Purna Chandra Behera, Mayurbhanj V. ITO, Ward-1, Baripada, Baripada

ITA 500/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7579 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P R MOHANTY
• Keywords: Depreciation; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO. 500/CTK/2014 ASSESSMENT YEAR : 2008 - 2009 SRI PURNA CHANDRA BEHERA, S/O SRI DAMODAR BEHERA, WARD NO.8, UDALA, DIST: MAYURBHANJ VS. ITO, WARD NO.1, BARIPADA PAN/GIR NO. AGVPB 0695 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 6 /10 / 2016 DATE OF PRONOUNCEMENT : 26 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 26.8.2014 , FOR THE ASSESSMENT YEAR 2008 - 09 . 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.11,26700/ - AS UNEXPLAI NED CASH CREDIT. 2 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN ENTRY OF CASH CREDIT IN THE ACCOUNTS OF THE ASSESSEE TO THE EXTENT OF RS.14,84,990/ - FROM TWO PERSONS NAMELY SRI ASHINI PANDA FOR RS.11,26,700/ - AND SRI G.SANKHUA FOR RS.3,58,290/ - THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE THE IDENTITY, CREDIT WORTHINESS OF THE CASH CREDITORS AND THE GENUINENESS OF THE TRANSACTION. FROM THE DETAILS SUBMITTED BY THE ASSESSEE THE ASSESSING OFFICER FOUND THAT BOTH THE PERSONS ARE ADMITTEDLY EMPL OYEE / RELATIVE OF THE ASSESSEE AND WERE NOT HAVING PAN NOR HAVE EVER F ILED ANY RETURN OF INCOME. ALL THE TRANSACTIONS ARE IN CASH. THEREFORE, THE ASSESSING OFFICER TREATED THE CASH CREDIT OF RS.14,84,990/ - AS UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE THE LD CIT(A), THE ASSESSEE SUBMI TTED CERTAIN DETAILS ALONG WITH BANK PASS BOOK COPIES OF BOTH THE LOAN CREDITORS . THE LD CIT(A) FORWARDED THE SAME TO THE ASSESSING OFFICER FOR VERIFICATION REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SUCH TRANSACTIONS. IN THE REMAND REPORT, THE ASSESSING OFFICER ADMITTED THAT SHRI ASHINI PANDA GAVE LOAN OF RS.11,26,700/ - TO THE ASSESSEE. HE DEPOSITED CASH OF RS.2,65,700/ - ON 5.4.2007, RS.3,90,000/ - ON 9.4.2007 AND RS.4,56,000/ - ON 22.9.2007 IN ASSESSEE'S SBI, UDALA BRANCH ACCOUNT AND RS.1 5,000/ - WAS GIVEN IN CASH ON 27.03.08. THE ASSESSING OFFICER OBSERVED THAT AS PER THE STATEMENT OF SRI ASHINI PANDA , IT IS CLEAR THAT IN THE FINANCIAL YEAR UNDER CONSIDERATION, 3 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 HIS TOTAL INCOME FROM SALARY, AGRICULTURE AND ACTIVITY OF CASUAL PRIEST WAS OF RS.1,27,000/ - . THE ASSESSING OFFICER ASSUMED THAT T HE CREDITOR MUST HAVE INCURRED SOME AMOUNT OUT OF RS.1,27,000/ - TO MEET HIS AND HIS FAMILY MEMBERS DAY TO DAY EXPENDITURE. FROM THE STATEMENT OF BANK ACCOUNT MAINTAINED AT SBI, UDALA BRANCH, UDALA OF THE CREDITOR , IT IS SEEN THAT THE ASSESSEE WAS CREDITED WITH ONL Y RS.40,280/ - . ACCORDING TO THE ASSESSING OFFICER, THE C REDITOR DID NOT HAVE ANY OTHER SAVINGS. HE HELD THAT SRI ASHINI PANDA FAILED TO PROVE HIS CREDITWORTHINESS. THE ASSESSING OFFICER HAS ALSO NOTED THAT SRI ASHINI PANDA CLAIMED TO HAVE ARRANGED THE SAID AMOUNT OF LOAN FROM DIFFERENT PERSONS KNOWN TO HIM IN HIS LOCALITY AND THE PERSONS EXTENDED THE LOAN TO SRI ASHINI PANDA WITHOUT ANY LOAN AGREEMENT AND CHARGIN G NO INTEREST. THE ASSESSING OFFICER OBSERVED THAT THE DETAILS FURNISHED BY SRI ASHINI PANDA CONTAINS ONLY NAMES & ADDRESS OF THE PERSONS FROM WHOM HE HAD ARRANGED THE LOAN AMOUNT OF RS.11,26,700/ - , BUT DOES NOT CONTAIN WHAT AMOUNT WAS ARRANGED AGAINST EA CH RESPECTIVE PERSONS. HE, THEREFORE, HELD THAT THE GENUINENESS OF THE LOAN - TR ANSACTIONS IS IN DOUBT AS THE HUGE AMOUNT OF LOAN WAS N O T TRANSACTED THROUGH ANY ACCOUNT PAYEE CHEQUE BUT WAS GIVE N /RECEIVED IN CASH. 5 . LD CI(A) AFTER CONSIDERING THE SUBMISS ION OF THE ASSESSEE AND REMAND REPORT OF THE ASSESSING OFFICER OBSERVED THAT SHRI ASHINI PANDA COULD NOT PROVE HIS CREDITWORTHINESS OF ADVANCING LOAN OF RS.11,26,700/ - AS HIS INCOME 4 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 DURING THE YEAR IS RS.1,27,000/ - AS OBSERVED BY THE ASSESSING OFFICER. T HEREFORE, HE SUSTAINED THE ADDITION OF RS.11,26,700/ - 6. LD A.R. OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSING OFFICER HAS EXAMINED THE LOAN CREDITOR SHRI ASHINI PANDA DURING THE REMAND PROCEEDINGS ON 4.10.2013, WHERE, HE ADMITTED THE FACT OF FINANCING RS.11,26,700/ - IN CASH TO THE ASSESSEE. HE FURTHER EXPLAINED THAT THE AMOUNTS WERE OUT OF HIS EARNINGS AND ALSO FROM BORROWING FROM PERSONS IN HIS AREA AND ALSO SUPPLIED THE NAME AND ADDRES S. ACCORDING TO THE ID A.R. OF THE ASSESSEE, AS FAR AS THE LOAN CREDITORS ARE CONCERNED, THEIR IDENTITY AND CREDITWORTHINESS IS PROVED AND GENUINENESS OF THE TRANSACTION IS ALSO PROVED. THE ASSESSING OFFICER WANTED TO VERIFY THE SOURCE OF SOURCE OF ADVANCI NG THE MONEY TO THE ASSESSEE WHICH IS NOT PERMISSIBLE IN LAW. IF THE CREDITOR IS UNABLE TO PROVE THE SOURCE OF HIS CREDIT, THEN ADDITION SHOULD BE MADE IN THE HANDS OF THE CREDITOR AND NOT IN THE HANDS OF THE ASSESSEE. FURTHER, THE ASSESSING OFFICER HAS NO T EXAMINED THOSE PERSONS FROM WHOM THE CREDITOR HAS BORROWED MONEY AND GIVEN TO THE ASSESSEE TO ASCERTAIN WHETHER THOSE PERSONS COULD HAVE ADVANCED THE AMOUNT TO THE ASSESSEE. IN THE ABSENCE OF SAME, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. 7 . LD D.R. RELIED ON THE ORDERS OF AUTHORITIES BELOW. 5 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 8 . AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, I AM OF THE CONSIDERED VIEW THAT RS. 11,26,700/ - SHOWN AS CREDIT IN THE BOOKS OF THE ASSESSEE BEING THE AMOUNT RECEIVED FROM SHRI ASHINI PANDA WAS ADDED AS UNEXPLAI NED CREDIT U/S.68 OF THE ACT. IT IS ALSO AN UNDISPUTED FACT THAT DURING THE REMAND PROCEEDINGS ON 4.10.2013, SHRI ASHINI PANDA APPEARED BEFORE THE ASSESSING OFFICER AND ADMITTED THE FACT OF HAVING ADVANCING THE LOAN OF RS. 11,26,700/ - IN CASH TO THE ASSESSEE. HE HAS EXPLAINED THAT HIS YEARLY INCOME IS RS.1,27,000/ - AND THAT HE HAS ARRANGED THE AMOUNT FROM HIS KNOWN PERSONS IN HIS LOCALITY. HE HAS ALSO PROVIDED THE NAME AND ADDRESS OF THOSE PERSONS TO THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD AFTER MAKING ENQUIRY THAT THOSE PERSONS COULD NOT HAVE ADVANCED MONEY TO SRI ASHINI PANDA. IN ABSENCE OF ANY SUCH MATERIAL BRING BROUGHT ON RECORD, I AM OF THE CONSIDE RED VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE CREDITWORTHINESS OF SHRI ASHINI PANDA AS NOT EXPLAINED. THE GENUINENESS OF THE TRANSACTION AND THE IDENTITY OF THE CREDITOR IS PROVED BY THE FACT THAT HE APPEARED BEFORE THE ASSESSING OF FICER AND ADMITTED THE FACT OF HAVING GIVING LOAN TO THE ASSESSEE OF RS.11,26,700/ - . THUS, IN MY CONSIDERED VIEW, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE U/S.68 OF THE ACT FOR AN AMOUNT OF RS.11,26,700/ - . I, THEREFORE, SET ASIDE THE ORDERS O F LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.L 1,26,700/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 6 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 9. GROUND NO.2 IS DIRECTED AGAINST THE ORDER OF THE LD CIT(A) CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON TWO VEHICLES OF RS.55,250/ - . 10. I HAVE HEARD THE RIVAL SUBMISSIONS OF LD REPRESENTATIVES OF PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING OF LIQUOR. HE OPINED THAT CONSIDERING TH E NATURE AND EXTENT OF BUSINESS, USE OF FOUR VEHICLES FOR BUSINESS PURPOSES IS QUITE UNREASONABLE. THEREFORE, HE DISALLOWED DEPRECIATION OF TWO VEHICLES AND ADDED RS.55,250/ - TO THE INCOME OF THE ASSESSEE. THE SAME WAS CONFIRMED IN APPEAL BY THE LD CIT(A ). 11. BEFORE ME, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE OF DEPRECIATION WAS MADE ON CONJECTURES AND SURMISES BY THE ASSESSING OFFICER OBSERVING THAT CONSIDERING THE NATURE AND EXTENT OF BUSINESS OF THE ASSESSEE, USE OF FOUR VEHICLES WAS UNREASONABLE. THE ASSESSING OFFICER HAS DISALLOWED THE DEPRECIATION OF TWO VEHICLES BUT HAS ALLOWED PETROL AND REPAIRING EXPENSES OF THE VEHICLES CLAIMED BY THE ASSESSEE. THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER THAT THE VEHICLES COULD NOT HAV E BEEN USED FOR THE BUSINESS OF THE ASSESSEE IS NOT JUSTIFIED CONSIDERING THE FACT THAT HE HIMSELF HAS ALLOWED DEDUCTION FOR PETROL AND REPAIRING OF THOSE VEHICLES. IT WAS, THEREFORE, ARGUED THAT THE DISALLOWANCE OF DEPRECIATION SHOULD BE DELETED. 7 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 12. ON THE OTHER HAND, LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 13. I FIND THAT FOR DISALLOWING THE DEPRECIATION OF RS.55,250/ - , THE ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD AFTER INVESTIGATION TO SHOW THAT THESE VEHICLES WERE NOT USED FOR TH E PURPOSES OF THE BUSINESS OF THE ASSESSEE. FURTHER, THE SUBMISSION OF THE LD A.R. THAT PETROL AND REPAIRING EXPENSES OF THESE VEHICLES CLAIMED BY THE ASSESSEE HAS BEEN ALLOWED BY THE ASSESSEE HAS REMAINED UNCONTROVERTED. IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE DISALLOWANCE OF DEPRECIATION OF RS.55,250/ - MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD CIT (A) CANNOT BE SUSTAINED IN LAW AND, THEREFORE, I SET ASIDE THE ORDERS OF LOWER AUTHORITIES ON THIS ISSUE AND VACATE THE DISALLOWANCE AND ALLOW THIS GROUND OF APPEAL TAKEN BY THE ASSESSEE. 14. GROUND NO.3 OF THE APPEAL IS DIRECTED AGAIN ST THE ORDER OF THE LD CIT(A) IN CONFIRMING THE A CTION OF THE ASSESSING OFFICER IN ADDING AGRICULTURAL INCOME OF RS.60,0 00/ - AS INCOME FROM OTHER SOURCES. 15. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED AGRICULTURAL INCOME OF RS.60,000/ - IN THE RETURN OF INCOME . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE PRODUCED COPY OF LAND PASS BOOK ISSUED BY THE REVENUE AND DISASTER MANAGEMENT DEPARTMENT GOVERNMENT OF ODISHA SHOWING DETAILS OF LAND HELD BY THE ASSESSEE AND HIS FAMILY. COPY OF LEDGER ACCOUNT OF AGRICU LTURAL INCOME WAS FURNISHED WHICH SHOWED CREDIT ENTRY ON 26.4.2007 SHOWING RECEIPT OF RS.60,000/ - . NO OTHER DETAILS LIKE CROP GROWN, 8 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 SALES PROCEEDS, EXPENDITURE IN AGRICULTURAL ETC, COULD BE FURNISHED BY THE ASSESSEE. HE FURTHER OBSERVED THAT THE LAND H OLDING OF THE ASSESSEE IS 11.825 ACRES, OUT OF WHICH CULTIVABLE LAND IS 5.670 ACRES ONLY, THE REST BEING EITHER HOMESTEAD LAND OR WATER BODY, ETC . THE ASSESSING OFFICER FURTHER NOTED THAT WHATEVER CROPS HAVE BEEN GROWN BY THE ASSESSEE ON 5.67 ACRES OF CU LTIVABLE LAND, IT WOULD HAVE BEEN USED FOR CONSUMPTION OF HIS FAMILY, LEAVING LITTLE TO BE SOLD AND INCOME DERIVED THEREFROM.. THEREFORE, HE TREATED THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IN THE RETURN AS INCOME FROM OTHER SOURCES AND ADDED THE SAM E TO THE TOTAL INCOME OF THE ASSESSEE. 16. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 17. BEFORE ME LD A.R. OF THE ASSESSEE ARGUED AND SUBMITTED THAT THE ASSESSEE FILED EVIDENCE IN THE FORM OF LAND PASSBOOK FOR RECEIPT OF AGRICUL TURE INCOME OF RS.60,000/ - , WHICH THE ASSESSING OFFICER HIMSELF ADMITTED IN THE ASSESSMENT ORDER. AFTER FILING THIS OVERWHELMING EVIDENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE AGRICULTURAL INCOME OF TH E ASSESSEE AS INCOME FROM OTHER SOU RCES AND LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. 18. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 9 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 19. I FIND THAT IN SUPPORT OF THE CLAIM OF EARNING OF AGRICULTURAL INCOME OF RS.60,000/ - , THE ASSESSEE FILED LAND PASSB OOK BEFORE THE ASSESSING OFFICER AND ALSO COPY OF THE SAME BEFORE ME WHEREFROM HE POINTED OUT THAT THE ENTRY OF RS.60,000/ - IN THE PASSBOOK IS THE ASSESSEES YEARLY AGRICULTURAL INCOME OF R S.60,000/ - . THE ASSESSING OFFICER AFTER VERIFICATION HAS NOT BROUG HT ANY MATERIAL ON RECORD TO SHOW THAT THE EVIDENCE FILED BY THE ASSESSEE IS NOT ACCEPTABLE OR BOGUS. WITHOUT BRINGING ANY MATERIAL ON RECORD TO THE CONTRARY, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN NOT ALLOWING THE CLA IM OF AGRICULTURAL INCOME OF RS.60,000/ - . I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO TREAT RS.60,000/ - AS AGRICULTURAL INCOME SHOWN BY THE ASSESSEE. HENCE, THIS GROUND OF THE APPEAL IS ALLOWED. 20 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. . ORDER PRONOUNCE D IN THE OPEN COURT ON 26 /10 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 26 /10 /2016 B.K.PARIDA, SPS 10 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : SRI PURNA CHANDRA BEHERA, S/O SRI DAMODAR BEHERA, WARD NO.8, UDALA, DIST: MAYURBHANJ 2. THE RESPONDENT. ITO, WARD NO.1, BARIPADA 3. THE CIT(A) CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY// 11 ITA NO. 500/CTK/2014 ASSESSMENT YEAR :2008 - 2009 DATE INITIA L 1. DRAFT DICTATED ON 26 / 10/16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26 / 10/16 (DICTATION PAD HAS BEEN ENCLOSED ALONG WITH ORIGINAL FILE) SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER A M 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS /PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE H.C. 9. DATE ON WHICH FILE GOES TO THE SR. PS 10. DATE OF DISPATCH OF ORDER.