Nikhil Surana, CHENNAI V. ITO, CHENNAI

ITA 1884/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7997 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained investment; Principle of natural justice; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NO. 1884/MDS/2015 / ASSESSMENT YEAR : 2009-10 NIKHIL SURANA, OLD NO. 851 & 852, NEW NO. 252 & 254, POONAMALEE HIGH ROAD, KILPAUK, CHENNAI 600 010. PAN AAADP2763Q ( /APPELLANT) V. THE INCOME-TAX OFFICER, BUSINESS WARD VII(1), CHENNAI 34. RESPONDENT) / APPELLANT BY : SHRI T. BANUSEKAR, FCA / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT ! / DATE OF HEARING : 02.02.2016 '# ! / DATE OF PRONOUNCEMENT : 17.02.2016 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 21 .4.2015 FOR THE ASSESSMENT YEAR 2009-10. - - ITA 1884/15 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEA L S ) I S TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE TO THE EX T EN T P R E JUDICIAL TO THE INTEREST OF THE APPELLANT AND AT ANY RATE I S OPPOSED T O TH E PRINCIPLES OF EQUITY , NATURAL JUSTICE AND FAIR PLAY . 2. FOR THAT THE COMMISSIONER OF INCOME TAX ( APPEALS ) FA I LED T O APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JU RI SDIC T IO N . 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) F A IL E D T O APPRECIATE THAT THE ASSESSING OFFICER ERRED IN INVOKING THE PROV I S I ONS OF SE CTI O N 69. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER R ED IN CONFIRMING THE ADDITION U/S . 69 OF RS . 5 , 72, 119/- . 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONSIDERING THE TOTAL COST OF ACQUISITION OF THE IMPUGNED PROPERTY AT RS . 7 1 , 94 , 119/-. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER R ED I N TAKING THE ACTUAL INVESTMENT MADE BY THE APPELLAN T AT RS . 35 , 47 ,1 19 /- AS RS . 33 , 19 , 579/-. 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FA I LED T O APPRECIATE THAT THE DIFFERENCE BETWEEN APPELLANT ' S SHARE I N THE TOTA L CO ST OF THE IMPUGNED PROPERTY AND BORROWED FUNDS WAS PAID BY THE APPE LL ANT OWN FUNDS . 8. FOR THAT THE APPELLANT OBJECTS TO THE LEVY OF THE INTEREST UNDER SECTION 234B. 2. THE LD. AR DID NOT PRESS GROUND NOS.1 & 2. THER EFORE, THE SAME IS DISMISSED AS NOT PRESSED. 3. GROUND NOS. 3 & 4 REVOLVE THE ISSUE REGARDING SUSTENANCE OF ADDITION OF ` 5,72,119/-. - - ITA 1884/15 3 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D HIS RETURN OF INCOME ADMITTING AN INCOME OF ` 2,97,570/-. THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S.143(3) OF THE ACT ASSESSED THE I NCOME AT ` 16,19,630/- BY MAKING AN ADDITION OF ` 13,22,060/- AS UNEXPLAINED INVESTMENTS U/S.69 OF THE ACT. AGGRIEV ED BY THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS) . 5. ON APPEAL, THE CIT(APPEALS) OBSERVED THAT THE TO TAL INVESTMENTS MADE BY THE ASSESSEES FATHER IN THE RE SIDENTIAL FLAT IS ` 36,47,000/-, WHICH IS VERIFIED FROM THE BALANCE SH EET OF THE ASSESSEES FATHER. THEREFORE, ACCORDING TO THE CIT (APPEALS), IT IS NOT CORRECT TO SAY THAT THE ASSESSEE HAS ACTUALL Y INVESTED 50% OF THE COST OF THE FLAT. THE ACTUAL INVESTMENT BY THE ASSESSEE IN THE ABOVE RESIDENTIAL FLAT COMES TO ` 35,47,119/-. 5.1 FURTHER, THE CIT(APPEALS) OBSERVED THAT THE RE WERE TWO OUTWARD CLEARANCES OF ` 5,60,542/- AND ` 1,25,000/- ON 5.6.2008 FROM THE BANK ACCOUNT OF SMT. VENU HARAN AND OUT OF THESE AMOUNTS, SHE HAS ADVANCED A SUM OF ` 7,00,000/- TO THE - - ITA 1884/15 4 ASSESSEE. HENCE, ACCORDING TO THE CIT(APPEALS), IT IS NOT POSSIBLE TO HOLD THAT SMT. VENU HARAN IS NOT HAVING CREDIT WORTHINESS BEFORE ADVANCING THE LOAN TO THE ASSESSE E. THE CIT(APPEALS), FURTHER OBSERVED THAT THERE WERE NO W ORTH MENTIONING TRANSACTIONS IN THE BANK ACCOUNT EITHER BEFORE OR AFTER THE ABOVE TRANSACTION AND IT IS NOT THE CASE OF THE AO THAT THE SAID OUTWARD CLEARANCES ARE NOT GENUINE. THERE FORE, THE CIT(APPEALS) OBSERVED THAT THIS FACT ALONE CANNOT B E TAKEN AS A REASON FOR REJECTING THE TRANSACTION. ACCORDINGLY, HE DIRECTED THE AO TO ACCEPT THE LOAN OF ` 7,00,000/- FROM VENU HARAN AS GENUINE ONE. 5.2 REGARDING THE BALANCE OF INVESTMENT OF ` 5,72,119/- ( ` 35,47,119 ` 29,75,000), THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAS NO EXPLANATION EXCEPT CLAIMING THAT TH E AOS ADDITION IS ONLY ARBITRARY. THEREFORE, ACCORDING T O THE CIT(APPEALS), IN THE ABSENCE OF ANY CLEAR EXPLANATI ON AND EVIDENCE FOR SOURCES OF INVESTMENT FOR THE BALANCE OF THE AMOUNT, THE ADDITION OF UNEXPLAINED INVESTMENTS TO THE EXTENT OF ` 5,72,119/- MADE BY THE AO IS JUSTIFIED AND CONFIRM ED. - - ITA 1884/15 5 6. THE LD. AR SUBMITTED THAT THE AO MADE THE COMPUT ATION OF TOTAL COST OF INVESTMENT BY CONSIDERING AN AMOUN T OF ` 3,12,000/- WHICH WAS REPAYMENT OF LOAN BY THE ASSES SES FATHER TO THE ASSESSEE AS A PART OF COST OF CONSTRUCTION T HOUGH IT IS AN INVESTMENT. FURTHER, HE SUBMITTED THAT THE AMOUNT OF ` 3,12,000/- WAS REFLECTED IN THE FINANCIAL STATEMENT OF BOTH TH E PARTIES AND THE ASSESSING OFFICER WAS THE SAME. THIS MAY BE VE RIFIED AT THE END OF THE AO. THE LD. AR ALSO SUBMITTED THAT AN A MOUNT OF ` 84,460/-, WHICH IS COST OF CONSTRUCTION, WAS NOT CO NSIDERED BY THE AO. IT IS ALSO REQUIRED TO BE CORRECTED. THUS , TOTAL COST OF CONSTRUCTION COMES ONLY ` 34,83,290/-, WHICH IS EXPLAINED BY THE ASSESSEE AND IF IT IS DULY VERIFIED BY EXAMINING TH E RECORDS OF THE ASSESSEES FATHER AS WELL AS THE ASSESSEE, THERE CA NNOT BE ANY ADDITION. HE FURTHER SUBMITTED THAT A SMALL AMOUNT OF ` 32,579/- WAS PAID OUT BY THE ASSESSEE FROM HIS OWN FUNDS, WH ICH WAS ALSO EXPLAINED BY THE ASSESSEE. 7. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEA LS). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN OUR OPINION, THE PLEA OF THE ASSESSE E IS HAVING - - ITA 1884/15 6 FORCE AND, THEREFORE, WE REMIT THE ENTIRE ISSUE BAC K TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND THE ASSESSEE IS DIRECTED TO RECONCILE THE FIGURE BY PRODUCING NECESSARY RECORDS AT THE REQUIREMENT OF THE AO. THE AO IS ALSO DIRECTED T O GIVE AN ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE BEF ORE DECIDING THE ISSUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 17 TH OF FEB., 2016 AT CHENNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 17 TH FEB., 2016. MPO* ;D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H3 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JLM /GF.