ACIT, CHENNAI V. Shri S.Gajaraj, CHENNAI

ITA 1962/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51675 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K ME GHANATH CHAUHAN
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Unexplained investment
• Section: 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER) .. I.T.A. NO. 1962/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS RANGE VI, CHENNAI 600 034. (APPELLANT) V. SHRI S. GAJARAJ, NO.6/13, VELAYUDHAM STREET, NUNGAMBAKKAM, CHENNAI 600 034. PAN : AAXPG5552C (RESPONDENT) APPELLANT BY : SHRI K. MEGHANATH CHAUHAN, JCIT RESPONDENT BY : SHRI T.N. SEETHARAM AN O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER PASSED BY THE CIT(A)-IX, CHENNAI DATED 31.08.2 010 FOR ASSESSMENT YEAR 2007-08. I.T.A. NO. 1962/MDS/10 2 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE ASSE SSEES BANK ACCOUNT AMOUNTING TO RS. 16,75,000/-. 3. THE LD. CIT(A) HAS DECIDED THIS ISSUE BY OBSERVI NG AS UNDER: 5. THE ONLY ISSUE INVOLVED IN THE APPEAL IS THE ADDITION OF RS.16,75,OOO/AS 'UNDISCLOSED INCOME' OF THE APPELLANT. THE ASSESSING OFFICER (HEREINAFTER REFERRED AS AO) HAS DEALT WITH THE ISSUE IN THE FOLLOWING MANNER. DURING THE COURSE OF THE SCRUTINY ASSESSMENT, THE A O FOUND TWO CASH DEPOSITS OF RS.8,OO,OOO/- AND RS.8,75,OOO/- ON 13.11.2006 AND 27.01.2007 IN THE SAVINGS BANK A/C OF THE APPELLANT WITH ING VYSYA BANK, T. NAGAR BRANCH FOR THE PERIOD RELEVANT TO TH E ASSESSMENT YEAR 2907-08. THE AO CALLED UPON THE APPELLANT TO FURNISH SOURCE FOR THESE CASH DEPOSITS . THE APPELLANT VIDE HIS LETTER DATED 29.10.09 STATED THE AMOUNT WAS THE MONEY RETURNED BY ONE MR. D. KARTHEESAN. THE AMOUNT WAS GIVEN BY WAY OF I.T.A. NO. 1962/MDS/10 3 BANKERS CHEQUE TO MR. D. KARTHEESAN FOR PURCHASE OF PLOTS AT PERUNGUDI. 5.1 IN ORDER TO VERIFY THE GENUINENESS OF THE STATEMENT THE AO SENT A LETTER TO SRI D. KARTHEESAN U/S 133(6) OF THE IT ACT. VIDE LETTER DATED 11.12.2009 SRI KARTHEESAN DENIED PAYING BACK ANY AMOUNT BY WAY OF CASH OR CHEQUE TO SRI. S. GAJARAJ AND THAT THE AMOUNT OF RS.16,75,OOO/- WAS TOWARDS FULL AND FINAL SETTLEMENT FOR THE PURCHASE OF PLOT NO.2, IN SURVEY NO.24/13 MEASURING 1925 SQ.FT AT OKKIYAM THORAIPAKKAM. IN VIEW OF THE DENIAL BY SRI.KARTHEESAN SRI.S.GAJARAJ WAS SUMMONED BY THE AO AND A STATEMENT WAS RECORDED U/S 131 OF THE IT ACT, 1961 ON 15.12.2009. 5.2 IN HIS SWORN STATEMENT THE APPELLANT HAS STATED THAT HE DID RECEIVE THE SUM OF RS.8,OO,OOO/- AND RS.8,75,000/- IN CASH FROM SRI. D. KARTHEESAN AND DEPOSITED THE SAME IN HIS ING VYSYA SB BANK A/C; HE ALSO PRODUCED ORDER OF THE MADRAS HIGH COURT DIRECTING THE SPECIAL COMMISSIONER AND I.T.A. NO. 1962/MDS/10 4 COMMISSIONER OF URBAN LAND CEILING AND URBAN LAND TAX TO HEAR THE APPELLANT AND PASS AN ORDER RELATING TO ISSUE OF NEW PATTA. HE ALSO STATED THAT HE HAD GIVEN A RECEIPT DT.27.01.2007 TO MR. D. KARTHEESAN FOR THE SUM OF RS.16,75,OO/- RETURNED BACK TO HIM. THE AO HOWEVER, ADDED THE SUM OF RS.16,75,OOO/- AS THE 'UNDISCLOSED INCOME' OF THE APPELLANT STATING THAT THE APPELLANT DOES NOT HAVE ANY DOCUMENTARY EVIDENCE TO PROVE THAT SRI. D. KARTHEESAN HAD ACTUALLY RETURNED BACK THE MONEY AND THE APPELLANT HAD ONLY PRODUCED A SELF PREPARED RECEIPT. THE AO ADDED THE SUM OF RS.16,75,000/- AS THE APPELLANTS 'UNDISCLOSED INCOME' STATING THAT THE APPELLANT HAS NOT PROVED GENUINENESS OF THE CASH DEPOSITS BEYOND REASONABLE DOUBT. 5.3 BEFORE ME THE LEARNED AR OF THE APPELLANT HAS PLACED ON RECORD A PAPER BOOK DATED 04.08.2010 IN SUPPORT OF HIS CONTENTIONS THAT THE APPELLANT WHO HAD ADVANCED SUMS OF RS.3,27,250/- AND RS.16,75,OOO/- BY WAY OF BANKERS CHEQUES TO SRI D. KARTHEESAN FOR PURCHASE OF PLOTS AT OKKIYAM THORAIPAKKAM. HE ALSO STATED THAT THE I.T.A. NO. 1962/MDS/10 5 APPELLANT WAS ABLE TO NEGOTIATE WITH SRI D. KARTHEESAN AND GOT BACK THE AMOUNT OF RS.16,75,000/- IN TWO INSTALLMENTS OF RS.8,OO,OOO AND RS.8,75,OOO/- RESPECTIVELY. ON BEING CONFRONTED BY THE AO THE APPELLANT HAD DULY DISCHARGED HIS ONU S OF PROVING THE DEPOSITS IN THE BANK BY PRODUCING COPY PF THE CASH RECEIPT GIVEN TO SRI. D. KARTHEESA N FOR THE AMOUNT RETURNED BACK. ALL THIS HAS BEEN DONE BY THE APPELLANT IN A SWORN STATEMENT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE APPELLANT'S LEARNED AR ALSO STRESSED ON THE FACT THA T THE AO INSTEAD OF RELYING ON THE SWORN STATEMENT OF THE APPELLANT, RELIED ON THE LETTER GIVEN BY SRI D. KARTHEESAN HAVING NO EVIDENTIARY VALUE. THE LEARNED AR ALSO SUBMITTED THAT THE PROPERTY WHICH THE APPELLANT HAD PURCHASED WAS OF THE VALUE OF RS.3,27,250J- ONLY AS PER THE REGISTERED SALE DEED. THE STATEMENT OF SRI D. KARTHEESAN THAT THE WHOLE AMOUNT OF RS.20,02,250/- REPRESENTED THE SALE CONSIDERATION FOR THE PLOT PURCHASED BY THE APPELLANT IS TOTALLY FALSE AND IS CONTRADICTORY TO THE DOCUMENTARY EVIDENCE VIZ., THE REGISTERED SALE DEED . THE LEARNED AR HAS PLACED A SALE DEED EXECUTED BY SRI D. KARTHEESAN IN FAVOUR OF MRS. VASANTHI FOR A CONSIDERATION OF RS.3,33,200/- FOR 1960 SQ. FT OF I.T.A. NO. 1962/MDS/10 6 VACANT LAND AT PLOT NO.1 IN SURVEY NO.24/13, NEXT T O THE APPELLANT'S LAND. THE LEARNED AR HAS ALSO STATED THAT THE ASSESSING OFFICER HAS NOT LED ANY MATERIAL TO PROVE THAT THE SAID SUM OF RS.16,75,OOO/- WAS THE UNDISCLOSED INCOME OF THE APPELLANT EXCEPT RELYING ON THE LETTER FROM SRI D. KARTHEESAN. THE LD. A.R. URGED THAT THE APPELLANT HAD DULY DISCHARGED HIS ONUS AND THE ADDITION OF RS. 16,75,000/- BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME IS TOTALLY UNWARRANTED AND DESERVES TO BE DELETED. 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE RIVAL SUBMISSIONS. THE LEARNED AO HAS ADDED RS.16,75,000/- AS 'UNDISCLOSED INCOME' OF THE APPELLANT STATING THE REASON THAT THE SOURCE OF THE CASH DEPOSITS OF RS.8,00,000/- AND RS.8,75,000/- MADE BY THE APPELLANT IN HIS SAVINGS BANK A/C WITH ING VYSYA BANK ON 13.11.2006 AND 27.01.2007 RESPECTIVELY HAS NOT BEEN PROVED BEYOND REASONABLE DOUBT. THE AO HAS PLACED RELIANCE SOLELY ON THE LETTER DATED 11.12.2009 FROM SRI D.KARTHEESAN IN WHICH HE HAD DENIED PAYING BACK ANY MONEY TO SRI S. GAJARAJ. THE AO HAS ALSO NOT ACCEPTED THE RECEIPT GIVEN BY SRI S. I.T.A. NO. 1962/MDS/10 7 GAJARAJ TO SRI D. KARTHEESAN STATING THAT IT WAS A SELF PREPARED RECEIPT SIGNED BY SRI S. GAJARAJ THE APPELLANT HIMSELF. 6.1 THE ARGUMENT OF THE LEARNED AR IS CONSIDERED CAREFULLY. I FIND MERIT IN THE ARGUMENT OF -THE LEARNED AR THAT THE AO IS NOT RIGHT IN MAKING THE ADDITION BASED ON THE LETTER FROM SRI D. KARTHEESAN BUT IGNORING THE S TATEMENT OF SRI S. GAJARAJ UNDER OATH EXPLAINING THE DETAILS OF THE - TRANSACTION WHICH TOOK PLACE BETWEEN HIM AND SRI D. KARTHEESAN AND ADMITTING THE FACT THAT HE HAD GIVEN THE AMOUNT OF RS.20,02,250/- TO SRI D. KARTHEESAN BUT PURCHASED ONLY ONE PLOT LE., PLOT NO.2, SURVEY NO.24/13, OKKIYAM THORAIPAKKAM VILLAGE MEASURING 1925 SQ. FT FOR A CONSIDERATION OF RS.3,27,250/- BY SALE DEED DATED 09.11.2006 REGISTERED AS DOCUMENT NO.6420 OF 2006 AND THAT SINCE THE OTHER TRANSACTIO N DID NOT MATERIALIZE HE GOT BACK THE BALANCE AMOUNT OF RS.16,75,000/-. THE LEARNED AR HAS ALSO GIVEN A SALE INSTANCE WHEREIN SRI D. KARTHEESAN HAD SOLD TH E ADJACENT PROPERTY PLOT NO.1, SURVEY NO.24/13, OKKIYAM THORAIPAKKAM VILLAGE MEASURING 1960 SQ.FT BY A SALE DEED OF THE SAME DATE I.E., 9.11.2006 REGISTERED AS DOCUMENT NO.6421 OF 2006 FOR A I.T.A. NO. 1962/MDS/10 8 CONSIDERATION OF RS.3,33,200/- I ALSO FIND MERIT IN THE CONTENTION OF THE LEARNED AR THAT AS BETWEEN THE LETTER DATED 11.12.2009 FROM SRI D. KARTHEESAN AND THE STATEMENT UNDER OATH GIVEN BY SRI S. GAJARAJ, THE LATTER HAS GREATER EVIDENTIARY VALUE AND SHOULD BE GIVEN DUE WEIGHT. IN MY VIEW, THE AO IS NOT JUSTIFIED IN REJECTING THE COPY OF THE CASH RECEIPT PRODUCED BY THE APPELLANT AS SELF PREPARED ESPECIALLY WHEN IT WAS PRODUCED WHEN THE AO WAS RECORDING THE SWORN STATEMENT OF SRI S. GAJARAJ AND ITS VERACITY WAS AFFIRMED IN THE SWORN STATEMENT EXPLAINING THE REASONS FOR ITS ISSUE. I AM ALSO OF THE VIEW THAT THE COURT ORDER AND ORDER OF THE ULC AUTHORITIES ADDUCED BY THE APPELLANT CANNOT BE IGNORED AND HAVE TO BE GIVEN DUE CREDENCE. THE AO HAS CLEARLY GONE WRONG IN PREFERRING THE BARE DENIA L BY SRI D. KARTHEESAN BY A LETTER TO THE SWORN STATEMENT OF THE APPELLANT AND THE DOCUMENTARY EVIDENCE PRODUCED IN SUPPORT. FOR THE AFORESAID REASONS, THE A0 IS DIRECTED TO DELETE THE ADDITION OF RS.16,75,0001/- MADE AS 'UNDISCLOSED INCOME'. HENCE, THESE GROUNDS OF APPEAL ARE ALLOWED. I.T.A. NO. 1962/MDS/10 9 4. THE LD. D.R. SUPPORTED THE ORDER OF THE AO WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER BEING NOT SATIS FIED WITH THE DEPOSIT OF SUM OF RS. 16,75,000/- IN THE BANK ACCO UNT OF THE ASSESSEE, ADDED THE SAME TO THE INCOME OF THE ASSES SEE AS UNEXPLAINED INVESTMENT. 6. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION B Y OBSERVING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE RIVAL SUBMISSIONS. THE LEARNED AO HAS ADDED RS.16,75,000/- AS 'UNDISCLOSED INCOME' OF THE APPELLANT STATING THE REASON THAT THE SOURCE OF THE CASH DEPOSITS OF RS.8,00,000/- AND RS.8,75,000/- MADE BY THE APPELLANT IN HIS SAVINGS BANK A/C WITH ING VYSYA BANK ON 13.11.2006 AND 27.01.2007 RESPECTIVELY HAS NOT BEEN PROVED I.T.A. NO. 1962/MDS/10 10 BEYOND REASONABLE DOUBT. THE AO HAS PLACED RELIANCE SOLELY ON THE LETTER DATED 11.12.2009 FROM SRI D. KARTHEESAN IN WHICH HE HAD DENIED PAYING BACK ANY MONEY TO SRI S. GAJARAJ. THE AO HAS ALSO NOT ACCEPTED THE RECEIPT GIVEN BY SRI S. GAJARAJ TO SRI D. KARTHEESAN STATING THAT IT WAS A SELF PREPARED RECEIPT SIGNED BY SRI S. GAJARAJ THE APPELLANT HIMSELF. 6.1 THE ARGUMENT OF THE LEARNED AR IS CONSIDERED CAREFULLY. I FIND MERIT IN THE ARGUMENT OF -THE LEARNED AR THAT THE AO IS NOT RIGHT IN MAKING THE ADDITION BASED ON THE LETTER FROM SRI D. KARTHEESAN BUT IGNORING THE S TATEMENT OF SRI S. GAJARAJ UNDER OATH EXPLAINING THE DETAILS OF THE - TRANSACTION WHICH TOOK PLACE BETWEEN HIM AND SRI D. KARTHEESAN AND ADMITTING THE FACT THAT HE HAD GIVEN THE AMOUNT OF RS.20,02,250/- TO SRI D. KARTHEESAN BUT PURCHASED ONLY ONE PLOT LE., PLOT NO.2, SURVEY NO.24/13, OKKIYAM THORAIPAKKAM VILLAGE MEASURING 1925 SQ. FT FOR A CONSIDERATION OF RS.3,27,250/- BY SALE DEED DATED 09.11.2006 REGISTERED AS DOCUMENT NO.6420 OF 2006 AND THAT SINCE THE OTHER TRANSACTIO N I.T.A. NO. 1962/MDS/10 11 DID NOT MATERIALISE HE GOT BACK THE BALANCE AMOUNT OF RS.16,75,000/-. THE LEARNED AR HAS ALSO GIVEN A SALE INSTANCE WHEREIN SRI D. KARTHEESAN HAD SOLD TH E ADJACENT PROPERTY PLOT NO.1, SURVEY NO.24/13, OKKIYAM THORAIPAKKAM VILLAGE MEASURING 1960 SQ.FT BY A SALE DEED OF THE SAME DATE I.E., 9.11.2006 REGISTERED AS DOCUMENT NO.6421 OF 2006 FOR A CONSIDERATION OF RS.3,33,200/- I ALSO FIND MERIT IN THE CONTENTION OF THE LEARNED AR THAT AS BETWEEN THE LETTER DATED 11.12.2009 FROM SRI D. KARTHEESAN AND THE STATEMENT UNDER OATH GIVEN BY SRI S. GAJARAJ, THE LATTER HAS GREATER EVIDENTIARY VALUE AND SHOULD BE GIVEN DUE WEIGHT. IN MY VIEW, THE AO IS NOT JUSTIFIED IN REJECTING THE COPY OF THE CASH RECEIPT PRODUCED BY THE APPELLANT AS SELF PREPARED ESPECIALLY WHEN IT WAS PRODUCED WHEN THE AO WAS RECORDING THE SWORN STATEMENT OF SRI S. GAJARAJ AND ITS VERACITY WAS AFFIRMED IN THE SWORN STATEMENT EXPLAINING THE REASONS FOR ITS ISSUE. I AM ALSO OF THE VIEW THAT THE COURT ORDER AND ORDER OF THE ULC AUTHORITIES ADDUCED BY THE APPELLANT CANNOT BE IGNORED AND HAVE TO BE GIVEN DUE CREDENCE. THE AO HAS CLEARLY GONE WRONG IN PREFERRING THE BARE DENIA L BY SRI D. KARTHEESAN BY A LETTER TO THE SWORN STATEMENT OF THE APPELLANT AND THE DOCUMENTARY I.T.A. NO. 1962/MDS/10 12 EVIDENCE PRODUCED IN SUPPORT. FOR THE AFORESAID REASONS, THE A0 IS DIRECTED TO DELETE THE ADDITION OF RS.16,75,0001/- MADE AS 'UNDISCLOSED INCOME'. HENCE, THESE GROUNDS OF APPEAL ARE ALLOWED. 7. BEFORE US, THE LD. D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER. WE FIND THAT THE LD. D.R. COULD NOT POINT OUT SPECIFIC ERROR IN THE ORDER OF THE LD. CIT(A). WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD PAID EARLIER RS. 20,02,250/- TO S HRI D. KARTHEESAN AND THE ASSESSEE PURCHASED A PLOT OF LAND FOR RS. 3,27,250/- FROM THE SAID PERSON AND RS. 16,75,000/- WAS DUE TO THE ASSESSEE FROM THE SAID PERSON BEFORE THE TRANSACTION IN QUESTION. THE ASSESSEE EXPLAINED THAT THE SAID DEPOSIT WAS OUT OF THE ABOV E MONEY RECEIVED FROM SHRI D. KARTHEESAN, WHICH WAS RECEIVA BLE BY HIM BEFORE THAT DATE. THE CONTENTION OF THE REVENUE IS THAT THE SAID SHRI D. KARTHEESAN HAS, IN A LETTER TO THE ASSESSEE , DENIED HAVING PAID MONEY TO THE ASSESSEE. WE DO NOT FIND ANY MAT ERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER TREATED THE LE TTER OF SHRI D. KARTHEESAN AS MORE SACROSANCT THAN THE SWORN STATEM ENT OF THE ASSESSEE. WE ALSO FIND THAT THE ASSESSING OFFICER HAS BROUGHT NO I.T.A. NO. 1962/MDS/10 13 MATERIAL THAT WHEN THE MONEY WAS PAID BY THE SAID S HRI D. KARTHEESAN TO THE ASSESSEE, IF IT WAS NOT PAID BEFO RE THE DATE OF TRANSACTION AS CLAIMED BY THE ASSESSEE. IN THE ABS ENCE OF ANY SUCH MATERIAL BROUGHT ON RECORD BY THE REVENUE, WE DO NO T FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IT IS CONFIRMED. GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 5 TH AUGUST, 2011. SD/- SD/- (HARI OM MARATHA) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 5 TH AUGUST, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-IX, CHENNAI-34 (4) CIT, CHENNAI-34 (5) D.R. (6) GUARD FILE