Mr.N.Vijayan Pillai, Kollam V. The ITO, Alappuzha

ITA 536/COCH/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9939 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: A S NARAYANAMOORTHY
• Section: 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI V.DURGA RAO, JM AND B.R.BASKARAN , AM I.T.A. NO. 536/COCH/2014 ASSESSMENT YEAR : 2007-08 SHRI N. VIJAYAN PILLAI, VIJAYASREE, MADAPALLY, MUKUNDAPURAM, CHAVARA-691 585.. [PAN: AGBPP 2573J] VS. THE INCOME TAX OFFICER, WARD(3), ALLEPPEY. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 05/05/2015 DATE OF PRONOUNCEMENT 08/05/2015 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 21-10-2014 PASSED BY THE LD. CIT(A)-V, KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL URGED BY THE ASSESSEE GIVE RISE TO THE FOLLOWING ISSUES: (A) ASSESSMENT OF UNEXPLAINED BANK DEPOSITS OF RS. 36,20,000/-. (B) ASSESSMENT OF DEPOSIT OF RS. 6,00,000/- FOUND IN SB ACCOUNT. I.T.A. NO.536/COCH/2014 2 (C) ASSESSMENT OF INTEREST INCOME OF RS.80,140/- BELONGING TO THE WIFE OF THE ASSESSEE. (D) ASSESSMENT OF INTEREST INCOME OF RS.39,360/- B ELONGING TO THE EDUCATIONAL INSTITUTION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS MANAGING PARTNER IN FIVE PARTNERSHIP FIRMS., OUT OF WHICH THREE FIRMS A RE RUNNING BAR ATTACHED HOTELS. THE RETURN OF INCOME FILED BY THE ASSESSEE, DECLARI NG AN INCOME OF RS.1,90,430/- WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED AIR INFORMATION, WHEREFROM IT WAS NOTICED THAT THE ASSESSEE HAD DEPOSITED DURING THE YEAR UNDER CONSIDERATION AN AG GREGATE AMOUNT OF RS. 20.75 LAKHS IN CASH IN HIS SB ACCOUNT MAINTAINED WITH ING VYSYA BANK. HENCE, THE ASSESSMENT WAS RE-OPENED OF THE YEAR UNDER CONSIDER ATION BY ISSUING NOTICE U/S. 148 OF THE ACT. THE ASSESSING OFFICER COMPLETED T HE ASSESSMENT BY DETERMINING THE TOTAL INCOME AT RS. 48,69,430/- BY MAKING VARIO US TYPES OF ADDITIONS. THE ASSESSEE DID NOT GET RELIEF IN THE APPEAL FILED BEF ORE THE LD. CIT(A) AND HENCE HE HAS FILED THIS APPEAL BEFORE US. 4. THE FIRST ISSUE RELATES TO THE ADDITION OF RS.36 .20 LAKSH RELATING TO DEPOSITS MADE IN A BANK ACCOUNT ASSESSEED U/S. 69 OF THE ACT . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS OPENED A BANK ACCOUNT UNDER PRAGATHI DEPOSIT SCHEME WITH ING VYSYA BANK. DURING THE YEAR RELEVA NT TO THE ASSESSMENT YEAR I.T.A. NO.536/COCH/2014 3 2007-08, THE ASSESSEE DEPOSITED IN THE ABOVE SAID A CCOUNT A SUM OF RS.36,20,000/- IN AGGREGATE. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE SOURCES FOR MAKING THE ABOVE SAID DEPOSITS, THE ASS ESSEE EXPLAINED THAT HE IS THE MANAGING TRUSTEE OF AN EDUCATIONAL INSTITUTION, NAMED MSN INSTITUTE OF MANAGEMENT AND TECHNOLOGY, CHAVARA AND THE ABOVE SA ID DEPOSITS HAVE BEEN MADE FROM THE CASH BALANCES AVAILABLE WITH THE INST ITUTION, CITED ABOVE. IT WAS FURTHER SUBMITTED THAT THE ABOVE SAID ACCOUNT WAS O PENED IN HIS NAME BY THE ABOVE SAID INSTITUTION ONLY AND HE IS HOLDING THE A CCOUNT AS A REPRESENTATIVE OF THE ABOVE SAID EDUCATIONAL INSTITUTION. HOWEVER, T HE ASSESSEE DID NOT FURNISH THE BOOKS OF ACCOUNT RELATING TO THE ABOVE SAID INS TITUTION AND HENCE, THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE H AS FAILED TO SUBSTANTIATE ITS CLAIM BY SHOWING THE NEXUS BETWEEN THE EDUCATIONAL INSTITUTION AND THE DEPOSIT. ACCORDINGLY, HE ASSESSED THE ABOVE SUM OF RS.36.20 LAKHS AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. IN THE APPEAL, T HE LD. CIT(A) CONFIRMED THE SAME AND HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS FILE D FOLLOWING DETAILS BEFORE LD CIT(A) TO PROVE THAT THE DEPOSITS IN THE PD SCHE ME WAS MADE BY THE EDUCATIONAL INSTITUTION :- (A) CERTIFICATE FROM JOINT DIRECTOR OF THE INSTITUT ION CLAIMING THAT THE IMPUGNED BANK ACCOUNT WAS OPERATED BY THE INSTI TUTION IN THE NAME OF THE ASSESSEE. (B) COPY OF THE BANK ACCOUNT PD NO. 1309 MAINTAINE D WITH ING VYSYA BANK. I.T.A. NO.536/COCH/2014 4 (C) LEDGER OF ACCOUNT FROM THE BOOKS OF MSN INSTIT UTE OF MANAGEMENT AND TECHNOLOGY WHEREIN THE BANK ACCOUNT NO. PD 1309 MAINTAINED BY THE INSTITUTION IS PLACED. (D) AUDITED ACCOUNT OF THE INSTITUTION FOR THE YEA R ENDING 31-03- 2007. (E) COPY OF PAN CARD. THE LD. AR FURTHER SUBMITTED THAT THE PD SCHEME GOT MATURED DURING THE YEAR UNDER CONSIDERATION ITSELF WITH THE MATURITY AMOUNT OF RS.36,39,325/- (DEPOSIT OF RS.36,20,000/- TI INTEREST OF RS.19,325/-). OUT OF THE MATURITY AMOUNT CITED ABOVE, A SUM OF RS.29,52,815/- WAS APPROPRIATED TOW ARDS THE LOAN ACCOUNT OF THE EDUCATIONAL INSTITUTION AND THE BALANCE AMOUNT O F RS.6,86,509/- WAS TRANSFERRED TO THE SB ACCOUNT NO. 19565 MAINTAINED WITH ING VYSYA BANK IN THE ASSESSEES NAME. THE LD. AR FURTHER SUBMITTED THAT THE ABOVE SB ACCOUNT AS WELL AS THE PRAGATHI DEPOSIT ACCOUNT BELONGS TO THE EDUCATIONAL INSTITUTION AND THEY HAVE BEEN OPENED IN THE NAME OF THE ASSESSEE T O OVERCOME CERTAIN PRACTICAL PROBLEMS. HE SUBMITTED THAT THE ABOVE SA ID EDUCATIONAL INSTITUTION IS RUN BY A TRUST NAMED THE MEMBER SREE NARAYANA PILL AI TRUST. THEN THE LD. AR INVITED OUR ATTENTION TO THE BALANCE SHEET AS ON 31 -03-2007 OF THE TRUST, CITED ABOVE AND SUBMITTED THAT THE SB ACCOUNT NO. 19565 M AINTAINED IN THE NAME OF THE ASSESSEE WAS DULY DISCLOSED AS BELONGING TO THE TRUST. ACCORDINGLY, HE SUBMITTED THAT THE IMPUGNED DEPOSIT HAS BEEN MADE B Y THE EDUCATIONAL INSTITUTION/TRUST IN THE NAME OF THE ASSESSEE AND H ENCE, THE ADDITION MADE BY THE ASSESSING OFFICER, WHICH WAS CONFIRMED BY THE C IT(A), IS LIABLE TO BE DELETED. I.T.A. NO.536/COCH/2014 5 6. ON THE OTHER HAND, THE LD. DR PLACED STRONG RELI ANCE ON THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. BEFORE US, THE ASSESSEE HAS FILED A PAPER BOOK WHER EIN COPY OF BANK ACCOUNT, COPY OF LEDGER ACCOUNT FROM THE MSN INSTITUTE OF MA NAGEMENT AND TECHNOLOGY ARE PLACED. THE AGGREGATE AMOUNT OF DEPOSIT MADE I N THE PRAGATHI DEPOSIT SCHEME ACCOUNT WAS RS.36,20,000/- AND ACCORDING TO THE LD A.R, THE SAID ACCOUNT WAS DULY RECORDED IN THE BOOKS OF MSN INSTI TUTE OF MANAGEMENT AND TECHNOLOGY. THESE DOCUMENTS HAVE BEEN FILED BEFORE US TO SUBSTANTIATE THE CLAIM THAT THE ABOVE SAID DEPOSITS HAVE BEEN MADE F ROM THE BALANCES AVAILABLE WITH THE INSTITUTION. IT WAS FURTHER SUBMITTED THA T THE ABOVE SAID ACCOUNT WAS OPENED BY THE ABOVE SAID INSTITUTION ONLY AND HE IS HOLDING THE ACCOUNT S A REPRESENTATIVE OF THE ABOVE SAID EDUCATIONAL INSTIT UTION, HE IS THE MANAGING TRUSTEE OF THE TRUST RUNNING THE EDUCATIONAL INSTIT UTION. HOWEVER, SINCE THE ASSESSEE DID NOT FURNISH THE BOOKS OF ACCOUNT RELAT ING TO THE ABOVE SAID INSTITUTION, THE ASSESSING OFFICER TOOK ADVERSE VIE W AGAINST THE ASSESSEE ON THIS ISSUE. ACCORDINGLY, HE HAS ASSESSED THE ABOVE SAID SUM OF RS.36.20 LAKHS AS INCOME OF THE ASSESSEE, WHICH WAS ALSO CONFIRMED BY LD CIT(A). 8. WE NOTICE THAT THE ASSESSEE DID NOT FURNISH THE BOOKS OF ACCOUNTS OF THE EDUCATIONAL INSTITUTION BEFORE THE ASSESSING OFFICE R, BUT SOME OF THE RELEVANT I.T.A. NO.536/COCH/2014 6 DETAILS WERE FURNISHED BEFORE THE LD. CIT(A). HOWE VER, THE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE ADDITION WITHOUT EXAMIN ING ANY OF THE DOCUMENTS FURNISHED BEFORE HIM IN ORDER TO SUBSTANTIATE THE C LAIM OF THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE TRUST RUNNING THE EDU CATIONAL INSTITUTION HAS ALREADY OBTAINED PERMANENT ACCOUNT NUMBER AND THE B OOKS OF ACCOUNTS HAVE BEEN DULY AUDITED. UNDER THESE SET OF FACTS, WE AR E OF THE VIEW THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN REJECTING THE CLAI M OF THE ASSESSEE WITHOUT EXAMINING THE RELEVANT DOCUMENTS/BOOKS OF ACCOUNTS OF THE TRUST/EDUCATIONAL INSTITUTION. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER BY DULY CONSIDERING THE BOOKS OF ACCOUNTS OF THE TRUST/EDUCATIONAL INSTITUTION AND A LSO BY DULY CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSESSEE. ACCORDINGL Y, WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING O FFICER TO EXAMINE THIS ISSUE DE NOVA, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 9. THE NEXT ISSUE RELATES TO THE ADDITION OF RS.6 L AKHS MADE BY THE ASSESSING OFFICER. THE LD. AR SUBMITTED THAT THE ASSESSEE HA D CONTESTED THIS ADDITION ALSO BEFORE THE LD. CIT(A), BUT THE FIRST APPELLATE AUTH ORITY HAS OMITTED TO ADDRESS THE SAME. THE LD. DR DID NOT DISPUTE THE ABOVE SAID SU BMISSION. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO ADJUDICATE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. I.T.A. NO.536/COCH/2014 7 10. THE NEXT ISSUE RELATES TO THE ADDITION OF INTER EST INCOME OF RS.80,140/- BELONGING TO THE ASSESSEES WIFE. THE LD. AR SUBMI TTED THAT THE ASSESSEES WIFE IS ASSESSED TO INCOME TAX AND HENCE, THE ABOVE SAID INTEREST INCOME SHOULD HAVE BEEN ADDED IN HER NAME AND NOT IN THE HANDS OF THE ASSESSEE. 12. WE HAVE HEARD THE LD. DR ON THIS ISSUE. A PERU SAL OF THE ASSESSMENT ORDER WOULD SHOW THAT THE ABOVE SAID INTEREST OF RS .80,140/- WAS NOTED FROM ING VYSYA BANK SB ACCOUNT NO. 8855, OUT OF WHICH A SUM OF RS.76,688/- HAS BEEN EARNED FROM OUT OF THE FIXED DEPOSIT MAINTAINE D IN THE NAME OF ASSESSEES WIFE. IF THE FIXED DEPOSIT HAS BEEN MADE BY THE AS SESSEES WIFE OUT OF HER OWN FUNDS, THEN THE INTEREST ARISING THEREON SHOULD BE ASSESSED IN THE HANDS OF THE ASSESSEES WIFE ONLY. HOWEVER, IT IS SEEN THAT TH E ASSESSING OFFICER HAS ASSESSED THE INTEREST INCOME WITHOUT PROPERLY EXAMINING THE RELEVANT DETAILS. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE ALSO REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE O RDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO EXAMINE T HIS ISSUE ALSO AFRESH. 13. THE NEXT ISSUE RELATES TO THE ADDITION OF INTER EST INCOME OF RS.39,360/-, WHICH IS CLAIMED AS BELONGING TO THE EDUCATIONAL IN STITUTION. THIS ISSUE ALSO REQUIRES VERIFICATION AT THE END OF THE ASSESSING O FFICER WITH REFERENCE TO THE BOOKS OF ACCOUNT OF THE EDUCATIONAL INSTITUTION. A CCORDINGLY, WE SET ASIDE THE I.T.A. NO.536/COCH/2014 8 ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT TH E ASSESSING OFFICER TO EXAMINE THIS ISSUE ALSO AFRESH. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 08-05-2015 SD/- SD/- (V.DURGA RAO) (B.R. BASKARAN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 8TH MAY, 2015 GJ COPY TO: 1. SHRI N. VIJAYAN PILLAI, VIJAYASREE, MADAPALLY, M UKUNDAPURAM, CHAVARA-691 585. 2. THE INCOME TAX OFFICER, WARD-3, ALLEPPEY, 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI , 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN