Sri. Shridhar G. Hebbar, Uttarakannada V. ITO, Hubli

ITA 847/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51402 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2011
• Assessment Year: misc
• Appeal Filed On: 28-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Keywords: Unexplained investment; Loose papers; Source of fund
• Section: 143(3); 133A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.847/B ANG/2010 (ASST. YE AR 2006-07) SRI SHRIDHAR G HEBBAR C/O SRI G.D HEBBAR, IDAGUNDI, YELLAPUR, DT. UTTAR KANNADA. . APPELLANT VS. THE INCOME-TAX OFFICER, WARD 3(1), HUBLI. . RESPONDENT APPELLANT BY : SHRI BALRAM R RAO REVENUE BY : SMT. SUSAN THOMAS JOSE DATE OF HEARING : 15-12-2011 DATE OF PRONOUNCEMENT : 29-12-2011 O R D E R PER SMT. P MADHAVI DEVI, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), HUBLI DATED 24.03.2010. ITA NO.847/B/10 2 THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U /S 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CI T(A) IN CONFIRMING THE ADDITION MADE BY THE AO AND HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL : I. THE HONBLE CIT(A) HAS ERRED IN CONCLUDING, THAT THE APPELLANT HAS DONE BUSINESS IN BETTLENUTS BASED ON THE LOOSE PAPERS FOUND DURING SURVEY WHICH THE APPELLANT HAS DENIED FROM THE VERY INCEPTION AND HENCE THE ADDITION OF RS.1,08,000/- BROUGHT TO TAX AS INCOME FROM BUSINESS BE DELETED. II. THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,27,000/- UNDER EXPLAINED CASH CREDITS WITHOUT CONSIDERING THE DETAILS OF APPELLAN T SOURCES OF INCOME FROM AGRICULTURE WHICH WERE SUBMITTED BEFORE THE HONBLE CIT(A) AND AS SUCH THE SAME IS LIABLE TO BE DELETED. III. THE HONBLE CIT(A) IS ERRED IN CONFIRMING TH E ADDITION OF RS.1,59,412/- ON ACCOUNT OF INVESTMENT MADE ON ALLEGED PURCHASE OF JEWELLERY FOR WANT OF ITA NO.847/B/10 3 SOURCES, WHICH IS NOT CORRECT AS THE APPELLANT HAS PROVIDED SOURCES FROM AGRICULTURE WHICH IS NOT CONSIDERED BY THE HONBLE CIT(A) AND HENCE HAS TO BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. A SURVEY U/S 133A HAD BEEN CARRIED OUT IN THE BUSIN ESS PREMISES OF M/S KAMADHENU MEDICALS ON 20.09.2005. DURING THE C OURSE OF SURVEY, CERTAIN BOOKS OF ACCOUNTS AND DOCUMENTS WER E FOUND AND IMPOUNDED. VERIFICATION OF THE IMPOUNDED MATERIAL INDICATED THAT THE ASSESSEE IS WORKING IN M/S KAMADHENU MEDICALS, A PR OPRIETARY CONCERN OF HIS BROTHER SHRI M.G HEBBAR, AS AN EMPLO YEE AND HE ALSO DERIVES REMUNERATION FOR THE SERVICES RENDERED. BE SIDES BEING AN EMPLOYEE, HE IS ALSO FOUND TO BE DOING BUSINESS IN BEETELNUT AND ALSO EARNING INTEREST INCOME FROM MONEY ADVANCED TO OTHE R PARTIES. IN VIEW OF THE SAME, A NOTICE U/S 142(2) WAS SERVED ON THE ASSESSEE ON 25.11.2005 CALLING FOR RETURN OF INCOME. THE ASSES SEE FILED HIS RETURN OF INCOME ON 11/10/2007 DECLARING A TOTAL INCOME OF RS.21,600/-. IN THE RETURN OF INCOME, THE ASSESSEE ADMITTED THAT HE IS WORKING AT M/S KAMADHENU MEDICALS ON A REMUNERATION OF RS.3,000/- P.M AND HAS ACCORDINGLY OFFERED RS.21,600/- AS INCOME FROM SALA RY. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), AO OB SERVED THAT IN THE ITA NO.847/B/10 4 LOOSE SHEET FOUND IN THE BUSINESS PREMISES OF M/S K AMADHENU MEDICALS, A TRADING & PROFIT AND LOSS ACCOUNT WAS D RAWN FOR THE YEAR ENDED 31.3.2005. IT WAS OBSERVED THAT IT RELATES T O BEETALNUT BUSINESS OF THE ASSESSEE AND THE TURNOVER FROM THE SAID TRAD ING ACCOUNT WAS RS.20,16,000/-. THE AO ON SCRUTINY OF THE BANK ACC OUNT OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS TAKEN A CC LOAN FROM VIKAS URBAN BANK, YELLAPUR AND THERE ARE NO BUSINESS TRAN SACTIONS IN THE SAID ACCOUNT. FURTHER, THE AO ALSO OBSERVED THAT T HE ASSESSEE IS ALSO MAINTAINING ACCOUNTS WITH STATE BANK OF INDIA AND V ARADA GRAMINA BANKS AT YELLAPUR AND THERE ARE BANK TRANSACTION SP READ OVER THROUGHOUT THE YEAR AND THAT THE VOLUME OF BANK TRA NSACTIONS INDICATE THAT HE IS DOING BUSINESS AND THAT THE LOOSE SHEET CONTAINING THE TRADING AND PROFIT AND LOSS ACCOUNT ESTABLISHES THE SAME. AS THE ASSESSEE FAILED TO DISCLOSE THE SAID ACTIVITY TO TH E DEPARTMENT, HE WORKED OUT THE NET PROFIT FROM THE SAID BUSINESS AT 5% OF THE TURNOVER AS PER THE PROVISION OF SEC. 44AF AND WORKED OUT IT OUT TO RS.1,08,000/- AND BROUGHT IT TO TAX AS INCOME FROM BUSINESS. AS REGARDS THE CASH CREDITS IN THE BANK ACCOUNTS, AS T HE ASSESSEE COULD NOT GIVE ANY EXPLANATIONS, THE SAME WERE TREATED AS UNE XPLAINED CASH CREDIT U/S 69 AND DEEMED TO BE ASSESSEES INCOME. ITA NO.847/B/10 5 4. DURING THE COURSE OF SURVEY, CERTAIN LOOSE SHE ETS WERE ALSO FOUND WHICH INDICATED THAT THE ASSESSEE HAD PURCHAS ED GOLD JEWELLARY WORTH RS.1,59,412/- BUT THE ASSESSEE COULD NOT EXPL AIN THE SOURCE FOR INVESTMENT IN PURCHASE OF THIS JEWELLERY AND THE SA ME WAS ALSO TREATED AS UNEXPLAINED INVESTMENT U/S 69 AND ADDED TO THE A SSESSEES INCOME. 5. AGGRIEVED BY THESE ADDITIONS, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE ASSESSEE HAS NEV ER CARRIED ON THE BEETELNUT BUSINESS. AS REGARDS THE SOURCE OF CASH DEPOSITS TO THE BANK AND ALSO INVESTMENT IN JEWELLARY, THE ASSESSEE EXPL AINED THAT THIS IS FROM HIS AGRICULTURAL INCOME. HOWEVER, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO AND THE ASSESSEE IS IN SECO ND APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI BALRA M R RAO, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BE FORE THE AUTHORITIES BELOW, SUBMITTED THAT THE ASSESSEE HAS NEVER CARRIE D ON THE BEETELNUT BUSINESS AND EVEN IF ITS IS TO BE CONSIDERED THAT T HE ASSESSEE IS CARRYING ON THE BETEL NUT BUSINESS, THEN IT HAS TO BE TREATED AS AGRICULTURAL INCOME, AS IT IS THE AGRICULTURAL PROD UCE FROM HIS OWN FARM LAND. ITA NO.847/B/10 6 7. THE LEARNED DR HOWEVER REBUTTED THIS ARGUMENT ST ATING THAT THE ASSESSEE HAD NOWHERE STATED THAT THE BEETELNUT HAS BEEN GROWN IN THE FARM LAND AND THAT THE AGRICULTURAL PRODUCE WAS FR OM THEIR OWN LAND. SHE SUBMITTED THAT THIS ARGUMENT OF THE ASSESSEE IS NOTHING BUT AFTER THOUGHT. ACCORDING TO THE LEARNED DR, THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE DOCUMENT FOUND DURING THE COURSE OF SURVEY DID NOT BELONG TO THE ASSESSEE AND THAT THE ASSESSEE HAS NO T CARRIED ON BEETELNUT BUSINESS. ACCORDING TO HER, THE ADDITION IS JUSTIFIED. 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORDS, WE FIND TH AT THE DOCUMENT PURPORTED TO BE TRADING AND PROFIT AND LOSS ACCOUNT RELATING TO BEETELNUT BUSINESS OF THE ASSESSEE HAS BEEN FOUND D URING THE COURSE OF SURVEY CONDUCTED IN THE PREMISES OF M/S KAMADHENU M EDICALS. THE ASSESSEE HAS NOT DENIED THE FINDING THAT THE DOCUME NTS BELONGS TO HIM EITHER BEFORE THE AUTHORITIES BELOW OR BEFORE US. THE ONLY ARGUMENT OF THE ASSESSEE WAS THAT THE HE IS NOT CARRYING ON THE BUSINESS AND EVEN IF IT IS TO BE CONSIDERED AS BUSINESS, IT IS NOTHING B UT AGRICULTURAL INCOME. THIS ARGUMENT OF THE ASSESSEE IS NOTHING BUT AN AFT ERTHOUGHT AS HE HAS NEVER RAISED SUCH CONTENTIONS BEFORE THE AUTHORITIE S BELOW. IN VIEW OF THE SAME, WE ARE INCLINED TO ACCEPT THE FINDING OF THE CIT(A) AND DO ITA NO.847/B/10 7 NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE CIT(A) ON THIS ISSUE. THE ADDITION IS ACCORDINGLY CONFIRMED. 9. AS REGARDS THE OTHER TWO GROUNDS, THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT HIS FAMILY CONSISTS OF HIS FATHER AND THREE BROTHERS, WHICH FORMS AN HUF AND OWNS AND POSSESSE S AGRICULTURAL LAND OF NEARLY 20 ACRES. HE SUBMITTED THAT HIS SHA RE OF AGRICULTURAL INCOME IS THE SOURCE FOR THE DEPOSIT INTO THE BANK ACCOUNT AND ALSO FOR INVESTMENT IN JEWELLEARY. HE PLACED RELIANCE UPON THE DECISION OF HONBLE A BENCH OF THE TRIBUNAL IN THE CASE OF M/ S MAHABALESHWAR G HEBBAR IN ITA NOS.347 TO 351 FOR THE ASSESSMENT Y EARS 2001-02 TO 2005-06, WHEREIN THE ISSUE HAS BEEN SET ASIDE TO TH E FILE OF THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE LAND HOLDINGS BELONG TO THE ASSESSEE OR HIS FATHER AND IF IT IS FOUND TO B E HELD IN THE NAME OF HIS FATHER, THEN TO VERIFY THE ASSESSEES SHARE IN THE SAID LAND HOLDING AND THEREAFTER ATTRIBUTE THE INCOME FROM THE AGRICU LTURE TO THE SHARE OF THE ASSESSEE AND IF IT IS SUFFICIENT TO EXPLAIN THE SOURCE OF CASH CREDITS INTO BANK, THEN TO DELETE THE ADDITION. HE SUBMITT ED SIMILAR DIRECTION MAY BE GIVEN IN ASSESSEES CASE ALSO. THOUGH THE LE ARNED DR OPPOSED THE SAID PLEA, SHE ADMITTED THAT SHRI MAHABALESHWAR G HEBBAR IS THE BROTHER OF THE ASSESSEE. ITA NO.847/B/10 8 10. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE ASSESSEES BROTHER IS RUNNING A MEDICAL SHOP IN THE NAME OF M/S KAMADHENU MEDICALS AND THE SURVEY WAS CONDUCTED IN THIS MEDICAL SHOP. IT IS ALSO RECORDE D IN THE SAID ORDER THAT AN ASSESSEE THEREIN WAS THE MEMBER OF THE HUF, WHICH HAD AGRICULTURAL LAND AND THEREIN IT WAS ACCEPTED THAT FROM THE RORS ASSESSEES FATHER IS THE OWNER OF THE LAND. ACCEPTI NG THE SAID FACT, IT HAD BEEN DIRECTED TO VERIFY AND DELETE THE ADDITION , IF THE ASSESSEES CONTENTION IS FOUND TO BE CORRECT. AS THE ASSESSEE IS THE BROTHER OF SHRI SHRI N.G HEBBAR AND HE IS ALSO PART OF THE HUF, WE ARE INCLINED TO GIVE SIMILAR DIRECTION TO THE AO. IN VIEW OF THE S AME, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUES OF THE SOURCE OF CAS H CREDITS AND ALSO INVESTMENT IN JEWELLERY TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY AS TO WHETHER THE LAND HOLDINGS BELONGED TO THE ASS ESSEE OR TO HIS FATHER AND IF THEY ARE HELD IN THE NAME OF HIS FATH ER, THEN TO VERIFY THE ASSESSEES SHARE IN THE SAID LAND HOLDINGS AND THER EAFTER ATTRIBUTE INCOME FROM AGRICULTURE FROM THE SHARE OF THE ASSES SEE AND IF IT IS SUFFICIENT TO EXPLAIN THE SOURCE OF CASH CREDITS IN TO THE BANK AND ALSO INVESTMENT IN JEWELLARY, THEN THE ADDITION SHALL B E DELETED. THESE TWO GROUNDS ARE ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. ITA NO.847/B/10 9 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DEC, 2011. SD/- SD/- (N.K SAINI) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 29/12/2011 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.