T.S.Dinadayalan, CHENNAI V. ITO, CHENNAI

ITA 703/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4651 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANANDD BABUNATH FCA LLB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 703/MDS/2013 (ASSESSMENT YEAR : 2008-09) SHRI T.S. DINADAYALAN, 31/12, PILLAIYAR KOIL STREET, EKKATTUTHANGAL, CHENNAI - 600 032. PAN : AEEPD 5103 M (APPELLANT) V. THE INCOME TAX OFFICER, BUSINESS WARD III(3), CHENNAI - 600 034 . (RESPONDENT) APPELLANT BY : SH. ANANDD BABUNATH, FCA, LLB RESPONDENT BY : SH. GURU BASHYAM, JCIT DATE OF HEARING : 21.08.2013 DATE OF PRONOUNCEMENT : 29.08.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT THE CIT(APPEALS) UPHELD ADDITIONS MADE BY THE ASSESSING OFFICER FOR CREDITS APPEARING IN TWO BANK ACCOUNTS HELD BY THE ASSESSEE. I.T.A. NO. 703/MDS/13 2 2. FACTS APROPOS ARE THAT ASSESSEE, A MANUFACTURER OF AUTOMOBILE SPARE PARTS, HAD FILED HIS RETURN FOR THE IMPUGNED ASSESSMENT YEAR ON 19.9.2008 DECLARING AN INCOME OF ` 4,26,864/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE PRODUCED BEFORE TH E ASSESSING OFFICER BOOKS AND OTHER DOCUMENTS, WHICH WERE CALLE D FOR. AS PER THE A.O., ASSESSEE HAD TWO ACCOUNTS WITH INDIAN OVERSEA S BANK AT EKKATUTHANGAL BRANCH, BEARING NUMBERS 1085010000148 05 AND 108502000001245. THE FORMER WAS IN ASSESSEES OWN NAME, WHEREAS, THE LATTER ACCOUNT WAS IN THE NAME OF S.D. S. INDIA & CO., OF WHICH ASSESSEE WAS A PROPRIETOR. THE TOTAL DEPOSIT IN FORMER ACCOUNT DURING THE RELEVANT PREVIOUS YEAR WAS ` 53,67,693/- AND IN LATTER ACCOUNT WAS ` 31,11,077/-. ASSESSING OFFICER WAS OF THE OPINION THAT BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE DID NOT SHOW ANY TRANSACTIONS IN THE ABOVE BANK ACCOUNTS. AS PER TH E ASSESSING OFFICER, ASSESSEES REPRESENTATIVE HAD AGREED ON TH IS. SHE ACCEPTED THE EXPLANATION OF THE ASSESSEE ONLY FOR AN AMOUNT OF ` 3,43,000/- AS CONTRAS. SHE THUS CAME TO A CONCLUSION THAT A SUM OF ` 81,35,770/- REPRESENTED UNDISCLOSED TURNOVER OF THE ASSESSEE. SHE APPLIED GP RATE AT 31.38%, AS SHOWN BY THE ASSESSEE IN ITS TAX AUDIT REPORT ON THE SUM OF ` 81,35,770/- AND MADE AN ADDITION OF ` 25,53,004/-. I.T.A. NO. 703/MDS/13 3 3. ASSESSEE MOVED IN APPEAL BEFORE CIT(APPEALS). A RGUMENT OF THE ASSESSEE WAS THAT CROSS VERIFICATION WAS NOT CO RRECTLY MADE WITH THE BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER. AS PER THE ASSESSEE, THE BALANCE IN A/C NO. 108502000001245 IN THE NAME OF S.D.S. INDIA & CO. WAS PROPERLY SHOWN IN HIS BALANC E SHEET. THE OTHER ACCOUNT OF THE ASSESSEE WAS AN S.B. A/C HELD FOR PERSONAL PURPOSES. FURTHER, AS PER ASSESSEE, IN THE S.B. A/ C, A SUM OF ` 5,43,000/- REPRESENTED TRANSFER FROM THE OVERDRAFT ACCOUNT, BUT THIS WAS NOT IGNORED BY THE ASSESSING OFFICER. SIMILARL Y, THERE WAS ANOTHER SUM OF ` 25,00,001/-, WHICH WAS A REVERSAL OF CHEQUE AND WAS A CONTRA ENTRY. THIS WAS ALSO CONSIDERED AS PA RT OF THE TURNOVER. A HOUSING LOAN OF ` 22,85,000/- RAISED BY THE ASSESSEE FROM STANDARD CHARTERED BANK, CHENNAI, AFTER DEDUCTING P ROCESSING CHARGES OF ` 20,908/-, WAS ALSO CREDITED TO THE S.B. A/C. AS P ER ASSESSEE, CONSIDERING ALL SUCH AMOUNTS AS UNEXPLAIN ED TURNOVER OF THE ASSESSEE, WAS UNJUSTIFIED. 4. HOWEVER, CIT(APPEALS) WAS NOT IMPRESSED BY THE C ONTENTION OF THE ASSESSEE. ACCORDING TO HIM, EXPLANATION OFFERE D BY THE ASSESSEE WAS NOT COGENT AND ASSESSEE COULD NOT PRODUCE RECOR DS TO I.T.A. NO. 703/MDS/13 4 SUBSTANTIATE ITS PLEA. HE CONFIRMED THE ADDITION O F GROSS PROFIT MADE BY THE ASSESSING OFFICER. 5. NOW BEFORE US, SH. ANANDD BABUNATH, LD. A.R. FOR THE ASSESSEE, RELYING ON PAPER-BOOK PAGE 9, WHICH IS BA LANCE SHEET OF S.D.S. INDIA & CO., AS ON 31.3.2008, SUBMITTED THAT CASH AT BANK SHOWN UNDER THE WORD CURRENT ASSETS WAS ` 2,59,236.64. TAKING US THROUGH THE COPY OF THE CASH CREDIT IN A/C NO. 1 08502000001245 IN THE NAME OF S.D.S. INDIA & CO. WITH INDIAN OVERS EAS BANK, PLACED AT PAPER-BOOK PAGES 34 TO 36, LEARNED A.R. SUBMITTE D THAT THE BALANCE AS ON 31.3.2008 WAS SHOWN AS ` 2,59,236.74. THE DIFFERENCE WAS OF ONLY 10 PAISE. VIS--VIS THE OTH ER ACCOUNT, LEARNED A.R. SUBMITTED THAT IT WAS ONLY AN S.B. A/C, THE CR EDITS IN WHICH WOULD BE EXPLAINED BY THE ASSESSEE. AS PER LEARNED A.R., ASSESSEE HAD ADMITTEDLY TAKEN A HOUSING LOAN OF ` 22,85,000/- FROM STANDARD CHARTERED BANK, CHENNAI, WHICH WAS CREDITED TO THIS S.B. A/C. THERE WAS A CONTRA ENTRY OF ` 2,50,000/- IN THE SAID ACCOUNT. ACCORDING TO HIM, THESE WERE VERY CLEAR THE COPY OF PAPER-BOOK P AGES 23 TO 25. AS PER THE LEARNED A.R., ASSESSEE HAD, WITHOUT PROP ERLY UNDERSTANDING THIS, AGREED THAT THE ACCOUNTS WERE N OT REFLECTED IN THE BOOKS OF ACCOUNTS. THEREFORE, ACCORDING TO HIM, TH E LOWER AUTHORITIES I.T.A. NO. 703/MDS/13 5 FELL IN ERROR IN CONSIDERING THE CREDITS IN SUCH AC COUNTS TO BE UNEXPLAINED TURNOVER. 6. PER CONTRA, SHRI GURU BASHYAM, APPEARING FOR THE REVENUE, SUBMITTED THAT ASSESSEES REPRESENTATIVE HAD AGREED TO THE ADDITIONS BEFORE THE ASSESSING OFFICER. HAVING AGREED, ASSES SEE COULD NOT NOW TURN AROUND AND SAY THAT THESE WERE PART OF BOO KS OF ACCOUNTS. ASSESSEE COULD HAVE POINTED OUT IT TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IF IT WERE A PART OF BOOKS OF ACCOUNTS. THEREFORE, LOWER AUTHORITIES WERE JUSTIF IED IN TREATING THE CREDITS IN SUCH ACCOUNTS TO BE UNDISCLOSED TURNOVER OF THE ASSESSEE. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL S UBMISSIONS. NO DOUBT, IT IS MENTIONED IN THE ASSESSMENT ORDER T HAT ASSESSEES REPRESENTATIVE HAD AGREED THAT TWO BANK ACCOUNTS WE RE NOT MENTIONED IN THE LEDGER/BOOKS OF ACCOUNTS FOR THE R ELEVANT PREVIOUS YEAR. NEVERTHELESS, WE CANNOT SAY THAT IT IS EQUI VALENT TO AN ADMISSION THAT WHOLE OF THE CREDITS IN SUCH ACCOUNT S WERE UNDISCLOSED TURNOVER OF THE ASSESSEE. IT WAS ALSO MENTIONED BY THE SAID REPRESENTATIVE THAT TRANSFER FROM OTHER ACCOUN TS COULD HAVE BEEN THERE IN THESE TWO BANK ACCOUNTS. ON THE OTHER HAN D, WE FIND THAT THE I.T.A. NO. 703/MDS/13 6 BALANCE SHEET OF THE ASSESSEE DOES SHOW A BALANCE O F ` 2,59,236.64 AS CASH AT BANK, AGAINST WHICH, THE CASH CREDIT IN A/C NO. 108502000001245 HAD A BALANCE OF ` 2,59,236.74. THE DIFFERENCE WAS ONLY TEN PAISE. SO, THERE IS MUCH STRENGTH IN THE ARGUMENT OF THE LEARNED A.R. THAT THE SAID BANK ACCOUNT WAS REFLECT ED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. VIS--VIS THE OTHER ACCO UNT, IT IS NOT DISPUTED THAT ASSESSEE HAD TAKEN A HOUSING LOAN OF ` 22,85,000/- FROM STANDARD CHARTERED BANK. WE ALSO FIND CERTAIN CONTRA ENTRY ON 11 TH OCTOBER, 2007 IN SUCH S.B. A/C. 8. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THA T THE MATTER REQUIRES A FRESH LOOK BY THE ASSESSING OFFICER. AS SESSING OFFICER HAS TO VERIFY WHETHER THE ENTRIES IN CASH CREDIT ACCOUN T WERE PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND WHETHER THE CREDITS IN THE S.B. A/C WERE EXPLAINED BY THE ASSES SEE. WITHOUT DOING SO, IT WILL NOT BE FAIR TO CONCLUDE THAT CRED ITS IN THESE TWO BANK ACCOUNTS WERE UNDISCLOSED TURNOVER OF THE ASSESSEE. WE, THEREFORE, DEEM IT FIT, IN THE INTEREST OF JUSTICE, TO SET ASI DE THE ORDERS OF AUTHORITIES BELOW AND REMIT THE ISSUE BACK TO THE F ILE OF THE A.O. FOR CONSIDERATION AFRESH. ASSESSEE SHALL BE GIVEN AN O PPORTUNITY TO I.T.A. NO. 703/MDS/13 7 EXPLAIN HIS CASE. ASSESSING OFFICER SHALL PROCEED IN ACCORDANCE WITH LAW. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 29 TH OF AUGUST, 2013, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH AUGUST, 2013. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VIII, CHENNAI (4) CIT-VI, CHENNAI-34 (5) D.R. (6) GUARD FILE