Sri D.S. Kumar, Tumkur V. DCIT, Tumkur

ITA 894/BANG/2009

• Counselvise Citation: 89421114 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 02-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment; Assessment record; Block assessment
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.894/BANG/2009 ASSESSMENT YEAR : 2004-05 SHRI D.S. KUMAR, SRINIVASA NILAYA, RAILWAY STATION ROAD, TUMKUR. : APPELLANT PAN : ACRPS1774L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, TUMKUR. : RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, C.A. RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADDL.CIT(DR) DATE OF HEARING : 22.06.2011 DATE OF PRONOUNCEMENT : 26.08.2011 O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF LD. CIT(APPEALS)-II, BANGALORE IN ITA NO.160/AC-C(1)/TM K/CIT(A)-II/08-09 DATED 24.6.2009 FOR THE A.Y. 2004-05 PASSED U/S. 25 0 R.W.S. 143(3), 144A OF THE ACT. ITA NO.894/BANG/09 PAGE 2 OF 7 2. THE ASSESSEE HAS RAISED FIVE GROUNDS IN HIS APPE AL WHEREIN GROUND NOS.1 & 5 ARE GENERAL IN NATURE AND DOES NOT REQUIR E ADJUDICATION. GROUND NO.4 RELATES TO INTEREST LIABILITY U/S. 234A, 234B & 234D OF THE ACT WHICH WE HEREBY HOLD IT TO BE CONSEQUENTIAL IN NATURE. THE OTHER TWO GROUNDS RELATE TO (I) ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVE STMENTS FOR RS.20 LAKHS BEING CAPITAL INTRODUCTION, (II) ADDITION MADE ON A CCOUNT OF LOAN RECEIVED FROM THE APPELLANTS WIFE FOR RS.21 LAKHS BEING UNE XPLAINED CREDITS. 3. THE ASSESSEE IS AN INDIVIDUAL TRADING IN INDIAN MADE FOREIGN LIQUOR (IMFL). THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.3.2006 SUBSEQUENT TO NOTICE U/S. 148 OF THE ACT ADMITTING AN INCOME O F RS.10,63,139/- AND AGRICULTURAL INCOME OF RS.1,75,000/-. THE INCOME D ISCLOSED BY THE ASSESSEE WAS UNDER THE HEADS; INCOME FROM BUSINESSE S (FROM VARIOUS UNITS), CAPITAL GAINS AND INCOME FROM OTHER SOURCES . IN THE FINAL ASSESSMENT ORDER, THE LD. AO MADE THE FOLLOWING TWO ADDITIONS WHEREBY THE ASSESSEE IS AGGRIEVED : (1) ADDITION ON ACCOUNT OF INTRODUCTION OF CAPITAL TO THE EXTENT OF RS.20 LAKHS. (2) ADDITION ON ACCOUNT OF LOAN RECEIVED FROM SMT. PADMA REKHA, WIFE OF THE ASSESSEE TO THE EXTENT OF RS.21 LAKHS. 4. WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF INTRODUCTION OF CAPITAL, THE LD. AO OBSERVED THAT THE INTRODUCTION OF CAPITAL OF RS.20 LAKHS FROM ACCUMULATED INCOME DURING THE EARLIER YEARS AN D FROM THE CONTRIBUTION OF HIS WIFE, SMT. PADMA REKHA WAS NOT SUPPORTED BY ANY TANGIBLE ITA NO.894/BANG/09 PAGE 3 OF 7 EVIDENCE. THERE WERE NO DETAILS WITH RESPECT TO T HE DATE OF INTRODUCTION OF THE CAPITAL AND THE MODE IN WHICH IT WAS RECEIVED. NO CASH FLOW STATEMENT WAS FURNISHED FOR VERIFICATION. BASED ON THESE REA SON LD.AO MADE AN ADDITION OF RS.20 LAKHS AS INCOME FROM UNEXPLAINED INVESTMENTS. 5. WITH RESPECT TO THE LOAN RECEIVED FROM SMT. PAD MA REKHA, WIFE OF THE ASSESSEE, IT WAS SUBMITTED THAT SMT. PADMA REKH A HAD DECLARED RS.2 CRORES UNDER VDIS SCHEME; HOWEVER LD. AO MADE THE F OLLOWING OBSERVATION AND MADE THE ADDITION TO THE EXTENT OF RS.21 LAKHS. (I) THE ASSESSEE HAD NOT FURNISHED ANY CASH FLOW ST ATEMENT OF SMT. PADMA REKHA. (II) THE ASSESSEE HAD NOT ESTABLISHED AS TO HOW THE PAYMENT WAS MADE BY SMT. PADMA REKHA TO HIM. (III) THE DETAILS OF AMOUNT RECEIVED BY HIM AND THE MODE OF RECEIPT WERE NOT EXPLAINED. (IV) SMT. PADMA REKHA HAD NOT MAINTAINED ANY BOOKS OF ACCOUNTS. (V) IT IS NOT REASONABLE TO BELIEVE THAT THE ASSESS EE OR HIS WIFE WAS MAINTAINING HUGE CASH BALANCE IN HAND. 6. BEFORE THE LD. CIT (APPEALS), THE APPELLANT FUR NISHED FUNDS FLOW STATEMENT OF SMT. PADMA REKHA FOR THE PERIOD 31.3.2 000 TO 31.3.2004 IN ORDER TO ESTABLISH THE GENUINENESS OF THE CLAIM WIT H RESPECT TO THE ACCUMULATION OF CAPITAL TO THE EXTENT OF RS.20 LAKH S. AFTER SCRUTINIZING THE FUNDS FLOW STATEMENT, THE LD. CIT(A) CAME TO THE FO LLOWING CONCLUSION:- ITA NO.894/BANG/09 PAGE 4 OF 7 (I) THE FUNDS FLOW STATEMENT FURNISHED BY THE ASSES SEE DOES NOT REFLECT THE CORRECT PICTURE OF THE FINANCIAL STATEM ENTS AND THUS IT CANNOT BE RELIED UPON. (II) OUT OF RS.2 CRORES DECLARED BY SMT. PADMA REKH A IN THE VDIS SCHEME, RS.65 LAKHS WAS APPLIED FOR PAYMENT OF TAX AND INTEREST. THE BALANCE OF RS.1,35,00,000/- WAS CLAI MED BY HER TO HAVE BEEN INVESTED AS SHARE APPLICATION MONEY. HOW EVER, FROM THE FUNDS FLOW STATEMENT, SUCH FACTS DO NOT EMERGE. THERE WAS NO EVIDENCE TO SHOW THAT SHARE APPLICATION MONEY WA S WITHDRAWN AND REINVESTED IN VARIOUS FIRMS AS STATED BY THE ASSESSEE. (III) THE CLAIM OF THE APPELLANT THAT THE CASH FLOW AND FUNDS FLOW STATEMENTS WAS BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS IS NOT CORRECT BECAUSE THEY DO NOT FORM PART OF THE ASSESSMENT RECORDS. (IV) BECAUSE OF THE FACTS MENTIONED ABOVE, THE LD. CIT(A) CONFIRMED THE ORDER OF THE LD. AO WITH RESPECT TO ADDITION MA DE ON ACCOUNT OF RS.20 LAKHS AS INCOME FROM UNEXPLAINED INVESTMEN TS. 7. THE LD. CIT(A) FURTHER REJECTED THE THEORY OF TH E APPELLANT FOR HAVING RECEIVED THE LOAN OF RS.21,00,000/- FROM HIS WIFE, SMT. PADMA REKHA, WITH THE FOLLOWING OBSERVATIONS: (I) THE STATEMENT SUBMITTED BY THE APPELLANT BEFORE THE APPELLATE AUTHORITY WAS NOT PART OF THE ASSESSMENT RECORDS AN D THEREFORE IT HAD NO SANCTITY. ITA NO.894/BANG/09 PAGE 5 OF 7 (II) IN THE REMAND REPORT DATED 20.2.2009, THE AO H AD RAISED SUSPICION AND REFUSED TO RELY ON IT. (III) ON VERIFICATION OF ASSESSMENT RECORDS, THE LD . CIT (A) NOTED THAT THE FUNDS FLOW STATEMENT SUBMITTED FOR THE YEAR END ED 31.3.2000 DID NOT BEAR THE SIGNATURE OF SMT. PADMA REKHA. T HE STATEMENT OF ACCOUNTS FOR THE SUBSEQUENT YEARS HAS NOT BEEN FILED. (IV) THE CLAIM OF THE APPELLANT WAS NOT SUPPORTED B Y ANY DOCUMENTARY EVIDENCE SUCH AS BALANCE SHEET, ETC. (V) COPIES OF THE STATEMENT OF AFFAIRS FILED FOR TH E YEAR ENDING 31.3.2003 AND 31.3.2004 ALSO DID NOT BEAR THE SIGNA TURE OF SMT. PADMA REKHA. 8. LD. AR SUBMITTED A PAPER BOOK CONSISTING OF 1 TO 62 PAGES CONTAINING WRITTEN SUBMISSIONS, FUNDS FLOW STATEMEN TS, CONFIRMATION LETTER FROM SMT. PADMA REKHA, VARIOUS STATEMENT OF AFFAIRS AND CASH FLOW STATEMENTS ETC AND COPY OF THE ORDER OF THE TRIBUNA L IN ITA NO.994/B/ IN ASSESSEES OWN CASE FOR THE A.Y. 2004-05. LD. AR SUBMITTED THAT THE APPELLANT HAD ADEQUATE FUNDS WHICH ARE FULLY EXPLAI NABLE WITH SUFFICIENT MATERIALS AND WERE FURNISHED BEFORE THE AUTHORITIES . THERE WAS A SEARCH IN THE CASE OF THE APPELLANT AND DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THE APPELLANT HAD FILED STATEMENT OF A FFAIRS, BOOKS OF ACCOUNTS, CASH FLOW STATEMENTS ETC. THE APPELLANT HAD MADE CASH FLOW STATEMENTS FOR THE YEAR 31.3.2001 ONWARDS, WHICH WA S ACCEPTED BY THE REVENUE. IN THE CASE OF SMT. PADMA REKHA, IT WAS E VIDENT FROM THE ITA NO.894/BANG/09 PAGE 6 OF 7 PROCEEDINGS THAT SHE HAD DECLARED RS.2 CRORES UNDER VDIS SCHEME FOR THE PERIOD ENDED 11.7.2000. WITH ALL THESE DETAILS, IT WAS APPARENT THAT THE ASSESSEE HAD BONAFIDE SOURCE FOR RS.41 LAKHS FOR WH ICH THE ADDITION MADE UNJUSTIFIABLE. 9. LD. DR VEHEMENTLY OPPOSED TO THE SUBMISSION OF L D. AR. LD. DR SUBMITTED THAT THE LD. AO AND THE LD. CIT(A) HAD TH OROUGHLY EXAMINED THE ISSUES BEFORE THEM FROM THE MATERIAL ON RECORD AND HAVE ARRIVED AT A FAIRLY REASONABLE CONCLUSION. HE FURTHER SUBMITTED THAT F ROM THE STATEMENT OF AFFAIRS FURNISHED BY THE APPELLANT BEFORE THE AUTHO RITIES, IT COULD NOT BE ESTABLISHED THAT THE ASSESSEE HAD BONAFIDE SOURCE T O THE EXTENT OF RS.41 LAKHS. IT WAS THEREFORE PRAYED THAT THE ORDER OF T HE LD. CIT(A) AND AO MAY BE CONFIRMED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIAL BEFORE US. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE ASSESSEE HAS NOT PRODUCED ANY COGENT EVIDENCE IN SU PPORT OF THE AVAILABILITY OF THE FUNDS WITH HIM. THE ASSESSEE C OULD NOT ESTABLISH WITH DOCUMENTARY EVIDENCE TO SHOW THE MODE OF CASH RECEI PTS FROM HIS WIFE SMT. PADMA REKHA. BANK STATEMENTS WERE NOT FURNISH ED BEFORE THE AUTHORITIES TO ESTABLISH SUCH PAYMENTS. SUCH HUGE PAYMENTS COULD NOT HAVE BEEN MADE BY CASH. LD. CIT(A) IN HIS ORDER H AD ALSO DISTINCTLY EXPRESSED VARIOUS DEFECTS OBSERVED BY HIM FROM THE EXAMINATION OF THE STATEMENT OF ACCOUNTS, FUNDS FLOW STATEMENT, ETC. P RODUCED BEFORE HIM. IN SUCH CIRCUMSTANCES, WE DO NOT FIND IT PROPER TO INT ERVENE WITH THE ORDERS OF THE REVENUE IN SUPPORT OF THE APPELLANT. THEREFOR E, WE HEREBY CONFIRM THE ORDER PASSED BY THE LD. CIT (A). ITA NO.894/BANG/09 PAGE 7 OF 7 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON 26/8/11. SD/- SD/- ( SMT. P. MADHAVI DEVI) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 26 TH AUGUST, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.