DCIT, Coimbatore V. Shri R. Balachandiran, Coimbatore

ITA 2728/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3968 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 21-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOPI KRISHNA
• Assessee Lawyers: M NARAYANAN CITRETD
• Keywords: Unexplained expenditure; Income from undisclosed sources; Retraction
• Section: 69C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2728/MDS/2016 ( / ASSESSMENT YEAR: 2013-14) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I, COIMBATORE 641 018. VS SHRI R. BALACHANDIRAN, NO.2/21, GOVANUR NAICKENPALAYAM POST, COIMBATORE 641 020. PAN: ADAPB8349N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI GOPIKRISHNA, JCIT /RESPONDENT BY : SHRI M. NARAYANAN, ADDL. CIT RETD. /DATE OF HEARING : 04.05.2017 ! /DATE OF PRONOUNCEMENT : 27.07.2017 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-18, CHENNAI DATED 09.06.2016 IN ITA NO.90/15-16 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S.250(6) R.W.S.143(3) OF THE ACT. 2. THERE IS A DELAY OF 2 DAYS IN FILING THE APPEAL BY THE REVENUE. THE LD.DCIT HAS FURNISHED AN AFFIDAVIT BEFORE US ST ATING THAT THE DELAY HAD OCCURRED DUE TO THE TIME LAG IN TRANSIT F ROM HIGHER 2 ITA NO.2728/MDS/2016 AUTHORITIES. IT WAS THEREFORE PLEADED THAT THE SHO RT DELAY IN FILING THE APPEAL MAY BE CONDONED. THE LD.AR OBJECTED TO THE SUBMISSION OF THE LD.DR. HOWEVER, AFTER HEARING BO TH SIDES, THOUGH WE DO NOT APPRECIATE THE LETHARGIC ATTITUDE OF THE REVENUE, IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED VIEW THAT THE SHORT DELAY IN FILING THE APPEAL REQUIRES TO BE CONDONED. ACCORDINGLY WE HEREBY CONDONE THE DELAY OF 2 DAYS IN FILING THE AP PEAL BY THE REVENUE AND PROCEED TO HEAR THE CASE ON MERITS. 3. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE I S AGGRIEVED BY THE ORDER OF THE LD.CIT(A) WHO HAD ERRED IN DELETIN G THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.1.30 CRORES INVOK ING THE PROVISIONS OF SECTION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED AS SMALL TIME CONTRACTOR. A SEA RCH U/S.132 WAS CARRIED OUT IN THE PREMISES OF SHRI R. ELANGOVAN (A SSESSEES BROTHER) ON 14.12.2012. DURING THE COURSE OF SEARCH , AN AGREEMENT BETWEEN SMT. S. SUGANTHI AND SHRI R. BALACHANDRAN A ND SHRI RANGASAMY WAS FOUND AND SEIZED IN WHICH IT WAS REVE ALED THAT SHRI R. BALACHANDRAN AND SHRI RANGASAMY HAD PAID AN ADVANCE OF 3 ITA NO.2728/MDS/2016 RS.1.30 CRORES FOR THE PURCHASE OF PROPERTY FROM SM T. SUGANTHI. DURING THE SEARCH OPERATION, SHRI R. BALACHANDRAN I N HIS STATEMENT U/S.132(4) OF THE ACT HAD ADMITTED TO HAVE PAID RS. 1.30 CRORES IN CASH OUT OF HIS UNACCOUNTED INCOME. ACCORDINGLY AP PRAISAL REPORT WAS MADE. HOWEVER, AT THE TIME OF ASSESSMENT THE A SSESSEE RETRACTED HIS STATEMENT FOR HAVING ADMITTED THAT TH E ADVANCE AMOUNT PAID FOR PURCHASE OF LAND AMOUNTING TO RS.1. 30 CRORES WAS OUT OF HIS UNACCOUNTED INCOME. FURTHER HE EXPLAINE D BEFORE THE LD.AO WITH EVIDENCE VIZ., FEDERAL BANK STATEMENT A/ C. NO.5147 OF SHRI R. ELANGOVAN THAT THE CASH WAS WITHDRAWN BETWE EN THE PERIOD 03.04.2012 TO 16.05.2012 FROM THE ABOVE MENTIONED S AVINGS BANK ACCOUNT AGGREGATING TO RS.1,44,00,000/- AND IN EACH OF THE SIXTEEN WITHDRAWALS AN AMOUNT OF RS OF RS.9 LAKHS WAS WITHD RAWN. THUS THE ASSESSEE ESTABLISHED BEFORE THE LD.AO THAT THE SOURCE OF ADVANCE WAS FROM THE AMOUNT ACCOUNTED AND WITHDRAWN BY SHRI R. ELANGOVAN FROM HIS FEDERAL BANK SAVINGS ACCOUNT NO. 5147. HOWEVER, THE LD.AO REJECTED THE EXPLANATION MADE BY THE LD.AR BECAUSE OF THE FOLLOWING REASONS: (I) WITHDRAWALS FROM THE BANK HAS BEEN MADE OVER A PERIOD OF TIME AND CASH ACCUMULATED IN HAND, THEREFORE THE NEXUS BETWEEN THE WITHDRAWALS AND THE PAYMENT MADE AFTER A CONSIDERABLE PERIOD OF TIME CANNOT BE ESTABLISHED. 4 ITA NO.2728/MDS/2016 (II) THERE WAS NO NECESSITY FOR THE ASSESSEE TO PAY BY CASH WHEN IT COULD HAVE BEEN PAID THROUGH BANK. (III) SHRI RANGASAMY THE CO-PURCHASER IS A RETIRED GOVERNMENT SERVANT, THEREFORE UNLIKELY TO CONTRIBUT E FOR THE PURCHASE OF SUCH LARGE PROPERTY. (IV) THE ASSESSEE HAD ADMITTED AT THE TIME OF SEARC H THAT THE INVESTMENT WAS MADE OUT OF HIS UNACCOUNTED INCOME. (V) THE RETRACTION MADE BY THE ASSESSEE IS AFTER A LONG PERIOD OF TIME AND THEREFORE NOT ACCEPTABLE. FOR THE ABOVE MENTIONED REASONS, THE LD. A.O MADE THE ADDITION IN THE HANDS OF THE ASSESSEE, INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT. 5. HOWEVER ON APPEAL, THE LD.CIT(A) HELD THAT THE A DDITION MADE IN THE HANDS OF THE ASSESSEE CANNOT BE SUSTAIN ED BECAUSE IT WAS WELL ESTABLISHED THAT THE ADVANCE FOR PURCHA SE OF LAND OF RS.1.30 CRORES WAS PAID OUT OF THE ACCOUNTED AMOUNT WITHDRAWN FROM THE BANK ACCOUNT OF SHRI ELANGOVAN. ON THAT R EGARD, THE LD.CIT(A) OBSERVED AS UNDER:- I HAVE GONE THROUGH THE EVIDENCES PRODUCED DURING APPELLATE PROCEEDINGS, SUCH AS BANK ACCOUNT, CASH B OOK EXTRACT, LETTER WRITTEN BY THE ASSESSEE TO THE AO, AGREEMENT 5 ITA NO.2728/MDS/2016 COPY FOR PURCHASE OF THE LAND AND CANCELLATION DEED OF THE ABOVE AGREEMENT ETC. AFTER GOING THROUGH THE SAME, I AM OF THE CONSIDERED VIEW THAT THE ADDITION MADE IN THE H ANDS OF THE ASSESSEE IS NOT TENABLE FOR THE FOLLOWING REASO NS. IN THE ASSESSMENT ORDER, IT IS SEEN, THAT THE AO, WHILE DISCUSSING ABOUT THE SOURCE, ADMITTED THE POSITION AS UNDER: 'FROM THE ACCUMULATED CASH BALANCE A SUM OF RS.1,30,00,000/- HAS BEEN WITHDRAWN ON 5.6.2012 AND PAID TO SMT.SUGANTHI. THE LAND ADVANCE PAID OF RS.1,30,0 0,000/- IS REFLECTED IN THE LAND ACCOUNT OF SHRI R. ELANGOV AN FOR THE PERIOD ENDED ON 31.3.2013. THE SAID SUM WAS RETURNE D ON 25.02.2013 AND THE SAME IS SEEN TO BE CREDITED IN T HE CASH BOOK OF SHRI R.ELANGOVAN.' THE AO FURTHER OBSERVED THAT 'SHRI RANGASWAMY, WHO IS THE CO-PURCHASER IS A RETIRED GOVERNMENT SERVANT AND IT 'S UNLIKELY THT HE COULD HAVE CONTRIBUTED FOR THE PURC HASE OF SUCH A LARGE PROPERTY.' THE AO FURTHER ALSO STATED THAT THE ASSESSEE IS A S MALL TIME CONTRACTOR. HERE THE ASSESSEE SAYS WHEN THE AO WAS OF THE VIEW THAT A RETIRED GOVERNMENT SERVANT COULD NOT HA VE THE WHEREWITHAL TO PAY SUCH A HUGE ADVANCE, THE SAME YA RD STICK AND ANALOGY SHOULD HAVE BEEN APPLIED IN THE C ASE OF THE ASSESSEE ALSO, SINCE HE IS TERMED BY THE AO AS A SMALL TIME CONTRACTOR. THIS ITSELF PROVES THAT THE ASSESS EE COULD NOT HAVE FOUND THE NECESSARY SOURCE FOR THE INVESTM ENT OUT OF HIS OWN. FURTHER, AS ADMITTED BY THE AO, IN THE ASSESSMENT ORDER, THE ENTRIES IN THE BANK ACCOUNT A ND CASH BOOK ALSO CORROBORATE AND SUPPORT THE ASSESSEE'S VE RSION THAT HE WAS NOT THAT MUCH AFFLUENT TO PAY SUCH A HU GE AMOUNT TO BUY AN IMMOVABLE PROPERTY AND IT WAS THE ASSESSEE'S BROTHER WHO SHOULD HAVE MADE THE INVESTM ENT USING HIS BROTHER (THE ASSESSEE)'S NAME. IN THE CIRCUMSTANCES THE ADDITION MADE IN THE HANDS OF THE ASSESSEE IS HEREBY DIRECTED TO BE DELETED. HENCE TH IS GROUND 6 ITA NO.2728/MDS/2016 OF APPEAL IS ALLOWED. IF NEED BE, THE AO MAY PURSUE THE MATTER FURTHER IN THE CASE OF THE ASSESSEE'S BROTHE R SHRI ELANGOVAN, FROM WHOSE ACCOUNT' THE AMOUNT IN QUESTI ON WAS DEBITED AND ON CANCELLATION OF THE AGREEMENT, THE S AME AMOUNT WAS CREDITED. 6. BEFORE US THE LD.DR VEHEMENTLY ARGUED IN SUPPORT OF THE ORDER OF THE LD.AO BY REITERATING HIS FINDINGS WHIL E AS THE LD.AR RELIED ON THE ORDER OF THE LD.CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CAS E, IT IS APPARENT THAT THE ASSESSEE HAD CLEARLY ESTABLISHED THE SOURCE FOR THE ADVANCE MADE FOR THE PURCHASE OF LAND, WHIC H IS NOTHING BUT WITHDRAWALS FROM HIS BROTHERS SAVINGS BANK ACC OUNT. THE LD.AO HAS NOT BROUGHT OUT ANY MATERIALS TO SUGGEST THAT THE AMOUNT WITHDRAWN BY SHRI ELANGOVAN HAS BEEN UTILIZE D OTHERWISE. HOLDING OF CASH-IN-HAND FOR A PERIOD OF FEW MONTHS IN ORDER TO FIND THE MOST APPROPRIATE TIME TO ADVANCE CASH FOR PURCHASE OF IMMOVABLE PROPERTY WHICH WILL BRING ADV ANTAGE TO THE ASSESSEE IS QUITE COMMON IN REAL ESTATE TRANSAC TIONS. THEREFORE, THE APPREHENSIONS OF THE LD.AO DO NOT HA VE MERIT. IN THIS SITUATION, WE DO NOT FIND IT NECESSARY TO INTE RFERE WITH THE 7 ITA NO.2728/MDS/2016 ORDER OF THE LD.CIT(A) ON THIS ISSUE. THEREFORE, WE HEREBY UPHOLD THE ORDER OF THE LD.CIT(A). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 27 TH JULY, 2017. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 27 TH JULY, 2017 JR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. (./ 0 /DR 6. /1 /GF