Income Tax Appellate Tribunal - Cuttack
Mr. Sandeep Kumar Narayanchetty, ... vs Acit, Central Circle-1, Bhubaneswar on 19 August, 2019
आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK श्री चन्द्र मोहन गगग, न्द्याययक सदस्य एवं श्री एऱ.ऩी.साहु, ऱेखा सदस्य के समऺ ।
BEFORE SHRI CHANDRA MOHAN GARG, JM AND SHRI L.P. SAHU, AM आयकर अऩीऱ(तऱाशियाां और अशिग्रहण)सां./IT(SS)A No.79-85/CTK/2018 ( नििाारण वषा / Assessment Year :201 0-2011 to 2016-2017) Mr. Sandeep Kumar Vs. The ACIT, Central Circle -
Narayanchetty, 1, Bhubaneswar-751007
Nehru Nagar, M.G.Road,
Jeypore, Koraput-764001
स्थायी ऱेखा सां ./ PAN No. : AGHPN 5726 H
(अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent)
यनधागररती की ओर से /Assessee by : Shri P.K.Mishra, Advocate
राजस्व की ओर से /Revenue by : Shri S.M.Keshkamat, CITDR
सुनवाई की तारीख / Date of Hearing : 07/08/2019
घोषणा की तारीख/Date of Pronouncement : 19/08/2019
आदे श / O R D E R
Per Bench:
These seven appeals have been filed by assessee against the order passed by the CIT(A)-2, Bhubaneswar, all dated 12.06.2018 for the assessment years 2010-2011 to 2016-2017.
2. Since the sole issue involved in all these appeals is identical, except difference in figures, therefore, with the consent of both the parties, all the above appeals have been taken for hearing en masse and disposed off by this consolidated order. First, we shall take up the appeals for the assessment years 2010-2011 to 2014-15 for adjudication. For the sake of convenience, we shall take into consideration the facts mentioned 2 IT(SS)A Nos.79-85/CTK/2018 in appeal of the assessee for the assessment year 2010-2011 in IT(SS)A No.79/CTK/2018, as a lead appeal, wherein the assessee has raised grounds as under :-
1. The Order of the Learned Commissioner of Income Tax (Appeals)-2 is contrary to the law, facts and circumstances of the case.
Issue of notice u/s 153A when there is no incriminating material is void ab initio
2. The Learned Commissioner of Income Tax Appeals has erred in upholding the assessment u/s 153A when there is no incriminating evidence found during the search proceedings.
3. The non-application of the mind of the Learned AO and the Learned Commissioner of Income Tax Appeals to the fact that the recording in the Panchanama evidencing No Documents were either found or seized makes the finding of the fact ipso facto manifestly unsustainable to hold that Bank Statements were the incriminating materials unearthed during the search, when infact all the Bank Accounts were already disclosed in the Original Return.
4. The Learned Commissioner of Income Tax Appeals has also erred in not considering the decision laid down by the Hon'ble Jurisdictional Tribunal where the Hon'ble Tribunal held that in the absence of Incriminating Materials an Assessment U/S.153A cannot be done apart from also holding that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed as per the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC).
Assessment U/S.153A is void ab initio in the absence of a Valid Warrant u/s. 132
5. The Learned Commissioner of Income Tax (Appeals)-2 erred in upholding the Validity of the Assessment when there being No Valid Search Warrant in the name of the Assessee Appellant.
6. There was no search warrant u/s. 132 of the I.T. Act on the appellant and, as such the so called search of the premises of the appellant was illegal and, consequently, the assessment framed U/S.153A was invalid."
OTHERS
7. For these and such other grounds as may be raised during the course of hearing.
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3. Brief facts of the case are that the assessee derives his income from salary, business and other sources. The assessee filed his original return of income on 04.06.2010 u/s.139 of the Act, 1961 showing a total income of Rs.2,24,180/- for the assessment year 2010-2011. A search and seizure operation u/s.132 of the Act was conducted in the residential premises of assessee on 12.02.2016 at Flat No.C-2, Krishna Apartment, Kodambakkam, Tamilnadu. After search operation, the case of the assessee along with other cases of the group was centralized with ACIT, Circle-1, Bhubaneswar vide Pr. CIT-1, Bhubaneswar's vide order dated 10.08.2016 and the same was intimated to the assessee. Thereafter notice u/s.153A of the Act was issued on 27.01.2017 requiring the assessee to file return of income for the previous year within 30 days of the receipt of the notice. In response to the above notice, the assessee filed the return of income on 13.03.2017 showing a total income of Rs.2,24,176/-. Accordingly notice u/s.143(2) was issued to assessee on 20.03.2017 fixing the date of compliance on 27.03.2017. Thereafter the AO issued notice u/s. 142(1) of the Act along with questionnaire to assessee on 10.07.2017 calling for information and documents to be complied on 25.07.2017. In response to the same, the assessee submitted computation of Income, copies of bank statements and the details as per this office questionnaire issued on 10.07.2017. The AO further noted that during the course of Search and Seizure operation at the residential premises of the assessee, it is unearthed that the assessee was having accounts in the Bank of India and State Bank of India, details 4 IT(SS)A Nos.79-85/CTK/2018 of which has been incorporated by the AO in para 6 of the assessment order and on perusal of the above bank accounts, the AO found that the total bank credits were of Rs.2,92,218/- during the year. The assessee was asked to explain the source of above bank credits, in response to which the assessee submitted that the above mentioned deposits were from professional income offered for tax during the year. Subsequently, on examination of above bank statements, the AO found that out of total bank credits of Rs.2,92,218/-, the bank interest was of Rs.768/- for the year under consideration, which was not shown in the return of income. The AO after excluding the business income of Rs.2,50,000/- and the bank interest of Rs.768/- from total bank credits of Rs.2,92,218/-, added the balance of Rs.41,450/- as undisclosed income.
4. Further, the AO on verification of return of income filed u/s. 153A of the IT Act, 1961, found that the assessee has shown the closing cash in hand of Rs,4,34,176/- for the year under consideration whereas the same amount was not shown in the return of income filed u/s.139 on 04.06.2010 which was mandatory as per the Income Tax Rules, 1962. The assessee was issued show cause letter to explain on 20.11.2017 as to why the amount of Rs.4,34,176/- will not be added to his total income as undisclosed income. In reply to the above the assessee has submitted that he had manually filed return of income u/s. 139 and hence shown only the taxable income as part of the return and it is purely the taxable income of the current year and earlier years which is reflecting as closing balances as on 31.03.2010. However, on verification of bank statement of 5 IT(SS)A Nos.79-85/CTK/2018 Bank of India, the AO found that there was no withdrawal during the year. Similarly, on verification of bank statement of State Bank of India, the AO found that there was total withdrawal of Rs.1,98,604/-, details of which has been incorporated by the AO in page 3 of the assessment order. Accordingly, the AO found that the above petty cash withdrawals by assessee were definitely for daily expenditure in the outstation where he was working. As a result of above, there was no chance of keeping cash- in-hand of Rs.4,34,176/- during the year. Further, the AO did not accept the claim of assessee that he had manually filed original return of income for which the assessee did not show closing cash-in-hand. Finally, the AO observed that there was no explanation offered along with any supporting documents by the assessee, therefore, treated Rs.4,34,176/- as undisclosed income and added the same to the total income of the assessee and framed the assessment u/s.143(3)/153A of the Act, dated 21.12.2017 for the assessment year 2010-2011. Similarly, the AO made additions for the other assessment years under consideration in rest of the cases of assessee as mentioned in their respective grounds of appeal raised before the Tribunal in Form No.36.
5. Aggrieved by the assessment order, the assessee approached the CIT(A). However, the CIT(A), in appeal dismissed the legal issue raised by the assessee and decided the appeal on merits for the assessment year 2010-2011. Similarly, for the assessment years 2011-2012, 2012- 2013, 2014-2015, 2015-2016 the CIT(A) dismissed the legal ground raised by the assessee and decided the appeal of the assessee on merits 6 IT(SS)A Nos.79-85/CTK/2018 giving partial relief. Further for the assessment year 2013-2014, the CIT(A) also dismissed the appeal of the assessee both on legal issue and on merits. For assessment year 2016-2017, it being the year of search, the CIT(A), partly allowed the appeal of the assessee on merit.
6. Now, the assessee is in further appeals before the Tribunal agitating both the legal issue as well as the additions made by the AO on merits and upheld by the CIT(A) in the respective assessment years under consideration.
7. At the outset, ld. AR, before us argued the legal issue and submitted that from assessment years 2010-2011 to 2014-2015, the assessments were completed by the AO u/s.153A of the Act making additions without having any incriminating material and the ld. AO disturbed the unabated/completed assessment u/s.143(3) of the Act. Therefore, the legal issue involved in these bunch of appeals relates to assessment years 2010-2011 to 2014-2015 may be adjudicated.
8. Ld A.R. submitted that the Assessing Officer has passed assessment U/S.153A of the Act and made consequential additions in absence of any incriminating materials and, therefore, impugned orders of Assessment passed U/S.153A of the Act are without jurisdiction and without the authority of law, as the completed Assessments cannot be disturbed in absence of any incriminating materials. Further, ld. AR submitted that in the Panchanama, no incriminating material has been found and seized. It was also the contention of ld. AR that during the course of search, neither any statement has been recorded nor anything 7 IT(SS)A Nos.79-85/CTK/2018 was asked by the Search Team regarding the deposits made in the Bank accounts. From this fact, it goes on saying without any iota of doubt that, the bank statements were not found during course of search. Therefore, the bank statements cannot be construed as incriminating material so as to attract section 153A of the Act. In absence of any incriminating material, the Search Assessment completed U/S.153A of the Act and consequential additions made therein, being not sustainable in the eye of law are deserves to be quashed. To support his contentions, ld. AR relied on the decision of coordinate bench of the Tribunal in the case of Dr. Sukanta Chandra Mallick vs. ACIT, Central Circle-2, Bhubaneswar, in I.T.(SS) A Nos.86-91/CTK/2018, order dated 08.07.2019.
9. On the other hand, ld. DR relied on the orders of lower authorities and submitted that during the course of search and seizure operation at the residential premises of the assessee, bank accounts of the assessee were unearthed on the basis of which the AO has rightly proceeded to make the additions. Ld. DR also drew our attention to the observations made by the CIT(A) at para 3.1 in the appellate order for the assessment year 2010-2011, wherein the CIT(A) has considered the judicial decisions of the Hon'ble High Court of Kerala in the case of E.N.Gopakumar Vs. CIT [2016] 75 taxmann.com 215 (Kerala) and the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad). Accordingly, ld.DR prayed for dismissal of all the appeals of the assessee.
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10. We have heard both the sides, carefully perused the orders of both the authorities below and the entire materials available on record in the form of paper book placed before us. The short question arises for adjudication before us is as to whether the Assessing Officer is justified to complete the assessment u/s.153A of the Act by making impugned addition for the assessment year under consideration even in the absence of any incriminating material deemed found during the search conducted u/s.132 of the Act. We find from the assessment order, as noted by the AO, that during the course of search and seizure operation at the residential premises of the assessee, it is unearthed that, the assessee was having Accounts in Bank of India and State Bank of India. Ld. AR drew our attention to the Panchanama filed in the paper book at pages 24 to 32 and submitted that no such incriminating material is found during the course of search to enable the AO to invoke the provisions of Section 153A of the Act. We have gone through the panchanama filed by the assessee in the paper book running from pages 24 to 32 and found that in the panchanama prepared on 12.02.2016 in para No.5, there is only a slanting line showing that nothing has been found and seized or found but not seized. We have also gone through the decision of the coordinate bench of the Tribunal in case of Dr. Sukanta Chandra Mallick and Dr. Sambeet Kumar Mallick relied upon by the ld. AR of the assessee and found that the issue involved in the present appeal has been decided by the Tribunal in favour of the assessee after observing as under :-
"8. We have heard the rival submissions and perused the material on record. Prima facie, the issue raised by both the 9 IT(SS)A Nos.79-85/CTK/2018 assessees in their respective appeals for the assessment years under consideration is with regard to the assessment u/s.153A of the Act is not maintainable as no incriminating documents whatsoever has been found or seized by the search team during the search conducted u/s.132 of the Act. We found that the ld. AR vehemently emphasized that no incriminating material was found during the course of search, hence no addition can be made. It was also the contention of ld. AR that the CIT(A) relying on the decisions of Hon'ble Kerala and Allahabad High Courts has dismissed the additional ground raised by the assessee in respect of no incriminating material was found in the course of search and the assessment u/s.153A has to be completed as per the original assessment order. During the course of hearing, ld. AR drew our attention to the para 2 of the assessment order and submitted that the AO in the last two lines has mentioned that case of the assessee was discussed during the assessment proceedings with the AR of the assessee with reference to the books of accounts seized relating to the group of the cases as a whole. For the completeness of our order, we would like to reproduce the para 2 of the assessment order, which reads as under :-
"02. Notice u/s.153A was issued on 31.01.2017. The A.R. of the Assessee, Ms. Swati Kejirwal, FCA appeared and submitted a copy of the Return u/s.153A filed on 10.03.2017 showing a Total income at Rs.2,05,420/-. Here Total Income u/s.153A is equal to that shown in the Return u/s.139(1). Accordingly, notices us/s.143(2) & u/s.142(1) are issued and served. The A.R., Ms. Swati Kejirwal, FCA appeared from time to time and the case is discussed with her with reference to the facts in the return of income and also with reference to the books of accounts seized relating to the group of the cases as a whole."
9. Further, the ld. AR drew our attention to the Panchanama filed in the paper book at pages 8 to 23 and submitted that no such books of accounts has been seized neither any incriminating material is found during the course of search to enable the AO to invoke the provisions of Section 153A of the Act. Accepting the contention of ld. AR, we have gone through the panchanama filed by the assessee in the paper book running from pages 8 to 23 and we found that in the panchanama prepared on 12.03.2016 in para No.5(a)(i), it is mentioned that books of accounts and documents were found and seized as per annexure „A‟ (01 sheets) and in Annexure-1 filed at page 10 of the paper book, contaiing list/inventory of a/c books etc. found/seized, it is mentioned that bunch of loose sheet found/seized and marked as SCMR-01. Similarly, in the panchanama prepared on 14.03.2016 & 17.03.2016, in para (i) of Sl.No.5(a), with regard to what are found and seized during the course of search, the panchas have put a cross mark on the same, meaning thereby there is no mention about the books of accounts found or seized during the course of search. Ld. DR was unable to establish that the loose sheets can be treated as books of accounts, whereas in the assessment order the AO has mentioned that the books of accounts have been 10 IT(SS)A Nos.79-85/CTK/2018 seized but in the copy of panchanama produced before us, no such books of accounts has been found and seized. Further, in the assessment order while making addition the AO has not referred to any loose sheet or any specific incriminating document found during the course of search enabling him to make such addition.
10. We find that the CIT(A) relying upon the decisions of the Hon‟ble High Court of Kerala in the case of E.N.Gopakumar Vs. CIT [2016] 75 taxmann.com 215 (Kerala) and the decision of Hon‟ble Allahabad High Court in the case of CIT Vs. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad) has held that even if there is no incriminating material, the AO is empowered to make additions in an assessment framed u/s.153A of the Act. We find that none of the decision relied upon by either of the parties are of jurisdictional High Court. It is a well settled position of law that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision favouring the assessee should be followed. For this, we derive support from the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). Therefore, we are of the considered view that in an assessment made u/s.153A of the Act for an assessment year for which assessment has not been abated, then the jurisdiction of the Assessing Officer to make addition in such an assessment, is confined to such incriminating search material and no addition dehors the search material can be made.
11. Undisputedly, in the instant case, the assessment for the assessment years in question have already been completed on the date of search in the cases of both the assessees and since no incriminating material was unearthed during the search, as is evident from the panchanama prepared during the course of search, no additions can be made to the income already assessed. To support our view, we shall rely on the decision of Hon‟ble Delhi High Court in the case of Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi), wherein the Hon‟ble High Court has held as under :-
"On a conspectus of section 153A(1), read with the provisos thereto, and in the light of the law explained in various decisions, the legal position that emerges is as under:
(i) Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place.
(ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise.11
IT(SS)A Nos.79-85/CTK/2018 (III) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six assessment years 'in which both the disclosed and the undisclosed income would be brought to tax'.
(iv) Although section 153 A does not say that additions should be .strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment 'can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this section only on the basis of seized material.'
(v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to complete assessment proceedings.
(vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer.
(vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. [Para 37] The present appeals concern assessment years 2002-03, 2005- 06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. [Para 38] The revenue's appeals are accordingly dismissed.[Para 40]"
12. In the present case, we find that there is nothing on record to suggest that any material was found in the course of search which would show any connection on addition made by AO with the seized material which is the subject matter of dispute in 12 IT(SS)A Nos.79-85/CTK/2018 assessment order. Nothing is found contrary to the stated position of the assessee. We also find that there is no material referred to by the AO to say that any incriminating material was unearthed during the search. Therefore, in the factual background, we do not find any justification for the AO to make the impugned additions/disallowance in an assessment finalized u/s 153A of the Act in the absence of any incriminating material having been found during the course of search, qua the impugned additions made in assessment order. Respectfully, following the ratio of decision of the Hon‟ble Delhi High Court in the case of Kabul Chawla (supra), wherein, the Hon'ble High Court after detail analysis concluded that, where there is no incriminating material qua each of the assessment year roped in under section 153A of the Act, then, no addition can be made while framing the assessment under section 153A of the Act. The aforesaid principle and ratio are clearly applicable on the facts of the present case also, as admittedly no incriminating material relating to these assessment years or as a matter of fact for any of the assessment years were found during the course of search and accordingly, we set aside the orders of both the authorities below and held that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment under section 153A of the Act. Thus, the grounds raised by the assessee for the assessment year 2010-2011 are allowed."
11. In the above case, the AO in the assessment order has mentioned that the books of accounts have been seized but in the copy of panchanama produced before us, no such books of accounts has been found and seized. Therefore, the Tribunal set aside the orders of both the authorities below holding therein that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment under section 153A of the Act. The aforesaid principle and ratio are clearly applicable on the facts of the present case also, as admittedly in the assessment year under consideration, while framing the assessment, the AO has not referred any incriminating material mentioned in the list or annexures prepared at the time of search, simply, the AO has mentioned that bank pass book was found whereas in the panchanama there was no mention with regard to 13 IT(SS)A Nos.79-85/CTK/2018 any books of account, bank pass book or any loose sheets were found during the course of search. During the course of hearing we asked the ld. DR as to whether any list or any annexure has been prepared, however, ld. DR replied that there was no such list has been prepared by the search team. We also asked the ld. DR as to whether any statement was recorded during the course of search, however, the ld. DR replied that no any statements have been recorded by the search team of the assessee. Therefore, it is clear that no incriminating material was found during the course of search, which could have been utilized for making assessment u/s.153A/143(3) of the Act. Accordingly, we set aside the orders of both the authorities below and held that when no incriminating material has been found during the course of search then, no addition can be made while framing the assessment under section 153A of the Act. Thus, the legal ground raised by the assessee for the assessment year 2010-2011 is allowed.
12. Since, we have held that the assessment framed by the AO u/s.153A of the Act is not sustainable as there is no incriminating material relating to the assessment years under consideration were found during the course of search, therefore, rest of the appeals i.e.IT(SS)A No.80 to 83/CTK/2018 for the assessment years 2011-2012 to 2014-2015 being similar in grounds raised in assessment year 2010-2011, the addition made therein by the AO and confirmed by the CIT(A) is not sustainable. As we have decided the legal issue raised by the assessee in the above appeals, therefore, we are refrained to adjudicate the appeals of the 14 IT(SS)A Nos.79-85/CTK/2018 assessee on merits. Thus, appeals of the assessee for assessment years 2011-2012 to 2014-2015 are allowed.
13. Now, we shall take up the appeals of the assessee in IT(SS)A No.84 & 85/CTK/2018 for the assessment years 2015-2016 & 2016-2017.
14. In IT(SS)A No.84/CTK/2018 for the assessment year 2015-2016, the assessee has raised the following grounds :-
1. The Order of the Learned Commissioner of Income Tax (Appeals)-2 is contrary to the law, facts and circumstances of the case.
Issue of notice u/s 153A when there is no incriminating material is void ab initio
2. The Learned Commissioner of Income Tax Appeals has erred in upholding the assessment u/s 153A when there is no incriminating evidence found during the search proceedings.
3. The non-application of the mind of the Learned AO and the Learned Commissioner of Income Tax Appeals to the fact that the recording in the Panchanama evidencing No Documents were either found or seized makes the finding of the fact ipso facto manifestly unsustainable to hold that Bank Statements were the incriminating materials unearthed during the search, when in fact all the Bank Accounts were already disclosed in the Original Return.
4. The Learned Commissioner of Income Tax Appeals has also erred in not considering the decision laid down by the HonlDle Jurisdictional Tribunal where the Hon'ble Tribunal held that in the absence of Incriminating Materials an Assessment U/S.153A cannot be done apart from also holding that when there are conflicting decisions of High Courts none of which is the jurisdictional High Court, then the decision in favour of the assessee should be followed as per the decision of Hon'ble supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC).
5. The Learned Commissioner of Income Tax (Appeals)-2 erred in upholding the Validity of the Assessment when there being No Valid Search Warrant in the name of the Assessee Appellant.
6. There was no search warrant u/s. 132 of the I.T. Act on the appellant and, as such the so called search of the premises of 15 IT(SS)A Nos.79-85/CTK/2018 the appellant was illegal and, consequently, the assessment framed U/S.153A was invalid."
Addition of Bank Credits of Rs.8,31,903/- as Undisclosed Income
7. The Learned Commissioner of Income Tax (Appeals)-2 erred in upholding the action of the Assessing officer in making the addition without even giving due weightage to the Financials including Balance Sheet that was filed during the course of the Appellate Proceedings as well as the Assessment Proceedings wherein the complete source of the movement of funds was well established apart from the fact that the Assessee is maintaining Books of Accounts as prescribed u/s.44AA of the Income Tax Act.
8. The Learned Commissioner of Income Tax (Appeals)-2 erred in confirming the additions of the Assessing Officer when infact the entire details and submissions were before the learned assessing officer. Further the Learned Commissioner of Income Tax (Appeals)-2 also erred in contending that these were fresh evidences when infact all these were before the Assessing Officer also, sent by the Appellant vide Registered Post with Ack. Due since the Appellant was residing in Chennai.
9. The Learned Commissioner of Income Tax (Appeals)-2 had erred in confirming the action of the learned AO in completely ignoring the Computation of Income supported by Audited Financials filed by the Assessee without giving any reason to the same and proceeded to make an Assessment purely based on Bank Credits which is invalid and bad in law. Addition of Rs. 17,288/- and Rs.2,455/- as Undisclosed Bank Interest and Miscellaneous Income
10. The Learned Commissioner of Income Tax (Appeals)-2 erred in not adjudicating the ground raised before him regarding the action of the learned Assessing officer in treating the above Income as Undisclosed when in fact the said Income has duly been offered to Tax both in the Original Return of Income as well as the Return filed in response to Notice u/s.l53A. The learned officer had clearly ignored the Financials and Computation of Income which is bad in law and invalid. OTHERS
11. For these and such other grounds as may be raised during the course of hearing.
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15. At the outset, ld. AR submitted that the assessee does not want to press the legal issue raised in grounds No. 1 to 6, therefore, ground Nos.1 to 6 are dismissed as not pressed.
16. Now, the grounds remained for adjudication before us i.e. Grounds No.7 to 9 with regard to addition of bank credits of Rs.8,31,903/- as undisclosed income and ground Nos.10 with regard to addition of Rs.17,288/- and Rs.2,455/- as undisclosed bank interest and miscellaneous income.
17. Ld. AR before us supported the order of CIT(A) to the extent of part relief given by the CIT(A). However, ld. AR submitted that the ld. CIT(A) has rejected the submissions of the assessee stating that the assessee has not made any application under Rule 46A of Income Tax Rules, 1962 for admitting of addition evidence. Ld. AR submitted that details of bank statement was not examined by the AO in detailed manner. He submitted that there was no any additional evidence before the CIT(A), it was of bank account details, which was not additional evidence, therefore, ld. AR requested for sending back to the AO to the extent of addition sustained by the CIT(A) rejecting the explanation of the assessee regarding the cash deposit in the bank.
18. On the other hand, ld. DR relied on the orders of authorities below and submitted that the assessee has not made any application in Rule 46A of the Rules, 1962 for admission of additional evidence. Further ld. DR submitted that the CIT(A) has passed a reasoned order which should not be disturbed.
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IT(SS)A Nos.79-85/CTK/2018
19. After hearing both the sides and perusing the material available on record, prima facie, we find that the CIT(A) has discussed the issue in detail at para 4 of the appellate order and considering the submissions of the assessee with regard to source of credits for which confirmations were also filed by the assessee before the AO regarding reimbursement claimed to have been received, deleted the addition of Rs.5,24,167/- on account of unexplained credits. The CIT(A) further deleted the addition of Rs.12,00,000/- made by the AO on account of unsecured loans. In this regard, the CIT(A) has found that the assessee has established the genuineness of the transaction and identity/creditworthiness of the lenders. It was also the observation of the CIT(A) that the bank accounts to which the loans are credited were already placed by the assessee before the AO during the assessment proceedings. Further, the CIT(A) has deleted the addition of Rs.1,11,598/- made by the AO on account of previous year salary receivables. In this regard, the CIT(A) observed that the assessee has stated before him that Form No.16 has shown salary earned during the year and not the actual salary received in bank and, therefore, accepted the explanation of the assessee. Accordingly, the CIT(A) has deleted the addition of Rs.18,35,765/- out of total addition made by the AO of Rs.26,67,668/- on account unexplained bank credits and sustained the addition of Rs.8,31,903/- as the explanation and details to substantiate the genuineness of the same were not filed by the assessee before the AO during the course of assessment proceedings, which were in the nature of additional evidence, even the assessee has 18 IT(SS)A Nos.79-85/CTK/2018 not made any application in Rule 46A of I.T.Rules, 1962 for admission of addition evidence. Ld. DR also could not controvert the above findings of the CIT(A) bringing any cogent material on record with regard to deletion of addition by the CIT(A). However, the ld. DR has agitated that the additional evidence were not filed by the assessee in the form of application under Rule 46A of I.T. Rules, 1962. From the above observations of the CIT(A), we do not see any good reason to interfere with the findings recorded by the CIT(A) with regard to deletion of additions.
20. However, with regard to the addition sustained by the CIT(A), we find force in the arguments of ld. DR that the assessee has not made any application under rule 46A of Rules, 1962 for admission of additional evidence before the CIT(A). In this regard, ld. AR of the assessee has submitted paper book containing 382 pages before us. We have gone through the paper book at pages 236 to 240, which were the details submitted by the assessee in response to the questionnaire issued by the AO. We noticed that the assessee had given details of bank accounts. If the AO was not satisfied from the transactions of the bank accounts, he could have called for the source of deposits and utilization of withdrawals. He could have examined each and every entry of the bank accounts. The assessee has also submitted the details of deposit and withdrawals from the bank accounts which are placed in the paper book. In the first appellate proceedings, it was again submitted before the CIT(A) but the CIT(A) has not accepted merely by stating that the assessee has not 19 IT(SS)A Nos.79-85/CTK/2018 made any application under Rule 46A of the I.T.Rules for admission of additional evidence. These documents were filed before the AO. We found substance in the submissions of ld. AR of the assessee that the documents placed before the AO by the assessee have not been properly considered by the AO as well as CIT(A) for assessment year under consideration. Considering the totality of facts and circumstances of the case, we think it fit to send back the issue of sustainability of addition by the CIT(A) of Rs.8,31,903/- to the file of AO for verification of the bank deposits and withdrawals made by the assessee after providing a reasonable opportunity to the assessee. The assessee is also directed to cooperate with the AO. Thus, ITA No.84/CTK/2018 is partly allowed for statistical purposes.
21. The grounds raised by the assessee in the appeal i.e. ITA No.85/CTK/2018 for assessment year 2016-2017 are similar to the grounds No.7 to 10 raised in ITA No.84/CTK/2018 for assessment year 2015-2016, in which we have upheld the findings recorded by the CIT(A) with regard to part deletion of addition and restored the issue of sustainability of addition confirmed by the CIT(A) to the file of AO for verification of the bank deposits and withdrawals made by the assessee after providing a reasonable opportunity to the assessee and directed the assessee to cooperate with the AO. Therefore, the grounds raised in present appeal for the assessment year 2016-2017 being similar to the grounds decided by us in the appeal of the assessee for assessment year 2015-2016 are partly allowed for statistical purposes as per our 20 IT(SS)A Nos.79-85/CTK/2018 observations made therein. Accordingly, appeal of the assessee for assessment year 2016-2017 in ITA No.85/CTK/2018 is partly allowed for statistical purposes.
22. In the result, appeals of the assessee i.e. ITA Nos.79 to 83/CTK/2018 are allowed and ITA Nos.84 & 85/CTK/2018 are partly allowed for statistical purposes.
Order pronounced in the open court on 19/08/2019.
Sd/- Sd/-
(C.M.GARG) (L.P.SAHU)
न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER
कटक Cuttack; ददनाांक Dated 19/08/2019
प्र.कु.शम/PKM, Sr.P.S.
आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :
1. अऩीऱाथी / The Appellant- .
2. प्रत्यथी / The Respondent-
3. आयकर आयुक्त(अऩीऱ) / The CIT(A),
4. आयकर आयुक्त / CIT
5. वविागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack
6. गार्ग पाईऱ / Guard file.
सत्यावऩत प्रयत //True Copy// आदे शािस ु ार/ BY ORDER, (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack