Dr.S.Arunachalam, CHENNAI v. ITO, CHENNAI

CO 61/CHNY/2010 | 2007-2008
Pronouncement Date: 29-10-2010 | Result: Dismissed

Appeal Details

RSA Number 6121723 RSA 2010
Assessee PAN AERPA8460M
Bench Chennai
Appeal Number CO 61/CHNY/2010
Duration Of Justice 3 month(s) 20 day(s)
Appellant Dr.S.Arunachalam, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Cross Objection
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-10-2010
Date Of Final Hearing 07-10-2010
Next Hearing Date 07-10-2010
Assessment Year 2007-2008
Appeal Filed On 09-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE ACCOUNTANT MEMBER] I.T.A.NO. 752/MDS/2010 ASSESSMENT YEAR : 2007-08 DR. S ARUNACHALAM NO.R 6/4 HIG ROW HOUSE VAIGAI STREET KALAKSHETRA EXTN. BESANT NAGAR CHENNAI 600 090 VS THE ITO BUSINESS WARD III(1) CHENNAI [PAN - AERPA8460M] (APPELLANT) (RESPONDENT) I.T.A.NO. 954/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ITO BUSINESS WARD III(1) CHENNAI VS DR. S ARUNACHALAM CHENNAI 600 090 (APPELLANT) (RESPONDENT) C.O.NO. 61/MDS/2010 [IN I.T.A.NO. 954/MDS/2010] ASSESSMENT YEAR : 2007-08 DR. S ARUNACHALAM CHENNAI 600 090 VS THE ITO BUSINESS WARD III(1) CHENNAI (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR DEPARTMENT BY : SHRI P.B SEKAR ITA 752 954/10 CO 61/10 :- 2 -: O R D E R PER HARI OM MARATHA JM: THE ABOVE CAPTIONED MATTERS ARE DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A) DATED 31.3.2010 FOR ASSESSMENT YEA R 2007-08. THE ASSESSEE WELL AS THE REVENUE HAVE FILED THEIR RESP ECTIVE APPEALS BUT THE ASSESSEE HAS ALSO SUPPORTED THE FINDINGS OF THE LD. CIT(A) THROUGH CROSS OBJECTION IN SO FAR AS THE DELETIONS MADE IN FAVOUR OF THE ASSESSEE. AS THE CROSS OBJECTION FILED BY THE ASS ESSEE IS SIMPLY TO SUPPORT THE FINDINGS OF THE LD. CIT(A) THE SAME ST ANDS DISMISSED. 2. BEFORE WE TAKE UP THE ISSUE RAISED IN THE CROSS APP EALS WE WOULD LIKE TO NARRATE THE RELEVANT FACTS LEADING TO THESE APPEALS. THE ASSESSEE IS A RETIRED PROFESSOR FROM ANNA UNIVERSIT Y AND WORKS AS A CONSULTANT IN THE STRUCTURE AND FOUNDATION ENGINEER ING. HE RETURNED HIS INCOME FOR ASSESSMENT YEAR 2007-08 ON 18.7.2008 DECLARING TOTAL INCOME OF ` 2 20 080/- BESIDES SHOWING AGRICULTURAL INCOME OF ` 2 01 655/-. DURING SCRUTINY THE ASSESSING OFFICER WANTED PROOF OF AGRICULTURAL INCOME AND THE ASSESSEE FILED A CERTIF ICATE FROM THE PERSONS MANAGING THE SADRAS AGRICULTURAL LANDS AND IDIKKI AGRICULTURAL LANDS TO SHOW THAT AGRICULTURAL INCOME WAS EARNED. THE ASSESSEE HAD DEPOSITED ` 15 LAKHS IN CENTURIAN BANK OF PUNJAB LTD WHICH IS NOW MERGED WITH HDFC BANK. WHEN SOURCE OF THE SAME W AS SOUGHT FROM ITA 752 954/10 CO 61/10 :- 3 -: THE ASSESSEE HE FILED AFFIDAVITS OF THE PERSONS FR OM WHOM HE CLAIMED TO HAVE RECEIVED THIS AMOUNT. AFTER VERIFYING THE EXPLANATION OF THE ASSESSEE THE ASSESSING OFFICER OF THE PERSONS FROM WHOM THE ASSESSEE HAS CLAIMED TO HAVE TAKEN LOANS INITIATED PROCEEDINGS U/S 147 R.W.S 148 AGAINST THEM AND AFTER DISBELIEVING T HE EVIDENCE THE ASSESSING OFFICER OF THE ASSESSEE HAS ADDED ` 15 LAKHS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. OUT OF THE TOTAL C LAIM IN RESPECT OF CONSULTANCY EXPENSES THE ASSESSING OFFICER HAS DIS ALLOWED ` 12 72 250/- AND OUT OF AGRICULTURAL INCOME CLAIMED ONLY ` 22 638/- HAS BEEN ALLOWED AND DISALLOWED THE BALANCE AMOUNT OF ` 1 79 017/- AS ASSESSEES INCOME FROM OTHER SOURCES. THE ASSESS EE PREFERRED APPEAL BEFORE THE LD. CIT(A) AGAINST THE ORDER DAT ED 30.12.2009 WHEREBY THE ASSESSING OFFICER HAS DETERMINED TAXABL E INCOME OF THE ASSESSEE AT ` 20 93 984/- AND HAS RAISED A DEMAND OF ` 10 01 280/-. AFTER CONSIDERING THE RIVAL SUBMISSIONS THE LD. CI T(A) HAS PARTLY AGREED WITH THE ASSESSEE. THE LD. CIT(A) HAS RESTR ICTED THE DISALLOWANCE TOWARDS CONSULTANCY EXPENSES TO 25% I .E ` 86 125/- OUT OF TOTAL AMOUNT OF ` 3 44 500/- AND THEREBY HAS GIVEN RELIEF OF ` 2 15 375/- ON THIS COUNT. HE HAS ALSO AGREED WITH THE SOURCE OF DEPOSIT OF ` 15 LAKHS MADE BY THE ASSESSEE IN THE BANK AND AS O RDERED TO DELETE THE SAME. REGARDING AGRICULTURAL INCOME EARNED FROM THE ITA 752 954/10 CO 61/10 :- 4 -: AGRICULTURAL LANDS OF THE ASSESSEE SITUATED AT SADR AS SOUTH ARCOT DISTRICT TAMIL NADU NO RELIEF HAS BEEN GIVEN BUT IN RESPECT OF AGRICULTURAL LANDS SITUATED AT KILVALLIYUR AFTER C ONSIDERING THE REPORT/CERTIFICATE DATED 21.10.2009 ISSUED BY VILLA GE ADMINISTRATIVE OFFICER AND AFTER MAKING ESTIMATION OF CROPS HE HA S ALLOWED ` 40 000/- AS AGRICULTURAL INCOME. REGARDING AGRICUL TURAL LAND AT IDIKKI DISTRICT IN THE ABSENCE OF CERTIFICATE OF VILLAGE ADMINISTRATIVE OFFICER HE HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICE R. NOW BOTH THE PARTIES ARE AGGRIEVED. THE ASSESSEE IS AGGRIEVED A GAINST THE SUSTAINED ADDITION AND THE DEPARTMENT IS AGGRIEVED IN REGARD TO THE RELIEF GRANTED TO THE ASSESSEE BY THE LD. CIT(A). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN SO FAR A S THE REVENUES APPEAL IS CONCERNED ONLY ONE ISSUE RELAT ING TO DELETION OF ADDITION MADE U/S 68 HAS BEEN DISPUTED. THE FACTS APROPOS THIS ISSUE ARE THAT THERE WAS AN AIR INFORMATION WITH REGARD T O WHICH THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF DEPOSIT OF ` 15 LAKHS IN THE BANK. IT WAS STATED THAT THIS AMOUNT WAS GIVEN BY TWO PERSONS NAMELY SHRI R.M JAGANNATHAN AND HIS SON SHRI M.J HA RI PRASAD TOWARDS THE PURCHASE OF PROPERTY IN THE NAME OF SHRI HARI P RASAD. TO SUPPORT THE ABOVE CONTENTION AN AFFIDAVIT AND DOCUMENTS RE GARDING PURCHASE OF THE SAID PROPERTY WERE FURNISHED AND THE PROOF O F PAYMENT THROUGH ITA 752 954/10 CO 61/10 :- 5 -: CHEQUE WAS ALSO PRODUCED. TO FURTHER VERIFY THIS F ACT THE ASSESSING OFFICER ISSUED SUMMONS ON 16.12.2009 U/S 131 TO BOT H THESE PERSONS REQUIRING THEM TO PRODUCE PROOF OF WITHDRAWAL FROM PF AND PROOF OF SAVINGS OUT OF WHICH THEY HAD ADVANCED THIS MONEY. BOTH THESE PERSONS CAME PRESENT AND THEIR STATEMENTS WERE RECO RDED AND THEY ENDORSED THE CONTENTION RAISED BY THE ASSESSEE. TH E ASSESSING OFFICER FURTHER INSISTED ON THE PROOF OF WITHDRAWAL FROM PF AND PROOF OF SAVINGS BY THEM THEREFORE VIDE LETTER DATED 23.12 .2009 THE ASSESSEE ENCLOSED A COPY OF SANCTION LETTER OF WITHDRAWAL OF PF DATED 11.10.2006 BUT THE ASSESSING OFFICER WAS NOT SATISF IED AND TREATED THE ENTIRE AMOUNT AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME U/S 68 OF THE ACT. BUT THE LD. CIT(A) WAS CONVINCED AND I N THIS REGARD HE HAS OBSERVED IN PARA 3.2 AND 3.3 OF HIS ORDER AS UNDER: 3.2 DURING APPELLATE PROCEEDINGS THE AR OF THE APP ELLANT FILED WRITTEN ARGUMENTS IN WHICH IT IS STATED THAT THE AD OUGHT NOT TO HAVE IGNORED THE AFFADAVIT GIVEN BY SR I R M JAGANNATHAN AND SRI M J HARI PRASAD IN RESPECT OF T HE AMOUNT OF RS 15 LAKHS. BOTH SHRI R M JAGANNATHAN AN D SHRI M J HARI PRASAD ARE INCOME TAX ASSESSEES. IT IS STA TED THAT THE AMOUNT OF RS 15 LAKHS GIVEN TO THE APPELLANT BY SRI R M JAGANNATHAN HAS BEEN PAID TOWARDS THE PURCHASE OF PROPERTY IN THE NAME OF SRI M J HARI PRASAD AND THE DETAILS OF CHEQUE PAYMENTS HAVE ALSO BEEN MENTIONED IN THE PUR CHASE DEED. IN VI E W OF TH E ABOVE IT WAS PLEADED THAT THE ADDIT I ON OF RS 1 5 LAKHS MADE IN THE ASSESSMEN T BE DELETED. 3.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R WRITTEN SUBMISSION AND THE AFFIDAVIT DT 13 11 2009 GIVEN BY SRI R M JAGANNATHAN AGED 61 YEARS. IN THE SAID AFFIDAVIT IT IS STATED AS UNDER: ITA 752 954/10 CO 61/10 :- 6 -: (A) SRI R M J AGANNATHAN W A S A TAMILNADU GOVERNMENT SERVANT AND AT THE TIM E O F R ET I REMENT WAS HOLDIN G T H E POS ITI O N OF ADDL RE G ISTRAR OF CO OPERAT I VE S OC I E TI ES A N D HI S SON SRI M J HAR I PR ASA D WAS WORK ING AS A SOFTWA R E ENG INEER WITH M/ S RA M CO SYSTEM . (B) SRI R M JAGANNATHAN OUT OF ACCUMULATED SAVINGS AND PF ADVANCE AMOUNT PAID TO DR S ARUNACHALAM THE APP ELLANT HEREIN TO THE EXTENT OF RS 15 LAKHS WHICH AMOUNT HE DEPOSITED IN HIS SB ACCOUNT AT CENTURION BANK OF PU NJAB LTD (NOW MERGED WITH HDFC) ANNA SALAI CHENNAI AND AFT ER NEGOTIATION AND FIXATION OF SALE CONSIDERATION SRI R M JAGANNATHAN AUTHORISED DR S ARUNACHALAM TO TRANSFER THE AMOUNT GIVEN TO HIS FRIEND SRI D S MANNAN AND THE A MOUNT WAS TRANSFERRED BY DR S ARUNACHALAM BY WAY OF CHEQU E NO. 053176 FROM SB A/C NO. 62 SB 60011913 AND PAID THE BALANCE CONSIDERATION AND OBTAINED THE SALE DEED VI Z DOCUMENT NO. 403/2007 DT 12 04 2007. (C) SRI R M JAGANNATHAN IS ASSESSED TO INCOME TAX WITH PA NO. ABFPJ 8501J AND SRI M J HARI PRASAD IS ALSO AN ASSESSEE WITH PA NO. AMBPH 6649F . FROM THE LETTER DATED 22.12.2009 FILED BY SRI R M JAGANNATHAN ADDRESSED TO ITO BUSINESS WARD III(1) CHENNAI IN RESPONSE TO SUMMONS ISSUED IT IS SEEN T HAT HE IS HAVING BANK ACCOUNT IN C C BANK ANNAMALAIPURAM AND WITHDREW THE AMOUNT FROM THE ABOVE BANK ACCOUNT. IT IS STATED THAT HE RECEIVED ` 6 10 000 AS PART WITHDRAWAL OF HIS PF ACCOUNT. HIS SON SRI M J HARI PRASAD OUT OF HIS SALARY SAVINGS GAVE ` 4 LAKHS. THUS ` 11 LAKHS WAS GIVEN BY SRI R M JAGANNATHAN AND ` 4 LAKHS FROM HIS SON SRI M J HARI PRASAD TOTALING TO ` 15 LAKHS WAS GIVEN TO DR S ARUNACHALAM FOR PURCHASE OF PROPERTY. IN VIEW OF T HE ABOVE EXPLANATION FURNISHED I AM OF THE VIEW THAT THE AD DITION OF ` 15 LAKHS MADE BY THE A.O IS NOT WARRANTED AND THE S AME IS DELETED. ITA 752 954/10 CO 61/10 :- 7 -: 4. NOW THE REVENUE IS AGGRIEVED. IT WAS ARGUED BY T HE LD.DR THAT THE ASSESSEE COULD NOT PROVE BEYOND DOUBT THE CREDITWORTHINESS OF THE PERSONS FROM WHOM THE MONEY WAS RECEIVED BY THE ASSESSEE/GIVEN BY THEM TO THE ASSESSEE. THE MAIN OBJECTIN OF THE LD.DR IS THAT COMPLETE DETAILS REGARDING SOURCE OF CASH WERE NOT COMING FORWARD FROM THE SIDE OF THE ASSESSEE. IN G ROUND NO.2.3 IT HAS BEEN MILDLY ACCEPTED THAT IN ANY CASE AVAILABIL ITY OF FUNDS TO THE TUNE OF ` 10 10 000/- ONLY BE SUPPOSED TO BE AVAILABLE AGAIN ST WHICH THE LD. CIT(A) HAS ACCEPTED ` 15 LAKHS. ON THE OTHER HAND THE LD.AR HAS SUPPORTED THE APPELLATE FINDINGS AND HAS VEHEME NTLY CONTENDED THAT THE CREDITWORTHINESS OF BOTH THESE PERSONS HAS BEEN FULLY PROVED ON RECORD AND SINCE THEIR IDENTITY AND THE TRANSACT IONS HAVE NOT BEEN DOUBTED NEVERTHELESS THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS IN QUESTION STAND APTLY PROVED ON RECO RD. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS IN THE LIGH T OF EVIDENCE AVAILABLE ON RECORD WE ARE OF THE CONSIDERED OPINI ON THAT THE AVERMENTS MADE IN THE DULY ATTESTED AFFIDAVIT DATED 13.11.2009 GIVEN BY SHRI R.M. JAGANNATHAN HE HAS GIVEN ENTIRE DETAI LS AS TO HOW THIS AMOUNT OF ` 15LAKHS WAS DEPOSITED IN ASSESSEES BANK ACCOUNT. PARA 3.3OF LD. CIT(A)S ORDER IS SELF-EVIDENT IN THIS RE GARD. THE AVERMENTS MENTIONED IN THIS AFFIDAVIT HAVE NOT BEEN CONTROVER TED BY THE ITA 752 954/10 CO 61/10 :- 8 -: ASSESSING OFFICER TO DISPROVE THE SAME. THEREFORE WE ARE IN AGREEMENT WITH THE LD. CIT(A) WHEN HE COMES TO THE CONCLUSION THAT THE SOURCE I.E CREDITWORTHINESS OF THE CREDITORS DULY ESTABLISHED ON RECORD. UNDER THESE CIRCUMSTANCES WE CANNOT INTER FERE WITH THE IMPUGNED FINDING OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN ASSESSEES APPEAL THE FIRST ISSUE PERTAINS TO C ONFIRMATION OF ADDITION OF ` 90 000/- MADE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE FACTS OF THIS ISSUE ARE THAT THE PO SSESSION F THE LAND AT SADRAS SOUTH ARCOT DISTRICT IS NOT IN DISPUTE. T HE SAME HAS BEEN DENIED BY THE LD. CIT(A) ON THE BASIS OF NON-FILING OF CERTIFICATE FROM THE VILLAGE OFFICER WITH REGARD TO INCOME FROM THE CONCERNED LAND. LIKEWISE THE OTHER ADDITION OF ` 71 655/- FROM IDIKKI LANDS THE POSITION IS THE SAME BECAUSE IN THE ABSENCE OF REPO RT FROM VILLAGE OFFICER THE SAME HAS NOT BEEN ALLOWED. 7. BEFORE US ALSO NO SUCH EVIDENCE REGARDING AGRICULT URAL PRODUCE FROM THESE TWO LANDS HAVE BEEN FILED THEREFORE WE CANNOT INTERFERE IN THE WELL ESTABLISHED FINDINGS OF THE LD. CIT(A) IN SO FAR AS THESE TWO ADDITIONS ARE CONCERNED. ITA 752 954/10 CO 61/10 :- 9 -: 8. THE OTHER ISSUE RAISED IN ASSESSEES APPEAL IS REGA RDING DISALLOWANCE OF ` 86 125/- OUT OF PROFESSIONAL INCOME @ 25% OUT OF TOTAL CLAIM OF ` 3 44 500/-. IT WAS ARGUED THAT THIS DISALLOWANCE IS BASED ON NO EVIDENCE AND APART FROM THIS THE ASSES SEE HAS CLAIMED DEPRECIATION ALONE AMOUNTING TO ` 1 60 240/- WHICH FOUND PART OF THESE EXPENSES. ON THE OTHER HAND THE LD.DR HAS R ESTRICTED HIS ARGUMENTS ON WHATEVER IS WRITTEN BY THE ASSESSING O FFICER/LD. CIT(A). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS IT WAS FOU ND THAT THE ASSESSEE HAD PRODUCED VOUCHERS FOR EXPENSES TOWARDS SALARY AND TRAVELING BEFORE THE ASSESSING OFFICER BUT IT IS A FACT THAT THE ASSESSEE HAS NOT MAINTAINED ITS BOOKS OF ACCOUNT AS REQUIRE D UNDER THE ACT. THE ASSESSING OFFICER HAS SIMPLY DISALLOWED 50% WHI CH HAS BEEN REDUCED BY THE LD. CIT(A) TO 25%. BUT WE ARE NOT I N AGREEMENT WITH BOTH OF THEM WHEN THE ASSESSEE HAD PRODUCED VOUCHER S FOR SALARY AND OTHER EXPENSES AND MAJOR AMOUNT HAS BEEN CLAIMED AS DEPRECIATION THEN THERE IS NO REASON TO DISBELIEVE THE ASSESSEE AND TO MAKE ADHOC DISALLOWANCE THEREFORE WE ORDER TO DELETE THE DIS ALLOWANCE MADE OUT OF EXPENSES CLAIMED AGAINST PROFESSIONAL INCOME AND PARTLY ALLOW THE APPEAL OF THE ASSESSEE. ITA 752 954/10 CO 61/10 :- 10 - : 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED WHERE AS THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.10.2010. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 29 TH OCTOBER 10 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR