DHARANI DHAR PANDA,GANJAM vs. ITO, PHULBANI WARD, PHULBANI

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ITA 347/CTK/2016Status: DisposedITAT Cuttack17 January 2017AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer failed to provide reasons for rejecting the assessee's explanation, making the addition unsustainable. The CIT(A)'s rejection of further submissions was also inappropriate given their broad appellate powers.

What were the facts?

The Assessing Officer added Rs. 7,25,000/- to the assessee's income under Section 68 as unexplained cash credits. The assessee failed to provide an explanation during assessment, and the CIT(A) confirmed the addition, not accepting subsequent submissions due to procedural violations.

What were the issues?

Whether the addition made under Section 68 is sustainable when the Assessing Officer has not provided reasons for rejecting the assessee's explanation, and whether the CIT(A) erred in rejecting subsequent submissions.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH,

Before: SHRI N.S SAINI

For Appellant: Shri D.K.Sheth, AR
For Respondent: Shri D.K.Pradhan, DR
Pronounced: 17/01

This is an appeal filed by the assessee against the order of CIT(A)-1,

Bhubaneswar, dated 17.6.2016, for the assessment year 2011-2012.

2.

The sole issued involved in this appeal is that the ld CIT(A) erred in

confirming the addition of Rs.7,25,000/- made by the Assessing Officer u/s.68

of the Act.

3.

I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. In the instant case, the

2 ITA No.347 /CT K/20 16 Asse ssme nt Ye ar :2011-12

Assessing Officer added Rs.7,25,000/- u/s.68 of the Act by observing as

under:

“During the assessment proceedings the assessee failed to explain the credits into the different bank accounts made through cheques and cash on various dates during the year under consideration as given below. i) Bank A/c no.50422200020840 of Syndicate Bank, Berhampur Rs. 1,06,000/- ii) BankA/cno.30330943300OfSBI, Bhanjanagar Rs.4,22,550/- iii) Bank A/c no. 11010912902 of SB1, Balipadar. Rs. 65,306/- iv) Bank A/c no.087510027000277 of Andhra Bank, Nimina Rs. 1,32,000/- Total Rs. 7,25,000/-

Accordingly the same is added to the total income of the assessee being unexplained cash credit u/s 68 of the IT Act, 1961 as no explanation was offered regarding the credits”

4.

On appeal, ld CIT(A) observed that AR of the assessee has filed written

submission and materials explaining the source of deposit. He did not accept

the same as there was violation of Rule 46A of Income Tax Rules and,

therefore, confirmed the action of the Assessing Officer.

5.

Before me, ld A.R. of the assessee submitted that the Assessing Officer

has made the addition u/s.68 of the Act without discussing why the plausible

explanation of the assessee was not accepted by him. He submitted that an

assessment proceedings is a quashi-judicial proceedings and the Assessing

Officer is bound to disclose the reasons for not accepting the explanation given

by the assessee during the course of assessment proceedings. Without doing

so, the addition made cannot be sustained in the eyes of law.

6.

Ld D.R. supported the orders of lower authorities.

3 ITA No.347 /CT K/20 16 Asse ssme nt Ye ar :2011-12

6.

I find from the above quoted order of the Assessing Officer that he has

not discussed in his order what was the query raised by him before making

the addition of Rs.7,25,000/- u/s.68 of the Act and what was the reply of the

assessee to the same and why the reply of the assessee was not accepted.

The assessment proceedings being a quashi judicial proceedings, the

Assessing Officer is bound to give reasons in assessment order before making

the addition as to why the explanation offered by the assessee is not

acceptable. Without doing so, the addition made is not sustainable in law.

Further, the CIT(A) did not accept the written submission and materials filed

before him explaining the source of deposit observing that it is in violation of

Rule 46A of Income Tax Rules, 1962. I do not appreciate this approach of the

CIT(A). The Hon’ble Supreme Court in CIT vs. Kanpur Coal Syndicate (1964)

53 ITR 225 (SC) has held that CIT(A) has plenary power in disposing an

appeal. The scope of his power is co-terminus with that of ITO. He can do

what the ITO can do and also direct him to do what he has failed to do. In the

case of Sreelekha Banerjee vs CIT, (1963), 49 ITR 112 (SC), the Hon’ble

Supreme Court held that the department cannot by merely rejecting a good

explanation unreasonably, convert good proof into no proof. I, therefore, set

aside the orders of lower authorities and delete the addition of Rs.7,25,000/-

u/s.68 of the Act made by the Assessing Officer and confirmed by the Ld

CIT(A) and allow the ground of appeal of the assessee.

4 ITA No.347 /CT K/20 16 Asse ssme nt Ye ar :2011-12

7.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 17/01/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 17/01 /2017 B.K.Parida, SPS

Copy of the Order forwarded to : 1. The Appellant : Dharanidhar Panda,At: B. Berhampur, PO: Biranchipur, Via: Buguda, Dist: Ganjam 2. The Respondent. ITO, Phulbani Ward, Phulbani 3. The CIT(A)-1, Bhubaneswar. 4. Pr.CIT, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

ASST.REGISTRAR, ITAT, Cuttack

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