V. Ravikumar, Bangalore V. Income Tax Officer, Ward -3(2)(4), Bangalore

ITA 767/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9295 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 12-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GANESH R GHALE TO DEPA
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Unexplained investment; Business expenditure; Opportunity of being heard; Set aside
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - C BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO. 767 /BANG/201 9 ASSESSMENT YEAR : 20 1 4 - 1 5 SHRI. V. RAVIKUMAR, NO.139, BALAJI LAYOUT, SUBRAMANYAPURA POST, OPP. SIMHADRI LAYOUT, BENGALURU 560 085. PAN : BBEPR 3801 C VS. THE INCOME TAX OFFICER, WARD 3(2)(4), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. H. GURUSWAMY, ITP REVENUE BY : SHRI. GANESH R. GHALE, ADVOCATE STANDING COUNSEL TO DEPARTMENT DATE OF HEARING : 1 1 . 11 .201 9 DATE OF PRONOUNCEMENT : 10 . 01 .20 20 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-3, BANGALORE DATED 26.02.2019 FOR ASSESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE IMPUGNED APPELLATE ORDER DATED: 26-02-2019 PASSED BY THE LD. CIT(A), BANGALORE-3 IS OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) HAS ERRED IN HOLDING A SUM OF RS. I,39.817/-AS INCOME BEING 8% ON THE UNDERSTATED TURNOVER OF RS. 17,47,712/- WHICH RESULTED IN ENHANCEMENT OF ASSESSMENT WITHOUT ISSUING A NOTICE U/S. 251(2) OF THE ACT. 3. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,29,000/- BEING THE CASH DEPOSITED INTO THE BANK WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 767/BANG/2019 PAGE 2 OF 6 4. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 25,65,000/- AS UNEXPLAINED INVESTMENT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND DELETE ANY OF THE GROUNDS AT THE TIME OF HEARING 3. IN THE COURSE OF HEARING, IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT GROUND NO.1 IS GENERAL. REGARDING GROUND NO.2, HE SUBMITTED THAT ENHANCEMENT IS MADE BY THE LEARNED CIT(A) BUT THE NOTICE UNDER SECTION 251(2) OF THE ACT WAS ISSUED. AT THIS JUNCTURE, THE BENCH WANTED TO KNOW RELEVANT PARA OF THE ORDER OF CIT (A) AS PER WHICH ENHANCEMENT HAS BEEN MADE BY HIM. IN REPLY, IT WAS POINTED OUT BY THE AR OF THE ASSESSEE THAT IN PARA NO.5.10 OF HIS ORDER, IT IS STATED BY THE LEARNED CIT(A) THAT AN INCOME OF RS.1,39,817/- BEING 8% OF RS.17,47,712/- WAS ALSO REQUIRED TO BE BROUGHT TO TAX AND HE HAS STATED THAT THE AO NEEDS TO TAKE REMEDIAL ACTION AS PER LAW TO BRING THE ABOVE INCOME TO TAX. AT THIS JUNCTURE, THE BENCH POINTED OUT THAT IT IS SPECIFICALLY STATED BY THE LEARNED CIT(A) IN SAME PARA OF HIS ORDER THAT ENHANCEMENT CANNOT BE MADE ON A FRESH ISSUE AND HE HAS MADE SOME OBSERVATIONS ONLY THAT THE AO MAY TAKE REMEDIAL ACTION AS PER LAW AND HENCE, THIS IS NOT A CASE OF ENHANCEMENT AND THEREFORE, THIS GROUND OF THE ASSESSEE IS NOT ARISING OUT OF ORDER OF THE LEARNED CIT(A). IN REPLY, LEARNED AR OF THE ASSESSEE HAD NOTHING TO SAY. 4. THE LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF THE CIT(A). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I FIRST OF ALL, I REPRODUCE PARA 5.10 FROM THE ORDER OF THE CIT(A). THIS PARA READS AS UNDER:- 5.10 IN ADDITION TO ABOVE THE INTEREST OF RS 17,714/- FROM SAVING ACCOUNTS (AFTER CONSIDERING DEDUCTION UNDER SECTION 8OTTA OF THE ACT) WAS REQUIRED TO BE BROUGHT TO TAX AS ADMITTED BY THE APPELLANT HIMSELF DURING APPELLATE PROCEEDINGS FURTHER THE APPELLANT HAS HIMSELF ADMITTED DURING APPELLATE PROCEEDINGS THAT HE HAD NOT DECLARED THE ENTIRE CONTRACTUAL RECEIPTS OF RS 29,59,000/- IN HIS ROI AND THE SAME WERE THUS UNDERSTATED BY RS 17,47,712/-(RS 29,59,000- RS 12,11,288). SO INCOME @ 8% ON THE SAME ITA NO. 767/BANG/2019 PAGE 3 OF 6 WORKS OUT TO BE RS1,39,817/- AND THE SAME WAS ALSO REQUIRED TO BE BROUGHT TO TAX. THE AO HAS NOT DISCUSSED EITHER OF THESE TWO ISSUES IN THE ASSESSMENT ORDER. AS ENHANCEMENT CANNOT BE MADE ON FRESH ISSUES, SO THE AO NEEDS TO TAKE REMEDIAL ACTION AS PER LAW TO BRING THE ABOVE INCOME TO TAX. 6. AS PER THE ABOVE PARA REPRODUCED FROM THE ORDER OF THE LEARNED CIT(A), IT COMES OUT THAT A CATEGORICAL FINDING IS GIVEN BY THE LEARNED CIT(A) THAT ENHANCEMENT CANNOT BE MADE ON FRESH ISSUES. HE HAS SIMPLY STATED THAT AO NEEDS TO TAKE REMEDIAL ACTION AS PER LAW TO BRING THE ABOVE INCOME TO TAX. IT IS NOW A SETTLED POSITION OF LAW THAT LEARNED CIT(A) HAS NO POWER TO REMAND ANY MATTER TO AO AND HENCE, THIS GROUND OF THE ASSESSEE IS PREMATURE AND LIABLE TO BE REJECTED. SO, I REJECT IT ACCORDINGLY. 7. REGARDING GROUND NO.3, IT WAS SUBMITTED THAT ON PAGE NO.7 OF THE PAPER BOOK, THE DETAILS REGARDING CASH WITHDRAWAL FROM THE BANK ACCOUNT IS AVAILABLE AS IT CONTAINS COPY OF BANK PASS BOOK FOR THE RELEVANT PERIOD AS PER WHICH, RS. 1.60 LAKH WAS WITHDRAWN ON 18.03.2013 AND RS.5 LAKH WAS WITHDRAWN ON 19.03.2013 AND THEREAFTER ON 04.04.2013, DEPOSIT WAS MADE OF RS.6.79 LAKH. IT WAS ALSO SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) AS PER PARA NOS.5.8 AND 5.9 OF HIS ORDER ON THIS BASIS THAT IN FINANCIAL YEAR 2012-13 ALSO, THE ASSESSEE WAS CARRYING OUT CONSTRUCTION WORK AND THE ABOVE SAID WITHDRAWALS FROM THE BANK WERE THE BUSINESS EXPENSES IN FINANCIAL YEAR 2012-13 AND THE ASSESSEE HAS NOT PRODUCED ANY DETAILS TO SHOW THAT SUCH AMOUNT OF RS.6.60 LAKHS WAS NOT UTILIZED BY HIM FOR HIS BUSINESS IN FINANCIAL YEAR 2012-13. HE SUBMITTED THAT ON THIS ASPECT, THE MATTER SHOULD BE RESTORED BACK TO THE AO FOR FRESH DECISION BECAUSE ASKING THE ASSESSEE TO PROVE NEGATIVE I.E., NON USER OF CASH IN FINANCIAL YEAR 2012-13 IS ASKING FOR IMPOSSIBLE WHEREAS THE AO SHOULD HAVE GIVEN A FINDING THAT THE SAID CASH WITHDRAWAL WAS USED IN FINANCIAL YEAR 2012-13. THE LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 767/BANG/2019 PAGE 4 OF 6 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, I REPRODUCE PARAS 5.8 AND 5.9 FROM THE ORDER OF THE CIT(A) FOR READY REFERENCE. THESE PARAS READ AS UNDER: 5.8 ANOTHER ARGUMENT OF THE APPELLANT IS THAT AN AMOUNT OF RS.1,60,000/- WAS WITHDRAWN ON 18.03.2013 AND ANOTHER AMOUNT OF RS.5,00,000/- WAS WITHDRAWN ON 19.03.2013 AND THE SAME WAS AVAILABLE FOR MAKING DEPOSITS OF RS.6,79,000/-ON 04.04.2013. HOWEVER, THIS CLAIM OF THE APPELLANT IS ALSO DEVOID OF ANY MERIT. IT IS NOTED THAT DURING FY 2012-13 ALSO THE APPELLANT WAS CARRYING OUT CONTRACTUAL WORK AND THE ABOVE SAID WITHDRAWALS FROM THE BANK WERE THE BUSINESS EXPENSES FOR FY 2012-13. THE APPELLANT HAS NOT PRODUCED ANY DETAILS TO SHOW THAT SUCH AMOUNT OF RS.6,60,000/- WAS NOT UTILIZED BY HIM FOR HIS BUSINESS IN FY 2012-13 AND THE SAME WAS STILL AVAILABLE WITH HIM FOR DEPOSITING BACK ON 04.04.2013. ANYHOW THE ABOVE ARGUMENT MADE VIDE LETTER DATED 11.02.2019 IS JUST AN AFTERTHOUGHT AS IN THE EARLIER SUBMISSIONS DATED 09.12.2017, 12.01.2018 AS WELL AS ON 13.02.2019, THE ONLY CLAIM OF THE APPELLANT WAS THAT THE AMOUNT OF RS.10,29,000/- WAS ITS CONTRACTUAL RECEIPTS, WHICH HAD NOT BEEN DECLARED BY HIM IN HIS RETURN OF INCOME. CONSIDERING ABOVE THE ARGUMENT OF THE APPELLANT THAT AMOUNT OF RS.6,79,000/- WAS DEPOSITED BY HIM FROM CASH AVAILABLE IN HIS HANDS OUT OF EARLIER CASH WITHDRAWALS IS REJECTED. 5.9 CONSIDERING ABOVE THE ADDITION OF RS.10,29,000/- IS CONFIRMED. THIS IS NOTED THAT THE APPELLANT IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. SO, THE ABOVE ADDITION OF RS.10,29,000/- WOULD BE AS PER PROVISION OF SECTION 69 OF THE ACT. 8. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER OF THE CIT(A), IT IS SEEN THAT THIS IS THE BASIS THAT THE ASSESSEE HAS NOT PRODUCED ANY DETAILS TO SHOW THAT THIS AMOUNT OF RS.6.60 LAKH WAS NOT UTILIZED BY THE ASSESSEE FOR HIS BUSINESS IN FINANCIAL YEAR 2012-13 AND THE SAME WAS STILL AVAILABLE WITH HIM FOR DEPOSITING BACK IN BANK ON 04.04.2013. HENCE, IT IS APPARENT THAT LEARNED CIT(A) WAS ASKING THE ASSESSEE TO PROVE NEGATIVE THAT THE AMOUNT IN QUESTION WAS NOT USED BY THE ASSESSEE IN FINANCIAL YEAR 2012-13 WHICH IS AN IMPOSSIBLE TASK. HENCE, I FEEL IT PROPER TO SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR FRESH DECISION. THE AO SHOULD EXAMINE THE FACTUAL ASPECTS OF THE MATTER AND IF IT IS NOT FOUND BY HIM THAT CASH WITHDRAWN ON 18.03.2013 AND 19.03.2013 WERE IN FACT USED BY THE ASSESSEE FOR ANY PURPOSE BEFORE 04.04.2013 WHEN THE ASSESSEE ITA NO. 767/BANG/2019 PAGE 5 OF 6 DEPOSITED RS.6.79 LAKHS IN HIS BANK ACCOUNT, IT SHOULD BE ACCEPTED THAT SUCH EARLIER CASH WITHDRAWAL WAS AVAILABLE WITH THE ASSESSEE FOR CASH DEPOSIT AND HENCE, THE SAME SHOULD BE CONSIDERED AS A SOURCE OF CASH DEPOSIT AND NEEDLESS TO SAY, THE AO SHOULD PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND HE SHOULD PASS SPEAKING AND REASONED ORDER. IF THE ASSESSEE HAS SOME OTHER EXPLANATION ALSO, THE SAME MAY BE SUBMITTED BEFORE THE AO AND HE SHOULD CONSIDER THAT ALSO. ACCORDINGLY, GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. 8. REGARDING GROUND NO.4, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT THE CONFIRMATION LETTER GIVEN BY MR. CHIRANJEEVI WHO HAD SPENT AN AMOUNT OF RS.19 LAKHS AS PER THE ASSESSEE IS REPRODUCED BY LEARNED CIT(A) IN PAGE NO.13 OF HIS ORDER AND ON THE SAME PAGE IN PARA 6.6 OF HIS ORDER, LEARNED CIT(A) HAS REPRODUCED THE RELEVANT PORTION OF THE STATEMENT OF SHRI. CHIRANJEEVI IN WHICH HE HAS STATED THAT HE KNOWS THE ASSESSEE BUT DENIED ABOUT THE FUNDING OF RS.19 LAKHS TO THE ASSESSEE FOR HOUSE CONSTRUCTION. HE SUBMITTED THAT UNDER THESE FACTS, THE ASSESSEE SHOULD HAVE BEEN PROVIDED AN OPPORTUNITY TO CROSS-EXAMINE MR. CHIRANJEEVI AND SINCE, THIS IS NOT DONE, THIS ISSUE SHOULD ALSO BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE MR. CHIRANJEEVI. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF THE REVENUE. 9. I HAVE CONSIDERED THE RIVAL SUBMISSION. I FIND THAT AS PER THE CONFIRMATION LETTER OF MR. CHIRANJEEVI REPRODUCED BY LEARNED CIT(A) ON PAGE NO.13 OF HIS ORDER, HE HAS STATED THAT HE HAS FINANCED THE COST OF CONSTRUCTION FOR THE HOUSE OF MR. V. RAVI KUMAR DURING THE PERIOD JUNE 2013 TO JAN 2014 AMOUNTING TO RS.19 LAKHS WHICH WAS SUBSEQUENTLY REIMBURSED TO HIM ON 23.01.2014 BY MR. RAVI KUMAR. IN REPLY TO QUESTION NO.10 OF HIS STATEMENT RECORDED BY THE AO WHICH IS REPRODUCED BY THE LEARNED CIT(A) IN PARA NO.6.6 OF HIS ORDER, HE HAS STATED THAT THE ASSESSEE HAS PAID RS.19 LAKHS THROUGH CHEQUE ON 23.01.2014 WHICH WAS RETURNED BACK BY HIM PARTLY IN THE SAME YEAR AND THE REMAINING AMOUNT IN THE NEXT YEAR BY CHEQUE. HENCE, IT IS SEEN ITA NO. 767/BANG/2019 PAGE 6 OF 6 THAT THE PAYMENT OF RS.19 LAKHS BY THE ASSESSEE TO MR. CHIRANJEEVI ON 23.01.2014 IS ACCEPTED BY MR. CHIRANJEEVI IN HIS STATEMENT ALSO. BUT IN THE STATEMENT, HE HAS DENIED ABOUT FINANCING OF CONSTRUCTION AND HE HAS STATED THAT THIS AMOUNT OF RS.19 LAKHS WAS GIVEN BY THE ASSESSEE TO HIM AS A LOAN. UNDER THESE FACTS, I FEEL IT PROPER THAT ON THIS ISSUE, THE ASSESSEE SHOULD BE PROVIDED AN OPPORTUNITY TO CROSS-EXAMINE MR. CHIRANJEEVI AND HENCE, I SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE ALSO AND RESTORE THE MATTER ALSO BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH A DIRECTION THAT THE AO SHOULD PROVIDE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND HE SHOULD ALSO PROVIDE THE OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE MR. CHIRANJEEVI AND THEREAFTER DECIDE THIS ISSUE AFRESH BY WAY OF A SPEAKING AND REASONED ORDER. THIS GROUND NO.4 IS ALSO ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- BANGALORE. DATED: 10 TH JANUARY, 2020. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE. ( N. V. VASUDEVAN ) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER