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Income Tax Appellate Tribunal, KOLKATA ‘B(SMC
Before: Shri P.M. Jagtap
Per Shri P.M. Jagtap, A.M..: This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax Appeal-11, Kolkata dated 22.12.2015.
2. Grounds No. 1 and 6 raised by the assessee in this appeal are general, which do not call for any specific adjudication.
At the time of hearing, the ld. counsel for the assessee has not pressed Ground No. 3 raised by the assessee in this appeal relating to the addition of Rs.64,896/- made on account of interest on FDR. The same is accordingly dismissed as not pressed. ./2016 Assessment year: 2008-2009 Page 2 of 8
The issue raised in Ground No. 2 relates to the addition of Rs.10,38,284/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of the alleged unexplained investment found to be made by the assessee in Bank deposit.
The assessee in the present case is an individual, who is engaged in the business of manufacturing of Mustard Oil. The return of income for the year under consideration was filed by him on 30.09.2008 declaring total income of Rs.3,62,697/-. As per the information received by the Assessing Officer, the assessee was found to have made investment of Rs.2,91,463/- and Rs.7,46,821/- in FDRs with UCO Bank, Beadon Street Branch, Kolkata on 24.07.2007 and 06.06.2007 respectively, but neither the said investment nor the interest earned thereon was disclosed by him in the return of income filed for the year under consideration. He, therefore, required the assessee to offer his explanation in the matter. In reply, it was submitted by the assessee that there was no fresh investment made in the FDs during the year under consideration and the investment found to be made was on account of transfer from one account to the F.D. account. It was also submitted by the assessee that the source of the said investment made originally was cash of Rs.6,13,200/- received by her mother Smt. Bhagwati Biswas, which was inherited by her from the husband on his death. It was submitted that since she was not having a Permanent Account Number, the cash was invested in Bank F.D. in the name of the assessee and after having withdrawn the same in the financial year 2008-09, the assessee had expended the same for the treatment of his mother. Affidavit of Smt. Bhagwati Biswas, mother of the assessee, was also filed by the assessee to support and substantiate this contention. The said evidence filed by the assessee in the form of affidavit of her mother, however, was not found to be reliable by the Assessing Officer on the following grounds:- “(1) As noted, it was mentioned of Sl. No. 2 of the said submission that the investment was transferred from one ./2016 Assessment year: 2008-2009 Page 3 of 8
account to fixed deposit account of the same bank, i.e. UCO Bank, Beadon Street Branch, Kolkata-6, which leads to the conclusion that there was fund transfer from one account to another.
But, in the affidavit was found otherwise since it was mentioned of Sl. No. 3 therein that the mother of the assessee was having cash fund to the tune of Rs.6,13,200/- which was claimed to be deposited into fixed deposit account of the assessee.
The affidavit claimed to explain the source of Rs.6,13,200/- but the investment in question is of Rs.10,38,284/-“.
He, therefore, concluded that the affidavit of his mother filed by the assessee was nothing but an after-thought and treating the investment found to be made by the assessee in the Bank deposits as unexplained, he made the addition of Rs.10,38,284/- to the total income of the assessee in the assessment completed under section 143(3) vide an order dated 16.12.2010.
Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging, inter alia, the addition of Rs.10,38,284/- made to his total income on account of unexplained investment allegedly made in the Bank deposits. During the course of appellate proceedings before the ld. CIT(Appeals), the following submission in writing was made by the assessee in support of his case on this issue:- "It is humbly prayed that Ld. AO has added certain amount of Fixed Deposit amounting to Rs.10,38,284/- on the ground that the assessee has not disclosed the same in his Balance Sheet for the FY 2007-08.
In regard to the above I would like to explain that during the course of hearing the assessee has explained that these Fixed Deposits are actually belong to her mother Smt. Bhagwati Biswas. Which she has made with the money she received on death of her husband amounting to Rs.6,13,200/- in the year 2003-04 and since she does not have any PAN Card hence she handed over this money to ./2016 Assessment year: 2008-2009 Page 4 of 8 his son, the assessee as a Caretaker to make FDR for her future security purpose. The above amount taking together interest accrued thereon become a sum of Rs.10,38,284/- on 06.06.2007 which was then renewed Vide her affidavit given before the Notary Public. Kolkata dt. 09.11.2010, she has confirmed the above facts.
The Ld. AO has cited certain irregularity in the above affidavit such as the amount mentioned in the affidavit was Rs.6,13,200/- but the investment in question is of Rs.10,38,284/-. But the fact is that she received the money immediately after her husband's death on 20.12.2000 & hence there is a gap of 6-7 years between date of receipt from her husband i.e. 20.12.2000 (date of death of her husband) & date of reinvestment i.e. 06/06/2007 & the Ld. A 0 has forget this fact. We are again submitting herewith copy of affidavit filed before the AO during scrutiny proceedings for your kind perusal.
Based on the aforesaid facts and on the circumstances of the case and the judicial pronouncements relied upon, it is submitted that the action of the AO of addition of amount of Fixed Deposit of Mother is bad in law, ab initio void and illegal & should be deleted”.
The ld. CIT(Appeals), however, did not find merit in the above submission made by the assessee. According to her, finding of fact was recorded by the Assessing Officer that the affidavit of his mother filed by the assessee to explain the source of investment was an after-thought. Accordingly on the basis of the said finding of the Assessing Officer, the addition made by the Assessing Officer on this issue was sustained by the ld. CIT(Appeals).
I have heard the arguments of both the sides and also perused the relevant material available on record. The ld. counsel for the assessee has filed additional evidence in the form of a letter dated 21.06.2016 issued by the concerned Bank, i.e. UCO Bank, Beaden Street Branch, Kolkata confirming that the investment in question made by the assessee in the Bank deposits was out of maturity proceeds of the investment made earlier in the bank deposits, which was renewed. As submitted by him, the said letter was obtained by the assessee from the Bank only on 21.06.2016 and since the same was not available either during the course ./2016 Assessment year: 2008-2009 Page 5 of 8 of assessment proceedings before the Assessing Officer or during the course of appellate proceedings before the ld. CIT(Appeals), the same could not be filed earlier. Although the ld. D.R. has raised a strong objection for admission of the said letter as an additional evidence on the ground that sufficient opportunity has already been given to the assessee by the Assessing Officer as well as by the ld. CIT(Appeals) to explain the source of investment in Bank deposits found to be made by the assessee, I find that the said investment was explained by the assessee right from the beginning as renewal of FDs earlier made with the Bank and the additional evidence now being filed by the assessee in the form of letter issued by the concerned Bank is just to support and substantiate the said explanation. The said additional evidence thus is very much relevant to decide the issue involved in the case of the assessee and keeping in view the same as well as the fact that the same was not available with the assessee earlier to file it before the Assessing Officer and the ld. CIT(Appeals), I admit the same as per Rule 29 of the Appellate Tribunal Rules, 1963 and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the said additional evidence. Ground No. 2 of the assessee’s appeal is accordingly treated as allowed for statistical purposes.
The issue involved in Ground No. 4 relates to the addition of Rs.3,41,122/- made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of difference in closing balance found in the Overdraft Account of the assessee.
In the balance-sheet filed along with the return of income, balance in the Overdraft Account with UCO Bank was shown by the assessee on the liability side as on 31.03.2008 at Rs.10,47,358/-. As per the Bank statement of the UCO Bank, the balance in the Overdraft Account of the assessee as on 31.03.2008 was appearing at Rs.7,06,236/-. During the course of assessment proceedings, the assessee was called upon by the Assessing Officer to explain the said difference and since no explanation ./2016 Assessment year: 2008-2009 Page 6 of 8 was offered by the assessee in this regard, the difference of Rs.3,41,122/- was added by the Assessing Officer to the total income of the assessee.
The addition of Rs.3,41,122/- made by the Assessing Officer on this issue was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and during the course of appellate proceedings before the ld. CIT(Appeals), the following explanation was offered by the assessee in order to reconcile the difference in the Overdraft balance:- "It is humbly prayed that Ld. AO has added a sum of Rs.3,41,122/- being the difference between the amounts of overdraft facility availed from UCO bank, as per balance sheet & the amount shown in the bank statement on the ground that the assessee has inflated the closing balance of the liability.
In regard to the above I would like to explain that since the business transactions are an ongoing process, it goes on and not stops even on the last day of the financial year. Businessmen receive cheques on everyday including on last day of the Financial Year similarly he issues cheques to the parties. Some of the cheques issued this year are presented for payment in the next Financial Year for which an Bank Reconciliation Statement is prepared. Each & every cheque was not presented on the same day. It took 2-3 days and sometimes even more time in clearing. In the instant case the assessee has issued cheques amount to Rs.2,21,000/- & Rs.99,840/- to one of his party Ms. Sambhu Traders, cheque of Rs.11,969/- & Rs.8,313/- for his LIC Premium which were cleared on 3rd , 4th April, 2008 & 3rd May, 2008. One of the cheque was later on cancelled & fresh cheque was issued in the month of June, 2008. We are submitting herewith the bank reconciliation statement citing therein all the details & copy of bank statement for the month of March, April & May, 2008 as a proof that same were cleared later on. Hence there is no question of inflated liability of Secured Loan.
Further it was established in the judicial pronouncement that if there be inflated liability in the balance sheet, then there must be corresponding inflated assets in the balance sheet which the Ld. AO has to identify. But in the instant case the Ld. AO has not mentioned any such amount.
./2016 Assessment year: 2008-2009 Page 7 of 8
Based on the aforesaid facts and on the circumstances of the case and the judicial pronouncements relied upon, it is submitted that the action of the A 0 of addition of difference in loan liability is bad in law, ab initio void and illegal & should be deleted”.
According to the ld. CIT(Appeals), the above explanation offered by the assessee, however, was not satisfactorily substantiated. She, therefore, proceeded to confirm the addition made by the Assessing Officer on this issue.
I have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the ld. counsel for the assessee referring to the submission made by the assessee on this issue before the ld. CIT(Appeals), the difference in the Overdraft balance in account with UCO Bank was explained by the assessee by pointing out that there were certain cheques issued by the assessee during the year under consideration but the same were not presented to Bank for payments upto 31.03.2008. He has submitted that a proper reconciliation statement, however, was not furnished by the assessee before the ld. CIT(Appeals) and in the absence of the same, the ld. CIT(Appeals) could not appreciate the explanation offered by the assessee in order to reconcile the difference in Overdraft balance in account. He has, therefore, prepared and furnished on record a reconciliation statement and urged that this matter may also be sent to the Assessing Officer for deciding the same afresh after verifying the said reconciliation statement. After considering all the facts and circumstances of the case, I find merit in this contention of the ld. counsel for the assessee. The impugned order of the ld. CIT(Appeals) on this issue is accordingly set aside and the matter is restored to the file of the Assessing Officer for deciding the same afresh after verifying the Bank reconciliation statement filed by the assessee and after giving the assessee one more opportunity of being heard. Ground No.4 is accordingly treated as allowed for statistical purposes. ./2016 Assessment year: 2008-2009 Page 8 of 8
The issue involved in Ground No. 5 relating to charging of interest under sections 234A, 234B and 234C is consequential in nature and the Assessing Officer is accordingly directed to allow the consequential relief, if any, to the assessee.
In the result, the appeal of the assessee is treated as partly allowed for statistical purposes. Order pronounced in the open Court on May 05, 2017.