Nandhi Dhall Mills, Salem V. ITO, Salem

ITA 1434/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90293 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 23-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: G BASKAR
• Keywords: Reopening of assessment
• Section: 147; 148; 143(3); 133A

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 ./ ITA NO.1434/MDS/2014 ( )( / ASSESSMENT YEAR : 2002-03 M/S NANDHI DALL MILLS, 42, NARASIMMAN CHETTY ROAD, SHEVAPET, SALEM 636 002. PAN : AACFN 0131 B V. THE INCOME TAX OFFICER, WARD I(2), SALEM 7. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. G. BASKAR, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. S. DAS GUPTA, JCIT 1 / 2% / DATE OF HEARING : 06.04.2015 3') / 2% / DATE OF PRONOUNCEMENT : 17.04.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DA TED 20.03.2014 AND PERTAINS TO ASSESSMENT YEAR 2002-03. 2 I.T.A. NO.1434/MDS/2014 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS REGA RDING REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX A CT, 1961 (IN SHORT 'THE ACT'). 3. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE ENGAGED ITSELF IN MANUFACTURING, PURCHASE AND SALE OF GRAMS AND PULSES. THE ASSESSEE FILED THE R ETURN OF INCOME FOR ASSESSMENT YEAR UNDER CONSIDERATION ON 31.10.20 02. ACCORDING TO THE LD. COUNSEL, THE RETURN FILED BY THE ASSESSE E WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. HOWEVER, NO ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFF ICER BY A NOTICE DATED 25.03.2009 REOPENED THE ASSESSMENT ON THE GRO UND THAT THE INCOME OTHERWISE ASSESSABLE TO TAX ESCAPED ASSESSME NT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BASIS OF GUESS WORK AND ESTIMATE WITHOUT ANY SUBSTANTIVE MATERIAL ON RECORD. ACCORDING TO THE L D. COUNSEL, THE ASSESSING OFFICER REOPENED THE ASSESSMENT ONLY ON T HE BASIS OF THE STATEMENT GIVEN TO A THIRD PARTY, NAMELY, CENTRAL B ANK OF INDIA, FOR THE PURPOSE OF GETTING HIGHER LOAN. THEREFORE, ACC ORDING TO THE LD. COUNSEL, REOPENING THE ASSESSMENT IS NOT JUSTIFIED. 3 I.T.A. NO.1434/MDS/2014 4. ON THE CONTRARY, SHRI DAS GUPTA, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R REOPENED THE ASSESSMENT BY RECORDING SUBSTANTIVE SATISFACTION ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. ACCORDING TO THE LD. D.R., THE LETTER DATED 5.12.2001 ADDRESSED TO THE BANK INDICATED MON TH-WISE DETAILS OF PURCHASE AND SALES. ON THE BASIS OF THE MATERIAL FOUND, THE ASSESSING OFFICER REOPENED THE ASSESSMENT AFTER RECORDING SATISFACTION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SEE SUBMITTED A STATEMENT TO CENTRAL BANK OF INDIA FOR THE PERIOD F ROM APRIL, 2001 TO NOVEMBER, 2001, WHICH CONTAINS THE MONTH-WISE PURCH ASE AND SALE OF DHALL. THE ASSESSEE NOW CLAIMS THAT FOR THE PUR POSE OF GETTING HIGHER CASH CREDIT / LOAN, THE STATEMENT WAS FURNIS HED TO THE BANK. IN VIEW OF THE STATEMENT GIVEN BY THE ASSESSEE TO T HE BANK, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT. ACCORDINGLY, THE CIT(APPEALS) CONFIRMED THE SAME. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO SERV ICE OF NOTICE UNDER SECTION 148 OF THE ACT. 4 I.T.A. NO.1434/MDS/2014 7. THE LD.COUNSEL FOR THE ASSESSEE HAS NOT SERIOUSL Y ARGUED THIS ISSUE. EVEN OTHERWISE, WE FIND THAT THE NOTIC E DATED 25.03.2009 WAS SERVED ON THE ASSESSEE ON 26.03.2009. THEREFOR E, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE WI TH REGARD TO SERVICE OF NOTICE. 8. NOW COMING TO THE MERIT OF THE ADDITION, SHRI G. BASKAR, THE LD. COUNSL, SUBMITTED THAT THE BOOKS OF ACCOUNT UPT O THE YEAR ENDED 31.03.2002 WERE DRAWN ON THE DATE OF SURVEY AND IT WAS SIGNED BY THE DEPARTMENT OFFICER. ON THE DATE OF SURVEY, NO DEFECT WAS POINTED OUT BY THE DEPARTMENT OFFICERS IN THE BOOKS OF ACCOUNT. APART FROM THAT, THERE WAS NO MATERIAL AVAILABLE ON RECORD OTHER THAN THE STATEMENT SAID TO BE GIVEN BY THE ASSESSEE TO CENTRAL BANK OF INDIA. ACCORDING TO THE LD. COUNSEL, THE S TATEMENT WAS GIVEN TO CENTRAL BANK OF INDIA, WHICH IS A THIRD PA RTY, FOR THE PURPOSE OF OBTAINING HIGHER LOAN / CASH CREDIT. PLACING RE LIANCE ON THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN CIT V. N. SWAMY (2000) 241 ITR 363, THE LD. COUNSEL SUBMITTED THAT THE STATEMENT GIVEN TO A THIRD PARTY, EVEN IF IT BE A BANK, CANNO T BE A BASIS FOR MAKING ASSESSMENT UNLESS THE SAME IS CORROBORATED B Y OTHER MATERIAL. IN THIS CASE, ACCORDING TO THE LD. COUNS EL, NO OTHER MATERIAL IS AVAILABLE ON RECORD. PLACING RELIANCE ON THE ANOTHER 5 I.T.A. NO.1434/MDS/2014 JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF CIT V. APCOM COMPUTERS P. LTD. (2007) 292 ITR 630, THE LD. COUNSEL SUBMITTED THAT THE STATEMENT GIVEN TO THE BANK WAS WITHOUT ANY PHYSICAL VERIFICATION. THEREFORE, THE STATEMENT GI VEN TO THE BANK CANNOT BE A BASIS FOR MAKING ANY ADDITION. THE LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE MAD RAS HIGH COURT IN THE CASE OF CIT V. SMT. SAKUNTALA DEVI KHETAN (2 013) 352 ITR 484. 9. ON THE CONTRARY, SHRI DAS GUPTA, THE LD. D.R. SU BMITTED THAT THE ASSESSING OFFICER MADE AN ADDITION OF ` 30.68 LAKHS ON ACCOUNT OF UNACCOUNTED SALES BEING A DIFFERENCE BETWEEN THE BOOKS OF ACCOUNT AND THE STATEMENT SUBMITTED TO THE BANK. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE WAS A SURVEY UNDER SECTION 133A CONDUCTED IN THE PREMISES OF THE ASSES SEE ON 17.10.2003. DURING THE SURVEY PROCEEDINGS, REVENUE AUTHORITIES FOUND A STATEMENT WHICH IS SAID TO BE GIVEN BY THE ASSESSEE TO CENTRAL BANK OF INDIA, WHICH CONTAINS MONTH-WISE PU RCHASE AND SALE OF DHALL. THE REVENUE AUTHORITIES FOUND THAT THERE WAS A DIFFERENCE BETWEEN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND THE STATEMENT GIVEN TO THE BANK. OTHE R THAN THIS 6 I.T.A. NO.1434/MDS/2014 STATEMENT GIVEN TO THE BANK, THERE WAS NO OTHER COR ROBORATIVE MATERIAL FOUND. NOW THE QUESTION ARISES FOR CONSID ERATION IS WHETHER AN ADDITION CAN BE MADE IN THE ASSESSMENT P ROCEEDINGS ON THE BASIS OF THE STATEMENT GIVEN BY THE ASSESSEE TO THE BANK, NAMELY, CENTRAL BANK OF INDIA. THE CLAIM OF THE AS SESSEE IS THAT THE STATEMENT WAS FURNISHED TO THE CENTRAL BANK OF INDI A FOR THE PURPOSE OF GETTING HIGHER LOAN / CASH CREDIT. WE F IND THAT HON'BLE MADRAS HIGH COURT IN THE CASE OF N. SWAMY (SUPRA) H AD AN OCCASION TO CONSIDER THE ISSUE. THE HON'BLE MADRAS HIGH COURT FOUND THAT THE ASSESSING OFFICER IS TO ASSESS THE I NCOME ON THE BASIS OF THE MATERIAL WHICH IS REQUIRED FOR THE PUR POSE OF ASSESSMENT AND NOT ON THE BASIS OF STATEMENT, WHICH THE ASSESSEE MAY HAVE GIVEN TO THIRD PARTY UNLESS THERE IS MATER IAL TO CORROBORATE THAT STATEMENT GIVEN TO THE THIRD PARTY EVEN IF IT BE A BANK. EVEN SUCH STATEMENT GIVEN BY THE ASSESSEE ITSELF CANNOT BE TREATED AS HAVING RESULTED IN AN IRREBUTTABLE PRESUMPTION AGAI NST THE ASSESSEE. IN FACT, JUSTICE R. JAYASIMHA BABHU, SPE AKING FOR THE BENCH, HAS OBSERVED AS FOLLOWS:- WE FIND IT A LITTLE DIFFICULT TO AGREE WITH THOSE OBSERVATIONS. THE ASSESSEES INCOME IS TO BE ASSES SED BY THE INCOME-TAX OFFICER ON THE BASIS OF THE MATERIAL WHICH IS REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ASSESS MENT AND ORDINARILY NOT ON THE BASIS OF THE STATEMENT WHICH THE 7 I.T.A. NO.1434/MDS/2014 ASSESSEE MAY HAVE GIVEN TO A THIRD PARTY UNLESS THE RE IS MATERIAL TO CORROBORATE THAT STATEMENT OF THE ASSES SEE GIVEN TO A THIRD PARTY, EVEN IF IT BE A BANK. THE MERE F ACT THAT THE ASSESSEE HAD MADE SUCH A STATEMENT BY ITSELF CANNOT BE TREATED AS HAVING RESULTED IN AN IRREBUTTABLE PRESU MPTION AGAINST THE ASSESSEE. THE BURDEN OF SHOWING THAT T HE ASSESSEE HAD UNDISCLOSED INCOME IS ON THE REVENUE. THAT BURDEN CANNOT BE SAID TO BE DISCHARGED BY MERELY RE FERRING TO THE STATEMENT GIVEN BY THE ASSESSEE TO A THIRD P ARTY IN CONNECTION WITH A TRANSACTION WHICH WAS NOT DIRECTL Y RELATED TO THE ASSESSMENT AND MAKING THAT THE SOLE FOUNDATI ON FOR A FINDING THAT THE ASSESSEE HAD DELIBERATELY SUPPRESS ED HIS INCOME. A SIMILAR VIEW WAS TAKEN BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF APCOM COMPUTERS P. LTD. (SUPRA). 11. IN THIS CASE, OTHER THAN THE STATEMENT SAID TO BE GIVEN BY THE ASSESSEE TO CENTRAL BANK OF INDIA, FOR THE PURPOSE OF AVAILING HIGHER CASH CREDIT / LOAN, NO OTHER CORROBORATIVE MATERIAL IS AVAILABLE ON RECORD. IN THESE CIRCUMSTANCES, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE ADDITION OF ` 30.68 LAKHS IS NOT JUSTIFIED. BY RESPECTFULLY FOLLOWING THE JUDGMENTS OF HON'BLE MAD RAS HIGH COURT IN THE CASE OF N. SWAMY (SUPRA) AND IN THE CASE OF APCOM COMPUTERS P. LTD. (SUPRA), THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. THE ADDITION OF ` 30.68 LAKHS IS DELETED. 8 I.T.A. NO.1434/MDS/2014 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S PARTLY ALLOWED. ORDER PRONOUNCED ON 17 TH OF APRIL, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !'# ! ) ( . . . ) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 17 TH APRIL, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A), SALEM 4. 1 92 /CIT, SALEM 5. 7: -2 /DR 6. ;( < /GF.