Bimal Chandra Hazra, Kolkata V. ITO, WD-52(2), KOLKATA, Kolkata

ITA 834/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4144 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 19-10-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 02-05-2014
• Court: TRIBUNAL
• Department Lawyers: S M SURANA
• Assessee Lawyers: BANIBRA DUTTA
• Keywords: Unexplained cash credit; Income from undisclosed sources
• Section: 143(3); 68; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI K. NARASIMHA CHARY, JM & DR. A.L.SAINI , AM ./ ITA NO.834/KOL/2014 ( / ASSESSMENT YEAR :2006-07) SHRI BIMAL CHANDRA HAZRA C/O P.K.MATHUR, ADVOCATE, 1 MEREDITH STREET, KOLKATA- 700072 VS. INCOME TAX OFFICER, WARD - 52(2) AAYAKAR BHAVAN, DAKSHIN, 2 GARIAHAT ROAD, KOLKATA-700072 ./ ./PAN/GIR NO. : ABCPH 5382F ( /APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : S.M. SURANA, ADVOCATE /ASSESSEE BY : SHRI BANIBRA DUTTA, ADDL.CIT / DATE OF HEARING : 19/10/2016 /DATE OF PRONOUNCEMENT 05/12/2016 / O R D E R PER DR.ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO THE ASSESSMENT YEAR 2006-2007, IS DIRECTED AGAINST THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, KOLKAT A IN APPEAL NO.123/CIT(A)-XXXIII/ITO WARD/52(2)/KOL/09-10, DATE D 16.01.2014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESS ING OFFICER U/S.143(3) OF THE INCOME TAX ACT (IN SHORT THE ACT), DATED 3 0.12.2008. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE MADE CASH DEPOSIT OF RS. 35,50,000/- IN HIS BANK AC COUNT WITH THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, ULTANDANGA BRANCH, KOLKATA ON VARIOUS DATES DURING THE FINANCI AL YEAR 2005-06. THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE APPE ARED BEFORE THE ASSESSING OFFICER AND SUBMITTED HIS EXPLANATION THR OUGH LETTER DATED 27- ITA NO.834/14 2 12-2008 STATING THAT THE FOLLOWING AMOUNTS WERE DEP OSITED IN CASH IN HIS HSBC BANK ACCOUNT ON THE FOLLOWING DATES: ON 01.07.2005 RS.9,00,000 ON 04.07.2005 RS.9,00,000 ON 04.07.2005 RS.2,00,000 TOTAL RS.20,00,000 THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF SUCH C ASH DEPOSITS OF RS.20,00,000/- IN HIS BANK ACCOUNT DURING THE F.Y.2 005-06. IN VIEW OF THE ASSESSEE`S INABILITY TO SUBSTANTIATE THE CLAIM OF C ASH DEPOSITS BY PRODUCING THE ACTUAL SOURCE OF SUCH DEPOSITS, THE S AME IS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT,1961 . AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS), WHO HAS ALSO CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER OB SERVING THE FOLLOWINGS: HENCE, WHILE THE APPELLANT`S CONTENTION REGARDING THE BANK ACCOUNT AND DEPOSITS BELONGING TO SMT. PRITILATA HAZRA IS FOUND TO BE INCORRECT, THE SOURCES OF FUNDS INCLUDING THE NATURE AND SOURCE OF THE AFORESAID ADVANCES REFUNDED BY RECEIVED FROM M/S SURNIMAN AND SHRI DURLAB CH.MAL IN HER HANDS CAN ALSO NOT BE CONSIDERED TO B E PROPERLY EXPLAINED. HENCE, I HOLD THAT THE ADDITION OF RS. 20,00,000/- WAS RIGHTLY MADE BY THE ASSESSING OFFICER, AS THE NATURE AND SOURCE OF THE DEPOSITS MADE IN APPELLANT`S BANK ACCOUNT WERE NOT SATISFACTORILY EX PLAINED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. THE ADDITION OF RS.20,00,000/- IS CONF IRMED. 3. NOT BEING SATISFIED WITH THE ORDER OF THE LD. CI T(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE ADDITION OF RS.20,00,000/- ON ACCOUNT OF UNEXPLAINE D CASH CREDIT ITA NO.834/14 3 U/S 68 IS UNFAIR, BASED ON NO EVIDENCE AND BASED ON INCONGRUOUS FACTUAL PREMISES. 2.THAT THE ASSESSEE CRAVE, LEAVE TO ADD, ALTER AND AMEND ANY GROUND OF GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 3.1 THE LD AR FOR THE ASSESSEE HAS VEHEMENTLY SUBMI TTED THAT FIRST OF ALL THE MONEY OF RS.20,00,000/- DOES NOT BELONG TO HIM BUT IT BELONG TO HIS WIFE. THE ASSESSING OFFICER DID NOT SUMMON HIS WIFE TO EXPLAIN THE SAID MONEY. ASSESSEE AND HIS WIFE ARE JOINT BANK HOLDERS AND MONEY BELONGED TO HIS WIFE ONLY. ASSESSEE`S WIFE NAME WAS ADDED TO THE BANK ACCOUNT AS JOINT HOLDER AFTER SOME TIME, DOES NOT M EAN THAT MONEY DOES NOT BELONG TO HER. ASSESSEE HAD EXPLAINED BEFORE TH E LD.CIT(A), THAT THE BANK ACCOUNT WITH HSBC, ULTADANGA BRANCH & EKADLIA BRANCH WAS BELONG TO SMT. PRITILATA HAZARA SPOUSE OF ASSESSEE AND WAS DULY SHOWN IN HER INCOME TAX RETURN. ASSESSEE ALSO SUBMITTED A FFIDAVIT IN HIS CONTENTION STATING THE FACT. THE LD AR ALSO SUBMITT ED THAT ASSESSING OFFICER DID NOT CONSIDER THE ASSESSEE`S AFFIDAVIT ( STATING THE FACT) AND TOTALLY IGNORED THE FACT THAT THE BANK ACCOUNT WAS NOT BELONGED TO THE ASSESSEE. THE LD AR FURTHER SUBMITTED THAT WIFE OF THE ASSESSEE SMT. PRITILATA HAZARA HAVING PAN NO. ABRPH6514L ASSESSE D U/S 143(3) BY ITO WARD 52(4) FOR A.Y. 2006-07. SHE HAD FILED THE HSBC BANK ACCOUNT BEFORE THE ASSESSING OFFICER, IN HER OWN ASSESSMENT U/S 143(3) OF THE ACT AND THE ASSESSING OFFICER ACCEPTED THE SAME IN HIS ORDER DATED 31/12/2008 STATING THE FOLLOWINGS: IN COURSE OF HEARING THE A/R OF THE ASSESSEE FIL ED DETAILS OF INVESTMENTS MADE IN DIFFERENT MUTUAL FUNDS AND COPY OF BANK ST ATEMENT ITA NO.834/14 4 THE LD. AR POINTED OUT THAT WHERE THE SAID BANK ST ATEMENT HAD BEEN ACCEPTED BY THE ASSESSING OFFICER IN ASSESSEE`S WIF E ASSESSMENT U/S 143(3) THEN THE SAME SHOULD NOT BE INCLUDED IN ASSE SSEE`S ASSESSMENT. APART FROM THE MERITS OF THE CASE, THE LD AR ALSO P UT BEFORE US AN ALTERNATIVE ARGUMENT STATING THAT THE SAID ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 IS NOT JUSTIFIED. THAT IS, THE SAID ADDITION MADE BY AO DOES NOT FIT IN THE AMBIT OF SECTION 68 OF THE I .T.ACT, BECAUSE THE BANK PASS BOOK IS NOT BOOKS OF ACCOUNTS OF THE ASSESSEE. IN ORDER TO MAKE ADDITION U/S 68 OF THE ACT, THE AMOUNT SHOULD BE CR EDITED IN THE BOOKS OF THE ASSESSEE. BANK PASSBOOK IS NOT BOOKS OF ACCOUNT S OF THE ASSESSEE HENCE THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. TO SUPPORT HIS PLEA THE LD AR HAS RELIED ON THE FOLLOW ING JUDGMENTS:- (1).124 ITR 94 ( PAT.HC) LAXMI NARAIN GUPTA VS. CIT : WE WILL FIRST CLARIFY A MISTAKE WHICH HAS BEEN COM MITTED BY THE DEPARTMENT WHILE ADDING THE INCOME FROM UNDISCLOSED SOURCES. A N INCOME FROM UNDISCLOSED SOURCES, IF CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE, IS LIABLE TO BE ASSESSED UNDER S.68 OF THE ACT, BUT IF SUCH INCOME FROM UNDISCLOSED SOURCES, THOUGH INVESTED, HAS NOT BEEN RECORDED IN THE ASSES SES BOOKS OF ACCOUNTS, SUCH INVESTMENT IS LIABLE TO BE ASSESSED IN TERMS O F SECTION 69 OF THE ACT. NOW, IN THE INSTANT CASE, THE INCOME FROM UNDISCLOSED SO URCES, WHICH IS SAID TO HAVE BEEN EARNED BY THE ASSESSEE, WAS ADMITTEDLY NOT CRE DITED IN THE BOOKS OF ACCOUNT MAINTAINED BY HIM, BUT PART OF IT HAD BEEN INVESTED IN THE FIRM IN WHICH HE IS A PARTNER AND IT WAS NOT KNOWN WHERE ITS OTHE R PART WAS LYING. THUS,IF AT ALL, SO FAR AS THE INVESTED PART IS CONCERNED, IT C OULD HAVE BEEN ASSESSED IN TERMS OF S.69 OF THE ACT, BUT IN NO CASE UNDER S. 6 8 OF THE ACT. (2.) 143 ITD 686: ITO V. KAMAL KUMAR MISHRA (LUCK-T RIB) 7. THE AFORESAID PROVISIONS OF SECTION 68 OF THE A CT CAN ONLY BE INVOKED WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATIONS OFFER ED BY HIM IS NOT IN THE OPINION OF THE INCOME TAX OFFICER,SATISFACTORY. 9 IN THE INSTANT CASE IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND WHATEVER CREDI T ENTRIES FOUND BY ITA NO.834/14 5 THE ASSESSING OFFICER, IT WAS FROM THE BANK ACCOUNT S OF THE ASSESSEE IN WHICH DEPOSITS WERE MADE AT DIFFERENT POINT OF TIME . EVEN THE PASSBOOK ISSUED BY THE BANK CANNOT BE TERMED TO BE THE BOOKS OF THE ASSESSEE AS PER THE JUDGMENT OF THE HON`BLE BOMBAY HIGH COURT B HAICHNAD N GANDHI (SUPRA). THEREFORE, THE PROVISIONS OF SECTION 68 CA NNOT BE INVOKED ON VARIOUS DEPOSITS/ CREDITS FOUND RECORDED IN THE BAN K ACCOUNT OF THE ASSESSEE IN THE ABSENCE OF BOOKS OF THE ASSESSEE MA INTAINED FOR THAT PREVIOUS YEAR. (3) 171 ITR 532 ( P & H-HC)SHANTA DEVI V. CIT PERUSAL OF SECTION 68 OF THE INCOME TAX ACT WOULD SHOW THAT IN RELATION TO THE EXPRESSION BOOKS THE EMPHASIS IS ON THE WO RD ASSESSEE. IN OTHER WORDS, SUCH BOOKS HAVE TO BE THE BOOKS OF THE ASSESSEE HIMSELF AND NOT OF ANY OTHER ASSESSEE. IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSEE MAINTAINED NO BOOKS OF ACCOUNT. THE CASH C REDIT ENTRY OF WHICH THE SUM IN QUESTION FORMS PART, WAS FOUND IN THE BO OKS THE ACCOUNT OF THE PARTNERSHIP FIRM WHICH IN ITS OWN RIGHT IS AN ASSES SEE. IN THE ABOVE VIEW OF THE MATTER, THE BOOKS OF ACCOUNT OF THE PARTNERSHIP FIRM HEREIN CANNOT BE CONSIDERED AS THOSE OF THE INDIVIDUAL ASSESSEE HERE IN AND THEREFORE, SECTION 68 OF THE INCOME TAX ACT WOULD NOT BE ATTRA CTED TO THE PRESENT CASE. THE ABOVE VIEW RECEIVES SUPPORT FROM LAXMI NA RAIN GUPTA V.CIT [1980] 124 ITR 94 (PAT). NO DECISION TAKING A CONTR ARY VIEW HAS BEEN BROUGHT TO OUR NOTICE AT THE BAR. FOR THE REASON AF OREMENTIONED, WE ANSWER THE QUESTION IN THE NEGATIVE, I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND DISPOSE OF THE REFERENCE AC CORDINGLY. NO COSTS. (4) 223 ITR 544 ( GAU-HC): ANAND RAM RAITANI VS. CI T IN THIS CONNECTION, MR.BHATTACHRJEE HAS DRAWN OUR ATTENTION TO A DECISION OF A PUNJAB AND HARYANA HIGH COURT IN SMT. SHANTA D EVI V. CIT [1988] 171 ITR 532 (P &H). IN THE SAID DECISION, THE PANJA B & HARYANA HIGH COURT HAD THE OCCASION TO CONSIDER A SIMILAR POINT. WHILE DECIDING THE POINT THE COURT OBSERVED THAT A PERUSAL OF SECTION 68 OF THE ACT SHOWS THAT IN RELATION TO THE EXPRESSION BOOKS, THE EMP HASIS IS ON THE WORD ASSESSEE MEANING THEREBY THAT SUCH BOOKS HAVE TO BE THE BOOKS OF THE ASSESSEE HIMSELF AND NOT OF ANY OTHER ASSESSEE. A P ARTNERSHIP FIRM IS AN ASSESSABLE ENTITY DISTINCT FROM THE INDIVIDUAL PART NER. THE BOOKS OF ACCOUNTS OF A PARTNERSHIP CANNOT BE TREATED AS THOS E OF THE INDIVIDUAL PARTNER. WE ARE IN RESPECTFUL AGREEMENT WITH THE DE CISION AND CONCLUSION ARRIVED AT BY THE PUNJAB AND HARYANA HIGH COURT. IN VIEW OF THE ABOVE, WE ANSWER THE QUESTION IN NEGATIVE I.E. IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. (5) 141 ITR 67 (BOM-HC) CIT, POONA VS. BHAICHAND H GANDHI IN VIEW OF THIS, THE TRIBUNAL WAS, WITH RESPECT, J USTIFIED IN HOLDING THAT THE PASSBOOK SUPPLIED BY THE BANK TO THE ASSESSEE IN TH E PRESENT CASE COULD NOT BE REGARDED AS A BOOKS OF THE ASSESSEE, THAT IS , A BOOK MAINTAINED BY THE ASSESSEE OR UNDER HIS INSTRUCTIONS. IN OUR VIEW , THE TRIBUNAL WAS JUSTIFIED IN THE CONCLUSIONS AT WHICH IT ARRIVED. ITA NO.834/14 6 3.4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRES ENTATIVE (DR) HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSI NG OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA NO.2 AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 3.5 HAVING HEARD THE RIVAL SUBMISSIONS, PURSED THE MATERIAL AVAILABLE ON RECORD, VIEW ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE, AS THE PROPOSITION CANVASSED BY THE LD.AR FOR THE ASSESSEE ARE SUPPORTED BY THE ABOVE CITED JUDGMENTS/ PRECEDENTS AND THE FACTS EXPLAINED BY HIM. ASSESSEE AND HIS WIFE IS JOINT BA NK HOLDER AND MONEY BELONGED TO HIS WIFE ONLY. ASSESSEE`S WIFE NAME WAS ADDED TO THE BANK ACCOUNT AS JOINT HOLDER AFTER SOME TIME, DOES NOT M EAN THAT MONEY DOES NOT BELONG TO HER. THE LD AR STATED THAT THE ASSESS EE HAD EXPLAINED BEFORE THE LD.CIT(A), THAT THE BANK ACCOUNT WITH HS BC, ULTADANGA BRANCH & EKADLIA BRANCH WAS BELONG TO SMT. PRITILATA HAZAR A SPOUSE OF ASSESSEE AND WAS DULY SHOWN IN HER INCOME TAX RETURN. ASSESS EE ALSO SUBMITTED AFFIDAVIT IN HIS CONTENTION STATING THE FACT. THE L D AR ALSO SUBMITTED THAT ASSESSING OFFICER DID NOT CONSIDER THE ASSESSEE AFF IDAVIT STATING THE FACT AND TOTALLY IGNORE THE FACT THAT THE BANK ACCOUNT W AS NOT BELONGED TO THE ASSESSEE. THE LD AR FURTHER SUBMITTED THAT WIFE OF THE ASSESSEE SMT. PRITILATA HAZARA HAVING PAN NO. ABRPH6514L ASSESSE D U/S 143(3) BY ITO WARD 52(4) FOR A.Y. 2006-07. SHE HAD FILED THE HSBC BANK ACCOUNT BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFI CER ACCEPTED THE SAME. THEREFORE, THE BANK ACCOUNT HAS ALREADY BEEN SHOWN IN THE ITA NO.834/14 7 INCOME TAX RETURN OF ASSESSEE`S WIFE AND THE SAME CANNOT AGAIN ASSESSABLE IN THE HAND OF THE ASSESSEE. THE LD AR ALSO POINTED OUT THAT ASSESSMENT ORDER CA NNOT BE ENLARGED BY THE CIT(A) AND OTHER AUTHORITIES. THE SUPERIOR AUTH ORITIES SHOULD DECIDE THE CASE AS PER ASSESSMENT ORDER/REMAND REPORT TAKE N FROM LOWER AUTHORITIES. THE LD AR FURTHER POINTED OUT WITH HELP OF THE JUDI CIAL PRECEDENTS CITED ABOVE THAT BANK PASS BOOK/BANK STATEMENT IS NOT B OOKS OF ACCOUNT OF THE ASSESSEE. AS PER THE SCHEME OF SECTION 68 OF TH E ACT THE AMOUNT SHOULD BE CREDITED IN THE BOOKS OF THE ASSESSEE THE REFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS NOT JUSTIFIED. BASED ON THE FACTUAL POSITION OF THE CAS E UNDER CONSIDERATION AND THE JUDICIAL PRECEDENTS CITED BY THE LD AR, WE ARE OF THE VIEW THAT ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRME D BY THE LD CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADD ITION. 3.6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05/1 2/2016. SD/ - (K.NARASIMHA CHARY) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 05/12/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT -SHRI BIMAL CHANDRA HAZRA 2. / THE RESPONDENT-ITO, WARD-52(2), KOLKATA 3. & ( ) / THE CIT(A), KOLKATA. 4. & / CIT 5. '( ) * , * , / DR, ITAT, KOLKATA 6. ) + / GUARD FILE. ITA NO.834/14 8 / BY ORDER, / ( ASSTT. REGISTRAR) & ' , / ITAT, ' //TRUE COPY//