ACIT, Madurai V. Sh. M.A.Abdul Munaff, Ramanathapuram

ITA 280/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57969 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-02-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 18-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNA
• Assessee Lawyers: G BASKAR
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 280/MDS/2011 ASSESSMENT YEAR : 2003-04 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-III, MADURAI. V. SHRI M. A. ABDUL MUNAFF, NO. 3, DEEN CHAMBER, RAILWAY FEEDER ROAD, RAMANATHAPURAM. (PAN : AESPA6266Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. GOPALAKRISHNA, JCIT RESPONDENT BY : SHRI G. BASKAR, ADVOCATE DATE OF HEARING : 15-02-2012 DATE OF PRONOUNCEMENT : 1 5-02-2012 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II, MADURAI IN ITA NO. 204/2007-08 DAT ED 05-07-2010 FOR THE ASSESSMENT YEAR 2003-04. 2. SHRI K. GOPALAKRISHNA, LEARNED SR. DR REPRESENTE D ON BEHALF OF THE REVENUE AND SHRI G. BASKAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. I.T.A. NO. 280/MDS/2011 2 3. IT WAS SUBMITTED BY THE LEARNED DR THAT IN THE C OURSE OF ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAD INDIVIDUAL CREDIT S IN HIS BOOKS. THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 131 OF THE INCOME TAX ACT, 1961 TO 24 CREDITORS OF WHICH 23 HAD APPEARED AND ONE HAD NOT. THE CREDITORS HAD CONFIRMED THE TRANSACTIONS. IT WAS THE SUBMISSION THAT THE INCOME OF THE CREDITORS VARIED BETWEEN ` 700/- AND 5000/- PER MONTH. IT WAS THE SUBMISSION THAT THE CREDITORS WERE BASICALLY COOLIES OR SMALL BUSINESSMEN, MASONS AND AGRICULTURISTS. IT WAS THE SUBMISSION THAT THE SAI D CREDITORS HAD BEEN SHOWN TO HAVE GIVEN THE ASSESSEE CREDITS VARYING BETWEEN ` 30,000/- AND ` 1,00,000/- AND MOST OF THE CREDITORS ` 50,000/-. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE CREDITORS HAD GIVEN THE ASSESSEE THE AMOUN TS IN CASH AND THE CREDITORS WERE NOT CAPABLE OF GIVING SUCH HUGE CREDITS TO THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD DISALLOWE D ALL THE 24 CREDITORS. IT WAS THE SUBMISSION THAT ON APPEAL THE LEARNED CIT(A) HA D DELETED THE ADDITION IN REGARD TO 21 CREDITORS AND RETAINED THE ADDITION IN RESPECT OF 3 CREDITORS AS MENTIONED IN PAGE 7 OF THE ORDER OF THE LEARNED CIT (A). IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELETED THE ADDITION BY HOLDING THAT THE ASSESSEE HAD PROVED THE IDENTITY AND THE GENUINENESS OF THE CREDITORS AND THAT THE CREDITORS WERE CREDIT-WORTHY. IT WAS THE SUBMISSIO N THAT THE LEARNED CIT(A) HAD ACCEPTED THE FACT THAT MOST OF THE CREDITORS WERE N OT HAVING BANK ACCOUNTS AND THAT AGRICULTURISTS AND SMALL TRADERS NEED NOT HAVE BANK ACCOUNTS. IT WAS THE I.T.A. NO. 280/MDS/2011 3 SUBMISSION THAT WHEN THE CREDITORS WHICH HAVE BEEN ACCEPTED BY THE LEARNED CIT(A) ARE COMPARED WITH THE CREDITORS WHOSE DISALL OWANCE HAS BEEN CONFIRMED BY THE LEARNED CIT(A), THERE IS NO DIFFERENCE AND T HERE WAS NO JUSTIFICATION FOR THE LEARNED CIT(A) IN DELETING THE CASH CREDITS AS ADDED BY THE ASSESSING OFFICER. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT ALL THE CREDITORS HAD CONFIRMED THE TRANSACTIONS. IT WAS T HE FURTHER SUBMISSION THAT THE CREDITORS HAVING APPEARED BEFORE THE ASSESSING OFFI CER, HAVING EXAMINED BY THE ASSESSING OFFICER AND HAVING CONFIRMED THE TRANSACT IONS, NO DISALLOWANCE COULD BE MADE. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE ASSESSING OFFICER CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS CALLED FOR CREDITORS BY ISSUANCE OF SUMMONS U/S 131. THE CREDITORS DID APPEAR. THE CREDITORS HAVE ADMITTED THAT THEY HAVE PAID THE AMOUNTS TO THE ASS ESSEE BY CASH. THE CREDITORS HAVE ALSO EXPLAINED THEIR SOURCE OF THE M ONEY. THE MONTHLY INCOME OF THE CREDITORS, AS STATED BEFORE THE ASSESSING OFFIC ER IN THE STATEMENT U/S 131, VARIES BETWEEN ` 2,000/-, ` 3,000/-, ` .4,000/-, ` 7,000/- ETC. ALL THESE CREDITORS ARE NO-INCOME INDIVIDUALS WHO ARE NOT INCOME-TAX AS SESSEES AND WHOSE FAMILIES CONSIST OF THE CREDITOR, HIS WIFE AND CHILDREN. NO NE OF THE CREDITORS HAS BROUGHT FORWARD ANY EVIDENCE TO SHOW IN REGARD TO THE PAYME NT OF THE AMOUNTS GIVEN TO THE ASSESSEE. NO EVIDENCE WHATSOEVER HAS BEEN BROU GHT FORWARD BY THE CREDITORS TO SHOW HOW THEY SAVED THE MONEY TO GIVE SUCH LARGE AMOUNTS VARYING I.T.A. NO. 280/MDS/2011 4 BETWEEN ` 30,000/-, ` 50,000/-, ` 70,000/- AND ` 1,00,000/- TO THE ASSESSEE. OBVIOUSLY, A PERSON OF SUCH SMALL MEANS, EVEN ASSUM ING THAT HE GIVES MONEY TO A BUSINESSMAN, WOULD MAINTAIN SOME EVIDENCE. THERE IS NO RELATIONSHIP BETWEEN THE CREDITORS AND THE ASSESSEE. NO PROMISS ORY NOTE OR COUNTER-CHEQUE IS AVAILABLE WITH THE CREDITORS. FURTHER THE ASSES SMENT YEAR IS 2003-04. IT IS OBVIOUS THAT A PERSON WHO IS HAVING SUCH A SMALL IN COME WHO WOULD BARELY BE ABLE TO MAKE THE FINANCIAL ENDS MEET, WOULD BE ABLE TO GIVE ANY AMOUNT TO THE ASSESSEE ON CREDIT. THERE IS NEITHER A STATEMENT T HAT THE ASSESSEE IS GIVING THE CREDITORS ANY INTEREST. THIS MAKES IT FAR MORE IMP ROBABLE THAT SUCH A LOW INCOME PERSON WOULD BE WILLING TO GIVE THE ASSESSEE SUCH A MOUNTS INTEREST-FREE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ACTION O F THE LEARNED CIT(A) IN DELETING THE ADDITION REPRESENTING THE CREDITS IN T HE NAMES OF THE 21 PERSONS IS ERRONEOUS AND IS LIABLE TO BE REVERSED AND WE DO SO . IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS ALLOWED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 15/02/2 012. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 15 TH FEBRUARY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE