ITO, Cuddalore V. Smt. M.Neela & Others, Panruti

ITA 2452/CHNY/2004

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51914 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-08-2011
• Assessment Year: 1990-1991
• Appeal Filed On: 07-10-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Keywords: Unexplained cash credit; Gift
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 2452/MDS/2004 (ASSESSMENT YEAR : 1990-91 ) THE INCOME TAX OFFICER TDS-I CUDDALORE VS SMT. M.NEELA & OTHERS L/H OF SHRI A.MAYAKRISHNAN 36/1, POLICE LANE III STREET KAMARAJ NAGAR PANRUTI (APPELLANT) (RESPONDENT) APPELLANT BY : DR.I.VIJAYAKUMAR, CIT/DR RESPONDENT BY : NONE DATE OF HEARING : 29-08-2011 DATE OF PRONOUNCEMENT : 04-10-2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE, FOR ASSESSMENT Y EAR 19990-91, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), C HENNAI, DATED 16.7.2004. 2. AT THE VERY OUTSET, IT MAY BE NOTED THAT DESPITE HA VING NOTED THE DATE OF HEARING BY THE LD.AR, SHRI N.DEVA NATHAN, ON THE LAST ITA 2452/04 :- 2 -: DATE OF HEARING I.E 26.5.2011, NONE APPEARED ON BEH ALF OF THE ASSESSEE NOR THERE IS ANY REQUEST FOR ADJOURNMENT. THEREFORE, THE CASE WAS HEARD EX-PARTE AND LD.CIT/DR WAS HEARD AT LENGTH. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.3.1992 FOR ASSESSM ENT YEAR 1999- 2000, DECLARING TOTAL INCOME OF ` 22,000/-. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE CASE OF M/S T.S.SUBRAMANIY A CHETTIAR & SONS, PANRUTTI, ON 17.9.1992. DURING THIS SURVEY I T WAS FOUND THAT THE ASSESSEE HAD AVAILED LOANS FROM THE ABOVE FIRM. CO NSEQUENT UPON THIS SURVEY PROCEEDINGS, THE ASSESSEES CASE WAS SELECTE D FOR SCRUTINY AND ASSESSMENT WAS COMPLETED ON 23.9.1993 AT A TOTAL IN COME OF ` 13,03,640/-. AGGRIEVED BY THE ORDER OF THE ASSESSI NG OFFICER, THE ASSESSEE WENT BEFORE THE LD. CIT(A), WHO HAS DELETE D A PORTION OF THE ADDITION AND HAS REMANDED OTHER PORTION OF ADDITION , FOR VERIFICATION AND RECONSIDERATION BY THE ASSESSING OFFICER. AFTE R COMPLYING WITH THE DIRECTIONS OF THE LD. CIT(A), THE THEN ITO(A.O) HAS PASSED HIS FRESH ORDER DETERMINING TOTAL INCOME AT ` 1,42,500/-. MEANWHILE, THE DEPARTMENT HAD FILED APPEAL BEFORE THE TRIBUNAL AGA INST THE ORDER OF THE LD. CIT(A) AND THE TRIBUNAL VIDE ITS ORDER DATE D 29.11.2002 HAD RESTORED THE ENTIRE CASE BACK TO THE FILE OF THE AS SESSING OFFICER AS THE ITA 2452/04 :- 3 -: ASSESSEE DID NOT APPEAR ON THE DATE OF HEARING. TH EREAFTER, THE ASSESSING OFFICER COMPLETED ASSESSMENT AS DIRECTED AND HAS DETERMINED THE INCOME OF THE ASSESSEE AT ` 10,43,394/-. IN SECOND ROUND, THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE REVENUE IS AGGRIEVED. 4. GROUND NOS. 1, 2 & 3 ARE GENERAL IN NATURE REQUIRIN G NO SPECIFIC ADJUDICATION. GROUND NO.4 RELATES TO CRED ITS STANDING IN THE NAMES OF SHRI G.RAJAGOPAL AND SHRI G.DEIVASIGAMMANI . IN FACT, CREDITS OF ` 50,000/- EACH WAS STANDING IN THE NAMES OF ABOVE T WO PERSONS. DURING REMAND PROCEEDINGS, THE ASSESSING OFFICER V ERIFIED ABOUT THEIR CREDITS AND THEY HAVE FAIRLY ADMITTED THAT THEY HAD GIVEN ` 50,000/- EACH TO THE ASSESSEE. ON THIS REASON, THE LD. CIT( A) HAS DELETED AN AMOUNT OF ` 1 LAKH. 5. BEFORE US, THE DEPARTMENT COULD NOT BRING ANY SUCH EVIDENCE WHICH COULD DISSUADE US FROM THE IMPUGNED FINDING. WE, THEREFORE, CONFIRM THIS FINDING OF THE LD. CIT(A) AND DISMISS GROUND NO.4. ITA 2452/04 :- 4 -: 6. GROUND NO.5 RELATES TO DELETION OF THE LOAN AMOUNT TAKEN FROM INDIVIDUAL ACCOUNT OF SHRI MAYAKRISHNAN, WHO I S THE KARTHA OF THE ASSESSEE-HUF. THIS CREDIT WAS INTRODUCED IN THE EA RLIER ASSESSMENT YEAR AND WAS NOT RELATED TO THIS ASSESSMENT YEAR. THIS FACT WAS VERIFIED FROM THE COPY OF TRIAL BALANCE OF THE EARL IER YEAR AND THE CLAIM OF THE ASSESSEE WAS FOUND TO BE CORRECT. IN THIS R EGARD ALSO, NO MATERIAL ARGUMENT WAS ADVANCED FROM THE SIDE OF THE REVENUE. THEREFORE, WE CANNOT DISTURB THIS FINDING OF THE LD . CIT(A) AND HENCE, THIS GROUND ALSO STANDS DISMISSED. 7. DURING THE COURSE OF SURVEY, IT WAS FOUND THAT M/ S T.S.SUBRAMANIA CHETTIAR & SONS HAD ADVANCED HUGE A MOUNTS OUTSIDE THE BOOKS OF ACCOUNT, TO VARIOUS PERSONS, INCLUDING THE ASSESSEE-HUF. THE ASSESSEE USED TO GET HUGE SUMS BY SIGNING A C ASH BOOK MAINTAINED BY THIS FIRM AND USED TO RETURN WITHIN S HORT PERIODS ALONGWITH INTEREST. THE ASSESSEE HAS AVAILED SEVER AL LAKHS OF RUPEES BY THIS WAY AND ALSO REPAID THE SAME. FROM THE AVA ILABLE CASH BOOK OF M/S T.S.SUBRAMANIYA CHETTIAR & SONS, IT WAS FOUND THAT THE ASSESSEE HAD AVAILED LOAN AND REPAID THEM FOR VARIOUS YEARS AS DETAILED BELOW: ITA 2452/04 :- 5 -: YEAR ENDED LOANS AVAILED BY THE ASSESSEE LOANS REPAID INCLUDING INTEREST 31.3.1989 ` 14,50,000 ` 11,02,567 31.3.1990 ` 4,15,000 ` 3,68,405 31.3.1991 ` 9,41,600 ` 3,19,156 31.3.1992 ` 2,15,05,930 ` 1,94,83,521 UPTO 12.9.1993 ` 25,09,500 ` 33,72,090 8. THE INCOME EARNED OUT OF THE TRANSACTIONS WAS NOT ADMITTED BY THE ASSESSEE. THE INVESTMENTS MADE BY THE ASSESSEE IN HIS NAME AND IN THE NAMES OF OTHER MEMBERS OF HIS F AMILY ARE AS UNDER: SL.NO NAME OF THE MEMBER ASSESSMENT YEAR AMOUNT OF INVESTMENT 1. IN THE CASE OF THE ASSESSEE 1990-91 ` 4,49,153 2. SMT. NEELAVATHY(WIFE) 1990-91 ` 3,81,673 3. SHRI M.RAVICHANDRAN(SON) 1990-91 ` 3,84,024 4. SHRI M.JAYASANKAR(SON) 1990-91 ` 3,85,846 9. THE QUESTION AROSE AS TO WHETHER THESE INCOMES AR E TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, AS INDIVIDUA L OR AS HUF. THE ASSESSING OFFICER FOUND THAT THE INVESTMENTS WERE N OT COMMENSURATE WITH THE INCOME RETURNED BY THE ASSESSEE. HE NOTIC ED THAT SMT. NEELAVATHY AND SHRI MAYAKRISHNAN-HUF WERE ASSESSED TO INCOME TAX, BUT SONS WERE NOT ASSESSED. SHRI M.JAYASANKAR WAS AN AGRICULTURIST AND SHRI M.RAVICHANDRAN WAS ONLY AN MBBS STUDENT. SMT.NEELAVATHY ITA 2452/04 :- 6 -: AND HER SONS DID NOT HAVE ANY INDEPENDENT SOURCES O F THEIR INCOME, TO MAKE SUCH HUGE INVESTMENTS. THE SOURCES FOR THE ABO VE INVESTMENT WERE NOT FULLY EXPLAINED BY THE ASSESSEE. TO EXPLA IN THE SOURCES OF INVESTMENTS MADE BY THE ASSESSEE AMOUNTING TO ` 4,49,153/- , THE ASSESSEE ENCLOSED A TRIAL BALANCE AS ON 31.3.1990. THE ASSESSEE CLAIMED LOAN OF ` 1,60,000/- IN THE CREDIT SIDE OF THE TRIAL BALANCE . THE ASSESSEE FILED CONFIRMATORY LETTERS FROM TWO PERSON S NAMELY, SHRI G.RAJAGOPAL AND SHRI DEIVASIGAMANI. A SUM OF ` 60,000/- WAS CLAIMED AS CREDIT FROM INDIVIDUAL ACCOUNT OF SHRI MAYAKRIS HNAN. THE ASSESSING OFFICER ADDED THESE CREDITS TO THE TOTAL INCOME ON THE GROUND THAT THE CREDITS FROM THESE TWO PERSONS ARE NOT GENUINE AND THAT NO BOOKS OF ACCOUNT OR ANY EVIDENCE WERE PRODUCED BY THE ASSESS EE FOR THE INDIVIDUAL ACCOUNT. THE DETAILS OF INCOME-TAX ASSE SSMENTS OF SHRI MAYAKRISHNAN-HUF AND SMT.NEELAVATHY ARE AS FOLLOWS: ASSESSMENT YEAR INCOME ADMITTED BY SHRI MAYAKRISHNAN-HUF INCOME ADMITTED BY SMT.NEELAVATHY INCOME AGRICULTURAL INCOME INCOME AGRICULTURA L INCOME 1978-79 -- -- 7,300 -- 1979-80 1505 3000 -- -- 1980-81 6967 3000 5400 -- 1981-82 9627 6900 7200 4000 1982-83 12740 9300 5400 -- 1983-84 10900 3200 4145 -- 1984-85 15500 5700 7350 5200 1985-86 15480 3920 8920 4100 1986-87 18410 22400 18200 6000 1987-88 18234 20120 18350 6500 1988-89 19600 29410 19040 18110 ITA 2452/04 :- 7 -: 10. SMT.NEELAVATHY IS ASSESSED TO INCOME TAX FROM ASSES SMENT YEAR 1978-79 ONWARDS. HER MAIN SOURCE OF INCOME IS FROM THE SALE OF MILK, INTEREST INCOME AND CHIT COMMISSION. AS REGA RDS DETAILS OF SOURCES FOR THE INVESTMENTS IN THE NAME OF ASSESS EES FAMILY MEMBERS, IT WAS ADMITTED THAT LOANS TO THE EXTENT O F ` 5,58,000/- WERE TAKEN FROM M/S T.S.SUBRAMANIA CHETTIAR & SONS, THE DETAILS OF WHICH ARE AS UNDER: DATE OF LOAN LOAN AMOUNT FOR INVESTMENT IN THE NAME OF 2-8-1989 ` 10,000 M.RAVICHANDRAN 25-11-1989 ` 60,000 28-11-1989 ` 1,00,000 1-8-1989 ` 40,000 M.JAYASANKAR 21-11-1989 ` 60,000 22-11-1989 1,50,000 20-11-1989 ` 50,000 M.NEELAVATHY AMMAL 22-11-1989 ` 50,000 11. FROM THE RECORDS IT WAS NOTICED THAT THERE ARE LAND HOLDINGS IN THE NAME OF SHRI M.RAVICHANDRAN, AS DETAILED BEL OW: DATE OF PURCHASE AMOUNT PROPERTY DETAILS 2.9.1978 11,200 1 ACRE 50 CENTS OF LANDS AT MELMAMPATTUVILLAGE 27.4.1983 694 11.1/4 CENTS OF LANDS AT MELMAMPATTU VILLAGE 17.11.1984 8,800 39 CENTS OF LANDS AT CHINNAPURANGANI VILLAGE 3.6.1986 27,327 2 ACRE 36 CENTS AT KADAMPULIYUR 12.8.1987 38370 4 ACRE 30.1/2 CENTS OF LANDS AT KADAMPULIYUR 25.4.1988 14,716 31 CENTS OF LANDS T VADAKAILASAM VILLAGE 101106 ITA 2452/04 :- 8 -: 12. IN THE ABSENCE OF ANY EVIDENCE OF AGRICULTURAL INCO ME FILED, THE ASSESSING OFFICER HAS ESTIMATED NET AGRICULTURA L INCOME AT ` 31,750/-. FINALLY FOLLOWING ADDITIONS WERE MADE: 1. UNEXPLAINED LOAN IN THE NAME OF SHRI G.RAJAGOPAL APPEARING IN ASSESSEES ACCOUNTS 22,504 2. UNEXPLAINED LOAN IN THE NAME OF SHRI G.DEIVASIGAMANI APPEARING IN ASSESSEES ACCOUNTS 50,000 3. UNEXPLAINED CREDIT FROM INDIVIDUAL ACCOUNT APPEARING IN ASSESSEES ACCOUNT 60,000 4. UNEXPLAINED LOANS IN THE NAME OF T.S.SUBRAMANIA CHETTIAR & SONS FOR THE INVESTMENT MADE BY SMT.M.NEELAVATHI, ASSESSEES WIFE 1,08,000 5. UNEXPLAINED GIFT IN THE NAME OF MOTHER OF SMT.M.NEELAVATHI AMMAL FOR THE INVESTMENT MADE BY SMT.M.NEELAVATHI, ASSESSEES WIFE 20,000 6. AGRICULTURAL INCOME CREDITED IN THE ACCOUNT OF SMT.NEELAVATHI AMMAL FOR THE INVESTMENT MADE BY SMT.M.NEELAVATHI AMMAL 37,150 7. INVESTMETN IN THE NAME OF SHRI M.JAISANKAR 3,60, 846 8. INVESTMENT IN THE NAME OF SHRI M.RAVICHANDRAN 2,84,024 13. THE OTHER GROUNDS RAISED IN THIS APPEAL ARE AS UNDE R: 6. THE CIT(A) ERRED IN HOLDING THAT SMT. NEELAVATH I AMMAL HAD GENUINE. INDEPENDENT INCOME SINCE ON ENQUIRY IT WAS FOUND THAT SHE DID NOT HAVE ANY GENUINE/INDEPENDENT INCOME AND SHE DID NOT HAVE ANY KNOWLEDGE ABOUT HER ADDRESS GIVEN IN T HE INCOMETAX RETURNS. NATURE OF BUSINESS DISCLOSED IN THE INCOMETAX RETURNS, LOCATION OF PROPERTIES. ETC 7. THE CIT(A) HAS UPHELD THE ADDITION OF GIFT FROM THE MOTHER OF NEELVATHI AMMAL APPEARING IN THE ACCOUNTS OF SMT. N EELAVATHI AMMAI, FOR ASSESSMENT IN THE HANDS OF THE ASSESSEE- HUF ITA 2452/04 :- 9 -: WHEREAS HE HELD THAT SHE HAD INDEPENDENT SOURCE OF INCOME AND DELETED THE ADDITION MADE TOWARDS UNEXPLAINED L OAN IN THE NAME OF S.SUBRAMANIA CHETTIAR & SONS AMOUNTING TO ` 1,08,000/- STATED AS SOURCE FOR THE INVESTMENT MAD BY SMT. NEELAVATHI, WHICH IS CONTRADICTORY. 8. THE CIT(A) ERRED IN DELETING THE ADDITION OF E XCESS AGRICULTURAL INCOME OF ` 37,150/- ADMITTED B SMT. NEELAVATHI AMMAL ASSESSED IN THE HANDS OF HUF SINCE THE ASSESS EE HAS NOT FILED PROPER DETAILS AND THE HIGHEST AGRICULTUR AL INCOME RETURNED BY THE ASSESSEE HERSELF FOR THE EARLIER YE AR ITSELF IS ` 18,110/-. 9. THE CIT(A) ERRED IN DELETING THE ADDITION MADE T OWARDS INTEREST AND COMMISSION CREDIT9D IN THE ACCOUNTS OF SMT. NEELAVATHI AMMAL BY ` 16,120/- IN THE HANDS OF THE ASSESSE HUF, SINCE IT WAS FOUND THAT SMT. NEEIVATHI AMMAL D ID NOT HAVE GENUINE, INDEPENDENT SOURCE OF INCOME. 10. THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITI ONS MADE BY THE ITO TOWARDS INVESTMENT IN THE NAME OF ASSESSEES SO NS SHRI M.JAISANKAR AND SHRI M.RAVICHANDRAN, RELYING ON THE BALANCE SHEET FILED BY THE ASSESSEE. 14. AFTER CONSIDERING THE SUBMISSIONS OF THE LD.DR ON THESE GROUNDS, WE HAVE FOUND THAT THE ORDER OF THE LD. CI T(A) DOES NOT REQUIRE ANY INTERFERENCE. PARAGRAPHS 9 TO 11 OF TH E LD. CIT(A)S ORDER WILL GIVE A CLEAR PICTURE OF THE FACTS AND EVIDENCE AND REASONING GIVEN FOR MAKING THE DELETION. ACCORDINGLY, WE DO NOT IN TERFERE IN THE APPELLATE FINDING AND CONFIRM THE SAME. ITA 2452/04 :- 10 - : 15. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 04-10-2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 4 TH OCTOBER, 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR