DCIT CORPORATE CIRCLE 4(2), CHENNAI vs. SRINIVASAN VENKATASUBRAMANIAN, CHENNAI

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ITA 2900/CHNY/2017Status: DisposedITAT Chennai03 October 2018AY 2013-146 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the matter required a fresh look by the Assessing Officer as crucial documents like the company's balance sheet and the undertaking were not properly verified by the lower authorities. The question of explaining the source of cash deposits was remitted back.

What were the facts?

The assessee deposited Rs. 78,00,000 in cash into his bank account. He claimed this was an advance from M/s. Kgeyee Residency P. Ltd., where he was a director, for making purchases. The Assessing Officer added the entire amount as unexplained. The CIT(A) deleted the addition, allowing relief for Rs. 72,50,000 but upholding an addition of Rs. 5,50,000.

What were the issues?

Whether the assessee could adequately explain the source of cash deposits in his bank account by demonstrating the nexus with withdrawals from a company where he was a director, and if the lower authorities had properly verified the supporting documents.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH : CHENNAI

Before: SHRI ABRAHAM P. GEORGE & SHRI DUVVURU RL REDDY]

For Respondent: Shri. G.G. Prabhakaran, C.A

आदेश / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER

1.

In this appeal filed by the Department, it is aggrieved that ld. Commissioner of Income Tax (Appeals) deleted an addition of �72,50,000/- made by the ld. Assessing Officer u/s.68 of the Income Tax Act, 1961 (in short ‘’the Act’’).

ITA No.2900 /2017 :- 2 -:

Facts apropos are that assessee had filed his return for the 2. impugned assessment year disclosing income of �20,46,210/-. Ld. Assessing Officer based on information provided by the ld. Authorised Representative during the course of hearing, came to a conclusion that a sum of �78,00,000/- deposited by the assessee in cash, in an account in his name, maintained with Canara Bank was not having explainable source. Though the assessee submitted that such money was paid to the assessee by a company called M/s. Kgeyee Residency P. Ltd, in which he was a director, for making purchases, this was not accepted by the ld. Assessing Officer. According to the ld. Assessing Officer, assessee could not prove the nexus between cash deposits made in his account and the withdrawals from the bank account of M/s. Kgeyee Residency P. Ltd. He made an addition of �78,00,000/- u/s.68 of the Act.

Aggrieved, assessee moved in appeal before ld. 3.

Commissioner of Income Tax (Appeals). Contention of the assessee was that he was identifying new suppliers for M/s. Kgeyee Residency P. Ltd and the money was given by the company to him, for effecting purchases on behalf of the said company. Assessee submitted an undertaking dated 24.08.2017 of M/s. Kgeyee Residency P. Ltd which inter alia stated as under:-

ITA No.2900 /2017 :- 3 -:

Sl.No Withdrawal Amount Bank Name Cheque No. withdrawn

1 02.02.2012 �8,00,0000 SBT, RA Puram 126053 2 04.01.2012 �1,00,0000 SBT, RA Puram 126057 3 18.01.2012 �1,00,0000 SBT, RA Puram 126068 4 02.02.2012 �8,00,0000 SBT, RA Puram 126080 5 08.02.2012 �1,00,0000 SBT, RA Puram 126087 6 11.02.2012 �10,00,0000 SBT, RA Puram 126090 7 29.02.2012 �1,50,0000 SBT, RA Puram 138622 8 03.03.2012 �11,00,0000 SBT, RA Puram 138629 9 10.03.2012 �11,00,0000 SBT, RA Puram 126096 10 21.03.2012 �2,00,0000 SBT, RA Puram 138634 11 28.03.2014 �2,00,0000 SBT, RA Puram 138636 12 28.03.2012 �5,00,0000 SBT, RA Puram 138637 13 31.03.2012 �11,00,0000 SBT, RA Puram 138640 Assessee also filed an affidavit stating that money received by him from the company were deposited in the bank account.

Ld. Commissioner of Income Tax (Appeals) after 4. considering the above submissions deleted the addition made by the ld. Assessing Officer. Observations of the ld. Commissioner of Income Tax (Appeals) were as under:-

‘’7. The observation of the ld. Assessing Officer as well as the contentions of the assessee before the undersigned are verified. The assessee company clearly withdrawn an amount of �72.50 lakhs from State Bank of Travancore, R.A. Puram, Chennai Branch. The said amount is also reflected in the financials of the assessee company M/s. Kgeyes Residency Pvt. Ltd. The assessee is the majority shareholder as well as Director of the company. It is quire possible that the amount of �72.50 lakhs is deposited in the bank account of the Director and subsequently transferred back to the company. However, it is seen that the total amount withdrawn by the company is only an amount of �72,50,000/- as against the ITA No.2900 /2017 :- 4 -: amount of �78 lakhs deposited by the Director. To this extent, there is a shortfall of �5,50,000/- for which the assessee does not have any explanation. This amount of �5,50,000/- is upheld to be added u/s.68 of the I.T. Act for assessment year 2013-14. The balance amount of �72,50,000/- is held as explained on account of the withdrawal made by the company prior to 23.04.2012. The assessee gets partial relief’’.

5.

Now before us, ld. Departmental Representative strongly assailing the order of the ld. Commissioner of Income Tax (Appeals) submitted that undertaking given by M/s. Kgeyee Residency P. Ltd and the affidavit of the assessee were never placed before the ld. Assessing Officer by the assessee. According to the ld. Departmental Representative, even the Balance sheet of the M/s. Kgeyee Residency P. Ltd was not examined by the ld. Commissioner of Income Tax (Appeals) before accepting the contention of the assessee that the money deposited in his bank account came from M/s. Kgeyee Residency P. Ltd . Thus, according to her, ld. Commissioner of Income Tax (Appeals) granted relief to the assessee without any good reason.

6.

Per contra, ld. Authorised Representative strongly supporting the order of the ld. Commissioner of Income Tax (Appeals) submitted that ld. Commissioner of Income Tax (Appeals) had given relief after finding that assessee had received the money from M/s. Kgeyee Residency P. Ltd and deposited it in his bank account.

ITA No.2900 /2017 :- 5 -:

We have considered the rival contentions and perused the 7. orders of the authorities below. It is not disputed that assessee had deposited �78,00,000/- in his personal bank account with Canara bank.

Contention of the assessee before lower authorities was that the amounts so deposited in the bank account were advanced to it by M/s. Kgeyee Residency P. Ltd, of which he was a director, for effecting purchases on their behalf. If this contention is true, assessee should appear as a debtor in the Balance sheet of M/s. Kgeyee Residency P.

Ltd. Withdrawals made by the assessee from M/s. Kgeyee Residency P. Ltd have to be reflected in the account of the said company. None of the lower authorities had verified the books of accounts of M/s.

Kgeyee Residency P. Ltd with regard to the transactions claimed by the assessee to have its originating source as the said company. That apart, the undertaking dated 24.08.2017 of M/s. Kgeyee Residency P.

Ltd was first time produced by the assessee before ld. Commissioner of Income Tax (Appeals). Affidavit filed by the assessee before the ld. Commissioner of Income Tax (Appeals) was also not before ld. Assessing Officer. Considering all these, we are of the opinion that the matter requires a fresh look by the ld. Assessing Officer. The question whether assesseeis able to explain the source of the cash deposits in his account with Canara bank is remitted back to the ld. Assessing Officer for consideration afresh in accordance with law.

ITA No.2900 /2017 :- 6 -:

In the result, the appeal of the Revenue is allowed for 8. statistical purpose.

Order pronounced in the open court at the time of hearing on Wednesday, the 3rd day of October 2018, at Chennai.

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