DCIT, CHENNAI V. D.Sridhar, CHENNAI

ITA 443/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51858 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: E SANKAR
• Assessee Lawyers: S SRIDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 443/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(3), CHENNAI 600 034. (APPELLANT) V. SHRI D. SRIDHAR, NO.2, DAMADORAN STREET, T. NAGAR, CHENNAI 600 017. PAN : APDPS6430G (RESPONDENT) APPELLANT BY : SHRI E. SANKAR, CIT- DR RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 15.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 16.11.2010 OF COMMISSIONER OF INCOME TAX (APP EALS)-V, CHENNAI, FOR THE ASSESSMENT YEAR 2006-07. I.T.A. NO. 443/MDS/11 2 2. GROUND NO. 2 IS DIRECTED AGAINST THE DELETION OF ADDITION OF RS. 22,05,576/- MADE BY THE ASSESSING OFFICER U/S 2(22)(E) OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT]. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER FOUND THAT THERE WAS AN OUTSTANDING OF RS. 22,05,576/- F ROM THE ASSESSEE TO THE COMPANY M/S RAJNI FOUNDATION PRIVATE LIMITED IN WHICH THE ASSESSEE HOLDS MORE THAN 10% OF EQUITY SHARE HOLDIN G. HENCE EH ASSESSING OFFICER ADDED RS. 22,05,576/- TO THE TOT AL INCOME OF THE ASSESSEE U/S 2(22)(E) OF THE ACT STATING THAT THERE WAS DIRECT OUTFLOW OF CASH TO THE ASSESSEE. 4. IN APPEAL, THE LD. CIT(A) OBSERVED THAT THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE WAS MANAGI NG DIRECTOR OF THE COMPANY AND IN-CHARGE OF ITS ENTIRE BUSINESS. THE MONEY ADVANCED WAS PAID TO VARIOUS LAND OWNERS WITH WHOM THE COMPANY INTENDED TO ENTER INTO CONTRACT IN FUTURE DATE. IT WAS ALSO SUBMITTED THAT THE ADVANCE IN THE NATURE OF TRADE A DVANCE AND NOT ANY PERSONAL LOAN TO THE ASSESSEE BY THE COMPANY. I.T.A. NO. 443/MDS/11 3 5. THE LD. CIT(A), CONSIDERING THE SUBMISSIONS, OBS ERVED THAT ON PERUSAL OF THE ASSESSMENT ORDER, HE FOUND THAT THE ASSESSING OFFICER ACCEPTED THE DETAILS FURNISHED BY THE ASSESSEE AND WAS SATISFIED WITH THE NATURE OF ADVANCE AS TRADE ADVANCE AND HEN CE HE DELETED THE ADDITION. 6. THE LD. D.R. VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF THE ASSESSING OFFICER. HE SUBMITTED THAT THE EVIDE NCES OF MAKING ADVANCE TO THE LAND OWNERS WITH WHOM THE COMPANY IN TENDED TO ENTER INTO CONTRACT ON FUTURE DATE WERE FILED BEFOR E THE LD. CIT(A) AND NOT BEFORE THE ASSESSING OFFICER. THUS THE ASS ESSING OFFICER DID NOT HAVE OPPORTUNITY OF VERIFYING THE SAME AND HENC E HE WAS JUSTIFIED IN MAKING THE ADDITION. 7. THE LD. A.R. SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFIC ER FOR VERIFICATION OF EVIDENCES OF PAYMENTS MADE TO THE LAND OWNERS WI TH WHOM THE I.T.A. NO. 443/MDS/11 4 COMPANY ENTERED INTO CONTRACT LATER ON FOR THE PURC HASE OF LAND AND THEN DECIDING THE ISSUE AFRESH. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL ON RECORD, WE FIND THAT IN THE INSTANT CAS E, THE ASSESSING OFFICER, BY INVOKING THE PROVISIONS OF U/S 2(22)(E) OF THE ACT HAS MADE ADDITION OF RS. 22,05,576/- AS DEEMED DIVIDE ND IN THE HANDS OF THE ASSESSEE. THE ASSESSEE, BEFORE THE LD. CIT( A), FILED EVIDENCE AND CONTENDED THAT THE AMOUNT RECEIVED FROM THE COM PANY WAS PAID TO LAND OWNERS AS ADVANCE WITH WHOM THE COMPAN Y ENTERED INTO CONTRACT FOR PURCHASE OF LAND. THEREFORE, THE ADVANCE WAS A TRADE ADVANCE. THE LD. A.R. OF THE ASSESSEE AGREED BEFORE US THAT HE HAS NO OBJECTION IF THE ISSUE IS RESTORED BACK T O THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE EVIDENCES FOR ADVANCES PAID TO LAND OWNERS FOR PURCHASE OF LAND BY THE COMPANY AND THEN ADJUDICATION OF THE ISSUE AFRESH BY THE ASSESSING O FFICER. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FO R ADJUDICATION OF THE ISSUE AFRESH AFTER VERIFICATION OF EVIDENCES FO R ADVANCES PAID TO I.T.A. NO. 443/MDS/11 5 THE LAND OWNERS BY THE ASSESSEE WITH WHOM THE COMPA NY ENTERED INTO A CONTRACT LATER ON FOR PURCHASE OF LAND AND T HEREAFTER TO ADJUDICATE THE ISSUE AFRESH AS PER LAW. HENCE, THI S GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES. 9. GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS DIR ECTED AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS. 10,96,518/- MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED C ASH CREDITS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THERE WAS AN OUTSTANDING IN THE BALANCE SHEET OF THE ASSE SSEE FROM NINE SUNDRY CREDITORS OF AN AMOUNT OF RS. 10,96,518/- A ND THE ASSESSEE COULD NOT FILE CONFIRMATION LETTERS FROM 7 PARTIES OUT OF NINE PARTIES. THEREFORE, THE ASSESSING OFFICER MADE ADD ITION OF RS. 10,96,518/- TO THE INCOME OF THE ASSESSEE. 11. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE F ILED CONFIRMATION OF THE CREDITORS AND RELYING UPON THE SAME, THE LD. CIT(A) DELETED THE ADDITION. I.T.A. NO. 443/MDS/11 6 12. THE REVENUE HAS TAKEN GROUND 3.3 IN THE APPEAL STATING THAT THERE WAS VIOLATION OF RULE 46A OF THE I.T. RULES, 1962 BY THE LD. CIT(A) BY ACCEPTING FRESH EVIDENCE SUCH AS CONFIRMA TION LETTERS/PAN OF THE CREDITORS PRODUCED BY THE ASSESSEE BEFORE HI M FOR THE FIRST TIME. 13. THE LD. D.R. VEHEMENTLY ARGUED IN SUPPORT OF TH E ORDER OF THE LD. CIT(A) AND RELIED UPON GROUND NO. 3.3 OF THE AP PEAL OF THE REVENUE. 14. THE LD. A.R. ALSO CONCEDED THAT ADDITIONAL EVID ENCE IN THE FORM OF CONFIRMATION LETTERS/PAN OF THE CREDITORS W AS PRODUCED FOR THE FIRST TIME BEFORE THE LD. CIT(A) AND SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FIL E OF THE ASSESSING OFFICER FOR ADJUDICATION OF THE ISSUE AFRESH AFTER VERIFICATION OF THE CONFIRMATION LETTERS OF THE CREDITORS 15. HENCE WE SET ASIDE THE ORDERS OF THE LOWER AU THORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR I.T.A. NO. 443/MDS/11 7 ADJUDICATION OF THE ISSUE AFRESH AFTER VERIFICATION OF CONFIRMATION LETTERS AND OTHER EVIDENCES FILED BEFORE THE LD. CI T(A) BY THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL EVIDENCES BEFORE THE ASSESSING OFFICER WHICH WERE FILED BEFORE THE L D. CIT(A) FOR THE FIRST TIME AS AND WHEN CALLED UPON BY THE ASSESSING OFFICER TO DO SO. THUS THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. 16. GROUND NO. 4 OF THE APPEAL OF THE REVENUE IS DI RECTED AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION O F RS. 1,21,770/-. 17. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ADDED RS. 1,21,770/- UNDER THE HEAD INTEREST INCOME NOT INCLUDED IN THE TOTAL INCOME AND ADDED AS ASSESSEES UNDISCLOSED I NCOME. 18. THE ASSESSING OFFICER OBSERVED IN THE ASSESSMEN T ORDER THAT ON PERUSAL OF TDS CERTIFICATES ISSUED BY THE CHENNA I CENTRAL COOPERATIVE BANK LTD IT IS FOUND THAT THE ASSESSEE HAS RECEIVED RS. 1,21,770/- AS INTEREST OTHER THAN INTEREST ON SECUR ITIES FROM THE I.T.A. NO. 443/MDS/11 8 SAID CHENNAI CENTRAL COOPERATIVE BANK LTD. ON THIS BASIS, THE ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF T HE ASSESSEE. 19. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE S UBMITTED THAT THE ADDITION WAS CONTRARY TO THE FACTS, AS BECAUSE THE SAID RECEIPT WAS TOWARDS RENT AND THE CHENNAI CENTRAL COOPERATIV E BANK LTD HAD INADVERTENTLY ISSUED TDS CERTIFICATE UNDER THE HEAD INTEREST OTHER THAN INTEREST ON SECURITIES INSTEAD OF RENT. IT WAS FURTHER EXPLAINED THAT THE RENTAL INCOME FROM THE SAID BANK WAS ALREADY DISCLOSED IN THE RETURN OF INCOME AND SUFFERED TAX. PHOTOCOPIES OF TDS CERTIFICATES ISSUED BY CHENNAI CENTRAL COOPERAT IVE BANK LTD WERE SUBMITTED SUPPORTING THE ARGUMENTS. THE LD. C IT(A), RELYING ON THESE CERTIFICATES PRODUCED BY THE ASSESSEE, DEL ETED THE ADDITION. 20. THE REVENUE IN GROUND NO. 4.2 OF THE GROUNDS OF APPEAL HAS TAKEN A GROUND THAT THE LD. CIT(A) VIOLATED RULE 46 A OF THE I.T. RULES BY NOT ALLOWING OPPORTUNITY TO THE ASSESSING OFFICER TO I.T.A. NO. 443/MDS/11 9 EXAMINE THE ACCOUNTS PRODUCED BY THE ASSESSEE BEFOR E THE LD. CIT(A) FOR THE FIRST TIME. 21. THE LD. D.R. VEHEMENTLY ARGUED IN SUPPORT OF TH E ORDER OF EH LD. CIT(A) AND RELIED UPON GROUND NO. 4.2 OF THE A PPEAL OF THE REVENUE. 22. THE LD. A.R. VERY FAIRLY CONCEDED THAT THE ADDI TIONAL EVIDENCE WERE FILED BEFORE THE LD. CIT(A) IN THE FORM OF TDS CERTIFICATES WHICH WERE NOT FILED BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION OF THE ISSUE AFRESH AFTER VERIFICATION OF THE SAME. 23. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R EMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR ADJUD ICATION AFRESH AFTER VERIFICATION OF TDS CERTIFICATES WHICH WERE FILED B EFORE THE LD. I.T.A. NO. 443/MDS/11 10 CIT(A) BY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE ALL EVIDENCES BEFORE THE ASSESSING OFFICER WHICH WERE FILED BEFOR E THE LD. CIT(A) FOR THE FIRST TIME AS AND WHEN CALLED UPON BY THE A SSESSING OFFICER TO DO SO. THUS THIS GROUND OF APPEAL OF THE REVENU E IS ALLOWED FOR STATISTICAL PURPOSES. 24. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON 23 RD SEPTEMBER, 2011. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 23 RD SEPTEMBER, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI, CHENNAI (5) D.R. (6) GUARD FILE