Shri N.Murali, CHENNAI V. ITO, CHENNAI

ITA 957/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64592 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: R PADMANABHAN
• Keywords: Unexplained investment
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 957/MDS/2012 (ASSESSMENT YEAR : 2007-08) SHRI N. MURALI, NO.4, NORTON III STREET, MANDAVELI, CHENNAI - 600 028. PAN : AGTPM6838R (APPELLANT) V. THE INCOME TAX OFFICER, MEDIA WARD I, CHENNAI - 600 034 . (RESPONDENT) APPELLANT BY : SHRI R. PADMANABHAN, CA RESPONDENT BY : SHRI K.E.B. RENGA RAJAN, JUNIOR STANDING COUNSEL DATE OF HEARING : 26.11.2012 DATE OF PRONOUNCEMENT : 26.11.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT AN ADDITION OF ` 29 LAKHS MADE BY THE ASSESSING OFFICER UNDER SECTI ON 69 OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS CONFIRMED BY CIT(APPEALS). I.T.A. NO. 957/MDS/12 2 2. FACTS AS CULLED OUT FROM THE ASSESSMENT ORDER AR E THAT ASSESSEE, A TELE SERIAL PRODUCER, HAD FILED HIS RET URN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING AN INCOME OF ` 22,27,806/-. ASSESSING OFFICER WAS IN RECEIPT OF INFORMATION THAT ASSESSEE HAD DEPOSITS OF ` 47,13,000/- IN HIS BANK ACCOUNTS. ASSESSING OFFICE R REQUIRED THE ASSESSEE TO SUBSTANTIATE SOURCE OF THE DEPOSITS. A SSESSEE, IT SEEMS, HAD PRODUCED CASH BOOK OR CASH FLOW STATEMENT BEFOR E THE ASSESSING OFFICER. AS PER THE A.O., THERE WAS A DEPOSIT OF ` 11,50,000/- IN ASSESSEES BANK ACCOUNT WITH CITY BANK ON 14.6.2006 , ` 7,50,000/- ON 1.6.2006 AND ` 10,00,000/- ON 13.6.2006. FURTHER THE ASSESSING OFFICER WAS APPREHENSIVE WHETHER CASH WAS AVAILABLE WITH ASSESSEE FOR MAKING THESE DEPOSITS. ACCORDING TO HIM, THESE ASPECTS COULD NOT BE VERIFIED. SHE, THEREFORE, CONSIDERED THE TOTAL SUM OF ` 29 LAKHS AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND COMPLETED THE ASSESSMENT ACCORDINGLY. 2. IN HIS APPEAL BEFORE CIT(APPEALS), CONTENTION OF THE ASSESSEE WAS THAT HE HAD FURNISHED BEFORE THE ASSESSING OFFI CER COPIES OF THE BANK STATEMENTS WITH EVIDENCE FOR THE SOURCE OF DEP OSITS. ACCORDING TO HIM, HE WAS HAVING TOTAL COLLECTIONS OF ` 1,08,07,903/- RECEIVED FROM VARIOUS CLIENTS AND SUCH RECEIPTS WERE DULY RE FLECTED IN HIS PROFIT I.T.A. NO. 957/MDS/12 3 & LOSS ACCOUNT AND TAXES WERE DEDUCTED AT SOURCE BY SUCH CLIENTS. ACCORDING TO ASSESSEE, ASSESSING OFFICER HAD FAILED TO CONSIDER WITHDRAWALS FROM BANK AS ALSO RENTAL INCOME OF ` 14,72,100/- RECEIVED BY THE ASSESSEE FROM SATHYAM COMPUTER SERV ICES LTD. WHICH WERE CREDITED IN THE BANK ACCOUNT. ASSESSEE ALSO SUBMITTED THAT SOME OF THE RECEIPTS WERE FROM ONE M/S SAMALPA TTI POWER CORPORATION AND ONE SMT. VYJANTHIMALA, WHO WERE HAV ING ADEQUATE SOURCE. CIT(APPEALS), HOWEVER, WAS NOT IMPRESSED. ACCORDING TO HIM, ASSESSEE WAS ACTIVELY CARRYING ON BUSINESS INV OLVING HUGE NUMBER OF TRANSACTIONS, BUT HAD NOT PROPERLY DOCUME NTED SUCH TRANSACTIONS. AS PER CIT(APPEALS), DEPOSITS MADE I N BANK WERE REQUIRED TO BE CORRELATED WITH THE TRAIL OF BUSINES S TRANSACTIONS WHICH GENERATED THE CASH AND ASSESSEE HAD FAILED TO DO SO . CIT(APPEALS) REFUSED TO CONSIDER THE CASH FLOW STATEMENT FILED B Y THE ASSESSEE STATING THAT IT WAS ONLY A SECONDARY EVIDENCE. ACC ORDING TO HIM, THERE WERE NO GROUNDS FOR ALLOWING TELESCOPING ALSO . IN THIS VIEW OF THE MATTER, HE CONFIRMED THE ADDITION. 3. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW, SUBMITTED THAT ASSESSEE HAD SHOW N PROFESSIONAL RECEIPTS OF ` 1,08,07,903/- AND HE HAD ALSO FURNISHED TAX AUDIT I.T.A. NO. 957/MDS/12 4 REPORT IN FORM NO.3CB AND 3CD. LEARNED A.R. BROUGH T TO OUR ATTENTION COPIES OF SUCH REPORTS AND FINAL ACCOUNT STATEMENTS PLACED AT PAPER-BOOK PAGES 17 TO 29. ACCORDING TO HIM, IN THE BALANCE SHEET AS ON 31.3.2007 PLACED AT PAPER-BOOK PAGE 15, CASH AND BANK BALANCE OF ` 2,07,633/- WAS SHOWN AND THIS TOOK IN TO ACCOUNT A LL THE BANK BALANCES, INCLUDING THE BALANCE WITH CITY BANK CONSIDERED FOR THE ADDITION. LEARNED A.R. FURTHER POINTED OUT THA T ASSESSEE HAD SUFFICIENT WITHDRAWALS FROM BANK WHICH JUSTIFIED TH E DEPOSITS MADE AND ALL SUCH BANK ACCOUNTS WERE APPEARING IN THE BO OKS OF ACCOUNTS ALSO. ACCORDING TO HIM, AT NO POINT OF TIME ASSESS EE HAD ARGUED THAT THE MONEY WAS COMING OUT OF BUSINESS TRANSACTIONS. LARGE PART OF MONEY, ACCORDING TO HIM, WERE WITHDRAWALS FROM ONE M/S PROXIMA TECHNOLOGIES (P.) LTD. IN WHICH ASSESSEE WAS A DIRE CTOR. ACCORDING TO HIM, ASSESSEE HAD CASH WITHDRAWALS OF ` 26,13,245/-, WITHDRAWAL FROM M/S PROXIMA TECHNOLOGIES (P.) LTD. ` 3,46,000/-, RENTAL RECEIPTS OF ` 1,33,632/- AND AMOUNTS RECEIVED ON SALE OF VEHICLE S ` 2,43,030/-, WHICH WERE MORE THAN SUFFICIENT FOR THE DEPOSITS WH ICH WERE CONSIDERED FOR ADDITION. ACCORDING TO HIM, DESPITE ALL THESE DETAILS BEING AVAILABLE, ASSESSING OFFICER HAD REACHED AN E RRONEOUS CONCLUSION THAT DEPOSITS WERE NOT PROPERLY EXPLAINE D. I.T.A. NO. 957/MDS/12 5 4. PER CONTRA, LEARNED D.R., STRONGLY SUPPORTING TH E ORDERS OF AUTHORITIES BELOW, SUBMITTED THAT ASSESSEE WAS HAVI NG PROFESSIONAL RECEIPTS FROM ONE M/S VIJAY TV VIDE AGREEMENT DATED 1 ST DAY OF MAY, 2006. HIS PROFESSIONAL RECEIPTS WERE ALL AFTER SUC H DATE. AS AGAINST THIS, DEPOSIT OF ` 11,50,000/- WAS ON 14.6.2006, ` 7,50,000/- ON 1.6.2006 AND ` 10,00,000/- ON 13.6.2006. NO PROFESSIONAL RECEIPT S WERE THERE PRIOR TO THESE DATES. HENCE, ASSESSEE C OULD NOT SAY THAT THESE AMOUNTS HAD COME FROM PROFESSIONAL RECEIPTS. ACCORDING TO HIM, ASSESSEE SHOULD HAVE SHOWN THESE TRANSACTIONS IN HIS CASH BOOK PRODUCED, BUT INSTEAD WAS BRINGING ON A STORY OF CERTAIN WITHDRAWALS MADE FROM VARIOUS PLACES TO JUSTIFY THE DEPOSITS. FURTHER, ACCORDING TO HIM, ASSESSEE WAS NOT ABLE TO SHOW HOW THE CASH INFLOW AND OUTFLOW WERE MATCHED. IN THESE CIR CUMSTANCES, ACCORDING TO HIM, THE DEPOSITS WERE CORRECTLY CONSI DERED AS UNEXPLAINED INVESTMENT. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. WITHOUT DOUBT, ASSESSEE HAD DEPOSITS OF ` 29 LAKHS IN THE BANK ACCOUNT. AS PER THE ASSESSEE, HE HAD WITHDRAWN MON EY FROM ONE M/S PROXIMA TECHNOLOGIES (P.) LTD. IN WHICH HE WAS A DIRECTOR, AND ALSO HAD OTHER DRAWING FROM HIS OWN BUSINESS FOR JU STIFYING SUCH I.T.A. NO. 957/MDS/12 6 DEPOSITS. A LOOK AT THE ORDER OF ASSESSING OFFICER CLEARLY SHOWS THAT SHE HAD NOT GONE THROUGH THE VARIOUS DETAILS FURNIS HED BY THE ASSESSEE. THE ORDER IS VERY CURT AND SIMPLY STATES WITHOUT VERIFICATION OF BANK ACCOUNT IT COULD NOT BE CONCLU DED WHETHER ENOUGH CASH WAS AVAILABLE WITH THE ASSESSEE FOR MAK ING THE DEPOSITS. IF THE ASSESSEE WAS INDEED MAINTAINING B OOKS OF ACCOUNTS, THEN HIS BANK ACCOUNT WOULD HAVE FOUND A MENTION IN SUCH BOOKS UNLESS IT WAS A PURELY PERSONAL BANK ACCOUNT. EVEN IF IT WAS A PURELY PERSONAL BANK ACCOUNT, ASSESSEE SHOULD SHOW THAT HE WAS HAVING SUFFICIENT FUNDS FOR JUSTIFYING THE DEPOSITS. CONT ENTION OF THE ASSESSEE THAT HE HAD DRAWING FROM HIS OWN BUSINESS AS WELL AS FROM THE COMPANY IN WHICH HE WAS A DIRECTOR, WAS NOT PRO PERLY EXAMINED BY THE ASSESSING OFFICER. IN THE FITNESS OF THE TH INGS, WE ARE OF THE OPINION THAT THE MATTER HAS TO BE VERIFIED BY THE A SSESSING OFFICER ONCE AGAIN FOR CONSIDERING THE CONTENTIONS OF THE A SSESSEE AND VERIFYING IT WITH THE RECORDS PRODUCED BY HIM. WE, THEREFORE, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMIT THE MATTER BACK TO THE FILE OF THE A.O. FOR CONSIDERATION AFRESH IN ACCORD ANCE WITH LAW. ASSESSING OFFICER SHALL GIVE AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN HIS SOURCE OF DEPOSITS. I.T.A. NO. 957/MDS/12 7 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON MONDAY, TH E 26 TH OF NOVEMBER, 2012, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 26 TH NOVEMBER, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VI, CHENNAI (4) CIT-IV, CHENNAI (5) D.R. (6) GUARD FILE