Shri. K. Parameshwarappa, Bangalore V. ITO, Bangalore

ITA 794/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8563 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: CHAT RAJ
• Keywords: Additional evidence; Tangible material
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T. A. NO.794/BANG/2014 (ASSESSMENT YEAR : 2008-09) SHRI K. PARAMESHWARAPPA, M/S. BASAVESHWARA ENGG. WORKS, NO.2, DEVASANDRA MAIN ROAD, K.R. PURAM, BANGALORE-560 036. . APPELLANT. PAN AFZPP 4828D VS. INCOME TAX OFFICER, WARD 8(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI CHAT RAJ, C.A. RESPONDENT BY : DR.P.K. SRIHARI, ADDL. CIT (D.R.) DATE OF HEARING : 25.02.2016 DATE OF PRONOUNCEMENT : 24 .03.2016. O R D E R PER SHRI VIJAY PAL RAO, J.M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DT.5.11.2013 OF COMMISSIONER OF INCOME TAX (APPEALS)-V, BANGALOR E FOR THE ASSESSMENT YEAR 2008-09. 2 ITA NO.794/BANG/2014 2. THE ASSESSEE HAS FILED THE FOLLOWING REVISED GROUNDS : 1. THE ORDER OF THE LEARNED CIT (APPEALS)-V, BANG ALORE, IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED T O LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUM STANCES OF THE CASE. 2. THE LEARNED CIT (APPEALS)-V, BANGALORE IS NOT JUSTIFIED IN PASSING THE IMPUGNED ORDER DECLINING TO ACCEPT THE EVIDENCES ADDUCED BY THE APPELLANT DURING THE COURSE OF APPEA L BY INVOKING THE PROVISIONS OF RULE 46A OF THE INCOME T AX RULES. 3. THE LEARNED CIT (APPEALS)-V ERRED IN NOT INVOK ING HIS QUASI JUDICIAL POWER AS ENVISAGED IN SUB-SECTION 4 OF SECTION 250 OF THE INCOME TAX ACT, 1961. 4. THE LEARNED CIT (APPEALS) V ERRED IN FACTS AS WELL AS IN LAW IN NOT ADMITTING THE ADDITIONAL EVIDENCE AS THE SUBMISSION GIVING DETAILS OF EVIDENCE AS TO SOURCE OF RS.1,46, 25,000 AND RS.40,00,000 BEING THE AMOUNT OF INVESTMENT IN PROP ERTY AND CAPITAL INTRODUCED IN THE FIRM WAS FORWARDED TO THE ASSESSING OFFICER FOR A REMAND REPORT AND THE LD. ASSESSING O FFICER WEIGHED AND CONSIDERED THOSE EVIDENCES AND FURNISHE D THE REPORT. HENCE THE LEARNED CIT (APPEALS) V, OUGHT TO HAVE CONSIDERED THE WEIGHT OF THE EVIDENCE INSTEAD OF AC CEPTING ON ONE AND REJECTING THE OTHER. 5. THE LEARNED CIT (APPEALS)-V ERRED BOTH IN FAC TS AND IN LAW IS NOT APPRECIATING THE FACT THAT APPELLANT WAS PREVENTED BY SUFFICIENT REASON TO PROVIDE HIS EVIDENCE BEFORE THE LEARNED ASSESSING OFFICER AS TO SOURCE OF RS.1,46,25,000 A ND RS. 40,00,000 BEING THE AMOUNT OF INVESTMENT IN PROPERT Y AND CAPITAL INTRODUCED IN THE FIRM. 6. THE LEARNED CIT (APPEALS) V ERRED BOTH IN F ACTS AS WELL AS IN LAW IS NOT APPRECIATING THAT THE EVIDENCE AS TO AGRICULTURAL 3 ITA NO.794/BANG/2014 INCOME PUT UP BEFORE HIM, WERE SUBJECT TO REMAND RE PORTS BY THE LEARNED ASSESSING OFFICER AND HENCE THE EVIDENC E, INSTEAD OF BEING SUMMARILY DENIED CONSIDERATION, NEEDED TO BE GIVEN PROPER WEIGHT AND CREDENCE. 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING THE APPEAL, YOUR APPELLANT HUMB LY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED . 3. THE ONLY THAT ISSUE ARISES IN THIS APPEAL OF THE ASSESSEE IS, WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER OF RS.40 LAKHS AND RS.1,46,25,000 UNDER SECTIONS 68 & 69 RESPECTIV ELY OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. THE ASSESSEE IS A PARTNER IN THE FIRM, M/S SRI S HANTHAVEERA TRANSFORMERS MANUFACTURING COMPANY. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS INTRODUCED CAPITAL TO THE EXTENT O F RS.40 LAKHS IN THE PARTNERSHIP FIRM. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SAID AMOUNT OF RS.40 LAKHS. APART FR OM THIS THE ASSESSEE ALSO PURCHASED IMMOVABLE PROPERTY FOR RS.1,46,25,00 0. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE DID NOT FURNISH THE DETAILS OF THE PURCHASE AND EXPLAINED THE SOURCE OF THE PURCHASE C ONSIDERATION IN SPITE 4 ITA NO.794/BANG/2014 OF REPEATED REQUESTS. SINCE THERE WAS NO RESPONSE FROM THE ASSESSEE DESPITE GIVING OPPORTUNITY FOR PRODUCING EVIDENCE/D ETAILS/SOURCES, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKIN G THE ADDITION OF THESE TWO AMOUNTS OF RS.40 LAKHS UNDER SECTION 68 A ND RS.1,46,25,000 UNDER SECTION 69 OF THE ACT. THE ASSESSEE CHALLENG ED THE ACTION OF THE ASSESSING OFFICER BEFORE THE CIT (APPEALS) AND FURN ISHED ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 19 62 IN SUPPORT OF THE EXPLANATION OF SOURCE OF RS.40 LAKHS. AS REGARDS T HE PURCHASE OF IMMOVABLE PROPERTY FOR RS.1,46,25,000, THE CIT (APP EALS) AFTER CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFI CER HAS DELETED THE SAID ADDITION ON THE GROUND THAT THE SAID PROPERTY WAS PURCHASED ON BEHALF OF THE FIRM BUT IN THE NAME OF THE PARTNER A S THE IMMOVABLE PROPERTY CANNOT BE PURCHASED IN THE NAME OF THE PAR TNERSHIP FIRM. THUS THE DISPUTE BEFORE US IS ONLY WITH REGARD TO THE AD DITION OF RS.40 LAKHS MADE UNDER SECTION 68 OF THE ACT WHICH WAS CONFIRME D BY THE CIT (APPEALS). 5. BEFORE US, THE LEARNED AUTHORISED REPRESENT ATIVE OF THE ASSESSEE HAS SUBMITTED THAT DURING THE COURSE OF THE APPELLA TE PROCEEDINGS, THE 5 ITA NO.794/BANG/2014 ASSESSEE SOUGHT PERMISSION TO ADDUCE ADDITIONAL EVI DENCE IN SUPPORT OF THE SOURCE OF RS.40 LAKHS. THE CIT (APPEALS) FORWA RDED THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER FOR EXAMINATION A ND COMMENTS. HOWEVER, THE CIT (APPEALS) DECLINED TO ADMIT THE AD DITIONAL EVIDENCE IN RESPECT OF SOURCE OF RS.40 LAKHS. THUS THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT WITHOUT EXAMINING THE EVIDENCE PLACED BEFORE IT, THE CIT (APPEALS) IS NOT JUSTIFIE D IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. HE HAS REF ERRED THE ADDITIONAL EVIDENCE PRODUCED BEFORE THE CIT (APPEALS) AND SUBM ITTED THAT THE ASSESSEE HAS FILED THE DETAILS OF THE AGRICULTURAL INCOME OF THE HUF. THUS THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT WHEN THE ASSESSEE HAS EXPLAINED THE SOURCE OF THE AMOUNT OF RS.40 LAKHS, THE SAME SHOULD HAVE ACCEPTED BY THE CIT (APPEALS). 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT DESPITE REPEATED SHOW CAUSE NOTICES AND OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER, THE ASSESSEE DID NO T RESPOND AND ALSO HAS NOT FURNISHED ANY EXPLANATION/DETAIL / EVIDENCE IN SUPPORT OF THE CLAIM BEFORE THE ASSESSING OFFICER. FURTHER, THE ADDITIO NAL EVIDENCE SOUGHT TO 6 ITA NO.794/BANG/2014 BE PRODUCED BEFORE THE CIT (APPEALS) IS NOTHING BUT AN AFTER THOUGHT. THEREFORE, IN THE ABSENCE OF ANY DOCUMENTARY EVIDEN CE AND DIRECT NEXUS BETWEEN THE DOCUMENTARY EVIDENCE AND THE AGRICULTUR AL INCOME OF THE HUF AS WELL AS SOURCE OF THE INVESTMENT OF RS.40 LA KHS BY THE ASSESSEE, SAME CANNOT BE ACCEPTED IN SUPPORT OF THE CLAIM. H E HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE ADDUCED BY THE ASSESSEE BEFOR E THE CIT (APPEALS) WAS FORWARDED TO THE ASSESSING OFFICER FOR HIS COMM ENTS. THUS, ONCE THE CIT (APPEALS) HAS FORWARDED THE ADDITIONAL EVIDENCE FOR EXAMINATION BY THE ASSESSING OFFICER FOR HIS COMMENTS, THEN THE AS SESSING OFFICER OUGHT TO HAVE EXAMINED THE VERACITY AS WELL AS THE MERITS OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE APART FROM RAISING O BJECTION AGAINST THE ADMISSIBILITY OF THE ADDITIONAL EVIDENCE FILED AT T HE APPELLATE STAGE. WE FIND THAT ONCE THE ADDITIONAL EVIDENCE WAS FORWARDE D TO A.O., THEN WITHOUT EXAMINATION OF THE ADDITIONAL EVIDENCE, THE CIT (APPEALS) IS NOT JUSTIFIED IN DECLINING TO ADMIT THE ADDITIONAL EVID ENCE. ACCORDINGLY, IN THE 7 ITA NO.794/BANG/2014 FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IS REQUIRED TO BE VERIFIED / EXAMINED AT THE LEVEL OF THE ASSESSING O FFICER TO COME TO THE CONCLUSION WHETHER THE SAID ADDITIONAL EVIDENCE DOE S EXPLAIN THE SOURCE OF THE INVESTMENT MADE BY THE ASSESSEE OF RS.40 LAK HS IN THE SHAPE OF CAPITAL INTRODUCED IN THE PARTNERSHIP FIRM AS WELL AS SOURCE OF ANY AMOUNT OUT OF RS.1,46,25,000 BEING PURCHASE CONSIDE RATION PAID BY THE ASSESSEE FOR PURCHASE OF THE IMMOVABLE PROPERTY ON BEHALF OF THE PARTNERSHIP FIRM. THUS, AT THE TIME OF CONSIDERI NG THE SOURCE OF INVESTMENT, THE AMOUNT, IF ANY, PAID BY THE ASSESSE E TOWARDS PURCHASE OF IMMOVABLE PROPERTY WAS ALSO TO BE TAKEN INTO CONSID ERATION. FURTHER WE MAKE IT CLEAR THAT MERE PRODUCTION OF THE DETAILS O F THE LAND HOLDINGS OF THE HUF IPSO FACTO WOULD NOT EXPLAIN THE SOURCE UNTIL AND UNLESS A TANGIBLE MATERIAL IS BROUGHT ON RECORD SHOWING THE REAL INCOME IN THE HANDS OF THE HUF WHICH IS AVAILABLE FOR MAKING SUCH INVESTMENT BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HAS TO EXAMINE THE ISSUE AS WELL AS THE EVIDENCE TO BE PRODUCED BY THE ASSESSEE IN SUPPORT OF THE 8 ITA NO.794/BANG/2014 CLAIM AND THEN DECIDE THE SAME AS PER LAW. ACCOR DINGLY, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER I N THE ABOVE SAID TERMS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 24 TH DAY OF MARCH 2016. SD / - (INTURI RAMA RAO) ACCOUNTANT MEMBER SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER DATED, THE 24 TH MARCH, 2016. *REDDY GP / DS / COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.