Kamalakannan.P, CHENNAI V. ITO, CHENNAI

ITA 2127/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9111 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: B SURESH
• Keywords: Unexplained cash credit; Unexplained investment; Peak credit
• Section: 143(3); 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . , $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2127/MDS/2015 & & / ASSESSMENT YEAR : 2011-12 SHRI KAMALAKANNAN.P DOOR NO.36, VAIGUNDAPURAM NUNGAMBAKKAM CHENNAI 600 434 VS. THE INCOME TAX OFFICER BUSINESS WARD XV(4)/NCW 3(4) CHENNAI [PAN AFWPK 4207 L] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : SHRI B. SURESH, CA *+) , /RESPONDENT BY : SHRI A.B. KOLI, JCIT , / DATE OF HEARING : 24 - 03 - 2016 , / DATE OF PRONOUNCEMENT : 01 - 0 6 - 2016 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, CHENNA I, DATED 14.10.2015 IN I.T.A.NO.35/2014-15/2011-12/CIT(A)-4 FOR ASSESSMENT YEAR 2011-12 PASSED U/S. 143(3) R.W.S 250(6) OF TH E ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPE AL, HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS: ITA NO. 2127/15 :- 2 -: (I) THE LD. CIT HAS ERRED IN CONFIRMING THE ADDITI ON OF ` 33,25,000/- MADE BY THE LD. ASSESSING OFFICER INVOK ING THE PROVISIONS OF SECTION 68 WITH RESPECT TO CASH DEPOS ITED IN HIS SAVINGS BANK. (II) THE LD. CIT HAS ERRED IN SUSTAINING THE ADDIT ION OF ` 5,00,000/- AGAINST THE ADDITION MADE BY THE LD. ASS ESSING OFFICER FOR ` 10,98,274/- INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT WITH RESPECT TO UNEXPLAINED INVESTMENTS IN PURCHASE OF IMMOVABLE PROPERTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF REAL ESTATE B ROKING, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 20. 5.2011 ADMITTING INCOME OF ` 4,02,630/-. SUBSEQUENTLY, THE CASE WAS SELECTED F OR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S. 143(3) O F THE ACT ON 27.3.2014 WHEREIN THE LD. ASSESSING OFFICER MADE AD DITION OF ` 33,25,000/- U/S. 68 AS UNEXPLAINED CASH CREDIT AND ` 10,98,274/- U/S. 69B(SIC) 69 TOWARDS UNEXPLAINED SOURCE FOR PURCHASE OF IMMOVABLE PROPERTY. 4. GROUND NO.1. ADDITION OF ` 33,25,000/- CASH CREDIT U/S. 68 OF THE ACT:- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD DEPO SITED CASH IN HIS SAVINGS BANK ACCOUNT NO.43087467 ON VARIOUS DATES A GGREGATING TO ` ITA NO. 2127/15 :- 3 -: 33,25,000/- DURING THE RELEVANT PREVIOUS YEAR. SIN CE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THE CASH CREDIT, HE MADE ADDITION OF THE ENTIRE AMOUNT OF ` 33,25,000/- INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT BY RELYING ON VARIOUS DECISIONS CITED IN HIS ORDER. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE L D. ASSESSING OFFICER BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE ENTIRE FACTS OF THE CASE AN D ALSO THE SUBMISSIONS MADE BY THE APPELLANT . FIRSTLY, I T IS AN ADM I TTED FACT THA T THE APPELLANT OUGHT TO HAVE MAINTAINED THE BOOKS OF ACCOUNTS OF THE BUSINESS WHICH HE WAS CARRYING OUT . AND THE SAID BOOKS OF ACCOUNTS SHOULD HAVE BEEN DULY SUPPORTED BY THE REL EVANT BILLS AND VOUCHERS. THE BOOKS OF ACCOUNTS ARE THE R ECORDS OF BUSINESS TRANSACTIONS OF ANY ASSESSEE BASED ON WHIC H THE . RETURN OF INCOME IS FURNISHED. IN THE INSTANT CASE , BY NOT MAINTAINING THE BOOKS OF ACCOUNTS, THE APPELLANT HAS FAILED TO DISC HARGE THE VERY BASIC AND INITIAL ONUS CAST UPON HIM . THE EXPLANATIONS RENDERED AT A LATER STAGE DURING THE COURSE OF THE ASSESSMENT P ROCEEDINGS , AS RE-PRODUCED ABOVE, HAVE NO LOCUS STANDI IN THE ABSE NCE OF THE BOOKS OF ACCOUNTS. MOREOVER, THE APPELLANT HAS ALSO NOT DISCHARGED THE SUBSEQUENT ONUS CAST UPON HIM DURING THE COURSE OF THE PROCEEDINGS BEFORE THE A.O. THE CONTENTION OF THE APPELLANT THAT THE ENTIRE CAS H DEPOSITED IN THE BANK ACCOUNT CANNOT BE TREATED AS UNEXPLAINED C ASH CREDIT SEEMS BONAFIDE. IT IS ALSO TRUE THAT A PEAK OF SUCH DEPOSITS NEEDS TO BE A RRI VED AT FOR MAKING ADDITIONS U NDER SUCH S I TUATIONS. BUT ALL THESE CONCL U SIONS OP E RATE IN A CONDITION WHERE TH E APPELLANT P R OVIDES THE RELEVANT BILLS AND VOUCHERS/ DOCUMENTS E TC . TO SUBSTANTIATE THE CONCLUSION. HOWEVER. V IN THE I NSTANT C A SE THE APPELLANT NOWHERE A TTEMPTS TO PRODUCE THE BOOKS OF A CCOUNTS O R THE RELEVANT BILLS/ VOUCHERS OR THE OTHER DOCUMENTS / PAPERS FOR EXAM I NATION B EF ORE THE AO . THE APPELLANT FAILS IN ALL RESPECTS. THEREFORE , THE CONCLUSION DRAWN BY THE AO, IN SUCH A SITU A TION, IS THE MOST BONAFIDE AND PRUDENT ONE WHEN H E GOES FOR ADDING THE ENTIRE CASH CRED I TS AS UNEXPLAINED CASH CREDITS . T H EREFORE , WI THOUT ASCERTAIN THE SOURCES OF THE CASH CREDITS AND THE U TILISATION OF THE WITHDRA W ALS FROM THE BANK ACCOUNT , THE PEAK OF THE CASH CREDITS, AS INTENDED BY THE APP E LLANT , COULD NEVER BE A FAIR A N D ACCURATE ITA NO. 2127/15 :- 4 -: CALCULATION. THE FAILURE ON THE PART OF TH E APPELLANT TO SUBSTANTIATE THE ENTRIES OF THE BANK ACCOUNT CANNOT BIND THE A O . FROM TAKING THE MOST REASONABLE AND POSSIBLE CONC L USION IN THE INTEREST OF T HE JUSTICE , THE FINDINGS OF T H E AO ARE FURTHER STRENGTHENED BY THE FO L LOWING JU D GEMENTS OF THE HON'BLE COU R TS : -THE RATIO OF THE JUDGEMENT OF THE HON ' BLE MADRAS HIGH COURT , REN D ERED IN THE CASE OF MUTHUKUAMR VS ITO , AS REFERRE D TO BY THE AO , IS SQUARELY A P PLICABLE TO THE CASE OF THE APPELLANT IN THAT CASE TH E HON'BLE COURT HELD THAT WHETHER , WHERE U NEXPLAINED DEPOSITS IN SAVI N GS BAN K A CCOUNT WERE ADDED AS CASH CREDITS , AS ASSESSEE COULD NOT SUBSTA N TIATE I T S CL AIMS THAT MONEY WAS RE C EIVED FROM NEIGHBOURS FO R MAKING PAYMENTS TO VA R IOUS PERSONS. IN THAT CASE T H E APPELLANT RAISED THE QUESTION THAT WHE N THE UNE X PLAINED CASH CREDITS HAD BEEN ADDED TO THE INCOME , THE TRIBUNAL SHOULD H AVE CONSIDERED DEDUCTING NECESSARY EXPENDITURE AND THE PROFIT ALO N E COULD B E TAKEN AS INCOME . THE HON'BLE COURT FURTHER HELD THAT ESPECIALLY WHEN NO EVIDENCE WAS PRODUCED BY THE ASSESSE TO SUBSTANTIATE THAT TH E SAID SUMS WERE PAID TO T HEM BY THE NEIGHBOURHOOD PEOPLE FOR CARRYING O U T CERTAIN CONSTRUCTION ACTIV I TY LIKE FLOOR LAYING, CARPENTRY, INTERIOR DECORATION E TC ., THERE WAS NO QUESTION OF GIVING ANY BENEFIT OF THE SAME TO THE ASSESSE . LN THE INSTANT CASE ALSO THE APPELLANT HAS FAILED TO PROVE THAT THE WITHDRAWALS FROM THE SAID BANK ACCOU N T WERE RE-DEPOSITED . IN VIEW OF THE ABOVE FINDINGS, THE AO WAS RIGHT IN INVOKING THE P ROVISIONS OF SECTION 69 IN THE CASE. RELIANCE IS AL SO PLACED ON THE FOLLOWING CASE LAWS WHEREIN THE CASH CREDITS UNDER SUCH CIRCUMSTANCES HAVE BEEN HELD TO BE A TTRACTING THE PROVISIONS OF SECTION 69 OF THE ACT : SUSHIL MODI V . COMMISSIONER OF I NCOME-TAX, (2015) 59 TAXMAN N . COM 63 (CALCUTTA) . BHAGWANDAS D . VACHHANI V. ACIT [2015] 56 TAXMANN . COM 284 (GUJ) . IN THE CASE OF SMT . RENU AGRAWAL VS . INCOME-TAX OFFICER*[2012] 2 TAXMANN.COM 94 (LTAT AGRA , THE ASSESSEE HAD FAILED TO PROVE THE SOURCE OF AMOUNT CREDITED IN HER BANK ACCOUNT MOREOVER , AFTER RECEIVING AMOUNT IN HER INDIVIDUAL CAPACITY IN WHICH CAPACITY SHE D I D NOT MAINTAIN ANY BOOKS OF ACCOUN T S , ASSESSEE IMMEDIATELY WITH DREW SAID AMOUNT FROM BANK ACCOUNT AND T R ANSFERRED IT TO HER PROPRIETORSHIP BUSINESS WHERE REGULA R BOOKS OF ACCOUNTS WERE MA I NTAINED . THE HON'BLE ITAT HELD THAT THE ADDITION MADE B Y THE ASSESSING OFFICER WAS JUSTIFIED. DURING THE COURSE OF HEARING BEFORE THE UNDERSIGNED , THE LD. AR ITA NO. 2127/15 :- 5 -: RELIED UPON THE RATIO OF THE JUDGEMENT OF THE HON'B LE ITAT BENCH - B . CHENNAI , IN THE CASE OF DCIT VS. MARIS ENTERPRISES AND THE BHAIYALAL SHYAM BEHARI V CIT , ITR 276 38(AII) WHERE THE PEAK OF THE CASH CREDITS WERE CONSIDERED FOR ADDIT I ON AND NOT THE ENTIRE DEPOSITS. THE FACTS OF THE PRESENT CASE OF THE APPE LLANT ARE DIFFERENT FROM THE ONE REFERRED TO ABOVE BY THE APPELLANT . IN THE CASE OF THE APPELLANT , THERE ARE NO BOOKS OF ACCOUNTS AVAILABLE FOR VER I FICATION NEITHER THE BILLS/ VOUCHERS OR ANY OTHER RELEVANT P APERS/ DOCUMENTS WERE PRODUCED FOR EXAMINATION . ON THE CONTRARY , T HE RATIO OF THE JUDGEMENT OF THE HON ' BLE MADRAS HIGH COURT, RENDERED IN THE CASE OF MUTHUKUAMR VS ITO , AS MENTIONED SUPR A , DIRECTLY APPLIES TO THE CASE OF THE APPELLANT . THEREFORE, IN THE LIGHT OF THE FAC T S AND CIRCUMST A NCES OF THE INSTANT CASE AND ALSO IN VIEW OF THE SUBMISSIONS OF THE APP ELLANT AND FINALLY FOLLOWING T HE RATIO OF JUDGEMENTS OF THE DIFFERENT HON'BLE COURTS AND ITAT , I AM OF THE CONSIDERED VIEW THAT THE ENTIRE AMOUNT OF CASH CREDITS IN THE SAID BANK ACCOUNT OF THE APPELLANT WARRANTED TO BE ADDED BACK AS UEXPLAINED CASH CREDI T . HENCE , THE ADDITION OF RS.33 , 25 , 000/- MADE BY THE A . O IS CONFIRMED . 4.1 BEFORE US, THE LD. AR ARGUED BY STATING T HAT THE ASSESSEE HAD PRODUCED CASH FLOW STATEMENT BEFORE THE LD. ASSESSI NG OFFICER WHICH EXPLAINED THE NATURE OF TRANSACTIONS AND WITHOUT GO ING INTO THE MERIT OF THE SAME, THE LD. ASSESSING OFFICER HAS SIMPLY M ADE THE ADDITION WHICH WAS FURTHER CONFIRMED BY THE LD. CIT(A). HE F URTHER SUBMITTED THAT EVEN IF IT IS ASSUMED THAT THE ENTIRE INCOME I S EARNED BY THE ASSESSEE FROM HIS REAL ESTATE BROKING BUSINESS, SUF FICIENT ALLOWANCE HAS TO BE GIVEN FOR THE CONNECTED EXPENDITURES INCU RRED IN THE BUSINESS. HE FURTHER ARGUED BY STATING THAT THE CAS H FLOW STATEMENT ALSO SHOWS THE WITHDRAWALS MADE BY THE ASSESSEE DUR ING THE RELEVANT PREVIOUS YEAR TO SUPPORT HIS CLAIM OF RELEVANT EXPE NDITURES. ITA NO. 2127/15 :- 6 -: 4.2 THE LD. DR VEHEMENTLY OPPOSED TO THE SUBMISSIO NS OF THE LD. AR AND ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE PLEADING FOR SUSTAINING THE ADDITION MADE. 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE MATERIALS ON RECORD. WE FIND MERIT IN THE SUBMISSI ONS OF THE LD. AR. FROM THE CASH FLOW STATEMENT SUBMITTED BY THE ASSES SEE BEFORE THE LD. ASSESSING OFFICER WHICH IS EXTRACTED IN HIS ORDER A T PAGE NOS. 6 & 7, IT IS EVIDENT THAT THE PEAK CREDIT AND THE CLOSING BAL ANCE OF THE ASSESSEE AS ON 3.12.2011 IS ` 15,05,892/- AGAINST WHICH THERE IS AN OPENING BALANCE AS ON 30.4.2010 OF ` 50,000/-. THIS SHOWS THAT THE MAXIMUM UNDISCLOSED INCOME EARNED BY THE ASSESSEE FROM HIS REAL ESTATE BROKING BUSINESS WOULD BE ` 10,53,262/-[ ` 15,05,892/- (CLOSING BALANCE) - ` 50,000/- (OPENING BALANCE) - ` 4,02,630/- (INCOME ALREADY DISCLOSED IN THE RETURN OF INCOME)]. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION ON ACCOUNT OF CAS H DEPOSITS IN THE ASSESSEES BANK ACCOUNT CAN BE SUSTAINED ONLY TO TH E EXTENT OF ` 10,50,000/- AS AGAINST THE ADDITION OF ` 33,25,000/- MADE BY THE LD. ASSESSING OFFICER WHICH IS FURTHER SUSTAINED BY THE LD. CIT(A). THEREFORE, WE HEREBY CONFIRM THE ADDITION OF ` 10,50,000/- ON ACCOUNT OF ADDITION MADE U/S. 68 OF THE ACT AND DIRECT THE LD. ASSESSING OFFICER TO DELETE THE BALANCE AMOUNT. ITA NO. 2127/15 :- 7 -: GROUND NO.2 SUSTAINING ` 5,00,000/- ADDITION AGAINST THE ADDITION OF ` 10,98,274/- MADE BY THE LD. ASSESSING OFFICER ON A CCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 6. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E LD. ASSESSING OFFICER ON EXAMINATION OF THE DETAILS OF THE IMMOVABLE PROPERTIES PURCHASED BY THE ASSESSEE MADE AN ADDITI ON OF ` 10,98,274/- INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT AS UNEXPLAINED INVESTMENT. ON APPEAL, THE LD. CIT(A) EXAMINED THE ISSUE AND ARRIVED AT A CONCLUSION THAT THE ASSESSEE HAD G ENUINE SOURCE FOR ANOTHER ` 5,00,000/- WHICH WAS PAID BY WAY OF DEMAND DRAFT D ATED 16.12.2010 DRAWN ON INDIAN BANK AND THEREBY SUSTAIN ED THE ADDITION FOR ONLY ` 5,00,000/-. SINCE THE ASSESSEE HAS NOT BROUGHT OUT ANY FURTHER MATERIALS TO SHOW THAT THE ADDITION OF RS.5 ,00,000/- IS NOT WARRANTED WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LD.CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE, 2016, AT CHENNAI. SD/ - SD/ - ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER / CHENNAI ITA NO. 2127/15 :- 8 -: 3 / DATED: 1 ST JUNE, 2016 RD , *45 65 / COPY TO: 1 . ) / APPELLANT 4. 7 / CIT 2. *+) / RESPONDENT 5. 5 * / DR 3. 7 () / CIT(A) 6. & / GF