S.Kanakaraj, CHENNAI V. ITO, Erode

ITA 1184/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4677 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 13-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Additional evidence; Onus to prove
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1184/MDS/2015 * * /ASSESSMENT YEAR: 2010-11 SHRI S.KANAGARAJ, NO.31-A, GANDHI STREET, KATTUPALAYAM, MODAKURICHI, ERODE-638 107. VS. THE INCOME TAX OFFICER, WARD-2(1), ERODE. [PAN: AKNPK 141 8 R ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.T.N.SEETHARAMAN, ADV. ./- 0 /RESPONDENT BY : MR.A.V.SREEKANTH, JCIT 0 /DATE OF HEARING : 13.03.2017 0 /DATE OF PRONOUNCEMENT : 12.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 12.02.2015 OF COMMISSIONER OF INCOME TAX (APPEALS)- 3, COIMBATORE, IN ITA NO.43/2013-14(A)-I FOR THE AY 2010-11 AND RAISE D THE FOLLOWING GROUNDS: ITA NO.1184/MDS/2015 :- 2 -: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SU STAINING ADDITION OF RS.49,68,404/- MADE IN THE ASSESSMENT ORDER AS INCO ME FROM UNDISCLOSED SOURCES U/S.68 OF THE ACT. 2. THE COMMISSIONER (APPEALS) ERRED IN NOT TAKING PROPE R NOTE OF THE EVIDENCE ADDUCED BY WAY OF CONFIRMATION LETTERS / AFFIDAVITS OF THE C REDITORS AND DRAWING ADVERSE INFERENCES. 3. THE APPELLANT SUBMITS THAT, IN HIS DETAILED WRITTEN SUBMISSIONS DATED 2.6.2014, 18.08.2014 AND 27.11.2014 THE APPELLANTS AUTHORIZE D REPRESENTATIVE HAD FURNISHED A COMPLETE EXPLANATION FOR THE NATURE AND SOURCE OF T HE CREDITS, WHICH HAVE NOT RECEIVED PROPER CONSIDERATION BY THE COMMISSIONER (APPEALS). 4. THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE A DDITION OF RS.14,95,000/- (OUT OF RS.21 ,35,000/-) CONSISTING OF THE FOLLOWING LOANS: A) K.R. KRISHNASAMY RS.6,35,000 C) SMT. S. MANONMANI RS.2,50,000 D) S.K. KALAISELVAM RS.2,50,000 E) K. PALANISAMY RS.3,00,000 LOAN FROM M. REVATHI RS.40,000 SUNDARAM RS.20,000 ------------ RS. 60,000 ----------------- RS. 14,95,000/- ----------------- 5. THE APPELLANT SUBMITS THAT: I. IN RESPECT OF RS.6,35,000/- SRI K.R. KRISHNASAMY HA D FILED AN AFFIDAVIT CONFIRMING THAT HE PAID THE AMOUNT FOR PROCUREMENT OF BUILDING MATERIALS AND CONSTRUCTION EXPENSES INCURRED BY THE APPELLANT FOR CONSTRUCTION OF HIS (SRI K.R. KRISHNASAMYS) HOUSE. THE AUTHORITIES BELOW WERE NOT RIGHT IN DISB ELIEVING THE UNCONTROVERTED AFFIDAVIT OF THE (TRADE) CREDITOR, WHO, ADMITTEDLY, IS AN ASSESSEE FILING RETURNS REGULARLY WITH THE L.T. DEPARTMENT. II. IN RESPECT OF RS.2,50,000/- BEING THE AMOUNT RECEIV ED FROM SMT. S. MANONMANI, HER AXIS BANKS STATEMENT HAD BEEN PRODUCED SHOWING THE PAYMENT BY CHEQUE; HER EXPLANATION HAS BEEN DISBELIEVED FOR ALLEGED WANT O F RELIABLE PROOF FOR CASH DEPOSITS IN HER ACCOUNT; THE APPELLANT IS ADVISED THAT HE CA NNOT BE EXPECTED TO PROVE THE SOURCE OF THE SOURCE AND NO ADVERSE INFERENCE COULD BE DRAWN TO HOLD THAT THE TRANSACTION WAS NOT GENUINE. III. IN RESPECT OF RS.2,50,000/- BEING THE AMOUNT RECEIV ED FROM SRI S.K.KALAISELVAN THE REASONS GIVEN FOR HOLDING THE TRANSACTION TO BE NON -GENUINE ARE SIMILAR TO THOSE IN THE CASE OF SMT. S. MANONMANI AND ARE CLEARLY UNSUS TAINABLE. IV. THE LOAN OF RS.3,00,000/- RECEIVED FROM SRI K.S. PA LANISAMY, BY CHEQUE WAS CONFIRMED BY THE CREDITOR, WHO IS A MAN OF MEANS OW NING 2 LORRIES AND HAD ALSO PURCHASED A FLAT FROM SRI BALAJI PROMOTERS FOR A CO NSIDERATION OF RS.15,25,000/- PAID BY CHEQUE TO THE FIRM; ON SUCH FACTS AND CIRCU MSTANCES, THE INFERENCE THAT THE LOAN DOES NOT APPEAR TO BE GENUINE IS TOTALLY UNJUS TIFIED. V. THE SUM OF RS.40,000/- AND RS.20,000/- RECEIVED FRO M SMT. M. REVATHI AND SRI P. MEENAKSHISUNDARAM, RESIDENTS OF DEVAKOTTAI, SIVAGAN GA DISTRICT., THOUGH CONFIRMED BY THEM BY LETTER IN WRITING WITH COPY OF THEIR BANK STATEMENTS, HAVE BEEN ADDED BACK ON THE GROUND THAT THE CREDITORS WE RE NOT PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER FOR ENQUIRY; HAVING REGARD TO THE EVIDENCES ADDUCED WITH RESPECT TO THESE AMOUNTS WHICH ARE NOT LARGE, THERE WAS NO VALID REASON FOR TREATING THESE AMOUNTS AS CASH CREDITS AND ADDING THE AMOUNTS TO THE APPELLANTS INCOME. ITA NO.1184/MDS/2015 :- 3 -: 6. THE COMMISSIONER (APPEALS) ERRED IN ACCEPTING TH E AMOUNT RECEIVED FROM SMT. PAPAYAAMMAL TO THE EXTENT OF RS.6,00,000/- ONLY (OU T OF RS.6,78,904); THE APPELLANT SUBMITS THAT, HAVING REGARD TO THE DETAILED EXPLANA TION / EVIDENCE ADDUCED IN HIS AUTHORIZED REPRESENTATIVES WRITTEN SUBMISSION DATE D 2.6.2014, THE ENTIRE AMOUNT OF RS.6,78,904/- SHOULD HAVE BEEN ACCEPTED AS PROVED. 7. THE COMMISSIONER (APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.4,62,000/- BEING THE AMOUNT RECEIVED FROM SRI BALAJI PROMOTERS, A FIRM IN WHICH THE APPELLANT IS A PARTNER BY CHEQUE, CONFIRMED BY THE FIRM AS ONE OF THE TRANSAC TIONS (CREDITS/DEBITS) BETWEEN THE APPELLANT AND THE FIRM AND SUBSTANTIATED BY PRODUCI NG COPIES OF THE PARTNERS CAPITAL AND CURRENT ACCOUNTS MAINTAINED BY THE FIRM. 8. THE APPELLANT SUBMITS THAT SRI BALAJI PROMOTERS, ERODE BEING A SEPARATE IDENTIFIED ENTITY ASSESSED TO INCOME TAX; THERE WAS NO GROUND TO DISB ELIEVE THE TRANSACTION BETWEEN THE APPELLANT AND THE FIRM AND DRAW AN ADVERSE INFERENC E TO ASSESS THE SUM OF RS.4,62,000/- AS UNEXPLAINED IN THE HANDS OF THE APPELLANT AND TO TREAT THE AMOUNT AS HIS INCOME. 9. THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING RS .29.32,500/- AS UNEXPLAINED DEPOSIT & IN THE APPELLANTS BANK ACCOUNTS WITH ICICI BANK/ AXIS BANK. 10. THE APPELLANT SUBMITS THAT THE AUTHORITIES BELO W HAVE NOT CONSIDERED THE EXPLANATIONS RENDERED AND THE JUDICIAL DECISIONS CITED OBJECTING TO THE TREATMENT OF THE DEPOSITS IN THE BANK ACCOUNT AS CASH CREDITS PLEASE SEE CIT VS BHAICHAND H.GANDHI (1983) 141 ITR 67 (BOM). 11. THE APPELLANT FURTHER SUBMITS THAT IN ADDING TH E CASH DEPOSITS IN THE APPELLANTS BANK ACCOUNTS AS UNEXPLAINED THE ASSESSING OFFICER / COMMI SSIONER (APPEALS) HAVE NOT CONSIDERED, THE PRIOR WITHDRAWALS OF CASH FROM THE ABOVE TWO BANK ACCOUNTS AVAILABLE TO MAKE THE SUBSEQUENT CASH DEPOSITS INTO THE BANK ACC OUNTS. 12. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED T HE APPELLANT PRAYS THAT THE HONBLE TRIBUNAL BE PLEASED TO ALLOW THIS APPEAL AND RENDER JUSTICE. 2.0 THE ASSESSEE FILED THE RETURN OF INCOME ON 26.10.2 007 ADMITTING THE TOTAL INCOME OF RS.1,92,000/- AND AGRICULTURAL INCO ME OF RS.2,93,000/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER (IN SHORT AO) FOUND THAT THERE WERE HUGE CASH CREDITS IN THE SAVI NGS BANK A/C WITH ICICI BANK, AND AXIS BANK AND MADE HUGE PURCHASES A ND SALES OF SHARE TRANSACTIONS AND ADMITTED ONLY SHARE INCOME OF THE PARTNERSHIP FIRM AND THE AGRICULTURAL INCOME. THE ASSESSEE INITIALLY DID NOT COOPERATE WITH THE AO FOR FURNISHING THE INFORMATION. SUBSEQUENTLY, T HE ASSESSEE FURNISHED DETAILS IN THE FORM OF LETTERS FROM ONE SHRI K.R.KR ISHNASWAMY, N UTHUKULI, AND SMT. K. JAYA LAKSHMI WIFE OF K.R.KRISHNASWAMY AND COPY OF THE RETURN OF INCOME OF BALAJI PROMOTERS AND EXPLAINED THAT THE SOURCE OF ITA NO.1184/MDS/2015 :- 4 -: DEPOSITS WAS FROM THE ABOVE PERSONS. THE AO DID NOT BELIEVE THE SOURCES EXPLAINED BY THE ASSESSEE AND MADE THE FOLLOWING AD DITIONS: K.R. KRISHNA SWAMY RS.21,35,000/- PAPAYAAMMAL RS.6,78,904/- M/S BALAJI PROMOTERS RS.4,62,000/- 2.1 THE ASSESSEE HAS MADE CASH DEPOSITS SB A/C WITH ICICI & AXIS BANK. IN RESPECT OF CASH DEPOSITS MADE IN HIS SB A/C IN I CICI BANK A/C NO.6062010574428 AND AXIS BANK A/C NO.1180101000386 78 AMOUNTING TO RS.43,52,500/-, THE ASSESSEE HAS NEITHER SUBMIT TED CONFIRMATION NOR EXPLAINED THE SOURCE OF DEPOSITS. THE AO ALLOWED C REDIT FOR AGRICULTURAL INCOME OF RS.2,90,000/- FROM THE TOTAL CASH DEPOSIT S OF RS.43,52,500/- AND MADE THE ADDITION OF BALANCE AMOUNT OF RS.40,6 2,500/- TO THE RETURN OF INCOME. THUS, THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.75,30,404/- RESULTING IN TOTAL ADDITION OF RS.73 ,38,404/- AGAINST THE RETURNED INCOME OF RS.1,92,000/-. 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) (IN SHORT LD.CIT(A)) AND THE LD.CIT(A) CONFIRMED THE ADDITI ON OF RS.49,68,404/- AND ALLOWED THE RELIEF OF THE REMAINING AMOUNT. 3.1 BEFORE THE LD.CIT(A), THE ASSESSEE FILED WRITTEN S UBMISSIONS AND THE ADDITIONAL EVIDENCES EXPLAINING THE SOURCES AS LOAN S FROM THE FOLLOWING PERSONS IN RESPECT OF RS.21,35,000/-. ITA NO.1184/MDS/2015 :- 5 -: A) K.R. KRISHNASAMY RS.6,35,00 0 B) SAKTHI MANAGEMENT SERVICES RS.6,0 0,000 C) SMT. S. MANONMANI RS.2,50,000 D) S.K. KALAISELVAM RS.2,50,000 E) K. PALANISAMY RS.3,00,000 M. REVATHI RS.40,000 SUNDARAM RS.20,000 MANI RS.60000 RS.1,00,000 -------------- 21,35,000 --------------- LD.CIT(A) CALLED FOR THE REMAND REPORT FR OM THE AO. ON THE BASIS OF THE REMAND REPORT THE LD.CIT(A) CONFIRMED THE FO LLOWING ADDITIONS OUT OF THE ABOVE AMOUNT OF RS.2135000/- A) K.R. KRISHNASAMY RS.6,35,000 C) SMT. S. MANONMANI RS.2,50,000 D) S.K. KALAISELVAM RS.2,50,000 E) K. PALANISAMY RS.3,00,000 -------------- RS.14,35,000 LOAN FROM M. REVATHI RS.40,000 SUNDARAM RS.20,000 ------------ RS. 60,000 ----------------- RS. 14,95,000/- ----------------- 3.2 IN CASE OF SMT.PAPAYAMMAL OUT OF THE TOTAL AMOUNT OF RS.6,78,904/- THE CIT(A) CONFIRMED RS.78,904/- AND DELETED THE BALANCE AMOUNT OF RS.6,00,000/-. 3.3 THE ADDITION IN RESPECT OF BALAJI PROMOTERS RS.4,6 2,000/- WAS CONFIRMED BY THE CIT(A). ITA NO.1184/MDS/2015 :- 6 -: 3.4 ADDITIONS OUT OF THE UNEXPLAINED CASH DEPOSITS A RE RS.40,62,500/- THE LD..CIT(A) CONFIRMED THE ADDITION OF RS.29,32,5 00/- AS PER THE FOLLOWING DISCUSSION: 7.4.1 THE ASSESSEE ARGUES THAT THE THREE DEPOSITS B ELONGING TO SHRI K R KRISHNASAMY WHICH WERE DEPOSITED INTO THE BANK ACCOUNT IS INCLUDED IN THE TOTAL DISALLOWANCE OF RS.43,52,500/ -. THE THREE DEPOSITS ARE RS.60,000/-, RS.1,00,000/- AND RS.4,75 ,000/-. I FIND THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE AN D THE SAID AMOUNT HAS TO BE SET OFF SINCE THE SUM OF RS.6,35,000/- IN THE NAME OF SHRI K R KRISHNASAMY IS ALREADY DISALLOWED IN THE DISALL OWANCES MENTIONED IN PARA 7.1.2. 7.4.2 THE ASSESSEE ALSO POINTS OUT THAT AN AMOUNT O F RS. 5,000/- ALONE IS DEPOSITED IN THE BANK ACCOUNT FOR WHICH TH E ASSESSING OFFICER HAS MISTAKENLY TAKEN THE SUM AS RS.5,00,000 /- ON 6/3/2010 WITH ICICI BANK. THERE A SUM OF RS. 4,95,000/- HAS TO BE REDUCED FROM THE ADDITION. THE BALANCE RS.29,32,500/- (RS.4 0,62,500/- MINUS RS.6,35,000 + RS. 4,95,000/-) AMOUNT STANDS C ONFIRMED IN THE HANDS OF THE APPELLANT. AGAINST THE ABOVE ADDITIONS, THE ASSESSEE H AS RAISED TOTAL 12 GROUNDS: 4.0 GROUND NOS.1-3 & 10-12 ARE GENERAL IN NATURE WHICH DO NOT REQUIRE SPECIFIC ADJUDICATION 5.0 GROUND NO.4 (A) & 5(I) ARE RELATED TO THE ADDITION OF RS.6,35,000/- IN RESPECT OF SHRI KRISHNASWAMY. THE LEARNED AUTHORIZED REPRESENTATIVE (IN SHORT L D.AR) ARGUED THAT THE AMOUNT WAS GIVEN BY MR. KR KRISHNASWAMY FO R CONSTRUCTION OF RESIDENTIAL HOUSES IN K.S.NAGAR TINDAL, ERODE IN TH E NAME OF SMT. J. ITA NO.1184/MDS/2015 :- 7 -: LAKSHMI AND THE ASSESSEE HAS GIVEN SWORN STATEMENT ON 20.06.2014 AND CONFIRMED THE PAYMENT MADE TO THE ASSESSEE. MR. KR ISHNASWAMY HAS ASSESSED TO INCOME TAX AND THE CREDITOR HAS CONFIRM ED IN THE STATEMENT RECORDED U/S.131. THERE IS NO CASE MAKING ADDITION IN THE HANDS OF THE ASSESSEE. ON THE OTHER HAND, THE LD.DR ARGUED THAT THERE WAS INCONSISTENCY IN THE REPLY OF THE CREDITOR AND LD.C IT(A) CONFIRMED THE ADDITION DUE TO INCONSISTENCIES IN THE REPLY SUBMI TTED BY MR.KRISHNASWAMY, HENCE CONTENDED THAT ADDITION BE C ONFIRMED. 6.0 WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE MR.KRISHNASWAMY INITIALLY GIVEN STATE MENT BEFORE THE AO STATING THAT HE HAS GIVEN A SUM OF RS.21,35,000/ - BY WAY OF CHEQUE. THE AO NOTICED THAT THERE WERE CASH CREDITS TO THE EXTENT OF RS.6,35,000/. SINCE THE EXPLANATION DID NOT MATCH, THE AO MADE TH E ADDITION. BEFORE THE LD.CIT(A), THE ASSESSEE HAS FILED ADDITIONAL EV IDENCE, IN THE FORM OF AN AFFIDAVIT STATING THAT MR.KRISHNASWAMY HAS GIVEN RS .6,35,000/- IN CASH. THE AO ALSO THE RECORDED A STATEMENT ON 20.06.2014 WHEREIN MR.SWAMY HAS CONFIRMED THE PAYMENT MADE TO THE ASSESSEE A SU M OF RS.6,35,000/. SINCE THE CREDITOR HAS CONFIRMED THE AMOUNT OF LOAN GIVEN TO THE ASSESSEE, THE SAME CANNOT BE CONSIDERED AS ADDITION IN THE HANDS OF THE ASSESSEE. THEREFORE, WE DELETE THE ADDITION MADE B Y THE AO AMOUNTING TO RS.6,35,000/- IN THE NAME OF SHRI KRISHNASWAMY A ND ALLOW THE ASSESSEES APPEAL ON THIS GROUND. ITA NO.1184/MDS/2015 :- 8 -: 7.0 SIMILARLY, SMT. MANONMANI HAS ADMITTED THAT SHE HA S GIVEN A LOAN OF RS.2,50,000/- AND RECEIVING THE INTEREST FROM MR .KANAGARAJ, SHRI SK KALAISELVAM HAS ADMITTED RS.2,50,000/- AND SHRI K. S.PALANISWAMY ALSO ADMITTED RS.3.00 LAKHS AS THE AMOUNTS GIVEN TO MR. KANAGARAJ. THE LD.CIT(A) CONFIRMED THE ADDITION IN ALL THE ABOVE F OUR CASES SINCE THE AMOUNTS WERE DEPOSITED IN CASH IN THE ACCOUNTS OF T HE CREDITORS AND THE CHEQUES WERE ISSUED SUBSEQUENTLY AFTER 10 DAYS. HO WEVER, ON VERIFICATION OF THE STATEMENTS RECORDED FROM THE CREDITORS, THE AO HAS NOT EXAMINED THE SOURCES OF THE CREDITORS. IT IS SETTLED LAW TH AT IN CASE OF CASH CREDITS IDENTITY CAPACITY AND CREDITWORTHINESS OF THE CREDI TORS REQUIRED TO BE ESTABLISHED BY THE ASSESSEE. THOUGH, IN THE PRESEN T CASE, IDENTITY IS ESTABLISHED THE CAPACITY AND CREDITWORTHINESS WAS N OT PROVED BY THE ASSESSEE AND THE AO ALSO HAS NOT EXAMINED THE SAME IN REMAND PROCEEDINGS. THE LD.CIT(A) MERELY SUSPECTING THE C REDITWORTHINESS, CONFIRMED THE ADDITION MADE BY THE AO. THEREFORE, W E ARE OF THE CONSIDERED OPINION THAT THE CASE SHOULD BE REMITTED BACK TO THE FILE OF THE AO TO EXAMINE THE CREDITWORTHINESS OF SHRI MANONMAN I, SHRI KALAISELVAM AND SHRI PALANISAMY AND ACCORDINGLY, WE REMIT THE M ATTER BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH ON MERITS. TH E ASSESSEES APPEAL ON THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 8.0 THE NEXT ADDITION OUT OF RS.14,95,000/- WAS LOAN F ROM SMT. REVATHI, RS.40,000/- AND SHRI SUNDARAM RS.20,000. IN BOTH TH E CASES, ITA NO.1184/MDS/2015 :- 9 -: CONFIRMATION LETTERS WERE FURNISHED BUT THE ADDITIO N WAS MADE FOR NON PRODUCTION OF CREDITORS. SINCE THE CONFIRMATIONS W ERE FILED BY THE ASSESSEE, THE BURDEN OF THE ASSESSEE HAS BEEN DISCH ARGED AND THE BURDEN SHIFTS TO THE AO TO REBUT THE EVIDENCE FURNISHED BY THE ASSESSEE. MR. MEENAKSHI SUNDARAM & MRS. REVATHI ARE WIFE AND HUSB AND AND AT THE TIME OF AOS ENQUIRY, THE ASSESSEE COULD NOT PRODUCE BOT H OF THEM BECAUSE OF ILL-HEALTH OF THE CHILDREN. THE LD.CIT(A) CONFIRME D THE ADDITION AS THE ASSESSEE COULD NOT PRODUCE BOTH OF THEM. 8.1 WE HEARD BOTH THE PARTIES. THE ASSESSEE HAS FURNI SHED THE CONFIRMATION LETTERS FROM BOTH OF THEM AND DISCHARG ED HIS BURDEN OF PROOF. IT IS FOR THE AO TO PROVE THAT THE CONTENTS OF THE CONFIRMATION LETTERS FURNISHED BY THE ASSESSEE ARE WRONG OR THE CREDITOR S HAD NO CAPACITY TO GIVE THE LOANS. IT IS INCORRECT TO CONFIRM THE ADD ITION MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE CREDITORS BEFORE THE AO FOR DEPOSING EVIDENCE. THE AO IS VESTED WITH THE POWERS U/S.133 (6) & 131 FOR COLLECTING THE INFORMATION FROM THE WITNESSES. WIT HOUT USING ANY OF THE POWERS FOR COLLECTING THE INFORMATION, THE AO CANNO T PROCEED TO MAKE THE ADDITION. SINCE, THE ASSESSEE HAS FILED CONFIRMATI ON LETTER AND AMOUNT INVOLVED IS VERY NEGLIGIBLE. WE HOLD THAT THE ADDI TION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE AND THE SAME IS DELETED. THE LOWER AUTHORITIES ORDERS IN RESPECT OF THE ADDITIONS IN THE CASE OF M RS.REVANITH & SHRI MEENAKSHI SUNDARAM ARE SET-ASIDE AND THE APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWED. ITA NO.1184/MDS/2015 :- 10 -: 9.0 GROUND NO.6 IS RELATED TO THE ADDITION OF RS.78,90 4/- IN RESPECT OF LOAN TAKEN FROM SMT. PAPAYAAMMAL. THE ASSESSEE HAS TAKEN A LOAN OF RS.6,78,904/- FROM SMT. PAPAYAAMMAL. THE AO MADE T HE ENTIRE AMOUNT AS ADDITION U/S.68 OF INCOME TAX ACT. 9.1 BEFORE THE LD.CIT(A), THE ASSESSEE FILED ADDITIONA L EVIDENCE AND THE CIT(A) CALLED FOR THE REMAND REPORT. THE AO IN THE REMAND REPORT STATED THAT THE CREDITOR IS 90 YEARS OLD LADY WHO I S NOT PHYSICALLY WELL/FIT TO DISCUSS THE TRANSACTION. THEREFORE, THE LD.CIT(A) C ONFIRMED THE RS.78,904/- AND ALLOWED RS.6.00 LAKHS ON THE BASIS OF THE DISCUSSION MADE WITH THE MANAGER ICICI BANK AND ON PERUSAL OF DOCUMENTS. 9.2 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. AT THE TIME OF THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT CREDITS MADE BY SHRI PAPAYAAMMAL WERE THROUGH BANK CHEQUE OR TRANSFER OF THE AMOUNT. THERE WAS NO CASH DEPOSIT MADE BY T HE CREDITOR. THE LD.CIT(A) ACCEPTED SIX LAKHS BUT CONFIRMED THE ADDI TION OF RS.78,904/-. THOUGH ALL THE CREDITS WERE MADE THROUGH BANK TRANS ACTIONS THROUGH CHEQUES OR TRANSFER ENTRIES FROM THE SAME CREDITOR, NO REASON HAS BEEN ASSIGNED BY THE LD.CIT(A) FOR CONFIRMING THE AMOUNT OF RS.78,904/-. THEREFORE, WE ARE UNABLE TO SUSTAIN THE ADDITION CO NFIRMED BY THE ITA NO.1184/MDS/2015 :- 11 -: LD.CIT(A) AMOUNTING TO RS.78,904/-. ACCORDINGLY, T HE SAME IS DELETED AND GROUND NO.6 IS ALLOWED. 10.0 GROUND NO.7 IS RELATED TO THE ADDITION OF RS.4,62, 000/- RECEIVED FROM M/S.BALAJI PROMOTERS: THE AO HAS MADE ADDITION OF RS.4,62,000/- RECEIVED FROM M/S.BALAJI PROMOTERS. THE ASSESSEE HAS RECEIVED A SUM OF RS .6.00 LAKHS THROUGH ICICI BANK ACCOUNT ON 21/07/2009 AND REPAID A SUM OF RS.1,38,000/- ON 21.10.2009 AND ON 02.03.2010 AND THE BALANCE REMAIN ED IN THE ACCOUNT OF CREDITOR WAS RS.4,62,000/- THE LD.CIT(A) CONFI RMED THE ADDITION BECAUSE OF NON-PRODUCTION OF BOOKS OF ACCOUNTS BY M /S.BALAJI PROMOTERS. THE ASSESSEE HAS FILED CONFIRMATION LETTER, BANK ST ATEMENT AND ACKNOWLEDGEMENT HAVING FILED THE INCOME TAX RETURNS IN THE CASE OF M/S.BALAJI PROMOTERS. THE AMOUNT WAS RECEIVED THR OUGH BANK AND PAID THROUGH BANK. THE ASSESSEE IS ONE OF THE PARTNERS OF M/S.BALAJI PROMOTERS. SINCE THE ASSESSEE HAS FURNISHED THE CO NFIRMATION, FILED INCOME TAX RETURNS AND THE TRANSACTION WAS MADE THR OUGH BANK CHANNELS IF THE SOURCE OF THE LOAN WAS NOT FOUND TO BE SATIS FACTORILY EXPLAINED, THEN THE ADDITION SHOULD BE MADE IN THE HANDS OF THE PAR TNERSHIP FIRM BUT NOT IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAS ESTA BLISHED THE IDENTITY AND FURNISHED THE INCOME TAX RETURNS, THE AO HAS NO T DOUBTED THAT THE LOAN WAS A BOGUS. THEREFORE, THE ORDER OF THE LD.C IT(A) CANNOT BE UPHELD ITA NO.1184/MDS/2015 :- 12 -: ON THIS ISSUE . ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES ARE SET A SIDE AND THE ADDITION IS DELETED. GROUND NO.7 OF TH E ASSESSEE IS ALLOWED. 11.0 GROUND NOS.9 & 10 ARE RELATED TO THE ADDITION OF R S.29,32,000/- MADE IN THE ICICI BANK: DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND TH AT THERE WERE CASH DEPOSITS TO THE EXTENT OF RS.43,52,500/- MADE IN THE BANK ACCOUNT. THE ASSESSEE DID NOT FURNISH ANY EXPLANATION OR SUP PORTING EVIDENCE OR PRODUCE THE BOOKS OF ACCOUNTS REGARDING THE SOURCE AND NATURE OF THE DEPOSITS MADE IN THE BANK ACCOUNT. THEREFORE, THE AO ALLOWED THE CREDIT OF RS.2,90,000/- RELATED TO AGRICULTURAL INCOME REC EIVED BY THE ASSESSEE AND THE BALANCE AMOUNT OF RS.40,62,500/- WAS ADDED TO THE RETURNED INCOME. THE ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION OF RS.29,32,500/- AFTER ALLOWING THE CREDIT FOR RS.6,35,000/- RELATING TO SHRI KRISHNASW AMY AND THE ERRONEOUSLY THE AMOUNT OF RS.4,95,000/- (AS DISCUSS ED IN PARA NO.7.4.2 OF THE CIT(A) ORDER (REPRODUCED ABOVE) INSTEAD OF R S.5,000/-). (THE AO HAS TAKEN THE AMOUNT OF RS.5.00 LAKHS ON 06.03.2010 INSTEAD OF RS.5000/- (RS.5,00,000/- - RS.5,000/- = RS.4,95,000 /-) WAS ADDED BACK TO THE RETURNED INCOME. ITA NO.1184/MDS/2015 :- 13 -: 11.1 APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED THAT THE LD.CIT(A) CONFIRMED THE ADDITION AFTER ALLOWING THE BENEFIT OF TELESCOPE OF DOUBLE ADDITIONS OF SHRI K.R.KRISHNASWAMY AND MISTAKE CO MMITTED BY AO BUT OTHER CASH FLOW STATEMENTS SUBMITTED WERE NOT PROPE RLY ANALYZED. THE LD.A.R FURTHER ARGUED THAT THE ASSESSEE WAS HAVING ADEQUATE CASH BALANCES TO MAKE THE CASH DEPOSITS AND ENCLOSED CAS H FLOW STATEMENT IN PAGE NOS.65 TO 72. THERE WAS NO DISCUSSION REGARDI NG CASH FLOW STATEMENT IN THE ASSESSMENT ORDER AND THE ASSESSEE HAS ARGUED THAT THE SOURCE WAS AGRICULTURAL INCOME. AS PER THE ASSESSME NT ORDER IT IS SEEN THAT THE ASSERSSEE HAS STATED THAT THE AMOUNTS RECE IVED FROM AGRICULTURAL LAND WOULD BE RS.1.00 CRORE. THE ASSESSING OFFICER HAS NOT EXAMINED THE CORRECTNESS OF THE SOURCE CLAIMED AT THE TIME OF AS SESSMENT. AND THE SAME WAS ALSO NOT EXPLAINED BY THE AO. IN THE PAPER BOOK FILED BY THE LD.AR THE CASH FLOW WAS SUBMITTED BEFORE THE LOWER AUTHORITIES. THE LD.CIT(A) ALSO HAS NOT GIVEN ANY FINDING ON THE CAS H FLOW AND THE AGRICULTURAL SOURCES CLAIMED BY THE ASSESSEE. THERE FORE, IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED OPINION THAT THE I SSUE SHOULD BE REMITTED BACK TO THE FILE OF THE AO TO EXAMINE THE AGRICULTU RAL SOURCES AND THE CORRECTNESS OF THE CASH FLOW AND DECIDE THE ISSUE A FRESH ON MERITS. ACCORDINGLY WE REMIT THE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WITH T HE INCOME TAX RETURNS AND EVIDENCES FILED BY THE ASSESSEE IN RESPECT OF C ASH FLOW STATEMENT AND DECIDE THE ISSUE AFRESH ON MERITS. THE ASSESSEE IS DIRECTED TO SUBMIT THE INFORMATION BEFORE THE ASSESSING OFFICER FOR EARLY COMPLETION OF ENQUIRIES ITA NO.1184/MDS/2015 :- 14 -: AND THE ASSESSMENT. THE ASSESSEES APPEAL ON THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 12 TH MAY, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF