N.Baskaran, Trichy V. Dy CIT Co Cle I, Trichy

ITA 2336/CHNY/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5383 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NOS.2336, 2337 & 2338/MDS/2012 ASSESSMENT YEARS : 2006-07, 2008-09 & 2009-10 SHRI N. BASKARAN 17, RENGA COMPLEX NEAR ANNA STATUE CHINTAMANI TRICHY 620002 VS THE DY. CIT COMPANY CIRCLE I TRICHY [PAN AAIPB 6004 H ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 02-01-2014 DATE OF PRONOUNCEMENT : 20-01-2014 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), TIRUCHIRAPALLI; ALL DATED 21.11.2012, PASSED IN AP PEAL NOS. 282/10-11, 256/10-11 & 281/1011, FOR ASSESSMENT YEARS 2006-07, 2008-09 AND 2009-10 RESPECTIVELY, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A.NOS.2336, 2337 & 2338/12 :- 2 -: 2. IT IS TO BE SEEN FROM THE GROUNDS PLEADED IN THE A PPEALS THAT THE ASSESSEE IS AGGRIEVED BY THE ACTION OF TH E CIT(A) IN CONFIRMING INTEREST DISALLOWANCE OF ` 8,69,307/- IN (I.T.A.NO.2336/ MDS/2012), ` 7,51,376/- U/S 40A(3), UNEXPLAINED CREDIT BALANCES SHOWN AS OUTSTANDING EXPENSES OF ` 1,49,95,432/-, INTEREST DISALLOWANCE OF ` 2,51,588/-, DIFFERENCE IN INCOME FROM BUS OPERATION OF ` 1,26,640/- (IN I.T.A.NO.2337/MDS/2012) AND INTEREST DISALLOWANCE OF ` 11,42,100/- IN (I.T.A.NO.2338/MDS/2012) MADE BY THE ASSESSING OFFICER. 3. COMING TO COMMON GROUND OF INTEREST DISALLOWANCE I N ALL CASES, THE ASSESSEE CONTENDS THAT THE SAME OUGHT T O HAVE BEEN DELETED IN THE LOWER APPELLATE PROCEEDINGS. TO BUT TRESS HIS ARGUMENTS, HE FILES HIS COMPUTATION OF INCOME, PROFIT & LOSS A CCOUNT, BALANCE SHEET, FUND FLOW STATEMENT FOR ASSESSMENT YEAR 20 06-07 AND PRAYS FOR DELETING THE INTEREST DISALLOWANCE. 4. THE REVENUE CHOOSES TO SUPPORT THE RELEVANT FINDING S IN ORDERS OF THE CIT(A) IN ALL CASES. WHILE QUOTING R EASONS STATED THEREIN, IT SUBMITS THAT SINCE THE DISALLOWANCE/ADDITION HAD RIGHTLY BEEN MADE BY THE ASSESSING OFFICER, IT HAS BEEN AFFIRMED IN T HE LOWER APPELLATE PROCEEDINGS. IT QUOTES CASE LAW OF HON'BLE JURISDI CTIONAL HIGH COURT I.T.A.NOS.2336, 2337 & 2338/12 :- 3 -: DATED 4.6.2013 IN TAX CASE (APPEAL) NO.171 OF 2010 M/S A.MURALI & CO.(P) LTD VS ACIT, [1999] 238 ITR 939(MAD) K.SOMAS UNDARAM AND BROTHERS VS CIT, [1996] 222 ITR 163 (MAD) CIT VS M. S. VENKATESWARAN, [1996] 222 ITR 168 (PAT) ASHIS MUKER JI VS UNION OF INDIA & OTHERS, [1990] 185 ITR 324 (MAD) CIT VS P. GANU RAO & SONS & [1990] 185 ITR 328 (BOM) BALAKRISHNA RAMGOPAL RUI A VS UNION OF INDIA & OTHERS TO PRAY FOR REJECTION OF THE APPEALS . AS COMMON ISSUE OF INTEREST DISALLOWANCE IS RAISE D IN ALL CASES, WE TAKE UP I.T.A.NO.2336/MDS/2012 AS THE L EAD CASE. 5. THE ASSESSEE IS AN INDIVIDUAL. HE IS A CIVIL CO NTRACTOR. ON 31.10.2006, THE ASSESSEE HAD RETURNED INCOME OF ` 6,30,310/-. ON 30.12.2008, THE ASSESSING OFFICER HAD FRAMED REGUL AR ASSESSMENT IN HIS CASE. THEREAFTER, OWING TO FAILURE OF THE ASSE SSING OFFICER TO CONDUCT AN ENQUIRY REGARDING ADVANCES GIVEN BY THE ASSESSEE TO HIS ASSOCIATE CONCERN M/S PNS TEXTILES, THE CIT INVOKE D PROCEEDINGS U/S 263 OF THE ACT. ON 28.3.2011, HE DIRECTED THE ASSE SSING OFFICER TO RE- EXAMINE ASSESSEES CASE AFRESH I.E WHETHER THE ADV ANCES WERE FROM INTEREST BEARING OR INTEREST FREE FUNDS. IN CONSEQ UENTIAL PROCEEDINGS, THE ASSESSEES THRUST WAS ON THE PLEA THAT THE TOT AL OVERDRAFT OF ` 80,82,958/- AS ON 31.3.2006 HAD BEEN DEPLOYED IN CA SH BALANCES AND I.T.A.NOS.2336, 2337 & 2338/12 :- 4 -: SECURITY DEPOSITS FOR CONTRACTS AND THERE WAS NO DI VERSION OF INTEREST BEARING FUNDS TO THE ASSOCIATE CONCERN. WE FIND F ROM THE ASSESSMENT ORDER DATED 30.12.2011 THAT THE ASSESSEES AFORESA ID PLEA COULD NOT CONVINCE THE ASSESSING AUTHORITY. THE ASSESSING OF FICER WENT THROUGH THE BALANCE SHEET TO CONCLUDE THAT THE BANK OVERDRA FT ACCOUNT READ ` 80,82,957/- AND THE MONEY ADVANCED TO THE ASSOCIATE D CONCERN STOOD AT ` 1,01,75,240/-. THEREAFTER, HE EXAMINED THE LEDGER OF ASSOCIATE CONCERN AND FOUND THAT ASSESSEES INVESTMENT READ A S ` 56,61,466/-. IN VIEW THEREOF, THE ASSESSING OFFICER HELD THAT A S INTEREST PAYMENTS OF ` 8,69,307/- WERE RELATED TO ADVANCES MADE TO AN ASS OCIATE CONCERN NOT FOR PURPOSE OF THE BUSINESS, THE SAME H AD TO BE DISALLOWED/ADDED IN ASSESSEES INCOME. ACCORDING LY, THE IMPUGNED DISALLOWANCE/ADDITION WAS MADE. 6. IN ASSESSEES APPEAL, HIS CONTENTIONS WERE THAT TH ERE WERE NO BORROWINGS IN THE OVERDRAFT ACCOUNT AS ON 31.3.2 005 AND 31.3.2006 AND THE INVESTMENTS HAD BEEN MADE THROUGH INTEREST FREE FUNDS. THE CIT(A) HAS RELIED ON LEDGER EXTRACT OF THE ASSOCIA TED CONCERN IN OBSERVING THAT THE ASSESSEE HAD INVESTED THE MONEY IN QUESTION FROM OVERDRAFT ACCOUNT. THUS, THE ARGUMENTS CHALLENGING THE DISALLOWANCE/ADDITION STAND REJECTED. I.T.A.NOS.2336, 2337 & 2338/12 :- 5 -: HENCE, THE ASSESSEE HAS RAISED THE IMPUGNED GROUN D. 7. WE HAVE CONSIDERED THE CONTENTIONS OF BOTH PARTIES, PERUSED THE CASE FILE, GONE THROUGH THE PAPER BOOK AS WELL AS CASE LAW QUOTED BY THE REVENUE. THERE IS NO DISPUTE BETWEEN THE P ARTIES THAT A SUM OF ` 56,61,466/- HAD BEEN INVESTED BY THE ASSESSEE IN THE ASSOCIATED CONCERN. THE QUARREL BETWEEN THEM IS THAT PER AS SESSEE, HE HAD MADE INVESTMENTS OUT OF NON-INTEREST BEARING FUNDS WHICH IS CONTESTED BY THE REVENUE. PROCEEDING ON THIS QUESTION, WE NO TICE FROM THE ASSESSEES DOCUMENTS FILED BEFORE US THAT IN THE FU NDS FLOW STATEMENT FOR THE YEAR ENDED 31.3.2006 I.E PREVIOUS YEAR RELE VANT TO THE IMPUGNED ASSESSMENT YEAR, HE HAD RESOURCES OF FUNDS AMOUNTING ` 1,10,29,738/-. THE ASSESSEE HAD APPROPRIATED THE SAME IN VARIOUS HEADS INCLUDING IMPUGNED INVESTMENT IN M/S PNS TEX TILES. IT IS A FACT THAT THE AFORESAID RELEVANT DOCUMENTS HAVE NEITHER BEEN CONSIDERED BY THE ASSESSING OFFICER NOR CIT(A). IN THESE CIRC UMSTANCES, WE ARE OF THE VIEW THAT DIRECTIONS OF THE CIT AS CONTAINED I N THE ASSESSMENT ORDER I.E TO FIND OUT WHETHER INTEREST FREE OR INTE REST BEARING FUNDS HAD BEEN INVESTED, REMAIN UNCOMPLIED. SO, WE FEEL THAT INTEREST OF JUSTICE WOULD BE MET IN CASE THE ISSUE IS RE-EXAMINED IN DE TAIL BY THE ASSESSING OFFICER. WE ORDER ACCORDINGLY AND RESTOR E THE ISSUE BACK TO I.T.A.NOS.2336, 2337 & 2338/12 :- 6 -: THE FILE OF THE ASSESSING AUTHORITY WHO SHALL PASS A FRESH ORDER IN ACCORDANCE WITH LAW AFTER ADEQUATELY HEARING THE A SSESSEE. SO FAR AS THE CASE LAWS QUOTED BY THE REVENUE IS CONCERNED, W E LEAVE IT OPEN FOR THE ASSESSING OFFICER TO CONSIDER THE SAME. ACCORDINGLY, I.T.A.NOS.2336/MDS/2012 AND 2338/MDS /2012 ARE ALLOWED FOR STATISTICAL PURPOSES WHEREAS THE R ELEVANT GROUND IN I.T.A.NO. 2337/MDS/2012 IS RESTORED BACK TO THE ASS ESSING OFFICER. 8. NOW, WE COME TO I.T.A.NO.2337/MDS/2012. AS STATED HEREINABOVE, IN THE COURSE OF ASSESSMENT, THE ASSES SING OFFICER HAD MADE FOUR DISALLOWANCES/ADDITIONS(SUPRA). IN THE L OWER APPELLATE PROCEEDINGS, THE SAME STAND CONFIRMED. WE FIND FRO M THE CIT(A)S ORDER THAT HE HAS DISCUSSED ONLY THE DISALLOWANCE O F ` 1,49,95,432/- RELATING TO UNEXPLAINED CREDIT BALANCE IN DETAIL. REGARDING REST OF THE ISSUES, HE HOLDS THAT THE ASSESSEE HAD NOT FILED AN Y WRITTEN SUBMISSIONS. IN OUR VIEW, THIS IS NOT A DECISION O N MERITS. IN OUR CONSIDERED OPINION, ONCE THE ASSESSEE HAS RAISED T HE GROUNDS AND ARGUED THE SAME IN PROCEEDINGS BEFORE THE CIT(A), IT IS NOT NECESSARY TO FILE WRITTEN ARGUMENTS. IN THESE CIRCUMSTANCES AND IN VIEW OF THE FACT THAT WE HAVE ALREADY RESTORED COMMON ISSUE OF INTEREST DISALLOWANCE BACK TO THE ASSESSING AUTHORITY, OTH ER ADDITIONS ARE ALSO I.T.A.NOS.2336, 2337 & 2338/12 :- 7 -: REMANDED TO THE ASSESSING OFFICER FOR DECISION IN ACCORDANCE WITH LAW. SO, I.T.A.NO.2337/MDS/2012 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 9. TO SUM UP, ALL APPEALS I.T.A.NOS.2336/MDS/2012, 2337/MDS/2012 AND 2338/MDS/2012 ARE ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 20 TH OF JANUARY, 2014, AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 20 TH JANUARY, 2014 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR