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Income Tax Appellate Tribunal, ‘SMC’ ‘B’ BENCH, CHENNAI
Before: Shri A. Mohan Alankamony
आदेश / O R D E R
This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-5, Chennai dated 02.12.2016 in for the assessment year 2012-13 passed U/s.250(6) r.w.s.143(3) of the Act.
The assessee has raised several grounds in her appeal, however the crux of the issue is that the Ld.CIT(A) has erred in confirming the order of the Ld.AO who had made addition of Rs.20 lakhs towards unexplained introduction of capital.
The brief facts of the case are that the assessee is an individual engaged in leather business, filed her return of income for the assessment year 2012-13 on 28.02.2013 admitting total income of Rs.4,86,650/-. Initially the return was processed U/s.143(1) of the Act. Subsequently the case was selected for scrutiny under CASS and finally assessment order was passed U/s.143(3) of the Act on 31.03.2015, wherein the Ld.AO made addition of Rs.20,00,000/- towards unexplained capital and assessed the total income of the assessee at Rs.24,68,650/-.
During the course of scrutiny assessment proceedings, it was noticed by the Ld.AO that the assessee had introduced capital of Rs.20 lakhs during the relevant financial year. On query, the Ld.AR could not explain the source for introducing the capital of Rs.20 lakhs. Therefore, the Ld.AO added the amount of Rs.20 lakhs as unexplained income U/s. 68 of the Act. Before the Ld.CIT(A), the assessee made the following submissions:-
(i) The assessee’s family consisting of 11 members who were casual labors working in the leather industry for about five decades, thereafter started leather business on their own from their accumulated savings.
(ii) The assessee’s family also owned building at Dindigul fetching annual rental income of Rs.4,50,000/-.
(iii) The assessee had obtained gold loan from local pawn lenders for Rs.2,25,000/-.
(iv) The collective savings of the assessee’s from the daily wages is Rs.7,50,000/-.
(v) Gold loan from local co-operative bank was Rs.5,00,000/-.
The Ld.CIT(A) rejected the submission of the assessee
because the assessee had not produced any documentary evidence. Thereafter the Ld.CIT(A) confirmed the order of the Ld.AO.
Before me the Ld.AR submitted a paper book containing
15 pages which contain the confirmation letter from the 11 members of the assessee’s family for having advanced cash to the assessee as detailed herein below:-
Amount received Sl.No. Name of relative Relationship to assessee as gift, by assessee (Rs.)
1 Mumtaj Begum Mother-in law of assessee 4,50,000/-
Brother of assessee’s 2 A. Bilal Husain 2,40,000/- husband Brother in law of the 3 A. Najumdeen 2,50,000/- husband of the assessee Brother in law of the 4 M. Abdul Ajis 2,50,000/- husband of the assessee Brother in law of the 5 M. Ameer John 50,000/- husband of the assessee Brother in law of the 1,00,000/- 6 Mr. A. Iqbal husband of the assessee 7 A. Subaitha Sister-in-law of assessee 50,000/- Brother-in-law of husband 8 A. Nizar Husain 1,00,000/- of assessee Brother in law of assessee’s 9 J. Sahabthen 1,00,000/- husband Brother in law of the 10 A. Bilal Husain 1,00,000/- assessee Savings from money given Accumulated 11 to assessee for household 2,10,000/- savings of assessee expenses by her husband TOTAL 20,00,000/-
Further after verifying the facts of the case, I find that the family consisting of 11 members which is not in dispute. The Ld.D.R also could not controvert the same. Even if a member of the family contributes an amount of Rs.2 lakhs, the assessee
would be able to generate capital of Rs.20 lakhs. Further considering the fact that the assessee and her family being illiterate, casual labors workers, working in the leather industry for number of years, and had made savings during the long period, in order to establish the business in a humble way, I’m of the view that the addition made by the Ld.AO for Rs.20 lakhs U/s.68 of the Act, which was further confirmed by the Ld.CIT(A) is not warranted. Therefore, I hereby direct the Ld.AO to delete the addition made in the hands of the assessee for Rs.20 lakhs U/s.68 of the Act.
In the result appeal of the assessee is allowed.
Order pronounced on the 28th August, 2017.