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Income Tax Appellate Tribunal, “C (SMC
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R These two appeals by different assessees are directed against different orders of Commissioner of Income Tax (Appeals)-19, I.T.A.Nos.1311 & 1312/Mds/2015. :- 2 -:
Chennai, dated 25.02.2015 for the assessment year 2007-2008. Since the issue in these two appeals is common in nature, hence these appeals are combined, heard together, and disposed of by a common order for the sake of convenience.
The grievance of the assessee’s in these appeals is with regard to confirming addition towards investment in Sqny Stones Private Limited �2.00 lacs out of assessee’s own personal income’’.
Since the issue is common in both appeals, I consider the facts as narrated in for adjudication.
The facts of the case are that there was a search u/s.132 of the act in the case of M/s. Sony Fireworks Private Limited and its sister concerns M/s. Amar packaging IndustrIes and M/s. Abi Fireworks Agencies and in the residential premises of Shri. P. Panjurajan, the founder of the group concerns at No.52 & 53, Satchiapuram Road, Thiruthangal. The assessee being one of the partners of M/s. Amar packikng industries and M/s. Abi firewords agencies were also searched. Books of accounts, documents and other materials relating to the assessee and the group concerns were found and I.T.A.Nos.1311 & 1312/Mds/2015. :- 3 -: seized/impounded. Subsequently, relevant statutory notices were issued. In response, the assessee filed the return of income for the assessment year 2007-2008 on 31.12.2009 admitting an income of �4,34,403/- and agricultural income of �76,500/-. The Assessing Officer completed the assessment u/s.143(3) r.w.s. 153A of the Act on 27.12.2010 by assessing the income at �12,06,373/- by making additions on account of additional income relating to M/s. Abi Fireworks Agencies offered in the revised return and unexplained investment of �2,00,000/- in M/s. Sqny Stones P. Ltd. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)
The Commissioner of Income Tax (Appeals) observed that during the year the assessee invested �17,43,500/- as share capital in M/ s. Sqny Stones P. Ltd. The assessee filed a reply dated 02.12.2010 explaining the source for the investment. The source for the investment was by way of loan from SBI, LIC policy loan, withdrawal from M/s. Chindia Granites and personal income. The AO accepted the sources in respect of which evidences/details were furnished before him in assessment proceedings. The assessee had not I.T.A.Nos.1311 & 1312/Mds/2015. :- 4 -: furnished details with regard to personal income. The Assessing Officer thus, made the addition of �2,00,000/- for the reason that the assessee had not explained the sources for the said part capital introduced with M/ s. Sqny Granites.
The assessee contended that the source of investment of � 2 lakhs in M/ s. Sqny Granites is personal income. The assessee has relied on a decision of the Tribunal in the case of P.
Ganesan in ITA No. 2011/MDS/2013. The assessee has also relied on the decision of the Supreme Court in CIT V. S Nellipparn. The assessee has not brought any material or evidence on record to show that there was a connection between personal income and investment of �2 lakhs in M/s.
Sqny Granites. Unless a connection between personal income and the investment is established, the source of investment cannot be said to be proved. The reliance of the assessee on the decision in the case of S.Nelliappam (supra) is misplaced in as much as in the said case the highest fact-finding authority had been held to have inferred that there was a connection between the profits withheld from the books and the cash credit entries, whereas in the present case, no material or evidence has been brought on record by the assessee to show that there I.T.A.Nos.1311 & 1312/Mds/2015. :- 5 -: was connection between the personal income offered in the revised return of income filed (as against return of income in response to notice u/s.153A) and the aforesaid investment of �2 lakhs. No details of personal income have been furnished even during appeal proceedings. Even during the course of appeal proceedings nothing has been brought on record to evidence the source of the aforesaid investment. As already discussed no material or evidence has been brought on record by the assessee to show that there is connection between the personal income and the source of the aforesaid capital of �2,00,000/- introduced with M/s. SPNY Granites. In the absence of any material or evidence brought on record, the Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer. Against this, the assessee is in appeal before us.
Both sides heard. The assessee filed a copy of the balance sheet in both cases as on 31.03.2007, explaining the assets and liabilities and submitted that investment in SQNY Stones (P) Ltd was properly explained. I have gone through the balance sheet filed by both parties. In the case of G. Sasimala there was an investment of I.T.A.Nos.1311 & 1312/Mds/2015. :- 6 -:
�17,43,500/- and the assessee pleaded that the amount was contributed from own capital and reserve and surplus. Similarly, there was an investment of �20,01,500/- by K. Grahalakshmi, the assessee explained that the amount was contributed from own capital and reserve and supply. Being so, there is no unexplained investment in the hands of the assessees to bring into tax. Accordingly, I inclined to delete the addition of �2.00 lacs each in both cases. The appeals of the assessee are allowed.
In the result, the appeals filed by the assessee in ITA No.1311
& 1312/Mds/2015 are allowed.
Order pronounced on Friday, the 4th day of September, 2015, at Chennai.