Vikash Agrawal (HUF), Sambalpur V. DCIT, Circle-1(1), Sambalpur, Sambalpur

ITSSA 11/CTK/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3021 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND SHRI A BY T. VARKEY, JUDICIAL MEMBER IT (SS) A NO. 11/CTK/2013 ASSESSMENT YEAR : 2004 - 05 VIKASH AGRWALA, HUF, C/O. SRI ANNAPURNA RICE MILLS, GUDKATIKRA , PO: GODBHAGA, SAMBALPUR VS. DCIT, CIRCLE 1(1), SAMBALPUR PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.R.MOHANTY /SAMBHULAL AGRAWAL , AR REVENUE BY : SHRI ASIT KUMAR MOHAPATRA, CIT DR DATE OF HEARING : 14 /02 / 2017 DATE OF PRONOUNCEMENT : 17 /02 / 2017 O R D E R PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - BERHAMPUR, CAMP: SAMBALPUR , DATED 189.12.2012 , FOR THE ASSESSMENT YEAR 2004 - 05 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2 LAKHS MADE BY THE ASSESSING OFFICER U/S.68 OF THE ACT TOWARDS THE OPENING CAPITAL AS ON 1.4.2003. 2 IT(SS)A NO. 11/CTK/2013 ASSESSMENT YEAR :2004 - 05 3. IN THE INSTANT CASE , THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOWN ESTIMATED INCOME FROM TRADING IN CHUDA AND CATTLE FEEDS AMOUNTING TO RS.50,000/ - . HE OBSERVED THAT DURING THE YEAR, THE ASSESSEE HAS PURCHASED A LAND OF RS.94,000/ - . THIS PURCHASE OF LAND HAS BEEN EXPLAINED OUT OF OPENING CAPITAL OF RS.2,35,500/ - . THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SOURCE OF THE OPENING OF CAPITAL AND, THEREFORE, MADE AN ADDITION OF RS.2,35,500/ - TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CREDIT U/S.68 OF THE ACT. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE OPENING CAPITAL OF RS.2,35,500/ - WAS THE ACCUMULATED CLOSING BALANCE AS ON 31.3.2003 VIDE YEAR WISE INCOME & WITHDRAWALS FOR THE EARLIER YEARS INCLUDING THE RETURNS OF INCOME FILED U/S.153A F OR THE ASSESSMENT YEAR 2002 - 03 & 2003 - 04, WHICH HAVE ALSO BEEN ASSESSED U/S.143( 3)/153A R.W.S. 153C BY THE SAME ASSESSING OFFICER ON THE SAME DATE I.E. 18.12.2009 AND, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. 5. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND THE ASSESSING OFFICER VIDE LETTER NO.8280 DATED 2.3.2012 STATED THAT AS PER THE DISCUSSION WITH RESPECT TO ASSESSMENT YEAR S 2002 - 03 , THE OPENING CAPITAL OF RS. 1,59,500/ - IS TREATED AS BOGUS CAPITAL AS THE ASSESSEE COULD NOT GIVE ANY EVIDENCE OF CARRYING OUT BUSINESS ACTIVITY OR COULD NOT SUBSTANTIATE THE BASIS OF OPENING CAPITA L . FOR THE A.Y.2003 - 04 , NO SUCH 3 IT(SS)A NO. 11/CTK/2013 ASSESSMENT YEAR :2004 - 05 EVIDENCE WAS PRODUCED BY THE ASSESSEE REGARDING THE OPENING CAPITAL OF RS. 1,98,000/ - . NOW, W ITH RESPECT TO A.Y.2004 - 05 , THE ASSESSING OFFICER TREATED THE OPENING CAPITAL OF RS. 2,35,500/ - AS THE UNEXPLAINED CASH CREDIT AND THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE CIT(A) AFTER CONSIDERING THE REMAND REPORT AND THE SUBMI SSION OF THE ASSESSEE OBSERVED THAT ADMITTEDLY, THE ASSESSEE HAS FILED FOR THE FIRST TIME HIS RETURN OF INCOME FOR ASST.YRS.20 02 - 03, 03 - 04 AND 04 - 05 SHOWING TOTAL INCOME OF RS.49,000/ - , RS.49,500/ - AND RS.50,000/ - RESPECTIVELY. THE ASSESSEE HAS CLAIMED TH AT THE OPENING CAPITAL IS OUT OF THE INCOME FROM THE PRECEDING YEARS INCLUDING ASST.YRS.2002 - 03 AND 2003 - 04. HE OBSERVED THAT THAT THE ASSESSEE SUBMITTED THAT RETURNS FOR THE EARLIER YEARS HAD NOT BEEN FILED BECAUSE THE SAME WERE BELOW THE TAXABLE LIMITS. THE CIT(A) OBSERVED THAT E VEN IF THAT BEING SO, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE BEFORE HIM OR B EFORE THE ASSESSING OFFICER REGARDING THE FACT THAT HE D ID POSSESS SUCH CAPITAL OF RS.2, 35 , 500/ - ALL IN CASH. THE ASSESSEE DID NOT HAVE A BANK ACCOUNT THOUGH ALL THE MEMBERS OF THE HUF ARE FROM A BUSINESS FAMILY. THEREFORE, HE HELD THAT NO CREDENCE CAN BE GIVEN TO THE ASSESSEE'S CLAIM OF BROUGHT FORWARD CAPITAL IN ASST.YRS.2002 - 03 AND 2003 - 04 IN ITS ENTIRETY . HE ALSO OBSERVED THAT IT IS DIFFIC ULT TO ACCEPT THAT THE ASSESSEE WAS HAVING SUCH OPENING CAPITAL IN EXCESS OF RS.2 LAKHS IN THE ABSENCE OF ANY EVIDENCE TO THAT EFFECT. FURTHER, WHATEVER MEAGER INCOME THE HUF EARNED IN THE PRECEDING TWO YEARS WOULD 4 IT(SS)A NO. 11/CTK/2013 ASSESSMENT YEAR :2004 - 05 NOT BE AVAILABLE IN ITS ENTIRETY WITHOUT ANY EXPENSES. THER E FORE, HE ACCEPTED RS. 35,500/ - AS EXPLAINED AND CONFIRMED THE BALANCE AMOUNT OF ADDITION OF RS.2 LAKHS. 7. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON 20.2.2008. IN PURSUANCE TO THE SAID SEARCH, NOTICE U/S.153C WAS ISSUED TO THE ASSESSEE BY THE ASSESSING OFFICER CALLING FOR RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2002 - 03, 2003 - 04 AND 2004 - 05. IN PURSUANCE TO THE SAID NOTICE, THE ASSESSEE FILED RETURNS OF INCOME FOR THE SAID THREE YEARS DISCLOSING INCOME OF RS.49,000/ - FOR A.Y. 2002 - 03, RS.49,500/ - FOR A.Y. 2003 - 04 AND RS.50,000/ - FOR A.Y. 2004 - 05. IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2002 - 03, THE ASSESSEE HAS SHOWN OPENING CAPITAL OF RS.1 ,59,500/ - AND CLOSING CAPITAL OF RS.1,98,000/ - . SIMILARLY , IN THE RE TURN OF INCOME FOR THE A.Y. 2003 - 04, THE ASSESSEE HAS SHOWN OPENING CAPITAL OF RS.1,98,000/ - AND CLOSING CAPITAL OF RS.2,35,500/ - AND IN THE RETURN OF INCOME FOR THE A.Y. 2004 - 05, THE ASSESSEE HAS SHOWN OPENING CAPITAL OF RS.2,35,500/ - AND CLOSING CAPITAL OF RS. 2,77,000/ - . IN THE ASSESSMENT MADE, THE ASSESSING OFFICER DID NOT ACCEPT THE R ETURNS FILED FOR THE ASSESSMENT YEARS 2002 - 03 AND 2003 - 04. CONSEQUENTLY, THE ASSESSING OFFICER IN THE ASSESSMENT FOR THE ASSESSMENT 5 IT(SS)A NO. 11/CTK/2013 ASSESSMENT YEAR :2004 - 05 YEAR 2004 - 05, ADDED OPENING CAPITAL OF RS.2,35,500/ - AS INCOME OF THE ASSESSMENT YEAR 2004 - 05. 9. ON APPEAL, THE CIT(A) VIDE HIS ORDER DATED 19.2.2012 PASSED FOR THE ASSESSMENT YEAR 2002 - 03 AND 2003 - 04 REVERSED THE ORDERS OF THE ASSESSING OFFICER AND ACCEPTED THOSE RETURNS O F INCOME AS VALID. HOWEVER, HE , IN THE APPELLATE ORDER PASSED FOR THE YEAR UNDER CONSIDERATION, ACCEPTED ONLY RS.35,500/ - AS OPENING CAPITAL AND CONFIRMED THE BALANCE ADDITION OF OPENING CAPITAL OF RS.2,00,000/ - . 10. BEING AGGRIEVED BY THIS ORDER OF THE CIT(A) FOR THE ASS ESSMENT YEAR 2004 - 05, THE ASSESSEE IS IN APPEAL BEFORE US. 11. WE FIND THE OPENING CAPITAL SHOWN IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2004 - 05 AT RS.2,35,500/ - IS EXACTLY THE SAME WHICH WAS SHOWN AS CLOSING CAPITAL IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003 - 04. IN OUR CONSIDERED VIEW, AFTER ACCEPTING THE RETURN OF INCOME FOR ASSESSMENT YEAR 2003 - 04 AS CORRECT, IT WAS NOT OPEN TO THE CIT(A) TO NOT TO ACCEPT A PART OF THE CLOSING CAPITAL SHOWN IN THAT ORDER IN THE ASSESSMENT YEAR UNDER APPEAL. ABSOLUTELY, NO REASON WAS GIVEN BY THE CIT(A) AS T O WHY A PART OF THE OPENING CAPITAL IS TO BE TREATED AS INCOME OF THE ASSESSMENT YEAR 2004 - 05 AND NOT THE INCOME OF EARLIER ASSESSMENT YEAR S . THEREFORE, IN OUR VIEW, THE ADDITION OF RS.2,00,000/ - CONFIRMED BY 6 IT(SS)A NO. 11/CTK/2013 ASSESSMENT YEAR :2004 - 05 THE CIT(A) IS NOT SUSTAINABLE. WE, THEREFORE, DELETE THE ADDITION OF RS.2 LAKHS AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 12 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 17 /02 /2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - ( ABY T. VARKEY) ( N.S SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CUTTACK; DATED 17 /02 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT;VIKASH AGRWALA , HUF, C/O. SRI ANNAPURNA RICE MILLS, GUDKATIKRA, PO: GODBHAGA, SAMBALPUR 2. THE RESPONDENT: DCIT, CIRCLE 1(1), SAMBALPUR 3. THE CIT(A), SAMBALPUR 4. CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//