P.S.Sarvanan, CHENNAI V. ITO, CHENNAI

ITA 2737/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96396 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Gift
• Section: 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL S M C BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.2737/MDS/2014 ' #$' / ASSESSMENT YEAR : 2007-08 SHRI P.S. SARAVANAN, 11, NAMBIAR STREET, SOWCARPET, CHENNAI - 600 079. PAN : APCPS 7180 J V. THE INCOME TAX OFFICER, WARD XII(3), CHENNAI - 600 006. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI G. BASKAR, ADVOCATE ()&' * + / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT , # * -. / DATE OF HEARING : 21.08.2015 /0$ * -. / DATE OF PRONOUNCEMENT : 23.11.2015 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, CHENNA I, DATED 02.04.2014 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.2737/MDS/14 2. THE FIRST GROUND OF THE APPEAL IS WITH REGARD TO ADDITION OF ` 5 LAKHS MADE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD RECEIVED A SUM OF ` 5 LAKHS BY CASH FROM SMT. MANJULA ON 23.04.2006, 15.05.2006 AN D 07.06.2006. THE ASSESSEE EXPLAINED BEFORE THE ASSE SSING OFFICER THAT THE ABOVE SAID SUM OF ` 5 LAKHS WAS RECEIVED ON THREE OCCASIONS FROM SMT. MANJULA. THEN, A SHOP AT NUNGA MBAKKAM WAS PURCHASED BY THE ASSESSEE ALONG WITH THE SAID S MT MANJULA FOR A SUM OF ` 10 LAKHS. THE ASSESSEE PRODUCED A COPY OF THE SALE DEED BEFORE THE ASSESSING OFFICER. HOWEVER, THE AS SESSING OFFICER MADE AN ADDITION OF ` 5 LAKHS, SINCE SMT. MANJULA WAS NOT AN ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE SALE D EED PRODUCED BEFORE THE ASSESSING OFFICER CLEARLY SHOWED THAT TH E PROPERTY WAS PURCHASED BY BOTH, THE ASSESSEE AND SMT. MANJULA FO R A SUM OF ` 10 LAKHS. THEREFORE, WHAT WAS RECEIVED BY THE ASSESSE E FROM SMT. MANJULA WAS TOWARDS HER SHARE OF MONEY FOR PURCHASI NG THE SHOP. THEREFORE, NO ADDITION CAN BE MADE. 3 I.T.A. NO.2737/MDS/14 4. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT ADMITTEDLY THE ASSES SEE RECEIVED ` 5 LAKHS FROM SMT. MANJULA. THEREFORE, IT IS FOR THE ASSESSEE TO EXPLAIN THE SOURCE FROM WHICH THE SUM OF ` 5 LAKHS WAS RECEIVED. THE CIT(APPEALS) FURTHER FOUND THAT THE ASSESSEES WIFE IS NOT CARRYING ON ANY BUSINESS OR PROFESSION, THEREFORE, HE REJECT ED THE CLAIM OF THE ASSESSEE. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. FROM THE MATERIAL AVAILABLE ON RECORD, IT APPEARS THAT THE ASSESSEE A LONG WITH HIS WIFE SMT. MANJULA PURCHASED A COMMERCIAL PREMISES AT NUN GAMBAKKAM FOR A CONSIDERATION OF ` 10 LAKHS. FROM THE ORDER OF THE ASSESSING OFFICER IT APPEARS THAT THE ASSESSEE HAS ALSO TAKEN A LOAN OF ` 10 LAKHS JOINTLY WITH HIS WIFE FROM CITI BANK. THE FA CT IS THAT THE ASSESSEE PURCHASED A COMMERCIAL PREMISES, NAMELY, S HOP FOR A SUM OF ` 10 LAKHS JOINTLY WITH SMT. MANJULA, THE ASSESSEES WIFE. THE ASSESSEE CLAIMS THAT A SUM OF ` 5 LAKHS WAS RECEIVED IN CASH FROM SMT. MANJULA. THE FACT REMAINS IS THAT SMT. M ANJULA IS NOT DOING ANY BUSINESS OR PROFESSION AND THERE IS NO MA TERIAL AVAILABLE ON RECORD TO SUGGEST THAT THE SAID PAYMENT OF ` 5 LAKHS WAS MADE 4 I.T.A. NO.2737/MDS/14 FROM HER PAST SAVINGS. THERE IS NO MATERIAL AVAILA BLE ON RECORD TO SUGGEST THAT SMT. MANJULA RECEIVED THE SUM OF ` 5 LAKHS FROM HER PARENTS, BROTHER, SISTER, ETC. EITHER AS GIFT OR SH ARE MONEY. IN THE ABSENCE OF ANY MATERIAL, THE CIT(APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THIS TRIBUNAL DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY IN TH E ABSENCE OF ANY MATERIAL TO SUGGEST THAT SMT. MANJULA HAD SUFFICIEN T SOURCE TO GIVE ` 5 LAKHS FOR MAKING INVESTMENT IN THE SHOP. ACCORDI NGLY, THE ORDER OF THE LOWER AUTHORITY IS CONFIRMED. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDI TION OF ` 40,000/- BEING THE RENTAL ADVANCE RECEIVED BY THE A SSESSEE. 7. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER FOUND THERE WAS A DEPOSI T OF ` 40,000/- ON 17.08.2006. THE ASSESSEE EXPLAINED BEFORE THE ASSE SSING OFFICER THAT THE ABOVE SAID SUM OF ` 40,000/- WAS RECEIVED FROM M/S QBRIK CONSULTANCY AS RENT ADVANCE FOR THE SHOP AT ALWARPE T. THE ASSESSING OFFICER FOUND THAT THE SAME WAS NOT DISCL OSED IN THE STATEMENT OF AFFAIRS FILED BY THE REPRESENTATIVE OF THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, MERELY BECAUSE THE SA ID SUM OF 5 I.T.A. NO.2737/MDS/14 ` 40,000/- WAS NOT DISCLOSED IN THE STATEMENT, IT CAN NOT BE SAID THAT IT WAS NOT RECEIVED TOWARDS RENTAL ADVANCE. 8. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE RECEIPT OF RENTA L ADVANCE WAS NOT DISCLOSED IN THE STATEMENT OF AFFAIRS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. SINCE THE ASSESSEE WAS NOT CARR YING ON ANY BUSINESS OR PROFESSION, HE IS ALSO NOT MAINTAINING ANY BOOKS OF ACCOUNT. IN FACT, THE CIT(APPEALS) DELETED THE AD DITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE SUM WA S RECEIVED AS ADVANCE FOR SHOP AT ALWARPET. 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SING OFFICER MADE AN ADDITION OF ` 40,000/- ON THE GROUND THAT THE RECEIPT OF RENTAL ADVANCE FROM M/S QBRIK CONSULTANCY WAS NOT R EFLECTED IN THE STATEMENT OF AFFAIRS. HOWEVER, ON APPEAL BY THE AS SESSEE, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS COMPUTED I NCOME FROM HOUSE PROPERTY AND THE ADVANCE WAS RECEIVED BY CHEQ UE, THEREFORE, THE IDENTITY AND GENUINENESS OF TRANSACTION WERE ES TABLISHED. THEREFORE, THE CIT(APPEALS) FOUND THAT THE ASSESSIN G OFFICER WAS NOT CORRECT IN MAKING ADDITION AND ACCORDINGLY, THE SAME WAS 6 I.T.A. NO.2737/MDS/14 DELETED. WHEN THE ADDITION MADE BY THE ASSESSING O FFICER WAS DELETED, IT IS NOT KNOWN WHY THE ASSESSEE HAS AGAIN RAISED THE GROUND BEFORE THIS TRIBUNAL AS GROUND NO.2. THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ISSUE WITH REGARD TO ADDITION OF ` 40,000/- TOWARDS RENTAL ADVANCE FOR SHOP AT ALWARPE T WAS ACCEPTED BY THE CIT(APPEALS) AND DELETED THE SAME, THE GROUND RAISED BY THE ASSESSEE IS MISCONCEIVED. 10. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 29,000/- BEING THE HAND LOAN RECEIVED FROM THE ASSE SSEES TENANT. 11. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE HAD ISSUED A CHEQUE FOR ` 30,000/- ON 19.08.2006 AND ANOTHER CHEQUE FOR ` 50,000/- ON 24.08.2006 TO ONE SMT. L. BINDIYA. THE ASSESSEE, IN FACT, COLLECTED ` 51,000/- FROM THE ABOVE SAID SMT. BINDIYA ON 24.11.2006. ACCORDING TO THE LD. COUNSEL, THE PAYMENT WAS MADE BY THE ASSESSEE FROM THE BANK ACCO UNT BY ISSUING CHEQUES. THE ASSESSING OFFICER MADE THIS A DDITION OF ` 29,000/- ON THE GROUND THAT THE ASSESSEE FAILED TO EXPLAIN THE TRANSACTION. ACCORDING TO THE LD. COUNSEL, EVEN IF THE ASSESSEE FAILS TO EXPLAIN THE TRANSACTION, WHAT WAS PAID BY THE AS SESSEE IS FROM 7 I.T.A. NO.2737/MDS/14 THE DEPOSIT IN THE BANK ACCOUNT, THEREFORE, CHEQUES ISSUED BY THE ASSESSEE NEED NOT BE A REASON FOR MAKING THE ADDITI ON. 12. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE MADE PA YMENT OF ` 80,000/- BY MEANS OF CHEQUES. ONE CHEQUE WAS FOR ` 30,000/- AND ANOTHER FOR ` 50,000/-. HOWEVER, THE ASSESSEE RECEIVED BACK ONLY ` 51,000/-. IT IS NOT KNOWN WHY THE BALANCE OF ` 29,000/- WAS NOT RECEIVED BACK. THEREFORE, THE CIT(APPEALS) HAS RIG HTLY CONFIRMED THE ADDITION. 13. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN FACT, THE ASSESSEE PAID ` 30,000/- ON 19.08.2006 AND ` 50,000/- ON 24.08.2006 TO ONE SMT. L. BINDIYA. IN OTHER WORDS, THE ASSESSEE PAID ` 80,000/-. THE ASSESSEE RECEIVED BACK ` 51,000/- ON 24.11.2006 FROM THE SAID SMT. BINDIYA. THE ADDITION OF ` 29,000/- WAS MADE IN RESPECT OF THE BALANCE AMOUNT OF ` 29,000/- WHICH WAS NOT RECEIVED FROM SMT. BINDIYA. THE FACT REMAINS THAT THE SUM OF ` 29,000/-, WHICH WAS NOT COLLECTED FROM SMT. BINDIYA WAS PAID BY THE ASSESSE E FROM THE BANK ACCOUNT. IF AT ALL ANY ADDITION HAS TO BE MAD E, IT SHOULD BE MADE ONLY IN RESPECT OF DEPOSIT MADE IN THE BANK AC COUNT AND NOT 8 I.T.A. NO.2737/MDS/14 IN RESPECT OF THE CHEQUE ISSUED BY THE ASSESSEE TO SMT. BINDIYA. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE BALANCE AMOUNT OF ` 29,000/- IS IN RESPECT OF THE CHEQUE ISSUED BY THE ASSESSEE TO SMT. BINDIYA. THEREFORE, THERE CANNOT BE MADE ANY ADDITION AS UNEXPLAINED INVESTMENT. IF AT ALL ANY ADDITION CAN BE MADE, IT SHOULD BE MADE IN RESPECT OF DEPOSIT MADE IN THE BA NK AS UNEXPLAINED INVESTMENT AND NOT IN RESPECT OF PAYMEN T MADE TO THE PARTY. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOL D THE ORDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF ` 29,000/- IS DELETED. 14. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 65,000/- BEING THE CHEQUES ISSUED TO M/S GREENLAND FARMS. 15. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS ISSUED A CHEQUE FOR ` 30,000/- ON 27.01.2007 AND ANOTHER CHEQUE FOR ` 35,000/- ON 23.12.2006 TO M/S GREENLAND FARMS. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE CHE QUES WERE ISSUED IN FAVOUR OF M/S GREENLAND FARMS ON BEHALF O F THE ASSESSEES FRIEND SHRI S. DINESH KUMAR. ACCORDING TO THE LD. COUNSEL, THE AVAILABILITY OF FUNDS IN THE BANK ACCO UNT IS NOT IN 9 I.T.A. NO.2737/MDS/14 DISPUTE. WHEN THE ASSESSEE HAS SUFFICIENT FUNDS IN THE BANK, WHICH WAS NOT DOUBTED BY THE ASSESSING OFFICER, MERE ISSU E OF CHEQUES IN FAVOUR OF M/S GREENLAND FARMS CANNOT BE A REASON FO R MAKING ADDITION. 16. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. D .R. SUBMITTED THAT THE ASSESSEE ISSUED TWO CHEQUES IN FAVOUR OF M /S GREENLAND FARMS. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE CHEQUES WERE ISSUED ON BEHALF OF HIS FRIEND SHR I S. DINESH KUMAR. IN THE ABSENCE OF ANY DETAILS ABOUT SHRI DI NESH KUMAR, THE ASSESSING OFFICER MADE THE ADDITION OF ` 65,000/-. 17. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. ADMITTEDL Y, THE CHEQUES WERE ISSUED IN FAVOUR OF M/S GREENLAND FARMS. THE AVAILABILITY OF FUNDS IN THE BANK ACCOUNT IS NOT DOUBTED BY THE ASS ESSING OFFICER. ONCE THE SOURCE OF AVAILABILITY OF FUNDS IS NOT IN DOUBT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERELY BECAUSE TH E CHEQUES WERE ISSUED IN FAVOUR OF M/S GREENLAND FARMS THAT CANNOT BE A REASON FOR MAKING ANY ADDITION. SECTION 69 OF THE ACT ENA BLES THE ASSESSING OFFICER TO TREAT THE INVESTMENT MADE BY T HE ASSESSEE AS INCOME PROVIDED THE ASSESSEE HAS NOT EXPLAINED ABOU T THE NATURE 10 I.T.A. NO.2737/MDS/14 AND SOURCE OF SUCH INVESTMENT. IN THIS CASE, THE N ATURE OF INVESTMENT IS THE PAYMENT MADE ON BEHALF OF SHRI DI NESH KUMAR AND THE SOURCE IS FROM THE ASSESSEES BANK ACCOUNT. THE AVAILABILITY OF FUNDS IN THE ASSESSEES BANK ACCOUN T IS NEITHER DOUBTED NOR DISPUTED BY THE ASSESSING OFFICER. WHE N THE FUNDS WERE AVAILABLE IN THE BANK ACCOUNT, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT MERELY BECAUSE THE ASSESSEE COULD NOT FURNISH DETAILS ABOUT SHRI DINESH KUMAR THERE CANNO T BE ANY ADDITION UNDER SECTION 69 OF THE ACT. THEREFORE, T HIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTEN T OF ` 65,000/- IS DELETED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON 23 RD NOVEMBER, 2015 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 23 RD NOVEMBER, 2015. KRI. 11 I.T.A. NO.2737/MDS/14 * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-IV, CHENNAI 4. , 6- /CIT-IX, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.