Vimal Kumar Sharma, Salem V. ITO Ward 1(2), Salem

ITA 1008/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6651 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 11-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R.RAGHUNATHAN
• Keywords: Unexplained cash credit; Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , , ' BEFORE SHRI GEORGE MATHAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1007/CHNY/2019 /ASSESSMENT YEAR: 2015-16 SHRI BHAWARLAL SHARMA, 33-A, KARIKALAN STREET, SHEVAPET, SALEM-636 002. VS. THE INCOME TAX OFFICER, WARD-1(2), SALEM. [PAN: AAKHB 0807 J ] ./ ITA NO.1008/CHNY/2019 /ASSESSMENT YEAR: 2015-16 SHRI VIMAL KUMAR SHARMA, 33-A, KARIKALAN STREET, SHEVAPET, SALEM-636 002. VS. THE INCOME TAX OFFICER, WARD-1(2), SALEM. [PAN: AAKHV 0308 L ] ./ ITA NO.1009/CHNY/2019 /ASSESSMENT YEAR: 2015-16 SHRI LAXMI VALLABH SHARMA, 33-A, KARIKALAN STREET, SHEVAPET, SALEM-636 002. VS. THE INCOME TAX OFFICER, WARD-1(2), SALEM. [PAN: AACHL 4238 D ] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.R.RAGHUNATHAN, FCA *+) , /RESPONDENT BY : MR. R.CLEMENT RAMESH- KUMAR, ADDL.CIT , /DATE OF HEARING : 29.07.2019 , /DATE OF PRONOUNCEMENT : 29.07.2019 ITA NOS.1007-1009/CHNY/2019 :- 2 -: / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE ARE THE APPEALS FILED BY THE ASSESSEES VIZ., SHRI BHAWARLAL SHARMA, SHRI VIMAL KUMAR SHARMA & SHRI LAXMI VALLAB H SHARMA AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEA LS), SALEM, IN APPEAL NOS.119/2017-18, 120/2017-18 & 122/2017-18 D ATED 08.02.2019 FOR THE AY 2015-16. 2. MR. R.CLEMENT RAMESH KUMAR, ADDL.CIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.R.RAGHUNATHAN, FCA, REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEES W ERE ORIGINALLY NOT HAVING TAXABLE INCOME. DURING THE RELEVANT AY, AS THE ASSESSEES HAD GENERATED TAXABLE INCOME, THE ASSESSEES HAD FILED R ETURNS FOR THE FIRST TIME. IT WAS A SUBMISSION THAT THE AO DID NOT ACCE PT THE OPENING CAPITAL BALANCE AS DISCLOSED BY THE ASSESSEES AND HAD CONSE QUENTLY, TREATED THE SAME AS UNEXPLAINED CASH CREDITS AND ADDED TO THE R ETURNED INCOME OF THE ASSESSEES. IT WAS A SUBMISSION THAT ON APPEAL, THE LD.CIT(A) HAD ALSO DISMISSED THE ASSESSEES APPEALS ON THE GROUND THAT THE ASSESSEES COULD NOT PROVIDE ANY CONCRETE PROOF TO ESTABLISH THE SOU RCE FOR THE OPENING CAPITAL. IT WAS A SUBMISSION THAT AS THE ASSESSEES HAD ADEQUATE OPENING CAPITAL AND THE SAME WAS SUPPORTED BY BALANCE SHEET AND P&L A/C AS ITA NOS.1007-1009/CHNY/2019 :- 3 -: FURNISHED FOR THE IMMEDIATELY PRECEDING AYS, THOUGH RETURNS HAD NOT FILED, AS THE ASSESSEES DID NOT HAVE ANY TAXABLE INCOME DU RING THE RELEVANT AY, THE ADDITIONS WERE LIABLE TO BE DELETED. 4. IN REPLY, THE LD.DR SUBMITTED THAT DURING THE DEMO NETIZATION TIME, THE ASSESSEES HAD DEPOSITED THE AMOUNTS IN THE CASE OF SHRI BHAWARLAL SHARMA (HUF) TO AN EXTENT OF RS.13,32,000/- SHRI VI MAL KUMAR SHARMA (HUF) TO AN EXTENT OF RS.13,49,000/- AND IN THE CAS E OF SHRI LAXMI VALLABH SHARMA (HUF) TO AN EXTENT OF RS.13,77,000/- . WHEN THE SAME WAS QUESTIONED, ALL THE ASSESSEES HAD COME UP WITH THE EXPLANATION THAT THEY WERE DOING MONEY LENDING ACTIVITIES AND THAT T HEY DO NOT HAVE TAXABLE INCOME DURING THE EARLIER YEARS BUT HAD GEN ERATED TAXABLE INCOME DURING THE RELEVANT AY AND THEREFORE, HAD FILED THE IR RETURNS. IT WAS A SUBMISSION THAT THE AO HAD DISBELIEVED THE ASSESSEE S CLAIMS AS THE ASSESSEES WERE NOT REGISTERED UNDER THE TAMIL NADU MONEYLENDERS ACT, 1957. IT WAS A FURTHER SUBMISSION THAT THE ASSESSE ES HAD ALSO ARGUED THAT THE INCOMES OF THE ASSESSEES DURING THE EARLIE R YEARS WERE BELOW THE TAXABLE LIMIT AND THEREFORE, NO RETURNS HAD BEEN FI LED. IT WAS A SUBMISSION THAT IF THE INCOMES OF THE ASSESSEES WER E BELOW TAXABLE LIMIT, THEN THE FUNDS WOULD HAVE BEEN USED FOR THEIR HOUSE HOLD EXPENSES ITSELF AND THERE WOULD BE NO FUNDS AVAILABLE FOR ACCRETION TO THE CAPITAL AS HAS BEEN CLAIMED. IT WAS A FURTHER SUBMISSION THAT A P ERUSAL OF THE BALANCE SHEET AND P&L A/C OF THE PARTIES PRODUCED CLEARLY S HOWED THAT THERE WERE NO DRAWINGS OR MINIMAL DRAWINGS WHICH COULD NOT HAV E SUSTAINED A FAMILY ITA NOS.1007-1009/CHNY/2019 :- 4 -: EVEN FOR ONE MONTH. IT WAS A FURTHER SUBMISSION TH AT THOUGH THE ASSESSEES HAVE GIVEN NAMES OF PERSONS TO WHOM THE L OANS HAD BEEN GIVEN AND HAVE PRODUCED CONFIRMATION LETTERS, THE S AID PERSONS HAVE NOT BEEN PRODUCED BEFORE THE AO FOR EXAMINATION ALSO. IT WAS A SUBMISSION THAT THE REVENUE HAS NO OBJECTION IF THE ISSUES IN THESE APPEALS ARE RESTORED TO THE FILE OF THE AO FOR RE-EXAMINATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. A PERUSAL OF THE PAPER BOOK FILED BY THE ASSESSEES CLEARLY SHOWS THAT THE ASSESSEES HAVE GIVEN CONFIRMATION LETTERS OBTAINED FROM VARIOUS PERSONS WHO CLAIMED TO HAVE RECEIVED MONEY FROM THE M. IT IS NOTICED THAT THE AO HAS NOT EXAMINED THESE PERSONS AT ALL. FURTHER, THE ASSESSEES SHOWN TO HAVE PAID SALARIES, THE SAME HAS ALSO NOT BEEN EXAMINED BY THE AO. THE AO HAS ALSO NOT CONSIDERED THE APPLICABILI TY OF THE PROVISIONS OF SEC.269SS & 269T AND SO ON AND SO FORTH IN RESPECT OF THE CASH TRANSACTIONS. A PERUSAL OF THE PAPER BOOK CLEARLY SHOWS THAT THE ASSESSEES HAVE RECEIVED CASH AMOUNTING TO RS.20,000 /- AND MORE DURING VARIOUS DATES. THE AO SEEMS TO HAVE DISBELIEVED TH E STATEMENT OF THE ASSESSEES WITHOUT DOING ANY DETAILED EXAMINATION. THIS IS NOT PERMISSIBLE. THIS BEING SO, THE ISSUES IN THESE AP PEALS ARE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION. THE AO SHALL B E AT LIBERTY TO CALL FOR THE PRODUCTION OF THE DEBTORS FOR VERIFICATION. THE CO NFIRMATION LETTERS ARE ALSO NOTICE TO BE IDENTICAL AND IT ALSO DOES NOT TALK OF RATE OF INTEREST OR THE ITA NOS.1007-1009/CHNY/2019 :- 5 -: DATES ON WHICH THE AMOUNTS WERE TAKEN, HOW TAKEN, I F RETURNED, WHEN RETURNED AND HOW RETURNED. IT ALSO DOES NOT EXPLAI N AS TO WHETHER THE BORROWERS WERE INCOME TAX ASSESSEES. IN FACT, SOME OF THEM SAY, THEY HAVE BORROWED MONEY FOR FAMILY, BUSINESS. NEITHER S AYS ANYTHING IN RESPECT OF THE SECURITY PROVIDED. THIS BEING SO, I N THE INTEREST OF NATURAL JUSTICE, THE ISSUES IN THESE APPEALS ARE RESTORED T O THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTING THE ASSESSEES ADEQUA TE OPPORTUNITY TO SUBSTANTIATE ITS CASE 7. IN THE RESULT, APPEALS FILED BY THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 29 TH DAY OF JULY, 2019 IN CHENNAI. SD/- SD/- ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 29 TH JULY, 2019. TLN , *45 65 /COPY TO: 1. ) /APPELLANT 4. 7 /CIT 2. *+) /RESPONDENT 5. 5 * /DR 3. 7 ( ) /CIT(A) 6. /GF