ITO, Namakkal V. Shri K.Nallasivam, Namakkal

ITA 1155/CHNY/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0809 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-02-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 15-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Keywords: Condonation of delay
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN,VICE-PRESID ENT AND SHRI VIKAS AWASTHY, JUDICIAL MEM BER ITA NO. ASSESSMENT YEAR APPELLANT RESPONDENT 487/MDS/2009 2000-01 INCOME TAX OFFICER, WARD-1(2), NAMAKKAL MR. K. NALLASIVAM, SELATHAR THOTTAM, KUPPUCHIPALAYALM, P.VELUR, P.O. NAMAKKAL PAN:AAJPN4513A 488/MDS/2009 & 489/MDS/2009 2002-03 & 2001-02 ITO, WARD-1(2) NAMAKKAL M/S. NALLASIVAM AND OTHERS, NAMAKKAL 1154/MDS/2009 2000-01 ITO, WARD-1(2) NAMAKKAL M/S. NALLASIVAM AND OTHERS, NAMAKKAL 1155 & 1156 /MDS/2009 2001-02 & 2002-03 ITO, WARD-1(2) NAMAKKAL MR. K. NALLASIVAM APPELLANT BY : MR. GURU BASHYAM, IRS, J CIT RESPONDENT BY : NONE DATE OF HEARING : 5 TH FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 5 TH FEBRUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE PRESENT SET OF SIX APPEALS I.E. ITA NO.487/MDS/2009 RELATING TO ASSESSMENT YEAR 2000-01 , ITA NO.1155/MDS/2009 FOR THE ASSESSMENT YEAR 2001-02, I TA NO.1156/MDS/2009 FOR THE ASSESSMENT YEAR 2002-03 HA VE BEEN FILED BY THE REVENUE AGAINST THE ASSESSEE IN H IS ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 2 INDIVIDUAL CAPACITY. WHEREAS ITA NO.1154/MDS/2009 F OR THE ASSESSMENT YEAR 2000-01, ITA NO.489/MDS/2009 FOR TH E ASSESSMENT YEAR 2001-02 AND ITA NO.488/MDS/2009 FOR THE ASSESSMENT YEAR 2002-03 HAVE BEEN FILED BY THE REV ENUE AGAINST THE ASSESSEE TREATING HIM AS AOP. A COMMO N ISSUE INVOLVED IN ALL THE AFORESAID APPEALS IS WHETHER TH E ASSESSEE IS TO BE ASSESSED AS INDIVIDUAL OR AS ASSOCIATION O F PERSONS (AOP). 2. THERE IS A DELAY OF 94 DAYS IN FILING OF APPEAL S I.E. ITA NOS.1154 TO 1156/MDS/2009. THE REVENUE HAS FILED APPLICATION FOR CONDONATION OF DELAY IN FILING OF A PPEALS. WE ARE SATISFIED WITH THE REASONS MENTIONED THEREIN CA USING DELAY IN FILING OF APPEALS. IN THE INTEREST OF JUST ICE AND FOR THE REASONS CITED IN APPLICATION SEEKING CONDONATION OF DELAY, THE DELAY IN FILING OF THESE APPEALS IS CONDONED AND TH E SAME ARE ADMITTED FOR DISPOSAL ON MERITS. 3. THE PRESENT SET OF APPEALS HAVE BEEN FILED BY T HE REVENUE WAY BACK IN THE YEAR 2009. NOTICE OF HEARIN G OF APPEAL WAS SENT TO THE ASSESSEE BY THE TRIBUNAL ON VARIOUS DATES AS WELL AS THE NOTICE WAS ORDERED TO BE SERV ED THROUGH ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 3 THE OFFICE OF THE DEPARTMENTAL REPRESENTATIVE. A P ERUSAL OF THE ORDER SHEET SHOWS THAT ON THE DATES FIXED, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE. EVERY TI ME, NOTICE WAS SERVED TO THE ASSESSEE THROUGH RPAD. HOWEVER, N EITHER THE ASSESSEE NOR HIS A.R. APPEARED BEFORE THE TRIBU NAL ON THE FOLLOWING DATES:- 20.04.2010, 01.11.2010 , 30.06.2011, 08.08.2011, 14.11.2011, 01.05.2012, 16.05.2012, 27.08.2012, 06.11.2012, 14.11.2012. EVEN TO-DAY I.E. 5.2.2013, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE IS PRESENT IN THE COURT DESPITE NOTICE WAS SERVED TO THE ASSESSEE ON 22.11.2012. IT IS EVIDENT FROM THE RECORD THAT SUFFICIENT OPPORTUNITY HAS BEEN AFFORDED TO THE ASSESSEE TO DEFEND HIS CASE. HOWEVE R, THE ASSESSEE HAS CHOSEN NOT TO APPEAR BEFORE THE TRIBUN AL. THEREFORE, THE ASSESSEE CANNOT TAKE THE PLEA THAT A SSESSEE WAS NOT HEARD OR SUFFICIENT OPPORTUNITY WAS NOT AFF ORDED TO THE ASSESSEE TO DEFEND HIS CASE BEFORE THE TRIBUNAL. S INCE THE APPEALS ARE PENDING SINCE 2009, NOW WE DEEM IT APPR OPRIATE TO DECIDE THE APPEALS ON MERITS, WITHOUT ADJOURNING IT FURTHER. ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 4 THE REVENUE HAS ASSAILED THE ORDER OF THE CIT(A), SALEM DATED 30.01.2009. THE CIT(A) VIDE IMPUGNED OR DER HAS DECIDED THE APPEALS OF THE ASSESSEE FOR THE ASS ESSMENT YEARS 2000-01, 2001-02 AND 2002-03. 4. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY UNDE R SECTION 133A WAS CONDUCTED AT THE PREMISES OF SHRI S.M.SAKT HIVEL ON 10.01.2003. SHRI S.M.SAKTHIVEL ADMITTED IN HIS SWO RN STATEMENT THAT HE EARNED ` 69,09,200/- FROM SAND QUARRYING BUSINESS JOINTLY CARRIED OUT WITH MR. K.NALLASIVAM (PRESENT ASSESSEE ) AND OTHERS. SHRI K.NALLASIVAM, SMT. V.SI VAGAMI AND SHRI A.P.RAMASAMY IN THEIR SEPARATELY RECORDED SWORN STATEMENTS HAD CONFIRMED THAT THEY JOINTLY CARRIED OUT THE BUSINESS OF SAND QUARRYING FOR WHICH MR. K.NALLASIV AM WAS LICENSE HOLDER. THIS LICENSE WAS TAKEN IN MAY, 1999 AND THE BUSINESS WAS CARRIED OUT TILL MAY, 2002. THE ASSESS ING OFFICER HELD THAT THE BUSINESS WAS CARRIED OUT BY MR. K.NAL LASIVAM ALONG WITH 14 OTHERS. THE ASSESSING OFFICER ASSESS ED THE INCOME IN THE STATUS OF AOP, AS THE SAND QUARRYING BUSINESS WAS BEING CARRIED OUT BY SEVERAL PEOPLE TOGETHER. T HE ASSESSING OFFICER HAS GIVEN A CATEGORIC FINDING THA T ALTHOUGH ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 5 THERE WAS NO PARTNERSHIP DEED, THE QUARRY LICENSE W AS IN THE NAME OF MR. K.NALLASIVAM AND THE ENTIRE BUSINESS A CTIVITY WAS CONDUCTED BY SHRI S.M.SAKTHIVEL WHO HAD PREVIO US EXPERIENCE IN SAND QUARRYING BUSINESS. THERE WERE J OINT BANK ACCOUNTS AND THE IMPOUNDED MATERIALS DURING THE SEA RCH PROVE EXISTENCE OF PARTNERSHIP. DURING THE ASSESSM ENT PROCEEDINGS TWO LETTERS DATED 29.09.2005 AND 24.12. 2005 WERE FILED BEFORE THE ASSESSING OFFICER STATING THA T BUSINESS WAS BEING DONE ALONG WITH 14 OTHER PARTNERS. FURTHE R, IN THEIR RESPECTIVE SWORN STATEMENTS, SHRI S.M.SAKTHIVEL, SH RI K.NALLASIVAM, SMT. V.SIVAKAMI AND SHRI A.P.RAMASAM Y HAD ADMITTED THAT BUSINESS WAS CARRIED ON ALONG WITH O THER PARTNERS AND SHARE OF EACH PARTNER WAS ALSO SPECIFI ED IN THE STATEMENTS. THE ASSESSING OFFICER IN VIEW OF THE E VIDENCE COLLECTED, THE SWORN STATEMENTS AND BY TAKING INT O CONSIDERATION VARIOUS CONSTITUENTS OF AOP CAME TO THE CONCLUSION THAT THE INCOME BE ASSESSED IN THE STA TUS OF AOP AND NOT AS INDIVIDUAL IN THE HANDS OF MR. K.NALLASI VAM. 5. AGGRIEVED AGAINST THE FINDINGS OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) . THE ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 6 CIT(A) REVERSED THE FINDINGS OF THE ASSESSING OFFIC ER AND HELD THAT THE INCOME FROM SAND QUARRYING BUSINESS SHOULD BE ASSESSED IN THE HANDS OF THE LICENSE HOLDER OF THE BUSINESS. THE CIT(A) OBSERVED THAT AS PER THE G.O. ISSUED BY DISTRICT COLLECTOR, NAMAKKAL DATED 12.5.1999, LICENSE HAS BE EN GRANTED TO SHRI K.NALLASIVAM IN HIS INDIVIDUAL CAPA CITY AND NOT IN THE NAME OF ANY PARTNERSHIP. THE CIT(A) HAS FURT HER HELD THAT SHRI K.NALLASIVAM WAS THE LICENSE HOLDER OF TH E BUSINESS FOR THREE YEARS FROM MAY, 1999 TO MAY, 2002 AND THE ENTIRE INCOME IS ASSESSABLE IN THE HANDS OF SHRI K.NALLASI VAM IN HIS INDIVIDUAL CAPACITY AND THE SHARE OF PROFIT OF OTHE R PERSONS ARE TO BE TREATED AS INTEREST RECEIVED ON THE SUMS ADVA NCED BY THEM AS CREDITORS IN THEIR HANDS. THE CIT(A) ALLOW ED THE APPEAL OF THE ASSESSEE AND DIRECTED THE ASSESSING O FFICER TO RECOMPUTE THE INCOME IN THE HANDS OF PERSONS WHO HA VE ADVANCED MONEY TO MR. NALLASIVAM. AGGRIEVED AGAINST THE ORDER OF THE CIT(A), THE REVE NUE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 6. SHRI GURU BASHYAM APPEARING ON BEHALF OF THE REV ENUE SUBMITTED THAT DOCUMENTS ON RECORD CLEARLY SHOW THE ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 7 EXISTENCE OF AOP. THE ENTIRE INCOME FROM SAND QUARR YING BUSINESS IS SHARED BY THE PERSONS OF AOP. ALTHOUGH THERE IS NO WRITTEN PARTNERSHIP DEED, BUT THE PROVISIONS OF THE INDIAN PARTNERSHIP ACT DOES NOT BAR THE EXISTENCE OF ORAL PARTNERSHIP. THE LEARNED D.R. SUBMITTED THAT THE CIT(A) HAS BRUS HED ASIDE THE SWORN STATEMENTS OF THE MEMBERS OF THE AOP RECO RDED DURING THE SURVEY CONDUCTED UNDER SECTION 133A OF T HE ACT. THE MEMBERS OF THE AOP HAD ADMITTED THE EXISTENCE OF AOP AND THEIR DEFINITE SHARE IN THE BUSINESS. THE CIT(A ) HAS MERELY ON ASSUMPTION HELD THAT PERCENTAGE OF PROFIT OF OTHER PERSONS ARE TO BE TREATED AS INTEREST RECEIVED ON T HE SUMS ADVANCED AS CREDITORS . 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE D.R. A ND HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES B ELOW. THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER DATED 29. 12.2006 RELEVANT TO THE ASSESSMENT YEAR 2000-01 HAS INDICAT ED THE SHARES OF VARIOUS MEMBERS OF THE AOP. THE SAID SHA RES HAVE BEEN DETERMINED ON THE BASIS OF THE SWORN STAT EMENTS OF THE SOME OF THE MEMBERS OF THE AOP. THE RELEVAN T EXTRACT ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 8 OF THE ORDER OF THE ASSESSING OFFICER IS REPRODUCED HEREIN BELOW:- AS PER THE SWORN STATEMENTS OF THE FOLLOWING 5 AND ENTRIES IN THE IMPOUNDED MATERIALS FOR CARRYING ONT EH ABOVE SAND QUARRYING BUSINESS A PARTNERSHIP WAS CONSTITUTED, CONSISTING THE FO LLOWING MEMBERS WITH THE SHARE INDICATED AGAINST EACH:- NAME OF MEMBER SHARE 1. V.SIVAKAMI (K.K.VEERAPPAN, K.NALLASIVAM) 39.5% 2. C.P.PERIYASAMY 12.5% 3. A.P.RAMASAMY 10.0% 4. T.C.RAMALINGAM 5.0% 5. K.RAJENDRAN 2.5% 6. R.UDAYAVAR 2.5% 7. K.CHANDRAN 2.5% 8. G.SEKAR 2.5% 9. V.ARJUNAN 2.5% 10. M.P.PALANISAMY 7.0% 11. S.NACHIMUTHU 2.5% 12. S.THIRUNAVUKKARASU 4.0% 13. S.MUTHU (S.MUTHUSAMY) 3.5% 14. T.P.BALUSAMY 1.0% 15. S.M.SAKTHIVEL 2.5% THE FOLLOWING EVIDENCES ARE RELIED UPON FOR THE EXI STENCE OF A PARTNERSHIP MEMBERS AND THEIR SHARE IN THE PARTNERS HIP:- 1. CLAUSE 3 OF APPENDIX TO THE PROCEEDINGS OF THE DISTRICT COLLECTOR IN ROC NO.203/99/MINC/B DATED 12.05.99 (WHICH PERMITS PARTNERSHIPS) 2. SWORN STATEMENTS OF SHRI S.M.SAKTHIVEL DATED 30. 01.2003 AND 09.04.2003. 3. SWORN STATEMENT OF SHRI K.NALLASIVAM, DATED 09.0 4.2003 4. SWORN STATEMENT OF SMT. V.SIVAKAMI DATED 09.04.2 003 5. SWORN STATEMENT OF SHRI K.K.VEERAPPAN DATED 09.0 4.2003 6. SWORN STATEMENT OF SHRI A.P.RAMASAMY DATED 09.04 .2003 7. LETTER FILED BY SHRI K.NALLASIVAM ON 29.09.2005 AND 26.12.05 DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN INDI VIDUAL STATUS FOR ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 9 THE ASSESSMENT YEAR 2000-01 TO 2002-03 (AS ALREADY MENTIONED THAT HE WAS DOING THE BUSINESS WITH PARTNERS). THE ASSESSING OFFICER HAS CULLED OUT FROM THE DOCUM ENTS AND THE SWORN STATEMENTS THAT THE INCOME FROM SAND QUAR RYING BUSINESS HAS TO BE ASSESSED IN THE STATUS OF AOP AN D NOT IN THE HANDS OF SHRI K.NALLASIVAM AS INDIVIDUAL. AS RE GARDS THE FINDINGS OF THE CIT(A) WITH REGARD TO GRANTING OF L ICENSE TO INDIVIDUAL IS CONCERNED, WE ARE OF THE CONSIDERED O PINION THAT THE FINDINGS OF THE CIT(A) ARE NOT TENABLE. THE GOV ERNMENT ISSUES LICENSE FOR QUARRYING BUSINESS EITHER IN THE NAME OF INDIVIDUAL OR IN THE NAME OF COMPANY FOR VARIOUS FA CTORS VIZ. RECOVERY OF OUTSTANDING AMOUNT, FIXING RESPONSIBILI TY FOR CONDUCTING BUSINESS OR EXPLOITATION OF NATURAL SOU RCE ETC. 8. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE CLEARLY INDICATE THAT THE SAND QUARRYING BUSINESS WAS CONDU CTED BY A GROUP OF PERSONS. THIS FACT IS ADMITTED BY THEM IN SWORN STATEMENTS. FURTHER, THE JOINT BANK ACCOUNTS IN THE NAMES OF MEMBERS OF AOP CLEARLY INDICATE THE EXISTENCE OF AO P. IN ITA NO.487 TO 489/MDS/2009 & ITA NOS.1154 TO 1156/MDS/2009 10 VIEW OF OUR ABOVE OBSERVATION, WE SET ASIDE THE ORD ERS OF CIT(A) AND ALLOW ALL THE SIX APPEALS OF THE REVENUE . ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY THE 5 TH DAY OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- ( DR. O.K.NARAYANAN ) (VIKAS AWASTHY) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 5 TH FEBRUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.