ACIT, Trivandrum V. Shri Jaru Anand, CHENNAI

ITA 2958/CHNY/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4446 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 12-07-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 18-01-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P N KAMALA DEVI
• Assessee Lawyers: S SRIDHAR
• Keywords: Period of limitation; Source of fund; Additional evidence; Time period of passing order
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) ..... I.T.A. NO. 2958 / MDS/05 ASSESSMENT YEAR : 2001-02 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I(2), TRIVANDRUM 3 . (APPELLANT) V. SHRI JARU ANAND, NO.1, MRC MAIN ROAD, RAJA ANNAMALAIPURAM, CHENNAI 600 028. PAN : AEWPP2535F (RESPONDENT) APPELLANT BY : SMT. P.N. KAMALA DEVI RESPONDENT BY : SHRI S. SRIDHAR O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL OF THE REVENUE, GRIEVANCE IS THAT T HE CIT(APPEALS) DELETED AN ADDITION OF RS.30.10 LAKHS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 [HEREIN AFTER CALLED THE ACT] 2. ACCORDING TO THE REVENUE, ASSESSEE COULD NOT PRO VE THE CASH CREDITS AND COULD NOT BRING ANY EVIDENCE TO SHOW THE CAPACITY O F THE CREDITOR, HIS IDENTITY AND GENUINENESS OF THE TRANSACTION. FURTHER, AS PER TH E REVENUE, AGAINST RS.30.10 LAKHS INTRODUCED BY THE ASSESSEE AS CAPITAL, SOME D ETAILS WERE GIVEN ONLY FOR RS.20.75 LAKHS. REVENUE ALSO DISPUTES THE FINDING OF THE CIT(APPEALS) THAT LETTER CALLING FOR DETAILS OF THE CASH CREDIT WAS ISSUED B Y THE ASSESSING OFFICER ON 26.3.2004. ACCORDING TO IT, SUCH LETTER WAS ISSUED ON 19.3.2004. REVENUE ALSO QUESTIONS ACCEPTANCE OF PHOTOSTAT COPIES AS EVIDENC E, AND ALSO ALLEGES VIOLATION I.T.A. NO. 2958/MDS/05 2 OF RULE 46A OF THE INCOME-TAX RULES, 1962 WHEN THE CIT(APPEALS) ACCEPTED ADDITIONAL EVIDENCE IN THE FORM OF CONFIRMATIONS. 3. SHORT FACTS APROPOS ARE THAT FROM THE BALANCE SH EET OF THE ASSESSEE, THE A.O. NOTED INTRODUCTION OF CAPITAL RS.30,10,000/-. EXPLANATION OF THE ASSESSEE WAS THAT A SUM OF RS.16.75 LAKHS OUT OF THE ABOVE A MOUNT WAS RECEIVED BY HIM FROM ONE SHRI K. MURUGAN. FOR THIS, THE ASSESSEE F ILED COPIES OF THE LETTERS ISSUED BY ONE M/S THAYAPPAN & CO., CHARTERED ACCOUN TANTS. ACCORDING TO THE ASSESSING OFFICER, ANOTHER PHOTO COPY OF A CONFIRMA TION FOR RS.2 LAKHS WAS ALSO FILED. BUT ALL THESE WERE PHOTOCOPIES. ASSESSING OFFICER INITIATED ENQUIRIES WITH SHRI K. MURUGAN WHO IN HIS REPLY DATED 23.3.2004 AD MITTED TO HAVE GIVEN THE AMOUNT TO ASSESSEE BY CHEQUE/DRAFT. WHEN SPECIFIC DETAILS WERE CALLED FOR, SHRI MURUGAN STATED IN HIS LETTER DATED 27.3.2004 THAT S OME OF THE AMOUNTS WERE SENT BY DRAFT WHEREAS SOME OF THE AMOUNTS WERE PAID BY H IM DIRECTLY TO THE CREDITORS AND SUPPLIERS OF THE ASSESSEE. ACCORDING TO THE A. O., SHRI K. MURUGAN ALSO STATED THAT EXACT DETAILS OF CHEQUES/DRAFTS WERE NO T AVAILABLE WITH HIM. FINDING THE LETTERS SENT BY SHRI K. MURUGAN TO BE CONTRADIC TORY AND ALSO SINCE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE FOR THE AMOUNTS RECEI VED OTHER THAN FROM SHRI K. MURUGAN, A.O. MADE AN ADDITION OF RS.30,10,000/- UN DER SECTION 68 OF THE ACT. 4. IN ITS APPEAL BEFORE THE CIT(APPEALS), ONE OF TH E GROUNDS TAKEN BY THE ASSESSEE WAS THAT ENOUGH OPPORTUNITY WAS NOT GIVEN TO HIM FOR EXPLAINING THE LOANS. LD. CIT(APPEALS) WAS OF THE OPINION THAT AF TER THE RECEIPT OF CONFIRMATION FROM SHRI MURUGAN FOR THE SUM OF RS.16,75,000/- REC EIVED, THERE WAS NO ENQUIRY MADE BY THE ASSESSING OFFICER REGARDING THE BALANCE CREDIT OUT OF THE TOTAL RS.30,10,000/-. HE, THEREFORE, DEEMED THAT THE A.O . HAD ACCEPTED THE CLAIM FOR I.T.A. NO. 2958/MDS/05 3 THE BALANCE SUM OF RS.13,35,000/-. NEVERTHELESS, N OTING THAT CONFIRMATION LETTERS IN RESPECT OF RS.13,35,000/- WERE FILED BY THE ASSE SSEE ONLY BEFORE HIM, THE CIT(APPEALS) GAVE A DIRECTION TO THE A.O. TO INFORM THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH PERSONS FOR VERIFICATION. 5. VIS--VIS THE CREDIT OF RS.16,75,000/- FROM SHRI K. MURUGAN, THE CIT(APPEALS) WAS OF THE OPINION THAT SHRI K. MURUGA N HAD FAXED THE DETAILS OF SOURCE OF FUNDS ON THE SAME DAY ON WHICH HE RECEIVE D THE LETTER FROM THE ASSESSING OFFICER. ACCORDING TO CIT(APPEALS), SH RI K. MURUGAN ALSO GAVE THE DETAILS OF THE ASSESSING OFFICER HAVING JURISDICTIO N OVER HIS CASE. SINCE THE ASSESSMENT WAS COMPLETED ON 30.3.2004, THE CIT(APPE ALS) WAS OF THE OPINION THAT ASSESSEES CLAIM REGARDING THE LOAN RECEIVED F ROM SHRI K. MURUGAN WAS EXAMINED BY THE ASSESSING OFFICER ONLY AT THE ELEVE NTH HOUR. IT SEEMS THAT ASSESSEE ALSO PRODUCED SHRI MURUGAN BEFORE THE CIT( APPEALS) ON 13.9.2004 WHEREIN HE CONFIRMED WHATEVER HE HAD STATED IN HIS LETTER DATED 27.3.2004. SINCE THE CREDITOR HAD CONFIRMED THE CREDIT AND ALS O APPEARED BEFORE HIM, THE CIT(APPEALS) RELYING ON THE DECISION IN THE CASE OF CIT V. DAULAT RAM RAWATMULL (87 ITR 349) (SC) HELD THAT ASSESSEE WAS NOT LIABLE TO PROVE THE SOURCE OF THE SOURCES. THUS, HE DELETED ADDITION OF RS.16,75,000 ALSO. IN A NUTSHELL, THE WHOLE OF THE ADDITION OF RS.30,10,000/- WAS DELETED . 6. NOW BEFORE US, THE LEARNED D.R. ASSAILING THE OR DER OF THE CIT(APPEALS) SUBMITTED THAT ASSESSEE HAD NOT PRODUCED ANY EVIDEN CE FOR THE CREDIT OF RS.13,35,000/- AND THE CIT(APPEALS) WENT WRONG IN C OMING TO A CONCLUSION THAT THE ASSESSING OFFICER HAD ACCEPTED SUCH CLAIM OF TH E ASSESSEE. ACCORDING TO HER, EXCEPT PHOTOCOPIES, NOTHING WAS PRODUCED BY TH E ASSESSEE FOR THE CREDITS. I.T.A. NO. 2958/MDS/05 4 RELYING ON THE ASSESSMENT ORDER, LEARNED D.R. FURTH ER ARGUED THAT BUT FOR THE SUM OF RS.16.75 LAKHS ALLEGED TO HAVE BEEN RECEIVED FROM SHRI K. MURUGAN, NO EVIDENCE WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM OF RECEIPT OF LOANS TO THE EXTENT OF RS.13,35,000/-. IN SO FAR A S CONFIRMATION FROM SHRI K. MURUGAN WAS CONCERNED, ACCORDING TO THE LEARNED D.R ., THE A.O. WAS NEVER GIVEN A CHANCE BY THE CIT(APPEALS) TO EXAMINE SHRI K. MURUGAN NOR WAS THE A.O. GIVEN THE RESULT OF SUCH EXAMINATION. SERIOUS OBJECTION WAS RAISED BY THE LEARNED D.R. ON THE ACCEPTANCE OF CONFIRMATION LETT ERS RELATING TO THE BALANCE RS.13,35,000/- WITHOUT PUTTING IT TO THE ASSESSING OFFICER. ACCORDING TO HER, RULE 46A OF THE INCOME-TAX RULES WAS CLEARLY VIOLATED. SHE ARGUED THAT ASSESSEE COULD NOT DISCHARGE THE ONUS PLACED ON HIM FOR PROV ING THE CREDIT. NEITHER THE GENUINENESS OF THE LOANS NOR THE CREDITWORTHINESS O F THE CREDITORS WERE BROUGHT OUT. THEREFORE, ACCORDING TO HER, THE CIT(APPEALS) HAD FALLEN IN ERROR WHEN HE DELETED THE ADDITION. 7. PER CONTRA, THE LEARNED A.R. SUBMITTED THAT THE POWER OF THE CIT(APPEALS) WAS COTERMINUS WITH THAT OF THE A.O. THEREFORE, AC CORDING TO HIM, LD. CIT(APPEALS) WAS ACTING WELL WITHIN HIS POWERS WHEN HE EXAMINED SHRI MURUGAN FOR CONFIRMING THE REPLIES EARLIER GIVEN BY HIM TO THE ASSESSING OFFICER. ACCORDING TO HIM, IN HIS EARLIER REPLIES TO THE ASSESSING OFF ICER, SHRI MURUGAN HAD CLEARLY MENTIONED THE DETAILS OF THE CHEQUE/DD RECEIVED AND THEREFORE ASSESSEE HAD PROPERLY DISCHARGED HIS ONUS FOR SUBSTANTIATING THE CREDIT. VIS--VIS THE SUM OF RS.13,35,000/- ARGUMENT OF THE LEARNED A.R. WAS THA T ASSESSING OFFICER HAD NEVER DISPUTED SUCH LOANS AND ASSESSEES EXPLANATIO N IN THIS REGARD WAS NEVER REBUTTED. I.T.A. NO. 2958/MDS/05 5 8. WE HAVE PERUSED THE ORDERS AS WELL AS HEARD THE RIVAL CONTENTIONS ON THE MATTER. THE AMOUNT OF RS.30,10,000/- SHOWN BY THE ASSESSEE AS LOAN INTRODUCED THROUGH HIS CAPITAL ACCOUNT CAN BE DIVID ED INTO TWO. FIRST - A SUM OF RS.16,75,000/- ALLEGED TO HAVE BEEN RECEIVED FROM O NE SHRI K. MURUGAN, THE OTHER - BALANCE SUM OF RS.13,35,000/-. TAKING UP T HE LATTER AMOUNT FIRST, THERE IS A CLEAR FINDING BY THE A.O. THAT EXCEPT FOR A SUM O F RS.2 LAKHS FOR WHICH A PHOTOCOPY OF A CONFIRMATION CERTIFICATE WAS FILED, NOTHING ELSE WAS AVAILABLE IN THE RECORD. THERE IS NO DISPUTE THAT THE ASSESSING OFF ICER HAD ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF RS.30,10,000/-. IN OUR OPINI ON, THE FINDING OF THE CIT(APPEALS) THAT ASSESSING OFFICER HAD NOT CARRIED OUT VERIFICATION IN RESPECT OF THE LOANS ALLEGED TO HAVE BEEN RECEIVED FROM PERSON OTHER THAN SHRI K. MURUGAN, AND HENCE THEY HAVE TO BE ACCEPTED AS GENUINE APPEA RS TO BE INCORRECT. THIS IS FOR THE REASON THAT THE ONUS FOR PROVING THE CREDIT WAS ON THE ASSESSEE AND ASSESSEE PURSUANT TO ENQUIRIES BY THE ASSESSING OFF ICER, HAD FURNISHED CONFIRMATION AND DETAILS WITH RESPECT TO SHRI K. MU RUGAN ONLY. THERE WAS NOTHING ON RECORD BASED ON WHICH ASSESSING OFFICER COULD HA VE MADE ANY FURTHER ENQUIRIES ON THE SUM OF RS.13,35,000/-. THEREFORE, CONCLUSION OF THE CIT(APPEALS) THAT ASSESSING OFFICER SHOULD BE DEEME D TO HAVE ACCEPTED THE CLAIM OF CREDIT TO THE EXTENT OF RS.13,35,000/- IS, IN OUR OPINION, NOT CORRECT. THERE IS NO SUCH ACCEPTANCE MADE BY THE ASSESSING O FFICER ANYWHERE IN THE ASSESSMENT ORDER. ASSESSEE HAVING FAILED IN SUBSTA NTIATING THE CREDIT, ASSESSING OFFICER WAS WELL JUSTIFIED TO MAKE THE ADDITION. B UT, NEVERTHELESS WE ALSO FIND THAT ASSESSEE HAD FILED CONFIRMATION LETTERS IN RESPECT OF RS.13,35,000/- BEFORE THE CIT(APPEALS) DURING THE APPELLATE PROCEEDINGS. IT IS ALSO NOTED THAT THE ASSESSMENT WAS COMPLETED TOWARDS THE FAG END OF THE LIMITATION PERIOD, AND I.T.A. NO. 2958/MDS/05 6 THEREFORE, ENOUGH TIME COULD NOT HAVE BEEN GIVEN TO THE ASSESSEE FOR BRINGING ON RECORD ALL THE DETAILS. OF COURSE, THE CIT(APPEALS ) HAD FORWARDED THE CONFIRMATION LETTERS TO THE ASSESSING OFFICER BUT I T WAS SO FORWARDED AFTER DELETING SUCH ADDITION. IN OUR OPINION, THE CIT(APPEALS) SH OULD HAVE FORWARDED THE CONFIRMATION LETTERS TO THE A.O. FOR A REMAND REPOR T BEFORE HE DECIDED THE ISSUE AND ONLY AFTER OBTAINING REPORT OF THE A.O., HE SHO ULD HAVE PROCEEDED TO ADJUDICATE ON THE MATTER. THERE IS A CLEAR VIOLATI ON OF RULE 46A OF THE INCOME-TAX RULES, VIS--VIS THE DELETION OF THE ADDITION OF RS .13,35,000/-, OUT OF THE TOTAL SUM OF RS.30,10,000/-. 9. COMING TO THE SECOND PART WHICH IS RS.16,75,000/ - ALLEGED TO HAVE BEEN RECEIVED FROM SHRI K. MURUGAN, IT IS NOT DISPUTED B Y THE REVENUE THAT SHRI K. MURUGAN HAD GIVEN DETAILS OF SOURCE OF FUNDS ON 23. 3.2004 TO THE A.O. THIS WAS NOT ACCEPTED BY THE A.O. FOR THE REASON THAT THERE WERE CONTRADICTION IN THE LETTERS SENT BY SHRI K. MURUGAN ON 23.3.2004 AND 27 .3.2004. SHRI MURUGAN HAD NOT GIVEN THE DETAILS OF CHEQUE/DD IN THE FIRST INS TANCE. IN THE SECOND INSTANCE, HE MENTIONED THAT SOME PAYMENTS WERE DIRECTLY MADE BY HIM TO THE CREDITORS AND SUPPLIERS OF THE ASSESSEE. BUT, NEVERTHELESS T HE CREDITWORTHINESS OF SHRI K. MURUGAN NOR THE GENUINENESS OF THE TRANSACTION HAS BEEN DOUBTED BY THE A.O. IT MIGHT BE TRUE THAT THERE MIGHT BE SOME CONTRADICTIO N IN THE REPLIES GIVEN BY SHRI MURUGAN BEFORE THE ASSESSING OFFICER. NEVERTHELESS HE HAD CONFIRMED THE CREDIT. IDENTITY OF CREDITOR ALSO WAS PROVED. SHR I MURUGAN DID APPEAR BEFORE THE CIT(APPEALS) DURING THE APPELLATE PROCEEDINGS AND F ILED THE DETAILS OF DEMAND DRAFT NUMBERS BEFORE HIM. IN OUR OPINION, THIS COU LD NOT BE CONSIDERED AS A NEW EVIDENCE. SHRI K. MURUGAN HAD ONLY CONFIRMED WHATE VER HE STATED EARLIER. ASSESSING OFFICER HAD DISALLOWED THE CREDIT ONLY BA SED ON CERTAIN CONTRADICTION IN I.T.A. NO. 2958/MDS/05 7 THE REPLIES. GENUINENESS OF TRANSACTION, THE CREDI TWORTHINESS OF SHRI K. MURUGAN OR HIS CAPACITY TO GIVE THE LOAN WERE NEVER DOUBTED . IF THE A.O. HAD DOUBTED THE LETTERS SENT BY SHRI K. MURUGAN, HE COULD HAVE SUMM ONED HIM AND EXAMINED HIM BEFORE MAKING THE ADDITION. HAVING NOT DONE SO , HE CANNOT BLAME THE CIT(APPEALS) FOR DOING WHAT HE WAS EXPECTED TO DO. IN OUR OPINION, THIS ADDITION OF RS.16,75,000/- WAS RIGHTLY DELETED BY THE CIT(AP PEALS) AFTER APPRECIATING THE FACTS OF THE CASE. NO INTERFERENCE IN THIS REGARD IS REQUIRED FROM OUR SIDE. 10. TO CONCLUDE VIS--VIS THE SUM OF RS.13,35,000/- OUT OF THE TOTAL SUM OF RS.30,10,000/-, WE SET ASIDE THE ORDERS OF THE AUTH ORITIES BELOW AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER FOR CONSIDERIN G THE CONFIRMATION LETTERS FILED BY ASSESSEE AND TO DEAL WITH IT IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE AN OPPORTUNITY TO EXPLAIN HIS CASE. VIS--VIS THE BALANCE SUM OF RS.16,75,000/- RECEIVED FROM SHRI K. MURUGAN, WE UPHOLD THE DELETI ON OF ADDITION MADE BY THE CIT(APPEALS). 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. THE ORDER WAS PRONOUNCED IN THE COURT ON 16 TH JULY, 2010. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 16 TH JULY, 2010. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-I, TRIVANDRUM/ CIT, TRIVANDRUM/D.R./GUARD FILE