R.Srinivasan, CHENNAI V. DCIT Central Circle 1, Coimbatore

ITA 1466/CHNY/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2197 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1996-1997
• Appeal Filed On: 01-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G SRINIVASA RAO
• Assessee Lawyers: B RAMAKRISHNAN; MRS K HEMALATHA ACA
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained investment; Search and seizure; Salary income; Source of fund; Additional evidence; Block assessment; Documents seized
• Section: 143(3); 158BC; 43; 48; 13; 22; 263; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , . , % BEFORE SHRI V.DURGA RAO, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.1466/CHNY/2018 ( / ASSESSMENT YEAR: 1996-97) MR. R.SRINIVASAN, 103, ASHOK NAGAR MAIN ROAD, KODAMBAKKAM, CHENNAI-24. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, COIMBATORE. PAN: AAIPS 8386H ( /APPELLANT) /RESPONDENT/ / APPELLANT BY : MR. B.RAMAKRISHNAN, FCA & MRS.K.HEMALATHA, ACA /RESPONDENT BY : MR.G.SRINIVASA RAO, CIT /DATE OF HEARING : 21.01.2021 /DATE OF PRONOUNCEMENT : 25.02.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -1, CHENNAI DATED 29.03.2018 AND PERTAINS TO ASSESSMENT YEAR 1996-97. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- I. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (CITA IN SHORT) IS WITHOUT JURISDICTIO N, IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO. 1466/CHNY/2018 2. THE LEARNED CIT(A) ERRED IN MAKING THE ADDITION OF RS 7,16,79,408/- ON SUBSTANTIVE BASIS WITHOUT CONSIDE RING THE FACT THAT THE ADDITIONS WERE ALREADY TAXED IN THE H ANDS OF AOP. 3. THE LEARNED CITA ERRED IN MAKING THE ADDITION OF RS 7,16,79,408/- AS UNEXPLAINED INVESTMENTS BEING CRE DITS IN VARIOUS BENAMI ACCOUNTS SEIZED ON A PROTECTIVE BASI S. 4. THE LEARNED CITA ERRED IN NOT CONSIDERING THE RE MAND REPORT CALLED FOR FROM THE ASSESSING OFFICER WHE REIN THE AO HAD CONSIDERED THE ADDITIONAL EVIDENCES FILED AND G IVEN THE REPORT. 3. THE ASSESSEE HAS ALSO FILED A PETITION FOR ADMIS SION OF ADDITIONAL GROUNDS OF APPEAL VIDE ITS LETTER DATED 07.01.2021. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT ASSE SSEE HAS BY INADVERTENT ERROR OMITTED TO RAISE CERTAIN GROUN DS OF APPEAL WITH REGARD TO VARIOUS ADDITIONS MADE BY THE ASSESS ING OFFICER, INCLUDING ADDITIONS TOWARDS BANK DEPOSITS WITH INDI AN OVERSEAS BANK , PANTHEON ROAD, CHENNAI, ADDITION ON ACCOUNT OF INTEREST INCOME IN RESPECT OF ABOVE DEPOSITS AND ADDITION TOWARDS SALARY AND INTEREST INCOME . THE FACTS OF WHICH ARE ALREADY ON RECORD AND HENCE, ADDITIONAL GROUNDS OF APPEAL MAY BE ADMITTED TO DECIDE THE ISSUES ON MERITS. 3 ITA NO. 1466/CHNY/2018 4. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ASSESSEE HAS FAILED TO MAKE OUT A CASE FOR FILING A DDITIONAL GROUNDS OF APPEAL WITH NECESSARY FACTS WAS ALREADY ON RECORD TO ESTABLISH THE NEXUS WITH EVIDENCE WHICH ARE REQU IRED TO BE EXAMINED ON THE ISSUE OF ADDITIONAL GROUNDS AND HEN CE, ADDITIONAL GROUNDS OF APPEAL FILED BY ASSESSEE MAY BE REJECTED. 5. HAVING HEARD BOTH SIDES AND CONSIDERED PETITION FILED FOR ADMISSION OF ADDITIONAL GROUNDS, WE FIND THAT ADDIT IONAL GROUNDS OF APPEAL FILED WITH REGARD TO VARIOUS ADDITIONS MA DE BY THE ASSESSING OFFICER ARE EMANATING FROM THE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER DATED 30.03.1999 AND FU RTHER NO NEW FACTS ARE BROUGHT ON RECORD WHICH ARE REQUIRED TO BE EXAMINED AND HENCE, ADDITIONAL GROUNDS OF APPEALS A RE ADMITTED TO DECIDE ISSUES ON MERITS. 6. THE BRIEF FACTS OF THE CASE AS CULLED OUT FROM A SSESSMENT ORDER ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 1996-97 DECLARING TOTAL INCOME OF ` 7,49,270/-. THE ASSESSEE WAS EMPLOYED WITH ONGC AT 4 ITA NO. 1466/CHNY/2018 CHENNAI TILL 1995. THEREAFTER, ASSESSEE BEGAN CARRY ING ON BUSINESS UNDER THE NAME OF VARIOUS ENTITIES SUCH AS M/S. S.R. ASSOCIATES, M/S. RAMADOSS FINANCE PVT. LTD AND M/S. RAMADOSS EXPORTS. A SEARCH AND SEIZURE U/S.132 OF T HE ACT WAS CONDUCTED IN THE RESIDENTIAL AND BUSINESS PREMI SES OF THE ASSESSEE ON 13.02.1996 AND DURING THE COURSE OF SEA RCH, VARIOUS INCRIMINATING MATERIALS SHOWING UNDISCLOSED INCOME WAS FOUND AND SEIZED. CONSEQUENT TO SEARCH, PROCEED INGS U/S 158BC OF THE ACT WAS INITIATED AND ASSESSMENT HAS B EEN COMPLETED UNDER SECTION 143(3) R.W.S 158BC ON 28.02 .1997 FOR THE BLOCK PERIOD FROM 01.04.1986 TO 13.02.1996. 7. DURING THE COURSE OF SEARCH ACTION U/S 132 OF TH E ACT, IT WAS NOTICED BY THE INVESTIGATION WING OF INCOME TAX DEPARTMENT THAT, M/S. TAMIL NADU TEXTILE CORPORATIO N WHICH WAS IMPLEMENTING FREE CLOTHING DISTRIBUTION SCHEME OF TAMIL NADU GOVERNMENT WAS SIPHONING SUBSTANTIAL AMOUNT OF MONEY THROUGH SOME INFLUENTIAL PERSONS, SUCH AS ASSESSE ES BROTHER MR.R.VENKATAKRISHNAN, WHO WAS P.A. TO THE SOCIAL WE LFARE MINISTER, IN-CHARGE OF FREE DISTRIBUTION SCHEME OF SAREES AND 5 ITA NO. 1466/CHNY/2018 DHOTIES OF TAMIL NADU GOVERNMENT. DURING THE COURSE OF SEARCH, STATEMENT U/S.132(4) OF THE ACT WAS RECORDE D FROM THE ASSESSEE AND ALSO ASKED TO EXPLAIN VARIOUS SEIZED M ATERIALS FOUND DURING THE COURSE OF SEARCH IN CONNECTION WIT H SUPPLY OF SAREES AND DHOTIES OF GOVERNMENT OF TAMIL NADU. IN THE STATEMENT RECORDED, ASSESSEE STATED THAT HE IS NOT AWARE OF HOW THESE PAPERS CAME TO HIS POSSESSION AND ALSO EX PLAINED HE DOES NOT HAVE ANY CONNECTION WITH THE PERSONS WH O ARE INVOLVED IN SUPPLY OF SAREES AND DHOTIES UNDER THE SCHEME THROUGH TNTC. SUBSEQUENT TO SEARCH, ON THE BASIS OF INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING , IT WAS ASCERTAINED THAT ASSESSEE IS BENEFICIARY OF SUBSTAN TIAL MONEY EARNED BY VARIOUS SUPPLIERS OF SAREES AND DHOTIES O F TNTC WHICH WAS SIPHONED OFF TO THE ASSESSEE. ON THE BAS IS OF MATERIALS FOUND SUBSEQUENT TO SEARCH, ASSESSMENT FO R THE ASSESSMENT YEAR 1996-97 WAS COMPLETED U/S. 143(3) O F THE ACT ON 30.03.1999 AND ADDITIONS WERE MADE TOWARDS UNEX PLAINED INVESTMENTS IN BANK DEPOSITS AMOUNTING TO ` 13,25,642/- , ESTIMATED INTEREST INCOME ON SAID UNEXPLAINED DEPOS IT OF ` 10,00,000/- AND SALARY INCOME NOT DISCLOSED IN THE RETURN OF 6 ITA NO. 1466/CHNY/2018 INCOME AMOUNTING TO ` 1,00,000/-. BESIDES THE ABOVE, A SUM OF ` 7,16,79,408/- WAS ALSO ADDED ON PROTECTIVE BASIS AS UNDISCLOSED INCOME OF THE ASSESSEE ON THE BASIS OF VARIOUS BANK ACCOUNTS HELD IN VARIOUS BENAMI ACCOUNTS ON TH E GROUND THAT AMOUNT TRANSFERRED TO VARIOUS BANK ACCOUNTS RE PRESENTS PROCEEDS OF TEXTILE SCAM PASSED ON TO THE ASSESSEE. FURTHER, THE ASSESSING OFFICER HAD RECORDED CLEAR FINDING RE GARDING NEXUS BETWEEN MATERIAL FOUND DURING THE COURSE OF S EARCH COUPLED WITH ENQUIRY CONDUCTED DURING POST-SEARCH INVESTIGATION AND AMOUNT TRANSFERRED TO VARIOUS BAN K ACCOUNTS OF THE ASSESSEE. HOWEVER, NO ADDITION WAS MADE IN B LOCK ASSESSMENT ON THE GROUND THAT ADDITIONS WERE ALREAD Y MADE TO THE AMOUNTS CREDITED IN VARIOUS BANK ACCOUNTS OF IN DIVIDUALS IN THE HANDS OF M.DEVARAJ & OTHERS, AOP. BUT, AT LATER STAGE, IT WAS ASCERTAINED THAT AMOUNTS TRANSFERRED TO CERTAIN INDIVIDUAL ACCOUNTS REPRESENT MONEY TRANSFERRED OUT OF TEXTILE SCAM AND SUCH MONEY WAS ASSESSABLE IN THE HANDS OF ASSESSEE, THE AO WAS OF THE OPINION THAT SAID AMOUNT IS UNDISCLOSED INCOME OF THE ASSESSEE FOR BLOCK PERIOD. HOWEVER NO ADDITION HAS BEEN MADE IN BLOCK ASSESSMENT BECAUSE BLOCK ASSESSMENT W AS 7 ITA NO. 1466/CHNY/2018 ALREADY COMPLETED. THEREFORE, TO PROTECT THE INTERE ST OF REVENUE THE ASSESSING OFFICER MADE A PROTECTIVE ADDITION FO R THE IMPUGNED ASSESSMENT YEAR ON THE GROUND THAT BOCK ASSESSMENT HAS BEEN ALREADY REVISED U/S.263 OF THE ACT, SO AS TO INCLUDE IMPUGNED UNDISCLOSED INCOME FOR THE BLOC K PERIOD. 8. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE LEARNED CIT(A). BEFORE L EARNED CIT(A), THE ASSESSEE HAS CHALLENGED VARIOUS ADDITIO NS MADE BY THE ASSESSING OFFICER INCLUDING ADDITIONS TOWARDS U NEXPLAINED INVESTMENTS BEING CREDITS IN BANK ACCOUNTS OF 5 PER SONS RELATED TO TEXTILE SCAM, ADDITIONS TOWARDS UNEXPLAI NED INVESTMENTS IN DEPOSITS WITH INDIAN OVERSEAS BANK, CHENNAI, ADDITION ON ACCOUNT OF ESTIMATED INCOME WITH RESPEC T OF DEPOSITS IN BANK ACCOUNT AND ADDITIONS TOWARDS SAL ARY AND INTEREST. DURING THE COURSE OF APPELLATE PROCEEDING S, ASSESSEE HAS FILED VARIOUS ADDITIONAL EVIDENCES TO PROVE THA T HE DO NOT HAVE ANY RELATIONSHIP WITH 5 PERSONS, WHO WERE PART OF SHRI M.DEVARAJ & OTHERS AS AN AOP AND HENCE, AMOUNTS TRANSFERRED FROM 5 PERSONS ACCOUNT CANNOT BE CONS IDERED AS 8 ITA NO. 1466/CHNY/2018 HIS UNEXPLAINED INVESTMENTS. DURING THE COURSE OF A PPELLATE PROCEEDINGS, LEARNED CIT(A) HAS FORWARDED VARIOUS E VIDENCES FILED BY ASSESSEE TO THE ASSESSING OFFICER FOR HIS COMMENTS. DURING THE COURSE OF REMAND PROCEEDINGS, ASSESSEE HAS EXPLAINED AMOUNTS TRANSFERRED FROM 5 PERSONS ACCOUN T AND ARGUED THAT AMOUNT CREDITED INTO ACCOUNTS OF SHRI V .KANNAN, SHRI K.MOHAN, SHRI S.GOPAL, SHRI V.SENTHAMARAI AND SHRI S.RAJA WERE TRANSFERRED FROM MEMBERS OF AOP (SHRI M .DEVARAJ & OTHERS) AND FURTHER AMOUNTS CREDITED IN THESE BA NK ACCOUNTS HAVE BEEN ASSESSED IN THE HANDS OF AOP. DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESSING OFFICER HAS EXAMI NED CLAIM OF THE ASSESSEE AND HAS ALSO ACCEPTED THE FACT THAT AMOUNT CREDITED IN THE BANK ACCOUNTS OF ABOVE 5 PERSONS AR E TRANSFERRED FROM MEMBERS OF AOP AND SAID AMOUNT HAS BEEN ALREADY SUBJECTED TO TAX IN THE NAME OF M/S. M.DEVA RAJ & OTHERS, AOP AND ACCORDINGLY, ACCEPTED SOURCE OF INC OME WHEREVER ASSESSEE WAS ABLE TO LINK TRANSFER OF FUND S. HOWEVER, WHEREVER ASSESSEE COULD NOT EXPLAIN CREDITS TO THE AOP ACCOUNTS, THE SAME HAS BEEN TREATED AS UNEXPLAINED 9 ITA NO. 1466/CHNY/2018 INVESTMENTS OF THE ASSESSEE. THE RELEVANT FINDINGS OF THE ASSESSING OFFICER IN THE REMAND REPORT ARE AS UNDER :- 8.1 AS SUBMITTED EARLIER ASSESSEE HAS PREFERRED P RESENT APPEAL FOR REGULAR SCRUTINY ASSESSMENT FOR ASSESSMENT YEA R 1996-97 . IT IS THE CONTENTION OF ASSESSEE THAT CREDITS IN FIVE BANK ACCOUNTS FOUND IN PREMISES OF ASSESSEE ARE TRANSFERS FROM BANK ACCOUNT OF MEMBERS OF AOP AS GIVEN AS UNDER:- 8.2 CREDITS IN THE NAME OF V.KANNAN: TRANSFEREE @ CHENNAI AOP MEMBERS A/C NO. BANK ACCOUNT AMOUNT ` V.KANNAN 2% 1208 IB KOTTURPURAM, CHENNAI 84,00,000 8.2 .1 THE ABOVE AMOUNTS ARE SAID TO BE TRANSFERS FROM ACCOUNTS OF THE FOLLOWING PERSONS:- TRANSFEREE @ COIMBATORE TRANSFEROR S BANK A/C BANK AMT ` AOP MEMBERSHIP V.PONNAMBALAM (V.PONNAMBALAM &CO.) 41337 BOM COIMBATORE 25,00,000 24% SAKTHIVEL (LAKSHMI TRADERS) 193291 BOM COIMBATORE 33,00,000 2% CREDIT 26,00,000 8.2.2 SUBMISSION: THE ASSESSEES CONTENTION APPEARS TO BE TRUE REGARDI NG THE TWO AMOUNTS AT RS. 25,00,000I-. AND RS. 33,00,000/- WHICH HAVE BEEN ASSESSED IN THE STATUS OF M/S. DEVARAJ AND OTH ERS. HOWEVER THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION REGARDIN G THE CREDIT OF 10 ITA NO. 1466/CHNY/2018 RS. 26,00,000/-. IT IS PERTINENT TO PAINT OUT THAT PAY-IN-SLIPS EVIDENCING PAYMENT OF RS. 26,00,000/- WORE FOUND IN THE PREMISES OF THE ASSESSES FOR WHICH THE ASSESSEE HAS NOT GIVE N ANY SATISFACTORY EXPLANATION. HENCE RS. 5800,000/- MAY BE TREATED AS HAVING FLOWN FROM FUNDS OF THE AOP (DEVARAJ AND OTH ERS) AND THE BALANCE RS. 2600,000/- MAY BE TREATED AS THE INCOME OF THE ASSESSEE SHRI, R. SRINLVASAN. 8.3 CREDITS IN THE NAME OF K.MOHAN TRANSFEREE @ CHENNAI AOP MEMBERS A/C NO. BANK ACCOUNT AMOUNT ` K.MOHAN 2% 1209 IB KOTTURPURAM, CHENNAI 1,01,00,000 8.3.1 THE ABOVE AMOUNTS ARE SAID TO BE TRANSFERS FR OM ACCOUNTS OF FOLLOWING PERSONS: TRANSFEREE @ COIMBATORE TRANSFEROR S BANK A/C BANK AMT ` AOP MEMBERSHIP V.PONNAMBALAM (CHAKRA TRADERS) 40896 BOM COIMBATORE 25,00,000 24% S.R.KANNAN (RAJAGANAPATHY TRADERS & SAKTHI PRINTERS) 193453 BOM COIMBATORE 36,00,000 2% S.R.KANNAN (RAJAGANAPATHY TRADERS & SAKTHI PRINTERS) 193453 BOM COIMBATORE 40,00,000 2% TOTAL 1,01,00,000 8.3.2. SUBMISSION: 11 ITA NO. 1466/CHNY/2018 THE ASSESSEE CONTENTION APPEARS TO BE TRUE REGARDIN G ABOVE AMOUNTS TOTALING TO ` 1,01,00,000/- WHICH HAVE BEEN ASSESSED IN THE STA TUS OF M/S. DEVARAJ & OTHERS. HENCE, ` 1,01,00,000/- MAY BE TREATED AS HAVING FLOWN FROM FUNDS OF AOP. 8.4 CREDITS IN THE NAME OF S.GOPAL TRANSFEREE @ CHENNAI AOP MEMBERS A/C NO. BANK ACCOUNT AMOUNT ` S GOPAL 2% 3980 KVB T NAGAR CHENNAI 75,00,000 8.4.1 THE ABOVE AMOUNTS ARE SAID TO BE TRANSFERS FR OM ACCOUNTS OF THE FOLLOWING: TRANSFEREE @ COIMBATORE TRANSFEROR S BANK A/C BANK AMT ` AOP MEMBERSHIP S.PRABHAKARAN (SABARI TRADERS) 41183 BOM COIMBATORE 75,00,000 2% 8.4.2 SUBMISSION THE ASSESSEE CONTENTION APPEARS TO BE TRUE REGARDIN G ABOVE AMOUNTS TOTALING TO ` 75,00,000/- WHICH HAVE BEEN ASSESSED IN THE STATU S OF M/S. DEVARAJ & OTHERS. HENCE, ` 75,00,000/- MAY BE TREATED AS HAVING FLOWN FROM F UNDS OF AOP. 8.5 CREDITS IN THE NAME OF SENTHAMARAI TRANSFEREE @ CHENNAI AOP MEMBERS A/C NO. BANK ACCOUNT AMOUNT ` R.SENTHAMARAI 2% 6026 IB KOTTURPURAM, CHENNAI 1,97,22,054 1215 IB KOTTURPURAM, CHENNAI 54,30,248 IB MANNADY , CHENNAI 1,04,27,106 12 ITA NO. 1466/CHNY/2018 8.5.1 THE ABOVE AMOUNTS ARE SAID TO BE TRANSFER FR OM ACCOUNTS OF THE FOLLOWING PERSONS. TRANSFEREE @ COIMBATORE TRANSFEROR S BANK A/C BANK AMT ` AOP MEMBERSHIP THIRUMALA TRADERS (S.BASKAR) 41051 BOM COIMBATORE 75,00,000 24% THIRUMALA TRADERS (S.BASKAR) 41051 BOM COIMBATORE 1,02,00,000 24% CREDIT 5,06,931 STD CLOSED TRANSFER 15,15,123 CREDIT 20,30,248 S.R.KANNAN (RAJAGANAPATHY TRADERS & SAKTHI PRINTERS) 193453 BOM COIMBATORE 34,00,000 2% THIRUMALA TRADERS (S.BASKAR) 41051 BOM COIMBATORE 30,00,000 2% CASH 3,00,000 CASH 2,00,000 S.R.KANNAN (RAJAGANAPATHY TRADERS & SAKTHI PRINTERS 193453 BOM COIMBATORE 30,00,000 2% S.R.KANNAN (RAJAGANAPATHY TRADERS & SAKTHI PRINTERS 193453 BOM COIMBATORE 30,00,000 2% FD CLOSED 9,27,106 13 ITA NO. 1466/CHNY/2018 8.5.2 SUBMISSION THE ASSESSEE CONTENTION APPEARS TO BE TRUE REGARDIN G ABOVE AMOUNTS EXCEPT CREDITS AND CASH PAYMENTS AS UNDER: CREDIT ` 5,06,931 CREDIT ` 20,30,248 CASH ` 3,00,000 CASH ` 2,00,000 TOTAL ` 30,37,179 HENCE, ` 30,37,179 MAY BE TREATED AS INCOME OF ASSESSEE SI NCE THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY EXPLANATIO N. 8.5 CREDITS IN THE NAME OF S.RAJA TRANSFEREE @ CHENNAI AOP MEMBERS A/C NO. BANK ACCOUNT AMOUNT ` S RAJA 2% 1152 IB MANNADY , CHENNAI 1,01,00,000 8.6.1 THE ABOVE AMOUNTS ARE SAID TO BE TRANSFER FROM ACCO UNTS OF THE FOLLOWING PERSONS TRANSFEREE @ COIMBATORE TRANSFEROR S BANK A/C BANK AMT ` AOP MEMBERSHIP THIRUMALA TRADERS (S.BASKAR) 41051 BOM COIMBATORE 20,00,000 24% S.R.KANNAN (RAJAGANAPATHY TRADERS & SAKTHI PRINTERS) 193453 BOM COIMBATORE 30,00,000 2% S.SELVARAJ BOM COIMBATORE 51,00,000 2% TOTAL 1,01,00,000 8.6.2. SUBMISSION: THE ASSESSEES CONTENTION APPEARS TO BE TRUE REGARDI NG THE ABOVE AMOUNTS TOTALING TO RS. 1,01,00000/- WHICH HAVE BEE N ASSESSED IN THE STATUS OF 14 ITA NO. 1466/CHNY/2018 MIS. DEVARAJ AND OTHERS. HENCE RS. 1,01 00,000/- MA Y BE TREATED AS HAVING FLOWN FROM THE FUNDS OF THE AOP. 8.7. CONCLUSION: (A) THE ASESSEE HAS NO SATISFACTORY EXPLANATION ABO UT THE SOURCE REGARDING THE AMOUNT OF RS. 26,00,000I- (PARA 8.2.3 ), RS. 30,37,179!- (PARA 8.5.2) WHICH MAY BE TREATED AS THE INCOME OF THE AS SESSEE. (B) IN THE ORIGINAL ASSESSMENT FAR THE AOP HE EXPEN SES WERE NOT AILOWED. IN THE REASSESSMENT SUBSEQUENT TO ITAT ORDER THE EX PENSES WERE ALLOWED AT 33.33% (PARA 7.6.1). THE DEDUCTIONS TOWARDS EXPENSE S WERE LATER ENHANCED TO 50% ON THE HONBLE ITAT ORDER ON MISCELLANEOUS PETI TION (PARA 7.64). SINCE EXPENSES HAVE BEEN ALLOWED THE CLAIM OF ASSESSEE T HAT THE CREDITS IN THE BANK ACCOUNT HAVE FLOWN FROM THE FUNDS OF THE AOP, NEEDS TO BE EXAMINED IN A DIFFERENT PERSPECTIVE. (C) THE REASONS FOR THE TRANSFERS OF FUNDS FROM AOP HAVE NOT BEEN SUBSTANTIATED BY THE ASSESSEE. ON ACCOUNT OF EXPANS ES HAVING BEEN ALLOWED, THESE TRANSFERS COULD BE CONSIDERED AS THE EXPENSES OF THE AOP. IN THAT CASE THOSE TRANSFERS PARTAKE THE CHARACTER OF INCOME IN THE HANDS OF TRANSFEREES I ULTIMATE RECEIVERS. 9. OTHER ADDITIONS: 9.1 ADDITION OF ` .13,25,642 TOWARDS DEPOSITS IN IOB PANTHEON ROAD: 9.1.1. THE BREAK UP FOR ADDITIONS ARE AS UNDER:- NAME A/C NO. AMT ` DATE OF DEPOSIT S.GOPAL 11944 305917 17.02.1996 N MURALI 11945 305917 17.02.1996 S MOHAN 11946 203945 17.02.1996 R SRINIVASAN11947 203945 17.02.1996 V SATYAKUMAR11948 203945 17.02.1996 V.MANJULA 11949 101973 17.02.1996 1325642 15 ITA NO. 1466/CHNY/2018 9.1.2 OUT OF THE ABOVE PERSONS ONLY SMT. MANJUL A IS RELATED TO SHRI R.SRINIVASAN. SMT. MANJULA IS WIFE OF SHRI R.VENKATAKRISHNAN AND IS SISTER-IN-LAW . HENCE IT I S HUMBLY SUBMITTED THAT IN ABSENCE OF MANY MATERIAL EVIDENCI NG DIRECT INVOLVEMENT OF R.SRINIVASAN OR ESTABLISHMENT ANY CO NNECTION WITH R.SRINIVASAN, THESE INVESTMENTS CANNOT BE ASSE SSED IN THE HANDS OF SHRI R.SRINIVASAN. 9.1.3 SHRI R.SRINIVASAN HAS NOT GIVEN ANY SATISFACT ORY EXPLANATION REGARDING DEPOSIT OF ` 2,03,945/-. HENCE, THIS MAY BE TREATED AS UNACCOUNTED INVESTED OF SHRI R.SRINI VASAN AND IT IS PRAYED THAT ADDITION MAY BE SUSTAINED. 9. THE LEARNED CIT(A) AFTER CONSIDERING RELEVANT SUBMISSIONS OF ASSESSEE AND ALSO BY TAKING NOTE OF REMAND REPORT ISSUED BY THE ASSESSING OFFICER HAS ALLOWED PARTIAL RELIEF TO THE ASSESSEE IN RESPECT OF ADDITIONS MADE TOWARD S ESTIMATED INTEREST INCOME ON BANK DEPOSITS AND ADDITIONS TOWA RDS SALARY AND INTEREST INCOME. HOWEVER, IN RESPECT OF PROTEC TIVE ADDITION TOWARDS CREDITS FOUND IN BANK ACCOUNTS, LEARNED CIT (A) WAS OF THE OPINION THAT ONLY REASON GIVEN BY THE ASSESSING OFFICER TO TREAT THE IMPUGNED ADDITION AS PROTECTIVE WAS THAT BLOCK ASSESSMENT WAS ALREADY COMPLETED AND SAME HAS BEEN 16 ITA NO. 1466/CHNY/2018 REOPENED U/S.263 AND A FRESH ASSESSMENT WAS BEING MADE TO INCLUDE THESE AMOUNTS IN THE BLOCK ASSESSMENTS. BUT , FACT REMAINS THAT REVISION PROCEEDINGS INITIATED BY LEA RNED CIT U/S.263 WAS CHALLENGED BY ASSESSEE BEFORE APPELLAT E AUTHORITY AND THE MATTER TRAVELLED UP TO MADRAS HIGH COURT W HICH WAS ULTIMATELY DECIDED ISSUE IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 11.09.2012. IN ARRIVING AT THIS CONCLUSION, T HE HONBLE HIGH COURT RELIED ON THE DECISION OF KARNATAKA HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. SMT. ANNAPOORNAMMA CHANDRASHEKAR (2012) 204 TAXMANN 158, WHICH WAS SUBSEQUENTLY UPHELD BY THE HONBLE SUPREME COURT. A S A RESULT OF THIS, ADDITION MADE IN BLOCK ASSESSMENT STANDS D ELETED. THEREFORE, ADDITION MADE FOR ASSESSMENT YEAR UNDER CONSIDERATION U/S.143(3) IS NOW A SUBSTANTIVE ADDIT ION. HOWEVER, IN RESPECT OF ADDITIONS TOWARDS UNEXPLAINE D INVESTMENTS BEING CREDITS IN BANK ACCOUNTS OF 5 PER SONS, LEARNED CIT(A) WAS OF THE OPINION THAT AMOUNTS FOU ND CREDITED TO THE BANK ACCOUNTS IS BENAMI ACCOUNT OF ASSESSEE AND ARGUMENT OF ASSESSEE THAT THE SAME HAS ALREADY BEEN TAKEN INTO ACCOUNT IN THE ASSESSMENT OF AOP IS MISPLACED. HE FURTHER 17 ITA NO. 1466/CHNY/2018 OBSERVED THAT SINCE NO INDIVIDUAL ASSESSMENT HAS BE EN MADE IN THE HANDS OF MEMBERS OF AOP IN RESPECT OF SUPPLI ES, AS IT HAS BEEN CONTENTIONS OF ALL MEMBERS OF AOP THAT TRA NSACTIONS WERE NOT DONE IN THEIR PERSONAL CAPACITY, BUT IN TH E CAPACITY OF AOP, BUT ON THE OTHER HAND, DEPOSITS IN BANK ACCOUN TS TREATED AS BENAMI ACCOUNTS OF THE ASSESSEE ARE NOT ON BEHAL F OF AOP. HE FURTHER OBSERVED THAT AOP HAS BEEN ASSESSED NOT ON THE BASIS OF TOTAL DEPOSITS IN THE ACCOUNT, BUT ON THE BASIS OF TOTAL VALUE OF SUPPLIES MADE AND FURTHER 50% OF TOTAL AM OUNT HAS BEEN ALLOWED AS DEDUCTION AND ONLY NET INCOME HAS B EEN ASSESSED TO TAX. ON THE OTHER HAND, AMOUNTS THAT HA VE BEEN TRANSFERRED INTO BENAMI ACCOUNT OF THE ASSESSEE IS ULTIMATE TRANSFER OF PROFITS FROM THIS SCAM AND THEREFORE, THE FACT THAT NET PROFIT ON SUPPLY OF SCHOOL UNIFORM AND SAREES OF TN TC HAS BEEN ASSESSED TO TAX IN THE HANDS OF AOP DOES NOT I N ANY WAY TAKE AWAY LIABILITY TO TAX AMOUNT TRANSFERRED TO TH E BENEFIT OF THE ASSESSEE. ACCORDINGLY, REJECTED EXPLANATION FURNISH ED BY ASSESSEE AND ALSO FINDINGS OF THE ASSESSING OFFICER IN REMAND REPORT AND SUSTAINED ADDITIONS MADE BY THE ASSESSIN G OFFICER TOWARDS UNEXPLAINED INVESTMENTS BEING CREDIT IN BAN K ACCOUNTS. 18 ITA NO. 1466/CHNY/2018 10. AS REGARDS ADDITIONS TOWARDS UNEXPLAINED INVEST MENTS IN DEPOSITS WITH INDIAN OVERSEAS BANK, PANTHEON ROAD, CHENNAI, LEARNED CIT(A) OBSERVED THAT ALTHOUGH ASSESSEE CLAI MS THAT THERE WAS NO CONNECTION BETWEEN THESE PERSONS AND T HE ASSESSEE, AT THE TIME OF SEARCH AND SEIZURE ACCOUNT OPENING FORMS IN RESPECT OF 15 PERSONS WERE FOUND AT THE P REMISES OF THE ASSESSEE. FURTHER, OUT OF THESE 15 PERSONS, TH ERE ARE FOUR FAMILY MEMBERS, REMAINING TEN PERSONS ARE OTHER THI RD PARTIES AND THERE IS NO REASON WHY ACCOUNT OPENING FORMS IN RESPECT OF THESE PERSONS SHOULD BE AVAILABLE IN THE ASSESSEE P REMISES. FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER HAS GATHERED VARIOUS EVIDENCES W HICH PROVES THAT AMOUNTS CREDITED INTO ABOVE ACCOUNT IS NOT FOR THE DISPOSAL OF ACCOUNTHOLDERS. THEREFORE, FROM THE ABO VE FACTS, IT IS VERY CLEARLY ESTABLISHED THAT ASSESSEE IS HAVING CONTROL AND OWNERSHIP OVER FUNDS HELD IN BANK ACCOUNT AND ACCOR DINGLY, ASSESSEE CANNOT CLAIM THAT THERE IS NO RELATIONSHIP WITH THESE PERSONS FROM WHOM VARIOUS AMOUNTS HAS BEEN CREDITED AND THEREFORE, REJECTED ARGUMENTS OF THE ASSESSEE AND M ADE 19 ITA NO. 1466/CHNY/2018 ADDITIONS TOWARDS AMOUNTS STANDING IN THE NAME OF V ARIOUS PERSONS IN THE BANK ACCOUNTS OF INDIAN OVERSEAS BAN K, PANTHEON ROAD, CHENNAI. INSOFAR AS ESTIMATED ADDIT ION OF RS.10,00,000/- INTEREST ON THE ABOVE BANK DEPOSITS, LEARNED CIT(A), AFTER TAKING INTO CONSIDERATION OF VARIOUS FACTS, HELD THAT IF WE CONSIDER QUANTUM OF UNEXPLAINED BANK DEPOSITS IN INDIAN OVERSEAS BANK ADDITION MADE BY THE ASSESSING OFFICE R TOWARDS POSSIBLE INTEREST EARNED ON SUCH DEPOSITS AMOUNTING TO RS 10,00,000/- APPEARS TO BE EXCESSIVE AND ACCOR DINGLY DIRECTED THE ASSESSING OFFICER TO ESTIMATE INTEREST OF RS.5,00,000/- ON SAID BANK DEPOSITS. THE RELEVANT F INDINGS OF LEARNED CIT(A) ARE AS UNDER:- 6. GROUND NO.2 RELATES TO A SUM OF RS.13,25,642/- TREATED AS UNEXPLAINED INVESTMENTS IN DEPOSITS WITH INDIAN OVE RSEAS BANK. THIS ISSUE IS DEALT WITH AT PARA 27 OF THE ASSESSME NT ORDER, THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCE EDINGS HAS ASCERTAINED THAT THE FOLLOWING ACCOUNTS IN INDIAN O VERSEAS BANK, PANTHEON ROAD, CHENNAI WERE OPERATED BY THE APPELLA NT: 20 ITA NO. 1466/CHNY/2018 7. THE ASSESSING OFFICER FOUND THAT THE AMOUNTS HEL D IN THESE ACCOUNTS WERE IN THE NAME OF FAMILY MEMBERS OF THE APPELLANT AND ALL THE DEPOSITS HAVE BEEN ENCA5SHED IMMEDIATEL Y ALTER THE DATE OF SEARCH, THE ASSESSING OFFICER FURTHER NOTED THAT ALL THE DEPOSIT ACCOUNTS WERE OPENED THROUGH CHEQUES ISSUED BY TNTC LTD. TO THE SUPPLIERS WHO IN TURN GAVE THIS MO NEY TO THESE PERSONS. THE ASSESSING OFFICER HELD THAT ALL THE AM OUNTS HAVE BEEN ENCASHED BY OPENING FIXED DEPOSITS IN THE NAME OF THE APPELLANTS FAMILY MEMBERS AN THE AMOUNTS TRANSFERR ED TO SAVINGS BANK ACCOUNTS WHICH WERE ALSO WITHDRAWN IMM EDIATELY AFTER THE SEARCH, ACCORDINGLY, THE ASSESSING OFFICE R HAS BROUGHT TO TAX THE TOTAL VALUE OF CREDITS IN THESE ACCOUNTS AMOUNTING TO RS.13,25,642/- AS UNEXPLAINED INVESTMENT OF THE APP ELLANT BY TRADING THE APPELLANT AS THE BENEFICIAL OWNER OF TH E AMOUNTS CREDITED IN THESE ACCOUNTS. 8. IN THE COURSE OF APPEAL, THE APPELLANT SUBMITTED THAT THERE WAS NO RELATIONSHIP BETWEEN THE APPELLANT AND THE O THER FIVE PERSONS FORMING PART OF THE LIST OF SIX PERSONS REP RODUCED ABOVE. IT S STATED THAT EXCEPT FOR SMT. V. MANJULA. WHO IS THE WIFE OF HIS BROTHER SHRI R VENKATAKRISHNAN, NONE OF THE OTHER 5 PERSONS ARE RELATED TO THE APPELLANT. THE APPELLANT HAS THEREFORE, ADMITTED THAT WHILE THE DEPOSIT STANDING IN HIS NAME TO THE EXTENT OF RS.2,03,945/- MAY BE CONSIDERED AS HIS INCOME FOR THE A.Y. 1996-97, THE REMAINING ADDITIONS MAY B E DELETED. 21 ITA NO. 1466/CHNY/2018 9. THE APPELLANTS CONTENTIONS ARE CONSIDERED. THOUG H THE APPELLANT STATED THAT THERE WAS NO CONNECTION BETWE EN THESE PERSONS AND THE APPELLANT, THAT STATEMENT IS NOT EN TIRELY TRUE. AT THE TIME OF SEARCH AND SEIZURE OPERATIONS, ACCOUNT OPENING FORMS IN RESPECT OF 15 PERSONS WERE FOUND AT THE AP PELLANTS PREMISES. THE DETAILS OF THESE PERSONS ARE FOUND AT PAGE 8 OF THE ASSESSMENT, ORDER. THE SAME IS REPRODUCED BELOW FOR READY REFERENCE: S/SHRI/SMT, 1 G. MOHAN 2 S. GOPAL 3 G. SHANTHI 4 G. RAHESWARI 5 R. SRINIVASAN, ASSESSEE 6 V. SRINIVASAN, BROTHER IN-LAW OF ASSESSEE 7. S ALAMELU, SISTER 8 R. SAKUNTHALA, MOTHER 9 V. MANJULA, SISTER-IN-LAW 10 M. MURALI II THIRUGNANAM, EMPLOYEE OF ASSESSEE 12 V. ARUNACHALAM 13 A. KASTURI 14 G. THIAGARAJAN 15 A. SATHISHKUNAR 22 ITA NO. 1466/CHNY/2018 10. OUT OF THESE 15 PERSONS, OTHER THAN THE APPELLA NT, THERE ARE FOUR FAMILY MEMBERS. THE REMAINING 10 PERSONS ARE O THER THIRD PARTIES AND THERE IS NO REASON WHY THE ACCOUNT OPEN ING FORMS IN RESPECT OF THESE PERSONS SHOULD BE AVAILABLE IN THE APPELLANTS PREMISES. IN THIS CONNECTION, AT SI.NO. 1 OF THE LIST IS THE ACCOUNT OPENING FORM IN THE CASE OF THIRUGNANAM . A LETTER ADDRESSED BY SHRI THIRUGNANAM TO THE ASSESSING OFFI CER DATED 20.12.1996 IS ENCLOSED AS ANNEXURE 2 TO THE ASSESSM ENT ORDER- IN THE SAID LETTER IT HAS BEEN CONFIRMED THA T THE AMOUNTS IN THE ACCOUNT WERE NOT FOR THE PERSONAL DISPOSAL O F SHRI THIRUGNANAM. SIMILARLY, IN RESPECT OF THREE OTHER P ERSONS AT SL.NOS.2, 10 AND 11 THE ADDRESS IN THE ACCOUNT OPEN ING FORM IS SAME AS THE APPELLANTS RESIDENTIAL PREMISES. SIMILA RLY, IN RESPECT OF SL.NOS. 3, 12, 13 AND 14 THE APPELLANT H AS ADMITTED THE DEPOSITS IN THEIR ACCOUNT AS HIS UNDISCLOSED IN COME TO THE EXTENT OF PAY IN SLIPS FOUND AT HIS PREMISES. FURTH ER, IN RESPECT OF PERSONS AT SI. NOS.12, 13 AND 15 THE ADDRESS IN THE ACCOUNT OPENING FORM IS E APPELLANTS ADDRESS IN RESPECT OF AGRICULTURAL LAND OWNED BY HIM. 11. ALL THESE FACTORS ESTABLISH THE APPELLANTS CON TROL AND OWNERSHIP OVER THE FUNDS HELD IN THE BANK ACCOUNTS OF THE 15 PERSONS LISTED AT PAGE 8 OF THE ASSESSMENT ORDER- O N THE BASIS OF THE SAME, THE APPELLANTS CONTROL OVER THE ACCOU NTS OF MR. S. GOPAL, MR. N. MURALI, MR. S. MOHAN, MS. V. MANJULA BESIDES THE DEPOSIT IN HIS OWN NAME THAT HAS BEEN DISPUTED BY T HE APPELLANT, IS ESTABLISHED. THEREFORE, ADDITION TO T HE EXTENT OF RS. 11,21,697/- AS UNEXPLAINED INVESTMENT IS CONFIRMED- THIS GROUND OF APPEAL IS PARTLY ALLOWED. 12. GROUND NO.3 RELATES TO THE ESTIMATED ADDITION O F INTEREST ON THE FIXED DEPOSITS. THIS ISSUE IS DEALT WITH BY THE ASSESSING 23 ITA NO. 1466/CHNY/2018 OFFICER AT PARA 30 OF THE ASSESSMENT ORDER. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CAME ACROSS EVIDENCE OF FIXED DEPOSITS IN THE NAME OF THE APPEL LANT AND HIS FAMILY MEMBERS AND ASSOCIATES. THESE FIXED DEPOSITS WERE MADE OUT OF THE AMOUNTS WITHDRAWN FROM THE BANK ACC OUNTS IN THE NAME OF VARIOUS PERSONS, INVOLVED IN THE TEXTIL E SCAN, WHICH WAS ACTUALLY THE BENAMI ACCOUNT OF THE APPELLANT. T HE ASSESSING OFFICER HAS ESTIMATED SUCH INTEREST AT RS .10 LAKHS CONSISTING OF RS.9 LAKHS BEING THE INTEREST ON SUCH BANK ACCOUNTS OF SUPPLIERS TO TNTC AND RS. I IAKH BEING THE INCREST IN RESPECT OF ACCOUNTS OF THE DEPOSITORS IN SHRI RA MDOSS FINANCE P. LTD. WHICH HAS BEEN ADMITTED BY THE APPE LLANT AS HIS OWN INCOME. 13. IN THE COURSE OF APPEAL) THE APPELLANT SUBMITTE D THAT EVEN ASSUMING ALL THE DEPOSITS IN THE INDIAN OVERSEAS BA NK, PANTHEON ROAD BRANCH BELONGS TO THE APPELLANT SINCE THEY WERE HELD IN THE BANK ONLY FOR A PERIOD OF 13 DAYS) IT IS CONTENDED THAT THE ESTIMATION OF RS. 10 LAKHS AS IN TEREST IS EXCESSIVE. 14. THE APPELLANTS CONTENTIONS ARE CONSIDERED. AS THE ASSESSING OFFICER HAS DETERMINED THE AMOUNT ON ESTI MATE BASIS, IN MY OPINION, THE ENDS OF JUSTICE WOULD BE MET R THE ESTIMATE IS MADE AT RS.5 LAKHS. 15. GROUND NOS.4, 5 & 6 RELATES TO THE ADDITION OF RS.7,16,79,408/- ON ACCOUNT OR UNEXPLAINED INVESTME NT BEING THE CREDITS APPEARING IN VARIOUS BENAMI ACCOUNTS AS SESSED IN THE HANDS OF THE APPELLANT FOR THE RELEVANT PREVIOU S YEAR ON PROTECTIVE BASIS. AS EXPLAINED EARLIER, TNIC WAS TH E AGENCY THROUGH WHICH THE TAMILNADU GOVERNMENT WAS IMPLEMEN TING A 24 ITA NO. 1466/CHNY/2018 WELFARE SCHEME FOR FREE DISTRIBUTION OF SAREES, DOT HIS AND SCHOOL UNIFORM TO THE POOR AND NEEDY. THE APPELLANT IS THE BROTHER OF SHRI R. VENKATAKRISHNAN WHO WAS THE PA TO THE SOCIA L WELFARE MINISTER IN CHARGE OF THE FREE DISTRIBUTION SCHEME OF THE TAMILNADU GOVERNMENT AT THAT TIME. IT WAS FOUND DUR ING THE SEARCH OPERATIONS THAT FOR THE PURPOSE OF PROCURING THE DOTHIS AND SAREES. A NUMBER OF BOGUS ENTITIES WERE FLOATED THROUGH THE CONNIVANCE OF THE APPELLANT AND SHRI R. VENKATA KRISHNAN. THE APPELLANT AND HIS BROTHER PROCURED MATERIALS FR OM OTHER PERSONS IN THE NAME OF THEIR BOGUS CONCERNS AND SUP PLIED THE SAME TO TNTC. TNTC DIRECTLY PAID THE AMOUNTS INTO T HE BANK ACCOUNT OF THESE CONCERNS FOR THE ALLEGED SUPPLIES. AS PER THE SEARCH DOCUMENTS) SINCE SOME OF THE SUPPLIES WERE A LSO BOGUS, SUBSTANTIAL FUNDS HAVE BEEN TRANSFERRED BY T HESE CONCERNS (WHICH SUPPLIED SAREES AND DOTHIS TO THE T NTC) TO THE ACCOUNT OF SHRI R.VENKATAKRISHNAN AND HIS FAMILY ME MBERS. IT HAS BEEN CONCLUDED BY THE ASSESSING OFFICER THAT TH E APPELLANT WAS ONE OF THE BENEFICIARIES OF THE TEXTILE SCAM ON ACCOUNT OF BOGUS PURCHASES AND OTHER MALPRACTICES RESULTING IN SUBSTANTIAL AMOUNTS BEING AMASSED BY THE SUPPLIERS OF SAREES AN D DOTHIS WHICH IN TURN HAS BEEN PASSED ON TO THE APPELLANT. 16. IN THE COURSE OF ASSESSMENT PROCEEDINGS, BASED ON DOCUMENTS SEIZED DURING SEARCH AND SUBSEQUENT INVES TIGATION, THE FOLLOWING BANK ACCOUNTS IN THE NAME OF OTHER PE RSONS HAS BEEN TREATED AS THE BENAMI ACCOUNTS OF THE APPELLAN T AND THE CREDITS N THE ACCOUNTS ARE TREATED AS THE APPELLANT S INCOME. AFTER IGNORING THE CROSS ENTRIES IN THESE ACCOUNTS, THE ASSESSING OFFICER FOUND THAT THAT TOTAL CREDITS IN THESE ACCOUNTS 25 ITA NO. 1466/CHNY/2018 WERE TO THE FOLLOWING EXTENT. 26 ITA NO. 1466/CHNY/2018 17. THE REASONS FOR TREATING THESE ACCOUNTS AS THE BENAMI ACCOUNT OF THE APPELLANT WERE AS FOLLOWS: I) THE PASSBOOKS OF 4 OUT OF THESE 5 ACCOUNTS WERE FOUND AT THE APPELLANTS PREMISES AT THE TIME OF SEARCH AND SEIZU RE OPERATIONS. NO PLAUSIBLE REASON COULD BE GIVEN BY T HE APPELLANT FOR THE PRESENCE OF THESE PASSBOOKS IN HIS PREMISES , II. A PAY IN SLIP EVIDENCING A DEPOSIT RS.26 LAKHS INTO THE ACCOUNT OF SHRI V. KANNAN WAS ALSO FOUND AT THE APP ELLANTS PREMISES. AT THE TIME OF SEARCH, THE APPELLANT DID NOT DISOWN THIS TRANSACTION AND MERELY STATED THAT HE WOULD EX PLAIN IT LATER. HOWEVER, THE APPELLANT COULD NOT EXPLAIN THE REASON S FOR THE EXISTENCE OF PAY IN SLIP AT HIS OFFICE. 27 ITA NO. 1466/CHNY/2018 III. MR. K. MOHAN AND V. KANNAN TWO OF THE ABOVE PA RTIES WERE NOT AVAILABLE AT THE ADDRESS AS SHOWN IN THE BANK A CCOUNT DETAILS. IV, ALL THE CREDITS IN THESE ACCOUNTS WERE ON ACCOU NT OF TRANSFER FROM CERTAIN ACCOUNTS MAINTAINED IN BANK OF MADURA COIMBATORE FROM PERSONS WHO WERE SUPPLIERS TO TNTC. V. SHRI PONNAMBALAM (FROM WHOM SUBSTANTIAL TRANSFER S WERE MADE TO THESE ACCOUNTS) HAS GIVEN A STATEMENT ON 09 .10.1998 THAT HE WAS ONLY ACTING UNDER THE INSTRUCTIONS OF T HE APPELLANT WHEN HE TRANSFERRED AMOUNTS INTO THE ACCOUNT OF SHR I V. KANNAN. IT MAY BE NOTED THAT A SUM OF RS.25 IAKHS H AS BEEN TRANSFERRED BY PONNAMBALAM TO THE ACCOUNT OF SHRI V . KANANN ON 25.02.1991. IT WAS FURTHER FOUND THAT ANOTHER PA Y IN SLIP FOR A TELEGRAPHIC TRANSFER OF RS.75 LAKHS BY SHRI V. PONN AMBALAM FROM THE ACCOUNT OF SABARI TRADERS TO THE ACCOUNT O F MR. S. GOPAL WAS ALSO FOUND AT THE PREMISES OF THE APPELLA NT. IF THE APPELLANT HAD NO CONNECTION WLTH SHRI PONNAMBALAM O R SHRI S. GOPAL, THERE WAS NO REASON WHY THE PAY IN SLIP FOR TELEGRAPHIC TRANSFER OF AMOUNTS BY PONNAMBALAM TO GOPAL SHOULD BE FOUND AT THE APPELLANTS PREMISES. VI IT WAS ALSO FOUND THAT SR ASSOCIATES, A CONCERN OWNED BY THE APPELLANT AND HIS FAMILY MEMBERS HAD ISSUED BIL LS TO TNEB FOR SUPPLY OF ENERGY GENERATED AND PUMPED TO TNEB G RID AND THE BILLS WERE SIGNED ON BEHALF OF SR ASSOCIATES BY SHRI PONNAMBALAM. IN THIS CONNECTION, THE ASSESSING OFFI CER HAS PINPOINTED THE SPECIFIC SEARCH MATERIAL WHICH IS AL SO ENCLOSED AS ANNEXURE 1 TO THE ASSESSMENT ORDER. VII. ALL THE DEPOSITS IN THESE ACCOUNTS WERE CONVER TED INTO FIXED DEPOSITS OF SMALLER DENOMINATIONS IN THE NAMES OF T HE APPELLANT 28 ITA NO. 1466/CHNY/2018 AND HIS FAMILY MEMBERS. SUBSEQUENTLY, THESE DEPOSIT S HAVE BEEN ENCASHED AND THE AMOUNTS HAVE BEEN WITHDRAWN B Y THE PARTIES SUPPORTING THE CONCLUSION THAT THESE ACCOUN TS ARE THE BENAMI ACCOUNTS OF THE APPELLANT. VIII. IN THE CASE OF S. RAJA, THOUGH THE BANK ACCOU NT PASSBOOK WAS NOT FOUND AT THE APPELLANTS PREMISES, OTHER EV IDENCES GATHERED AFTER THE SEARCH SHOWS THAT THE AMOUNTS IN THIS ACCOUNT WERE ALSO THE APPELLANTS BENAMI INVESTMENT ONLY. IN THIS CONNECTION, THE ASSESSING OFFICER HAS FOUND TH AT THE APPELLANT OPERATED A LOCKER IN INDIAN BANK, MANNADI BRANCH AND THE RENT IN RESPECT OF THE SAID LOCKER HAS BEEN CHARGED TO THE ACCOUNT OF MR. S. RAJA AND K. SENTHAMARAI. THE BANK IN THIS REGARD HAS CONFIRMED THAT THE LOCKER FACILITY AT TH E BANKS MANNADI BRANCH WAS AVAILED BY THE APPELLANT ON 28.1 0.1995 AND THE LOCKER RENT WAS DEBITED IN THE ACCOUNT OF S HRI S. RAJA. 18. THE FIRST ISSUE TO BE DECIDED IS WHETHER THE AD DITION MADE ON PROTECTIVE BASIS IS TO BE TREATED AS A SUBSTANTI VE ADDITION OR NOT. IN THIS CONNECTION, IT IS FOUND THAT THE ONLY REASON CITED BY ASSESSING OFFICER FOR MAKING THE ADDITION ON A PROT ECTIVE BASIS IS THAT THE SAME ADDITION WAS PROPOSED TO BE MADE I N THE BLOCK ASSESSMENT OF THE APPELLANT. IT IS STATED THAT THE BLOCK ASSESSMENT WAS BEING REOPENED UNDER SECTION 263 AND A FRESH ASSESSMENT WAS BEING MADE INCLUDING THESE AMOUNTS I N THE BLOCK ASSESSMENT. SUBSEQUENTLY, IN FACT, THE BLOCK ASSESSMENT WAS REOPENED AND THE AMOUNTS W ADDED IN THE SAME. H OWEVER THE APPELLANT CHALLENGED THE COMMISSIONERS POWER T O REOPEN AN ASSESSMENT MADE UNDER SECTION 158 BD IN TERMS OF SECTION 263, AS THE COMMISSIONER HAD GRANTED ADMINISTRATIVE APPROVAL FOR THE ORDER PASSED UNDER SECTION 158 BD. THE ISSU E TRAVELLED UP TO THE MADRAS HIGH COURT IN THE APPELLANTS OWN CASE WHICH 29 ITA NO. 1466/CHNY/2018 ULTIMATELY DECIDED THE ISSUE IN FAVOUR OF THE APPEL LANT IN ITS ORDER DATED 11.09.2012. IN ARRIVING AT THIS CONCLU SION, THE MADRAS HIGH COURT RELIED UPON THE KARNATAKA HIGH CO URT DECISION IN THE CASE OF CIT VS. SMT. ANNAPOORNAMM A CHANDRA SHAKAR(2012) 204 TAXMAN 58, WHICH WAS SUBSEQUENTLY UPHELD BY THE HONBLE SUPREME COURT. AS A RESULT AS ON DAT E, THE ADDITION MADE IN THE BLOCK ASSESSMENT STANDS DELETE D. THEREFORE THE ADDITION MAD FOR THE ASSESSMENT YEAR UNDER SECTION 143(3) IS NOW SUBSTANTIVE ADDITION. 19. IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S, THE PRIMARY REASON GIVEN BY THE APPELLANT AGAINST THE A DDITIONS WAS THAT AS THE SAME WAS ALSO BEING MADE IN THE BLOCK A SSESSMENT THE SAME WAS NOT WARRANTED AGAIN IN REGULAR ASSESSM ENT. SUBSEQUENTLY, THE APPELLANT WDE THE SUBMISSION DATE D 13.12.2012 HAS, FOR THE FIRST TIME, SUBMITTED THAT AN ASSESSMENT IN RESPECT OF THE VARIOUS SUPPLIERS TO TNTC HAS BEE N COMPLETED IN THE STATUS OF AN ASSOCIATION OF PERSONS (AOP). I T IS FURTHER STATED THAT THE DEPOSITS INTO THE ACCOUNT OF THESE 5 PERSONS ARE FROM OTHER 5-6 ACCOUNTS WHICH ARE IN THE NAME OF PE RSONS WHO ARE ALSO MEMBERS OF THE AOP. IT IS STATED THAT ONCE THE INCOME OF THE AOP IS ASSESSED, THE AMOUNTS STANDING IN THE ACCOUNTS OF THE MEMBERS OF AOP CANNOT BE TAXED AS INCOME OF THE APPELLANT. IN THIS CONNECTION, THE APPELLANT HAS PL ACED ON RECORD THE ASSESSMENT ORDER PASSED IN THE HANDS OF THE AOP . 20. REFERENCE TO THE ASSESSMENT ORDER PASSED IN THE HANDS OF THE AOP INDICATES THAT THE ADDITION IN THE HANDS OF THE AOP HAS BEEN MADE ON THE BASIS OF TOTAL VALUE OF GOODS SUPP LIED BY THE AOP TO TNTC. THIS AMOUNT HAS BEEN DETERMINED BY EST IMATING THE GROSS PROFITS EARNED BY THE SUPPLIERS IN RESPEC T OF DIFFERENT ITEMS SUCH AS SCHOOL UNIFORM, SAREES, DHOTIS SUPPLI ED BY THEM 30 ITA NO. 1466/CHNY/2018 AFTER TAKING INTO ACCOUNT THE SUPPLY PRICE TO TNTC AS WELL AS THEIR COST PRICE. ON THE PROFIT ARRIVED IN THIS MAN NER, FURTHER DEDUCTIONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER TO THE EXTENT OF 1/3 OF THE TOTAL PROFIT. THE RELEVANT PAR T OF THE ORDER PASSED IN THE CASE OF THE AOP IS EXTRACTED BELOW: 8. THE TOTAL INCOME WAS COMPUTED AS UNDER ON THE BASIS OF THE DETAILS COLLECTED FROM THE TNTC RECORDS: 15 TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE ESPECIALLY THE FACT THAT THE ASSESSEE COULD NO T HAVE 31 ITA NO. 1466/CHNY/2018 EARNED 120% PROFIT ON THE SALE OF UNIFORM CLOTH, FU RTHER ALLOW A SUM EQUAL TO 1/3D OF THE TOTAL INCOME COMPUTED N TH E ANGINA! ASSESSMENT ORDER TOWARDS PROBABLE EXPENSES AS SLATE D ABOVE. THIS LVIII BE DEDUCTED FROM THE TOTAL INCOME AND TH E BALANCE IS ASSESSED TO TAX AS UNDER: TOAL INCOME AS PER ORIGINAL ORDER. 9,25,51,290 LESS: EXPENSES ALLOWED AS DISCUSSED. 3,08,50,430 TOTAL INCOME 6,17,00,860 22. THIS MATTER HAS BEEN FURTHER AGITATED BY THE AO P BEFORE THE HONBLE ITAT WHO HAVE FINALLY HELD THAT OUT OF THE TOTAL INCOME ESTIMATED TO HAVE BEEN EARNED BY THE AOP ON ACCOUNT OF SUPPLY OF SARIS, DHOTIS AND UNIFORM TO TNTC, 50% OF THE SAME SHOULD BE ALLOWED AS DEDUCTION. THUS, FINALLY A SUM OF RS. 4,62,75,645/- HAS BEEN ASSESSED AS THE TOTAL INCOME OF THE AOP ON ACCOUNT OF SUPPLY OF SARIS, DHOTIS AND UNIFO RM TO TNTC. 22. THE APPELLANTS CONTENTION THAT THE AMOUNTS FOUN D CREDITED TO THE BANK ACCOUNT HELD TO BE HIS BENAMI ACCOUNT H AS ALREADY BEEN TAKEN INTO ACCOUNT IN THE ASSESSMENT OF THE AO P, IS MISPLACED. IT IS FOUND THAT NO INDIVIDUAL ASSESSMEN T, HAS BEEN MADE IN THE HANDS OF THE MEMBERS OF THE AOP IN RESP ECT OF THESE SUPPLIES, AS IT HAS BEEN THE CONTENTION OF AL L THE MEMBERS OF THE AOP THAT THE TRANSACTIONS WERE DONE NOT IN T HEIR PERSONAL CAPACITY, BUT IN THE CAPACITY OF THE AOP. ON THE OT HER HAND THE DEPOSITS IN THE ACCOUNTS TREATED AS THE BENAMI ACCO UNT OF THE APPELLANT ARE NOT ON BEHALF OF THE AOP. FURTHER, THE AOP HAS BEEN ASSESSED, NOT ON THE BASI S OF THE TOTAL DEPOSITS IN THE ACCOUNT BUT ON THE BASIS OF T HE TOTAL VALUE OF SUPPLIES MADE AND FURTHER 50% OF THE TOTAL AMOUN T HAS BEEN ALLOWED AS DEDUCTION AND ONLY THE NET INCOME HAS BE EN 32 ITA NO. 1466/CHNY/2018 ASSESSED TO TAX IN THEIR HANDS. THE OTHER HAND, THE AMOUNTS THAT HAVE BEEN TRANSFERRED INTO THE BENAMI ACCOUNT OF TH E APPELLANT, IS THE ULTIMATE TRANSFER OF THE PROFITS FROM THIS S CAM INTO THE ACCOUNTS OF THE BENEFICIARY, BEING THE APPELLANT, T HEREFORE, THE FACT THAT THE NET PROFIT ON SUPPLY OF SCHOOL UNIFOR M AND SANS TO TWIG HAS BEEN ASSESSED TO TAX IN THE HANDS OF THE A OP DOES NOT IN ANY WAY, TAKE AWAY THE LIABILITY TO TAX OF T HE APPELLANT ON RECEIPT OF THESE PROFITS INTO THE BANK ACCOUNT TREA TED AS HIS BENAMI ACCOUNT. THEREFORE, THE MAIN CONTENTION OF T HE APPELLANT THAT AMOUNTS TREATED AS APPELLANTS BENAM I INCOME, HAVE BEEN ALREADY ASSESSED TO TAX IN THE HANDS OF A OP IS REJECTED. IN THE LIGHT OF THESE FINDINGS, THE ACTUA L DEPOSITS INTO THE ACCOUNTS ARE BEING EXAMINED. 23. IN THE CASE OF V. KANNAN, THE TOTAL DEPOSITS AR E AS UNDER: A. TRANSFER FROM MR. V. PONNAMBALAM SRI GHAKRA TR ADERS RS. 25,00,000/ B. TRANSFER FROM MR. S. SAKTHIVEL R.. 33,00,000/- C. OTHER CREDITS RS.26,00,000/-. 24. AS POINTED OUT BY THE ASSESSING OFFICER, MR. V. KANNAN IS TREATED TO BE THE BENAMI OF THE APPELLANT FOR VARIO US REASONS SUCH AS THE PASSBOOKS AND PAY IN SLIP FOR DEPOSIT I NTO THE ACCOUNT BEING AVAIJABIE AT HIS PREMISES, MR. V. KAN NAN NOT BEING AVAILABLE AT THC ADDRESS AS PER THE BANK ACCO UNT AND THE APPELLANT FAILING TO ESTABLISH THE IDENTITY OF THE PERSON. IN THE COURSE OF APPEAL, THE APPELLANT COULD NOT CONTROVER T THESE FINDINGS OF THE ASSESSING OFFICER AND THEIR BALD AS SERTION THAT THEY HAVE NOTHING TO DO WITH MR.V. KANNAN IS REJECT ED FOR WANT OF ANY EVIDENCE. 33 ITA NO. 1466/CHNY/2018 25. THE DEPOSITS INTO THE ACCOUNT OF MR.V. KANNAN A RE MADE TO THE EXTENT OF RS.25 IAKHS BY MR.V. PONNARNBALAM. AS EXPLAINED EARLIER, MR. V. PONNAMBALARN IS AN EMPLOYEE OF THE APPELLANT AS EVIDENCED BY ANNEXURE 1 TO THE ASSESSMENT ORDER. FU RTHER, MR. PONNAMBALAM HAS ALSO ADMITTED IN A STATEMENT RECORD ED BEFORE THE ASSESSING OFFICER ON 09.10.1998 THAT HE WAS ACTING UNDER THE INSTRUCTIONS OF THE APPELLANT AND DID NOT DO THE BUSINESS OF SUPPLYING CLOTHES TO TNTC ON HIS OWN. T HE PAY IN SLIP SIGNED BY MR. V. PONNAMBALAM ON BEHALF OF SABA RI TRADERS, COIMBATORE WAS ALSO FOUND AT THE PREMISES OF THE APPELLANT. ALL THESE SHOWS THAT THE AMOUNTS TRANSFE RRED TO THE ACCOUNT OF MR. V. KANNAN IS THE APPELLANTS INCOME AND THE TRANSFER MADE BY MR. V. PONNAMBALAM WAS UNDER THE INSTRUCTION OF THE APPELLANT. IN VIEW OF THE SAME, THIS AMOUNT OF RS. 25 LAKHS TRANSFERRED TO THE ACCOUNT OF MR. V. K ANNAN BY MR. V. PONNAMBALAM IS CONFIRMED. 26. AS REGARDS THE SUM OF RS. 33 LAKHS CREDITED IN THIS ACCOUNT, THE SAME HAS BEEN WITHDRAWN IMMEDIATELY IN CASH. AS THE APPELLANT WAS IN CONTROL OF THIS BANK ACCOUNT, THE AMOUNT WITHDRAWN AS CASH IS CORRECTLY HELD AS APPELLANTS INCOME. 27. BESIDES THE SAME, A SUM OF RS.26 LAKHS WAS ALSO FOUND CREDITED TO THE ACCOUNT OF MR. V. KANNAN. NO EXPLAN ATION HAS BEEN GIVEN BY THE APPELLANT REGARDING THE SOURCE OF THIS AMOUNT. THE GENERAL EXPLANATION OF THE APPELLANT TH AT ALL AMOUNTS HAVE BEEN TAKEN INTO ACCOUNT IN THE ASSESME NT OF THE AOP WILL NOT COVER THIS CREDIT INTO THE ACCOUNT OF MR. V. KANNAN. IN VIEW OF THE SAME THE ADDITION MADE TO THE EXTENT OF KS. 26 LAKHS INTO HIS ACCOUNT IS ALSO CONFIRMED. 34 ITA NO. 1466/CHNY/2018 28. IN THE COURSE OF THE APPEAL, THE APPELLANT WAS ASKED TO FURNISH THE PARTICULARS OF ADDRESS AND PAN OF MR. V . KANNAN BUT THE APPELLANT SLATED THAT MR. V. KANNAN WAS NOT A T AX PAYER AT THAT TIME AND THEREFORE DID NOT FURNISH ANY DETAILS . THE BANK ACCOUNT UNDER THE CONTROL OF THE APPELLANT SHOWS HO W THE SURPLUS GENERATED IN THE SCAM HAS BEEN APPROPRIATED BY THE APPELLANT. HENCE, THE ADDITION OF RS 84 LAKHS IN TH E HANDS OF THE APPELLANT IS CONFIRMED. 29. THE TOTAL DEPOSITS INTO THE ACCOUNT OF MR. K. M OHAN ARE AS UNDER: A. TRANSFER FROM V. PONNAMBALAM CHAKRA TRADERS RS.25 LAKHS B. TRANSFER FROM SR. KANNAN COIMBATORE RS.36 LAKH S C. TRANSFER FROM SR. KANNAN COIMBATORE RS.40 LAKH S 30. AS IN THE CASE OF MR. V. KANNAN, THE ACCOUNT OF MR. K. MOHAN IS ALSO A BENAMI ACCOUNT OF THE APPELLANT. TH IS CONCLUSION IS SUPPORTED BY THE FACT THAT THE BANK P ASSBOOK WERE FOUND AT THE APPELLANTS PREMISES AND THE APPEL LANT FAILED TO GIVE ANY EXPLANATION FOR THE PRESENCE AT HIS PRE MISES. FURTHER, THE SUM OF RS. 25 LAKHS INTO THIS ACCOUNT IS BY MR. V. PONNAMBALAM WHO IS AN EMPLOYEE WITH SR ASSOCIATES A CONCERN OWNED BY THE APPELLANT. THEREFORE, THE SUM OF RS.25 LAKHS TRANSFERRED INTO THIS ACCOUNT IS CORRECTLY TR EATED AS THE APPELLANTS INCOME. 31. SIMILARLY, THE SUM OF RS 36 LAKHS AND RS. 40 LA KHS IS ALSO ASSESSABLE IN THE HANDS OF THE APPELLANT AS THESE A MOUNTS HAVE BEEN WITHDRAWN IN CASH IMMEDIATELY AFTER DEPOS IT. THE APPELLANT COULD NOT PROVIDE PAN OR ANY OTHER DETAIL S OF MR. K. 35 ITA NO. 1466/CHNY/2018 MOHAN. COUPLED WITH THE FACT THAT THE PASS BOOK AND PAY-IN SLIP WERE FOUND IN THE APPELLANTS POSSESSION, THE ADDIT ION OF RS 1,01,00,000/- IN THE HANDS OF THE APPELLANT IS CONF IRMED. 32. THE DEPOSIT INTO THE ACCOUNT OF S. GOPAL IS TO THE EXTENT OF RS. 75 LAKHS TRANSFERRED FROM SABARI TRADERS. THE C ONCLUSION THAT S. GOPAL IS THE BENAMI OF THE APPELLANT AND TH E TRANSFER TO THIS ACCOUNT IS THE INCOME OF THE APPELLANT IS SUPP ORTED BY THE FOLLOWING FACTS; A. THE HANK PASSBOOK OF THIS PERSON WAS FOUND AT TH E PREMISES OF THE APPELLANT. B. FURTHER, AT PAGE 8 OF THE ASSESSMENT ORDER THE A SSESSING OFFICER HAS EXPLAINED THAT THE ACCOUNT OPENING FORM FOR THE BANK ACCOUNT OF THIS PERSON WAS FOUND AT THE APPELL ANTS PREMISES AND THE ADDRESS AS PER THE ACCOUNT OPENING FORM IS THE SAME AS THE APPELLANTS RESIDENTIAL ADDRESS. C. THE SUM OF RS.75 LAKHS TRANSFERRED INTO THIS ACC OUNT IS THROUGH A TELEGRAPHIC TRANSFER. THE RELEVANT PAY IN SLIP IN RESPECT OF THE SAID TRANSFER IS ALSO FOUND FROM THE APPELLANTS PREMISES. (REFER PARAGRAPH 14 PAGE 6 OF THE ASSESSM ENT ORDER). THE PAY IN SLIP IS SIGNED BY SHRI V. PONNAM BALAM WHO IS AN EMPLOYEE OF THE APPELLANT. D. THE SUM OF RS.75 LAKHS HAS BEEN CONVERTED INTO F DS IN THE NAME OF THE APPELLANT AND HIS FAMILY MEMBERS WHICH HAVE ULTIMATELY BEEN ENCASHED BY THEM. ALL THIS ADEQUATELY SUPPORTS THE CONCLUSION OF TREA TING THE DEPOSIT AS THE APPELLANTS INCOME. HENCE THE ADDITION OF RS. 75 LAKHS IS UPHELD. 36 ITA NO. 1466/CHNY/2018 33. IN THE CASE OF R SENTHAMARAI, THE TOTAL DEPOSIT S ARE AS UNDER: 34. FROM THE ABOVE DETAILS, IT IS NOTED THAT SUBSTA NTIAL SUMS HAVE BEEN TRANSFERRED FROM TIRUMALA TRADERS AGGREGA TING TO RS. 2.07 CRORES TO TWO BANK ACCOUNTS OF MR. SENTHAM ARAI. THE ASSESSING OFLICER HAS EXPLAINED AT PARAGRAPH 5 PAGE 3 OF THE ASSESSMENT ORDER THAT MR. A. SELVARAJ, WHO OPERATES UNDER THE TRADE NAME OF TIRURNALA TRADERS, HAS TRANSFERRED SU BSTANTIAL FUNDS FROM HIS SAVINGS BANK ACCOUNT FROM BANK OF MA DURA, MAIN BRANCH, COIMBATORE INTO FIXED DEPOSITS IN THE NAME OF THE APPELLANT AND HIS FAMILY MEMBERS. THESE FIXED D EPOSITS HAVE SUBSEQUENTLY BEEN USED BY THE APPELLANT THROUG H HIS FIRM, SR. ASSOCIATES, TO TAKE A LOAN FROM THE BANK FOR HI S WINDMILL PROJECT. THE AMOUNTS HAVE BEEN SUBSEQUENTLY TRANSFE RRED TO A LOAN ACCOUNT IN THE NAME OF VARIOUS PARTIES INCLUDI NG MR. A- 37 ITA NO. 1466/CHNY/2018 SELVARAJ AND REMAIN OUTSTANDING IN THE BOOKS OF ACC OUNT OF SR ASSOCIATES. THIS CLEARLY SHOWS THAT MR. A. SELVARAJ AS WELL HIS FIRM TIRUMALA TRADERS ARE BENAMI OF THE APPELLANT. THEREFORE, THE AMOUNTS TRANSFERRED INTO THE ACCOUNT OF R SENT HAMARAI FROM TIRUMALA TRADERS HAVE BEEN CORRECTLY TREATED A S THE APPELLANTS INCOME. THIS CONCLUSION IS FURTHER SUPP ORTED BY THE FACT THAT THE ENTIRE SUM OF RS. 1.02 CRORES IN THE ACCOUNT OF MR. R. SENTHAMARAI WAS CONVERTED INTO SHORT TERM DEPOSI TS IN THE NAME OF 20 PERSONS @ RS.5 LATHS EACH AND WITHDRAWN IMMEDIATELY AFTER THE SEARCH ON 15.02.1996. 35. IN ALL RS. 94 LAKHS HAS BEEN TRANSFERRED BY MR. SR KANNAN TO MR. SENTHAMARAIS KOTTURPURAM AND MANNADY ACCOUN T, A REFERENCE TO THE MANNADY ACCOUNT SHOWS THAT AS SOON AS AMOUNTS ARE CREDITED IN THIS ACCOUNT, THE SAME HAVE BEEN WITHDRAWN IN CASH IMMEDIATELY. THE APPELLANT WAS FO UND TO POSSESS THE PASS BK OF THIS ACCOUNT. THE APPELLANT COULD NOT GIVE THE PAN OR THE ADDRESS OR ANY OTHER PARTICULAR S OF MR. SENTHAMARAI. THEREFORE, THESE AMOUNTS ARE CORRECTLY TREATED AS THE APPELLANTS INCOME AS ALL THE THREE ACCOUNTS AR C BENAMI ACCOUNT OF THE APPELLANT. 36, BESIDES THE DEPOSITS FROM THE SUPPLIERS TO TNTC , THERE ARE OTHER DEPOSITS IN THE ACCOUNT OF MR R. SENTHAMARAI ON ACCOUNT OF CREDITS AS WELL AS DEPOSIT OF CASH. THESE ARE AL SO WITHDRAWN IN CASH IMMEDIATELY. NO EXPLANATION HAS BEEN GIVEN BY THE APPELLANT IN RESPECT OF THESE DEPOSITS WHICH AGGREG ATE TO RS 5479,408/- 37. THEREFORE, ADDITION TO THE EXTENT OF RS. 3,58.7 9,408/-IS UPHELD AS THE ACCOUNT OF MR. R. SENTHAMARAI IS TREA TED AS THE BENAMI ACCOUNT OF THE APPELLANT. 38. IN THE CASE OF S. RAJA THE TOTAL DEPOSITS ARE AS UNDER: A. TIRUMALA TRADERS - RS. 20 LAKHS 38 ITA NO. 1466/CHNY/2018 B. S.R. KANNAN RS. 30 LAKHS C. A. SELVARAJ RS.51 LAKHS 39. THE CONCLUSION OF THE ASSESSING OFFICER THAT TH E ACCOUNT OF MR. S. RAJA IS THE BENAMI ACCOUNT OF THE APPELLANT IS SUPPORTED BY THE FACT THAT THE SENIOR MANAGER OF INDIAN BANK VIGILANCE DEPARTMENT HAS ADMITTED BEFORE THE ASSESSING OFFICE R THAT SERIOUS VIOLATION OF PROCEDURES IN RESPECT OF ACCOU NT OPENING AND TRANSACTION OF BUSINESS WERE FOUND IN RESPECT O F THE ACCOUNTS OF S. RAJA THE APPELLANT AND R. SENTHAMARA I. IT WAS EXPLAINED THAT THE APPELLANT ALSO USED THE NAME OF R.S. VASAN AND OPERATED A LOCKER IN THE INDIAN BANK MANNADI BR ANCH AND THE LOCKER RENT FOR THE SAME WAS DEBITED TO THE ACC OUNTS OF R. SENTHAMARAI AND S. RAJA. THIS SUPPORTS THE CONCLUSI ON THAT S. RAJA IS THE BENAMI OF THE APPELLANT- THE CONCLUSION IS FURTHER SUPPORTED BY THE FACT THAT THE OUT OF THE SUM OF R S. 1.01 CRORE, RS. 58 LAKHS WAS WITHDRAWN AS CASH AND RS 10 LAKHS WAS TRANSFERRED TO THE ACCOUNT OF MR. V. KANNAN. THE BA LANCE RS. 33 LAKHS WAS CONVERTED INTO SHORT TERM FIXED DEPOSI TS AND ENCASHED SUBSEQUENTLY. THUS THE ENTIRE AMOUNT STAND ING IN THE ACCOUNT WAS WITHDRAWN MAINLY AS CASH AND PARTLY BY CONVERTING INTO SHORT TERM FIXED DEPOSITS WITHIN TWO-THREE DAY S AFTER THE SEARCH BEFORE THE MODUS OPERANDI COULD BE UNDERSTOO D. FOR THE DETAILED REASONS IN PARA 34 THIRUMALA TRADERS A ND MR. A. SELVARAJ ARE THE BENAMI OF THE APPELLANT. ACCORDING LY ADDITION OF RS. 101 LAKHS IS UPHELD AS THE ACCOUNT IN THE NAME OF S. RAJA IS HELD TO BE BENAMI ACCOUNT OF THE APPELLANT. 39 ITA NO. 1466/CHNY/2018 11. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION FROM GROUND NO. 2 TO 4 OF ASSESSEE APPEAL IS ADDITION TO WARDS UNEXPLAINED INVESTMENTS BEING CREDIT IN BANK ACCOUN T. THE ASSESSING OFFICER HAD MADE PROTECTIVE ADDITION OF ` 7,16,79,408/- ON ACCOUNT OF UNEXPLAINED INVESTMENT S BEING CREDITS APPEARING IN VARIOUS BANK ACCOUNTS FOR RELE VANT ASSESSMENT YEAR. THE FACTS WITH REGARD TO IMPUGNED DISPUTE ARE THAT THE ASSESSEE WAS BROTHER OF MR.R.VENKATARA MAN, WHO WAS P.A. TO SOCIAL WELFARE MINISTER, IN-CHARGE OF F REE DISTRIBUTION SCHEME OF SAREES AND DHOTIES OF TAMIL NADU GOVERNMENT. THE GOVT. OF TAMILNADU IMPLEMENTED THE SCHEME THROUGH M/S. TNTC LTD. IT WAS FOUND DURING THE COUR SE OF SEARCH THAT SAREES AND DHOTIES WERE PROCURED THROU GH BOGUS ENTITIES IN CONNIVANCE WITH ASSESSEE AND MR. R.VENKATAKRISHNAN. FURTHER, MATERIALS FOUND DURING THE COURSE OF SEARCH INDICATE THAT AMOUNT PAID BY TNTC WAS ULT IMATELY ROUTED THROUGH VARIOUS BANK ACCOUNTS WHICH WERE ULT IMATELY BENEFICIALLY HELD BY ASSESSEE AND ACCORDINGLY, ASSE SSING OFFICER HAS MADE ADDITIONS ON PROTECTIVE BASIS FOR THE IMPUGNED 40 ITA NO. 1466/CHNY/2018 ASSESSMENT YEAR ON THE GROUND THAT SAME NEEDS TO BE BROUGHT TO TAX IN THE BLOCK ASSESSMENT . 12. THE LEARNED AR FOR THE ASSESSEE DURING COURSE OF HEARING HAS EXPLAINED ISSUE WITH A HELP OF CHART TH AT OUT OF TOTAL ADDITIONS MADE BY THE ASSESSING OFFICER IN THE N AME OF 5 INDIVIDUALS, DURING THE COURSE OF REMAND PROCEEDING S, THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THE FACT TH AT ALL THESE AMOUNTS WERE ALREADY CONSIDERED FOR TAXATION IN THE BLOCK ASSESSMENT OF M/S. M.DEVARAJ & OTHERS, AOP AND FUR THER AMOUNTS TRANSFERRED TO BANK ACCOUNTS OF FIVE INDIV IDUALS IS TRANSFERRED FROM VARIOUS ACCOUNTS OF MEMBERS OF AO P AND CONSEQUENTLY, SOURCE OF INCOME IS EXPLAINED IN THE HANDS OF ASSESSEE AND HENCE, NO ADDITION COULD BE MADE TOWAR DS UNEXPLAINED INVESTMENTS CREDITED IN BANK ACCOUNT. THE AR FURTHER SUBMITTED THAT ISSUE HAS BEEN CONSIDERED IN THE HANDS OF M/S. M.DEVARAJ & OTHERS, AOP, WHERE CREDITS FOUN D IN VARIOUS BANK ACCOUNTS INCLUDING BANK ACCOUNTS HELD IN THE NAMES OF SHRI V.KANNAN, SHRI K.MOHAN, SHRI S.GOPAL, SHRI R.SENTHAMARAI AND SHRI S.RAJA WERE ALREADY CONSIDE RED AND 41 ITA NO. 1466/CHNY/2018 INCLUDED IN GROSS RECEIPTS FOR THE PURPOSE OF ESTIM ATION OF INCOME. ONCE SAID RECEIPTS HAVE ALREADY CONSIDERED IN THE HANDS OF AOP, SAME CREDITS CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE. IN THIS REGARD, HE HAS FILED COPIES OF ASSESSMENT ORDER, OF M/S. M.DEVARAJ & OTHERS AOP, ORDER OF LEA RNED CIT(A) AND ITAT, WHERE ISSUE HAS BEEN EXAMINED AND FOUND THAT CREDITS FOUND IN VARIOUS BANK ACCOUNTS INCLUDING BA NK ACCOUNTS OF ABOVE FIVE PERSONS ARE PART OF PROCEEDS OF AOP AND THE SAME IS TAXABLE IN THE HANDS OF AOP. THEREFORE, WHE N CREDITS ARE ALREADY TAXED IN THE HANDS OF AOP, FURTHER ADDI TION ON CREDITS IN VARIOUS BANK ACCOUNTS AS UNEXPLAINED INV ESTMENTS OF THE ASSESSEE AMOUNTS TO DOUBLE ADDITION WHICH IS NO T PERMISSIBLE UNDER LAW. 13. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING THE ORDER OF LEARNED CIT(A) SUBMITTED THAT LEARNED CIT(A) HAS BROUGHT OUT VARIOUS FACTS AND REASONS WHY CLAIM OF ASSESSEE CANNOT BE ACCEPTED HENCE, THERE IS NO MERIT IN THE ARGUMENTS OF ASSESSEE THAT CREDITS FOUND IN BANK ACCOUNT OF FI VE PERSONS WERE ALREADY ASSESSED IN THE HANDS OF M/S. M.DEVA RAJ& 42 ITA NO. 1466/CHNY/2018 OTHERS AOP. THE DR FURTHER SUBMITTED THAT IN THE HA NDS OF AOP ONLY GROSS RECEIPTS HAS BEEN CONSIDERED FOR THE PURPOSE OF ESTIMATION OF INCOME AND AFTER ALLOWING EXPENSES ONLY PROFIT HAS BEEN TAXED. FURTHER, PROFIT HAS BEEN ULTIMATELY TRANSFERRED TO ACCOUNTS OF INDIVIDUALS, WHICH ARE HELD TO BE BE NAMI ACCOUNTS OF THE ASSESSEE AND HENCE, ULTIMATE BENEFI CIARY OF FUNDS TRANSFERRED FROM OTHER ACCOUNTS AND CREDITED IN THE ACCOUNTS OF FIVE PERSONS IS UNEXPLAINED INVESTMENTS OF ASSESSEE AND SAME NEEDS TO BE TAXED IN THE HANDS OF ASSESSEE. THE LEARNED CIT(A), AFTER CONSIDERING RE LEVANT FACTS HAS RIGHTLY ASSESSED CREDITS IN THE HANDS OF ASS ESSEE AND HIS ORDER SHOULD BE UPHELD. 14. WE HAVE HEARD BOTH PARTIES, PERUSED MATERIALS A VAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE FACTS BORNE OUT FROM RECORDS CLEARLY INDICATE THAT BLOCK ASSESSMENT HAS BEEN COMPLETED IN THE CASE OF ASSES SEE U/S. 158BC OF THE ACT, WHERE, NO ADDITION HAS BEEN MADE IN RESPECT OF AMOUNTS FOUND CREDITED IN THE BANK ACCOUNT OF V ARIOUS INDIVIDUALS. THE FACTS FURTHER INDICATE THAT ALL TH E AMOUNTS 43 ITA NO. 1466/CHNY/2018 CREDITED IN INDIVIDUAL BANK ACCOUNT OF VARIOUS PERS ONS HAS BEEN CONSIDERED AS RECEIPTS OF M/S. M.DEVARAJ & OTHERS, AOP AND ACCORDINGLY, CREDITS FOUND IN VARIOUS BANK ACCOUNTS HAS BEEN TREATED AS GROSS RECEIPTS OF AOP FOR THE PURPOSE OF TAXATION. FURTHER, IN THE HANDS OF AOP, ASSESSMENT HAS BEEN C OMPLETED AFTER ALLOWING NECESSARY DEDUCTION FOR EXPENSES, TO ARRIVE AT PROFITS FROM BUSINESS. THIS FACT HAS BEEN FURTHER CONFIRMED FROM ORDERS OF TRIBUNAL, WHERE THE TRIBUNAL HAS ACCEPTED ARGUMENTS OF AOP AND ASSESSED TOTAL CREDITS FOUND IN BANK ACC OUNTS OF VARIOUS INDIVIDUALS AS RECEIPTS OF AOP. IN FACT, TH E ASSESSING OFFICER HAS ACCEPTED THIS FACT, BUT HE HAS PROPOSED TO MAKE ADDITIONS TOWARDS CREDITS FOUND IN BANK ACCOUNT OF FIVE INDIVIDUALS ON THE SOLE GROUND THAT CERTAIN PAPERS RELATING TO OPENING OF BANK ACCOUNT FORMS OF THE ABOVE PERSONS WERE FOUND IN THE RESIDENTIAL PREMISES OF ASSESSEE. THE ASSESSING OFFICER HAS ALSO TAKEN SUPPORT FROM THE FACT THAT P OST-SEARCH ENQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS REVEALED FURTHER FACTS WITH REGARD TO A SSOCIATION OF ASSESSEE WITH VARIOUS INDIVIDUALS CONNECTED WITH TE XTILE SCAM. THEREFORE, HE CAME TO THE CONCLUSION THAT AMOUNTS F OUND 44 ITA NO. 1466/CHNY/2018 CREDITED IN BANK ACCOUNTS OF FIVE PERSONS ARE BENAM I OF THE ASSESSEE AND TOTAL AMOUNT FOUND IN THOSE BANK ACCOU NTS IS UNEXPLAINED INVESTMENTS OF THE ASSESSEE. BUT, BECAU SE CREDITS FOUND IN BANK ACCOUNT PERTAIN TO THE PERIOD COVERED UNDER BLOCK PERIOD, AND BLOCK ASSESSMENT HAS BEEN ALREADY COMPL ETED HE COULD NOT MAKE ADDITION ON SUBSTANTIVE BASIS FOR TH E IMPUGNED ASSESSMENT YEAR. HOWEVER, HE HAS CHOSEN TO MAKE PRO TECTIVE ADDITION ON THE GROUND THAT BLOCK ASSESSMENTS WER E PROPOSED TO REOPEN BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT TO INCLUDE UNEXPLAINED CREDITS FOUND IN THE BANK ACCOU NT. 15. THE ASSESSING OFFICER HAS MADE ADDITIONS TOWARD S UNEXPLAINED CREDITS ON PROTECTIVE BASIS, BECAUSE TH E SAME CANNOT BE ADDED ON SUBSTANTIVE BASIS FOR IMPUGNED ASSESSMENT YEAR. THEREFORE, ISSUE FIRST NEEDS TO BE ADDRESSED IS WHETHER PROTECTIVE ADDITION MADE BY ASSESSING O FFICER FOR IMPUGNED ASSESSMENT YEAR IS BASED ON CERTAIN EVIDE NCES AND ASSESSING OFFICER IS RIGHT IN MAKING ADDITIONS TO WARDS SAID BANK DEPOSITS FOR IMPUGNED ASSESSMENT YEAR. ADMITT EDLY, ALL CREDITS FOUND IN BANK ACCOUNT OF FIVE PERSONS PERTA IN TO BLOCK 45 ITA NO. 1466/CHNY/2018 PERIOD COVERING FROM 01.04.1986 TO 13.02.1996. FURT HER, BLOCK ASSESSMENT WAS COMPLETED IN THE CASE OF THE ASSESSE E WITHOUT MAKING ANY ADDITION. FURTHER, BLOCK ASSESSM ENTS WERE SUBJECTED TO REVISION PROCEEDINGS U/S. 263 OF THE A CT BY LEARNED CIT AND SUCH REVISION PROCEEDINGS WAS CHALLENGED BE FORE THE APPELLATE AUTHORITY. FINALLY, THE MATTER WENT UPTO HONBLE MADRAS HIGH COURT AND THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE ON THE GROUND THAT BLOCK ASSESSMENTS CANNO T BE SUBJECTED TO 263 PROCEEDINGS. THE LEARNED CIT(A), TAKING CLUE FROM ABOVE FACTS, HAS CONVERTED PROTECTIVE ADDITION S ON SUBSTANTIVE BASIS ONLY ON THE GROUND THAT ONCE ADD ITIONS MADE IN BLOCK ASSESSMENTS STAND DELETED IN APPELLATE P ROCEEDINGS, THEN PROTECTIVE ADDITION MADE IN SUBSEQUENT FINANC IAL YEAR WOULD BECOME SUBSTANTIVE ADDITION. WE HAVE GONE THR OUGH REASONS GIVEN BY LEARNED CIT(A) TO TREAT ADDITIONS MADE IN THE HANDS OF ASSESSEE ON SUBSTANTIVE BASIS AND FIND T HAT REASONS GIVEN BY THE LD. CIT(A) IS NOT IN ACCORDANCE WITH LAW. IN ORDER TO BRING ANY ADDITION ON SUBSTANTIVE BASIS, EVIDENC E GATHERED DURING THE COURSE OF PROCEEDINGS SHOULD CLEARLY IND ICATE THAT ADDITION IS RELATED TO THAT ASSESSMENT YEAR AND MOR E 46 ITA NO. 1466/CHNY/2018 PARTICULARLY TO THE CONCERNED ASSESSEE. UNLESS THE ASSESSING OFFICER OR LEARNED CIT(A) BROUGHT CLEAR EVIDENCE TO PROVE THAT ADDITIONS PERTAINS TO IMPUGNED ASSESSMENT YEAR, THE SAME CANNOT BE BROUGHT TO TAX BY CONVERTING PROTECTIVE A DDITION INTO SUBSTANTIVE ADDITION. IN THIS CASE, THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) HAS CATEGORICALLY ACCEPTED THE FACT THAT ADDITIONS MADE TOWARDS UNEXPLAINED INVESTMENT BEI NG CREDIT IN BANK ACCOUNT DOES NOT PERTAIN TO IMPUGNED ASSESS MENT YEAR. IN FACT, THE ASSESSING OFFICER AS WELL AS LEA RNED CIT(A) HAS CATEGORICALLY ADMITTED THAT CASH CREDITS FOUND IN BANK ACCOUNT PERTAINS TO BLOCK PERIOD. MOREOVER, DEPARTM ENT HAS REVISED THE ASSESSMENT ORDER TO INCLUDE ABOVE CREDI TS, BUT FINALLY COULD NOT SUCCEED IN ATTEMPT, BECAUSE ASSES SEE HAS SUCCEEDED IN APPEALS. THEREFORE, WE ARE OF THE CON SIDERED VIEW THAT MERELY FOR THE REASON THAT ADDITION PROP OSED IN BLOCK ASSESSMENT COULD NOT BE SUSTAINED, BECAUSE OF SOME REASONS, SAME CANNOT BE TREATED AS SUBSTANTIVE IN THE HANDS OF ASSESSEE, MORE PARTICULARLY, WHEN CREDITS DOES NOT PERTAIN TO IMPUGNED ASSESSMENT YEAR. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT FINDINGS RECORDED BY LEARNED C IT(A) TO 47 ITA NO. 1466/CHNY/2018 CONSIDER PROTECTIVE ADDITION MADE BY ASSESSING O FFICER INTO SUBSTANTIVE ADDITION IS NOT IN ACCORDANCE WITH LAW AND DOES NOT SUPPORTED BY ANY EVIDENCES. 16. BE THAT AS IT MAY, COMING TO THE ISSUES ON HAND . THE ASSESSING OFFICER HAS MADE PROTECTIVE ADDITION TO WARDS UNEXPLAINED INVESTMENTS CREDITED IN BANK ACCOUNT O N THE GROUND THAT ASSESSEE IS FINAL BENEFICIARY OF AMOUNT S FOUND CREDITED IN BANK ACCOUNT OF FIVE INDIVIDUALS . HOWE VER, DURING REMAND PROCEEDINGS, THE SAME ASSESSING OFFICER HIM SELF HAD ADMITTED THAT CREDITS IN THE NAME OF FIVE INDIVIDUA LS HAS BEEN ALREADY ASSESSED IN THE HANDS OF M/S.M.DEVARAJ & OT HERS, AOP FOR BLOCK ASSESSMENT AND AMOUNT TRANSFERRED TO THE ACCOUNTS OF FIVE INDIVIDUALS IS TRANSFERRED OUT OF THE ACCO UNTS OF MEMBERS OF AOP. THEREFORE, ONCE THE ASSESSING OFFICER HIMSE LF HAS ADMITTED FACT THAT ASSESSEE HAS EXPLAINED SOURCE OF INCOME TOWARDS CREDITS FOUND IN BANK ACCOUNT, THEN LEARNED CIT(A) CANNOT DISREGARD FINDINGS RECORDED BY ASSESSING OF FICER TO MAKE OR SUSTAIN ADDITION, UNLESS HE BROUGHT ON RE CORD CLEAR EVIDENCE TO PROVE THAT FINDINGS RECORDED BY ASSESSI NG OFFICER ARE INCORRECT OR FACTS ON RECORD INDICATE THAT CRE DITS FOUND IN 48 ITA NO. 1466/CHNY/2018 BANK ACCOUNT REPRESENTS UNEXPLAINED INCOME OF ASSE SSEE. IN THIS CASE, IN REMAND REPORT THE ASSESSING OFFICER HAS CLEARLY ACCEPTED THAT CREDITS FOUND IN BANK ACCOUNT OF MR.V .KANNAN MAINTAINED WITH INDIAN BANK, KOTTURPURAM BRANCH, CH ENNAI, IS TRANSFERRED FROM OTHER BANK ACCOUNTS ARE MEMBERS O F AOP. HE FURTHER NOTED THAT EVEN IN NAME OF MR.V.KANNAN A SU M OF ` 25,00,000/- WAS TRANSFERRED FROM MR.V.PONNAMBALAM OF M/S. PONNAMBALAM & CO. FROM BANK OF MADURA, COIMBATORE, WHERE M/S. PONNAMBALAM & CO. IS MEMBER OF AOP WITH 24% PR OFIT SHARE. HE FURTHER NOTED THAT A SUM OF ` 33,00,000/- WAS TRANSFERRED FROM MR. SAKTHIVEL, PROPRIETOR OF LAKS HMI TRADERS THROUGH BANK OF MADURA, COIMBATORE BRANCH. THEREFOR E, FROM REMAND REPORT OF ASSESSING OFFICER, IT IS VERY CLEA R THAT OUT OF ` 84.00 LAKHS FOUND CREDITED IN THE NAME OF MR.V.KANN AN, A SUM OF ` 58.00 LAKHS HAS BEEN TRANSFERRED FROM MEMBERS OF AOP. THE ASSESSING OFFICER FURTHER RECORDED A CATE GORICAL FINDING THAT ASSESSEE HAS EXPLAINED TWO CREDITS FOU ND IN HIS BANK ACCOUNT WITH NECESSARY EXPLANATION. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THAT LEARNED CIT(A) HAS E RRED IN IGNORING FINDINGS RECORDED BY ASSESSING OFFICER IN THE REMAND 49 ITA NO. 1466/CHNY/2018 REPORT TO EXPLAIN SOURCE OF INCOME, WHILE CONFIRMI NG ADDITIONS MADE TOWARDS CREDITS FOUND IN THE NAME OF MR.V.KAN NAN HENCE, WE REVERSE FINDINGS OF LEARNED CIT(A) AND DI RECT THE ASSESSING OFFICER TO DELETE ADDITIONS TO THE EXTEN T OF ` 58.00 LAKHS OUT OF TOTAL CREDITS FOUND AMOUNTING TO ` 84.00 LAKHS IN THE NAME OF MR.V.KANNAN BANK ACCOUNT HELD WITH IND IAN BANK, KOTTURPURAM BRANCH, CHENNAI. AS REGARDS A SUM OF ` 26.00 LAKHS, EVEN AT THIS STAGE, THE ASSESSEE IS UNABLE T O FURNISH ANY EXPLANATION WITH REGARD TO SOURCE OF INCOME. HENCE, ADDITION MADE BY ASSESSING OFFICER AND CONFIRMED BY LEARNED CIT(A) TO THE EXTENT OF UNEXPLAINED CREDIT OF ` 26.00 LAKHS IN THE BANK ACCOUNT OF MR.V.KANNAN IS HEREBY CONFIRMED. 17. AS REGARDS ADDITION IN BANK ACCOUNT IN THE NAME OF MR. K.MOHAN, FOR A SUM OF ` 1,01,00,000/- , THE ASSESSING OFFICER IN THE REMAND REPORT HAS RECORDED A CATEGORICAL FI NDING THAT A SUM OF ` 25.00 LAKHS TRANSFERRED FROM MR.V.PONNAMBALAM OF CHAKRA TRADERS FROM BANK OF MADURA, COIMBATORE BRAN CH, WHERE HE WAS MEMBER OF AOP WITH 24% PROFIT. SIMIL ARLY, A SUM OF ` 36.00 LAKHS AND ` 40.00 LAKHS WAS TRANSFERRED FROM MR.S.R. KANNAN OF M/S. RAJAGANAPATHY TRADERS & SAKT HI 50 ITA NO. 1466/CHNY/2018 PRINTERS FROM BANK OF MADURA, COIMBATORE BRANCH, WHERE MR. S.R.KANNAN WAS ALSO A MEMBER OF AOP WITH 2% PROFIT . THUS, ALL CREDITS FOUND IN THE NAME OF MR. K.MOHAN IN THE BANK ACCOUNT HELD WITH INDIAN BANK, KOTTURPURAM BRANCH, CHENNAI WERE EXPLAINED AND FOUND TRANSFERRED FROM THE ACCOU NT OF MEMBER OF AOP. THEREFORE, ONCE SOURCE OF FUNDS FOR CREDITS FOUND IN BANK ACCOUNT OF MR. K.MOHAN WAS EXPLAINED OUT OF KNOWN SOURCE OF INCOME, THEN THERE IS NO REASON FOR LEARNED CIT(A) TO REJECT EXPLANATION OFFERED BY ASSESSEE O NLY ON THE BASIS OF CERTAIN EVIDENCES FOUND DURING THE COURSE OF SEARCH AND ISSUE IN CONNECTION WITH SUPPLIES TO TNTC, EVEN THOUGH ASSESSEE HAS DENIED HAVING ANY RELATIONSHIP WITH T HOSE PARTIES AND SUCH EXPLANATION WAS ACCEPTED TO BE GENUINE IN BLOCK ASSESSMENT PROCEEDINGS. HENCE, WE DIRECT THE ASSESS ING OFFICER TO DELETE ADDITIONS MADE TOWARDS CREDITS FO UND IN BANK ACCOUNT OF MR. K.MOHAN HELD IN INDIAN BANK, KOTTURP URAM BRANCH, CHENNAI. 18. SIMILARLY, CREDITS FOUND IN BANK ACCOUNT OF MR. S.GOPAL HELD IN KARUR VYSYA BANK, T.NAGAR, CHENNAI AMOUNTIN G TO 51 ITA NO. 1466/CHNY/2018 ` 75.00 LAKHS, IT IS THE FINDINGS OF ASSESSING OFFICE R IN REMAND REPORT THAT A SUM OF ` 75.00 LAKHS WAS TRANSFERRED FROM MR.S. PRABHAKARAN OF M/S. SABARI TRADERS FROM BANK OF MAD URA, COIMBATORE BRANCH AND SAID MR.PRABHAKARAN WAS MEM BER OF AOP WITH 2% PROFIT. FURTHER, WHEN SOURCE OF CREDI T FOUND IN BANK ACCOUNT WAS OUT OF KNOWN SOURCE OF INCOME, S UCH SOURCE WAS SUBJECTED TO TAX IN BLOCK ASSESSMENT PRO CEEDINGS, THEN NO ADDITIONS COULD BE MADE TOWARDS CREDIT IN T HE CASE OF ASSESSEE ON THE BASIS OF SAME EVIDENCES WHICH WERE ONCE REJECTED DURING THE COURSE OF BLOCK ASSESSMENT PROC EEDINGS. LIKEWISE, CREDITS FOUND IN THE NAME OF MR. R.SENTHA MARAI AT INDIAN BANK, KOTTURPURAM BRANCH, CHENNAI AMOUNTING TO ` 3,55,79,408/-, THE ASSESSING OFFICER HAS RECORDED CATEGORICAL FINDING THAT OUT OF A SUM OF ` 3,55,79,408/-, FOUR CREDITS AMOUNTING TO ` 30,37,179/- WAS NOT EXPLAINED WITH KNOWN SOURCE OF INCOME. EXCEPT THIS, REMAINING CREDITS W ERE TRANSFERRED FROM MR. S.BASKAR OF THIRUMALA TRADERS , WHO WAS MEMBER OF AOP WITH 24% AND SUCH TRANSFER HAS BEEN M ADE FROM BANK OF MADURA, COIMBATORE BRANCH. SIMILARLY, FEW TRANSFERS HAVE COME FROM MR.S.R.KANNAN OF M/S. 52 ITA NO. 1466/CHNY/2018 RAJAGANAPATHY TRADERS AND SAKTHI PRINTERS WHICH WE RE OUT OF RECEIPTS OF M/S.DEVARAJ & OTHERS, AOP. FROM THE ABO VE, IT IS CLEAR THAT ASSESSEE HAS EXPLAINED SOURCE TOWARDS CR EDITS FOUND IN BANK ACCOUNT OF MR. R.SENTHAMARAI EXCEPT TO THE EXTENT OF 4 CREDITS AMOUNTING TO ` 30,37,179/- WHICH WERE REMAINED UNEXPLAINED EVEN BEFORE US. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT LEARNED CIT(A) HAS ERRED IN CO NFIRMING ADDITIONS MADE TOWARDS CREDITS FOUND IN THE NAME OF MR. R.SENTHAMARAI HELD IN INDIAN BANK, KOTTURPURAM BRA NCH, CHENNAI, EVEN THOUGH THE ASSESSING OFFICER HAS ACC EPTED EXPLANATION FURNISHED BY ASSESSEE WITH NECESSAR Y EVIDENCES. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITIONS MADE TOWARDS CREDITS FOUND IN BANK ACCOUN T OF MR. R.SENTHAMARAI HELD IN INDIAN BANK, KOTTURPURAM BRAN CH, CHENNAI TO THE EXTENT OF ` 3,25,42,229/-. THE REMAINING CREDITS OF ` 30,37,179/- ARE UNEXPLAINED AND TREATED AS UNEXPLAI NED INVESTMENTS OF THE ASSESSEE, HENCE ASSESSING OFFI CER IS DIRECTED TO RESTRICT ADDITIONS TO THE EXTENT OF ` 30,37,179/-. 53 ITA NO. 1466/CHNY/2018 19. AS REGARDS CREDITS FOUND IN BANK ACCOUNT OF MR .S.RAJA HELD IN INDIAN BANK, KOTTURPURAM BRANCH TO SUM OF ` 1,01,00,000/-, THE FINDINGS OF ASSESSING OFFICER I N THE REMAND REPORT WAS THAT TOTAL CREDITS FOUND IN THE NAME OF MR. S.RAJA WAS TRANSFERRED FROM MR.S.BASKAR OF M/S. THIRUMALA TRADERS, MR. S.R.KANNAN, OF M/S. RAJAGANAPATHY TRADERS & SA KTHIVEL PRINTERS AND MR. A.SELVARAJ AND ALL WERE MEMBERS O F AOP AND FURTHER, CREDITS FOUND IN BANK ACCOUNTS OF THESE P ERSONS WERE ALREADY CONSIDERED IN THE ASSESSMENT OF M/S. DEVARA J & OTHERS, AOP. THEREFORE, ONCE SOURCE OF INCOME IS EXPLAINED TOWARDS CREDITS FOUND IN BANK ACCOUNT, THEN NO ADDITION COU LD BE MADE ON SUCH CREDITS IN THE HANDS OF ASSESSEE ON SAME RE ASONS WHICH WERE ONCE REJECTED DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS. HENCE, WE DIRECT THE ASSESS ING OFFICER TO DELETE ADDITION MADE TOWARDS CREDITS FOU ND IN BANK ACCOUNT OF MR. S.RAJA HELD WITH INDIAN BANK, CHENNA I AMOUNTING TO RS. 1,01,00,000/-. 20. THE NEXT ISSUE THAT CAME UP FOR CONSIDERATION F ROM GROUND NO.5 OF ASSESSEES APPEAL IS ADDITION TOWAR DS 54 ITA NO. 1466/CHNY/2018 UNEXPLAINED INVESTMENT OF DEPOSITS WITH INDIAN BANK , PANTHEON ROAD, CHENNAI AMOUNTING TO ` 13,25,642/-. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT OUT OF TOTAL DEPOSI TS OF ` 13,25,642/- IN THE NAME OF SIX PERSONS, EXCEPT SMT .V.MANJULA, ALL OTHERS ARE NOT RELATED TO ASSESSEE AND HENCE, C REDITS FOUND IN THE NAME OF THOSE PERSONS CANNOT BE ASSESSED IN THE HANDS OF ASSESSEE AS UNEXPLAINED INCOME . 21. HAVING HEARD BOTH SIDES AND CONSIDERING MATERIA L ON RECORD, WE FIND THAT ASSESSING OFFICER IN THE REMAN D REPORT HAD RECORDED CATEGORICAL FINDING THAT EXCEPT DEPOSITS F OUND IN THE NAME OF MR. R.SRINIVASAN IN ACCOUNT NO.11947 AMOU NTING TO ` 2,03,945/-, THE REMAINING CREDITS FOUND IN OTHERS N AMES HAS BEEN SATISFACTORILY EXPLAINED. THE ASSESSING OFFICE R FURTHER RECORDED THAT EXCEPT SMT.MANJULA, ALL OTHER PERSONS ARE UNRELATED TO ASSESSEE. THEREFORE, ONCE THERE IS CAT EGORICAL FINDING FROM ASSESSING OFFICER THAT BANK ACCOUNT MA INTAINED IN THE NAME OF PERSONS TO WHOM ASSESSEE HAS NO RELATIO N, THE SAME CANNOT BE CONSIDERED AS BENAMI ACCOUNTS OF ASS ESSEE AND CREDITS FOUND IN SAID BANK ACCOUNT CANNOT BE CO NSIDERED AS 55 ITA NO. 1466/CHNY/2018 UNEXPLAINED INVESTMENT, MORE PARTICULARLY, WHEN ASS ESSEE HAS DISOWNED SUCH DEPOSITS DURING THE COURSE OF SEARCH & SEIZURE AND FURTHER THE SAID EXPLANATION WAS ACCEPTED DURIN G ASSESSMENT PROCEEDINGS. THE LEARNED CIT(A) WITHOUT CONSIDERING EXPLANATION FURNISHED BY THE ASSESSEE HAS SIMPLY CONFIRMED ADDITIONS MADE TOWARDS CREDITS FOUND IN T HE NAME OF VARIOUS PERSONS WITH INDIAN OVERSEAS BANK, PANTHEON ROAD, CHENNAI. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITIONS MADE IN THE NAME OF VARIOUS PERSONS AS UN EXPLAINED INVESTMENTS OF THE ASSESSEE TO THE EXTENT OF ` 11,21,697/-. IN RESPECT OF CREDITS IN THE NAME OF MR. R. SRINIVASAN FOR ` 2,03,945/-, NO EXPLANATION HAS BEEN FILED IN INCLUD ING ANY KIND OF EVIDENCES TO JUSTIFY CREDITS IN BANK ACCOUNT. HE NCE, WE DIRECT THE ASSESSING OFFICER TO CONFIRM ADDITION OF ` 2,03,945/- FOUND IN THE NAME OF MR. R.SRINIVASAN WITH INDIAN OVERSEA S BANK, PANTHEON ROAD, CHENNAI. 22. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.6 OF ASSESSEES APPEAL IS ESTIMATED ADDIT ION OF INTEREST INCOME IN RESPECT OF DEPOSITS WITH BANK AC COUNT. THE 56 ITA NO. 1466/CHNY/2018 ASSESSING OFFICER HAS MADE ESTIMATED ADDITION OF ` 10.00 LAKHS TOWARDS INTEREST INCOME IN RELATION TO VARIOUS DEPO SITS FOUND IN BANK ACCOUNT OF VARIOUS PERSONS. THE LEARNED CIT(A ) HAS RESTRICTED ESTIMATED ADDITION TO A SUM OF ` 5.00 LAKHS ON THE GROUND THAT CONSIDERING QUANTUM OF DEPOSIT FOUND IN BANK AND PERIOD OF DEPOSIT HELD IN BANK ACCOUNT INCOME ESTI MATED BY ASSESSING OFFICER APPEARS TO BE ON HIGHER SIDE. 23. WE FIND THAT ADDITIONS SUSTAINED BY LEARNED CIT (A) TOWARDS ESTIMATED INCOME APPEARS TO BE REASONABLE, WHEN COMPARED TO AMOUNT OF DEPOSITS HELD IN BANK ACCOUNT OF VARIOUS PERSONS AND PERIOD FOR SUCH BANK DEPOSITS, AND HENCE, WE ARE INCLINED TO UPHOLD FINDINGS OF LEARNED CIT(A ) AND REJECT THE GROUND TAKEN BY ASSESSEE. 24. THE NEXT ISSUE THAT CAME UP FOR CONSIDERATION F ROM GROUND NO.7 OF ASSESSEE APPEAL IS ADDITION TOWARDS SALARY AND INTEREST. THE ASSESSING OFFICER HAS MADE ADDITION T OWARDS SALARY INCOME OF ` 65,000/-. THE ADDITION MADE TOWARDS SALARY IN SUBSEQUENT ASSESSMENT YEAR WAS DELETED BY TRIBUN AL ON THE GROUND THAT SAID ADDITION MADE WAS NOT BASED ON ANY MATERIAL 57 ITA NO. 1466/CHNY/2018 OR EVIDENCE. SIMILARLY, ADDITIONS MADE TOWARDS INTE REST OF ` 44,254/-, IT WAS THE FINDING OF THE ASSESSING OFFIC ER THAT INTEREST ON FIXED DEPOSITS IN BANK OF MADURA AND IN TEREST ON SAVINGS BANK ACCOUNT WITH KARUR VYSYA BANK ARE NOT CONSIDERED FOR TAXATION. BUT, DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT INTEREST ADDITION OF ` 44,254/- WAS ALREADY CONSIDERED IN BLOCK ASSESSMENT AND HENCE, FURTHER ADDITION IN REGULAR A SSESSMENT AMOUNTS TO DOUBLE ADDITION. AS REGARDS, ADDITION OF SALARY, THE ASSESSING OFFICER NOTED THAT SINCE TRIBUNAL HAS DEL ETED ADDITIONS TOWARDS BLOCK ASSESSMENT ON THE GROUND TH AT SAID ADDITION WAS NOT BASED ON ANY MATERIAL, THE SAME MA Y BE SUSTAINED IN REGULAR ASSESSMENT. 25. WE HAVE HEARD BOTH PARTIES, PERUSED MATERIAL AV AILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. AS REGARDS SALARY FROM M/S.RAMDOSS FINANCE PVT. LTD., IT WAS AN ADMITTED FACT THAT ASSESSEE HAS FAILED TO DISCLOSE SALARY RECEIVED FROM THE SAID COMPANY IN THE RETURN OF INC OME FILED FOR RELEVANT ASSESSMENT YEAR. THEREFORE, THERE IS NO ER ROR IN THE 58 ITA NO. 1466/CHNY/2018 FINDINGS RECORDED BY LOWER AUTHORITIES TO SUSTAIN A DDITION TOWARDS SALARY. HENCE, ADDITION MADE TOWARDS SALARY IS CONFIRMED. AS REGARD ADDITION TOWARDS INTEREST INCO ME, IT WAS A FINDING OF ASSESSING OFFICER IN REMAND REPORT THAT SAID INTEREST INCOME WAS ALREADY ASSESSED IN BLOCK ASSESSMENT AN D ASSESSEE HAS NOT CHALLENGED THE ADDITION. THUS, FUR THER ADDITION TOWARDS SAID INCOME IN REGULAR ASSESSMENT AMOUNTS TO DOUBLE ADDITION. HENCE, WE DIRECT THE ASSESSING OFF ICER TO DELETE ADDITION MADE TOWARDS INTEREST ON FIXED DEPO SITS AND INTEREST ON SAVINGS BANK ACCOUNT AMOUNTING TO ` 44,254/- . 26. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEBRUARY, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA ) ' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ' /CHENNAI, ' /DATED 25 TH FEBR UARY, 2021 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .