Balamurugan K, CHENNAI V. ACIT, Salem

ITA 2039/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96590 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 09-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 28-07-2014
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: K MEENATCHI SUNDARAM
• Keywords: Income from undisclosed sources; Source of fund; Corroborative evidences; Condonation of delay
• Section: 133A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2039/MDS/2014 / ASSESSMENT YEAR :20 08 - 09 SHRI K. BALAMURUGAN, C/O SUNDARAM & NARAYANAN, CHARTERED ACCOUNTANTS, 18, BALAIAH AVENUE, LUZ CHURCH ROAD, MYLAPORE, CHENNAI 600 004. [PAN: A LDPK9068Q ] VS. T HE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE I , SALEM . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI K. MEENATCHI SUNDARAM, C.A. / RESPONDENT BY : SHRI A. B. KOLI, J CIT / DATE OF HEARING : 0 9 . 1 2 .201 5 / DATE OF P RONOUNCEMENT : 17 . 1 2 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX ( APPEALS ) , SALEM , DATED 31 . 12 .20 1 3 RELEVANT TO THE ASSESSMENT YEAR 20 08 - 09 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS RELATING TO CONFIRMATION ADDITION OF . 45,73,537/ - . I.T.A. NO . 2039 /M/ 14 2 2. THE APPEAL OF THE ASSESSEE IS FOUND TO HAVE BEEN FILED LATE BY 134 DAYS IN FILING THE APPEAL. THE ASSESSEE HAS FILED AN AFFIDAVIT TO CONDONE THE DELAY IN FILLING THE APPEAL. IN THE AFFIDAVIT, THE ASSESSEE HAS STATED THAT HE GOT DEVELOPED BACK PAIN AND HE DOCTOR HAS ADVISED TO TAKE REST AND AVOID TRA VEL AND THEREFORE, HE COULD NOT FILE THE APPEAL IN TIME. IN SUPPORT OF HIS SUBMISSIONS, THE ASSESSEE HAS FILED COPY OF THE MEDICAL CERTIFICATE HAVING TAKEN TREATMENT FOR HIS AILMENT. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THERE WAS NO WILFUL ATTEMPT ON THE PART OF THE ASSESSEE AND PRAYED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL FOR HEARING. THE LD. DR HAS NOT SERIOUSLY OBJECT TO THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE . 3. WE HAVE CAREFULLY CONSIDERED THE PETITION FOR CONDONATION OF DELAY AND THE AFFIDAVIT FILED BY THE ASSESSEE. WE HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND FIND THAT THERE IS SUFFICIENT CAUSE FOR CONDONING THE DELAY. ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE ABOVE APPEAL AND ADMIT THE APPEAL S FOR HEARING. 4. BRIEF FACTS OF THE CASE ARE THAT A SURVEY UNDER SECTION 133A(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 12.02.2008. DURING THE COURSE OF SURVEY, IT WAS N OTICED THAT THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE THE SUNDRY CREDITORS AS APPEARED IN THE BOOKS OF ACCOUNT AND ACCORDINGLY, AGREED TO ADMIT A SUM OF I.T.A. NO . 2039 /M/ 14 3 .85.13 LAKHS. THEREAFTER, THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 ON 30.09.2008 ADMITTING INCOME OF .21,70,210/ - . THE ASSESSING OFFICER HAS NOTICED THAT IN THE TRADING AND PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, TH E ASSESSEE HAS ADMITTED A SUM OF .39,26,463/ - AS INCOME UNDER SECTION 133A OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTINY BY ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT. THE GIST OF STATEMENT RECORDED BY THE SURVEY TEAM IS REPRODUCED AS UNDER: IT IS SIGNIFICANT TO NOTE THAT THE STATEMENT WAS RECORDED ON THE DATE OF SURVEY FROM THE PROPRIETOR SHRI. K. BALAMURUGAN ON 12.02.2008. THE ASSESSEE WAS ASKED TO FURNISH DETAILS / CLARIFICATION REGARDING THE SUNDRY CREDITORS AND SOURCES OF INCOME GENERATED FOR R EPAYMENT OF CREDITORS VIDE QUESTION NUMBERS 10 & 11. IN RESPONSE TO THESE QUESTIONS, THE ASSESSEE HAS MERELY ANSWERED THAT THE FIGURES OF SUNDRY CREDITORS AS STOOD ON 31.03.2007 WERE CORRECT. THE ASSESSEE ALSO STATED THAT HE HAS SETTLED SOME OF THE AMOUNTS IN THE BOOKS OUT OF INCOME GENERATED FROM UNACCOUNTED TURNOVER MADE DURING THE YEAR. FURTHER, THE ASSESSEE STATED IN THE REPLY THAT HE HAS MADE PAYMENTS TO CREDITORS AMOUNTING TO RS.L,55,00,000/ - IN RESPECT OF TWO CONCERNS WHEREIN HE IS A PROPRIETOR OF ON E CONCERN AND A PARTNER IN ANOTHER CONCERN, AND THE CREDITORS WERE STATED TO BE SETTLED DURING THE FINANCIAL YEAR 2007 - 08 ONLY AND HE ALSO STATED THAT DESPITE REPAYMENT OF THE LOANS, THE SUMS WERE CONTINUED TO BE SHOWN IN THE BOOKS OF THE FINANCIAL YEAR 20 07 - 08. FURTHER HE STATED THAT THE UNACCOUNTED INCOME FOR REPAYMENT OF SUCH CREDITORS WERE GENERATED FROM THE PARALLEL BUSINESS CARRIED ON WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT FOR VARIOUS YEARS AND PARTLY PAID OUT OF THE CAPITAL ACCOUNT. THEREFOR E, THE ASSESSEE DEARLY STATED THAT A SUM OF RS.L,55,00,000/ - WOULD BE OFFERED AS ADDITIONAL INCOME IN ADDITION TO THE REGULAR INCOME FOR BOTH THE CONCERNS. 5. AS PER THE ABOVE STATEMENT, THE CREDITORS HAVING ALREADY BEEN PAID OUTSIDE THE BOOKS AND THE C REDITORS WERE CONTINUED TO SHOWN IN THE BOOKS OF ACCOUNT. THIS WOULD CONSTITUTE BOGUS LIABILITY. THE ADDL.CIT [UNDER SECTION I.T.A. NO . 2039 /M/ 14 4 144A OF THE ACT] HAS GIVEN A FINDING THAT SUCH CESSATION OF LIABILITY HAS TO BE ASSESSED UNDER SECTION 41(1) OF THE ACT AND DIRECTE D THE ASSESSING OFFICER TO ASSESS THE SAME FOR THE ASSESSMENT YEAR IN QUESTION. CONSIDERING THE ABOVE FACTS AND ALSO THE DIRECTION GIVEN BY THE ADDL.CIT, THE INCOME ADMITTED BY THE ASSESSEE DURING THE COURSE OF SURVEY AND NOT ADMITTED IN THE RETURN OF INCO ME AMOUNTING TO .45,73,537/ - WAS TREATED AS INCOME OF THE ASSESSEE AND BROUGHT TO TAX. 6. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HAS CONTENDED THAT THE ASSESSING OFFICER HAS NO OTHER EVIDENCE EXCEPT THE STATEMENT RECORDED ON THE DATE OF SURVEY UN DER SECTION 133A OF THE ACT AND NEITHER THE ASSESSING OFFICER NOR THE ADDL.CIT VERIFIED THE BOOKS OF ACCOUNTS AND ENTRIES REFLECTING PAYMENT TO THE CREDITORS. THEREFORE, THE ASSESSEE PRAYED THAT THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. THE LD. CIT(A) HAS OBSERVED THAT AFTER THE DATE OF SURVEY, THE ASSESSEE HAS FILED A DETAILED LIST OF CREDITORS WHO WERE SETTLED OUT OF BOOKS, IN CORROBORATION OF THE STATEMENT MADE EARLIER. THEREFORE, THE LD. CIT(A) HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS MADE THE ADDITION BASED ON THE STATEMENT RECORDED DURING THE COURSE OF SURVEY. THE ASSESSEE HAS NOT FILED ANY BOOKS OF ACCOUNTS FOR VERIFICATION, SINCE THE ASSESSEE WAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. THEREFORE, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. I.T.A. NO . 2039 /M/ 14 5 7. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADDITION WAS MADE BASED ON THE STATEMENT R ECORDED DURING THE COURSE OF SURVEY WITHOUT ANY EXTERNAL OR CORROBORATIVE EVIDENCES. BY RELYING ON THE DECISION IN THE CASE OF CIT V. KHADER KHAN SONS 25 TAXMANN.COM 413(SC), THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE ADDITION MADE BY THE ASSESSING O FFICER SHOULD BE DELETED. 8. ON THE OTHER HAND, THE LD. DR HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 9. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE WAS A SURVEY UN DER SECTION 133A(1) OF THE ACT AND DURING THE COURSE OF SURVEY, THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE THE SUNDRY CREDITORS APPEARING IN THE BOOKS OF ACCOUNTS AND ACCORDINGLY AGREED TO ADMIT A SUM OF .85.13 LAKHS TOWARDS SUNDRY CREDIT BASED ON THE CREDITORS LIST FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08 AGAINST THE OUTSTANDING AMOUNT OF .1,83,70,298/ - AS ON 31.03.2007. SUBSEQUENTLY, THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 30.09.2008 ADMITTING INCOME OF .21,70,210/ - INCLUDIN G SUNDRY CREDITORS BALANCE OFFERED AS INCOME OF RS.39,26,463/ - UNDER SECTION 133A OF THE ACT. THEREFORE, THE BALANCE AMOUNT OF .45,73,537/ - [ .85,00,000 . 39,26,463], WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME WAS BROUGHT TO TAX. AFTER I.T.A. NO . 2039 /M/ 14 6 CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT BASED ON THE STATEMENT RECORDED DURING THE COURSE OF S URVEY, THE ABOVE ADDITION WAS MADE, WHICH CANNOT BE SUSTAINED IN THE EYES OF LAW. AFTER CAREFULLY CONSIDERING THE ORDERS OF AUTHORITIES BELOW, WE FIND THAT THE ASSESSMENT ORDER IS VERY CRYPTIC. IT DOES NOT CONTAIN DETAILS OF SUNDRY CREDITORS, DETAILS OF CO NFIRMATION FROM THE SUNDRY CREDITORS AGAINST WHICH THE ABOVE ADDITION WAS MADE. THE ABOVE ADDITION WAS MADE OUT OF DIFFERENT AMOUNT ADMI TTED BY THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDINGS AND NOT ADMITTED IN THE RETURN OF INCOME FILED BY THE ASSES SEE. THE LD. ADDL.CIT HAS GIVEN A SPECIFIC DIRECTION TO THE ASSESSING OFFICER TO VERIFY AND ASSESS THE ENTIRE ADMISSION MADE IN SO FAR AS ASSESSMENT YEAR 2007 - 08. THE LD. ADDL.CIT HAS DIRECTED TO EXAMINE THE OUTSTANDING LIABILITY FOR THE SUBSEQUENT YEAR ON ACCOUNT OF TRADE CREDITORS LIABILITY BECOMING PAYABLE IN THE SUBSEQUENT YEAR. HOWEVER, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD. 10. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMIT THE MATTER B ACK TO THE ASSESSING OFFICER TO PASS A SPEAKING ORDER AFTER EXAMINING THE DETAILS IN VIEW OF THE DIRECTIONS I.T.A. NO . 2039 /M/ 14 7 OF THE LD. ADDL.CIT AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. 1 1 . IN THE RESU LT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 17 TH DECEMBER , 2015 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 17 . 1 2 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.