ITO, Nagapattinam V. Shri M.H.Mohamed Ayub, Nagapattinam

ITA 353/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61015 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: M NARAYANAN RETD
• Keywords: Unexplained cash credit; Unexplained investment; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.353/MDS/2011 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER WARD I 92) NAGAPATTINAM VS SHRI M.H.MOHAMED AYUB NO.3/3 MAIN ROAD, PUTTUR PORAVACHERY NAGAPATTINAM TK. [PAN: ALKPM4078R] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT/DR RESPONDENT BY : SHRI M.NARAYANAN, RETD. ADDL. CIT DATE OF HEARING : 09-04-2012 DATE OF PRONOUNCEMENT : 20-04-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSES SEE AGAINST THE ORDER OF THE LD.CIT(A), TIRUCHIRAPALLI, DATED 14.12.2010. 2. GROUND NOS.1 & 4 OF THE APPEAL ARE GENERAL IN NATUR E AND HENCE, REQUIRES NO ADJUDICATION BY US. 3. GROUND NO.2 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) DELETING ADDITION OF ` 40.14 LAKHS MADE BY THE ASSESSING I.T.A.NO.353/11 :- 2 -: OFFICER AS UNEXPLAINED CASH CREDITS IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING A SAW MILL IN THE NAME CHOLA SAW MILL. FROM THE AIR INFORMATION FROM THE CITY UNION BANK, THE ASSESSING OFFICER FOU ND THAT THE ASSESSEE HAS DEPOSITED CASH OF ` 10 LAKHS OR MORE IN THE SAVINGS BANK ACCOUNT DURING THE FINANCIAL YEAR 2006-07. THE ASS ESSING OFFICER HAD WRITTEN A LETTER TO THE CITY UNION BANK, TIRUVARUR, AND IN RESPONSE TO THE SAME, THE BANK FURNISHED THE STATEMENT OF ACCOU NT OF SHRI M.H.MOHAMED AYUB, SAVINGS BANK A/C NO.289387 FOR TH E PERIOD 1.4.2006 TO 31.3.2007. ON VERIFICATION OF THE SAME , THE ASSESSING OFFICER OBSERVED THAT THERE ARE DEPOSITS IN CASH AS WELL AS THROUGH CHEQUE TO THE TUNE OF ` 40,14,460/-. IN THE SWORN STATEMENT OF THE ASSESSEE RECORDED ON 2.12.2009, IN REPLY TO QUESTIO N NO.6, THE ASSESSEE STATED THAT THE DEPOSITS BELONG TO M/S THE ATRE CHOLA AND ARE ACCOUNTED FOR IN THE BOOKS OF M/S THEATRE CHOLA, WH ICH IS A PARTNERSHIP CONCERN. IN REPLY TO QUESTION NO.10, T HE ASSESSEE ALSO SUBMITTED THAT THE ABOVE ACCOUNT WAS OPENED IN HIS NAME FOR M/S THEATRE CHOLA AS PER POWER GIVEN BY OTHER PARTNERS FOR ADMINISTRATIVE CONVENIENCE AND THAT ACCOUNT BELONGS TO M/S THEATRE CHOLA AND FOR ITS BUSINESS PURPOSE ONLY. THE ASSESSING OFFICER FURTH ER OBSERVED THAT THE PARTIES WHO HAVE SIGNED THE GENERAL POWER OF AU THORIZATION ARE NOT I.T.A.NO.353/11 :- 3 -: PARTNERS IN THE FIRM, THEATRE CHOLA, HENCE, THE CIT Y UNION BANK ACCOUNT BELONGS TO SHRI M.H.MOHAMED AYUB ONLY. THE ASSESSING OFFICER ALSO OBSERVED THAT ASSESSEE HAS NOT PRODUC ED THE COUNTER FOILS OF BANK TRANSACTIONS AND THEREFORE, INFERRED THAT I T DOES NOT RELATE TO M/S THEATRE CHOLA. THE ASSESSING OFFICER WAS ALSO OF THE OPINION THAT THE BANK ACCOUNT SHOULD BE IN THE NAME OF THE FIRM. THE ASSESSING OFFICER ALSO OBSERVED THAT THE BOOKS OF ACCOUNT PRO DUCED ON 17.12.2009 WERE WRITTEN IN A SINGLE DAY AND EXPENSE S WERE WRITTEN IN PENCIL. THESE WERE NOT PRODUCED ON THE DATE OF SUM MON HEARING AND AFTER TWO DAYS OF HEARING THE BOOKS WERE PRODUCED. HE ALSO OBSERVED THAT THE NET COLLECTIONS SAID TO HAVE BEEN DEPOSITE D IN THE CITY UNION BANK DOES NOT TALLY WITH THE RECEIPTS SHOWN IN THE FIRM. HE ALSO OBSERVED THAT IN THE COURSE OF HEARING THE ASSESSE E SUBMITTED THAT THE DEPOSITS IN CITY UNION BANK ARE WITHDRAWALS FRO M STATE BANK OF INDIA, TIRUVARUR. HE OBSERVED THAT ENQUIRY FROM ST ATE BANK OF INDIA REVEALS THAT SHRI M.H.MOHAMED AYUD HAD AVAILED TERM LOAN OF ` 21,68,000/- IN THE NAME OF THEATRE CHOLA ON 6.2.200 6 AND THE DRAFT/PAY ORDER WAS FOR MACHINERY PURCHASE. THEREF ORE, THE ASSESSING OFFICER OBSERVED THAT THE DEPOSITS OF ` 40,14,460/- INCLUDING INTEREST OF ` 1701/- WITH CITY UNION BANK SAVINGS BANK ACCOUNT 2 89387 OF SHRI M.H.MOHAMED AYUB ARE UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. I.T.A.NO.353/11 :- 4 -: 5. IN APPEAL, THE LD.CIT(A) DELETED THE ADDITION B Y OBSERVING AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSI ONS. I FIND THAT THE DEBITS AND CREDITS IN THE BANK ACCOUN T RELATE TO THE TRANSACTIONS OF THE THEATRE RUN BY THE FIRM IN WHICH THE APPELLANT IS ONLY A PARTNER. HENCE IT IS INCOR RECT TO TREAT THE CREDITS IN THE BANK ACCOUNT TO BE UNEXPLA INED INVESTMENT OF THE APPELLANT. MOREOVER THE APPELLAN T HAS DULY EXPLAINED THE SOURCE FOR ` 20,82,104. THE BALANCE AMOUNT OF CREDIT ALSO REPRESENT THEATRE COLLECTIONS FOR A PART OF THE YEAR WHICH HAS BEEN CREDITED IN THIS BA NK TO OVERCOME ITS APPROPRIATION BY THE STATE BANK OF IND IA TOWARDS THE LOAN AVAILED FROM THAT BANK. THEREFORE , OTHER CREDITS ALSO EXPLAINED. HENCE THE ENTIRE ADDITION OF ` 40,14,460 HAS BEEN MADE MERELY ON SURMISE AND WITHO UT VERIFICATION THEREOF. HENCE THIS ADDITION IS DELET ED. 6. THE LD.CIT/DR ARGUED AND SUBMITTED THAT THE LD.CIT (A) HAS ADMITTED ADDITIONAL EVIDENCE WHILE DELETING THE ADD ITION WITHOUT ALLOWING REASONABLE OPPORTUNITY TO THE ASSESSING OF FICER FOR VERIFYING THOSE EVIDENCES. HENCE, HE SUBMITTED THAT THE MATT ER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING THOSE EVIDENCES. THE LD. A.R OF THE ASSESSEE ALSO SUBMIT TED THAT HE HAS NO OBJECTION TO THE MATTER BEING RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE EVIDENCES AND THERE AFTER DECIDING THE ISSUE AFRESH. 7. AFTER CONSIDERING THE VIAL SUBMISSIONS AND THE MATE RIALS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSING OFF ICER HAS MADE THE ADDITION OF ` 40,14,460/- TO THE INCOME OF THE ASSESSEE AS I.T.A.NO.353/11 :- 5 -: UNEXPLAINED INVESTMENT SINCE THE ASSESSEE COULD NO T FILE NECESSARY EVIDENCES TO EXPLAIN THE SOURCE OF DEPOSITS IN THE CITY UNION BANK IN THE NAME OF THE ASSESSEE SHRI M.H.MOHAMED AYUB. T HE LD.CIT(A) HAS DELETED THE ADDITION MERELY ON RELYING ON THE S UBMISSIONS MADE BY THE ASSESSEE AND WITHOUT VERIFYING THE EVIDENCES S UBMITTED BY THE ASSESSEE BY OBSERVING THAT THE DEBITS AND CREDITS I N THE BANK ACCOUNT RELATE TO THE TRANSACTION OF THE THEATRE RUN BY THE FIRM WHEREIN THE ASSESSEE WAS A PARTNER. FURTHER, THE LD.CIT(A) HA S ALSO OBSERVED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF ` 20,82,104/- AS ` 7,80,000/- IN THE BANK ACCOUNT ON 7.2.2007 BEING OU TWARD CLEARING AND ` 5 LAKHS DEPOSITED IN THE BANK ACCOUNT ON 9.2.2007 BEING OUTWARD CLEARING AND ` 8,02,104/- DEPOSITED IN THE BANK ON 9.3.2007 BEING THE FDR DEPOSIT. THE LD.CIT(A) HAS NOT VERI FIED WHETHER THESE AMOUNTS DEPOSITED IN THE BANK ARE FROM THE DISCLOSE D SOURCES OF THE ASSESSEE OR OF THE FIRM M/S THEATRE CHOLA. AS BOTH THE PARTIES HAVE AGREED BEFORE US THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE NECES SARY DOCUMENTS AND THEREAFTER RE-ADJUDICATING THE ISSUE AFRESH AS PER LAW, WE SET ASIDE THE ORDER OF THE LD.CIT(A)ON THIS ISSUE AND REMAND TH E MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO RE-ADJUDICATE THE ISSUE AFRESH AFTER NECESSARY VERIFICATION OF THE DETAILS, DOCUMENTS AN D BOOKS OF ACCOUNT BY PASSING A SPEAKING ORDER. NEEDLESS TO MENTION TH AT THE ASSESSING I.T.A.NO.353/11 :- 6 -: OFFICER SHALL GIVE PROPER OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE ALL THE E VIDENCES BEFORE THE ASSESSING OFFICER AS AND WHEN CALLED UPON TO DO SO. THUS, THE GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.3 OF THE APPEAL OF THE REVENUE IS DIRECTE D AGAINST THE ORDER OF THE LD.CIT(A) DELETING THE AD DITION OF ` 14.50 LAKHS AS UNEXPLAINED CREDIT IN THE NAME OF ASSESSE ES FATHER. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD SHOWN ` 1.50 LAKHS IN HIS CASH FLOW STATEMENT AS CONTRIBUT ION FROM HIS FATHER SHRI S.MOHAMED HUSSAIN FOR BUSINESS ESTABLIS HMENT. IN THE SWORN STATEMENT RECORDED ON 4.11.2009, THE ASSESSE E STATED THAT HIS FATHER WAS AGED 75 YEARS AND WAS STAYING WITH HIM. THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CLAIM TH AT ` 14.50 LAKHS WAS RECEIVED FROM HIS FATHER. THE ASSESSING OFFICE R, THEREFORE, TREATED ` 14.50 LAKHS AS UNEXPLAINED CREDIT AND ADDED THE SA ME TO THE INCOME OF THE ASSESSEE. 10. ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE ASSESS EE, IN THE BALANCE SHEET FILED, HAS ADMITTED ` 11 LAKHS RECEIVED FROM HIS FATHER AND THE BALANCE FROM HIS SISTERS. THE LD.C IT(A) ALSO OBSERVED THAT THE APPELLANTS FATHER HAS CONFIRMED THE CONTR IBUTION OF ` 11 LAKHS I.T.A.NO.353/11 :- 7 -: TO THE APPELLANT AND THEREFORE, DELETED THE ADDITIO N OF ` 11 LAKHS AND CONFIRMED THE BALANCE ADDITION OF ` 3.50 LAKHS. 11. THE LD. CIT/DR SUBMITTED THAT THE CONFIRMATION FIL ED BEFORE THE LD.CIT(A) WAS NOT FILED BEFORE THE ASSESSING O FFICER AND THE ASSESSING OFFICER WAS NOT ALLOWED THE OPPORTUNITY T O VERIFY THE SAME. HE FURTHER SUBMITTED THAT THE MATTER SHOULD BE REST ORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE CONFI RMATION AND DETAILS AND TO RE-ADJUDICATE THE ISSUE AFRESH. THE LD. A.R OF THE ASSESSEE HAD NO OBJECTION TO THE MATTER BEING RESTORED BACK TO T HE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND THEREAFTER R E-ADJUDICATING THE SAME. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE MAT ERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAD SHOWN ` 11.00 LAKHS AS RECEIVED FROM HIS FATHER. SINCE THE ASSE SSEE COULD NOT SUBSTANTIATE THE RECEIPT BY FILING NECESSARY EVIDEN CES IN SUPPORT OF THE SAME, THE ASSESSING OFFICER TREATED THE SAME AS UNE XPLAINED CREDIT AND ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE . ON APPEAL, THE LD.CIT(A) DELETED THE ADDITION OF ` 11 LAKHS BY OBSERVING THAT THE SAME WAS CONFIRMED BY THE ASSESSEES FATHER. WE FIND T HAT THIS EVIDENCE WAS NOT FILED BEFORE THE ASSESSING OFFICER. AS BOT H THE PARTIES BEFORE US HAVE AGREED THAT THE MATTER SHOULD BE RESTORED B ACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION OF THE ISSUE AFRESH AS PER LAW I.T.A.NO.353/11 :- 8 -: AFTER VERIFICATION OF THE CONFIRMATION/DETAILS, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THE ISSUE AND REMAND THE MATTER B ACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION OF THE ISSUE AFRESH AS PER LAW AFTER VERIFICATION. THE ASSESSING OFFICER SHALL AL LOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJU DICATING THE ISSUE AFRESH. THUS, THIS GROUND OF APPEAL IS ALSO ALLOWE D FOR STATISTICAL PURPOSES. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 -04-2012. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 20 TH APRIL, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR