T.Nagoor Meeran, CHENNAI V. ITO, CHENNAI

ITA 1023/CHNY/2015

• Counselvise Citation: 102321714 RSA 2015
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 17-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 06-05-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHALJCIT
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Document seized; Source of fund; Documents seized
• Section: 147

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHENNAI . , , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1023 /MDS./2015 ( !' / ASSESSMENT YEAR :2004-05) MR.T.NAGOOR MEERAN , NO.8,MALAYATHAMMAN KOIL STRET, MUNNURPET,PADI, CHENNI 600 050. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-7(1), CHENNAI-34 PAN ADPPN 1866 R ( / APPELLANT ) ( / RESPONDENT ) #$ % & / APPELLANT BY : MR.G.BASKAR,ADVOCATE '(#$ % & / RESPONDENT BY : DR.B.NISCHAL,JCIT, D.R ) !* % +, / DATE OF HEARING : 17.07.2015 -' % +, /DATE OF PRONOUNCEMENT : 26.08.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A)-7, CHENN AI DATED ITA NO.1023 /MDS/2015 2 28.01.2015 IN ITA NO.46/CIT(A)-7/2011-12 PASSED UN DER SEC.143(3) READ WITH SEC. 147 & SEC. 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED THREE ELABORATE GROUNDS IN HIS APPEAL, AND THEY ARE REPRODUCED HEREIN BELOW:- GROUNDS OF APPEAL 1.1. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DELETED THE ENTIRE ADDITION MADE UNDER THE CAPTION UNACCOUNTED INVEST MENTS IN PURCHASE OF PROPERTIES. 1.2. THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILE D TO NOTE THAT THE ASSESSEE HAD EXPLAINED THE SOURCES FOR THE ENTIRE INVESTMENT AND A CASH FLOW STATEMENT WAS ALSO FILED IN SUPPORT THEREOF. THEREFORE NO POR TION OF THE INVESTMENT IS TO BE TREATED AS UNEXPLAINED OR UNACCOUNTED. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE LOAN REPAYMEN T AS UNACCOUNTED IN A SUMMARY MANNER. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N FIXING THE AGRICULTURAL INCOME AT A MEAGER RS.1,50,000/- AS AGAINST LS.2,00 ,000/- CLAIMED. FURTHER, THE ASSESSEE HAD CLAIMED THE FOLLOWING REL IEF BEFORE THE TRIBUNAL VIDE DETAILS FURNISHED DATED 17/07/2017. RELIEF CLAIMEI) BEFORE THE HONBLE TRIBUNAL 1 . CIT(A) OUGHT TO HAVE DELETED (ITEM 2) ` 1,01,000 ALSO. 2. NO CREDIT GIVEN FOR OPENING CASH CLAIMED OF ` 2,88,000 IN THE CASH FLOW STATEMENT. 3. AGRICULTURAL INCOME OF 6.73 ACRES IN TUTUCORIN D ISTRICT FIXED AT MERE ` 1,50,000 AS AGAINST ` 2,50,000/- IAKHS CLAIMED. ITA NO.1023 /MDS/2015 3 FROM THE ABOVE IT IS APPARENT THAT THE SURVIVING GR OUND BEFORE THE TRIBUNAL CAN BE DEDUCED AS FOLLOWS FOR ADJUDICATION :- 1. THE LD. CIT (A) OUGHT TO HAVE TREATED THE PURCH ASE PRICE OF THE PROPERTY INVESTED IN ITEM NO.2 AS ` 6,90,000 INSTEAD OF ` 8,92,000/- AND ACCORDINGLY GRANT RELIEF TO THE ASSE SSEE FOR ` 1,01,000/- (8,92,000 - 6,90,000=2,02,000 2 = ` 1,01,000/-) BEING THE ASSESSEES SHARE OF INVESTMENT. 2. THE LD. CIT (A) HAS NOT CONSIDERED THE OPENING CASH BALANCE OF ` 2,88,000/- AVAILABLE WITH THE ASSESSEE. 3. THE LD. CIT (A) HAS ONLY ACCEPTED ` 1,50,000 AS INCOME FROM THE ASSESSEES AGRICULTURAL LAND OF 6.73 LAND AS AGAINST ` 2,50,000 CLAIMED BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF SCRAP METAL AND ALSO GETTING RENTAL INCOME, FILED HIS RETURN OF INCOME FOR THE A SSESSMENT YEAR 2004-05 ON 23.12.2004 ADMITTING HIS INCOME AS ` 98,500/-. SUBSEQUENTLY, A SURVEY U/S.133A WAS CONDUCTED ON 03 .09.2009 IN THE BUSINESS PREMISES OF THE ASSESSEE WHEREIN CERTA IN DOCUMENTS ITA NO.1023 /MDS/2015 4 AND BOOKS OF ACCOUNTS WERE FOUND. THEREAFTER, THE A O REOPENED THE ASSESSMENT U/S.147 OF THE ACT BY ISSUING NOTICE U/S .148 AND COMPLETED THE ASSESSMENT U/S.143(3) R.W.S.147 OF TH E ACT ON 30/12/2011 WHEREIN THE LD. ASSESSING OFFICER MADE A DDITION OF ` 10,71,500/- ON ACCOUNT OF UNACCOUNTED INVESTMENTS. 4.1 GROUND NO.1 - THE PURCHASE PRICE OF THE PROPERTY INVESTED IN ITEM NO.2. THE LD. ASSESSING OFFICER HAD ARRIVED AT ` 9,37,000/- AS THE UNEXPLAINED SOURCE FOR PURCHASE OF PROPERTIES BY OB SERVING AS UNDER:- AS PER THE APPRAISAL REPORT RECEIVED FROM DD1Y ATIO N) CHENNAI THE ASSESSEE ALONG WITH ON SHRI PEER MOHAMMED HAS MADE THE FOLLO WING TRANSACTIONS IN CASH DURING THE FINANCIAL YEAR 2003-04. SL. NO. DATE OF PURCHASE NAME AMOUNT 1 07-7-2003 NAGOOR MEERAN AND PEER MOIIIIIMD(50:50 SHARE) PROPERTY AT NO.8LMANNUR VILLAGE MANICKKAM PILLAI ST, SURVEY NO.14/3, DOOR NO.26, 1500 SQFT 6,90,000/- 2 17-10-2003 NAGOOR MEERAN AND PEER MOHAMMED (50:50 SHARE) PROPERTY AT NO.87MANNUR VILLAGE MANICKKAM PILLAI ST, SURVEY NO.14/3, DOOR NO.25/14, 1800 SQFT 8,92,000/- 3 25-10-2003 NAGOOR MEERAN AND PEER MOHAMMED (50:50 SHARE) PROPERTY AT NO.8 7 MANNURPET 2,02,000/- ITA NO.1023 /MDS/2015 5 VILLAGE, SURVEY NO.1413, 1800 SQFT IN RESPONSE TO NOTICE U/S. 142 (1) THE ASSESSEE HAS IN HIS REPLY STATED THAT HE HAS AGREED TO HAVE INVESTED IN PROPERTY MENTIONED IN SI.NO.2 & 3 I.E. 2 17-10-2003 NAGOOR MEERAN AND PEER MOHAMMED (50:50 SHARE) PROPERTY AT NO.87MANNUR VILLAGE MANICKKAM PILLAI ST, SURVEY NO.14/3, DOOR NO.25/14, 1800 SQFT 8,92,000/- 3 25-10-2003 NAGOOR MEERAN AND PEER MOHAMMED (50:50 SHARE) PROPERTY AT NO.8 7 MANNURPET VILLAGE, SURVEY NO.1413, 1800 SQFT 2,02,000/- BUT IN RESPECT OF THE THIRD PROPERTY I.E. PROPERTY AT MANNUR VILLAGE FOR RS.6,90,000I- IT IS ONLY SALE AGREEMENT AND NOT SAL E DEED TOWARDS PURCHASE. THE SALE AGREEMENT WAS EXECUTED ON 07-7-2003 IN RESPECT OF THE ABOVE PROPERTY AND THE SALE DEED FOR THE SAME WAS EXECUTED ON 17-1 0-2 003 AND HENCE THIS SHOULD NOT BE TAKEN IN TO ACCOUNT AS THE VALUE AS PER THE SALE DEED DATED 17-10-2003 IN RESPECT OF THE SAME PROPERTY IS ALREADY TAKEN INTO ACCOUNT. HOWEVER, WHILE GOING THROUGH THE DOCUMENT DATED 07- 7-2003 AND DOCUMENT DATED 17-10-2003 IT IS FOUND THAT THE DOOR NO. MENT IONED IN THE TWO DOCUMENTS ARE DIFFERENT AS PER THE SURVEY REPORT I.E. DOCUMEN T REGISTERED ON 07-7-2003 IS DOOR NO.25/14 AND DOCUMENT REGISTERED ON 17-10-2003 IS 26.TO VERIFY THIS THE DOCUMENT PERTAINING THESE TRANSACTIONS AVAILABLE IN SEIZED DOCUMENTS WERE VERIFIED IE. SEIZED DOCUMENTS IN ANN/SKR/DOC/LS-6. IT IS FOUND DOCUMENT REGISTERED ON 07- 7-2003 IS ONLY AN AGREEMENT AND N OT AN SALE DEED. HOWERVER, IT IS FOUND THAT THE ASSESSEE SHRI NAGOOR MEERAN HA S PAID RS. 1,90,000 + RS.2,00,00/- TO THE OWNER OF THE PROPERTY. HENCE TH IS IS TREATED AS ADVANCE PAYMENT IN THE ABSENCE OF ANY CANCELLATION AGREEMEN T. ITA NO.1023 /MDS/2015 6 REGARDING THE SOURCE OF FUNDS CLAIMED BY THE ASSESS EE FOR THE PURCHASE OF 50% SHARE OF TWO PROPERTIES WHICH THE ASSESSEE HAS AGRE ED COMES TO RS.9,37,000/-. 4.2 ON APPEAL, THE LD. CIT (A) DELETED ` 3,90,000/-. HIS FINDINGS ARE REPRODUCED HEREIN BELOW FOR REFERENCE:- 4.1.2 I HAVE CONSIDERED THE ASSESSEES SUBMISSION S CAREFULLY. THE MAIN REASON FOR THE ASSESSING OFFICER TO SUSPECT THE ASS ESSEES EXPLANATION THAT THAT THE TRANSACTION MENTIONED AT SL. NO.1 WAS ONLY AN A GREEMENT ENTERED ON 07.07.2003 TO PURCHASE THE PROPERTY OF 1500 SQ.FT. LOCATED AT NO.87, MANNUR VILLAGE MANICKKAM PILLAL ST, SURVEY NO.14/3. DOOR N O.26, WHICH WAS FINALLY CONCLUDED AS A SALE DEED ON 17.10.2003 BY SHOWING T HE SALE CONSIDERATION AT RS.8,92,000/-, WAS THE DIFFERENCE IN THE DOOR NUMBE RS OF THE PROPERTIES MENTIONED IN THE DOCUMENTS AS PER THE ASSESSING OFF ICER, THE DOOR NUMBER OF THE PROPERTY MENTIONED IN THE DOCUMENT DATED 07.07. 2003 WAS 25/14 WHILE THAT THAT OF THE DOCUMENT DATED 17.10.2003 WAS 26. THIS OBSERVATION OF THE ASSESSING OFFICER IS NOT CORRECT. IN BOTH OF THESE DOCUMENTS THE DOOR NUMBERS ARE MENTIONED AS 26 ONLY. IN FACT DOCUMENT DATED 07 .07.2003 CONTAINED THE DOOR NO.26 WHILE THAT THAT OF THE DOCUMENT DATED 17.10.2 003 CONTAINED THE DOOR NO.26/14 (AND NOT 25/14 AS CONTEMPLATED BY THE ASSE SSING OFFICER) FURTHER,.AS EXPIAINED BY THE ASSESSEE, THE AGREEMENT DATED 07.0 7.2003 WAS TO PURCHASE THE PROPERTY OF 1500 SQ.FT LOCATED AT NO 87, MANNUR VILLAGE MANICKKAM PILLAI ST, SURVEY NO 14/3, DOOR NO 26 FOR RS.6,90,000/- FROM S HRI Y.UMMAR AND SHRI Y.SAIFUDDEN. LATER ON THE SELLERS ALSO TOOK THE POS SESSION OF ANOTHER 337.5 SQ.FT OF LAND IN THE SAME DOOR NUMBER FROM MS. S. SELVI (WHICH WAS UNDER DISPUTES EARLIER) AND MADE A COMBINED SALE DEED FOR 1800 SQ. FT ON 17 102003 BY SHOWING THE TOTAL SALE CONSIDERATION AT RS 8,92,000/- HOWEV ER, THE ASSESSEE, AS AN ABUNDANT PRECAUTION OBTAINED ANOTHER SALE DEED FROM MS S.SELVI FOR 337.5 SQFT ON 25.10.2003 BY SHOWING THE SALE CONSIDERATION AT RS 2,02,000/- THUS, THE SALE ITA NO.1023 /MDS/2015 7 CONSIDERATION SHOWN AT TRANSACTION MENTIONED AT SL NO 2 OF RS 8,92,000/- IS THE TOTAL OF THE TRANSACTIONS MENTIONED AT SL NO.2 OF R S.8.92,000/0 IS THE TOTAL OF THE TRANSACTIONS MENTIONED AT SL.NOS.1 & 3 (I.E.RS 6,90 ,000 + RS 2,02,000). THUS, THERE IS A DUPLICATION OF THE AMOUNTS CONSIDERED BY THE ASSESSING OFFICER IN HIS ORDER TO THE EXTENT OF RS 3,90,000/- (I E RS 1,90,0 00+ RS 2,00,000) SHOWN IN THE TRANSACTION MENTIONED AT SL NO. 1, WHICH FINALLY CU LMINATED IN THE TRANSACTION MENTIONED AT SL NO 2 THEREFORE THE UNEXPLAINED INVE STMENTS IN THE PROPERTIES COMPUTED BY THE ASSESSING OFFICER ARE EXCESS BY RS 3,90,000/- WHICH NEEDS TO BE DELETED THE ASSESSING OFFICER IS DIRECTED ACCORD INGLY. THE ASSESSEE GETS A RELIEF OF RS 3,90,000/-. 4.3 BEFORE US, THE LD. A.R. SUBMITTED THAT THE AMO UNT STATED IN ITEM NO.2 IS ONLY ` 6,90,000/- AS AGAINST ` 8,92,000 ADOPTED BY THE REVENUE. THUS THE EXCESS AMOUNT OF ` 2,02,000/- IS ADOPTED BY THE REVENUE WHILE CONSIDERING THE AMOUNT INVESTED BY TH E ASSESSEE AND THE CO-OWNER OF THE PROPERTY. IT WAS THEREFORE PLE ADED THAT THE ASSESSEES SHARE OF ` 1,01,000/- MAY BE DELETED. LD. D.R ON THE OTHER HAND RELIED ON THE ORDERS OF THE REVENUE. 4.4. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE P ARTIES AND PERUSING THE MATERIALS ON RECORD, I FIND THAT THE I SSUE HAS BEEN CONSIDERED BY THE LD. CIT (A) IN DETAIL AND AN AMOU NT OF ` 3,90,000/- IS DELETED. BEFORE ME, NO FURTHER MATERIALS WERE P RODUCED IN ORDER TO ITA NO.1023 /MDS/2015 8 JUSTIFY THE CLAIM OF THE ASSESSEE. THEREFORE, I HE REBY CONFIRM THE ORDER OF THE LD. CIT (A). ACCORDINGLY THIS ISSUE IS DECIDED AGAINST THE ASSESSEE. 5.1 GROUND NO. 2 NON-CONSIDERATION OF THE OPENING CASH BALANCE OF ` 2,88,000/-. THE ASSESSEE HAS CLAIMED AN AMOUNT OF ` 2,88,000/- AS THE OPENING CASH AVAILABLE WITH HIM FOR MAKING THE INVE STMENT. THE REVENUE REJECTED THE CLAIM OF THE ASSESSEE WHILE AR RIVING AT THE SOURCE OF INVESTMENT. I DO NOT SUBSCRIBE TO THIS V IEW OF THE REVENUE. ANY INDIVIDUAL WILL DEFINITELY HAVE SOME ACCUMULATE D AMOUNT WITH HIM ESPECIALLY WHEN SUCH INDIVIDUALS ARE IN BUSINESS EA RNING INCOME YEAR AFTER YEAR. CONSIDERING THE FINANCIAL STATUS OF TH E ASSESSEE, THE AMOUNT CLAIMED BY THE ASSESSEE APPEARS TO BE REASON ABLE. THEREFORE, I HEREBY DIRECT THE REVENUE TO TREAT ` 2,88,000/- AS THE GENUINE SOURCE AVAILABLE WITH HIM FOR MAKING THE IN VESTMENTS AND THE SAME SHOULD NOT BE TREATED AS UNDISCLOSED INCOME. T HIS GROUND RAISED BY THE ASSESSEE IS DECIDED IN HIS FAVOUR. ITA NO.1023 /MDS/2015 9 6.1 GROUND NO.3 AGRICULTURAL INCOME ALLOWED BY TH E LD. CIT (A) OF ` 1,50,000/-. THE ASSESSEE HAS CLAIMED ` 2,50,000/- AS HIS AGRICULTURAL INCOME FROM THE EXTENT OF 6.73 ACRES AGRICULTURAL L AND IN TUTICORIN DISTRICT, WHICH WAS AVAILABLE WITH HIM FOR MAKING T HE INVESTMENTS. THE LD. CIT (A) ACCEPTED ` 1,50,000/- AND DISALLOWED THE BALANCE. ON THIS ISSUE, I AM OF THE CONSIDERED VIEW THAT THE CL AIM OF THE ASSESSEE APPEARS TO BE REASONABLE BECAUSE ON AN ACRE OF LAND AGRICULTURAL INCOME OF ` 30,000 TO ` 40,000 PER ANNUM CAN BE RATIONALLY ESTIMATED. HENCE THIS ISSUE IS ALSO ALLOWED IN HIS FAVOUR. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 26 TH AUGUST, 2015 AT CHENNAI. SD/- ( . ! ' ) (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER CHENNAI, DATED THE 26 TH AUGUST, 2015. ITA NO.1023 /MDS/2015 10 K S SUNDARAM. . % '+/ 0 10'+ /COPY TO: 1. #$ /APPELLANT 2. '(#$ /RESPONDENT 3. ) 2+ ( ) /CIT(A) 4. ) 2+ /CIT 5. 0!56 '+ 7 /DR 6. 68 9* /GF