Case Law Details
Brief about the case
The assessee is an individual engaged in the business of trading in scrap. For the assessment year under consideration, the appellant filed original return of income on 04-12-2001 admitting total income of Rs. 82,200/-. The said return of income was processed u/s. 143(1) of the Act. A Search and seizure operations was also conducted in the appellant’s premises on 07-11-2007. Subsequently, notice u/s. 148 was issued on 27-03-2008 in response to which the appellant filed return of income on 01-09-2009 admitting income of Rs. 91,720/-. As against the said return of income, the assessment was completed by the ACIT, Circle- 6(1), Hyderabad vide order dt. 30-11-2009 u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs.2093486/- mainly adding Rs.1961766/- on account of addition due to difference in opening balance of capital account filed during the course of assessment proceedings.
Beside, the assessee claimed the deduction under section 80U of Rs. 40,000/- for physical disability and submitted a certificate issued by the civil surgeon, Gandhi Hospital in support of the claim which was also disallowed.
Being aggrieved by this addition, the assessee filed an appeal before the CIT(A), who vide order dt. 30-09-2010, dismissed the appeal on the ground that the assessee failed to substantiate the opening balance of the capital for the year under consideration. Aggrieved, the assessee filed the appeal before Tribunal.
Contention of Assessee
No addition in respect of opening balance can be made in the year under consideration. If at all an addition is warranted, it can be made only in the preceding year. In support of his claim, Ld. AR of the assessee quoted the decisions given by co-ordinate benches of the Tribunal in the similar issues.
In relation to disallowance u/s 80U, the assessee prayed to give a fresh opportunity to produce the certificate regarding the disability and to take the same in to account while assessing the total income of the assessee
Contention of Revenue
Ld. DR of Revenue placed reliance on the orders of lower authorities and submitted that no interference is called for by the Hon’ble Tribunal in the matter.
Held by Tribunal
The issue before the tribunal is covered by the decision of the co-ordinate bench of this Tribunal in the case of Smt. Surapu Indira Devi Vs. ACIT (cited by the assessee). Lower authorities have overlooked the principle that the opening balance cannot be disturbed this year. The authorities can only reopen for the earlier year. In another case ACIT Vs. Smt. N. Sasikala (2005) 92 TTJ (Chennai) 119 it was held that If the Department doubted the availability of cash balance, it can go to the concerned assessment year 1990-91, and treat it as unexplained income, but it cannot treat the opening balance in the assessment year 1991-92 as unexplained. We also find that from the material on record, as a result of search and seizure operations, there is no material indicating that the opening cash balance was not available. Hence, it is settled principle of law that in the case of assessments made u/s. 153A, the additions can be made only based on the material seized, in the absence of any such material, the addition cannot be made. Therefore this ground of appeal filed by the assessee is allowed.
On the issue of claim of deduction u/s. 80U of the Act, since the claim was withdrawn before the AO and therefore, the CIT(A) is perfectly justified in rejecting the claim of the appellant. Hence, this ground of appeal was dismissed.
