Josphine Nirmala Raj, CHENNAI V. ITO, CHENNAI

ITA 608/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8635 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-03-2016
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: N VIJAYAKUMAR
• Keywords: Unexplained investment; Gift

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NO.608/MDS/2016 / ASSESSMENT YEAR : 2008-09 SMT. JOSEPH NIRMALA RAJ 104, MAURYA ENCLAVE NO.1, THIRD AVENUE ASHOK NAGAR, CHENNAI VS. THE INCOME TAX OFFICER BUSINESS WARD III(3) CHENNAI [PAN AHJPJ 4788 L] ( ! / APPELLANT) ( '# ! /RESPONDENT) / APPELLANT BY : SHRI N. VIJAYAKUMAR, CA /RESPONDENT BY : SHRI N. MADHAVAN, JCIT / DATE OF HEARING : 17 - 06 - 2016 / DATE OF PRONOUNCEMENT : 18 - 08 - 2 016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-14, CHENN AI, DATED 22.1.2016 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS ADDITIO N OF ` 5,75,000/- AS UNEXPLAINED INVESTMENT U/S 69A OF TH E ACT. 3. SHRI N. VIJAYAKUMAR, LD. REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE DEPOSITED ` 14,80,000/- IN THE BANK ACCOUNT. OUT OF ` 14,80,000/- ACCORDING TO THE LD. REPRESENTATIVE, A ITA NO.608/16 :- 2 -: SUM OF ` 6,25,000/- WAS RECEIVED AS LOAN FROM FOUR PERSONS. THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM THE SA ID FOUR PERSONS BEFORE THE AUTHORITIES BELOW. THE ASSESSING OFFICE R, IN FACT, ACCEPTED THE RECEIPT OF ` 50,000/- AS LOAN FROM ONE SHRI MANOJ ANNADURAI. A S FAR AS CLAIM OF ` 2 LAKHS RECEIVED FROM SMT. THERESA JOSEPH, MOTHER OF THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT THE MOTHER OF THE ASSESSEE HAS NO SOURCE OF INCOME. SIMILARLY, CASH LOAN FROM SMT. FLORA MANGALANATHAN, SISTER OF THE ASSESSEE AND LO AN OF ` 75,000/- FROM SHRI K. ASWATHAMAN WAS ALSO REJECTED BY THE AS SESSING OFFICER. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE CREDITORS AND THE FINANCIAL CAPACIT Y TO ADVANCE THE MONEY TO THE ASSESSEE. THE GENUINENESS OF THE TRA NSACTION WAS ALSO ESTABLISHED. ACCORDING TO THE LD. REPRESENTATIVE F OR THE ASSESSEE, SMT. THERESA JOSEPH AND SMT. FLORA MANGALANAHAN HAP PENED TO BE THE ASSESSEES MOTHER AND SISTER RESPECTIVELY, THE REFORE, THE ASSESSING OFFICER CANNOT DOUBT THE GENUINENESS OF THE TRANSAC TION. THE ASSESSEES MOTHER WAS RECEIVING PENSION, THEREFORE, IT CANNOT BE SAID THAT SHE COULD NOT HAVE ADVANCED MONEY TO THE ASSE SSEE. THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN ADDING A SUM OF ` 5,75,000/- AS UNEXPLAINED INVESTMENT. 4. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT EVEN THOUGH SMT THERE SA JOSEPH AND ITA NO.608/16 :- 3 -: SMT. FLORA MANGALANATHAN ARE CLOSE RELATIVES OF THE ASSESSEE, THEY HAVE NO SOURCE FOR MAKING ADVANCE TO THE ASSESSEE. SMT THERESA JOSEP SURVIVES ON A MONTHLY INCOME OF LESS THAN ` 10,000/- AND THEREFORE, IT CANNOT BE SAID THAT SHE ADVANCED ANY MONEY TO THE ASSESSEE OUT OF HER PENSION INCOME. SMT. FLORA MAN GALANATHAN HAS NO TAXABLE INCOME, THEREFORE, SHE HAS NO SOURCE TO ADVANCE THE SUM OF ` 3 LAKHS TO THE ASSESSEE. IN THE ABSENCE OF ANY M ATERIAL, ACCORDING TO THE LD. DR THE CIT(A) HAS RIGHTLY SUST AINED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE MATERIAL AVAILABLE ON RECORD, THIS IS SECOND ROUND OF LITIGA TION BEFORE THIS TRIBUNAL. IN THE FIRST ROUND, THIS TRIBUNAL REMIT TED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATI ON. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE SOURC E FOR MAKING DEPOSIT IN THE BANK ACCOUNT ARE LOANS/GIFTS RECEIVE D FROM CLOSE RELATIVES. ON VERIFICATION OF THE BANK ACCOUNT OF SMT. THERESA JOSEPH, MOTHER OF THE ASSESSEE, THE ASSESSING OFFICER FOUN D THAT THE ASSESSEES MOTHER WITHDRAWN MONEY IN THE RANGE OF ` 5000/- TO ` 10,000/- ON MONTHLY BASIS, THEREFORE, THE ASSESSING OFFICER FOUND THAT OUT OF THESE DRAWINGS, SHE COULD NOT HAVE SAVED A S UM OF ` 2 LAKHS. ITA NO.608/16 :- 4 -: MOREOVER, SMT. FLORA MANGALANATHAN HAS ALSO NO TAXA BLE INCOME AND SHE HAS NO SOURCE FOR EARNING ANY INCOME. IN THE A BSENCE OF ANY MATERIAL TO SUGGEST THAT THE ABOVE FOUR PERSONS FRO M WHOM MONEY WAS SAID TO BE RECEIVED HAS SOURCE OF INCOME, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY CONF IRMED THE ORDER OF THE ASSESSING OFFICER. EVEN THOUGH THE ASSESSEE C LAIMS THAT HER MOTHER SMT THERESA JOSEPH WAS RECEIVING PENSION INC OME, NO MATERIAL IS AVAILABLE BEFORE THIS TRIBUNAL TO SHOW THAT SHE HAS RECEIVED ANY PENSION. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY R EASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY, THE SAME IS CONFIRMED. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 2,06,000/- U/S 69 OF THE ACT. 7. SHRI N. VIJAYAKUMAR, LD. REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE ASSESSEE DEPOSITED A SUM OF ` 8,55,000/- IN CASH OUT OF AGRICULTURAL INCOME. THE ASSESSING OFFICER, IN FACT, ACCEPTED THE AGRICULTURAL INCOME TO THE EXTENT OF ` 6,48,000/- AND THE BALANCE ` 2,06,000/- WAS TREATED AS UNEXPLAINED INCOME U/S 69A OF THE ACT. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE OWNS APPROXIMATELY 110 ACRES OF AGRICULTURAL LAND AT ACHARAPAKKAM AND MATHURAPUTHUR VILLAGES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD ITA NO.608/16 :- 5 -: APPROXIMATELY 40 ACRES OF LAND. FOR THE ASSESSMENT YEAR 2007-08 THE ASSESSEE HAS DISCLOSED AGRICULTURAL INCOME TO THE E XTENT OF ` 5,40,000/-, THEREFORE, THE SOURCE FOR DEPOSIT IN TH E BANK ACCOUNT IS INCOME FROM AGRICULTURE. 8. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DR SUBMITTED THAT ADMITTEDLY THE ASSESSEE DEPOSITED ` 8,55,000/- IN THE BANK ACCOUNT IN CASH. THE ASSESSEE HAS PRODUCED COPIES OF THE PHO TOGRAPHS TO INDICATE THAT THE ASSESSEE CULTIVATED MANGO AND G UAVA TREES. HOWEVER, THE ASSESSEE HAS NOT PRODUCED ANY MATERIA L TO PROVE THE SALE OF AGRICULTURAL PRODUCE. SINCE THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL TO SUPPORT THE SALE OF AGRICULTURAL PR ODUCE, THE ASSESSING OFFICER TREATED ` 6,49,000/- AS INCOME FROM AGRICULTURE AND THE BALANCE OF ` 2,06,000/- WAS TREATED AS UNEXPLAINED DEPOSIT IN T HE BANK ACCOUNT. ACCORDING TO THE LD. DR, THE CIT(A) HAS R IGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 9. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOT IN DISPUTE THAT THE ASSESSEE WAS OWNING 110 ACRES OF LAND AND SHE WAS ALSO CULTIVATING MANGO AND GUAVA TREES. THE ASSESSING O FFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL TO SUPPORT THE SALE OF AGRICUL TURAL PRODUCE. THE ITA NO.608/16 :- 6 -: AGRICULTURE MARKET IN THIS COUNTRY IS UNREGULATED. THEREFORE, EXPECTING MATERIAL DOCUMENT TO SUPPORT THE SALE OF AGRICULTUR AL PRODUCE IS SOMETHING WHICH ASSESSEE COULD NOT PRODUCE BEFORE THE ASSESSING OFFICER. THE LAND HOLDING IS NOT IN DISPUTE. THE CULTIVATION OF MANGO AND GUAVA IS ALSO NOT IN DISPUTE. WHEN THE ASSESS EE CLAIMS THAT MANGO AND GUAVA WERE SOLD IN THE LOCAL MARKET, THE ASSESSING OFFICER CANNOT EXPECT THE ASSESSEE TO PRODUCE SUPPORTING M ATERIAL TO EVIDENCE THE SALE OF MANGO AND GUAVA. SO LONG AS T HE AGRICULTURAL MARKET REMAINS UNREGULATED IN THIS COUNTRY, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT EXPECTING SUPPORTING DOCUME NT FOR SALE OF AGRICULTURAL PRODUCE FROM THE AGRICULTURIST IS NOT JUSTIFIED. THE GROUND REALITY EXISTED IN THIS COUNTRY CANNOT BE IGNORED B Y THE INCOME TAX AUTHORITIES WHILE MAKING ASSESSMENT OF INCOME. THE REFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE OWNS 110 ACRES OF LAND AND CULTIVATING MANGO AND GUAVA, THE CLAIM OF ` 8,55,000/- FROM AGRICULTURE IS VERY REASONABLE. TH EREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO MAKE ANY ADDITIO N TOWARDS DEPOSIT IN THE BANK ACCOUNT. THE AGRICULTURAL PRODUCE ARE SOLD IN THE OPEN MARKET FOR CASH, THEREFORE, THE AGRICULTURIST HAS T O DEPOSIT THE MONEY IN THE BANK BY CASH. THEREFORE, THE ASSESSING OFFI CER IS NOT JUSTIFIED IN MAKING ADDITION OF ` 2,06,000/-. ACCORDINGLY, THE ORDERS OF THE LOWER ITA NO.608/16 :- 7 -: AUTHORITIES ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 10. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 3,64,843/- FROM REDEMPTION OF MUTUAL FUNDS AS INCOM E FROM SHORT TERM CAPITAL GAINS. 11. SHRI N. VIJAYAKUMAR, LD. REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED ` 3,64,843/- ON REDEMPTION OF MUTUAL FUNDS. ACCORDI NG TO THE LD. REPRESENTATIVE, THE ASSESSEE, IN FACT, RED EEMED THE MUTUAL FUNDS AND RECEIVED ` 3,64,843/-. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN ADDING A SUM OF ` 3,64,843/- AS SHORT TERM CAPITAL GAINS. 12. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DR SUBMITTED THAT DURING SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER FOUND RECEIPT OF SHORT TERM CAPITAL GAINS FROM REDEMPTION OF MUTUAL FUNDS. SINCE THE ASSESSEE FAILED TO OFFER THE SAME IN THE RETURN OF INCOME, THE ASSESSING OFFICER TREATED THE SAME AS SHORT TERM CA PITAL GAINS AND MADE ADDITION U/S 111A OF THE ACT. IN THE ABSENC E OF ANY SUPPORTING MATERIAL, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. ITA NO.608/16 :- 8 -: 13. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT I S NOT IN DISPUTE THAT THE ASSESSEE HAS REDEEMED MUTUAL FUNDS TO THE EXTEN T OF ` 3,64,843/-. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE REDEMPTION OF MUTUAL FUNDS HAS TO BE CONSIDERED AS SHORT TERM CAP ITAL GAINS. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADD ITION MADE BY THE ASSESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY R EASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND ACCORDINGLY THE SA ME IS CONFIRMED. 14. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDITIO N OF ` 21,03,595/- AS UNEXPLAINED INCOME. 15. SHRI N.VIJAYAKUMAR, LD. REPRESENTATIVE FOR THE ASS ESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SOLD 40 ACRES OF LAND AT MATHURAPUTHUR VILLAGE FOR A TOTAL CONSIDERATION OF ` 78,88,500/-. THE ASSESSEE HAS ALSO SOLD CASUARIN A AND EUCALYPTUS TREES STANDING ON THE LAND FOR ` 21 LAKHS TO THE PURCHASER OF THE LAND. THE LD. REPRESENTATIVE FURTHER CLARIF IED THAT THE STANDING TREES HAS TO BE SOLD ALONGWITH THE LAND TO THE PURC HASER OF THE LAND. HOWEVER, THERE WAS NO REFERENCE IN THE SALE AGREEME NT OR THE SALE DEED SAID TO BE ENTERED INTO BETWEEN THE PURCHASER AND THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF ` 21,03,595/- AS UNEXPLAINED INCOME IN THE ABSENCE OF ANY MATERIAL O N RECORD. ITA NO.608/16 :- 9 -: ACCORDING TO THE LD. REPRESENTATIVE, CASUARINA AND EUCALYPTUS TREES ARE PART OF THE AGRICULTURAL LAND , THEREFORE, THE COST RECEIVED BY THE ASSESSEE ON SALE OF SUCH TREES TO THE PURCHASER ALO NGWITH THE LAND HAS TO BE NECESSARILY TREATED AS AGRICULTURAL INCOME. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION. 16. ON THE CONTRARY, SHRI N. MADHAVAN, LD. DR SUBMITTED THAT THE COST OF THE TREES SOLD BY THE ASSESSEE HAS TO BE OFFERED FOR TAXATION. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE CLAIMS THAT AN AMOUNT OF ` 21 LAKHS WAS RECEIVED TOWARDS SALE OF TREES AND THE SAME WAS NOT OFFERED FOR TAXATION. ACCORDING T O THE LD. REPRESENTATIVE, THE ASSESSEE CLAIMED BEFORE THE AU THORITIES BELOW THAT THE SUM OF ` 21 LAKHS WAS RECEIVED BY WAY OF THREE DEMAND DRAFTS. COPY OF THE SALE DEED DOES NOT REFER ABOUT THE SALE OF STANDING TREES ALONGWITH THE LAND. THE DEMAND DRAFT RECEIVE D BY THE ASSESSEE WAS OVER AND ABOVE THE AMOUNT RECEIVED FOR TRANSFER OF THE LAND. THE DEMAND DRAFTS WERE TAKEN FROM THE VERY SAME BRANCH AND THE SERIAL NUMBERS OF THE DEMAND DRAFTS ARE CONTINUOUS. ACCOR DING TO THE LD. DR, THE SALE OF THE TREES CANNOT BE CONSTRUED TO B E PART OF THE SALE OF THE LAND SINCE THERE WAS NO REFERENCE ABOUT SALE OF TREES IN THE REGISTERED SALE DEED. ITA NO.608/16 :- 10 -: 17. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS SOLD 40 ACRES OF LAND. THE ASSE SSEE CLAIMS THAT THE STANDING TREES VIZ. CASUARINA AND EUCALYPTUS TREES, WERE SOLD ALONGWITH THE LAND. IT IS ALSO NOT IN DISPUTE THAT THE SALE DEED DOES NOT REFER TO ANY SALE OF THE STANDING TREES ALONGWITH THE LAND. IF THE TREES WERE STANDING ON THE LAND AT THE TIME OF SALE, NATURALLY , IT HAS TO BE REFERRED IN THE SALE DEED. THE COPY OF SALE DEED IS NOT AVA ILABLE BEFORE THIS TRIBUNAL. HOWEVER, ON A QUERY FROM THE BENCH, THE LD. REPRESENTATIVE CLARIFIED THAT SALE OF STANDING TREES WAS NOT REFER RED IN THE REGISTERED SALE DEED AND THERE WAS NO REFERENCE IN THE SALE AG REEMENT ALSO. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THERE WAS NO REFERENCE ABOUT THE SALE OF TREES IN THE REGISTERED SALE DEED OR IN THE AGREEMENT FOR SALE, THE PRESUMPTION IS THAT THERE W ERE NO TREES STANDING ON THE LAND. MOREOVER, THE ASSESSEE CLAI MS THAT SHE WAS CULTIVATING MANGO AND GUAVA TREES. THEREFORE, THER E WAS A DOUBT WHETHER CASUARINA AND EUCALYPTUS TREES WERE STANDIN G ON THE LAND WHICH WAS SAID TO BE SOLD BY THE ASSESSEE. NO MAT ERIAL IS PRODUCED BEFORE THIS TRIBUNAL TO SUGGEST THAT TREES WERE STA NDING ON THE LAND WHICH WAS SOLD BY THE ASSESSEE. COPY OF THE ADANG AL REGISTER IS ALSO NOT PRODUCED BEFORE THIS TRIBUNAL WHICH WOULD INDIC ATE THE STANDING TREES. IN THE ABSENCE OF ANY MATERIAL, THIS TR IBUNAL IS OF THE ITA NO.608/16 :- 11 -: CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS R IGHTLY FOUND THAT RECEIPT OF ` 21,03,595/- IS NOT PART OF THE SALE CONSIDERATION FOR SALE OF 40 ACRES OF LAND. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND ACCORDI NGLY THE SAME IS CONFIRMED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2016, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 18 TH AUGUST, 2016 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF