V.T.Rajandran, Mannargudi V. ITO, Nagapattinam

ITA 1740/CHNY/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7450 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 31-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T T DURAIRAJ KANDIAR F
• Keywords: Unexplained investment; Depreciation
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER ITA NO.1740(MDS)/2011 ASSESSMENT YEAR : 2004-05 SHRI V.T.RAJANDRAN, 53A, AZAD ROAD, MANNARGUDI-614 001. PAN AAIPR7725F. VS. THE INCOME-TAX OFFICER, WARD I(2), NAGAPATTINAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.T.DURAIRAJ KANDIAR, F CA RESPONDENT BY: SHRI SHAJI P JACOB, IRS, ADDL. COMMISSIONER OF INCOME-TAX. DATE OF HEARING : 19 TH JANUARY, 2012 DATE OF PRONOUNCEMENT : 19 TH JANUARY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2004-05. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS), T IRUCHIRAPALLI DATED 24-8-2011 AND ARISES OUT OF THE ASSESSMENT CO MPLETED - - ITA 1740 OF 2011 2 UNDER SECTION 143(3), READ WITH SECTION 254 OF THE INCOME-TAX ACT, 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS BELOW:- THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS), TIRUCHIRAPALLI, IN ITA NO.157/2009-10 , DATED 24-8-2011, FOR THE ASSESSMENT YEAR 2004-05 IS AGAINST THE FACTS OF THE CASE, LEGAL PRINCIPLES INV OLVED, WEIGHT OF EVIDENCE ON RECORD AND PRINCIPLES OF NATU RAL JUSTICE. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) HAD ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFI CER ARBITRARILY MAKING AN ADDITION OF ` 11,92,220/- AS UNEXPLAINED INVESTMENT IN BUILDING: A) WITHOUT CONSIDERING THE BALANCE SHEET FILED ALON G WITH THE RETURN OF INCOME AND B) WITHOUT CONSIDERING THE DIRECTION OF THE HONBLE ITAT WHILE SETTING ASIDE THE ORDER FOR CONSIDERATION OF DEPRECIATION IF BALANCE SHEET IS FILED. - - ITA 1740 OF 2011 3 FOR THESE AND OTHER GROUNDS WHICH MIGHT BE URGED TO BE ALLOWED AT THE TIME OF HEARING, THE APPELLANT HUMBL Y PRAYS THAT THE ADDITION OF ` 11,92,220/- AS UNEXPLAINED INVESTMENT MADE BY THE INCOME-TAX OFFICER MAY KINDL Y BE ORDERED TO BE DELETED AND RENDER JUSTICE. 3. THE ISSUE OF ADDITION TOWARDS UNEXPLAINED INVESTMENT HAD IN FACT ONCE COME UP BEFORE THE INCO ME-TAX APPELLATE TRIBUNAL, C-BENCH, CHENNAI, IN ITA NO.369 (MDS)/2008. THE SAID ISSUE WAS SET ASIDE BY THE TRIBUNAL FOR RE -CONSIDERATION OF THE ASSESSING AUTHORITY, THROUGH THEIR ORDER DAT ED 31-7-2008. THE TRIBUNAL HAS CLEARLY GIVEN A DIRECTION TO THE A SSESSING AUTHORITY THAT ADDITIONS IN RESPECT OF UNEXPLAINED SOURCES CAN BE MADE ONLY IF THE ASSESSEE IS NOT SUCCESSFUL IN EXPL AINING THE SOURCE AVAILABLE IN HIS HANDS. THE TRIBUNAL HAS AL SO DIRECTED THE ASSESSING OFFICER THAT IF THE BUILDING HAS BEEN CON STRUCTED, AS ARGUED BY THE ASSESSEE, THEN DEPRECIATION SHOULD AL SO BE ALLOWED TO THE ASSESSEE. 4. AS PER THE BALANCE SHEET AS ON 31-3-2004 AVAILA BLE IN THE RECORDS, THERE IS ALREADY A CREDIT AMOUNT OF ` 1,06,12,934/- - - ITA 1740 OF 2011 4 IN THE CAPITAL ACCOUNT OF THE ASSESSEE. THE OPENIN G CAPITAL BALANCE WAS ` 1,02,74,597/-. THE ASSESSEE HAD INCOME FROM TRG KALYANA MANDAPAM AND DRAVIDAR FARMS. FURTHER, THE ASSESSEE HAD FOREIGN REMITTANCE OF ` 1,31,275/- AND INTEREST IN HIS NRE ACCOUNT OF ` 67,394/- AND FURTHER AN AGRICULTURAL INCOME OF ` 1,10,960/-. THE OPENING BALANCE OF THE ASSESSEES CAPITAL ITSELF WAS MADE UP OF FOREIGN REMITTANCES MADE BY T HE ASSESSEE INTO HIS NRE ACCOUNT IN INDIA. THE ASSESSEE IS A D RIVER WORKING IN GULF. HE HAS BEEN REMITTING HIS SAVINGS FROM TI ME TO TIME AND IT IS HOW HIS CAPITAL HAS BEEN BUILT UP. THE INVES TMENTS MADE BY THE ASSESSEE IN KALYANA MANDAPAM AND OTHER ASSETS H AVE IN FACT CAME DIRECTLY FROM HIS NRE ACCOUNT. THESE DET AILS CLEARLY SHOW THAT THE ASSESSEE HAS EXPLAINED HIS SOURCES. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE RE IS NO HARD GROUND FOR THE ASSESSING AUTHORITY TO HOLD THE ASSESSEE AGAIN RESPONSIBLE FOR ADDITION TOWARDS UNEXPLAINED INVESTMENTS, EVEN IN THE SECOND ROUND OF ASSESSMENT. WE FIND TH AT THE ASSESSING AUTHORITY HAS NOT APPLIED HIS MIND PROPER LY TO THE SPEAKING FACTS OF THE CASE. WHEN THE SOURCES OF FU NDS AND APPLICATION OF FUNDS HAVE BEEN WELL EXPLAINED THROU GH BALANCE - - ITA 1740 OF 2011 5 SHEET AND SUPPORTING DOCUMENTS, THERE IS NO REASON TO COME TO A CONCLUSION ONLY ON THE BASIS OF THE PRESUMPTION T HAT THE ASSESSEE HAS NOT EXPLAINED THE SOURCES OF HIS INVES TMENTS. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE NOT ABLE TO ENDORSE THE CONCLUSION ARRIVED AT BY TH E ASSESSING AUTHORITY. ACCORDINGLY, THE ADDITION OF ` 11,92,000/- IS DELETED. 7. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 19 TH JANUARY, 2012 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 19 TH JANUARY, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.