DCIT, CHENNAI V. Dr.D. Sujai Anand, CHENNAI

ITA 956/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7784 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B LAKSHMINARAYANA
• Assessee Lawyers: J PURUSHOTHAMAN
• Keywords: Reopening of assessment; Unexplained cash credit
• Section: 143(3); 147; 68

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.956/MDS/2015 &C.O.NO.60/MDS/2015 ( / ASSESSMENT YEAR: 2006-07) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-5(1), 121, UTHAMAR GANDHI SALAI, CHENNAI-34. VS DR.D.SUJAI ANAND, 4, 10 TH STREET, NANDANAM EXTENSION, NANDANAM, CHENNAI-35. PAN:AAKPS5124P ( / APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. B.LAKSHMINARAYANA JCIT /RESPONDENT BY : MR. J.PURUSHOTHAMAN, C.A /DATE OF HEARING : 7 TH JANUARY, 2016 /DATE OF PRONOUNCEMENT : 9 TH MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL AND THE CROSS OBJECTION ARE FILED BY THE REVENUE AND ASSESSEE RESPECTIVELY AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -15, CHENNAI DATED 30.01.2015 IN ITA NO.711/13-14/A-15 PASSED UNDER SECTION 143(3) R.W.S.147 & 250 OF THE ACT. 2. THE REVENUE HAS RAISED FOUR GROUNDS IN ITS APPEA L, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING THE ADDITION OF RS.1,42,52,500/- BY HOLDING THAT TH E JOURNAL 2 ITA NO.956/MDS/2015 & C.O. NO.60/MDS/2015 ENTRIES PASSED IN THE SUBSEQUENT YEAR TOWARDS ALLOT MENT OF SHARES OF M/S.SOUTH INDIA BOTTLING CO.PVT.LTD., IN THE NAME OF ASSESSEES FAMILY MEMBERS RECONCILED THE DIFFER ENCE. 3. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED S EVERAL GROUNDS; HOWEVER, THE CRUX OF THE ISSUE IS WITH RES PECT TO VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 1 47 OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S A DIRECTOR IN M/S. REDDY FOREX PVT. LTD., FILED HIS R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.10.200 6. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND T HE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 22.12.2008. SUBSEQUENTLY, THE LEARNED ASSESSING OFFICER NOTICED FROM THE BALANCE SHEET OF THE ASSESSEE THAT THERE WERE LIABILITIES TO THE TUNE OF RS.1,69,52,500/- B EING AMOUNT PAYABLE TO M/S.SOUTH INDIA BOTTLING CO.PVT.LTD.. HO WEVER ON VERIFICATION OF THE SAID COMPANYS BALANCE SHEET IT WAS REVEALED THAT THE LOANS RECEIVABLE FROM THE ASSESSE E WAS ONLY RS.27,00,000/-. THEREFORE, THE LEARNED ASSESSI NG OFFICER 3 ITA NO.956/MDS/2015 & C.O. NO.60/MDS/2015 WAS OF THE VIEW THAT A SUM OF RS.1,42,52,500/- HAD ESCAPED ASSESSMENT AND THEREFORE REOPENED THE ASSESSMENT IN VOKING THE PROVISIONS OF SECTION 147 OF THE ACT AND THE REASSESSMENT WAS COMPLETED ON 13.11.2013 WHEREIN THE LEARNED ASSESSING OFFICER MADE ADDITION UNDER SECTI ON 68 OF THE ACT FOR RS.1,42,52,500/- AND ACCORDINGLY INITI ATED PENALTY PROCEEDINGS. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) AFTER EXAMINING THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE RELEVANT JOURNAL ENTRIES CAME TO A FINDING THAT THE ASSESSEE AND HER RELATIVES WERE ALLOTTED W ITH EQUITY SHARES IN M/S. SOUTH INDIA BOTTLING PVT.LTD. FOR RS.2,31,50,500/- AS DETAILED HEREIN BELOW:- I) SAILAJA REDDY RS.1,17,50,000/- II) NITHYA REDDY RS. 25,02,500/- III) THE ASSESSEE RS. 62,00,000/- TOTAL RS. 2,04,52,500/- ADD: OUTSTANDING RS. 27,00,000 IN THE ASSESSEES BOOKS TOTAL RS. 2,31,52,500/- IT WAS FURTHER OBSERVED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE HAD PASSED T HE 4 ITA NO.956/MDS/2015 & C.O. NO.60/MDS/2015 NECESSARY ADJUSTMENT ENTRIES DURING THE SUBSEQUENT YEAR FOR THE SHARES ALLOTTED IN HER RELATIVES NAMES SINCE I NITIALLY THE ENTIRE AMOUNT FOR THE SHARES ALLOTTED WAS SHOWN IN HER BOOKS AND IN THE BOOKS OF M/S. SOUTH INDIA BOTTLING CO. P VT.LTD ALSO THE ASSESSEE WAS SHOWN AS THE DEBTOR. FOR THE AFORE SAID REASONS, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) DELETED THE ADDITION OF RS.1,42,52,500/-. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENT LY ARGUED BY STATING THAT NO SUCH ADJUSTMENT ENTRIES W ERE PASSED BY THE ASSESSEE OR M/S. SOUTH INDIA BOTTLING CO. PVT.LTD., IN THEIR RESPECTIVE BOOKS DURING THE RELE VANT ASSESSMENT YEAR AND THEREFORE THE FINDING OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS A ND THEREFORE IT WAS PLEADED THAT THE ORDER OF THE LEAR NED ASSESSING OFFICER MAY BE SUSTAINED. 7. THE LEARNED AUTHORIZED REPRESENTATIVE ON THE OTH ER HAND, RELIED ON THE ORDER OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS). HE FURTHER ARGUED BY STATING THAT REOPENING OF THE ASSESSMENT BY THE LEARNED ASSESSIN G 5 ITA NO.956/MDS/2015 & C.O. NO.60/MDS/2015 OFFICER WAS ERRONEOUS WHICH WAS BASED ON THE ERRONE OUS ENTRIES PASSED BY THE ASSESSEE AS WELL AS M/S. SOUT H INDIA BOTTLING CO. PVT.LTD.. 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. FROM THE ORDER O F THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IT IS APPARENT THAT HE HAS EXAMINED THE BOOKS OF ACCOUNT OF THE AS SESSEE AND VERIFIED THE STATEMENT OF ACCOUNTS OF M/S. SOUT H INDIA BOTTLING CO. PVT. LTD., AND THEREAFTER CAME TO A CO NCLUSION THAT THE DIFFERENCE IN THE STATEMENT OF ACCOUNTS OF THE ASSESSEE AND M/S. SOUTH INDIA BOTTLING CO.PVT. LTD. , WAS DUE TO THE ENTIRE TRANSITION OF ALLOTMENT OF SHARES BEI NG SHOWN IN THE ASSESSEES BOOKS I.E., FOR THE SHARES ALLOTTED IN THE NAME OF THE ASSESSEES RELATIVES. HOWEVER IN THE SUBSEQU ENT YEAR DUE TO THE ADJUSTMENT ENTRIES PASSED IN THE BOOKS O F THE ASSESSEE THE AMOUNT WAS RECONCILED. THEREFORE THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) ARRIVED AT A CONCLUSION THAT THE LEARNED ASSESSING OFFICER WAS N OT LEGALLY CORRECT IN MAKING THE ADDITION OF RS.1,42,52,500/- IN THE HANDS OF THE ASSESSEE. SINCE THE LEARNED COMMISSION ER OF 6 ITA NO.956/MDS/2015 & C.O. NO.60/MDS/2015 INCOME TAX (APPEALS) HAS MADE A CATEGORICAL FINDING ON THE ISSUES INVOLVED, WE DO NOT FIND IT NECESSARY TO INT ERFERE WITH HIS ORDER. ACCORDINGLY, WE HEREBY CONFIRM THE SAME. HOWEVER, ON THE ISSUE OF REOPENING, WE ARE IN AGREE MENT WITH THE ORDERS OF THE REVENUE BECAUSE THE LEARNED ASSESSING OFFICER OBSERVED THAT THE CLOSING BALANCE IN THE ACCOUNTS OF THE ASSESSEE AND M/S. SOUTH INDIA BOTTL ING CO. PVT. LTD., DID NOT MATCH, BASED ON WHICH THE LEARNE D ASSESSING OFFICER HAD RIGHTLY FORMED A OPINION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AS TH ERE WAS AN UNEXPLAINED CREDIT STANDING IN HIS BOOKS. TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO WAS OF TH E VIEW THAT THE LEARNED ASSESSING OFFICER HAD BONAFIDE REA SON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. IN THESE CIRCUMSTANCES, WE ONCE AGAIN D O NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF TH E LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) ON THIS ISSUE. 7 ITA NO.956/MDS/2015 & C.O. NO.60/MDS/2015 9. IN THE RESULT, BOTH THE APPEAL FILED BY THE REVE NUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH MARCH, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 9 TH MARCH, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .