Deep Chand Jain, Bhubaneswar V. ITO, Jeypore

ITA 75/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4370 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2011
• Court: TRIBUNAL
• Department Lawyers: A K PATRA
• Assessee Lawyers: D K SETH

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 075/CTK/2011 (ASSESSMENT YEAR 2007 - 08) DEEP CHAND JAIN, PROP.SAJJAN MARKETIN G AGENCY, MAIN ROAD, NABARANGPUR,DIST. NABARANAGPUR. PAN: ADKPJ 1577 G VERSUS INCOME - TAX OFFICER, WARD 2, JEYPORE. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH, AR FOR THE RESPONDENT SHRI A.K.PATRA, DR ORDER SHRI K.S.S.PRASAD RAO, JUDICI AL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.30.11.,2010 FOR THE ASSESSMENT YEAR 2007 - 08 RAISING THE ONLY GROUNDS OF APPEAL. 1. FOR THAT ASSESSING OFFICER HAD TREATED THE AMOUNT BR OUGHT TO THE BOOKS OF ACCOUNTS FOR 1036543 AS UNEXPLAINED AND ADDED TO THE RETURNED INCOME. THE AMOUNT 1036543 IS INCLUSIVE OF AMOUNT TRANSFERRED FROM HIS PERSONAL ACCOUNT FOR 195000 AND THE MATURITY PROCEEDS OF FIXED DEPOSIT FOR 841543. HOWEVER ALLOWING ONLY THE INTEREST AMOUNT FOR 127262 AND CONFIRMING THE BALANCE OF 909281 AS UNEXPLAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS UNJUST, ARBITRARY AND UNLAWFUL. 2. THE FACTS RELEVANT ARE THAT D URING THE COURSE OF ASSESSMENT U/S.143(3), THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS CAPITALIZED 9,09,281 AND 1,27,262 FROM ENCASHMENT OF FDR AND INTEREST THEREOF DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NEITHER WITHDRAWN FROM THE CAPITAL ACCOUNT TO MAKE ANY FIXED DEPOSIT NOR DISCLOSED ANY INTEREST INCOME FOR TAXATION. SINCE THE ASSESSEE FAILED TO FURNISH DETAILS OF SUCH FDR LIKE THE ACCOUNT NUMBER, NAME OF THE ISSUING BANKS ALONG WITH DATE OF OPENING AND DATE OF ENCASHMENT OF SUCH FDR, THE ASSESSING OFFICER TREATED THE ABOVE A MOUNTS TOTALING TO 10,36,543 AS ITA NO.075/CTK/2011 2 UNDISCLOSED SOURCE AND THEREFORE, HE ADDED THE SAME TO THE TOTAL INCOME AS INCOME FROM OTHER SOURCES. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) . THE ASSESSEE CONTENDED BEFORE HIM THAT HE HAD RECEIVED THE MATURITY AMOUNT OF FIXED DEPOSITS OF 10,36,543 INCLUDING INTEREST OF 1,27,262, THE PRINCIPAL AMOUNT OF DIFFERENT FIXED DEPOSIT BEING MADE BY WITHDRAWING THE SAME FROM THE CAPITAL ACCOUNT IN RESPECTIVE YEAR OF DEPOSITS. SUCH DEPOSITS WERE MADE OUT OF DRAWING OF THE EARLIER YEARS AND INCOME COMPONENT OF 1,27,262 HAS BEEN SHOWN AS INCOME OF THE YEAR. BUT THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE LEARNED CIT(A) HOLDING THAT THE EXPLANATION IS NOT SATISFACTORY. HOWEVER, THE LEARNED CIT(A) ON THE FINDING THAT THE INTEREST COMPONENT OF 1,27,262 HAS ALREADY BEEN OFFERED FOR TAXATION, HE CONFIRMED THE BALANCE ADDITION OF 9,09,281 BY ALLOWING PARTIAL RELIEF TO THE ASSESSEE ON THIS SCORE . 4. AGGRIEVED FURTHER, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIB UNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THE ASSESSEE HAS BEEN INSISTING BEFORE THE AUTHORITIES BELOW THAT THE AMOUNT HAVE BEEN ROUTED THROUGH THE BANKING CHANNELS FROM THE CURRENT ACCOUNT OF THE FIRM AND AS PART OF DRAWINGS OF THE ASSESSEE DEPOSITED IN THE BANK IN THE FOR M OF FIXED DEPOSITS. THE LEARNED CIT(A) HAS AGREED TO THE PROPOSITION THAT INTEREST CANNOT BE TAXED UNDER THE PROVISIONS OF SECTION 68. IT WAS ONLY A MATTER OF ESTABLISHING THAT THE DRAWINGS HAVE BEEN USED P L OUGHING BACK IN THE FORM OF FIXED DEPOSITS TO BE CREDITED IN THE CAPITAL ACCOUNT THEREFORE CANNOT BE TAXED AS NOT SPECIFICALLY EXPLAINED UNDER THE PROVISIONS OF SECTION 68. WE FIND SUFFICIENT FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ITA NO.075/CTK/2011 3 ASSESSEE FOR THESE FACTS TO BE VERIFIED BY THE ASSESSING OFFICER ON THE BASIS OF ANALYSIS OF THE AMOUNT AVAILABLE WHEN THE BANK CERTIFIES THAT THE FIXED DEPOSITS WERE MADE THROUGH THE CURRENT ACCOUNT BALANCES. FOR THIS PURPOSE, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE ABOVE FACTS OF FIXED DEPOSIT, CREDIT IN THE CAPITAL ACCOUNT AVAILABLE TO THE ASSESSEE FROM DRAWINGS FROM THE CURRENT ACCOUNT OF THE FIRM TO BE INVESTED BY THE ASSESSEE IN FIXED DEPOSITS, THEREFORE, THE ADDITION COULD NOT BE MADE IN THE IMPUGNED ASSESSMENT YEAR. NEEDLESS TO SAY THAT THE ASSESSEE IS TO ASSIST THE ASSESSING OFFICER IN DERIVING THE AMOUNT AVAILABLE FROM DRAWINGS BY ISSUE OF CHEQUES FROM CURRENT ACCOUNT TO BE DEPOSITED IN THE FIXED DEPOSITS TO EARN INTEREST ON MATURITY AT A LUMP SUM AMOUNT ULTIMATELY CREDITED IN THE CAPITAL ACCOUNT IN THE IMPUGNED YEAR. WE DIRECT ACCORDINGLY. 6. IN THE RESUL T, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON DT. 30 TH JUNE, 2011 S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 30 TH JUNE, 2011 H.K.PADHEE, SEN IOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: DEEP CHAND JAIN, PROP.SAJJAN MARKETING AGENCY, MAIN ROAD, NABARANGPUR,DIST. NABARANAGPUR. 2. THE RESPONDENT: INCOME - TAX OFFICER, WARD 2, JEYPORE. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.