Iv. The Copy Of The Ledger Account Of The Appellantreflecting In Their Books Of Accounts For Therelevant Period Under Consideration v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE C.V.KARTHIKEYAN The Income Tax Officer,Non Corporate Ward 18(3)ChennaiRespondent Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, Madras 'B' Bench, Chennai, dated 16.8.2018 made in ITANo.1682/Chny/2017 against the order of the Commissioner ofIncome Tax (Appeals-III) 121, Mahatma Gandhi Road, Chennai-600034 dated 20/12/12 in ITA No.319/11-12 and Pan No. forthe Assesment year 2009-10 and against the order of the IncomeTax Officer Salary Ward III(3) Chenna-34 PAN/GIR No.BBFPS447Bfor the Assessment year 2009-10 previse year Assessment 2008-09 J U D G M E N T(Delivered by DR.VINEET KOTHARI,J) The Assessee, Sunil Balasubramaniam Shankar has filed thisAppeal under Section 260A of the Act raising the followingpurported substantial questions of law arising from the orderpassed by the Income Tax Appellate Tribunal dated 16.8.2018dismissing the Assessee's Appeal for the Assessment Year 2009-2010 upholding that the addition made by the Assessing Authorityunder Section 69 of the Act as unexplained investment in the 5Credit Cards of the Assessee, which were allowed by the Assesseeto be used by his friend Mr.Neelamegan and the total usageamount of RS.34,86,141/- was added as undisclosed income in thehands of the Assessee as unexplained income/expenditure:- "i) Whether on the facts and circumstances of https://hcservices.ecourts.gov.in/hcservices/ the case, was the Tribunal correct in upholdingthe decisions of the lower authoritiesespecially when the opportunity of crossexamination is not provided to the Assessee? ii) Whether on the facts and circumstances ofthe case, was the Tribunal correct in upholdingthe assessment order when the same Deponent hasreversed his version by filing an Affidavitbefore the Tribunal, while cross examination ofsuch Deponent was denied by the AssessingOfficer and CIT(A)?" 2. The relevant findings of the Tribunal in this regard arequoted below for ready reference:-"6. We have heard both sides, perused the materialsavailable on record and gone through the orders ofauthorities below. It is a second round oflitigation. Vide order dated 27.11.2013 inI.T.A.No.1327/Mds/2013 & C.O.No.138/Mds/2013, theTribunal directed the Assessing Officer to re-examine the explanation submitted before the learnedCIT(A) that assessee's friend Shri.Neelamegan hasused the credit cards and made payments and anyother details as may be furnished. Accordingly, theAssessing Officer served notice on the assessee andcalled for details. The Assessing Officer alsosummoned Shri.Neelamegan under Section 131 of theAct. In his sworn statement, Shri.Neelameganinsisted that no credit cards can be used by a thirdparty as signature of the card holder is mandatorywhile using credit card, and objected having usedthe credit card of the assessee and also emphasizedthat it is not all possible to use the credit cardby a third party. Mr.Neelamegan also stated that hehas no idea of four stores-namely Mls.Aakash Decors,Mls.C.R.Agencies, Mls.Jaya Medicals and Mls.ArunaPharmacy, where the credit cards were used. Further,before the Assessing Officer, the assessee vide hisletter dated 19.2.2015 stated that the credit cardtransactions are not real transactions of expensesand it is loan transactions. However, Mr.Neelameganwho is mentioned as agent in swiping credit card invarious stores has refused having used assessee'scredit card as well as having taken huge loan fromthe assessee and thus, the assessee's statement wasnot proved. Since the basic issue of the usage ofcredit cards by Shri.Neelamegan was not proved, theusage of credit card by the assessee forRs.34,86,141/- was taken as unexplained expenditureand the Assessing Officer treated the same as deemed income as per section 69 of the Act and hence,assessed as income from other sources. 6.1 During the course of appellate proceedings,the learned CIT(A) called for the following detailsof M/s.Aakash Decors, M/s.C.R.Agenies, M/s.JayaMedicals and M/s.Aruna Pharmacy, where the creditcards were stated to have used: i. PAN of these four concerns. ii. The copy of their ITR for the relevant periodunder consideration. iii. The addresses of income tax office where theywere filing their return of income. iv. The copy of the ledger account of the appellantreflecting in their books of accounts for therelevant period under consideration. v. The bank account statements of these fourentities from which the funds were transferred tothe account of the assessee. The address of thebank branches was also called for. Before the learned CIT(A), on 1.2.2017, the ARfurnished the addresses of these four parties.However, he failed to furnish the confirmation fromthese parties. Since the assessee could not furnishany other details before the learned CIT(A), thelearned CIT(A) confirmed the addition. 6.2 It isthe contention of the assessee that Shri.Neelameganhas used his credit card, but during the de novoassessment proceedings, the Assessing Officerexamined Shri.Neelamegan under Section 131 of theAct, who has categorically denied that he has usedthe credit card of the assessee and moreover, he hasstated that he has no idea of four stores-namely:M/s.Aakash Decors, M/s.C.R.Agencies, Mls.JayaMedicals and Mls.Aruna Pharmacy, where the creditcards were used. So far as credit card transactions,Shri.Neelamegan has denied the entire transaction.Since the assessee failed to establish thatShri.Neelamegan used assessee's credit card andrepaid the amount, we find that the addition made bythe Assessing Officer was rightly confirmed by thelearned CIT(A). We do not find any infirmity in theorder passed by the learned CIT(A). Accordingly, theground raised by the assessee stands dismissed." 3.LearnedcounselfortheAppellant-Assessee,Mr.Sathyanarayanan has submitted before the Court that theOriginal Assessment Order was passed by the Assessing Authorityon 28.12.2011 for the Assessment Year 2009-2010 making someaddition and disallowing the credit card payments to the tune ofRs.34,86,141/- and the Appeal filed by the Assessee before the Commissioner of Income Tax (Appeals) came to be allowed by orderdated 20.12.2012, however, the Tribunal, in the first round oflitigation, remanded the case back to the Assessing Authorityvide its order dated 27.11.2013. Upon remand, the learnedAssessing Authority, again made the same additions by making thefollowing observation:- "The main contention of the assessee before theCIT(A) was that his credit cards were mainly usedby his friend Mr.Neelamegan and repaid the amountto the assessee through fund Transfer/Directdeposit in assessee's account, cheque and cashmodes just before the credit card due dates. The ITAT has appropriated the issue to theAssessing Officer stating that in course ofscrutiny, the assessee had failed to provide thedetails of the expenses, usage of credit cards byhis friend Shri.Neelamegan and payment thereof. "The main contention of the assessee before theCIT(A) was that his credit cards were mainly usedby his friend Mr.Neelamegan and repaid the amountto the assessee through fund Transfer/Directdeposit in assessee's account, cheque and cashmodes just before the credit card due dates. The ITAT has appropriated the issue to theAssessing Officer stating that in course ofscrutiny, the assessee had failed to provide thedetails of the expenses, usage of credit cards byhis friend Shri.Neelamegan and payment thereof. During the course of assessment proceedings,the assessee produced only a statement showing acomplete chart for each credit card with detailsof when swiped and repayment from which bankaccount and particulars of deposit into the Bankaccount for the purpose of repayment. The assessee did not provide provide detailsor prove that said credit cards were used byMr.Neelamegan and repayment also made by him.Summons was issued to Mr.Neelamegan, however itreturned unserved with a remark "LEFT'. Summonsu/s. 131 was served to Mr.Neelamegan throughaffixture in the address. A sworn statement wasrecorded from Mr.Neelamegan, wherein he insistedthat no credit cards can be used by a third partyas signature of the card holder is mandatory whileusing credit card. Hence he objected having usedthe credit card of the assessee and alsoemphasized that it is not all possible to use thecredit card by a third party. Mr.Neelamegan alsostated that he has no idea of four stores-namely:M/s.Aakash Decors, M/s.C.R.Agencies, M/s.JayaMedicals, M/s.Aruna Pharmacy, where the creditcards were used.The records of Mr.Neelamegan (AJBPM9737C) wascollected from the concerned Jurisdictionalofficer.The Neelamegan's Bank account statement ofHDFC account and ICICI Bank account statements,which was available in the Miscellaneous recordwere verified. It is seen from ICICI bank accountof Mr.Neelamegan that only 3 cheques were issuedby Mr.Neelamegan to the assessee: https://hcservices.ecourts.gov.in/hcservices/ Mr.Neelamegan replied that those cheques wereissued to the assessee for the repayment of loantaken by him from the assessee. https://hcservices.ecourts.gov.in/hcservices/ Mr.Neelamegan replied that those cheques wereissued to the assessee for the repayment of loantaken by him from the assessee. The assessee in his letter dated 19/02/2015,had stated that the credit card transactions arenot real transactions of expenses, it is loantransactions. However, Mr.Neelamegan who ismentioned as agent in swiping credit card invarious stores has refused having used assessee'scredit card as well as having taken huge loan fromthe assessee, the assessee's statement was notproved. The assessee's statement of having usedcredit card as loan transactions cannot beaccepted. As the basic issue of the usage of creditcards by Mr.Neelamegan was not proved, the usageof credit card by the assessee for Rs.34,86,141/-is taken as unexplained expenditure. Theunexplained expenditure for Rs.34,86,141/- isdeemed income as per section 69 and hence,assessed as income from other sources."4. The learned counsel submitted that the AssessingAuthority took a Sworn Statement of Mr.Neelamegan withoutaffording the Assessee an opportunity of cross-examining the saidperson viz., Mr.Neelamegan, who was his friend and colleague inthe Insurance Company in which the Assessee was serving as LegalOfficer and the Credit Cards were allowed to be used by hisfriend Neelamegan. All the credit entries came through NEFTTransfers from various Firms viz., M/s.Aakash Decors,M/s.C.R.Agencies, M/s.Jaya Medicals, M/s.Aruna Pharmacy asrepayment of loans taken by Mr.Neelamegan from the Assessee byusage of his Credit Cards. The Assessing Authority, however,disbelieved the said version on the basis of the Affidavit givenby Mr.Neelamegan that he never used the Credit Cards and tookloan from the Assessee. In the absence of the said creditentries in the Bank having been proved by the Assessee, theAssessing Authority has made the additions in the hands of theAssessee and the submission of the Appellant in the second roundalso came to be disbelieved by the Commissioner of Income Tax(Appeals) vide order dated 10.2.2017 and by the learned Tribunal,by the impugned order passed on 16.8.2018. 5. Having heard the learned counsel for the parties, we are satisfied that no substantial question of law arises in thepresent Appeal requiring our further consideration under Section260A of the Act. The very nature of the transactions involvedin the present case by allowing usage of 5 Credit Cards by theAssessee to his alleged friend Mr.Neelamegan and the creditentries given through various Firms named above, in the bankaccount of the Assessee, created suspicion in the mind of theAssessing Authority and therefore, they called upon the Assesseeto prove such credit entries. Despite the opportunity, by wayof second round of litigation, provided by the learned Tribunal,it appears that the Assessee failed to prove the credit entries. 6. We are also unable to appreciate the usage of creditcards in the name of the Assessee by third party, which requiressignatures of the person concerned using such Credit Cards.Apparently, therefore, all those transactions were undertaken bythe third parties on behalf of the Assessee himself andtherefore, the defence pleaded by the Assessee that they wereallegedly loan taken by Mr.Neelamegan and repayments made by himto the Bank account of the Assessee does not inspire anyconfidence. In our opinion, therefore, the fact finding Bodybelow have rightly added the said amount in the hands of theAssessee as unexplained income/expenditure of the Assessee.Such addition does not appear to be perverse requiring ourconsideration under Section 260A of the Act. The Appeal isdevoid of merits and is liable to be dismissed. Accordingly, itis dismissed. No costs. Sd/- Assistant Registrar(CO) //True copy// Sub Assistant Registrar ssk. To Sd/- Assistant Registrar(CO) //True copy// Sub Assistant Registrar ssk. To 1. The Income Tax Officer, Non Corporate Ward 18(3) Chennai Non Corporate Ward 18(3) Chennai 2. Income Tax Appellate Tribunal, Madras 'B' Bench, Chennai Madras 'B' Bench, Chennai 3. The Commissioner of Income Tax 121, MG Road, Chennai-600 034. 121, MG Road, Chennai-600 034. 4. The Income Tax Officer Salary Ward III(3), Chennai – 600 034. +1cc to Mr.TR.Senthilkumar, Advocate SR.No.37853 +1cc to Mr.S.Sathiyanarayanan, Advocate SR.No.42809(31/07/2019) TCA No.277 of 2019 AD(CO)GMY(30/05/2019)