Sri M.P.Purushothaman, CHENNAI V. ACIT, CHENNAI

ITA 107/CHNY/2006

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8778 (ITAT-CHENNAI)
• Duration Of Justice: 10 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-06-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 09-01-2006
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Gift; Depreciation; Reasonable cause
• Section: 43B; 142(1); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1313/MDS/2008 / ASSESSMENT YEAR : 2001-02 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE VII CHENNAI VS. SHRI M.P. P URUSHOTHAMAN 346, PANTHEON ROAD CHENNAI 600 008 [PAN AGMPP 4159 R ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NO.107/MDS/2006 / ASSESSMENT YEAR : 2001-02 SHRI M.P. P URUSHOTHAMAN 346, PANTHEON ROAD CHENNAI 600 008 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI ( &' / APPELLANT) ( ()&' /RESPONDENT) DEPARTMENT BY : SHRI P. RADHAKRISHNAN, JCIT ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 13 - 06 - 2016 / DATE OF PRONOUNCEMENT : 05 - 08 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THE REVENUE FILED APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IX, CHENNAI, D ATED 24.3.2008, ITA NO.1313/08 & 107/06 :- 2 -: DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICE R U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, FOR ASSESSMENT YEAR 2001- 02. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF THE CIT( A)-I, CHENNAI, DATED 14.11.2005. 2. LET US FIRST TAKE UP REVENUES APPEAL I.T.A.NO. 1313/MDS/2008. 3. SHRI P. RADHAKRISHNAN, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THE INTEREST CLA IMED ON THE LOAN FROM SHRI V.L.ITTIACHEN. THE ASSESSEE HAS ALSO CLAIMED UNEXPLAINED CASH CREDIT TO THE EXTENT OF ` 39,62,000/-. THE ASSESSEE HAS NOT DISCLOSED THE COMMISSION AND INTEREST IN THE RETURN OF INCOME . THE DIFFERENCE IN RATES OF DEPRECIATION TO THE EXTENT OF ` 45,933/- WAS ALSO CONSIDERED FOR LEVY OF PENALTY. ACCORDING TO THE LD. REPRESEN TATIVE, THE ASSESSEE CLAIMED TO HAVE RECEIVED LOAN FROM A NON-RESIDENT I NDIAN. HOWEVER, NO CONFIRMATION LETTER WAS FILED. THE CORRECT ADDR ESS OF THE CREDITOR WAS NOT FURNISHED TO THE ASSESSING OFFICER. THEREF ORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS FURNISHED INAC CURATE PARTICULARS. REFERRING TO THE PENALTY ORDER, THE LD. DR SUBMITTE D THAT SINCE THE ASSESSEE HAS NOT ESTABLISHED THE CLAIM IN THE ASSES SMENT PROCEEDINGS, ITA NO.1313/08 & 107/06 :- 3 -: THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY, T HEREFORE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4. ON THE CONTRARY, SHRI S. SRIDHAR, LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIVED A SUM OF ` 50 LAKHS AS LOAN UNDER THE SPECIAL SCHEME OF RBI WITH APPROVAL OF TH E RBI FROM SHRI V.L.ITTIACHEN, A NON-RESIDENT INDIAN DURING THE ASS ESSMENT YEAR 1988- 89. DURING THE ASSESSMENT YEAR 2000-01, A SUM OF ` 40,60,000/- WAS CONVERTED AS GIFT FROM THE LOAN ACCOUNT. HOWEVER, THIS CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS CESSATION OF LIABILITY. REFERRING TO THE PENALTY ORDER, THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER CLAIMS THAT THE ASSESSEE HAS NOT FURNISHED THE CORRECT AND COMPLETE ADDRESS OF THE DONOR. THE FAC T THAT THE ASSESSEE BORROWED LOAN OF ` 50 LAKHS FROM THE NON-RESIDENT INDIAN AFTER OBTAINING APPROVAL FROM RBI IS NOT IN DISPUTE . IT IS ALSO NOT IN DISPUTE THAT THE SAID LOAN WAS CONVERTED INTO GIFT TO THE EXTENT OF ` 40,60,000/-. THEREFORE, IT IS NOT CORRECT TO SAY T HAT THE ASSESSEE HAS NOT FURNISHED CORRECT ADDRESS OF THE CREDITOR. REF ERRING TO THE UNEXPLAINED CASH CREDIT TO THE EXTENT OF ` 39,62,000/-, THE LD. COUNSEL SUBMITTED THAT THIS LOAN WAS TREATED AS UNEXPLAINED ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT PAID INTEREST TO THE LOAN CREDITOR. THE LOAN IS REFLECTED IN THE OPENING BALANCE. OUT OF ` 39,62,000/-, A ITA NO.1313/08 & 107/06 :- 4 -: SUM OF ` 20 LAKHS IS APPEARING AGAINST SHRI V.L.ITTIACHEN W HOSE IDENTITY AND CREDITWORTHINESS ARE ALREADY ESTABLISH ED BEFORE THE ASSESSING OFFICER. THEREFORE, THE CIT(A)HAS RIGHTLY DELETED THE PENALTY. 5. REFERRING TO THE RENTAL RECEIPT OF ` 9 LAKHS, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS RECEIVED RENT FROM M/S EMPEE INTERNATIONAL HOTELS & RESORTS LTD . THIS RENTAL I NCOME WAS OMITTED TO BE INCLUDED IN THE RETURN OF INCOME. THE CIT(A) FO UND THAT THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE IN NOT DISCLOSING THE RENTAL INCOME IN THE RETURN. THEREFORE, ACCORDING T O THE LD. COUNSEL, THE CIT(A) HAS RIGHTLY DELETED THE PENALTY. 6. REFERRING TO THE PAYMENT OF INTEREST OF ` 2,04,225/- AND COMMISSION OF ` 30,900/-, THE LD. COUNSEL SUBMITTED THAT THE ASSES SING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON TH E GROUND THAT THE INTEREST WAS PAID FOR EARNING DIVIDEND INCOME. THE FACT THAT THE INTEREST WAS PAID IS NOT IN DISPUTE AND THE PAYMENT OF COMMISSION IS ALSO NOT IN DISPUTE. MERELY BECAUSE DISALLOWANCE WA S MADE BY REFERRING TO A STATUTORY PROVISION, THAT CANNOT BE REASON TO LEVY PENALTY. THE LD. COUNSEL PLACED HIS RELIANCE ON TH E JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS RELIANCE PETROPRO DUCTS PVT. LTD, 322 ITR 158. ITA NO.1313/08 & 107/06 :- 5 -: 7. REFERRING TO THE DIFFERENCE IN THE RATE OF DEPRECIA TION, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE CLAIMED DEPREC IATION @ 25%. HOWEVER, THE ASSESSING OFFICER ALLOWED DEPRECIATION ONLY @ 15%. WHEN THE ASSESSEE CLAIMS A STATUTORY DEDUCTION AND MERELY BECAUSE THE ASSESSING OFFICER RESTRICTED THE RATE OF DEPREC IATION THAT CANNOT BE REASON TO LEVY PENALTY. ACCORDING TO THE LD. COUNS EL, THIS CANNOT BE TREATED AS FURNISHING INACCURATE PARTICULARS OF INC OME. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAS RECEIVED LOAN FROM NON-RESIDENT INDIAN AFTER OBTAINING NECESSARY APPRO VAL FROM RBI. A SUM OF ` 40,60,000/- WAS CONVERTED INTO GIFT SUBSEQUENTLY. FROM THE VERY SAME PERSON, THE ASSESSEE HAS RECEIVED A CASH CREDIT OF ` 39,62,000/-. SINCE THE ASSESSEE HAS RECEIVED THE MONEY AFTER GETTING NECESSARY APPROVAL FROM RBI, IT IS NOT CORRECT TO S AY THAT THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR IS NOT PROVED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERELY BECAUSE AN ADDIT ION WAS MADE IN THE ASSESSMENT PROCEEDINGS THAT WILL NOT RESULT AUT OMATICALLY IN LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HAS TO RE- APPRECIATE THE MATERIAL AVAILABLE ON RECORD. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE WAS A JUSTIFICATION I N CLAIMING THE LOAN ITA NO.1313/08 & 107/06 :- 6 -: AMOUNT AS GIFT. MERELY BECAUSE THE CLAIM OF THE A SSESSEE WAS DISALLOWED IN THE ASSESSMENT PROCEEDINGS, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT IT CANNOT BE CONSTRUED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS IN VIEW OF THE JUD GMENT OF THE APEX COURT IN RELIANCE PETROPRODUCTS PVT. LTD(SUPRA). SIMILARLY, RENTAL RECEIPT WAS FUND TO BE OMITTED IN THE RETURN OF INC OME. THE CIT(A) FOUND THAT THERE WAS REASONABLE CAUSE IN NOT DISCLO SING THE SAME IN THE RETURN OF INCOME. THIS TRIBUNAL DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 9. SIMILARLY, FOR THE DISALLOWANCE OF INTEREST AND COM MISSION AND RESTRICTING THE DEPRECIATION TO 15% AS AGAINST THE CLAIM OF 25% BY THE ASSESSING OFFICER CANNOT BE CONSTRUED AS FURNIS HING INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELE TED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. 10. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. 11. NOW COMING TO ASSESSEES APPEAL I.T.A.NO. 107/MDS/ 2006, THE FIRST GROUND OF APPEAL IS WITH REGARD TO LIMITA TION. ITA NO.1313/08 & 107/06 :- 7 -: 12. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 143(2) BEY OND THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RE TURN OF INCOME WAS FILED, THEREFORE, THE ASSESSMENT PROCEEDINGS AR E NOT VALID. 13. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT RAISED THIS ISSUE BEFORE THE ASSESSING OFFICER. IN FACT, THE ASSESS EE APPEARED BEFORE THE ASSESSING OFFICER AND PARTICIPATED IN THE PROCE EDINGS, THEREFORE, AT THIS STAGE, THE ASSESSEE CANNOT CONTENT THAT NOTIC E U/S 132(2) WAS NOT RECEIVED BY HIM. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FRO M THE MATERIAL AVAILABLE ON RECORD IT APPEARS THAT THIS TRIBUNAL B Y AN ORDER DATED 16.2.2006 DIRECTED THE ASSESSEE TO FILE AN AFFIDAV IT MAKING A CATEGORICAL STATEMENT ABOUT THE NON-RECEIPT OF NOTI CE U/S 143(2). EVEN AFTER THE EXPIRY OF ALMOST TEN MONTHS, NO AFFI DAVIT WAS FILED. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CLAIM OF THE ASSESSEE THAT NO NOTICE WAS RECEIVED CANNOT BE ACCEPTED AT THIS STAGE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY RE ASON TO UPHOLD THE CONTENTION OF THE ASSESSEE. ITA NO.1313/08 & 107/06 :- 8 -: 15. THE NEXT GROUND OF APPEAL IS WITH REGARD TO FAILURE OF THE ASSESSING OFFICER TO GIVE ADEQUATE OPPORTUNITY TO T HE ASSESSEE. 16. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSING OFFICER HAS NOT PROVIDED ADEQUATE OPP ORTUNITY DURING ASSESSMENT PROCEEDINGS, THEREFORE, THE ASSESSEE CO ULD NOT PARTICIPATE AND PRODUCE NECESSARY MATERIAL PROPERLY. THEREFORE , THE ENTIRE ASSESSMENT IS VITIATED. 17. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DR SUBM ITTED THAT AFTER RECEIPT OF NOTICE U/S 142(1), THE AUTHO RIZED REPRESENTATIVE WAS APPEARED BEFORE THE ASSESSING OFFICER. HOWEVER , THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS NOT FILED ANY POWER OF AUTHORIZATION. WHEN THE SAME WAS QUESTIONED BY THE ASSESSING OFFICER, HE SIMPLY SUBMITTED THAT HE WAS A LOYAL EM PLOYEE OF M/S EMPEE DISTILLERIES LTD AND APPEARING ON BEHALF OF HIS MANAGING DIRECTOR-CUM-CHAIRMAN, SHRI M.P.PURUSHOTHAMAN, THE PRESENT ASSESSEE. THEREFORE, IT IS FOR THE ASSESSEE TO APP EAR BEFORE THE ASSESSING OFFICER AND PARTICIPATE IN THE PROCEEDING S. SINCE THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFI CER EVEN THOUGH NOTICE WAS RECEIVED ON HIM, HE CANNOT SAY THAT NO O PPORTUNITY WAS GIVEN. ITA NO.1313/08 & 107/06 :- 9 -: 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE RECEIVED THE NOTICE ISSUED BY THE ASSESSIN G OFFICER U/S 142(1) AND ONE SHRI G. PALANIDAS, DY. G.M(TAXATION) OF M/S EMPEE GROUP OF COMPANIES APPEARED BEFORE THE ASSESSING OF FICER. HOWEVER, HE HAS NOT FILED ANY AUTHORIZATION TO APPEAR ON BEH ALF OF THE ASSESSEE. HE SIMPLY CLAIMED THAT HE WAS A LOYAL EMPLOYEE OF M /S EMPEE DISTILLERIES LTD, THEREFORE, HE IS APPEARING ON BEH ALF OF HIS MANAGING DIRECTOR-CUM-CHAIRMAN, SHRI M.P.PURUSHOTHAMAN. AS RIGHTLY SUBMITTED BY THE LD. DR, WHEN THE NOTICE WAS RECEIVED FROM TH E ASSESSING OFFICER IT IS FOR THE ASSESSEE TO APPEAR BEFORE THE ASSESS ING OFFICER AND IF HE COULD NOT APPEAR IN PERSON IT IS FOR HIM TO MAKE AL TERNATE ARRANGEMENT. THEREFORE, AT THIS STAGE, IT MAY NOT BE PROPER ON THE PART OF THE ASSESSEE TO CLAIM THAT NO PROPER OPPOR TUNITY WAS GIVEN. THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2001-02. REMANDING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER AF TER A LAPSE OF ALMOST 15 YEARS MAY NOT SERVE ANY PURPOSE, THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO UPHOLD THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 19. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 40,80,000/-. ITA NO.1313/08 & 107/06 :- 10 -: 20. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE RECEIVED A LOAN OF ` 50 LAKHS FROM SHRI V.L.ITTIACHEN, A NON-RESIDENT INDIAN. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE OBTAINED PERMISSION FROM RBI FOR RECEIVING THE LOAN OF ` 50 LAKHS. SUBSEQUENTLY, THE SAID LOAN WAS CONVERTED INTO GIFT TO THE EXTENT OF ` 40,60,000/-. THE ASSESSEE HAS ALSO PAID INTEREST IN THE MEANTIME. SINCE THE LOAN WAS CONVERTED INTO GIFT, ACCORDING T O THE LD. COUNSEL, THE SAME CANOT BE ASSESSED AS INCOME OF THE ASSESS EE. 21. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DR SUBM ITTED THAT THE ASSESSEE BY A LETTER DATED 24.3.2004 CLA IMED BEFORE THE ASSESSING OFFICER THAT HE RECEIVED A LOAN OF ` 50 LAKHS FROM SHRI V.L.ITTIACHEN, A NON-RESIDENT INDIAN. THE ASSESSE E ALSO CLAIMED THAT PRIOR APPROVAL WAS OBTAINED FROM RBI. SUBSEQUENTLY , THE ASSESSEE CLAIMS THAT THE OUTSTANDING AMOUNT OF ` 40,60,000/- WAS CONVERTED INTO GIFT. HOWEVER, NO MATERIAL WAS PRODUCED BEFOR E THE ASSESSING OFFICER TO PROVE THE CONVERSION OF LOAN INTO GIFT. SINCE THE ASSESSEE CLAIMS THAT THE LOAN WAS CONVERTED INTO GIFT, IT WO ULD AMOUNT TO WAIVER OF THE LOAN. THE RBI BY LETTER DATED 7.10.1987 GRA NTED PERMISSION FOR AVAILING LOAN OF ` 50 LAKHS ON PAYMENT OF INTEREST @ 8% PER ANNUM FOR A PERIOD OF TEN YEARS. THE ASSESSING OFFICER H AS REPRODUCED THE CONDITIONS LAID DOWN BY RBI FOR GRANTING PERMISSION . THE ASSESSEE ITA NO.1313/08 & 107/06 :- 11 -: HAS ALSO ACCEPTED THE STAND OF THE DEPARTMENT THAT INTEREST PAYABLE TO SHRI V.L. ITTIACHEN AND OTHERS WAS NOT ALLOWABLE FO R THE ASSESSMENT YEAR 1994-95 TO 1995-96 AND THE ASSESSEE PAID TAXE S ON THE SO CALLED INTEREST UNDER KAR VIVADH SAMADHAN SCHEME, 1998 (KV SS). THE LD. DR FURTHER POINTED OUT THAT THE ASSESSEE RECEIVED GIFT OF ` 91,59,000/- FROM THE SAME PERSON IN THE EARLIER ASSESSMENT YEAR . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE BY WAY OF BOOK E NTRY SHOWING THE OUTSTANDING AMOUNT OF ` 40,60,000/- AS GIFT, THEREFORE, ASSESSING OFFICER FOUND THAT THIS CONSTITUTES CESSATION OF LI ABILITY TOWARDS THE PRINCIPAL AMOUNT HENCE, IT HAS TO BE ASSESSED AS IN COME OF THE ASSESSEE U/S 41(1) OF THE ACT. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE RECEIVED A LOAN OF ` 50 LAKHS FROM SHRI V.L.ITTIACHEN, A NON- RESIDENT INDIAN. DURING THE YEAR UNDER CONSIDERATI ON BY WAY OF BOOK ENTRY, THE ASSESSEE CLAIMED THAT THE OUTSTANDING L OAN OF ` 40,60,000/- WAS CONVERTED INTO GIFT. THEREFORE, IT IS OBVIOUS THAT THE CREDITOR WAIVED THE PRINCIPAL AMOUNT WITHOUT ANY CONSIDERATI ON. ONCE THE PRINCIPAL AMOUNT WAS WAIVED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS WOULD FORM PART OF THE INCOME OF THE ASSESSEE U/S 41(1) OF THE ACT. THEREFORE, THE CIT(A) HAS RIGHTL Y CONFIRMED THE ITA NO.1313/08 & 107/06 :- 12 -: ADDITION MADE BY THE ASSESSING OFFICER. THIS TRIBU NAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 23. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 39,62,212/-. 24. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT AS ON 31.3.2001 THE UNSECURED LOAN OUTSTANDING WAS ` 39,62,212/-. THE ASSESSEE HAS NOT FILED ANY CONFIRMATION LETTER FROM THE CREDITORS. REFERRING TO THE ASSESSMENT ORDER THE LD. COUNSEL S UBMITTED THAT IN FACT THE ASSESSING OFFICER CALLED FOR EXPLANATION W ITH REGARD TO THE OUTSTANDING LOAN AMOUNT OF ` 1,51,49,487/-. IN THE ABSENCE OF ANY CONFIRMATION LETTER, THE ASSESSING OFFICER DISALLOW ED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE ASSES SEE HAS ACTUALLY PAID INTEREST. MERELY BECAUSE CONFIRMATION LETTER WAS N OT FILED, THERE CANNOT BE ANY ADDITION. 25. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DR SUBM ITTED THAT OUTSTANDING UNSECURED LOAN IN THE ACCOUNT OF T HE ASSESSEE WAS TO THE EXTENT OF ` 1,51,49,487/-. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE OUTSTANDING LOAN AMOUNT SHOULD NOT BE TREAT ED AS INCOME OF THE ASSESSEE. THE ASSESSEE COULD NOT FURNISH ANY EXPLANATION AND NO ITA NO.1313/08 & 107/06 :- 13 -: CONFIRMATION LETTER WAS ALSO FILED FROM THE CREDITO R. THE ASSESSEE ALSO HAS NOT PAID ANY INTEREST ACTUALLY. THE PAYMENT OF INTEREST CLAIMED BY THE ASSESSEE FOR ASSESSMENT YEARS 1994-95 AND 1995 -96 WAS IN FACT DISALLOWED BY THE ASSESSING OFFICER AND THE SAME WA S ACCEPTED BY THE ASSESSEE AND PAID TAXES UNDER KVSS, 1998. THEREFOR E, ACCORDING TO THE LD. DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE AD DITION MADE BY THE ASSESSING OFFICER. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS ON 31.3.2001, THE ASSESSING OFFICER FOUND AN UNSECURED LOAN OF ` 39,62,212/-. WHEN THERE IS A CREDIT IN THE BOOKS OF ACCOUNT, THE ASS ESSEE HAS TO NECESSARILY ESTABLISH THE IDENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. IN THIS CASE, THE ASSESSEE HAS NOT FILED ANY CONFIRMATION LETTER. MO REOVER, THE DETAILS AND MODE OF PAYMENT ARE NOT AVAILABLE ON RECORD. I N THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE CLAIM OF UNSECURED LOAN, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RI GHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 27. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 9 LAKHS TOWARDS RENT. ITA NO.1313/08 & 107/06 :- 14 -: 28. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAS NO OBJECTION TO TREAT THE SUM OF ` 9 LAKHS AS INCOME FROM RENT. HOWEVER, THE PROPERTY TAX PAID BY THE ASSESSEE HAS TO BE ALLOWED WHILE COMPUTING THE INCOME FROM HOUSE PROPE RTY. 29. ON THE OTHER HAND, SHRI P. RADHAKRISHNAN, LD. DR SU BMITTED THAT THE ASSE BY LETTER DATED 19.3.2004 SUBMITTED B EFORE THE ASSESSING OFFICER THAT HE HAS NO OBJECTION TO TREAT A SUM OF ` 9 LAKHS AS INCOME FROM RENT. THE ASSESSEE HAS NOT CLAIMED THE PROPE RTY TAX AND WATER TAX PAID AS DEDUCTION WHILE COMPUTING THE RENTAL IN COME. IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THAT THE ASSESS EE HAS ACTUALLY PAID THE PROPERTY TAX AND WATER TAX DURING THE YEAR UNDE R CONSIDERATION, THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED. 30. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR, TH E ASSESSEE CLEARLY STATED BEFORE THE ASSESSING OFFICER BY LETTER DATED 19.3.2004 AND HE HAS NO OBJECTION TO ASSESS A SUM OF ` 9 LAKHS AS INCOME FROM RENT. NOW THE ASSESSEE CLAIMS THAT THE PAYMENT OF PROPER TY TAX AND WATER TAX HAS TO BE DEDUCTED WHILE COMPUTING THE RENTAL I NCOME. HOWEVER, AS SUBMITTED BY THE LD. DR, NO MATERIAL IS AVAILABL E ON RECORD THAT THE ASSESSEE HAS ACTUALLY PAID THE PROPERTY TAX AND WAT ER TAX DURING THE ITA NO.1313/08 & 107/06 :- 15 -: YEAR UNDER CONSIDERATION. IN VIEW OF THE PROVISION S OF SEC. 43B OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION TH AT THE TAXES HAS TO BE ALLOWED WHILE COMPUTING THE RENTAL INCOME PROVIDED THE SAME WAS PAID DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR ATLEAST BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME FOR TH E YEAR UNDER CONSIDERATION. THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT PROPERTY TAX AND WATER TAX IS ALLOWABLE DEDUCTION W HILE COMPUTING THE INCOME FROM HOUSE PROPERTY. HOWEVER, IT IS FOR THE ASSESSEE TO ESTABLISH THAT THE PAYMENT HAS ACTUALLY BEEN MADE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER SHALL VERIFY THE PAYMENT OF PROPERTY TAX AND WATER TAX. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE OF ADDITION OF ` 9 LAKHS IS REMITTED BACK TO THE FILE OF THE ASSESS ING OFFICER. AS ADMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER, THE SAME SHALL BE TAKEN AS INCOME FROM RENT. HOWEVER, THE ASSESSI NG OFFICER SHALL VERIFY WHETHER THE ASSESSEE HAS ACTUALLY PAID THE PROPERTY TAX AND WATER TAX DURING THE YEAR UNDER CONSIDERATION. IF THE ASSESSEE PRODUCE NECESSARY EVIDENCE TO ESTABLISH THE ACTUAL PAYMENT OF WATER TAX AND PROPERTY TAX DURING THE YEAR UNDER CONSIDER ATION OR BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME, THE SAME HAS TO BE ALLOWED. ITA NO.1313/08 & 107/06 :- 16 -: 31. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISALL OWANCE OF INTEREST PAYMENT TO THE EXTENT OF ` 2,04,225/- AND PAYMENT OF COMMISSION TO THE EXTENT OF ` 30,900/-. 32. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSING OFFICER DISALLOWED THE PAYMENT OF INT EREST AND COMMISSION AS IT WAS DISALLOWED FOR ASSESSMENT YEAR S 1999-2000 AND 2000-01. THE ASSESSING OFFICER FOUND THAT THE ASS ESSEE HAS NOT SHOWN ANY INCOME RELATABLE TO PAYMENT OF INTEREST A ND COMMISSION. ACCORDING TO THE LD. COUNSEL, WHEN THE ASSESSEE AC TUALLY INCURRED EXPENDITURE TOWARDS PAYMENT OF INTEREST AND COMMISS ION, THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED THE SAME. 33. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DR SUBM ITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS FO R THE REASONS FOR PAYMENT OF INTEREST AND COMMISSION. THE CIT(A) FOU ND THAT THE INTEREST PAYMENT MAY BE FOR EARNING THE EXEMPTED IN COME, THEREFORE, IT WAS DISALLOWED U/S 14A. IN THE ABSENCE OF ANY DETAILS WITH REGARD TO THE NATURE OF PAYMENT OF INTEREST AND COMMISSION AND THE PURPOSE FOR WHICH IT WAS PAID, ACCORDING TO THE LD. DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 34. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ASSESSEE CLAIMED ITA NO.1313/08 & 107/06 :- 17 -: PAYMENT OF INTEREST TO THE EXTENT OF ` 2,04,225/- AND COMMISSION TO THE EXTENT OF ` 30,900/- FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND THAT SIMILAR CLAIM WAS DISA LLOWED FOR THE ASSESSMENT YEAR 1999-2000 AND 2000-01. AS RIGHTLY SUBMITTED BY THE LD. DR, THE CIT(A) FOUND THAT THE ASSESSING OFFICER PERHAPS DISALLOWED THE CLAIM OF THE ASSESSEE U/S 14A OF THE ACT. TH E FACT REMAINS NO DETAILS AE AVAILABLE ON RECORD WITH REGARD TO THE N ATURE OF PAYMENT OF INTEREST AND COMMISSION. SINCE NO DETAILS ARE AVAI LABLE ON RECORD, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(A) AND ACCORDINGLY THE SAME IS CONFIRMED. 35. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. 36. TO SUMMARIZE, THE REVENUES APPEAL IS DISMISSED WHE REAS THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 5 TH AUGUST, 2016 RD ITA NO.1313/08 & 107/06 :- 18 -: !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF