M/s Veena Fabrics, CHENNAI V. ITO, Madurai

ITA 1484/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58088 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER] I.T.A.NO.1484/MDS/2011 ASSESSMENT YEAR : 2001-02 M/S VEENA FABRICS C/O SHRI S.SRIDHAR ADVOCATE NEW NO.14, OLD NO.82, FLAT NO.5 1 ST AVENUE, INDIRA NAGAR ADYAR, CHENNAI 600 020 VS THE INCOME TAX OFFICER WARD II(4) CHENNAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR RESPONDENT BY : SHRI R.B.NAIK, CIT/DR DATE OF HEARING : 12-03-2012 DATE OF PRONOUNCEMENT : 16-03-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF THE LD.CIT(A)-I, MADURAI, DATED 16.6.2011. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS )-I , MADURAI DATED 16.06.2011 IN I . T . A.NO.78/ 2007-08 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW , FACTS , AND IN THE CIRCUMSTANCES OF THE CASE . I.T.A.NO. 1484/11 :- 2 -: 2. THE CIT (APPEALS) ERRED IN CONFIRMING THE EXPA RTE ORDER PASSED I N TERMS OF SECTION 144 OF THE ACT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION . 3 . THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE FIN DINGS RECORDED I N THIS REGARD IN PARA 5 . 1 OF THE IMPUGNED ORDER WERE WRONG , INCORRECT , UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW . 4 . THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE ORD ER OF RE - ASSESSMENT WAS PASSED OUT OF TIME, INVALID , PASSED WITHOUT JURISDICTION AND NOT SUSTAINABLE BOTH ON F ACTS AND IN LAW . 5. THE CIT (APPEALS) ERRED I N BRINGING TO TAX PARTLY THE PARTNERS ' CAPITAL CONTRIBUTION AS UNEXPLAINED CREDIT WITHIN THE SCOPE OF SECTION 68 OF THE ACT ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE WITHOUT ASSIG NING PROPER REASONS AND JUSTIFICATION . 6 . THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE PAR TNERS ' CAP I TAL CONTRIBUTION IN THE FIRST YEAR OF BUSINESS OPERATION WAS ERRONEOUSLY BROUGHT TO TAX WITHIN TH E SCOPE OF SECTION 68 OF THE ACT . 7. THE CIT (APPEALS) FAILED TO APPRECIATE THAT IN A NY EVENT THERE WAS NO POWER VESTED FOR FURNISHING INFORMATI ON/ MATERIALS FOR 'SOURCE FOR SOURCE ' AND HENCE THE ASSESSMENT OF PARTNERS ' CAPITAL PARTLY UNDE R SECTION 68 OF THE ACT IN THE HANDS OF THE APPELLANT ' S PARTNERSHIP FIRM WAS ERRONEOUS AND INVALID . 8. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG RECORDED THE ARGUMENTS/SUBMISSIONS OF THE APPELLAN T IN PARA 5 . 4 . 4 OF THE IMPUGNED ORDER , THE ASSESSMENT OF PARTNERS' CAPITAL CONTRIBUTION TO THE EXTENT MENTIO NED IN PARA 5 . 4.9 OF THE IMPUGNED ORDER WAS ERRONEOUS AND INVALID. 9 . THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE FIN DINGS RECORDED I N THIS REGARD IN PARA 5 . 4 . 7 & 5 . 4.8 OF THE IMPUGNED ORDER WERE WRONG , INCORRECT , UNJUSTIFIED, ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 10 . THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE DECISIONS REFERRED TO IN PARA 5 . 4.5 AND PARA 5 . 4 . 6 WERE NOT APPLICABLE TO THE FACTS OF THE CASE AND CITED O UT OF CONTEXT . I.T.A.NO. 1484/11 :- 3 -: 11 . THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE WRI TTEN SUBMISSIONS FILED DATED 11 . 6 . 2008 WAS NOT TAKEN INTO CONSIDERATION IN PROPER PERSPECTIVE AND NON- CONSIDERATION OF THE RELEVANT FACTS WOULD VITIATE T HE IMPUGNED ORDER . 12. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THE RE WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS NULLITY IN LAW. 13. THE CIT (APPEALS) FAILED TO APPRECIATE THAT IN ANY EVENT THE ASSESSMENT OF BALANCE AMOUNT OF CAPITAL CONTRIBUTION ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WAS NOT SUSTAINABLE. 14. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GROUNDS/ARGUMENTS AT THE TIME OF HEARING. 3. THE ONLY GRIEVANCE OF THE ASSESSEE IN THE ABOVE GROUNDS OF APPEAL IS THAT THE LD.CIT(A) ERRED IN BRINGING TO TAX THE PARTNERS CAPITAL CONTRIBUTION OF ` 1,60,000/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FI ND THAT IN THE INSTANT CASE, THE ASSESSING OFFICER ADDED ` 2,60,000/- TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED ` 2,60,000/- AS CAPITAL CONTRIBUTION FROM ITS TWO PARTNERS OF ` 1,30,000/- EACH. THE ASSESSING OFFICER OBSERVING THAT IN THE PARTNERSHIP DEED THE AMOUNT OF CAPITAL CONTRIBUTION BY EACH PARTNER WAS SHOWN AT ` 50,000/- EACH, TREATED THE CONTRIBUTION OF ` 1,00,000/- BY BOTH THE PARTNERS AS EXPLAINED AND TREATED THE REST AMOUNT OF ` 1,60,000/- AS UNEXPLAINED CREDIT INVOKING I.T.A.NO. 1484/11 :- 4 -: THE PROVISIONS OF SECTION 68 OF THE ACT. ON APPEAL , THE LD.CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE US, THE LD. A.R OF THE ASSESSEE EXPLAI NED THAT THE SOURCE OF CAPITAL CONTRIBUTION WAS FULLY EXPLAINED BEFORE THE LD.CIT(A), BUT THE SAME WAS IGNORED BY THE LD.CIT(A). HE ARG UED THAT AS THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT, HE COU LD NOT PROPERLY EXPLAIN THE SAME BEFORE THE ASSESSING OFFICER. 6. THE LD.CIT/DR CONCEDED THAT HE HAS NO OBJECTION IF THE ISSUE WAS RESTORED BACK TO THE ASSESSING OFFICER FOR RE-A DJUDICATION. 7. WE FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF REMAINING CAPITAL CONTRIBUTION OF ` 1,60,000/- WAS FOUND TO BE UNSATISFACTORY ON THE BASIS OF CERTAIN COGENT MATERIAL. IN THESE CIRCUMS TANCES, IN OUR CONSIDERED OPINION, IT SHALL BE FAIR AND IN THE INT EREST OF JUSTICE THAT THE ASSESSEE IS ALLOWED ONE MORE OPPORTUNITY TO EXPLAIN THE SOURCE OF CREDIT OF ` 1,60,000/- IN ITS CAPITAL ACCOUNT. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE A ND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUD ICATION OF THE ISSUE AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE A LL THE DETAILS AND I.T.A.NO. 1484/11 :- 5 -: MATERIALS AS AND WHEN CALLED UPON BY THE ASSESSING OFFICER. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16-03-2012. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 6 TH MARCH, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR