ACIT, CHENNAI V. Shri V.Meenakshisundaram, CHENNAI

ITA 1967/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4769 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 06-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: S CH ENCHU RATHNA REDDY
• Keywords: Unexplained cash credit
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 1967/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE IV, CHENNAI 600 034. (APPELLANT) V. SHRI V. MEENAKSHISUNDARAM, NO.14, JAKKAMMAL KOIL STREET, POSTAL AUDIT COLONY, CHINMAYA NAGAR, CHENNAI 600 092. PAN : AAIPM4904D (RESPONDENT) APPELLANT BY : SHRI K.E.B. RENGARAJAN JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI S. CH ENCHU RATHNA REDDY O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, AGAINST AN OR DER DATED 19.8.2010 OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-VIII, CHENNAI, IT HAS RAISED FIVE GROUNDS IN TOTO, OUT OF WHICH, GROUNDS NO.1 AND 5 ARE GENERAL, NEEDING NO ADJUDICATION. I.T.A. NO. 1967/MDS/10 2 2. VIDE ITS GROUND NO.2, REVENUE IS AGGRIEVED THAT LD. CIT(APPEALS) HELD INTEREST PAYMENTS CLAIMED BY THE ASSESSEE AGAINST LOAN AVAILED FOR PURCHASE OF A FLAT AT ADYA R TO BE ALLOWABLE. AS PER THE REVENUE, LD. CIT(APPEALS) HAD ADMITTED F RESH EVIDENCE AND THIS WAS NEVER PUT TO THE ASSESSING OFFICER LEA DING TO VIOLATION OF RULE 46A OF INCOME-TAX RULES, 1962. 3. VIDE ITS GROUND NO.3, GRIEVANCE OF THE REVENUE I S THAT LD. CIT(APPEALS) DELETED AN ADDITION OF ` 45 LAKHS MADE BY THE A.O. FOR UNEXPLAINED CASH CREDITS, AFTER ADMITTING FRESH EVI DENCE AGAIN VIOLATING RULE 46A. 4. WHEN THESE TWO GROUNDS WERE TAKEN UP, LEARNED A. R. SUBMITTED THAT THE BANK STATEMENT RELATING TO ICICI BANK LOAN ACCOUNT AND ALSO THE CONFIRMATIONS WITH REGARD TO THE ADDIT ION OF ` 45 LAKHS AS CASH CREDIT, WERE FILED FOR THE FIRST TIME BEFORE T HE LD. CIT(APPEALS). HOWEVER, ACCORDING TO HIM, EVIDENCE FILED WERE VERY CLEAR BY ITSELF AND NO PURPOSE WOULD HAVE BEEN SERVED BY OBTAINING A REMAND REPORT FROM THE ASSESSING OFFICER. I.T.A. NO. 1967/MDS/10 3 5. LEARNED D.R. STRONGLY ASSAILED THE ORDER OF LD. CIT(APPEALS) FOR ADMITTING FRESH EVIDENCE WITHOUT PUTTING IT BEFORE THE ASSESSING OFFICER. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. ASSESSEE HAD ADMITTED INCOME FROM HOUSE PROPERTY AT SARDAR PATEL ROAD, ADYAR. DURING THE COURSE OF APPEAL PROCEEDIN GS BEFORE LD. CIT(APPEALS), HE HAD CLAIMED INTEREST PAYMENT OF ` 2,55,200/- AND IN SUPPORT, ICICI BANK STATEMENT WAS ALSO PRODUCED. N EVERTHELESS, WE FIND THAT THE SAID STATEMENT WAS NEVER PUT TO THE A SSESSING OFFICER BY LD. CIT(APPEALS). VIS--VIS ADDITION OF ` 45 LAKHS ON CASH CREDITS, LD. CIT(APPEALS) HAD DELETED ` 43,40,000/- THEREFROM CONSIDERING CONFIRMATIONS FILED FROM 13 PARTIES, MENTIONED AT P ARA 6 OF HIS ORDER. MAY BE THE CONFIRMATIONS WERE CORRECT. BUT, NEVERT HELESS, THIS WAS NEVER PRODUCED BEFORE THE A.O. AT THE TIME OF ASSES SMENT AND ALSO NOT PUT TO HIM BY LD. CIT(APPEALS) FOR HIS EXAMINAT ION. HENCE, IN BOTH THESE ASPECTS, WE FIND THAT THERE WAS VIOLATION OF RULE 46A. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(APPEALS) AS WELL AS THE A.O. IN THIS REGARD AND REMIT THE ISSUE REGARDING INTEREST ON LOAN AND CASH CREDITS, BACK T O THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ASSESSE E SHALL BE FREE TO I.T.A. NO. 1967/MDS/10 4 FILE ANY EVIDENCE THAT HE DEEMS FIT, IN SUPPORT OF HIS CASE. THE A.O. SHALL PROCEED IN ACCORDANCE WITH LAW. GROUNDS NO.2 AND 3 OF THE REVENUE ARE THEREFORE, ALLOWED FOR STATISTICAL PURP OSES. 7. VIDE ITS GROUND NO.4, GRIEVANCE OF THE REVENUE I S THAT LD. CIT(APPEALS) HELD TWO PROPERTIES, VIZ. A PROPERTY B EARING NO.14, JAKKAMMAL KOIL STREET, CHENNAI-92 AND PROPERTY BEAR ING NO.11 AGAIN AT JAKKAMMAL KOIL STREET, CHENNAI-92, AS USED BY TH E ASSESSEE FOR HIS BUSINESS. THE A.O. HAD, DURING THE COURSE OF A SSESSMENT, SUMMONED THE ASSESSEE UNDER SECTION 131 OF INCOME-T AX ACT, 1961 (IN SHORT THE ACT). IT WAS FOUND DURING THE EXAM INATION THAT THE ASSESSEE WAS OWNING THREE FLATS IN THE SECOND FLOOR OF 14, JAKKAMMAL KOIL STREET AND ALSO A THREE STORIED BUIL DING BEARING NO.11 IN THE SAME STREET. AS PER THE A.O., THESE W ERE NOT OFFERED BY THE ASSESSEE FOR TAXATION UNDER THE HEAD INCOME FR OM HOUSE PROPERTY. HE, THEREFORE, RELYING ON THE RENT RECE IVED WITH REGARD TO ADJACENT PROPERTY, FIXED THE ANNUAL LETTING VALUE O F THESE TWO PROPERTIES AT ` 4,80,000/- EACH TOTALLING TO ` 9,60,000/-. 8. IN ITS APPEAL BEFORE LD. CIT(APPEALS), SUBMISSIO N OF THE ASSESSEE WAS THAT BOTH THESE PREMISES WERE USED BY HIM FOR HIS I.T.A. NO. 1967/MDS/10 5 BUSINESS PURPOSES. IT SEEMS ASSESSING OFFICER WAS PRESENT BEFORE LD. CIT(APPEALS) DURING A HEARING HELD ON 26.2.2010 AND HE WAS ASKED TO FURNISH A REPORT REGARDING THE USE OF THES E PROPERTIES. AN INSPECTORS REPORT WAS FURNISHED TO LD. CIT(APPEALS ) WHEREIN THE INSPECTOR SUBMITTED AS UNDER:- PREMISES AT NO.11 IS A THREE STORIED BUILDING WHICH IS USED FOR THE PURPOSE OF BUSINESS OF VASANTHA ENTERPRISES, KR ONIC HEALTH CARE AND MEENA HEALTH CARE (P) LTD. ALL THE CONCER NS ARE SISTER CONCERNS AND THE PLACE IS SHARED JOINTLY AND INSEPAR ABLY BY THESE BUSINESS CONCERNS. PREMISES AT NO.14 IS ALSO A THREE STORIED BUILDING. THREE FLATS IN THE TOP FLOOR ARE USED BY V. MEENAKSHISUNDARAM FOR T HE PURPOSE OF ALL HIS BUSINESS INTERESTS WHICH ARE FOUND TO BE INSEPARABLE. ONE FLAT IN THE TOP FLOOR IS OWNED BY A THIRD PARTY. BASED ON THE ABOVE REPORT OF THE INSPECTOR, LD. CIT (APPEALS) CAME TO A CONCLUSION THAT THESE PREMISES WERE USED BY THE A SSESSEE FOR HIS BUSINESS AND DELETED THE ADDITION MADE FOR THE ANNU AL LETTING VALUE ON THESE PROPERTIES. 9. NOW BEFORE US, LEARNED D.R., ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE REPORT OF THE INSP ECTOR WOULD SHOW THAT PREMISES NO.11, JAKKAMMAL KOIL STREET WAS USED BY THE SISTER CONCERNS AND NOT BY THE ASSESSEE. THEREFORE, ACCOR DING TO HIM, AT I.T.A. NO. 1967/MDS/10 6 LEAST, IN SO FAR AS PREMISES NO.14, JAKKAMMAL KOIL STREET WAS CONCERNED, THE ANNUAL LETTING VALUE OUGHT HAVE BEEN CONSIDERED IN THE HANDS OF THE ASSESSEE AND LD. CIT(APPEALS) ERRE D IN DELETING THE ADDITION IN TOTO. 10. PER CONTRA, LEARNED A.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. THE QUESTION BEFORE US IS WHETHER THESE TWO PREMISE S WERE USED BY THE ASSESSEE FOR HIS BUSINESS OR NOT. INSPECTORS REPORT CLEARLY MENTIONED THAT PREMISES NO.11 WAS USED JOINTLY AND INSEPARABLY BY THREE BUSINESS CONCERNS AND ONE OF SUCH BUSINESS CO NCERNS WAS VASANTHA ENTERPRISES. IF WE LOOK AT PARA 2 OF ASSE SSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HIMSELF HAS MENTION ED THAT ASSESSEE WAS THE PROPRIETOR OF M/S VASANTHA ENTERPRISES. HE NCE, THE ARGUMENT OF LEARNED D.R. THAT THE PREMISES NO.11 WA S NOT USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, COULD NOT BE ACCEPTED. IN SO FAR AS PREMISES NO.14 IS CONCERNED, THE INSPECTO R HIMSELF HAS STATED THAT THESE WERE USED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPI NION THAT THE I.T.A. NO. 1967/MDS/10 7 PREMISES BEING USED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE CANNOT BE CONSIDERED FOR ASSESSMENT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. LD. CIT(APPEALS) RIGHTLY DELETED THE ADDITION. NO INTERFERENCE IS CALLED FOR. GROUND NO.4 IS DISMISS ED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE SIXTH DAY OF JULY, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 6 TH JULY, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VIII, CHENNAI-34 (4) CIT-VI, CHENNAI-34 (5) D.R. (6) GUARD FILE