DURAI PUGAZHENTHI, SALEM V. ACIT CENTRAL CIRCLE, SALEM

ITA 1329/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3816 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Set aside
• Section: 69B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALB(SMC) BENCH: CHENNAI (CAMP AT COIMBATORE) . . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ I.T.A.NO.1329/CHNY/2019 ( / ASSESSMENT YEAR: 2007-08) SHRI DURAI PUGAZHENTHI, NO.1/103, BRINDAVAN ROAD, 3 RD CROSS, FAIRLANDS, SALEM - 636 016. VS THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SALEM. PAN: AENPP 5237R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI G.BASKAR, ADVOCATE /RESPONDENT BY : SHRI A.R.V. SREENIVASAN, ADDL. CIT /DATE OF HEARING : 03.02.2020 ! /DATE OF PRONOUNCEMENT : 03.02.2020 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-16, CHE NNAI DATED 12.02.2019 AND PERTAINS TO THE ASSESSMENT YEAR 2007 -08. 2. SHRI G. BASKAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ONLY ISSUE ARISING IN THIS APPEA L IS CONFIRMING THE 2 ITA NO.1329/CHNY/2019 ADDITION OF RS. 22,50,000/- U/S. 69B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). ACCORDING TO THE LD. REPRESENTATIVE, T HERE WAS A SEARCH AT THE PREMISES OF THE ASSESSEE ON 10.02.2012. DURING THE COURSE OF SEARCH OPERATION, AN AGREEMENT OF SALE DATED 09.01.2007 EN TERED INTO BETWEEN THE ASSESSEE AND ONE MR. PONGOPAL WAS FOUND. AS PE R THE AGREEMENT DATED 09.01.2007, THE ASSESSEE AGREED TO PURCHASE 1 1 RESIDENTIAL FLATS FROM PONRAM PROMOTERS FOR TOTAL CONSIDERATION OF RS . 1,10,00,000/- AND THE ASSESSSEE HAS PAID RS. 40,00,000/- AS ADVANCE I N CASH. THE ASSESSING OFFICER (AO) DOUBTED THE SOURCE OF PAYMEN T OF RS. 22.50 LAKHS OUT OF THE ADVANCE OF RS. 40 LAKHS. THE ASSESSEE E XPLAINED BEFORE THE AO THAT A SUM OF RS. 6.50 LAKHS WAS RECEIVED AS ADV ANCE IN THE YEAR 2003. ANOTHER SUM OF RS. 1 LAKH WAS PAID FROM THE ACCUMULATIVE INCOME OF THE EARLIER YEARS THE ASSESSEE HAS ALSO HAVE AGR ICULTURAL INCOME FROM HUF TO THE EXTENT OF RS. 8.50 LAKHS. THE ASSESSEE HAS RECEIVED RS. 6.50 LAKHS FROM HIS WIFE FROM AGRICULTURAL INCOME. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO SINCE THERE WAS A CONTRADICTORY STATEMENT RECORDED U/S. 131(1A) OF THE ACT. THE AS SESSEE APPEARS TO HAVE EXPLAINED THAT THE SOURCE FOR PURCHASE OF RESI DENTIAL FLAT WAS FROM BUSINESS AND HUF INCOME AND WIFES INCOME THEREFORE , THE AO MADE AN ADDITION. REFERRING TO THE ASSESSMENT ORDER, THE L D. REPRESENTATIVE 3 ITA NO.1329/CHNY/2019 SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE SOURC E FOR DEPOSIT THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING ADD ITION OF RS. 22.50 LAKHS. 3. ON THE CONTRARY, SHRI A.R.V. SREENIVASAN, THE LD . DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS TO E STABLISH THE IDENTITY OF CREDITORS, THE GENUINENESS OF THE TRANSACTION AND C REDITWORTHINESS OF THE CREDITOR. IN THIS CASE, THE ASSESSEE HAS EXPLAINED THE IDENTITY OF THE CREDITORS HOWEVER, THE GENUINENESS OF THE TRANSACTI ON WAS NOT ESTABLISHED. THE ASSESSEE COULD NOT EVEN GIVE THE ADDRESS OF THE CREDITORS EVEN THOUGH HE CLAIMS THAT THEY ARE CLOSE RELATIVES. THEREFORE, THE LD. CIT(A) WAS RIGHTLY CONFIRMED THE ADDITION M ADE BY THE AO. 4. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASSE SSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE ASSESSEE HAS EXPLAINED BEFORE THE ASSESSING OFFICER, THE SOURCE OF DEPOSIT OF RS. 22.50 LAKHS. THE AO IN FA CT REPRODUCED THE EXPLANATION OF THE ASSESSEE AT PARA 6 OF HIS ORDER. SINCE, THE AO DOUBTS THE GENUINENESS OF THE TRANSACTION, THE CIT(A) CONF IRMED THE ADDITION MADE BY THE AO. IT IS NOT KNOWN HOW ONE COULD ESTA BLISH THE AGRICULTURAL INCOME. IN THIS COUNTRY AGRICULTURE IS AN UNORGANI ZED SECTOR. EXPECTING EVIDENCE FROM THE AGRICULTURIST FOR THEIR AGRICULTU RE INCOME IS SOMETHING 4 ITA NO.1329/CHNY/2019 IMPOSSIBLE ONE. SO LONG AS THE AGRICULTURE ACTIVI TY IN THIS COUNTRY IS UN- ORGANIZED AND IT IS SOLD IN THE UN-REGULATED MARKET , NO ONE COULD ESTABLISH THE AGRICULTURE INCOME. MOREOVER, THE INVESTMENT I S ONLY 22.50 LAKHS. IN THE PRESENT ECONOMIC SCENARIO, WHICH PREVAILS IN OU R COUNTRY EVEN A SMALL AGRICULTURAL LABOUR WOULD EARN RS. 500 TO RS. 1,000 /- IN DAY. A PERSON EMPLOYED IN HAIR CUTTING SHOP OR IN ROAD SIDE RESTA URANT ALSO EARN RS. 1,000/- TO 2,000/- PER DAY. THIS ECONOMIC FACTOR CA NNOT BE DOUBTED BY ANYONE IN THIS COUNTRY. TAKING INTO CONSIDERATION O F THE ECONOMIC SITUATION PREVAILS IN THE COUNTRY, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THERE IS NO JUSTIFICATION FOR MAKING ADDITION OF RS. 22.5 0 LAKHS. ACCORDINGLY, THE ORDERS OF BOTH THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF RS. 22.50 LAKHS IS DELETED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD FEBRUARY, 2020 AT CHENNAI (CAMP AT COIMBATORE). SD/- ( (( ( . .. . . .. . . . . . ) )) ) (N.R.S. GANESAN) / JUDICIAL MEMBER /CHENNAI, /DATED, THE 03 RD FEBRUARY, 2020. EDN, SR. PS 5 ITA NO.1329/CHNY/2019 '# $%&% /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ) ( )/CIT(A) 4. ) /CIT 5. %*+ , /DR 6. +