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Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH,
Before: SHRI N.S SAINI
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.
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.
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”
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.
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.
Ld D.R. supported the orders of lower authorities.
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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.
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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