ITO, Kancheepuram V. Shri J.Raman, Sriperambudur

ITA 693/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58143 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR STAND ING
• Assessee Lawyers: N DEVANATHAN
• Keywords: Unexplained investment; Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 693/(MDS)/2010 ASSESSMENT YEAR : 2006-07 AND C.O.NO.41/(MDS)/2010 THE INCOME-TAX OFFICER, WARD-I(1), 96-MM AVENUE, I.T. OFFICE, KANCHIPURAM-631 501. VS. SHRI J. RAMAN, PROP: M/S. RAMAN EARTH MOVERS, NO.57, ANNA STREET, PENNALUR VILLAGE, IRRUNGATTUKOTTAI P.O., SRIPERUMBUDUR TALUK. PAN AKEPR 0327 Q (APPELLANT) (RESPONDENT/CROSS OBJECTOR) DEPARTMENT BY : SHRI KEB RENGARAJAN, JR. STA NDING COUNSEL & SHRI ANIRUDH RAI, IRS, COMMISSIONER OF INCOME-TAX ASSESSEE BY : SHRI N. DEVANATHAN, ADVOCAT E DATE OF HEARING : 22 ND MARCH, 2012 DATE OF PRONOUNCEMENT : 27 TH MARCH, 2012 ITA 693 & CO 41/10 :- 2 -: O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE REVENUE; THE CROSS OB JECTION BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2006 -07. THESE PROCEEDINGS ARE DIRECTED AGAINST THE ORDER OF THE C OMMISSIONER OF INCOME-TAX(APPEALS)-IX AT CHENNAI PASSED ON 16.02.2 010. THE APPEAL AND THE CROSS OBJECTION ARISE OUT OF THE ASS ESSMENT COMPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1 961. 2. IN COMPLETING THE ASSESSMENT, THE ASSESSING AU THORITY HAS MADE AN ADDITION OF ` 19 LAKHS TO THE INCOME OF THE ASSESSEE, UNDER SEC.69 OF THE INCOME-TAX ACT, 1961, AS UNEXPLAINED INVESTMENT. ACCORDING TO THE ASSESSING AUTHORITY, THE ASSESSEE HAD FURNISHED A COPY OF CERTIFICATE OF REGISTRATION ISSUED BY THE A SSISTANT REGISTERING AUTHORITY, PONDICHERRY IN RESPECT OF JCB MACHINE PU RCHASED BY THE ASSESSEE FOR ` 19 LAKHS. THE DATE OF REGISTRATION IS FOUND TO BE 1 ST AUGUST, 2005. THE ASSESSING OFFICER ASKED FOR THE PURCHASE DETAILS AND THE DETAILS OF REPAYMENTS. THEY WERE N OT PRESENTED. ON THE OTHER HAND, THE ASSESSEE HAD FILED A CASH FLOW STATEMENT ITA 693 & CO 41/10 :- 3 -: WHEREIN HE HAS EXPLAINED THE SOURCES FOR ACQUIRING JCB MACHINE AND ALSO THE INCOME EARNED FROM THE OPERATION OF TH AT MACHINE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATIONS OFFERED BY THE ASSESSEE AND TREATED THE AMOUNT OF ` 19 LAKHS AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE AND ADDED T HE SAME TO THE INCOME OF THE ASSESSEE. 3. IN FIRST APPEAL, THE COMMISSIONER OF INCOME-TAX( APPEALS) HELD THAT THE ASSESSEE HAD AVAILED LOANS AND THE EM I STATEMENT ISSUED BY INDUSIND BANK REVEALED ` 16 LAKHS AS LOANS FROM LEYLAND GROUP. THE SEED MONEY OF ` 3 LAKHS WAS STATED TO BE HIS OWN INCOME ACCRUED FROM THE BANK. AFTER CONSIDERING AL L THE DETAILS, THE COMMISSIONER OF INCOME-TAX(APPEALS) FOUND THAT THER E WAS NO JUSTIFICATION IN TREATING THE SUM OF ` 19 LAKHS AS UNEXPLAINED. THUS, HE DELETED THE ADDITION OF ` 19 LAKHS. 4. THE REVENUE IS AGGRIEVED AND, THEREFORE, THE SEC OND APPEAL BEFORE US. THE ADDITION OF ` 19 LAKHS ALONE, IS THE ISSUE RAISED BEFORE US IN THE PRESENT APPEAL. THE RELEVANT GROU NDS RAISED BY THE REVENUE IN THE PRESENT APPEAL READ AS BELOW : ITA 693 & CO 41/10 :- 4 -: 2. THE LD. CIT(A) ERRED IN DELETING THE ENTIRE ADD ITION OF ` 19 LAKHS MADE ON ACCOUNT OF UNEXPLAINED SOURCES FOR THE PURCHASE OF JCB MACHINE U/S.69 OF THE ACT. 2.1 THE LD. CIT(A) WHILE ADMITTING THE ADDITIONAL EVIDENCE IN THE FORM OF REVISED BALANCE SHEET FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE CIT(A), OUGHT TO HAVE GIVEN OPPORTUNITY AS ENUMERATED UNDER RULE 46A OF T HE INCOME-TAX RULES, 1962. 2.2 THE LD. CIT(A) FAILED TO NOTE THAT THE AUDITED BALANCE SHEET FILED WITH THE RETURN DOES NOT SHOW THE INVES TMENTS MADE BY THE ASSESSEE AND ALSO THE LOANS OF THE CRED ITORS IN THE ASSETS AND LIABILITY SIDE. 2.3 THE LD. CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE EVEN AFTER GETTING THE ACCOUNTS AUDITED U/S.44AB WH ICH HAS BEEN FILED BEFORE AO AND IF THE ASSESSEE FURNIS HES A NEW REVISED BALANCE SHEET BEFORE THE CIT(A) THEN TH ERE IS SERIOUS LAPSE ON THE PART OF THE ASSESSEE IN GET TING THE ACCOUNTS AUDITED AND HENCE NEITHER THE ASSESSEES ACCOUNTS/BALANCE SHEET FILED BEFORE AO NOR THE ONE FILED BEFORE CIT(A) ARE RELIABLE. 2.4 THE LD. CIT(A) OUGHT TO HAVE CALLED FOR REMAND REPORT FROM THE AO ON THE CORRECTNESS OF THE ACCOUNTS/BALANCE SHEET CLAIMED TO HAVE BEEN MAINTAI NED BY THE ASSESSEE. ITA 693 & CO 41/10 :- 5 -: 5. WE HEARD SHRI K.E.B.RENGARAJAN, THE LEARNED STAN DING COUNSEL AND SHRI ANIRUDH RAI, THE LEARNED COMMISSIO NER OF INCOME- TAX APPEARING FOR THE REVENUE AND SHRI N. DEVANATHA N, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE. 6. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS CONS IDERED THE ISSUE IN A DETAILED MANNER IN PARAGRAPH 5 OF HI S ORDER. AS THE DISCUSSION MADE BY THE COMMISSIONER OF INCOME-TAX(A PPEALS) IS SELF EXPLANATORY AND CONVINCING, THOSE DISCUSSIONS ARE EXTRACTED BELOW: 5. THE SECOND ADDITION RELATES TO PURCHASE OF JCB MACHINE FOR ` 19 LAKHS. THE AO SAYS THAT, THE ASSESSEE HAS FURNISHED A COPY OF CERTIFICATE OF REGISTRATION ISSUED BY ASST. REGISTERING AUTHORITY, PONDICHERRY. THE DATE OF REGI9STRATION IS FOUND TO BE 01.08.2005. WHEN THE ASSESSEE WAS ASKED TO PRODUCE THE PURCHASE INVOICE AND THE EMI STATEMENT, IT WAS NOT RESPONDED TO. ONLY C ASH FLOW STATEMENT WAS FILED WHEREIN THE ASSESSEE EXPLA INED THE SOURCE FROM THE CAPITAL AND INCOME AND GROSS CO NTRACT RECEIPTS. NOT SATISFIED WITH THE EXPLANATION, THE AO CONCLUDED THAT THE EXACT AMOUNT OF COST OF THE NEW JCB ITA 693 & CO 41/10 :- 6 -: MACHINE COULD NOT BE DETERMINED AND THE ONLY INFORM ATION TO DETERMINE THE VALUE IS FROM THE ASSESSEES LETTE R DT. 18.12.2008 INDICATING THE VALUE OF JCB MACHINE AT ` 19 LAKHS. AS THE SOURCE OF THIS INVESTMENT HAS NOT BE EN PROVED BY THE ASSESSEE, THE AO TREATED THIS ` 19 LAKHS AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT AND ADDED TO TAXABLE INCOME. 5.1 IT WAS SUBMITTED BY THE APPELLANT THAT, THE A O HAS NOT EXAMINED THE EMI PAYMENT, LOAN OUTSTANDING OF N EW JCP ETC IN BOOKS AND FILING REVISED COMPUTATION OF BALANCE SHEET AS PER BOOKS. IT IS STATED THAT LOAN OF ` 16 LAKHS WAS OBTAINED FROM INDUS BANK AS PER EMI STATEMENT DIREC TLY OBTAINED FROM THE LOAN CREDITOR. THE MARGIN MONEY WAS ACCOUNTED FOR IN BOOKS FILED BEFORE THE AO AND IT W AS GENERATED ONLY FROM BANK DRAWALS AND CASH ON HAND. IT WAS SUBMITTED THAT THERE WAS NO SUPPRESSION OF ` 19 LAKHS AND IT IS SUPPORTED BY LOAN EVIDENCE. HENCE, IT WA S PRAYED THAT ADDITION IS NOT WARRANTED AND BE DELETED. ITA 693 & CO 41/10 :- 7 -: 5.2 I HAVE CONSIDERED THE SUBMISSIONS. IN THE WRIT TEN ARGUMENTS, IT IS SEEN THAT NEW JCP MACHINE WAS PURCHASED FOR ` 19 LAKHS FROM MARGIN OF ` 3 LAKHS DERIVED FROM OWN ACCRUALS PAID FROM THE BANK AND OUT OF LOA N OF ` 16 LAKHS FROM LEYLAND GROUP. THE COPY OF THE LEDGE R ACCOUNT SHOWING JCP MACHINE PURCHASE EMI ACCOUNT AN D DEPRECIATION WAS WRONGLY DEBITED IN DIESEL OPERATIO N EXPENSES. THE AO DISALLOWED ` 19 LAKHS ON ACCOUNT OF NON PRODUCTION OF PROPER EVIDENCE FOR SOURCE OF INV ESTMENT BY THE APPELLANT. IT WAS ADMITTED THAT USUALLY FIN ANCIER IS HAVING PURCHASE INVOICE OF JCP MACHINE AND FURTHER WITHOUT GIVING AN OPPORTUNITY TO THE APPELLANT REJE CTED THE NEW MACHINERY PURCHASED. A COPY OF STATEMENT OF AC COUNT AS ON 26.04.2007 FROM INDUSIND BANK LIMITED, NO.89, G.N.CHETTY ROAD, T. NAGAR, CHENNAI 600 017 IS FILED AND PLACED ON RECORD. IT COULD BE SEEN FROM THE STATEM ENT OF ACCOUNT THAT THE AMOUNT FINANCED WAS ` `` ` 16 LAKHS AND MARGIN MONEY WAS ` `` ` 3 LAKHS AND THAT THE CONTRACT DATE IS MENTIONED AS 30.07.2005. WITH PRODUCTION OF THIS EVIDENCE, I AM OF THE VIEW THAT THE APPELLANT HAS ITA 693 & CO 41/10 :- 8 -: DISCHARGED HIS DUTY FOR THE SOURCE TOWARDS ACQUISIT ION OF JCP MACHINE. HENCE, I DIRECT THE AO TO DELETE THE ADDITION OF ` `` ` 19 LAKHS. 7. ON GOING THROUGH THE ABOVE ORDER OF THE COMMIS SIONER OF INCOME-TAX(APPEALS), WE FIND THAT HE HAS EXAMINED A LL THE RELEVANT DOCUMENTARY DETAILS TO COME TO A CONCLUSION THAT TH E INVESTMENT MADE BY THE ASSESSEE OF ` 19 LAKHS IN PURCHASING JCB MACHINE HAS BEEN EXPLAINED. WE DO NOT FIND MUCH FORCE IN THE A RGUMENT OF THE REVENUE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS ) HAS ADMITTED FRESH EVIDENCE IN VIOLATION OF RULE 46A. IT IS CLEAR FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE ASSESSEE H AD PLACED BEFORE THE ASSESSING OFFICER HIMSELF, THE DETAILED STATEME NT OF EMI PAYMENTS. THIS EMI STATEMENT ITSELF WOULD SHOW THA T THE ASSESSEE HAD AVAILED LOANS AND THE REPAYMENTS HAVE BEEN MADE AS PER THE SCHEDULE. AS FAR AS THE DOCUMENTS ARE CONCERNED, T HE ASSESSEE HAS SHOWN THE OUTSTANDING LOAN IN HIS BOOKS OF ACCO UNT. THE SERIOUS OBJECTION OF THE REVENUE IS THAT THE ASSESS EE HAS MADE GOOD, THE EARLIER OMISSION BY FILING REVISED BALANC E-SHEET. THE POINT TO BE REMEMBERED IS THAT ALL THE ORIGINAL ENTRIES A RE REFLECTED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN THE ORDINARY COURSE ITA 693 & CO 41/10 :- 9 -: OF BUSINESS. THE BALANCE-SHEET IS A COMPILATION OF BALANCES AVAILABLE IN THE BOOKS OF ACCOUNT. THE BALANCE-SHE ET IS NOT A RECORD OF ORIGINAL ENTRY. THE BOOKS OF ACCOUNT IS THE REC ORD OF ORIGINAL ENTRY IN WHICH THE ASSESSING AUTHORITY HAS NOT POINTED OU T ANY DEFECT. IF SO, THE REVISING OF BALANCE-SHEET IS TECHNICAL IN N ATURE WHICH SHOULD NOT GO TO DEFEAT THE BOOKS OF ACCOUNT AND OTHER DOC UMENTARY EVIDENCES AVAILABLE WITH THE ASSESSEE TO PROVE THAT JCB MACHINE WAS PURCHASED AGAINST LOANS. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE F IND THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ADJUDICATED THE ISSUE IN A JUST AND PROPER MANNER. HIS ORDER IS ACCORDINGLY , UPHELD. 8. THE CROSS OBJECTION FILED BY THE ASSESSEE IS TO SUPPORT THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). AS THE APPEAL FILED BY THE REVENUE IS DISMISSED, THE CROSS OBJECT ION HAS BECOME INFRUCTUOUS. 9. IN RESULT, THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ITA 693 & CO 41/10 :- 10 -: ORDER PRONOUNCED ON TUESDAY, THE 27 TH OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 27 TH MARCH, 2012. MPO* COPY TO: (1) PETITIONE R (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.