ITO, CHENNAI V. D.Umapathy, CHENNAI

ITA 1438/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95824 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 12-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: K BALASUBR AMANIAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1438/MDS/2015 ( / ASSESSMENT YEAR : 2010-2011) THE INCOME TAX OFFICER NON-CORPORATE WARD -6(3). CHENNAI 600 006. ( %& /APPELLANT) VS SHRI. D. UMAPATHY, NO.5C/8, MEENAMBAL STREET, KANNADASAN NAGAR, KODUNGAIYUR, CHENNAI 600 118. [PAN: AAAPU 5316M] ( !'%& /RESPONDENT) / APPELLANT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT / RESPONDENT BY : SHRI. K. BALASUBRAMANIAN, ADVOCATE /DATE OF HEARING : 10.08.2015 ! /DATE OF PRONOUNCEMENT : 12.08.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI, DA TED 04.03.2015 FOR THE ASSESSMENT YEAR 2010-2011. I.T.A.NO.1438/MDS/2015 :- 2 -: 2. THE FIRST GROUND RAISED BY THE REVENUE IN THIS APPE AL IS WITH REGARD TO DELETING THE ADDITION OF C2,00,000/- BEIN G ADVANCE RECEIVED FOR SALE OF LAND. 3. THE F ACTS OF THE CASE ARE THAT THE ASSESSEE HAS RECEIVED A SUM OF C2,00,000/- AS ADVANCE TOWARDS SALE OF LAND. THERE WAS CANCELLATION OF SALE AGREEMENT ON 29.10.2010 WHEREI N NO MENTION OF REFUND OF ADVANCE. THE ASSESSING OFFICER OBS ERVED THAT THE RETENTION OF ADVANCED RECEIVED AFTER CANCELLATION OF THE AGREEMENT OF SALE WAS UNUSUAL. THE ASSESSING OFFICER STATED THAT CANCELLATION DEED DOES NOT MAKE ANY MENTION OF THE SAME NOR THE ASSESSEE ABLE TO PROVIDE ANY EVIDENCE FOR THE REPAYMENT. FROM THE PERUSAL OF THE CANCELLATION DEED, THE ASSESSING OFFICER OBSERVED THAT THOUGH BOTH THE PARTIES HAVE SIGNED, NO MENTION WAS FOUND AS TO THE REPAYMENT OF THE ADVANCE RECEIVED OF C2,00,000/-. IT WAS FOUND THAT THE AGREEMENT FOR SALE AND CANCELLATION DEED WERE PERUSED BY THE ASSESSING OFFICER. IT WAS SEEN THAT BOTH THE DEEDS WERE REGISTERED WITH REGISTRATION DEPARTMENT, GOVER NMENT OF TAMIL NADU. IN THE AGREEMENT DATED 16.12.2009, IT W AS NOTICED THAT THE SALE CONSIDERATION WAS FIXED AT C27,20,100 /- AND A SUM OF C2,00,000/- WAS RECEIVED BY THE ASSESSEE FROM MR. R. MANI @ RAGHAVENDRAMANI ON THE DATE OF AGREEMENT. IN THE CA NCELLATION I.T.A.NO.1438/MDS/2015 :- 3 -: DEED DATED 29.03.2010, IT WAS STATED THAT THE SALE AGREEMENT DATED 16.12.2009 WAS CANCELLED WITH THE CONSENT OF BOTH THE PARTIES AS THE PURCHASER ACTED CONTRARY TO THE CONT ENTS MENTIONED IN THE SALE AGREEMENT. IN THE CANCELLATION DEED, NO THING WAS MENTIONED ABOUT THE RETURN OF ADVANCE MONEY. AGREEM ENT FOR SALE DATED 16.12.2009 CLEARLY REVEALS RECEIPT OF MONEY B Y THE ASSESSEE ON 16.12.2009 AND THE SAME WAS SHOWN AS LIABILITY I N THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2009. THOUGH CANC ELLATION DEED WAS DATED 29.03.2010, IT WAS CONTENDED BY THE ASSES SEE THAT THE MONEY WAS RETURNED TO THE BUYER OF LAND IN THE NEXT FINANCIAL YEAR. THE ASSESSING OFFICER NOWHERE DOUBTED THE RECEIPT OF C2,00,000/- BY THE ASSESSEE DURING THE RELEVANT TO ASSESSMENT Y EAR 2010-11. THAT BEING THE CASE, THE COMMISSIONER OF INCOME TA X (APPEALS) OF THE CONSIDERED VIEW THAT THERE WAS QUESTION OF A DDING THE SUM AS UNSUBSTANTIATED LIABILITY. THE ASSESSING OFFICER DOUBTED THE REPAYMENT BY THE ASSESSEE TO THE BUYER OF THE LAND. BUT THE TRANSACTION OF REPAYMENT FALLS IN THE NEXT FINANCIA L YEAR 2010-11 AND IT CANNOT BE A GROUND TO TREAT THE RECEIPT AS U NSUBSTANTIATED LIABILITY. NO FINDING WAS GIVEN BY THE ASSESSING O FFICER TO SAY THAT THE ASSESSEE DID NOT RECEIVE THE ADVANCE FROM THE P URCHASER OF THE LAND. IN THE ABSENCE OF NO FINDING, THE ADDITIO N CANNOT BE I.T.A.NO.1438/MDS/2015 :- 4 -: SUSTAINED. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION OF C.2,00,000/- MADE TOWARDS UNSUBSTANTIAT ED LIABILITY BEING LAND ADVANCE. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE, THE PLEA OF THE LD. DEPARTME NTAL REPRESENTATIVE IS THAT THERE WAS NO EVIDENCE FOR THE PAYMENT OF RE FUND OF C2,00,000/- BY THE ASSESSEE TO THE CONCERNED PARTIES. HOWEVER , THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE PLACED A COP Y OF THE RECEIPT DATED 15.05.2010 FOR THE PAYMENT OF C2,00,000/- TO SHRI.D. UMAPATHI WHICH WAS PRODUCED BEFORE US AND THE ASSESSING OFFI CER HAD NO OCCASION TO EXAMINE THE SAME. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION WITHOUT ANY BASI S. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO MAKE INVESTIGATION AND DECIDE THE ISSUE AFRESH. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT GROUND RAISED BY THE REVENUE IS WITH REGAR D TO DELETION OF ADDITION OF C75,65,717/- MADE TOWARDS U NSUBSTANTIATED LIABILITY. I.T.A.NO.1438/MDS/2015 :- 5 -: 6. THE FACTS OF THE CASE ARE THAT THERE WAS DIFFERENC E BETWEEN THE OUTSTANDING LIABILITIES IN RESPECT OF SOME CREDITOR S AS PER BALANCE SHEET AND THE AMOUNTS REFLECTED IN THE STATEMENTS RELATIN G TO THOSE CREDITORS FURNISHED BY THE ASSESSEE AND THE SAME WAS BROUGHT TO TAX BY THE ASSESSING OFFICER. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 7. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), T HE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE ARGUED THAT THE ASSESSING OFFICER WAS WRONG IN COMPARING THE OUTSTANDING LIA BILITIES WITH THE SCHEDULE OF PAYMENTS PROVIDED BY THE INSTITUTIONS F ROM WHICH LOANS WERE AVAILED BY THE ASSESSEE. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE ALSO CONTENDED THAT IN SOME OF THE ACCOUNTS, NO REPAYMENTS WERE MADE AND THE OPENING BALANCE WAS TA KEN AS CLOSING BALANCE AS ON 31.03.2010 BUT THE ASSESSING OFFICER TOOK THE FIGURES FROM THE REPAYMENT SCHEDULE AND MISCALC ULATED THE DIFFERENCE. THE COMMISSIONER OF INCOME TAX (APPEALS ) OBSERVED THAT FROM THE DETAILS FURNISHED, THE ASSESSEE'S CON TENTION WAS CORRECT. HE OBSERVED THAT A PERUSAL OF STATEMENTS W HICH ARE ACTUALLY SCHEDULES REVEALS THAT THE ASSESSING OFFIC ER TOOK THE DUES AS ON 31.03.2010 WHICH ARE NOT ACTUAL AND COMPARED THEM WITH I.T.A.NO.1438/MDS/2015 :- 6 -: THE BALANCE OUTSTANDING AS ON 31.03.2010 IN THE BAL ANCE SHEET. THE ASSESSING OFFICER FAILED TO TAKE THE ACTUAL FI GURES FROM THE BOOKS OF ACCOUNTS AVAILABLE IN RESPECT OF THOSE ACC OUNTS. THE METHOD ADOPTED BY THE ASSESSING OFFICER WAS NOT CO RRECT AND CANNOT BE CORRECT. THE ADDITION WAS UNWARRANTED AND AN EXERCISE IN VAIN. THE ASSESSING OFFICER SHOULD HAVE OBTAINED ACCOUNTS COPY FROM THE CREDITORS AND COMPARED WITH THE FIGURES DI SCLOSED BY THE ASSESSEE IN THE BALANCE SHEET. THE REPAYMENT SCHEDU LE WAS MISTAKEN BY THE ASSESSING OFFICER AS ACTUAL ACCOUN T. IT WAS SEEN THAT OUT OF SEVEN ITEMS, FIVE ARE OPENING BALANCES AND THERE BEING NO TRANSACTIONS WITH THEM IN THIS YEAR, NO ADDITION CAN BE MADE IN THIS YEAR. ACCORDING TO THE ASSESSEE, REMISSION OF LIABILITY IN RESPECT OF WHICH A DEDUCTION WAS ALLOWED IN ANY PREVIOUS YE AR CAN ALONE BE BROUGHT TO TAX U/S 41(1) BUT NOT AN ALLEGED UNSU BSTANTIATED LIABILITY. THE LD. AUTHORISED REPRESENTATIVE FOR AS SESSEE ALSO PLACED RELIANCE ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS BHOGILAL RAMJIBHAI ATARA (2014) 43 TAXMANN.COM 5 5 IN SUPPORT OF HIS CONTENTION. SINCE THE LOANS TO THE SEVEN PARTIES ARE OUTSTANDING AS ON 31.03.2010 AND CONTINUED TO BE CA RRIED ON OR REPAIR IN SUBSEQUENT YEARS, THE OUTSTANDING LIABIL ITY STOOD PROVED AND DID NOT GET REMITTED OR CEASED. THE COMMISSIONE R OF INCOME I.T.A.NO.1438/MDS/2015 :- 7 -: TAX (APPEALS) DELETED THE ADDITION OF C75,65,717/- MADE BY THE ASSESSING OFFICER. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. THERE WAS DIFFERENCE BETWEEN THE AMOUNT RE FLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND AMOUNT SHOWN IN THE RESPECTIVE PARTIES ACCOUNT IN THEIR BOOKS OF ACCOUN TS WHICH IS AS FOLLOWS: SL. NO DETAILS OF LOAN CREDITOR AMOUNT CLAIMED BY ASSESSEE C AMOUNT AS PER STATEMENT OF THE BANK, FINL. INSTITUTION ETC RS DIFFERENCE C 1 CHOLOMANDALAM FINANCE 1,17,926/ - 39,105/ - 78,821/ - 2 ICICI BANK 1,79,119/ - NIL 1,79,119/ - 3 ING VYSYA 5,28,559/ - 3,12,298/ - 2,16,261/ - 4 RELIANCE 6,62,814/ - 4,21,447/ - 2,41,367/ - 5 SAKTHI FINANCE 12,93,400/ - 9,90,966/ - 3,02,434/ - 6 SHRIRAM TRANSPORT FINANCE 1,28,85,901/ - 63,95,047/ - 64,90,854/ - 7 SREI EQUIPMENT FINANCE P. LTD 1,23,052/ - 66,191/ - 56,861/ - TOTAL 75,65,717/ - THE ASSESSEE HAS NOT FURNISHED THE EXACT REASON FOR THE DIFFERENCE IN HIS BOOKS OF ACCOUNTS. IT IS THE DUTY OF THE ASSES SEE TO FILE NECESSARY RECONCIL STATEMENT WITH THE ASSESSEES BOOK OF ACCO UNTS AND BALANCE I.T.A.NO.1438/MDS/2015 :- 8 -: APPEARING ON PARTIES BOOKS OF ACCOUNTS. IF IT IS O PENING BALANCE, THE SAME SHOULD BE PROVED WITH THE EARLIER YEAR BALANCE SHEET AS ON 31.03.2009. WITHOUT EXAMINING ALL THESE THINGS THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION. IN OUR O PINION, IT IS APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER AND WITH THE DIRECTION TO THE ASSESSEE TO P LACE NECESSARY EVIDENCE TO PIN POINT EXACT DIFFERENCE APPEARING WI TH ASSESSEES BOOKS OF ACCOUNTS AND RESPECTIVE PARTIES ACCOUNT. THE ASSESSING OFFICER SHALL PASS FRESH ORDER AFTER EXAMINING THE BOOKS OF ACCOUNTS ALONGWITH PARTIES ACCOUNTS AS APPEARING IN THEIR BO OKS OF ACCOUNTS. THE GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. 9. THE LAST GROUND RAISED BY THE REVENUE IN THIS APPEA L IS WITH REGARD TO DELETION OF ADDITION OF C15,00,000/- MADE TOWARDS ADVANCE RECEIVED FOR SALE OF VEHICLES. 10. THE FACTS OF THE CASE ARE THAT THE ASSESSEE RECEI VED PAYMENTS FROM PARTIES WHO WANTED TO BUY BACK THE VEHICLES FR OM THE ASSESSEE WAS TREATED AS UNSUBSTANTIATED LIABILITY AS THE LET TERS SENT TO THOSE PARTIES RETURNED UNSERVED AND THE CONFIRMATION LETT ERS FROM THE PARTIES OBTAINED BY THE ASSESSEE LACK VERACITY. THE ASSESSEE STATED BEFORE THE I.T.A.NO.1438/MDS/2015 :- 9 -: ASSESSING OFFICER THAT THE ADVANCE OF C15,00,000/- RECEIVED FROM THE DRIVERS WHO ARE THE PROSPECTIVE BUYERS OF THE VEHICLE WAS ADJUSTED IN THE NEXT YEAR AGAINST THE HIRE CHARGES PAYABLE TO T HEM BECAUSE THEY DID NOT BUY THE VEHICLES FROM THE ASSESSEE. THE ASS ESSEE ALSO CONTENDED THAT THE AMOUNT OF C15,00,000/- WAS RECEIVED THROUGH CHEQUES FROM ONE MR. RAMU (C12,95,OOO BY CHEQUE + C 2,05,OOO/- BY CASH). HOWEVER, THE ASSESSING OFFICER MADE AN AD DITION OF C15,00,000/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 11. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED T HAT THE ASSESSING OFFICER DID NOT TAKE THE INVESTIGATION T O THE LOGICAL END OF PROVING THE LIABILITY AS BOGUS. IN THE OF THE ASSE SSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT THE BANK ACCOUNTS PARTICULARS OF THE ASSESSEE WERE OBTAINED AND VERIFIED. BUT THE LEDGER ACCOUNT IN THE NAME OF SHRI RAMU FOR NEW VEHICLE REVEALS RECEIPT OF C.15 LAKHS (CHEQUE & CASH). THE ASSESSING OFFICER DID NOT MAKE EFFORTS TO ASK THE ASSESSEE TO PRODUCE THE PAR TIES FOR EXAMINATION WHEN HIS LETTERS TO THE CREDITORS RETUR NED UNSERVED. THE ASSESSING OFFICER WAS CONTENT IN STATING THAT THE CONFIRMATION LETTERS OF THE CREDITORS PRODUCED BY THE ASSESSEE ARE NOT G ENUINE. MERE I.T.A.NO.1438/MDS/2015 :- 10 -: SUSPICION ON THE PART OF THE ASSESSING OFFICER CAN NOT LEAD TO THE CONCLUSION THAT THE LIABILITY WAS BOGUS/ UNSUBSTANT IATED. THE ONUS OF PROVING THE CONFIRMATION LETTERS OF THE CREDITORS A S BOGUS LIES ON THE ASSESSING OFFICER AS THE ASSESSEE DISCHARGED HIS ON US BY FURNISHING CONFIRMATION LETTERS FROM THE CREDITORS. THE ASSESS ING OFFICER FAILED TO PROVE BEYOND DOUBT THAT THE ALLEGED CREDIT WAS BOGU S. IN THE ABSENCE OF CLEAR CUT FINDING AND ONLY BASED ON DOUBT, THE A DDITION WAS NOT TENABLE. HENCE, THE COMMISSIONER OF INCOME TAX (APP EALS) DELETED THE ADDITION OF C.15,OO,OOO/- MADE BY THE ASSESSING OFFICER. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THE CASE, THE COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE ADDITION WITHOUT CARRYING ON ANY FURTHE R ENQUIRY NEITHER BY HIMSELF NOR THROUGH THE ASSESSING OFFICER. IN OUR OPINION, OBSERVATION OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT O NUS OF PROVING CREDITORS AS BOGUS LIES ON THE ASSESSING OFFICER W HICH IS NOT CORRECT. AS THE ASSESSEE FAILED TO DISCHARGE THE ONUS BY PRO DUCING RELEVANT CONFIRMATIONS FROM THE RELEVANT PARTIES, IT IS NOT TENABLE. HENCE, WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ENQUIRY AND THE ASSESSING OFFICER AFTER C ONDUCTING NECESSARY I.T.A.NO.1438/MDS/2015 :- 11 -: ENQUIRY SHALL REDO THE ASSESSMENT. THIS GROUND IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1438/MDS/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH DAY OF AUGUST, 2015, AT CHENNAI. SD/- SD/- ( ! ) (CHALLA NAGENDRA PRASAD) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER '# /CHENNAI. $% /DATED:12.08.2015. KV %& '( )( /COPY TO: 1. * APPELLANT 2. / RESPONDENT 3. + ( )/CIT(A) 4. + /CIT 5. (,- . /DR 6. -/ 0 /GF.