O.M.Dhandapani, Dindigul V. ITO, Dindigul

ITA 845/CHNY/2011

• Counselvise Citation: 84521714 RSA 2011
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C B RENGARAJAN JR
• Assessee Lawyers: T VASUDEVAN
• Keywords: Unexplained cash credit; Gift; Valuation report
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENN AI BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. ITA NO.845/MDS./2011 ASSESSMENT YE AR:2005-2006 SHRI O.M.DHANDAPANI, LATHAPPANPATTY, KUTHILIPPAI, ODDANCHATRAM TALUK, DINDIGUL DISTRICT VS. ITO,WARD 1(1), DINDIGUL. PAN AGUPD 0823 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.VASUDEVAN, ADVOCATE DEPARTMENT BY : SHRI K.C.B.RENGARAJAN, JR.STANDING COUNSEL DATE OF HEARING : 04.10.11 DATE OF PRONOUNCEMENT : 04.10 .11 O R D E R PER HARI OM MARATHA, JUDICIALL MEMBER : THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 IS DIRECTED AGAINST THE ORDER OF LD. COMMIS SIONER OF INCOME TAX(A)-II, MADURAI, DATED 18.02.2011. THE APPELLANT/ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(A) IN SO FAR AS IT IS AGAINST THE ASSESSEE IS CONTRARY TO LAW, ERRONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CAS E. PAGE OF 8 ITA. 845/MDS/11 SHRI O M DHANDAPANI 2 2. THE COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING THE ADDITION OF RS.50,000/- AS UNEXPLAIN ED CASH CREDITS. 3. THE COMMISSIONER OF INCOME TAX(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD DISCHARGED THE ONU S OF PROVING THE CREDITS FROM THE THREE PERSONS BY WA Y OF FILING CONFIRMATION LETTERS AND FURTHER THE CREDIT WORTHINESS OF THOSE PERSONS HAD BEEN ESTABLISHED BY WAY OF FILING CERTIFICATE ON THE EXTENT OF LAND HOL DINGS AND HENCE CONFIRMING THE CREDITS AS UNEXPLAINED WAS WHOLLY UNJUSTIFIED. 4. THE COMMISSIONER OF INCOME TAX(A) HAVING ACCEPTED THE IDENTITY OF CREDITORS AND CREDIT WORTH INESS OF PERSONS ON THE STRENGTH OF THEIR LAND HOLDINGS O UGHT TO HAVE ALSO ACCEPTED THE GENUINENESS OF THE CREDIT S ON THE BASIS OF THE CONFIRMATION LETTERS FILED BY T HEM AND DELETED THE ADDITIONS. 5. THE COMMISSIONER OF INCOME TAX(A) IN CONFIRMING THE ADDITION OF RS.110000/- RECEIVED FROM THE ASSESSEES FATHER-IN-LAW AS A GIFT. 6. THE COMMISSIONER OF INCOME TAX(A) FAILED TO APPRECIATE THAT A TOTAL AMOUNT OF RS.2 LACS WAS RECEIVED BY THE ASSESSEE FROM HIS FATHER-IN-LAW AS GIFT AND THAT THE DONOR HAD SUFFICIENT AGRICULTURAL INCO ME OVER THE PAST MANY YEARS FOR MAKING THE GIFT AND HE NCE SUSTAINING A PART OF THE GIFT AS UNEXPLAINED IS UNJUSTIFIED AND UNWARRANTED. 7. THE COMMISSIONER OF INCOME TAX(A) FURTHER FAILE D TO APPRECIATE THAT THE DONOR WAS ENGAGED IN PAGE OF 8 ITA. 845/MDS/11 SHRI O M DHANDAPANI 3 AGRICULTURAL OPERATIONS OVER THE PAST MANY YEARS AN D MERELY CONSIDERING THE CURRENT YEARS INCOME AND NO T GIVING CREDIT FOR PAST YEARS SAVINGS TO REJECT APP ORTION OF GIFT AS UNEXPLAINED WAS WHOLLY UNJUSTIFIED AND UNTENABLE IN LAW. 8. THE COMMISSIONER OF INCOME TAX(A) OUGHT TO HAVE GIVEN DUE CONSIDERATION TO THE EXPLANATIONS FURNISH ED IN THIS REGARD AND DELETED THE ENTIRE ADDITIONS. 9. THE COMMISSIONER OF INCOME TAX(A), IN ANY VIEW OF THE MATTER, OUGHT TO HAVE DELETED THE ADDITIONS ON ACCOUNT OF UNEXPLAINED CREDIT AND THE GIFT FROM FAT HER- IN-LAW AND ALLOWED THE APPEAL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD. ASSESSEE HAS BEEN DOING MONEY LENDING BUSINESS AND FOR THE YEAR UNDER CONSIDERATI ON, HE FILED HIS RETURN OF INCOME ON 30.03.2007 ADMITTING TOTAL INCOME OF RS.65,000/- AS INCOME FROM BUSINESS AND HAS ALSO SH OWN RS.2,00,000/-, AS HIS AGRICULTURAL INCOME. SUBSEQU ENTLY, ACTION UNDER SECTION 147 WAS INITIATED AND IN RESPO NSE TO NOTICE DATED 02.11.07 ISSUED U/S.148, THE ASSESSEE REQUESTED THROUGH HIS LETTER DATED 22.02.07 THAT THE ORIGINAL RETURN FILED ON 30 TH MARCH, 2007 MAY BE CONSIDERED AS A RETURN FILED IN RESPONSE TO THIS NOTICE. SUBSEQUENTLY, ASSESSMENT WAS PAGE OF 8 ITA. 845/MDS/11 SHRI O M DHANDAPANI 4 COMPLETED ON 31.12.08, WHEREIN FOLLOWING ADDITIONS WERE MADE. 1 DIFFERENCE IN VALUATION OF PROPERTY TREATED AS INCOME FROM OTHER SOURCES 4,19,900 2 UNEXPLAINED CASH CREDITS U/S.68 OF THE INCOME TAX ACT, 1961 50,000 3 UNEXPLAINED CASH GIFTS TREATED AS INCOME FROM OTHER SOURCES 1,10,000 TOTAL 5,79,900 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD.CIT(A), WHO HAS UPHELD ADDITION OF RS.1,10,000/- AND OF RS.50,000/-. HE HAS DELETED ADDITION OF RS.4,19,90 0/-, BEING DIFFERENCE IN VALUATION REPORT SUBMITTED BY THE ASS ESSEE AND THAT OF THE DEPARTMENTAL VALUATION OFFICER (DVO). THE ASSESSEE IS FURTHER AGGRIEVED. 4. THE FIRST ISSUE OF ASSESSEES APPEAL IS REGARDI NG CONFIRMED-ADDITION OF RS.50,000/-, MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED RS.50,000/- AS CREDITS, FROM THE FOLLOWING PERSONS: SHRI MUTHIAPPA GOWNDER RS.20,000/- SHRI KALIAPPA GOWNDER RS.20,000/- SHRI NATCHIMUTHU GOWNDER RS.10,000/- TOTAL RS.50,000/- PAGE OF 8 ITA. 845/MDS/11 SHRI O M DHANDAPANI 5 THIS AMOUNT HAS BEEN TREATED BY THE A.O. AS UNEXPLA INED CASH-CREDIT. THESE CREDITS WERE INTRODUCED DURING T HE RELEVANT ASSESSMENT YEAR. THE ASSESSEE FILED CONFIRMATION L ETTERS FROM THE CREDITORS, BUT THEY WERE FOUND TO BE NOT ASSESS ED TO TAX AND THAT IS WHY COMMISSIONER OF INCOME TAX(A) HAS N OT PLACED MUCH RELIANCE ON THESE CONFIRMATION-LETTERS. THE ASSESSEE ALSO FILED PROOF OF THEIR LAND HOLDINGS, I N THE FORM OF CERTIFICATE OF VAO, TO PROVE THAT THEIR CREDIT WORT HINESS. IN OUR CONSIDERED OPINION, THE AMOUNTS CREDITED BEING SMAL L AND RECEIVED FROM AGRICULTURISTS CANNOT BE DOUBTED ONLY BECAUSE THEY ARE NOT ASSESSED TO INCOME TAX. THEY ARE NOT N ECESSARILY REQUIRED TO POSSESS PERMANENT ACCOUNT NUMBERS (PA N). THE IDENTITY OF THE CREDITORS IS NOT IN DOUBT. IN OUR C ONSIDERED OPINION WITH REGARD TO THIS SMALL CREDIT, THE ASSES SEE HAS DISCHARGED ONUS LYING ON HIM BY PROVING THE IDENTI TY AND CREDIT WORTHINESS OF THE CREDITORS AND THE GENUNITY OF TH E TRANSACTIONS, WHICH STAND CONFIRMED BY THEIR LETTER S. THEREFORE, WE ORDER TO DELETE THIS ADDITION OF RS.50,000/- FRO M THE HANDS OF THE ASSESSEE. 5. THE NEXT ISSUE IS REGARDING ADDITION OF RS.1,10, 000/-. THE FACTS APROPOS OF THE ISSUE ARE THAT IN HIS BALA NCE SHEET AS PAGE OF 8 ITA. 845/MDS/11 SHRI O M DHANDAPANI 6 ON 31.03.2005, THE ASSESSEE ALLEGEDLY RECEIVED A SU M OF RS.7,50,000/-, AS GIFT. THE ASSESSING OFFICER, AFT ER DUE EXAMINATION HAS ACCEPTED THIS GIFT, TO THE EXTENT O F RS.5,50,000/-, AS GENUINE BUT REMAINING HE HAS ADDE D. AS PER THE ASSESSEE HE HAD RECEIVED A DONATION OF RS.5,05, 000/- ON THE OCCASION OF EAR-BORING CEREMONY ALONG WITH GOLD WEIGHING OF 58 GRAMS AND VALUED AT RS.48,000/-. A SUM OF RS.2,00,000/- WAS STATED TO HAVE BEEN RECEIVED AS G IFT FROM FATHER-IN-LAW, BUT EXACT DATE / OCCASION OF RECEIPT OF THE GIFT COULD NOT BE SUPPLIED. THE DONOR IS ADMITTEDLY NOT ASSESSED TO TAX. ASSESSEE SUBMITTED CHITTA ADANGAL (CONFIRM ATION OF DIFFERENT CROPS CULTIVATED) OF SHRI KARUPPANNA GOWN DER, FATHER- IN-LAW OF THE ASSESSEE. THIS PROOF HAS NOT BEEN TR EATED AS SUFFICIENT ENOUGH IN THE EYES OF THE LAW. BUT THE IDENTITY OF THE DONOR HAS NOT BEEN DOUBTED. ASSESSEE ALSO PRODUCED THE PROOF OF LAND HOLDINGS OF THE DONOR. THE OBJECTION OF THE REVENUE IS THAT HE DID NOT MAINTAIN ANY AGRICULTURA L ACCOUNT TO SUBSTANTIATE HIS INCOME OUT OF AGRICULTURAL PRODUCE AND TO ESTABLISH GENUINENESS OF THE GIFT. WHEN THE ASSESS ING OFFICER HAS HIMSELF ALLOWED A SUM OF RS.90,000/-, OUT OF TH E SAME GIFTED AMOUNT OF RS.2 LAKHS, IN OUR CONSIDERED OPI NION, FACTUM OF GIFT STANDS ESTABLISHED. IN THESE CIRCUMSTANCES PAGE OF 8 ITA. 845/MDS/11 SHRI O M DHANDAPANI 7 DISALLOWANCE OF RS.1,10,000/- OUT OF THE SAME GIFT BASED ON SAME EVIDENCE IS NOT AT ALL WARRANTED AND JUSTIFIED , THEREFORE, WE ACCEPT THE ENTIRE GIFT GIVEN BY THE FATHER-IN-LA W WHICH IS NOT VERY UNUSUAL IN CASE OF AGRICULTURISTS. THE AGRICU LTURISTS USUALLY DO NOT MAINTAIN ANY ACCOUNTS FOR AGRICULTUR AL PRODUCE AND THERE IS NO NEED FOR THEM TO BE ASSESSED TO TAX . THE REVENUE HAS NOT DISPUTED THE LAND HOLDINGS OF THE D ONOR, BUT SIMPLY BECAUSE THE ASSESSEE COULD NOT PROVE THE EXA CT AGRICULTURAL INCOME, A PORTION OF THE GIFT HAS BEEN DISALLOWED. THIS ACTION OF THE LD. ASSESSING OFFICER AS WELL AS THE LD. COMMISSIONER OF INCOME TAX(A) IS NOT JUSTIFIED AND DESERVES TO BE SET ASIDE. ACCORDINGLY, WE REVERSE THE FINDI NG OF THE LD. COMMISSIONER OF INCOME TAX(A) ON BOTH THE GROUNDS A ND ACCEPT THE APPEAL BY ORDERING TO DELETE THE ADDITI ONS. 6. IN RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSI ON OF HEARING ON 4 TH OCTOBER, 2011. SD/- SD/- (DR.O.K.NARAYANAN ) ( HARI OM MARATHA ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 4 TH OCTOBER, 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE