G.M.Samiullah, CHENNAI V. ITO, CHENNAI

ITA 1218/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0884 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: D K BHANDARI
• Keywords: Unexplained investment; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1218/MDS/2012 (ASSESSMENT YEAR: 2007-08) MR. G.M.SAMIULLAH, B.P.JAIN & CO., 2, GEE GEE MINAR, 23, COLLEGE ROAD, CHENNAI-600006. PAN: APJPS6137E VS. THE INCOME TAX OFFICER, BUSINESS WARD-XV(3), CHENNAI-600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. D.K.BHANDARI, CA RESPONDENT BY : MR. ANIRUDH RAI, CIT DR DATE OF HEARING : 9 TH JANUARY, 2013 DATE OF PRONOUNCEMENT : 21 ST JANUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNING THE ORDER OF THE CIT(A)-XII, CHENNAI DATED 1.3.201 2 RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS A SMALL TRAVEL AGENT. DURING THE FINANCIAL YEAR 2006-07, THE ASSESSEE PURCHASED LAND FOR A CONSIDERATION OF ` 35,86,275/-. THE ASSESSEE SPENT ANOTHER SUM OF ` 3,60,888/- TOWARDS REGISTRATION EXPENSES ETC. FOR T HE SAID PROPERTY. THE ASSESSEE FILED ITS RETURN OF INC OME FOR THE ITA NO.1218/MDS/2012 2 ASSESSMENT YEAR 2007-08 ON 13.3.2008 DECLARING INCO ME OF ` 1,87,500/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 22.7.2008. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 29.12.2009 MADE ADDITION TO THE TUNE OF ` 32,35,663/- ON ACCOUNT OF UNEXPLAINED INVESTMENTS. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) V IDE ORDER DATED 1.3.2012 PARTLY ALLOWED THE APPEAL OF THE ASS ESSEE. HOWEVER, THE CIT(A) CONFIRMED UNEXPLAINED INVESTME NT TO THE EXTENT OF ` 11,48,163/-. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORD ER OF THE CIT(A). 3. SHRI D.K.BHANDARI APPEARING ON BEHALF OF THE ASS ESSEE SUBMITTED THAT THE CIT(A) HAS ERRED IN CONFIRMING T HE CREDITS TOWARDS PURCHASE OF PROPERTY TO THE EXTENT OF ` 9.00 LAKHS AND BALANCE OF INVESTMENTS MADE AMOUNTING TO ` 2,48,163/- DURING THE YEAR. THE A.R. SUBMITTED THAT THE ASSES SEE WAS ABLE TO EXPLAIN THE SOURCE OF LOANS TAKEN FOR THE P URCHASE OF THE PROPERTY. DURING THE APPELLATE PROCEEDINGS, THE CIT(A) ITA NO.1218/MDS/2012 3 HAD SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER . IN THE REMAND REPORT DATED 20.4.2011, THE ASSESSING OFFICE R HAD CATEGORICALLY STATED THAT THE LOANS TAKEN BY THE AS SESSEE TO THE TUNE OF ` 28.00 LAKHS FROM THE FOLLOWING PERSONS WERE FOUND TO BE GENUINE:- 1. ABDUL RAHIM 2. ZAHEEDA BEGUM 3. ZAREENA SHAMEEM 4. KABIRUNISSA ONCE THE LOANS WERE FOUND TO BE GENUINE, THERE IS N O QUESTION OF MAKING ANY ADDITION ON ACCOUNT OF UNEXP LAINED CREDITS. THE LEARNED AR PLACED ON RECORD COPY OF T HE REMAND REPORT DATED 20.4.2011 AND SUBMITTED THAT THE ASSES SEE WAS ABLE TO EXPLAIN SOURCE OF FUNDS AS WELL AS GENUINEN ESS OF THE CREDITORS. THE LEARNED AR FURTHER CONTENDED THAT TH E CIT(A) FAILED TO TAKE INTO CONSIDERATION THE AMOUNT OF ` 7,00,000/- RECEIVED BY ASSESSEE FROM MR.SHANAWAZ ON ACCOUNT OF SALE OF 1/5 TH SHARE IN PROPERTY. THE ASSESSING OFFICER IN ITS RE MAND REPORT AFTER VERIFYING THE TRANSACTION HAD HELD THE SAME TO BE ITA NO.1218/MDS/2012 4 GENUINE. THEREFORE, THE ADDITION MADE BY THE CIT( A) IS LIABLE TO BE SET ASIDE. 4. ON THE OTHER HAND, SHRI ANIRUDH RAI APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT IN THE REMAND REPORT, THE ASSESSING OFFICER HAS CATEGORICALLY STATED THAT FROM THE TOTAL AMOUNT OF ` 7.00 LAKHS RECEIVED FROM ZAHEEDA BEGUM A SUM OF ` 5,00,000/- WAS RECEIVED BY THE ASSESSEE IN THE FINANCIAL YEAR 2005-06. SIMILARLY, FROM THE TOTAL L OAN AMOUNT OF ` 6.00 LAKHS, THE ASSESSEE RECEIVED FROM KABIRUNISS A AN AMOUNT OF ` 4.00 LAKHS WAS RECEIVED IN THE FINANCIAL YEAR 2005-06. THUS, FROM THE TOTAL LOAN AMOUNT OF ` 28.00 LAKHS, ` 9.00 LAKHS WAS RECEIVED IN THE FINANCIAL YEAR 2005- 06, THEREFORE, THE SAME CANNOT BE TAKEN INTO CONSIDERAT ION. THE D.R. STRONGLY SUPPORTED THE ORDER OF THE CIT(A) AND PRAYED FOR DISMISSAL OF THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES. WE HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW. THE ASSESSEE DURING THE PERIOD UNDER CONSIDE RATION PURCHASED A PROPERTY FOR A CONSIDERATION OF ` 35,86,275/-. THE ITA NO.1218/MDS/2012 5 TOTAL AMOUNT SPENT BY THE ASSESSEE INCLUDING REGIST RATION EXPENSES ETC. ALONG WITH SALE CONSIDERATION AMOUNTS TO ` 39,47,163/-. IT IS AN ADMITTED FACT THAT THE ASSESS EE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNTS. WHEN THE ASSES SEE WAS ASKED TO EXPLAIN THE SOURCE OF FUNDS FOR PURCHA SE OF THE PROPERTY, THE ASSESSEE COULD NOT SHOW THE GENUINENE SS OF THE CREDITORS BEFORE THE ASSESSING OFFICER. HOWEVER, DU RING THE PENDENCY OF THE APPEAL BEFORE THE FIRST APPELLATE A UTHORITY, THE ASSESSING OFFICER WAS ASKED TO SUBMIT REMAND REPOR T. AFTER CONDUCTING ENQUIRY, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE DETAILS FURNISHED BY THE ASSESS EE OF THE CREDITORS FROM WHOM THE ASSESSEE HAD ALLEGEDLY TAKE N LOAN AMOUNTING TO ` 28.00 LAKHS WERE FOUND TO BE GENUINE. HOWEVER, OUT OF THE SAID LOAN OF ` 28.00 LAKHS, ` 9.00 LAKHS WERE RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2005-06. THE ASSESSING OFFICER SUBMITTED REMAND R EPORT DATED 20.4.2011 TO THE CIT(A). THE CIT(A) CAME TO T HE CONCLUSION THAT SINCE AN AMOUNT TO THE TUNE OF ` 9,00,000/- WAS RECEIVED DURING THE FINANCIAL YEAR 2005-06 RELE VANT TO THE ASSESSMENT YEAR 2006-07, THE SAME CANNOT FORM SOURC E FOR ITA NO.1218/MDS/2012 6 INVESTMENT OF ` 30,48,163/- IN THE PROPERTY DURING THE ASSESSMENT YEAR 2007-08. THE CIT(A) BEING SATISFIED WITH THE EXPLANATION AND THE GENUINENESS OF THE CREDITORS ON THE BASIS OF THE REMAND REPORT DELETED THE ADDITION OF ` 19.00 LAKHS ONLY. 6. A PERUSAL OF THE REMAND REPORT DATED 20.4.2011 S HOWS THAT APART FROM THE ABOVE CREDITORS, THE ASSESSING OFFICER HAS CONFIRMED ANOTHER SUM OF ` 7,00,000/- RECEIVED IN CASH BY ASSESSEE FROM ONE SHANAWAZ ON ACCOUNT OF ADVANCE FO R SALE OF 1/5 TH SHARE IN PROPERTY. THE CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE SAID AMOUNT RECEIVED BY THE ASSES SEE DURING THE RELEVANT FINANCIAL YEAR, NOR ANY REASON HAS BEEN GIVEN FOR NOT CONSIDERING THE SAID AMOUNT. THE A.R. FOR THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF REMAINING AMOUNT I.E. ` 4,48,163/- ( ` 11,48,163 7,00,000) OF INVESTMENT MADE IN THE AFORESAID PROPERTY. SINCE THE A.R. IS UNABLE TO FURNISH ANY EXPLANATION WHATSOEVER FOR THE REMAINING AMOUN T, WE CONFIRM THE ADDITION TO THE TUNE OF ` 4,48,163/- . ITA NO.1218/MDS/2012 7 7. IN VIEW OF OUR ABOVE FINDING, WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 2 1 ST DAY OF JANUARY, 2013 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 21 ST JANUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.