ACIT, Vellore V. K.Suhail Ahmed, Ambur

ITA 441/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86249 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: T VASUDEVAN
• Keywords: Unexplained investment
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI .. , ! , '#$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO.441/MDS/2014 ' % &% / ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, VELLORE. V. SHRI K. SUHAIL AHMED, PROP: M/S SUHAIL LEATHERS, NO.38, JALALPET, 3 RD STREET, AMBUR. PAN : AISPK 4081 D (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT *+!(,- / RESPONDENT BY : SHRI T. VASUDEVAN, ADVOCATE . ,/ / DATE OF HEARING : 21.01.2015 01& ,/ / DATE OF PRONOUNCEMENT : 22.01.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 28.10.2013, PASSED BY LD. COMMISSIONER OF INC OME TAX (APPEALS)-VII, CHENNAI, AND IT RELATES TO ASSESSMEN T YEAR 2010-11. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(APPEALS) IN GRANTING RELIEF IN RESPECT OF FOLLOWING ISSUES:- 2 I.T.A. NO. 441/MDS/2014 (A) ADDITION RELATING TO UNPROVED CREDITS : ` 8,74,256/- (B) ADDITION RELATING TO UNEXPLAINED INVESTMENT : ` 27,50,075/- 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE SUNDRY CREDITORS BALANCE WERE DISC LOSED AT ` 1.17 CRORES IN THE BALANCE SHEET. THE ASSESSING OFFICER ISSUED SUMMONS TO ALL THE CREDITORS. NOTICES SENT TO SOME OF THE CREDITORS WERE RETURNED UNSERVED AND SOME OF THE CREDITORS DI D NOT RESPOND. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE AMOU NT OUTSTANDING IN THE NAME OF FOLLOWING CREDITORS AS INCOME OF THE ASSESSEE:- S.NO. NAME OF THE CREDITOR AMOUNT 1. WORLD LEATHER LINKS ` 1,99,500 2. NAZLIN ENTERPRISES ` 1,53,750 3. SSV ENTERPRISES ` 3,25,000 4. A.S. LEATHERS ` 1,47,342 5. MAS LEATHERS ` 1,04,350 6. MUSARATH TRADING COMPANY ` 2,49,889 7. UNITED MANUFACTURERS ` 5,37,779 8. THABASIYA TANNING INDUSTRIES ` 4,71,101 9. NADEEM LEATHERS ` 3,75,160 10. NADEEM PRIME TANNERS ` 3,71,700 11. ZANOOR INTERNATIONAL ` 3,56,407 TOTAL ` ` ` ` 32,91,974 IT IS PERTINENT TO NOTE THAT THE ASSESSEE IN HIS RE PLY DATED 4.2.2013 ADMITTED THE ABOVE SAID AMOUNT AS HIS INCOME SINCE HE COULD NOT PERSUADE THE CREDITORS TO CONFIRM THE BALANCE OUTST ANDING. 3 I.T.A. NO. 441/MDS/2014 3. THE A.O. ALSO NOTICED THAT THE ASSESSEE HAS PURCHASED AN IMMOVABLE PROPERTY IN BANGALORE ALONG WITH HIS BROT HER. THE ASSESSEE SUBMITTED THAT THE SAID PROPERTY WAS PURCH ASED BY HIS BROTHER AND HIS NAME WAS INCLUDED IN THE DOCUMENT F OR SENTIMENTAL REASONS. SINCE THE ASSESSEES BROTHER WAS COMPUTIN G HIS INCOME UNDER SECTION 44AD OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND SINCE HE DID NOT HAVE BALANCE SHEET, THE ASSESS EE AGREED TO OFFER 50% OF THE COST OF THE PROPERTY AS HIS INCOME . ACCORDINGLY, THE ASSESSING OFFICER ASSESSED ` 27.50 LAKHS AS INCOME OF THE ASSESSEE TOWARDS UNACCOUNTED INVESTMENT. 4. THE ASSESSEE CHALLENGED BOTH THE ADDITIONS IN TH E APPEAL FILED BY THE CIT(A), EVEN THOUGH HE HAD AGREED FOR THE SAID ADDITIONS. THE LD. CIT(APPEALS) NOTICED THAT THE S UNDRY CREDITORS BALANCE TO THE EXTENT OF ` 24,17,718/- WAS OUTSTANDING EVEN ON 31.03.2008. ACCORDINGLY, HE TOOK THE VIEW THAT THE ASSESSING OFFICER WAS NOT RIGHT IN ASSESSING THE ABOVE SAID A MOUNT IN ASSESSMENT YEAR 2010-11. THE LD. CIT(APPEALS) FURT HER HELD THAT THE ASSESSEE HAS DISCHARGED HIS ONUS BY PROVIDING A LL THE DETAILS RELATING TO CREDITORS AND HENCE THE ONUS GOT SHIFTE D TO THE A.O. TO DISPROVE THE CLAIM OF THE ASSESSEE. SINCE THE A.O. FAILED TO DISCHARGE THE ONUS PLACED ON HIM, THE LD. CIT(APPEA LS) HELD THAT THE ENTIRE ADDITION OF ` 32,91,974/- CANNOT BE SUSTAINED. 4 I.T.A. NO. 441/MDS/2014 5. WITH REGARD TO THE ADDITION RELATING TO INVESTME NT MADE IN IMMOVABLE PROPERTY, THE LD. CIT(APPEALS) NOTICED TH AT THE ASSESSEES BROTHER HAD SOLD THE PROPERTY SUBSEQUENT LY ON 25.01.2012 AND HAS OFFERED THE ENTIRE AMOUNT OF SHO RT TERM CAPITAL GAIN ARISING ON THE SALE OF PROPERTY AS HIS INCOME IN HIS RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2012-13. ACCORDIN GLY, THE LD. CIT(APPEALS) HELD THAT THE ENTIRE PROPERTY BELONGED TO THE ASSESSEES BROTHER ONLY AND ACCORDINGLY DELETED THE ADDITION OF ` 27.50 LAKHS RELATING TO UNEXPLAINED INVESTMENT. 6. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAD AGREED FOR ADDITION OF BOTH THE AMOUNTS BY FILING LETTERS BEFO RE THE ASSESSING OFFICER AND HENCE HE IS NOT ENTITLED TO RETRACT FRO M THE SAME. HE SUBMITTED THAT THE LD CIT(APPEALS) DID NOT CONSIDER THE ABOVE SAID FACT. HE SUBMITTED THAT THE SUNDRY CREDITORS TO TH E EXTENT OF ` 8,74,256/- WAS NOT OLD BALANCE AND HENCE THE LD CIT (APPEALS) SHOULD HAVE CONFIRMED THE ADDITION TO THAT EXTENT. WITH REGARD TO THE ADDITION RELATING TO THE INVESTMENT MADE IN HOU SE PROPERTY, THE LD D.R SUBMITTED THAT THE ASSESSEES BROTHER HAS FA ILED TO PROVE THAT HE HAD ACTUALLY PAID THE ENTIRE CONSIDERATION. 7. ON THE CONTRARY, THE LD.COUNSEL SUBMITTED THAT T HE LD. CIT(APPEALS) HAS DELETED THE ADDITION RELATING TO S UNDRY CREDITORS TO 5 I.T.A. NO. 441/MDS/2014 THE EXTENT OF ` 24.17 LAKHS ON THE REASONING THAT THE SAID AMOUNT WAS OUTSTANDING EVEN ON 31.03.2008. HE SUBMITTED T HAT THE REVENUE HAS ACCEPTED THE RELIEF GRANTED TO THAT EXT ENT AND IT IS CONTESTING ONLY THE BALANCE AMOUNT OF ` 8,74,256/-. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAD FURNISHED A LL THE DETAILS TO THE ASSESSING OFFICER AND HE CANNOT BE FOUND FAULT WITH FOR NON- COMPLIANCE OF NOTICES ISSUED TO THE CREDITORS. HE SUBMITTED THAT THE LIABILITY TOWARDS CREDITORS DID NOT CEASE TO EXIST AS ON 31.3.2010 AND HENCE THE QUESTION OF ASSESSING THE OUTSTANDING LIA BILITY AS INCOME OF THE ASSESSEE U/S 41(1) DOES NOT ARISE. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF COCHIN BENCH OF THE TRI BUNAL RENDERED IN THE CASE OF M/S S.N. SPICES V ITO (2014) (12) TMI 7 13 ITAT COCHIN. WITH REGARD TO ADDITION RELATING TO INVEST MENT MADE IN IMMOVABLE PROPERTY, THE LD.COUNSEL PLACED RELIANCE ON THE ORDER OF THE LD. CIT(APPEALS). WITH REGARD TO THE ACCEPTAN CE GIVEN TO THE ASSESSING OFFICER, THE LD. COUNSEL SUBMITTED THAT T HE ASSESSEE WAS CONSTRAINED TO AGREE FOR THE ADDITIONS SINCE HE COU LD NOT BRING THE RELEVANT FACTS TO THE SATISFACTION OF THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, BEFORE THE LD. CIT(APPEALS), THE ASSESSEE COULD FURNISH THE RELEV ANT DETAILS AND HENCE THE LEARNED CIT(A) HAS GRANTED RELIEF. THE L D.COUNSEL SUBMITTED THAT THE ASSESSEE SHOULD NOT BE MADE TO S UFFER FOR NO 6 I.T.A. NO. 441/MDS/2014 FAULT OF HIM AND ACCORDINGLY SUBMITTED THAT THE LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING BOTH THE ADDITIONS. 8. THE FIRST ISSUE RELATES TO RELIEF GRANTED IN RES PECT OF SUNDRY CREDITORS BALANCE. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE REVENUE IS CONTESTING THE RELIEF GRAN TED TO THE EXTENT OF ` 8,74,256/-. APPARENTLY, THE SAID AMOUNT WAS NOT RE LATED TO EARLIER YEARS. FURTHER, WE NOTICE THAT THE ASSESSI NG OFFICER HAS ASSESSED THE ABOVE SAID AMOUNT ONLY FOR THE REASON THAT NOTICES ISSUED TO THE PARTIES REMAINED UN-RESPONDED. HOWEV ER, THE FACT REMAINS THAT THE LIABILITY TOWARDS THIS CREDITS CON TINUED TO EXIST AS ON 31.3.2010 AND THE SAID FACT HAS NOT BEEN CONTROVERT ED BY THE ASSESSING OFFICER. HENCE, IN OUR CONSIDERED OPINIO N VIEW, THERE IS NO QUESTION OF INVOKING PROVISIONS OF SECTION 41(1) OF THE ACT IN RESPECT OF THESE CREDITORS. THE FACT REMAINS THAT THESE CREDITORS REPRESENT TRADE CREDITORS AND THE ASSESSEE HAS ALRE ADY FURNISHED THEIR ADDRESSES. FURTHER, AS STATED EARLIER, THE A DDITION HAS BEEN MADE WITHOUT MAKING ANY FURTHER ENQUIRY. HENCE, IN OUR VIEW, THE LD. CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADDI TION OF ` 8,74,256/-. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE. 7 I.T.A. NO. 441/MDS/2014 9. THE NEXT ISSUE RELATES TO ADDITION ON ACCOUNT OF INVESTMENT MADE IN THE PURCHASE OF PROPERTY IN BANGALORE. THE LD. CIT(APPEALS), AFTER VERIFYING THE RETURN FILED BY T HE ASSESSEES BROTHER FOR THE ASSESSMENT YEAR 2012-13, HAS GIVEN A FINDING THAT THE ASSESSEES BROTHER HAS SOLD THE ABOVE SAID PROP ERTY ON 25.01.2012 AND HAS OFFERED THE ENTIRE AMOUNT AS CAP ITAL GAIN IN HIS HAND. FURTHER, WE NOTICE THAT THE ASSESSEES BROTH ER HAS ALSO SENT A LETTER TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN HE HAS ADMITTED THAT HE HAD ONL Y PURCHASED THE PROPERTY AND FURTHER STATED THAT THE ASSESSEE H AD NOT CONTRIBUTED ANY AMOUNT TOWARDS THE PURCHASE OF THE PROPERTY. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF LD CIT(APPEALS) ON THIS ISSUE ALSO AND ACCORDINGLY UPH OLD THE SAME. 10. THE LD D.R CONTENDED THAT THE ASSESSEE WAS NOT ENTITLED TO RETRACT FROM THE ADMISSION MADE DURING THE COURSE O F ASSESSMENT PROCEEDINGS. THE SAME CANNOT BE, IN OUR CONSIDERED OPINION VIEW, BE TAKEN AS GENERAL PROPOSITION OF LAW. IN THE CAS E OF ADDITION RELATING TO IMMOVABLE PROPERTY, WE HAVE NOTICED THA T THE SUBSEQUENT ACT OF ASSESSEES BROTHER IN OFFERING TH E ENTIRE AMOUNT OF CAPITAL GAINS ARISING ON SALE OF VERY SAME PROPE RTY IN HIS HANDS, IN FACT, VINDICATES THE STAND OF THE ASSESSEE THAT HE DID NOT 8 I.T.A. NO. 441/MDS/2014 CONTRIBUTE ANY AMOUNT. IN RESPECT OF SUNDRY CREDI TORS, THE DEPARTMENT HAS ACCEPTED THE RELIEF GRANTED BY LD CI T(APPEALS) TO THE EXTENT OF ` 24,17,718/-, MEANING THEREBY, THE REVENUE IS ALSO ACCEPTING THE FACT THAT THE ASSESSEE HAS AGREED FOR THE ADDITION UNDER PECULIAR CIRCUMSTANCES, THOUGH THE ADDITION W AS NOT WARRANTED. HENCE IN THE FACTS AND CIRCUMSTANCES O F THE CASE, WE ARE OF THE VIEW THAT THE ADMISSION MADE BY THE ASSE SSEE HAS LOST ITS RELEVANCE, SINCE THE IMPUGNED ADDITIONS WERE TOTALL Y AGAINST THE FACTS PREVAILING ON RECORD. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 22 ND DAY OF JANUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKASAWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 22 ND JANUARY, 2015. KRI. 9 I.T.A. NO. 441/MDS/2014 B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A)-VII, CHENNAI-34 4. . E/ /CIT-III, CHENNAI 5. FG *'/' /DR 6. GH% I /GF.