N.LATHA,CHENNAI vs. ITO, CHENNAI

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ITA 3481/CHNY/2016Status: DisposedITAT Chennai05 December 2017AY 2010-118 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the additional evidence filed by the assessee, consisting of confirmation letters from debtors, was not available to the Assessing Officer during the assessment proceedings. Therefore, the issue was remitted back to the Assessing Officer for fresh consideration.

What were the facts?

The assessee, engaged in chit business, received Rs. 36,00,000/- from debtors, which was disproportionate to her declared income sources. The Assessing Officer reopened the assessment and added this amount as income from undisclosed sources as the assessee failed to provide satisfactory explanation or documentary evidence.

What were the issues?

Whether the addition of Rs. 36,00,000/- as income from undisclosed sources was justified without proper appreciation of evidence, and if additional evidence should be considered.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 269SS,Section 271D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, B/“SMC” BENCH, CHENNAI

Before: SHRI CHANDRA POOJARI

Hearing: 05.12.2017

आदेश / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

1.

This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-5, Chennai dated 08.11.2016 pertaining to assessment year 2010-11.

2.

The assessee raised the following grounds for consideration.

1. For that the order of the Commissioner of Income Tax (Appeals)is contrary to law, facts and circumstances of the case to the extent prejudicial to the interest of the appellant and at any rate is opposed to the principles of equity, natural justice ) and fair play. 2 For that the Commissioner of Income Tax (Appeals) failed to appreciate that the / order of the Assessing Officer is without jurisdiction. 3. For that the reopening was bad in law. 4. For the reopening was made on a mere change of opinion. 5. For that the assessment was reopened without any new tangible material. 6. For that the Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.36,00,000/- as income from undisclosed sources. 2.1 The assessee has also raised the following additional grounds.

“For that the AO erred in not passing the speaking order.”

2.2 The assessee filed a petition for admission of additional grounds stating that the assessee failed to raise the said ground due to inadvertence and prayed that this additional ground may be admitted.

2.3. At the time of hearing, the ld.A.R has not pressed the ground Nos.1 to 5 raised in assessee’s appeal. Accordingly, these grounds are dismissed as not pressed.

3.

The main grievance of the assessee in her appeal is with regard to confirming the addition of `36 lakhs by Ld.CIT(A) as income from undisclosed sources made by the ld. Assessing Officer.

4.

The brief facts of the case are that the asessee is engaged in Chit business during the period relevant to AY 2010-11. On going through the Cash Flow Statement for the year ending 31.03.2010, it is found that the assessee has admitted to have received `36,00,000/- from debtors. The transaction involved is disproportionate to the source of income being salary and interest on bank deposits as admitted by assessee. Further, in the statement of total income for the above period, the assessee has offered income from salary and interest income only but has not offered any income from any other source. It is considered necessary that the genuineness of assessee’s claim of receipt from debtors of `36,00,000/- needs to be verified in the light of relevant accounts and transactions made through bank as well. Holding that there is reason to believe that there is an element of escapement of income under this score besides suppression of income from salary and interest income, the assessment has been reopened u/s.147 by issue of Notice u/s 148 and was duly served on the assessee on 18.09.2014. In response, the assessee has filed a return of income for AY 2010-11 admitting a total income of `4,16,640/- on 17.10.2014. In the above return she has offered an additional Income of `20,000/- and `37,672/- under Salary and Interest income respectively, thereby reconciling the difference in income from the above two sources as admitted in the return filed on 25.07.2011 and that as received as per record except to the tune of `1,346/- which has been brought to tax.

4.1 In the course of assessment proceedings, the asséssee has been asked to explain the source from which the advance to debtors to the extent of `36,00,000/- has been made and the source from which (i.e) details of debtors from whom the same has been received back along with necessary documentary evidence In respect of transaction of loan given above `20,000/- in cash in violation of the provisions of Section 269SS also explanation has been called for from the assessee. Sri P Kamalesan the authorized representative of the assessee, appeared and the case has been heard on various dates. Despite reasonable opportunities given the assessee could not offer explanation/furnish details required of her. In the situation it is presumed that she has no explanation to offer and accordingly `36,00,000/- has been treated as income from unexplained sources and brought to tax under Income from Other Sources Regarding her income from chit business it is claimed that the subscription received from the members has been deposited in bank and interest earned thereon has been offered as income for assessment. Accordingly, the assessment is completed on the above lines and `36 lakhs is added to the income of assessee as income from undisclosed sources.

Aggrieved by the order of ld. Assessing Officer, the assessee carried the appeal before the Ld.CIT(A).

4.2 Before the Ld.CIT(A), the assessee had not filed any information regarding the source of that receipt of `36 lakhs. Hence, the addition was confirmed by the Ld.CIT(A) by observing as under:-

“7.1 Before the AO the assessee did not file any evidence to explain the sources for the receipt from debtors of `36,00,000/-.

The assessee did not file any evidence to explain the sources for the receipt from debtors of `36,00,000/- before the Ld.CIT(A) also.”

Against the order of Ld.CIT(A), now the assessee is in appeal before us.

5.

The main grievance of the assessee before me is that the order passed by the lower authorities is very cryptic and evidences not appreciated properly by the lower authorities and placed before me a copy of confirmation letters from the following persons, which was filed by the assessee in the course of penalty proceedings initiated by the ld. Assessing Officer u/s.271D of the Act.

Sl No. Name Amount Letter dated 1 Mr.P.Premnath Rs.2,50,000/- 18/07/2017 2 Mr.R.Stephen Rs.2,50,000/- 18/07/2017 3 Mr.D.Shanmugam Rs.2,50,000/- 18/07/2017 4 Mr.T.R.Narasiman Rs.5,22,960/- 18/07/2017 5 Mr.K.Marriappan Rs.5,45,070/- 18/07/2017 6 Mr.K.Kishore Kumar Rs.2,50,000/- 18/07/2017 7 Mr.B.Sasi Kumar Rs.2,50,000/- 18/07/2017 8 Mr.B.Nagaraj(HUF) Rs.5,18,000/- 18/07/2017 9 Mr.B.Akbhar Rs.2,50,000/- 18/07/2017 The ld.A.R submitted that these evidences are filed before the ld. Assessing Officer at the time of hearing of penalty proceedings initiated u/s.271D of the Act andprayed that this may be remitted to the ld. Assessing Officer for fresh consideration.

6.

On the other hand, ld.D.R submitted that these are additional evidences, which should not be admitted and the assessee was not produced in spite of giving many opportunities. In reply to the above argument of the ld.D.R , the ld.A.R submitted that the Bench on earlier occasion on 14.09.2017 directed the assessee to produce cash flow statement and other related records. Hence, it was produced as per the direction of the bench and it is to be considered.

7.

I have heard both the parties and perused the material on record. Admittedly, the Bench on earlier occasion dated 14.09.2017 directed the assessee to furnish the cash flow statement and balance sheet concern so as to verify the genuineness of the transaction as well as the identity of the parties, who return back the money to the assessee. Hence, the same has been considered. However, these documents are not available to the ld. Assessing Officer at the time of assessment proceedings. Hence, it is appropriate to consider the same by the ld. Assessing Officer and decide the issue afresh. Accordingly, the issue is remitted to the file of ld. Assessing Officer to consider the above evidences filed by the assessee and decide the issue in accordance with law.

8.

In the result, the appeal of assessee is partly allowed for statistical purposes. Order pronounced on 05th December, 2017.

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