ACIT, CHENNAI V. M/s. Thakurdas Choithram Private Ltd., CHENNAI

ITA 2193/CHNY/2012

• Counselvise Citation: 219321714 RSA 2012
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.2193/MDS/2012 ASST. YEAR : 2009-10 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(2), CHENNAI. (APPELLANT ) V. M/S. THAKURDAS CHOITHRAM PRIVATE LTD, 173, HEBEL CENTRE, ANNA SALAI, CHENNAI-600 002. PAN : AABCT8699J. (RESPONDENT) DEPARTMENT BY : SHRI P.B. SEKARAN, CIT ASSESSEE BY : SHRI V.S. JAYAKUMAR, ADVOCATE DATE OF HEARING : 28 AUG 2013 DATE OF PRONOUNCEMENT : 28 AUG 2013 O R D E R PER S.S. GODARA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE FOR ASSESSMENT Y EAR 2009-10, IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME TAX (APPEALS)-III, CHENNAI DATED 31.8.2012, PASSED IN ITA 2193/MDS/2012 2 APPEAL NOS.569/2011-12/A.III, IN PROCEEDINGS UNDER SEC.143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THE COURSE OF HEARING, THE REVENUE VEHEMEN TLY ARGUES THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) HAS WRONGLY DELETED THE IMPUGNED ADDITION OF ` .15,95,61,667/- UNDER SEC.68 OF THE ACT, MADE BY THE ASSESSING OFFI CER IN THE NATURE OF UNEXPLAINED CASH CREDITS. IT ALSO ARGUES THAT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ) ON EXIGIBILITY OF THE PROVISION HOLDING THAT THE SAME WOULD BE INVOKED ONLY WHEN ANY SUM IS FOUND TO HAVE BEEN CRE DITED IN THE ASSESSEES BOOKS OF ACCOUNT ARE NOT BASED ON CORREC T APPRECIATION OF THE LAW. ACCORDINGLY, ON FACTS AS WELL AS LAW, IT PRAYS FOR ACCEPTANCE OF THE APPEAL. 3. IN REPLY, THE ASSESSEES SUBMISSION IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DE LETED THE ADDITION IN QUESTION MADE BY THE ASSESSING OFFICER ON MERITS OF THE CASE. ON THE LEGALITY ASPECT, IT CONCEDES THE ISSUE IN FAVOUR OF THE REVENUE QUA APPLICABILITY OF SEC.68. ITA 2193/MDS/2012 3 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY. ON 30.3.2011 IT HAD FILED ITS RETURN DISC LOSING INCOME OF ` .16,94,72,168/- ALONGWITH AGRICULTURAL INCOME OF ` .15,95,91,667/-. ON BEING SOUGHT DETAILS ABOUT THE AGRICULTURAL INCOME IN THE COURSE OF SCRUTINY, THE ASSESSEE WO ULD PLEAD THAT THE SAME REPRESENTED THE DIFFERENTIAL AMOUNT BETWEE N INCOME AND EXPENDITURE IN ITS PROFIT AND LOSS ACCOUNT. IT WOULD ALSO EXPLAIN THAT SINCE THE INCOME IN QUESTION HAD ALREA DY BEEN DECLARED IN THE SHAPE OF LONG TERM CAPITAL GAINS, T HEREFORE, THE DISCLOSURE OF AGRICULTURAL INCOME WAS ONLY AN ERRO R. 5. WE NOTICE FROM THE ASSESSMENT ORDER DATED 30.12.2011 THAT THE ASSESSING OFFICER DID NOT AGREE TO THE ASSESSEES AFORESAID EXPLANATION. HE EXAMINED ASSE SSEES STATEMENT OF BANK ACCOUNTS FROM 01.4.2007 TO 31.3.2 010 AND CONCLUDED THAT IN ITS BALANCE SHEET IT DID NOT PROV E ANY INVESTMENTS IN EARNING THE AGRICULTURAL INCOME. TH EREFORE, THE AFORESAID SUM OF ` .15,95,91,667/- STOOD ADDED IN ASSESSEES INCOME AS UNEXPLAINED CASH CREDITS UNDER SEC.68 O F THE ACT. ITA 2193/MDS/2012 4 6. IN ASSESSEES APPEAL BEFORE COMMISSIONER OF INC OME TAX (APPEALS), WE FIND THAT THE LOWER APPELLATE AUT HORITY HAS FIRST OF ALL TAKEN INTO CONSIDERATION THE FACTS THAT IN T HE RELEVANT ACCOUNTING PERIOD, THE ASSESSEE HAD SOLD ITS AGRICU LTURAL LANDS MEASURING 25.69 ACRES SITUATED AT KOKILAMEDU NEAR K ALPAKKAM, (PURCHASED IN THE YEAR 1989 FOR ` .8,98,426/-). AS PER COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAINS OF A SUM OF ` .16,94,72,168/- DERIVED FROM THE AFORESAID LAND. IT IS THE CATEGOR IC FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSES SEE HAD NOT CARRIED ANY BUSINESS SINCE THE ASSESSMENT YEAR 1990-91. THEREAFTER, HE TAKES INTO CONSIDERATION THE ASSESSE ES PROFIT AND LOSS ACCOUNT, BALANCE SHEET, LEDGER ACCOUNTS AND BA NK STATEMENTS. OBSERVES THAT THE ASSESSEE HAD NOT CAR RIED ANY AGRICULTURAL ACTIVITY AND ALSO THAT IT HAD CATEGORI ZED THE AMOUNT IN QUESTION AS DIFFERENCE BETWEEN INCOME AND EXPEND ITURE IN THE PROFIT AND LOSS ACCOUNTS DESPITE THE FACT THAT THE INCOME AMOUNT ITSELF HAD BEEN DECLARED AS LONG TERM CAPITAL GAINS . AS PER THE ITA 2193/MDS/2012 5 COMMISSIONER OF INCOME TAX (APPEALS), ONCE THE ASSE SSEE HAD DECLARED ITS INCOME IN THE NATURE OF LONG TERM CAPI TAL GAINS, THERE WAS HARDLY ANY JUSTIFICATION TO SUPPORT THE I MPUGNED ADDITION WHICH ONLY REPRESENTED THE DIFFERENCE BETW EEN INCOME IN THE NATURE OF CAPITAL GAINS AND EXPENDITURE AMOU NT. QUA FINDINGS OF THE ASSESSING OFFICER BASED ON THE ASSE SSEES BANK STATEMENTS, THE COMMISSIONER OF INCOME TAX (APPEALS ) IS OF THE OPINION THAT MOST OF THE SAME PERTAINED TO SUBSEQUE NT ASSESSMENT YEARS. IN THIS MANNER, THE IMPUGNED ADD ITION STANDS DELETED ON MERITS. 7. COMING TO LEGALITY OF EXIGIBILITY OF THE PROVI SION, THE COMMISSIONER OF INCOME TAX (APPEALS) HOLDS THAT SEC .68 OF THE ACT CAN BE INVOKED ONLY IN CASE WHEN BOOKS OF ACCOU NT ARE MAINTAINED BY THE ASSESSEE AND ANY SUM IS FOUND TO HAVE BEEN CREDITED WITHOUT ANY JUSTIFIABLE EXPLANATION TENDER ED BY THE ASSESSEE. ITA 2193/MDS/2012 6 IT IS IN VIEW OF THESE FINDINGS OF COMMISSIONER O F INCOME TAX (APPEALS) DELETING THE ADDITION ON MERIT S AS WELL AS LAW THAT THE REVENUE HAS FILED THE INSTANT APPEAL. 8. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CASE FILE. ADMITTEDLY, THE REVENUE HAS NOT FILED A NY DOCUMENTARY EVIDENCE IN THE SHAPE OF ANY PAPER BOOK TO CONTROVERT THE FINDINGS OF THE COMMISSIONER OF INCO ME TAX (APPEALS) BASED ON A PERUSAL OF ASSESSEES BALANCE SHEET, PROFIT AND LOSS ACCOUNT, LEDGER ACCOUNT AND BANK STATEMENT . WE ALSO FIND THAT THE ASSESSEES INCOME ALREADY STANDS DECL ARED AS LONG TERM CAPITAL GAINS OF ` .16,94,72,168/-. THE DISPUTE BETWEEN THE PARTIES IS ONLY QUA REST OF THE AMOUNT OF ` .15,95,91,667/-. IN THIS REGARD, WE NOTICE THAT THE ASSESSEE HAD SOLD I TS LAND FOR A TOTAL CONSIDERATION OF ` .19,26,75,061/- AS PER REGISTERED SALE DEED IE. THE PRICE STATED TO BE MUCH MORE THAN THE GUIDELINE VALUE AS STATED IN THE COMMISSIONER OF INCOME TAX ( APPEALS)S ORDER. THEREAFTER, IT CHOSE TO DECLARE CAPITAL GAI NS AND ALSO DISCLOSED AGRICULTURAL INCOME QUA THE DIFFERENCE AM OUNT VIS--VIS ITA 2193/MDS/2012 7 EXPENSES. IN OUR OPINION, ONCE THE INCOME ITSELF S TANDS DISCLOSED AS LONG TERM CAPITAL GAINS, IN THE ABSEN CE OF ANY EVIDENCE TO THE CONTRARY, THE DIFFERENCE BETWEEN IN COME AND EXPENDITURE CANNOT BE ADDED IN ASSESSEES TOTAL INC OME. THERE IS NO MATERIAL TO COME TO THE CONCLUSION THAT THE A SSESSEE HAD EITHER EARNED AGRICULTURAL INCOME OR ANY UNEXPLAINE D CASH CREDITS HAD ARISEN. IN THESE CIRCUMSTANCES, IT EMANATES TH AT THE ASSESSEE HAD WRONGLY DECLARED THE AGRICULTURAL INCO ME WHICH IT HAS EXPLAINED BY LEADING COGENT MATERIAL IN SUPPORT . THEREFORE, WE FIND NO MERIT IN THE CONTENTION OF THE REVENUE T HAT ON MERITS, THE ADDITION IN QUESTION IS LIABLE TO BE RESTORED. 9. COMING TO LEGAL ASPECT OF THE REVENUES ARGUMEN TS (SUPRA), AS RECORDED HEREINABOVE, EVEN THE ASSESSEE DOES NOT DISPUTE THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN REJECTING THE EXIGIBILITY OF SEC.68 OF THE ACT VIS--VIS FACTS OF THE CASE. HOWEVER, SINCE ON MERITS WE HAV E REJECTED REVENUES ARGUMENTS, THE DECISION OF THE LEGAL PLEA IN FAVOUR OF THE REVENUE IS MERELY OF ACADEMIC SIGNIFICANCE. ITA 2193/MDS/2012 8 10. CONSEQUENTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 28 TH DAY OF AUGUST 2013, AT CHENNAI. SD/- SD/- ( DR. O.K. NARAYANAN ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL ME MBER CHENNAI, DATED : 28 TH AUGUST 2013 JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT(A) CHENNAI (4) CIT, CHENNAI (5) D.R. (6) GUARD FILE.