ACIT, CHENNAI V. G.Bharathi, CHENNAI

ITA 1861/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7780 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-08-2015
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: M NARAYANAN RETD
• Keywords: Gift; Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.1857 TO 1862/MDS/2015 * +* /ASSESSMENT YEARS: 2005-06 TO 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE-8, CHENNAI-600 034. VS. SMT. G. BHARATHI, PLOT NO.4, KRISHNA NAGAR, 27 TH STREET, MADURAVOYAL, CHENNAI-600 095. [PAN: A H G PB 3678 N ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.SHIVA SRINIVAS, JCIT ./,- 0 1 /RESPONDENT BY : MR.M.NARAYANAN, RETD. ADDL. CIT. # 0 2' /DATE OF HEARING : 23.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 23.02.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THESE COMMON APPEALS ARE FILED BY THE REVENUE AGAI NST THE ORDERS DATED 12.01.2015 OF COMMISSIONER OF INCOME TAX (APP EALS)-9, CHENNAI, IN ITA NOS.4 TO 9/14-15 FOR THE AYS 2005-06 TO 2010 -11, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN APPEALS: ITA NOS.1857 TO 1862/MDS/2015 :- 2 -: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON ON UNEXPLAINED GIFTS FOR THE ASST. YEARS 2006-07 TO 2008-09 OF RS.1,12,00,000/-. 2.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THERE WAS NO ACTUAL TRANSFER OF FUNDS FROM THE DONORS AS HELD BY THE AO. 3.1 THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O N CASH CREDITS FOR THE ASST. YEARS 2005- 06 & 2009-10 OF RS.63,88,034/-. 3.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE CLAIM ON CASH CREDITS IN THE CAPITAL ACCOUNT NEEDS TO BE RECONCILED AND EXPLAINE D WITH SUPPORTING PROOFS. 4.1 THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF CLAIM ON COMMISSION PAYABLE FOR THE ASST. YEARS 2006-07 TO 2010-11 OF RS.82,22,769/ -. 4.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE ONUS IS UPON THE ASSESSEE TO PROVE THE NECESSITY AND GENUINENESS OF THE TRANS ACTION TOWARDS COMMISSION PAYABLE. 5. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION ON UNEXPLAINED SUNDRY CREDITORS FOR THE ASST. YEARS 2005-06, 2009-10 & 2010-11 OF RS.94,88 ,781/-. 5.1 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE ASSESSEE FAILED TO SUBMIT DETAILED CONFIRMATIONS FROM CREDITORS WITH SUPPORT ING PROOFS OF GENUINENESS AND CREDIT WORTHINESS OF TRANSACTIONS. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET-ASIDE A ND THAT OF THE ASSESSING OFFICER RESTORED. 2.0 IN THIS CASE, A SURVEY U/S.133A WAS CONDUCTED AT T HE BUSINESS PREMISES OF THE ASSESSEE ON 21.02.2012 BY THE ACIT, BUSINESS CIRCLE-III, CHENNAI. THE ASSESSEE CARRIES BUSINESS FROM PLOT N O.4, KRISHNA NAGAR, 27 TH STREET, MADURAVOYAL, CHENNAI-95. DURING THE COURS E OF SURVEY, THE ADDITIONS WERE FOUND INDICATING INVESTMENTS IN MOVA BLE AND NON-MOVABLE PROPERTIES SUCH AS JEWELLERY, FIXED DEPOSITS, LAND, BUILDINGS, FLATS, ETC. THE ASSESSEE DURING THE COURSE OF SURVEY ADMITTED THE A DDITIONAL INCOME OF RS.4.65 CR. (IN THE HANDS OF THE ASSESSEE, HER HUSB AND AND HER MOTHER). SUBSEQUENTLY, THE AO ISSUED NOTICE U/S.148 AND THE ASSESSEE HAS FILED THE REVISED RETURNS FOR THE AYS 2005-06 TO 2010-11 AS U NDER: ITA NOS.1857 TO 1862/MDS/2015 :- 3 -: ASSESSMENT YEAR ORIGINAL INCOME RETURNED (RS.) INCOME AS PER RETURN FILED IN RESPONSE TO 148 NOTICE (RS.) DIFFERENCE (RS.) 2005-06 7,23,441.00 7,06,441.00 - 2006-07 9,62,184.00 15,08,803.00 5,46,619.00 2007-08 10,72,788.00 22,38,805.00 11,66,017.00 2008-09 11,24,649.00 41,84,719.00 30,60,070.00 2009-10 10,07,445.00 32,51,706.00 22,44,261.00 2010-11 6,36,301.00 45,04,965.00 38,68,664.00 3.0 THE AO ISSUED NOTICES U/S.147 AND COMPLETED THE RE -ASSESSMENT U/S.147 R.W.S.143(3) BY AN ORDER DATED 30.03.2013. THE AO COMPUTED THE INCOME APPLYING INVESTMENT METHOD AND INCOME ME THOD AND ASSESSED THE TOTAL INCOME HIGHER OF THE TWO FOR THE YEAR ASS ESSMENT YEAR. 4.0 IN THE CASE OF INCOME METHOD, THE COMMON ADDITION MADE TO THE RETURNED INCOME WAS DISALLOWANCE OF THE COMMISSION PAYMENT. WHEREAS IN THE INVESTMENT METHOD, THE YEAR-WISE BREAK-UP OF ADDITIONS MADE TO THE RETURNED INCOME ARE AS UNDER: ASSESSMENT YEAR UNEXPLAINED GIFTS AMOUNT ADDED TOTAL INCOME ASSESSED CASH CREDIT COMMISSION PAYABLE SUNDRY CREDITORS PAYABLE 2005-06 - 15,93,536.00 - 30,34,811.00 53,51,788.00 2006-07 27,00,000.00 - 20,00,000.00 - 62,08,803.00 2007-08 40,00,000.00 - 23,97,734.00 - 86,36,538.00 2008-09 45,00,000.00 - 23,17,434.00 - 1,10,02,153.00 2009-10 - 47,94,498.00 8,48,601.00 46,53,970.00 1,35,48,775.00 2010-11 - - 6,59,000.00 18,00,000.00 69,69,580.00 5.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) PARTLY ALLOWED THE ASSESSEES APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENU E HAS FILED APPEAL BEFORE US. THE REVENUE CHALLENGED THE ORDER OF THE LD.CIT(A) IN COMMON GROUNDS OF APPEAL FOR ALL THE AYS. ITA NOS.1857 TO 1862/MDS/2015 :- 4 -: 6.0 APPEARING FOR THE REVENUE, THE LD.DR ARGUED THAT T HE LD.CIT(A) HAS DELETED THE ADDITION RELATING TO GIFTS, CASH CREDIT S, COMMISSION PAYABLE AND SUNDRY CREDITORS PAYABLE PERTAINING TO THE AYS 2005-06 TO 2010-11, THOUGH, THE ASSESSEE WAS NOT IN A POSITION TO EXPLA IN THE SOURCE OF THE CREDITS AND THE CONFIRMATION FOR OUTSTANDING LIABIL ITIES AND REQUESTED TO SET-ASIDE THE ORDERS OF LD.CIT(A). ON THE OTHER HA ND, THE LD.AR RELIED ON THE LD.CIT(A)S ORDER AND STATED THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE ADDITION AND REQUESTED TO CONFIRM THE ORDER OF THE LD.CIT(A). 7.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. FOR ALL THE AYS, THE AO COMPUTED THE IN COME APPLYING INVESTMENT METHOD AS WELL AS THE INCOME METHOD AND ADOPTED INCOME OF THE HIGHER OF THE TWO METHODS FOR THE YEAR. AS PER THE COMPUTATION OF INCOME MADE BY THE AO, THE TAXABLE INCOME FOR THE A YS 2005-06 TO 2010- 11 WORKED OUT AS UNDER: ASSESSMENT YEAR INVESTMENT METHOD (RS.) INCOME METHOD (RS.) 2005-06 53,51,788.00 44,50,041.00 2006-07 62,08,803.00 61,67,139.00 2007-08 86,36,538.00 57,38,504.00 2008-09 1,10,02,153.00 71,84,719.00 2009-10 1,35,48,775.00 60,94,706.00 2010-11 69,69,580.00 69,69,580.00 8.0 FROM THE ABOVE COMPUTATION, IT IS NOTICED THAT THE COMPUTATION OF INCOME BY APPLYING TWO DIFFERENT METHODS RESULTED I N TWO DIFFERENT INCOMES, WHICH SHOWS THAT THE AO HAS NOT COMPUTED T HE INCOME CORRECTLY AND HAS NOT FOLLOWED THE CORRECT METHOD TO DEDUCE T RUE AND CORRECT INCOME. WHILE DETERMINING THE TOTAL INCOME UNDER T HE INCOME METHOD, ITA NOS.1857 TO 1862/MDS/2015 :- 5 -: THE AO HAS MADE ADDITION RELATING TO COMMISSION PAI D IN ALL THE AYS AND WHEREAS IN CASE OF INVESTMENT METHOD, THE AO HAS MA DE THE ADDITIONS IN RESPECT OF UNEXPLAINED GIFTS, CASH CREDITS, COMMISS ION PAYABLE AND SUNDRY CREDITORS. THE AO STARTED COMPUTING THE INCOME IN INVESTMENT METHOD BY TAKING THE RETURNED INCOME INSTEAD OF OPENING VALUE OF ASSETS/INVESTMENTS AND MADE THE ADDITIONS RELATING TO GIFTS, COMMISSIO N PAYABLE, ETC. UNEXPLAINED GIFTS, CASH CREDITS ARE THE SOURCES AND THE COMMISSION PAYABLE AND SUNDRY CREDITORS PAYABLE ARE THE LIABIL ITIES. IN THE INVESTMENT METHOD, THE AO SHOULD CONSIDER ONLY THE INVESTMENTS AND OUTGOINGS BUT NOT THE ADDITIONS RELATING TO SEC.68. SINCE THE TW O METHODS FOLLOWED BY THE AO RESULTED IN TWO DIFFERENT TAXABLE INCOMES, I T IS VIEWED THAT THE AO HAS NOT FOLLOWED THE TRUE AND CORRECT METHOD FOR DE TERMINING THE TAXABLE INCOME OF THE ASSESSEE AND REQUIRE FRESH CONSIDERAT ION. THEREFORE, WE ARE OF THE VIEW THAT THE FILE SHOULD BE REMITTED BACK T O THE FILE OF THE AO AND THE AO SHOULD ADOPT ONLY ONE METHOD WHICH CAN DEDUC E THE TRUE AND CORRECT INCOME OF THE ASSESSEE AND RE-COMPUTE THE T OTAL INCOME FOR ALL THE AYS IN ACCORDANCE WITH THE LAW. THEREFORE, WE SET- ASIDE THE ORDERS OF THE LOWER AUTHORITIES FOR THE AYS 2005-06 TO 2010-11 TO RE-DO THE ASSESSMENT AFRESH DE NOVO. ITA NOS.1857 TO 1862/MDS/2015 :- 6 -: 9.0 IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 23 RD FEBRUARY, 2016. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF