Prasanta Kumar Martha, Bhubaneswar V. DCIT, Bhubaneswar

ITSSA 139/CTK/2011

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7523 (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.139,140,141 AND 142/CTK/2011 (ASSESSMENT YEARS 2003 - 04, 2004 - 05,2005 - 06 AND 2006 - 07) PRASANTA KUMAR MARTHA, PRADHAN SA HI, PANCHAGAON, AIRFIELD, BHUBANESWAR 752 050 PAN: AMUPM 6435 D 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 TRIPATHY, CIT - DR DATE OF HEARING : 23.04.2012 DATE OF PRONOUNCEMENT : 11.05.2012 ORDER PER BENCH : ALL THESE APPEALS BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEARS ARE ON THE LEARNED CIT(A) CONFIRMING THE PURPORTED UNDISCLOSED INCOME BROUGHT TO TAX BY THE ASSESSI NG 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 ASSESSEE ON 24.7.2008 WHEN T HE 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 OFFICE R BROUGHT TO TAX FOR THE ASSESSMENT YEAR 2003 - 04, THE OPENING CAPITAL BALANCE OF 94,000 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. FURTHER D RAWINGS ESTIMATED BY THE ASSESSING OFFICER AT 82 ,000 , 75,000, 70,000 AND 19,000 W ERE BROUGHT TO TAX IN THE ASSESSMENT YEARS IT(SS)A NOS.139,140,141 AND 142/C TK/2011 2 2003 - 04, 2004 - 05, 2005 - 06 AND 2006 - 07 RESPECTIVELY . FOR THE ASSESSMENT YEAR 20 06 - 07 ADVANCE FROM SUBHAM ESTCON (P) LTD., AM OUNTING TO 8 LAKHS HAVE BEEN BROUGHT TO TAX . 3. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE 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 GEN ERAL GROUNDS RAISED COMMON TO THE YEARS HAVE BEEN ADJUDICATED BY ASSIGNING BRIEF ADJUDICATION OF THE SPECIFIC GROUNDS ON MERITS RAISED BY THE ASSESSEE. THE LEARNED CIT(A) CONFIRMED THE ADDITIONS SO BROUGHT ON RECORD BY THE ASSESSING OFFICER WITHOUT CONSIDE RING THE ISSUES ON THE BASIS OF TOTALITY OF THE FACTS BROUGHT ON RECORD BY THE ASSESSEE APPELLANT BEFORE HIM. 4 . THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT THE ASSESSING OFFICER HAS NO BASIS 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 EXPENDI TURES CANNOT BE COMPUTED ON A 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 CO NJECTURES INSOFAR AS THE SEARCH ED MATERIAL INDICATED AMOUNT RECEIVED FROM SUBHAM 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 BEE N RECEIVED UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T.ACT, WHEN HE HIMSELF CONSIDERED THE CASE OF THE ASSESSEE O N THE BASIS IT(SS)A NOS.139,140,141 AND 142/C TK/2011 3 OF SUBHAM ESTCON (P) LTD., THE ASSESSEE, WHO WAS TO BE SEARCHED AND HAD DECLARED UNDISCLOSED INCOME HAD BEEN DEALT WITH BY HIM WHEN THIS ASSESSEE CAME UNDER THE 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 CONSID ERED EITHER UNDER THE PROVISIONS OF SECTION 68 OR 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 OUGHT TO HAVE CONSIDERED THE CASE OF THE ASSESSEE WITH THE BACKGROUND THAT AN NON - INCOME TAX PAYEE NEED NOT BE HELD TO HAVE A STATUS OF AN TAXABLE ENTITY WHEN THE PERSONAL ASSETS OF THE ASSESSEE AMOUNTING TO 94,000 HAVE ALSO BEEN TAXED BEING BELOW TAXABLE LIMIT. HE FURNISHED THE COPIES OF THE DECLARATION MADE BY THE ASSESSEE NAMELY SUBHAM ESTCON (P) LTD., WHICH JUSTIFIE D THE HOLDING OF THE LAND AGAINST 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. 5 . THE LEARNED CIT - DR SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. AS REGARDS THE ADDITION OF 94,000 BEING OPENING CAPITAL OF THE ASSESSMENT YEAR 2003 - 04 IT IS THE CONTENTION OF THE ASSESSEE THAT HE WAS ENGAGED IN BUSINESS ACTIVITIES AND WAS EARNING SOME AMO UNT BUT HOWEVER HE DID NOT FILE ANY RETURN OF INCO ME FOR THE PREVIOUS ASSESSMENT YEARS, SUCH INCOME BEING BELOW TAXABLE LIMIT. WE FIND THAT THE ENDEAVOR OF THE ASSESSING OFFICER APPEARS TO BE TAXING THOSE VERY AMOUNTS WHICH DID NOT FORM PART OF THE UNDISCLOSED INCOME BEING BELOW TAXABLE LIMITS WHEN HE WA S IT(SS)A NOS.139,140,141 AND 142/C TK/2011 4 NOT TO TAX ITEMS OF ASSETS OR DRAWINGS FALLING WITHIN THOSE LIMITS. THEREFORE, THE ADDITION ON ACCOUNT OF LOW DRAWINGS AND PERSONAL ASSETS HELD AS CAPITAL CANNOT BE TAXED IN THE IMPUGNED YEAR. THE SAME IS DIRECTED TO BE DELETED. FOR THE VERY SAME REASON, THE ADDITION MADE ON ACCOUNT OF LOW DRAWINGS ONLY IN OTHER AYS UNDER CONSIDERATION CANNOT BE SUSTAINED AND AS SUCH, THEY ARE DIRECTED TO BE DELETED BEING FROM INCOME BELOW TAXABLE LIMITS FOR THOSE YEARS . 7 . AS REGARDS THE ADDITION OF 8,00,000 IN THE ASSESSMENT YEAR 2006 - 07, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SAID AMOUNT HAD BEEN ADVANCED BY SUBHAM ESTCON (P) LTD AND ALSO DULY DISCLOSED IN THEIR BALANCE SHEET AND THE SAME HAS BEEN ASSESSED BY THE ASSESSING OFFICER U /S.153A AND NO ADVERSE INFERENCE HAS BEEN DRAWN AGAINST THE CONCERN FOR GIVING ADVANCE TO THE ASSESSEE. 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 RETU RNS 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 8 LAKHS EITHER UNDER THE PROVISIONS OF SECTION 2(22)(E) OR U/S.68. IN THIS VIEW OF THE MATTER, WE DI RECT DELETION OF THE SAID ADDITION OF 8 LAKHS MADE IN THE ASSESSMENT YEAR 2006 - 07. 8 . 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. IT(SS)A NOS.139,140,141 AND 142/C TK/2011 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: PRASANTA KUMAR MARTHA, PRADHAN SAHI, PANCHAGAON, AIRFIELD, BHUBANESWAR 752 050 2. THE RESPONDENT: DEPUTY COMMISSIONER OF INCOME - T AX, 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.