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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
Per Shri P.M. Jagtap :- This appeal is preferred by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-VIII, Kolkata dated 12.12.2012, whereby he deleted the additions of Rs.27,49,417/- and Rs.10,95,056/- made by the Assessing Officer on account of unexplained credit card payments and unexplained capital introduction respectively.
The assessee in the present case is an individual, who derives income from salary, business and other sources. The return of income for the year under consideration was filed by him on 30.07.2009 declaring total income of Rs.3,71,139/-. During the course of assessment proceedings, it was found by the Assessing Officer that the assessee has made credit card payments to three Banks aggregating to Rs.27,49,417/-. ./2013 Assessment year: 2009-2010 Page 2 of 6 He also found that the assessee has also introduced a capital of Rs.10,95,056/- in M/s. Peoples Tannery. In this regard, the assessee was called upon by the Assessing Officer to establish on evidence the source of credit card payments as well as the capital introduced in M/s. Peoples Tannery during the year under consideration. The assessee, however, failed to offer any explanation to the satisfaction of the Assessing Officer despite several opportunities given in this regard. The Assessing Officer, therefore, was left with no option but to complete the assessment on the basis of material available on record and in the assessment so completed under section 143(3) vide an order dated 28.11.2011 additions of Rs.27,49,417/- and Rs.10,95,056/- were made by the Assessing Officer to the total income of the assessee on account of unexplained credit card payments and unexplained capital introduction respectively.
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 both the additions made by the Assessing Officer on account of unexplained credit card payments and unexplained capital introduction. During the course of appellate proceedings, detailed written submissions were filed by the assessee along with documentary evidence in support of his case and after taking into consideration the same, the ld. CIT(Appeals) deleted both the additions made by the Assessing Officer for the following reasons given in his impugned order :- “5.1.3. I have carefully considered the material brought on record, the findings recorded by the Assessing Officer as well as the arguments and submission put forth on behalf of the appellant. I have also gone through the ratio laid down in the judgements cited on behalf of the appellant. In this case, the Assessing Officer has sought to tax the source of expenditure incurred through credit cards. Section 68 requires that there is a credit in the books maintained by an assessee; such credit is of a sum during the previous year; and the assessee offers no explanation about the nature and source of such credit; or the explanation offered by the assessee is not in the opinion of the assessing authority, satisfactory. Then the sum so credited may be charged to tax as income of the assessee of that previous year. Section 2(12A) of ./2013 Assessment year: 2009-2010 Page 3 of 6
the IT Act coins a definition of the expression 'books or books of account' so as to include - -ledgers -day-books; -account books, and -other books Whether kept- (a) In the written form or (b) As print outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device.
Books must be those of the assessee and that a pass book supplied by the bank to the assessee cannot be regarded as a book of the assessee, that is, a book maintained by the assessee or under his instructions. On the same analogy, the entries in the credit cards managed by a financial institution or a bank could not by itself be considered as a book of account regularly maintained for the purposes of section 68 of the Income-tax Act. May it as may be, in the instant case, it is not the case of the Assessing Officer that the credit in the credit cards aggregating to Rs. 27,49,417/- on a particular date through only a single entry. The credits in the accounts are through numerous transactions throughout the year and the sources of which would differ. From the record, it would appear that the appellant has explain the different sources, whereas the Assessing Officer has not pointed out a single item of credit which could be said to be cash credit introduced from unexplained sources during the relevant financial year under consideration. On the other hand, he should have proved that each and every item of expenditure incurred through the credit card was from unexplained sources. By rejecting the explanation offered and by insisting that the appellant did not furnish cash flow chart, it could not be said that the Assessing Officer has discharged the burden of proof.
Having regard to the facts and circumstances of the case, I am of the opinion that the addition on account of unexplained cash credit of Rs.27,49,417/- as made by the Assessing Officer under sec. 68 of the Income-tax Act is unjustified. Therefore, the addition made by him under sec. 68 of the Act at Rs.27,49,417/- is hereby deleted and this ground of appeal of the appellant is allowed.
I have carefully considered the material placed on record and the submissions put forth on behalf of the appellant. From the material placed on record, it is amply clear that it is not a fresh credit introduced in the books during the year under consideration, but a debit balance in the name of the appellant in the books of M/s. S.G. International Pvt. Ltd. taken over by ./2013 Assessment year: 2009-2010 Page 4 of 6
Peoples Tannery. It is well settled that the if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory, there is prima facie evidence against the assessee, viz., the receipt of money, and if he fails to rebut the same, the said evidence being unrebutted can be used against him by holding that it is a receipt of an income nature. While considering the explanation of the assessee, the department, however, cannot act unreasonably - Sumati Dayal v. CIT [1995} 80 Taxman 89/214 ITR 801 (SC). It is not the case of the Assessing Officer that the cash credit of Rs.10,95,056/- appearing in the books of the appellant remained unexplained. The Assessing Officer has not brought on record any sort of material evidence to establish that the appellant has not discharged his burden of proof or that the explanation offered by the appellant was not satisfactory. The ratio laid down by the Hon'ble Supreme Court in the case of CIT v. P Mohanakala [2007} 291 ITR 278(SC) that the opinion of the Assessing Officer is required to be based on proper appreciation of material and other attending circumstances available on record is squarely applicable to the facts and circumstances of the present case. The Assessing Officer has not brought any material on record to reach to the conclusion that the explanation offered by the appellant is not satisfactory. In view of the facts, I am of the opinion, this is a case where the Assessing Officer failed to discharge his burden of proof. Therefore, in the light of the ratio laid down by the Hon'ble Supreme Court in the cases cited supra, the addition of Rs.10,95,056/- on account of unexplained cash credit under sec. 68 of the Act is unjustified. The addition is accordingly deleted”.
Aggrieved by the order of the ld. CIT(Appeals), the revenue has preferred this appeal before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. In Ground No. 1 of its appeal, the Revenue has raised a preliminary issue that both the additions made by the Assessing Officer to the total income of the assessee have been deleted by the ld. CIT(Appeals) by relying on certain documents filed by the assessee for the first time before him without giving any opportunity to the Assessing Officer to verify the same and there is thus a clear violation of Rule 46A of the Income Tax Rules, 1962. While supporting the revenue’s case on this issue, the ld. D.R. has invited our attention to the assessment order passed by the Assessing Officer under section 143(3) as ./2013 Assessment year: 2009-2010 Page 5 of 6 well as the copy of the relevant order-sheet entries recorded by the Assessing Officer during the course of assessment proceedings and the copy of ASR submitted by the Assessing Officer to the concerned Additional CIT dated 25.02.2013 to point out that the various documents submitted by the assessee before the ld. CIT(Appeals) were not filed before the Assessing Officer during the course of assessment proceedings and the same constituting additional evidence was relied upon by the ld. CIT(Appeals) to give relief to the assessee on both the issues without giving any opportunity to the Assessing Officer to verify the same. When this position clearly evident from the relevant documents placed on record was confronted to the ld. counsel for the assessee, he has not been able to dispute the same. It is thus clear that the ld. CIT(Appeals) vide his impugned order has deleted both the additions in question made by the Assessing Officer by relying on the additional evidence filed by the assesese for the first time before him without giving any opportunity to the Assessing Officer to verify the same and there is a clear violation of Rule 46A of the Income Tax Rules, 1962. We, therefore, set aside the impugned order of the ld. CIT(Appeals) on both the issues involved in this case and restore the matter back to the Assessing Officer for deciding the same afresh after verifying the entire evidence brought on record by the assessee. Needless to observe that the Assessing Officer shall give proper and sufficient opportunity of being heard to the assessee.