Shanmugam Ramasamy, CHENNAI V. ITO International Taxation 2(2), CHENNAI

ITA 1423/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1572 (ITAT-CHENNAI)
• Duration Of Justice: 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R V AROON PRASAD
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Bonafide belief; Additional evidence; Corroborative evidences; Ignorance of law; Set aside
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI , . BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.2193/CHNY/2018,1421 TO 1425/CHNY/2019 ( [ [ / ASSESSMENT YEARS: 2008-09 TO 2013-14) SHRI SHANMUGAM RAMASAMY, FLAT NO.11/C2, GROUND FLOOR, F3, DHASARATHAPURAM 4 TH STREET, SALIGRAMAM, CHENNAI 600 093. VS THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 2(2), CHENNAI. PAN: DRBPS0400K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI B. RAMAKRISHNAN, FCA / RESPONDENT BY : SHRI R.V. AROON PRASAD, JCIT /DATE OF HEARING : 06.06.2019 /DATE OF PRONOUNCEMENT : 07.06.2019 / O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THESE APPEALS OF THE ASSESSEE ARISE OUT OF THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI VIDE PROCEEDINGS IN ITA NOS. 41/CIT(A)-16/2008-09 DATED 30.01.2008 FOR THE ASSESSMENT YEAR 2008-09, ITA NOS.129/CIT(A)-16/2018-19, 130/CIT(A)-16/2018-19, 131/CIT(A)-16/2018-19 AND 132/CIT(A)- 16/2018-19, ALL DATED 20.03.2019 FOR THE ASSESSMENT YEARS 2009-10 TO 2013-14 AGAINST THE ORDERS OF ASSESSMENT PASSED BY THE ITO, INTERNATIONAL TAXATION-2(2), CHENNAI (HEREIN AFTER REFERRED TO AS LD. 2 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 AO) U/S. 143(3) R.W.S.147 OF THE INCOME TAX ACT,1961 (HEREIN AFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEARS 2008-09 TO 2012-13 AND 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2013-14. AS THE ISSUES INVOLVED IN ALL THESE APPEALS ARE IDENTICAL IN NATURE, THE SAME ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THOUGH THE ASSESSEE HAD RAISED SEVERAL GROUNDS OF APPEAL ON MERITS, ONE OF THE PRELIMINARY GROUND RAISED IS IN RESPECT OF GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY NOT GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CITIZEN OF MALAYSIA AND IS A NON-RESIDENT. HE HOLDS OVERSEAS CITIZEN OF INDIA (OCI) STATUS HAVING MALAYSIAN PASSPORT. DURING THE YEAR UNDER CONSIDERATION, THE LD.AO OBSERVED THAT THE ASSESSEE HAD MADE CASH DEPOSITS IN HIS NRO SAVINGS BANK ACCOUNT WITH BANK OF BARODA, VADAPALANI A/C. NO.29900100001423 AS TABULATED UNDER:- 3 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 ASSESSMENT YEAR CASH CREDIT IN THE BANK ACCOUNT IN RS. 2008-09 38,55,160 2009-10 1,48,36,861 2010-11 95,83,500 2011-12 2,45,25,800 2012-13 1,25,30,000 2013-14 66,51,000 NO RETURN OF INCOME WAS FILED BY THE ASSESSEE. THE LD.AO BASED ON THIS INFORMATION OBTAINED IN RESPECT OF CASH DEPOSITS SOUGHT TO REOPEN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2008-09 TO 2012-13 AND FOR ASSESSMENT YEAR 2013-14 IN THE REGULAR COURSE. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE STATED THAT HE HAD INTENDED TO START EDUCATIONAL TRUST AND HAD ACCORDINGLY COLLECTED MONIES AS LIFE MEMBERSHIP SUBSCRIPTION FROM HIS FRIENDS AND RELATIVES. IT WAS ALSO SUBMITTED THAT FORMATION OF THE TRUST WAS DELAYED AND HENCE THE MEMBERSHIP RECEIVED WERE KEPT UNDER THE CURRENT LIABILITIES IN THE BALANCE SHEET AND ACCUMULATED IN THE BANK ACCOUNT OF THE ASSESSEE. IT WAS ALSO PLEADED THAT SINCE THE ASSESSEE WAS A MALAYSIAN CITIZEN AND WAS NOT FREQUENTING INDIA, IT TOOK CONSIDERABLE TIME FOR HIM TO GET THE PROPOSED TRUST REGISTERED WHICH ULTIMATELY HAPPENED IN THE YEAR 2015. TILL SUCH TIME, THE MONEY COLLECTED TOWARDS LIFE MEMBERSHIP SUBSCRIPTION WAS RETAINED IN THE ASSESSEE'S BANK ACCOUNT. IT WAS ALSO SUBMITTED THAT TOTAL 4 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 CREDITS IN THE BANK ACCOUNT ALSO INCLUDED THE AMOUNTS WITHDRAWN BY THE ASSESSEE AND REDEPOSITED INTO THE VERY SAME ACCOUNT. THE LD. AO OBSERVED THAT THE TRUST WAS ULTIMATELY REGISTERED ONLY IN THE YEAR 2015 AND HENCE THE DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE FOR THE VARIOUS ASSESSMENT YEARS AS ABOVE ARE TO BE TAXED AS UNEXPLAINED CASH CREDIT WHICH WAS DONE ACCORDINGLY. SINCE THE ASSESSEE WAS A CITIZEN OF MALAYSIA HOLDING OCI STATUS THEREON AND IN VIEW OF THE FACT THAT HE WAS NOT FREQUENTING INDIA, THE FACT OF APPEALS TO BE FILED AGAINST THE ORDER OF ASSESSMENTS BEFORE THE LD.CIT(A) WAS MISSED OUT BY THE ASSESSEE DUE TO HIS ABSENCE IN INDIA AND ALSO DUE TO IGNORANCE OF LAW. THE ASSESSEE HAD A BONAFIDE BELIEF THAT THESE ARE NOT HIS MONIES AS HE HAD ACTED MERELY AS A POST OFFICE TO COLLECT THE LIFE MEMBERSHIP SUBSCRIPTION FROM VARIOUS FRIENDS AND RELATIVES AND PASS ON THE SAME TO THE ACCOUNT OF THE TRUST AS AND WHEN THE TRUST WAS STARTED. LATER THE ASSESSEE FILED APPEALS BEFORE THE LD.CIT(A) WITH A DELAY OF 774 DAYS FOR THE ASSESSMENT YEARS 2009-10 TO 2012-13. HOWEVER FOR THE ASSESSMENT YEARS 2008-09 & 2013-14, THE APPEAL WAS FILED BEFORE THE LD.CIT(A) IN TIME. BEFORE THE LD. CIT(A), IT WAS PLEADED THAT THE ASSESSEE HAD SUBMITTED THE DETAILS OF SUBSCRIPTIONS FOR LIFE MEMBERSHIP FEES RECEIVED FROM VARIOUS PARTIES ALONG WITH NAME, 5 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 ADDRESS, PAN CARD AND OTHER EVIDENCES SHOWING THE GENUINENESS OF THE TRANSACTIONS. THE LD. CIT(A) TOOK NOTE OF THE FACT OF THE OBSERVATION OF THE LD. AO THAT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE ASSESSMENT YEARS 2008-09 TO 2013-14 EXCEPT FOR THE ASSESSMENT YEAR 2011-12 AND FURTHER NOTICED FROM THE CASH FLOW STATEMENTS SUBMITTED DURING THE COURSE OF ASSESSMENT FOR 2013-14 THAT THE AMOUNTS COLLECTED FROM PEOPLE AS LIFE MEMBERSHIP SUBSCRIPTION FOR TRUST WERE SUBSEQUENTLY UTILIZED. THE LD. CIT(A) HOWEVER CONCLUDED THAT THE ASSESSEE WAS UTILIZING THE MONEY COLLECTED AS LIFE MEMBERSHIP FEE FOR HIS OWN PURPOSES AND ACCORDINGLY UPHELD THE ACTION OF THE LD. AO IN TREATING THOSE CREDITS AS UNEXPLAINED CASH CREDITS. THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2009-10 TO 2012-13 OBSERVED THAT THE ASSESSEE HAS NOT GIVEN PROPER REASONS FOR THE DELAY OF 774 DAYS IN PREFERRING THE APPEALS BEFORE HIM AND ACCORDINGLY DISMISSED ALL THE APPEALS AS BARRED BY LIMITATION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE PRIMARY FACTS STATED HEREIN ABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. IT IS NOT IN DISPUTE THAT THERE WERE CERTAIN 6 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE FOR THE ABOVE MENTIONED ASSESSMENT YEARS. WE FIND THAT THE ASSESSEE TRIED TO EXPLAIN THAT THESE MONIES WERE COLLECTED TOWARDS LIFE MEMBERSHIP SUBSCRIPTION FROM HIS VARIOUS FRIENDS AND RELATIVES FOR THE PROPOSED TRUST TO BE FORMED IN INDIA FOR CARRYING ON EDUCATIONAL ACTIVITY AMONG OTHER CHARITABLE OBJECTS. IT IS NOT IN DISPUTE THAT THE ASSESSEE COULD NOT PRODUCE PROPER SUPPORTING EVIDENCES TO PROVE THE BASIC THREE INGREDIENTS OF SECTION 68 OF THE ACT NAMELY 1) IDENTITY OF THE PARTIES (ALLEGED DONORS) 2) CREDITWORTHINESS OF THE PARTIES (ALLEGED DONORS) AND 3) GENUINENESS OF THE TRANSACTIONS BEFORE THE LOWER AUTHORITIES IN THE FIRST ROUND. SO ON PLAIN READING OF THE MATERIALS AVAILABLE ON RECORD THERE CANNOT BE ANY MISTAKE THAT COULD BE ATTRIBUTED IN THE ACTION OF THE LD. AO IN TREATING THE SAID SUM AS UNEXPLAINED CASH CREDITS. HOWEVER WE FIND THAT THE ASSESSEE HAD SUBMITTED VARIOUS DOCUMENTS AS ADDITIONAL EVIDENCE TOGETHER WITH THE PETITION IN TERMS OF RULE 29 OF THE INCOME TAX TRIBUNAL RULES, 1963 IN SUPPORT OF HIS CONTENTIONS. THE FOLLOWING ARE THE ADDITIONAL DOCUMENTS WHICH THE ASSESSEE HAS PLACED BEFORE US:- (I) CONSOLIDATED BANK STATEMENT OF BANK OF BARODA, VADAPALANI BRANCH, SAVINGS BANK NRO NO.29900100001423 FOR THE PERIOD 22.09.2007 TO 03.01.2015. 7 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 (II) LIST OF PARTIES FROM WHOM LIFE MEMBERSHIP SUBSCRIPTION WAS RECEIVED ALONG WITH THEIR ADDRESS AND PAN. (III) CASH BOOK (IV) CASH FLOW STATEMENT (V) LEDGER EXTRACT OF THE ASSESSEE IN M/S. GANGA EDUCATIONAL TRUST 4.1 IT IS NOT IN DISPUTE THAT THE PROPOSED TRUST WAS ULTIMATELY FORMED BY THE ASSESSEE IN THE YEAR 2015 AND REGISTRATION U/S.12AA OF THE ACT WAS ALSO OBTAINED THEREON IN THE NAME OF THE NEW TRUST WHICH WAS FORMED. THE LD. AR ALSO PLEADED BEFORE US THAT ON FORMATION OF THE TRUST, THE ASSESSEE HAD UTILIZED THE MONIES LYING WITH HIM BUT WERE APPARENTLY BELONGING TO THE NEW TRUST BY MAKING PAYMENTS TO PARTIES FOR AND ON BEHALF OF THE SAID NEW TRUST IN ACCORDANCE WITH THE OBJECTS OF THE SAID NEW TRUST. THE LD. AR STATED THAT LET ALL THESE FACTS BE VERIFIED BY THE LD. AO TO APPRECIATE THE CONTENTIONS OF THE ASSESSEE FOR THE ABOVE MENTIONED ASSESSMENT YEARS. 4.2 PER CONTRA, THE LD.DR VEHEMENTLY OBJECTED TO SET ASIDE OF ALL THESE APPEALS TO THE LD. AO, AS IN HIS OPINION, THE VARIOUS 8 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 MONIES WERE RECEIVED AND DEPOSITED IN THE ASSESSEE'S BANK ACCOUNT PRIOR TO THE FORMATION OF THE TRUST AND ASSESSEE WAS ACTUALLY ENJOYING THE MONEY FOR QUITE A LONG TIME. HE ALSO ARGUED THAT THERE IS NO EVIDENCE TO PROVE THAT THESE MONIES WERE SUBSEQUENTLY USED BY THE ASSESSEE FOR AND ON BEHALF OF THE NEW TRUST. 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE US ARE MORE FACTUAL IN NATURE AND HAD ADMITTEDLY NOT BEEN FILED BEFORE THE LOWER AUTHORITIES IN FULL AND HENCE IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE DEEM IT FIT AND APPROPRIATE TO ADMIT THESE ADDITIONAL EVIDENCES AND ALSO HOLD THAT THESE DOCUMENTS ARE TO BE EXAMINED BY THE LD. AO AFRESH TO ARRIVE AT THE APPROPRIATE CONCLUSION ON FACTS. HENCE, WE DEEM IT FIT AND APPROPRIATE TO REMIT ALL THESE APPEALS TO THE FILE OF LD. AO FOR DENOVO ADJUDICATION AND DECIDE THE SAME IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS ALSO DIRECTED TO CO- OPERATE WITH THE LD. AO AND NOT TO TAKE ADJOURNMENTS EXCEPT DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES WHICH ARE BEYOND THE CONTROL OF THE ASSESSEE. ACCORDINGLY THE VARIOUS GROUNDS RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2008-09 TO 2013-14 ARE 9 ITA NOS.2193/CHNY/2018 & 1421 TO 1425/CHNY/2019 ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 7 TH JUNE, 2019 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 7 TH JUNE, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. [ /GF ( . ) (DUVVURU RL REDDY) / JUDICIAL MEMBER ( ) (M. BALAGANESH) /ACCOUNTANT MEMBER