DCIT, CHENNAI V. Shri Jacob George, CHENNAI

ITA 1417/CHNY/2008

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3940 (ITAT-CHENNAI)
• Duration Of Justice: 9 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-07-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 24-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VANA
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Income from undisclosed sources; Tax effect; Capital receipt
• Section: 143(3); 153A; 263; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NOS.1417, 1418 & 1419/MDS/2008. / ASSESSMENT YEAR : 2001-02, 2004-05 & 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) CHENNAI 600 034. VS. SHRI. JACOB GEORGE, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. ./I.T.A. NOS.505 & 506/MDS/2015. / ASSESSMENT YEAR : 2006-07 & 2007-2008 SHRI. JACOB GEORGE, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024 VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) CHENNAI 600 034. [PAN ADRPJ 8104C ] ./I.T.A. NO.2076/MDS/2007 / ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) CHENNAI 600 034. VS. M/S. GREENFIELD TIMBER AND PLYWOODS PRIVATE LIMITED, 4, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. [ PAN AAACG 1187A ] ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 2 -: ./I.T.A. NO.1418/MDS/2010 / ASSESSMENT YEAR : 2001-02 SMT. ELIZABETH JACOB, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. [ PAN AADPE 2919D ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) CHENNAI 600 034. ./I.T.A. NO.2077/MDS/2007. / ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) CHENNAI 600 034. VS. M/S. WOOD STOCK PRIVATE LIMITED, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. ./I.T.A. NO.503/MDS/2015 / ASSESSMENT YEAR : 2003-04 M/S. WOOD STOCK PRIVATE LIMITED, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. [ PAN AAACW 0652P ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) (I/C.) CHENNAI 600 034. ./I.T.A. NO.502/MDS/2015 / ASSESSMENT YEAR : 2003-04 M/S. VANA PANA PENCIL INDUSTRIES, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. [ PAN AADFV 2917C ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) (I/C.) CHENNAI 600 034. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 3 -: ./I.T.A. NO.504/MDS/2015 / ASSESSMENT YEAR : 2003-04 M/S. ARASAN COTTAGE & MATCH INDUSTRIES, 154, RANGARAJAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. [ PAN AACFT5820N ] (APPELLANT) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1) (I/C.) CHENNAI 600 034. (RESPONDENT ) ASSESSEE BY : SHRI. G. BASKAR, ADVOCATE DEPARTMENT BY DEPARTMENT FOR VANA PANA PENCIL INDUSTRIES : : SHRI. ARUN C. BHARATH, CIT. SHRI. ASISH TRIPATHI, JCIT. /DATE OF HEARING : 11-07-2017 /DATE OF PRONOUNCEMENT : 31-07-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ALL THE ABOVE APPEALS RELATE TO CERTAIN ASSESSEES FALLING WITHIN A GROUP. ASSESSEES INVOLVED ARE SHRI. JACOB GEORGE, S MT. ELIZABETH JACOB, M/S. GREENFIELD TIMBER AND PLYWOODS PRIVATE LIMITED, M/S. WOOD STOCK PRIVATE LIMITED, M/S. VANA PANA PENCIL I NDUSTRIES AND M/S. ARASAN COTTAGE & MATCH INDUSTRIES. OUT OF THESE IT A NOS.1417, 1418 & 1419/MDS/2008 ARE APPEALS OF THE REVENUE DIRECTED AGAINST ORDERS ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 4 -: OF LD. CIT(A)-II, CHENNAI DATED 28.03.2008 FOR ASS ESSMENT YEARS 2001-02, 2004-05 AND 2005-06, RELATING TO THE ASSES SEE SHRI. JACOB GEORGE. ITA NOS. 505 & 506/15 ARE APPEALS FILED BY SHRI. JACOB GEORGE FOR ASSESSMENT YEARS 2006-07 AND 2007-08. APPEAL NO .1418/2010 IS FILED BY THE ASSESSEE SMT. ELIZABETH JACOB AND IS DIRECTED AGAINST AN ORDER PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) FOR ASSESSMENT YEAR 2001-02. APPEAL NOS.502/15, 503 /15 AND 504/15 ARE APPEALS OF M/S. VANA PANA PENCIL INDUSTRIES, M/ S. WOOD STOCK P. LTD AND M/S. ARASAN COTTAGE & MATCH INDUSTRIES RES PECTIVELY DIRECTED AGAINST ORDERS LEVYING PENALTY U/S.271(1) (C) OF TH E ACT FOR ASSESSMENT YEAR 2003-04 WHICH WAS CONFIRMED BY THE LD. COMMISS IONER OF INCOME TAX (APPEALS). APART FROM THIS, THERE ARE APPEALS FILED BY THE DEPARTMENT IN THE CASE OF THE CASE OF M/S. GREENFIE LD TIMBER AND PLYWOODS PVT LTD NUMBERED AS 2076/MDS/2007 AND M/S . WOOD STOCK P. LTD NUMBERED AS 2077/MDS/2007 BOTH FOR ASSESSM ENT YEAR 2005- 06. 2. LD. COUNSEL FOR THE ASSESSEES AT THE OUTSET SUBMITT ED THAT DEPARTMENT APPEALS IN THE CASE OF SHRI. JACOB GEORG E, FOR ASSESSMENT YEARS 2001-02 AND 2004-05, AS ALSO APPEAL OF THE RE VENUE IN THE CASE OF M/S. WOOD STOCK P. LTD FOR ASSESSMENT YEAR 2005- 06 WERE NOT ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 5 -: MAINTAINABLE SINCE TAX EFFECT WAS BELOW RS. 10,00,0 00/- IN EACH OF THESE CASES. 3. LD. DEPARTMENTAL REPRESENTATIVE FAIRLY AGREED THAT THE TAX EFFECT IN RESPECT OF THESE ASSESSEES FOR ASSESSMENT YEARS 2001-02, WAS BELOW THE LIMITS LAID DOWN IN CBDT CIRCULAR NO.21/2 015, DATED 10 TH DECEMBER, 2015. 4. ACCORDINGLY, APPEALS OF THE REVENUE IN ITA NOS.1417/MDS/2008, 1418/MDS/2008 AND 2077/MDS/2007 ARE DISMISSED. 5. NOW, WE TAKE UP DEPARTMENT APPEAL IN ITA NO.1419/MDS/2008 OF SHRI. JACOB GEORGE FOR ASSESSM ENT YEAR 2005- 06 FOR ADJUDICATION. 6. FACTS CAPTURED IN THE ASSESSMENT ORDER OF SHRI. JA COB GEROGE FOR THE IMPUGNED ASSESSMENT YEAR, ARE RELEVA NT IN THE APPEAL FILED BY THE DEPARTMENT IN THE CASE OF M/S. GREEN FIELD TIMBER AND PLYWOODS PVT. LTD ALSO. ASSESSEE WHO IS THE DIRECT OR OF M/S. GREEN FIELD TIMBER AND PLYWOODS PVT. LTD AND M/S. WOOD ST OCK P. LTD HAD FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESS MENT YEAR DISCLOSING INCOME OF RS.2,22,567/-. THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE ON 15.07.2004. DURING THE COURSE OF SEARC H MATERIAL ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 6 -: NO.ANN/RK/LS/S WAS FOUND FROM THE RESIDENTIAL PREMI SES OF THE ASSESSEE WHICH GAVE INFORMATION ABOUT THE SALE OF 215 CENTS OF LAND AT VARIOUS SURVEY NUMBERS. ASSESSEE WAS QUESTIONED ON THIS. HE CONFIRMED THAT THE SEIZED SHEET WAS WRITTEN IN HIS OWN HANDWRITING. ACCORDING TO HIM, THE NOTINGS IN THE SAID SHEET REP RESENTED PAYMENTS RECEIVED AND TO BE RECEIVED FROM ONE SHRI. SHANMUGA DURAI FOR SALE OF 215 CENTS PROPERTY AT MADHAVARAM. AS PER THE ASSES SEE THE AGREED PRICE WAS RS.2.10 CRORES, OUT OF WHICH RS.91,00,00 0/- WAS RECEIVED UPTO DATE OF THE SEARCH. ASSESSEE CONFIRMED RS.40, 00,000/- WAS RECEIVED IN CHEQUE AND RS.51,00,000/- WAS RECEIVED IN CASH. THE BALANCE RS.1,19,00,000/- AS PER THE ASSESSEE WAS STILL TO BE RECEIVED FROM SHRI. SHANMUGADURAI. CHEQUES WERE ISSUED BY SHRI. SHANMUGADURAI IN THE NAME OF M/S. GREEN FIELD TIMBE R AND PLY WOODS PVT. LTD AND M/S. WOOD STOCK P. LTD. ASSESSEE WAS POWER OF ATTORNEY HOLDER OF M/S. GREEN FIELD TIMBER AND PLY WOODS PVT . LTD AND ALSO REPRESENTED ONE SHRI. C. STANLEY WHO WAS HIS MAN AGER AND WHOSE NAME WAS ALSO MENTIONED IN THE SEIZED DOCUMENT. 7. THE DEPARTMENT FOR HAVING A BETTER CLARITY ON THE TRANSACTIONS INVOLVED EXAMINED SHRI. SHANMUGADURAI ON 15.07.2004. SHRI. SHANMUGADURAI CONFIRMED HAVING ENTERED INTO A N AGREEMENT WITH ASSESSEE. ACCORDING TO HIM, HE WAS STILL TO TAKE POSSESSION OF THE LAND AND HAD IN ADDITION TO THE AMOUNT MENTIONED I N THE AGREEMENT, ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 7 -: SPENT A SUM OF RS.2,00,000/- FOR EARTH FILLING IN T HE SUBJECT LAND. HE ALSO CONFIRMED THAT TOTAL AMOUNT PAID BY HIM CAME TO RS.91,00,000/- OF WHICH RS.40,00,000/- WAS PAID IN CHEQUE AND RS .51,00,000/- IN CASH. SHRI. SHANMUGADURAI ALSO STATED THAT THE CAS H PAYMENT OF RS.51,00,000/- WAS NOT REFLECTED IN HIS BOOKS OF AC COUNTS. LD. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAD RECEIVED RS.51,00,000/- WHICH WAS NOT REFLECTED IN HIS BOOKS NOR IN THE BOOKS OF THE TWO COMPANIES, VIZ M/S. GREENFIELD TIMBER A ND PLYWOODS PVT LTD AND M/S. WOOD STOCK PRIVATE LIMITED. ACCORDING TO LD. ASSESSING OFFICER, NOT ONLY THE SUM OF RS.51,00,000/- BUT A LSO THE EARTH FILLING EXPENDITURE INCURRED BY SHRI. SHANMUGADURAI WAS A LSO NOT RECORDED IN THE BOOKS OF ACCOUNTS. HE HELD THAT ASSESSEE H AD ENJOYED THE RECEIPT OF RS.53,00,000/-, THOUGH THE CONVEYANCE O F THE PROPERTY WAS YET TO BE GIVEN IN THE NAME OF SHRI. SHANMUGADURAI. 8. OUT OF THE 2.15 ACRES OF LAND INVOLVED IN THE DISPU TE, 19 CENTS OF THE LAND WAS HELD BY ASSESSEES MANAGER SHRI. C. STANLEY, 119 CENTS WAS IN THE NAME OF M/S. GREEN FIELD TIM BER AND PLY WOODS PVT. LTD AND 77 CENTS OF LAND IN THE NAME OF M/S. W OOD STOCK P. LTD. THE 19 CENTS HELD BY SHRI. C. STANLEY WAS CONSIDERE D BY THE LD. ASSESSING OFFICER AS OWNED BY THE ASSESSEE HIMSELF . SINCE ASSESSEE HAD RECEIVED THE SUM OF RS.51,00,000/- AND HAD ALSO BENEFITED FROM THE EARTH FILLING EXPENDITURE OF RS.2,00,000/- INCU RRED FOR DEVELOPMENT ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 8 -: OF THE PROPERTY, LD. ASSESSING OFFICER CONSIDERED T HE SUM OF RS..53,00,000/- AS UNACCOUNTED INCOME IN THE HANDS OF THE ASSESSEE. HE ALSO MADE PROTECTIVE ADDITIONS IN THE HANDS M/S . GREEN FIELD TIMBER AND PLY WOODS PVT. LTD AND M/S. WOOD STOCK P . LTD, IN THE RATIO OF THEIR RESPECTIVE HOLDINGS 9. APART FROM THE ABOVE, AN ADDITION OF RS.1,87,493/- CLAIMED AS EXPENDITURE INCURRED TOWARDS EARTH FILLING, WAS ALSO MADE. AS PER THE LD. ASSESSING OFFICER THE TOTAL EXPENDITURE IN CURRED FOR EARTH FILLING CAME TO RS.3,87,493/-. LD. AO REJECTED THE EXPLANA TION GIVEN BY THE ASSESSEE THAT SUCH EXPENDITURE WAS MET BY HIM USIN G THE ADVANCE RECEIVED FROM SHRI. SHANMUGADURAI. 10. LD. ASSESSING OFFICER ALSO MADE AN ADDITION OF RS. 45,992/- FOR A CREDIT IN ASSESSEES BANK ACCOUNT WHICH WAS N OT EXPLAINED AND RS.6,30,000/- DISBELIEVING THE LOAN REPAYMENT TO ON E SHRI. M.V. ABRAHAM. HE ALSO MADE AN ADDITION FOR THE VALUE OF 1347 GRAMS OF JEWELLERY FOUND AT THE TIME OF SEARCH, REJECTING A SSESSEES CONTENTION THAT THESE WERE OUT OF MARRIAGE GIFTS AND PARTLY BE LONGED TO HIS MOTHER, DAUGHTERS AND WIFE. 11. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMM ISSIONER OF ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 9 -: INCOME TAX (APPEALS), WITH REGARD TO THE ADDITION MADE FOR ADVANCE RECEIVED ON SALE OF PROPERTY GAVE A FINDING THAT T HE PROPERTY FOR WHICH SUM OF ADVANCE WAS RECEIVED WAS HELD BY M/S. GREEN FIELD TIMBER AND PLYWOODS P. LTD AND M/S. WOOD STOCK PVT. LTD. ACC ORDING TO HIM, SINCE TRANSACTIONS RELATED TO THE PROPERTY HELD BY TWO COMPANIES, NO ADDITION COULD HAVE MADE IN THE HANDS OF THE ASSESS EE. SIMILARLY WITH REGARD TO THE ADDITION FOR LAND FILLING EXPENDITU RE ALSO THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIE W THAT THE PROPERTY BEING IN THE NAME OF M/S. WOOD STOCK PVT . LTD, COULD NOT BE CONSIDERED AS ASSESSEES INCOME. IN SO FAR AS ADDI TION OF RS.6,30,000/- DISBELIEVING LOAN REPAYMENT CLAIMED T O HAVE BEEN MADE TO SHRI. M.V. ABRAHAM, LD. COMMISSIONER OF INCOME T AX (APPEALS) HELD THAT CASH FLOW STATEMENT FILED BY THE ASSESSEE EVID ENCED AVAILABILITY OF ADEQUATE FUNDS FOR REPAYING SHRI. M.V. ABRAHAM. FOR THE ADDITION MADE AGAINST JEWELLERY FOUND DURING THE TIME OF SEA RCH, LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE OPI NION THAT ASSESSEES HOUSEHOLD HAD TWO MALE MEMBERS AND FOUR LADY MEMBERS. ACCORDING TO HIM, HOLDING OF 2347 GRAMS OF JEWELLE RY COULD NOT BE DEEMED AS UNREASONABLE. HE THUS, DELETED THE ADDIT IONS MADE ON ALL THE ITEMS MENTIONED ABOVE. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 10 -: 12. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS OPPOSED TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N OF RS.45,992/- MADE TOWARDS CASH DEPOSIT IN BANK ALC ON THE GROUND THAT IT IS ONLY INTEREST FROM FDR ALC ALREADY OFFERED AND ASSESSED. 2.1 THE LEARNED CIT(A)OUGHT TO HAVE APPRECIATED THA T IN THE CASE OF CREDIT OF INTEREST ON FIXED DEPOSITS, T HERE CANNOT BE ANY DEPOSIT BY CASH. 2.2 THE LEARNED CIT(A) FAILED TO OBSERVE THAT THE ASSESSEE'S DAUGHTER HAD NO INDEPENDENT SOURCE OF INCOME AND HENCE THE SAME WAS RIGHTLY ASSESSED IN T HE HANDS OF THE ASSESSEE. 3. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N OF RS.53 LAKHS MADE TOWARDS ON MONEY RECEIVED FROM SRLSHANMUGADURAI ON THE GROUND THAT THE PROPERTY IS OWNED BY M/S.WOOD STOCK PVT LTD AND M/S.GREEN FIELD TIMBER & PLYWOODS (P) LTD., 3.1 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE IS THE MAIN PERSON CONTROLLING THE AFFAIRS OF THE COMPANIES M/S.GREEN FIELD TIMBER AND PLYWOODS PVT L TD AND M/S.WOODSTOCK PVT LTD AND THAT SINCE THE REGIST RATION OF THE PROPERTY HAS NOT BEEN MADE, THE ASSESSING OF FICER CONSIDERED THE UNACCOUNTED RECEIPT IN THE HANDS OF THE ASSESSEE. 3.2 THE LEARNED CIT(A) HAS FAILED TO NOTE THAT THE ASSESSING OFFICER HAS ONLY ASSESSED THE UNACCOUNTED ON MONEY PAYMENT IN THIS TRANSACTION RECEIVED BY THE ASSESSEE THROUGH HIS NEGOTIATIONS WITH SRI.S.SHANMUGADURAI WHO ALSO CONFIRMED THESE FACTS. 4. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N OF RS.6,30,OOO/- MADE ON THE REPAYMENT OF LOAN RECEIVED FROM SRI.M.V. ABRAHAM ON THE GROUND THAT THE CASH FLOW C HART SUBMITTED SHOWED ADEQUATE FUNDS TO EXPLAIN THE REPAYMENT. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 11 -: 4.1 THE CIT(A) OUGHT TO HAVE NOTED THAT THE ASSESSE E HIMSELF HAS SUBMITTED IN THE STATEMENT RECORDED ON 10.8.2004 THAT THE REPAYMENT IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. 4.2 THE LEARNED CIT(A) OUGHT TO HAVE NOTED THAT THE CASH FLOW STATEMENT PREPARED AND FILED AFTER THE SEARCH HAS NOT SANCTITY ESPECIALLY WHEN NO EVIDENCE FOR THE ACCOUN TING OF THE REPAYMENT FOUND DURING THE SEARCH. 5. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N OF RS 8,79,860/- MADE TOWARDS THE UNEXPLAINED INVESTMENT IN JEWELLERY OF 1347 GRAMS. 5.1 THE LEARNED CIT(A) WHILE WORKING OUT THE REASON ABLE QUANTUM OF POSSESSION OF JEWELLERY BASED ON THE SOCIO ECONOMIC STATUS OF THE ASSESSEE'S FAMILY, HAS FAILED TO NOTE THAT THE CBDT CIRCULAR IN THIS REGARD IS MEANT FOR EFFECTING SEIZURE OF JEWELLERY AND NOT FOR ASSESSING THE UNACCOUNTED JEWELLERY. 6. THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,87,493/- BEING UNEXPLAINED EXPENDITURE TOWARDS EARTH FILLING OF TH E PROPERTY AT MADHAVARAM ON THE GROUND THAT THE PROPERTY BELONGED TO M/S.WOODSTOCK PVT LTD AND M/S.GREEN FIE LD TIMBER AND PLYWOOD PVT ITD. 6.1 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE A DDITION WAS MADE FOR WANT OF EXPLANATION AND RELEVANT MATERIALS AND THE ASSESSEE BEING THE MAIN PERSON CONTROLLING THE AFFAIRS OF THE SAID COMPANY. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER RESTORED. 13. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT THE SUM OF RS.45,992/- DEPOSITED IN THE BANK ACCOUNT OF THE AS SESSEE WAS ERRONEOUSLY CONSIDERED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS) AS FIXED DEPOSIT INTEREST. ACCORDING TO HIM, THE AMOUNT WAS CASH DEPOSIT, FOR WHICH ASSESSEE COULD NOT GIVE ANY EXPLANATION. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 12 -: 14. VIZ-A-VIZ THE ADDITION MADE FOR MONEY RECEIVED FROM SHRI. SHANMUGADURAI, LD. COUNSEL SUBMITTED THAT ASSESSEE HAD RECEIVED UNACCOUNTED CONSIDERATION IN EXCESS OF WHAT WAS EVE NTUALLY MENTIONED IN THE CONVEYANCE DEED. ACCORDING TO HI M, THE ADDITION WAS BASED ON A SEIZED MATERIAL FOUND FROM THE OFFIC E PREMISES OF THE ASSESSEE AND IN ANSWER TO QUESTION NO.5, ASSESSEE H AD MENTIONED THAT THE LOOSE SHEETS WERE IN HIS OWN HANDWRITING. AC CORDING TO HIM HAD THERE WAS ACCOUNTED RS.86,00,000/- ONLY OUT OF THE TOTAL AGREED CONSIDERATION OF RS.2,10,00,000/-. AS PER THE LD. D R BALANCE OF RS.1,24,00,000/- WAS UNACCOUNTED. FURTHER AS PER L D. DEPARTMENTAL REPRESENTATIVE, ASSESSEE HAD ACCEPTED RECEIPT OF U NACCOUNTED CONSIDERATION OF RS.51,00,000/-. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) HAD WHILE ADJUDICATING THE APPEALS OF THE TWO COMPANIES IN WHOSE HANDS, PROTECTIVE ASSESSMENTS WERE MADE, DELETED SUCH ADDI TIONS CONSIDERING THE RECEIPT AS CAPITAL IN NATURE. AS PER LD. DEPA RTMENTAL REPRESENTATIVE ONCE IT WAS ACCEPTED THAT THERE WAS UNACCOUNTED RECEIPT OF RS.51,00,000/-, IT HAD TO BE ASSESSED AS UNACCOUNTED INCOME, EITHER IN THE HANDS OF THE ASSESSEE OR IN THE HANDS OF TWO COMPANIES WHICH HELD THE LAND. AS PER THE LD. DR, THE ASSESSEE ALSO ENJOYED THE BENEFIT OF LAND FILLING EXPENSES OF RS. 2,00,000/- DONE BY SHRI. SHANMUGADURAI WHICH THE LATTER HAD CONFIRMED. ACCORDING TO ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 13 -: HIM, LD. COMMISSIONER OF INCOME TAX (APPEALS) FELL IN ERROR IN DELETING THE ADDITION OF RS.53,00,000/- BOTH IN THE HANDS O F THE ASSESSEE AS WELL AS IN THE HANDS OF TWO COMPANIES. LD. DEPARTM ENTAL REPRESENTATIVE POINTED OUT THAT ASSESSEE WAS THE P ERSON WHO WAS CONTROLLING THE AFFAIRS OF TWO COMPANIES. TO A QUES TION FROM THE BENCH WHETHER HE WAS SEEKING LIFTING OF THE CORPORATE VEI L OF THE TWO COMPANIES, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT HE WAS NOT ARGUING ON THOSE LINES. ACCORDING TO HIM, UNAC COUNTED RECEIPTS HAD TO BE CONSIDERED AS INCOME EITHER IN THE HANDS OF THE ASSESSEE OR IN THE HANDS OF TWO COMPANIES. 15. VIZ-A-VIZ THE ADDITION OF RS.6,30,000/- BEING REPA YMENT OF A LOAN CLAIMED TO HAVE EARLIER TAKEN FROM ONE SHRI. M.V. ABRAHAM, WHICH WAS DELETED BY THE LD. CIT(A), SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT THERE WAS NO SOURCE FOR THE ASSESSEE TO MAKE SUCH PAYMENT. AS PER LD. DEPARTME NTAL REPRESENTATIVE SUCH REPAYMENT WAS NOT REFLECTED IN THE BOOKS ALSO. ACCORDING TO HIM, LD. COMMISSIONER OF INCOME TAX (A PPEALS) HAD ERRONEOUSLY MENTIONED THAT A CASH FLOW STATEMENT WA S FILED BY THE ASSESSEE BEFORE THE LD. ASSESSING OFFICER. AS PR TH E LD. DR, THE ADDITION WAS UNJUSTLY DELETED BY THE LD. COMMISSIONER OF INC OME TAX (APPEALS). ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 14 -: 16. COMING TO THE ADDITION OF RS.8,79,860/- FOR JEWELL ERY OF 1347 GRAMS, DELETED BY THE LD. COMMISSIONER OF INCO ME TAX (APPEALS), SUBMISSION OF THE LD. DEPARTMENTAL REPRE SENTATIVE WAS THAT CBDT INSTRUCTION NO.1916, DATED 11 TH MAY, 1994 ONLY PRESCRIBED MAXIMUM QUANTUM OF GOLD JEWELLERY THAT WAS EXEMPT F ROM SEIZURE IN A SEARCH. ACCORDING TO HIM, THIS CIRCULAR COULD NO T BE CITED AS A REASON FOR DELETING AN ADDITION MADE FOR WANT OF EXPLANAT ION FOR THE SOURCE OF THE JEWELLERY. AS PER LD. DEPARTMENTAL REPRESEN TATIVE ASSESSEE HAD NOT GIVEN ANY EXPLANATION FOR THE JEWELLERY FOU ND AT THE TIME OF SEARCH. 17. COMING TO THE LAST ADDITION OF RS.1,87,493/- INCU RRED FOR EARTH FILLING WHICH WAS ALSO DELETED BY THE LD. COM MISSIONER OF INCOME TAX (APPEALS), LD. DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT THERE WAS NO SOURCE FOR SUCH EXPENDITURE IN THE HANDS OF THE ASSESSEE. 18. IN REPLY, THE LD. AUTHORISED REPRESENTATIVE FAIRLY ADMITTED THAT ASSESSEE HAD NO SOURCE FOR RS.45,992/- DEPOSIT ED IN HIS BANK ACCOUNT. AS PER LD. AUTHORISED REPRESENTATIVE THOU GH THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD CONSIDERE D IT AS INTEREST, RECEIVED BY THE ASSESSEE, HE HAD NO EVIDENCE TO PRO DUCE IN THIS REGARD. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 15 -: 19. VIZ-A-VIZ ADDITION MADE FOR ADVANCE RECEIVED FROM SHRI. SHANMUGADURAI, LD. AUTHORISED REPRESENTATIVE RELYIN G ON PAPER BOOK PAGE NO.1 SUBMITTED THAT 19 CENTS OF LAND WHICH WAS SOLD BY SHRI. C. STANLEY WAS ACQUIRED BY HIM ON 04.04.1996. AS PER LD. AUTHORISED REPRESENTATIVE THIS WAS SOLD TO SHRI. SHANMUGADURAI , THROUGH A SALE DEED EXECUTED ON 23 RD JUNE, 2005. AGAIN, AS PER LD. AUTHORISED REPRESENTATIVE, THE LAND HELD BY M/S. WOOD STOCK PR IVATE LIMITED WAS SOLD BY SHRI. SHANMUGADURAI, AS THE POWER AGENT OF THE SAID COMPANY ON 27 TH DAY OF JULY, 2005. ACCORDING TO HIM, THE SALE WAS EFFECTED BY SHRI. SHANMUGADURAI IN HIS CAPACITY AS THE POWER O F ATTORNEY HOLDER OF M/S. WOOD STOCK PRIVATE LIMITED AND SUCH POWER OF ATTORNEY WAS EXECUTED ONLY ON 29.06.2005. FURTHER, AS PER LD. A UTHORISED REPRESENTATIVE THE SALE OF THE LAND HELD BY M/S. GR EEN FIELD TIMBER AND PLY WOODS P. LTD, WAS ALSO EFFECTED ON 27.07.20 05 BASED ON A POWER OF ATTORNEY EXECUTED BY THE SAID COMPANY IN F AVOUR OF SHRI. SHANMUGADURAI ON 29.06.2005. THUS, ACCORDING TO HI M, IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR THERE WAS NO SALE EFFECTED BY THE TWO COMPANIES OR SHRI. C. STAN LEY OR THE ASSESSEE. EVEN THE POWER OF ATTORNEYS WERE EXECUTED AFTER TH E RELEVANT PREVIOUS YEAR. THUS, ACCORDING TO HIM, THE AMOUNT S RECEIVED AS ADVANCES, IRRESPECTIVE OF WHO RECEIVED IT, WAS NO T INCOME. AS PER THE LD. AUTHORISED REPRESENTATIVE, POSSESSION OF TH E PROPERTY ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 16 -: REMAINED WITH THE COMPANIES AND SHRI. C. STANLEY AL L THROUGH THE RELEVANT PREVIOUS YEAR. ASSESSEE, AS PER LD. AUTHOR ISED REPRESENTATIVE, COULD NOT BE SADDLED WITH A TAX ON ADVANCES RECEI VED BY HIM ON BEHALF OF TWO COMPANIES. 20. IN SO FAR AS REPAYMENT OF RS.6,30,000/- WAS CONCERN ED, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE HAD EARLIER RECEIVED LOAN FROM SHRI. M.V. ABRAHAM ON BEHALF OF TWO COMPANIES IN WHICH HE WAS THE DIRECTOR. ACCORDING TO THE LD. AU THORISED REPRESENTATIVE, ASSESSEE HAD USED THE MONEY WITH HIM FOR EFFECTING THE REPAYMENT OF LOANS. THEREFORE AS PER LD. AUTHOR ISED REPRESENTATIVE IT COULD NOT BE CONSIDERED AS PAID OUT OF ANY UNEXP LAINED INCOME. 21. AS FOR THE ADDITION OF RS.1,87,493/- FOR EARTH FILI NG EXPENDITURE, CONTENTION OF THE LD. AUTHORISED REPRE SENTATIVE WAS THAT THIS WAS MET OUT OF ADVANCE RECEIVED FROM SHRI. S HANMUGADURAI. 22. COMING TO THE ADDITION MADE FOR JEWELLERY, LD. AUT HORISED REPRESENTATIVE RELYING ON CBDT INSTRUCTION NO.1916( SUPRA), SUBMITTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AD CONSIDERED THE SOCIO- ECONOMIC BACKGROUND OF THE ASSESSEE AND HIS FAMILY WHILE GIVING RELIEF AND THERE WAS NO REASON FOR DISTURBIN G IT. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 17 -: 23. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS ADDIT ION OF RS.45,992/- MADE FOR UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT I S CONCERNED, LD. AUTHORISED REPRESENTATIVE FAIRLY AGREED THAT IT WAS CASH DEPOSIT AND NOT CREDIT OF ANY FIXED DEPOSIT INTEREST. WE ARE T HEREFORE OF THE OPINION THAT THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) FELL IN ERROR IN DELETING SUCH ADDITION. THE ADDITION IS RE INSTATED . GROUND NO.2 OF THE REVENUE IS ALLOWED. 24. COMING TO THE ISSUE OF MONEY RECEIVED FROM SHRI. SHANMUGADURAI WHICH WAS CONSIDERED AS UNEXPLAINED INCOME IN THE HANDS OF THE ASSESSEE, THE SOURCE OF THE SUM WAS NO T DISBELIEVED BY THE REVENUE. ASSESSEE HAD ALSO ACCEPTED THAT THE MO NEY HAD COME FROM SHRI. SHANMUGADURAI. SHRI.SHANMUGADURAI HAD CO NFIRMED THE PAYMENT OF SUCH MONEY. IT IS ALSO AN ADMITTED POS ITION THAT THE LAND AGAINST WHICH THE ADVANCE WAS RECEIVED BY THE ASSES SEE WERE HELD NOT IN ASSESSEES NAME BUT IN THE NAME OF M/S. GREEN F IELD TIMBER AND PLYWOODS P. LTD AND M/S. WOOD STOCK P. LTD, APART F ROM A SMALL HOLDING OF 19 CENTS IN THE NAME OF SHRI. C. STANLE Y WHO WAS THE MANAGER OF THE ASSESSEE. LD. DEPARTMENTAL REPRESEN TATIVE DID NOT SEEK LIFTING OF THE CORPORATE VEIL OF THESE COMPA NIES. WHEN CONSIDERATION IS RECEIVED FOR SALE OF LAND HELD BY TWO COMPANIES, ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 18 -: IRRESPECTIVE OF THE FACT WHETHER IT WAS ON-MONEY OR NOT, IN OUR OPINION THE ADDITION, IF AT ALL WAS TO BE MADE, COULD ONL Y BE IN THE HANDS OF THE CONCERNED COMPANIES. ASSESSEE MIGHT HAVE HELD THE MONEY WITH HIM, IN HIS CAPACITY OF DIRECTOR OF THESE COMPANIE S, SINCE COMPANIES WERE JURISTIC PERSONS WHICH COULD ACT ONLY THROUGH ITS DIRECTORS. IN THE STATEMENT RECORDED FROM THE ASSESSEE DURING THE C OURSE OF SEARCH, HE HAD SPECIFICALLY MENTIONED THAT THE LAND WAS IN THE NAME OF TWO COMPANIES. THAT APART, DURING THE RELEVANT PREVIO US YEAR THERE WAS NO TRANSACTION RELATING TO THE LAND. THE TWO COMPAN IES HAD EXECUTED POWER OF ATTORNEY, GIVING THE POWER TO SHRI. SHANMU GADURAI TO SELL THE LAND ONLY ON 29.06.2005. THE SALE EFFECTED BY SHRI . C. STANLEY WAS ON 23 RD JUNE, 2005. THEREFORE, THE AMOUNTS RECEIVED PRIO R TO THE DATE OF SALE/ EXECUTION OF PAO REMAINED ADVANCE IN THE HAN DS OF THE RECIPIENTS AND COULD NOT BE CONSIDERED AS INCOME. THERE IS NO CASE FOR THE REVENUE THAT POSSESSION OF THE LAND WAS HAN DED OVER TO SHRI. SHANMUGADURAI DURING THE COURSE OF THE RELEVANT PR EVIOUS YEAR. THUS NOT ONLY THE LAND DID NOT BELONG TO THE ASSESSEE, B UT EXECUTION OF THE POWER OF ATTORNEY AS WELL AS THE SALE OF THE LAND H APPENED AFTER THE RELEVANT PREVIOUS YEAR. THE AMOUNT RECEIVED DURING THE RELEVANT PREVIOUS YEAR AS ADVANCE FROM THE PROSPECTIVE BUYER COULD NOT BE CONSIDERED AS INCOME IN THE HANDS OF THE ASSESSEE O R THE COMPANIES DURING THE IMPUGNED ASSESSMENT YEAR. THE ADDITION WAS IN OUR ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 19 -: OPINION RIGHTLY DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). GROUND NO.3 OF THE REVENUE IS DISMISSED. 25. COMING TO THE REPAYMENT OF LOAN OF RS.6,30,000/- CONSIDERED AS UNEXPLAINED BY THE LD. ASSESSING OFFI CER, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A F INDING THAT ASSESSEE HAD SUFFICIENT CASH, BASED ON A CASH FLOW STATEMENT FURNISHED BY THE ASSESSEE. HOWEVER, LD. DEPARTMENTAL REPRESEN TATIVE HAS VEHEMENTLY ARGUED THAT THE CASH FLOW STATEMENT WAS NEVER BEFORE LD. ASSESSING OFFICER. CONSIDERING THE FACTS AND CIRCU MSTANCES, WE ARE OF THE OPINION THAT MATTER CAN BE CONSIDERED AFRESH BY THE LD. ASSESSING OFFICER. IF THE ASSESSEE IS ABLE TO PROVIDE CASH FLOW STATEMENT AND PROVE THAT HE HAD SUFFICIENT CASH FOR EFFECTING THE REPAYMENT OF LOAN TO SHRI. M.V. ABRAHAM, THE ADDITION CANNOT BE MADE. WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND REMIT IT BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. GROUND NO.4 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 26. COMING TO THE DELETION OF AN ADDITION OF RS.8,79,86 0/- MADE AGAINST 1347 GRAMS JEWELLERY HELD BY THE ASSESSEE, WHAT WE FIND IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD C ONSIDERED THE ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 20 -: HOLDING OF ASSESSEES FAMILY AS UNDER WHILE GIVING RELIEF TO THE ASSESSEE. SHRI. JACOB GEORGE 100 GMS SHRI. GEORGE JACOB 100 GMS SMT. ELIZABETH JACOB 500 GMS SMT. THANGAMMA GEORGE 500 GMS SMT. RESHMA JACOB 500 GMS MS. LEEMA JACOB 250 GMS. --------------- 1950 GMS --------------- THERE IS NO CASE FOR THE REVENUE THAT ANY OF THE AB OVE PERSONS WERE NOT FAMILY MEMBERS OF THE ASSESSEE. CONSIDERING CBD T INSTRUCTION NO.1916 (SUPRA), WE ARE OF THE OPINION THAT RELIEF GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS FAIR. WE D O NOT FIND ANY REASON TO INTERFERE WITH THE DIRECTIONS GIVEN BY TH E LD. COMMISSIONER OF INCOME TAX (APPEALS). GROUND NO. 5 OF THE REVENUE I S DISMISSED. 27. COMING TO THE ADDITION OF RS.1,87,493/- MADE BY THE LD. ASSESSING OFFICER, CONSIDERING THE EXPENDITURE IN CURRED FOR EARTH FILLING OF THE PROPERTY AS UNEXPLAINED, WE FIND T HAT THE LD. ASSESSING OFFICER HIMSELF HAD ACCEPTED THE LAND AS BELONGIN G TO M/S. WOOD STOCK PVT.LTD. HENCE, EXPENDITURE INCURRED FOR FIL LING UP THE SAID PROPERTY EVEN IF IT WAS UNEXPLAINED, COULD HAVE BEE N CONSIDERED ONLY IN THE HANDS OF THE SAID COMPANY AND NOT IN THE HAN DS OF THE ASSESSEE. WE ARE THEREFORE OF THE OPINION THAT THE SAID ADDITION WAS ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 21 -: RIGHTLY DELETED BY THE LD. COMMISSIONER OF INCOME T AX (APPEALS). GROUND NO.6 OF THE REVENUE IS DISMISSED. 28. AS A RESULT OF OUR DISCUSSION, WE ALLOW GROUND NO.2 OF THE REVENUE, DISMISS ITS GROUNDS 3, 5 & 6 AND ALLOW IT S GROUND NO.4 FOR STATISTICAL PURPOSE. GROUND NOS. 1 & 7 ARE GENERAL IN NATURE NEEDING NO SPECIFIC ADJUDICATION. APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 29. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE SHRI. JA COB GEORGE FOR ASSESSMENT YEAR 2006-007 NUMBERED AS IT A NO.505/MDS/2015. THE ONLY ADDITION ON WHICH ASSESS EE IS AGGRIEVED IS ON A SUM OF RS.1,80,000/- CONSIDERED AS PERQUIS ITE VALUE OF FURNISHED ACCOMMODATION. 30. ASSESSEE BEING THE DIRECTOR OF M/S. WOOD STOCK PVT. LTD WAS PROVIDED WITH FURNISHED RESIDENTIAL ACCOMMODATION. LD. ASSESSING OFFICER HAD CONSIDERED ITS PERQUISITE VALUE AT RS.1 ,80,000/-. THE ADDITION MADE IN THIS REGARD BY THE LD. ASSESSING O FFICER WAS CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 31. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE ASSAIL ING THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) SUBMITTED THAT THE VALUATION OF PERQUISITE IN THE NATURE OF A FUR NISHED ACCOMMODATION SHOULD HAVE BEEN DONE AS PER RULE 3 O F INCOME TAX ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 22 -: RULES, 1962. ACCORDING TO HIM, ADDITION OF RS.1,80 ,000/- EXCEEDED THE AMOUNT PRESCRIBED AS PER THE SAID RULES. 32. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD FO LLOWED HIS OWN ORDER FOR THE EARLIER YEAR WHICH WAS NEVER CHALLENG ED BY THE ASSESSEE. ACCORDING TO HIM, ASSESSEE COULD NOT NOW SAY THAT T HE PERQUISITE WAS OVERVALUED. 33. AD LIBITUM REPLY OF THE LD. AUTHORISED REPRESENTATI VE WAS THAT RULE ITSELF HAD COME INTO EFFECT FROM 01.04. 2005. ACCORDING TO HIM, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAVE FOLLOWED HIS OWN ORDER FOR AN EARLIER YEAR DISREGA RDING SUCH RULE. 34. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. VALUE OF RESIDENT IAL ACCOMMODATION PROVIDED BY THE EMPLOYER HAS TO BE DETERMINED AS P ER RULE 3 (1) OF INCOME TAX RULES. THE SAID RULE AS IT STOOD ON 01.0 4.2005 GAVE THERE UNDER A TABLE WHICH IS REPRODUCED HEREUNDER:- SL. NO CIRCUMSTANCES WHERE ACCOMMODATION IS UNFURNISHED WHERE ACCOMMODATION IS FURNISHED 1 2 3 4 (1) WHERE THE ACCOMMODATION IS PROVIDED BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT TO THE EMPLOYEES LICENSE FEE DETERMINED BY THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT IN THE VALUE OF PERQUISITE AS DETERMINED UNDER COLUMN (3) AND INCREASED BY 10% PER ANNUM OF THE ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 23 -: (2) EITHER HOLDING OFFICE OR POST IN CONNECTION WITH THE AFFAIRS OF THE UNION OR OF SUCH STATE OR SERVING WITH ANY BODY OR UNDERTAKING UNDER THE CONTROL OF SUCH GOVT. ON DEPUTATION WHERE THE ACCOMMODATION IS PROVIDED BY ANY OTHER EMPLOYER AND A ) WHERE THE ACCOMMODATION IS OWNED BY THE EMPLOYER, OR B ) WHERE THE ACCOMMODATION IS TAKEN ON LEASE OR RENT BY THE RESPECT OF ACCOMMODATION IN ACCORDANCE WITH THE RULES FRAMED BY SUCH GOVERNMENT AS REDUCED BY THE RENT ACTUALLY PAID BY THE EMPLOYEE ( I ) 15% OF SALARY IN CITIES HAVING POPULATION EXCEEDING 25 LAKHS AS PER 2001 CENSUS; ( II ) 10% OF SALARY IN CITIES HAVING POPULATION EXCEEDING 10 LAKHS BUT NOT EXCEEDING 25 LAKHS AS PER 2001 CENSUS; III ) 7.5% OF SALARY IN OTHER AREAS, IN RESPECT OF THE PERIOD DURING WHICH THE SAID ACCOMMODATION WAS OCCUPIED BY THE EMPLOYEE DURING THE PREVIOUS YEAR AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID BY THE EMPLOYEE. ACTUAL AMOUNT OF LEASE RENTAL PAID OR PAYABLE COST OF FURNITURE (INCLUDING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER HOUSEHOLD APPLIANCES, AIR-CONDITIONING PLANT OR EQUIPMENT) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, THE ACTUAL HIRE CHARGES PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABLE FOR THE SAME BY THE EMPLOYEE DURING THE PREVIOUS YEAR. THE VALUE OF PERQUISITE AS DETERMINED UNDER COLUMN (3) AND INCREASED BY 10% PER ANNUM OF THE COST OF FURNITURE (INCLUDING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER HOUSEHOLD APPLIANCES, AIR-CONDITIONING PLANT OR EQUIPMENT OR OTHER SIMILAR APPLIANCES OR GADGETS) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, BY THE ACTUAL HIRE CHARGES PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABLE FOR THE SAME BY THE EMPLOYEE DURING THE PREVIOUS YEAR. THE VALUE OF PERQUISITE AS DETERMINED UNDER ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 24 -: (3) EMPLOYER WHERE THE ACCOMMODATION IS PROVIDED BY THE EMPLOYER SPECIFIED IN SERIAL NUMBER (1) OR (2) IN A HOTEL (EXCEPT WHERE THE EMPLOYEE IS PROVIDED SUCH ACCOMMODATION FOR A PERIOD NOT EXCEEDING IN AGGREGATE FIFTEEN DAYS ON HIS TRANSFER FROM ONE PLACE TO ANOTHER). BY THE EMPLOYER OR 15% OF SALARY WHICHEVER IS LOWER AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID BY THE EMPLOYEE. NOT APPLICABLE COLUMN (3) AND INCREASED BY 10% PER ANNUM OF THE COST OF FURNITURE (INCLUDING TELEVISION SETS, RADIO SETS, REFRIGERATORS, OTHER HOUSEHOLD APPLIANCES, AIR-CONDITIONING PLANT OR EQUIPMENT OR OTHER SIMILAR APPLIANCES OR GADGETS) OR IF SUCH FURNITURE IS HIRED FROM A THIRD PARTY, BY THE ACTUAL HIRE CHARGES PAYABLE FOR THE SAME AS REDUCED BY ANY CHARGES PAID OR PAYABLE FOR THE SAME BY THE EMPLOYEE DURING THE PREVIOUS YEAR. 24% OF SALARY PAID OR PAYABLE FOR THE PREVIOUS YEAR OR THE ACTUAL CHARGES PAID OR PAYABLE TO SUCH HOTEL, WHICH IS LOWER, FOR THE PERIOD DURING WHICH SUCH ACCOMMODATION IS PROVIDED AS REDUCED BY THE RENT, IF ANY, ACTUALLY PAID OR PAYABLE BY THE EMPLOYEE: THE LOWER AUTHORITIES HAD NOT APPLIED THE ABOVE R ULE WHILE VALUING THE RESIDENTIAL ACCOMMODATION GRANTED TO THE ASSESS EE BY ITS EMPLOYER. WE ARE THEREFORE OF THE OPINION THAT IS SUE REQUIRES A FRESH LOOK BY THE LD. ASSESSING OFFICER. WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND REMIT THE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH. WE MAY HASTEN TO ADD THAT LD. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 25 -: ASSESSING OFFICER IS FREE TO CONSIDER WHETHER ASSES SEE COULD BE DEEMED AS AN EMPLOYEE, IN HIS STATUS AS DIRECTOR OF THE COMPANY. 35. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 36. NOW, WE TAKE UP APPEAL OF THE ASSESSEE OF SHRI. JA COB GEORGE FOR ASSESSMENT YEAR 2007-2008 IN ITA NO.506/ MDS/2015. 37. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD . COMMISSIONER OF INCOME TAX (APPEALS) HAD NOT ADJUDI CATED THE GROUNDS RAISED BY HIM CHALLENGING THE JURISDICTION TO MAKE AN ASSESSMENT U/S. 144 OF THE ACT NOR THE GROUNDS CH ALLENGING THE ADDITION OF RS.2,50,000/- AS DIRECTORS REMUNERATION AND RS.46,000/- AS INTEREST ON CAPITAL. ACCORDING TO HIM, LD. COM MISSIONER OF INCOME TAX (APPEALS) HAD ADJUDICATED ONLY THE GROUND RAISE D ON VALUATION OF FREE RESIDENTIAL ACCOMMODATION GIVEN BY M/S. WOOD STOCK P. LTD. EVEN THIS, AS PER THE LD. AR WAS INCORRECTLY DONE, IGNORING RULE 3 OF THE INCOME TAX RULES. 38. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE ISSUES MAY BE REMITTED BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR ADJUDICATION. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 26 -: 39. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE HAD RAISED GROUNDS CHALLENGING THE ASSESSMENT DONE U/S. 144 OF THE ACT, APART FROM GROUNDS ON ESTIMATION OF REMUNERATION FROM M /S. GREEN FIELD TIMBER AND PLYWOODS P. LTD AND M/S. WOOD STOCK P. L TD, ADDITION FOR VALUATION OF PERQUISITES IN THE NATURE OF RENT FREE ACCOMMODATION AND ADDITION FOR INTEREST ON CAPITAL FROM THE FIRMS OF M/S. ARASAN COTTAGE MATCH INDUSTRIES AND M/S. VANA PANA PENCIL WOOD IND USTRIES. EXCEPT FOR THE ISSUE RELATING TO VALUATION OF PERQUISITES IN THE NATURE OF FURNISHED ACCOMMODATION, OTHER ISSUES WERE NOT ADJ UDICATED BY THE LD. ASSESSING OFFICER. WE ARE THEREFORE OF THE OPIN ION THAT ISSUES INCLUDING VALUATION OF THE PERQUISITES IN THE NATUR E OF FURNISHED ACCOMMODATION CAN BE CONSIDERED BY THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) AFRESH. IN SO FAR AS VALUATION OF PE RQUISITES IN THE NATURE OF FURNISHED ACCOMMODATION IS CONCERNED, LD. COMMISSIONER OF INCOME TAX (APPEALS) IS DIRECTED TO KEEP IN MIND OU R DIRECTIONS ON THE ISSUE IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006-2007. 40. IN THE RESULT, APPEAL OF THE ASSESSEE FOR ASSESSMEN T YEAR 2007-2008 IS ALLOWED FOR STATISTICAL PURPOSES. 41. NOW, WE TAKE UP APPEALS FILED BY THE ASSESSEES M/S. VANA PANA PENCIL INDUSTRIES, M/S. WOOD STOCK PRIVATE LIM ITED AND M/S. ARASAN COTTAGE AND MATCH INDUSTRIES FOR ASSESSMENT YEAR 2003-04 IN ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 27 -: ITA NOS.502/2015, 503/2015 AND 504/2015, WHICH ARE AGAINST LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT, WHICH WAS CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 42. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. COMM ISSIONER OF INCOME TAX (APPEALS) HAD NOT ADJUDICATED ON THE MERITS OF THE PENALTY LEVIED BUT ON DISMISSED THE APPEALS OF THE ASSESSEES FOR WANT OF APPEARANCE. 43. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THE PENALTIES WARE RIGHTLY LEVIED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). AC CORDING TO HIM, A NUMBER OF OPPORTUNITIES WERE GIVEN BY THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) TO THE ASSESSEES BUT THESE WER E NOT AVAILED BY THE ASSESSEES. 44. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ALL THESE THREE APPEALS WER E SIMILARLY WORDED. WHAT WAS HELD BY HIM IN HIS ORDER IS REPRODUCED HER EUNDER:- 4. THE CASE WAS POSTED FOR HEARING ON 31.10.2014. .ORR 11.11.2014 MS.SRINIRANJANI, ADVOCATE SOUGHT ADJOURNMENT ON BEHALF OF THE AUTHORISED REPRESENTATIVE MS. ANITA .SUMANTH WHO WAS STATED TO BE BUSY IN THE HIGH COURT. THE HEARING OF THE APPEAL WAS ADJOURNED TO ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 28 -: 13.11.2014. ON 13.11.2014, MS. RADHIKA. VASUDEVAN, ADVOCATE FROM THE OFFICE OF MS. ANITA SUMANTH, AUTHORISED REPRESENTATIVE WAS PRESENT SEEKING FURTHER ADJOURNMENT ON BEHALF OF THE AUTHORISED REPRESENTATIVE AS NO POWER IN HER FAVOUR WAS AVAILABLE ON RECORD. IN THE INTEREST OF JUSTICE LAST AND FINAL OPPORTUNITY WAS GIVEN TO FILE ALL THE SUBMISSIONS AND MATERIAL OR EVIDENCE ON WHICH. THE. APPELLANT SOUGHT TO RELY TO SUPPORT ITS GROUNDS OF APPEAL. ACCORDINGLY, .THE CASE WAS ADJOURNED TO 20.11.2014 AND IT WAS ALSO INFORMED THAT NO FURTHER OPPORTUNITY SHALL BE ALLOWED. IN THE MEANTIME ANOTHER ADJOURNMENT WAS SOUGHT BY THE AR FOR HEARING ON 26.11.2014. THE CASE WAS ADJOURNED TO 26.11.2014 AS PER THE ORAL REQUEST OF THE AUTHORISED REPRESENTATIVE MS. ANITA SUMANTH, ADVOCATE. ON 26.11.2014 MS. RADHIKA VASUDEVAN, ADVOCATE ATTENDED AND EXPLAINED THE ISSUE IN APPEAL. 5, I HAVE CONSIDERED THE FACTS OF THE CASE VIS-A- VIS THE GROUNDS OF APPEAL AND THE REASONING OF THE AO IN LEVYING PENALTY UNDER SECTION 271(1)(C). AS IS EVIDENT FROM THE PENALTY ORDER, IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO NO REPLY WAS FURNISHED BEFORE THE AO. EVEN BEFORE ME APART FROM HAVING AGITATED THE ISSUE OF LEVY OF PENALTY, NO SUBMISSIONS, WHATSOEVER, HAVE BEEN FURNISHED ON BEHALF OF THE APPELLANT TO SUBMIT OR TO SHOW AS TO WHY THE PROVISIONS OF SECTION 271(1)(C) WERE NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. IN THE ABSENCE OF ANY MATERIAL OR EVIDENCE BROUGHT ON RECORD BY THE APPELLANT TO OFFER ANY EXPLANATION WITH REGARD TO UNDERVALUATION OF APPELLANT'S STOCK, THE REPAYMENT IN CASH OF ONSHORE LOAN AND SUNDRY CREDITORS, WHICH, DURING THE COURSE OF STATEMENT, HAD BEEN ADMITTED TO BE OUT OF THE UNDISCLOSED/ UNACCOUNTED INCOME OF THE APPELLANT, I FIND ANY INFIRMITY IN THE ACTION OF THE AO IN LEVYING PENALTY ON SUCH UNDISCLOSED/UNACCOUNTED INCOMES ADMITTED BY THE APPELLANT. THE GROUNDS OF APPEAL, THEREFORE, ARE DISMISSED AS UNSUBSTANTIATED AND THE PENALTY LEVIED BY THE AO IS UPHELD. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 29 -: IT IS CLEAR FROM THE ABOVE THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD NOT APPLIED HIS MIND TO THE MERITS OF THE ISSUES RAISED BY THE ASSESSEES. CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASES, WE ARE OF THE OPINION THAT ASSESSEES HAVE T O BE GIVEN ONE MORE OPPORTUNITY FOR SUPPORTING THE GROUNDS TAKEN B Y IT BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). WE THEREFORE SET ASIDE THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) IN THESE THREE CASES AND REMIT THE APPEALS BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR CONSIDERAT ION AFRESH IN ACCORDANCE WITH LAW. ASSESSEES ARE DIRECTED TO CO- OPERATE AND APPEAR BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). 45. IN THE RESULT, THE APPEALS OF THE ASSESSEES IN ITA 502/MDS/2015 TO 504/MDS/2015 ARE ALLOWED FOR STATIS TICAL PURPOSES. 46. NOW, WE TAKE UP THE APPEAL OF SMT. ELIZABETH JACO B FOR ASSESSMENT YEAR 2001-02 IN ITA NO.1418/MDS/2010. 47. ASSESSEE IN THIS APPEAL ASSAILS AN ORDER DATED 25 TH MARCH, 2009 OF LD. COMMISSIONER OF INCOME TAX -II, CHENNAI PASSED U/S. 263 OF THE ACT. 48. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSM ENT FOR THE IMPUGNED ASSESSMENT YEAR WAS ORIGINALLY COMPL ETED ON 29.12.2006. AS PER LD. AUTHORISED REPRESENTATIVE SU CH ASSESSMENT WAS ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 30 -: PURSUANT TO A SEARCH AND WAS DONE U/S. 143(3) R.W .S. 153A & 153C OF THE ACT. CONTENTION OF THE LD. AUTHORISED REPRESEN TATIVE WAS THAT ASSESSEE HAD IN HER RETURN OF INCOME FILED ORIGINAL LY, SHOWN A SUM OF RS.3,72,781/- AS CAPITAL SUBSIDY IN HER CAPITAL A CCOUNT WITH M/S. RAJKUMARI SAW MILL, WHICH WAS HER PROPRIETARY CONC ERN. AS PER THE LD. AUTHORISED REPRESENTATIVE THE RETURN WAS FILED BY T HE ASSESSEE ON 30.10.2001 AND THE SEARCH WAS CONDUCTED ON 15.07.20 04. FURTHER, AS PER LD. AUTHORISED REPRESENTATIVE NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH WHICH WOULD SHOW THAT THE CAPITAL SUBSIDY WAS ERRONEOUSLY OR INCORRECTLY SHOWN BY THE ASSESSEE. ACCORDING TO HIM, LD. ASSESSING OFFICER WHILE DOING AN ASSESSMENT U/S. 153C OF THE ACT COULD MAKE AN ADDITION ONLY FOR INC OME ARISING OR COMING OUT OF SEARCH. THERE WAS NO MATERIAL WITH T HE LD. ASSESSING OFFICER WHICH COULD SHOW THAT THE AMOUNT SHOWN BY T HE ASSESSEE WAS NOT A CAPITAL SUBSIDY. AS PER LD. AUTHORISED REPRES ENTATIVE NO ADDITION WAS MADE AGAINST THE CAPITAL SUBSIDY BY THE LD. A SSESSING OFFICER IN HIS ORDER DATED 29.12.2006, SINCE IT WAS AN ASSESSM ENT U/S. 143(3) R.W.S. 153C OF THE ACT. ACCORDING TO HIM, LD. COMM ISSIONER OF INCOME TAX COULD NOT TAKE A VIEW THAT THE CLAIM OF EXEMPT ION U/S. 10(31) OF THE ACT, FOR THE SUM OF RS.3,72,781/- WAS INCORRE CTLY ALLOWED. 49. CONTINUING HIS ARGUMENTS, LD. AUTHORISED REPRESENTA TIVE, SUBMITTED THAT LD.CIT HAD ATTEMPTED A REVISION CI TING A REASON THAT ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 31 -: ASSESSEE WAS ONLY RUNNING A SAW MILL AND NOT A PLA NTATION GROWER. ACCORDING TO HIM, ASSESSMENT DONE U/S. 153C OF THE ACT DID NOT CARRY ANY MISTAKE OR ERROR WHICH COULD WARRANT INVOKATION OF SEC. 263 OF THE ACT. 50. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT ASSESSEE WAS RUNNING A SAW MILL AND NOT A PLANTATIO N GROWER. ACCORDING TO HIM, CAPITAL SUBSIDY RECEIVED BY THE A SSESSEE COULD BE CONSIDERED AS EXEMPT U/S. 10(31) OF THE ACT, ONLY I F IT WAS RECEIVED BY A PLANTATION GROWER. CONTENTION OF THE LD. DEPARTM ENTAL REPRESENTATIVE THERE WAS A CLEAR ERROR IN THE ASS ESSMENT ORDER WHICH WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. TH US, ACCORDING TO HIM, LD. COMMISSIONER OF INCOME TAX WAS JUSTIFIED IN EXE RCISING SHE REVISIONARY POWERS U/S. 263 OF THE ACT. 51. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. REASON WHY LD. COM MISSIONER OF INCOME TAX INVOKED SEC. 263 OF THE ACT APPEARS AT PARA 1 OF HIS ORDER AND THIS IS REPRODUCED HEREUNDER:- THE INCOME-TAX ASSESSMENT IN THIS CASE OF THE ASSESSEE FOR THE ASST.YEAR 2001-02 WAS COMPLETED BY THE ACIT., CENTRAL CIRCLE-II(1), CHENNAI ON 29.12. 2006 DETERMINING THE TOTAL INCOME OF RS.2,50,2201- U/S.1 43(3) R.W.S. 153A & 153C. ON EXAMINATION OF RECORDS, IT IS SEEN ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 32 -: THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE HAS FILED A REVISED STATEMENT OF INCOME AN D SHOWN CAPITAL SUBSIDY OF RS.3,72,781/-, WHICH WAS CLAIMED AS EXEMPT U/S.10(31) OF THE I.,T ACT AND WA S ACCORDINGLY ALLOWED. HOWEVER, THE PROVISIONS OF SEC .1 0(31) APPLY ONLY TO PLANTATION GROWER AND NOT TO TH E ASSESSEE, WHO IS RUNNING THE BUSINESS OF SAW MILL. THEREFORE, THE CLAIM HAS BEEN WRONGLY ALLOWED BY THE ASSESSING OFFICER. THIS HAS RESULTED IN NOT ONLY THE ASSESSMENT BEING ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. NO DOUBT U/S. 10(31) OF THE ACT EXEMPTION FOR SUBSI DY IS AVAILABLE ONLY TO AN ASSESSEE WHICH CARRY ON A BUSINESS OF GROWIN G AND MANUFACTURING RUBBER, COFFEE, CARDAMOM OR SUCH OTHE R COMMODITIES. HOWEVER, WHAT WE FIND IS THAT ASSESSEE HAD IN HER R ETURN FILED ON 30.10.2001 CLEARLY MENTIONED THE SUM OF RS.3,72,781 /- AS CAPITAL SUBSIDY IN HER CAPITAL ACCOUNT WITH M/S. RAJKUMARI SAW MILL. LD. CIT WAS OF THE OPINION THAT ASSESSING OFFICER HAD ERRE D IN GIVING THE EXEMPTION UNDER SECTION 10(31) OF THE ACT TO SUCH A MOUNT IN THE ORDER PASSED BY THE LD. ASSESSING OFFICER U/S. 143( 3) R.W.S. 153A AND 153C OF THE ACT. IT IS TRITE LAW THAT AN ADDITION MADE IN A SEARCH ASSESSMENT SHOULD NECESSARY EMANATE FROM THE MATER IAL FOUND DURING THE COURSE OF SEARCH. LD. DEPARTMENTAL REPRESENTAT IVE COULD NOT PLACE BEFORE US ANY RECORD, WHICH WAS FOUND DURING THE COURSE OF ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 33 -: SEARCH, THAT COULD SHOW THAT CAPITAL SUBSIDY OF RS. 3,72,781/- WAS INCORRECTLY CLAIMED BY THE ASSESSEE OR WAS IN RELAT ION TO ITS BUSINESS OF SAW MILL. THERE IS MUCH STRENGTH IN THE ARGUMENT O F THE LD. AUTHORISED REPRESENTATIVE THAT LD. ASSESSING OFFICER COULD NO T HAVE MADE AN ADDITION FOR SUCH SUBSIDY IN THE SEARCH ASSESSMENT, WHEN THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. IN FACT THERE WAS NO ADDITION WHATSOEVER MAY BE MADE BY THE LD. A SSESSING OFFICER TO THE RETUNED INCOME. IN THE CIRCUMSTANCES, WE CA NNOT SAY THAT ORDER OF THE LD. ASSESSING OFFICER HAD ANY ERROR IN IT, WHICH COULD JUSTIFY APPLICATION OF THE REVISIONARY POWERS UNDER SEC.263 OF THE ACT. FOR INVOKING SEC 263 OF THE ACT, TWIN CONDITIONS HAD TO BE SATISFIED; ONE IS THAT THERE IS AN ERROR IN THE ORDER AND SECOND IS T HAT SUCH ERROR IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. EVEN AB SENCE OF ONE LIMB IS FATAL. WE ARE OF THE OPINION THAT THE ORDER OF THE LD. ASSESSING OFFICER DID NOT HAVE ANY ERROR WHICH COULD WARRANT INTERFER ENCE U/S. 263 OF THE ACT. WE SET ASIDE THE ORDER OF THE LD. CIT. APPEAL OF THE ASSESSEE IS ALLOWED. 52. THIS LEAVES US WITH THE APPEAL OF THE DEPARTMENT IN THE CASE OF THE ASSESSEE M/S. GREENFIELD TIMBER AND PLYWOOD S PRIVATE LTD FOR ASSESSMENT YEAR 2005-06 NUMBERED AS ITA NO.2076/MDS /2007. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 34 -: 53. ONLY EFFECTIVE GROUND RAISED BY THE REVENUE WHICH A PPEARS AS GROUND 2, IS ON THE DELETION OF AN ADDITION OF R S.29,33,488/- MADE BY THE LD. ASSESSING OFFICER PROTECTIVELY IN THE HA NDS OF THE ASSESSEE. 54. FACTS RELATING TO THE ABOVE GROUND HAS BEEN CAPTURE D BY US IN THE APPEAL OF THE ASSESSEE IN JACOB GEORGE IN ITA NO.1419/MDS/2008, AT PARA 6 ABOVE. A PROTECTIVE AD DITION WAS MADE BY THE LD. ASSESSING OFFICER FOR THE PRORATA AMOUNT OF ADVANCE RECEIVED FROM SHRI. SHANMUGADURAI, CONSIDERING THE AREA OF LAND HELD BY THE ASSESSEE SOLD TO SHRI. SHANMUGADURAI. SUCH ADDITION CAME TO RS.29,33,488/-. LD. COMMISSIONER OF INCOME TAX (APP EALS) HAD DELETED THE ADDITION CONSIDERING THE SUM AS CAPITAL RECEIPT. WE HAVE AT PARA 14 ABOVE HELD THAT THE AMOUNT RECEIVED FROM SH RI. SHANMUGADURAI REMAINED AS AN ADVANCE AND COULD NEVE R BE CONSIDERED AS INCOME IN THE RELEVANT PREVIOUS YEAR, EITHER IN THE HANDS OF SHRI. JACOB GEORGE OR IN THE HANDS OF COMPANIES . WE ARE THEREFORE OF THE OPINION THAT THE ADDITION WAS RIGHTLY DELETE D BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THOUGH FOR DI FFERENT REASONS. WE DO NOT FIND ANY REASON TO INTERFERE. ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 35 -: 55. APPEAL OF THE REVENUE IN ITA NO.2076/MDS/2007 IS DISMISSED. 56. TO SUMMARIZE THE RESULT, APPEALS OF THE REVENUE IN RESPECT OF SHRI. JACOB GEORGE IN ITA NOS.1417/MDS/2008, 141 8/MDS/2008 FOR ASSESSMENT YEARS 2001-02 & 2004-05 ARE DISMISSED WH EREAS ITA NO.1419/MDS/2008 FOR ASSESSMENT YEAR 2005-06 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ASSESSEE APPEALS IN ITA NOS.50 5 & 506/MDS/2015 FOR ASSESSMENT YEARS 2006-07 AND 2007-08 ARE ALLOWE D FOR STATISTICAL PURPOSE. DEPARTMENT APPEAL IN RESPECT OF M/S.WOOD S TOCK PRIVATE LIMITED IN ITA NO. 2077/MDS/2007 FOR ASSESSMENT YE AR 2005-06 IS DISMISSED WHEREAS THIS ASSESSEES APPEAL IN ITA NO. 503/MDS/2015 FOR ASSESSMENT YEAR 2003-04 IS ALLOWED FOR STATISTICAL PURPOSE. APPEAL NO.502/MDS/2015 OF THE ASSESSEE M/S. VANA PANA PEN CIL INDUSTRIES AND ITA NO.504/MDS/2015 OF THE ASSESSEE M/S. ARAS AN COTTAGE & MATCH INDUSTRIES, BOTH FOR ASSESSMENT YEAR 2003-04 ARE ALLOWED FOR STATISTICAL PURPOSE. APPEAL OF THE ASSESSEE SMT. ELIZABETH JACOB FOR ASSESSMENT YEAR 2001-02 IN ITA NO.1418/MDS/2010 IS ALLOWED. APPEAL OF THE DEPARTMENT IN THE CASE OF THE ASSESSEE M/S. GREEN FIELD TIMBER ITA NOS.1417-19, 505 & 506/15 AND OTHERS :- 36 -: PLYWOOD P. LTD IS DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF JULY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER / CHENNAI. ! / DATED: 31 ST JULY, 2017 KV !' # $% &% / COPY TO: 1 . '( / APPELLANT 3. ) () / CIT(A) 5. %+, # - / DR 2. #.'( / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF