K.V. Jayaraman, CHENNAI V. ACIT, Coimbatore

ITA 2210/CHNY/2013

• Counselvise Citation: 221021714 RSA 2013
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LAKSHMI SRIRAM
• Keywords: Depreciation
• Section: 133A; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . , . . , ! ' [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NOS.2210 & 2211/MDS/2013 / ASSESSMENT YEARS : 2009-10 AND 2010-11 SHRI K.V.JAYARAMAN NO.17 SUNDARAM BROTHERS LAYOUT RAMANATHAPURAM COIMBATORE 641 045 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX RANGE II COIMBATORE [PAN ADJPV 7536L] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MS. LAKSHMI SRIRAM, ADVOCATE /RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT / DATE OF HEARING : 30-01-2014 ! / DATE OF PRONOUNCEMENT : 31-01-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX ( APPEALS)-I COIMBATORE, BOTH DATED 20.11.2013, PASSED IN APPEAL NO.47/12-13 FOR ASSESSMENT YEAR 2009-10 CONFIRMING PENALTY IMPOSED UNDER SECTION I.T.A.NOS.2210 AND 2211/13 :- 2 -: 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT TH E ACT) AND 59/12- 13 FOR ASSESSMENT 2010-11, IN PROCEEDINGS U/S 143( 3) OF THE ACT. FIRST WE TAKE UP I.T.A.NO.2210/MDS/2013 FOR ASSESS MENT YEAR 2009-10. 2. IN THE COURSE OF HEARING, THE ASSESSEE VEHEMENTLY ARGUES THAT THE CIT(A) HAS ERRED IN CONFIRMING IMPUGNED PE NALTY IMPOSED U/S 271(1)(C) OF THE ACT OF ` 59,61,027/- IN ABSENTIA THE AUTHORIZED REPRESENTATIVE. IT IS SUBMITTED BY THE ASSESSEE T HAT NEITHER HE HAD CONCEALED INCOME NOR HAD FURNISHED INACCURATE PARTI CULARS OF INCOME. ACCORDINGLY, HE PRAYS THAT THE IMPUGNED PENALTY BE DELETED. 3. THE REVENUE ARGUES FOR AFFIRMING THE PENALTY UPHEL D BY THE CIT(A) AND PRAYS FOR REJECTION OF THE APPEAL. 4. THE ASSESSEE IS AN INDIVIDUAL. HE IS IN THE BUS INESS OF BOREWELLS AND REAL ESTATE. ON 30.9.2009, THE AS SESSEE HAD FILED HIS RETURN DISCLOSING TOTAL INCOME OF ` 1,27,38,140/- AND AGRICULTURAL INCOME OF ` 15,39,000/-. 5. THE DEPARTMENT HAD CONDUCTED A SURVEY ON 20.9.201 0 IN ASSESSEES BUSINESS PREMISES. IN COURSE THEREOF, T HE ASSESSEE OFFERED A SUM OF ` 1,70,000/- AS INCOME IN ADDITION TO WHAT WAS ALREAD Y I.T.A.NOS.2210 AND 2211/13 :- 3 -: DECLARED HEREINABOVE. PER ASSESSEE, THE SAME HAD BEEN USED AS A SOURCE FOR INVESTMENT IN FIXED DEPOSITS. MEANWHILE , IN THE COURSE OF SCRUTINY, THE ASSESSEE FILED REVISED STATEMENT R EDUCING DEVELOPMENT CHARGES FROM ` 2,78,67,509/- TO ` 1,08,67,509/- IN VIEW OF THE FACT THAT HE HAD ALREADY OFFERED THE DIFFERENTIAL AMOUNT OF ` 1,70,000/- IN THE COURSE OF SURVEY. FURTHERMORE, HE IS ALSO STATED TO HAVE OFFERED CLOSING STOCK OF LAND IN REAL ESTATE BUSINESS OF ` 22,90,090/- AS INCOME COUPLED WITH ADDITIONAL INCOME IN THE SHAPE OF DISA LLOWANCE OF 10% OF EXPENDITURE UNDER THE HEAD LAND DEVELOPMENT CHARGE S IN THE REAL ESTATE BUSINESS AMOUNTING TO ` 5 LAKHS AND ALSO A SUM OF ` 4 LAKHS IN THE SHAPE OF EXPENSES ON ACCOUNT OF PETROL, DIESEL, OIL AND SALARY ETC. IN THIS MANNER, THE ASSESSING OFFICER FRAMED REGUL AR ASSESSMENT ON 30.12.2011 MAKING TOTAL ADDITION OF ` 2,01,90,090/-. IN HIS VIEW, THE CONDUCT OF THE ASSESSEE IN REDUCING DEVELOPMENT C HARGES AND ADMITTING STOCK ETC. AMOUNTED TO CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH WARRANTED I NITIATION OF PENALTY U/S 271(1)(C) OF THE ACT. IT IS NOT IN DISPUTE T HAT THE ASSESSEE DID NOT CARRY THE ADDITIONS IN FURTHER APPEAL AND THE A SSESSMENT ATTAINED FINALITY. I.T.A.NOS.2210 AND 2211/13 :- 4 -: 6. COMING TO PENALTY PROCEEDINGS, THE ASSESSEE DENIED TO HAVE EITHER CONCEALED OR FURNISHED INACCURATE PARTICULAR S OF INCOME . HE PLEADED BEFORE THE ASSESSING OFFICER THAT SINCE THE RE WERE MISTAKES IN THE COMPUTATION SUBMITTED, HE HAD FILED REVISED STA TEMENTS ETC. TO CURE THE SAID DEFECTS. A PERUSAL OF THE PENALTY OR DER DATED 29.6.2012 REVEALS THAT THE SAME COULD NOT CONVINCE THE ASSESS ING OFFICER WHO IMPOSED THE IMPUGNED PENALTY OF ` 59,61,027/- @ 100% OF THE TAX SOUGHT TO BE EVADED ON THE GROUND THAT BUT FOR SUR VEY AND SCRUTINY, THE ASSESSEE WOULD NOT OFFER AFORESAID INCOMES OVE R AND ABOVE WHAT WAS ALREADY DECLARED (SUPRA). 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. WE FIND THAT THE CIT(A) HAS DECIDED THE SAME IN ABSENTIA THE ASS ESSEES AUTHORIZED REPRESENTATIVE AND CONFIRMED THE PENALTY AS FOLLOWS : 5. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY TH E APPELLANT AND ALSO THE ORDER OF THE ASSESSING OFFICER. AS SEEN FR OM THE ORDER OF THE ASSESSING OFFICER WITH REGARD TO THE FACTS OF THE C ASE: (A) SURVEY U/S 133A WAS CONDUCTED ON 20.09.2010. (B) THE ASSESSEE ADMITTED RS.1,70,00,000/- FROM REAL ESTATE BUSINESS WHICH WAS USED AS SOURCE FOR INVESTMENT IN FIXED DEPOSITS. (C) DURING THE COURSE OF HEARING THE ASSESSEE FIL ED A REVISED STATEMENT INCREASING THE INCOME BY RS.22,90,000/-. (D) REGARDING THE DEVELOPMENT CHARGES THE ASSESSE E VOLUNTARILY ADMITTED RS.5 LAKHS UNDER LAND DEVELOPMENT EXPENDIT URE (E) THE ASSESSEE VOLUNTARILY ADMITTED ` 4 LAKHS FROM HIS BOREWELL BUSINESS. I.T.A.NOS.2210 AND 2211/13 :- 5 -: 6. IN THE ORDER THE ASSESSING OFFICER STATED THAT T HE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME VOLUNTARILY WITH REGA RD TO DEVELOPMENT CHARGES, CLOSING STOCK AND BOREWELL BUSINESS. IN TH E ORDER IT WAS MENTIONED THAT THE ASSESSEE OFFERED RS.1,70,00,000/ - TO EXPLAIN THE INVESTMENTS MADE IN FIXED DEPOSITS. THI S WAS ONLY DETECTED DURING THE COURSE OF SURVEY PROCEEDINGS U/ S 133A OF THE INCOME TAX ACT, 1961. WITH REGARD TO THE INCREASE I N VALUATION OF CLOSING STOCK AND OFFER MADE IN LAND D EVELOPMENT CHARGES AMOUNTING TO RS.5LAKHS AND THE INCOME FROM BOREWELL BUSINESS OF RS.4 LAKHS, INCOMES WERE OFFERED TO TAX VOLUNTARILY BY THE ASSESSEE. THESE AMOUNTS WERE OFF ERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFF ICER HAS CORRECTLY LEVIED PENALTY ON THE CONCEALED INCOME OF RS.1,70,00,000/- WHICH IS CONFIRMED. THEREFORE, THE ASSESSEE IS IN APPEAL. 8. WE HAVE HEARD THE PARTIES AND GONE THROUGH THE CASE FILE. ADMITTEDLY, THE ASSESSEE DID NOT APPEAR BEFORE THE CIT(A) IN THE LOWER APPELLATE PROCEEDINGS. BEFORE US, HE SUBMITS THAT HIS AUTHORIZED REPRESENTATIVE COULD NOT APPEAR OWING TO A TOE PR OBLEM AND STILL THE CIT(A) HAS WRONGLY CONFIRMED THE PENALTY. IT IS AL SO CONTENDED THAT THE RELEVANT CASE LAW AS WELL AS FACTS ON RECORD ST RONGLY PROVE THAT THE ASSESSEE HAD NEITHER CONCEALED NOR FURNISHED INACCU RATE PARTICULARS OF INCOME. AFTER GIVING OUR THOUGHTFUL CONSIDERATION, WE ARE OF THE VIEW THAT INTEREST OF JUSTICE WOULD BE MET IN CASE THE F ILE IS RESTORED BACK TO THE CIT(A). WE DEEM IT NECESSARY TO OBSERVE THAT U NDER THE PROVISIONS OF THE ACT AND BEING A FINAL FACT FINDIN G AUTHORITY, THIS TRIBUNAL CAN STILL ADJUDICATE UPON THE VALIDITY O F THE PENALTY IMPOSED. I.T.A.NOS.2210 AND 2211/13 :- 6 -: BUT IN THE LARGER INTEREST OF JUSTICE, IT IS DEEMED APPROPRIATE THAT THE LOWER APPELLATE AUTHORITY EXAMINES THE ISSUE IN ACC ORDANCE WITH LAW AFTER ALLOWING ADEQUATE OPPORTUNITY OF HEARING TO T HE ASSESSEE. ACCORDINGLY, THE CASE IS REMITTED BACK TO THE CIT(A ). I.T.A.NO.2210/MDS/2013 IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO. 2211/MDS/2013 9. A PERUSAL OF THE GROUNDS RAISED IN THE APPEAL REVEALS THAT THE GRIEVANCE OF THE ASSESSEE IS TWO FOLDED I.E ON THE ONE HAND HE CHALLENGES ACTION OF THE CIT(A) IN DECIDING HIS AP PEAL IN ABSENTIA AND ON THE OTHER COMING TO THE MERITS OF THE CASE, HE PLEADS THAT THE IMPUGNED DISALLOWANCE/ADDITIONS U/S 68 OF THE ACT R EGARDING ADVANCE AMOUNTS RECEIVED AND ALSO THAT OF DEPRECIATION CLAI M DISALLOWED @ 50% TO THE TUNE OF ` 34,00,845/- HAVE BEEN WRONGLY MAINTAINED IN THE LOWER APPELLATE PROCEEDINGS. 10. BEFORE US, THE ASSESSEE REITERATES THE AVERMENTS I N THE PLEADINGS AND ARGUES THAT THE IMPUGNED ADDITIONS OU GHT TO HAVE BEEN DELETED BY THE CIT(A). 11. THE REVENUE HAS CHOSEN TO SUPPORT THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITIONS. I.T.A.NOS.2210 AND 2211/13 :- 7 -: 12. THE ASSESSEE FILED HIS RETURN FOR ASSESSMENT YEAR 2010-11 ON 15.10.2010 DISCLOSING INCOME OF ` 24,89,490/-. AFTER THE SURVEY DATED 20.9.2010, THE ASSESSING OFFICER FRAMED REGU LAR ASSESSMENT VIDE ORDER DATED 26.6.2012. THEREIN, HE DISALLOWED /ADDED EXCESS DEPRECIATION OF ` 17,00,423/-, EXPENSES OF ` 6,00,000/- AND ALSO CASH CREDITS U/S 68 OF THE ACT OF SUNDRY CREDITORS AMOU NTING TO ` 2,29,23,550/-. IN THIS MANNER, ASSESSEES INCOME W AS COMPUTED AT ` 2,77,13,470/- WITH AGRICULTURAL INCOME OF ` 15,00,000/-. 13. THE ASSESSEE CARRIED THE MATTER IN APPEAL. IT IS TO BE SEEN FROM THE CASE FILE THAT THE CIT(A) HAS DECIDED THE CASE IN ABSENTIA OF ASSESSEES AUTHORIZED REPRESENTATIVE, BY OBSERVING AS FOLLOWS: 5. THE CASE WAS POSTED FOR HEARING ON 16.05.2013, 01.08.2013, 28.08.2013, 18.09.2013, 04.10.2013 AND 30.10.2013. NO ONE APPEARED FOR THE APPELLATE PROCEEDINGS. SINCE SUFF ICIENT NUMBER OF HEARINGS HAVE BEEN GIVEN TO THE APPELLANT, THE G ROUNDS OF APPEAL ARE ADJUDICATED ON MERITS OF THE CASE. 6. THE APPELLANT IN THE GROUNDS OF APPEAL HAS MADE THE FOLLOWING SUBMISSION: THE APPELLANT SUBMITS THAT TO PROVE THE GENUINENESS OF THE TRANSACTION OF THE RECEIPT AND PAYMENT OF LAND ADVA NCE AMOUNT FROM MAKHANLAL RATHI, VARDHAN RATHI, SADHANA DEVI A ND RANGARAJ, AN AGREEMENT OF SALE, CANCELLATION OF AGR EEMENT, CONFIRMATION OF BALANCE WAS SUBMITTED TO PROVE THE GENUINENESS OF THE TRANSACTION. 7. IN THE ORDER THE ASSESSING OFFICER STATED THAT THE ASSESSEE HAS DEPOSITED CASH DEPOSIT OF RS.3,30,94,000/- IN SAVIN GS BANK A/C WITH CENTRAL BANK OF INDIA. AFTER EXAMINING THE EVIDENCE SUBMITTED I.T.A.NOS.2210 AND 2211/13 :- 8 -: BY THE ASSESSEE, FURTHER LETTERS WERE SENT TO THE S ELECTED CREDITORS TO ASCERTAIN THE VERACITY OF THE CLAIM OF THE ASSES SEE. 8. THE ASSESSING OFFICER AT PARA 8.1 AND 8.2 OF THE ORDER HAS ELABORATELY DISCUSSED ABOUT THE CASH SOURCED FROM S UMESH BABU, MAKHANLAL RATHI, VARDHAN RATHI, SADHANA DEVI AND SH RI RANGARAJ. THE ASSESSING OFFICER IN HIS ORDER STATED THAT THE GENUINENESS OF THE TRANSACTION ALONG WITH THE CREDI TWORTHINESS OF THE CREDITORS HAVE NOT BEEN PROVED BEFORE THE ASSES SING OFFICER. WITH REGARD TO ANY CASH BROUGHT INTO THE B OOKS OF THE APPELLANT, THE APPELLANT HAS TO PROVE THE GENUINENE SS OF THE TRANSACTION, IDENTITY OF THE CREDITOR AND CREDITWOR THINESS OF THE CREDITOR. SINCE THE APPELLANT COULD NOT PROVE T HE GENUINENESS OF THE TRANSACTION, AND THE CREDITWORTHINESS OF THE CREDITORS, THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF TH E INCOME TAX ACT IS CONFIRMED. THIS GROUNDS OF APPEAL ARE DISMIS SED. 9. GROUND NOS.9, 10 & 11 : THESE GROUNDS OF APPEAL IS REGARDING THE DISALLOWANCE OF DEPRECIATION. THE APPELLANT IN THE GROUNDS OF APPEAL SUBMITTED THAT THE CLAIM OF DEPRECIATION ON HOTEL CHERAN AT RS.34,00,845/- HAS BEEN DISALLOWED AT THE RATE OF 5 0% MERELY STATING THAT THE HOTEL WAS PUT TO USE ONLY F ROM THE MONTH OF JANUARY. THE APPELLANT SUBMITS THAT THE HOTEL WAS P UT TO USE ON AND FROM 07.09.2009 I.E. FROM THE DATE OF INAUGURAT ION. THE HOTEL WAS RUN ON TRIAL BASIS TO ADDRESS THE TEETHING TROU BLES AND ALSO TO KNOW THE TASTE OF THE PEOPLE FOR STABILIZING THE RE STAURANT. 10. I HAVE GONE THROUGH THE GROUNDS OF APPEAL AND ALSO THE ORDER OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER IN HIS ORDER STATED THAT THE HOTEL CHERAN WAS PUT TO USE ONLY IN THE MONTH OF NOVEMBER 2009 ONWARDS FOR LODGING PURPOSES AND FROM JANUARY 10 FOR RESTAURANT PURPOSES. THE ASSESSEE BEFORE THE AS SESSING OFFICER FILED THE INVITATION CARD SHOWING THAT THE HOTEL WAS INAUGURATED ON 07.09.2009. EVEN THOUGH THE HOTEL WAS OCCUPIED FOR LODGING PURPOSE FROM NOVEMBER 2009 AS STATED BY THE ASSESSING OFFICER IN THE ORDER, THE HOTEL WAS INAUG URATED ON 07.09.2009 AND THE HOTEL WAS FUNCTIONAL FROM 07.09.2009. THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT TH E HOTEL WAS INAUGURATED ON 07.09.2009. THE OCCUPATION OF ROOMS CANNOT BE A CRITERIA FOR ALLOWING DEPRECIATION ON THE ASSET I .E. THE HOTEL. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAI M OF DEPRECIATION OF THE APPELLANT. THESE GROUNDS OF APP EAL ARE ALLOWED. I.T.A.NOS.2210 AND 2211/13 :- 9 -: THEREFORE, THE ASSESSEE HAS FILED THE INSTANT APPE AL. 14. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE ARGUMENTS OF THE PARTIES AND GONE THROUGH THE CASE FILE. BY FOLLOWING THE REASONING OF I.T.A.NO.2210/MDS/2013 HEREIN AS WELL, WE DEEM IT APPROPRIATE THAT INTEREST OF JUSTICE WOULD BE MET IN CASE THIS APPEAL IS ALSO RESTORED BACK TO THE FILE OF THE CIT(A). WHIL ST ORDERING SO, WE GRANT LIBERTY TO THE ASSESSEE TO PRODUCE RELEVANT EVIDENCE, IF ANY, IN THE LOWER APPELLATE PROCEEDINGS, IF SO ADVISED. CONSEQUENTLY, I.T.A.NO.2211/MDS/2013 IS ALLOWED FOR STATISTICAL PURPOSES. 15. TO SUM UP, BOTH APPEALS OF THE ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 31 ST OF JANUARY, 2014, AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S. S. GODARA) JUDICIAL MEMBER DATED: 31 ST JANUARY, 2014 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR