R.VIJAYAKANNAN,SALEM vs. ITO, SALEM

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ITA 3104/CHNY/2014Status: DisposedITAT Chennai08 April 2015AY 2002-034 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the investments were made and the capital amount was credited in the financial year ending March 31, 2001, any addition could only be made for AY 2001-02, not AY 2002-03. Therefore, the addition for AY 2002-03 was not sustainable.

What were the facts?

The Assessing Officer made an addition of Rs. 10,00,000/- for AY 2002-03 on account of unexplained investments in M/s Vetrivel Explosives Private Limited. The assessee contended that the investments were made in the previous financial year, i.e., FY 2000-01.

What were the issues?

Whether the addition of unexplained investment made in a prior financial year is sustainable for the current assessment year? Whether the timing of investment dictates the assessment year for addition?

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

Hearing: 06.04.2015Pronounced: 08.04.2015

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Salem dated 28.11.2014 and pertains to assessment year 2002-03.

2.

Shri G. Baskar, Ld.counsel for the assessee, submitted that the Assessing Officer made an addition of `10,00,000/-. In the first round of litigation, this Tribunal by an order dated 12.01.2011 remanded back the matter to the file of the Assessing Officer. The Assessing Officer confirmed the addition once again to the extent of `10,00,000/- on the ground that the contemporaneous evidence in the form of return of income was not filed by the assessee.

According to the Ld. counsel, when the investments were made in M/s Vetrivel Explosives Private Limited for the period from 01.04.1999 to 31.03.2001, there cannot be any addition for the financial year 2001-02 which is relevant to the assessment year 2002-03. At the best, the addition could be made only for the financial year 2000-01 which is relevant to the assessment year 2001-02. Referring to paper-book, more particularly pages 35 and 36, the Ld. counsel submitted that all the payments were made by cash before 31.03.2001. Hence, there cannot be any addition for the year under consideration.

3.

On the contrary, Shri Das Gupta, the Ld. Departmental Representative, submitted that the assessee made investments in M/s Vetrivel Explosives Private Limited for the period from 01.04.1999 to 31.03.2001 towards share capital and advances to assessee would not have earned so much of money for the period from 01.04.1999 to 31.03.2001. As per the direction of this Tribunal, the Assessing Officer as well as the CIT(Appeals) examined the matter and found that `10,00,000/-, which was credited to the capital account for the year ending 31.03.2001, as income from other sources. The Assessing Officer has rightly rejected the claim of the assessee with regard to `10,00,000/- considering as income from other sources and this was rightly confirmed by the CIT(Appeals).

4.

We have considered the rival submissions on either side and perused the relevant material on record. The Assessing Officer made an addition of `10,00,000/- on the ground that the investments made in share capital of M/s Vetrivel Explosives Private Limited remains unexplained. The Assessing Officer, after considering the claim of the assessee that all the investments were made till 31.03.2001, found that the amount credited to the capital account to the extent of `10,00,000/- in the year ending 31.03.2001 as income from other sources was not explained. The fact remains that the investments in M/s Vetrivel Explosives Private Limited were made in the year ending 31.03.2001 and the capital amount

4 credited is also in the year ending 31.03.2001. Therefore, if at all there is any addition, it could be made only for the financial year 2000-01 which is relevant to the assessment year 2001-02. Hence, the addition made for the assessment year 2002-03 is not sustainable. In view of the above, the orders of the lower authorities are set aside and the addition of `10,00,000/- is deleted.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced on 8th of April, 2015 at Chennai.

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