Income Tax Appellate Tribunal - Chennai
J.Raman, Kancheepuram vs Department Of Income Tax on 22 March, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI
BEFORE Dr. O.K.NARAYANAN, VICE-PRESIDENT
AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER
ITA No. 693/(Mds)/2010
Assessment Year : 2006-07
AND
C.O.No.41/(Mds)/2010
The Income-tax Officer, Vs. Shri J. Raman,
Ward-I(1), Prop: M/s. Raman Earth
96-MM Avenue, I.T. Office, Movers,
Kanchipuram-631 501. No.57, Anna Street,
Pennalur Village,
Irrungattukottai P.O.,
Sriperumbudur Taluk.
PAN - AKEPR 0327 Q
(Appellant) (Respondent/Cross objector)
Department by : Shri KEB Rengarajan, Jr. Standing Counsel
& Shri Anirudh Rai, IRS, Commissioner of
Income-tax
Assessee by : Shri N. Devanathan, Advocate
Date of Hearing : 22nd March, 2012
Date of Pronouncement : 27th March, 2012
:- 2 -: ITA 693 & CO 41/10
ORDER
PER Dr.O.K.NARAYANAN, VICE-PRESIDENT:
This appeal is filed by the Revenue; the cross objection by the assessee. The relevant assessment year is 2006-07. These proceedings are directed against the order of the Commissioner of Income-tax(Appeals)-IX at Chennai passed on 16.02.2010. The appeal and the cross objection arise out of the assessment completed under sec.143(3) of the Income-tax Act, 1961.
2. In completing the assessment, the assessing authority has made an addition of ` 19 lakhs to the income of the assessee, under sec.69 of the Income-tax Act, 1961, as unexplained investment. According to the assessing authority, the assessee had furnished a copy of certificate of registration issued by the Assistant Registering Authority, Pondicherry in respect of JCB machine purchased by the assessee for ` 19 lakhs. The date of registration is found to be 1st August, 2005. The Assessing Officer asked for the purchase details and the details of repayments. They were not presented. On the other hand, the assessee had filed a cash flow statement :- 3 -: ITA 693 & CO 41/10 wherein he has explained the sources for acquiring JCB machine and also the income earned from the operation of that machine. The Assessing Officer was not satisfied with the explanations offered by the assessee and treated the amount of ` 19 lakhs as unexplained investment in the hands of the assessee and added the same to the income of the assessee.
3. In first appeal, the Commissioner of Income-tax(Appeals) held that the assessee had availed loans and the EMI statement issued by Indusind Bank revealed ` 16 lakhs as loans from Leyland Group. The seed money of ` 3 lakhs was stated to be his own income accrued from the bank. After considering all the details, the Commissioner of Income-tax(Appeals) found that there was no justification in treating the sum of ` 19 lakhs as unexplained. Thus, he deleted the addition of ` 19 lakhs.
4. The Revenue is aggrieved and, therefore, the second appeal before us. The addition of ` 19 lakhs alone, is the issue raised before us in the present appeal. The relevant grounds raised by the Revenue in the present appeal read as below :
:- 4 -: ITA 693 & CO 41/10
"2. The Ld. CIT(A) erred in deleting the entire addition of ` 19 lakhs made on account of unexplained sources for the purchase of JCB machine u/s.69 of the Act.
2.1 The Ld. CIT(A) while admitting the additional evidence in the form of revised Balance Sheet filed by the assessee for the first time before CIT(A), ought to have given opportunity as enumerated under Rule 46A of the Income-tax Rules, 1962.
2.2 The Ld. CIT(A) failed to note that the audited Balance Sheet filed with the return does not show the investments made by the assessee and also the loans of the creditors in the assets and liability side.
2.3 The Ld. CIT(A) failed to appreciate the fact that the even after getting the accounts audited u/s.44AB which has been filed before AO and if the assessee furnishes a new revised Balance Sheet before the CIT(A) then there is serious lapse on the part of the assessee in getting the accounts audited and hence neither the assessee's accounts/Balance Sheet filed before AO nor the one filed before CIT(A) are reliable.
2.4 The LD. CIT(A) ought to have called for remand report from the AO on the correctness of the accounts/balance sheet claimed to have been maintained by the assessee.":- 5 -: ITA 693 & CO 41/10
5. We heard Shri K.E.B.Rengarajan, the learned Standing Counsel and Shri Anirudh Rai, the learned Commissioner of Income- tax appearing for the Revenue and Shri N. Devanathan, the learned counsel appearing for the assessee.
6. The Commissioner of Income-tax(Appeals) has considered the issue in a detailed manner in paragraph 5 of his order. As the discussion made by the Commissioner of Income-tax(Appeals) is self explanatory and convincing, those discussions are extracted below:
"5. The SECOND addition relates to purchase of JCB machine for ` 19 lakhs. The AO says that, the assessee has furnished a copy of certificate of registration issued by Asst. Registering Authority, Pondicherry. The date of regi9stration is found to be 01.08.2005. When the assessee was asked to produce the purchase invoice and the EMI statement, it was not responded to. Only cash flow statement was filed wherein the assessee explained the source from the capital and income and gross contract receipts. Not satisfied with the explanation, the AO concluded that the exact amount of cost of the new JCB :- 6 -: ITA 693 & CO 41/10 machine could not be determined and the only information to determine the value is from the assessee's letter dt. 18.12.2008 indicating the value of JCB machine at ` 19 lakhs. As the source of this investment has not been proved by the assessee, the AO treated this ` 19 lakhs as unexplained investment u/s.69 of the Act and added to taxable income.
5.1 It was submitted by the appellant that, the AO has not examined the EMI payment, loan outstanding of new JCP etc in books and filing revised computation of balance sheet as per books. It is stated that loan of ` 16 lakhs was obtained from Indus Bank as per EMI statement directly obtained from the loan creditor. The margin money was accounted for in books filed before the AO and it was generated only from bank drawals and cash on hand. It was submitted that there was no suppression of ` 19 lakhs and it is supported by loan evidence. Hence, it was prayed that addition is not warranted and be deleted. :- 7 -: ITA 693 & CO 41/10 5.2 I have considered the submissions. In the written arguments, it is seen that new JCP machine was purchased for ` 19 lakhs from margin of ` 3 lakhs derived from own accruals paid from the bank and out of loan of ` 16 lakhs from Leyland group. The copy of the ledger account showing JCP machine purchase EMI account and depreciation was wrongly debited in diesel operation expenses. The AO disallowed ` 19 lakhs on account of non production of proper evidence for source of investment by the appellant. It was admitted that usually financier is having purchase invoice of JCP machine and further without giving an opportunity to the appellant rejected the new machinery purchased. A copy of statement of account as on 26.04.2007 from Indusind Bank Limited, No.89, G.N.Chetty Road, T. Nagar, Chennai 600 017 is filed and placed on record. It could be seen from the statement of account that the amount financed was ` 16 lakhs and margin money was ` 3 lakhs and that the contract date is mentioned as 30.07.2005. With production of this evidence, I am of the view that the appellant has :- 8 -: ITA 693 & CO 41/10 discharged his duty for the source towards acquisition of JCP machine. Hence, I direct the AO to delete the addition of ` 19 lakhs."
7. On going through the above order of the Commissioner of Income-tax(Appeals), we find that he has examined all the relevant documentary details to come to a conclusion that the investment made by the assessee of ` 19 lakhs in purchasing JCB machine has been explained. We do not find much force in the argument of the Revenue that the Commissioner of Income-tax(Appeals) has admitted fresh evidence in violation of Rule 46A. It is clear from the orders of the lower authorities that the assessee had placed before the Assessing Officer himself, the detailed statement of EMI payments. This EMI statement itself would show that the assessee had availed loans and the repayments have been made as per the schedule. As far as the documents are concerned, the assessee has shown the outstanding loan in his books of account. The serious objection of the Revenue is that the assessee has made good, the earlier omission by filing revised balance-sheet. The point to be remembered is that all the original entries are reflected in the books of account maintained by the assessee in the ordinary course :- 9 -: ITA 693 & CO 41/10 of business. The balance-sheet is a compilation of balances available in the books of account. The balance-sheet is not a record of original entry. The books of account is the record of original entry in which the assessing authority has not pointed out any defect. If so, the revising of balance-sheet is technical in nature which should not go to defeat the books of account and other documentary evidences available with the assessee to prove that JCB machine was purchased against loans.
7. In the facts and circumstances of the case, we find that the Commissioner of Income-tax(Appeals) has adjudicated the issue in a just and proper manner. His order is accordingly, upheld.
8. The cross objection filed by the assessee is to support the order of the Commissioner of Income-tax(Appeals). As the appeal filed by the Revenue is dismissed, the cross objection has become infructuous.
9. In result, this appeal filed by the Revenue and the cross objection filed by the assessee are dismissed. :- 10 -: ITA 693 & CO 41/10
Order pronounced on Tuesday, the 27th of March, 2012 at Chennai.
Sd/- Sd/-
(Challa Nagendra Prasad) (Dr. O.K.Narayanan)
Judicial Member Vice-President
Chennai,
Dated the 27th March, 2012.
mpo*
Copy to: (1) Petitioner
(2) Respondent
(3) CIT
(4) CIT(A)
(5) D.R.
(6) G.F.