P Ramasamy, Kumbakonam V. ITO, Ward-1(1), Kumbakonam

ITA 3156/CHNY/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8334 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 19-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Set aside

Judgement Text

आयकर अपील सं./ITA No.3156/Chny/2018 िनधा रण वष /Assessment Year: 2001-02 Mr.P.Ramasamy, No.27/29, 2 nd Street, Thiruvalluvar Nagar, Kumbakonam. v. The Income Tax Officer, Ward-I(1), Kumbakonam. [PAN: AAIPR 7169 P] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.S.Sridhar, Adv. यथ क ओर से /Respondent by : Mr.P. Sajit Kumar, JCIT सुनवाई क तारीख/Date of Hearing : 08.02.2022 घोषणा क तारीख /Date of Pronouncement : 23.02.2022 आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-I, Tiruchirapalli, dated 20.09.2018 and pertains to AY 2001-02. 2. The assessee has raised the following grounds of appeal: 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts, circumstances as also the legal position obtaining in the case of the appellant. 2. The learned Commissioner of Income Tax (Appeals) should and accepted the status and should not have disturbed the same in view of the various pronouncements made by various High Courts, which were already referred. आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI माननीय ी वी. दुगा राव, ाियक सद एवं माननीय ी जी. मंजूनाथा, , लेखा सद के सम BEFORE HON’BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND HON’BLE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA No.3156/Chny/2018 :: 2 :: Investment in property. The assessee is doing the business of finance and certain amount realized from debtors is invested in the property. The assessing officer has not accepted the same and made additions on this. Cost of construction: The Commissioner (Appeals) failed to appreciate that the difference between the appellant's reported cost and state pwd rates of Rs.1,00,980/- (Rs.1926430- Rs.1825450) being less than 15%, no addition could be made and hence the addition is unsustainable both in law as well as facts. 2.2 The Commissioner (Appeals) further failed to appreciate that the predecessor Commissioner (Appeals) having held that no addition is warranted and there being no appeal by the department, the addition now made is untenable. 3. For these and other reasons that may be adduced at the time of hearing the appellant prays that the additions/disallowances made as above be deleted and the income returned be accepted. 3. The brief facts of the case are that the assessee is engaged in the business of money lending, has received salary from partnership firm. The assessment for the impugned AY 2001-02 has been completed u/s.143(3) r.w.s.147 of the Act on 28.12.2006. The assessee preferred an appeal before the Ld.CIT(A) and the Ld.CIT(A), Trichy, vide his order dated 02.09.2010 partly allowed the appeal filed by the assessee. The Department has filed appeal against the order of the Ld.CIT(A) before the ITAT and the ITAT vide its order dated 28.04.2011 set aside the order of the Ld.CIT(A) and restored the matter back to the AO. Consequent to the order of the ITAT, the AO has taken up the case for hearing and called upon the assessee to justify various issues involved in the appeal. In response, the assessee has filed necessary details including source of income for investment in house property and also unexplained investment in construction of house property. The AO after considering relevant submissions of the assessee, has completed the assessment u/s.143(3) ITA No.3156/Chny/2018 :: 3 :: r.w.s.254 of the Act on 28.03.2013 and made various additions, including addition towards unexplained investment for purchase of property at Rs.7.00 lakhs, unexplained investment in cost of construction and addition towards agricultural income, etc. The assessee carried the matter in appeal before the Ld.CIT(A) and challenged the addition made by the AO towards investment in property, difference in cost of construction and investment in money lending business. The Ld.CIT(A), for the reasons stated in his appellate order dated 20.09.2018, partly allowed the appeal filed by the assessee, wherein, he has sustained additions made towards investment in property, disallowance of agricultural income, difference in cost of construction and unexplained investment in purchase of car. Aggrieved by the Ld.CIT(A)’s order, the assessee is in appeal before us. 4. The first issue that came up for our consideration from the assessee’s appeal is investment in purchase of property. The assessee claimed to have invested in purchase of property out of outstanding debtors receivables from money lending business to the tune of Rs.7.00 lakhs. The AO did not accept the explanation of the assessee that investment to the tune of Rs.7.00 lakhs is out of outstanding debtors from money lending business, because, the assessee was unable to file necessary evidence to support the claim that it has outstanding receivables from the money lending business. On appeal, the Ld.CIT(A) has sustained the addition made by the AO towards investment in property to the tune of Rs.7.00 ITA No.3156/Chny/2018 :: 4 :: lakhs on the ground that the assessee has failed to explain the realization of outstanding debtors with necessary evidences. 5. The Ld.AR submitted that the Ld.CIT(A) has erred in sustaining addition made towards unexplained investment in property to the tune of Rs.7.00 lakhs without consideration the explanation of the assessee that source for investment is out of realization of outstanding debtors from the money lending business. The Ld.AR referring to the Ld.CIT(A)’s order submitted that if you go through the findings of the Ld.CIT(A), the Ld.CIT(A) has sustained additions in one line without giving any reasons. Therefore, the issue may be set aside to the file of the AO to give one more opportunity to the assessee to explain source for investment in purchase of property. 6. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the assessee neither produced any details nor justified its case before the Ld.CIT(A) by filing necessary evidences. Therefore, there is no reason to give one more opportunity of hearing to the assessee. 7. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO has made additions towards investment in property to the tune of Rs.7.00 lakhs on the ground that the assessee has failed to file evidences to justify his claim of realization of outstanding debtors from finance business. It was the claim of the assessee that it has filed necessary financial statements to ITA No.3156/Chny/2018 :: 5 :: prove the availability of source of income and such source is explained out of realization of outstanding debtors. Although, assessee claimed to have filed necessary details including financial statement on perusal of the order of the AO & the Ld.CIT(A), we find that the authorities below have made additions by holding that the assessee has not filed any details. There are contradictory arguments from both the sides, one side the assessee claims to have filed various details to justify his case, on the other side, it was observed that no details have been filed. Therefore, to ascertain the correct facts with regard to source for investment in property and also to give one more opportunity to the assessee, we deem it appropriate to set aside the issue to the file of the AO. Hence, we set aside the issue to the file of the AO and direct the AO to re-consider the issue in accordance with law after giving one more opportunity of hearing to the assessee to file necessary evidences. 8. The next issue that came up for our consideration from the assessee’s appeal is difference in cost of construction of Rs.1,00,980/-. The assessee claims that the AO as well as the Ld.CIT(A) have not arrived at difference in cost of construction with reference to various details filed by the assessee including bills and vouchers for construction. Therefore, submitted that the issue may be set aside to the file of the AO to give one opportunity of hearing to the assessee. 9. Heaving heard both sides, we find that the AO has made addition towards difference in cost of construction by taking into account Valuation ITA No.3156/Chny/2018 :: 6 :: Report and cost of construction admitted by the assessee. Further, the AO has allowed deduction towards available funds from rent advance, etc., to arrive at difference of Rs.4,31,078/-. The Ld.CIT(A) has restricted the addition to Rs.1,00,980/- without assigning any reasons as to how difference in cost of construction worked out by the AO is not incorrect. Since, there are contradictory findings from the AO as well as the Ld.CIT(A) on the issue of difference in cost of construction and also fact that the assessee claims to have filed all details to justify the amount invested for cost of construction, we deem it appropriate to set aside the issue to the file of the AO. Thus, the issue has been remitted back to the file of the AO and direct the AO to re-consider the issue in accordance with law. 10. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order pronounced on the 23 rd day of February, 2022, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) याियक सद य/JUDICIAL MEMBER Sd/- (जी. मंजूनाथा) (G. MANJUNATHA) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 23 rd February, 2022. TLN, Sr.PS आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु"/CIT 2. यथ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु" (अपील)/CIT(A) 6. गाड फाईल/GF