Income Tax Appellate Tribunal - Chennai
M.H.Mohamed Ayub, Nagapattinam vs Department Of Income Tax on 9 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH : CHENNAI
[BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND
SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER]
I.T.A.No.353/Mds/2011
Assessment year : 2007-08
The Income Tax Officer vs Shri M.H.Mohamed Ayub
Ward I 92) No.3/3 Main Road, Puttur
Nagapattinam Poravachery
Nagapattinam Tk.
[PAN: ALKPM4078R]
(Appellant) (Respondent)
Appellant by : Shri Anirudh Rai, CIT/DR
Respondent by : Shri M.Narayanan, Retd. Addl.
CIT
Date of Hearing : 09-04-2012
Date of Pronouncement : 20-04-2012
ORDER
PER N.S. SAINI, ACCOUNTANT MEMBER
This is an appeal filed by the assessee against the order of the ld.CIT(A), Tiruchirapalli, dated 14.12.2010.
2. Ground Nos.1 & 4 of the appeal are general in nature and hence, requires no adjudication by us.
3. Ground No.2 of the appeal is directed against the order of the ld.CIT(A) deleting addition of ` 40.14 lakhs made by the Assessing :- 2 -: I.T.A.No.353/11 Officer as unexplained cash credits in the Savings Bank Account of the assessee.
4. The brief facts of the case are that the assessee is running a saw mill in the name 'Chola Saw Mill'. From the AIR information from the City Union Bank, the Assessing Officer found that the assessee has deposited cash of ` 10 lakhs or more in the Savings Bank Account during the financial year 2006-07. The Assessing Officer had written a letter to the City Union Bank, Tiruvarur, and in response to the same, the bank furnished the statement of account of Shri M.H.Mohamed Ayub, Savings Bank A/c No.289387 for the period 1.4.2006 to 31.3.2007. On verification of the same, the Assessing Officer observed that there are deposits in cash as well as through cheque to the tune of ` 40,14,460/-. In the sworn statement of the assessee recorded on 2.12.2009, in reply to Question No.6, the assessee stated that the deposits belong to M/s Theatre Chola and are accounted for in the books of M/s Theatre Chola, which is a partnership concern. In reply to Question No.10, the assessee also submitted that the above account was opened in his name for M/s Theatre Chola as per power given by other partners for administrative convenience and that account belongs to M/s Theatre Chola and for its business purpose only. The Assessing Officer further observed that the parties who have signed the general power of authorization are not :- 3 -: I.T.A.No.353/11 partners in the firm, Theatre Chola, hence, the City Union Bank Account belongs to Shri M.H.Mohamed Ayub only. The Assessing Officer also observed that assessee has not produced the counter foils of bank transactions and therefore, inferred that it does not relate to M/s Theatre Chola. The Assessing Officer was also of the opinion that the bank account should be in the name of the firm. The Assessing Officer also observed that the books of account produced on 17.12.2009 were written in a single day and expenses were written in pencil. These were not produced on the date of summon hearing and after two days of hearing the books were produced. He also observed that the net collections said to have been deposited in the City Union Bank does not tally with the receipts shown in the firm. He also observed that in the course of hearing the assessee submitted that the deposits in City Union Bank are withdrawals from State Bank of India, Tiruvarur. He observed that enquiry from State Bank of India reveals that Shri M.H.Mohamed Ayud had availed term loan of ` 21,68,000/- in the name of Theatre Chola on 6.2.2006 and the draft/pay order was for machinery purchase. Therefore, the Assessing Officer observed that the deposits of ` 40,14,460/- including interest of ` 1701/- with City Union Bank Savings Bank Account 289387 of Shri M.H.Mohamed Ayub are unexplained and added the same to the income of the assessee.
:- 4 -: I.T.A.No.353/11
5. In appeal, the ld.CIT(A) deleted the addition by observing as under:
"7. I have carefully considered the above submissions. I find that the debits and credits in the bank account relate to the transactions of the theatre run by the firm in which the appellant is only a partner. Hence it is incorrect to treat the credits in the bank account to be unexplained investment of the appellant. Moreover the appellant has duly explained the source for ` 20,82,104. The balance amount of credit also represent theatre collections for a part of the year which has been credited in this bank to overcome its appropriation by the State Bank of India towards the loan availed from that bank. Therefore, other credits also explained. Hence the entire addition of ` 40,14,460 has been made merely on surmise and without verification thereof. Hence this addition is deleted.
6. The ld.CIT/DR argued and submitted that the ld.CIT(A) has admitted additional evidence while deleting the addition without allowing reasonable opportunity to the Assessing Officer for verifying those evidences. Hence, he submitted that the matter should be restored back to the file of the Assessing Officer for verifying those evidences. The ld. A.R of the assessee also submitted that he has no objection to the matter being restored back to the file of the Assessing Officer for verification of the evidences and thereafter deciding the issue afresh.
7. After considering the vial submissions and the materials available on record, we find that the Assessing Officer has made the addition of ` 40,14,460/- to the income of the assessee as :- 5 -: I.T.A.No.353/11 unexplained investment since the assessee could not file necessary evidences to explain the source of deposits in the City Union Bank in the name of the assessee Shri M.H.Mohamed Ayub. The ld.CIT(A) has deleted the addition merely on relying on the submissions made by the assessee and without verifying the evidences submitted by the assessee by observing that the debits and credits in the bank account relate to the transaction of the Theatre run by the firm wherein the assessee was a partner. Further, the ld.CIT(A) has also observed that the assessee has explained the source of ` 20,82,104/- as ` 7,80,000/- in the bank account on 7.2.2007 being outward clearing and ` 5 lakhs deposited in the bank account on 9.2.2007 being outward clearing and ` 8,02,104/- deposited in the bank on 9.3.2007 being the FDR deposit. The ld.CIT(A) has not verified whether these amounts deposited in the bank are from the disclosed sources of the assessee or of the firm M/s Theatre Chola. As both the parties have agreed before us that the matter should be restored back to the file of the Assessing Officer for verification of the necessary documents and thereafter re-adjudicating the issue afresh as per law, we set aside the order of the ld.CIT(A)on this issue and remand the matter back to the file of the Assessing Officer to re-adjudicate the issue afresh after necessary verification of the details, documents and books of account by passing a speaking order. Needless to mention that the Assessing :- 6 -: I.T.A.No.353/11 Officer shall give proper opportunity of being heard to the assessee. The assessee is also directed to produce all the evidences before the Assessing Officer as and when called upon to do so. Thus, the ground of appeal of the Revenue is allowed for statistical purposes.
8. Ground No.3 of the appeal of the Revenue is directed against the order of the ld.CIT(A) deleting the addition of ` 14.50 lakhs as unexplained credit in the name of assessee's father.
9. The brief facts of the case are that the assessee had shown ` 1.50 lakhs in his cash flow statement as contribution from his father Shri S.Mohamed Hussain for business establishment. In the sworn statement recorded on 4.11.2009, the assessee stated that his father was aged 75 years and was staying with him. The assessee did not produce any evidence in support of his claim that ` 14.50 lakhs was received from his father. The Assessing Officer, therefore, treated ` 14.50 lakhs as unexplained credit and added the same to the income of the assessee.
10. On appeal, the ld.CIT(A) observed that the assessee, in the Balance Sheet filed, has admitted ` 11 lakhs received from his father and the balance from his sisters. The ld.CIT(A) also observed that the appellant's father has confirmed the contribution of ` 11 lakhs :- 7 -: I.T.A.No.353/11 to the appellant and therefore, deleted the addition of ` 11 lakhs and confirmed the balance addition of ` 3.50 lakhs.
11. The ld. CIT/DR submitted that the confirmation filed before the ld.CIT(A) was not filed before the Assessing Officer and the Assessing Officer was not allowed the opportunity to verify the same. He further submitted that the matter should be restored to the file of the Assessing Officer for verification of the confirmation and details and to re-adjudicate the issue afresh. The ld. A.R of the assessee had no objection to the matter being restored back to the file of the Assessing Officer for verification and thereafter re-adjudicating the same.
12. After considering the rival submissions and the material available on record, we find that the assessee had shown ` 11.00 lakhs as received from his father. Since the assessee could not substantiate the receipt by filing necessary evidences in support of the same, the Assessing Officer treated the same as unexplained credit and added the amount to the income of the assessee. On appeal, the ld.CIT(A) deleted the addition of ` 11 lakhs by observing that the same was confirmed by the assessee's father. We find that this evidence was not filed before the Assessing Officer. As both the parties before us have agreed that the matter should be restored back to the file of the Assessing Officer for adjudication of the issue afresh as per law :- 8 -: I.T.A.No.353/11 after verification of the confirmation/details, we set aside the order of the ld.CIT(A) on the issue and remand the matter back to the file of the Assessing Officer for adjudication of the issue afresh as per law after verification. The Assessing Officer shall allow reasonable opportunity of hearing to the assessee before adjudicating the issue afresh. Thus, this ground of appeal is also allowed for statistical purposes.
13. In the result, the appeal of the Revenue is partly allowed for statistical purposes.
Order pronounced in the open court on 20-04-2012.
Sd/- Sd/-
(CHALLA NAGENDRA PRASAD) (N.S.SAINI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 20th April, 2012
RD
Copy to: Appellant/Respondent/CIT(A)/CIT/DR