D.Leela Devi, CHENNAI V. ACIT, CHENNAI

ITSSA 4/CHNY/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0297 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-06-2014
• Assessment Year: misc
• Appeal Filed On: 21-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N RENGARAJ
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Unexplained investment
• Section: 143(3); 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' # $ %& , ' $(% $) BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER IT(SS)A NO.04/MDS/2014 BLOCK PERIOD : 01.04.1996 TO 02.01.2003 SMT. D. LEELA DEVI, NO.6, RANJITH ROAD, KOTTURPURAM, CHENNAI - 600 085. PAN : AACPL 2898 B V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(5), CHENNAI - 600 034. (&+/ APPELLANT) (-.&+/ RESPONDENT) &+ / $ / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE -.&+ / $ / RESPONDENT BY : SHRI N. RENGARAJ, CIT $ 0 / 12 / DATE OF HEARING : 11 TH JUNE, 2014. 345 / 12 / DATE OF PRONOUNCEMENT : 18 TH AUGUST, 2014 / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS (CENTRAL) -I, CHENNAI, DATED 24.12.2013, PASSED UNDER SECTION 158BD READ W ITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961, FOR THE BLOCK P ERIOD 01.04.1996 TO 02.01.2003. 2 I.T.(SS) A. NO.04/MDS/14 2. THE FACTS AS EMANATING FROM THE RECORDS ARE AS U NDER:- A SEARCH UNDER SECTION 132 WAS CONDUCTED IN THE C ASE OF SHRI D. SHRI HARI RAO AND OTHERS OF M/S COSMO GRANI TES PVT. LTD. DURING THE COURSE OF SEARCH, IT TRANSPIRED THAT SHR I D. SHRI HARI RAO AND HIS FAMILY MEMBERS HAVE BEEN SHOWING SUBSTANTIA L INCOME UNDER THE HEAD AGRICULTURAL INCOME. IN THE CASE OF ASSESSEE, IT WAS OBSERVED THAT NO BOOKS WERE MAINTAINED. THE AS SESSEE IS A SOLE PROPRIETRESS OF M/S FLOOR FIXERS. THE BOOKS OF THE FIRM WERE NOT MAINTAINED UP-TO-DATE. IT WAS FURTHER NOTICED THAT THERE WAS NEGATIVE CASH BALANCE TO THE TUNE OF ` 17,90,716/- AS ON 28.12.2002. FURTHER, GOLD JEWELLERY WEIGHING 763.9 GRAMS BELONG ING TO THE ASSESSEE WAS FOUND. ANOTHER SUM OF ` 3,59,964/- WAS INVESTED IN PROPERTY. THE ASSESSING OFFICER, VIDE ASSESSMENT O RDER DATED 28.02.2007 PASSED UNDER SECTION 158BD READ WITH SEC TION 143(3), MADE ADDITIONS TO THE TUNE OF ` 12,63,500/- ON ACCOUNT OF EXCESSIVE AGRICULTURAL INCOME BY TREATING IT AS UNDISCLOSED I NCOME, ` 25,94,426/- AS UNDISCLOSED INCOME IN RESPECT OF NEG ATIVE CASH BALANCE, ` 1,86,268/- AS UNEXPLAINED INVESTMENT IN JEWELLERY ( THE A.O. CONSIDERED 300 GMS OF JEWELLERY AS EXPLAINED A ND THE REMAINING 463.9 GMS WAS TREATED AS UNEXPLAINED) AND ` 3,59,964/- AS UNEXPLAINED ADVANCE FOR PURCHASE OF PROPERTY. 3 I.T.(SS) A. NO.04/MDS/14 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE P REFERRED AN APPEAL BEFORE CIT(APPEALS). THE CIT(APPEALS), V IDE IMPUGNED ORDER, CONFIRMED THE ADDITION ON ACCOUNT OF ALLEGED EXCESS AGRICULTURAL INCOME, NEGATIVE CASH BALANCE AND UNEX PLAINED ADVANCE FOR PURCHASE OF PROPERTY. HOWEVER, IN RESP ECT OF GOLD JEWELLERY, THE CIT(APPEALS) GAVE FURTHER RELIEF OF 200 GRAMS AND TREATED 263.9 GRAMS OUT OF TOTAL 763.9 GRAMS AS UNE XPLAINED INVESTMENT IN JEWELLERY. 3. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. SHRI R. VIJAYARAGHAVAN, ADVOCATE, APPEARING ON B EHALF OF THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS BEEN REGULARLY FILING HER RETURN OF INCOME AND HAS BEEN DISCLOSING AGRICU LTURAL INCOME IN EACH OF THE ASSESSMENT YEAR STARTING FROM 1997-98 T O 2002-03. THE TOTAL AGRICULTURAL INCOME DURING THE ABOVE ASSESSME NT YEARS IS ` 13,44,500/-. THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) HAVE ERRED IN COMING TO THE CONCLUSION THAT THE ASS ESSEE HAS SHOWN EXCESSIVE AGRICULTURAL INCOME AND ACCEPTED AG RICULTURAL INCOME TO THE TUNE OF ` 81,000/- ONLY. THE BALANCE AGRICULTURAL INCOME AMOUNTING TO ` 12,63,500/- HAS BEEN ARBITRARILY TREATED AS UNDISCLOSED INCOME. AS REGARDS NEGATIVE CASH BALAN CE, THE LD. 4 I.T.(SS) A. NO.04/MDS/14 COUNSEL CONTENTED THAT THE ASSESSEE HAD EMPLOYED A PART-TIME ACCOUNTANT, FOR WRITING BOOKS OF ACCOUNT ON WEEKLY BASIS. SINCE THE BOOKS WERE NOT UPDATED, THEY WERE SHOWING NEGATIVE CASH BALANCE. THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERAT ION WITHDRAWAL FROM THE BANKS. NOW, THE BOOKS HAVE BEEN UPDATED A ND THE ASSESSEE CAN EXPLAIN NEGATIVE CASH BALANCE. ON THE ISSUE OF UNEXPLAINED ADVANCE FOR PURCHASE OF PROPERTY, THE L D. COUNSEL CONTENTED THAT THE ASSESSEE IN THE BALANCE SHEET AS ON 31.3.2003 HAS SHOWN INVESTMENT TO THE TUNE OF ` 3,60,964/- IN BBC FLAT (UNDER CONSTRUCTION). THE INVESTMENT HAS BEEN MADE OUT OF SAVINGS OF THE ASSESSEE AND HER HUSBAND. AS FAR AS INVESTMENT IN JEWELLERY IS CONCERNED, THE LD. COUNSEL CONTENDED THAT THE ASSES SEE IS AN OLD LADY OF 72 YEARS OF AGE AND THE JEWELLERY HAS BEEN ACQUIRED BY HER OVER THE PERIOD OF TIME. 5. ON THE OTHER HAND, SHRI N. RENGARAJ, CIT, APPEAR ING FOR THE DEPARTMENT, STRONGLY SUPPORTED THE ORDER OF THE CIT (APPEALS). THE LD. D.R. CONTENTED THAT THE ASSESSEE HAS NOT BEEN A BLE TO EXPLAIN SHORTAGE OF CASH AND THE CIT(APPEALS) HAS RIGHTLY U PHELD THE FINDINGS OF THE A.O. ON OTHER ISSUES. THE LD. D.R. PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 5 I.T.(SS) A. NO.04/MDS/14 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW PERUSED. ADDITIONS HAVE BEEN MADE ON THE BASIS OF MATERIALS ALLEGEDLY RECOVERED DURING SEARCH CONDUCTED IN THE CASE OF SH RI D. SHRI HARI RAO, HUSBAND OF THE ASSESSEE. THE ASSESSEE HAS CHA LLENGED THE ADDITIONS MADE BY THE AUTHORITIES BELOW. 7. THE FIRST GROUND RAISED BY THE ASSESSEE IN APPEA L IS WITH REGARD TO TREATING AGRICULTURAL INCOME TO THE TUNE OF ` 12,63,500/- AS UNDISCLOSED INCOME. A PERUSAL OF THE RECORDS SHO W THAT THE ASSESSEE HAS BEEN REGULARLY FILING RETURN OF INCOME DECLARING AGRICULTURAL INCOME AS UNDER:- YEAR AGRICULTURAL INCOME 1997 - 98 ` 132,000 1998 - 99 ` 175,000 1999 - 2000 ` 182,000 2000 - 2001 ` 275,000 2001 - 2002 ` 282,500 2002 - 2003 ` 298,000 TOTAL ` 1,344,500 THE ASSESSEE IS HAVING AGRICULTURAL LAND TO THE TUN E OF 30 ACRES AT VILLAGE THERVAI, SATYAVEDU TALUK, 10 ACRES OF LAND AT VILLAGE MEDUR, PONNERI TALUK AND 7 ACRES OF LAND AT VILLAGE AYYANA LLUR, PONNERI TALUK. THE AGRICULTURAL INCOME SHOWN BY THE ASSESS EE OVER THE ASSESSMENT YEARS HAS BEEN ACCEPTED BY THE DEPARTMEN T. IT WAS 6 I.T.(SS) A. NO.04/MDS/14 ONLY AFTER THE SEARCH, THAT THE REVENUE DISALLOWED SUBSTANTIAL AGRICULTURAL INCOME AS UNDISCLOSED INCOME AND ACCEP TED ONLY ` 81,000/- AS AGRICULTURAL INCOME. SIMILAR ADDITION WAS MADE IN THE CASE OF SHRI D. VENKATESH CONSEQUENT TO THE SAME SE ARCH. THE CIT(APPEALS) AFTER APPRAISAL OF EVIDENCE DELETED TH E ADDITION. THE REVENUE CHALLENGED THE ORDER OF CIT(APPEALS) BEFORE THE TRIBUNAL IN I.T.(SS) A. NO. 136/MDS/2007. THE TRIBUNAL, VID E ORDER DATED 13 TH MAY, 2008, UPHELD THE FINDINGS OF THE CIT(APPEALS) WITH FOLLOWING OBSERVATIONS:- 5. A PERUSAL OF THE ABOVE DETAILS MAKES OUT A CASE THAT THE ENTIRE AMOUNT OF ` 7,55,400/- TREATED BY THE ASSESSEE AS AGRICULTURAL INCOME HAD BEEN DISCLOSED TO THE DEPARTMENT THROUGH HIS REGULAR RETURNS FILED FOR THE RESPECTIVE ASSESSMENT YEAR. ALL THOSE REGULAR RETURNS WERE FILED WELL BEFORE THE DA TE OF SEARCH CONDUCTED ON 2.1.2003. THEREFORE, IT IS NEEDLESS TO SAY THAT THE AGRICULTURAL INCOME HAS ALREADY BEEN DISCLOSED TO THE DEPARTMENT EVEN BEFORE THE SEARCH AND THEREFORE, ON THE SAID GROUND ALONE IT IS NOT POSSIBLE TO HOLD THAT THE SUM OF ` 7,55,400/- WAS IN THE NATURE OF UNDISCLOSED INCOME. THE ORDER OF THE TRIBUNAL WAS SUBSEQUENTLY CONFIRME D BY THE HON'BLE MADRAS HIGH COURT REPORTED AS 310 ITR 303 ( MAD). THE FACTS IN THE CASE OF PRESENT ASSESSEE ARE IDENTICAL . IN VIEW OF SIMILAR FACTS AND CIRCUMSTANCES, WE RESPECTFULLY FO LLOW THE VIEW 7 I.T.(SS) A. NO.04/MDS/14 TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL AND DELETE THE ADDITION. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED ACCORDINGLY. 8. THE SECOND ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO ADDITION MADE ON ACCOUNT OF NEGATIVE CASH BALANCE O F M/S FLOOR FIXERS OF WHICH, THE ASSESSEE IS A SOLE PROPRIETRES S. THE LD. COUNSEL HAS CONTENDED THAT THE ACCOUNTS WERE NOT RE GULARLY MAINTAINED, THEREFORE, THERE WAS NEGATIVE CASH BALA NCE. SUBSEQUENT TO THE SEARCH, THE BOOKS WERE UPDATED AN D ADJUSTMENTS WERE MADE. THERE WERE CERTAIN VOUCHERS PERTAINING TO OTHER COMPANIES WHICH WERE WRONGLY ENTERED IN THE B OOKS OF M/S FLOOR FIXERS, NOW, THE RECTIFICATIONS WERE CARRIED OUT. THE ASSESSEE CAN EXPLAIN NEGATIVE CASH BALANCE. IN OUR CONSIDER ED VIEW, THIS ISSUE NEEDS RE-VISIT TO THE A.O. THE ASSESSEE SHAL L EXPLAIN REASONS FOR NEGATIVE CASH BALANCE AND ADJUSTMENTS MADE, TO THE SATISFACTION OF THE A.O. THE A.O., AFTER TAKING INTO CONSIDERAT ION THE RECTIFICATIONS CARRIED OUT BY THE ASSESSEE AND WITH DRAWALS FROM THE BANKS, IF ANY, SHALL DECIDE THE ISSUE AFRESH IN ACC ORDANCE WITH LAW. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PU RPOSE. 9. THE THIRD ISSUE RAISED BY THE ASSESSEE IN HER AP PEAL IS WITH REGARD TO UNEXPLAINED ADVANCE FOR PURCHASE OF PROPE RTY. THE LD. 8 I.T.(SS) A. NO.04/MDS/14 COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE AMO UNT OF ` 3,59,964/- HAS BEEN ADVANCED TO M/S BBC ASSOCIATES FOR PURCHASE OF A FLAT. THE ADVANCES HAVE BEEN MADE FROM THE SA VINGS OF THE ASSESSEE AND HER HUSBAND SHRI D. SHRI HARI RAO. WE FIND MERIT IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. T HE ASSESSEE IS HAVING INCOME FROM AGRICULTURE AND BUSINESS. SOURC E OF INCOME FOR MAKING ADVANCES FOR PURCHASE OF PROPERTY IS WELL EX PLAINED. THE ASSESSEE HAS REFLECTED INVESTMENT IN HER BALANCE SH EET AS WELL. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. THE LAST GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO INVESTMENT IN JEWELLERY. DURING THE COURSE OF SEAR CH, GOLD JEWELLERY WEIGHING 763.9 GRAMS WAS FOUND. THE ONLY EXPLANATI ON GIVEN BY THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE ASSES SEE IS 72 YEARS OF AGE AND ACQUIRED JEWELLERY OVER THE PERIOD OF TI ME. THE LD. COUNSEL HAS MADE BALD STATEMENT WITHOUT ANY CORROBO RATIVE EVIDENCE, AS TO WHEN THE JEWELLERY WAS ACQUIRED AND THE SOURCE OF ACQUIRING JEWELLERY. WE DO NOT FIND MERIT IN THE S TATEMENT OF THE LD. COUNSEL FOR THE ASSESSEE. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 11. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. 9 I.T.(SS) A. NO.04/MDS/14 ORDER PRONOUNCED ON MONDAY, THE 18 TH OF AUGUST, 2014 AT CHENNAI. SD/- SD/- ( ... ) ( # $ %& ) (DR. O.K. NARAYANAN) (VIKAS AWASTHY) /VICE-PRESIDENT ' $(% /JUDICIAL MEMBER /CHENNAI, H(! /DATED, THE 18 TH AUGUST , 2014. KRI. (I / -'1J# K#51 /COPY TO: 1. &+ /APPELLANT 2. -.&+ /RESPONDENT 3. 0 L1 () /CIT(A)(CENTRAL)-I, CHENNAI 4. 0 L1 /CIT, CENTRAL-I, CHENNAI 5. # MN -'1' /DR 6. NO P /GF.