Principal Commissioner Of Income Tax 6 v. Anandhiakilan

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MR.JUSTICE N.SATHISH KUMAR Tax Case (Appeal) Nos. 447, 448, 449 and 450 of 2018,C.M.P.Nos.9801, 9802 & 9803 of 2018 Principal Commissioner of Income Tax 6,No.121, Nungambakkam High Road,Chennai 600 034. ... Appellant in all the Appeals -vs- AnandhiAkilan,No.9, State Bank Colony, Shastri Nagar, Adyar,Chennai – 600 020.PAN: AFQPJ 5942 P ... Respondent in all the Appeals Common Prayer: Tax Case (Appeals) filed under Section 260-A ofthe Income Tax Act, 1961 against the order of the Income TaxAppellate Tribunal Madras 'A' Bench, dated 12.04.2017 inI.T.A.No.970/Mds/2016 for the assessment year 2006-2007 and inI.T.A.No.971/Mds/2016 for the assessment year 2007-2008 and inI.T.A.No.972/Mds/2016 for the assessment year 2008-2009 and inI.T.A.No.974/Mds/2016 for the assessment year 2011-2012. For Appellantin all the Appeals:Mr.T.R.Senthil Kumar These appeals have been filed by the Revenue under Section260A of the Income Tax Act, 1961 ('the Act' for brevity),challenging the common order passed by the Income Tax AppellateTribunal Madras 'A' Bench, dated 12.04.2017 in I.T.A.Nos.970 to974/Mds/2016 for the Assessment Years 2006-2007, 2007-2008,2008-2009 and 2011-2012. https://hcservices.ecourts.gov.in/hcservices/ 2. The appeals have been filed raising the followingquestions of law:-“1. Is not the finding of the Tribunalperverse when the CIT(A) admitted freshevidences and deleted the additions byviolating Rule 46A of the Income Tax Rules?2. Whether on the facts and in thecircumstances of the case, the AppellateTribunal as right in deleting the additionsmade under Section 68 of the Income Tax Act?3. Whether the ITAT was justified inaccepting the explanation for cash depositsin bank account that the same were out ofrental/agriculture income and to give creditfor the same as the assessee had no proof ofnexus for the same?” 3. The respondent/assessee is an individual stated to beengaged in consultancy services and also earning rental incomefrom properties as well as agricultural income. The assesseefiled her return of income for the assessment years 2006-2007 to2011-2012. The returns were re-opened by issuing a notice underSection 148 of the Act on the ground that the income has escapedfor the assessment years 2006-2007 to 2008-2009. The assesseefiled a letter stating that the original return filed may betreated as a return in response to the re-opening notice. 4. The Revenue has given the issues involved for therespective assessment years in a tabulated form in theirmemorandum of grounds of appeal, which is quoted herein below: 5. It is the case of the revenue that for the AssessmentYears 2006-07 and 2007-08, the assessee received Rs.5 lakhs asgift from her younger sister even though her total income isRs.5,16,339/-. When a remand report was called for from theAssessing Officer, the assessee could not produce bankstatements but had given only confirmation letter that paymentswere made through cheques. The Commissioner of Income Tax(Appeals)[CIT(A)] confirmed the additions on this account. TheTribunal has deleted the additions stating that the genuinenessof the gift cannot be doubted in the absence of any contraryevidence against the assessee. Challenging the said finding,the Revenue is before us by filing these appeals. 6. For the Assessment Year 2007-08, the assessee claimedthat Rs.29.5 lakhs was received from her father-in-law out ofRs.36.5 lakhs. The remand report was called for from theAssessing Officer, but the assessee could not produce details asto when the money was paid, what is the mode of payment, etc.,and consequently, CIT(A) has confirmed the additions. TheTribunal, by the impugned order has deleted the additions beingsatisfied that the assessee had explained the transactions,which were through banking channels. 6. For the Assessment Year 2007-08, the assessee claimedthat Rs.29.5 lakhs was received from her father-in-law out ofRs.36.5 lakhs. The remand report was called for from theAssessing Officer, but the assessee could not produce details asto when the money was paid, what is the mode of payment, etc.,and consequently, CIT(A) has confirmed the additions. TheTribunal, by the impugned order has deleted the additions beingsatisfied that the assessee had explained the transactions,which were through banking channels. 7. For the Assessment Year 2007-08, the assessee had shownloan of Rs.22 lakhs from her husband in the cash flow statementbut Rs.16 lakhs alone was reflected in the bank account. TheAssessing Officer made an addition of Rs.6 lakhs as unexplainedcredit under Section 68 of the Act. When a remand report wascalled for by the Assessing Officer, the assessee could notproduce bank statements or confirmation letter that paymentswere made through cheques. The CIT(A) therefore confirmed theadditions on this account. The Tribunal deleted the additions onthe ground that the transaction being between close relatives,cannot be doubted. 8. During the Assessment Year 2008-09, the AssessingOfficer made an addition of Rs.9.4 lakhs as unexplained creditreceived from one Mr.Nethaji on the ground that the assessee hadnot furnished the details of the land for which advance wasreceived and non-furnishing of confirmation letter. In theappeal before the CIT(A), remand report was called for by the https://hcservices.ecourts.gov.in/hcservices/ Assessing Officer and provided to the assessee, but no rebuttalwas produced by the assessee. Therefore, the CIT(A) hasconfirmed the addition. The case of the Revenue is that beforethe Appellate Tribunal for the first time, the assessee producedrecords stating that Mr.Nethaji paid the amount of Rs.9.4 lakhsto purchase the land belonging to the assessee and the salecould not be completed and Rs.8.4 lakhs was repaid toMr.Nethaji. The Tribunal being satisfied with the explanation,deleted the addition. The Revenue is before us in these appealsstating that records having been produced for the first timebefore the Tribunal, the same could not have been admitted inviolation of Rule 46A of the Income Tax Rules, 1962. 9. For the Assessment Year 2011-12, the Assessing Officermade an addition of Rs.22.1 lakhs as cash deposit in bankaccount in Corporation Bank. These deposits were not reflectedin the cash flow statement furnished by the assessee.Accordingly, the Assessing Officer treated the said amount asunexplained credit under Section 68 of the Act. Before the CIT(A), the assessee submitted that the cash are out of the rentalincome and agricultural income and for the same evidence wasproduced. However, the CIT(A) confirmed the addition. On appealbefore the Tribunal, the Tribunal directed the Assessing Officerto give credit to the agricultural income available in the saidassessment orders and the balance shortage to be confirmed asunexplained cash credit and thereby partly allowed the appeals. 10. We have heard Mr.T.R.Senthil Kumar, learned counselappearing for the appellant/Revenue and Mr.M.P.Senthil Kumar,learned counsel appearing for the respondent/assessee. 11. The first issue is whether the transactions by theassessee with her father-in-law and Mr.Nethaji were properlyexplained and whether those records which are produced by theassessee were produced before the Tribunal for the first time.The answer to this question is found in the order passed by theTribunal in paragraphs 13 and 25. For easy reference, the sameis quoted hereunder:- 10. We have heard Mr.T.R.Senthil Kumar, learned counselappearing for the appellant/Revenue and Mr.M.P.Senthil Kumar,learned counsel appearing for the respondent/assessee. 11. The first issue is whether the transactions by theassessee with her father-in-law and Mr.Nethaji were properlyexplained and whether those records which are produced by theassessee were produced before the Tribunal for the first time.The answer to this question is found in the order passed by theTribunal in paragraphs 13 and 25. For easy reference, the sameis quoted hereunder:- “13. Before the CIT(Appeals), the assesseesubmitted that Rs.29,50,000/- was returned byher father-in-law out of Rs.36,50,000/- givento him. However, the assessee could notsubstantiate the mode of payment and receiptbefore the CIT(Appeals) also. However, theassessee submitted that full address, PAN andcopy of return was given and transactions arethrough banking channels. The AO in hisremand report dated 25.01.2016 has statedthat the addition should be confirmed and thecopy of the same was given to the assessee, who has not furnished further submissions. Nodetails, regarding dates of such advancegiven and received were not given and theassessee was not able to prove that suchadvances were through transfer/account payeecheques only. Therefore, the CIT(Appeals)confirmed the addition of Rs.29,50,000/- madeby the AO. Against this, the assessee is inappeal before us. ................ 25. The CIT(Appeals) observed that theassessee furnished confirmation letter fromMr.Netaji. However, the CIT(Appeals) observedthat the AO in his remand report dated25.01.2016 has stated that the additionshould be confirmed. A copy of the remandreport was given to the assessee, who has notfurnished further submissions. Since, theassessee could not substantiate the same withher Bank account, the CIT(Appeals) confirmedthe action of the AO. Aggrieved, the assesseeis in appeal before us.” 12. From the above order passed by the Tribunal, it isevidently clear that the records pertaining to the paymentreceived by the assessee from her father-in-law was placedbefore the CIT(A) and he had called for remand report andAssessing Officer had submitted his report on 25.01.2016 statingthat the addition should be confirmed. Similarly, the documentsrelating to the transactions with Mr.Netaji was placed beforethe CIT(A) and a remand report was called for and the AssessingOfficer submitted his report on 25.01.2016 stating that theaddition should be confirmed. Therefore, the Revenue is notcorrect in their stand that the documents pertaining toMr.Netaji was produced before the Tribunal for the first time. 13. The factual aspect of the matter has been culled out bythe Tribunal in its order as referred above and we cannot take adifferent stand in the absence of any valid document produced bythe Revenue to show that what has been recorded by the Tribunalis factually erroneous. Thus, the substantial question of lawstating that there has been violation of Rule 46A of the IncomeTax Rules stands rejected. 14. The other issues are gift from the sister of theassessee which arises in the AY 2006-07(T.C.(A).No.447 of 2018)and in the AY 2008-09(T.C.(A).No.449 of 2018). The next issue isregarding the disallowance of agricultural income which arisesin all the four assessment years i.e., AY 2006-07(T.C.(A).No.447of 2018), AY 2007-08(T.C.(A).No.448 of 2018), AY 2008-09(T.C. https://hcservices.ecourts.gov.in/hcservices/ 14. The other issues are gift from the sister of theassessee which arises in the AY 2006-07(T.C.(A).No.447 of 2018)and in the AY 2008-09(T.C.(A).No.449 of 2018). The next issue isregarding the disallowance of agricultural income which arisesin all the four assessment years i.e., AY 2006-07(T.C.(A).No.447of 2018), AY 2007-08(T.C.(A).No.448 of 2018), AY 2008-09(T.C. https://hcservices.ecourts.gov.in/hcservices/ (A).No.449 of 2018) and AY 2011-12(T.C.(A).No.450 of 2018). Withregard to the amount received from father-in-law, this issuearises in the AY 2007-08(T.C.(A).No.448 of 2018). With regard tothe unsecured loan from Shri Akilan Ramanathan, this issuearises in the arises in the AY 2007-08(T.C.(A).No.448 of 2018).With regard to the amount received from Mr.Netaji, this arisesin the AY 2008-09(T.C.(A).No.449 of 2018). With regard to theunexplained credit – deposit into savings bank account, thisissue arises in the AY 2008-09(T.C.(A).No.449 of 2018) and in2011-12(T.C.(A).No.450 of 2018). 15. We have heard the submissions of the learned counselfor both sides. 16. The Tribunal has done a fact finding method. As thetribunal being the last fact finding authority in the hierarchyprovided under the provisions of the Income Tax Act, it hasgiven reasons as to why the additions could not be made. Therevenue is not entitled to re- agitate the factual issues beforeus as this Court exercising its appellate power under Section260A of the Income Tax Act, 1961 will decide only thesubstantial question of law, which will be framed forconsideration. 17. We find that the questions raised are entirely factualand if we embark upon to examine the correctness of thequestions framed, we would be compelled to go into the factualthicket, which is impermissible. Thus, we find that nosubstantial question of law arises for consideration on theabove issues as all of them are factual. 18. In the result, the appeals filed by the revenue failsand the accordingly, the same stands dismissed and thesubstantial question of law No.1 pertaining to violation of Rule46A of the Income Tax Rules, 1962, is answered against therevenue. No costs. Consequently, connected MiscellaneousPetitions are closed. nsd/svki To 1.The Income-tax Appellate Tribunal Bench “A” Chennai. 2.The Joint Commissioner of Income Tax,Business Range III, Chennai-34Business Range III, Chennai-34 3.The Commissioner of Income Tax (Appeals)-15. Chennai 600 034. Chennai 600 034. +1cc to M/s.Philip George.P, Advocate, S.R.No.81254 +1cc to Mr.M.P.Senthil Kumar, Advocate, S.R.No.81297 T.C.(A).Nos.447 to 450 of 2018 VSNII(CO)CS/07/01/2019