO PROPRIETARY CONCERNS, AS CAN B E SEEN FROM HIS ORDER. THIS BEING THE ISSUE, IMPUGNED ORDER FIND TH AT THE AO HAS MADE A MOUNTAIN OUT OF A MOLEHILL WITHOUT PROPER ANALYZI NG OF THE ENTRIES IN THE RETURN. IN ANY CASE, MAKING ADDITION BY COMPARI NG ASSESSEES OWN RETURN WITH ASSESSEES OWN BALANCE SHEETED IS ABSUR D. AS STATED, THERE WAS NO UNEXPLAINED INVESTMENT AS SUCH. THE ADDITION OF RS.1,15,94,080/- IS THEREFORE, DELETED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 5. LD. DR BEFORE US SUBMITTED THAT ALL THE NECESSAR Y DETAILS ARE NOT FILED BEFORE AO SO THE MATTER MAY BE RESTORED TO THE FILE OF AO FOR FRESH ADJUDICATION. HE VEHEMENTLY RELIED ON THE ORDER OF AO. ON THE OTHER HAND, LD. AR FILED PAPER BOOK WHICH IS RUNNING PAGES FROM 1 TO 78 AND DEMONSTRATED THAT THE AMOUNT OF 98,000 WAS SHOWN UNDER THE HEAD INVESTMENT WITH THE INCOME TAX RETURN WHEREAS IN THE BALANCE AMOUNT OF ITA NO.392/KOL/2016 A.Y. 2011-12 DCIT CIR-5(2), KOL. VS. SH R.RAM YADAV PAGE 4 INVESTMENT WAS SHOWN UNDER THE HEAD CURRENT ASSET AT 1,42,11,080/-. IN SUPPORT LD. AR FURTHER PROVIDED THE BREAK-UP OF CUR RENT ASSET WHICH READS AS UNDER:- BS-3IV OTHER CURRENT ASSETS UNITED TRADING CO. 11,465,514.00 UNITED MARBLE UNITED CONSTRUCTION 2,745,566.00 14,211,080.00 LD. AR RELIED ON THE ORDER OF LD. CIT(A). IN REJOINDER THE LD. DR REQUESTED THE BENCH TO REST ORE THE MATTER TO THE FILE OF AO WITH SPECIFIC DIRECTION FOR BETTER APPRECIATION OF THE FACTS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ADDITION MADE BY AO MERELY ON THE BASIS OF DIFFERENCE OBSERVED BY HIM BETWEEN THE AMOUNT OF IN VESTMENT SHOWN BY THE ASSESSEE IN THE AUDITED FINANCIAL STATEMENT VIS-A-V IS IN THE IT RETURNS. HOWEVER, WE NOTE THAT THE ASSESSEE HAS SHOWN A SUM OF 98,000 IN THE BALANCE SHEET UNDER THE HEAD INVESTMENT AND THE REM AINING INVESTMENT WAS SHOWN UNDER THE HEAD CURRENT ASSET . THUS, IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS MADE UNEXPLAINED INVESTMENT U/S 69B OF THE ACT. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). CONSEQUENTLY WE UPHOLD THE SAME. HENCE, THIS GROUND OF REVENUE IS DISMISSED. 7. NEXT ISSUE RAISED BY REVENUE IN GROUND NO.3 IS T HAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 5,83,655/- ON ACCOUNT OF UNEXPLAINED INCOME. 8. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS OBSERVED THAT ASSESSEE HAS SHOWN INTEREST INCOME OF 47,524/- AS INCOME FROM OTHER SOURCE WHEREAS AS PER FORM 26AS INTEREST INCOME EAR NED BY THE ASSESSEE IS OF 8,251/- AND 6,22,798/- ON THE FIXED DEPOSIT (FD) MADE WITH THE BANK OF BARODA AND HDFC. THUS A DIFFERENCE OF 5,83,565/- WAS OBSERVED BY AO WHICH WAS TREATED AS UNDISCLOSED INCOME U/S. 69A OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.392/KOL/2016 A.Y. 2011-12 DCIT CIR-5(2), KOL. VS. SH R.RAM YADAV PAGE 5 9. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE AMOUN T OF INTEREST INCOME FOR 6,31,050/- (FD 622797 + BANK OF BARODA INTEREST OF 82,502/-) WAS DECLARED IN THE PROFIT AND LOSS ACCOUNT. THEREFORE NO ADDITI ON ON ACCOUNT OF UNDISCLOSED INCOME ON INTEREST IS WARRANTED. LD. CIT(A) AFTER C ONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE SAME MADE BY AO BY OBSERVIN G AS UNDER:- 3.2 HAVING VERIFYING THE RETURN AND THE AUDITED BA LANCE SHEET, ASSESSEES CONTENTION I FOUND TO BE CORRECT. IN FAC T, ASSESSEE CREDITED BOTH RS.47,524/- (INTEREST ON SBA/CS) AND RS.6,31,0 50/- (INTEREST ON FDRS) RESPECTIVELY IN COLUMNS NO. 5C (PART A-QD) AN D 2D (PART A-P&L) IN ITR-4. THE AO MADE THE ADDITION WITHOUT CHECKING THE FIGURES BORNE OUT OF RETURN AND BALANCE SHEET. THIS ADDITION OF R S.5,83,655/- IS ALSO DELETED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 10. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 11. AT THE OUTSET, IT WAS OBSERVED THAT THE INTERES T INCOME OF 6,31,050/- WAS DULY DISCLOSED IN THE INCOME TAX RETURN AS EVID ENT FROM THE COLUMN NO.3 OF PROFIT AND LOSS ACCOUNT WHICH PLACED ON PAGE 11 OF THE PAPER BOOK. IN THIS REGARD, LD. DR FAILED TO BRING ANYTHING CONTRARY TO THE FINDING OF LD. CIT(A). THUS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF L D. CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. CONSEQUENTLY, GROUND RAISED BY REV ENUE IS DISMISSED. 12. LAST GROUND OF REVENUE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. 13. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 15/ 12/2017 SD/- SD/- ($ &) ( &) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (- 15 / 12 /201 7 ITA NO.392/KOL/2016 A.Y. 2011-12 DCIT CIR-5(2), KOL. VS. SH R.RAM YADAV PAGE 6 / COPY OF ORDER FORWARDED TO:- 1 . / APPELLANT-DCIT, CIRCLE-5(2),AAYAKAR BHAWAN,P-7, C HOWRINGHEE SQ.8 TH FL KOL-69 2. /RESPONDENT-SHRI RAJA RAM YADAV, 285, R.B.C ROAD, K OL-28 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 $$3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,