ITO, Bangalore V. Shri. Ibrahim Sait, Bangalore

ITA 929/BANG/2012

• Counselvise Citation: 92921114 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 25-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L V BHASKARA REDDY JT
• Assessee Lawyers: S N SHYANBHOG
• Keywords: Unexplained cash credit; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.929/BANG/2012 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, WARD 8(1), BANGALORE. VS. SHRI IBRAHIM SAIT, # 413, 4 TH LEVEL, PRESTIGE CENTRE POINT, CUNNINGHAM ROAD, BANGALORE 560 052. PAN: AKVPS 4794C APPELLANT RESPONDENT APPELLANT BY : SHRI L.V. BHASKARA REDDY, JT. CIT(DR) RESPONDENT BY : SHRI S.N. SHYANBHOG, ADVOCATE DATE OF HEARING : 26.11.2013 DATE OF PRONOUNCEMENT : 26.11.2013 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 16.05.2012 OF THE CIT(APPEALS)-V, BENGALURU RELATING TO ASSESSMEN T YEAR 2007-08. 2. THE REVISED GROUNDS OF APPEAL FILED BY THE REVEN UE READS AS FOLLOWS:- 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW, FAC TS AND CIRCUMSTANCES OF THE CASE. ITA NO.929/BANG/2012 PAGE 2 OF 10 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE COMMISSION AGENTS RECEIVE THE ENTIRE COMMISSION ONC E THE DEAL IS FINALIZED AND NOT IN INSTALMENTS. 3. THE CIT(A) HAS ERRED IN ALLOWING THE LOANS AS G ENUINE WITHOUT GOING THROUGH THE GENUINENESS OF THE TRANSA CTIONS. 4. THE CIT(A) ERRED IN ALLOWING CONTRACT RECEIPTS, AS THE ASSESSEE OPTED TO FILE FRESH EVIDENCES BEFORE THE A PPELLATE AUTHORITIES ONLY. 5. WHETHER THE CIT(A) WAS RIGHT IN ADMITTING ADDIT IONAL EVIDENCE UNDER RULE 46A WITHOUT STIPULATING THE APP LICABILITY OF THE CONDITIONS UNDER THE SAME TO THE FACTS OF THE C ASE. 6. THE CIT(A) ERRED IN DISALLOWING ENTIRE EXPENDIT URE WITHOUT DISCUSSING THE DETAILS. 3. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE AND CALL FOR NO ADJUDICATION. GROUND NO.5 IS WITH REGARD TO THE ACTION OF THE CIT (APPEALS) IN ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULE S, 1962. THIS GROUND IS STATED TO BE COMMON FOR THREE DIFFERENT ISSUES RAIS ED BY THE REVENUE IN GROUNDS NO.2, 3 & 4 AND HENCE THE SAME WILL BE DEAL T WITH WHILE DEALING WITH THOSE GROUNDS. 4. AS FAR AS GROUND NO.2 RAISED BY THE REVENUE IS C ONCERNED, THE FACTS ARE AS FOLLOWS. THE ASSESSEE IS AN INDIVIDUAL. HE CARRIES ON THE BUSINESS OF REAL ESTATE AGENCY AND INTERIOR DECORATION. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD D ECLARED INCOME FROM COMMISSION AT RS.3,16,000 ON THE ACTIVITY OF IDENTI FYING HOUSES FOR RENT. THE AO ALSO NOTICED THAT THE ASSESSEE HAD SHOWN COM MISSION OF RS.18,000/- UNIFORMLY FOR ALL THE 12 MONTHS. THE C OMMISSION WAS STATED TO ITA NO.929/BANG/2012 PAGE 3 OF 10 HAVE BEEN RECEIVED IN CASH. THE AO WAS OF THE VIEW THAT IT IS IMPROBABLE THAT COMMISSION FOR IDENTIFYING HOUSES WOULD BE IDE NTICAL IN ALL THE MONTHS AND THAT COMMISSION COULD VARY DEPENDING UPON THE H OUSES IDENTIFIED FOR THE PURPOSE OF LEASE. THE AO THEREFORE REFUSED TO ACCEPT THE COMMISSION INCOME AS SHOWN BY THE ASSESSEE. THE AO WAS FURTHE R OF THE VIEW THAT SINCE THE ASSESSEE HAD NOT FILED DETAILS AND EVIDEN CE, CONSIDERING THE FACT THAT THE COMMISSION EARNED BY THE ASSESSEE IN THE E ARLIER YEAR WAS RS. 9 LAKHS, IT WOULD BE REASONABLE TO ESTIMATE INCOME FR OM COMMISSION FOR THE YEAR AT RS.12 LAKHS. THE AO THUS ESTIMATED COMMISS ION INCOME AT RS.8,84,000 [12,00,0000 MINUS 3,16,000 SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS], WHICH WAS ADDED TO THE TOTAL IN COME DECLARED BY THE ASSESSEE. 5. BEFORE THE CIT(APPEALS), THE ASSESSEE POINTED OU T THAT THE BOOKS OF ACCOUNTS WERE PRODUCED AND COPIES OF LEDGER ACCOUNT S WERE ALSO FILED AND THAT WITHOUT REJECTING THE BOOK RESULTS, THE AO WAS NOT ENTITLED TO MAKE ANY ESTIMATION OF COMMISSION INCOME. RELIANCE WAS PLAC ED BY THE ASSESSEE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. V. CIT, 26 ITR 775 (S C) , FOR THE PROPOSITION THAT THE AO WHILE MAKING AN ASSESSMENT IS NOT ENTITLED TO MAKE ANY GUESS OR MAKE ANY ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR MATERIAL. THE ASSESSEE ALSO POINTED OUT THAT COMMI SSION RECEIVED BY HIM DURING THE PREVIOUS YEAR WAS FROM ONE PARTY IN 12 E QUAL MONTHLY INSTALMENTS OF RS.18,000 AND THAT A CONFIRMATION FR OM THE AFORESAID PARTY ITA NO.929/BANG/2012 PAGE 4 OF 10 HAD ALSO BEEN FILED. IT IS NOT IN DISPUTE THAT THE CONFIRMATION WAS CONFRONTED TO THE AO AND THE AO HAS NOT THOUGHT IT FIT TO MAKE ANY ENQUIRIES IN THE REMAND REPOT FILED BEFORE THE CIT(A). CONSIDERING THE ABOVE ASPECTS, THE CIT(A) WAS OF THE VIEW THAT THE COMMISSION DECLARED BY THE ASSESSEE OUGHT TO BE ACCEPTED AND THE ADDITION MADE BY THE A O WAS WITHOUT ANY BASIS AND SHOULD BE REJECTED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E HAS RAISED GROUND NO.2 BEFORE THE TRIBUNAL. THE ARGUMENT OF THE LD. DR BEFORE US WAS THAT THE CONFIRMATION FROM THE PARTY FROM WHOM COMMISSIO N WAS RECEIVED HAD NOT BEEN FILED BEFORE THE AO AND NO REASONS HAVE BE EN ADDUCED BY THE ASSESSEE FOR NOT FILING THE SAME BEFORE THE AO. IN OTHER WORDS, THE LD. DR SUBMITTED THAT THERE WAS VIOLATION OF THE PROVISION S OF RULE 46A OF THE I.T. RULES. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND ARE OF THE VIEW THAT UNDER RULE 46A(4) OF THE ACT, THE CIT(APP EALS) HAS THE POWER TO DIRECT PRODUCTION OF ANY DOCUMENT TO ENABLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE. THE CIT(A) HAD DU LY CONFRONTED THE CONFIRMED FILED BY THE ASSESSEE TO THE AO AND CALLE D FOR A REMAND REPORT. THE AO HAS NOT THOUGHT IT FIT TO EXAMINE THE PERSON WHO FILED THE CONFIRMATION. IN THESE CIRCUMSTANCES, WE ARE OF TH E VIEW THAT THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE AO WAS JUSTIFIED AND CALLS FOR NO INTERFERENCE. ITA NO.929/BANG/2012 PAGE 5 OF 10 8. AS FAR AS GROUND NO.3 IS CONCERNED, THE FACTS AR E THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD SHOWN LOAN LIABILITY OF RS.2,60,000 FROM ATHIQUR REHMAN, RS.6,82,624 FROM JAVED SAIT CO-OWNER PROPERTY, RS.78,780 FROM FAROOQ BAI A ND RS.5 LAKHS FROM SMT. RABIA BAI. THE ASSESSEE FILED CONFIRMATION FR OM THESE PARTIES ON 31.12.2007 WHICH WAS THE LAST DATE FOR COMPLETION O F ASSESSMENT. THE AO WAS OF THE VIEW THAT ALL THE CONFIRMATIONS HAD BEEN SIGNED BY ONE PERSON AS PA HOLDER, BUT NO PA COPY WAS FILED. THE AO THE REFORE TREATED THESE CONFIRMATIONS AS NOT GENUINE. THE AO THEREFORE TRE ATED THE AMOUNT SHOWN AS LOAN AS UNEXPLAINED CASH CREDIT AND ADDED THE SA ME TO THE TOTAL INCOME OF THE ASSESSEE. 9. BEFORE THE CIT(A), THE ASSESSEE FILED EVIDENCE T O SUBSTANTIATE THE IDENTIFY, CREDIT WORTHINESS AND GENUINENESS OF THE LOANS AND SUBMITTED AS FOLLOWS:- A. JAVEED SAIT CO-OWNER PROPERTY : THIS IS ONLY THE VALUE OF HOUSE SITE BROUGHT BY SRI JAVED SAIT FOR JOINT DEVE LOPMENT AND IS NOT CASH OR CHEQUE. THE COPY OF LEDGER A/C AND CON FIRMATION LETTER IS FILED. THE COPY OF THE SALE DEED GIVEN EA RLIER IS AVAILABLE ON THE RECORD WHICH IS SUFFICIENT TO PROVE THE LIAB ILITY. SO, THIS ADDITION NEEDS TO BE DELETED. B. RS. 5,00,000/- RECEIVED FROM SMT. RABIA BAI : T HE CONFIRMATION LETTER AS CALLED FOR WAS ALREADY FILED WITH A.O. NOW, YOUR APPELLANT HAS FURNISHED THE PAN OF THE THIS AS SESSEE. THE LEDGER COPY OF ACCOUNTS OF YOUR APPELLANT CONFIRMIN G RECEIPT OF THIS AMOUNT BY CHEQUE WAS ALSO ENCLOSED. THUS, YOUR APPELLANT HAS DISCHARGED THE ONUS CAST ON HIM. HENCE, THIS AD DITION NEEDS TO BE DELETED. ITA NO.929/BANG/2012 PAGE 6 OF 10 C. RS. 2,60,000/- RECEIVED FROM MR. ATHIQUR REHAMA N: FOR THIS CONFIRMATION LETTER WAS FILED BEFORE THE A.O. ALONGWITH THE WRITTEN ARGUMENT, YOUR APPELLANT HAS FILED THE BANK A/C COPY AND ALSO THE LEDGER COPY SHOWING ABOVE TRANSACTION. TH E A.O. HAS NOT GIVEN ANY REPORT ON THIS TRANSACTION EXCEPT STA TING THAT THIS CANNOT BE ACCEPTED NOW. WHEN THERE IS NO DOUBT ABOU T THE AUTHENTICITY OF THIS TRANSACTION, THERE IS NO CASE FOR DISALLOWANCE. SO, THE ADDITION NEEDS TO BE DELETED. D. RS. 78,780/- RECEIVED FROM FAROOQ BAI : THE CON FIRMATION LETTER ALREADY FILED AT THE TIME OF COMPLETION OF T HE ASSESSMENT. THE A.O REJECTED THE SAME HOLDING THAT THIS WAS SIG NED BY THE PA HOLDER, WHICH IS NOT FACTUALLY CORRECT. THE CONFIRM ATION LETTER IS SIGNED BY THE PARTY ONLY. HENCE, THIS ADDITION NEED S TO BE DELETED. 10. THE CIT(APPEALS) AFTER CONSIDERING THE STAND TA KEN BY THE AO AND THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSES SEE HAD PROVED THE IDENTITY OF CREDITORS AND GENUINENESS OF THE TRANSA CTIONS. THE ADDITION OF RS.16,47,404 WAS THUS DELETED. 11. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE HAS RAISED GROUND NO.3 BEFORE THE TRIBUNAL. THE ONLY GRIEVANCE PROJE CTED IN THIS GROUND IS THAT THE CIT(A) HAS WRONGLY ACCEPTED THAT THE TRANS ACTIONS OF LOANS WERE GENUINE TRANSACTIONS. 12. THE LD. DR REITERATED THE STAND OF THE REVENUE AS REFLECTED IN THE GROUND OF APPEAL. 13. WE ARE OF THE VIEW THAT THERE IS NO MERIT IN TH E GROUND RAISED BY THE REVENUE. AS FAR AS THE SUM OF RS.6,82,624 IN THE N AME OF JAVED SAIT CO- OWNER PROPERTY IS CONCERNED, THIS IS THE VALUE OF S ITE BROUGHT FROM JAVED ITA NO.929/BANG/2012 PAGE 7 OF 10 SAIT FOR JOINT DEVELOPMENT. THE ASSESSEE HAD TAKEN THE PROPERTY FOR JOINT DEVELOPMENT AND THE VALUE OF THE SITE HAD BEEN SHOW N AS LIABILITY. THE LEDGER ACCOUNT AND CONFIRMATION OF JAVED SAIT HAD A LSO BEEN FILED. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE GENUINENESS OF THIS TRANSACTION. MOR E SO, WHEN THE AO HAS NOT GIVEN ANY ADVERSE COMMENTS ON THESE DOCUMENTS I N HIS REMAND REPORT. SIMILARLY, WITH REGARD TO THE SUM OF RS.5 LAKHS REC EIVED FROM SMT. RABIA BAI, RS.2,60,000 RECEIVED FROM ATHIQUR REHMAN, AND RS.78, 780 RECEIVED FROM FAROOQ BAI, THE CONFIRMATIONS HAVE BEEN FILED AND THE CIT(A) FOUND FROM THE CONFIRMATIONS THAT CONFIRMATION BY FAROOQ BAI HAD BEEN SIGNED BY HIMSELF AND NOT BY ANY PA AGENT. IN RESPECT OF SMT . RABIA BAI, PAN HAD BEEN FURNISHED AND THE FACT THAT THE SUM WAS RECEIV ED BY CHEQUE WAS ALSO ESTABLISHED. SO ALSO, IN THE CASE OF ATHIQUR REHMA N THE TRANSACTION WAS THROUGH BANKING CHANNELS. IN RESPECT OF THE AFORE SAID CREDIT, THERE WAS NO ADVERSE COMMENTS IN THE REMAND REPORT OF THE AO FIL ED BEFORE THE CIT(A). IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CREDITS IN QUESTION WERE RIGHTLY TREATED AS EXPLAINED BY THE CIT(A). 14. AS FAR AS GROUND NO.4 IS CONCERNED, THE FACTS A RE AS FOLLOWS. THE AO NOTICED THAT THE ASSESSEE WAS CARRYING ON INTERI OR DECORATION BUSINESS UNDER THE NAME AND STYLE, TIME INTERIORS. IN THIS BUSINESS, THE ASSESSEE HAD SHOWN CONTRACT RECEIPTS AT RS.31,44,802. THE A SSESSEE PRODUCED COPY OF LEDGER EXTRACT AS WELL AS COPIES OF VAT RET URNS FOR THE MONTHS APR. 2006 TO FEB. 2007. ON PERUSAL OF THE VAT RETURNS, THE AO NOTICED THAT THE ITA NO.929/BANG/2012 PAGE 8 OF 10 TOTAL SUM OF RS.40,26,000 HAD BEEN DECLARED BY THE ASSESSEE. THE AO THEREFORE ADDED A SUM OF RS.8,81,198 [ 40,26,000 MI NUS 31,44,802] AS CONCEALED CONTRACT RECEIPTS. FURTHER THE AO ALSO H ELD THAT SINCE VAT RETURN FOR MAR. 07 WAS NOT FILED, A SUM OF RS.5 LAK HS WAS TO BE TAKEN AS CONTRACT RECEIPTS FOR THE MONTH OF MAR. 07. FURTHE R ADDITION OF RS.5 LAKHS WAS ALSO MADE TO THE TOTAL INCOME OF THE ASSESSEE. 15. BEFORE THE CIT(A), THE ASSESSEE FILED COPIES OF VAT RETURNS AND ALSO EXPLAINED THE DIFFERENCE BETWEEN THE RECEIPTS DISCL OSED IN THE VAT RETURN AND THAT SHOWN IN THE BOOKS OF ACCOUNTS. IT WAS EX PLAINED THAT THE SUM OF RS.5,38,000 WAS ADVANCE RECEIVED IN THE EARLIER YEA RS WHICH HAD BEEN DECLARED FOR VAT PURPOSES ONLY IN THIS YEAR. SO AL SO ANOTHER SUM OF RS.4,70,000 WAS ACCOUNTED FOR THE PURPOSE OF VAT, B UT WAS TREATED AS ADVANCE IN THE BOOKS OF ACCOUNTS. THE ASSESSEE ALS O POINTED OUT THAT THE AO DID NOT ASK FOR RETURN OF VAT FOR THE MONTH OF M AR. 07. THE ASSESSEE ALSO EXPLAINED THAT THERE WAS BOUND TO BE DIFFERENC E IN FIGURES BETWEEN THE RETURNS FILED FOR VAT AND BOOKS OF ACCOUNTS MAINTAI NED BY THE ASSESSEE. A DETAILED RECONCILIATION STATEMENT OF THE TURNOVER S HOWN IN VAT RETURNS AND THE BOOKS MAINTAINED FOR INCOME-TAX PURPOSES WAS AL SO FILED BEFORE THE CIT(A). THE VAT RETURN FILED FOR THE MONTH OF FEB. AND MAR. 07 WAS ALSO FILED BEFORE THE CIT(A). ITA NO.929/BANG/2012 PAGE 9 OF 10 16. THE CIT(APPEALS) AFTER EXAMINING ALL THESE DOCU MENTS FOUND NO DISCREPANCY IN THE TURNOVER DECLARED BY THE ASSESSE E FOR THE INCOME-TAX PURPOSES AND THEREFORE DELETED THE ADDITION MADE BY THE AO. 17. THE GRIEVANCE OF THE REVENUE AS PROJECTED IN GR OUND NO.4 IS THAT FRESH EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT (A) OUGHT NOT TO HAVE BEEN ACCEPTED. IT CAN BE THUS SEEN FROM THE GROUND S OF APPEAL OF THE REVENUE ON THIS ISSUE THAT THE CORRECTNESS OF RECON CILIATION AS GIVEN BY THE ASSESSEE BEFORE THE CIT(A) IS NOT DOUBTED BY THE RE VENUE. AS WE HAVE ALREADY OBSERVED, UNDER THE PROVISIONS OF RULE 46A( 4) OF THE RULES, THE CIT(APPEALS) HAS INHERENT POWER TO CALL FOR ANY DOC UMENT. IN THE AFORESAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) W AS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE ON THIS ISSUE. 18. IN THE RESULT, THE APPEAL BY THE REVENUE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 26TH DAY OF NOVEMBER, 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 26 TH NOVEMBER, 2013. /D S/ ITA NO.929/BANG/2012 PAGE 10 OF 10 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.