V.Sivakumar, S/o. Sri Veerapandi Thevar, Theni V. ITO, Theni

ITA 163/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9157 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Gift
• Section: 143(3); 69; 148; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.163/MDS/2016 ( / ASSESSMENT YEAR: 2001-02) MR. V.SIVAKUMAR, S/O.SHRI VEERAPANDITHEVAR, NEAR WATER TANK, DOMBUCHERRY, BODI, THENI DIST. VS THE INCOME TAX OFFICER, WAD-I(2) THENI. PAN: BWJPS1579Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. G.BASKAR, ADVOCATE /RESPONDENT BY : MR. A.B. KOLI, JCIT /DATE OF HEARING : 31 ST MARCH, 2016 /DATE OF PRONOUNCEMENT : 9 TH JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, MADURAI DATED 27.11.2015 IN ITA NO.0157/2008-09 PASSED UNDER SECTION 143(3) & 250(6) OF THE ACT. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN HIS AP PEAL IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN PARTLY RESTRICTING THE ADDITION OF ` 2,00,160/- MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 69 OF T HE ACT BEING UNEXPLAINED INVESTMENT. 2 ITA NO.163 /MDS/2016 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. P.N.R. S PINNING MILLS LTD., IT WAS NOTICED THAT M/S. P.N.R. SPINNIN G MILLS LTD., HAD RECEIVED ` 2,90,00,000/- AS SHARE APPLICATION MONEY FROM 50 PERSONS WHICH INCLUDES THE ASSESSEE AS WELL FOR HAVING INVESTED AN AMOUNT OF RS.5,00,400/-. IT WAS FURTH ER OBSERVED BY THE LEARNED ASSESSING OFFICER THAT PERS ONS WHO HAVE INVESTED MONEY IN M/S. P.N.R. SPINNING MILLS L TD., ARE NOT ASSESSED TO TAX, HENCE TO INVESTIGATE THE SOURC E OF INVESTMENT OF THESE PERSONS, NOTICE WAS ISSUED UNDE R SECTION 148 OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR 20 01-02 AFTER OBTAINING THE REQUISITE SANCTION. SUBSEQUEN TLY, IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE IT WAS REVEALED THAT THE SOURCE OF INCOME WAS FROM AGRICULTURAL ACTIVITIES WHICH WAS MEAGER AMOUNTING TO RS.20,577/-, RS.21,898/-, RS.19,638/-, AND RS.17,45 5/- FOR THE ASSESSMENT YEARS 2001-02 TO 1998-99 RESPECTIVEL Y. THE ASSESSEE HAD EXPLAINED VIDE HIS LETTER DATED 15.12. 2008 FILED ON 23.12.2008 BEFORE THE LEARNED ASSESSING OFFICER THAT THE SOURCE OF INVESTMENT IN THE SHARE APPLICATION MONEY WAS OUT OF THE REPAYMENT OF LOAN RECEIVED BY HIM AND THE S OURCE OF 3 ITA NO.163 /MDS/2016 ADVANCING THE LOAN EARLIER WAS FROM HIS SAVINGS, AG RICULTURAL INCOME AND GIFTS RECEIVED FROM FAMILY MEMBERS. HOW EVER, THE LEARNED ASSESSING OFFICER CAME TO THE CONCLUSIO N THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF I NVESTMENT AND THEREFORE MADE ADDITION OF RS.5,00,400/- IN THE HANDS OF THE ASSESSEE INVOKING THE PROVISIONS OF SECTION 6 9 OF THE ACT. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) RESTRICTED THE ADDITION MADE BY THE LEARN ED ASSESSING OFFICER FROM ` 5,00,400/- TO ` RS.2,00,160/- BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRESENTATIVE. ADMITTEDLY, THE APPELLANT HAD INVESTED RS.5,00,400/- TOWARDS SHARE CAPITAL CONTRIBUTION IN THE COMPANY BY NAME M/S. PNR SPINNING MILLS LTD. AND THE CAPITAL CONTRIBUTION WAS MADE IN CASH. IT IS FURTHER SEEN FROM THE CASE RECORDS THAT THE APPELLANT HAD FILED CONFIRMATION LETTERS FROM DIFFERENT DEBTORS CERTIFYING THAT THEY HAD BORROWED MONEY FROM THE APPELLANT WHICH WAS REPAID SUBSEQUENTLY. IT IS FURTHER SEEN THAT THE APPELLANT IS HAVING AGRICULTURAL INCOME AND HAS FILED A CERTIFICATE FROM VILLAGE ADMINISTRATIVE OFFICER THAT A SUM OF RS.60,000/- IS DERIVED FROM AGRICULTURAL INCOME. CONSIDERING THE ABOVE FACTS, I FIND THAT THE ENTIRE AMOUNT COULD NOT BE TAXED UNDER THE HEAD OTHER SOURCES AS THERE IS A LIKELIHOOD OF PAST SAVINGS BY THE APPELLANT. IN THE 4 ITA NO.163 /MDS/2016 CIRCUMSTANCES, I HOLD THAT 60% OF THE INVESTMENT IN SHARE CAPITAL CAN BE TAKEN AS INCOME OUT OF PAST SAVINGS FROM COMMISSION INCOME AND AGRICULTURAL INCOME AND THE BALANCE 40% CAN BE TAXED AS UNEXPLAINED INVESTMENT DURING THIS YEAR. ACCORDING, THE ADDITION OF RS.5,00,400/- IS RESTRICTED TO RS.2,00,160/-. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT SOURCE F OR MAKING THE INVESTMENT BECAUSE THE MONEY LENT BY HIM EARLIE R WAS RECEIVED BACK DURING THE RELEVANT ASSESSMENT YEAR A ND THE SAME WAS INVESTED IN SHARES. HENCE, IT WAS PLEADED THAT THE ADDITION SUSTAINED BY THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) FOR RS.2,00,160/- MAY BE DELETED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS AP PARENT FROM THE FACTS OF THE CASE THAT M/S. PNR SPINNING MILLS HAD DISCLOSED IN ITS BOOKS OF ACCOUNT THAT IT HAD RECEI VED 5 ITA NO.163 /MDS/2016 RS.2,90,00,000/- BY WAY OF SHARE APPLICATION MONEY FROM 50 PERSONS INCLUDING THE ASSESSEE FOR THE RELEVANT ASS ESSMENT YEAR 2001-02 WHO WERE MEN WITH MODEST RESOURCE. FRO M THE FACTS AND CIRCUMSTANCES OF THESE TRANSACTIONS, IT CAN BE UNDOUBTEDLY INFERRED THAT M/S. PNR SPINNING MILLS P VT.LTD. HAD UTILIZED THE NAMES OF THESE 50 PERSONS TO BRING THE AMOUNT OF RS.2,90,00,000/- INTO ITS BUSINESS AS ACC OUNTED CASH. IT IS ALSO EVIDENT THAT THESE 50 PERSONS DO N OT HAVE SUFFICIENT SOURCE OF INCOME TO MAKE SUCH INVESTMEN T, ESPECIALLY IN THE CASE OF THE ASSESSEE WHOSE FACTS ARE BEFORE US. FURTHER NO SANE MEN OF MEAGER RESOURCE WILL INV EST IN THE SHARES OF A PRIVATE LIMITED COMPANY WITHOUT ANY GUA RANTEE FOR THE SAFETY OF SUCH INVESTMENT. IN THIS SITUATIO N, IT CAN BE FURTHER INFERRED THAT THE AMOUNT OF RS.2,90,00,000/ - MAY BE THE UNDISCLOSED INCOME OF M/S. PNR SPINNING MILLS P VT.LTD. CONSIDERING THESE FACTS, WE ARE OF THE STRONG VIEW THAT THE ASSESSEE WHO HAD ONLY GIVEN AN ACCOMMODATION ENTRY HAS BECOME THE SCAPEGOAT. THOUGH WE DO NOT APPRECIATE THIS KIND OF MISREPRESENTATION MADE BY THE ASSESSEE BEF ORE THE REVENUE, AT THE SAME TIME WE DO NOT FIND IT JUSTIF IED TO TAX THE ASSESSEE FOR AN INCOME WHICH HE HAS NOT EARNED. IT IS 6 ITA NO.163 /MDS/2016 FURTHER REVEALED THAT IN MOST OF THE CASES PERTAINI NG TO OTHER SIMILAR INVESTORS ADDITIONS ARE NOT MADE IN THEIR H ANDS, HOWEVER ONLY IN FEW CASES AS THAT OF THE ASSESSEE, ADDITIONS ARE MADE BY THE REVENUE. WE DO NOT UNDERSTAND AS T O WHY THE REVENUE HAS TREATED THE CASES OF THE ASSESSEES DIFFERENTLY WHEN THE FACTS ARE IDENTICAL WITH RESPE CT TO OTHER INVESTORS AS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE. THEREFORE, IN THE INTEREST OF JUSTI CE, WE HEREBY DELETE THE ADDITION SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OF ` 2,00,160/-. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 9 TH JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF