Tca/375/2013 Of S.muthukumar v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 03.07.2013CoramThe Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Ms.Justice K.B.K.VASUKI Tax Case (Appeal) Nos.375 and 376 of 2013--- S.Muthukumar ... Appellant inTC(A).375/2013 S.Stanley Rajan ... Appellant inTC(A).376/2013-vs- The Income Tax OfficerBusiness Ward No.IV(2)Chennai ... Respondent inboth TCs Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Chennai 'D' Bench dated 30.01.2013 in Appeal No.2067&2068(MDS)/2012. For appellants : Mr.AR.L.Sundaresan,Senior Counsel forMs.AL.Ganthimathi For respondent : Mr.Arun Kurian JosephStanding Counsel forIncome Tax Dept. COMMON JUDGMENT (The Judgment of the Court was made byCHITRA VENKATARAMAN, J.)The following substantial questions of law are raised by the assessees seeking admission of thepresent Tax Case Appeals, preferred as against the orders of the Income Tax Appellate Tribunal,Chennai 'D' Bench dated 30.01.2013 in Appeal Nos.2067 & 2068 (MDS)/2012. "1. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was rightin law in holding that the amount of deposit in the bank account of the appellant should be treatedas un-disclosed income chargeable under Section 68 of the Income Tax Act ?2. Whether the order of the Income Tax Appellate Tribunal is vitiated in not considering thealternative submissions of the Appellant to treat the quantum of deposit as un-disclosed businessturnover and not un-disclosed income and thereby assess 5% of the same as net taxable income ?" 2. The assessees herein are Civil Engineers. In the course of scrutiny of assessment, it was foundthat the assessees made cash deposit to the tune of Rs.50,75,000/- in savings bank account. It is matter of fact that the assessee in TC(A).No.375 of 2013, along with Stanley Rajan (Assessee inTC(A).No.376 of 2013), constituted a partnership firm. The assessees explained that these moniesbelonged to various people who had entrusted the same with them for getting various civil worksdone in respect of their house properties; they were providing artisans, carpenters, masons andother skilled workers to all the needy people in the neighbourhood for renewal and renovation ofhouse properties and also for constructing new buildings; thus, the money, in fact, did not belong tothem. The assessees finally offered 5% of the cash deposits for taxation, which amounted toRs.2,50,000/- in each of the assessee's cases. 3. The Joint Commissioner of Income Tax, Range-IV, Chennai, after examining the case of theassessees under Section 144 of the Income Tax Act, 1961 (hereinafter called as the "Act") held thatthe assessee could not establish that the money, in fact, belonged to the neighbours, who had madepayments for carrying out the work relating to interior decoration etc. However, the JointCommissioner of Income Tax directed the Assessing Officer to give one more opportunity to theassessees to substantiate their version. 4. The Assessing Officer, hence, called upon the assessees to give evidence in support of theircontention. Except for pointing out that they had withdrawn a sum of Rs.7,50,000/- each, there wereno materials to show that these monies were utilised for making payments to various persons. In thebackground of these facts, assessment order was made by the Income Tax Officer addingRs.50,75,000/- to the taxable income. Aggrieved by the said assessment, the assessees went onappeal before the Commissioner of Income Tax (Appeals). 5. Having lost the appeal before the Commissioner of Income Tax (Appeals), the assesseesapproached the Income Tax Appellate Tribunal. 4. The Assessing Officer, hence, called upon the assessees to give evidence in support of theircontention. Except for pointing out that they had withdrawn a sum of Rs.7,50,000/- each, there wereno materials to show that these monies were utilised for making payments to various persons. In thebackground of these facts, assessment order was made by the Income Tax Officer addingRs.50,75,000/- to the taxable income. Aggrieved by the said assessment, the assessees went onappeal before the Commissioner of Income Tax (Appeals). 5. Having lost the appeal before the Commissioner of Income Tax (Appeals), the assesseesapproached the Income Tax Appellate Tribunal. 6. On going through the materials, the Income Tax Appellate Tribunal found that there were nomaterials produced before the Authorities below to show that the Saving Bank deposits made bythem were related to other persons; even after remand by the Joint Commissioner, the assessees hadnot produced any acceptable evidence to substantiate their contentions. In the absence of anyacceptable evidence by the assessees and they having failed to produce even the basic materials, theIncome Tax Appellate Tribunal held that the assessment under Section 143(3) of the Act could not beinterfered. Aggrieved by the said order, the present Tax Case Appeals have been filed. 7. It may be noted that the assessees filed Miscellaneous Applications before the Income TaxAppellate Tribunal, contending that the cash deposits should have been treated as unexplained cashcredits and the same should not be treated as undisclosed business turnover and that the incomethereon alone should be assessed. The Income Tax Appellate Tribunal rejected such contention andpointed out that by filing such Miscellaneous Petitions, the assessees wanted to re-argue the appealsbefore the Tribunal; further, there was no mistake apparent on the face of the record to entertainthe Rectification Petition. 8. Having regard to the addition made as business income, learned Senior counsel appearing for theappellants/assessees raised the question that when the unexplained cash credits had been added tothe income, the Tribunal should have considered deducting necessary expenditure and the profitalone could be taken as income. 9. We do not think such a contention, at this stage, is acceptable, especially when no evidence wasproduced by them to substantiate that the said sums were paid to them by the neighbourhood people for carrying out certain construction activity like floor laying, carpentry, interior decoration etc., Inthe circumstances, being pure findings of fact, we do not find any substantial question of law toadmit the appeals. Consequently, the Tax Case Appeals are dismissed at the admission stage itself.No costs. (C.V.,J) (K.B.K.V.,J) 03.07.2013Index:YesInternet:Yesnvsri To 1.The Income Tax Officer, Business Ward, No.IV(2) Chennai 2.The Commissioner of Income Tax (Appeals)VIII, Nungamabakkam,Chennai-34 3. The Income Tax Appellate Tribunal, Chennai Bench DChennai. CHITRA VENKATARAMAN, J.andK.B.K.VASUKI, J. nvsri