G. ELUMALAI, VELLORE V. DCIT, CENGTRAL CIRCLE-3(4), CHENNAI

ITA 1591/CHNY/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6018 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-05-2024
• Assessment Year: misc
• Appeal Filed On: 26-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Depreciation
• Section: 131; 142(1); 153A; 143(2); 69A

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी एबी टी वक᳹, ᭠याियक सद᭭य एवं ᮰ी एस. आर. रघुनाथा, लेखा सद᭭य के समᭃ BEFORE SHRI ABY T VARKEY, HON’BLE JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 1591/Chny/2023 िनधाᭅरण वषᭅ / Assessment Year: 2020-21 G. Elumalai 308/66, Bajani Koil Street, Alamelurangapuram, Puduvasur, Vellore – 632 009. [PAN: AAXPE-9401-E] v. The Dy. Commissioner of Income Tax, Central Circle -3(4), Chennai-34. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri. M. Karunakaran, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri. V. Nandakumar, CIT सुनवाई कᳱ तारीख/Date of Hearing : 09.05.2024 घोषणा कᳱ तारीख/Date of Pronouncement : 05.07.2024 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: This appeal instituted by the assessee is against the order of the Commissioner of Income Tax (Appeals), Chennai- 20, for the assessment year 2020-21, vide order dated 08.12.2023. 2. The sole issue raised by the assessee is that sustaining the addition of Rs.22,89,925/- out of Rs.27,74,000/- being cash found during the search on 13.07.2019 as unexplained money :-2-: ITA. No: 1591/Chny/2023 u/s. 69A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 3. The brief facts are that, the assessee is an agriculturist and doing business of real estate cum builders. In connection with the by-election to the Vellore Parliamentary constituency, checking was conducted on 13.07.2019 by the flying squad team, during which cash of Rs.27,74,000/- was found in the residence of the assessee, for which the assessee could not explain source for the same. Subsequently, a summons u/s. 131 of the Act was issued to the assessee. During the course of examination, the assessee claimed that the amount received against sale of immovable properties was the source for the said cash but could not furnish any documentary evidence for the same. Since, the assessee failed to substantiate the source for cash, the same is treated as unexplained money. The case was notified to the Circle vide notification no. 20/2020-21 in C.No.831/PCIT-8/Cent & Decent/2020-21 dated 29.03.2021. The Assessing Officer noted that the assessee has not filed his return of income for the assessment year 2020-21 and issued notice u/s. 142(1) of the Act on 26.08.2021. Later, the assessee filed return of income but Assessing Officer noted that :-3-: ITA. No: 1591/Chny/2023 e-verification was pending and therefore notice u/s. 143(2) of the Act was not issued. 4. And the Assessing Officer noted that during the course of examination u/s. 131 of the Act, the assessee has claimed that the source for the cash of Rs.27,74,000/- found was out of sale of some immovable properties and the jewel loan taken by his son. And pointed out that in the statement recorded u/s. 132A of the Act, the assessee had provided the details of income earned by himself and his family and his HUF was Rs.11,53,700/-. However, the Assessing Officer didn’t accept the statements of the assessee and passed an order u/s. 153A r.w.s. 153B(1)(b) r.w.s. 144 of the Act on 28.09.2021 and added Rs.27,24,000/- as unexplained money u/s. 69A of the Act, r.w.s. 115BBE of the Act. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A). 5. The ld.CIT(A) acknowledged that the assessee had furnished the details of cash flow statements of himself, (G. Elumalai), Elumalai HUF, E. Babu (son) and E. Janaki Ammal (wife), in support of the cash found at Rs.27,74,000/- on the date of search. On perusal of documents and statements :-4-: ITA. No: 1591/Chny/2023 including cash flow statement by the assessee, the ld.CIT(A) has accepted Rs.4,84,075/- as cash on hand available as on 13.07.2019 (date of seizure) and reduced the addition made u/s. 69A of the Act by the Assessing Officer to Rs.22,89,925/- by giving a deduction of Rs.4,84,075/- as explained money and passed an order on 18.12.2023. Aggrieved by the impugned order of the ld.CIT(A), the assessee is before us. 6. The Ld. Counsel for the assessee assailing the action of the ld.CIT(A) stated that the complete cash flow was provided to show that the cash was available at the time of search which belongs to the family members (Supra). However, the ld.CIT(A) has erred in passing the impugned order by sustaining the addition of Rs.22,89,925/-. The Ld. Counsel for the assessee filed a paper book containing 53 pages wherein the assessee had filed a cash flow statement of G.Elumalai, G.Elumalai HUF, E.Babu and E.Janaki Ammal from 01.04.2018 to the date of seizure i.e. up to 13.07.2019 and stated that the cash available was Rs.29,09,042/- as against the amount allowed as cash held by the ld.CIT(A) of Rs.4,84,075/-. The Ld. Counsel for the assessee, submitted that the ld.CIT(A) has erred in not considering the commission of Rs.3 lakhs rental :-5-: ITA. No: 1591/Chny/2023 income of Rs.8,47,500/- and agricultural income of Rs.11,75,000/- as income of the family members to arrive at the cash on hand as on 13.07.2019, which totals to Rs.23,22,500/- which according to ld.AR would explain the balance amount of Rs.22,89,925/- and placed before us the cash flow statement which is reproduced as under: Details G. Elumalai Elumalai (HUF) E. Babu E.Janaki Ammal Total Opening cash 14,472 1,372 87,227 51,882 1,54,953 Profit on sale of plots 4,20,000 12,120 2,50,000 3,60,000 10,42,120 Business income Depreciation 3,00,000 1,87,200 28,793 3,694 4,87,200 32,487 Rental income fy 18-19 1.4.19 to 30.6.19 2,64,000 66,000 1,20,000 30,000 2,94,000 73,500 6,78,000 1,69,500 Agricultural income Last year Current year 10,000 10,000 3,00,000 1,00,000 2,40,000 75,000 3,20,000 1,20,000 8,70,000 3,05,000 Cost of properties sold 4,86,045 3,28,090 23,98,779 2,64,320 34,77,234 Receipt from firm 2,65,125 2,65,125 Gift 7,02,000 7,02,000 Decrease in bank balance SB interest 5,24,294 89,948 1,49,813 47,479 6,74,107 1,37,427 TOTAL 15,70,517 15,71,817 36,19,638 22,33,181 89,95,153- A Less: Purchase of properties 11,61,070 13,69,013 6,88,800 32,18,883 Drawings IT, etc 6,766 2,49,600 3,50,615 6,06,981 Gift to Janaki 7,02,000 7,02,000 Cash deposit 12,77,353 :-6-: ITA. No: 1591/Chny/2023 in bank TOTAL 11,67,836 2,49,600 24,21,628 19,66,153 58,05,217- B Cash on hand on 13.7.19 4,02,681 13,22,217 11,98,010 2,67,028 31,89,936 (A-B) As per cash flow statement 1.4.19 to 13.7.19 2,97,681 12,22,117 12,13,772 1,75,472 29,09,042 AS PER ASSESSING OFFICER Cash on hand on 13.7.2019 -2,40,550 2,88,782 5,74,993 -1,39,150 4,84,075 7. Further, the ld.AR submitted that the ld.CIT(A) has not considered the following income which was available as cash on hand as on 13.07.2019 as under: Details G. Elumalai Elumalai (HUF) E. Babu E.Janaki Ammal Total Commission 3,00,000 3,00,000 Rental income 3,30,000 1,50,000 3,67,500 8,47,500 Agricultural income 20,000 4,00,000 3,15,000 4,40,000 11,75,000 TOTAL 6,50,000 4,00,000 4,65,000 8,07,500 23,22,500 8. According to the ld.AR, the ld.CIT(A) failed to appreciate that the assessee has sufficient source of the cash as explained supra and therefore prayed that the addition sustained by the ld.CIT(A) be deleted. 9. Per contra, the ld.DR relying on the decision of the ld.CIT(A)/AO submitted that the ld.CIT(A) has already given relief of Rs.4,84,075/- and therefore, the balance addition should be sustained. :-7-: ITA. No: 1591/Chny/2023 10. We have gone through the facts and circumstances of the case and perused the material. We note that the assessee claims himself to be an agriculturalist and doing business of real estate/builder and during the by-election to the Vellore Parliamentary Constituency, the flying squad found that the assessee was having cash of Rs.27,74,000/- in his possession/residence. Later on, the Assessing Officer asked the assessee to prove the nature and source of the amount seized and according to the Assessing Officer, the assessee failed to prove the same and therefore, he made the entire addition of Rs.27,74,000/- which addition was restricted to Rs.22,89,925/- by the ld.CIT(A). Before us, the ld.AR has submitted that he has agricultural income to the tune of Rs.11,75,000/- in the year under consideration and was available with him and for that he has brought to our notice that the assessee and his family is holding the agricultural land in their name which is captured in chart below: Name of the person Total extent of agricultural land holding in all places G. Elumalai 7.94 acres G. Elumalai (HUF) 11.96 acres E. Babu 2.81 acres Mrs. Janaki Ammal 4.32 acres Total land holdings 27.03 acres :-8-: ITA. No: 1591/Chny/2023 11. Thus, according to the ld.AR, the assessee/family agricultural income cannot be doubted and ought to have been accepted. Likewise, according to the ld.AR, the assessee had rental income of Rs.8,47,500/- and commission/brokerage from real estate transactions of Rs.3 lakhs which totals to Rs.23,22,500/-, which will be sufficient to explain the balance amount of Rs.22,89,925/- (sustained by the ld.CIT(A)). The assessee has filed paper book containing more than 53 pages to prove the agricultural income, rental income as well as the commission income and prayed us to remit back issue to Assessing Officer, since the assessee did not get proper opportunity before the Assessing Officer. Therefore, relying on the decision of the Hon’ble Supreme Court in the case of Tin Box Company vs CIT, [2001] 249 ITR 216 (SC), we restore the addition of Rs.22,89,925/- back to the file of the JAO. Since, the revenue is not in appeal, we confirm the ld.CIT(A) action of deleting Rs.4,84,075/-. We direct the assessee to file all the documents to prove the agricultural income, rental income and commission and if the Assessing Officer finds that the explanation given by the assessee is correct, then no addition may be made or else addition may be sustained. The ld.AR, has undertaken to file all the details and participate in the :-9-: ITA. No: 1591/Chny/2023 assessment proceedings and the Assessing Officer to frame in accordance with law. 12. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 05 th July, 2024 at Chennai. Sd/- (एबी टी वकŎ ) (ABY T VARKEY) Ɋाियक सद˟/Judicial Member Sd/- (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद˟/Accountant Member चे᳖ई/Chennai, ᳰदनांक/Dated, the 05 th July, 2024 JPV आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT – Chennai 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF