S. Jagadeeshwara Reddy, Bangalore V. DCIT, Bangalore

ITA 66/BANG/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73372 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-12-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 24-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRISCILLA SINGSIT
• Assessee Lawyers: S RAMA JOGI REDDY; S SRINIVAS KAMATH
• Keywords: Unexplained investment; Search and seizure; Salary income; Document seized; Peak credit; Retraction; Documents seized
• Section: 142(1); 153A; 131; 132; 139

Judgement Text

ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 1 OF 17 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE CBENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.66/BANG/2011 (ASSESSMENT YEAR: 2005-06) SHRI S. JAGADEESHWARA REDDY, NO.71, 2 ND FLOOR, R J GARDEN OUTER RING ROAD, MARATHAHALLY BANGALORE 560037 PAN: ABPPS 0261 B VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(3) BANGALORE (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. SRINIVAS KAMATH, CA & SHRI S. RAMA JOGI REDDY DEPARTMENT BY: MS. PRISCILLA SINGSIT, DR DATE OF HEARING: 08/01/2014 DATE OF PRONOUNCEMENT: 17/01/2014 O R D E R PER GEORGE GEORGE K. J.M. THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS D IRECTED AGAINST THE CIT (A)-VIS ORDER DATED 11.10.2010. TH E RELEVANT ASSESSMENT YEAR IS 2005-06. 2. THE ASSESSEE HAS RAISED THREE GROUNDS IN ITS MEM ORANDUM OF APPEAL. THE FIRST AND THIRD GROUNDS ARE GENERAL IN NATURE AND, THUS, NO SPECIFIC ADJUDUCATION IS CALLED FOR. THE S URVIVING GROUND READS AS FOLLOWS: ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 2 OF 17 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AUTHORITIES BELOW ERRED IN MAKING ADDITION OF RS.43,34,502/-. 2.1 THE ASSESSEE HAS ALSO CLAIMED TO HAVE FILED AN ADDITIONAL GROUND CHALLENGING THE PERIOD FOR CHARGING INTEREST U/S. 234A AND 234B. HOWEVER, ON PERUSAL OF THE CASE RECORDS, WE DO NOT FIND ANY ADDITONAL GROUND FILED BY THE ASSESSEE. T HE LD. AR OF THE ASSESSEE WAS NOT ABLE TO PRDOUCE ANY PROOF EVID ENCING THE FILING OF ADDITONAL GROUND FOR A.Y. 2005-06, HENCE WE PROCEED TO DISPOSE OF ONLY THE GROUND ON MERIT, NAMELY, ADDITI ON OF RS.43,34,502. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THERE WAS SEARCH AND SEIZURE ACTION CONDUCTED U/S 132 OF THE ACT ON 11.01.2008 IN THE BUSINESS AS WELL AS TH E RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS GROUP OF COMPANIES . CONSEQUENT TO THE SEARCH, THE CASES OF THESE GROUPS WERE CENTRALIZED. THEREAFTER, NOTICE U/S 153A WAS ISSUED ON 10.06.2008 AND SERVED ON THE ASSESSEE ON 24-06-2008 , HOWEVER, THERE WAS NO RESPONSE. SINCE THERE WAS NO COMPLIANC E TO THE NOTICE ISSUED U/S 153A, A NOTICE U/S 142(1) WAS ISS UED ON 17.08.2009. IN THE MEANWHILE, THE ASSESSEE HAS FILE D HIS RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS.10,52,995/- AND AGRICULTURAL INCOME OF RS.1,60,000/-, THE BREAKUP O F THE SAME ARE AS UNDER: I. INCOME FROM SALARY (NET) RS.2,75,000 II. INCOME FROM HOUSE PROPERTY (-)RS.80,801 III. INCOME FROM BUSINESS RS.1,56,672 IV. INCOME FROM CAPITAL GAINS RS. 36,426 ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 3 OF 17 V. INCOME FROM OTHER SERVICES (AS OFFERED) RS.6,65,698 BANK INTEREST RS. 426 TOTAL RS.10,52,995 3.1 AFTER SCRUTINY OF THE SEIZED MATERIALS AND CALL ING FOR THE ASSESSEES EXPLANATION DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER MADE THE FOLLOWI NG ADDITIONS ON ACCOUNT OF : I) CASH DEPOSITED IN THE MUNISWAMIS BANK A/C RS.50,0 0,000 II) INTEREST PAID FROM UNDISCLOSED SOURCE RS. 1,80,000 TOTAL RS.51,80,000 3.2 IN THIS APPEAL, WE ARE CONCERNED ONLY THE ADDIT ION OF RS.50,00,000/-. 4. CASH DEPOSIT INTO THE BANK ACCOUNT OF MUNISWAMY REDDY RS.50,00,000 : THE CONSIDERATION OF FACTS AND CONCLUSIONS OF THE ASSESSING OFFICER ARE SUMMARIZED AS BELOW: AMOUNTS WERE DEPOSITED BY CASH INTO THE BANK ACCOUN T OPENED IN THE NAME OF ONE SHRI MUNISWAMY REDDY ON 31.03.2005. THE STATEMENT OF SRI JAGADEESWARA REDDY WAS RECORDE D ON 31.03.2008 AND HE WAS ASKED TO EXPLAIN THE SOURCE O F DEPOSIT OF RS50 LAKHS, HOWEVER, HE COULD NOT EXPLAI N THE SOURCE OF THE DEPOSIT. IN REPLY TO QUESTION NO.17 OF HIS STATEMENT RECORDE D U/S 131 OF THE ACT ON 31.03.2008, HE ADMITTED TO OFFER AN AMOUNT OF RS.50 LAKHS AS INCOME IN HIS HANDS. THE ASSESSEE FILED HIS RETURN OF INCOME ON 16.09.20 09 IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT, HOWEVER , INCOME SO DECLARED WAS NOT OFFERED FOR TAXATION. ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 4 OF 17 VIDE WRITTEN SUBMISSION DATED 14.10.2009, THE ASSES SEE CLAIMED THAT THE AMOUNT HAS BEEN DULY REFLECTED IN HIS BOOKS OF ACCOUNTS AND, HENCE, CANNOT BE ASSESSED AS UNDISCLOSED INCOME. THE ASSESSING OFFICER HAS EXAMINED THE BANK STATEME NTS RELATING TO THE ASSESSEE AND OBSERVED THAT THERE WA S NO SUBSTANTIAL CASH WITHDRAWAL FROM HIS BANK ACCOUNTS BEFORE MAKING DEPOSIT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE FILED EXTRACT OF HIS CASH BOOK FOR THE PERIOD FROM 01.04.2004 TO 31.03.2005 AND IT WAS FOUND THAT CERT AIN ENTRIES IN THE CASE BOOK ARE NOT CORRECT. ACCORDING TO THE ASSESSING OFFICER, CASH BOOK PREPARED BY THE ASSESS EE WAS AN AFTER-THOUGHT AND SELF-SERVING. FINDING OF THE ASSESSING OFFICER IS THAT THE DEPOSI T MADE WAS IN CASH AND THERE IS NO EVIDENCE THAT PART OF T HE MONEY DEPOSITED WAS RECEIVED FROM SHRI LOKESWARA REDDY AN D SHRI VISHWANATHANA REDDY. CONSIDERING THESE FACTS, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLA IM REGARDING SOURCES OF THE CASH FOR RS.50.00 LAKHS AN D THE SAME WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSE E AS UNDISCLOSED SOURCE OF INCOME. 5. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT (A). THE CIT (A), OUT OF THE ADDITION OF RS.50.00 LAKHS MADE BY THE ASSESSING OFFICER, SUSTAINED THE ADDITION TO THE EX TENT OF RS.43,34,502/-.THE CIT (A) REDUCED THE PEAK CREDIT DISCLOSED BY THE ASSESSEE AMOUNTING TO RS.6.65 LAKHS FROM THE AD DITION OF RS.50.00 LAKHS. 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES, WHEREAS THE LEARNED DR SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER AND THE CIT ( A). ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 5 OF 17 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THERE WAS A SEARCH AND SEIZURE ACTION CARRIED OUT U/S 132(1) OF THE ACT ON 11.01.2 008 IN THE CASE OF THE ASSESSEE AND GROUP OF COMPANIES RELATIN G TO THE ASSESSEE. DURING THE COURSE OF SEARCH PROCEEDING, P APERS AND DOCUMENTS WERE FOUND AND SEIZED. A STATEMENT WAS RE CORDED ON 31.03.2008 FROM SHRI S. JAGADEESWARA REDDY AND HE W AS ASKED TO EXPLAIN THE CONTENTS/NOTINGS APPEARING ON THE SE IZED MATERIALS. WHILE RECORDING THE STATEMENT OF SHRI J AGADEESWARA REDDY, CERTAIN QUESTIONS PUT BEFORE HIM WHICH WERE AS UNDER: Q. 17 PLEASE EXPLAIN THE TRANSACTION IN THE SB A/C OF SRI MUNNISWAMY REDDY WITH ANDHRA BANK, KORAMANGALA BRAN CH IN ACCOUNT NO.CA 173. ANS. I HAVE SEEN THE BANK ACCOUNT OF SRI MUNNISWAMY REDDY SHOWN BY YOU. THE TRANSACTIONS CONTAINED IN THIS AC COUNT WERE DONE AT THE REQUEST OF THE BRANCH MANAGER, ANDHRA B ANK, KORAMANGALA BRANCH, BANGALORE, IN ORDER TO MEET THE YEAR END TARGETS. I DISCUSSED THE REQUEST OF THE BANK MANAGE R WITH SRI LOKESWARA REDDY AND ARRANGED FOR RS.50.00 LAKHS TO THE BANK MANAGER. I AM UNABLE TO EXPLAIN THE SOURCE OF DEPOS ITS OF RS.50 LAKHS INTO THIS ACCOUNT WHICH WAS ARRANGED BY US. I THEREFORE, ADMIT THE ENTIRE AMOUNT IN MY HANDS FOR THE ASSESSM ENT YEAR 2005-06. 7.1 THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASS ESSMENT YEAR 2005-06 ON 16.09.2009, DECLARING TOTAL TAXABLE INCO ME OF ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 6 OF 17 RS.10,52,698/- ONLY. THEREBY THE ADDITIONAL INCOME DECLARED WAS RS.8,58,828/- (RS.10,52,995 RS.1,94,167/-). DURIN G THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITT ED HIS REPLIES VIDE DATED 14.10.2009 AND EXPLAINED THAT: WITH REGARD TO DEPOSIT OF RS.50.00 LAKHS, I SUBMIT THAT I HAVE DEPOSITED AN AMOUNT OF RS.30.00 LAKHS OUT OF C ASH BALANCE AVAILABLE WITH ME, THE SOURCE FOR THIS CASH BALANCE IS OUT OF CASH WITHDRAWN FROM BANK ON ACCOUNT OF AMOUNT RECEIVED F ROM SALE OF SITES WHICH ARE DECLARED AND TAXES PAID. HOWEVER, I HAVE OFFERED AN AMOUNT OF RS.6.65 LAKHS ON ACCOUNT OF PEAK CREDI T. DETAILED WORKING OF PEAK CREDIT IS ENCLOSED FOR YOUR KIND IN FORMATION. BALANCE AMOUNT OF RS.20.00 LAKHS WAS DEPOSITED BY S HRI LOKESWARA REDDY AND VISHWANATHA REDDY. THE ABOVE TRANSACTIONS ARE DULY REFLECTED IN THEIR BOOKS. THE REFORE, THE AMOUNT OF RS.50.00 LAKHS IS DEPOSITED OUT OF AVAILA BLE CASH BALANCE AND I HAVE OFFERED PEAK CREDIT OF RS.6.65 L AKHS AND, HENCE, RS.50.00 LAKHS CANNOT BE ASSESSED AS UNDISCL OSED INCOME. 7.2 SIMILAR SUBMISSION WAS ALSO MADE VIDE REPLY DAT ED 20.10.2009 AND 26.10.2009 AND THE ASSESSEE, FURTHER , SUBMITTED THAT: E. MUNISWAMY REDDY ACCOUNT RS.50.00 LAKHS: AT THE REQUEST OF THE BRANCH MANAGER OF THE BANK T O MEET THEIR YEAR END TARGETS, WE HAVE ARRANGED RS.50.00 L AKHS FROM THE FOLLOWING ACCOUNTS: A. JAGADEESWARA REDDY RS.30.00 LAKHS ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 7 OF 17 B. LOKESWARA REDDY RS. 15.00 LAKHS C. VISHWANATHA REDDY RS. 5.00 LAKHS THE SOURCE FOR THE CASH WAS DRAWN FROM THEIR ACCOUN TS/BANK ACCOUNTS AS REFLECTED THEIR BANK PASS SHEETS AND/O R CASH BOOKS OF THE RESPECTIVE ACCOUNT HOLDERS AND FURTHER EVIDE NCING THE FACT THAT THE MANAGER HAS RETURNED THE SAID AMOUNTS BY B ANK TRANSFER TO THEIR ACCOUNTS ON APRIL 29, 2005 TO MAY 09, 2005 EXCEPT FOR JAGADEESWARA REDDY TO WHOM THE MANAGER WAS HANDED O VER RS.30.00 LAKHS IN CASH ON APRIL 02, 2005. 7.3 FROM THE DISCUSSION MADE ABOVE, THE FOLLOWING F ACTS EMERGE: IN THE STATEMENT RECORDED FROM THE ASSESSEE ON 31.03.2008, HE FAILED TO EXPLAIN THE SOURCES OF DEP OSITS OF RS.50.00 LAKHS. EVEN HE AGREED TO OFFER FOR TAXATIO N OF THE SAME AS UNDISCLOSED SOURCE OF INCOME; WHILE FILING RETURN OF INCOME IN PURSUANCE OF THE N OTICE ISSUED U/S 153A, THE ASSESSEE OFFERED PEAK CREDIT O F RS.6.65 LAKHS; THE CONTENTION OF THE ASSESSEE THAT RS.50.00 LAKHS ARRANGED FROM THE ACCOUNTS OF JAGADEESWARA REDDY, LOKESWARA REDDY AND VISHWANATHA REDDY AND THE SOURC ES FOR THE CASH DRAWN FROM THEIR RESPECTIVE ACCOUNT/BA NK ACCOUNTS; DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS ALSO CONTENDED THAT THE AMOUNT OF RS.50.00 LAKHS WA S ALREADY RECORDED IN HIS CASH BOOK FOR THE RELEVANT PERIOD. IF SO WHY AN AMOUNT OF RS.50.00 LAKHS WAS DEPOSITED IN FICTITIOUS BANK ACCOUNT? ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 8 OF 17 7.4. IN VIEW OF THE ABOVE, IT IS APPARENT THAT THE ASSESSEE HAS CHANGED HIS STAND AT DIFFERENT STAGES. IN THE INITI AL STAGE, HE FAILED TO EXPLAIN THE SOURCE OF RS.50.00 LAKHS, LAT ER ON OFFERED RS.6.65 LAKHS AS PEAK CREDIT WHILE FILING RETURN OF INCOME. FINALLY, HIS CONTENTION IS THAT THE ENTIRE SUM OF R S.50.00 LAKHS STANDS EXPLAINED BY FURNISHING CASH BOOK FOR THE RE LEVANT PERIOD. IF THE SAID DEPOSIT CLAIMED AS EXPLAINED, THEN THER E WAS NO NEED TO DEPOSIT IN FICTITIOUS BANK ACCOUNT AND CONSEQUEN TLY, DISCLOSE AN INCOME OF RS.6.65 LAKHS AS PEAK CREDIT. 7.5. WITH REGARD TO THE EXPLANATION OF SOURCES FOR RS.50.00 LAKHS WITH DOCUMENTARY EVIDENCE IS CONCERNED, THE C IT (A) HAS GIVEN AN ELABORATE REASONING IN SUB-PARA (I) TO (I V) OF PARA 2.1.3 OF HIS ORDER AS TO WHY THE EXPLANATION OF THE ASS ESSEE CANNOT BE ACCEPTED. THE RELEVANT FINDINGS OF THE CIT (A) REA D AS FOLLOWS: 2.1.3 THE ARGUMENTS TAKEN BY THE APPELLANT ARE NOT FOUND ACCEPTABLE IN VIEW OF THE REASONS GIV EN BY THE ASSESSING OFFICER IN PARAGRAPH 6 OF THE ASSESSMENT ORDER AND THE FACTS DISCUSSED BELOW:- (I) THE CURRENT ACCOUNT BEARING NO.173 IN THE NAME OF SRI MUNISWAMY REDDY WITH THE ANDHRA BANK, KORAMANGALA BRANCH WAS OPENED ON 31.03.2005 BY DEPOSITING CASH OF RS.50,00,000/-. THE ENTIRE CASH OF RS.50,00,000/- REMAINED IN THE BANK ACCOUNT TILL 02.04.2005. (II) IT IS ARGUED THAT THE AMOUNT OF RS.15,00,000/- WAS DEPOSITED IN THE BANK ACCOUNT OF SRI MUNISWAMY REDDY FROM THE CASH WITHDRAWN FROM THE SAVINGS BANK ACCOUNT OF SRI G LOKESHWARA REDDY BEARING NO.2258 WITH ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 9 OF 17 ANDHRA BANK, KORAMANGALA BRANCH. ON VERIFICATION OF BANK ACCOUNT STATEMENT OF SRI G LOKESHWAR REDDY, IT IS NOTICED THAT THERE WAS NO CASH WITHDRAWAL ON 31.03.2005 AND THE BALANCE IN THE BANK ACCOUNT WAS ONLY RS.10,500/-. THUS, THERE IS NO NEXUS WITH THE DEPOSIT OF CASH OF RS.50,00,000/- IN THE BANK ACCOUNT OF SRI MUNISWAMY REDDY WITH WITHDRAWAL FROM BANK ACCOUNT OF SRI G. LOKESHWARA REDDY. THE PERUSAL OF THE BANK ACCOUNT STATEMENT OF SRI G LOKESHWARA REDDY ALSO REVEALS THAT THE BANK ACCOUNT WAS OPENED ON 19.02.2005 BY DEPOSITING THE CASH OF RS.500/- AFTER THAT CASH OF RS.10,000/- WAS DEPOSITED ON 16.02.2005, ON 19.03.2005 THE CHEQUE OF RS. 20,00,000/- RECEIVED FROM J R HOUSING WAS DEPOSITED AND ON THE SAME DAY THE CASH OF RS.20,00,000/- WAS WITHDRAWN, THE CASH WAS USED BY SRI G LOKESHWARA REDDY BEFORE 31.03.2005 WHICH IS EVIDENT FROM THE FACT THAT SRI G LOKESHWARA REDDY WITHDRAWN CASH OF RS.5,600/- ON 12.04.2005 AND RS.10,000/- ON 19.04.2005. SRI G LOKESHWARA REDDY WAS DEPOSITING SMALL AMOUNTS IN THE BANK ACCOUNT WHICH IS EVIDENT FROM THE FACT THAT ON 08.04.2005, THE CASH OF RS.12,500/- AND ON 20.05.2005, THE CASH OF RS.1,600/- IS DEPOSITED WHICH MEANS THAT RS.20,00,000/- WAS WITHDRAWN FOR IMMEDIATE NEEDS AND THERE IS NO EVIDENCE TO PROVE THAT THE CASH WITHDRAWN ON 19.03.2005 IS USED FOR DEPOSITING RS.15,00,000/- IN THE ACCOUNT OF MUNISWAMY REDDY ON 31.03.2005. THIS ARGUMENT IS CLEARLY AFTER THOUGHT WHICH IS EVIDENT FROM THE FACT THAT IN THE STATEMENT RECORDED U/S 131 OF THE INCOME TAX ACT, AFTER TWO MONTHS AND TWENTY DAYS OF THE SEARCH IN REPLY TO QUESTION NO.17, THE APPELLANT ADMITTED THAT HE IS UNABLE TO EXPLAIN THE SOURCE OF DEPOSIT OF RS.50,00,000/- AND ALSO ADMITTED THE ENTIRE AMOUNT AS INCOME IN HIS HAND FOR THE ASSESSMENT YEAR 2005-06. DURING THE ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 10 OF 17 STATEMENT RECORDED U/S 131 OF THE INCOME TAX ACT, WHEREVER THE TRANSACTIONS ARE RECORDED IN THE BOOKS OF ACCOUNTS, THE APPELLANT CLEARLY STATED THAT THE TRANSACTIONS ARE RECORDED IN THE BOOKS OF ACCOUNTS FOR EXAMPLE, IN QUESTION NO.2, WHEN HE WAS ASKED ABOUT THE SEIZED MATERIAL RELATED TO THE BANK ACCOUNTS SEIZED IN ANNEXURE A/JR/1, HE STATED THAT THE JOTTINGS IN THE SHEETS ARE DETAILS OF THE CHEQUES DEPOSITED, CASH DEPOSITED AND THE BALANCE IN THE BANK ACCOUNT. THESE ARE REFLECTED IN THE BANK ACCOUNT AND MY LEDGER ACCOUNT. IN REPLY TO QUESTION NO.3 HE STATED THAT THIS ENTRY RELATES TO THE CURRENT YEAR AND THE SAME IS RECORDED IN THE BOOKS OF ACCOUNTS OF M/S J R HOUSING DEVELOPERS PVT LTD. THUS, IF ON THE DATE OF THE RECORDING OF THE STATEMENT, THE CASH OF RS.50.00 LAKHS DEPOSITED IN THE ACCOUNT OF MUNISWAMY REDDY WAS OUT OF THE KNOWN SOURCE OF INCOME, THERE WAS NO NEED TO ADMIT THAT HE IS UNABLE TO EXPLAIN THE SOURCE OF THE CASH. IT IS FURTHER EVIDENT FROM THE FACT THAT THE DEPOSIT OF RS.50.00 LAKHS IN THE BANK ACCOUNT OF SRI MUNISWAMY REDDY WAS NOT REFLECTED IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR U/S 139(1) OF INCOME TAX ACT. THE BANK ACCOUNT WAS ADMITTED ONLY IN THE BALANCE SHEET FILED AFTER THE SEARCH IN RESPONSE TO NOTICE U/S 153A OF THE INCOME TAX ACT. (III) IN THE SUBMISSION DATED 26.10.2009, PRODUCED BEFORE THE ASSESSING OFFICER, THE APPELLANT CLAIMED THAT RS.5,00,000/- WAS ARRANGED FROM THE BANK ACCOUNT OF SRI VISHWANATHA REDDY. ON VERIFICATION OF THE BANK ACCOUNT STATEMENT OF THE CURRENT ACCOUNT BEARING NO.1207041 WITH ANDHRA BANK, KORAMANGALA BRANCH IN THE NAME OF SRI VISHWANATHA REDDY, IT IS NOTICED THAT AS ON 31.03.2005, THE CASH BALANCE AVAILABLE IN THE BANK ACCOUNT IS ONLY RS.4,945/- AND NO CASH WITHDRAWAL IS MADE ON 31.03.2005. IT IS ALSO NOTICED FROM THE BANK ACCOUNT STATEMENT THAT THE LAST WITHDRAWAL IN ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 11 OF 17 CASH WAS MADE ON 07.12.2004 OF RS.7,00,000/- IMMEDIATELY AFTER THE AMOUNT OF RS.7,00,000/- DEPOSITED ON THE SAID DATE, SO THERE IS NO NEXUS BETWEEN THE DEPOSIT OF CASH OF RS.50,00,000/- IN THE ACCOUNT OF SRI MUNISWAMY REDDY WITH THE WITHDRAWALS OF THE CASH FROM THE BANK ACCOUNT OF SRI VISHWANATHA REDDY, WHICH IS FURTHER EVIDENT FROM THE STATEMENT OF THE APPELLANT RECORDED U/S 131 DISCUSSED ABOVE. (IV) THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS FILED ABSTRACT OF CASH BOOK FOR THE PERIOD 01.04.2005 TO 31.03.2005 TO JUSTIFY THAT THE CASH OF RS.30,00,000/- WAS DEPOSITED IN THE ACCOUNT OF SRI MUNISWAMY REDDY OUT OF THE CASH BALANCE AVAILABLE WITH HIM. THE ASSESSING OFFICER HELD THAT THE CASH BOOK IS AFTER THOUGHT. THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THE CASH BOOK AFTER THROUGH WHICH IS EVIDENT FROM THE FOLLOWING FACTS:- (A) IN THE STATEMENT RECORDED U/S 131 OF THE INCOME TAX ACT, AFTER TWO MONTHS AND TWENTY DAYS OF COMMENCEMENT OF THE SEARCH, THE APPELLANT DID NOT PRODUCE SUCH CASH BOOK CONTRARY TO THAT HE HIMSELF ADMITTED THAT HE IS UNABLE TO EXPLAIN THE SOURCE OF THE CASH DEPOSITED OF RS.50,00,000/- IN THE BANK ACCOUNT OF SRI MUNISWAMY REDDY. THE PERUSAL OF THE STATEMENT CLEARLY REVEALS THAT WHEREVER THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNTS, THE APPELLANT POINTED OUT THAT THE TRANSACTIONS ARE RECORDED IN THE BOOKS OF ACCOUNTS. (B) THE APPELLANT THROUGH THIS CASH BOOK TRIED TO JUSTIFY THAT THE CASH BALANCE AS ON 01.04.2004 WAS AVAILABLE AT RS.20,16,472/- WHICH IS INCORRECT IN VIEW OF THE FACT THAT NO SUCH CASH BALANCE WAS SHOWN IN THE RETURN OF INCOME FILED FOR EARLIER ASSESSMENT YEARS. THE PERUSAL OF ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 12 OF 17 THE BALANCE SHEET FILED FOR ASSESSMENT YEAR 2004-05 ALONG WITH THE RETURN OF INCOME FILED U/S 139 ON 31.03.2006, IT IS NOTICED THAT THE CASH ON HAND WAS SHOWN AT RS.9,836/- ONLY. FURTHER, THE PERUSAL OF THE RETURN OF INCOME FILED ON 31.03.2006 FOR ASSESSMENT YEAR 2005-06 THAT IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME, ONLY THE ACCOUNT WITH CANARA BANK HAVING BALANCE OF RS.2,503/- IS REFLECTED. THE ACCOUNT IN THE NAME OF SRI MUNISWAMY REDDY IS NOT REFLECTED IN THE BALANCE SHEET. THE ARGUMENT ALSO FOUND UNACCEPTABLE IN VIEW OF THE FACT THAT IF THE CASH TO THE EXTENT OF RS.20,16,472/- WAS AVAILABLE ON 01.04.2004, THERE WAS NO NEED TO WITHDRAW THE CASH OF RS.49,000/- ON 06.04.2004, RS.12,00,000/- ON 14.05.2004, RS.3,50,000/- ON 15.07.2004,RS.3,00,000/- ON 16.09.2004 WHICH MAKES IT CLEAR THAT THE OPENING CASH BALANCE OF RS.20,16,472/- WAS NOT AVAILABLE. FURTHER, THERE IS NOT CASH WITHDRAWAL FROM ANY BANK ACCOUNT ON 31.03.2005 TO JUSTIFY THAT THE CASH WAS WITHDRAWN FROM THE BANK ACCOUNT TO DEPOSIT IN THE MUNISWAMYS ACCOUNT, THE LAST WITHDRAWAL OF CASH IS RS.6,36,551/- ON 01.12.2004 WHICH WAS UTILISED FOR PAYMENT FOR PURCHASE OF CONSTRUCTION MATERIAL FOR CONSTRUCTION OF THE HOUSE WHICH MAKES IT CLEAR THAT THERE WAS NO EXPLAINED CASH OF RS.30,00,000/- WAS AVAILABLE WITH THE APPELLANT ON 31.03.2005 TO DEPOSIT IN THE BANK ACCOUNT OF SRI MUNISWAMY REDDY WHICH IS FURTHER EVIDENT FROM THE ADMISSION OF THE APPELLANT IN REPLY TO QUESTION NO.17 IN THE STATEMENT RECORDED U/S 131 OF THE INCOME TAX ACT ON 31.03.2008. THE FACTS DISCUSSED ABOVE ESTABLISHES BEYOND DOUBT THAT THE APPELLANT FAILED TO PROVE THE SOURCE OF TH E INVESTMENT OF RS.50,00,000/- IN CASH IN THE BANK ACCOUNT IN THE NAME OF SRI MUNISWAMY REDDY, WHICH ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 13 OF 17 ADMITTEDLY BELONGS TO THE APPELLANT AS IN THE BALAN CE SHEET FILED IN RESPONSE TO NOTICE U/S 153A OF THE INCOME TAX ACT, THE ACCOUNT HAS BEEN OWNED BY THE APPELLANT. IN THE STATEMENT RECORDED U/S 131 OF THE INCOME TAX ACT ON 31.03.2008, I.E. AFTER TWO MONTHS AND TWENTY DAYS OF THE INITIATION OF SEARCH U/S 132 ON 11.01.2008, THE APPELLANT IN REPLY TO QUESTION NO.17 ADMITTED THAT I AM UNABLE TO EXPLAIN THE SOURCE OF DEPOSIT OF RS.50,00,000/- IN THIS ACCOUNT WHICH WAS ARRANGED BY US. I THEREFORE, ADMIT THE ENTIRE AMOUNT IN MY HAND FOR ASSESSMENT YEAR 2005- 06. HOWEVER, WHILE FILING THE RETURN IN RESPONSE T O NOTICE U/S 153A ON 16.09.2009, THE APPELLANT INSTEAD OF RS.50,00,000/- OFFERED THE INCOME ON ACCOUNT OF THIS INVESTMENT AT RS.6,65,498/- WHICH AMOUNTS TO RETRACTION OF THE STATEMENT AFTER ONE YE AR AND SIX MONTHS WHICH EVEN OTHERWISE CANNOT BE ALLOWED. THIS VIEW FINDS SUPPORT FROM THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (I) THE BOMBAY HIGH COURT IN THE CASE OF SRI RAMESHCHANDRA AND CO., V CIT (1987) (168 ITR 375) HELD THAT WHERE AN ASSESSEE HAS MADE A STATEMENT OF THE FACTS, HE CAN HAVE NO GRIEVANCE IF THE TAXING AUTHORITY TAXES HIM IN ACCORDANCE WITH THAT STATEMENT. IF HE CAN HAVE NO GRIEVANCE, HE CAN FILE NO APPEAL. IN THE CASE OF THE APPELLANT ALSO, THE UNEXPLAINED INVESTMENT OF RS.50.00 LAKHS IN THE BANK ACCOUNT OF SRI MUNISWAMY REDDY ADMITTED BY THE APPELLANT HAS BEEN ASSESSED IN HIS CASE AND THEREFORE, HE SHOULD NOT HAVE GRIEVANCE AGAINST SUCH ADDITIONS. (II) THE MADHYA PRADESH HIGH COURT IN THE CASE OF ISHWARDIN MEWALAL V CIT (169 ITR 587) HELD THAT IN NARAYAN BHAGWANTRAO GOSAVI BALAJIWALE V GOPAL VINAYAK GOSAVI, AIR 1960 SC 100, IT HAS BEEN HELD THAT AN ADMISSION IS THE BEST EVIDENCE THAT AN OPPOSING PARTY CAN REPLY UPON, AND THOUGH NOT CONCLUSIVE, IS DECISIVE OF THE MATTER, UNLESS SUCCESSFULLY WITHDRAWN OR PROVED ERRONEOUS. ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 14 OF 17 IT HAS NOT BEEN SHOWN TO US THAT THE ADMISSIONS REFERRED TO ABOVE WERE EITHER PROVED ERRONEOUS OR SUCCESSFULLY WITHDRAWN BY THE PERSONS WHO HAD MADE THOSE ADMISSIONS BEFORE THE INCOME TAX AUTHORITIES. IN THIS BACKGROUND, WE ARE NOT INCLINED TO AGREE WITH THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. (III) THE HON'BLE SUPREME COURT IN THE CASE OF DEWAN BAHADUR SETH DAS MOHTA V. THE UNION OF INDIA & ORS (26 ITR 722) HELD THAT WHERE THE PETITIONER ENTERED INTO A VOLUNTARY SETTLEMENT WITH THE GOVERNMENT AND HIS LIABILITY TO PAY TAX AROSE FROM SUCH SETTLEMENT, HE CANNOT QUESTION THE SETTLEMENT UNLESS AND UNTIL HE CAN ESTABLISH THAT HIS CONSENT WAS IMPROPERLY PROCURED. IN THE CASE OF THE APPELLANT ALSO, THE APPELLANT HIMSELF ADMITTED FOR PAYING THE TAXES ON THE UNDISCLOSED INVESTMENTS DURING THE STATEMENT RECORDED U/S 131 OF INCOME TAX ACT AND THE APPELLANT FAILED TO ESTABLISH THAT THE STATEMENT WAS IMPROPERLY PROCURED. (IV) THE HON'BLE ITAT F BENCH, MUMBAI IN THE CASE OF ACIT VS. EXPRESSO INVESTMENT REPORTED IN 008 SOT 0287 HAS DISCUSSED ALL ASPECTS OF RETRACTION ALONG WITH THE PROVISION OF THE INDIAN EVIDENCE ACT AND HELD THAT BY ITS DECLARATION AND ACTS THE ASSESSEE INTENTIONALLY CAUSED/MADE THE DEPARTMENTAL AUTHORITIES TO BELIEVE THE DECLARATION MADE BY THE ASSESSEE TO BE TRUE AND INDUCED THEM TO ACT UPON SUCH BELIEF. IN OUR VIEW IT IS NOT OPEN TO THE ASSESSEE TO CHANGE THE STAND IT HAS ALREADY TAKEN AND THUS CAUSE THE SITUATION IN HIS FAVOUR BY INDUCING THE DEPARTMENT NOT TO INVESTIGATE OR ENQUIRE INTO THE MATTER ON THE SEIZED DOCUMENTS. IT IS NOT OPEN TO THE ASSESSEE TO TURN AROUND ON THE SAID DECLARATION. THIS IS BASED ON MAXIM, ALLEGANS CONTRIA NON EST AUDIENDUS (A PERSON ALLEGING CONTRADICTORY FACTS SHOULD NOT BE HEARD). IN PICKARD V. SEARS ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 15 OF 17 (1837) 6 AD. & EI 469, 474, IT HAS BEEN HELD THAT WHERE A PERSON BY HIS WORDS OR CONDUCT WILLFULLY CAUSES ANOTHER TO BELIEVE THE EXISTENCE OF A CERTAIN STATE OF THINGS AND INDUCES HIM TO ACT ON THAT BELIEF, SO AS TO ALTER HIS OWN PREVIOUS POSITION, THE FORMER IS CONCLUDED FROM AVERRING AGAINST THE LATTER QA DIFFERENT STATE OF THINGS AS EXISTING AT THE SAME. IN THE CELEBRATED BOOK TITLED ADMINISTRATIVE LAW BY SIR WILLIAM WADE (EIGHTH EDITION BY WADE AND FORSYTH OXFORD UNIVERSITY PRESS), THE LEGAL POSITION HAS BEEN EXPLAINED AT P.242 AS UNDER:- THE BASIC PRINCIPLE OF ESTOPPEL IS THAT A PERSON WHO BY SOME STATEMENT OR REPRESENTATION OF FACT CAUSES ANOTHER TO ACT TO HIS DETRIMENT IN RELIANCE ON THE TRUTH OF IT IS NOT ALLOWED TO DENY IT LATER, EVEN THOUGH IT IS WRONG. JUSTICE HERE PREVAILS OVER TRUTH. ESTOPPEL IS OFTEN DESCRIBED AS A RULE OF EVIDENCE, BUT MORE CORRECTLY IT IS A PRINCIPLE OF LAW. AS A PRINCIPLE OF COMMON LAW, IT APPLIES ONLY TO REPRESENTATIONS ABOUT PAST OR PRESENT FACTS. IN EVIDENCE ACT ALSO, IT IS CLEARLY LAID DOWN IN SECTION 115 THEREOF, THAT WHEN ONE PERSON HAS BY HIS DECLARATION OR ACT OR OMISSION, INTENTIONALLY CAUSED OR PERMITTED ANOTHER PERSON TO BELIEVE A THING TO BE TRUE AND TO ACT UPON SUCH BELIEF, NEITHER HE NOR HIS REPRESENTATIVE SHALL BE ALLOWED, IN ANY SUIT OR PROCEEDING BETWEEN HIMSELF AND SUCH PERSON OR HIS REPRESENTATIVE TO DENY THE TRUTH OF THAT THING. SECTION 115 OF THE EVIDENCE ACT ALSO INCORPORATES A STATUTORY PRINCIPLE OF COMMON LAW THAT A PERSON ALLEGING CONTRADICTORY FACTS SHOULD NOT BE HEARD. IF THE ASSESSEE HAD NOT MADE THE SAID DECLARATION, OR STATEMENT, THE DEPARTMENTAL AUTHORITIES COULD HAVE CONTINUED ENQUIRIES AND COULD HAVE INVESTIGATED THE ENTIRE MATTER ON THE BASIS OF VARIOUS DOCUMENTS ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 16 OF 17 SEIZED DURING THE COURSE OF SEARCH LIKE BLANK CHEQUES WITH PASS BOOKS ETC . 7.6. THE ABOVE FINDINGS OF THE CIT (A) HAS NOT BEEN DISPELLED BY THE LEARNED AR. MOREOVER, AS MENTIONED EARLIER, IF THE DEPOSIT OF RS.50.00 LAKHS AS CLAIMED BY THE ASSESSEE IS EXPLAI NED, THERE WAS NO NEED TO DEPOSIT THE AMOUNT IN FICTITIOUS BAN K ACCOUNT AND LATER DECLARE IN THE ASSESSEES RETURN OF INCOM E, A SUM OF RS.6.65 LAKHS AS PEAK CREDIT. FOR THE AFORESAID REA SONING, WE UPHOLD THE CIT (A)S ORDER AS CORRECT AND IN ACCORD ANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2014. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED THE 17 TH JANUARY, 2014. VNODAN/SPS / DS ITA NO.66 OF 2011 S JAGADEESHWARA REDDY BANGALORE. PAGE 17 OF 17 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE