Maheswari yuvaraj, CHENNAI V. ACIT, CHENNAI

ITA 284/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9047 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J ILAVARASI
• Assessee Lawyers: A SATYASEELAN
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 28 4 /MDS/2014 / ASSESSMENT YEAR :20 08 - 09 MRS. MAHESWARI YUVARAJ, C/O ANAND AND PONNAPPAN C.AS., 46 - B, 4 TH FLOOR, SOUTH BOAG ROAD, T. NAGAR, CHENNAI 17. [PAN: A GOPM2127N ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , COMPANY CIRCLE II I( 2 ), CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A. SATYASEELAN, ADVOCATE / RESPONDENT BY : SMT. J. ILAVARASI, JCIT / DA TE OF HEARING : 1 1 . 0 4 .201 6 / DATE OF P RONOUNCEMENT : 30 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) III , CHENNAI , DATED 04 . 11 .20 1 3 RELEVANT TO THE ASSESSMENT YEAR 20 08 - 09 . 2. THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF ADDITION BY THE LD. CIT(A) AT .27,58,349/ - BY INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. I.T.A. NO . 284 /M/ 14 2 3. FACTS OF THE CASE ARE THAT WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS ADVANCE AN AMOUNT OF .47,42,657/ - AND SINCE THE ASSESSEE FAILED TO GIVE SATISFACTORY EXPLANATION, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT AND MADE THE ADDITION OF .27,58,349/ - , WHICH WAS CONFIRMED BY THE LD. CIT(A). AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. ACCORDING TO THE LD . COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAS ADVANCED A SUM OF .8,81,435.89 DURING THE EARLIER YEARS AND THE SAME IS APPEARING AS OPENING BALANCE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE . THE PROPERTY BELONGS TO THE ASSESSEE AND THE PAYMENTS WERE MADE PIE CEMEAL BASIS AND WERE DEBITED TO THE DIRECTORS ACCOUNT INSTEAD OF ADVANCE FOR PURCHASE OF FLAT. THE ASSESSEE, BEING A DIRECTOR, IS ENTITLED FOR MONTHLY SALARY OF .75,000/ - AND LET HER PROPERTY TO THE COMPANY FOR A MONTHLY RENT OF .60,000/ - PER MONTH. THE SE AMOUNTS WERE ROUTED THROUGH DIRECTOR S CURRENT ACCOUNT AND THE END OF THE YEAR, CORRESPONDING ENTRY OF SALARY WAS MADE AND THIS WAS RESULTED IN DAY - TO - DAY BALANCE IN DIRECTOR S ACCOUNT BEING A RUNNING ACCOUNT. ACCORDING TO THE LD. AR, IF WE CONSIDER THI S ASPECT, THERE CANNOT BE ANY REASON INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE LD. A R HAS SUBMITTED THAT THE ADVANCE PAID TO THE ASSESSEE ON DAY - TO - DAY BASIS CANNOT BE SET OFF A GAINST THE SUBSEQUENT I.T.A. NO . 284 /M/ 14 3 ENTRY TOWARDS SALARY AND RENT OR SALE OF PROPERTY. HE RELIED ON THE JUDGEMENT IN THE CASE OF MISS P. SARAD A V. CIT 229 ITR 444 (SC) , WHEREIN, IT WAS HELD THAT WITHDRAWAL MADE BY THE SHARE HOLDER ON VARIOUS DATES, THE AMOUNTS TO THE CUR RENT ACCOUNT O F THE DIRECTOR, IN TERMS OF SECTION 2(22)(E) OF THE ACT, EVEN THOUGH ULTIMATELY THE AMOUNT WAS ADJUSTED AGAINST THE CURRENT BALANCE OF ANOTHER SHARE HOLDER AT THE END OF THE YEAR. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECOR D AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE DIRECTOR OF THE ASSESSEE COMPANY IS NOT ENTITLED FOR SALARY AND RENT FROM COMPANY M/S. THIRUVONAM IMPEX PVT. LTD. IF THIS FACT IS TRUE AND IF THE SAID AMOUNT IS ULTIMATELY ADJUSTED TOWARDS SALARY AND RENT AT THE END OF THE YEAR THAT AMOUNT CANNOT BE CONSIDERED FOR INVOKING THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. FURTHER, THE PLEA OF THE ASSESSEE IS THAT THE ASSESSEE HAS RECEIVED A SUM OF .54,20,000/ - TOWARDS SALE OF FLAT. IF THIS AMOUNT IS EMANATED FROM THE SALE OF FLAT AND ULTIMATELY SALE TOOK PLACE AND ADJUSTED TOWARDS SALE CONSIDERATION THEN ALSO THIS AMOUNT GOES OUT OF THE PURVIEW OF SECTION 2(22)(E) OF THE ACT. FURTHER, REGARDING OPE NING BALANCE, IF IT IS NOT CONSIDERED IN EARLIER ASSESSMENT YEAR THEN ONLY IT SHOULD BE CONSIDERED FOR APPLICABILITY OF SECTION 2(22)(E) OF THE ACT. WITH THESE OBSERVATIONS, WE ARE INCLINED TO REMIT TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERAT ION AND DECIDE THE ISSUE DE NOVO AFTER ALLOWING SUFFICIENT I.T.A. NO . 284 /M/ 14 4 OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES . ORDER PRONOUNCED ON THE 30 TH JUNE , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 6 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.