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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश / O R D E R
Per A. Mohan Alankamony, AM:-
This appeal by the Revenue is directed against the order
passed by the Ld. Commissioner of Income Tax (Appeals)-18, Chennai dated 09.06.2016 in ITA No.90/15-16 for the assessment year 2013-14 passed u/s.250(6) r.w.s.143(3) of the Act.
There is a delay of 2 days in filing the appeal by the Revenue. The Ld.DCIT has furnished an affidavit before us stating that the
delay had occurred due to the time lag in transit from higher
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authorities. It was therefore pleaded that the short delay in filing
the appeal may be condoned. The Ld.AR objected to the submission of the Ld.DR. However, after hearing both sides, though we do not appreciate the lethargic attitude of the Revenue,
in the interest of justice we are of the considered view that the short delay in filing the appeal requires to be condoned. Accordingly we hereby condone the delay of 2 days in filing the appeal by the
Revenue and proceed to hear the case on merits.
The Revenue has raised several grounds in its appeal,
however the crux of the issue is that the Revenue is aggrieved by the order of the Ld.CIT(A) who had erred in deleting the addition made by the Ld.AO amounting to Rs.1.30 crores invoking the provisions of Section 69C of the Act as unexplained expenditure.
The brief facts of the case are that the assessee is an individual engaged as small time contractor. A search U/s.132 was
carried out in the premises of Shri R. Elangovan (assessee’s brother) on 14.12.2012. During the course of search, an agreement between Smt. S. Suganthi and Shri R. Balachandran and Shri
Rangasamy was found and seized in which it was revealed that Shri R. Balachandran and Shri Rangasamy had paid an advance of
3 ITA No.2728/Mds/2016
Rs.1.30 crores for the purchase of property from Smt. Suganthi.
During the search operation, Shri R. Balachandran in his statement U/s.132(4) of the Act had admitted to have paid Rs.1.30 crores in cash out of his unaccounted income. Accordingly appraisal report
was made. However, at the time of assessment the assessee retracted his statement for having admitted that the advance amount paid for purchase of land amounting to Rs.1.30 crores was
out of his unaccounted income. Further he explained before the Ld.AO with evidence viz., Federal bank statement A/c. No.5147 of Shri R. Elangovan that the cash was withdrawn between the period
03.04.2012 to 16.05.2012 from the above mentioned savings bank account aggregating to Rs.1,44,00,000/- and in each of the sixteen withdrawals an amount of Rs of Rs.9 lakhs was withdrawn. Thus the assessee established before the Ld.AO that the source of
advance was from the amount accounted and withdrawn by Shri R. Elangovan from his Federal Bank Savings Account No.5147. However, the Ld.AO rejected the explanation made by the Ld.AR
because of the following reasons: (i) Withdrawals from the bank has been made over a period of time and cash accumulated in hand, therefore the nexus
between the withdrawals and the payment made after a considerable period of time cannot be established.
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(ii) There was no necessity for the assessee to pay by cash
when it could have been paid through bank. (iii) Shri Rangasamy the co-purchaser is a Retired Government servant, therefore unlikely to contribute for the
purchase of such large property. (iv) The assessee had admitted at the time of search that the investment was made out of his unaccounted income.
(v) The retraction made by the assessee is after a long period of time and therefore not acceptable.
For the above mentioned reasons, the Ld.A.O made the addition in the hands of the assessee, invoking the provisions of Section 69C of the Act.
However on appeal, the Ld.CIT(A) held that the addition made in the hands of the assessee cannot be sustained because it was well established that the advance for purchase of land of
Rs.1.30 crores was paid out of the accounted amount withdrawn from the bank account of Shri Elangovan. On that regard, the Ld.CIT(A) observed as under:- “I have gone through the evidences produced during appellate proceedings, such as bank account, cash book extract, letter written by the assessee to the AO, Agreement
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copy for purchase of the land and cancellation deed of the above agreement etc. After going through the same, I am of the considered view that the addition made in the hands of the assessee is not tenable for the following reasons.
In the assessment order, it is seen, that the AO, while discussing about the source, admitted the position as under:
"From the accumulated cash balance a sum of Rs.1,30,00,000/- has been withdrawn on 5.6.2012 and paid to Smt.Suganthi. The land advance paid of Rs.1,30,00,000/- is reflected in the land account of Shri R. Elangovan for the period ended on 31.3.2013. The said sum was returned on 25.02.2013 and the same is seen to be credited in the cash book of Shri R.Elangovan."
The AO further observed that "Shri Rangaswamy, who is the co-purchaser is a retired government servant and it's unlikely tht he could have contributed for the purchase of such a large property."
The AO further also stated that the assessee is a small time contractor. Here the assessee says when the AO was of the view that a retired government servant could not have the wherewithal to pay such a huge advance, the same yard stick and analogy should have been applied in the case of the assessee also, since he is termed by the AO as a small time contractor. This itself proves that the assessee could not have found the necessary source for the investment out of his own. Further, as admitted by the AO, in the assessment order, the entries in the bank account and cash book also corroborate and support the assessee's version that he was not that much affluent to pay such a huge amount to buy an immovable property and it was the assessee's brother who should have made the investment using his brother (the assessee)'s name. In the circumstances the addition made in the hands of the assessee is hereby directed to be deleted. Hence this ground
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of appeal is allowed. If need be, the AO may pursue the matter further in the case of the assessee's brother Shri Elangovan, from whose account' the amount in question was debited and on cancellation of the agreement, the same amount was credited.”
Before us the Ld.DR vehemently argued in support of the
order of the Ld.AO by reiterating his findings while as the Ld.AR relied on the order of the Ld.CIT(A).
We have heard the rival submissions and carefully perused the materials on record. From the facts of the case, it is apparent that the assessee had clearly established the source
for the advance made for the purchase of land, which is nothing but withdrawals from his brother’s savings bank account. The Ld.AO has not brought out any materials to suggest that the amount withdrawn by Shri Elangovan has been utilized
otherwise. Holding of cash-in-hand for a period of few months in order to find the most appropriate time to advance cash for purchase of immovable property which will bring advantage to
the assessee is quite common in real estate transactions. Therefore, the apprehensions of the Ld.AO do not have merit. In this situation, we do not find it necessary to interfere with the
7 ITA No.2728/Mds/2016 order of the Ld.CIT(A) on this issue. Therefore, we hereby uphold the order of the Ld.CIT(A).
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on the 27th July, 2017.
(एन.आर.एस. गणेशन) Sd/- (ए. मोहन अलंकामणी) Sd/- (N.R.S. Ganesan) (A. Mohan Alankamony) लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member चे�नई/Chennai, �दनांक/Dated 27th July, 2017 JR आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF