Asharani Khurana, Jeypore V. ITO Ward-1, Jeypore

ITA 445/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0806 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2010
• Court: TRIBUNAL
• Department Lawyers: J KHANRA
• Assessee Lawyers: K PANIGRAHI
• Section: 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, (SMC) CUTTACK BENCH, CUTTACK () BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. / ITA NO.445/CTK/2010 / ASSESSMENT YEAR 2006 - 07 ASHARANI KHURANA, PROP.M/S.SUPREME CASHEW INDUSTRIES, HARDAPUTR, P.O. JEYPORE, DIST. KORAPUT. - - - VERSUS - INCOME - TAX OFFICER, WARD 1, JEYPORE. ( /APPELLANT ) (/ RESPONDENT ) / FOR THE A PPELLANT : / SHRI K.PANIGRAHI, AR / FOR THE RESPONDENT: / SHRI J.KHANRA, DR / ORDER (SMC) . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THIS APPEAL BY THE ASSESSEE RAISES A SOLITARY GROUND WITH RESPECT T O ADDITION OF 3 LAKHS AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE AND CONFIRMED BY THE LEARNED CIT(A) BY MISINTERPRETING THE FACTS WHICH IN ITSELF ARE CLARIFICATORY IN THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). 2. THE BRIEF FACTS RE LATING TO THE ISSUE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF SCRUTINY ASSESSMENT U/S.143(3) ON THE ASSESSEE DEALING IN CASHEW INDUSTRY RETURNED INCOME AT 1,66,850. HE VERIFIED THAT THE OPENING CASH BALANCE ON 1.4.2005 AT 10,29,093 WHICH IN TH E BALANCE SHEET FOR THE ASSESSMENT YEAR 2005 - 0 6 WAS SHOWN AT 7,29,093. PROCEEDING TO ASSESS THE INCOME FOR THE ASSESSMENT YEAR 2006 - 07 HE CHOSE TO TAKE THE DIFFERENCE OF THE IMMEDIATELY PRECEDING ASSESSMENT YEAR OF 3 LAKHS AS TAXABLE IN THE IMPUGNED ASSE SSMENT YEAR WHICH WAS APPEALED AGAINST BEFORE THE LEAR NED CIT(A). THE LEARNED CIT(A) INSTEAD OF CLARIFYING THE STAND OF THE ASSESSEE CH OSE TO CONFIRM THE TWO DIFFERENT CASH BALANCE WITHIN A SPAN OF 24 HOURS BY 3 LAKHS HELD IT TO BE TAXABLE IN THE IMPUGNE D ASSESSMENT YEAR. HE SUPPLEMENTED HIS CONTENTION BY BRINGING OTHER MATERIAL BEING THE DIFFERENCE IN THE SALES TAX AND VOLUNTARY PAYMENT OF PROFESSIONAL TAX WHICH HA D NO RELEVANCE TO THE ISSUE IN HAND. / ITA NO.445/CTK /2010 2 3. I HAVE CAREFULLY GONE THROUGH THE PAPER BOOK WHICH INTER ALIA INCLUDES CONSOLIDATED BALANCE SHEET FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 WHICH IMMEDIATELY CLARIFY THE POSITION THAT THE CASH IN HAND AS SHOWN ON 31.3.2005 AMOUNTING TO 7,29,000 HAD NOT BEEN DISTURBED IN VIEW OF THE FACT THAT THE DRAWINGS ON ACCOUNT OF HAVING OBTAINED PERSONAL CAR LOAN HAD NOT BEEN SHOWN IN THE BALANCE SHEET WHICH NOW HAS BEEN SEPARATELY SHOWN AMOUNTING TO 3 LAKHS. IT WAS NOT THE CASE OF THE ASSESSING O FFICER DISCOVERING A MISTAKE INSOFAR AS THE CAPITAL BALANCE AS MAY BE PERUSED HAS BEEN SHOWN FOR THE AYS IN IDENTICAL MANNER AND AFTER ENTERING THE INCOME PERTAINING TO THE RESPECTIVE AYS. HE SAID THAT THE CASH WAS NOT PHYSICAL CASH AVAILABLE AS SHOWN IN THE BALANCE SHEET INSOFAR THE SOLE PROPRIETRESS THE ASSESSEE CANNOT BE SAID TO BE HOLDING MORE THAN 10 LAKHS JUST 24 HOURS PRIOR TO THE DATE OF CLOSURE. HE SUBMITTED THAT IT WAS A MERE MISTAKE INSOFAR AS NO CORROBORATIVE EVIDEN CE OR CONTROVERTING MATERIAL HAD BEEN FOUND TO HOLD THAT THE INCOME OF AN EARLIER YEAR WAS EARNED IN THE IMPUGNED ASSESSMENT YE AR WHEN A MISTAKE WAS RECTIFIED IN THE BALANCE SHEET ON 31.3.2006. THE CAR LOAN WHICH THAT WAS OBTAINED IN THE IMPUGNED ASSESSMENT YEAR WAS SHOWN AS PERSONAL DRAWINGS THEREFORE REDUCED THE CONTRA OF HOLDING CASH AS WITHDRAWAL WAS BROUGHT INTO THE BALANCE SHEET AND THERE WAS NEVER A PHYSICAL SHORTAGE OF CASH BETWEEN 31.3.2005 AND 1.4.2005. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HIS PART SUBMISSIONS. 5. I HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND I HAVE ALSO CONSIDERED THE SUBMISSI ONS, AN ERROR TO BE EXPLAINED HAS BEEN STRETCHED TOO FAR BY BOTH THE AUTHORITIES , AS REDUCTION IN CASH BALANCE FROM 31.3.2005 TO 1.4.2005 HAS BEEN HELD AS INCOME WHEN THE ASSESSEE HAS CLEARLY INDICATED THAT THE DRAWINGS WERE AVAILAB LE AGAINST THE CAR LOAN OBTAINED THEREFORE WOULD NOT HAVE REDUCED THE CASH BALANCE FROM THE CAPITAL ACCOUNT. THE CAPITAL ACCOUNT REMAINING INTACT THEREFORE , DID NOT HAVE ANY ELEMENT OF INCOME TO BE EXPLAINED WHETHER HAS EVAPORATED IN THE ASSESSEES BUSINESS OVERNIGHT. I AM INCLINED TO AGREE WITH THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT BOTH THE AUTHORITIES HAVE NOT ANALYZED THE FACTS IN ITS RIGHT PERCEPTIVE TO INDICATE AS TO HOW THE DRAWINGS COULD BE TAXED WHETH ER UNDER THE PROVISIONS OF SECTION 68 OR SECTION 69 WHEN THE ASSESSEE BEING AN / ITA NO.445/CTK /2010 3 INDIVIDUAL WAS NOT HOLDING CASH TO THE EXTENT AS IT HAD SHOWN ON THE LAST DAY OF THE ASSESSMENT YEAR (EARLIER AS DRAWN) WHEN ALL THE ADDITIONS TO THE CAPITAL HAVE BEEN EXPLAINED . THE CLERICAL ERROR INDICATING A CAR LOAN AS DRAWINGS HAS REDUCED THE CASH BALANCE WHICH WAS CORRECTED GIVING AN IMPRESSION OF CASH INCOME IN THE IMPUGNED ASSESSMENT YEAR IS THE OPENING CAPITAL BALANCE ACCORDANCE WITH THE BOOKS OF ACCOUNT. FINDING NO INFI RMITY IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE, I HAVE NO REASON TO SUSTAIN THE ADDITION OF 3 LAKHS AS OBSERVED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). THE SAID AMOUNT OF 3 LAKHS IS DIRECTED TO BE DELETED FROM THE INCOME OF THE ASSESSEE. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 27.01.2011 S D/ - (. . ), , (K.K.GUPTA), ACCOU NTANT MEMBER. () DATE: 27.01.2011 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : ASHARANI KHUR ANA, PROP.M/S.SUPREME CASHEW INDUSTRIES, HARDAPUTR, P.O. JEYPORE, DIST. KORAPUT. 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1, JEYPORE. 3. / THE CIT, 4. ()/ THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.