Shri.B.K.Badarinath, Kolar V. Income-Tax Officer, Kolar

ITA 909/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5278 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 909/BANG/2016 ASSESSMENT YEAR : 2009-10 SHRI B.K. BADARINATH, OPP. TOWN POLICE STATION, GOWRIPET, KOLAR. PAN: AGKPB 2529B VS. THE INCOME TAX OFFICER, WARD 1, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI R. CHANDRASHEKAR, ADVOCATE RESPONDENT BY : SHRI M.K. BIJU, JCIT DATE OF HEARING : 24.05.2017 DATE OF PRONOUNCEMENT : 07.06.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 24.02.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2009-10. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 909/BANG/2016 PAGE 2 OF 8 1.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 25,52,905/- MADE BY THE LEARNED ASSESSING AUTHORITY FOR THE ASSESSME NT YEAR 2009-10 UNDER UN-EXPLAINED DEPOSIT INTO BANK. 2.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD DEPOSIT RELATES TO JOINT HINDU UNDIVIDED FAMILY TO WHICH THE APPELLANT IS KARTHA. 3.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THE SOURCE FOR DEPOSIT INTO BANK IS OUT OF THE SALE PROCEEDS OF THE PROPERTY AND WHICH SALE IS ASSESSED TO CAPITAL GAINS IN THE HANDS OF HUF ASSESSED UNDER PAN AAGHB9555H 4.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING CASH FLOW STATEMENT OF THE HUF, WHEREIN IT IS EXPLAINED THE SOURCE FOR DEPOSIT IN BANK AND WHICH CASH FLOW STATEMENT WAS CONSIDERED I N THE CASE OF SMT. B. JAYASREE, THE APPELLANTS WIFE, FOR THE PURPOSE OF DELETING THE ADDITION MADE IN HER HA NDS IN PROCEEDINGS U/S 264 OF THE ACT. 5.THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMING THE ADDITION OF RS. 25,52,905/- IS OPPOSED TO LAW AND ADDITION IS N OT WARRANTED IN THE APPELLANTS CASE. 6.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE LEVY OF INTEREST CHARGED U/ S 234 B OF THE ACT AND THE LEVY IS OPPOSED TO THE DECISIO N OF HONBLE HIGH COURT OF KARNATAKA RENDERED IN THE CAS E T.P. INDRAKUMAR VS. ITO (322 ITR 454). APPELLANT CRAVES LEAVE OF THE HONBLE TRIBUNAL TO ADD/MODIFY/DELETE ANY OTHER GROUND OR GROUNDS AT TH E TIME OF HEARING. 2. THE ASSESSEE IS AN INDIVIDUAL AND FILED RETURN OF I NCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 23.09.2009 D ECLARING AN INCOME OF RS. 1,80,000/-. THE AO WHILE COMPLETING THE ASS ESSMENT U/S. 143(3) HAS MADE AN ADDITION OF RS. 25,52,905/- ON ACCOUNT OF DEPOSITS MADE IN ITA NO. 909/BANG/2016 PAGE 3 OF 8 SAVINGS BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A). THE CIT(A) ISSUED A R EMAND ORDER ASKING THE AO TO CONSIDER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AS WELL AS CASH FLOW STATEMENT. THE AO FILED HIS COMMENTS AND REMAND REPORT. THE CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 3. BEFORE THE TRIBUNAL THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DULY EXPLAINED THE SOURCE OF DEPOSIT OF RS . 25 LAKHS AS IT WAS RECEIVED FROM HUF ON ACCOUNT OF SALE PROCEEDS OF PR OPERTY. FURTHER THE ASSESSEE FILED THE CASH FLOW STATEMENT OF HUF SHOWI NG THE CREDIT WORTHINESS OF THE HUF FOR DEPOSIT OF RS. 25 LAKHS I N THE BANK ACCOUNT. THE LD. AR HAS POINTED OUT THAT A HUF PROPERTY SITU ATED AT KOLAR WAS SOLD IN THE FINANCIAL YEAR 2008-09 AND THE CAPITAL GAIN ON SALE OF SAID PROPERTY WAS ALSO SHOWN IN THE RETURN OF INCOME FIL ED BY THE HUF. THE INCOME OF THE HUF WAS ASSESSED UNDER SEPARATE PAN A ND THEREFORE THERE WAS SUFFICIENT FUND WITH THE HUF OF THE ASSESSEE TO SOURCE THE DEPOSITS OF RS. 25 LAKHS IN THE BANK ACCOUNT OF THE ASSESSEE. HE HAS FURTHER POINTED OUT THAT IN THE CASE OF THE WIFE OF THE ASSESSEE TH E CASH DEPOSIT OF RS. 23 LAKHS WAS ACCEPTED BY THE AO WHILE CONSIDERI NG THE CASH FLOW STATEMENT OF HUF. THUS THE LD. AR HAS SUBMITTED TH AT THE TOTAL FUND AVAILABLE WITH THE HUF AS ON 31.03.2009 WAS RS. 62, 67,451/- AND THE ITA NO. 909/BANG/2016 PAGE 4 OF 8 ASSESSEE FURNISHED THE CASH FLOW STATEMENT SHOWING THE APPLICATION OF THAT FUND WHICH INCLUDES THE INVESTMENT MADE IN THE DEPO SITS IN THE BANK IN THE NAME OF THE ASSESSEE AS WELL AS HIS WIFE. HE H AS FURTHER POINTED OUT THAT THOUGH THE CIT(A) DIRECTED THE AO TO FILE THE REMAND REPORT HOWEVER, WHILE PASSING THE IMPUGNED ORDER THE CIT(A ) HAS NOT CONSIDERED THE REMAND REPORT FILED BY THE AO. THER EFORE, WHEN THE AO IN THE REMAND REPORT HAS ACCEPTED THE AVAILABILITY OF THE FUND WITH THE HUF THEN THE ADDITION MADE BY THE AO IS NOT SUSTAIN ED. 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E CIT(A) HAS CONSIDERED THE CASH FLOW STATEMENT OF HUF AND FOUND THAT THE ASSESSEE HAS NOT GIVEN THE EXPLANATION ABOUT THE BOOK DEBTS AND OTHER INVESTMENT OF RS. 12,84,000/- AS WELL AS PAWN BROKING ADVANCES OF RS. 3,76,480/-. THEREFORE TO THE EXTENT OF THE SAID AMOUNT OF MORE THAN RS. 16 LAKHS THE ASSESSEE FAILED TO FURNISH THE EXPLANATION. HE HAS REFERRED TO THE FINDING OF THE CIT(A) IN PARA 6 AND SUBMITTED THAT THE CIT( A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE CASH FLOW STATEMENT OF HUF FOUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE S OURCE OF THE DEPOSIT OF RS. 25 LAKHS. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 909/BANG/2016 PAGE 5 OF 8 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS EXPLAINED THE SOURCE OF D EPOSIT OF RS. 25 LAKHS IN THE BANK ACCOUNT AS THE FUND AVAILABLE WITH THE HUF AND FILED THE CASH FLOW STATEMENT OF HUF FOR THE FINANCIAL YEAR 2008-0 9. IT IS PERTINENT TO NOTE THAT THE AO HAS NOT EXAMINED THE RELEVANT RECO RD AND SOURCE OF THE DEPOSIT AND MADE THE ADDITION BY RECORDING THE REAS ON THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AGREED FOR THE ADDIT ION. WHEN THE ASSESSEE CHALLENGED THE ORDER OF THE AO AND FILED THE WRITTE N SUBMISSIONS AS WELL AS CASH FLOW STATEMENT OF HUF TO SHOW THE SOURCE OF DEPOSIT OF RS. 25 LAKHS, THE CIT(A) SENT THE SAID RECORD TO TH E AO FOR HIS COMMENTS AND FILING OF THE REMAND REPORT. IN THE REMAND REP ORT THE COPY OF WHICH HAS BEEN FILED BY THE ASSESSEE AT PAGE NO. 1 AND 2 OF THE PAPER BOOK THE AO HAS STATED THAT THE INCOME ARISING ON ACCOUNT OF CAPITAL GAIN FROM SALE OF PROPERTY WAS DULY TO OFFER TO TAX IN THE RETURN OF INCOME FILED BY THE JOINT HUF. THE AO FURTHER NOTED THAT THE INTEREST EARNED ON FIXED DEPOSIT HAS ALSO BEEN REFLECTED IN THE RETURN OF IN COME FILED BY THE JOINT HUF. FURTHER THE AO FOUND THAT THE COMMISSIONER OF INCOME TAX IV BANGALORE IN THE PROCEEDINGS U/S. 264 OF THE IT ACT IN CASE OF SMT. B. JAYASHREE THE WIFE OF THE ASSESSEE ACCEPTED THE SOU RCE OF THE DEPOSIT IN THE ACCOUNT OF THE WIFE AS FUND AVAILABLE WITH THE HUF SHOWN IN THE CASH FLOW STATEMENT. THE AO FURTHER RECORDED IN THE REM AND REPORT THAT ON ITA NO. 909/BANG/2016 PAGE 6 OF 8 PERUSAL OF THE ASSESSMENT RECORD OF THE HUF IT IS E VIDENT THAT SUCH DETAILS WERE AVAILABLE. FURTHER THE AO HAS CLARIFIED THAT THE ASSESSEE HAS NOT GIVEN THE CONSENT FOR A SUM OF RS. 25,52,905/- BUT WHAT WAS ACCEPTED WAS THAT DEPOSIT WAS OF RS. 25 LAKHS AND NOT RS. 25,80, 000/- AS REPORTED IN THE AIR. IT IS PERTINENT TO NOTE THAT THE CIT(A) WHILE PASSING THE IMPUGNED ORDER HAS NOT MADE ANY REFERENCE OF REMAND REPORT F ILED BY THE AO. THUS IT IS APPARENT THAT THE IMPUGNED ORDER HAS BEEN PAS SED BY THE CIT(A) WITHOUT CONSIDERING THE REMAND REPORT OF THE AO. T HOUGH THE CIT(A) HAS RAISED AN ISSUE OF BOOK DEBTS AND PAWN BROKING ADVANCES HOWEVER, WITHOUT CONSIDERING THE REMAND REPORT OF THE AO RAI SING THESE DOUBTS ABOUT THE AVAILABILITY OF THE FUND WITH THE HUF AND WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SAME IS NOT PERMISSIBLE. ONCE THE CIT(A) HAS ASKED THE AO TO FILE THE REMAND REPO RT AFTER CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE THEN NON-CONSIDE RING OF THE REMAND REPORT WHILE PASSING THE IMPUGNED ORDER AMOUNTS VIO LATION OF PRINCIPLE OF NATURAL JUSTICE AS THE CONTENTION OF THE ASSESSEE A S CONSIDERED BY THE AO WERE NOT CONSIDERED BY THE CIT(A). EVEN OTHERWISE WHEN THE HUF HAS SHOWN THE AVAILABILITY OF FUND OF RS. 62,67,451/- I N THE CASH FLOW STATEMENT ALONG WITH THE APPLICATION OF FUND WAS AL SO EXPLAINED WHICH INCLUDES THE DEPOSITS MADE IN THE BANK IN THE NAME OF SMT. B. JAYASHREE OF RS. 23 LAKHS AND FURTHER A SUM OF RS. 25 LAKHS I N THE NAME OF THE ITA NO. 909/BANG/2016 PAGE 7 OF 8 ASSESSEE THEN IN THE ABSENCE OF ANY CONTRARY RECORD OR FACT TO DISPUTE THE DETAILS POINTED OUT IN THE CASH FLOW STATEMENT, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE. FURTHER THE CASH FLOW STATE MENT OF THE AFFAIRS OF THE HUF WAS ACCEPTED IN THE CASE OF THE WIFE FOR TH E PURPOSE OF SOURCE OF DEPOSIT AND THE AO HAS CLEARLY STATED IN THE REMAND REPORT THAT ALL THE PARTICULARS AS SHOWN IN THE CASH FLOW STATEMENT ARE ALSO FOUND IN THE ASSESSMENT RECORD OF THE HUF. THEREFORE, WHEN THE PARTICULARS OF THE CASH FLOW STATEMENTS ARE ACCEPTED BY THE AO THEN TH E SOURCE AS EXPLAINED BY THE ASSESSEE AS FUND AVAILABLE WITH THE HUF CANN OT BE DENIED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE TH E ADDITION MADE BY THE AO IS NOT SUSTAINABLE AND THE SAME IS DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. 7. PRONOUNCED IN THE OPEN COURT ON THIS 07 TH DAY OF JUNE, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 07 TH JUNE, 2017. / MS/ ITA NO. 909/BANG/2016 PAGE 8 OF 8 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.