Ita/100029/2017 Of Mallikarjuna H.s v. The Income Tax Officer

IN THR HIGH COURT OF KARNATAKA|DHARWAD BENCH DATED THIS THE 22 DAY OF JANUARY, 2018) PRESENT THE HON’BLE MRS. JUSTICE S. SUJATHA ANT) THR HON’BLE MR. JUSTICK JOHN MICHABL CUNHA ITA No. 100029 /20 BRIWEHEN MALLIKARJUNA H.S.,R.S.NO.177/3, P/No.5,VIDYANAGAR EXTENSION,GOKAK-591 307. . APPBLLANT (BY SRIYUTHS ASHOK A.KULKARNI, NEILOO PRASAD,SIDDA REDDY.K.G., ROOPA ANAVEKAR, |H.R.KAMBIYAVAR, K.R.PRASAD, ADVS.)_ ANT) THE INCOME TAX OFFICER,WARD-1,.GOKAK-591 307. _ RESPONDENT (BY SRI.Y.V.RAVIRAJ, ADV.) THIS APPEAL IS FILED UNDER SECTION Q600A OF THEINCOME TAX ACT, 1961 PRAYING TO ALLOW THE APPEAL BY|SETTING ASIDE THER ORDER OF THE INCOME TAX APPELLATETRIBUNAL IN ITA NO.50/PNJ/2015 DATED 28.07.2015 FOR,AY:2009-10 IN ANNEXURE-A, THE ASSESSMENT ORDER PAN.NO.ADBPM67/25EK ON 22.12.2011 FOR THE ASSESSMENT YEA2Q0O9- 1IN|ANNBXURE-B.ANT)APPEBLLATKORDERNO.163/BGM/2011-12 DATED03.11.2014HORTHE;ASSESSMENI YEAR JOO9-10 IN ANNBXURE-C.. THIS APPKAL COMING ON FOR ADMISSIONTHIS DAY,».SUJATHA J., DELIVERED THE FOLLOWING: 7 OD 3 JUDGMENT This appeal is filed by the assessee challenging theorder passed by the Income Tax Appellate TribunalPanaji Branch, Panaji-Goa (ITAT’ for short) relating toassessment year 2009-2010. ? The assessee/appellant an individual is regularlyassessed to Income Tax. The appellant is working as aDevelopment Officer in Life Insurance Corporation ofIndia and had “(filed income tax return (for tAssessment Year 2009-2010 declaring taxable income ofRs.8,33970/-.Duringthematerialperiod,theappellant’s main source of income was from salary,commission and incentives received from LIC of Indlia.In the said assessment proceedings, the respondentnoticed huge deposits in Savings Bank account of theassessee with the Corporation Bank, Gokak. On enquirymade, it was explained by the assessee that suchdeposits are from out of the savings from salary,earnings from incentives and bonus received from the ° 3: LIC of India. Not agreeing with the same, therespondent-Assessing Officer made an addition ofRs.61,88,940/- by invoking Section 69A of the IncomeTax Act, 1961 (the Act’ for short). Being aggrieved bythe same, the assessee preferred an appeal before theCIT(A), wherein, the Appellate Authority called for theremand reports to verify the stand of the appellant. Tworemand reports were furnished, one is dated 20.08.2013.and other is dated 15.04.2014. The remand report dated 15.04.2014 reads thus: “As directed by the Commissioner of Income|Tax (Appeals), Belgaum, I have examined the cash|flow statement with reference to Bank statementsof the assessee. It is ascertained from the cash|flow statements that all the cash deposits are out|of cash withdrawals from the Bank accounts and|receipts from the LIC agent who has repaid thehand loans given earlier. However,ON.14.03.2009CmSUTNofRs.2,50,000/- is shown as deposit into Axis Bankbut the cash on hand is not reduced by equalamount. The assessee 1s not in a position to explainthe discrepancy. Thus, the cash on hand as on. “4s. 31.03.2009|Should|be|Rs. 99,650/-andNOT|Rs.3,49,650/-." 3.The Appellate Authority proceeded to consider thefirst remand report dated 20.08.2013 and confirmed theadditions of Rs.23,31,600/- on the ground of cashdeposits. Being aggrieved, the appellant preferred anappeal before the ITAT. The ITAT considering the peakcash credit in the cash flow statement, modified the)addition made by the Assessing Officer, reducing it toRs.18,62,5900/- representing the peak of the cash creditin the cash flow of the assessee. Being aggrieved by thesame, the assessee is in appeal under Section 260A ofthe Act, raising the following substantial questions oflaw. “4s. 31.03.2009|Should|be|Rs. 99,650/-andNOT|Rs.3,49,650/-." 3.The Appellate Authority proceeded to consider thefirst remand report dated 20.08.2013 and confirmed theadditions of Rs.23,31,600/- on the ground of cashdeposits. Being aggrieved, the appellant preferred anappeal before the ITAT. The ITAT considering the peakcash credit in the cash flow statement, modified the)addition made by the Assessing Officer, reducing it toRs.18,62,5900/- representing the peak of the cash creditin the cash flow of the assessee. Being aggrieved by thesame, the assessee is in appeal under Section 260A ofthe Act, raising the following substantial questions oflaw. UWhether on the facts and in _ thcircumstances of the case the finding ofthe Tribunal that any part of the cashdeposits made by the appellant is hisbank|account,in|CXCESS|ofRs.2,50,000/-, is unproved or notsatisfactorily explainediS perverseinasmuch as it is totally contrary to thefinding of the Assessing Officer in thesecond remand report, which wastotally ignored by the ITAT though it was a part of the record and urged forconsideration at the time of hearingand such remand report was submittedafter verification by the AssessingOfficer at the instance of CIT{(A)? i)Whether on the facts and in _ thcircumstances of the case any part ofthe|additionin.(OSUT?of|Rs. 18,62,500/-asunexplaineddeposits upheld by the ITAT ts liable totax u/S 69A of the Act? 4We have heard the learned counsel appearing forthe parties and perused the material on record. 5.The only grievance of the appellant/assessee isthat the Appellate Authority CIT (Appeals) ignored thesecond remand report dated 15.04.2014 submitted bythe Assessing Officer, wherein it was categoricallyobserved by the Assessing Officer that, cash flowstatement with reference to bank statements of the'assessee was ascertained and it was found that all cashdeposits are out of cash withdrawals from the bankaccount and receipts from the LIC agent, who hasrepaid the hand loans given earlier. Such being thesituation, the CIT (Appeals) placing reliance on the first remand report dated 20.08.2013 confirmed the additionof Rs.23,31,600/- under Section 609A of the Act, whichis wholly unsustainable. However, the ITAT also failedto appreciate the same and not adverting to the remandreport submitted by the Assessing Officer proceeded todecide the matter based on the peak cash credit as perthe cash flow statement. Accordingly, learned counselsubmitted that the approach of the CIT(Appeals) as wellas ITAT is contrary to the second remand reportsubmitted by the Assessing Officer. Hence, he seeks fora remand to the Appellate Authority to reconsider thematter in the light of the second remand reportsubmitted by the Assessing Officer. 6.The learned counsel appearing for the revenue hasno objection to remand the matter to the AppellateAuthority, in view of the categorical finding given in thesecond remand report of the Assessing Officer, asextracted in para 9.3 of the order of the AppellateAuthority.| 2 7 8] T.Having heard the rival submissions of the parties,indisputably the CIT (Appeals) has relied only on firstremand.reportot the AssessingOfficerdated20.08.2013. Despite extracting the contents of thesecond remand report, no finding is given on the same,which goes contrary to the submissions of the AssessingOfficer. It was obligatory on the part of ITAT to examinethis aspect when the records were before it. The ITATproceeded to reduce the addition made by the AssessingOfficer confirmed by the CIT(Appeals) to Rs.18,62,500/-,.which1S|primafactevitiatedandrequiresreconsideration. In the facts and circumstances of the!case, without answering the substantial questions oflaw raised by the assessee/appellant herein, we deem itappropriate to remand the matter to the CIT (Appeals) toconsider the second remand report of the AssessingOfficer dated 15.04.2014 and pass appropriate orders inaccordancewithlaw.1n.aynexpedite|Manne [lAccordingly, we proceed to pass the following: “8: ORDER /+The appeal is allowed in part. “8: ORDER /+The appeal is allowed in part. //+The impugned order is set aside. The matter1SremandedTOtheCIT.(Appeals) TO reconsider the same in the light of thesecond remand report dated 15.04.2014|submitted by the Assessing Officer and topass an appropriate order as expeditiouslyas possible. ///+TheASSECSSEEshall|APpPCa beforeCIT.(Appeals)Of]05.02.2018|withotuianticipating any notice and shall receivefurther orders. the sd/-.JUDGE| MBS /- od/-.JUDGE