Shri S.Thangaraj, CHENNAI V. ACIT, CHENNAI

CO 125/CHNY/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8309 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2013
• Assessment Year: misc
• Appeal Filed On: 10-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.(SS)A.NO.27/MDS/2009 BLOCK PERIOD 01-04-1988 TO 20-04-1999 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE IX CHENNAI VS SHRI. S. THANGARAJ NO.40, THAIYAPPA MUDALI STREET CHENNAI - 1 [PAN AAAFV 2455 L] (APPELLANT) (RESPONDENT) C.O.NO.125/MDS/2009 BLOCK PERIOD 01-04-1988 TO 20-04-1999 SHRI. S. THANGARAJ NO.40, THAIYAPPA MUDALI STREET CHENNAI - 1 VS THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE IX CHENNAI (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P. JACOB, ADDL. CIT ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 05-03-2013 DATE OF PRONOUNCEMENT : 08-03-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REV ENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-IX, CHENNAI, DATED 19.3.2009. I.T.(SS)A.NO. 27/09 C.O 125/09 :- 2 -: 2. IN THE APPEAL OF THE REVENUE, THE SOLE ISSUE INVOL VED IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION MADE BY T HE ASSESSING OFFICER AMOUNTING TO ` 8,05,127/-. THE ISSUE INVOLVED IN THE CROSS OBJEC TION OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIR MING THE LOAN CREDITS TO THE EXTENT OF ` 3,00,720/-. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. IN THIS CASE, ADDITION U/S 68 OF THE ACT WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF LOAN CREDITORS. THIS IS A SE COND ROUND OF APPEAL BEFORE THE TRIBUNAL. IN THE FIRST ROUND OF APPEAL, THE TRIBUNAL CONFIRMED CERTAIN ADDITIONS, DELETED CERTAIN ADDITI ONS AND SET ASIDE CERTAIN ADDITIONS TO THE FILE OF THE ASSESSING OFFI CER FOR ADJUDICATION AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE. 4. IN THE SECOND ROUND, THE ASSESSING OFFICER MADE THE ADDITION OF ` 7,20,720/- RELATING TO THE FOLLOWING LOAN CREDITOR S NOT PRODUCED BEFORE HIM FOR EXAMINATION: SL.NO. NAME AMOUNT 1. MARUDHAI A. 1,00,000 2. MARUDHAI C. 1,50,000 3. SHANMUGHAM PILLAI 50,000 4. VADIVELU M. 1,20,000 5. ANNAKAMU 50,000 6. RAJASEKARAN 80,000 I.T.(SS)A.NO. 27/09 C.O 125/09 :- 3 -: 7. KAMATCHI AMMAL 5,720 8. PAAPU 50,000 9. RAMANI 17,500 10. VIJAYA 17,500 11. SHANMUGASUNDARA 80,000 TOTAL 7,20,720 5. SIMILARLY, THE ASSESSING OFFICER MADE ADDITION IN R ESPECT OF THE FOLLOWING LOAN CREDITORS WHO WERE PRODUCED BEFO RE THE ASSESSING OFFICER: NAME AMOUNT 1. THANGAVELU 70,000 2. KAVERI M. 4,30,000 3. MUTHUKARUPPAIAH 50,000 4. SARASWATHI 39,000 5. RAJU 36,627 6. CHINNASAMY 60,000 7. KAMARAJ 44,600 8. SUNDARAM 37,500 9. PALANIANDI 68,000 10. PERIANNAN 18,000 11. RAVI M. 17,500 12. SARASU 6,000 13. PERIAIAH 16,000 14. MEENA 30,000 15. AMSAVALLI 17,500 16. MUTHU 20,000 17. CHINNAIAH 17,000 18. SUBRAMANIAN 20,000 19. CHELLIAH 40,000 20. KANGARATHINAM 80,000 21. NATARAJAN 42,500 22. PRABHAKARAN 41,400 23. CHELLIAH N. 43,500 24. NALLAMMAL 60,000 TOTAL 13,05,127 I.T.(SS)A.NO. 27/09 C.O 125/09 :- 4 -: 6. ON APPEAL, THE CIT(A) DELETED THE ADDITION OF ` 8,05,127/- IN RESPECT OF THE CREDITORS WHO WERE PRODUCED BEFOR E THE ASSESSING OFFICER. FURTHER, THE CIT(A), OUT OF LOAN CREDITOR S WHO WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER, DELETED THE ADDITION IN RESPECT OF THE FOLLOWING PERSONS NAME AMOUNT MARUDHAI A. 1,00,000/- SHANMUGHAM PILLAI 50,000/- VADIVELU M. 1,20,000/- 2,70,000/- ON THE GROUND THAT THE ADDITION IN RESPECT OF THE C REDITORS WERE DELETED BY THE CIT(A). IN THE FIRST ROUND OF APPEA L, THE TRIBUNAL UPHELD SUCH DELETION. THE CIT(A) CONFIRMED THE BAL ANCE DISALLOWANCE OF ` 3,00,720/- MADE BY THE ASSESSING OFFICER. 7. THE REVENUE IS IN APPEAL BEFORE US IN RESPECT OF DE LETION OF LOAN CREDITORS OF ` 8,05,127/- BY THE CIT(A). 8. THE DR SUBMITTED THAT THE DELETION OF ` 2,70,000/- MADE BY THE CIT(A) IN RESPECT OF THE ABOVE PERSONS ON THE G ROUND THAT THESE WERE DELETED BY THE CIT(A) AND SUCH DELETION WAS UP HELD BY THE TRIBUNAL IS FACTUALLY INCORRECT. ACCORDING TO THE DR, ADDITION IN RESPECT OF THESE THREE CREDITORS WAS SET ASIDE BY THE TRIBU NAL BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH. I.T.(SS)A.NO. 27/09 C.O 125/09 :- 5 -: 9. THE A.R OF THE ASSESSEE DID NOT DISPUTE THE ABOVE CONTENTION OF THE DR. THUS, WE FIND THAT THE DELET ION OF ADDITION OF ` 2,70,000/- BY THE CIT(A) WAS ON AN ERRONEOUS GROUND . THE A.R COULD NOT POINT OUT ANY REASON AS TO WHY ADDITION OF ` 2,70,000/- AS MADE BY THE ASSESSING OFFICER SHOULD NOT BE RESTORED. W E, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) IN RESPECT OF DELETIO N OF ADDITION OF ` 2,70,000/- IN RESPECT OF ABOVE MENTIONED THREE LOAN CREDITORS AND RESTORE THE ORDER OF THE ASSESSING OFFICER MAKING A DDITION OF ` 2,70,000/- IN RESPECT OF THESE CREDITORS. 10. IN RESPECT OF DELETION OF ` 8,05,127/- RELATING TO THE CREDITORS WHO APPEARED BEFORE THE ASSESSING OFFICER, THE DR C ONTENDED THAT THE TOTAL LOAN TAKEN FROM THESE CREDITORS WERE ` 13,05,127/-. THE ASSESSING OFFICER, AFTER EXAMINING THE CREDITORS, M ADE A REASONABLE ESTIMATE ABOUT THEIR CREDITWORTHINESS OF ` 5 LAKHS AND THEREFORE, MADE THE BALANCE ADDITION OF ` 8,05,127/-. HE, THEREFORE, CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION O F ` 8,05,127/-. 11. THE A.R OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A) WHO DELETED THE ADDITION ON THE GROUND THAT IT CANN OT BE PRESUMED THAT HALF OF THE LOAN IS GENUINE AND HALF OF THE LO AN IS NOT GENUINE. IN THE OPINION OF THE CIT(A) SINCE THE PERSONS HAVE AP PEARED AND FILED I.T.(SS)A.NO. 27/09 C.O 125/09 :- 6 -: DETAILS ABOUT THEIR CAPACITY AND SINCE SOME CREDITO RS ARE INCOME TAX PAYERS ALSO SUCH LOAN CREDITORS SHOULD BE ACCEPTED AS GENUINE. 12. WE FIND THAT THE ASSESSING OFFICER HAS OUT OF THE A GGREGATE LOAN OF ` 13,05,127/- FROM THE PERSONS WHO APPEARED BEFORE T HE ASSESSING OFFICER, HAS ACCEPTED A SUM OF ` 5 LAKHS AS GENUINE LOAN AND MADE ADDITION OF BALANCE AMOUNT OF ` 8,05,127/-. THE IDENTITIES OF THE CREDITORS IN QUESTION IS NOT IN DISPUTE. FURTHER IT IS ALSO NOT IN DISPUTE THAT THESE LOAN CREDITORS APPEARED BEFORE THE ASSES SING OFFICER AND CONFIRMED OF THEIR ADVANCING THE LOANS IN QUESTION TO THE ASSESSEE. THE ASSESSING OFFICER HAS NOT GIVEN ANY PARTYWIE BR EAK-UP OF ` 5 LAKHS FROM THESE CREDITORS WHICH WAS ACCEPTED BY HIM AS G ENUINE. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSIN G OFFICER AS TO HOW HE HAS ARRIVED AT THE FIGURE OF ` 5 LAKHS AND BY APPLYING WHICH TEST HE CONCLUDED THAT THESE CREDITORS HAD THE CAPA CITY OF ADVANCING LOAN TO THE ASSESSEE TO THE TUNE OF ` 5 LAKHS ONLY AND COULD NOT HAVE ADVANCED LOAN TO THE EXTENT OF ` 13,05,127/- TO THE ASSESSEE. IN ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RECOR D, IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER ARBITRARI LY ACCEPTED THE LOAN TO THE EXTENT OF ` 5 LAKHS ONLY AS GENUINE AND ARBITRARILY ADDED BALANCE AMOUNT OF ` 8,05,127/- AND SUCH AN ACTION IS NOT SUSTAINABLE. WE, THEREFORE, DO NOT FIND ANY GOOD REASON TO INTER FERE WITH THE ORDER I.T.(SS)A.NO. 27/09 C.O 125/09 :- 7 -: OF THE CIT(A) IN RESPECT OF THESE CREDITS. THEREFO RE, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AS DISCUSSED ABOVE. 13. IN THE CROSS OBJECTION, THE ASSESSEE DISPUTED THE CONFIRMATION OF ADDITION OF ` 3,00,720/- BY THE CIT(A) IN RESPECT OF THE SEVEN CREDITORS WHO COULD NOT BE PRODUCED BEFORE TH E ASSESSING OFFICER. 14. THE A.R COULD NOT POINT OUT ANY SPECIFIC ERROR IN T HE ORDER OF THE CIT(A). IN ABSENCE OF ANY REASON BEING POINTED OUT BY THE A.R FOR ANY INTERFERENCE WITH THE ORDER OF THE CIT(A), WE D O NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN RESPECT OF THIS ISSUE. THEREFORE, THE CROSS OBJECT ION FILED BY THE ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS P ARTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON FRIDAY, THE 08 TH OF MARCH, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 08 TH MARCH, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR