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Income Tax Appellate Tribunal, ‘D’ BENCH
Before: Shri M.Balaganesh & Shri S.S.Viswanethra Ravi
This appeal by the revenue is directed against the order dated 15-10-2014 passed by the Commissioner of Income Tax(Appeals), Durgapur U/Sec 250 of the Act for the assessment year 2009-10.
None appeared for Respondent Assessee. Therefore, we proceeded to dispose of the appeal after hearing the Ld. DR of the Appellant Revenue and perusing the material available on record.
In this appeal, the Revenue has raised the following grounds of appeal:- A. That Ld CIT(A) failed to appreciate the fact of the case in its proper perspective from the point that assessee failed to put forth any convincing explanation against destination/utilisation of outgoing cash, booked under the disguise of instalment payment, particularly under the circumstances when the Smt. Uma Sen 1
datewise impugned cash going out of cash book were not deposited either directly in the loan account nor in the joint account maintained with husband wherefrom cheques were issued.
B. That Ld CIT(A) was not right in allowing relief against addition made under the head of 'Unexplained Investment' up to the extent of Rs.869208 out of total addition of Rs.976208 relying upon the ground that the same should not be taxed as the payments were made from joint A/c No 6620, all deposits of which were taxed in the hand of the husband, without appreciating the fact that datewise exodus of cash from books of wife was not deposited in the said A/c and issue had little relevance with the point of addition under consideration.
C. That Ld CIT(A) was not right in allowing relief the entire addition of ' Unexplained Expenditure' amounting to Rs. 2949272 particularly considering the circumstances that books were not jected in course of assessment and no loan/gift from husband has been shown in the books of the assessee for which the issue deserves to get set aside
D. That the appellant craves leave to add, alter, amend, modify, substitute, delete and/or rescind all or any grounds of appeal on or before final hearing.”
The brief facts of the case are that the assessee is an individual and engaged in the business of letting out of machinery and filed return of income on 29-03-2010 declaring an aggregate income of Rs. 1,89,984/-. Under scrutiny, notices U/sec 143(2) and 142(1) of the Act were issued. In response to such notices, the assessee was represented through her AR and filed books of account. During such proceedings the AO found that the assessee maintained two bank accounts one with HDFC Bank vide bearing account no.6620 with her husband, Sri Kalyan Sen and another with Mr. Debdurlav Sen bearing account no. 31694. The AO further found that the payments involving to an extent of Rs.13,03,812/- are not reflected in the cash book. According to AO neither the assessee nor her AR appeared before him and for such non-compliance, he added an amount to an extent of Rs.9,76,208/- u/s. 69 as unexplained investment.
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Besides above, the AO further found that the assessee has made payments towards instalments, according to him the same were also not reflected in the cash book and added to an extent of Rs.29,49,272/- u/s. 69C as unexplained expenses and passed order u/sec 144 of the Act.
Against which the assessee preferred an appeal before the CIT(A). Before him, the assessee contended that, she was having a joint account vide bearing no. 6620 in HDFC Bank with her husband, Sri Kalyan Sen and the impugned amount was added by the AO in her husband’s assessment for the AY 2009- 10, basing on which, the CIT-A deleted the impugned addition made by the AO. Relevant portions of submissions of assessee, remand report of the AO and replies of the remand report during the course of 1st appellate proceedings are reproduced herein below:-
(i) Submissions of Assessee:
"The cash payment in respect of the instalment payment in respect of JCB’s i.e1) JS80 2)JS 200 is partly made in cash and partly paid by Mr. Kalyan Sen (PAN:BDP52803P), the payments made in cash are also reflected in ledgers of JS-80 and JS-200, so these payments are not an unexplained one, so the addition made by the Ld.ITO as unexplained investment is not tenable and liable to be deleted. The detail explanation of the said amount i.e. Rs.9,76,208/-(i.e. amount paid in cash in respect of above machinery) is given below. a) Rs.1,07,000/- dated 21.05.2008 is not reflected in HDFC’s payment schedule for JS200, because it is a down payment which is pre condition for availing the finance facility. (Tax invoice of seller and statement of HDFC Bank is attached). b) Rs.1,44,868/- dated 22.06.2008 is a instalment payment which is made on 2nd July 2008, but due to mistake of an accountant it is entered on 22.06.2008, as it is also apparent from the order of Ld. ITO itself that the payment is made on 02.07.2008 and also shown in the payment schedule of HDFC Bank.
ITA No. 53/Kol/15 Smt. Uma Sen 3 c) Rs.1,44,868/-dated 06.10.2008 is also a instalment payment of HDFC for JS, 200 which is made on 03.10.2008 and it is same as (b) above. d) Rs.2,89,736/- dated 09.12.2008 it is also a instalment payment for the month of November and December which is made on 03.11.2008 and 02.12.2009 respectively. And these payment also reflected in payment schedule of HDFC Bank., e) Rs.1,44,868/- dated 04.03.2009 it is also a instalment payment which is made on 03.03.2009 and also reflected in payment schedule".
(ii) AO’s remand report dt: 9.12.2013:
"Unexplained investment: Rs.9,76,208/- (Para No: B of assessment order):
Under this head, the A.O. added up Rs.9,76,208/- as unexplained investment. During the remand proceedings the A/R of the assessee stated that the said payments were reflected in the Bank loan payment schedule but dates defer due to mistake on the part of the Accountant. On perusal of Cash Book and ledger copy of respect loan accounts and the submission of the A/R, it is found that out of the sum of Rs.9,76,208/-, an account of Rs.1,07,000/- was paid as down payment to Jayshree auto, Faridpur against loan vehicle loan shown in the cash book but not reflected in the payment schedule as the payment was made before purchase of the machine.
Rest of the amount i.e. Rs.8,69,208/- was paid as repayment of loan account No. 3216075 of Uma Sen in HDFC Bank which was funded by another HDFC Savings Bank account No. 6620 jointly held with her husband Sri Kalyan Sen and reflected in the Cash Book".
(iii) Reply of the Assessee to the remand report:
"Unexplained investment: Rs.9,76,20B/- (Para No.: B of assessment order) and Unexplained Expenses: Rs.29,49,272/- (Para No.: C of assessment order): Sir the appellant was the owner of three JCEs during the financial year 2008-09 JCB JS 200 (financed By ICICI) JCB JS 80 (financed By HDFC) 3. JCB JS 200 (financed By HDFC)
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The details of amount paid towards instalment is given below :-
Particulars Financed By Loan Installment Amount taken by the paid during the FY Ld.AO as instalment 2008-09As per payment in his payment schedule assessment order of the finance Co. JCB JS ICICI 7,41,246 17,72,474 200 JCB JS HDFC 13,03,812 13,03,812 80 JCB JS HDFC 7,99,680 7,99,680 200 amount paid during the 28,44,738 38,75,966 FY 2008-09
It is apparent from the above table that the Ld. A. O. has considered a hypothetical figure in respect of instalment payment of ICICl, instead of taking Rs. 7,41,246/- as instalment payment he had taken Rs.10,72,474/- as instalment payment. Sir, I would also like to say that the out of the above amount (i. e. Rs.28,44,738/-) Rs.27,20,792/-is already reflected and explained in the books of account of the appellant, ledger of the all three JCBs has been attached. So, I request you to please deleted the addition made by the Ld. A.O. by invoking Sec. 69 and Sec. 69C As there is no unexplained investment or unexplained expenses on the part of the appellant.
Considering the above, the CIT-A was of the opinion that the Assessee was holding a joint account with her husband and found that the deposits as found and added by the AO to the Assessee were already examined and added in the hands of her husband and deleted the same and observation of which is reproduced herein below:
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I have gone through the written submission of the appellant as well as the A.O. in his remand report. As per the remand report out of Rs. 9,76,208/-, Rs.1,07,000/- has been made as down payment for the purchase of machinery and the same is explained in the remand report. Regarding the balance amount of Rs. 8,69,208/, it is seen that this amount has gone out of the joint Bank Account bearing No. 6620 of HDFC Bank, Durgapur Branch. The joint Account is in the names of Shri Kalyan Sen, husband of Smt. Uma Sen and the appellant and the deposits in this account have already been added in the hands of her husband i.e. Shri Kalyan Sen for the assessment year 2009-10. Hence since the source of the payment of Rs. 9,76,208/- has already been explained, the A.O. was not justified in disallowing and making addition of this amount. Accordingly the entire addition of Rs. 9,76,208/- is hereby deleted.
Before us, the Ld.DR relied on the facts of the case and on the order of AO. The assessee submitted that the CIT-A considered the remand report as forwarded by the AO wherein no adverse contentions were raised by the AO and relied on the order of CIT-A.
We find that CIT-A deleted the said addition made on account of unexplained investment on the basis of remand report as sought by him on the submissions as made by the assessee that the deposits in the said bank account was verified in the assessment of her husband and added to his account. In such circumstances, we find no merit in the issue of revenue and ground concerning the same is dismissed.
Ground no-2 is that the AO found that the assessee has made payments towards instalments, according to him the same were not reflected in the cash book and added to an extent of Rs.29,49,272/- u/s. 69C as unexplained expenses. In challenge, the Assessee during the 1st appellate proceedings, submitted as under:
ITA No. 53/Kol/15 Smt. Uma Sen 6 (i) Submissions of Assessee:
"Rs.29/49/272/- as described as unexplained expenses u/s. 69C out of which Rs.14,27,503/- is paid through the bank account no. 6620 of HDFC Bank (As discussed in Para B of assessment order/this is joint account with appellants husband i. e. Mr. Kalyan Sen (BDPS280JP) who is also a income tax assessee, The same had already been added in the assessment order dated: 30,12.2011 for the assessment year 2009-2010 of Kalyan Sen (PAN: BDAPS2803P) so to avoid the double taxation of the same income it should also to be deleted from the assessment of appellant"
(ii) AO’s remand report dt: 9.12.2013:
"Regarding addition of Rs.29,49,272/- under the head "unexplained expenses", the A/R of the assessee stated that out of the said sum/ an amount of Rs.14, 27,503/- had been paid as EMI through bank and as the said undisclosed bank account has been considered while making assessment of Sri Kalyan Sen. husband of the assessee, no double taxation should be made.
On going through the records, it is found that an amount of Rs.14,27,503/- was paid EMI against vehicle loan through the alleged undisclosed bank account No.6620 in HDFC Bank jointly maintained with her husband Sri Kalyan Sen as discussed above. Hence the balance amount of Rs.15,21,769/- is remained unexplained".
(iii) Reply of the Assessee to the remand report:
“Unexplained investment : Rs. 9,76,208/- ( Para No. B of assessment order) and Unexplained Expenses : Rs.29,49,272/- (Para No. C of assessment order) : Sir the appellant was the owner of three JCBs during the financial year 2008-09 1. JCB JS 200 (financed By ICICI) 2. JCB JS 80 (financed By HDFC) 3. JCB JS 200 (financed By HDFC)
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The details of amount paid towards instalment is given below :-
Particulars Financed By Loan Installment Amount taken by the paid during the FY Ld.AO as instalment 2008-09As per payment in his payment schedule assessment order of the finance Co. JCB JS 200 ICICI 7,41,246 17,72,474 JCB JS 80 HDFC 13,03,812 13,03,812 JCB JS 200 HDFC 7,99,680 7,99,680 amount paid during the FY 28,44,738 38,75,966 2008-09
It is apparent from the above table that the Ld. A. O. has considered a hypothetical figure in respect of instalment payment of ICICl, instead of taking Rs. 7,41,246/- as instalment payment he had taken Rs.17,72,474/- as instalment payment.
Sir, I would also like to say that the out of the above amount (i. e. Rs. 28, 44,738/-) Rs.27,20,792/- is already reflected and explained in the books of account of the appellant, ledger of the all three JCB’s has been attached.
So, I request you to please deleted the addition made by the Ld. A.O. by invoking Sec. 69 and Sec. 69C
As there is no unexplained investment or unexplained expenses on the part of the appellant.
Considering the above, the CIT-A was of the opinion that the Assessee was holding a joint account with her husband and found that the deposits as found and added by the AO to the Assessee were already examined and added in the hands of her husband and deleted the same and observation of which is reproduced herein below: 6.3 I have gone through the findings of the AO. in his assessment order as well as I have gone through the findings of the AO in the remand report. I have also given my sympathetic consideration to the submission of the appellant. In this regard, I am of the considered opinion that there is substantial force 'in the submission of the appellant. In this case, the A.O. has brought out the alleged discrepancies in the payment of Smt. Uma Sen 8
instalments for purchase of machinery in a detailed chart with three columns at page 3 of the assessment order. As per the chart, it is seen that the total amount of the first column comes to Rs. 17,72,474/-, the total of the second column comes to Rs. 7,99,680/- and the total of the third column comes to Rs. 13,03,812/-. Thus the total of these three columns in the chart comes to Rs. 38,75,966/-. Out of this total amount of Rs.38,75,966/-, the A.O. has disallowed Rs. 9,76,208/- as unexplained investment and has disallowed balance amount of Rs. 29,49,272/- as unexplained expenses. As per the AO. in the first column, the total amount of Rs. 17,72,474/- has gone out of ICICI Bank. However, the AO. has not examined this account in its proper perspective as the various cheques issued from this account were subsequently bounced and the total of such bounced cheques comes to Rs. 10,31,228/- and the A.O. has included these bounced cheques in arriving at the figure of Rs. 17,72,474/-. Thus if the bounced cheques of Rs.10,31,228/- is excluded from this amount of Rs. 17,72,474/-, then the actual amount of payment comes to Rs. 7,41,246/-. It is seen that out of Rs. 7,41,246/-, the payment of Rs.6,17,330/ was made from the Cash Book of the appellant and from M/s.Sen Enterprise i.e. the proprietary concern of appellant's husband, Shri Kalyan Sen. The balance amount of Rs. 1,23,916/- has been paid on 20.10.2008 from the joint account of Shri Kalyan Sen and Smt. Uma Sen in HDFC Bank. It is worth mentioning that the deposits in the HDFC Bank Account have already been added in the hands of Shri Kalyan Sen. Accordingly there is no further need to make such further addition in the hands of Smt. Uma Sen. Accordingly the amount of Rs. 17,72,474/- i.e. the total amount of the first column of the assessment order at page 3 is fully explained. In the second column of the chart at page 3 of the assessment order, the total amount has been shown at Rs. 7,99,680/-. After examining the cash Book and other details of the appellant, it is seen that Rs. 2,66,560/- has been paid out of the Cash Book of the appellant and Rs. 5,33,120/- has been paid from M/s. Sen Enterprise, i.e. the proprietary concern of the husband of the assessee, Shri Kalyan Sen. Thus the total amount of Rs. 7,99,680/- as appearing in the second column of the chart at page 3 of the assessment order is hereby explained. Now coming to Rs. 13,03,812/- as appearing in third column of the chart at page 3 of the assessment order, it is seen that the same amount has been paid from the Cash Book of the appellant and accordingly the same is explained. This is further to mention that once the bounced cheque amounting to Rs. 10,31,228/- is taken out of the total figure of Rs. 38,75,966/- as arrived in the chart at page 3 of the assessment order, then the actual amount of the alleged discrepancy made by the A.O. comes to Rs. 28,44,738/-. As discussed in Para 4 of this order, it is seen that out of Rs.28,44,738/-, Rs.9,76,208/- has already been explained and deleted. Similarly the balance amount as discussed above is also found to have been explained, as the source of some payment is found in the books of account of the appellant and some payments had gone from M/s. Sen Enterprise and there are also payments out of the joint account in HDFC Bank. Since the Smt. Uma Sen 9 deposits of HDFC Bank account has already been added in the hands of appellant’s husband, Shri Kalyan Sen, the first name in the joint Account of the HDFC Bank, Durgapur Branch, there is no need for further addition on this issue in the case of the appellant. Accordingly the addition of Rs.29,49,272/- by the AO, which is made in a very circuitous manner, is hereby deleted.
Before us, the Ld.DR relied on the facts of the case and on the order of AO. The Assessee submitted that the CIT-A considered the remand report as forwarded by the AO wherein no adverse contentions were raised by the AO and relied on the order of CIT-A. We find that the CIT-A examined the chart as prepared by the AO and found that as per the chart the total payment of instalments for purchase of machinery of Rs. 38,75,966/- Out of which the AO already disallowed Rs. 9,76,208/- as unexplained investment as discussed and deleted by us covering ground no-1 above and has disallowed balance amount of Rs. 29,49,272/- as unexplained expenses without examining the non-payment of various cheques issued from the said account. With regard to the balance amount as discussed by the CIT-A the source of some payment is found in the books of account of the assessee and some payments were from M/s. Sen Enterprise and there are also payments out of the joint account in HDFC Bank. We find that CIT-A deleted the said addition made on account of unexplained investment on the basis of remand report as sought by him on the submissions as made by the assessee that the deposits in the joint Account of the HDFC Bank, Durgapur Branch was verified in the assessment of her husband and added to his account. In such circumstances, we find no merit in the issue and ground no-2 concerning the same is dismissed.
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