Sarmistha Rath, Bhubaneswar V. ACIT, Bhubaneswar

ITSSA 23/CTK/2009

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7526 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 02-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 28-01-2009
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: P S PANDAKAMAL AGARWALLA ARS
• Keywords: Unexplained investment; Income from undisclosed sources; Source of fund; Assessment record; Revised return
• Section: 69; 139

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 23/ CTK / 2009 (A.Y. 2003 - 04 ) IT(SS)A 55/ CTK / 2009 (A.Y. 2004 - 05 ) IT(SS)A 96/ CTK / 2009 (A.Y. 2005 - 06 ) IT(SS)A 199/ CTK / 2 009 (A.Y. 2006 - 07 ) AND IT(SS)A 98/ CTK / 2009 (A.Y. 2005 - 06 ) IT(SS)A 99/ CTK / 2009 (A.Y. 2006 - 07 ) SMT.SARMISTHA RATH, B - 10, BJB NAGAR, BHUBANESWAR 751 014. PAN:AAYPR 3115 M VERSUS ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), BHUBANESWAR. (APPELLAN T) (RESPONDENT) FOR THE APPELLANT: SHRI P.S.PANDA/KAMAL AGARWALLA,ARS FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, DR DATE OF HEARING : 02.04.2012 DATE OF PRONOUNCEMENT : 25.04.2012 ORDER PER BENCH : IT(SS)A NOS. 23, 55, 96 AN D 199/CTK/2009 AR E APPEALS FILED BY THE ASSESSEE PERTAINING TO ASSESSMENTS MADE U/S.153A/143(3) OF THE I.T.ACT,1961 FOR THE AYS 2003 - 04,2004 - 05,2005 - 06 AND 2006 - 07,WHEREAS IT(SS)A NOS.98 AND 99/CTK/2009 FILED BY THE ASSESSEE PERTAINING TO ORDER IMPOSING PENALTY U/S.271(1)( C) OF THE I.T.ACT, 1961 FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIRST TAKE UP THE APPEALS IN IT(SS)A NOS. 23, 55, 96 AND 199/CTK/2 009. 3. THE ASSESSEE, AN INDIVIDUAL, DERIVES INCOME FROM CAPITAL GAIN AND INCOME FROM OTHER SOURCES. A S EARCH AND SEIZURE OPERATION U/S.132 OF THE L.T.ACT,1961 WAS CONDUCTED BY THE DEPARTMENT ON 09.08.2005 IN THE OFFICE PREMISES OF THE SOCIETY, ORISSA COMP UTER ACADEMY AND RESIDENTIAL PREMISES OF THE DIRECTORS. DURING THE COURSE OF SEARCH OPERATION, INCRIMI NATING DOCUMENTS , BOOKS OF ACC OUNT ETC. WERE FOUND AND SEIZED, BASED ON WHICH THE IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 2 ASSESSING OFFICER ISSUED NOTICE U/S.153A OF THE ACT ON 08.03.2006 REQUIR ING THE ASSESSEE TO FI LE A RETURN OF INCOME. ON 28.04. 2006, THE ASSESSEE FILED HER RETURNS FOR THE AYS UNDER CONSIDERATION. THEREAFTER THE ASSESSING OFFICER ISSUED NOTICE U/S.143(2) ON 16.1.2007. THE ASSESSEE SUO MOTU FILED REVISED RETURNS ON 6.12.2007. TH E ASSESSING OFFICER, THOUGH TREATED THE REVISED RETURN AS NON - EST ALLEGING TO HAVE BEEN FILED BELATEDLY, HELD THE ADDITIONAL INCOME DISCLOSED IN THE REVISED RETURN AS REGARDS THE FOLLOWING DEPOSIT S/INVESTMENTS AND INTEREST ON R.D.A/C., AS UNDISCLOSED INCOM E OF THE ASSESSEE BESIDES MAKING ADDITION ON OTHER COUNTS AND COMPLETED THE ASSESSMENTS FOR ALL THE AYS U/S.153A/143(3) OF THE ACT. A.Y. DEPOSIT IN BANK INVESTMENT IN R.D. A/C INTEREST ON RD A/C DEPOSIT IN BANK INVESTMENT IN BIRLA SUNLIFE INVESTMENT IN BA JAJ ALLIANZ 2003 - 04 - 30,00,000 77,730 - - - 2004 - 05 57,16,237 10,00,000 3,65,004 9,50,000 - - 2005 - 06 2,56,50,442 - 10,77,116 33,43,020 - - 2006 - 07 - - 17,08,992 45,91,126 1,19,00,000 1,01,00,000 4. AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE T HE CIT(A) AND THE LEARNED CIT(A) SUSTAINED THE ABOVE ADDITIONS IN THE RESPECTIVE AYS UNDER CONSIDERATION BESIDES MAKING ENHANCEMENT OF INCOME OF 3,16, 18,256 AND 5,32, 50, 205 IN THE AYS 2005 - 06 AND 2006 - 07 RESPECTIVELY. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE ASSESSEE HAS RAISED A GROUND, COMMON TO ALL THESE AP PEALS , IS AGAINST THE VIEW OF AUTHORITIES BELOW HOLDING THE R EVISED RETURNS SUBMITTED BY THE ASSESSEE AS NON - EST. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT IN RESPONSE O F NOTICE U/S.153A ON 28.5.2007. SUBSEQUENTLY, AFTER REVIEWING THE IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 3 DOCUMENTS AND DETAILS OF INVESTMENT MADE BY THE ASSESSEE AND AFTER RECONCILING THE ENTIRE INCOME/INVESTMENT WITH THE STATEMENT OF AFFAIRS, THE ASSESSEE SUO MOTU FILED REVISED RETURNS ON 06.12.2007 DISCLOSING ADDITIONAL INCOME OF 30,77,730, 70,81,241, 2,67,27,555 AND 17,08,992 IN THE A.YS. 2003 - 04 , 2004 - 05, 2005 - 06 AND 2006 - 07 RESPECTIVELY. THE LEARNED AR OF THE ASSESSEE DID NOT DISPUTE THE ADDITIONS BUT CONTENDED BEFORE US THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) HOLDING THE SAME AS UNDISCLOSED INCOME IS NOT PROPER. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW POINTING OUT TO THE FACT THAT THE ASSESSEE HAD NOT FILED THE FIRST RETURN IN TI ME. 6. ON CAREFUL GOING THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, THE UNDISPUTED FACTS ARE THAT FOR ALL THE AYS UNDER CONSIDERATION THE ASSESSEE FILED RETURNS ON 28.4.2006 IN RESPONSE TO NOTICE U /S.153A. BUT AFTER RECONCILING THE ENTIRE INCOME/INVESTMENT WITH THE STATEMENT OF AFFAIRS, THE ASSESSEE FILED SUO MOTU THE REVISED RETURNS ON 6.12.2007 DISCLOSING THE ABOVE ADDITIONAL INCOME BEFORE THE SAME WAS DETECTED BY THE TAX AUTHORITIES. THERE IS ALS O NO DISPUTE TO THE FACTS THAT THE ASSESSING OFFICER HAS UTILISED THE INFORMATION MADE IN THE REVISED RETURN FILED BY THE ASSESSEE. BY FILING THE REVISED RETURNS DISCLOSING ADDITIONAL INCOME IN THE REVISED RETURNS, THE INTENTION OF THE ASSESSEE APPEARS TO BE VERY MUCH CLEAR FOR VOLUNTARY DISCLOSURE OF THE SAID INCOME WHICH WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN DETECTED AFTER FILING OF THE ORIGINAL RETURNS BUT BEFORE ASSESSMENTS. SINCE THE ASSESSEE HAS DISCLOSED THE INCOME/INVESTMENT SUO MOT U IN THE REVIS ED RETURNS OF INCOME FILED BEFORE DETECTION OF THE SAME BY THE DEPARTMENT, AND SINCE THE ASSESSING OFFICER HAS UTILIZED THE INFORMATION MADE IN THE REVISED RETURNS, THE IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 4 SAID AMOUNTS CANNOT BE HELD AS UNDISCLOSED INCOME, AS RIGHTLY CONTENDED BY THE LEARNED AR OF THE ASSESSEE. 7. AS REGARDS THE ADDITION OF 9,50,000 MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IN THE ASSESSMENT YEAR 2004 - 05, WE FIND THAT THERE WERE CASH DEPOSITS OF 9,00, 000 ON 8.8.2003 AND 50,000 ON 21.03.2003 IN THE I DBI BANK . THE ASSESSEE WAS REQUESTED BY THE AO TO FURNISH THE SOURCE OF THE SAME. IT WAS SUBMITTED BY THE ASSESSEE VIDE HIS LETTER DT.17.09.2007 THAT THE SAID AMOUNT WAS DEPOSITED FROM OUT OF THE AVAILABLE CASH BALANCE. OBSERVING THAT NO FUND FLOW STATEMEN T WAS FILED IN SUPPORT THEREOF, THE ASSESSING OFFICER HELD THE SAID AMOUNT AS INCOME FROM UNDISCLOSED SOURCES AND ADDED THE SAME TO THE TOTAL INCOME. ON APPEAL, THE LEARNED CIT(A) UPHOLD THE SAID ADDITION. 8. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT T HE CASH WAS DEPOSITED BY THE ASSESSEE IN IDBI BANK A/C. NO. 0421000005077 ON TWO DATES I.E., 8.8.2003 AND 21.8.2003. IN SUPPORT, HE FURNISHED A COPY OF THE BANK STATEMENT IN SUPPORT OF SUCH DEPOSITS AT PAGE 27 OF THE PB. T HE AFORESAID AMOUNT WERE DEPOSITED OUT OF OPENING FUND OF 18,37,709 AND FUNDS OFFERED FOR TAXATION IN THE ASSESSMENT YEAR 2003 - 04 AT 30,77,730 AND 70,81,241 IN THE A.Y. 2004 - 05 . HE BROUGHT TO OUR NOTICE TO PAGE 122 OF THE PB, WHICH STATEMENT OF AFFAIRS FILED ON 31.03.2003 SHOWS THE CLOSING FUND AT 18,37,709. DURING THE COURSE OF HEARING BEFORE THE LEARNED CIT(A) THE ABOVE FACT WAS BROUGHT BEFORE HIM , WHICH HOWEVER, WAS IGNORED ALLEGING THAT NO STATEMENT OF AFFAIRS FOR THE A.Y. 2003 - 04 HAS BEEN FILED BY REFERRING TO THE RETURN FILED BY THE APPELLANT U/S. 139 O N 30.09.2003 AND WITHOUT REFERRING TO THE REVISED RETURN FILED ON 06.12.2007 WHERE IN THE STATEMENT OF AFFAIR WAS ENCLOSED. THE LEARNED DR DID NOT DISPUTE THE ABOVE FACTS STATED BY THE IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 5 LEARNED AR OF THE ASSESSEE. THEREFORE, CONSIDERING THE AMOUNTS SURRENDE RED BY THE ASSESSEE AND THE FUNDS AVAILABLE WITH THE ASSESSEE AS DISCUSSED ABOVE WHICH IS VERY MUCH GLARING ON GOING THROUGH THE STATEMENT OF AFFAIRS FURNISHED BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE AMOUNT OF 9,50,000 DEPOSITED IN THE BAN K CANNOT BE HELD TO BE OUT OF UNDISCLOSED SOURCES OF INCOME AND AS SUCH, WE DIRECT DELETION OF THE SAID AMOUNT OF 9,50,000 BY ALLOWING GROUND OF THE ASSESSEE RAISED IN THIS REGARD. 9. AS REGARDS THE ADDITION OF 33,43,020 IN SAVINGS BANK A/C. NO.024010100 205245 WITH UTI BANK, SATYANAGAR BRANCH, BHUBANESWAR, IN THE ASSESSMENT YEAR 2005 - 06, THE ASSESSING OFFICER HAS OBSERVED THAT IN HER REPLY DT. 14.12.2007, THE ASSESSEE FURNISHED A RECONCILIATION STATEMENT FROM WHERE THE CASH AMOUNTING TO 33,43,020 WAS C LAIMED TO HAVE BEEN DEPOSITED OUT OF HER OWN FUND. IN SUPPORT OF HER CLAIM , NO DATE WISE FUND FLOW STATEMENT WAS FILED. EVEN IN HER LETTER DT. 17.09.2007 THE ASSESSEE HAS SUBMITTED THAT NO PERSONAL ACCOUNT WAS MAINTAINED, SO THE GENUINENESS OF THE CLAIM IS NOT PROVED. THUS, THE SOURCE OF DEPOSIT OF 33,43,020 IN THE S.B. ACCOUNT A/C. 024010100205245 WITH UTI BANK, SATYANAGAR BRANCH, BHUBANESWAR REMAINS UNSUBSTANTIATED. EVEN FROM THE OFFER MADE FOR EARLIER YEARS NO SUCH SOURCE IS FOUND AVAILABLE, IF THE CASH FLOW STATEMENT FOR THE A.Y. 2001 - 02 IS TAK EN AS THE BASIS. THE LEARNED CIT(A) DID NOT BELIEVE THE CONTENTION OF THE ASSESSEE THAT THE ABOVE DEPOSIT WAS MADE OUT OF OWN FUNDS ON THE OBSERVATION THAT THE ASSESSEE HAS DECLARED INCOME IN THE RETURN ONLY THE INCOME FROM THE CAPITAL GAIN AND INCOME FROM OTHER SOURCES (INTEREST INCOME) , THEREFORE, THERE IS NO QUESTION OF HAVING ANY OWN FUND IN HAND TO DEPOSIT 33,43,020 IN CASH IN SB ACCOUNT. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 6 MAKING THE IMPUGNED ADDITION HOLDING THE SAM E FROM UNDISCLOSED SOURCE WITHOUT TAKING INTO CONSIDERATION THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE IN THE REVISED RETURNS I.E., 30,77,730, 70,81,241 AND 2,67,27,555 IN THE ASSESSMENT YEAR 2003 - 04, 2004 - 05 AND 2005 - 06. WE FIND AND THE LEARNED D R DID NOT DISPUTE THAT THE DISCLOSURE SO MADE BY THE ASSESSEE HAS BEEN BROUGHT TO TAX BY THE ASSESSING AUTHORITIES. IN SUCH VIEW OF THE MATTER, THERE IS NO REASON TO DISBELIEVE IN THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT IN QUESTION WAS DEPOSITED IN SAVINGS BANK ACCOUNT OUT OF OWN FUNDS AND AS SUCH, THE ADDITION OF 33,43,020 IS NOT JUSTIFIED AND PROPER AND HENCE THE SAME IS DIRECTED TO BE DELETED. 10. AS REGARDS CONFIRMATION OF ADDITION OF 45,91,126 MADE IN THE ASSESSMENT YEAR 2006 - 07 , THE ASSESSIN G OFFICER OBSERVED THAT AS PER THE RECONCILIATION STATEMENT FURNISHED ON 14.12.2007 THE ASSESSEE HAS DEPOSITED THE SAID AMOUNT IN THE SAVINGS BANK ACCOUNT NO.024010100205245 AT UTI BANK, SATYANAGAR AND IT WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN DEPOSITED OUT OF OWN FUND. THE ASSESSING OFFICER OBSERVED THAT IN SUPPORT OF HER CLAIM NO DATE WISE FUND FLOW STATEMENT WAS FILED. THEREFORE, THE ASSESSING OFFICER HELD THE SAID DEPOSITS TO BE OUT OF UNDISCLOSED SOURCES AND SO ADDED THE SAME TO THE TOTAL INCOME. THE LEARNED CIT(A) CONFIRMED THE SAME OB THE OBSERVATION THAT THERE IS NO KNOWN SOURCE AVAILABLE OF CREATING/GENERATING OWN CASH FUND OF 45,91,126. THE LEARNED AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A) HA S CONSIDERED ONLY THE ORIGINAL RETURN BUT IGNORED THE REVISED RETURNS/ADDITIONAL INCOME OFFERED FOR TAXATION AND THE STATEMENT OF AFFAIRS FILED ALONG WITH THE REVISED RETURN ON 6.12.2007. WE FIND FORCE IN SUCH CONTENTION OF THE LEARNED AR OF THE ASSESSEE. THE LEARNED DR DID NOT DISPUTE THE FACT THAT THE ASSESSEE IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 7 HAS OFFERED FOR TAXATION THE ADDITIONAL INCOME THROUGH REVISED RETURNS OF 30,77,8730, 70,81,241, 2,67,27,55 AND 17,23,474 IN THE AYS 2003 - 04,2004 - 05,2005 - 06 AND 2006 - 07. CONSIDERING SUCH DISCLOSURE, THERE IS NO REASON TO DISBELIEVE THE CLAIM OF THE ASSESSEE THAT THE AMOUNT OF 45,91,126 WAS DEPOSITED OUT OF OWN FUNDS. THE REFORE, THE IMPUGNED ADDITION OF 45,91,126 CANNOT BE SUSTAINED AND HENCE, THE SAME IS DIRECTED TO BE DELETED. 11. AS REGARDS THE SUSTENANCE OF ADDITION OF 1,19, 00, 000 MADE IN THE ASSESSMENT YEAR 2006 - 07 TOWARDS INVESTMENT IN BIRLA SUN LIFE INSURANCE, THE ASSESSING OFFICER MADE THE SAID ADDITION ON THE OBSERVATION THAT THE INVESTMENTS IN BIRLA SUN LIFE INSURANCE THOUGH MADE THROUGH BANK BUT THE SOURCE OF THE SAME WAS NOT ACCOUNTED FOR AND HOW THE FUND WAS AVAILABLE TO THE ASSESSEE IS NOT CLEAR. THE LEARNE D CIT(A) HAS CONFIRMED THE SAME. BEFORE US, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT 1,09,00,000 HAS BEEN INVESTED DIRECTLY BY THE ASSESSEE AS PER THE DETAILS GIVEN IN THE BANK STATEMENTS (PAGES 143 TO 145 PB) AND THE ANALYSIS OF BANK STATEMENT ( PAGE 146 OF THE PB ) . WE HAVE PERUSED THE SAME AND FOUND THE CONTENTION OF THE AR OF THE ASSESS EE TO BE CORRECT . THE ASSESSEE HAS DEPOSITED THE AMOUNT THROUGH CHEQUES FROM BANK OF BORODA OF 20, 00, 000 AND THE BALANCE AMOUNT FROM IDBI 68952, WHICH IS VERY MUCH CLEAR FROM THE BANK STATEMENTS FURNISHED BY THE ASSESSEE. FOR THE REST OF THE AMOUNT OF 1 0,00,000 DEPOSITED IN POLICY NO.501088, THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SAID DEPOSIT WAS VIDE CHEQUE NO.41542 OF FEDERAL BANK DIRECTLY DEPOSITED BY ONE SRI PRADEEP PRADHAN FROM HIS BANK ACCOUNT OUT OF ADVANCE LYING WITH HIM, WHICH IS EVID ENT FROM THE IDBI ACCOUNT NO.68952 OF THE ASSESSEE. WHEN THE ABOVE FACTS ARE POINTED OUT, THE LEARNED DR COULD NOT IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 8 CONTROVERT THE SAME. CONSIDERING THE MATERIAL EVIDENCE PRODUCED BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT WITHOUT PROPERLY EXAMININ G THE SAME THE AUTHORITIES BELOW ARE NOT AT ALL JUSTIFIED IN MAKING THE ADDITION OF 1,19, 00, 000 HOLDING THE SAME TO HAVE BEEN DEPOSITED OUT OF UNDISCLOSED SOURCES. THEREFORE, WE DIRECT DELETION OF THE SAID ADDITION OF 1,19, 00, 000. 12. AS REGARDS THE ADD ITION OF 1,01, 00, 000 MADE IN THE ASSESSMENT YEAR 2006 - 07 , WE FIND THAT THE LEARNED CIT(A) HAS REJECTED THE ARGUMENT OF THE LEARNED AR OF THE ASSESSEE MADE BEFORE HIM ON THIS ISSUE ON THE GROUND THAT THAT THERE WAS NO GROUND OF APPEAL REGARDING ADDITION OF 1,01,00,000. WHEN, TH E LEARNED AR OF THE ASSESSEE CONTESTED THIS ADDITION DURING THE COURSE OF HEARING BEFORE HIM, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN REJECTING THE SAME TECHNICALLY WITHOUT CONSIDERING THE FACTS AN D EVIDENCES FURNISHED BY THE ASSESSEE IN THIS REGARD. A POINT RAISED BUT NOT DECIDED BY THE APPELLATE AUTHORITY IS AGAINST PRINCIPLES OF LAW. 13. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER FOUND THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERAT ION THE ASSESSEE WAS FOUND TO HAVE MADE INVESTMENT OF 1,11,75,427 IN INSURANCE POLICIES OF BAJAJ ALLIANC LIFE INSURANCE COMPANY. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INVESTMENT OF 1,01,00,000 OUT OF THE TOTAL INVESTMENT 1,11,75,427 WILL NOT BE TREATED AS AN INVESTMENT MADE OU T OF UNDISCLOSED SOURCES. THE ASSESSEE FURNISHED THE DETAILS OF SUCH INVESTMENT IN INSURANCE POLICIES AND EXPLAINED THE SAME TO HAVE BEEN INVESTED OUT OF THE AVAILABLE BALANCE IN BANK AND OUT OF LOAN FROM IDBI BANK AS DETAILED IN PARAGRAPH 5.4 OF THE ASSES SMENT ORDER . THE ASSESSING OFFICER OBSERVED IN PARAGRAPH 5.5 AS UNDER : IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 9 THE ASSESSEE DURING THE COURSE OF SCRUTINY PROCEEDINGS FILED A COPY OF BANK STATEMENT OF ACCOUNT NO. 438010100044776 MAINTAINED WITH UTI BANK, KALPANA SQUARE, BHUBANESWAR. ON PERUSAL OF THE STATEMENT, IT IS SEEN THAT ON 28.03.2006 AN AMOUNT OF 50,00,000 WAS CREDITED IN THE ACCOUNT BY WAY OF CLEARING. SUBSEQUENTLY, A SUM OF 50,00,000 IS FOUND TO HAVE BEEN CREDITED TO THE SAID ACCOUNT BY WAY OF TRANSFER ON 03.04.2006 CREATING A BALAN CE OF 1,00,00,000 IN THE ACCOUNT. THE INVESTMENT OF 1,00,00,000 TOWARDS PREMIUM IN BAJAJ ALLIANZ LIFE INSURANCE CO. WAS MADE BY CHEQUE BEARING NO. 16053, WHICH WAS DEBITED TO THE ACCOUNT ON 05.04.2006. I.E. THE F.Y. 2006 - 07 RELEVANT TO THE A.Y. 2007 - 08 . SINCE THE INVESTMENT IS FOUND TO HAVE BEEN EFFECTIVELY MADE DURING THE F.Y. 2006 - 07, IT WILL BE DEALT WITH IN THE RESPECTIVE A.Y. 2007 - 08 AND NO FURTHER ADDITION FOR THIS AMOUNT OF INVESTMENT IS MADE IN THIS A.Y. THE ASSESSING OFFICER MADE THE ADDITION OF 1,01,00,000. 13. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE INVESTED A SUM OF 1,11,75,427 IN BAJAJ ALLIANZ INSURANCE POLICY OUT OF WHICH 1,01,00,000 HAS BEEN CONSIDERED AS UNEXPLAINED BY THE ASSESSI NG OFFICER OBSERVING THAT THAT OUT OF THE TOTAL INVESTMENT ONLY 10,75,427 HAS BEEN SHOWN IN THE RETURN OF INCOME FILED ON 30.03.2007, WHICH IS NOT CORRECT. IN FACT THE ENTIRE AMOUNT OF INVESTMENT OF 1,11,75,427 MADE HAS BEEN DULY DISCLOSED IN THE STATE MENT OF AFFAIRS FILED ALONG WITH REVISED RETURN FILED ON 06.12.2007 , WHEREIN THE SOURCE OF ABOVE DEPOSIT HAS ALSO BEEN EXPLAINED. BUT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION WITHOUT REFERRING TO THE OTHER DOCUMENTS FILED. HE FURTHER SUBMITTED THAT OUT OF THE ALLEGED UNEXPLAINED INVESTMENT OF 1,01,00,000 , 50,00,000 HAS BEEN INVESTED OUT OF AMOUNT BORROWED FROM IDBI BANK AND IN SUPPORT HE FURNISHED A COPY OF BANK STATEMENT AT PAGE 141 OF THE PB. FURTHER, A SUM OF 50,00,000 HAS BEEN INVESTED BY AMOUNT RECEIVED FROM SRI BHABANI CHARAN RATH, HU SBAND OF THE ASSESSEE AND IN SUPPORT THEREOF IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 10 REFERRED TO THE BANK STATEMENT AT PAGE 138 OF THE PB AND ALSO TO THE CERTIFICATE OBTAINED FROM AXIS BANK PLACED AT PAGE 142 OF THE PB. THE BALANCE AMOUNT OF 1,00,000 HAS BEEN INVESTED OUT OF OWN FUND. HE SUBMIT TED THAT 1,00,000 WAS PAID ON 23.01.2006 AND THE BALANCE AMOUNT OF 1,00,00,000 WAS PAID ON 31.03.2006 WHICH WAS CLEARED FROM THE BANK ACCOUNT OF THE ASSESSEE ON 05.04.2006. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE ENTIRE AMOUNT HAS BEEN TRANS ACTED THROUGH BANK AND THE SAME FACT WAS ALSO MENTIONED BEFORE THE ASSESSING OFFICER, WHICH IS CLEARLY EVIDENT FROM HIS ORDER ITSELF. WHEN THE ABOVE FACTS WERE BROUGHT TO THE NOTICE OF THE LEARNED DR, HE COULD NOT CONTROVERT THE SAME BY PRODUCING ANY MATER IAL CONTRARY TO IT. WE HAVE PERUSED THE ABOVE MATERIAL PLACED BEFORE US, AND CONSIDERING THE BANK STATEMENTS, CERTIFICATE AND ALSO THE STATEMENT OF AFFAIRS, WE FIND THAT THE INVESTMENT WAS FROM GENUINE SOURCE DULY REFLECTED IN THE STATEMENT OF AFFAIRS FILE D BY THE ASSESSEE FOR THE AY 2006 - 07 ALONG WITH THE REVISED RETURN. THEREFORE, THE IMPUGNED ADDITION OF 1,01,00,000 MADE BY THE ASSESSING OFFICER HOLDING THE SAME TO BE UNEXPLAINED WITHOUT CONSIDERING THE MATERIAL PLACED BEFORE HIM IS NOT PROPER AND HENCE , WE DIRECT DELETION OF THE SAID ADDITION. 14. AS REGARDS THE ENHANCEMENT OF INCOME MADE BY THE LEARNED CIT(A) IN THE ASSESSMENT YEAR 2005 - 06 CONSIDERING THE DEPOSITS OF 3,05,78,256 AND 10,40,000 IN IIDBI BANK AS INVESTMENT, WE FIND THAT THE LEARNED C IT(A) ISSUED SHOW CAUSE NOTICE AS UNDER : 2. DURING COURSE OF APPELLATE PROCEEDING, IT IS SEEN THAT ADDITIONS HAVE BEEN MADE ON ACCOUNT OF INVESTMENT MADE IN THE RD ACCOUNT, DEPOSIT IN THE SB ACCOUNT AT BHUBANESWAR (024010100205445) AND THE DEPOSIT IN THE SB ACCOUNT AT BALASORE (221010100000125) WITH THE AXIS BANK. HOWEVER, NO IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 11 ENQUIRY WAS CONDUCTED ABOUT THE OTHER BANK ACCOUNT AT THE TIME OF ASSESSMENT AND ON MY REPEATED REQUEST YOUR REPRESENTATIVE FAILED TO SUBMIT THE COPY OF THE BANK ACCOUNTS MAINTAINED BY YOU. IN VIEW OF THE ABOVE FACT, THE AO WAS DIRECTED TO COLLECT THE DETAILS OF THE BANK ACCOUNTS MAINTAINED BY YOU AND IN VIEW OF THE SAID DIRECTION, THE AO VIDE THE LETTER DT.18.2.2009 SUBMITTED THE COPY OF BANKS STATEMENT AND AFTER PERUSAL OF THE ACCO UNTS, IT IS FOUND THAT THESE ACCOUNTS AND THE DEPOSITS THEREIN ARE NOT DISCLOSED BY YOU. THE DETAIL IS AS BELOW: SL. NO. ACCOUNT NO./BANK TOTAL AMOUNT (IN ) PERIOD I) 042104000068952/IDBI 3,05,78,256 01.04.04 TO 31.03.05 II) 042104000050777/IDBI 26,04,807 - DO - ---------------- 3,31,83,063 ======= T HE DEPOSITS IN THESE ACCOUNTS ARE MOSTLY IN CASH. FROM THE ASSESSMENT RECORD, NO SATISFACTORY SOURCE OF DEPOSIT IS FOUND. IS IT THE SIPHONED MONEY OF OCA WHEREIN, YOUR HUSBAND MR. B.C.RATH AND BROTHER MR. SUBRAT PRASANNAMISHRA ARE PRESIDENT AND SECRETARY RESPECTIVELY? I PROPOSE TO ENHANCE YOUR INCOME BY SAID AMOUNT ( 3,31,83,063) TREATING IT AS UNEXPLAINE D INVESTMENT. BEING A CASE OF ENHANCEMENT OF INCOME, A SHOW - CAUSE U/S. 251(2) OF THE I.T. ACT, 1961 IS HEREBY GIVEN TO YOU TO SUBMIT YOUR REPLY, IF ANY, WITHIN 10 DAYS OF RECEIPT OF THIS LETTER. THE LEARNED CIT(A) HAS OBSERVED THAT THE ASSESSEE FURNISHED A STATEMENT EXPLAINING THE SOURCE OF DEPOSIT IN ACCOUNT NO.04210400000000050777 IN IDBI BANK BUT DID NOT FURNISH ANY SUCH DETAILS OF SOURCE OF DEPOSITS IN A/C.NO.042104000068952 . HE MADE THE IMPUGNED ADDITIONS , WHICH RESULTED THE ENHANCEMENT OF ASSESSMENT, BY OBSERVING IN PARAGRAPH 5 OF HIS ORDER, AS UNDER : 5. GOING THROUGH THE DETAIL OF SOURCE OF DEPOSIT IN ACCOUNT NO. 042104000050777 EXPLAINED BY MR. PANI, IT IS FOUND THAT THE EXPLANATION FOR FOLLOWING DEPOSITS ARE NOT SUPPORTED BY ANY IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 12 EVIDENCE OR DEC LARED IN THE RETURN OF INCOME: DATE. PARTICULARS OF DEPOSITS AMOUNT (IN ) 14.06.2004 ADVANCE FROM DR. B.C. RATH 1,00,000 07.08.2004 CASH DEPOSIT FROM AVAILABLE CASH 5,40,000 14.03.2005 ADVANCE FROM DR. B.C. RATH 3,00,000 28.03.2005 ADVANCE FROM ASHALATA MISHRA 1,00,000 -------------- 10,40,000 ======== AND NO EXPLAN ATION HAS BEEN GIVEN REGARDING THE DEPOSITS IN THE ACCOUNT NO. 042104000068952 WHICH WAS INITIALLY DISOWNED BUT LATER ON ACCEPTED. IN THIS ACCOUNT, THE DEPOSITS ARE MOSTLY IN CASH IN RANGE OF 49,000 TO BELOW 50,000. THUS, THE DEPOSIT OF 3,16,18,256 I N THESE TWO BANK ACCOUNTS ARE TREATED AS UNEXPLAINED INVESTMENT U/S. 69 OF THE I.T. ACT, 1961 AND THE APPELLANTS INCOME IS ENHANCED BY 3,16,18,256 ( 3,05,78,256 + 10,40,000). 15. THE LEARNED AR OF THE ASSESSEE SUBMITTED BEFORE US THAT T HE ASSESSEE OPERATED ITS FINANCIAL TRANSACTION THROUGH HER VARIOUS BANK ACCOUNTS . HE FURNISHED ALL THE DETAILS PLACED AT PAGES 63 TO 82 OF PB, ON THE BASIS OF WHICH HE SUBMITTED THAT T HE ASSESSEE HAD MADE CONSIDERABLE TRANSACTIONS BETWEEN BANKS DEPENDING ON AVAILABLE FUNDS AND WITHIN THE FAMILY MEMBERS AS WELL AS OUTSIDERS. HE POINTED OUT BY REFERRING TO THE BANK STATEMENTS THAT IN LINE WITH DEPOSIT WITHDRAWALS HAVE ALSO BEEN MADE AND PAYMENTS HAVE BEEN EFFECTED TO THE PERSONS FROM WHOM THE AMOUNT HAVE BEEN RECEIVED A ND CREDITED TO THE BANK ACCOUNT. HE FURNISHED A SUMMARY OF BANK STATEMENTS WHICH IS PLACED AT PAGE 82 OF THE PB. HE POINTED OUT THAT THERE WERE WRONG ENTRIES IN THE BANK STATEMENTS FOR 1,03,10,000 WHICH HAS BEEN SUBSEQUENTLY BEEN RECTIFIED BY THE BANK. T HERE ARE CONTRA ENTRIES OF IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 13 1,00,00,000 BY WAY OF TRANSFERRING FUNDS FROM ONE BANK ACCOUNT TO ANOTHER AS PER NECESSITY. T HE AMOUNT INVESTED OUT OF THE BANK ACCOUNTS HAS BEEN DULY DISCLOSED IN THE STATEMENT OF AFFAIRS FILED ALONG WITH THE REVISED RETURN FI LED ON 06.12.2007. DUE TO CERTAIN CIRCUMSTANCES, THE ASSESSEE HAD DISOWNED THE ADDITIONAL INCOME OFFERED IN THE REVISED RETURN. SIMILARLY SHE HAD ALSO DISOWNED CERTAIN BANK STATEMENTS WHICH WERE USED FOR MAKING TRANSACTIONS REFLECTED IN THE STATEMENT OF AF FAIRS FILED. HE SUMMARIZED THE ABOVE SUBMISSIONS THAT THE ASSESSEE COMPUTED THE INCOME, ORIGINALLY NOT OFFERED FOR TAXATION AND ASSETS REMAINING IN DISCLOSED CREATED OUT OF SUCH INCOME AND SUBSEQUENTLY OFFERED THE SAME FOR TAXATION SUO - MOTTO BY FILING THE REVISED RETURN ON 06.12.2007. THE ASSESSING OFFICER WHILE PASSING THE ORDER, CONSIDERED THE REVISED RETURN AS NONEST WITH THE CONTENTION THAT THE ORIGINAL RETURN WAS FILED BELATEDLY, BUT ADDED THE ADDITIONAL INCOME DISCLOSED IN THE REVISED RETURN AND ALSO CONSIDERED THE ASSETS CREATED OUT OF THE ABOVE ADDITIONAL INCOME AND DULY DISCLOSED IN THE STATEMENT OF AFFAIRS AS UNEXPLAINED AND ADDED FURTHER. THE IRONY IS THAT WHILE PASSING THE ORDER, THE LEARNED WENT ONE STEP AHEAD AND ADDED THE ENTIRE CREDIT IN THE BANK ACCOUNT AND IGNORED THE DETAILS/ CONTRA/WRONG/REVERSE ENTRIES WHICH IS NOT AT ALL JUSTIFIED. THE LEARNED AR OF THE ASSESSEE FURTHER REFERRED TO PAGES 66 TO 69 OF THE PB AND CONTENDED THAT FROM THE BANK STATEMENT ENCLOSED IN THE PAPER BOOK AT PAGE NO. 66 TO 69, IT MAY BE SEEN THAT IN THE CASE OF CHEQUE DEPOSITED ON 14.06.2004 FOR 1,00,000 AND ON 28.03.2005 FOR 1,00,000 THE NAME OF THE PERSON FROM WHOM THE SAME HAS BEEN RECEIVED HAS BEEN DULY MENTIONED IN THE BANK STATEMENT. THE CASH DEPOSITED ON 07.08.2004 FOR 5,40,000 WAS MADE BY WITHDRAWING THE EQUIVALENT AMOUNT FROM IDBI BA NK A /C NO. 042104000068952 ON THE SAME DATE (PAGE 73 OF PB). BESIDES ABOVE 3,00,000 CHEQUE DEPOSITED ON 14.03.2005 WAS RECEIVED FROM THE HUSBAND OF IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 14 THE APPELLANT SRI B.C. RATH. THE SAME IS DULY REFLECTED IN THE BANK STATEMENT OF THE ASSESSEE (PAGE 68 OF PB) . SRI B.C. RATH & SMT. ASHALATA MISHRA WERE ASSESSED BY THE SAME A.O. AND IN CASE OF ANY DOUBT ON THE ABOVE EXPLANATIONS, THE SAME COULD HAVE BEEN CROSS VERIFIED FROM THEIR RETURNS. IN VIEW OF THE ABOVE, WHEN THE ASSESSEE HAS DULY EXPLAINED THE SOURCE O F DEPOSITS IN BOTH THE ACCOUNTS IN IDBI BANK DULY SUPPORTED WITH EVIDENCE LIKE BANK STATEMENTS AND STATEMENT OF AFFAIRS FURNISHED BY THE ASSESSEE ALONG WITH THE REVISED RETURN, BOTH THE ADDITIONS MADE BY THE LEARNED CIT(A) IS NOT AT ALL JUSTIFIED AND THERE FORE, THE LEARNED AR OF THE ASSESSEE PRAYED FOR DELETION OF THE SAME. THE LEARNED DR SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A). 16. HAVING HEARD BOTH THE PARTIES AND CAREFULLY GOING THROUGH THE MATERIAL MADE AVAILABLE ON RE CORD I.E., THE BANK STAT EMENTS AND STATEMENT OF AFFAIRS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS EXPLAINED THE DEPOSITS IN BOTH THE ACCOUNTS IN IDBI BANK AND HENCE, WE ARE OF FURTHER VIEW THAT THERE WAS NO REASON FOR MAKING AN ENHANCEMENT OF THE INCOME BY LIKE AMOUNT AS MADE BY THE LEARNED CIT(A).ACCORDINGLY, WE DIRECT DELETION OF THE SAID ADDITIONS OF 3,05,78,256 AND 10,40,000 AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD. 17. AS REGARDS THE ENHANCEMENT OF ASSESSMENT MADE BY THE LEARNED CIT(A) BY MAK ING ADDITION OF 5,32,50,205 IN THE ASSESSMENT YEAR 2006 - 07, FROM THE COPY OF BANK STATEMENT FROM DIFFERENT BANKS OBTAINED AND SUBMITTED BY THE ASSESSING OFFICER, THE LEARNED CIT(A) FOUND THAT THE ASSESSEE HAS DEPOSITED 4,88,23,089 IN CASH IN ITS ACCOUN T NO. 042104000068952 MAINTAINED WITH IDBI BANK, BHUBANESWAR IN THE NAME OF MRS. SARMISTHA MISHRA, 16,43,339 IN ITS ACCOUNT NO.0421040000S0777 WITH IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 15 IDBI BANK, BHUBANESWAR IN T HE NAME OF MRS. SARMISTHA RATH, 85,71,250 IN ACCOUNT NO.06880100004883 MAINT AINED WITH BANK OF BARODA AND 50 LAKH IN ACCOUNT NO.43801010004476 WITH AXIS BANK, BHUBANESWAR DURING THE ACCOUNTING YEAR 2005 - 06. ON THE ABOVE BASIS, THE LEARNED CIT(A) ISSUED SHOW CAUSE NOTICE ON 25.2.2009 AS UNDER : DURING COURSE OF APPELLATE PROCEEDI NG, IT IS SEEN THAT ADDITIONS HAVE BEEN MADE ON ACCOUNT OF INVESTMENT MADE IN THE RD ACCOUNT, DEPOSIT IN THE SB ACCOUNT AT BHUBANESWAR (024010100205245), THE DEPOSIT IN THE SB ACCOUNT AT BALASORE (221010100000125) WITH THE AXIS BANK AND INVESTMENT IN THE B IRLA SUN LIFE INSURANCE AND BAJAJ ALLIANZ LIFE INSURANCE. HOWEVER, NO ENQUIRY WAS CONDUCTED ABOUT THE BANK ACCOUNT FROM WHERE INVESTMENT MADE IN BIRLA LIFE INSURANCE AND BAJAJ ALLIANZ LIFE INSURANCE AT THE TIME OF ASSESSMENT AND ON MY REPEATED REQUEST YOUR REPREHENSIVE FAILED TO SUBMIT THE COPY OF THE BANK ACCOUNTS MAINTAINED BY YOU. IN VIEW OF THE ABOVE FACT, THE AO WAS DIRECTED TO COLLECT THE DETAILS OF THE BANK ACCOUNTS MAINTAINED BY YOU AND THE AO VIDE LETTER DT.18.02.2009 SUBMITTED THE COPY OF BANKS STATEMENT AND AFTER PERUSAL OF THE ACCOUNTS, IT IS FOUND THAT THESE ACCOUNTS AND THE DEPOSITS THEREIN ARE NOT DISCLOSED BY YOU. THE DETAIL IS A S BELOW: SL. NO. --------- ACCOUNT NO./BANK ---------------------------- TOTAL AMOUNT (IN ) ---------------------------- PERIOD ---------------------------- I) 042104000068952/IDBI 4,88,23,089 01.04.05 TO 31.03.06 II) 042104000050777/IDBI 16,43,399 - DO - III) 06880100004883/ BANK OF BARODA 85,71,250 - DO - IV) 43801010004476/AXIS BANK 50,00,000 28.03.06 ---------------- 6,40,37,738 ========= THE DEPOSITS IN THESE ACCOUNTS ARE MOSTLY IN CASH EXCEPT THE AXIS BANK. FROM THE ASSESSMENT RECORD, NO SATISF ACTORY SOURCE OF DEPOSIT IS FOUND. IS IT THE SIPHONED MONEY OF OCA WHEREIN, YOU HUSBAND MR. B.C. RATH AND BROTHER MR. SUBRAT PRASANNA MISHRA ARE PRESIDENT AND SECRETARY RESPECTIVELY? I PROPOSE TO IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 16 ENHANCE YOUR INCOME BY SAID AMOUNT ( 6,40,37,738) TREATING IT AS UNEXPLAINED INVESTMENT. BEING A CASE OF ENHANCEMENT OF THE INCOME, A SHOW - CAUSE U/S.251(2) OF THE I.T. ACT, 1961 IS HEREBY GIVEN TO YOU TO SUBMIT YOUR REPLY, IF ANY, WITHIN 10 DAYS OF RECEIPT OF THIS LETTER. IN RESPONSE TO THE ABOVE SHOW CAUSE NOTI CE, THE ASSESSEE FILED RECONCILIATION STATEMENT. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE RECONCILIATION STATEMENT FURNISHED BY IT, THE LEARNED CIT(A) MADE THE ADDITION OF 5,32,50,205 TREATING THE SAME AS UNEXPLAINED INVESTMENT AND THIS RESULT ED IN ENHANCEMENT OF ASSESSMENT. THE RELEVANT PORTION IN PARAGRAPH 4.2 OF HIS ORDER IS REPRODUCED AS UNDER : GOING THROUGH THE RECONCILIATION STATEMENT SUBMITTED BY MR. PANI IN RESPECT OF DEPOSITS IN IDBI BANK ACCOUNT NO. 042104000050777, THE FOLLOWING D EPOSITS WERE FOUND NOT SUPPORTED BY ANY DOCUMENT/DECLARED IN THE RETURN OF INCOME. DATE. ---------- PARTICULARS OF DEPOSITS ---------------------------- AMOUNT (IN ) -------------------- 24.06.2005 CASH DEPOSIT OUT OF AVAILABLE CASH 1,00,000 04.10.2005 CASH DEPOSIT OUT OF AVAILABLE CASH 15,000 23.02.2006 ADVANCE FROM SANGHAMITRA MISHRA 9,00,000 08.03.2006 SALE OF KOTAK MUTURAL FUND 1,25,116 -------------- 11,40,116 ======== SIMILARLY, IN BANK OF BARODA, A/C. NO. 06880100004883, FOLLOWING DEPOSITS WERE NOT FOUND SUPPORTED BY ANY DOCUMENT/DECLARED IN THE RETURN OF INCOME. DATE. ---------- PARTICULARS OF DEPOSITS ---------------------------- AMOUNT (IN ) ------------------------- 19.08.2005 CASH DEPOSIT FROM CASH AVAILABLE 2,000 10.11.2005 ADVANCE EARLIER GIVEN TO OCA RECEIVED 1,35,000 14.11.2005 ADVANCE EARLIER GIVEN TO B.C. RATH 1,50,000 -------------- 2,87,000 ======== IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 17 SIMILARLY, IN AXIS BANK, A/C NO. 43801010004476, DEPOSIT OF 50 LAKH IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE FROM THE BANK AS A LOAN. IT IS ALSO NOT KNOWN AGAINST WHAT SECURITY, THE BANK HAS PROVIDED LOAN OF 50 LAKH. THE APPELLANT HAS NOT SUBMITTED NAY EXPLANATION REGARDING DEPOSIT OF 4,88,23,089 IN ACCOUNT NO. 042104000068952 MAINTAINED WITH IDBI BANK. THUS, THE TOTA L UNEXPLAINED DEPOSIT IN THESE BANK ACCOUNTS COMES TO 5,52,50,205 ( 4,88,23,089 + 50 LAKH + 11,40,116 + 2,87,000). OUT OF THIS, 20 LAKH HAS BEEN INVESTED IN THE BIRLA SUNLIFE INSURANCE BY MAKING WITHDRAWAL FROM BANK OF BARODA WHICH HAS BEEN ADDED BY THE AO AND CONFIRMED BY ME IN EARLIER GROUNDS. THUS, THE DEPOSIT OF 5,32,50,205 IN THESE FOUR BANK ACCOUNTS ARE TREATED AS UNEXPLAINED INVESTMENT U/S.69 OF THE I.T. ACT, 1961 AND THE APPELLANTS INCOME IS ENHANCE BY 5,32,50,205. 18. THE LEARNED AR OF THE ASSESSEE CONTENDED BEFORE US THAT THE LEARNED CIT(A) HAS CONSIDERED THE DEPOSITS FROM THE FOLLOWING BANK ACCOUNTS AS UNEXPLAINED AND THE ADDED THE SAME TO THE INCOME OF THE ASSESSEE. NAME OF THE BANK A/C NO. AMOUNT IDBI 50777 11,40,116 BANK OF B ARODA 04883 2,87,000 AXIS BANK 44776 50,00,000 IDBI 68952 4,88,23,089 BY REFERRING TO THE BANK STATEMENT AND ALSO THE RECONCILIATION STATEMENTS FURNISHED BY THE ASSESSEE PLACED AT DIFFERENT PAGES OF THE PAPER BOOK, THE LEARNED AR OF THE ASSESSEE SUBMITT ED ACCOUNT - WISE AS UNDER : 1. IDBI BANK 50777 11,40,116 A ) FROM THE DETAILS OF ADDITION MADE, IT MAY BE SEEN THAT 9,00,000 HAS BEEN RECEIVED AS LOAN FROM SMT. SANGHAMITRA MISHRA, SISTER IN LAW OF THE APPELLANT. IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 18 B ) THE ABOVE AMOUNT HAS BEEN DULY SHOWN AS LOAN F ROM SMT. MISHRA IN THE STATEMENT OF AFFAIRS FILED BY THE APPELLANT AS ON 31.03.2006, THE SPREADSHEET OF WHICH IS ENCLOSED IN THE PAPER BOOK AT PAGE NO.122. C ) FURTHER, TWO CASH DEPOSITS OF 1,00,000 AND 25,000 WERE MADE OUT OF CASH IN HAND ON THE DATES OF D EPOSIT WHICH IS EVIDENT FROM THE AVAILABLE OPENING CASH IN HAND AS 31.03.2005. D ) BESIDES ABOVE, 125,116/ - RECEIVED FROM KOTAK MAHINDRA IS THE WITHDRAWAL OF INVESTMENT OF 1,00,000 MADE BY THE APPELLANT ON 29.06.05. THE DIFFERENTIAL AMOUNT OF 25,116/ - HAS BEEN DULY CONSIDERED AS INCOME WHILE FILING THE RETURN AND INCLUDED IN OTHER INCOME OF 91,052. 2. BANK OF BARODA 4883, 2,87,000 A) FROM THE DETAILS OF THE ADDITION GIVEN IN THE ORDER, IT MAY BE SEEN THAT 1,35,000/ - WAS THE REFUND OF ADVANCE FROM OCA . THE APPELLANT HAD CURRENT ACCOUNT WITH ORISSA COMPUTER ACADEMY. AT THE TIME OF REQUIREMENT OF FUNDS, THE APPELLANT REMITTES FUNDS TO ORISSA COMPUTER ACADEMY AND THE SAME IS RETURNED BACK AS PER MUTUAL CONVENIENCE. AS ON 31.03.2006 THERE WAS ADVANCE LAYIN G WITH ORISSA COMPUTER ACADEMY FOR 18,25,000 AND THE SAME HAS BEEN DISCLOSED IN THE STATEMENT OF AFFAIRS FILED WITH THE DEPARTMENT AND SPREAD SHEET OF WHICH IS ENCLOSED IN THE PAPER BOOK AT PAGE NO. 122. B) SIMILARLY THE APPELLANT WAS ALSO MAINTAINING C URRENT ACCOUNT WITH HER HUSBAND SRI B.C. RATH. THE AMOUNT OF 150,000 RECEIVED ON 14.11.2005 IS IN THE NATURE OF SAME. C) LASTLY THE CASH DEPOSIT OF 2,000 IS MADE OUT OF CASH IN HAND. D) IT IS PERTINENT TO MENTION ALL THE ABOVE ASSESSEE WERE ASSESSED BY THE SAME A.O. HENCE, BEFORE MAKING ANY ADDITION FOR THE ABOVE TRANSACTIONS WHICH ARE CONSIDERED AS UNEXPLAINED THE LD. A.O. COULD HAVE CROSS VERIFIED FROM THEIR RECORDS. 3. AXIS BANK 4476, 50,00,000 IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 19 A) THE AFORESAID AMOUNT WAS CREDITED TO THE AXIS BANK A/C NO. 4476 ON 28.03.2006. B) THE SAID AMOUNT WAS TRANSFERRED FROM THE APPELLANTS ANOTHER ACCOUNT MAINTAINED WITH IDBI 0082 WHICH IS A LOAN ACCOUNT. C) IN FACT DURING THE YEAR THE APPELLANT HAD AVAILED LOAN FROM IDBI BANK AND LOAN BALANCE OUTSTANDING A S ON 31.03.2006 WAS 68,18,314 WHICH HAS BEEN DULY DISCLOSED IN THE STATEMENT OF AFFAIRS FILED BEFORE THE LD. A.O., SPREAD SHEET OF WHICH IS ENCLOSED IN THE PAPER BOOK AT PAGE NO.122. D) OUT OF THE BALANCE OUTSTANDING OF 68,18,314 AS ON 31.03.2006, THE L D. CIT(A) CONSIDERED 50,00,000 AS UNEXPLAINED WITH A CONTENTION THAT WHAT SECURITY HAS BEEN OFFERED FOR AVAILING THE LOAN. E) WITHOUT VERIFYING, SIMPLY CONSIDERING THE GENUINE LOAN OBTAINED AS BOGUS WITH A VAGUE CONTENTION IS ILLEGAL AND BAD IN LAW. 4. IDBI BANK 68952 4,88,23,089 THE LD. CIT(A) HAS ADDED 4,88,23,089 CONSIDERING IT AS THE TOTAL CREDIT INTO THE BANK ACCOUNT WHICH SHOULD HAVE BEEN 4,82,23,089. PROBABLY IT IS A TOTALING MISTAKE. 1 . THE APPELLANT OPERATED ITS FINANCIAL TRANSACTION THROUGH H ER VARIOUS BANK ACCOUNTS, THE DETAILS OF WHICH ALONGWITH THE BANK STATEMENT ARE ENCLOSED IN THE PAPER BOOK AT PAGE NO. 124 TO 146. 2 . THE APPELLANT HAD MADE CONSIDERABLE TRANSACTIONS BETWEEN BANKS DEPENDING ON AVAILABLE FUNDS AND WITHIN THE FAMILY MEMBERS AS WELL AS OUTSIDE RS. 3 . FROM THE ENCLOSED BANK STATEMENTS, IT MAY BE SEEN THAT IN LINE WITH DEPOSITS WITHDRAWALS HAVE ALSO BEEN MADE AND PAYMENTS HAVE BEEN EFFECTED TO THE PERSONS FROM WHOM THE AMOUNT HAVE BEEN RECEIVED AND CREDITED TO THE BANK ACCOUNT. 4 . THE APP ELLANT HAS PREPARED A SUMMARY OF BANK STATEMENTS WHICH HAS BEEN ENCLOSED IN THE PAPER BOOK AT PAGE NO. 146. 5 . FROM THE ENCLOSED STATEMENT IT MAY ALSO BE SEEN THAT THERE ARE IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 20 CHEQUES ISSUED WHICH WERE SUBSEQUENTLY RETURNED AMOUNTING TO 25,00,000. 6 . FROM THE EN CLOSED STATEMENT IT MAY BE NOTED THAT THE AMOUNT INVESTED OUT OF THE BANK ACCOUNTS HAS BEEN DULY DISCLOSED IN THE STATEMENT OF AFFAIRS FILED ALONGWITH THE REVISED RETURN FILED ON 06.12.2007. TO BE PRECISE 89.00 LAKHS HAVE BEEN PAID FROM THIS BANK ACCOUNT FOR INVESTMENT IN BIRLA SUNLIFE WHICH HAS ALSO BEEN ADDED BY THE LD. A.O. IN HIS ORDER AND CONFIRMED BY LD. CIT(A). BY THIS THE ADDITION BECOME DOUBLE. 7 . UNLIKE OTHER THREE BANK ACCOUNTS NO ANALYSIS OF THE ENTRIES WERE MADE BY THE LD. CIT (A) BUT THE TOTAL CREDIT WAS ADDED. MOREOVER, WHILE ADDING THE CREDIT SIDE, WITHOUT ANALYZING THE SAME, THE LD. CIT (A) DID NOT EVEN CONSIDER THE DEBIT SIDE / WITHDRAWALS AND INVESTMENTS MADE OUT OF IT. THE FOLLOWING FIGURES SPEAK FOR ITSELF. SL. NO. PARTICULARS AMOUNT 1. TOTAL CREDITS / DEPOSITS ( THIS INCLUDES AN ENTRY OF 25.00 LACS AGAINST A DISHONOURED CHEQUE ) 4,82,23,089 2. TOTAL DEBITS / WITHDRAWALS ( WHICH IS OUT OF THE DEPOSITS MADE ABOVE AND OPENING BALANCE OF 1,27,55,356) 5,99,71,539 3. THE ABOVE WITHDRAWAL S INCLUDE INVESTMENT IN BIRLA SUN LIFE INSURANCE POLICY ALREADY ADDED AND CONFIRMED BY LD. CIT (A) 89,00,000 4. THE TOTAL AMOUNT OF ADDITIONAL INCOME OFFERED FOR TAXATION DURING THE SEARCH PERIOD AND FORMS PART OF THE ABOVE TRANSACTIONS BY WAY OF CIRCULAT ING CAPITAL BEFORE BEING PARKED IN SPECIFIC ASSETS AS PER THE STATEMENT OF AFFAIRS FILED. 3,86,10,000 8 . DUE TO CERTAIN CIRCUMSTANCES, THE APPELLANT HAD DISOWNED THE ADDITIONAL INCOME OFFERED IN THE REVISED RETURN. SIMILARLY SHE HAD ALSO DISOWNED CERTAIN BAN K STATEMENTS WHICH WERE USED FOR MAKING TRANSACTIONS REFLECTED IN THE STATEMENT OF AFFAIRS FILED. THE LD. A.O./ CIT (A) PROBABLY CONSIDERED THIS IN ITS STRICT SENSE AND MADE ALL THE ADDITIONS IGNORING THE ADDL. INCOME OFFERED WHICH WERE TRANSACTED THROUGH THESE BANKS. ON THE BASIS OF ABOVE, THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE ASSESSEE COMPUTED THE INCOME, ORIGINALLY NOT OFFERED FOR TAXATION AND ASSETS IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 21 REMAINING IN DISCLOSED CREATED OUT OF SUCH INCOME AND SUBSEQUENTLY OFFERED THE SAME FOR TAXA TION SUO - MOTTO BY FILING THE REVISED RETURN ON 06.12.2007. THE ASSESSING OFFICER CONSIDERED THE REVISED RETURN AS NONEST WITH THE CONTENTION THAT THE ORIGINAL RETURN WAS FILED BELATEDLY, BUT ADDED THE ADDITIONAL INCOME DISCLOSED IN THE REVISED RETURN AND A LSO CONSIDERED THE ASSETS CREATED OUT OF THE ABOVE ADDITIONAL INCOME AND DULY DISCLOSED IN THE STATEMENT OF AFFAIRS AS UNEXPLAINED AND ADDED FURTHER. THE IRONY IS THAT WHILE PASSING THE ORDER, THE LEARNED CIT(A) WENT ONE STEP AHEAD AND ADDED THE ENTIRE CRE DIT IN THE BANK ACCOUNT AND IGNORED THE DETAILS/ CONTRA/WRONG/REVERSE ENTRIES WHICH IS NOT PROPER AND AS SUCH, HE PRAYED FOR DELETION OF THE ADDITION OF 5,32,50,205. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A). 1 9. HAVING HEARD BOTH THE PARTIES AND CAREFULLY GOING THROUGH THE MATERIAL MADE AVAILABLE ON RECORD I.E., THE BANK STATEMENTS AND STATEMENT OF AFFAIRS AND THE RECONCILIATION STATEMENT, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS SATISFACTORILY EXPLA INED THE DEPOSITS IN VARIOUS ACCOUNTS IN IDBI BANK, BANK OF BARODA, AXIS BANK AND THEREFORE, THERE WAS NO REASON FOR MAKING ENHANCEMENT OF THE ASSESSMENT AS MADE BY THE LEARNED CIT(A). ACCORDINGLY, WE DIRECT DELETION OF THE SAID ADDITION OF 5,32,50,205. 20. NOW ADVERTING TO APPEALS IN ITA NOS.98 AND 99/CTK/2009, WE FIND THAT THE LEARNED CIT(A) HAS LEVIED PENALTY U/S.271(1)(C), VIDE HIS ORDERS BOTH DT.18.5.2009 BASED ON THE ADDITIONS OF 3,16,18,256 AND 5,32,50,250 IN THE ASSESSMENT YEARS 2005 - 06 AND 20 06 - 07 MADE BY HIM WHICH RESULTED IN ENHANCEMENT OF ASSESSMENTS. IN THE QUANTUM APPEALS FILED BY THE ASSESSEE, WE HAVE DIRECTED DELETION OF THE SAID ADDITIONS IN THE RESPECTIVE AYS. THEREFORE, THE BASIS FOR LEVYING PENALTY BEING NO MORE BY NOW, THE IMPUGNED IT(SS)A NOS.23,55,96 AND 199/CTK/2009 AND IT(SS)A NOS. 98 AND 99/CTK/2009 22 PENALTY U/S.271(1)(C) OF THE I.T.ACT LEVIED ON THAT BASIS CANNOT SURVIVE. IN SUCH VIEW OF THE MATTER, WE CANCEL THE PENALTY LEVIED BY THE LEARNED CIT(A) FOR BOTH THE AYS 2005 - 06 AND 2006 - 07 BY ALLOWING THE APPEALS OF THE ASSESSEE IN THIS REGARD. 21. IN T HE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 25.04.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDE D TO : 1. THE APPELLANT: SMT.SARMISTHA RATH, B - 10, BJB NAGAR, BHUBANESWAR 751 014. 2. THE RESPONDENT: ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(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.