Ranjita Panda, Bhubaneswar V. DCIT, Bhubaneswar

ITSSA 131/CTK/2011

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7524 (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 INCOME 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 . 131,132 AND 133/CTK/2011 (ASSESSMENT YEAR S 2003 - 04,2007 - 08 AND 2009 - 10) RANJITA PANDA,N - 1 /191, IRC VILLAGE, NAYAPAL LI, BHUBANESWAR 751 015 PAN: AIZPP 3801 B VERSUS DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.C.B HADRA, AR FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, CIT - DR DATE OF HEARING : 23.4.2012 DATE OF PRONOUNCEMENT : 11.05.2012 ORDER PER BENCH : THE APPEALS BY THE ASSESSEE FOR THE IMPUGNED AYS ARE ON THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMING THE PURPORTED UNDISCLOSED INCOME BROUGHT TO TAX BY THE ASSESSING OFFICER A S 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 ASSESSEE ON 24.07.2008. THIS OPERATION RE LATED TO SUBHAM ESTCON GROUP OF CASES, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS. BASED ON SEARCHED MATERIAL, THE ASSESSING OFFICER MADE ADDITION OF 4,21,500 AS UNSUBSTANTIATED OPENING CAPITAL AND 8,976 AS NON - AVAILABILITY OF CASH AS PER CASH FLOW IN THE ASSESSMENT YEAR 2003 - 04, 4,00,000 ON ACCOUNT OF ADVANCE FROM SUBHAM ESTCON (P) LTD., IN THE ASSESSMENT YEAR 2007 - 08 AND 4,00,000 ON ACCOUNT OF ADVANCE FROM SUBHAM ESTCON (P) LTD., AND 11,98,000 ON ACCOUNT OF EXCESS NSC IN THE ASSESSMENT YEAR 2009 - 10. 3. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY, WHO CONFIRMED THE ABOVE ADDITIONS EXCEPT PARTLY ALLOWING RELIEF ON ADDITION MADE ON ACCOUNT OF NSC IN THE ASSESSMENT YEAR 2009 - 10 AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. IT(SS)A NOS. 131,132 AND 133/CTK/2011 2 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL MADE AVAILABLE ON RECORD. 5. AS REGARDS ADDITION OF 4,21,500 IN THE ASSESSMENT YEAR 2003 - 04, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN BUSINESS ACTIVITIES AND WAS EARNING INCOME DULY DISCLOSED IN THE RETURNS FILED IN THE AYS 2001 - 02 AND 2002 - 03. IN SUPPORT HE PRODUCED THE CO PIES OF IT RETURNS WITH STATEMENT OF AFFAIRS PLACED ON PAGES 4 TO 11 OF THE PB AND THE COPY OF PANCHANAMA EVIDENCING ASSETS FOUND, PLACED ON PAGES 12 TO 18 OF THE PAPER BOOK). THE LEARNED DR COULD NOT CONTROVERT THE ABOVE SUBMISSIONS OF THE LEARNED AR OF T HE ASSESSEE. ON GOING THROUGH THE ABOVE EVIDENCES, WE FIND THAT THE ASSESSEE HAD CAPITAL BALANCE OF 3,46,500 AND 4,21,500 IN THE FORM OF ASSETS AS INVESTMENT IN BUSINESS, CASH & BANK BALANCE, GOLD & JEWELLERY, RECURRING DEPOSIT, KISHAN VIKASH PATRA, HOUSE HOLD EQUIPMENTS, ACCRUED INTEREST ETC., IN THE ASSESSMENT YEARS 2001 - 02 AND 2002 - 03 RESPECTIVELY. THEREFORE, IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER HAD NO REASON TO BRING TO TAX THIS AMOUNT HELD AGAINST CAPITAL IN THE ASSESSMENT YEAR 2003 - 04 AS IT DID NOT RELATE TO ANY SEARCH MATERIAL AND AS SUCH, WE DIRECT DELETION OF THE SAID ADDITION. 5.1. AS REGARDS THE ADDITION OF 8,976 MADE IN THE ASSESSMENT YEAR 2003 - 04, ON PERUSAL OF THE STATEMENT OF AFFAIRS AS ON 31.3.2003 PLACED ON PAGE 3 OF THE PB, WE FIND THAT THE AMOUNT OF 8,976 REPRESENTS ACCRUED INTEREST ON KVP OF 59,000 APPEARING ON BOTH THE SIDES OF BALANCE SHEET. THE CASH AND BANK BALANCE AS ON 31.3.2003 IS 2,14,280.95 WHICH IS WELL AND SUFFICIENT BALANCE. FURTHER THE ASSESSEE HAS NOT ALSO CONSIDERED 8,976 FOR ARRIVING AT THE CASH BALANCE BUT THE ASSESSING OFFICER HAS WRONGLY TAKEN THE SOURCES AND APPLICATION OF SOU RCES SHOWN IN THE CASH FLOW STATEMENT. IN VIEW OF THIS, WE DELETE THE SAID ADDITION OF 8,876. IT(SS)A NOS. 131,132 AND 133/CTK/2011 3 5.2 . AS REGARDS THE ADDITION OF 4,00,000 BEING THE ADVANCE FROM SUBHAM ESTCON P LTD., THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SEARCH MATERIAL INDICA TED AMOUNT RECEIVED FROM SUBHAM ESTCON (P) LTD., FOR THE PURPOSE OF INVESTMENT IN PLOTS OF LAND FOR AND ON BEHALF OF THE COMPANY. THE ASSESSING OFFICER MISDIRECTED HIMSELF TO HOLD WHETHER SUCH ADVANCE COULD HAVE BEEN RECEIVED UNDER THE PROVISIONS OF SECTIO N 2(22)(E) OF THE I.T.ACT, WHEN HE HIMSELF HAD CONSIDERED THE CASE OF THE ASSESSEE ON 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 T HE CENTRAL CIRCLE 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 O F SECTION 68 OR UNDER THE PROVISIONS OF SECTION 2(22)(E) WHICH THE LEARNED CIT(A) HAS FAILED TO CORRELATE . AS WE HAVE DEALT WITH THE 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 4 LAKHS EITHER UNDER T HE PROVISIONS OF SECTION 2(22)(E) OR U/S.68 IN THE ASSESSMENT YEAR 2007 - 08 . 5.3. AS REGARDS SUSTENANCE OF ADDITION OF 2,35,000 ON ACCOUNT OF NSC IN THE ASSESSMENT YEAR 2009 - 10, WE FIND THAT THE ASSESSING OFFICER OBSERVED THAT DURING THE SEARCH OPERATION THE ASSESSEE WAS FOUND TO HAVE INVESTED 13,40,000 IN NSC BUT IN THE DETAILS FILED THE ASSESSEE HAD SHOWN NSC FOR IT(SS)A NOS. 131,132 AND 133/CTK/2011 4 1,42,000 AND AS THERE WAS NO EXPLANATION FOR THE BALANCE EXCESS AMOUNT OF 11,98,000 THE ASSESSING OFFICER MADE ADDITION OF 11,98,000. 5.4. HAVING HEARD BOTH THE PARTIES AND PERUSING THE MATERIAL MADE AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS DISCLOSED NSC ACTUALLY HELD 1,42,000 AND KVP OF RES.2,30,000 TOTALLING TOGETHER 3,72,000 IN HER STATEMENT FILED BEFORE THE ASSESSING OF FICER, WHICH IS MORE THAN NSC OF 1,24,000 AND KVP OF 1,98,000 CALCULATED BY IT. WE FIND FROM THE DETAILS SUBMITTEED THAT THE ASSESSING OFFICER AND THE LEARNED CIT(A) WRONGLY ADDED AN AMOUNT OF 2,35,000 ( 3,77,000 1,42,000) TO THE INCOME OF THE A SSESSEE. FURTHER, WE FIND NO MERIT IN THE FACTUAL ASPECTS FOR THIS CONSIDERATION FOR THE ASSESSMENT YEAR 2009 - 10 AS WERE BEFORE THEM. THERE WAS NO UNDISCLOSED INCOME TO BE CONSIDERED FOR TAXATION AGAINST HOLDING OF ASSETS ONLY. THE ASSESSING OFFICER AND LEARNED CIT(A ) MISDIRECTED THEMSELVES TO HOLD CLAIM OF DEDUCTION WITHOUT BRING TO TAX THE GROSS INCOME WHICH HAS BEEN OTHERWISE ACCEPTED BY THEM UNDER REGULAR ASSESSMENT. THE SAME IS DIRECTED TO BE DELETED. 6. IN THE RESULT, THE APPEALS OF THE 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: RANJITA PANDA,N - 1 /191, IRC VILLAGE, NAYAPALLI, BHUBANESWAR 751 015 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, S ENIOR PRIVATE SECRETARY.