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Income Tax Appellate Tribunal, ‘B’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
In this appeal filed by the assessee, he is aggrieved on an addition of �25,73,500/- which was confirmed by the ld. Commissioner of Income Tax (Appeals). One another issue raised by the assessee is regarding an addition �31,565/- for differential interest. However, no serious arguments were advanced by the ld. Authorised Representative on the latter issue.
ITA No.2695/Mds/2016 :- 2 -:
Facts apropos for the first issue are that assessee, a director 2. of a company called M/s. Tamilnadu Air Travels Pvt Ltd had deposited a sum of �25,73,500/- in his account in City Union Bank, Triplicane Branch, Chennai during the relevant previous year. Since assessee had not filed an return of income for the impugned assessment year a notice u/s.148 of the Income Tax Act, 1961 (in short ‘’the Act’’) was issued to the assessee. Pursuant to this notice assessee filed a return on 25.11.2013 admitting an income of �1,57,490/- after deductions.
The income declared included salary of �2,10,000/- and interest �34,819/-. Assessee was required to explain the source of the cash deposits made in City Union Bank. Explanation of the assessee was that such deposits were made out of drawings from M/s. Tamil Nadu Air Travels Pvt Ltd, wherein assessee was a director. As per the assessee, deposits were made in his personal account so as to improve the relationship with the bank. Assessee also furnished copy of the return, balance sheet and profit and loss account of M/s. Tamil Nadu Air Travels Pvt Ltd, in support. Assessee also filed a copy of the bank account of the said company with State Bank of Travancore, Triplicane. Since the company’s bank account did not reflect any such withdrawals, ld. Assessing Officer issued a letter u/s.133(6) of the Act and summoned the company officials u/s.131 of the Act requiring them
ITA No.2695/Mds/2016 :- 3 -: to produce the books of accounts of the company. It seems this was not complied with.
In the meanwhile assessee filed a letter from one Mr. 3.
Ganapathy who claimed to be a real estate broker. Mr. Ganapathay in the letter, stated that he had arranged acquisition of a property for M/s. Tamil Nadu Air Travels Pvt Ltd. As per Mr. Ganapathy, for such purchase, an advance of �30,00,000/- was given to one Shri.
Dhanasekar. Since the deal did not go through, as per Mr. Ganapathy, the money was returned by Shri. Dhanasekar on various dates and this was in turn given by him to the assessee. When ld. Assessing Officer doubted the reliability of the evidence in the nature of letter dated 04.03.2014 given by Mr. Ganapathay, assessee submitted as under:-
‘’M/s. Tamilnadu Air Travels Pvt. Ltd, Chennai is unable to trace and submit the book of account. Non transactions in the savings bank account of Mr. S. Muniyandi is related to him. This money is deposited by M/s. Tamilnadu Air Travels Pvt. Ltd for purchase of property in its name. Which is very much factually and material proved through the fallowing. a) Property is registered in the name of M/s. Tamilnadu Air Travels Pvt. Ltd (Copy of sale deed already filed). b) Fund deposited in the SB accounts are utilized only far purchase of the above property. c) M/s. Tamilnadu Air Travels Pvt. Ltd Audited balance sheet shows the addition of property in its fixed assets schedule. d) Confirmation from M/s. Tamilnadu Air Travels Pvt. Ltd that the amount is deposited by them.
ITA No.2695/Mds/2016 :- 4 -:
Further rejection of affidavit filed by Mr. Ganapathy without any valid reason is not acceptable.
While making an assessment the office has to. ensure that only that the income of the assessee is assessed not the receipts. Treating the receipt of the assessee as income is not acceptable. The statement or affidavit by a third party is mare than corroborative evidence and statement of facts. The officer has every right to enquire or verify the same. With making proper enquiry or verification of facts rejecting the evidence is not acceptable by law and against the nature justice.
Also. rejecting the source of receipts from the company far more non submission of books off accounts is not justifiable an the following grounds. a. The copies of books accounts are required far proof of cash flaw in the savings bank account of the director. But we have very much provided with the proof that the cash deposited in the 58 account of director is utilized far purchase of property in the name of company. No. one will deposit money personnel money in to. the SB account far purchase of property in the name of Private Company on which 2 non related per sans are owners. b. We had further confirmed that the amounts are not withdrawn in single period during this year they are paid to. a seller far purchase an one property during the previous year which is not materialize and the same was returned periodically to. the company (Confirmation from the broker already submitted). The directors of the company felt that if the money is deposited in the company account they will be utilized for business purpose the objective of purchase of property will not be materialized Sa they mutually agreed to. deposit the same in a separate bank account in the name of one of the director. From that account statement it is very clear that the funds deposited It not utilized only for the purpose of purchase of property. We had provided an affidavit from the broke as material evidence for proof of such transaction since we are unable to locate the old seller’’. After filing the above reply, assessee also produced Mr. Ganapathy before ld. Assessing Officer on 14.03.2014. Mr. Ganapathy confirmed what he had stated in his letter dated 04.03.2014. Ld. Assessing
ITA No.2695/Mds/2016 :- 5 -:
Officer also posed few queries for which Mr. Ganapathay replied as under:- "Q. No. 8:What is the mode of re-payment of earlier advance paid? Please state whether you have proof. Ans: This amount was returned in four instalments by Shri Dhanasekaran. There is no proof for this. After receipt of the final instalment, the written agreement was destroyed by both the parties. Q. No. 9:As per the agreement, what is time gap between the advance given and received back. Please confirm the month and year. Ans: The money was received within 6 months from the date of agreement. But I don't remember the year.
Q. No. I0:Have you made arrangement for purchase of any other property for Mr. Muniyandi? Ans: After getting the money referred to above, I had made arrangement for purchase of old property for M/s. Tamil Nadu Air Travels Pvt Ltd. at Wallajah Road. After fixing the price at Rs.35 lakhs and getting a small amount of token advance, I remember that the balance amount was paid on the date of registration. For this transaction, I received 1 % commission. "
Ld. Assessing Officer thereafter made an analysis of the balance sheet of M/s. Tamil Nadu Air Travels Pvt Ltd as on 31.03.2005 and 31.03.2006. He found from the said balance sheets that the sum of Rs.30,00,000/- claimed by Mr. Ganapathy to have been paid as advance for purchase of property to Shri.Dhanasekaran in the financial year 2004-05 did not find a place in the Balance sheet as on 31.03.2005. As per the ld. Assessing Officer, the sundry debtors balance as on 31.03.2005 was �21,12,449/- only. Thus, according to ITA No.2695/Mds/2016 :- 6 -: ld. Assessing Officer claim of the assessee was not at all believable. He also noted that assessee had not drawn any salary from the said company and had no source whatsoever for justifying the deposits made in the bank account. He made an addition of �25,73,500/-.
There was an addition of �31,565/- also being difference between interest admitted in the return of income filed and actual interest received by the assessee from banks.
Aggrieved, assessee moved in appeal before ld. 4.
Commissioner of Income Tax (Appeals). Ld. Commissioner of Income Tax (Appeals) was of the opinion that contentions taken by the assessee before ld. Assessing Officer were rightly rejected by the ld. Assessing Officer. According to him, money, if any, taken by the assessee from the company for giving advance for purchase of the property was not reflected in the Audited balance sheet of the company. Further, as per ld. Commissioner of Income Tax (Appeals) assessee’s wife was also having no source of income and was only a home maker. He confirmed the additions.
Now before me, ld. Authorised Representative strongly 5. assailing the orders of the lower authorities reiterated the arguments taken before the ld. Assessing Officer. According to him, broker Shri.
Ganapathy having confirmed the transactions and return of money to ITA No.2695/Mds/2016 :- 7 -: the assessee, the lower authorities were not justified in making the additions. Further according to him, assessee even produced Mr. Ganapathy before ld. Assessing Officer and Mr. Ganapathy had also confirmed the facts stated by the assessee.
Per contra, ld. Departmental Representative strongly 6.
supported the orders of the authorities below.
I have considered the rival contentions and perused the orders of the authorities below. Contention of the assessee is that a sum of Rs.30,00,000/- was given by M/s. Tamil Nadu Air Travels Pvt Ltd for acquiring a property on behalf of the said company in an earlier year, through Shri. Ganapathy and the said sum was returned to the assessee by Mr. Ganapathy when the deal did not come through. As against this, the initial stand of the assessee was that deposits made in M/s. City Union Bank were out of the withdrawals made from the company for purchase of the property. If what Mr. Ganapathy stated is true, the advance of �.30,00,000/- given by him to Shri. Dhanasekar, on behalf of the company would have found a place in the assets of the company as on 31.03.2005. The advance paid for acquiring asset, whether stock in trade or not, has to appear in balance sheet and if it does not appear it only means that there was no such advance given by the company. Just because assessee
ITA No.2695/Mds/2016 :- 8 -: produced Mr. Ganapathy would not convert whatever he stated as true. Ld. Assessing Officer also specifically noted that Mr. Ganapathy had given vague answers regarding date of receipt of advance back from Mr. Dhanasekar and payment of the money back to assessee or M/s. Tamil Nadu Air Travels Pvt Ltd. Nothing of what has been stated by Mr. Ganapathy was supported by any evidence. The balance sheet of M/s. Tamil Nadu Air Travels Pvt Ltd did not reflect any transaction which assessee claimed. In the circumstances, I am of the opinion that assessee was unable to substantiate the source of the cash deposits made by him in his bank account. I do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals).
In the result, the appeal of the assessee stands dismissed. 8.