DCIT, Madurai V. S.Jayabalan, Madurai

ITA 1752/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7221 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 19-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment
• Section: 143(3); 153A; 6; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NOS. 1751 & 1752/MDS/2014 ( / ASSESSMENT YEARS: 2003-04 & 2006-07) ADDITIONAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III, MADURAI. VS MR. S.JAYABALAN, 4, SAKTHIVELAMMAL NAGAR, S.S.COLONY, MADURAI-625 016. PAN: ABVPJ3974E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. ANIRUDH RAI, CIT DR /RESPONDENT BY : MR. S.SRIDHAR, ADVOCATE / DATE OF HEARING : 15 TH DECEMBER, 2014 /DATE OF PRONOUNCEMENT : 26 TH DECEMBER, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE TWO APPEALS ARE FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2003-04 AND 2006-07 AGAINST COMMO N ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I , MADURAI DATED 13.3.2014 ARISING OUT OF THE ASSESSME NT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. ITA NO.1751/MDS/2014:- (A.Y.2003-04): 2. THE ISSUE IN THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 IS THAT COMMISSIONER OF IN COME TAX (APPEALS) ERRED IN DELETING ADDITION MADE IN RE SPECT OF 2 ITA NO.1751 & 1752/MDS/2014 INVESTMENTS MADE AND DOWN PAYMENT FOR TRICHY BAJAJ DEALERSHIP. 3. BRIEF FACTS ARE THAT THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT MADE ADDITION OF ` 9,30,000/- AS UNDISCLOSED INVESTMENTS STATING THAT THE ACCOUNTS O F THE ASSESSEE AS WELL AS HIS FAMILY MEMBERS DO NOT SHOW DRAWINGS TO THE EXTENT OF INVESTMENT IN CASH IN THE SHARES OF GROUP COMPANIES. IT WAS THE SUBMISSION OF THE ASSE SSEE THAT THE INVESTMENTS WERE REFLECTED IN THE BOOKS OF ACC OUNTS. THE ASSESSING OFFICER STATING THAT THE ASSESSEE HAS NOT DISCLOSED THE INVESTMENTS IN THE RETURN FOR THE ASSESSMENT YE AR 2003- 04 AND IN THE BOOKS OF ACCOUNTS, THUS MADE THE S AID ADDITION. ON APPEAL, COMMISSIONER OF INCOME TAX (A PPEALS) DELETED THE ADDITION OBSERVING THAT INVESTMENTS ARE DISCLOSED IN THE TRIAL BALANCE FOR THE RESPECTIVE YEARS AND ALL ARE DISCLOSED IN THE RETURNS FILED BEFORE THE SEARCH IT SELF. THE REVENUE IS IN APPEAL AGAINST THIS ORDER OF THE COMM ISSIONER OF INCOME TAX (APPEALS). 3 ITA NO.1751 & 1752/MDS/2014 4. SIMILARLY, THE ASSESSING OFFICER WHILE COMPLETIN G ASSESSMENT MADE ADDITION OF ` 1,00,00,000/- BASED ON THE LETTER DATED 21.01.2003 ADDRESSED TO SHRI S.SOUNDAR ARAJAN BY ONE MR. M.V.M.S.RAJAMANICAM STATING THAT A SUM OF ` 1,00,00,000/- WAS PAID RECENTLY BY THE ASSESSEE TO TAKEOVER BAJAJ AUTO DEALERSHIP AT TRICHY AND ` 10,00,000/- IS PAYABLE TO SHRI S.RAJAMANICAM ON ACCOUNT OF PARTITION. TH IS LETTER WAS SEIZED IN THE COURSE OF SEARCH. BASED ON THIS L ETTER, ASSESSING OFFICER MADE ADDITION OF ` 1,00,00,000/- STATING THAT THE ASSESSEE MR. JAYABALAN PAID THIS AMOUNT FO R TAKING OVER BAJAJ AUTO DEALERSHIP AT TRICHY AND INVESTMENT S WERE NOT REFLECTED IN THE RETURNS OR BOOKS OF ACCOUNTS. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED TH E ADDITION STATING THAT INVESTMENTS ARE DISCLOSED IN THE TRIAL BALANCE FOR THE ASSESSMENT YEAR AND ALL ARE DISCL OSED IN THE RETURN FILED BEFORE THE SEARCH. THE REVENUE IS IN A PPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 5. DEPARTMENTAL REPRESENTATIVE AT THE OUTSET SUBMIT S THAT ASSESSEE FILED FRESH MATERIALS AND MADE NEW SUBMIS SIONS 4 ITA NO.1751 & 1752/MDS/2014 BASED ON WHICH COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITIONS WITHOUT CALLING FOR REMAND RE PORT. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ADDITIONS MADE IN RESPECT OF INVESTMENT OF ` 9,30,000/- MADE IN GROUP CONCERNS AND ` 1,00,00,000/- PAID FOR DEALERSHIP OF BAJAJ AUTO AT TRICHY. 7. COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). HE FURTHER SUBMITS THAT IN FACT THE COMMISSIONER OF INCOME TA X (APPEALS) IN THE COURSE OF APPEAL PROCEEDINGS ASKE D FOR VARIOUS CLARIFICATIONS FROM THE ASSESSING OFFICER A S TO ON WHAT BASIS THE ADDITIONS WERE MADE AND ASSESSING OFFICER REPLIED TO SUCH CLARIFICATIONS AND CONSIDERING THOSE REPLI ES BY ASSESSING OFFICER AND SUBMISSIONS OF THE ASSESSEE DELETED ADDITIONS. THEREFORE, COUNSEL PLEADS FOR SUSTAININ G THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 8. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER NOTICED THAT ASSESSEE MADE INVESTMENTS IN GROUP CONCERNS TO THE EXTENT OF ` 9,30,000/- FOR THE ASSESSMENT YEAR 2003-04. THE ASSESSING OFFI CER 5 ITA NO.1751 & 1752/MDS/2014 REQUIRED THE ASSESSEE TO EXPLAIN THE INVESTMENTS MA DE AND THE ASSESSEE SUBMITTED THAT THESE INVESTMENTS ARE R EFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER STATING THAT NO SUCH INVESTMENT W AS REFLECTED IN THE BOOKS OF ACCOUNT , MADE THE ADDITI ONS FOR THE ASSESSMENT YEAR 2003-04. SIMILARLY ASSESSING OFFI CER MADE ADDITION OF ` 1,00,00,000/- BASED ON THE LETTER SEIZED IN THE COURSE OF THE SEARCH IGNORING THE SUBMISSION S OF THE ASSESSEE THAT INVESTMENTS WERE ALL REFLECTED IN TH E BOOKS OF ACCOUNTS IN THE RESPECTIVE PARTIES ACCOUNTS WHO MAD E INVESTMENTS. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITIONS OBSERVING AS UNDER: - 6. UNDISCLOSED INVESTMENT IN ASSETS AO MADE THE ADDITION UNDER THIS HEAD AS UNDER: UNDISCLOSED INVESTMENT IN ASSETS AY 2003- 04 9,30,000 AY 2007- 08 5,80,000 6.1 FOR AY 2003-04 THE DETAILS OF SHARE ALLOTMENT IN THE NAME OF APPELLANT IS AS BELOW: S I NAME OF THE NUMBER OF VALUE TOTAL DATE OF MODE OF NO COMPANY S HARES OF EACH SHARE SS VALUE ALLOTMENT PAYMENT 1 S USEE N R MOTORS 5000 10 50000 2 . 12 . 02 C A S H PVT LTD 6 ITA NO.1751 & 1752/MDS/2014 2 SUSEE AUTO SALES 58000 10 5 , 80 , 000 5 . 2 . 03 OTH E R THAN & SERVI C E PVT L TD CAS H 3 SUSEE TRADE S 30000 10 3 , 00 , 000 5 . 2 . 03 OTH E R TH A N C A S H T O TAL VALUE 93,000 9,30,000 6.1.1 WHEN QUESTIONED, ASSESSEE HAS REPLIED THAT THE SHARES HELD IN SUSEE NR MOTORS, SUSEE AUTO SALES AND SERVICES (P) LTD AND SUSEE TRADES ARE REFLECTED IN THE BOOKS OF ACCOUNTS. 6.1.2 AO HELD THAT THE BOOKS OF ACCOUNTS AND ESPECIALLY RETURNS AND ITS ENCLOSURES DO NOT INDICATE ANY ENTRIES TO THE EFFECT THAT THE ASSESSEE MADE DEPOSITS IN THE ABOVE COMPANIES FOR THE AY 2003-2004 AND THAT THE INDIVIDUAL ACCOUNTS OF SHRI.S. JAYABALAN DO NOT SHOW DRAWINGS TO THE EXTENT OF INVESTMENT IN CASH AND BY OTHER THAN CASH. AO ADDED BACK THIS AMOUNT OF RS.9, 30,000/- AS THE UNEXPLAINED INVESTMENT. 6.1.3 DURING THE' APPEAL AR MENTIONED AS UNDER: THE A.R PRODUCED THE BOOKS OF ACCOUNTS OF SHRI.S.JAYABALAN FOR THE FINANCIAL YEAR 01.04.2002 TO 31.03.2003. IN THE CASH BOOK PRODUCED, A DEBIT OF RS.50,OOO/- ON 02.12.2002 IS REFLECTED TOWARDS INVESTMENT MADE BY THE APPELLANT IN SUSEE NR MOTORS PRIVATE LIMITED TOWARDS COST OF 5000 SHARES AT THE RATE OF RS.1 0 PER SHARE. THE A.R ALSO PRODUCED FORM-2 FILED BEFORE THE REGISTRAR OF COMPANIES, CHENNAI. THE APPELLANT WAS A PARTNER IN SUSEE AUTO, MADURAI (PARTNERSHIP FIRM). THE BALANCE STANDING TO THE CREDIT OF CURRENT ACCOUNT OF THE APPELLANT ON 01.04.2002 AMOUNTED TO ` 1,84,01,1 02.37 FROM WHICH A SUM OF RS.5,80,000 WAS DEBITED ON 05.04.2012 BEING AMOUNT TRANSFERRED TO CAPITAL ACCOUNT (NEW). FURTHER, THIS SUM OF RS.5, 80,000/- WAS TRANSFERRED TO BUSINESS CONSIDERATION ACCOUNT ON 14.12.2002. ON 15.12.2002, THIS BUSINESS CONSIDERATION WAS TRANSFERRED TO SHARE CAPITAL ACCOUNT IN THE BOOKS OF SUSEE AUTO SALES AND SERVICES PRIVATE LIMITED. (RESULTING COMPANY) THE A.R ALSO PLACED ON RECORD, FORM-2 FILED WITH THE REGISTRAR OF COMPANIES, CHENNAI. 7 ITA NO.1751 & 1752/MDS/2014 FROM THE ABOVE FACTS OF THE CASE, IT IS CLEAR THAT THE AMOUNT WAS AVAILABLE WITH THE APPELLANT FOR INVESTMENT MADE IN SUSEE AUTO SALES AND SERVICES PRIVATE LIMITED. THE APPELLANT WAS A PARTNER IN SUSEE TRADES, MADURAI (PARTNERSHIP FIRM). THE BALANCE STANDING TO THE CREDIT OF CURRENT ACCOUNT OF THE APPELLANT ON 01.04.2002 AMOUNTED TO RS.14, 68,039.80 FROM WHICH A SUM OF ` 2, 37,499/- WAS DEBITED ON BEING AMOUNT TRANSFERRED TO CAPITAL ACCOUNT. FURTHER, TOTAL SUM OF RS.3, 00,000/- INCLUDING OPENING BALANCE OF RS.62,501/- WAS TRANSFERRED TO BUSINESS CONSIDERATION ACCOUNT ON 14.12.2002. ON 15.12.2002, THIS BUSINESS CONSIDERATION WAS TRANSFERRED TO SHARE CAPITAL ACCOUNT IN THE BOOKS OF SUSEE TRADES PRIVATE LIMITED (RESULTING COMPANY) THE A.R ALSO PLACED ON RECORD, FORM-2 FILED WITH THE REGISTRAR OF COMPANIES, CHENNAI. FROM THE ABOVE FACTS OF THE CASE, IT IS CLEAR THAT THE AMOUNT WAS AVAILABLE WITH THE APPELLANT FOR INVESTMENT MADE IN SUSEE TRADES PRIVATE LIMITED. 6.3 AR MENTIONED THAT, APPELLANT, THOUGH INDIVIDUAL, HAS MAINTAINED CASH BOOK AND PREPARED TRIAL BALANCE FOR EACH YEAR INDICATING ALL THE INVESTMENTS AND THESE WERE FILED WITH THE ORIGINAL RETURNS OF INCOME. DURING THE APPEAL COPIES OF THE SAME FOR THE RELEVANT YEARS IS PRODUCED WHICH ARE PLACED ON RECORD. ALSO THE CORRESPONDING CAPITAL ACCOUNTS / LOAN ACCOUNTS IN THE FIRMS AND COMPANIES REFLECTING THE WITHDRAWALS ARE FILED. IT IS CLEAR FROM THE EXPLANATION THAT ALL THE INVESTMENTS ARE OUT OF TRANSFERS FROM GROUP CONCERNS AND ARE REFLECTED IN THE TRIAL BALANCES OF THE RESPECTIVE YEARS. I HAVE PERUSED THE RECORDS AND IT IS SEEN THAT ORIGINAL RETURNS AND THE ENCLOSURES ARE NOT AVAILABLE. IT IS INFORMED BY THE AO THAT ORIGINAL RETURNS AND THE ENCLOSURES ARE NOT AVAILABLE IN THE ASSESSMENT FOLDERS. 6.3.1 IT IS CLEAR FROM THE TRIAL BALANCES AND THE CORRESPONDING ACCOUNTS IN THE GROUP ENTITIES FROM WHERE AMOUNTS ARE DRAWN THAT 8 ITA NO.1751 & 1752/MDS/2014 VIEW OF THE AO THAT ALL THE A BOVE INVESTMENTS AS DISCLOSED IN THE TRAIL BALANCES FOR THE RESPECTIVE YEARS AS ALL ARE DISCLOSED IN THE RETURNS FILED BEFORE THE SEARCH ITSELF. AO DID NOT BOTHER TO TRACE THE ORIGINAL RETURNS AND VERIFY THE CLAIM NOR BOTHERED TO ASK THE AR TO FILE THE DETAILS BEFORE COMING TO CONCLUSION. THEREFORE THE ADDITION UNDER THIS HEAD IS DELETED FOR ALL THE THREE YEARS. 7. PAYMENT MADE FOR TRICHY BAJAJ DEALERSHIP AO MADE THE ADDITION OF RS 1,00,00,000 UNDER THIS HEAD FOR AY 2003-04. 7.1 SEIZED MATERIAL SRKLB&D/S V DATED 04.07.2006 - CONTAIN 48 LOOSE SHEETS (MOSTLY LETTERS WRITTEN AMONG BROTHERS OF THE APPELLANT.). ONE OF THE LETTERS IN ... A LETTER (IN TAMIL) DATED 21.01.2003 ADDRESSED TO SHRI.S.SOUNDARARAJAN IN THE LETTER HEAD OF MV.M.S.RAJAMANICAM, TIRUMANGALAM STATING THAT A SUM OF RS.1 CRORE WAS PAID RECENTLY BY SHRI.S.JAYABALAN TO TAKE OVER THE BAJAJ AUTO DEALERSHIP AT TRICHIRAPPALLI AND RS.10 LAKHS IS PAYABLE TO SHRI.S.RAJAMANICAM ON ACCOUNT OF PARTITION. 7.2 WHEN QUESTIONED WHY THE ABOVE AMOUNT SHOULD NOT BE ADDED TO HIS UNDISCLOSED INCOME, ASSESSEE IN HIS REPLY DATED 15.12.2008 HAS STATED THAT IT IS REFLECTED IN THE RESPECTIVE PARTIES ACCOUNTS IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED. AO DID NOT AGREE AND ADDED BACK TO THE INCOME. 7.3 DURING THE APPEAL A.R SUBMITTED THAT THE ADDITION MADE IS BASELESS AND IS BASED ONLY ON AN ALLEGATION AND FILED WRITTEN SUBMISSIONS VIDE LETTER DT. DEC.2 2013 AS UNDER: BAJA] DEALERSHIP AT TRICHY WAS RUN BY DEE YES EMM, TRICHY. IT WAS A PRIVATE LIMITED COMPANY. THE SAID COMPANY WAS ESTABLISHED IN THE YEAR 1991 AND WAS CARRYING ON THE BUSINESS AT 1/1 ALEXANDRIA ROAD, TRICHY. THE SHARES OF DEE YES EMM AUTOS PRIVATE LIMTED, TRICHY WAS PURCHASED AT THE RATE OF RS.15/- PER SHARE AND THE TOTAL OF 95500 SHARES WERE ACQUIRED BY THE FAMILY MEMBERS OF THE APPELLANT AS DETAILED BELOW: 9 ITA NO.1751 & 1752/MDS/2014 NAME NO. OF SHARES AMOUNT S . JAYABALAN 30 , 000 4 , 50 , 000/- J . NIRMALA 5,000 75 , 000/ - J . RAIIV SUBRAMANIAM 55,500 8,32,500/ - R . REVATHY 5,000 75,000/ - TOTAL 95,500 14 , 32 , 500/ - THE PAYMENTS FOR THE SAID ACQUISITION WAS PAID BY DEMAND DRAFTS DRAWN ON CANARA BANK AND PARTLY IN CASH BY THE FIRM SUSEE AUTO ( IN WHICH APPELLANT WAS A PARTNER) ON 28.06.2002 AND 08.07.2002. LEDGER ACCOUNT EXTRACT OF DEE YES EMM AUTO, TRICHY IN THE BOOKS OF SUSEE AUTO WAS PLACED ON RECORD. THE A.R ALSO SUBMITTED AFFIDAVIT FROM M.NEELAKANDAN OF KARUR WHO WAS THE THEN MANAGING DIRECTOR OF DEE YES EMM AUTOS PRIVATE LIMITED. IN THE SAID AFFIDAVIT IT STATED ON OATH IN PARAGRAPH 8 7.4 SINCE SUCH A HUGE ADDITION WAS MADE IN A SUMMARY MANNER WITH CRYPTIC OBSERVATIONS IN THE ASSESSMENT ORDER SOME CLARIFICATIONS WERE REQUESTED FROM THE AO, WHO VIDE LETTER DATED 11.12.2013 CLARIFIED AS UNDER:- ISSUE ASSESSING OFFICERS REMARKS 1. WHETHER ANY MATERIAL EXISTS OTHER THAN THE IMPOUNDED PAPER DISCUSSED IN THE ASSESSMENT ORDER TO SUPPORT THIS ADDITION APART FROM THE SEIZED MATERIALS REFERRED TO IN THE ORDER (PAGE NOS 4 TO 10 OF SEIZED MATERIAL) WHICH IS A LETTER WRITTEN BY ASSESSEE'S BROTHER SHRI MV.M.S. RAJAMANICAM TO THE ASSESSEE, IN ANOTHER LETTER WRITTEN BY SHRI MV.M.S. RAJAMANICAM TO ANOTHER BROTHER OF THE ASSESSEE. SHRI SOUNDARAJAN THERE IS REFERENCE ABOUT BAJAJ DEALERSHIP AT TRICHY. THIS LETTER IS AVAILABLE IN PAGE NO.11 TO 14 OF SEIZED MATERIAL IN ANNEXURE SRKLB&D/SV IN IT. SHRI MV.M.S. RAJAMANICAM HAS STATED THAT ASSESSEE'S ANOTHER BROTHER SHRI RAJENDRAN HAD MADE AN ALLEGATION THAT THE ASSESSEE HAD OBTAINED BAJAJ DEALERSHIP AT TRICHY BY PAYING RS. 1 CRORE AND HAD CLAIMED THAT DEALERSHIP HAD TO BE TRANSFERRED TO HIM IN LIEU OF AMOUNT DUE TO HIM ON PARTITION OF FAMILY PROPERTY AND OPINED THAT THERE IS JUSTICE IN THE CLAIM MADE BY SHRI RAJENDRAN 2. WHAT ARE THE ENQUIRIES DONE DURING THE COURSE OF AS PER RECORDS NO ENQUIRY APPEARS TO BE MADE ON THIS ISSUE DURING ASSESSMENT PROCEEDINGS. AS PER 10 ITA NO.1751 & 1752/MDS/2014 ASSESSMENT PROCEEDINGS ON THIS ISSUE RECORDS NO ENQUIRY APPEARS TO BE MADE ON THIS ISSUE DURING ASSESSMENT PROCEEDINGS. 3. ANY STATEMENT WAS RECORDED FROM THE SELLER OF THE AGENCIES. NO 4 WHETHER ANY STATEMENT WAS RECORDED FROM ASSESSEE ON THIS ISSUE DURING ASSESSMENT? NO. 5. WHETHER ANY POST SEARCH INVESTIGATION WAS DONE FROM INVESTIGATION UNIT THE ONLY REFERENCE FOUND IN THIS REGARD IN RECORDS IS THE STATEMENT RECORDED U/S.131 ON 13.11.2006 FROM THE ASSESSEE BY ADIT (INV) IN QUESTION NO.38 OF THAT STATEMENT THIS ISSUE WAS RAISED & THE ASSESSEE REBUTTED CONTENTS OF THE LETTERS SAYING ALLEGATIONS RAISED BY THE BROTHER ARE FALSE AND HE HAD NOT GIVEN ANY MONEY AS STATED IN THOSE LETTERS. VERFICIATION OF RECORDS SHOWS THAT THIS MATTER WAS NOT PERUSED BY ADIT(INV). 6. COPY OF REMARKS IN THE APPRAISAL REPORT ON THIS ISSUE LETTER WRITTEN BY MV.M.S. RAJAMANICAM HAVING REFERENCE ABOUT ACQUISITION OF BAJAJ DEALERSHIP AT TRICHY IS ANNEXURE SRKLB&D/SV AND RELEVANT PAGE NOS. ARE 4 TO 14 REFERENCE TO THIS ANNEXURE WAS FOUND IN APPRAISAL REPORT IN TWO PLACES. ONE IS ABOUT PAGE NO.23 OF THE ANNEXURE FOUND AT PAGE NO.24 OF APPRAISAL REPORT AND OTHER IS ABOUT PAGE NO.26 OF THE ANNEXURE FOUND AT P AGE 31 OF APPRAISAL REPORT. BOTH RELATE TO PAYMENT MADE TO SHRI RAJENDRAN. NO REFERENCE REGARDING BAJAJ DEALERSHIP IS FOUND IN THE APPRAISAL REPORT.(COPY OF RELEVANT PORTION OF APPRAISAL REPORT IS SUBMITTED HEREWITH. 9. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), WE FIND NO VALID REASON TO IN TERFERE WITH HIS FINDINGS THAT THESE INVESTMENTS WERE ALRE ADY 11 ITA NO.1751 & 1752/MDS/2014 REFLECTED IN THE TRIAL BALANCES AND BOOKS OF ACCOUN TS AND THE ASSESSING OFFICER HAS NEVER CROSS VERIFIED THE RE TURNS, BOOKS OF ACCOUNTS AND NO PROPER ENQUIRIES WERE MADE AND THERE WAS NO SUFFICIENT SEIZED MATERIALS TO MAKE TH ESE ADDITIONS. WE ALSO FIND THAT IN RESPECT OF THE ADD ITION OF ` 1 CRORE MADE TOWARDS INVESTMENT IN TRICHY BAJAJ DEAL ERSHIP NO CORROBORATIVE EVIDENCE WAS SEIZED TO SUGGEST TH AT THE ASSESSEE MADE INVESTMENT OF ` 1 CRORES IN TRICHY BAJAJ DEALERSHIP . ADDITION CANNOT BE SUSTAINED ONLY BASE D ON THE LETTER WRITTEN BY ONE MR. M.V.M.S.RAJAMANICAM TO MR . S.SOUNDARARAJAN THAT ASSESSEE HAD PAID ` 1 CRORE FOR ACQUIRING BAJAJ DEALERSHIP IN TRICHY OVER AND ABOVE THE INVESTMENT MADE BY THE ASSESSEE AND HIS FAMILY MEMB ERS IN ACQUIRING THE COMPANY DEE YES EMM WHICH IS OWNING T HE BAJAJ DEALERSHIP. THIS LETTER ALONE CANNOT BE THE B ASIS FOR MAKING THE ADDITION. FURTHER NONE OF THE FINDINGS O F THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE BEEN REB UTTED BY THE REVENUE WITH EVIDENCES. THUS, WE AFFIRM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETIN G THE ADDITIONS. 12 ITA NO.1751 & 1752/MDS/2014 ITA NO.1752/MDS/2014:- (A.Y.2006-07): 10. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IS THAT COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN DELETING ADDITIONS MADE IN R ESPECT OF INVESTMENTS MADE IN FAMILY CONCERNS. 11. THE ASSESSING OFFICER WHILE COMPLETING ASSESSME NT FOR THE ASSESSMENT YEAR 2006-07 MADE ADDITION OF ` 19,25,000/- STATING THAT ASSESSEE MADE INVESTMENT IN SUSI AUTOM OBILES PVT. LTD. BY WAY OF CASH AND PURCHASED 192500 SHAR ES @ FACE VALUE OF ` 10/- PER SHARE AND THE INDIVIDUAL ACCOUNTS OF THE ASSESSEE AS WELL AS ACCOUNTS OF FAMILY MEMBERS DO NOT SHOW DRAWINGS TO THE EXTENT OF INVESTMENT MADE BY T HE ASSESSEE IN SHARES. THE ASSESSEE SUBMITS THAT THES E INVESTMENTS WERE REFLECTED IN THE BOOKS OF ACCOUNT S. HOWEVER, ASSESSING OFFICER WITHOUT ACCEPTING THE SUBMISSIONS MADE ADDITION. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION OBSERVING AS UNDER:- 5. BOGUS SHARES IN FAMILY MEMBERS: ASSESSING OFFIC ER MADE THE ADDITION UNDER THIS HEAD AS UNDER:- ASSESSMENT BOGUS SHARES 13 ITA NO.1751 & 1752/MDS/2014 YEAR IN FAMILY MEMBERS 2003-04 14,260 2004-05 1,45,100 2006-07 19,25,000 5.4 FOR AY 2006-07 APPELLANT WAS ALLOTTED 1,92,500 SHARES OF RS 10 FACE VALUE OF SUSEE AUTOMOBILES (P) LTD ON 7.11.2005. THE TOTAL INVESTMENT IS RS 19, 25,000. WHEN QUESTIONED ASSESSEE HAS REPLIED THAT THE SHARES HELD IN COMPANY IS REFLECTED IN THE BOOKS OF ACCOUNTS. AO REJECTED THE ARGUMENT HOLDING THAT RETURNS AND ITS ENCLOSURES DO NOT INDICATE ANY ENTRIES NOR IN THE RETURNS OF COMPANY THERE IS NO ENTRY TO THE EFFECT. 5.4.1 THE A. R VIDE LETTER DECEMBER 02, 2013 SUBMITTED AS UNDER: THE LEDGER ACCOUNT EXTRACT OF SHRI S.JAYABALAN IN THE BOOKS OF SUSEE AUTO SALES AND SERVICES PRIVATE LIMITED FOR THE PERIOD 01.08.2004 TO 31.08.2004 IS ATTACHED. IN WHICH ACCOUNT A DEBIT OF RS.20,OO,OOO/- ON 02.08.2004 IS FOUND AS JOURNAL ENTRY TOWARDS INVESTMENT MADE BY THE APPELLANT IN SUSEE AUTOMOBILES PRIVATE LIMITED BEING COST OF 1,92,500 SHARES AT THE RATE OF RS.10 PER SHARE. AS PER FORM-2 FILED DATE OF ALLOTMENT IS 02.08.2004. THE AO HAS TAKEN DATE OF ALLOTMENT TO BE 07.11.2005 WHICH HAPPENS TO BE THE DATE ON WHICH THE SAID FORM-2 HAD BEEN FILED BELATEDLY WITH THE REGISTRAR OF COMPANIES. AS SUCH, THERE IS NO INVESTMENT IN THE SAID COMPANY BY SHRI.S.JAYABALAN DURING THE FINANCIAL YEAR ENDED 31.03.2006 AND THE ADDITION MADE IS NOT WARRANTED 5.5 AR MENTIONED THAT, APPELLANT, THOUGH INDIVIDUAL, HAS MAINTAINED CASH BOOK AND PREPARED TRIAL BALANCE FOR EACH YEAR INDICATING ALL THE INVESTMENTS AND THESE WERE FILED WITH THE ORIGINAL RETURNS OF INCOME. DURING THE APPEAL COPIES OF THE SAME FOR THE RELEVANT YEARS IS PRODUCED WHICH ARE PLACED ON RECORD. ALSO THE CORRESPONDING CAPITAL ACCOUNTS/ LOAN ACCOUNTS IN THE FIRMS AND COMPANIES REFLECTING THE WITHDRAWALS ARE FILED. IT IS CLEAR FROM THE 14 ITA NO.1751 & 1752/MDS/2014 EXPLANATION THAT ALL THE INVESTMENTS ARE OUT OF TRANSFERS FROM GROUP CONCERNS AND ARE REFLECTED IN THE TRIAL BALANCES OF THE RESPECTIVE YEARS. I HAVE PERUSED THE RECORDS AND IT IS SEEN THAT ORIGINAL RETURNS AND THE ENCLOSURES ARE NOT AVAILABLE. IT IS INFORMED BY THE AO THAT ORIGINAL RETURNS AND THE ENCLOSURES ARE NOT AVAILABLE IN THE ASSESSMENT FOLDERS. THE AO SHOULD HAVE LINKED THEM BEFORE PASSING THE ORDERS. 5.5.1 IT IS CLEAR FROM THE TRIAL BALANCES AND THE CORRESPONDING ACCOUNTS IN THE GROUP ENTITIES FROM WHERE AMOUNTS ARE DRAWN THAT VIEW OF THE AO THAT ALL THE ABOVE INVESTMENTS AS UNDISCLOSED IN FACTUALLY INCORRECT, AS THEY ARE DISCLOSED IN THE TRAIL BALANCES FOR THE RESPECTIVE YEARS AS ALL ARE DISCLOSED IN THE RETURNS FILED BEFORE THE SEARCH. AO DID NOT BOTHER TO TRACE THE ORIGINAL RETURNS AND VERIFY THE CLAIM NOR BOTHERED TO ASK THE AR TO FILE DETAILS BEFORE COMING TO CONCLUSION. THEREFORE, THE ADDITION UNDER THIS HEAD IS DELETED FOR ALL THE THREE YEARS. 12. ON GOING THROUGH THE ABOVE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS), WE FIND NO VALID REASON TO INTERFERE WITH HIS FINDINGS THAT THESE ADDITIONS WERE ALREAD Y REFLECTED IN THE TRIAL BALANCES AND BOOKS OF ACCOUNTS AND THE ASSESSING OFFICER HAS NEVER CROSS VERIFIED THE RE TURNS, BOOKS OF ACCOUNTS AND NO PROPER ENQUIRIES WERE MADE AND THERE WAS NO SUFFICIENT SEIZED MATERIALS TO MAKE TH ESE ADDITIONS. NONE OF THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE BEEN REBUTTED BY THE REV ENUE WITH EVIDENCES. THUS, WE AFFIRM THE ORDER OF THE 15 ITA NO.1751 & 1752/MDS/2014 COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E ADDITIONS. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , THE 26 TH DAY OF DECEMBER, 2014 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED, 26 TH DECEMBER, 2014 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .