Smt. Namita Mohanty, Bhubaneswar V. ACIT, Central Circle-2, Bhubaneswar

ITSSA 65/CTK/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4875 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 26-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard; Additional evidence; Procedural lapse; Set aside
• Section: 132; 139; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE S/ AND ARUN KHODPIA, ACCOUNTANT MEMBER Smt Namita Mohanty, Plot No.130, S.M.Tower, Mancheswar Industrial Estate, Rasulgarh, Bhubaneswar. PAN/GIR No. (Appellant Per C.M.Garg Both the separate order assessment year IT(SS) A No.65/CTK/2019: A.Y. 2011 2. The assessee has raised the following grounds: “1. That, Id Commissioner of Income Tax (Appeals), [in short CIT (A)] erred on facts and in l 13,09,440/ been found and seized by search team during search u/s 132 of IT. IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK S/SHRI CHANDRA MOHAN GARG, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER IT(ss)A Nos.65 & 66/CTK/2019 Assessment Years : 2011-12 & 2015 Smt Namita Mohanty, Plot No.130, S.M.Tower, Mancheswar Industrial Estate, Rasulgarh, Bhubaneswar. Vs. ACIT, Central Circle Bhubaneswar. No.AFKPM 2564 C (Appellant) .. ( Respondent Assessee by : Shri K.C.Jena, AR Revenue by : Shri M.K. Goutam, Date of Hearing : 23/3/ 20 Date of Pronouncement : 05/ O R D E R g, JM Both the appeals filed by the assessee are directed orders of the CIT(A)-2, Bhubaneswar dated 20.6.2019, assessment years 2011-12 & 2015-16. IT(SS) A No.65/CTK/2019: A.Y. 2011-12 The assessee has raised the following grounds: 1. That, Id Commissioner of Income Tax (Appeals), [in short CIT (A)] erred on facts and in law by confirming addition of Rs. 13,09,440/- u/s 153A when no incriminating material whatsoever has been found and seized by search team during search u/s 132 of IT. Page1 | 12 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER /CTK/2019 2015-16 ACIT, Central Circle-2, Bhubaneswar. Respondent) , AR CIT (DR) / 2022 /4/2022 are directed against the Bhubaneswar dated 20.6.2019, for the 1. That, Id Commissioner of Income Tax (Appeals), [in short CIT aw by confirming addition of Rs. u/s 153A when no incriminating material whatsoever has been found and seized by search team during search u/s 132 of IT. IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page2 | 12 Act, 1961 and the original return filed u/s 139 on 12.07.2012 has already been processed. 2. That, ld CIT(A) erred on facts and in law by rejecting the additional evidence produced u/s 46A on the plea that sufficient opportunity of being heard was given, when interest of justice should prevail over technical/procedural lapses. 3. That, Id CIT(A) erred on facts and in law by giving contradictory views in rejecting additional evidence, not questioning the primary documents like chart of land holding, cash book, profit & loss account of the agricultural operation and ledger copy of expenses incurred, but raising the issue of non-availability of original documents such as registered deed of land holding, bills & vouchers for expenses and evidence regarding sale of agricultural produce.” 3. The issue under consideration is whether the assessment u/s 153A can be considered as valid if no incriminating material found during the course of search? 4. Facts of the case are that a search and seizure operation u/s.132 of the I.T.Act, 1961 was conducted at the premises of the assessee on 20.10.2016. Thereafter, notice u/s.153A of the Act was issued on 16.4.2018. In response to the same, the assessee filed return of income on 21.8.2018 disclosing taxable income of Rs.2,85,300/-. The return of income filed u/s.153A was taken up for scrutiny and notice u/s.143(2) of the Act was issued on 6.9.2018. Notice u/s.142(1) alongwith questionnaire was issued on 16.8.2018 asking the compliance. During the search, some documents were seized. The Assessing officer passed the assessment order dated 26.12.2018 under Section 153A / 143(3) of I.T. Act, wherein, inter alia, Rs.13,09,440/- was made towards agricultural income. The assessee IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page3 | 12 filed appeal before the Ld. CIT(A), who vide impugned appellate order dated 20.6.2019, the Ld. CIT(A) sustained the addition, considering the evidences furnished by the assessee, containing a chart of land holding of 52.74 acre in the name of the assessee and land holding in the name of Shri Gagan Bihari Mallick of 63.84 acres, profits and loss account of agricultural operations , etc. 5. At the time of hearing before us, the Ld. Counsel for the assessee contended that no incriminating materials were found / seized during or at the time of aforesaid search and seizure action under Section 132 of I.T. Act and therefore the AO had no jurisdiction under Section 153A of I.T. Act to make the assessment and addition in the assessment year 2011-12 for which no assessment was pending or abated and the assessments were completed on 20.10.2016, i.e. the date of search, whereby the aforesaid addition was made. He further submitted that the issue on this point is squarely covered in favour of the assessee by order of Hon’ble Delhi High court in the case of Kabul Chawla vs. CIT (2016) 380 ITR 573 (Delhi). 6. Per contra, ld CIT DR supported the orders of lower authorities. However, ld CIT DR could not controvert that there was no incriminating materials in the hands or before the AO while making addition to the returned income of the assessee and assessment for A.Y. 2011-12 was not pending or abated assessment but the assessment was completed on the date of search i.e. 20.10.2016. IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page4 | 12 7. We have heard both sides and also perused the materials available on record. In the instant case, the assessee had claimed Rs.13,90,440/- as agricultural income but the AO for want of evidence, had made addition of Rs.13,90,440/- holding that it is not an agricultural income. Before the CIT(A), the assessee had filed a chart of land holding in her name as well as in the name of Shri Gagan Bihar Mallik, inter alia, profits and loss account of agricultural operations, ledger copies of expenses incurred for the agricultural operation, which was not found favour by the CIT(A). 8. There is no dispute that no incriminating materials were found / seized during aforesaid search and seizure action under Section 132 of I.T. Act on the issue of exempt agriculture income. There is also no dispute about the fact that no assessment proceedings were pending in the case of the assessee on 20.12.2016, the date of search and seizure action U/s 132 of I.T. Act. In these facts and circumstances, the issue, whether, the AO had the jurisdiction to make the aforesaid addition without any incriminating material to the completed assessments is squarely covered in favour of the assessee by the decision of Hon’ble Delhi High Court in the case of Kabul Chawla(supra). 9. In the result, appeal of the assessee is allowed. IT(ss) A No.66/CTK/2019: Asst.year: 2015-16 IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page5 | 12 10. The only grievance in this appeal is that the ld CIT(A) is not justified in confirming the addition of Rs.13,50,000/- treating the same as unexplained cash deposit to make fixed deposit u/s.153A, when no incriminating material was found during the course of search u/s.132 of the act, not considering the confirmation for advance received for Rs.4,50,000/- & Rs.5,00,000/- from daughter in law and son as also remaining Rs.4,00,000/- out of saving from income of the assessee, who is sernior citizen and was consistently filing return of income and paying due taxes etc. 11. Ld R. of the assessee submitted that the Assessing Officer had made addition on the version of Shri Somendra Kumar Mohanty, son of the assessee, who was not authorized person to give statement or submit any explanation on behalf of assessee. The ld A.R. also pointed out that if any case the AO recorded statement of son of assessee Shri Soumendra Kumar Mohanty in this regard, then the same was also not confronted to the assessee. Therefore, same cannot be taken into consideration for making the addition in the hands of the assessee. Further, drawing out attention to page 4 of the assessment, ld A.R. submitted that in compliance to show cause notice of the AO, the assessee submitted that the fixed deposit of Rs.13,50,000/- was made by the assessee out of loan of Rs.4,50,000/- from Smt. Avinandita Mohanty, daughter-in-law and Rs.5,00,000/- from Sri Debasis Mohanty and balance amount of Rs.4,00,000/- was out of own IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page6 | 12 savings of the assessee. He submitted that the aforesaid loans are duly shown in the statement of affairs of the creditors Smt. Avinandita Mohanty and Shri Debasis Mohanty. To substantiate the loan amount, the copies of statement of affairs alongwith ledger copy & cash flow of the assessee are submitted before the AO. Therefore, same cannot be doubted in any manner. Ld counsel further drew our attention towards APB and submitted that the assessee has submitted return of income and statement of affairs before the AO as well as ld CIT(A) pertaining to said creditors Smt. Avinandita Mohanty and Debasis Mohanty, who are assessee’s daughter-in- law and son and without any doubt and discrepancies therein, the authorities below have rejected same at the threshold without any proper examination and verification. 12. Ld counsel submitted that the assessee is a senior citizen and earning income from substantial source, therefore, the remaining amount of Rs.4,00,000/- met out of regular cash in hand. Finally, ld AR submitted that the assessee has successfully demonstrated the source of fixed deposit of Rs.13,50,000/- on the strength of supporting plausible and self speaking documentary evidences, therefore, the addition made by the AO and confirmed by the CIT(A) may kindly be set aside. 13. Replying to above, ld CIT DR submitted that the assessment year 2015-16 is the year of abated assessment as on the date of search on 20.10.2016 and the assessment proceedings for assessment year 2015-16 IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page7 | 12 was not completed and pending before the AO . Therefore, the AO was very much empowered to pass the assessment order u/s.153A/143(3) of the Act. Ld CIT DR further submitted that from para 4 of assessment order, it is clearly discernible that the assesse is changing her stand again and again, therefore, in view of judgment of Hon’ble Delhi High Court in the case of Bharati Telecom Finance ltd vs CIT, 296 ITR 249(Del), there was no need to accept the explanation of the assessee and the revenue authorities were very much entitled and empowered to make the addition in the hands of the assessee. Therefore, assessment as well as the order of the CIT(A) may kindly be confirmed. 14. Placing rejoinder to above, ld A.R. submitted that since the assessee is a senior citizen living with her family including son and daughter-in-law, therefore, there is no need to draw the money for the purpose of personal expenses, thus the allegation of no drawing cannot be made against the assessee. He further submitted that during the course of post search enquiry, Shri Soumendra Kumar Mohanty was asked to explain the source of cash from which fixed deposit was made by the assessee but no query was raised from the assessee during the post search enquiry and reply or statement given by Shri Soumendra Kumar Mohanty cannot be used against the assessee without confronting the same to the assessee as Sri Soumendra Kumar Mohanty was neither the AR of the assessee to furnish explanation before the revenue authorities regarding the impugned fixed IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page8 | 12 deposit. Ld A.R. submitted that the case law relied by ld CIT DR in the case of Bharati Telecom Finance Ltd (supra) is not applicable to the present case as in the present case it is not the case of the AO for making addition in the hands of assessee that the assessee has changed her stand regarding the source of cash received for making fixed deposit. 15. Ld AR strenuously contended that from the observation of the AO in the 3 rd and 4 th para at page 4 , it is clearly discernible that the assessee submitted all possible evidences under her command to explain the source of cash used for making F.D. in the form of ledger copy, cash flow statement, I.T.Returns, computation of income, etc but the AO without conducting any verification and examination dismissed the same at the threshold relying the imaginary documents. Ld A.R. vehemently pointed out that the revenue authorities cannot dismiss the relevant and plausible documentary evidence without any examination at the threshold for making addition in the hands of the assessee. Ld counsel submitted that the AO could have asked the assessee to produce both the creditors for further verification and confirmation but without show causing the assessee, the AO proceeded to make addition, which is not sustainable. Ld counsel relied on the following decisions: i) DCIT vs A.M. Exports(2019) 69 ITR (Trib) 503 (JaIPUR) ii) Singhal Exim Pvt Ltd vs ITO (2019) 71 ITR (Trib.)(S.N) 49 (Delhi) IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page9 | 12 16. On careful consideration of the rival submissions, first of all, we may point out that the CIT DR has not disputed the fact that the assessee is a senior citizen and was earning income and filing the return of income. So far as the explanation given by Shri Soumendra kumar Mohanty during post search enquiry is concerned, from para 4 part-1 of the assessment order, we are unable to see that whether Soumendra Kumar Mohanty was asked by way of show cause and his statement was recorded by the AO and it is not clear in which capacity, Sri Mohanty was asked to explain the source of cash used by the assessee for making fixed deposit. We may point out that there is nothing in the assessment order that the explanation given by Sri soumendra Kumar Mohanty was confronted to the assessee in any manner. 17. We further note that in compliance to show cause notice of the AO, the assessee submitted all plausible explanation that the impugned amount have been made out of loan from her daughter in law of Rs.4,50,000/- and son of Rs.5,00,000/- and balance amount of Rs.4,00,000/- out of regular income of the assessee in hand. To substantiate this fact, the assessee has filed statement of affairs alongwith cash flow statement in Annexure and the AO without any verification and examination dismissed these documentary evidences by observing that these are cooked and imaginary documents. If the AO after examination and verification of documentary evidence submitted by the assessee was not satisfied, then he could have show caused the assessee to call both the creditors by using powers IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page10 | 12 available on him as per the provisions of the Act but without such exercise, the AO proceeded to make addition without any justified reason. When the assessee is filing names of the creditors, PAN Nos. copies of the income tax return, copies of ledger account and statement of affairs pertaining to both the creditors and cash flow statement in the hands of the assessee, then we are satisfied that the assessee has filed all relevant and plausible evidences under her command to substantiate the source for purchase of impugned fixed deposit. The revenue authorities dismissed the same without any proper verification and examination. In any case, the AO or ld CIT(A) wanted to examine the capacity and creditworthiness of the creditors, then the assessee could have been asked to present or the AO could have issued notice as per the provisions of the Act to both the creditors but without such exercise, the AO proceeded to make addition, which is not a proper and justifiable approach of the revenue. 18. So far as the allegation of changing of stand is concerned, it is not the case of the AO that he is making addition in the hands of the assessee due to shifting of version of the assessee. In this regard, we feel it proper to reproduce the relevant para of the assessment order, which reads as follows: “The submission and annexure attached thereon has been examined. It_is to be stated that the annexure as prepared by the assessee like ledger copy, cash flow and statement of affairs are all cooked and imaginary and nothing is based on truth or facts. The initiation of the cash in hand by preparation of statement of affairs is bogus as IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page11 | 12 that has no matching with the I.T.return in the case of Smt Avinandita Mohanty and Smt Sandhya Mohanty. Further return of the individual's mentioned here did not prepare any statement of affairs or balance sheet since the I.T.Retum has been filing in the earlier occasion. Moreover the statements of the issues are contradictory in different places and the prepared and submitted statement of affairs and other accounts have no sanctity and evidentiary value. In such circumstance the submission of the assessee cannot be accepted as true and, accordingly Rs.13,50,000/- investment in the FD is construed as unexplained investment of the assessee and added to the total income.” From the above, it is clear that the AO without making any verification of documentary evidence filed by the assessee, dismissed the same at the threshold on whims and surmises without pointing out any factual defects and discrepancies therein. As regards to the judgment relied by ld CIT DR of Hon’ble Delhi High Court in the case of Bharati Telecom Finance ltd (supra), on respectful, cautious and vigilant reading of this judgment, we are of the considered view that the benefit of this judgment is not available to the revenue in the present case, being distinct and different facts and circumstances. We also find that the judgments cited by ld A.R. in the case of A.M. Export (supra) and in the case of Singhal Exim Pvt Ltd(supra) are applicable to the facts of the present case. 18. In view of foregoing discussion, we are of the considered opinion that the assessee has submitted all possible and plausible evidences under her control and command to substantiate that she received money of Rs.4,50,000/- and Rs.5,00,000/- from her daughter in law and son and Rs.4,00,000/- out of her own savings, these facts get support from the IT(ss)A No.66/CTK/2019 Assessment Year : 2015-16 Page12 | 12 return of income and payment of tax thereon. Thus, no addition can be made in regard to these two creditors in the hands of the assessee. Therefore, use of amount of Rs.4,00,000/- out of savings of assessee for making investment in fixed deposit cannot be doubted in any manner and the entire addition made by the AO cannot be held as sustainable, therefore, we direct the AO to delete the same. 18. In the result, appeal of the assessee is allowed. Order pronounced on 05 /4/2022. Sd/- sd/- (Arun Khodpia) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 05 /04/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Smt Namita Mohanty, Plot No.130, S.M.Tower, Mancheswar Industrial Estate, Rasulgarh, Bhubaneswar. 2. The Respondent. ACIT, Central Circle-2, Bhubaneswar 3. The CIT(A)-2, Bhubaneswar 4. Pr.CIT-2, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//