KARTHIK NARYANAN KANDASAMY, CHENNAI V. ACIT, NCC-7(1), CHENNAI

ITA 3553/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3678 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 31-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M KARUNAKARAN ADOVCATE
• Keywords: Unexplained cash credit; Gift; Opportunity of being heard; Additional evidence
• Section: 143(3); 143(2); 68

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.3553/CHNY/2018 / ASSESSMENT YEAR: 2014-15 & S.P. NO. 57/CHNY/2019 [IN I.T.A. NO. 3553/CHNY/2018] SRI KARTHIK NARYANAN KANDASAMY, 10/08 Z BLOCK ANNA NAGAR, CHENNAI, CHENNAI 600 040. [PAN:AAIPK 6994 M] VS. THE ACIT, NON CORPORATE WARD 7(1), CHENNAI. ( APPELLANT ) (R ESPONDENT ) APPELLANT BY : SHRI M. KARUNAKARAN, ADOVCATE RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT / DATE OF HEARING : 05.03.2019 /DATE OF PRONOUNCEMENT : 08.03.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI DATED 31.10.2018 RELEVANT TO THE ASSESSMENT YEAR 2014-15. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IS THAT THE I.T.A.NO.3553/CHNY/2018 & S.P. NO. 57/CHNY/2019 2 LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF .1,58,51,877/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. THE ASSESSEE RAISED THIS IN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION OF .1,58,51,877/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE NOTED THAT THE ASSESSING OFFICER HAD ONLY ONCE SENT A EMAIL DATED 26/07/2016 RAISING QUERY REG. INCREASE IN CAPITAL & MISMATCH IN SALES. THE ASSESSEE HAD REPLIED BY EMAIL ON 22/09/2016 FOR THE SAME. THE ASSESSING OFFICER DID NOT THEREAFTER EITHER BY EMAIL OR BY WRITTEN COMMUNICATION ASK FOR ANY FURTHER DETAILS NOR RAISE ANY QUERY AND PROCEEDED TO PASS THE ORDER DT. 29/12/2016 WITHOUT GIVING ANY NOTICE. 4. THE ASSESSING OFFICER IS NOT CORRECT IN HOLDING THAT THE DIFFERENCE IN THE CAPITAL ACCOUNT WHEN COMPARED WITH THE CAPITAL AS ON 31/03/2012 AND 31/03/2014 OF .1,58,51,877/- WAS NOT EXPLAINED ESPECIALLY WHEN THE APPELLANT HAD RECONCILED THE INCREASE IN THE CAPITAL ACCOUNT AS OWING TO CREDIT OF THE PROFITS OF THE YEAR ENDED 31/03/2012, 31/03/2013 AND 31/03/2014 AND ALSO DUE TO CONVERSION OF LOAN ACCOUNT OF FATHER AS GIFT IN THE YEAR ENDED 31/03/2013. 7. THE APPELLANT SUBMITS THAT THE GIFT PROVIDER IS NONE ELSE THAN THE APPELLANTS OWN FATHER WHO WAS ALSO A DOCTOR AND WHO ON HIS DEATH BED HAS WRITTEN LETTER LIKE A WILL WHEREIN HE HAS FORGONE THE LOAN OF .1,19,05,255/- PROVIDED TO THE APPELLANT AND TREATED THE SAME AS GIFT WHICH WAS THE MAIN REASON FOR INCREASE IN THE CAPITAL OF THE APPELLANT AS ON 31/03/2014 WHEN COMPARED TO THE EARLIER YEARS. 9. THE APPELLANT SUBMITS THAT THE INCREASE IN THE CAPITAL ACCOUNT AS ON 31/03/2014 WAS FULLY RECONCILED BY THE APPELLANT AS STATED IN THE WRITTEN SUBMISSIONS WHICH WAS DUE TO CREDIT OF PROFIT OF THE EARLIER YEARS WHICH WERE KEPT SEPARATELY IN THE BOOKS. 10. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER HAS TAKEN THE INCOME FOR THE ASSESSMENT YEAR 2014-15 AT .16,26,848/- WHILE ARRIVING AT THE DIFFERENCE OF .1,58,51,877/- WHEN THE CORRECT INCOME OF THE YEAR WAS .26,63,268/-. THIS FACTUAL MISTAKE WAS ALSO NOT RECTIFIED BY THE FIRST APPELLATE AUTHORITY EVEN THOUGH THE SAME WAS SUPPORTED BY THE RETURN OF INCOME FILED. 11. THE APPELLANT SUBMITS THAT THERE IS NO DISCREPANCY IN THE CAPITAL ACCOUNT AS ON 31 ST MARCH, 2014 AND THE INCREASE IN THE CAPITAL ACCOUNT AS ON 31.03.2012 AND AS ON 31/03/2014 WAS FULLY EXPLAINED, RECONCILED WITH SUPPORTING DOCUMENTS AND THEREFORE THE AUTHORITIES BELOW ERRED IN MAKING AN ADDITION OF .1,58,51,877/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 12. THE APPELLANT THEREFORE PRAYS THAT THE ADDITION OF .1,58,51,877/- MADE U/S 68 MAY BE DELETED AND JUSTICE RENDERED. 3. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS A DOCTOR BY I.T.A.NO.3553/CHNY/2018 & S.P. NO. 57/CHNY/2019 3 PROFESSION. HE IS RUNNING A HOSPITAL IN THE NAME AND STYLE OF IK HOSPITALS. FOR THE ASSESSMENT YEAR 2014-15, HE FILED THE RETURN OF INCOME ON 23/03/2016 ADMITTING A TOTAL INCOME OF .25,71,430/-. THE ASSESSMENT WAS TAKEN FOR SCRUTINY, THE ASSESSING OFFICER ISSUED NOTICE U/S 143(2) ON 26/07/2016. THE REASON FOR SCRUTINY WAS TO VERIFY THE MISMATCH BETWEEN THE SALES TURNOVER AND TO VERIFY THE INCREASE IN THE CAPITAL ACCOUNT. THE ASSESSMENT WAS AGREED TO BE COMPLETED THROUGH ELECTRONIC FORM AND, THEREFORE, THE CORRESPONDENCE WAS EXCHANGED ONLY THROUGH EMAIL. IN RESPONSE TO THE NOTICE OF THE ASSESSING OFFICER U/S 143(2), THE APPELLANT SENT AN EMAIL ON 22/09/2016 STATING THAT THERE WAS NO SALES DONE BY HIM AND, THEREFORE, THE QUESTION OF EXPLAINING THE MISMATCH DOES NOT ARISE. IN RESPECT OF INCREASE IN THE CAPITAL, THE APPELLANT SUBMITTED THAT IT WAS DUE TO THE ACCUMULATION OF PROFIT AS PER PROFIT AND LOSS ACCOUNT OF THE EARLIER YEARS. THE ASSESSING OFFICER ACCEPTED THE SUBMISSION OF THE APPELLANT WITH REGARD TO MISMATCH OF THE SALES TURNOVER BUT DID NOT ACCEPT THE EXPLANATION OF THE APPELLANT WITH REGARD TO THE INCREASE IN THE CAPITAL. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 29/12/2016 U/S 143(3) DETERMINING THE TOTAL INCOME AT .1,84,23,307/-. THE DIFFERENCE BETWEEN THE INCOME RETURNED AND I.T.A.NO.3553/CHNY/2018 & S.P. NO. 57/CHNY/2019 4 ASSESSED AROSE DUE TO THE ADDITION OF .1,58,51,877/- BEING THE ALLEGED INCREASE IN THE CAPITAL. 4. AGGRIEVED, THE APPELLANT PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. THE LD. CIT(A) UPHELD THE VIEW TAKEN BY THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ACCUMULATED PROFIT AND LOSS FIGURE OF OPENING BALANCE IN RESPECT OF INCREASE IN THE CAPITAL, THE ASSESSEE SUBMITTED THAT IT WAS DUE TO ACCUMULATION OF PROFIT AS PER PROFIT AND LOSS ACCOUNT OF THE EARLIER YEARS (ON 01/04/2013 .59,74,637/-) BUT THE ASSESSING OFFICER DID NOT ACCEPT THE SAME SINCE THE ASSESSEE FAILS TO FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14. HOWEVER, IT IS NOT IN DISPUTE THAT THE ASSESSEE PAID A TAX FOR THE ASSESSMENT YEAR 2013-14. IT IS FURTHER SUBMITTED THAT THE AMOUNT OF .1,19,05,225/- WAS RECEIVED AS A GIFT FROM HIS FATHER BUT THE ASSESSING OFFICER DID NOT ACCEPT THE SAME BY SAYING THAT THE ASSESSEE FAILED TO PRODUCE GIFT DEED, IDENTITY, GENUINENESS AND I.T.A.NO.3553/CHNY/2018 & S.P. NO. 57/CHNY/2019 5 CREDITWORTHINESS OF THE DONOR. ON THIS ASPECT, IT IS THE SUBMISSIONS OF THE ASSESSEE THAT THE DONOR IS NONE OTHER THAN THE FATHER OF THE ASSESSEE THEREFORE, THE QUESTION OF PROVING OF IDENTITY DOES NOT ARISE SO FAR AS GENUINENESS IS CONCERNED, THE AMOUNT WAS RECEIVED BY THE ASSESSEE ONLY BY WAY OF CHEQUE AND THE DONOR HAD BEEN FILING THE RETURN OF INCOME REGULARLY, ALL THESE EVIDENCES WERE PLACED BEFORE THE ASSESSING OFFICER BUT HE HAS NOT CONSIDERED THE ADDITIONAL EVIDENCES PLACED BEFORE HIM. THEREFORE, THE ORDER PASSED BY THE LOWER AUTHORITIES LIABLE TO BE REVERSED. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESSEE HAS SUBMITTED ONLY PROOF OF TALLY STATEMENT WITHOUT PROVIDING VOUCHER RECEIPTS AND LEDGER IN RESPECT OF HIS CLAIM TO BELIEVE HIS CONTENTION. THEREFORE, THE ORDERS PASSED BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A) ARE TO BE CONFIRMED. IT IS AN ADMITTED FACT THAT THE ASSESSEE PLACED THE ADDITIONAL EVIDENCES BEFORE THE ASSESSING OFFICER AS PER THE DIRECTIONS OF LD. CIT(A) AT THE TIME OF REMAND PROCEEDINGS BUT THE ASSESSING OFFICER HAS NOT CONSIDERED AND HE HAS NOT EXAMINED THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BY SAYING THAT THE ASSESSEE FAILED TO SATISFY THE CONDITIONS LAID DOWN IN RULE 46A OF INCOME TAX RULES, 1962. ONCE THE LD. CIT(A) ASK FOR REMAND REPORT, IT IS THE BOUNDEN DUTY OF THE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL EVIDENCES AND SUBMIT HIS REPORT TO THE LD. CIT(A). HOWEVER, HE FAILED TO DO SO. THEREFORE, I.T.A.NO.3553/CHNY/2018 & S.P. NO. 57/CHNY/2019 6 WE ARE OF THE CONSIDERED OPINION THAT THE ACTION OF THE ASSESSING OFFICER IS NOT ON THE CORRECT LINES. HENCE, WE REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE ALL THE EVIDENCES WHICH ARE TO BE PLACED BY THE ASSESSEE AFTER GIVING SUFFICIENT OPPORTUNITY OF BEING HEARD AND DECIDE THE MATTER AFRESH. 7. SINCE WE DISPOSED OF THE MAIN APPEAL, THE STAY PETITION IN S.P. NO.57/CHNY/2019 FILED BY THE ASSESSEE REQUIRES NO ADJUDICATION AND ACCORDINGLY, THE SP FILED BY THE ASSESSEE STANDS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE STAY PETITION IS DISMISSED. ORDER PRONOUNCED ON THE 8 TH MARCH, 2019 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 08.03.2019 RS, SR. PS /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.