ITO, CHENNAI V. V.M.S.Kumaraguru, CHENNAI

ITA 1178/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61372 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Source of fund; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER] I.T.A.NO.1178/MDS/2012 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER SALARY WARD IV(4) CHENNAI VS SHRI V.M.S. KUMARAGURU NO.9, MALVIYA AVENUE SIVAGAMIPURAM THIRUVANMIYUR CHENNAI - 41 [PAN AJJPK9876A] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI ANANDD BABUNATH, CA DATE OF HEARING : 31-07-2012 DATE OF PRONOUNCEMENT : 31-07-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-VI, CHENNAI, DATED 28.2.2012. 2. THE SOLE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF ` 22,63,970/- ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT AS UNEXPLAI NED INVESTMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED FROM THE BANK STATEMENT OF HDFC BANK AND STANDARD I.T.A.NO. 1178/12 :- 2 -: CHARTERED BANK FILED BY THE ASSESSEE THAT THE AS SESSEE HAS MADE VARIOUS CASH AND CHEQUE DEPOSITS TOTALING TO ` 30,83,300/- DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2007-08. THE ASSESSING OFFICER FURTHER OBSERVED THAT AFTER TAKING INTO CON SIDERATION THE SALARY RECEIPTS, LOAN RECEIPTS FROM BANKS, AND MUTUAL FUND REDEMPTION PAYMENTS, HE WAS OF THE VIEW THAT THE ASSESSEE COU LD NOT MAKE DEPOSITS IN BANK WHICH IS NOT POSSIBLE OUT OF THE S ALARY AND OTHER KNOWN SOURCES OF INCOME. HE, THEREFORE, ADDED THE TOTAL DEPOSITS MADE BY THE ASSESSEE IN THE BANK AMOUNTING TO ` 30,83,300/- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION. 5. BEING AGGRIEVED BY THE SAID ORDER, THE REVENUE IS I N APPEAL BEFORE US. 6. THE DR RELIED ON THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THIS APPEAL. 7. ON THE OTHER HAND, THE A.R OF THE ASSESSEE SUPPORT ED THE ORDER OF THE CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSI NG THE MATERIALS ON RECORD, WE FIND THAT THE CIT(A) HAS DE LETED THE ADDITION OF ` 22,63,970/- OUT OF THE TOTAL ADDITION OF ` 30,83,300/- MADE BY THE I.T.A.NO. 1178/12 :- 3 -: ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN BANK ACCOUNTS BY THE ASSESSEE BY OBSERVING AS UNDER: 4. THE SECOND GROUND RELATES TO ADDITION OF DEPO SITS IN THE BANK ACCOUNT AS UNEXPLAINED INVESTMENT OF ` 30,83,300/-. THE A.O MADE THE SAID ADDITION ON THE GROUND THAT AFTER TAKING INTO CONSIDERATION OF SALARY RECEIPTS, LOAN RECEIVED FRO M BANKS AND MUTUAL FUND REDEMPTION PAYMENTS THE APPELLANT COULD NOT HAVE MADE DEPOSIT TO THIS TUNE. THE AR FILED ADDITI ONAL EVIDENCE IN THE FORM OF BANK STATEMENT / BANK BOOK, CASH FLOW STATEMENTS FOR THE BORROWALS ETC. WHICH WERE A DMITTED AS ADDITIONAL EVIDENCE U/R 46A AND THE AO WAS ASKED TO EXAMINE AND FURNISH A REPORT. THE AO VIDE LETTER DATED 25.10.2010 SUBMITTED THAT THE APPELLANT IS ONLY RECEIPT OF S ALARY INCOME OF RS. 4,83,834/- AND NET HOUSE PROPERTY INCOME OF RS.57,582/- AND HENCE THE APPELLANT COULD NOT HAVE MADE ALL THOSE INVESTMENT AND HENCE SOUGHT FOR REJECTION OF THE SUBMISSION OF THE APPELLANT. THE AR IN REJOINDER TO REMAND REPORT DATED 11.06.2010 ARGUED THAT THE AO FAILED T O TAKE INTO CONSIDERATION LOANS BORROWED FROM BANKS AND FINANCI AL INSTITUTIONS. THE REJOINDER WAS FORWARDED TO THE AO WITH A DIRECTION TO EXAMINE THE SUBMISSION OF THE AR ALONG WITH ITS ENCLOSURE AFTER AFFORDING OPPORTUNITY TO THE APPELL ANT. 4.1 THE AO IN HIS REPORT DATED 17.08.2010 SUBMITTED THAT THE APPELLANT IS ONLY A BENAMI OF M/S. BUTTERFLY MARKET ING P. LTD. THE AR SUBMITTED A LETTER DATED 20.02.2012 OBJECTI NG TO THE CONCLUSION DRAWN BY THE AO. AS THE ISSUE RELATES T O VARIOUS TRANSACTIONS IN THE BANK ACCOUNT OF THE APPELLANT, THE APPELLANT WAS ASKED TO FURNISH DETAILED ANALYSIS OF VARIOUS TRANSACTIONS IN THE BANK RELATING TO THE ADDITION A LONG WITH PROOF OF SOURCE FOR THESE CREDITS. THE AR FILED D ETAILED WORKING WHICH WAS ADMITTED AS ADDITIONAL EVIDENCE ON 01.11.2011 AND THE SAME WAS FORWARDED TO THE AO FOR EXAMINATION. THE AO MERELY REITERATED THE VIEW TAKEN BY HIS PREDECESSOR VIDE HIS REPORT DATED 17.08.2010. I N VIEW OF THE ABOVE THE APPEAL IS ADJUDICATED AFTER EXAMINING THE EVIDENCE FURNISHED BY THE AR ON 01.11.2011. 4.2 IN THE LETTER DATED 1 ST NOVEMBER 2011, THE APPELLANT FURNISHED ANALYSIS OF DEPOSITS IN BANK ACCOUNTS, CO PIES OF PERSONAL LOANS SANCTION LETTERS BY BANKS, COPIES OF MUTUAL FUND STATEMENTS ISSUED BY STANDARD AND CHARTERED BA NK, CHENNAI TOWARDS REDEMPTION AND INVESTMENT, COPIES O F LETTER ISSUED BY M/S GANQADHARM APPLIANCES LTD. IN SUPPORT OF TRAVELLING ADVANCE AND REIMBURSEMENT OF EXPENSES TO WARDS I.T.A.NO. 1178/12 :- 4 -: ACCOMPLISHMENT OF EMPLOYMENT, CONFIRMATION OF ACCOU NT COPY ISSUED BY M/S. BUTTERFLY MARKETING P. LTD. PERUSAL OF THE ANALYSIS OF DEPOSITS IN VARIOUS BANK ACCOUNTS MAINT AINED BY THE APPELLANT FOR THE PERIOD 01.04.2006 31.03.2007 ALONG WITH THE EXPLANATION OF THE BASIC SOURCE OF THESE DEPOSITS FILED ON 01.11.2011 WHICH WAS REMANDED TO THE AO REVEAL THAT EACH OF THE DEPOSITS ARE EXPLAINED ALONG WITH MODE OF DEPOSIT AND SOURCE OF DEPOSIT. THE APPELLANT IS IN RECEIPT OF SALARY FROM M/S GANGADHARAM APPLIANCES LTD., DERIV ES INCOME FROM HOUSE PROPERTY, RECEIVES DIVIDEND FROM MUTUAL FUND AND REDEEMS MUTUAL FUNDS AND THE SOURCES EXPLA INED MOSTLY RELATE TO THESE TRANSACTIONS. THE APPELLANT ALSO FILED PROOF IN THE FORM OF CERTIFICATE FROM EMPLOYE R FOR SALARY AND REIMBURSEMENT OF TRAVEL EXPENSES, COPIES OF LOA N SANCTION LETTERS FOR LOANS TAKEN WHOSE CHEQUES HAVE BEEN DE POSITED, COPIES OF TRANSACTIONS/REDEMPTION STATEMENT OF ACCO UNT, ETC. IN THE ABOVE BACKDROP, I FIND THAT THE ADDITION OF RS.30,83,300/- MADE BY THE AO IS NOT JUSTIFIABLE AND THE AO HAS NO T QUANTIFIED AS TO WHICH ARE THE DEPOSITS IN THE BANK ACCOUNTS R ELATING TO WHICH ADVERSE INFERENCE IS DRAWN. HOWEVER I FIND TH AT THE APPELLANT HAS DEPOSITED CASH ON VARIOUS DATES AS EX TRACTED FROM THE SUBMISSIONS MADE ON 21.11.2011 WHICH IS AS UNDER: CITI BANK DATE SOURCE AMOUNT 12.01.2007 OUT OF OWN FUNDS 29,990.00 24.02.2007 OUT OF OWN FUNDS 15,000.00 ------------ 44,990.00 ------------- HDFC BANK 17.04.2006 OUT OF OWN FUNDS 25,000.00 20.04.2006 OUT OF OWN FUNDS 10,000.00 29.04.2006 OUT OF OWN FUNDS 10,000.00 03.05.2006 OUT OF OWN FUNDS 28,620.00 24.05.20 06 OUT OF OWN FUNDS 25,000.00 29.05.2006 OUT OF OWN FUNDS 29,220.00 02.06.2006 OUT OF OWN FUNDS 5,000.00 22.06.2006 OUT OF OWN FUNDS 29,220.00 23.06.2006 OUT OF OWN FUNDS 25,000.00 30.06.2006 OUT OF OWN FUNDS 8,000.00 26.07.2006 OUT OF OWN FUNDS 10,000.00 27.07.2006 OUT OF OWN FUNDS 10,000.00 28.07.2006 OUT OF OWN FUNDS 25,000.00 02.08.2006 OUT OF OWN FUNDS 27,000.00 17.08.2006 OUT OF OWN FUNDS 6,000.00 23.08.2006 OUT OF OWN FUNDS 25,000.00 I.T.A.NO. 1178/12 :- 5 -: 30.08.2006 OUT OF OWN FUNDS 29,220.0 0 04.09.2006 OUT OF OWN FUNDS 15,000.00 15.09.2006 OUT OF OWN FUNDS 28,000.00 20.09.2006 OUT OF OWN FUNDS 29,220.00 14.10.2006 OUT OF OWN FUNDS 15,000.00 26.10.2006 OUT OF OWN FUNDS 25,000.00 26.10.2006 OUT OF OWN FUNDS 28,620.00 22.11.2006 OUT OF OWN FUNDS 15,000.00 25.11.2006 OUT OF OWN FUNDS 29,220.00 27.11.2006 OUT OF OWN FUNDS 20,000.00 18.12.2006 OUT OF OWN FUNDS 7,500.00 29.12.2006 OUT OF OWN FUNDS 29,220.00 29.12.2006 OUT OF OWN FUNDS 30,000.00 13.01.2007 OUT OF OWN FUNDS 29,220.00 20.01.2007 OUT OF OWN FUNDS 11,000.00 20.01.2007 OUT OF OWN FUNDS 13,840.00 22.01.2007 OUT OF OWN FUNDS 25,000.00 02.02.2007 OUT OF OWN FUNDS 7,000.00 12.02.2007 OUT OF OWN FUNDS 5,000.00 15.02.2007 OUT OF OWN FUNDS 25,000.00 01.03.2007 OUT OF OW N FUNDS 29,220.00 15.03.2007 OUT OF OWN FUNDS 25,000.00 17.03.2007 OUT OF OWN FUNDS 5,000.00 7,64,340.00 STANDARD CHARTERED BANK 09.06.2006 OUT OF OWN FUNDS 10,000.00 4.3. THE APPELLANT DERIVES ALL RECEIPTS THROUGH B ANKING CHANNEL AND SUBSTANTIAL PAYMENTS ARE ALSO MADE THRO UGH BANKING CHANNEL. THEREFORE I HOLD THAT THE CASH DEP OSIT MADE IN THE BANK ACCOUNT TO THE TUNE OF RS.8,19,330/- AS WORKED OUT ABOVE, CLAIMED THAT THEY ARE OUT OF 'OWN FUNDS IS NOT CORROBORATED AND HENCE I CONFIRM THE ADDITION TO TH IS EXTENT. THE REST OF THE ADDITION ON THIS GROUND IS DELETED . THIS GROUND OF APPEAL IS PARTLY ALLOWED. 9. THE DR COULD NOT POINT OUT ANY SPECIFIC ERROR IN TH E ABOVE QUOTED ORDER OF THE CIT(A). FURTHER, HE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE AMOUNT OF ` 22,63,970/- DEPOSITED IN THE BANK BY THE ASSESSEE WAS NOT OUT OF THE DIS CLOSED SOURCES OF THE ASSESSEE. IN THE ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RECORD, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REA SON TO INTERFERE WITH I.T.A.NO. 1178/12 :- 6 -: THE ORDER OF THE CIT(A) WHICH IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON TUESDAY, THE 31 ST OF JULY, 2012, AT CHENNAI. SD/- SD/- (SATBEER SINGH GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 31 ST JULY, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR I.T.A.NO. 1178/12 :- 7 -: IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER] I.T.A.NO.1178/MDS/2012 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER SALARY WARD IV(4) CHENNAI VS SHRI V.M.S. KUMARAGURU NO.9, MALVIYA AVENUE SIVAGAMIPURAM THIRUVANMIYUR CHENNAI - 41 [PAN AJJPK9876A] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : NONE DATE OF HEARING : 01-03-2013 DATE OF PRONOUNCEMENT : 01-03-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-VI, CHENNAI, DATED 28.2.2012. 11. BY AN ORDER OF EVEN DATE IN M.P.NO.248/MDS/2012 FI LED BY THE REVENUE, THE ORDER OF THE TRIBUNAL DATED 31.7. 2012 PASSED IN I.T.A.NO. 1178/MDS/2012 WAS RECALLED AS GROUND NO.2 .2 RAISED BY THE REVENUE IN ITS APPEAL WAS NOT ADJUDICATED UPON BY T HE TRIBUNAL. THE SAID GROUND READS AS UNDER: I.T.A.NO. 1178/12 :- 8 -: 2.2 THE LD. CIT(A) HAS ERRED IN DELETING THE ADDI TION OF ` 20 LAKHS ON INVESTMENTS IN MUTUAL FUND. 12. WE, NOW, PROCEED TO DISPOSE OF THE ABOVE GROUND OF APPEAL OF THE REVENUE. 13. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND FROM AIR INFORMATION THAT THE ASSESSEE MADE INVESTMENT OF ` 20 LAKHS IN THE PURCHASE OF UNITS OF BENCH MARK MUT UAL FUND DURING THE YEAR. SINCE THE ASSESSEE WAS UNABLE TO GIVE A NY PROPER EXPLANATION, THE SAME WAS ADDED TO THE INCOME OF TH E ASSESSEE AS UNEXPLAINED INVESTMENT. 14. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE ASSESSEE FURNISHED EXTRACT OF BANK AC COUNT RELATING TO THE INVESTMENT IN MUTUAL FUND OF ` 21,27,818/- AND ` 35,12,270/- DURING THE YEAR UNDER APPEAL AGGREGATING TO ` 56,40,086/- GIVING DETAILS OF SOURCE OF DEPOSITS AND THE MANNER OF INV ESTMENT IN MUTUAL FUND. THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 5 THE TH IRD GROUND RELATES TO ADDITION OF INVESTMENT IN MUTUTAL FUND OF RS.20 LAKHS. THE APPELLANT HAS FURNISHED AN EXTRACT OF BANK ACCOUNT RELATING TO AMOUNT OF INVESTMENT IN MUTUTAL FUND OF RS.21.27,818/- AND RS.35,12,270/- DURING THE RELEVANT FY AGGREGATING TO RS.56,40,086/- GIVING DETAILS OF SOURCE OF DEPOSIT AND THE MANNER OF INVESTMENT IN MUTUAL FUND. I FIND THAT THE ADDITION OF RS.20,00,000/- MADE BY THE AO IS NOT JUSTIFIABLE AS I.T.A.NO. 1178/12 :- 9 -: ON 30.11.2006 THE APPELLANT ISSUED CHEQUE FOR RS.20,00,000/- AND AS ON THAT DATE HE HAD ACCUMULATED BALANCE OF RS.24,80,806/- IN HIS ACCOUNT WITH CITI BANK. THE ANALYSIS OF SOURCES OF DEPOSIT WAS FURNISHED ON 01.11.2011. AS THE APPELLANT HAS DISCHARGED TNE ONUS OF PROVING THE SOURCE OF INVESTMENT IN MUTUTAL FUND, I DELETE THE ADDITION MADE ON THIS GROUND. THIS GROUND OF APPEAL IS ALLOWED. 15. THE DR RELIED ON THE GROUNDS OF APPEAL RAISED BY TH E REVENUE. 16. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE C ASE WAS CALLED FOR HEARING AND THEREFORE, THE APPEAL WA S HEARD EX-PARTE QUA THE RESPONDENT- ASSESSEE. 17. AFTER CONSIDERING THE SUBMISSIONS OF THE DR, WE FIN D THAT THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER MA DE ADDITION OF ` 20 LAKHS FOR INVESTMENT MADE BY THE ASSESSEE IN UNITS OF BENCH MARK MUTUAL FUND DURING THE YEAR ON THE GROUND THAT NO E XPLANATION FOR THE SAID INVESTMENT WAS MADE BY THE ASSESSEE. 18. BEFORE THE CIT(A), THE ASSESSEE FILED EXTRACT OF B ANK STATEMENT GIVING THE DETAILS OF INVESTMENT MADE IN MUTUAL FUND DURING THE YEAR OF ` 21,27,818/- AND ` 35,12,270/- AGGREGATING TO ` 56,40,086/- EXPLAINING THE SOURCE OF DEPOSIT AND TH E MANNER OF INVESTMENT IN MUTUAL FUND. FROM THE DETAILS FILED BY THE ASSESSEE THE CIT(A) FOUND THAT CHEQUE FOR ` 20 LAKHS WAS ISSUED BY THE ASSESSEE I.T.A.NO. 1178/12 :- 10 -: ON 30.11.2006 AND ON THAT DATE THE ASSESSEE HAD AN ACCUMULATED BALANCE OF ` 24,80,806/- IN HIS ACCOUNT WITH CITI BANK. THEREF ORE, HE HELD THAT THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE SOURCE OF INVESTMENT IN MUTUAL FUND AND DELETED THE ADDITI ON MADE BY THE ASSESSING OFFICER. 19. THE DR COULD NOT POINT OUT ANY SPECIFIC ERROR IN TH E ORDER OF THE CIT(A). HE COULD NOT BRING ANY MATERIAL ON REC ORD TO SHOW THAT THE INVESTMENT OF ` 20 LAKHS MADE BY THE ASSESSEE IN THE PURCHASE OF UNITS OF BENCH MARK MUTUAL FUND WAS NOT OUT OF OUT DISCLOSED SOURCES OF INCOME. IN THE ABSENCE OF ANY SUCH MATERIAL BEI NG BROUGHT ON RECORD, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REA SON TO INTERFERE WITH THE ORDER OF THE CIT(A). IT IS CONFIRMED AND THE G ROUND OF APPEAL OF THE REVENUE IS DISMISSED. 20. IN THE RESULT, GROUND NO.2.2 OF THE APPEAL OF THE REVENUE IN I.T.A.NO. 1178/MDS/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON FRIDAY , THE 1ST OF MARCH, 2013, AT CHENNAI SD/- SD/- (SATBEER SINGH GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 01 ST MARCH, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR