Shri Varadarajan, CHENNAI V. ITO, CHENNAI

ITA 1992/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61288 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMAT
• Assessee Lawyers: D ANAND
• Keywords: Unexplained investment; Revised return
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N.S.SAINI, ACCOUNT ANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1992/MDS/2011 (ASSESSMENT YEAR: 2007-08) SHRI VARADARAJAN, C/O. M/S. PASS ASSOCIATES, ADVOCATES 90, ARMENIAN STREET, 4 TH FLOOR, ORIENT CHAMBERS, CHENNAI-600 001. PAN:ACDPV6184H VS. INCOME TAX OFFICER, WARD-1(1), CHENNAI-4. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. D.ANAND, ADVOCATE RESPONDENT BY : DR. YOGE SH KAMAT, JCIT DATE OF HEARING : 30 TH MAY, 2012 DATE OF PRONOUNCEMENT : 6 TH JULY, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNING THE ORDER OF THE CIT(A)-IV, CHENNAI DATE D 09.09.2011. 2. THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSE SSEE IS A BROKER AND A REAL ESTATE DEALER. HE IS ALSO HAVING AGRICULTURAL INCOME. FOR THE ASSESSMENT YEAR 2007-08, HE FILED HIS ORIGINAL RETURN OF INCOME ON 16.08.2007 ADMITTING ` 1,38,789/- AS HIS TOTAL INCOME INCLUDING ` 50,305/- AS SHORT TERM CAPITAL ITA NO.1992/MDS /2011 2 GAIN. A SURVEY WAS CONDUCTED UNDER SECTION 133A AT HIS BUSINESS PREMISES ON 3.6.2008. IN RESPONSE TO THE N OTICE UNDER SECTION 143(1) DATED 8.6.2009, THE ASSESSEE F ILED REVISED RETURN OF INCOME ON 23.07.2009 ADMITTING TO TAL INCOME OF ` 15,12,120/-. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 30.12.2009 MADE ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE FOLLOWING HEADINGS:- I) PROFIT ON SALE OF LAND (PROTECTIVE ASSESSMENT) ` 12,71,430 II) UNEXPLAINED INVESTMENT ` 3,88,920 III) INTEREST DISALLOWED U/S.14A ` 1,58,400 AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A ) IN AN EX- PARTE ORDER CONFIRMED THE ORDER OF THE ASSESSING OF FICER AND DISMISSED THE APPEAL OF THE ASSESSEE VIDE ORDER DAT ED 9.9.2011. NOW, THE ASSESSEE IS IN SECOND APPEAL BEF ORE THE TRIBUNAL ASSAILING THE ORDER OF THE CIT(A). 3. SHRI D.ANAND, ADVOCATE APPEARING ON BEHALF OF T HE ASSESSEE SUBMITTED THAT THE CIT(A) HAS PASSED EX-PA RTE ORDER WITHOUT AFFORDING SUFFICIENT OPPORTUNITY OF H EARING TO THE ITA NO.1992/MDS /2011 3 ASSESSEE. THE ASSESSING OFFICER HAS ADDED INCOME FR OM PROFIT ON SALE OF PROPERTY IN THE TOTAL INCOME OF T HE ASSESSEE ON PROTECTIVE BASIS ALTHOUGH THE INCOME FROM SALE O F LAND WAS EARNED BY HIS BROTHER AND SISTER, WHO HAVE FILED SE PARATE RETURNS FOR THE ASSESSMENT YEAR 2007-08. THE COUNSE L FOR THE ASSESSEE HAS PLACED ON RECORD, PHOTOCOPIES OF THE ASSESSMENT ORDERS IN THE CASE OF SHRI M.VENKATESAN AND SMT. M.VASANTHI, BROTHER AND SISTER OF THE ASSESSEE TO SHOW THAT PROFIT FROM SALE OF LAND HAS ALREADY BEEN ASSE SSED IN THE HANDS OF THE REAL OWNERS OF THE PROPERTY I.E. MR. M.VENKATESAN AND MRS. M.VASANTHI. HE SUBMITTED THAT ASSESSEE HAD NO CONCERN WHATSOEVER WITH THE PROPERT Y IN QUESTION. AS REGARDS ADDITIONS MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT TO THE TUNE OF ` 3,88,920/-. THE COUNSEL SUBMITTED THAT CIT(A) HAS WRONGLY COME TO T HE CONCLUSION THAT THE ASSESSEE WAS NOT ABLE TO EXPLAI N THE SOURCE OF ENTIRE INVESTMENT. ALTHOUGH THE COUNSEL F AIRLY CONCEDED THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN INVESTMENT TO THE TUNE OF ` 1,70,000/-. HE FURTHER SUBMITTED THAT FOR THE REMAINING AMOUNT, THE ASSESSING OFFIC ER HAS ITA NO.1992/MDS /2011 4 MADE DOUBLE ADDITION WHICH IS REQUIRED TO BE RECTIF IED. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS WRONGLY COME TO THE CONCLUSION THAT THE ASSESSING O FFICER WANTED TO DISALLOW THE PAYMENT OF INTEREST FOR WANT OF PROOF AND HAS WRONGLY MENTIONED THE SECTION AS SECTION 14 A. THE ASSESSEE WAS ABLE TO SHOW THAT THE ASSESSEE HAS PAI D INTEREST ON THE BORROWINGS FROM HIS PARENTS AND ONE SHRI PADAM CHAND. 4. ON THE OTHER HAND, DR. YOGENDRA KAMAT, APPEARING ON BEHALF OF THE REVENUE, SUPPORTED THE ORDERS OF THE CIT(A) AND ASSESSING OFFICER. HE SUBMITTED THAT SEVERAL OPPORTUNITIES WERE AFFORDED TO THE ASSESSEE, BUT TH E A.R. OF THE ASSESSEE DID NOT APPEAR ON THE DATES FIXED AND WHENEVER HE APPEARED, HE SOUGHT ADJOURNMENT ON ACCOUNT OF HI S PERSONAL INCONVENIENCE. THE CIT(A) WAS CONSTRAINED TO DECIDE THE CASE IN THE ABSENCE OF THE A.R. OF THE A SSESSEE. HOWEVER, THE LEARNED DR ADMITTED THAT THE PROFIT FR OM SALE OF LAND IN QUESTION HAS BEEN ASSESSED IN THE HANDS OF MR. M.VENKATESAN AND MRS. M.VASANTHI. IN THE HANDS OF THE ITA NO.1992/MDS /2011 5 ASSESSEE, THE AMOUNT HAS BEEN ADDED ONLY ON ACCOUNT OF PROTECTIVE ASSESSMENT. 5. WE HAVE HEARD SUBMISSIONS MADE BY THE RESPECTIVE PARTIES. A PERUSAL OF THE ORDER PASSED BY THE CIT(A ) SHOWS THAT THE CASE WAS POSTED FOR HEARING FOR FIVE TIMES . OUT OF WHICH THREE TIMES NONE APPEARED ON BEHALF OF THE AS SESSEE. THE CIT(A) WAS CONSTRAINED TO PASS THE ORDER ON MER ITS ON THE BASIS OF STATEMENT OF FACTS AND GROUNDS OF APPE AL FILED BY THE ASSESSEE. ADMITTEDLY PROFIT ON SALE OF LAND HA S BEEN ADDED INTO THE TOTAL INCOME OF THE ASSESSEE ON THE BASIS OF PROTECTIVE ASSESSMENT. THE COUNSEL APPEARING ON BEH ALF OF THE ASSESSEE PLACED ON RECORD ASSESSMENT ORDERS IN THE CASE OF SHRI M.VENKATESAN AND SMT. M.VASANTHI WHEREIN PR OFIT FROM SALE OF LAND HAS BEEN ASSESSED TO TAX SHAR E IN THE CASE OF MR. M.VENKATESAN AND SHARE IN THE CASE OF SMT. M.VASANTHI. THE ADDITIONS HAVE BEEN MADE IN THE RES PECTIVE ASSESSMENTS ON THE BASIS OF THE RETURNS FILED BY TH E AFORESAID PERSONS ADMITTING SHARE EACH IN THE SALE OF LAN D. IN VIEW OF THE ABOVE ADMISSIONS, THE ADDITIONS MADE IN THE TOTAL ITA NO.1992/MDS /2011 6 INCOME OF THE ASSESSEE ON ACCOUNT OF PROTECTIVE ASS ESSMENT IS DELETED. THIS GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED. 6. WITH RESPECT TO UNDISCLOSED INVESTMENTS, THE COU NSEL FOR THE ASSESSEE HAS CONCEDED THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE SOURCE OF INVESTMENT TO THE TUN E OF ` 1,70,000/- AND THUS ADMITTED THE SAME AS UNDISCLOSE D INVESTMENT. HOWEVER, AS REGARDS REMAINING AMOUNT OF ` 2,18,920/- IS CONCERNED, AS PER THE CONTENTION OF T HE COUNSEL, IT IS THE DOUBLE ADDITION. WE ARE OF THE C ONSIDERED OPINION THAT OUT OF THE TOTAL PURCHASES MADE BY THE ASSESSEE TO THE TUNE OF ` 4,20,600/-, THE ASSESSING OFFICER HAS MADE ADDITION TO THE TUNE OF ` 3,88,920/- AND HAS ALLOWED THE BALANCE BEING EXPLAINED BY THE ASSESSEE. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEE HAS ADMITT ED THE SHORT TERM SALE OF PROPERTY TO THE TUNE OF ` 61,825/- AS WELL. THE ASSESSING OFFICER HAS MENTIONED IN THE ORDER TH AT THE ASSESSEE HAS PRODUCED NECESSARY DOCUMENTATION WITH REGARD TO SHORT TERM PROFIT ON SALE OF PROPERTY. DESPITE T HIS, THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THE SAID AMOUNT TOWARDS EXPLAINED SOURCE OF INVESTMENT. SINC E, THE ITA NO.1992/MDS /2011 7 SAID AMOUNT OF ` 61,825/- IS EXPLAINED, THE AMOUNT OF UNDISCLOSED INVESTMENT IS REDUCED FROM ` 3,88,920/- TO ` 3,27,095/-. OUT OF THE SAID AMOUNT, THE COUNSEL FOR THE ASSESSEE HAS CONCEDED AMOUNT OF UNEXPLAINED INVESTM ENT AS ` 1,70,000/-. HOWEVER, THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN REMAINING DIFFERENCE. THEREFORE, ` 3,27,095/- IS CONSIDERED AS UNEXPLAINED INVESTMENT. THIS GROUND O F ASSESSEE IS PARTLY ALLOWED IN THE ABOVE TERMS. 7. THE THIRD ADDITION MADE BY THE ASSESSING OFFICER IS ON THE GROUND OF DISALLOWANCE OF INTEREST UNDER SECTIO N 14A. THE ASSESSEE/APPELLANT HAS PAID INTEREST ON THE LOANS P AID TO HIS PARENTS AND ONE SHRI PADMA CHAND. THE SAID AMOUNT IS REFLECTED FROM THE BANK STATEMENTS. THE CIT(A) HAS WRONGLY COME TO THE CONCLUSION THAT THE ASSESSING OFFICER W ANTED TO DISALLOW THE INTEREST FOR WANT OF PROOF AND NOT UN DER THE PROVISIONS OF SECTION 40(A). A PERUSAL OF THE ASSE SSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS NOT RECO RDED ANY SUCH FINDING THAT THE ASSESSEE WAS NOT ABLE TO PROD UCE ANY DOCUMENTARY EVIDENCE TO SHOW THE PAYMENT OF INTERES T ON THE LOAN. WE ARE OF THE CONSIDERED OPINION THAT THE CI T(A) HAS ITA NO.1992/MDS /2011 8 ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSIN G OFFICER WANTED TO DISALLOW THE INTEREST FOR WANT OF PROOF. WE ALLOW THE CLAIM OF ASSESSEE ON ACCOUNT OF PAYMENT OF INTEREST ON LOANS AND ALLOW THE GROUND OF APPEAL AS WELL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 6 TH DAY OF JULY, 2012 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 6 TH JULY , 2012. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F .