Income Tax Appellate Tribunal - Chennai
V.T.Rajandran, Mannargudi vs Assessee on 19 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE Dr. O.K.NARAYANAN, VICE-PRESIDENT
AND SHRI HARI OM MARATHA, JUDICIAL MEMBER
ITA No.1740(Mds)/2011
Assessment Year : 2004-05
Shri V.T.Rajandran, The Income-tax Officer,
53A, Azad Road, Vs. Ward I(2),
Mannargudi-614 001. Nagapattinam.
PAN AAIPR7725F.
(Appellant) (Respondent)
Appellant by : Shri T.T.Durairaj Kandiar, FCA
Respondent by: Shri Shaji P Jacob, IRS, Addl.Commissioner
of Income-tax.
Date of Hearing : 19th January, 2012
Date of Pronouncement : 19th January, 2012
ORDER
PER Dr.O.K.NARAYANAN, VICE-PRESIDENT:
This appeal is filed by the assessee. The relevant assessment year is 2004-05. The appeal is directed against the order of the Commissioner of Income-tax(Appeals), Tiruchirapalli dated 24-8-2011 and arises out of the assessment completed
-2- ITA 1740 of 2011 under section 143(3), read with section 254 of the Income-tax Act, 1961.
2. The grounds raised by the assessee read as below:-
"The order of the learned Commissioner of Income- tax(Appeals), Tiruchirapalli, in ITA No.157/2009-10, dated 24-8-2011, for the assessment year 2004-05 is against the facts of the case, legal principles involved, weight of evidence on record and principles of natural justice.
The learned Commissioner of Income-tax(Appeals) had erred in confirming the order of the Assessing Officer arbitrarily making an addition of ` 11,92,220/- as unexplained investment in building:
a) without considering the balance sheet filed along with the return of income and
b) without considering the direction of the Hon'ble ITAT while setting aside the order for consideration of depreciation if balance sheet is filed.
-3- ITA 1740 of 2011 For these and other grounds which might be urged to be allowed at the time of hearing, the appellant humbly prays that the addition of ` 11,92,220/- as unexplained investment made by the Income-tax Officer may kindly be ordered to be deleted and render justice."
3. The issue of addition towards unexplained investment had in fact once come up before the Income-tax Appellate Tribunal, C-Bench, Chennai, in ITA No.369(Mds)/2008. The said issue was set aside by the Tribunal for re-consideration of the assessing authority, through their order dated 31-7-2008. The Tribunal has clearly given a direction to the assessing authority that additions in respect of unexplained sources can be made only if the assessee is not successful in explaining the source available in his hands. The Tribunal has also directed the Assessing Officer that if the building has been constructed, as argued by the assessee, then depreciation should also be allowed to the assessee.
4. As per the balance sheet as on 31-3-2004 available in the records, there is already a credit amount of ` 1,06,12,934/-
-4- ITA 1740 of 2011 in the capital account of the assessee. The opening capital
balance was ` 1,02,74,597/-. The assessee had income from TRG Kalyana Mandapam and Dravidar Farms. Further, the assessee had foreign remittance of ` 1,31,275/- and interest in his NRE account of ` 67,394/- and further an agricultural income of ` 1,10,960/-. The opening balance of the assessee's capital itself was made up of foreign remittances made by the assessee into his NRE account in India. The assessee is a driver working in Gulf. He has been remitting his savings from time to time and it is how his capital has been built up. The investments made by the assessee in Kalyana Mandapam and other assets have in fact came directly from his NRE account. These details clearly show that the assessee has explained his sources.
5. In the facts and circumstances of the case, there is no hard ground for the assessing authority to hold the assessee again responsible for addition towards unexplained investments, even in the second round of assessment. We find that the assessing authority has not applied his mind properly to the speaking facts of the case. When the sources of funds and application of funds have been well explained through balance
-5- ITA 1740 of 2011 sheet and supporting documents, there is no reason to come to a conclusion only on the basis of the presumption that the assessee has not explained the sources of his investments.
6. In the facts and circumstances of the case, we are not able to endorse the conclusion arrived at by the assessing authority. Accordingly, the addition of ` 11,92,000/- is deleted.
7. In result, this appeal filed by the assessee is allowed.
Order pronounced in the open Court at the time of hearing on Thursday, the 19th January, 2012 at Chennai.
Sd/- Sd/-
(Hari Om Maratha) (Dr. O.K.Narayanan)
Judicial Member Vice-President
Chennai,
Dated the 19th January, 2012.
V.A.P.
Copy to: (1) Appellant
(2) Respondent
(3) CIT
(4) CIT(A)
(5) D.R.
(6) G.F.