C.Shankar, CHENNAI V. ITO, CHENNAI

ITA 2328/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8331 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2015
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Peak credit
• Section: 143(3); 142(1); 133(6)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2 328 /MDS/201 5 / ASSESSMENT YEAR :20 11 - 1 2 SHRI C . S HANKAR, OLD NO. 2 , NEW NO.3 , 1 ST FLOOR, 5 TH STREET, ALWARPET, CHENNAI 600 018. [PAN: A YYPS1959A ] VS. THE INCOME TAX OFFICER , BUSINESS RANGE XV(3) , CHENNAI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR , ADVOCATE / RESPONDENT BY : SHRI SUPRIYO PAL , J CIT / DATE OF HEARING : 14 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 07 . 1 0 .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 ) 4 , CHENNAI , DATED 28 . 1 0 .20 1 5 RELE VANT TO THE ASSESSMENT YEAR 20 11 - 1 2 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF .48,56,103/ - MADE UNDER SECTION 69A OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO . 2328 /M/ 15 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME AT .8,64,210/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 10.09.2012. TH E ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE WAS OPERATING THREE BANK ACCOUNTS AND THE EXAMINATION OF THE SOURCE FOR THE CASH DEPOSITS MADE IN THE BANK ACCOUNTS WAS THE PURPOSE OF THE SCRUTINY, HE ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT TO VERIF Y THE ACCOUNTS OF THE ASSESSEE. AS PER THE FINAL ACCOUNTS, THE ASSESSEE WAS STATED TO HAVE OPERATED TWO BANK ACCOUNTS, ONE AT ORIENTAL BANK OF COMMERCE AND THE OTHER AT HDFC BANK. HOWEVER, AS PER AIR DATA, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSE E HAS HELD ANOTHER BANK ACCOUNT AT VIJAYA BANK AND MAXIMUM TRANSACTIONS UNDERTAKEN THROUGH THIS THIRD ACCOUNT WAS HIDDEN FROM THE VIEW OF THE DEPARTMENT. THEREFORE, COPIES OF THE STATEMENT OF BANK ACCOUNTS WERE OBTAINED UNDER SECTION 133(6) OF THE ACT AND NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED REQUIRING THE ASSESSEE TO EXPLAIN THE SOURCE FOR THE CASH DEPOSITS MADE IN ALL THREE ACCOUNTS. THE SALIENT OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 3 TO 6 ARE REPRODUCED AS UNDER: 3. IN RESPONSE TO T HE SAME, THE AUTHORIZED REPRESENTATIVE FILED A REPLY ON 22.01.2014, BUT THE SAME DID NOT ADDRESS THE REQUIREMENTS OF THE DEPARTMENT. IN ORDER TO PROVE THE SOURCE OF CASH DEPOSITS, THE ASSESSEE HAS TO NECESSARILY PROVIDE CASH BOOK AND THE BANK BOOK FOR THE FINANCIAL YEAR 2010 - 11. EVEN ON REPEATED INSISTENCE, THE BOOKS OF ACCOUNTS IN THE MANNER SOUGHT WAS NEVER PROVIDED. THE NOTICE U/S 142(1) DATED 13.01.2014 IS SELF - EXPLANATORY AND THE REPLY PROVIDED ON 22.01.2014 DID NOT ATTEND TO THE ESSENTIAL REQUIREMENTS , IT I.T.A. NO . 2328 /M/ 15 3 IS PERTINENT TO MENTION THAT UNDER SIMILAR CIRCUMSTANCES, WHILE THE RETURN OF INCOME FOR THE AY 2010 - 11 WAS UNDER SCRUTINY, THE ASSESSEE HAD PROVIDED THE BANK BOOK AND THE CASH BOOK AND FROM THE PARTICULAR GATHERED IN THOSE BOOKS OF ACCOUNTS, THE ASSE SSMENT WAS COMPLETED MAKING AN ADDITION OF .1,19,07,402/ - . THE CONSTITUENTS OF THIS ADDITION IS THE UNEXPLAINED CASH DEPOSITED IN THE BANK ACCOUNT OF .45,82,402/ - AND THE UNEXPLAINED INVESTMENT IN MONEY LENDING OF .73,25,000/ - . 4. SINCE THE CASE BOOK AND BANK BOOK PRODUCED DURING THE COURSE OF ASSESSMENT FOR THE AY 2010 - 11 FORMED THE BASIS FOR THIS ADDITIONS, THE AUTHORIZED REPRESENTATIVE IN ORDER TO THWART SUCH ATTEMPTS TO ARRIVE AT THE CORRECT INCOME OF THE ASSESSEE, DESISTED FROM PROVIDING SUCH ACCOUNTS IN THE YEAR UNDER CONSIDERATION. UNDER THE CIRCUMSTANCES, THIS OFFICE HAD TO ARRIVE AT THE PEAK VALUE OF THE CASH DEPOSITS BY APPLYING THE PRINCIPLE OF TAXATION THAT EVOLVED IN AY 2010 - 11 IN ORDER TO COMPUTE THE TAXABLE INCOME FOR THE YEAR. 5. THE CASH DEPOSITS AND WITHDRAWALS IN ALL THE TH REE BANK ACCOUNTS PUT TOGETHER, ON DIFFERENT DATES WERE TAKEN INTO CONSIDERATION AND AS PER THE TABULATION PROVIDED AS ANNEXURE, THE PEAK VALUE IN THE CASH DEPOSITS AFTER PROVIDING DEDUCTIONS FOR WITHDRAWALS IN CASH IS ATTAINED ON 21.03.2011 AND THIS VALUE IS .94,38,505/ - . AS STARTED EARLIER, THE UNEXPLAINED CASH ASSESSED U/S. 69A IN AY 2010 - 11 IS .45,82,402/ - . AFTER TELESCOPING THIS VALUE WHICH IS ALREADY BROUGHT TO TAX, THE ASSESSEE IS NOT IN A POSITION TO OFFER AN EXPLANATION WITH REGARD TO THE SOURCE FOR THE BALANCE CASH DEPOSIT OF .48,56,103/ - . ACCORDINGLY, THE SAME IS BROUGHT TO TAX U/S. 69A OF THE IT ACT, 1961. 6. IT NEEDS TO BE AGREED THAT THE UNEXPLAINED INVESTMENT IN MONEY LENDING ASSESSED U/S. 69B DURING AY 2010 - 11 IS ROTATED DURING THE YEAR UND ER CONSIDERATION AND THEREFORE, HAVING UNDERTAKEN THE EXERCISE OF TAXING THE UNEXPLAINED INVESTMENT IN MONEY LENDING IN AY 2010 - 11, A NECESSITY DOES NOT ARISE DURING THE YEAR UNDER CONSIDERATION TO REPEAT THE SAME PROCEDURE. FURTHER SINCE THE INVESTMENT ME THOD BEING THE CASH DEPOSITS IN BANK ACCOUNTS IS ADOPTED IN COMPUTING THE TAXABLE INCOME, THE INTEREST EARNED DURING THE YEAR ALSO GETS TELESCOPED IN THE CASH DEPOSITS AND HENCE, THE INTEREST EARNED ON THE MONEY LENDING BALANCES IS NOT BROUGHT TO TAX SEPAR ATELY. 2.1 WITH THE ABOVE OBSERVATIONS, THE ASSESSING OFFICER MADE ADDITION OF .48,56,103/ - UNDER SECTION 69A OF THE ACT AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 31.03.2014. I.T.A. NO . 2328 /M/ 15 4 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LD. CIT(A). AFTER CONSIDERING THE FACTS OF THE CASE , THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CONTENDED THAT THE LD. CIT(A) WENT IN WRONG TO SUSTAIN THE ADDITION MADE BY THE ASSESSING OFFICER SINCE THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ALTERNATIVE CONTENTION FOR CONSIDERING PEAK CREDIT FROM THE BANK ACCOUNTS FROM THE ANALYSIS OF STATEMENT OF ACCOUNT WAS NO T CONSIDERED PROPERLY AND OUGHT TO HAVE APPRECIATED THAT THE MISREADING OF DECISIONS FOR REJECTING THE STAND OF THE ASSESSEE WOULD VIT IATE HIS DECISION AND PLEADED THAT THE ADDITION MADE SHOULD BE DELETED. 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT IN THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2011 - 12, THE ASSESSEE HAS NOT REVEALED COMPLETE PARTICULARS ESPECIALLY NOT DISCLOSED THE BANK ACCOUNT MAINTAINED WITH THE VIJAYA BANK AND MOREOVER THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS FOR VERIFICATION OF THE CREDITS AND DEBITS IN THE SAID ACCOUNT . AFTER OBTAINING THE STATEMENT OF BANK ACCOUNTS I.T.A. NO . 2328 /M/ 15 5 UNDER SECTION 133(6) OF THE ACT, WHEN THE ASSESSEE HAS NOT FURNISH PROPER EXPLANATION WITH REGARD TO THE SOURCE FOR THE CASH DEPOSITED IN THE FINANCIAL YEAR 2010 - 11 IN T HE BANK ACCOUNT MAINTAINED WITH VIJAYA BANK, THE ASSESSING OFFICER SHOULD HAVE BROUGHT TO TAX THE ENTIRE CASH DE POSITS MADE BY THE ASSESSEE. WHATEVER THE BUSINESS IT MAY BE THE ASSESSEE WAS ENGAGED, BUT, EACH ASSESSMENT YEAR IS DIFFERENT AND EVERY ASSESSME NT HAS TO BE MADE INVARIABLY WHEN THE ASSESSEE FURNISH TRUE AND COMPLETE PARTICULARS OF THE INCOME AND EXPENDITURE AND THE ASSESSING OFFICER SHOULD ENSURE THAT NO INCOME SHOULD ESCAPE ASSESSMENT. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS DISCLOSED OPERATION OF TWO BANK ACCOUNTS AND DECLARED INCOME OF THE ASSESSEE AT .8,64,210/ - . WE ARE UNABLE TO FIND THE DETAILS WITH REGARD THE TAXABLE INCOME BY MAINTAINING TWO BANK ACCOUNTS SEPARATELY AND TOTAL UNDISCLOSED INCOME BY MAI NTAINING THE THIRD BANK ACCOUNT WITH VIJAYA BANK WHEREIN THE ASSESSEE HAS MADE TRANSACTIONS WITH THIS BANK ACCOUNT. IT MAY BE A FACT THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010 - 11 WAS ALSO UNDER SCRUTINY AND IT IS NOT CLEAR THAT DURING THE FINANCIAL Y EAR 2009 - 10 ALSO THE ASSESSEE WAS MAINTAINING THREE BANK ACCOUNTS TO ARRIVE AT A PROPORTIONATE UNDISCLOSED INCOME BY CLUBBING THE CREDIT ENTRIES IN ALL THREE BANK ACCOUNTS MAINTAINED IN THE FINANCIAL YEAR 2010 - 11 AND REDUCING THEREFROM THE AMOUNTS WITHDRAW N DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE ABSENCE OF COMPLETE PARTICULARS OF INCOME, BOOKS OF I.T.A. NO . 2328 /M/ 15 6 ACCOUNT, IN FACT, WE HAVE NO SECOND OPINION ABOUT THE METHOD ADOPTED BY THE ASSESSING OFFICER WHEN THE DEPARTMENT HA S DE TEC TED THE THIRD ACCOUNT MAINTAINED BY THE ASSESSEE AND NOT DISCLOSED IN THE RETURN FILED BY THE ASSESSEE. HOWEVER, WE DO NOT FIND ANYTHING ABOUT REPLY/SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE AUTHORITIES BELOW AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. MOREOVER, AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT ONE MORE OPPORTUNITY MAY BE GRANTED TO THE ASSESSEE FOR FILING COMPLETE DETAILS BEFORE THE ASSESSING OFFICER. IN VIEW OF THE ABOVE AND TO MEET THE ENDS OF JUSTICE, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO VERIFY THE DETAILS AS MAY BE FILED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. IN CASE, I F THE ASSE SSEE FAILS TO FURNISH SUITABLE EXPLANATION, COMPLETE INCOME AND EXPENDITURE INCURRED DURING THE FINANCIAL YEAR 2010 - 11, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) STANDS SUSTAINED. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 07 TH OCTOBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 07 . 1 0 .201 6 VM/ - I.T.A. NO . 2328 /M/ 15 7 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.