K.Senguttuvan, CHENNAI V. ITO, Namakkal

ITA 1499/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8822 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 26-05-2016
• Court: TRIBUNAL
• Section: 131; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1499/MDS/2016 / ASSESSMENT YEAR : 2011-12 SHRI K. SENGUTTUVAN S/O K KARUPPIAH 11, BYE PASS ROAD PARAMATH VELUR NAMAKKAL 638 182 VS. THE INCOME TAX OFFICER WARD 5 NAMAKKAL [PAN ACPPS 8288 P] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI T.S. LAKSHMI VENKATARAMAN, CA /RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 02 - 0 8 - 2016 ! / DATE OF PRONOUNCEMENT : 10 - 0 8 - 2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX, SALEM, DATED 28.3.2016, PASSED U/S 263 OF THE INCOME-TAX ACT, 1961(THE AC T IN SHORT). 2. FACTS APROPOS ARE THAT THE ASSESSEE, EARNING INCOM E FROM SALARY AND TEXTILE AGENCY COMMISSION, HAD FILED HIS RETURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING AN INCOME OF ` 4,48,880/-. FROM ITA NO. 1499/16 :- 2 -: AIR INFORMATION, THE ASSESSING OFFICER NOTED THAT T HE ASSESSEE HAD MADE CASH DEPOSITS OF ` 15,24,963/- IN SB ACCOUNT NO.4302532801 IN KARNATAKA BANK LTD AND ` 20,64,980/- IN SB ACCOUNT NO.8264200 MAINTAINED WITH BANK OF INDIA DURING THE PREVIOUS Y EAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE WAS REQUIR ED TO EXPLAIN THE SOURCE OF THESE DEPOSITS. SUMMON U/S 131 WAS ISSUED AND STATEMENT OF ASSESSEE WAS RECORDED. IN THE STATEM ENT THE ASSESSEE MENTIONED THAT HE WAS OWNER OF A HOUSE AT NAGAMPALL I VILLAGE WHICH HE PROPOSED TO SELL TO ONE SHRI P. SUBRAMANIAM. AS PER THE ASSESSEE ON 15.6.2010 HE HAD RECEIVED AN ADVANCE OF ` 24 LAKHS FROM SHRI SUBRAMANIAM. THE ASSESSEE ALSO PRODUCED A COPY OF THE SALE AGREEMENT DATED 15.6.2010 BEFORE THE ASSESSING OFFI CER. CONTENTION OF THE ASSESSEE WAS THAT THIS MONEY WAS DEPOSITED IN THE ABOVE MENTIONED BANK ACCOUNTS. FURTHER, AS PER THE ASSE SSEE, THE BALANCE SUM OF `11,89,943/- REPRESENTED THE TRANSACTIONS RELATING TO TEXTILE COMMISSION BUSINESS. THE ASSESSMENT WAS COMPLETED BY MAKING ADDITION FOR PROFITS FROM TEXTILE COMMISSION BUSINE SS AND A SUM OF ` 7,529/- TOWARDS SB ACCOUNT INTEREST NOT OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME. 3. THEREAFTER, A NOTICE U/S 263 OF THE ACT WAS ISSUE D TO THE ASSESSEE BY THE PRINCIPAL CIT. THROUGH THIS, THE ASSESSEE WAS PUT ON ITA NO. 1499/16 :- 3 -: NOTICE THAT THE ASSESSING OFFICER HAD NOT CONSIDERE D THE STATEMENT OF AFFAIRS OF THE ASSESSEE AS ON 31.3.2011 PROPERLY. AS PER THE PRINCIPAL CIT, IF ASSESSEE HAD RECEIVED ADVANCE OF ` 24 LAKHS ON 15.6.2010 BASED ON THE SALE AGREEMENT, THEN THE SAME SHOULD H AVE BEEN REFLECTED IN THE LIABILITY SIDE OF THE STATEMENT OF AFFAIRS. AS PER THE PRINCIPAL CIT, THE ASSESSEE HAD NOT FURNISHED ANY DOCUMENT TOWARDS REPAYMENT OF THE ADVANCE OR FOR CANCELLATION OF THE AGREEMENT. THUS, HE WAS OF THE OPINION THAT THE ORDER OF THE A SSESSING OFFICER WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. 4. IN REPLY TO THE ABOVE NOTICE, THE ASSESSEE POINTED OUT TO THE PRINCIPAL CIT THAT THE DEPOSITS WERE DULY VERIFIED BY THE ASSESSING OFFICER. AS PER THE ASSESSEE, SUPPORTING DOCUMENT S WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO P OINTED OUT THAT THE ASSESSING OFFICER HAD RECORDED STATEMENTS FROM BOTH THE ASSESSEE AND THE PROSPECTIVE PURCHASER. THUS, THERE WAS PRO PER ENQUIRY CONDUCTED BY THE ASSESSING OFFICER. CONTENTION OF THE ASSESSEE WAS THAT THE PRINCIPAL CIT EFFECTIVELY WANTS TO SUBSTIT UTE HIS VIEW. HOWEVER, THE PRINCIPAL CIT WAS NOT IMPRESSED OF THE SUBMISSIONS OF THE ASSESSEE. ACCORDING TO HIM, IF THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT WAS ADVANCE RECEIVED BASED ON THE SALE AGREEMENT AND SUCH MONEY WAS USED FOR DEPOSITING IN THE BANK THEN THE LIABILITY ITA NO. 1499/16 :- 4 -: OUGHT TO HAVE BEEN REFLECTED IN THE STATE OF AFFAIR S. AS PER THE PRINCIPAL CIT, THE BANK BALANCE DULY REFLECTED IN T HE STATE OF AFFAIRS BUT CORRESPONDING LIABILITY WAS NOT SHOWN THEREIN. ACC ORDING TO HIM, THE ASSESSING OFFICER HAS NOT LOOKED INTO THESE ASPECTS WHILE COMPLETING THE ASSESSMENT, AND THEREFORE, THE ORDER OF THE ASS ESSING OFFICER WAS ERRONEOUS INSOFAR AS IT WAS PREJUDICIAL TO THE INT EREST OF THE REVENUE. HE, THEREFORE, CANCELLED THE ASSESSMENT ORDER AND D IRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME OF THE ASSE SSEE AFRESH AFTER HEARING THE ASSESSEE. 5. LD. AR STRONGLY ASSAILING THE ORDER OF THE PRINCIPA L CIT, SUBMITTED THAT THE ASSESSING OFFICER HAD MADE ENQU IRIES ON THE VERY SAME ISSUE OF SOURCE FOR THE DEPOSITS MADE BY THE ASSESSEE IN THE BANK ACCOUNTS. RELIANCE WAS PLACED ON THE JUDGMEN T OF THE DELHI HIGH COURT IN THE CASE OF CIT VS SUNBEAM AUTO LTD, 332 ITR 167. 6. PER CONTRA, THE LD. DR SUPPORTED THE ORDER OF THE P RINCIPAL CIT. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSING OFF ICER HAD EXHAUSTIVELY DEALT WITH THE DEPOSITS MADE BY THE A SSESSEE IN HIS BANK ACCOUNTS WITH KARNATAKA BANK AND BANK OF INDIA. A SSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE MON EY USED FOR THE ITA NO. 1499/16 :- 5 -: DEPOSITS HAD COME OUT OF THE PROPOSED SALE OF PROPE RTY TO SHRI. P. SUBRAMANIAM. THE ASSESSING OFFICER HAD ISSUED SUMMO NS TO SHRI P. SUBRAMANIAM AS WELL AS THE ASSESSEE AND RECORDED S TATEMENTS FROM THEM. BALANCE OF THE AMOUNT AFTER DEDUCTING THE SU M OF ` 24 LAKHS WHICH THE ASSESSEE RECEIVED AS ADVANCE WAS CONSIDE RED BY THE ASSESSING OFFICER AS PART OF THE ASSESSEES TEXTIL E AGENCY COMMISSION. THIS AMOUNT WAS ALSO SUBJECTED TO ASSESSMENT @ 8% T HEREOF. THUS, THE ASSESSING OFFICER HAD CONDUCTED ENQUIRIES ON SO URCE OF THE MONEY DEPOSITED IN SB ACCOUNTS. ASSESSEE HAD ALSO FILE D A COPY OF THE SALE AGREEMENT BEFORE THE ASSESSING OFFICER. THE ONLY R EASON FOR THE PRINCIPAL CIT TO INVOKE THE POWER VESTED ON HIM U/ S 263 OF THE ACT WAS THAT STATEMENT OF AFFAIRS FILED BY THE ASSESSE E DID NOT REFLECT THE ADVANCE RECEIVED FROM SHRI P. SUBRAMANIAM. JUST FO R A REASON THAT THE STATEMENT OF AFFAIRS DID NOT REFLECT THE ADVAN CE, WE CANNOT IGNORE THE AGREEMENT FOR SALE PRODUCED BY THE ASSESSEE W HICH WAS CONFIRMED BY THE PROSPECTIVE BUYER. WE CANNOT SAY THAT THE ASSESSING OFFICER WAS OBLIVIOUS TO THE STATEMENT OF AFFAIRS WHILE VERIFYING THE SOURCE OF DEPOSITS IN THE BANK ACCOUNTS. THIS BEIN G THE CASE, AT THE BEST, IT CAN BE CONSIDERED AS AN INADEQUATE ENQUIR Y AND NOT A CASE OF LACK OF ENQUIRY. THAT SEC. 263 OF THE ACT CANNOT BE INVOKED IN A CASE OF INADEQUATE ENQUIRY BUT CAN BE INVOKED IN THE C ASE OF LACK OF ENQUIRY IS THE PRINCIPLE THAT EMERGES OUT OF THE DELHI HIGH COURT ITA NO. 1499/16 :- 6 -: JUDGMENT IN THE CASE OF SUNBEAM AUTO LTD (SUPRA). IN THESE CIRCUMSTANCES, IN OUR OPINION, THE PRINCIPAL CIT WA S TRYING TO SUBSTITUTE HIS VIEW WITH A LAWFUL VIEW TAKEN BY THE ASSESSING OFFICER. THE ORDER OF THE ASSESSING OFFICER DID NOT SUFFER FROM ANY ER ROR MUCH LESS AN ERROR WHICH WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE, THEREFORE, QUASH THE ORDER OF THE PRINCIPAL CIT PAS SED U/S 263 OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10 TH AUGUST, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF