SRI.MOHANDAS RAMA NAIK V. INCOME TAX OFFICER

ITA/100155/2015

AI Insights

This case involves an appeal by Sri Mohandas Rama Naik against the order of the Income Tax Appellate Tribunal, Panaji, which pertained to the assessment years 2009-10 and 2010-11. The Tribunal had remanded the matter back to the Assessing Officer to calculate the peak of deposits in the assessee's bank account, after providing a proper hearing. The primary contention was regarding the source of cash deposits made by the assessee, who was an LIC agent. The Assessing Officer had initially made additions to the assessee's income due to unexplained cash deposits, which were contested and led to the current appeal.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 755337 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-02-2017
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: V V RAVIRAJ
• Assessee Lawyers: A SHANKAR; SHASHANK HEGDE; M LAVA
• Keywords: Assessment Year; Income tax appeal; LIC agent; Remand order; Peak Deposit
• Section: 44AD; 260A

Judgement Text

"Date of Order 06.02.2017 ITA 100155-56/2015 Mohandas Rama Naik Vs. Income Tax Officer, Ward – 1, Karwar, Santeri Krupa Building Habbuwada, Karawar . 1/6 IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH DATED THIS THE 6TH DAY OF FEBRUARY, 2017 BEFORE THE HON’BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE SRI. JUSTICE SREENIVAS HARISH KUMAR I.T.As. No.100155-156/2015 BETWEEN: SRI.MOHANDAS RAMA NAIK, H.NO.971, ASHRAM ROAD, KARWAR-581 301, UTTAR KANNADA DISTRICT ... APPELLANT (BY SRI. A SHANKAR, SHASHANK HEGDE & M LAVA, ADVOCATES) AND INCOME TAX OFFICER, WARD-1, KARWAR, SANTERI KRUPA BUILDING, HABBUWADA, KARWAR-581 306. ... RESPONDENT (BY SRI V V RAVIRAJ, INCOME TAX OFFICER ) THESE ITAs ARE FILED U/S. 260A OF THE INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE, TO ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE INCOME TAX APPELLANT TRIBUNAL, PANAJI BENCH, PANAJI IN ITA NOS.378 & 379/PNJ/2014 RELATING TO Date of Order 06.02.2017 ITA 100155-56/2015 Mohandas Rama Naik Vs. Income Tax Officer, Ward – 1, Karwar, Santeri Krupa Building Habbuwada, Karawar . 2/6 ASSESSEMENT YEARS 2009-10 & 2010-11 VIDE THIS ORDER DTD: 22.01.2015, IN THE INTEREST OF EQUITY AND JUSTICE. THESE ITAs COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING: JUDGEMENT Sri A Shankar, Shashank Hegde & M Lava, Adv for the appellant. Sri V. V. Raviraj, Adv for the respondent. 1. This Income Tax Appeal has been filed by the Assessee against the order of the Income Tax Apellate Tribunal, Panaji Branch, Panaji dated: 22-01-2015 for A.Ys. 2009-10 and 2010-11, remanding the matter back to the Assessing Officer to workout the peak of deposits after giving proper and sufficient opportunity of hearing to the Assessee and to the extent the Assessing Officer finds the peak of deposits, the addition was sustained. 2. The relevant direction of the learned Tribunal in Para No. 3 of the impugned order is quoted below for the ready reference:- Date of Order 06.02.2017 ITA 100155-56/2015 Mohandas Rama Naik Vs. Income Tax Officer, Ward – 1, Karwar, Santeri Krupa Building Habbuwada, Karawar . 3/6 “3. The Assessee has derived the income as an LIC agent. The AO asked for the source of the investment and in the absence of the same, the AO made addition of Rs.31,85,000/- in the A.Y 2009-10 and Rs. 7,29,500/- in the A.Y.2010-11. We noted that the matter went before CIT(A) and CIT(A) directed the AO to estimate the Assessee’s income to be 8% of the total cash deposited in his ICICI Bank Account u/s 44 AD. In our opinion, the provisions of Sec. 44AD are not applicable in the case of the Assessee as the Assessee is not engaged in the eligible business as mentioned in explanation (b) of Sec. 44AD. The Assessee has derived the income, as returned by him as per the assessment order, only as an agent of LIC. Once the Assessee has deposited the cash in his bank account, the onus is on the Assessee to prove the source from where the amount has been deposited in his bank account. The Assessee might have also withdrawn the amount from the said bank account during both the assessment years. We, therefore, in the interest of justice and fair play to both the Date of Order 06.02.2017 ITA 100155-56/2015 Mohandas Rama Naik Vs. Income Tax Officer, Ward – 1, Karwar, Santeri Krupa Building Habbuwada, Karawar . 4/6 parties, set aside the order of CIT(A) and restore this issue to the file of the AO with the direction that the AO shall work out the peak deposit after giving proper and sufficient opportunity of hearing to the Assessee and to the extent the AO finds the peak deposit, the addition is sustained.” 3. The learned counsel for the Asseesee has submitted before us that the learned Income Tax Tribunal has erred in setting aside the order passed by the CIT (Appeal) on 17-06-2014 and the Assessing Officer will be now bound to make the addition only as per the peak of the deposits made by the Assessee during the year in question. 4. He drew our attention to the special provisions of Sec.44AD providing for special provisions for computing profits and gains of business on presumptive basis prior to its substitution by the Finance (No.2) Act 2009 w.e.f. 1-04-2011. The provisions of Section of 44AD of the Act applied to the Assessees engaged in the Date of Order 06.02.2017 ITA 100155-56/2015 Mohandas Rama Naik Vs. Income Tax Officer, Ward – 1, Karwar, Santeri Krupa Building Habbuwada, Karawar . 5/6 business of civil construction or supply of labour for civil construction. However, after its amendment w.e.f. 01-04-2011, the said provisions applied to the ‘eligible business’ as defined in the Explanation in the said provision and all business except the business of plying, hiring or leasing goods carriages referred to section 44AE of the Act are now covered by the said provisions of the Act. 5. The assessment year in the present case is involved before us are prior to amendment viz., A.Y. 2009-10 and 2010-11. However, since the provisions of Section 44AD are admittedly applicable to the present assessee, as they exist prior to amendment, we see no error in the impugned order passed by the learned Tribunal remanding the matter back to the learned Assessing Officer to workout the peak of deposits after giving proper and sufficient opportunity of hearing to the Assessee. Date of Order 06.02.2017 ITA 100155-56/2015 Mohandas Rama Naik Vs. Income Tax Officer, Ward – 1, Karwar, Santeri Krupa Building Habbuwada, Karawar . 6/6 6. The objections raised before us are thus open to raise by the Assessee before the Assessing Officer also and therefore, the grievance raised before us that the Income Tax Officer will be bound to act in a particular manner is not correct. 7. In our considered opinion no substantial question of law arises out of the remand order passed by the learned Tribunal and the Income Tax Officer is now expected to pass further orders, only after giving a reasonable opportunity of hearing to the Asseessee in accordance with law. 8. Accordingly, the present appeal stands disposed of. No costs. Sd/- JUDGE Sd/- JUDGE Yan/Vmb "