G.Suryakala, Vellore V. DCIT, CHENNAI

CO 151/CHNY/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6836 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 22-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A MAHESH
• Keywords: Unexplained cash credit; Depreciation
• Section: 153A; 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A.NOS. 1533 TO 1537/MDS/2010 AND C.O.NOS. 150 TO 154/MDS/2010 (ASSESSMENT YEARS : 2002-03 TO 2006-07) THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL-CIRCLE-IV(1), CHENNAI. VS. SMT. G. SURYAKALA, NO.15, 14 TH EAST CROSS ROAD, GANDHI NAGAR, VELLORE-632014. PAN ABHPS 8170 K (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI R.B.NAIK, IRS, COMMIS SIONER OF INCOME-TAX RESPONDENT BY : SHRI A. MAHESH, FCA DATE OF HEARING : 18 TH JANUARY, 2012 DATE OF PRONOUNCEMENT : 20 TH JANUARY, 2012 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THERE ARE FIVE APPEALS AND FIVE CROSS OBJECTIONS. THE APPEALS ARE FILED BY THE REVENUE. THE CROSS-OBJECTIONS ARE FIL ED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 2002-03, 2003-04, 2004-05, 2005-06 AND 2006-07. THE APPEALS AND CROSS OBJECTIONS ARE DIRECTED AGAINST ITA 1533 TO 1537 & C O 150 TO 154/10 :- 2 -: THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEA LS)-I AT CHENNAI, ALL DATED 28.6.2010 AND ARISE OUT OF THE ASSESSMENTS CO MPLETED UNDER SEC.153A READ WITH SECTION 153C READ WITH SECTION 1 43(3) OF THE INCOME- TAX ACT, 1961. 2. THE ASSESSEE, IN ALL THESE CASES WAS CARRYING ON THE BUSINESS OF RUNNING TRANSPORT BUSES ON THE STRENGTH OF ROUTE PE RMIT. THE ASSESSEE HAD BEEN REGULARLY FILING RETURNS OF INCOME AND BOO KS WERE AUDITED. BUT WHEN A CONSEQUENT SEARCH WAS CARRIED OUT BY THE DEP ARTMENT, IT WAS BROUGHT TO LIGHT THAT THE ASSESSEE HAD LEASED OUT H ER BUSES AND INCOME WAS EARNED OUT OF SUCH LEASE ARRANGEMENTS. IT IS TH E CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS NOT RETURNED SUCH LEASE INCOME FOR TAXATION. THEREFORE, THE ASSESSMENTS FOR THESE ASS ESSMENT YEARS HAVE BEEN COMPLETED ON ESTIMATING INCOME RELYING ON THE THEORY OF LEASE AGREEMENTS. WHILE COMPLETING THE IMPUGNED ASSESSME NTS, THE ASSESSING OFFICER HAS CONSIDERED THE INCOME OF THE ASSESSEE AND HER MINOR SON, SHRI MANIKANDARAMAN, TOGETHER. IN FIRST APPEALS, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE ASSESSEE HAD MAINTAINED REGULAR BOOKS OF ACCOUNT AND THEY WERE F ILED BEFORE THE DEPARTMENT ALONG WITH THE RETURNS OF INCOME AND THE REFORE, THERE IS NO BASIS IN CONSIDERING THE QUESTION OF INCOME ON THE BASIS OF THE ALLEGED COPIES OF LEASE AGREEMENTS FOUND IN THE COURSE OF S EARCH. THE ITA 1533 TO 1537 & C O 150 TO 154/10 :- 3 -: COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THE ASSESSEE HAD MAINTAINED BOOKS OF ACCOUNT FOR ALL THE ENTRIES AND DETAILS WERE SUPPORTED BY VOUCHERS AND BILLS. THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCORDINGLY HELD THAT THE ADDITIONS OF IN COME MADE BY THE ASSESSING AUTHORITY ON THE BASIS OF THE LEASE AGREE MENTS WILL NOT STAND AND DIRECTED THE ASSESSING OFFICER TO ADOPT THE INC OME AS PER THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. CERTAIN IND IVIDUAL ADDITIONS WERE ALSO DELETED. THE REVENUE IS AGGRIEVED AND TH EREFORE, THE SECOND APPEALS BEFORE US. 3. IN HER APPEALS BEFORE THE COMMISSIONER OF INCOME -TAX(APPEALS), THE ASSESSEE HAD ALSO RAISED OBJECTIONS TO THE VALI DITY OF NOTICES ISSUED UNDER SEC.153A AND CONSEQUENT RE-ASSESSMENTS COMPLE TED ON HER. SHE HAD ALSO CHALLENGED THE LEVY OF INTEREST UNDER SEC.234A AND 234B. THE COMMISSIONER OF INCOME-TAX(APPEALS) UPHELD THE ISSUE OF NOTICE UNDER SEC.153A AND CONSEQUENT RE-ASSESSMENTS AND AL SO UPHELD THE LEVY OF INTEREST UNDER SEC.234A & 234B. ON THESE T WO POINTS, THE ASSESSEE IS AGGRIEVED, AND THEREFORE, THE CROSS OBJ ECTIONS FILED BY HER. 4. THE REVENUE HAS RAISED EXACTLY COMMON GROUNDS FO R ALL THE FIVE ASSESSMENT YEARS UNDER APPEAL. THE GROUNDS RAISED BY THE REVENUE ARE EXTRACTED BELOW : ITA 1533 TO 1537 & C O 150 TO 154/10 :- 4 -: 1.A ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE A.O. TOWARDS INCOME FROM LEASE OF BUSES. 1.B THE LEARNED CIT(A) HAS ERRED IN ACCEPTING THE ARGUMENTS OF THE AR WITHOUT CONSIDERING THE REASONS ADVANCED BY THE A.O. IN PARA 8 TO 10 OF THE ASSESSMENT ORDER FOR CO MPUTING THE INCOME AS PER LEASE DEEDS. 1.C THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERIN G THE STATEMENT OF THE ASSESSEE AT THE TIME OF SEARCH THAT SHE DID NOT MAINTAIN ANY BOOKS FOR THE BUS OPERATIONS AND T HAT THE INCOME FROM LEASE OF BUSES WERE RECEIVED BY HER IN CASH. 1.D THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE BOOKS WHICH WERE PRODUCED AT THE TIME OF SCRUTINY CANNOT BE REL IED UPON SINCE THE ASSESSE DID NOT MAINTAIN ANY SUCH BOOKS O F ACCOUNT AND THE CLAIM IS ONLY AN AFTERTHOUGHT AND NOT GENUI NE. 2A ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE A.O. TOWARDS INCOME FROM OTHER SOURCES RELATING TO INTER EST AND UNEXPLAINED CREDITS. 2B THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE INCOME FROM OTHER SOURCES RELATING TO INTEREST AND UNEXPLAINED CREDITS DID ITA 1533 TO 1537 & C O 150 TO 154/10 :- 5 -: NOT FORM PART OF INCOME FROM BUS OPERATIONS AND HEN CE THE A.O. IS JUSTIFIED IN ADDING THESE AMOUNTS SEPARATEL Y. 2C THE LEARNED CIT(A) HAS FAILED TO NOTE THE OTHER CREDITS IN THE BOOKS OF ACCOUNTS BY WAY OF CASH CREDITS CREDIT ED STRAIGHT TO THE CAPITAL A/C OR P & L A/C WAS NOT EXPLAINED B Y THE ASSESSEE EITHER BEFORE THE A.O. OR BEFORE THE CIT( A). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IN DELETING THE INTEREST U/S 234D BY NOT CON SIDERING THE ORDER OF THE HONBLE ITAT BANGALORE-B BENCH IN THE CASE OF SIGMA ALDRICH FOREIGN HOLDING COMPANY VS ASSISTANT COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION ) CIRCLE 19(1), BANGALORE REPORTED IN 104 ITD 95. 5. THE GROUNDS RAISED BY THE ASSESSEE IN HER CROSS OBJECTIONS READ AS BELOW : THE APPELLANT OBJECTS TO THE UPHOLDING OF THE LEGA LITY OF ISSUE OF NOTICE U/S 153A RWS 153C AND THE CONSEQUENTIAL REAS SESSMENT; LEVY OF SURCHARGE ON TAX DENIES ITS LIABILITY TO IN TERESTS U/S 234A & 234B RESPECTIVELY FOR 2002-03 A/Y ON THE FOLLOWIN GS GROUNDS: ITA 1533 TO 1537 & C O 150 TO 154/10 :- 6 -: 1. NOTICE U/S 153A & REASSESSMENT 1.1 THE NOTICE U/S 153A DATED 23.9.2008 FOR 2002-03 A/Y IS ILLEGAL AND NON-EST IN LAW AND THEREFORE THE SAID N OTICE AND CONSEQUENT ASSESSMENT ARE LIABLE TO BE QUASHED. 1.2 THE APPELLANT PRAYS FOR THE PRODUCTION OF STRIC T PROOF AND EVIDENCE RELATING TO 2002-03 A/Y BY THE DEPARTMENT TO SUBSTANTIATE THE INITIATION OF ACTION U/S 132, ONLY AS A RESULT OF WHICH NOTICE U/S 153A HAS BEEN ISSUED. 1.3 THE COMMISSIONER (APPEALS) ERRED IN UPHOLDING T HE VALIDITY OF THE NOTICE U/S 153A IN PARA 7 OF HIS OR DER, WITHOUT ACCEDING TO THE APPELLANTS PRAYER CITED IN PARA 6( 3) OF HIS ORDER. 1.4 THE COMMISSIONER (APPEALS) MISDIRECTED HIMSELF IN UPHOLDING THE VALIDITY OF THE NOTICE U/S 153A IN PA RA 7 OF HIS ORDER, WITHOUT DECIDING ON THE VALIDITY OF THE SEAR CH U/S 132 OF SRI G. VISWANATHAN, WHICH IS THE FOUNDATION OF THE INVOKING SEC.153C, IN THE APPELLANTS CASE. 1.5 THE LEARNED COMMISSIONER (APPEALS) ERRED IN U PHOLDING THE ISSUE OF JURISDICTION ON THE ERRONEOUS PRESUMPT ION THAT THE ITA 1533 TO 1537 & C O 150 TO 154/10 :- 7 -: APPELLANT HAD NOT OBJECTED TO THE SAME BEFORE THE A O (PARA 8), WHILE THE APPELLANT HAD OBJECTED TO THE SAME IN HER LETTER DT. 14.7.09. LEVY OF INTEREST U/S 234A & 234B 2. THE APPELLANT DENIES HER LIABILITY TO THE INTER ESTS U/S 234A & 234B RESPECTIVELY, AS THE ENTIRE DEMAND HAS ARISEN ONLY ON ACCOUNT OF THE AFORESAID UNLAWFUL ASSESSMENT, WHICH COULD NOT HAVE BEEN ANTICIPATED AND THEREFORE NOT LEVIABLE AT ALL AS HELD IN CIT VS REVATHI EQUIPMENT LTD. 298 ITR 67 (MAD). ON THESE GROUNDS AND ON SUCH OTHER GROUNDS AS MAY B E PUT FORTH AT THE TIME OF HEARING, THE APPELLANT PRAYS T HAT: A) THE NOTICE U/S 153A, DATED 23.9.2009, BE QUASHED AND THE ASSESSMENT BE ANNULLED; B) THE INTERESTS CHARGED U/S 234A & 234B, BE DELETE D AND JUSTICE BE RENDERED. 6. WE HEARD SHRI R.B.NAIK, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE AND SHRI A. MAHESH, THE L EARNED CHARTERED ACCOUNTANT APPEARING FOR THE RESPONDENT-ASSESSEE. 7. IT IS A FACT ON RECORD THAT THE ASSESSEE HAS BEE N MAINTAINING REGULAR BOOKS OF ACCOUNT WITH SUPPORTING VOUCHERS A ND EVIDENCES TO ITA 1533 TO 1537 & C O 150 TO 154/10 :- 8 -: SUPPORT THE INCOME RETURNED BY HER IN RESPECT OF BU SINESS OF BUS TRANSPORT CARRIED ON BY HER. THE ASSESSEE HAS BEEN FILING RETURNS OF INCOME REGULARLY SUPPORTED BY THOSE BOOKS OF ACCOUN T. THEREFORE, IN A CONSISTENT MANNER, THE ASSESSEE HAS BEEN FILING HER RETURNS OF INCOME ON THE BASIS OF BOOKS OF ACCOUNT MAINTAINED BY HER. SHE HAS CLAIMED DEPRECIATION IN RESPECT OF BUSES AND CLAIM OF SUCH DEPRECIATION REDUCED THE QUANTUM OF TAXABLE INCOME IN A SUBSTANTIAL MANN ER. THE ASSESSEE HAS REPLACED OLD BUSES WITH NEW BUSES OFF AND ON AN D SALE AND PURCHASE OF THE BUSES WERE PROPERLY RECORDED IN THE BOOKS OF ACCOUNT, ALSO EXPLAINING ADDITIONAL SOURCES NECESSARY TO ACQ UIRE TWO NEW BUSES. THEREFORE, IN A NUTSHELL, IT IS NECESSARY TO STATE THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT IN A VERY REASONABLE MA NNER, AS RIGHTLY POINTED OUT BY THE COMMISSIONER OF INCOME-TAX(APPEA LS). THE ASSESSING AUTHORITY HAS NOT POINTED OUT ANY DEFECT OR LAPSE TO REJECT THE BOOKS OF ACCOUNT EITHER FULLY OR PARTLY. THEREFORE , IN ORDER TO REJECT THE BOOK RESULTS FURNISHED BY THE ASSESSE, THERE SHOULD BE SUFFICIENT DOCUMENTARY PROVOCATION FOR THE ASSESSING OFFICER T O DO THAT. THEN ONLY, THE ASSESSING OFFICER COULD HAVE ESTIMATED TH E INCOME IN THE HANDS OF THE ASSESSEE PRESUMABLY EVEN ON THE BASIS OF COPIES OF THE LEASE AGREEMENTS FOUND IN THE COURSE OF SEARCH. IT IS TRUE THAT COPIES OF SUCH LEASE AGREEMENTS WERE FOUND IN THE COURSE OF S EARCH. BUT THE ITA 1533 TO 1537 & C O 150 TO 154/10 :- 9 -: IMPLICATION OF THOSE LEASE AGREEMENTS WERE NOT ENQU IRED INTO BY THE ASSESSING AUTHORITY IN AN OBJECTIVE MANNER AND NO C ONCLUSION WAS ARRIVED AT THEREFROM. THE ASSESSING OFFICER IMMEDI ATELY JUMPED INTO A CONCLUSION THAT THE ASSESSEE WAS ALSO GETTING LEASE INCOME ON THE BASIS OF THE COPIES OF THOSE LEASE AGREEMENTS. IT IS TO BE SEEN THAT WHEN QUESTIONED, THE LESSEE HAD DENIED ANY SUCH LEASE AR RANGEMENTS WITH THE ASSESSEE AND THE ASSESSING AUTHORITY LEFT THE E NQUIRY AT THAT STAGE WITH AN OPEN END. THE RESULT IS THAT THE SEARCH A ND FINDING OF THE COPIES OF THE LEASE AGREEMENTS HAD NOT IN FACT, BROUGHT OU T ANY CONCLUSIVE FINDINGS AGAINST THE ASSESSEE. THEREFORE, AS RIGHT LY POINTED OUT BY THE COMMISSIONER OF INCOME-TAX(APPEALS) NO RELIANCE CAN BE PLACED ON THE SO CALLED LEASE AGREEMENTS IN PREFERENCE TO REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE F IND THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) TO ACCEPT T HE INCOME RETURNED BY THE ASSESSEE AS PER THE BOOKS OF ACCOUNT, IS JUS T AND PROPER. THE ORDERS ARE UPHELD ON THIS POINT. AS THIS IS THE ON LY POINT TO BE CONSIDERED IN ALL THESE APPEALS, WE FIND THAT THE FIRST APPELL ATE ORDERS STAND GOOD. THE APPEALS FILED BY THE REVENUE ARE LIABLE TO BE D ISMISSED. ITA 1533 TO 1537 & C O 150 TO 154/10 :- 10 -: 9 NOW, COMING TO THE CROSS OBJECTIONS FILED BY THE ASSESSEE, WE HAVE TO STATE THAT THE RE-ASSESSMENTS HAVE BEEN MAD E BY THE ASSESSING AUTHORITY ON THE BASIS OF SEARCH CARRIED OUT IN THE PREMISES AND ALSO ON THE BASIS OF CERTAIN PRIMA FACIE MATERIALS COLLECTE D AGAINST THE ASSESSEE. THE FINAL OUTCOME OF THE SEARCH MAY NOT BE EXACTLY AS EXPECTED BY THE REVENUE. BUT SUCH FINDINGS ARISING OUT OF SUBSEQUE NT EXAMINATION DO NOT INVALIDATE THE NOTICES ISSUED BY THE ASSESSIN G AUTHORITY. WE AGREE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS POINT. AS FAR AS THE QUESTION OF INTEREST UNDER SE C.234A AND 234B IS CONCERNED, IT IS NOTHING BUT CONSEQUENTIAL AND THER E IS NO FORCE IN THE ARGUMENTS OF THE ASSESSEE. THE CROSS APPEALS ARE L IABLE TO BE DISMISSED. 10. IN RESULT, THE APPEALS AS WELL AS THE CROSS OBJ ECTIONS ARE DISMISSED. ORDERS PRONOUNCED ON FRIDAY, THE 20 TH OF JANUARY, 2012 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDEN T CHENNAI, DATED THE 20 TH JANUARY, 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR