ITO, WD-59(1), KOLKATA, KOLKATA vs GEORGE THOMAS, KOLKATA

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: Shri P.M. Jagtap

Per Shri P.M. Jagtap, A.M..: This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-18, Kolkata dated 18.02.2016.

The assessee in the present case is an individual, who is a Staff member of St. Lawrance High School. As per the information received by the Assessing Officer, the asessee had made cash deposits of Rs.11,55,499/- in his account with ICICI Bank and had also made investment of Rs.20,00,000/- in Mutual Fund and expended a total sum of Rs.2,21,370/- through his HDFC Credit Card. Since no return of income for the year under consideration was filed by the assessee, a notice under section 148 was issued by the Assessing Officer, which was served on 07.06.2011 through ‘Affixation’. There was, however, no compliance on the part of the assessee to the said notice as well as the subsequent notice issued by the Assessing Officer under section 142(1) during the ./2016 Assessment year: 2008-2009 Page 2 of 5 course of assessment proceedings. The Assessing Officer, therefore, was left with no option but to complete the assessment ex-parte to the best of his judgment. In the assessment so completed under section 144/147 vide an order dated 30.12.2011, the total income of the assessee was determined by the Assessing Officer at Rs.33,76,869/- as under:-

(i) Unexplained investment made in Mutual Rs.20,00,000/- Fund (ii) Cash deposits with ICICI Bank Rs.11,55,499/-

(iii) Unexplained expenditure incurred through Rs. 2,21,499/- HDFC Credit Card

Against the order passed by the Assessing Officer under section 144/147, an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submissions made by the assessee and the material brought on record, the ld. CIT(Appeals) deleted the additions of Rs.20,00,000/- and Rs.11,55,499/- made by the Assessing Officer to the total income of the assessee on account of unexplained investment made in Mutual Fund and unexplained cash deposits with ICICI Bank respectively for the following reasons given in paragraph no. 7 of his impugned order:-

“7. I have carefully considered the facts of the case, submissions of assessee and his AR and the information provided by Calcutta Province of the Society of Jesus. There appears to be some irregularity in the handling of funds of St. Lawrence High School. Assessee has submitted that he was used by the management of the school in these financial irregularities. He was not fully aware of the implications of these financial transactions and had only acted at the behest of the management of the school. On the other hand the Calcutta Province of the Society of Jesus has informed that Sri George Thomas had committed some irregularity but ultimately he was made to return the money to St. Lawrence High School. It is very difficult at this stage to ascertain who is at fault. Whether it is Sri George Thomas or the management of St. Lawrence High School. However, one thing is certain that money belong to St. Lawrance High School which may had been temporarily diverted but ultimately it has gone back to St. Lawrence High School. There is nothing on record to suggest that Shri Geroge Thomas has in any manner being able to fully siphon of or utilized this money. Hence no income appears to have accrued in the hands of Sri George Thomas. In their reply dated 26.01.2016, Calcutta Province of the Society of Jesus has informed that notice u/s 148 was issued to St. Lawrence High School and ./2016 Assessment year: 2008-2009 Page 3 of 5 order has been passed in that case. Thus any irregularity regarding the source of cash deposit or any other deposit has to be looked into in the hands of St. Lawrence High School. So far as expenditure to credit card is concerned, it is not clear as to who was the actual beneficiary. Under the circumstances, it is presumed that Sri George Thomas had spent the amount on his personal expenses and these could not have been refunded to the St. Lawrence High School. Hence this expenditure of Rs.2,21,370/- is treated as income of the assessee and addition to this extent is confirmed. However, balance addition of Rs.31,55,499/- is deleted for the reason mentioned above. Hence, addition of Rs.2,21,370/- only is sustained”.

Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal on the following grounds:-

“(1) The Ld. CIT (A) has erred in admitting and acting upon additional evidence in the form of reply received from Calcutta Province of Society of Jesus & also on some documents which were purported to have been submitted to A.O. at the stage of stay petition for collection of demand i.e. after the completion of the assessment proceedings. Therefore, as per law all these constituted fresh evidence.

(2) That on the facts and the circumstances of the case the Ld. CIT(A) is not justified in giving relief of Rs.31,55,499/- by holding that since the money belonged to St. Lawrence School Management and this was returned to the school no addition was called for without independently verifying the source of money at the hands of the assessee by checking/ verifying the bank account details of the assessee in which the deposits have been made/ from which the investments are stated to have been made.

(3) That on the facts and the circumstances of the case the Ld. CIT(A) erred in allowing such relief without verifying from the accounts of the school as to how the money had been accounted for in its books of accounts and how the same had been considered for computing total income of the school”.

At the time of hearing fixed in this case on 11.05.2017, none appeared on behalf of the assessee. Even there was no appearance on behalf of the assessee at the time of hearing fixed in this case earlier on 29.09.2016, 30.11.2016, 11.01.2017 and 23.02.2017. Keeping in view this non-compliance on the part of the assessee, this appeal of the ./2016 Assessment year: 2008-2009 Page 4 of 5 revenue is being disposed of ex-parte qua the respondent-assessment after hearing the arguments of the ld. D.R. and perusing the relevant material available on record. As rightly submitted by the ld. D.R., relief has been given by the ld. CIT(Appeals) to the assessee by deleting the additions of Rs.20,00,000/- and Rs.11,55,499/- made by the Assessing Officer on account of unexplained investment made in Mutual Funds and unexplained cash deposits with ICICI Bank respectively by relying on the correspondence made with Calcutta Province of the Society of Jesus, who runs St. Lawrance High School without giving any opportunity to the Assessing Officer to verify the same. As pointed out by him in this regard, the said correspondence was not even available when the assessment was framed by the Assessing Officer vide an order dated 30.12.2011 passed under section 144/147. After having considered the entire material available on record including especially the orders of the authorities below, I find merit in the contention of the ld. D.R. Accordingly, I set aside the impugned order of the ld. CIT(Appeals) on the issues raised by the Revenue in this appeal and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the additional evidence filed by the assesese for the first time before the ld. CIT(Appeals) in the form of correspondence with Calcutta Province of the Society of Jesus. Needless to observe that the Assessing Officer shall afford proper and sufficient opportunity of being heard to the assessee.

In the result, the appeal of the Revenue is treated as allowed for statistical purposes.

ITO, WD-59(1), KOLKATA, KOLKATA vs. GEORGE THOMAS, KOLKATA