A.Pugazhendi, CHENNAI V. ITO, Krishnagiri

ITA 1298/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7747 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 28-05-2015
• Court: TRIBUNAL
• Department Lawyers: SASIKUMAR JCI T ITA NO ETC
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1006 & 1007/MDS/2015 / ASSESSMENT YEARS : 2003-04 & 2004-05 SHRI A.SHANMUGAM NO.1, ANGALAMMAN KOIL STREET DHARMAPURI 636 701 VS. THE INCOME TAX OF FICER WARD I(2) KRISHNAGIRI [PAN AKYPS 0846 G] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.1234/MDS/2015, 1462 & 1463/MDS/2014 / ASSESSMENT YEARS : 2002-03, 2003-04 & 2004-05 SHRI P. SELVAM S/O K. PERUMAL PULIAMPATTY VILLAGE D. THURUNJIPATTI POST DHARMAPURI 635 202 VS. THE INCOME TAX OFFICER WARD I(1) KRISHNAGIRI [PAN COAPS 0820 N] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.1256, 1257 &1258/MDS/2014 & 1233/MDS/2015 / ASSESSMENT YEARS : 2002-03,2003-04, 2004-05 & 20 05-06 SHRI P. THANGAVEL NO.3/18-A, OPP. TO EB OFFICE COLLECTORATE POST DHARMAPURI 636 705 VS. THE INCOME TAX OFFICER WARD I(1) KRISHNAGIRI [PAN ABKPT 4475 D] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : SHRI SASIKUMAR, JCI T ITA NO.1006/15 ETC. :- 2 -: ./ I.T.A.NOS.1300 & 1301/MDS/2015 / ASSESSMENT YEARS : 2004-05 & 2003-04 SHRI J. RAVICHANDRAN NO.12/17, MUNIAPPA CHETTY STREET DHARMAPURI 636 701 VS. THE INCOME TAX OFFICER WARD I(2) KRISHNAGIRI [ PAN AASPR 2606 M] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.1296 & 1297/MDS/2015 / ASSESSMENT YEARS : 2004-05 & 2003-04 SHRI D.RAJARAMAN L/R SMT.R SHANTHI NO.5/1359 TAMS COLONY DHARMAPURI VS. THE INCOME TAX OFFICER WARD I(2) KRISHNAGIRI [PAN ADBPR 5908 E ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NOS.1298 & 1299/MDS/2015 / ASSESSMENT YEARS : 2003-04 & 2004-05 SHRI A. PUGAZHENDI L/R SMT. KANCHANA NO.7A, RAMALINGA CHETTY STREET DHARMAPURI VS. THE INCOME TAX OFFICER WARD I(1) KRISHNAGIRI [PAN AFMPP 6449 P] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR , ADVOCATE /RESPONDENT BY : SHRI SASIKUMAR, JCIT / DATE OF HEARING : 25 - 02 - 2016 ! / DATE OF PRONOUNCEMENT : 18 - 0 3 - 2016 ITA NO.1006/15 ETC. :- 3 -: / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THESE APPEALS OF SIX INDEPENDENT ASSESSEES ARE DI RECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER O F INCOME-TAX (APPEALS), SALEM, FOR ASSESSMENT YEARS 2002-03, 200 3-04, 2004-05 AND 2005-06. SINCE COMMON ISSUE ARISES FOR CONSIDER ATION IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. 2. SHRI G. BASKAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEES WERE ENGAGED BY DHARMAPURI CO-OPERAT IVE TOWN BANK LTD., DHARMAPURI, FOR INSTALLATION OF COMPUTER SOF TWARE IN THE BANK. THE ASSESSEES WERE ALSO ENTRUSTED WITH THE WORK OF ANNUAL MAINTENANCE. IN THE COURSE OF CARRYING OUT ITS ACTI VITY, THE BANK FOUND THAT THERE WAS MISAPPROPRIATION OF FUNDS FROM VARIO US ACCOUNTS. THE LD. COUNSEL FURTHER SUBMITTED THAT A CRIMINAL CASE WAS ALSO REGISTERED AND THE MATTER IS PENDING ENQUIRY BEFORE THE MAGIST RATE COURT. REFERRING TO THE COPY OF THE ASSESSMENT ORDER FOR T HE ASSESSMENT YEAR 2002-03, IN I.T.A.NO.1256/MDS/2014, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS MADE A CATEGORICAL STATEMENT THAT ONLY A SUM OF ` 38 LAKHS WAS INVESTED IN HIS NAME AND HIS FAMILY ME MBERS NAME. THE LD. COUNSEL CLARIFIED THAT THE ASSESSEE IS NOT AN EMPLOYEE OF THE BANK. THE ASSESSEE WAS ENGAGED ONLY TO OPERATE THE COMPU TER SOFTWARE. ITA NO.1006/15 ETC. :- 4 -: THE LD. COUNSEL FURTHER SUBMITTED THAT THE PASSWORD FOR THE COMPUTER WAS GIVEN TO THE OFFICIALS OF THE BANK, THEREFORE, WITH CONNIVANCE OF THE OFFICIALS OF THE BANK, THE ASSESSEE HAS WITHDR AWN MONEY FROM THE BANK ACCOUNT AND USED THE SAME FOR HIS OWN PURPOSES . THEREFORE, THE MONEY WITHDRAWN FROM THE BANK WAS TAKEN AS INCOME O F THE ASSESSEE FOR VARIOUS ASSESSMENT YEARS. THE LD. COUNSEL FURT HER SUBMITTED THAT SINCE THE MATTER WAS PENDING ENQUIRY BEFORE THE COM PETENT COURT OF LAW AND IF IT WAS FOUND THAT THE ASSESSEE HAS MISA PPROPRIATED THE FUNDS FROM DHARMAPURI CO-OPERATIVE TOWN BANK LTD., THERE IS A RISK OF FORFEITING THE ACCOUNT, THEREFORE, THE ASSESSEE COULD NOT HAVE EARNED ANY INCOME AT ALL DURING THE YEAR UNDER CONSIDERATI ON. HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRM ED BY THE CIT(A) IS NOT JUSTIFIED AT ALL. 3. REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUN SEL SUBMITTED THAT THE CIT(A), AFTER REPRODUCING ALL TH E MATERIAL FACTS, FOUND THAT HE IS NOT IN AGREEMENT WITH THE ARGUMENT S OF THE ASSESSEE. ACCORDING TO THE LD. COUNSEL, THE CIT(A) BEING A FI RST APPELLATE AUTHORITY HAVING POWERS COTERMINOUS WITH THAT OF TH E ASSESSING OFFICER, OUGHT TO HAVE REAPPRECIATED THE MATERIAL A VAILABLE ON RECORD AND FIND OUT WHETHER THE ASSESSEE EARNED ANY INCOM E FOR THE YEAR UNDER CONSIDERATION OR NOT. THE CIT(A), WITHOUT CON SIDERING ANY MATERIAL FACTS, HAS SIMPLY FOUND THAT HE IS NOT IN AGREEMENT WITH THE ARGUMENTS ITA NO.1006/15 ETC. :- 5 -: OF THE ASSESSEE. WITHOUT REFERRING TO THE ADJUDIC ATION OF THE ASSESSING OFFICER, THE CIT(A) FOUND THAT AN ESTIMAT ION HAS TO BE MADE TO AN EXTENT OF COMMERCIAL EXPENSES. ACCORDINGLY, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE LD. COUNSEL FURTHER SUBMITTED THAT THE CIT(A) DOES NOT APPLY HIS MIND TO THE FACTS OF THIS CASE. THE CIT(A) IS EXPECTED TO REAPPRECIATE THE MA TERIAL AVAILABLE ON RECORD AND COME TO AN INDEPENDENT CONCLUSION RATHER THAN PLACING RELIANCE ON SOME OF THE MATERIAL. THEREFORE, ACCOR DING TO THE LD. COUNSEL, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HEARD SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSES SEE ALSO IN I.T.A.NO.1296/MDS/2015 ETC. 5. ON THE CONTRARY, SHRI SASIKUMAR, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME IN THE REGULAR COURSE. THE ASSESSING OFFICE R FOUND THAT THE ASSESSEE MISAPPROPRIATED THE FUNDS FROM DHARMAPURI CO-OPERATIVE TOWN BANK LTD., AND UTILIZED THE SAME FOR MAKING IN VESTMENT IN HIS NAME AND THE MEMBERS OF THE FAMILY. FROM THE ORDER OF THE LOWER AUTHORITY IT APPEARS THAT A CRIMINAL CASE WAS PENDI NG BEFORE THE MAGISTRATE COURT, DHARMAPURI. THE CONCERNED POLICE OFFICER WHO INVESTIGATED THE MATER FILED THE FINAL REPORT BEFOR E THE MAGISTRATE. THE ITA NO.1006/15 ETC. :- 6 -: LD. DR FURTHER SUBMITTED THAT THE ASSESSEE MISAPPR OPRIATED THE FUNDS ALONGWITH THE OFFICIALS OF THE DHARMAPURI CO-OPERAT IVE TOWN BANK LTD., AND INVESTED THE SAME IN LANDED PROPERTIES. THE A SSESSEE COULD NOT EXPLAIN THE SOURCE OF INCOME FOR MAKING THE INVESTM ENTS. THEREFORE, THE CIT(A) FOUND THAT IN THE ABSENCE OF ANY OTHER M ATERIAL, HE COULD NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AL L THE ASSESSEES ARE IN ONE WAY OR OTHER CONNECTED WITH THE MISAPPROPRIA TION OF FUNDS FROM DHARMAPURI CO-OPERATIVE TOWN BANK LTD., DHARMAPURI. A CRIMINAL CASE IS ALSO PENDING BEFORE THE MAGISTRATE COURT, DHARMAPURI IN CONNECTION WITH MISAPPROPRIATION OF FUNDS. THE ASS ESSING OFFICER, AFTER CONSIDERING THE RELEVANT FACTS OF THE CASE, F OUND THAT THE ASSESSEES WITH THE HELP OF BANK OFFICIALS MISAPPROP RIATED THE FUNDS. THE ASSESSING OFFICER FURTHER FOUND THAT THE ASSES SEE SHOULD HAVE PAID A PORTION OF THE FUNDS MISAPPROPRIATED TO THE BANK OFFICIALS. AFTER CONSIDERING THE STATUS OF THE ASSESSEE AND THE POS SIBLE EXPENDITURE FOR MAINTAINING THE FAMILY, FOUND THAT A SUM OF ` 15,51,184/- BEING 40% OF THE AMOUNT MISAPPROPRIATED WOULD HAVE BEEN S HARED BY THE ASSESSEE AMONG OTHER BANK OFFICIALS. ON APPEAL BY THE ASSESSEE, THE CIT(A), AFTER REFERRING TO THE PENDENCY OF THE CRIM INAL CASE BEFORE THE MAGISTRATE COURT AND THE ENQUIRY SAID TO BE PENDING BEFORE THE DY. ITA NO.1006/15 ETC. :- 7 -: REGISTRAR OF THE CO-OPERATIVE SOCIETIES, HAS SIMPLY STATED THAT HE IS NOT IN AGREEMENT WITH THE ARGUMENTS OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) BEING A FIRS T APPELLATE AUTHORITY HAVING POWERS COTERMINOUS WITH THAT OF THE ASSESSIN G OFFICER, HAS TO RE-APPRECIATE THE MATERIAL AVAILABLE ON RECORD AND FIND OUT WHETHER THE MONEY MISAPPROPRIATED BY THE ASSESSEE ALONGWITH OT HERS ACCRUED TO THE ASSESSEE AS INCOME OR NOT. ALL RECEIPTS OF MO NEY CANNOT BE CONSIDERED TO BE INCOME OF THE ASSESSEE. UNDER SE CTIONS 4 AND 5 OF THE INCOME-TAX ACT, 1961, THE MONEY WHICH IS RECEIV ED OR ACCRUED TO THE ASSESSEE IN WHICH THE ASSESSEE HAS AN INTERES T TO RETAIN THE SAME AS INCOME CAN ALONE BE SUBJECT MATTER OF TAXATION U NDER THE INCOME- TAX ACT. IF THE ASSESSEE MISAPPROPRIATED THE FUND S AND UTILIZED THE SAME AS ITS OWN MONEY AND THERE IS NO CHANCE OF REC OVERY FROM THE ASSESSEE, THEN THERE IS A POSSIBILITY OF CONSIDERIN G THAT AMOUNT AS INCOME OF THE ASSESSEE. THE CIT(A), WITHOUT CONSI DERING ALL THE MATERIAL FACTS, HAS SIMPLY FOUND THAT HE IS NOT IN AGREEMENT WITH THE ARGUMENTS OF THE ASSESSEE. THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT IT IS FOR THE CIT(A) TO RE-APPRECIATE THE MATERIAL AVAILABLE ON RECORD AND RECORD HIS OWN CONCLUSION AND REASONS FOR NOT AGREEING THE ARGUMENTS OF THE ASSESSEE. IN THE ABSENCE OF ANY REASONS RECORDED BY THE CIT(A) FOR NOT AGREEING WITH THE A RGUMENTS OF THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE MATTER ITA NO.1006/15 ETC. :- 8 -: NEEDS TO BE RECONSIDERED BY THE CIT(A). IN OTHER W ORDS, THE CIT(A) BEING THE FIRST APPELLATE AUTHORITY IS BOUND TO PAS S A SPEAKING ORDER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES A RE SET AIDE AND THE ENTIRE ISSUE RAISED BY THE ASSESSEE IN ALL THE APP EALS IS REMITTED BACK TO THE FILE OF THE CIT(A). THE CIT(A) SHALL RECONS IDER THE ISSUE AFRESH AND THEREAFTER DISPOSE OF THE APPEALS BY RECORDING HIS OWN REASONS WHY HE IS NOT IN AGREEMENT WITH THE ARGUMENTS OF TH E ASSESSEE. 7. WITH THE ABOVE OBSERVATIONS, ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 18 TH MARCH, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF