Smt. Meena Devi, CHENNAI V. ITO, CHENNAI

ITA 2995/CHNY/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5298 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-05-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 24-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Notional interest
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.2995/CHNY/2016 ' #$' / ASSESSMENT YEAR : 2013-14 SMT. MEENA DEVI, C/O SHRI S. SRIDHAR, SH. A.S. SRIRAMAN, ADVOCATES, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AAFPD 0978 D V. THE INCOME TAX OFFICER, NON CORPORATE WARD 5(3), CHENNAI (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ()&' * + / RESPONDENT BY : SHRI B. SAHADEVAN, JCIT , # * -. / DATE OF HEARING : 28.03.2018 /0$ * -. / DATE OF PRONOUNCEMENT : 18.04.2018 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNA I, DATED 27.09.2018 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. THE FIRST ISSUE IS WITH REGARD TO DELETION OF AD DITION ON NOTIONAL INTEREST OF 20,82,480/-. 2 I.T.A. NO.2995/CHNY/16 3. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ADVANCE WAS GIVEN TO RELATED PARTIES FROM INTEREST-FREE FUNDS. THE LD.COUNSEL PLACED RELIANCE ON THE JUDGM ENT OF MADRAS HIGH COURT IN CIT V. HOTEL SAVERA (1999) 239 ITR 79 5. THE LD.COUNSEL SUBMITTED THAT SINCE MORE THAN 3 CRORES WERE AVAILABLE WITH THE ASSESSEE AS INTEREST-FREE FUNDS, THE CIT(A PPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 4. REFERRING TO THE SECOND ISSUE WITH REGARD TO ADD ITION OF 4,00,000/- UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), THE LD.COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE DEBIT BALANCE AGAINST M/S VIJAY SHANTI BUILDERS WAS SHOWN AS 54,00,000/- AS AGAINST 50,00,000/-, THEREFORE, THE DIFFERENCE OF 4,00,000/- WAS TREATED AS UNEXPLAINED CREDIT. ACCO RDING TO THE LD. COUNSEL, THE DIFFERENCE OF 4,00,000/- IS DUE TO WRONG POSTING AS UTTAM KUMAR JAIN 3,00,000/- AND CHUITRA JAIN 1,00,000/- IN THE LEDGER ACCOUNT. THE LD.COUNSEL SUBMITTED THAT THIS MAY BE VERIFIED. 5. COMING TO THE THIRD ISSUE WITH REGARD TO ASSESSM ENT OF RENTAL INCOME IN RESPECT OF GODOWN LET OUT BY THE ASSESSEE , THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE CONSTRUCTED A G ODOWN ON A LEASE HOLD LAND AND THE RENTAL INCOME WAS DISCLOSED UNDER THE HEAD 3 I.T.A. NO.2995/CHNY/16 INCOME FROM HOUSE PROPERTY. HOWEVER, ACCORDING T O THE LD. COUNSEL, THE ASSESSING OFFICER MADE ADDITION OF 54,000/- AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 6. ON THE CONTRARY, SHRI B. SAHADEVAN, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE IS IN T HE BUSINESS OF MONEY LENDING, THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ADVANCE WAS GIVEN WITHOUT ANY INTEREST. THE ASSESSEE, ACCO RDING TO THE LD. D.R., IN ORDER TO REDUCE THE TAXABLE INCOME, CLAIMS THAT THE ADVANCE WAS GIVEN WITHOUT INTEREST. MOREOVER, NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS SO MUCH INT EREST-FREE FUNDS FOR THE PURPOSE OF GIVING ADVANCE. THEREFORE, ACCO RDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE OR DER OF THE ASSESSING OFFICER. 7. WITH REGARD TO THE ADDITION OF 4,00,000/-, THE LD. D.R. SUBMITTED THAT AFTER THE QUERIES RAISED BY THE ASSE SSING OFFICER, THE ASSESSEE ADJUSTED THE BOOKS OF ACCOUNT, THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE DIFFERENCE OF 4,00,000/- OCCURRED DUE TO WRONG POSTING CANNOT BE ACCEPTED. REFERRING TO INCOME FR OM LETTING OUT OF GODOWN, THE LD. D.R. SUBMITTED THAT THE ASSESSEE HA S CONSTRUCTED 4 I.T.A. NO.2995/CHNY/16 GODOWN ON THE LEASE HOLD LAND, THEREFORE, THE INCOM E HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT INTEREST-FREE FUNDS WERE AVAILABLE FOR GIVING ADVANCE TO VARIOUS RELATED PERSONS, THEREFORE, THE ADDITION OF 20,82,480/- TOWARDS NOTIONAL INTEREST IS NOT JUSTIFIED. BUT, N O MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE ASSESSEE HA S INTEREST-FREE FUNDS FOR THE PURPOSE OF GIVING ADVANCE. SINCE THE ASSESSEE CLAIMS THAT MORE THAN 3 CRORES WAS AVAILABLE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ADDITION OF 20,82,480/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER ON THE BASIS OF BALANCE SHEET AND OTHER FINA NCIAL STATEMENTS OF THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFR ESH, IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 9. NOW COMING TO DISALLOWANCE OF 4,00,000/-, THE ASSESSEE CLAIMS THAT IT IS A WRONG POSTING IN THE NAMES OF T WO DIFFERENT 5 I.T.A. NO.2995/CHNY/16 PERSONS. HOWEVER, THE ASSESSING OFFICER CLAIMS THA T IT IS ONLY ADJUSTMENT. THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT SINCE THE MAIN ADDITION OF 20,82,480/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER, THE ADDITION OF 4,00,000/- ALSO NEEDS TO BE RE- EXAMINED. THE ASSESSING OFFICER SHALL RE-EXAMINE W HETHER THE ASSESSEE HAS REALLY MADE WRONG POSTING AND WRONG EN TRY OR IT IS ONLY ADJUSTMENT TO AVOID TAX AND THEREAFTER DECIDE THE ISSUE AFRESH, IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE O PPORTUNITY TO THE ASSESSEE. 10. SIMILARLY, THE ADDITION OF 54,000/- WITH REGARD TO RENTAL INCOME ALSO NEEDS TO BE EXAMINED BY THE ASSESSING O FFICER ON THE BASIS OF MATERIAL THAT MAY BE PRODUCED BY THE ASSES SEE. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE IN ACCORDANCE WITH LAW AND DECIDE AFTER GIVING A REASONABLE OPPOR TUNITY TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6 I.T.A. NO.2995/CHNY/16 ORDER PRONOUNCED ON 18 TH APRIL, 2018 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 18 TH APRIL, 2018 KRI. * (-34 54$- /COPY TO: 1. &' /APPELLANT 2. ()&' /RESPONDENT 3. , 6- () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI 5. 4#7 (- /DR 6. 8' 9 /GF.