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Income Tax Appellate Tribunal, “DB” BENCH, JABALPUR
O R D E R
PER PAVAN KUMAR GADALE JM:
The revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-1,Jabalpur passed u/s 143(3) r.w.s 147 and 250 of the Act. The revenue has raised the following grounds of appeal:
1. The Ld. CIT(A) erred in Law and on facts in deleting the addition Rs. 1,10,58,722/- made by the Assessing Officer u/s 69B on account of difference between investment in firm Karam Enterprises disclosed at Rs. 4518562/- in capital
ShriRakeshJaiswal, Jabalpur. - 2 - account of the assessee in his books and the investment of Rs.1,55,77284/- in capital account shown in the balance sheet of Karma Enterprises.
The Ld. CIT(A) erred in Law and on facts on deleting the above addition without appreciating the fact that the assessee has submitted a manipulated balance sheet in the reassessment proceedings by introducing unsecured loan of Rs. 13371299/- (claimed to have been taken in earlier assessment year) to justify the unexplained investments including Rs. 1,10,58,722/-.
3. That the appellant reserves the right to amend/alter any of the grounds of appeal
/add other grounds of appeal at the time of hearing
2. The brief facts of the case are that, the assessee is engaged in the business of wine dealership and is a partner in firm M/s Karam Enterprises. The assessee has filed the return of income for the A.Y 2008-09 on 03.10.2018 disclosing a total income of Rs.9,88,700/- and the assessment was completed U/sec143(3) of the Act vide order dated 29.12.2010 with the assessed income of Rs.14,17,540/-. Subsequently the Assessing Officer (A.O) found that the assessee has introduced an amount of Rs.45,18,502/- on 08.03.2005 in the A.Y 2005-06 and the same was withdrawn from assessee savings bank account and reflected in the individual balance sheet. Whereas the AO found that in the current assessment year, closing
ShriRakeshJaiswal, Jabalpur. - 3 - balance reflected in the balance sheet of partnership firm M/s Karam Enterprises is Rs. 1,55,77,284/-.However in the balance sheet of assessee it was disclosed at Rs. 45,18,562/-. Therefore the AO has reason to believe that the income has escaped assessment and issued notice u/sec148 of the Act. Subsequently notice U/sec142(1) of the Act was issued. In compliance, the Ld.AR of the assessee attended from time to time and furnished the details. The AO on perusal of the facts and information found that in the assessee’s balance sheet the amount reflected is Rs.45,18,562/- and in the balance sheet of the Karam Enterprises is Rs. 1,55,77,284/- and the assessee has filed the details and supporting evidences in respect of facts and the assessee’s salary, profit share and remuneration accumulated over the period of time. But the AO was not satisfied with explanations and made the addition of difference amount of Rs.1,10,58,722/- u/s 69B of the Act and assessed the total income of Rs. 1,24,76,260/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 21.03.2016.
3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A).Whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and ShriRakeshJaiswal, Jabalpur. - 4 - findings of the AO and dealt on the evidences and information and has granted relief on the disputed issue U/sec69B of the Act and partly allowed the assessee appeal. Aggrieved by the order of the CIT(A), the revenue has filed an appeal before the Hon'ble Tribunal.
4. At the time of hearing, the Ld. DR submitted that the CIT(A) has erred in granting relief to the assessee irrespective of the fact that the assessee could not substantiate with the details of the capital account maintained before the lower authorities and the Ld. DR supported the order of the A.O.
5. Per Contra, the Ld.AR submitted that the assessee has cooperated in submitting the details before the lower authorities with the evidences supporting the increase in the balances and the CIT(A) has considered the primary evidences and granted the relief.TheLd.AR substantiated the submissions with factual paper book and synopsis and supported the order of the CIT(A).
6. We heard the rival submissions and perused the material on record. The sole disputed grievance envisaged by the Ld.DR that the CIT(A) has erred in deleting the addition u/sec69B of the Act overlooking the findings of the ShriRakeshJaiswal, Jabalpur. - 5 - Assessing Officer. Whereas the Ld. AR submitted that the assessee has maintained separate accounts for the proprietary concern and the transactions in the partnership concern and consolidated balance sheet reflecting all the balances and the investments and were filed in the proceedings and the balances are accumulated over the period time from F.Y 2005 to 2008. At this juncture, we consider it appropriate to refer to the findings of the CIT(A) in granting relief to the assessee observing at para 7.1.2 to 7.2 of the order as under:
7.1.2. The AR of the appellant in his written submission furnished in support of this issue of appeal contended as under:-
Addition of Rs. 1,10,58,722/- (Point No. 1 in grounds of appeal):-
During the year under consideration assessee was partner in the firm M/s Karam Enterpries and having one liquor group of Bhopal District in his individual name from which the assessee was having income. During the of original assessment proceeding assessee had filed the audited report of M/s Rakesh Jaiswal (individual business balance sheet M/s. Rakesh Jaiswal C/o Le Delicaey Restaurant, M.P. Nagar, Bhopal) same is enclosed here with as per Annexure-1, which only pertains to the liquor business which has been correlated
ShriRakeshJaiswal, Jabalpur. - 6 - with the balance sheet of M/s Karam Enterprises copy enclosed here with as per Annexure-2. If the same had been tailed with personal balance sheet of assessee there was no such difference. Original investment of Rs.45,18,562/- dated 08.03.2005 which had been made from this liquor balance sheet which continued till the year under consideration. In M/s Karam Enterprises on 08.03.2005 this amount of Rs.45,18,562/- during AY 2005-06 was taken and later on additions and withdrawals were made by the assessee. Additions were duly reflected in the personal balance sheet of the assessee which was submitted before the AO the course of assessment proceedings, same is enclosed here with as missioner of femotax per Axure-3. It is submitted that the audited financial statements of s RakeshJaiswal as on 31.03.2008 may please be looked by which it will euch clear that these audited financial statements are only related business of liquor only.
Looking into the above facts the addition made may kindly be deleted.
7.1.3.DECISION:-I have carefully considered the submission put forth & the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO in the impugned assessment order and other material brought on record. The AO observed in the assessment order that the firm's capital has been reflected at full amount of Rs.1,55,77,284/- but, the corresponding figure of investment is reflected in the hands of the assessee is at Rs.45,18,562/-. Therefore, the different amount of Rs.1,10,58,722/- was brought to tax u/s 69B of the I.T. Act, 1961 by the AO. Since the assessee has concealed his particulars of income, the ShriRakeshJaiswal, Jabalpur. - 7 - penalty proceedings u/s 271(1)(c) of the Act, were also initiated separately for the concealment of income.
7.1.4 In the curse of appellate proceedings before me, the ld AR submitted that during the year under consideration, the appellant was a partner in the firm, M/s Karam Enterprise and having one liquor group of Bhopal District in his individual name from which the appellant was having income from the same proprietary concern. During the course of original assessment proceeding, the assessee had filed the audited report of M/s RakeshJaiswal (individual Commissionable balance sheet M/s RakeshJaiswal C/o Le DelicaeyRestant, M.P. Nagar, Bhopal) and the same was furnished with the submission as per Annexure-1, which only pertains to the liquor business which has been correlated with the balance sheet of M/s Karam Enterprises copy of which was enclosed with as perAnnexure-2.It is contented that if the same had been tailed withpersonal balance sheet of the appellant there was no such difference. Original investment of Rs.45,18,562/- dated 08.03.2005 which had been made from this liquor balance sheet was continued till the year under consideration. In M/s Karam Enterprises on 08.03.2005 this amount of Rs.45,18,562/- during AY 2005-06 was taken and later on additions and withdrawals were made by the assessee. Additions were duly reflected in the personal balance sheet of the assessee which was submitted before the AO during the course of assessment proceedings, same was also furnished as per Annexure-3. It is submitted that the audited financial statements of M/s RakeshJaiswal as on 31.03.2008 may please be looked into from which it would be very much clear that these audited financial statements are only related to the business of liquor of proprietary concern only.
ShriRakeshJaiswal, Jabalpur. - 8 - 7.15. After carefully considering the submission details/supporting documents furnished by the AR and perusing the entire facts of the case, I am inclined to agree with the contention of the appellant that the AO has only made the comparison with the balance Sheet of Registered Firm's capital account with the capital Income of the appellant wherein it is seen that there is no such account of the Proprietary business's capital account but he failed to ke into account the consolidated personal/individual Balance She Commissioner reference in the capital account balance as observed by the AO The misunderstood the accounting part of the appellant as he Completely ignored the appellant's individual/personal balance sheet and capital account and considered only two other capital account of the Registered Firm & the capital account of proprietary business concern. In view of the above findings and observation, I am of the considered opinion that the AO was not justified in making the impugned addition of Rs.1,10,58,722/-being the difference observed between the two capital accounts of the registered as well as proprietary business firm. Therefore, the same is directed to be deleted and this ground of appeal is allowed.
7.2Ground No. 2: This ground of appeal is general in nature and hence requires no specific adjudication. Moreover, the appellant has not advanced any written submission in this regard. Therefore, this ground of appeal is dismissed as not pressed.
8.0 CONCLUSION: In the result, the appeal is partly allowed.
When a query was raised to Ld. AR to explain how the funds are accumulated in individual account and ShriRakeshJaiswal, Jabalpur. - 9 - the closing balance in the partnership firm. The Ld.AR referred to the Audited accounts of the proprietary concern as at 31-03-2008 placed at page 1 to 16 of the paper book and in particular at page 14 the investment in the partnership firm M/s Karan Enterprises was reflected. Further the Ld.AR demonstrated the capital account reflecting the opening balance, credits of the remuneration and share of profit from the firm placed at page 32 of the paper book. The Ld.AR has drawn attention to the consolidated balance sheet of the assessee as at 31.03.2008 were the assessee has disclosed the closing balance of capital account with M/s Karam Enterprises of Rs,1,55,77,284/- under “Current Assests” placed at page 33 of the paper book. The Ld.AR also substantiated the submissions with the consolidated balance sheets from the year 2005 to 2008 reflecting the balances of capital account in the M/s Karam Enterprises. We find the CIT(A) has dealt on the facts, submissions and provisions of Act and passed a reasonable order. The Ld. DR could not controvert the findings of the CIT(A) on the disputed issue with any new cogent material or information to ShriRakeshJaiswal, Jabalpur. - 10 - take different view. Accordingly, we do not find any infirmity in the order of the CIT(A) on the disputed issue and uphold the same and dismiss the grounds of appeal of the revenue.
8. In the result, the appeal filed by the revenue is dismissed. order pronounced in the open court on 18.09.2023 Sd/- Sd/- (OM PRAKASH KANT) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Jabalpur Dated 18.09.2023 KRK, PS Copy of the Order forwarded to : The Appellant 1. The Respondent 2. 3. The CIT (Judicial) The PCIT 4. DR, ITAT, Jabalpur 5. 6. Guard File आदेशानुसार/BY ORDER, स�या�पत ��त //True Copy// 1.
( Asst. Registrar) ITAT, Jabalpur
ShriRakeshJaiswal, Jabalpur. - 11 -
Initial Date 1. Draft dictated on 14.09.2023 PS 2. Draft placed before author 15.09.2023 PS
Draft proposed & placed before PS the second member 4. Draft discussed/approved by PS Second Member. 5. Approved Draft comes to the PS Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed her Member…