ITO, V. Shri. B, Chandrashekhar,

ITA 455/BANG/2013

• Counselvise Citation: 45521114 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR
• Assessee Lawyers: K GANGADHAR SASTRY ITP
• Keywords: Business income; Assessment record
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.408/BANG/2013 & CO NO.99/BANG/2013 (IN ITA NO.455/BANG/2013) ASSESSMENT YEAR : 2009-10 SHRI B. CHANDRASHEKAR, NO.B6, D BLOCK, I FLOOR, UNITY BUILDING, J.C. ROAD, BANGALORE 560 002. PAN: AFPPC 7183N VS. THE INCOME TAX OFFICER, WARD 4(4), BANGALORE. APPELLANT RESPONDENT ITA NO.455/BANG/2013 ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD 4(4), BANGALORE. VS. SHRI B. CHANDRASHEKAR, NO.B6, D BLOCK, I FLOOR, UNITY BUILDING, J.C. ROAD, BANGALORE 560 002. PAN: AFPPC 7183N APPELLANT RESPONDENT ASSESSEE BY : SHRI K. GANGADHAR SASTRY, ITP REVENUE BY : SHRI BIJOY KUMAR PANDA, ADDL. CIT(DR) DATE OF HEARING : 17.09.2014 DATE OF PRONOUNCEMENT : 26.09.2014 ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 2 OF 9 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER OUT OF THE ABOVE, ITA 408/BANG/2013 AND ITA NO.4 55/BANG/2013 ARE APPEALS FILED BY THE ASSESSEE AND REVENUE RESPE CTIVELY AGAINST AN ORDER DATED 4.1.2013 OF THE CIT(APPEALS)-II, BANGAL ORE. THE CO FILED BY THE ASSESSEE, SUPPORTS THE ORDER OF THE CIT(APPEALS ), TO THE EXTENT RELIEFS WERE GIVEN TO BY HIM AND ASSAILS IT TO THE EXTENT A DDITIONS WERE SUSTAINED. 2. ASSESSEE, IN HIS APPEAL, HAS FILED GROUNDS OF A PPEAL AS ALSO CONCISE GROUNDS OF APPEAL. GROUNDS 1 & 9 OF THE GRO UNDS OF APPEAL ARE GENERAL, NEEDING NO ADJUDICATION. VIDE HIS GROUNDS 2 TO 5, ASSESSEE ASSAILS THE VALIDITY OF THE ASSESSMENT DONE U/S. 14 4 OF THE INCOME-TAX ACT, 1961 [THE ACT] FOR A REASON THAT NO NOTICE OF HEA RING WAS SERVED ON HIM, DESPITE CHANGE OF INCUMBENT. 3. LD. AR IN SUPPORT OF THE ASSESSEES CONTENTION T HAT NO NOTICE WAS SERVED ON HIM, SUBMITTED THAT NONE OF THE LETTERS M ENTIONED BY THE ASSESSING OFFICER WAS SERVED ON HIM. PER CONTRA, L D. DR PRODUCED THE ASSESSMENT FILE BEFORE US AND SUBMITTED THAT NOTICE S FOR HEARING WERE DULY ISSUED, BUT ASSESSEE HAD NOT CARED TO RECEIVE SUCH NOTICES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y GONE THROUGH THE ASSESSMENT RECORD PRODUCED BEFORE US. NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE AND ACKNOWLEDGEMENT DATED 26.8.2010 OF THE ASSESSEE IS ON RECORD. LETTER DATED 19.12.2011 SENT BY THE AO BY REGISTERED POST, IN THE ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 3 OF 9 ADDRESS GIVEN BY THE ASSESSEE IN THE RETURN OF INCO ME, HAS BEEN RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT CLA IMED. ATTEMPTED DELIVERY ON 21.12.2011 IS CLEAR FROM THE POSTAL COVER. EVEN NOTICES SENT BY THE AO, DURING REMAND PROCEEDINGS, TO THE ADDRESS GIVEN BY THE ASSESSEE IN ITS APPEAL BEFORE CIT(APPEALS), AGAIN BY REGISTERED POS T, IS ALSO SEEN RETURNED UNCLAIMED. ASSESSEE CANNOT TAKE REFUGE U/S. 129, SINCE THE RECORDS SHOW THAT NOTICES WERE ISSUED TO THE ASSESSEE, EVEN AFTE R THE INCUMBENT HAD CHANGED. THUS, THERE IS NO SUBSTANCE IN THE CLAIM OF THE ASSESSEE THAT NOTICES WERE NEVER SERVED TO HIM. NOTICES AND LETT ERS HAVE TO BE DEEMED AS SERVED AND WE ARE OF THE OPINION THAT THE AO WAS LEFT WITH NO CHOICE BUT TO COMPLETE THE ASSESSMENT U/S. 144 OF THE ACT. GR OUNDS 2 TO 5 OF THE ASSESSEES APPEAL ARE DISMISSED. 5. THROUGH GROUNDS 6 TO 8, GRIEVANCE RAISED BY THE ASSESSEE IS ON THE SUSTENANCE OF ADDITION OF RS.22,29,000 OUT OF TOTAL RS.33,69,000 DONE BY THE AO. SAME GRIEVANCE APPEARS IN ITS CROSS OBJECT IONS ALSO, THOUGH DIFFERENTLY WORDED. AS AGAINST THIS, REVENUE IN IT S APPEAL IS AGGRIEVED ON THE RELIEFS GIVEN TO THE ASSESSEE. 6. FACTS APROPOS ARE THAT ASSESSEE HAVING BUSINESS INCOME AS WELL AS INCOME FROM OTHER SOURCES HAD FILED HIS RETURN OF I NCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31.3.2010, DECLARING AN INCOME O F RS.6,13,300. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143( 2) WAS SERVED ON THE ASSESSEE. AO FOUND FROM ANNUAL INFORMATION RETUR NS (AIR) THAT ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 4 OF 9 ASSESSEE HAD MADE CASH DEPOSITS OF RS.16,19,000 IN HIS ACCOUNT WITH M/S. ING VYSYA BANK. FURTHER, IN THE BALANCE SHEET FILE D ALONG WITH THE RETURN, A SUM OF RS.15,50,000 WAS SHOWN AS PAYABLE TO ONE S MT. VIJAYALAKSHMI DEVI AND RS.2,00,000 PAYABLE TO OTHERS. NOTICES WE RE ISSUED TO THE ASSESSEE SEEKING HIS EXPLANATION FOR THE DEPOSITS A ND EVIDENCE FOR THE LOANS. THERE BEING NO RESPONSE FROM THE ASSESSEE, AO CONSIDERED THE LOANS OF RS.17,50,000 AS INCOME U/S. 68 OF THE ACT AND RS.16,19,000 AS UNEXPLAINED CASH DEPOSITS. AN ADDITION OF RS.33,69 ,000 WAS MADE TO THE RETURNED INCOME OF RS.6,13,300. 7. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE C IT(APPEALS). AS PER THE ASSESSEE, IT HAD SUFFICIENT SOURCE AND THE RECEIPTS AS WELL AS DEPOSITS WERE REFLECTED IN HIS CASH BOOK. LD. CIT( A) SOUGHT A REMAND REPORT BASED ON THE SUBMISSIONS OF THE ASSESSEE. C ONTENTION OF THE ASSESSEE WAS THAT THE SUM OF RS.15,50,000 SHOWN AS DUE TO SMT. VIJAYALAKSHMI DEVI, WAS ARISING OUT OF A SERIES OF TRANSACTION RELATING TO A PROPERTY ACQUIRED BY HIM. AS PER THE ASSESSEE, HE HAD PURCHASED A RESIDENTIAL PROPERTY BEARING NO.31, BEML LAYOUT, 5 TH STAGE, KENGERI HOBLI, BANGALORE FROM ON S. SRIDHAR ON 28.8.2008, WHICH WA S OCCUPIED BY SAID SMT. VIJAYALAKSHMI. CONSIDERATION AGREED WAS RS.37 ,00,000. SINCE SHRI SRIDHAR HAD ALREADY TAKEN A LEASE ADVANCE OF RS.12, 00,000 FROM SMT. VIJAYALAKSHMI DEVI, ASSESSEE HAD REDUCED SUCH AMOUN T FROM THE TOTAL CONSIDERATION OF RS.37,00,000 AND PAID ONLY RS.25 L AKHS TO SHRI SRIDHAR. AS PER THE ASSESSEE, A FRESH AGREEMENT WAS ENTERED INTO BY THE ASSESSEE ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 5 OF 9 WITH SMT. VIJAYALAKSHMI, WHEREBY ASSESSEE HAD ENHAN CED THE LEASE ADVANCE TO RS.15,50,000, BY RECEIVING A FURTHER SUM OF RS.3,50,000 FROM SMT. VIJAYALAKSHMI. ASSESSEE ALSO PRODUCED A CONFI RMATION FROM SMT. VIJAYALAKSHMI IN THIS REGARD. AS PER THE ASSESSEE, IT WAS THIS AMOUNT OF RS.15,50,000 WHICH WAS SHOWN AS PAYABLE TO SMT. VIJ AYALAKSHMI IN HIS BALANCE SHEET. 8. AO, DURING THE REMAND PROCEEDING, ISSUED A SUMMO NS TO SMT. VIJAYALAKSHMI IN THE ADDRESS GIVEN BY THE ASSESSEE, WHICH COULD NOT BE SERVED SINCE SHE HAD LEFT THAT ADDRESS. SINCE ASSE SSEE COULD NOT PRODUCE ANY EVIDENCE TO PROVE THE COURSE OF EVENTS SUGGESTE D BY HIM, THE CIT(A) CHOSE TO ACCEPT THE REMAND REPORT AND CONFIRMED THE ADDITION. HOWEVER, INSOFAR AS THE LOAN OF RS.2,00,000 FROM SMT. D. MAM ATHA AND SHRI R. SHEKARAPPA WAS CONCERNED, LD. CIT(A) ACCEPTED THE G ENUINENESS SINCE ASSESSEE COULD GIVE CONFIRMATION AS WELL AS PA NUMB ERS OF THESE PERSONS. 9. NOW BEFORE US, LD. AR SUBMITTED THAT SUMMONS COU LD NOT BE SERVED ON SMT. VIJAYALAKSHMI SINCE SHE HAD VACATED THE PRE MISES. AS PER THE LD. AR, ASSESSEE HAD REPAID THE LEASE ADVANCE TO SMT. V IJAYALAKSHMI AND SHE HAD MOVED TO BOMBAY. ACCORDING TO HIM, IT WILL BE DIFFICULT TO LOCATE THE SAID PERSON NOW. HOWEVER, AS PER LD. AR, ENGLISH T RANSLATION OF THE MORTGAGE DEED DATED 26.12.2008 CLEARLY PROVED THAT RS.15,50,000 SHOWN AS PAYABLE TO SMT. VIJAYALAKSHMI WAS ARISING OUT OF GENUINE TRANSACTIONS. ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 6 OF 9 10. PER CONTRA AND IN SUPPORT OF ITS APPEAL, LD. DR SUBMITTED THAT THE ALLEGED DUES FROM SMT. VIJAYALAKSHIMI WERE NEVER SU BSTANTIATED BY THE ASSESSEE. ACCORDING TO HIM, THE ADDITION IN THIS R EGARD WAS RIGHTLY CONFIRMED BY THE CIT(A). HOWEVER, ACCORDING TO HIM , LD. CIT(A) ERRED IN ACCEPTING THE LOAN OF RS.2,00,000 SHOWN AS RECEIVED FROM SMT. D. MAMATHA AND SHRI R. SHEKARAPPA, BASED ON MERE CONFI RMATION LETTERS FILED. 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IF THE CLAIM OF THE ASSESSEE WITH REGARD TO THE AMOUNT OF RS.15,50,000 AS DUE FROM SMT .VIJAYALAKSHMI WAS TRUE, THIS WOULD HAVE D EFINITELY FOUND A PLACE IN THE SALE DEED DATED 28.8.2008 THROUGH WHICH ASSE SSEE PURCHASED THE PROPERTY, WHICH WAS OCCUPIED BY SMT. VIJAYALAKSHMI AS A LESSEE. ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THIS DEED OR SHOW HOW THE LEASE ADVANCE WAS REFLECTED THEREIN. WHEN ASSESSEE ASSER TS SOMETHING, IT IS HIS ONUS TO SUBSTANTIATE. THE SO CALLED MORTGAGE DEED DATED 26.12.2008, ENGLISH TRANSLATION OF WHICH HAS BEEN PLACED AT PB PAGE 40 TO 41 IS, ADMITTEDLY, NOT REGISTERED. ASSESSEE WAS UNABLE TO PRODUCE SMT. VIJAYALAKSHMI. EVEN SUMMONS COULD NOT BE SERVED SIN CE SHE HAD LEFT THE ADDRESS. ASSESSEE IS UNABLE TO GIVE ANY DETAILS OF HER WHEREABOUTS. IN SUCH A SITUATION, WE CANNOT FAULT THE AO OR THE CIT (A) IN DISBELIEVING THE VERSIONS OF THE ASSESSEE. MERE CONFIRMATION BY ITS ELF WOULD NOT SERVE ANY PURPOSE. HOWEVER, VIS--VIS THE LOANS OF RS.2 LAKH S FROM SMT. D. MAMATHA AND SHRI R. SHEKARAPPA, ASSESSEE NOT ONLY PRODUCED THE CONFIRMATIONS BUT ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 7 OF 9 ALSO FURNISHED THEIR PA NUMBERS. AO COULD HAVE VER Y WELL VERIFIED FROM THEIR ASSESSMENT RECORDS TO CHECK THEIR CREDITWORTH INESS. LD. CIT(A) WAS RIGHT IN ACCEPTING THIS LOAN AMOUNT. THUS, WE CONF IRM THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.15,50,000 A ND DELETING THE ADDITION OF RS.2 LAKHS OUT OF THE TOTAL LOANS OF RS.17,50,00 0. 12. VIS--VIS THE ADDITION FOR CASH DEPOSITS OF RS. 16,19,000 WITH M/S. ING VYSYA BANK, SUBMISSION OF THE ASSESSEE BEFORE T HE CIT(A) WAS THAT THE DEPOSITS WERE REFLECTED IN HIS CASH BOOK. AS P ER THE ASSESSEE, RS.7 LAKHS DEPOSITED ON 02.4.2008 WAS OUT OF THE CASH BA LANCE AS ON 01.4.2008. FURTHER ACCORDING TO HIM, CASH DEPOSITS TO THE TUNE OF RS.15,70,000 WERE OUT OF EARLIER YEAR ADVANCE REFUN DS OF RS.4 LAKHS, COMMISSION OF RS.8 LAKHS AND CASH BALANCE OF RS.3,7 0,000. ACCORDING TO THE ASSESSEE, THERE WAS NEVER ANY SHORTAGE OF CASH IN HIS CASH BOOK. 13. LD. CIT(A) ACCEPTED THE CLAIM OF OPENING BALANC E OF RS.7 LAKHS AVAILABLE FOR DEPOSITING IN BANK. OUT OF RS.5 LAKH S CLAIM OF COMMISSION RECEIPT, CIT(A) ACCEPTED 30% VIZ., RS.2,40,000 AS POSSIBLE AMOUNT OF COMMISSION. IN OTHER WORDS, HE ACCEPTED THE SOURCE FOR RS.9,40,000 AND SUSTAINED AN ADDITION OF RS.6,79,000 ONLY OUT OF RS .16,19,000 MADE BY THE AO. 14. NOW, BEFORE US, LD. AR STRONGLY ASSAILING THE O RDERS OF THE AUTHORITIES BELOW, SUBMITTED THAT THE ADDITIONS WERE MADE IGNOR ING THE CASH BOOK ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 8 OF 9 PRODUCED. WHEN ALL THE DEPOSITS WERE SHOWN IN THE CASH BOOK AND THERE WAS NO DEFICIT CASH BALANCE, SUCH AN ADDITION COULD NOT HAVE BEEN MADE. 15. PER CONTRA AND IN SUPPORT OF ITS APPEAL, LD. DR SUBMITTED THAT ASSESSEE COULD NOT PROVE THE SOURCE OF RECEIPTS DEP ICTED IN ITS CASH BOOK. RECEIPT OF EARLIER YEARS ADVANCES WERE NOT SUBSTANT IATED. LD. CIT(A) HAD SIMPLY BELIEVED THE VERSION AND GIVEN RELIEF TO THE ASSESSEE. 16. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE HAD PRODUCED A CASH BOO K IN THE REMAND PROCEEDING. NO DOUBT, THE CASH BOOK COPY OF WHICH HAS BEEN PLACED AT PB PAGES 30 TO 39 DOES SHOW THE DEPOSITS TO THE BANK. THE COMMISSION RECEIPTS ACCOUNTED IN THIS CASH BOOK COMES TO RS.10 ,27,000, APART FROM RS.4 LAKHS SHOWN AS EARLIER YEAR LOAN RECOVERIES. SINCE ASSESSEE ITSELF HAS SHOWN BUSINESS INCOME OF RS.6,13,000, COMMISSIO N RECEIPT CANNOT BE DISBELIEVED. HOWEVER, NO EVIDENCE WHATSOEVER WAS P RODUCED BY THE ASSESSEE FOR ADVANCE RETURN OF RS.4 LAKHS. EVEN IF WE DISBELIEVE THE OPENING CASH BALANCE OF RS.7,85,572.82 SHOWN IN TH E CASH BOOK, ASSESSEE HAD GROSS COMMISSION RECEIPT OF RS.10,27,0 00, A GOOD ENOUGH SOURCE FOR DEPOSIT IN THE BANK ACCOUNT. THIS BRING S DOWN THE POSSIBLE UNEXPLAINED DEPOSIT TO RS.5,92,000. THIS IS MORE T HAN OFFSET BY THE LOAN OF RS.15,50,000 FROM SMT. VIJAYALAKSHMI DISBELIEVED FO R ITS GENUINENESS. SINCE THE LATTER AMOUNT HAS BEEN CONSIDERED AS UNEX PLAINED INCOME, IT WOULD BE MORE THAN SUFFICIENT TO EXPLAIN ANY POSSIB LE DEFICIT OF CASH FOR ITA NOS.408 & 455/BANG/2013 & CO NO.99/BANG/2013 PAGE 9 OF 9 EXPLAINING THE DEPOSITS INTO THE BANK. THEREFORE, WE ARE OF THE OPINION THAT, ADDITION FOR DEPOSITS IN THE BANK ACCOUNT WAS NOT REQUIRED AT ALL. SUCH ADDITIONS STAND DELETED IN FULL. 17. IN THE RESULT, WE CONFIRM THE ADDITION OF RS.15 ,50,000 FOR ALLEGED LOAN WHEREAS DELETE IN FULL THE ADDITION OF RS.16,1 9,000 FOR DEPOSITS IN BANK. 18. TO SUMMARISE THE RESULT, APPEAL AND CROSS OBJEC TION OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED , WHEREAS APPEAL OF THE REVENUE IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF SEPTEMBER , 2014 . SD/- SD/- ( N.V. VASUDEVAN ) ( ABRAHAM P. GEORG E ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE, DATED, THE 26 TH SEPTEMBER , 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.