A.Asangan, Vedaranyam V. ITO, Nagapattinam

ITA 1075/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5200 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: N QUADIR HOSEYN
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence
• Section: 133A; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO.1075/MDS/2010 ASSESSMENT YEAR : 2005-06 SHRI A.ASANGAN 7, SANNATHI STREET VEDARANYAM 609 001 VS THE ITO WARD I(2) NAGAPATTINAM 611001 [PAN AKIPA2036N] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.QUADIR HOSEYN RESPONDENT BY : SHRI K.E.B RENGARAJAN, JR. STANDING COUNSEL O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE, FOR ASSESSMENT YEAR 2005-06, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), TIRUC HIRAPPALLI, DATED 20.4.2010, WHICH IS A COMMON ORDER FOR VARIOUS YEAR S. 2. IN THIS APPEAL, ONLY TWO EFFECTIVE GROUNDS HAVE BEEN RAISED ONE IS AGAINST THE SUSTAINED ADDITION OF RS. 8,32,0 23/- OUT OF RS. 25,75,000/- AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT; AND THE OTHER IS AGAINST SUSTAINED ADDITION OF RS. 1,90, 000/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. ITA 1075/10 :- 2 -: 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS DOING BUSINESS IN SALT AND PRAWN CULTURE. DURING T HE YEAR, THE ASSESSEE PURCHASED LAND FOR A CONSIDERATION OF RS. 25,75,000/-. THIS PROPERTY WAS PURCHASED JOINTLY WITH ONE SHRI S. CHA NDRAMOHAN NAGORE FOR RS. 22,50,000/-; THE ASSESSEES SHARE BEING RS. 11,25,000/-. HOWEVER, THE DOCUMENT VALUE IS SHOWN AT RS. 3,67 ,454/-. A SURVEY U/S 133A WAS CONDUCTED IN THIS CASE ON 30.5.2007, D URING WHICH THE ASSESSEES FATHER SHRI V. AYYADURAI HAS ACCEPTED T HAT THE LAND IN QUESTION WAS PURCHASED FROM ONE SHRI M. CHANDRASEKA RAN FOR RS. 22,50,000/- JOINTLY WITH SHRI S.CHANDRAMOHAN. TH E ASSESSING OFFICER HAS TAKEN THE COST OF THIS LAND (AT VILANKANNI VIL LAGE) AT RS. 11,25,000/-. APART FROM THIS, THE ASSESSEE HAS PUR CHASED 10 ACRES OF LAND FOR RS. 14,50,000/-. THUS, TOTAL INVESTMENT DURING THE RELEVANT PERIOD IS WORKED OUT TO RS. 25,75,000/-. AS PER T HE ASSESSING OFFICER, THE INVESTMENTS WERE NOT EXPLAINED SATISFACTORILY. HE, THEREFORE, TREATED THE SAME AS UNEXPLAINED INVESTMENT AND ADDE D THE SUM OF RS. 25,75,000/- TO THE ASSESSEES RETURNED INCOME. AGG RIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT( A), WHO HAS PARTLY ALLOWED THE CLAIM WITH REGARD TO UNEXPLAINED INVEST MENT BUT, ADDITION OF RS. 1,90,000/- ON ACCOUNT OF UNEXPLAINED CREDIT ORS HAS BEEN SUSTAINED. THE ASSESSEE IS IN FURTHER APPEAL. ITA 1075/10 :- 3 -: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE MATERIAL AVAILABLE ON RECORD. IN SO FAR AS THE ADD ITION OF RS. 1,90,000/-, BEING SUNDRY CREDITORS SHOWN IN THE BAL ANCE SHEET, IS CONCERNED, THE CASE OF THE LD.AR IS THAT THE ASSESS ING OFFICER HAS ONLY CALLED FOR THE NAMES AND ADDRESSES OF THE CREDITORS WHICH WERE SUPPLIED AND SINCE NO FURTHER DETAILS/INFORMATION W AS CALLED FOR, IT WOULD BE UNJUST TO ASSESS THE CREDITS IN THE ABSENC E OF CONFIRMATORY LETTERS FROM THE CREDITORS. THE CASE OF THE LD. D R IS THAT THE ASSESSING OFFICER HAD DEPUTED HIS INSPECTOR ATTACHED TO HIS O FFICE TO VISIT THE CREDITORS AND TO ENQUIRE FROM THEM REGARDING THEIR CREDITS. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED CONFIRMATORY LET TERS WHICH WERE ACCEPTED AS ADDITIONAL EVIDENCE IN THE LIGHT OF RUL E 46A(1)(D) OF THE RULES. THESE CONFIRMATORY LETTERS WERE SUBJECT TO VERIFICATION BY ASSESSING OFFICER AFTER CONDUCTING REQUISITE ENQUIR Y AS HE DEEMED FIT AND TO SUBMIT HIS REPORT. THE ASSESSING OFFICER DE PUTED HIS INSPECTOR, WHO HAS SUBMITTED THAT THERE WERE DISCREPANCY BETWE EN THE AVERMENTS MADE IN THE CONFIRMATORY LETTERS AND THE INFORMATION GIVEN TO HIM. THE REPORT OF THE INSPECTOR WAS PUT TO THE AR, WHO COULD NOT REBUT THE SAME WITH CREDIBLE EVIDENCE. UNDER THESE CIRCUMSTANCES, THE LD. CIT(A) HAS CONFIRMED THE ADDITION. 5. BEFORE US, SIMILAR ARGUMENTS WERE PUT FORTH BY BOTH THE PARTIES. IT IS TRUE THAT THERE IS NO DOUBT ABOUT THE IDENTIT Y OF THE CREDITORS. THE ITA 1075/10 :- 4 -: ASSESSEE HAS FILED CONFIRMATORY LETTERS FROM THE CR EDITORS FROM WHICH THE FACTUM OF ADVANCEMENT OF CREDITS STAND PROVED. THE ASSESSING OFFICER HAS NOWHERE MENTIONED AS TO WHETHER THE CRE DITWORTHINESS OF THE CREDITORS WAS ESTABLISHED OR NOT. BUT IT SEEMS THAT THE ASSESSING OFFICER HAS NOT ENTERED INTO THIS AREA EITHER BECAU SE THE CREDITWORTHINESS OF THE CREDITORS STAND PROVED ON R ECORD OR BECAUSE HE ELSE DID NOT AT ALL MOVE FURTHER IN THIS DIRECTION. WHATEVER MAY BE THE REASON, IN OUR CONSIDERED OPINION, THE IDENTITY OF THE CREDITORS; THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENE SS OF THE TRANSACTIONS STAND PROVED ON RECORD. HENCE, WE DO NOT FIND ANY REASON TO SUSTAIN THIS ADDITION OF RS. 1,90,000/- I N THE HANDS OF THE ASSESSEE. CONSEQUENTLY, THE SAME IS DIRECTED TO BE DELETED. 6. IN SO FAR AS THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS. 8,32,0233/- OUT OF TOTAL ADDITION OF RS. 25, 75,000/- IS CONCERNED, THE FACTS ARE THAT THE ASSESSING OFFICER HAS ADDED THE SUM OF RS. 25,75,000/- AS UNEXPLAINED INVESTMENT IN PUR CHASE OF LAND FROM TWO PERSONS NAMELY, SHRI M.CHANDRASEKARAN AND SHRI PACKIRISAMY. THE REASON FOR THIS ADDITION IS THAT THE ACTUAL CON SIDERATION PAID WAS RS. 11,25,000/- [1/2 SHARE] OF TOTAL CONSIDERATIO N OF RS. 22,50,000/- TO SHRI M.CHANDRASEKARAN AND RS. 14,50,000/- TO SH RI PACKIRISAMY. AS PER THE LD.AR, THE ENTIRE PURCHASES HAVE BEEN ACCOU NTED FOR IN THE BOOKS OF ACCOUNT AND THE PURCHASE OF LANDS IS REFLE CTED IN THE BALANCE ITA 1075/10 :- 5 -: SHEET AS ON 31.3.2005. THIS IS SHOWN AT RS. 17,45 ,977/-. SO, ACCORDING TO THE LD.AR, THERE IS NO UNEXPLAINED INV ESTMENT AT ALL AS THE ENTIRE INVESTMENTS HAVE BEEN ACCOUNTED FOR AND THE SOURCES ALSO STOOD EXPLAINED IN THE BOOKS OF ACCOUNT. IT WAS AR GUED THAT IN FACT THE ASSESSEE HAD PAID RS. 5,34,050/- TO SHRI PACKIRISA MY. HIS FATHER HAD ADMITTED RS. 14,50,000/- DURING SURVEY UNDER COERC ION AND DURESS. IT IS TRUE THAT SHRI PACKIRISAMY HAS CONFIRMED THE SAL E CONSIDERATION AT RS. 5,34,050/- IN HIS CONFIRMATORY LETTER AND WHEN HE WAS SUMMONED, HIS STATEMENT WAS ALSO RECORDED WHICH HAS BEEN ACCE PTED BY THE DEPARTMENT. IT IS TRUE THAT NO ADDITION ON ACCOUNT OF ON-MONEY HAS BEEN MADE IN THE ASSESSMENT ORDER OF THE SELLER. I N OUR OPINION, THERE CANNOT BE TWO VIEWS ABOUT A SINGLE SUM OF MONEY ONE IN THE HANDS OF SELLER AND ANOTHER IN THE HANDS OF PURCHASER. ON T HE BASIS OF THE STATEMENT OF ASSESSEES FATHER, ADDITION CANNOT BE MADE. WE ARE IN AGREEMENT WITH THE LD.AR THAT THE STATEMENT MADE DU RING SURVEY HAS NO EVIDENTIARY VALUE WHICH CAN DISCARD THE DOCUMENT ARY PROOF. IN THIS REGARD, RELIANCE HAS BEEN PLACED ON THE DECISION OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF CIT VS S.KHADER KHAN SON (300 ITR 157) WHEREIN IT HAS BEEN HELD THAT STATEMENT MA DE DURING SURVEY HAS NO EVIDENTIARY VALUE. WHEN THE SELLER SHRI P ACKIRISAMY WAS CALLED FOR AND HIS STATEMENT WAS RECORDED IN HIS AS SESSMENT PROCEEDINGS AND THE ASSESSING OFFICER HAS ACCEPTED THE SALE ITA 1075/10 :- 6 -: CONSIDERATION AT RS. 5,34,050, THIS AMOUNT HAS TO BE ACCEPTED IN ASSESSEES CASE ALSO. IN THE CASE OF PURCHASE OF P ROPERTY FROM M.CHANDRASEKARAN ON- MONEY WAS PAID. IT IS NOT DIS PUTED THAT ON- MONEY HAS ALSO BEEN RECORDED IN THE BOOKS OF ACCOUN T. IN OUR CONSIDERED OPINION, THE FINDING OF THE LD. CIT(A) I N THIS REGARD IS CORRECT. HE HAS ONLY SUSTAINED, PART OF THE ADDI TION MADE ON ACCOUNT OF INVESTMENT, WHICH HAS NOT BEEN ACCOUNTED FOR. THE AMOUNT OF RS. 8,32,023/- IS THE DIFFERENCE BETWEEN THE ACTUAL INV ESTMENT OF RS. 25,75,000/- AND THE ACCOUNTED INVESTMENT OF RS. 17 ,42,977/-. WE HAVE NO REASON TO INTERFERE IN THIS IMPUGNED FINDIN G. ACCORDINGLY, THIS ADDITION IS SUSTAINED. 7. IN THE RESULT, THE APPEAL STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 6 .5.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 6 TH MAY, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR