ITO, Dindigul V. Shri S.M.Mohamed Sait, Dindigul

ITA 1057/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1149 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-01-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL: D- BENCH:CHENN AI (BEFORE SHRI ABRAHAM P. GEORGE. ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEM BER) ITA NO. 1057/ MDS/10 ASST. YEAR 2006-07 THE ITO, WARD I(1), DINDIGUL VS. SHRI S.M. MOHAMMED SAIT, NO.9 ALAGAR ST., BEGAMPUR, DINDIGUL PAN ADVPM6100H (APPELLANT) (RESPONDENT) APPELLANT BY : RESPONDENT BY: SHRI.K.E.B. RENGARAJAN, JR. STANDING COUNSEL SHRI T.VASUDEVEN ORDER PER SHRI ABRAHAM P.GEORGE, A.M: IN THIS APPEAL OF THE REVENUE, ITS GRIEVANCE IS TH AT CIT(A) DELETED AN ADDITION OF ` 32,45,547/- MADE BY THE AO UNDER SEC. 68 OF THE INC OME-TAX ACT, 1961 (THE ACT FOR SHORT). ACCORDING TO THE R EVENUE ONE CREDITOR NAMED SHRI C.SANKAR HAD CONFIRMED THAT TRANSACTION TO THE TUNE OF ` 4 LAKHS ALONE HAD TAKEN PLACE DURING THE PREVIOUS YEA R RELEVANT TO THE IMPUGNED ASST. YEAR AND THERE WAS NO BALANCE DUE FR OM THE ASSESSEE EXCEPT FOR SUCH TRANSACTIONS. REVENUE ALSO STATES T HAT ANOTHER CREDITOR SHRI A.V.M. KANNAN HAD CONFIRMED THE TRANSACTION TO THE EXTENT OF ` 17 ITA NO. 1057/MDS /10 2 LAKHS DURING THE PREVIOUS YEAR RELEVANT TO THE IMPU GNED A.Y, AND ALSO STATED THAT BUT FOR A SUM OF ` 10,000/- EVERYTHING WAS RECEIVED FROM THE ASSESSEE. SIMILARLY AS PER THE REVENUE ANOTHER CRED ITOR SHRI CHANDRAMOHAN HAD CONFIRMED CREDIT TRANSACTION WITH THE ASSESSEE ONLY TO THE EXTENT OF `6,60,742/-. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, A TRADER IN WO OD AND ALSO ENGAGED IN LORRY OPERATION HAD FILED RETURN OF INCO ME FOR THE IMPUGNED A.Y ADMITTING TOTAL INCOME OF `2,08,540/-. AO DURIN G THE COURSE OF ASSESSMENT MADE ENQUIRIES THROUGH INSPECTOR OF INCOME-TA X REGARDING THE GENUINENESS OF THE SUNDRY CREDITORS SHOWN BY THE ASSESSE E. ASSESSEE FILED CONFIRMATION LETTERS. BUT NEVERTHELESS, AS P ER THE AO THE SAID CONFIRMATION LETTERS DID NOT HAVE ANY DATE OF PA YMENT, DATE OF RECEIPT AND MODE OF PAYMENT. FOR THIS REASON AS WELL A S BASED ON THE REPORT OF THE INSPECTOR, HE MADE AN ADDITION OF `32, 45,547/- UNDER SEC. 68 OF THE ACT AS UNEXPLAINED CASH CREDIT. 3. IN HIS APPEAL BEFORE THE CIT(A), ARGUMENT OF THE ASSESSEE WAS THAT THE CREDITORS WERE ALL AGRICULTURISTS AND WERE NOT AWARE OF THE METHOD IN WHICH THE TRANSACTIONS HAD TO BE RECORDED. FURTHER AS PER THE ASSESSEE THE DISALLOWED CREDITS WERE NOT FRESH ONES AND BUT FOR A SUM OF ` 3,03,844/- COMING FROM ONE SHRI A.V.M. KANNAN, ALL OTHERS WER E OPENING BALANCE. CIT(A) ADDRESSED A LETTER TO THE AO FOR CLARIFICATI ON IN THIS REGARD. ITR SEEMS ITA NO. 1057/MDS /10 3 AO IN HIS REPLY TO THE CIT(A) STATED THAT SHRI C.SA NKAR, SHRI A.V.M. KANNAN AND SHRI CHANDRAMOHAN HAD ONLY CONFIRMED THE BALANCES AS ON 31-03-2006 BUT DID NOT ENCLOSE ANY ACCOUNT COPY. AS PER THE AO INSPECTORS REPORT SHOWED THAT TRANSACTION WITH TH E CREDITORS CAME TO ` 4,10,000/- ONLY. VIS--VIS THE CLAIM OF THE ASSESSE E THAT THE AMOUNTS WERE OPENING CREDIT BALANCE, SUBMISSION OF THE AO W AS THAT IT WAS THE ONUS OF THE ASSESSEE TO PROVE THIS WITH MATERIAL EV IDENCE. LD. CIT(A) AFTER VERIFYING THE RECORDS AND SUBMISSIONS WAS OF THE O PINION THAT RETURN FILED BY THE ASSESSEE FOR THE A.Y 2005-06 SHOWED THAT THE CLOSING BALANCES IN RESPECT OF ALL THESE CREDITORS, WERE THE SAME AS FO R THE IMPUGNED A.Y, EXCEPT FOR SHRI A.V.M. KANNAN, FOR WHOM, THERE WAS INCREASE OF ` 3,03,844/-. IN THIS VIEW OF THE MATTER, AND FINDING THE INSPECTORS REPORT TO BE VAGUE AND GENERAL, HE DELETED THE ADDITION IN FU LL. IN SOFAR AS THE INCREASE IN THE CLAIM OF SHRI A.V.M. KANNAN WAS CON CERNED, LD.CIT(A) WAS OF THE OPINION THAT THE AO COULD NOT BRING ANYTHING ON RECORD TO DISPUTE THE CONFIRMATIONS FILED BY THE SAID PERSON. 4. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE ORD ER OF THE CIT(A) SUBMITTED THAT THE CREDITORS CONFIRMATION DID NOT HAVE ANY DETAILS TO PROVE THE GENUINENESS OF THE TRANSACTION. ACCORDING TO HI M, THE INSPECTORS REPORT ALSO POINTED OUT THAT THE TRANSACTIONS WERE NOT ABOVE BOARD. THEREFORE, IN HIS OPINION ADDITION WAS RIGHTLY DONE BY THE AO. ITA NO. 1057/MDS /10 4 5. PER CONTRA, LD. AR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 6. WE HAVE PERUSED THE ORDERS AND HEARD BOTH THE PA RTIES. THE FINDING OF THE CIT(A) IS CLEAR THAT THE THREE CREDITORS WHO SE BALANCES WERE CONSIDERED FOR ADDITION BY THE AO, WERE EXISTING PE RSONS AND HAD ALSO GIVEN STATEMENTS BEFORE THE INCOME-TAX INSPECTOR. R EVENUE HAS FAILED TO PRODUCE BEFORE US THE REPORT OF THE INSPECTOR. HENC E WE ARE CONSTRAINED TO ACCEPT THE VERSION OF THE CIT(A) THAT NONE OF THESE CREDITORS HAD DENIED THE TRANSACTIONS. IT CANNOT BE EXPECTED FROM AGRICU LTURISTS TO MAINTAIN EXACT BOOKS OF ACCOUNT. FURTHER, THERE IS NO DISPUTE THAT AS ON 31-03-2005 BALANCE DUE FROM THE CREDITORS WERE AS UNDER: 1. C.SHANKAR ` 12,00,000/- 2. A.V.M.KANNAN ` 14,80,961/- 3. CHANDRAMOHAN ` 6,60,742/- AS ON 31-03-2006 THE BALANCE DUE FROM THE ABOVE CRE DITORS WERE AS UNDER: 1. C.SHANKAR ` 12,00,000/- 2. A.V.M.KANNAN ` 17,84,805/- 3. CHANDRAMOHAN ` 6,60,742/- IN ANY CASE OPENING BALANCE COULD NOT HAVE BEEN CON SIDERED FOR THE ADDITION FOR THE RELEVANT PREVIOUS YEAR. THE ONLY I NCREASE IS IN THE CASE OF ITA NO. 1057/MDS /10 5 SHRI A.V.M. KANNAN, THAT TOO FOR A SUM OF ` 3,03,844/-. EVEN HERE THERE IS NO DISPUTE THAT THE PARTY WAS EXISTING AND HE HAD C ONFIRMED THE TRANSACTION EVEN BEFORE THE INSPECTOR. IN OUR OPINI ON, THERE EXISTED NO VALID GROUND FOR MAKING THE ADDITION OF SUCH AMOUNTS IN T HE IMPUGNED A.Y UNDER SEC. 68 OF THE ACT. DELETION WAS RIGHTLY DONE . 7. APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31- 01 -2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 31ST JANUARY, 2011. NBR CC: ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE.