K.Kumar, CHENNAI V. ITO, Tambaram

ITA 1096/CHNY/2014

• Counselvise Citation: 109621714 RSA 2014
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: B RAMAKRISHNAN
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . , . . , ! ' [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1096/MDS/2014 / ASSESSMENT YEAR : 2009-10 SHRI K.KUMAR NO.3, C.V. RAMAN STREET ANNA NAGAR CHENNAI 600 064 VS. THE INCOME TAX OFFICER BUSINESS WARD I(2) TAMBARAM [PAN AADPK 0028 R ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI B. RAMAKRISHNAN, CA /RESPONDENT BY : SHRI ANIRUDH RAI, CIT / DATE OF HEARING : 11-09-2014 ! / DATE OF PRONOUNCEMENT : 25-09-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 20 09-10, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCO ME-TAX-VII CHENNAI DATED 21.3.2014, PASSED IN C.NO.7033/13-14/CIT-VII DIRECTING THE ASSESSING OFFICER TO REDO THE ASSESSMENT IN PROCEED INGS UNDER SECTION263 OF THE INCOME-TAX ACT, 1961 (IN SHORT TH E ACT). I.T.A.NO. 1096/14 :- 2 -: 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS A CIVIL CO NSTRUCTION CONTRACTOR. THE ASSESSEE HAD FILED HIS RETURN ON 31.3.2010 ADMITTING INCOME OF ` 1,80,080/-. THE ASSESSING OFFICER TOOK UP SCRUTI NY. HE TALLIED THE ASSESSEES BOOKS OF ACCOUNT AND BANK S TATEMENTS. ALSO GOT AN AIR INFORMATION THAT THE ASSESSEES BANK ACCOUNT (NOT SHOWN EITHER IN HIS BOOKS OR BALANCE SHEET) HAD DEPOSITS OF ` 54 LAKHS MADE IN THE RELEVANT PREVIOUS YEAR. THE SUM TOTAL OF THESE DE POSITS CAME TO BE ` 60,28,000/-. THERE WERE TOTAL 10 CREDIT INSTANCES. ONLY TWO OF THEM WERE BY WAY OF CHEQUES AMOUNTING TO ` 80,000/- AND ` 40,000/-, RESPECTIVELY. THE REST OF THE MONEY DEPOSITED WAS IN CASH. THE ASSESSING OFFICER NOTICED THESE PAYMENTS TO HAVE BE EN WITHDRAWN WITHIN 2-3 MONTHS. HE SOUGHT FOR RELEVANT DETAILS. 3. IN RESPONSE, THE ASSESSEE SUBMITTED THE FOLLOWING EXPLANATION: THE BANK ACCOUNT REFERRED TO BY YOU IN YOUR LET TER CITED ABOVE, THOUGH MAINTAINED IN MY NAME, THE AMOUNT DEP OSITED WERE FROM DIFFERENT PARTIES FOR IDENTIFICATION AND PURCHASE OF LAND FOR CONSTRUCTION PURPOSES. SINCE I AM CONTRACTOR A ND I AM WELL EQUIPPED IN THE FIELD OF REAL ESTATE WITH A NETWORK FOR IDENTIFYING PROPERTY, I AM APPROACHED BY PROSPECTIVE BUYERS FOR PURCHASING LAND AND SUBSEQUENTLY FOR CONSTRUCTION OF HOUSE PRO PERTY. AS AND WHEN I AM ABLE TO PUT TOGETHER A PROSPECTIVE BUYER OF LAND AND SELLER, I AM BENEFITED ONLY WAY OF THE CONSTRUCTION CONTRACT BEING GIVEN TO ME. HENCE THERE IS NO MARGIN FOR ME IN TH E TRANSACTION. THE AMOUNTS DEPOSITED ARE WITHDRAWN SUBSEQUENTLY FOR DISBURSEMENT AS AND WHEN THE PROPERTY IS IDENTIFIED AND ACCEPTED BY THE BUYER FO R PAYMENT TO THE LAND OWNER. I.T.A.NO. 1096/14 :- 3 -: 4. THE ASSESSING OFFICER FRAMED A REGULAR ASSESSMENT ON 7.10.2011. HE OBSERVED THAT NATURE OF THE IMPUGNED DEPOSITS JUSTIFIED THE ASSESSEES SUBMISSIONS REPRODUCED HEREINABOVE. ONLY INTEREST CREDITED OF ` 55,098/- AND ` 92,546/- TOTALLING TO ` 1,58,644/- OMITTED TO BE DECLARED AS INCOME WAS ADDED. THE TO TAL INCOME WAS COMPUTED AS ` 3,38,730/-. THE ASSESSMENT IN THE ASSESSEES CAS E ATTAINED FINALITY. 5. SUBSEQUENTLY, THE CIT FORMED AN OPINION THAT THE AFORESAID ASSESSMENT WAS ERRONEOUS AND CAUSED PREJUDICE TO TH E INTEREST OF THE REVENUE. HE PROPOSED REVISION THEREOF AND ISSUED S ECTION 263 NOTICE DATED 30.9.2013 AS UNDER: 2. A RETURN OF INCOME WAS FILED FOR THE AY 2009- 10 WITH A TOTAL INCOME OF ` 1,80,080/-. SUBSEQUENTLY, THE CASE WAS SELECTED F OR SCRUTINY U/S 143(3) AND ASSESSMENT WAS COMPLETED O N 07-10- 2011 BY MAKING ADDITION OF ` 1,58,644/- ON ACCOUNT OF NON- ADMISSION OF INTEREST RECEIPTS DERIVED FROM BANK DE POSITS. 3. THE CASE WAS TAKEN UP FOR SCRUTINY TO VERIFY TH E CASH DEPOSITS IN THE ACCOUNT WITH KVB. THE UNACCOUNTED BANK ACCO UNT HAS SUBSTANTIAL OPENING BALANCE AND CLOSING BALANCE. T HE DRAWINGS FROM THE ACCOUNT DURING THE YEAR IS MEAGER COMPARIN G THE QUANTUM OF CASH DEPOSITS. THE ASSESSEE CLAIMED TH AT THE CASH DEPOSITED IN THE BANK ACCOUNT RELATED TO PROSPECTIV E BUYERS OF LAND IDENTIFIED BY HIM. FURTHER, CLAIMED THAT HE W AS BENEFITTED BY WAY OF GETTING CONSTRUCTION CONTRACT WITH REFERENCE TO THE SUBJECT AND. THE TRANSACTION APPEARS TO BE JOINT VENTURE I N THE DEVELOPMENT OF PROPERTIES. THE AO DID NOT OBTAIN T HE LIST OF PARTIES FROM WHOM THE MONEY HAD BEEN OBTAINED AND T HE TIME OF WITHDRAWAL AND ITS APPLICATION SINCE THE MONEY WAS CLAIMED TO BE BELONGING TO THIRD PARTIES. THE AO ALSO DID NOT OB TAIN ANY CONFIRMATION FROM THE PARTIES FROM WHOM THE MONEY W AS OBTAINED. I.T.A.NO. 1096/14 :- 4 -: IT IS ALSO NOT KNOWN WHETHER THE SELLER OF THE LAND S DISCLOSED THE CAPITAL GAIN ARISING FROM SALE OF LAND. 4. AGAIN, ACCORDING TO THE AO THE BANK ACCOUNT HAS NOT BEEN DISCLOSED IN THE BOOKS. AS PER THE BALANCE SHEET, THERE ARE TWO ACCOUNTS WITH KVB. THE BANK BALANCES STATED IN THE BALANCE SHEET DO NOT TALLY WITH THE BALANCES IN THE BANK AC COUNT STATEMENT AVAILABLE ON RECORD. 5. ON THE AFORESAID FACTS, IT IS OBSERVED THAT TH E ASSESSING OFFICER HAS NOT CONSIDERED THIS ASPECT WHILE COMPLE TING THE SCRUTINY ASSESSMENT. CONSIDERING THE AFORESAID POI NT IT IS FOUND THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING O FFICER IS TO BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE. 6. YOU ARE, THEREFORE, DIRECTED TO SHOW CAUSE AS TO WHY THE ABOVE ASSESSMENT COMPLETED U/S 143(3) FOR THE AY 2 009-10 PASSED BY THE ASSESSING OFFICER SHOULD NOT BE SET A SIDE OR MODIFIED OR CANCELLED WITH A DIRECTION TO RE-DO THE SAID ASSESSMENT. 6. THE ASSESSEE FILED HIS REPLY ON 23.10.2013. HE PL EADED THAT THE ASSESSING OFFICER HAD RIGHTLY FRAMED ASSESSMENT AFTER ACCEPTING HIS EXPLANATION REGARDING THE AFORESAID DEPOSITS MADE B Y THE OTHER PARTIES FOR PURCHASE OF LAND TO WHOM BUILDING PROJECTS ON T HE LAND RAISED BY THEM HAD BEEN ASSIGNED. HE STATED THAT THESE DEPOS ITS HAD BEEN WITHDRAWN FROM TIME TO TIME FOR PURCHASE OF LAND BY THE ULTIMATE BUYERS. PER ASSESSEE, THE CITS REVISION PROPOSAL TANTAMOUNTED TO TOUCHING UPON THE SUFFICIENCY OF ENQUIRY IN ASSESSM ENT, NOT PERMISSIBLE AS PER LAW. HE SUBMITTED THAT THE IMPU GNED ASSESSMENT FRAMED WAS NEITHER ERRONEOUS NOR CAUSED ANY PREJUDI CE TO THE INTEREST OF THE REVENUE AS THE ASSESSING OFFICER HAD TAKEN O NE OF THE POSSIBLE VIEW IN ACCEPTING HIS EXPLANATION REGARDING SOURCE OF DEPOSITS ETC. HE I.T.A.NO. 1096/14 :- 5 -: ALSO PRAYED FOR DROPPING THE REVISION PROPOSAL. TH E CIT DID NOT AGREE AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSE SSMENT, AS UNDER: 2. IT IS OBSERVED FROM RECORDS THAT THE ASSESSING OFFICER HAS NOT CAUSED ENQUIRIES ON THE FOLLOWING POINTS: I) CASH DEPOSITS AND WITHDRAWALS IN KARUR VYSYA BAN K ACCOUNTS. II) DETAILS OF THIRD PARTIES FROM WHOM AMOUNTS WE RE STATED TO BE RECEIVED FOR PURCHASE OF LANDS. III) CONFIRMATION LETTERS 5. IN RESPONSE TO THE NOTICE OF HEARING, ASSESSEE S AUTHORISED REPRESENTATIVE SHRI P.G. SATGURU DAS, FCA OF U. GOP INATH & CO. WAS PRESENT FOR THE HEARING. 4. IT IS OBSERVED FROM RECORDS THAT THE ASSESSING OFFICER HAS NOT VERIFIED THE CASH DEPOSITS AND CORRESPONDING DRAWIN GS IN THE BANK ACCOUNT. THE ASSESSING OFFICER DID NOT GATHER THE DETAILS OF THIRD PARTIES FROM WHOM THE ASSESSEE RECEIVED CASH. FOR ANY CREDIT, THE CREDIT IS PROVED BY IDENTIFYING THE PARTY, PROV ING THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE PARTY. THE ASSESSING OFFICER HAS NOT DRAWN ANY REASONED OP INION APPLYING THE ABOVE PRINCIPLES. THEREFORE, IT AMOUN TS TO NON- APPLICATION OF MIND AFTER GATHERING THE NECESSARY I NFORMATION. THE ASSESSING OFFICER FAILED TO GATHER SUCH MATERIAL FA CTS AND VERIFY THE SAME. 5. IT IS ALSO OBSERVED THAT BANK BALANCES AS PER BANK ACCOUNT STATEMENT DO NOT TALLY WITH THE BALANCES SHOWN IN T HE BALANCE SHEET. THE ASSESSING OFFICER IN PARA 2 OF ASSESSME NT ORDER HAS ALSO STATED THAT THE BANK ACCOUNT HAS NOT BEEN DISC LOSED IN THE BOOKS. ASSESSING OFFICER IN THE SCRUTINY ASSESSMEN T DID NOT CAUSE ENQUIRIES TO VERIFY THE BANK ACCOUNTS AND REC ONCILING THE BALANCES. ASSESSEES AUTHORISED REPRESENTATIVE SU BMITTED THAT INADEQUATE ENQUIRY BY THE ASSESSING OFFICER CANNOT BE A GROUND FOR INITIATING PROCEEDING U/S 263. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS NOT EVEN ADVENTED TO GATHERIN G OF INFORMATION AND VERIFYING THE SAME. AS POINTED IN PARA 2 OF THE ORDER, ASSESSING OFFICER DID NOT CAUSE ENQUIRIES ON THE ISSUE AND BEFORE ARRIVING AT CONCLUSION. 6. IN VIEW OF THE ABOVE, THE ASSESSMENT ORDER PASS ED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTERESTS OF REVENUE ON ACCOUNT OF THE OMISSION TO CONSIDER THE ISSUES I.T.A.NO. 1096/14 :- 6 -: MENTIONED ABOVE WITH REFERENCE TO THE FACTS AND FIG URES. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: 1. RAMPYARI DEVI SARAOGI VS CIT (SC) 67 ITR 84 2. MALABAR INDUSTRIAL CO. LTD VS CIT (S.C) 243 ITR 83 3. SWARUP VEGETABLE PRODUCTS INDUSTRIES LTD VS CIT (ALL) 187 ITR 412 4. GEE VEE ENTERPRISES VS ADDL. CIT & ORS (DEL) 99 ITR 375 5. RAJALAKSHMI MILLS LTD. VS ITO (ITAT SB CHENNAI) 121 ITD 343, 313 ITR (AT) 182 6. SRM SYSTEMS & SOFTWARE PVT. LTD VS ACIT 2010- TIOL-646-HC-MAD-IT 7. THEREFORE, THE ASSESSMENT IS SET SIDE FOR DENO VO CONSIDERATION AND PASSING OF NECESSARY ORDER AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE. THEREFORE, THE ASSESSEE IS IN APPEAL. 7. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. THE ASSESSEE RAISES TWO FOLDED SUBSTANTIVE ARGUMENTS TH AT THE CITS ORDER IS VIOLATIVE OF SECTION 129 OF THE ACT AND SUFFIC IENCY OF AN ENQUIRY DURING ASSESSMENT WOULD NOT FORM A SUBJECT MATTER O F SECTION 263 PROCEEDINGS. HE CONTENDS THAT ONCE THERE WAS CHANG E IN THE INCUMBENT CIT, HIS SUCCESSOR OUGHT TO HAVE INITIATE D SECTION 263 PROCEEDINGS FROM THE VERY BEGINNING INSTEAD OF CONT INUING FROM THE STAGE IT WAS LEFT BY THE EARLIER INCUMBENT. IT IS EVIDENT THAT THE CITS ISSUING 263 NOTICE AND PASSING ORDER ARE DIFFERENT. THIS INDICATES CHANGE OF INCUMBENT IN THE CITS OFFICE. HOWEVER, WE DO NOT FIND FROM PERUSAL OF THE RELEVANT STATUTORY PROVISION I. E SECTION 129 THAT SUCH A COURSE IS MANDATORILY TO BE ADOPTED BY THE L ATTER AUTHORITY. IT SIMPLY ENVISAGES THAT THE SUBSEQUENT AUTHORITY MAY RESUME INCOME I.T.A.NO. 1096/14 :- 7 -: TAX PROCEEDINGS FROM THE STAGE IT WAS LEFT BY HIS P REDECESSOR. THEN COMES THE PROVISO THERETO. IT STIPULATES THAT THE CONCERNED ASSESSEE MAY PRAY FOR RE-HEARING OF THE PRIOR PROCEEDINGS UN DERTAKEN BY THE PREDECESSOR AUTHORITY AS WELL. THE ASSESSEE NOWH ERE DEMONSTRATES TO HAVE ADOPTED SUCH A RECOURSE. NEITHER IS ANY CA SE LAW QUOTED ENVISAGING RECOMMENCEMENT OF PROCEEDINGS FROM THE B EGINNING AS MANDATORY. THEREFORE, THE ASSESSEES ARGUMENTS A RE REJECTED. 8. THE ASSESSEES SECOND PLEA IS THAT THE ASSESSING O FFICER HAD CONDUCTED ALL DUE ENQUIRIES, TOOK ONE OF THE POSSIB LE VIEW WHILE ACCEPTING HIS EXPLANATION AND IT IS NOT A CASE OF L ACK OF ENQUIRY. FROM THE VERY BEGINNING, HE DENIED TO HAVE HIMSELF DEPOS ITED THE CASH PAYMENTS IN HIS BANK ACCOUNT(SUPRA). THE ASSESSING OFFICER ALSO STATES THAT THE SAID DEPOSITS OR THE BANK ACCOUNT A RE NOT PART OF THE BOOKS AS WELL AS BALANCE SHEET. THE ASSESSEE DOES NOT PLACE ON RECORD ANY MATERIAL BEFORE US PROVING THAT THE ASSE SSING OFFICER HAD EVER SOUGHT ANY LIST OF THE DEPOSITORS IN QUESTION. HE HAD ONLY CALLED FOR DETAILS FROM THE ASSESSEE. THE ASSESSEES EX PLANATION STANDS ALREADY BEEN REPRODUCED HEREINABOVE. IT WAS IMPERA TIVE FOR THE ASSESSING OFFICER TO ATLEAST ASK FOR LIST OF THE D EPOSITORS FOLLOWED BY THEIR CONFIRMATIONS. THE SAME WAS NOWHERE DONE. T HEREFORE, THE PRESENT IS A CASE OF NO ENQUIRY BY THE ASSESSING OF FICER MUCH LESS A SUFFICIENT ENQUIRY. THE ASSESSEE QUOTES A PLETHO RA OF JUDGMENTS I.T.A.NO. 1096/14 :- 8 -: CIT VS SUNBEAM AUTO LTD 332 ITR 67, CIT VS VIKAS PO LYMERS 341 ITR 537, CIT VS ANIL KUMAR SHARMA 335 ITR 83, ITO VS D. G. HOUSING PROJECTS LTD 343 ITR 329,CIT VS HERO AUTO LTD 343 ITR 342 AND DIT VS JYOTI FOUNDATION 357 ITR 388. THERE IS NO JUDIC IAL PRECEDENT HOLDING THAT THE CIT CONCERNED DOES NOT HAVE JURISD ICTION TO INITIATE REVISION PROCEEDINGS U/S 263 OF THE ACT IN CASE OF NO ENQUIRY AT ALL MADE IN ASSESSMENT. THE ASSESSEES LATTER ARGUMENT IS ALSO REJECTED. THE CITS ORDER DIRECTING THE ASSESSING OFFICER TO REDO ASSESSMENT IS AFFIRMED. 9. THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 25 TH OF SEPTEMBER, 2014, AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 25 TH SEPTEMBER, 2014 RD %& '()( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. *./ / CIT(A) 6. ,01 / GF