Income Tax Appellate Tribunal - Chandigarh
Mr.Nand Lal Sharma, vs Income Tax Officer, on 19 June, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "एकल सद यीय', च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH
'SMC' CHANDIGARH
ीमती दवा संह, या!यक सद य
BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER
आयकर अपील सं./ ITA No. 1098/CHD/2016
!नधा#रण वष# / Assessment Year : 2010-11
Shri Nand Lal Sharma, बनाम The ITO,
S/o Shri Moti Lal Sharma, Kullu (HP).
VS
Village - Mansari, PO-Haripur,
Distt. Kullu (HP).
थायी लेखा सं./PAN No: AZWPS6712L
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Vijay Bhardwaj
& Shri Gaurav Goyal, CAs
राज व क ओर से/ Revenue by : Shri ManjitSingh, CIT-DR
सन
ु वाई क तार ख/Date of Hearing : 04.06.2019
उदघोषणा क तार ख/Date of Pronouncement : 19.06.2019
आदे श/ORDER
The present appeal has been filed by the assessee assailing the correctness of the order dated 29.08.2016 of CIT(A), Palampur pertaining to 2010-11 assessment year on the following ground :
1. That the impugned Assessment Order is unsustainable in law as well as on merits.
2. That no proper and reasonable opportunity of hearing was allowed.
3. That under the facts and circumstances, the Ld. AO committed grave error of law and facts in treating the closing balance of Rs. 5,29,551/- of savings bank account as undisclosed income and consequently adding the same in the returned income.
4. That under the facts and circumstances, the Ld. AO erred on law and on merits in making the addition of Rs. 16,05,000/- being payments for immediate delivery of goods.
5. That under the facts and circumstances, the Ld. AO erred on law and on merits in making the addition of the agriculture income of Rs 1,90,210/-.
6. The A.O. has erred in initiating penalty proceedings u/s 271(l)(c).
7. The Appellant craves to add/ amend/ alter any or all grounds of Appeal at the time of hearing.
ITA 1098/CHD/2016 A.Y. 2010-11 Page 2 of 4
2. The ld. AR submitted that in the grounds mentioned, AO may be substituted by CIT(A) as there has been a mistake in cutting/pasting and thus, the mistakes are typos. The ld. CIT-DR had no objection to the said request.
3. Inviting attention to the assessment order and the impugned order ld. AR submitted that the assessee admittedly has been engaged only in trading of medicinal plants for the last 10 years or so prior to the assessment year under consideration. It was also his submission that the assessee has been assessed to tax for the last 3-4 years prior to 2010-11 assessment year although readily the assessment orders are not available with him. It was his submission that all along for his business, the assessee had a current account alongwith a Saving Bank Account in Punjab National Bank, Naggar. It was his submission that various cheques, withdrawals and deposits from Saving Bank Account No. 2705000100056833 had been taken into consideration by the AO qua some of which additions have been made. Though part relief has been granted by the CIT(A) however, in the said background, the additions in the manner made by the AO on the ground that it was not a disclosed account, were not maintainable. For ready reference, specific finding of the AO challenged before the CIT(A) is extracted hereunder :
3. During the course of assessment the assessee has stated that all bank transactions were made on account of business activities from trading of medicinal plants which has been verified iron the books of accounts produced. The assessee was found to have maintaining saving bank account with Panjab National Bank, Naggar bearing No. 27050O0100O56833. The perusal of same if is seen that there is credit balance of Rs.
529551/- whereas in the balance sheet no such closing balance has been disclosed. Therefore, an amount of Rs. 529551/- added in the returned income as undisclosed income.
From the above I am satisfied that the assessee has concealed his income and furnished inaccurate particulars of his income to the extent of Rs. 529551/- as mentioned above. Penalty proceedings u/s 2 7 1 ( 1 ) ( c ) of the Act has been initiated separately.
4. Seeking permission to interject the ld. CIT-DR submitted that the assessee himself has submitted before the CIT(A) that his Saving Bank Account was not incorporated in his business accounts and thus, the order passed by the CIT(A) has been in the line of the arguments advanced on behalf of the assessee. Accordingly, in order to appreciate the grievance which is posed by the assessee, it is appropriate to extract the finding of the CIT(A) challenged by the assessee in the present proceedings :
"It is observed that appellant is the proprietor of M/s Nanda Medicinal Plant Traders, hence credit balance in the saving account No. 270500100056833 shall be part of cash in hand as shown in the balance sheet. The ld. AO has noted in the order that appellant has stated that all bank transactions were made on account of ITA 1098/CHD/2016 A.Y. 2010-11 Page 3 of 4 business activities from trading of medicinal plants which has been verified from the books of account produced. Also the source of credit balance in PNB, Naggar account has not been explained by the appellant during the appellate proceedings."
5. The ld. AR on behalf of the assessee reiterated his submissions as advanced before the CIT(A). Reliance was also placed upon the submissions advanced before the Bench which elaborate the issue as canvassed before the CIT(A) which he failed to consider. These are available at pages 1 to 7 of the Paper Book. Specific attention was invited to paras 'e' to 'g' of the same, accordingly, these are reproduced hereunder :
(e) The CIT(A) erred in holding that the closing balance in the saving account of the appellant represented his undisclosed income. The CIT(A) failed to appreciate the fact that it is the same account in which Rs. 41.77.600/- was deposited in cash and the same was examined and accepted by the A.O. in totality. Therefore, there could have been no occasion to assume that the balance standing to the credit of such account as on the year end came from undisclosed sources when all deposits in this account were examined and accepted by the A.O. The balance at the year-end represented the amount remaining unspent out of the cash deposited during the year which already stood examined and accepted.
(f) Without prejudice to the above, and supposing that the balance at the year-end represented the undisclosed income of the appellant, what about the opening balance n the account as at the beginning of the year. It is worth noting that the opening balance of this account of the appellant as on 01-04-2009 was Rs. 9,58,041 /-.
(g) Therefore, if there could be any additions on non- disclosure of the said account, it would have been (-) 428,490/- as the closing balance in this account was less than the opening balance. Therefore, during the year there was no accretion to the account rather there was a depletion of Rs. 4,28,490/-. No addition could presumably be made on the basis of an account which had a higher opening balance; all credits examined and accepted but closing balance being added as undisclosed income. On this account also, the CIT(A) has committed great error of judgment in confirming this addition and therefore the addition deserves to be deleted."
5.1 The ld. AR has also relied upon decision in the case of Ajay Jaisukhlal Mehta Vs ACIT (2018) 173 ITD 430 (Ahd) and attention was invited to Paper Book page 35 which contains the copy of the specific bank account which would show the opening balance of Rs. 9,61,041.43 and closing balance of Rs. 5,29,551.23.
6. The ld. CIT-DR though relied on the order submitted that let the facts be considered as per the past history of the assessee as claimed after verification.
7. I have heard the rival submissions and perused the material available on record. In the facts of the present case, it is necessary to see whether the withdrawals and deposits made in the Saving Bank Account are linked with the sale business of the assessee i.e. trading in herbal plants. It is seen that the said facts need to be addressed. It is also noted that the assessee is claimed to be a tax payer for the last 3 to 4 years prior to the year under ITA 1098/CHD/2016 A.Y. 2010-11 Page 4 of 4 consideration. Accordingly, the past history of the assessee also needs to be considered. Accordingly, in view thereof, the impugned order is set aside back to the file of the CIT(A) with the direction to pass a speaking order in accordance with law addressing the specific facts of the case. The assessee in its own interest is directed to ensure full and fair5 participation before the said authority. Said order was pronounced in the Open Court at the time of hearing itself.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 19th June,2019.
Sd/-
( दवा संह ) (DIVA SINGH) या!यक सद य/Judicial Member "पन ू म"
आदे श क त)ल*प अ+े*षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant - 2. यथ / The Respondent - 1. आयकर आयु,त/ CIT 2. आयकर आयु,त (अपील)/ The CIT(A)
3. *वभागीय त न/ध, आयकर अपील य आ/धकरण, च1डीगढ़/ DR, ITAT, CHANDIGARH
4. गाड फाईल/ Guard File आदे शानुसार/ By order, सहायक पंजीकार/ Assistant Registrar