T.Gunasekaran, CHENNAI V. ITO, CHENNAI

ITA 3253/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6027 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 29-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: ANAND BABUNATH
• Keywords: Unexplained cash credit; Depreciation
• Section: 68

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC D BENCH, CHENNAI . , ! BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.3253/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) SHRI T. GUNASEKARAN, DOOR NO.3, A.E. KOIL SOUTH MADA STREET, TONDIARPET, CHENNAI 600 081. VS THE INCOME TAX OFFICER, CORPORATE WARD 4(4), CHENNAI. PAN: AFDPG3687D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI ANAND BABUNATH, CA /RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 06.09.2017 ! /DATE OF PRONOUNCEMENT : 04.10.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)- 5, CHENNAI DATED 23.09.2016 IN ITA NO.80/CIT(A)-5/15-1 6 FOR THE ASSESSMENT YEAR 2012-13 PASSED U/S.250(6) R.W.S.143 (3) OF THE ACT. 2 ITA NO.3253/MDS/2016 2. THE ASSESSEE HAS RAISED THE FOLLOWING TWO GROUND S IN HIS APPEAL:- (I) THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE DISALLOWANCE OF DEPRECIATION TO THE TUNE OF RS.4,54 ,500/- WITHOUT CONSIDERING THE SUBMISSIONS OF THE APPELLAN T AND THE REMAND REPORT OF THE AO. (II) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDI TIONS MADE U/S.68 OF THE ACT TO THE TUNE OF RS.24,07,000/- WIT HOUT CONSIDERING THE SUBMISSIONS OF THE APPELLANT AND TH E REMAND REPORT OF THE AO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL EARNING INCOME FROM LORRY TRANSPORT AND BROKERAGE FROM COMMODITY EXCHANGES, FILED HIS RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2012-13 ON 31.03.2014 DECLARING TOT AL INCOME OF RS.9,77,480/-. INITIALLY THE RETURN WAS PROCESS ED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 27.03.2015, WHEREIN THE LD .AO MADE SEVERAL ADDITIONS/DISALLOWANCE AS WELL AS WITH THE ABOVE MENTIONED ADDITIONS/DISALLOWANCE. 3 ITA NO.3253/MDS/2016 4. GROUND NO. 2(I) : DISALLOWANCE OF DEPRECIATION RS.4,54,500/-:- THE ASSESSEE HAS DISCLOSED ADDITION OF ASSETS TO THE TUNE OF RS.41,14,500/- IN HIS BALANCE SHEET. WHEN QUERI ED, HE COULD PRODUCE BILLS AND VOUCHERS ONLY TO THE EXTENT OF RS .36,60,000/-. HENCE THE LD.AO DISALLOWED DEPRECIATION FOR THE BAL ANCE AMOUNT OF RS.4,54,500/- WHICH WORKS OUT TO RS.1,36,350/-. ACCORDINGLY THE AMOUNT OF RS.1,36,350/- WAS ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) OBTAINED REMAND REPORT FROM THE LD.AO. THE ASSESSEE HAD SUBMITTED THE INV OICES FOR RS.4,54,500/- BEING THE AMOUNT INCURRED FOR ADDITIO NAL FITTINGS IN THE MOTOR TRUCKS. HOWEVER THE LD.CIT(A) REJECTED T HE INVOICES SUBMITTED BY THE ASSESSEE DUE TO THE FOLLOWING REAS ONS:- (I) THE LD.AO IN HIS REMAND REPORT DID NOT MENTION THAT HE HAS VERIFIED THE GENUINENESS OF THE INVOICE. (II) THE INVOICE SUBMITTED BY THE LD.AR WAS DATED 0 3.08.2011 AND IT WAS RELATED TO 12 WHEEL LORRY BODY BUILDING . (III) THOUGH THE INVOICE WAS IN THE NAME OF T. GUNA SEKARAN, THE ASSESSEE DID NOT MENTION THAT THE REGISTRATION NUMBER OF THE LORRY. 4 ITA NO.3253/MDS/2016 (IV) FURTHER THERE WAS NO SUFFICIENT EVIDENCE TO SH OW THAT THE ASSESSEE HAS USED THE 12 WHEEL LORRY FOR HIS BUSI NESS DURING THE RELEVANT ASSESSMENT YEAR. 4.1 BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE HAS SUBMITTED SUFFICIENT EVIDENCE TO ESTABLISH THAT THE TOTAL INVESTMENT ON THE MOTOR TRUCKS WAS RS.41,14,500/-. IT WAS THEREFORE PLEADED THAT THE DEPRECIATION MAY BE GRAN TED ON THE ENTIRE AMOUNT. THE LD.DR ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE LD.REVENUE AUTHORITIES. 4.2 AFTER HEARING BOTH THE PARTIES, I FIND THE ACTI ONS OF THE LD.REVENUE AUTHORITIES NOT APPROPRIATE. BOTH THE LD .AO AND THE LD.CIT(A) HAD GRANTED THE BENEFIT OF DEPRECIATION T O THE EXTENT OF RS.36,60,000/- WITH RESPECT TO THE PURCHASE OF THE MOTOR TRUCKS. THEY HAD WITHDRAWN THE BENEFIT OF DEPRECIATION FOR RS.1,36,340/- ONLY FOR THE REASON THAT THE ASSESSEE HAS NOT FURNI SHED THE INVOICE FOR THE BALANCE AMOUNT OF RS.4,54,500/-. H OWEVER, WHEN THE MATTER WAS REMANDED TO THE LD.AO BY THE LD.CIT( A), THE ASSESSEE HAD FURNISHED THE INVOICE FOR THE BALANCE AMOUNT OF RS.4,54,500/-. THE GENUINENESS OF THE INVOICE IS N OT DISPUTED BY THE LD.AO. IN THIS SITUATION, THE OBSERVATION MADE BY THE 5 ITA NO.3253/MDS/2016 LD.CIT(A) DOES NOT HAVE ANY MERITS. THEREFORE, I H EREBY DIRECT THE LD.AO TO GRANT DEPRECIATION BENEFIT TO THE ASSE SSEE FOR THE ENTIRE AMOUNT OF RS.41,14,500/- TOWARDS PURCHASE OF MOTOR TRUCK. ACCORDINGLY THE ADDITION MADE FOR RS.1,36,3 40/- STANDS DELETED. 5. GROUND NO. 2(II) : ADDITION U/S.68 OF THE ACT FOR RS.24,07,000/-. DURING THE COURSE OF SCRUTINY ASSESSMENT THE LD.A O OBSERVED FROM THE CASH BOOK PRODUCED BY THE ASSESSE E THAT THE ASSESSEE HAD INTRODUCED CASH IN ITS BUSINESS FOR RS .24,07,000/-. SINCE THE ASSESSEE COULD NOT OFFER ANY EXPLANATION WITH RESPECT TO THE SOURCE OF THE CASH INTRODUCED, THE LD.AO ADD ED THE ENTIRE AMOUNT OF RS.24,07,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. WHEN THE MATTER CROPPED UP BEFORE THE LD. CIT(A), THE LD.CIT(A) OBTAINED A REMAND REPORT FROM THE LD.AO. IN THE REMAND REPORT, THE LD.AO HAS STATED AS FOLLOWS: IT IS SEEN THAT THE ASSESSEE HAS TWO PROPRIETARY CONCERNS AND THERE IS NO FRESH INTRODUCTION OF CAPITAL INTO THE ACCOUNTS OF M/S. ADVENTURES INDIA BUT THE CASH DEPOSITS EVERY M ONTH INTO ITS CASH BOOK IS ACTUALLY WITHDRAWAL FROM M/S. LAKSHMI RAJA TRANSPORT FOR THE PAYMENT OF EXPENSES OF M/S. LAKSH MI RAJA TRANSPORT. IN VIEW OF THE ABOVE THE ASSESSEES CLA IM OF CASH DEPOSIT IS ACCEPTABLE 6 ITA NO.3253/MDS/2016 SUBSEQUENTLY WHEN THE LD.CIT(A) EXAMINED THE MATTER IT WAS OBSERVED THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUC ED BEFORE THE LD.AO DURING THE REMAND PROCEEDINGS. THE LD.CI T(A) FURTHER OBSERVED THAT THE LD.AR WAS NOT ABLE TO SUB STANTIATE THE CASH ENTRIES MADE IN THE LEDGER ACCOUNTS OF THE ASS ESSEE BEFORE HIM. THEREFORE THE LD.CIT(A) SUSTAINED THE ADDITIO N MADE BY THE LD.AO. 5.1 BEFORE US THE LD.AR SUBMITTED THAT THE LD.AO HA D ACCEPTED THE SOURCE OF CASH DEPOSIT OF THE ASSESSEE AND HAS SPECIFICALLY STATED SO IN HIS REMAND REPORT. BUT T HE LD.CIT(A) WITHOUT EXAMINING THE ISSUE IN DETAIL HASTILY CAME TO A CONCLUSION THAT THE CASH ENTRIES MADE IN THE LEDGER ACCOUNTS O F THE ASSESSEE IS NOT SUBSTANTIATED. HE THEREFORE PLEADE D THAT DUE WEIGHTAGE MAY BE GIVEN TO THE REMAND REPORT AND THE ADDITION MADE FOR RS.24,07,000/- IN THE HANDS OF THE ASSESSE E MAY BE DELETED. THE LD.DR ON THE OTHER HAND ARGUED IN SUP PORT OF THE ORDER OF THE LD.CIT(A) AND PLEADED FOR SUSTAINING T HE SAME. 5.2 AFTER HEARING BOTH THE PARTIES, I FIND MERIT IN THE SUBMISSION OF THE LD.AR. IN THE REMAND PROCEEDINGS, THE LD.AO HAD VIVIDLY EXAMINED THE ISSUE AND HAD ACCEPTED THE CLAIM OF CA SH DEPOSIT 7 ITA NO.3253/MDS/2016 TO BE GENUINE. THE LD.CIT(A) HAS NOT GIVEN ANY SPE CIFIC FINDINGS IN HIS ORDER AS TO WHICH ACCOUNTING ENTRY IN THE LE DGER ACCOUNT OF THE ASSESSEE REMAIN UNEXPLAINED. IT ESTABLISHES TH E FACT THAT THE LD.CIT(A) HAS COME TO THE CONCLUSION WITHOUT PROPER LY EXAMINING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. T HEREFORE, RELYING ON THE FINDINGS OF THE LD.AO IN THE REMAND PROCEEDINGS, I HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE FOR RS.24,07,000/- U/S.68 OF THE ACT TOWARDS UNEXPLAINE D CREDIT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 04 TH OCTOBER, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 04 TH OCTOBER, 2017 RSR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF