K.P.CHEVVELL,COIMBATORE vs. ITO, COIMBATORE

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-2, Coimbatore, dated 27.10.2016 and pertains to assessment year 2008-09.

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee is engaged himself in the business of civil construction. According to the Ld. counsel, during the course of business activity, the assessee received ₹11,19,000/- from some of his friends and relatives for carrying out some repair work on cost- to-cost basis. In fact, according to the Ld. counsel, the friends and relatives paid only the cost of the material and labour and there was no margin / profit for the assessee. According to the Ld. counsel, the amount received from friends and relatives are deposited in the Savings Bank account of the assessee since it is not business receipt. The assessee withdrew the money from Savings Bank account and carried out the repairs as requested by the respective friends and relatives. According to the Ld. counsel, the only mistake committed by the assessee is depositing of the said money in Savings Bank account instead of keeping the same in hand. According to the Ld. counsel, keeping money in hand is not safe and at the very same time, the assessee cannot ignore the friends and relatives.

The Ld.counsel further submitted that the respective friends and relatives confirmed the fact of giving the money to the assessee. However, the CIT(Appeals) rejected the same on the ground that they are identically worded. According to the Ld. counsel, when the fact that the friends and relatives advanced money to the assessee is not disputed, merely because the confirmation letters were similarly worded, that cannot be a reason to reject the claim of the assessee. When the address and other details of the respective persons are available, it cannot be rejected without examination. Therefore, according to the Ld. counsel, the addition of ₹11,19,000/- is not justified.

On the contrary, Smt. C. Yamuna, the Ld. Departmental Representative, submitted that the confirmation letters said to be filed by the assessee are similarly worded. Moreover, according to the Ld. D.R., nobody will pay the entire amount in advance for carrying out contract work. The payers have no PAN and the entire money was paid in cash. According to the Ld. D.R., the assessee could not furnish the details with regard to expenditure incurred for carrying out the so-called repair works for his friends and relatives.

We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, there was a deposit of ₹11,19,000/- in the Savings Bank account of the assessee. The assessee is admittedly in the business of civil construction. Apart from the Savings Bank account in which the amount of ₹11,19,000/- was deposited, the assessee is also having a separate account for business. The Revenue doubts the source of deposit since the amount was deposited in the Savings Bank account and not in the account maintained for business purposes. The claim of the assessee right from the Assessing Officer is that his friends and relatives requested him for carrying out some repair works, therefore, the assessee agreed to carry out the works on cost-to-cost basis without profit or margin. Hence, the deposit was made in the Savings Bank account. To substantiate this, the dispute that the confirmation letters were filed before the authorities below. The CIT(Appeals) found that the confirmation letters are similarly worded. When requested to explain the deposit made in the bank account, it is normal practice for anyone to approach the payer and confirm the fact of payment. Therefore, it would be normally worded on identical words. However, the purpose for which money was given is clearly mentioned in the confirmation letters. The address of the payers is also clearly available in the confirmation letters. Therefore, the Assessing Officer and the CIT(Appeals) are not justified in rejecting the confirmation letters on the ground that these were similarly worded.

When the assessee received money for carrying out certain repairs and other works for his relatives and friends on cost-to-cost basis, which is not connected with the business of the assessee, this Tribunal is of the considered opinion that even in the absence of any bills for carrying out the repairs, there cannot be any addition in the hands of the assessee. The deposit of ₹11,19,000/- was established before the authorities below that it was received from friends and relatives for carrying out repairs and other works.

In the result, the appeal filed by the assessee is allowed.