ACIT, CHENNAI V. Shri R.Kumar, CHENNAI

ITA 1235/CHNY/2012

• Counselvise Citation: 123521714 RSA 2012
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VASU
• Keywords: Income from undisclosed sources
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A B ENCH C HENN AI BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI S.S.GODARA , JUDICIAL MEMBER .. ITA NO. 1233 TO 1239 /MDS./ 20 12 ASSESSMENT YEAR S : 200 3 - 04 TO 2009 - 10 ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - I(5), CHENNAI 600 034. VS. SHRI R. KUMAR, 88, BRINDAVAN STREET,WEST MAMBALAM, CHENNAI - 33. PAN AAOPK 5368 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P JAC OB ADDL. CIT D.R RESPONDENT BY : SHRI VASU ADVOCATE DATE OF HEARING : 02 .0 8 .12 DATE OF PRONOUNCEMENT : 24 .0 8 .12 O R D E R PER BENCH : THESE APPEALS FILED BY REVENUE ARISE FROM COMMON ORDER OF CIT(APPEALS) - I, CHENNAI - 34, DATED 29.03.12 IN CASE NO. ITA NO.151 TO 157/10 - 11 FOR ASSESSMENT YEARS 2003 - 04 TO 2009 - 10 RESPECTIVELY ; IN PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTI ON 15 3A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) AND U NDER SECTION 143(3) FOR ASSESSMENT YEAR 2009 - 10 ONLY. ITA . 1233 TO 1239 /MDS/ 12 2 2. THE DEPARTMENTAL REPRESENTATIVE BEFORE US HAS STATED THAT ONLY ONE ISSUE IS INVOLVED IN ALL APPEALS I.E. THE CIT(A) HAS WRONGLY ALLOWED DISCOUNT @ 1 5% TO THE ASSESSEE IN RESPECT OF UNACCOUNTED CASH CONS IDERATION , WHICH HAD BEEN DISALLOWED BY A.O. HE HAS SUPPORTED THE GROUNDS RAISING VARIOUS PLEAS ON THE S OLE ISSUE. THE A.R. HAS HOWEVER DRAWN SUPPORT FROM CIT(A) S ORDER. THEREFORE, IN VIEW OF VARIANCE IN THE STANDS OF PARTIES , WE FRAME T HE FOLLOWING ISSUE FOR OUR ADJUDICATION IN CORRECT PERSPECTIVE : - WHETHE R THE CIT(A) S ORDER ALLOWING THE ASSESSEE DISCOUNT @ 1 5% IN RESPECT OF THE UNACCOUNTED CASH, WHICH HAD BEEN DISALLOWED BY A.O; IS LIABLE TO BE CONFIRMED OR MODIFIED AS PER RESPECTIVE VERSIONS OF BOTH PARTIES? FOR THE SAKE OF CONVENIENCE AND BREVITY, WE TAKE UP ITA NO.1233/MDS./12 FOR A.Y. 2003 - 04 AS THE LEAD CASE . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN BUSINESS OF REAL ESTATE. HE IS ALSO DIRECTO R OF M/S.NAVIN HOUSING & PROPERTIES PVT. LTD. AND PR OPRIETOR OF M/S.VASUDHA ENTERPR ISES. ON 25.11.2003, HE FILED HIS RETURN ITA . 1233 TO 1239 /MDS/ 12 3 ADMITTING INCOME OF ` 38,91,320/ - . ON 13.03.06, THE ASSESSING OFFICER COMPLETED ASSESSMENT UNDER SECTION 143(3) OF THE ACT CO MPUTING TOTAL INCOME AS ` 39,31,230/ - AND AGRICULTURAL INCOME OF ` 55,000/ - . 4. THEREAFTER, A SEARCH UNDER SECTION132 OF THE ACT WA S CONDUCTED ON 11.09.08 QUA M/S.NAVIN HOUSING & PROPERTIES (SUPRA) LEADING TO SEIZURE OF ALLEGED ACCOUNTS, CASH ETC. THE ASSESSEE AND HIS FAMILY MEMBERS FILED AFFIDAVITS TO THE EFFECT THAT THE ALLEGED UNACCOUNTED INCOME SEIZED IN SEARCH BELONGED TO THE ASSESSEE ONLY WHICH WAS ASSESSABLE IN HIS HANDS. ON THIS, THE DEPARTMENT ISSUED NOTICE TO ASSESSEE UNDER SECTION.153A OF THE ACT. IN RESPONSE, ASSESSEE FILED RETURN ON 05.07.10; THIS TIME DECLARING INCOME OF ` 51,91,320/ - AND AGRICULTURAL INCOME OF ` 55,000/ - WITH FURTHER ACKNOWLEDGEMENT OF INCOME UNDER THE HEAD OTHER SOURCES AS ` 13,00,000/ - AS UNDISCLOSED INCOME IN CONS EQUENCE TO THE SEARCH . IN AD DITION TO THIS, THE ASSESSEE ALSO FILED HIS RETURN OF INCOME YEAR WISE AS FOLLOWS: - ITA . 1233 TO 1239 /MDS/ 12 4 A.Y. DATE TOTAL INCOME AGRICULTURAL INCOME 2003 - 04 05.07.2010 51,91,320/ - 55,000/ - 2004 - 05 05.07.2010 54,90,500/ - 15,000/ - 2005 - 06 05.07.2010 91,85,017/ - 40,000/ - 2006 - 07 05.07.2010 76,12,734/ - 42,000/ - 2007 - 08 05.07.2010 1,06,30,107/ - 42,000/ - 2008 - 09 05.07.2010 2,60,05,850/ - 40,000/ - 2009 - 10 05.07.2010 2,16,25,170/ - 40,000/ - THE A.O. THEN, TOOK RECOURSE TO SCRUTINY ASSESSME NT PROCEEDINGS AND IN ASSESSMENT ORDER DATED 31.12.10 UNDER SECTION.153A CAME TO THE CONCLUSION THAT SINCE THE ASSESSEE HAD ADMITTED INCOME OF ` 13,00,000/ - IN ADDITION TO THE EARLIER INCOME COMPUTED UNDER SECTION 143(3) OF THE ACT AS ` 39,31,230/ - , THER EFOR E, THE SUBSEQUENT AMOUNT HAD TO BE ADDED IN ASSESSEE S TOTAL INCOME AS ` 52,31,231/ - AS AGAINST ` 51,91 ,320/ - RETURNED BY THE ASSESSEE. 5 . FURTHER, THE A.O. TOOK COGNIZANCE OF THE FACT THAT THE ASSESSEE HAD RECEIVED 10% OF THE TOTAL CONSIDERATION FROM TH E PROJECTS CONSTRUCTED WHERE OUTRIGHT PURCHASE OF LAND WAS CONCERNED IN CASH. THE PROJECT - WISE DETAILS IN THIS REGARD WERE AS UNDER: - ITA . 1233 TO 1239 /MDS/ 12 5 NAME OF THE PROJECT ASST. YEAR TOTAL CONSIDERATION VIGNESHWAR 2005 - 06 42202625 SILVER OAK 2005 - 06 25285000 MADHUVA NDHLAN 2007 - 08 28933500 MANORANJITHAM 2007 - 08 22091000 KAUSHIK 2006 - 07 15555000 DAFFOLDILS 2004 - 05 27225000 MYLAM 2007 - 08 28385750 TOTAL 18,96,77,875 WITH REFERENCE TO ABOVE, THE ASSESSEE EXPLAINED BEFORE ASSESSING OFFICER THAT IN SOME CASES OF OUTRIGHT PU RCHASE OF LAND, 10% OF TOTAL CONSIDERATION RECEIVED FROM PROJECTS CONSTRUCTED CAME TO BE RS.1,89,67,788/ - ( 10% OF 18,96,77,875 / - ). FURTHER, PROJECT - WISE COLLECTI ON FIGURES WERE TABULATED BY ASSESSING OFFICER AS UNDER: - NAME OF THE PROJECT ASST. YEAR TOTAL CONSIDERATION TOTAL RECEIPTS TO BE CONSIDERED FAL LING WITHIN THE RELEVANT PERIOD AS PE R ASSESSEE S SUBMISSION DIFFERENCE (RS.) VIGNESHWAR 2005 - 06 42202625 33 625625 85,77,000 SILVER OAK 2005 - 06 25285000 25285000 MADHUVANDHLAN 2007 - 08 28933500 28933500 MANORANJITHAM 2007 - 08 22091000 22091000 KAUSHIK 2006 - 07 15555000 15555000 ITA . 1233 TO 1239 /MDS/ 12 6 DAFFOLDILS 2004 - 05 27225000 17325000 99,00,000 MYLAM 2007 - 08 28385750 28385750 TOTAL ` 18,96,77,875 17,12,00,875 1,84,77,000 THEREAFTER, THE A.O. AC CEPTED THE ASSESSEE S EXPLANATION REGARDING THE ABOVE DIFF ERENCE AMOUNT STATING THAT SINCE IT WAS PRIOR - YEAR S COLLECTION (A.Y 2003 - 04 TO 2009 - 10) , SO, IT WAS OUT OF T HE PURVIEW OF SEARCH ASSESSMENT. HOWEVER, F OR A.Y S . 2003 - 04 TO 2007 - 08 , SINCE THE ASSESSEE HAD ADMITTED AN AMOUNT OF ` 1,19,50,000/ - AS UNDISCLO SED I NCOME WITH THE FOLLOWING PARTICULARS : - A.Y. ` 2003 - 04 13,00,000 2004 - 05 24,00,000 2005 - 06 28,00,000 2006 - 07 31,50,000 2007 - 08 23,00,000 TOTAL DISCLOSURE 1,19,50,000 THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE HAD ADMITTED ONLY AN AMOUNT OF ` 1,19,50,000/ - INSTEAD OF ` 1,71,20,088/ - . THEREFORE, THE SAME LED TO A DIFFERENCE OF ` 51.70 LAKHS ITA . 1233 TO 1239 /MDS/ 12 7 (1,71,20,088 11,95,000) WHICH THE ASSESSEE HAD TERMED AS A DISCOUNT OFFERED TO MANY FLAT S PURCHASER. THE ASSESSEE S REASONING WAS REPELLED BY ASSESSING OFFICER FOR WANT OF ANY CORROBORATIVE EVIDENCE. THEREFORE, THE SAID AMOUNT WAS ADDED IN ALL ASSESSMENT YEARS I.E. FROM A.Y. 2003 - 04 TO 2007 - 08 ONLY BY MAKING THE COMPUTATION AS UNDER: - PROJECT A.Y 03 - 04 04 - 05 05 - 06 06 - 07 07 - 08 TOTAL VIGNESHWAR 2788750 19954000 10882875 0 0 33625625 SILVER OAK 1599495 19001000 4684505 0 0 25285000 MADHUVANDHLAN 0 0 3794569 13125233 12013698 22091000 MANORANJITHAM 0 0 8552000 12675780 863220 15555000 KAUSHIK 0 0 10539801 5015199 0 1 7325000 DAFFOLDILS 10379750 10379750 0 0 0 28385750 MYLAM 0 0 910000 2199200 0 5483750 28385750 TOTAL 14767995 45900250 39363750 52808212 18360668 171200875 10% OF COLLECTION 1476800 4590025 3936375 5280821 1836067 17120088 UNDISCLOSED INCOME ADMITTED BY ASSESSEE 1300000 2400000 2800000 3150000 2300000 11950000 DIFFERENCE 176800 2190025 1136375 2130821 (463933) 5170088 6 . IN THIS MANNER, THE A.O. ADDED TH E AMOUNT OF ` 1,76,800/ - (SUPRA) IN ASSESSMENT OF A.Y 2003 - 04. ACCORDINGLY, THE ASSESSEE S TOTAL INCOME (INCLUSIVE OF THAT UNDER SECTION.69A OF ` 13,00,000 ) WAS CALCULATED AS ` 54,08,030/ - THROUGH ASSESSMENT ORDER DATED 31.12.10. ITA . 1233 TO 1239 /MDS/ 12 8 7 . IN APPEAL, THE CIT(A) HAS ACCEPTED ASSESSEE S ARGUMENTS CHALLENGING ADDITIONS (SUPRA) MADE BY ASSESSING OFFICER; BY HOLDING THAT: 9. I HAVE CONSIDERED THE FACTS OF THE CASE, THE STATEMENTS GIVEN AT THE TIME OF SEARCH AS WELL AS LATER BEFORE THE ADIT AND OTHER SEIZED MATERIAL RELEVANT TO THE ISSUE. THE POINT OF DISPUTE IS THAT AFTER CONSIDERING THE RECEIPT, NOT CONSIDERING THE PAYMENT PART VIZ. THE DISCOUNT. THE CASH RECEIPT RANGES FROM 1 TO 10% AND THE DISCOUNT FROM 0 TO 30%. THE APPELLANT PLEADS FOR THE MAXIMUM AT 30% WHER EAS THE ASSESSING OFFICER HAD GIVEN NONE. THE ASSESSING OFFICER HAS DISCUSSED THIS IN PARAGRAPH 9,16 & 17 OF PAGE 10 FOR THE A.Y 2008 - 09 AND 2009 - 10. ACCORDING TO HIM, THE APPELLANT COULD NOT PRODUCE ANY PROOF FOR DISCOUNT. 10. HE ALSO OBSERVES THAT IF T HE CONTENTION OF THE APPELLANT REGARDING DISCOUNT IS ACCEPTED, THEN THE TOTAL UNDISCLOSED CASH COLLECTION IN RESPECT OF PROJECTS COME TO ` 3,36,89,500/ - WHEREAS THE TOTAL UNEXPLAINED CASH FOUND AND SEIZED FROM THE APPELLANT AND EXPLAINED AS ON MONEY COLLEC TED FROM THESE THREE PROJECTS AMOUNT TO ` 3,94,43,000/ - THUS, THERE IS AN EXCESS OF ` 57,53,500/ - . ITA . 1233 TO 1239 /MDS/ 12 9 THEREFORE, THE CONTENTION REGARDING DISCOUNT CANNOT BE ACCEPTED. 11. THE LD. A.RS SUBMIT THAT THE AMOUNT OF ` 3,94,43,000/ - IS THE TOTAL OF THE AMOUNT FOUND AT THE RESIDENCE, AMOUNT FOUND IN THE OFFICE PREMISES AND THE AMOUNT OF ` 75,00,000/ - FOUND IN THE LOCKER. THEIR ARGUMENT IS THAT ONLY THE AMOUNTS FOUND IN THE RESIDENCE AND OFFICE RELATE TO THE CASH RECEIVED FOR THESE PROJECTS, AND THE CASH FOUND IN THE LOC KER IS THE PERSONAL CASH WHICH HAS ALREADY BEEN EXPLAINED AS BELONGING TO THE APPELLANT S FATHER AND OTHER FAMILY MEMBERS WHO ARE ALSO ASSESSEES ON THEIR OWN AND HAVING CASH BALANCE. 12. IN MY OPINION, SELECTIVELY CONSIDERING ONE PART OF THE STATEMENT AND IGNORING THE OTHER IS NOT REASONABLE. IF THE CONTENTIONS OF THE APPELLANT REGARDING THE CASH FOUND IN THE LOCKER ARE CONSIDERED, THEN THE EXCESS WORKED OUT WILL NOT ARISE. TAKING ALL THESE FACTS AND CIRCUMSTANCES INTO CONSIDERATION, I AM OF THE OPINION THAT A DISCOUNT AT 15% WOULD BE REASONABLE, AS HAS BEEN WORKED OUT BELOW: A.Y. AMOUNT DISALL O WE D AS PER ORDER 15% DISCOUNT NET AMOUNT TO BE DISALLOWED ITA . 1233 TO 1239 /MDS/ 12 10 2003 - 04 176800 26520 150280 2004 - 05 2190025 328504 1861521 2005 - 06 1136375 170456 965919 2006 - 07 213 0821 319623 1811198 200 7 - 08 17244727 258709 1466018 200 8 - 09 4707800 706170 4001630 200 9 - 10 12222070 1833311 10388760 HENCE, THE GROUNDS RELATING TO THIS ISSUE FOR ALL YEARS ARE DECIDED ACCORDINGLY. THEREFORE, THE REVENUE IS AGGRIEVED. 8 . BEFORE US , THE D.R HAS ASSAILED THE CIT(A) S FINDING BY RAISING VARIOUS PLEAS RAISED IN GROUNDS AND PRAYED THAT SINCE THE ORDER OF A.O. HAS BEEN WRONGLY REVERSED, THEREFORE, THE SAME BE RESTORED. 9 . THE A.R. ON THE OTHER HAND, HAS PREFERRED TO PLACE RELIANCE ON C IT (A) S ORDER AND PRAYED FOR DI S MISSING THE APPEAL. 10 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FACTS, FINDINGS OF BOTH LOWER AUTHORITIES WITH THE ABLE ASSISTANCE OF LEARNED REPRESENTATIVES. IT EMERGES THAT AFTER SEARCH , THE ASSESSEE S STATE MENTS HAD BEEN REDUCED IN WRITING BY THE ITA . 1233 TO 1239 /MDS/ 12 11 DEPARTMENT WHEREIN HE HAD EXPLAINED BOTH ASPECTS OF THE ISSUE I.E. CASH RECEIPTS RANGING FROM 1 TO 10%(SUPRA) AS WELL AS DISCOUNTS OFFERED TO THE FLAT PURCHASERS FROM 1 TO 30%. WE NOTICE FROM THE ASSESSMENT ORDER T HAT THE ASSESSING AUTHORITY HAD ONLY TOOK COGNIZANCE OF ASSESSEE S REPLIES T O QUESTION NOS.18,19 TO 21 ONLY INSTEAD OF THE ENTIRE STATEMEN T OF FACTS. T HE ASSESSEE HAS NOWHERE DISPUTED A.O. S CALCULATION OF 10% CASH COMPONENT; AS HIS SUBMISSIONS MADE BEFO RE CIT(A) INDICATES. THEREFORE, WE OBSERVE THAT IF A.O. WOULD HAVE CONSIDERED THE ASSESSEE S EXPLANATION AS A WHOLE, BOTH ASPECTS OF THE ASSESSEE S VERSION WOULD STAND PROPERLY APPRECIATED. IT NOWHERE COMES FROM A.O. S FINDINGS THAT THE ASSESSEE HAD NOT OFFERED ANY DISCOUNT AS TO ONLY BASIS OF FINDING IS THAT THER E WAS NO CORROBORATIVE EVIDENCE LED BY THE ASSESSEE. 11 . IN OUR OPINION, ONCE THE A.O. HAD NOT DISPUTED THE ASSESSEE S PLEA OF DISCOUNT OFFERED TO FLATS BUYERS, THE ADDITIONS (SUPRA) COULD NO T HAVE BEEN MADE. IT IS ONLY IN VIEW OF THESE FACTS AND CIRCUMSTANCES THAT THE CIT(A) HAS RESTRICTED THE ADDITION FROM 30% TO 1 5%(SUPRA) ON THE BASIS OF PRINCIPLES OF REASONABLENESS WHICH CANNOT BE FAULTED WITH. IT IS SETTLED LAW THAT THE FIRST APPELLA TE AUTHORITY ALSO EXERCISES ITA . 1233 TO 1239 /MDS/ 12 12 JURISDICTION VESTED WITH A.O. IN THE LIGHT OF THIS SETTLED POSITION , WE ALSO OBSERVE THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS RIGHTLY EXERCISED HIS JURISDICTION IN REST RICTING THE CLAIM OF DISC OUNT BY LIMITING IT FROM 30% TO 15% ONLY. SO, WE FIND NO REASON TO INTERFERE IN THE WELL FOUNDED ORDER OF CIT(A). ITA NOS.1234 TO 1239/MDS./12 12 . BOTH THE LEARNED REPRESENTATIVES ARE AD - IDEM THAT OUR FINDINGS HEREINABOVE IN THE LEAD CASE ALSO SQUARE LY COVER SOLE ISSUE INVOLVED ALL APPEALS. IT IS ALSO EVIDENT FROM TH E RECORD THAT FACTUAL POSITION AS WELL AS ISSUE INVOLVED IN ALL CASES IS TH E SAME. THEREFORE, WE UPHELD CIT(A) S ORDER IN THESE CASES AS WELL. 13 . IN THE LIGHT OF OUR ABOVE DISCUSSIONS, ALL REVENUE S APPEALS ARE DISMISSED. ORDER P RONOUNCED ON FRIDAY, THE 24 TH AUG U ST , 2012 AT CHENNAI SD/ - SD/ - (N.S.SAINI) ( S.S.GODARA ) ACCOUNTNT MEMBER JUDICIAL MEMBER CHENNAI, DATED 24 TH AUGUST , 2012 . K S SUNDARAM COPY TO: ASSESSEE / AO / CIT (A) / CIT / D.R. / GUARD FILE ITA . 1233 TO 1239 /MDS/ 12 13