K.Velavan, Erode V. ITO, Erode

ITA 2194/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90335 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 26-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Salary income; Principle of natural justice
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO. 2194/MDS/2014 ( / ASSESSMENT YEAR: 2010-11) MR. K.VELAVAN, 8 & 9, TMS NAGAR, KEEZH THINDAL, THINDAL POST, ERODE-638 012. VS INCOME TAX OFFICER, WARD-I(1), ERODE. PAN: ACNPV2715N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. N.MADHAVAN, JCIT /DATE OF HEARING : 26 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 20 TH MAY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE DATED 01.07.2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING ADDITION OF ` 8,95,000/- WHICH WAS BASED ON THE STATEMENT RECORDED FROM DR.R.A. ELANGO AND SMT. E.SHANTHI WI THOUT PROVIDING COPIES OF STATEMENTS. THIS ISSUE RELATES TO ON MONEY PAYMENTS MADE BY THE ASSESSEE TO DR.R.A.ELANG O AND HIS WIFE SMT. E.SHANTHI. 2 ITA NO.2194/MDS/2014 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2009-10 IN ITA NO.354/MDS/2014 DATE D 20.06.2014 AGAINST THE ASSESSEE. COPY OF THE ORDER IS PLACED ON RECORD. THE CO-ORDINATE BENCH OF THIS TRI BUNAL IN ASSESSEES OWN CASE IN ITA NO.354/MDS/2014 DATED 20.6.2014 UPHELD THE ADDITION REGARDING ON-MONEY O BSERVING AS UNDER:- 7. THE GROUNDS RAISED BY THE ASSESSEE IN THE PRES ENT APPEAL READ AS BELOW: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS AND BAD IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE GROUNDS OF APPEAL IN PROPER PERSPECTIVE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF ` 10,00,000/- WHICH WAS BASED ON THE STATEMENT RECORDED FROM DR.R.A.ELANGO AND SMT. E.SHANTHI WITHOUT PROVIDING COPIES OF THE STATEMENTS. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE PROFIT MARGIN @ 20% ON SALE OF MEDICINES, WHICH WAS WITHOUT ANY BASIS. 8. WE HEARD SHRI S.SRIDHAR, THE LEARNED ADVOCATE APPEARING FOR THE ASSESSEE AND SHRI GURU BASHYAM, T HE LEARNED JOINT COMMISSIONER OF INCOME TAX, APPEARING FOR THE REVENUE. 9. ON GOING THROUGH THE FACTGS OF THE CASE, WE ARE INCLINED TO AGREE WITH THE COMMISSIONER OF INCOME T AX 3 ITA NO.2194/MDS/2014 (APPEALS) THAT THE ADDITION OF ` 10 LAKHS WAS JUSTIFIED. THIS WAS PROVED BY THE DETAILS REFLECTED IN THE SEI ZED DIARY AND SUPPORTED BY THE STATEMENTS GIVEN BY DR.R.A.ELANGO AND SMT. E.SHANTHI. THE ARGUMENTS ADVANCED BY THE ASSESSEE LIKE LACK OF OPPORTUNITY, NATURAL JUSTICE ARE JUST FOR ARGUMENT SAKE. IT WAS ALSO PROVED THAT ASSESSEE HAS PAID AN AMOUNT OF ` 10 LAKHS OUTSIDE THE RECORD. TEHREFORE, THE SAID AMOUNT HAD RIGHTLY BEEN ADDED. 4. RESPECTFULLY FOLLOWING THE SAID ORDER OF THIS TR IBUNAL, WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE AND A FFIRMED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S). 5. THE NEXT ISSUE IN THE GROUNDS OF APPEAL OF THE ASSESSEE IS THAT COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN SUSTAINING THE PROFIT MARGIN @ 30% IN RES PECT OF SALE OF MEDICINES AS AGAINST 20% CONSIDERED FOR THE ASSESSMENT YEAR 2009-10. 6. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE HAS ALSO BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF TH IS TRIBUNAL CITED ABOVE AND AFFIRMED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONSIDERING THE RATE OF PROFIT AT 20% OF MEDICINES. THE CO-ORDINATE BENCH IN ITA NO. 353MDS/2014 DATED 20.6.2014 AFFIRMED THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONSIDE RING THE 4 ITA NO.2194/MDS/2014 RATE OF PROFIT @ 20% ON THE MEDICINES DISPENSED BY THE ASSESSEE AS JUSTIFIED. FOR THIS YEAR ALSO, WE RESTR ICT THE RATE OF PROFIT ON SALE OF MEDICINES @ 20% IN TUNE WITH THE ASSESSMENT YEAR 2009-10. THIS GROUND OF THE ASSESSE E IS PARTLY ALLOWED. 7. THE LAST ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT G IVING SET OFF OF PROFIT ON SALE OF MEDICINES ARRIVED AT I N THE ASSESSMENT YEAR 2009-10, AGAINST THE ADDITION OF ` 5,59,190/-. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT MADE ADDITION OF ` 5,59.190/- AS CASH CREDIT UNDER SECTION 68 OF THE ACT OBSERVING AS UNDER:- WHILE SCRUTINIZING THE DETAILS ON RECORD AND THE RETURN OF INCOME, IT IS NOTICED THAT PROPRIETORS CAPITAL FOR THE ASSESSMENT YEAR 2010-11 WAS ` 39,94,149/-. WHEN COMPARED TO PROPRIETORS CAPITAL ( ` 24,04,799/-) FOR THE PREVIOUS YEAR 2008-09 THERE WAS AN INCREASE OF ` 15,89,350/-. BUT DURING THE PREVIOUS YEAR 2009-10, BALANCE AMOUNT CARRIED TO THE BALANCE SHEET IN PROPRIETORS ACCOUNT IS ` 10,30,160/- ONLY. WHEN THE ASSESSEE WAS QUESTION ABOUT DIFFERENCE AMOUNT OF ` 5,59,190/-, HE WAS NOT IN A POSITION TO EXPLAIN THE SAME WITH RECORDS AFTER TAKING CONCRETE EFFORTS. HENCE T HIS DIFFERENCE AMOUNT OF ` 5,59,190/- IS TREATED AS CASH CREDIT U/S.68 OF THE ACT AND THE SAME IS ADDED TO T HE RETURNED INCOME AS INCOME FROM OTHER SOURCES. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) SUS TAINED THE ADDITION SUSTAINED THE ADDITION OBSERVING THAT ASSESSEE 5 ITA NO.2194/MDS/2014 SUBMITTED THAT THE SAID AMOUNT WAS GIVEN BY THE ASS ESSEES FATHER AND SPOUSE FROM THEIR PENSION INCOME AND SAL ARY INCOME RESPECTIVELY AS GIFTS TO THE ASSESSEE, BUT N O EVIDENCE REGARDING SOURCES OF THE FATHER AND SPOUSE WERE FUR NISHED. 8. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE INCOME I.E. PROFIT ON SALE OF MEDICINES ESTIMATED FOR THE ASSES SMENT YEAR 2009-10 SHOULD BE CONSIDERED AGAINST THE SET OFF FO R THIS ASSESSMENT YEAR ALSO. 9. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 10. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHO RITIES. ON READING OF THE ASSESSMENT ORDER AND THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS), WE DO NOT FIN D ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS) WHICH CONFIRMED THE ADDITION OBSERVIN G AS UNDER:- 11. GROUND NO.8. :THIS GROUND OF APPEAL IS REGARD ING THE ADDITION MADE ON ACCOUNT OF PROPRIETOR'S CAPITA L ACCOUNT. THE AUTHORIZED REPRESENTATIVE SUBMITTED TH AT THE SUBJECT SUM OF RS.5,59,190/- WAS GIVEN BY THE ASSESSEE'S FATHER AND SPOUSE FROM THEIR PENSION IN COME AND SALARY INCOME RESPECTIVELY AS GIFT TO THE ASSE SSEE. 6 ITA NO.2194/MDS/2014 HOWEVER, NO EVIDENCE REGARDING THE SOURCE OF THE FATHER OF THE ASSESSEE AND THE SPOUSE OF THE ASSESS EE WERE FURNISHED. THE AUTHORIZED REPRESENTATIVE WAS ASKED TO PRODUCE THE BANK ACCOUNT DETAILS AND THE SOURCE OF CASH FROM WHICH THE GIFTS WERE GIVEN TO THE APPELLANT. IN THE ABSENCE OF ANY INFORMATION / EVID ENCE FURNISHED FROM THE APPELLANT, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. THIS GROUND OF APPE AL IS DISMISSED. 11. THUS, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE GROUNDS RAISE D BY THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DAY OF MAY, 2015 . SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAG ENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 20 TH MAY, 2015 SOMU ./ 0/ / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .