Nusra Imran, Bangalore V. ITO, Bangalore

ITA 844/BANG/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1614 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-01-2011
• Assessment Year: misc
• Appeal Filed On: 28-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI ADD L
• Keywords: Unexplained investment
• Section: 143(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 844/BANG/2010 ASSESSMENT YEAR : 2004 - 05 NUSRA IMRAN, NO.122/1, VEERANNA GARDEN STREET, MOORE ROAD CROSS, FRAZER TOWN, BANGALORE 560 005. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(2), BANGALORE. : RESPONDENT APPELLA NT BY : SHRI KIRAN KUMAR, ADVOCATE. RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADD L.CIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - I IN ITA NO.33/W - 1(2)/A - I/06 - 07 DATED 27.4.2010 FOR THE A.Y. 2004 - 05. ITA NO.844/BANG/10 PAGE 2 OF 6 2. THE ASSESSEE HAS RAISED TWO GROUNDS IN HER APPEAL AND ONE ADDITIONAL GROUND ON THE DATE OF THE HEARING AND THEY ARE LISTED HEREINBELOW: 1. SINCE THE ASSESSEE HAS NOT MADE ANY INVESTMENT DURING THE FINANCIAL YEAR 2003 - 04, THE ADDITION TO THE RETURNED INCOME U/S. 69 OF THE INCOME - TAX ACT, 1961, OF RS.2,00,000 BEING LOAN CREDITORS, IS UNJUSTIFIED. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE LOAN CREDITORS AGGREGATING TO RS.2,00,000 AS BONA FIDE. ADDITIONAL GROUND WITHOUT PREJUDICE TO ANY OTHER GROUNDS, AS NO INVESTMENT WAS MADE DURING THE FINANCIA L YEAR CONCERNED AND AS NO BOOKS OF ACCOUNT WERE MAINTAINED, THE ADDITION OF LOAN CREDITORS OF RS.2,00,000 IS LIABLE TO BE DELETED AS THE SAME IS CONTRARY TO SECS. 68 AND 69 OF THE INCOME - TAX ACT, 1961. 3. THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE A. Y. 2004 - 05 ON 31.3.2006 DECLARING AN INCOME OF RS.42,355 AND AGRICULTURAL INCOME OF RS.64,389. INITIALLY THE ASSESSMENT WAS COMPLETED U/S. 143(1) WHICH WAS LATER SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3) ON 22.12.2006 BY MAKING AN ADD ITION OF RS.2,00,000 U/S. 69 OF THE ACT. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, LD. ASSESSING OFFICER IN ORDER TO VERIFY THE LOAN OF RS.2 LAKHS RECEIVED BY THE ASSESSEE FROM 12 PERSONS WHICH WAS LESS THAN RS.20,000 FROM EACH, DEPUTED HIS INSPECTO R TO VERIFY THE ADDRESS. THE INSPECTOR SUBMITTED A REPORT IN RESPECT OF TWO PERSONS THAT NO SUCH PERSONS EXISTED ON THE GIVEN ADDRESS. THE LD. AO THEREFORE DISBELIEVED THE CLAIM OF THE ASSESSEE THAT SHE WAS IN RECEIPT OF LOAN OF RS.2 LAKHS FROM 12 PERSO NS LESS THAN RS.20,000 EACH AND ITA NO.844/BANG/10 PAGE 3 OF 6 BROUGHT THE SAME TO TAX U/S. 69 AS INCOME FROM UNEXPLAINED INVESTMENTS SINCE THE ASSESSEE IN HER RETURN OF INCOME HAD DISCLOSED IN HER STATEMENT OF AFFAIRS AS ON 31.3.2004 WHEREIN TWO ITEMS OF INVESTMENT WAS SHOWN VIZ., SITE AT NAGAVARA, BANGALORE AMOUNTING TO RS.1,89,000 AND SITE AT HOSUR AMOUNTING TO RS.34,815. 5. BEFORE THE LD. CIT(A), THE ASSESSEE PLEADED THAT THE ABOVE INVESTMENTS WERE MADE DURING THE A.Y. 2005 - 06 AND NOT IN A.Y. 2004 - 05 AND THEREFORE THE LD. AO HAD ERRED TO MAKE THE ADDITION U/S. 69 FOR THE RELEVANT ASSESSMENT YEAR. HOWEVER, THE LD. CIT(A) DISMISSED THE ASSESSEE S CONTENTION SINCE THE ASSESSEE HAD SHOWN HER ASSETS AS HER OWN IN THE STATEMENT OF AFFAIRS AS ON 31.3.2004. FURTHER, ON EXAMINING THE ISSUE OF LOAN RECEIVED BY THE ASSESSEE, THE LD. CIT(A) CAME TO A VIEW AFTER OBTAINING A REJOINDER FROM THE AO THAT THE LOAN TRANSACTIONS ARE NOT GENUINE, SINCE ALL THE PERSONS WHO ADVANCED THE LOAN WERE MEN OF MEAGER MEANS HAVING NUMBER OF DEPENDANTS AND NOT CAPAB LE OF ACCUMULATING SAVINGS. 6. LD. AR FORCEFULLY SUBMITTED BEFORE US THAT THE ASSESSEE HAD PRODUCED ALL THE 12 PERSONS FROM WHOM SHE BORROWED FUNDS BEFORE THE LD. CIT(A) AND STATEMENTS WERE RECORDED AND ALL THE PERSONS ADMITTED FOR HAVING LENT SUCH SUM TO T HE ASSESSEE. NAMES AND ADDRESS OF THESE PERSONS ALONG WITH THEIR OCCUPATION AND DETAILS OF FAMILY MEMBERS WERE ALSO FURNISHED. THESE PERSONS WERE EITHER THE FRIENDS OR RELATIVES OF THE ASSESSEE. THUS THE ASSESSEE HAD DISCHARGED HER ONUS BEFORE THE REVEN UE. LD. AR VEHEMENTLY ARGUED THAT THE FINDINGS OF THE LD. CIT(A) THAT ITA NO.844/BANG/10 PAGE 4 OF 6 THESE PERSONS WERE MEN OF MEAGER MEANS IS ERRONEOUS BECAUSE EACH OF THESE PERSONS OR THEIR SPOUSE WERE IN SOME OCCUPATION OR THE OTHER WITH GOOD EARNINGS. LD. AR FURTHER SUBMITTED THAT DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD NOT MADE ANY INVESTMENTS BUT HAD ERRONEOUSLY STATED SO IN THE STATEMENT OF AFFAIRS AS ON 31.12.2004. THE DATE OF THE INVESTMENTS AS PER THE SALE DEED MAKES IT EVIDENT THAT THE SITE AT NAGAVARA WAS PURC HASED ON 31.8.2004 FOR AN AMOUNT OF RS.1,89,000 AND THE SITE AT HOSUR WAS PURCHASED ON 1.6.2004 FOR AN AMOUNT OF RS.34,815. LD. AR FURTHER ARGUED THAT NO BOOKS OF ACCOUNTS WERE MAINTAINED BY THE ASSESSEE AND THEREFORE CREDITING OF ANY SUM IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ATTRACTING THE PROVISIONS OF SECTION 68 OF THE ACT CASH CREDITS DOES NOT ARISE. 7. LD. DR STOUTLY DEFENDED THE ORDER OF LD. AO AND LD.CIT(A) AND SUBMITTED THAT THE SOURCE OF RS.2 LAKHS WAS HIGHLY QUESTIONABLE. THE ASSESSEE COULD NOT HAVE OBTAINED THE LOAN FROM PEOPLE OF MEAGER INCOME SUCH AS AUTO DRIVERS, TEA STALL OWNERS, SCHOOL TEACHERS, PETTY SALESMEN, WELDERS, FOOT WEAR SELLERS, STREET PEDDLERS AND HOUSEWIVES. BY JUST PRODUCING THESE PERSONS BEFORE THE REVENUE ALONE DOES NOT ESTABLISH THAT THESE PERSONS HAD GENUINELY LENT SUM TO THE ASSESSEE. THE ASSESSEE SHOULD FURTHER ESTABLISH BEFORE THE REVENUE WHETHER THESE PERSONS WERE IN A POSITION TO LEND SUCH SUM TO THE ASSESSEE. LD. DR PRAYED FOR CONFIRMING THE ORDER OF THE LD. CI T(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED OVER THE RECORDS AVAILABLE BEFORE US MINUTELY. THE ASSESSEE HAS PRODUCED ALL THE PERSONS ITA NO.844/BANG/10 PAGE 5 OF 6 FROM WHOM SHE BORROWED BEFORE THE REVENUE. THE ONLY REASON FOR DISALLOWANCE BY THE LD. CIT(A) APPEARS TO BE FOR THE FACT THAT THESE PERSONS WERE MEN OF MEAGER MEANS HAVING NO SOURCE OF INCOME FOR SUCH ACCUMULATION OF FUNDS TO BE LENT TO THE ASSESSEE. WE DO NOT AGREE WITH THIS OBSERVATION OF THE LD. CIT(A). ALL THE PERSONS WHO LENT THE MONEY OR THEIR SPOUSE ARE I N SOME OCCUPATION OR THE OTHER IN THE CITY OF BANGALORE . THEIR CAPACITY TO EARN IS MUCH MORE THAN OBSERVED BY THE REVENUE. FOR EXAMPLE, THE INCOME FROM TEA STALL COULD BE MUCH MORE THAN RS.400 PER DAY, SIMILARLY AN AUTO DRIVER MAY ALSO EARN MORE THAN RS. 300 A DAY, A SCHOOL TEACHER MAY EARN MORE THAN RS.8,000 SINCE THEY HAVE A SCOPE FOR RENDERING PRIVATE TUITIONS, INCOME FROM SALE OF FOOTWEAR OR BELLS MAY FETCH SUBSTANTIAL INCOME SINCE THE MARGIN IN THESE PRODUCTS ARE HIGH. THE ASSESSEE HAS PRODUCED ALL T HE PERSONS FROM WHOM SHE HAS BORROWED BEFORE THE REVENUE THEREFORE SHE HAS DISCHARGED HER ONUS. THE REVENUE HAS NOT COME OUT WITH ANY CONCRETE FINDING TO DISPROVE THE CONTENTION OF THE ASSESSEE. FURTHER IT IS EVIDENT THAT THE DATE OF REGISTRATION OF THE IMMOVABLE PROPERTIES FALLS DURING THE SUBSEQUEN T ASSESSMENT YEAR. A WRONG SUBMISSION IN THE STATEMENT OF AFFAIRS CANNOT NAIL THE ASSESSEE WHEN HE HAS COME OUT WITH EVIDENCE AS TO HIS ACTUAL DATE OF INVESTMENT. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCE S OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED TO MAKE ADDITION OF RS.2 LAKHS U/S. 69 OF THE ACT. THEREFORE WE HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION OF RS.2 LAKHS MADE U/S. 69 OF THE ACT. 9. IN THE RESULT THE APPE AL OF THE ASSESSEE IS ALLOWED. ITA NO.844/BANG/10 PAGE 6 OF 6 PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF FEBR UARY, 2011 . SD/ - SD/ - ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 4 TH FEBR U ARY, 2011. DS/ - COPY TO: BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE. 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE