Muthukrishnan Ravi, CHENNAI V. ACIT, CHENNAI

ITA 2053/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8258 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Unexplained cash credit; Gift; Question of law
• Section: 260A; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.2053/MDS/2015 / ASSESSMENT YEAR : 2010-11 SHRI MUTHUKRISHNAN RAVI NO.9, KASTURI ESTATE II AVENUE POES GARDEN CHENNAI 600 086 VS. THE ASSTT. COMMIS SIONER OF INCOME-TAX COMPANY CIRCLE III(4) [PRESENTLY CORPORATE CIRCLE 3(2) CHENNAI [PAN AFDPR 6115 H ] ( %& / APPELLANT) ( '(%& /RESPONDENT) ./ I.T.A.NOS.2054/MDS/2015 / ASSESSMENT YEAR : 2010-11 SMT SWARNALATHA RAVI NO.9, KASTURI ESTATE II AVENUE POES GARDEN CHENNAI 600 086 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) [PRESENTLY CORPORATE CIRCLE 3(2) CHENNAI [PAN AFAPS 7366 G ] ( %& / APPELLANT) ( '( %& /RESPONDENT) / APPELLANT BY : SHRI B RAMAKRISHNAN, FCA /RESPONDENT BY : SHRI P RADHAKRISHNAN, JCIT / DATE OF HEARING : 30 - 1 1 - 2015 ! / DATE OF PRONOUNCEMENT : 07 - 01 - 2016 ITA NOS.2053 & 2054/15 :- 2 -: / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE APPEALS OF TWO INDEPENDENT ASSESSEES AR E DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME-TAX (APPEALS)-11, CHENNAI, FOR ASSESSMENT YEAR 2010-1 1. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. IN LET US FIRST TAKE UP I.T.A.NO. 2053/MDS/2015 I N THE CASE OF SHRI MUTHUKRISHNAN RAVI. 3. SHRI B RAMAKRISHNAN, LD. REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE RE WAS CASH DEPOSIT OF ` 23,77,000/- IN THE SAVINGS BANK ACCOUNTS OF THE A SSESSEE WITH INDIAN BANK AND AXIS BANK DURING THE PERIOD F ROM 1.4.2009 TO 31.3.2010. THE ASSESSING OFFICER TREATED THE SAME AS INCOME OF THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS AND THE CIT( A) HAS ALSO CONFIRMED THE SAME VIDE HIS ORDER DATED 30.12.2013. ON FURTHER APPEAL BEFORE THIS TRIBUNAL, THE ORDER OF THE CIT(A ) WAS CONFIRMED BY THIS TRIBUNAL BY AN ORDER DATED 12.5.2014. THE ASS ESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF TH E ACT AND LEVIED PENALTY @ 300%. ACCORDING TO THE LD. REPRESENTATIV E, THE ADDITION WAS MADE ON ESTIMATE BASIS FOR WANT OF VERIFICATION . THE ASSESSEE ITA NOS.2053 & 2054/15 :- 3 -: HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FURN ISHED ANY INACCURATE PARTICULARS. PLACING RELIANCE ON THE JU DGMENT OF THE MADRAS HIGH COURT IN THE CASE OF M/S V KALYANAM VS ITO, 32 7 ITR 477, THE LD. REPRESENTATIVE SUBMITTED THAT MERELY BECAUSE THE EX PLANATION OF THE ASSESSEE WAS REJECTED, THAT WOULD NOT AUTOMATICALLY RESULT IN LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDING TO T HE LD. REPRESENTATIVE, THE ASSESSING OFFICER HAS TO RE-APPRECIATE THE MATE RIAL AVAILABLE ON RECORD ON THE BASIS OF THE ASSESSEES EXPLANATION AND THEREAFTER TAKE AN INDEPENDENT CONCLUSION. MERELY BECAUSE THE APPE AL OF THE ASSESSEE WAS DISMISSED BY THIS TRIBUNAL THAT CANNOT BE A REASON FOR LEVY OF PENALTY @ 300%. THE LD. REPRESENTATIVE FUR THER SUBMITTED THAT IF AT ALL THE PENALTY HAS TO BE LEVIED, IT HAS TO BE LEVIED ONLY @ 100% AND NOT @ 300%. 4. ON THE CONTRARY, SHRI P RADHAKRISHNAN, THE LD. DEPA RTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER RECEIVED AIR INFORMATION REGARDING CASH DEPOSITS OF MORE THAN ` 10 LAKHS IN THE SAVINGS BANK ACCOUNT MAINTAINED BY THE ASSESSEE IN INDIAN BANK AND AXIS BANK. THE ASSESSEE CLAIMED BEFORE THE ASSESS ING OFFICER THAT HE HAS TAKEN A LOAN OF ` 10 LAKHS FROM SHRI AKSHAYA KUMAR SINGH AND ANOTHER SUM OF ` 50 LAKHS FROM SHRI SRIDHAR MARRAMREDDY TOWARDS ADVANCE SALE CONSIDERATION OF SALE OF LAND. THE A SSESSEE HAS ALSO USE HIS PAST SAVINGS FOR MAKING DEPOSITS IN THE BANK. THE ASSESSING ITA NOS.2053 & 2054/15 :- 4 -: OFFICER EXAMINED SHRI AKSHAYA KUMAR SINGH, FINANCIA L CONTROLLER OF M/S VASANTHA BHAVAN HOTELS PVT. LTD. WHEREIN THE A SSESSEE IS A MANAGING DIRECTOR. THE SAID SHRI AKSHAYA KUMAR SIN GH MADE CONTRADICTORY STATEMENT AND FAILED TO PRODUCE THE S UPPORTING MATERIAL FOR ADVANCING ` 10 LAKHS TO THE ASSESSEE. THEREFORE, THE ASSESSI NG OFFICER DISBELIEVED THE CLAIM OF THE ASSESSEE ABOU T THE RECEIPT OF ` 10 LAKHS FROM SHRI AKSHAYA KUMAR SINGH. THE LD. DR F URTHER SUBMITTED THAT SHRI AKSHAYA KUMAR SINGH GOT MARRIED ON 13.12. 2008. HOWEVER, HE GAVE THE MONEY IN MAY, 2009. THE SOURCE FOR GIV ING MONEY WAS ON ACCOUNT OF MARRIAGE. ACCORDING TO THE LD. DR, WHEN THE MARRIAGE ITSELF TOOK PLACE IN DECEMBER, 2008 IT IS NOT KNOWN HOW AF TER A GAP OF SIX MONTHS, THE SAID SHRI AKSHAYA KUMAR SINGH WAS ABLE TO GIVE MONEY TO THE ASSESSEE. THE SAID SHRI AKSHAYA KUMAR SINGH HAS NOT RECEIVED BACK THE MONEY SO FAR EVEN AFTER A GAP OF 45 MONTHS OF LENDING, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY FOUND THAT HOW A MIDDLE CLASS HOTEL PERSON COULD WAIT TILL 45 MONTHS FOR RE CEIVING BACK THE MONEY ADVANCED TO THE ASSESSEE. THEREFORE, THE A SSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THE CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER @ 300%. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER ABOUT THE RECEIPT OF ` 10 LAKHS AS LOAN ITA NOS.2053 & 2054/15 :- 5 -: FROM SHRI AKSHAYA KUMAR SINGH AND ANOTHER SUM OF ` 50 LAKHS FROM SHRI SRIDHAR MARRAMREDDY FOR ADVANCE SALE CONSIDERA TION. ON EXAMINATION, SHRI AKSHAYA KUMAR SINGH IN RESPONSE T O QUESTION NO.10 ADMITTED THAT HE GAVE A SUM OF ` 10 LAKHS IN CASH TO THE ASSESSEE. THE SAID SHRI AKSHAYA KUMAR SINGH CLARIFIED THAT TH E MONEY WAS GIVEN TO THE ASSESSEE DURING MAY 2009. HE CLARIFIED THA T OUT OF THE MARRIAGE GIFT RECEIVED FROM HIS FATHER-IN-LAW A SUM OF ` 7 LAKHS WAS ADVANCED TO THE ASSESSEE AND ANOTHER SUM OF ` 3 LAKHS WAS FROM HIS PERSONAL SAVINGS. HOWEVER, HE COULD NOT PRODUCE TH E BANK DETAILS, THEREFORE, THE ASSESSING OFFICER DOUBTED THE GENUIN ENESS OF THE TRANSACTION AND MADE ADDITION U/S 68 OF THE ACT IN THE ASSESSMENT PROCEEDINGS. 6. SHRI SRIDHAR MARRAMREDDY WAS ALSO EXAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS . HE ALSO ADMITTED THAT HE GAVE ` 50 LAKHS IN CASH TO THE ASSESSEE. IN RESPONSE TO QUESTION NO.13, SHRI SRIDHAR MARRAMREDD Y EXPLAINED THAT HE DRAWN ` 19 LAKHS FROM M/S KOVELA DEVELOPERS IN CASH AND AN OTHER SUM OF ` 15 LAKHS FROM SHRI MAHENDRA KUMAR SWAMY, HIS FRIEN D IN USA IN RESPECT OF SALE OF HIS PROPERTY AT MYSORE. THE BALANCE OF ` 16 LAKHS WAS GIVEN TO THE ASSESSEE AFTER SELLING THE GOLD C OIN AND US DOLLARS POSSESSED BY HIM. THE ASSESSING OFFICER AFTER REFE RRING TO THE PASSPORT OF SHRI SRIDHAR MARRAMREDDY FOUND THAT THE AGREEMENT FOR ITA NOS.2053 & 2054/15 :- 6 -: SALE WAS EXECUTED AT CHENNAI ON 2.4.2009. HOWEVER, SHRI SRIDHAR MARRAMREDDY ARRIVED AT CHENNAI ONLY ON 17.2.2009 AN D LEFT CHENNAI ON 8.3.2009. THEREAFTER, HE ARRIVED CHENNAI AIRPORT ON LY ON 23.7.2009. THEREFORE, THE SO CALLED AGREEMENT COULD NOT HAVE B EEN EXECUTED ON 2.4.2009 AT CHENNAI. AFTER EXAMINING THE NRE BANK ACCOUNT OF SHRI SRIDHAR MARRAMREDDY, THE ASSESSING OFFICER FOUND TH AT THE BALANCE IS ONLY ` 4,94,700/- AS ON 26.11.2008, THE SAID SHRI SRIDHAR MARRAMREDDY COULD NOT HAVE ADVANCED THE MONEY TO THE ASSESSEE. THEREFORE, TO THIS EXTENT, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS REGARDING HIS INCOME. IN OTHER WORDS, THE AMOUNTS SAID TO BE RECEIVED TOWARDS ADVANCE ON SALE CONSIDERATION FOR SALE OF P ROPERTY FROM SHRI SRIDHAR MARRAMREDDY WAS FOUND TO BE FALSE BY THE AS SESSING OFFICER. THIS FACTUAL SITUATION COULD NOT BE CONTROVERTED BY THE ASSESSEE. SHRI SRIDHAR MARRAMREDDY WAS NOT AVAILABLE IN INDIA ON 2 .4.2009, THEREFORE, HE COULD NOT HAVE EXECUTED THE AGREEMENT FOR SALE A ND HE COULD NOT HAVE ADVANCED ` 50 LAKHS. INSPITE OF ALL THESE THINGS, THE ASSESS ING OFFICER CONFINED HIMSELF ONLY IN RESPECT OF DEPOSIT OF ` 23,77,000/-. THEREFORE, THIS TRIBUNAL FINDS THAT THE ASSESSEE H AS CONCEALED THE PARTICULARS OF INCOME BY CLAIMING THE SAME AS SALE CONSIDERATION AND LOAN RECEIVED FROM SHRI SRIDHAR MARRAMREDDY AND SH RI AKSHAYA KUMAR SINGH ETC. HOWEVER, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT LEVY OF PENALTY @ 300% MAY NOT BE NECESSARY. THIS TRIBUNAL IS OF THE ITA NOS.2053 & 2054/15 :- 7 -: CONSIDERED OPINION THAT THE LEVY OF PENALTY @ 100% WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE ORDERS OF THE LO WER AUTHORITIES ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO L EVY PENALTY @ 100% INSTEAD OF 300%. 7. NOW COMING TO I.T.A.NO.2054/MDS/2015 IN THE CASE OF SMT. SWARNALATHA RAVI, THE ASSESSING OFFICER LEVIED PENA LTY WITH REGARD TO ` 60,50,000/- ADDED AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 8. SHRI B RAMAKRISHNAN, LD. REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE MADE A CASH DEPOSIT OF ` 65,50,000/- IN HER SAVINGS BANK ACCOUNTS MAINTAINED WITH INDIAN BA NK AND AXIS BANK. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE RECEIVED ` 50 LAKHS FROM SHRI SRIDHAR MARRAMREDDY AS ADVANCE FOR SALE O F LAND. SHRI SRIDHAR MARRAMREDDY WAS ALSO EXAMINED BY THE ASSESS ING OFFICER AND HE ADMITTED THAT HE GAVE ` 50 LAKHS TO THE ASSESSEE IN CASH. THE ASSESSING OFFICER MADE ADDITION FOR WANT OF ADEQUAT E EVIDENCE. THE CIT(A) ALSO CONFIRMED THE SAME. 9. THE ASSESSEE FILED AN APPEAL AGAINST THE QUANTUM ADDITION BEFORE THIS TRIBUNAL. THIS TRIBUNAL, HOWEVER, CONF IRMED THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSEE FILED FURTHER APPEAL U/S 260A OF THE ACT BEFORE THE MADRAS THE HIGH COURT. THE HIGH COURT IN TAX CASE (APPEAL) NO.884 OF 2004 ADMITTED THE APPEAL ON 24.1 1.2004 ON THE ITA NOS.2053 & 2054/15 :- 8 -: GROUND THAT THERE WAS A SUBSTANTIAL QUESTION OF LAW ARISING FOR CONSIDERATION IN THE APPEAL FILED BY THE ASSESSEE. PLACING RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE O F CIT VS NAYAN BUILDERS & DEVELOPERS[2014] 368 ITR 722, THE LD. RE PRESENTATIVE SUBMITTED THAT WHEN THE PENALTY WAS IMPOSED FOR CON CEALMENT OF INCOME AGAINST A QUANTUM ADDITION AND THE QUANTUM A DDITION MADE BY THE LOWER AUTHORITY IS SUBJECT MATTER OF APPEAL BEF ORE THE HIGH COURT, THE HIGH COURT FOUND THAT NO PENALTY CAN BE LEVIED WHEN THE HIGH COURT ADMITTED THE APPEAL. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE HIGH COURT FOUND THAT THERE WAS A SUBSTANT IAL QUESTION OF LAW FOR ADJUDICATION, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED ANY PART OF THE INCOME. 10. ON THE CONTRARY, SHRI P RADHAKRISHNAN, THE LD. DR SUBMITTED THAT AS IN THE CASE OF SHRI MUTHUKRISHNAN RAVI, THE ASSESSEE CLAIMED BEFORE THE LOWER AUTHORITY THAT HE RECEIVED MONEY F ROM SHRI AKSHAYA KUMAR SINGH AND SHRI SRIDHAR MARRAMREDDY. SINCE TH E FACTS ARE IDENTICAL, THE ASSESSING OFFICER LEVIED PENALTY U/ S 271(1)(C) OF THE ACT. HOWEVER, THE CIT(A) MODIFIED THE ORDER OF THE ASSESSING OFFICER AND RESTRICTED THE PENALTY TO 100%, THEREFORE, NO I NTERFERENCE IN THE ORDER OF THE CIT(A) IS CALLED FOR. ITA NOS.2053 & 2054/15 :- 9 -: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E QUANTUM ADDITIONS MADE BY THE LOWER AUTHORITIES ARE CONFIRMED BY THIS TRIBUNAL AND IT IS NOT IN DISPUTE THAT AN APPEAL IS FILED BY THE ASSE SSEE BEFORE THE HIGH COURT. THE HIGH COURT, IN FACT, ADMITTED THE APPEA L FILED BY THE ASSESSEE ON THE GROUND THAT THERE IS A SUBSTANTIAL QUESTION OF LAW WHICH NEEDS TO BE ADJUDICATED. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE HIGH COURT ADMITTED THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THIS TRIBUNAL IN THE QUANTUM PROCEEDIN GS, CAN THERE BE A LEVY OF PENALTY? THE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS & DEVELOPERS (SUPRA) EXAMINED THIS ISSUE AND FOUND THAT WHEN THE HIGH COURT ADMITTED THE SUBSTANTIAL QUESTION OF LAW IN THE QUANTUM PROCEEDINGS ON THE BASIS OF WHICH THE PENALTY WAS L EVIED, THE PENALTY LEVIED BY THE LOWER AUTHORITIES HAS TO BE DELETED. IN THE CASE BEFORE US ALSO, THE APPEAL FILED BY THE ASSESSEE AGAINST THE QUANTUM ADDITION WAS ADMITTED BY THE HIGH COURT, THEREFORE, BY RESPE CTFULLY FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE O F NAYAN BUILDERS & DEVELOPERS (SUPRA) THE PENALTY LEVIED BY THE LOWE R AUTHORITY IS DELETED. 12. IN THE RESULT, I.T.A.NO. 2054/MDS/2013 IS ALLOWED. 13. TO SUMMARIZE, I.T.A.NO.2053/MDS/2015 IS PARTLY ALLO WED WHEREAS I.T.A.NO.2054/MDS/2015 IS ALLOWED. ITA NOS.2053 & 2054/15 :- 10 -: ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JANUARY, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 07 TH JANUARY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF