DURAISWAMY CHINNADURAI,COIMBATORE V. ITO, NCW-4(4), COIMBATORE

ITA 1782/CHNY/2024

AI Insights

The case involves Duraiswamy Chinnadurai, a retired school teacher, who appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi, for the assessment year 2013-14. The primary contention was regarding the reassessment proceedings under section 148 and subsequent additions made to his income. The Assessing Officer had reopened the assessment based on information from a search operation related to his business partners, Venkataraman and Padmanabhan, and added substantial amounts to Chinnadurai's income, alleging unexplained investments and expenditures. The Income Tax Appellate Tribunal (ITAT) upheld the legal validity of the reassessment but found the additions regarding the unsold plots to be inadequately supported by evidence, thus remitting the matter back for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 27197 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: TIN box 249 ITR 216
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHEILA PARTHASARTHY
• Assessee Lawyers: S.RAMACHANDRAN
• Keywords: Set aside; Difference of opinion; Change of opinion; Corroborative evidences; Unexplained expenditure; Document seized; Documents seized
• Section: 147; 148; 143(3); 142(1); 132; 69A

Judgement Text

" Page - 1 - of 7 आयकर अपीलीय अधिकरण, ‘बी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI श्री एबी टी. वर्की, न्यायिर्क सदस्य एवं श्री अयिताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1782 /Chny/2024 निर्ाारण वर्ा /Assessment Years: 2013-14 Duraiswamy Chinnadurai, No.146, N.G.N.Street, New Siddhapudur, Coimbatore. [PAN: ACPPC1349B] Income Tax Officer, Non Corp, Ward-4(4), Coimbatore (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Shri S.Ramachandran, CA प्रत्यर्थी की ओर से /Revenue by : Ms.Sheila Parthasarthy, Addl.CIT सुिवाई की तारीख/Date of Hearing : 02.12.2024 घोर्णा की तारीख /Date of Pronouncement : 22.01.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed against the order bearing DIN & Order No.ITBA/NFAC/S/250/2024-25/1064762387(1) dated 09.05.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), National Faceless Appeal Center[NFAC], Delhi, for the assessment years 2013- 14. Through the aforesaid appeal the assesse has challenged order u/s 250 dated 09.05.2024 passed by NFAC, Delhi. 2.0 The assessee has raised altogether seven grounds of appeal, of which grounds 1 to 4 are legal grounds and grounds 5 to 7 on merits. ITA No.1782/Chny/2024 :- 2 -: Page - 2 - of 7 3.0 The legal grounds are seminal to the validity of reassessment proceedings u/s 148 and therefore considering the complexity of the matter we deem it appropriate to adjudicate the legal grounds first. Explaining the brief factual matrix of the case, Ld. Counsel for the assessee, informed that the assessee is a retired school teacher. At the time of his superannuation, he was in receipt of surplus funds of which Rs. 15 lakhs was given to two persons namely Shri Venkataraman and Shri Padmanabhan who had asked him to join their real estate ventures. It was agreed that the assessee would get an even amount of Rs.15 lakhs as return against the impugned investment. The assessee submitted that upon receipt of the same he disclosed said Rs. 15 lakhs in his return of income for AY-2013-14 filed on 04.08.2014 declaring total income of Rs.17,16,210/-. In respect of this return of income first assessment was completed by the Ld. AO vide his order u/s 143(3) r.w.s. 147 dated 02.11.2016 accepting the returned income. Prior to completing the assessment, notice u/s 148 was issued on 10.09.2015. The Ld. Counsel informed that meanwhile a search u/s 132 was conducted upon two persons namely Shri Venkataraman and Shri Padmanabhan on 05.09.2013. During the course of search sworn statement of said Shri Venkataraman was recorded by investigation wing on 12.09.2013. Drawing reference to item no.11(2) of the reasons ITA No.1782/Chny/2024 :- 3 -: Page - 3 - of 7 recorded for reopening assessment u/s. 147 dated 31.03.2021 in assessee’s case for AY-2013-14, the Ld.Counsel informed that said Shri Venkataraman had submitted that “…out of the 60 sites nearly 45 sites were sold during the year 2011 and 2012 and the remaining sites were shared by among us equally....”. This statement was given on 12.09.2013. The Ld. AO concluded that the unsold sites brought by the assessee have not been brought to tax. Therefore, taking approval from the supervisory authority, assessment was reopened. The Ld. AO passed his assessment order dated 30.03.2022 u/s 147 r.w. 144B of the act making additions of Rs. 90,33,000/-. The impugned addition included addition of Rs.15 lakhs and Rs. 42 lakhs treating assessee’s share of investment as unexplained u/s 69A r.w. 115BBE, Rs.25 lakhs and Rs.8.33 lakhs as an unexplained expenditure u/s 69C, r.w. 115BBE. While making the impugned additions the Ld. AO recorded in para 5.3 of his order that “… the reply given by the assessee is duly considered and the same is not acceptable. The assessee has not furnished any details as called for vide notice u/s 142(1) of the act 1961 and only submitted written submissions objecting that no unsold sites were received from Krishna Nagar phase-7….”. He accordingly proceeded to rely upon information provided by the investigation wing, seized documents and statement of other persons. The Ld.First Appellate Authority confirmed ITA No.1782/Chny/2024 :- 4 -: Page - 4 - of 7 the order of the Ld.AO vide his order dated 09.05.2024 supra both on the grounds concerning legal issues as well as merits of the addition. 4.0 We have heard rival submissions in the light of material available on records. It is the case of the Ld. Counsel for the assessee that proceedings u/s 148 are hit by invalidity on account of change of opinion, approval accorded beyond limitation date etc. The Ld. DR citing reference to provisions of section 147 / 148, TOLA guidelines issued qua Covid-19 and factual matrix of the case argued that there is no infirmity in the proceedings initiated u/s 148. We have noted that, vide paras 4.3.1 to para 5.8 of his appellate order, the Ld.CIT(A) has comprehensively analyzed intricate facts of the case in the light of contemporaneous status and judicial pronouncements governing the matter. Accordingly, we are of the view that the order of the Ld. CIT(A) does not require any interference at this stage. Accordingly, ground of appeal no. 1 to 4 of the assessee challenging the legal grounds are dismissed. 4.1 As regards the merits of the addition, the Ld. Counsel for the assessee has argued that the addition of Rs. 42 lakhs qua profit earned on unsold plots is arbitrary, excessive and not supported by facts on record. It was argued that the unsold plots were not given to the assessee by the two partners and therefore no addition can be made in ITA No.1782/Chny/2024 :- 5 -: Page - 5 - of 7 its hands. It was also stated that there is no indication of assessee’s name on the impugned seized documents so as to attach any taxability in his hands. The Ld. DR would like to make us believe upon the correctness of the order of the lower authorities. 4.2 We have noted that the order of the Ld. AO suffers from the fundamental deficiency of a non-speaking order. He has merely relied upon the information received from investigation wing, seized documents, statement of assessee’s partners and proceeded to draw his unilateral conclusions. Even though the notice u/s 148 was issued on 31.03.2021 and the assessee had filed a return in response thereof, column-8 of assessment order dated 30.03.2022 shows that only three notices were issued on 16.12.2021, 06.01.2022 and 14.02.2022. Thus, the entire assessment was completed between period of two months. Further, even though assessment was concluded on 30.03.2022, last notice was given on 14.02.2022 only. There is nothing on record to allude that the Ld.AO made any independent enquiries on the matter. There is no discussion to the bank accounts of the assessee, nor is there any reference to, much required enquiries, with assessee’s two partners. The same was necessary because the entire hypothesis is built upon seized documents admittedly written by the assessee’s partners as well as their sworn statements during survey proceedings. The Ld. CIT(A) ITA No.1782/Chny/2024 :- 6 -: Page - 6 - of 7 has also proceeded to confirm the impugned addition, vide para 6.3.3 of his order, justifying the same on account of non-compliance by the assessee. The assessee also cannot absolve himself from the responsibility of not adequately complying with the statutory notices of the Ld. AO. Nothing has been brought on records that there existed any justified grounds for the indicated non-compliance. 4.3 Be that as it may be, we are of the view that the matter concerning taxability of profit on unsold plots available to the assessee, if any, have not been objectively and comprehensively analyzed by the lower authorities. We are therefore of the view that ends of justice would be met if the assessee is given one more opportunity to present its case and file supporting evidences before the Ld.AO. The decision to remit it back to the Ld. AO is taken in view of the fact that an Assessing Officer is the fulcrum of assessment proceedings. He possess the first right and responsibilities to examine facts of a case before arriving at his decision qua determination of taxable income in a particular case. We have noted with respectful deference the decision of Hon’ble Apex Court in the case of TIN box 249 ITR 216 on the subject matter. Accordingly, the issue of addition u/s 69A made by the Ld. AO amounting to Rs.42 lakhs which have been contested by the assessee through grounds of appeal No.5 to 7 supra stands remitted back to the Ld. AO for fresh adjudication de novo ITA No.1782/Chny/2024 :- 7 -: Page - 7 - of 7 by passing a speaking order. To the extent the order of lower authorities on this issue stands set aside. It shall be open to the Ld.AO to conduct all or any enquiry deemed necessary to arrive at a judicious decision. The Ld. AO shall give opportunities of being heard to the assesse and it shall be bounden upon the assesse to comply with the notices issued by the Ld. AO. Any non-compliance on the part of the assesse shall be adversely viewed. The assessee is at liberty to produce all the evidences filed through its paper book before us including any other evidences deemed relevant in support of its claims before the Ld. AO during the readjudication proceedings. Accordingly, the grounds of appeal No.5 to 7 raised by the assessee are therefore allowed for statistical purposes. 5.0 In the result, the appeal is partly allowed. Order pronounced on 22nd , January-2025 at Chennai. Sd/- ( एबी टी. वकी) (ABY T VARKEY) न्यानयक सदस्य / Judicial Member Sd/- (अयिताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, नदिांक/Dated: 22nd , January-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "