I.Iyyappan, CHENNAI V. ITO, CHENNAI

ITA 390/CHNY/2013

• Counselvise Citation: 39021714 RSA 2013
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 07-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2013
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Opportunity of being heard
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.390 /MDS./2013 ( !' #' / ASSESSMENT YEAR :2007-08) SHRI I.IYYAPPAN , PROP.HIMALAYA BUILDERS, 13-B/33,ALAGIRI NAGAR, 2 ND STREET, VADAPALANI,CHENNAI 600 026. VS. THE INCOME TAX OFFICER, BUSINESS WARD-III(1), CHENNAI. PAN AAJPI 8230 P ( / APPELLANT ) ( / RESPONDENT ) $% & ' / APPELLANT BY : MR.G.BASKAR,ADVOCATE ()$% & ' / RESPONDENT BY : MR.MILAND MADHUKAR BHANDARI, CIT, D.R * + & ,- / DATE OF HEARING : 07.09.2015 .# & ,- /DATE OF PRONOUNCEMENT : 06.11.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-VIII, CHE NNAI DATED ITA NO.390 /MDS/2013 2 14.12..2012 IN ITA NO.134/11-12(A)-VIII PASSED UNDE R SEC.143(3) READ WITH SECTION SEC. 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED FIVE ELABORATE GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT:- I) THE LD. CIT(A) ERRED IN UPHOLDING THE BUSINESS I NCOME OF RS.22,35,580/- WORKED OUT @ 12.38% OF THE BANK DEPO SITS BY THE LD. ASSESSING OFFICER. II) THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITIO N OF RS.13,83,340/- ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE ACT IN RESPECT OF THE PROPERTY AT NO.7, 3 RD STREET, ALAGIRI NAGAR, VADAPLANI,CHENNAI. III) THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITIO N OF RS.89 LAKHS ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S.68 OF THE A CT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, ENGAGED IN BUSINESS OF CONSTRUCTION/SAL E OF FLATS AND SOLE PROPRIETOR OF THE FIRM M/S.HIMALAYA BUILDERS, FILED HIS RETURN OF INCOME ON 31.10.2007 ADMITTING TOTAL INCOME OF ` .2,34,270/-. ON THE EARLIER ITA NO.390 /MDS/2013 3 OCCASION THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.1302/MDS/2010 VIDE ORDER DATED 03.01.2011 HAD SE T ASIDE THE ORDER OF THE AUTHORITIES BELOW AND RESTORED THE MAT TER BACK TO THE FILE OF LD. ASSESSING OFFICER WITH A DIRECTION TO FRAME THE ASSESSMENT AFRESH AFTER GIVING DUE OPPORTUNITY OF BEING HEARD. THEREAFTER, THE LD. ASSESSING OFFICER FRAMED THE ASSESSMENT ORDER DATED 29.12.2011 WHICH WAS CONTESTED BY THE ASSESSEE AND THE LD. CIT (A) DISPOSED OFF THE APPEAL VIDE HIS ORDER DATED 14.12.2012 AGGR IEVED BY WHICH THE ASSESSEE IS NOW ON APPEAL BEFORE US. 4. GROUND NO.1:- ESTIMATION OF BUSINESS INCOME AT ` 22,35,580/- BEING 12.38% OF THE BANK DEPOSITS. DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, IT WA S OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAD MADE BANK DEPOSITS AMOUNTING TO ` 1,80,57,998/-. THE ASSESSEE COULD NOT SUBSTANTIATE THE INCOME EARNED FROM THESE TRANSACTI ONS BY PRODUCING THE BOOKS OF ACCOUNTS, BILLS, VOUCHERS ETC. EVEN I N THE SECOND ROUND BEFORE THE LD. ASSESSING OFFICER, THE ASSESSEE COUL D NOT PRODUCE ANY BOOKS OF ACCOUNTS, INVOICES, BILLS VOUCHERS ETC., T O SUBSTANTIATE THE ITA NO.390 /MDS/2013 4 INCOME EARNED BY THE ASSESSEE. THEREFORE, THE LD. A SSESSING OFFICER KEEPING IN VIEW OF THE ESTIMATION OF INCOME MADE BY THE LD. ASSESSING OFFICER IN HIS ORIGINAL ORDER DATED 29.12 .2009 @ 15% OF THE BANK DEPOSITS WHICH WAS SUBSEQUENTLY REDUCED TO 8% BY THE LD. CIT (A) AND THE ADMITTED GROSS PROFIT OF 12.38% BY THE ASSESSEE IN HIS RETURN OF INCOME, THE LD. ASSESSING OFFICER IN THE SECOND ROUND ADOPTED 12.38% ON THE TOTAL CASH DEPOSITS OF ` 1,80,57,988/- AND THUS ESTIMATED AN AMOUNT OF ` 22,35,580/- AS THE BUSINESS INCOME OF THE ASSESSEE. THE LD. CIT (A) CONFIRMED THE ORDER OF T HE LD. ASSESSING OFFICER AGREEING WITH THE VIEW OF THE LD. ASSESSING OFFICER. BEFORE US, THE LD. A.R. SUBMITTED THAT THE LD. ASSESSING OFFIC ER HAD ADOPTED 12.38% ON THE ENTIRE DEPOSITS MADE BY THE ASSESSEE IN HIS BANK WHICH WAS ERRONEOUS BECAUSE THERE WERE OTHER DEPOSI TS THAT DO NOT FALL IN THE REVENUE FIELD. HOWEVER, HE COULD NOT A DVANCE ANY MATERIALS OR ARGUMENTS TO JUSTIFY HIS STAND. IN TH ESE CIRCUMSTANCES, WE ARE LEFT WITH NO OTHER OPTION BUT TO CONFIRM THE ORDERS OF THE REVENUE SINCE THE ASSESSEE HAS HIMSELF HAD ADOPTED 12.38% GROSS PROFIT AS HIS BUSINESS INCOME ON THE TOTAL CASH DEP OSITS OF ITA NO.390 /MDS/2013 5 1,80,57,998/-. THEREFORE, WE HEREBY CONFIRM THE ORD ERS OF THE REVENUE ON THIS ISSUE. 5. GROUND NO.2:- ADDITION OF ` 13,83,340/- ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69 OF THE ACT ON PURCHASE OF IMMOVAB LE PROPERTY VIZ. NO.7,3 RD STREET, ALAGIRI NAGAR,VADAPLANI,CHENNAI. DURING THE COURSE OF SURVEY CONDUCTED AT THE BUSI NESS PREMISES OF THE ASSESSEE ON 27.03.2008, A COPY OF T HE AGREEMENT DATED 05.10.2006 FOR PURCHASE OF THE AFORESAID PROP ERTY WAS REVEALED WHEREIN IT WAS STATED THAT THE PURCHASE CO NSIDERATION WAS ` 50 LAKHS AND A SUM OF ` 25 LAKHS WAS PAID IN CASH. THEREFORE WHILE COMPLETING THE ORIGINAL ASSESSMENT ON 29.12.2009, T HE ENTIRE AMOUNT OF ` 50 LAKHS WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT. DURING TH E APPELLATE PROCEEDINGS BEFORE THE LD. CIT (A), THE ASSESSEE HA D PRODUCED THE COPY OF SUPPLEMENTARY AGREEMENT DATED 08.10.2006 AN D THE BANK STATEMENTS OF THE ACCOUNT MAINTAINED WITH THE CENTR AL BANK OF INDIA, NANDAMPAKKAM BRANCH, CHENNAI WHICH SHOWED THE ASSES SEE HAD WITHDRAWN ON 04.10.2006 ` 20.50 LAKHS. THE LD. CIT (A) CONSIDERING ITA NO.390 /MDS/2013 6 THE FRESH EVIDENCE ALLOWED THE APPEAL OF THE ASSESS EE AND DELETED THE ADDITION. DURING THE SECOND ROUND BEFORE THE L D. ASSESSING OFFICER THE FOLLOWING FACTS WERE CONSIDERED AND THE LD. ASSESSING OFFICER MADE AN ADDITION OF RS.13,83,340/-. (A) AS PER THE ORIGINAL AGREEMENT, A SUM OF RS.50 LAKHS WAS AGREED UPON AS SALE CONSIDERATION. RS.25 LAKHS WAS PAID IN CASH. THERE IS NO EVIDENCE FOR THE PAYMENT OF ANOTHER RS.25 LAKHS TO PROVE THAT THE TOTAL SALE CONSIDERAT ION IS RS.50 LAKHS. (B) THE ASSESSEE HAS PRODUCED EVIDENCE THAT A SUM OF RS.20,50,000/- WAS DRAWN FROM THE CENTRAL BANK OF INDIA ON 04.10.2006, ONE DAY BEFORE THE DATE OF ORIGINAL AGREEMENT, I.E. ON 05.10.2006. (C) AS PER THE AGREEMENT DATED 05.10.2006, CASH O F RS.25 LAKHS WAS PAID. THIS HAS NOT BEEN DISPUTED. (D) AS PER THE SALE DEED DATED 10.11.2006,RS.9,33,3 40/-WAS PAID IN CASH. AS PER THE SALE DEED DATED 27.11.2006, RS.9,33,340/- WAS PAID BY DEMAND DRAFT DRAWN ON CENTRAL BANK OF INDIA. (E) AS PER THE SALE DEED DATED 10.11.2011, THERE WA S NO MENTION THAT THE CASH OF RS.9,33,40/- WAS ALREADY RECEIVED (AS PER THE ORIGINAL AGREEMENT ). FROM THE ABOVE EVIDENCES, IT MAY BE SEEN THAT THE F OLLOWING PAYMENTS WERE MADE FOR THE PURCHASE OF THE PROPERTY: TOTAL SUM PAID AS ABOVE 43,66,680 LESS : SOURCES EXPLAINED: 1. WITHDRAWAL OF CASH ON 04.10.06 FROM THE CENTRAL BANK OF INDIA.... 20, 50,000 2. DD TAKEN FROM CENTRAL BANK OF INDIA 9,33,340 29,83,340 SOURCES NOT EXPLAINED 13,83,340 DATE MODE OF PAYMENT AMOUNT (RS.) 05.10.2006 (AS PER ORIGINAL AGREEMENT) CASH 25,00,000 10.112006 (CASH PAYMENT AS PER SALE DEED) CASH 9,33,340/- 27.11.2006 (AS PER SALE DEED) DEMAND DRAFT 9,33,340/- TOTAL SUM PAID AS ABOVE WHICH EVIDENCES AVAILABLE AGAINST RS.50 LAKHS AS PER THE AGREEMENT. 43,66,680/- ITA NO.390 /MDS/2013 7 FROM THE FACTS AND EVIDENCES, IT IS ASCERTAINED THA T THE ASSESSEE IS NOT ABLE TO PRODUCE EVIDENCE FOR RS.13,83,340/- AND AS SUCH, THE SAME IS ADDED T O THE TOTAL INCOME OF THE ASSESSEE U/S 69 OF THE ACT, AS UNEXPLAINED INVESTMENTS. ON APPEAL, THE LD. CIT (A) UPHELD THE ORDER OF THE LD. ASSESSING OFFICER SINCE THE ASSESSEE COULD NOT EXPLAIN THE SO URCE OF RS.13,83,340/- EVEN DURING THE APPELLATE STAGE. BE FORE US ALSO, THE LD. A.R. COULD NOT JUSTIFY THE SOURCE OF RS.13,83,3 40/- TOWARDS PURCHASE OF IMMOVABLE PROPERTY. THEREFORE, WE DO N OT HAVE ANY OTHER OPTION BUT TO CONFIRM THE ORDERS OF THE REVEN UE. ACCORDINGLY, WE HEREBY RESTRAIN FROM INTERFERING WITH THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. 6.1. GROUND NO.3 :- ADDITION OF RS.89 LAKHS ON ACC OUNT OF UNEXPLAINED CASH CREDITS U/S.68 OF THE ACT. THE LD. ASSESSING OFFICER IN THE SECOND ROUND ADD ED RS.89 LAKHS TO THE INCOME OF THE ASSESSEE BECAUSE THE AFO RE-STATED AMOUNT DISCLOSED IN THE BALANCE SHEET WAS STATED AS CREDIT ORS AND THE ASSESSEE WAS NOT IN A POSITION TO ESTABLISH THAT TH EY WERE CREDITORS. BEFORE THE LD. CIT (A) ALSO, THE ASSESSEE COULD NOT FURNISH ANY DETAILS TO SUBSTANTIATE THE GENUINESS OF THE CREDIT ORS AND SINCE IT WAS ITA NO.390 /MDS/2013 8 CASH INTRODUCED INTO THE BUSINESS OF THE ASSESSEE A ND THE SOURCE COULD NOT BE EXPLAINED, THE LD. CIT (A) CONFIRMED T HE ORDER OF THE LD. ASSESSING OFFICER. BEFORE US ALSO, THE ASSESSEE COU LD NOT BRING OUT ANY MATERIALS TO SUBSTANTIATE THE GENUINENESS OF TH E CREDITORS OF ` 89 LAKHS. HENCE WE HEREBY CONFIRM THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON 6 TH NOVEMBER, 2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 6 TH NOVEMBER, 2015. K S SUNDARAM. & (,/0 1 0#, /COPY TO: 1. $% /APPELLANT 2. ()$% /RESPONDENT 3. * 2, ( ) /CIT(A) 4. * 2, /CIT 5. 05 (,6! /DR 6. ' 7+ /GF