A.Gokulakrishnan, Chidambaram V. ITO, Cuddalore

ITA 396/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4504 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2017
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: R VENKATESH
• Keywords: Unexplained cash credit
• Section: 68; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . .. # , ' ) BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER, AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.396/MDS/2017 *+ + /ASSESSMENT YEAR: 2010-11 SHRI A.GOKULAKRISHNAN, NO.14, 4 TH CROSS, MURALIS PARK, ANNAMALAI NAGAR, CHIDAMBARAM-608 001. VS. THE INCOME TAX OFFICER, WARD-I(4), CUDDALORE [PAN: AKUPG 0580 D ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.R.VENKATESH, CA /0. 1 /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT 1 /DATE OF HEARING : 28.03.2017 1 /DATE OF PRONOUNCEMENT : 30.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 02.06.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- PUDUCHERRY, CHENNAI, IN ITA NO.514/CIT(A)-PDY/2013-14 FOR THE A Y 201011. ITA NO.396/MDS/2017 :- 2 -: 2.0 DELAY: THERE WAS A DELAY OF 163 DAYS FOR WHICH TH E ASSESSEE HAS FILED AFFIDAVIT REQUESTING FOR CONDOTIONATION OF DELAY. D URING THE APPEAL PROCEEDINGS, THE LD.AR OF THE ASSESSEE SUBMITTED TH AT DUE TO ILL-HEALTH OF THE ASSESSEE AND HIS FATHER THE APPEAL COULD NOT B E FILED WITHIN THE TIME ALLOWED. THE ASSESSEE ALSO ENCLOSED THE MEDICAL CE RTIFICATE AND MEDICAL PRESCRIPTIONS. THE LD.DR DID NOT OBJECT FOR CONDO NATION OF THE DELAY. THE ISSUE HAS BEEN HEARD AND AFTER CONSIDERING THE SUB MISSIONS MADE BY THE LD.AR THE DELAY IS CONDONED. 3.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E ADDITION OF RS.17,81,000/- AS UNEXPLAINED CASH CREDITS. THE AS SESSEE IS AN EMPLOYEE IN ANNAMALAI UNIVERSITY FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,40,550/-. DURING THE ASSESSMENT PROCEEDING S, THE AO FOUND THAT THERE WERE CASH CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE IN ICICI BANK A/C NO.61501502396 TO THE EXTENT OF RS.17,81,000/-. THE AO ISSUED NOTICES AND POSTED THE CASE FOR SEVERAL TIMES BUT T HE ASSESSEE HAS NOT EXPLAINED THE SOURCE AND NATURE OF CREDIT. THEREF ORE, THE AO MADE THE ADDITION OF RS.17,81,000/- AS UNEXPLAINED CASH CRED ITS AND COMPLETED THE ASSESSMENT. THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. T HE LD.CIT(A) CONFIRMED THE ADDITION OBSERVING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE NATURE AND SOURCE OF THE CASH CREDIT U/S 68 OF I.T.ACT. THE RELEVANT ITA NO.396/MDS/2017 :- 3 -: PART OF THE CIT(A) ORDER IS EXTRACTED AS UNDER FOR THE SAKE OF CONVENIENCE AND CLARITY: 7. DECISION AND THE REASONS: THE ASSESSEE HAS NOT RESPONDED TO VARIOUS STATUTORY NOTICES ISSUED BY THE AO. DESPITE REASONABLE OPPORTUNITIES GIVEN, THE ASSESSEE WAS NO T WILLING TO EXPLAIN THE NATURE AND SOURCE FOR THE CASH DEPOSITS MADE INTO THE BANK ACC OUNT. THE AO HAS EXAMINED THE BANK ACCOUNT OF ICICI BANK ONLY AND FOUND THE CASH DEPOS ITS. IT SEEMS THAT THE ASSESSEE WAS MAINTAINING BANK ACCOUNTS WITH OTHER BANKS LIKE KAR UR VYSYA AND INDIAN BANK. THE CHIT - AMOUNT FROM JANAPRIYA CHIT FUNDS LTD. OF RS.9,00,00 0/- WAS RECEIVED BY THE ASSESSEE BY CHEQUE. THE ASSESSEE HAD NOT FURNISHED THE DETAILS OF BANK IN WHICH THE SAID CHEQUE WAS DEPOSITED. THE AO HAS ALSO NOT CONSIDERED THE OTHER BANK ACCOUNTS MAINTAINED BY THE ASSESSEE TO SEE WHETHER ANY CASH DEPOSITS WERE MADE IN THE SAID BANK ACCOUNTS ALSO. THOUGH THE ASSESSEE CLAIMS THAT HE IS HAVING AGRICU LTURAL LANDS, NO AGRICULTURAL INCOME WAS OFFERED FOR TAX. FURTHER, IT IS SEEN FROM THE CHIT STATEMENT FURNISHED BY M/S.JAYA PRIYA CHIT FUNDS, THE SUM OF RS.9,00,000/- RECEIVED COMPRISES OF RS.6,00,000/- AS CHIT DIVIDEND AND THE BALANCE REPRESENT CHIT CONTRIBUTION OF RS.30,00 0/- P.M. THE ASSESSEE HAS NOT ADMITTED THE CHIT, DIVIDEND OF RS.6,00,000/- AS HIS INCOME A T ALL. FURTHER, IT IS ALSO NOT CLEAR AS TO WHY THE ASSESSEE SHOULD TAKE JEWEL LOANS AND MORTGA GE LOANS ONLY TO DEPOSIT INTO THE BANK ACCOUNT WHEN THERE ARE NO IMMEDIATE WITHDRAWALS OF THE LOAN AMOUNT TAKEN. AS RIGHTLY STATED BY THE AO, THE CREDITWORTHINESS OF THE MORTG AGEE WHO HAS CLAIMED TO HAVE ADVANCED THE AMOUNT WAS NOT VERIIFIED AND THE MORTG AGE DEED WAS ALSO NOT REGISTERED. THE JEWEL LOAN AVAILED DURING THE PERIOD FROM 1/4/2009 TO 31/3/2010 WAS ONLY RS.6,56,100/- WHEREAS THE REPAYMENT OF SUCH JEWEL LOAN EXCEEDS TH E LOAN AVAILED AND HENCE THE JEWEL LOAN CANNOT BE CONSIDERED AS A SOURCE FOR MAKING TH E CASH DEPOSITS INTO THE BANK ACCOUNT. THE ASSESSEE SHOULD HAVE GIVEN EXPLANATION FOR EACH AND EVERY ONE OF THE CASH DEPOSITS MADE AND EXPLAINED THE SOURCES WHICH HE FAILED TO D O. ALL THINGS CONSIDERED, IT IS CLEAR THAT THE ASSESSEE HAD NOT DISCHARGED HIS BURDEN OF PROVI NG THE NATURE AND SOURCE FOR THE CASH DEPOSITS MADE INTO THE BANK ACCOUNT AND THE AO WAS Q UITE JUSTIFIED IN MAKING THE ADDITION OF RS.17,81,000/- AS UNEXPLAINED CREDIT IN THE BANK ACCOUNT. I THEREFORE CONFIRM THE ADDITION OF RS.17,81,000/- MADE IN THE ASSESSMENT. 3.1 APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED TH AT THE ASSESSEE IS AN EMPLOYEE OF ANNAMALAI UNIVERSITY AND RECEIVING T HE SALARY AND DID NOT HAVE ANY OTHER SOURCE OF INCOME. THE LD.CIT(A) HAS MISTAKEN THAT THE ASSESSEE HAS RECEIVED THE AMOUNT OF RS.9.00 LAKHS W HICH WAS ADJUSTED REPAY THE LOAN TAKEN AGAINST THE MORTGAGE DEED. BU T THE SAME WAS NOT TAKEN AS THE SOURCE FOR THE CREDITS MADE IN THE BAN K ACCOUNT OF THE ICICI BANK. DURING THE APPEAL PROCEEDINGS, THE ASSESSEE HAS SUBMITTED EVIDENCE IN RESPECT OF THE FOLLOWING CASH LOANS TAK EN FROM THE VARIOUS PERSONS, WHICH WERE CREDITED AS CASH DEPOSITS IN TH E BANK ACCOUNTS OF ICICI: ITA NO.396/MDS/2017 :- 4 -: (I) ON 22.04.2009 CASH LOAN OF RS.10.00 LAKHS FR OM M/S.JANAPRIYA CHIT FUNDS LTD. (II) ON 03.09.2009 CASH LOAN OF RS.3.00 LAKHS FR OM M/S.JANAPRIYA CHIT FUNDS LTD. (III) RS.4.00 LAKHS TOWARDS RENT ADVANCE FROM HIS P ROPERTY (PAGE NO.21-23 OF PAPER BOOK) (IV) RS.7.00 LAKHS AS A LOAN FROM EQUITABLE MORTGAG E BY DEPOSIT OF TITLE DEEDS ON 01.06.2009 (IN PAGE NO.24-26 OF PAPE R BOOK) THE LD.AR SUBMITTED THAT THE ABOVE LOANS WERE TAKE N FROM M/S.JANAPRIYA CHIT FUNDS LTD., ADVANCE FOR RENT AGA INST LETTING OUT OF HIS PROPERTY AND EQUITABLE MORTGAGE LOANS AND THE SAME WERE CREDITED IN THE BANK ACCOUNTS ON VARIOUS DATES AND THE WITHDRAWALS MADE FROM THE BANK ACCOUNT WERE USED FOR RE-DEPOSITING THE CASH. IN A NUTSHELL THE AR EXPLAINED THAT THE SOURCE FOR THE CASH DEPOSITS IN BANK ACCOUNT WAS THE LOANS AND THE CIRCULATION OF CASH WITHDRAWALS. THE AR FURTHER SUBMITTED TAHT THE ABOVE EVIDENCES WERE FURNISHED BEFORE THE LD.CIT(A),BUT HE HAS NOT EXAMINED THE DETAILS. WITHOUT EXAMINING THE DET AILS, THE LD.CIT(A) HAS CONFIRMED THE ADDITION. THE LD.AR ARGUED THAT AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO PROVE THE GENUINENESS OF T HE CREDITS. 3.2 ON THE OTHER HAND, THE LD.DR ARGUED THAT THE AO HAS GIVEN NUMBER OF OPPORTUNITIES BUT THE ASSESSEE HAS NOT UT ILIZED OPPORTUNITIES GIVEN BY THE AO. THEREFORE, THE AO HAS COMPLETED T HE ASSESSMENT U/S.144 OF IT ACT. BEFORE THE LD.CIT(A) THE ASSESSE E HAS EXPLAINED THE SOURCES AS GOLD LOANS AND CIRCULATION OF WITHDRAWA LS FROM THE DEPOSITS AND ALSO AGRICULTURAL INCOME APART FROM THE SOURCES FROM THE FRIENDS STAYED IN ABROAD. FURTHER, THE LD.DR FURTHER SUBMI TTED THAT THE AO HAS MADE THE ADDITION IN RESPECT OF THE CREDITS MADE I N THE ICICI BANK ITA NO.396/MDS/2017 :- 5 -: ACCOUNT, WHEREAS THE ASSESSEE STATED THAT HE IS HA VING BANK ACCOUNT IN KARUR VYSYA BANK, INDIAN BANK ALSO. THOUGH THE ASS ESSEE STATED THAT THE ASSESSEE HAS RECEIVED THE RENT ADVANCE, THE SAME HA S NOT BEEN ADMITTED BY THE ASSESSEE IN THE INCOME TAX RETURNS, FOR YEA R UNDER CONSIDERATION OR FOR THE EARLIER YEARS. THE LD.DR FURTHER ARGUED THAT THE CASH LOANS ARE NOT PERMITTED AS PER SEC.269SS OF IT ACT. THEREFOR E, THE LD.DR VEHEMENTLY ARGUED THAT THE AO HAS RIGHTLY MADE THE ADDITION WHICH REQUIRED TO BE CONFIRMED. 4.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE ASSESSEE HAS FURNISHED THE EVIDENCE BEFORE US FOR TAKING THE FOLLOWING CASH LOANS: RS.10.00 LAKHS FROM JAIPRIA FINANCE ON 21.04.2009 RS.3.00 LAKHS FROM JAIPRIA FINANCE ON 03.09.2009 RS.4.00 LAKHS RENT ADVANCE FOR LET OUT OF HIS PROPE RTY RS.9.00 LAKHS CASH LOAN ON EQUITABLE MORTGAGE THE ASSESSEE ALSO EXPLAINED THAT THE ABOVE CASH LO ANS WERE USED FOR MAKING CASH DEPOSITS IN THE BANK ACCOUNT. THE LD.A R FOR QUERY FROM THE BENCH REPLIED THAT THE CASH LOANS TAKEN BY THE ASSE SSEE WERE NOT DEPOSITED IN THE BANK ACCOUNT ON THE SAME DAY AND C ANNOT BE RECONCILED ON TRANSACTION TO TRANSACTION BASIS. THE ASSESSEE SUBMITTED THAT RENTAL INCOME WAS ADMITTED BY THE ASSESSEE IN THE RETURNS OF INCOME. THEREFORE, ALL THESE ISSUES REQUIRED FURTHER VERIFICATION AT T HE LEVEL OF AO. THOUGH NON SUBMISSION OF REPLY AND NOT EXPLAINING THE SOUR CE OF DEPOSIT BEFORE THE AO IS NOT AN APPRECIABLE ACTION ON THE PART OF THE ASSESSEE MERELY ITA NO.396/MDS/2017 :- 6 -: BECAUSE THE ASSESSEE HAS TAKEN THE CASH LOANS WHIC H IS A SUBJECT MATTER OF PENALTY U/S 269SS CANNOT BE A REASON FOR MAKING THE ADDITION. IN THE INSTANT CASE THE GENUINENESS OF THE SOURCE OF THE C ASH DEPOSITS AND ITS APPLICATION OF FUNDS REQUIRED EXAMINATION BEFORE TR EATING THE DEPOSITS AS UNEXPLAINED INCOME U/S 69 OF IT ACT. THE LD.DR FUR THER ARGUED THAT THE ASSESSEE WAS HAVING OTHER BANK ACCOUNT IN KARUR VYS YA BANK AND INDIAN BANK WHICH WAS NOT BROUGHT ON RECORD BY THE ASSESSE E. CONSIDERING ALL THE FACTS AND MERITS OF THE ASSESSEE, WE SET-ASIDE THE ORDERS OF LOWER AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE O F THE AO TO EXAMINE THE ENTIRE ASSESSMENT AND RE-COMPUTE THE INCOME AFRESH IN ACCORDANCE WITH LAW. ACCORDINGLY, WE SET-ASIDE THE ASSESSMENT DE N OVO TO RE-DO THE SAME. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . ) ( DUVVURU RL REDDY )) /JUDICIAL MEMBER ( . . # ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMB ER /CHENNAI, 7 /DATED: 30 TH MAY, 2017. TLN 1 /*#8 98 /COPY TO: 1. . /APPELLANT 4. : /CIT 2. /0. /RESPONDENT 5. 8 /** /DR 3. : ( ) /CIT(A) 6. + /GF