Sri. S. Guruswamy, Mysore V. Asst.C.I.T., Mysore

ITA 629/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8700 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-12-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: C R NULVI
• Keywords: Gift; Opportunity of being heard; Deemed to accrue or arise in india
• Section: 147; 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.629(BNG)/2015 (ASSESSMENT YEAR : 2011-12) SHRI S.GURUSWAMY, PROP: SHARAT BAR & RESTAURANT, NO.689, BAZAR STREET, NAZARBAD, MYSORE PAN NO.ADHPG4976A APPELLANT VS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), MYSORE. RESPONDENT ASSESSEE BY : SHRI C.R.NULVI, CA REVENUE BY : DR.P.K.SRIHARI, ADDL.CIT DATE OF HEARING : 07-12-201 5 DATE OF PRONOUNCEMENT : 13-01-2016 O R D E R PER SHRI INTURI RAMA RAO, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), MYSORE DATED 24-02-2015 FOR THE ASSESSMENT YEAR : 2001-02. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL; 1. THE ORDER OF THE AO IS AGAINST THE FACT AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.629 (B)/2015 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ACTION OF THE LD.AO IS JUSTIFIED TO SUSTAIN THE ADDITION AGITATED BEFORE THE HONBLE TRIBUNAL WITHOUT CONTRADICTING WITH THE ASSESSEE FOR THE SUBMISSION MADE BEFORE HIM. 3. THE AO IS ERRED IN PASSING THE ORDER U/S 143 R.W.S.254 ON HIS OWN ASSUMPTION AND PRESUMPTIONS BY IGNORING CASH FLOW STATEMENT AND BALANCE SHEET FILE D BEFORE HIM FOR ALL THE YEARS. 4.FOR THESE AND OTHER REASONS WHICH MAY BE ADDUCED AT THE TIME OF HEARING YOUR HONOUR IS REQUESTED TO DEL ETE THE ADDITIONS MADE BY THE AO. 5. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, AMEND A ND/OR DELETE ANY OF THE GROUNDS DURING THE COURSE OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 WA S FILED ON 22-02- 2006 DECLARING AN INCOME OF RS.1,32,100/- APART FRO M AGRICULTURAL INCOME OF RS.1,90,000/-. THE SAID RETURN OF INCOME WAS TR EATED AS INVALID AS IT WAS FILED BEYOND THE TIME LIMIT AND SUBSEQUENTLY, A NOTICE U/S 147 OF THE IT ACT WAS ISSUED AND THE RE-ASSESSMENT WAS COMPLET ED U/S 144 3 ITA NO.629 (B)/2015 R.W.S.147 OF THE IT ACT, 1961 ON 17-12-2007 DETERMI NING THE TOTAL INCOME OF RS.10,25,020/- AFTER MAKING THE FOLLOWING ADDITI ONS; A. SUNDRY INCOME AS ADMITTED RS. 70,000 B. ADDITION TOWARDS EXCESS OPENING CAPITAL ABOVE SUBJECTED TO TAX REPRESENTING EXCESS OF ASSETS OVER LIABILITY RS.3,88,313 C. EXCESS OF AGRICULTURE INCOME CLAIMED AS DISCUSSED ABOVE SUBJECT TO TAX AS INCOME REPRESENTING EXCESS OF ASSETS OVER LIABILITIES R S.1,00,000 D. FINANCE LIABILITIES DISCHARGED AS DISCUSSED ABOVE TREATED AS DEEMED INCOME U/S 69 RS.3,93,160 AGAINST THE SAID ASSESSMENT ORDER, AN APPEAL WAS PR EFERRED BEFORE THE LD.CIT(A), MYSORE, WHO VIDE ORDER DATED 29-10- 2010 PARTLY ALLOWED THE APPEAL BY DELETING THE ADDITION MADE U/S 69 OF THE IT ACT, 1961 OF RS.3,93,160/- AND THE ADDITION OF RS.70,000/- SUSTA INING THE ADDITION OF OPENING BALANCE TO THE EXTENT OF RS.3,18,313/-. 4. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE TRIBU NAL WAS PLEASED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND THE MAT TER WAS REMANDED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACC ORDANCE WITH LAW AFTER 4 ITA NO.629 (B)/2015 AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AFTER THE ORDER OF THE TRIBUNAL, THERE ARE TWO SURVIVING ADDI TIONS WHICH WERE AGITATED BEFORE THE AO. ONE SUCH ISSUE IS ADDITION ON ACCOUNT OF EXCESS OF OPENING CAPITAL OF RS.3,88,313/- ANDRS.1.00 LAKH ON AGRICULTURAL INCOME. PURSUANT TO THE ORDER OF THE HONBLE TRIBUNAL ASSES SMENT WAS COMPLETED VIDE ORDER DATED 5/6/12 THE AO BY HOLDING THAT THE EXPLANATION OFFERED BY THE ASSESSEE DOES NOT SUBSTANTIATE THE AVAILABILITY OF CASH BALANCE OF RS.4,73,126/- AS ON 31-03-2001 AND CONCLUDED THAT T HE OPENING CASH BALANCE OF RS.4,73,126/- WAS NOT AVAILABLE AND TREA TED RS.3,88,313/- AFTER DEDUCTING A SUM OF RS.84,813/- WHICH WERE TRE ATED AS EXPLAINED AS UNAVAILABLE CASH BALANCE AND BROUGHT TO TAX. THE A O ALSO DISBELIEVED THE AGRICULTURAL INCOME OF RS.1.00 LAKH AND TREATED IT AS INCOME FROM OTHER SOURCES. 5. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LD.CIT(A), WHO VIDE IMPUGNED ORDER HAS DISMISSED TH E SAME. 6. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5 ITA NO.629 (B)/2015 7. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED T HAT THE WHOLE APPROACH OF THE AO IN MAKING ADDITIONS ON ACCOUNT O F DIFFERENCE IN OPENING CAPITAL DOES NOT STAND THE TEST OF LAW. IT IS HIS CONTENTION THAT THE ISSUE OF THE OPENING BALANCE CAN BE EXAMINED ONLY I N THE EARLIER YEARS NOT DURING THE YEAR UNDER CONSIDERATION. HE FURTHER CO NTENDED THAT THE OPENING BALANCE ADOPTED BY THE ASSESSEE IS TRUE AND CORRECT. THE DIFFERENCE HAD ARISEN, AS THE AMOUNTS OF OPENING BA LANCE ADOPTED BY THE AO HAD ARISEN ONLY ON ACCOUNT OF ESTIMATING HIGHER DRAWINGS OF RS.1,23,453/- AS AGAINST RS.93,455/- AND DISBELIEVI NG THE GIFT RECEIVED FROM WIFE. LIKEWISE, HE HAS LISTED SEVERAL DISCRE PANCIES IN THE WORKING MADE BY THE AO FOR THE PURPOSE OF ARRIVING AT THE O PENING CAPITAL. 8. ON THE OTHER HAND, LEARNED SR.DR RELIED ON THE O RDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ADDITIONS WERE MADE BY THE AO SOLELY B Y DISTURBING THE AMOUNT OF OPENING CAPITAL AND DISBELIEVING THE AGRI CULTURAL INCOME OF RS.1.00 LAKH. WITHOUT GOING IN TO THE CORRECTNESS OR OTHERWISE OF THE 6 ITA NO.629 (B)/2015 WORKING ADOPTED BY THE AO FOR THE PURPOSE OF ARRIVI NG AT THE OPENING BALANCE, WE ADJUDICATE THE ISSUE AS FOLLOWS. THE Q UESTION OF ADDITION ARISES ONLY WHEN OPENING CAPITAL BALANCE AND THE AG RICULTURAL INCOME SHOWN AS A SOURCE FOR ACQUISITION OF ASSET OR FOR T HE PURPOSE OF MEETING EXPENDITURE. THE AO HAD NOT GIVEN ANY FINDING THAT OPENING CAPITAL BALANCE AND AGRICULTURAL INCOME WAS UTILIZED FOR TH E PURPOSE OF ACQUISITION ANY ASSET OR MEETING ANY EXPENDITURE. I N THE ABSENCE OF THESE FINDINGS, THE QUESTION OF ADDITION DOES NOT ARISE A ND STAND THE TEST OF LAW AND HENCE, WE SET ASIDE THE ORDER OF THE LOWER AUTH ORITIES AND DIRECT THE AO TO DELETE THE ADDITION OF RS.3,88,313/-ON ACCOUN T OF DIFFERENCE IN OPENING BALANCE AND ADDITION OF RS.1.00 LAKH DISBEL IEVED THE AGRICULTURAL INCOME. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH JANUARY, 2016. SD/- (VIJAYPAL RAO) SD/- (INTURI RAMARAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE D A T E D : 13-01-2016 7 ITA NO.629 (B)/2015 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR,ITAT, BANGALORE