ACIT, Erode V. Smt. S. Venkateswari, Prop. Balamurugan Agency, Erode

ITA 3144/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3958 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 11-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOPI KRISHNA
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Additional evidence
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2723/MDS/2016 ' (' / ASSESSMENT YEAR : 2013-14 SMT. S. VENKATESWARI, PROP: SRI BALAMURUGAN AGENCIES, NO.18, NEW BUS STAND COMPLEX, KOVAI MAIN ROAD, PERUNDURAI 638 052. PAN : AEBPV 2163 E V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -2, NO.15, GANDHIJI ROAD, ERODE 638 001. (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.3144/MDS/2016 ' (' / ASSESSMENT YEAR : 2013-14 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -2, NO.15, GANDHIJI ROAD, ERODE 638 001. V. SMT. S. VENKATESWARI, PROP: SRI BALAMURUGAN AGENCIES, NO.18, NEW BUS STAND COMPLEX, KOVAI MAIN ROAD, PERUNDURAI 638 052. (*+/ APPELLANT) (,-*+/ RESPONDENT) './ 0 1 /ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE 2 0 1 /REVENUE BY : SHRI GOPIKRISHNA, JCIT 3 0 /$ / DATE OF HEARING : 04.05.2017 4!( 0 /$ / DATE OF PRONOUNCEMENT : 27.07.2017 2 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE, DATED 31.08.2016 AND PERTA IN TO ASSESSMENT YEAR 2013-14. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON O RDER. 2. LETS FIRST TAKE ASSESSEES APPEAL IN I.T.A. NO.2723/MDS/2016. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE BEFORE THI S TRIBUNAL IS THAT THE ADDITION OF ` 5,05,000/- BEING THE GIFT SAID TO BE RECEIVED FROM HER MOTHER. 4. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE RECEIVED GIFT FROM HER MOTHER TO THE EXTENT OF ` 5,05,000/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE FILED AN AFFIDAVIT BEFORE THE ASSESSING OFFICER WHEREIN THE ASSESSEES MOTHER CONFIRMED THE FACT OF GIVING GIFT TO THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER DISAL LOWED THE CLAIM OF THE ASSESSEE. THE CIT(APPEALS) ALSO CONFIRMED T HE ADDITION 3 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 MADE BY THE ASSESSING OFFICER. ACCORDING TO THE LD . COUNSEL, THE IDENTITY OF THE ASSESSEES MOTHER IS NOT IN DISPUTE . THE ASSESSEES MOTHER CONFIRMED THE TRANSACTION BY FILING AN AFFID AVIT, THEREFORE, THE GENUINENESS OF TRANSACTION AND CAPACITY OF THE ASSE SSEES MOTHER TO GIFT ` 5,05,000/- CANNOT BE DOUBTED. HENCE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFI RMING THE ADDITION MADE BY THE ASSESSING OFFICER. 5. ON THE CONTRARY, SHRI GOPIKRISHNA, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT NO DOUBT AN AFFIDAVI T WAS FILED FROM THE ASSESSEES MOTHER BEFORE THE ASSESSING OFFICER. THE AFFIDAVIT STATES THAT THE GIFT WAS GIVEN OUT OF HER OLD SAVIN GS. THE ASSESSEES MOTHER DID NOT HAVE ANY INDEPENDENT SOURCE OF INCOM E. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FO UND THAT SHE HAS NO CAPACITY TO GIVE A GIFT. THE ASSESSEES MOTHER IS NOT ASSESSED TO TAX. THEREFORE, THE ASSESSING OFFICER CAME TO A CO NCLUSION THAT THE ASSESSEE HAS INTRODUCED HERSELF UNACCOUNTED MONEY I N THE GUISE OF GIFT FROM HER MOTHER. HENCE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MAD E BY THE ASSESSING OFFICER. 4 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR THE PURPOSE OF PROVING A CASH CREDIT, THE ASSESSEE HAS TO NECES SARILY ESTABLISH THE IDENTITY, CREDITWORTHINESS OF CREDITORS AND GEN UINENESS OF TRANSACTION. IN THIS CASE, THE IDENTITY OF THE CRE DITOR IS NOT IN DISPUTE. THE GENUINENESS OF TRANSACTION WAS ALSO ESTABLISHED BY FILING AN AFFIDAVIT FROM THE DONOR, NAMELY, THE ASSESSEES MO THER. AT THE BEST, THE ASSESSING OFFICER CAN DOUBT THE CREDITWOR THINESS OF CREDITOR. THE ASSESSEES MOTHER CLAIMS THAT GIFT W AS GIVEN FROM HER PAST SAVINGS. THE ASSESSING OFFICER DISBELIEVED TH E GIFT BECAUSE SHE HAS NO INDEPENDENT SOURCE OF INCOME AND SHE WAS NOT ASSESSED TO TAX. 7. THE ASSESSEES MOTHER APPEARS TO BE HOUSEWIFE. SHE HAS TO TAKE CARE OF HOUSEHOLD EXPENSES. WHENEVER RECEI VED MONEY FROM HUSBAND OR SON FOR HOUSEHOLD EXPENSES, INDIAN LADIES USE TO SAVE PART OF THE MONEY AND WHENEVER THE HUSBAND OR SON URGENTLY NEEDS SOME MONEY, THE LADIES USE TO GIVE THE SAME O UT OF THEIR SAVINGS. THIS SAVING HABIT OF HOUSEWIVES IN THIS C OUNTRY, MORE PARTICULARLY, IN SOUTHERN PART OF COUNTRY, CANNOT B E IGNORED BY THE ASSESSING OFFICER. WHEN THE ASSESSEES MOTHER CLAI MS THAT SHE 5 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 SAVED MONEY GIVEN FOR HOUSEHOLD EXPENSES AND FILED AN AFFIDAVIT BEFORE THE ASSESSING OFFICER, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE CLAIM OF THE ASSESSEES MOTHER CAN NOT BE BRUSHED ASIDE SO LIGHTLY WITHOUT EXAMINING IT. THE ASSESS MENT YEAR UNDER CONSIDERATION IS 2013-14. EVEN A MASON OR CONSTRUC TION WORKER IS RECEIVING SALARY OF ` 400 TO 500 PER DAY. IN THIS ECONOMIC SITUATION, THERE IS NO REASON TO DOUBT THE CAPACITY OF THE ASS ESSEES MOTHER TO GIVE ` 5,05,000/- TO THE ASSESSEE. THEREFORE, THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT ALL THE INGREDIENTS WHICH A RE NECESSARY FOR PROVING THE GIFT WERE ESTABLISHED BY THE ASSESSEE. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADD ITION. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE A ND THE ADDITION OF ` 5,05,000/- MADE BY THE ASSESSING OFFICER IS DELETED . 8. NOW COMING TO REVENUES APPEAL IN I.T.A. NO.3144/MDS/2016, THE FIRST GROUND OF APPEAL IS DIS ALLOWANCE OF FREIGHT CHARGES PAID TO THE CONTRACTORS. 9. SHRI GOPIKRISHNA, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF ` 3,26,15,735/- TOWARDS FREIGHT CHARGES SINCE THE REQ UIRED DETAILS WERE NOT FILED BY THE ASSESSEE. NO EVIDENCE FOR PA YMENT OF FREIGHT 6 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 CHARGES WAS FILED BEFORE THE ASSESSING OFFICER. TH E PERMANENT ACCOUNT NUMBERS OF THE CONTRACTORS WERE ALSO NOT AV AILABLE ON RECORD. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE GENUINENESS OF LIABIL ITY AND ITS PAYMENT IS NOT PROVED. HENCE, THE SUM OF ` 3,26,15,735/- WAS DISALLOWED. ACCORDING TO THE LD. D.R., ON APPEAL B Y THE ASSESSEE, THE CIT(APPEALS) RESTRICTED THE DISALLOWANCE TO ` 44,30,887/- ON THE GROUND THAT THE PAYMENT MADE BY THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TAX, THEREFORE, THERE CANNOT BE DISALL OWANCE UNDER SECTION 40(A)(IA) OF THE ACT. THE PAYMENT MADE TO THE TRANSPORT CONTRACTORS TOWARDS FREIGHT CHARGES WAS QUANTIFIED AS ` 44,30,887/-. ACCORDINGLY, THE CIT(APPEALS) RESTRICTED THE DISALL OWANCE TO THE EXTENT OF ` 44,30,887/-. ACCORDING TO THE LD. D.R., HIRE CHARG ES ARE LIABLE FOR DEDUCTION OF TAX AT THE TIME OF PAYMENT OR CREDIT, THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN RESTRICTING TH E CLAIM TO ` 44,30,887/-. 10. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSE L FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS NOT HIRED ANY LORRY. IN FACT, THE ASSESSEE PURCHASED IRON ORE, WHICH WAS TO BE SUPPLIED TO CHETTINAD CEMENT CORPORATION LTD. IN FACT, THE IRON ORE WAS 7 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 PURCHASED FROM KAMACHI SPONGE & POWER CORPORATION L TD. THE SUPPLY OF IRON ORE INCLUDED PAYMENT OF FREIGHT CHAR GES. ACCORDING TO THE LD. COUNSEL, SINCE THE PAYMENT IS COMPOSITE ONE FOR PURCHASE OF IRON ORE AND TRANSPORTATION TO CHETTINAD CEMENT CORPORATION LTD., THE SAME CANNOT BE CONSTRUED AS HIRE CHARGES, THERE FORE, NOT LIABLE FOR DEDUCTION OF TAX EITHER UNDER SECTION 194C OF T HE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') OR UNDER SECTION 194 H OF THE ACT. SOME OF THE TRANSPORTERS THROUGH WHOM THE TRANSPORT WAS MADE, HAVE NO PERMANENT ACCOUNT NUMBER, BUT MANY OF TRANS PORTERS HAD PERMANENT ACCOUNT NUMBER. ACCORDING TO THE LD. COU NSEL, NO TAX WAS DEDUCTED IN THE CASE OF THE TRANSPORTERS WHO HA VE PERMANENT ACCOUNT NUMBER IN VIEW OF SECTION 194C(6) OF THE AC T. IN RESPECT OF THOSE PERSONS WHO HAVE NO PERMANENT ACCOUNT NUMB ER, THE PAYMENT WAS MADE TO THE EXTENT OF ` 44,30,887/- WHICH WAS DISALLOWED BY THE CIT(APPEALS). THEREFORE, ACCORDI NG TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY RESTRICTED TH E DISALLOWANCE TO ` 44,30,887/-. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CONTENDS THAT THE PAYMENT WAS A COMPOSITE ONE FOR P URCHASE OF 8 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 IRON ORE AND TRANSPORTATION, THEREFORE, NOT LIABLE FOR DEDUCTION OF TAX. THE ASSESSEE ALSO CLAIMS THAT IN VIEW OF SECTION 19 4C(6) OF THE ACT, IN THE CASE OF THOSE TRANSPORTERS WHO HAVE PERMANEN T ACCOUNT NUMBER, TAX NEED NOT BE DEDUCTED. IN RESPECT OF OT HERS, WHO HAVE NO PERMANENT ACCOUNT NUMBER, THE PAYMENT WAS MADE T O THE EXTENT OF ` 44,30,887/-, WHICH WAS DISALLOWED BY THE CIT(APPEAL S). THE FACT REMAINS THAT THE PERMANENT ACCOUNT NUMBER WAS FURNISHED BY THE ASSESSEE EXCEPT IN RESPECT OF PAYM ENT MADE TO THE EXTENT OF ` 44,30,887/-. MOREOVER, IT IS NOT IN DISPUTE THAT T HE PAYMENT MADE BY THE ASSESSEE IS COMPOSITE ONE FOR I RON ORE AND TRANSPORT OF THE SAME. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY RESTRICTED THE DISALLOWANCE AT ` 44,30,887/-. HENCE, THE SAME IS CONFIRMED. 12. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDI TION MADE ON ACCOUNT OF CLOSING STOCK TO THE EXTENT OF ` 32,63,677/-. 13. SHRI GOPIKRISHNA, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION TO THE CLOSING STOCK TO THE EXTENT OF ` 32,63,677/-. HOWEVER, THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE BY ENTERTAINING A N ADDITIONAL EVIDENCE WITHOUT GIVING AN OPPORTUNITY TO THE ASSES SING OFFICER. 9 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 THEREFORE, ACCORDING TO THE LD. D.R., THERE IS A CL EAR VIOLATION OF RULE 46A OF THE INCOME-TAX RULES, 1962. 14. WE HAVE HEARD SHRI S. SRIDHAR, THE LD.COUNSEL F OR THE ASSESSEE ALSO. THE ASSESSEE HAS FURNISHED AN ALTER NATE WORKING BEFORE THE CIT(APPEALS), WHICH WAS TAKEN INTO CONSI DERATION BY THE CIT(APPEALS) WHILE GIVING THE RELIEF. THEREFORE, A CCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE C LAIM OF THE ASSESSEE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(APPEALS) FOUND THAT THE PURCHASE AND SALES MADE DURING FINANCIAL YEAR HAVE TO BE REFLECTED AS CLOSING STOC K ON THE LAST DAY OF THE FINANCIAL YEAR. THE ASSESSEE ADMITTEDLY FILED AN ALTERNATE WORKING BEFORE THE CIT(APPEALS). THE CIT(APPEALS) AFTER CONSIDERING THE ALTERNATE WORKING FILED BY THE ASSE SSEE, ALLOWED THE CLAIM WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSI NG OFFICER. RULE 46A OF THE INCOME-TAX RULES, 1962 CLEARLY SAYS THAT WHENEVER ADDITIONAL EVIDENCE IS FILED BY THE ASSESSEE, AN OP PORTUNITY SHALL BE GIVEN TO THE ASSESSING OFFICER TO CONTRADICT THE SA ME. SINCE SUCH AN OPPORTUNITY WAS NOT GIVEN, THIS TRIBUNAL IS OF T HE CONSIDERED 10 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 OPINION THAT THE ASSESSING OFFICER HAS TO RECONSIDE R THE ENTIRE ISSUE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ISSUE OF CLOSING STOCK IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE B EFORE HIM, IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 16. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 5 LAKHS. 17. SHRI GOPIKRISHNA, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT THE ASSESSING OFFICER MADE AN ADDITI ON OF ` 5 LAKHS. THE ASSESSEE TRADED IN MULTI COMMODITY EXCHANGE. T HE ASSESSEE INVESTED IN MULTI COMMODITY EXCHANGE, WHICH WAS NOT REFLECTED IN THE FINANCIAL STATEMENT FILED BY THE ASSESSEE. ACC ORDING TO THE LD. D.R., THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFI CER THAT SHE IS NOT TRADING, BUT SOMEONE MIGHT HAVE USED HER PERMAN ENT ACCOUNT NUMBER. THE ASSESSING OFFICER HAS FOUND THAT EXAC T AMOUNT OF INVESTMENT WAS NOT ASCERTAINED AS THE TRANSACTIONS WERE SQUARED OFF ON THE SAME DAY OR WITHIN FEW DAYS. THEREFORE, THE ASSESSING OFFICER ADDED THE SUM OF ` 5 LAKHS BEING THE INVESTMENT MADE IN 11 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 MULTI COMMODITY EXCHANGE. THE CIT(APPEALS) DELETED THE ADDITION WITHOUT ANY MATERIAL. THEREFORE, ACCORDING TO THE LD. D.R., THE ORDER OF THE CIT(APPEALS) IS NOT JUSTIFIED. 18. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSE L FOR THE ASSESSEE, SUBMITTED THAT THE PAN OF THE ASSESSEE WA S USED BY SOMEONE AND NO INVESTMENT WAS MADE BY THE ASSESSEE. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WHEN THE TRANSACTION WAS NOT ASCERTAINABLE IN MULTI COMMODIT Y EXCHANGE BY CITING PERMANENT ACCOUNT NUMBER, IT IS NOT KNOWN HO W THE ASSESSEE CLAIMS THAT SOMEONE HAS USED HER PERMANENT ACCOUNT NUMBER. IF REALLY PAN WAS MISUSED BY SOMEONE, THEN WE HAVE TO EXAMINE WHO HAS INVESTED THE MONEY IN MULTI COMMODI TY EXCHANGE AND WHO ENJOYED THE PROFIT OF THE TRANSACT ION MADE. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN DEL ETING THE ADDITION ON THE GROUND THAT THE ADDITION WAS MADE ON SURMISE . HENCE, THE MATTER NEEDS TO BE RECONSIDERED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF ` 5 LAKHS IS 12 I.T.A. NO.2723/MDS/16 I.T.A. NO.3144/MDS/16 REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 20. IN THE RESULT, THE ASSESSEES APPEAL IN I.T.A. NO.2723/MDS/2016 IS ALLOWED, WHEREAS, THE REVENUES APPEAL IN I.T.A. NO.3144/MDS/2016 IS PARTLY ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED ON 27 TH JULY, 2017 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 27 TH JULY, 2017. KRI. 0 ,/78 98(/ /COPY TO: 1. './ / ASSESSEE 2. ASSESSING OFFICER 3. 3 :/ () /CIT(A)-3, COIMBATORE 4. PRINCIPAL CIT-2, COIMBATORE 5. 8; ,/ /DR 6. <' = /GF.