ACIT, CHENNAI V. Shri P.Ravichandran, Kancheepuram

ITA 967/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5207 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 16-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH D BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA , JUDICIAL MEMBER I.T.A. NO. 967/MDS/2010 ASSESSMENT YEAR : 2002-03 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-I(3), CHENNAI-600 034. (APPELLANT) VS. SHRI P. RAVICHANDRAN, NO.151/80-A, BHARATHIDASAN STREET, MAMALLAN NAGAR, KANCHIPURAM. PAN AABPR 3115 Q (APPELLANT) (RESPONDENT) C.O.NO.65/MDS/2010 (IN I.T.A. NO. 967/MDS/2010) ASSESSMENT YEAR : 2002-03 SHRI P. RAVICHANDRAN, KANCHIPURAM. (CROSS-OBJECTOR) VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CHENNAI 34. (APPELLANT IN APPEAL) APPELLANT BY : SHRI K.E.B.RENGARAJAN CROSS OBJECTOR BY : NONE ITA 967 & CO 65/MDS/10 :- 2 -: O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THE APPEAL IS FILED BY THE REVENUE AND THE CROSS-O BJECTION BY THE ASSESSEE. THE ASSESSMENT YEAR IS 2002-03. T HE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS)I, AT CHENNAI DATED 17.2.2010. THE MATTE R IS CONCERNED WITH THE LEVY OF PENALTY UNDER SSEC.271(1 )(C) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS A CIVIL ENGINEER AND A CONTRACTO R BY PROFESSION. HE RETURNED A TOTAL INCOME OF ` 1,25,940/- FOR THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSMENT WAS COMPLETED UNDER SEC.143(3) ON A TOTAL INCOME OF ` 8,88,440/-. THE ADDITION HAS BEEN CONTRIBUTED BY ALLEGED UNEXPLAINED INVESTM ENT. IN FACT, THE GENESIS OF THE CASE IS THAT A SEARCH AND SURVEY ACTION IS CARRIED OUT IN SRM GROUP CONCERNS. IN THE COURSE O F SEARCH, ONE SHRI R. BALAJI HAD STATED THAT HE HAD RECEIVED A SU M OF ` 271 LAKHS FROM TEN PERSONS AMONGST WHOM SHRI P. RAVICHA NDRAN HAS ITA 967 & CO 65/MDS/10 :- 3 -: GIVEN A SUM OF ` 12 LAKHS. THE DETAILS WERE ALSO FURNISHED DATE- WISE. 3. WHILE VERIFYING THE ACCOUNTS OF THE ASSESSEE, TH E ASSESSING AUTHORITY FOUND THAT HE HAS DECLARED A CAPITAL INVE STMENT IN M/S. SRI BALAJI ASSOCIATES TO THE EXTENT OF ` 5,75,000/- ALONE AND NOT TO THE FULL EXTENT OF ` 12 LAKHS AS EARLIER STATED BY SHRI R. BALAJI. WHEN THIS DIFFERENCE OF ` 6,25,000/- WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, THE ASSESSING AUTHORITY SAYS, HE COUL D NOT OFFER ANY EXPLANATION. IN SUCH A CIRCUMSTANCE, THE DIFFERENT IAL AMOUNT OF ` 6,25,000/- WAS TREATED AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE UNDER SEC.69 OF THE ACT AND MADE TH E ADDITION. 4. IT IS IN PURSUANCE OF THE ABOVE ASSESSMENT, THE PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. T HE ASSESSING OFFICER LEVIED A MINIMUM PENALTY OF ` 2,00,430/-. 5. IN FIRST APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS FOUND THAT THE ASSESSEE HAD STATED IN THE COURS E OF ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 THAT HE HAD PAID ITA 967 & CO 65/MDS/10 :- 4 -: ` 5,75,000/- TO SRI R. BALALJI AS CAPITAL IN THE FIRM OF M/S. SRI BALAJI ASSOCIATES. HE FOUND THAT THE ASSESSEE HAD FURNISHE D ALL THE DETAILS AND ALL HIS INVESTMENTS IN THE FIRM, M/S. S RI BALAJI ASSOCIATES ARE REFLECTED IN THE ACCOUNTS AND BALANC E-SHEET OF THE ASSESSEE. THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ADDITION WA S MADE BY THE ASSESSING AUTHORITY NOT ON THE BASIS OF ANY CONCEAL MENT DETECTED AGAINST THE ASSESSEE BUT ONLY ON THE BASIS OF THE S TATEMENT OF ANOTHER PERSON WHEREAS THE FACTS ASSERTED BY THE AS SESSEE ARE REFLECTED IN HIS REGULAR ACCOUNTS OF BOOK. THEREFO RE, HE HELD THAT THERE IS NO REASON TO LEVY OF PENALTY OF ` 2,00,430/- IN ASSESSEES HANDS. THE PENALTY HAS BEEN DELETED BY THE COMMISS IONER OF INCOME-TAX (APPEALS). 6. THE REVENUE IS AGGRIEVED AND THEREFORE, THE SECO ND APPEAL BEFORE US. 7. THE GROUND RAISED BY THE REVENUE IS THAT THE COM MISSIONER OF INCOME-TAX (APPEALS) HAS FAILED TO NOTE THAT THE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM THAT THE UNDISCLOS ED INVESTMENT ITA 967 & CO 65/MDS/10 :- 5 -: OF ` 6,25,000/- WAS REALLY MADE IN THE PREVIOUS YEAR RE LEVANT TO THE ASSESSMENT YEAR 2003-04 AGAINST THE ACTUAL EVID ENCE AVAILABLE ON RECORDS BY WAY OF ORAL STATEMENT FROM SRI R. BALAJI THAT THE ASSESSEE HAD RECEIVED ` 12 LAKHS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2002-03. 8. IN THE CROSS-OBJECTION FILED BY THE ASSESSEE BEF ORE THE TRIBUNAL, THE ASSESSEE HAS SOUGHT TO SUPPORT THE OR DER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 9. WHEN THE MATTER WAS CALL ON FOR HEARING, NOBODY WAS PRESENT FOR THE ASSESSEE IN SPITE OF NOTICE SERVED. THEREFORE, WE HEARD SHRI K.E.B.RENGARAJAN, THE LEARNED STANDING C OUNSEL APPEARING FOR THE REVENUE AND PROCEED TO DISPOSE OF THESE MATTERS, EX PARTE, QUA THE ASSESSEE. 10. AS RIGHTLY OBSERVED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS), THE INVESTMENTS MADE BY THE ASSESSEE IN THE FIRM, M/S. SRI BALAJI ASSOCIATES HAVE BEEN RECORDED IN HIS REG ULAR BOOKS OF ACCOUNT AND THOSE INVESTMENTS ARE REFLECTED IN THE BALANCE SHEET ITA 967 & CO 65/MDS/10 :- 6 -: FILED BY THE ASSESSEE. AS PER THOSE ACCOUNTS AND R ECORDS, THE INVESTMENT OF ` 12 LAKHS HAS BEEN MADE BY THE ASSESSEE IN A PERIOD OF TWO PREVIOUS YEARS RELEVANT TO THE ASSESS MENT YEARS 2002-03 AND 2003-04. THE ASSESSING AUTHORITY HAS T REATED THE ENTIRE AMOUNT OF ` 12 LAKHS AS THE INVESTMENTS MADE IN THE ASSESSMENT YEAR 2002-03 ONLY ON THE BASIS OF THE ST ATEMENT OF SRI R. BALAJI. WHEN THE ASSESSEE IS REGULARLY ASSE SSED TO INCOME-TAX AND WHEN HE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND WHERE HIS AFFAIRS WERE REFLECTED IN THE RESPECT IVE BALANCE- SHEET, THE ASSESSING AUTHORITY SHOULD HAVE GIVEN MO RE CREDENCE TO THOSE DOCUMENTARY EVIDENCES RATHER THAN TO THE O RAL STATEMENT OF SRI R. BALAJI. ANOTHER INTERESTING FACTOR IS TH AT SRI R. BALAJI WAS NOT EXAMINED BY THE ASSESSEE. IT IS ALSO TO BE SEE N THAT THE STATEMENT OF SRI R. BALAJI IS NOT SUPPORTED BY ANY DIRECT OR INDIRECT EVIDENCE EXCEPT HIS SELF SERVING STATEMENT. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) IS JUSTIFIED I N DELETING THE PENALTY. THE APPEAL FILED BY THE REVENUE THUS FAIL S. CONSEQUENTLY, THE CROSS-OBJECTION FILED BY THE ASSE SSEE ALSO FAILS. ITA 967 & CO 65/MDS/10 :- 7 -: 12. IN RESULT, THE APPEAL AS WELL AS THE CROSS-OBJE CTION ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING, ON TUESDAY, THE 10 TH DAY OF MAY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED : 10 TH MAY, 2011 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR