V.P.Unnikrishnan, Kerala V. ITO, CHENNAI

ITA 1653/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81171 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C V PAVANA KUMAR
• Assessee Lawyers: K M RAMAKRISHNAN
• Keywords: Unexplained investment; Additional evidence
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , . . , ! ' [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1653/MDS/2014 / ASSESSMENT YEAR : 2009-10 SHRI V.P.UNNIKRISHNAN KEERTHI(H) BRAHMAMANGALAM PO THALYOLAPRAMBU VAIKOM T. KOTTAYAM KERALA 686 605 VS. THE INCOME TAX OFFICER WARD I(1) CHENNAI [PAN AAZPU 7298 K ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI K.M. RAMAKRISHNAN, CA /RESPONDENT BY : SHRI C.V.PAVANA KUMAR, JCIT / DATE OF HEARING : 15 -09-2014 ! / DATE OF PRONOUNCEMENT : 19-09-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 200 9-10, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCO ME-TAX APPEALS (CENTRAL)-I CHENNAI, DATED 26.3.2014, PASSED IN I.T .A.NO.160/2013-14 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-T AX ACT, 1961 (IN SHORT THE ACT). I.T.A.NO.1653/14 :- 2 -: 2. THE ASSESSEES GROUNDS IN THE PRESENT APPEAL; THOU GH NO VERY SPECIFICALLY DRAFTED, CHALLENGE THE CIT(A)S OR DER AFFIRMING DISALLOWANCE OF ` 17,13,460/- ADDED BACK AT HIS OWN INSTANCE FOR NON - DEDUCTION OF TDS, ADDITION OF UNEXPLAINED CASH DE POSITS OF ` 11.50 LAKHS WITH INTEREST ACCRUING THEREUPON OF ` 40,000/- MADE IN THE ASSESSMENT ORDER DATED 29.11.2011. IN THE COURSE O F HEARING, THE ASSESSEE ORALLY ASSAILS ANOTHER ADDITION OF CAPITAL INTRODUCED AMOUNTING TO ` 27.29 LAKHS. THE REVENUE OPPOSES THIS ORAL SUBMISSION FOR WANT OF SPECIFIC PLEADINGS. THE CAS E FILE REVEALS THAT THIS ISSUE HAS ALREADY BEEN ADJUDICATED BY BOTH TH E LOWER AUTHORITIES. IT DOES NOT REQUIRE ANY ADDITIONAL EVIDENCE OR MATE RIAL BEYOND THE CASE RECORD. THEREFORE, WE GRANT THE ASSESSEE LEA VE TO RAISE THIS ORAL PLEA AND REJECT THE REVENUES TECHNICAL OBJECTIO NS. 3. THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN GARMEN T MANUFACTURING BUSINESS. HE HAD FILED HIS RETURN ON 1.10.2009 ADMITTING INCOME OF ` 1,39,169/-. THE SAME WAS SUMMARILY PROCESSED. THE ASSESSING OFFICER COMPLETED A REGU LAR ASSESSMENT, INTER ALIA, DISALLOWING A SUM OF ` 4,05,076/- U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS, MADE ADDITION TOWARDS UN EXPLAINED INVESTMENTS IN HDFC BANK ACCOUNT OF ` 11.50 LAKHS WITH APPROXIMATE INTEREST OF ` 40,000/- AND ALSO ADDED CAPITAL INTRODUCED IN THE ACCOUNT I.T.A.NO.1653/14 :- 3 -: OF M/S K.K EXPORTS OF ` 27.29 LAKHS. THE CIT(A) HAS ONLY DELETED THE DISALLOWANCE U/S 40(A)(IA) AND AFFIRMED THE REMAINI NG OF THE ASSESSING OFFICERS FINDINGS. 4. THE ASSESSEES FIRST GROUND IS ABOUT SELF-MADE DIS ALLOWANCE OF ` 17,13,460/-. HE HAD PAID THESE SUMS AS JOB WORK C HARGES OF ` 7,10,570/- AND COMMISSION OF ` 10,02,890/- TO M/S SYNERGIES INDIA. THE ASSESSEE HAD NOT DEDUCTED ANY TDS. WE FIND FR OM PAGE 6 OF THE PAPER BOOK THAT HE HAD HIMSELF ADDED BACK THIS AMOU NT IN COMPUTING TOTAL INCOME FOR NON-DEDUCTION OF TDS. IN ASSESSME NT, THE ASSESSING OFFICER DISALLOWED/ADDED A FURTHER SUM OF ` 4,05,026/-(SUPRA) INCURRED ON MACHINERY RENT, SOFTENING CHARGES AND I RONING EXPENSES OF ` 1,51,000/-, ` 1,41,399/- AND ` 1,12,627/-, RESPECTIVELY. 5. IN LOWER APPELLATE PROCEEDINGS, THE ASSESSEE CHALL ENGED THE VERY APPLICABILITY OF TDS PROVISIONS I.E 194, 194H AND 194J OF THE ACT AND PRAYED FOR DELETING THE DISALLOWANCE AND ALSO F OR RESTORATION OF THIS ADDED BACK AMOUNT. THE CIT(A) HAS HELD THAT T HE TDS PROVISIONS DO NOT APPLY IN THE ASSESSEE/INDIVIDUALS CASE SIN CE HIS BUSINESS HAD STARTED IN FINANCIAL YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2009-10. THE CIT(A) HAS ONLY DELETED THE DISALLOWA NCE (SUPRA) INSTEAD OF RESTORING THE ADDED BACK AMOUNT. THE ASSESSEES PLEA OF THIS RESTORATION HAS REMAINED UNDECIDED. I.T.A.NO.1653/14 :- 4 -: 6. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE REL EVANT FINDINGS. THERE IS NO DISPUTE ABOUT THE FACTUAL PO SITION THAT THE RELEVANT FINANCIAL YEAR IS THE FIRST YEAR OF THE ASSESSEES BUSINESS. THE CIT(A) APPEARS TO HAVE RELIED UPON 2 ND PROVISO TO SECTION 194H FOR REJECTING APPLICABILITY OF THE TDS PROVISIONS I N THIS CASE. THE REVENUE DOES NOT CHALLENGE THIS CLINCHING FINDING B Y FILING A SEPARATE APPEAL OR CROSS OBJECTIONS. ONCE THAT IS THE CASE, WE OBSERVE THAT THE ASSESSEES GROUND TO RESTORE BACK THE ADDED AMOUNT (SUPRA) CANNOT BE TURNED DOWN MERELY BECAUSE OF ESTOPPEL PRINCI PLE. WE REITERATE THAT IN A TAXING STATUTE, IT IS THE LETTER OF LAW WHICH GIVES THE REVENUE RIGHT TO COLLECT THE TAX. ONCE THAT ITSELF DOES NO T APPLY, THE IMPUGNED DISALLOWANCE CANNOT WITHSTAND ON THE BASIS OF A MER E TECHNICAL PLEA. THUS, WE HOLD THAT WHEN THE TDS PROVISIONS THEMSELV ES ARE NOT EVEN ATTRACTED, THERE IS NO JUSTIFICATION TO APPROVE T HE ASSESSEES MISTAKE IN DISALLOWING/ADDING THE AFORESAID SUM OF ` 17,13,460/-. WE ACCEPT THE ASSESSEES CONTENTIONS AND ALLOW HIM TO RESTOR E THE ADDED BACK AMOUNT. THE ASSESSEES RELEVANT GROUND IS ACCEPTE D. 7. THE ASSESSEES NEXT GROUND IS ABOUT UNEXPLAINED CASH DEPOSITS OF ` 11.50 LAKHS AND APPROXIMATE INTEREST AMOUNT OF ` 40,000/- TOTALLING TO ` 11.90 LAKHS. THE ASSESSING OFFICER HAD RECEIVED AIR INFORMATION CONTAINING HIS PAN AND ACCOUNT HOLD ERS NAME AS M/S I.T.A.NO.1653/14 :- 5 -: INSTYLE FASHIONS. THE ACCOUNT STATEMENT DEMONSTR ATES IT TO BE A JOINTLY OPERATED ACCOUNT. THE ASSESSEE HAD HIMSEL F ADMITTED THESE DEPOSITS TO HAVE BEEN MADE ON 20.9.2008, 22.9.2008 AND 5.3.2009 HAVING DEPOSITED SUMS OF ` 6 LAKHS, ` 3.5 LAKHS AND ` 2 LAKHS, RESPECTIVELY. HE PLEADED THAT THE AFORESAID CONCER N BELONGED TO ONE OF HIS FRIEND WITH WHOM THE RELATIONS HAD TURNED SO UR. THE ASSESSEE ALSO EXPRESSED HIS INABILITY TO GET CONFIRMATION OF THE FACT THAT THE MONEY DEPOSITED BELONGED TO HIS FRIEND (PROPRIETOR OF THE AFORESAID ENTITY). THE ASSESSING OFFICER REJECTED THIS EXPLA NATION FOR WANT OF SUFFICIENT EVIDENCE AND TREATED THESE DEPOSITS AS UNEXPLAINED INVESTMENTS. HE ALSO APPROXIMATED INTEREST ACCRUED OF ` 40,000/- AS ON 31.3.2009. THIS RESULTED IN CONSEQUENTIAL ADDITI ON OF ` 11.90 LAKHS. 8. THE CIT(A) HAS ALSO UPHELD THE ASSESSING OFFICERS FINDINGS BY QUOTING ASSESSEES FAILURE TO FURNISH SUFFICIEN T EVIDENCE. 9. WE HAVE EXAMINED THE RIVAL CONTENTIONS AND GONE THR OUGH RELEVANT FINDINGS IN ASSESSMENT AS WELL AS LOWER AP PELLATE ORDER. THE ASSESSEES STAND FROM THE VERY BEGINNING ADMITS TO HAVE HIMSELF MADE ALL THESE CASH DEPOSITS IN HDFC BANK ACCOUNT O F THE AFORESAID CONCERN. HE ATTRIBUTES THE MONEY TO HIS FRIEND/PRO PRIETOR OF THE AFORESAID ENTITY. NO EVIDENCE MUCH LESS A SATISFAC TORY ONE IS FORTHCOMING IN THE SCRUTINY ASSESSMENT, REMAND RE PORT SUBMITTED BY I.T.A.NO.1653/14 :- 6 -: THE ASSESSING OFFICER, IN LOWER APPELLATE PROCEEDIN GS OR THE CIT(A)S ORDER. THE ASSESSEE ALSO FAILS TO PROVE ANY LACK OF OPPORTUNITY OF HEARING AT THE HANDS OF BOTH LOWER AUTHORITIES. WE MAKE IT CLEAR THAT ONCE HE HAD ADMITTED THESE DEPOSITS, IT CAN BE VAL IDLY PRESUMED THAT THE SAID CASH MONEY BELONGED TO THE HOLDER/DEPOSITO R/ASSESSEE. WE HOLD THAT ONCE THE ASSESSEE HAS NOT PROVED THE IMP UGNED DEPOSITS, HIS OTHER PLEAS OF SOUR RELATIONS WITH HIS FRIEND D O NOT INSPIRE CONFIDENCE. THEREFORE, THE ADDITION PERTAINING TO ` 11.50 LAKHS DEPOSITED IS AFFIRMED. WE ALSO DO NOT FIND FROM TH E BANK STATEMENT ANY INTEREST CREDITS OF ` 40,000/-. THAT BEING THE CASE, THE AUTHORITIES BELOW SEEM TO HAVE PROCEEDED ONLY ON AN APPROXIMATI ON WHICH COULD NOT HAVE BEEN RESORTED TO WITHOUT ANY SUPPORTIVE IN TEREST CREDITED. SO, THE ASSESSEES CHALLENGE QUA THIS INTEREST IS A CCEPTED. THE RELEVANT GROUND IS PARTLY DECIDED IN ASSESSEES F AVOUR. 10. THIS LEAVES US WITH THE LAST ISSUE OF ADDITION OF C APITAL INTRODUCED OF ` 27.29 LAKHS AS UNEXPLAINED INVESTMENT. THE ASSESSING OFFICER HAD NOTICED THE ASSESSEES LEDGE R ACCOUNT WITH M/S K.K.EXPORTS DEMONSTRATING FRESH CAPITAL OF ` 27.29 LAKHS INTRODUCED ON VARIOUS OCCASIONS FROM SEPTEMBER 2008 TO MARCH 2 009. THE ASSESSEE STATED ITS SOURCE AS JOINT INCOME OF HIMS ELF AND HIS WIFE SMT.SUSILA UNNIKRISHNAN EARNED IN JORDAN FROM THE Y EAR 2002 TO 2006BY WORKING IN A GARMENT FACTORY. HE SUBMITTED THAT THE AFORESAID I.T.A.NO.1653/14 :- 7 -: AMOUNTS HAD BEEN LATER ON GIVEN TO RELATIVES IN IND IA AND TAKEN BACK IN THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFIC ER REJECTED THE SAID EXPLANATION FOR WANT OF DETAILS OF MONEY BROUGHT IN INDIA, ITS ROTATION, LACK OF IN-BOUND AND OUT-BOUND ACCOUNTING AS WELL A S DETAILS BY WAY OF INCOME TAX RETURNS AND ADDED THIS ENTIRE SUM OF ` 27.29 LAKHS AS UNEXPLAINED INVESTMENTS. 11. IN LOWER APPELLATE PROCEEDINGS, THE ASSESSEE FILED A BREAK- UP OF THIS ENTIRE SUM OF ` 27.29 LAKHS AS TO HAVE OBTAINED FROM HIS WIFE ( ` 10 LAKHS) AND THE BALANCE FROM ONE OF HIS SISTER. HE FILED HIS WIFES AFFIDAVIT DATED 30.7.2012. SHE SOLEMNLY AF FIRMED TO HAVE EARNED THE AFORESAID MONEY IN JORDAN, DEPOSITED THE SAME IN INDIA WITH SYNDICATE BANK FROM 16.6.2003 (STATEMENTS ALRE ADY ON RECORD) AND TO HAVE GIVEN A SUM OF ` 10 LAKHS TO THE ASSESSEE. SHE ALSO CLAIMED THAT THE VERY SUM OF ` 10 LAKHS GIVEN INTEREST FREE WAS RETURNED ON 22.4.2009 BY CHEQUE NO.207114 OF SNI, C HENNAI 602024 (PAGE 48 OF THE PAPER BOOK). NEITHER THE ASSESSING OFFICER IN REMAND PROCEEDINGS NOR THE CIT(A) SOUGHT FURTHER DETAILS FROM HER. THE LATTER AUTHORITY HAS SIMPLY TURNED DOWN THE AFORESA ID EXPLANATION AS NON-CREDIT WORTHY FOR UPHOLDING THE ADDITION. 12. WE HAVE HEARD BOTH PARTIES AND PERUSED THE ORDERS O F BOTH THE LOWER AUTHORITIES. RELEVANT CONTENTS OF THE PA PER BOOK HAVE ALSO I.T.A.NO.1653/14 :- 8 -: BEEN GONE THROUGH. THE ADDITION OF CASH INTRODUCED IN QUESTION IS OF ` 27.29 LAKHS. THE ASSESSEE HAS ATTRIBUTED A SUM OF ` 10 LAKHS AS LOAN FROM HIS WIFE. IT HAS ALREADY COME ON RECORD THAT THE SAME VERY LOAN WAS REPAID BY WAY OF A CHEQUE (SUPRA). THERE IS N O FINDING REBUTTING HIS WIFES THIS SOLEMN AFFIRMATION. NOR THE AUTHOR ITIES BELOW HAVE SOUGHT FOR ANY MORE DETAILS. THUS, WE TREAT THIS S UM OF ` 10 LAKHS AS EXPLAINED. SO FAR AS BALANCE SUM OF ` 17.29 LAKHS IS CONCERNED, THERE IS NO MATERIAL ON RECORD FILED BY THE ASSESSEE EX PLAINING ITS SOURCE. WE FIND FROM HIS AFFIDAVIT AT PAGE 53 OF THE PAPER BOOK THAT HE SIMPLY AVERS TO HAVE TRANSFERRED A SUM OF ` 17 LAKHS EARNED IN JORDAN (SUPRA) TO ONE OF HIS SISTER. NO DETAILS OR PARTICULARS EI THER OF THE MONEY TRANSFERRED, ITS INSTRUMENT OR NOT EVEN NAME AND DETAILS OF HIS SISTER ARE FORTHCOMING. WE MAKE IT CLEAR THAT ONCE THE A SSESSEE HAD CLAIMED TO HAVE EARNED THE AMOUNT IN QUESTION IN JO RDAN UPTO THE YEAR 2006, TRANSFERRED IT TO HIS SISTER AND RECEIVED TH E MONEY BACK FOR IMPUGNED INVESTMENT, HAS TO BE COGENTLY PROVED. TH E ASSESSEE HAS TENDERED ONLY A VAGUE EXPLANATION WITHOUT ANY RELE VANT EVIDENCE. SO, WE AFFIRM THIS REMAINING ADDITION OF ` 17.29 LAKHS IN HIS HANDS. THE RELEVANT ARGUMENTS ARE PARTLY ACCEPTED. I.T.A.NO.1653/14 :- 9 -: 13. THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 19 TH OF SEPTEMBER, 2014, AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 19 TH SEPTEMBER, 2014 RD %& '()( / COPY TO : 1 . / APPELLANT 2 . / RESPONDENT 3. *+, / CIT(A) 4. * / CIT 5. (-. / / DR 6. .01 / GF