M.Ramanathan, CHENNAI V. ACIT, Trichy

ITA 2598/CHNY/2014

• Counselvise Citation: 259821714 RSA 2014
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 15-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Gift; Business income; Salary income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL S M C BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NOS.2598 & 2599/MDS/2014 ' #$' / ASSESSMENT YEARS : 2006-07 & 2007-08 SHRI M. RAMANATHAN, NO.108, CHURCH STREET, KARAIKAL. PAN : AAEPR 2204 B V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, TIRUCHIRAPALLI. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ()&' * + / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT , # * -. / DATE OF HEARING : 21.08.2015 /0$ * -. / DATE OF PRONOUNCEMENT : 04.09.2015 / O R D E R BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS), TIRUCHIRAPALLI, DATED 21.08.2014 AND PER TAIN TO ASSESSMENT YEARS 2006-07 AND 2007-08. THEREFORE, I HEARD BOTH 2 I.T.A. NOS.2598 & 2599/MDS/14 THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY T HIS COMMON ORDER. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASSE SSEE ON 09.11.2006. AFTER THE SEARCH, THE ASSESSEE FILED R ETURN FOR THE ASSESSMENT YEAR 2006-07 ON 23.02.2007. IN THE ASSE SSMENT YEAR 2006-07, THE ASSESSEE GIFTED A SUM OF ` 5 LAKHS TO HIS SON SHRI R. GANESAN WHICH WAS REFLECTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE AND HIS SON SHRI R. GANESAN. IN THE ASSES SMENT YEAR 2007-08, THE ASSESSEE GAVE A SUM OF ` 7 LAKHS. SINCE THE TRANSACTION WAS SETTLED DURING THE END OF THE YEAR, THE SAME WAS NOT REFLECTED IN THE RESPECTIVE STATEMENT. ACCORDI NG TO THE LD. COUNSEL, INITIALLY A SUM OF ` 5 LAKHS WAS GIVEN AS LOAN. SUBSEQUENTLY, IT WAS CONVERTED INTO GIFT. WHEN THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE ENT IRE SUM OF ` 12 LAKHS WAS GIVEN AS LOAN, THE ASSESSING OFFICER DISB ELIEVED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT GIFT THEORY WAS AFTERTHOUGHT TO COVER THE EXCESS CASH DURING THE COURSE OF SEARCH O PERATION. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE SUM OF ` 5 LAKHS AS UNACCOUNTED INVESTMENT. SIMILARLY, FOR THE ASSESSM ENT YEAR 2007- 08, THE ASSESSEE CLAIMED THAT THE LOAN OF ` 7 LAKHS WAS BETWEEN SON 3 I.T.A. NOS.2598 & 2599/MDS/14 AND FATHER, DURING THE PREVIOUS YEAR 2006-07, THE S AME WAS SETTLED AT THE END OF THE YEAR. THEREFORE, THIS WAS NOT RE FLECTED IN THE RESPECTIVE STATEMENTS. THE ASSESSEE HAS ALSO CONFI RMED BEFORE THE LOWER AUTHORITIES, DURING EXAMINATION ON 09.11. 2006, THAT HE HAD GIVEN A LOAN OF ` 12 LAKHS, OUT OF WHICH, ` 7 LAKHS WAS GIVEN DURING THE ASSESSMENT YEAR 2007-08. WHILE CONSIDERING THI S, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE NEVER STA TED THAT HE RECEIVED BACK THE SUM OF ` 7 LAKHS IN THE SAME YEAR. SIMILARLY, THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEES SO N ADMITTED THE FACT OF RECEIPT OF LOAN. HOWEVER, HE FOUND THAT TH E ASSESSEES SON HAS NOT STATED THAT HE HAS RETURNED BACK THE LOAN T AKEN FROM HIS FATHER. THEREFORE, THE ASSESSING OFFICER FOUND THA T THE EXPLANATION OF THE ASSESSEE WAS AFTERTHOUGHT. THEREFORE, HE MA DE AN ADDITION OF ` 7 LAKHS FOR THE ASSESSMENT YEAR 2007-08. ACCORDING TO THE LD. COUNSEL, THE FACT THAT THE ASSESSEE GAVE THE AMOUNT EITHER AS LOAN OR AS GIFT IS NOT IN DISPUTE. THE ASSESSING OFFICE R DOUBTS ABOUT THE RETURN OF THE MONEY BY THE ASSESSEES SON. ACCORDI NG TO THE LD. COUNSEL, NO SPECIFIC QUERY WAS RAISED EITHER BEFORE THE ASSESSEE OR BEFORE HIS SON ABOUT THE RETURN OF THE LOAN BY THE ASSESSEES SON. IN THE ABSENCE OF ANY SPECIFIC CLARIFICATION EITHER FROM THE ASSESSEE OR FROM THE ASSESSEES SON, ACCORDING TO THE LD. CO UNSEL, THE 4 I.T.A. NOS.2598 & 2599/MDS/14 ASSESSING OFFICER CANNOT PRESUME THAT THE ASSESSEE S SON HAS NOT RETURNED THE MONEY. IN THE ABSENCE OF ANY FURTHER MATERIAL, OTHER THAN THE PRESUMPTION, ACCORDING TO THE LD. COUNSEL, THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. 3. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT DURING THE COURSE OF EXAMINATION, THE ASSESSEE EXPLAINED, MORE PARTICULARLY IN RESPON SE TO QUESTION NO.8, THAT HE ADVANCED A SUM OF ` 12 LAKHS TO HIS SON SHRI R. GANESAN ON TWO OCCASIONS. IN RESPONSE TO QUESTIONN AIRE ISSUED ON 30.09.2008, THE ASSESSEE STATED BEFORE THE ASSESSIN G OFFICER THAT THE BALANCE WAS ` 89,738/- AS ON 01.04.2006. DURING THE ASSESSMENT YEAR 2007-08, THE SALARY INCOME OF THE A SSESSEE WAS ` 66,000/- AND THE PROPERTY INCOME WAS ` 28,589/-. APART FROM THIS, THE ASSESSEE HAD ALSO RECEIVED BUSINESS INCOME FROM TWO FIRMS AND INTEREST INCOME. THE ASSESSEE CLAIMED THAT IN THE MIDDLE OF THE YEAR, A SUM OF ` 6 LAKHS WAS WITHDRAWN FROM PARTNERSHIP FIRM, M/S RABBIT BUILDERS. HOWEVER, THE ASSESSING OFFICER FO UND THAT THE ASSESSEE HAS NOT FILED CASH FLOW STATEMENT TO SUPPO RT HIS ARGUMENT. IN THE ABSENCE OF SUFFICIENT DOCUMENT, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSES SEE. REFERRING TO THE LOAN OF ` 7 LAKHS FOR THE ASSESSMENT YEAR 2007-08, THE 5 I.T.A. NOS.2598 & 2599/MDS/14 ASSESSING OFFICER CAME TO A CONCLUSION THAT IT IS N OT THE CASE OF THE ASSESSEE THAT HE RECEIVED BACK THE AMOUNT DURING TH E YEAR UNDER CONSIDERATION. IT IS ALSO NOT THE CASE OF THE ASSE SSEE THAT HIS SON SHRI R. GANESAN SHOWED IN HIS RETURN A SUM OF ` 7 LAKHS DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY FOUND THAT THE EXPLANATION OF THE ASSESSEE THAT HE RECEIVED BACK THE MONEY FROM HIS SON DURING THE YEAR UNDER C ONSIDERATION IS AFTERTHOUGHT. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADDITION OF ` 5 LAKHS FOR THE ASSESSMENT YEAR 2006-07 AND ` 7 LAKHS FOR THE ASSESSMENT YEAR 2007-08. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE AS SESSMENT YEAR 2006-07, THE ASSESSEE, DURING THE EXAMINATION, EXPL AINED BEFORE THE ASSESSING OFFICER THAT HE GAVE A LOAN OF ` 5 LAKHS TO HIS SON. THE ASSESSING OFFICER FOUND THAT THE ASSESSEES REP RESENTATIVE IN HIS LETTER DATED 30.09.2008 CLARIFIED THAT A SUM OF ` 5 LAKHS WAS GIVEN TO HIS SON SHRI R. GANESAN DURING THE ASSESSM ENT YEAR 2006- 07. HOWEVER, THE ASSESSEE, DURING THE EXAMINATION, CLARIFIED THAT WHAT WAS GIVEN TO HIS SON IS A LOAN. THEREFORE, TH E ASSESSING OFFICER FOUND THAT THE GIFT PORTION OF ` 5 LAKHS IS A SEPARATE ONE AND IT CANNOT BE LINKED TO THE LOAN PORTION OF ` 7 LAKHS WHICH WAS SAID TO BE 6 I.T.A. NOS.2598 & 2599/MDS/14 GIVEN DURING THE ASSESSMENT YEAR 2007-08. THE ASSE SSING OFFICER FURTHER FOUND THAT THE GIFT OF ` 5 LAKHS IS SEPARATE AND LOAN OF ` 5 LAKHS GIVEN DURING THE ASSESSMENT YEAR 2006-07 IS S EPARATE. THEREFORE, HE MADE AN ADDITION OF ` 5 LAKHS FOR THE ASSESSMENT YEAR 2006-07. THE FACT REMAINS THAT THE TOTAL SUM OF MO NEY GIVEN BY THE ASSESSEE TO HIS SON IS ONLY ` 12 LAKHS. ` 5 LAKHS WAS GIVEN IN THE ASSESSMENT YEAR 2006-07 AND ANOTHER SUM OF ` 7 LAKHS WAS GIVEN IN ASSESSMENT YEAR 2007-08. THE ASSESSING OFFICER APP EARS TO HAVE ACCEPTED THE GIFT OF ` 5 LAKHS. HOWEVER, HE CONFUSES HIMSELF THAT THE LOAN OF ` 5 LAKHS IS A SEPARATE ONE AND HE MADE AN ADDITION W ITH REGARD TO LOAN AND NOT WITH REGARD TO GIFT. THE FA CT REMAINS IS THAT FOR THE ASSESSMENT YEAR 2006-07, WHAT WAS GIVEN BY THE ASSESSEE IS ONLY A SUM OF ` 5 LAKHS EITHER AS LOAN OR GIFT TO HIS SON SHRI R. GANESAN. THEREFORE, THERE IS NO NECESSITY FOR THE ASSESSING OFFICER TO TAKE THE TRANSACTION AS TWO INDEPENDENT TRANSACT IONS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE TRAN SACTION OF ` 5 LAKHS IS ONLY ONE TRANSACTION. THEREFORE, THE ASSESSING OFFICER MAY NOT BE JUSTIFIED IN TREATING THE TRANSACTION BETWEEN TH E ASSESSEE AND HIS SON IN THE ASSESSMENT YEAR 2006-07 AS TWO TRANSACTI ONS AND MAKING AN ADDITION OF ` 5 LAKHS. SINCE THE TRANSACTION IS ONLY ONE TRANSACTION, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE 7 I.T.A. NOS.2598 & 2599/MDS/14 ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTEN T OF ` 5 LAKHS IS NOT JUSTIFIED. ACCORDINGLY, THE ORDERS OF THE LOWE R AUTHORITIES ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICE R STANDS DELETED. 5. COMING TO THE ASSESSMENT YEAR 2007-08, READING O F THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSEE AN D HIS SON CATEGORICALLY ADMITTED THAT PAYMENT AND RECEIPT OF LOAN WAS TO THE EXTENT OF ` 7 LAKHS. THE ASSESSING OFFICER APPEARS TO HAVE PRESUMED THAT THE SUM OF ` 7 LAKHS WOULD NOT HAVE BEEN REPAID DURING THE YEAR UNDER CONSIDERATION, SINCE NEITHER THE ASSESSEE NOR THE ASSESSEES SON CLAIMED BEFORE HIM THAT THE SAME WAS REPAID. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THE LOAN TRANSACTION WAS CONFIRMED AND THEY CLAIMED THAT IT IS NOT REFLECTED IN THE STATEMENT BECAUSE THE TRANSACTION WAS SETTLED D URING THE SAME FINANCIAL YEAR, THE PRESUMPTION OF THE ASSESSING OF FICER WAS THAT THE LOAN TRANSACTION WAS NOT SETTLED DURING THE YEAR UN DER CONSIDERATION. THEREFORE, THE PRESUMPTION OF THE A SSESSING OFFICER THAT THERE WAS NO CLAIM EITHER BY THE ASSESSEE OR B Y HIS SON THAT THE LOAN WAS REPAID DURING THE YEAR UNDER CONSIDERATION IS BEYOND IMAGINATION. THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THERE IS NO JUSTIFICATION IN MAKING ADDITION OF ` 7 LAKHS. ACCORDINGLY, THE 8 I.T.A. NOS.2598 & 2599/MDS/14 ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF ` 7 LAKHS MADE FOR THE ASSESSMENT YEAR 2007-08. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON 4 TH SEPTEMBER, 2015 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 4 TH SEPTEMBER, 2015. KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A), TIRUCHIRAPPALLI 4. , 6- /CIT, CENTRAL-II, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.