Bhabani Charan Rath, Bhubaneswar V. ACIT, Bhubaneswar

ITA 468/CTK/2012

• Counselvise Citation: 46822114 RSA 2012
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 28-09-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: P S PANDAK K AGARWAL ARS
• Keywords: Search and seizure; Revised return
• Section: 139; 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 468/CTK/2012 / ASSESSMENT YEAR 206 - 07 BHABANI CHARAN RATH, B - 20, BJB NAGAR, BHUBANESWAR 751 014 PAN: AAKPR 0120 J - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, CI RCLE 1(2), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.S.PANDA/K.K.AGARWAL, ARS / FOR THE RESPONDENT: / S MT. PARAMITA TRIPATHY, DR / DATE OF HEARI NG: 06.11.2012 / DATE OF PRONOUNCEMENT: 09.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL IS ON THE SOLITARY ISSUE BY THE ASSESSEE THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L EARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER WITH RESPECT TO THE CASH FOUND AT THE TIME OF SEARCH AMOUNTING TO 31,11,650 IGNORING THE FACT THAT THE SAME IS PART OF THE AMOUNT SURRENDERED AS INCOME VOLUNTARILY. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE DERIVES THE INCOME FROM CAPITAL GAIN & OTHER SOURCES . HE FILED HIS RETURN OF INCOME U/S 139 OF THE INCOME TAX ACT, 1961 BY DECLARING AN INCOME OF 4 4,12,770 . SEARCH AND SEIZURE OPERATION WAS CARRIE D OUT IN THE PREMISES OF THE ASSESSEE ON 9TH AUGUST 2005. CONSEQUENT TO THE SEARCH OPERATION NOTICE U/S 153A WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FILED RETURN OF INCOME U/S 153A(A) ON 6TH OF DECEMBER 2007 BY DECLARING AN INCOM E OF 5,68,82,520. DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS THE PARTICULARS I.T.A.NO. 468/CTK/2012 2 REQUISITIONED BY THE ASSESSING OFFICER WERE SUPPLIED AND ALL EXPLANATIONS NEEDED WERE SUBMITTED BY THE ASSESSEE . HOWEVER, THE ASSESSING OFFICER TREATED T HE RETURN OF INCOME FILED ON 6 TH DECEMBER 2007 AS NON EST BUT THE INFORMATION CONTAINED IN THAT RETURN IS TAKEN AS EVIDENCE FOR THE PURPOSE OF ASSESSMENT AND ASSESSED AN INCOME OF 5,98,59,300. THE BELATED FILING OF RETURN ON 31.3.2007 WAS ON AN INCOME OF 44,12,769 WHEN DURING THE COURSE OF PROCEEDINGS U/S.143(3), THE ASSESSING OFFICER NOTED THE AVAILABILITY OF CASH ON THE DATE OF SEARCH ON ACCOUNT OF WITHDRAWAL FROM BANK. IT WAS S UBMITTED THAT IT IS PART OF THE INCOME DECLARED BEING 5.24 CRORES WHICH INCLUDED THE PART OF THE INCOME EVEN IF THE WITHDRAWAL FROM THE BANK IN THE SEARCH PROCEEDING DID NOT COINCIDE TO THE FINDING OF THE PHYSICAL CASH. THE ASSESSING OFFICER MADE THE ADDI TION OF 31,11,650 WHICH WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE APPELLANT BEFORE HIM AND NOTED VIDE PARAGRAPH 5.2 OF HIS ORDER, AS UNDER : 5.2 . I HAVE GONE THROUGH THE D ETAILED FINDINGS OF THE AO AND THE SUBMISSION OF THE APPELLANT. THE DRAWINGS AS PER CAPITAL ACCOUNT SHOWN BY THE APPELLANT IN THE STATEMEN T OF AFFAIRS FILED BEFORE THE AO ARE AS UNDER: DRAWINGS DRAWINGS - 2,32,851 TDS DEDUCTED - 1,53,811 INCOME TA X - 34,54,601 ADVANCE TAX - 4,00,000 TOTAL 42,41,263 IN THE SPREAD SHEET FILED DURING THE COURSE OF APPEAL HEARING, THE APPELLANT SHOWS DRAWINGS OF 42.41 LAKHS I.E. THE ABOVE AMOUNT. IN THE GROUNDS OF APPEAL, IT HAS BE EN STATED THAT THE CASH FOUND DURING THE COURSE OF SEARCH HAS ALREADY BEEN DISCLOSED BEFORE THE ADIT ( INV. ) BY THE ASSESSEE IN HIS LETTER DT.5.9.2005. HOWEVER, THE NATURE OF SUCH DISCLOSURE HAS NOT BEEN EXPLAINED. THE APPELLANT DURING THE COURSE OF SEARCH I.T.A.NO. 468/CTK/2012 3 CLAIMED THAT THE CASH FOUND WAS OUT OF THE CASH WITHDRAWN FROM IDBI ACCOUNT ON THE SAME DAY WHICH HA S BEEN PROVED NOT TRUE BY THE AO . THE APPELLANT DURING THE APPELLATE PROCEEDINGS HAS NOT SPECIFICALLY CLAIMED THAT THE CASH FOUND DURING THE COURSE OF SEARC H WAS OUT OF THE CASH WITHDRAWN FROM IDBI BANK ON THE SAME DAY. HOWEVER, THE APPELLANT IS CLAIMING THAT THE CASH FOUND IS EXPLAINED THROUGH STATEMENT OF AFFAIRS AND HAS BEEN CONSIDERED IN DRAWINGS. HOWEVER, IT HAS NOT BEEN EXPLAINED HOW THE CASH FOUND, WHI CH MAY HAVE BEEN SEIZED, HAS BEEN USED BY THE APPELLANT AS NARRATED IN THE ABOVE TABLE. IN ANY CASE, CASH WAS ALSO WITHDRAWN FROM THE IDBI BANK WHICH WAS AVAILABLE FOR USE BY THE APPELLANT APART FROM THE CASH FOUND DURING THE COURSE OF SEARCH. HENCE, THERE IS NO EXPLANATION BY THE APPELLANT ABOUT THE SOURCE OF CASH FOUND DURING THE COURSE OF SEARCH. THE APPELLANT HAS ALSO NOT EXPLAINED ABOUT THE USE OF THE CASH WITHDRAWN FROM IDBI BANK ON THE DAY OF SEARCH WHICH COULD HAVE BEEN USED IN THE MANNER AS GIVEN I N THE ABOVE TABLE. IN VIEW OF THE SAME, THE APPELLANT HAS FAILED TO EXPLAIN THE SOURCE OF CASH FOUND DURING THE COURSE OF SEARCH FOR WHICH I HAVE NO REASON TO INTERFERE IN THE CONCLUSIONS ARRIVED AT BY T HE AO . ACCORDINGLY, THE ADDITION OF 31,11,650 IS CONFIRMED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT DURING THE COURSE OF SEARCH, CASH OF 31,11,650 WAS FOUND. DURING THE COURSE OF SEARCH, THE INVESTIGATING OFFICER ASKED FOR THE SOURCE OF CASH FOUND WHICH THE APPELLANT DID NOT EXPLAIN INSTANTLY SINCE THEY WERE NOT IN PROPER FRAME OF MIND DUE TO THE ACTION TAKEN U/S. 132 OF THE I. T. ACT, 1961. SUBSEQUENTLY IN RESPONSE TO SUMMON U/S. 131 OF THE I.T. ACT, 1961 SMT. SARMISTHA RATH, WIFE OF THE APPELLANT APPEARED ON 02.09.2005 AND SHE EXPLAINED THAT THE MONEY FOUND IN THE BED ROOM OF THEIR RESIDENTIAL BUILDING REPRESENTED WITHDRAWAL FROM THE ACCOUNT NO. 9850 OF IDBI BANK, MAINTAINED IN THE NAME OF THE FIRM, GLOBAL SOFT, BY HER HUSBAND SRI B. C. I.T.A.NO. 468/CTK/2012 4 RATH, THE APPELLANT. DURING POST SEARCH INQUIRY FROM THE BANK PERSONNEL, CERTAIN DISCREPANCIES WERE NOTED WHICH CREATED SUSP ICION IN THE MIND OF THE I.T. AUTHORITIES WITH REGARD TO THE SOURCE OF THE SAID CASH FOUND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE A.O., THE ASSESSEE IN HIS REPLY STATED THAT HE HAS SURRENDERED 524.69 LAKHS DURING THE YEAR AND THE CASH FOUND DURING THE COURSE OF SEARCH IS A PART OF THE SURRENDERED INCOME OF THE ASSESSEE. IGNORING THE ABOVE SUBMISSION OF THE ASSESSEE , THE A.O. CONSIDERED THE CASH FOUND AS UNEXPLAINED WITH A CONTENTION THAT NO DE TAILED BREAKUP OF THE UNDISCLOSED INCOME SURRENDERED DURING THE YEAR WAS SUBMITTED, THOUGH THE ASSESSEE HAD ONLY FILED THE STATEMENT OF AFFAIRS FOR THE SAID YEAR DETAILING ALL THE ASSETS AND SOURCES THEREOF WHICH INCLUDED SURRENDERED INCOME. IN PARA 5.2, P AGE 6 OF HIS ORDER, THE LEARNED CIT (A) HAS NOTED THAT THE ALLEGED CASH FOUND AND SEIZED DURING THE COURSE OF PROCEEDINGS UNDERTAKEN U/S 132 HAS BEEN DULY SHOWN AS DRAWINGS. HOWEVER, HE CONFIRMED THE ORDER OF THE A.O. WITH REGARD TO THE ABOVE ADDITION CONS IDERING THE DETAILED EXPLANATION GIVEN DURING THE POST SEARCH INQUIRY MADE BY THE INVESTIGATING AUTHORITIES IGNORING THE REVISED RETURN FILED AND DISCLOSURE MADE U/S 132(4) OF THE INCOME TAX ACT , 1961. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SURRENDERED 5 LAKHS, 6 LAKHS, 10 LAKHS AND 15 LAKHS FOR THE ASSESSMENT YEAR S 2000 - 01, 2001 - 02, 2002 - 03, 2003 - 04, 2004 - 05 AND 2005 - 06 RESPECTIVELY TOTALING 111 LAKHS. FURTHER WHILE FILING THE REVISED RETURN ON 06.12.2007 IN RESPONSE TO NOTICE U/S.153A OF THE I.T . ACT, 1961 THE ASSESSEE FURTHER DISCLOSED SUO - MOTTO 0 . 78 LAKHS, 3.65 LAKHS, 10.77, 424.61 LAKHS FOR THE AYS 2003 - 04, 2004 - 05, 2005 - 06 AND 2006 - 07 RESPECTIVELY TOTALING 539.81 LAKHS. THE ASSESSEE HAD DISCLOSED ALMOST 650.81 LAKHS (I.E., 111 LAKHS + 539.81 LAKHS AS INCOME OF THE ASSESSEE AFTER REVIEW ING HIS ENTIRE I.T.A.NO. 468/CTK/2012 5 UNACCOUNTED FINANCIAL ASSETS AND OTHER ASSETS AND PREPARED A STATEMENT OF AFFAIRS UP TO THE DATE OF FILING OF REVISED RETURN ON 06.12.2007 WHICH FACTORED IN ALL UNACCOUNTED ASSETS UP TO THA T DATE AND DISCLOSED EVERYTHING IN THE REVISED RETURN WHICH INCLUDED THE ABOVE SEIZURE BESIDES THE INCOME DISCLOSED U/S. 132(4) OF THE I.T. ACT, 1961. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT A FTER SURRENDERING THE INCOME BOTH U/S.132(4) AND IN T HE REVISED RETURN, THERE WAS SUFFICIENT CASH IN HAND AS ON THE DATE OF SEARCH WHICH IS PRIMA FACIE EVIDENT FROM THE STATEMENT OF AFFAIRS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH COPY HE FURNISHED IN THE PAPER BOOK AT PAGE NO.47. BUT IG NORIN G THE ABOVE FACT S , THE A.O. CONSIDERED THE SAME AS UNEXPLAINED AND MADE A SEPARATE ADDITION AND SAME WAS CONFIRMED BY THE CIT (A) IGNORING THE AMOUNT SURRENDERED BOTH U/S 132(4) AND BY WAY OF FILING REVISED RETURN WHICH IS ILLEGAL AND BAD IN LAW. THE LEARN ED COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE STATEMENT OF AFFAIRS INDICATES THAT THE ALLEGED SEIZURE HAS BEEN DULY CONSIDERED IN DRAWINGS AND SAME HAS BEEN DULY SHOWN BOTH BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED CIT(A) BUT I GNOR ING THE EXPLANATION OF THE ASSESSEE , THE LEARNED CIT(A) IN PARA - 1, PAGE - 7 OF HIS ORDER CONCLUDED AS UNDER : HOWEVER, IT HAS NOT BEEN EXPLAINED HOW THE CASH FOUND, WHICH MAY HAVE BEEN SEIZED, HAS BEEN USED BY THE ASSESSEE AS NARRATED IN THE ABOVE TABLE . HENCE, THERE IS NO EXPLANATION BY THE ASSESSEE ABOUT THE SOURCE OF CASH FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE HAS ALSO NOT EXPLAINED ABOUT THE USE OF THE CASH WITHDRAWN FROM IDBI BANK ON THE DAY OF SEARCH WHICH COULD HAVE BEEN USED IN THE MANNER AS GIVEN IN THE ABOVE TABLE. IN VIEW OF THE SAME, THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF CASH FOUND DURING THE COURSE OF SEARCH FOR WHICH I HAVE NO REASON TO INTERFERE IN THE CONCLUSIONS ARRIVED AT BY THE A.O. ACCORDINGLY, THE ADDITION OF 31,11 ,650 IS CONFIRMED. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE ALREADY EXPLAINED THAT THE SOURCE OF CASH FOUND DURING THE COURSE OF SEARCH IS OUT OF AMOUNT DISCLOSED U/S 132(4) AND THE AMOUNT DISCLOSED IN THE REVISED RETURN I.T.A.NO. 468/CTK/2012 6 FILED ON 0 6.12.2007. THE SAME FACT IS EVIDENT FROM THE AMOUNT SHOWN AS DRAWINGS IN A.Y. 2006 - 07. AS REGARDS THE USE OF CASH DRAWAL FROM IDBI BANK, THE ASSESSEE HAD ALSO DULY EXPLAINED IN THE CASH BOOK OF M/S.GLOBAL SOFT. IN VIEW OF THE ABOVE, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IGNORING THE FACTUAL ASPECTS AS BROUGHT ON RECORD BY THE ASSESSEE IS NOT JUSTIFIED AND AS SUCH, THE SAID ADDITION IS LIABLE TO BE DELETED. 5. THE LEA RNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE INSOFAR AS THE LEARNED COUNSEL OF THE ASSESSEE REFERS TO THE FACT THAT SIMULTANEOUSLY WITHDRAWAL FROM BANK AND THE PHYSICAL CASH AVAILABLE MISMATCH CANNOT BE TAKEN UP FOR CONS IDERATION AS A COVER OF UMBRELLA TO HOLD THAT THE CASH COULD NOT BE TAXED AS INCOME FROM OTHER SOURCES. IT WAS SEIZED AND ADJUSTED AGAINST THE TAX DUES OF THE ASSESSEE MAY KINDLY BE BORNE IN MIND. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. ON CAREFUL CONSIDER ATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE HA S TO BE ACCEPTED SIMPLY BECAUSE THE AMOUNT OF DECLARATION AS MADE IS FAR EXCEEDING THE AMOUNT FOUND AT THE TIME OF SEARCH THEREFORE WAS NOT TO BE IDENTIFIED BY THE PARTICULAR WITHDRAWAL FROM THE BANK WHEN THE UTILIZATION OF WITHDRAWAL FROM A PARTICULAR BANK HAS BEEN EXPLAINED BY THE ASSESSEE. THE AMOUNT IS SUCH THAT IT MAY NOT HAVE ANY IDENTITY EXCEPT THE SERIAL NUMBERS WHIC H CAN ONLY BE CONSIDERED FOR TAXATION AS BELONGING TO FROM VERY TAX PAID AMOUNT OR FROM WITHDRAWAL FROM A PARTICULAR BANK. WE ARE UNABLE TO SATISFY OURSELVES WITH THE CONTENTION OF THE ASSESSING OFFICER AND THE LEARNED CIT(A) INSOFAR AS THE LEARNED CIT(A) HAS TRIED TO OPINE THAT THE ASSESSEE WAS TO EXPLAIN THE SOURCE OF CASH WHETHER WAS TO BE IDENTIFIED ON THE RENDERING OF INCOME AS I.T.A.NO. 468/CTK/2012 7 REGULAR BOOKS OF ACCOUNT OR SOURCE IDENTIFIABLE OVER AND ABOVE FROM WITHDRAWAL FROM THE BANK ONLY. WHEN THE AMOUNT WHICH HAS B EEN DECLARED AND SUFFERED TAX HAS ALREADY BEEN ACCEPTED IT WAS NOBODYS CASE TO IDENTIFY THE PARTICULAR AMOUNT AND THAT TOO IN CASH FOR THE PURPOSE OF SEIZURE UNDER THE PROVISIONS OF SECTION 153A WHEN THE INCOME RELATING TO THE SEIZURE WAS TO BE EXPLAINED FOR THE PURPOSE OF TAXATION IN THE IMPUGNED ASSESSMENT YEAR. WE DO FIND THAT THE INCOME DECLARED BY THE ASSESSEE AND SOURCE OF INCOME GENERATED BEING ORISSA COMPUTER ACADEMY HAS ALREADY BEEN SUBJECTED TO TAX WHEN AS THE LEARNED DR POINTED OUT WERE CASES DI SPOSED OF BY THIS BENCH OF THE TRIBUNAL EARLIER BUT THIS APPEAL WHICH HAD REMAINED PENDING BEFORE THE LEARNED CIT(A). WE MAY ADD THAT THE INCOME GENERATED IN THIS IMPUGNED ASSESSMENT YEAR HAS BEEN RENDERED TO TAX FAR EXCEEDS THE AMOUNT SEIZED COULD ALONE B ECOME NOT NOW CONTROVERTIBLE INSOFAR AS INCOME TAX IS PAID ON INCOME GENERATED AND HERE IS A CASE WHERE THE INCOME HAS BEEN GENERATED AND HELD IN CASH BY THE ASSESSEE THEREFORE LEAVING DOUBT AND SURMISES ONLY ON THE CHANGE OF DENOMINATION DOES NOT R E ALLY CONTRADICT THAT THE AMOUNT SEIZED BY THE DEPARTMENT WAS WHETHER FROM DIFFERENT SOURCES OR FROM THE ASSESSEES OWN COFFERS HAS TO BE UNDERSTOOD JUDICIOUSLY TO CLAIM TAX THEREON. THE DOUBT EXISTING EVEN AFTER TAX HAS BEEN PAID IS AN EXERCISE IN FUTILITY INSO FAR AS IT WOULD ONLY LEAD TO DOUBLE TAXATION WHICH THE LEARNED COUNSEL OF THE ASSESSEE HAS EXPLAINED GOES AGAINST THE SPIRIT OF THE INCOME - TAX ACT. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING O FFICER TO DELETE THE ADDITION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 09.11.2012 ( ), I.T.A.NO. 468/CTK/2012 8 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : BHABANI CHARAN RATH, B - 20, BJB NAGAR, BHUBANESWAR 751 014 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 06.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.