Shri Gyan Prakash Motwani, Faizabad V. Dy. Commissioner of Income Tax, Faizabad

ITA 692/LKW/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4009 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Income from undisclosed sources; Reason to believe; Reassessment proceedings
• Section: 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. P . K. BANSAL , ACCOUNTANT MEMBER AND SHRI ABY T VARKEY , JUDICIAL MEMBER ITA NO. 692/LKW/2015 ASSESSMENT YEAR: 2009 - 10 SHRI GYAN PRAKASH MOTWANI LG CHAMBER JAMUNIYA BAGH, F AIZABAD V. DY. CIT CIRCLE FAIZABAD T AN /PAN : AEOPP6710Q (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI SAMRAT CHANDRA, C.A. RESPONDENT BY: SHRI AMIT NIGAM, D.R. DATE OF HEARING: 08 08 2016 DATE OF PRONOUNCEMENT: 31 08 2016 PER ABY T VARKE Y, J.M : O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), FAIZABAD DATED 15.9.2015 FOR THE ASSESSMENT YEAR 2009 - 10. 2 . THE ASSESSEE IN THIS CASE HAS CHALLENGED THE LEGAL VALIDITY OF THE REOPENING OF ASSESSMENT UNDER SECTION 147 /148 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED IN SHORT 'THE ACT') AS WELL AS RAISED GROUNDS ON MERIT. WE ARE INCLINED TO DEAL WITH THE GROUNDS THAT HAVE BEEN RAISED ON MERIT FIRST. 3 . GROUNDS NO.9 AND 10 ARE AGAINST THE CONFIRMATION OF ADDITION OF R S.1,27,470/ - MADE BY THE ASSESSING OFFICER TOWARDS CASH DEPOSITS IN THE JOINT SAVING BANK ACCOUNT. [ ITA NO.692/LKW/2015, A.Y. 2009 - 10 ] 2 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FURNISHED THE RETURN OF INCOME DECLARING AN INCOME OF RS.3,64,860/ - ON 29.3.2010. THE ITO - I, FAIZABAD ISSUED A QUERY ON 29.6.2012 FOR WHICH THE ASSESSEE HAS REPLIED VIDE LETTER DATED 14.8.2012. HOWEVER, THE ASSESSING OFFICER , AFTER RECORDING THE REASON TO REOPEN THE ASSESSMENT , ISSUED NOTICE ON 19.11.2012 UNDER SECTION 148 OF THE ACT , PURSUANT TO WHICH TH E ASSESSEE REPLIED THAT THE RETURN FILED ON 29.3.2010 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE DATED 19.11.2012. BASED ON AIR INFORMATION THAT RS.10.01 LAKHS HAS BEEN DEPOSITED BY THE ASSESSEE IN THE BANK OF BARODA, FAIZABAD, NOTICE UNDER SECT ION 148 OF THE ACT WAS ISSUED AND PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE INITIATED AGAINST THE ASSESSEE. AFTER ISSUING NOTICES UNDER SECTION 142(1) AND 143(2) OF THE ACT AND AFTER GOING THROUGH THE REPLIES FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER WAS NOT CONVINCED IN RESPECT TO THE SOURCE OF DEPOSIT MADE IN THE BANK AND HE MADE AN ADDITION OF RS.10 LAKHS AS INCOME FROM UNDISCLOSED SOURCES. 5 . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO GIVE PARTIAL REL IEF TO THE ASSESSEE BY HOLDING AS UNDER: - 6. FROM THE PERUSAL OF THE INFORMATIONS/DOCUMENTS PLACED ON RECORDS IT WAS SUBMITTED BY APPELLANT THAT BANK ACCOUNT (SB A/C NO.7644) OF BANK OF BARODA IS JOINTLY OWNED BY APPELLANT WITH HIS RELATIVE SHRI INDER KUM AR (PAN - AETPK3713K) WHO IS ALSO ASSESSED TO TAX AND BOTH CO ACCOUNT HOLDER EARNED JOINT INCOME RENT AND SALE OF PROPERTY DULY CREDITED IN SAID BANK ACCOUNT. FURTHER, A DETAILED NOTE, REGARDING AVAILABILITY OF CASH TO APPELLANT OF RS.4,47,198/ - AND OTHER CO - OWNERS BANK HOLD AT RS.4,25,332/ - AGGREGATING RS.8,72,530/ - WAS PREPARED AND SUBMITTED AND [ ITA NO.692/LKW/2015, A.Y. 2009 - 10 ] 3 REGA R DING REST AMOUNT RS.1,27,470/ - IT WAS EXPLAINED SAME IS MET THOUGH OPENING CASH BALANCE AS ON 1.4.2008 BY BOTH CO - ACCOUNT HOLDERS. ASSESSEE COULD NOT PROV IDE OR EXPLAIN ANY PROOF ON OPENING CASH IN HAND AVAILABLE TO HIM OR OTHER CO - ACCOUNT HOLDER, THEREFORE, OPENING BALANCE OF RS.1,27,470/ - COULD NOT BE SUSTAINED. AFTER VERIFICATION THE INFORMATIONS AVAILABLE ON RECORD I.E. DETAIL OF RENT INCOME EARNED IN CASH, OTHER INCOME AS PER ITR OF ASSESSEE AND OTHER CO - OWNER AND CASH WITHDRAWAL FROM BANK ETC. IN SUPPORT OF AVAILABILITY OOF CASH TO ASSESSEE AND OTHER CO - ACCOUNT HOLDER TO THE EXTENT OF RS.8,72,530/ - IS HEREBY ACCEPTED. THEREFORE, THIS GROUND OF APPEAL IS PARTLY ALLOWED AND APPELLANT GETS RELIEF OF RS.8,72,530/ - AGAINST ADDITION OF RS10 LAKHS AND ADDITION OF RS.1,27,470/ - IS HEREBY SUSTAINED. 6 . AGGRIEVED, THE ASSESSEE IS BEFORE US. 7 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE WAS MAINTAINING A JOINT ACCOUNT IN THE BANK OF BARO DA, (ACCOUNT NO.00670100007644), FAIZABAD BRANCH, FAIZABAD JOINTLY WITH HIS NEPHEW, SHRI INDER KUMAR KANODIA (PAN AETPK3713K). IN THE ASSESSMENT YEAR UNDER CONSIDERATION , THE ASSESSEE AND THE JOI NT BANK ACCOUNT HOLDER HAS DEPOSITED AN AMOUNT OF RS.10.10 LAKHS IN THE BANK ACCOUNT ON DIFFERENT DATES. WE TAKE NOTE THAT THE ASSESSEE HAS BEEN ABLE TO CONVINCE THE LD. CIT(A) THE SOURCE IN RESPECT TO RS.8,72,530/ - OUT OF RS.10 LAKHS ADDITION MADE BY THE ASSESSING OFFICER. ONLY THE AMOUNT WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A) IS RS.1,27,470/ - ON THE BASIS THAT THE ASSESSEE COULD NOT PROVIDE OR EXPLAIN ANY PROOF IN RESPECT TO THE OPENING CASH IN HAND AVAILABLE TO HIM OR OTHER CO - ACCOUNT HOLDER. WE T AKE NOTE THAT THE ASSESSEE HAS FILED BEFORE THE LD. CIT(A) ON 14.9.2015 THE PROOF IN RESPECT TO THE [ ITA NO.692/LKW/2015, A.Y. 2009 - 10 ] 4 OPE NING CASH IN HAND OF RS.4,67,709 / - AS ON 1.4.2008 AND HA S FILED THE COPY OF FINANCIAL STATEMENT AS ON 31.3.2008 ALONG WITH COPY OF ITR FOR ASSESSMENT YEA R 2008 - 09. FROM A PERUSAL OF THE FINANCIAL STATEMENT AS ON 31.3.2008, WE TAKE NOTE THAT THE ASSESSEE HAD OPENING CASH IN HAND AND BANK OF RS.4,67,709 / - ( WHICH INCLUDED BANK BALANCE OF RS 1,49,804 IN BANK OF BARODA ACCOUNT NUMBER 0099 AND HALF OF RS 8920 I.E, RS 4460 IN ACCOUNT NUMBER 07644 IN BOB, THUS AGGREGATE BANK BALANCE AS ON 1.04.2008 WAS RS 1,54,264.). THUS THE CASH IN HAND ON 1.04.2008 WAS RS 3,13,345 ( RS 4,67,709 RS 1,54,264 ) AND THE FACT IS THAT THE ASSESSEE HAD DECLARED RS 3,96,814 AS INCO ME FOR ASSESSMENT YEAR 2008 - 09. IN THE LIGHT OF THE SAID DOCUMENTS, WE FIND THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE SOURCE OF RS.1,27,470/ - AND , THEREFORE, WE ARE INCLINED TO DELETE THE ADDITION SUSTAINED BY THE LD. CIT(A) ON THIS ISSUE. 8 . COMING TO TH E NEXT ISSUE I.E. GROUNDS NO.11 & 12 IS IN RESPECT TO THE CONFIRMATION OF ADDITION OF RS.3.12 LAKHS ON ACCOUNT OF ACCRETION IN THE CAPITAL ACCOUNT. 9 . THE BRIEF FACTS ON THIS ISSUE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOTICED CAPITAL OF RS.4.50 LAKHS IN CASH IN HIS CAPITAL ACCOUNT IN THE FIRM, M/S HARISH HOSIERY . THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO FURNISH THE SOURCE OF THE SAME, BUT ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE FAILED TO PRODUCE THE SOURCE OF CASH DEPO SIT OF RS.4.50 LAKHS, THEREFORE, HE ADDED THE SAME AS INCOME FROM UNDISCLOSED SOURCES AND MADE AN ADDITION OF RS.4.50 LAKHS. [ ITA NO.692/LKW/2015, A.Y. 2009 - 10 ] 5 10 . ON APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) WAS PLEASED TO DELETE THE ADDITION OF RS.1.38 LAKHS AND CONFIRMED THE ADDITION OF R S.3.12 LAKHS. AGGRIEVED, THE ASSESSEE IS BEFORE US. 11 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE HAS MADE CASH CONTRIBUTION OF RS.4.50 LAKHS TOWARDS CAPITAL ACCOUNT OF THE ASSESSEE IN THE PARTNERSHIP FIRM, M/S HARISH H OSIERY WHERE THE ASSESSEE WAS A PARTNER IN THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE HAS MADE A CONTRIBUTION OF RS.4.50 LAKHS FROM 1.4.2008 TO 1.3.2009. THE ASSESSEE HAD WITHDRAWN AN AMOUNT OF RS.1.38 LAKHS FROM 7.10.2008 TO 30.12.2008. THUS THE CONTRI BUTION IN THE CAPITAL ACCOUNT OF THE ASSESSEE WAS TO THE TUNE OF RS.3.12 LAKHS. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAD SUFFICIENT OPENING CASH BALANCE IN HAND AS ON 1.4.2008 AT RS.4,67,709/ - (INCLUDING BANK BALANCE OF RS.1,19,8 04/ - IN BANK OF BARODA ACCOUNT NO.0099 AND 50% OF RS.8,920/ - I.E. RS.4,460/ - BALANCE AS ON 1.4.2008 IN BANK OF BARODA ACCOUNT NO.07644). THUS , THE AGGREGATE OPENING BALANCE IN BANK AS ON 1.4.2008 WAS RS.1,54,264/ - . THEREFORE, WE TAKE NOTE THAT THE ASSES SEE HAD CASH IN HAND IN THE BEGINNING OF THE YEAR AT RS.3,13,345/ - . THUS THE ASSESSEE WAS HAVING SUFFICIENT OPENING CASH IN HAND BEFORE MAKING CONTRIBUTION IN HIS CAPITAL ACCOUNT IN M/S HARISH HOSIERY TO THE TUNE OF RS 3.12 LAKHS . SO THE LD. CIT(A)S REA SONING THAT THERE WAS NO DOCUMENT IN RESPECT TO THE CASH IN HAND AS ON 1.4.2008 IS ERRONEOUS AND , THEREFORE , WE ARE INCLINED TO DELETE THE ADDITION OF RS.3.12 LAKHS. 12 . SINCE WE HAVE DEALT WITH THE ISSUES ON MERIT AND DELETED THE ADDITIONS, WE ARE NOT INCLI NED TO ADJUDICATE THE LEGAL ISSUE IN RESPECT TO THE REOPENING. HOWEVER, IT MAY BE NOTED THAT MERELY ON THE BASIS OF THE DEPOSIT IN THE BANK PER SE CANNOT BE THE BASIS FOR TAKING A VIEW THAT [ ITA NO.692/LKW/2015, A.Y. 2009 - 10 ] 6 THE INCOME HAS ESCAPED ASSESSMENT. THE ASSESSING OFFICER HAS OPI NED THAT AN INCOME OF RS.10.01 LAKHS HAS ESCAPED ASSESSMENT BECAUSE THE ASSESSEE HAS RS.10.01 LAKHS IN HIS BANK ACCOUNT, BUT THEN SUCH AN OPINION PRECEDE S ON A FALLACIOUS ASSUMPTION THAT THE BANK DEPOSIT CONSTITUTE UNDISCLOSED INCOME AND OVERLOOKS THE FACT THAT THE SOURCE OF DEPOSIT NEED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE. FROM THE POINT OF VIEW OF THE REVENUE AUTHORITIES , IT MAY DESIRABLE TO EXAMINE THE MATTER IN DETAIL. BUT THEN REASSESSMENT PROCEEDINGS CANNOT BE RESORTED TO ONLY TO EXAMINE T HE FACTS OF THE CASE IN DETAIL. IT MAY BE KEPT IN MIND THAT UNLESS THERE IS A REASON TO BELIEVE RATHER THA N SUSPECT THAT THE INCOME HAS ESCAPED ASSESSMENT, THE REOPENING UNDER SECTION 147/148 OF THE ACT CANNOT BE RESORTED TO. WITH THIS OBSERVATION, WE AL LOW THE APPEAL OF THE ASSESSEE WITHOUT ADJUDICATING THE LEGAL ISSUE . 13 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31.8.2016. SD/ - SD/ - [P. K. BANSAL ] [ ABY T VARKEY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST 1 . APPELLANT AUGUST , 2016 JJ: 2408 COPY FORWARDED TO: 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR