ITO, CHENNAI V. Sahni Management & Financial Services, CHENNAI

ITA 3421/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6458 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 20-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T MANOJ KUMAR JAIN
• Assessee Lawyers: B SAGADEVAN
• Keywords: Unexplained investment
• Section: 143(3); 148; 144

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC A BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.3421/MDS/2016 ( / ASSESSMENT YEAR: 2005-06) THE INCOME TAX OFFICER, NON-CORPORATE WARD 3(3), CHENNAI 34. VS M/S. SAHNI MANAGEMENT & FINANCIAL SERVICES, C/O, YOGANANDH & RAM, G-1, SHREE VISHNU APARTMENTS, NO.12, 12 TH CROSS STREET, DANDEESWARAM NAGAR, VELACHERY, CHENNAI 600 042. PAN: AACFS0894A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI T. MANOJ KUMAR JAIN, CA /RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 01.08.2017 ! /DATE OF PRONOUNCEMENT : 03.08.2017 / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-4, CHENNAI DATED 22.09.2016 IN ITA NO.12/2013-14/A.Y 2 005- 06/CIT(A)-4 FOR THE ASSESSMENT YEAR 2005-06 PASSED U/S.250(6) R.W.S.144, 147 & 143(3) OF THE ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS I N ITS APPEAL:- 2 ITA NO.3421/MDS/2016 THE LD. CIT(A) HAS ERRED IN APPRECIATING THE FACT THAT THE ASSESSEE DID NOT FILE COMPLETE DETAILS AT THE TIME OF ORIGINAL ASSESSMENT AND AT THE TIME OF FURNISHING REMAND REP ORT. THE LD.CLT (A) HAS ERRED IN APPRECIATING THE FACT T HE ASSESSEE HAS NOT DISCLOSED THE INVESTMENTS IN THE BALANCE SH EET FILED FOR THE RELEVANT ASSESSMENT YEAR. THE LD.CLT(A) HAS ERRED IN APPRECIATING THE FACT TH AT IN RESPECT OF M/S. CHOLA MUTUAL FUND AND RELIANCE MUTU AL FUND, THAT THE ASSESSEE HAS SHOWN THE INVESTMENTS O NLY IN THE BANK ACCOUNTS AND NOT IN THE BALANCE SHEET FILED BY IT FOR THE RELEVANT ASSESSMENT YEAR. THE LD.CLT (A) HAS ERRED IN APPRECIATING THE FACT T HAT THE ASSESSEE DID NOT EXPLAIN THE INVESTMENTS PROPERLY A T THE TIME OF ASSESSMENT AND AT THE TIME OF EXAMINATION BEFORE FU RNISHING REMAND REPORT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM ENGAGED IN THE BUSINESS OF RENDERING FINANCIAL SERV ICES. THE ASSESSEE HAD NOT FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR AND FURTHER IT WAS OBSERVED FROM TH E AIR INFORMATION THAT THE ASSESSEE HAD PURCHASED MUTUAL FUNDS TO THE EXTENT OF RS.47,63,158/-. THEREFORE, THE CASE WAS REOPENED U/S.147 / 148 OF THE ACT AND FINALLY EX-PARTE ORDER WAS PASSED U/S.143(3) & 144 OF THE ACT ON 30.03.2013, WHEREIN THE LD.AO MADE ADDITION OF RS.47,63,158/- AS THE UNEXPLAINED INVESTMENT. 3 ITA NO.3421/MDS/2016 4. ON APPEAL, THE LD.CIT(A) EXAMINED THE ISSUE IN D ETAIL AFTER OBTAINING A REMAND REPORT AND ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- I HAVE VERIFIED THE ABOVE SUBMISSIONS OF THE APPEL LANT IN THE LIGHT OF THE DOCUMENTS AND HAVE ARRIVED AT THE CONC LUSION THAT THE DISCREPANCIES POINTED OUT BY THE ASSESSING OFFI CER IN THE REMAND REPORTS HAVE RESULTED ON ACCOUNT OF IMPROPER ANALYSIS OF THE INVESTMENTS. THE INVESTMENTS MADE DURING TH E YEAR UNDER CONSIDERATION HAVE BEEN FUNDED FROM THE BANK ACCOUNT OF THE APPELLANT WHICH WERE DULY REFLECTED IN THE B ANK ACCOUNT STATEMENT. THE REMAINING INVESTMENTS HAVE EMANATED FROM SWITCH IN AND SWITCH OUT OF THE EXISTING OLD INVEST MENTS. HENCE, THE SUBMISSIONS OF THE APPELLANT WHICH ARE B ASED ON THE DOCUMENTARY EVIDENCES AND DULY SUPPORTED BY THE RELEVANT BANK ACCOUNT, ARE FOUND IN ORDER AND, HENCE, DOES N OT ATTRACT ANY ADVERSE INFERENCE. THEREFORE, IN VIEW OF THE A BOVE FACTS OF THE CASE, THE ADDITION EFFECTED BY THE AO ON ACCOUN T OF UNEXPLAINED INVESTMENT AT RS.47,63,158/- IN THE EXP ARTE ASSESSMENT U/S.144 OF THE ACT, IS DELETED. 5. BEFORE US, THE LD.DR POINTED OUT PARA 7 OF PAGE NO.3 OF CIT(A) ORDER, WHEREIN IT WAS STATED AS FOLLOWS: IN THE REMAND REPORT, IT WAS ALSO POINTED OUT THAT THE FIGURES OF INVESTMENTS AS REFLECTED BY THE ASSESSEE VIZ-A-V IZ THE INFORMATION OBTAINED FROM THE FINANCIAL INSTITUTION S, DID NOT MATCH. IT WAS OBSERVED BY THE AO THAT ONLY TWO OF THE INVESTMENTS APPEARING IN THE AIR HAVE BEEN SHOWN BY THE ASSESSEE IN ITS SCHEDULE UNDER THE INVESTMENTS. HO WEVER, IN THAT ALSO THE AMOUNTS DID NOT MATCH. AND THEREAFTER ARGUED BY STATING THAT THE INFORMATI ON RECEIVED FROM THE FINANCIAL INSTITUTION DID NOT MATCH WITH T HE INVESTMENT MADE BY THE ASSESSEE. HE THEREFORE SUBMITTED THAT T HE MATTER 4 ITA NO.3421/MDS/2016 MAY BE REMITTED BACK TO THE FILE OF LD.AO FOR DE-NO VA CONSIDERATION. 6. THE LD.AR ON THE OTHER HAND ARGUED STATING THAT HE ASSESSEE HAD FILED THE DETAILED EXPLANATION OF THE INVESTMENT MADE BY THE FIRM BEFORE THE LD.CIT(A) AND THE LD.AR AT THE TIME OF REMAND PROCEEDINGS AND FINALLY THE LD.CIT(A) AFT ER VERIFYING THE ENTIRE RECORDS, HAD ARRIVED AT THE CONCLUSION T HAT ALL THE INVESTMENTS MADE BY THE ASSESSEE ARE IN ORDER AND T HE SOURCE EXPLAINED. HE FURTHER ARGUED STATING THAT THERE WE RE SOME INVESTMENTS SWITCHED TO ANOTHER INVESTMENTS WHICH W AS EXPLAINED DURING THE COURSE OF THE REMAND PROCEEDIN GS AND THE PROCEEDINGS BEFORE THE LD.CIT(A). THE LD.AR FURTHE R SUBMITTED BEFORE US A DETAILED RECONCILIATION OF THE INVESTME NT MADE BY THE ASSESSEE FIRM DURING THE RELEVANT ASSESSMENT YEAR W HICH THE LD.DR COULD NOT SUCCESSFULLY CONFRONT. THE LD.AR WI TH THE ABOVE SUBMISSION PRAYED THAT THE ORDER OF THE LD.CIT(A) M AY BE SUSTAINED. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CAS E, IT IS APPARENT THAT THE LD.CIT(A) HAS ARRIVED AT THE CONC LUSION BASED 5 ITA NO.3421/MDS/2016 ON THE REMAND REPORT AND AFTER EXAMINING THE RECONC ILIATION STATEMENTS SUBMITTED BY THE ASSESSEE. HE HAS FURTH ER STATED IN HIS ORDER THAT THE INVESTMENT MADE DURING THE YEAR UNDER CONSIDERATION HAVE BEEN SOURCED FROM THE BANK ACCOU NT OF THE APPELLANT WHICH HAD DULY REFLECTED IN THE BANK STAT EMENT. THE LD.CIT(A) HAS ALSO VERIFIED THAT THE OTHER INVESTME NTS WHICH WERE SWITCHED FROM THE OLD INVESTMENTS. FURTHER, T HE LD.DR COULD NEITHER FIND ANY DISCREPANCY IN THE RECONCILI ATION STATEMENT SUBMITTED BEFORE US NOR COULD POINT OUT ANY INVESTM ENT AGAINST WHICH THE SOURCE WAS UNEXPLAINED. IN THIS SITUATIO N, I DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THEREFORE THE APPEAL FILED BY THE REVENUE IS DEVOID OF MERITS. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THE 03 RD AUGUST, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 03 RD AUGUST, 2017 JR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF