ITO, Bangalore V. Sri. S. Bhaskar, Bangalore

ITA 765/BANG/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68356 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: L V BHASKARA REDDY JT
• Assessee Lawyers: S R R K SHARMA
• Keywords: Unexplained investment; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.765/BANG/2012 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER, WARD 8(2), BANGALORE. VS. SHRI S. BHASKAR, NO.150, 10 TH MAIN ROAD, SADASHIVANAGAR, BANGALORE 560 080. PAN: AEUPS 8301J APPELLANT RESPONDENT C.O. NO.13/BANG/2013 (IN ITA NO.765/BANG/2012) ASSESSMENT YEAR : 2006-07 SHRI S. BHASKAR, NO.150, 10 TH MAIN ROAD, SADASHIVANAGAR, BANGALORE 560 080. PAN: AEUPS 8301J VS. THE INCOME TAX OFFICER, WARD 8(2), BANGALORE. CROSS OBJECTOR RESPONDENT REVENUE BY : SHRI L.V. BHASKARA REDDY, JT.CIT(DR) ASSESSEE BY : SHRI S.R.R.K. SHARMA, C.A. DATE OF HEARING : 26.11.2013 DATE OF PRONOUNCEMENT : 26.11.2013 ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 2 OF 8 O R D E R PER BENCH ITA 765/BANG/2012 IS AN APPEAL BY THE REVENUE AGA INST THE ORDER DATED 30.03.2012 OF THE CIT(APPEALS)-V, BENGALURU R ELATING TO ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS FILED THE CROSS OBJ ECTION. 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE AFOR ESAID APPEAL AND CO ARISE FOR CONSIDERATION ARE AS FOLLOWS. THE ASS ESSEE IS AN INDIVIDUAL. HE IS A DIRECTOR IN SHRI MARUTHI POWER GEN (INDIA) LTD. [MARUTHI FOR SHORT] AND PROPRIETOR OF TAMARA VEG. RESTAURANT, BANGALORE . THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE A.Y. 2006-07 ON 03.0 7.2007 DECLARING TOTAL INCOME OF RS.1,48,882. RETURN WAS PROCESSED U/S. 1 43(1) OF THE ACT ON 14.03.2008. SUBSEQUENTLY, THE AO RECEIVED INFORMAT ION FROM ITO, WARD 3(2), HYDERABAD STATING THAT THE ASSESSEE HAS INVES TED RS.50 LAKHS IN PURCHASING SHARES OF A COMPANY BY NAME M/S. RITHWIK ENERGY GENERATION PVT. LTD., HYDERABAD [REGPL FOR SHORT] . CONSEQU ENTLY A NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 22.12.2008. IN RESPO NSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE REQUESTED THAT THE RETURN OF I NCOME ORIGINALLY FILED BE TREATED AS A RETURN FILED IN RESPONSE TO NOTICE U/S . 148 OF THE ACT. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSEE WAS ASKED TO EXPLAIN THE SOURCE OF FUNDS FOR HAVING MADE INVE STMENT OF RS.50 LAKHS IN THE SHARES OF REGPL. THE ASSESSEE TOOK A STAND THA T THE CHEQUE IN QUESTION WAS ISSUED BY HIM IN HIS CAPACITY AS DIREC TOR OF MARUTHI. THE ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 3 OF 8 ASSESSEE ALSO SUBMITTED THAT THE CHEQUE WAS ISSUED IN THE NAME OF M/S. BOVING FOURESS COMPANY [BOVING FOR SHORT] TOWARDS SUPPLY OF EQUIPMENTS BY THEM TO REGPL. REGPL HAS IN TURN ISS UED SHARES OF THE VALUE OF RS.50 LAKHS. THE ASSESSEE FURTHER POINTED OUT THAT THE SHARES WERE SHOWN AS INVESTMENTS IN THE BOOKS OF MARUTHI. IT WAS ALSO POINTED OUT THAT IN THE BOOKS OF MARUTHI, THE INVESTMENT IS REFLECTED UNDER THE HEAD AMR POWER PVT. LTD. AS FOLLOWS:- SRI MARUTHI POWER-GEN (INDIA) PVT. LTD. 22/4, RACE COURSE ROAD, BANGALORE 560 009. BALANCE SHEET AS AT 31 ST MARCH 2006 ___________________________________________________ _________ DATE PARTICULARS VCH TYPE VCH NO. DEBIT ___________________________________________________ _________ 21.3.2006 TO CANARA BANK CA-7259 PAYMENT 192 50,00,000 BEING AMOUNT PAID BY CHEQUE NO 585235 TOWARDS SHARE APPLICATION MONEY TO RITHWIK PROJECTS ___________________________________________________ _________ 4. THE ASSESSEE TOOK A STAND THAT THE INVESTMENT IN QUESTION WAS THAT OF MARUTHI AND NOT THAT OF THE ASSESSEE. THE ASSES SEE ALSO ENCLOSED A COPY OF CANARA BANK ACCOUNT OF MARUTHI FROM WHICH A SUM OF RS.50 LAKHS HAD BEEN GIVEN TO REGPL. ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 4 OF 8 5. THE AO, HOWEVER, HELD THAT THE INFORMATION RECEI VED FROM ITO, WARD 3(2), HYDERABAD CLEARLY MENTIONED THAT THE ASSESSEE HAD INVESTED RS.50 LAKHS AND THAT THE PAN NO. VIZ., AEUPS8301J WHICH I S THAT OF THE ASSESSEE HAD BEEN FOUND IN THE RECORDS OF THE COMPA NY. THE AO THEREFORE HELD THAT THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF INVESTMENT OF RS.50 LAKHS AND MADE ADDITION OF RS.50 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. 6. BEFORE THE CIT(APPEALS), THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE AO. BEFORE THE CIT(A), THE ASSESSEE FILED CERTAIN DOCUMENTS AND REMAND REPOT WAS CALLED BY THE CIT(A) FROM THE AO ON THE DOCUMENTS FILED BY THE ASSESSEE. THE MAIN SUBMISSIO N OF THE ASSESSEE WAS THAT MERE MENTION OF PAN BY REGPL IN ITS BOOKS COULD NOT BE SUFFICIENT TO COME TO THE CONCLUSION THAT THE INVES TMENT MADE WAS BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT TO MAKE ADDI TION U/S. 69 OF THE ACT, REVENUE HAS TO PROVE FLOW OF INVESTMENT FROM T HE ASSESSEE. IN VIEW OF THE FACT THAT THE CHEQUE FOR RS.50 LAKHS WAS ISSUED FROM THE BANK ACCOUNT IN THE NAME OF MARUTHI, IT WAS SUBMITTED THAT THE F LOW OF FUNDS WAS FROM MARUTHI AND THEREFORE THE ADDITION MADE IN THE HAND S OF THE ASSESSEE CANNOT BE SUSTAINED. 7. THE CIT(APPEALS) AFTER NARRATING THE RIVAL CONTE NTIONS HELD AS FOLLOWS:- ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 5 OF 8 6. I HAVE CAREFULLY CONSIDERED THE STAND TAKEN BY THE A.O AND THE SUBMISSIONS MADE BY THE A.R. OF THE APPELLANT. I HAVE ALSO EXAMINED THE DOCUMENTS FURNISHED BY THE A.R OF THE APPELLANT. AS THE TRANSACTION HAS BEEN ACCOUNTED FOR IN THE BO OKS OF ACCOUNTS OF M/S. MARUTHI POWER GEN (INDIA) PVT. LTD . I AM CONVINCED THAT THE ADDITION MADE BY THE A.O IS UNWA RRANTED. THEREFORE, THE ADDITION MADE BY THE A.O AMOUNTING T O RS.50 LAKHS IS DELETED AND THE APPEAL IS ALLOWED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E HAS PREFERRED APPEAL BEFORE THE TRIBUNAL. IN THE GROUNDS OF APPEA L, THE REVENUE HAS TAKEN THE PLEA THAT SINCE THE INVESTMENT IS REFLECT ED IN THE BOOKS OF REGPL IN THE NAME OF THE ASSESSEE, IT WAS RIGHTLY ASSESSE D BY THE AO IN THE HANDS OF THE ASSESSEE IN THE ABSENCE OF EXPLANATION OF SOURCE OF FUNDS FOR MAKING THE INVESTMENT. THE ASSESSEE IN HIS CO HAS MERELY SUPPORTED THE ORDER OF THE CIT(APPEALS) AND HAS REITERATED THE ST AND TAKEN BEFORE THE CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE HAVE ALSO PERUSED THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE CIT(A). THE FACT THAT THE SUM OF RS.50 LAKHS WAS PAID TO REGPL BY IS SUE OF CHEQUE FROM THE BANK ACCOUNT OF MARUTHI IS NOT IN DISPUTE. IT IS CLEAR THAT THE SUM OF RS.50 LAKHS FLOWED FROM MARUTHI AND NOT FROM THE AS SESSEE. HOWEVER, IT IS SEEN THAT THE ASSESSEE HAS GIVEN A CONFIRMATION IN THE ASSESSMENT OF REGPL THAT THE SUM OF RS.50 LAKHS WAS PAID BY MARUT HI ON BEHALF OF THE ASSESSEE AND THAT HE WAS A DIRECTOR OF MARUTHI. IT IS FURTHER SEEN THAT REGPL HAD BY A CONFIRMATION DATED 31.03.2006 STATED THAT THE SUM OF ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 6 OF 8 RS.50 LAKHS PAID TO M/S. BOVING WAS TREATED AS SHAR E APPLICATION MONEY OF THE ASSESSEE. EVEN IN THE BOOKS OF ACCOUNTS OF REG PL, THE SUM OF RS.50 LAKHS IS SHOWN AS FOLLOWS:- RITHWIK ENERGY GENERATION (P) LTD 2005-06. SHARE APPLICATION R. BHASKAR LEGER ACCOUNT 1-APR-2005 TO 31-MAR-2006 ___________________________________________________ _________ DATE PARTICULARS VCH TYPE VCH NO. CREDIT ___________________________________________________ _________ 24-3-2006 BY BOVING FOURESS LTD. JOURNAL 5 50,00, 000 BEING THE AMOUNT PAID BY MRS. S BHASKAR VIDE, CANARA BANK, BANGALORE CH.NO. 585235 DT. 21-03-2006 ___________________________________________________ _________ 10. IT THUS APPEARS THAT THERE IS A CONTRADICTION IN THE STAND TAKEN BY THE ASSESSEE IN THE PRESENT ASSESSMENT PROCEEDINGS AND IN THE CONFIRMATION FILED WHICH IS AT PAGE 9 OF THE ASSESSEES PB. THI S CONFIRMATION HAS PRESUMABLY BEEN FILED IN THE ASSESSMENT OF REGPL TO EXPLAIN THE CREDIT ENTRY IN THE FORM OF SHARE CAPITAL BY REGPL. IN TH E LIGHT OF THE CONFLICTING EVIDENCE, WE ARE OF THE VIEW THAT THE CONCLUSIONS O F THE CIT(A) DOES NOT APPEAR TO BE CORRECT. WE ALSO FIND THAT THE CIT(A) HAS NOT ELABORATED ON THE DOCUMENTS FILED BY THE ASSESSEE BASED ON WHICH HE CAME TO THE CONCLUSION THAT THE SUM OF RS. 50 LAKHS IS INVESTED BY MARUTHI AND IT IS NOT ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 7 OF 8 THAT OF THE ASSESSEE. WE ARE OF THE VIEW THAT IT W ILL BE IN THE FITNESS OF THINGS TO SET ASIDE THE ORDER OF THE CIT(APPEALS) A ND REMAND THE ISSUE BACK TO THE CIT(APPEALS) FOR FRESH CONSIDERATION, A S HIS IMPUGNED ORDER IS A NON-SPEAKING ORDER. WE ALSO DIRECT THE CIT(A) TO EXAMINE THE OTHER DOCUMENTS WHICH ARE ON RECORD AND WHICH GO TO SHOW THAT THE INVESTMENT IS ONLY THAT OF THE ASSESSEE AND NOT THAT OF MARUTH I VIZ., THE ASSESSEES CONFIRMATION, THE CONFIRMATION OF REGPL AS WELL AS THE ENTRY IN THE BOOKS OF REGPL WHICH ARE AT PAGES 9, 10 & 11 OF THE ASSES SEES PAPERBOOK. THE CIT(APPEALS) WILL AFFORD OPPORTUNITY OF BEING H EARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. FOR STATISTICAL PURPOSE S, THE APPEAL BY THE REVENUE IS TREATED AS ALLOWED. 11. THE CROSS OBJECTION WHICH IS PURELY SUPPORTIVE OF THE ORDER OF THE CIT(A) IS DISMISSED AS NOT MAINTAINABLE. 12. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES, WHILE THE CROSS OBJECTION OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS 26TH DAY OF NOVEMBER, 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 26 TH NOVEMBER, 2013. /D S/ ITA NO.765/BANG/12 & CO NO.13/BANG/2013 PAGE 8 OF 8 COPY TO: 1. REVENUE 2. ASSESSEE 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.