Shri Udai Bhan Singh, Faizabad V. Income TAx Officer I, Faizabad

ITA 468/LKW/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7644 (ITAT-LUCKNOW)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-03-2012
• Assessment Year: misc
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Opportunity of being heard
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B : LUCKNOW BEFORE SHRI S. K. YADAV, JUDICIAL MEMBER AND SHRI B. R. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 468 /LKW/ 11 ASSESSMENT YEAR: 2006 - 2007 SHRI UDAI BHAN SINGH, VS. INCOME TAX OFFICER - I, 1/14/3B, HAUSILA NAGAR, FAIZABAD. CIVIL LINES, FAIZABAD. PAN:AQYPS7499D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. P. MISHRA, ADVOCATE RESPONDENT B Y : SHRI K. C. MEENA, D. R. DATE OF HEARING : 13 / 03 /201 2 DATE OF P RONOUNCEMENT :13/03/2012 ORDER PER B. R. JAIN: THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 12 / 05 /20 11 OF LEARNED CIT(A) - I , LUCKNOW RAISES THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN FAILING TO QUASH THE ASSESSMENT ORDER, WHICH HAS BEEN ARBITRARILY PASSED BY THE LEARNED INCOME TAX OFFICER. 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN FAILING TO APPRECIATE THE WRITTEN SUBMISSIONS AND SUSTAINING THE ADDITION OF ` 3,45,320/ - (IN RESPECT OF THE ENTIRE 2 OPENING CAPITAL BALANCE), WHICH WAS ARBITRARILY MADE BY THE LEARNED INCOME TAX OFFICER. 3. THAT THE APPELLANT CRAVES FOR PERMISSION TO ADD, DELETE OR AMEND ANY GROUND / GROUNDS OF APPEAL. 2. BRIEFLY, THE FACTS ARE THAT THE APPELLANT CREDI TED A SUM OF ` 3,45,320/ - ON ACCOUNT OF OPENING CAPITAL. THE ASSESSING OFFICER HELD THIS ENTIRE OPENING CAPITAL AS UNEXPLAINED AS THE APPELLANT ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM WITH ANY EVIDENCE. 3. BEFORE THE LEARNED CIT(A) THE APPELLANT SOUGH T TO EXPLAIN THE AMOUNT OF OPENING CAPITAL AVAILABLE WITH HIM OUT OF ACCUMULATION IN THE PAST AND THE GIFTS RECEIVED BY HIM. NEITHER DRAWINGS NOR GIFTS ARE SHOWN TO HAVE BEEN SUBSTANTIATED BY ANY EVIDENCE AND DRAWINGS BEING VERY LOW TO THE TUNE OF ` 6,000/ - TO ` 10,000/ - PER YEAR WERE TAKEN AS A MOVE TO SUGGEST HIGHER ACCUMULATION OUT OF SMALL INCOME. THE APPELLANT CASTED A CHART OF CAPITAL ACCUMULATION WHICH ALSO WAS NOT FOUND TO BE BACKED BY ANY EVIDENCE. HE, THEREFORE, UPHELD THE DECISION TAKEN BY THE ASSESSING AUTHORITY AND REJECTED THE GROUND RAISED IN APPEAL BEFORE HIM. 4. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS TAKEN A PLEA THAT HE IS AN OLD INCOME TAX ASSESSEE AND DOING BUSINESS FOR LAS T SEVERAL YEARS. THIS BUSINESS WAS CARRIED WITH THE INVESTMENT OF CAPITAL AVAILABLE IN THE PAST AND ACCUMULATIONS FROM YEAR TO YEAR FROM EARNING AND GIFTS BUT THE AUTHORITIES BELOW DID NOT CONSIDER THE EXPLANATION 3 IN RIGHT PERSPECTIVE. THE PARTIES, HOWEV ER, ARE NOT ABLE TO ASSIST AS TO WHETHER THE AMOUNT OF OPENING CAPITAL OF ` 3,45,320/ - IS BACKED BY ASSETS DECLARED IN THE EARLIER YEARS. THE AMOUNT OF OPENING CAPITAL IN THE CASE OF AN OLD ASSESSEE CANNOT BE TREATED AS UN EXPLAINED CREDIT U/S 68 OF THE ACT IN A CASE WHERE THE CAPITAL AMOUNT IS BROUGHT FORWARD FROM THE EARLIER YEARS IS A VIEW ENTERTAINED BY HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX VS PRAMESHWAR BOHRA [2008] 301 ITR 404 (RAJ) . HOWEVER, R EJECTION OF OPENING BALANCE OF CAPITAL ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE SOURCE AND HOW IT WAS ACCUMULATED FOR YEARS HAS BEEN FOUND JUSTIFIED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF C. PACKIRISAMY VS ASSISTANT COMMISSIONER OF INCOME - T AX [2009] 315 ITR 293 (MAD) . IT THEREFORE, IS A BOUND EN DUTY ON THE APPELLANT ASSESSEE TO SUBSTANTIATE THE SOURCE OF ACCUMULATION OR EXPLAIN THAT THE SAME STANDS DECLARED IN ITS EARLIER RETURN S BUT IN THE PRESENT CASE, THE ASSESSEE DID NOT HAVE EFFECTIVE OPPORTUNITY OF EXPLAINING ITS CASE BEFORE THE ASSESSING AUTHORITY. WE, THEREFORE, SET ASIDE THE ORDER AND REMIT THE MATTER BACK TO THE ASSESSING AUTHORITY FOR MAKING NECESSARY VERIFICATION OF FACTS WITH REFERENCE TO EARLIER YEARS INCOME TAX RETURN AND THE EXPLANATION THAT THE ASSESSEE MAY TENDER IN THE REM IT PROCEEDINGS. NEEDLESS TO ADD, EFFECTIVE AND REASONABLE OPPORTUNITY OF BEING HEARD SHALL BE ALLOWED TO THE ASSESSEE BEFORE TAKING DECISION IN ACCORDANCE WITH LAW. 4 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY AS ANNOUNCED IN THE OPEN COUNT IMMEDIATELY AFTER CONCLUSION OF THE HEARING ON 13/03/2012. SD/. SD/. ( S. K. YADAV ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13/03/2012 *SINGH 1303 C OPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR