ITO, Pollachi V. Shri r. Senthilvadivel, Pollachi

ITA 3052/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4737 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: S PARAMASIVAM ITP
• Keywords: Reason to believe
• Section: 143(3); 142(1); 131; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NOS. 2782 & 3052/MDS/2016 #% % /ASSESSMENT YEAR : 2011-12 & 2009-10 INCOME TAX OFFICER, WARD -1, 30, VENKATESA COLONY, POLLACHI 642 001. VS. SHRI R.M. SENTHIL VADIVEL, 4/22, RAMANTHAPURAM, MANNUR (PO), POLLACHI 642 109. [PAN: CFJPS 8357A] ( / APPELLANT) ( /RESPONDENT) DEPARTMENT BY : SHRI. SHIVA SRINIVAS, JCIT '(* + /RESPONDENT BY : SHRI. S. PARAMASIVAM, ITP + /DATE OF HEARING : 15.03.2017 + /DATE OF PRONOUNCEMENT : 28.04.2017 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE REVENUE HAS FILED APPEALS AGAINST THE DIFFERE NT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE FOR THE ASSESSMENT YEAR 2011-12 IN ITA NO. 59/15-16 DATED 29.06.2016 PASSED U/S. 143(3) ITA NOS. 2782 & 3052/MDS/2016 :- 2 -: R.W.S. 147 OF THE ACT AND FOR THE ASSESSMENT YEAR 2 009-10 IN ITA NO. 24/16- 17 DATED 22.08.2016 U/S. 143(3) OF THE ACT. SINCE THE APPEALS ARE INTERLINKED, FOR THE SAKE OF CONVENIENCE WE TAKE UP THE REVENUE APPEAL IN ITA NO. 3052/MDS/2016 FOR THE ASST. YEAR 2009-10 AN D FACTS NARRATED. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT TH E ASSESSEE AS A PARTNER OF THE FIRM M/S. SENTHIL & CO. HAS THE RESP ONSIBILITY TO PROVE THE GENUINENESS OF THE FIRM WHICH HE HAS NOT DONE. THE CASE LAW REPORTED IN 44 ITR 521 IN THE CASE OF LADHU RAM TAP ARIA VS. CIT (SC) AND 214 ITR 851 IN THE CASE OF SUMATI DAYAL VS CIT ARE APPLICABLE IN THIS CASE. 3. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT TH E ADDITION WAS MADE ON SUBSTANTIVE BASIS AS THE ASSESSEE HAS FAILE D TO PROVE THE GENUINENESS OF THE FIRM. 4. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT AD DITION ON ACCOUNT OF CALCULATION MISTAKE IN AGRICULTURAL INCOME WAS DONE BY THE ASSESSING OFFICER AS THE ASSESSEE HAS SHOWN THE AGRICULTURAL INCOME AS SOURCE FOR OTHER INVESTMENTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PARTNER IN M/S. VANJIAMMAN FINANCE AND REAL ESTATES AND ALSO R ECEIVED AGRICULTURAL INCOME. THE ASSESSEE HAS INTRODUCED A 25 LAKHS AS HIS CAPITAL CONTRIBUTION TO HIS SHARE IN PARTNERSHIP FIRM AND FURTHER INVEST ED A 3.26 CRORES AS DEPOSITS IN THE SAID FIRM. THE ASSESSEE HAS FILED THE RETURN OF INCOME BUT ITA NOS. 2782 & 3052/MDS/2016 :- 3 -: THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT TH E ASSESSEE HAS CONCEALMENT THE INCOME AND ISSUED NOTICE U/S. 148 O F THE ACT DATED 31.03.2015. IN COMPLIANCE TO NOTICE, THE ASSESSEE FILED LETTER TO CONSIDER THE RETURN OF INCOME FILED ON 23.03.2015 WITH INCOM E OF RS. 1,48,710/- AND AGRICULTURAL INCOME OF RS. 10 LAKHS AS DUE COMPLIAN CE OF NOTICE AND LD. AO ISSUED NOTICE U/S. 143(2) AND 142(1) OF THE ACT. F URTHER, THE LD AO CALLED FOR THE DETAILS OF COMPUTATION OF INCOME, BOOKS OF ACCOUNTS, BANK ACCOUNT STATEMENTS, LAND HOLDINGS ETC AND IN RESPONSE, THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAIL S OF PURCHASE OF AGRICULTURAL LANDS AND INCOME AND THE SOURCES. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS WITHDRAWN A SUM OF RS. 351 LA KHS FROM M/S. SENTHIL & CO., WHERE THE ASSESSEE IS A PARTNER. THE LD. AO C ALLED THE ASSESSEE TO PRODUCE DETAILS OF INVESTMENTS IN THE FIRM AND ASSE SSEE SUBMITTED THAT THE FIRM M/S. SENTHIL & CO. WAS CONSTITUTED AS PER PART NERSHIP DEED AT 01.04.2008 BY 14 PARTNERS AS REFERRED AT PARA 5 OF THE ORDER AND THE ASSESSEE EXPLAINED THE SOURCES FOR INVESTMENT. THE ASSESSING OFFICER ON PERUSAL OF THE SUBMISSIONS IN RESPECT OF SOURCES OF INVESTMENT IN PARTNERSHIP FIND THAT THE ASSESSEE IS ONLY ASSESSED TO INCOME T AX AND HAVING PAN. THE LD. AO ON ASSUMPTION TO VERIFY, RELATION OF CAPITAL CONTRIBUTION OF PARTNERS ISSUED NOTICE U/S. 148 OF THE ACT TO THE FIRM. THE ASSESSING OFFICER HAVING RE-OPENED ASSESSMENT U/S. 147 OF THE ACT HAS ISSUED SUMMONS U/S. 131 OF THE ACT TO VERIFY THE GENUINENESS AND CAPITAL CONTR IBUTION OF REMAINING ITA NOS. 2782 & 3052/MDS/2016 :- 4 -: PARTNERS IN THE FIRM AND INSPITE OF SERVING OF SUMM ONS NONE APPEARED ON THE HEARING DATE. THE LD. AO IN THE ABSENCE OF INF ORMATION OF THE PARTNERS AND ALSO NONE OF THEM APPEARED AND GENUINENESS OF I NVESTMENTS OF THE FIRM COULD NOT BE VERIFIED AND THE ASSESSING OFFICER FOU ND THAT THE ASSESSEE HAS CONTRIBUTED RS. 25 LAKHS IN THE FIRM THROUGH DEBIT ENTRY IN THE CURRENT ACCOUNT OF THE PARTNERSHIP FIRM AND ALSO WITHDRAWN FROM THE FIRM RS. 3,51,50,000/-. THE ASSESSING OFFICER ALLEGED THAT THE FIRM WAS CONSTITUTED ONLY FOR THE PURPOSE OF DOING MONEY LENDING BUSINES S BUT NO TRANSACTIONS WERE CARRIED OUT AND RELIED ON THE DECISION OF HON' BLE SUPREME COURT. THE LD. AO IS OF THE OPINION THAT THE MONEY BELONGS TO ASSESSEE AND ROUTED INTO THE FIRM THROUGH OTHER PARTNERS. WHERE THE FIRM IS ONLY NAME LENDER AND MADE ADDITION FOR RS. 4,45,00,000/- IN THE HANDS OF THE ASSESSEE ON SUBSTANTIVE BASIS AND IN THE CASE OF THE FIRM ON PR OTECTIVE BASIS AND THE LD AO HAS TREATED RS. 1,60,000/- AS INCOME FROM OTHER SOURCES INSTEAD OF AGRICULTURAL INCOME AND ASSESSED INCOME OF RS. 4,48 ,08,710/- AND PASSED ORDER U/S. 143(3) OF THE ACT DATED 31.03.2016. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEA L WITH CIT(A). THE LD. AR ARGUED THE GROUNDS, REITERATED THE SUBMI SSIONS OF ASSESSMENT PROCEEDINGS. THE LD. CIT(A) CONSIDERED THE FINDING S OF THE ASSESSING OFFICER AT PAGE 2 AND 3 OF HIS ORDER AND FOUND THAT THE AMOUNT OF RS. 4,45,00,000/- WAS CREDITED IN THE PARTNERSHIP FIRM M/S. SENTHIL & CO. ITA NOS. 2782 & 3052/MDS/2016 :- 5 -: THEREFORE, THE PRIMARY OBJECT TO EXPLAIN THE IDENTI TY AND GENUINENESS OF CLAIM CREDITED IN THE BOOKS OF ACCOUNT LIES ON THE FIRM AND THE LD. AO ISSUED NOTICE U/S. 148 OF THE ACT AND THE RE-ASSESSMENT OF THE M/S. SENTHIL & CO. PARTNERSHIP FIRM IS PENDING. THE LD. CIT(A) IS OF THE OPINION THAT SINCE THERE IS PENDING OF ASSESSMENT PROCEEDINGS IN THE HANDS OF THE FIRM THEREFORE THE AMOUNT OF RS. 4,45,00,000/-ADDED IN T HE ASSESSMENT OF ASSESSEE IS CONSIDERED AS PROTECTIVE ASSESSMENT UNT IL FINAL DECISION IS TAKEN IN THE HANDS OF THE FIRM AND PARTLY ALLOWED THE APP EAL. 5. AGGRIEVED BY THE CIT(A) ORDER, REVENUE HAS FILED A N APPEAL WITH THE TRIBUNAL. BEFORE US, THE LD. DR ARGUED THAT TH E ASSESSEE IS A PARTNER OF M/S. SENTHIL & CO. AND IS LIABLE TO PROVE THE GENUI NENESS OF THE FIRM AND RELIED ON THE HONBLE SUPREME COURT DECISION. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSMENT IN THE CASE OF ASSES SEES ON SUBSTANTIVE BASIS AND THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE FIRM AND PRAYED FOR SET ASIDE OF THE ORDER OF THE CIT(A) . CONTRA, THE LD. AR RELIED ON THE ORDERS OF THE CIT(A). 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS. THE FACTS BEING THAT THE A SSESSING OFFICER HAS MADE SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE AND WORKED OUT THE PROTECTIVE ASSESSMENT OF THE FIRM. WHEREAS, THE AS SESSING OFFICER HAS ITA NOS. 2782 & 3052/MDS/2016 :- 6 -: REASON TO BELIEVE ESCAPEMENT OF INCOME AND HAS ISSU ED NOTICE U/S. 148 OF THE ACT ON THE PARTNERSHIP FIRM AND MADE ASSESSMENT ON PROTECTIVE BASIS. THE LD. AR SUBMITTED THAT SAME IS PENDING FOR HEARI NG BEFORE CIT(A). THE FACTS BEING THE ASSESSEE HAS FAILED TO ESTABLISH AN D PROVE THE GENUINENESS OF CAPITAL CONTRIBUTION BY THE PARTNERS BEFORE THE LOWER AUTHORITIES AND THEY ARE INTERLINKED WITH THE ASSESSEE INVESTMENTS. WE F OUND THERE IS A NEXUS OF FUNDS TRANSFER BETWEEN THE ASSESSEE AND THE FIRM WI TH REGARD TO CONTRIBUTION AND WITHDRAWALS. ACCORDINGLY IN THE I NTEREST OF JUSTICE, WE REMIT THE ENTIRE DISPUTED ISSUE TO THE CIT(A) TO AD JUDICATE ON MERITS ON COMPARISON WITH THE APPELLATE PROCEEDINGS OF PARTNE RSHIP FIRM M/S. SENTHIL & CO AND THE ASSESSEE SHALL BE PROVIDED ADEQUATE OPPO RTUNITY OF HEARING BEFORE PASSING THE ORDER AND GROUNDS OF APPEAL OF R EVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. 7. SIMILARLY, THE REVENUE HAS FILED AN APPEAL IN ITA N O. 2782/MDS/2016 FOR THE ASSESSMENT YEAR 2012-13 WHICH ARE INTERLINKED. THEREFORE, WE ARE OF THE OPINION THAT THIS APPEAL I S ALSO REMITTED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION AND GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. ITA NOS. 2782 & 3052/MDS/2016 :- 7 -: 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 3052/MDS/2016 AND IN ITA NO. 2782/MDS/2016 ARE ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 28TH DAY OF APRIL, 2017 AT CHENNAI. SD/ - ( . ) (A. MOHAN ALANKAMONY) /ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI / / DATED: 28 TH APRIL, 2017. JPV + '#12 32 / COPY TO: 1 . * / APPELLANT 2. '(* / RESPONDENT 3. 4 () / CIT(A) 4. 4 / CIT 5. 2 '## / DR 6. % / GF