Shri S. Muniyandi, Director, M/s.Tamilnadu Air Travels P.Ltd., CHENNAI V. ITO, CHENNAI

ITA 2695/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4978 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 19-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN IRS
• Assessee Lawyers: A S SRIRAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , ! [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 2695/MDS/2016 / ASSESSMENT YEAR : 2006-2007. SHRI. S. MUNIYANDI, DIRECTOR, M/S. TAMILNADU AIR TRAVELS P. LTD, NO.11, TRIPLICANE HIGH ROAD, CHENNAI 600 005. [PAN AFOPM 8561K] VS. THE INCOME TAX OFFICER, CORPORATE CIRCLE 3(2) CHENNAI. ( '# / APPELLANT) ( $%'# /RESPONDENT) / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADVOCATE /RESPONDENT BY : SHRI. B. SAHADEVAN, IRS, JCIT. /DATE OF HEARING : 03-04-2017 ! /DATE OF PRONOUNCEMENT : 12-04-2017 & / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, HE IS AGGR IEVED ON AN ADDITION OF <25,73,500/- WHICH WAS CONFIRMED BY THE LD. COMMISS IONER OF INCOME TAX (APPEALS). ONE ANOTHER ISSUE RAISED BY THE ASSESSEE IS REGARDING AN ADDITION <31,565/- FOR DIFFERENTIAL INTEREST. HOWE VER, NO SERIOUS ARGUMENTS WERE ADVANCED BY THE LD. AUTHORIS ED REPRESENTATIVE ON THE LATTER ISSUE. ITA NO.2695/MDS/2016 :- 2 -: 2. FACTS APROPOS FOR THE FIRST ISSUE ARE THAT ASSESSEE , A DIRECTOR OF A COMPANY CALLED M/S. TAMILNADU AIR TRAVELS PVT LTD HAD DEPOSITED A SUM OF <25,73,500/- IN HIS ACCOUNT IN CITY UNION BANK, TRIPLICANE BRANCH, CHENNAI DURING THE RELEVANT PREVIOUS YEAR. SINCE ASSESSEE HAD NOT FILED AN RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR A NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT) WAS ISSUED TO THE ASSESSEE. PURSUANT TO THIS NOTICE AS SESSEE FILED A RETURN ON 25.11.2013 ADMITTING AN INCOME OF <1,57,490/- A FTER DEDUCTIONS. THE INCOME DECLARED INCLUDED SALARY OF <2,10,000/- AND INTEREST <34,819/-. ASSESSEE WAS REQUIRED TO EXPLAIN THE SO URCE OF THE CASH DEPOSITS MADE IN CITY UNION BANK. EXPLANATION OF T HE ASSESSEE WAS THAT SUCH DEPOSITS WERE MADE OUT OF DRAWINGS FROM M/S. TAMIL NADU AIR TRAVELS PVT LTD, WHEREIN ASSESSEE WAS A DIRECTO R. AS PER THE ASSESSEE, DEPOSITS WERE MADE IN HIS PERSONAL ACCOUN T SO AS TO IMPROVE THE RELATIONSHIP WITH THE BANK. ASSESSEE ALSO FURNI SHED COPY OF THE RETURN, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT O F M/S. TAMIL NADU AIR TRAVELS PVT LTD, IN SUPPORT. ASSESSEE ALSO FILE D A COPY OF THE BANK ACCOUNT OF THE SAID COMPANY WITH STATE BANK OF TRA VANCORE, TRIPLICANE. SINCE THE COMPANYS BANK ACCOUNT DID NOT REFLECT ANY SUCH WITHDRAWALS, LD. ASSESSING OFFICER ISSUED A LETTER U/S.133(6) OF THE ACT AND SUMMONED THE COMPANY OFFICIALS U/S.131 OF THE A CT REQUIRING THEM ITA NO.2695/MDS/2016 :- 3 -: TO PRODUCE THE BOOKS OF ACCOUNTS OF THE COMPANY. IT SEEMS THIS WAS NOT COMPLIED WITH. 3. IN THE MEANWHILE ASSESSEE FILED A LETTER FROM ONE M R. GANAPATHY WHO CLAIMED TO BE A REAL ESTATE BROKER. MR. GANAPATHAY IN THE LETTER, STATED THAT HE HAD ARRANGED ACQUISIT ION OF A PROPERTY FOR M/S. TAMIL NADU AIR TRAVELS PVT LTD. AS PER MR. GAN APATHY, FOR SUCH PURCHASE, AN ADVANCE OF <30,00,000/- WAS GIVEN TO O NE SHRI. DHANASEKAR. SINCE THE DEAL DID NOT GO THROUGH, AS P ER MR. GANAPATHY, THE MONEY WAS RETURNED BY SHRI. DHANASEKAR ON VARI OUS DATES AND THIS WAS IN TURN GIVEN BY HIM TO THE ASSESSEE. WH EN LD. ASSESSING OFFICER DOUBTED THE RELIABILITY OF THE EVIDENCE I N THE NATURE OF LETTER DATED 04.03.2014 GIVEN BY MR. GANAPATHAY, ASSESSEE SUBMITTED AS UNDER:- M/S. TAMILNADU AIR TRAVELS PVT. LTD, CHENNAI IS U NABLE TO TRACE AND SUBMIT THE BOOK OF ACCOUNT. NON TRANSACT IONS IN THE SAVINGS BANK ACCOUNT OF MR. S. MUNIYANDI IS REL ATED TO HIM. THIS MONEY IS DEPOSITED BY M/S. TAMILNADU AIR TRAVELS PVT. LTD FOR PURCHASE OF PROPERTY IN ITS NAME. WHIC H IS VERY MUCH FACTUALLY AND MATERIAL PROVED THROUGH THE FALL OWING. A) PROPERTY IS REGISTERED IN THE NAME OF M/S. TAMILNAD U AIR TRAVELS PVT. LTD (COPY OF SALE DEED ALREADY FILED). B) FUND DEPOSITED IN THE SB ACCOUNTS ARE UTILIZED ONLY FAR PURCHASE OF THE ABOVE PROPERTY. C) M/S. TAMILNADU AIR TRAVELS PVT. LTD AUDITED BALANCE SHEET SHOWS THE ADDITION OF PROPERTY IN ITS FIXED ASSETS SCHEDULE. D) CONFIRMATION FROM M/S. TAMILNADU AIR TRAVELS PVT. L TD THAT THE AMOUNT IS DEPOSITED BY THEM. ITA NO.2695/MDS/2016 :- 4 -: FURTHER REJECTION OF AFFIDAVIT FILED BY MR. GANAPAT HY WITHOUT ANY VALID REASON IS NOT ACCEPTABLE. WHILE MAKING AN ASSESSMENT THE OFFICE HAS TO. ENSUR E THAT ONLY THAT THE INCOME OF THE ASSESSEE IS ASSESSED NOT TH E RECEIPTS. TREATING THE RECEIPT OF THE ASSESSEE AS INCOME IS N OT ACCEPTABLE. THE STATEMENT OR AFFIDAVIT BY A THIRD P ARTY IS MARE THAN CORROBORATIVE EVIDENCE AND STATEMENT OF FACTS. THE OFFICER HAS EVERY RIGHT TO ENQUIRE OR VERIFY THE SAME. WITH MAKING PROPER ENQUIRY OR VERIFICATION OF FACTS REJECTING T HE EVIDENCE IS NOT ACCEPTABLE BY LAW AND AGAINST THE NATURE JUSTIC E. ALSO. REJECTING THE SOURCE OF RECEIPTS FROM THE COM PANY FAR MORE NON SUBMISSION OF BOOKS OFF ACCOUNTS IS NOT JU STIFIABLE AN THE FOLLOWING GROUNDS. A. THE COPIES OF BOOKS ACCOUNTS ARE REQUIRED FAR PR OOF OF CASH FLAW IN THE SAVINGS BANK ACCOUNT OF THE DIRECTOR. B UT WE HAVE VERY MUCH PROVIDED WITH THE PROOF THAT THE CASH DEP OSITED IN THE 58 ACCOUNT OF DIRECTOR IS UTILIZED FAR PURCHAS E OF PROPERTY IN THE NAME OF COMPANY. NO. ONE WILL DEPOSIT MONEY PER SONNEL MONEY IN TO. THE SB ACCOUNT FAR PURCHASE OF PROPERT Y IN THE NAME OF PRIVATE COMPANY ON WHICH 2 NON RELATED PER SANS ARE OWNERS. B. WE HAD FURTHER CONFIRMED THAT THE AMOUNTS ARE NO T WITHDRAWN IN SINGLE PERIOD DURING THIS YEAR THEY AR E PAID TO. A SELLER FAR PURCHASE AN ONE PROPERTY DURING THE PREVIOUS YEAR WHICH IS NOT MATERIALIZE AND THE SAME WAS RETURNED PERIODICALLY TO. THE COMPANY (CONFIRMATION FROM THE BROKER ALREA DY SUBMITTED). THE DIRECTORS OF THE COMPANY FELT THAT IF THE MONEY IS DEPOSITED IN THE COMPANY ACCOUNT THEY WILL BE UT ILIZED FOR BUSINESS PURPOSE THE OBJECTIVE OF PURCHASE OF PROPE RTY WILL NOT BE MATERIALIZED SA THEY MUTUALLY AGREED TO. DEPOSIT THE SAME IN A SEPARATE BANK ACCOUNT IN THE NAME OF ONE OF THE D IRECTOR. FROM THAT ACCOUNT STATEMENT IT IS VERY CLEAR THAT T HE FUNDS DEPOSITED IT NOT UTILIZED ONLY FOR THE PURPOSE OF P URCHASE OF PROPERTY. WE HAD PROVIDED AN AFFIDAVIT FROM THE BRO KE AS MATERIAL EVIDENCE FOR PROOF OF SUCH TRANSACTION SIN CE WE ARE UNABLE TO LOCATE THE OLD SELLER. AFTER FILING THE ABOVE REPLY, ASSESSEE ALSO PRODUCE D MR. GANAPATHY BEFORE LD. ASSESSING OFFICER ON 14.03.2014. MR. GA NAPATHY CONFIRMED WHAT HE HAD STATED IN HIS LETTER DATED 04.03.2014. LD. ASSESSING ITA NO.2695/MDS/2016 :- 5 -: OFFICER ALSO POSED FEW QUERIES FOR WHICH MR. GANA PATHAY REPLIED AS UNDER:- ' Q. NO. 8: WHAT IS THE MODE OF RE-PAYMENT OF EARLIER ADVANCE PAID? PLEASE STATE WHETHER YOU HAVE PROOF. ANS: THIS AMOUNT WAS RETURNED IN FOUR INSTALMENTS B Y SHRI DHANASEKARAN. THERE IS NO PROOF FOR THIS. AFTER REC EIPT OF THE FINAL INSTALMENT, THE WRITTEN AGREEMENT WAS DESTROY ED BY BOTH THE PARTIES. Q. NO. 9: AS PER THE AGREEMENT, WHAT IS TIME GAP BETWEEN THE ADVANCE GIVEN AND RECEIVED BACK. PLEASE CONFIRM THE MONTH AND YEAR. ANS: THE MONEY WAS RECEIVED WITHIN 6 MONTHS FROM THE DATE OF AGREEMENT. BUT I DON'T REMEMBER THE YEAR. Q. NO. I0: HAVE YOU MADE ARRANGEMENT FOR PURCHASE OF ANY OTHER PROPERTY FOR MR. MUNIYANDI? ANS: AFTER GETTING THE MONEY REFERRED TO ABOVE, I H AD MADE ARRANGEMENT FOR PURCHASE OF OLD PROPERTY FOR M/S. T AMIL NADU AIR TRAVELS PVT LTD. AT WALLAJAH ROAD. AFTER FIXING THE PRICE AT RS.35 LAKHS AND GETTING A SMALL AMOUNT OF TOKEN ADV ANCE, I REMEMBER THAT THE BALANCE AMOUNT WAS PAID ON THE DA TE OF REGISTRATION. FOR THIS TRANSACTION, I RECEIVED 1 % COMMISSION. ' LD. ASSESSING OFFICER THEREAFTER MADE AN ANALYSIS O F THE BALANCE SHEET OF M/S. TAMIL NADU AIR TRAVELS PVT LTD AS ON 31.03. 2005 AND 31.03.2006. HE FOUND FROM THE SAID BALANCE SHEETS THAT THE SUM OF RS.30,00,000/- CLAIMED BY MR. GANAPATHY TO HAVE BE EN PAID AS ADVANCE FOR PURCHASE OF PROPERTY TO SHRI.DHANASEKAR AN IN THE FINANCIAL YEAR 2004-05 DID NOT FIND A PLACE IN TH E BALANCE SHEET AS ON 31.03.2005. AS PER THE LD. ASSESSING OFFICER, THE SUNDRY DEBTORS BALANCE AS ON 31.03.2005 WAS <21,12,449/- ONLY. TH US, ACCORDING TO ITA NO.2695/MDS/2016 :- 6 -: LD. ASSESSING OFFICER CLAIM OF THE ASSESSEE WAS NOT AT ALL BELIEVABLE. HE ALSO NOTED THAT ASSESSEE HAD NOT DRAWN ANY SALARY FROM THE SAID COMPANY AND HAD NO SOURCE WHATSOEVER FOR JUSTIFYING THE DEPOSITS MADE IN THE BANK ACCOUNT. HE MADE AN ADDITION OF < 25,73,500/-. THERE WAS AN ADDITION OF <31,565/- ALSO BEING DIFF ERENCE BETWEEN INTEREST ADMITTED IN THE RETURN OF INCOME FILED AND ACTUAL INTEREST RECEIVED BY THE ASSESSEE FROM BANKS. 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). LD. COMMISSI ONER OF INCOME TAX (APPEALS) WAS OF THE OPINION THAT CONTENTIONS TAKEN BY THE ASSESSEE BEFORE LD. ASSESSING OFFICER WERE RIGHTLY REJECTED BY THE LD. ASSESSING OFFICER. ACCORDING TO HIM, MONEY, IF AN Y, TAKEN BY THE ASSESSEE FROM THE COMPANY FOR GIVING ADVANCE FOR P URCHASE OF THE PROPERTY WAS NOT REFLECTED IN THE AUDITED BALANCE SHEET OF THE COMPANY. FURTHER, AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEES WIFE WAS ALSO HAVING NO SOURCE OF INCOME AND WAS ONLY A HOME MAKER. HE CONFIRMED THE ADDITIONS. 5. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES REITE RATED THE ARGUMENTS TAKEN BEFORE THE LD. ASSESSING OFFICER. ACCORDING T O HIM, BROKER SHRI. GANAPATHY HAVING CONFIRMED THE TRANSACTIONS AND RET URN OF MONEY TO ITA NO.2695/MDS/2016 :- 7 -: THE ASSESSEE, THE LOWER AUTHORITIES WERE NOT JUSTIF IED IN MAKING THE ADDITIONS. FURTHER ACCORDING TO HIM, ASSESSEE EVEN PRODUCED MR. GANAPATHY BEFORE LD. ASSESSING OFFICER AND MR. GANA PATHY HAD ALSO CONFIRMED THE FACTS STATED BY THE ASSESSEE. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CONTENTION OF THE ASSESSEE IS THAT A SUM OF RS.30,00,000/- WAS GIVEN BY M/S. TAMIL NADU AIR TRAVELS PVT LTD FOR ACQUIRING A PROPERTY ON BEHALF OF THE SAID COMPANY IN AN EARLIER YEAR, THROUGH SHRI. GANAPATHY AND THE SAID SUM WAS RETURNED TO THE ASSESSEE BY MR. GANAPATHY WHEN THE DEAL DID NOT COME THROUGH. AS AGAINST THIS, THE INITIAL STAND OF TH E ASSESSEE WAS THAT DEPOSITS MADE IN M/S. CITY UNION BANK WERE OUT OF T HE WITHDRAWALS MADE FROM THE COMPANY FOR PURCHASE OF THE PROPERTY . IF WHAT MR. GANAPATHY STATED IS TRUE, THE ADVANCE OF <.30,00,00 0/- GIVEN BY HIM TO SHRI. DHANASEKAR, ON BEHALF OF THE COMPANY WOULD HAVE FOUND A PLACE IN THE ASSETS OF THE COMPANY AS ON 31.03.200 5. THE ADVANCE PAID FOR ACQUIRING ASSET, WHETHER STOCK IN TRADE O R NOT, HAS TO APPEAR IN BALANCE SHEET AND IF IT DOES NOT APPEAR IT ONLY MEANS THAT THERE WAS NO SUCH ADVANCE GIVEN BY THE COMPANY. JUST BECAUS E ASSESSEE ITA NO.2695/MDS/2016 :- 8 -: PRODUCED MR. GANAPATHY WOULD NOT CONVERT WHATEVER H E STATED AS TRUE. LD. ASSESSING OFFICER ALSO SPECIFICALLY NOTED THAT MR. GANAPATHY HAD GIVEN VAGUE ANSWERS REGARDING DATE OF RECEIPT O F ADVANCE BACK FROM MR. DHANASEKAR AND PAYMENT OF THE MONEY BACK T O ASSESSEE OR M/S. TAMIL NADU AIR TRAVELS PVT LTD. NOTHING OF WHA T HAS BEEN STATED BY MR. GANAPATHY WAS SUPPORTED BY ANY EVIDENCE. THE BALANCE SHEET OF M/S. TAMIL NADU AIR TRAVELS PVT LTD DID NOT REFL ECT ANY TRANSACTION WHICH ASSESSEE CLAIMED. IN THE CIRCUMSTANCES, I AM OF THE OPINION THAT ASSESSEE WAS UNABLE TO SUBSTANTIATE THE SOURCE OF THE CASH DEPOSITS MADE BY HIM IN HIS BANK ACCOUNT. I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 12TH DAY O F APRIL, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 12TH APRIL, 2017 KV %& '()( / COPY TO: 1. / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF