ACIT, Thanjavur V. S.Shanmuganathan, Thanjavur

ITA 1278/CHNY/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4471 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 01-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2014
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Peak credit; Condonation of delay
• Section: 69

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 1278 /MDS/201 4 / ASSESSMENT YEAR :20 1 0 - 1 1 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, THANJAVUR. VS. SHRI S. SHANMUGANATHAN, NO. 45, OLD MARIAMMAN KOIL STREET, CAUVERY NAGAR, EAST GATE, TH ANJAVUR 613 001. [PAN: AA YPS9235R ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SUPRIYO PAL , J CIT / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 08 . 0 5 .201 7 / DATE OF P RONOUNCEMENT : 24 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , TIRUCHI RAPALLI DATED 07 .0 1 .201 4 REL E VANT TO THE ASSESSMENT YEAR 20 1 0 - 11 , WHEREBY THE DEPARTMENT HAS CHALLENGED DELETION OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT I.E., INVESTMENT IN CHIT CONTRIBUTION UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] CONSIDERING FRESH EVIDENCE SUCH I.T.A. NO . 1278 /M/ 1 4 2 AS FUND FLOW STATEMENT AND STATEMENT OF AFFAIRS FILED FOR THE FIRST TIME BEFORE THE FIRST APPELLATE AUTHORITY WITHOUT ADHERING TO THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. FURTHER, THE LD. CIT(A) E RRED IN DELETING THE PEAK CREDIT OF DEPOSIT IN SB ACCOUNT ACCEPTING MONTH WISE FUND FLOW STATEMENT IGNORING THE PRINCIPLE THAT ENTRIES IN BANK ACCOUNTS AND INVESTMENTS ARE TO BE EXPLAINED DATE - WISE AND WHENEVER IT CANNOT BE EXPLAINED, THEY ARE TO BE TREATE D AS UNEXPLAINED CASH/INVESTMENT VIOLATING THE RULE 46A OF IT RULES. 2. THE APPEAL OF THE REVENUE IS FOUND TO HAVE BEEN FILED LATE BY SEVEN DAYS. THE REVENUE HAS FILED PETITION FOR CONDONATION OF DELAY AND THE LD. DR HAS SUBMITTED THAT THE RECORDS PERTA INING TO THIS CASE COULD NOT BE LOCATED IMMEDIATELY SINCE THE CONCERNED DEALING OFFICIALS WERE DEPUTED ON ELECTION DUTY AS EXPENDITURE OBSERVER AND THEREFORE, THE DEPARTMENT COULD NOT FILE THE APPEAL AND PLEADED THAT THE SHORT DELAY IN FILING THE APPEAL MA Y BE CONDONED AND ADMITTED FOR HEARING. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT OBJECTED TO THE SUBMISSIONS OF THE LD. DR. SINCE WE ARE OF THE OPINION THAT THE REVENUE WAS PREVENTED BY SUFFICIENT CAUSE IN NOT FILING THE APPEAL IN TIME, WE CONDONE THE DELA Y IN FILING THE APPEAL AND ADMITTED FOR HEARING. 3 . AT THE VERY OUTSET, THE LD. DR WHILE REFERRING TO GROUND NO.2 & 3 OF THE GROUNDS OF APPEAL HAS PLEADED THAT PROVISIONS OF RULE 46A HAVE BEEN VIOLATED BEFORE ACCEPTING FRESH EVIDENCE FILED BY THE ASSESSE E FOR THE FIRST I.T.A. NO . 1278 /M/ 1 4 3 TIME IN APPEAL PROCEEDING AND CONSIDERING THE SAME TO DELETE THE ADDITION. THEREFORE, IT WAS PRAYED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORING THE MATTER BACK ON HIS FILE WITH THE DIRECTION TO DECIDE THE APPEAL AFRESH IN AC CORDANCE WITH LAW. 4. TO THIS MOVE OF THE LD. DR, LD. COUNSEL FOR THE ASSESSEE DID NOT OBJECT BUT SUBMITTED THAT NO DOUBT FRESH EVIDENCES HAVE BEEN FILED BEFORE THE FIRST APPELLATE AUTHORITY, BUT THE LD. CIT(A) HAS DULY CONSIDERED THE SAME TO ALLOW RELI EF TO THE ASSESSEE AS WAS ALLOWABLE. 5 . WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSEE HAS FILED FRESH EVIDENCE FOR THE FIRST TIME BEFORE THE FIRST APPELLATE AUTHORITY, WHICH IS FOUND TO HAVE BEEN ACCEPTED AND CONSIDERED FOR ALLOWING RELIEF TO THE ASSESSEE IN DELETING THE IMPUGNED ADDITION MADE IN RELATION TO THE UNEXPLAINED INVESTMENT AND FROM THE ORDER OF THE LD. CIT(A), WE DO NOT FIND THAT HE HAS COMPLIED WITH THE PROVISIONS OF RULE 46A OF THE INCOME TAX RUL ES, 1962 BEFORE ACCEPTING THE FRESH EVIDENCE AND CONSIDERING THE SAME. THEREFORE, IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES IN THIS REGARD AND RESTORE TH E MATTER BACK T O THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THIS ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. I.T.A. NO . 1278 /M/ 1 4 4 6 . THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN ACCEPTING THE CLAIM OF THE ASSESSEE THAT INTEREST ON MONEY LENDING IS TO BE TAKEN AT 12%, WITHOUT APPRECIATING THE FACT THAT EVEN THE BANKS ARE CHARGING INTEREST UP TO 18%. 6.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM THE RECEIPTS AND PAYMENTS ACCOUNT, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAS CREDITED A SUM OF .7,55,200/ - ONLY AS INCOME EARNED FROM THE CHIT AMOUNT OF .2,31,38,460/ - . BY APPLYING THE RATE OF INTEREST AT 24% ON ESTIMATED BASIS WITHOUT HAVING ANY EVIDENCE B ROUGHT ON RECORD , THE ASSESSING OFFICER WORKED OUT THE INTEREST RECEIPT AND AFTER NETTING THE INTEREST EARNED BY THE ASSESSEE, BALANCE INTEREST RECEIPT WAS BROUGHT TO TAX. 6.2 ON APPEAL, AFTER CONSIDERING THE FACTS OF THE CASE, THE LD. CIT(A) DIRECTED TH E ASSESSING OFFICER TO ADOPT AND CALCULATE INTEREST RATE AT 12%. 6.3 AFTER CONSIDERING THE SUBMISSIONS OF BOTH PARTIES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS ESTIMATED THE INTEREST INCOME AT THE RATE OF 24 %, WHICH IS EXORBITANTLY HIGH, WITHOUT ANY PIECE OF EVIDENCE BROUGHT ON RECORD. SINCE THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ADOPT AND CALCULATE INTEREST RATE AT 12% AND IT WAS THE SUBMISSION OF THE LD. DR THAT EVEN THE BANKS ARE CHARGING INTEREST UP TO 18%, WE DIRECT THE ASSESSING OFFICER TO OBTAIN INTEREST RATE FROM THE STATE BANK OF INDIA AS I.T.A. NO . 1278 /M/ 1 4 5 COULD BE CHARGED IN THE RELEVANT FINANCIAL YEAR AND ADOPT THE SAME IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THE GROU ND S RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSE S . ORDER PRONOUNCED ON THE 24 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVV URU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 24 . 0 5 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.