Pukraj Sanjay Samra, CHENNAI V. ITO, CHENNAI

ITA 1791/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7640 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 13-06-2016
• Court: TRIBUNAL
• Department Lawyers: H KABILA JCIT
• Assessee Lawyers: M MAHAVEER CHAND JAIN
• Keywords: Unexplained investment; Salary income; Corroborative evidences; Onus to prove
• Section: 143(3); 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , ' # BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1791/MDS/2016 / ASSESSMENT YEAR : 2007-08 SHRI PUKRAJ SANJAY SARMA, NO. 20, PATEL NAGAR, II STREET, MUDICHUR ROAD, WEST TAMBARAM, CHENNAI 600 045. [PAN: AAFPK 6346Q] VS. INCOME TAX OFFICERR, NON-CORPORATE WARD-6(3), CHENNAI - 600 006. ( / APPELLANT) ( / RESPONDENT) $% & / APPELLANT BY : SHRI M. MAHAVEER CHAND JAIN, CA )*$% & / RESPONDENT BY : MR. H. KABILA, JCIT & + /DATE OF HEARING : 05.12.2016 & + /DATE OF PRONOUNCEMENT : 02.03.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI IN ITA NO. 220/CIT( A)-5/13-14 DATED 17.03.2016 FOR THE ASSESSMENT YEAR 2007-08. :-2-: I.T.A. NO. 1791/MDS/2016 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE ADDITION OF RS. 19,86,000/- WITHOUT CONSIDERING THE EXPLANATION OFFERED IN THE PROPER PERSPECTIVE. 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) WENT WRONG IN CONCLUDING THAT THE CASH DEPOSITED IN THE BANK IS HIS INCOME, FOR THE SIMPLE REASON THAT BANK PAY IN SLIPS WERE NOT PROD UCED. 2.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST OVER AND A BOVE 12% ON THE LOAN TAKEN FROM THE VARIOUS CREDITORS. 2.4 THE LEARNED INCOME TAX OFFICER AS PER REMAND RE PORT, ACCEPTED ALL THE ENTRIES IN THE BOOKS OF ACCOUNTS, AND ALSO VERIFIE D AS CORRECT BUT REJECTED THE TOTAL ACCOUNTS AS THE ASSESSEE COULD NOT PRODUCE THE ORIGINAL REMITTANCE SLIP FOR THE AMOUNT. SHE ALSO VERIFIED TOTAL SALES, MONTHLY SALES WITH REFERENCE TO CASH AND CREDIT SA LES. SHE ALSO CHECKED TOTAL COLLECTION IN CASH FOR EVERY MONTH A ND COMPARED WITH CASH BOOK. SHE ALSO VERIFIED CORRECTNESS OF INSTA LMENTS PAID TO THE BANK. CASH BOOK ALSO IS ENCLOSED HEREWITH. 2.5 IN SHORT THE CASH REMITTANCE MADE IN SAVINGS BA NK ACCOUNT IN THE ENTIRE PERIOD OF THE YEAR RS. 19,86,000/- WAS DISA LLOWED FOR THE REASON THAT NO CASH REMITTANCE SLIPS WAS PRODUCED. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY AND BUSINESS AND FILED THE RETUR N OF INCOME FOR THE ASSESSMENT :-3-: I.T.A. NO. 1791/MDS/2016 YEAR 2007-08 ON 31.03.2008 WITH TOTAL INCOME OF RS. 1,47,780/- AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) ON 29.12.2009. SU BSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S. 14 3(2) WAS ISSUED. IN COMPLIANCE TO THE NOTICE LD. AR APPEARED FROM TIME TO TIME AND FILED NECESSARY DETAILS CALLED FOR IN THE ASSESSMENT. THE ASSESSING OFFICER FOUND AS PER AIR INFORMATION, THE ASSESSEE HAS MADE CASH DEPOSITS OF RS. 19,86,000/- WITH TAMILNADU MERCANTILE BANK LTD. ON PERUSAL OF THE BANK STATEMENT THE ASSESSEE HAS REGULARLY ISSUED CHEQUES TO THE KOTAK MAHINDRA, DCB LIMITED, ABN AMRO BANK, STA NDARD INDUS IND BANK, ING VYSYA BANKS AND EXPLAINED THE TRANSACTIONS BY LETTE R DATED 15.12.2009 THAT THE ASSESSEE'S WIFE SMT. NANDA IS THE PROPRIETY OF M/S. VENTURE HEALTH NEEDS AND OBTAINED PERSONAL LOANS FROM ABN BANK, CHOLAMANDALA M DBS FINANCE, GE MONEY, ING VYSYA AND THE CHEQUES HAVE BEEN ISSUED FROM THE ACCOUNT OF THE ASSESSEE AND WERE HONOURED AFTER RECEIVING CASH FROM WIFE. THE CONTENTION OF THE LD. AR THAT THESE CHEQUES WERE ISSUED FROM THE ASSESSEE BANK AC COUNT, HOWEVER, PERTAINING TO THE ASSESSEE'S WIFE BUSINESS BUT ASSESSEE COULD NOT FILE ANY PROOF OF AMOUNT IN BANK ACCOUNT PERTAINS TO HIS WIFE. FURTHER, THE ASSESSE E OBTAINED PERSONAL LOANS FROM THE FINANCIAL COMPANIES ON VARIOUS DATES AND THE SAME W AS INVESTED IN VENTURE HEALTH NEED AND WAS NOT DISCLOSED IN THE RETURN OF INCOME BUT THE LD. AO CONSIDERED THE INVESTMENT OF THE ASSESSEE IN VENTURE HEALTH NEED A S UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. SINCE, THE ASSESSEE CLAIMED INTERES T ON LOAN CREDITORS @15%. THE ASSESSING OFFICER OBSERVED THAT SUCH INTEREST AT HI GHER SIDE AND RESTRICTED THE INTEREST RATE TO 12% AND DISALLOWED THE EXCESS INTE REST RS. 39,552/- AND MADE ADDITION ALONG WITH ADDITION OF SECTION 68 AND 69 O F THE ACT TO THE RETURNED INCOME :-4-: I.T.A. NO. 1791/MDS/2016 AND ASSESSED INCOME OF RS. 28,32,420/- AND PASSED O RDER U/S. 143(3) OF THE ACT DATED 29.12.2009. 4. AGGRIEVED BY THE ORDER, ASSESSEE FILED AN APPEAL WITH THE CIT(A). THE LD CIT(A) CONSIDERED THE SUBMISSIONS OF THE LD. AR AND THE FINDINGS OF THE ASSESSING OFFICER. THE FACT REMAINS THAT THE ASSESSEE HAS IS SUED CHEQUES TO THE FINANCIAL COMPANIES WHERE THE LOAN WAS OBTAINED BY THE WIFE O F THE ASSESSEE FOR BUSINESS AND IT WAS EXPLAINED THAT THE CASH DEPOSITS PERTAIN S TO THE ASSESSEE'S WIFE AND SAME WAS DEPOSITED IN THE ASSESSEE'S BANK ACCOUNT. THE LD. CIT(A) CALLED FOR THE REMAND REPORT DATED 10.11.2010 FROM THE ASSESSING OFFICER AS REFERRED AT PAGE 4 TO 6 OF THE ORDER AND THE ASSESSEE ALSO FILED THE SUBMISSIONS T O THE REMAND REPORT REFERRED AT PARA 4.2 OF THE ORDER. FURTHER, IN THE HEARING PRO CEEDINGS THE ASSESSEE WAS CALLED FOR FURTHER CLARIFICATIONS AND TO SUBMIT EVIDENCES. THE LD CIT(A) FOUND IN RESPECT OF CASH DEPOSITS RS. 19,86,000/- IN TAMILNADU MERCANTI LE BANK LTD, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE AND NO SATISFYING EXPLANAT IONS WERE PROVIDED AND UPHELD THE ACTION OF THE LD AO, WHEREAS, IN RESPECT OF INV ESTMENT OF ASSESSEE MADE IN VENTURE HEALTH NEEDS BY THE ASSESSEE TREATED BY THE LD AO AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. THE LD CIT(A) FIND THAT THE ASSESSEE HAS OBTAINED LOANS FROM THE FINANCIAL COMPANIES AND INVESTED IN THE VENTURES HEALTH NEEDS RS. 6,58,190/- IS OF THE OPINION THAT THE SOURCE IS SUB STANTIATED AND PROPERLY EXPLAINED AND DELETED THE ADDITION OF RS. 6,58,190/- AND UPHE LD THE ACTION OF THE ASSESSING OFFICER IN ADDITION OF EXCESS INTEREST CLAIM ON RS. 39,552/- AND PARTLY ALLOWED THE APPEAL AND PASSED ORDER DATED 17.03.2016. :-5-: I.T.A. NO. 1791/MDS/2016 5. AGGRIEVED BY THE ORDER, ASSESSEE HAS APPEALED BE FORE THE TRIBUNAL. BEFORE US, THE LD AR SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL AND AS PER AIR INFORMATION THE LD AO MADE ADDITION OF CASH DEPOSIT S IN BANK ACCOUNT ALLEGED THAT THERE IS NO SUPPORTING EVIDENCE AND ALSO THE ASSESS EE COULD NOT SUBSTANTIATE THE DEPOSITS. THE LD. CIT(A) HAS ERRED IN UPHOLDING TH E ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE EXCESS INTEREST ON LOAN FROM VAR IOUS CREDITORS AND THE LD AO CONTENTION AS MENTIONED IN THE REMAND REPORT THAT T HE ASSESSEE COULD NOT PRODUCE THE ORIGINAL REMITTANCE SLIP OF BANK ACCOUNT AND DU E TO CERTAIN DIFFICULTIES THE SAME COULD NOT BE PRODUCED WITHIN THE TIME AND PRAYED FO R ALLOWING THE APPEAL. CONTRA, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES. 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 6.1 THE IMPUGNED CASH DEPOSITS OF RS. 19.86 LAKHS I N THE ASSESSEE'S BANK ACCOUNT WITH THE TAMILNADU MERCANTILE BANK, TAMBARA M, ON DIFFERENT DATES DURING THE YEAR, WAS EXPLAINED BY THE ASSESSEE BEFO RE THE REVENUE AUTHORITIES AS BEING ADVANCED BY M/S. VENTURE HEALTH NEEDS, THE PROPRIETARY CONCERN OF HIS WIFE, SMT. NANDA. THOUGH THE ACCOUNTS (VIZ., LEDGE R, CASH BOOK) OF THE SAID CONCERN WERE PRODUCED IN THE REMAND PROCEEDINGS, RE FLECTING THE SAID PAYMENTS TO THE ASSESSEE, THE SAME WERE NOT CONSIDERED AS ES TABLISHING THE ASSESSEE'S CLAIM IN THE ABSENCE OF THE BANK STATEMENT/S OF VEN TURES HEALTH NEEDS, SO AS TO VERIFY THE SOURCE OR THE AVAILABILITY OF CASH WITH THE SAID FIRM, CLAIMED TO BE WITHDRAWN FROM THE BANK. TWO, THE SAID FIRM HAD AL SO OBTAINED LOANS FROM DIFFERENT INSTITUTIONS, SO THAT IT COULD WELL BE TH AT THE WITHDRAWAL WAS FOR THE RE- :-6-: I.T.A. NO. 1791/MDS/2016 PAYMENT OF THESE LOANS, AND THAT THEREFORE THE SAI D LOAN ACCOUNTS WOULD ALSO BE REQUIRED TO BE SEEN. IN FACT, VENTURE HEALTH NEEDS ALSO MAINTAINED BANK ACCOUNT WITH THE VERY SAME BANK BRANCH, SO THAT THE TRANSFE R OF FUNDS FROM IT TO THE ASSESSEE, WHERE SO, COULD HAVE BEEN RATHER DIRECTLY MADE, I.E., BY CHEQUE OR BY TRANSFER. THE IMPUGNED AMOUNT STANDS ACCORDINGLY RE GARDED AS UNEXPLAINED AND DEEMED AS INCOME. 6.2 IT IS THUS CLEAR THAT THOUGH AN EXPLANATION HAS BEEN FURNISHED, WHICH MAY WELL BE TRUE, IT HAS NOT BEEN PROPERLY SUBSTANTIATE D, IN THE ABSENCE OF WHICH THE CASH DEPOSITS HAVE BEEN REGARDED AS UNEXPLAINED. BO TH THE ASSESSEE'S AND HIS WIFE'S ACCOUNTS WOULD REQUIRED BEING CONSIDERED TOG ETHER. THIS IS AS BOTH OF THEM HAVE AVAILED LOANS FROM VARIOUS FINANCIAL INST ITUTIONS AND, BESIDES, HAVE BUSINESS ASSETS AND INVESTMENTS, I.E., APART FROM H AVING INCURRED EXPENDITURE. IN FACT, THE ASSESSEE HAS ALSO MADE INVESTMENT IN VENT URE HEALTH NEEDS, WHICH OBTAINS AS ON 31.03.2007, THE YEAR-END, AND WHICH W AS IN FACT REGARDED AS UNEXPLAINED BY THE AO. HOWEVER, ONCE THE ACCOUNTS O F BOTH THE ASSESSEE AND HIS WIFE ARE CONSIDERED TOGETHER, INCORPORATING ALL THE TRANSACTIONS DURING THE YEAR, COUPLED WITH THE PRODUCTION OF PRIMARY EVIDENCE, IN CLUDING BANK STATEMENTS, IT WOULD MAKE LITTLE DIFFERENCE WHETHER IT IS THE INVE STMENT IN VENTURE HEALTH NEEDS OR IN THE BANK ACCOUNTS WHICH IS REGARDED AS UNEXPL AINED. IT WAS VEHEMENTLY CLAIMED BEFORE US BY THE LD. AR THAT THE ACCOUNTS H AVE BEEN PROPERLY RE-CASTED INCORPORATING ALL THE TRANSACTIONS, AND THAT THEREF ORE THE IMPUGNED TRANSACTIONS CAN BE EXPLAINED WITH REFERENCE THERETO. WE FIND SU BSTANCE IN THIS CONTENTION AND, ACCORDINGLY, ONLY CONSIDER IT PROPER THAT THE MATTER BE RESTORED TO THE FILE OF :-7-: I.T.A. NO. 1791/MDS/2016 THE AO FOR RE-EXAMINATION THEREOF. NEEDLESS TO ADD, THE BURDEN OF PROOF TO ESTABLISH HIS CASE WOULD BE ON THE ASSESSEE. THE AO SHALL DECIDE IN ACCORDANCE WITH LAW BY ISSUING DEFINITE FINDINGS OF FACT, AND AFTER ALLOWING DUE OPPORTUNITY TO ASSESSEE TO PRESENT ITS CASE BEFORE HIM. WE DECIDE ACCORDINGLY. 7. THE ONLY OTHER ISSUE IN APPEAL IS THE DISALLOWAN CE OF INTEREST PAID BY THE ASSESSEE TO HIS CREDITORS AT THE RATE OF 15% PER AN NUM, TO THE EXTENT OF 3%, I.E., IN EXCESS OF THAT EARNED ON HIS IN GOOD HOPE HEALTH CARE LTD., BEING AT 12% P.A. NO EXPLANATION FOR THE SAID DIFFERENCE STANDS FURNI SHED AT ANY STAGE, INCLUDING BEFORE US. WE ACCORDINGLY CONFIRM THE DISALLOWANCE . WE DECIDE ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 2ND DAY OF MARCH, 2017 AT CHENNAI. SD/ - ( ) (SANJAY ARORA) ' /ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) % ' /JUDICIAL MEMBER /CHENNAI, . /DATED: 02ND MARCH, 2017 JPV & )'+01 21-+ /COPY TO: 1. $% /APPELLANT 2. )*$% /RESPONDENT 3. 3+ ( )/CIT(A) 4. 3+ /CIT 5. 145 )'+' /DR 6. 567 /GF