L.K.Sudhish, CHENNAI V. ACIT, CHENNAI

ITA 694/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96268 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 15-04-2013
• Court: TRIBUNAL
• Assessee Lawyers: R PADMANABHAN
• Keywords: Unexplained investment; Source of fund
• Section: 143(3); 153A; 234B; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI , . ! '# , $ %& ' [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ] ./ I.T.A.NOS.691 TO 697/MDS/2013 / ASSESSMENT YEARS :2001-02 TO 2007-08 SHRI L.K. SUDHISH NO.97, SECOND CROSS STREET VENKATESH NAGAR VIRUGAMBAKKAM CHENNAI 600 092 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI [PAN AAWPS 0074 J] ( () / APPELLANT) ( *+() /RESPONDENT) ./ I.T.A.NO.714/MDS/2013 / ASSESSMENT YEARS : 2006-07 TH E DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(2) CHENNAI VS. SHRI L.K. SUDHISH NO.97, SECOND CROSS STREET VENKATESH NAGAR VIRUGAMBAKKAM CHENNAI 600 092 ( () / APPELLANT) ( *+() /RESPONDENT) ASSESSEE BY : SHRI R. PADMANABHAN, CA DEPARTMENT BY : SHRI K. RAMASAMY, SR.SPECIAL PUBLIC PROSECUTOR FOR GOVT. OF INDIA / DATE OF HEARING : 14 - 10 - 2015 / DATE OF PRONOUNCEMENT : 16 - 10 - 2015 ITA NO.691/13 ETC. :- 2 -: , / O R D E R PER BENCH ALL THE APPEALS BY THE ASSESSEE FOR ASSESSMENT YEARS 2001- 02 TO 2007-08 AND THE APPEAL BY THE REVENUE FOR ASS ESSMENT YEAR 2006-07 ARE DIRECTED AGAINST THE COMMON ORDER OF TH E COMMISSIONER OF INCOME-TAX-I, CHENNAI, DATED 31.1.2013. 2. FIRST WE TAKE UP THE ASSESSEES APPEALS. THE FIRS T COMMON ISSUE IS WITH REGARD TO DISALLOWANCE OF EXPENSES M ADE UNIFORMLY @ 2.5% OF THE EXPENDITURE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, A PRODUCER OF FEATURE FILMS AND ALSO THE SECRETARY OF THE YOUTH WING OF DMDK. AN ACTION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CONDUCTED IN CASE OF THE ASSESSEE ON 23.01.2007 SUB SEQUENT TO WHICH, ASSESSMENTS UNDER SECTION 153A R.W.S. 143(3) WERE C OMPLETED FOR THE ASSESSMENT YEARS 2001-02, 02-03, 03-04 04-05, 05-06 AND 07-08. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBS ERVED THAT THE ASSESSEE HAS DEBITED EXPENSES IN THE INCOME AND EXP ENDITURE ACCOUNT AND THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO PRODUCE DETAILS TO SUPPORT THE EXPENDITURE INCURRED. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUPPORT THE EXPENDITURE INCURRED. ACCOR DINGLY, THE ASSESSING OFFICER HAD MADE AN ESTIMATED DISALLOWANC E OF 5% OF ITA NO.691/13 ETC. :- 3 -: EXPENDITURE AMOUNTING TO ` 19,76,437/-, ` .30,00,748/-, ` 21,954/-, ` 24,41,070/-, ` 6,233/- AND ` 45,415/- FOR THE ASSESSMENT YEARS 2001- 02, 02-03, 03-04 04-05, 05-06 AND 07-08 RESPECTIVEL Y. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE T HE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS FILED CERTAIN VOUCHERS AND SUBMITTED THAT 5% DISALLOWANCE MADE BY THE ASSESSIN G OFFICER IS ON HIGHER SIDE. THE CIT(A), AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, HAS OBSERVED THAT THE ASSESSEE HAS FURNIS HED RELEVANT EVIDENCE, WHICH ARE PERUSED IN THE PRESENCE OF ASSE SSING OFFICER AND FOUND THAT SOME OF THE VOUCHERS ARE SELF VOUCHED. C ONSIDERING THE FACT THAT SOME VOUCHERS ARE SELF-VOUCHED, THE CIT(A) HA S DISALLOWED 50% OF THE DISALLOWANCES I.E. 2.5% OF EXPENDITURE AND T HE BALANCE IS DELETED. AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE US. 5. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. IT WAS BROUGHT TO OUR NOTICE THAT ON SIMIL AR ISSUE FOR ASSESSMENT YEARS 2001-02 TO 2005-06 AND 2007-08, TH E REVENUE CAME IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ACTI ON OF THE CIT(A) IN DISALLOWING EXPENSES @ 2.5% AS AGAINST 5% DISALLOWE D BY THE ASSESSING OFFICER. THE TRIBUNAL AFTER HEARING THE L D. DR IN THESE ASSESSMENT YEARS, VIDE ORDER DATED 23.8.2013, HAS H ELD AS UNDER: ITA NO.691/13 ETC. :- 4 -: 7.AFTER CAREFUL CONSIDERATION OF THE ORDERS OF ASSE SSING OFFICER AND THE LD. CIT(APPEALS) AND CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE AS MADE BEFORE THE LD. CIT(APPEALS), WE FI ND THAT THE ASSESSEE HAD CLAIMED CERTAIN EXPENDITURE AND NO SUPP ORTING EVIDENCES HAVE BEEN FILED BEFORE THE ASSESSING OFFI CER. HOWEVER, BEFORE THE LD. CIT(APPEALS), SOME VOUCHERS WERE FIL ED, WHICH WERE PERUSED IN THE PRESENCE OF THE ASSESSING OFFIC ER AND FOUND THAT SOME VOUCHERS ARE SELF-VOUCHED. THE LD. CIT(AP PEALS), KEEPING IN VIEW ALL THE FACTORS, RESTRICTED THE DIS ALLOWANCE FROM 5% TO 2.5%. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(APPEALS) AND ACCORDINGL Y, WE DISMISS THE GROUNDS RAISED BY THE REVENUE FOR THE ASSESSMEN T YEARS 2001-02, 02-03, 03-04 04-05, 05-06 AND 07-08. 6. IN VIEW OF THE ABOVE, THE ISSUE IN DISPUTE IS ALREA DY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIB UNAL. BEING SO, THE GROUND RAISED BY THE ASSESSEE IN THESE APPEALS HAV E BECOME INFRUCTUOUS AND HENCE DISMISSED. 7. THE NEXT ISSUE IN ALL THE APPEALS OF THE ASSESSEE IS WITH REGARD TO CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. CHARGING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT ARE MANDATORY IN NATURE AND THEREFORE, THE ASSESSING OF FICER IS DIRECTED TO COMPUTE INTEREST U/S 234A, 234B AND 234C ACCORDING LY. 8. IN I.T.A.NO.692/MDS/2013 AND I.T.A.NO.694/MDS/2013 FOR ASSESSMENT YEARS 2002-03 AND 2004-05, THE ASSESSEE HAS CHALLENGED SUSTENANCE OF ADDITION TOWARDS UNEXPLAINED INVESTME NT IN LAND. ITA NO.691/13 ETC. :- 5 -: 9. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE WAS A SKED TO EXPLAIN THE SOURCE OF INVESTMENT IN PROPERTIES IN S URVEY NO.1353/2B AND 1353/2A PURCHASED O 21.1.2002 AND 23-3-2003 RES PECTIVELY. IN THE ABSENCE OF COGENT AND CREDIBLE EVIDENCE IN SUPP ORT OF THE SOURCES FOR INVESTMENT AND ABSENCE OF A COPY OF SALE DEED, THE ASSESSING OFFICER DISALLOWED PROPORTIONATE VALUE OF PROPERTY. THUS, THE ASSESSING OFFICER ADDED ` 10,69,842/- FOR THE ASSESSMENT YEAR 2002- 03 AND ` 29,34,217/- FOR ASSESSMENT YEAR 2004-05. 10. ON APPEAL, THE CIT(A) OBSERVED THAT THERE IS SOURCE FROM KARPS PETROLEUM WHERE THE ASSESSEE ISSUED FIVE DEM AND DRAFTS OF ` 2,85,000/- EACH AND CASH OF ` 3240/- TOTALLING TO ` 14,28,240/- BEING DRAWN FROM THE SAID COMPANY. THE CIT(A) OBSERVED T HAT THERE IS NO EXPLANATION IN RESPECT OF CASH BROUGHT IN TO THE TO TAL ` 3,20,000/- AND ALSO THERE IS NO EXPLANATION TOWARDS STAMP DUTY AND REGISTRATION CHARGES PAID AT ` 1,93,905/-. AS SUCH, OUT OF THE TOTAL ADDITION OF ` 10,69,842/-, THE CIT(A) SUSTAINED ADDITION OF ` 3,20,000/- AND ` 1,93,905/- AND DELETED THE BALANCE AMOUNT. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE HAS FILED THE CASH FLOW STATEMENT BEF ORE THE LOWER AUTHORITIES DULY EXPLAINING THE SOURCE OF FUND TO M AKE INVESTMENT OF ` ITA NO.691/13 ETC. :- 6 -: 10,69,842/- WHICH WAS NOT PROPERLY APPRECIATED BY T HEM AND PRAYED FOR AN OPPORTUNITY TO EXPLAIN THE SAME BEFORE THE L OWER AUTHORITIES. 12. THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE ARG UMENT OF THE LD. COUNSEL AND SUBMITTED THAT INSPITE OF OP PORTUNITY GIVEN TO THE ASSESSEE, HE HAS NOT TAKEN ANY PAIN TO EXPLAIN THE SAME. 13. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE PLACED RECEIPT AND PAYMENT ACCOUNT BEFORE US EXPLAINING THE SOURCE OF INVESTM ENT IN THESE ASSESSMENT YEARS. IN OUR OPINION, THE RECEIPT AND PAYMENT ACCOUNT SUPPORTED BY THE REQUISITE DOCUMENTS TO EXPLAIN THE NATURE OF SOURCE OF FUNDS IT IS TO BE CONSIDERED AS EXPLAINED BY THE ASSESSEE. BEING SO, CONSIDERING THE REQUEST OF THE ASSESSEE, WE ARE RE MITTING THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAM E AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 14. FURTHER, THE ASSESSING OFFICER MADE AN ADDITION OF ` 29,34,217/- IN ASSESSMENT YEAR 2004-05 TOWARDS UNEX PLAINED INVESTMENT. THE CIT(A) HAS DELETED THE SAME BY OBS ERVING THAT THE PROPERTY IN QUESTION WAS ACQUIRED ON 1.9.2003 AND I T IS RELATED TO ASSESSMENT YEAR 2004-05. AS THE PURCHASE CONSIDERA TION HAS BEEN PAID BY CHEQUE TO THE PARTIES CONCERNED ON 1.9.2003 FROM THE ACCOUNT ITA NO.691/13 ETC. :- 7 -: OF LKS PETROLEUM INDIA PVT LTD IN WHICH THE ASSESS EE IS A DIRECTOR AND HE DELETED THE SAME FOR ASSESSMENT YEAR 2002-03. T HEREAFTER, HE HAS GIVEN DIRECTION TO THE ASSESSING OFFICER TO ASSESS THE SAME IN ASSESSMENT YEAR 2004-05. AGAINST THIS ISSUE THE A SSESSEE IS IN APPEAL BEFORE US FOR ASSESSMENT YEAR 2004-05. 15. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. ACCORDING TO THE LD. COUNSEL, THE CIT(A) S ATISFIED ABOUT THE SOURCE OF FUND IN ASSESSMENT YEAR 2003-04 THAT IT C AME FROM M/S LKS PETROLEUM INDIA PVT. LTD. THE CIT(A) IS NOT JUSTIF IED IN GIVING DIRECTION TO THE ASSESSING OFFICER TO CONSIDER THE SAME IN AS SESSMENT YEAR 2004-05. IN OUR OPINION, IF THE CHEQUE IS ISSUED FROM LKS PETROLEUM INDIA PVT. LTD AND IS DULY REFLECTED IN THE BOOKS O F ACCOUNT OF LKS PETROLEUM INDIA PVT. LTD AND THEY ARE FILING RETURN OF INCOME THEN THERE IS NO QUESTION OF TREATING THE SAME IN THE HA NDS OF ASSESSEE AS UNEXPLAINED INVESTMENT IN ASSESSMENT YEAR 2004-05. AS SUCH, THE ASSESSEE HAS TO EXPLAIN THE SAME BEFORE THE ASSESSI NG OFFICER. ACCORDINGLY, WE ARE REMITTING THIS ISSUE TO THE FIL E OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. NEEDLESS TO SAY T HAT THE ASSESSING OFFICER SHALL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.691/13 ETC. :- 8 -: 16. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS BEF ORE US SEEKING ADMISSION OF THE SAME FOR ASSESSMENT YEARS 2001-02 TO 2007- 08 WHICH READ AS FOLLOWS: 1.THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITIONS TO THE ASSESSMENT COMPLETED ALREADY U/ S.143 CONSIDERI NG THE FACT THAT THERE IS NO INCRIMINATING DOCUMENTS FOUND DURI NG SEARCH. 2. THE HONB'LE TRIBUNAL MAY DIRECT THE ASSESSING OF FICER TO DELETE THE ADDITIONS AS THE ASSESSMENT VIZ 2001-02 TO 2007 -08 WERE COMPLETED BEFORE THE SEARCH U / S.143 AND NO INCRIM INATING DOCUMENTS WERE FOUND DURING THE SEARCH. THE ORDER O F THE IT AT CHENNAI 'D' BENCH IN THE CASE OF ABS SANJAY VS THE ACIT CENTRAL CIRCLE SALEM IS APPLICABLE TO THE ASSESSEES CASE. THE DATE OF SEARCH BEING 23/1/2007. 3. HONB'LE TRIBUNAL MAY TREAT THIS' AS PART AND PAR CEL' OF THE ROUNDS RAISED IN THE APPEAL MEMO IN FORM 36 WHEREIN THE ASSESSEE HAS DISPUTED THE FOLLOWING ADDITIONS: A) DISALLOWANCES OF 2.5% OF THE EXPENDITURE. B) CHARGING OF UNDER U / S 234A AND 234C. C) UNEXPLAINED INVESTMENT IN LAND FOR ASST 2003-04 AND 2004-05. 17. SINCE WE HAVE ALREADY ADJUDICATED THE ISSUE IN APPE ALS OF THE REVENUE FOR ASSESSMENT YEARS 2001-02 TO 2005-06 AND 2007-08, THESE ADDITIONAL GROUNDS HAVE BECOME INFRUCTUUS AND HENCE, DISMISSED. 18. IN THE RESULT, I.T.A.NOS.691, 693, 695, 696 AND 697/MDS/2013 ARE DISMISSED. I.T.A.NOS.692 AND 694/ MDS/2013 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.691/13 ETC. :- 9 -: 19. NOW, WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSE SSMENT YEAR 2006-07 IN I.T.A.NO.714/MDS/2013. 20. THE FIRST GROUND IN REVENUES APPEAL IS WITH REGAR D TO GRANTING RELIEF @ 2.5% OF THE EXPENSES AS AGAINST 5 % DISALLOWED BY THE ASSESSING OFFICER. 21. WE HAVE ALREADY DECIDED SIMILAR ISSUE IN REVENUES APPEALS FOR ASSESSMENT YEARS 2001-02 TO 2005-06 & 2007-08 I N I.T.A.NOS.709 TO 715/MDS/2013, ORDER DATED 23.8.2015. AS THE FAC TS ARE SIMILAR IN ASSESSMENT YEAR 2006-07, FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE DISMISS THIS GROUND OF APPEAL. 22. THE SECOND GROUND IS WITH REGARD TO DELETION OF AD DITION TOWARDS UNEXPLAINED EXPENSES OF ` 25 LAKHS. FACTS OF THIS ISSUE ARE THAT THE ASSESSEE HAS PAID ` 25 LAKHS TO THE DMDK PARTY MEMBERS. THE ASSESSEE BEING THE YOUTH WING SECRETARY HAD RE CEIVED THESE AMOUNTS IN THIS CAPACITY. FULL DETAILS ARE AVAILAB LE IN THE MATERIAL SEIZED. THE ASSESSING OFFICER PROCEEDED TO ADD THI S AMOUNT TO THE INCOME RETURNED SINCE THE ASSESSEE HAD NOT BACKED HIS SUBMISSION BY CO-RELATING IT WITH EVIDENCES. ITA NO.691/13 ETC. :- 10 -: 23. ON APPEAL, THE CIT(A) DELETED THE ADDITION ON THE R EASONING THAT THIS WAS DULY REFLECTED IN THE BOOKS OF ACCOUN T OF DMDK PARTY FOR THE ASSESSMENT YEAR 2007-08. AGAINST THIS, THE REV ENUE IS IN APPEAL BEFORE US. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CONTENTION OF THE LD. DR I S THAT DMDK PARTY IS NOT MAINTAINING THE PROPER BOOKS OF ACCOUNT AND THE EXPENSES ARE NOT REFLECTED IN THE BOOKS OF DMDK PARTY. ON THE CONTR ARY, THE LD. COUNSEL SUBMITTED THAT IT WAS REFLECTED IN THE BOOKS OF ACC OUNT OF THE DMDK PARTY. HOWEVER, NO MATERIAL HAS BEEN FURNISHED TO SHOW THAT THIS AMOUNT OF ` 25 LAKHS IS DULY ACCOUNTED FOR IN THE BOOKS OF ACC OUNT OF DMDK PARTY. AS SUCH, WE ARE NOT IN A POSITION TO E XPRESS ANY OPINION ON THIS ISSUE AND THIS REQUIRES FURTHER VERIFICATIO N AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE REMIT THIS ISSU E BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AFTER GIVIN G ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 25. IN THE RESULT, THE APPEAL OF THE REVENUE FOR ASSESS MENT YEAR 2006-07 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 26. TO SUMMARIZE THE RESULT, THE APPEALS OF THE ASSES SEE IN I.T.A.NOS.691, 693, 695, 696 AND 697/MDS/2013 ARE D ISMISSED. ITA NO.691/13 ETC. :- 11 -: I.T.A.NOS.692 AND 694/MDS/2013 ARE PARTLY ALLOWED F OR STATISTICAL PURPOSES. THE REVENUES APPEAL IN I.T.A.NO. 714/ MDS/2013 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2015, AT CHENNAI. SD/- SD/- ( . ! '# ) ( V. DURGA RAO ) $ / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI / DATED: 16 TH OCTOBER, 2015 RD ' #$ %$ / COPY TO: 1 . &' / APPELLANT 4. ( / CIT 2. ')&' / RESPONDENT 5. $*+ ' , / DR 3. ( () / CIT(A) 6. +/ 0 / GF