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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI CHANDRA POOJARI
Assessment Year: 2017-18 Dattatraya Krishnappa Lonakar 752, Negalur Road HAVERI, Hosaritti ITO Vs. Hosaritti SO 581 213 Ward-1 Karnataka Haeveri PAN NO.AALPL2480Q ASSESSEE RESPONDENT Assessee by : Shri Ravi Shankar, A.R. Revenue by : Smt. Akta Jain B., D.R. Date of Hearing : 29.02.2024 Date of Pronouncement : 29.02.2024 O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC for the assessment year 2017-18 dated 26.10.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal:
1. The order passed by the learned Commissioner of Income Tax, NFAC, under section 250 of the Act is so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
2. The appellant denies himself to be assessed at Rs.5,10,39,803/- as against the income of Rs. 60,000/- returned for the assessment year 2017-18 on the facts and circumstances of the case.
3. The learned CIT(A) was not justified in confirming the addition of Rs. 5, 09,79,803/- as income of the appellant, without appreciating that the said bank account did not belong to the appellant, on the facts and circumstances of the case.
4. The learned CIT(A) was not justified in alleging that the assessing officer of the firm has not made proper enquiry during assessment, Dattatraya Krishnappa Lonakar, Hosaritti Page 2 of 5 when the accounts of the firm were audited and the turnover of the firm was the source of the deposits into the current account, thus arrived at a perverse conclusion that the turnover was not recorded in the books of the firm, on the facts and circumstances of the case.
5. The authorities below failed to appreciate the documents provided by the bank, to the effect that the current account belonged to the firm and the name of the account also belonged to the firm, who have proceeded to hold that the deposits was his individual income, for the mere reason that his PAN was linked to the current account, on the facts and circumstances of the case.
6. The authorities below failed to appreciate that neither of the provisions of section 68 or section 69 of the act, are applicable, since already accounted in the books of the firm and thus no addition ought to have been made in the hands of the appellant on the facts and circumstances of the case.
The invocation of section 115BBE of the Act is also bad in law, since there was no instance of unexplained income, on the facts and circumstances of the case.
The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case.
The appellant craves to add, alter, amend, substitute, change and delete any of the grounds of appeal
10. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered and the appellant shall be awarded cost in prosecuting the appeal and also order for the refund of institution fees as part of the cost.
2. The assessee has raised following additional grounds along with a petition for admission of additional grounds:
1. The notice issued under section 148 of the Act is bad in law on the facts and circumstances of the case.
2. The provision of sections 147, 148, 149 and 151 has been substituted by the Finance Act, 2021 and there is no saving clause envisaged under the new provision to continue with the proceedings initiated under the erstwhile provisions of the Act, thus the order passed is bad in law, on the facts and circumstances of the case
3. The learned assessing officer has failed to obtain proper sanction under section 151 of the Act. Without prejudice, the sanction accorded, if any, is mechanical and without application of mind on the facts and circumstances of the case.
Dattatraya Krishnappa Lonakar, Hosaritti Page 3 of 5 4. The order of re-assessment passed under section 147 of the Act is bad in law and void-ab-initio as the mandatory conditions to invoke the provision of section 148 did not exist on the facts and circumstances of the case.
5. The assumption of jurisdiction under section 148 r.w.s. 147 of the Act is absent or having not been complied with by the learned assessing officer, consequently the order passed on an invalid assumption of jurisdiction do not survive on the facts and circumstances of the case.
6. The reason recorded by the learned assessing officer, may, utmost be considered as reason to suspect and under no stretch of imagination the same cannot be construed as reason to believe which is a basic ingredient for a valid assumption of re- assessment under the facts and circumstances of the case.
7. The Appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal
8. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered. 2.1 The ld. A.R. submitted that these additional grounds may be admitted and disposed of on merit for the advancement of substantial cause of justice since there was no need of investigation of any fresh facts otherwise on record and placed reliance on the judgement of Hon’ble Supreme Court in the case of NTPC Vs. CIT reported in 229 ITR 383. 2.2 Though assessee filed a petition for admission of additional grounds, but at the time of hearing, the ld. A.R. has not put any serious arguments for admission and adjudication of these additional grounds. Accordingly, these additional grounds are not considered for adjudication.
3. The crux of above main grounds is with regard to sustaining of addition of Rs.5,09,79,803/- towards deposit into current account bearing No.CA89067392498 with Karnataka Vikas Grameena Bank, Hosaritti Branch in the name of M/s. Krishna Traders, wherein assessee was the partner in that firm. 3.1 Facts of the issue are that assessee was partner in M/s. Krishna Traders where there is a taxable profit as per I.T. return of the firm amounting to Rs.53,943/-. The assessment of the firm has Dattatraya Krishnappa Lonakar, Hosaritti Page 4 of 5 been completed u/s 143(3) of the Act on 14.3.2019 assessing the income at the returned amount. It was noted by the present AO that the AO of the firm was not aware of the cash deposit of Rs.5,09,79,803/- in its firm’s account as the firm’s bank account was linked to the assessee’s PAN account, thereby this fact of cash deposit though it was belonged to the firm was not questioned in the course of assessment of the said firm. However, the same has been considered in the hands of present assessee as income and addition was made by ld. AO.
The ld. CIT(A) has confirmed the addition made by ld. AO by observing that the assessee has not demonstrated the manner in which said cash deposit has been accounted in the firm and reasonableness of considering the operation scale of the firm since the assessee has failed to provide any document before the ld. AO or before NFAC to demonstrate the cash deposits in the bank account has been duly accounted in the books of accounts of the firm. The assessee has merely relied on the assessment order of the firm stating that the ld. AO of the firm has accepted all the bank details knowing fully well that the ld. AO had no information about such huge cash deposit of Rs.5,09,79,803/- in the account of the firm since the same was linked to the assessee’s PAN. Against this assessee is in appeal before us.
We have heard the rival submissions and perused the materials available on record. The ld. A.R. has submitted that the deposit made in said bank account was in no way relate to the assessee and it is the bank account of the firm M/s. Krishna Traders, wherein the assessee was only one of the partners. It was also submitted that the present assessee, being an individual partner in that firm, the balance in that bank account cannot be assessed in the hands of present assessee. In our opinion, there is merit in the argument of ld. A.R. that balance in that said bank account bearing No. CA89067392498 with Karnataka Vikas Grameena Bank, Dattatraya Krishnappa Lonakar, Hosaritti Page 5 of 5 Hasaritti Branch cannot be assessed in the hands of present assessee and it was also noted that the said bank account was linked to the assessee’s PAN account incorrectly that cannot be reason to add the deposit in that bank account in the hands of present assessee. Accordingly, we direct the ld. AO to delete the addition made on this count. However, we make it clear that the ld. AO of the firm is at liberty to take appropriate measures to examine that bank account in the hands of M/s. Krishna Traders, if there is escapement of that income in the hands of M/s. Krishna Traders and to assess the same in firm hands in accordance with law. With this observation, we allow the grounds taken by the assessee.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 29th Feb, 2024