Smt Mamata Acharya, Bhubaneswar V. ITO, Bhubaneswar

ITA 66/CTK/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4268 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 21-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2009
• Court: TRIBUNAL
• Department Lawyers: H M MOHARANA
• Assessee Lawyers: P C SETHI
• Keywords: Unexplained investment; Opportunity of being heard; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE HONBLE SHRI D.K.TYAGI, JUDICIAL MEMBER. /AND HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER . / I.TA.NO . 66/CTK/2009 / ASSESSMENT YEAR 2005 - 06 SMT. MAMATA ACHARYA, PROP. MAMATA MOTORS, PLOT NO.513, LAXMI SAGAR, BHUBANESWAR 751 006 AEPPA 8059 L - - - VERSUS - . INCOME - TAX OFFICER, WARD 1(1), BHUBANESWAR. / A PPELLANT RESPONDENT FOR THE APPELLANT : SHRI P.C.SETHI, AR FOR THE RESPONDENT : SHRI H.M.MOHARANA, DR / ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THE ASSESSEE IS IN APPEAL AGITATING THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMING CERTAIN ADDITION/DISALLOWANCE WHICH HAVE BEEN RAISED BEFORE US IN THE FOLLOWING GROUNDS . 1. THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS - II), BHUBANESWAR WAS NOT CORRECT IN CONFIRMING THE ORDER OF THE INCOME TAX OFFICER HOLDING THAT RS.11,76,000/ - WAS ASSESSABLE AS UNEXPLAINED INVESTMENT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE WHICH IS UNJUST , ARBITRARY AND BAD IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS - IL), BHUBANESWAR WAS WRONG IN CONFIRMING RS.2,40,000/ - REPAYMENT OF HOUSING LOAN AS UNEXPLAINED INVESTMENT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS - II), BHUBANESWAR WAS WRONG IN CONFIRMING THE ORDER OF INCOME TAX OFFICER FOR ARBITRARY ADDITION OF RS.26,000/ - UNDER THE HEAD PETROL & LUBRICANT AND TRAVEL & CONVEYANCE WHICH IS UNJUST, ARBITRARY AND BAD IN L AW. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS - II), BHUBANESWAR WAS WRONG IN CONFIRMING THE ORDER OF INCOME TAX OFFICER FOR ARBITRARY ADDITION OF RS.787/ - UNDER THE HEAD ELECTRICAL INSTRUMENTS WHICH IS UNJUST, ARBITRARY AND BAD IN IAW. I.TA.NO .66/CTK/2009 2 5. ANY OT HER GROUNDS TO ADD OR TO AMEND AT THE TIME OF HEARING OF THE APPEAL. 2. AS NOTED BY THE LEARNED COUNSEL IN THE ORDER SHEET, GROUNDS NO.3 AND 4 ARE NOT PRESSED AND THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 3. THE BRIEF FACTS AS BROUGHT ON RECORD ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31.8.2005 DECLARING INCOME AT RS.1,23,720.THE ASSESSEE DERIVED INCOME FROM RETAIL BUSINESS OF AUTOMOBILE SPARE PARTS. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS HELD THAT THE ASSESSEE HAD DEPOSIT ED AMOUNTS IN HER SAVINGS BANK ACCOUNT WHICH WERE ULTIMATELY SPENT BY WITHDRAWAL OF CASH IN TREATMENT OF HER HUSBAND AT MADRAS WHO FINALLY EXPIRED SUFFERING FROM CANCER. THE ASSESSING OFFICER HELD THAT THE DEPOSITS WAS EXPLAINED TO BE FROM SALE OF JEWELLERY, PAST SAVINGS AND FRIENDLY LOANS FROM FRIENDS AND OTHER RELATIVES AT THE TIME OF EMERGENCY SITUATION I.E., THE ASSESSEES HUSBANDS TREATMENT AT MADRAS. T HE SUM DEPOSITED IN THE BANK WAS CONSIDERED AS UNEXPLAINED INVESTMENT TO BE THE INCOME OF TH E ASSESSEE U/S.69 AMOUNTING TO RS.11,76,000.THE ASSESSING OFFICER ALSO ADDED A SUM OF RS.2,40,000 BEING THE AMOUNT REPAID ON HOME LOAN BORROWED DEPOSIT ED IN INDIAN BANK WHICH COULD NOT FORM PART OF THE ASSESSEES EXPLAINED SOURCE OF INCOME BEING A SUM OF RS.2,40,000. 4. THE ASSESSEE FLED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO CONSIDERED THE ISSUE AT LENGTH AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER INTER ALIA CONSIDERING THE ISSUE OF ADDITION OF RS.11,76,000 ON HUMANITARIAN GROUND S AS WELL . 5. THE LEARNED COUNSEL BEFORE US SUBMITTED THAT THE AUTHORITIES BELOW MISDIRECTED THEMSELVES TO HOLD THAT THE SAID SUMS WERE NOT PART OF THE ASSESSEES BUSINESS IN SO FAR AS HE FURNISHED A COPY OF THE INDIAN BANK ACCOUNT WHICH STANDS IN THE NAME OF M/S.MA MATA MOTORS. HE PERSUADE THE STATEMENT FOR THE FULL PERIOD WHERE THE AMOUNT OF RS.25 ,000 EACH IN INSTALLMENTS HAS BEEN CREDITED TO THE HOME LOAN ACCOUNT OF INDIAN BANK THEREFORE SATISFIED THE QUERY THAT THE AMOUNT REPAID FOR SQUARING OF THE HOME LOAN ACCOU NT THE PART OF THE ASSESSEES BUSINESS. ON THE ISSUE OF RS.11,76,000 DISALLOWED, HE POINTED OUT THAT AS THE NAME SUGGESTS THE ASSESSING OFFICER HAD KNOWN THAT THESE AMOUNTS WERE RECEIVED FROM FRIENDS AND RELATIVES AND PAST SAVINGS W A S NOT PART OF THE BUSIN ESS ASSETS TO BE DISCLOSED IN THE BALANCE SHEET. THE ASSESSING OFFICER I.TA.NO .66/CTK/2009 3 THEREFORE MISDIRECTED HIMSELF TO HOLD ON FURNISHING OF THE DETAILS OF FRIENDS AND RELATIVES TO THE EXTENT THAT THE AMOUNT SPENT ON THE HUSBANDS ILLNESS COULD HAVE BEEN THROUGH THE BUSI NESS ACCOUNT FOR CONFIRMING THE ADDITION U/S.69.HE POINTED OUT THAT THE AUTHORITIES BELOW THEREFORE CONTRADICTED THEIR OWN OBSERVATIONS ON FACTS BY HOLDING THAT WHERE THE AMOUNTS WERE TAKEN FROM FRIENDS AND RELATIVES WHETHER WOULD BE CONSIDERED U/S.68 OR U /S.69 WHEN NO BALANCE IN THE SAID ACCOUNT REMAINED AT THE END OF THE YEAR IN BUSINESS . THE ASSESSING OFFICER THEREFORE OUGHT TO HAVE CONSIDERED THAT THE EXPLANATION FOR THE REMAINING LOAN CREDITORS OTHER THAN THE SON AND DAUGHTER WHICH HE ALLOWED FROM THE TOTAL DEPOSITS OF RS.12,36,000 COULD BE TESTED FOR TAXABILITY U/S.68 ONLY. IT WAS NEVER THE CASE OF THE LEARNED CIT(A) ALSO TO REBUT THAT THE ASSESSING OFFICER HAD RIGHTLY INITIATED TAXATION OF THE SAID SUM U/S.69 WHEN THE ASSESSEE APPELLANT BEFORE HIM SUB MITTED THAT THE SOURCE OF DEPOSIT MONEY IN BANK WAS ADEQUATELY EXPLAINED. NO EFFORT WAS MADE BY THE ASSESSING OFFICER OR BY THE LEARNED CIT(A) TO VERIFY WHETHER THE AMOUNT DEPOSITED IN THE BANK HAD ALREADY BEEN SUBJECTED TO TAX IN THE EARLIER YEARS BEING A WIFE WAS TO TAKE CARE OF HER LATE HUSBAND . HE PRAYED THAT BOTH THESE AMOUNTS HAVE BEEN BROUGHT TO TAX ON THE BASIS OF ERRONEOUS CONSIDERATION OF FACTS AND CONCLUSION ARE UNJUSTIFIED AND MAY KINDLY BE DIRECTED TO BE DELETED. 6. THE LEARNED DR OPPOSED THE C ONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE BY INDICATING THAT THE COPY OF ACCOUNT OF INDIAN BANK AND COPY OF ACCOUNT OF UTI BANK WERE NOT FURNISHED THE ASSESSING OFFICER WHO HAD NOTED THE BORROWING FROM FRIENDS AND RELATIVES TO THE EXTENT OF RS.3,65 ,000. THE REMAINING AMOUNT IN THE BANK ACCOUNT THEREFORE UTILIZED FOR THE TREATMENT OF I LLNESS OF ASSESSEES HUSBAND HAD NOT BEEN EXPLAINED TO THAT EXTENT WAS RIGHTLY CONSIDERED U/S.69.THE LEARNED CIT(A) THEREFORE CONFIRMED THE ACTION OF THE ASSESSING OFFI CER IN SO FAR AS THE PAYMENT OF HOME LOAN WAS ALSO NOT PART OF CASH CREDIT ACCOUNT IN INDIAN BANK AS SHOWN IN THE BALANCE SHEET FURNISHED AT PAGE 24 OF THE PB FILED BY THE LEARNED COUNSEL. HE P OINTED OUT THAT THE CASH CREDIT SHOWN IN THE ACCOUNT IS RS.885 0 AS AGAINST NOW THE COPY OF ACCOUNT WHICH ROUTED THROUGH SAVINGS BANK ACCOUNT NO.1491 INCORPORATING THE REPAYMENT THROUGH WITHDRAWALS REDUCE THE LOAN AMOUNT AS AT 31.3.2005 TO RS.87,682 HAS NOT BEEN REFLECTED IN THE BALANCE SHEET. HE POINTED OUT THAT A C ORRESPONDING ASSET I.TA.NO .66/CTK/2009 4 HAS TO BE INCORPORATED ON REPAYMENT OF THE LOAN WHICH HAS BEEN ROUTED THROUGH THE BUSINESS BOOKS OF THE ASSESSEE. HE THEREFORE, PRAYED THAT THE ISSUES BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING BOTH THE ADDITIONS ON T HE BASIS OF SUPPORTING DOCUMENTS NOW FURNISHED BY THE LEARNED COUNSEL. THE COPY OF THE UTI BANK STATEMENT REQUIRES VERIFICATION IN THE LIGHT OF VERIFYING THE PAST SAVINGS AVAILABLE TO THE ASSESSEE PRIOR TO 1.4.2004. 7. WE HAVE HEARD THE RIVAL CONTENTION AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. ON CAREFUL CONSIDERATION, WE ARE INCLINED TO HOLD THAT THE MATTER REQUIRES VERIFICATION IN THE LIGHT OF PROS AND CONS OF THE APPLICABILITY OF PARTICULAR SECT IO N FOR ADDITION/DISALLOWANCE. THE HOME LOAN REPAYMENTS WERE THROUGH BOOKS OF ACCOUNT AND THE LEARNED DR RIGHTLY POINTED OUT HAS CREATED AN ASSET IN THE IMPUGNED ASSESSMENT YEAR. SIMILARLY, THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE AVAILABILITY OF FUNDS WITH THE ASSESSEE AS ON 1.4.2004 WHEN REPEATEDLY AFTE R HAVING FOUND THAT ONLY A MEAGER SUM WAS OBTAINED FROM SELLING OF JEWELLERY AND LOANS FROM FRIENDS AND RELATIVES THE BALANCE COULD ONLY BE CONSIDERED U/S.68 WHEN THE CREDITWORTHINESS OF THE LOAN CREDITORS REMAIN ED UN PROVED. THE CASE OF THE REVENUE THEREFO RE TO TAX U/S.69 DOES NOT APPEAR TO BE PROPER, IN VIEW OF THE FACT THAT THE AMOUNTS WERE SPENT FOR TREATMENT OF THE AILING HUSBAND OF THE ASSESSEE, WHO FINALLY DIED WERE PERSONAL . WE ARE INCLINED TO SET ASIDE THE OR DER OF THE LEARNED CIT(A) ON THESE ISSUE S AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRAMING DE NOVO ASSESSMENT ON THESE TWO ADDITIONS AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE LIGHT OF MATERIAL FACTS NOT CONSIDERED IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 23.07.2010 SD/ - SD/ - ( ), D.K.TYAGI JUDICIAL MEMBER (K.K.GUPTA), ACCOUNTANT MEMBER. DATE: 23.07.2010 ( /) H.K.PADHEE SENIOR.PRIVATE SECRETARY. I.TA.NO .66/CTK/2009 5 - COPY OF THE ORDER FORWARDED TO : / THE APPELLANT : SMT. MAMATA ACHARYA, PROP. MAMATA MOTOR S, PLOT NO.513, LAXMI SAGAR, BHUBANESWAR 751 006 / THE RESPONDENT : INCOME - TAX OFFICER, WARD 1(1), BHUBANESWAR. THE CIT, THE CIT(A), DR, CUTTACK BENCH GUARD FILE TRUE COPY , BY ORDER , [ ] SENIOR PRIVATE SECRETARY