Ita/6001/2013 Of The Deputy Commissioner Of Income Tax v. Sri. R. Charuchandra

IN THB HIGH COURT OF KARNATAKAKALABURAGI! BENC DATEHBD THIS THE 1[th]DAY OF FEBRUARY, 2017 PRESENT THE HON’BLE MR.JUSTICEARAVIND KUMAR AND THE HON’BLE MR.JUSTICE B.A.PATILI.T.A.NO. 6001/2013 BETWEEN: THR DBEPUTY COMMISSIONER OINCOME TAXCHKENTRAL CIRCLEBELGAUMTHROUGH THR COMMISSIONBROF INCOME TAXGULBARGAAYKAR BHAVAN, SEDAM ROADGULBARGA ~ APPELLAN (BY SRI, AMEET KUMAR DESHPANDE, ADV) AND: SRI R CHARUCHANDRAPROPRIBTORSRI SRINIDHI MINESDR.NANGANGOUDA GARDEN STATION ROAD, HOSPET 583 201 _ RESPONDEN (BY SRI MALLIKARJUN SAHUKAR, ADV - ABSENT )| THIS APPEAL IS FILED UNDER SECTION J6O0A OINCOMETAX|ACTPRAYINGTOSETASIDETHEJUDGMENT AND ORDER DATED 24.08.2012 PASSED BYTHE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH,PANAJI IN ITA NO.181/PNJ/2011 CONFIRMING THEJUDGMENT AND ORDER DATED 10.08.2011 PASSED INITA NO.19/DCIT/CCI/BELGAUM/CIT(A)-VI/B’LORE /201011 PASSED BY THR COMMISSIONBR OF [INCOME TA(APPEALS)-VI, BANGALORE AND PASS SUCH OTHERAPPROPRIATEH ORDER IN THR INTEREST OF JUSTICE THIS APPBAL COMING ON FOR ADMISSION THISDAY,ARAVIND KUMAR J©, DELIVERED THE FOLLOWING; JUDGMENT ReVeENLU1S.1nappealcallingin.questioncorrectness and legality of the order passed by IncomeTax|AppellateTribunal,|Panaji Bench1nITANo.181/PNJ/2011.datedI4OS.2012|whereunderappeal filed by the revenue came to be dismissed anddisallowance which had been made by the Assessing Officer and allowed by Commissioner of Income Tax(Appeals) came to be confirmed. a2Assessee1S.ay?individualandsearchoperation was carried out under Section 132 of IncomeTax Act, 1961 (for short ‘Act’)) on 25.03.2008. Btreating the said proceedings as one under Section 153Aof the Act, assessee was given an opportunity to filerevised return of income and pursuant to same, returnof income was filed by assessee on 13.04.2009declaring a total income ofra3,/9,27,/20/- and saidreturn of income came to be processed under Section141 of the Act by issuing notice under Section 143(2) ofthe Act. After hearing the representative of theassessee, assessment order dated 21.12.2009 came tobe passed by the Assessing Officer (for short ‘AO)|whereunder AO disallowed certain claims made by theassessee or in other words, added the following: 3.Being aggrieved by the same, assessee filedan|appealbeforeCommissioneroT|IncomeTax(Appeals)-VI, Bangalore (for short “CIT (Appeals)’) inAppeal No. 19/ DCIT/ CCI / BELGAUM / CIT(A)-VI,B’LORE/2010-11. Appellate Authority by a detailedorder as discussed in paragraphs 10.1 to 10.6of its order allowed the claim of the assessee and rejected theerounds urged by the revenue. Being aggrieved by thesame, revenue filed an appeal before Income TaxAppellate Tribunal, Panaji Bench, Panaji (for shortTTAT’) in ITA No.181/PNJ/2011 contending that a sumoT|Zz39,90,000/- which was added by the AssessingOfficer as undisclosed income of the assessee was notrequired to be interfered by ‘CIT (Appeals)’ sinceassessee had not enclosed cash flow statement for theyear 2008-09; non-production of the accounts relatingto HUF status before the Assessing Officer was notconsidered by CIT (Appeals) and as such, sum of|Z2,89,000/- found and seized at the time of search hadremained|unexplained;afforestationcharges;?Rs.2,75,/5,/42/- accepted as revenue expenditure iserroneous and it ought to have been treated as capitalexpenditure and it ought to have dismissed the appealfiled by the revenue. )$We have heard Sri Ameet Kumar Deshpande,learned Advocate appearing for revenue. Statement ofobjections have been filed by respondent which is flawedbecause of objections raised by the Registry and rightlyso. Though respondent is served and represented, none566/5<4$ )$We have heard Sri Ameet Kumar Deshpande,learned Advocate appearing for revenue. Statement ofobjections have been filed by respondent which is flawedbecause of objections raised by the Registry and rightlyso. Though respondent is served and represented, none566/5<4$ %$Reiterating the grounds urged before theTribunal, it.1S|contended|byMr.AmeeétKumarDeshpande, learned Advocate appearing for the revenuethat both the appellate authorities have erred in notappreciating the material which was available beforeAssessing Officer who had disallowed the claim of theassessee and deletion made by CIT (Appeals) is based onassumptions and presumptions. Hence, contendingthat orders of CIT (Appeals) as well as Tribunal beingerroneous and contrary to factual aspects, substantialquestionsoT|lawas|formulated|in.the566/57 memorandum would arise for consideration and heprays for framing said questions of law and answeringthe same in favour of the revenue. ($As could be seen from the order of theTribunal, it is found that Tribunal has succinctlydiscussed with reference to each of the disallowancemade by the Assessing Officer and particularly withreference to the undisclosed investment in moneylending which had been added as income of theassessee by the Assessing Officer and it has beennoticed by the Tribunal that Assessee had withdrawn asum otfz16 lakhs on O7.09.2007,|Z10 lakhs on08.10.2007 from State Bank of Mysore and for theassessment year 2002-03 on every long term capitalgain ofz18.2 lakhs received from sale consideration ofz20.15 lakhs and as such, upheld the contention of theassessee that he had the benefit of cash available with him. Tribunal also noticed that assessee had submittedcash flow statement before CIT (Appeals) to substantiatethat entire sale consideration as well as long termcapital gains offered for the taxation for assessmentyear 2002-03 disclosed that cash was available with theassessee for lending since same had been withdrawnfrom the Bank and as such, it has been concluded thatsufficient cash was available with the assessee forlending. In that view of the matter, grounds urged bythe revenue came to be rejected by the appellateauthority and affirmed by the Tribunal. T.Insotar as cash oftz2,89,000/- seizedduring the course of search having been added asunexplained cash by the Assessing Officer also receivedthe attention of both the appellate authorities. It is notin dispute that at the time of search, a sum ofz2,89,000/- cash was in possession of the assessee, out of which |z2,00,000/- was seized. Assessee iS Owning4’ acres of agricultural land in HUF capacity and inthe said account, book cash of|4,16,092/- has beenreflected and this was also with the assessee. I[t wasalso noticed by CIT (Appeals) that an agreement to sellhad been entered into by assessee and had receivedbackz1,80,000/- as refund since said deal did notmaterialise or sale did not take place. Hence, CIT(Appeals) concluded that as on 25.03.2008 assesseepossessed cash balance as per book a sum ofz2,96,092/- and in that background, addition ofz2,89,000/- came to be deleted. Since it was noticedalter verification of books of account maintained byassessee that assessee had sufficient cash on hand,deletion made by CIT (Appeals) came to be affirmed byITAT. of which |z2,00,000/- was seized. Assessee iS Owning4’ acres of agricultural land in HUF capacity and inthe said account, book cash of|4,16,092/- has beenreflected and this was also with the assessee. I[t wasalso noticed by CIT (Appeals) that an agreement to sellhad been entered into by assessee and had receivedbackz1,80,000/- as refund since said deal did notmaterialise or sale did not take place. Hence, CIT(Appeals) concluded that as on 25.03.2008 assesseepossessed cash balance as per book a sum ofz2,96,092/- and in that background, addition ofz2,89,000/- came to be deleted. Since it was noticedalter verification of books of account maintained byassessee that assessee had sufficient cash on hand,deletion made by CIT (Appeals) came to be affirmed byITAT. &$A sum of —z2,/9,/9,(42/- had been incurredby assessee towards afforestation charges and balanceAmount out of|So Crores which was agreed to be offereas income for the assessment year 2008-09 came to beoffered for taxation. However, Assessing Officer foundthat agreement dated 29.01.2007 between the assesseeand Sri Goutam Chand Lonavat entered into on behalfof M/s.Rajashree Minerals stipulated only fixed royaltyof|z4659/- per metric tonne on the basis of selling pricof MMTC of Fe-65% ore, a refundable deposit ofzo Crores was paid to the assessee at the time ofagreement which was repayable at the end of 4[th]year OTat the end of contract period and all the expensesincurred for renewal of mining licence had to be borneby the second party i.e., M/s.Rajashree Mineral and inview of the same, payment ofz2./9 Crores made by theassessee during the month of February, 2007 to theForest Department was inadmissible. CIT (Appeals) noticedthat|aSSECSSCEhadpaidaSUTM;?|2,/9,/9,/42/- to the Forest Department towardsafforestation charges and it was never the case ofrevenue that said expenditure is a capital expenditure.As the lease was only for a period of four years, amountspent towards afforestation charges was rightly held asan expenditure not being enduring in nature and assuch, it was treated as revenue expenditure. Thoughamount was paid by the assessee on 01.02.2007, it wasbooked as expenditure for the assessment year 2008-09since Forest Department has informed that demanddrait furnished by assessee would be encashed by theDepartment only in case of approval is granted and inthe event of non-approval of licence or non-renewal oflicence, demand draft would be returned back and assuch, hability having crystallised during financial year2007-08, same was claimed by the assessee in theassessment year 2008-09. CIT (Appeals) noticed that as| per clauses (vi) and (vii) in the agreement, second partynamely, M/s.Rajashree Mineral had to pursue renewalof the mining lease application and it had agreed toprovide money on behalf of first party. As per clause(vill) second party M/s.Rajashree Mineral had alsoagreed to invest but the same was to be adjusted over aperiod of time. It was found by CIT (Appeals) that as perclause (xi), *all amounts* that are to be paid to variousGovernment Department officially are to be treated asadvance and are to be debited to Mine Owner’s account.Representative or signatory to the agreement - SriGoutam Chand in his statement made before theAssessingOfficer|whensummoned|by AO,hasconfirmed that expenditure incurred towards fee paidon account of afforestation was borne by the assessee.At the same time, statement furnished by the assesseebeforeAssessingOfficeralsodisclosedthatM/s.Rajashree Mineral either as a firm or Sri Goutam Chand as its proprietor had not claimed the expensesin their respective accounts. Thus, it came to be heldbyboththe appellateauthoritiesthat|thoughexpenditure is financed by Sri Goutam Chand ofM/s.Rajashree Minerals who had taken a mine on leasefrom assessee, they were recoverable from the assesseeand their accounts also disclosed the same. In view ofthe fact that none of the parties other than the assesseehas claimed said amount as expenditure and thisaspect having not been questioned by the revenue,appeal of the revenue rightly came to be dismissed bythe Tribunal. On appreciation of entire material onrecord, as noticed herein above, Tribunal has rejectedthe claim of the revenue and has attfirmed the ordepassed by CIT (Appeals). Findings recorded by both theappellate authorities are all questions of fact and thereis no question of law involved in this appeal for beingadjudicated by admitting the same and answering it. Hence, we are of the considered view that it is not a fitcase for being admitted. Hence, we proceed to pass the following; ORDER "3#Appeal is hereby dismissed. "33#Order dated 24.08.2012 passed by IncomeTax Appellate Tribunal, Panaji Bench in ITANo.181/PNJ/2011confirmingthe.;<=/<passed by Commissioner of Income Tax(Appeals)-VI,Bangalore|in.AppealNo.19/DCIT/CCI/BELGAUM/CIT{(A)-VIB’LORE/Y2OLO-11dated10.08.20 1 34hereby aifirmed.Tax Appellate Tribunal, Panaji Bench in ITANo.181/PNJ/2011confirmingthe.;<=/<passed by Commissioner of Income Tax(Appeals)-VI,Bangalore|in.AppealNo.19/DCIT/CCI/BELGAUM/CIT{(A)-VIB’LORE/Y2OLO-11dated10.08.20 1 34hereby aifirmed. Ordered accordingly. Sd/-JUDGE Sd/- JUDGE