M. KADIRVELU, SALEM V. ITO, WARD - 1 (2), SALEM

ITA 1334/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2045 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRINIRANJANI
• Keywords: Unexplained cash credit; Business income
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, C (SMC) BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NO.1334/CHNY/2019 #$% &$ / ASSESSMENT YEAR : 2010-2011 SHRI. M. KADIRVELU, NO.3/252, DHANALAKSHMI GARDEN, PUTTUR ITTERI ROAD, SALEM 636 002. VS. THE INCOME TAX OFFICER, WARD 1(2) SALEM [PAN AEZPK 6855Q] ( / APPELLANT) ( /RESPONDENT) !' '( ) * / APPELLANT BY : MS. S. SRINIRANJANI, ADVOCATE +,'( ) * /RESPONDENT BY : SHRI. AR.V. SREENIVASAN, JCIT # - ) . /DATE OF HEARING : 03-12-2019 /0&% ) . /DATE OF PRONOUNCEMENT : 04-12-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-, SALEM (CIT(A) FOR SHORT) DATED 25.02.2019 FOR THE ASSESSMENT YEAR (AY ) 2010-2011. ITA NO.1334 /2019 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1.1 THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS) DISPOSING OF THE APPEAL IN A SUMMARY MANNER WITHOUT ADVERTING TO THE MATERIALS ON RECORD AND THE SUBMISSIONS MADE IN THE PROPER PE RSPECTIVE IS WRONG AND ILLEGAL. 1.2 THE CIT(A) COMPLETING THE APPELLATE PROCEEDINGS IN A MECHANICAL MANNER WITHOUT GIVING ANY FINDINGS OF HIS OWN AND M ERELY REITERATING THE ORDER OF ASSESSMENT IS UNTENABLE AND BAD IN LAW . 2.1 THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF R S.12,17,000/- AS UNEXPLAINED CASH CREDITS U/S.69 OF THE ACT. 2.2. THE CIT(A) ERRED IN CONSIDERING THE FACT THAT THE ASSESSEE HAD OFFERED INCOME FROM LORRIES U/S. 44AE ON PRESUMPTIV E BASIS AND THAT HE IS NOT LEGALLY REQUIRED TO MAINTAIN REGULAR BOOKS O F ACCOUNT UNDER THE PROVISIONS OF SECTION 44AA OF THE INCOME TAX ACT. 2.3. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD DISCLOSED LOAN REPAYMENTS AND THE SAVINGS BANK WAS ONLY A PASSAGE WAY FOR LOAN ACCOUNT. 2.4 THE CIT(A) ERRED IN NOT CONSIDERING THE DEPRECI ATION ALLOWANCE WORKINGS ON LORRIES; SUBMITTED BY THE APPELLANT BEF ORE THE ASSESSING OFFICER. 3.1 THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE LEVY OF INTEREST U/SS. 234A & 234B. 3.2 IN ANY EVENT, THE CIT(A) FAILED TO SEE THAT THE INTEREST LEVIED IS HIGH, EXORBITANT AND ARBITRARY. 4. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL ENGAGED IN THE BUSI NESS OF HIRING AND PLYING OF LORRIES. THE RETURN OF INCOME FOR THE AY 2010-11 WAS NOT FILED BY THE ASSESSEE VOLUNTARILY U/S.139 (1) OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT). BASED ON THE INFORMAT ION RECEIVED BY THE ASSESSING OFFICER THAT ASSESSEE HAD DEPOSITS IN TWO BANK ACCOUNTS ITA NO.1334 /2019 :- 3 -: NAMELY KARNATAKA BANK, SALEM BRANCH AND SBI BANK , SALEM BRANCH FORMED AN OPINION THAT INCOME GOT ESCAPED ASSESSME NT TO TAX AND ACCORDINGLY A NOTICE U/S.148 OF THE ACT DATED 30.0 3.2017 WAS ISSUED AND SERVED ON THE ASSESSEE ON 06.04.2017. IN RESPONSE T O WHICH, THE RETURN OF INCOME WAS FILED ON 02.05.2017 ADMITTING TOTAL I NCOME OF I3,60,010/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT W AS COMPLETED BY THE INCOME TAX OFFICER, WARD 1(2) SALEM VIDE ORDER DAT ED 27.12.2017 PASSED U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT , 1961 (FOR SHORT THE ACT) AT TOTAL INCOME OF RS.15,77,010/-. WHILE D OING SO, THE ASSESSING OFFICER MADE ADDITION OF I12,17,000/- AS UNEXPLAINE D CASH DEPOSITS IN THE SAID BANK ACCOUNTS REJECTING THE EXPLANATION O F THE ASSESSEE THAT DEPOSITS WERE MADE OUT OF GROSS RECEIPTS EARNED FRO M THE BUSINESS OF HIRING AND PLYING OF LORRIES AND HE FURTHER SUBMI TTED THAT THE INCOME WAS OFFERED TO TAX UNDER PRESUMPTIVE PROVISIONS U/ S.44AE OF THE ACT AND THEREFORE NO ADDITION CAN BE MADE. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER HAD CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. THE LD. COUNSEL REITERATED THAT THE CASH DEPOSITS IN THE SAID TWO BANKS ACCOUNTS WE RE MADE OUT OF THE GROSS RECEIPTS FROM THE BUSINESS OF HIRING AND P LYING OF LORRIES. SINCE ITA NO.1334 /2019 :- 4 -: THE RETURN OF INCOME WAS FILED UNDER THE PROVISIONS OF SECTION 44AE OF THE ACT I.E. UNDER PRESUMPTIVE RATE OF TAX, THE QUE STION OF ANY FURTHER ADDITION DOES NOT ARISE. IN SUPPORT OF THIS, HE P LACED RELIANCE ON THE JUDGMENT OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. NITIN SONI (2012) 21 TAXMANN.COM 477 . 6. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAD FAILED TO DISCLOSE THESE TWO BANK ACCOUNTS AND THEREFORE THE CASH DEPOSITED IN THE SB ACCOUNTS HAS NO NEXUS WITH THE RECEIPTS FROM THE BUSINESS CARRIED ON BY HIM AND T HE ADDITION WAS MADE UNDER THE HEAD INCOME FROM OTHER SOURCES AND TH EREFORE DECISION OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF NIT IN SONI (SUPRA) RELIED UPON BY THE ASSESSEE HAVE NO APPLICATION TO THE F ACTS OF THE PRESENT CASE. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. ADMITTEDLY, ASSESSEE OFFERED INCOME FROM BU SINESS OF PLYING AND HIRING OF LORRIES UNDER PRESUMPTIVE RATE OF TAX UN DER THE PROVISIONS U/S.44AE OF THE ACT. THERE IS NO GAIN SAYING THAT ONCE THE ASSESSEE OPTS FOR PRESUMPTIVE RATE OF TAX U/S.44AE, NO FURT HER ADDITION CAN BE MADE IN RESPECT OF BUSINESS OF PLYING AND HIRING OF LORRIES. HOWEVER, APPARENTLY, IN THE PRESENT CASE, THE ADDITION RELAT ES TO UNEXPLAINED DEPOSITS MADE IN SB ACCOUNTS WHICH FALLS UNDER THE HEAD INCOME FROM OTHER SOURCES. THE EXPLANATION OF THE ASSESSEE W AS THAT CASH DEPOSITS ITA NO.1334 /2019 :- 5 -: ARE MADE OUT OF BUSINESS RECEIPTS REQUIRES TO BE ES TABLISHED BY PROVING NEXUS BETWEEN CASH DEPOSITED ON THE BANK ACCOUNTS AND BUSINESS RECEIPTS. THE ASSESSING OFFICER HAD NOT REBUTTED TH E SUBMISSIONS OF THE ASSESSEE BY COGENT FINDINGS. THEREFORE, WE REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE WHETHER OR NOT, THERE IS NEXUS BETWEEN BUSINESS RECEIPTS AND D EPOSITS MADE IN THE SB ACCOUNTS. IN THE ABSENCE OF ANY SUCH NEXUS THE ASSESSING OFFICER COULD BE JUSTIFIED IN MAKING THE ADDITION. THUS, T HIS MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DENOV O ASSESSMENT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 4TH DAY OF DECEMBER, 2019 , AT CHENNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' # /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED: 4 TH DECEMBER, 2019. KV 3 ) +.4 5' !6 5&. / COPY TO: 1 . !' '( / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; +.#< / DR 2. +,'( / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF