Vedha Srinivasan, CHENNAI V. ITO, CHENNAI

ITA 1780/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5579 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N DEVANATHAN
• Keywords: Source of fund
• Section: 68; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1780/MDS/2016 ' (' / ASSESSMENT YEAR : 2010-11 SMT. VEDHA SRINIVASAN, 16, GOWDIA MUTT ROAD, ROYAPETTA, CHENNAI - 600 014. PAN : ACGPV 6395 P V. THE INCOME TAX OFFICER, BUSINESS WARD IX(3), CHENNAI - 600 006. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. N. DEVANATHAN, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 19.12.2017 2!( . 1$ / DATE OF PRONOUNCEMENT : 28.12.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-13, CHENNA I, DATED 24.03.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. SH. N. DEVANATHAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF 19,00,000/- 2 I.T.A. NO.1780/MDS/16 UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SH ORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, OUT OF 19,00,000/-, 9,00,000/- WAS CREDITED TOWARDS CAPITAL ACCOUNT OF THE ASSESSEES SON AND DAUGHTER. ACCORDING TO THE LD. COUNSEL, THE HOUSE, WHICH WAS OWNED BY THE ASSESSEES SON AND DAUGHTER, WAS LET O UT FOR RUNNING WOMENS HOSTEL. THE RENT RECEIVED BY THE ASSESSEE ON BEHALF OF HER DAUGHTER AND SON WAS DEPOSITED IN THE BANK ACCO UNT TO THE EXTENT OF 9,00,000/-. ACCORDING TO THE LD. COUNSEL, THE ASSE SSEES SON IS SETTLED IN USA. THE ASSESSEES SON IS NOT A SSESSED IN INDIA SINCE HE HAS NO TAXABLE INCOME IN INDIA. ACCORDING TO THE LD. COUNSEL, THE ASSESSEES SON HAS PROPERTY AT KELAMBA KKAM FROM WHICH HE RECEIVED A RENTAL INCOME OF 3,00,000/-. SIMILARLY, THE ASSESSEES DAUGHTER RECEIVED RENTAL INCOME OF 6,00,000/- FROM THE PROPERTY AT GOWDIYA MUTT ROAD, ROYAPETTAH. ACCORDI NG TO THE LD. COUNSEL, THE ASSESSEES DAUGHTER WAS ASSESSED TO TA X, HENCE, THE ASSESSEES DAUGHTER DISCLOSED THE RECEIPT OF 6,00,000/- AND PAID THE TAXES. 3. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSEE HAS ALSO ENTERED INTO AN AGREEMENT FOR SAL E OF PROPERTY WITH M/S VIKAS PROMOTERS AND DEVELOPERS. THE PROPE RTY WAS SITUATED AT AN INTERIOR PLACE IN MAHABALIPURAM VILL AGE. THE 3 I.T.A. NO.1780/MDS/16 DEVELOPER COULD NOT COMPLY WITH THE AGREEMENT, THER EFORE, THE AGREEMENT WAS SUBSEQUENTLY CANCELLED. THE ADVANCE RECEIVED FROM THE DEVELOPER WAS DEPOSITED IN THE BANK ACCOUN T TO THE EXTENT OF 10,00,000/-. THE ASSESSING OFFICER, ACCORDING TO T HE LD. COUNSEL, HAS NOT DISPUTED THE SOURCE OF FUND. THE ASSESSING OFFICER HAS MADE ADDITION ONLY ON SURMISE AND CONJE CTURES. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ADDITI ON CANNOT STAND IN THE EYE OF LAW. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS A WIDOW AND SHE HAS NO SOURCE OF INCOME OTHER THAN PE NSION. 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT. WHEN THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT, THE PROVIS IONS OF SECTION 68 OF THE ACT IS NOT APPLICABLE. ACCORDING TO THE LD. COUNSEL, THE BANK PASSBOOK OF THE ASSESSEE CANNOT BE CONSTRUED A S BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, ACCORDING TO T HE LD. COUNSEL, ANY CREDIT FOUND IN THE BANK PASSBOOK CANNOT BE A B ASIS FOR MAKING ADDITION UNDER SECTION 68 OF THE ACT. 5. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSING OFFICER SELECTED THE RETURN FILED BY THE ASSESSEE FOR SCRUTINY CONTRARY TO THE CIRCULAR ISSUED BY THE CBD T IN CIRCULAR NO.749A DATED 12.03.1996. PLACING RELIANCE ON THE JUDGMENT OF 4 I.T.A. NO.1780/MDS/16 ANDHRA PRADESH HIGH COURT IN CIT V. SMT. NAYANA P. DEDHIA (2004) 270 ITR 572, THE LD.COUNSEL SUBMITTED THAT THE ASSE SSING OFFICER HAS EXCEEDED HIS JURISDICTION IN TAKING THE RETURN FOR SCRUTINY. THE LD.COUNSEL HAS ALSO PLACED HIS RELIANCE ON THE DECI SION OF THIRD MEMBER OF GUWAHATI BENCH OF THE TRIBUNAL IN SMT. MA DHU RAITANI V. ACIT (2011) 10 ITR(TRIB) 91. PLACING RELIANCE O N PAGE 1 OF THE PAPER-BOOK, THE LD.COUNSEL SUBMITTED THAT THE RENT RECEIVED ON BEHALF OF THE ASSESSEES SON SHRI SURESH KUMAR IN R ESPECT OF THE PROPERTY AT KELAMBAKKAM WAS DISCLOSED TO THE EXTENT OF 3,00,000/- RENT RECEIVED FROM THE PROPERTY AT GOWDIYA MUTT ROA D WAS ALSO DISCLOSED IN THE ACCOUNTS. THE ADVANCE RECEIVED FR OM M/S VIKAS PROMOTERS AND DEVELOPERS AGAINST SALE AGREEMENT FOR DEVELOPMENT AND SALE OF VACANT LAND AT MAHABALIPURAM WAS ALSO D ISCLOSED IN THE ACCOUNT. THIS FACT WAS NOT TAKEN INTO CONSIDERATIO N BY THE ASSESSING OFFICER. REFERRING TO THE COPY OF REVISE D STATEMENT OF INCOME FILED BY THE ASSESSEES DAUGHTER SMT. SREEDE VI SRINIVASAN, THE LD.COUNSEL SUBMITTED THAT THE RENT RECEIVED FOR THREE MONTHS AND FOR VACANT PERIOD WAS DISCLOSED IN THE REVISED STATEMENT FILED BEFORE THE AUTHORITIES. THEREFORE, ACCORDING TO TH E LD. COUNSEL, AT THE BEST, THE SUM OF 3,00,000/- RECEIVED FROM THE PROPERTY BELONGING TO THE ASSESSEES SON HAS TO BE ASSESSED ONLY IN THE 5 I.T.A. NO.1780/MDS/16 HANDS OF THE ASSESSEES SON AND IN RESPECT OF 6,00,000/- BEING RENT RECEIVED FROM THE PROPERTY AT GOWDIYA MUTT ROA D BY THE ASSESSEES DAUGHTER CAN BE ASSESSED ONLY IN THE HAN DS OF THE ASSESSEES DAUGHTER. ACCORDING TO THE LD. COUNSEL, THE ADVANCE RECEIVED FROM M/S VIKAS PROMOTERS AND DEVELOPERS IS NOT INCOME OF THE ASSESSEE SINCE IT WAS RETURNED SUBSEQUENTLY, TH EREFORE, THERE CANNOT BE ANY ADDITION IN THE HANDS OF THE PRESENT ASSESSEE. THE LD.COUNSEL HAS ALSO PLACED HIS RELIANCE ON VARIOUS JUDGMENTS OF THE HIGH COURTS AND SUPREME COURT. 6. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE HAS CLAIMED THAT 10,00,000/- WAS DEPOSITED IN THE BANK ACCOUNT FROM THE ADVANCE RECEIVED FOR SALE OF PROPERTY. THE ASS ESSING OFFICER FOUND THAT THE ORIGINAL AGREEMENT WAS NOT FILED, AN D AGREEMENT ITSELF WAS DATED 06.05.2009, WHEREAS, THE MONEY WAS RECEIV ED ON VARIOUS DATES. THE LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO DISCLOSED RENTAL INCOME FROM THE PROPERTY AT GOWDIYA MUTT ROAD ONLY FOR THREE MONTHS AT THE RATE OF 50,000/- PER MONTH AND THE REMAINING PERIOD WAS DECLARED TO BE VACANT. TH EREFORE, ACCORDING TO THE LD. D.R., THE ASSESSEE COULD NOT H AVE HAD SO 6 I.T.A. NO.1780/MDS/16 MUCH OF MONEY FOR MAKING DEPOSIT IN THE BANK ACCOUN T, HENCE, THE ASSESSING OFFICER HAS RIGHTLY MADE ADDITION WHICH W AS CONFIRMED BY THE CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. OUT OF 19,00,000/- ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE CLAIMS THAT 3,00,000/- PERTAINS TO RENTAL INCOME FROM THE PROPE RTY BELONGING TO HER SON AND 6,00,000/- FROM THE PROPERTY AT GOWDIYA MUTT ROAD BELONGING TO HER DAUGHTER. THE ASSESSEE HAS ALSO CLAIMS THAT 10,00,000/- WAS RECEIVED TOWARDS ADVANCE FOR SALE O F PROPERTY TO M/S VIKAS PROMOTERS AND DEVELOPERS. TH E ASSESSING OFFICER DOUBTS THE PART SALE CONSIDERATION CLAIMED TO BE RECEIVED AS ADVANCE AND ALSO THE AVAILABILITY OF RENTAL INCOME. THE FACT THAT THE ASSESSEES SON OWNED PROPERTY AND LET OUT IS NOT IN DISPUTE. THE ASSESSEE HAS ALSO DISCLOSED 3,00,000/- AS RENT RECEIVED FROM THE PROPERTY BELONGING TO HER SON. THEREFORE, THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT THERE CANNOT BE ANY DISPUTE WITH REGARD TO 3,00,000/- DEPOSITED IN THE BANK ACCOUNT. IN RESPE CT OF 6,00,000/-, THE ASSESSEE DISCLOSED AS INCOME SAID T O BE RECEIVED FROM THE PROPERTY AT GOWDIYA MUTT ROAD BELONGING TO HER DAUGHTER. 7 I.T.A. NO.1780/MDS/16 THE ASSESSEE HAS DISCLOSED RENTAL INCOME OF 50,000/- PER MONTH FOR THREE MONTHS AND REMAINING PERIOD APPEARS TO BE KEPT VACANT. BUT, INCOME-TAX ACT PROVIDES FOR PAYMENT OF INCOME- TAX IN RESPECT OF THE RENTAL INCOME WHICH IS EXPECTED TO BE RECEIV ED OR RECEIVABLE. SECTION 23(1)(C) OF THE ACT SPECIFICALLY PROVIDES F OR PAYMENT OF TAX WHEN THE PROPERTY WAS VACANT DURING THE WHOLE AND P ART OF THE PREVIOUS YEAR. HENCE, THE ASSESSEE HAS TO NECESSAR ILY DISCLOSE 6,00,000/- IN THE COMPUTATION. MOREOVER, THE ASSES SEE HAS NO OTHER SOURCE OF INCOME OTHER THAN PENSION. THEREFO RE, THE INCOME DEPOSITED IN THE BANK ACCOUNT IN RESPECT OF THE PRO PERTY WHICH IS ADMITTEDLY BELONGING TO HER DAUGHTER CANNOT BE TAKE N AS INCOME OF THE ASSESSEE AT ALL. HENCE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITION OF 6,00,000/-. 8. NOW COMING TO THE ADVANCE, NO DOUBT, THE DEPOSIT S WERE MADE ON DIFFERENT DATES. THE FACT IS THAT THE ASSE SSEE RECEIVED THE ADVANCE WHICH CANNOT BE DOUBTED SINCE THERE WAS AN AGREEMENT FOR SALE OF PROPERTY. MOREOVER, THE ASSESSEE IS A WIDOW. SHE HAS NO OTHER SOURCE OF INCOME. BUT FOR THIS ADVANCE, T HE ASSESSEE COULD NOT HAVE HAD ANY MONEY FOR MAKING DEPOSIT OF 10,00,000/- IN THE BANK ACCOUNT. IN THE ABSENCE OF ANY OTHER SOUR CE OF INCOME 8 I.T.A. NO.1780/MDS/16 OTHER THAN A MEAGRE PENSION, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE ASSESSEE CANNOT HAVE ANY SOURCE FO R MAKING SUCH DEPOSIT. HENCE, THE CONTENTION OF THE ASSESSEE THA T THE MONEY WAS DEPOSITED FROM AND OUT OF THE ADVANCE RECEIVED FROM M/S VIKAS PROMOTERS AND DEVELOPERS CANNOT BE REJECTED. THE M ATTER WOULD STAND DIFFERENTLY IN CASE THE ASSESSEE HAS OTHER SO URCE OF INCOME. IN THE ABSENCE OF ANY OTHER SOURCE OF INCOME, AND T HE ASSESSEE BEING A WIDOW, COULD NOT HAVE EARNED SO MUCH OF MON EY IN OTHER SOURCES. THEREFORE, THE ADDITION MADE BY THE ASSES SING OFFICER CANNOT STAND IN THE EYE OF LAW. ACCORDINGLY, THE O RDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITION MA DE BY THE ASSESSING OFFICER TO THE EXTENT OF 19,00,000/- IS DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 28 TH DECEMBER, 2017 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 28 TH DECEMBER, 2017. KRI. 9 I.T.A. NO.1780/MDS/16 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI-34. 5. 69 ,1 /DR 6. :' ; /GF.