Sri. S. Balasubramani, Bangalore V. ITO, Bangalore

ITA 965/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7644 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K BIJU JT BENGALURU
• Assessee Lawyers: S V RAVISHANKAR
• Section: 234B; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.965/BANG/2016 ASSESSMENT YEAR : 2006-07 SHRI S. BALASUBRAMANI, NO.1066, 2 ND CROSS, 7 TH MAIN, SRIRAMPURAM, BANGALORE 560 021. PAN: ADBPB 3921B VS. THE INCOME TAX OFFICER, WARD 6(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S.V. RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI M.K. BIJU, JT.CIT(DR)(ITAT), BENGALURU DATE OF HEARING : 22.08.2017 DATE OF PRONOUNCEMENT : 31.08.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE CIT (A) IN SO FAR AS IT IS AG AINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, AND WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.965/BANG/2016 PAGE 2 OF 6 2. THE APPELLANT DENIES HIMSELF LIABLE TO BE ASSES SED TO A TOTAL INCOME OF RS. 9,76,008/ - AS AGAINST THE TOTAL INCO ME RETURNED BY THE APPELLANT OF RS. 1,50,550/- FOR THE IMPUGNED AS SESSMENT YEAR 2006-07 ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRM ING THE DISALLOWANCE OF UNSECURED LOAN OF RS.2,70,000/- THO UGH THE APPELLANT HAD FILED AFFIDAVIT OF THE LENDER ALONG W ITH DOCUMENTS TO PROVE THE LENDER HAD ADVANCED THE LOAN ON THE FA CTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE LOANS HAVE BEEN ADEQUATELY EXPLAINED BY THE APPELLA NT BY SHOWING THE IDENTITY AND CAPACITY OF THE LENDER AND ALSO THE GENUINENESS OF THE LOAN. 5. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN RESTRIC TING THE RELIEF IN RESPECT OF UNSECURED LOAN AVAILED FROM SM T. AMUDHA, ONLY TO RS.1,00,000/ - , BEING THE EXTENT OF SAVING S OF THE CURRENT YEAR, IGNORING THAT THE LENDER HAD BEEN EARNING SIM ILAR AMOUNTS FOR THE PAST MANY YEARS AND HAD ACCUMULATED SAVINGS TO THE EXTENT OF RS. 3,70,000/- ON THE FACTS AND CIRCUMSTA NCES OF THE CASE. 6. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN SUSTAIN ING THE EXPENDITURE DISALLOWANCE OF RS. 36,156/ - BEING 10% OF THE EXPENDITURE CLAIMED BY THE APPELLANT IN HIS BOOKS B Y STATING THAT THE EXPENDITURE CLAIMED WAS EXCESSIVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT AL L THE EXPENDITURE HAVE BEEN INCURRED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSES OF BUSINESS AND HENCE NO DISALLOWANCE WAS CALLED FOR ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE APPELLANT HAD REPORTED A SUBSTANTIVE INCREASE IN TU RNOVER AND THE EXPENDITURE INCURRED WAS COMMENSURATE TO ACHIEVE TH E SALES ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.965/BANG/2016 PAGE 3 OF 6 9. WITHOUT PREJUDICE, THE DISALLOWANCE SUSTAINED A T 10% IS UNJUSTIFIED, ARBITRARY AND EXCESSIVE AND REQUIRES T O BE SUBSTANTIALLY REDUCED ON THE FACTS AND CIRCUMSTANCE S OF THE CASE. 10. WITHOUT PREJUDICE, THE ORDER OF ASSESSMENT IS VOID AS THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH SECTIO N 153 OF THE ACT, AND HENCE VOID. 11. THE APPELLANT DENIES THE LIABILITY TO PAY INTE REST UNDER SECTION 234B AND 234C OF THE ACT IN VIEW OF THE FAC T THAT THERE IS NO LIABILITY TO ADDITIONAL TAX AS DETERMINED BY THE LEARNED ASSESSING OFFICER. WITHOUT PREJUDICE THE RATE, PERI OD AND ON WHAT QUANTUM THE INTEREST HAS BEEN LEVIED ARE NOT DISCER NABLE FROM THE ORDER AND HENCE DESERVES TO BE CANCELLED ON THE FAC TS AND CIRCUMSTANCES OF THE CASE. 12. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODI FY, DELETE OR SUBSTITUTE ANY OR ALL OF THE GROUNDS AND TO FILE A PAPER BOOK AT THE TIME OF HEARING THE APPEAL. 13. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MA Y BE TAKEN AT THE TIME OF THE HEARING THE APPEAL, THE APPELLAN T PRAYS THAT THE APPEAL BE ALLOWED IN THE INTEREST OF JUSTICE AND EQ UITY. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS OPTED NOT TO PRESS GROUND NOS. 1, 2, 4,5 AND 7 TO 1 3. ACCORDINGLY, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 3. WITH REGARD TO GROUND NO.3, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO HAS MADE AN ADDITION OF UNSECURED LOAN OF RS.6,36,800 O N THE GROUND THAT NONE APPEARED ON BEHALF OF ASSESSEE AND ORDER PASSE D U/S. 144 OF THE ACT. 4. BEFORE THE CIT(APPEALS), THE ASSESSEE HAS STATED THAT HE HAS TAKEN LOAN OF RS.2,66,800 FROM HIS MOTHER, SMT SAVITHRI A ND RS.3,70,000 FROM HIS ITA NO.965/BANG/2016 PAGE 4 OF 6 WIFE, SMT. AMUDHA. HE HAS ALSO FURNISHED FINANCIAL STATUS OF BOTH THE CREDITORS. THE CIT(APPEALS) RE-EXAMINED THE ISSUE AND HAS ACCEPTED THE GENUINENESS OF THE CREDITS WITH REGARD TO SMT. SAVI THRI, MOTHER OF ASSESSEE AND DELETED THE ADDITION OF RS.2,66,800. 5. SO FAR AS LOAN OF RS.3,70,000 RECEIVED FROM HIS WIFE, SMT. AMUDHA IS CONCERNED, THE CIT(A) HAS RE-EXAMINED THE ISSUE IN THE LIGHT OF RETURNS FILED BY SMT. AMUDHA AND HER FINANCIAL STATUS AND H E HAS ALLOWED CREDIT OF RS.ONE LAKH AND RETAINED THE ADDITION OF RS.2,70,00 0, WHICH IS CHALLENGED BY THE ASSESSEE BEFORE US WITH THE SUBMISSION THAT HE HAS TAKEN LOAN FROM HIS WIFE IN CASH. IN ORDER TO JUSTIFY THE FINANCIA L POSITION AND AVAILABILITY OF FUNDS WITH HIS WIFE, OUR ATTENTION WAS INVITED TO T HE RETURNS FILED BY SMT. AMUDHA WITH THE SUBMISSION THAT THERE WAS SUFFICIEN CY OF FUNDS WITH SMT. AMUDHA, THEREFORE NO ADDITION IS CALLED FOR. 6. THE LD. DR, ON THE OTHER HAND, PLACED RELIANCE U PON THE ORDER OF CIT(APPEALS) WITH THE SUBMISSION THAT CIT(A) HAS AL READY GIVEN CREDIT OF RS.ONE LAKH AND RESTRICTED THE ADDITION OF RS.2,70, 000, THEREFORE, NO INTERFERENCE IS CALLED FOR THEREIN. 7. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT ASSESSEE HAS INT RODUCED CASH CREDIT OF RS.3,70,000 IN HIS BOOKS OF ACCOUNTS IN THE NAME OF HIS WIFE, SMT. AMUDHA. WE HAVE ALSO CAREFULLY EXAMINED THE COPIES OF THE RETURNS FILED, ITA NO.965/BANG/2016 PAGE 5 OF 6 WHEREFROM IT IS EVIDENT THAT THE WIFE OF ASSESSEE, SMT. AMUDHA HAS SHOWN INCOME OF RS.1,03,500 IN THE AY 2005-06 AND IN AY 2 004-05, SHE HAS SHOWN INCOME FROM OTHER SOURCE AT RS.70,200 ONLY. IN AY 2006-07, INCOME WAS SHOWN AT RS.1,40,260. KEEPING IN VIEW T HE INCOME SHOWN BY SMT. AMUDHA IN DIFFERENT ASSESSMENT YEARS, WE ARE O F THE OPINION THAT SOME FUNDS WERE AVAILABLE WITH ASSESSEES WIFE WHIC H COULD BE ADVANCED. BUT IS QUITE STRANGE TO NOTE THAT THE ENTIRE AMOUNT AS CLAIMED BY THE ASSESSEE IS KEPT WITH HIM. IF 3 YEARS INCOME IS TO BE ADDED, IT MAY COME AROUND RS.2 LAKHS & ODD, THEREFORE, THE CONTENTION OF ASSESSEE MAY BE PARTLY ACCEPTED. THE CIT(A) HAS ALREADY GRANTED CR EDIT OF RS.1 LAKH AND RETAINED THE ADDITION OF RS.2,70,000. TAKING INTO ACCOUNT THE FINANCIAL STATUS OF HIS WIFE, AT THE MOST, CREDIT OF RS.70,00 0 CAN BE ALLOWED TO THE ASSESSEE. ACCORIDNGLY, WE ALLOW THE SAME AND RESTR ICT THE ADDITION TO RS.2 LAKHS. 8. WITH REGARD TO GROUND NO.6 WHICH RELATE TO DISAL LOWANCE OF 10% OF EXPENDITURE CLAIMED, WE FIND THAT ASSESSEE DID NOT APPEAR BEFORE THE AO, WHO HAS MADE DISALLOWANCE OF EXPENDITURE AT 20% FOR THE REASON THAT VOUCHERS COULD NOT BE VERIFIED. SIMILAR WAS THE POSITION BEFORE THE CIT(APPEALS) AND THE CIT(APPEALS), HOWEVER, RESTR ICTED THE DISALLOWANCE TO 10%. SINCE ALL VOUCHERS ARE NOT AVAILABLE FOR VERIFICATION, WE FIND NO ITA NO.965/BANG/2016 PAGE 6 OF 6 INFIRMITY IN THE ORDER OF CIT(APPEALS) WHO HAS REST RICTED THE DISALLOWANCE TO 10%. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT( APPEALS) IN THIS REGARD. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2017. SD/- SD/- ( JASON P. BOAZ ) ( SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2017. / D ESAI S MURTHY / 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.