ITO, CHENNAI V. N.Murali, CHENNAI

ITA 1485/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90623 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: P RAJASEKARAN
• Keywords: Income from undisclosed sources; Additional evidence; Reasonable cause
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NOS.1485, 1530 TO 1534/MDS/2013 ( / ASSESSMENT YEARS: 2005-06 TO 2010-11) INCOME TAX OFFICER, BUSINESS WARD-IV(2) CHENNAI-600 034. VS MR. N.MURALI, 21, GANGAI AMMAN KOIL STREET,VADAPALANI , CHENNAI-600 026. PAN: ATKPM3914A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. P.RADHAKRISHNAN, JCIT /RESPONDENT BY : MR. P.RAJASEKARAN, C.A /DATE OF HEARING : 14 TH MAY, 2015 /DATE OF PRONOUNCEMENT : 8 TH JULY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: ALL THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS- VIII), CHENNAI DATED 18.02.2013 FOR THE ASSESSMENT YEARS 2004-05 TO 2010-11. THE REVENUE RAISED COMMON GROUNDS IN ALL THESE APPEALS STATING THAT COMMISSIO NER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER AS UNEXPLAINED MONEY ON THE B ASIS OF NEW EVIDENCE PRODUCED BEFORE HIM FOR THE FIRST TIME . 2 ITA NOS. 1485, 1530 TO 1534/MDS/2013 2. THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 2006-07 TO 2010-11 ARE TIME BARRED BY 9 DAYS. THE DEPARTMENT FILED SEPARATE PETITIONS EXPLAINING REA SONS FOR DELAY IN FILING OF APPEALS AND PRAYS FOR CONDONATIO N OF DELAY. WE HAVE PERUSED THE REASONS AND ARE SATISFIED THAT THERE IS A REASONABLE CAUSE FOR THE DELAY IN FILING OF THE APP EALS. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF NINE D AYS IN FILING OF THESE FIVE APPEALS. THE PETITIONS FOR CONDONATIO N OF DELAY ARE THUS ALLOWED AND THE APPEALS FOR THE ASSESSMENT YEARS 2006-07 TO 2010-11 ARE ADMITTED. 3. BRIEF FACTS ARE THAT SURVEY WAS CONDUCTED IN THE CASE OF MR. E. VELU AT NO.103,GANGAI AMMAL KOIL STREET, VAD APALANI, CHENNAI. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE MR. MURALI WAS ONE OF THE MONEYLENDERS TO MR. E. VELU AND THE MONEY RECEIVED FROM THE ASSESSEE BY MR . VELU IS BEING ROTATED THEREBY EARNING COMMISSION. A STAT EMENT WAS RECORDED FROM THE ASSESSEE ON 12.04.2010 AND 26.05.2010 DURING THE COURSE FROM WHICH IT CAME TO LIGHT THAT ASSESSEE WAS RUNNING AN AUTOMOBILE SPARE PARTS SHOP IN THE NAME & STYLE OF M/S.VEL MURUGAN TRADERS AND HE CLOS ED THE 3 ITA NOS. 1485, 1530 TO 1534/MDS/2013 SAID BUSINESS IN THE YEAR 2005 AND THEREAFTER ENGA GED IN THE MONEY LENDING BUSINESS . THE ASSESSEE HAS GIVEN MO NEY TO MR. E.VELU, THE MEDIATOR FOR ROTATION IN MONEY LEND ING BUSINESS AND WAS EARNING INTEREST THEREFROM. MONEY LENDING FETCHES INTEREST @ 2% ON AN AVERAGE AND ASSESSEE HA S ESTIMATED INTEREST INCOME @ 1.5% PER MONTH AND PAID 0.5% PER MONTH AS COMMISSION TO MR. E.VELU. THE ASSESSEE IS ALSO DOING MONEY LENDING BUSINESS ON HIS OWN FOR WH ICH HE IS EARNING INTEREST ON AN AVERAGE @ 2% PER MONTH. THE ASSESSEE HAD NEVER FILED HIS RETURN OF INCOME AND D OES NOT MAINTAIN ANY BOOKS OF ACCOUNT. DURING THE COURSE OF ENQUIRY, ASSESSEE PREPARED AND SUBMITTED COMPUTATION OF INCO ME, PROFIT & LOSS ACCOUNT AND BALANCE SHEET FOR THE PER IODS ENDING 31.3.2004 TO 31.03.2010 AND ALSO PAID TAXES AS PER HIS COMPUTATION OF INCOME FOR THE SAID YEARS. ASSES SMENTS FOR THE ASSESSMENT YEARS 2006-07 TO 2010-11 WERE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7 OF THE ACT BY THE ASSESSING OFFICER ON 31.10.2011 MAKING A DDITIONS TOWARDS INCOME FROM UNDISCLOSED SOURCES. THE ASSES SEE PREFERRED APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS) AND HE DELETED THE ADDITIONS HOLDING TH AT 4 ITA NOS. 1485, 1530 TO 1534/MDS/2013 ADDITIONS ARE NOT BASED ON ANY MATERIAL EVIDENCE ON RECORD AND THE ESTIMATED ADDITIONS HAVE NO BASIS, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN ASSESSING INCOME FROM UNDISCLOSED SOURCES. DEPARTMENTAL REPRESENTATIVE F URTHER SUBMITS THAT ADDITIONAL EVIDENCES WERE PRODUCED BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE FIRST TIME BASED ON WHICH HE DELETED THE ADDITIONS. THEREFORE , DEPARTMENTAL REPRESENTATIVE SUBMITS THAT MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDI CATION IN THE LIGHT OF THE EVIDENCES PRODUCED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE COMMISSIONER OF INCOME TAX (A PPEALS). 5. COUNSEL FOR THE ASSESSEE SUBMITS THAT EXCEPT TH E NAMES AND ADDRESSES OF THE PERSONS WITH WHOM THE ASSESSEE HAS THE BUSINESS TRANSACTION, NO NEW EVIDE NCES WERE PRODUCED. WITH REGARD TO THE SUBMISSION MADE B Y THE DEPARTMENTAL REPRESENTATIVE THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER, THE COUNSEL SUBMITS THAT THESE 5 ITA NOS. 1485, 1530 TO 1534/MDS/2013 MATTERS ARE RELATED TO ASSESSMENT YEARS 2005-06 TO 2010-11 AND THE PERSONS WITH WHOM THE ASSESSEE WAS HAVING FINANCIAL DEALINGS WERE ALL SCATTERED AND AT THIS P OINT OF TIME ASSESSEE CANNOT BE ABLE TO TRACE THE PERSONS WITH W HOM HE HAD FINANCIAL DEALINGS. COUNSEL FOR THE ASSESSEE SU BMITS THAT ALL THE TRANSACTIONS ARE MADE THROUGH BANKING CHANN ELS AND THEREFORE THERE IS NO PURPOSE WILL BE SERVED, EVEN IF THE MATTER IS REMITTED BACK TO THE ASSESSING OFFICER FO R VERIFICATION. COUNSEL VEHEMENTLY SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELEING THE ESTIMATED ADDITION WHICH WAS MADE WITHOUT ANY BASIS . 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER MADE ESTIMATED ADDITION TOWAR DS UNDISCLOSED SOURCES IN ALL THESE ASSESSMENT YEARS. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DE LETED SUCH ADDITIONS OBSERVING AS UNDER:- 7. THE AO HAS MADE AN ADDITION OF RS.4,81,317/- O N OBJECTION TO THE ADDITION MADE THE AD, THE AR OF TH E APPELLANT HAS STATED THAT-THERE WAS NO CASH CREDIT IN THE BANK ACCOUNT; THE MODUS OPERANDI OF THE BUSINESS IS THAT THE APPELLANT USED TO FINANCE BY WAY OF CHEQUE DISCOUNTING ON A MAXIMUM OF 100 DAYS OF VARIOUS BUSINESS PEOPLE. THE CHEQUES HAVE BEEN DEPOSITED ON 6 ITA NOS. 1485, 1530 TO 1534/MDS/2013 THE DUE DATES. THE MAXIMUM TERM OF LOAN IS 100 DAYS. SINCE THE TRADERS CARRYING ON THE BUSINESS IN THE W EE HOURS OF THE DAY AND LATE EVENINGS NEED CASH SUPPOR T AND THE APPELLANT IS SUPPORTING THEM BY LENDING CAS H BY DISCOUNTING THEIR CHEQUES WHICH ARE DEPOSITED INTO THE BANK ON THE DUE DATES. THE WHOLE TRANSACTION WERE CARRIED OUT WITH AVAILABLE CAPITAL OF RS.3,67,650/- AS ON 31,03,2004 ALONG WITH THE INTEREST EARNED. THEREON. THERE IS NO FRESH DEPOSIT MADE IN CASH IN ORDER TO CONCLUDE FOR AN ADDITIONAL INCOME TO BE ADDED UNDER OTHER SOURCES. THE APPELLANT HAS ALSO SUBMITTED TH E NAMES AND ADDRESSES OF THE PERSONS . WITH WHOM THE APPELLANT WAS HAVING FINANCIAL TRANSACTIONS. COPY O F THE BANK STATEMENT FOR THE PERIOD UNDER CONSIDERATION H AS ALSO BEEN FILED REFLECTING THE TRANSACTIONS ENTERED INTO FOR CHEQUE DISCOUNT FINANCE WITH THE FINANCE BROKERS. T HE NATURES OF THESE TRANSACTIONS ARE ALL SAME FOR THE AY YEARS UNDER CONSIDERATION I.E. FOR THE A Y 2004-05 TO 2010-11. COPY OF THE STATEMENTS OF AFFAIRS FILED B EFORE THE ADIT ON ACCOUNT OF SURVEY IS ALSO ENCLOSED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT WAS ASKED TO EXPLAIN THE TOTAL DEPOSITS OF RS.8,46,567/ - APPEARING IN HIS. BANK ACCOUNT FOR THE PERIOD UNDER CONSIDERATION. THE APPELLANT IN HIS REPLY HAS STATE D THAT THE ENTIRE AMOUNT RECEIVED BY WAY OF CHEQUES RECEIV ED FROM VARIOUS PERSONS BY WAY OF REPAYMENT OF LOAN AN D EXPLAINED THAT OUT OF RS.8,46,567/-, AN AMOUNT OF R S.3 LAKHS REPRESENTS LOAN AMOUNT RETURNED BY WAY OF CHE QUE. THIS CAN BE VERIFIED FROM THE BANK STATEMENT ITSEL F AS DEBITS ALONG WITH CHEQUE RETURN CHARGES. THE BALANC E AMOUNT CREDITED AS PER BANK STATEMENT AMOUNTS TO RS.5,46,467/-. 7.1 ON VERIFYING THE SUBMISSIONS MADE THE AR OF TH E APPELLANT ALL THE DEPOSITS IN THE BANK ACCOUNT I.E. 'IOB, KODARNBAKKARN BRANCH WERE IN CHEQUE AND THE WHOLE TRANSACTIONS WERE CARRIED OUT WITH AVAILABLE CAPITA L OF RS.3,67,650/- ALONG WITH THE INTEREST EARNED THEREO N. THE APPELLANT DECLARED THAT THERE WAS NO FRESH DEPOSIT MADE IN CASH AND HAVE TO CONCLUDE FOR AN ADDITIONAL INCO ME TO BE ADDED AS UNDISCLOSED INCOME FROM OTHER SOURCES. THE APPELLANT ALSO SUBMITTED THE NAMES AND ADDRESSES OF THE PERSONS WITH WHOM HE HAS HAVING FINANCIAL TRANSACTI ONS. A COPY OF STATEMENT OF AFFAIRS HAS ALSO BEEN FILED BEFORE THE ADIT. WITHOUT CONSIDERING THE ANY ONE OF THE A BOVE DETAILS FILED BEFORE THE ASSESSING OFFICER MADE AN ADDITION OF RS.4,81,318/- TO THE INCOME RETURNED. W ITHOUT 7 ITA NOS. 1485, 1530 TO 1534/MDS/2013 EXAMINING AND CONFIRMING THE TRANSACTIONS FROM THE DETAILS GIVEN BY THE AR OF THE APPELLANT FOR THE FI NANCIAL TRANSACTION WHICH ARE. CROSS VERIFIABLE SINCE THEY ARE ALL CARRIED BY WAY OF CHEQUE THE ESTIMATION MADE BY THE ASSESSING OFFICER AT RS4,81,317/- CANNOT BE SUSTAIN ED WHICH IS NOT BASED ON ANY MATERIAL ON, RECORD. OVER AND ABOVE THE AO HAS TREATED SOME OF THE TRANSACTIONS IN CASH THAT ARE NOT REFLECTED IN THE BANK ACCOUNT HAD RESORTED TO ESTIMATE DISALLOWANCE OF .LOAN DEBTORS REPAID AND THE CROSS RECEIPT ADMITTED. THEREFORE THE .ADDI TION RNADE BY THE ASSESSING OFFICER IS NOT BASED ON ANY MATERIAL EVIDENCE ON RECORD AND THE ESTIMATED ADDIT ION MADE DID NOT HAVE ANY BASIS. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. THE APPEL LANT SUCCEEDS ON THIS GROUND OF APPEAL. SIMILARLY, THE COMMISSIONER OF INCOME TAX (APPEALS) ON EXAMINING THE ADDITIONS MADE FOR ALL OTHER ASSESSME NT YEARS DELETED THE ADDITION HOLDING THAT THERE IS NO BASIS FOR SUCH ADDITIONS. NONE OF THESE FINDINGS OF THE COMMISSION ER OF INCOME TAX (APPEALS) HAVE BEEN REBUTTED BY THE REVE NUE EXCEPT STATING THAT MATTER HAS TO GO BACK TO THE AS SESSING OFFICER FOR VERIFICATION AS RULE 46A IS VIOLATED B Y THE COMMISSIONER OF INCOME TAX (APPEALS). 7. ON HEARING BOTH THE PARTIES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCES IN THE FORM OF NAMES AND ADDRESSES OF THE PERSONS WITH WHOM HE HAD FINANCIAL TRANSACTIONS. THIS EVIDENCE WAS NOT PUT F ORTH BEFORE 8 ITA NOS. 1485, 1530 TO 1534/MDS/2013 THE ASSESSING OFFICER BY THE ASSESSEE AND THE COMMI SSIONER OF INCOME TAX (APPEALS) HAS NOT CALLED FOR A REMAND REPORT. IN THE CIRCUMSTANCES, WE DEEM IT APPROPRIATE TO REM IT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, WHO SHA LL EXAMINE SUCH EVIDENCE AND IF HE FINDS THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH SUCH PARTIES ARE GENUINE, THE ESTIMATED ADDITION SHOULD BE DELETED. THE ASSESSIN G OFFICER SHALL GIVE ADEQUATE OPPORTUNITY TO THE ASSESSEE AND PASS CONSEQUENTIAL ORDER ACCORDINGLY. 8. IN THE RESULT, ALL THESE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 8 TH JULY, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .