Subrat Prasanna Mishra, Bhubaneswar V. ACIT, Bhubaneswar

ITSSA 3/CTK/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8419 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-05-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 14-01-2011
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: B PANDA
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 153A

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. IT (SS) A NO. 03/CTK/2011 (ASSESSMENT YEAR 2000 - 01) SUBRAT PRASANNA MISHRA, 138, NILAK ANTHESWAR ROAD, BARAMUNDA,BHUBANESWAR 751 003 PAN: ACMPM 7565 L VERSUS ASST.COMMISSONER OF INCOME - TAX, CIRCLE 1(2), BHUBANESWAR. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI B.PANDA, AR FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, DR ORDER SHRI K.K.GUPTA, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE ADDITION AS COMPUTED BY THE ASSESSING OFFICER IN HIS PROCEEDINGS U/S.153A/143(3). 2. THE BRIEF FACTS ON THE ISSUE IN DISPUTE BEFORE US ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 9.8.2005 AND ACCORDINGLY NOTICE U/S.153A WAS ISSUED REQUIRING THE ASSESSEE TO FILE A RETURN OF INCOME.ON28.4.2006 THE ASSESSEE FILED THE RETURN SHOWING TOTAL INCOME O F RS.9 2,494. AS REQUIRED BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED A CASH FLOW STATEMENT WHICH WAS A STATEMENT OF AFFAIRS AS ON 31.3.2000. THE SAID STATEMENT INDICATED OPENING CASH BALANCE OF RS.10,73,443. THIS OPENING CASH BALANCE, ACCORDING TO TH E ASSESSING OFFICER, WAS CREATED TO EXPLAIN SUBSEQUENT INVESTMENT/EXPENDITURE. THE ASSESSING OFFICER OBSERVED THAT THE OPENING CASH BALANCE AS CLAIMED BY THE ASSESSEE HAS NO BASIS. THEREFORE, HE CONSIDERED THE OPENING BALANCE AT NIL AND HELD THE AMOUNT OF RS.10,73,443 AS UNACCOUNTED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE SAME AND HENCE, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMEN TS SUBMITTED THAT ASSUMING BUT NOT ACCEPTING THAT THE CASH BALANCE APPEARING AS AN OPENING BALANCE IT(SS)A NO. 03/CTK/2011 2 ONLY INDICATES THAT THE SAME CANNOT BE TAXED IN THE IMPUGNED ASSESSMENT YEAR AS BELONGING TO THE EARLIER YEARS. EVEN ASSUMING THAT THE ASSESSING OFFICER HAS DENIED THE ASSESSEE OF HOLDING OF SUCH CASH WAS IMPROBABLE , WAS TO SUBSTANT IATE AS TO HOW THE ASSESSEE HAD LIQUIDATED HIS ASSETS WHETHER BELONGING TO HIM OR NOT WAS NOT TO BE CONSIDERED FOR THE PURPOSE OF TAXATION IN THE IMPUGNED ASSESSMENT YEAR ONLY. THE NATURE OF ADDITION THEREFORE, CRIPPLES DOWN TO THE FACT THAT IT IS THE CASH BALANCE WHICH IS BEING DEEMED AS IMPROBABLE OF HAVING THE NATURE OF INCOME IN THE HANDS OF THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEM ENTLY ARGUED THAT IN THE SAME TERMINOLOGY THE CLOSING BALANCE HELD BY THE ASSESSEE SHOULD HAVE ALSO BEEN CONSIDERED FOR THE PURPOSE OF INVESTMENT AND OTHER EXPENDITURE TO BE ALLOWED OR TO BE REDUCED THERE FROM TO BRING TO TAX THE ACTUAL INCOME IN THE HANDS OF THE ASSESSEE, IF ANY. NO ADDITION HAS BEEN MADE IN SUBSEQUENT YEARS. THE LEARNED CIT(A) STOPPED SHORT OF DECIDING THAT IT WAS NOT THE CASH BALANCE BUT A STATEMENT OF AFFAIRS WHICH INDICATED THE ASSESSEE HOLDING ASSETS CONTINUED TO BE HELD WITH HIM WIT HOUT BEING SUBJECTED TO TAX IN THE EARLIER YEARS. FOR REACHING CONCLUSION , HE UPHELD THE ORDER OF THE ASSESSING OFFICER BUT THE CONCLUSION WOULD HAVE BEEN TO SPELL OUT THE NATURE OF INCOME BY HOLDING SUCH BALANCE WAS NOT SPELT OUT BY THE ASSESSING OFFICER THEREFORE SHOULD NOT BE TAXED IN THE IMPUGNED ASSESSMENT YEAR. 4. THE LEARNED DR SUBMITTED THAT IT WAS THE ASSESSEES OWN ENDEAVOR TO ESTABLISH THAT HE HAD CASH AMOUNTING TO RS.10,73,443 AVAILABLE TO IT ON THE 1 ST DAY OF THE ASSESSMENT WHICH HE COULD NO T EXPLAIN WAS IN ALL PROBABILITY NOT HELD BY HIM WAS CONSIDERED BY THE ASSESSING OFFICER AND THE LEARNED CIT(A) AS MONEY FOR CAPITAL FORMATION FOR THE PURPOSE OF EXPLAINING SUBSEQUENT INVESTMENT OR EXPENDITURE. THE ASSESSEE BEING A SALARIED EMPLOYEE GOT AS SETS LIQUIDATED BELONGING TO HIS FATHER THEREFORE WAS RIGHTLY SUBJECTED TO TAX IN THE IMPUGNED ASSESSMENT YEAR WHEN HE FILED NO EVIDENCE TO CLAIM THAT THE INCOME GENERATED ON THE LIQUIDATION OF THOSE ASSETS HAD BEEN RENDERED FOR TAXATION. IN PROCEEDINGS U/ S.153A, THE ASSESSING OFFICER WAS WITHIN HIS RIGHT TO HOLD THAT THIS WAS THE ASSESSEES UNACCOUNTED INCOME TO BE TAXED IN THE IMPUGNED ASSESSMENT YEAR AS THE SAME HAD NOT BEEN TAXED IN OTHER YEARS. IT(SS)A NO. 03/CTK/2011 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE PAPER BOOK INDICATING THE SEQUENCE OF RETURNS FILED AND THE NATURE OF ASSETS LIQUIDATED BY THE ASSESSEES FATHER WHO WAS A PENSIONER WHO RECEIVED BULK AMOUNTS AS RETIREMENT BENEFIT AND HOLDING AGRICULTURAL LAND WHICH WAS SOLD IN CASH WHICH RESULTED IN HOLDING OF ASSET BEING CASH WHETHER WAS HELD WITH THE ASSESSEE OR HIS FATHER WAS NOT THE CASE OF THE ASSESSEE. IT IS NOT CAPITAL FORMATION AS SUGGESTED BY THE LEARNED DR IN VIEW OF THE ASSESSEE FILING THE CASH FLOW STATEMENT INDICATING AMOUNT OF ASSETS HELD BY HIM ON THE OPENING DAY AND SLIGHTLY REDUCED AFTER HAVING USED FOR PERSONAL PURPOSES AT THE CLOSE OF THE YEAR TO RS.9,57,865 . THIS CLEARLY CRYSTALLIZED THE ISSUE AS SUGGESTED BY THE LEARNED COUNSEL THAT THE INC OME, IF ANY, DID NOT PERTAIN TO THE IMPUGNED ASSESSMENT YEAR. THE MERE PRESUMPTION IN THE MIND OF THE ASSESSING OFFICER AND THE LEARNED CIT(A) THAT THE GENERATION OF CASH AS SHOWN TO HAVE BEEN HELD BY THE ASSESSEE AT THE BEGINNING OF THE YEAR AND CLOSING B ALANCE OF THE YEAR SUGGEST SOME INCOME IN THE IMPUGNED ASSESSMENT YEAR OR OTHER AYS HA S NOT BEEN ESTABLISHED BY HIM INSOFAR AS ONLY THE OPENING BALANCE HAS BEEN TAXED AND THE USE OF CLOSING BALANCE CASH IS NEVER BEING TALKED ABOUT. WE ARE OF THE CONSIDERED VIEW THAT THE PURPOSE OF UTILISATION ONLY CAN BE CONSIDERED OF HAVING GENERATED INCOME AFTER PAYING TAX WAS THE INTENTION OF THE ASSESSEE WHILE FILING THE CASH FLOW STATEMENT. THE ASSESSEE THEREFORE WAS SUBJECTED TO TAX ON ASSETS HELD BY WAY OF HIS FATHER S RETIREMENT BENEFIT RECEIPTS ALONG WITH SALE OF AGRICULTURAL LAND COULD NOT BE TAXED AS INCOME EVEN IF THEY MAY HAVE AROSE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR U/S . 153A THERE IS NO IOTA OF EVIDENCE THAT THE SALE OF THESE LAND OR RETIREMENT BENEFI TS OCCURRED IN THE IMPUGNED ASSESSMENT YEAR MORE SO NOT BELONGING TO THE ASSESSEE COULD NOT BE TAXED IN THE IMPUGNED ASSESSMENT YEAR. THE LEARNED CIT(A) HAS NOT UPHELD THE ADDITION AS COMPUTED BY THE ASSESSING OFFICER BY JUSTIFYING AS TO HOW A ASSUMPTION AND PRESUMPTION IN THE MIND OF THE ASSESSING OFFICER COULD BE THE POSSIBILITY FOR TAXATION IN THE IMPUGNED ASSESSMENT YEAR ONLY. 6. THE INCOME, IF ANY, DOES NOT BELONG TO THE IMPUGNED ASSESSMENT YEAR. THERE IS NO ELEMENT OF INCOME IN THE ASSET HELD BY THE ASSESSEE FROM HIS FATHER WAS IT(SS)A NO. 03/CTK/2011 4 NOT FOR THE PURPOSE OF CAPITAL FORMATION , THE FATHER BEING A SENIOR CITIZEN IN HIS OWN RIGHT. THE TAXATION OF THE SAID SUM ON THE REQUIREMENT OF THE ASSESSING OFFICER TO FILE THE CASH FLOW STATEMENT THEREFORE COULD NOT BE USED AGAINST THE ASSESSEE ON MISINTERPRETING THE FACTS THEREIN . THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT THEREFORE CANNOT BE IDENTIFIED OF HOLDING THE AMOUNT TO BE TAXED IN HIS HAND WHEN PHYSICAL CASH HOLDING IS NOT BELIEVED BY THE ASSESSING OFFICER HIMSELF. THE INCOME THEREFORE SO BROUGHT TO TAX BY THE ASSESSING OFFICER HAS NO BEARING TO ANY CORROBORATIVE EVIDENCE. THE ADDITION SO CONFIRMED BY THE LEARNED CIT(A) IS DIRECTED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRON OUNCED IN OPEN COURT ON DT. 27 TH MAY, 2011 SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 27 TH MAY, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDE R FORWARDED TO : 1. THE APPELLANT: SUBRAT PRASANNA MISHRA, 138, NILAKANTHESWAR ROAD, BARAMUNDA,BHUBANESWAR 751 003 2. THE RESPONDENT: ASST.COMMISSONER OF INCOME - TAX, CIRCLE 1(2), BHUBANESWAR. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FI LE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.