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Income Tax Appellate Tribunal, BANGALORE BENCH “ A ”
Before: SHRI A.K. GARODIA & SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : These appeals by the assessee are directed against the composite order of Commissioner of Income Tax (Appeals) dt.22.7.2015 for the Assessment Years 1996-97 & 1998-99 respectively.
First we will take up the appeal for the Assessment Year 1996-97 wherein the assessee has raised the following grounds :
2 & 1349/Bang/2015 “1. The impugned order of assessment is liable to set aside in so far as the same is illegal, unlawful, improper, irregular and opposed to law and facts and circumstances of the case.
2. The Learned Appellate Commissioner erred is upholding order of the Respondent Officer assessing the sum of Rs.3,OO,OOOj- without appreciating the actual facts of the case and without taking cognizance of the declaration made by the Appellant under the VDIS u/s. 65 of the Finance Act, 1997 and as such the same is liable to set aside.
The Learned Appellate Commissioner erred is upholding order of the Respondent Officer assessing the total income of the Appellant for the A.Y.1996- 97 at Rs.3,OO,OOOj- without giving credit for the declaration made under the VDIS u/s 65 of the Finance Act, 1997, just because the authorities have not yet issued the Certificate u/s.68(2) of the Finance Act, 1997 and as such the same is liable to set aside.
4. The Learned Appellate Commissioner erred is upholding order of the Respondent Officer determining the income of the Appellant from the Brick Business at Rs.3,OO,OOOj- with complete disregard to the facts of the case and as such the impugned order is liable to set aside.
5. The Learned Appellate Commissioner erred is upholding impugned order of assessment made by the Learned Respondent Officer which is illegal and unlawful and as such is liable to set aside. 6. That the impugned levy of interest of Rs.1,36,085 u/s. 234A is liable to set aside in so far as the appellant is not liable there for. 7. That the impugned levy of interest of Rs.1,43,585 u/s.234B is liable to set aside in so far as the appellant is not liable there for.”
addition made by the Assessing Officer by estimating the business income of the assessee at Rs.3 lakhs without giving credit for the declaration made under the Voluntary Disclosure of Income Scheme (in short ‘VDIS’), 1997. In this case, a notice under Section 148 of the Income Tax Act, 1961 (in short 'the Act') was issued as the assessee did not file any return of income. The Assessing Officer noted that despite various opportunities the assessee did not furnish the details as called for and time limit for completion of assessment was going to expire on 31.3.2004. Accordingly, the Assessing Officer proceeded to complete the assessment ex-parte under Section 144 r.w.s. 147 of the Act. The Assessing Officer noted that on the basis of information available and as per the statement recorded under Section 131 by the DDIT, Pune dt.11.3.2004 in the central prison premises the assessee admitted the total income of Rs.50,000 from the business of bricks. The Assessing Officer further noted that taking into consideration the assessee’s household expenses and telephone expenses and investment in household goods, the income of the assessee was proposed to determine at Rs.3 lakhs as business income. Accordingly, the Assessing Officer made an addition by estimating the income from brick business at Rs.3 lakhs.
(Appeals) and contended that as per the VDIS, 1997, the assessee had already declared an income of Rs.3,20,000 for the Assessment Year 1996-97. Thus the assessee contended before the CIT (Appeals) that the assessee had already declared income of more than Rs.3 lakhs in the VDIS, 1997 and therefore no further addition can be made as per the provisions of section 64 of the VDIS, 1997. The CIT (Appeals) did not accept the contention of the assessee and confirmed the action of the Assessing Officer.
Before us, the learned Authorised Representative of the assessee has referred to the income declared by the assessee for the various years under VDIS, 1997 and submitted that for the year under consideration, the assessee has already declared an income of Rs.3,20,000 on account of investment in agricultural land, motor cycle as well as cash. Thus the credit to the extent of income declared in the VDIS has to be given to the assessee and no addition can be made by the Assessing Officer to the extent of said income already declared in the VDIS. He has referred to the sections 64 & 68 of the Finance Act, 1997 under which VDIS, 1997 was introduced and notified by the Govt. of India. Thus it is pleaded that if the credit of the income already declared under the business income of the assessee to the extent of the said declaration made.
On the other hand, the learned Departmental Representative has submitted that in the VDIS, the assessee has declared income in respect of the investment in the land, motor cycle and cash whereas the Assessing Officer has made the addition on account of the household expenditure and investment in the household goods. Thus the learned Departmental Representative has submitted that no credit can be given of the income declared in the VDIS when the addition made by the Assessing Officer is not in respect of the investment which is declared in the VDIS.
We have heard the rival submissions as well as considered the relevant material on record. We find that the CIT (Appeals) has denied the benefit of declaration in the VDIS, 1997 on the ground that the assessee has failed to furnish the certificate issued by the competent authority under Section 68 (2) of VDIS, 1997. It is pertinent to note that the assessee disclosed the income under the VDIS,1997 by making an application vide acknowledgment dt.29.12.1997 duly issued by the department. The fact of filing the application and disclosure of income under VDIS, 1997 has not been disputed by the assessee for disclosure under VDIS, 1997 was rejected. Therefore, merely because the concerned authority has not issued a certificate under Section 68(2), the fact of filing of disclosure of the income cannot be negated. We find that the assessee has declared income of Rs.3,20,000 for the Assessment Year 1996-97 under VDIS, 1997 on account of investment in agricultural land, motor cycle and cash. The Assessing Officer has proceeded to estimate the business income of the assessee on the ground of household expenses and household investment of goods but the finding of the Assessing Officer is vague without giving any details of household expenditure and the alleged investment in household goods. The relevant part of the Assessing Officer at para 4.1 as under :-
It is seen from above details that for the A.Y. 1996-97 the assessee has admitted total income of Rs.50,000 from the business of bricks. Taking into consideration, the assessee's household expenses and telephone expenditure and investment in house hold goods, the assessee was requested vide this office letter under Section 144 to file objections/explanation, if any to my proposal to determine his business income for the year under consideration at Rs.3,00,000. The assessee has failed to furnish any objection / explanation to the said proposal. In the circumstances, taking into consideration assessee's own statement regarding his incomes for the AYs 1997-98 to 2000-01, the assessee's income from the business in brick is estimated at Rs.3,00,000 for the A.Y. 1996- 97. estimating the business income of the assessee, the Assessing Officer has not given any reference of household expenditure, telephone expenditure and investment in household goods. Therefore in the absence of any tangible material to show that the assessee has incurred the expenditure to the extent of Rs.3 lakhs, the estimation made by the Assessing Officer is only a guess work without supporting evidence. Since the assessee has already declared a sum of Rs.3,20,000 under VDIS, 1997, therefore to the extent of said sum, no addition can be made as per the provisions of section 68 of the said scheme which reads as under :-
68. Voluntarily disclosed income not to be included in the total income -- (1) The amount of the voluntarily disclosed income shall not be included in the total income of the declarant for any assessment year under the Income Tax Act, if the following conditions are fulfilled namely :- (i) the declarant credits such amount in the books of account, if any, maintained by him for any source of income or in any other record, and intimates the credit so made to the Assessing Officer; and (ii) the income tax in respect of the voluntarily disclosed income is paid by the declarant within the time specified in section 65 or section 66. (2) The Commissioner shall, on an application made by the declarant, grant a certificate to him setting forth the particulars of the voluntarily disclosed income and the amount of income tax paid in respect of the same.
Rs.3,20,000 as income under the VDIS, 1997 for the year under consideration, we delete the addition made by the Assessing Officer of Rs.3 lakhs.
For the Assessment Year 1998-99, the assessee has raised the following grounds :-
“ 1. The impugned order of assessment is liable to set aside in so far as the same is illegal, unlawful, improper, irregular and opposed to law and facts and circumstances of the case.
2. The Learned Appellate Commissioner erred is upholding order of the Respondent Officer erred in adding a sum of Rs.1,26,723/- (Rs.1,26,850) to income of the Appellant, the same being the alleged unexplained deposit made by the Appellant in to an Banking Account, with complete disregard to the facts of the case and as such the impugned addition is liable to set aside. . .
3. The Learned Appellate Commissioner erred is upholding addition Rs.1,26,723/- (Rs.1,26,850) made by the Respondent Officer with complete disregard to the funds available with the appellant and as such it is liable to set aside.
4. That the impugned levy of interests u/s 234A, 234B and 234C are liable to set aside in so far as the appellant is not liable there for.”
During the assessment proceedings, the Assessing Officer made an addition of Rs.1,26,723 on account of deposit in the Savings Bank Account of the assessee and the same was brought to tax as unexplained cash credit under Section 68 of the Act. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed.
Assessment Year 1997-98, the assessee declared a sum of Rs.90,000 under the VDIS, 1997 on account of cash and further a sum of Rs.67,500 was declared as cash for the Assessment Year 1996-97 being part of the total income declared at Rs.3,20,000 for the said assessment year. Thus the learned Authorised Representative has submitted that the assessee has already declared a cash of Rs.1,57,500 in the VDIS disclosure and therefore no addition can be made to the extent of the said cash declared by the assessee.
On the other hand, the learned Departmental Representative has relied upon the orders of authorities below and submitted that the assessee has not declared the cash deposit in the bank account as there is nothing in the VDIS made by the assessee to show that the cash declared was also in respect of the bank account of the assessee.
We have heard the rival submissions as well as considered the relevant material on record. There is no dispute that the assessee declared total cash of Rs.1,57,500 comprising of Rs.67,500 for the Assessment Year 1996-97 and account of the assessee to the extent of Rs.1,20,000 is covered by the declaration made by the assessee of cash to the extent of Rs.1,57,500 and accordingly, no addition can be made on account of cash found with the assessee to the extent of the said amount declared in the VDIS,1997. It is not the case of the Assessing Officer that apart from the cash found in the bank, the cash declared in the VDIS was also found with the assessee. Therefore in the absence of any other amount found by the Assessing Officer in cash the addition of Rs.1,20,000 as unexplained cash credit under Section 68 cannot be made in view of the declaration made in the VDIS, 1997. Accordingly, we delete the addition made by the Assessing Officer on this count.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 29.04.2016.