ITO, Bangalore V. Shri. V. Purushotham, Bangalore

ITA 780/BANG/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1520 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 144

Judgement Text

PAGE 1 OF 5 ITA NO.780/BANG/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE DR. O K NARAYANAN, VICE PRESIDENT AND SHRI GEORGE GEORGE K., J.M. ITA NO.780/BANG/2010 (ASST. YEAR 2005-06) THE INCOME TAX OFFICER, WARD-1(2), BANGALORE. - APPELLANT VS SHRI V PURUSHOTHAM, NO.33, ANNASWAMY MUDALIAR ROAD, BANGALORE-42. - RESPONDENT APPELLANT BY : SMT. JACINTA ZIMIK VASHAI, ADDL . CIT RESPONDENT BY : SHRI BALRAM R RAO, ADVOCATE O R D E R PER GEORGE GEORGE K : THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE CIT(A)-I'S ORDER DATED 17.3.2010. THE RELEVANT ASSESSMENT YEAR IS 2005-06. 2. IN THIS APPEAL, THE DEPARTMENT CHALLENGE ON MER ITS IS TWO FOLDS, NAMELY, I) WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF EXPENSES OF RS.42,952/- OUT OF THE TOTAL DISALLOWANCE OF RS.66,000/-. PAGE 2 OF 5 ITA NO.780/BANG/2010 2 II) WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.10,85,000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN A FIRM. 3. THE FACTUAL BACKGROUND WITH REFERENCE TO THE AB OVE TWO ISSUES ARE AS FOLLOWS:- THE ASSESSEE IS AN INDIVIDUAL. HE DERIVES INCOM E FROM HOUSE PROPERTY AND BUSINESS. FOR THE CONCERNE D ASST. YEAR, RETURN OF INCOME WAS FILED DECLARING AN INCOME OF RS.4,59,720/-. ASSESSMENT U/S 144 OF THE ACT WAS C OMPLETED VIDE ORDER DATED 30.11.2007. THE A.O., WHILE COMP LETING THE BEST JUDGEMENT ASSESSMENT, DISALLOWED EXPENSES TO T HE TUNE OF RS. 66,000/-, OUT OF THE TOTAL EXPENSES CLAIMED AMO UNTING TO RS.2,19,997/-. THE REASON FOR THE DISALLOWANCE WAS THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE FOR THE CLAIM OF SUCH EXPENDITURE AND ON ADHOC BASIS, DISALLOWED 30% OF T HE SAME AND BROUGHT IT TO TAX. 4. THE ADDITION OF RS.10,85,000/- WAS MADE BY THE A O BY OBSERVING THUS:- IN THE STATEMENT OF AFFAIRS, THE ASSESSEE HAS SHOWN INVESTMENT IN FIRM OF RS.1,65,000/-. THE ASSESSEE WAS ASKED TO SUBMIT BALANCE SHEET OF THESE FIRMS BY ISSUE OF SUMMONS U/S 131, BUT THE ASSESSEE DID NOT SUBMIT ANY REPLY. ON VERIFICATION OF THE FIRMS RETURN, IT IS SEEN THAT 2 FIRMS ARE DECLARING RENTAL INCOME OF RS.6,00,000/- AND RS.3,00,000/-. AS THE ASSESSEE DID NOT SUBMIT ANY PAGE 3 OF 5 ITA NO.780/BANG/2010 3 DETAILS, IT IS ESTIMATED THAT TO EARN ABOVE MENTIONED RENTAL INCOME, THE ASSESSEE FIRM SHOULD HAVE INVESTED AN AMOUNT OF RS.15,00,000/- AND RS.10,00,000/- WHICH IS EQUALLY INVESTED BY ASSESSEE AND HIS WIFE SMT. UMA PUROSHOTTAM. HENCE, EACH INDIVIDUALS SHARE WORKS OUT TO RS.12,50,000/- AND AS PER STATEMENT, THE ASSESSEE IS SHOWING INVESTMENT OF RS.1,65,000/-. THE DIFFERENCE OF RS.10,85,000/- IS BROUGHT TO TAX AS UNEXPLAINED INVESTMENT. 5. THE ASSESSEE, BEING AGGRIEVED, FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 6. WITH REFERENCE TO EXPENSES AMOUNTING TO RS.66,0 00, THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.23,048 /- AND A RELIEF OF RS.42,952/- WAS GRANTED TO THE ASSESSEE ON THIS ACCOUNT. 6.1. WITH REFERENCE TO ADDITION OF RS.10,85,000/- , THE CIT(A) DELETED THE ADDITION BY OBSERVING THUS:- IN THIS GROUND, THE ISSUE RELATES TO ADDITION OF RS.10,85,000/- AS UNEXPLAINED INVESTMENT FROM M/S EMERALD HOLDINGS. THIS ISSUE TOO HAS BEEN DEALT BY ME IN THE CASE OF SMT. UMA PURUSHOTHAM VIDE SUPRA IN FAVOUR OF HER. FOLLOWING THE SAME REASONING, HERE ALSO THE GROUND STANDS ALLOWED AND THE ADDITION IS DELETED. 7. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFO RE US. 8. THE LEARNED DR SUBMITTED THAT THE ASSESSMENT HA S BEEN COMPLETED U/S 144 OF THE ACT ON ACCOUNT OF NON -COOPERATION PAGE 4 OF 5 ITA NO.780/BANG/2010 4 ON THE PART OF THE ASSESSEE IN COMPLIANCE WITH THE NOTICES U/S 143(2) OF THE ACT. IT WAS SUBMITTED THAT THE CIT(A ) HAS ADMITTED FRESH EVIDENCE/DOCUMENTS AND HAS DELETED THE ADDITI ONS MADE BY THE AO IN CONTRAVENTION OF RULE 46A OF THE INCOME T AX RULES. IT WAS ALSO SUBMITTED THAT IN THE CASE OF ASSESSEES W IFE, THE MATTER WAS REMITTED BACK BY THE TRIBUNAL TO THE AO FOR FRES H CONSIDERATION, VIDE ORDER DATED13/01/2011 IN ITA NO.270/BANG/2010. 9. THE LEARNED AR, ON THE OTHER HAND, SUPPORTED TH E FINDING OF THE CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. IDENTICAL ISSUES HAD CROPPED U P IN THE CASE OF ASSESSEES WIFE. IN THE CASE OF ASSESSEES WIFE, THE MATTER WAS REMITTED BACK TO THE FILE OF THE AO BY THE TRIBUNAL IN ITA NO.270/BANG/2010 DATED 13/01/2011. FOLLOWING THE S AME REASONING IN ITA NO.270/BANG/2010, WE REMIT THESE ISSUES BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION OF THE MATTER AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO SAY THE ASSESSEE WOULD EXTEND FULL COOPE RATION TO THE AO SO AS TO FACILITATE THE FRAMING OF THE PROPER AS SESSMENT AND WOULD ALSO BE ENTITLED TO FILE ANY ADDITIONAL EVIDEN CE BEFORE THE AO IN SUPPORT OF HIS CASE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PAGE 5 OF 5 ITA NO.780/BANG/2010 5 THE ORDER PRONOUNCED ON FRIDAY, THE 25 TH DAY OF FEBRUARY, 2011 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (GEORGE GEORGE K) VICE PRESIDENT ACCOUNTANT MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) THE CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. MSP/21.2. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.