ITO, Puri Ward, Puri V. Sri Prasanna Kumar Patra, Puri

ITA 438/CTK/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5622 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 08-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P R MOHANTY
• Assessee Lawyers: D K PRADHAN
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PA V AN KUMAR GADALE, JM ./ ITA NO. 438 / CTK /20 1 7 ( [ [ / ASSESSMENT YEAR : 20 11 - 20 12 ) ITO, PURI WARD PURI, VS. PRASANNA KUMAR PATRA, MAHODADHI MARKET BUILDING, MOCHI SAHI, PURI ./ ./ PAN/GIR NO. : A ASPP 9347 D ( / APPELLANT ) .. ( / RESPONDENT ) [ /AS SESSEE BY : SHRI D.K.PRADHAN , DR /R EVENUE BY : SHRI P.R.MOHANTY, AR / DATE OF HEARING : 25 / 0 6 /201 8 / DATE OF PRONOUNCEMENT 27 / 06 /201 8 / O R D E R PER SHRI PA V AN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT( A) - 2 , BHUBANESWAR , FOR THE ASSESSMENT YEAR S 2011 - 2012 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF I.T.ACT . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 01. 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 RESTRICTING THE ADDITION TO RS. 17,05,527/ - AS AGAINST RS. 61,70,372/ - MADE BY THE AO IN SPITE OF THE FACT THAT THE ASSESSEE HAS NOT SHOWN THE FIXED DEPOSITS OF RS. 56,05,903/ - TO THE ASSET SIDE OF THE BALANCE SHEET IN VIOLAT ION OF THE ACCOUNTING SYSTEM. 02. 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 ENTIRE ADDITION OF RS. 14,53,500/ - WITHOUT CONSIDERING THE FACT THAT AN AMOUNT OF RS. 6,439/ - BEING THE CLOSING BALANCE OF THE SAVINGS ACCOUNT WITH ALLAHABAD BANK HAS NOT BEEN SHOWN TO THE ASSET SIDE OF THE BALANCE SHEET IN VIOLATION OF THE ACCOUNTING POLICY. ITA NO. 438/CTK/2017 2 03. THE 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 IS ENGAGED IN THE BUSINESS OF GROCERY AND HOTEL AND FILED THE RETURN OF INCOME ON 30.12.2011 FOR THE ASSESSMENT YEAR 2011 - 2012 WITH TOTAL INCOME OF RS. 5,32,640/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) AND 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN COMPLIANCE THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE AO COMPLETED THE ASSESSME NT U/S.143(3) OF THE ACT AFTER MAKING ADDITIONS AND ASSESSED TOTAL INCOME OF RS.84,23,600/ - AND PASSED ORDER DATED 06.03.2014 . 4. ON APPEAL BEFORE THE CIT(A), LD. AR ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO . LD. CIT(A) HAVING CO NSIDERED THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF AO HAS GRANTED RELIEF IN FAVOUR OF THE ASSESSEE. 5. AGAINST THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. DR SUBMITTED ON THE FIRST GROUND THAT THE CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE ADDITION TO THE EXTENT OF RS.17,05,527/ - AS AGAINST MADE BY THE AO. THE CONTENTION OF LD. DR THAT THE CIT(A) HAS NOT CONSIDERED THE FINDINGS OF THE AO AND ONLY DEALT ON THE SUBMISSION S MADE IN THE APPELLATE PROCEEDINGS AND DELETED THE A DDITION. IN RESPECT OF SECOND GROUND OF APPEAL, WHERE THE CIT(A) HAS DELETED THE ADDITION OF RS.14,53,500/ - IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS NOT DISCLOSED THE CLOSING BALANCE OF SAVINGS BANK ACCOUNT IN HIS BALANCE SHEET THOUGH ITA NO. 438/CTK/2017 3 THE CIT(A) EMPH ASIZED ON THE FINDINGS MADE BY THE AO IN THE ASSESSMENT ORDER BUT GRANTED RELIEF AND PRAYED FOR ALLOWING THE APPEAL . 7. CONTRA, LD. AR RELIED ON THE ORDERS OF THE CIT(A) AND EMPHASIZED THAT THE CIT(A) HAS CONSIDERED ALL THE FACTS AND THE REMAND REPORT AN D THE ASSESSEE REJOINDER AND FURTHER BASED ON THE GENUINENESS OF THE TRANSACTION S , THE LD. CIT(A) HAS GRANTED RELIEF. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON THE FIRST DISPUTED ISSUE , THE CONTENTION OF LD. DR IS THAT THE C IT(A) RESTRICTED THE ADDITION TO RS.17,05,527/ - IS NOT IN ACCORDANCE WITH LAW, IRRESPECTIVE OF THE FACT THAT THE AO HAS CONSIDERED ALL INFORMATION AND MADE ADDITION , WHEREAS THE CIT(A) HAS GRANTED RELIEF . THE LD. AR HAS REFERRED TO PAGE 7 OF THE CIT(A) ORD ER AT PARA 5.4 WHERE INFORMATION SUBMITTED BY THE ASSESSEE IN RESPECT OF BANK ACCOUNTS WAS FORWARDED TO THE AO FOR HIS COMMENTS AND FURTHER T HE AO SUBMITTED THE REMAND REPOT ON 11.05.2016. WE FOUND THE CIT(A) HAS REFERRED THE REMAND REPOT AT PAGE 8 & 9 OF THE ORDER AND THE ASSESSEE WAS ALSO PROVIDED OPPORTUNITY TO FILE THE REJOINDER AND ACCORDINGLY A REJOINDER WAS FILED BY THE ASSESSEE ON 27.10.2016 REFERRED AT PARA 5.4.3 WHICH READS AS UNDER: - 5.4.3 AS A REJOINDER THE APPELLANT HAS FILED HIS SUBMISSION V IDE LETTER DTD.27.10.2016 WHICH IS AS BELOW: 'WHILE PREPARING FOR FINAL HEARING OF THE MATTER, ON DETAILED SCRUTINY OF THE BANK ACCOUNTS OF DIFFERENT BANKS, CASH SHORTFALL OF RS. 17,05,527/ - IS DICTATED AS PER REVISED CASH FLOW STATEMENT FILED. THE APPEL LANT IN ORDER TO BY PEACE OF MIND AND FURTHER LITIGATION IN THE MATTER; GIVING AN OFFER WITH A REQUEST TO MAKE ADDITION OF RS.17,05,527/ - TO THE RETURNED INCOME.' ITA NO. 438/CTK/2017 4 9. ON PERUSAL OF THE ABOVE SUBMISSIONS , WE FIND THE ASSESSEE HAS ACCEPTED THE DEFICIENCY I N THE CASH FLOW STATEMENT AND FURTHER TO BUY PEACE AND AVOID LITIGATION AGREED FOR THE ADDITION. WE FOUND THE CIT(A) HAVING CONSIDERED THE TOTALITY OF FACTS , THE REMAND REPORT AND REJOINDER HAS DEALT AT PARA 5.4.4. WHICH READS AS UNDER : - 5.4.4 I HAVE CLO SELY EXAMINED THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT. I HAVE ALSO CLOSELY EXAMINED THE SUBMISSIONS OF THE APPELLANT INCLUDING REJOINDER. THE ASSESSING OFFICER HAS STATED THAT THE CLOSING BALANCE IN THE HDFC ACCOUNT OF RS.1,92 407/ - IS TAXABLE. THE CLOSING B ALANCE HAS B EEN ARRIVED AT BY CONSIDERING OPENING BALANCE, RECEIPT AND PAYMENTS DURING THE YEAR. SINCE ALL THE ENTRIES FOR ARRIVING AT THE CLOSING BALANCE, ARE EXPLAINED, THERE IS NO JUSTIFICATION IN HOLDING THAT THE CLOSING BALANCE IS UNDISCLOSED INCOME OF THE APPELLANT. THE ASSESSING OFFICER HAS ALSO STATED THAT THE FIXED DEPOSITS OF RS. 26,05,903/ - BY WAY OF FUND TRANSFER IN ALLAHABAD BANK ARE UNDISCLOSED INCOME OF THE APPELLANT. I FIND THAT THE TWO FIXED DEPOSITS OF RS.5,56,216/ - AND RS.5,49,687/ - ARE OF EARLIER YEARS AND THEREFORE, THEY CANNOT BE TAXED IN THE YEAR UNDER CONSIDERATION. WHEREAS THE CIT(A) HAVING CONSIDERED THE FACT S AND ASSESSEES SUBMISSION WITH REGARD TO ACCEPTING THE DEFICIENCY IN THE REVISED CASHFLOW STATEMENT HAS DEALT AT PARA 5.4.4 REFERRED ABOVE, WHERE FIXED DEPOSITS ARE OF EARLIER YEARS WERE EXCLUDED AND CONSIDERING THE FACT OF ASSESSEE HAVING ACCEPTED THE CASH DEFICIT OF RS.17,05,527/ - , THE CIT(A) TOOK A REASONED VIEW OF R ESTRICTING THE ADDITION TO RS.17,05,527/ - WHICH ACCORDING TO US IS ACCEPTABLE . THE L D. DR COULD NOT BRING OUT ANY NEW MATERIAL FACTS IN THE ORDER OF CIT(A) AND THEREFORE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS GROUND OF APPEAL AND WE UPHOLD THE SAME AND DISMISS THIS GROUND OF APPEAL OF REVENUE. 1 1 . LD. DR ARGUED THE SECOND GROUND OF APPEAL IN RESPECT OF UNDISCLOSED DEPOSITS IN THE SAVINGS BANK ACCOUNT IN ALLAHABAD BANK ITA NO. 438/CTK/2017 5 WHEREAS THE ASSESSEE HAS FILED THE FINANCIAL DETAILS IN THE APP ELLATE PROCEEDINGS EXPLAINING THE NATURE AND SOURCE OF BANK DEPOSITS. WE FOUND THE CIT(A) HAS FORWARDED THE SUBMISSIONS TO THE ASSESSING OFFICER AND THE AO HAS FILED REMAND REPORT ON 11.05.2016 REFERRED AT PARA 5.2 OF THE CIT(A)S ORDER. THE ASSESSEE ALSO FILED REJOINDER TO AOS REMAND REPORT AND THE CIT(A) CONSIDERED THE FINDINGS OF THE AO IN THE REMAND REPORT EXPLAIN ED THAT THE ASSESSEE HAS FILED THE CASH FLOW STATEMENT IN RESPECT OF DEPOSITS IN ALLAHABAD BANK SUBSTANTIATING THAT SUCH RECEIPTS ARE IN RES PECT OF GROSS SALES AND RECEIPT OF THE YEAR BUT THE AO FURTHER MENTIONED THAT THOUGH THE GROSS RECEIPTS OF SALE S HAVE BEEN CONSIDERED FOR BANK DEPOSITS BUT THE ASSESSEE HAS NOT DISCLOSED THE CLOSING BANK BALANCE IN THE BALANCE SHEET , WHEREAS L D. CIT(A) HAV ING CONSIDERED THE FACTS AND FINDINGS OF THE AO IN THE REMAND REPORT SUBMITTED THAT THE DEPOSITS ARE FROM THE GROSS SALES AND DELETED THE ADDITION. 12. FURTHER, L D.DR SUBMITTED THAT THOUGH THE DEPOSITS ARE FROM THE GROSS SALES / RECEIPTS OF ASSESSEE BUSINES S BUT THE ASSESSEE FAILED TO DISCLOSE THE CLOSING BALANCE IN THE BALANCE SHEET RS.6,439/ - . WHEN A QUERY WAS RAISED BY THE BENCH TO THE LD. AR FOR THE REASONS FOR EXCLUSION OF CLOSING BANK BALANCE , THE EXPLANATIONS ARE NOT CONVINCING. WE C ONSIDERING THE OVE RALL ASPECTS AND THE CONTENTION S OF LD. DR AND MATERIAL FOUND THAT THE ASSESSEE COULD NOT SUPPORT THE STAND OF NON INCLUSION OF CLOSING BALANCE IN THE BALANCE SHEET AND WE FOUND STRENGTH IN THE SUBMISSIONS OF LD. DR IN RESPECT OF CLOSING BALANCE WHICH WAS EXCLUDED FROM THE BALANCE SHEET AND WE CONFIRM THE ADDITION OF CLOSING BALANCE . ITA NO. 438/CTK/2017 6 ACCORDINGLY, WE MODIFY THE ORDER OF CIT(A) TO THE EXTENT OF RS.6,439/ - WHICH IS TO BE TAXED IN THE HANDS OF THE ASSESSEE AND THIS GROUND OF APPEAL OF REVENUE IS PARTLY ALLOWE D. 1 3 . IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27/06 / 201 8 . SD/ - ( N.S.SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 27 / 06 /201 8 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY//