P.Kandaswamy, Coimbatore V. ACIT, Coimbatore

ITA 2078/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64235 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M N MURTH Y NAIK IRS
• Assessee Lawyers: K RAGHU
• Keywords: Gift; Business income; Business expenditure
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.2078(MDS)/2011 ASSESSMENT YEAR: 2008-09 SHRI P.KANDASWAMY, 20, PARIS NAGAR, CIVIL AERODROME, COIMBATORE-641 014. PAN AEKPK0818E. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE III, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAGHU, FCA RESPONDENT BY : SHRI M.N.M URTHY NAIK, IRS, CIT. DATE OF HEARING : 28 TH AUGUST, 2012 DATE OF PRONOUNCEMENT : 7 TH SEPTEMBER, 2012 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER.- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, COIMB ATORE, DATED 12-10-2011 IN APPEAL NO.301/10-11, FOR THE AS SESSMENT YEAR 2008-09. - - ITA 2078 OF 2011 2 2. THE ONLY ISSUE RAISED IN THE GROUNDS OF APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HAVE HELD THAT THE ASSESSEES EXPLANATIONS IN RESPECT OF THE SOURCES FOR ` 6,23,500/- ARE REASONABLE AND BONA FIDE AND, THERE FORE, THE ASSESSING OFFICER COULD NOT HAVE ADDED THE SAME AS INCOME OF THE ASSESSEE. 3. THE ASSESSEE, AN INDIVIDUAL CARRYING ON THE BUSINESS OF MANUFACTURING MOTOR PARTS, FILED HIS RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 21-9-2008, DECLA RING AN INCOME OF ` 7,73,920/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) BY ORDER DATED 28-12-2010 DETERMININ G THE INCOME OF THE ASSESSEE AT ` 26,97,371/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MADE AN ADDITION OF ` 16,26,000/- AS UNEXPLAINED CASH DEPOSITS UNDER SEC TION 68 OF THE INCOME-TAX ACT, 1961. 4. ON APPEAL THE COMMISSIONER OF INCOME- TAX(APPEALS) SUSTAINED THE ADDITION TO THE EXTENT O F ` 6,23,500/- AND THE BALANCE WAS DELETED. THE SAID AMOUNT OF ` 6,23,500/- CONSISTS OF THE FOLLOWING:- 1. WITHDRAWALS FROM CENTRAL BANK OF INDIA ` 2,40,500/- - - ITA 2078 OF 2011 3 2. FAMILY SAVINGS OF EARLIER YEARS ` 3,33,000/- 3. GIFT FROM MOTHER-IN-LAW ` 50,000/- ---------------- ` 6,23,500/- ---------------- WITH REGARD TO THE CASH DEPOSITS OF ` 2,40,000/-, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER AND THE COMM ISSIONER OF INCOME-TAX(APPEALS) THAT THIS AMOUNT REPRESENTS THE DEPOSITS MADE IN THE KOTAK MAHINDRA BANK ACCOUNT FROM OUT OF THE WITHDRAWALS MADE FROM CENTRAL BANK OF INDIA. THE A SSESSING OFFICER REJECTED THIS CONTENTION OF THE ASSESSEE, S TATING THAT THE ASSESSEE MAINTAINED ACCOUNT IN CENTRAL BANK OF INDI A, WHICH IS USED FOR BUSINESS TRANSACTIONS OF THE PROPRIETARY C ONCERN AND THE BANK ACCOUNT MAINTAINED IN KOTAK MAHINDRA BANK IS A PERSONAL SAVINGS BANK ACCOUNT OF THE ASSESSEE, WHICH IS NOT USED FOR BUSINESS PURPOSES. THE ASSESSING OFFICER ALSO STAT ED THAT THE TRANSACTIONS IN CENTRAL BANK OF INDIA FIND PLACE IN REGULAR BOOKS OF ACCOUNT, WHEREAS KOTAK MAHINDRA BANK ACCOUNT IS NOT ENTERED INTO THE REGULAR BOOKS OF ACCOUNT; IN OTHER WORDS, TRANSACTIONS THEREIN ARE NOT REFLECTED IN THE REGUL AR BOOKS OF ACCOUNT. THE ASSESSING OFFICER OBSERVED THAT CASH WITHDRAWN FROM CENTRAL BANK OF INDIA IS ENTERED INTO THE CASH BOOK - - ITA 2078 OF 2011 4 MAINTAINED FOR THE PURPOSE OF BUSINESS AND THE SAME IS USED FOR MEETING THE BUSINESS EXPENSES INCURRED IN CASH AND, THEREFORE, HE OBSERVED THAT THE ASSESSEE CANNOT NOW SHOW THE S AME CASH WHICH IS USED FOR INCURRING BUSINESS EXPENSES AS TH E SOURCE FOR CASH DEPOSITS IN NON BUSINESS BANK ACCOUNT. THE CO MMISSIONER OF INCOME-TAX(APPEALS) SUSTAINED THE ADDITION STATI NG THAT THERE IS NO CO-RELATION REGARDING THE WITHDRAWAL OF CASH AND THE DEPOSITS MADE IN THE SAVINGS BANK ACCOUNT IN KOTAK MAHINDRA BANK. THEREFORE, THE COMMISSIONER OF INCOME-TAX(AP PEALS) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT THE CASH WITHDRAWALS OF ` 2,40,500/- MADE FROM CENTRAL BANK OF INDIA WERE DEPOSITED IN THE KOTAK MAHINDRA BANK ACCOUNT. 5. REGARDING FAMILY SAVINGS OF THE ASSESSEE IN EAR LIER YEARS, THE ASSESSEE SUBMITTED THAT HE HAD SOME SAVI NGS FROM FAMILY IN EARLIER YEARS FOR MAKING CASH DEPOSITS IN TO THE BANK ACCOUNT. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE STATING THAT THE ASSESSEE HAS NOT EXPL AINED AS TO HOW THE SAVINGS CAME ABOUT, AS THE ONLY SOURCE FOR THE FAMILY WAS RENTAL INCOME AND BUSINESS INCOME FROM AMTEX ENGINEERING. THE ASSESSING OFFICER OBSERVED THAT B OOKS OF - - ITA 2078 OF 2011 5 ACCOUNT ARE MAINTAINED IN RESPECT OF THESE SOURCES AND ANY WITHDRAWAL THEREFROM WILL GO TOWARDS MEETING THE HO USEHOLD EXPENSES AND OTHER EXPENSES AND NO DETAILS WERE GIV EN OF HAVING SURPLUS CASH AVAILABLE OUT OF THE WITHDRAWAL S FOR HOUSEHOLD EXPENSES. HE ALSO OBSERVED THAT NO DETAI LS OF HAVING AGRICULTURAL INCOME IN HINDU UNDIVIDED FAMILY CAPAC ITY WERE SUBMITTED, SINCE THE HUF HAS NOT FILED ANY RETURN O F INCOME SHOWING AGRICULTURAL INCOME. THE COMMISSIONER OF I NCOME- TAX(APPEALS) ACCEPTED THE VIEW OF THE ASSESSING OFF ICER AND SUSTAINED THE ADDITION OF ` 3,33,000/-. 6. WITH REGARD TO ` 50,000/-, THE ASSESSEE SUBMITTED THAT THIS AMOUNT WAS RECEIVED FROM HIS MOTHER-IN-LA W AS GIFT. THE ASSESSEE SUBMITTED A LETTER OF CONFIRMATION FRO M HIS MOTHER- IN-LAW IN SUPPORT OF THE CASH GIFT OBTAINED BY HIM. HOWEVER, THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE A SSESSEE, STATING THAT IN THE ABSENCE OF ANY INDEPENDENT SOUR CE FOR VERIFICATION TO PROVE AVAILABILITY OF CASH IN THE H ANDS OF MOTHER-IN- LAW, THE CREDITWORTHINESS CANNOT BE ASCERTAINED AND THEREFORE REJECTED THE EXPLANATION OF THE ASSESSEE. HE ALSO OBSERVED THAT CONFIRMATION FILED IS ONLY SELF SERVING STATEMENT A ND IT DOES NOT - - ITA 2078 OF 2011 6 PROVE THE GENUINENESS OF THE TRANSACTION. THE COMM ISSIONER OF INCOME-TAX(APPEALS) UPHELD THIS ADDITION, AGREEING WITH THE VIEW OF THE ASSESSING OFFICER. 7. WITH REGARD TO THE ADDITION OF ` 2,40,000/-, REPRESENTING DEPOSITS IN THE KOTAK MAHINDRA BANK AC COUNT FROM OUT OF THE WITHDRAWALS FROM CENTRAL BANK OF INDIA, THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAD FILED A STATEMENT BEFORE THE LOWER AUTHORITIES CO-RELATING THE DEPOSI TS MADE IN THE KOTAK MAHINDRA BANK ACCOUNT FROM THE WITHDRAWALS F ROM CENTRAL BANK OF INDIA ACCOUNT. A COPY OF SUCH RECO NCILIATION WAS ALSO FILED BEFORE US. THE COUNSEL SUBMITS THAT THE MATTER REGARDING THE DEPOSIT OF ` 2,40,500/- IN THE KOTAK MAHINDRA BANK ACCOUNT FROM OUT OF THE WITHDRAWALS MADE FROM THE C ENTRAL BANK OF INDIA ACCOUNT MAY BE SENT BACK TO THE ASSESSING OFFICER FOR CONSIDERING THE SAME AFRESH. THE COUNSEL FOR THE D EPARTMENT EXPRESSED NO OBJECTION IN REMITTING THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER FOR EXAMINING THIS ISSUE WITHIN T HE LIMITED PURPOSE. ON GOING THROUGH THE RECONCILIATION FILED BY THE COUNSEL, WE FEEL IT NECESSARY TO SEND BACK THE ISSU E OF ADDITION TO THE EXTENT OF ` 2,40,500/- TO THE FILE OF THE ASSESSING OFFICER TO - - ITA 2078 OF 2011 7 CONSIDER IT AFRESH IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. 8. WITH REGARD TO THE FAMILY SAVINGS OF ` 3,33,000/-, WE ARE OF THE VIEW THAT IT CANNOT BE DISBELIEVED THAT A PERSON HAVING A RUNNING BUSINESS WITH A TURNOVER OF ABOUT ` 100 LAKHS PER YEAR, AND HAVING RENTAL INCOME FOR SO MANY YEARS, MAY NOT HAVE SAVINGS TO THE EXTENT OF ` 3,33,000/-. IN FAIRNESS, WE DIRECT THE ASSESSING OFFICER TO CONSIDER ` 2 LAKHS AS SAVINGS OF EARLIER YEARS FROM OUT OF HIS FAMILY SAVINGS. THEREFORE, A DDITION TO THE EXTENT OF ` 2 LAKHS IS DIRECTED TO BE DELETED. 9. WITH REGARD TO THE CASH GIFT FROM HIS MOTHER-IN -LAW, THE ASSESSEE COULD NOT SUBSTANTIATE THE RECEIPT OF THE SAME SHOWING THE SOURCE OF HIS MOTHER-IN-LAW, ETC. IN T HE ABSENCE OF THOSE DETAILS, WE FEEL THAT THE LOWER AUTHORITIES A RE CORRECT IN TREATING THE SAID AMOUNT AS UNDISCLOSED CASH DEPOSI T UNDER SECTION 68 OF THE ACT. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. - - ITA 2078 OF 2011 8 ORDERS PRONOUNCED ON FRIDAY, THE 7 TH OF SEPTEMBER, 2012 AT CHENNAI. SD/- SD/- (DR. O.K.NARAYANAN) (CHAL LA NAGENDRA PRASAD) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED, THE 7 TH SEPTEMBER, 2012. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.