S LATHA, KOVILPAGTTI V. ITO WARD 2, TUTITCORIN

ITA 1820/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4789 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: K BALASUBR AMANIAN
• Section: 148; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . , .. ', BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO.1819/CHNY/2018 $% % /ASSESSMENT YEAR: 2009-10 SHRI S.SEKAR, NO.1203/6, RAJIVNAGAR, 6 TH ST., KOVILPATTI-628 501. VS. THE INCOME TAX OFFICER, WARD-2, TUTICORIN. [PAN: APUPS 9551 B ] ( ( /APPELLANT) ( )*( /RESPONDENT) ./ ITA NO.1820/CHNY/2018 $% % /ASSESSMENT YEAR: 2009-10 SMT. S.LATHA, NO.1203/6, RAJIVNAGAR, 6 TH ST., KOVILPATTI-628 501. VS. THE INCOME TAX OFFICER, WARD-2, TUTICORIN. [PAN: A BKPL 0577 C ] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.K.BALASUBRAMANIAN, CA )*( + /RESPONDENT BY : MR.S.BHARATH, CIT + /DATE OF HEARING : 15.10.2018 + /DATE OF PRONOUNCEMENT : 16.10.2018 / O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE ASSESSEES AGAINST O RDERS DATED 28.03.2018 OF THE PRINCIPAL CIT, MADURAI-1, MADURAI , U/S.263(1) OF THE INCOME TAX ACT, 1961, (IN SHORT THE ACT). ITA NO.1819/CHNY/2018 & ITA NO.1820/CHNY/2018 :- 2 -: 2. LD.COUNSEL FOR THE ASSESSEES SUBMITTED THAT ASSE SSEE SHRI S.SEKAR WAS ENGAGED IN CIVIL CONTRACT WORK AND ASSESSEE SMT .S.LATHA WAS DERIVING INCOME FROM COMMISSION. AS PER THE LD.AR, THE FORM ER HAD FILED RETURN OF INCOME FOR THE IMPUGNED AY DECLARING INCOME OF RS.3 ,44,530/- AND THE LATTER HAD FILED RETURN OF INCOME FOR THE IMPUGNED AY DECLARING INCOME OF RS.3,52,860/-. ACCORDING TO THE LD.AR, THESE RETUR NS WERE PROCESSED U/S.143(1) OF THE ACT AND INCOME RETURNED ACCEPTED. THEREAFTER, AS PER THE LD.AR, NOTICES U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE SHRI S.SEKAR ON 05.01.2015 AND TO THE ASSESSEE SMT.S.LAT HA ON 30.09.2014. SUBMISSION OF THE LD.AR WAS THAT THE REASONS FOR IS SUING SUCH NOTICES WERE CITED AN ESCAPEMENT OF INCOME DUE TO ADDITION OF CAPITAL OF RS.68,50,000/- IN THE CASE OF SHRI S.SEKAR, AND UNS ECURED LOAN OF RS.65,00,000/- SHOWN IN THE CASE OF ASSESSEE SMT.S. LATHA. THEREAFTER, AS PER THE LD.AR, THE ASSESSMENTS WERE COMPLETED BY THE AO AFTER VERIFYING THE EVIDENCES FILED BY THE RESPECTIVE ASS ESSEES FOR THE CREDITS IN THE BALANCE SHEET. FURTHER, AS PER THE LD.AR WAS T HAT THE ASSESSMENTS WERE DULY COMPLETED U/S.143(3) R.W.S.147 OF THE ACT FOR BOTH THE ASSESSEES CASES. 3. CONTINUING HIS SUBMISSION, THE LD.AR STATED THA T LD.CIT HAD THEREAFTER INVOKED THE POWERS VESTED ON HIM U/S.263 OF THE ACT AND ISSUED NOTICES. AS PER THE LD.AR, THE REASONS CITED IN SUCH NOTICE FOR THE ASSESSEE SHRI S.SEKAR READ AS UNDER: ITA NO.1819/CHNY/2018 & ITA NO.1820/CHNY/2018 :- 3 -: THE ASSESSEE HAS SHOWN RS.80,00,000/- AS ADVANCES I N THE LIABILITY SIDE OF THE BALANCE SHEET AND PART OF THE SAID ADVANCES WAS INV ESTED IN M/S SRI JEYANTHI BUILDERS, A FIRM IN WHICH THE ASSESSEE WAS A PARTNE R. DURING THE ASSESSMENT PROCEEDINGS U/S.143(3) R.W.S.147, GENUINENESS OF T RANSACTION WAS NOT PROPERLY EXAMINED BY THE ASSESSING OFFICER. THE REASONS CITED FOR SMT S.LATHA WERE AS UNDER: THE ASSESSEE HAS SHOWN RS.65,00,000/- AS UNSECURED LOAN RECEIVED FROM FRIENDS AND RELATIVES, IN THE LIABILITY SIDE OF THE BALANCE SHEET AND PART OF THE AMOUNT RECEIVED AS UNSECURED LOAN WAS INVESTED IN M/S.SRI JEYANTHI BUILDERS, A FIRM IN WHICH THE ASSESSEE WAS A PARTNER. DURING THE ASSESS MENT PROCEEDINGS U/S.143(3) R.W.S.147, GENUINENESS OF TRANSACTION WAS NOT PROP ERLY EXAMINED BY THE ASSESSING OFFICER. 4. CONTENTION OF THE LD.AR WAS THAT THE ASPECTS ON WHICH THE LD.CIT HAD SOUGHT TO INVOKE THE POWERS VESTED ON HIM U/S.2 63 OF THE ACT WERE PROPERLY EXAMINED BY THE AO DURING THE COURSE OF RE -ASSESSMENT PROCEEDINGS. AS PER THE LD.AR, IT WAS ONLY AFTER F INDING THE EXPLANATION OFFERED BY THE ASSESSEE TO BE SATISFACTORY THAT THE AO HAD COMPLETED THE ASSESSMENT. CONTENTION OF THE LD.AR WAS THAT THE L D.CIT WAS ENDEAVOURING TO SUBSTITUTE HIS VIEW WITH A LAWFUL V IEW TAKEN BY THE AO. ACCORDING TO HIM, POWERS U/S.263 OF THE ACT COULD N OT BE INVOKED FOR SUBSTITUTING A LAWFUL VIEW TAKEN BY THE AO. 5. PER CONTRA, LD.DR STRONGLY SUPPORTING THE ORDERS OF THE LD.CIT SUBMITTED THAT THE AO HAD NOT DONE PROPER VERIFICAT ION OF THE RECORDS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF THE RE-ASSESSMENT PROCEEDINGS. ACCORDING TO HIM, FAILURE OF THE AO T O DO SO, RENDERED THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELIANCE ITA NO.1819/CHNY/2018 & ITA NO.1820/CHNY/2018 :- 4 -: WAS PLACED ON THE JUDGMENT OF THE HONBLE HIGH COUR T IN THE CASE OF K.A.RAMASAMY CHETTIAR VS. CIT (1996) 220 ITR 657. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW CAREFULLY. IT IS NOT DISPUTED TH AT IN BOTH THE ASSESSEES CASES SHRI S.SEKAR & SMT.S.LATHA, ORIGINAL ASSESSME NTS WERE COMPLETED U/S.143(1) OF THE ACT, AND THESE WERE LATER RE-OPEN ED. REASONS FOR SUCH RE-OPENING MENTIONED IN THE ASSESSMENT ORDER OF SHR I S.SEKAR WAS UNDER: SUBSEQUENTLY, A NOTICE UNDER SECTION 148 WAS ISSUE D ON 05/01/2015 AS THERE WAS AN ESCAPEMENT OF INCOME DUE TO FRESH ADDITION I N CAPITAL TO THE TUNE OF RS.68,50,000/-. IN THE CASE OF SMT.S.LATHA, THE REASON WAS MENTION ED UNDER: TO VERIFY THE GENUINENESS OF THE UNSECURED LOAN OF RS.65,00,000/- SHOWN IN THE BALANCE SHEET OF THE ASSESSEE, THE CASE WAS SELECTE D FOR SCRUTINY. THAT THE AO HAD DULY VERIFIED THE DETAILS FILED BY THE ASSESSES DURING THE RE-ASSESSMENT PROCEEDINGS, IS CLEAR FROM THE FOLLOW ING EXCERPTS TAKEN FROM THE RESPECTIVE ASSESSMENT ORDERS: SHRI S.SEKAR: DURING THE COURSE OF HEARING, IT WAS EXPLAINED BY T HE ASSESSEES REPRESENTATIVE THAT THE AMOUNT CREDITED UNDER ADVANCES OF RS.80,00 ,000/- IN THE BALANCE SHEET WAS THE ADVANCE RECEIVED FROM SUB CONTRACTORS. IT I S ALSO ADDED THAT THE FRESH INVESTMENT IN SRI JEYANTHI BUILDERS OF RS.68,50000/ - IS OUT OF THE ABOVE ADVANCES RECEIVED FROM SUB CONTRACTORS. THE ASSESSEC HAS FIL ED DETAILS REGARDING THE PERSONS FROM WHOM THE ADVANCES WERE RECEIVED. THE A SSESSEE HAS ALSO FILED COPIES OF RETURN OF INCOME FILED BY THE PERSONS FRO M WHOM ADVANCES WERE RECEIVED AND ALSO CONFIRMATION LETTERS FROM THE PER SONS CONCERNED. ON PERUSAL OF THE DETAILS, IT IS FOUND THAT THE ASSESSEES CONTEN TIONS ARE ACCEPTABLE AND CONSIDERED. ITA NO.1819/CHNY/2018 & ITA NO.1820/CHNY/2018 :- 5 -: SMT. S.LATHA: WHEN THE ASSESSEES REPRESENTATIVE WAS ASKED TO PRO DUCE EVIDENCE TO PROVE THE GENUINENESS OF THE UNSECURED LOAN, HE HAS FILED CON FIRMATION LETTERS FROM THE PERSONS FROM WHOM THE ASSESSEE HAS RECEIVED UNSECUR ED LOAN TO THE EXTENT OF RS.65,00,000/- AND THE SAME HAVE BEEN VERIFIED. 7. IN OUR OPINION, IT IS CLEAR THAT THE AO HAD EXAM INED THE CREDITS SHOWN BY THE ASSESSEES IN THEIR RESPECTIVE BALANCE SHEET, WITH THE DETAILS FILED BY THEM. IN THE CASE OF SHRI S.SEKAR, THE AO CLEARLY MENTIONED THAT THE ASSESSEE HAD FILED REQUIRED INFORMATION REGARDI NG THE PERSONS FROM WHOM HE HAD CLAIMED RECEIPT OF ADVANCE AND ALSO FIL ED CONFIRMATION LETTERS. THE AO ALSO MENTIONED THAT HE HAD VERIFIE D SUCH DETAILS AND FOUND IT TO BE ACCEPTABLE. 8. A READING OF THE REASONS MENTIONED BY THE LD.CIT FOR INVOKING THE POWERS VESTED ON HIM U/S.263 REPRODUCED BY US AT PA RA 3 CLEARLY SHOW THAT THEY WERE ON ISSUES WHICH STOOD ALREADY VERIFI ED BY THE AO. IT IS TRITE LAW THAT POWERS U/S.263 OF THE ACT CAN BE INVOKED O NLY WHERE THERE IS AN ERROR IN THE ORDER OF THE ASSESSMENT ORDER AND SUCH ERROR HAS CAUSED PREJUDICE TO THE REVENUE. NO DOUBT, FAILURE TO ENQ UIRE INTO AN ISSUE WHICH ANY PRUDENT PERSON WOULD HAVE DONE CAN RENDER THE O RDER ERRONEOUS AND PREJUDICIAL. HOWEVER ONCE ENQUIRIES ARE DONE, JUST BECAUSE THE CIT FOUND THE RESULTS OF THE ENQUIRY NOT TO HIS LIKING, WE CA NNOT SAY THAT THERE WAS ABSENCE OF APPLICATION OF MIND OR INADEQUATE APPLIC ATION OF MIND. SUCH POWERS CANNOT BE USED FOR SUBSTITUTING A LAWFUL VIE W TAKEN BY THE AO. COMING TO THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF ITA NO.1819/CHNY/2018 & ITA NO.1820/CHNY/2018 :- 6 -: K.A.RAMASAMY CHETTIAR VS. CIT (1996) 220 ITR 657, R ELIED UPON BY THE LD.DR, THERE THE CONCERNED OFFICER HAD NOT DONE THE ENQUIRIES WHICH WERE EXPECTED FROM HIM. AS AGAINST THIS, IN BOTH THE CA SES BEFORE US, IT IS CLEAR THAT THE AO HAD MADE THE NECESSARY ENQUIRIES. WE A RE OF THE OPINION THAT THE LD.CIT FELL IN ERROR IN INVOKING JURISDICTIONAL POWER U/S.263 OF THE ACT. ACCORDINGLY, THE ORDERS OF THE LD.CIT ARE SET-ASIDE . 9. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE S IN ITA NO.1819 & 1820/CHNY/2018 ARE ALLOWED. ORDER PRONOUNCED ON THE 16 TH DAY OF OCTOBER, 2018, IN CHENNAI. SD/- SD/- ( . . ' ) ( DUVVURU R.L. REDDY ) $ /JUDICIAL MEMBER ( . ) ( ABRAHAM P.GEORGE ) /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: OCTOBER 16, 2018. TLN + )$23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )$$ /DR 3. 5 ( ) /CIT(A) 6. % /GF