KanniappanMurugadoss, CHENNAI V. ITO, CHENNAI

ITA 1880/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8012 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 22-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 21-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SRREKANTH JT
• Assessee Lawyers: G BASKAR
• Keywords: Capital asset; Source of fund; Additional evidence; Cost of acquisition; Fair market value
• Section: 143(3); 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI , !' . ' $ %, & %' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.1880/MDS/2015 & ) '*) / ASSESSMENT YEAR : 2011-12 KANNIAPPAN MURUGADOSS, 5A, SRIDEVI KARUMARIAMMAN NAGAR, NEAR VELAMMAL VIDYALALA, AYAMBAKKAM, CHENNAI 600 095. [PAN: AIPPM 1194C ] (,-/ APPELLANT ) VS. INCOME TAX OFFICER, NON-CORPORATE WARD-7(4) AAYAKAR BHAVAN, WANAPARTHY BLOCK, ROOM NO.604, 6 TH FLOOR, 121, M.G.ROAD, CHENNAI 600 034. (./,-/ RESPONDENT) ./ ITA NO.1981/MDS/2015 & ) '*) / ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER, NON-CORPORATE WARD-7(4) AAYAKAR BHAVAN, WANAPARTHY BLOCK, ROOM NO.604, 6 TH FLOOR, 121, M.G.ROAD, CHENNAI 600 034. (,-/ APPELLANT ) VS. KANNIAPPAN MURUGADOSS, 5A, SRIDEVI KARUMARIAMMAN NAGAR, NEAR VELAMMAL VIDYALALA, AYAMBAKKAM, CHENNAI 600 095. [PAN: AIPPM 1194C ] (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI G.BASKAR, ADVOCATE ./,- 0 1 /RESPONDENT BY : SHRI A.V.SRREKANTH, JT. CIT ' 0 2 /DATE OF HEARING : 22.11.2016 3* 0 2 /DATE OF PRONOUNCEMENT : 16.01.2017 / O R D E R 2 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) PER SANJAY ARORA, AM : THESE ARE CROSS APPEALS ARISING FROM THE ORDER DATE D 15/6/2015 BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI, PA RTLY ALLOWING THE ASSESSEES APPEAL CONTESTING HIS ASSESSMENT UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HERE-IN-AFTER) DATED 18/2/ 2014 FOR ASSESSMENT YEAR (AY) 2011-12. 2. CASH DEPOSITS OF RS. 42.28 LACS AND RS. 13.87 LA CS DURING THE RELEVANT PREVIOUS YEAR WERE FOUND IN THE ASSESSEES SAVINGS BANK ACCOUNTS WITH PUNJAB NATIONAL BANK, MOGAPPAIR EAST AND STATE BANK OF IND IA, PADI, RESPECTIVELY. THESE BANK ACCOUNTS WERE NOT REFLECTED IN THE BOOKS OF THE ASSESSEES BUSINESS, I.E., MANUFACTURE AND TRADING IN PLASTIC ITEMS, CAR RIED UNDER THE PROPRIETARY CONCERN, M/S. INDTECH INDUSTRIES. THE SAME BEING UN EXPLAINED AS TO THEIR SOURCE, WERE ASSESSED AS INCOME FROM OTHER SOURCES. THERE W AS, LIKEWISE, ANOTHER CASH INTRODUCTION OF RS. 62.75 LACS IN THE ASSESSEES CA PITAL ACCOUNT IN THE SAID FIRM, AND WHICH WAS FOR THE SAME REASON ASSESSED AS BUSIN ESS INCOME. A COMPARISON OF THE SALES FIGURE PER THE PROFIT & LOSS A/C OF THE BUSINESS (RS. 343.10 LACS) AND THAT PER THE SALES-TAX RETURN (RS. 380.68 LACS) , REVEALED DIFFERENCE OF RS. 37.57 LACS. THOUGH EXPLAINED TO BE ON ACCOUNT OF EX CISE DUTY, INCLUDED IN THE MONTHLY SALES TURNOVER, CREDITED IN THE BOOKS OF AC COUNT TO A SEPARATE ACCOUNT, THE SAME WAS NOT SUBSTANTIATED, SO THAT THE SAME CA ME TO BE ADDED AS INCOME. IN APPEAL, THE LD. CIT(A) WAS OF THE VIEW THAT THE CAS H INTRODUCED IN THE PARTNERSHIP FIRM AS WELL AS IN THE BANK ACCOUNTS IS TO BE TAKEN TOGETHER. ALSO, THE CASH WITHDRAWALS SHALL FORM A SOURCE FOR CASH DEPOS ITS, I.E., SUBSEQUENT TO THE WITHDRAWAL/S. ACCORDINGLY, IT IS THE PEAK AMOUNT AV AILABLE IN ALL THE ACCOUNTS TOGETHER THAT SHOULD BE CONSIDERED AND BROUGHT TO T AX. HE ALSO AGREED WITH THE ASSESSEE IN THAT CERTAIN CREDITS (IN THE FIRM) ARE BY WAY OF JOURNAL ENTRIES, IN FAVOUR OF SPECIFIED PERSONS, AMOUNTING TO RS.21.93 LACS (LISTED AT PARA 4.4 OF HIS ORDER), FOR WHICH DELETION WAS THEREFORE DIRECTED. AGAIN, THE ASSESEE FILING A 3 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) SALES RECONCILIATION, STATING THE AMOUNT CREDITED S EPARATELY, HE DIRECTED EXCLUSION OF ADDITION ON ACCOUNT OF THE SAID DIFFER ENCE. AGGRIEVED, BOTH THE PARTIES ARE IN APPEAL. 3. BEFORE US, THE ASSESSEES CASE WAS FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF TWO AGREEMENTS FOR SALE DATED 5/4/2010 WITH TWO DIFFERENT PERSONS FOR SALE BY THE ASSESSEE OF HIS TWO IMMOVABLE PROPE RTIES AT RS. 35 LACS EACH. THE SAME PER THE ENDORSEMENTS MADE AT THE BACK OF ITS PAGES, BEGINNING PAGE 1, HAD YIELDED HIM CASH AT RS. 25 LACS EACH, I.E., AT A TOTAL OF RS. 50 LACS. THE LD. DEPARTMENT REPRESENTATIVE (DR) WOULD OBJECT TO THE SAID PLEA, STATING THAT THE SAME WAS NOT ADMISSIBLE IN TERMS OF RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, RELYING FOR THE PURPOSE OF T HE DECISION IN THE CASE OF VELJI DEORAJ & CO. V. CIT [1968] 68 ITR 708 (BOM), TO WHICH IN FACT REFERENC E WAS ALSO MADE BY THE BENCH DURING HEARING. ON A FURTHER ENQUIRY BY THE BENCH AS TO IF THE SALE (OF PROPERTY) HAD MATURED, EVEN IF SUBS EQUENTLY, WHICH WOULD FIND REFLECTION IN THE ASSESSEES RETURN, HE REPLIED IN THE NEGATIVE, FURNISHING NO FURTHER EXPLANATION. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE LAW 4.1 RULE 29 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963, WHICH READS AS UNDER, IS A PROVISION REGARDING PRODUCTION OF AD DITIONAL EVIDENCE BEFORE THE TRIBUNAL: 29. PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE TR IBUNAL. THE PARTIES TO THE APPEAL SHALL NOT BE ENTITLED TO PRODUCE ADDITIONAL EVIDENCE EITHER ORAL OR DOCUMENTARY BEFORE THE TRIB UNAL, BUT IF THE TRIBUNAL REQUIRES ANY DOCUMENTS TO BE PRODUCED OR A NY WITNESS TO BE EXAMINED OR ANY AFFIDAVIT TO BE FILED TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTIAL CAUSE, OR, IF THE INCOME-TAX AUTH ORITIES HAVE DECIDED THE CASE WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE A SSESSEE TO ADDUCE EVIDENCE EITHER ON POINTS SPECIFIED BY THEM, OR NOT SPECIFIED BY THEM, 4 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) THE TRIBUNAL, FOR REASONS TO BE RECORDED, MAY ALLOW SUCH DOCUMENT TO BE PRODUCED OR WITNESS TO BE EXAMINED OR AFFIDAVIT TO BE FILED OR MAY ALLOW SUCH EVIDENCE TO BE ADDUCED . THE RULE PLACES A BAR ON THE PARTIES TO THE APPEAL TO PRODUCE ADDITIONAL EVIDENCE, EITHER ORAL OR DOCUMENTARY, BEFORE THE TRIBUNAL. BU T THE TRIBUNAL IS VESTED WITH A JUDICIAL DISCRETION TO ALLOW THE PRODUCTION OF THE ADDITIONAL EVIDENCE IN THE FOLLOWING CIRCUMSTANCES: I. IF THE TRIBUNAL REQUIRES ANY DOCUMENTS TO BE PRODUC ED OR ANY WITNESS TO BE EXAMINED OR ANY AFFIDAVIT TO BE FILED TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTIAL CAUSE; OR II. IF THE INCOME-TAX AUTHORITIES HAVE DECIDED THE CASE WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE EITH ER ON POINTS SPECIFIED BY THEM, OR NOT SPECIFIED BY THEM. THE TRIBUNALS POWER TO ADMIT ADDITIONAL EVIDENCE I S LIMITED. ON THE EXISTENCE OF EITHER OF THE CIRCUMSTANCES MENTIONED ABOVE, THE TRIBUNAL, FOR REASONS TO BE RECORDED, MAY ALLOW SUCH DOCUMENT TO BE PRODUCED OR WITNESS TO BE EXAMINED OR AFFIDAVIT TO BE FILED OR MAY ALLOW S UCH EVIDENCE TO BE ADDUCED. THE RULE DOES NOT THUS ENABLE AN ASSESSEE OR THE DE PARTMENT TO TENDER FRESH EVIDENCE TO SUPPORT ITS CASE, MUCH LESS TO MAKE OUT A NEW CASE. THE HON'BLE HIGH COURT IN VELJI DEORAJ & CO. (SUPRA) CLARIFIED THAT THE ADMISSION OF ADDITIONAL EVIDENCE IS MADE TO DEPEND NOT ON THE RE LEVANCY OR MATERIALITY BUT UPON THE FACT WHETHER OR NOT THE APPELLATE COURT RE QUIRES THE EVIDENCE TO ENABLE IT TO PRONOUNCE THE ORDER OR FOR ANY OTHER SUBSTANT IAL CAUSE. FURTHER, THE MERE FACT THAT THE EVIDENCE SOUGHT TO BE PRODUCED IS VIT AL AND IMPORTANT DOES NOT PROVIDE A SUBSTANTIAL CAUSE TO ALLOW ITS ADMISSION AT THE APPELLATE STAGE, ESPECIALLY WHEN THE EVIDENCE WAS AVAILABLE TO THE P ARTY AT THE INITIAL STAGE AND HAD NOT BEEN PRODUCED BY HIM . THIS, IT WAS FURTHER EXPLAINED, IS AS THE RULE IS NOT TO ALLOW A LITIGANT, WHO HAS BEEN UNSUCCESSFUL IN THE LOWER COURTS, TO PATCH UP THE WEAK PARTS OF HIS CASE AND FILL UP THE OMISS IONS IN THE COURT OF LAW. THE ADMISSION OF ADDITIONAL EVIDENCE BY THE TRIBUNAL IS THUS DEPENDENT ON THE 5 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) TRIBUNAL REQUIRING IT FOR THE PURPOSE OF PRONOUNCIN G ITS JUDGMENT OR FOR THE PURPOSE OF CURING SOME INHERENT LACUNA WHICH IT HAS ITSELF DISCOVERED (REFER PGS. 713-715 OF THE REPORTS). IN THIS CONTEXT, IT WOULD BE USEFUL TO REFER TO THE CONSTITUTIONAL BENCH DECISION IN K. VENKATARAMIAH VS. A. SEETHARAMA REDDY AIR 1963 SC 1526, 1530, WHEREIN IT WAS OBSERVED IN THE CONTEXT OF THE PROVISION OF ORDER 41, RULE 27(1) OF CODE OF CIVIL PROCEDURE, 1908, TO WHICH R. 29 IS SIMILAR IN TERMS, THAT THE APPELLATE COURT HA S THE POWER TO ALLOW ADDITIONAL EVIDENCE NOT ONLY WHERE IT REQUIRES SUCH EVIDENCE T O ENABLE IT TO PRONOUNCE THE JUDGMENT BUT ALSO FOR ANY OTHER SUBSTANTIAL CAUSE. THERE MAY WELL BE CASES WHERE EVEN THOUGH THE COURT FINDS THAT IT IS ABLE T O PRONOUNCE THE JUDGMENT ON THE STATE OF RECORD AS IT IS, SO THAT IT CANNOT STR ICTLY BE SAID THAT IT REQUIRES ADDITIONAL EVIDENCE TO ENABLE IT TO PRONOUNCE THE J UDGMENT, IT STILL CONSIDERS THAT IN THE INTEREST OF JUSTICE SOMETHING WHICH REMAINS OBSCURE SHOULD BE FILLED UP, SO THAT IT CAN PRONOUNCE ITS JUDGMENT IN A MORE SAT ISFACTORY MANNER. SUCH A CASE WILL BE ONE FOR ALLOWING ADDITIONAL EVIDENCE FOR AN Y OTHER SUBSTANTIAL CAUSE UNDER RULE 27(1)(B) OF THE CODE. THIS ASPECT WAS AG AIN EMPHASIZED RECENTLY BY THE HONBLE COURT IN IBRAHIAM UDDIN AND ANR. [2012] 8 SCC 148, WHEREIN IT WAS EXPLAINED THAT THE WORDS FOR ANY OTHER SUBSTAN TIAL CAUSE MUST BE READ WITH THE WORD REQUIRES AT THE BEGINNING OF THE SENTENC E, SO THAT IT IS ONLY WHERE, FOR ANY OTHER SUBSTANTIAL CAUSE, THE APPELLATE COURT RE QUIRES ADDITIONAL EVIDENCE, THAT THIS RULE SHALL APPLY, FOR EXAMPLE, WHEN EVIDENCE HAD BEEN TAKEN BY THE LOWER COURTS SO IMPERFECTLY THAT THE APPELLATE COURT CANN OT PASS A SATISFACTORY JUDGMENT (REFER PG. 168 OF THE REPORTS). ANALYSIS 4.2 WE MAY NEXT EXAMINE THE FACTS OF THE CASE, IN T HE BACKDROP OF WHICH THE EVIDENCE BEING PRAYED FOR ADMISSION IS TO BE CONSID ERED. CLEARLY, THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION WITH REGARD TO TH E NATURE AND SOURCE OF THE CASH DEPOSITS IN HIS TWO BANK ACCOUNTS AS WELL AS T HAT INTRODUCED IN BUSINESS. 6 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) THE ASSESSEES CASE WAS SELECTED FOR ASSESSMENT UND ER THE VERIFICATION PROCEDURE BY THE ISSUE OF NOTICE UNDER SECTION 143( 2) ON 01/8/2012. A DETAILED QUESTIONNAIRE WAS ISSUED ON 27/6/2013. THE HEARING WAS CONDUCTED AT, BEGINNING 7/8/2013, ON DIFFERENT DATES EXTENDING UP TO 17/1/2014, WITH THE ASSESSEE PERSONALLY ATTENDING ON 25/11/2013. ALL TH IS WHILE NO REFERENCE TO ANY PROPOSED SALE OR SALE AGREEMENT WAS MADE BY THE ASS ESSEE. VIDE LETTER DATED 11/2/2014, I.E., AFTER THE CLOSE OF THE HEARING, TH E ASSESSEE FOR THE FIRST TIME SUBMITTED THAT HE HAD RECEIVED SOME ADVANCE MONEY FOR THE SALE OF PROPERTY. THEN, AGAIN, NO MATERIAL TO SUBSTANTIATE THE CLAIM, OR DETAILS, WERE FURNISHED. BEFORE THE FIRST APPELLATE AUTHORITY AS WELL, IN WH OSE OFFICE THE ASSESSEE WAS PERSONALLY PRESENT ON 14/3/2014, THE ASSESSEE RAISE D THE CLAIM SANS ANY DETAILS, MUCH LESS MATERIAL, LEADING TO ITS REJECTION BY HIM (REFER PARA 4.4.2 OF THE IMPUGNED ORDER). THE SAME HAVING NOT BEEN CONSIDERE D BY THE ASSESSING AUTHORITY, THIS RATHER OUGHT TO HAVE BEEN ASSESSEE S FIRST PLEA BEFORE THE LD. CIT(A), I.E., ADMISSION OF ADDITIONAL EVIDENCE. THE SAME, REGULATED BY RULE 46A OF THE INCOME TAX RULES, 1962, ITSELF REQUIRES RECORDING OF REASONS BY HIM JUSTIFYING HIS ACCEPTANCE, ONLY SUBJECT TO WHICH CO ULD THE SAME BE ADMITTED. FURTHER, AND EVEN AS THE SAME, I.E., ADMISSION, IS SUBJECT TO BEING CHALLENGED IN FURTHER APPEAL, THE RELIANCE THEREON IS SUBJECT TO ITS CONSIDERATION BY THE ASSESSING AUTHORITY, INCLUDING NOT ONLY MEETING THE SAME BUT ADDUCING MATERIAL IN REBUTTAL. THE ASSESSEES CONDUCT IN NOT FURNISHI NG THE TWO AGREEMENTS AT ANY TIME, EVEN YEARS AFTER EXECUTING THE SAME ON 5/4/20 10, AND EVEN AS THE SAME CONSTITUTES HIS ONLY EXPLANATION ON MERITS, THE SUB STRATUM OF HIS CASE IN RESPECT OF THE PRINCIPAL ADDITION PROPOSED AND MADE, OR IN APPEAL, IS INCOMPREHENSIBLE, IF NOT PERPLEXING. TO BEGIN WITH, WHAT IS THE LEGAL VALIDITY OF THE SAID AGREEMENTS, WHICH BEING IN RELATION TO THE TRANSFER OF IMMOVABLE PROPERTY ARE REQUIRED BY LAW TO BE REGISTERED UNDER THE REGISTRA TION ACT, 1908? THEN, AGAIN, IT IS NOT ACCOMPANIED BY ANY DETAILS, VIZ. CONFIRMA TION BY THE PROPOSED BUYERS, 7 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) STATING THEIR PANS, OR IF THE AMOUNT PAID BY THEM WAS ACCOUNTED FOR. THOUGH, STRICTLY SPEAKING, THE SAME SHOULD NOT CONCERN THE ASSESSEE, WE REFER TO THIS AS THIS COULD PERHAPS BE THE REASON FOR NOT DIVULGING THESE AGREEMENTS. OR, IS IT THAT THE SAME ARE AN AFTER-THOUGHT, WITH THE ASSESSEE TA KING TIME TO IDENTIFY PERSONS WHO COULD BE SAID TO HAVE PAID HIM CASH TO HIM AGAI NST THE PURPORTED SALE? THERE IS NO EXPLANATION AS TO WHY THE ENTIRE CONSID ERATION HAS BEEN PAID IN CASH, I.E., ASSUMING THAT THE SALE IS OTHERWISE A CCOUNTED FOR OR INTENDED TO BE DISCLOSED. TWO, WHY HAD THE SAME, AGREED TO BE CLOS ED BY 31/12/2010, NOT BEEN EVEN YEARS LATER, PARTICULARLY CONSIDERING THAT THE VENDEES HAD PAID A SUBSTANTIAL SUM, I.E., BOTH IN ABSOLUTE TERMS AS WELL AS RELATI VELY, I.E., IN RELATION TO THE SALE CONSIDERATION, AND COULD ENFORCE PERFORMANCE THROUG H THE COURT? FURTHER, WHAT IS THE FAIR MARKET VALUE (FMV) OF THE TWO PROPERTIE S AT THE RELEVANT TIME? AGAIN, HAD THE PARTIES/BUYERS, WHO CONTINUED PAYING INTERM ITTENTLY UP TO JANUARY, 2011, DEMANDED THEIR MONEY BACK OR WAIVED THE SAME, I.E., THE LEGAL STATUS OF THE SAID AGREEMENTS. THIS BECOMES PARTICULARLY RELEVANT CONS IDERING THAT THE AGREEMENTS HAVE ADMITTEDLY NOT BEEN CARRIED OUT. DID THE ASSES SEE DISCLOSE THE FACT OF ADVANCE RECEIVED IN ANY OF THE RETURNS FILED FOR TH E SUBSEQUENT YEARS? THIS IS AS THE AMOUNT RECEIVED IS LIABLE TO BE UNDER SECTION 5 1 REDUCED FROM THE COST OF ACQUISITION OF THE CAPITAL ASSET/S UNDER REFERENCE. AGAIN, IS IT A CASE OF FORFEITURE? THIS IS AS THE SAME, COUPLED WITH NON-T RANSFER OF THE CAPITAL ASSET UNDER REFERENCE, WOULD RENDER THE AMOUNT LIABLE TO BE CONSIDERED AS INCOME U/S. 2(24)(XVII) R/W 56(2)(IX), I.E., FOR THE YEAR OF FO RFEITURE. FINALLY, WE OBSERVE THAT, EVEN CONSIDERING THE SAID AGREEMENTS AT FACE VALUE, WITHOUT ANY SUPPORTING MATERIAL OR EXPLANATION, THE ASSESSEE HAS ADMITTEDL Y NO EXPLANATION FOR THE SOURCE OF THE BALANCE AMOUNT OF RS. 68.90 LACS, I.E ., RS. 118.90 LACS MINUS RS. 50 LACS, ADDITION IN RESPECT OF WHICH SHALL IN ANY CASE OBTAIN. THAT IS, THERE IS IN FACT A TACIT ADMISSION ON THE PART OF THE ASSESSEE TO BE HAVING NO EXPLANATION (AS 8 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) TO THE NATURE AND SOURCE OF FUNDS) FOR NEARLY RS. 7 0 LACS, ADMITTEDLY FOUND WITH HIM DURING THE RELEVANT YEAR. FINDINGS 4.3 CLEARLY, THERE WAS NO DEARTH OF OPPORTUNITY WIT H THE ASSESSEE FOR PRODUCING THE EVIDENCE, WHICH IT PRESSES FOR ADMISS ION BEFORE US VIDE APPLICATION DATED MARCH 22, 2016. RATHER, THE VERY FACT OF ITS AVAILABILITY ALL THROUGH ITSELF RAISES SEVERAL QUESTIONS, IF NOT DOU BTS, IN THE MATTER. WITH REGARD TO OUR REQUIRING THE SAME FOR PASSING AN ORDER, WE ARE NOT IN THE LEAST MOVED. THE JURISDICTIONAL FACT OF THE ASSESSEE BEING FOUND TO BE THE OWNER OF THE MONIES IN HIS ACCOUNTS IS ADMITTED AND NOT IN DISPUTE. ALL , THEREFORE, THAT IS REQUIRED TO CONSIDERED IS THE REASONABILITY OF THE ASSESSEES E XPLANATION, IF ANY, FURNISHED TOWARD THE NATURE AND SOURCE OF THE IMPUGNED CASH D EPOSITS. A MERE MENTION OF THE SALE OF PROPERTY, IF THE REFERENCE THERETO BEFO RE THE LD. CIT(A) IS TAKEN INTO ACCOUNT, WITHOUT ANYTHING FURTHER, MUCH LESS SUBSTA NTIATED, CANNOT BE IN LAW REGARDED AS AN EXPLANATION, AND WAS ACCORDINGLY N OT CONSIDERED BY HIM. THE ASPECT OF ANY OTHER SUBSTANTIAL CAUSE STANDS ALSO EXPLAINED BY THE HIGHER COURTS AS IN TERMS OF THE REQUIREMENT BY THE TRIBUNAL FOR PRONOUNCING ITS ORDER IN A SATISFACTORY MANNER. WE HAVE ANALYZED THE ASSESSEE S CONDUCT AS WELL AS THE DOCUMENTS PRAYED FOR ADMISSION IN LIGHT OF THE OBTA INING FACTS AND THE POSITION OF LAW, TO FIND THAT THE SAME, ON THE CONTRARY, NEE D NOT BE TAKEN ON RECORD AND ONLY NEED TO BE IGNORED. THE ADMISSION, AS EXPLAINE D, IS NOT TO PROVIDE FURTHER INNINGS OR WITH A VIEW TO FILL UP THE GAPS IN ITS C ASE BY A PARTY AND STRENGTHEN ITS CASE. WE, ACCORDINGLY, HAVE NO HESITATION TO HOLD T HAT THERE IS NO REQUIREMENT FOR THE SAID EVIDENCE, EVEN THE CREDIBILITY OF WH ICH IS SUSPECT. THE ASSESSEES APPLICATION OR PLEA IN THIS REGARD, I.E., ADMISSION OF ADDITIONAL EVIDENCE, IS ACCORDINGLY REJECTED. YES, OF COURSE, THERE IS THE QUANTITATIVE ASPECT IN-AS-MUCH AS BOTH THE AUTHORITIES HAVE ARRIVED AT A DIFFERENT AMOUNT OF THE ADDITION, 9 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) RESULTING IN CROSS APPEALS. THE SAME THOUGH IS INDE PENDENT OF THE EVIDENCE UNDER REFERENCE. ON MERITS, WE, CONSIDERING THE MATERIAL ON RECORD, FIND THE ASSESSEES CASE QUA THE IMPUGNED ADDITION, WHICH STANDS ALSO CONTESTED BY THE REVENUE FOR THE PART RELIEF ALLOWED BY THE LD. CIT(A), AS SANS ANY EXPLANATION, MUCH LESS MATERIALS, TO THE EXTENT OF THE BALANCE AMOUNT - WHICH WE HAVE ARRIVED AT RS. 68.90 LACS (REFER PARA 4.2 OF THIS ORDER). AND AN EXPLANATION (BEFORE THE LD. CIT(A)) FOR AN UNSPECIFIED AMOUNT - WHICH IS SUBSEQUENTLY SOUGHT TO BE SUPPORTED BY AGREEMENTS FOR RS.70 LACS, CLAIMING TO HAVE RECEIVED A SUBSTANTIAL PART (RS.50 LACS) THEREOF, I.E., EVEN WHERE REGARDE D AS A PART OF THE ASSESSEES CASE. WHO IS A PARTY/S TO WHICH THE PROPERTY/S IS A GREED TO BE SOLD; AT WHAT TERMS; HOW IS THE CONSIDERATION RECEIVED/TO BE RECE IVED; WHEN DID THE SALE/TRANSFER TAKES PLACE; AND WHERE NOT, WHAT IS A COURSE OF ACTION ADOPTED BY EITHER PARTY FOR SPECIFIC PERFORMANCE, ETC., ARE AL L QUESTIONS THAT BEG AN ANSWER. WHY, EVEN THE AMOUNT/S REMAINS UNSPECIFIED? THE BAL D STATEMENT BEFORE THE FIRST APPELLATE AUTHORITY CAN HARDLY BE CONSIDERED AS AN EXPLANATION. THE PROVISIONS OF SECTIONS 69/69A STAND RIGHTLY INVOKED BY THE REVENUE. THE ONLY QUESTION THAT SURVIVES IS THE QUANTUM OF THE ADDITI ON. WE FIND THE BASIS OF A PEAK AMOUNT, AS ADOPTED BY THE LD. CIT(A), AS REASO NABLE. IN FACT, WE FIND THAT THE ASSESSING OFFICER (AO) HAS HIMSELF ALLOWED THE ASSESSEE CREDIT FOR RS. 1 LAC (OUT OF RS. 2.35 LACS WITHDRAWN) AGAINST DEPOSITS I N THE SBI ACCOUNT, AS WELL AS FOR RS. 0.10 LAC WITHDRAWN FROM PNB A/C, SO THAT IT IS NOT THAT HE WAS NOT ALIVE TO THE SAME. THE BALANCE RS. 1.35 LAC STANDS WITHDR AWN FROM THE CAPITAL ACCOUNT ON 31/3/2011, I.E., THE LAST DATE OF THE YEAR. THE UTILIZATION OF THE SAME AS WELL AS OF THAT WITHDRAWN EARLIER (RS. 1.0 LAC) IN THE BOOK S OF THE FIRM IS TO BE SEEN BEFORE CREDIT AGAINST THE SAME COULD BE ALLOWED . THIS IS AS IT COULD WELL BE THAT THE SAME IS CONSUMED FOR HOUSEHOLD/PERSONAL WITHDRA WALS OR TOWARD YEAR-END INVESTMENTS THE ASSESSEE ALSO AVAILING DEDUCTION UNDER CHAPTER VI-A AT RS. 10 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) 1.04 LACS, IN WHICH CASE THE CREDIT, TO THAT EXTENT , COULD NOT BE ALLOWED. WHY, IT COULD BE THAT THE CASH IS REFLECTED AS CASH-IN-HAND IN THE BOOKS OF THE FIRM, AND CARRIED OVER AS SUCH FOR UTILIZATION IN THE FOLLOWI NG YEAR, SO THAT ALLOWING CREDIT FOR THE SAME (TO THAT EXTENT) WOULD BE INCONSISTENT WITH THE MATERIAL ON RECORD. AGAIN, WE OBSERVE A DIFFERENCE BETWEEN THE CASH DEP OSITS IN THE SBI ACCOUNT. WHILE THE AO TAKES THIS FIGURE AT RS. 13.87 LACS (R EFER PARA 5.5 OF HIS ORDER), THE LD. CIT(A) ADOPTS THIS AT RS. 20.39 LACS. WITH REGA RD TO THE CREDIT OF RS. 21.93 LACS IN RESPECT OF CASH CREDIT IN THE ASSESSEES CA PITAL ACCOUNT, OSTENSIBLY AGAINST JOURNAL ENTRIES ALLOWED BY THE LD. CIT(A), WE O BSERVE THAT THE REVENUE IS RIGHTLY AGGRIEVED (PER GROUND 2.3 OF ITS APPEAL) I N-AS-MUCH AS NO OPPORTUNITY TO EXAMINE AND, WHERE SO, MEET AND/OR REBUT HAS BEE N PROVIDED TO THE AO. FURTHER, WHO ARE THE CREDITORS; THEIR CAPACITY; THE GENUINENESS OF THE TRANSACTIONS, WHICH ASPECTS REMAIN OBSCURE OR OVER- LOOKED. IN FACT, IT DOES NOT APPEAR THAT THE LD. CIT(A) HAS ALLOWED CREDIT, OR ELSE THE AGGREGATE OF CASH DEPOSITS (AS CONSIDERED BY HIM) WOULD NOT AMOUNT TO RS. 103.07 LACS, I.E., AS AGAINST RS. 118.90 LACS BY THE AO, OR AT A DIFFEREN CE OF RS. 15.83 LACS . DECISION 4.4 IN VIEW OF THE FOREGOING, EVEN AS WE CONFIRM TH E ADDITION IN PRINCIPLE, THE MATTER WITH REGARD TO ITS QUANTIFICATION, BEING INC HOATE, CLEARLY REQUIRES DETERMINATION, TO BE DECIDED AFTER DUE VERIFICATION , OF COURSE AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. WE D IRECT ACCORDINGLY. THIS DECIDES THE ASSESSEES APPEAL AND GD. 2.3 OF THE RE VENUES APPEAL. 5. THE ONLY OTHER ISSUE RAISED IS VIDE GROUNDS 2.1 & 2.2 OF THE REVENUES APPEAL. WHILE THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE ON THE BASIS OF A SALES RECONCILIATION, THE REVENUE IS AGGRIEVED BY I TS ADMISSION, CLAIMED TO BE IN VIOLATION OF RULE 46A SUPRA. THE SAID RECONCILIATIO N APPEARS AT PAGE 3 OF THE IMPUGNED ORDER, AS UNDER: (AMO UNT IN RS.) 11 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) SALES RECONCILIATION TURNOVER SALES REPORTED IN VAT RETURN DECLARED IN TRANDING A/C SALES @ 4% 5476526 4965119 CST SALES @ 2% 32367639 29345095 LABOUR CHARGES 223413 646930 TOTAL 38067578 34957144 ADD: EXCISE DUTY TREATED SEPARATELY ED 10% 3431022 EC 2% 68620 SH 1% 34310 TOTAL 38067578 38491096 DECLARED IN TRADING ACCOUNT AS SALES IS 3431021 6 DECLARED IN TRADING ACCOUNT AS DIRECT INCOME 646930 EXCISE DUTY CREDIT TREATED SEPARATELY 353395 2 _______________ 38491098 _______________ 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE AO CLEARLY RECORDS THAT THOUGH A CLAIM TO THAT EFFECT WAS MADE, NO PROPER RECONCILIATION WAS FILED. THE REVENUES GRIEVANCE A S TO NON-OBSERVANCE OF R.46A IS MAINTAINABLE, WITH THE ASSESSEE BEING OBLI GED TO FURNISH NOT ONLY THE RECONCILIATION, BUT, WHERE SO REQUIRED, THE SALES A ND THE EXCISE RETURNS, SUBSTANTIATING HIS CLAIMS. IN FACT, THE FIRST THING THAT STRIKES ONE IS THAT IT IS NOT SO MUCH THE FURNISHING OF THE SALES RECONCILIATION THA T EXPLAINS THE ASSESSEES CASE AS IS THE DEPOSIT OF THE EXCISE DUTY, WHICH IS, AS CLAIMED, THE PRINCIPAL DIFFERENCE BETWEEN THE SALES AS PER THE BOOKS AND THE SALES-TA X RETURN. THE REASON IS SIMPLE. EVEN IF THE DIFFERENTIAL AMOUNT REPRESENTS, AS STAT ED, EXCISE DUTY (OR SALES-TAX) ON THE SALES FOR THE YEAR, CREDITED TO A SEPARATE A CCOUNT, IT YET FORMS PART OF THE 12 ITA NOS.1880/MDS/2015 & 1981/MDS/2015 KANNIAPPAN MURUGADOSS (AY 2011-12) ASSESSEES TURNOVER IN VIEW OF SECTION 145A OF THE ACT. IT IS ONLY BY VIRTUE OF ITS PAYMENT THAT DEDUCTION IN ITS RESPECT OBTAINS, I.E., U/S. 37(1) R/W. S. 43B, AND THE SAME GETS IN EFFECT EXCLUDED IN COMPUTING THE A SSESSEES INCOME. THIS IS RATHER FURTHER SUBJECT TO THE SAME REPRESENTING A L IABILITY, AS OTHERWISE THE QUESTION OF ITS DEDUCTION DOES NOT ARISE. THE PAYME NT IS TO BE MADE DURING THE RELEVANT YEAR, EXCEPT WHERE THE LIABILITY ARISES FO R THE CURRENT YEAR, IN WHICH CASE IT COULD BE MADE UP TO THE DUE DATE OF FILING THE R ETURN U/S. 139(1) FOR THAT YEAR. THEN, AGAIN, WE OBSERVE A DIFFERENCE OF RS. 4,23,51 7/- (IN THE RECONCILIATION) IN THE ACCOUNT LABOUR CHARGES, QUA WHICH THERE IS NO CLAIM BY THE ASSESSEE OR EVEN FINDING BY THE LD. CIT(A), THOUGH GETS DELETE D IN PURSUANCE OF HIS ORDER. THE MATTER REQUIRES BEING EXAMINED BY THE AO, WHO S HALL ADJUDICATE IN ACCORDANCE WITH LAW BY ISSUING DEFINITE FINDINGS OF FACT AND AFTER ALLOWING THE ASSESSEE AN OPPORTUNITY TO STATE AND PROVE HIS CASE . WE DECIDE ACCORDINGLY. 7. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY AL LOWED FOR STATISTICAL PURPOSES, WHILE THE REVENUES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED ON JANUARY 16, 2017 AT CHENNAI . SD/- SD/- ( . ' $ % ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) & /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, 4 /DATED, JANUARY 16 TH , 2017 EDN. 5 0 .&267 87*2 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. $ 92 ( )/CIT(A) 4. $ 92 /CIT 5. 7':; .&2& /DR 6. ;<) = /GF