M.Inderchand, Kumbakonam V. ITO, Kumbakonam

ITA 1655/CHNY/2015

• Counselvise Citation: 165521714 RSA 2015
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 20-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: R VAIDYANATHAN
• Section: 69; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL S M C BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.1655/MDS/2015 ' #$' / ASSESSMENT YEAR : 2006-07 SHRI M. INDERCHAND, 33, T.S.R. BIG STREET, KUMBAKONAM. PAN : AAAHM 4153 N V. THE INCOME TAX OFFICER, WARD I(1), KUMBAKONAM. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SH. R. VAIDYANATHAN, FCA ()&' * + / RESPONDENT BY : SHRI A.B. KOLI, JCIT , # * -. / DATE OF HEARING : 25.09.2015 /0$ * -. / DATE OF PRONOUNCEMENT : 13.11.2015 / O R D E R THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, TIRUCHIRAPA LLI, DATED 15.04.2015 IN ITA NO.340/2008-09/CIT(A)/TRY. THE A PPEAL ARISES OUT OF THE ASSESSMENT UNDER SECTION 143(3) AND 250 OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED GROUNDS IN RESPECT OF AD DITION OF ` 1 LAKH AS UNDISCLOSED INCOME AND ALSO THE LD. CIT(APP EALS) NOT 2 I.T.A. NO.165/MDS/15 CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE AND ALSO WORKINGS OF THE ASSESSEE FOR THE PURPOSE OF ALLOWING INTEREST O N FUNDS DIVERTED AND FURTHER THE CIT(APPEALS) HAS ERRED IN NOT CONSI DERING CORRECT VALUE OF BUSINESS ASSETS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS RUNNING A JEWELLERY SHOP AND FILED THE INCOME-TAX RETURN FOR THE ASSESSMENT YEAR ON 27.03.2008 WITH TOTAL INCOME OF ` 4,92,110/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 19 .05.2008. SUBSEQUENTLY THE CASE WAS CONSIDERED FOR SCRUTINY W ITH THE APPROVAL OF CHIEF COMMISSIONER OF INCOME TAX, TRICH Y VIDE C.NO.910(1)/CCIT/TRY/08-09 DATED 26.09.2008 AND THE NOTICE WAS ISSUED UNDER SECTION 143(2) OF THE ACT. IN THE ASS ESSMENT PROCEEDINGS, AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED ON VARIOUS DATES AND PRODUCED BOOKS OF ACCOUNT FOR EXAMINATION AND ALSO FILED OTHER DETAILS. THE LD. ASSESSING OF FICER PERUSED THE INFORMATION AND EXAMINED THE BOOKS OF ACCOUNT. THE ASSESSEE IS ALSO PARTNER IN THREE SISTER CONCERNS WHICH ARE HAV ING INTERCONNECTION BUSINESS TRANSACTIONS OF JEWELLERY. THE ASSESSING OFFICER FOUND THE BALANCE AS PER BOOKS OF ACCOUNT P RODUCED BY THE ASSESSEE AND THE ACCOUNT COPIES OF SISTER CONCERNS ARE NOT TALLIED, ASSESSEE FILED EXPLANATIONS ON 24.11.2008 MENTIONIN G OF 3 I.T.A. NO.165/MDS/15 RECONCILIATION OF SISTER CONCERNS IS DUE WHEREAS HI S ACCOUNTS WERE CLOSED BEFORE SPECIFIED DATE FOR TAX AUDIT. INTER- CONNECTED TRANSACTIONS ARE TO BE RECONCILED WITH ENTRIES IN B OOKS OF ACCOUNTS. LD. A.O. REJECTED THE SUBMISSION AND MADE ADDITION OF ` 1 LAKH RECEIVED FROM SHRI NAVNEETH KUMAR AS UNEXPLAINED IN VESTMENT UNDER SECTION 69 OF THE ACT. THE A.O. CALCULATED I NTEREST ON THE AMOUNT UTILIZED OUT OF BANK LOANS AND SUNDRY DEBTOR S FOR NON- BUSINESS PURPOSE AND MADE PROPORTIONATE DISALLOWANC E OF ` 3,37,642/- AND ASSESSED THE TOTAL INCOME OF ` 9,29,750/- AND DEMAND RAISED TO ` 2,03,963/-. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL WITH CIT(APPEALS), KUMBAKO NAM AND FILED WRITTEN SUBMISSIONS AND OTHER DETAILS IN THE APPELL ATE PROCEEDINGS. THE LD. CIT(APPEALS) IGNORED THE WRITTEN SUBMISSION S AND CONFIRMATION LETTER OF ` 1 LAKH FROM ASSESSEES SON SHRI I. NAVNEETH KUMAR SETHIA, WHO IS ASSESSED TO INCOME-TAX BY THE SAME ASSESSING OFFICER FOR ADVANCE OF ` 1 LAKH TO THE ASSESSEE AND ADDITIONAL INFORMATION WITH CALCULATION THAT THAT N O AMOUNT WAS DIVERTED FOR NON-BUSINESS PURPOSE ON WHICH THE LD. A.O. DISALLOWED THE INTEREST. FURTHER, THE LD. CIT(APPEALS) WITHOUT CONSIDERING THE 4 I.T.A. NO.165/MDS/15 SUBMISSIONS, EVIDENCE AND EXPLANATIONS, CONFIRMED T HE ORDER OF THE ASSESSING OFFICER BY DISMISSING THE APPEAL OF THE A SSESSEE. 5. ASSESSEE AGGRIEVED BY THE ORDER OF THE CIT(APPEA LS), FILED AN APPEAL BEFORE THE TRIBUNAL AND RAISED GROUNDS FO R NON- ACCEPTANCE OF EVIDENCE BY THE CIT(APPEALS) AND DISA LLOWANCE OF INTEREST ON FUNDS DIVERTED. THE LD. AR ARGUED THAT THE EVIDENCE PRODUCED ARE GENUINE AND BONAFIDE, AND THE CREDITWO RTHINESS OF SHRI I. NAVNEETH KUMAR SETHIA, WHO HAS ADVANCED ` 1 LAKH TO THE ASSESSEE, CAN BE SUBSTANTIATED WITH HIS INCOME-TAX ASSESSMENT. FURTHER, THE CIT(APPEALS) IGNORED THE DETAILED WORK INGS OF THE ASSESSEE FOR UTILIZATION OF FUNDS. THE LD. AR HAS EMPHASIZED THAT THE CIT(APPEALS) HAS OVERLOOKED THE INFORMATION WHI CH IS VERY CRUCIAL FOR ASSESSMENT PURPOSE AND PRAYED THE TRIBU NAL TO DELETE THE ADDITION MADE BY THE A.O. AND SUPPORTED THE CAS E WITH SUBMISSION OF PAPER-BOOK CONTAINING INTIMATION OF T HE FINANCIAL STATUS AND CREDITWORTHINESS OF THE LOAN CREDITOR. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE RELIED ON THE ORDER OF THE CIT(APPEALS) AND ARGUED THAT THE CIT(APPEALS) HAS CONSIDERED THE WRITTEN SUBMISSIONS AND PASSED THE ORDERS. 5 I.T.A. NO.165/MDS/15 7. THE TRIBUNAL, AFTER HEARING THE RIVAL SUBMISSION S OF BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECO RD, IS OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS FILED DETA ILS BEFORE THE CIT(APPEALS) HAVING EVIDENTIAL VALUE AND ARE NECESS ARY FOR ASSESSMENT, TO PROVE THE CORRECTNESS OF THE CLAIMS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RECONSIDERED. ACCORDINGLY, THE ORDERS OF THE AUTHO RITIES BELOW ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FIL E OF THE A.O. FOR EXAMINING THE MATERIALS FILED IN THE APPELLATE PROC EEDINGS BEFORE THE CIT(APPEALS). THE A.O. SHALL PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEREAFTER DECIDE THE I SSUE IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 TH NOVEMBER, 2015 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 13 TH NOVEMBER, 2015. 6 I.T.A. NO.165/MDS/15 KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-2, TIRUCHIRAPPALLI 4. , 6- /CIT-2, TIRUCHIRAPPALLI 5. 4#7 (- /DR 6. 8' 9 /GF.