S.Elango, CHENNAI V. DCIT, CHENNAI

ITA 1031/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8324 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Income from undisclosed sources
• Section: 143(3); 2(14); 142(1)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1 0 3 1 /MDS/201 4 / ASSESSMENT YEAR :20 09 - 1 0 SHRI S. ELANGO, G - 9, APPU MANOR, NO. 137, PERAMBUR BARRACKS ROAD, PURASAWALKAM, CHENNAI 600 0 07 . [PAN:A A P C E6397G ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX , C ENTRAL CIRCLE III ( 1 ) , CHENNAI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI S UPRIYO PAL, JCIT / DATE OF HE ARING : 26 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 07 . 1 0 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I , C HENNAI , DATED 27 . 0 2 .20 1 4 RELEVANT TO THE ASSESSMENT YEAR 20 09 - 1 0 . THE ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUNDS: (I) THE LD. CIT(A) HAS ERRED IN RESTRICTING 50% OF THE AGRICULTURAL INCOME COMPUTED BY THE ASSESSING OFFICER. (II) THE LD. CIT(A) HAS ER RED IN SUSTAINING THE ADDITION OF CASH DEPOSIT OF .10 LAKHS I.T.A. NO . 1 0 31 /M/ 16 2 (III) THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF DIFFERENTIAL AMOUNT OF CASH DEPOSIT OF .66,520/ - IN ASSESSEE S BANK ACCOUNT. (IV) THE LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF THE CLAIM OF INTEREST PAYMENT AGGREGATING TO .1 0,42,947/ - . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL , ENGAGED IN MARKETING OF RESIDENTIAL PLOTS, SALARY & HP INCOME. HE FILED HIS RETURN OF INCOME ON 29.09.2009 ADMITTING TOTAL INCOME OF .1,02,23,127/ - . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACTS WERE ISSUED CALLED VARIOUS DETAILS. AFTER TAKING INTO CONSIDERATION THE DETAILS FILED BY THE ASSESSEE AND THE SUBMISSIONS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 23.12.2011 BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .1,42,65,596/ - AFTER MAKING VARIOUS ADDITIONS. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. 4. ON BEING AGGRIEV ED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING VARIOUS GROUNDS AS REPRODUCED HEREINABOVE . ACCORDINGLY, WE PROCEEDED TO ADJUDICATE THE ISSUES AS PER THE GROUNDS RAISED BY THE ASSESSEE. I.T.A. NO . 1 0 31 /M/ 16 3 5 . THE FIRST GROUND RELATES TO RESTRICTING THE CLAIM OF AGRICULTURAL INCOME AT 50% OF .18,33,002/ - . IN THE RETURN OF INCOME, THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME AT .18,33,002/ - . SINCE THE ASSESSEE HAS NOT CARRIED OUT ANY AGRICULTURAL OPERATION, THE ASSESSING OFFICER TREATED THE ABOVE INCOME AS INCOME FROM UNEXPLAINED SOURCES AN D BROUGHT TO TAX. 5 . 1 ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEARS IN I.T.A. NOS. 1507 TO 1511/MDS/2011 DATED 06.06.2013 , WHEREIN IT WAS HELD THAT ONCE THE ASSESSEE HAS PROVED THE HOLDING OF THE AGRICULTURAL LANDS, TO PRESUME THAT NO AGRICULTURAL INCOME WAS DERIVED THEREFROM WAS UNFAIR, THE LD. CIT(A) HAS RESTRICTED 50% OF THE INCOME OF .18,33,002/ - AS INCOME DERIVED FROM THE SAID LAND HOLDINGS AND SUSTAINED BALANCE 50%. 5.2 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) WAS NOT CORRECT IN RESTRICTING THE AGRICULTURAL INCOME AND PLEADED THAT THE DISALLOWA NCE OF 50% OF AGRICULTURAL INCOME SHOULD BE TREATED AS INCOME FROM AGRICULTURE. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). 5.3 WE HAVE CONSIDERED BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORD ERS OF AUTHORITIES BELOW. THE ASSESSEE I.T.A. NO . 1 0 31 /M/ 16 4 HAS CLAIMED AGRICULTURAL INCOME AT .18,33,002/ - . SINCE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF REAL ESTATE, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE CANNOT BE CONSIDERED AS A CULTIVATOR OR RECEIVER OF RENT IN KIND AS PER THE DEFINITION UNDER SECTION 2(14) OF THE ACT AND MADE TH E DISALLOWANCE BY TREATING THE ABOVE INCOME AS INCOME FROM UNEXPLAINED SOURCES. IT IS NOT DISPUTED THAT THE ASSESSEE WAS HOLDING AGRICULTURAL LAND TO CLAIM AGRICULTURAL INCOME. IN THIS CASE, THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME IN THE FORM OF LEASE RENT RECEIPT IN RESPECT OF THE AGRICULTURAL LANDS AT DIFFERENT PLACES. AGAINST THE APPEALS FILED BY THE ASSESSEE FOR EARLIER ASSESSMENT YEARS, THE TRIBUNAL VIDE ITS ORDER DATED 06.06.2013 HAS HELD THAT ONCE THE ASSESSEE HAS PROVED THE HOLDING OF THE AGRIC ULTURAL LANDS TO PRESUME THAT NO AGRICULTURAL INCOME WAS DERIVED THEREFROM WAS UNFAIR. HOWEVER, IN THE ABSENCE OF COMPLETE DETAILS WITH REGARD TO DERIVING OF INCOME FROM THE SAID LANDS , THE LD. CIT(A) ALLOWED 50% OF THE INCOME OF .18,33,002/ - AS INCOME DE RIVED FROM THE SAID LAND HOLDINGS AND SUSTAINED THE BALANCE DISALLOWANCE. 5 .4 THE MAIN DISPUTE OF THE DEPARTMENT IS WITH REGARD THE INCOME FROM THE LANDS AT KOLLI HILLS AND ULAGANKATHAN VILLAGE. THE ABOVE LOCATION OF THE LAND HOLDINGS ARE NOT SITUATED IN METRO CITY SO THAT THE LEASE - HOLDER CAN EXECUTE AGREEMENT OR OF ANY KIND AND THE ASSESSEE CAN PRODUCE THE SAME BEFORE THE AUTHORITIES BELOW. WE HAVE CAREFULLY CONSIDERED THE APPELLATE I.T.A. NO . 1 0 31 /M/ 16 5 ORDER AND ASSESSMENT ORDER PASSED BY THE AUTHORITIES BELOW ON THIS IS SUE. WHEN THE AGRICULTURAL LAND HELD BY THE ASSESSEE WAS NOT DISPUTED, IT CANNOT BE HELD THAT THERE WAS NO INCOME FROM THE ABOVE SAID AGRICULTURAL LAND HOLDINGS. SINCE T HE LD. CIT(A) RESTRICTED THE DISALLOWANCE ON ESTIMATED BASIS IN THE ABSENCE OF MATERIAL EVIDENCE FOR THE INCOME EARNED BY THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS ON HIGHER SIDE AND IT HAS TO BE REASONABLY REDUCE THE DIS ALLOWANCE SUSTAINED BY THE LD. CIT(A). ACCORDINGLY, WE ALLOW 75% OF THE INCOME OF .18,33,002/ - AS INCOME DERIVED FROM THE SAID LAND HOLDINGS AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW THE BALANCE 25%. THUS, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 6 . THE NEXT GROUND RAISED BY THE ASSESSEE IS WIT H REGARD TO SUSTAINING THE ADDITION OF CASH DEPOSIT OF .10 LAKHS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THERE WAS A CASH DEPOSIT OF . 10 LAKHS WITH UTI BANK ON 11.08.2008. WHEN THE ASSESSEE WAS ASKED TO EXPLA IN, THE ASSESSEE HAS SUBMITTED THAT THE SAME WAS OUT OF THE WITHDRAWAL OF .10 LAKHS ON 06.08.2008. IF THE EXPLANATION OFFERED BY THE ASSESSEE IS CORRECT, THEN THE RECEIPT OF THE SAME SHOULD HAVE BEEN RECORDED IN THE CASH BOOK. HOWEVER, SINCE THERE WAS NO ENTRY IN THE CASH BOOK FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER ASSESSED THE SAME AS UNACCOUNTED INCOME OF THE ASSESSEE. ON APPEAL, THE AR OF THE ASSESSEE I.T.A. NO . 1 0 31 /M/ 16 6 HAS REITERATED THE SAME SUBMISSION BEFORE THE LD. CIT(A) AS WAS MADE BEFORE THE ASSESSING OFF ICER. SINCE THE ASSESSEE HAS NOT MADE ANY CONVINCING EXPLANATION BEFORE THE LD. CIT(A) AS TO WHY THE ASSESSEE HAS NOT MADE ENTRY OF THE WITHDRAWAL IN THE BOOK, THE LD. CIT(A) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 6 .1 ON BEING AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND BY REITERATING THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT IT WAS SIMPLE TECHNICAL MISTAKE THAT THE ASSESSEE HAS NOT MADE ENTRY OF WITHDRAWAL IN THE CASH BOOK AND IT CANNOT BE A GROUND TO TREAT THE WITHDRAWAL AS UNACCOUNTED INCOME OF THE ASSESSEE. THEREFORE, HE PLEADED THAT THE ADDITION MADE BY THE ASSESSING OFFICER MAY BE DELETED. 6 .2 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT IF PROPER EN TRIES ARE NOT MADE IN THE CASH BOOK, IT CANNOT BE TERMED AS TECHNICAL REASON . IT WAS NOT THE ONLY INSTANCE THAT THE ASSESSEE HAS NOT MADE ENTRY OF THE WITHDRAWAL IN THE CASH. IN THE RELEVANT FINANCIAL YEAR, WHEN THE ASSESSEE MADE DEPOSIT WITH AXIS BANK OF .1,00,000/ - ON 26.03.2009, THE ASSESSEE HAS NOT MADE ENTRY OF THE WITHDRAWAL IN THE CASH BOOK AND THEREFORE, THE ASSESSING OFFICER HAS TREATED THE SAME AS UNACCOUNTED INCOME, WHICH WAS NOT DISPUTED BEFORE THE LD. CIT(A) OR BEFORE THE TRIBUNAL. THEREFORE, THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE SHOULD NOT BE ACCEPTED. I.T.A. NO . 1 0 31 /M/ 16 7 6 .3 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO THE CASH DEPOSIT WITH UTI BANK ON 11.08.2008, T HE ASSESSEE HAS SUBMITTED THAT THE SAID AMOUNT WAS WITHDRAWN FROM THE BANK ON 06.08.2008. IN THE CASH BOOK MAINTAINED BY THE ASSESSEE, THE ASSESSEE HAS NOT MADE ENTRY OF THE WITHDRAWAL . IF IT IS THE WITHDRAWAL FROM BANK ACCOUNT AS CLAIMED BY THE ASSESSEE T HEN , THE ASSESSEE SHOULD HAVE MADE ENTRY IN THE CASH BOOK. IN THE ABSENCE OF SUITABLE EXPLANATION OFFERED BY THE ASSESSEE, WE ARE INCLINED TO ACCEPT THE MERE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT WAS A TECHNICAL MISTAKE . AS CONTENDED BY TH E LD. DR, ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS MADE SIMILAR ADDITION WHEN THE ASSESSEE HAS GIVEN SAME REPLY WITH REGARD TO THE AMOUNT DEPOSITED IN THE AXIS BANK ACCOUNT AND NOT SHOWN IN THE CASH BOOK. IN VIEW OF THE A BOVE FACTS AND CIRCUMSTANCES, WE SUSTAIN THE ADDITION MADE BY THE ASSESSING OFFICER AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7 . THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF DI FFERENTIAL AMOUNT OF CASH DEPOSIT OF .66,520/ - ON 10.05.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE FOR THE CASH DEPOSIT OF .3,00,000/ - MADE ON 10.05.2008 WITH INDIAN BANK. THE ASSESS EE HAS SUBMITTED THAT A SUM OF .3,70,000/ - WAS WITHDRAWN FROM THE CASH I.T.A. NO . 1 0 31 /M/ 16 8 AVAILABLE WITH HIS PROPRIETARY CONCERN M/S. ABI ESTATES ON 07.05.2008 TOWARDS EXPENSES AT KOLLI HILLS, WHERE, HE HAS AGRICULTURAL LANDS. THE ASSESSEE CLAIMED THAT HE RECEIVED .2,33,48 0/ - TOWARDS LEASE AMOUNTS FROM AGRICULTURAL LANDS AT KOLLI HILLS. AS THERE WAS A RECEIPT FROM LEASE ON 10.05.2008, AN AMOUNT OF .3,00,000/ - OUT OF THE AMOUNT DRAWN FROM M/S. ABI ESTATES HAS BEEN DEPOSITED INTO THE BANK ACCOUNT. SINCE THE ASSESSEE HAS EXPL AINED THE RECEIPT TO THE EXTENT OF . 2,33,480/ - , THE DIFFERENCE AMOUNT OF .66,520/ - WAS BROUGHT TO TAX AS UNEXPLAINED INCOME OF THE ASSESSEE. ON APPEAL, THE ASSESSEE HAS FAILED TO GIVE ANY CONVINCING EXPLANATION WITH REGARD TO THE SOURCE FOR .66,520/ - . T HEREFORE, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. EVEN BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT GIVEN ANY DETAILS WITH REGARD TO THE SOURCE FOR .66,520/ - EXCEPT REITERATING THE SUBMISSIONS AS WAS MADE BEFORE THE ASS ESSING OFFICER. HENCE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 8 . THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN SU STAINING THE DISALLOWANCE OF THE CLAIM OF INTEREST PAYMENTS AGGREGATING TO .10,42,947/ - . ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED TO HAVE PAID INTEREST TO THE TUNE OF .30,02,079/ - . ACCORDINGLY , THE ASSESSEE I.T.A. NO . 1 0 31 /M/ 16 9 WAS ASKED TO EXPLAIN. AS PER THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS BORROWED LOANS FROM VARIOUS BANKS AND MADE TAX PAYMENTS TO THE EXTENT OF .10,42,947/ - . THE PAYMENT OF INTEREST ON LOANS TAKEN FOR PAYMENT OF TAX CANNOT BE CONSIDERED A S EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS, THE INTEREST CLAIMED TO THE EXTENT OF .10,42,947/ - WAS DISALLOWED AND BROUGHT TO TAX. ON APPEAL, THE LD. CIT(A) HAS OBSERVED THAT AS THE PAYMENT OF INTEREST ON LOANS TAKEN FOR PAYMENT OF TAX CANNOT BE CONSIDERED AS EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS, HE SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE GROU NDS OF APPEAL AND HAS NOT FILED ANY EXPLANATION WITH REGARD TO THE CLAIM OF THE ASSESSEE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. THUS, THE GROUND RAISED BY THE ASSESSEE IS DIS MISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED ON THE 07 TH OCTOBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 07 . 1 0 .201 6 VM/ - I.T.A. NO . 1 0 31 /M/ 16 10 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.