ITO, Bangalore v. Shri. N. Ramamurthy, Bangalore

ITA 1204/BANG/2009 | 2006-2007
Pronouncement Date: 26-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 120421114 RSA 2009
Assessee PAN EYEAR2005W
Bench Bangalore
Appeal Number ITA 1204/BANG/2009
Duration Of Justice 4 month(s) 9 day(s)
Appellant ITO, Bangalore
Respondent Shri. N. Ramamurthy, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 26-04-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 26-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year 2006-2007
Appeal Filed On 17-12-2009
Judgment Text
PAGE 1 OF 8 ITA N O.1204/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B' BEFORE DR. O K NARAYANAN VICE PRESIDENT AND SHRI GEORGE GEORGE K J.M. ITA NO.1204/BANG/09 (ASST. YEAR 2006-07) THE INCOME TAX OFFICER WARD-6(3) BANGALORE-1. - APPELLANT VS SHRI N RAMAMURTHY NO.438 13TH CROSS DASARAHALLI MAIN ROAD BHUVANESHWARI NAGAR BANGALORE-24. - RESPONDENT APPELLANT BY : SMT. V S SREELEKHA ADDL. CIT RESPONDENT BY : SHRI S RAJAGOPALAN ADVOCATE O R D E R PER GEORGE GEORGE : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E CIT(A)'S ORDER DATED 16.9.2009 IN RELATION TO ASST. YEAR 200 6-07. 2. GROUNDS NO.1 5 AND 6 ARE GENERAL IN NATURE AND HENCE THE SAME ARE NOT DISPOSED OFF SINCE NO SPECIFIC ADJUDIC ATION IS CALLED FOR. 3. THE REMAINING EFFECTIVE GROUNDS NAMELY II) I II) AND IV) READS AS FOLLOWS:- PAGE 2 OF 8 ITA N O.1204/BANG/2009 2 II) THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF RS.4 50 000/- MADE BY THE AO AS UNEXPLAINED INVESTMENT ACCEPTING THE FRESH CLAIM OF THE ASSESSE E WITH REGARD TO THE SOURCE OF INVESTMENT MADE BEFORE THE CIT(A) WITHOUT APPRECIATING THE FACT THE EXPLANATION WITH REGARD TO THE SOURCE OFFERED BY TH E ASSESSEE BEFORE HIM WAS TOTALLY DIFFERENT FROM THE ONE OFFERED BEFORE THE AO AND THEREFORE COULD NOT HAVE BEEN ADMITTED WITHOUT GIVING THE OPPORTUNITY TO THE AO IN THE MATTER. III) THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF RS.2 33 265/- MADE BY THE AO AS SHORT TERM CAPITAL GAINS ON THE BASIS OF ADDITIONAL EVIDENCE FURNISHE D BY THE ASSESSEE BEFORE THE CIT(A) WITH REGARD TO DEVELOPMENT EXPENSES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD MADE A CLAIM FOR DEVELOPMENT EXPENSES OF RS.1 67 000/- ONLY AT THE TIME OF ASSESSMENT PROCEEDINGS AND WAS ABLE TO SUBSTANTIATE HIS CLAIM WITH EVIDENCE TO THE EXTENT OF RS.85 225/ - ONLY. IV) THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON MADE BY THE AO ON ACCOUNT OF SHORT TERM CAPITAL GAINS ON THE BASIS OF ADDITIONAL EVIDENCE FURNISHE D BY THE ASSESSEE BEFORE THE CIT(A) WITHOUT GIVING AN OPPORTUNITY TO THE AO FOR EXAMINATION OF THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE BEFOR E THE CIT(A). 4. THE BRIEF FACTS PERTAINING TO (II) GROUND MENTI ONED ABOVE ARE AS FOLLOWS:- DURING THE RELEVANT ASST.YEAR IN QUESTION ASSESS EE PURCHASED FOUR SITES FOR AN AGGREGATE SALE CONSIDER ATION OF RS.11 57 380/- FOR WHICH THE ASSESSING OFFICER CA LLED FOR THE SOURCES. THE ASSESSEE PRODUCED THE RENTAL AGREEMENTS FOR HAV ING RAISED LEASE PAGE 3 OF 8 ITA N O.1204/BANG/2009 3 ADVANCES DURING THE YEAR TO THE EXTENT OF RS.2 75 0 00/- BESIDES PROOF FOR RECEIPTS OF SALE CONSIDERATION OF RS.3 91 000/- IN RESPECT OF PROPERTY SOLD TO MAHESH GOENKA ON 27.12.2005. IN ADDITION AN EXPENDITURE OF RS.50 000/- WAS ALSO FURNISHED BEFORE THE ASSESSING OFFICER WHICH WAS ACCEPTED. HOWEVER THE ASSESSING OFFICER WAS NOT C ONVINCED WITH REGARD TO THE SOURCE TO THE EXTENT OF RS.4 50 000/- AND HENCE CHOSEN TO TREAT IT AS UNEXPLAINED INVESTMENT BY INVOKING PROV ISIONS OF SECTION 69 OF THE I T ACT. ACCORDINGLY THE ASSESSING OFFICER TAXED RS.4 50 000/- UNDER UNEXPLAINED INVESTMENT. 4.1 BEFORE THE FIRST APPELLATE AUTHORITY THE ASSE SSEE RAISED THE FOLLOWING GROUND :- THAT THE ASSESSING OFFICER HAS ALSO ERRED IN TAXING RS.4 50 000/- BY TREATING THE INVESTMENT AS UNEXPLAINED INCOME U/S 69 OF THE I T ACT 1961 BY IGNORING THE BANK BALANCE OF RS.6 50 000/- AVAILABLE AS ON 1.4.2005. 4.2 THE CIT(A) AFTER PERUSING THE BANK ACCOUNT OF THE ASSESSEE DECIDED THE ISSUE IN ASSESSEE'S FAVOUR. THE RELEVANT PORTION OF THE CIT(A)'S ORDER READS AS FOLLOWS:- 'THE APPELLANT PRODUCED BANK STATEMENT HELD WITH AMANATH COOPERATIVE BANK GANGENAHALLI BRANCH R T NAGAR BANGALORE A/C 10100 IN WHICH IT IS SEEN THAT THE BANK BALANCE AVAILABLE AS ON 1.4.2005 IS RS.6 85 816/-. THE PASS BOOK ALSO REVEALS CREDIT OF BANK INTEREST RS.10 980/- CREDITE D ON 10.9.2005. BESIDES THE ABOVE THE PASS SHEET ALSO REVEALS THAT THE CLEARING CREDIT OF PAGE 4 OF 8 ITA N O.1204/BANG/2009 4 RS.3 91 000/- BEING SALE PROCEEDS OF SITE SOLD TO MR. MAHESH GOENKA. BESIDES ABOVE THE APPELLANT ALSO PROCURED HOUSE AND SHOP LEASE ADVANCES TO THE EXTENT OF RS.3 50 000/- FROM VARIOUS TENANTS AS PER COPIES OF LEASE AGREEMENT PRODUCED BEFORE ME. I AM THEREFORE SATISFIED THAT THE APPELLANT HAS GOT SUFFICIENT FUNDS TO INVEST ON FOUR SITES REFERRED T O ABOVE. THE ADDITIONS OF RS.4 50 000/- UNDER UNEXPLAINED INVESTMENT IS HEREBY DELETED'. 4.3 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFOR E US. 4.4 IT WAS SUBMITTED BY THE LEARNED DR THAT THE EX PLANATION WITH REGARD TO SOURCE OFFERED BEFORE THE ASSESSING OFFICER WAS DIFFERENT FROM THE EXPLANATION FURNISHED BEFORE THE CIT(A) AN D THEREFORE THE ASSESSING OFFICER OUGHT TO HAVE PROVIDED AN OPPORTU NITY TO EXAMINE THE NEW EXPLANATION SUBMITTED BY THE ASSESSEE. 4.5 ON THE OTHER HAND THE LEARNED AR SUBMITTED TH AT NO NEW EXPLANATION WAS FURNISHED BEFORE THE CIT(A). ON TH E CONTRARY THE BANK BALANCE IN AMANATH COOPERATIVE BANK R T NAGAR BANGALORE WAS FURNISHED TO THE ASSESSING OFFICER AND THE ASSE SSEE HAD EXPLAINED THAT THE AMOUNT AVAILABLE IN THE BANK WAS UTILIZED FOR THE INVESTMENT OF FOUR SITES REFERRED ABOVE. THE ASSESSING OFFICER H AD IGNORED THE ASSESSEE'S PLEA IN SO FAR AS THE BANK BALANCE AVAIL ABILITY AS ON 1.4.2005 IS CONCERNED AND ARBITRARILY TAXED RS.4 50 000/- W HICH IS UNJUST AND UNCALLED FOR. PAGE 5 OF 8 ITA N O.1204/BANG/2009 5 4.6 HAVING HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD WE ARE OF THE VIEW THAT THE FIR ST APPELLATE AUTHORITY'S ORDER IS TO BE SUSTAINED. THE CIT(A) HAS CATEGORIC ALLY FOUND THAT THE ASSESSEE HAS ENOUGH SOURCE TO COVER UP THE INVESTME NT IN THE IMPUGNED FOUR SITES. THE CIT(A) RENDERED THE ABOVE FINDING A FTER CAREFULLY PERUSING THE ASSESSEE'S BANK STATEMENT HELD WITH AM ANATH COOPERATIVE BANK R T NAGAR BANGALORE A/C NO.10100. AS REGAR DS THE DR'S CONTENTION THAT NEW EXPLANATION WAS FURNISHED BY TH E ASSESSEE BEFORE THE CIT(A) ACCORDING TO US IT MAY NOT BE FULLY CO RRECT. THE BANK STATEMENT WAS BROUGHT TO THE NOTICE OF THE ASSESSIN G OFFICER THEREFORE THERE IS NO FRESH MATERIAL THAT WAS PRODUCED BEFORE THE CIT(A). IT WAS BASED ON THE EXISTING MATERIAL THAT CIT(A) HAS COME TO THE CONCLUSION IN FAVOUR OF ASSESSEE. WE FIND THAT THE CIT(A)'S F INDING/CONCLUSION IS JUSTIFIED AND THERE IS NO MATERIAL PLACED ON RECORD TO DISPEL HIS FINDING. 4.7 IN THE RESULT THIS GROUND OF THE REVENUE IS D ISMISSED. 5. AS REGARDS THE (III) AND (IV) GROUNDS MENTIONED ABOVE THE RELEVANT FACTS ARE AS FOLLOWS:- DURING THE ASST. YEAR THE ASSESSEE HAD SOLD A SI TE MEASURING 30X40 TO ONE SRI MAHESH GOENKA AS PER SAL E DEED EXECUTED AND REGISTERED ON 27.12.2005 FOR A CONSIDERATION OF RS/3 91 000/-. THE SITE IN QUESTION WAS BOUGHT ON 29.12.2003 FOR RS.72 510/- AS PER THE REGISTERED SALE DEED EXECUTED. THE ASSESSING OFFICE R COMPUTED SHORT TERM CAPITAL GAINS AT RS.2 33 265/- AS PER WORKING IN THE ASSESSMENT ORDER DATED 5.11.2008. THE SHORT TERM CAPITAL GAIN S COMPUTED ABOVE WAS AFTER ALLOWING DEVELOPMENT CHARGES TO THE EXTEN T OF RS.85 225/-. PAGE 6 OF 8 ITA N O.1204/BANG/2009 6 5.1 BEFORE THE FIRST APPELLATE AUTHORITY THE ASSE SSEE SUBMITTED THAT HE HAD INCURRED EXPENDITURE TOWARDS DEVELOPMEN T CHARGES TO THE EXTENT OF RS.2 90 000/- BUT THE ASSESSING OFFICER E RRONEOUSLY REJECTED THE CLAIM AND ERRED IN DETERMINING THE SHORT TERM C APITAL GAINS ON THE SALE OF SITE AT RS.2 33 265/-. IT WAS FURTHER SUBM ITTED THAT THE SITE SOLD IN QUESTION WAS IN FACT NOTIFIED BY THE BDA FOR ACQ UISITION AND IN ORDER TO PROTECT THE SITE THE ASSESSEE HAD INVESTED RS.2 90 000/- TOWARDS SUPER STRUCTURE DURING THE YEAR 2005 WITH AN INTENT ION OF OVERCOMING THE ACQUISITION THREAT HOPING THAT THE ACQUISITION PROCEEDINGS WOULD BE DROPPED. IT WAS SUBMITTED THAT THE PROOF FOR INCUR RING SUCH EXPENDITURE IS SUPPORTED BY A LETTER OF CONFIRMATION ISSUED BY BUILDING CONTRACTORS. THE PAYMENT TO THE BUILDING CONTRACTORS IN SUPPORT OF THE ASSESSEE'S CLAIM TOWARDS DEVELOPMENT CHARGES WAS MADE BY THE C ROSSED CHEQUE AND DESPITE FURNISHING ALL THE NECESSARY PARTICULAR S AND DOCUMENTARY EVIDENCES THE ASSESSING OFFICER WAS WRONG TO RESTR ICT THE DEVELOPMENT CHARGES TO RS.85 225/-. THE FIRST APPELLATE AUTHOR ITY DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING THUS:- 'THE APPELLANT HAS SOLD PROPERTY TO SHRI MAHESH GOENKA FOR RS.3 91 000/- WHICH WAS ACQUIRED BY THE APPELLANT FOR RS.72 510/-. THE APPELLANT HAS CLAIMED THAT HE HAD MADE AN INVESTMENT OF RS.2 60 225/- TOWARDS DEVELOPMENT OF PROPERTY AS PER THREE DIFFERENT RECEIPTS FROM A BUILDER BY NAME SHRI DINESH SRINIVAS AND PRODUCED COPIES BEFORE ME. THE ASSESSING OFFICER HAS CONSIDERED ONLY ONE RECEIPT FOR RS.85 225/- AS AGAINST THREE RECEIPTS AVAILABLE FOR AN AGGREGATE SUM OF RS.2 60 225/-. THE ASSESSING OFFICER HAS NOT ASSIGNED ANY REASONS FOR NON ACCEPTANCE OF THE OTHER RECEIPTS OF RS.1 00 000/- PLUS RS.75 000/- TO PAGE 7 OF 8 ITA N O.1204/BANG/2009 7 DINESH SRINIVAS CONSULTING ENGINEERS TOWARDS CONSTRUCTION OF COMPOUND WALL AND ROOM ON THE SAID PROPERTY'. 5.2 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFOR E US. 5.3 THE LEARNED DR SUBMITTED THAT THE ADDITION UND ER SHORT TERM CAPITAL GAINS MADE BY THE ASSESSING OFFICER WA S DELETED BY THE CIT(A) ERRONEOUSLY BY RELYING ON ADDITIONAL EVIDENC E FURNISHED BY THE ASSESSEE BEFORE THE CIT(A) WITH REGARD TO DEVELOPME NT CHARGES EXPENSES. IT WAS SUBMITTED THE ASSESSEE INITIALLY HAD MADE A CLAIM OF DEVELOPMENT EXPENSES TO THE TUNE OF RS.1 67 000/- O NLY AT THE TIME OF ASSESSMENT PROCEEDINGS AND WAS ABLE TO SUBSTANTIATE ITS CLAIM WITH EVIDENCE ONLY TO THE EXTENT OF RS.85 225/-. 5.4 THE LEARNED AR REITERATED THE SUBMISSION MADE BEFORE THE CIT(A) AND SUPPORTED THE FINDING OF THE CIT(A). 5.5 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE FIND BEFORE THE AO THE AS SESSEE HAD CLAIMED DEVELOPMENT CHARGES ONLY TO THE EXTENT OF RS.1 67 0 00/- AND HAD FURNISHED THE DETAILS WITH REFERENCE TO EXPENDITURE AMOUNTING TO RS.85 225/- ONLY. THEREFORE IN THE INTEREST OF JU STICE WE ARE OF THE VIEW THIS MATTER IS TO BE EXAMINED AFRESH BY THE A SSESSING OFFICER CONCERNED. ACCORDINGLY WE RESTORE THIS ISSUE TO T HE ASSESSING OFFICER FOR FRESH CONSIDERATION. THE ASSESSING OFFICER SHA LL AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE H E DECIDES THE MATTER. PAGE 8 OF 8 ITA N O.1204/BANG/2009 8 HENCE GROUND NO.(III) AND (IV) MENTIONED ABOVE IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AS INDICATED ABOVE. THE ORDER IS PRONOUNCED ON ..26TH....APRIL 2010 SD/- SD/- (DR. O K NARAYANAN) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBE R COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT(A) CONCE RNED. 4. THE CIT CONCERNED. 5. THE DR 6. GUARD FILE. 7. GF ITAT NEW DELHI. MSP/13.4. BY ORDER ASST. REGISTRAR ITAT BANGALORE.