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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM & DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the Revenue, pertaining to assessment year 2013-14, is directed against the order passed by ld. Commissioner of Income Tax (Appeals)-11, Kolkata in appeal no. 128/CIT(A)-11/CIR-37/15-16/Kol, which in turn arises out of an assessment order passed by Assessing Officer u/s 143(3) of the Income Tax Act, 1961 ( in short ‘Act’) dated 31/12/2015.
At the time of hearing none appeared on behalf of assessee in spite of issuance of notice for hearing and Ld. Departmental Representative(DR), was present for the appellant Revenue. In the absence of any appearance by the assessee, the appeal is being disposed of ex parte qua the assessee, after hearing Ld. DR for the Revenue on merits in terms of Rule 24 of the Income Tax Appellate, Tribunal, Rules, 1963.
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The grounds of appeal raised by the Revenue are as follows:
1. That Ld. CIT(A) has erred in allowing assessee's appeal by accepting that opening capital as on first day of AY 2013-14 (as on 01.04.2012) was brought forward capital from last day of previous AY 2012-13 (as on 31.03.2012) when disclosed figure of closing capital (as on 31.03.2012) in e-return for AY 2012-13 was only Rs. 1,06,43,052/-, against the brought forward opening capital (as on 01.04.2012) of Rs. 3,73,00,424/-, as reflected in capital account of AY 2013-14, filed by assessee before Assessing Officer.
2. That Ld. CIT(A) has erred in accepting the un-substantiated claim of merger of capital account, in respect of personal and professional accounts of assessee for AY 2013-14, when no reasonable explanation for discrepancy in closing capital as on 31.03.2012 & 01.04.2012 was filed before Assessing Officer despite repeated opportunity allowed by AO to assessee. 3. That Ld. CIT(A) has erred in accepting Rs. 3,76,00,424/- as opening capital as on 01.04.2012 without bringing documentary evidence on record when disclosed closing capital as on 31.03.2012 was much lesser at Rs.1,06,43,052/- in return of income filed for AY 2012-13.
That the appellant craves leave to add or alter or modify any or all of the above grounds of appeal before or at the time of hearing of appeal.
4. These three grounds raised by the Revenue are interlinked and relate to single issue of difference in opening capital account as on 01.04.2012 of Rs. 2,69,57,372/- (Rs. 376,00,424 – Rs. 106,43,052) therefore these grounds are taken together for the purpose of adjudication of Revenue’s appeal.
Facts of the case which can be stated quite shortly are as follows: During the assessment proceedings, the ld. Assessing Officer observed that amount standing in the capital account of the assessee as on 31.03.2012 was Rs. 1,06,43,052/-. However, the opening capital as on 01.04.2012 was Rs. 3,76,00,424/-. Thus, there was a difference of Rs. 2,69,57,372/-. The assessee was asked to explain the difference of Rs. 2,69,57,372/-. However, the assessee could not explain the difference properly, therefore the Assessing Officer made addition of Rs. 2,69,57,372/- (being difference between Rs. 3,76,00,424 – Rs. 1,06,43,052).
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On appeal, the ld. CIT(A) deleted the addition. Aggrieved the revenue is in appeal before us.
We have heard ld. D.R. and perused the material available on record. The ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. We note that as perreturn of income of A. Y. 2012-13 (e-filed on 29/09/2012 and date of Tax Audit Report is 28/09/2012), the proprietor's capital as on 31.03.2012 is Rs 1,06,43,052/-. As per the return filed for the A Y 2013-14 on 30.09.2013, the proprietor's capital as on 31.03.2013 was to the tune of Rs 4,00,28,553/-. So, the Assessing Officer noticed that the opening and closing capital balance of the assessee does not match with the income including tax free income as disclosed by the assessee in her return of income. The assessee was requested to submit a copy of capital account. In response, the assessee submitted a copy of capital account for the FY 2012-13 and after going through the same,Assessing Officer noticed that the opening capital is shown at Rs 3,76,00,424/-,whereas the proprietor's capital as on 31.03.2012 was Rs. 1,06,43,052/-. So, there was a difference of Rs 2,69,57,372/- (Rs. 37600424 – Rs. 10643052). The assessee was requested to submit the copy of audited accounts and tax audit report for the F Y 2011-12 corresponding to the A Y 2012-13. In response, the assessee filed a copy of the tax audit report in Form No.3CD but no copies of audited accounts were submitted by the assessee. The assessee was requested to submit explanation of introduction of capital. In response to that, the assessee submitted a copy of capital account for the F. Y. 2011-12 and 2012-13. The copy of capital account filed by the assessee for the F Y 2011-12 shows the closing capital of Rs. 3,76,00,424/- whereas as per the return filed for A. Y. 2012-13, the closing capital was Rs 1,06,43,052/-. On repeated opportunity, the assessee could not clarify the difference. In view of the above, sufficient opportunity had been given to the assessee but no explanation could be filed, no source of such introduction of capital could be filed by the assessee and as such the amount of Rs 2,69,57,372/- was added to the total income of the assessee u/s 68 of the I.T. Act, 1961.
4 Padmaja ShailenRuparel We note that during the assessment proceedings, the Ld. A.O observed that amount standing in the Capital Account of the assessee as on 31.03.2012 was Rs. 1,06,43,052/-. However, the opening capital as on 01.04.2012 was Rs. 3,76,00,424/-. Thus, there was a difference of Rs. 2, 69, 57,372/-. The A.O called for the explanation of the assessee, but he notes that despite sufficient opportunities granted no explanation was filed by the assessee related to source of introduction of capital amounting to Rs. 2,69,57,372/-. He, therefore, added this amount to the taxable income of the assessee.
During the appellate proceedings, the Ld. A.R for the assessee stated that prior to the assessment year 2013-14, the appellant used to maintain separate Balance Sheet and Capital Accounts for her personal and professional transactions. In the said year, the appellant decided to merge both of her accounts into one and that is why, the balance from her personal account got added to her capital in the professional account.
The Ld A.R was asked to explain if the said personal and professional accounts were disclosed in the Return of Income filed by the appellant during the earlier year. He was also requested to furnish copies of Return of Income along with all the financial statements. The same were filed and it was observed by the ld. CIT(A) that the appellant had maintained two separate accounts, one pertaining to her professional earnings and the other pertaining to her personal earnings and taxes were paid by the assessee on all her earnings. Therefore, the two accounts in question are disclosed accounts. The reason for the difference of Rs. 2,69,57,372/- has arisen because the assessee has merged her personal and professional accounts. We note that the ld. CIT(A) has co-terminus power as that of Assessing Officer and he examined the personal accounts and professional accounts of the assessee and he noticed that difference has arisen because assessee merged her personal accounts with professional accounts. The ld. CIT(A) examined the reason of difference and deleted the addition. We do not find any infirmity in the order passed by ld. CIT(A), hence we dismiss the appeal of revenue.
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In the result, the appeal of the Revenue is dismissed. Order pronounced in the Court on 29.01.2020