Hemalatha Chandran, CHENNAI V. ITO, CHENNAI

ITA 603/CHNY/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3957 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 26-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Business income; Onus to prove
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.603/MDS/2015 * +* / ASSESSMENT YEAR : 2011-12 SMT. HEMALATHA CHANDRAN, C/O SHRI S. SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AACPC 2079 H V. THE INCOME TAX OFFICER, BUSINESS WARD III(3), CHENNAI - 600 034. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /0-. 1 2 / RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT ' 1 3& / DATE OF HEARING : 27.10.2016 45+ 1 3& / DATE OF PRONOUNCEMENT : 23.11.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE WAS DISPOSED OF EARL IER BY AN ORDER DATED 01.04.2016. HOWEVER, THE ASSESSEE FILE D A MISCELLANEOUS PETITION IN M.P. NO.200/MDS/2016 ON T HE GROUND THAT THE GROUND NOS. 8 AND 10 WERE NOT DISPOSED OF. ACC ORDINGLY, THE APPEAL WAS REOPENED ONLY FOR THE PURPOSE OF ADJUDIC ATING THE 2 I.T.A. NO.603/MDS/15 GROUND RAISED BY THE ASSESSEE IN GROUND NOS.8 AND 1 0. ACCORDINGLY, THE APPEAL WAS POSTED TODAY. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT GROUND NOS.8 AND 10 ARE IDENTICALLY ONE AND SA ME. REFERRING TO GROUND NO.8, THE LD.COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSING OFFICER DISALLOWED ` 4,42,885/-. REFERRING TO THE ORDER OF THE ASSESSING OFFICER, THE LD.COUNSEL SUBMITTED THA T THE ADDITION OF ` 4,42,85/- WAS MADE BECAUSE OF DIFFERENCE BETWEEN TH E REALIZABLE VALUE OF CLOSING STOCK AND THE VALUE OF CLOSING STO CK DISCLOSED IN THE BALANCE SHEET. IT IS NOT A REAL PAYMENT AS CLAIMED BY THE REVENUE. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ADDITI ON MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. 3. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE EXPLAIN ED BEFORE THE ASSESSING OFFICER THAT THE CASH DEPOSIT OF ` 13,00,000/- WAS FROM REALIZATION OF FIXED ASSETS OVER THE LIABILITIES. THE ASSESSEE HAS FILED CONFIRMATION OF SALE TO THE EXTENT OF ` 6,17,720/-. HOWEVER, GENUINENESS OF CONFIRMATION LETTER WAS NOT ESTABLIS HED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(APPEALS). SINCE THE BURDEN OF PROOF WAS NOT DISCHARGED BY THE ASSESSEE, THE CI T(APPEALS) 3 I.T.A. NO.603/MDS/15 CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R TOWARDS UNDISCLOSED BUSINESS INCOME. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE ADMITTEDLY FILED CONFIRMATION LETTERS FROM 7 PURCHA SERS OF THE CLOSING STOCK. THE BALANCE SHEET DISCLOSES THE CLOSING STO CK VALUED AT ` 1,74,835/- AS PER THE CONFIRMATION LETTER FILED BY THE ASSESSEE, THE SALE PROCEEDS WERE OUT OF SALE OF CLOSING STOCK. T HEREFORE, IT IS NOT A CASE OF DIFFERENCE BETWEEN THE REALIZABLE VALUE A ND THE VALUE OF CLOSING STOCK WHICH WERE DISCLOSED IN THE BALANCE S HEET. THE ASSESSEE CLAIMS THAT THE STOCK WAS SOLD AND SALE PR OCEEDS REMAIN OUTSTANDING ON THE LAST DAY OF THE FINANCIAL YEAR. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE CONFIRMATION LETTE R FILED BY THE ASSESSEE WAS IN THE LETTER HEAD OF THE ASSESSEES B USINESS CONCERN ITSELF. THEREFORE, IT CREATES A DOUBT. THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE CLAIMS TH AT THE STOCK WAS SOLD AND THE SALE PROCEEDS WERE OUTSTANDING ON THE LAST DAY OF THE FINANCIAL YEAR, THE SAME OUGHT TO HAVE BEEN EXA MINED BY THE ASSESSING OFFICER BY GIVING AN OPPORTUNITY TO THE A SSESSEE. IN THIS CASE, WHILE REJECTING THE CONFIRMATION LETTER FILED BY THE ASSESSEE, 4 I.T.A. NO.603/MDS/15 THE ASSESSING OFFICER HAS NOT TAKEN ANY STEP TO EXA MINE THE PURCHASERS. HAD THE ASSESSING OFFICER EXAMINED THE PURCHASES ON THE BASIS OF SO-CALLED CONFIRMATION LETTER FILED BY THEM, THE REAL FACT OF THE CASE MIGHT HAVE COME OUT. SINCE THE ASSESSI NG OFFICER HAS NOT DONE SUCH AN EXERCISE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDIN GLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITIO N OF ` 4,42,885/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFTER EXAMINING THE SO-CALLED 7 PURCHASERS AND THEREAFTER DECIDE THE SAME IN ACCORD ANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 5. NOW COMING TO GROUND NO.10, SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT AN ADDITION WAS MA DE TOWARDS UNEXPLAINED INVESTMENT TO THE EXTENT OF ` 7,00,000/-. THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT SHE SOLD G OLD JEWELLERY TO 6 PERSONS. THE ASSESSEE HAS ALSO FILED CONFIRMATION LETTER FROM THESE 6 PERSONS. HOWEVER, THE LD.COUNSEL CLAIMED BEFORE THE ASSESSING OFFICER THAT THE JEWELLERY WAS GIVEN TO THE ASSESSE E BY HER MOTHER. THEREFORE, THERE WAS A CONTRADICTORY CLAIM MADE BY THE ASSESSEE AND HER REPRESENTATIVE. THEREFORE, THE ASSESSING O FFICER DISALLOWED 5 I.T.A. NO.603/MDS/15 THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 7,00,000/- AND MADE AN ADDITION UNDER SECTION 69 OF THE ACT. 6. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THERE WAS UNEXPLAINE D INVESTMENT IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE TO THE EXT ENT OF ` 7,00,000/-. SINCE THE ASSESSEE MADE CONTRADICTORY CLAIM BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER DISBEL IEVED THE CLAIM OF THE ASSESSEE AND MADE ADDITION UNDER SECTION 69 OF THE ACT. NO DOCUMENTARY EVIDENCE WAS FILED EITHER BEFORE THE AS SESSING OFFICER OR BEFORE THE CIT(APPEALS) WITH REGARD TO SOURCE FO R OWNING THE GOLD JEWELLERY. THEREFORE, THE CIT(APPEALS) FOUND THAT SINCE THERE WAS NO CONFIRMATION FROM THE 6 PERSONS FOR PURCHASE OF GOLD JEWELLERY, THE CLAIM OF THE ASSESSEE COULD NOT BE ACCEPTED. T HEREFORE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THERE WAS DEPOSIT IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE TO THE EXTENT OF ` 7,00,000/-. THE ASSESSEE CLAIMS THAT SHE SOLD HER JEWELLERY TO 6 PERSONS AND ALSO FILED CONFIRMATION LETTERS. THE LD.COUNSEL FOR THE ASSESSEE CLAIMED B EFORE THE 6 I.T.A. NO.603/MDS/15 ASSESSING OFFICER THAT THE SOURCE OF JEWELLERY IS T HE JEWELLERY GIVEN BY THE ASSESSEES MOTHER. IT IS NOT KNOWN HOW THE STATEMENT MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IS CON TRADICTORY TO EACH OTHER. WHEN THE ASSESSEES MOTHER GAVE JEWELL ERY TO THE ASSESSEE AND THE SAME WAS, IN TURN, SOLD BY THE ASS ESSEE, IT CANNOT BE SAID THE ASSESSEE IS GIVING CONTRADICTORY STATEM ENT. WHAT IS TO BE SEEN IS WHETHER THE ASSESSEE SOLD THE JEWELLERY TO SO-CALLED 6 PERSONS. THE CONFIRMATION LETTERS WERE FILED BEFOR E THE ASSESSING OFFICER, THE ASSESSING OFFICER DID NOT TAKE ANY PAI N TO VERIFY THE SALE OF THE JEWELLERY TO THE SO-CALLED 6 PERSONS. THERE FORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFF ICER HAS TO EXAMINE THE PURCHASERS OF JEWELLERY ON THE BASIS OF SO-CALLED CONFIRMATION LETTERS FILED BY THE 6 PERSONS. ACCOR DINGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDI TION OF ` 7,00,000/- IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFIC ER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRESH AFTER EX AMINING THE SO- CALLED PURCHASERS, WHO FILED CONFIRMATION LETTERS, AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVIN G A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7 I.T.A. NO.603/MDS/15 8. IT IS MADE CLEAR THAT THE OTHER PART OF THE ORDE R OF THIS TRIBUNAL DATED 1 ST APRIL, 2016 REMAINS AS SUCH. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 23 RD NOVEMBER, 2016 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 23 RD NOVEMBER, 2016. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-15, CHENNAI-34 4. ' :3 /CIT-6, CHENNAI 5. 8; /3 /DR 6. * < /GF.