Shri Sadanand M. Padmini., Chikodi V. Income Tax Officer, Ward-1, Nipani

ITA 6/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93575 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Keywords: Unexplained cash credit; Unexplained investment; Business income
• Section: 143(3); 234B; 147; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 06 /PNJ/201 5 (ASST. YEAR : 20 11 - 1 2 ) SHRI SADANAND MAHALAINAGAPPA PAMADINI, N.M. ROAD, CHIKODI, DIST. BELGAUM. VS. ITO, WAR - 1, NIPANI. PAN NO. AHDPP 8811 E (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI ANAND SHANKAR MARATHE - DR DATE OF HEARING : 14 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 14 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , BELGAUM , DATED 0 3 / 12 /201 4 . 2. THE ASSESSEE HAS FILED ADJOURNMENT PETITION FOR ADJOURNING THE HEARING IN THE MONTH OF AUGUST, 2015. THE REASON FOR SEEKING ADJOURNMENT WAS NOT FOUND TO BE PLAUSIBLE ONE BY THE BENCH AND, THEREFORE , ADJOURNMENT PETITION WAS REJECTED AND THE APPEAL WAS TAKEN UP FOR HEARING. 3 . THE BENCH PROCEEDED TO DECIDE THE APPEAL TAKING INTO CONSIDERATION THE SUBMISSION S OF THE DEPARTMENTAL REPRESENTATIVE AND THE MATERIALS AVAILABLE ON RECORD. 4 . THE FIRST GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 25,60,000/ - UNDER SEC. 69 OF THE INCOME TAX ACT. 2 ITA NO. 06/PNJ/2015 5. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBTAINED THE ACCOUNT EXTRACT OF THE ASSESSEE FROM SHRI MAHALAXMI CREDIT SAHAKARI LTD. , A SOCIETY ENGAGED IN MONEY LEN D ING . AS PER THE AFORESAID EXTRACT , THE ASSESSEE HA S REPAID THE LOAN OF RS. 10 LAC. IN CASH ON 03/08/2010 ALONG WITH INTEREST AMOUNT OF RS. 14 LAC. AND PENAL INTEREST OF RS.1,60,000/ - ON THE SAME DA Y . THUS, THE ASSESSEE HAS PAID IN CASH TO THE SOCIETY A SUM OF RS. 25,60,000/ - ON 03/08/2010. ON A SHOW CAUSE NOTICE , THE ASSESSEE EXPLAINED THE SOURCE OF THE AFORESAID CASH OF RS.25,60,000/ - DEPOSITED ON 03/08/2010 , OUT OF ADDITIONS OF RS.4,80,000/ - AND RS. 19,71,000/ - MADE IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2004 - 05 AND 2005 - 06 REPRESENTING FEE IN CASH RECEIVED BY THE ASSESSEE FR O M ANOTHER ADVOCATE BY THE NAME S HRI C.R.MAGNUR . THE SAID ADDITIONS FOR THE TWO ASSESSMENT YEARS WERE DONE BY THE ASSESSING OFFICER VIDE HIS ORDERS UNDER SEC. 143(3) READ WITH SEC. 147, BOTH DATED 23/12/2009 , AGAINST WHICH THE ASSESSEE HAD FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX(APPEALS) , BELGAUM ON 25/01/2010 CONTESTING THE AFORESAID ADDITIONS MADE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS), BELGAUM VIDE HIS ORDERS DATED 28/01/2013 AND 30/01/2013 FOR THE TWO ASSESSMENT YEARS , HAS CONFIRMED BOTH THE AFORESAID ORDERS OF THE ASSESSING OFFICER AND THUS, THE ISSUE OF ADDITIONS MADE BY THE ASSESSING OFFICER FOR THE AFORESAID TWO ASSESSMENT YEARS REACHED FINALITY WITH THE AFORESAID TWO ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS ), BELGAUM ON 28 TH AND 30 TH OF JANUARY, 2013 RESPECTIVELY. 6 . THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE FOR THE SOURCE OF AMOUNT OF RS. 25,60,000/ - BY OBSERVING THAT THESE TRANSACTIONS PERTAIN TO THE PREVIOUS YEARS ENDING ON 31/03/2004 & 31/03/2005 I.E. MORE THAN SIX YEARS BEFORE THE CASH PAYMENT TO THE AFORESAID SOCIETY ON 03/08/2010 I.E. DURING THE PERIOD CORRESPONDING TO THE ASSESSMENT YEAR 2011 - 12 . THE ASSESSING OFFICER DOUBTED AS TO HOW SUCH A HUGE MONEY WAS KEPT AND HOW WAS IT AVAILABLE WITH THE 3 ITA NO. 06/PNJ/2015 ASSESSEE FOR SUCH A LONG PERIOD OF MORE THAN SIX YEARS. THE ASSESSING OFFICER FURTHER OBSERVED THAT IN THE BALANCE SHEET FOR THE EARLIER YEAR ENDING ON 31/03/2010, THE ASSESSEE HAS SHO WN CASH IN HAND OF RS.8,96,415/ - WHEREAS BUSINESS INCOME DECLARED FOR THE PREVIOUS YEAR 2010 - 11 RELEVANT TO THE ASSESSMENT YEAR 2011 - 12 WAS ONLY RS.5,25,256/ - INCLUDING AGRICULTUR AL INCOME OF RS. 3,25,000/ - . FURTHER, IN THE BALANCE SHEET FOR THE YEAR ENDING 31/03/2011, THE ASSESSEE AGAIN CLAIMED CASH IN HA N D AT RS. 13,37,227/ - . THEREFORE, THE ASSESSING OFFICER ARRIVED AT A CONCLUSION THAT FROM THOSE DETAILS IT WAS VERY CLEAR THAT CASH PAYMENT MADE TO THE SOCIETY OF RS. 25,60,000/ - WAS TOT ALLY OUT OF BOOKS OF ACCOUNTS AND IT REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE, THE EXPLANATION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND THE ENTIRE CASH DEPOSIT OF RS. 25,60,000/ - WAS BROUGHT TO TAX UNDER SEC. 69 AS UNEXPLAINED INVESTMENT IN THE BANK FOR WHICH NO SATISFACTORY EXPLANATION HAD BEEN OFFERED BY THE ASSESSEE. 7. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HAD ALREADY DEPOS IT ED THE AMOUNT OF RS. 25,60,000/ - IN CASH ON 03/08/201 1 WITH THE AFORESAID SOCIETY AND TILL 31/03/2013, THE ASSESSEE WAS DENYING BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) OF HAVING RECEI VED FEE IN CASH OF RS. 4,80,000/ - AND RS. 19,71,000/ - IN ASSESSMENT YEARS 2004 - 05 AND 2005 - 06. 8. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD DEPARTMENTAL REPRESENTATIVE, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. 10. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION MADE DEPOSIT OF RS. 25,60,000/ - ON 4 ITA NO. 06/PNJ/2015 03/08/2010 WITH SHRI MAHALAXMI CREDIT SOUHARD SAHAKARI LTD. FOR REPAYMENT OF LOAN. WHEN REQUIRED TO EXPLAIN THE SOURCE FOR THE SAME, THE ASSESSEE EXPLAINED THAT IN ASSESSMENT YEAR S 2004 - 05 AND 2005 - 06, THE ASSESSING OFFICER VIDE ORDER DATED 23/12/2009 PASSED UNDER SEC. 143(3) READ WITH SEC. 147 HAD MADE THE ADDITION OF RS. 4,80,000/ - AND RS. 19,71,000/ - RESPECTIVELY REPRESENTING RECEIPT OF FEE FROM ANOTHER ADVOCATE IN THE NAME OF SHRI C.R. MAGNUR IN CASH. THE SOURCE OF RS. 25,60,000/ - WAS EXPLAINED BY THE ASSESSEE BEING OUT OF THE ABOVE INCOME ASSESSED IN ASSESSMENT YEAR S 2004 - 05 AND 2005 - 06 . THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE BECAUSE SINCE ASSESSMENT YEAR S 2004 - 05 AND 2005 - 06 MORE THAN FIVE YEARS HAD ELAPSED AND THE ASSESSEE COULD NOT HAVE KEPT SO MUCH AMOUNT S OF CASH WITH HIM. 11 . THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE TILL 3 0 /0 1 /201 3 WAS CHALLENGING THE ADDITION MADE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND THAT THE DEPOSIT WITH THE SAID SOCIETY WAS MADE ON 03/0 8/2010 WELL BEFORE THE DECISION CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE ABOVE FACTS AND CIRCUMSTANCE OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DEPOSITED THE CASH OF RS. 25,60,000/ - ON 03/08/2010 . T HE ASSESSMENT UNDER SEC. 143(3) FOR THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 CONFIRMING THE ADDITION OF RS. 4,80,000/ - AND RS. 19,71,000/ - RESPECTIVELY FOR THE AFORESAID ASSESSMENT YEARS WAS MADE BY THE ASSESSING OFFICER ON 29/ 12/2009 . THE ASSESSEE HAS EXPLAINED THE SOURCE OF DEPOSIT OF CASH BEING OUT OF THE ADDITIONAL INCOME ASSESSED TO TAX BY THE ASSESSING OFFICER IN ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 . IN OUR CONSIDERED VIEW THE SAID EXPLANATION OF THE ASSESSEE AND THE SOURCE OF DEPOSIT OF CASH OF RS. 25,60,000/ - WITH THE SOCIETY CANNOT BE BRUSHED ASIDE BY THE ASSESSING OFFICER. NO MATERIAL WAS BROUGHT ON RECORD BY THE DEPARTMENTAL REPRESENTATIVE TO 5 ITA NO. 06/PNJ/2015 SHOW THAT THE ADDITION OF RS. 4,80,000/ - FOR ASSESSMENT YEAR 2004 - 05 AND RS. 19,71,000/ - FOR ASSESSMENT YEAR 2005 - 06 WAS VARIED IN APPEAL BY ANY HIGHER AUTHORITY. IN OUR CONSIDERED VIEW WHEN THE ADDITIONAL INCOME HAS BEEN ASSESSED TO TAX AND THAT TOO THE CASH RECEIPT OF FEE OF RS . 24,51,200/ - , THE CREDIT FOR THE SAME CANNOT BE DENIED TO THE ASSESSEE IN THE ASSESSMENT YEAR 2010 - 11. BOTH ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) HA VE DOUBTED THAT THE ASSESSEE COULD NOT HAVE AT RS.25,60,000/ - FOR MAKING THE DEPOSIT IN THE SOCIETY IN CASH BY THE ASSESSEE TILL THE DATE OF DEPOSIT I.E. 03/08/2010 . BESIDES THIS DOUBT RAISED BY THE LOWER AUTHORITIES, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THEM TO SHOW THAT THE ASSESSEE COULD NOT HAVE RS.25,60,000/ - IN CASH AVAILABLE WITH HIM TO MAKE DEPOSIT IN THE SOCIETY FOR REPAYMENT OF LOAN OF RS. 25,60,000/ - . THE ASSESSING OFFICER IN THE ORDER HAS ALSO ACCEPTED THE FACT THAT AS ON 31/03/2010, THE ASSESSEE HAD SHOWN CASH IN HAND OF RS. 8,96,415/ - IN THE BALANCE SHEET FILED WITH THE DEPARTMENT . SIMILARLY, FOR THE YEAR ENDING 31/03/2011 , THE ASSESSEE HAD SHOWN CASH IN HAND OF RS. 13,37,227/ - IN THE BALANCE SHEET FILED WITH THE DEPARTMENT. THUS, THE ASSESSEE HAD SUFFICIENTLY EXPLAINED THE SOURCE OF DEPOSIT OF RS. 25,60, 000/ - IN THE SOCIETY DURING THE YEAR UNDER CONSIDERATION AND THEREFORE, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION OF RS. 25,60,000/ - IN THE HANDS OF THE ASSESSEE UNDER SEC. 69 OF THE ACT AS UNEXPLAINED INVESTMENT . WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.25,60,000/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 12 GROUND NO.2 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE ADD ITION OF RS.93,272/ - IN RESPECT OF ENTRIES BY WAY OF TRANSFER . 13 THE ASSESSING OFFICER MADE THE ADDITION OF RS. 93,272/ - ON THE GROUND O F UNEXPLAINED CREDIT TRANSFER AS ASSESSEE HAD NOT OFFERED ANY EXPLANATION FOR THE SAME. WE FIND THAT BEFORE THE COMMISSIONER OF 6 ITA NO. 06/PNJ/2015 INCOME TAX (APPEALS) ALSO NO EXPLANATION FOR THE SAME WAS GIVEN BY THE ASSESSEE. THEREFORE, THE ADDITION WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 14 THE DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 15 WE FIND THAT BEFORE US ALSO, THERE IS NO EXPLANATION FOR THE SOURCE OF RS. 93,272/ - BEING CREDIT ENTRIES BY WAY OF TRANSFER AND HENCE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 16 GROUND NO.3 OF THE APPEAL IS DIRECTED AGAINST THE CHARGING OF INTEREST UNDER SEC. 234B OF THE ACT. 17 . THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER FOR CHARGING THE INTEREST UNDER SEC. 234B OF THE ACT ON THE GROUND TH A T IT IS CONSEQUENTIAL. WE FIND NO INFIRMITY IN THIS FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) . T HEREFORE , THE ORDER OF THE CO MMISSIONER OF INCOME TAX(APPEALS) IS CONFIRMED AND THIS GROUND OF APPEAL OF THE ASSESSEE IS ALSO DISMISSED. 18 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON TUESDAY , THE 1 4 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH JU LY , 201 5 . VR/ - 7 ITA NO. 06/PNJ/2015 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 8 ITA NO. 06/PNJ/2015 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 14 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 15 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 15 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 15 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 14 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 15 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER