Ranjan Kumar Palar, Bhubaneswar V. DCIT, Bhubaneswar

ITSSA 123/CTK/2011

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7520 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 24-10-2011
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: S C BHADRA
• Keywords: Search and seizure
• Section: 68

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM IT (SS) A NO S . 123,124,125,126, 127 AND 128/CTK/2011 (A YS 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07,2007 - 08 AND 2009 - 10) RANJAN KUMAR PALAR , LB - 196, NUAPALLY BRIT COLONY, NAYAPALLI, BHUBANEWWAR 751 012 PAN: AJOPP 4336 P VERSUS DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.C.BHADRA, AR FOR THE RESPONDENT SMT. PARAMITA TRIP ATHY, CIT - DR DATE OF HEARING : 23.04.2012 DATE OF PRONOUNCEMENT : 11.05.2012 ORDER SHRI K.K.GUPTA, AM : ALL THESE APPEALS BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEARS ARE ON THE LEARNED CIT(A) CONFIRMING THE PURPORTED UNDISCLOSED INCOME BR OUGHT TO TAX BY THE ASSESSING OFFICER AS PER ASSESSING OFFICERS ORDER U/S.144/153A(B) OF THE INCOME - TAX ACT,1961. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF THE AS SESSEE ON 24.7.2008 WHEN THE OPERATION RELATED TO THE GROUP CONCERNS OF SUBHAM ESTCON GROUPS OF CASES. THE ASSESSEE WAS WORKING FOR SUBHAM ESTCON (P) LTD., WHEN HE WAS SUBJECTED TO SEARCH AND FILED RETURNS IN RESPONSE TO NOTICE U/S.153A. RETURNS WERE FILED WHEN THE ASSESSING OFFICER BROUGHT TO TAX FOR THE ASSESSMENT YEAR 2003 - 04, THE OPENING CAPITAL BALANCE OF 88,000 BEING HELD BY THE ASSESSEE AS CASH IN BANK, PERSONAL ASSETS LIKE GOLD JEWELLERY, LIC PREMIUM AND HOUSE HOLD ASSETS. THE ASSESSING OFFICER THEN PROCEEDED TO TAX DRAWINGS WHICH SOURCE OF INCOME HAD NOT BEEN RENDERED TO TAX BY THE ASSESSEE. FOR THE A SSESSMENT YEAR 2004 - 05, DRAWINGS ESTIMATED BY THE ASSESSING OFFICER AT 72,000 WAS BROUGHT TO TAX. FOR THE ASSESSMENT YEAR 2005 - 06 DRAWINGS AMOUNTING TO 70,000 WAS BROUGHT TO TAX. FOR THE IT(SS)A NOS.123,124,125,126, 127 AND 128/CTK/2011 2 ASSESSMENT YEAR 20 06 - 07 ADVANCE FROM SUBHAM ESTCON (P) LTD., AMOU NTING TO 8 LAKHS HAVE BEEN BROUGHT TO TAX ALONG WITH THE PURPORTED ESTIMATED DRAWINGS OF 10,000 PER MONTH TOTALLING 1,20,000 HAVE BEEN INCLUDED TO THE INCOME AS FROM UNDISCLOSED SOURCES. A SUM OF 11,00,000 WAS BROUGHT TO TAX IN THE ASSESSMENT YEAR 2009 - 10 HOLDING A VIEW THAT THE ASSESSEE NEITHER BEING A SHARE HOLDER NOR A CREDITOR COULD NOT HAVE RECEIVED THE ADVANCE OF 11 LAKHS FROM SUBHAM ESTCON (P) LTD., WAS TAXED BY THE ASSESSING OFFICER. 3. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST AP PELLATE AUTHORITY, WHO CONFIRMED ALL THESE ADDITIONS FOR THE IMPUGNED AYS AS MENTIONED ABOVE BY WAY OF A COMMON ORDER FOR ALL THE AYS ON THE VARIOUS GENERAL GROUNDS RAISED COMMON TO THE YEARS HAVE BEEN ADJUDICATED BY ASSIGNING BRIEF ADJUDICATION O N THE SPE CIFIC GROUNDS ON MERITS RAISED BY THE ASSESSEE. THE LEARNED CIT(A) CONFIRMED THE ADDITIONS SO BROUGHT ON RECORD BY THE ASSESSING OFFICER WITHOUT CONSIDERING THE ISSUES ON THE BASIS OF TOTALITY OF THE FACTS BROUGHT ON RECORD BY THE ASSESSEE APPELLANT BEFORE HIM. 4. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE TRIBUNAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTE D THAT THE ASSESSING OFFICER HAD NO REASON TO BRING TO TAX AMOUNTS WHICH COULD NOT BE RELATED TO ANY SEARCH MATERIAL MORE SO AS THE STATUS OF THE ASSESSEE COULD NOT BE DETERMINED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 153A. EARNING OF INCOME, PAYING TAX AFTER UTILISING THE SAME FOR PERSONAL HOUSE HOLD EXPENDITURE CANNOT BE COMPUTED BY MERE STATEMENT TAKEN BY THE ASSESSING OFFICER AT THE TIME OF SEARCH. HE SUBMITTED A PAPER BOOK WHICH INDICATES THAT THE BASIS OF BRINGING TO TAX CERTAIN AMOUNT SUCH AS, PERSONAL ASSETS AND DRAWINGS IS PURELY ON SURMISES AND CONJECTURES INSOFAR AS THE SEARCH MATERIAL INDICATED AM OUNT RECEIVED FROM SUBHAM IT(SS)A NOS.123,124,125,126, 127 AND 128/CTK/2011 3 ESTCON (P) LTD., FOR THE PURPOSE OF INVESTMENT IN PLOTS OF LAND ON BEHALF OF THE COMPANY. THE ASSESSING OFFICER MISDIRECTED HIMSELF TO HOLD WHETHER SUCH ADVANCE COULD HAVE BEEN RECEIVED UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T.ACT, WHEN HE HIMSELF HAD CONSIDERED THE CASE OF THE ASSESSEE O N THE BASIS OF SUBHAM ESTCON (P) LTD., THE ASSESSEE, WHO WAS TO BE SEARCHED AND HAD DECLARED UNDISCLOSED INCOME HAD BEEN DEALT WITH BY HIM THAT ASSESSEE ENCOMPASSED UNDER THE CENTRAL CI RCLE UNDER HIS JURISDICTION. UNDISCLOSED INCOMES COULD NOT BE TAXED ON MERE ASSUMPTIONS AND PRESUMPTION. THE PURPORTED ADVANCES HAVE BEEN ROUTED THROUGH THE REGULAR BOOKS OF ACCOUNT THEREFORE CANNOT BE CONSIDERED EITHER UNDER THE PROVISIONS OF SECTION 68 O R UNDER THE PROVISIONS OF SECTION 2(22)(E) WHICH THE LEARNED CIT(A) HAS FAILED TO CORRELATE IN VIEW OF THE FACT THAT THE LEARNED CIT(A) HAVING ADJUDICATED THE ISSUE WITH RESPECT TO NON - ISSUE OF NOTICE U/S.143(2) THE ASSESSMENTS HAVING BEEN PASSED U/S.144 O UGHT TO HAVE CONSIDERED THE CASE OF THE ASSESSEE WITH THE BACKGROUND THAT AN NON - INCOME TAX PAYEE NEED NOT SUGGEST THAT HE MAY BE GIVEN STATUS OF TAXABLE ENTITY WHEN THE PERSONAL ASSETS OF THE ASSESSEE AMOUNTING TO 88,000 HAVE ALSO BEEN TAXED ARE BEING BELOW TAXABLE LIMIT. HE FURNISHED THE COPIES OF THE DECLARATION MADE BY THE ASSESSEE NAMELY SUBHAM ESTCON (P) LTD., WHICH JUSTIFIES THE HOLDING OF LAND AND THE ADVANCE FOR THE SAME WHICH CANNOT BE TAXED AGAIN IN THE HANDS OF THE ASSESSEE. HE PRAYED THAT ALL THE ADDITIONS AS CONFIRMED BY THE LEARNED CIT(A) MAY BE DIRECTED TO BE DELETED. 6. THE LEARNED CIT - DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE ARE UNABLE TO SATISFY OUR SELVES TO THE CONTENTION OF THE ASSESSING OFFICER FIRST ESTABLISHING THE STATUS OF THE ASSESSEE HOLDING THE CAPITAL WORTH 88,000 IT(SS)A NOS.123,124,125,126, 127 AND 128/CTK/2011 4 OUGHT TO BE HAVING LIFE ST YLE SPENDING 72 ,000 TO 1,20,000 PER ANNUM PURELY ON ASSUMPTIONS AND PRESUMPTIONS HAVING THE MISCONSTRUED VIEW THAT THE AMOUNT RECEIVED FROM THE SEARCH ED PARTY NAMELY SUBHAM ESTCON (P) LTD., WHO HAD GIVEN ADVANCE TO TH E ASSESSEE FOR FURTHERANCE OF ITS BUSINESS AND ALSO HAVING DECLARED THE SAME TAXABLE COULD NOT BE TAXED AGAIN IN THE HANDS OF THE PRESENT ASSESSEE. THE PURPOSE FOR WHICH THE AMOUNTS HAD BEEN RECEIVED WAS ALSO UTILISED PARTLY BY THE ASSESSEE, THEREFORE, CAN NOT BE CONSIDERED AS UNDISCLOSED INCOME FOR TAXATION HAVING ESTABLISHED THE FACTS THAT THE SUM OF 8 LAKHS WAS SUFFICIENT TO INVEST IN LAND AMOUNTING TO 1,17,390. WE ARE FURTHER UNABLE TO SATISFY OURSELVES TO THE FA CT FOR THE ASSESSMENT YEAR 2009 - 10 THE ASSESSING OFFICER HOLDING A VIEW THAT THE AMOUNT OF 11 LAKHS WHETHER COULD BE CONSIDERED AS DEE MED DIVIDEND IN VIEW OF THE ASSESSEE NOT HAVING RENDER ED ANY INCOME SOUGHT TO TAX THE WHOLE OF THE AMOUNT RECEIVED WHEN THE AMOUNTS STANDS REFLECTED AS ADVANCE GIVEN TO THE ASSESSEE FROM THE COMPANY NAMELY SUBHAM ESTCON (P) LTD., . AS WE HAVE DEALT WITH TH E ISSUE IN THE CASE OF SUBHAM ESTCON (P) LTD., VIDE SEPARATE ORDER PASSED ON TODAY IN IT(SS) A NOS. 116 TO 122/CTK/2011 WHEN THE SEARCH TOOK PLACE ON 24.7.2008 AND THE ASSESSEE HAD FILED THE REGULAR RETURNS WHICH INCOME HAS BEEN DECLARED AT 1.36 CRORES THEREFORE COULD NOT BE CONSIDERED IN ISOLATION IN THE HANDS OF THE ASSESSEE BEFORE US FOR TAXATION OF 11 LAKHS EITHER UNDER THE PROVISIONS OF SECTION 2(22)(E) OR U/S.68. INTERESTINGLY THE ASSESSING OFFICER DID NOT DEEM IT FIT TO HOLD THE PU RPORTED HOUSE HOLD DRAWINGS ETC., THIS YEAR WHICH RATHER CLARIFIES THE ISSUE IN FAVOUR OF THE ASSESSEE THAT HE WAS NOT TO BE TAXED O N SUCH PURPORTED ESTIMATIONS IN THE EARLIER YEARS AS WELL BEING BELOW TAXABLE LIMITS . IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY MERIT IN THE ADDITIONS MADE BY THE ASSESSING OFFICER AND IT(SS)A NOS.123,124,125,126, 127 AND 128/CTK/2011 5 SUSTAINED BY THE LEARNED CIT(A) FOR THE RESPECTIVE ASSESSMENT YEARS. WE, THEREFORE, DIRECT DELETION OF THE SAME BY ALLOWING THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, ALL THE APPEALS OF T HE ASSESSEE ARE ALLOWED. S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 11.05.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: RANJAN KUMAR PALAR, LB - 196, NUAPALLY BRIT COLONY, NAYAPALLI, BHUBANEWWAR 751 012 2. THE RESPONDENT: DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.