Shah Gambhidas Kiran, CHENNAI V. ACIT, CHENNAI

CO 123/CHNY/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5693 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 27-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TAPAS KUMAR DUTTA
• Assessee Lawyers: R RAJAA KANTHADAI; MRS INDIRA
• Keywords: Unexplained investment; Additional evidence; Assessment record
• Section: 69; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI BEFORE SHRI U.B.S. BEDI, J.M. & SHRI ABRAHAM P. GEORGE, A.M. I.TA. NO.1612/MDS/2010 ASSESSMENT YEAR 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE VIII, CHENNAI 6. VS . SHAH GAMBHIRDAS KIRAN, NO.93, GOVINDAPPA NAICKEN STREET,PARRYS, CHENNAI 600 001. [PAN: AGUPK5063D] C.O. NO. 123/MDS/2010 [IN I.TA. NO.1612/MDS/2010] ASSESSMENT YEAR 2007-08 SHAH GAMBHIRDAS KIRAN, NO.93, GOVINDAPPA NAICKEN STREET,PARRYS, CHENNAI 600 001. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE VIII, CHENNAI 6. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI TAPAS KUMAR DUTTA ASSESSEE BY : MRS. INDIRA & MR. R. RAJAA KANTHADAI O R D E R PER U.B.S. BEDI, J.M. THIS APPEAL OF THE DEPARTMENT AND T HE CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CI T(A) IX, CHENNAI DATED 24.06.2010 RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. IN THE APPEAL OF THE D EPARTMENT, THE CHALLENGE IS WITH REGARD TO DELETION OF ADDITION OF ` .20,90,882/- MADE UNDER SECTION 69 OF THE INCOME TAX ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTUAL FUNDS, WHEREAS, THE CO OF THE ASSESSEE IS IN SUPPORT OF T HE ORDER OF THE LD. CIT(A) AS PER THE COUNSEL FOR THE ASSESSEE. 3. AS REGARDS ISSUE INVOLVED IN THE DEPARTMENTS AP PEAL, THE ASSESSING OFFICER INVOKED THE PROVISION OF SECTION 69 IN RESPECT OF THE AMOUNT, WHICH WAS I.T.A. NO.1612/MDS/10 & CO NO. 123/MDS/10 2 INVESTED BY THE ASSESSEE IN MUTUAL FUND. THE ASSESSING OFFICER HAD ADDED THE AMOUNT SO INVESTED AS UNEXPLAINED IN VESTMENT GIVING FOLLOWING REASONS: FROM THE READING OF THE SE CTION, IT TRANSPIRES THAT FIRSTLY, THE INVESTMENT MADE BY THE ASSESSEE SHOULD HAVE B EEN DULY ACCOUNTED FOR, BUT IN THE INSTANT CASE THE ASSESSEE HAD NOT SHOW N ANY INVESTMENTS MADE DURING THE YEAR AND HE CAME WITH THE DETAILS OF INVESTMENTS IN MUTUAL FUNDS ONLY WHEN ASKED FOR THE SAME. FURTHER FROM THE AIR INFORMATION ALSO IT IS CRYSTAL CLEAR THAT THE ASSESSEE HAS MADE INVESTMENT IN VARIOUS MUTUAL FUNDS. SECONDLY THE ASSESSEE HAS GIVEN EXPLANATIONS FOR THE SOURCE OF INVESTMENT, VIDE LETT ER DATED 25.12.2009 RECEIVED BY THIS OFFICE ON 29.12.2009, HOWEVER THE EXPLANATION IS NOT SATISFACTORY AND HENCE NOT ACCEPTABLE. IN VIEW OF THE ABOVE, I AM OF THE CONCEDED VIEW THAT THE ASSESSEE HAS MADE THIS INVESTMENT FROM HIS UNDISCLOSED SOURCE OF INCOME. THEREFORE, INVOKING THE PROVISIONS OF SECTION 69, THE ENTIRE AMOUNT OF 20,90,882 IS TREATED AS UN EXPLAINED INVESTMENT S AND ADDED BACK TO THE TOTAL INCOME. 4. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND MADE FOLLOWING ARGUMENTS BEFORE THE LD. CIT(A) TO CLAIM THAT THE INVESTMENT S ARE FULLY ACCOUNTED FOR AND EXPLAINED. A. THE INVESTMENTS ARE FULLY DOCUMENTED AS DRAWINGS IN THE BOOKS OF THE BUSINESS AND THEREFORE FULLY EXPLAINED AND FURTHER, B. THE SOURCE OF THE INVESTMENT S IS ALSO TAX-PAID INCOMES WHICH ARE FULLY RECORDED IN THE BOOKS OF ACCOUNT. C. FURTHER, THE LEARNED AO HAS ALSO TAKEN A SUM OF ` .8,89,882 TWICE, SINCE THIS SUM WAS RE-INVESTED IN MUTUAL FUNDS OUT OF REDEMPTION OF EARLIER INVESTMENTS. D. ALLOWING FOR THE ABOVE ACCOUN TING ERROR, THE IMPUGNED SUM IS ` .20,90,882 LESS ` .8,89,882 = ` .12,01,000/-. I.T.A. NO.1612/MDS/10 & CO NO. 123/MDS/10 3 E. THE ABOVE SUM OF ` .12,01,000/- WAS TRANSFERRED OFFICIALLY FROM THE PERSONAL ACCOUNT OF THE ASSE SSEE WITH THE STATE BANK OF SAURASHTRA, AND THE DETAILS ARE: DATE CHEQUE NO. AMOUNT 21/08/2006 146052 500,000 28/08/2006 146053 600,000 17/10/2006 146057 100,000 TOTAL 12,00,000 F. THE BALANCE IN THE ABOVE A CCOUNT WITH THE STATE BANK OF SAURASHTRA WAS OUT OF DECLARED INCOMES AND RECEIPTS (A/Y 2007- 08), AS DETAILED BELOW: DATE CHQ. NO. AMOUNT NATURE OF TRANSACTION ISSUED BY & FROM 14/08/2006 651708 500,000 29/08/2006 651394 250,000 DRAWINGS FROM BUSINESS ELECTRICALS INDIA CURRENT A/C FROM STANDARD CHARTERED BANK CURRENT A/C NO. 42-0-504486-3 22/08/2006 221775 12,50,000 PART OF SALE CONSIDERATION OF ASSESSEE;S HOUSE LIC HOUSING FINANCE LIMITED ON BEHALF OF THE BUYER TOTAL 20,00,000 4.1 IT WAS PLEADED BEFORE THE LD. CIT(A) FOR DELETION OF THE IMPUGNED ADDITION AS THE ASSESSEE HAS FULLY EXPLAINED THE IN VESTMENTS OUT OF DECLARED INCOMES AND WITHOUT ANY MALAFIDE INTENTION TO C ONCEAL IN ANY MANNER WHATSOEVER. 5. THE LD. CIT(A), WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION AS PER PARA 7 TO 11 OF THE ORDER, WHICH IS REPRODUCED AS UNDER: 7. I HAVE GIVEN CAREFUL CONSIDER ATION TO THE ABOV E ARGUMENTS AND REASONS STATED BY THE ASSESSING OFFI CER IN HER ORDER WHILE INVOKING THE PROVISIONS OF SECT ION 69. THE ISSUE TO BE DECIDED IS WHETHER THE AMOUNTS INVESTED IN MUTUAL FUNDS ARE EXPLAINED OR NOT. I HAVE STUDIED ORDER PASSED BY THE ASSESSING OFFICER AND HEARD THE APPELLANT. I.T.A. NO.1612/MDS/10 & CO NO. 123/MDS/10 4 SECTION 69 EMPOWERS THE AS SESSING OFFICER TO TREAT THE INVESTMENTS MADE BY THE ASSESSEE IN A GIVEN FINANCIAL YEAR AS UNEXPLAINED INVESTMENT OF THAT YEAR ONLY IF: (A) THE INVESTMENTS SO MADE BY THE ASSESSEE ARE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED BY HIM AND (B) THE ASSESSEE FAILS TO OFFER A SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH IN VESTMENTS MADE BY HIM. 8. IN THE MATTER BEFORE ME, THE A PPELLANT HAD MADE A LL THE MENTIONED INVESTMENTS THROUGH HIS BANK ACCOUNT AND ALSO TRANSFERRED THE FUNDS TO THE SAID B ACCOUNT FROM HIS BU SINESS IN A COMPLETELY TRANSPARENT MANNER, AS DOCUMENTED AND DETAILED ABOVE BY THE APPELLANT. 9.1 THERE ARE NO COVERT TRANSACTI ONS, AND THE VERY FACT THAT THE TRANSACTIONS WERE THROUGH REGULA R AND CONNECTED BANK ACCOUNTS CONFIRM THAT THERE WAS NO INT ENT TO DEFRAUD THE EXCHEQUER. 9 2 SECONDLY, IT IS NOT A CASE WHERE THE APPELLANT HAS NOT OFFERED ANY EXPLANATIONS ABOUT THE NATURE AND SOURCE OF THE TRANSACTIONS. THE APPELLANT HAS ACCOUNTED THE TRANSFE RS TO THE PERSONAL ACCOUNT AS DRAWINGS IN THEIR BOOKS OF ACCO UNTS AND ALSO DECLARED THE INCOME WITH THE DEPARTMENT AND PAID TAXES THEREON. 9.3 THIRDLY, IT WAS OPEN TO THE ASSESSING OFFICER TO EXAMINE THESE FACTS IN DETAIL AND REACH THE SOURCE OF INVESTMENTS. THE ASSESSING OFFICER HAS PRESUMED THE INVESTMENTS TO BE FROM UNEXPLAINED SOURCES WITHOUT APPRECIATING THE FUNDA MENTAL FACTS OF THE CASE. 10. CONSIDERING THE ABOVE FACT, I AM OF THE OPINION THAT ADDITIONS CANNOT BE MADE ON THE BASIS OF PERCEPTION. THE REALITY IS THAT THE INVESTMENTS ARE FULLY DOCUMENTED AND ABOVE-BOARD AND EXPLAINED. THEREFORE, MATERIALS BROUGHT OUT ON RECORD BY THE ASSESSING OFFICER ARE NOT SUFFICIENT TO BRING THE CASE OF THE APPELLANT WITHIN THE AMBIT OF SECTION 69 OF THE IN COME TAX ACT. ACCORDI NGLY, I AGREE WITH THE LEARNED AUTHORIZED REPRESENTATIVE AND HO LD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN TREATING THE AMOUNT AS UNEXPLAINED INVESTMENTS. HENCE, THE AO IS DIRECTED TO DELETE THE ADDITION OF ` .20,90.882/-. 11. IN THE RESULT, THE APPEAL IS ALLOWED. 6. AGGRIEVED BY THIS OR DER OF THE LD. CIT(A), THE DEPARTMENT HAS CAME UP IN APPEAL AND WHILE RELYING UPON THE ORDER OF THE ASSESSI NG OFFICER, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT( A) AND RESTORING THAT OF THE ASSESSING I.T.A. NO.1612/MDS/10 & CO NO. 123/MDS/10 5 OFFICER. THE ASSESSEE IN THIS CASE DID NOT DISCLOSE ANY SUCH INVESTMENTS FOR THE YEAR UNDER CONSIDERATION AND WHEN THE A SSESSING OFFICER CALLED FOR DETAILS OF INVESTMENT MADE DURING THE YEAR ON THE BASIS OF AIR INFORMATION, THE ASSESSEE CAME FORWARD WITH THE IDEA OF CORROBORATING THE INVESTM ENT SHOWN IN THE AIR WITH THAT OF WITHDRAWALS MADE AND THE LD. CIT(A) HAS FAILED TO SEE THE INCONSISTENT/SHIFTING STAND TAKEN BY THE ASSE SSEE IN THE LIGHT OF THE MAGNITUDE OF INVESTMENT WHICH WAS NOT SHOWN IN T HE BALANCE SHEET. W HATEVER DOCUMENTARY EVIDENCE IN ORDER TO SUBSTANTIATE THE INVESTMENT WAS FURNISHED BEFORE THE LD. CIT(A) WAS NOT FURNISHED BEFORE THE A SSESSING OFFICER AND THE LD. CIT(A) WITHOUT CALLING FOR ANY REMAND REPORT OR ASSOCIAT ING THE ASSESSING OFFICER WITH THE APPEAL PROCEEDINGS, HAS JUST ACCEPTED THE ADDI TIONAL EVIDENCE, CONSIDERED IT AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESS EE, WHICH IS IN CONT RAVENTION OF RULE 46A OF THE IT RULES. THEREFOR E, IT WAS PLEADED THAT IN A LL FAIRNESS, THE ORDER OF THE LD. CIT(A) SHOULD BE SET ASIDE AND T HE MATTER TO BE RESTORED BACK WITH THE DIRECTION TO COMPLY WITH THE RULE 46A AS ADDITIONAL EVIDENCE HAS BEEN ADMITTED AND CONSIDERED TO DELETE THE IMPUGNED ADDITION. 7. THE LD. COUNSEL FOR THE ASSESSEE STR ONGLY OBJECT TO THE PLEA RAISED BY THE DEPARTMENT AND SUBMITTED THAT ALL THE DOCU MENT PRODUCED BEFORE THE LD. CIT(A) WERE THERE BEFORE THE ASSESSI NG OFFICER, WHICH WERE NOT CONSIDERED AT ALL AND THE ADDITION WAS JUST MADE, THER EFORE, THE LD. CIT(A) HAS APPROPRIATELY CONSIDERED ALL THE RELEVANT DOCUMENTS AND PASSED A VERY REASONED AND DETAILED ORDER, WHICH IS STRICTLY IN ACCORDANCE WITH THE LAW AND IN VIEW OF THE FACTS AND CIRCUMSTANCES, THE ORDER OF THE LD. CI T(A) MAY BE UPHELD. I.T.A. NO.1612/MDS/10 & CO NO. 123/MDS/10 6 8. THE LD. DR, AT THIS JUNCTURE WA S ASKED TO PRODUCE THE ASSESSMENT RECORDS OF THE ASSESSEE FOR THE YEAR UNDER CONS IDERATION, WHICH WAS PRODUCED AND AFTER EXAMINATION OF THE SAME BY THE BENCH, IT WAS NOTICED THAT DETAILS OF PERSONAL BANK ACCOUNTS AND OTHER RELATED DOCUMENTA RY EVIDENCE AS FURNISHED BEFORE THE LD. CIT(A) WAS NOT THERE IN THE ASSESS MENT RECORD AND AT THIS STAGE, THE ASSESSEES COUNSEL WAS SPECIFICALLY A SKED TO SHOW THE ACKNOWLEDGEMENT OF HAVING FURNISHED THE DOCUMENTARY EVIDEN CE BEFORE THE ASSESSING OFFICER, WHICH IS STATED TO HAVE BEEN FURNISHED BEFORE T HE LD. CIT(A), HE WAS UNABLE TO DO SO. HOWEVER, THE LD. COUNSEL FOR THE ASSESSE E JUST INSISTED FOR CONFIRMATION OF THE ORDER OF THE LD. CIT(A) AND REPEATED THAT ALL THE DOCUME NTS WERE FILED BEFORE THE ASSESSING OFFICER AND WHEN SUGGESTION TO SE T ASIDE THE ORDERS AND RESTORE THIS ISSUE TO THE ASSESSING OFFICER WAS MADE, HE DID NOT RAISE ANY OBJECTION. 9. AFTER HAVING HEARD BOTH THE SIDES AND CONSIDERING THE MATERIAL ON RECORD, WE FIND THAT THE LD. CIT(A) HAS ADMITTED CERTAIN EVI DENCE, WHICH WAS NOT FILED BEFORE THE ASSESSING OFFICER APPEARS TO HAV E BEEN CONSIDERED BY THE LD. CIT(A) IN ORDER TO GRANT RELIEF IN DELET ING THE IMPUGNED ADDITION AND THE ASSESSING OFFICER HAS NOT BEEN ASSOCIATED WITH T HE APPEAL PROCEEDING AND AS IS APPARENT FROM THE APPELLATE ORDER NOR ANY REMAND REPORT HAS BEEN OBTAINED FROM THE ASSESSING OFFICER. SO, IN OUR CONSIDERED VIEW , THERE IS A CLEAR VIOLATION OF RULE 476A OF IT RULES, THEREFOR E, IN VIEW OF THE FACTS AND CIRCUMSTANCES AND MATERIAL ON RECORD, WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW ON THIS ISSUE AND RESTORE THE MATT ER BACK ON THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO RE-DECIDE THE I SSUE IN RELATION TO INVESTMENT IN MUTUAL I.T.A. NO.1612/MDS/10 & CO NO. 123/MDS/10 7 FUND DE NOVO AFTER GIVING ADEQUATE OPPORTUNI TY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 10. THE CROSS OBJECTION OF THE ASSE SSEE, AS STATED BY THE ASSESSEE AND OTHERWISE ALSO IS IN SUPPOR T OF THE ORDER OF THE LD . CIT(A) AND SINCE WE HAVE REMITTED THE ISSUE BACK ON THE FILE OF T HE ASSESSING OFFICER FOR RECONSIDERATION OF THE ISSUE AFRESH ON ACCOUNT OF INVESTMENT MADE IN THE MUTUAL FUNDS, THEREFORE, THE CO FILED BY THE ASSESSEE HAS BEC OME INFRUCTUOUS AND THE SAME IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE DEPARTMENT GETS ACCEPTED FOR STATISTICAL PURPOSE AND THE CO OF THE ASSESSEE GETS DISMISSED. ORDER PRONOUNCED SOON AFTER THE CONCLUSION OF HEARING ON 24.02.2011. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 24.02.2011 VM/- COPY TO : APPELLANT/RES PONDENT/CIT(A)- /CIT, /DR