ITO, Trichy V. S.P.Ramanathan, Trichy

ITA 173/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57943 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNA SR
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 173/MDS/2011 (ASSESSMENT YEAR : 2005-06) THE INCOME TAX OFFICER, WARD I(2), TRICHY. (APPELLANT) V. SHRI S.P. RAMANATHAN, NO.44, BABU ROAD, TRICHY 2. PAN : AEDPR9755E (RESPONDENT) APPELLANT BY : SHRI K. GOPALAKRISHNA, SR.AR (DR) RESPONDENT BY : SHRI R. VIJAYAR AGHAVAN, ADVOCATE SHRI S.P. CHIDAMBARAM, ADVOCATE DATE OF HEARING : 22.02.2012 DATE OF PRONOUNCEMENT : 22.02.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT LD. CIT(APPEALS) DELETED THE ADDITIONS MADE BY THE A.O. CONSIDERING NEW EVIDENCE IN THE FORM OF REGISTERED SALE DEED AN D BANK ACCOUNT STATEMENTS WHICH WERE NOT PRODUCED BEFORE THE A.O., WITHOUT GIVING I.T.A. NO. 173/MDS/11 2 AN OPPORTUNITY TO THE ASSESSING OFFICER TO GIVE HIS OPINION ON SUCH EVIDENCE. 2. ASSESSEE, ENGAGED IN THE BUSINESS OF FILM DISTRI BUTION, HAD FILED ITS RETURN OF INCOME ON 30.12.2005 DECLARING AN INC OME OF ` 6,10,480/- AND AGRICULTURAL INCOME OF ` 2,12,150/-. WHEN THE ASSESSMENT WAS COMPLETED, THE A.O. MADE AN ESTIMATE D ADDITION OF ` 2 LAKHS IN THE BUSINESS OF DISTRIBUTION AND FURTHER ADDITION OF ` 1,12,150/- UNDER THE HEAD INCOME FROM OTHER SOURCES AS EXCESS AGRICULTURAL INCOME CLAIMED, ` 9,29,995/- AS UNEXPLAINED CREDIT INTO CURRENT ACCOUNT AND ` 78 LAKHS AS UNEXPLAINED INVESTMENTS. 3. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ASSESSEE ARGUED THAT THE ADDITION UNDER THE HEAD BUSINESS INCOME WAS MADE WITHOUT ANY SPECIFIC FINDING. WITH REGARD TO THE ADDITION FOR CREDIT IN CURRENT ACCOUNT, ARGUMENT OF THE ASSESSEE WAS THAT SUCH ADD ITIONS WERE PROFITS CREDITED FOR THE YEAR ENDING 31.3.2005, DIV IDEND RECEIVED ON SHARES, MATURITY OF LIC, RECEIPT OF MEDICAL CLAIM A ND RENT RECEIVED FROM PROPERTY. VIS--VIS ADDITION ON EXCESS AGRICU LTURAL INCOME, ARGUMENT OF THE ASSESSEE WAS THAT FOR THE PRECEDING PREVIOUS YEAR, THE AGRICULTURAL INCOME RETURNED WAS ` 2,65,650/- AND THERE WERE NO I.T.A. NO. 173/MDS/11 3 VARIATIONS IN THE EXTENT OF LAND AND PATTERN OF CRO P. VIS--VIS THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT OF ` 78 LAKHS, ASSESSEE ARGUED THAT EVIDENCE COULD NOT BE PRODUCE AT THE TIME OF ASSESSMENT SINCE HE WAS ILL AND FURTHER, ACCORDING TO HIM, ALL THE PAYMENTS WERE MADE BY CHEQUES AND THE INVESTMENT IN THE RELEVANT PREVIOUS YEAR WAS ONLY FOR PURCHASE OF A HOUSE PROP ERTY ` 49,17,160/- AND EXPENSES FOR CONSTRUCTION IN ATHANK UDI VILLAGE WAS ` 4,83,086/- ONLY. 4. LD. CIT(APPEALS) DELETED THE ADDITION OF ` 2 LAKHS UNDER THE HEAD BUSINESS INCOME SINCE ACCORDING TO HIM, BOOK S WERE AUDITED AND THERE WAS NOTHING IN THE RECORD WHICH JUSTIFIED SUCH AN ESTIMATED ADDITION. VIS--VIS THE ADDITION FOR AGRICULTURAL INCOME, LD. CIT(APPEALS) SUSTAINED THE ACTION OF THE A.O. VIS- -VIS FOR CURRENT ACCOUNT CREDIT, LD. CIT(APPEALS) WAS OF THE OPINION THAT THE AMOUNTS CREDITED WERE EXPLAINED IN THE BOOKS OF ACCOUNTS AN D HENCE SUCH AN ADDITION WAS NOT WARRANTED. VIS--VIS ` 78 LAKHS AS UNEXPLAINED INVESTMENTS, LD. CIT(APPEALS) ACCEPTED THE PLEA OF THE ASSESSEE THAT THE PROPERTY PURCHASED WAS ONLY FOR ` 49,17,160/- AND NOT FOR ` 78 LAKHS. IT SEEMS ASSESSEE PRODUCED DOCUMENTS FOR PU RCHASE OF THE I.T.A. NO. 173/MDS/11 4 PROPERTY AND BANK STATEMENTS IN EVIDENCE. AS PER L D. CIT(APPEALS), THE SUM OF ` 78 LAKHS MENTIONED IN THE SALE DEED WAS MARKET VALU E FOR REGISTRATION PURPOSE AND THERE WAS NO MATERIAL TO SHOW THAT ANY EXCESS PURCHASE CONSIDERATION OVER AND ABOVE ` 49,17,160/- WAS GIVEN. LD. CIT(APPEALS) THUS ACCEPTED THE CONTENTI ONS OF THE ASSESSEE AND DELETED THE ADDITIONS MADE BY THE A.O. IN THIS REGARD. 5. NOW BEFORE US, LEARNED D.R. SUBMITTED THAT ATLEA ST AN ADDITION OF ` 23,82,840/-, BEING THE DIFFERENCE BETWEEN WHAT WAS PAID BY THE ASSESSEE AND THE AMOUNT DECLARED AS MARKET VALUE I N THE SALE DEED OUGHT HAVE BEEN CONFIRMED BY LD. CIT(APPEALS) AND F URTHER ACCORDING TO HIM, LD. CIT(APPEALS) ACCEPTED NEW EVIDENCE IN T HE FORM OF THE REGISTERED SALE DEED AND BANK STATEMENTS WHICH WERE NOT FURNISHED BEFORE THE A.O. LEARNED A.R. FAIRLY ADMITTED THAT THE REGISTERED SALE DEED AND BANK STATEMENTS WERE PRODUCED BY THE ASSES SEE FIRST TIME BEFORE LD. CIT(APPEALS). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE MAIN ADDITION, WHICH WAS DELETED BY LD. CIT(APP EALS), WAS ` 78 LAKHS. IT IS AN ADMITTED POSITION THAT THE SALE DE ED DOCUMENTS WITH RESPECT TO THE PROPERTY AND BANK STATEMENTS WERE NE VER PRODUCED I.T.A. NO. 173/MDS/11 5 BEFORE THE A.O. BUT ONLY BEFORE LD. CIT(APPEALS). THIS POSITION IS CLEAR FROM ASSESSEES GROUND BEFORE LD. CIT(APPEALS ) THAT HE WAS SUFFERING FROM ILLNESS AND WAS NOT ABLE TO PRODUCE EVIDENCE AT THE TIME OF ASSESSMENT. LD. CIT(APPEALS) ALLOWED THE C LAIM OF THE ASSESSEE ON THE FRESH EVIDENCE PRODUCED BY THE ASSE SSEE BEFORE HIM WITHOUT GETTING AN OPINION OF THE A.O. IT IS, THEREFORE, CLEAR THAT THERE WAS A VIOLATION OF RULE 46A, SINCE PRINCIPLES OF NATURAL JUSTICE WAS NOT ADHERED TO. IT IS ALSO NOTED THAT THERE IS NO GROUND OF THE REVENUE WITH REGARD TO OTHER ADDITIONS DELETED BY L D. CIT(APPEALS) BUT FOR THE ADDITION MADE UNDER THE HEAD UNEXPLAIN ED INVESTMENT ` 78 LAKHS. WE ARE, THEREFORE, OF THE OPINION THAT T HE MATTER HAS TO GO BACK TO A.O. FOR FRESH CONSIDERATION. THE ORDERS O F LD. CIT(APPEALS) AS WELL AS A.O. ARE SET ASIDE ON THE ISSUE REGARDIN G UNEXPLAINED INVESTMENT OF ` 78 LAKHS AND REMITTED BACK TO THE FILE OF A.O. FOR CONSIDERATION DE NOVO. ASSESSEE SHALL BE GIVEN PRO PER OPPORTUNITY TO JUSTIFY ITS CASE THAT THERE WAS NO SUCH INVESTMENT OF ` 78 LAKHS AND THE INVESTMENT WAS ONLY ` 49,17,160/-, AS ALSO TO JUSTIFY THE DIFFERENCE BETWEEN SUM PAID AS SHOWN IN THE DOCUMENTS AND THE AMOUNT STATED AS MARKET VALUE FOR REGISTRATION PURPOSES. ASSES SEE HAS TO EXPLAIN I.T.A. NO. 173/MDS/11 6 THE SOURCE OF THE INVESTMENT ALSO AND A.O. SHALL PR OCEED IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 22 ND FEBRUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND FEBRUARY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), TIRUCHIRAPALLI (4) CIT-I, TIRUCHIRAPALLI (5) D.R. (6) GUARD FILE