H. Thimmaiah, Channapatna v. ITO, Mandya

ITA 1160/BANG/2009 | 2006-2007
Pronouncement Date: 30-07-2010 | Result: Allowed

Appeal Details

RSA Number 116021114 RSA 2009
Bench Bangalore
Appeal Number ITA 1160/BANG/2009
Duration Of Justice 7 month(s) 22 day(s)
Appellant H. Thimmaiah, Channapatna
Respondent ITO, Mandya
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-07-2010
Date Of Final Hearing 14-07-2010
Next Hearing Date 14-07-2010
Assessment Year 2006-2007
Appeal Filed On 08-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1160/BANG/2009 ASSESSMENT YEAR : 2006-07 H. THIMMAIAH PROP: SRINIVASA PROVISION STORES ANNEGOWDA BUILDING M.G. ROAD CHANNAPATNA. : APPELLANT VS. THE INCOME TAX OFFICER WARD-3 MANDYA. : RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN C.A. RESPONDENT BY : SHRI K.N. SHYAM SUNDAR ADDL.CIT(D R) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL AGGRIEVED AGAIN ST THE ORDER OF LD. CIT(APPEALS) IN ITA NO.108/CIT(A) MYS/08-09 FOR THE ASSESSMENT YEAR 2006-07 DATED 2.9.2009. 2. THE ASSESSEE HAD INITIALLY SUBMITTED AN ELABORAT E LONE GROUND WITH RESPECT TO ADDITIONS MADE DUE TO UNACCOUNTED INVEST MENT IN BUILDING FOR AN AMOUNT OF RS.4 LAKHS. SUBSEQUENTLY THE ASSESSEE SUB MITTED TWO CONCISE ITA NO.1160/BANG/09 PAGE 2 OF 6 GROUNDS AND TWO ADDITIONAL GROUNDS. THE FIRST CONCI SE GROUND AND THE SECOND ADDITIONAL GROUND ARE GENERAL IN NATURE THER EFORE NOT CONSIDERED. THE SECOND CONCISE GROUND LEADS TO THE SAME ISSUE A S MENTIONED ABOVE. IN THE FIRST ADDITIONAL GROUND THE ASSESSEE DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S. 234-B AND 234-C OF THE ACT . 3. THE ASSESSEE IS AN INDIVIDUAL RUNNING A PROVISIO N STORE. A SURVEY U/S. 133A WAS CONDUCTED ON THE ASSESSEE ON11.8.2006 WHEREIN IT WAS FOUND THAT THE ASSESSEE WAS NOT MAINTAINING STOCK B OOK. RETURN WAS FILED BY THE ASSESSEE ON 30.10.2006 AND IT WAS PROCESSED U/S. 143(1) OF THE ACT SUBSEQUENT TO WHICH ASSESSMENT WAS COMPLETED U/S. 1 43(3) OF THE ACT ON 26.12.2008. 4. THE ASSESSEE HAD OFFERED A SUM OF RS.4 LAKHS AS UNACCOUNTED INVESTMENT IN THE CONSTRUCTION OF BUILDING AT THE T IME OF SURVEY CONDUCTED ON 11.8.2006 BASED ON WHICH THE ASSESSING OFFICER CONCLUDED THE ASSESSMENT MAKING AN ADDITION OF RS.4 LAKHS. 5. ON APPEAL BY THE ASSESSEE LD. CIT(A) MADE THE F OLLOWING OBSERVATIONS AND DISMISSED THE APPEAL OF THE ASSESS EE:- (1) THE ASSESSEE HAD NOT GIVEN ANY EXPLANATION WITH RESPECT TO ADDITIONAL INVESTMENT IN BUILDING ARISING FROM THE INCOME OF THE BUSINESS AT ANY TIME DURING THE COURSE OF SURVE Y OR THEREAFTER. (2) THE APPELLANT IN HIS STATEMENT WHICH WAS MADE AFTER 3 DAYS OF THE SURVEY HAD ADMITTED THAT THE INVESTMENT IS MAD E FROM UNACCOUNTED INCOME AND MAY BE TAXED ACCORDINGLY. (3) THE RETURN OF INCOME FOR ALL THE YEARS WAS FILE D FOR THE FIRST TIME ONLY AFTER THE SURVEY. ITA NO.1160/BANG/09 PAGE 3 OF 6 (4) THE ASSESSEE HAD NOT MAINTAINED BOOKS OF ACCOUN TS. (5) THOUGH THE APPELLANT HAD SUBMITTED CASH FLOW ST ATEMENTS AND STATEMENT OF AFFAIRS DURING THE APPEAL PROCEEDINGS THE SAME DOES NOT HAVE ANY GROUNDING IN ANY CONTEMPORANEOUS ACCOUNTS MAINTAINED BY HIM. (6) NO DETAILS WERE SUBMITTED AS TO HOW AND WHEN T HE MONEY WAS WITHDRAWN FROM BUSINESS OUT OF THE PROFIT GENERATED AND INVESTED IN THE BUILDING. (7) THE CLAIM OF THE ASSESSEE IS GENERAL IN NATURE AND NOT BACKED UP WITH ANY EVIDENCE. 6. LD. AR SUBMITTED A PAPERBOOK CONTAINING 1 TO 19 PAGES CONSISTING COPY OF STATEMENT RECORDED U/S. 131 OF THE ACT ON 1 4/08/2006 IN KANNADA ALONG WITH ENGLISH TRANSLATION COPY OF THE ACKNOWL EDGEMENT FOR HAVING FILED THE RETURN OF INCOME ALONG WITH THE COMPUTATI ON OF TOTAL INCOME TRADING & PROFIT & LOSS ACCOUNT AND STATEMENT OF AF FAIRS FOR THE A.Y. 2003- 04 2004-05 2005-06 AND 2006-07 AND COPIES OF THE LETTER SUBMITTED TO THE REVENUE ON VARIOUS DATES. LD. AR SUBMITTED THA T AT THE TIME OF THE SURVEY THE ASSESSEE HAD OFFERED A SUM OF RS.4 LAKH S FOR THE A.Y. 2006-07 HOWEVER HAD MADE A PLEA THAT SINCE HE HAD DECLARED INCOME OF RS.4 92 740 AND RS.10 66 000 FOR THE A.Y. 04-05 AND 05-06 RESPECTIVELY THE SAME BE CONSIDERED AS AVAILABLE FUNDS FOR INVES TMENT OF RS.4 LAKHS IN THE CONSTRUCTION OF BUILDING AS A TELESCOPING BENEF IT. LD. AR PLEADED THAT THE ASSESSEE HAD FURNISHED BEFORE THE LD. AO THE RE QUISITE STATEMENT OF AFFAIRS INCLUDING CASH FLOW STATEMENTS FOR THE A.Y. 2003-04 2004-05 2005- 06 AND 2006-07 TO JUSTIFY THE INVESTMENT MADE IN TH E BUILDING. HOWEVER THE LD. AO DID NOT PERUSE OVER THE DETAILS FURNISHE D AND WENT AHEAD WITH THE ASSESSMENT ONLY ON THE BASIS OF STATEMENT MADE DURING THE COURSE OF ITA NO.1160/BANG/09 PAGE 4 OF 6 THE SURVEY. LD. AO FAILED TO APPRECIATE THE FACT TH AT AT THE TIME OF THE SURVEY THE BOOKS OF ACCOUNTS WERE NOT READY AND COM PLETE AND THEREFORE THE ASSESSEE COULD NOT KNOW HIS CORRECT STATE OF AF FAIRS. IT WAS THEREFORE PRAYED BY THE LD. AR THAT THE ADDITION MADE ON ACCO UNT OF UNEXPLAINED INVESTMENT ON BUILDING FOR AN AMOUNT OF RS.4 LAKHS MAY BE DELETED SINCE THE ENTIRE AMOUNT IS ACCOUNTED. 7. LD. DR VEHEMENTLY OPPOSED TO THE SUBMISSIONS OF THE LD. AR AND SUPPORTED THE FINDINGS OF LD. CIT(A) AND LD. AO. L D. DR FURTHER SUBMITTED THAT THE ASSESSEE HAD FURNISHED ITS RETURN ONLY PUR SUANT TO THE ACTION U/S. 133A AND HAD FURTHER CONCEDED THAT THE BOOKS OF ACC OUNTS ARE NOT MAINTAINED AND HAD MADE AN INVESTMENT WHICH IS NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS TO THE EXTENT OF RS.4 LAKHS. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. AT THE OUTSET WE FIND THAT NEITHER THE LD. AO NOR THE LD. CIT(A) HAS SCRUTINIZED THE STATEMENT OF AFFAIRS AND CASH FLOW STATEMENTS FURNISHED BY THE ASSESSEE. THE LD. CIT(A) WITHOUT EXAMINING THE STATEMENTS HAD BLUNTLY REMARKED THAT THOUGH THE APPELLANT HAS FILED CASH FLOW STATEMENT AND STATEMENT OF AFFAIRS DURING THE APPEAL PROCEEDINGS THE SAME DOES NOT HAVE ANY GROUNDING IN ANY CONTEMPORANEOUS ACCOUNTS MAINTAINE D BY HIM. THE APPELLANT HAS GIVEN NO DETAILS AS TO HOW AND WHEN THE MONEY WAS W ITHDRAWN FROM BUSINESS OUT OF THE PROFITS GENERATED AND INVESTED IN THE BUILDING. WE FIND I T SURPRISING TO NOTE THAT HOW THE LD. CIT(A) COULD ARRIVE AT THIS CONCLU SION IN THE APPELLATE PROCEEDINGS WITHOUT EXAMINING THE FINANCIAL STATEM ENTS FURNISHED BY THE ASSESSEE SUCH AS TRADING AND PROFIT & LOSS ACCOUNT BALANCE SHEET AND ITA NO.1160/BANG/09 PAGE 5 OF 6 CASH FLOW STATEMENTS ETG. FOR THE PREVIOUS YEARS 2 002-03 TO 2005-06. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS TH E ASSESSEE HAD CONTENDED THAT HIS STATEMENTS WERE RECORDED BY THE REVENUE WITHOUT ANY ASSISTANCE OF AN AUDITOR AND FURTHER HE WAS HANDICA PPED SINCE HIS BOOKS OF ACCOUNTS WERE NOT READILY AVAILABLE. IT IS ALSO IM PORTANT FACT THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS RUNNING A PROVISION STORE WHEREIN IT IS VERY DIFFICULT TO MAINTAIN STOCK REGISTER IN THE NORMAL COURSE. CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE WE ARE OF THE OP INION THAT THE FILE NEEDS TO BE REMITTED BACK TO THE DESK OF THE LD. AO WITH DIRECTIONS FOR PROPER AND JUDICIOUS EXAMINATION OF ALL THE FINANCIAL STATEMEN TS AND DOCUMENTS FURNISHED BY THE ASSESSEE. IT IS ORDERED ACCORDINGL Y. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE IN THE PROC EEDINGS OF THE REVENUE. WITH REGARD TO THE FIRST ADDITIONAL GROUND RAISED B Y THE ASSESSEE WE HOLD THAT THE INTEREST CHARGEABLE U/S 234-B AND 234-C AR E CONSEQUENTIAL AND THEREFORE THE ASSESSEES PRAYER IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JULY 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 30 TH JULY 2010. DS/- ITA NO.1160/BANG/09 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.