ACIT, CHENNAI V. Shri M.V.Muthuramalingam, CHENNAI

ITA 1485/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5144 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-04-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 09-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO.1485/MDS/2010 ASSESSMENT YEAR : 2002-03 THE ACIT CENTRAL CIRCLE I(4) CHENNAI VS SHRI M.V.MUTHURAMALINGAM VELLAMMAL GARDEN 21A, KRISHNA NAGAR CHENNAI 600 050 [PAN AAKPM0400G] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN RESPONDENT BY : SHRI G. BASKAR O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2002-03, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) II, CHENNAI, DATED 26.5.2010. 2. THE ASSESSEE HAS SHOWN RECEIPT OF RENTAL INCOME IN THE RETURN OF INCOME FILED FOR THIS YEAR ON 15.11.2002. A PERUSAL OF THE BANK SUMMARY REVEALED THAT THE ASSESSEE HAD RECEIVE D A LEASE ITA 1485/10 :- 2 -: ADVANCE OF ` 15 LAKHS AND ANOTHER SUM OF ` 17 LAKHS AS LOAN FROM VARIOUS PERSONS BY CASH INCLUDING FROM SHRI MOHANL AL JAIN AND M/S ANUPAM MOTOR FINANCE LTD. THE ASSESSEES REPRESENT ATIVE WAS ASKED TO FILE CONFIRMATIONS WITH REGARD TO LOANS RECEIVED FROM VARIOUS PARTIES INCLUDING SHRI MOHANLAL JAIN. HE WAS ALSO REQUIRED TO FILE CONFIRMATION REGARDING THE ADVANCES RECEIVED. THE ASSESSEE FUR NISHED THE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM HE HAD TAKEN LEASE ADVANCE(S) AND LOANS BUT DID NOT FURNISH THEIR CONF IRMATORY LETTERS. SINCE THE DETAILS WERE FILED ONLY ON 30.3.2005, THE FAG END OF THE ACCOUNTING YEAR, THE ASSESSING OFFICER HAS TREATED THE ENTIRE AMOUNT OF ` 32 LAKHS AS ASSESSEES UNDISCLOSED INCOME AND HAS ADDED THE SAME TO HIS TOTAL INCOME DECLARED. AGGRIEVED, THE ASSESSEE FILED FIRST APPEAL BEFORE THE LD. CIT(A). DURING APPELLATE PRO CEEDINGS, THE LD.AR ALSO FURNISHED CONFIRMATORY LETTERS FROM THE LENDER S WHICH WERE SENT TO THE ASSESSING OFFICER ALONGWITH LETTER DATED 28.1.2 009 SEEKING HIS REMAND REPORT. THE ASSESSING OFFICER, VIDE LETTER DATED 9.2.2009 SUBMITTED THE REPORT STATING THAT OUT OF 23 CREDITO RS 14 CREDITORS WERE RESIDING OUTSIDE CHENNAI IN SIVAGANGAI DISTRICT, TH EREFORE, VERIFICATION HAD TO BE DONE BY THE ASSESSING OFFICER HAVING JUR ISDICTION OVER THOSE PERSONS. SUBSEQUENTLY, THE ASSESSING OFFICER FILED DETAILED REMAND ITA 1485/10 :- 3 -: REPORT VIDE LETTER DATED 26.5.2009 BASED ON THE REP ORT OF THE CONCERNED ITO. THE GIST OF THIS REMAND REPORT IS AS UNDER: ''AS PER THE COMMISSION ISSUED BY THE DCIT, CENTRAL CIRCLE.II(4), CHENNAI, I HAVE MADE ENQUIRIES IN RESPECT OF LEASE ADVANCES AND LOANS GIVEN BY VARIOUS PARTIES TO SRI M.V.MUTHURAMALINGAM , CHAIRMAN OF VELAMMAL EDUCATIONAL TRUST. THE DETAILS OF ENQUIRIES CONDUCTED ARE SUBMITTED AS UNDER: THERE ARE ALTOGETHER EIGHTEEN PARTIES FROM WHOM SRI M.V.MUTHURAMALINGAM HAD RECEIVED LEASE ADVANCES/LOA NS. I HAVE CONDUCTED ENQUIRIES WITH SEVENTEEN PERSONS. ON E LOAN CREDITOR M.RATHINAM OF LADANENTHAL VILLAGE IS DECEA SED AND HENCE THE DETAILS WITH REGARD TO HIS LOAN AMOUNT CO ULD NOT BE VERIFIED. LETTERS WERE ISSUED TO THE PARTIES, CALLING FOR DET AILS OF LEASE ADVANCE/LOAN GIVEN BY EACH OF THEM TO SRI M.V.MUTHURAMALINGAM. SEVENTEEN PERSONS APPEARED IN PERSON BEFORE ME ON 29 TH APRIL,2009. SWORN STATEMENTS WERE RECORDED FROM ALL THE SEVENTEEN PERSONS. THE ORIGINALS OF SU CH SWORN STATEMENTS ARE ENCLOSED. OUT OF THE SEVENTEEN PERSONS, SIX HAVE TAKEN THE AG RICULTURAL LAND BELONGING TO SRI M.V.MUTHURAMALINGAM AND HIS F AMILY MEMBERS IN LADANENTHAL VILLAGE, SIVAGANGA DISTRICT, ON LEASE AND HAVE PAID LEASE ADVANCES OF ` 250000 EACH. THE LEASE ADVANCES WERE CONFIRMED TO HAVE BEEN PAID IN CASH. LEASE AGREEMENTS WEE ENTERED INTO BY EACH OF THEM WITH SR I M.V.MUTHURAMALINGAM. COPIES OF LEASE AGREEMENTS WER E SUBMITTED BY THE PARTIES, AT THE TIME OF THEIR PERS ONAL APPEARANCE BEFORE ME. ALL THESE SIX PERSONS ARE FAR MERS, HAVING THEIR OWN AGRICULTURAL LAND AND LIVING I N THE SAME VILLAGE OF LADANENTHAL, SIVAGANGA DISTRICT. THE GENUINENESS OF IDENTITY OF THESE SIX PERSONS WERE VERIFIED AND FOUND CORREC T. SINCE THE SOURCES OF LEASE ADVANCES PAID TO SRI M.V.MUTHURAMA LINGAM IS CLAIMED TO BE MAINLY FROM AGRICULTURE, I HAVE PERSO NALLY VISITED LADANENTHAL VILLAGE, MADE ENQUIRIES IN THE VILLAGE, WHERE ALL THE SIX OF THEM ARE RESIDING. ITA 1485/10 :- 4 -: LADANENTHAL VILLAGE IS SITUATED ON MADURAI-RAMESWAR AM ROAD. THE DISTANCE FROM MADURAI TO THIS VILLAGE IS ABOUT 123 KMS. THE VILLAGE LIES ON THE BANKS OF VAIGAI RIVER AND IS AG RICULTURALLY RICH. COCONUT IS THE MAJOR CULTIVATED CROP. SUGARCANE, PA DDY AND OTHER CASH CROPS ARE ALSO CULTIVATED. ON VERIFICATION OF THE BACKGROUND OF THESE SIX LESS EES, THE TRANSACTION BETWEEN THEM AND SRI M.V.MUTHURAMALINGA M ARE FOUND TO BE GENUINE. THE AGRICULTURAL LAND BELONGIN G TO SRI M.V.MUTHURAMALINGAM ARE STILL UNDER LEASE AN-D CULT IVATION WITH THESE SIX PERSONS. THE COPIES OF LEASE DEEDS ENTERE D INTO BETWEEN THESE PARTIES AND SHRI M.V.MUTHURAMALINGAM ARE ENCLOSED. THE BALANCE ELEVEN PERSONS, OUT OF THE SEVENTEEN, A RE LOAN CREDITORS OF SRI M.V.MUTHURAMALINGAM. AS IN THE CAS ES OF LEASE ADVANCES, LETTERS WERE ISSUED TO THESE LOANS CREDIT ORS ALSO, CALLING FOR OF THEIR LENDING TO SRI M.V.MUTHURAMA LINGAM. ALL THE ELEVEN PERSONS APPEARED BEFORE ME ON 29 TH APRIL,2009 . SWORN STATEMENTS WERE RECORDED FROM EACH OF THEM. T HE ORIGINALS OF SUCH SWORN STATEMENTS ARE ENCLOSED. I ALL THE ELEVEN PERSONS ARE EITHER RELATIVES OR FRIE NDS OF SRI M . V.MUTHURAMALINGAM. OUT OF THE ELEVEN, SEVEN ARE RESIDING IN LADANENTHAL VILLAGE ITSELF. THREE OF TH EM, SHRI N.ESWARAN, SR I P.RAMACHANDRAN AND SRI A.PUVANENDIREAN ARE RESIDENTS OF THIRUPUVANAM, A SMALL TOWN BEFORE LADANENTHAL VILLAGE, ON MADURAI-RAMESWARM ROAD. ONE PERSON, SRI V.S.RAJENDRAN IS RESIDING IN K.K.NAGAR , MADURAI . THE GENUINENESS OF IDENTITY OF THESE ELEVEN PERSONS WERE VERIFIED AND FOUND CORRECT. THE LOANS WERE CONFIRMED TO HAVE BEEN GIVEN IN CASH. THE SOURCES F OR LENDING OF THESE PERSONS IS CLAIMED TO BE FROM AGRI CULTURE, RETIREMENT BENEFITS AND FAMILY SAVINGS. AS STATED ABOVE, I PERSONALLY VISITED THIRUPUVANAM AND LADANENTHAL VIL LAGE, MADE ENQUIRIES, WHERE TEN OF THE ELEVEN PERSONS ARE RESIDING. ON SUCH VERIFICATION OF THE BACKGROUND OF THESE PER SONS, THE LENDING OF MONEY BY EACH OF THEM TO SRI M.V.MUTHURAMALINGAM IS FOUND TO BE GENUINE. SHRI V.S.RAJENDRAN, RESIDENT OF K.K.NAGAR, MADURAI IS A RETIRED GOVT.SERVANT AND A RELATIVE OF SRI M . V . MUTHURAMALINGAM. HE HAS ALSO CONFIRMED HIS LOAN TO SR I \ ITA 1485/10 :- 5 -: M.V . MUTHURAMALINGAM. ALL THESE LOAN CREDITORS WERE . HAVING - , PROMISSORY NOTES EXECUTED BY SHRI M.V.MUTHURAMALINGAM . COPIES O F THE SAID PROMISSORY NOTES WERE SUBMITTED. FROM THE ABOVE NARRATED FACTS, VERIFICATION OF DOCU MENTS \ PRODUCED AND ENQUIRIES CONDUCTED, WHAT I COULD INFE R IS THAT THE LEASE \ ADVANCES AND LOANS CLAIMED BY SRI M.V.MUTHURAMALINGAM ARE ) GENUINE. 3. A COPY OF THE ABOVE REMAND REPORT WAS GIVEN TO THE LD.AR FOR HIS COMMENTS. AFTER EXAMINING THE RIVAL COMMENTS OF THE PARTIES, THE LD. CIT(A) HAS GIVEN PART RELIEF TO THE ASSESSEE. NOW, THE REVENUE IS AGGRIEVED AND HAS RAISED THE FOLLOWING GROUNDS: 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` 30.25,000 MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED CREDITS. 1.2 THE LEARNED CIT(A) HAS ERRED IN STATING THAT THE FINDINGS OF ACIT VIRUDHUNAGAR RELATING TO CREDITS W ILL BE FINAL WITHOUT NOTING THAT THE ACIT VIRUDHUNAGAR HAS CERTIFIED REGARDING THE GENUINENESS OF THE CREDITOR S WITHOUT ANY SUPPORTING MATERIAL RELATING TO THE CREDITWORTH INESS OF THE CREDITORS WHICH FACT WAS DULY BROUGHT TO THE NO TICE OF THE LEARNED CIT (A) BY THE ASSESSING OFFICER IN THE REMAND REPORT. 1.3 THE LEARNED CIT(A) HAS ERRED IN STATING THAT T HE ASSESSING OFFICER HAS ONLY SUSPECTED THE GENUINENES S AND CREDITWORTHINESS OF THE TRANSACTIONS WITHOUT NOTING THAT SEVERAL LOANS WERE CLAIMED TO BE OBTAINED BY CASH W HEN THE CREDITORS HAD BANK ACCOUNTS. 1.4 THE LEARNED CIT (A) ERRED IN TREATING THE CRE DITS AS GENUINE ON THE GROUND THAT THE ASSESSING OFFICER HA S NOT CALLED FOR THE CASH BOOK OR MADE ANY FURTHER ENQUIR Y. ITA 1485/10 :- 6 -: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. AFTER COGITAT ING THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE CONSIDERE D OPINION THAT THE IMPUGNED ISSUE OF CREDITS NEEDS TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER BECAUSE THE RELEVANT RECORDS/EVID ENCE WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER AND WHEN THE EVIDENCE(S) IN QUESTION WERE FILED BEFORE THE LD. CIT(A) FOR THE F IRST TIME DURING APPELLATE PROCEEDINGS, IT WAS VERY CUMBERSOME TO DE AL WITH THE SAME THROUGH A REMAND PROCEEDINGS. SINCE THE ASSESSEE H AD FILED EVEN THE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM LEASE ADVANCE AND LEASE RENTALS STATED TO HAVE BEEN RECEIVED, YET T HESE WERE FILED AT THE FAG END OF THE TIME PERMITTED FOR MAKING ASSESSMENT , THEREBY CREATING A SITUATION WHEREIN THE ASSESSING OFFICER WAS PRACT ICALLY PRECLUDED FROM VERIFYING THEM. IN THIS WAY, ASSESSEE HAS DE FEATED THE VERY PURPOSE OF SECTION 143(3). BUT TO BE FAIR IN THE G IVEN FACTS AND CIRCUMSTANCES OF THE CASE, CONSIDERING THE PLEA OF INABILITY OF THE ASSESSEE IN GETTING THE EVIDENCE IN TIME, WE ARE UN ABLE TO ACCEPT THIS LATTER EVIDENCE BUT AT THE SAME TIME WE CANNOT DI SCREDIT THE SAME. THEREFORE, IT BECOMES IMPERATIVE, IN THE INTEREST O F JUSTICE, TO RESTORE THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFIC ER SO THAT HE CAN ITA 1485/10 :- 7 -: DIRECTLY DEAL WITH THE ISSUE AS PER LAW. ACCORDIN GLY, WE RESTORE THE APPEAL TO THE FILE OF THE ASSESSING OFFICER. HE SH ALL GIVE CLEAR OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEREAFT ER REFRAME THE ASSESSMENT ON THIS ISSUE, AFRESH. 5. IN THE RESULT, THE APPEAL OF REVENUE STANDS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5. 5.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 5 TH MAY, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR