Palanivel Sundaram, CHENNAI V. ACIT Non Corporate Circle 7(1), CHENNAI

ITA 2863/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3712 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 09-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Keywords: Unexplained cash credit; Salary income; Non passing of speaking order; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , ! ' # , $ %& BEFORE SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBE R ./ ITA NO.2863/CHNY/2018 ' ( )( /ASSESSMENT YEAR: 2015-16 SHRI PALANIVEL SUNDRAM, PROP: PRESS FORM INDUSTRIES, CHENNAI 600 098. VS. THE ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-7(1), CHENNAI. [PAN: AASPS 4727J] ( *+ /APPELLANT) ( ,-*+ /RESPONDENT) *+ . / / APPELLANT BY : SHRI T.N.SEETHARAMAN, ADV. ,-*+ . / /RESPONDENT BY : MRS. VIJAYAPRABHA, JCIT 0 . 1$ /DATE OF HEARING : 25.02.2020 23) . 1$ / DATE OF PRONOUNCEMENT : 25.02.2020 %# / O R D E R PER SHRI MAHAVIR SINGH, VICE PRESIDENT : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE O RDER OF CIT(A)- 2, CHENNAI, IN ITA NO. 52/CIT(A)-7/2017-18 DATED 23 .08.2018. THE ASSESSMENT WAS FRAMED BY ACIT, NON-CORPORATE CIRCLE -7, CHENNAI FOR THE RELEVANT A.Y. 2015-16 VIDE ORDER DATED 26.1 2.2017 U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . ITA NO.2863/CHNY/2018 (A.Y 2015-16) SHRI PALANIVEL SUNDARAM :- 2 -: 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE AGAIN ST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY ASSESSING OF FICER AT RS. 40,02,285/- AS UNEXPLAINED CREDIT. FOR THIS THE AS SESSEE RAISED GROUNDS NO.2 TO 6 WHICH READS AS UNDER: 2. THE COMMISSIONER (APPEALS) ERRED IN CONFIRMIN G THE ADDITION OF RS.40,02,2851- (RS.28,00,000/+ RS.12,02,2851-) M ADE IN THE ASSESSMENT ORDER AS 'UNEXPLAINED CREDIT' AND DISMIS SING THE APPEAL. 3. THE AUTHORITIES BELOW ERRED IN NOT APPRECIATING THAT THE APPELLANT IS THE SOLE PROPRIETOR OF THE BUSINESS CA RRIED ON UNDER THE TRADE NAME 'PRESS FORM INDUSTRIES' AND IS MAINTAIN ING BOOKS OF ACCOUNT AND BANK ACCOUNTS SEPARATELY ON HIS PERSONA L ACCOUNT AND FOR HIS BUSINESS TRANSACTIONS AND MONIES ARE TRANSF ERRED FROM THE PERSONAL BOOKS / BANK ACCOUNT TO HIS CAPITAL ACCOUN T IN THE BUSINESS BOOKS OF ACCOUNT AND VICE VERSA. 4. THE ASSESSING OFFICER/COMMISSIONER (APPEALS) FAI LED TO SEE THAT TOTAL THE SUM OF RS.28,00,000/- BROUGHT INTO T HE CAPITAL ACCOUNT IN THE BUSINESS BOOKS OF ACCOUNT WERE BY WAY OF CHE QUES DRAWN ON VARIOUS DATES ON THE APPELLANT'S PERSONAL BANK ACCO UNTS (A/C NOS. 887568610/ 504954057) WITH INDIAN BANK AND WERE NOT 'UNEXPLAINED CREDITS' AS ALLEGED. 5. THE ASSESSING OFFICER / COMMISSIONER (APPEALS) F URTHER FAILED TO SEE THAT THE CANTEEN EXPENSES FOR PFI STAFF WERE PAID FOR BY THE APPELLANT AND RECORDED IN THE BUSINESS BOOKS OF ACC OUNT BY WAY OF JOURNAL ENTRIES AND WERE NOT 'UNEXPLAINED CREDIT' A S MISCONSTRUED BY THE AUTHORITIES BELOW. 6. THE COMMISSIONER (APPEALS) ERRED IN REPEATING T HE INCORRECT REMARKS MADE BY THE ASSESSING OFFICER IN PARA 4.1 O F THE ASSESSMENT ORDER REGARDING ACCOUNTING FOR SALARY (TO THE PROPR IETOR), OFFER OF SALARY INCOME IN THE RETURN OF INCOME, COMMENT ON T HE AUDIT REPORT AND ROUTING THE PAYMENTS THROUGH THE P&L A/C ETC AN D ENDORSING THE REASONS ATTRIBUTED BY THE AO FOR REJECTING THE APPE LLANT'S EXPLANATION IN REGARD TO THE ADDITIONS DISPUTED IN THE APPEAL. 3. BRIEFLY STATED FACTS ARE THAT ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS INTRODUCED CAPITAL OF RS. 80,67,630/- FOR WHICH HE CALLED FOR THE DETAILS ITA NO.2863/CHNY/2018 (A.Y 2015-16) SHRI PALANIVEL SUNDARAM :- 3 -: FROM THE ASSESSEE. FINALLY, THE ASSESSING OFFICER N OTED AFTER VERIFICATION OF DETAILS THAT THE REMAINING INCREASE IN CAPITAL AMOUNTING TO RS. 40,02,285/- REMAIN UNEXPLAINED AND THE SAME READS AS UNDER: SL. NO. NATURE OF TRANSACTION DESCRIPTION AMOUNT 1. TRANSFERRED FROM SAVING A/C. FOR ASSET PURCHASES THE SAVING A/C. IS CREDITED WITH SALARY FROM PFI, SAVING INTEREST AND LIC MATURITY RS. 28,00,000/- 2. BUSINESS EXP. PAYMENT THE AMOUNT PERTAINING TO CANTEEN EXPENSE IS PAID BY MR. P. SUNDARAM FOR PFI STAFF. RS. 12,02,285/- 4. ACCORDING TO ASSESSING OFFICER, THE SALARY RECEI PT OF RS. 7,30,000/- IS USED FOR THE PURCHASE OF ASSET IN THE NAME OF ASSESSEES PROPRIETARY CONCERN AND FURTHER THE ASSESSEE HAS NO T DEBITED THE SALARY IN THE BOOKS OF ACCOUNTS MAINTAINED. EVEN TH E AMOUNT PERTAINING TO CANTEEN EXPENSES PAID BY MR. P. SUNDA RAM FOR PFI STAFF IS ALSO NOT EXPLAINED PROPERLY. THE ASSESSEE PREFE RRED APPEAL BEFORE CIT(A), THE CIT(A) DECIDED THE APPEAL DISMISSING TH E APPEAL BY GIVING FOLLOWING DECISION: 7. DECISION:- 7.1 THE APPELLANT SAY IN THE MATTER IS CONSIDERED. I FIND THAT THE ASSESSING OFFICER IN HIS ORDER HAS EXTENSIVELY EXAM INED THE ISSUE. IN THE APPELLATE PROCEEDINGS ALSO, THE APPELLANT HAS G IVEN THE SAME EXPLANATION AS WAS GIVEN BEFORE THE ASSESSING OFFIC ER. THE REASONS ATTRIBUTED BY ASSESSING OFFICER FOR REJECTING THE A PPELLANTS EXPLANATION RE REPRODUCED BELOW: 4.1 AS PER THE EXPLANATION OFFERED IN SL. NO.1, THE ASSESSEE HAD RECEIVED SALARY OF RS. 7,30,000/- PER MONTH FROM HIS PROPRIETARY CONCERN M/S. PRESS FORM INDUSTRIES AND FURTHER THIS AMOUNT IS USED FOR PURCHASE OF ASSET IN THE NA ME OF HIS PROPRIETARY CONCERNED. THE EXPLANATION OF THE ASSES SEE IS NOT ACCEPTED AS THE SALARY WAS NOT DEBITED IN BOOKS OF ACCOUNT ITA NO.2863/CHNY/2018 (A.Y 2015-16) SHRI PALANIVEL SUNDARAM :- 4 -: MAINTAINED BY THE ASSESSEE AND ALSO THERE IS NO COM MENT IN THE AUDIT REPORT. EVEN THOUGH THE PAYMENT IS REFLECTIN G THE BANK ACCOUNT OF THE ASSESSEE BUT THE SAME WAS NEITHER RO UTED THROUGH AUDITED PROFIT AND LOSS A/C. NOR OFFERED AS SALARY INCOME IN HIS RETURN OF INCOME. HENCE, THE EXPLANATION OFF ERED BY THE ASSESSEE IN THIS REGARD IS NOT ACCEPTED. 4.2 LIKEWISE IN THE SL. NO.2 OF THE ASSESSEES EXPL ANATION, IT IS FOUND THAT MR. P SUNDARAM PROPRIETOR OF M/S. PRESS FROM INDUSTRIES PAID CANTEEN EXPENSES FROM HIS PERSONAL ACCOUNT AND THE SAME WAS SHOWN AS ADDITIONAL CAPITAL. AS PER T HE ASSESSEES EXPLANATION, THE ASSESSEE IS MAINTAINING SEPARATE ACCOUNT FOR HIMSELF AND FOR HIS PROPRIETARY CONCERN . IN THIS REGARD IT IS ALSO TO BE NOTED THAT THE ASSESSEE IS WHOLE A ND SOLE PROPRIETOR OF THE FIRM M/S. PRESS FROM INDUSTRIES A ND THEY ARE NTO SEPARATE ENTITY. HENCE, THERE IS NO NECESSITY TO M AINTAIN SEPARATE ACCOUNT. HOWEVER IF ANY PAYMENT WAS MADE B Y THE ASSESSEE ON BEHALF OF THE PROPRIETARY CONCERN THE S AME SHOULD BE SHOWN AS LIABILITY NOT AS CAPITAL. HENCE IN THIS REGARD ALSO THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTED . 7.2 IN MY CONSIDERED VIEW, THERE IS NO REQUIREMENT FOR INTERFERENCE WITH THE AOS FINDINGS. 5. AGGRIEVED, NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE . T HE LD. COUNSEL FOR THE ASSESSEE TOOK US THROUGH THE ASSESSEES PAPER BOOK CONSISTING OF PAGES NO.1 TO 17, WHEREIN PROPRIETORS CAPITAL ACCOUNT ABSTRACT, CAPI TAL ACCOUNT FOR THE PERIOD 01.04.2014 TO 31.03.2015, JOURNAL VOUCHERS F OR STAFF CANTEEN EXPENSES AND BALANCE SHEET ALONG WITH SCHEDULES AS ON 31 ST MARCH 2015 IS ENCLOSED. THE LD. COUNSEL DREW OUR ATTENTI ON TO PAGE NO.2, WHEREIN THE DETAILS OF LIABILITY PAYMENT FROM THE P ERIOD 30 TH APRIL 2014 TO 30 TH NOVEMBER 2014 ARE DEBITED. FURTHER, THE LD. COUNSE L ALSO DREW ITA NO.2863/CHNY/2018 (A.Y 2015-16) SHRI PALANIVEL SUNDARAM :- 5 -: OUR ATTENTION TO THE ITEM OF SALARY DEBITED IN THE BOOKS OF ACCOUNTS W.E.F 06.05.2014 TO 07.03.2015. THE LD. COUNSEL ALS O DREW OUR ATTENTION TO PAGE NO.2A OF THE ASSESSEES PAPER BOO K, WHEREIN THE DETAILED EXPLANATION IS GIVEN AS REGARDS TO CREDIT MADE IN THE BOOKS OF ACCOUNTS, WHICH WAS ADDED BY ASSESSING OFFICER AND CONFIRMED BY CIT(A). IN VIEW OF THE ABOVE, THE LD. COUNSEL STAT ED THAT THE ACTUALLY NOMENCLATURE USED BY THE ASSESSEE AS SALARY IS ACTU ALLY WITHDRAWAL AND NOT SALARY. HE HAS STATED THAT THE ASSESSEE CO ULD NOT PRESENT HIS CASE PROPERLY BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) AND HE DREW OUR ATTENTION TO THE ORDER OF CI T(A), WHICH IS TOTALLY NON SPEAKING ORDER AND PASSED A SINGLE LINER. IN VI EW OF THE ABOVE, HE STATED THAT SINCE ALL THE DETAILS ARE AVAILABLE WIT H THE TRIBUNAL, WHICH WERE ALREADY AVAILABLE BEFORE THE ASSESSING OFFICER , THE MATTER CAN BE DECIDED HERE ONLY. 7. ON THE OTHER HAND, THE LD. SR. DR HEAVILY RELIED ON THE ORDER OF THE CIT(A). WHEN IT WAS POINTED OUT TO HER THERE IS NO ADJUDICATION AT ALL SHE COULD NOT ANSWER OUR QUERY. 8. AFTER HEARING BOTH THE SIDES, WE NOTED FROM T HE FACTS AND EVIDENCE PRODUCED BEFORE US, IT SEEMS THAT THE ASSESSEE HAS A CASE PRIMA FACIE BUT, IT SEEMS THE AUTHORITIES BELOW HAVE NOT GONE I NTO THE DETAILS. HENCE, THE MATTER NEEDS VERIFICATION AT THE LEVEL O F THE ASSESSING ITA NO.2863/CHNY/2018 (A.Y 2015-16) SHRI PALANIVEL SUNDARAM :- 6 -: OFFICER IN REGARD TO UNEXPLAINED CREDIT OF RS. 28,0 0,000/- BEING SALARY DEBITED IN THE CHART AND RS. 12,02,285/- BEING LIAB ILITIES DEBITED IN THE CHART ENCLOSED AT PAGE NO.2 OF THE ASSESSEES PAPER BOOK. HENCE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R EMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION ON THIS ISSUE. NEEDLESS TO SAY THAT THE ASSESSING OFFICER WILL CONSIDER THE ENTIRE EVIDENCE AND THEN DECIDE THE ISSUE ACCORDING TO LAW. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 25 TH DAY OF FEBRUARY, 2020 IN CHENNAI. SD/- SD/- ) (M. BALAGANESH) /ACCOUNTANT MEMBER ( ) (MAHAVIR SINGH) /VICE PRESIDENT /CHENNAI, 4% /DATED: 25 TH FEBRUARY, 2020 . EDN, SR. P.S %# . ,'15 65)1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 71 ( )/CIT(A) 4. 0 71 /CIT 5. 58' ,'1' /DR 6. '9( : /GF