Om Prakash Roy(HUF), Cuttack v. ITO, Bhubaneswar

ITA 145/CTK/2010 | 2006-2007
Pronouncement Date: 25-02-2011

Appeal Details

RSA Number 14522114 RSA 2010
Assessee PAN AAAHO6604E
Bench Cuttack
Appeal Number ITA 145/CTK/2010
Duration Of Justice 10 month(s) 3 day(s)
Appellant Om Prakash Roy(HUF), Cuttack
Respondent ITO, Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Bench Allotted DB
Date Of Final Hearing 23-02-2011
Next Hearing Date 23-02-2011
Assessment Year 2006-2007
Appeal Filed On 22-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. /AND . . . S HRI K.S.S.PRASAD RAO JUDICIAL MEMBER / I.T.A.NO. 145/CTK?2010 / ASSESSMENT YEAR 2006 - 07 OM PRAKASH ROY (HUF) C - 4/32 MAYAPURI APARTMENT NAGESWAR TANGI BHUBANESWAR AAAHO 6604 E - - - VERSUS - INCOME - TAX OFFICER WARD 1( 2) BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.K.PATTNAIK/A.KEDIA ARS / FOR THE RESPONDENT: / SHRI S.C.MOHANTY DR / ORDER . . S HRI K.K.GUPTA ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN CONFIRMING THE ASSESSING OFFICER HOLDING THE VIEW THAT 6 LAKHS INTRODUCED BY THE MEMBERS OF THE HUF WERE NOT AVAILAB LE TO THE MEMBERS TO DEPOSIT IN THE BANK ACCOUNT OF ASSESSEE AGAINST WHICH AN AMOUNT OF 6 75 000 WAS GIVEN TO ONE OF ITS MEMBERS REQUIRING IT URGENTLY. THE ADDITION U/S.68 HAS BEEN CONFIRMED BY THE LEARNED CIT(A) AMOUNTING TO 6 LAKHS WHICH IS BEING ARGU ED BY THE LEARNED COUNSEL FOR THE ASSESSEE. 2. HE REITERATED THAT THE ASSESSEE IS A HUF COMPRISING OF FOUR ADULT MEMBERS WHO HAVE ASSESSABLE INCOME IN THEIR OWN HANDS AS INDIVIDUALS WHICH BASICALLY RENDERED INCOME FROM INTEREST AND HOUSE PROPER TY FIL ED RETURN OF INCOME OF 2 06 361 FOR THE IMPUGNED ASSESSMENT YEAR .DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN THE DEPOSIT OF CASH WITHIN TH E PERIOD OF 10 DAYS A SUM OF 2 6 LAKHS WHICH THE ASSESSEE RES PONDED BY SUBMITTING THAT THE ASSESSEE ITSELF HAVING HIGHER TAXABLE RETURNED INCOME WAS DISTRIBUTED AMONGST THE MEMBERS OF HUF IN CASH WHICH IS A MATTER OF DOCUMENTS AVAILABLE WITH THE DEPARTMENT IN THE FORM OF INCOME - TAX RETURNS FILED AND THE DRAWINGS MA DE BY THE HUF TO BE DISTRIBUTED AS A FAMILY SETTLEMENT AMONGST THE FAMILY MEMBERS. THE AMOUNT DEPOSITED BY THE MEMBERS IN THE BANK ACCOUNT OF THE HUF WAS ON A SPECIFIC REQUISITION B Y ONE OF THE MEMBERS NAMELY SMT. SANGEETA ROY WHO WAS TO ISSUE CHEQUE OF 6 75 000.THE ASSESSING OFFICER FURTHER VERIFIED THE FACT OF AVAILABILITY OF CASH AT THE TIME DEPOSIT ED IN THE MONTH OF FEBRUARY 2006 BY VERIFYING THE AMOUNT DRAWN IN CASH BY RESPECTIVE DEPOSITORS FROM THE PERIOD FROM JULY 2002 TO JANUARY 2006. THEREAFTE R HE PROCEEDED TO CONSIDER THE WITHDRAWAL IN CASH WHETHER WAS SUFFICIENT TO MEET THE HOUSE HOLD REQUIREMENTS OF THE MEMBERS LEAVING THE AVAILABILITY OF THE CASH TO BE DEPOSITED IN THE BANK WAS NOT SATISFACTORY. HE PROPOSED TO TAX THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. AGGRIEVED THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY WHO IN HIS BRIEF ORDER HAS AGREED WITH THE ASSESSING OFFICER THAT THERE WAS NO CREDIBLE EVIDENCE TO EXPLAIN HOLDING OF CASH BY THE INDIVIDUAL MEMBERS TO BE DEPOS ITED WITHIN A SHORT SPAN OF 8 DAYS IN THE MONTH OF FEBRUARY 2006. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V.CIT ( 214 ITR 810 ) THE ADDITION U/S.68 WAS UPHELD. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH ESE ARE THE UNDISPUTED FACTS WHICH HAVE BEEN LOOKED INTO ON SUSPICION AND SURMISES. HE POINTED OUT THAT THE HUF HAS BEEN EARNING TAXABLE INCOME FOR THE PAST FOUR YEARS ON WHICH TAX ON THE STATUS OF SPECIFIED HUF RATES HAVE BEEN PAID. THE EARNINGS ARE HELD BY THE MEMBERS OF THE HUF THEREFORE THE HOLDING OF CASH 3 AT ANY PARTICULAR TIME COULD NOT BE SUBJECTED TO SCRUTINY BY THE ASSESSING AUTHORITIES AFTER THEY VERIFIED THAT THE CASH HELD WAS ALREADY RENDERED TO TAX. AS MENTIONED EARLIER THE HUF CONSISTS OF FOU R ADULT MEMBERS WHO ALL ARE INCOME TAX ASSESSEES IN THEIR INDIVIDUAL CAPACITY AND WERE ALSO CONDUCTING ACTIVITIES FOR THE BENEFIT OF THE JOINT FAMILY. THERE WAS NO REASON TO CLAIM EXPENSES AGAINST THE WITHDRAWALS AS COMPUTED BY THE ASSESSING OFFICER IN HIS ORDER WHICH RATHER SUPPORTS THE CASE OF THE ASSESSEE THAT THE WITHDRAWALS FROM THE HUF WERE NOT DEPOSITED IN THE BANK BUT HELD BY THEN WHEN WITHDRAWALS FOR THE PURPOSE OF HOUSE HOLD EXPENSES ARE NOT FROM PERSONAL ACCOUNTS . HAVING NOTED THAT THE ASSESSEE I N THEIR INDIVIDUAL CAPACITY HAD DRAWN AMOUNT SUFFICIENT TO ME E T THEIR EXPENSES OVER THE SAID PERIOD THE AUTHORITIES BELOW OUGHT TO HAVE ACCEPTED THE FACT THAT THE A MOUNT WAS AVAILABLE WITH THE INDIVIDUAL MEMBERS OF THE HUF FOR MEETING OUT ANY URGENT REQUI REMENT OF SMT. SANGEETA ROY WHO HAD TO MAKE PAYMENT OF 6 75 000. THE AMOUNTS WHICH WERE HELD WITH THEM INDIVIDUALLY WERE THE AMOUNT ALREADY SUBJECTED TO TAX THEREFORE COULD NOT BE RE - QUESTIONED WHETHER WERE UTILISED FOR HOUSE HOLD EXPENSES OR REINVESTED. FOR RE - INVESTMENT PURPOSE THE MEMBERS CAN ONLY DO IT THROUGH THE BANKING CHANNELS OF THE HUF INSOFAR AS THE AMOUNTS STOOD EXPLAINED THEREIN. THEREFORE HE ARGUED THAT THE LEARNED CIT(A) ASSIGNING NO REASON HAS HELD THE EXPLANATION OF THE ASSESSEE APPELLAN T AS UNSATISFACTORY. HE HAS SUPPORTED HIS VIEW BY STATING THAT THE CHEQUE PAID BY SMT. SANGEETA ROY COULD DIRECTLY BE PAID BY THE HUF WHEN SHE WAS MEMBER HAS NO BEARING TO THE FACTS OF THE ASSESSEES CASE. HE PRAYED THAT THIS AMOUNT OF ADDITION BE DIRECTED TO BE DELETED. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW FOR HIS PART OF SUBMISSIONS. HE POINTED OUT THAT THE LIABILITY OF INDIVIDUAL MEMBERS OF 4 HUF HOLDING CASH IN ABSENCE OF BOOKS OF ACCOUNT WAS RIGHTLY CONSIDERED BY THE ASSESSING OFFICER AS HAVING BEEN UTILISED FOR HOUSEHOLD EXPENSES THEREFORE LEFT NO ROOM FOR THE HUF TO ACCEPT DEPOSITS OF 6 LAKHS WITHIN A SPAN OF EIGHT DAYS IN FEBRUARY. NO DOCUMENTARY EVIDENCE HAS BEEN PRODUCED TO ESTABLISH THE SAME. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION TO THE FACTS AND CIRCUMSTANCE WE ARE INCLINED TO HOLD THAT THE AUTHORITIES BELOW MISDIRECTED THEMSELVES TO COMPUTE AVAILABILITY OF CASH WITH THE MEMBERS OF THE HUF VIS - - VIS WHAT HE HELD AS EXPENSES TO BE UTILISED EITHER BY THE HUF OR BY THE INDIVIDUAL MEMBERS OF THE HUF WHEN THE ASSESSEE HAS BEEN CATEGORICALLY STATING THAT THE HUF STATUS OF FOUR INDIVIDUAL MEMBERS WHO ARE INCOME - TAX ASSESSEES SEPARATELY AND ARE FILING T HEIR RETURNS REGULARLY. IT WAS NOT THE CASE OF THE ASSESSING OFFICER OF INVOKING THE PROVISIONS OF SECTION 68 ON THE BASIS OF THE DEPOSITORS OF CASH IN THE BANK NOT HAVING CREDITWORTHINESS TO THE EXTENT THAT IT WAS ONE OF THE MEMBERS OF THE HUF ONLY OUT OF THE INCOME - TAX ASSESSES AS WAS REQUIRED FOR ISSUING CHEQUE AMOUNTING TO RTS.6 75 000. THE LEARNED COUNSEL BEFORE US HAS SUBMITTED THAT THE HUF HAS BEEN RENDERING INCOME TO TAX WHICH INCOME WAS SUFFICIENT TO HOLD CASH BY THE INDIVIDUAL MEMBERS AFTER INCURRING EXPENDITURES WHICH HAS BEEN EXCLUSIVELY MADE BY THE MEMBERS BY WITHDRAWAL OF CASH FROM THEIR SEPARATE BANKING ACCOUNTS. AS THE INDIVIDUAL MEMBERS REQUIRED NO CONFIRMATION TO HOLD CASH THE AMOUNT AVAILABLE WI TH EACH OF THEM WAS HELD IN BETWEEN 2003 - 04 TO 2006 - 07 TO BE UTILISED BY SMT.SANGEETA ROY FOR I SSUING CHEQUE WHICH ONLY ARISES A SUSPICION IN THE MINDS OF THE ASSESSING AUTHORITIES FOR ISSUE OF A CHEQUE AFTER CASH DEPOSITS. THE SAID INCOME THEREFORE CANNOT BE TAXED IN THE HANDS OF THE HUF 5 ONCE MEMBER OF HUF CONTRIBUTING CAPITAL TO THE HUF WITHDRAWS THE SUM ON THE BASIS OF INCOME GENERATED AGAINST HOUSE PROPERTY AND INTEREST WHICH ASSETS HAVE REMAINED THE SAME . IT IS AN EXERCISE IN FUT I LITY TO BE CONSIDERED UNDER THE PROVISIONS OF SECTION 68. HE POINTED OUT THAT IT WAS A SIMPLE CASE OF CAPITAL OF HUF BELONGING TO THE MEMBERS WAS REDUCED BY 6 LAKHS AGAINST THE HOLDING OF SDAME ASSETS WHICH HAS NOT BEEN DISTRIBUTED AND THEREFORE COULD NOT BE TERMED AS INTRODUCTION OF CASH DEPOSIT IN THE BANK WAS ASSESSEES OWN MONEY U/S.68. WE ARE INCLINED TO FIND FAVOUR IN THE CONTENTION OF THE LEARNED COUNS EL THAT HAV ING RENDERED INCOME OF MORE THAN 6 LAKHS COMBINED FOR THE IMPUGNED ASSESSMENT YEAR AS INDIVIDUALS AND HUF THERE WAS NO REASON FOR THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S.68 WH EN NO CORROBORATIVE EVIDENCE HAD BEEN BROUGHT ON RECORD BUT TO ESTABLISH THAT HE HOUSE HOLD EXPENSES WHICH HAD BEEN CLAIMED FROM THE BANK IN CASH FOR THE EARLIER YEARS COULD NOT BE AVAILABLE TO THE ASSESSEE FOR DEPOSIT. THE AMOUNT WAS UTILISED BY A MEMBER OF THE HUF THEREFORE ONLY WAS A DEPLETION IN THE CAPITAL ACCOUNT WHEN THE AMOUNT OF ASSETS REMAIN IN TACT PLUS AMOUNT OWED BY SMT.SANGEETA ROY THEREFORE REQUIRES NO ASSUMING JURISDICTION UNDER THE PROVISIONS OF SECTION 68. IN VIEW THEREOF THE ADDITION OF 6 LAKHS IS DIRECTED TO BE DELETED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 25 TH FEBRUARY 2011 S D/ - S D/ - ( . . . ) ( K.S.S.PRASAD RAO) JUDICIAL MEMBER ( . . ) (K.K.GUPTA) ACCOUNTANT MEMBER. ( ) DATE: 25 TH FEBRUARY 2011 ( ) ( H.K.PADHEE ) SENIOR.PRIVATE SECRETARY. 6 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY