ITO, CHENNAI V. Shri V.Devendran, CHENNAI

ITA 1467/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4805 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 08-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 1467/MDS/2010 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, BUSINESS WARD III(3), CHENNAI 600 034. (APPELLANT) V. SHRI V. DEVENDIRAN, NEW NO.16, WEST KODAMBAKKAM RD., VIJAYA NAGAR, WEST MAMBALAM, CHENNAI 600 033. PAN : AAQPD5716N (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI K. BA LASUBRAMANIAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, IT HAS RAISED FOUR GROUNDS IN TOTO. CRUX OF THE ISSUE IS REGARDING THE DELETION OF AN ADDITION OF ` 19 LAKHS, MADE BY THE A.O. UNDER SECTION 68 OF THE INC OME-TAX ACT, 1961 (IN SHORT THE ACT), FOR CERTAIN CASH DEPOSIT S IN THE BANK OF ASSESSEE. AS PER THE REVENUE, ASSESSEE COULD NOT P ROVE THE SOURCE AND CREDITWORTHINESS OF THE CREDITORS, AND THE CIT( APPEALS) HAD I.T.A. NO. 1467/MDS/10 2 CONSIDERED FRESH EVIDENCE THEREBY VIOLATING RULE 46 A(3) OF INCOME- TAX RULES, 1962. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, DERIVING INCOME AS COMMISSION AGENT ARRANGING HOUSING LOANS, MORTGAGE LOANS, WORKING CAPITAL LOANS, ETC., HAD FILED HIS RETURN FOR THE I MPUGNED ASSESSMENT YEAR DECLARING AN INCOME OF ` 1,49,000/-. ASSESSING OFFICER WAS IN RECEIPT OF AIR INFORMATION REGARDING ACCOUNTS MAINT AINED BY THE ASSESSEE IN DENA BANK. ASSESSING OFFICER IDENTIFIE D CASH DEPOSITS OF ` 5,50,000/- ON 27.4.2006, ` 2,50,000/- ON 3.5.2006 IN ACCOUNT NO.5691 AND DEPOSITS OF ` 2,50,000, ` 3,90,000/-, ` 2,10,000/- AND AGAIN ` 2,50,000/- ON 17.4.2006, 26.7.2006, 7.8.2006 AND 2 2.7.2006 RESPECTIVELY, IN ACCOUNT NO.8985 OF THE ASSESSEE IN DENA BANK, T. NAGAR AND ALWARPET, FOR WHICH EXPLANATIONS WERE SOU GHT. 3. IN SO FAR A SUM OF ` 5,50,000/- WAS CONCERNED, EXPLANATION OF THE ASSESSEE WAS THAT THIS WAS RECEIVED FROM ONE SH RI PREM NAVAS ON 27.4.2006 FOR ISSUING A CHEQUE TO M/S BOB HOUSIN G FINANCE LTD. AS PER THE ASSESSEE, SHRI PREM NAVAS HAD MORTGAGED HIS LAND FOR RAISING A HOUSING LOAN FROM THE SAID CONCERN AND HE WANTED TO GET AN ENHANCED LOAN FROM M/S DENA BANK BY MORTGAGING SAME PROPERTY. I.T.A. NO. 1467/MDS/10 3 THEREFORE, ACCORDING TO THE ASSESSEE, USING THE MON EY GIVEN BY SHRI PREM NAVAS, HE HAD ISSUED CHEQUE TO M/S BOB HOUSING FINANCE LTD. FOR CLOSING THE LOAN ACCOUNT OF SHRI PREM NAVA S AND THEREAFTER ARRANGED LOAN FOR A HIGHER AMOUNT TO SHRI PREM NAVA S FROM DENA BANK. 4. WITH REGARD TO THE SUM OF ` 2,50,000/- DEPOSITED ON 3.5.2006, EXPLANATION OF THE ASSESSEE WAS THAT THE AMOUNT WAS GIVEN BY ONE SHRI SINGARAJ FOR PAYING FOR A MACHINERY PURCHASED BY HIM. ACCORDING TO ASSESSEE, NEGOTIATIONS FOR THE PURCHAS E WAS DONE BY THE ASSESSEE AND AT THE POINT OF TIME WHEN SHRI SIN GARAJ WAS TO MAKE THE PAYMENT, LATTER WAS NOT HAVING A CHEQUE BO OK WITH HIM. 5. IN SO FAR AS OTHER FOUR SUMS TOTALLING TO ` 11 LAKHS WAS CONCERNED, EXPLANATION OF THE ASSESSEE WAS THAT THE SE WERE RECEIVED AS ADVANCE FOR DISPOSAL OF A PROPERTY OWNED BY ONE MRS. BHUVANESWARI. ACCORDING TO ASSESSEE, MRS. BHUVANES WARI HAD GIVEN A GENERAL POWER OF ATTORNEY IN FAVOUR OF THE ASSESS EE BASED UPON WHICH HE HAD NEGOTIATED SALE OF PROPERTY AND RECEIV ED THE ADVANCE. AS PER THE ASSESSEE, MRS. BHUVANESWARI WAS FINDING IT DIFFICULT TO PAY MONTHLY INSTALMENTS OF A LOAN TAKEN BY HER FROM DEN A BANK, WHICH I.T.A. NO. 1467/MDS/10 4 WAS ARRANGED BY HIM, AND THIS COMPELLED THE ASSESSE E TO DISPOSE THE PROPERTY HELD BY HIM UNDER GPOA. 6. HOWEVER, THE ASSESSING OFFICER WAS NOT IMPRESSED BY ANY OF THE ABOVE EXPLANATIONS. ACCORDING TO HIM, IN EACH OF THE ABOVE CASES, THE PARTIES COULD HAVE DIRECTLY DEPOSITED TH E CASH AND NONE OF THESE CREDITORS COULD EXPLAIN THE SOURCE. SHE, THE REFORE, TREATED THE CASH DEPOSITS AS UNEXPLAINED UNDER SECTION 68 OF TH E ACT AND MADE AN ADDITION OF ` 19 LAKHS. 6. IN ITS APPEAL BEFORE THE CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT HE HAD FILED COPIES OF RETURNS OF SHRI PREM NAVAS AND ALSO CONFIRMATION FROM SMT. FARIDHA NIVAS, WIFE OF SHRI PREM NAVAS, WITH REGARD TO THE LOAN GIVEN BY SHRI PREM N AVAS. IT WAS ARGUED BY THE ASSESSEE THAT IN SO FAR AS THE AMOUNT RECEIVED FROM SHRI SINGARAJ WAS CONCERNED, LATTER APPEARED BEFORE THE A.O. AND CONFIRMED THE CASH GIVEN TO THE ASSESSEE AND FURTHE R EXPLAINED THE SOURCE THEREOF. ASSESSEE ALSO SUBMITTED THAT SMT. FARIDHA NIVAS AND SMT. SHAMEEM PARVEEN WERE PERSONALLY PRODUCED B EFORE THE ASSESSING OFFICER FOR CONFIRMING THE MONEY GIVEN BY SHRI PREM NAVAS. LD. CIT(APPEALS), AFTER GOING THROUGH THE C ONFIRMATIONS FILED I.T.A. NO. 1467/MDS/10 5 BY THE RESPECTIVE PERSONS AND ALSO IN VIEW OF THE F ACT THAT THE ASSESSEE COULD PRODUCE SMT. FARIDHA NIVAS, SMT. SHA MEEM PARVEEN AND SHRI SINGARAJ BEFORE THE A.O., WAS OF THE OPINION THAT THE ADDITION WAS NOT CALLED FOR. ACCORDING TO LD. CIT(APPEALS), CONFIRMATIONS FILED BY THE RESPECTIVE PARTIES CLEAR LY DEMONSTRATED THAT THE RECEIPTS WERE GENUINE. HE, THEREFORE, DELETED THE ADDITION. 7. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE VERSION OF THE ASS ESSEE WAS UNBELIEVABLE. ACCORDING TO HIM, ASSESSEE HAD RECEI VED CASH FROM SHRI PREM NAVAS FOR CLEARING THE HOUSING LOAN TAKEN BY SHRI PREM NAVAS FROM M/S BOB HOUSING FINANCE LTD. IF THAT WA S SO, LEARNED D.R. ARGUED THAT THE SAID SHRI PREM NAVAS HIMSELF C OULD HAVE DIRECTLY PAID THE AMOUNT TO M/S BOB HOUSING FINANCE LTD. AND THERE WAS NO REASON FOR HIM TO ROUTE THE MONEY THROUGH AS SESSEE. SIMILARLY, LEARNED D.R. POINTED OUT NOTHING STOPPED SHRI SINGARAJ FOR MAKING PAYMENT IN CASH FOR THE PURCHASE OF MACHINER Y. IN SO FAR AS CASH RECEIVED FROM MRS. BHUVANESWARI WAS CONCERNED, LEARNED D.R. SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE WAS NOT RELIABLE. LEARNED D.R. ARGUED THAT THE CIT(APPEALS) HAD RELIE D ON AN AGREEMENT FOR SALE DATED 25.5.2006, BETWEEN THE ASS ESSEE AND ONE I.T.A. NO. 1467/MDS/10 6 SHRI B. SURESH AND MRS. S. CHANDRA, WHICH WAS NEVER PRODUCED BY THE ASSESSEE BEFORE THE A.O. NOR EVER PUT TO HIM. 8. PER CONTRA, LEARNED A.R. SUBMITTED THAT ASSESSEE HAD DISCHARGED HIS ONUS WITH REGARD TO EACH OF THE CASH DEPOSIT IN DENA BANK. ACCORDING TO HIM, FOR THE SUM RECEIVED FROM SHRI PREM NAVAS, ASSESSEE HAD PRODUCED SMT. FARIDHA NIVAS SINCE SHRI PREM NAVAS WAS NOT AVAILABLE AT THE TIME OF SCRUTINY PROCEEDIN GS. FURTHER, AS PER THE LEARNED A.R., THE POSITION WAS CLEARLY ELABORAT ED BY SMT. FARIDHA NIVAS WITH RESPECTIVE PA NUMBERS AND REASON WHY MON EY WAS ROUTED THROUGH ASSESSEE, WAS ALL EXPLAINED. WITH R EGARD TO MONEY RECEIVED FROM SHRI SINGARAJ, ARGUMENT OF THE LEARNE D A.R. WAS THAT THERE WAS A CLEAR CONFIRMATION FROM SAID SHRI SINGA RAJ ALONG WITH HIS PA NUMBER AND ADMITTEDLY SHRI SINGARAJ HAD APPEARED BEFORE THE ASSESSING OFFICER PERSONALLY. IN SO FAR AS CREDITS RELATED TO MRS. BHUVANESWARI, ARGUMENT OF LEARNED A.R. WAS THAT THE SE WERE RECEIVED AS ADVANCE FOR SALE OF PROPERTY FOR WHICH MRS. BHUVANESWARI HAD GIVEN A GPOA TO THE ASSESSEE. AS PER THE LEARN ED A.R., WHERE ADDITIONAL EVIDENCE PRODUCED WAS CLINCHING IN NATUR E, REQUIREMENT OF RULE 46A(3) COULD BE DISPENSED WITH. FOR THIS RELI ANCE WAS PLACED ON THE DECISION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF ITO V. I.T.A. NO. 1467/MDS/10 7 INDUSTRIAL ROADWAYS (2008) 305 ITR (AT) 219. THERE FORE,, ACCORDING TO HIM, THE ADDITIONS WERE RIGHTLY DELETED BY THE L D. CIT(APPEALS). 9. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THE CONFIRMATION GIVEN BY SMT. FARIDHA NIVAS AND SM T. SHAMEEM PARVEEN IN RELATION TO SUM OF ` 5,50,000/- ALLEGED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM SHRI PREM NAVAS, RUNS AS FOLLOWS:- WE, MRS. FARIDHA NIVAS AND MRS. S. SHAMEEM PARVEEN, ARE ASSESSED TO INCOME-TAX UNDER THE JURISDICTION OF THE ITO, TA MBARAM, CHENNAI. OUR JOINT FAMILY CONSISTS OF THE FOLLOWING PERSONS:- (A) MR S PREM NAVAS PA NO.AAEPP9554C-ITO WARD I(3 ) TAMBARAM (B) MR S ANWAR AEAPA4820N-ITO WARD I(1) TAMBARAM (C) MRS. FARIDHA NIVAS AAEPF4975F-ITO WA RD I(2) TAMBARAM (D) MRS SHAMEEM PARVEEN BCRPS0419K-ITO WARD I( 4) TAMBARAM WE HAD TAKEN A HOUSING LOAN FROM M/S BANK OF BARODA HOUSING FINANCE LTD. FOR THE PURPOSE OF CONSTRUCTION OF A R ESIDENTIAL HOUSE PROPERTY AT THE ABOVE SAID ADDRESS. DUE TO BUSINESS CRISIS, WE COULD NOT PAY THE INSTALMENTS REGULARLY. THE BANK HAD DECL ARED OUR LOAN ACCOUNT AS NPA AND PROCEEDED TO AUCTION THE PROPERT Y. IN ORDER TO SAVE OUR PROPERTY AND ALSO TO COME OUT OF FINANCIAL CRISIS, WE DECIDED TO MORTGAGE THE SAME PROPERTY FOR HIGHER LOAN WITH D ENA BANK. FOR AVAILING THE MORTGAGE LOAN, WE HAD TO CLEAR THE EXI STING LOAN AND PRODUCE THE ORIGINAL DOCUMENTS TO DENA BANK. MR. D EVENDIRAN IS OUR FAMILY FRIEND AND HE HELPED US IN AVAILING THE MORTG AGE LOAN WITH DENA BANK. BECAUSE OF OUR PROFESSIONAL COMMITMENTS, WE COULD NOT SPAE TIME TO VISIT THE BOB HOUSING FINANCE LTD. TO FOLLO W UP AND SETTLE THE LOAN. SO, WE REQUESTED OUR FAMILY FRIEND MR. DEVEND IRAN TO FOLLOW UP THE MATTER. HE WENT TO BOB HOUSING FINANCE LTD AND INFORMED US ABOUT THE DUES TO BE PAID TO THEM TO GET THE ORIGIN AL DOCUMENTS. WE REQUESTED MR. DEVENDIRAN TO ISSUE THE CHEQUES FOR ` 7 LAKHS TO BOB I.T.A. NO. 1467/MDS/10 8 HOUSING FINANCE LTD TO SETTLE THE DUES. AS PER OUR REQUEST, MR. DEVENDIRAN HELPED US BY ISSUING HIS CHEQUE. WE PAID THE ABOVE SUM BY CASH TO MR. DEVENDIRAN, SO THAT THE CHEQUE ISSUED B Y HIM IS CLEARED ON WHEN IT IS PRESENTED FOR PAYMENT. THE ABOVE SUM WAS MET BY FOUR OF US FROM OUR PERSONA L SAVINGS, PLEDGE OF JEWELS, HAND LOANS FROM OUR FRIENDS AND R ELATIVES. ONCE THE MORTGAGE LOAN FROM DENA BANK WAS OBTAINED, WE CLEAR ED OUR JEWEL LOANS AND PETTY LOANS TAKEN FROM OUR FRIENDS AND REL ATIVES. ALL THE FOUR OF US ARE ASSESSED TO INCOME-TAX AND THE COPIE S OF OUR INCOME- TAX ACKNOWLEDGEMENTS FOR THE AY 2009 10 ARE ENCLOSE D HEREWITH FOR YOUR REFERENCE. 10. BOTH THE ABOVE PERSONS HAD ALSO APPEARED BEFORE THE A.O. ON BEHALF OF SHRI PREM NAVAS. IN THE CASE OF SHRI SIN GARAJ, ADMITTEDLY HE HAD APPEARED BEFORE THE A.O. AND FILED A COPY OF THE ACCOUNT OF THE ASSESSEE IN HIS BOOKS WITH THE FOLLOWING CONFIR MATION:- I CONFIRM THE ABOVE. MY PA NO IS ABEPS 2881A. I A M ASSESSED TO INCOME-TAX IN THE FILES OF ITO, WARD I( 4) TAMBARAM. 11. IN THE CASE OF THE MONEY ARISING OUT OF SALE EF FECTED ON BEHALF OF MRS. BHUVANESWARI, ASSESSEE HAD PRODUCED COPY OF POWER OF ATTORNEY, LETTER FROM DENA BANK CERTIFYING CLOSURE OF HER LOAN ACCOUNT AND HER DENA BANK HOUSING LOAN STATEMENT. HOWEVER, THE AGREEMENT FOR SALE DATED 25.5.2006 ENTERED BY HIM W ITH SHRI B. SURESH AND MRS. S. CHANDRA, IN RELATION TO THIS PRO PERTY WAS FIRST PRODUCED BEFORE THE CIT(APPEALS) ONLY. THUS, EXCEP T FOR THE SUM OF I.T.A. NO. 1467/MDS/10 9 ` 11 LAKHS ALLEGED TO HAVE BEEN RECEIVED FROM MRS. B HUVANESWARI, ASSESSEE HAD PRODUCED MORE THAN SUFFICIENT EVIDENCE DISCHARGING HIS ONUS FOR EACH OF THE DEPOSITS MADE. THE CONCERNED PERSONS WERE ALL INCOME-TAX ASSESSEES. IN RESPECT OF MRS. BHUVANESW ARI THERE WAS NO PERSONAL APPEARANCE BY THE CREDITOR. NEITHER WA S ANY CONFIRMATION FILED. NEVERTHELESS, ASSESSEE DID PRO DUCE AN AGREEMENT FOR SALE ENTERED INTO BY HIM, BY VIRTUE O F A GENERAL POWER OF ATTORNEY FROM MRS. BHUVANESWARI. BUT, WITHOUT D OUBT THIS AGREEMENT WAS NOT PRODUCED BEFORE THE A.O. NOR PUT TO HIM BY THE LD. CIT(APPEALS) FOR HER COMMENTS. IN SO FAR AS ARGUME NT OF THE LEARNED D.R. THAT CONCERNED PERSONS COULD HAVE MADE THE PAY MENTS DIRECTLY, WE FIND CONSIDERABLE STRENGTH IN THE AVERMENT OF TH E LEARNED A.R. THAT ASSESSEE WAS ARRANGING LOANS FROM DENA BANK AND IT WAS, THEREFORE, REQUIRED TO ROUTE THE PAYMENTS FOR CLOSURE OF EXIST ING LOANS OF HIS CUSTOMERS, THROUGH DENA BANK, FOR ENSURING SMOOTH A RRANGEMENT OF SUBSEQUENT LOANS TO BE RAISED FROM DENA BANK. WE A RE, THEREFORE, OF THE OPINION THAT ASSESSEE HAD PRODUCED SUFFICIENT E VIDENCE AND DISCHARGED HIS ONUS BY EXPLAINING THE DEPOSITS IN B ANK ACCOUNT IN SO FAR AS CREDITS FROM SHRI PREM NAVAS AND SHRI SINGAR AJ ARE CONCERNED. HOWEVER, IN THE CASE OF CREDITS FROM MRS. BHUVANESW ARI, THE MATTER I.T.A. NO. 1467/MDS/10 10 REQUIRES A RE-VISIT BY THE A.O., SINCE THERE HAS BE EN CLEAR VIOLATION OF RULE 46A(3). IN THE ABSENCE OF A CONFIRMATION FROM THE SAID PERSON, THE AGREEMENT FOR SALE UNLESS PROPERLY CORROBORATED , CANNOT BE CONSIDERED AS CLINCHING EVIDENCE. HENCE WHILE CONF IRMING THE ORDER OF THE LD. CIT(APPEALS), IN SO FAR AS IT RELATED TO DELETION OF THE ADDITION OF ` 5,50,000/- AND ` 2,50,000/- RECEIVED FROM SHRI SINGARAJ, WE SET ASIDE HIS ORDER DELETING THE ADDITION OF ` 11 LAKHS ALLEGED TO HAVE BEEN RECEIVED FROM MRS. BHUVANESWARI AND REMIT IT BACK TO THE A.O. FOR FRESH CONSIDERATION. ASSESSEE SHALL BE GI VEN OPPORTUNITY TO SUBSTANTIATE HIS CLAIM, AND THE A.O. SHALL PROCEED IN ACCORDANCE WITH LAW. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 24 TH JUNE, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 24 TH JUNE, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-VIII, CHENNAI / CIT-VI, CHENNAI/D.R./GUARD FILE