R. Nagendra, Bangalore V. ITO, Bangalore

ITA 612/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0420 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R KRISHNAMURTHY
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Business income; Business expenditure

Judgement Text

ITA.612/BANG/2014 PAGE - 1 THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A NO.612/BANG/2014 (ASSESSMENT YEAR : 2009-10) SHRI. R. NAGENDRA, NO.6, OPP ROAD TO PENIEL SCHOOL, SWATHANTRA NAGAR M AIN ROAD, AYYAPANAGAR, K. R. PURAM, BANGALORE 560 036 .. APPELLANT PAN : ADTPN5718L V. INCOME-TAX OFFICER, WARD 8(1), BANGALORE .. RESPONDENT ASSESSEE BY : SHRI. R. KRISHNA MURTHY, ADVOCATE REVENUE BY : DR. P. K. SRIHARI, ADDL. CIT HEARD ON : 14.03.2016 PRONOUNCED ON : 29.04.2016 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST AN ORDER DT.28.02.2014 OF CIT (A)- LTU, BENGALURU, FOR THE ASSESSMENT YEAR 2009-10. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : ITA.612/BANG/2014 PAGE - 2 11. THE ORDERS OF THE ASSESSING AUTHORITY AND CIT (A) A RE CONTRARY TO LAW AND THEY FAILED TO APPRECIATE THE F ACTS AND WEIGHT OF EVIDENCE ON RECORD. 12. THE ORDERS OF THE ASSESSING AUTHORITY AND CIT (A) A RE AGAINST THE PRINCIPLES OF LEGITIMATE EXPECTATIONS E NTITLED BY THE APPELLANT. 13. THE AO AND THE FIRST APPELLANT AUTHORITY HAVE FAILE D TO APPRECIATE THE CONFIRMATION GIVEN BY THE MOTHER-IN- LAW WHO HAS GIVEN THAT AMOUNT WHICH AMOUNT IS ARRIVED FROM THE SALE PROCEEDINGS OF THE AGRICULTURE LAND. THE MOTHER-IN- LAW RECEIVED THE SAID AMOUNT THROUGH THE AGREEMENT TO S ELL AS WELL AS THE EXECUTION OF SALE DEED FROM THE PURCHASER. 14. THE FIRST APPELLANT AUTHORITY HAS FAILED TO APPRECIATE TRANSACTION OF THE AGRICULTURAL LAND BEL ONGED THE FAMILY OF THE MOTHER-IN-LAW CONSISTED OF HER HU SBAND AND CHILDREN. THE WIFE OF THE APPELLANT IS ONE OF T HE DAUGHTER OF THE FAMILY OF SINT. RAJAMMA AND GOOD IN TENTION OF THE FAMILY OF RAJAMMA WERE GIVEN THE AMOUNT FROM TH E SALE OF THE AGRICULTURAL LAND WAS GIVEN TO THE APPELLANT FO R PURCHASE OF SITE, WHICH IS NOT UNDISCLOSED INVESTMENT OF THE APPELLANT. 15. THE FIRST APPELLATE AUTHORITY HAS FAILED TO APPRECIATE BANK TRANSACTION, WHICH WAS NOT IN DATE WISE, WHICH IS UNJUST AND ARBITRARY. THUS THE ORDER IS NO T SUSTAINABLE IN LAW. 16. THE FIRST APPELLATE AUTHORITY AND ASSESSING AUTHORITY HAVE FAILED APPRECIATE AND GAVE A FINDING BASED ON THE ACCOUNTS OF THE ASSESSEE WHICH WAS NOT AUDITED BALANCE SHEET. BY OVERSIGHT, IN THE BALANCE SHEET AS WELL AS IN TH E WRITTEN SUBMISSIONS, THE AMOUNT OF RS. 7 LAKHS WAS MENTIONE D AS LOAN TAKEN FROM THE MOTHER-IN-LAW OF THE ASSESSEE. THERE FORE THERE NO CONTRADICTORY STATEMENT OR FACT GIVEN BY THE ASS ESSEE. THE AMOUNT OF RS. 7 LAKHS WAS GIFTED BY SMT. RAJAMMA, T HE MOTHER IN LAW OF THE ASSESSEE, WHICH STATEMENT WAS CONFIRMED BY SMT. RAJAMMA AND THEIR FAMILY BY GIVEN THEIR DECLARATIO NS. 17. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUN DS AT THE TIME OF HEARING. ITA.612/BANG/2014 PAGE - 3 2. DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS PURCHASED A PROPERTY BEARING SITE NO.6 AT BASAVANAPURA, FOR A C ONSIDERATION OF RS.20 LAKHS + RS.1,88,310/- AS COST OF REGISTRATION AND S TAMP DUTY, TOTAL AMOUNTING TO RS.21,88,310/-. ASSESSEE HAS EXPLAINE D THE SOURCE OF THE SAID AMOUNT BEING LOAN FROM DEWAN HOUSING FINANCE LTD ( DHFL IN SHORT) OF RS.14,76,360/- AND A SUM OF RS.7,11,915/- AS CASH GIFT FROM HIS MOTHER-IN- LAW. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THERE WAS A CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSES SEE WITH AXIS BANK TO THE TUNE OF RS.18,28,200/-. AO TREATED THE SAID CA SH TRANSACTION HAS UNEXPLAINED THE CASH CREDIT U/S.68 OF THE ACT AND F URTHER THE AMOUNT OF RS.7,11,950/- CLAIMED TO BE CASH / GIFT FROM MOTHER -IN-LAW WAS TREATED AS UNEXPLAINED INVESTMENT IN THE PROPERTY U/S.69 OF TH E ACT. 3. ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT (A), BUT COULD NOT SUCCEED AS THE CIT (A) HAS CONFIRMED THE ADDITION MADE BY THE AO. 4. BEFORE US, LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE AMOUNT OF RS.18,28,200/- CONSIDERED AS UNEXPLAINED CASH CREDI T WHICH FORMS PART OF THE INCOME DECLARED BY THE ASSESSEE FROM ITS BUSINE SS ACTIVITY AS RECEIVED FROM STUDIO, GROSS INCOME OF RS.17,00,0420/- , OUT OF WHICH ASSESSEE HAS ITA.612/BANG/2014 PAGE - 4 DECLARED A NET INCOME OF RS.3,02,400/-. LD. AR HAS SUBMITTED THAT THE AO AS WELL AS THE CIT (A) HAS IGNORED THIS ASPECT THAT THE DEPOSITS IN THE BANK ARE MADE FROM THE BUSINESS RECEIPTS OF THE ASSESSEE . AS REGARDS THE AMOUNT CLAIMED TO HAVE BEEN RECEIVED AS A GIFT FROM MOTHER -IN-LAW, LD. AR HAS SUBMITTED THAT DUE TO OVER SIGHT THE ASSESSEE HAS M ENTIONED THE SAID AMOUNT OF RS.7,11,950/- AS LOAN TAKEN FROM HIS MOTHER-IN-L AW. HOWEVER THE SAID AMOUNT IS IN FACT A GIFT RECEIVED FROM THE MOTHER-I N-LAW. HE HAS FURTHER SUBMITTED THAT ASSESSEE HAS EXPLAINED THE SOURCE OF THE SAID AMOUNT IN THE HANDS OF THE MOTHER-IN-LAW, THE SALE CONSIDERATION OF THE AGRICULTURAL LAND AS WELL AS THE AGRICULTURAL INCOME. HE HAS FURTHER SUBMTITED THAT IN SUPPORT OF THE ASSESSEE'S CLAIM HE HAS PRODUCED THE SALE DE ED AND CONFIRMATION / DECLARATION FROM THE MOTHER-IN-LAW OF THE ASSESSEE. THUS THE ASSESSEE HAS DISCHARGED ITS ONUS BY PRODUCING THE SALE DEED AS W ELL AS THE CONFIRMATION / DECLARATION BY THE MOTHER-IN-LAW, WHEREBY THE SOURC E OF THE SAID AMOUNT OF RS.7 LAKHS HAS BEEN EXPLAINED. HE HAS FURTHER CONT ENDED THAT WHEN THE AO HAS ACCEPTED THE BUSINESS INCOME OF THE ASSESSEE AN D THE GROSS RECEIPT, THEN THE ADDITION MADE ON ACCOUNT OF THE CASH DEPOSIT IN THE BANK ACCOUNT IS NOT JUSTIFIED WITHOUT CONSIDERING THE GROSS RECEIPTS AV AILABLE WITH THE ASSESSEE. THUS HE HAS PLEADED THAT THE ADDITION MADE BY THE A UTHORITIES BELOW MAY BE DELETED. ITA.612/BANG/2014 PAGE - 5 5. ON THE OTHER HAND, LD. DR HAS STRONGLY RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE EXPLANATIO N OF THE ASSESSEE IS VERY VAGUE WHICH IS NOT SUPPORTED BY ANY TANGIBLE EVIDEN CE. THEREFORE THE EXPLANATION OF THE ASSESSEE IS AN AFTER-THOUGHT WHE N THE AO HAS ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE CONSIDERATION OF PURCHASE OF THE PROPERTY BEING, SITE NO.6 AND FURTHER THE SOURCE OF CASH DEPOSIT IN THE BANK. HE HAS FURTHER CONTENDED THAT THE AO AS WELL AS THE CIT (A) HAS EXAMINED THE RELEVANT RECORD AND GIVEN A FINDING THAT THE AS SESSEE FAILED TO ESTABLISH THE SOURCE OF THE CASH DEPOSIT IN THE BANK AS WELL AS THE PURCHASE CONSIDERATION TO THE EXTENT OF RS.7,11,000/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND REL EVANT MATERIAL ON RECORD. THERE IS NO DISPUTE AS FAR AS THE COST OF A CQUISITION OF THE SITE NO.6 AT BASAVANAPURA, AMOUNTING TO RS.21,88,310/- THE AS SESSEE EXPLAINED THE SOURCE OF THE PURCHASE CONSIDERATION PARTLY BY AVAI LING LOAN OF RS.17,46,360/- FROM DHFL., WHICH HAS BEEN ACCEPTED BY THE AO. THE DISPUTE IS ONLY WITH RESPECT OF THE BALANCE AMOUNT OF RS.7,11,950/- WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS RECEIVED FROM H IS MOTHER-IN-LAW. AO REJECTED THE EXPLANATION OF THE SOURCE OF THE PURCH ASE CONSIDERATION BEING LOAN FROM MOTHER-IN-LAW AND FURTHER THE ADDITION OF UNEXPLAINED CASH CREDIT ITA.612/BANG/2014 PAGE - 6 OF RS.18,28,200/- WAS MADE BY THE AO U/S.68 OF THE ACT. SOURCE OF CASH DEPOSIT HAS BEEN EXPLAINED BY THE ASSESSEE AS BUSIN ESS RECEIPT, BUT IT WAS NOT ACCEPTED BY THE AO. IT IS PERTINENT TO NOTE TH AT THE AO CONSIDERED ONLY DEPOSIT SIDE OF THE BANK ACCOUNT WITHOUT CONSIDERIN G THE WITHDRAWAL. FURTHER WHEN THE AO ACCEPTED THE GROSS RECEIPT FROM THE BUSINESS OF STUDIO, THEN TO THAT EXTENT THE DEPOSIT IN BANK ACCOUNT CAN BE CONSIDERED AS EXPLAINED SOURCE IF THE EXPENDITURE INCURRED BY THE ASSESSEE FROM THE CORRESPONDING WITHDRAWAL FROM THE BANK. THEREFORE THIS ASPECT OF DEPOSIT AND WITHDRAWAL IN THE BANK ACCOUNT HAS NOT BEEN EXA MINED BY THE AUTHORITIES BELOW. ACCORDINGLY WE SET ASIDE THIS I SSUE TO THE RECORD OF AO TO EXAMINE THE SAME AFRESH BY CONSIDERING THE DEPOS IT AS WELL AS EXPLAINING THE WITHDRAWALS BY MATCHING THE SAME WITH THE BUSIN ESS RECEIPTS AND BUSINESS EXPENDITURE OF THE ASSESSEE. 7. AS REGARDS THE GIFT RECEIVED FROM THE MOTHER-IN- LAW, IT IS FOUND THAT THE SOURCE WAS EXPLAINED AS SALE OF AGRICULTURAL LA ND FOR A CONSIDERATION OF RS.10 LAKHS. HOWEVER, IN THE SALE DEED THE CONSIDER ATION IS STATED TO BE ONLY RS.2,20,000/-. THOUGH THE ASSESSEE PRODUCED CONFIRM ATION OF THE PURCHASER OF THE AGRICULTURAL LAND REGARDING THE CONSIDERATIO N OF RS.10 LAKHS VIDE AGREEMENT DT.21.01.2008, THE SAID CONFIRMATION WAS NOT ACCEPTED BY THE ITA.612/BANG/2014 PAGE - 7 CIT (A) ON THE GROUND THAT IT WAS NOT PRODUCED BEFO RE THE AO. APART FROM THE CONFIRMATION OF THE PURCHASER OF THE AGRICULTUR AL LAND, THE ASSESSEE ALSO PRODUCED THE DECLARATION OF THE MOTHER-IN-LAW, FATH ER-IN-LAW AND OTHER RELATIVES REGARDING THE GIFT OF RS.7 LAKHS GIVEN BY THE MOTHER-IN-LAW. GENUINENESS OF THE AGREEMENT HAS NOT BEEN EXAMINED BY THE AO. FURTHER THE AO HAS ALSO NOT EXAMINED THE PARTIES TO THE TRA NSACTION TO VERIFY THE CLAIM OF THE ASSESSEE AND REJECTED THE CLAIM AT THE THRESHOLD. THEREFORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THIS ISSUE IS SET ASIDE TO THE RECORD OF THE AO TO CONDUCT A PROPER ENQUIRY AND VERIFICAT ION BY EXAMINING THE CONCERNED PARTIES TO THE TRANSACTION AND THEN DECID E THE ISSUE AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF APRIL, 2016. SD/- SD/- (INTURI RAMA RAO) (VIJAY PAL R AO) ACCOUNTANT MEMBER JUDICIA L MEMBER MCN