Date Of Order 06.02.2017 Ita v. Income Taxofficer, Ward – 1, Karwar, Santerikrupa Building Habbuwada, Karawar

Date of Order 06.02.2017 ITA 100155-56/2015Mohandas Rama Naik Vs. Income TaxOfficer, Ward – 1, Karwar, SanteriKrupa Building Habbuwada, Karawar . 1/6 IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH DATED THIS THE 6 DAY OF FEBRUARY, 2017 BEFORE THE HON’BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE SRI. JUSTICE SREENIVAS HARISH KUMAR I.T.As. No.100155-156/2015 BETWEEN:SRI.MOHANDAS RAMA NAIK,H.NO.971, ASHRAM ROAD,KARWAR-581 301,UTTAR KANNADA DISTRICT (BY SRI. A SHANKAR, SHASHANK HEGDE& M LAVA, ADVOCATES) ... APPELLANT AND INCOME TAX OFFICER,WARD-1, KARWAR, SANTERI KRUPA BUILDING,HABBUWADA, KARWAR-581 306. ... RESPONDENT (BY SRI V V RAVIRAJ, INCOME TAX OFFICER ) THESE ITAs ARE FILED U/S. 260A OF THE INCOME TAXACT 1961, PRAYING TO FORMULATE THE SUBSTANTIALQUESTION OF LAW STATED ABOVE, TO ALLOW THEAPPEAL AND SET ASIDE THE FINDINGS TO THE EXTENTAGAINST THE APPELLANT IN THE ORDER PASSED BY THEINCOME TAX APPELLANT TRIBUNAL, PANAJI BENCH,PANAJI IN ITA NOS.378 & 379/PNJ/2014 RELATING TO ASSESSEMENT YEARS 2009-10 & 2010-11 VIDE THISORDER DTD: 22.01.2015, IN THE INTEREST OF EQUITYAND JUSTICE. THESE ITAs COMING ON FOR HEARING THIS DAY, THECOURT MADE THE FOLLOWING: JUDGEMENT Sri A Shankar, Shashank Hegde& M Lava, Adv for the appellant. Sri V. V. Raviraj, Adv for the respondent. 1.This Income Tax Appeal has been filed by the Assessee against the order of the Income Tax ApellateTribunal, Panaji Branch, Panaji dated: 22-01-2015 forA.Ys. 2009-10 and 2010-11, remanding the matter backto the Assessing Officer to workout the peak of depositsafter giving proper and sufficient opportunity of hearingto the Assessee and to the extent the Assessing Officerfinds the peak of deposits, the addition was sustained. 2.The relevant direction of the learned Tribunal inPara No. 3 of the impugned order is quoted below forthe ready reference:- 3/6 “3. The Assessee has derived theincome as an LIC agent. The AO asked for thesource of the investment and in the absenceof the same, the AO made addition ofRs.31,85,000/- in the A.Y 2009-10 and Rs.7,29,500/- in the A.Y.2010-11. We noted thatthe matter went before CIT(A) and CIT(A)directed the AO to estimate the Assessee’sincome to be 8% of the total cash deposited inhis ICICI Bank Account u/s 44 AD. In ouropinion, the provisions of Sec. 44AD are notapplicable in the case of the Assessee as theAssessee is not engaged in the eligiblebusiness as mentioned in explanation (b) ofSec. 44AD. The Assessee has derived theincome, as returned by him as per theassessment order, only as an agent of LIC.Once the Assessee has deposited the cash inhis bank account, the onus is on the Assesseeto prove the source from where the amounthas been deposited in his bank account. TheAssessee might have also withdrawn theamount from the said bank account duringboth the assessment years. We, therefore, inthe interest of justice and fair play to both the Date of Order 06.02.2017 ITA 100155-56/2015Mohandas Rama Naik Vs. Income TaxOfficer, Ward – 1, Karwar, SanteriKrupa Building Habbuwada, Karawar . 4/6 parties, set aside the order of CIT(A) andrestore this issue to the file of the AO with thedirection that the AO shall work out the peakdeposit after giving proper and sufficientopportunity of hearing to the Assessee and tothe extent the AO finds the peak deposit, theaddition is sustained.” 3.The learned counsel for the Asseesee hassubmitted before us that the learned Income TaxTribunal has erred in setting aside the order passed bythe CIT (Appeal) on 17-06-2014 and the AssessingOfficer will be now bound to make the addition only asper the peak of the deposits made by the Assesseeduring the year in question. 4.He drew our attention to the special provisions 4/6 parties, set aside the order of CIT(A) andrestore this issue to the file of the AO with thedirection that the AO shall work out the peakdeposit after giving proper and sufficientopportunity of hearing to the Assessee and tothe extent the AO finds the peak deposit, theaddition is sustained.” 3.The learned counsel for the Asseesee hassubmitted before us that the learned Income TaxTribunal has erred in setting aside the order passed bythe CIT (Appeal) on 17-06-2014 and the AssessingOfficer will be now bound to make the addition only asper the peak of the deposits made by the Assesseeduring the year in question. 4.He drew our attention to the special provisions of Sec.44AD providing for special provisions forcomputing profits and gains of business on presumptivebasis prior to its substitution by the Finance (No.2) Act2009 w.e.f. 1-04-2011. The provisions of Section of44AD of the Act applied to the Assessees engaged in the Date of Order 06.02.2017 ITA 100155-56/2015Mohandas Rama Naik Vs. Income TaxOfficer, Ward – 1, Karwar, SanteriKrupa Building Habbuwada, Karawar . 5/6 business of civil construction or supply of labour forcivil construction. However, after its amendment w.e.f.01-04-2011, the said provisions applied to the ‘eligiblebusiness’ as defined in the Explanation in the saidprovision and all business except the business of plying,hiring or leasing goods carriages referred to section44AE of the Act are now covered by the said provisionsof the Act. 5.The assessment year in the present case isinvolved before us are prior to amendment viz., A.Y.2009-10 and 2010-11. However, since the provisions ofSection 44AD are admittedly applicable to the presentassessee, as they exist prior to amendment, we see noerror in the impugned order passed by the learnedTribunal remanding the matter back to the learnedAssessing Officer to workout the peak of deposits aftergiving proper and sufficient opportunity of hearing tothe Assessee. Date of Order 06.02.2017 ITA 100155-56/2015Mohandas Rama Naik Vs. Income TaxOfficer, Ward – 1, Karwar, SanteriKrupa Building Habbuwada, Karawar . 6/6 6.The objections raised before us are thus open to raise by the Assessee before the Assessing Officeralso and therefore, the grievance raised before us thatthe Income Tax Officer will be bound to act in aparticular manner is not correct. 7.In our considered opinion no substantialquestion of law arises out of the remand order passedby the learned Tribunal and the Income Tax Officer isnow expected to pass further orders, only after giving areasonable opportunity of hearing to the Asseessee inaccordance with law. 8.Accordingly, the present appeal stands disposed of. No costs. Sd/-JUDGE Sd/-JUDGE Yan/Vmb