SKothandan, CHENNAI V. ACIT, CHENNAI

ITA 2276/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8538 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 15-12-2015
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: P RANGA RAMANUJAM
• Keywords: Unexplained cash credit; Source of fund; Additional evidence
• Section: 142(1); 131; 68; 12

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2276 /MDS/201 5 / ASSESSMENT YEAR :20 12 - 13 SHRI S. KOTHANDAN, NO. 218, 5 TH STREET, NEHRU NAGAR, ANNANAGAR, CHENNAI 600 0 4 0 . [PAN:A ONPK8106J ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , NON - CORPORATE CIRCLE 7 ( 1 ) , C HENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI P. RANGA RAMANUJAM , C.A. / RESPONDENT BY : SHRI S HIVA SRINIVAS , JCIT / DATE OF HEARING : 1 8 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 09 . 0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 7 , CHENNAI , DATED 30 . 1 0 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 13. THE FIRST EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED CASH CRE DITS UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND THE I.T.A. NO . 2276 /M/ 15 2 NEXT GROUND RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE TOWARDS CAPITAL GAINS. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL AND FLORIST & DECORATOR. HE FILED HIS RETURN OF INCOME ON 29.09.2012 ADMITTING TOTAL INCOME OF .1,05,55,400/ - . THE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT DATED 23.09.2013 WAS ISSUED. SUBSEQUENTLY, A NOTICE UNDER SECTION 142(1) OF THE ACT DATED 24.07.2014 WAS ALSO ISSUED TO THE ASSESSEE. IN RESPONSE THERETO, THE ASSESSEE PRODUCED THE DETAILS BEFORE THE ASSESSING OFFICER AS CALLED FOR. 2.1 THE A SSESSING O FFICER IN HIS ASSESSMENT ORDER HAS NOTED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER THE CONSIDERATION, THE A SSESSEE HAS RECEIVED FRESH UNSECURED LOAN TO THE EXTENT OF .3.15 CRORES. THE LOANS HAVE BEEN PRIMARILY UTILIZED IN PURCHASING LAND TO THE TUNE OF .2.27 CRORES. THEREFORE, THE ASSESSING OFFICER HAS MADE FOLLOWING A DDITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDITS (A) CASH CREDIT OF .40,00,000/ - FROM MRS. BHARANI : 2.2 BEFORE THE ASSESSING OFFICER, CONFIRMATION OF THE TRANSACTION WAS FILED BY THE A SSESSEE , WHEREIN, THE CREDITOR MRS. BHARANI HAS ADMITTED THAT SHE HAS GIVEN .40,00,000/ - TO THE ASSESSEE AND ALSO MENTIONED HER PAN NUMBER. IN RESPONSE TO SUMMONS UN DER SECTION 131 OF THE ACT ISSUED BY THE I.T.A. NO . 2276 /M/ 15 3 ASSESSING OFFICER , THE SON OF THE CREDITOR, ONE MR. NANDAKUMAR APPEARED AND FILED LEDGER EXTRACTS STATING THAT SOURCES OF HIS MOTHER WERE FROM INTEREST RECEIPTS AND RENTAL INCOME. HOWEVER, SINCE N O CORROBORATIVE EVI DENCE FOR THE SOURCE, SUCH AS THE DETAILS OF INTEREST OR RENTAL INCOME, OR THE COPY OF RETURN OF INCOME OF MRS. BHARANI WAS FILED FOR THE RECORD TO ESTABLISH THE SOURCE IN THE HANDS OF THE CREDITOR , THE ASSESSING OFFICER MADE THE ADDITION AS THE ASSESSEE F AILED TO PROVE THE CREDITWORTHINESS OF THE CREDITOR. (B) CASH CREDIT OF .70,00,000/ - FROM SHRI KUMARAVEL 2.3 BEFORE THE ASSESSING OFFICER, A CONFIRMATION OF THE TRANSACTION WAS FILED BY THE ASSESSEE T HE CREDITOR SHRI KUMARAVEL HAS ADVANCED .70.00 LA KHS ON A SINGLE DATE I.E., 18.10.2011 WITH TWO DIFFERENT SETS OF CHEQUES BEARING NUMBERS 024161 TO 024169 FOR .39.00 LAKHS AND BEARING 047281 TO 047285, 042787 AND 042788 FOR .31.00 LAKHS. FURTHER, THE CREDITOR D ID NOT RESPOND TO THE SUMMONS UNDER SECTIO N 131 OF THE ACT ISSUED BY THE A SSESSING O FFICER . THE A SSESSING O FFICER FOLLOWED THE TRAIL OF MONEY IN THE BANK ACCOUNT OF SHRI KUMARAVEL AND ESTABLISHED THAT THE SOURCE OF FUNDS IN THE HANDS OF CREDITOR WAS CREDIT TRANSFER FROM BANK ACCOUNT OF TWO PERSONS THROUGH WHOM SHRI KUMARAVEL HAS RECEIVED MONEY THROUGH CLEARING OF CHEQUES (A) .39 LAKHS FROM MR. VINOTH AND (B) .31 L AKHS FROM ONE MR. VENKAT I A H . I.T.A. NO . 2276 /M/ 15 4 2.4 WHEN THE ASSESSING OFFICER MADE ENQUIRY WITH MR. VINOTH , IT WAS REVEALED T HAT HE IS A POWER AGENT OF SHRI KUMARAVEL, STUDIED UPTO 10 TH STANDARD AND DOING REAL ESTATE BROKERAGE FOR 1 - 2 PERCENT COMMISSION. HE FURTHER STATED THAT HE WAS GETTING RENTAL INCOME OF .3,000/ - PER MONTH AND HIS TOTAL ESTIMATED EARNINGS PER YEAR WOULD BE .1.00 LAKHS TO .1.50 LAKHS. SHRI VINOTH HAS SUBMITTED THAT HE WAS NOT HAVING INCOME THAT WOULD FALL INTO TAX NET AND THEREFORE, HE DOES NOT POSSESS PAN. HOWEVER, ON VERIFICATION OF THE BANK ACCOUNT OF SHRI VINOTH, THERE WERE SUBSTANTIAL DEPOSITS ON VARIOUS DATES TO THE TUNE OF .82.00 LAKHS APPROXIMATELY. WHEN HE WAS ASKED TO IDENTIFY THE SOURCE FROM WHICH TH E DEPOSITS WERE RECEIVED, SHRI VINOTH HAS STATED THAT THESE DEPOSITS WERE MADE ON INSTRUCTIONS FROM MR. KUMARAVEL AND HE ALSO STATED THAT THESE DEPOSITS WOULD HAVE BEEN THE REALIZATION ON ACCOUNT OF SALE OF RESIDENTIAL PLOTS BEING PROMOTED BY SHRI KUMARAVE L AT PERIYAPALAYAM, CHENNAI. SHRI VINOTH ALSO STATED THAT HE COULD NOT IDENTIFY THE PARTIES TO WHOM THE RESIDENTIAL PLOTS WERE SOLD. WHEN HE WAS ASKED TO CLARIFY ABOUT THE PAY - IN - SLIPS FOR DEPOSIT OF SUCH HUGE AMOUNT IN HIS ACCOUNT, IT WAS SUBMITTED BY SHR I VINOTH THAT THE PAY - IN - SLIPS WERE PREPARED BY SHRI KUMARAVEL AND HIS MANAGER/AGENTS. I MMEDIATELY PRIOR TO THE ISSUE OF CHEQUE TO MR. KUMARAVEL OF .39 LAKHS, THERE WAS A DEPOSIT OF . 39,20,000 / - IN THE BANK ACCOUNT OF MR.VINOTH, WHICH CAME FROM M/S. CHAN DRAMMA MALAR NILAYAM. MR. VINOTH HAD GIVEN BLANK CHEQUES TO MR. KUMARAVEL, AND HE IS NOT AWARE OF THE PARTY M/S. CHANDRAMMA MALAR NILAYAM. I.T.A. NO . 2276 /M/ 15 5 2.5 WHEN THE A SSESSING O FFICER MADE ENQUIRY WITH MR. VENKAT TYA, IT WAS REVEALED THE HE IS A CALL TAXI DRIVER DERIV ING A MONTHLY INCOME OF . 10 , 000 / - AND HAS NO OTHER SOURCE OF INCOME. FURTHER, HE WA S NOT ASSESSED TO TAX, AND DOES NOT HAVE A PAN. T HE DEPOSITS IN HIS BANK ACCOUNT WERE MADE ON THE INSTRUCTION OF MR. KUMARAVEL. I MMEDIATELY PRIOR TO THE ISSUE OF CHEQUE TO MR. KUMARAVEL OF .31 LA KHS, THERE WAS A DEPOSIT OF .36 LAKHS IN THE BANK ACCOUNT OF MR. VENKATTYA WHICH CAME FROM THE SAME PARTY, I. E ., M/S. CHANDRAMMA MALAR NILAYAM. MR. VENKATTYA HAD GIVEN BLANK CHEQUES TO MR. KUMARAVEL, AND HE IS NOT AWARE OF THE PARTY M/S. CHANDRAMMA MALAR NILAYAM. T HE BANK ACCOUNT WAS OPENED DURING THE FINANCIAL YEAR, JUST A FEW DAYS BEFORE THE IMPUGNED TRANSACTION. DESPITE GIVING OPPORTUNITY, THE ASSESSEE HAS NOT PRODUCED THE CREDITOR SHRI KUMARAVEL TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE CRED ITS AND THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION AND BROUGHT TO TAX . (C) CASH CREDIT OF .3,00,000/ - FROM SHRI PALANI 2.6 AS WAS THE CASE OF EARLIER CREDITORS, A CONFIRMATION OF THE TRANSACTION WAS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. T HE SUMMONS ISSUED TO THE CREDITORS WAS RETURNED UNSECURED BY THE POSTAL AUTHORITIES ON A CCOUNT OF INSUFFICIENT ADDRESS. T HE ASSESSEE FAILED TO PRODUCE THE CREDITOR IN PERSON FOR VERIFICATION. SINCE THE ASSESSEE HAS NOT I.T.A. NO . 2276 /M/ 15 6 PROVED THE GENUINENESS OF THE TRANSACTION, CREDIT WORTHINESS OF THE CREDITORS AND IDENTITY OF THE CREDITOR, THE ASSESSING OFF ICER MADE THE ADDITION AND ADDED TO THE INCOME OF THE ASSESSEE. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND FILED WRITTEN SUBMISSIONS SEEKING DELETION OF THE IMPUGNED AMOUNTS ON ACCOUNT OF UNEXPLAINED CASH CREDITS. AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE AND THE FACTS OF THE CASE, SINCE THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS UNDER SECTION 68 OF THE ACT TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS AND MOREOVER THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER HAS RESULTED IN INCRIMINATING EVIDENCES AGAINST THE ASSESSEE, WHICH WERE NOT REBUTTED, THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL R AISING VARIOUS GROUNDS WITH REGARD TO THE UNEXPLAINED CASH CREDITS AND THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 5. ON THE OTHER HAND, THE LD. DR HAS STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. BEFORE US, IN THE FORM OF AN AFFIDAVIT, I.T.A. NO . 2276 /M/ 15 7 THE ASSESSEE HAS FILED ADDITIONAL EVIDENCES SUCH AS COPY OF ITR V, STATEMENT OF TO TAL INCOME, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE ASSESSMENT YEARS 2010 - 11 AND 201 2 - 13 WITH REGARD TO THE CREDITOR MRS. BARANI AND PLEADED FOR ADMISSION OF THE ADDITIONAL EVIDENCES. WHEN THE ASSESSEE COULD FILE THE ABOVE DETAILS, BUT FAILED TO F URNISHED ANY SIMILAR DETAILS WITH REGARD TO OTHER CREDITORS. IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. MERE FURNISHING OF THE PARTICULARS IS NOT ENOUGH. MERE PAYMENT BY AC COUNT PAYEE CHEQUE IS NOT SACROSANCT NOR IT MAKE A NON - GENUINE TRANSACTION GENUINE. ONLY FILING OF CONFIRMATION LETTERS FROM THE CREDITORS SHRI KUMARAVEL AND SHRI PALANI, THE ASSESSEE SHALL NOT ESCAPE FROM THE ONUS CAST UPON HIM. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WHILE ADMITTING THE ADDITIONAL EVIDENCES FILED IN RESPECT OF MRS. BARANI, WE SET ASIDE THE ORDER OF THE LD. CIT(A) TO THE EXTENT OF THE UNEXPLAINED CASH CREDIT FROM MRS. BARANI AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER F OR VERIFICATION AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. HOWEVER, THE UNEXPLAINED CASH CREDITS IN RESPECT OF SHRI KUMARAVEL AND SHRI PALANI STAND SUSTAINED SINCE THE ASSESSEE FAILED TO PROVE THE CRE DITWORTHINESS OF THE CREDITORS, GENUINENESS OF THE TRANSACTION AND IDENTITY OF THE CREDITORS BEFORE THE ASSESSING OFFICER. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO . 2276 /M/ 15 8 7. WITH REGARD TO LAST GROUND RAISED IN THE APPEAL OF THE ASSESSEE OF COMPUTATION OF CAPITAL GAINS, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THE GROUND AT THE TIME OF HEARING. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 8. IN THE RESULT, THE APPEAL FIL ED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 9 TH SEPTEMBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 09 . 0 9 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.