S.Nageswaran, Kanchipuram V. ITO Ward 2, Kanchipuram

CO 56/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8005 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 11-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N VIJAYAKUMAR
• Keywords: Reopening of assessment; Unexplained investment; Audit objection; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ I.T.A.NO.2973/CHNY/2017 ( [ [ / ASSESSMENT YEAR: 2001-02) & CO NO. 56/CHNY/2018 THE INCOME TAX OFFICER, WARD-2, KANCHIPURAM VS SHRI S. NAGESWARAN, NO.54, RIVER BANK STREET, SEVELIMEDU, KANCHIPURAM 631 502. PAN: ADHPN9687N ( /APPELLANT) ( /RESPONDENT) [ /ASSESSEE BY : SHRI AR.V. SREENIVASAN, JCIT /REVENUE BY : SHRI N. VIJAYAKUMAR, CA /DATE OF HEARING : 27.06.2019 /DATE OF PRONOUNCEMENT : 18.07.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI DATED 28.09.2017 AND PERTAINS TO THE ASSESSMENT YEAR 2001-02. 2 I.T.A. NO.2973/CHNY/2017 & C.O. NO.56/CHNY/2018 2. SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDITION OF RS.7,75,628/- U/S.69 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). EVEN THOUGH THE TAX EFFECT INVOLVED IN THIS CASE IS VERY LOW, THE REVENUE HAS FILED THE APPEAL SINCE THERE WAS AN AUDIT OBJECTION. ACCORDING TO THE LD.DR, THE ASSESSING OFFICER MADE ADDITION OF RS.9,40,822/- AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. THE CIT(A) HOWEVER SUSTAINED THE ADDITION OF RS.1,65,194/- AND DELETED THE ADDITION OF RS.7,75,606/-. ACCORDING TO THE LD.DR, THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNT. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE SOURCE FOR RS.59,178/- WAS FROM FLOWER BUSINESS. THE FUND FLOW STATEMENT SAID TO BE FILED BY THE ASSESSEE COULD NOT BE VERIFIED SINCE THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. THERE WAS NO PROPER EXPLANATION FORTHCOMING FROM THE ASSESSEE TO THE EXTENT OF RS.9,40,822/-, HENCE THE ASSESSING OFFICER MADE THE ADDITION. THEREFORE THE CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 3. ON THE CONTRARY SHRI N. VIJAYAKUMAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FAMILY CONSISTS OF HIS WIFE 3 I.T.A. NO.2973/CHNY/2017 & C.O. NO.56/CHNY/2018 MRS. GODHAVARI NAGESWARAN AND TWO SONS SHRI N. VINAYAGAM & SHRI N. SUBRAMANIAN. THE ASSESSEE ENGAGED HIMSELF IN THE BUSINESS OF SALE OF FLOWERS. THE FAMILY MEMBERS ALSO ASSISTED THE ASSESSEE IN THE FLOWER BUSINESS AND THEY ARE ALSO PAID SALARY. INTEREST ALSO PAID ON THE OUTSTANDING WAGES PAYABLE TO THE RESPECTIVE FAMILY MEMBERS. IN FACT A SUM OF RS.49,572/- WAS CREDITED IN THE RESPECTIVE FAMILY MEMBERS ACCOUNT. IN THE FUND FLOW STATEMENT FILED BEFORE THE ASSESSING OFFICER, IT WAS DISCLOSED BOTH WAGES AND INTEREST WAS DUE. IT MEANS THAT THE ENTIRE AMOUNT WAS OUTSTANDING AT THE YEAR END. THE ASSESSING OFFICER HAS NOT CONSIDERED THIS FUND FLOW STATEMENT. THEREFORE THE CIT(A) AFTER CONSIDERING THE FUND FLOW STATEMENT FOUND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE TO THE EXTENT OF RS.7,75,606/-. ACCORDINGLY HE RESTRICTED THE ADDITION ONLY TO THE EXTENT OF RS.1,65,194/-. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER MADE ADDITION OF RS.9,40,800/- EVEN THOUGH HE FOUND THAT THE UNEXPLAINED INVESTMENT WAS RS.9,40,822/-. THE CIT(A) AFTER CONSIDERING THE FUND FLOW STATEMENT FILED BY THE ASSESSEE AND THE SOURCE OF INCOME OF HIS 4 I.T.A. NO.2973/CHNY/2017 & C.O. NO.56/CHNY/2018 WIFE AND TWO CHILDREN FOUND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE TO THE EXTENT OF RS.7,75,606/-. IN FACT, THE OUTSTANDING WAGES AND INTEREST ON SUCH WAGES ARE FOUND TO BE GENUINE BY THE CIT(A). THE CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE FOUND THAT THE INVESTMENT IN KALYANAMANDAPAM TO THE EXTENT OF RS.1,65,194/- CANNOT BE ACCEPTED SINCE NO MATERIAL EVIDENCE WAS AVAILABLE TO SUPPORT THE CLAIM OF THE ASSESSEE. THE CIT(A) HAS ALSO FOUND THAT THE ASSESSEE HAS NOT PAID ANY TAX IN ANY OF THE EARLIER YEARS. THE CIT(A) ALSO FOUND THAT THE ASSESSEES TWO CHILDREN ARE MARRIED AND THEY ARE ALSO HAVING CHILDREN. AFTER CONSIDERING THE SUPPORT FROM HIS FAMILY MEMBERS AND THE EXPENDITURE INCURRED FOR MAINTAINING THE FAMILY, THE CIT(A) FOUND THAT THE ASSESSEES EXPLANATION WITH REGARD TO THE SOURCE OF RS.1,65,194/- CANNOT BE ACCEPTED. HOWEVER HE GRANTED RELIEF TO THE EXTENT OF RS.7,75,606/-. THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF THE CIT(A) CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.1,65,194/-. THE REVENUE ALONE IS IN APPEAL. HAVING TAKEN INTO CONSIDERATION, THE INCOME GENERATED OUT OF THE FLOWER BUSINESS, THE INCOME OF THE ASSESSEES WIFE AND HIS TWO CHILDREN, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION TO THE EXTENT OF RS.7,75,606/-. IT IS NOT IN 5 I.T.A. NO.2973/CHNY/2017 & C.O. NO.56/CHNY/2018 DISPUTE THAT THE ASSESSEES FAMILY CONSISTS OF 8 MEMBERS, THE ASSESSEE CONSTRUCTED A KALYNAMANDAPAM AND THE INVESTMENT IN OTHER YEARS. THE REVENUE HAS DISPUTED THE INVESTMENT MADE BY THE ASSESSEE ONLY FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSEE DISCLOSED THE INVESTMENT OF RS.79,115/- FOR THE ASSESSMENT YEAR 2000-01. SIMILARLY FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE HAS DISCLOSED RS.94,704/-. CONSIDERING THE FAMILY SITUATION THAT THERE ARE TWO ADULT MALE CHILDREN AND THEY ARE ALSO MARRIED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT INVESTMENT OF RS.7,75,606/- IN THE CONSTRUCTION OF THE KALYANAMANDAPAM CANNOT BE DOUBTED. BY TAKING INTO CONSIDERATION OF THE EXISTING ECONOMIC SCENARIO IN THIS PART OF THE COUNTRY MORE PARTICULARLY THE SALARY AND WAGES OF THE EMPLOYEES FOR THE ASSESSMENT YEAR 2001-02, THE FAMILY MEMBERS AND ASSESSEE COULD HAVE EARNED RS.7,75,606/-. THEREFORE THE CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION TO RS.1,65,194/-. HENCE THIS TRIBUNAL DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 5. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONLY TO CHALLENGE THE ORDER OF REOPENING. ADMITTEDLY THE ASSESSMENT WAS REOPENED ON 6 I.T.A. NO.2973/CHNY/2017 & C.O. NO.56/CHNY/2018 THE BASIS OF FACTUAL SITUATION BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER BY THE INTERNAL AUDIT WING OF THE DEPARTMENT. WHEN THE INTERNAL AUDIT WING OF THE DEPARTMENT BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THE EXISTING FACTS AND SITUATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT. THEREFORE REOPENING OF ASSESSMENT IS CONFIRMED. 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 18 TH JULY, 2019 AT CHENNAI. SD/- SD/- ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, /DATED, THE 18 TH JULY, 2019. RSR /COPY TO: 1. [ / ASSESSEE 2. /REVENUE 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF