C.Rajalakshmy, CHENNAI V. ITO Non Corporate Ward 14(5), CHENNAI

CO 186/CHNY/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3757 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 234B; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2254/CHNY/2017 ( / ASSESSMENT YEAR: 2012-13) THE INCOME TAX OFFICER, NON-CORPORATE WARD 14(5), CHENNAI. VS SMT. C. RAJALAKSHMY, NEW NO.4, OLD NO.10, 57 TH STREET, ASHOK NAGAR, CHENNAI 600 083. PAN: ADXPR0667E ( /APPELLANT) ( /RESPONDENT) & C.O. NO.186/CHNY/2017 (IN ITA NO. 2254/CHNY/2017) SMT. C. RAJALAKSHMY, NEW NO.4, OLD NO.10, 57 TH STREET, ASHOK NAGAR, CHENNAI 600 083. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD 14(5), CHENNAI. PAN: ADXPR0667E ( /APPELLANT) ( /RESPONDENT) / REVENUE BY : SHRI AR.V. SREENIVASAN, JCIT /ASSESSEE BY : SHRI T. BANUSEKAR, CA '# /DATE OF HEARING : 08.02.2018 '# /DATE OF PRONOUNCEMENT : 03.05.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-14, CHENNAI, DATED 29.03.2017 IN ITA NO.47/2015-16 FOR THE ASSESSMENT 2 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 YEAR 2012-13 PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. THE ASSESSEE HAS ALSO RAISED CROSS OBJECTIONS AGAINST T HE ORDER OF THE LD.CIT(A). 2 REVENUES APPEAL:- THE REVENUE HAS RAISED THREE GROUNDS IN ITS APPEAL HOWEVER THE CRUXES OF THE ISSUES ARE THAT:- (I) THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIO N MADE BY THE LD.AO WHO HAD TREATED THE ADVANCE RECEIVED AMOUNTIN G TO RS.55,50,000/- TOWARDS THE INCOMPLETE CONSTRUCTION WORK AS THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSM ENT YEAR. (II) THE LD.CIT(A) HAS ERRED IN DELETING 75% OF THE ADDITION MADE BY THE LD.AO INVOKING SECTION 68 OF THE ACT BEING UNEXPLAINED MARRIAGE CASH GIFTS RECEIVED BY THE ASS ESSEE, ON ESTIMATE BASIS. 3. ASSESSEES CROSS OBJECTION:- THE ASSESSEE HAS RAISED TWO CROSS OBJECTIONS AND T HEY ARE BRIEFLY STATED HEREIN BELOW FOR ADJUDICATION: 3 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 (I) THE LD.CIT(A) HAS ERRED IN CONFIRMING 25% OF TH E AGGREGATE MARRIAGE CASH GIFTS RECEIVED BY THE ASSESSEE AS UNE XPLAINED CREDIT U/S.68 OF THE ACT. (II) THE LD.CIT(A) HAS ERRED IN LEVYING INTEREST U/ S.234A & 234B OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF REAL ESTATE A ND PROPERTY DEVELOPMENT, FILED HER RETURN OF INCOME ELECTRONICA LLY FOR THE ASSESSMENT YEAR 2012-13 ON 31.01.2013 ADMITTING TOT AL INCOME OF RS.8,20,800/-. INITIALLY THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 13.0 8.2013. FINALLY THE ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE A CT ON 28.03.2015 WHEREIN THE LD.AO MADE ADDITIONS OF RS.5 5,50,000/- BEING THE AMOUNT RECEIVED BY THE ASSESSEE AGAINST WHICH THE CONSTRUCTION WORK IS YET TO BE COMPLETED AND RS.13, 95,000/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT BEING THE MARRIAGE CASH GIFTS RECEIVED ON THE WEDDING OF HER DAUGHTER. 4 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 REVENUES APPEAL: 5. GROUND NO.2(I) : ADDITION OF RS.55,50,000/-:- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDIN GS, IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD REC EIVED RS.1,02,50,000/- TOWARDS CONSTRUCTION WORK IN KANCH IPURAM. OUT OF THIS AMOUNT, RS.47,00,000/- WAS TREATED AS THE REVE NUE RECEIPT DURING THE RELEVANT ASSESSMENT YEAR AND THE BALANCE AMOUNT OF RS.55,50,000/- WAS SHOWN AS SUNDRY CREDITORS. ON QU ERY IT WAS EXPLAINED BY THE ASSESSEE THAT THE SUM OF RS.55,50, 000/- RELATES TO THE INCOMPLETE CONSTRUCTION WHICH WAS SUBSEQUENTLY COMPLETED DURING THE FINANCIAL YEAR 2012-13 AND HENCE IT WAS SHOWN AS SUNDRY CREDITORS. HOWEVER THE LD.AO REJECTED THE SUBMISSIO N OF THE ASSESSEE AND TREATED THE AMOUNT OF RS.55,50,000/- A LSO AS THE REVENUE RECEIPT DURING THE RELEVANT ASSESSMENT YEAR BECAUSE TDS WAS DEDUCTED FOR THE ENTIRE AMOUNT OF RS.1,02,50,00 0/- RECEIVED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. ON AP PEAL, THE LD.CIT(A) DELETED THE ADDITION MADE BY THE LD.AO BE CAUSE THE ASSESSEE HAD BEEN CONSISTENTLY TREATING HER REVENUE INCOME IN HER BOOKS OF ACCOUNTS IN THE EARLIER YEARS BASED ON COM PLETION OF WORK AND THE ADVANCE RECEIPT AS LIABILITY. THE LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE RELIED IN THE DECISIONS OF THE CASES, CIT 5 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 VS. BILAHARI INVESTMENTS PVT. LTD. REPORTED IN 299 ITR 1-SC, CIT VS. SAKHI FINANCE LTD. REPORTED IN 292 ITR 2321 MADRAS, CIT VS. ANNAMALAI FINANCE LTD. REPORTED IN 275 ITR 451 MADRAS , WHEREIN THE FOLLOWING RATIO WAS LAID DOWN THE ASSESSEE IS FREE TO FOLLOW ANY RECOGNIZED SYSTE M OF ACCOUNTING AND THE REVENUE CANNOT CHANGE OR TAMPER WITH THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE UNLESS THE REVE NUE IS ABLE TO CONCRETELY PROVE THAT ANY REAL INCOME HAS ESCAPED FROM THE NET OF TAXATION . AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 5.1. THE LD.DR VEHEMENTLY ARGUED IN SUPPORT OF THE ORDER OF THE LD.AO, WHILE AS LD.AR RELIED ON THE ORDER OF THE LD .CIT(A). 5.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF AC COUNTING THEREBY RECOGNIZING THE REVENUE RECEIPT ON PROJECT S COMPLETION METHOD. ACCORDINGLY THE ADVANCE AMOUNT RECEIVED BY THE ASSESSEE WAS TREATED AS LIABILITY, SINCE THE CONSTRUCTION AC TIVITY FOR THAT PORTION OF THE ADVANCE WAS IN PROGRESS AND COMPLETED DURING THE SUBSEQUENT ASSESSMENT YEAR. THIS METHOD OF ACCOUNTING CONSISTE NTLY FOLLOWED BY 6 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 THE ASSESSEE CANNOT BE FOUND FAULT WITH AND THEREFO RE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN THIS ISSUE. THE DECISIONS RELIED BY THE LD.CIT(A) IN HIS ORDER IS ALSO RELEVA NT TO THE ISSUE IN THE APPEAL. HENCE, WE HEREBY UPHOLD THE ORDER OF LD.CIT (A) ON THIS ISSUE. 6. GROUND NO.2(II) : ADDITION OF RS. 13,95,000/- :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT W AS NOTICED BY THE LD.AO THAT THE ASSESSEE HAD MADE VAR IOUS CASH DEPOSITS IN HER BANK ACCOUNT. ON QUERY, IT WAS EXPL AINED THAT CASH DEPOSIT MADE ON 02.11.2011 AMOUNTING TO RS.13,95,00 0/- IN HER BANK ACCOUNT WERE CASH GIFTS RECEIVED BY HER DURING THE MARRIAGE OF HER DAUGHTER ON THE SAME DAY. THE LD.AO REJECTED THE SU BMISSION OF THE ASSESSEE BECAUSE OF THE FOLLOWING REASONS:- I. SINCE THE MARRIAGE TOOK PLACED BETWEEN 9AM AND1 1AM THERE WOULD NOT HAVE BEEN SUFFICIENT TIME TO COUNT THE CA SH GIFTS AND DEPOSIT IT IN THE BANK ON THE SAME DAY. II. THE ASSESSEE HAS NOT DISCLOSED THE EXPENDITURE INCURRED IN CONNECTION WITH THE MARRIAGE OF HER DAUGHTER. 7 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 III. THE MARRIAGE VENUE WAS A PRESTIGIOUS MARRIAGE HALL, THE RENT RANGING BETWEEN RS.5 TO 10 LAKHS OTHER THAN THE EXP ENDITURE INCURRED FOR FOOD, MUSIC, CLOTHES, ETC., FOR THE ABOVE STATED REASONS THE LD.AO OPINED THAT THE AMOUNT OF RS.13,95,000/- STATED TO BE AS CASH GIFTS WOULD BE THE UNEXPLAINED INCOME OF THE ASSESSEE AND THEREBY INVOKING THE PRO VISIONS OF SECTION 68 OF THE ACT, MADE ADDITION. ON APPEAL, T HE LD.CIT(A) CONSIDERING THE FINANCIAL STATUS OF THE FAMILY ESTI MATED THE UNEXPLAINED INCOME AT 25% OF THE TOTAL MARRIAGE GIF TS RECEIVED AND THEREBY SUSTAINED THE ADDITION TO THE EXTENT OF RS. 3.5 LAKHS. 6.1 BEFORE US THE LD.DR HEAVILY RELIED ON THE ORDER OF THE LD.AO AND PLEADED THAT THE SAME MAY BE SUSTAINED AND THE ORDE R OF THE LD.CIT(A) MAY BE SET ASIDE. THE LD.AR ON THE OTHER HAND ARGUED BY STATING THAT THE ADDITION SUSTAINED BY THE LD.CIT(A ) IS ERRONEOUS AND RELIEF MAY BE GRANTED FOR THE ENTIRE AMOUNT OF CASH GIFTS OF RS.13,95,000/-. 6.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS A CUSTOMARY PR ACTICE TO OFFER CASH 8 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 GIFTS ON THE OCCASION OF MARRIAGES. THEREFORE THE E NTIRE CASH DEPOSITS MADE IN THE BANK ACCOUNT CLAIMED TO HAVE BEEN RECEI VED AS CASH GIFTS CANNOT BE TAXED INVOKING THE PROVISIONS OF SE CTION 68 OF THE ACT. THE LD.CIT(A) AFTER EXAMINING THE FAMILY STATUS OF THE ASSESSEE HAS FAIRLY ESTIMATED THE CASH GIFTS RECEIVED DURING THE OCCASION OF HER DAUGHTERS MARRIAGE. IN THIS SITUATION, WE DO NOT F IND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THIS I SSUE. ASSESSEES CROSS OBJECTION:- 7. GROUND NO. 3(I) : SUSTAINING THE ADDITION OF 25% OF THE TOTAL MARRIAGE GIFT U/S.68 OF THE ACT:- SINCE WE HAVE UPHELD THE ORDER OF THE LD.CIT(A) FO R SUSTAINING THE ADDITION OF 25% OF THE AGGRIGATE MARRIAGE CASH GIFTS RECEIVED BY THE ASSESSEE AMOUNTING TO RS.3.5 LAKHS, THE CROSS O BJECTION RAISED BY THE ASSESSEE ON THIS ISSUE DOES NOT SURVIVE. 8. GROUND NO.3(II) : LEVY OF INTEREST U/S.234A & 234B OF THE ACT:- LEVY OF INTEREST U/S.234A & 234B OF THE ACT ARE CO NSEQUENTIAL IN NATURE AND THEREFORE THIS GROUND RAISED BY THE ASSE SSEE IS ALSO NOT MAINTAINABLE. 9 ITA NO. 2254/CHNY/2017 & CO NO.186 /CHNY/2017 9. IN THE RESULT THE APPEAL OF THE REVENUE AS WEL L AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 03 RD MAY, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER &' /CHENNAI, () /DATED 03 RD MAY, 2018 RSR 1. / ASSESSEE 2. /REVENUE 3. - ( )/CIT(A) 4. - /CIT 5. ./0 1 /DR 6. 02 /GF