Shri. H.M. Suresh, Bangalore V. ITO, Bangalore

ITA 502/BANG/2010

• Counselvise Citation: 50221114 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-06-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 13-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: S VENKATESAN
• Keywords: Unexplained investment; Peak credit
• Section: 142(1); 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.502(BNG.)/2010 (ASSESSMENT YEAR : 2005-06) SHRI H.M.SURESH THE INCOME -TAX OFFICER, SRI RAMA NLAYA, WARD-4(3), HULIMAVU, BANNERGHATTA ROAD, BANGALORE BANGALORE PAN NO.BRTPS7137R VS APPELLANT RESPONDENT ASSESSEE BY : SHRI S. VENKATESAN, CA REVENUE BY : SMT. SUSAN THOMAS JOSE, JCIT DATE OF HEARING : 12-06-2012 DATE OF PRONOUNCEMENT : 29-06-2012 O R D E R PER SHRI N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 08- 01-2010 OF CIT(A)-II, BANGALORE RELATING TO AY: 20 05-06. 2. THE ASSESSEE IS AN INDIVIDUAL. THE AO BASED ON THE AIR FILED BY M/S CANARA BANK, ET & T SECTION TO THE EFFECT THAT THE ASSESSEE HAD DEPOSITED A TOTAL AMOUNT OF RS.69,20,000/- IN HIS S B ACCOUNT DURING THE PREVIOUS RELEVANT ASSESSMENT YEAR 2005-06 ISSUE D A NOTICE U/S 142(1) OF THE IT ACT, 1961 ( THE ACT) ON 14-09-2007 CALLING UPON THE ASSESSEE TO FILE RETURN OF INCOME FOR THE ASSESSMEN T YEAR 2005-06 ON ITA NO.502(B)/2010 2 OR BEFORE 08-10-2007. THE ASSESSEE DESPITE RECEIPT OF THE SAID NOTICE, DID NOT FILE ANY RETURN OF INCOME ON 26-11-2007. A LETTER WAS ISSUED BY THE AO REQUESTING THE ASSESSEE TO FILE THE RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON OR BEFORE 07-12-2007. THIS LETTER WAS SERVED ON THE ASSESSEE ON 30-11-2007 BUT THE ASSESS EE DID NOT COMPLY WITH THE AFORESAID LETTER ALSO. THE AO THER EFORE, PROCEEDED TO COMPLETE THE ASSESSMENT U/S 144 OF THE IT ACT, TO T HE BEST OF HIS JUDGMENT. THEREAFTER, THE AO REFERRED TO PROVISION S OF SEC.68 OF THE ACT AND CONCLUDED THAT THE ASSESSEE WAS BOUND TO EX PLAIN THE NATURE AND SOURCE OF SUM CREDITED IN HIS BOOKS OF ACCOUNTS . SINCE THE ASSESSEE FAILED TO ESTABLISH THE NATURE AND SOURCE OF CREDIT IN HIS BOOKS OF ACCOUNTS, THE AO MADE AN ADDITION OF RS.69 ,20,000/- TO THE TOTAL INCOME OF THE ASSESEEE. THE AO PASSED THE A SSESSMENT ORDER ON 31-12-2007. 3. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT HE WAS AN AGRICULTURIST AND THAT HE WAS GIVEN AN EXTENT OF AB OUT 15 ACRES OF AGRICULTURAL LAND UNDER A FINAL DECREE DATE 16-11-2 000 IN A PARTITION SUIT ON THE FILE OF THE 28 TH ADDL. CITY CIVIL JUDGE, BANGALORE IN O.S.NO.15539/2000. IT WAS CONTENDED BY THE ASSESSEE E THAT HE ALONG WITH HIS WIFE AND MINOR SONS CONSISTED A HUF AND TH E DEPOSITS IN THE BANK ACCOUNT ARE NOTHING BUT INCOME DERIVED FROM AG RICULTURE, BY THE HUF. BESIDES THE ABOVE, THE ASSESSEE SUBMITTED THAT HE WAS REARING CATTLE AND SELLING MILK AND MILK PRODUCTS B ESIDES DERIVING INCOME FROM BROKERAGE AND COMMSSIION. THE ASSESEEE THUS SUBMITTED THAT THE IMPUGNED ADDITION SHOULD BE DELE TED. ALTERNATIVELY, THE ASSESSEE SUBMITTED THAT THE AO C OULD NOT HAVE ITA NO.502(B)/2010 3 ADDED THE ENTIRE DEPOSITS IN THE BANK ACCOUNT AS IN COME. AS ON 31- 03-2004, THE BALANCE IN THE SAID BANK ACCOUNT WAS R S.14,78,394/-. THE PEAK IN THE SAID BANK ACCOUNT TILL 31-03-2005 W AS RS.16,48,454/- AS ON 08-052004. EVEN IN WORST CIRCU MSTANCES WHAT COULD HAVE BEEN TAXED AS UNEXPLAINED INVESTMENT U/S 69 IN THE SAID BANK ACCOUNT IS RS.16,48,454/- MINUS THE OPENING BA LANCE OF RS.14,78,394/- I.E. RS.1,70,060/-. THEREFORE, IN TH E WORST CIRCUMSTANCES WHAT COULD BE TAXED IS RS.1,70,060/-. EVEN THIS CANNOT BE ASSESSED TO TAX U/S 144 OF THE ACT, BECAU SE THE DEPOSITS REPRESENTED THE DEPOSITS OF THE FUNDS OF THE JOINT FAMILY AND CERTAIN WOKS DONE ON CHARITABLE BASIS. IN FINE, IT WAS SUB MITTED THE INCOME ASSESSEE REQUIRES TO BE DELETED IN AS MUCH AS THE S AME IS NOT ASSESSABLE IN THE INDIVIDUAL STATUS AND FURTHERMORE THE FUNDS IN THE BANK ACCOUNT ARE ALL EXPLAINED. EVEN ASSUMING AN A DDITION HAS TO BE MADE THE SAME HAS TO BE MADE BY CONSIDERING THE DEPOSITS IN THE SAID BANK ACCOUNT WITHOUT IGNORING THE OPENING BALA NCE AT THE BEGINNING OF THE PREVIOUS YEAR AND THE WITHDRAWALS BEFORE IT REACHED ITS PEAK DURING THE PREVIOUS YEAR. 4. THE CIT(A) DID NOT ACCEPT THE PLEA OF THE ASSES SEE. HE HELD THAT THE ASSESSEE DID NOT ESTABLISH THE EXISTENCE OF AGR ICULTURAL INCOME. ON THE PLEA OF THE ASSESSEE REGARDING QUANTUM OF AD DITION, THE CIT(A)HELD AS FOLLOWS (PARA 3.6 (III) (IV) PAGE 13 OF CIT(A)S ORDER): (III) THE APPELLANTS CONTENTION IS NOT ACCEPTABL E AS THE MAJOR DEPOSIT WERE MADE BY CASH ONLY AND THE APPELLANT CO ULD NOT EXPLAIN THE NATURE AND SOURCES OF CASH. IT IS ALSO OBSERVED THAT WITHDRAWALS WERE MADE THROUGH CHEQUES AS UNDER : ITA NO.502(B)/2010 4 ICICI BANK RS. 59,000 KOTAK MAHINDRA RS. 80,000 RAJA RS. 1,00,000 MUNINARAYANA RS. 5,00,000 B.S.GANESH PRASAD (RTO) RS. 94,550 NARAYANAPPA RS.3,01,000 JAGADUL PRASAD RS. 1,00,000 ASWATHI RS.11,00,000 PRASHANTH RS. 3,18,000 SRI RAM MOHAN BRICKS RS. 6,50,000 VENKATA SWAMI RS. 4,80,000 (IV) THERE ARE CERTAIN PAYMENTS, WHICH APPEAR IN T HE BANK STATEMENT. THE NATURE OF THE SAID TRANSACTIONS IS NOT EXPLAINED. UNDER THE CIRCUMSTANCES, THE PEAK CREDI T CANNOT BE TAKEN. FURTHER, IT WAS ALSO CLAIMED THAT THE DE POSITS INCLUDE OPENING BALANCE OF RS.14,78,394/- AND THAT THIS SHOULD ALSO BE CONSIDERED WHILE WORKING OUT THE PEA K CREDIT. THIS ARGUMENT IS ALSO NOT ACCEPTABLE BECAUSE THE AP PELLANT DOES NOT APPEAR TO HAVE OFFERED THESE AMOUNTS FOR T AX IN THE EARLIER YEARS NOR ANY SUCH ASSESSMENT APPEARS TO HA VE BEEN MADE. HENCE, IT CANNOT BE CONSIDERED FOR BEING SET OFF AGAINST ANY UNDISCLOSED INCOME OF THE EARLIER YEARS. IN VI EW OF THE FACTS MENTIONED ABOVE, THE ADDITION AS MADE BY THE AO IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE FILED BEFORE US A STATEMENT SHOWING CSH WITHDRAWAL AND CASH DEPOSITS IN THE BANK ACCOUNT FOR THE PERIOD 1.4.2004 TO 31.3.2005. ACCO RDING TO HIM THE WITHDRAWALS FROM THE BANK ACCOUNTS THOUGH THROUGH B EARER CHEQUES WERE HIS OWN WITHDRAWALS WHICH WILL GO TO EXPLAIN T HE DEPOSITS MADE AFTER SUCH WITHDRAWAL. HE ALSO FILED THE LEDGER AC COUNT OF THE PERSONS WHO HAD WITHDRAWN FROM THE BANK ACCOUNT BY BEARER CHEQUES TO SHOW THAT THE SAID WITHDRAWALS WERE ASSE SSEES OWN ITA NO.502(B)/2010 5 MONEY. IT WAS HIS SUBMISSION THAT IN THE CIRCUMSTA NCES ONLY THE PEAK CREDIT HAD TO BE ADDED. IT WAS HIS SUBMISSION THAT THE ASSESSEE BEING AN AGRICULTURALIST COULD NOT PUT FORTH HIS CA SE IN THE PROPER PERSPECTIVE BEFORE THE LOWER AUTHORITIES AND REQUES TED THAT THE MATTER SHOULD BE REMANDED TO THE AO TO ENABLE THE A SSESSEE TO ESTABLISH HIS CASE WITH LIBERTY TO LET IN EVIDENCE AS MAY BE NECESSARY. IN THIS REGARD IT WAS ALSO POINTED OUT THAT THE CIT (A) DID NOT CONFRONT THE ASSESSEE REGARDING HIS CONCLUSIONS REGARDING TH E PLEA OF THE ASSESSEE FOR MAKING ADDITION OF ONLY PEAK CREDIT AN D THEREFORE THE ASSESSEE DID NOT HAVE PROPER OPPORTUNITY TO EXPLAIN HIS CASE. THE LEARNED DR RELIED ON THE FINDINGS OF THE CIT(A) IN THIS REGARD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE A RE OF THE VIEW THAT THE PLEA OF THE LEARNED COUNSEL FOR REMAND ON THE QUESTION OF ADDITION TO BE MADE OF ONLY THE PEAK CREDIT IN THE BANK ACCOUNT REQUIRES FRESH EXAMINATION BY THE AO. THE PROCEEDI NGS BEFORE THE AO WERE COMPLETED U/S.144 OF THE ACT. EVEN BEFORE CIT(A), THE PLEA OF THE ASSESSEE HAS NOT BEEN EXAMINED BY POINTING O UT AS TO WHY THE THEORY OF MAKING ADDITION OF ONLY THE PEAK CREDIT I N THE BANK ACCOUNT CANNOT BE ACCEPTED. THE CIT(A) HAS PROCEEDED ON TH E BASIS THAT WITHDRAWALS IN THE NAME OF THIRD PARTIES WOULD NOT BE AVAILABLE FOR DEPOSIT OF THE CASH WITHDRAWN FROM THE BANK. THE A SSESSEE NOW POINTS OUT THAT THOSE WITHDRAWALS IN SOME CASES ARE ASSESSEES OWN WITHDRAWALS. IF THE PLEA OF THE ASSESSEE IS FOUND TO BE CORRECT, THEN THE ADDITION HAS TO BE RESTRICTED ONLY TO THE EXTEN T OF PEAK CREDIT. WE THEREFORE REMAND THE ISSUE TO THE AO FOR FRESH EXAM INATION. FOR STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. ITA NO.502(B)/2010 6 7. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH JUNE, 2012. SD/- SD/- (JASON P BOAZ) (N.V.VASUD EVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE: D A T E D : 29-06-2012 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-IV, BANGALORE. 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) SR. PRIVATE SECRETARY, ITAT, BANGALORE