Akshay Sarin, CHENNAI V. DCIT, CHENNAI

ITA 232/CHNY/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9239 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: DR M SRINIVASA RAO
• Keywords: Unexplained cash credit; Business income; Salary income; Block assessment
• Section: 273B; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.229 TO 233/CHNY/2015 / ASSESSMENT YEARS: 2005-06 TO 2008-09 SHRI AKSHAY SARIN, NO.15/4, MASILAMANI ROAD, BALAJI NAGAR, ROYAPETTAH, CHENNAI 600 014. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1), CHENNAI -34. PAN: ADPPA2535A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : DR.M.SRINIVASA RAO, CIT / RESPONDENT BY : SHRI K.RAVI, ADVOCATE /DATE OF HEARING : 29.01.2019 /DATE OF PRONOUNCEMENT : 01.04.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-19, CHENNAI, DATED 28.11.2014 IN ITA NO.272/10-11, 182/09-10, 65/08-09 & 93/07-08 FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 PASSED U/S.250(6) R.W.S. 143(3) / 144 OF THE ACT AND ORDER DATED 28.11.2014 IN ITA NO.27/10-11 FOR THE ASSESSMENT YEAR 2007-08 PASSED U/S.250(6) R.W.S. 271F OF THE ACT. 2 ITA NOS.229 TO 233/CHNY/2015 2.1 THE ASSESSEE HAS RAISED THE FOLLOWING IDENTICAL GROUND WITH RESPECT TO THE SAME FACTS IN ALL THE APPEALS FOR THE RELEVANT ASSESSMENT YEARS:- THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD.AO TOWARDS ACCRUED INTEREST ON THE INVESTMENT MADE BY THE ASSESSEE AS DETAILED HEREIN BELOW:- PARTICULARS AY 2005-06 ITA NO.229/CHNY/2015 AY 2006-07 ITA 230/CHNY/2015 AY 2007-08 ITA 231/CHNY/2015 AY 2008-09 ITA233/CHNY/2015 INVESTMENT IN FD WITH ANDHRA BANK RS.54,112 @ 9% RS.4,870 RS.4,870 RS.4,870 RS.4,870 DEPOSITS OF RS.8,10,656/- IN RD ACCOUNT @ 9% RS.72,959 RS.72,959 RS.72,959 RS.72,959 RBI BONDS RS.19,50,000/- @ 9% RS.1,75,000 RS.1,75,000 RS.1,75,000 RS.1,75,000 INVESTMENT IN UTI, ICICI, IDBI AND HDFC RELIEF BONDS AGGREGATING TO RS.2,25,000/- @ 9% RS.20,250 RS.20,250 RS.20,250 RS.20,250 ADVANCE MADE TOWARDS PROMISSORY NOTES AGGREGATING TO RS.8,50,000 @ 24% RS.2,04,000 RS.2,04,000 RS.2,04,000 RS.2,04,000 LOAN TO NADIAWALA GRANDSON AGGREGATING TO RS.2,50,000/- @ 24% RS.60,000 RS.60,000 RS.60,000 RS.60,000 AMOUNT ADVANCED TO M/S. STATUS ENTERPRISES RS.1,50,000/- @ 24% RS.36,000 RS.36,000 RS.36,000 RS.36,000 3 ITA NOS.229 TO 233/CHNY/2015 2.2 FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.230/CHNY/2015, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OTHER THAN THE GROUND RAISED HEREIN ABOVE IN PARA NO. 2.1:- THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ORDER OF THE LD.AO WHO HAD MADE ADDITION OF RS.1,00,000/- TOWARDS DEPOSITS MADE ON 11.06.2005 IN THE ASSESSEES BANK ACCOUNT MAINTAINED WITH STANDARD CHARTERED BANK. 2.3 FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.231/CHNY/2015, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OTHER THAN THE GROUND RAISED HEREIN ABOVE IN PARA NO. 2.1:- THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD ESTIMATED THE INCOME OF THE ASSESSEE AT RS.8,50,000/- AS AGAINST RS.4,89,096/- ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME FILED. 2.4 FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.232/CHNY/2015 WITH RESPECT TO THE PENALTY APPEAL, THE ASSESSEE HAS FILED THE FOLLOWING GROUND:- THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD LEVIED PENALTY OF RS.5,000/- INVOKING THE PROVISION OF SECTION 271F OF THE ACT. 4 ITA NOS.229 TO 233/CHNY/2015 2.5 FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.232/CHNY/2015, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OTHER THAN THE GROUND RAISED HEREIN ABOVE IN PARA NO. 2.1:- THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD ESTIMATED THE INCOME OF THE ASSESSEE AT RS.8,50,000/- AS AGAINST RS.5,28,344/- ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME FILED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL CLAIMED TO HAVE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 & 2008-09 ADMITTING TOTAL INCOME OF RS.3,26,584/-, RS.4,56,910/-, RS.4,89,096/- & RS.5,28,344/- ON 05.09.2006, 18.03.2008, 03.06.2009 & 31.08.2009 RESPECTIVELY. A SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEES FATHER SHRI RAKESH SARIN ON 27.03.2003 WHICH WAS CONCLUDED ON 28.08.2003. THEREAFTER A NOTICE U/S.158BC R.W.S. 158BD WAS SERVED TO THE ASSESSEE ON 02.03.2005 AND THE ASSESSMENT U/S.143(3) R.W.S. 158BC & 158BD OF THE ACT WAS PASSED ON 28.02.2007. THE CASE WAS SELECTED FOR SCRUTINY FOR THE ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 & 2008-09 AND ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 26.12.2007,10.12.2008, 30.12.2009 & 29.12.2010 RESPECTIVELY 5 ITA NOS.229 TO 233/CHNY/2015 WHEREIN THE LD.AO MADE THE ABOVE ADDITIONS WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD.CIT(A). FURTHER PENAL PROVISIONS OF SECTION 271F OF THE ACT WAS ALSO INVOKED ON THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 AND PENALTY WAS LEVIED FOR NON-FILING OF RETURN OF INCOME. 4. GROUND NO.2.1 : ADDITION TOWARDS ACCRUED INTEREST: FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09, ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT WHEREIN THE LD.AO MADE ADDITION BY ESTIMATING THE INTEREST INCOME ON THE UNACCOUNTED BANK DEPOSITS / INVESTMENT IN RBI BONDS / INVESTMENT IN UTI, ETC., @ 9% AND ADVANCE MADE TO PRIVATE PARTIES @ 24% AS DETAILED HEREIN BELOW:- 'INTEREST ACCRUED FROM INVESTMENT IN FD WITH ANDRA BANK (9% OF RS.54,112) RS. 4,870/- INTEREST ACCRUED FROM DEPOSITS IN RD (9% OF RS.8,10,656) RS. 72,959/- INTEREST ACCRUED FROM RBI BONDS (9% OF 19,50,000) RS.1,75,500/- INTEREST ACCRUED FROM INVESTMENTS (9% OF 2,25,000) RS. 20,250/- INTEREST ACCRUED FROM PROMISSORY NOTES (24% OF 8,50,000) RS.2,04,000/- INTEREST ACCRUED FROM LOAN TO NADIAWALA GRANDSON (24% OF RS.2,50,000) RS. 60,000/- INTEREST ACCRUED FROM MONEY ADVANCED TO STATUS ENTERPRISES (24% OF RS.1,50,000) RS. 36,000/- ========= TOTAL RS.5,73,579/- ========== 4.1 ON APPEAL, THE LD.CIT(A) HAD CONFIRMED THE ORDER OF THE LD.AO BY AGREEING WITH HIS VIEW. HOWEVER SINCE THIS BENCH OF THE 6 ITA NOS.229 TO 233/CHNY/2015 TRIBUNAL IN THE ASSESSEES CASE IN IT(SS)A NO.18/CHNY/2014 FOR THE BLOCK ASSESSMENT PERIOD 01.04.1996 TO 27.03.2003 VIDE ORDER DATED 28.03.2019 HAD DELETED THE ADDITION MADE TOWARDS ADVANCE TO M/S.NADIADWALA GRANDSON FOR RS.2,50,000/-, RS.8,50,000/- TOWARDS UNACCOUNTED PROMISSORY NOTES, THERE IS NO SCOPE FOR ESTIMATING THE INTEREST INCOME ON SUCH ADVANCE FOR ALL THE RELEVANT ASSESSMENT YEARS. FURTHER WITH RESPECT TO THE OTHER ADDITIONS OF RS.4,870/- TOWARDS INTEREST ACCRUED FROM INVESTMENT IN FD IN ANDHRA BANK, RS.72,959/- TOWARDS INTEREST ACCRUED FROM DEPOSITS IN RD ACCOUNT, RS.1,75,500/- TOWARDS INTEREST ACCRUED FROM RBI BONDS, RS.20,250/- TOWARDS INTEREST ACCRUED FROM INVESTMENTS IN UTI, ETC., RS.36,000/- TOWARDS INTEREST ACCRUED FROM MONEY ADVANCED TO M/S. STATUS ENTERPRISES, IT IS APPARENT FROM RECORD THAT THE ASSESSEE HAS NOT RECEIVED/REALIZED THE INTEREST INCOME AND SINCE THE ASSESSEE BEING INDIVIDUAL WHO HAS THE LEGITIMATE RIGHT TO MAINTAIN HIS BOOKS OF ACCOUNTS IN CASH SYSTEM OF ACCOUNTING AS PER SECTION 145(1) OF THE ACT, THEREFORE THE INTEREST INCOME CAN BE TAXED IN THE HANDS OF THE ASSESSEE ONLY IN THE YEAR IN WHICH HE RECEIVES THE INTEREST. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE INTEREST INCOME ESTIMATED IN THE HANDS OF THE ASSESSEE AMOUNTING TO RS.4,870/- TOWARDS INTEREST ACCRUED FROM INVESTMENT IN FD WITH ANDHRA BANK, RS.72,959/- TOWARDS INTEREST ACCRUED FROM 7 ITA NOS.229 TO 233/CHNY/2015 DEPOSITS IN RD ACCOUNT, RS.1,75,500/- TOWARDS INTEREST ACCRUED FROM RBI BONDS, RS.20,250/- TOWARDS INTEREST ACCRUED FROM INVESTMENTS IN UTI, ETC., RS.36,000/- TOWARDS INTEREST ACCRUED FROM MONEY ADVANCED TO STATUS ENTERPRISES, SINCE THE ASSESSEE HAS NOT RECEIVED THE SAME DURING THE RELEVANT ASSESSMENT YEARS. 5. GROUND NO.2.2: ADDITION OF RS.1,00,000/- TOWARDS DEPOSITS IN BANK ACCOUNT MAINTAINED WITH STANDARD CHARTERED BANK:- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2006-07, IT WAS OBSERVED BY THE LD.AO THAT THERE WERE CASH DEPOSITS TO THE TUNE OF RS.1,00,000/- IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE IN STANDARD CHARTERED BANK, MYLAPORE BRANCH. SINCE ASSESSEE COULD NOT EXPLAIN THE SOURCE FOR THE CASH DEPOSIT, THE LD.AO ADDED THE SAME AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BECAUSE EVEN BEFORE HIM, THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF INVESTMENT. 5.1 EVEN BEFORE US AT THIS STAGE, THE LD.AR DID NOT FURNISH ANY EXPLANATION TOWARDS THE SOURCE OF CASH DEPOSIT MADE BY THE ASSESSEE IN HIS BANK ACCOUNT FOR RS.1,00,000/-. THEREFORE WE 8 ITA NOS.229 TO 233/CHNY/2015 HEREBY CONFIRM THE ADDITION OF RS.1,00,000/- MADE AND SUSTAINED BY THE LD.REVENUE AUTHORITIES FOR THE ASSESSMENT YEAR 2006-07. 6. GROUND NO.2.3: ESTIMATION OF INCOME OF THE ASSESSEE AT RS.8,50,000/- FOR THE ASSESSMENT YEAR 2007-08:- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2007-08, THE LD.AO WAS OF THE VIEW THAT SINCE THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 03.06.2009, WHICH IS BEYOND THE TIME LIMIT IT IS INVALID AND NON-ERST. HENCE REJECTING THE RETURN FILED BY THE ASSESSEE, THE LD.AO ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE AS RS.5,00,000/- & FURTHER ESTIMATED THE SALARY INCOME OF THE ASSESSEE AS RS.3,50,000/- AND ACCORDINGLY PASSED ORDERS U/S.144 OF THE ACT. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO. 6.1 AT THE OUTSET, WE FIND THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME THOUGH NOT WITHIN DUE DATE BUT BELATEDLY. THE LD.AO HAS SIMPLY REJECTED THE RETURN FILED BY THE ASSESSEE TREATING IT TO BE NON-ERST. HOWEVER WE ARE OF THE VIEW THAT THOUGH THE LD.AO HAD REJECTED THE RETURN OF INCOME FILED BY THE ASSESSEE, IT WOULD HAVE BEEN APPROPRIATE TO EXAMINE THE DETAILS SUBMITTED THEREIN AND THEREAFTER ARRIVE AT THE APT CONCLUSION BASED ON MERITS. SINCE THE 9 ITA NOS.229 TO 233/CHNY/2015 LD.AO HAS FAILED TO DO SO, WE ARE OF THE CONSIDERED VIEW THAT THE LD.AO IS NOT CORRECT IN ESTIMATING THE BUSINESS INCOME OF THE ASSESSEE AT RS.5,00,000/- AND SALARY INCOME OF THE ASSESSEE AT RS.3,50,000/-. THEREFORE WE HEREBY DIRECT THE LD.AO TO ASSESS THE INCOME STATED IN THE RETURN OF INCOME BELATEDLY FILED BY THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 7. GROUND NO.2.4: LEVY OF PENALTY U/S.271F OF THE ACT FOR THE ASSESSMENT YEAR 2007-08:- SINCE THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 IN SPITE OF NOTICE ISSUED U/S.142(1) OF THE ACT ON 19.09.2008 AND 20.07.2009, THE LD.AO INVOKING HIS DISCRETIONARY POWERS UNDER THE PENAL PROVISIONS OF SECTION 271F OF THE ACT, LEVIED PENALTY FOR RS.5,000/-. ON PERUSING THE FACTS IT IS APPARENT THAT THE ASSESSEE THOUGH HAD NOT FILED HIS RETURN OF INCOME WITHIN THE STIPULATED PERIOD, HE HAS FILED THE RETURN OF INCOME BELATEDLY. FURTHER THE PENAL PROVISIONS OF SECTION 271F OF THE ACT HAS BEEN WITHDRAWN WITH EFFECT FROM 1 ST APRIL 2018. MOREOVER IT IS APPARENT THAT THE AFFAIRS OF THE ASSESSEE HAVING BEEN MANAGED BY HIS PARENTS THERE COULD HAVE BEEN SOME LAPSE ON THE PART OF THE ASSESSEE TO COMPLY WITH THE PROVISIONS OF THE ACT WITHIN THE STIPULATED PERIOD OF TIME. THEREFORE TAKING A LENIENT VIEW AND 10 ITA NOS.229 TO 233/CHNY/2015 DRAWING STRENGTH FROM THE PROVISIONS OF SECTION 273B OF THE ACT, WE HEREBY DIRECT THE LD.AO TO DELETE THE PENALTY LEVIED FOR RS.5000/- BY INVOKING THE PROVISIONS OF SECTION 271F OF THE ACT. 8. GROUND NO.2.5: ESTIMATION OF INCOME OF THE ASSESSEE AT RS.8,50,000/- FOR THE ASSESSMENT YEAR 2008-09:- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2008-09, THE LD.AO WAS OF THE VIEW THAT THE ASSESSEE HAD NOT DECLARED HIS BUSINESS INCOME THOUGH HE HAD EARNED BUSINESS INCOME. SIMILARLY THE LD.AO FURTHER OBSERVED THAT THOUGH THE ASSESSEE HAD EARNED SALARY INCOME HE HAS NOT DECLARED THE SAME. THEREFORE THE LD.AO ESTIMATED THE BUSINESS INCOME OF THE ASSESSEE AS RS.5,00,000/- & THE SALARY INCOME OF THE ASSESSEE AS RS.3,50,000/- AND ACCORDINGLY PASSED ORDERS U/S.143(3) OF THE ACT. ON APPEAL, THE LD.CIT(A) UPHELD THE ORDER OF THE LD.AO. 8.1 AT THE OUTSET WE FIND THAT THE LD.AO HAD RECORDED IN HIS ORDER THAT THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 31.08.2009 ADMITTING TOTAL INCOME OF RS.5,28,344/-. IN SUCH SITUATION, WE FAILED TO UNDERSTAND AS TO WHY THE LD.AO HAD ESTIMATED THE BUSINESS INCOME AND SALARY INCOME 11 ITA NOS.229 TO 233/CHNY/2015 OF THE ASSESSEE AGGREGATING TO RS.8,50,000/- WITHOUT EXAMINING THE RETURN OF INCOME FILED BY THE ASSESSEE WHEREIN HE HAD ADMITTED RS.5,28,344/-. THE LD.CIT(A) HAS ALSO NOT GIVEN ANY FINDING ON THE SAME. THEREFORE WE HEREBY DIRECT THE LD.AO TO ACCEPT THE ADMITTED INCOME OF THE ASSESSEE AT RS.5,28,344/- AND DELETE THE ADDITION MADE BY HIM OF RS.8,50,000/- BY ESTIMATING THE INCOME. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NO.229, 231 & 233/CHNY/2015 FOR THE ASSESSMENT YEARS 2005-06, 2007-08, 2008-09 & PENALTY APPEAL IN ITA NO.232/CHNY/2015 FOR THE ASSESSMENT YEAR 2007-08 ARE ALLOWED AND ITA NO.230/CHNY/2015 FOR THE ASSESSMENT YEAR 2006-07 IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 01 ST APRIL, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 01 ST APRIL, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF