KARUNAKARAN VINODKUMAR, COIMBATORE V. ITO INTNL TAXN WARD, COIMBATORE

ITA 1066/CHNY/2022

AI Insights

The case involves two appeals by the assessee, Shri Karunakaran Vinodkumar, against the orders of the Commissioner of Income Tax (Appeals)-16, Chennai, concerning the assessment years 2012-13 and 2013-14. The primary issues in the appeals included the addition of Rs.64,250 as salary income, the addition of Rs.2,43,170 as unexplained investment in properties, and the addition of Rs.7,35,000 as unexplained cash credit. The Tribunal found that the assessee had adequately explained the sources of some investments and income, leading to the deletion of certain additions, while other additions were sustained due to lack of sufficient explanation or evidence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134948 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 07-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 07-12-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Salary income
• Section: 68; 234B

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ (एस एम सी) ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ (SMC) BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT आयकर अपील सं./ITA Nos.: 1066 & 1067/CHNY/2022 िनधाᭅरण वषᭅ/Assessment Years: 2012-13 & 2013-14 Shri Karunakaran Vinodkumar, 4/75, Harishree Bhavan, Super Garden Avenue, Vadavalli, Coimbatore – 641 041. PAN: AHEPV 1368D Vs. The Income Tax Officer, International Taxation Ward, Coimbatore. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri R. Viswanathan, CA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri S. Chandrasekaran, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 08.03.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 08.03.2023 आदेश /O R D E R These appeals by the assessee are arising out of the two different orders of the Commissioner of Income Tax (Appeals)-16, Chennai in ITA Nos.148 & 149/CIT(A)-16/2018-19 both dated 12.08.2022. The assessments were framed by the Income Tax Officer, International Taxation, Coimbatore for the assessment years 2012-13 & 2013-14 - 2 - ITA Nos.1066 & 1067/Chny/2022 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide orders of even date 31.12.2018. 2. These appeals by the assessee are time barred by 50 days and assessee has filed affidavit for condonation petition. The facts are that the orders of CIT(A) dated 12.08.2022 was received by assessee on 20.08.2022 and appeal should have been filed before the Tribunal on or before 19.10.2022 but actually appeal was filed before Tribunal only on 08.12.2022 thereby there is a delay of 50 days. The assessee stated the reason that he was pursuing alternative remedies of filing rectification petition and the reason reads as under:-. 2 The order of CIT(A) dtd,, 12.08.2022 was received on 20.08,2022. Rectification petition was filed before CIT(A) and the order dtd 02.09.2022 was received on 13.09.2022. 3. The above orders were handed over by the appellants father to Sri Naveen Matthew in the office of his Income Tax Auditor Srl CA V.S.Saravanan who handled our assessment proceedings. The above orders were misplaced in the auditor office and could be traced out only on 09.11.2022 and appeal fees was paid on 10.11.2022. 4, The above orders were handed over to CA Sri A.Arjunaraj and the appeal petition were prepared and sent for signature, The appellant could come back to Coimbatore only on 06.12.2022 from IRAC and the appeal petition could be sent by RPAD on 06.12.2022. Hence going by the reason, I’m of the view that cause seems reasonable and therefore I condone the delay and admit the appeals. - 3 - ITA Nos.1066 & 1067/Chny/2022 ITA No.1066/CHNY/2022 3. The first issue in this appeal of assessee is as regards to the order of CIT(A) upholding the addition made by AO of Rs.64,250/- on account of salary income. 4. Brief facts are that the AO noted that the assessee has received a sum of Rs.11,00,000/- as compensation on resignation from the company and the same was not disclosed in the return of income. The AO also noted the assessee’s explanation that the amount of Rs.10,00,000/- received from company was on behalf of the mother-in-law cannot be accepted as the company have directly refunded the amount to assessee’s mother-in-law to her bank account and there is no requirement to give the same to the assessee. Accordingly, the AO made addition on this count at Rs.11,64,250/-. Aggrieved assessee preferred appeal before CIT(A). 4.1 The CIT(A) deleted the addition in regard to salary given by company to the assessee for an amount of Rs.11,00,000/- by observing in para 7.3 as under “7.3 I have carefully considered the matter. Regarding addition of Rs.11,00,000/-it is seen that Smt. Sabira and assessee were having credit balances of Rs.10,00,000/- and Rs.1,00,000/- in the account of Airtech Machine and tools as on 31.03.2011. Those credit no longer appear in the account as on 31.03.2012. Smt. Sabeera had confirmed that her money of - 4 - ITA Nos.1066 & 1067/Chny/2022 Rs.10,00,000/- was returned by the company through the account of her son-in-law. The AO simply brushed aside the documentary evidences and stated that the said sum could have been directly credited to the account of Smt Sabeera. It is seen that the AO had totally relied on the statement of G. Kumaravel without affording opportunity of cross-examination from assessee. Considering the documents filed, addition of Rs.11,00,000/- cannot be sustained. But, the ld.CIT(A) sustained the addition of Rs.64,000/- only on the basis that the explanation of the assessee that salary receipt was shown as income from other sources is not acceptable by giving the following reasoning:- The explanation regarding the sum of Rs.64,250/- cannot be accepted as stated by the AO. The assessee had the benefit of advice of a Chartered Accountant. It is not credible that salary receipt was shown as income from other sources. Addition of Rs.64,000/- is sustained. Aggrieved, assessee is in appeal before the Tribunal. 5. I have heard rival contentions and gone through facts and circumstances of the case. Before me, the ld.counsel for the assessee drew my attention to the assessee’s paper-book and stated that assessee has already declared income from other sources amounting to Rs.72,000/- which includes this addition of Rs.64,000/- made by the AO and sustained by CIT(A). When a query was put to him that how he will explain that this is the same income he stated that the income from other sources is only this Rs.64,000/- apart from interest from savings bank account, hence - 5 - ITA Nos.1066 & 1067/Chny/2022 there is no scope of any other income. After hearing ld.counsel and going through the case records, I noticed that this income has been explained by assessee and even otherwise it is not clear from the assessment order that how the AO is making addition of this Rs.64,000/- because the salary income narrated by AO in his order is only Rs.11,00,000/- which is deleted by CIT(A) because the assessee has already declared this amount under the head salary. Hence, I delete the addition and allow this issue of assessee’s appeal. 6. Coming to second issue against the order of CIT(A) upholding the addition made by AO of Rs.2,43,170/-. 7. Briefly stated facts are that the assessee has tried to explain the purchase of the following properties:- i. Vacant site on 16.12.2011 for an amount of Rs.1,73,720/- ii. Purchase of vacant site on 23.08.2011 for Rs.2,74,000/- iii. Purchase of vacant plot in July, 2011 for an amount of Rs.69,450/- iv. Purchase of vacant plot on 05.03.2012 for a sum of Rs.1,41,850/- v. Purchase of another land on 30.03.2012 for a sum of Rs.2,80,300/- The assessee has made investment to the tune of Rs.9,39,320/- during the year in purchase of various assets out of which, the assessee was able to explain the father’s withdrawal of - 6 - ITA Nos.1066 & 1067/Chny/2022 Rs.7,00,000/- on 05.03.2012 and hence, the AO treated the two properties, purchase of vacant plot in July, 2011 for Rs.69,450/- and purchase of another site on 30.03.2012 for a sum of Rs.2,80,300/- as unexplained and added to the returned income of the assessee as unexplained investment in property u/s.69 of the Act amounting to Rs.3,69,450/-. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) restricted the addition at Rs.2,43,170/- by giving following finding:- “7.3.1 Regarding additions of RS.3,69,450/- it is seen that tin the assessment order, the AO had doubted that the sources of investments amounting to Rs.1,73,720/- and Rs.69,450/-. The two totaled Rs.2,43,170/-. On examination of facts, it is seen that there was no sufficient cash withdrawals within short period of purchase of property. The cash book showing cash balances has no factual basis. Therefore, addition to the tune of Rs.2,43,170/- is sustained.” Aggrieved, assessee is in appeal before the Tribunal. 8. I have heard rival contentions and gone through facts and circumstances of the case. I noted that even from the fund position as noted by the AO there is withdrawal from father’s bank account maintained at SBI, Vadavalli, an amount of Rs.2,40,000/- and withdrawal of Rs.7,00,000/- on 05.03.2012, total comes to Rs.9,40,000/- whereas investment is only Rs.9,39,320/-. It means that the investment and withdrawal matches. In term of the above, - 7 - ITA Nos.1066 & 1067/Chny/2022 I allow this issue in favour of assessee and I direct the AO to delete the addition. 9. The next issue in this appeal of assessee is as regards to the order of CIT(A) upholding the addition made by AO of Rs.7,35,000/-. 10. Brief facts are that the AO made addition of Rs.7,35,000/- by observing in para 7.3 as under:- “7.3 Unexplained cash credit u/s 68 of the Act:- Assessee’s AR had produced cash book for F.Y. 2011-12 and the same perused carefully and found that assessee had made cash deposit of Rs.1,00,000/- on 17-12-2011, Rs.2,35,000/- on 03-01-2012 and Rs.4,00,000/- on 07-01-2012 in his City Union Bank account and no immediate similar withdrawal was made from his account. In view of the above, a sum of Rs.7,35,000/- is added back to his returned total income in want of documentary evidence and cash on hand cannot be allowed as assessee had huge expense on education of his children and family expense. The CIT(A) confirmed the addition by observing in para 7.3.2. as under:- “7.3.2 Even with regard to cash deposit of Rs.7,35,000/- it is seen that there no substantial cash withdrawals within reasonable period before deposit of the cash. Therefore, the action of the AO is sustained.” Aggrieved, now assessee is in appeal before Tribunal. 11. Even now before me, assessee could not produce any evidence as was the situation before AO, as was the situation before CIT(A). - 8 - ITA Nos.1066 & 1067/Chny/2022 In absence of any documentary evidence or explanation, I confirm the addition. Therefore, this issue of assessee’s appeal is dismissed. 12. As regards to charging of interest u/s.234A, 234B & 234C of the Act, which are consequential in nature and AO while giving appeal effect to the order of the Tribunal will recompute accordingly. The appeal of the assessee is party-allowed. ITA No.1067/CHNY/2022 13. The only issue in this appeal of assessee is as regards to the order of CIT(A) upholding the addition of Rs.59,000/- deposited by one Mrs.Shakila Muralibalan. 14. I have heard rival contentions and gone through facts and circumstances of the case. Brief facts are that the AO during the course of assessment proceedings noticed that the assessee has made cash deposit in his bank account amounting to Rs.15,49,000/- which was unexplained. Hence, he made addition. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) restricted the addition at Rs.59,000/- claimed to have been received by assessee from Mrs. Shakila Muralibalan. The assessee filed confirmation from the depositor and lady, who claimed to have been the cousin of the - 9 - ITA Nos.1066 & 1067/Chny/2022 assessee. The CIT(A) noted that she was a school teacher earning Rs.23,000/- per month and hence, he has not accepted the cash deposit of Rs.59,000/- received from her. Even now before me assessee could not file any evidence or explanation to explain this credit entry of Rs.59,000/-, hence I dismiss this ground. 15. As regards to charging of interest u/s.234A, 234B & 234C of the Act, which are consequential in nature and AO while giving appeal effect to the order of the Tribunal will recompute accordingly and this appeal of assessee is dismissed. 16. In the result, the appeals filed by the assessee in ITA No.1066/CHNY/2022 is partly-allowed and ITA No.1067/CHNY/2022 is dismissed. Order pronounced in the open court on 8 th March, 2023 at Chennai. Sd/- (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 8 th March, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.