DCIT, CHENNAI V. G.Kumar, CHENNAI

ITA 1240/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64105 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-07-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1240(MDS)/2011 ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE III(2), CHENNAI. VS. SHRI G.KUMAR, 80, THIRUVALLUVAR SALAI, ALWARPET, CHENNAI-18. PAN AABPK6989P. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, IRS, CIT RESPONDENT BY : SHRI S.SRIDHAR, A DVOCATE DATE OF HEARING : 25 TH JULY, 2012 DATE OF PRONOUNCEMENT : 7 TH AUGUST, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II AT CHENNAI, DATED 24-2-2011. THE APPEAL ARISES OUT OF THE ASSE SSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX AC T,1961. - - ITA 1240 OF 2011 2 2. THERE IS A DELAY OF SEVEN DAYS IN FILING THIS A PPEAL BY THE REVENUE. THE DELAY IS CONDONED AND THE APPE AL IS ADMITTED. 3. THE ONLY GROUND RAISED BY THE REVENUE IS THAT T HE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DE LETING THE ADDITION TOWARDS UNRECORDED CREDIT SALES REPRESENTE D AS DEFICIT IN CLOSING STOCK AMOUNTING TO ` 67,57,807/-. 4. IN THE COURSE OF SEARCH, A STOCK DEFICIT OF ` 67,57,807/- WAS NOTICED. THIS WAS BASED ON THE IN VENTORY TAKEN AT THE TIME OF SEARCH. THEREAFTER, THE ASSES SEE HAD FILED DETAILS BEFORE THE ADDITIONAL DIRECTOR OF INCOME-TA X(INVESTIGATION) POINTING OUT A NUMBER OF DISCREPANCIES IN THE INVEN TORY FINALIZED AT THE TIME OF SEARCH. ACCORDING TO THE ASSESSEE, THE CORRECT VALUE OF THE DEFICIT STOCK WOULD BE MUCH LESS THAN THE VALUE INITIALLY ESTIMATED BY THE OFFICERS IN THE COURSE O F SEARCH. AS AGAINST THE INCOME RELATING TO THE DEFICIT STOCK, T HE ASSESSEE HAS ACCEPTED ` 26,24,688/- AS UNEXPLAINED INVESTMENT IN THE PROPERTY AT NO.81A, THIRUVALLUVAR SALAI. 5. THE COMMISSIONER OF INCOME-TAX(APPEALS) IN FIRS T APPEAL HELD THAT THE QUANTUM OF INCOME OF ` 26,24,688/- AGAINST - - ITA 1240 OF 2011 3 A DEFICIT STOCK OF ` 67,57,807/- WAS JUST AND PROPER AND, THEREFORE, THERE IS NO REASON TO ESTIMATE ANY INCOM E MORE THAN THAT, ESPECIALLY WHEN NO OTHER ASSET OR EVIDENCE WA S FOUND IN THE COURSE OF SEARCH, SUPPORTING THE CASE OF THE RE VENUE THAT MUCH MORE INCOME WOULD HAVE BEEN EARNED BY THE ASSE SSEE AGAINST THE DEFICIT STOCK. AS THE ASSESSEE HAS ADM ITTED AN UNACCOUNTED INCOME OF ` 26,24,688/- INVOLVED IN THE PURCHASE OF PROPERTY AT 81A, THIRUVALLUVAR SALAI, THE COMMISSIO NER OF INCOME-TAX(APPEALS) DELETED THE INDEPENDENT ADDITIO N OF ` 67,57,807/- MADE BY THE ASSESSING OFFICER. 6. WE FIND THAT THERE IS NO JUSTIFICATION IN TREAT ING THE ENTIRE VALUE OF DEFICIT STOCK OF ` 67,57,807/- AS THE UNACCOUNTED INCOME IN THE HANDS OF THE ASSESSEE. IN ADDITION T O THE DISCREPANCIES IN THE STOCK INVENTORY PREPARED BY TH E DEPARTMENT AT THE TIME OF SEARCH, AS POINTED OUT BY THE ASSESS EE BEFORE THE INVESTIGATING OFFICER HIMSELF, THERE ARE SO MANY OT HER FACTORS WHICH GO TO REDUCE THE PROBABLE INCOME THAT WOULD A RISE OUT OF THE UNACCOUNTED SALES REPRESENTED BY STOCK DEFICIEN CY. ONE OF THE MAIN ITEMS IS THE OTHER EXPENDITURE RELATING TO THE SALES. IN THESE CIRCUMSTANCES, AN INCOME OF ` 26,24,688/- AGAINST A STOCK - - ITA 1240 OF 2011 4 DEFICIT OF ` 67,57,807/- IS QUITE REASONABLE. THIS AMOUNT HAS ALREADY BEEN ADMITTED BY THE ASSESSEE AS UNDISCLOSE D INCOME WITH REFERENCE TO THE PURCHASE OF THE PROPERTY AT T HIRUVALLUVAR SALAI. WHEN THIS IS THE POSITION, AS RIGHTLY HELD BY THE COMMISSIONER OF INCOME-TAX(APPEALS), THERE IS NO JU STIFICATION IN MAKING ANOTHER INDEPENDENT ADDITION OF ` 67,57,807/-. THE COMMISSIONER OF INCOME-TAX(APPEALS) IS JUSTIFIED IN HIS ORDER. 7. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 7 TH OF AUGUST, 2012 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 7 TH AUGUST, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.