Swati Gupta, CHENNAI V. ITO, CHENNAI

ITA 3259/CHNY/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5025 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: M NARAYANAN I T PRACTITIONER
• Keywords: Unexplained cash credit; Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO.3259/MDS/2016 / ASSESSMENT YEAR : 2007-2008 SMT. SWATI GUPTA, 140, FLAT NO.27, II FLOOR LUZ GINZA SHANTI VIHAR COMPLEX, ROYAPETTAH HIGH ROAD, CHENNAI 600 014. [PAN AHIPG 2509D] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(4) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. M. NARAYANAN, I.T. PRACTITIONER /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 02-01-2018 !' /DATE OF PRONOUNCEMENT : 04-01-2018 % / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, IT IS AGGRIE VED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI THR OUGH HIS ORDER DATED 22.09.2016 CONFIRMED AN ADDITION OF B12,32,37 0/- MADE BY THE LD. ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT. 2. FACTS APROPOS ARE THAT ASSESSEE IN THE BALANCE SHEE T FILED BY HER ALONGWITH RETURN OF INCOME HAD SHOWN ONE M/S . AYYAPPA REAL ITA NO.3259/MDS/2016. :- 2 -: ESTATE (P) LTD AS A LOAN CREDITOR WITH BALANCE OF B12,32,370/-. LD. ASSESSING OFFICER VERIFIED THE BALANCE SHEET AND TA X AUDIT REPORT OF M/S. AYYAPPA REAL ESTATE (P) LTD AND FOUND THAT IT DID NOT REFLECT ANY LOAN/ADVANCE TO THE ASSESSEE. ASSESSEE WAS PUT ON N OTICE. REPLY OF THE ASSESSEE WAS AS UNDER:- IN REPLY TO QUERY REGARDING DIFFERENCE OF RS. 12, 32,370 BETWEEN THE CREDIT BALANCE SHOWN IN SWAN GUPTA'S BOOKS OF ACCOUNTS AS ON 31.03.2007 IN THE NAME OF AYYAPPA REAL ESTATE PRIVATE LIMITED AND SWATI GUPTA'S ACCOUNT IN THE BOOKS OF AYYAPPA REAL ESTATE PRIVATE LIMITED THE ASSESSEE SUBMIT AS UNDER . ON INSTRUCTION OF MANAGEMENT THE SUM OF RS. 6,16,185/- DUE FROM SWATI GUPTA WAS TRANSFERRED TO AYYAPPA ROLLER FLOUR MILLS ACCOUNT BY AYYAPPA REAL ESTATE (P) LIMITED BUT THE ACCOUNTANT HANDLING SWAN GUPTA'S ACCOUNT INSTEAD OF DEBITING HAS CREDITED AYYAPPA REAL ESTATE (P) LIMITED'S ACCOUNT AND DEBITED TO AYYAPPA ROLLER FLOUR MILLS LIMITED IN HER BOOKS. ON VERIFYING INTER GROUP BALANCES, SWATI GUPTA NOTICED THE DIFFERENCES IN BALANCES AND RECTIFIED T HE ENTRY IN ASSESSMENT YEAR 2008-09.AS THE DIFFERENCE OF RS.12,32,370/ - WAS RECTIFIED IN NEXT ASSESSMENT YEAR SO YOU ARE REQUESTED TO DROP THE PROPOSAL OF ADDITIONS IN 2007-08 AND OBLIGE BY STATING DIFFERENCE IN BALANCES IN BETWEEN THE TWO CONCERNS. HOWEVER, LD. ASSESSING OFFICER DID NOT ACCEPT THE A BOVE REPLY. ACCORDING TO HIM, THERE WERE NO SUPPORTING EVIDENCE FILED BY THE ASSESSEE FOR SUBSTANTIATING ITS CONTENTION. FURTHE R, ACCORDING TO HIM, BOOKS OF THE ASSESSEE REFLECTED A SUM OF B12,32,370 /- AS DUE TO M/S. AYYAPPA REAL ESTATE (P) LTD WHEREAS NO CORRESPONDIN G ENTRY ITA NO.3259/MDS/2016. :- 3 -: APPEARED IN THE ACCOUNTS OF THE SAID COMPANY. AN ADDITION OF B12,32,370/- WAS MADE AS UNEXPLAINED CASH CREDIT. 3. ASSESSEES APPEAL BEFORE THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) DID NOT MEET WITH ANY SUCCESS. ACCORD ING TO LD. COMMISSIONER OF INCOME TAX (APPEALS) JUST BECAUSE A SSESSEE HAD PASSED A RECTIFICATION ENTRY IN THE SUBSEQUENT YEA R, WOULD NOT CONVERT AN UNEXPLAINED CREDIT TO AN EXPLAINED ONE. HE CON FIRMED THE ORDER OF THE LD. ASSESSING OFFICER. 4. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT THERE WERE TWO CONCERNS NAMELY M/S. AYYAPPA REAL ESTATE (P) LTD AND M/S. AYYAPPA ROLLER FLOUR MILLS BOTH BELONGING TO THE SAME GROUP OF CREDITORS. ACCORDING TO HIM, OPEN ING CREDIT BALANCE IN THE ACCOUNT OF M/S. AYYAPPA REAL ESTATE (P) LTD IN THE BOOKS OF THE ASSESSEE ON 01.04.2006 WAS B6,16,185/-. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE THERE WAS A MUTUAL DECISI ON TO CONSOLIDATE THE BALANCES AND THE SUM OF B6,16,185/- WAS DECIDE D TO BE TRANSFERRED TO THE ACCOUNT OF M/S. AYYAPPA ROLLER F LOUR MILLS. HOWEVER, AS PER LD. AUTHORISED REPRESENTATIVE, ACCOUNTANT OF THE ASSESSEE PASSED A WRONG ENTRY. INSTEAD OF DEBITING THE ACCOU NT OF M/S. AYYAPPA REAL ESTATE (P) LTD, HE CREDITED THE SAID ACCOUNT W ITH B6,16,185/-, ITA NO.3259/MDS/2016. :- 4 -: THEREBY GIVING RISE TO A CLOSING CREDIT BALANCE OF B12,32,370/-. ACCORDING TO HIM, THERE WERE NO DUES TO M/S. AYYAPP A REAL ESTATE (P) LTD. CONTENTION OF THE LD. AUTHORISED REPRESENTATI VE WAS THAT ASSESSEE OUGHT NOT HAVE BEEN TAXED FOR A WRONG J OURNAL ENTRY. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. CONTENTION OF THE ASSESSEE IS THAT THE SUM OF B6,16,185/- APPEARING AS CREDIT BALANCE IN T HE ACCOUNT OF M/S. AYYAPPA REAL ESTATE (P) LTD AS ON 01.04.2006, WAS D ECIDED TO BE TRANSFERRED TO THE ACCOUNT OF M/S. AYYAPPA ROLLER F LOUR MILLS. AS PER THE ASSESSEE, JOURNAL ENTRY PASSED WAS VICE VERSA RESULTING IN A CREDIT BALANCE OF B12,32,370/- IN THE ACCOUNT OF M/S. AYYA PPA REAL ESTATE (P) LTD. IN MY OPINION, THOUGH LD. ASSESSING OFFICER V ERIFIED THE ACCOUNTS OF M/S. AYYAPPA REAL ESTATE (P) LTD, HE DID NOT VER IFY THE BOOKS OF ACCOUNTS OF M/S. AYYAPPA ROLLER FLOUR MILLS. THERE IS MUCH STRENGTH IN THE ARGUMENT OF THE LD. AUTHORISED REPRESENTATIVE T HAT THERE CAN BE NO REAL INCOME ARISING FROM A WRONG JOURNAL ENTRY. IN MY OPINION, THE LD. ASSESSING OFFICER SHOULD HAVE CONSIDERED THE A GGREGATE BALANCE IN ASSESSEES NAME IN THE BOOKS OF BOTH M/S. AYYAPPA R EAL ESTATE (P) LTD ITA NO.3259/MDS/2016. :- 5 -: AND M/S. AYYAPPA ROLLER FLOUR MILLS AND THEREAFTER COMPARED IT WITH THE BALANCE IN THE NAME OF THESE CONCERNS IN THE BO OKS OF THE ASSESSEE. I AM OF THE OPINION THAT WHETHER JOURNA L ENTRY PASSED BY THE ASSESSEE WAS WRONG AND WHETHER BALANCE IN ASSES SEES NAME IN THE TWO CONCERNS NAMELY M/S. AYYAPPA REAL ESTATE (P ) LTD AND M/S. AYYAPPA ROLLER FLOUR MILLS TALLIED WITH THE BALANC E SHOWN IN THE NAME OF THE CONCERNS, IN THE BOOKS OF THE ASSESSEE, AT LEAST IN THE AGGREGATE, REQUIRES A REVISIT BY THE LD. ASSESSING OFFICER. I THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R EMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERAT ION AFRESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 4TH DAY OF J ANUARY, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 4TH JANUARY, 2018 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF