ITO, Coimbatore v. Shri R.Ananda Padmanabhan, Coimbatore

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE ACCOUNTANT MEMBER] I.T.A.NO.1822/MDS/2009 ASSESSMENT YEAR : 2006-07 THE ITO WARD II(3) COIMBATORE VS SHRI R.ANANDA PADMANABHAN 165 D.B ROAD R.S.PURAM COIMBATORE 641 002 [PAN AAHHA5923M] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI S.SRIDHAR O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE FOR ASSESSME NT YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) COIMBA TORE DATED 29.9.2009. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 17.8.2006 ADMITTING TOTAL INCOME OF ` 1 41 078/-. THE ASSESSMENT WAS COMPLETED WITH AN ADDITION OF ` 13 00 000/- U/S 68 OF THE ACT ON ITA 1822/09 :- 2 -: ACCOUNT OF UNEXPLAINED CASH CREDIT. THE ASSESSEE HAD WITHDRAWN ` 13 00 000/- FROM INDUS IND BANK ON THREE DATES AS U NDER: 26.6.2005 ` 5 00 000 4.7.2005 ` 3 70 000 19.8.2005 ` 4 30 000 ` 13 00 000 3. THIS WITHDRAWAL WAS REFLECTED IN THE CASH BOOK OF T HE ASSESSEES HUF AND DEBITED IN THE BOOK. THIS AMOUNT WAS GIVEN AS HAND LOANS TO THREE PERSONS WHICH WAS TAKEN BACK AND RE-DEPOSITED INTO THE SAME BANK AS UNDER: 27.7.2005 ` 4 80 000 5.10.2005 ` 3 65 000 7.11.2005 ` 5 00 000 ` 13 45 000 4. THESE AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT AN D ALSO REFLECTED BOTH IN CASH BOOK AS WELL AS BANK STATEME NTS. THE ASSESSEE ALSO ACCOUNTED FOR THE INTEREST RECEIVED AND PAID TAX THEREON. THE ASSESSEE HAD OMITTED TO ENTER THE LENDING AS WELL A S THE RECEIPT IN THE BOOKS OF ACCOUNT ON THE REASONING THAT THIS BEING H AND LOANS FOR A SHORT PERIOD WERE NOT REQUIRED TO BE SO RECORDED. THE ASSESSEE EXPLAINED THIS MISTAKE AS A CLERICAL ERROR COMMITTE D INADVERTENTLY. THIS FACT WAS ALSO ASCERTAINED BY THE ASSESSING OFFICER WITH REFERENCE TO BANK STATEMENT FILED BEFORE HIM. THE ASSESSING OFF ICER ALSO VERIFIED RE-DEPOSIT OF THESE AMOUNTS AS STATED ABOVE. FURTH ER ARGUMENT OF THE ITA 1822/09 :- 3 -: ASSESSEE WAS THAT EVEN AFTER WITHDRAWAL OF THESE AM OUNTS THERE IS NO CASH BALANCE IN THE BOOKS OF ACCOUNT. SO THIS IMP UGNED AMOUNT CANNOT BE TREATED AS UNEXPLAINED CREDITS AND ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. BUT THE ASSESSING OFFICER W AS NOT AGREEABLE WITH THE CONTENTION OF THE ASSESSEE AND ADDED ` 13 00 000/- U/S 68 OF THE ACT. AGGRIEVED THE ASSESSEE FILED APPEAL BEFO RE THE LD. CIT(A) WHO IN TURN DELETED THE IMPUGNED ADDITION. NOW T HE REVENUE IS AGGRIEVED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE C AREFULLY PERUSED THE ENTIRE RECORDS. IT WAS ARGUED BY THE L D.DR THAT THE IMPUGNED ADDITION WAS MADE PURELY ON THE BASIS OF A BSENCE OF CREDIT ENTRIES IN THE CASH BOOK WHICH COULD VERY WELL INFE R THAT THE ASSESSEE HAD UNACCOUNTED CASH IN HIS POSSESSION. IN GROUND NO.3 THE REVENUE HAS TAKEN A STAND THAT THE LD. CIT(A) COMMITTED ERR OR IN CONCLUDING THAT THE CASH BOOK FOR THE RELEVANT PERIOD DID NOT SHOW ANY DEFICIT BALANCE AT ANY POINT OF TIME EVEN IF THE LOAN TRANS ACTIONS WERE ENTERED PROPERLY. BUT BEFORE US THIS FACT COULD NOT BE SUB STANTIATED BY WAY OF ORAL OR WRITTEN SUBMISSIONS. ON THE OTHER HAND TH E LD.AR RELIED ON THE ORDER APPEALED AGAINST AND ALSO ON THE DECISION OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF SR VENKATA RATNA M VS CIT 127 ITR 807 ON WHICH THE LD. CIT(A) HAS ALSO RELIED. ITA 1822/09 :- 4 -: 6. WE HAVE NOTICED THAT THE ASSESSING OFFICER HAS MAD E THE IMPUGNED ADDITION PURELY ON SURMISES AND CONJECTURE S WHICH IS FURTHER BASED ON HIS GRAVE SUSPICION. THE OBSERVAT ION OF THE LD. CIT(A) THAT THE CASH BOOK FOR THE RELEVANT PERIOD D ID NOT SHOW ANY DEFICIT BALANCE AT A ANY POINT OF TIME EVEN IF THE TRANSACTIONS WERE CORRECTLY BOOKED IS FOUND TO THE CORRECT OBSERVATIO N BECAUSE THERE IS NO EVIDENCE TO CONTRADICT THE AVAILABILITY OF THESE AMOUNT OR NOT AVAILABLE FOR RE-DEPOSITING THE SAME. THE ASSESSEE HAD WITHDRAWN TOTAL AMOUNT OF ` 13 00 000/- AND RE-DEPOSITED ` 13 45 000/- BY TREATING THE DIFFERENCE AS INTEREST RECEIVED WHICH WAS ALSO OFFERED AS INTEREST INCOME TO TAX AT ` 2 29 550/-. BUT THE LD. CIT(A) HAS NOT TREATED THE INTEREST RECEIVED TO BE RELATED WITH TH E INCOME RETURNED AND THEREFORE HE HAS TREATED THIS AMOUNT OF ` 45 000/- AS INCOME EARNED BY THE ASSESSEE ON ACCOUNT OF ADVANCING LOAN S TO THE THREE INDIVIDUALS THAT IS WHY HE HAS GIVEN RELIEF OF ` 12 55 000/- INSTEAD OF ` 13 00 000/-. THE ASSESSEE IS NOT IN APPEAL BEFORE US. THE HELD PORTION OF THE HON'BLE KARNATAKA HIGH COURTS DECIS ION (SUPRA) READS AS UNDER: ' ONCE THE PETITIONER-ASSESSEE DISCLOSED THE SOURCE AS HAVING COME FROM THE WITHDRAWAL MADE ON GIVEN DATE FROM A GIVEN BANK IT WAS NOT FOR RESPONDENTS NOS1 AND 2 TO CONC ERN THEMSELVES WITH WHAT THE ASSESSEE DID WITH THAT MON EY I.E. WHETHER HE HAD KEPT THE SAME IN HIS HOUSE OR UTILIZ ED THE SERVICES OF A BANK BY DEPOSITING THE SAME. THE ITO HAD ONLY TWO CHOICES BEFORE HIM. ONE WAS TO REJECT THE EXPLA NATION AS ITA 1822/09 :- 5 -: NOT BELIEVABLE FOR THE REASON THAT ON HIS INVESTIGA TION NO SUCH PIGMY DEPOSIT WAS EVER MADE IN THE BANK. IN THE ALT ERNATIVE HE OUGHT TO HAVE CALLED UPON THE ASSESSEE-PETITIONER T O SUBSTANTIATE HIS CLAIM BY DOCUMENTARY EVIDENCE. HAV ING EXERCISED NEITHER OF THE CHOICES IT WAS NOT OPEN T O THE ITO TO MERELY SURMISE THAT IT WOULD NOT BE PROBABLE FOR TH E ASSESSEE TO KEEP ` 15 000/- UN-UTILISED FOR A PERIOD OF TWO YEARS. ' 7. IN THIS CASE ALSO THE ASSESSING OFFICER HAS NOT SUB STANTIATED HIS CLAIM BY MAKING FURTHER ENQUIRIES AND BRINGING SOME PROOF ON RECORD FAILING WHICH ALL HIS INFERENCES ARE TO BE TREATED AS SIMPLY SURMISES AND CONJECTURES. THEREFORE WE DO NOT FIND ANY FALLACY IN THE FINDING OF THE FIRST APPELLATE AUTHORITY HENCE WE CANNOT ALLOW T HIS REVENUES APPEAL. 8. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT O N 25.2.2011. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 25 TH FEBRUARY 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR