V.Babu, CHENNAI V. DCIT, CHENNAI

ITA 296/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95929 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S BALASUBRAMANIAN
• Assessee Lawyers: N V BALAJI
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 133A; 147; 68; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , ! ', $ %& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO.296/MDS/2015 ( )( / ASSESSMENT YEAR : 2007-08 SHRI V. BABU, 7, R.K. NAGAR 2 ND CROSS STREET, MANDAVELI, CHENNAI - 600 028. PAN : AAKPB 2530 Q V. THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE RANGE 3, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. N.V. BALAJI, ADVOCATE -.+, / 0 / RESPONDENT BY : SH.S. BALASUBRAMANIAN, CIT 1 / 2$ / DATE OF HEARING : 15.07.2015 34) / 2$ / DATE OF PRONOUNCEMENT : 21.08.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI , DATED 07.10.2014 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.296/MDS/15 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO ADDITION OF ` 10 CRORES UNDER SECTION 68 OF THE INCOME-TAX ACT, 1 961 (IN SHORT 'THE ACT'). THE ASSESSEE HAS ALSO RAISED A GROUND WITH REGARD TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. 3. SHRI N.V. BALAJI, THE LD.COUNSEL FOR THE ASSESSE E, SUBMITTED THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED HIMSELF IN THE BUSINESS OF CIVIL CONTRACT IN THE NAME AND STYLE OF BABU AS SOCIATES. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, A SUM OF ` 10 CRORES WAS CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE ON 09. 02.2007. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T ONE SHRI K.R. ELANGOVAN, AN OLD FRIEND OF HIM, CONTACTED TWO DAYS BEFORE 9.2.2007 OVER PHONE AND CLARIFIED WHETHER THE ASSESSEE WOULD BE INTERESTED IN ACCOMMODATING TRANSACTION OF ` 10 CRORES. THE SAID SHRI ELANGOVAN HAS ALSO CLARIFIED THAT THE AMOUNT SHOULD BE TRANSFERRED IMMEDIATELY TO ANOTHER ACCOUNT FOR WHICH THE ASSESS EE WOULD BE PAID A COMMISSION OF ` 3 LAKHS. THE ASSESSEE AGREED ACCORDINGLY AND AN AMOUNT OF ` 10 CRORES WAS TRANSFERRED TO THE ASSESSEES ACCOUNT IN STATE BANK OF INDIA BY M/S COMMERCIAL BU ILDERS PVT. LTD. THE LD.COUNSEL CLARIFIED THAT THE ASSESSEE HAS NO R ELATIONSHIP OR ANY BUSINESS CONNECTION WITH M/S COMMERCIAL BUILDER S PVT. LTD. IMMEDIATELY, AFTER TRANSFER OF ` 10 CRORES, SHRI K.R. ELANGOVAN 3 I.T.A. NO.296/MDS/15 CONTACTED THE ASSESSEE AND GAVE HIS ACCOUNT NUMBER TO TRANSFER THE FUNDS IMMEDIATELY. ACCORDINGLY, THE ASSESSEE I SSUED A CHEQUE WITH WRITTEN INSTRUCTION TO TRANSFER THE FUNDS BY R TGS TO THE EXTENT OF `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` 14 CRORES OUT OF WHICH, ` 4 CRORES WERE PAID BY WAY OF DEMAND DRAFT TO SHRI M.P . SAMSUDHEEN, WHO IS THE POWER OF ATTORNEY EXECUTOR O F SALE DEED, AND ANOTHER SUM OF ` 10 CRORES WAS TRANSFERRED BY WAY OF RTGS TO ACCOUNT NO.10624892066 WITH STATE BANK OF INDIA, CI T NAGAR BRANCH, CHENNAI, ON 09.02.2007 IN FAVOUR OF M/S BAB U AND 4 I.T.A. NO.296/MDS/15 ASSOCIATES. THE LD.COUNSEL SUBMITTED THAT THE ASSE SSEE IS NOT DOING BUSINESS AS PARTNERSHIP CONCERN IN THE NAME O F BABU ASSOCIATES, AND WHAT WAS REFERRED AS BABU AND ASS OCIATES IS A PARTNERSHIP FIRM REPRESENTED BY SHRI C. KARTHIKEYAN . THEREFORE, THE ASSESSEE, ACCORDING TO THE LD. COUNSEL, IS NOTHING TO DO WITH THIS TRANSACTION. ON A QUERY FROM THE BENCH, WHETHER TH E ACCOUNT NO. MENTIONED IN THE SALE DEED, HELD WITH STATE BANK OF INDIA, CIT NAGAR BRANCH, BELONGS TO THE ASSESSEE OR ANYBODY EL SE, THE LD.COUNSEL HAD FAIRLY SUBMITTED THAT THE BANK ACCOU NT BELONGS TO THE ASSESSEE. THE LD.COUNSEL HAS ALSO CLARIFIED THAT T HE AMOUNT OF ` 10 CRORES BY RTGS WERE CREDITED TO THE ACCOUNT OF THE ASSESSEE. HOWEVER, THE LD.COUNSEL CLARIFIED THAT THE ASSESSEE DOES NOT KNOW WHO IS SHRI KARTHIKEYAN. THE LD.COUNSEL HAS ALSO C LARIFIED THAT THE LAND, WHICH WAS SUBJECT MATTER OF TRANSFER BY THE S ALE DEED, DOES NOT BELONG TO THE ASSESSEE. WHEN A QUERY WAS RAISE D AS TO WHEN THE LAND DOES NOT BELONG TO THE ASSESSEE, UNDER WHA T CAPACITY A SUM OF ` 10 CRORES WAS CREDITED IN THE ACCOUNT OF THE ASSESS EE, THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE DOES NOT KNO W UNDER WHAT CAPACITY IT WAS CREDITED. THE LD.COUNSEL HAS ALSO CLARIFIED THAT THERE IS NO PARTNERSHIP FIRM BABU AND ASSOCIATES IN EXISTENCE. THEREFORE, ACCORDING TO THE LD. COUNSEL, BABU AND ASSOCIATES IS A FICTITIOUS PARTNERSHIP FIRM. 5 I.T.A. NO.296/MDS/15 5. SHRI N.V. BALAJI, THE LD.COUNSEL FOR THE ASSESSE E, FURTHER SUBMITTED THAT ON VERIFICATION, THE ASSESSING OFFIC ER FOUND THAT AN AMOUNT OF ` 9,97,01,500/- WAS TRANSFERRED TO MOHAN LAL JEWELLER S, 139/141, NSC BOSE ROAD, CHENNAI. THE REVENUE AUTHO RITIES HAVE ALSO EXAMINED MOHAN LAL JEWELLERS. THE REVENUE AUT HORITIES FOUND THAT GOLD BULLION WAS DELIVERED TO THE ASSESSEE ON RECEIPT OF ` 9,97,01,500/-. REFERRING TO THE SWORN STATEMENT RE CORDED FROM MOHANLAL KHATRI, THE PROPRIETOR OF MOHAN LAL JEWELL ERS, A COPY OF WHICH IS AVAILABLE AT PAGE 5 OF THE PAPER-BOOK, THE LD.COUNSEL SUBMITTED THAT AS PER THE STATEMENT OF SHRI MOHANLA L KHATRI, THE GOLD WAS DELIVERED TO BABU AND ASSOCIATES. IN FACT, THE ASSESSEE HAS NOTHING TO DO WITH BABU AND ASSOCIATES. ACCORDING TO THE LD. COUNSEL, SINCE THE MONEY WAS RECEIVED BY THE ASSESS EE THROUGH BANKING CHANNEL AND IT WAS IMMEDIATELY TRANSFERRED TO MOHAN LAL JEWELLERS FOR A COMMISSION OF ` 3 LAKHS, THE ENTIRE ADDITION CANNOT BE SUSTAINED. THE LD.COUNSEL HAS ALSO CLARIFIED TH AT IT CANNOT BE SUBJECTED TO CAPITAL GAINS ALSO SINCE THE LAND IN Q UESTION DOES NOT BELONG TO THE ASSESSEE. THE LD.COUNSEL CLARIFIED T HAT THE ASSESSEE MAY NOT HAVE ANY OBJECTION TO BRING THE AMOUNT FOR CAPITAL GAIN TAX IN RESPECT OF THE OWNERS OF THE LAND. HOWEVER, THE AMOUNT OF ` 10 6 I.T.A. NO.296/MDS/15 CRORES CANNOT BE SUBJECTED TO TAX IN THE HANDS OF T HE PRESENT ASSESSEE. 6. ON THE CONTRARY, SHRI S. BALASUBRAMANIAN, THE LD . DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT ADMITTE DLY A SUM OF ` 10 CRORES WAS CREDITED TO THE BANK ACCOUNT OF THE A SSESSEE. THOUGH A REFERENCE WAS MADE IN THE SALE DEED THAT B ABU AND ASSOCIATES WAS REPRESENTED BY SHRI C. KARTHIKEYAN, THE ACCOUNT NO. REFERRED IN THE SALE DEED BELONGS TO THE ASSESS EE. IN FACT, ` 10 CRORES WERE CREDITED TO THE ACCOUNT OF THE ASSESSEE . OUT OF THE SAID AMOUNT, A SUM OF ` 9,97,01,500/- WAS TRANSFERRED TO MOHAN LAL JEWELLERS FOR PURCHASE OF GOLD BULLION. THEREFORE, THE ENTIRE MONEY WAS RECEIVED BY THE ASSESSEE AND UTILIZED BY THE AS SESSEE. REFERRING TO THE ASSESSMENT ORDER, THE LD. D.R. SUB MITTED THAT THE ONUS IS ON THE ASSESSEE TO EXPLANATION HOW THE MONE Y, WHICH IS CREDITED IN HIS ACCOUNT, DOES NOT BELONG TO HIM. T HE CLAIM OF THE ASSESSEE THAT HE IS ELIGIBLE ONLY FOR A COMMISSION OF ` 3 LAKHS, IS NOT SUBSTANTIATED SINCE THE ENTIRE MONEY WAS TRANSFERRE D TO MOHAN LAL JEWELLERS FOR PURCHASE OF JEWELLERY. THEREFORE, TH E CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSE SSING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. ADMITTEDL Y, A SUM OF ` 10 7 I.T.A. NO.296/MDS/15 CRORES WAS CREDITED IN THE BANK ACCOUNT OF THE ASSE SSEE IN THE ACCOUNT NO.10624892066 HELD IN STATE BANK OF INDIA, CIT NAGAR BRANCH, CHENNAI, ON 09.02.2007. APPARENTLY, THIS A MOUNT WAS TRANSFERRED ON THE BASIS OF COPY OF THE SALE DEED, WHICH IS AVAILABLE AT PAGE 17 OF THE PAPER-BOOK. THE FACT REMAINS THA T IN ORDER TO MISLEAD THE AUTHORITIES, BABU AND ASSOCIATES WAS DESCRIBED AS A PARTNERSHIP FIRM REPRESENTED BY SHRI KARTHIKEYAN. HOWEVER, THE BANK ACCOUNT OF THE ASSESSEE IS CORRECTLY MENTIONED IN THE PAYMENT SCHEDULE. IN FACT, A SUM OF ` 10 CRORES WAS CREDITED IN THE ACCOUNT OF THE ASSESSEE. THE ASSESSEE CLAIMS THAT IT WAS T RANSFERRED TO MOHAN LAL JEWELLERS ON THE INSTRUCTION OF SHRI ELAN GOVAN AND HE RETAINED ONLY A SUM OF ` 3 LAKHS. ON EXAMINATION, SHRI ELANGOVAN DISOWNED THE ENTIRE TRANSACTION AND HE WENT TO THE EXTENT OF SAYING THAT HE DOES NOT KNOW ANYTHING AT ALL. THE SAID AM OUNT WAS TRANSFERRED TO MOHAN LAL JEWELLERS AND OWNER OF THE MOHAN LAL JEWELLERS, ON EXAMINATION, CLARIFIED THAT HE DELIVE RED GOLD BULLION ON RECEIPT OF ` 9,97,00,000/-. SHRI MOHANLAL KHATRI, THE OWNER OF MOHAN LAL JEWELLERS CLARIFIED THAT THE GOLD BULLION WAS D ELIVERED TO BABU AND ASSOCIATES. NOW THE ASSESSEE CONTENDS THAT THE RE IS NO PARTNERSHIP FIRM BY NAME BABU AND ASSOCIATES AND IT IS A FICTITIOUS CONCERN. THE FACT REMAINS THAT THE ASSESSEE TRANSFE RRED THE FUNDS OF ` 9.97,00,000/-. GOLD BULLION WAS DELIVERED BY MOHAN LAL 8 I.T.A. NO.296/MDS/15 JEWELLERS ON RECEIPT OF FUNDS. THEREFORE, THE ASSE SSEE IN FACT RECEIVED THE GOLD BULLION ON PAYMENT OF ` 9,97,00,000/-. IN THE SALE DEED IN WHICH THE PAYMENT WAS RECEIVED, WAS SHOWN A S IF THE BABU AND ASSOCIATES IS CONFIRMING PARTY. THE F ACT REMAINS THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND AND HE HA S NOTHING TO DO WITH THE LAND WHICH WAS SUBJECT MATTER OF TRANSFER BY THE SALE DEED DATED 27.02.2007. THEREFORE, IT IS FOR THE ASSESSE E TO EXPLAIN WHY AN AMOUNT OF ` 10 CRORES SHOULD NOT BE TREATED AS HIS INCOME. THE EXPLANATION OF THE ASSESSEE THAT HE WAS ACCOMMODATI NG ON THE REQUEST OF SHRI ELANGOVAN FOR A COMMISSION ` 3 LAKHS IS NOT SUBSTANTIATED. THE MATERIAL AVAILABLE ON RECORD SU GGESTS THAT THE ASSESSEE HAS RECEIVED THE GOLD BULLION TO THE EXTEN T OF ` 9,97,00,000/-. THEREFORE, THIS TRIBUNAL DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY TREATING THE ENTIR E AMOUNT OF ` 10 CRORES AS INCOME OF THE ASSESSEE. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AU THORITIES. 8. EVEN THOUGH THE ASSESSEE HAS RAISED A GROUND REG ARDING REOPENING OF ASSESSMENT, NO ARGUMENT WAS ADVANCED D URING THE COURSE OF HEARING EITHER BY THE ASSESSEE OR BY THE REVENUE. 9. ON GOING THROUGH THE ORDERS OF THE LOWER AUTHORI TIES, IT APPEARS THAT THE ASSESSEE FILED A RETURN OF INCOME ON 13.11.2007 9 I.T.A. NO.296/MDS/15 DECLARING A TOTAL INCOME OF ` 16,27,456/-. INITIALLY, THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. CONSEQU ENT TO A SURVEY UNDER SECTION 133A OF THE ACT, THE ASSESSMENT WAS R EOPENED BY ISSUING A NOTICE ON 12.02.2010 AND THE SAME WAS COM PLETED ON 31.12.2010. CONSEQUENTLY, THE CASE WAS AGAIN REOPE NED BY ISSUING A NOTICE UNDER SECTION 148 OF THE ACT ON 22 .07.2011. SINCE THE ASSESSING OFFICER HAS NOT CONSIDERED THE CREDIT OF ` 10 CRORES IN THE BANK ACCOUNT AND IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT THERE WAS CHANGE OF OPINION, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY REOP ENED THE ASSESSMENT. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIRMED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON 21 ST AUGUST, 2015 AT CHENNAI. SD/- SD/- ( ! ' ) ( ... ) (CHANDRA POOJARI) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 21 ST AUGUST, 2015. KRI. 10 I.T.A. NO.296/MDS/15 / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-V, CHENNAI 4. 1 :2 /CIT-V, CHENNAI-34 5. 8; -2 /DR 6. <( = /GF.