ITO, Dindigul V. R.Balachandran, CHENNAI

ITA 6/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4754 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2016
• Court: TRIBUNAL
• Department Lawyers: ANAND BABUNATH
• Assessee Lawyers: SHIVA SRINIVASJCIT
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Business income
• Section: 143(3); 142(1); 133A; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , ' # BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 6/MDS/2016 / ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, WARD (1), DINDIGUL. VS. SHRI. R. BALACHANDRAN, 2A, BLOCK NO.1, SECOND FLOOR, 136, SHYAMALA GARDENS, ARCOT ROAD, SALIGRAMAM, CHENNAI - 600 093. [PAN: AAZPB 4121E] ./ I.T.A. NO. 404/MDS/2016 / ASSESSMENT YEAR : 2009-10 SHRI. R. BALACHANDRAN, 2A, BLOCK NO.1, SECOND FLOOR, 136, SHYAMALA GARDENS, ARCOT ROAD, SALIGRAMAM, CHENNAI - 600 093. [PAN: AAZPB 4121E] VS. INCOME TAX OFFICER, WARD (1), DINDIGUL. ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI A NAND BABUNATH, CA )*% & / RESPONDENT BY : SHRI S HIVA SRINIVAS, JCIT & /DATE OF HEARING : 06.03.2017 & /DATE OF PRONOUNCEMENT : 26.04.2017 :-2-: I.T.A. NOS. 6 & 404/MDS/2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THESE ARE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-1, MADURAI IN ITA NO. 15/2011-12 DATED 16.10.2016. SINCE, THE ISSUES ARE COMMON, APPEALS ARE HEARD TOGETHER AND DISPOSED OFF BY COMMON ORDER . FOR THE SAKE OF CONVENIENCE, WE TAKE UP THE FACTS NARRATED IN THE A SSESSEE APPEAL ITA NO. 404/MDS/2016 AND FACTS NARRATED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2. THE CIT (A) FAILED TO APPRECIATE THAT THE APPELL ANT WAS ONLY ONE OF THE CO-OWNER OF THE PROPERTY PURCHASED AND THE CONSIDERATION PAID BY APPELLANT'S SON WAS PURELY FR OM THE CAPITAL OF HIS SON MR. B MALLIKARJUN AND SUCH SUM O F INVESTMENT WAS ALLEGEDLY ADDED TO THE APPELLANT'S I NCOME WITHOUT CONSIDERING THE EVIDENCES SUBMITTED IN SUPP ORT OF THE SAME BY WRONGLY INVOKING THE SECTION 69 OF THE INCOME TAX ACT 1961. 3. THE CIT (A) FAILED TO APPRECIATE THAT THE APPELL ANT'S SON HAD RECEIVED A GIFT OF RS. 30 LAKHS FROM, SRI P RAG HUPATHI NAIDU, THE FATHER OF THE APPELLANT (I.E. GRANDFATHE R OF B MALLIKARJUN, SON OF THE APPELLANT), WHICH IS FROM A ND OUT OF THE EARNINGS OF THE DONOR (MR. P RAGHUPATHI NAIDU) WHO OWNS A BIG AGRICULTURAL LANDS SITUATED NEAR THE CIT Y OF DINDIGUL. :-3-: I.T.A. NOS. 6 & 404/MDS/2016 4. THE CIT (A) FAILED TO APPRECIATE THAT THE INVEST MENT BY THE APPELLANT'S SON IS DIFFERENT & INDEPENDENT FROM THE APPELLANT'S INVESTMENT AND CANNOT BE EQUATED AND AD DED TO THE APPELLANT'S INCOME AS UNDISCLOSED INVESTMENT. 5. WITHOUT PREJUDICE TO THE ABOVE, THE CIT (A) FAIL ED TO APPRECIATE THAT THE APPELLANT HAD THE REQUIRED SOUR CE TO PAY FOR THE PROPERTY AND TO ACQUIRE IT. 6. WITHOUT PREJUDICE TO THE ABOVE, THE CIT (A) FAIL ED TO APPRECIATE THAT THERE WAS NO UNEXPLAINED INVESTMENT BY THE APPELLANT AND MAKING ADDITION OF RS. 30 LAKHS AS HI S INCOME IS UNLAWFUL AND NOT TENABLE IN THE PROVISION S OF INCOME-TAX ACT, 1961. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL HAVING INCOME FROM BUSINESS ON EXECUTION OF CONSTRUCTION C ONTRACTS OF CIVIL STRUCTURES AND INFRASTRUCTURE DEVELOPMENT IN THE AREAS OF DIND IGUL AND ASSESSEE IS ALSO A PARTNER WITH DIAMOND BLUE METAL WORKS. THERE WAS S URVEY OPERATIONS U/S. 133A OF THE ACT AT THE BUSINESS PREMISES ON 09.01.2 009. AT THE TIME OF SURVEY, THE LD. AR OFFERED TO DISCLOSE RS. 2.08 CRO RES AS INCOME WITH THE DEPARTMENT. THE ASSESSEE FILED RETURN OF INCOME FO R THE ASSESSMENT YEAR 2009-10 ON 21.03.2010 WITH TOTAL INCOME OF RS. 17,2 4,765/- AND RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSE QUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOTICE, LD. AR APPEARED FROM TIME TO TIME. THE ASSESSING OFFICER ISSUED NOTICE U/S. 142(1) OF THE ACT CALLIN G FOR VARIOUS DETAILS. THE LD. AO FOUND THAT THE ASSESSEE HAS MADE INVESTMENTS IN THE PROPERTY AT CHENNAI, :-4-: I.T.A. NOS. 6 & 404/MDS/2016 DINDIGUL AND HAS CREDITS IN HIS BOOKS OF ACCOUNTS A ND THE ASSESSEE ALSO INCURRED CERTAIN EXPENDITURE IN RESPECT OF WAGES/LA BOUR CHARGES WHICH ARE NOT DULY SUPPORTED WITH EVIDENCE. THE LD. AO DISCUSSED IN DETAILED AT PAGE 3 TO 11 OF THE ORDER AND MADE ASSESSMENT AS THE ASSESSEE HAS MADE UNDISCLOSED INVESTMENTS JOINTLY IN THE FLAT RS. 56,86,143/- AT CHENNAI AND UNDISCLOSED INCOME IN LAND AND BUILDING JOINTLY OWNED BY THE FA MILY MEMBERS AT DINDIGUL RS. 1,73,44,500/- AND ALSO THE LD. AO TREATED RS. 1 0,12,826/- AS UNEXPLAINED SUNDRY CREDITORS WHERE THE ASSESSEE HAS NOT PRODUCE D EVIDENCE. THE ASSESSING OFFICER MADE ADDITION OF RS. 11,57,432/- UNDER UNEXPLAINED EXPENDITURE AND RS. 45,99,995/- AS UNEXPLAINED EXPE NDITURE PERTAINING TO LABOUR AND WAGES AS THE ASSESSEE HAS NOT PRODUCED S UPPORTING AND THE LD. AO ASSESSED TOTAL INCOME OF RS. 2,98,00,900/- AND P ASSED ORDER U/S. 143(3) OF THE ACT DATED 29.12.2011. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR ARGUED THE GROUNDS AND SUBSTANTIATED THIS ARGUMENTS ON THE DISPUTED ISSUE OF RS. 30 LAKHS. THE LD. CIT(A) FOUND THAT THE ASSESSEE MADE INVESTMENTS IN PROPERTIES AND THE REMAND REPORT WAS CALLED FROM ASSESSING OFFICER AND ALSO COMMENTS WERE FILED BY THE ASSESSEE. THE LD. CIT(A) IS OF THE OP INION THAT IN REMAND REPORT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY MATER IAL EVIDENCE COLLECTED IN THE ASSESSMENT PROCEEDINGS OR IN REMAND PROCEEDINGS AND THE ASSESSING OFFICER HAS MADE ADDITION OF NOT ONLY THE ON MONEY BUT ACTUAL AMOUNT PAID :-5-: I.T.A. NOS. 6 & 404/MDS/2016 FOR INVESTMENTS. SINCE, THE ADDITION IN THE CASE O F ASSESSEE'S SON MR. B. MALLIGARJUN, BEING MEDICAL STUDENT WAS DELETED IN I TA NO. 317/2011-12 DATED 16.10.2015 AND THE LD. CIT(A) HAS CONFIRMED IN THE HANDS OF THE ASSESSEE. IN RESPECT OF OTHER ADDITION THE LD. CIT(A) HAS GRA NTED PARTIAL RELIEF AND PARTLY ALLOWED THE APPEAL. 5. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. AR ARGUED THAT TH E LD. CIT(A) ERRED IN NOT CONSIDERING THE FACTS THAT THE ASSESSEE IS CO-OWNER , PURCHASED THE PROPERTY ALONG WITH OTHERS AND THE CONSIDERATION PAID BY ASS ESSEE SON MR. B. MALLIGARJUN IS PURELY IN THE NATURE OF CAPITAL CONT RIBUTION AND PROVISIONS OF SECTION 69 OF THE ACT CANNOT BE INVOKED. THE ASSES SEE'S SON B. MALLIKARJUN RECEIVED GIFT FROM HIS GRANDFATHER, I.E., FATHER OF THE ASSESSEE WHO IS HOLDING BIG AGRICULTURAL LANDS SITUATED IN AND AROUND DINDI GUL AND THE INVESTMENT CANNOT BE TAXED IN HIS HANDS AND THE SOURCE IS SUPP ORTED WITH EVIDENCE AND LD. AR PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LD. DR RELIED ON THE FINDINGS OF THE CIT(A) ON THIS GROUND AND OPPOSED T HE APPEAL. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. AR CONTENTION THAT ASS ESSEE'S SON WHO HAS INVESTED THE AMOUNT HAS RECEIVED GIFT FROM ASSESSEE 'S FATHER P. RAGHUPATHY NAIDU, WHO IS HAVING SUBSTANTIAL INCOME FROM AGRICU LTURAL ACTIVITIES AND PROPERTIES AND THEREFORE THE SOURCE CANNOT BE DISBE LIEVED. THE LD. DR :-6-: I.T.A. NOS. 6 & 404/MDS/2016 SUBMITTED THAT THE CIT(A) TOOK CORRECT DECISION AND CONFIRMED THE ADDITION AS IT WAS NOT SUBSTANTIATED. WE ON THE PERUSAL OF THE CIT(A) ORDER FIND THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE SOURCE TO THE E XTENT OF RS. 30 LAKHS AND THE LD. CIT(A) OBSERVED THAT THE AMOUNT OF RS. 30 L AKHS WAS DELETED IN THE ASSESSEE'S SON CASE IN ITA NO. 315/2011-12 DATED 15 .10.2015, AS THE ADDITION CANNOT BE INVOKED BECAUSE THE ASSESSEE'S SON WAS TH E MEDICAL STUDENT AT THE TIME OF PURCHASE OF THE PROPERTY AND THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS. 30 LAKHS. WE ARE OF THE OPINION AND PRIMA FACIE THE ASSESSEE COULD NOT SUBSTANTIATE THIS SOURCE OF RS. 30 LAKHS AND THE LD. CIT(A) CONSIDERED THE FACTS AND TOOK THE DECISION. ACCORD INGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS G ROUND. WHERE, THE LD. CIT(A) HAS CONSIDERED THE EXPLANATIONS, PROVISIONS AND THE FACTS VIS-A-VIS EXPLANATIONS OF THE ASSESSEE. ACCORDINGLY, WE UPHE LD THE ACTION OF THE CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. 7. NOW WE TAKE UP THE REVENUE APPEAL, WHERE THE APP EAL WAS FILED WITH THE TRIBUNAL. BEFORE US, THE LD. DR ARGUED THAT TH E LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ESTIMATE 8% AS C ONTRACT RECEIPTS ON RS. 2,48,01,565/- AS THE BUSINESS INCOME HAS BEEN ENHAN CED. THE LD. CIT(A) ERRED FURTHER THAT THE 8% OF CONTRACT RECEIPTS ARE NOT COVERED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT AND THE ASSES SEE HAS TAKEN INTO :-7-: I.T.A. NOS. 6 & 404/MDS/2016 CONSIDERATION ALL THE FACTS WHILE FILING THE RETURN OF INCOME. THE LD. CIT(A) ERRED IN CONFIRMING RS. 30 LAKHS IN RESPECT OF ON M ONEY PAYMENT OF RS. 1,73,44,500/-. FURTHER, THE LD. CIT(A) HAS OVERLOO KED THE STATEMENT RECORDED AND DIRECTED THE LD. AO TO DELETE THE ADDI TION AND LD. DR PRAYED FOR CONFIRMING THE REMAINING AMOUNT AND ALLOW THE APPEA L. CONTRA, THE LD. AR RELIED ON THE ORDERS OF THE CIT(A) ON THIS GROUND. 8. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. WE FIND THAT LD. CIT(A) HAS DE LETED THE ADDITION OF RS. 1,43,44,500/- AS THE ACTUAL MONEY WAS PAID BY THE S MT. RAJYALAKSHMI, ASSESSEE'S WIFE AND NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT RECORDED. THE LD. CIT(A) HAS CONFIRMED THE ADDITIO NS TOWARDS UNEXPLAINED GIFTS AND CREDITS IN THE HANDS OF SMT. RAJYALAKSHMI IN ITA NO. 318/2011-12 DATED 16.10.2005 AND NOW THE LD. CIT(A) HAS DELETED THE ADDITION. SINCE, WIFE OF THE ASSESSEE IS ALREADY TAXED AND ONCE AGAI N SAME AMOUNT CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE. THEREFORE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS GROU ND AND DISMISS THE GROUND OF THE REVENUE. ON DISPUTED ISSUE THAT THE LD. CIT (A) HAS ESTIMATED 8% ON CIVIL CONTRACT RECEIPTS OF RS. 2,48,01,565/-. THE LD. CIT(A) FOUND THAT THE ASSESSEE IS IN THE BUSINESS OF CIVIL CONTRACT WORKS AND HAS EARNED SUBSTANTIAL INCOME FROM CONTRACT WORKS AND SUCH AMOUNT WAS UTIL ISED FOR THE PURPOSE OF INVESTMENTS OF NEW ASSETS AND DUE TO ESTIMATION OF INCOME @ 8% THE INCOME OF THE ASSESSEE HAS BEEN ENHANCED FROM RS. 16,86,91 5/- TO RS. 19,84,125/-. :-8-: I.T.A. NOS. 6 & 404/MDS/2016 WE FOUND THE LD. CIT(A) HAS TAKEN THE RATIONAL DECI SION ON ESTIMATION @ 8% AS THE ASSESSEE IS CONTRACTOR AND DEPEND ON CIVIL C ONTRACT WORKS AND ALSO CONSIDERING THE BOOK OF ACCOUNTS ARE NOT PROPERLY R ELIABLE AND ENHANCED INCOME TO RS. 19,84,125/-. THEREFORE, WE ARE NOT IN CLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THE GROUND AND UPHOLD THE SA ME AND DISMISS THE REVENUE APPEAL. IN THE RESULT, REVENUE APPEAL IS DISMISSED. 9. IN THE RESULT, ASSESSEE APPEAL IN ITA NO. 404/MD S/2016 AND THE REVENUE APPEAL IN ITA NO. 6/MDS/2016 ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 26TH DAY OF APRI L, 2017 AT CHENNAI. SD/ - ( . ) ( A. MOHAN ALANKAMONY ) # / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) ) # /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 26TH APRIL, 2017 JPV & )'23 43 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3 )'' /DR 6. 9 /GF