AVATHAN SURESH KUMAR,CHENNAI vs. ACIT, TRICHY

PDF · subscribers
ITA 1281/CHNY/2016Status: DisposedITAT Chennai31 May 2017AY 2011-125 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the AO had not properly examined the source of the large cash deposits, making the assessment order erroneous and prejudicial to the revenue. Therefore, the Principal Commissioner was justified in directing a fresh assessment.

What were the facts?

The assessees made substantial cash deposits in bank accounts, which the Assessing Officer (AO) accepted after considering their explanation about rotation of capital from closed loans. However, the Principal Commissioner of Income Tax initiated revision proceedings under Section 263.

What were the issues?

Whether the AO's assessment order was erroneous and prejudicial to the interest of the revenue due to lack of proper inquiry into the source of substantial cash deposits.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH

Hearing: 26.04.2017Pronounced: 31.05.2017

Heard together (4 matters)

ITA No. 1281/Mds/2016
ITA No. 1282/Mds/2016
ITA No. 1283/Mds/2016
ITA No. 1284/Mds/2016

Read from the judgment's own cause title. This page is filed under one of them.

& आयकर अपील सं./ITA No. 1284/Mds/2016 िनधा�रण वष� / Assessment Year : 2011-12 Shri Avathan Ramesh Kumar, The Asstt. Commissioner of Income C/o. S. Sridhar, A.S. Sriraman, v. Tax, Advocates, Circle – III, New No.14, Old No.82, Flat No.5, Trichy. 1st Avenue, Indira Nagar, Adyar, Chennai – 600 020. PAN: ACFPR5984D (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellants by : Shri S. Sridhar, Advocate ��यथ� क� ओर से/Respondent by : Shri M.M. Bhusari, CIT सुनवाई क� तारीख/Date of Hearing : 26.04.2017 घोषणा क� तारीख/Date of Pronouncement : 31.05.2017 आदेश आदेश /O R D E R आदेश आदेश PER N.R.S. GANESAN, JUDICIAL MEMBER:

These appeals of the assessees are directed against the orders passed by the Principal Commissioner of Income Tax, Central-2, Chennai dated 24.03.2016 under Section 263 of the Income Tax Act, 1961 (in short ‘the Act’).

2.

Shri S. Sridhar, the Ld. counsel for the assessee submitted that the assessees filed the return of income for the assessment year 2011-12, disclosing Rs.11,81,455/-, Rs.18,06,813/-, Rs.11,79,041/- and Rs.28,16,067/- respectively. During the course of assessment proceeding, the Assessing Officer found that the assessees have deposited Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores in Axis Bank and ICICI bank respectively.

The assessees explained before the AO, money received from closed loan was used for giving new loans and the deposit was made on rotation of capital. The AO after considering the income of the assessee from petrol bunk found that capital available for money lending business would be Rs.60 lakhs, accordingly made addition of only Rs.5 lakhs and the return of the assessee was accepted. Therefore the Principal Commissioner is not justified in exercising his revisional jurisdiction U/s.256 of the Act.

3.

On the contrary, Shri M.M. Bhusari, the Ld. Departmental Representative submitted that there was a deposit of Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores in the bank account of the assessees respectively. There was no discussion in the assessment order regarding the source for deposit of Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores in the bank account of the assessees. Since the AO has not examined the source for deposit of Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores in the bank account, he found that the order of the AO is erroneous and pre-judicial to the interest of the Revenue.

4.

We have considered the rival submissions on either side and perused the material available on record. Admittedly there was a cash deposit of Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores in the bank account of the assessees. The AO has not examined the source for making such deposits. The AO observed that the money received from various closed loans was used for giving new loans. Admittedly, the assessees are not maintaining any books of account for money lending business.

Therefore, it is necessary for the AO to examine the source for making deposit of Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores respectively. Since the AO has not made any enquiry with regard to source for deposit Rs.7.13 crores, Rs.2.33 crores, Rs.3.7 crores and Rs.4.8 crores in the bank account of the assessees, this Tribunal is of the considered opinion that the Principal Commissioner has rightly found that the order of the AO is erroneous and pre-judicial to the interest of the Revenue. Therefore the Principal Commissioner has rightly directed the Assessing Officer to redo the assessment after conducting the necessary enquiries with regard to source of deposit in the bank account of the assessees. Therefore this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly the same is confirmed.

5.

In the result, the appeals of the assessee are dismissed.

Order pronounced on 31st May, 2017 at Chennai.

More judgments on Section 263

All 13,616 judgments and leading authorities on Section 263 →

Recent GST High Court judgments

Search GST case law →