S.H. Bhagyalakshmi, Bangalore V. CIT - (APPEALS)-II, Bangalore

ITA 9/BANG/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5598 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRABHAKAR RAO J
• Assessee Lawyers: M JAGADEESH
• Keywords: Principle of natural justice; Source of fund; Reasonable cause
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.9/BANG/2011 ASSESSMENT YEAR : 2005-06 MRS. S.H. BHAGYALAKSHMI, AGED ABOUT 40 YEARS, W/O. MR. P. CHANDRAIAH, NO.190, SRIRAMA ROAD, T.R. NAGAR BANGALORE 560 028. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 3(3), BANGALORE. : RESPONDENT APPELLANT BY : SHRI M. JAGADEESH, ADVOCATE RESPONDENT BY : SHRI PRABHAKAR RAO, JCIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIREC TED AGAINST THE IMPUGNED ORDER OF THE LD. CIT (A)-II, BANGALORE, IN ITA NO.3 43/W-3(3)/CIT(A)-II/08-09 DATED: 15.3.2010 FOR THE ASSESSMENT YEAR 2005-06 . 2. THE ASSESSEE HAS RAISED FOUR GROUNDS I N HER GROUNDS OF APPEAL IN AN ILLUSTRATIVE AND NARRATIVE MANNER, HOWEVER, THE SUBSTANCES OF WHICH ARE CONFINED TO TWIN ISSUES, NAMELY: ITA NO.9/BANG/11 PAGE 2 OF 8 (I) THAT THE CIT(A) ERRED IN CONFIRMING THE STAND OF TH E AO IN ASSESSING RS.1.75 LAKHS AS INCOME OF THE ASSESSEE E VEN THOUGH IT WAS A LOAN RECEIVED FROM THE ASSESSEES F ATHER; & (II) THAT THE CIT (A) ALSO ERRED IN CONFIRMING THE STAND OF THE AO IN TREATING RS.1.96 LAKHS AS TAXABLE INCOME THOU GH THE ACTUAL CASH DEFICIT IN THE BOOKS OF ACCOUNT WAS ONL Y RS.1.61 LAKHS. 3. BEFORE VENTURE TO ADDRESS TO THE ASSESS EES GRIEVANCES, IT WAS NOTICED THAT THERE WAS A SUBSTANTIAL DELAY OF 233 D AYS IN INSTITUTING THIS APPEAL AGAINST THE IMPUGNED ORDER OF LD. CIT (A). THE ASSESSEE, IN HER AFFIDAVIT DATED: 7.1.2011, HAD SOLEMNLY AFFIRMED TH AT SHE WAS HOSPITALIZED FOR GYNECOLOGICAL PROBLEM AND WAS ADVISED TO TAKE B ED REST WHICH PREVENTED HER TO BRIEF THE COUNSEL TO TAKE NECESSAR Y COURSE OF ACTION AGAINST THE ORDER OF THE LD. CIT (A). IT WAS, THER EFORE, PLEADED THAT AS SHE WAS PREVENTED BY A REASONABLE CAUSE, THE DELAY IN P REFERRING THE APPEAL WITHIN THE STIPULATED TIME FRAME BE CONDONED ETC. 3.1. AFTER DUE CONSIDERATION OF THE ASSESSEES SUBMISSION AND ALSO THE CIRCUMSTANCE UNDER WHICH SHE WAS PLACED, THE DELAY OF 233 DAYS IN INSTITUTING THIS APPEAL WAS CONDONED AND THE REGIST RY WAS DIRECTED TO TAKE THE ASSESSEES APPEAL ON RECORD. 4. TURNING TO THE ISSUES RAISED, IT WAS N OTICED THAT THE ASSESSEE, AN INDIVIDUAL, ENGAGED IN THE PROFESSION OF FINANCIAL ACCOUNTING, FURNISHED HER RETURN OF INCOME FOR THE AY UNDER CHALLENGE ON 8.8. 2005 WHICH WAS PROCEEDED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS SUBJECTED TO SCRUTINY. AFTER DUE CONSIDERATION OF THE ASSESSEES EXPLANATION AND, ACCORDING TO THE AO, (I) WHEN THE ASSESSEES REPRESENTATIVE ITA NO.9/BANG/11 PAGE 3 OF 8 WAS REQUIRED TO RECONCILE THE DIFFERENCE IN CASH DE FICIT, HE HAD CONCEDED THAT THERE WAS A CASH DEFICIT OF RS.1.96 LAKHS AND AGREED FOR ASSESSING THE SAME IN THE ASSESSEES HANDS; AND (II) WITH REGARD TO THE ALLEGED LOAN OF RS.1.75 LAKHS RECEIVED FROM THE ASSESSEES FATHER, THE LD. A R HAD FAILED TO PRODUCE ANY EVIDENCE, BUT, CONSENTED FOR ADDITION, HE WENT AHEAD IN CONCLUDING THE ASSESSMENT BY TREATING RS.1.96 LAKHS AND RS.1.75 LAKHS AS THE ASSESSEES INCOME. 5. AGGRIEVED, THE ASSESSEE CARRIED TH E ISSUES BEFORE THE LD. CIT (A) FOR SOLACE. HOWEVER, THE LD. CIT (A), AFTER TA KING INTO ACCOUNT THE ASSESSEES CONTENTIONS AS WELL AS THE PERUSAL OF TH E RECORDS, TOOK DIVERGENT VIEWS WHICH ARE EXTRACTED, BRIEFLY, AS UN DER: (I) CASH CREDITS: 5THE FACTS AVAILABLE ON RECORD REVEAL THAT THE APPELLANT HAS BORROWED AN AMOUNT OF RS.1,75,000/- FROM SHRI HANUM ANTHAIAH, FATHER OF THE APPELLANT. THE APPELLANT HAS FURNISHED COPY OF THE CONFIRMATION FROM SHRI HANUMANTHAIAH FROM WHICH IT TRANSPIRES THAT TH E AMOUNT WAS RECEIVED IN CASH. THERE IS NO BASIC INFORMATION LIKE COMPLE TE ADDRESS OF THE LOAN CREDITOR, PAN, WARD/CIRCLE WHERE HE IS ASSESSED TO TAX. IT IS RELEVANT TO MENTION THAT, IN THE REMAND PROCEEDINGS, IN THE CAS E OF SHRI PUTTAIAH CHANDRAIAH (APPELLANTS HUSBAND) THE AO HAS RECORDE D THE STATEMENT FROM SHRI HANUMANTHAIAH, WHICH REVEALS THAT SHRI HANUMAN THAIAH IS A RETIRED COMMERCIAL TAX OFFICER OF THE STATE GOVERNMENT DRAW ING A PENSION OF RS.8000/- PER MONTH AND HE IS ALSO WORKING IN AN AU DITORS OFFICE ON A SALARY OF RS.2600/MONTH. APART FROM THIS, HE IS RE CEIVING RENTAL INCOME OF RS.4000/MONTH AND ALSO GETTING RS.10000/MONTH FROM HIS SON WHO IS EMPLOYED. THUS, HE IS GETTING AMOUNT AGGREGATING T O RS.24600/MONTH. HE ADMITTED THAT HE LENT TO SHRI PUTTAIAH CHANDRAIAH B Y WAY OF CASH OF RS.50000/-. SINCE THE SOURCE OF FUND HAD BEEN CLAI MED IN RESPECT OF THE LOAN GIVEN TO SHRI PUTTAIAH CHANDRAIAH, IN MY APPELLATE ORDER ITA NO.343/W 3(3)/CIT(A)-II/08-09 DATED 5.3.2010 CREDITS TO THE EXTENT OF RS.50000/- WERE DECIDED IN HIS FAVOUR. 5.1. AS DISCUSSED ABOVE, SHRI HANUMANTHAIAH HAS GIV EN LOAN TO SHRI P. CHANDRAIAH OUT OF SOURCES MENTIONED ABOVE AND NO FU RTHER AMOUNT WAS ITA NO.9/BANG/11 PAGE 4 OF 8 AVAILABLE TO MAKE ADVANCE TO THE APPELLANT. THE LO AN SAID TO HAVE BEEN GIVEN TO THE APPELLANT REMAINS UNEXPLAINED. EVEN T HE LOAN CONFIRMATION LETTER FURNISHED BY THE APPELLANT IS FOUND TO BE DE FECTIVE AND THE SAME WAS NOT AUTHENTICATED BY THE APPELLANT. THUS, IT HAS N O EVIDENTIARY VALUE. IN VIEW OF THE FACTS MENTIONED ABOVE, I DO NOT FIND IN FIRMITY IN THE AOS ACTION IN BRINGING THE AMOUNT OF RS.175000/- TO TAX.: (II) DEFICIENCY IN CASH BOOK OF RS.196625/- : 6.3. THE APPELLANT HAS FURNISHED COPY OF DAILY S UMMARY FOR THE PERIOD 1/4/2004 TO 6/6/2004 WHICH SHOWS THAT CASH SHORTAGE ON 5/6/2004 WAS RS.1,61,091/-. HOWEVER, NO EXPLANATION WAS OFFERED WITH REGARD TO THE SHORTAGE OF CASH BEFORE THE AO AND THE APPELLANT AG REED FOR ADDITION. THE APPELLANTS ONLY GRIEVANCE IS THAT THE CASH SHORTAG E WAS ONLY RS.1,61,091/- AND NOT RS.1,96,625/-. RECORDS SUGGEST THAT THE AO HAS WORKED OUT THE DEFICIT IN CASH FROM THE DETAILS FURNISHED BY THE A PPELLANT WHICH WAS ACCEPTED BY HER AT THE TIME OF ASSESSMENT PROCEEDIN GS AND NO SUCH DEFICIENCY WAS POINTED OUT TO HIM. SINCE SUCH DIFF ERENCE WAS NOT CONTESTED BEFORE THE AO, THE APPELLANTS PLEA CANNOT BE ACCEP TED AT THIS STAGE.. 6. AGITATED, THE ASSESSEE HAS COME UP WI TH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, IT WAS VEHEMENTLY ARG UED BY THE LD. A R THAT - THE FACT THAT RS.1.75 LAKHS RECEIVED AS LOAN FROM THE FATHER OF THE APPELLANT WAS ERRONEOUSLY INCLUDED IN THE INCOME AS SESSABLE FOR TAX; THAT A LETTER OF CONFIRMATION FROM SHRI HANUMANTHAIAH WA S DULY PRODUCED BEFORE THE CIT (A) THAT THE SAID AMOUNT WAS PROVIDE D AS HAND LOAN TO THE APPELLANT; THAT THE CIT (A) ERRED WITHOUT EXAMINING HIM IN PERSON, CONFIRMED THE LOAN BY TAKING INFORMATION AVAILABLE IN A SIMILAR MATTER PERTAINING TO THE APPELLANTS HUSBAND; - WITH REGARD TO THE CASH DEFICITS, SUBMISSION WAS MADE, HOWEVER, THE AO ERRONEOUSLY COMPUTED AS RS.1.96 LAKHS WHEREAS THE A CTUAL THE CASH DEFICIT IN THE BOOKS OF ACCOUNT OF THE APPELLANT AS ON 5.6. 2004 WAS ONLY RS.1.61 LAKHS; THAT BY OVERLOOKING THE CORRECT POSITION, TH E LD. CIT (A) ERRED IN UPHOLDING THE ORDER OF THE AO ON THIS POINT. 6.1. ON THE OTHER HAND, THE LD. D R WAS VE RY FIRM IN HIS CONVICTION THAT THE TWIN ISSUES HAVE SINCE BEEN THOROUGHLY ANA LYZED AND CONCLUDED JUDICIALLY BY THE LD. CIT (A) WHICH REQUIRES NO INT ERVENTION OF THIS BENCH AT ITA NO.9/BANG/11 PAGE 5 OF 8 THIS STAGE. IT WAS, THEREFORE, PASSIONATELY PLEADE D THAT THE STAND OF THE LD. CIT (A) BE SUSTAINED. 7. WE HAVE CAUTIOUSLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO DILIGENTLY GONE THROUGH THE RELEVANT RECORDS. IT W AS THE CASE OF THE LD. AO THAT THE ASSESSEES A R WAS SPECIFICALLY REQUIRED T O FURNISH CONCRETE EVIDENCE TO PROVE THE RECEIPT OF RS.1.75 LAKHS FROM THE ASSESSEES FATHER. THE LD. A R HAD FAILED TO PRODUCE ANY DOCUMENTARY E VIDENCE, BUT, GRACIOUSLY, ACCORDING TO THE AO, CONSENTED FOR SUCH AN ADDITION. DURING THE APPELLATE PROCEEDINGS, THE LD. CIT (A) HAD ANAL YZED THE ISSUE AT LENGTH AND ALSO NOTED THAT THE LD. AO, DURING THE COURSE O F REMAND PROCEEDINGS IN THE CASE OF ASSESSEES HUSBAND, RECORDED THE STATEM ENT OF SHRI HANUMANTHAIAH [WHO ALLEGED TO HAVE LENT RS.1.75 LAK HS TO THE ASSESSEE] WHEREIN HE HAD ADMITTED THAT HE LENT TO SHRI PUTTAI AH CHANDRAIAH CASH OF RS.50,000/-. ON THE BASIS OF SUCH AN ADMISSION, TH E LD. CIT (A) HAD ACCEPTED THAT THE LOAN AMOUNT OF RS.50000/- STANDS EXPLAINED HOWEVER DID NOT ACCEPT THE ASSESSEES CLAIM OF HAVING RECEIVED RS.1,75,000/- FROM HER FATHER. 7.1. ON PERUSING THE RECORDS PLACED BEFORE US WE FIND THAT THE ASSESSEE HAD EXPLAINED THAT APPELLANT HAD BORROWED A CASH LOAN OF RS.1,75,000/- (RS.ONE LAKH SEVENTY FIVE THOUSAND ONLY) FROM HER F ATHER MR. HANUMANTHIAH ON JUNE 5, 2004 FOR THE PURPOSE OF PAYMENT OF AMOUN T TOWARDS PURCHASE OF A BANGALORE DEVELOPMENT AUTHORITY SITE AT BANASHANK ARI II STAGE, BANGALORE, BY THE HUSBAND OF THE APPELLANT HEREIN [SOURCE: PARA 2.B. OF STATEMENT OF FACTS ON PAGE 3 OF FORM NO.36]. THOUGH THE LD. AO HAS ITA NO.9/BANG/11 PAGE 6 OF 8 COMMENTED THAT THE ASSESSEE HAD NOT PRODUCED ANY EV IDENCE TO SUBSTANTIATE THAT SHE HAS RECEIVED RS. 1,75,000/- F ROM HER FATHER THE LD. CIT(A) HAD CONCEDED THAT THE ASSESSEE HAD FURNISHED CONFIRMATION LETTER FROM HER FATHER SHRI HANUMANTHAIAH BEFORE HIM. THE ONLY GROUSE OF THE LD.CIT(A) WAS THAT COMPLETE ADDRESS, PAN,WARD/CIRC LE WHERE HE IS ASSESSED TO TAX WAS NOT FURNISHED. MOREOVER THE LD. CIT(A) WAS OF THE OPINION THAT SHRI HANUMANTHAIAH THE ASSESSEES FATH ER WHO IS A RETIRED COMMERCIAL TAX OFFICER OF THE STATE GOVERNMENT THOU GH HIS GROSS INCOME IS RS. 24,600/- PER MONTH HAVING ALREADY ADVANCED R S. 50,000/- TO THE APPELLANTS HUSBAND WOULD NOT BE IN A POSITION TO A DVANCE A FURTHER SUM OF RS. 1,75,000/- TO HIS DAUGHTER. THIS SWEEPING REMAR K OF THE LD.CIT(A) IS NOT ACCEPTABLE. IT IS NOT UNCOMMON IN OUR SOCIAL EN VIRONMENT TO RECEIVE FINANCIAL HELP FROM ONES FATHER. FURTHER THE APPELL ANTS FATHER ALONG WITH HIS PENSION INCOME IS ALSO IN RECEIPT OF FINANCIAL SUPP ORT FROM HIS OTHER SIBLINGS AND, THUS, HAS A SOUND BACKGROUND. THEREFORE IT IS OBVIOUS THAT HE WOULD BE IN A POSITION TO SUPPORT HIS DAUGHTER WITH A SUM OF RS. 1,75,000/- ESPECIALLY WHEN IT COMES TO ACQUIRING OF A BUILDING SITE. FROM THE LD.CIT(A)S ORDER PARA 5, IT IS EVIDENT THAT THE AP PELLANTS FATHER HAD APPEARED BEFORE THE LD.AO, WHO IN TURN HAD RECORDED HIS STATEMENTS. HE HAS ALSO SUBMITTED CONFORMATION LETTER FOR THE AMOU NT PAID TO HIS DAUGHTER. 7.2. IN AN OVERALL CONSIDERATION OF THE FAC TS AND CIRCUMSTANCES OF THE ISSUE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. C IT (A) HAS ERRED IN COMING TO A CONCLUSION THAT THE LD. AO WAS JUSTIFIE D IN BRINGING RS.1.75 LAKHS TO TAX IN THE HANDS OF THE ASSESSEE. ACCORDI NGLY THE ADDITION MADE ON THIS COUNT IS DELETED. ITA NO.9/BANG/11 PAGE 7 OF 8 8. WITH REGARD TO DEFICIENCY IN CASH BOO K, WE FIND THAT THE LD. AO WENT AHEAD IN BRINGING TO TAX OF RS.1.96 LAKHS IN T HE ABSENCE OF RECONCILIATION OF THE DIFFERENCE. WHEN THE ASSESSE E HAD FURNISHED A COPY OF DAILY SUMMARY FOR THE PERIOD 1.4.2004 TO 6.6.2 004 WHICH SHOWED THE CASH SHORTAGE ON 5.6.2004 WAS ONLY RS.1.61,091/- AS AGAINST RS.1,96,625/- , THE LD. CIT (A), IN STEAD OF ANALYZING THE ISSUE, TOOK A STAND THAT SINCE NO EXPLANATION WAS OFFERED WITH REGARD TO THE SHORTAGE OF CASH BEFORE THE AO AND THE APPELLANT AGREED FOR ADDITION AND, THEREFOR E, DECIDED THE ISSUE AGAINST THE ASSESSEE. 8.1. THE STAND OF THE LD. CIT (A), IN OUR CONSIDERED VIEW, IS AGAINST THE INTEREST OF NATURAL JUSTICE AND FAIRNESS. THE AO HAD, PERHAPS, WORKED OUT THE DEFICIT IN CASH FROM THE DETAILS AVAILABLE WITH HIM. THOUGH THE ASSESSEE BEING MAGNANIMOUS IN CONCEDING THAT THERE WAS A CASH DEFICIT, HOWEVER, HER GRIEVANCE IS CONFINED TO THE FACT THAT THE CASH SHORTAGE WAS ONLY RS.1,61,091/-, BUT , NOT RS.1,96,625/-. 8.2. IN VIEW OF THE ABOVE, WE ARE OF T HE FIRM VIEW THAT THIS ISSUE SHOULD BE LOOKED INTO AFRESH WITH REFERENCE TO DAI LY SUMMARY FURNISHED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. TO FACILITATE THE LD. AO TO ADDRESS TO THE GRIEVANCE OF THE ASSESSEE, THIS ISSU E IS REMITTED BACK TO THE FILE OF THE LD. AO WITH A SPECIFIC DIRECTION TO LOO K INTO THE ISSUE AFRESH AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE P ROVISIONS OF THE ACT, OF COURSE, AFTER AFFORDING A REASONABLE OPPORTUNITY OF THE ASSESSEE OF BEING HEARD. IN THE MEANWHILE, THE ASSESSEE, THROUGH HER LD. A R, IS ADVISED TO FURNISH THE RELEVANT DETAILS TO THE LD. AO WHICH WO ULD FACILITATE HIM TO ITA NO.9/BANG/11 PAGE 8 OF 8 IMPLEMENT THE DIRECTION OF THIS BENCH EXPEDITIOUSLY . IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, THE ASSESSEES A PPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MAY, 2011. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 20 TH MAY, 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.