Krishna Kumarappa, CHENNAI V. ITO, CHENNAI

ITA 781/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64247 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM JT
• Assessee Lawyers: B VENKATRAMAN IRSRETD
• Keywords: Presumptive income; Opportunity of being heard
• Section: 44AD; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A.NO.781/MDS/2012 ASSESSMENT YEAR : 2008-09 SHRI KRISHNA KUMARAPPA # 31, MFS LANE PANTHEON ROAD EGMORE CHENNAI 600 008 [PAN AENPK5605C] VS THE ITO BUSINESS WARD VI(3) CHENNAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.VENKATRAMAN, IRS(RETD.) RESPONDENT BY : SHRI GURU BHASHYAM, JT. CIT DATE OF HEARING : 06-09-2012 DATE OF PRONOUNCEMENT : 06-09-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF THE CIT(A)-IX, CHENNAI, DATED 31.1.2012, BY TAKING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER DATED 31 . 01 . 2012 OF LEARNED COMMISSIONER APPEALS - IX U/S 250[6] OF IT ACT 1961 FOR THE ASSESSMENT YEAR 2 008 - 09 IN THE APPELLANT CASE IS CONTRARY TO PROVISIONS OF THE ACT AND FACTS OF THE CASE & NOT LEGA L SUSTAINABLE AND AGAINST PRINCIPLES OF NATURAL JUSTI CE. I.T.A.NO.781/12 :- 2 -: 2. THE LEARNED COMMISSIONER APPEALS ERRED IN NOT AFFO RDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLANT BEFORE CONCLUDING THE APPELLATE PROCEEDINGS . THE LEARNED COMMISSIONER APPEALS FAILED APPRECIATE THAT THE HEARING NOTICES STATED TO HAVE BEEN SERVED WERE NOT ACTUALLY RECEIVED BY THE APPELLANT . 3. THE LEARNED COMMISSIONER APPEALS ERRED IN CONFIRMI NG THE ASSESSING OFFICER ' S DECISION TO HOLD THE CASH DEPOSITS APPEARING IN T HE BANK STATEMENT AS DISTINCT AND SEPARATE FROM THE GROSS R ECEIPTS OFFERED FOR PRESUMPTIVE TAXATION U/S 44AD . 4. THE LEARNED COMMISSIONER APPEALS OUGHT TO HAVE HEL D THAT THE ASSESSING OFFICER FAILED TO ADOPT THE SAME STAND AS WAS TAKEN FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR IN THE MATTER OF CASH DEPOSITS MADE I N TO THE BANK ACCOUNT WHILE FRAMING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2008 - 09. 5. THE LEARNED COMMISSIONER APPEALS OUGHT TO HAVE APP RECIATED THAT THE PROVISIONS OF SEC 68 WHICH IS A CHARGING SECTION SH OULD BE CONSTRUED STRICTLY . THE APPLICABILITY OF THE INGREDIENTS OF SEC 68 NOT BEING SATISF I ED THIS CASE , THE LEARNED COMMISSIONER APPEALS ERRED CONFIRMING T HE ADDITION MADE BY THE ASSESSING OFFICER BY APPLYING SECTION 68 OF THE INCOME TAX ACT, 1961. 6. THE LEARNED COMMISSIONER APPEALS OUGHT TO HAVE APP RECIATED THAT BANK STATEMENT WOULD NOT ANSWER THE DESCRIPTION OF 'BOOKS OF ACCOUNTS' MAINTAINED BY THE APPELLANT AND HENCE, C ASH DEPOSITS IN BANK ACCOUNTS WOULD NOT FALL WITHIN THE AMBIT OF S EC 68 OF THE INCOME TAX ACT, 1961. 7. THE LEARNED COMMISSIONER APPEALS ERRED IN CONFIRMI NG THE ASSESSING OFFICER'S DECISION TO TAX THE SAME AMOUNT TWICE, FI RST INCLUDING IT WITH THE CONSTRUCTION TURNOVER OF THE APPELLANT U/S 44AD AND TAXING IT AT THE PRESUMPTIVE RATE OF 8% AND AGAIN TAXING THE SAME AT THE NORMAL RATE APPLICABLE TO INDIVIDUAL U/S 68 OF THE ACT . WHICH IS NOT PERMISSIBLE UNDER THE INCOME TAX ACT, 1961. 8. FOR THE ABOVE GROUNDS AND ANY OTHER GROUND THAT MA Y BE ADDUCED WITH THE LEAVE OF THE HON'BLE TRIBUNAL, IT IS PRAYED THA T THE ORDER OF THE LEARNED COMMISSIONER APPEALS MAY BE SET ASIDE AND THE ADDITIONS CONFIRMED BY HIM DELETED. 9. THE APPELLANT CRAVES LEAVE FOR ADDUCING NECESSARY EVIDENCE, AMENDMENTS AND EXPLANATIONS INCLUDING WRITTEN ONE T O THE AFORESAID GROUNDS AND ALSO ADDITIONAL GROUNDS IN TH E COURSE OF HEARING OF THE APPELLATE PROCEEDINGS. I.T.A.NO.781/12 :- 3 -: 2. THE A.R OF THE ASSESSEE ARGUED AND SUBMITTED THAT ASSESSEE EARNED INCOME FROM THE BUSINESS OF CIVIL CONSTRUCTION WORK. HE SUBMITTED THAT THE ASSESSEE DID NOT MAI NTAIN ANY BOOKS OF ACCOUNT. ITS GROSS RECEIPTS FROM BUSINESS WAS ` 22,16,194/- AND THE ASSESSEE, IN ACCORDANCE WIT H THE PROVISIONS OF SECTION 44AD OF THE ACT OFFERED 8% OF THE GROSS RECEIPTS AMOUNTING TO ` 1,77,296/- AS INCOME FROM CIVIL CONSTRUCTION WORK. THE ASSESSING OFFICER OBSERVED FROM THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH ABN A MRO BANK THAT THE ASSESSEE HAD MADE CASH DEPOSITS TOTA LING TO ` 15,08,000/- DURING THE FINANCIAL YEAR 2007-08. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSE SSEE THAT THE SAID DEPOSITS WERE OUT OF CIVIL CONSTRUCTIONAL WORK RECEIPTS BY THE ASSESSEE AND TREATED THE SAME AS UNEXPLAINED C REDIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 68 OF TH E ACT AND MADE ADDITION OF THE SAME TO THE INCOME OF THE ASS ESSEE. HE FURTHER SUBMITTED THAT AS THE ASSESSEE HAD NOT MAI NTAINED BOOKS OF ACCOUNT AND THE ENTRIES WERE ONLY FOUND CR EDITED IN THE BANK ACCOUNT OF THE ASSESSEE WHICH CANNOT BE SAID TO BE THE BOOKS OF ACCOUNT OF THE ASSESSEE AS HELD BY VA RIOUS TRIBUNALS AND HIGH COURTS, THE PROVISIONS OF SECTIO N 68 ARE NOT I.T.A.NO.781/12 :- 4 -: APPLICABLE TO THE ASSESSEE AND HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) W AS NOT JUSTIFIED. 3. ON THE OTHER HAND, THE DR, REBUTTING THE ARGUMENTS MADE BY THE A.R OF THE ASSESSEE, SUBMITTED THAT TH E ASSESSING OFFICER HAS STATED IN HIS ORDER THAT THE ASSESSEE HAD NOT FILED ANY EVIDENCE TO SHOW THAT THE CASH DE POSITS MADE IN THE BANK ACCOUNT WITH ABN AMRO WERE OUT OF THE B USINESS RECEIPTS OF THE ASSESSEE FROM CIVIL CONSTRUCTION W ORK. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS FO UND THAT THREE CHEQUES WERE ISSUED FROM THIS ACCOUNT BY THE ASSESSEE. CHEQUE NO.1 BEARING NO.658002 DATED 23.5.2007 OF ` 1,05,000/- WAS PAID TO ICICI BANK LTD SB ACCOUNT B .KRISHNA KUMARAPPA. THE SECOND CHEQUE BEARING NO.866441 DAT ED 20.08.2007 AMOUNTING TO ` 1,18,000/- WAS PAID TO DEUTSCHE BANK CARD NO.4412 8510 0276 6004. THE THIRD CHEQUE NO.866446 DATED 22.11.2007 OF ` 1,30,000/- WAS PAID TO REAL CO. LTD. FROM THIS, THE ASSESSING OFFICER HELD TH AT THE ASSESSEE HAD NOT WITHDRAWN ANY AMOUNT OUT OF THE CA SH DEPOSITS MADE BY HIM FOR THE PURPOSE OF ALLEGED CIV IL CONSTRUCTION WORK. THEREFORE, THE ASSESSING OFFICE R HAD RIGHTLY I.T.A.NO.781/12 :- 5 -: NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT THE CASH DEPOSITED IN THE BANK ACCOUNT WITH ABN AMRO WAS OUT OF THE CONSTRUCTION BUSINESS OF THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. WE FIND THAT IN THE INSTANT CASE, ADDITIO N OF ` 15,08,000/- WAS MADE BY THE ASSESSING OFFICER AS UN EXPLAINED CASH DEPOSITS MADE IN ABN AMRO BANK U/S 68 OF THE ACT AND HAD NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE T HAT THE SOURCE OF THE DEPOSITS WAS OUT OF CIVIL CONSTRUCTIO N BUSINESS OF THE ASSESSEE BECAUSE NO EVIDENCE FOR THE SAME WAS F ILED BEFORE HIM AND ALSO THAT NO AMOUNTS DEPOSITED IN TH E BANK WAS WITHDRAWN FOR THE PURPOSES OF THE CIVIL CONSTRUCTIO N BUSINESS OF THE ASSESSEE. WE FIND THAT THE ASSESSEE FILED AP PEAL BEFORE THE CIT(A) AGAINST THE ADDITION MADE BY THE ASSESSI NG OFFICER. THE CIT(A) ISSUED NOTICE OF HEARING TO THE ASSESSE E ON 11.7.2011, 22.12.2011 AND 31.1.2012 BUT THE ASSESS EE DID NOT MAKE COMPLIANCE TO THE SAME. THEREFORE, THE CIT(A) DISMISSED THE APPEAL FOR WANT OF PROSECUTION BY THE ASSESSEE AND ALSO OBSERVED THAT THE ASSESSING OFFICER HAS TA KEN INTO CONSIDERATION ALL THE FACTS BEFORE MAKING ADDITION TO THE I.T.A.NO.781/12 :- 6 -: RETURNED INCOME. WHEN QUESTIONED BY THE BENCH, THE A.R ADMITTED THAT THE COMPLIANCE WITH THE NOTICES ISSUE D BY THE CIT(A) COULD NOT BE MADE BY THE ASSESSEE. HOWEVER , HE SUBMITTED THAT IF GIVEN AN OPPORTUNITY, THE ASSESS EE IS IN A POSITION TO FILE ALL THE DETAILS IN SUPPORT OF HIS CLAIM BEFORE THE CIT(A). IN THE ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE JUST AND FAIR TO ALLOW ONE MORE OPPORTUNITY TO THE ASSESSEE TO PLEA D ITS CASE BEFORE THE CIT(A) BY FILING ALL THE RELEVANT MATERI ALS. WE WOULD ALSO HASTEN TO ADD HERE THAT WHEN THE BENCH ASKED T HE DR THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF T HE CIT(A) FOR RE-ADJUDICATION OF THE ISSUE AFRESH, THE DR SUBMITT ED THAT HE HAD NO OBJECTION TO THE SAME. WE, THEREFORE, SET A SIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE MAT TER BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION OF THE ISSU E INVOLVED IN THE APPEAL AFRESH AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL THE DETAILS AND EVIDENCES BEFORE THE CIT(A ) AS AND WHEN CALLED UPON TO DO SO. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO.781/12 :- 7 -: 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 06 TH OF SEPTEMBER, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 06 TH SEPTEMBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR