Sri C.M. Rizaulla, Bangalore V. ITO, Bangalore

ITA 806/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60736 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Depreciation; Opportunity of being heard; Assessment record; Revised return
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BANGALORE BENCH A BANGALORE BENCH A BANGALORE BENCH A BEFORE SHRI N.K. SAINI, ACCOUNTANTMEMBER BEFORE SHRI N.K. SAINI, ACCOUNTANTMEMBER BEFORE SHRI N.K. SAINI, ACCOUNTANTMEMBER BEFORE SHRI N.K. SAINI, ACCOUNTANTMEMBER AND AND AND AND SMT. P.MADHAVI DEVI, JUDICIAL MEMBER SMT. P.MADHAVI DEVI, JUDICIAL MEMBER SMT. P.MADHAVI DEVI, JUDICIAL MEMBER SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.806(BANG)/2011 (ASSESSMENT YEAR: 2006-07) SHRI C.M.RIZAULLA, # 75, 2 ND MAIN, 13 TH CROSS, VASANTHNAGAR, BANGALORE-52. PAN: ADRPR 2272H VS. APPELLANT INCOME-TAX OFFICER, WARD 1(2), BANGALORE. RESPONDENT APPELLANT BY: SHRI V.SRINIVASAN, CA. RESPONDENT BY : SHRI SARAVANAN, B, JCIT. DATE OF HEARING: 22-05-2012. DATE OF PRONOUNCEMENT: 22-05-2012. O R D E R O R D E R O R D E R O R D E R PER N.K.SAINI, AM: PER N.K.SAINI, AM: PER N.K.SAINI, AM: PER N.K.SAINI, AM: THIS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER D ATED 18-7-2011 OF THE LD. CIT(A)-I, BANGALORE. THE FOLL OWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1 . THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS TH EY ARE AGAINST THE APPELLANT , ARE OPPOSED TO LAW , EQUITY, WEIGHT OF EVIDENCE , PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2 . THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING TH E ADDITION OF ` 22 , 345/- AS COMMISSION AND OPENING BALANCE DIFFERENCE UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANT'S CASE . ITA NO.806(BANG)/2011 PAGE 2 OF 15 3. THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF ` 1 , 31,171/- AS THE VARIATION IN CASH BALANCE UNDER TH E FACTS AND I N THE CIRCUMSTANCES OF THE APPELLANT'S CASE . 4. THE LEARNED CIT[A] I S NOT JUSTIFIED IN UPHOLDING THE ADDITIONS OF ` 7 , 00 , 000/- AND ` 2 , 00 , 000/- AS UNEXPLAINED CASH RECEIPTS FROM M/S . ANF HOLDINGS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE . 5 . THE LEARNED CIT[A] IS NOT JUSTIFIED IN UPHOLDING TH E ADDITION OF ` 2 , 40 , 000/- AS THE CASH DEPOSIT IN BANK ACCOUNT UNDER THE FACTS AND IN THE C IR CUMSTANCES OF THE APPELLANT ' S CASE. 6. WITHOUT PREJUDICE TO THE ABOVE, THE ADDITIONS MA DE ARE HIGHLY EXCESSIVE AND LIABLE TO BE REDUCED SUBSTANTI ALLY . 7 . W I THOUT PREJUDICE TO THE R I GHT TO SEEK WAIVER WITH THE HON'BLE CCIT/DG , THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S 234-A , 234-B AND 234-D OF THE ACT , WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF T HE APPELLANT'S CASE AND THE LEVY DESERVES TO BE CANCEL LED. 8 . FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL , YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE A PPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FE ES AS PART OF THE COSTS. 2. GROUND NOS.1 AND 8 ARE GENERAL IN NATURE, SO TH ESE DO NOT REQUIRE ANY ADJUDICATION ON OUR PART. 3. VIDE GROUND NO.2, THE GRIEVANCE OF THE ASSESSEE RELATES TO CONFIRMATION OF ADDITION OF `22,345/-. 3.1. FACTS OF THE CASE RELATING TO THIS ISSUE IN BR IEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 21- 2-2007 DECLARING INCOME OF `2,48,179/- WHICH WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS 'THE ACT' FOR SHORT]. LATER ON, THE CASE WAS SELECTED FOR S CRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT THE ITA NO.806(BANG)/2011 PAGE 3 OF 15 ASSESSEE HAD SHOWN COMMISSION OF `22,000/- AND OPEN ING BALANCE DIFFERENCE OF `345/-BUT THE SAME WAS NOT DE CLARED AS INCOME. THE AO TREATED THE AFORESAID AMOUNT AS THE ASSESSEES INCOME. 3.2. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT( A) AND SUBMITTED THAT THE COMMISSION AND OPENING BALANCE D IFFERENCE OF `22,000 & `345 RESPECTIVELY WERE OUT OF ESTIMATE D INCOME OF `60,000 FROM REAL ESTATE BUSINESS SHOWN UNDER BANK COLUMN AND THEREFORE SUCH SUM SHOULD NOT HAVE BEEN ADDED B Y THE AO. THE LD.CIT(A) POINTED OUT THAT THE ASSESSEE COULD N OT ESTABLISH ANY NEXUS BETWEEN THOSE TWO ENTRIES AND THEREFORE H E CONFIRMED THE ADDITION MADE BY THE AO. NOW, THE AS SESSEE IS IN APPEAL. 3.3. LEARNED COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND T HE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3.4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD, WE ARE OF THE OPINION T HAT THE ASSESSEE WAS NOT HAVING ANY PLAUSIBLE EXPLANATION A GAINST THE OBSERVATION OF THE AO PARTICULARLY WHEN NO NEXUS HA S BEEN ESTABLISHED BETWEEN THE ESTIMATED INCOME AND THE OP ENING BALANCE DIFFERENCE AS WELL AS COMMISSION AMOUNTING TO `22,000 & `345 RESPECTIVELY. WE, THEREFORE, DO NOT FIND AN Y VALID GROUND TO INTERFERE WITH THE FINDING OF THE LD.CIT( A) ON THIS ISSUE. ITA NO.806(BANG)/2011 PAGE 4 OF 15 4. VIDE GROUND NO.3, THE GRIEVANCE OF THE ASSESSEE RELATES TO CONFIRMATION OF ADDITION OF `1,31,171 MA DE BY THE AO AS VARIATION IN CASH BALANCE. 4.1. THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO TICED THAT THE FUND FLOW STATEMENT OF THE ASSESSEE REVEALED TH AT DEPRECIATION HAS BEEN TAKEN AS CASH RECEIPTS. ACCO RDING TO HIM, IT WAS ONLY A NOTIONAL DEDUCTION AND NOT A CASH REC EIPT AND IF IT WAS TO BE PRESUMED THAT THE ASSESSEES ACTUAL INCOM E FROM REAL ESTATE WAS `1,22,362 AND AFTER DEPRECIATION THE NET INCOME OF `60,000 WAS DECLARED, THEN THE CREDIT OF DEPRECIATI ON AS CASH RECEIPT WOULD BE ACCEPTED. HE FURTHER OBSERVED THA T AS PER ASSESSEES FUND FLOW STATEMENT, THE ASSESSEE HAD CL OSING BALANCE OF `2,88,552 BUT AS PER STATEMENT OF AFFAIR S, THE ASSESSEE WAS SHOWING CASH BALANCE OF `1,57,381. ACC ORDINGLY THE DIFFERENCE OF `1,31,171 (`2,88,552 - `1,57,381/ -) WAS ADDED TO THE INCOME OF THE ASSESSEE. 4.2. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT( A) WHO OBSERVED THAT THE ASSESSEE HAD NOT BEEN ABLE TO REC ONCILE THE DIFFERENCE. HE, ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE AO. NOW THE ASSESSEE IS IN APPEAL. 4.3. LEARNED COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE ASSESSEE REVISED THE RETURN OF I NCOME AS WELL AS FUND FLOW STATEMENT. HE REFERRED TO PAGE 3 OF THE ASSESSEES COMPILATION AND STATED THAT IN EARLIER S TATEMENT OF ASSETS OVER LIABILITIES, CASH WAS SHOWN AT `1,57,38 1. LATER ON ITA NO.806(BANG)/2011 PAGE 5 OF 15 THE SAME WAS REVISED AND CASH WAS SHOWN AT `2,88,55 3. REFERENCE WAS MADE TO PAGE 5 OF THE ASSESSEES COMP ILATION. IT WAS STATED THAT IN THE REVISED RETURN OF INCOME, SH ARE IN THE COMMERCIAL BUILDING WAS INCREASED TO `3,77,251 FROM `2,46,089. ACCORDINGLY, THE ASSESSEE REVISED THE RETURN OF INC OME AND THE AO ALSO COMPUTED THE INCOME ONLY ON THE BASIS OF RE VISED RETURN OF INCOME. THEREFORE, THE AO WAS NOT JUSTIF IED IN TREATING VARIANCE IN CASH IN HAND SHOWN IN EARLIER AND THE L ATER STATEMENT OF AFFAIRS/CASH FLOW STATEMENT AS INCOME OF THE ASSESSEE. 4.4. IN HIS RIVAL CONTENTIONS, LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 4.5. WE HAVE CONSIDERED SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE E ARLIER, DECLARED INCOME AT `2,48,180/-. IN THE SAID INCOME, RENTAL INCOME BEFORE PROVIDING DEDUCTION U/S 24 OF THE ACT WAS TAKEN AT `2,46,089 (COPY OF THE SAME IS AVAILABLE AT PAGE 2 OF THE ASSESSEES COMPILATION). STATEMENT OF ASSETS OVER LIABILITIES SHOWING RENTAL INCOME AT `2,46,089 IS AVAILABLE AT PAGE 3 OF THE ASSESSEES COMPILATION, IN THE SAID STATEMENT, CASH IN HAND HAS BEEN SHOWN AT `1,57,381. THEREAFTER, THE ASSESSEE R EVISED THE RETURN OF INCOME WHEREIN THE RETURNED INCOME BEFORE DEDUCTION U/S 24 WAS TAKEN AT `3,77,251 AND THE TOTAL INCOME DECLARED WAS `3,39,990/-. (COPY OF THE SAME IS AVAILABLE AT PAGE 4 OF THE ASSESSEES COMPILATION). ON THE BASIS OF THE SAID RETURN OF INCOME OF `3,77,251 THE ASSESSEE PREPARED THE STATE MENT OF ITA NO.806(BANG)/2011 PAGE 6 OF 15 ASSETS OVER LIABILITIES AS ON 31-3-2005 (COPY OF TH E SAME IS AVAILABLE AT PAGE 5 OF THE ASSESSEES COMPILATION). IN THE SAID STATEMENT, CASH IN HAND HAS BEEN SHOWN AT `2,88,543 . IT IS ALSO NOTICED FROM THE COMPUTATION OF INCOME MADE BY THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT THAT I NCOME WAS TAKEN AS PER REVISED STATEMENT AT `3,39,993 WHICH C LEARLY ESTABLISHES THAT THE AO, WHILE FRAMING THE ASSESSME NT CONSIDERED REVISED STATEMENT OF ASSETS OVER LIABILI TIES AS WELL AS REVISED INCOME. HOWEVER, WHILE MAKING THE IMPUGNED ADDITION, HE CONSIDERED CASH IN HAND AVAILABLE IN THE PRE-REV ISED STATEMENT OF ASSETS OVER LIABILITIES. IN OUR OPINI ON, WHEN THE AO CONSIDERED THE INCOME ON THE BASIS OF REVISED STATE MENT OF ASSETS OVER LIABILITIES, THEN HE OUGHT TO HAVE CONS IDERED CASH IN HAND ALSO WORKED OUT IN THE REVISED STATEMENT OF AS SETS OVER LIABILITIES AS ON 31-3-2006. IN THE SAID STATEMENT OF AFFAIRS, CASH IN HAND SHOWN WAS AT `1,57,381 AND NOT `2,88,552 WH ICH WAS CONSIDERED BY THE AO. WE, THEREFORE ARE OF THE CON SIDERED VIEW THAT THE AO WRONGLY MADE THE ADDITION AND THE LD.CI T(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY TH E AO. WE, ACCORDINGLY, DELETE THE ADDITION OF `1,31,171 MADE BY THE AO AND CONFIRMED BY THE LD.CIT(A). 5. IN THE GROUND NO.4, THE GRIEVANCE OF THE ASSESSE E RELATES TO THE ADDITION OF `7 LAKHS AND `2 LAKHS AS MADE BY THE AO AS UNEXPLAINED CASH RECEIPTS FROM M/S.ANF HOLDIN GS. FACTS RELATING TO THIS ISSUE IN BRIEF ARE THAT THE AO, DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT THE ASSESSE E FURNISHED AN AGREEMENT COPY BETWEEN THE ASSESSEE AND SHRI ITA NO.806(BANG)/2011 PAGE 7 OF 15 MD.AZEEMUDDIN OF M/S.ANF HOLDING AND AS PER THE SAI D AGREEMENT, THE ASSESSEE PAID THE FOLLOWING AMOUNTS: 11-2-2005 `5,00,000 30-3-2006 `2,00,000 FURTHER, THE ASSESSEE RECEIVED BACK AN AMOUNT OF `3 ,50,000 ON 6-10-2006. ACCORDING TO THE AO, THE ASSESSEE, IN H IS CASH FLOW STATEMENT HAS SHOWN RECEIPTS IN CASH OF `7 LAKHS FR OM M/S.ANF HOLDINGS BUT DID NOT SUBMIT ANY EVIDENCE IN SUPPORT OF THE SAME. THE SUBMISSION OF THE ASSESSEE WAS THAT THE AMOUNT WAS SHOWN AS PAID ON 31-3-2006 BUT THESE WERE PAID EARLIER IN MARCH 2005. IT WAS FURTHER STATED THAT THE ASSESSEE HAD RECEIVED BACK AN AMOUNT OF `3.5 LAKH ON 6-10-2005 B UT IN THE AGREEMENT IT WAS WRONGLY MENTIONED AS 6-10-2006. H OWEVER, THE AO DID NOT ACCEPT THE ARGUMENT OF THE ASSESSEE BY OBSERVING THAT IF THIS AMOUNT WAS PAID BEFORE MARCH 2005, IT COULD HAVE BEEN INCLUDED IN THE AGREEMENT WHICH WAS DATED 21-3-2005 AND WOULD NOT BE ENTERED AS AN ADDITIONAL ENTRY. HE ALSO MENTIONED THAT THE AMOUNT RECEIVED BACK ON 6-1 0-2005 WAS ALSO NOT ACCEPTABLE AS THE AGREEMENT CLEARLY ST ATED THAT REPAYMENT WAS ON 6-10-2006. THE AO ALSO DID NOT AC CEPT THE CONFIRMATION OF SHRI MD.AZEEMUDDIN WHEREIN IT WAS S TATED THAT HE HAD PAID BACK `3,50,000 ON 6-10-2005. THE AO, A CCORDINGLY, TREATED `7 LAKHS AS INCOME FROM OTHER SOURCES AND MADE THE ADDITION. HE FURTHER OBSERVED THAT AS PER THE AGRE EMENT, THE ASSESSEE HAD PAID AN AMOUNT OF `2 LAKHS ON 30-3-200 6 BUT THE SAME WAS NOT SHOWN IN THE CASH FLOW STATEMENT. HE, ITA NO.806(BANG)/2011 PAGE 8 OF 15 ACCORDINGLY, CONSIDERED THE SAID AMOUNT OF `2 LAKHS ALSO AS INCOME FROM OTHER SOURCES AND MADE THE ADDITION. 5.1. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT( A) AND FURNISHED AN AFFIDAVIT FROM SHRI MD.AZEEMUDDIN. IT WAS STATED THAT THE DATE HAD BEEN WRONGLY PUT THEREIN AS 30-3- 2006 INSTEAD OF 30-3-2005. THE ASSESSEE ALSO FURNISHED A COPY OF STATEMENT OF AFFAIRS AS ON 31-9-2005 TO SHOW THAT T HE SAME PAYMENT HAD BEEN REFLECTED THEREIN AND HAD BEEN FIL ED ALONG WITH INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2005 -06 WITH ITO, WARD 1(2), BANGALORE. IN THE SAID AFFIDAVIT O F SHRI MD.AZEEMUDDIN FURNISHED BY THE ASSESSEE IT WAS STATED AS UNDER: THAT THE NEGOTIATION OF THE PROPERTY WAS NOT MATERIALIZED AND I RETURNED THE AMOUNT TO C M RIZAULA: A) ON 6-10-2005, AMOUNT OF `3,50,000 AND ON 3-12- 2005, AMOUNT OF `3,50,000. ON WRITING SHARA CONFIRMING THE RETURN OF AMOUNT `3,50,000 ON 6-10-2005, BY MISTAKE I WROTE DATE 6-10-2006. SINCE THE ABOVE SAID DOCUMENT WAS ADDITIONAL EVIDEN CE, THE LD.CIT(A) SENT THE SAME TO THE AO FOR EXAMINATION A ND REPORT. 5.2. THE AO IN HIS REMAND REPORT, REPORTED AS UNDER : I REQUEST THE COMMISSIONER OF INCOME-TAX(APPEALS) TO KINDLY REJECT THE AFFIDAVIT OF SRI MD.AZEEMUDIN AND ALSO THE AGREEMENT WHICH HAVE BEEN FILED BY THE ASSESSEE IN THE COURSE OF THE APPELLATE PROCEEDINGS , FOR THE FOLLOWING REASONS: 1. THE DATES MENTIONED IN THE SECOND PAGE OF THE AGREEMENT (WHICH SRI MD . ITA NO.806(BANG)/2011 PAGE 9 OF 15 AZEEMUDDIN CALL IT AS 'SHARA') HAVE BEEN SCRIBBLED AND MANIPULATED. 2. IN THE AGREEMENT FILED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE DATE OF RETURNING THE AMOUNT OF ` 3,50,000 /- IS WRITTEN BY SRI MD. AZEEMUDDIN AS 6-10-2006. HOWEVER, IN THE COPY OF THE AGREEMENT WHICH HAS BEEN FILED IN THE COURSE OF THE APPELLATE PROCEEDINGS, THE DATE HAS BEEN MANIPULATED AS 6-10-2005. 3 EVEN THE ASSESSEE HAS ACKNOWLEDGED THE RECEIPT OF ` 3,50,000/- ON 6 - 10 - 2006 AS PER COPY OF THE AGREEMENT FILED BEFORE THE A . O. THIS DATE HAS ALSO BEEN MANIPULATED IN THE COPY OF THE AGREEMENT FILED BEFORE THE CIT(APPEALS). 4. IN THE AFFIDAVIT SRI MD. AZEEMUDDIN HAS STATED THAT HE NEGOTIATED FOR A PROPERTY WITH THE ASSESSEE AND AN ADVANCE WAS GIVEN DIRECTLY TO THE ASSESSEE BY CHEQUES. IT IS SEEN FROM THE BANK ACCOUN T HELD BY THE ASSESSEE (WHICH IS AVAILABLE ON THE ASSESSMENT RECORDS) THAT NO AMOUNTS HAVE BEEN RECEIVED BY THE ASSESSEE FROM SRI MD. AZEEMUDDIN BY WAY OF CHEQUES DURING THE PREVIOUS YEAR RELEVANT TO THE A . Y.2006-07. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE IS TRYING TO SUBMIT THE MANIPULATED DOCUMENTS AND ALSO WRONG SUBMISSION BEFORE THE COMMISSIONER OF INCOME - TAX(APPEALS)-I, BANGALORE TO GET RELIEF IN HIS CASE. HE IS TRYING TO EXPLAIN THAT HE HAD RECEIVED THE AMOUNT O F ` 7,00,000/- DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2006-07 ITSELF WHICH IS INCORRECT IN VIEW OF THE FACTS STATED ABOVE. ITA NO.806(BANG)/2011 PAGE 10 OF 15 HENCE, I ONCE AGAIN REQUEST T HE COMMISSIONER OF INCOME - TAX (APPEALS)-I BANGALORE TO KINDLY REJECT THE AFFIDAVIT AND THE AGREEMENT FILED BY THE ASSESSEE AND CONFIRM THE ADDITION OF ` 7,00,000 /- MADE BY THE AO., AS THE ASSESSEE HAS TRIED TO EXPLAIN THE SOURCES FOR THE AMOUNT OF ` 7,00,000 /- BY WAY OF MANIPULATED DOCUMENTS'. 5.3. IN THE REJOINDER, THE ASSESSEE STATED AS UNDER : THE ADVANCE GIVEN DURING THE F.Y.ENDED 31-3-2005 TO ANF HOLDINGS HAS BEEN RECEIVED BACK HAS BEEN DEPOSITED BY YOUR APPELLANT INTO THE BANK A/C ANNEXURE-3 & ANNEXURE -4 5.4. THE LD.CIT(A), AFTER CONSIDERING THE STATEMENT OF THE ASSESSEE AND THE REMAND REPORT OF THE AO, CONSIDERE D THE COPY OF THE BANK ACCOUNT OF THE ASSESSEE WITH HDFC BANK. THE ENTRIES IN THE SAID ACCOUNT READ AS UNDER: SL. SL.SL. SL. NO. NO. NO. NO. DATE DATE DATE DATE NARRATION NARRATION NARRATION NARRATION CHQ CHQ CHQ CHQ /REF. /REF. /REF. /REF. NUMBER NUMBER NUMBER NUMBER VALUE VALUE VALUE VALUE DATE DATE DATE DATE WITHDRAWAL WITHDRAWAL WITHDRAWAL WITHDRAWAL AMOUNT AMOUNT AMOUNT AMOUNT DEPOSIT DEPOSIT DEPOSIT DEPOSIT AMOUNT AMOUNT AMOUNT AMOUNT 1 7 - 10 - 2005 CASH DEP - BANGALORE - KAS 7 - 10 - 05 - 4,00,000 2 6 - 12 - 2005 - DO - 6 - 12 - 05 1,00,000 3 9 - 12 - 2005 CHQ PAID MICR INW CLG-BLRE- 0777917 9 - 12 - 05 1,92,788 (PROPERTY ADV) - 4 9 - 12 - 2005 - DO - 0777 914 9 - 12 - 05 91,156 5 9 - 12 - 2005 CASH DEP - BANGALORE-KAS 9 - 12 - 05 - 2,40,000 6 12 - 12 - 2005 CHQ PAID MICR INW CLG-BLRE 0777916 12 - 12 - 05 39,378 - 7 13 - 12 - 2005 - DO - 0777915 12 - 12 - 05 26,678 - 8 9 - 12 - 2005 - DO - 0777917 9 - 12 - 05 1,92,788 - ON THE BASIS OF THE AFORESAID ACCOUNT, THE LD.CIT(A ) OBSERVED THAT THE ENTRIES DID NOT REFLECT ANY ENTRY OF `3,50 ,000 IN ANY OF THE DATES, BESIDES THE DATES DID NOT TALLY AT ALL W ITH THE CONTENTS OF THE AFFIDAVIT FILED BY THE ASSESSEE WHICH WAS NO T CORROBORATED BY ANY COGENT MATERIAL. HE, THEREFORE, DID NOT ACC EPT THE SAID ITA NO.806(BANG)/2011 PAGE 11 OF 15 AFFIDAVIT AS EVIDENCE AND ACCORDINGLY CONFIRMED THE ADDITION OF `7 LAKHS AND `2 LAKHS MADE BY THE AO. NOW, THE AS SESSEE IS IN APPEAL. 5.5. LEARNED COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT IN THE COPY OF THE CASH FLOW STATEME NT ONLY THE AMOUNT RECOVERED WAS SHOWN AS SOURCE OF CASH. OUR ATTENTION WAS DRAWN TO PAGE 9 OF THE ASSESSEES COMPILATION W HICH IS THE COPY OF CASH ACCOUNT AND IT WAS STATED THAT ON 6-10 -2005 AND 13-3-2006 THE ASSESSEE RECEIVED A SUM OF `3,50,000 ON EACH DATE FROM M/S.ANF HOLDING, THAT AMOUNT WAS RECOVERE D IN VIEW OF THE ADVANCE ALREADY GIVEN WHICH WAS APPEARING IN THE STATEMENT OF AFFAIRS OVER LIABILITIES AS ON 31-3-20 05. REFERENCE WAS MADE TO PAGE 7 OF THE ASSESSEES COMPILATION WH ICH IS COPY OF THE STATEMENT OF ASSETS OVER LIABILITIES AS ON 3 1-3-2005. IT WAS ACCORDINGLY SUBMITTED THAT THE ASSESSEE RECOVER ED THE ADVANCE DURING THE YEAR UNDER CONSIDERATION WHICH W AS EARLIER GIVEN TO M/S.ANF HOLDING. THEREFORE, THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION. AS REGARDS THE ADDITION OF `2 LAKHS, IT WAS STATED THAT THERE WAS A MISTAKE IN THE DATE WRI TTEN IN THE AGREEMENT COPY WHEREIN THE YEAR MENTIONED WAS 2006 INSTEAD OF 2005 WHICH HAS BEEN CERTIFIED BY FILING AN AFFID AVIT AND ALSO IN THE STATEMENT. THEREFORE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) WAS NOT JUSTIFIED. IT WAS CONTENDED THAT THE REAL ESTATE AGENT SHRI MD.AZEEMUDDIN, IN HIS AF FIDAVIT FURNISHED BEFORE THE LD.CIT(A), CLEARLY STATED THAT HE HAS RECEIVED THE SUM OF `5 LAKHS ON 21-3-2005 AND `2 LA KHS ON ITA NO.806(BANG)/2011 PAGE 12 OF 15 30-3-2005. THEREFORE, THE TOTAL AMOUNT OF `7 LAKHS WAS APPEARING IN THE STATEMENT OF ASSETS OVER LIABILITI ES AS ON 31-3- 2005. HOWEVER, BY MISTAKE, THE YEAR WAS PUT AS 200 6 INSTEAD OF 2005 AGAINST THE PAYMENT OF `2 LAKHS AND THIS FA CT WAS CLARIFIED BEFORE THE AO AS WELL AS THE CIT(A). THE REFORE, THE ADDITION WAS NOT JUSTIFIED. 5.6. IN HIS RIVAL SUBMISSIONS, THE LEARNED DEPARTM ENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5.7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH TH E PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL ON RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE ASSESSEE DE CLARED ADVANCE OF `7 LAKHS IN ITS ASSETS OVER LIABILITIES AS ON 31-3-2005 COPY OF WHICH IS AVAILABLE AT PAGE 7 OF THE ASSESSE ES COMPILATION. THE CLAIM OF THE ASSESSEE WAS THAT TH IS DOCUMENT WAS FURNISHED TO THE DEPARTMENT ALONG WITH RETURN O F INCOME FOR THE YEAR ENDING ON 31-3-2005 I.E. ASSESSMENT YEAR 2 005-06 AND THAT AMOUNT WAS CLAIMED TO HAVE RECEIVED IN THE FIN ANCIAL YEAR 2005-06 I.E. THE AY 2006-07, WHICH IS CLEAR FROM PA GE 7 OF THE ASSESSEES COMPILATION WHEREIN IT IS MENTIONED THAT A SUM OF `3,50,000 WAS RECEIVED ON 6-10-2005 AND A SIMILAR A MOUNT WAS ALSO RECEIVED ON 30-3-2006. SIMILARLY AS REGARDS ` 2 LAKHS PAID TO M/S.ANF HOLDING, THE CLAIM OF THE ASSESSEE IS TH AT THE SAID AMOUNT WAS PAID ON 21-3-2005. IN SUPPORT OF THAT CL AIM, THE ASSESSEE FURNISHED AFFIDAVIT OF SHRI MD.AZEEMUDDIN (REAL ESTATE AGENT), IN OUR OPINION, THIS ISSUE REQUIRES RE-CONS IDERATION AT THE LEVEL OF THE AO. THE ASSESSEE HAD ALREADY DISCLOSE D ALL THOSE ITA NO.806(BANG)/2011 PAGE 13 OF 15 FACTS ALONG WITH HIS RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2005-06 AND ADVANCE OF `7 LAKHS IS APPEARING I N THE NAME OF M/S.ANF HOLDING WHICH WAS CLAIMED TO HAVE BEEN R ECEIVED IN THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER CONSID ERATION, IF THAT FACT IS FOUND BY THE AO TO BE TRUE THEN NO ADD ITION FOR A SUM OF `7 LAKHS IS TO BE MADE. SIMILAR IS THE POSI TION WITH REGARD TO PAYMENT OF `2 LAKHS WHICH WAS CLAIMED TO HAVE BEEN MADE ON 31-3-2005 AND NOT 31-3-2006 AS MENTIONED IN THE AGREEMENT. ACCORDINGLY, THIS ISSUE IS ALSO SENT BAC K TO THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE AO SHOULD VERIFY FROM RECORDS AVAILABLE WITH HIM. HE SHOULD ALSO ALLOW A FAIR AND REASONABLE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 6. VIDE GROUND NO.5, THE GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITION OF `2,40,000/-. 6.1. FACTS RELATING TO THIS ISSUE IN BRIEF ARE THA T THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT A SUM OF `2,40,000 WAS SHOWN AS CASH DEPOSIT IN THE B ANK ACCOUNT ON 9-12-2006. THE CLAIM OF THE ASSESSEE WA S THAT THE SAID AMOUNT WAS DEPOSITED OUT OF THE DRAWINGS FROM BANK. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT WHENEVER THERE WAS SHORTAGE OF CASH, ASSESSEE WAS SHOWING RECEIPTS FROM M/S.ANF HOLDING AND THE ARGUM ENT THAT AMOUNT WAS WITHDRAWN FROM BANK TO BE KEPT AS CASH W AS NOT LOGICAL AS IF THE ASSESSEE DID NOT HAVE ANY REQUISI TION OF FUNDS HE WOULD HAVE KEPT THE AMOUNT IN BANK ITSELF. ITA NO.806(BANG)/2011 PAGE 14 OF 15 6.2. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT( A) WHO CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESS EE COULD FILE NO EXPLANATION. NOW THE ASSESSEE IS IN APPEAL. 6.3. LEARNED COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT THE AMOUNT IN QUESTION WAS DEPOSITED IN BANK ACCOUNT FROM THE EARLIER WITHDRAWALS. THEREFORE, T HE ADDITION WAS NOT JUSTIFIED. 6.4. IN HIS RIVAL SUBMISSIONS, LEARNED DEPARTMENTA L REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF CASH DEPOSIT IN THE BANK. THEREFORE, THE ADDITION WAS RIGHTLY MADE. 6.5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSE E DEPOSITED A SUM OF `2,40,000 IN HIS BANK ACCOUNT ON 9-12-2005 W HICH IS CLEAR FROM THE STATEMENT OF ACCOUNT FROM HDFC, COPY OF WHICH IS PLACED AT PAGE 12 OF THE ASSESSEES COMPILATION. BEFORE THE SAID DATE, THERE WERE CERTAIN CASH WITHDRAWALS. HO WEVER, IT IS NOT CLEAR AS TO WHETHER THOSE WITHDRAWALS WERE UTIL ISED ONLY FOR DEPOSITING THE AMOUNT IN QUESTION OR USED ELSEWHERE . IT APPEARS THAT NO PROPER EXPLANATION WAS GIVEN BY THE ASSESSEE TO THE AO OR TO THE LD.CIT(A). AT THE SAME TIME, I T CANNOT BE DENIED THAT THERE WERE CERTAIN CASH WITHDRAWALS BEF ORE DEPOSITING THE AMOUNT IN THE BANK. IN OUR OPINION, THIS ISSUE ALSO REQUIRES FRESH ADJUDICATION AT THE LEVEL OF TH E AO. WE, ITA NO.806(BANG)/2011 PAGE 15 OF 15 THEREFORE, SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND FAIR OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. GROUND NO.7 OF THE ASSESSEE RELATES TO CHARGING OF INTEREST U/SS.234A, 234B AND 234D OF THE ACT. REGA RDING THIS ISSUE, IT WAS THE COMMON CONTENTION OF BOTH THE PAR TIES THAT IT IS CONSEQUENTIAL IN NATURE. WE, ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2012 SD/- SD/- (SMT. P.MADHAVI DEVI) (SMT. P.MADHAVI DEVI) (SMT. P.MADHAVI DEVI) (SMT. P.MADHAVI DEVI) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER (N.K. SAINI) (N.K. SAINI) (N.K. SAINI) (N.K. SAINI) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE DATE : 22 ND MAY, 2012. EKS COPY TO : COPY TO : COPY TO : COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE