DCIT, Bangalore V. Shri K.B. Laxman(HUF), Bangalore

ITA 429/BANG/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9518 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-08-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 20-04-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SWATI S PATIL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment

Judgement Text

PAGE 1 OF 8 ITA NO.429/BANG/2007 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N L KALRA, A.M. AND SHRI GEORGE GEORGE K, J.M. ITA NO.429/BANG/2007 (ASST. YEAR 2003-04) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10(1), BANGALORE. - APPELLANT VS SHRI K B LAKSHMAN (HUF), MANASA THEATRE, KONANKUNTE, BANGALORE. - RESPONDENT APPELLANT BY : SMT. SWATI S PATIL RESPONDENT BY : SHRI V SRINIVASAN O R D E R PER N L KALRA : THE REVENUE HAS FILED APPEALS AGAINST THE ORDER O F LEARNED CIT(A)-IV, BANGALORE DATED 12TH JANUARY, 200 7. 2. THE ASSESSING OFFICER WHILE COMPLETING ASSESSME NT HAS MADE THE FOLLOWING ADDITIONS:- A) ADDITION OF RS.60,22,170 THE ASSESSEE WAS GENERAL POWER OF ATTORNEY HOLDER IN RESPECT OF TWO SALE DEEDS REFERRED TO A SALE DEE D NO.17325 AND SALE DEED NO.8033. THE AO HAS ADDED THE ENTIRE PAGE 2 OF 8 ITA NO.429/BANG/2007 2 CONSIDERATION OF RS.60,22,170/-. IN RESPECT OF ABO VE SALE DEEDS, THE ASSESSEE OFFERED RS.18 LAKHS IN RESPECT OF SUCH TRANSACTIONS. IT WAS STATED THAT THE BALANCE WAS PAID TO THE LAND OWNERS B) ADDITION OF RS.47,67,000/- THE ASSESSEE MADE A PAYMENT OF RS.47,67,000/- TO BDA ON 28TH JANUARY, 2003. BEFORE THE AO, THE ASSES SEE EXPLAINED THE SOURCE OF PAYMENT. ACCORDING TO THE A O, THE ASSESSEE CANNOT TAKE THE ADVANTAGE TO EXPLAIN ONE S OURCE FOR MORE THAN ONE EXPENDITURE. THE AO, THEREFORE, TREA TED A SUM OF RS.47,67,000/- AS UNEXPLAINED INVESTMENT. C) ADDITION OF RS.12,17,055/- WHILE EXPLAINING THE SOURCE OF RS.47,67,000/-, TH E ASSESSEE MENTIONED THAT THE AMOUNT OF RS.59,84,055/ - WAS RECEIVED FROM SHRI RAVICHANDRA. IT WAS STATED THAT RS.4 LAKHS WAS RECEIVED FOR CIVIL WORKS FOR THE ASST. YEAR 2003 -04 AND RS.8 LAKHS WAS RECEIVED FOR THE ASST. YEAR 2004-05. A SU M OF RS.12,17,055/- WAS RECEIVED TOWARDS MISCELLANEOUS E XPENSES. ON THE BASIS OF THE STATEMENT OF SHRI RAVICHANDRA, THE AO CONCLUDED THAT THE SUM HAS NOT BEEN RECEIVED TOWARD S CIVIL WORKS; THEREFORE, THE SUM OF RS.12,17,055/- WAS ADD ED. D) ADDITION OF RS.90,08,799/- THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE I S HAVING AN ACCOUNT NO.1690 IN STATE BANK OF MYSORE, P UTTENAHALLI. PAGE 3 OF 8 ITA NO.429/BANG/2007 3 THE AO OBTAINED THE COPY OF THE ACCOUNT. THE ASSESS ING OFFICER NOTICED THAT THIS ACCOUNT HAS NOT BEEN SHOW N EITHER IN HIS INDIVIDUAL CAPACITY OR HUF CAPACITY. THERE ARE T OTAL CREDITS TO THE EXTENT OF RS.90,08,799/- IN THIS ACCOUNT UP TO 31ST DECEMBER, 2002. THE SAME WAS ADDED TO THE INCOME. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) AFTER GOING THROUGH THE RECEIPTS AND PAYMENT ACCOUNT, HELD THAT THE ASSESSEE HAS PAID A SUM OF RS.42,22,170/- TO THE LAND OWNERS I.E. GOWRAMMA AND NARAYANAMMA. THE ASSESSEE WAS HOLDING POWER OF ATTO RNEY. ON THE BASIS OF SUCH RECEIPT AND PAYMENT, THIS ADDITION WAS DELETED. 4. IN RESPECT OF BALANCE OF RS.18 LAKHS, THE LEARN ED CIT(A) AT PAGE 7 OF HIS ORDER OBSERVED THAT SUCH IS SUE WILL BE DECIDED WHILE DECIDING GROUND OF APPEAL NO.4 RELATI NG TO ACCOUNT NO.1690. IN RESPECT OF ADDITION OF RS.47,67,000/- AND RS.12,17,055/-, THE LEARNED CIT(A) HELD THAT THE SO URCE OF EXPENDITURE STANDS EXPLAINED AND THE PURPOSE OF EXP ENDITURE IS ALSO CLEAR. EVEN IF THE AMOUNTS WERE PAID ON BEHAL F OF ONE PARTY, THOUGH THE AMOUNT WAS RECEIVED FROM THE OTHER PARTY, THEN THE SAME CAN BE TREATED AS SHORT TERM LOAN GIVEN TO A C LOSE ACQUAINTANCE. IN RESPECT OF ADDITION OF RS.90,08,7 99/-, THE LEARNED CIT(A) AT PAGE 13 OF HIS ORDER HAS OBSERVED THAT SUCH ACCOUNT MAY BELONG TO THE ASSESSEE IN HIS INDIVIDUA L CAPACITY BECAUSE THE OTHER MEMBERS OF THE FAMILY GAVE A CERTI FICATE THAT PAGE 4 OF 8 ITA NO.429/BANG/2007 4 ACCOUNT NO.1690 DOES NOT BELONG TO THE FAMILY. THE LEARNED CIT(A) THEREFORE DIRECTED THE AO TO EXAMINE THE ENT RIES WHILE DOING ASSESSMENT OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. 5. WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE F OR THE FIRST TIME FILED RECEIPT AND PAYMENT ACCOUNT FOR THE ASST. YEAR 2002-03 BEFORE THE LEARNED CIT(A). THE RECEIPT AND PAYMENT ACCOUNT IS REPRODUCED AS UNDER:- TO OPENING BALANCE: 1. CASH 91,100.54 2. STATE BANK OF MYSORE 21,92,627.00 (A/C NO.3061) 3. BANK OF INDIA 789.46 4. BANK OF INDIA 2,689.00 DAYANAND PAI 76,00,000.00 AGRICULTURAL LAND COMPENSATION 10,28,241.00 ADVANCE FOR SITE NO.155/4B 10,93,747.00 RAVICHANDRA : SALE OF LAND UNDER SALE DEED DATED 23.12.02 & 8.1.03 SBM A/C 3061 DT.23.12.02 23,00,000 DT.11.1.03 36,84,055 CASH 38,115 60,22, 170.00 RAVI (FOR PURCHASE OF LAND AT MYSORE) 7,00,000.00 K B LAKSHMAN (INDIVIDUAL) 1,253.00 AGRICULTURAL-INCOME 6,00,000.00 LOAN REPAYMENT 7,458.00 THEATRE FIXED RENT 4,16,000.00 MISCELLANEOUS INCOME 12,288.00 BY OPENING BALANCE 1. STATE BANK OF MYSORE (A/C NO.10088) 9,04,760.00 2. BANK OF INDIA (A/C NO. 80225) 8,88,373.0 0 3. BANK OF INDIA (A/C NO. 80143) 8,51,942. 58 4. BANK OF BARODA 4,61,157.00 SUJANA BEVELOPERS (KB LAKSHMAN-INDIVIDUAL) 20,00,000.00 SITE NO.13/14 (KB LAKSHMAN-INDIVIDUAL) 6,92,480.00 KB LAKSHMAN-INDIVIDUAL 78,85,991.00 DRAWING 1,00,000. 42 RAVI LAND AT MYSORE 7,00,000.00 BDA-BETTERMENT CHARGES 47,67,000.00 ADVANCE 169/4, 170,4-9,39/2 1. K VITTAN RAO 10,00,000.00 2 JEENA BAI 6,50,000.00 3. KASHINATHA RAO 6,50,000.00 4. K GANESSH RAO 16,50,000.00 5. RAJANI RAO 15,00,000.00 6. KURUP 23,00,000.0 0 PAGE 5 OF 8 ITA NO.429/BANG/2007 5 SALE OF LAND RAVICHANDRA 37,33,270.00 BROOKES-(KB LAKSHMAN) (INDIVIDUAL) 1,14,40,000.00 CLOSING BALANCE: 1. STATE BANK OF MYSORE (A/C NO.10088) 6,04,419.00 2. BANK OF INDIA (A/C NO.80225) 7,24,533.00 3. DO- (A/C NO.80134) 7,49,250.58 4. BANK OF BARODA 4,61,157.00 PROPERTY ADVANCE 7,04,055.00 ---------- ------ 3,81,85,04 7.58 BANK INTEREST: 1. HOUSING LOAN 1,39,308.00 2. ON BANK LOAN 2,97,032.00 PROPERTY ADVANCE : 1. GOWRAMMA 2. NARAYANAMMA 42,22,170.00 CLOSING BALANCE : 1. STATE BANK OF MYSORE (A/C NO.4207) 28,75,501.00 2. A/C NO.3061) 35,01,583.00 3. CASH 50,6 94.58 ----- ---------- 3,81,85 ,047.58 6. IN THE RECEIPT AND PAYMENT ACCOUNT, THE ASSESSEE HAS SHOWN PAYMENT OF RS.42,22,170 TO GOWRAMMA AND NARAYANAMMA I.E. LAND OWNERS ON WHOSE BEHALF HE WAS HAVING THE GENERAL POWER OF ATTORNEY. SIMPLY ON THE BASIS OF SU CH RECEIPT AND PAYMENT, THE PAYMENTS CANNOT BE ACCEPTED. THE AO WAS HAVING NO OPPORTUNITY TO ASCERTAIN AS TO WHETHER SU CH PAYMENTS WERE ACTUALLY MADE. WE ARE ALSO AWARE OF THE FACTS THAT THE LEARNED CIT(A) HAS NOTICED THAT EVEN IF THE PAYMENTS HAVE NOT BEEN MADE AND SUCH PAYMENTS ARE DUE TO THE LAND OWNE RS THEN FOR COMPUTING INCOME, ONE WILL HAVE TO ALLOW THE LI ABILITY. WE HAVE SEEN THE SALE DEEDS. THE LAND OWNERS WILL BE ABLE TO TELL AS TO HOW MUCH PAYMENTS THEY HAVE RECEIVED AND IN WHICH YEAR. FOR CLAIMING DEDUCTION FROM THE RECEIPT, WHICH HAS BEEN CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE, THE ONUS IS ON TH E ASSESSEE TO SHOW THAT THE AMOUNT WAS ACTUALLY PAID OR A LIABILIT Y WAS INCURRED, WHICH WAS SUBSEQUENTLY DISCHARGED. THOUGH THE PAGE 6 OF 8 ITA NO.429/BANG/2007 6 LEARNED CIT(A) IN RESPECT OF RS.18 LAKHS MENTIONED THAT HE WILL BE DISPOSING OF THAT ISSUE WHILE DISPOSING OF THE I SSUE IN RESPECT OF BANK ACCOUNT NO.1690 BUT WHILE DISPOSING OF THAT GROUND OF APPEAL, THE LEARNED CIT(A) HAS NOT TOUCHED THAT ISS UE. THE LEARNED CIT(A) HAS DELETED THE ENTIRE ADDITION OF R S.60,22,170/. CONSIDERING THE ENTIRE CIRCUMSTANCES, WE FEEL THAT THE SUM OF RS.18 LAKHS IS REQUIRED TO BE TAXED IN THE HANDS OF THE ASSESSEE IN RESPECT OF SUCH TRANSACTIONS. IN RESPECT OF CLA IM OF RS.42,22,170/-, THE ISSUE IS REQUIRED TO BE RECONSI DERED BY THE AO AND THE ASSESSEE WILL HAVE TO ADDUCE EVIDENCE OF INCURRING SUCH LIABILITY. THE AO WILL BE FREE TO ASCERTAIN AS TO HOW SUCH LIABILITY HAS BEEN DISCHARGED. IN CASE SUCH LIABILI TY HAS BEEN DISCHARGED OUT OF UNEXPLAINED SOURCES, THEN THE AO WILL BE FREE TO MAKE ADDITION ACCORDINGLY. HENCE, THE ISSUE OF A DDITION OF RS.42,22,170/- IS RESTORED BACK ON THE FILE OF THE AO. 7. IN RESPECT OF ADDITION OF RS.47,67,000/- AND RS.12,17,055/-, WE ARE OF THE VIEW THAT THE AO WILL HAVE TO EXAMINE THE SOURCE OF THE PAYMENTS. IF THE ASSESSEE HAS MADE PAYMENTS ON BEHALF OF ONE PERSON WHILE RECEIVING THE SAME FROM OTHER PERSON THEN THE AO WILL HAVE TO ASCERTAIN FRO M THE ASSESSEE AS TO HOW THE OTHER PERSON HAS REPAID THE AMOUNT. IF THE APPARENT SOURCE OF THE EXPENDITURE IS CLEAR THE N THE AMOUNT CANNOT BE ADDED AS UNEXPLAINED. OF COURSE, THE SOU RCE OF RECEIPT CAN BE USED FOR EXPLAINING ONLY ONE ITEM AND THE SAME RECEIPT CANNOT BE CONSIDERED FOR EXPLAINING TWO DIF FERENT PAGE 7 OF 8 ITA NO.429/BANG/2007 7 EXPENSES. AS PER RECEIPT AND PAYMENT ACCOUNT, THE A SSESSEE HAS RECEIVED LOT OF PAYMENTS. THE DATES OF RECEIPTS ARE NOT MENTIONED. HOWEVER, THE AO WILL ENQUIRE AND THE AS SESSEE WILL GIVE EVIDENCE THAT HE WAS HAVING THE RESOURCES TO P AY FOR SUCH EXPENSES. HENCE THIS ISSUE IS ALSO RESTORED BACK O N THE FILE OF THE AO. 8. IN RESPECT OF ISSUE OF OWNERSHIP OF SAVING BANK ACCOUNT NO.1690, THE AO HAS GOT THE BENEFIT OF EXAM INING THE OTHER PARTICULARS OF THE HUF. MOREOVER, ASSESSMENT IN THE HANDS OF INDIVIDUAL WAS COMPLETED ON 31ST DECEMBER, 2007 WHILE THE LEARNED CIT(A) HAS PASSED THE APPELLATE ORDER O N 12TH JANUARY, 2007. INSPITE OF DIRECTION OF THE LEARNED CIT(A), THE AO HAS NOT EXAMINED THE ENTRY WHILE GIVING ASSESSMEN T OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. THE LEARNED AR SUBMITTED THAT THE SUM OF RS.10 LAKHS ADDED AS UNEXPLAINED CR EDIT IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY WAS DEPOSITED IN THE BANK ACCOUNT NO.1690. MOREOVER, THE LEARNED AR HAS POINTED OUT THAT THE AO HAS ADDED ALL THE CREDITS UP TO 31S T DECEMBER, 2002 WITHOUT CONSIDERING THE SOURCE OF THE DEPOSIT. HENCE, THIS ISSUE IS ALSO REQUIRED TO BE RESTORED BACK ON THE F ILE OF THE AO TO COME TO A DEFINITE CONCLUSION AS TO WHOM SUCH BA NK ACCOUNT BELONGS I.E. EITHER TO THE ASSESSEE IN HIS INDIVIDU AL CAPACITY OR IN HUF CAPACITY. IT IS FOR THE REVENUE TO CONSIDER AS TO WHETHER ANY REMEDIAL ACTION IS REQUIRED TO BE TAKEN IN THE C ASE OF THE INDIVIDUAL, AS THE AO HAS NOT COMPLIED WITH THE DIR ECTION OF THE PAGE 8 OF 8 ITA NO.429/BANG/2007 8 LEARNED CIT(A). IF THE ASSESSEE CONTENT THAT SUCH BANK ACCOUNT BELONGS TO THE INDIVIDUAL THEN THE AO WAS REQUIRED TO CONSIDER SUCH CONTENTION WHILE COMPLETING ASSESSMENT OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. HENCE, WE FEEL IT PROPER A ND JUSTIFIABLE TO RESTORE THIS ISSUE TO THE FILE OF THE AO. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28TH AUGUST, 2009 . SD/- SD/- (N L KALRA) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED:28/8/2009 COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR 6. GF 7. GF, ITAT, DELHI BENCH BY ORDER MSP/28/8/ ASSISTANT REGISTRAR, ITAT, BANGALORE.