Shri C, Satheesh Kumar, CHENNAI V. ACIT, Trichy

ITA 166/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81139 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: D ANAND; SIDDHARRTH MEHTA
• Keywords: Unexplained investment; Gift; Source of fund

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! ' #$ , % &# ' BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO.166/MDS/2014 % ( )( / ASSESSMENT YEAR : 2009-10 SHRI C. SATHEESH KUMAR, # 155, PUDUKKOTTAI ROAD, ARANTHANGI 614 616. PAN : AKZPS 1557 K V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, TRICHY. ($+/ APPELLANT) (-.$+/ RESPONDENT) $+ / / APPELLANT BY : SHRI D. ANAND, ADVOCATE & SHRI SIDDHARRTH MEHTA, CA -.$+ / / RESPONDENT BY : SHRI N. MADHAVAN, JCIT 0 / 12 / DATE OF HEARING : 9 TH JULY, 2014 34) / 12 / DATE OF PRONOUNCEMENT : 4 TH SEPTEMBER, 2014 / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILI NG THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), TIRU CHIRAPPALLI, DATED 05.09.2013, FOR THE ASSESSMENT YEAR 2009-10. 2 I.T.A. NO. 166/MDS/14 2. THE ASSESSEE IS A MONEY LENDER. HE FILED HIS RE TURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 31.07.2009 DE CLARING INCOME OF ` 21,34,403/-. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY ON THE BASIS OF AIR INFORMATION. NOTICE U NDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 19.08.2010. D URING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAS PURCHASED A HOUSE AT ST. MARYS RO AD, CHENNAI, FOR A CONSIDERATION OF ` 1,90,75,120/-, WHICH WAS NOT REFLECTED IN THE RETURN. THE ASSESSEE EXPLAINED THAT THE HOUSE WAS ACQUIRED OUT OF THE FUNDS OF HUF AND THE SAME HAS BEEN REFLECTED IN THE RETURN OF INCOME FILED IN THE STATUS OF HUF. THE A.O. WAS NO T SATISFIED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND MADE ADDITION OF ` 1,90,75,120/- AS UNEXPLAINED INVESTMENT UNDER SECTI ON 69B OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN THE IN COME RETURNED BY THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS ) AFTER ANALYSING THE EVIDENCE AND DOCUMENTS ON RECORD, UPH ELD THE FINDINGS OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 3 I.T.A. NO. 166/MDS/14 NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFOR E THE TRIBUNAL ASSAILING THE FINDINGS OF THE CIT(APPEALS) . 3. SHRI D. ANAND, ADVOCATE, APPEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE PROPERTY IN QUESTION W AS ACQUIRED THROUGH THE FUNDS OF HUF. THE PROPERTY HAS BEEN SH OWN IN THE RETURN OF INCOME FILED ON BEHALF OF THE HUF. THE A SSESSEE IS A COPARCENER. THE AUTHORITIES BELOW HAVE ERRED IN MA KING ADDITION UNDER SECTION 69B OF THE ACT IN THE HANDS OF THE AS SESSEE. 5. ON THE OTHER HAND, SHRI N. MADHAVAN, JCIT, REPRE SENTING THE DEPARTMENT, SUPPORTING THE IMPUGNED ORDER, CONTENDE D THAT THE ASSET IN QUESTION HAS BEEN ACQUIRED BY THE ASSESSEE AND HIS WIFE IN THEIR INDIVIDUAL CAPACITY. IN THE PURCHASE DEED, T HE PANS OF ASSESSEE AND HIS WIFE IN THE INDIVIDUAL STATUS HAVE BEEN MENTIONED. FUNDS FOR THE PURCHASE OF ASSET WERE DRAWN FROM THE INDIVIDUAL BANK ACCOUNTS OF THE ASSESSEE. THE PROPERTY WAS PU RCHASED ON 15.09.2008, WHEREAS, THE APPLICATION FOR OBTAINING PAN FOR HUF WAS MADE ON 09.03.2009. THE ASSESSEE HAS NOT PLACE D ON RECORD ANY EVIDENCE TO SHOW THAT THE FUNDS OF HUF WERE UTI LIZED FOR PURCHASE OF THE PROPERTY. THE BANK ACCOUNTS FROM W HERE THE PAYMENTS WERE MADE FOR PURCHASE OF ASSET, I.E. INDI AN BANK, ANNA SALAI BRANCH, CHENNAI, INDIAN OVERSEAS BANK, R.K. N AGAR BRANCH, 4 I.T.A. NO. 166/MDS/14 CHENNAI AND PUDUKOTTAI DISTRICT CENTRAL CO-OPERATIV E BANK, ARANTHANGI BRANCH, ARE OPENED AND OPERATED BY THE A SSESSEE IN HIS INDIVIDUAL STATUS. THERE IS NOTHING ON RECORD TO S HOW THAT ANY BANK ACCOUNTS WAS MAINTAINED BY HUF AT THE TIME OF PURCH ASE OF PROPERTY. IN THE BALANCE SHEET OF HUF, FILED ALONG WITH THE RETURN OF INCOME, THE OPENING CAPITAL BALANCE IS SHOWN AS ` 48,00,000/-. HOWEVER, NO DETAILS OF CAPITAL ACCOUNT AND LOAN CRE DITORS ARE FURNISHED. EVEN IN THE RETURN OF INCOME FILED IN T HE STATUS OF HUF, SOURCE OF FUNDS IN THE HANDS OF HUF HAS NOT BEEN EX PLAINED. THE ASSESSEE HAS ALLEGED THAT THE CORPUS OF HUF FUNDS I S FROM ANCESTRAL PROPERTY. HOWEVER, THE DETAILED ENQUIRIE S MADE BY THE ASSESSING OFFICER REVEALED THAT THE FATHER OF ASSES SEE SHRI A. CHIDAMBARAM HAS MADE GIFT OF ` 19,00,000/- ONLY TO THE ASSESSEE. THE LD. D.R. PRAYED FOR DISMISSING THE APPEAL OF AS SESSEE AND SUSTAINING THE IMPUGNED ORDER. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS ASSAILED THE F INDINGS OF THE AUTHORITIES BELOW FOR TREATING THE INVESTMENT MADE BY HUF, IN THE HANDS OF THE ASSESSEE UNDER SECTION 69B OF THE ACT. AS PER THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE, TH E PROPERTY AT ST. 5 I.T.A. NO. 166/MDS/14 MARYS ROAD. CHENNAI HAS BEEN PURCHASED FROM THE FU NDS OF HUF. THE HUF WAS ALLEGEDLY FORMED ON 03.07.1996 AND THE SOURCE OF CORPUS OF THE HUF IS STATED TO BE FROM THE SHARE IN ANCESTRAL PROPERTY WHICH THE ASSESSEE RECEIVED FROM HIS FATHE R. THE ASSESSEE ALLEGEDLY BEQUEATHED HIS SHARE AND RECEIVE D VARIOUS AMOUNTS BY CHEQUES WHICH WERE DEPOSITED IN S.B. ACC OUNTS WITH INDIAN BANK, ANNA SALAI BRANCH, CHENNAI AND INDIAN OVERSEAS BANK, R.K. NAGAR BRANCH, CHENNAI. HOWEVER, THE INVESTIGATION CONDUCTED BY THE ASSES SING OFFICER TELL A DIFFERENT STORY ALTOGETHER. THE PRO PERTY IN QUESTION WAS PURCHASED ON 15.09.2008. THE PROPERTY IS REGISTERED IN THE NAME OF ASSESSEE AND HIS WIFE IN INDIVIDUAL STATUS. AT THE TIME OF PURCHASE OF THE PROPERTY, PANS OF THE ASSESSEE AND HIS WIFE WERE FURNISHED. THE APPLICATION FOR ALLOTMENT OF PAN IN THE NAME OF HUF WAS MADE ON 09.03.2009 AND PAN WAS ALLOTTED TO HUF ON 18.03. 2009, I.E. ALMOST SIX MONTHS AFTER THE PURCHASE OF PROPERTY. THE ASSESSEE HAD FURTHER ALLEGED THAT THE RETURNS OF INCOME FOR HUF WERE BEING FILED SINCE THE TIME OF ITS FORMATION. HOWEVER, AS PER THE FINDINGS OF A.O., THE RETURN OF INCOME IN THE STATUS OF HUF WAS FILED FOR THE FIRST TIME IN RESPECT OF ASSESSMENT YEAR 2009-10. 6 I.T.A. NO. 166/MDS/14 7. AS REGARDS THE CORPUS OF HUF FUNDS, ENQUIRIES MA DE BY THE ASSESSING OFFICER DISCLOSE THAT THE FATHER OF THE A SSESSEE SHRI A. CHIDAMBARAM HAS MADE GIFT TO THE ASSESSEE OF ` 19,00,000/- ONLY AND THE SAME HAS BEEN REFLECTED IN THE CASH FLOW ST ATEMENT FOR THE FINANCIAL YEAR 2008-09. THE CORPUS IS BUILT OV ER CASH DEPOSITS FROM ASSESSEES OWN FUNDS AND NOT FROM ANY ANCESTRA L PROPERTY. FURTHER, ENQUIRIES MADE BY THE ASSESSING OFFICER FR OM THE BANKS FROM WHICH THE AMOUNTS WERE WITHDRAWN REVEAL THAT T HE BANK ACCOUNTS WERE MAINTAINED AND OPERATED BY THE ASSESS EE IN HIS INDIVIDUAL STATUS AND NOT IN THE STATUS OF HUF. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THE THEORY OF HUF HAS BEEN INTRODUCED BY THE ASSESSEE AS A COL OURABLE METHOD TO CIRCUMVENT THE PROVISIONS OF INCOME-TAX A CT. THE EXISTENCE OF HUF AT THE TIME OF PURCHASE OF PROPERT Y IS A BIG QUESTION. THERE IS NOTHING ON RECORD TO SHOW THAT HUF EVER EXISTED AT THE TIME OF PURCHASE. THE CREATION OF HUF IS AN AFTERTHOUGHT. THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THE SOURCE O F FUNDING OF HUF. AS PER ASSESSEES OWN CONTENTION, THE MEMBERS OF HUF INCLUDE HIS WIFE AND TWO MINOR CHILDREN ONLY. THE ASSESSEE HAS NOT BEEN ABLE TO GIVE THE DETAILS OF OPENING CAPITAL AN D THE DETAILS OF LOAN CREDITORS TO THE TUNE OF ` 1.95 CRORES. 7 I.T.A. NO. 166/MDS/14 8. WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF T HE ASSESSEE. THE FINDINGS OF THE CIT(APPEALS) IN THE IMPUGNED OR DER ARE CONFIRMED AND APPEAL OF THE ASSESSEE IS DISMISSED A S DEVOID OF MERIT. ORDER PRONOUNCED ON THURSDAY, THE 4 TH OF SEPTEMBER, 2014 AT CHENNAI. SD/- SD/- ( ... ) ( ' #$ ) (DR. O.K. NARAYANAN) (VIKAS AWASTHY) /VICE-PRESIDENT % &# /JUDICIAL MEMBER /CHENNAI, G& /DATED, THE 4 TH SEPTEMBER, 2014. KRI. &H / -%1I' J')1 /COPY TO: 1. $+ /APPELLANT 2. -.$+ /RESPONDENT 3. 0 K1 () /CIT(A), TIRUCHIRAPPALLI 4. 0 K1 /CIT-I, TIRUCHIRAPPALLI 5. 'LM -%1% /DR 6. M( N /GF.