ITO, CHENNAI V. Anand Rajagopal, CHENNAI

ITA 29/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4868 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 27-02-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 04-01-2017
• Court: TRIBUNAL
• Department Lawyers: R DURAIPANDIAN
• Keywords: Unexplained investment; Source of fund; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , '.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.29/MDS/2017 * * /ASSESSMENT YEAR: 2013-14 THE INCOME TAX OFFICER, NON-CORPORATE WARD-16(1), ROOM NO.523-B, 5 TH FLOOR, WANAPARTHY BLOCK, AAYAKAR BHAWAN, 121, MAHATMA GANDHI ROAD, CHENNAI-600 034. VS. SHRI ANAND RAJAGOPAL, AKSHYA, 3-412, 14 TH STREET, VENKATESWARA NAGAR, KOTTIVAKAM, CHENNAI-600 041. [PAN: AAIPA 9632 Q ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.R.DURAI PANDIAN, JCIT ./ - 0 /RESPONDENT BY : MR.SAROJ KUMAR PARIDA, ADV. 0 /DATE OF HEARING : 27.02.2017 0 /DATE OF PRONOUNCEMENT : 19.04.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 19.10.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 4, CHENNAI, IN ITA NO.137/2015-16/AY 2013-14/CIT(A)-4 FOR THE AY 2013- 14 AND RAISED THE FOLLOWING GROUNDS: ITA NO.29/MDS/2017 :- 2 -: 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (AP PEALS) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANC E MADE BY THE AO TO THE TUNE OF RS.80,00,000/- U/S 69 OF THE I.T ACT, 1961. 3. THE LD.CIT(A) ERRED IN DELETING THE ADDITION BASED O N THE ADDITIONAL DETAILS PRODUCED BY THE ASSESSEE DURING THE APPEAL PROCEEDINGS WHICH WE RE NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. 4. THE LD.CIT(A) ERRED IN DELETING THE IMPUGNED ADDITI ON, WITHOUT AFFORDING AN OPPORTUNITY TO THE AO UNDER RULE 46A(3) OF THE I.T RULES IN RESPE CT OF THE ADDITIONAL DETAILS SUBMITTED BEFORE THE CIT(A). 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASID E AND THAT OF THE ASSESSING OFFICER RESTORED. 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO THE A DDITION OF RS.80.00 LAKHS MADE BY THE ASSESSING OFFICER (IN SHORT AO) IN THE ASSESSMENT ORDER U/S.69 OF INCOME TAX ACT (IN SHORT THE ACT) . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSES SEE HAS MADE INVESTMENT IN HOUSE PROPERTY TO THE TUNE RS.70.00 L AKHS AND PAID A SUM OF RS.10.00 LAKHS TO M/S.METALLIC BELLOWS PVT. LTD. THE AO COMPILED THE STATEMENT OF SOURCES OF FUNDS AND APPLICATION OF FU NDS OF THE ASSESSEE AND HIS WIFE AND ARRIVED AT THE UNEXPLAINED INVESTMENT OF RS.80.00 LAKHS, WHICH WAS BROUGHT TO TAX. 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WEN T ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) (IN SHORT LD.CIT(A)) AND THE LD.CIT(A) ALLOWED THE ASSESSEE S APPEAL PLACING RELIANCE ON THE ADDITIONAL EVIDENCE IN THE FORM OF CASH FLOW STATEMENT EVIDENCES FOR ADDITIONAL SOURCES WERE FURNISHED BY THE ASSESSEE. THE CIT(A) ALLOWED THE ASSESSEES APPEAL ON THE BASIS O F EXPLANATION OFFERED BY THE ASSESSEE AND THE ADDITIONAL SOURCES OF INCOM E BROUGHT TO THE NOTICE OF THE LD.CIT(A) DURING THE APPELLATE PROCEE DINGS. ITA NO.29/MDS/2017 :- 3 -: 4.0 APPEARING FOR THE REVENUE, THE LEARNED DEPARTMENTA L REPRESENTATIVE (IN SHORT LD.DR) ARGUED THAT THE LD.CIT(A) HAS ALLOWED THE ASSESSEES APPEAL WITHOUT AFFORDING THE OPPORTU NITY TO THE AO AS REQUIRED UNDER RULE 46A EVEN THOUGH THE ASSESSE HAS CLAIMED THE NEW SOURCE OF FUNDS FOR EXPLAINING THE INVESTMENT. THE LD.DR STATED THAT THE CASH FLOW STATEMENT, NEW SOURCES OF INCOME RELATING TO THE ASSESSEES WIFE FOR THE AY 2003-04, LONG TERM CAPITAL GAINS, ETC., WERE PLACED BEFORE THE LD.CIT(A) AS SOURCE OF INVESTMENTS AND TO COVER THE DEFICIENCY BUT THE SAME EVIDENCES WERE NOT MADE AVAILABLE TO THE AO AN D THE LD.CIT(A) FAILED TO GIVE OPPORTUNITY TO THE AO UNDER RULE 46A (3). THEREFORE, HE ARGUED THAT THE CASE SHOULD BE REMITTED BACK TO THE FILE OF THE AO TO EXAMINE THE ADDITIONAL EVIDENCES. ON THE OTHER HAN D, THE LEARNED AUTHORIZED REPRESENTATIVE (IN SHORT LD.AR) RELIED ON THE ORDERS OF THE LD.CIT(A). 5.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. IT IS EVIDENT FROM THE LD.CIT(A)S ORDER THAT THE ASSESSEE HAS CLAIMED NEW SOURCES OF FUNDS BEFORE THE LD.CIT(A) A S PER THE DISCUSSION IN PAGE NO.11 OF THE LD.CIT(A) ORDER. THE ASSESSEE BR OUGHT THE ADDITIONAL SOURCES SUCH AS SALE OF PROPERTIES AND THE RELEVANT DOCUMENTS WHICH CONSTITUTE ADDITIONAL EVIDENCE BEFORE THE LD.CIT(A) TO COVER THE DEFICIENCY OF FUNDS WHICH WERE NOT PLACED BEFORE THE AO. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PART OF CIT(A) ORDER AS UND ER: ITA NO.29/MDS/2017 :- 4 -: III) THE APPELLANT WHILE FURNISHING THE APPLICATION OF FUNDS FOR RS.1,99,59,840/- VIDE HIS LETTER DATED 23.01.2016 HAS INFORMED THE AO THAT THE PERSONAL EXPENSES RELATING TO THE RELEVANT PERIOD WAS RS.95,11,037/-. THE APPELLANT WISH TO SUBMIT THAT THE ABOVE PERSONAL EXPENSES INCLUDED PAYMENT OF TAXES ALSO WHICH AMOUN TS TO RS.42,15,384/- FOR WHICH THE BREAKUP DETAILS ARE FURNISHED VIDE (ANNEXURE-IV). A S AGAINST THE ABOVE FACTS, THE AO HAS SEPARATELY CONSIDERED THE TAX PAYMENTS MADE BOTH BY THE APPELLANT AND HIS WIFE AMOUNTING TO RS.36,31,831/- AS APPLICATION FUNDS OV ER AND ABOVE THE PERSONAL EXPENSES (WRONGLY DENOTED BY THE AO AS HOUSE HOLD EXPENSES) OF RS.1,00, 00,000/- UNILATERALLY DETERMINED BY HIM FOR THE PURPOSE OF COMPUTING THE DEFICIENCY OF FUNDS WHICH IS NOT IN ORDER. AS THE TAX PAYMENT OF RS.42,15,384/- HAS ALR EADY BEEN INCLUDED IN THE PERSONAL EXPENSES OF RS.95,11,037/- FURNISHED BY THE APPELLA NT, THE SAME HAS TO BE DEDUCTED FROM THAT AMOUNT AND THE BALANCE OF RS.52,95,653/- ALONE HAS TO BE CONSIDERED AS PERSONAL EXPENSES WHILE COMPUTING THE SURPLUS DEFICIENCY OF FUNDS. IV) THE APPELLANT WISH TO SUBMIT THAT THE FOLLOWING ADDITIONAL SOURCES OF INCOME HAVE TO BE ALSO CONSIDERED WHILE COMPUTING THE SURPLUS DEFICIE NCY OF FUNDS. A) THE APPELLANTS TOTAL INCOME FOR THE ASSESSMENT YEAR 2012-13 INCLUDED A LONG TERM CAPITAL GAIN OF RS.11,87,712/- ARISING OUT OF THE D ISPOSAL OF AN ASSET FOR A SALE CONSIDERATION OF RS.17,42,231/-. THE DIFFERENCE BET WEEN THE LONG TERM CAPITAL GAIN AND THE SALE CONSIDERATION AMOUNTING TO RS,5,54,519 /- ALSO CONSTITUTES A SOURCE OF INCOME AT THE HANDS OF THE APPELLANT WHICH HAS TO B E CONSIDERED AT THE TIME COMPUTING THE SOURCES OF INCOME. B) THE APPELLANT SUBMITS THAT HE HAD DISPOSED OF AN IM MOVABLE PROPERTY IN THE FORM OF A RESIDENTIAL BUILDING ON 4-4-2005 FOR A SALE CO NSIDERATION OF RS.13,00,000/- AND THE SAID SALE WAS REGISTERED AS DOCUMENT NO.2481 OF 2005 ON THE FILES OF JOINT SUB REGISTRAR, SOUTH CHENNAI. THIS RESIDENTIAL PROPERTY WAS ACQUIRED BY THE APPELLANT ON 21-11-1995 FROM THE TAMIL NADU, HOUSING BOARD, T HIRUVANMIYUR DIVISION, CHENNAI. AS THERE WAS NO LONG TERM CAPITAL GAIN ARI SING TO THE ASSESSEE IN THIS TRANSACTION ON ACCOUNT OF INDEXED COST OF ACQUISITI ON, THE RELEVANT INCOME DID NOT FIND PLACE IN THE TOTAL INCOME RETURNED BY THE APPE LLANT FOR THE ASSESSMENT YEAR 2006-07. THE SALE CONSIDERATION OF RS.13,00,000/- I S ALSO TO BE CONSIDERED AS AN ADDITIONAL SOURCE OF INCOME. C) WHILE THE ASSESSING OFFICER HAS CONSIDERED THE CLOSI NG BANK BALANCE OF RS.8,41,983/- FOR COMPUTING THE DEFICIENCY/SURPLUS F UNDS, HE HAS OMITTED TO CONSIDER THE OPENING BALANCE OF RS.4,09.187 AS ON 1 .4.2001 AS A SOURCE OF INCOME. A COPY OF THE BANK STATEMENT FOR THE MONTH OF APRIL 2001 EVIDENCING THE ABOVE OPENING BALANCE IS ENCLOSED FOR KIND PERUSAL (ANNEX URE-V). THE ABOVE SOURCE OF INCOME IS ALSO TO BE CONSIDERED FOR COMPUTING THE S URPLUS DEFICIENCY IN FUNDS. D) THE ASSESSING OFFICER HAS ERRONEOUSLY CONSIDERED AN AMOUNT OF RS.2,15,000/- TOWARDS APPELLANTS INVESTMENT IN MUTUAL FUNDS WHILE COMPUTING THE APPLICATION OF FUNDS WHICH ACTUALLY RELATES TO THE INVESTMENT MADE BY HIS FATHER THIRU. R.RAJAGOPAL. A COPY OF THE PROOF OF INVESTMENT MADE BY THE FATHER OF THE APPELLANT IS ENCLOSED (ANNEXURE-VI). THEREFORE, THIS AMOUNT IS LIABLE TO BE DELETED WHILE COMPUTING THE APPLICATION OF FUNDS. E) WHILE COMPUTING THE CHAPTER VI A DEDUCTIONS VIDE PA GE NO.4 OF THE ORDER, THE ASSESSING OFFICER HAS ERRONEOUSLY DETERMINED THE SAM E AT RS.14,73,298/- INSTEAD OF AT RS.10,86,088/-. THE AO HAS CONSIDERED RS.1,23, 000/- AS CHAPTER VIA DEDUCTION FOR THE ASSESSMENT YEAR 2010-11 FOR THE S POUSE OF THE APPELLANT AGAINST WHICH NO TAXABLE INCOME WAS RETURNED BY THE ASSESSE E. FOR THE ASSESSMENT YEAR 2004-05, THE APPELLANT HAS CLAIMED ONLY RS.10,000/- AS CHAPTER VIA DEDUCTION AGAINST WHICH THE AO HAS CONSIDERED A DEDUCTION OF R S.1,00,000/-. FURTHER AN AMOUNT OF RS.1,74,210/- REPRESENTING PAYMENTS MADE BY THE APPELLANT TOWARDS MEDICLAIM POLICY AND TUITION FEE WHICH IS ALREADY I NCLUDED IN THE PERSONAL EXPENSES OF RS.52,95,653/- WAS ADDITIONALLY CONSIDERED BY AO UNDER CHAPTER VIA DEDUCTION. THEREFORE, AN AMOUNT OF RS.3,87,210/- HAS TO BE DED UCTED FROM THE CHAPTER VIA DEDUCTION OF RS.14,73,298/- CONSIDERED BY THE AO WHI LE COMPUTING THE SURPLUS /DEFICIENCY IN FUNDS. ITA NO.29/MDS/2017 :- 5 -: 6.0 THE LD.CIT(A) IN HIS APPELLATE ORDER CONSIDERED TH E SUBMISSIONS MADE BY THE ASSESSEE ALONG WITH THE ADDITIONAL EVID ENCES WITHOUT GIVING AN OPPORTUNITY TO THE AO AS REQUIRED UNDER RULE 46A (3) OF IT ACT. FOR A QUERY FROM THE BENCH, THE LD.AR STATED THAT THERE I S NO CASH FLOW STATEMENT AVAILABLE WITH THE LD.AR FOR EXPLAINING T HE SOURCES AND APPLICATION OF FUNDS AND DID NOT OBJECT FOR SENDING THE MATTER BACK TO AO. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E ISSUE SHOULD GO BACK TO THE FILE OF THE AO TO EXAMINE THE ADDITIONAL EVI DENCES AND ADDITIONAL SOURCES OF INCOME PLACED BY THE ASSESSEE BEFORE THE LD.CIT(A) AND DECIDE THE ISSUE AFRESH ON MERITS. ACCORDINGLY, WE SET-AS IDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE BACK TO THE F ILE OF AO. 7.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 19 TH APRIL, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF