Dr.R.Manokaran, Aruppukottai V. ITO, Virudhunagar

CO 18/CHNY/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5892 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TAPAS KUMAR DUTTA
• Assessee Lawyers: N DEVANATHAN
• Keywords: Unexplained cash credit; Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI HARI OM MARATHA, J.M. AND SHRI N.S. SAINI, AM .. I.T.A. NO. 358/MDS/2010 ASSESSMENT YEARS 2006-07 THE INCOME-TAX OFFICER WARD I(2) VIRUDHUNAGAR VS. DR. R. MANOHARAN NO. 33, PATTABIRAMAR KOVIL STREET ARUPUKOTTAI (PAN NO. ACYPM 4367 Q) (APPELLANT) (RESPONDENT) CO NO. 18/MDS/2010 A/O I.T.A. NO. 358/MDS/2010 ASSESSMENT YEARS 2006-07 DR. R. MANOHARAN VS. T HE INCOME-TAX OFFICER NO. 33, PATTABIRAMAR KOVIL STREET WARD I(2) ARUPUKOTTAI VIRUDHUNAGAR (PAN NO. ACYPM 4367 Q) ASSESSEE BY : SHRI N. DEVANATHAN DEPARTMENT BY : SHRI TAPAS KUMAR DUTTA O R D E R PER N.S. SAINI, A.M :- THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS O BJECTION FILED BY THE ASSESSEE, BOTH DIRECTED AGAINST THE OR DER PASSED BY THE PAGE 2 OF 9 I.T.A. NO. 358/MDS/2010 CIT(A)-II, MADURAI DATED 10.12.2009 FOR ASSESSMENT YEAR 2006-07 IN APPEAL NO. 338/2008-09. 2. IN THIS APPEAL, THE REVENUE HAS TAKEN TWO EFFECT IVE GROUNDS OF APPEAL WHICH READ AS UNDER: 1. THE COMMISSIONER OF INCOME-TAX [APPEALS] ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED GIFT OF ` . 10,14,132/- BY OBSERVING THAT THE TRANSACTION WAS EVIDENCED FROM THE TRANSFER OF FUNDS FROM THE NRE AC COUNT. THE COMMISSIONER OF INCOME-TAX [APPEALS] HAS FAILED TO NOTE THAT ON 30.01.2006 A SUM OF ` . 6,14,132/- WAS CREDITED IN THE BANK ACCOUNT OF ASSESSEE AND THERE WAS NO CORRESPON DING DEBIT ENTRY FOR ` 6,14,132/- ON 30.01.2006 IN THE DONOR ACCOUNT FURNISHED BY THE ASSESSEE. 2. THE COMMISSIONER OF INCOME-TAX [APPEALS] HAS ERR ED IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE NAME OF SHRI D. SUKUMARAN ` 4 LAKHS. THE COMMISSIONER OF INCOME-TAX [APPEALS] OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE IS A NOMINEE OF THE CR EDITOR AND HAS THE POWER TO DRAW CHEQUE FROM THE NRE ACCOUNT O F THE CREDITOR. THE COMMISSIONER OF INCOME-TAX [APPEALS] OUGHT TO HAVE FOLLOWED THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF CIT. VS P. MOHANAKALA [CIVIL APPEAL NO. 2540 OF PAGE 3 OF 9 I.T.A. NO. 358/MDS/2010 2007 DATED 15.5.2007] AND HELD THAT THE DOUBTFUL NATUR E OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WER E FOUND CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE A SSESSEE HAVE BEEN DULY TAKEN INTO CONSIDERATION BY THE AUTHOR ITIES BELOW. THE TRANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONE. MAY BE THE MONEY CAME BY WAY OF BANK CHE QUES AND PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQUENCE. 3. SINCE THE FACTS AND ISSUE INVOLVED IN BOTH THE GROUNDS ARE COMMON, THEY ARE BEING DISPOSED OFF TOGETHER AS UND ER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE MATERIAL ON RE CORD. IN THE INSTANT CASE, ASSESSEE CLAIMED TO HAVE RECEIVED A G IFT OF ` 10,14,132/- FROM HIS YOUNGER BROTHER, NAMELY, DR. D HINAKARAN RADHAKRISHNAN, WHO IS PRESENTLY AN US CITIZEN, EMPL OYED AS SOFTWARE CONSULTANT IN AR & T, USA. OUT OF THE AFO RESAID GIFT OF ` 10,14,132/-, ` 4 LAKHS WAS RECEIVED BY CHEQUE FROM NRE ACCOUNT OF HIS BROTHER MAINTAINED WITH CANARA BANK, ARUPUKOTT AI AND BALANCE AMOUNT OF ` 6,14,132/- WAS RECEIVED THROUGH CHEQUE DRAWN ON CI TY PAGE 4 OF 9 I.T.A. NO. 358/MDS/2010 BANK, SCARSDALE, NEW YORK 10583 FOR UDS 14000 WHICH WAS CREDITED IN THE STATE BANK OF INDIA ACCOUNT OF THE ASSESSEE ON 30.01.2006. 5. FURTHER, THE ASSESSEE ALSO CLAIMED TO HAVE RECEI VED LOAN OF ` . 4 LAKHS FROM HIS NEPHEW, NAMELY, SHRI SUKUMARAN DUR AIRAJ, WHO IS ALSO A US CITIZEN EMPLOYED AS SOFTWARE CONSULTANT T HROUGH NRE A/C MAINTAINED WITH CANARA BANK, ARUPUKOTTAI. THE ASSE SSING OFFICER HAS TREATED THE AFORESAID GIFT AMOUNT OF ` . 10,14,132/- AND LOAN OF ` 4 LAKHS AS ASSESSEES INCOME OF THE YEAR UNDER CON SIDERATION BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT. 5. THE MAIN REASON FOR NOT ACCEPTING THE ABOVE GIFT AND LOAN BY THE ASSESSEE WAS THAT THE DONOR WAS RESIDENT OF USA AND THEREFORE, CONFIRMATION COULD NOT BE GIVEN. ASSESSEE WAS A NO MINEE AND POWER OF ATTORNEY HOLDER IN NRE ACCOUNTS AND THEREF ORE, THE TRANSACTION WAS UNILATERAL. THE ASSESSING OFFICER SUPPORTED HIS ACTION BY RELYING ON THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS. MOHANAKALA REPORTED IN 291 ITR 278 [SC]. PAGE 5 OF 9 I.T.A. NO. 358/MDS/2010 6. ON APPEAL, THE COMMISSIONER OF INCOME-TAX [APPEA LS] DELETED THE ADDITIONS BY OBSERVING THAT THE ADDITIONS MADE IN THIS REGARD WERE UNWARRANTED AND NOT CALLED FOR. THE APPELLANT FURNISHED SUFFICIENT EVIDENCES TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF TRANSACTION OF DONOR AND CREDITOR BE FORE THE ASSESSING OFFICER. HENCE BOTH THE ADDITIONS WERE D ELETED. 7. BEFORE US, THE MAIN CONTENTION OF THE LD. D.R. W AS THAT THE COMMISSIONER OF INCOME-TAX [APPEALS] HAS DELETED TH E ADDITIONS BY OBSERVING THAT THE ENTRIES AMOUNT HAS COME FROM NRE ACCOUNT OF THE DONOR AND HE POINTED OUT FROM THE NRE ACCOUNT O F THE DONOR MAINTAINED WITH CANARA BANK THAT ` 6,14,132/- HAS NOT BEEN PAID TO THE ASSESSEE FROM THE SAID ACCOUNT. 8. ON THE OTHER HAND, THE LD. A.R. OF THE ASSESSEE FULLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME-TAX [APPEAL S]. PAGE 6 OF 9 I.T.A. NO. 358/MDS/2010 9. WE FIND THAT IN THE INSTANT CASE, THE IDENTITY O F BOTH THE CREDITORS IS NOT IN DOUBT AND THE SAME WAS ALSO SUP PORTED BY A COPY OF PASSPORT OF BOTH THE CREDITORS. THE ASSESSING O FFICER HAS STATED IN THE ASSESSMENT ORDER THAT THE CONFIRMATION OF TH E DONOR COULD NOT BE FILED, BUT THE COMMISSIONER OF INCOME-TAX [A PPEALS] HAS OBSERVED FROM THE ASSESSMENT ORDER THAT THE CONFIRM ATION OF DONOR WAS FILED BEFORE THE ASSESSING OFFICER. THE LD. D. R. BEFORE US HAS NOT DISPUTED THE ABOVE FINDING OF THE COMMISSIONER OF INCOME-TAX [APPEALS]. 10. WE FURTHER OBSERVE THAT THE GIFT OF ` 4 LAKHS FROM SHRI DINAKARAN RADHAKRISHNAN AND LOAN FROM SHRI SUKUMARA N DURAIRAJ WAS RECEIVED BY ASSESSEE FROM NRE ACCOUNTS MAINTAIN ED BY BOTH CREDITORS WITH CANARA BANK, ARUPUKOTTAI. FROM THE NRE ACCOUNT OF BOTH THE CREDITORS, WE FIND THAT THE BALANCE AS ON 31.3.2005 IN THEIR NRE ACCOUNTS WERE MUCH MORE THAN THE AMOUNT OF ` 4 LAKHS GIVEN BY EACH OF THE CREDITORS TO THE ASSESSEE DURING F.Y . 2005-06. THE REVENUE COULD NOT POINT OUT ANY CASH DEPOSIT IN THE SAID NRE ACCOUNT. THUS, IN RESPECT OF THE SAID TRANSACTION, CREDIT WORTHINESS OF THE CREDITORS OR GENUINENESS OF THE TRANSACTIONS CANNOT BE PAGE 7 OF 9 I.T.A. NO. 358/MDS/2010 DISPUTED. WE DO NOT FIND ANY MATERIAL ON THE BASIS OF WHICH THE SAID AMOUNT CAN BE TREATED AS ASSESSEES UNDISCLOSE D INCOME OF THE YEAR UNDER CONSIDERATION. THAT THE ASSESSEE WAS A NOMINEE IN THE AFORESAID ACCOUNTS OR THAT THE ASSESSEE WAS AUTHORI ZED TO OPERATE THE SAID ACCOUNT DOES NOT EMPOWER THE ASSESSING OFF ICER TO TREAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE SAID A CCOUNTS AS INCOME OF THE ASSESSEE WITHOUT ANY FURTHER MATERIAL . IN RESPECT OF BALANCE AMOUNT OF ` 6,14,132/-, WE FIND THAT THE CLAIM OF THE ASSESSEE ALL ALONG WAS THAT THE SAID AMOUNT WAS SEN T BY HIS BROTHER, NAMELY, SHRI DINAKARAN RADHAKRISHNAN FROM HIS BANK ACCOUNT MAINTAINED WITH CITY BANK, SCARSDALE, NEW YORK. IT WAS NEVER THE CASE OF THE REVENUE THAT THE SAID AMOUNT WAS RECEIV ED BY THE ASSESSEE THROUGH NRE ACCOUNT OF SHRI DINAKARAN RADH AKRISHNAN, MAINTAINED WITH CANARA BANK, ARUPUKOTTAI. THEREFOR E, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE MERELY BECAUSE THE TRANSACTION OF ` 6,14,132 IS NOT REFLECTED IN THE NRE ACCOUNT OF SH RI DINAKARAN RADHAKRIHSNAN, MAINTAINED WITH CANARA BAN K. WE FIND THAT THE SAID AMOUNT CAME TO THE ASSESSEE FROM OUTS IDE INDIA THROUGH PROPER BANKING CHANNEL WHICH IS SUPPORTED B Y PHOTOCOPY OF CHEQUE NO. 682099636 DATED 28.12.2005 DRAWN BY SHRI DINAKARAN PAGE 8 OF 9 I.T.A. NO. 358/MDS/2010 RADHAKRISHNAN. IT IS ALSO OBSERVED THAT THE SIGNAT URE OF THE DONOR IN THE AFORESAID CHEQUE ALSO AGREES WITH THE SIGNAT URE OF THE DONOR IN THE GIFTS DECLARATION COPY OF WHICH IS ALSO FILE D BEFORE US. THUS WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH TH E ORDER OF THE COMMISSIONER OF INCOME-TAX [APPEALS]. FURTHER, IN OUR CONSIDERED OPINION, IN THE INSTANT CASE, ASSESSEE RECEIVED GIF T FROM HIS OWN YOUNGER BROTHER AND ON FACTS, THE CASE IS DISTINGUI SHABLE FROM THE FACTS IN THE CASE OF CIT VS. MOHAN KALA [SUPRA] AND THEREFORE, IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. THERE FORE, THE APPEAL OF THE REVENUE IS DISMISSED. 11. THE CROSS OBJECTION FILED BY THE ASSESSEE BEING IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX [APPEAL S] HAS BECOME INFRUCTUOUS IN VIEW OF OUR ABOVE DECISION. HENCE T HE SAME STANDS DISMISSED. PAGE 9 OF 9 I.T.A. NO. 358/MDS/2010 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 23.5.2011. SD/- SD/- ((HARI OM MARATHA ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 23 RD MAY, 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE