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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri N.V.Vasudevan & Shri Waseem Ahmed
आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-2, Kolkata dated 04.12.2015 pertaining to assessment year 2011-12. Revenue has raised following grounds:- “
1. That the Ld. CIT(A) has erred in deleting the addition of unexplained investment of Rs.1,15,91,080/- though the same is not reflected under the head ‘Investment’ of the assessee in his Balance Sheet and the assessee failed to offer any plausible explanation regarding the said investment. The onus to substantiate its claim lies with assessee, which the assessee failed to justify.
2. That the Ld. CIT(A) has erred in treating the investment under the head “other current Asset” though the meaning of “Other Current Asset” does not include investment.
A.Y. 2011-12 DCIT Cir-5(2), Kol. Vs. Sh R.Ram Yadav Page 2 3. That thee Ld. CIT(A) has erred in deleting the addition of unexplained income of Rs.5,83,565/- though as penalty the nature of income, it comes under the purview of ‘Income from Other Sources’, in which it has not been shown. The interest from bank under no circumstances is business income of the assessee since the assessee is not engaged in the business of money lending or non banking financial activities.”
That your petitioner doth hereby craves leave of furnishing additional grounds and / deletion or modifications of any of the grounds set forth above, on or before the final date of hearing of this appeal petition.”
First issue raised by Revenue in ground No. 1 & 2 is that Ld. CIT(A) erred in deleting the addition made by the Assessing Officer for ₹1,15 91,080/- on account of undisclosed investment u/s. 69B of the Act.
Briefly stated facts are that assessee is an individual and engaged in business of Indian made foreign liquor, trading of marble and construction business. The assessee was running his business under three proprietorship concerns namely, M/s United Trading Co, M/s United Marble and M/s United Construction. The assessee in his balance sheet has shown following investments:- M/s United Trading Co Fixed Deposit with HDFC Rs. 1,12,58,913/- Fixed deposit with bank of Baroda Rs. 2,00,000/- Accrued interest on FD Rs. 6,601/- Rs.1,14,65,514/- M/s United Construction Deposits with NSC Rs. 1,15,566/- Deposits with Sahara India Rs. 10,000/- Reliance Rs. 98,000/- Rs. 2,23,566/- Total investment Rs.1,16,89,080/- However, during the course of assessment proceedings, AO observed that the amount of investment shown by assessee in his income tax return is of ₹98,000.00 only. Thus, the difference of ₹1,15,91,080/- (11689080 – 98,000) was observed which assessee failed to explain on the basis of any A.Y. 2011-12 DCIT Cir-5(2), Kol. Vs. Sh R.Ram Yadav Page 3 documentary evidence. Therefore, AO treated the same as undisclosed investment u/s. 69B of the Act and added to the total income of assessee.
4. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the amount of investment was shown in column No. IV of the I.T return i.e. other “current asset for ₹1,42,11,080/- Therefore there is no difference between the amount of investment shown by the assessee in his audited financial statement vis-à-vis in the income tax return. Ld. CIT(A) after considering the submissions of assessee deleted the addition made by AO ob observing a under:- “2.2 I have duly considered the submission of the assessee and verified the return in ITR-4 and the audited balance sheets and the contention of the assessee is found correct In ITR-4, the assessee has shown investment of Rs.98,000/- in column 2c(Part A-BS), pertains to investment in the shares of Reliance. The assessee has also shown ‘other current assets of Rs.1,42,11,080/- in column 3iv (part A-BS) of the ITR-4, which included (i) Fixed Deposits with HDFC of Rs.1,12,58,913/- (ii) Fixed deposit with Bank of Baroda of Rs.2,00,000/-, (iii) Accrued interest on FDs of Rs.6,601/- [all these entries are shown in the audited balance sheet of the proprietary concern M/s United Trading Co.], and (iv) deposits with NSC of Rs.1,15,566/-, (ii) deposits with Sahara India of Rs.10,000/-[both entries are reflected in the balance sheet of another proprietry concern M/s United Construction]. In fact, the AO himself accepted that all these entries we reflected in the balance sheet of two proprietary concerns, as can be seen from his order. This being the issue, impugned order find that the AO has made a mountain out of a molehill without proper analyzing of the entries in the return. In any case, making addition by comparing assessee’s own return with assessee’s own balance sheeted is absurd. As stated, there was no unexplained investment as such. The addition of Rs.1,15,94,080/- is therefore, deleted.” The Revenue, being aggrieved, is in appeal before us.
Ld. DR before us submitted that all the necessary details are not filed before AO so the matter may be restored to the file of AO for fresh adjudication. He vehemently relied on the order of AO. On the other hand, Ld. AR filed paper book which is running pages from 1 to 78 and demonstrated that the amount of ₹98,000 was shown under the head “investment” with the income tax return whereas in the balance amount of A.Y. 2011-12 DCIT Cir-5(2), Kol. Vs. Sh R.Ram Yadav Page 4 investment was shown under the head “current asset” at ₹1,42,11,080/-. In support Ld. AR further provided the break-up of current asset which reads as under:- “BS-3iv Other current assets United Trading Co. 11,465,514.00 United Marble United construction 2,745,566.00 14,211,080.00 Ld. AR relied on the order of Ld. CIT(A). In rejoinder the ld. DR requested the Bench to restore the matter to the file of AO with specific direction for better appreciation of the facts.
We have heard the rival contentions of both the side and perused the material available on record. The addition made by AO merely on the basis of difference observed by him between the amount of investment shown by the assessee in the audited financial statement vis-a-vis in the IT returns. However, we note that the assessee has shown a sum of ₹98,000 in the balance sheet under the head investment and the remaining investment was shown under the head “current asset”. Thus, it cannot be concluded that the assessee has made unexplained investment u/s 69B of the Act. Thus, we do not find any infirmity in the order of Ld. CIT(A). Consequently we uphold the same. Hence, this ground of Revenue is dismissed.
Next issue raised by Revenue in ground No.3 is that Ld. CIT(A) erred in deleting the addition made by AO for ₹5,83,655/- on account of unexplained income.
The AO during the course of assessment proceedings observed that assessee has shown interest income of ₹47,524/- as income from other source whereas as per Form 26AS interest income earned by the assessee is of ₹8,251/- and ₹6,22,798/- on the fixed deposit (FD) made with the bank of Baroda and HDFC. Thus a difference of ₹5,83,565/- was observed by AO which was treated as undisclosed income u/s. 69A of the Act and added to the total income of the assessee.