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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S.SUNDER SINGH
आदेश / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
These common appeals are filed by the Revenue against the Orders dated 12.01.2015 of Commissioner of Income Tax (Appeals)-9, Chennai, in to 19/14-15 for the AYs 2005-06 to 2010-11, the Revenue has raised the following grounds in appeals: to 1856 & 1937/Mds/2015 :- 2 -:
The order of the learned CIT(A) is contrary to law and facts of the case.
2.1 The learned CIT(A) erred in deleting the addition on unexplained gifts for the Asst. Years 2008-09 of Rs.11,00,000/-.
2.2 The learned CIT(A) ought to have appreciated the fact that there was no actual transfer of funds from the donors as held by the AO.
3.1 The learned CIT(A) erred in deleting the addition on cash credits for the Asst. Years 2005- 06 & 2009-10 of Rs.29,34,312/-.
3.2 The learned CIT(A) ought to have appreciated the fact that the claim on cash credits in the capital account needs to be reconciled and explained with supporting proofs.
4.1. The learned CIT(A) erred in deleting the disallowance of claim on commission payable for the Asst. Years 2006-07 to 2010-11 of Rs.1,10,98,435/-.
4.2. The learned CIT(A) ought to have appreciated the fact that the onus is upon the assessee to prove the necessity and genuineness of the transaction towards commission payable.
5.1 The learned CIT(A) erred in deleting the addition on unexplained sundry creditors for the Asst. years 2007-08, 2009-10 & 2010-11 of Rs.1,05,68,641/-.
5.2 The learned CIT(A) ought to have appreciated the fact that the assessee failed to submit detailed confirmations from creditors with supporting proofs of genuineness and credit worthiness of transactions.
For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set-aside and that of the Assessing Officer restored.
2.0 In this case, a survey u/s.133A was conducted at the business premises of the assessee on 21.02.2012 by the ACIT, Business Circle-III, Chennai. The assessee carries business from Plot No.4, Krishna Nagar, 27th Street, Maduravoyal, Chennai-95. During the course of survey, the additions were found indicating investments in movable and non-movable properties such as jewellery, fixed deposits, land, buildings, flats, etc. The assessee during the course of survey admitted the additional income of Rs.4.65 Cr. (in the hands of the assessee, her husband and her mother).
Subsequently, the AO issued notice u/s.148 and the assessee has filed the revised returns for the AYs 2005-06 to 2010-11 as under: to 1856 & 1937/Mds/2015 :- 3 -:
Original Income as per Assessment Income return filed in Difference Year returned response to 148 (Rs.) (Rs.) notice (Rs.) 2005-06 5,34,709.00 5,31,282.00 - 2006-07 9,34,714.00 13,24,452.00 3,89,738.00 2007-08 9,91,760.00 19,45,413.00 9,53,653.00 2008-09 11,55,874.00 72,87,548.00 61,31,674.00 2009-10 *10,52,806.00 47,85,326.00 37,32,520.00 2010-11 7,29,305.00 46,31,553.00 39,02,248.00 * For the AY 2009-10, the original income returned was Rs.10,52,806/- but scrutiny assessment resulted in additions and income was assessed at Rs.34,27,810/- 3.0 The AO issued notices u/s.147 and completed the re-assessment u/s.147 r.w.s.143(3) by an Order dated 30.03.2013. The AO computed the income applying investment method and income method and assessed the total income higher of the two for the Assessment Year.
4.0 In the case of income method, the common addition made to the returned income was disallowance of the commission payment. Whereas in the investment method, the year-wise break-up of additions made to the returned income are as under:
Amount added Assessment Unexplained Total income Sundry Commission Year gifts assessed Cash credit creditors payable payable 2005-06 - 30,94,490.00 - - 36,29,199.00 2006-07 - - 36,98,435.00 - 50,22,887.00 2007-08 - - 24,00,000.00 20,48,250.00 44,48,250.00 2008-09 11,00,000.00 - 25,00,000.00 - 1,08,87,548.00 2009-10 - 21,27,222.00 20,00,000.00 67,20,391.00 1,56,32,939.00 2010-11 - - 5,00,000.00 18,00,000.00 69,31,553.00 to 1856 & 1937/Mds/2015 :- 4 -:
5.0 Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) partly allowed the assessee’s appeal.
Aggrieved by the order of the Ld.CIT(A), the Revenue has filed appeal before us. The Revenue challenged the order of the Ld.CIT(A) in common grounds of appeal for all the AYs.
6.0 Appearing for the Revenue, the Ld.DR argued that the Ld.CIT(A) has deleted the addition relating to gifts, cash credits, commission payable and sundry creditors payable pertaining to the AYs 2005-06 to 2010-11, though, the assessee was not in a position to explain the source of the credits and file confirmation for outstanding liabilities and requested to confirm the Orders of the AO. On the other hand, the Ld.AR relied on the Ld.CIT(A)’s order and stated that the Ld.CIT(A) has rightly deleted the addition and requested to confirm the order of the Ld.CIT(A).
7.0 We heard the rival submissions and perused the material placed before us. For all the AYs, the AO computed the income applying investment method as well as the income method and adopted income of the higher of the two methods for the year. As per the computation of income made by the AO, the taxable income for the AYs 2005-06 to 2010- 11 worked out as under: to 1856 & 1937/Mds/2015 :- 5 -:
Investment Assessment Income method Year method (Rs.) (Rs.) 2005-06 36,29,199.00 16,77,609.00 2006-07 30,66,752.00 50,22,887.00 2007-08 63,93,660.00 54,89,510.00 2008-09 1,08,87,548.00 98,14,048.00 2009-10 1,56,32,939.00 67,85,326.00 2010-11 69,31,553.00 51,31,553.00 8.0 From the above computation, it is noticed that the computation of income by applying two different methods resulted in two different incomes, which shows that the AO has not computed the income correctly and has not followed the correct method to deduce true and correct income. While determining the total income under the income method, the AO has made addition relating to commission paid in all the AYs and whereas in case of investment method, the AO has made additions in respect of unexplained gifts, cash credits, commission payable and sundry creditors. The AO started computing the income in investment method by taking the returned income instead of opening value of assets/investments and made the additions relating to gifts, commission payable, etc.
Unexplained gifts, cash credits were the sources and the commission payable and sundry creditors payable are the liabilities. In the investment method, the AO should consider only the investments and outgoings but not additions relating to Sec.68. Since the two methods followed by the AO resulted in two different taxable incomes, it is viewed that the AO has not followed the true and correct method for determining the taxable income of the assessee and require fresh consideration. Therefore, we are to 1856 & 1937/Mds/2015 :- 6 -: of the view that the file should be remitted back to the file of the AO and the AO should adopt only one method which can deduce the true and correct income of the assessee and re-compute the total income for all the AYs in accordance with the law. Therefore, we set-aside the orders of the lower authorities for the AYs 2005-06 to 2010-11 to re-do the assessment afresh de novo.
9.0 In the result, all the appeals of the Revenue are allowed for statistical purposes.