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Income Tax Appellate Tribunal, S M C BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN
आदेश /O R D E R
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-IV, Chennai, dated 02.04.2014 and pertains to assessment year 2007-08.
The first ground of the appeal is with regard to addition of `5 lakhs made under Section 68 of the Income-tax Act, 1961 (in short 'the Act').
Shri G. Baskar, the Ld.counsel for the assessee, submitted that during the course of assessment proceedings, the Assessing Officer found that the assessee had received a sum of `5 lakhs by cash from Smt. Manjula on 23.04.2006, 15.05.2006 and 07.06.2006. The assessee explained before the Assessing Officer that the above said sum of `5 lakhs was received on three occasions from Smt. Manjula. Then, a shop at Nungambakkam was purchased by the assessee along with the said Smt Manjula for a sum of `10 lakhs. The assessee produced a copy of the sale deed before the Assessing Officer. However, the Assessing Officer made an addition of `5 lakhs, since Smt. Manjula was not an assessee. According to the Ld. counsel, the sale deed produced before the Assessing Officer clearly showed that the property was purchased by both, the assessee and Smt. Manjula for a sum of `10 lakhs. Therefore, what was received by the assessee from Smt. Manjula was towards her share of money for purchasing the shop.
Therefore, no addition can be made.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that admittedly the assessee received `5 lakhs from Smt. Manjula. Therefore, it is for the assessee to explain the source from which the sum of `5 lakhs was received. The CIT(Appeals) further found that the assessee’s wife is not carrying on any business or profession, therefore, he rejected the claim of the assessee.
I have considered the rival submissions on either side and perused the relevant material on record. From the material available on record, it appears that the assessee along with his wife Smt. Manjula purchased a commercial premises at Nungambakkam for a consideration of `10 lakhs. From the order of the Assessing Officer it appears that the assessee has also taken a loan of `10 lakhs jointly with his wife from Citi Bank. The fact is that the assessee purchased a commercial premises, namely, shop for a sum of `10 lakhs jointly with Smt. Manjula, the assessee’s wife. The assessee claims that a sum of `5 lakhs was received in cash from Smt. Manjula. The fact remains is that Smt. Manjula is not doing any business or profession and there is no material available on record to suggest that the said payment of `5 lakhs was made from her past savings. There is no material available on record to suggest that Smt. Manjula received the sum of `5 lakhs from her parents, brother, sister, etc. either as gift or share money. In the absence of any material, the CIT(Appeals) confirmed the addition made by the Assessing Officer. This Tribunal do not find any infirmity in the order of the lower authority in the absence of any material to suggest that Smt. Manjula had sufficient source to give `5 lakhs for making investment in the shop. Accordingly, the order of the lower authority is confirmed.
The next ground of appeal is with regard to addition of ` 40,000/- being the rental advance received by the assessee.
Shri G. Baskar, the Ld.counsel for the assessee, submitted that the Assessing Officer found there was a deposit of `40,000/- on 17.08.2006. The assessee explained before the Assessing Officer that the above said sum of `40,000/- was received from M/s Qbrik Consultancy as rent advance for the shop at Alwarpet. The Assessing Officer found that the same was not disclosed in the statement of affairs filed by the representative of the assessee. According to the Ld. counsel, merely because the said sum of `40,000/- was not disclosed in the statement, it cannot be said that it was not received towards rental advance.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the receipt of rental advance was not disclosed in the statement of affairs filed by the assessee before the Assessing Officer. Since the assessee was not carrying on any business or profession, he is also not maintaining any books of account. In fact, the CIT(Appeals) deleted the addition made by the Assessing Officer on the ground that the sum was received as advance for shop at Alwarpet.
I have considered the rival submissions on either side and perused the relevant material on record. The Assessing Officer made an addition of `40,000/- on the ground that the receipt of rental advance from M/s Qbrik Consultancy was not reflected in the statement of affairs. However, on appeal by the assessee, the CIT(Appeals) found that the assessee has computed income from house property and the advance was received by cheque, therefore, the identity and genuineness of transaction were established.
Therefore, the CIT(Appeals) found that the Assessing Officer was not correct in making addition and accordingly, the same was deleted. When the addition made by the Assessing Officer was deleted, it is not known why the assessee has again raised the ground before this Tribunal as ground No.2. This Tribunal is of the considered opinion that when the issue with regard to addition of `40,000/- towards rental advance for shop at Alwarpet was accepted by the CIT(Appeals) and deleted the same, the ground raised by the assessee is misconceived.
The next ground of appeal is with regard to addition of `29,000/- being the hand loan received from the assessee’s tenant.
Shri G. Baskar, the Ld.counsel for the assessee, submitted that the assessee had issued a cheque for `30,000/- on 19.08.2006 and another cheque for `50,000/- on 24.08.2006 to one Smt. L.
Bindiya. The assessee, in fact, collected ` 51,000/- from the above said Smt. Bindiya on 24.11.2006. According to the Ld. counsel, the payment was made by the assessee from the bank account by issuing cheques. The Assessing Officer made this addition of `29,000/- on the ground that the assessee failed to explain the transaction. According to the Ld. counsel, even if the assessee fails to explain the transaction, what was paid by the assessee is from the deposit in the bank account, therefore, cheques issued by the assessee need not be a reason for making the addition.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee made payment of `80,000/- by means of cheques. One cheque was for `30,000/- and another for `50,000/-. However, the assessee received back only `51,000/-. It is not known why the balance of `29,000/- was not received back. Therefore, the CIT(Appeals) has rightly confirmed the addition.
I have considered the rival submissions on either side and perused the relevant material on record. In fact, the assessee paid `30,000/- on 19.08.2006 and `50,000/- on 24.08.2006 to one Smt.
L. Bindiya. In other words, the assessee paid `80,000/-. The assessee received back `51,000/- on 24.11.2006 from the said Smt. Bindiya. The addition of `29,000/- was made in respect of the balance amount of `29,000/- which was not received from Smt.
Bindiya. The fact remains that the sum of `29,000/-, which was not collected from Smt. Bindiya was paid by the assessee from the bank account. If at all any addition has to be made, it should be made only in respect of deposit made in the bank account and not in respect of the cheque issued by the assessee to Smt. Bindiya. This Tribunal is of the considered opinion that the balance amount of `29,000/- is in respect of the cheque issued by the assessee to Smt. Bindiya. Therefore, there cannot be made any addition as unexplained investment. If at all any addition can be made, it should be made in respect of deposit made in the bank as unexplained investment and not in respect of payment made to the party. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the addition of `29,000/- is deleted.
The next ground of appeal is with regard to addition of `65,000/- being the cheques issued to M/s Greenland Farms.
15. Shri G. Baskar, the Ld.counsel for the assessee, submitted that the Assessing Officer found that the assessee has issued a cheque for `30,000/- on 27.01.2007 and another cheque for `35,000/- on 23.12.2006 to M/s Greenland Farms. The assessee explained before the Assessing Officer that the cheques were issued in favour of M/s Greenland Farms on behalf of the assessee’s friend Shri S. Dinesh Kumar. According to the Ld. counsel, the availability of funds in the bank account is not in dispute. When the assessee has sufficient funds in the bank, which was not doubted by the Assessing Officer, mere issue of cheques in favour of M/s Greenland Farms cannot be a reason for making addition.
16. On the contrary, Shri A.V. Sreekanth, the Ld. D.R. submitted that the assessee issued two cheques in favour of M/s Greenland Farms. The assessee explained before the Assessing Officer that the cheques were issued on behalf of his friend Shri S. Dinesh Kumar. In the absence of any details about Shri Dinesh Kumar, the Assessing Officer made the addition of `65,000/-.
I have considered the rival submissions on either side and perused the relevant material on record. Admittedly, the cheques were issued in favour of M/s Greenland Farms. The availability of funds in the bank account is not doubted by the Assessing Officer.
Once the source of availability of funds is not in doubt, this Tribunal is of the considered opinion that merely because the cheques were issued in favour of M/s Greenland Farms that cannot be a reason for making any addition. Section 69 of the Act enables the Assessing Officer to treat the investment made by the assessee as income provided the assessee has not explained about the nature and source of such investment. In this case, the nature of investment is the payment made on behalf of Shri Dinesh Kumar and the source is from the assessee’s bank account. The availability of funds in the assessee’s bank account is neither doubted nor disputed by the Assessing Officer. When the funds were available in the bank account, this Tribunal is of the considered opinion that merely because the assessee could not furnish details about Shri Dinesh Kumar there cannot be any addition under Section 69 of the Act. Therefore, this Tribunal is unable to uphold the order of the lower authority. Accordingly, the addition made by the Assessing Officer to the extent of `65,000/- is deleted.
In the result, the appeal of the assessee is partly allowed.
Order pronounced on 23rd November, 2015 at Chennai.