ITO, Tiruppur V. M.Jaganathan, Tiruppur

ITA 394/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9083 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 02-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH J
• Assessee Lawyers: N V BALAJI
• Keywords: Unexplained cash credit; Source of fund; Deemed to accrue or arise in india; Onus to prove; Reason to believe
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.394/MDS./2016 / ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER, WARD -1(1), ADAMS PLAZA, NO.121,SIXTY FEET ROAD, TIRUPUR 641 602. VS. SHRI M.JAGANATHAN , 10-C,SARADHA COMPLEX, DEVANGAPURAM STREET, TIRUPUR 641 602. [PAN ACRPJ 2041 H ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.A.V.SREEKANTH, JCIT,DR /RESPONDENT BY : MR.N.V.BALAJI,ADVOCATE / DATE OF HEARING : 02 - 06 - 201 6 / DATE OF PRONOUNCEMENT : 17 - 06 - 2016 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, COIMBATORE) DATED 19/11/2015 PERTAINING TO ASSESSMENT YEAR 2011-12. ITA NO. 394/MDS./2016 :- 2 -: 2. THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS W ITH REGARD TO DELETION OF ADDITION BY THE CIT(A) MADE BY THE AO U /S.68 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED THE RETURN OF INCOME ON 22.09.2011 ADMITTING A TOTAL INCOME OF ` 17,87,700 AND THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 31.03.2014. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A O FOUND THAT THE ASSESSEE HAS NOT FURNISHED ADDRESS OF THE PARTIES A ND SOURCES FOR CASH GIVEN BY THE PARTIES IN SUPPORT OF THE CLAIM OF CAS H RECEIPTS OF ` 53,03,670/- AS CLAIMED IN THE CASH BOOK OF JS ESTAT ES AND PROPERTY. HENCE, THE LD. ASSESSING OFFICER MADE ADDITION OF ` 53,03,670/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT PLACING R ELIANCE IN THE JUDGEMENT OF SUPREME COURT IN THE CASE OF SUMATI DA YAL VS. CIT REPORTED IN 214 ITR 801. THE APEX COURT HAS RULED THAT THE BURDEN OF PROOF LAY ON THE ASSESSEE TO EXPLAIN THE CASH CREDI TS AS NOT BEING INCOME OF ASSESSEE. IF ONUS IS NOT DISCHARGED THEN SUCH CASH CREDITS COULD BE ASSESSED AS DEEMED INCOME OF ASSESSEE U/S. 68 OF THE ACT. THEREFORE, IN THE ABSENCE OF PROOF, THE CASH CREDIT S OF ` 53,03,670/- CLAIMED TO HAVE RECEIVED FROM VARIOUS PARTIES IS NO T ACCEPTED AND TREATED AS ASSESSEES UNEXPLAINED INCOME. AGGRIEVE D THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ITA NO. 394/MDS./2016 :- 3 -: 4. ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE ADDI TION HAS BEEN MADE ON THE GROUND THAT THE CREDIT OF ` 53,03,670/- IS THE CASH RECEIPTS RECEIVED FROM VARIOUS PERSONS ON VARIOUS D ATES AS PER ANNEXURE TO THE ASSESSMENT ORDER AND NOT PROVED WIT H EVIDENCE. FURTHER, CIT(A) OBSERVED THAT THE ASSESSEE HAD ENTE RED INTO A JOINT VENTURE PROGRAMME FOR CONSTRUCTION OF COMMERCIAL CO MPLEX IN COIMBATORE. THE AMOUNTS WERE ADVANCES GIVEN TO VARI OUS PARTIES GIVEN DURING THE F.Y 2009-10. AS THE CONSTRUCTION D ID NOT TAKE OFF, THE AMOUNTS WERE RECEIVED BACK DURING THE FINANCIAL YEA R 2010-11 AND THE DETAILS WERE FURNISHED AS PART OF BALANCE SHEET FOR FINANCIAL YEAR 2009- 10 BEFORE THE AO. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE CONTENDS THAT CONFIRMATION LETTERS WERE PRODUCED BE FORE THE AO. LCITS OBSERVED THAT THE ASSESSEES CLAIM IS THAT THE AMOU NT OF ` 53,03,670/- IS THE AMOUNT ADVANCED BY HIM DURING FINANCIAL YEAR 2009-10 AND RECEIVED BACK IN THE FINANCIAL YEAR 2010-11. IF TH ERE IS A REASON TO BELIEVE THAT THE AMOUNT IS NOT GENUINE, THE CORRECT COURSE WOULD HAVE BEEN TO INITIATE PROCEEDINGS FOR ASSESSMENT YEAR 20 10-11 IN ASSESSEES CASE AS THE ASSESSEE CLAIMS TO HAVE ADVANCED THE MO NEY TO VARIOUS PARTIES. HERE, IT IS AVAILABILITY OR THE SOURCE OF FUNDS WITH THE ASSESSEE DURING THE FINANCIAL YEAR 2009-10 WHICH IS THE RELE VANT QUESTION. THE FACT THAT THESE ARE NOT CASH CREDITS AND THE AMOUNT S ADVANCED EARLIER HAS NOT BEEN REBUTTED IN THE ASSESSMENT ORDER. SINC E IDENTITY AND ITA NO. 394/MDS./2016 :- 4 -: COMPLIANCE OF THE PERSONS STATED TO HAVE RECEIVED T HE ADVANCES HAVE BEEN FURNISHED, ADDITION FOR FINANCIAL YEAR 2010-11 U/S.68 OF THE ACT RELEVANT FOR ASSESSMENT YEAR 2011-12 IS NOT SUSTAIN ABLE. CIT(A) OBSERVED THAT IN FACT CLAIM IS THAT IT IS ASSESSEE S OWN FUNDS ADVANCED DURING FINANCIAL YEAR 2009-10 AND RECEIVED BACK DUR ING F.Y 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12. HENCE, THE CIT (A) DELETED THE ADDITION OF ` 53,03,670/- MADE BY THE AO U/S.68 OF THE ACT. AGGRI EVED, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD.D.R SUBMITTED THAT BEFORE THE AO, THE AS SESSEE HAS NOT PRODUCED ALL THE MATERIALS TO PROVE THAT THIS AMOUN T IS RECEIVED BY THE ASSESSEE ON REFUND OF EARLIER ORDER ADVANCES MADE B Y THE ASSESSEE. HOWEVER, THE LD.CIT(A) PLACED RELIANCE ON THE FRESH DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM AND DELETED THE ADDITION WHICH IS NOT PROPER. 6. ON THE OTHER HAND, LD.A.R SUBMITTED THAT THE AS SESSEE HAS PRODUCED ALL THE MATERIALS REQUIRED TO PROVE THE RE CEIPT OF MONEY ON REFUND OF EARLIER ORDER ADVANCES MADE BY THE ASSESS EE TO VARIOUS PARTIES IN THE FINANCIAL YEAR 2009-10 RELEVANT TO A SSESSMENT YEAR 2010- 11. TO PROVE THIS, HE HAS FILED COPIES OF TRIAL B ALANCE. IN OUR OPINION, THE FINDINGS OF THE AO AS WELL AS CIT(A) GOES CONTR ARY TO EACH OTHER. ITA NO. 394/MDS./2016 :- 5 -: SINCE THE AO HAS CATEGORICALLY RECORDED IN THE ASSE SSMENT ORDER ORDER AT PAGE -4 AS FOLLOWS:- IT IS APPARENT THAT THE ENTIRE CAPITAL IN THE TRIA L BALANCE OF M/S.JS ESTATE AND PROPERTIES ARE NOT SHOWN IN THE C ONSOLIDATED BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 & 2011-12.MOREOVER, THE ASS ESSEE HAS NOT SHOWN ANY INCOME FROM THE BUILDING CONSTRUCTION ACTIVITIES. THEREFORE,, IN THE ABSENCE OF THE DETAILS OF ADVANC ES IN THE RETURN OF INCOME OF ASSESSMENT YEAR 2010-11 AND 2011-12,T HE ASSESSEES CLAIM OF SOURCE FOR CASH RECEIPTS OUT OF PREVIOUS YEARS ADVANCE IS NOT ACCEPTED. FURTHER, THE ASSESSEE HAS NOT FURNISHED ADDRESS O F THE PARTIES AND SOURCES FOR CASH GIVEN BY THE PARTIES I N SUPPORT OF THE CLAIM OF CASH RECEIPTS OF ` 53,03,670/- AS CLAIMED IN THE CASH BOOK OF JS ESTATES AND PROPERTY. HENCE, THE ASSESSEES C LAIM OF CASH RECEIPTS FROM VARIOUS PERSONS TO THE EXTENT OF ` 53,03,670/- IS NOT ACCEPTED FOR THE REASONS RULED BY THE APEX COURT IN THE CASE OF SUMATI DAYAL VS. CIT REPORTED IN 214 ITR 801. THE APEX COURT HAS RULED THAT THE BURDEN OF PROOF LAY ON THE ASSES SEE TO EXPLAIN THE CASH CREDITS AS NOT BEING INCOME OF ASSESSEE. IF ONUS IS NOT DISCHARGED THEN SUCH CASH CREDITS COULD BE ASSESSED AS DEEMED INCOME OF ASSESSEE U/S.68 OF THE ACT. THEREFORE, IN THE ABSENCE OF PROOF, THE CASH CREDITS OF ` 53,03,670/- CLAIMED TO HAVE RECEIVED FROM VARIOUS PARTIES IS NOT ACCEPTED AND T REATED AS ASSESSEES UNEXPLAINED INCOME AND THE SAME IS ADDED TO THE TOTAL INCOME UNDER THE HEAD OTHER SOURCES. IN VIEW OF THE ABOVE CONTRADICTORY FINDINGS OF THE LOWER AUTHORITIES, WE ARE REMITTING THE ISSUE IN DISPUTE TO THE FILE OF A O FOR FRESH ITA NO. 394/MDS./2016 :- 6 -: CONSIDERATION AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2016, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 17 TH JUNE, 2016 K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF