V.Rajendrababu, CHENNAI V. ITO, CHENNAI

ITA 141/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4839 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 131; 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 141/MDS/2017 / ASSESSMENT YEAR : 2009-2010. SHRI. V. RAJENDRABABU, NO.21, RAIN TREE APARTMENTS, D-BLOCK, 4A VENUS COLONY, 2 ND CROSS STREET, CHENNAI 600 018. [PAN AAQPV 7257G] VS. INCOME TAX OFFICER, BUSINESS WARD II (3) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. K. MEENAKSHI SUNDARAM, ITP. /RESPONDENT BY : SHRI. MURALI MOHAN, JCIT. /DATE OF HEARING : 26-04-2017 !' /DATE OF PRONOUNCEMENT : 27-04-2017 % / O R D E R ASSESSEE IN THIS APPEAL IS AGGRIEVED ON SUSTENANCE OF A ADDITION OF D22,00,000/- WHICH WAS MADE BY THE LD. ASSESSING OFFICER DISBELIEVING A CLAIM OF LOAN OF D6,00,000/- RECEIVE D FROM ONE SMT. H.RUKMANI AND D16,00,000/- RECEIVED FROM ONE SHRI . T. GURUMURTHY. ITA NO.141/MDS/2017 :- 2 -: 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSE E WAS DOING REAL ESTATE BUSINESS DURING THE RELEVANT PREV IOUS YEAR. AS PER LD. AUTHORISED REPRESENTATIVE ASSESSEE HAD ALTOGET HER TAKEN ELEVEN NEW LOANS DURING THE RELEVANT PREVIOUS YEAR AND LD. ASSESSING OFFICER HAD FOUND NINE LOANS OUT OF THESE TO BE GENUINE. AS PER LD. AUTHORISED REPRESENTATIVE, LD. ASSESSING OFFICER HA D DISBELIEVED THE CLAIM OF LOAN FROM SMT. H. RUKMANI AND SHRI. T. GUR UMURTHY FOR A REASON THAT PARTIES DID NOT APPEAR BEFORE HIM WHEN SUMMONS WERE ISSUED. AS PER LD. AUTHORISED REPRESENTATIVE SMT. RUKUMANI WAS LIVING ALONE AND DOING A BUSINESS OF PROVIDING SMALL LOAN S TO NUMBER OF BORROWERS. CONTENTION OF THE LD. AUTHORISED REPRESE NTATIVE WAS THAT SHE COLLECTED ALL SUCH LOANS AND CONVERTED IT INTO A SINGLE LOAN TO THE ASSESSEE, SINCE ASSESSEE BELONGED TO HER COMMUNITY AND WAS FOUND BY HER TO BE TRUSTWORTHY. AS PER LD. AUTHORISED RE PRESENTATIVE THE LADY WHO WAS LIVING IN CHITTOR, ANDHRA PRADESH HAD CONFIRMED THE LOAN THROUGH A LETTER SENT TO THE LD. ASSESSING OFFICER . LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT LD. ASSESSING OFFICER IF HE DISBELIEVED THE LOAN OF D6,00,000/- RECEIVED FROM SMT. RUKUMANI , OUGHT HAVE ISSUED A COMMISSION THROUGH CHITTOR INCOME TAX OFF ICER FOR VERIFICATION. 3. IN SO FAR AS LOAN OF D16,00,000/- FROM SHRI. T. GUR UMURTHY WAS CONCERNED, SUBMISSION OF THE LD. AUTHORISED REP RESENTATIVE WAS ITA NO.141/MDS/2017 :- 3 -: THAT SHRI. T GURUMURTHY WAS DOING TRANSPORT BUSINE SS IN KERALA. AS PER LD. AUTHORISED REPRESENTATIVE IT WAS DUE TO THI S REASON THAT HE DID NOT RESPOND TO THE SUMMONS ISSUED BY THE LD. ASSESS ING OFFICER. ACCORDING TO HIM, BOTH THE ABOVE LOANS WERE RECEIVE D THROUGH ACCOUNT PAYEE CHEQUES. THE IDENTITY OF THE CREDITORS STOO D ESTABLISHED, AND BOTH THESE CREDITORS, ACCORDING TO HIM, WERE HAVIN G FUNDS IN THEIR RESPECTIVE BANK ACCOUNT. THUS, AS PER THE LD. AUTHO RISED REPRESENTATIVE SOURCE OF THE CREDIT WAS ALSO PROV ED. ACCORDING TO HIM, IT WAS NOT NECESSARY FOR THE ASSESSEE TO SHO W THE SOURCE OF THE SOURCE. 4. THAT APART, AS PER THE LD. AUTHORISED REPRESENTATI VE, ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS . HENCE, ACCORDING TO HIM, SEC. 68 OF THE ACT COULD NOT HAVE APPLIED. FURTHER ACCORDING TO HIM, UNLESS AND UNTIL THE CREDITS AP PEARED IN THE BOOKS OF ACCOUNTS, AN ADDITION COULD NOT BE MADE U/S. 68 OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS. 1. SMT. SHANTHA DEVI VS. CIT (1988) 171 ITR 532 (P & H ) 2. CIT VS. BHAICHAND H. GANDHI (1983) 141 ITR 67 (BOM) 3. ANAND RAM RAITHANI VS. CIT ( 1997) 223 ITR 544 (GUJ ) 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT DESPITE SUMMONS, CONCERNED CREDITORS DID NOT APPEAR BEFORE LD. ASSESSING OFFICER. ACCORDING TO HIM, A NUMBER OF OP PORTUNITIES WERE ITA NO.141/MDS/2017 :- 4 -: GRANTED TO THE ASSESSEE TO BRING THE CREDITORS BUT ASSESSEE HAD FAILED TO BRING THEM OR SUBSTANTIATE ITS CLAIM OF LOANS. FURTHER, ACCORDING TO HIM, ONUS WAS ON THE ASSESSEE TO SHOW THE CREDITWOR THINESS OF THE PARTIES, GENUINENESS OF THE LOAN AND SOURCE FOR THE LOAN. ASSESSEE HAD NOT DISCHARGED THIS ONUS. THUS ACCORDING TO HIM, T HE ADDITIONS WERE RIGHTLY MADE AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. FIRST DEALING WIT H THE LEGAL CONTENTION TAKEN BY THE LD. AUTHORISED REPRESENTATIVE THAT AN ADDITION U/S.68 OF THE ACT COULD NOT HAVE BEEN MADE SINCE ASSESSEE WA S NOT MAINTAINING ANY BOOKS OF ACCOUNTS. DURING THE RELEVANT PREVIOU S YEAR ASSESSEE HAD RAISED ALTOGETHER LOANS AGGREGATING TO D79,19,7 94/ FROM ELEVEN PARTIES. OUT OF THIS, LD. ASSESSING OFFICER HAD AC CEPTED CREDITS EXCEPT FOR D6,00,000/- FROM SMT. H. RUKMANI AND D16,00,000 /- FROM SHRI. T. GURUMURTHY. NATURE OF THE INCOME OF THE ASSESSEE M ENTIONED BY THE LD. ASSESSING OFFICER WAS INCOME FROM HOUSE PROPE RTY AND INCOME FROM OTHER SOURCES. EVEN IN THE FINAL ASSESSMENT , ONLY THESE TWO HEADS OF INCOME WERE CONSIDERED. THUS, THOUGH ASSE SSEE HAD CLAIMED IT WAS DOING A REAL ESTATE BUSINESS, NEITHER IT HA D CLAIMED ANY PROFIT FROM THIS BUSINESS NOT ANY LOSS. IN OTHER WORDS, ASSESSEE COULD NOT ITA NO.141/MDS/2017 :- 5 -: DEMONSTRATE ANY BUSINESS TO HAVE BEEN CONDUCTED BY HIM DURING THE RELEVANT PREVIOUS YEAR. LOANS TAKEN BY THE ASSESSE E DURING THE RELEVANT PREVIOUS YEARS WERE OBVIOUSLY TO JUSTIFY I NVESTMENTS MADE WHICH INTER ALIA INCLUDED ASSETS GIVEN AS COLLATE RAL TO HDFC BANK FOR GETTING OVERDRAFTS. THUS, THOUGH LD. ASSESSING OF FICER MENTION THE ADDITION TO HAVE BEEN MADE U/S. 68 OF THE ACT, APP LICABLE SECTION WAS SEC. 69 OF THE ACT. IN OTHER WORDS THE ADDITIONS W ERE FOR UNEXPLAINED INVESTMENTS. MENTIONING A WRONG SECTION IN THE ASS ESSMENT ORDER, WHILE MAKING AN ADDITION, WOULD NOT IPSO FACTO MAKE AN ADDITION UNLAWFUL, IF THE CIRCUMSTANCES SHOW THAT SUCH AN ADDITION COULD HAVE BEEN RIGHTLY MADE UNDER ANOTHER SECTION. EVEN OTH ERWISE SUCH A MISTAKE COULD BE CURED BY SEC. 292B OF THE ACT. 7. NOW COMING TO THE CASES RELIED ON BY THE LD. AUTHOR ISED REPRESENTATIVE. IN THE CASES OF ANAND RAM RAITHANI (SUPRA) DECIDED BY THE HONBLE HIGH COURT OF GUJARAT, THE ADDITION U/S. 68 OF THE ACT WAS DONE WHERE BOOKS OF ACCOUNTS OF THE FIRM WAS CO NSIDERED AS THE BOOKS OF THE PARTNER. THE SAID CASE HAS NO RELEVAN CE ON FACTS HERE. SIMILARLY IN THE CASE OF BHAICHAND H. GANDHI (SUPRA ) DECIDED BY HONBLE BOMBAY HIGH COURT WHAT WAS HELD WAS THAT PA SSBOOK SUPPLIED BY A BANK COULD NOT BE CONSIDERED AS A BOOKS OF ACC OUNTS MAINTAINED BY AN ASSESSEE. THE CASE OF SMT. SHANTHA DEVI (SUPRA ) DECIDED BY ITA NO.141/MDS/2017 :- 6 -: HONBLE PUNJAB AND HARYANA HIGH COURT, DEALT WITH A N ADDITION FOR CASH CREDIT ENTRY FOUND IN THE BOOKS OF ACCOUNTS OF A PARTNERSHIP MADE IN THE HANDS OF A PARTNER. NONE OF THESE WOULD HE LP THE CAUSE OF THE ASSESSEE SINCE HERE THE ADDITIONS HAVE TO BE CONSI DERED AS DONE U/S. 69 OF THE ACT. 8. COMING TO THE MERITS OF THE CASE WHAT THE ASSESSEE FILED IN SO FAR AS THE TWO CREDITS IN QUESTION ARE CONCERNED , WERE LETTERS FROM THE CONCERNED CREDITORS. IT MIGHT BE TRUE THAT BOT H THESE AMOUNTS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES. THE QUESTIO N IS WHETHER A MERE CONFIRMATION AND CLAIM THAT LOAN WAS RECEIVED BY ACCOUNT PAYEE CHEQUE WOULD SATISFY THE CONDITIONS FOR ACCEPTING T HE GENUINENESS OF A LOAN TRANSACTION. IN THE CASE OF SMT. H. RUKMANI SOURCE GIVEN WAS VAGUE. IN THE CASE OF SHRI. T. GURUMURTHY THERE WA S NOTHING ON RECORD TO SHOW THAT ANY RETURNWAS FILED BY SHRI.T. GURUMURTHY OR ANY INCOME WAS EARNED BY SHRI. T. GURUMURTHY FROM HIS TRANSPORT BUSINESS. ASSESSEE WAS GIVEN NUMBER OF OPPORTUNITI ES FOR PROVING THE CREDIT CLAIMED BY SHRI. T. GURUMURTHY. OBSERVATION S OF THE LD. ASSESSING OFFICER ON THE OPPORTUNITIES GIVEN TO THE ASSESSEE AND HIS RESPONSE IS REPRODUCED HEREUNDER:- 'YOUR ATTENTION IS INVITED TO THE ABOVE REFERRED LE TTERS, VIDE YOUR LETTER DATED 07-12-2011, TIME HAS BEEN SOUGHT TO SUBMIT ITA NO.141/MDS/2017 :- 7 -: THE EVIDENCES IN RESPECT OF LOAN RECEIVED FROM SRI GURUMURTHY, IN RESPECT OF THIS IT IS HEREBY INFORME D THAT THE CREDIT VERIFICATION PROCESS WAS STARTED VIDE OUR LE TTER DATED 01-11-2011 ITSELF, THE ONUS OF RESPONSIBILITY OF PROVING THE GENUINENE SS IS VESTED WITH THE ASSESSEE, HOWEVER, CONSIDERING YOUR LETTER DATED 1-11-2011, TIME WAS GRANTED UPTO 05-12-2011. NECESSARY EFFORTS COULD HAVE BEEN TAKEN TO PRODUCE THE EVIDENCES TO THIS OFFICE IN SUPPORT OF LOAN RECEIVE D FROM GURUMURTHY. HOWEVER, CONSIDERING YOUR REQUEST TIME IS GRANTED U P TO 15- 12-2011 TO SUBMIT THE EVIDENCES IN RESPECT OF LOAN RECEIVED FROM GURUMURTHY, FAILING WHICH THE LOAN WILL BE TRE ATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME - TAX ACT AND THE TIME BARRING ASSESSMENT FOR THE A-YEAR 2009-2010 WILL BE COMPLETED' TILL DATE THE ASSESSEE HAS NOT PRODUCED ANY EVIDENC E IN RESPECT OF LOAN RECEIVED FROM SRI GURUMURTHY. HENCE , THE LOAN OF RS 16,00,000/- RECEIVED FROM GURUMURTHY IS TREATED AS UNEXPLAINED CASH CREDIT AND TREATED AS INCOME FO R THE ASSESSMENT YEAR 2009-2010 U/S 68 INCOME TAX ACT. FURTHER THE ASSESSEE HAS RECEIVED RS 6,00,000/- FROM MRS RUKMANI, TO VERIFY THE GENUINENESS OF THE LOAN TWO SUMMONS U/ S 131 WERE ISSUED TO HER. BUT BOTH THE SUMMONS WERE RETURNED UNSERVED. HENCE THE LATEST AD DRESS OF SMT. RUKMANI WAS OBTAINED FROM THE ASSESSEE. SUM MON WAS ISSUED TO THE NEW ADDRESS AND SERVED ON HER. IN RESPONSE TO OUR SUMMONS, THE ASSESSEE SUBMITTED HIS REPLY WHICH IS REPRODUCED BELOW IN MY OPINION, THE FACTS CLEARLY ESTABLISHED THAT A SSESSEE WAS UNABLE TO DISCHARGE THE PRIMARY ONUS RESTING ON IT, FOR PR OVING THE GENUINENESS OF THE TRANSACTIONS, CREDIT WORTHINESS OF THE CREDITOR. JUST BECAUSE MONEY WAS RECEIVED BY CHEQUES FROM BANK WOU LD NOT BE ITA NO.141/MDS/2017 :- 8 -: SUFFICIENT TO PROVE THE CREDIT WORTHINESS OF THE PA RTY OR THE GENUINENESS OF THE TRANSACTIONS. IN THE CIRCUMSTA NCES, I AM OF THE OPINION THAT THE ADDITIONS WERE RIGHTLY SUSTAINED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEALS). I DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIE S. 9. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DISMIS SED. ORDER PRONOUNCED ON THURSDAY, THE 27 TH DAY OF APRIL, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:27 TH APRIL, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF