Mrs. Madhu Kumbhat, CHENNAI V. ACIT, CHENNAI

ITA 2421/CHNY/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8114 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 22-08-2016
• Court: TRIBUNAL
• Department Lawyers: MRS H KABILA
• Assessee Lawyers: D ANAND
• Keywords: Unexplained investment; Business income; Source of fund; Onus to prove
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO: 2421/MDS/2016 / ASSESSMENT YEAR : 2012-13 MRS. MADHU KUMBHAT, OLD NO. 142/ NEW NO. 208, GOVINDAPPA NAICKEN STREET, CHENNAI - 600 001. [PAN: AFEPK 7224B] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE - 11, 611, ANNA SALAI, CHENNAI - 600 006. ( $ / APPELLANT) ( %&$ /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE / RESPONDENT BY : MRS. H. KABILA, JCIT /DATE OF HEARING : 28.11.2016 /DATE OF PRONOUNCEMENT : 01.12.2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 13, CHENNAI, ITA NO. 25/CIT( A)-13/2012-13 DATED 27.05.2016 PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT. :-2-: I.T.A. NO. 2421/MDS/2016 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 13 OUGHT TO HAVE APPRECIATED THE SUBMISSIONS MADE BY APPELLANT AND OUGHT NOT TO HAVE SUSTAINED THE ADDITION OF RS. 8 LAKHS AS UNEX PLAINED INVESTMENT. 2.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE APPELLANT HAD INTROD UCED ADDITIONAL CAPITAL IN THE FIRM IN WHICH SHE WAS A PARTNER FRO M THE LIQUID RESOURCES SHE HAD WITH HER AND THIS FACT WAS ALSO BROUGHT TO THE NOTICE OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 13. 2.3 THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE AP PRECIATED THE FACT THAT THE APPELLANT HAD FILED ITS STATEMENT OF AFFAIRS AS ON 31.03.2011 WHICH CLEARLY DEPICTED THAT THE APPELLA NT HAD ENOUGH CASH BALANCE TO MAKE THE ADDITIONAL CONTRIBUTION T OWARDS HER CAPITAL IN THE FIELD FOR THIS APPELLATE TRIBUNAL. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS THE PROPRIETIX OF M/S. K- MAST INDUSTRIES DEALING IN HIGH MAST LIGHT POLES AN D ELECTRIC FITTINGS AND M/S. KUMAR INVESTMENTS BEING A FINANCIAL CONCERN AND ALS O SHE IS A PARTNER IN M/S. ASHOK ELECTRIC COMPANY, M/S. KUMAR ELECTRICAL ENTER PRISES AND M/S. K-LITE INDUSTRIES AND M/S. KUMAR HOLOGRAPHICS. THE ASSESS EE HAS FINANCIAL SOURCES FROM INCOME FROM HOUSE PROPERTY, INTEREST FROM BANK AND BUSINESS INCOME AND :-3-: I.T.A. NO. 2421/MDS/2016 FILED RETURN OF INCOME ELECTRONICALLY ON 13.08.2013 WITH TOTAL INCOME OF RS. 37,71,680/- AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICE U/S. 143(2) OF THE ACT WAS ISSUED. THE ASSESSEE DURING THE FINANCIAL YEAR 2011-12 HAS INTRODUCED CAPITAL OF R. 8 LAKHS ON VARIOUS DATES IN HER CAPIT AL ACCOUNT OF PARTNERSHIP FIRM M/S. KUMAR ELECTRICAL ENTERPRISES. THE ASSESSEE EX PLAINED THAT THERE IS SUFFICIENT CASH BALANCE AS ON 31.03.2011 IN HER BOOKS OF ACCOU NT AND AMOUNT WAS BROUGHT INTO THE BUSINESS ON VARIOUS DATES. THE ASSESSING OFFICER FOUND THAT THE EXPLANATIONS ARE NOT VERIFIABLE FROM THE DETAILS FI LED BY THE ASSESSEE AND TREATED RS. 8 LAKHS AS UNEXPLAINED INVESTMENT ALONG WITH OT HER ADDITIONS AND ASSESSED TOTAL INCOME OF RS. 56,44,850/- U/S. 143(3) OF THE ACT DATED 27.03.2015. 4. AGGRIEVED BY THE ORDER, ASSESSEE FILED AN APPEAL WITH THE CIT(A). THE LD. AR OF THE ASSESSEE ARGUED THE GROUNDS, RETREATE D THE SUBMISSIONS THAT THE ASSESSEE HAS SUFFICIENT CASH BALANCE AS ON 31.03.20 11 AND RS. 8 LAKHS WAS INVESTED AS CAPITAL IN PARTNERSHIP FIRM. THE LD. C IT(A) CONSIDERED THE FINDINGS OF THE LD. AO AND SUBMISSIONS OF THE ASSESSEE THAT SHE HAS ADEQUATE CASH BALANCE AS ON 31.03.2011 FOR CONTRIBUTION IN PARTNERSHIP FI RM M/S. KUMAR ELECTRICAL ENTERPRISES. THE LD. CIT(A) RELIED ON THE ACTION O F THE LD. AO IN TREATING AS UNEXPLAINED INVESTMENT AND DISMISSED THE ASSESSEE'S GROUND AND PARTLY ALLOWED THE APPEAL. AGGRIEVED, THE ASSESSEE HAS FILED BEFO RE THE TRIBUNAL. :-4-: I.T.A. NO. 2421/MDS/2016 5. BEFORE US, THE LD. AR ARGUED THAT THE ASSESSEE I S A PROPRIETIX AND IS IN BUSINESS FOR MORE THAN TWO DECADES AND FILED THE IN COME TAX RETURNS FROM EARLIER ASSESSMENT YEARS. THE ACTION OF THE AO IN DISALLOWING THE ADDITION TO CAPITAL ACCOUNT IS WITHOUT ANY BASIS AND THE LD. CI T(A) HAS CONFIRMED THE ORDER. THE LD. AR PRAYED, THAT THE ASSESSEE HAS ADEQUATE S OURCE OF INCOME/CASH BALANCE IN THE BOOKS OF ACCOUNTS AND CAN EXPLAIN EA CH DEPOSIT IN THE FIRM AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LD. DR RELIED ON THE ORDER OF THE CIT(A) AND LOWER AUTHORITIES AND OPPOSED THE GROUND S. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD. THE SOLE CRUX OF THE MATTER IS THAT THE ASSESSEE HAS CO NTRIBUTED RS. 8 LAKHS ON VARIOUS DATES TO HER CAPITAL ACCOUNT FOR THE FINANC IAL YEAR 2011-12, WHICH THE REVENUE CONSIDERED AS UNEXPLAINED AS TO ITS SOURCES . THE ASSESSEE HAS FILED STATEMENT OF AFFAIRS AS ON 31.03.2011. WE FIND STR ENGTH IN THE ARGUMENTS OF THE LD. AR D. ANAND THAT THE ASSESSEE HAS BEEN FILLING HER INCOME TAX RETURNS REGULARLY AND HAS SOURCES OF INCOME, WHICH ARE BEIN G REGULARLY DISCLOSED TO THE INCOME TAX DEPARTMENT: SHE BEING A ASSESSEE FOR A D ECADE. AND THAT SHE CAN SUBSTANTIATE EACH ENTRY OF CASH DEPOSIT WITH THE AV AILABLE CASH BALANCE. AT THE SAME TIME, WE ARE CONSCIOUS THAT ONE WOULD NOT NORM ALLY ACCUMULATE CASH BALANCE TO THIS EXTENT, PARTICULARLY CONSIDERING TH AT THE ASSESSEE IS IN BUSINESS/ES, FOR WHICH CAPITAL IS LIFELINE AND, TWO , THE INCOME FROM PARTNERSHIP FIRMS AND HOUSE PROPERTY WOULD USUALLY BE DEPOSITED /REFLECTED IN THE BANK ACCOUNT/S. CONSIDERING THE FACTS AS A WHOLE, WE AR E OF THE VIEW THAT AN :-5-: I.T.A. NO. 2421/MDS/2016 OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE, HAV ING SUBSTANTIAL INCOME FROM BUSINESS AND OTHER SOURCES, TO EXPLAIN THE DETAILS OF EACH CASH ENTRY OF DEPOSIT IN THE PARTNERSHIP FIRM. WE MAY FURTHER ADD THAT THE BURDEN TO PROVE HER CLAIM, WHICH BOILS DOWN TO JUSTIFYING HER STATEMENT OF AFF AIRS AS ON 31.03.2011, REASONABLY SATISFYING THE REVENUE, IS ON THE ASSESS EE. ACCORDINGLY, THE MATTER REMITTED TO THE FILE OF CIT(A), WHO SHALL ADJUDICAT E PER SPEAKING ORDER AFTER HEARING BOTH THE SIDES BEFORE HIM. WE DECIDE ACCOR DINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 1ST DAY OF DECEMB ER, 2016 AT CHENNAI. SD/ - ( ) (SANJAY ARORA) / ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, * /DATED: 1ST DECEMBER, 2016 JPV -./ 0/ /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. 1 ( )/CIT(A) 4. 1 /CIT 5. / -- /DR 6. 5 /GF