ITO, CHENNAI V. Govind Kumar Chordia, CHENNAI

ITA 2558/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9074 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: D ANAND
• Keywords: Unexplained investment
• Section: 142(1); 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.2558/MDS/2014 # % &% / ASSESSMENT YEAR : 2007-2008. THE INCOME TAX OFFICER, BUSINESS WARD X(4) CHENNAI 600 006 VS. SHRI. GOVIND KUMAR CHORDIA, NO.342, MINT STREET, SOWCARPET, CHENNAI 600 079. [PAN AAFPC 9022R] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. +,'( ) * /RESPONDENT BY : SHRI. D. ANAND, ADVOCATE. ! ) - / DATE OF HEARING : 06-06-2016 ./& ) - / DATE OF PRONOUNCEMENT : 17-06-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, CHE NNAI IN ITA NO.779/13-14, DATED 02.04.2014 FOR THE ASSESSMENT YEAR 2007-2008 ITA NO. 2558/MDS/2014. :- 2 -: PASSED U/S.271(1) (C) AND 250 OF THE INCOME TAX AC T, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 2.1. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THOUGH THE LOAN AMOUNT OF 1,07,00,000/- HAD BEEN SANCTIONED, ONLY 66.21 LAKHS HAD BEEN DISBURSED TILL 31/3/2007 AN D HENCE THE SOURCE OF INVESTMENT OF 40.78 LAKHS MADE IN THE FINANCIAL YEAR 2006-07 HAS NOT BEEN PRO VED. 2.2 THE LD.CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HIMSELF HAD SUBMITTED THAT THE SOURCE OF INVESTMENT TO BE THE LEAN OF 1,07,00,000/- AND HAS CLAIMED THE ABOVE SUM AS SECURED LOAN IN THE BALANCE SHEET AS ON 31/3/2007. 2.3. THE LD.CIT(A) FAILED TO APPRECIATE THAT IF THE EXISTING LOAN AMOUNT OF 49,03,162/- WAS DOSED OUT OF THE INITIAL DISBURSEMENT, THEN THE ASSESSEE WOULD HAVE HAD ONLY 17,18,606/- FO R THE DEVELOPMENT OF THE PROPERTY AS AGAINST 1,07,00,000/- SPENT BY HIM. 2.4 THE LD.CIT(A) FAILED TO APPRECIATE THAT THE REMAINING LOAN AMOUNT OF 40.78 LAKHS AD NOT BEEN DISBURSED AS ON 31/3/2007 HOWEVER THE SAME HAS BEEN CLAIMED TO HAVE B EN SPENT BY THE ASSESSEE AND HENCE CONSTITUTES CONCEALMENT O F THE INCOME OUT OF WHICH THE INVESTMENT HAS BEEN MADE. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS IN THE BUSINESS OF MONEY LENDING AND FILED RETURN OF INCO ME ON 27.12.2007 DECLARING TOTAL INCOME OF ?1,03,412/- FOR THE ASSE SSMENT YEAR 2007- 2008 AND THE RETURN OF INCOME WAS PROCESSED U/S.143 (1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES ITA NO. 2558/MDS/2014. :- 3 -: U/S.143(2) AND 142(1) OF THE ACT WERE ISSUED. IN C OMPLIANCE TO NOTICES, THE LD. AUTHORISED REPRESENTATIVE OF ASSES SEE APPEARED FROM TIME TO TIME AND FILED INFORMATION. THE LD. ASSESS ING OFFICER IN THE ASSESSMENT PROCEEDINGS FOUND THAT ASSESSEE IS DERIV ING INCOME FROM MONEY LENDING BUSINESS AND HAS DISCLOSED HOUSE PROP ERTY AT BANGALORE UNDER FIXED ASSETS IN BALANCE SHEET AT ? 1,24,45,907/- AS ON 31.03.2007 AND THE VALUE OF FIXED ASSET AS AT 3 1.03.2006 IS ?49,03,162/-. THE LD. ASSESSING OFFICER SOUGHT CLA RIFICATIONS ON INCREASE IN VALUE OF PROPERTY. THE LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE ASSESSEE IS DEVELOPING HOUSE PRO PERTY AT BANGALORE AND HAS BORROWED LOANS FROM BANK BEING ?1,07,00,000 /- FROM STANDARD CHARTERED BANK AND FURNISHED COPY OF SANC TION LETTER DATED 15.03.2007. THE LD. ASSESSING OFFICER FOUND FROM T HE LOAN SANCTION LETTER, THE ASSESSEE ALONGWITH THREE OTHER APPLICA NTS HAD BORROWED LOAN AND REQUESTED TO PRODUCE THE OWNERSHIP DETAIL S OF PROPERTY, APPROVED PLAN AND CONSTRUCTION COST. ON 29.12.2009, THE LD. AUTHORISED REPRESENTATIVE PRODUCED ASSESSEE SAVING BANK ACCOUNT IN KARNATAKA BANK, BANGALORE AND EXPLAINED THAT OUT OF SANCTIONED AMOUNT, THE BANK HAS DISBURSED ?66,21,768/- ON 30 .03.2007. THE LD. ASSESSING OFFICER WAS SUSPICIOUS AS THE ASSESS EE OBTAINED LOAN FROM STANDARD CHARTERED BANK ?1,07,00,000/- AND DIS CLOSED IN BALANCE SHEET BUT BANK HAS DISBURSED ?66,21,768/- IN THE P REVIOUS YEAR 2006- ITA NO. 2558/MDS/2014. :- 4 -: 2007. THE LD. ASSESSING OFFICER WANTED CLARIFICATI ONS ON THE BALANCE LOAN AMOUNT OF ?40,78,232/-. SINCE THERE WAS NO R EPLY AND DETAILS ARE NOT FURNISHED, THE LD. ASSESSING OFFICER MADE A DDITION OF ?40,78,232/- TO THE RETURNED INCOME AS UNEXPLAINED INVESTMENTS AND ASSESSED TOTAL INCOME ?41,81,644/- AND PASSED ORDER U/S.143(3) OF THE ACT DATED 29.12.2009. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DISMISSED THE APPEAL FOR NON P ROSECUTION AND ASSESSEE HAS ACCEPTED THE DECISION OF THE COMMISSIO NER OF INCOME TAX (APPEALS)-IV, CHENNAI DATED 29.12.2011 AND PAID THE DISPUTED TAXES. SUBSEQUENTLY, THE LD. ASSESSING OFFICER INI TIATED PENALTY PROCEEDINGS AND ISSUED NOTICE. IN COMPLIANCE TO NO TICE, THE LD. AUTHORISED REPRESENTATIVE APPEARED AND THE CASE WAS DISCUSSED. THE LD. ASSESSING OFFICER CONSIDERED THE FINDINGS OF TH E ASSESSMENT ORDER AND ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) I N DISMISSING THE QUANTUM APPEAL. THE LD. AUTHORISED REPRESENTATIVE REITERATED THE SUBMISSIONS OF ASSESSMENT AND APPELLATE PROCEEDINGS AND FILED A DETAILED LETTER DATED 22.03.2012 EXPLAINING THAT T HERE IS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE A ND ASSESSEE HAS FULLY CO-OPERATED WITH THE DEPARTMENT AND PAID DISP UTED TAXES. BUT LD. ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSIONS AS THE ASSESSEE ITA NO. 2558/MDS/2014. :- 5 -: COULD NOT PROVE THE ADDITION OF UNEXPLAINED INVEST MENTS IN ASSESSMENT PROCEEDINGS OR IN APPELLATE PROCEEDINGS AND RELIED ON THE JUDICIAL DECISIONS AND EXPRESSED CATEGORICAL FI NDINGS THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS PLACED O N HIM TO SUBSTANTIATE THE ADDITION AND LEVIED MINIMUM PENALT Y OF ?11,73,470/-. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEA L BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 5. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE ARGUED THE GROUNDS AND REITERATED TH E SUBMISSIONS WITH EVIDENCE PLACED IN ASSESSMENT AND IN QUANTUM A PPEAL AND PENALTY PROCEEDINGS. THE LD. AUTHORISED REPRESENTAT IVE FURTHER SUBSTANTIATED HIS ARGUMENTS WITH WRITTEN SUBMISSION S REFERRED AT PARA 9 & 10 BY LD. COMMISSIONER OF INCOME TAX (APPEALS) . PRIME FACIE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSID ERED THE FINDINGS OF THE LD. ASSESSING OFFICER IN ASSESSMENT AND PENA LTY PROCEEDINGS WERE THE LD. ASSESSING OFFICER HAS MADE AN OBSERVAT ION THAT THE ASSESSEE COULD NOT EXPLAIN THE REMAINING LOAN AMOU NT OF ?40,78,232/- AND RAISED THE DOUBTS. IN THE ABSENCE OF ANY EXPLA NATION BY THE ASSESSEE, THE LD. ASSESSING OFFICER HAS TREATED THE DISPUTED AMOUNT AS UNEXPLAINED INVESTMENTS AND THE LD. COMMISSIONER O F INCOME TAX (APPEALS) EMPHASIZED LOAN LIABILITY CANNOT BE A SOU RCE OF INCOME FOR ITA NO. 2558/MDS/2014. :- 6 -: ADDITION AND IS OF THE OPINION THAT THE LEVY OF PE NALTY IS UNWARRANTED AND DELETED THE PENALTY REFERRED AT PARA 13 OF HIS ORDER AS UNDER:- 13. FURTHER, THE AO HAS NOT COUNTERED THE BASIC REASONING OF THE AR THAT THE LOAN ACCOUNT WITH KARNATAKA BANK WAS CLOSED OUT OF THE INITIAL ADVANCES MADE BY STANDARD CHARTERED BANK. THE LOAN AMOUNT FROM STANDARD CHARTERED BANK OF 1,07,00,000/- WAS SANCTIONED ON 15-3-2007 FOR A PERIOD OF 108 MONTHS AND AS PER THE AO HIMSELF AN AMOUNT OF 66,21,768/- WAS DISBURSED TO THE ASSESSEE ON 30-8-2007 LEAVING ASIDE 40,78,232/- WHICH WAS DISBURSED LATER IN THE NEXT FINANCIAL YEA R AS PER THE TERMS OF THE LOAN SANCTION ORDER. HENCE, THE REMAINING LOAN AMOUNT OF 40,78,232/- WOULD BY NO MEANS CONSTITUTE CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC. 271(1)(C) AND HENCE THE PENALTY IMPOSED IS HELD TO BE UNTENABLE, AND THEREFORE DIRECTED TO BE DELETED. AND ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE REV ENUE HAS ASSAILED AN APPEAL BEFORE TRIBUNAL. 6. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARG UED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE PENALTY WITHOUT CONSIDERING THE FACTS THAT OUT OF ? 1,07,00,000/- SANCTIONED AMOUNT ONLY ?66,21,768/- LAKHS WAS CREDI TED TO THE ASSESSEE BANK ACCOUNT BEFORE 31.03.2007 AND THE AS SESSEE COULD NOT SUBSTANTIATE WITH THE SOURCE OF INVESTMENT OF ?40,7 8,232/- THOUGH THE ASSESSEE HAS DISCLOSED IN THE BALANCE SHEET ?1,07,0 0,000/-. THE FACT THAT THE ASSESSEE HAS A EXISTING LOAN AND WAS CLOSE D AFTER INITIAL DISBURSEMENT BY THE STANDARD CHARTERED BANK. THE L D. COMMISSIONER ITA NO. 2558/MDS/2014. :- 7 -: OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN NOT AP PRECIATING THE FACTS THAT REMAINING LOAN AMOUNT OF ?40,78,232/- WAS NOT DISBURSED BEFORE 31.03.2007, WHICH WAS CLAIMED TO BE SPENT BY THE AS SESSEE IN THE CONSTRUCTION AND PRAYED FOR SET ASIDE OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 7. CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED TH E GENUINE FACTS AND LOANS OBTAINED BY THE ASSESSEE IN DEVELOP MENT OF HOUSE PROPERTY, THE LD. ASSESSING OFFICER HAS DISALLOWED ?40,78,232/- AS UNEXPLAINED INVESTMENTS AS THE SAME WAS NOT DISBURS ED BEFORE 31.03.2007. FURTHER TO SUBSTANTIATE THE ARGUMENTS, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED COPY OF CERTIFICATE FROM K ARNATAKA BANK LTD DATED 19.02.2010 CERTIFYING ?40,29,328/- WAS DISBUR SED ON 22.03.2007 AND THE LOAN ACCOUNT WAS CLOSED ALONGWITH THE SANC TION COPY LETTER OF STANDARD CHARTERED BANK DATED 15.03.2007, AND FURTH ER EXPLAINED THAT ?1,07,00,000/- WAS DISBURSED IN TWO INSTALLMEN TS IE ?66,21,768/- WAS DISBURSED AND CREDITED TO ASSESSEES SAVING BAN K ACCOUNT WITH KARNATAKA BANK LTD ON 30.03.2007 AND ?40,29,328/- W AS DISBURSED BY STANDARD CHARTERED BANK ON 22.03.2007 AND THE SAID AMOUNT WAS CREDITED TO THE ASSESSEES LOAN ACCOUNT WITH KARNAT AKA BANK LTD, SO TOTAL SANCTIONED LOAN AMOUNT OF ?1,07,00,000/- CRED ITED BEFORE 31.03.2007. THE FINDINGS OF THE LD. ASSESSIN G OFFICER IN THE PENALTY PROCEEDINGS AND REVENUES ARGUMENTS BEFORE THE TRIBUNAL ITA NO. 2558/MDS/2014. :- 8 -: THAT BALANCE AMOUNT WAS NOT DISBURSED BEFORE 31.03. 2007 IS WITHOUT ANY VERIFICATION AND AUTHENTIC REPORT AND THE ASSES SEE HAS SUBSTANTIAL EVIDENCE TO SUPPORT THE DISBURSEMENT OF LOAN AMOU NT AND PRAYED FOR DISMISSAL OF APPEAL. 8. WE HEARD THE RIVAL SUBMISSION, PERUSED THE MATERIAL ON RECORD AND EVIDENCE FILED. THE CRUX OF THE ISSUE I N APPELLATE PROCEEDINGS WHICH LD. DEPARTMENTAL REPRESENTATIVE IS PRESSING THAT THE ASSESSEE HAS DISCLOSED THE LOAN FROM STANDARD C HARTERED BANK AS ON 31.03.2007 AS ?1,07,00,000/- BUT SUBSTANTIATED ONLY TO THE EXTENT OF ?66,21,768/- AS REFERRED BY THE LD. ASSESSING OF FICER IN THE ASSESSMENT PROCEEDINGS. THE LD. AUTHORISED REPRES ENTATIVE DREW OUR ATTENTION TO THE CERTIFICATE DATED 19.02.2010 ISSUE D BY THE KARNATAKA BANK LTD THAT ?40,29,328/- WAS RECEIVED FROM STANDA RD CHARTERED BANK TOWARDS LOAN ACCOUNT OF ASSESSEE ON 22.03.2007 AND THE ASSESSEES SAVING BANK ACCOUNT WAS CREDITED WITH ? 66,21,768/- ON 30.03.2007 AND SUPPORTED THE LOAN TRANSACTIONS WIT H BANK STATEMENTS, CERTIFICATES AND LOAN AGAINST PROPERTIE S LETTER DATED 15.03.2007. FURTHER, WE FOUND THAT ON COMPARISON W ITH THE VALUE OF PROPERTY DISCLOSED BY THE ASSESSEE AS ON 31.03.200 6 IS ?49,03,162/- AND THE SAID VALUE AS OF 31.03.2007 IS ?1,24,45,907 /- AND THE DIFFERENTIAL VALUE OF CONSTRUCTION COST SPENT DURI NG THE FINANCIAL YEAR ITA NO. 2558/MDS/2014. :- 9 -: IS ?75,42,745/- AND THE ASSESSEE SUPPORTED THE COS T WITH KARNATAKA BANK LOAN AND DISBURSEMENT FROM THE STANDARD CHART ERED BANK HOUSING LOAN AMOUNT OF ?1,07,00,000/-. FURTHER, TH E LOAN SOURCE CANNOT BE TREATED AS INCOME FOR ASSESSMENT. THEREF ORE, WE ARE OF THE OPINION THAT COMMISSIONER OF INCOME TAX (APPEALS) H AS ELABORATELY DISCUSSED VIZ-A-VIZ CONSIDERED THE ASSESSEE SUBMISS IONS AND THE LOAN DOCUMENTS AND ALLOWED THE APPEAL. WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND D ISMISS THE GROUNDS OF THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IN DISMIS SED. ORDER PRONOUNCED ON FRIDAY, THE 17TH DAY OF JUNE , 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 1 / DATED:17.06.2016 KV 2 ) +#-34 54&- / COPY TO: 1 . '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :;% < / GF