ITO, CHENNAI V. Shri Suman Jain, L/R of Late Sajjan Devi, CHENNAI

ITA 718/CHNY/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4484 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P N KAMALA DEVI
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Source of fund; Set aside
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, AM AND SHRI GEORGE MATHAN, J.M. .. I.T.A. NO. 718/MDS/2009 ASSESSMENT YEAR 2005-06 THE INCOME-TAX OFFICER BUSINESS WARD XII(2) CHENNAI VS. SHRI SUMAN JAIN L/R OF LATE SAJJAN DEVI NO. 9, PLOT NO. 489 1 LINK ROAD, MKB NAGAR CHENNAI 600 039. (PAN NO. AAVPS 8740 C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. BANUSEKAR DEPARTMENT BY : SMT. P.N. KAMALA DEVI O R D E R PER ABRAHAM P. GEORGE, AM IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANCE IS REGARDING DELETION OF CERTAIN DISALLOWANCES AND ADDITIONS MAD E BY THE ASSESSING OFFICER WHICH ARE LISTED HEREUNDER: PAGE 2 OF 6 I.T.A. NO. 718/MDS/2009 I. PAYMENTS MADE TO SUB-BROKERS RS. 4,20,054/- II. INTEREST PAYMENT RS. 82,000/- III. GIFT DISALLOWED RS. 1,50,000/- IV. UNEXPLAINED INVESTMENTS FOR SQUARING UP LOANS RS. 4,00,000/- 2. VIS-A-VIS THE FIRST DISALLOWANCE, FINDING OF THE ASSESSING OFFICER WAS THAT LETTER SENT BY HIM TO TWO SUB-BROKERS, TO WHOM ASSESSEE HAD CLAIMED TO HAVE PAID, HAD COME BACK WITH THE RE MARKS NO SUCH NAME IN THE ADDRESS. FURTHER, ACCORDING TO THE AS SESSING OFFICER, THOUGH THE PA NOS. WERE GIVEN, RETURNS WERE NOT BE ING FILED BY THE SAID PERSONS. HE, THEREFORE, CONSIDERED THE CLAIM OF COMMISSION PAID TO THE SUB-BROKERS AS NOT PROVED. 3. ASSESSEE HAD CLAIMED PAYMENT OF INTEREST TO FIVE PERSONS TOTALLING RS. 82,000/-. ASSESSING OFFICER NOTED FR OM THE TRIAL BALANCE THAT ONLY THE NAMES OF TWO PERSONS OUT OF T HE FIVE APPEARED THEREIN. ACCORDING TO THE ASSESSING OFFI CER, BOOKS PRODUCED BY ASSESSEE DID NOT REFLECT ANY TRANSACTIO NS FROM THE PAGE 3 OF 6 I.T.A. NO. 718/MDS/2009 OTHER THREE PERSONS. CLAIM WAS, THEREFORE, CONSIDE RED BY HIM AS BASELESS AND DISALLOWED. 4. THERE WAS CREDIT OF RS. 1,50,000/- IN THE CAPITA L ACCOUNT OF THE ASSESSEE SHOWN AS GIFT. ASSESSEE HAD ALSO GIV EN A GIFT OF RS. 2 LAKHS ON THE SAME DAY. LETTERS ADDRESSED TO THE DO NOR AS WELL AS DONEE WERE RETURNED BY THE POSTAL AUTHORITIES. ASS ESSEE HAD FILED DECLARATION OF GIFT FROM DONOR ALONG WITH HIS P.A. NUMBER. HOWEVER, ASSESSING OFFICER WAS OF THE OPINION THAT THE GIFT WAS NOT PROVED. SUM OF RS. 1,50,000/- WAS, THEREFORE, ADDE D U/S 69 OF THE ACT. 5. BANK STATEMENT OF THE ASSESSEE REFLECTED CASH DE POSITS TOTALLING RS. 13 LAKHS ON FIVE DIFFERENT DATES. EX PLANATION OF THE ASSESSEE WAS THAT HE HAD OBTAINED LOANS FROM 73 PER SONS TOTALLING RS. 13 LAKHS WHICH WAS UTILIZED FOR MAKING DEPOSITS . ASSESSING OFFICER THOUGH HE ACCEPTED THAT LOANS RECEIVED WERE REFLECTED IN THE CASH BOOK, WAS OF THE VIEW THAT ASSESSEE WAS UN ABLE TO SHOW HOW HE HAD SQUARED UP ENTIRE LOAN OF RS. 13 LAKHS. ASSESSEE DID BRING TO THE NOTICE OF THE ASSESSING OFFICER THAT T HERE WERE CASH PAGE 4 OF 6 I.T.A. NO. 718/MDS/2009 WITHDRAWALS OF RS. 9 LAKHS IN MARCH 2005 FOR REPAYM ENT OF THE LOAN. NEVERTHELESS, ASSESSING OFFICER WAS OF THE OPINION THAT BALANCE SUM OF RS. 4 LAKHS REMAINED TO BE EXPLAINED AND HE, THE REFORE, CONSIDERED IT AS REPAYMENTS MADE FROM UNDISCLOSED S OURCES AND ADDITION OF LIKE AMOUNT WAS MADE. 6. LD. CIT(A), IN ASSESSEES APPEAL, DELETED THE FI RST ADDITION OF RS. 4,20,054/- FINDING THAT ASSESSEE HAD GIVEN PA N OS OF THE SUB- BROKERS. ADDITION OF RS. 82,000/- WAS DELETED BY H IM ON A FINDING THAT SQUARED UP LOANS WOULD NEVER FIND A PLACE IN T HE LOAN BALANCE. ADDITION OF RS. 1,50,000/- WAS DELETED BY HIM FOR A REASON THAT THE DONORS PA NOS WERE GIVEN AND EVIDENCE FURNISHED BY ASSESSEE WAS SATISFACTORY. ADDITION OF RS. 4 LAKHS WAS DELETED BY HIM FOR THE REASON THAT THE SAID SUM WAS NOT REPAID IN CASH BUT SETTLED BY GIVING CERTAIN EQUITY SHARES TO THE PARTIES CONCERN ED. 7. NOW BEFORE US, LD. D.R. SUBMITTED THAT THE LD. CIT(A) HAD SUMMARILY ACCEPTED THE ARGUMENTS OF THE ASSESSEE WI THOUT GOING INTO THE MERITS. ACCORDING TO HER, JUST BECAUSE PA NUMBER WAS THERE OR BECAUSE LOANS WERE SQUARED UP OR BECAUSE S HARES WERE PAGE 5 OF 6 I.T.A. NO. 718/MDS/2009 GIVEN IN LIEU OF LOAN BALANCES, ADDITIONS OUGHT NOT HAVE BEEN DELETED. 8. PER CONTRA, THE LD. A.R. SUBMITTED THAT HE HAD N O OBJECTION IN THE MATTER BEING REMITTED BACK TO THE ASSESSING OFF ICER FOR CONSIDERATION AFRESH. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS. WE FIND FROM THE ORDER OF THE LD. CIT(A) THAT NO CL EAR REASONING WAS GIVEN BY HIM FOR DELETING THE ADDITIONS MADE. AS S TATED BY THE LD. D.R., JUST BECAUSE PA NUMBERS WERE THERE, CLAIM OF EXPENSES OF RS. 4,20,054/- TO SUB-BROKERS COULD NOT HAVE BEEN ALLOW ED. BUT, NEVERTHELESS, THE ASSESSING OFFICER ALSO PLACED UND UE EMPHASIS ON RETURNS BEING NOT FILED BY THE PARTIES. AS FOR THE ALLEGED PAYMENT OF RS. 82,000/- INTEREST ON LOANS, NEITHER THE LD. CIT (A) NOR THE ASSESSING OFFICER MADE A THOROUGH VERIFICATION OF T HE BOOKS OF ACCOUNT BEFORE COMING TO A CONCLUSION THAT SUCH INT EREST PAYMENTS WERE ACTUALLY NOT THERE. VIS-A-VIS GIFT OF RS. 1,5 0,000/-, NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(A) HAD MADE NECES SARY ENQUIRIES, ESPECIALLY SINCE THE DONOR HAD DIED. FINALLY, IN R ELATION TO THE PAGE 6 OF 6 I.T.A. NO. 718/MDS/2009 ADDITION OF RS. 4 LAKHS FOR THE ALLEGED LOAN REPAYM ENTS MADE OUT OF UNDISCLOSED SOURCES OF INCOME, THE PLEA OF THE ASSE SSEE THAT SUCH SUM WAS SQUARED UP BY GIVING SHARES IN LIEU. BUT TH IS EXPLANATION WAS NEVER GIVEN BEFORE THE ASSESSING OFFICER AT ALL . THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED O PINION THAT THE ISSUES NEED TO BE REVISITED BY THE ASSESSING OFFICE R. HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER FOR FRESH VERIFICATION OF THE CLAIMS OF THE ASSESSEE AND DEALING WITH IT IN ACCORDANCE WITH LAW . NEEDLESS TO SAY, ASSESSEE HAS TO BE GIVEN A PROPER OPPORTUNITY FOR EXPLAINING ITS CASE. 9. IN THE RESULT, APPEAL FILED BY REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 .07.2010. SD/- SD/- (GEORGE MATHAN ) ( ABRAHAM P.GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH JULY, 2010. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE