A.Jesu Rajendran, CHENNAI V. ITO Business Ward XIII(2), CHENNAI

ITA 2817/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5270 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 22-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K G RAGHUNATH
• Keywords: Source of fund

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 ./ ITA NO.2817/CHNY/2017 ' (' / ASSESSMENT YEAR : 2005-06 SHRI A. JESU RAJENDRAN, NO.7, VALLALAR STREET, VETRISELVI ANBALAGAN NAGAR, CHENNAI - 600 082. PAN : ACQPJ 5627 E V. THE INCOME TAX OFFICER, BUSINESS WARD XIII(2), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI K.G. RAGHUNATH, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 05.04.2018 2!( . 1$ / DATE OF PRONOUNCEMENT : 26.04.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -12, CHENNAI, DATED 09.10.2017 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2 I.T.A. NO.2817/CHNY/17 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDIT ION OF 79,21,500/- AS UNDISCLOSED INCOME. 3. SHRI K.G. RAGHUNATH, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF ONE SHRI R.N. SHANMUGAM. IN THE COURSE OF SEARCH OPERATION, ACCORDING TO THE LD . COUNSEL, THE REVENUE AUTHORITIES CLAIMED THAT THEY FOUND MATERIA L TO INDICATE THAT THE ASSESSEE HAS PURCHASED LAND TO THE EXTENT OF 14 ACR ES AND 21.38 GUNTAS AT ILLATHORE VILLAGE, KUNDAN HOBLI, DEVANHALLI TALU K, BANGALORE RURAL DISTRICT, FOR A TOTAL CONSIDERATION OF 79,21,500/- ON 12.10.2004 FROM M/S ALFA HOME MAKERS PVT. LTD. ACCORDING TO THE LD. CO UNSEL, THE ASSESSEE EXPLAINED BEFORE THE INVESTIGATION WING OF THE DEPA RTMENT THE SOURCE FOR MAKING SUCH INVESTMENT. ACCORDING TO THE LD. COUNS EL, THE ASSESSEE IN FACT PURCHASED THE PROPERTY FROM M/S ALFA HOME MAKE RS PVT. LTD. HOWEVER, NO PAYMENTS WERE MADE DURING THE YEAR UNDE R CONSIDERATION. REFERRING TO THE SALE DEED, A COPY OF WHICH IS AVAI LABLE AT PAGE 8 OF THE PAPER-BOOK, THE LD. REPRESENTATIVE SUBMITTED THAT T HE CHEQUES WERE ISSUED ON 12.10.2004. THE AMOUNT AVAILABLE IN THE BANK ACCOUNT WAS LESS THAN 1 LAKH DURING THE TIME WHEN THE CHEQUE WAS ISSUED A ND SALE DEED WAS EXECUTED. ACCORDING TO THE LD. COUNSEL, T HE VENDOR OFFERED THE LAND FOR SALE ON CREDIT. HOWEVER, THE ASSESSEE GAV E CHEQUE ON THE DATE OF THE EXECUTION OF SALE DEED EVEN THOUGH THE FUNDS WERE NOT AVAILABLE IN THE BANK. ACCORDING TO THE LD. COUNSEL, THE ASSESS EE REQUESTED THE 3 I.T.A. NO.2817/CHNY/17 VENDOR TO PRESENT THE CHEQUE FOR CLEARANCE AFTER SU FFICIENT FUNDS WERE DEPOSITED IN THE BANK. SUFFICIENT FUNDS WERE DEPOS ITED IN THE BANK DURING THE ASSESSMENT YEAR 2006-07. FOR THE ASSESSMENT YE AR 2006-07, THE ASSESSEE HAS DISCLOSED THE INCOME TO THE REVENUE AU THORITIES. 4. REFERRING TO THE BANK STATEMENT, WHICH IS AVAILA BLE AT PAGES 15 AND 16 OF THE PAPER-BOOK, THE LD.COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE CHEQUE WAS IN FACT REALIZED ONLY ON 11.04.2005 WHICH FALLS IN THE ASSESSMENT YEAR 2006-07. ACCORDING TO THE LD. COUN SEL, WHEN THE ASSESSEE ISSUED CHEQUE IN FAVOUR OF THE VENDOR WITH OUT HAVING SUFFICIENT BALANCE IN THE BANK ACCOUNT, IT DOES NOT AMOUNT TO INVESTMENT OR PAYMENT OF MONEY BY THE ASSESSEE. AT THE BEST, THE PAYMENT HAS TO BE CONSTRUED ON THE DATE ON WHICH THE ASSESSEE DEPOSIT ED SUFFICIENT MONEY IN THE BANK ACCOUNT FOR CLEARANCE OF CHEQUE. ACCOR DING TO THE LD. COUNSEL, THE FUNDS WERE DEPOSITED ONLY IN THE ASSES SMENT YEAR 2006-07, THEREFORE, THE ASSESSEE WAS EXPECTED TO EXPLAIN THE SOURCE FOR MAKING DEPOSIT IN THE BANK ACCOUNT FOR THE ASSESSMENT YEAR 2006-07. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IN FACT DISCLOSED THE SOURCE FOR MAKING DEPOSIT IN THE ASSESSMENT YEAR 2006-07, HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR UNDER CON SIDERATION IS NOT JUSTIFIED. 4 I.T.A. NO.2817/CHNY/17 5. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE CLAIM OF THE ASS ESSEE THAT THE VENDOR OFFERED THE LAND FOR SALE ON CREDIT BASIS IS AN AFT ERTHOUGHT. IN FACT, ACCORDING TO THE LD. D.R., THE ASSESSEE ACQUIRED TH E LAND WITH AN INTENTION OF DEVELOPING THE SAME INTO HOUSING SITE. THE LAND WAS PURCHASED FOR REAL ESTATE BUSINESS. THE LD. D.R. F URTHER SUBMITTED THAT THE ASSESSEE STATED BEFORE THE INVESTIGATION WING O F THE DEPARTMENT THAT HE RECEIVED 73 LAKHS AS INTEREST-FREE LOAN FROM ONE SHRI SATHIS H. THIS AMOUNT OF 73 LAKHS ALONG WITH 6 LAKHS FROM HIS PERSONAL SAVINGS WAS USED FOR PURCHASE OF PROPERTY. SUBSEQUENTLY, THE A SSESSEE OFFERED ANOTHER EXPLANATION FOR SOURCE OF FUNDS CLAIMING TH AT IT IS A WINDFALL GAIN OR INTEREST-FREE LOAN. IN VIEW OF THE CONTRADICTOR Y STAND TAKEN BY THE ASSESSEE, ACCORDING TO THE LD. D.R., THE CIT(APPEAL S) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R TO THE EXTENT OF 79,21,500/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE ISSUED CHEQUE FOR MAKING INVESTMENT IN THE LANDED PROPERTY ON 12.10.2004. THE ASSESSEE HAD NO SUFFIC IENT BALANCE IN THE BANK ACCOUNT. THE QUESTION ARISES FOR CONSIDERATIO N IS WHEN THE ASSESSEE ISSUED THE CHEQUE AND NO CASH BALANCE WAS AVAILABLE FOR CLEARANCE OF CHEQUE ON THE DATE ON WHICH THE CHEQUE WAS ISSUED AND 5 I.T.A. NO.2817/CHNY/17 SUBSEQUENTLY THE ASSESSEE DEPOSITED CASH IN THE BAN K AND THE VENDOR DEPOSITED THE CHEQUE FOR CLEARANCE, WHAT WILL BE TH E DATE ON WHICH THE INVESTMENT WAS MADE BY THE ASSESSEE? THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT EVEN THOUGH THE DATE OF CHE QUE HAS TO BE CONSIDERED AS DATE OF PAYMENT IN RESPECT OF SALE DE ED, FOR THE PURPOSE OF INCOME-TAX ACT, THE ACTUAL DEPOSIT OF CASH IN THE B ANK ACCOUNT FOR THE PURPOSE OF CLEARANCE OF THE CHEQUE HAS TO BE TAKEN INTO CONSIDERATION. 7. IF THE ASSESSEE HAD SUFFICIENT CASH BALANCE IN T HE BANK ACCOUNT WHILE ISSUING A CHEQUE, THE MATTER WOULD STAND ON D IFFERENT FOOTING. IN THIS CASE, THE BANK BALANCE WAS LESS THAN 1 LAKH WHICH IS NOT SUFFICIENT FOR CLEARING THE CHEQUE. THEREFORE, THE ACTUAL DEP OSIT OF CASH MADE IN THE BANK ACCOUNT FOR HONOURING / CLEARING THE CHEQU E HAS TO BE TAKEN AS DATE OF INVESTMENT. IN THIS CASE, ADMITTEDLY, THE CASH WAS DEPOSITED IN THE BANK ACCOUNT SO AS TO ENABLE THE VENDOR TO ENCA SH THE CHEQUE DURING THE ASSESSMENT YEAR 2006-07. THEREFORE, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE CANNOT BE ANY ADDITIO N FOR THE ASSESSMENT YEAR 2005-06. HENCE, WE ARE UNABLE TO UPHOLD THE O RDERS OF THE LOWER AUTHORITIES. ACCORDINGLY, ORDERS OF BOTH THE AUTHO RITIES BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICE R IS DELETED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6 I.T.A. NO.2817/CHNY/17 ORDER PRONOUNCED ON 26 TH APRIL, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 26 TH APRIL, 2018. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-12, CHENNAI 4. PRINCIPAL CIT-3, CHENNAI. 5. 69 ,1 /DR 6. :' ; /GF.