M.Krishnakumar (HUF), CHENNAI V. ACIT, Salem

ITA 941/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7861 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 27-04-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.941/MDS/2015 / ASSESSMENT YEARS : 2002-03 SHRI M. KRISHNAKUMAR (HUF) 21-B, AMBIKA GARDENS GANAPATHY NAGAR EXTENSION MAMBALASALAI, TRICHY - 5 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE SALEM [PAN AAEHK 2337 N ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.942/MDS/2015 / ASSESSMENT YEARS : 2005-06 SHRI M. KRIS HNAKUMAR NO.70, AMBALAVASAL SWAMI KOVIL STREET, GUGAI SALEM 636 006 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE SALEM [PAN AENPK 4624 R ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 11 - 01 - 2016 ! / DATE OF PRONOUNCEMENT : 04 - 0 3 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED A GAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TA X (APPEALS)-18, ITA NO. 941 & 942/15 :- 2 -: CHENNAI, FOR ASSESSMENT YEARS 2002-03 AND 2005-06. THEREFORE, WE HEARD THE APPEALS TOGETHER AND DISPOSING OF THE SAM E BY THIS COMMON ORDER. 2. LET US FIRST TAKE UP THE APPEAL IN I.T.A.NO. 941/MD S/2015 FOR ASSESSMENT YEAR 2002-03. 3. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDITION OF ` 7,92,686/- ON ACCOUNT OF OPENING CAPITAL BALANCE. 4. SHRI S.SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE ON THE BASIS OF THE INFORMATION SAID TO BE RECEIVED FROM CENTRAL EXCISE DEPARTMENT. DURING THE COURSE OF SEARCH OPERATION, NO INCRIMINA TING MATERIAL WAS FOUND. THE LD. COUNSEL FURTHER SUBMITTED THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED CAPITAL ACCOUNT DISCLOSING THE OPENING CASH BALANCE OF ` 7,92,686/-. THE ASSESSING OFFICER WANTED THE DETAILS OF THE LOAN CREDITORS AND CONFIR MATION FROM THEM. THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM SIX LOAN CREDITORS. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE IN SUPPOR T OF THE LOAN CREDITORS, THE ASSESSING OFFICER DISBELIEVED THE CL AIM OF THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, WHEN THE PERSONS WHO ADVANCED THE MONEY CONFIRMED THE SAME, THE ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. REFERRING TO THE ORDER OF THE ITA NO. 941 & 942/15 :- 3 -: CIT(A), THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WITHOUT CONSIDERING THE EXPLANATION OF THE ASSESSEE, HE SI MPLY FOUND THAT THE ASSESSING OFFICER IS JUSTIFIED IN MAKING THE ADDITI ON WITH REGARD TO OPENING CAPITAL OF ` 7,92,686/-. ACCORDING TO THE LD. COUNSEL, THE CIT(A) OUGHT TO HAVE RE-EXAMINED THE CLAIM OF THE ASSESSEE AND THEREAFTER RECORD HIS OWN FINDINGS IN THE IMPUGNED ORDER. IN THE ABSENCE OF ANY SUCH DISCUSSION, ACCORDING TO THE LD . COUNSEL, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 5. ON THE CONTRARY, DR.B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT INITIALLY, THE ASSES SEE CLAIMED THE AMOUNT OF ` 7,92,686/- AS LOAN CREDIT BEFORE THE ASSESSING OFF ICER. HOWEVER, SUBSEQUENTLY, THE ASSESSEE CLAIMED THAT WHAT WAS RECEIVED BY THE ASSESSEE IS GIFT FROM RELATIVES AND FRIENDS AT THE TIME OF MARRIAGE. IN VIEW OF THIS SHIFTING OF STAND, THE A SSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. REFERRING T O THE ASSESSMENT ORDER, THE LD. DR SUBMITTED THAT THE ASSESSEES AV ERAGE INCOME PER YEAR IS ABOUT ` 55,000/- WHICH IS NOT EVEN SUFFICIENT TO MEET HIS DAY- TO-DAY ACTIVITIES. THERE ARE NO OTHER SOURCE OF IN COME OR FUNDS AVAILABLE TO THE ASSESSEE, HENCE, THE DISCLOSURE O F ACCUMULATED INCOME AS OPENING CAPITAL TO THE EXTENT OF ` 7,92,686/- WAS RIGHTLY ADDED AS INCOME OF THE ASSESSEE. ITA NO. 941 & 942/15 :- 4 -: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ADDITION WAS MADE TOWARDS OPENING CAPITAL. THE ASSESSEE EXPLAINED BE FORE THE ASSESSING OFFICER THAT WHAT WAS SHOWN AS CAPITAL WAS LOAN REC EIVED FROM VARIOUS PERSONS. THE ASSESSEE HAS ALSO FILED CONFIRMATION LETTERS. SUBSEQUENTLY, BY A LETTER DATED 18.12.2009 THE ASS ESSEE COMPLETELY CHANGED HIS STAND AND STATED THAT WHAT WAS RECEIVED IS GIFT FROM RELATIVES AND FRIENDS AT THE TIME OF MARRIAGE. IN VIEW OF THE CHANGING STAND, THE ASSESSING OFFICER DISBELIEVED THE CLAIM OF THE ASSESSEE AND FOUND THAT THE ASSESSEE HAS NO SOURCE OF INCOME TO ACCUMULATE THE AMOUNT OF ` 7,92,686/-. THEREFORE, THE ASSESSING OFFICER ADDE D THE SUM OF ` 7,92,686/- AS INCOME FOR THE YEAR UNDER CONSIDERAT ION. IT IS NOT THE CASE OF THE ASSESSEE BEFORE THE LOWER AUTH ORITIES THAT THE ASSESSEE HAS ACCUMULATED INCOME. THE FACT THAT THE ASSESSEE HAS A MEAGER INCOME OF ` 55,000/- PER YEAR IS NOT IN DISPUTE. THE ASSESSE E COULD NOT SUFFICIENTLY EXPLAIN THE SOURCE FOR THE CAPITAL ACCOUNT TO THE EXTENT OF ` 7,92,686/-. INITIALLY THE ASSESSEE CLAIMED THAT THESE ARE LOAN CREDITS AND SUBSEQUENTLY, CLAIMED THAT THESE A RE GIFTS RECEIVED DURING THE COURSE OF MARRIAGE. HOWEVER, THE ASSES SEE COULD NOT SUBSTANTIATE BOTH THE CLAIMS BEFORE THE ASSESSING O FFICER. IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE CLAIM O F THE ASSESSEE EITHER AS LOAN OR AS GIFT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ITA NO. 941 & 942/15 :- 5 -: THE ASSESSING OFFICER HAS RIGHTLY MADE ADDITION OF ` 7,92,686/-. THE CIT(A) HAS RIGHTLY CONFIRMED THE SAME. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND ACCORDINGLY, THE SAME IS CONFIRMED. 7. NOW COMING TO I.T.A.NO. 942/MDS/2012 FOR ASSESSMENT YEAR 2005-06, THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDITION OF ` 95,520/- BEING EXPENDITURE CLAIMED BY THE ASSESSEE TOWARDS INSURANCE POLICIES. 8. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT DURING THE COURSE OF SEARCH OPERATION, THE REVENUE AUTHORITIES FOUND THAT THE ASSESSEE HAS PAID A SUM OF ` 1,82,681/- TOWARDS INSURANCE POLICIES. THE SOURCE FOR THE PAYMENT OF ` 1,82,681/- WAS REFLECTED IN THE CASH FLOW STATEMENT FILED BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER REJECTED THE CASH FLOW STATEM ENT ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE RETURN U/S 13 9(1) OF THE ACT. IN THE ABSENCE OF ANY MATERIAL, ACCORDING TO THE LD. C OUNSEL, DISALLOWANCE OF ` 95,520/- IS NOT JUSTIFIED. WHEN THE ASSESSING OFF ICER ACCEPTED THE EXPENDITURE INCURRED TOWARDS INSURANCE POLICIES TO THE EXTENT OF ` 57,885/-, HE HAS NO REASON TO DISALLOW ` 95,520/-. 9. ON THE CONTRARY, DR. B.NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CASH FLOW STATEME NT FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS REJECTED BY THE ASSESSING ITA NO. 941 & 942/15 :- 6 -: OFFICER. AFTER CONSIDERING THE SOURCE OF INCOME TO THE EXTENT OF ` 57,885/- WHAT WAS DISALLOWED IS ` 95,520/-. THE ASSESSING OFFICER HAS ALSO CONSIDERED THE WITHDRAWALS SHOWN TO THE EXTENT OF ` 60,000/- AS TOO LOW FOR MEETING THE DAY-TO-DAY AFFAIRS OF THE ASSESSEE. ACCORDING TO THE LD. DR, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION OF ` 95,520/-. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE ADMITTEDLY CLAIMED AN EXPENDITURE OF ` 1,82,681/- TOWARDS INSURANCE POLICIES. THE CIT(A), AFTER CONSIDERING THE DRAWIN GS SHOWN IN THE CASH FLOW STATEMENT, ACCEPTED THE PAYMENT TOWARDS INSURA NCE POLICIES TO THE EXTENT OF ` 55,885/-. THE FACT THAT THE ASSESSEE IS A PARTNE R IN A PARTNERSHIP FIRM VIZ. SWATHY INDUSTRIES IS NOT IN D ISPUTE. IN FACT, M/S SWATHI INDUSTRIES IS ENGAGED IN MANUFACTURING AND S ALE OF DETERGENT SOAPS. THE ASSESSEE HIMSELF ADMITTED AN INCOME OF ` 2,61,520/- IN THE RETURN OF INCOME. HOWEVER, THE ASSESSING OFFIC ER DETERMINED THE TOTAL INCOME AT ` 3,57,040/-. BY TAKING INTO CONSIDERATION THE NATU RE OF THE BUSINESS, THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT THE INCOME MIGHT HAVE BEEN GENERATED FROM THE BUSINESS FOR MAKING THE PAYMENT TO THE EXTENT OF ` 1,82,681/-. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ADDITION OF ` 95,520/- WHICH IS PART OF THE ITA NO. 941 & 942/15 :- 7 -: PAYMENT TOWARDS INSURANCE POLICIES IS NOT CALLED FO R. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF ` 95,520/-. 11. IN THE RESULT, ASSESSEES APPEALS I.T.A.NO. 941/MD S/2015 IS DISMISSED WHEREAS I.T.A.NO.942/MDS/2015 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 4 TH MARCH, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF