K.S.Narendrakumar, Pollachi V. ITO, Pollachi

ITA 1088/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8774 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 29-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: G BASKAR
• Keywords: Source of fund; Retraction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI .. , . . !' , # $% BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.1087/MDS/2014 # & '& / ASSESSMENT YEAR : 2009-10 SHRI K.S. SIVAKUMAR 1/26, KMG ILLAM, MARAPPAGOUNDER STREET, POLLACHI 642 129. PAN : AMDPS 3112 J V. THE INCOME TAX OFFICER, WARD I(1), POLLACHI. ()*/ APPELLANT) (,-)*/ RESPONDENT) ./ ITA NO. 1088/MDS/2014 # & '& / ASSESSMENT YEAR : 2009-10 SHRI K.S. NARENDRAKUMAR 1/26, KMG ILLAM, MARAPPAGOUNDER STREET, POLLACHI 642 129. PAN: ACJPN 7605 F V. THE INCOME TAX OFFICER, WARD I(1), POLLACHI. ()*/ APPELLANT) (,-)*/ RESPONDENT) )* . / / APPELLANTS BY : SHRI G. BASKAR, ADVOCATE ,-)*./ / RESPONDENT BY : SHRI N. MADHAVAN, JCIT 0 .1 / DATE OF HEARING : 29.01.2015 2'' .1 / DATE OF PRONOUNCEMENT : 04.02.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS FILED BY THE RESPECTIVE ASSESSEE S ARE DIRECTED AGAINST THE SEPARATE ORDERS, BOTH DATED 26 .02.2014, 2 I.T.A. NOS. 1087/MDS/2014 I.T.A. NO. 1088/MDS/2014 PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)- II, COIMBATORE AND THEY RELATE TO ASSESSMENT YEAR 2009- 10. SINCE THE ISSUES URGED IN BOTH THE APPEALS ARE IDENTICAL IN N ATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS RELATING TO THE CASES UNDER CONSIDERAT ION ARE STATED IN BRIEF. THE RETURNS OF INCOME FILED BY BO TH THE ASSESSEES FOR THE YEAR UNDER CONSIDERATION WERE TAKEN UP FOR SCRUTINY BY THE ASSESSING OFFICER. DURING THE COURSE OF SCRUTINY A SSESSMENT PROCEEDINGS, IT WAS NOTICED THAT BOTH THE ASSESSEES HAVE MADE DEPOSITS BY WAY OF CASH IN THEIR RESPECTIVE BANK AC COUNTS. THE MAXIMUM AMOUNT OF DEPOSIT WAS FOUND TO HAVE BEEN MA DE IN JULY, 2008. THE DETAILS OF DEPOSITS MADE INTO THE BANK B Y BOTH THE ASSESSEES ARE GIVEN BELOW:- NAME OF THE ASSESSEE AGGREGATE AMOUNT OF DEPOSITS MADE DURING THE YEAR AGGREGATE AMOUNT OF DEPOSITS MADE IN JULY, 2008. (1) SH. K.S. SIVAKUMAR ` 38,51,735 ` 23,94,000 (2) SH. K.S. NARENDRAKUMAR ` 20,56,000 ` 11,01,000 THE ASSESSING OFFICER ASKED THE ASSESSEES TO EXPLAI N THESE DEPOSITS. BOTH THE ASSESSEES SUBMITTED THAT THEY H AVE UNDERTAKEN 3 I.T.A. NOS. 1087/MDS/2014 I.T.A. NO. 1088/MDS/2014 AGRICULTURAL ACTIVITIES BY GROWING COCONUT TREES AN D THE CASH DEPOSITED INTO BANK ACCOUNTS REPRESENT ADVANCE AMOU NT RECEIVED FROM THE VENDORS. BOTH THE ASSESSEES GAVE NAMES OF THREE VENDORS. THE ASSESSING OFFICER MADE ENQUIRIES FROM THEM AND HE FOUND THAT ALL THE THREE VENDORS ARE OF POOR MEANS; NOT MAINTAINING ANY BOOKS OF ACCOUNT; DO NOT HAVE PAN AND DO NOT H AVE EVEN BANK ACCOUNTS. FURTHER, THESE VENDORS STATED THAT THEY WERE HANDING OVER MONEY TO THE ASSESSEES AFTER THE COMPLETION OF SALES. THEY FURTHER CONFIRMED THAT THERE IS NO CHANCE TO GET HE AVY INCOME DURING A PARTICULAR MONTH, I.E. JULY, 2008. BEFORE THE ASSESSING OFFICER, THE ASSESSEE LATER SUBMITTED THE RETRACTIO N LETTERS OBTAINED FROM THE VENDORS AND IN THAT LETTER, THEY APPEAR TO HAVE MENTIONED THAT THEY HAD GIVEN ADVANCE MONEY TO THE ASSESSEE. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THE SAME AND ACCOR DINGLY ASSESSED THE AGGREGATE AMOUNT OF DEPOSITS MADE IN T HE BANKS AS INCOME IN THE RESPECTIVE HANDS. 3. BOTH THE ASSESSEES HAD DECLARED AGRICULTURAL INC OME OF ` 18 LAKHS EACH. THE ASSESSING OFFICER TOOK THE VIEW TH AT THE AGRICULTURAL INCOME DECLARED BY THEM IS ON THE HIGH ER SIDE. ACCORDINGLY, HE DETERMINED THE AGRICULTURAL INCOME, BY ADOPTING SOME METHODOLOGY, AT ` 17.29 LAKHS IN THE HANDS OF SHRI K.S. 4 I.T.A. NOS. 1087/MDS/2014 I.T.A. NO. 1088/MDS/2014 SIVAKUMAR AND AT ` 14.99 LAKHS IN THE HANDS OF SHRI K.S. NARENDRAKUMAR. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE DIFFERENCE BETWEEN AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AND THAT ESTIMATED BY HIM AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. THE LD. CIT(APPEALS) ACCEPTED THE AGRICULTURAL I NCOME DECLARED BY THE ASSESSEES AT ` 18 LAKHS IN THE HANDS OF EACH OF THE ASSESSEES. HOWEVER, HE CONFIRMED THE ASSESSMENT OF BANK DEPOSITS BY ACCEPTING THE VIEW OF THE A.O. THAT THE AGRICULTURAL INCOME OF THE ASSESSEES CANNOT BE CONSIDERED AS SOU RCE FOR THE BANK DEPOSITS. 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE MAIN CONTENTION OF LD A.R WAS THAT THESE ASSESSEES ARE H AVING NET AGRICULTURAL INCOME OF ` 18.00 LAKHS EACH AND THE SAME SHOULD BE CONSIDERED AS SOURCES AVAILABLE WITH THE ASSESSEE F OR MAKING DEPOSITS. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS GIVEN 15% DEDUCTION TOWARDS EXPENSES, WHILE WORKING OUT T HE AGRICULTURAL INCOME AND HENCE THE NET INCOME OF RS.18.00 LAKHS S HOULD BE GROSSED UP AND THE SAME SHOULD BE SET OFF AGAINST T HE BANK DEPOSITS. ON THE CONTRARY, THE LD D.R CONTENDED TH AT THE VENDORS 5 I.T.A. NOS. 1087/MDS/2014 I.T.A. NO. 1088/MDS/2014 HAVE CLEARLY STATED THAT THEY HAVE NOT PAID ANY ADV ANCE TO THE ASSESSEE AND HENCE THE IMPUGNED DEPOSITS DO NOT HAV E LINK WITH THE AGRICULTURAL INCOME. THE LD D.R FURTHER SUBMIT TED THAT THE ASSESSEES ARE TRUSTEES IN SOME OF THE EDUCATIONAL I NSTITUTIONS AND HENCE THE LD CIT(APPEALS) HAS OPINED THAT THE IMPUG NED DEPOSITS WERE RECEIVED AS PART OF AMOUNTS ACCUMULATED FOR ED UCATIONAL ACTIVITIES. 6. THOUGH THE ASSESSING OFFICER AS WELL AS THE LD CIT(APPEALS) HAS OBSERVED ABOUT THE LINKS OF THESE ASSESSEES WIT H EDUCATIONAL INSTITUTIONS AND FURTHER POINTED OUT THAT THE MONTH OF JULY, BEING THE MONTH OF ADMISSION AND THE IMPUGNED DEPOSITS MIGHT BE LINKED TO THAT, YET WE NOTICE THAT THEY ARE ONLY PRESUMPTIONS AND HENCE WE DO NOT FIND IT NECESSARY TO CONSIDER THE SAID OBSERVAT IONS. THE ISSUE BEFORE US IS ABOUT THE SOURCES FOR THE DEPOSITS MAD E INTO THE BANK ACCOUNT. 7. THE CONTENTION OF THE ASSESSEES IS THAT THE Y HAVE RECEIVED ADVANCES FROM THE VENDORS, WHERE AS THE VENDORS HAV E INITIALLY DENIED PAYMENT OF ANY ADVANCE TO THE ASSESSEES. HO WEVER, LATER THEY HAVE RETRACTED FROM THEIR STATEMENTS BY SUBMIT TING LETTERS TO THE ASSESSING OFFICER. HENCE, WE ARE OF THE VIEW THAT THEIR ORIGINAL STATEMENT GIVEN BEFORE THE ASSESSING OFFICER WILL L OSE ITS SIGNIFICANCE 6 I.T.A. NOS. 1087/MDS/2014 I.T.A. NO. 1088/MDS/2014 CONSIDERABLY. AT THE SAME TIME, THE FACT THAT THE SE ASSESSEES HAVE EARNED AGRICULTURAL INCOME OF ` 18.00 LAKHS CANNOT BE DENIED. HENCE, PART OF THE SAID AGRICULTURAL INCOME SHOULD DEFINITELY BE AVAILABLE FOR MAKING THE IMPUGNED BANK DEPOSITS. W E NOTICE THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THESE ASSESSEES HAD SPENT AWAY ENTIRE AGR ICULTURAL INCOME. THE DIFFICULTY ARISES DUE TO THE FACT THAT MAJOR PORTION OF DEPOSITS HAS BEEN FOUND TO HAVE BEEN MADE IN THE MO NTH OF JULY, 2008. BUT WE HAVE ALREADY HELD THAT THE STATEMENTS GIVEN BY THE VENDORS INITIALLY HAVE LOST ITS SIGNIFICANCE DUE TO THEIR RETRACTION. AT THE TIME OF HEARING, THE DETAILS OF INCOME DECLARED IN THE EARLIER YEARS WERE NOT FURNISHED TO US. FROM THE ASSESSMEN T ORDER, WE NOTICE THAT THE ASSESSEES ARE HAVING OTHER SOURCES OF INCOME. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT T HESE ASSESSEES COULD HAVE UTILIZED PART OF THEIR REGULAR INCOME, A GRICULTURAL INCOME AND ALSO PAST SAVINGS, IF ANY, IN MAKING THE DEPOSI TS. THE THEORY OF GROSSING UP THE AGRICULTURAL INCOME AS ADVANCED BY LD A.R SHALL NOT BE APPLICABLE IN THE INSTANT CASE, SINCE IT IS ADMI TTED THAT THE ASSESSEES HAVE NOT WITHDRAWN ANY MONEY BY WAY OF CA SH. ONLY IF CASH IS WITHDRAWN, THE EXPENSES COULD BE INCURRED. HENCE, WE ARE OF THE VIEW THAT THE IMPUGNED ISSUE SHALL MEET THE ENDS OF JUSTICE, IF 7 I.T.A. NOS. 1087/MDS/2014 I.T.A. NO. 1088/MDS/2014 THE SOURCES AVAILABLE WITH EACH OF THE ASSESSEE FOR MAKING DEPOSITS ARE ESTIMATED AT ` 17.00 LAKHS EACH. WE ORDER ACCORDINGLY. 8. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED B Y LD CIT(APPEALS) IN THE HANDS OF BOTH THE ASSESSEES ON THIS ISSUE AN D DIRECT THE ASSESSING OFFICER TO ALLOW CREDIT OF ` 17.00 LAKHS IN THE HANDS OF EACH OF THE ASSESSEES AS SOURCES AND COMPUTE THE ADDITIO N ACCORDINGLY. 9. IN THE RESULT, THE APPEALS FILED BY THE ASSE SSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THE 4 TH DAY OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( . . !' ) ( .. ) (S.S. GODARA) (B.R. BASKARAN) # /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, ? /DATED, THE 4 TH FEBRUARY, 2015. KRI. @ . ,#1AB CB'1 /COPY TO: 1. )* /APPELLANTS 2. ,-)* /RESPONDENT 3. 0 D1 () /CIT(A)-II, COIMBATORE 4. 0 D1 /CIT-III, COIMBATORE 5. BE! ,#1# /DR 6. ! & F /GF.