S.C. Hosmani, Gadag V. ITO, Gadag

ITA 533/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51256 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS GOSE J
• Assessee Lawyers: ASHOK KULKARNI
• Keywords: Unexplained cash credit; Business expenditure; Opportunity of being heard; Corroborative evidences; Revised return
• Section: 142(1); 250; 143(2); 68; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS. 532 & 533/BANG/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 SHRI S.C. HOSAMANI, GADAG. C/O. A. RAGHAVENDRA RAO & ASSOCIATES, CHARTERED ACCOUNTANTS, VAKIL CHAWL, POST: GADAG 582 101. : APPELLANT PAN: ABLPH7899E VS. THE INCOME TAX OFFICER, WARD 1, GADAG. : RESPONDENT APPELLANT BY : SHRI ASHOK KULKARNI, ADVOCATE. RESPONDENT BY : SMT. SUSAN THOMAS GOSE, JCIT(DR) DATE OF HEARING : 25.07.2011 DATE OF PRONOUNCEMENT : 26.08.2011 O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THESE TWO APPEALS ARE FILED BY THE ASSESSEE DIREC TED AGAINST THE ORDER OF CIT(APPEALS), HUBLI IN ITA NO.133 & 132/CI T(A)HBL/08-09 DATED 8.1.2010 AND 7.1.2010 FOR THE A.Y. 2005-06 AND 2006 -07 RESPECTIVELY ITA NOS.532 & 533/BANG/2010 PAGE 2 OF 13 PASSED U/S. 250 R.W.S. 144 AND 147 OF THE ACT. SIN CE THE ISSUES RELATING TO BOTH THE ASSESSMENT YEARS ARE COMMON, THEY ARE DISP OSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FOR BOTH THESE ASSESSMENT YEARS, THE ASSESSEE H AS RAISED FIVE GROUNDS EACH WHEREIN GROUND NOS. 1 & 5 ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. THE OTHER GROUNDS ARE L ISTED HEREINBELOW FOR ADJUDICATION. (1) GROUND NO.2 (COMMON FOR BOTH YEARS): THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.2,39,055 (FOR A.Y. 2005-06) AND RS.16,81,119 (FOR A.Y. 2006-07) OUT OF THE COMMISSI ON INCOME RECEIVED FROM THE LIC. THE ASSESSEE HAS MAINTAINED THE DAY TO DAY BOOKS OF ACCOUNTS AND VERIFIED BY THE INCOME-TA X OFFICER FOR THE A.Y. 2005-06. (2) GROUND NO.3 (FOR A.Y. 2005-06) : THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.2,18,500 AS UNEXPLAIN ED INVESTMENT IN PURCHASE OF SONY TV AND DVD. THE ASSESSEE HAS N OT PURCHASED THE SAID EQUIPMENT. THE INVOICE DOES NOT MENTION THE ADDRESS. IT ONLY STATES AS S.C. HOSMANI. THER E ARE MANY PERSONS BY THIS NAME IN HUBLI AND OTHER PLACES. TH E INVOICE DOES NOT MENTION THE CLEAR ADDRESS. THE SUPPLIER H AS NOT GIVEN ANY PARTICULARS AS TO WHERE THEY DID INSTALL THE EQ UIPMENT. THE SAID EQUIPMENT HAS NEVER BEEN INSTALLED IN THE ASSE SSEES RESIDENCE. ITA NOS.532 & 533/BANG/2010 PAGE 3 OF 13 (3) GROUND NO. 3 (FOR A.Y. 2006-07): THE LD. CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS.6,19,668 OUT OF A SUM OF RS.8,00,000 CREDITED DURING THE PREVIOUS YEAR 2005-06 INTO THE CORPORATION BANK ACCOUNT OF THE ASSESSEE. (4) GROUND NO.4 (COMMON FOR BOTH YEARS) : THE LEARNED CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS. 57,600 (AY 2005 -06) AND RS.64,200 (AY 2006-07) BEING RENTAL INCOME. THE PRO PERTY BELONGS TO THE FAMILY OF THE ASSESSEE IN THE CAPACI TY AS HUF. THE RENTAL INCOME CANNOT BE ASSESSED IN THE HANDS O F THE ASSESSEE. 3. THE ASSESSEE AN INDIVIDUAL, WORKING AS A LIC AGE NT, FILED HIS RETURN OF INCOME FOR THE A.Y. 2005-06 ON 9.11.2005 DECLARI NG AN INCOME OF RS.1,49,870 AND THE SAME WAS PROCESSED ON 28.2.2006 WITH A REFUND OF RS.13,116. BASED ON LOCAL INFORMATION RECEIVED BY THE ASSESSING OFFICER, THE ASSESSEE WAS SERVED WITH A NOTICE U/S. 148 OF T HE ACT ON 11.9.2007, WHICH WAS DULY SERVED ON HIM ON 14.9.2007 FOR BOTH THE ASSESSMENT YEARS. THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE A.Y. 2006-07. IN ALL FIVE OPPORTUNITIES WERE GIVEN TO THE ASSESSEE FOR F ILING HIS RETURN OF INCOME BY ISSUANCE OF NOTICE U/S. 143(2) / 142(1) OF THE I NCOME-TAX ACT. SINCE THE ASSESSEE DID NOT RESPOND TO THE NOTICE ISSUED ON TH E FIVE OCCASIONS, THE LD. ASSESSING OFFICER COMPLETED THE ASSESSMENT PROCEEDI NGS U/S. 144 OF THE ACT. 4. GROUND NO.2 (COMMON FOR BOTH YEARS) : DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2005-06 AND 2006-07, THE ASSES SEE HAD RECEIVED LIC COMMISSION TO THE TUNE OF RS.2,81,241 AND RS.19,77, 787.26 RESPECTIVELY. ITA NOS.532 & 533/BANG/2010 PAGE 4 OF 13 FOR THE A.Y. 2005-06, THE ASSESSEE HAD CLAIMED AN E XPENDITURE OF RS.1,49,871. HOWEVER, THE LD. AO DISALLOWED THE EN TIRE EXPENDITURE CLAIMED BY THE ASSESSEE FOR THE A.Y. 2005-06 SINCE NO SUPPORTING EVIDENCE WAS PRODUCED. FOR THE A.Y. 2006-07 THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME AND THEREFORE THE LD.AO TREATED THE ENTIR E COMMISSION EARNED TO THE TUNE OF RS. 19,77,787.26 AS THE INCOME OF THE A SSESSEE AND BROUGHT TO TAX. 5. ON APPEAL BEFORE THE LD. CIT(A), IT WAS HELD AS FOLLOWS IN A.Y. 2005- 06: 4.2. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND . .. . IN THIS CASE A REMAND REPORT WAS CALLED FOR BY THIS OFFICE LETTER DT: 18.03.2009 WHICH IS SUBMITTED BY AO VIDE LETTER DT: 22.05.2009. THE AO IN HIS REMAND REPORT STATES THAT ASSESSEE WA S PRESENT AND PRODUCED THE BOOKS OF ACCOUNT, I.E. LEDGER AND CASH BOOK FOR THE F.Y. 04-05. THE AO FURTHER STATES IN HIS REMAND RE PORT THAT THE BOOKS OF ACCOUNT PRODUCED BY THE APPELLANT WERE EXA MINED AND THE APPELLANT WAS ASKED TO PRODUCE THE BILLS AND VO UCHERS ON THE BASIS OF WHICH EXPENSES ARE DEBITED IN THE BOOKS. THE APPELLANT EXPRESSED HIS INABILITY TO PRODUCE THE BILLS/VOUCHE RS IN RESPECT OF THE EXPENSES CLAIMED TO HAVE BEEN INCURRED FOR HAVI NG EARNED COMMISSION INCOME. IT IS THUS SEEN THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED BEFORE THE AO, HOWEVER, A LEDGER AND CASH BOOK WERE PRODUCED BEFORE THE AO DURING THE REMAND PROCEEDINGS BUT THE APPELLANT COULD NOT SUBSTANTIAT E HIS CLAIM OF EXPENDITURE RECORDED IN THE BOOKS W.R. TO THE BILLS /VOUCHERS WHICH WERE ADMITTEDLY NOT MAINTAINED, HENCE NOT FUR NISHED BEFORE THE AO DURING REMAND PROCEEDINGS. COMING TO THE CIRCULAR NO.648 DT: 30.03.1993 RELIED UPON BY THE A PPELLANT, IT IS NOTICED THAT THE CASE OF THE APPELLANT IS NOT COVER ED BY THE PROVISIONS OF PARA 2, 3 & 4 OF THE SAID CIRCULAR. THE BENEFIT OF ADHOC DEDUCTION OF RS.20,000/- TO INSURANCE AGENTS OF LIC OF INDIA IS APPLICABLE ONLY IN RESPECT OF THE INSURANC E AGENT IN WHICH CASE THE TOTAL COMMISSION (INCLUDING THE 1 ST YEAR COMMISSION, RENEWAL COMMISSION AND BONUS COMMISSION) IS LESS TH AN RS.60,000/- P.A. IN THE CASE OF PRESENT APPELLANT, THE TOTAL COMMISSION INCOME FROM LIC IS RS.2,81,241/- WHICH E XCEEDS RS.60,000/-, THEREFORE THE APPELLANTS CASE IS COVE RED BY ITA NOS.532 & 533/BANG/2010 PAGE 5 OF 13 PROVISIONS PROVIDED IN PARA 5 OF THE SAID CIRCULAR WHICH IS AS UNDER: THE BENEFIT OF ADHOC DEDUCTION WILL NOT BE AVAILABL E TO AGENTS WHO HAVE EARNED TOTAL COMMISSION OF MORE THA N RS.60,000/- DURING THE YEAR. THE ADMISSIBILITY OF THE EXPENDITURE CLAIMED BY SUCH AGENTS WILL BE DECIDED BY THE ASSES SING OFFICERS AS PER THE PROVISIONS OF THE ACT. 4.3 IT IS THUS CLEAR THAT THE SAID CIRCULAR IS NOT APPLICABLE IN THE CASE OF THE APPELLANT. HOWEVER, CONSIDERING THE FAC T THAT THE APPELLANT IS AN LIC AGENT AND SOME EXPENSES ARE REQ UIRED TO BE INCURRED IN CONNECTION WITH EARNING OF SUCH COMMISS ION. THE APPELLANT EVEN THOUGH HAS NEITHER MAINTAINED ANY RE CORDS FOR SUCH EXPENSES ATTRIBUTABLE TO THE EARNING OF THE CO MMISSION TO THE TUNE OF RS.2,81,241/- NOR THE RETURN HAS BEEN FILED IN RESPECT OF COMMISSION INCOME WHICH REPRESENTS HIS UNDISCLOSED INCOME FOR THE A.Y. 2005-06. THE APPELLANT HAS ALSO NOT FURNIS HED ANY DETAILS AS REGARDS MAINTAINING A CAR, TELEPHONES & MOBILE PHONES AND USE OF THE SAME FOR THE PURPOSE OF BUSINESS. N O DETAIL OF EMPLOYEES IF ANY AS CLAIMED HAS BEEN FURNISHED. CO NSIDERING THE FACTS AND CIRCUMSTANCES, 15% OF TOTAL COMMISSION EA RNED IS ALLOWED AS REASONABLE EXPENDITURE HAVING INCURRED G ENUINELY FOR THE PURPOSE OF EARNING THE COMMISSION, WHICH COMES TO RS.42,186/-. THUS, THE APPELLANT GETS THE RELIEF OF RS.42,186/- AND THE BALANCE ADDITION OF RS.2,39,055/- (281241 M INUS 42186) ON ACCOUNT OF COMMISSION IS CONFIRMED. THOUGH THE BOARDS CIRCULAR RELIED BY THE APPELLANT IS NOT APPLICABLE TO THE FACTS OF THE APPELLANT, HOWEVER, THE ALLOWANCE OF 15% OF EXPENSE S IS STILL IN CONFORMITY TO THE SAID CIRCULAR OF THE BOARD. 6. LD. AR SUBMITTED THAT THE ASSESSEE HAD PRODUCED THE BOOKS OF ACCOUNTS AND CASH BOOK FOR BOTH THE ASSESSMENT YEAR S, HOWEVER, COULD NOT PRODUCE THE VOUCHERS FOR THE EXPENSES INCURRED. F OR THE A.Y. 2005-06, THE ASSESSEE HAD DECLARED A NET PROFIT AT 53.29%. FURTHER, RELYING ON THE CIRCULAR NO.648 DATED 30.3.1993, PRAYED THAT A FURT HER ALLOWANCE MAY BE GIVEN SINCE THE ALLOWANCE OF 15% GRANTED BY THE LD. CIT(A) IS TOO LOW AND UNREALISTIC. ITA NOS.532 & 533/BANG/2010 PAGE 6 OF 13 7. LD. DR OBJECTED TO THE ARGUMENT OF THE LD. AR AN D SUBMITTED THAT THE MATTER HAS BEEN CONSIDERED BY THE CIT(A) AFTER OBTA INING A REMAND REPORT AND HAVE ALSO ANALYSED THE CIRCULAR REFERRED BY THE APPELLANT AND CAME TO A MAGNANIMOUS CONCLUSION BY GRANTING 15% ALLOWANCE TO THE ASSESSEE FOR THE EXPENSES INCURRED. IT WAS PRAYED THAT THE ORDE R OF THE LD. CIT(A) MAY BE SUSTAINED. 8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED T HE MATERIALS ON RECORD BEFORE US. THE ASSESSEE HAS NOT MAINTAINED VOUCHERS FOR THE EXPENSES INCURRED IN CONNECTION WITH HIS PROFESSION , WHICH IS MANDATORY AS PER THE ACT. AT THE SAME TIME, IT IS A FACT THAT A LIC AGENT INCURS LOTS OF TRAVELING EXPENSES IN ORDER TO CANVASS PROSPECTIVE CLIENTS. FURTHER, IT IS A COMMON PRACTICE FOR THEM TO PASS ON CERTAIN COMMISS ION RECEIVABLE BY THEM TO THE CLIENTS IN ORDER TO OBTAIN THE BUSINESS . THE LIC AGENTS HAS TO SPEND LOT OF TIME AND ENERGY GOING AFTER THE POTENT IAL CLIENTS INCURRING EXPENDITURE TO SECURE THE BUSINESS AND OFTEN IT BEC OMES A HIMALAYAN TASK. TAKING IN VIEW OF ALL THESE ASPECTS AND THE AMOUNT OF LIC COMMISSION EARNED BY THE APPELLANT, WHEREBY IT IS EVIDENT THAT THE APPELLANT IS OPERATING AT A LOWER MIDDLE LEVEL, WE ARE OF THE CO NSIDERED VIEW THAT 40% ALLOWANCE WOULD BE APPROPRIATE TO COVER UP THE EXPE NSES INCURRED. IT IS ORDERED ACCORDINGLY. GROUND NO.2 FOR BOTH THE ASSESSMENT YEARS ARE THUS DISPOSED OF. 9. GROUND NO.3 (A.Y. 2005-06) : THE LD. ASSESSING OFFICER HAD INFORMATION THAT THE ASSESSEE HAD PURCHASED SONY PR OJECTION TV AND DVD PLAYER ON 30.9.2004 AMOUNTING TO RS.2,18,500. HE W AS ALSO IN POSSESSION OF THE COPY OF INVOICE OBTAINED FROM THE DEALER. W HEN QUERIED, THE ITA NOS.532 & 533/BANG/2010 PAGE 7 OF 13 ASSESSEE INITIALLY REPLIED THAT THE INFORMATION REC EIVED BY THE REVENUE IS INCORRECT SINCE HE DID NOT PURCHASE THE TV & DVD PL AYER. HOWEVER, VIDE LETTER DATED 14.9.2007 ADDRESSED TO THE DDI (INV.), HUBLI, HE SUBMITTED THAT THERE WAS AN OMISSION IN THE DECLARATION MADE ON 28 .8.2007 AND CONCEDED TO HAVE PURCHASED THE SONY TV AND THE DVD PLAYER FR OM BELLAD & CO., HUBLI. VIDE THE SAME LETTER, THE ASSESSEE HAD ALSO STATED THAT HE SHALL FILE A REVISED RETURN FOR THE YEAR 2004-05 DECLARING THE COST OF THE T.V. & DVD PLAYER AS RS.2,18,500 AND DECLARE THE SAME AMOUNT A S ADDITIONAL INCOME FOR THAT YEAR. HOWEVER, THE ASSESSEE DID NOT COMPL Y WITH THE SUBMISSIONS MADE BEFORE THE REVENUE BY FILING HIS REVISED RETUR N. THEREFORE, THE LD. ASSESSING OFFICER MADE AN ADDITION OF RS.2,18,500 A S INCOME FROM UNDISCLOSED INVESTMENT U/S. 69 OF THE I.T. ACT AND ALSO INITIATED PENALTY PROCEEDINGS. 10. THE LD. CIT(A) AFTER OBTAINING A REMAND REPORT, CONFIRMED THE ADDITION OF RS.2,18,500 IN THE HANDS OF THE ASSESSE E U/S. 69 OF THE ACT WITH THE FOLLOWING OBSERVATIONS: (1) THE AO HAD OBTAINED A COPY OF THE INVOICE NO.28 7 FROM M/S. BELLAD & CO., HUBLI, THE DEALER FOR SONY TV & DVD P LAYER. (2) THE DEALER HAD FURTHER CONFIRMED THAT THE APPEL LANT HIMSELF TOOK DELIVERY OF THE ELECTRONIC GADGETS FROM THE SHOP AN D NO DOOR DELIVERY WAS MADE. 11. LD. AR SUBMITTED THAT APPELLANT WAS UNDER STR ESS BEFORE THE LD.AO AND THEREFORE HE HAD MADE SUCH STATEMENT, HOWEVER LATTER ON CORRECTED HIS STAND FIRMLY. HE SUBMITTED THAT THE TELEVISION OF THIS KIND ARE NOT ITA NOS.532 & 533/BANG/2010 PAGE 8 OF 13 DELIVERED TO THE CUSTOMERS AT THE SHOWROOM BUT ARE DELIVERED AND INSTALLED IN THE PREMISES OF THE BUYER. WITHOUT PROPER INSTA LLATION AND GUIDANCE, THE BUYER OF SUCH ELECTRONIC GADGETS WILL NOT BE ABLE T O OPERATE THE SAME. HE VEHEMENTLY ARGUED STATING THAT THE APPELLANT HAD NO T PURCHASED THE TELEVISION BUT ONLY OUT OF BARE CONFUSION AND COERC ION HAD MADE SUCH AN ADMISSION BEFORE THE REVENUE ON AN EARLIER INSTANCE . HE ALSO POINTED OUT THAT THE NAME GIVEN IN THE INVOICE IS THAT OF SIDHU HOSAMANE, WHILE AS THE APPELLANTS NAME IS S.C. HOSAMANE. FURTHER IN THE INVOICE, THE ADDRESS OF THE APPELLANT IS NOT MENTIONED. DETAILS OF DISPATC H DOCUMENTS HAVE ALSO NOT BEEN MENTIONED. LD. AR PRAYED THAT IN THESE CI RCUMSTANCES, CONSIDERING THE INVOICE OF RS.2,18,500 AS THAT OF T HE ASSESSEE WILL BE UNJUST AND THEREFORE THE ADDITION MADE ON ACCOUNT O F THE SAME MAY BE DELETED. 11. LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A) AN D PRAYED THAT THE ADDITIONS MAY BE SUSTAINED BECAUSE THE REVENUE HAD MADE A DETAILED INVESTIGATION ON THIS REGARD AND HAVE ASCERTAINED T HAT THE APPELLANT HAD PURCHASED THE TELEVISION AND DVD PLAYER BY PAYING C ASH AND TOOK DELIVERY OF THE SAME FROM THE SHOWROOM IN PERSON. 12. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIAL PRODUCED BEFORE US. AS POINTED OUT BY THE LD. AR, ON PERUSING THE INVOICE, WE FIND THAT THE NAME OF THE APPELLANT APPEARS IN T HE COLUMN CONSIGNEE WITH THE VARIANCE. THE DETAILS IN THE COLUMN DEL IVERY NOTE, SUPPLIERS REFERENCE, BUYERS ORDER NO., DISPATCH DOCUMENT NO. , DISPATCH THROUGH, TERMS OF DELIVERY ETC., ARE LEFT BLANK. HOWEVER, IN THE COLUMN DESCRIPTION OF GOODS, THE CODE NO. OF THE PRODUCT IS GIVEN AS K.P. F.S.57M91 AND DVP ITA NOS.532 & 533/BANG/2010 PAGE 9 OF 13 N.S. 575P. THE POSSESSION OF THE ELECTRONIC GADG ETS WITH THE IDENTICAL CODE COUPLED WITH THE INVOICE WOULD HAVE CERTAINLY ESTABLISHED THAT THE ASSESSEE HAD PURCHASED THE EQUIPMENTS BY PAYING CAS H, HOWEVER IN THIS CASE SUCH POSSESSION IS NOT ESTABLISHED. FURTHER F ROM THE INVOICE, THE ACKNOWLEDGEMENT OF THE RECEIPT OF GOODS BY THE APPE LLANT OR THE PAYMENT FOR THE PRODUCTS BY THE APPELLANT IS NOT ESTABLISHE D. EVEN THOUGH A CLOUD OF SUSPICION CAN BE FELT BY THE EXISTENCE OF THE INVOI CE AND THE STATEMENT GIVEN BY THE DEALER, WE DO NOT FEEL THAT IT WILL BE A CONCLUSIVE EVIDENCE TO NAIL THE ASSESSEE FOR HAVING MADE SUCH PURCHASES, T HEREFORE WE ARE OF THE VIEW THAT IT WILL NOT BE PROPER TO BURDEN THE APPEL LANT BY TREATING THE VALUE OF THE GADGETS MENTIONED IN THE INVOICE TO BE UNEXP LAINED INVESTMENT OF THE APPELLANT U/S. 69 OF THE ACT AND ACCORDINGLY WE HEREBY DELETE THE ADDITION MADE BY THE REVENUE ON THIS COUNT. GROUND NO.3 (FOR A.Y. 2005- 06) IS THUS DISPOSED OFF IN FAVOUR OF THE ASSESSEE . 13. GROUND NO. 3 (FOR A.Y. 2006-07): THE LD. DDIT(INV.) HAD MADE AN ENQUIRY WHEREBY IT WAS REVEALED THAT THE ASSESSEE H AD DEPOSITED RS.3 LAKHS & RS.5 LAKHS ON 29.12.2005 AND 3.1.2006 RESPE CTIVELY IN HIS SAVINGS BANK ACCOUNT WITH CORPORATION BANK. THE ASSESSEE W AS ASKED TO FURNISH DETAILS OF THE SAME. SINCE THERE WAS NO RESPONSE F ROM THE ASSESSEE ON THIS REGARD, THE LD. AO TREATED THIS SUM OF RS.8 LA KHS AS UNEXPLAINED CASH CREDITS AND ADDED TO THE INCOME OF THE ASSESSEE U/S . 68 OF THE ACT. BEFORE THE LD. CIT(A) ALSO, THE ASSESSEE COULD NOT FURNISH PROPER EXPLANATION IN SPITE OF AFFORDING SUFFICIENT OPPORTUNITIES. THERE FORE, ACCORDING TO THE LD. CIT(A), THE ONLY QUESTION LEFT OUT FOR ADJUDICATION WAS WHETHER THE ASSESSEE DESERVES THE BENEFIT OF TELESCOPING. THE LD. CIT(A) OBSERVED THAT ITA NOS.532 & 533/BANG/2010 PAGE 10 OF 13 THE ASSESSEE HAD WITHDRAWN CASH FROM THE BANK PRIOR TO THE DEPOSIT OF RS.8 LAKHS TO THE EXTENT OF RS.5,37,000. FURTHER, THE A SSESSEE HAD PAID CASH CHEQUES FOR WITHDRAWAL IN THE NAME OF S.B. PALI AND S.H. HOLI AGGREGATING TO RS.3,70,500 PRIOR TO THE DATES OF THE BANK DEPOS IT OF RS. 8,00,000/-. WITH RESPECT TO WITHDRAWAL OF RS.5,37,000, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THIS AMOUNT WOULD HAVE BEEN UTILIZE D BY THE ASSESSEE TOWARDS HIS BUSINESS EXPENDITURE AMOUNTING TO RS.2, 96,668(19,77,787 X 15%) AND TOWARDS HIS PERSONAL EXPENSE ESTIMATING TO RS.60,000 AND THE BALANCE AMOUNT OF RS.1,80,332 WAS ALLOWED TO BE SET OFF. THUS, THE AMOUNT OF RS.6,19,668 (8 LAKHS 1,80,332) WAS TRE ATED AS UNEXPLAINED CASH CREDITS. WITH RESPECT TO THE WITHDRAWALS BY M R. S.B. PALI AND S.H. HOLI AGGREGATING TO RS.3,70,500, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THESE AMOUNTS WERE PAID TO THE SAID PARTIES AND THE REFORE CANNOT BE ALLOWED TO BE SET OFF. 14. LD. AR SUBMITTED THAT HE HAS SUBSTANTIAL COMMIS SION INCOME FROM LIC DURING THE RELEVANT YEARS AND EARLIER YEARS TO EXPLAIN THE CASH DEPOSIT. HE ALSO SUBMITTED THAT FROM THE CASH BOOK IT IS EVI DENT THAT HE HAD PROPER CASH BALANCE TO DEPOSIT THE SAME IN THE BANK. IT W AS THEREFORE PRAYED THAT THE ADDITION SUSTAINED BY THE LD. CIT(A) MAY BE DEL ETED. 15. ON THE OTHER HAND, LD. DR VEHEMENTLY ARGUED THA T THE MATTER WAS ANALYSED IN DETAIL BY THE LD. CIT(A) AND THEREFORE HIS ORDER MAY BE SUSTAINED. 16. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIAL AVAILABLE BEFORE US. IT IS EVIDENT FROM THE ORDER OF THE LD.CIT(A) THAT HE HAD ANALYSIED THE BANK STATEMENT WITHOUT DRAWING A CASH FLOW STATEMENT ITA NOS.532 & 533/BANG/2010 PAGE 11 OF 13 WHICH ALONE WILL BRING OUT THE ACTUAL FIGURE OF UNE XPLAINED CASH CREDIT. IT IS ALSO EVIDENT THAT THE ASSESSEE HAS NOT PRODUCED HIS BOOKS OF ACCOUNTS OR CO-OPERATED WITH THE REVENUE IN THE ASSESSMENT PROC EEDINGS. THEREFORE IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED V IEW THAT ONE MORE OPPORTUNITY MAY BE OFFERED TO THE ASSESSEE, FOR HIM TO PRODUCE THE RELEVANT BOOKS OF ACCOUNTS, CASH FLOW STATEMENTS, ETC AND ES TABLISH HIS CLAIM TO BE BONAFIDE. ACCORDINGLY, WE HEREBY REMIT THIS MATTER BACK TO THE FILE OF THE LD. AO WHO SHALL EXAMINE ALL THE RELEVANT MATERIALS PRO DUCED BY THE ASSESSEE AND PASS APPROPRIATE ORDER AS PER LAW AFTER AFFORDI NG SUFFICIENT OPPORTUNITY OF BEING HEARD. WE FURTHER DIRECT THE ASSESSEE TO P ROMPTLY CO-OPERATE WITH THE REVENUE IN ITS ASSESSMENT PROCEEDINGS. 17. GROUND NO.4 (COMMON FOR BOTH YEARS) : THE ASSESSEE HAD ADMITTED BEFORE THE DDIT (INV.) THAT HE IS IN RECEI PT OF RENTAL INCOME FROM TWO SHOPS AMOUNTING TO RS.3,200 PER MONTH WITH AN A DVANCE OF RS.40,000 IN AGGREGATE FOR THE PERIOD JANUARY, 2006 TO MARCH, 2006. THUS, AN AMOUNT OF RS.6,600 WAS ADDED TO THE ASSESSEES INCO ME FOR THE ASSESSMENT YEAR 2006-07. FURTHER, ON LOCAL ENQUIRY IT WAS LEARNT THAT THE ASSESSEE HAD RENTED HIS OTHER BUILDING TO DISTRICT S.C. & MINORITIES SOCIAL WELFARE DEPARTMENT FOR A MONTHLY RENTAL OF RS.4,800 PER MONTH FROM 1.10.2003. THE ASSESSEE HAD NOT DISCLOSED THIS REC EIPT IN HIS RETURN OF INCOME, SINCE HE HAD NOT RECEIVED THE RENTAL INCOME FROM THE GOVERNMENT THOUGH IT HAD ACCRUED TO HIM. THE LD. AO ALSO ADDE D THIS AMOUNT OF RS.57,600 (4800 X 12) AS HIS INCOME ON ACCRUAL BASI S FOR BOTH THE ASSESSMENT YEARS. ITA NOS.532 & 533/BANG/2010 PAGE 12 OF 13 18. WHEN THE MATTER CAME UP BEFORE THE LD. CIT(A) H E WAS ALSO OF THE OPINION THAT THE ADDITION MADE ON ACCOUNT OF RENTAL INCOME IS JUSTIFIABLE, HOWEVER, HOLDING IT TO BE INCOME FROM HOUSE PROPERT Y GRANTED DEDUCTION OF 30% TOWARDS REPAIRS U/S. 24 OF THE ACT. THE ASSESS EE HAD ARGUED BEFORE THE LD. CIT(A) THAT THE PROPERTY GIVEN ON RENT TO T HE GOVERNMENT DEPARTMENT BELONGED TO THE HUF OF THE ASSESSEE AND NOT TO HIM SINCE THE SAID PROPERTY WAS PURCHASED OUT OF HUF FUNDS REALIS ED ON SALE OF PROPERTY AT HUBLI, WHICH BELONGED TO VARIOUS FAMILY MEMBERS OF THE APPELLANT. 19. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE C ONSIDERED OPINION THAT WITH RESPECT TO THE BUILDING WHEREIN THE RENT WAS R ECEIVABLE FROM THE GOVERNMENT DEPARTMENTS BELONGS TO THE ASSESSEE OR T HE HUF REQUIRES TO BE VERIFIED. ONLY IF THE BUILDING BELONGS TO THE A SSESSEE, THE RENTAL INCOME WILL BE ASSESSABLE IN HIS HANDS. IF THE BUILDING BE LONGS TO THE HUF OF THE ASSESSEE, THEN THE RENTAL INCOME OF THAT BUILDING C ANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. FOR SUCH A VERIFICATION, WE REMIT THIS MATTER ALSO BACK TO THE FILE OF LD. AO WHO SHALL EXAMINE ALL TH E ASPECTS MENTIONED SUPRA AND ARRIVE AT AN APPROPRIATE DECISION AS PER MERIT AND LAW. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE WITH THE RE VENUE IN ORDER TO EXPEDITE THE PROCEEDINGS. THE ORDER OF THE LD.CIT(A ) IN REGARD TO THE RENTAL INCOME OF RS. 6,600/- RECEIVED FROM SRI. KISHORE AN D SRI VIJAYKUMAR REDDY FOR THE ASSESSMENT YEAR 2006-07 IS HEREBY CONFIRMED SINCE NO MATERIALS WAS BROUGHT BEFORE US TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. ITA NOS.532 & 533/BANG/2010 PAGE 13 OF 13 20. IN THE RESULT, THE ASSESSEES APPEALS FOR THE A .YS. 2005-06 AND 2006-07 ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26/8/11. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 26 TH AUGUST, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.