N.Kalaimani, Erode V. ITO, Erode

ITA 2113/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86360 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Principle of natural justice; Peak credit
• Section: 143(3); 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , ! ' . . # , $ ! % BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.2113/MDS/2014 $ & ''& / ASSESSMENT YEAR : 2010-11 SMT. N. KALAIMANI, C/O SHRI S. SRIDHAR, ADVOCATE, 112/1, PERIYAR STREET, ERODE 638 001. PAN : AKIPK 5601 P V. THE INCOME TAX OFFICER, WARD I(4), ERODE. ()*/ APPELLANT) (,-)*/ RESPONDENT) )* . / / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ,-)* . / / RESPONDENT BY : SHRI S. DAS GUPTA, JCIT 0 ' . 1 / DATE OF HEARING : 16.02.2015 2' . 1 / DATE OF PRONOUNCEMENT : 11.03.2015 / O R D E R PER S.S. GODARA, JUDICIAL MEMBER: THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-1 1 ARISES FROM ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- I, COIMBATORE, DATED 18.07.2014 PASSED IN APPEAL NO .151/13- - - I.T.A. NO. 2113/MDS/2014 2 14, PARTLY SUSTAINING ADDITIONS OF UNEXPLAINED CASH DEPOSITS OF ` 25.50 LAKHS TO ` 6 LAKHS, UPHOLDING UNEXPLAINED FIXED DEPOSITS IN TAMILNAD MERCANTILE BANK LTD. OF ` 3 LAKHS, UNEXPLAINED DEPOSITS OF ` 28,000/- IN SOUTH INDIAN BANK, UNACCOUNTED INTERES T INCOME OF ` 4,052/- ARISING FROM THE AFORESAID FIXED DEPOSITS A ND THAT OF UNEXPLAINED/POOR DRAWINGS OF ` 36,000/-, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T 'THE ACT'). 2. THE ASSESSEE REFERS TO HER GROUNDS AND SUBMITS T HAT HER PLEAS AT NOS.3 AND 5 OF UNEXPLAINED DEPOSITS OF ` 28,000/- AND POOR DRAWINGS ADDITION OF ` 36,000/- ARE NOT PRESSED. THE REVENUE DOES NOT OPPOSE THIS CONTENTION. THIS LEAV ES US WITH THE REMAINING THREE ISSUES. RATHER TWO OF THEM ONL Y AS FOR UNEXPLAINED FIXED DEPOSITS AND INTEREST GROUNDS ARE INTERCONNECTED. 3. THE ASSESSEE / AN INDIVIDUAL IS A MONEY LENDER . SHE FILED HER RETURN ON 26.02.2011 ADMITTING TOTAL INCO ME OF ` 2,86,920/-. THE A.O. TOOK UP SCRUTINY. HE INTER ALIA NOTICED CASH DEPOSITS OF ` 25.50 LAKHS IN THE TAMILNADU MERCANTILE BANK ON VARIOUS DATES WITHOUT ANY CORRESPONDING ENTRY IN THE CAPITAL - - I.T.A. NO. 2113/MDS/2014 3 ACCOUNT AND BALANCE SHEET. SHE HAD NOT DECLARED TH E SAID SUM AS INCOME. THE ASSESSEE HAD MADE THE IMPUGNED DEPO SITS FROM 18.09.2009 ONWARDS STARTING FROM A SUM OF ` 4 LAKHS TO HAVE BEEN RETURNED BY HER HUSBAND (TO THE EXTENT OF ` 3.90 LAKHS, ` 20,000/- PER MONTH AS MONTHLY INCOME). THE NATURE OF OTHER DEPOSITS ON VARIOUS DATES FROM 26.09.2009 TO 08.02. 2010 WAS STATED TO BE ON ACCOUNT OF WITHDRAWALS MADE EARLIER . IT WAS PLEADED THAT A SUM OF ` 2 LAKHS HAD COME FROM EARLIER SURPLUS WITHDRAWALS, MONTHLY INCOME, LIC PAYMENTS AND CASH GIFTS FROM HER HUSBAND. ALL THESE AVERMENTS COULD NOT IMPRESS THE ASSESSING AUTHORITY. IT CONCLUDED THAT THE ASSESSE ES EXPLANATION QUOTED HEREINABOVE DID NOT REFER TO ANY SUPPORTIVE MATERIAL, NO CASH FLOW STATEMENT WAS FORTHCOMING, A BSENCE OF RELEVANT EVIDENCE AND ENTRIES IN THE BALANCE SHEET REVEALING LACK OF NECESSARY DETAILS. IT OBSERVED THAT AN ATTEMPT HAD BEEN MADE TO SUPPRESS THE IMPUGNED DEPOSITS. THIS RESULTED I N ADDITION IN QUESTION OF ` 25.50 LAKHS AS UNEXPLAINED CASH DEPOSITS. 4. THE CIT(APPEALS) HAS ADOPTED PEAK CREDIT FORMULA TO RESTRICT THIS ADDITION TO THE TUNE OF ` 6 LAKHS AS UNDER:- - - I.T.A. NO. 2113/MDS/2014 4 7. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO THE ORDER OF THE ASSESSING OFFIC ER. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS STATE D THAT AFTER EXAMINING THE REPLY OF THE ASSESSEE, THE ASSE SSING OFFICER CONCLUDED THAT THE ASSESSEE HAS JUST NARRAT ED A SUITABLE FIGURE JUST TO FIT-IN IN ORDER TO EXPLAIN THE SOURCE OF CASH DEPOSITS. THE ASSESSING OFFICER TREATED THE EXPLANATION TENDERED BY THE ASSESSEE AS NOT GENUINE , TRUE AND REASONABLE. REGARDING THE 1 ST CASH DEPOSIT IN THE ABOVE S.B. ACCOUNT AMOUNTING TO ` 4 LAKHS, THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT AN AMOUNT OF ` 3,90,000/- WAS RETURNED BY HER HUSBAND SHRI M.P. NAGARAJAN AND THE RE WAS AN INCOME OF ` 20,000/- PER MONTH FROM APRIL 2009 TO AUGUST 2009 AMOUNTING TO ` 1 LAKH. FROM THE AVAILABLE SOURCE OF ` 4,90,000/- THE ASSESSEE HAD DEPOSITED ` 4 LAKHS. THE ASSESSING OFFICER VERIFIED THE DETAILS AND STATED T HAT AN AMOUNT OF ` 3,90,000/- WAS THE BALANCE OUTSTANDING MONEY ADVANCED BY THE APPELLANT TOWARDS HER HUSBAND AS ON 31.03.2009 AND A SUM OF ` 2,30,000/- IS STILL SHOWN AS OUTSTANDING AS ON 31.03.2010. THE ASSESSING OFFICE R HAS NOT BROUGHT-IN ANY EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT DOES NOT EARN THE AMOUNT OF ` 20,000/- PER MONTH FROM MILK BOOTH. THE AUTHORIZED REPRESENTATIVE WHI LE EXPLAINING THE SOURCE OF CASH DEPOSIT OF ` 4,00,000/- MADE ON 18.09.2009 REFERRED TO THE RECEIPT OF MONEY RETU RNED FROM HER HUSBAND AMOUNTING TO ` 3,90,000/-. REGARDING THE OTHER DEPOSITS, THE ASSESSEE EXPLAINED THAT THEY WERE MAD E OUT OF WITHDRAWALS MADE EARLIER FROM THE SAID BANK ACCOUNT . AN EXAMINATION OF THE BANK ACCOUNT WOULD CLEARLY SHOW THAT ON 24.09.2009, THE APPELLANT WITHDREW AN AMOUNT OF ` 3,97,500/- AND DEPOSITED ` 1 LAKH ON 26.09.2009 AND ` 3 LAKHS ON 29.09.2009. SIMILARLY AN AMOUNT OF ` 4 LAKHS WAS WITHDRAWN ON 01.10.2009 AND DEPOSITED BACK ON 20.10 .2009. THE ASSESSEE ALSO EXPLAINED THE SOURCE FOR CASHDEPO SIT MADE ON 24.10.2009. THE SOURCE WAS FROM THE MILK B OOTH INCOME FOR THE MONTHS OF SEPTEMBER AND OCTOBER AND CASH AVAILABLE I.E. OUT OF ` 4,90,000/- ONLY ` 4 LAKHS WAS DEPOSITED ON 18.09.2009. HOWEVER, AFTER CONSIDERING ALL THE CASH WITHDRAWALS AND ALSO CASH DEPOSITS, I FIND THAT THE PEAK CASH DEPOSIT OF ` 6 LAKHS IS TO BE TREATED AS UNEXPLAINED INCOME U/S 68 OF THE INCOME-TAX ACT, 1961. THIS GROUND OF APPEAL IS PARTLY ALLOWED. - - I.T.A. NO. 2113/MDS/2014 5 5. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE RE LEVANT FINDINGS. THE ASSESSEE PRODUCES HER BANK ACCOUNT S TATEMENT FROM 18.09.2009 TO 31.03.2010. SHE ARGUES THAT THE CIT(APPEALS) HAS WRONGLY TREATED A PEAK CREDIT OF ` 6 LAKHS INSTEAD OF ` 2 LAKHS. IT IS EVIDENT THAT PEAK CREDIT IN HER AC COUNT STATEMENT IS ` 6,27,500/- AS ON 08.02.2010 INSTEAD OF ` 6 LAKHS. THE ASSESSEE HAD DEPOSITED ` 4 LAKHS ON 18.09.2009. A SUM OF ` 3,90,000/- IS STATED TO HAVE BEEN RETURNED BY HER H USBAND. THE CIT(APPEALS) DOES NOT REJECT VERACITY OF THIS PLEA. IT IS FURTHER SEEN THAT THE ASSESSEE HAD DEPOSITS A SUM OF ` 2 LAKHS AS ON 20.10.2009 OVER AND ABOVE THE AFORESAID SUM OF ` 4 LAKHS. REMAINING AMOUNTS ARE CORRESPONDING DEPOSITS AND WI THDRAWALS INSTANCES. THE ASSESSEE CLAIMS TO BE EARNING A MON THLY MILK BOOK INCOME OF ` 20,000/-. SHE FAILED TO SUBSTANTIATE IT IN THE COURSE OF ASSESSMENT. THE ASSESSING OFFICER DOES N OT REJECT THIS PLEA ALTOGETHER. BUT ONLY CITES LACK OF SUFFI CIENT MATERIAL. IT IS ALSO AN UNDISPUTED FACT THAT THE CIT(APPEALS)S FINDINGS DO NOT SPECIFICALLY DEAL WITH THAT OF ASSESSING OFFICERS CONCLUSION. IN THESE CIRCUMSTANCES, WE FEEL THAT INTEREST OF JUSTI CE WOULD BE MET IN CASE THIS PEAK CREDIT OF ` 6 LAKHS IS FURTHER MODIFIED TO ` 3 LAKHS - - I.T.A. NO. 2113/MDS/2014 6 ONLY. MORE SO, WHEN THE LOWER APPELLATE ORDER ACCE PTS GENUINENESS OF ` 4 LAKHS DEPOSITED ON 18.09.2009 LEAVING BEHIND A SUM OF ` 2 LAKHS ONLY. WE REITERATE THAT PEAK CREDIT IN THI S CASE IS ` 6,27,500/-. THESE PECULIAR CIRCUMSTANCE RESULT IN MODIFICATION OF THIS ADDITION TO ` 3 LAKHS ONLY. THE ASSESSEES GROUND PARTLY SUCCEEDS. 6. NOW WE COME TO THE ASSESSEES SECOND SUBSTANTIVE GROUND REGARDING UNEXPLAINED FIXED DEPOSIT OF ` 3 LAKHS MADE IN TAMILNAD MERCANTILE BANK MADE IN CASH. THE ASSESSI NG OFFICER OBSERVES THAT THE ASSESSEES BALANCE SHEET OR STATE MENT OF INCOME DOES NOT REFLECT THE SAID INCOME. THE ASSES SEE PLEADS THAT HER MATERNAL GRAND FATHER SHRI S.P. MUTHUSAMY GOUNDER HAD DEPOSITED THIS SUM IN HER NAME. HE WAS STATED NOT TO BE HAVING ANY BANK ACCOUNT. THIS REPLY COULD NOT IMPR ESS UPON THE ASSESSING AUTHORITY. IT REJECTED THE DONORS AFFID AVIT FILED WITHOUT ANY ATTESTATION OR CERTIFICATION BY A NOTARY. THE ASSESSING OFFICER FURTHER REFERRED TO THE ASSESSEES ACCOUNTS NOT DECLARING THE AFORESAID SUM AS GIFT. HE ALSO RETURNED A FIND ING THAT IT WAS THE ASSESSEE HERSELF INSTEAD OF HER MATERNAL GRAND FATHER, WHO HAD DEPOSITED THIS AMOUNT INTO BANK. ALL THESE MAT ERIALS MADE - - I.T.A. NO. 2113/MDS/2014 7 HIM TO OBSERVE THAT THE ASSESSEES GIFT CLAIM WAS N OT A GENUINE AND BONAFIDE ONE. THE ASSESSING OFFICER QUOTED THE ASSESSEES FAILURE TO DISCHARGE ONUS OF PROVING SOURCE OF THE IMPUGNED FIXED DEPOSIT AND MADE CONSEQUENTIAL ADDITION OF ` 3 LAKHS U/S 69 OF THE ACT. 7. THE CIT(APPEALS) HAS SUSTAINED THE ASSESSING OFF ICERS FINDINGS. 8. WE HAVE HEARD BOTH SIDES AND PERUSED THE CASE FI LE. THE ASSESSEE SUBMITS THAT NEITHER OF THE AUTHORITY BELO W HAS SUMMONED HER MATERNAL GRAND FATHER. THIS PROCEDURA L PLEA IS NOT SUPPORTED BY ANY MATERIAL. ONCE THE ASSESSING OFFICER HAD EXAMINED ALL OF HER PLEAS AT LENGTH IN ASSESSMENT O RDER, IT WAS INCUMBENT ON THE ASSESSEE TO HAVE PRAYED FOR NECESS ARY REMAND REPORT IN THE LOWER APPELLATE PROCEEDINGS OR TO TAKE SUFFICIENT MEASURES FOR PROVING AUTHENTICITY OF HER CLAIM. THIS WAS NEVER DONE. IN THESE CIRCUMSTANCES, WE OBSERVE THAT THIS PROCEDURAL PLEA DESERVES TO BE REJECTED IN THE ABSE NCE OF SUFFICIENT MATERIAL ON RECORD. IT IS ALSO NOT HER CASE THAT OF THE LOWER AUTHORITY HAS NOT COMPLIED WITH PRINCIPLES OF NATURAL JUSTICE - - I.T.A. NO. 2113/MDS/2014 8 AND DENIED SUFFICIENT OPPORTUNITY OF HEARING. THER EFORE, THE ASSESSEES CORRESPONDING GROUND FAILS. THIRD ADDIT ION OF INTEREST INCOME OF ` 4,052/- ON SAID FIXED DEPOSITS IS ALSO DECIDED AGAI NST HER. 9. THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 11 TH OF MARCH, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (S.S. GODARA) ( . ) ( . . # ) !/ ACCOUNTANT MEMBER $ ! /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 11 TH MARCH, 2015. KRI. 5 . ,$167 87'1 /COPY TO: 1. )* /APPELLANT 2. ,-)* /RESPONDENT 3. 0 91 () /CIT(A)-I, COIMBATORE 4. 0 91 /CIT-II, COIMBATORE 5. 7':# ,$1$ /DR 6. #;& < /GF.