ITO, CHENNAI V. V.Shanmugavel, CHENNAI

ITA 473/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6516 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: V KANNAN
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 168/MDS/2011 ASSESSMENT YEAR : 2007-08 SHRI V. SHANMUGAVEL, 25, GILCHRIST AVENUE, ROSE VINE APARTMENTS, HARRINGTON ROAD, CHENNAI-600 031. V. THE INCOME TAX OFFICER, BUSINESS WARD-XV(3), CHENNAI. (PAN:BHPS7585C) A N D I.T.A. NO. 473/MDS/2011 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, V. SHRI V. SHANMUG AVEL, BUSINESS WARD-XV(3) 25, GILCHRIST AVENUE, CHENNAI. ROSE VINE APARTMENTS, HARRINGTON ROAD, CHENNAI-600 031. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI V. KANNAN DEPARTMENT BY : SHRI P.B. SEKARAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : ITA NO. 168/MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AND ITA NO. 473/MDS/20 11 IS AN APPEAL FILED BY THE I.T.A. 168 & 473/MDS/2011 2 REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEAL S)-XII, CHENNAI IN ITA NO.82/09-10 DATED 16-12-2010FOR THE ASSESSMENT YEAR 2007-08. 2. SHRI V. KANNAN, ITP REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI P.B. SEKARAN, LEARNED CIT-DR REPRESENTED ON BEHALF OF TH E REVENUE. 3. AT THE TIME OF HEARING THE LEARNED AUTHORISED RE PRESENTATIVE SUBMITTED THAT IN THE ASSESSEES APPEAL THE ISSUE WAS AGAINST THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING AN ADDITION OF ` 8,26,825/- AS INCOME FROM PROPERTY IN RESPECT OF T HE PROPERTY AT 7 TH FLOOR, LAKSHMI BHAVAN, NO. 609, MOUNT ROAD, CHENN AI WHICH HAD NOT BEEN LET OUT ON RENT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS THE SUBMISSION THAT THE SAID PROPERTY WAS RENTED OU T FOR THE LAST 35 YEARS TO THE VIGILANCE & ANTI-CORRUPTION DEPARTMENT AND DURING T HE RELEVANT ASSESSMENT YEAR THE PROPERTY WAS LYING VACANT. IT WAS THE SUBMISSI ON THAT THE ASSESSING OFFICER HAD ESTIMATED THE RENTAL INCOME FROM THE SAID PROPE RTY. IT WAS THE SUBMISSION THAT AS PER SECTION 23(1) OF THE INCOME TAX ACT, 19 61 AS THE PROPERTY WAS NOT LET OUT FOR THE WHOLE YEAR, RENT WAS LIABLE TO BE TAKE N AT NIL. 4. IN REPLY, THE LEARNED DR SUBMITTED THAT PROBABLE RENT WAS LIABLE TO BE ASSESSED EVEN THOUGH THE PROPERTY WAS NOT LET OUT D URING THE WHOLE YEAR IN VIEW OF THE PROVISIONS OF SECTION 23(1)(C) OF THE ACT. HE VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT (A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE PROVISIONS OF SECTION 23(1)(C) SHOWS THAT IF THE ACTUAL RENT RECE IVED IS LESS THAN THE SUM I.T.A. 168 & 473/MDS/2011 3 REFERRED TO IN CLAUSE (A) (I.E. THE SUM FOR WHICH T HE PROPERTY MIGHT REASONABLY BE LET FROM YEAR TO YEAR), THE SUM RECEIVED OR RECEIVA BLE BY THE OWNER WAS LIABLE TO BE TREATED AS THE ANNUAL VALUE OF THE PROPERTY. HE RE, THE PROPERTY HAS NOT BEEN LET OUT DURING THE WHOLE YEAR. CONSEQUENTLY, THE A CTUAL RENT RECEIVED OR RECEIVABLE BY THE ASSESSEE IN RESPECT OF THE SAID P ROPERTY WOULD BE NIL AND AS THE SAID ANNUAL RENT RECEIVED OR RECEIVABLE IS LOWER TH AN THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FRO M YEAR TO YEAR, THE ANNUAL VALUE OF THE PROPERTY WHICH HAS NOT BEEN LET OUT WO ULD HAVE TO BE TAKEN AT NIL. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER IS DIRECTE D TO EXCLUDE THE RENTAL INCOME ASSESSED FOR THE PROPERTY WHICH HAS NOT BEEN LET OU T. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN REGARD TO THE REVENUES APPEAL IT WAS SUBMITT ED BY THE LEARNED DR THAT THE ISSUE IN THE APPEAL WAS AGAINST THE ACTION OF T HE LEARNED CIT(A) IN DELETING THE ADDITION MADE U/S 68 OF THE ACT REPRESENTING UN EXPLAINED CREDITS. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN BANK DEPOSITS TO AN EXTENT OF ` 19,82,930/-. IT WAS THE SUBMISSION THAT AS THE ASSESSEE WAS UNABLE TO EXPLAIN THE DEPOSIT IN T HE BANK ACCOUNT, THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED CASH CREDIT S. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD VERIFIED THE ACCOUNT OF M/S. V. SHANMUGAVEL & CO. P. LTD. IN WHICH THE ASSESSEE WAS DIRECTOR, WHEREIN IT WAS SHOWN THAT THE ASSESSEE HAD WITHDRAWN ` 24 LAKHS FROM M/S. V. SHANMUGAVEL & CO. P. LTD. I T WAS THE I.T.A. 168 & 473/MDS/2011 4 SUBMISSION THAT CONSEQUENTLY THE LEARNED CIT(A) HAD DELETED THE ADDITION. IT WAS THE SUBMISSION THAT THE ACCOUNT OF M/S. V. SHANMUGA VEL & CO. P. LTD. HAD NOT BEEN PLACED BEFORE THE ASSESSING OFFICER FOR HIS VE RIFICATION. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ACCOUNTS OF M/S. V. SHANMUGAVEL & CO. P. LTD. WERE BEFORE TH E ASSESSING OFFICER. THE CASH-FLOW STATEMENT OF THE ASSESSEE WITH M/S. V. SH ANMUGAVEL & CO. P. LTD. FOR 5 YEARS AND THE COPIES OF THE INCOME TAX RETURNS AND STATEMENTS WERE ALSO FILED BEFORE THE ASSESSING OFFICER. IT WAS THE SUBMISSIO N THAT THE ASSESSING OFFICER HAD TREATED THE SAME AS UNEXPLAINED CASH CREDIT ONLY ON THE GROUND THAT THE ASSESSEE HAD NOT PRODUCED THE CASH BOOK OF M/S. V. SHANMUGAV EL & CO. P. LTD. IT WAS THE SUBMISSION THAT THE SAME EVIDENCES WERE VERIFIED BY THE LEARNED CIT(A) AND THE LEARNED CIT(A) HAD EXAMINED THE RECEIPTS AND PAYMEN T ACCOUNT OF THE ASSESSEE FOR THE PERIOD 01-04-2005 TO 31-03-2006, WHICH SHOW ED THE CASH RECEIPT FROM M/S. V. SHGANMUGAVEL & CO. P. LTD. OF ` 24 LAKHS. THE LEARNED AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO PAGE 17 OF THE PAPER BOOK FILED BY THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE ALS O PLACED BEFORE US THE COPY OF THE STATEMENT OF ACCOUNT OF THE ASSESSEE IN THE BOO KS OF M/S. V. SHANMUGAVEL & CO. P. LTD. WHICH SHOWED THE CASH DEPOSIT OF ` 24 LAKHS WITH THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR. THE LEARNED AUTHORIS ED REPRESENTATIVE FURTHER DREW OUR ATTENTION TO PAGE 32 & 33 OF THE PAPER WHI CH IS COPY OF THE RETURN OF NET I.T.A. 168 & 473/MDS/2011 5 WEALTH FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2006-07. IT WAS FAIRLY CONCEDED BY THE LEARNED AUTHORISED REPRESENTATIVE T HAT THE RETURN WAS FILED ON 30-04-2010, MUCH AFTER THE ASSESSMENT ORDER. IT WA S THE SUBMISSION THAT IN THE SAID RETURN THE ASSESSEE HAS DISCLOSED THE CASH AT ` 39,20,662/-. IT WAS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE CONFIRMED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE ASSESSING OFFICER SHOWS THAT THE ACCOUNTS OF M/S. V . SHAMUGAVEL & CO. P. LTD. WERE BEFORE THE ASSESSING OFFICER. THE ASSESSING O FFICER DOES NOT DISPUTE THE ENTRIES AS FOUND IN THE COMPANYS ACCOUNTS. ALL TH AT THE ASSESSING OFFICER SAYS IS THAT THE CASH BOOK OF THE COMPANY WAS NOT PRODUCED TO EXPLAIN THE AVAILABILITY OF CASH OF THE COMPANY AT THE POINT OF TIME WHEN MONEY WAS GIVEN TO THE ASSESSEE. FURTHER THE ASSESSING OFFICER HAS CONSIDERED THE FA CT THAT M/S. V. SHANMUGAVEL & CO. P. LTD. HAS BEEN RETURNING LOSSES YEAR AFTER YE AR SINCE 1991-92. A PERUSAL OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT THE LEAR NED CIT(A) HAS EXAMINED THE ACCOUNTS OF THE ASSESSEE AS ALSO M/S. V. SHANMUGAVE L & CO. P. LTD. THE LEARNED CIT(A) HAS CONSIDERED THE FACT THAT THE ASSESSEE HA S BEEN SHOWN AS A CREDITOR UNDER OTHER LIABILITIES OF CURRENT LIABILITIES IN T HE BALANCE SHEET OF M/S. V. SHANMUGAVEL & CO. P. LTD. ONCE THE ASSESSEE HAS BE EN SHOWN AS A CREDITOR IN THE BALANCE SHEET OF M/S. V. SHANMUGAVEL & CO. P. L TD. AND THAT HAS NOT BEEN DISTURBED, OBVIOUSLY THE SAME CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT WHEN THE MONEY IS DEPOSITED IN THE BANK ACCOUNT OF THE A SSESSEE. IN THE I.T.A. 168 & 473/MDS/2011 6 CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR A NY INTERFERENCE. IN THE CIRCUMSTANCES THE APPEAL OF THE REVENUE STANDS DISM ISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 10. THE ORDER WAS PRONOUNCED IN THE COURT ON 30/06/ 2011. SD/- SD/- (ABARAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 30 TH JUNE, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE