Shri G.R. Srinivasan, CHENNAI V. ITO, CHENNAI

ITA 2216/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6469 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 25-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: B RAMANA KUMAR
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC C BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2216/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) SHRI G.R. SRINIVASAN , 22A, MALONY ROAD, T.NAGAR, CHENNAI 600 017. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD 2(1), CHENNAI PAN: AAIPS7828N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI B. RAMANA KUMAR, ADVOCATE /RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL. CIT /DATE OF HEARING : 08.06.2017 ! /DATE OF PRONOUNCEMENT : 03.08.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)- 2, CHENNAI DATED 30.03.2016 IN ITA NO.124/CIT(A)-2/201 4-15 FOR THE ASSESSMENT YEAR 2011-12 PASSED U/S.250(6) R.W.S .143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT :- 2 ITA NO.2216/MDS/2016 (I) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD.AO WHO HAD MADE ADDITION OF RS.15,40,000/- BEING THE CASH DEPOSIT MADE IN THE BANK ACCOUNT BY TREATI NG IT AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. (II) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDE R OF THE LD.AO, WHO HAD MADE ADDITION OF RS.21,97,073/- BEIN G THE EXPENDITURE INCURRED BY WAY OF PAYMENT MADE THROUGH CREDIT CARDS. (III) THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE REVENUE FOR CHARGING INTEREST U/S.234B OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSES SMENT YEAR 2011-12 ON 05.07.2011, ADMITTING TOTAL INCOME OF RS .5,71,216/-. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND FINALLY ORDER U/S.143(3) OF THE ACT WAS PASSED ON 25.03.2014, WHE REIN THE LD.AO ADDED RS.15,40,000/- & RS.21,97,073/- TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT IN BANKS AND UNEXPLAINED EXPENDITURE SPENT THROUGH CREDIT CARDS RESPECTIVELY AND FURTHER LEVIED INTEREST U/S.234B OF THE ACT. 3 ITA NO.2216/MDS/2016 4. GROUND NO. 2(I) & (II) : ADDITION OF RS.15,40,000/- & RS.21,97,073/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WA S OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD MADE PA YMENTS THROUGH CREDIT CARD FOR RS.21,97,073/- AND HAD DEPO SITED RS.15,40,000/- IN HIS BANK ACCOUNT. IT WAS FURTHER OBSERVED THAT THE ASSESSEE HAD UTILIZED THE AMOUNT DEPOSITED IN T HE BANK ACCOUNT FOR MAKING PAYMENT TO THE CREDIT CARD. IT WAS EXPLAINED BY THE ASSESSEE THAT HE HAD PURCHASED MEDICINES TO PERSONS WHO HAVE COME FROM ABROAD FOR THE PURPOSE OF HIS BU SINESS WHICH WAS DULY REIMBURSED BY THEM. THE REIMBURSED AMOUNT WAS DEPOSITED IN THE BANK ACCOUNT AND THUS THE PAYM ENT WAS MADE TOWARDS THE PURCHASE OF MEDICINES WHICH WAS HA NDED OVER TO THE FOREIGN BUYERS. SINCE THE ASSESSEE COU LD NOT PROVIDE SUFFICIENT EVIDENCE BEFORE THE LD.AO TO SUBSTANTIAT E HIS CLAIM, THE LD.AO MADE ADDITION WITH RESPECT TO THE AMOUNT OF RS.15,40,000/- DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AS WELL AS THE AMOUNT OF RS.21,97,073/- BEING THE AMOU NT SPENT BY THE ASSESSEE FOR PURCHASE OF MEDICINES, BY REJECTIN G THE EXPLANATION OFFERED BY THE ASSESSEE BECAUSE OF THE FOLLOWING REASONS:- 4 ITA NO.2216/MDS/2016 1. THE ASSESSEE FAILED TO ESTABLISH THAT THE MEDIC INES WERE PURCHASED FOR THEIR FOREIGN CLIENTS ONLY; 2. AT PRESENT DAYS AUTHORISED FX DEALERS ARE AVAILA BLE IN MANY PLACED OF THE CITY. THERE IS EVERY OPPORTUNITY FOR THE FOREIGNERS TO CONVERT THEIR CURRENCY IN ADVANCE. HE NCE THE ASSESSEE HAS MET OUT THE EXPENSES FOR THE FOREIGNER S IS NOT ACCEPTABLE; 3. THE USAGE OF CREDIT CARDS AND DEPOSITS IN THE BA NK WERE NOT OCCURRED IN ONE OR TWO OCCASIONS RATHER IT OCCU RRED ON VARIOUS DATES. IT ESTABLISHES THERE IS NO EXTRAORDINARY/EMERGENCY SITUATION. HENCE THE ASSESS EE'S CLAIM IS BASELESS AND NOT ACCEPTABLE; 4. THE ASSESSEE HAS NOT EXPLAINED WHAT PREVENTED TH E FOREIGN BUYERS FROM CONVERTING THEIR CURRENCIES PRIOR TO TH EIR PURCHASE OF GOODS; 5. AS SEEN FROM THE BILLS PRODUCED BY THE ASSESSEE, THE CREDIT CARD WAS USED FOR PURCHASE OF ANTI CANCER MEDICINES . IN THAT CASE, THE FOREIGNERS ARE WELL AWARE IN WELL ADVANCE THAT THE MEDICINE HAS TO BE PURCHASED. IN THESE CIRCUMSTANCE S IT IS NOT ACCEPTABLE THAT THE FOREIGNERS DEPENDED UPON THE AS SESSEE FOR THE PURCHASE; 6. IT IS STATED BY THE ASSESSEE THAT THE FOREIGN BU YERS STAY FOR 10 TO 11 MONTHS. IN THAT CASE THEY ARE AWARE OF THE QUANTUM OF AMOUNT REQUIRED FOR THEIR STAY WELL ADVANCE. IN THE SE CIRCUMSTANCES, IT IS NOT ACCEPTABLE THAT THE FOREIG NERS DEPENDED UPON THE ASSESSEE FOR THE PURCHASE; 4.1 ON APPEAL, THE LD.CIT(A) ALSO CONFIRMED THE ORD ER OF THE LD.AO BY AGREEING WITH HIS VIEWS. 5 ITA NO.2216/MDS/2016 4.2 AT THE OUTSET, I DO NOT FIND MERIT IN THE ORDER OF BOTH THE REVENUE AUTHORITIES FOR MAKING ADDITION WITH RESPEC T THE AMOUNT SPENT THROUGH CREDIT CARD FOR RS.21,97,073/- BECAUS E THE ASSESSEE HAD NOT CLAIMED THE SAME AS EXPENDITURE IN HIS BOOKS OF ACCOUNT. HENCE, ADDITION CANNOT BE MADE FOR RS.2 1,97,073/. THEREFORE, I HEREBY DELETE THE ADDITION MADE BY THE LD.AO WHICH IS FURTHER SUSTAINED BY THE LD.CIT(A) FOR RS.21,97,073/-. THE REVENUE MAY HAVE REASONS TO BELIEVE THAT THE AMOUNT DEPOSITED BY THE ASSESSEE IN HIS BANK AC COUNT FOR RS.15,40,000/- MAY BE FROM HIS UNACCOUNTED INCOME B ECAUSE IT IS NOT PROVED WITH EVIDENCE THAT THE AMOUNT WAS REI MBURSED BY THE PERSONS WHO HAD COME FROM ABROAD. HOWEVER CONSI DERING THE EARNINGS OF THE ASSESSEE, PERSONAL RESOURCES AN D HIS OWN SAVINGS, IM OF THE CONSIDERED VIEW THAT AN ALLOWAN CE SHOULD BE GIVEN AT LEAST TO THE EXTENT OF RS.10 LAKHS. ACCOR DINGLY, I HEREBY CONFIRM THE ADDITION MADE BY THE LD.AO WITH RESPECT TO UNEXPLAINED INVESTMENT IN BANK TO THE EXTENT OF RS. 5,40,000/-. AS REGARDS CHARGING OF INTEREST U/S.234B OF THE ACT , IT HAS BEEN CONSISTENTLY HELD THAT IT IS CONSEQUENTIAL IN NATUR E; HENCE THE GROUND IS ACCORDINGLY DISPOSED OFF. 6 ITA NO.2216/MDS/2016 4. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON THE 3 RD AUG, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 3 RD AUG, 2017 JR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF