ITO, CHENNAI V. T.Chinnadurai, CHENNAI

ITA 1426/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7406 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M GOPINATH
• Keywords: Unexplained cash credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO.1426/CHNY/2017 / ASSESSMENT YEAR : 2012-2013. INCOME TAX OFFICER, NON CORPORATE WARD 15(1) CHENNAI 600 034 VS. SHRI. T. CHINNADURAI, A7, VI CROSS STREET, INDIRA NAGAR, ADAYAR, CHENNAI 600 020. [PAN AEEPC 9133N] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. SHAJI P. JACOB, ADDL. CIT $%! ' # /RESPONDENT BY : SHRI. M. GOPINATH, ADVOCATE & ' ' () /DATE OF HEARING : 10-07-2018 *+ ' () /DATE OF PRONOUNCEMENT : 10-07-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: IN THIS APPEAL FILED BY THE REVENUE, WHICH IS DI RECTED AGAINST AN ORDER DATED 15.02.2017 OF COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHENNAI, IT HAS TAKEN ALTOGETHER THRE E GROUNDS OF WHICH GROUNDS 1 & 3 ARE GENERAL, NEEDING NO SPECIFIC ADJ UDICATION. ITA NO.1426/CHNY/2017 :- 2 -: 2. GROUND NO.2 IS REPRODUCED HEREUNDER:- L.THE ORDER OF THE LD CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.THE LD CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.1,02,06,929/- U/S 68 OF THE IT ACT. 2.1 THE LD CIT(A) ERRED IN DIRECTING THE AO TO DELE TE THE ADDITION OF 11,88,000/- - ON ACCOUNT OF LOW PERSONAL DRAWINGS. 2.2) THE LD CIT(A) ERRED IN DIRECTING THE AO TO DEL ETE THE ADDITION FOR TAXES PAID FOR RS.13, 17,620/-. 2.3) THE LD CIT(A) ERRED IN DIRECTING THE AO TO DEL ETE THE ADDITION OF RS.1,27,12,549/- MADE U/S 68 OF THE IT ACT. 2.4) THE LD CIT(A) ERRED IN DELETING THE EXCESS CLA IM OF OPENING CAPITAL EVEN THOUGH ASSESSEE FAILED TO SUBSTANTIATE THE SAME AND EXISTENCE OF SUCH OPENING CAPITAL. 2.5)THE LD CIT(A) GROSSLY ERRED IN NOT FOLLOWING TH E BINDING DECISION OF THE JURISDICTIONAL HIGH COURT I N C.PAKIRASAMY VS.ACIT (315 ITR 293) ON IDENTICAL CIRCUMSTANCES. 2.6) THE LD CIT(A) ERRED IN HOLDING THAT BALANCE SH EET OF THE ASSESSEE CANNOT BE RELIED UPON WHEN ASSSESSEE FURNISHED SUCH SIGNED BALANCE SHEET BEFORE BANK AUTHORITIES AS WELL AS ENCLOSED WITH THE INCOME TAX RETURN FILED UNDER VERIFICATION. 2.7) THE LD CIT(A) ERRED IN HOLDING THAT THE OPENIN G CAPITAL IS ONLY A NOTIONAL ENTRY AND IT IS NOT REFL ECTED AS ASSETS IN BALANCE SHEET WHEN THE BALANCE SHEET SHOW S CORRESPONDING ASSETS SUCH AS 'INVESTMENTS' AND 'LOA N AND ADVANCES' AND WHETHER SUCH FINDINGS OF CIT(A) I S PERVERSE BEING CONTRARY TO FACTS ON RECORD. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING. IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. FACTS APROPOS ARE THAT ASSESSEE AN INDIVIDUAL HAVI NG INCOME FROM REAL ESTATE, INCOME FROM OTHER SOURCES AND AGR ICULTURAL INCOME, ITA NO.1426/CHNY/2017 :- 3 -: HAD FILED HIS RETURN FOR THE IMPUGNED ASSESSMENT Y EAR DISCLOSING INCOME OF B2,51,033/-. FROM THE BALANCE SHEET AS ON 31.03.2012 FILED BY THE ASSESSEE, IT WAS NOTED BY THE LD. ASSESSING OFFICER THAT ASSESSEE HAD SHOWN A CAPITAL OF B7,49,13,460/-. THE SAID AMOUNT B7,49,13,460/- WAS REFLECTED IN THIS BALANCE SHEET AS UNDER:- OPENING CAPITAL AS ON 01.04.2011 B7,46,48,917 ADD: NET PROFIT FOR THE YEAR B5,20,950 LESS: DRAWINGS B2,56,407 B7,49,13,460 ASSESSEE WAS REQUIRED TO EXPLAIN THE SOURCE FOR THE CAPITAL OF B7,46,48,917/- AS ON 01.04.2011. REPLY OF THE ASSE SSEE READ AS UNDER:- 'THE ASSESSEE HAS BEEN MAINTAINING SINGLE ENTRY SYS TEM OF BOOK KEEPING FOR MORE THAN A DECADE AND HIS INCOME TAX R ETURNS WERE FILED AFTER PREPARATION OF INCOME AND EXPENDIT URE ACCOUNT TILL FINANCIAL YEAR 2010-11. WITH THE INTENTION OF AVAILING BANK LOAN THE ASSESSEE REQUESTED THE AUTHORISED REPRESEN TATIVE TO PREPARE AND SUBMIT TO THE BANK A BALANCE SHEET FOR THE YEAR ENDING 31103/2012. THUS A BALANCE SHEET WAS FOR THE FIRST TIME DRAWN LISTING OUT ALL THE MOVABLE AND IMMOVABLE PRO PERTIES OF THE ASSESSEE ON THE ASSETS SIDE AND KNOWN LIABILITY DUE TO MR SIVAKUMAR WAS DEDUCTED TO ARRIVE AT THE CAPITAL BALANCE AS ON 3110312012. FROM SUCH ARRIVED AMOUNT DUE ADJUSTMENTS WERE MADE FOR NET PROFITS AND DRAWINGS FOR THE YEAR TO ARRIVE AT THE OPENING CAPITAL AS ON 01.04.2011 AMOUNTING TO RS 7,46,48,9 17/- ITA NO.1426/CHNY/2017 :- 4 -: THIS OPENING CAPITAL IS A CUMULATIVE SUM ACCUMULATE D OVER A PERIOD OF TIME AND IT HAS BEEN DEMONSTRATED BY WAY OF A DETAILED WORKING ENCLOSED' APART FROM THE ABOVE REPLY, ASSESSEE ALSO GAVE A TA BLE (HEREAFTER REFERRED AS THE TABLE) FOR JUSTIFYING THE OPENI NG CAPITAL OF B7,46,48,917/-. THE SAID TABLE READ AS UNDER:- FY INCOME DECLARED AGRICULTURAL INCOME CAPITAL GAINS DIVIDEND TOTAL OPENING BALANCE 1,18, 42,598 2003 - 04 2,06,270 98,600 14,66,274 ...... 17,71,144 2004 - 05 2,75,876 ...... 38,96,405 ...... 41,72,281 2005 - 06 3,31,853 ...... 49,32,670 ...... 52,64,523 2006 - 07 1,69,954 ...... ...... 14,988 1,84,942 2007 - 08 27,62,260 1,00,000 ...... 5,396 28,6 7,656 2008 - 09 5,49,667 1,25,000 ...... 5,995 6,80,662 2009 - 10 9,85,550 1,25,000 4,60,00,000 ...... 4,71,10,550 2010 - 11 6,29,562 1,25,000 ...... ...... 7,54,562 TOTAL 7,46,48,918 4. LD. ASSESSING OFFICER DID NOT DOUBT THE CLAIM OF AG RICULTURAL INCOME, NOR THE CLAIM OF CAPITAL GAINS, NOR THE CLA IM OF DIVIDEND AS APPEARING IN THE TABLE FURNISHED BY THE ASSESSEE. HOWEVER, HE REQUIRED THE ASSESSEE TO SUBSTANTIATE THE OPENING B ALANCE OF ITA NO.1426/CHNY/2017 :- 5 -: B1,18,42,598/- AS ON 01.04.2003, SHOWN IN SUCH TABL E. ASSESSEE EXPLAINED THE SAID AMOUNT OF B1,18,42,598/- AS FOL LOWS:-- SL.NO PARTICULARS AMOUNT (B) 1 LAND AT PALLIKARANAI 4,89,562 2 LAND AT KARAPAKKAM 4,51,527 3 LAND AT SHOLINGANALLUR 6,84,080 4 CASH AT BANK 10,500 5 VALUE OF AGRICULTURAL PRODUCE, FOOD GRAIN STOCK AND CASH IN HAND. 1,02,06,929 TOTAL 1,18,42,598 LD. ASSESSING OFFICER BELIEVED THE CLAIM OF THE AS SESSEE WITH REGARD TO VALUE OF THE LAND AT PALLIKARANAI, KARAPAKKAM AND SHOLINGANALLUR BUT REFUSED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT B1 ,02,06,929/- WAS CASH AND VALUE OF AGRICULTURAL PRODUCE AND FOOD G RAIN STOCK AS ON 01.04.2003. HE HELD THAT A SUM OF B1,02,06,929/- OU T OF THE OPENING CAPITAL OF B7,49,48,917/- AS ON 01.04.2011 SHOWN BY THE ASSESSEE STOOD UNEXPLAINED. AN ADDITION OF B1,02,06,929/- W AS MADE U/S.68 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 5. LD. ASSESSING OFFICER ALSO FOUND FROM THE TABLE REP RODUCED AT PARA 3 ABOVE THAT ASSESSEE HAD NOT SHOWN ANY DRAWIN GS FOR MEETING HIS PERSONAL EXPENSES DURING THE FINANCIAL YEARS 2 003-04 TO 2011-12. ITA NO.1426/CHNY/2017 :- 6 -: LD. ASSESSING OFFICER FURTHER NOTED ASSESSEE HAD AL SO NOT SHOWN ANY SOURCE FOR THE TAXES PAID DURING THESE YEARS EXCEP T FOR TAX OF B2,56,407/- PAID FOR THE IMPUGNED ASSESSMENT YEAR. THE SHORTFALL IN DRAWINGS AND TAXES PAID WERE WORKED OUT BY THE LD. ASSESSING OFFICER AS UNDER:- FOR THE FY ADDITION FOR DRAWINGS ADDITION FOR TAXES PAID 2003 - 04 84,000 ...... 2004 - 05 96,000 80,000 2005 - 06 1,08,000 6,347 2006 - 07 1,20,000 1,193 2007 - 08 1,32,000 2,00,000 2008 - 09 1,44,000 78, 993 2009 - 10 1,56,000 8,06,262 2010 - 11 1,68,000 1,44,825 2011 - 12 1,80,000 ...... TOTAL 11,88,000 13,17,620 LD. ASSESSING OFFICER TOOK A VIEW THAT, IF THESE A MOUNTS WERE ALSO CONSIDERED AS OUTFLOWS FOR THE RESPECTIVE YEARS, F UNDS AVAILABLE FOR EXPLAINING THE CAPITAL OF B7,46,48,917/- AS ON 01.0 4.2011 SHOWN BY THE ASSESSEE, WOULD GO DOWN BY LIKE AMOUNT. ADDITI ONS OF B11,88,000/- AND B13,17,620/- WERE ALSO MADE. AGGR EGATE ADDITIONS CAME TO B1,27,12,549/-. 6. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). ARGUMENT OF THE ASSESSEE ITA NO.1426/CHNY/2017 :- 7 -: WAS THAT THE AMOUNT OF B1,18,42,598/-, WAS OPENING CAPITAL AS ON 01.04.2003, AND COULD NOT BE CONSIDERED FOR TAXAT ION FOR THE IMPUGNED ASSESSMENT YEAR. SIMILARLY, AS PER THE AS SESSEE NOTIONAL DRAWINGS FOR EARLIER YEARS AND TAXES PAID FOR EARLI ER YEARS COULD NOT HAVE BEEN CONSIDERED FOR ADDITION FOR THE IMPUGNED ASSESSMENT YEAR SINCE THESE DID NOT RELATE TO THE RELEVANT PREVIOUS YEAR. CONTENTION OF THE ASSESSEE WAS THAT BALANCE SHEET AS ON 31.03.201 2 RELIED ON BY THE LD. ASSESSING OFFICER FOR MAKING THE ADDITION WAS PREPARED FOR AVAILING A BANK LOAN, LISTING THEREIN ALL THE MOVA BLE AND IMMOVABLE PROPRIETIES HELD BY IT. AS PER THE ASSESSEE, OPENI NG CAPITAL WAS NOTHING BUT THE CUMULATIVE SUM OF THE AGGREGATE VA LUE OF INVESTMENTS. 7. LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONS IDERING THE ABOVE SUBMISSIONS HELD THAT THE SUM OF B1,02,0 6,929/- WAS NOT INTRODUCED BY THE ASSESSEE EITHER IN THE FORM OF CA SH OR IN HIS BANK ACCOUNT DURING THE RELEVANT PREVIOUS YEAR. AS PER THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OPENING BALANC E REPRESENTED THE AGGREGATE VALUE OF THE ASSETS AND THE BALANCE S HEET WHICH WAS PREPARED FOR THE PURPOSE OF BANK LOAN MIGHT NOT PR ESENT EXACT FACTS AND FIGURES. FURTHER, AS PER THE LD. COMMISSIONER OF INCOME TAX (APPEALS), INADEQUATE DRAWINGS OF B11,88,000/- FO R EARLIER YEARS WORKED OUT BY THE LD. ASSESSING OFFICER WAS PURELY BASED ON ITA NO.1426/CHNY/2017 :- 8 -: ASSUMPTIONS AND HAD NO JUSTIFICATION. LD. COMMISSI ONER OF INCOME TAX (APPEALS) ALSO REACHED A FINDING THAT THE ADDIT ION OF B13,17,620/- MADE FOR DEFICIT DUE TO TAXES PAID DURING THE EARL IER YEARS, WAS ALSO NOT JUSTIFIED. THUS, HE DELETED THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER. FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AS IT APPEARS AT PARAS 16 TO 18 OF HIS ORDER IS REPRODUCE D HEREUNDER:- 16. I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AND THE SAME ARE FOUND ACCEPTABLE. FIRST OF ALL, THE FOREMOST THING TO BE NOTED IS THA T WHETHER THIS AMOUNT OF RS.1,02,06,929/-WAS EVER INTRODUCED IN THE FORM OF CASH IN THE BOOKS OF ACCOUNTS OF THE APPELLANT DURING THE RELEVANT YEAR 'UNDER CONSIDERATION OR WHETHER IT WAS DEPOSITED IN THE BANK ACCOUNT OF THE APPELLANT IN THAT RELEVANT YEAR. IF THE SAME IS NOT THERE, THEN THE TAXABILITY OF SOMETHING WHICH IS NOT EXISTING DOES NOT ARISE. AS THE BALANCE SHEET WAS DRAWN FOR THE PURPOSES OF BANK LOAN, THE CAPITAL FORMULATION IN THE IMPUGNED BALANCE SHEET WAS BASED ON THE ASSETS AND THE LIABILITIES HELD BY THE APPELLANT PRIOR TO THE RELE VANT ASSESSMENT YEAR UNDER CONSIDERATION. UNDER THESE CIRCUMSTANCES, THE BALANCE SHEET MAY NOT PRESENT EXACT AND CORRECT FACTS AND FIGURES WOULD RESULT IN INCORRECT ASSESSMENT OF TAXABLE INCOME. HENC,E I AM OF THE CONSIDERED OPINION THAT THERE WAS NO UNEXPLAINED CASH CREDIT AVAILABLE WITH THE APPELLAN T DURING THE YEAR UNDER CONSIDERATION WHICH THE ASSESSING OFFICER COULD HAVE TAXED U/S.68 OF THE AC T. ACCORDINGLY, THE ADDITION OF 1,02,06,929/- IS DELETED. 17. THE OTHER ADDITION IS ON ACCOUNT OF UNEXPLAINED DRAWINGS OF RS.11,88, 000/-. THE AO HAS ONCE AGAIN RELIED ON THE IMPUGNED BALANCE SHEET OF THE APPELLA NT FOR THE RELEVANT YEAR UNDER CONSIDERATION AND OBSER VED THAT THE APPELLANT HAD NOT REDUCED THE AMOUNT OF PERSONAL DRAWINGS AND D TAXES PAID DURING THE CORRESPONDING PERIOD FROM THE SAID ACCUMULATED CAPI TAL. THE AO ALSO NOTICED THAT THE DRAWINGS OF RS.2.56,407/- ITA NO.1426/CHNY/2017 :- 9 -: ADMITTED BY THE APPELLANT FOR THE RELEVANT YEAR UN DER CONSIDERATION CONSISTED OF TAXES PAID ONLY. IN VIE W F THIS, THE AO HELD THAT THE PERSONAL DRAWINGS AND TAXES PAID WHIC H WERE NOT CONSIDERED BY THE APPELLANT, REPRESENTED MONEY ALREADY SPENT AND NOT AVAILABLE AS CAPITAL -A S ON 31/03/2012. HENCE, ACCORDING TO THE AO, TO THE EXTENT OF DRAWINGS AND TAXES PAID IN THE PREVIOUS ASSESSMENT YEARS, THE APPELLANT DID NOT EXPLAIN THE SOURCE OF CAPITAL. BASED ON THIS ASSUMPTION, THE AO CALCULATED THE PERSONAL DRAWINGS AT RS.11,88,000/-FOR THE PREVIOUS YEARS STARTING FROM THE F.Y 2003-04 TILL THE F.Y. UNDER CONSIDERATION. ACCORDINGLY, TO THIS EXTENT OF RS.11,88,OOO/-, IT WAS TREATED AS UNEXPLAINED CASH CREDIT ULS 68 OF THE ACT WHICH WAS ADDED BACK TO THE INCOME OF THE ASSESSEE 18. I HAVE CONSIDERED THE ABOVE FINDINGS OF THE A O AND THE SAME ARE NOT ACCEPTABLE. THE ABOVE ASSUMPTIONS AND THE CORRESPONDING CALCULATIONS CARRIED OUT BY T HE AO DO NOT SUBSTANTIATE HIS FINDINGS. AS ALREADY DISCUSSED IN DETAIL AT PARA 16 ABOVE, THE IMPUGNED BALANCE SHEET DOES NOT REFLECT CORRECT AND OBJECTIV E FACTS AND FIGURES WHICH COULD BE RELIED ON FOR EFFE CTING SUCH ADDITIONS. THEREFORE, IT WILL BE WRONG ON THE PART OF THE AO TO HOLD THAT THIS AMOUNT OF RS.11,88,OOO/-DI D NOT SUFFICE THE OPENING CAPITAL OF THE APPELLANT. H ENCE, THE SAME CANNOT BE TREATED AS UNEXPLAINED CASH CRED IT FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE AD IS DIRECTED TO DELETE THE ADDITION OF 11,88,000/- 8. NOW BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) SUBMITTED THE BALANCE SHEET FILED BY THE ASSESSEE AS A PART OF ITS RETURN FOR ASSESSMENT YEAR 2011-12, REFLECTE D PROPRIETORS CAPITAL AS NIL. AS PER THE LD. DEPARTMENTAL REPRESENTA TIVE, SUCH BALANCE SHEET WAS AN INTEGRAL PART OF THE RETURN FOR THE I MMEDIATELY PRECEDING ASSESSMENT YEAR 2011-2012, FILED BY THE ASSESSEE. CONTENTION OF THE ITA NO.1426/CHNY/2017 :- 10 -: LD. DEPARTMENTAL REPRESENTATIVE WAS THAT THE CAPIT AL HAD INCREASED TO B7,46,48,918/-, IN ONE DAY. VIZ CAPITAL OF ZERO AS ON 31.03.2011 HAD INCREASED TO B7,46,48,917/- AS ON 01.04.2011. DESP ITE THIS, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, THE LD. ASSESSING OFFICER HAD ACCEPTED THE EXPLANATION FOR THE SOURCE GIVEN BY TH E ASSESSEE EXCEPT FOR THE SUM OF B1,27,12,549/-. ACCORDING TO HIM, L D. ASSESSING OFFICER WAS FAIR ENOUGH TO ACCEPT THE CLAIM OF AGRICULTURAL INCOME AND CAPITAL GAINS FOR EARLIER YEARS. HOWEVER, ASSESSEE AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, COULD NEVER GIVEN ANY REASONABLE E XPLANATION FOR THE SUM OF B1,02,06,929/- OUT OF THE OPENING BALANCE C LAIMED ON 01.04.2003. ASSESSEE HAVING FILED ITS BALANCE SHEE T ALONGWITH ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, LD. COMMISSIONER OF INCOME TAX (APP EALS) FELL IN GROSS ERROR IN HOLDING THAT SUCH BALANCE SHEET DID NOT P RESENT THE CORRECT FIGURES. CONTENTION OF THE LD. DEPARTMENTAL REPRESE NTATIVE WAS THAT THE OPENING BALANCE CLAIMED BY THE ASSESSEE ON 01. 04.2003 WAS A FICTITIOUS ONE. ONCE THIS WAS IGNORED, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, THERE WAS A DEFICIT OF B1,02,06,9 29/- IN THE OPENING BALANCE OF B7,46,48,917/- AS ON 01.04.2011 CLAIMED BY THE ASSESSEE. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, DIFFER ENCE IN OPENING BALANCE, TO THE EXTENT NOT EXPLAINED BY THE ASSESSE E, COULD BE ADDED ITA NO.1426/CHNY/2017 :- 11 -: U/S.68 OF THE ACT, BY VIRTUE OF THE JUDGMENT OF HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C. PACKIRISAMY VS. ACIT, 315 ITR 293 . 9. VIZ-A-VIZ, ADDITION MADE FOR DEFICIT ARISING DUE T O EXPENDITURE INCURRED FOR PERSONAL NEEDS AND PAYMENT OF TAXES FOR EARLIER YEARS, CONTENTION OF THE LD. DEPARTMENTAL R EPRESENTATIVE WAS THAT ASSESSEE HIMSELF HAD NOT SHOWN ANY SOURCE FOR SUCH AMOUNTS. IF THESE AMOUNTS WERE CONSIDERED AS PAID OUT OF THE IN COME DECLARED BY THE ASSESSEE FOR EARLIER YEARS, AS PER THE LD. DEPA RTMENTAL REPRESENTATIVE, THERE WOULD BE A FURTHER DEFICIT OF B25,05,620/- IN THE OPENING CAPITAL AS ON 01.04.2011. AS PER THE L D. DEPARTMENTAL REPRESENTATIVE, LD. COMMISSIONER OF INCOME TAX (APP EALS) HAD WITHOUT ANY RHYME AND REASON, DELETED THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER. 10. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) SUBMITTED THAT OPENING CAPITAL AS ON 01.04.2003 COULD NOT BE A SUBJECT MATTER OF ADDITION FOR IMPUGNED ASSESSMENT YEAR. AS PER TH E LD. AUTHORISED REPRESENTATIVE, VALUE OF THE ASSETS HELD BY THE AS SESSEE AS ON 31.03.2012 AFTER DEDUCTING THE OUTSIDE LIABILITIES WAS SHOWN BY IT AS ITS CAPITAL. CONTENTION OF THE LD. AUTHORISED REPR ESENTATIVE WAS THAT ASSETS IN THE BALANCE SHEET WERE ALL ACQUIRED IN EA RLIER YEARS AND HENCE THE OPENING BALANCE DID NOT REPRESENT ANY INC OME OF THE ITA NO.1426/CHNY/2017 :- 12 -: IMPUGNED ASSESSMENT YEAR. AS PER THE LD. AUTHORIS ED REPRESENTATIVE, ASSESSEE OWNED 20 TO 25 ACRES OF AGRICULTURAL LAND WITH SUGARCANE AND PADDY CULTIVATION. FURTHER, AS PER THE LD. AUT HORISED REPRESENTATIVE, ASSESSEE WAS IN GULF WORKING AS FIT TER AND LABOUR CONTRACTOR DURING THE PERIOD 1990 TO 2000 AND HAD THE WHEREWITHAL TO ACQUIRE ASSETS SHOWN IN THE BALANCE SHEET IN THE E ARLIER YEARS. LONG AND SHORT OF THE CONTENTIONS OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT OPENING CAPITAL REPRESENTED ASSETS ACQUIRED DU RING EARLIER YEARS AND COULD NOT BE A SUBJECT MATTER OF ADDITION FOR T HE IMPUGNED ASSESSMENT YEAR. VIZ-A-VIZ THE ADDITION MADE FOR DE FICIT IN OPENING CAPITAL DUE TO INADEQUACY OF SOURCE FOR PERSONAL EX PENSES AND PAYMENT OF TAXES, SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE SUCH EXPENSES/PAYMENTS ALSO PERTAINED TO EARLIER YEARS. THUS, AS PER THE LD. AUTHORISED REPRESENTATIVE, LD. COMMISSI ONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITIONS M ADE BY THE LD. ASSESSING OFFICER. AS FOR THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C. PACKIRISAMY (SUPRA), CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT IN THE SAID CASE CONCERNED ASSESSEE HAD FILED RETURNS FOR A NUMBER OF EARLIER ASSESSMENT YEARS ON THE VERY SAME DAY, AS IT FILED ITS RETURN FOR T HE ASSESSMENT YEAR IN QUESTION. AS AGAINST THIS, HERE THE ASSESSEE HAD F ILED RETURNS FOR THE ITA NO.1426/CHNY/2017 :- 13 -: EARLIER YEARS IN TIME. THUS, ACCORDING TO HIM, THE CASE OF C. PACKIRISAMY (SUPRA) HAD NOT APPLICATION. 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED POSITION THAT ASSESSEE HAD SHOWN OPENING CAPITAL OF B7,46,48,917/ - AS ON 01.04. 2011 IN ITS BALANCE SHEET FILED WITH ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR. IT IS ALSO AN ADMITTED POSITION TH AT IN THE BALANCE SHEET FORMING PART OF THE RETURN FILED FOR THE IMME DIATE PRECEDING ASSESSMENT YEAR 2011-12, IT HAD SHOWN PROPRIETORS CAPITAL AS NIL. THUS, CAPITAL OF THE ASSESSEE INCREASED FROM ZERO A S ON 31.03.2011 TO B7,46,48,917/- ON 01.04.2011. WHAT WE FIND IS THAT LD. ASSESSING OFFICER HAD ACCEPTED THE EXPLANATION OF THE ASSESSE E FOR THE ABOVE SUM EXCEPT FOR B1,27,12,549/-. THE TABLE REPRODUCED BY US AT PARA 3 ABOVE WAS FURNISHED BY THE ASSESSEE TO JUSTIFY THE OPENING CAPITAL OF B7,46,48,917/-. THIS TABLE, IN OUR OPINION COULD BE CONSIDERED ONLY AS A SELF SERVING DOCUMENT. EVEN IF ASSESSEE HAD NO A GRICULTURAL INCOME, NO CAPITAL GAINS AND NO DIVIDEND, AND NO INVESTMEN TS IN LAND IT COULD STILL HAVE CLAIMED THAT THE OPENING BALANCE IN THE CAPITAL ACCOUNT CAME FROM BALANCES HELD BY IT AS ON 01.04.2003, O R EARLIER BY SIMPLY REFRAMING THIS TABLE. IN OTHER WORDS ASSESSEE COUL D CHANGE ANY FIGURES GIVEN IN TABLE GIVEN ABOVE, TO SATISFY THE REQUIREMENT OF CAPITAL AS ON 01.04.2011, AND ARGUE THAT OPENING BALANCE AS ON 01.04.2011 ITA NO.1426/CHNY/2017 :- 14 -: WERE FROM BALANCES AVAILABLE WITH IT ON 01.04.2003, AND HENCE COULD NOT BE CONSIDERED FOR ADDITION IN THE IMPUGNED ASSE SSMENT YEAR. IF SUCH CLAIM IS ALLOWED, ANY AMOUNT SHOWN BY THE ASSE SSEE AS OPENING BALANCE CAN BE CLAIMED AS COMING OUT FROM BALANCE S OF THE EARLIER YEARS. DESPITE THIS LACUNA IN THE CLAIM OF THE ASS ESSEE, LD. ASSESSING OFFICER ACCEPTED WHAT ALL THE ASSESSEE COULD EVEN R EMOTELY SUBSTANTIATE IN SUCH OPENING BALANCE. LD. ASSESSI NG OFFICER, IN OUR OPINION WAS MORE THAN FAIR IN ACCEPTING EVERY EXPL ANATION GIVEN BY THE ASSESSEE EXCEPT FOR ITS CLAIM OF OPENING CAPIT AL OF B1,02,06,929/- AS ON 01.04.2003 AND DEFICIT DUE TO NON REFLECTION OF DRAWINGS AND SOURCES FOR TAX PAYMENTS IN THE EARLIER YEARS. ASS ESSEE WAS DUTY BOUND TO EXPLAIN EVERY RUPEE OUT OF THE OPENING CAP ITAL BALANCE OF B7,46,48,917/- SHOWN BY IT AS ON 01.04.2011. ESPECI ALLY SO SINCE IT HAD SHOWN NIL AMOUNT AS ITS CAPITAL IN THE BALANCE SHEET AS ON 31.03.2011 FORMING PART OF ITS RETURN FOR ASSESSM ENT YEAR 2011-12. EXPLANATION OF THE ASSESSEE THAT THE SUM OF B1,02,0 6,929/- REPRESENTED CASH IN HAND, VALUE OF FOOD GRAIN STOCK AND VALUE OF AGRICULTURAL PRODUCE WAS NOT SUBSTANTIATED BEFORE THE LD. ASSESSING OFFICER, THROUGH ANY EVIDENCE. THAT APART, AGRICU LTURAL INCOME SHOWN BY THE ASSESSEE HIMSELF WAS IN THE VICINITY OF B1,0 0,000/- TO B1,25,000/- PER YEAR, AND THE PROBABILITY OF ACCUMU LATING A HUGE AMOUNT FROM SUCH AGRICULTURAL INCOME WAS NEGLIGIBL E. ITA NO.1426/CHNY/2017 :- 15 -: 12. COMING TO THE QUESTION OF DRAWINGS AND TAXES IN THE EARLIER YEARS, IT IS AN ADMITTED POSITION THAT SUCH DRAWING S AND TAXES DO NOT APPEAR IN THE TABLE FURNISHED BY THE ASSESSEE REPRO DUCED BY US AT PARA 3 ABOVE. OR IN OTHER WORDS, ASSESSEE HAD NO SOURCE FOR HIS PERSONAL EXPENSES AND TAXES PAID. HENCE, WE HAVE TO CONSIDE R THAT SUCH AMOUNTS HAD GONE OUT OF THE INCOME OF THE RESPECTIV E YEARS. THEN WITHOUT DOUBT, OPENING CAPITAL AS ON 01.04.2011, WO ULD REMAIN UNEXPLAINED TO THE EXTENT OF SUCH AGGREGATE DRAWING S AND TAXES. 13. LD. COMMISSIONER OF INCOME TAX (APPEALS) IN OUR OPI NION FELL IN ERROR IN CONSIDERING THE BALANCE SHEET FILED BY THE ASSESSEE ALONGWITH ITS OWN RETURN AS NOT FACTUAL AND INCORR ECT ONE. AN ASSESSEE CANNOT BE ALLOWED TO APPROBATE AND REPROBATE. IT CA NNOT SAY THAT ITS OWN BALANCE SHEET DID NOT REFLECT CORRECT STATE OF AFFAIRS. JUST BY CLAIMING THAT THE CAPITAL WAS REPRESENTED BY ASSETS , WHICH WERE ACQUIRED DURING EARLIER YEARS, IN OUR OPINION AN AS SESSEE CANNOT ESCAPE FROM ITS ONUS OF EXPLAINING THE SOURCE OF SU CH CAPITAL. IN THE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THA T LD. ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION FOR UN EXPLAINED CAPITAL, DRAWINGS AND TAXES PAID. JUDGMENT OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF C. PACKIRISAMY (SUPRA ) DOES ENABLE AN ASSESSING OFFICER TO MAKE AN ADDITION FOR DEFICIT IN OPENING CAPITAL. THE ADDITIONS ITA NO.1426/CHNY/2017 :- 16 -: MADE BY THE LD. ASSESSING OFFICER, ARE ALL REINSTA TED. ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS SET ASIDE. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY, THE 10 TH JULY, 2018, AT CHENNAI. SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER SD/- ( . ! ' ) (ABRAHAM P. GEORGE) $ % / ACCOUNTANT MEMBER - ' / CHENNAI . / DATED:10 TH JULY, 2018. KV / ' $(0 1 2 1 ( / COPY TO: 1 . ! / APPELLANT 3. & 3( ( ) / CIT(A) 5. 167 $(8 / DR 2. $%! / RESPONDENT 4. & 3( / CIT 6. 79 :' / GF