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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri Mahavir Singh & Shri Waseem Ahmed
आदेश/O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the Revenue is arising out of order of Commissioner of Income Tax (Appeals)-XXXVI, Kolkata in appeal No.411/CIT(A)-XXXVI/Kol/R- 1,Mid./10-11 dated 04.11.2011. Assessment was framed by ACIT, Ranje- 1,Midnapore u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 23.12.2010 for assessment year 2008-09.
At the outset, it was noticed that the assessee has prepared two sets of audited financial statements one for the Income Tax and other for the bank. The financial statements prepared for the bank were having inflated figures of opening stock, capital employed, land & building and drawings etc. and the reasons for the inflated figures is to show a healthy picture of the business in ITO Wd-1(1), Mid. v. Kala Baran Banerjee Page 2 order to have the cash credit facility from the bank. However the figure of the net profit was shown exactly the same in the both sets of audited balance sheet. The AO rejected the return submitted with the income tax department under section 145(3) of the Act and considered the balance sheet submitted with the bank for the purpose of assessment. Accordingly the AO has made the addition of the difference shown between both the set of Balance sheet as enumerated below : (i) difference in opening stock of Rs.9,80000/-; (ii) difference in opening capital of Rs.22,45,038/-; (iii) difference in land & building as unaccounted investment of Rs.8,99,870/- (iv) difference in drawings as unexplained expenditure of Rs.6,67,506/-.
Aggrieved assessee preferred an appeal before the CIT(A) who has deleted the addition made by the AO, having the reliance on the judgment of Hon’ble Madras High Court in the case of CIT Vs N. Swamy (2000) 241 ITR 363 (Mad), it is held that the assessee’s income is to be assessed by the ITO on the basis of material which is required to be considered for the purpose of assessment and not on the basis of the statement which the assessee may have given to a third party, even if it be a bank. The mere fact that the assessee had made such a statement by itself cannot be treated as having resulted in an irrebuttable presumption against the assessee. The burden of proving that the assessee had undisclosed income is on the Revenue. That burden cannot be said to be discharged by merely referring to the statement given by the assessee to a third party.
Aggrieved, Revenue is in appeal before us on the following grounds : “1. That on the facts and in the circumstances of the case, the Ld. CIT(A)-XXXVI, Kolkata, has erred both in facts and in law in deleting the addition of Rs.9,80,000/- made by the Assessing Officer in respect of the difference of Opening Stock as per audited a/c. as at 31-03-2008 submitted by the assessee to the Bank and as per audited a/c as at 31- 03-2008 submitted by the assessee along with the Return of Income.
ITO Wd-1(1), Mid. v. Kala Baran Banerjee Page 3 2. That on the facts and in the circumstances of the case, the Ld. CIT(A)-XXXVI, Kolkata, has erred both in facts and in law in deleting the addition of Rs.22,45,038/- made by the Assessing Officer in respect of the difference in Opening Capital as per audited a/c as at 31-03-2008 submitted by the assessee to the Bank and as per audited a/c as at 31- 03-2008 submitted by the assessee along with the Return of Income.
That on the facts and in the circumstances of the case, the Ld. CIT(A)-XXXVI, Kolkata, has erred both in facts and in law in deleting the addition of Rs.8,88,870/- made by the Assessing Officer U/s 69B in respect of the difference in Land & Building as unaccounted investment as per audited a/c as at 31-03-2008 submitted by the assessee to the Bank and as per audited a/c as at 3-03-2008 submitted by the assessee along with the Return of Income.
That on the facts and in the circumstances of the case, the Ld. CIT(A)- XXXVI, Kolkata, has erred both in facts and in law in deleting the addition of Rs.6,67,506/- made by the Assessing Officer U/s 69C in respect of the difference in Drawings as unexplained expenditure as per audited a/c as at 31-03-2008 submitted by assessee to the Bank and as per audited a/c as at 31-03-2008 submitted by the assessee along with the Return of Income.”
Mr. Amitabh Chowdhury Ld. Departmental Representative appearing on behalf of Revenue and the Mr. Sujit Sekhareswar Roy Ld. Authorized Representative appearing on behalf of assessee.
We have heard rival parties and perused the materials available on record. Before us, Ld. DR submitted that the additions had been deleted by Ld. CIT(A) without having any remand report from the AO and the submission made by the AR before CIT(A) has never been confronted by AO. So in this case Ld. DR prays that matter should be remitted back to the file of AO with a direction to decide the matter afresh. On the contrary, Ld. AR supported the order of Ld. CIT(A).
After careful examination and the facts of the present case we observe that order passed by AO is on the basis of details which was submitted before Bank for sanctioning loan and AO rejected the financial statements submitted by assessee to Department. However, it was further observed by Ld. CIT(A)
ITO Wd-1(1), Mid. v. Kala Baran Banerjee Page 4 has given the relief to assessee after having reliance in the judgment stated above. It is further observed that the assessment has actually not been carried out in this case. The CIT(A) should have restored the file to the AO with the direction to frame the assessment as per law on the basis of information submitted in the Income Tax Return. However in the interest of justice and fair play we are of the view that this matter should be restored to the file of AO for fresh examination and pass order according to law after providing reasonable opportunity of being heard to assessee. It is also important to note that the assessee should cooperate in the assessment proceedings.