Biswanath Pattnaik, Bhubaneswar v. DCIT, Bhubaneswar

ITA 320/CTK/2012 | 2008-2009
Pronouncement Date: 25-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 32022114 RSA 2012
Assessee PAN ADRPP4231G
Bench Cuttack
Appeal Number ITA 320/CTK/2012
Duration Of Justice 1 year(s) 11 month(s) 16 day(s)
Appellant Biswanath Pattnaik, Bhubaneswar
Respondent DCIT, Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 25-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 25-04-2014
Date Of Final Hearing 22-04-2014
Next Hearing Date 22-04-2014
Assessment Year 2008-2009
Appeal Filed On 09-05-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK .. .. BEFORE SHRI P.K.BANSAL A M & SHRI D.T.GARASIA J M ./ ITA NO. 317 / CT K /20 1 2 ( / ASSESSMENT YEAR : 200 6 - 07 ) BISWANATH PATTNAIK PLOT NO.210/1320 SARALA NAGAR BHUBANESWAR - 751 006 VS. DCIT SPECIAL RANGE AAYAKAR BHAWAN RAJASWA VIHAR BHUBANESWAR - 751 007. ./ ./ PAN/GIR NO. : A DRPP 4231 G ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 318/ CTK /20 12 ( / ASSESSMENT YEAR :200 6 - 07 ) BISWANATH PATTNAIK PLOT NO.210/1320 SARALA NAGAR BHUBANESWAR - 751 006 VS. DCIT SPECIAL RANGE AAYAKAR BHAWAN RAJASWA VIHAR BHUBANESWAR - 751 007. ./ ./ PAN/GIR NO. : A DRPP 4231 G ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 319/ CTK /20 12 ( / ASSESSMENT YEAR :200 7 - 0 8 ) BISWANATH PATTNAIK PLOT NO.210/1320 SARALA NAGAR BHUBANESWAR - 751 006 VS. DCIT SPECIAL RANGE AAYAKAR BHAWAN RAJASWA VIHAR BHUBANESWAR - 751 007. ./ ./ PAN/GIR NO. : A DRPP 4231 G ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA N O. 320/ CTK /20 12 ( / ASSESSMENT YEAR :200 8 - 0 9 ) BISWANATH PATTNAIK PLOT NO.210/1320 SARALA NAGAR BHUBANESWAR - 751 006 VS. DCIT SPECIAL RANGE AAYAKAR BHAWAN RAJASWA VIHAR BHUBANESWAR - 751 007. ./ ./ PAN/GIR NO. : A DRPP 4231 G ( / APPELLANT ) .. ( / RESPONDENT ) ITA NO S . 317 TO 320 /201 2 2 /ASSESSEE BY : SHRI S.K.AGRAWALLA /REVENUE BY : SHRI N.K.NEB / DATE OF HEARING : 2 2 ND APRIL 201 4 / DATE OF PRONO UNCEMENT : 25 TH APRIL 201 4 / O R D E R PER BENCH : ALL THESE APPEALS ARE RELATING TO THE SAME ASSESSEE THEREFORE FOR THE SAKE OF CONVENIENCE THESE APPEALS ARE DECIDED BY THIS COMMON ORDER. ITA NO.317/CTK/2012 2 . GROUND NO.1 RELAT ES TO ADDITION OF INTEREST ON THE LOAN GIVEN TO M/S DEBA JENA & MR. K.P.MOHANTY. 2 . 1 THE FACTS RELATING TO THIS GROUND ARE THAT THERE HAD BEEN A SURVEY IN THE CASE OF ASSESSEE U/S.133A ON 18 - 3 - 2008. DURING THE COURSE OF SURVEY CERTAIN DOCUMENTS WERE FO UND. THE ASSESSING OFFICER NOTED FROM PAGE 22 OF THE IMPOUNDED DOCUMENT UNDER THE MARKS OF IDENTIFICATION PHRC - 11 THAT THE ASSESSEE HAS ADVANCED LOAN OF RS. 1 00 000/ - (INCORRECTLY NOTED RS. 2 00 000/ - ) TO SHRI K.P.MOHANTY VIDE CHEQUE NO.684 DATED 16 - 12 - 200 5 OF SBI BHUBANESWAR AND THE EMI OF RS. 4 330/ - INCLUDING INTEREST FOR 60 MONTHS WAS AGREED TO BE PAID TO THE ASSESSEE W.E.F.16 - 1 - 2006. THE AO SINCE NOTED THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING MADE THE ADDITION IN RESPECT OF THE ACCRUED INTEREST. SIMILARLY IT WAS NOTED THAT ITA NO S . 317 TO 320 /201 2 3 AS PER PAGE 39 OF THE IMPOUNDED DOCUMENTS MARKS OF IDENTIFICATION PHRC - 11 THE ASSESSEE ADVANCED CASH LOAN OF RS. 1 00 000/ - TO SHRI DEBA JENA ON 8 - 2 - 2006. THE INTEREST WAS AGREED AT THE RATE OF RS.5000/ - PER M ONTH WHICH WAS NOT DISCLOSED BY THE ASSESSEE. THE AO ADDED THE INTEREST OF RS. 10 000/ - FOR TWO MONTHS. TOTAL INTEREST OF RS. 12 990/ - WAS ADDED. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DIRECTED THE AO TO REWORK THE INTEREST ACCRUED TO THE ASSESSEE ON ALL THESE TWO LOANS AND TO COMPUTE THE INCOME ACCORDINGLY. 2.2 BEFORE US LEARNED AR VEHEMENTLY ARGUED THAT THE ASSESSEE IS FOLLOWING CASH ACCOUNTING SYSTEM. THE INTEREST HAS NOT BEEN RECEIVED THEREFORE IT WAS NOT SHOWN AS INCOME. 2.3 LEA RNED DR ON THE OTHER HAND FILED BEFORE US THE PHOTOCOPY OF THE ITR - 4 IN WHICH THE ASSESSEE HAS CATEGORICALLY ASCERTAINED REGARDING MERCANTILE SYSTEM OF ACCOUNTING. 2.4 WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED FROM THE A SSESSMENT ORDER AS WELL AS ITR - 4 THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS MERCANTILE. THE ASSESSEE HAS NOT CHALLENGED THE METHOD OF ACCOUNTING FOLLOWED BY HIM. UNDER THESE CIRCUMSTANCES IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) . THUS GROUND NO.1 STANDS DISMISSED. ITA NO S . 317 TO 320 /201 2 4 3 . GROUND NO.2 RELATES TO SUSTENANCE OF THE ADDITION OF RS. 5 96 194/ - BY THE CIT(A) OUT OF THE ADDITION OF RS. 9 34 888/ - ATTRIBUTABLY MADE BY THE AO. 3.1 BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT THE ASSESSEE HAS RECEIVED ON 27 - 1 - 2006 FOR A SUM OF RS. 40 000/ - & RS. 2 565/ - THROUGH SB ACCOUNT BEARING NO. 10872234602 OF STATE BANK OF INDIA . SIMILARLY ON DIFFERENT DATES AN AMOUNT OF RS.1 43 478/ - WAS RECEIVED TO SB ACCOUNT NO 10003041 4 OF PUNJAB NATIONAL BANK. IN THE ABSENCE OF SATISFACTORY EXPLANATION THE ASSESSEE HAS ADDED A SUM OF RS. 1 86 043/ - AS INCOME FROM OTHER SOURCES. THE AO ALSO NOTICED THAT A SUM OF RS. 4 02 400/ - DEPOSITED IN CASH IN SB ACCOUNT NO. 10872234602 AND SIMILARLY ON DIFFERENT DATES AMOUNTING TOTALING TO RS. 3 46 445/ - WAS DEPOSITED IN CASH IN SB ACCOUNT NO. 100030414 OF PUNJAB NATIONAL BANK. THE ASSESSEE STATE S THAT THESE RECEIPTS WERE MADE OUT OF THE PROFESSIONAL RECEIPTS AND PART OF THAT WAS OUT OF THE CASH WITHDRA WAL FROM THE BANK. THE AO AFTER NOTING THAT THE ASSESSEE WAS HAVING VERY MEAGER OPENING AND CLOSING BALANCES OF THE CASH TREAT ED SUM OF RS. 7 48 845/ - TO BE THE UNEXPLAINED CASH DEPOSIT. THUS THE TOTAL ADDITION OF RS. 9 34 888/ - WAS MADE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) NOTED THAT THE ASSESSEE HAS INCOME FROM PENSION AMOUNTING TO RS.1 19 430/ - AND PENSION FROM LIC AMOUNTING TO RS.10 608/ - IN ONE ACCOUNT IS NOT TAXABLE THEREFORE HE REDUCED THE SAID AMOUNT AND ALSO NOTED THAT THE AS SESSEE HAS SHOWN ADDITIONAL INCOME OF RS. 2 08 656/ - . THEREFORE HE ALSO REDUCED THE SAID ITA NO S . 317 TO 320 /201 2 5 INCOME AND SUSTAINED THE ADDITION TO THE EXTENT OF RS. 5 96 194/ - SUBJECT TO FURTHER REDUCTIONS IF THE ASSESSEE CAN WORK OUT LOWER AMOUNT BEING CASH CREDITED IN THE AFO RESAID BANK ACCOUNT IN SBI AND PUNJAB NATIONAL BANK. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3.2 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW AS WELL AS THE DOCUMENTS RELIED ON BEFORE US. DURING THE COURSE OF HEARING AVAILABLE IN THE PAPER BOOK FILED BY THE ASSESSEE WE NOTED FROM THE CASH - FLOW STATEMENT AT PAGE S 138 & 139 AS WELL AS THE PROFIT AND LOSS ACCOUNT COPY OF WHICH IS AVAILABLE AT PAGE 145 IN THE PAPER BOOK THAT IN ADDITION TO THE INCOME OF RS.2 08 656/ - FOR WHICH THE CREDITED HAS BEEN GIVEN BY THE CIT(A). THE ASSESSEE HAS ALSO SHOWN INCOME FROM ENDOSCOPY AMOUNTING TO RS.1 48 300/ - AND INCOME FROM ULTRASOUND AND SCANNING AT RS. 2 94 350/ - . THE TOTAL OF THESE AMOUNT COMES TO RS. 4 42 650/ - . THUS A SUM OF RS.4 42 650/ - IN OUR OPINION WAS ALSO AVAILABLE WITH THE ASSESSEE FOR DEPOSITING IN THE BANK. WE ACCORDINGLY REDUCE THE ADDITION BY THE SAID AMOUNT AND SUSTAIN THE ADDITION TO THE EXTENT OF RS. 1 53 544/ - (5 96 194 4 42 650). T HUS THIS GROUND IS PARTLY ALLOWED. 4. THE NEXT GROUND RELATES TO ADDITION MADE IN RESPECT TO THE LOAN MADE TO MR. DEBA JENA. 4.1 THE FACTS IN BRIEF RELATING TO THIS ADDITION ARE THAT THE AO NOTED FROM PAGES 39 OF THE IMPOUNDED DOCUMENT UNDER THE MARKS O F ITA NO S . 317 TO 320 /201 2 6 IDENTIFICATION PHRC - 11 THAT THE ASSESSEE HAS ADVANCED A SUM OF RS.1 LAKH TO SHRI DEBA JENA ON 8 - 2 - 2006 AND AGAIN A SUM OF RS.1 LAKH ON 24 - 2 - 2006 IN CASH. WHEN QUESTIONED THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ADVANCED ONLY A SUM OF RS.1 LAKH TO SHR I DEBA JENA AND IS IMPOUNDED DOCUMENTS IS THE CONFIRMATION OF THE LOAN GIVEN BY THE ASSESSEE. THE AO WAS NOT SATISFIED AND HE MADE THE ADDITION OF RS.2 LAKHS AS UNEXPLAINED INVESTMENT. WHEN THE MATTER WENT BEFORE THE CIT(A) THE CIT(A) CONFIRMED THE ORDER OF THE AO ON THIS ISSUE. 4.2 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. BEFORE US LEARNED AR REITERATED THE SUBMISSION MADE BEFORE THE CIT(A) THAT THE ASSESSEE HAS ADVANCED ONLY A SUM OF RS. 1 LAKHS TO MR. DEBA JENA NOT RS. 2 LAKHS BUT COULD NOT FILE THE COPY OF THE ASSESSED DOCUMENT TO PROVE THAT THE ASSESSEE HAS ADVANCED ONLY A SUM OF RS. 1 LAKH ONCE. WE HAVE ALSO LOOKED INTO THE CASH - FLOW STATEMENT FILED BY THE ASSESSEE. COPY OF WHICH IS AVAILABLE AT PAGE 138 & 139 OF THE PAPER BOOK. W E NOTED THAT IN THE SAID CASH - FLOW STATEMENT THE ASSESSEE HAS SHOWN ONLY A SUM OF RS. 1 LAKH LOAN TO MR. DEBA JENA AND THEREFORE THE BALANCE SUM OF RS. 1 LAKHS REMAINS UNEXPLAINED. IN OUR OPINION ONCE THE ASSESSEE HAS ADVANCED THE MONEY TO A PERSON THE ONUS IS ON THE ASSESSEE TO EXPLAIN THE SOURCE TO THE SATISFACTION OF THE AO. THE ASSESSEE SINCE FAILED TO ADDUCE ANY EVIDENCE WE THEREFORE SUSTAIN THE ADDITION TO THE EXTENT OF RS. 1 LAKH. THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO S . 317 TO 320 /201 2 7 5. GROUND NO.4 RE LATES TO INVESTMENT MADE IN ACQUIRING THE LAND FOR RS.1 84 378/ - SUSTAINED BY THE CIT(A). 5.1 FACTS GIVING RISE TO THIS GROUND ARE THAT THE LAND BEARING PLOT NO. 436 OF KHATA NO.594 OF MOUZA NAKHARA WAS PURCHASED BY THE ASSESSEE ON 28 - 6 - 2005 FOR WHICH SAL E - DEED WAS EXECUTED FOR RS. 1 61 000/ - AND STAMP DUTY OF RS. 17 170/ - . THE VALUATION ADOPTED FOR STAMP DUTY WAS RS. 2 04 600/ - ON WHICH THE DEFICIT STAMP DUTY OF RS.5 668/ - WAS PAID. THE AO CONSIDERED THE VALUATION OF THE LAND IS RS. 2 04 600/ - + STAMP DUTY T OTALING TO RS. 2 27 978/ - AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) NOTED THAT ACTUALLY THE ASSESSEE HAS PAID A SUM OF RS. 1 61 000/ - + STAMP DUTY RS. 17 710/ - AND DEFICIT STAMP DUTY OF RS. 5 668/ - TOTALING TO RS. 1 84 378/ - . 5.3 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS SHOWN AN ADDITIONAL INCOME OF RS. 2 68 656/ - . THE ADDITIONAL INCOME SHOWN BY THE ASSESSEE HAS DULY BEEN ACCEPTED BY THE CIT(A) AND HAS NOT BEEN DISPUTED BY THE REVENUE. THIS INCOME ALTHOUGH HAS BEEN CONSIDERED FOR THE PURPOSE OF DEPOSIT MADE IN THE BANK BUT WE NOTED THAT THERE WITHDRAWAL ALSO FROM THE BANK RS. 55 500/ - FROM PUNJAB NATI ONAL BANK AND RS. 1 6 6 000 / - FROM SBI TOTALING TO RS. 2 21 500/ - TOTALING TO RS. 2 21 500/ - . THIS AMOUNT HAS DULY BEEN SHOWN BY THE ASSESSEE IN THE CASH - FLOW STATEMENT. REVENUE ITA NO S . 317 TO 320 /201 2 8 HAS NOT DISPUTED THE CASH - FLOW STATEMENT FILED BY THE ASSESSEE AND THE CASH - FLOW WITHDRAWAL BY THE BANK. THIS AMOUNT IN OUR OPINION IS SUFFICIENT TO COVER UP THE INVESTMENT MADE IN THE BANK AND THE INVESTMENT SHOWN IN THE CASH FLOW STATEMENT. IN THESE CIRCUMSTANCES IN OUR OPINION NO ADDITION IN THIS REGARD CAN BE SUSTAINED. WE TH EREFORE DELETE THE ADDITION OF RS. 1 84 378/ - . THIS GROUND OF THE ASSESSEE IS ALLOWED. 6. GROUND NO.5 RELATES TO ADDITION OF NOMINAL RENTAL INCOME. 6.1 THE FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT IN A PORTION OF THE ASSESSEES HOUSE PR OPERTY. THE ASSESSEES WIFE WAS RUNNING THE PADMA HOSPITAL. THE AO ESTIMATED THE RENT OF THE SAME AT RS. 2 07 000/ - AND TREATED IT TO BE THE INCOME OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) ASKED THE AO TO COMPUTE THE RENT @ RS.10 PER SQ.FT. . 6.2 WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME . IT IS NOT DISPUTED BEFORE US THAT IN A PORTION OF THE PROPERTY OWNED BY THE ASSESSEE THE ASSESSEES WIFE IS RUNNING THE HOSPITAL IN PARTNERSHIP UNDER THE NAME AND STY LE OF PADMA HOSPITAL. THIS IS ALSO FACT THAT THE ASSESSEE HAS NOT CHARGING ANY RENT FOR THE SAID USAGE FROM HIS WIFE. SECTION 22 OF THE IT ACT LAYS DOWN THAT ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDINGS OR LANDS APPURTENANT THERETO OF WHICH THE ASS ESSEE IS THE OWNER OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR ITA NO S . 317 TO 320 /201 2 9 PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME TAX SHALL BE CHARGEABLE TO INCOME - TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THIS IS A FACT THAT THE PORTION OF THE HOUSE PROPERTY IS NOT OCCUPIED BY THE ASSESSEE BUT WAS OCCUPIED BY THE WIFE OF THE ASSESSEE FOR THE PURPOSE OF BUSINESS OR PROFESSION CARRIED ON BY HER. THEREFORE IN VIEW OF THIS SECTION THE ANNUAL VALUE OF THE PORTION OF THE BUILDING WHICH IS OCCUPIED BY THE WIFE OF THE ASSESSEE IN WHICH THE ASSESSEE IS CARRYING ON THE PROFESSION WILL BE SUBJECT TO INCOME FROM HOUSE PROPERTY IN THE HANDS OF THE ASSESSEE. SECTION 23 OF THE IT ACT LAYS DOWN HOW THE A NNUAL VALUE HAS TO BE DETERMINED. CLAUSE (A) OF SECTION 23(1) WHICH IS APPLICABLE IN THE CASE OF THE ASSESSEE AS THE ASSESSEE HAS NOT ACTUALLY RECEIVED ANY RENT THEREFORE THE ANNUAL VALUE WILL BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECT ED TO LET FROM YEAR TO YEAR. WE NOTED THAT THE AO HAS ESTIMATED THE MARKET VALUE AT RS. 15 PER SQ.FT. WHILE THE CIT(A) HAS GIVEN THE DIRECTION TO THE AO TO TAKE THE FAIR MARKET VALUE AT THE RATE OF RS. 10 PER SQFT. IN THE ABSENCE OF ANY EVIDENCE BEING BROUGH T OUT ON RECORD FROM EITHER SIDE AND SPECIALLY THE FACT THAT THE PORTION OF THE PROPERTY OF THE ASSESSEE IS IN RESIDENTIAL ZONE AND PART OF WHICH IS ALSO USED FOR RESIDENTIAL PURPOSES BY THE ASSESSEE. WE THEREFORE THINK IT APPROPRIATE THAT THE FAIR MARKE T VALUE OF THE RENT BE ESTIMATED AT THE RATE OF RS. 7 PER SQFT. AND ACCORDINGLY WE DIRECT THE AO TO RECOMPUTE THE RENTAL INCOME AND ADDITION TO THAT EXTENT IS SUSTAINED. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO S . 317 TO 320 /201 2 10 7. GROUNDS NO . 6 & 7 SI NCE NOT PRESSED THEREFORE DISMISSED AS NOT PRESSED. ITA NO.318/CTK/2012 8. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE AO LEVYING PENALTY UNDER SECTION 271A AMOUNTING TO RS. 25 000/ - AND SUSTAINED BY THE CIT(A). 8.1 BRIEF FACTS IN THIS REGARD ARE THAT THE PENALTY PROCEEDINGS U/S.271A WAS INITIATED VIDE ASSESSMENT ORDER DATED 31 - 12 - 2009 PASSED U/S.143(3)/147 BY ISSUING SHOW CAUSE NOTICE DATED 31 - 12 - 2009 ON FAILURE TO COMPLY SECTION 44AA READ WITH RULE 6F. THE ASSESSE SUBMIT TED THE WRITTEN EXPLANATION THAT ASSESSEE IS A RETIRED GOVERNMENT SURGEON EARNING PENSION AND CONSULTANCY INCOME FROM M/S PADMA HOSPITAL AND RESEARCH CENTRE AND OTHERS AFTER HIS RETIREMENT. THE ASSESSEE FURTHER SUBMITTED THAT HE HAS ENGAGED AN ACCOUNTANT T O MAINTAIN BOOKS OF ACCOUNT FOR HIS PROFESSIONAL RECEIPTS AFTER RETIREMENT BUT THE ACCOUNTANT WAS NOT COMPETENT ENOUGH TO MAINTAIN THE ACCOUNTS AS REQUIRED UNDER THE I.T PROVISIONS AND PERSONALLY I DO NOT HAVE ANY KNOWLEDGE FOR PREPARATION OF ACCOUNTS AS R EQUIRED UNDER THE I.T. ACT. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE HE THEREFORE LEVIED THE PENALTY ON THE ASSESSEE HOLDING THAT IT IS TRITE THAT EVEN IGNORANCE OF LAW ON THE PART OF AN ILLITERATE AND LAY MAN IS NO EXCUSE. HE NOTED THAT AS PER SECTION 44AA READ WITH RULE 6F & NOTIFICATION NO. SO352(E) DATED 6 - 4 - 2004 THE ASSESSEE WAS REQUIRED TO MAINTAIN THE CERTAIN BOOKS OF ACCOUNT ITA NO S . 317 TO 320 /201 2 11 HOWEVER THE ASSESSEE HAS MAINTAINED ONLY A LEDGER WHICH WAS PRODUCED DURING THE ASSESSMENT PROCEEDIN GS AND NO OTHER DETAILS COULD BE PRODUCED. THE GROSS RECEIPT OF THE ASSESSEE EXCEEDED TO RS. 1 50 000/ - . THEREFORE THE AO IMPOSED A MINIMUM AND MAXIMUM PENALTY AMOUNTING TO RS. 25 000/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) . THE CIT(A) CONFIRMED T HE ORDER OF THE AO BY HOLDING AS UNDER : - 4. I HAVE CAREFULLY GONE THROUGH THE RELEVANT DETAILS. NO BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED IN THIS CASE. FURTHER THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET HAS BEEN PREPARED ON THE BASIS OF LIMITED TRANSAC TIONS AND SOME OF THE TRANSACTIONS ARE NOT REFLECTED IN THE BALANCE SHEET. THE APPELLANT IS A PROFESSIONAL DOCTOR AND EXPECTED TO MAINTAIN BOOKS OF ACCOUNTS PROPERLY AND CORRECTLY. HOWEVER HE HAS FAILED NOT ONLY TO MAINTAIN PROPER BOOKS OF ACCOUNTS BUT AL SO FAILED TO MAINTAIN CORRECT BOOKS OF ACCOUNTS RESULTING IN SUPPRESSION OF TOTAL INCOME. THE APPELLANTS CLAIM THAT THE ACCOUNTANT WHO WAS MAINTAINING THE ACCOUNTS WAS NOT QUITE CONVERSANT WITH THE INCOME TAX LAW IS AN UNVERIFIABLE ASSERTION AND NOT A REA SONABLE GROUND. IT DOES NOT EXPLAIN WHY INCOME OFFERED IN THE RETURN IS LOW AS THE APPELLANT IN ANY CASE KNOWS HOW MUCH HE EARNS. ACCORDINGLY THERE IS NO REASON FOR ME TO INTERFERE IN THE ORDER OF THE AO. PENALTY LEVIED BY THE AO U/S.271A OF THE ACT IS CONFIRMED. 8.2 BEFORE US LEARNED AR DID NOT DENY THAT THE ASSESSEE HAS NOT COMPLIED WITH PROVISIONS OF SECTION 44A BUT HE CONTENDED THAT THE ASSESSEE COULD NOT GET THE COMPETENT ACCOUNTANT. IN THE ABSENCE OF COMPETENT ACCOUNTANT THE ASSESSEE WAS NOT A BLE TO KEEP THE MAINTENANCE OF THE BOOKS AND ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 44AA READ WITH RULE 6F. 8.3 LEARNED DR ON THE OTHER HAND VEHEMENTLY CONTENDED THAT IF CERTAIN OBLIGATION HAS BEEN IMPOSED UNDER THE LAW THE ASSESSEE IS ITA NO S . 317 TO 320 /201 2 12 B OUND TO DISCHARGE THE OBLIGATION. THE LEVY OF PENALTY IS A DETERRENT SO THAT ASSESSEE MAY DISCHARGE HIS OBLIGATION. IGNORANCE OF LAW IS OF NO EXCUSE. 8.4 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED IN VIEW OF THE SPECIFIC PROV ISIONS OF SECTION 44AA READ WITH RULE 6F THE ASSESSEE IS BOUND TO MAINTAIN THE REGULAR BOOKS OF ACCOUNTS AS HAS BEEN STIPULATED THEREUNDER. THUS THE ASSESSEE HAS COMMITTED THE DEFAULT. NO DOUBT SECTION 273 EMPOWERS THE AO NOT TO LEVY THE PENALTY IN CASE THE AO SATISFIED THAT THE ASSESSEE IS HAVING A REASONABLE CAUSE. EVEN THOUGH THE ASSESSEE COULD NOT GET PROPER ACCOUNTANT TO MAINTAIN THE BOOKS OF ACCOUNTS BUT NO COGENT MATERIAL OR EVIDENCE HAS BEEN FILED BY THE ASSESSEE WHICH MAY PROVE THAT THE ASSESSE E HAS TAKEN THE STEP TO APPOINT THE PROPER ACCOUNTANT FOR MAINTENANCE OF THE ACCOUNT AS STIPULATED UNDER RULE 6F. THE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS A REASONABLE CAUSE. WE THEREFORE DO NOT FIND NAY INFIRMITY OR ILLEGALITY IN THE ORDER OF TH E CIT(A) IN CONFIRMING THE PENALTY IMPOSED BY THE AO. THUS APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 319/CKT/2012 9. GROUND NO.1 RELATE TO ADDITION MADE IN RESPECT TO THE INTEREST ON LOAN ADVANCED BY THE ASSESSEE TO SHRI K.P.MOHANTY AND SHRI DEBA JENA. ITA NO S . 317 TO 320 /201 2 13 9.1 BOTH THE PARTIES AGREED THAT THIS GROUND IS SIMILAR TO THE GROUND NO.1 IN ITA NO.317/CTK/2012 AND WHATEVER THE VIEW THIS TRIBUNAL HAS TAKEN IN THE SAID APPEAL SIMILAR VIEW MAY BE TAKEN IN THIS APPEAL ALSO. 9.2 WE HAVE ALREADY CONFIRMED THE ORDER OF THE CIT(A) IN RESPECT TO THE ADDITION MADE BY THE AO FOR THE INTEREST ADDED. RESPECTFULLY FOLLOWING OUR ORDER IN ITA NO.317/CKT/2012 IN THE PREC EDING PARAGRAPH WE DISMISS THIS GROUND TAKEN BY THE ASSESSEE AND CONFIRM THE ORDER OF CIT(A). 10. GROUND NO.2 RELATES TO ESTIMATION OF DRAWINGS AND THEREBY SUSTENANCE OF THE ADDITION BY THE CIT(A). 10.1 BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT ASSESSEE HAS NOT MADE ANY DRAWING TOWARDS HOUSEHOLD EXPENSES THEREFORE HE ESTIMATED HOUSEHOLD DR AWINGS AT RS. 3 60 000/ - . HE ALSO NOTED THAT ASSESSEE HAS INVESTED A SUM OF RS.1 LAKH FOR CLAIMING DEDUCTION UNDER CHAPTER - VIA AND MADE ADDITION OF RS. 4 60 000/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) BEFORE WHOM ASSESSEE CONTENDED THAT ASSESSEE HA S INCOME FROM PENSION AND RENTAL INCOME AMOUNTING TO RS. 1.5 LAC APPROXIMATELY. THE ASSESSEE ALSO STATED THAT THE ASSESSEE HAS PAID LIC PREMIUM AMOUNTING TO RS. 75 000/ - THROUGH BANK TO AVAIL DEDUCTION U/S. 6F ELECTRICITY AND TELEPHONE EXPENSES WERE PAID TH ROUGH BANK ACCOUNT. ON THIS BASIS THE CIT(A) REDUCED THE ADDITION TO RS. 2 LAKHS . ITA NO S . 317 TO 320 /201 2 14 10.2 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. LEARNED DR EVEN THOUGH VEHEMENTLY CONTENDED BEFORE US THAT THE ASSESSEE MADE SUFFICIENT DRAWINGS TO MEET T HE HOUSEHOLD EXPENSES BUT HE COULD NOT ADDUCE ANY EV IDENCE IN THE SHAPE OF THE CASH FLOW STATEMENT WHICH MAY PROVE THAT THEY WERE SUFFICIENT DRAWINGS TO MEET OUT THE PERSONAL EXPENSES OF THE ASSESSEE. WE HAVE SEEN FROM THE BALANCE SHEET COPY OF WHICH IS A VAILABLE AT PAGE 146 THAT THE ASSESSEE HAS NOT SHOWN ITS DRAWING. UNDER THESE CIRCUMSTANCES IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). IN OUR OPINION CIT(A) WAS FAIR AND REASONABLE TO REDUCE THE ADDITION TO RS. 2 LAKH SPECIF ICALLY CONSIDERING THE FACTS OF THE CASE THAT THE ELECTRICITY TELEPHONE CHARGES AND LIC PREMIUM HAS BEEN PAID BY THE ASSESSEE THROUGH BANK ACCOUNT. THUS THIS GROUND OF THE ASSESSEE STANDS DISMISSED. 11 . GROUND NO. 3 IS RELATING TO ADDITION MADE IN RESPEC T OF THE INCOME FROM HOUSE PROPERTY. 11.1 BOTH THE PARTIES AGREED THAT THIS GROUND IS SIMILAR TO THE GROUND NO.5 IN ITA NO.317/CTK/2012 AND WHATEVER THE VIEW THIS TRIBUNAL HAS TAKEN IN THE SAID APPEAL SIMILAR VIEW MAY BE TAKEN IN THIS APPEAL ALSO. 11. 2 AFTER CONSIDERING RIVAL SUBMISSIONS WE NOTED THAT SIMILAR GROUND HAS BEEN TAKEN BY THE ASSESSEE AS GROUND NO.5 IN ITA NO. 317/CTK/2012 WHEREIN WE HAVE RESTORED THIS ISSUE TO THE FILE OF THE AO AND DIRECTED THE AO TO ESTIMATE THE HOUSE PROPERTY INCOME BY ITA NO S . 317 TO 320 /201 2 15 WORKING OUT THE ANNUAL VALUE AT THE RATE OF RS. 7/ - PER SQ.FT. THEREFORE SIMILAR DIRECTIONS ARE HEREBY GIVEN FOR THIS ISSUE ALSO. THUS THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 12. GROUND NOS. 4&5 HAVE NOT BEEN PRESSED BY THE LEARNED AR. THEREFORE W E DISMISS THE GROUNDS NO. 4 & 5 AS NOT PRESSED. ITA NO.320/CKT 13. BOTH THE PARTIES AGREED THAT GROUND NO.1 IN THIS APPEAL IS SIMILAR TO THE GROUND NO. 1 IN ITA NO.317/CTK/2012 AND WHATEVER THE VIEW THIS TRIBUNAL HAS TAKEN IN THE SAID APPEAL SIMILAR VIEW MA Y BE TAKEN IN THIS APPEAL ALSO. 13 . 1 THIS GROUND RELATES TO ADDITION ON ACCOUNT OF INTEREST ON THE LOAN GIVEN TO SHRI DEBA JENA AND MR. K.P.MOHANTY. IN THE ORDER PASSED ITA NO. 317/CTK/2012 FOR ASSESSMENT YEAR 2006 - 0 7 IN THE PRECEEDING PARAGRAPH WE HAVE ALREADY DISMISSED THIS GROUND. RESPECTFULLY FOLLOWING OUR ORDER FOR THIS ASSESSMENT YEAR WE DISMISS THIS GROUND ALSO. 14. GROUND NO.2 RELATES TO THE ADDITION OF RS. 2 87 500/ - SUSTAINED BY THE CIT(A) AS UNEXPLAINED ON THE BASIS OF IMPOUNDED DOCUMENT PAG E NO. 9 OF PHRC - 11 . 14.1 FACTS RELATING TO THIS GROUND ARE THAT THE AO NOTED THAT THE ASSESSEE HAS PAID A SUM OF RS. 10 87 500/ - FOR ACQUISITION OF THE PLOT AT BAIKUNTHAPUR PROJECT. BASED IMPOUNDED DOCUMENT PHRC - 11 (PAGE - 9) WHILE ASSESSEE HAS SHOWN A SUM OF RS. 8 LAKHS THEREFORE HE MADE ITA NO S . 317 TO 320 /201 2 16 ADDITION OF RS. 2 87 500/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) NOTED THAT THE IMPOUNDED DOCUMENT AT PAGE 9 OF PHRC - 11 CLEARLY MENTIONED THAT AMOUNT OF RS. 10 06 500/ - IS THE COST OF THE LAND AND THE ADDI TIONAL REGISTRATION CHARGES OF RS. 81 000/ - HAS BEEN PAID AND THEREFORE HE CONFIRMED THE ADDITION. 14.2 BEFORE US ALSO EVEN THOUGH THE LEARNED AR VEHEMENTLY CONTENDED THAT NO ADDITION SHOULD BE MADE BUT WE NOTED FROM THE IMPOUNDED DOCUMENT AT PAGE 9 OF PHRC - 11 THAT IT HAS CLEARLY BEEN MENTIONED THAT THE ASSESSEE HAS INCURRED A SUM OF RS. 10 06 500/ - TOWARDS PLOT NO. 65 AT BAIKUNTHAPUR PROJECT. THE ASSESSEE HAS ALSO INCURRED A SUM OF RS. 81 000/ - TOWARDS REGISTRATION CHARGES. EVEN THOUGH THE LEARNED AR VEHE MENTLY CONTENDED THAT ON THE BASIS OF THE DOCUMENT NO ADDITION SHOULD BE MADE BUT COULD NOT DRAW OUR ATTENTION TOWARDS ANY COGENT MATERIAL OR EVIDENCE WHICH ASSESSEE HAS NOT INCURRED THE SAID AMOUNT. EVEN THE SOURCE OF DIFFERENCE AMOUNT HAS ALSO NOT BEEN EXPLAINED. UNDER THESE FACTS AND CIRCUMSTANCES IN OUR OPINION WE DO NOT HAVE ANY OTHER ALTERNATIVE EXCEPT TO CONFIRM THE ORDER OF THE CIT(A). THUS THIS GROUND STANDS DISMISSED. 15. GROUND NO. 3 RELATES TO ADDITION OF RS. 20 000/ - AS UNEXPLAINED INVESTME NT. 15.1 THE AO ON THE BASIS OF IMPOUNDED DOCUMENTS AT PAGE 10 & 27 OF PHRC - 9 WHICH CONSISTS OF TWO RECEIPTS OF RS. 10 000/ - EACH DATED 29 - 12 - 2007 AND 7 - 12 - 2007 TOTALING TO RS. 20 000/ - TAKEN AS ITA NO S . 317 TO 320 /201 2 17 UNEXPLAINED INVESTMENT. WHEN THE MATTER WENT BEFORE THE CI T(A) THE CIT(A) ALSO CONFIRMED THE SAME. 15.2 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED FROM THE SCHEDULE OF THE BALANCE SHEET WHICH IS AVAILABLE THEIR RETURN AND COPY OF THE SHARA INDIA THAT DURING THE YEAR ASSESSEE HAS INV ESTED A SUM OF RS. 1 2 0 000/ - THE SAID SUM OF DULY BEEN SHOWN IN THE ASSESSED STATEMENT OF THE ASSESSEE SUBMITTED BEFORE THE AO IN COMPLIANCE WITH THE PROVISIONS OF SECTION 142 (1)(III) AS ON 31 - 3 - 2007 DEPOSITED WITH THE SAHARA INDIA PVT. LTD. OF RS. 4 74 4 31/ - WHICH INCREASED TO RS. 5 94 431/ - . IN VIEW OF THIS WE FIND THE AMOUNT OF RS. 20 000/ - WAS DULY EXPLAINED. WE THEREFORE DELETE AFORESAID ADDITION. THIS GROUND STANDS ALLOWED. 16 . GROUND NO. 4 RELATES TO THE SUSTENANCE OF THE ADDITION OF RS. 1 LAKH OUT OF THE ADDITION OF RS. 2 24 328/ - MADE BY THE AO ON ACCOUNT OF LOW DRAWINGS. 16.1 THE AO NOTED THAT THE ASSESSEE HAS MADE DRAWING OF RS. 90 000/ - OUT OF THE CAPITAL ACCOUNT OUT OF WHICH ONLY A SUM OF RS. 40 672/ - WAS AVAILABLE TOWARDS THE DOMESTIC EXPENSES. A SUM OF RS. 95 000/ - WAS PROVIDED BY THE ASSESSEES WIFE AS DOMESTIC EXPENSES. THE AO ESTIMATED THE DOMESTIC EXPENSES AT RS.3 60 000/ - OUT OF WHICH HE REDUCED THE SAID SUM OF RS. 1 35 672/ - AND MADE THE ADDITION OF RS. 2 24 328/ - . WHEN THE MATTER WENT TO THE CIT(A0 THE CIT(A) RESTRICTED THE ADDITION ON ACCOUNT OF DRAWING OF RS. 1 LAKH. ITA NO S . 317 TO 320 /201 2 18 16.2 WE HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW IN OUR OPINION NO INTERFERENCE IS CALLED FOR IN THE ORD ER OF THE CIT(A) . THE CIT(A) HAS GIVEN THE CATEGORICAL FINDING THAT WHILE ESTIMATING THE DRAWING THE AO HAS NOT ANALYZED THE OTHER INCOME OF THE ASSESSEE I.E. PENSION INTEREST ETC. WHICH DO NOT FORM PART OF THE PROFESSIONAL INCOME AND THEREFORE DOES NOT APPEAR IN THE BALANCE SHEET. IN OUR OPINION THE ESTIMATION OF THE HOUSEHOLD EXPENSES AT RS. 3 LAKHS BY THE CIT(A) IS MUCH MORE REASONABLE KEEPING WITH THE FACTS THAT THE WIFE OF THE ASSESSEE IS ALSO A DOCTOR AND RUNNING A HOSPITAL THEREFORE REQUIRED TO MAINTAIN CERTAIN STANDARD OF LIVING . NO COGENT MATERIAL AND EVIDENCE WAS BROUGHT TO OUR KNOWL EDGE BY THE LEARNED AR WHO MADE COMPEL US TO DELETE THE ADDITION MADE BY THE AO. THIS GROUND STANDS DISMISSED. 17 . BOTH THE PARTIES AGREED THAT GROUND NO.5 IS SIMILAR TO THE GROUND NO. 5 RAISED IN ITA NO.317/CTK/2012 AND WHATEVER THE VIEW THIS TRIBUNAL HA S TAKEN IN THE SAID APPEAL SIMILAR VIEW MAY BE TAKEN IN THIS APPEAL ALSO. 17.1 RESPECTFULLY FOLLOWING THE VIEW TAKEN BY US IN ITA NO. 317/CTK/2012 WE ALLOW THIS GROUND OF THE ASSESSEE FOR STATISTICAL PURPOSES. ITA NO S . 317 TO 320 /201 2 19 1 8 . IN THE RESULT ITA NO. 317 319 & 320/ CTK/2012 ARE PARTLY ALLOWED AND ITA NO. 318/CTK/2012 IS HEREBY DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH APRIL 201 4 . 25 TH APRIL 2014 SD/ - SD/ - ( .. ) ( D.T.GARASIA ) ( .. ) ( P.K.BANSAL ) / JUDICIAL MEMBER / ACCOUN TANT MEMBER CUTTACK ; DATED 25 / 0 4 /2014 . . /PKM . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER / ( ASSTT. REGISTRAR) / ITAT CUTTACK 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) BHUBANESWAR 4. / CIT BHUBANESWAR 5. / DR ITAT CUTTACK 6. / GUARD FILE. //TRUE COPY//