ITO, Erode V. R.Sivalingam, Erode

ITA 347/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7830 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 28-09-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit
• Section: 133A; 147; 131; 148

Judgement Text

, ' ' , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , % & BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ( ) / APPELLANT BY : MR . SUPRIY O PAL, JCIT ,-( ) / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE ) /DATE OF HEARING : 28.09.2016 ) /DATE OF PRONOUNCEMENT : 20.12.2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION S OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME TAX - ./ I.T.A. NO. 347/MDS/2016 & C.O. NO. 46/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER, WARD 1(4), ERODE. VS. SHRI R. SIVALINGAM, 61/1B, PAVITHRA APARTMENT, KUMALAN KUTTAI, COLLECTORATE POST, ERODE - 638 011. [PAN: APAPS 0181H] (APPELLANT) (RESPONDENT/ CROSS O BJECTOR) :-2-: I.T.A. NO.347/MDS/2016 & C.O. NO. 46/MDS/2016 3, DATED 23.11.2015 IN ITA NO. 598/2014-15 FOR THE ASSESSMENT YEAR 2012-13 PASSED U/S. 143 AND 250 OF THE INCOME TAX ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LD. CIT(A) HAS IGNORED THE FACT THAT, UNDIS CLOSED INCOME WAS ADMITTED BY THE ASSESSEE ON THE BASIS OF MATERIAL/ DOCUMENT IMPOUNDED DURING THE SURVEY OPERATION AND HIS SWO RN STATEMENT. 2.2 THE LD. CIT(A) HAS IGNORED THE FACT THAT, ASSES SEE HAS NOT RETRACTED HIS STATEMENT OR IMMEDIATELY AFTER SURVEY OPERATIO N BY WAY OF ANY AFFIDAVIT, BY BRINGING FRESH FACT CONTRADICTING, E VIDENCES COLLECTED BY THE ASSESSING OFFICER DURING THE SURVEY PROCEEDING S. 2.3 THE LD. CIT(A) HAS ERRED IN RESTRICTING THE INC OME OF THE ASSESSEE AT 8% WITHOUT HAVING BASIS OF ANY LOGIC OR EVIDENCE. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS MANAGING DIRECTOR OF M/S. SIGARAM CONSTRUCTION (P) LTD., AND IS IN CI VIL CONTRACT BUSINESS. THERE WAS SURVEY OPERATIONS U/S. 133A OF THE ACT ON THE C OMPANY AND THE ASSESSEE'S BUSINESS PREMISES. IN THE COURSE OF SUR VEY CERTAIN DOCUMENTS WERE IMPOUNDED AND ALSO DIARY CONTAINING ENTRIES AG GREGATED TO RS. 1,61,50,000/-. PRIMA FACIE, ASSESSEE ACCEPTED THE TRANSACTIONS. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U /S. 148 OF THE ACT AND THE :-3-: I.T.A. NO.347/MDS/2016 & C.O. NO. 46/MDS/2016 ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 10.10.2013 DISCLOSING TOTAL INCOME OF RS. 8,57,780/ -. THE ASSESSING OFFICER HAS PROVIDED REASONS FOR RE-OPENING OF ASSESSMENT U /S. 147 OF THE ACT AND THE ASSESSEE HAS FILED THE OBJECTIONS REFERRED AT P AGE 4 AND 5 OF THE ASSESSMENT ORDER. FURTHER, THE LD. AO FOUND THE AS SESSEE HAS FILED THE RETURN OF INCOME AFTER SURVEY OPERATIONS AND THE AS SESSEE HAS NOT COME FORWARD TO COLLECT THE COPY OF IMPOUNDED DOCUMENTS AND THE STATEMENT RECORDED IN SURVEY. WHEREAS, THE ASSESSEE HAS REQU ESTED FOR STATEMENT RECORDED ON 11.12.2015. THE ASSESSING OFFICER DEAL T ELABORATELY ON THE SUBMISSIONS AND THE STATEMENT RECORDED IN SURVEY AN D ENTRIES IN DIARY IMPOUNDED IN SURVEY OPERATIONS. THE CONTENTIONS OF THE LD. AR THAT THE ASSESSEE HAS REQUESTED FOR COPY OF IMPOUNDED DOCUME NTS AND DIARY AND WERE NOT PROVIDED. WHEREAS, THE ASSESSING OFFICER ON VE RIFICATION OF THE SURVEY RECORDS IN THE ASSESSMENT PROCEEDINGS FOUND THAT TH E ASSESSEE IS NOT INTERESTED IN COMPLETION OF THE ASSESSMENT BY MAKIN G VARIOUS ALLEGATIONS AND THE LD. AO RELIED EXCLUSIVELY ON ENTRIES IN THE DIA RY AND MADE ADDITION OF RS. 1,61,50,000/- AND PASSED ORDER AND RAISED THE DEMAN D. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE THE CIT(A). IN THE APPELLANT PROCEEDINGS, THE LD. AR A RGUED THE GROUNDS AND SUBMITTED THE INFORMATION THAT THERE WAS A SURVEY O PERATION U/S. 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE AND NO TICE WAS ISSUED U/S. 148 :-4-: I.T.A. NO.347/MDS/2016 & C.O. NO. 46/MDS/2016 OF THE ACT AND RETURN OF INCOME WAS FILED BY THE AS SESSEE ON 10.10.2013 DISCLOSING TOTAL INCOME OF RS. 8,57,780/-. THE ASS ESSING OFFICER MADE ADDITION AS UNEXPLAINED CASH CREDITS AND ASSESSEE F ILED OBJECTIONS IN THE ASSESSMENT PROCEEDINGS AND FURTHER ASSESSEE WAS NOT PROVIDED WITH DOCUMENTS AND DIARY. THE LD. CIT(A) PERUSED THE ASS ESSMENT ORDER AND ARGUMENTS LEAD BY THE LD. AR IS OF THE OPINION THAT THE SUBMISSIONS ON UN- EXPLAINED CREDITS IN THE ASSESSMENT BASED ON THE IM POUNDED MATERIAL IS NOT IN ORDER AND THE COPY OF DIARY DOES NOT CONTAIN INFORM ATION IN WRITING OF ENTRIES RELATING TO THE BUSINESS OF THE ASSESSEE. THE ASSE SSEE IS A CIVIL CONTRACTOR AND THE ENTRIES AGGREGATE TO RS. 1,61,50,000/- COMP RISING CASH ENTRIES NOT REFLECTED IN THE BUSINESS OF ACCOUNTS. THE ASSESSEE FILED THE INCOME TAX RETURNS FOR EARLIER ASSESSMENT YEARS FROM 2009-10 T O 2012-13, WHERE THE ASSESSEE WAS OFFERING INCOME OF RS. 2.51 LAKHS TO R S. 8.57 LAKHS. THE LD. CIT(A) FOUND THE ADDITION BY THE LD. AO IS MORE THA N 25 TIMES OF THE TAXABLE INCOME AND THE RE-ASSESSMENT ORDER DOES NOT SPECIFY WITH ANY EVIDENCE EXCEPT THE DIARY. THE ASSESSEE BEING A CIVIL ENGIN EER AND NOT WELL VERSE WITH ACCOUNTING KNOWLEDGE AND THE SOLE EVIDENCE OF RS. 1 ,61,50,000/- CANNOT BE TREATED AS INCOME OF THE ASSESSEE IN COMPARISON WIT H THE EARLIER YEARS INCOME AS THERE IS NO AUTHENTICATED EVIDENCE OF SOURCE OF INCOME WITH THE REVENUE. THE LD. CIT(A) CONSIDERING THE NATURE OF ACTIVITY OF THE ASSESSEE AS A CIVIL CONTRACTOR, 8% OF TOTAL AMOUNT OF RS. 1,61,50,000/- IS REASONABLE TO CONSIDER AS ADDITIONAL INCOME OF THE ASSESSEE AND WORKED OUT TO RS. 12,92,000/- AND :-5-: I.T.A. NO.347/MDS/2016 & C.O. NO. 46/MDS/2016 TREATED 8% AS ADDITIONAL INCOME OVER REFUNDED INCOM E AND PARTLY ALLOWED THE APPEAL. 5. AGGRIEVED BY THE ORDER, THE REVENUE HAS FILED AN APPEAL BEFORE US, THE LD. DR ARGUED THAT THE CIT(A) ERRED IN NOT CONS IDERING THE FACTS THAT THE ASSESSEE HAS DECLARED UNDISCLOSED INCOME IN THE SUR VEY OPERATIONS BASED ON MATERIAL AND HAS NOT RETRACTED IN THE ASSESSMENT PR OCEEDINGS AND THE LD. CIT(A) ESTIMATING 8% OF INCOME ON TOTAL ASSESSMENT IS WITHOUT ANY BASIS AND LD. DR SUBTANTIATED HIS ARGUMENTS WITH COPY OF DOCU MENTS AND DIARY AND PRAYED FOR SETTING ASIDE THE ORDER OF CIT(A). CONT RA, LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND SWORN STATEMENT. THE LD. DR ARGUMENTS ARE BASED ON THE MATERIAL THAT THE CIT(A) HAS ERRED IN NOT CONSIDERING THE REAL FACTS THAT THE ASSESSEE HAS ACCEPTED IN THE SURVEY OPERATIONS TO OFFER THE DISP UTED INCOME AND WHEREAS, THE ASSESSEE HAS NOT OFFERED ADDITIONAL INCOME AND THERE ARE CONFLICTING VERSION OF THE ASSESSEE THAT HE WAS NOT PROVIDED WI TH THE COPY OF IMPOUNDED DOCUMENTS CONSIDERED BY THE LD. AO FOR ADDITION. T HE LD. AR OF THE ASSESSEE RELIED ON THE SUBMISSIONS IN THE SWORN STATEMENT, W HERE THE ASSESSEE HAS SPECIFICALLY MENTIONED ALL THE FACTS AND SHALL OFFE R ADDITIONAL INCOME BEING A CIVIL CONTRACTOR. WE PERUSED THE STATEMENT RECORDE D U/S. 131 OF THE ACT AT :-6-: I.T.A. NO.347/MDS/2016 & C.O. NO. 46/MDS/2016 PAGE 6 WITH DETAILS OF ENTRIES AND WE COUNTER CHECK THE ENTRIES WITH DIARY AND FOUND THAT ON THE SAID DATE THERE IS NO OTHER ENTRY WRITTEN EXCEPT SHOWN AS CASH AND IT IS NOT CLEAR WHETHER THIS AMOUNT PERTAI NS TO ASSESSEE OR PERTAINS TO THE COMPANY, WHERE THE ASSESSEE IS A MANAGING DI RECTOR OR IT IS RECEIPT OR EXPENDITURE. THE LD. AO TREATED THE SAME AS UNEXPL AINED MONEY RECEIVED WITHOUT ANY INDEPENDENT INVESTIGATION AND PROOF TO TAX IN THE HANDS OF THE ASSESSEE. WE ARE OF THE OPINION THAT THE LD. CIT(A ) HAS DEALT ON THE DISPUTED ISSUE OF RS. 1,61,50,000/- AND COMPARED THE INCOME OF CURRENT YEAR WITH INCOME AS PER RETURN OF INCOME FILED FOR THE EARLIE R ASSESSMENT YEARS 2009-10 RS. 2.15 LAKHS, 2010-11 RS. 6.25 LAKHS, 2011-12 RS. 6.54 LAKHS AND 2012- 13 RS. 8.57 LAKHS AND IS OF THE OPINION THAT ADDITI ON MADE IS MORE THAN 25 TIMES OF THE RETURNED INCOME SINCE THE ASSESSEE IS A CIVIL CONTRACTOR, LD. CIT(A) TOOK A REASONABLE VIEW OF ADDITION @ 8% OF T HE DISPUTED AMOUNT AS ADDITIONAL INCOME. THE REVENUE HAS NOT MADE INVEST IGATION OR SUPPORTED WITH ANY RECORDS EXCEPT RELY ON THE DIARY FOUND IN THE COURSE OF SURVEY WITH INADEQUATE INFORMATION. THE LD. AO HAS CONSIDERED THE AMOUNT AS UNEXPLAINED CASH CREDIT AND WHEREAS, THE LD. CIT(A) TO BALANCE THE ACTION OF THE ASSESSING OFFICER HAS ESTIMATED 8% ON RS. 1,61, 50,000/- BEING RS. 12,92,000/- AS ADDITIONAL INCOME OVER AND ABOVE THE RETURN OF INCOME. :-7-: I.T.A. NO.347/MDS/2016 & C.O. NO. 46/MDS/2016 7. CONSIDERING THE APPARENT FACTS AND MATERIAL ON R ECORD AND THE STATEMENT WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) WHO HAS DISCUSSED ELABORATELY ON THE DISPUTED ISSUE VIS -A-VIS, THE EXPLANATIONS OF THE ASSESSEE AND PARTLY ALLOWED THE APPEAL. ACCORD INGLY, WE UPHELD THE ORDER OF THE CIT(A) AND DISMISS THE REVENUE GROUND. 8. THE ASSESSEE HAS FILED C.O. NO. 46/MDS/2016, FOR THE SAID ASSESSMENT YEAR SINCE WE HAVE DISMISSED THE REVENUE APPEAL THE CO BECOME INFRUCTUOUS AND IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 20TH DAY OF DECEMB ER, 2016 AT CHENNAI. SD/ - ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 20TH DECEMBER, 2016 JPV ) ,%56 76 /COPY TO: 1. ( /APPELLANT 2. ,-( /RESPONDENT 3. 8 ( )/CIT(A) 4. 8 /CIT 5. 6 ,%% /DR 6. /GF