ACIT, CHENNAI V. Shri T.M.Rajaa, CHENNAI

ITA 1148/CHNY/2011

• Counselvise Citation: 114821714 RSA 2011
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 17-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Deemed dividend
• Section: 143(3)

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.1148/MDS/2011 / ASSESSMENT YEAR : 2004-05 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE IX CHENNAI VS. SHRI T.M.RAJAA NO.G-245, (NEW NO.24) ANGAPPA STREET CHENNAI - 1 [PAN ACEPR 3194 E] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI GURU BHASHYAM, JCIT /RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 11-09-2014 ! / DATE OF PRONOUNCEMENT : 25-09-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2004-0 5, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOM E-TAX(APPEALS)-XII CHENNAI, DATED 3.3.2011, PASSED IN I.T.A.NO.267/200 7-08 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). [ I.T.A.NO1148/11. :- 2 -: 2. THE REVENUES TWO SUBSTANTIVE GROUNDS RAISED IN THI S APPEAL CHALLENGE THE CIT(A)S ORDER DELETING ADDITIONS OF UNEXPLAINED CASH CREDITS AS FRESH CAPITAL OF ` 12.25 LAKHS AND ` 1,53,927/- MADE IN THE ASSESSMENT ORDER DATED 29.12.2006. 3. THE ASSESSEE IS AN INDIVIDUAL. HE DERIVES INCOM E FROM SALARY, BUSINESS AND COMMISSION/BROKERAGE AND ALSO INTEREST. THE ASSESSEE HAD FILED HIS RETURN ON 20.1.2006 ADMITTIN G LOSS OF ` 22,707/-. THE ASSESSING OFFICER TOOK UP SCRUTINY . HE NOTICED THAT A SUM OF ` 12.25 LAKHS HAD BEEN INTRODUCED AS FRESH CAPITAL (AS PARTNER) IN A FIRM M/S KAVITHA EXPORTS INTERNATIONAL IN REL EVANT PREVIOUS YEAR. ANOTHER CREDIT INSTANCE OF ` 1,53,917/- WAS ALSO NOTICED IN THE ASSESSEES CAPITAL ACCOUNT AS PROFITS. THE ASSESSI NG OFFICER ADDED BOTH THESE SUMS AS UNEXPLAINED CREDITS IN THE AS SESSEES INCOME. 4. THE ASSESSEE PREFERRED AN APPEAL. HE PLACED ON R ECORD LEDGER ACCOUNT COPY OF M/S LOTUS MARKETING REFLECTI NG CASH DRAWINGS, HIS CASH IN HAND ACCOUNT DEMONSTRATING RECEIPTS OF ` 5.5 LAKHS FROM M/S LOTUS MARKETING PAID TO THE OTHER FIRM M/S KAVI THA EXPORTS INTERNATIONAL(SUPRA), LEDGER COPY OF ANOTHER ENTIT Y M/S SEA INDIA FREIGHT SYSTEM PVT. LTD (FOR WHOM HE WORKED AS MANA GING DIRECTOR) AND ACCOUNT STATEMENTS OF VIJAYA BANK. THE CIT(A) FORWARDED ALL THIS MATERIAL TO THE ASSESSING AUTHORITY. THE ASSESSING OFFICER SUBMITTED I.T.A.NO1148/11. :- 3 -: HIS REPORT DATED 11.10.2007 EXPRESSING SATISFACTION ABOUT THE SOURCE OF CASH DEPOSITS AMOUNTING TO ` 6.75 LAKHS INVESTED IN THE FIRM M/S KAVITHA EXPORTS INTERNATIONAL. HE STATED THAT THE ASSESSEE HAD HELD MORE THAN 10% SHARES AND VOTING POWER IN M/S SEA IN DIA (SUPRA). IN ASSESSING OFFICERS VIEW, A SUM OF ` 9 LAKHS PAID BY THE SAID COMPANY WOULD BE DEEMED DIVIDEND 2(22)(E) OF THE ACT. THE CIT(A) CONFRONTED CONTENTS OF THIS REPORT TO THE ASSESSEE. HE OBJEC TED AND DENIED TO HAVE ANY DEBIT BALANCE IN THE SAID ENTITIES ACCOUN T AND ALSO ASSERTED THAT CREDIT BALANCE AS ON 1.4.2003 WAS ` 8,55,340/- WITH CLOSING BALANCE AS ON 31.3.2004 AT ` 1,00,706/-. THE CIT(A) SENT THESE OBJECTIONS TO THE ASSESSING AUTHORITY ON 9.2.2010. THE ASSESSING OFFICER DOES NOT APPEAR TO HAVE FILED ANY RESPONSE DESPITE SPECIFIC REMINDERS ON 20.12.2006 AND 28.1.2011. THE CIT(A) HAS DRAWN AN ADVERSE INFERENCE AND ACCEPTED THE ASSESSEES ADDI TIONAL PLEA FOR DELETING THIS ADDITION OF ` 6.75 LAKHS. COMING TO THE BALANCE SUM OF ` 5.50 LAKHS OUT OF ` 12.25 LAKHS, THE ASSESSING OFFICER SUBMITTED IN HIS REPOR T THAT THE ASSESSEES NAME DID NOT APPEAR EITHER IN THE LIST OF DEBTORS O R SUNDRY CREDITORS IN THE BOOKS OF M/S LOTUS MARKETING NOR HIS BANK ACCOU NT REVEALED ANY SUCH RECEIPT. THE ASSESSEE STATED THAT BOOKS IN QUESTION ALONGWITH CAPITAL AND LEDGER ACCOUNT IN RESPECT OF THE AFORES AID FACTS ALREADY STOOD PRODUCED. HE CLAIMED TO HAVE WITHDRAWN THIS SUM OF ` 5.50 I.T.A.NO1148/11. :- 4 -: LAKHS OUT OF THE CAPITAL ACCOUNT NOT REFLECTED EITH ER IN THE ARRAY OF LOAN DEBTORS OR SUNDRY CREDITORS. THE CIT(A) FORWARDED THESE GROUNDS ALSO TO THE ASSESSING OFFICER ON 28.1.2011. HEREIN AGAI N, THE ASSESSING AUTHORITY DID NOT FILE ANY REPLY DESPITE SPECIFIC R EMINDERS. THE CIT(A) PROCEEDED ON AN ASSUMPTION ACCEPTING ASSESSEES FAC TUAL PLEAS FOR DELETING THE BALANCE ADDITION OF ` 5.50 LAKHS. 5. NOW WE COME TO THE OTHER ADDITION OF ` 1,53,917/-(SUPRA). THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS IN THE LOWER APPELLATE PROCEEDINGS THAT THIS SUM RELATED TO HIS SHARE IN P ROFITS OF THE IMPUGNED ASSESSMENT YEAR AND NOT ASSESSMENT YEAR 1 999-2000. HE PLACED ON RECORD INCOME TAX RETURNS IN SUPPORT. TH E CIT(A) CONFRONTED THESE FACTS TO THE ASSESSING AUTHORITY. ALIKE THE FORMER ISSUE, HIS RESPONSE NEVER CAME. THE CIT(A) HAS DEL ETED THIS ADDITION AS WELL FOR WANT OF THE ASSESSING OFFICERS SUBMISS IONS. THEREFORE, THE REVENUE IS AGGRIEVED ON BOTH COUNTS. 6. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. THE REVENUE SUBMITS THAT THE CIT(A) HAS DRAWN ADVERSE I NFERENCE AND ACCEPTED THE ASSESSEES FACTUAL ARGUMENTS WITHOUT ANY SPECIFIC ADJUDICATION OF FACTS AS WELL AS THE PLEA OF DEEME D DIVIDEND (SUPRA). IT ALSO HOLDS THE ASSESSEE RESPONSIBLE FOR DELAYING THE ASSESSING OFFICERS RESPONSE. THE ASSESSEE SUPPORTS THE CIT( A)S ORDER. I.T.A.NO1148/11. :- 5 -: HOWEVER, HE FAILS TO REBUT THE REVENUES PLEAS CITI NG LACK OF SPECIFIC ADJUDICATION ON FACTS AND THE ISSUE OF DEEMED DIVID END. IT IS EVIDENT TO US THAT THE CIT(A)S FINDINGS ON THE ADVERSE INF ERENCE DRAWN DO NOT QUOTE ANY SPECIFIC MATERIAL FOR ACCEPTING THE ASSES SEES FACTUAL ASSERTIONS (SUPRA). THE ASSESSEE DOES NOT SEEM TO HAVE FILED THESE RELEVANT DETAILS IN SCRUTINY. HE ONLY CHOSE TO FI LE THE RELEVANT LEDGERS AND BOOKS IN THE LOWER APPELLATE PROCEEDINGS. THUS , WE OBSERVE THAT THE LOWER APPELLATE ORDER IS NOT SUSTAINABLE AND D EEM IT APPROPRIATE TO REMIT BOTH ISSUES BACK TO THE ASSESSING OFFICER FOR AFRESH ADJUDICATION AS PER LAW. THE IMPUGNED ASSESSMENT Y EAR IS 2004-05. A TIME PERIOD OF ALMOST MORE THAN A DECADE HAS ELAP SED SINCE 31.3.2004. WE WOULD APPRECIATE IF THE LEARNED ASSE SSING OFFICER CONCLUDES THE HEARINGS AS EARLY AS POSSIBLE. 7. THE REVENUES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. 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 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF