Shri D. Thomas Raj, Arakkonam V. ITO, Vellore

ITA 2601/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7797 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B NAVEEN KUMAR
• Assessee Lawyers: N DEVANATHAN
• Section: 68

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC A BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2601/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) SHRI D. THOMAS RAJ, 373/149, DURAISAMY NAGAR, ARAKKONAM VS THE INCOME TAX OFFICER, WARD (3)(1), VELLORE PAN: AJHPT2457Q ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI N. DEVANATHAN, ADVOCATE /RESPONDENT BY : SHRI B. NAVEEN KUMAR, JCIT ! /DATE OF HEARING : 09.02.2017 '# ! /DATE OF PRONOUNCEMENT : 15.02.2017 / O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-13, CHE NNAI IN ITA NO.18/CIT(A)-13/AY 2011-12 DATED 20.07.2016 FOR THE ASSESSMENT YEAR 2011-12, U/S. 250(6), R.W.S143(3) & 147 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS A PPEAL. HOWEVER THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- 2 I.T.A. NO.2601/MDS/2016 I. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE AO WITH RESPECT TO ADDITION OF RS.4,70,000/- ON ACCOUNT OF UNEXPLAINED OPENING BALANCE. II. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE AO WITH RESPECT TO ADDITION OF RS.1,60,000/- INVOKING THE P ROVISIONS OF SECTION 68 OF THE ACT. III. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDE R OF THE AO WITH RESPECT TO ADDITION OF RS.1,35,000/- ON ACCOUNT OF PURCHASE OF TATA SUMO VEHICLE. IV. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDE R OF THE AO WITH RESPECT TO ADDITION OF RS.1,38,000/- DUE TO INSUFFI CIENT DRAWING DURING THE RELEVANT ASSESSMENT YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN BUSINESS ACTIVITIES, FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ELECTRONICALLY ON 26.05.2011ADMITTI NG INCOME AS RS.2,20,500/-. THE SAME WAS INITIALLY PROCESSED U/ S.143(1) OF THE ACT AND SUBSEQUENTLY NOTICE U/S.148 OF THE ACT WAS ISSU ED TO THE ASSESSEE ON 05.04.2013 AND FINALLY ASSESSMENT WAS COMPLETED U/S.143(3) READ WITH SECTION 147 OF THE ACT ON 31.03.2015, WHEREIN THE LD. AO HAD MADE THE ABOVE STATED ADDITIONS. 3 I.T.A. NO.2601/MDS/2016 4.1 GROUND NO.I: ADDITION OF RS.4,70,000/- :- THE ASSESSEE HAD DISCLOSED OPENING BALANCE OF RS.4, 70,000/- BEING THE AMOUNT ADVANCED TO MS. RACHEL DURING THE ASSESSMENT YEAR 2008-09. SINCE, THE ASSESSEE WAS NOT ABLE TO PRODU CE THE SOURCE OF THE ADVANCE, THE LD. AO MADE THE ADDITION OF RS.4,70,00 0/- IN THE HANDS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF THE LEARNED AO REJECTING THE PLEA OF THE ASSESSEE THAT HE HAD OWN SOURCE OF INCOME FROM PART -TIME PREACHING ACTIVITIES AND RECEIPT OF COMPENSATION RS.2,20,000 /-. BEFORE US, THE LD. AR SUBMITTED THAT THE REVENUE HAD NOT QUESTIONED OR RATHER ACCEPTED THE SOURCE OF THE ADVANCES MADE DURING THE ASSESSME NT YEAR 2008-09 AND THEREFORE ADDITION CANNOT BE MADE FOR THE RELEV ANT ASSESSMENT YEAR WHEREIN THE AMOUNT IS ONLY AN OPENING BALANCE. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE REVENUE AND ARGUED IN SUPPORT OF THE SAME. 4.2 I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT THE CASE O F THE REVENUE, THAT THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 AND NOT DISCLOSED THE ADVANCES MADE FOR RS. 4,70,000/- TO MS.RACHEL IN THAT ASSESSMENT YEAR. THE LD. AO HAD MADE THE ADDITION IN THE RELEVANT ASSESSMENT YEAR 2011-2012 ONLY FOR THE REASON THAT THE 4 I.T.A. NO.2601/MDS/2016 SOURCE OF ADVANCES WAS NOT ESTABLISHED FOR THE ASSE SSMENT YEAR 2008- 09. IT IS WORTHWHILE TO MENTION THAT, IF AT ALL SO URCE OF RS.4,70,000/- WAS NOT ESTABLISHED FOR THE ASSESSMENT YEAR 2008-09 THE N ADDITION SHOULD HAVE BEEN MADE FOR THE ASSESSMENT YEAR 2008-09 AND NOT FOR THE RELEVANT ASSESSMENT YEAR 2011-12. MOREOVER, REVENU E HAS NOT MADE ANY ALLEGATIONS THAT THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09. FURTHER IT IS NOT THE CASE OF THE REVENUE THAT MS. RACHEL HAS NOT ACKNOWLEDGED THE DEBT DURIN G THE RELEVANT ASSESSMENT YEAR. CONSIDERING THESE FACTS, I DO NOT FIND ANY MERIT IN THE ORDER OF THE REVENUE FOR MAKING ADDITION OF RS.4,70 ,000/- IN THE HANDS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. H ENCE, I HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION OF RS.4,70,000/- MADE IN THE HANDS OF THE ASSESSEE. 5. ADDITION OF RS.1,60,000/-:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WA S OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD DEPOSI TED CASH FOR RS.1,60,000/- IN HIS BANK ACCOUNT VIZ., SBI, ARAKKO NAM BRANCH ON 17.03.2011. SINCE THE ASSESSEE COULD NOT ESTABLISH THE SOURCE OF THE CASH DEPOSIT THE LD. AO MADE ADDITION OF RS.1,60,00 0/- IN THE HANDS OF THE ASSESSEE INVOKING SECTION 68 OF THE ACT. ON AP PEAL, THE LD. CIT(A) APPEARS TO HAVE OMITTED TO ADJUDICATE THE ISSUE. B EFORE US, THE LD. AR 5 I.T.A. NO.2601/MDS/2016 SUBMITTED THAT THE ASSESSEE HAD SUFFICIENT SOURCE O F INCOME FOR RS.1,60,000/- SINCE FOR THE RELEVANT ASSESSMENT YEA R ITSELF HE HAD DECLARED INCOME OF RS.2,20,500/-. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN RELIGIOUS ACTIVITIES AS PRE ACHER AND HE HAD RECEIVED CONTRIBUTIONS FROM THE DEVOTEES FOR PURSUI NG HIS ACTIVITIES. THEREFORE, THE SOURCE OF CASH DEPOSIT STANDS EXPLAI NED. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. AFTER HEARING BOTH SIDES, I FIND MERIT IN THE SUBMISSION OF THE LD. AR. CONSIDERING THE NATURE OF ACTIVITIES OF THE ASSESSE E AND THE INCOME DECLARED BY HIM DURING THE RELEVANT ASSESSMENT YEAR , I AM OF THE CONSIDERED VIEW THAT THE CASH DEPOSIT OF RS.1,60,00 0/- MADE BY THE ASSESSEE IN HIS BANK ACCOUNT IS JUSTIFIABLE. THERE FORE, I HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION OF RS.1,60,000/- MADE BY HIM INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. 6. ADDITION OF RS.1,35,000/- :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WA S NOTICED BY THE LD. AO THAT THE ASSESSEE OWNS A TATA SUMO CAR. IN THE SWORN STATEMENT Q.NO.15, THE ASSESSEE HAD STATED THAT HE HAD PURCHASED THE CAR FOR RS.1,35,000/-. SINCE THE SAME WAS NOT REFL ECTED IN THE BALANCE SHEET FILED BY THE ASSESSEE, THE LD. AO MADE THE AD DITION OF RS.1,35,000/- . ON APPEAL, THE LD. CIT(A) CONFIRME D THE ORDER OF THE LD. 6 I.T.A. NO.2601/MDS/2016 AO AGREEING WITH HIS VIEWS. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE US THAT THE TATA SUMO CAR WAS PURCHASED DURING THE EARLIER ASSESSMENT YEARS AND THEREFORE ADDITION CANNOT MADE DURING THE RELEVANT ASSESSMENT YEAR. THE LD. AR REFERRED TO PAGE NO.16 OF THE PAPER BOOK BEING THE RECEIPT DATED 10.04.2008 ISSUED BY M/S. N EW INDIA ASSURANCE CO. LTD., FOR INSURING THE VEHICLE NO.TN 04 C 7027 FOR RS.5,130/- IN THE NAME OF THE ASSESSEE. THE LD. DR COULD NOT CONTROVE RT TO THE SUBMISSION OF THE ASSESSEE. THE LD.A.R FURTHER SUB MITTED THAT THE ASSESSEE HAD SUFFICIENT DECLARED SOURCE OF INCOME F OR THE PURCHASE OF THE CAR IN THE RELEVANT ASSESSMENT YEAR WHEN THE CA R WAS PURCHASED. AFTER PERUSING THE ISSUE, IT IS OBVIOUS THAT THE AS SESSEE HAD PURCHASED THE VEHICLE BEFORE THE ASSESSMENT YEAR 2011-12. TH EREFORE, ADDITION OF RS.1,35,000/- CANNOT BE MADE IN THE HANDS OF THE AS SESSEE FOR THE ASSESSMENT YEAR 2011-12. HENCE, I HEREBY DIRECT TH E LD. AO TO DELETE THE ADDITION OF RS.1,35,000/- MADE IN THE HANDS OF THE ASSESSEE TOWARDS PURCHASE OF TATA SUMO CAR. 7. ADDITION OF RS.1,38,000/- :- SINCE THE ASSESSEE HAD DISCLOSED ONLY RS.42,000/- A S HIS DRAWINGS FOR THE RELEVANT ASSESSMENT YEAR, IT WAS O PINED BY THE LD.A.O., THAT THE SAME WOULD NOT BE SUFFICIENT FOR MEETING T HE EXPENDITURE MADE BY THE ASSESSEE CONSIDERING HIS STANDARD OF LIVING AND LIFE STYLE. HENCE, 7 I.T.A. NO.2601/MDS/2016 HE MADE AN ADDITION OF RS.1,38,000/- TOWARDS POOR D RAWINGS. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE A O. AT THE OUTSET, I FIND THAT THE ADDITION MADE BY THE REVENUE OF RS.1, 38,000/- TOWARDS POOR DRAWING IS ARBITRARY AND WITHOUT PROPER REASON ING. THEREFORE, I HEREBY DIRECT THE AO TO DELETE THE ADDITION OF RS.1 ,38,000/- 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 15 TH FEBRUARY, 2017. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER $% /CHENNAI, &' /DATED 15 TH FEBRUARY, 2017 JR. ' )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. *-. / /DR 6. .0 /GF.