P RAMANATHAN, ERODE V. ITO, WARD-2(1), , ERODE

ITA 3322/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3174 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.3322/CHNY/2018 / ASSESSMENT YEAR : 2012-2013. P. RAMANATHAN, 27, SIVAM COMPLEX, THANGAM NAGRA PART -1, KATHIRAMPATTI POST, ERODE 638 107. [PAN ACJPR 7775E] VS. THE INCOME TAX OFFICER, WARD 2(1) ERODE. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. SRIDHAR DORA, JCIT. /DATE OF HEARING : 05-02-2019 /DATE OF PRONOUNCEMENT : 25-02-2019 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS DIR ECTED AGAINST AN ORDER DATED 31.10.2018 OF LD. CIT(A)-3, COIMBATO RE, IT IS AGGRIEVED ON AN ADDITION OF RS.58,00,000/- CONSIDERED AS UNA CCOUNTED CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. ITA NO.3322/CHNY/2018. :- 2 -: 2. FACTS APROPOS ARE THAT ASSESSEE AN INDIVIDUAL HAD N OT FILED ANY RETURN FOR THE IMPUGNED ASSESSMENT YEAR. LD. A O WAS HAVING INFORMATION REGARDING DEPOSITS MADE BY THE ASSESSEE IN A BANK ACCOUNT BEARING NO.10958695363 MAINTAINED BY THE A SSESSEE WITH STATE BANK OF INDIA, PALLIPALAYAM AND IN ANOTHER AC COUNT BEARING NO.20044779461 WITH ICICI BANK, ERODE. THERE WAS AN AGGREGATE CASH DEPOSIT OF RS.70,00,000/- IN THESE BANK ACC OUNTS. IN A STATEMENT RECORDED ON 04.12.2012, IT SEEMS ASSESSEE COULD EXPLAIN ONLY THE SOURCE FOR RS.12,00,000/-, OUT OF THE AGGR EGATE DEPOSITS OF RS.70,00,000/-, AND STATED THAT THE BALANCE AMOUN T COULD BE CONSIDERED AS INCOME EARNED FROM DISCLOSED SOURCES . THEREAFTER NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 (IN SHO RT THE ACT) WAS ISSUED TO THE ASSESSEEE ON 07.04.2015. ASSESSEE HA D FILED A RETURN ON 20.10.2014 ADMITTING INCOME OF RS.2,59,120/- AND AGRICULTURAL INCOME OF RS.3,00,000/-. THEREAFTER, IT SEEMS THERE WAS NO RESPONSE FROM THE ASSESSEE ON THE HEARING NOTICES ISSUED BY THE LD. AO. RELYING ON THE STATEMENT RECORDED FROM THE ASSESSEE ON 04.1 2.2012, LD. AO PROPOSED TO MAKE AN ADDITION OF RS.58,00,000/-. THI S WAS INTIMATED TO THE ASSESSEE THROUGH A LETTER DATED 21.12.2016. EVEN FOR THIS, THERE WAS NO REPLY FROM THE ASSESSEE. LD. AO, THE REAFTER COMPLETED THE ASSESSMENT MAKING AN ADDITION OF RS.58,00,000/- . ITA NO.3322/CHNY/2018. :- 3 -: 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. CIT( A). BEFORE LD. CIT(A), ASSESSEE SOUGHT TO PRODUCE ADDIT IONAL EVIDENCE FOR JUSTIFYING THE SOURCE FOR THE CASH DEPOSITS IN THE BANK ACCOUNTS. ADDITIONAL EVIDENCE WERE IN THE NATURE OF CONFIRMA TIONS FROM ONE SHRI. N. RAMASAMY, FATHER OF THE DAUGHTER -IN-LAW OF THE ASSESSEE, SMT. S. RENUGA, DAUGHTER-IN-LAW OF THE ASSESSEE, DR. P.R. SENTHIL RAJA, SON OF THE ASSESSEE AND SMT. PALANIAMMAL WIFE OF THE A SSESSEE. LD. CIT(A) SOUGHT A REMAND REPORT FROM THE LD. AO ON TH E ADDITIONAL EVIDENCE AND EXPLANATION FOR THE SOURCE GIVEN BY T HE ASSESSEE. LD. AO IN THE REMAND REPORT DATED 31.07.2018 STATED THA T ASSESSEE HAD IN HIS DEPOSITION, SPECIFICALLY ADMITTED RS.58,00,000/ - AS UNEXPLAINED INCOME. ACCORDING TO HIM, THIS WAS RECONFIRMED BY THE ASSESSEE VIDE A LETTER DATED 24.12.2012. AS PER THE LD. AO, ASSE SSEE WAS A WELL QUALIFIED PERSON WHO WORKED AS A DEPUTY DIRECTOR OF AGRICULTURE IN STATE GOVERNMENT SERVICE AND COULD NOT SAY THAT HE DID NOT UNDERSTAND THE CONSEQUENCE OF THE ADMISSION MADE IN THE DEPOSITION. ACCORDING TO HIM, CASH FLOW STATEMENTS FILED BY THE ASSESSEE FOR HIS WIFE, SON, DAUGHTER-IN-LAW AND FATHER OF DAUGHTER-I N-LAW DISCLOSED THE FOLLOWING DISCREPANCIES. 1. SMT. R. PALANIAMMAL HAD CLAIMED RECEIPT O F LOANS FROM RELATIVES AGGREGATING TO RS.15,85,000/- DURING THE PERIOD 01.07.2011 ITA NO.3322/CHNY/2018. :- 4 -: TO 15.08.2011 FROM 106 PERSONS ON DIFFERENT DATE AN D ALL THESE LOANS WERE BELOW RS.20,000/-. 2. DR. P.R. SENTHILRAJA CLAIMED RECEIPT OF LOAN F ROM FRIENDS AND RELATIVES AGGREGATING TO RS.15,67,000/- DURING 01 .07.2011 TO 15.08.2011 FROM 110 PERSONS AND RETURN OF LOAN OF R S.6,76,000/- TO 45 PERSONS DURING THE PERIOD 01.05.2011 TO 15.06. 2011 ON DIFFERENT DATES AND ALL THE LOANS WERE BELOW RS.20,000/-. 3. DR. S. RENUGA CLAIMED RECEIPT OF LOAN FR OM RELATIVES AGGREGATING TO RS.11,90,000/- DURING THE PERIOD 01. 07.2011 TO 15.08.2011 FROM 81 PERSONS ON DIFFERENT DATES AND ALL THE LOANS WERE BELOW RS.20, 000/- . AS PER THE LD. AO ALL THESE PERSONS CLAIMED THE AM OUNTS TO HAVE BEEN GIVEN TO THE ASSSESSEE FOR PAYING BACK THEIR HOUSI NG LOAN BUT THERE WAS NO EVIDENCE FILED. ACCORDING TO THE LD. AO AD DITIONAL EVIDENCE FILED BY THE ASSESSEE WERE COOKED UP AND COULD NO T BE ACCEPTED. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE AN D THE REMAND REPORT OF THE LD. AO, LD. CIT(A) HELD THAT A DDITION OF RS.58,00,000/- WAS JUSTIFIED. CONCLUSIONS DRAWN BY THE LD. CIT(A) WERE AS UNDER:- ITA NO.3322/CHNY/2018. :- 5 -: I. THE RETURNS OF IN COME FOR A.Y. 2012-2013 OF SMT. S . RENUGA AND DR. P.R. SENTHIL RAJA HAD BEEN FILED ON 21.12.2013 AND 21.11.2014; WITH THE EXPRESS PURPOSE OF CREATING A PAPER TRAIL TO DEFLECT THE TAX BURDEN FROM THE APPELLANT. II. THE PUTATIVE LENDERS OF DR.5.RENUGA , DR.P.R. S ENTHIL RAJA AND SMT.PALANIAMMAL ARE SMALL TIME VILLAGERS, AGRIC ULTURISTS, ETC., THE AMOUNTS LENT HAVE REMAINED OUTSTANDING TI LL DATE THAT IS, NEARLY SEVEN YEARS FROM THE TIME THEY ARE SUPPO SED TO HAVE ADVANCED THESE SUMS. MOREOVER, THE ALLEGED LOANS AR E FREE OF INTEREST. III. THE ALLEGED LENDERS DO NOT HAVE PANS. IV. THE ALLEGED GIFT IS NOT SUPPORTED BY EVEN A SHR ED OF EVIDENCE. V. IT IS RATHER BIZARRE AND DIFFICULT TO ACCEPT THA T THE AMOUNT SUPPOSED TO HAVE BEEN GIVEN BY DR.S.RENUGA, DR.P.R. SENTHIL RAJA AND SMT.PALANIAMMAL ARE ODD FIGURES RS.24,61,6 54/-, RS. 17,05,704/- AND RS. 28,03,944/- RESPECTIVELY. IT CA NNOT BE A MERE CONFIDENCE THAT THESE SUMS EXACTLY MATCH THE R EPAYMENT OF INTEREST AND PRINCIPAL OF THE HOUSING LOAN IN TH E NAME OF SHRI.N.RAMASAMY, DR.S.RENUGA, DR.P.R.SENTHIL RAJA A ND SMT.PALANIAMMAL. VI.IT IS ALSO DIFFICULT TO ACCEPT THAT THESE PERSON S WOULD FIRST GIVE ODD AMOUNTS TO THE APPELLANT WHO WOULD THEN DE POSIT THE SAME IN HIS BANK ACCOUNT AND SUBSEQUENTLY USE THE FUNDS TO SQUARE OFF THE HOUSING LOAN. THE ALLEGED LENDERS CO ULD HAVE DEPOSITED THE AMOUNTS DIRECTLY IN THEIR RESPECTIVE BANK ACCOUNTS AND UTILIZED THE SAME TO DISCHARGE THEIR H OUSING LOAN LIABILITY. 5. NOW BEFORE US, LD. AUTHORIZED REPRESENTATIVE STR ONGLY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT SHRI. N. RAMASAMY IN ANSWER TO QUESTION NO.11, HAD CONFIRM ED PAYMENT OF RS.67,000/- IN CASH TO THE ASSESSEE. PLACING RELIA NCE ON THE SWORN ITA NO.3322/CHNY/2018. :- 6 -: STATEMENT OF SMT. S. RENUGA, DAUGHTER-IN-LAW OF THE ASSESSEE, LD. AR SUBMITTED THAT IN ANSWER TO QUESTION NO.18, SHE HAD CONFIRMED PAYING RS.24,61,564/- TO THE ASSESSEE IN CASH. REL YING ON THE STATEMENT OF ASSESSEES WIFE SMT. R. PALANIAMMAL, L D. AR SUBMITTED THAT IN ANSWER TO QUESTION NO.17, SHE HAD CONFIRME D PAYING RS.28,03,944/- TO THE ASSESSEE. AS FOR THE ASSESSEE S SON DR. P.R. SENTHIL RAJA, LD. AR SUBMITTED THAT LATTER HAD FILE D AN AFFIDAVIT CONFIRMING PAYMENT OF RS.17,05,704/- TO THE ASSES SEE, ACCORDING TO HIM, CONTENTS OF THIS AFFIDAVIT WERE NEVER FOUND T O BE WRONG. FURTHER, ACCORDING TO THE LD. AR, EACH OF THE PERSONS HAD FI LED THEIR RETURNS OF INCOME AND THE LOANS GIVEN TO THE ASSESSEE WERE CL EARLY SHOWN THEREIN. CONTENTION OF THE LD. AR WAS THAT ASSESSE E HAD USED THE MONEY FOR REPAYMENT OF INTEREST AND PRINCIPAL OF A HOUSING LOAN JOINTLY TAKEN BY SHRI. N. RAMASAMY, SMT. S. RENUGA, DR.P.R. SENTHILRAJA AND SMT. PALANIAMMAL. IN ANY CASE, ACCO RDING TO HIM, ASSESSEE WAS NOT BOUND TO PROVE THE SOURCE OF THE S OURCES. AN ADDITION, AS PER THE LD. AR, IF AT ALL MADE COULD H AVE BEEN ONLY IN THE HANDS OF THE CONCERNED CREDITORS AND NOT IN THE HAN DS OF THE ASSESSEE. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRO NGLY SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT LD. CIT(A) HAD GIVEN CLEAR REASONS FOR CONFIRMING THE ADDITION AT PARA 5.6 ITA NO.3322/CHNY/2018. :- 7 -: OF HIS ORDER. ACCORDING TO HIM, IT WAS A MAKE BELI EVE STORY GIVEN BY THE ASSESSEE AND COULD NOT BE CONSIDERED AS PROPE R SOURCE FOR CASH DEPOSITS OF RS.58,00,000/- IN ITS BANK ACCOUNTS. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUT ED THAT SHRI. N. RAMASAMY, SMT. S. RENUGA AND DR.P.R. SENTHILRAJA HA D FILED THEIR RETURNS FOR THE IMPUGNED ASSESSMENT YEAR. SHRI. N. RAMASAMY, FATHER OF DAUGHTER-IN-LAW OF THE ASSESSEE IN THE STATEMEN T RECORDED FROM HIM ON 02.05.20018, WHILE ANSWERING Q.NO.9, STATED THAT MY CONTRIBUTION TOWARDS REPAYMENT OF LOAN IS RS.67,000 /- ONLY AND TO Q. NO.10, HE ANSWERED THAT WE ARE A JOINT FAMILY AND THAT THE REMAINING THREE PERSONS HAVE PAID FOR ME TO CLOSE THE HOUSING LOAN. HE REITERATED THE SAME WHILE ANSWERING Q. NO.11 ALSO, STATING INTERALIA THAT HE HAD GIVEN RS.67,000/- TO THE APPELLANT FOR SETTLEMENT OF HOUSING LOAN. HE HAD ALSO FILED A RETURN OF INCOME FOR ASSESSMENT YEAR 2012-2013 ON 31.08.2012. AS FOR SMT. S. RENUGA , DAUGHTER-IN- LAW OF THE ASSESSEE HAD STATED AS UNDER TO QUESTION NO.18. Q. NO:18. DURING THE F.Y. 2011-12, HOW MUCH CASH G IVEN BY YOU TO SRI P. RAMANATHAN? I HAVE GIVEN AN AMOUNT OF RS.24,61,564/- BY WAY OF CASH IN R/O. REPAYMENT OF LOAN TO SBI, PALLIPALAYAM BRANCH, NAMA KKAL ON BEHALF OF ME . ITA NO.3322/CHNY/2018. :- 8 -: SHE ALSO MENTIONED IN THE VERY SAME STATEMENT THAT SHE HAD RECEIVED LOAN OF RS.11,90,000/- FROM VARIOUS PERSONS AND RS .5,00,000/- AS GIFT FROM HER MOTHER. THE LIST OF THE PERSONS FROM WHOM LOANS WERE AVAILED WERE ALSO PROVIDED. SHE HAD ALSO FILED HER RETURN OF INCOME ON 21.12.2013 AND A CASH FLOW STATEMENT WAS FILED BY H ER ALONGWITH THE RETURN. SMT. PALANIAMMAL, WIFE OF THE ASSESSEE HA D ANSWERED AS UNDER WITH REGARD TO THE AMOUNT OF RS.28,03,944/- GIVEN BY HER. Q.NO.17 DURING FY.2011-12 HOW MUCH CASH GIVEN BY YOU TO SRI.P.RAMANATHAN AND OTHERS? ANS. I HAVE GIVEN AN AMOUNT OF RS.28,03,944/- BY WAY OF CASH IN RESPECT OF OTHERS . I WILL SUBMIT THE DETAILS BEFORE 18/06/2018. O.NO.I8 PLEASE PROVIDE THE EVIDENCE FOR CASH TRANSACTION OF R S.28,03,944/-? ANS. RS.12,OO,000/- PAID OUT OF AGRICULTURAL LAND SALES. BALANCE A LIST OF BALANCE LOAN FROM FRIENDS AND RELATIVES F ROM 01/07/2011 TO 15/08/2011 FOR AN AMOUNT OFRS.15,67,0 00/- HAS BEEN SUBMITTED. Q.NO.19 CAN YOU ABLE TO FURTHER ANY EVIDENCE REGARDING THE LOAN RECEIPTS FOR RS.15,85,000/- AND CASH PAID TO SRI.P.RAMANATHAN FOR REPAYMENT OF HOUSING LOAN ON B EHALF YOU TO THE EXTENT OF RS.28,03,944/- ANS. I WILL GIVE THE EVIDENCE BEFORE 18/0612018. ITA NO.3322/CHNY/2018. :- 9 -: IN SO FAR AS DR. P.R. SENTHILRAJA, SON OF THE ASSES SEE IS CONCERNED, THE SAID PERSON HAD FILED AN AFFIDAVIT ON 16.07.2018 FO R GIVING A SUM OF RS.17,05,704/- TO THE ASSESSEE. HE HAD ALSO FILED HIS RETURN OF INCOME ON 21.10.2014 WHEREIN HE HAD DISCLOSED THE AMOUNT G IVEN TO HIS FATHER. THUS ALL THE PERSONS HAD CONFIRMED THE AMO UNTS GIVEN TO THE ASSESSEE AND ALSO STATED THAT THESE WERE FOR REPAYM ENT OF HOUSING LOAN AND INTEREST. IN OUR OPINION, THIS EXPLAINS TH E ODD FIGURE THE ASSESSEE HAD RECEIVED FROM SHRI. N. RAMASAMY, SMT. S. RENUGA, DR.P.R. SENTHILRAJA AND SMT. PALANIAMMAL. JUST BECA USE THEY FILED THEIR RESPECTIVE RETURNS SUBSEQUENT TO THE RECORD ING OF THE STATEMENT FROM THE ASSESSEEE ON 04.12.2012, WOULD N OT BE SUFFICIENT REASON FOR IGNORING THEIR CONFIRMATIONS. SHRI. N. RAMASAMY SMT. S. RENUGA, AND SMT. PALANIAMMAL HAD APPEARED BEFORE TH E LD. AO AND CONFIRMED THE FACTUM OF MONEY GIVEN TO THE ASSESSEE . AS FOR DR.P.R. SENTHILRAJA, HE HAD FILED AN AFFIDAVIT, CONTENTS OF WHICH WAS NOT FOUND TO BE INCORRECT. IT MIGHT BE TRUE THAT THE CREDIT ORS HAD IN TURN CLAIMED LARGE NUMBER OF LOANS TO HAVE BEEN TAKEN FR OM VARIOUS PERSONS WHO WERE NOT HAVING PAN. THE REVENUE IS FR EE TO PROCEED AGAINST THE CREDITORS, IF THE SOURCE FOR THE MONEY SHOWN BY THEM WAS FOUND TO BE NOT GENUINE. HOWEVER, IN OUR OPINION ASSESSEE BEFORE US HAD PRODUCED SUFFICIENT EVIDENCE FOR SUPPORTING TH E SOURCE OF THE DEPOSIT OF RS.58,00,000/- IN HIS BANK ACCOUNT. THE ADDITION WAS IN OUR ITA NO.3322/CHNY/2018. :- 10 -: OPINION WAS NOT WARRANTED AND ITS STANDS DELETED. G ROUNDS 6 & 7 ARE ALLOWED. 8. WE ALSO FIND THAT ASSESSEE HAS TAKEN GROUNDS NU MBERS 3 TO 5 ASSAILING THE ISSUE OF NOTICE U/S.148. HOWEVER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE WAS NOT PRESSING THESE G ROUNDS. ACCORDINGLY, GROUNDS 3 TO 5 OF THE ASSESSEE ARE DIS MISSED AS NOT PRESSED. GROUNDS 1 AND 2 ARE GENERAL IN NATURE NEED ING NO SPECIFIC ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 25TH DAY OF FEBR UARY, 2019, AT CHENNAI. SD/ (N.R.S. GANESAN) / JUDICIAL MEMBER SD/- (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER !' / CHENNAI #$ / DATED:25TH FEBRUARY, 2019. KV $%&& '(&)( / COPY TO: & 1 . / APPELLANT 3. & *&+, / CIT(A) 5. (-.& / / DR 2. / RESPONDENT 4. & * / CIT 6. .0&1 / GF ITA NO.3322/CHNY/2018. :- 11 -: