2012 (6) TMI 155 - AT - Income Tax

Whether the incomes made by the assessee in his own name and in the name of family member through the loan taken are to be assessed in the hands of the assessee, as individual or as HUF - Revenue appeal dismissed

Issues Involved:
1. Non-appearance of the assessee and ex-parte hearing.
2. Verification and deletion of credits standing in the names of Shri G. Rajagopal and Shri G. Deivasigammani.
3. Deletion of the loan amount taken from the individual account of Shri Mayakrishnan.
4. Assessment of income and investments made by the assessee and family members.
5. Additions made by the Assessing Officer and their deletion by the CIT(A).

Detailed Analysis:

1. Non-appearance of the assessee and ex-parte hearing:
At the outset, despite the noted date of hearing, none appeared on behalf of the assessee, nor was there any request for adjournment. Consequently, the case was heard ex-parte, and the CIT/DR was heard at length.

2. Verification and deletion of credits standing in the names of Shri G. Rajagopal and Shri G. Deivasigammani:
The credits of Rs. 50,000/- each were standing in the names of Shri G. Rajagopal and Shri G. Deivasigammani. During remand proceedings, the Assessing Officer verified these credits, and both individuals admitted to having given Rs. 50,000/- each to the assessee. Consequently, the CIT(A) deleted an amount of Rs. 1 lakh. The Department could not provide any evidence to counter this finding, leading to the confirmation of the CIT(A)'s decision and the dismissal of Ground No. 4.

3. Deletion of the loan amount taken from the individual account of Shri Mayakrishnan:
The credit introduced in the earlier assessment year was verified from the trial balance of the earlier year and found to be correct. The Revenue did not advance any material argument against this finding, leading to the confirmation of the CIT(A)'s decision and the dismissal of Ground No. 5.

4. Assessment of income and investments made by the assessee and family members:
During the survey, it was found that M/s T.S. Subramania Chettiar and Sons had advanced significant amounts outside the books of account to various persons, including the Assessee-HUF. The assessee availed several lakhs of rupees, repaid them, and these transactions were recorded in the cash book of M/s T.S. Subramania Chettiar and Sons. The income earned from these transactions was not admitted by the assessee. The investments made by the assessee and family members were detailed, and the question arose whether these incomes should be assessed in the hands of the assessee as an individual or as HUF. The Assessing Officer found that the investments were not commensurate with the income returned by the assessee and added various amounts to the total income, citing unexplained credits and loans.

5. Additions made by the Assessing Officer and their deletion by the CIT(A):
The CIT(A) partly allowed the appeal of the assessee, leading to the Revenue's appeal. The grounds raised by the Revenue included the genuineness of Smt. Neelavathi Ammal's independent income, the contradictory findings of the CIT(A) regarding unexplained loans and gifts, the deletion of excess agricultural income, and the deletion of additions towards interest and commission credited in the accounts of Smt. Neelavathi Ammal. After considering the submissions of the CIT/DR, the Tribunal found that the order of the CIT(A) did not require any interference. The reasoning and evidence provided by the CIT(A) in paragraphs 9 to 11 of their order were found to be sufficient, leading to the confirmation of the appellate finding and dismissal of the Revenue's appeal.

Conclusion:
The appeal of the Revenue was dismissed, and the order of the CIT(A) was confirmed. The judgment was pronounced in the open court on 4.10.2011.

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