Sri P. Ganesan, Sivakasi V. DCIT, Madurai

ITA 2011/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5394 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PG R
• Keywords: Unexplained investment; Business income; Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ! '# $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 2011/MDS/2013 ( / ASSESSMENT YEAR : 2007-08) MR. P.GANESAN, 74A, VELAYUTHAM ROAD, SIVAKASI-626 123. VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III, MADURAI. PAN:ABYPG3315R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. V.RAJASEKARAN, CA /RESPONDENT BY : MR. K.NAGESWARA RAO, CIT& MR. GURU BHASHYAM, JCIT / DATE OF HEARING : 31 ST JANUARY, 2014 ! /DATE OF PRONOUNCEMENT : 27 TH FEBRUARY, 2014 ' / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MADURAI , DATED 07.08.2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THE FIRST ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTA INING ITA NOS.2011/MDS/2013 2 ADDITION MADE TOWARDS UNACCOUNTED ADVANCE OF ` 5,00,000/- IN RESPECT OF PROPERTY AT PUNJAY KALAMANGALAM VILLA GE. IN THE COURSE OF SEARCH PROCEEDINGS, ADVANCE RECEIPT FOR ` 10,00,000/- WAS SEIZED. AS PER THIS RECEIPT DATED 9 .1.2007 ` 10,00,000/- WAS GIVEN BY THE ASSESSEE TO SMT. SAROJ INI AND MRS. SARADHAMANI BEING ADVANCE FOR PURCHASE OF PROP ERTY OF 3.73 ACRES OF MR. M.SENGOTTAIYANS LAND AT PUNJAI KALAMANGALAM. HOWEVER, WHEN THIS WAS QUESTIONED, ASSESSEE REPLIED THAT ASSESSEE PURCHASED LAND FROM THE ABOVE SELLER FOR ONLY ` 4,90,000/- ONLY AND THE ADVANCE GIVEN WAS IN RESPECT OF ANOTHER PIECE OF LAND TO BE PURCH ASED. BUT THE SAID ADVANCE WAS RECEIVED BACK SINCE THE DEAL C OULD NOT BE MADE. HOWEVER, SINCE THERE WAS NO EVIDENCE TO P ROVE RETURN OF MONEY, ASSESSEE ACCEPTED THIS SUM AS INCO ME AND FILED REVISED RETURN ADMITTING 50% OF THE INCOME. T HE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT M ADE ADDITION OF ` 5,00,000/- BEING 50% OF ASSESSEES SHARE IN ASSESSEES HANDS AND 50% IS ADDED IN THE HANDS OF S HRI P.KARVANNAN. APART FROM THIS ADDITION, THE ASSESSI NG OFFICER ALSO MADE FURTHER ADDITION OF ` 5,00,000/- ON THE GROUND THAT ITA NOS.2011/MDS/2013 3 SMT. VALLIAMMAL, MOTHER OF MR. SENGOTTAIYAN ALSO O WNS 3.7 ACRES OF LAND AT THAT VILLAGE AND THERE IS A POSSIB ILITY THAT ASSESSEE WOULD HAVE GIVEN ADVANCE OF ` 10,00,000/- TO SMT. VALLIAMMAL, MOTHER OF MR. SENGOTTAIYAN. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THIS ADDITION OF ` 5,00,000/-. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS A DDITION MADE BY THE ASSESSING OFFICER IS ONLY ON SURMISES T HAT THE ASSESSEE MIGHT HAVE PURCHASED LAND FROM MRS. VALLIA MMAL, MOTHER OF MR. SENGOTTIYAN BY PAYMENT OF ` 10,00,000/- ON- MONEY, WHICH IN FACT IS NOT CORRECT. MRS. VALLIAMMA L IS ONLY POWER OF ATTORNEY HOLDER OF MR. SENGOTTAIYAN AND TH ERE HAS BEEN NO TRANSACTION OF PURCHASE OF PROPERTY FROM SM T. VALLIAMMAL AND THEREFORE ADDITION MADE BY THE ASSES SING OFFICER TREATING THE TRANSACTION AS SEPARATE TRANSA CTION, WHICH IS ONLY AN ASSUMPTION, THE ADDITION BASED ON SUCH ASSUMPTION IS UNSUSTAINABLE. ITA NOS.2011/MDS/2013 4 4. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER APPEARS TO HAVE BEEN MADE THI S ADDITION ON THE ASSUMPTION THAT ASSESSEE MIGHT HAVE PURCHASED ONE MORE LAND FROM MRS. VALLIAMMAL, MOTHE R OF MR. SENGOTTAIYAN. THE ADDITION APPEARS TO HAVE BEEN MAD E ONLY ON SURMISES AND PROBABILITIES. NO ADDITION CAN BE M ADE ON THE BASIS OF SURMISES AND PROBABILITIES WITHOUT ANY CONCRETE EVIDENCE TO SUGGEST THAT ASSESSEE HAS PAID ANY ON-M ONEY FOR PURCHASE OF THE PROPERTY. THUS, WE DELETE THE ADDIT ION OF ` 5,00,000/- MADE BY THE ASSESSING OFFICER. THIS GROU ND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. THE NEXT ISSUE IN THE GROUND OF APPEAL OF THE A SSESSEE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING ADDITION TOWARDS UNACCOUNTED INVESTMENT IN SQNY STONES PVT. LTD. THE ASSESSING OFFICER WHILE COMPL ETING THE ASSESSMENT MADE ADDITION OF ` 3,00,000/- ON THE GROUND THAT ASSESSEE HAS NOT FURNISHED SATISFACTORY EVIDENCE FO R SOURCE OF PERSONAL INCOME. DURING THE YEAR THE ASSESSEE IN VESTED ` 49,15,000/- AS SHARE CAPITAL IN M/S. SQNY STONES P. LTD. THE ITA NOS.2011/MDS/2013 5 SOURCE FOR THE SAME WAS EXPLAINED BY LETTER DATED 2 .12.2010 AS LOAN FROM SBI LIC POLICY, WITHDRAWAL FROM MICKY PAPER CAPS, VINAYAGA FIREWORKS AND CHINDIA GRANITES AND PERSONAL INCOME. THE ASSESSEE FILED COPY OF SBI LOA N ACCOUNT COPY IN SUPPORT OF EVIDENCE. HOWEVER, NO E VIDENCE WAS FILED FOR SOURCE OF PERSONAL INCOME OF ` 3,00,000/-. THE ASSESSING OFFICER DISBELIEVED THE VERSION OF THE AS SESSEE AND MADE ADDITION OF ` 3,00,000/- FOR WANT OF SOURCE. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ADDITION. 6. THE COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 5 2 OF THE PAPER BOOK SUBMITS THAT ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 HAD INCOME FROM BUSINESS AND PROFESSION AT ` 24,78,334 AND ` 16,45,000/- FOR THE ASSESSMENT YEAR 2006- 07 AND IS HAVING VARIOUS SOURCES FOR THE INCOME FR OM SALARY, INTEREST, INCOME FROM BUSINESS, INCOME FROM PROPERT Y ETC. THE COUNSEL SUBMITS THAT SINCE THE ASSESSEE IS HAVI NG SUFFICIENT SOURCE, EXPLANATION OF THE ASSESSEE CANN OT BE BRUSHED ASIDE. ITA NOS.2011/MDS/2013 6 7. HEARD BOTH PARTIES. PERUSED ORDERS OF LOWER AUTH ORITIES. ON A PERUSAL OF THE RETURNS FILED FOR THE ASSESSMEN T YEARS 2006-07 AND 2007-08, THERE ARE SUBSTANTIAL INCOME R EPORTED BY THE ASSESSEE IN THE FORM OF BUSINESS INCOME, SAL ARY, HOUSE PROPERTY. THEREFORE, IN SUCH CIRCUMSTANCES, A SSESSING OFFICER SHOULD NOT BE DISBELIEVED THE EXPLANATION O F THE ASSESSEE THAT HE HAS INVESTED PERSONAL INCOME OF ` 3,00,000/- IN SHARE CAPITAL OF M/S. SQNY STONES P. LTD. THEREFORE, WE DELETE THE DISALLOWANCE MADE BY THE A SSESSING OFFICER AND REVERSE THE IMPUGNED ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, TH E 27 TH DAY OF FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) (CHALLA NAGEN DRA PRASAD) ACCOUNTANT MEMBER JUDI CIAL MEMBER CHENNAI, DATED THE 27 TH FEBRUARY, 2014. SOMU COPY TO: (1) APPELLANT (4) CIT (A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.