K.R.Mani, Tiruchengode V. DCIT, Salem

ITA 746/CHNY/2015

• Counselvise Citation: 74621714 RSA 2015
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 09-04-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Assessee Lawyers: T VASUDEVAN
• Keywords: Corroborative evidences; Retraction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.746 /MDS./2015 ( ! '! / ASSESSMENT YEAR :1999-00) MR.K.R.MANI , PROP.OMEGA GRANITES, 3/63,ANNA NAGAR,KARUVEPPAMPATTI POST, TIRUCHENGODE TALUK . VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-II, SALEM . PAN AFBPM 7526 B ( / APPELLANT ) ( / RESPONDENT ) #$ % & / APPELLANT BY : MR.T.VASUDEVAN,ADVOCATE '(#$ % & / RESPONDENT BY : MR.A.V.SREEKANTH,JCIT, D.R ) * % +, / DATE OF HEARING : 29.10.2015 -' % +, /DATE OF PRONOUNCEMENT : 18.12.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A), CHENNAI DATED ITA NO. 746/MDS/2015 2 29.01.2015 IN ITA NO.28/2009-10 PASSED UNDER SEC.1 43(3) READ WITH SECTION SEC. 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVEN ELABORATE GROUNDS IN ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE A SSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD UPHELD THE ORDER OF THE LD. ASSESSING OFFICER IN CONFIRMING THE ADDI TION OF ` 40 LAKHS OUT OF ` 50 LAKHS MADE BY THE A.O AS UNDISCLOSED INCOME FROM OTHER SOURCES. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THE CAS E OF THE ASSESSEE SURVEY U/S.133A OF THE ACT WAS CONDUCTED IN THE BUS INESS PREMISES OF THE ASSESSEE ON 03.03.2009. THEREAFTER THE ASSES SEE FILED HIS RETURN OF INCOME ON 21.12.1999 FOR THE ASSESSMENT Y EAR 1999-2000. DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS REV EALED THAT THE ASSESSEE HAD EXTENDED LOAN TO MR.M.KALIANNAN AS DET AILED HEREIN BELOW: SL. NO. DATE OF PAYMENT AMOUNTS ( ` ) MODE OF PAYMENT 1 21.07.98 10 LAKHS CHEQUE ITA NO. 746/MDS/2015 3 2 25.09.98 10 LAKHS CASH 3 17.11.98 10 LAKHS CASH 4 18.11.98 10 LAKHS CASH 5 25.11.98 10 LAKHS CASH THE ASSESSEE ADMITTED AT THE TIME OF SURVEY THAT TH E AFORESAID AMOUNT OF ` 50 LAKHS EXTENDED AS LOAN TO MR.M.KALIANNAN WAS EAR NED BY THE ASSESSEE AND MAY BE TREATED AS INCOME FROM OTHER SOURCES WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS. HOWEVER ON 16.03.1999 THE ASSESSEE RETRACTED THE STATEMENT GIV EN AT THE TIME OF SURVEY WITH THE SUBMISSIONS THAT THE LOANS AGGREGAT ING TO ` 50 LAKHS WAS RECORDED IN HIS ROUGH CHITTA BOOK MAINTAINED FOR THE BUSINESS OF GRANITE UNDER THE NAME OMEGA GRANITES. IT WAS THEREFORE STATED THAT THE AFORESAID AMOUNT CANNOT BE TREATED AS INCO ME FROM UNDISCLOSED SOURCES. SUBSEQUENTLY AT THE TIME OF AS SESSMENT PROCEEDINGS THE LD. ASSESSING OFFICER AFTER CONSIDE RING THE ABOVE FACTS, MADE ADDITION OF ` 50 LAKHS IN THE HANDS OF THE ASSESSEE AS INCOME FROM OTHER SOURCES BY OBSERVING AS UNDER:- 9. I HAVE CONSIDERED OF THE ASSESSEE VERY CAREFUL LY. DURING THE COURSE OF SURVEY, NO BOOKS EXCEPT THE SO CALLED ROUGH CHITT A WERE AVAILABLE. THOUGH THE ASSESSEE WAS CARRYING ON THE BUSINESS ON LARGE SCALE, ADMITTEDLY, REGULAR ITA NO. 746/MDS/2015 4 BOOKS OF ACCOUNT FOR THE PREVIOUS YEAR 98-99 WERE N OT PREPARED EVEN UP TO 3.9.99, THE DATE OF SURVEY. THE SOCALLED ROUGH CH ITTA IS INCOMPLETE INSOFAR AS IT CONTAINS ONLY ENTRIES RELATING TO CERTAIN WITHDR AWALS FROM AND DEPOSITS IN TO THE BANKS, QUARRY EXPENSES INCURRED IN CASH ETC. THE EN TRIES FOR SALE PROCEEDS RECEIVED, OTHER MAJOR EXPENSES ETC., DO NOT FIND PL ACE IN THIS CHITTA. BE THAT AS IT MAY, THE ASSESSEE HAS GIVEN A CATEGORICAL STATEMENT AT THE TIME OF SURVEY TO THE EFFECT THAT HE HAD ADVANCED LOANS OUT OF HIS INCOME FROM OTHER SOURCES. HIS CONFESSION THAT HE HAD INCOME FROM SOURCES OTHER TH AN FROM GRANITE BUSINESS AND THAT SUCH INCOME WAS USED FOR ADVANCING LOANS, CANNOT BE EASILY BRUSHED ASIDE. THE INFORMATION GIVEN BY HIM AT THE TIME OF SURVEY WAS WELL WITHIN HIS KNOWLEDGE AND WHATEVER STATEMENT HE HAD GIVEN IS VE RY MUCH MATERIAL TO THE PROCEEDINGS ON HAND. MOREOVER, THE ENTRIES IN THE ROUGH CHITTA REFERRED TO BY THE ASI ARE FOUND TO A NOT RECORDED IN THE THE NORM AL COURSE, BUT INSERTED ON A. LATER DATE. NEITHER THE ASSESSEE NOR THE REPRESENTA TIVE IS ABLE TO EXPLAIN SATISFACTORILY THE CIRCUMSTANCES UNDER WHICH THE EN TRIES WERE INSERTED. POSSIBLY, IN ORDER TO CREATE RECORDS FOR THE PURPOSE OF PRODU CTION BEFORE THE COURT IN CONNECTION WITH THE INSOLVENCY PETITION FILED BY SR I.KALIANNAN AND TO STRENGTHEN THE CLAIM OF HIS DUES, THE ENTRIES WOULD HAVE BEEN INSERTED. 10. ADMITTEDLY, PAYMENTS TO THE EXTENT OF RS.40 LA KHS WERE MADE TO SRI.M.KALIANNAN IN CASH IN FOUR INSTALLMENTS.- THE ASSESSEES REPRESENTATIVE HAS NO SATISFACTORY EXPLANATION TO OFFER AS TO WHY THE ASSESSEE SOUGHT TO ADVANCE SUCH HUGE SUMS IN CASH, WHEN THE ASSESSEE WAS OPERA TING REGULAR BANK ACCOUNTS AND LARGE SCALE TRANSACTIONS WERE PASSED T HROUGH BANKS. THE MODE OF PAYMENTS AND THE MANNER IN WHICH THE ENTRIES WERE I NSERTED WOULD LEAD ONE TO THE IRRESISTIBLE CONCLUSION THAT BUT FOR THE INSOLV ENCY PETITION FILED BY SRI.KALIANNAN, THE ASSESSEE WOULD NOT HAVE DISCLOSE D THE PAYMENTS. IT IS ALSO TO BE NOTED THAT THE ASSESSEE HAD CHOSEN TO MAKE THE D ISCLOSURE AT THE TIME OF SURVEY WHEN THE IMPUGNED ENTRIES WERE CLAIMED TO HA VE EXISTED, WHICH SHOWS ITA NO. 746/MDS/2015 5 THAT THE STATEMENT WAS CONSCIOUSLY GIVEN AND THAT T HE SUBSEQUENT RETRACTION OF EARLIER STATEMENT IS ILL-FOUNDED. 11. MOREOVER, THE ADMISSION GIVEN AT THE TIME OF S URVEY IS AN ENTIRELY IMPORTANT PIECE OF EVIDENCE, AS HELD BY VARIOUS COU RTS. FOLLOWING THE DECISION OF THE APEX COURT IN THE CASE OF PULLANGODE RUBBER PRO DUCE CO. LTD., VS. STATE OF KERALA (91 ITR 18), THE HON ALLAHABAD HIGH COURT HA S HELD IN THE CASE OF DR S C GUPTA VS CIT (248 ITR 712) THAT A STATEMENT MADE VO LUNTARILY BY THE ASSESSEE, COULD FORM THE BASIS OF ASSESSMENT AND THAT THE MER E FACT THAT THE ASSESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMEN T UNACCEPTABLE. IT IS ALSO RELEVANT TO CITE THE CASE OF SURJEET SINGH CHHABRA VS. UNION OF INDIA & OTHERS DECIDED BY THE HON.SUPREME COURT [135 TAXATION 711) , WHEREIN IT HAS BEEN HELD THAT THE CONFESSION MADE BEFORE THE CUSTOMS. AUTHOR ITIES, THOUGH RETRACTED, IS AN ADMISSION AND BINDS THE PETITIONER. 12. THE FACT THAT ENTRIES WERE MADE IN THE SOCALL ED ROUGH CHITTA, CANNOT NULLIFY THE STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF SURVEY AND SUCH STATEMENT HAS AN OVERRIDING EFFECT, PARTICULARLY WH EN THE ASSESSEE HAD NOT MAINTAINED REGULAR BOOKS OF ACCOUNT IN THE COURSE O F BUSINESS. THE SUBSEQUENT STATEMENT GIVEN ON 11.3.99 IS THE RESULT OF AFTERTH OUGHT. 13. IN THE LIGHT OF THE ABOVE DISCUSSIONS, I HOLD THAT THE LOANS AGGREGATING TO RS.50,00,000/- ADVANCED TO SRI.KALIANNAN DURING THE PREVIOUS YEAR WERE OUT OF THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE S, AND ACCORDINGLY PROCEED TO ADD THIS OF RS.50 LAKHS TO THE INCOME OF THE ASS ESSEE, AS INCOME UNDER THE HEAD OTHER SOURCES. ITA NO. 746/MDS/2015 6 4. ON APPEAL, THE LD. CIT (A) ALSO CONFIRMED THE O RDER OF THE LD. ASSESSING OFFICER. THE RELEVANT PORTION OF THE ORDE R IS EXTRACTED HEREIN BELOW FOR REFERENCE:- AS CAN BE SEEN A SWORN STATEMENT WAS RECORDED BY T HE APPELLANT WHEREIN, THE APPELLANT HAS ADMITTED TO HAVING GIVEN A LOAN OF RS . 50 LAKHS TO ONE SRI. KALIANNAN AND HAS OFFERED THE SAME AS INCOME FROM O THER SOURCES. SUBSEQUENTLY, ON 16.3.99, THE APPELLANT HAS FILED A LETTER DATED 11.3.99, WHEREIN HE HAS RETRACTED THE STATEMENT, BY SAYING THAT THE DISCLOSURE WAS MADE WITHOUT VERIFICATION OF RECORD AND THAT THE DETAILS WERE AV AILABLE IN THE ROUGH CHITTA MAINTAINED FOR OMEGA GRANITES. THE APPELLANT ALSO S TATED THAT THE SAME WAS AVAILABLE AT THE TIME OF SURVEY AND WAS EXAMINED. T HE APPELLANTS AUTHORISED REPRESENTATIVE WAS SHOWN CERTAIN INTERPOLATIONS M ADE IN THE ROUGH CHITTA, WITH REGARD TO THE LOAN TRANSACTION, IT WAS STATED SINCE IT WAS A ROUGH BOOK, THERE WAS NOTHING WRONG IN ADDITION & DELETION OF ENTRIES . I HAVE SEEN THE ENTIRE RECORD. IT IS SEEN THAT TH E ASSESSING OFFICER HAS ANALYSED THE ENTIRE SUBMISSION AND THE IMPOUNDED DO CUMENT AND HAS COME TO A CONCLUSION THAT THE PRODUCTION OF ROUGH CHITTA WAS ONLY AN AFTERTHOUGHT. I AM OF THE OPINION THAT THE EXPLANATION OFFERED BY THE APP ELLANT ARE AN AFTERTHOUGHT AND NOT COLLABORATED BY ANY EVIDENCE EXCEPT OTHER ROUGH CHITTA WHICH HAS INTERPOLATIONS. I AM IN FULL AGREEMENT WITH THE C ONCLUSION OF THE ASSESSING OFFICER WITH REGARD TO THE ADMISSIBILITY OF THE ENT RIES IN THE ROUGH CHITTA, WHICH SEEMS TO BE AN AFTERTHOUGHT. THE ASSESSING OFFICER HAS CLEARLY ANALYZED THE CIRCUMSTANCES AND THE ENTRIES IN THE ROUGH CHITTA A ND CONCLUDED THAT CONTENTION IS AN AFTERTHOUGHT. IT IS HELD THAT THE APPELLANT H AS NOT BEEN ABLE TO PROVIDE ANY CORROBORATIVE EVIDENCES TO SUGGEST / PROVE THAT THE PROPERTY ACCOUNTED FOR AND THE ROUGH CHITTA WAS CORRECT. THE CONTENTION OF THE APPELLANT ARE NOT ALLOWED. GROUND NO.2.2 TO 2.5 ARE NOT ALLOWED. HOWEVER, THE PAYMENT OF RS.10,00,000/- ITA NO. 746/MDS/2015 7 BY WAY OF CHEQUE ON 27.7.98 IS ALLOWED AS THERE IS NO FINDING OF AN UNDISCLOSED BANK ACCOUNT. 5. THE LD. A.R. ARGUED BEFORE US BY CITING THE DEC ISION OF HONBLE MADRAS HIGH COURT REPORTED IN [2008] 300 ITR 157(MA D.) IN THE CASE OF CIT VS. S.KHADER KHAN SON WHEREIN IT WAS HELD TH AT THE SWORN STATEMENT AND ADMISSIONS MADE AT THE TIME OF SURVEY U/S.133A SHALL NOT HAVE ANY EVIDENTIARY VALUE UNLESS CORROBORATED WITH RELIABLE MATERIALS ON RECORD. LD. D.R ON THE OTHER HAND REL IED IN THE ORDERS OF THE REVENUE. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF T HE CASE IT IS APPARENT THAT THE LOAN OF ` 50 LAKHS IS ADVANCED TO MR.M.KALIANNAN AND THE SAME IS NOT DISPUTED. THE ONLY CLAIM OF TH E ASSESSEE IS THAT THE TRANSACTIONS HAS BEEN RECORDED IN HIS ROUGH CH ITTA BOOK AND THEREFORE CANNOT BE TREATED AS HIS UNDISCLOSED INCO ME. FURTHER FROM THE ORDERS OF THE REVENUE IT IS NOT CLEAR WHETHER T HE AMOUNT IS INCORPORATED IN THE REGULAR BOOKS OF ACCOUNTS OF TH E ASSESSEE EXPLAINING THE SOURCE FOR THE AMOUNT ADVANCED TO MR .M.KALIANNAN. ITA NO. 746/MDS/2015 8 HOWEVER THE STAND OF THE REVENUE IS THAT THE ASSESS EE HAD ADMITTED AT THE TIME OF SURVEY THAT THE AMOUNT OF ` 50 LAKHS ADVANCED TO MR.M.KALIANNAN IS OUT OF HIS UNDISCLOSED INCOME FRO M OTHER SOURCES. THE ASSESSEE OR THE LD. A.R HAS ALSO NOT BROUGHT OU T ANYTHING ON RECORD AT THE TIME OF ASSESSMENT PROCEEDINGS TO SUG GEST THAT THE AMOUNT OF ` 50 LAKHS IS RECORDED IN THE ASSESSEES REGULAR BOOK S OF ACCOUNTS EXPLAINING THE SOURCE FOR ADVANCES MADE. I N THESE CIRCUMSTANCES THE DECISIONS RELIED UPON BY THE ASSE SSEE WILL NOT HAVE ANY RELEVANCE. THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT THE AMOUNT OF ` 50 LAKHS IS FROM THE DISCLOSED INCOME OF THE ASSESSEE. THIS ASPECT HAS TO BE ESTABLISHED FROM TH E BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND FROM THE RE TURN OF INCOME FILED BY HIM OVER THE EARLIER YEARS WHICH THE ASSES SEE HAS FAILED TO COMPLY. THE REVENUE SHOULD HAVE ALSO PROCEEDED TO V ERIFY THE BOOKS OF ACCOUNTS OF THE ASSESSEE ONCE THE ASSESSEE RETRACTS FROM HIS STATEMENTS MADE AT THE TIME OF SURVEY INSTEAD O F MAKING ADDITIONS BASED ON SUCH STATEMENTS. THEREFORE CONSI DERING THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN THE INTEREST OF JUSTICE WE REMIT ITA NO. 746/MDS/2015 9 THE MATTER BACK TO THE FILE OF LD. ASSESSING OFFICE R FOR DENOVO CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH DECEMBER,2015 AT CHENNAI. SD/- SD/- ( . . . ) ( N.R.S.GANESAN ) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 18 TH DECEMBER,2015. K S SUNDARAM. % '+./ 0 /'+ /COPY TO: 1. #$ /APPELLANT 2. '(#$ /RESPONDENT 3. ) 1+ () /CIT(A) 4. ) 1+ /CIT 5. /4 '+5 /DR 6. 6! 7* /GF