Income Tax Officer, Ward- 4(2)(1), Bangalore V. Smt R Meena, Bengaluru

ITA 722/BANG/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0666 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 08-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Additional evidence; Retraction
• Section: 148; 40A(3); 133A; 69B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No. 722/Bang/2020 Assessment Year : 2009-10 The Income-tax Officer, Ward 4 (2)(1), Bangalore. Vs. Smt. R. Meena, No. 13, 1st Main Road, Ankappa Reddy Layout, Kaggadasapura, C V Raman Nagar, Bangalore – 560 093. PAN: AGRPM0228K APPELLANT RESPONDENT Assessee by : Smt. Suman Lunkar, CA Revenue by : Shri Sankarganesh K, JCIT (DR) Date of Hearing : 23-12-2021 Date of Pronouncement : 03-01-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by revenue against order dated 28.02.2020 passed by Ld.CIT(A)-9, Bangalore for Assessment Year 2009-10 on following grounds of appeal: “1. On the facts of the case and as per law, the Ld CIT(A) erred in directing to delete the addition of Rs. 40 lakhs made on the basis of statement recorded of husband of assessee who offered an additional income on account of inflated expenses found during the course of survey proceedings. 2. On the facts of the case and as per law, the Ld CIT(A) erred in directing to delete the addition made on account of payment reduced in cash book at Rs.3,41,918/-, cash expenses of Rs. 3 lakhs without calling for report from the AO and accepting the additional evidence and explanation submitted by the assessee in contravention of the Rule 46A. Page 2 of 9 ITA No. 722/Bang/2020 3. On the facts of the case and as per law, the Ld CIT(A) erred in directing to delete the addition made on account of unexplained investment of Rs.1,04,53,000/- without calling the report from the AO and accepting the additional evidence and explanation submitted by the assessee in contravention of the Rule 46A.” 2. Brief facts of the case are as under: The assessee is a proprietrix of M/s. Aishwarya Enterprises. For the year under consideration, there was a survey u/s. 133A at the business premises of M/s. Aishwarya Enterprises. During the survey, statement of Shri V. Ramu, husband of assessee was recorded on 16.11.2009 wherein he agreed to declare an additional income of Rs. 40 Lakhs for Assessment Year 2009-10 in case of M/s. Aishwarya Enterprises, on verification of the return filed subsequently by M/s. Aishwarya Enterprises the Ld.AO noted that the additional income was not offered to tax as agreed by Shri V. Ramu, husband of assessee. 2.1. The Ld.AO accordingly issued notice u/s. 148 in the 148 proceedings. The Ld.AO called upon various details based on which submission were filed by assessee. The Ld.AO after considering submissions so filed made following additions. A. Income admitted during survey – Rs. 40,00,000/- B. Bank payments reduced in cash book – Rs. 3,41,918/- C. Cash payment disallowed u/s. 40A(3) – Rs. 3,00,000/- D. Unexplained investments held u/s. 69B – Rs. 1,04,53,000/- 3. Aggrieved by the above additions, assessee filed appeal before Ld.CIT(A). The CIT(A) considered the additions by observing as under: “17. It is seen that the AO has made addition of Rs.40,00,000/- merely on the basis of appellant's husband's statement that there are inflated expenses. However, I find that there is no discussion in the assessment order that which inflated expenses were debited by the assessee in his books. Also, there are no Page 3 of 9 ITA No. 722/Bang/2020 evidences of such expenses brought forth by the AO in his order. 18. In view of the above, the addition made by the AO amounting to Rs. 40,00,000/- based on the appellant's husband's statement is deleted. 19. Ground No. 4.3 relates to the addition amounting to Rs.3,14,918/- on the ground of non-production of vouchers. The AO in his order has stated that the amount of Rs. 3,41,918/- was reduced from cash book but the AR could not establish the same through vouchers. Hence, the addition. 20. The submissions of the appellant are examined. It is seen from the assessment order that the AO has mentioned the voucher numbers in his order against the expenses. The AR was asked to produce the vouchers before me. The same were examined and it is found that these expenses are completely undertaken for the purpose of business and are all supported by proper vouchers. Therefore, the same cannot be disallowed. In view of this the addition to the extent of Rs. 3,41,918/- made by the AO for non-production of vouchers is deleted. 21. Ground no. 4.4 is related to the addition of Rs.3,00,000. The addition of Rs. 3,00,000 is made based on the disallowance of Rs. 3,00,000/- being paid in cash. The AO in his order has stated that the AR could not produce any documentary evidence against this payment to Sri. Ramananjappa. Since, this is cash payment more than the prescribed limit, the same was disallowed u/s 40(A)(3). 22. I have examined the submissions of the appellant and I found that this expense was never claimed by the appellant as an expenditure. Therefore, the addition made by the AO is only redundant and hence the addition is deleted. Therefore, this addition is deleted. 23. Grounds 4.5.1, 4.5.2 and 4.5.3 are related to addition of Rs.1,04,53,000/- made u/s 69B. This addition is examined. The AO in his order has made this addition based on the premise that in the ledger account of R.Suresh there is a difference of Rs. 1,04,53,000/- in the closing balance as claimed by the appellant and as per the actual ledger. I have examined this issue and I find that the ledger of R. Suresh extracted by the AO in the order is only till date 10.07.2007 and not till the closing of the year that is 31.03.2008. In this regard the AR was asked to produce the, complete ledger for the year ending 31.03.2008. 24. The arguments and the submissions of the appellant are verified in the light of assessment order. It is seen that Page 4 of 9 ITA No. 722/Bang/2020 the opening balance on 01.04.2008 in the ledger account of R. Suresh as taken by the AO in his order is Rs.32,22,000/-. The AO has mentioned in his order that the closing balance for the R. Suresh account on 31.03.2008 was Rs. 1,36,75,000/-. Hence, the opening balance on 01.04.2008 is taken wrongly as Rs.32,22,000/- in place of Rs.1,36,75,000/-. The AR was asked to explain this discrepancy. 25. In response to this the AR produced copies of ledger extract and it was found that the addition made by the AO is on account of ledger extract only till 10.07.2007. However, till the end of financial year 2007-08, the appellant has adjusted credit of Rs. 1,04,53,000/- towards sale of flats. Hence, the closing balance was Rs. correctly taken at 32,22,000/-. Therefore, I find that there is no discrepancy regarding the opening balance as on 01.04.2008. 26. In view of the above there is no discrepancy in the opening and closing balances in the account of R. Suresh and hence, the addition made by the AO is deleted.” Aggrieved by the order of Ld.CIT(A), the revenue is in appeal before us. 4. Ground No. 1: The Ld.Sr.DR submitted that assessee had agreed for declaring Rs.40 Lakhs as additional income in the name of proprietary concern for the year under consideration. Further in the return filed, the said amount was not added. It was submitted that the addition deserves to be confirmed as it is based on an admission made on behalf of assessee by her husband. The Ld.Sr.DR relied on following decisions:  Decision of Hon’ble Delhi High Court in case of PCIT vs. Avinash Kumar Setia reported in (2017) 81 taxmann.com 476  Decision of Hon’ble Delhi High Court in case of Raj Hans Tower Pvt.Ltd. vs.CIT reported in (2015) 56 taxmann.com 67  Decision of Hon’ble Allahabad High Court in case of Sanjeev Agarwal vs. ITSC reported in (2015) 56 taxmann.com 214 Page 5 of 9 ITA No. 722/Bang/2020  Decision of Hon’ble Allahabad High Court in case of Navdeep Dhingra vs.CIT reported in (2015) 56 taxmann.com 214. 5. He thus relied on the orders passed by the Ld.AO. 5.1. On the contrary, the Ld.AR submitted that the statement recorded during survey u/s.133A do not have any evidentiary value. In support, he submitted that the issues stands squarely covered by decision of Hon’ble Supreme Court in case of CIT vs. S. Khader Khan Son reported in [2012] 25 taxmann.com 413 (SC). He submitted that the ratio has been followed by this Tribunal in following cases.  ITO vs. Toms Enterprises, 103 taxmann.com 289 (Cochin)  PCIT vs. IIBS Infonet (P) Ltd, 88 taxmann.com 643 (Del.)  M/s. Kathyayini Enterprises vs. DCIT, ITA No. 2329/Bang/2019 The Ld.AR thus supported the view taken by the Ld.CIT(A). 6. We have perused the submissions advanced by both sides in the light of records placed before us. 6.1. We note that the survey u/s.133A was conducted at the business premises of assessee on 16/11/2009. AT the time of survey, Smt.R.Meena was not there but her husband was present. We note that the revenue recorded statement of Smt.R Meena’s husband. It is submitted that the addition is made solely on the basis of admission by Smt.R Meena’s husband. 6.2. The Ld.CIT(A) deleted the addition on the premise that it was based of statement of Smt.R Meena’s husband. The Ld.CIT(A) was convenience that there was nothing on record to establish the inflation of explanation except for the statement from Smt.R Meena’s husband. He relied on following decisions: Page 6 of 9 ITA No. 722/Bang/2020  Decision of Hon’ble Madras High Court in case of CIT vs. Balasubramanian reported in (2013)215 Taxman 288.  Decision of Hon’ble Delhi High Court in case of CIT vs. Dhingra Meatl Works reported in (2011)196 Taxman 488.  Decision of Hon’ble Kerala High Court in case of Paul Mathews & Sons vs. CIT (2003) 263 ITR 101 6.1. We note that Hon'ble Kerala High Court in the case of Paul Mathews & Sons v. CIT(supra) held that, statement of assessee recorded during the course of survey under provisions of section 133A(3)(iii) can be said to be useful or relevant to the assessment proceedings only in the circumstances when there is a material on record to prove through the existence of any of the activities on the basis of which disclosure is stated to be made. It was categorically mentioned by the Hon'ble High Court that statement recorded under section 133A cannot be given evidentiary value as such evidentiary value is not attached with the provisions of section 133A of the Act. The only basis for addition as per Assessing Officer was the statement of the assessee without any corroborative material or documentary evidence on record. 6.2. Hon'ble Madras High Court in the case of CIT v. S. Khandar Khan Chand(supra) , observed that where assessee admitted suppressed income but there was no documentary evidence in possession of the department, no addition can be made on the basis of such statement. Hon’ble Delhi High Court in case of Pr.CIT vs. IIBS Infonet (P.)Ltd. reported in (2017) 88 taxmann.com 643 held that, there has to be material available to support the statement made in the course of survey proceeding. Page 7 of 9 ITA No. 722/Bang/2020 In the present facts of the case, the admission by Smt.R Meena’s husband is not supported by any supporting evidence. The decisions relied by the Ld.Sr.Dr are therefore not applicable as the facts therein are different. In those cases there were seized materials to corroborate the statement or that the retraction was done much late which was construed by the Courts to be an after thought. We are therefore of the opinion that no addition could be made solely based on the admission by Smt.R Meena’s husband in his statement recorded by the revenue. Respectfully following ratio laid down by Hon’ble Courts referred herein above, we do not find any infirmity in the view taken by Ld.CIT(A). Accordingly, this ground raised by revenue stands dismissed. 7. Ground nos. 2-3: This ground has been raised by the revenue alleging that the Ld.CIT(A) decided the issue in contradiction of Rule 46A without calling for remand report from the Assessing Officer. The Ld.Sr.DR argued that the additions were not subjected to verification by the Ld.AO and therefore the view taken by Ld.CIT(A) cannot be upheld. 7.1. On the contrary, the Ld.AR pointed out that remand report was called for by the Ld.CIT(A) and filed by the Ld.AO on 11.02.2015. The Ld.AO had opportunity to go through the additional evidences filed by the assessee. He thus submitted that there is no injustice caused to the revenue as the Ld.CIT(A) had followed the due process of law. It is further submitted by Ld.AR that the view taken by Ld.CIT(A) is based on the appreciation of facts and verification carried out by him during Page 8 of 9 ITA No. 722/Bang/2020 the appellate proceedings. He thus supported the order passed by Ld.CIT(A). 8. We have perused the submissions advanced by both sides n the light of records placed before us. 8.1. We note that the Ld.CIT(A) has examined the issue having regards to the remand report filed by the Ld.AO placed at page 57-84 of the paper book filed before us. He also analysed the vouchers, ledger book and various other documentary evidences in support of the cash payments in order to take a view that the addition deserves to be deleted. It has been observed by us that sum of Rs.3 Lakhs has been disallowed by assessee u/s.40A(3) for non production of documentary evidences. The assessee had paid such amount in cash to one Shri Ramananjappa which was in contravention to the provisions of the Act. This has been noted by the Ld.CIT(A). However, the grounds of appeal raised by revenue challenging the cash expenses on the presumption that the same is allowed by the first appellate authority. 9. In respect of Rs. 1,04,53,000/-, we note that Ld.CIT(A) called for the ledger extract and found that the addition made by the Ld.AO is based on the ledger extract till 10/07/2017. The Ld.CIT(A) noted that the assessee had adjusted the said sum by the end of F.Y. 2007-08 and the reconciliation of balance was taken at Rs. 32,22,000/- being the closing balance for Shri R. Suresh account as on 31.03.2008. This was verified by the Ld.CIT(A) from the details/evidences and the Ld.CIT(A) took a view that the correct closing balance was Rs.32,22,000/-. He thus deleted the addition made by the Ld.AO. The revenue nas not been able to bring on record any evidence contrary to this Page 9 of 9 ITA No. 722/Bang/2020 finding of fact by the Ld.CIT(A). We therefore do not find any infirmity in the order of Ld.CIT(A). Accordingly, these grounds raised by revenue stands dismissed. In the result, the appeal filed by revenue stands dismissed. Order pronounced in the open court on 03rd January, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 03rd January, 2022. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore