Sushilaben Kanubhai Patel, Anand V. The ACIT., Circle-1, Baroda

ITSSA 566/AHD/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8597 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 11-01-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 24-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Assessee Lawyers: B T THAKKAR
• Keywords: Speculation loss
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI T.R. MEEN A, ACCOUNTANT MEMBER SUSHILABEN KANUBHAI PATEL, BARODA (APPELLANT) PAN NO. AKMPP0435G VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, BARODA (RESPONDENT) REVENUE BY : SRI T. SANKAR, SR. D.R. ASSESSEE BY : SRI B.T. THAKKAR, A.R. DATE OF HEARING : 11-01-2013 DATE OF PRONOUNCEMENT : 31-01-2013 / ORDER PER : MUKUL KR. SHRAWAT, JUDICIAL MEMBER:- THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF LD. CIT(A)-IV, AHMEDABAD DATED 26 TH MARCH, 2011. THE GROUNDS RAISED ARE HEREBY DECIDED AS FOLLOWS:- IT(SS)A NO. 566/AHD/2010 A.Y.:-1999-2000 IT(SS)A NO.566 /AHD/2010 A.Y. 1999-2000 PAGE NO SUSHILABEN KANUBHAI PATEL VS. ASST. COMMISSIONER OF INCOME TAX 2 2. GROUND NO. 1 1. THE LEARNED CIT HAS ERRED ON LAW AND ON FACTS IN UPHOLDING ADDITION OF RS. 1,00,000/- AS UNDISCLOSED INVESTMEN T . THE SAME BEING UNLAWFUL AND UNJUST BE DELETED NOW. 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORR ESPONDING ASSESSMENT ORDER PASSED U/S 153A R.W.S. 143(3) & R.W.S. 254 OF THE ACT DATED ARE THAT EARLIER THE ASSESSEE IN INDIVIDUAL CAPACITY WA S SUBJECTED TO AN ASSESSMENT U/S 153A OF I.T. ACT AND VIDE AN ORDER D ATED 8 TH MARCH, 2006 ASSESSED AT RS. 1,00400/-. IN THAT ASSESSMENT THE ADDITION WAS IN RESPECT OF UNDISCLOSED INCOME AS ALSO DISALLOWANCE OF CLAIM OF LOSS. THAT ASSE SSMENT WAS CONFIRMED BY CIT(A), HOWEVER, THE RESPECTED ITA T HAD SET ASIDE THE ISSUE WITH REGARD TO THE UNDISCLOSED INCOME AND SET OFF OF LOSS TO THE FILE OF THE A.O. IN CONSEQUENCE THEREOF, THE PRESENT ASSES SMENT WAS MADE BY THE A.O. THE CLAIM OF THE ASSESSEE WAS THAT THE IMPUGN ED AMOUNT WAS A LOAN AMOUNT; BUT THAT WAS NOT FOUND CONVINCING HENCE ASS ESSED AGAIN IN THE HANDS OF THE ASSESSEE. IN RESPECT OF THE SECOND IS SUE OF CARRY FORWARD OF LOSS, IT WAS DISALLOWED, PRIMARILY ON THE GROUND TH AT NO RETURN AT THE ORIGINAL STAGE WAS FILED IN TIME BY THE ASSESSEE. THE ASSES SEES CLAIM WAS THAT THE LOSS WAS DUE TO INTEREST EXPENDITURE AND THAT THERE WAS NO LOSS ON SPECULATION TRANSACTION ETC. HOWEVER, THE A.O. HAS DISALLOWED THE CLAIM ON THE GROUND THAT THE RETURN OF INCOME WAS NOT FILED IN TIME. I N THE RESULT, THE SAME INCOME, WHICH WAS ASSESSED AT THE FIRST ROUND OF A SSESSMENT PROCEEDINGS WAS, REPEATED. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, LD. CIT(A) HAS MENTIONED THAT THERE WAS NO SANCTION OF LOAN BY THE SAID SOCIETY. ACCORDING TO HIM, THE DISBURSEMENT WAS MADE IN CASH . IT WAS NOTED BY LD. IT(SS)A NO.566 /AHD/2010 A.Y. 1999-2000 PAGE NO SUSHILABEN KANUBHAI PATEL VS. ASST. COMMISSIONER OF INCOME TAX 3 CIT(A) THAT OUT OF THE CASH OF RS. 1,00,000/- DISBU RSED ON 24-09-1998 AN AMOUNT OF 75,000/- WAS RE-DEPOSITED ON 15-12-1998. IN HIS OPINION CERTAIN ADJUSTMENTS HAVE BEEN MADE AND NO CERTIFICATE OF SA NCTION OF LOAN WAS FURNISHED. AGAIN THE ADDITION WAS CONFIRMED. IN R ESPECT OF THE SECOND ISSUE OF LOSS ON INTEREST EXPENDITURE, IT WAS NOTED BY TH E LD. CIT(A) THAT THE INTEREST WAS PAID TO M/S AMBIKA FINANCE OF RS. 84,8 75/-. AGAINST THAT THE ASSESSEE HAS RECEIVED INTEREST OF 9,038/- FROM M/S ASHAPURI FINANCE. THUS, THERE WAS A LOSS OF RS. 75,430/-. LD. CIT(A) HAS H ELD THAT THE ASSESSEE HAS NOT EXPLAINED WHY THE INTEREST WAS PAID TO M/S AMBI KA FINANCE. WHETHER THE INTEREST WAS PAID FOR EARNING INTEREST WAS QUES TIONED. ACCORDING TO HIM, IT WAS NOT AN ALLOWABLE EXPENDITURE HENCE THE ACTIO N OF THE A.O. WAS CONFIRMED. 4. FROM THE SIDE OF THE APPELLANT LD. A.R. , SRI B. T. THAKKAR, APPEARED AND AT THE OUTSET INFORMED THAT ITAT SMC AHMEDABAD IN ITA NO. 2602/AHD/2007 A.Y. 1999-2000 VIDE AN ORDER DATED 09 -08-2007, WHILE SETTING ASIDE, HAD OBSERVED AS UNDER:- 7. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, I AM OF THE CONSIDERED OPINION THAT THE EXPLANATION OF THE ASSE SSEE THAT IT HAD LOAN SANCTIONED BY SARDAR CO-OP. SOCIETY AND IN THE EVENT THE ASSESSEE DID NOT AVAIL OF THE SAME, THE SAME WOULD HAVE BEEN LAP SED, WAS NOT GIVEN BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). THEREFORE, THEY HAD NO OCCASION TO EXAMINE THE SAME WITH RELEV ANT SEIZED MATERIAL. WE FEEL THAT THE SAID EXPLANATION HAS TO BE CONSIDE RED TOGETHER WITH THE SEIZED MATERIAL IN ORDER TO DECIDE THE ISSUE IN ITS TRUE AND CORRECT PERSPECTIVE. HENCE, I SET ASIDE T HE ORDER OF THE LEARNED CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF ABOVE OBSERVATION AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. IT(SS)A NO.566 /AHD/2010 A.Y. 1999-2000 PAGE NO SUSHILABEN KANUBHAI PATEL VS. ASST. COMMISSIONER OF INCOME TAX 4 13. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. I FIND THAT THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S NOT FILED THE ORIGINAL RETURN OF INCOME. THE RETURN OF INCOME WAS FILED O N 6.3.2006 WHICH BEYOND THE TIME PRESCRIBED U/S. 153A OF THE ACT. H ENCE, HE DID NOT ALLOW THE SET OFF OF LOSS TO THE ASSESSEE. I FURTHER OBS ERVE THAT THE LEARNED CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS NOT EXPLA INED WITH EVIDENCE ON WHAT ACCOUNT THE LOSS WAS INCURRED BY THE ASSESSEE. HE OBSERVED THAT ACCORDING TO THE I.T. ACT SPECULATION LOSS AND LOSS FROM MAINTENANCE OF RACE-HORSE CANNOT BE ALLOWED TO BE ADJUSTED AGAINST INCOME UNDER OTHER HEADS OF INCOME. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, I OF THE CONSIDERED OPINION THAT AS THE CASE HAS BEEN RESTOR ED ON THE ISSUE OF DEPOSITS IN THE BANK TO THE FILE OF THE ASSESSING O FFICER FOR DECIDING THE SAME AFRESH, I ALSO FEEL IT PROPER TO RESTORE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER TO RE-DECIDE THE SAME AFRESH. TH E ASSESSEE IS DIRECTED TO FILE ALL THE DETAILS WITH REGARD TO THE LOSS INC URRED TO THE ASSESSING OFFICER, WHO WILL EXAMINE THE DETAILS AND EVIDENCE FILED BY THE ASSESSEE AND THEN DECIDE THE ISSUE AS PER LAW. 4.1. LD. A.R. HAS ALSO DRAWN OUR ATTENTION ON T HE RESPECTIVE ACCOUNTS OF SUBEDAR CO-OP. CREDIT SOCIETY. HE HAS EXPLAINED TH AT IT WAS A FARMERS CO- OPERATIVE SOCIETY AND THE ASSESSEE WAS GRANTED A LOAN OF RS. 1,00,000/- IN CASH. THE SAID ACCOUNT ITSELF PROVED THAT FIRST THERE W AS A SANCTIONING OF LOAN AND LATER ON THE SAME AMOUNT WAS RE-DEPOSITED. THE LOAN WAS GRANTED BECAUSE A TRANSACTION WAS REQUIRED TO BE MADE TO MA INTAIN AS ALSO TO REMAIN IN TO OPERATION THE ACCOUNT OF THE ASSESSEE. HIS W RITTEN EXPLANATION IN THIS REGARD IS AS UNDER:- 9. THE APPELLANT SAYS AND SUBMITS THAT A LOAN - CA SH CREDIT OF RS. 1,00,000/- WAS SANCTIONED BY THE SARDAR CO. OP. CREDIT SOCIETY, BORSAD TO THE ASSESSEE AND FIRST DIS BURSEMENT WAS MADE ON 14.12.1998. IN THE EVENT THE ASSESSEE DID NOT AVAIL OF THE LOAN FACILITY, THE SAME WOULD HAVE LAPSED. THEREFORE, THE ASSESSEE WITHDRAWN RS. 1,00,000/- AND RE-DEPOSIT ED RS.75 P 000/- ON 15.12,1998 I.E. ON THE NEXT DAY. SIMILARLY, SHE WIT HDREW RS. IT(SS)A NO.566 /AHD/2010 A.Y. 1999-2000 PAGE NO SUSHILABEN KANUBHAI PATEL VS. ASST. COMMISSIONER OF INCOME TAX 5 1,00,000/- ON 15.12.1998 AND RE-DEPOSI TED RS. L,00,000/-ON 17.12.1998. SHE FURTHER WITHDREW RS.1,00,000/- ON 21.12.1998 AND RE-DEPOSITED RS. 1,00,000/- ON 01.01.1999. THERE WAS NO PURPOSE OF WITHDRAWING FROM THE LOAN ACCOUNT, EXC EPT THE REASON STATED HEREIN ABOVE. THE APPELLANT SAYS AND SUBMITS THAT THE AMOUNT WITHDRAWN FROM THE LOAN ACCOUNT HAS BEEN RE-DEPOSIT ED IN THE SAME ACCOUNT. SOURCE OF THE DEPOSIT IS WELL EXPLAINED BY THE APPELLANT AND THEREFORE SAME CANNOT BE TREATED AS UNDISCLOSED INV ESTMENT. FROM THE COPY OF THE ACCOUNT OF SARDAR CO. CREDIT SOCIETY, BORSAD IT WOULD BE SEEN THAT FIRST TRANSACTION TOOK PLACE ONL Y ON 14-12-1998. SINCE THERE WAS NO TRANSACTION WITH THE SOCIETY PRI OR TO 14-12-1998, NO STATEMENT OF ACCOUNT CAN BE FURNISHED BY THE APP ELLANT. FURTHER SARDAR CO. OP. CREDIT SOCIETY IS A SMALL CREDIT CO- OPERATIVE SOCIETY IN RURAL AREA, THEREFORE, NO SANCTION LETTER WAS IS SUED TO THE ASSESSES. THE EXPLANATION WAS FURNISHED BY THE APPELLANT BEFO RE THE ASSESSING OFFICER AS WELL AS BEFORE CIT(APPEALS). HOWEVER THE EXPLANATION WAS NOT CONSIDERED BY THIS AUTHORITY. THE APPELLANT PRA Y THAT CONSIDERING THE FACTS OF THE CASE THE ADDITION ON ACCOUNT OF UN DISCLOSED INVESTMENT MADE BY THE AO MAY KINDLY BE DELETED. 5. FROM THE SIDE OF THE REVENUE LD. D.R., SRI T. SH ANKAR, APPEARED AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE HAS ALSO ARGUED THAT THE RESPECTED TRIBUNAL HAD GIVEN AN OPPORTUNITY TO THE ASSESSEE TO FILE EVIDENCE IN RESPECT OF THE ADDITION BUT EVEN THEN NO SUCH EF FORT WAS MADE. IN THAT EVENT THE ADDITION DESERVES TO BE UPHELD. 6. HAVING HEARD BOTH THE SIDES, WE ARE OF THE V IEW THAT THE BANK ACCOUNT NO. 128 OF SARDAR CO-OP SOCIETY, ACCOUNT NO . 23 AND ACCOUNT NO. 1221 WERE FOUND DURING THE COURSE OF SEARCH PROCEED INGS. IF AN ACCOUNT IS NOTICED BY THE REVENUE DEPARTMENT DURING THE COURSE OF SEARCH THEN THAT EVIDENCE SHOULD BE CONSIDERED AS A WHOLE; AS IT WAS RECOVERED AT THE TIME OF SEARCH. THE ASSESSEE HAD CONSISTENTLY INFORMED THA T A TRANSACTION WAS IT(SS)A NO.566 /AHD/2010 A.Y. 1999-2000 PAGE NO SUSHILABEN KANUBHAI PATEL VS. ASST. COMMISSIONER OF INCOME TAX 6 REQUIRED TO BE MADE TO AVAIL THE FACILITY OF LOAN W ITHIN A SPECIFIED PERIOD OTHERWISE THE LOAN WOULD HAVE BEEN LAPSED. SINCE I NCEPTION THIS FACTUAL POSITION WAS VERY MUCH BEFORE THE REVENUE AUTHORITI ES. THAT DOCUMENT WAS IN POSSESSION OF THE REVENUE DEPARTMENT HENCE THE A O SHOULD HAVE APPLIED HIS MIND PRIMARILY ON THE FACT THAT THE IMPUGNED DO CUMENT HAD DISCLOSED THE LOAN AMOUNT AT THE START OF THE ACCOUNT. IT HAS AL SO BEEN INFORMED BY THIS ASSESSEE THAT THE MATTER BEING OLD, THEREFORE, EXCE PT THE ACCOUNTS NO OTHER DETAILS COULD BR PLACED BEFORE THE REVENUE AUTHORIT IES. HOWEVER THE ACCOUNTS ARE SELF-EXPLANATORY. IN THE SAID ACCOUNT , FIRST THERE WAS AN ENTRY OF SANCTION OF LOAN AND THAT LOAN WAS RE-DEPOSITED, TH EREFORE WE HEREBY CONCLUDE THAT ONCE AN ACCOUNT WAS FOUND IN POSSESSI ON OF THE ASSESSEE AND THAT INFORMATION HAD BEEN MADE THE BASIS OF THE IMP UGNED ADDITION THEN THE SAID MATERIAL MUST BE CONSIDERED AS A WHOLE I.E. AL L THE DEBITS AND CREDITS WERE TO BE TAKEN IN TO CONSIDERATION. IT IS NOT JU STIFIABLE TO PICK AND CHOOSE FEW ENTRIES. AS PER THE SAID ACCOUNT THERE WAS AN ENTRY OF ADVANCE OF RS. 1,00,000/- TO ASSESSEE AND THEM THEREAFTER THE ENTR IES ARE IN RESPECT OF RE- DEPOSIT OF THE AMOUNT. THEREFORE, THE SAID ACCOUNT HAS TO BE ADJUDICATED AS IT WAS FOUND. THIS BEING THE POSITION OF FACTS; HE NCE WE DEEM IT PROPER TO DISMISS THE ADDITION AND APPROVE THE EXPLANATION OF THE ASSESSEE. RESULTANTLY, THIS GROUND OF THE ASSESSEE IS HEREBY ALLOWED. 7. GROUND NO. 2 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND O FACTS IN NOT ALLOWING SET OFF OF LOSS U/S 71 OF THE ACT AGAINST INCOME FR OM OTHER SOURCES. THE RETURNED LOSS OF RS. 75,400/- BE ALLOWED AS SET OFF AGAINST ADDITION OF RS. 1,00,400/- MADE BY A.O. DURING ASSE SSMENT PROCEEDINGS. IT(SS)A NO.566 /AHD/2010 A.Y. 1999-2000 PAGE NO SUSHILABEN KANUBHAI PATEL VS. ASST. COMMISSIONER OF INCOME TAX 7 7.1. AT THE OUTSET, LD. A.R. HAD MADE A STATEMENT T HAT THIS GROUND WOULD BE DEPENDENT ON THE RESULT OF GROUND NO. 01. HE HA S DECLARED THAT IN CASE GROUND NO. 1 GOES IN FAVOUR OF THE ASSESSEE THEN GR OUND NO. 2 IS ONLY ACADEMIC. SINCE GROUND NO. 1 HEREINABOVE HAS GONE IN FAVOUR OF THE ASSESSEE THEN IN CONSEQUENCE THEREUPON GROUND NO. 2 HAD BECOME REDUNDANT, THEREFORE, DISMISSED. 8. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD : DATED 31/01/2013 A.K. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '#