K.Sivakumar, CHENNAI V. DCIT, CHENNAI

ITA 1763/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9096 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Proportionate interest; Block assessment
• Section: 69C; 143(3); 153A; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1762, 1763, 1764 & 1765/MDS/2014 ( )( / ASSESSMENT YEARS : 2006-07 TO 2009-10 SHRI K. SIVAKUMAR, C/O M/S SUBBARAYA AIYAR PADMANABHAN & RAMAMANI ADVOCATES, NEW NO.75A (OLD NO.105A), DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI - 600 004. PAN : AJTPS 5869 H V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE IV(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. SRINIVAS, JCIT 1 / 2% / DATE OF HEARING : 04.04.2016 3') / 2% / DATE OF PRONOUNCEMENT : 01.06.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-I, CHENNAI AND PERTAIN TO ASSESSMENT YEARS 2006-07, 2007- 08, 2008-09 AND 2009-10. SINCE COMMON ISSUE ARISES FOR 2 I.T.A. NOS.1762 TO 1765/MDS/14 CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT FOR ASSESSMENT YEAR 2006-07, THE ASS ESSEE HAS RAISED AN ADDITIONAL GROUND WITH REGARD TO JURISDIC TION TO FRAME ASSESSMENT UNDER SECTION 153A OF THE INCOME-TAX ACT , 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, FO R THE ASSESSMENT YEAR 2006-07, THE ASSESSEE FILED RETURN OF INCOME I N THE REGULAR COURSE ON 29.12.2006 AND THE REGULAR ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 31.12.2008. THE RE WAS SEARCH IN THE PARTNERSHIP FIRM M/S RM. K.V. GROUP OF CONCE RNS IN WHICH THE ASSESSEE WAS A PARTNER. CONSEQUENT TO THE SEARCH, A NOTICE UNDER SECTION 153A WAS ISSUED. THE ASSESSING OFFICER COM PLETED THE ASSESSMENT BY MAKING SEVERAL ADDITIONS WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. ACCORD ING TO THE LD. COUNSEL, THE REGULAR ASSESSMENT WAS COMPLETED ON 31 .12.2008 UNDER SECTION 143(3) OF THE ACT BEFORE THE DATE OF SEARCH. NO ASSESSMENT PROCEEDING WAS PENDING AS ON 18.02.2009 WHEN THE SEARCH WAS CONDUCTED. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE IMPUGNED ASSESSMENT WILL NOT ABATE. THE COMPLETED ASSESSMENT 3 I.T.A. NOS.1762 TO 1765/MDS/14 CANNOT BE REOPENED UNDER SECTION 153A OF THE ACT. IF AT ALL ANY NEW MATERIAL WAS FOUND, THE ASSESSING OFFICER CAN M AKE FURTHER ADDITION UNDER SECTION 153A OF THE ACT. IN THE ABS ENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N, THE ASSESSING OFFICER CANNOT REOPEN THE COMPLETED ASSESSMENT UNDE R SECTION 143(3) OF THE ACT, IN THE GUISE OF MAKING ASSESSMEN T UNDER SECTION 153A OF THE ACT. AT THE BEST, THE ASSESSMENT CAN B E REOPENED UNDER SECTION 147 IF AT ALL ANY INCOME WAS OMITTED TO BE CONSIDERED IN THE REGULAR ASSESSMENT. THE LD.COUNSEL FURTHER SUBMITTED THAT SINCE ADMITTEDLY NO MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH OPERATION, THE ASSESSING OFFICER CANNOT MAKE ANY AS SESSMENT UNDER SECTION 153A OF THE ACT FOR THE ASSESSMENT YE AR 2006-07. ACCORDING TO THE LD. COUNSEL, ADDITION CAN BE MADE TO THE INCOME RATHER ASSESSED ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. SINCE NO MA TERIAL WAS UNEARTHED DURING THE COURSE OF SEARCH OPERATION, AC CORDING TO THE LD. COUNSEL, THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT CANNOT BE DISTURBED. 3. ON THE CONTRARY, SHRI SRINIVAS, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THIS ISSUE WAS NOT R AISED BEFORE THE 4 I.T.A. NOS.1762 TO 1765/MDS/14 LOWER AUTHORITIES. THE ASSESSEE IS RAISING THIS IS SUE FOR THE FIRST TIME BEFORE THIS TRIBUNAL. ON A QUERY FROM THE BENCH, T HE LD. D.R. CLARIFIED THAT NO SEIZED MATERIAL APPEARS TO BE FOU ND FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE ASSESSI NG OFFICER HAS NOT REFERRED ANY SEARCH MATERIAL IN THE ASSESSMENT ORDER. ACCORDING TO THE LD. D.R., EVEN THOUGH THE PENDING ASSESSMENT PROCEEDING ALONE ABATE, THE ASSESSING OFFICER CAN C OMPUTE THE INCOME ON THE BASIS OF THE MATERIAL AVAILABLE ON RE CORD EVEN IN CASE NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH O PERATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT NO INCRIMINATING MATERIAL WAS FOUND DU RING THE COURSE OF SEARCH OPERATION. WE HAVE CAREFULLY GONE THROUG H THE PROVISIONS OF SECTION 153A OF THE ACT. SECTION 153A OF THE AC T CLEARLY SAYS THAT ALL THE PENDING ASSESSMENT PROCEEDINGS ON THE DATE OF SEARCH WOULD ABATE AND THE ASSESSING OFFICER HAS TO PASS A COMPOSITE ASSESSMENT ORDER UNDER SECTION 153A OF THE ACT INCL UDING ALL THE INCOME DISCLOSED IN THE REGULAR RETURN OF INCOME. IN THE CASE BEFORE US, THE RETURN FILED IN THE REGULAR COURSE WAS SCRU TINIZED BY THE DEPARTMENT AND THE ASSESSMENT ORDER WAS PASSED UNDE R SECTION 5 I.T.A. NOS.1762 TO 1765/MDS/14 143(3) OF THE ACT ON 31.12.2008. ON THE DATE OF SE ARCH, ADMITTEDLY, NO ASSESSMENT WAS PENDING AND IT WAS COMPLETED. ON CE THE ASSESSMENT PROCEEDING WAS COMPLETED, THE ASSESSING OFFICER WAS EXPECTED TO PASS ASSESSMENT ORDER UNDER SECTION 153 A OF THE ACT ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE CO URSE OF SEARCH OPERATION. IN OTHER WORDS, THE MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OPERATION CAN ALONE BE BASIS FOR MAKING A SSESSMENT UNDER SECTION 153A OF THE ACT. 5. THE REVENUE NOW CONTENDS BEFORE THIS TRIBUNAL TH AT THIS ISSUE WAS NOT RAISED BEFORE THE LOWER AUTHORITIES. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ISSUE RAISED BY THE ASSESSEE GOES TO THE VERY ROOT OF THE JURISDICTION OF THE ASSESSI NG OFFICER TO COMPLETE THE BLOCK ASSESSMENT. IN OTHER WORDS, THE ASSESSING OFFICER HAS NO JURISDICTION TO PASS ASSESSMENT ORDE R UNDER SECTION 153A OF THE ACT IN THE ABSENCE OF INCRIMINATING MAT ERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE ISSUE OF JURISDICTION C AN BE RAISED EVEN BEFORE THIS TRIBUNAL. THE MATTER WOULD BE DIFFEREN T IF ANY MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. R EMITTING BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION, 6 I.T.A. NOS.1762 TO 1765/MDS/14 WOULD NOT SERVE ANY PURPOSE AT ALL. THEREFORE, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY MATER IAL FOUND DURING THE COURSE OF SEARCH OPERATION, NO ASSESSMENT CAN B E MADE UNDER SECTION 153A OF THE ACT, ESPECIALLY WHEN THE ASSESS MENT WAS NOT PENDING ON THE BASIS OF RETURN FILED BEFORE THE DAT E OF SEARCH. A SIMILAR VIEW WAS TAKEN BY THIS TRIBUNAL IN THE ASSE SSEE'S OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A. NO. 1090/MDS/ 2014 DATED 05.02.2015. 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES FOR THE ASSESSMENT YEAR 2006-07. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES FO R ASSESSMENT YEAR 2006-07 ARE SET ASIDE AND THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 7. NOW COMING TO OTHER ASSESSMENT YEARS, THE FIRST ISSUE ARISES FOR CONSIDERATION IS CLASSIFICATION OF RENTAL INCOM E. 8. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSING OFFICER CLASSIFIED 30% OF RENTAL INCOME AS INCOME FROM OTHER SOURCES. ACCORDING TO THE LD. COUNSEL, THE ENTIRE INCOME HAS TO BE CLASSIFIED AS INCOME FROM H OUSE PROPERTY. 7 I.T.A. NOS.1762 TO 1765/MDS/14 THE CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER ON THE GROUND THAT FOR THE EARLIER ASSESSMENT YEAR, A SIMILAR INCOME WAS CONSIDERED AND 30% OF THE SAME WAS CLASSIFIED A S INCOME FROM OTHER SOURCES. REFERRING TO THE ORDER OF THIS TRIBUNAL IN RESPECT OF OTHER CO-OWNERS OF THE SAME PROPERTY, THE LD.COU NSEL SUBMITTED THAT THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICE R TO CONSIDER THE ENTIRE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. SINCE IN RESPECT OF THE VERY SAME PROPERTY, THE RENTAL INCOM E WAS CLASSIFIED AS INCOME FROM HOUSE PROPERTY IN RESPECT OF OTHER C O-OWNERS, THERE IS NO REASON FOR TAKING A DIFFERENT VIEW IN THE HAN DS OF THE PRESENT ASSESSEE. THE LD.COUNSEL PLACED ON RECORD A COPY OF THE ORDER OF THE CIT(APPEALS) DATED 30.11.2012 IN THE CASE OF ON E OF THE CO- OWNERS, NAMELY, SMT. V. DHANALAKSHMI. THE LD.COUNS EL SUBMITTED THAT THE REVENUE HAS ACCEPTED THIS DECISION OF THE CIT(APPEALS) AND NOT FILED ANY APPEAL AGAINST THIS ORDER BEFORE THIS TRIBUNAL. 9. ON THE CONTRARY, SHRI SRINIVAS, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE LET OUT THE BUILDING ALONG WITH AMENITIES LIKE LIFT, AIR-CONDITIONER, ET C. THEREFORE, THE CHARGES COLLECTED FOR LIFT AND AMENITIES HAVE TO BE CLASSIFIED AS INCOME FROM OTHER SOURCES. THE LD. D.R. HAS ALSO S UBMITTED THAT IN 8 I.T.A. NOS.1762 TO 1765/MDS/14 THE CASE OF ONE OF THE CO-OWNERS, NAMELY, SMT. V. D HANALAKSHMI, THE CIT(APPEALS) DELETED THE CLASSIFICATION MADE BY THE ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO CONSI DER THE ENTIRE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. NO FU RTHER APPEAL WAS FILED BEFORE THIS TRIBUNAL AGAINST THE ORDER OF THE CIT(APPEALS). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE APPEARS TO HAVE 1/6 TH INTEREST AS CO-OWNER OF THE PROPERTY. IN THE CASE OF SMT. V. DHANALAKSHMI, THE ISSUE OF RENTAL I NCOME WAS CONSIDERED AND THE CIT(APPEALS) FOUND THAT THERE WA S NO EVIDENCE TO INDICATE THAT THE ASSESSEE PROVIDED ANY AMENITIE S EXCEPT LETTING OUT THE PROPERTY ON RENT. ACCORDINGLY, THE CIT(APP EALS) DIRECTED THE ASSESSING OFFICER TO TAKE THE ENTIRE INCOME AS INCO ME FROM HOUSE PROPERTY AND ALLOW THE STATUTORY DEDUCTION PROVIDED UNDER SECTION 24 OF THE ACT. NO APPEAL WAS FILED AGAINST THIS OR DER OF THE CIT(APPEALS) IN RESPECT OF ONE OF THE CO-OWNERS SMT . V. DHANALAKSHMI. IT IS NOT IN DISPUTE THAT THE ASSESS EE IS ALSO ONE OF THE CO-OWNERS OF THE PROPERTY, THEREFORE, THERE IS NO REASON TO TAKE A DIFFERENT VIEW IN RESPECT OF THE ASSESSEE. WHEN THE PROPERTY IS SAME AND IT WAS LET OUT BY ALL THE CO-OWNERS, AND W HEN THE 9 I.T.A. NOS.1762 TO 1765/MDS/14 CLASSIFICATION OF INCOME IN THE HANDS OF SMT. V. DH ANALAKSHMI ATTAINED FINALITY, THIS TRIBUNAL IS UNABLE TO UPHOL D THE IMPUGNED ORDER OF THE CIT(APPEALS) WHEREIN 30% OF THE RENTAL INCOME WAS TREATED AS INCOME FROM OTHER SOURCES. THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW HAVE TO TAKE A CONSISTENT VIEW IN THE CLASSIFICATION OF INCOME FRO M THE VERY SAME PROPERTY. THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO TAKE THE ENTIRE INCOME AS INCOME FROM HOUSE PROPERTY AND ALLOW DEDUCTION U NDER SECTION 24 OF THE ACT. 11. THE NEXT GROUND OF APPEAL IS REGARDING DISALLOW ANCE OF EXPENDITURE UNDER SECTION 69C OF THE ACT. 12. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE RE WAS INADEQUATE DRAWING FOR HOUSEHOLD EXPENDITURE. ACCO RDING TO THE LD. COUNSEL, THE ASSESSEE CLAIMED OPENING CASH BALA NCE OF ` 24,56,500/-. THE ASSESSING OFFICER ESTIMATED THE E XPENDITURE AT ` 3,60,000/- FOR THE ASSESSMENT YEAR 2003-04 AND INCR EASED THE SAME BY 15% YEAR AFTER YEAR. ACCORDING TO THE LD. COUNSEL, THE 10 I.T.A. NOS.1762 TO 1765/MDS/14 ASSESSEE HAS FILED A REVISED ESTIMATION OF FAMILY E XPENDITURE WHICH INDICATES THE ACCUMULATED DRAWINGS FROM OTHER FAMIL Y MEMBERS ALSO. THE ASSESSEES FAMILY CONSISTS OF HIS WIFE A ND HIS SON. THE CIT(APPEALS), WITHOUT CONSIDERING THE DRAWINGS DISC LOSED BY THE ASSESSEE AND THE SIZE OF THE FAMILY OF THE ASSESSEE , SIMPLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. ACCORDING TO THE LD. COUNSEL, WHEN THE ASSESSEES FAMILY CONSIST S OF HIS WIFE AND SON, THE DRAWINGS SHOWN BY THE ASSESSEE FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION TO THE EXTENT OF ` 2,10,500/- IS JUSTIFIED. THEREFORE, NO FURTHER ADDITION IS CALLED FOR. 13. ON THE CONTRARY, SHRI SRINIVAS, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT FOR THE ASSESSMENT Y EAR 2006-07, THE ASSESSEE HAS DISCLOSED DRAWING OF ` 3,61,750/- AND THE ASSESSING OFFICER ESTIMATED AT ` 6,30,000/- AND THE DIFFERENCE WAS FOUND TO BE ` 1,86,250/-. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS DISCLOSED ONLY A SUM OF ` 2,10,500/-. ACCORDING TO THE LD. D.R., EVERY YEAR THERE WAS INFLATION AND THE AS SESSEE HAS TO NECESSARILY MEET MORE EXPENDITURE FOR THEIR LIABILI TIES. THEREFORE, THE EXPENDITURE FOR THE ASSESSMENT YEAR 2007-08 WOU LD NOT GO BELOW THE EXPENDITURE DISCLOSED FOR THE ASSESSMENT YEAR 2006-07. 11 I.T.A. NOS.1762 TO 1765/MDS/14 SINCE THE ASSESSING OFFICER ESTIMATED THE EXPENDITU RE AT ` 6,30,000/-, THE SAME WAS ESTIMATED FOR THE ASSESSME NT YEAR 2007- 08 ALSO. THE BALANCE OF ` 4,19,500/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY, FOR OTHER ASSESSMENT Y EARS ALSO, THE ASSESSING OFFICER MADE ADDITION. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TEXTILES IN CHENNAI AND TIRUNELVELI. THE ASSESSEE HAS SHOWN THE EXPENDITUR E FOR MEETING THE HOUSEHOLD EXPENSES. THE ASSESSING OFFICER FOUN D THAT THERE WAS SHORTFALL IN RELATION TO SOURCE OF MEETING OF E XPENDITURE. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER ESTI MATED THE EXPENDITURE AT ` 4,19,500/-. AS RIGHTLY SUBMITTED BY THE LD. D.R., FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS DISCL OSED DRAWING FOR HOUSEHOLD EXPENDITURE AT ` 3,61,750/-, HOWEVER, FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS DISCLOSED ONLY ` 2,10,500/-. THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE SAME EXPENDITURE AS WAS INCURRED FOR ASSESSMENT YEA R 2006-07 OUGHT TO HAVE BEEN INCURRED FOR THE ASSESSMENT YEAR 2007-08 ALSO. ESTIMATION OF EXPENDITURE AT ` 6,30,000/- WITHOUT ANY MATERIAL IS 12 I.T.A. NOS.1762 TO 1765/MDS/14 UNJUSTIFIED. THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE ASSESSEES FAMILY CONSISTS OF ONLY HIMSELF, HIS WIF E AND HIS SON. THEREFORE, TAKING INTO CONSIDERATION OF THE BUSINES S ACTIVITY OF THE ASSESSEE AND SIZE OF THE FAMILY, THE ASSESSEE WOULD HAVE INCURRED AN EXPENDITURE OF ` 3,61,750/- AS IT WAS DISCLOSED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07. THEREFORE, THE DI FFERENCE BETWEEN ` 3,61,750/- AND ` 2,10,500/- CAN AT THE BEST BE ESTIMATED AS EXPENDITURE FOR HOUSEHOLD DURING THE ASSESSMENT YEAR 2007-08. IN VIEW OF THE ABOVE FACTUAL SITUATION, THIS TRIBUN AL IS OF THE CONSIDERED OPINION THAT THE ADDITION OF ` 4,19,500/- IS NOT JUSTIFIED. HENCE, THE ASSESSING OFFICER IS DIRECTED TO RESTRIC T THE ADDITION ONLY TO ` 1,51,250/-. ACCORDINGLY, THE ORDERS OF THE LOWER A UTHORITIES ARE MODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO M AKE ADDITION TO THE EXTENT OF ` 1,51,250/- INSTEAD OF ` 4,19,500/-. 15. THE NEXT GROUND OF APPEAL IS WITH REGARD TO PRO PORTIONATE DISALLOWANCE OF INTEREST ON THE HOUSING LOAN. 16. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT THE ASSESSEE IS ONE OF THE CO-OWNERS OF THE PROPERTY. THEY HAVE BORROWED A SUM OF ` 5 CRORES FOR CONSTRUCTION. THE 13 I.T.A. NOS.1762 TO 1765/MDS/14 ASSESSING OFFICER FOUND THAT A SUM OF ` 83,50,000/- WAS NOT USED FOR CONSTRUCTION. ACCORDING TO THE LD. COUNSEL, A SUM OF ` 70,00,000/- WAS PAID TO VARIOUS TEMPLES AS PER THE DIRECTION OF THE HR&CE TO THE FIRM RM.K.V. & SONS. ACCORDING TO THE LD. COUN SEL, THE COST OF CONSTRUCTION HAS TO BE REIMBURSED BY THE ASSESSEE F ROM THE LOAN BORROWED. INSTEAD OF PAYING TO THE PARTNERS, THE S AME WAS PAID TO THE TEMPLES AS DIRECTED BY THE HR&CE. THEREFORE, A CCORDING TO THE LD. COUNSEL, PROPORTIONATE INTEREST HAS TO BE ALLOW ED WHILE COMPUTING NOTIONAL INCOME. 17. ON THE CONTRARY, SHRI SRINIVAS, THE LD. D.R. SU BMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF OTHER CO-OWNERS. THE LD. D.R. SUBMITTED THAT THE DISPUTE BEFORE THIS TRIBUNAL WAS NOT WITH REGARD TO CLAIM OF ` 83.50 LAKHS, BUT THE DISPUTE WAS ONLY WITH REGARD TO ` 70 LAKHS PAID TO THE TEMPLES AS DONATION. THIS TRIBUNAL FOUND THAT THERE WAS NO RE FERENCE IN THE LEASE DEED WITH REGARD TO LIABILITY OF THE ASSESSEE TO REIMBURSE THE EXPENDITURE INCURRED BY RM.KV & SONS, THE PARTNERSH IP FIRM. THEREFORE, THIS TRIBUNAL FOUND THAT THE CLAIM OF TH E ASSESSEE THAT RM.K.V. HAS INVESTED THE FUNDS FOR CONSTRUCTION AND THE SAME HAS TO BE REIMBURSED IS NOT SUPPORTED BY ANY EVIDENCE. ACCORDING TO 14 I.T.A. NOS.1762 TO 1765/MDS/14 THE LD. D.R., A SIMILAR DISALLOWANCE WAS CONFIRMED BY THIS TRIBUNAL IN RESPECT OF OTHER CO-OWNERS IN I.T.A. NO.234/MDS/ 2013 BY ORDER DATED 07.08.2015. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AN IDENTICAL DISALLOWANCE OF INTEREST WAS CONSIDERED BY THIS TRI BUNAL IN RESPECT OF OTHER CO-OWNERS. THIS TRIBUNAL, AS RIGHTLY POIN TED OUT BY THE LD. D.R., FOUND THAT THERE WAS NO MATERIAL TO SUPPORT T HE CLAIM OF THE ASSESSEE THAT INSTEAD OF REIMBURSING THE COST OF CO NSTRUCTION, DONATION WAS GIVEN TO TEMPLES. THIS TRIBUNAL FOUND THAT THERE WAS NO MENTION ABOUT THE LIABILITY OF THE ASSESSEE IN T HE LEASE AGREEMENT. IN THE ABSENCE OF MATERIAL, THIS TRIBUN AL FOUND THAT THE ASSESSEE HAS DIVERTED THE SUM OF ` 70 LAKHS BORROWED FOR CONSTRUCTION. IN VIEW OF THIS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DECISION TAKEN IN RESPECT OF OTHER CO-OWNERS IS ALSO EQUALLY APPLICABLE IN THE CASE OF PRESENT ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 19. THE ASSESSEE HAS RAISED ONE MORE GROUND WITH RE GARD TO DISALLOWANCE OF ` 17 LAKHS FOR THE ASSESSMENT YEAR 2009-10. 15 I.T.A. NOS.1762 TO 1765/MDS/14 20. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE A SSESSEE, SUBMITTED THAT A SUM OF ` 17,48,400/- WAS FOUND AT THE RESIDENCE OF THE ASSESSEE DURING THE COURSE OF SEARCH OPERATION. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THESE A RE ALL CASH BALANCE AVAILABLE WITH THE ASSESSEE FROM AND OUT OF DRAWINGS FROM THE BUSINESS CONCERNS AFTER MEETING OUT THE DOMESTI C EXPENSES. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE AND HIS BROTHER WERE LIVING TOGETHER. SINCE IT IS A COMMON FAMILY, ACCO RDING TO THE LD. COUNSEL, THE EXPENSES WOULD BE MET BY DRAWINGS COMM ONLY FROM THE BUSINESS FIRM AND A PORTION OF THE SAME WOULD B E HANDED OVER TO OTHER YOUNGER BROTHERS SHRI K. PONANAND AND SHRI K. MAHESH. THE MONEY WITHDRAWN FOR FAMILY EXPENDITURE OF ALL T HE BROTHERS WERE KEPT IN THE RESIDENCE OF THE ASSESSEE. THEREFORE, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION UNDER SEC TION 69A OF THE ACT. THE LD.COUNSEL FURTHER SUBMITTED THAT WHAT WA S FOUND DURING THE COURSE OF SEARCH OPERATION IS ONLY ACCUMULATED DRAWINGS FROM THE BUSINESS FIRM, THEREFORE, THE ADDITION MADE BY THE AUTHORITIES BELOW ARE NOT JUSTIFIED. 16 I.T.A. NOS.1762 TO 1765/MDS/14 21. ON THE CONTRARY, SHRI SRINIVAS, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE FILED R ETURN OF INCOME IN HIS INDIVIDUAL STATUS. NO CASH FLOW STATEMENT W AS FILED BEFORE THE ASSESSING OFFICER AND DURING THE COURSE OF SEARCH O PERATION. THE ASSESSEE HAS INCOME ONLY FROM THE FIRM IN WHICH HE HAPPENED TO BE A PARTNER IN THE STATUS OF INDIVIDUAL. THE INTERES T / NOTIONAL INCOME AND PROFIT EARNED FROM THE FIRM WAS CREDITED IN THE CURRENT ACCOUNT OF THE ASSESSEE. THE ASSESSEE DRAWS FROM THIS CURR ENT ACCOUNT AND MAINTAINS THE EXPENDITURE FOR THE PURPOSE OF ME ETING DAY-TO- DAY EXPENSES. WHENEVER THERE WAS SURPLUS, THE ASSE SSEE IS OPENING FIXED DEPOSIT IN THE BANK. THE INTEREST EA RNED ON SUCH FIXED DEPOSIT IS ONCE AGAIN PLOUGHED INTO FIXED DEP OSIT. REFERRING TO THE CLAIM OF THE ASSESSEE THAT HIS BROTHER USED TO GIVE HIS MONEY, THE LD. D.R. SUBMITTED THAT THE ASSESSEES ELDER BR OTHER SHRI K. VISWANATHAN DIED ON 26.01.2006. EVEN AFTER HIS DEA TH, THE ASSESSEE CONTINUED THE SAME PRACTICE. THEREFORE, T HE ASSESSING OFFICER HAS RIGHTLY FOUND THAT THE EXPLANATION OF T HE ASSESSEE WAS NOT SATISFACTORY. ACCORDINGLY, HE MADE ADDITION UN DER SECTION 69A OF THE ACT IN RESPECT OF THE CASH FOUND DURING THE COURSE OF SEARCH OPERATION. 17 I.T.A. NOS.1762 TO 1765/MDS/14 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED IN THE BUSINES S OF TEXTILE IN CHENNAI AND TIRUNELVELI. THE ASSESSEE-FIRM CONSIST S OF FOUR BROTHERS AND THE ELDER BROTHER SHRI K. VISWANATHAN DIED ON 26.1.2006. EVEN THOUGH THE ASSESSEE IS FILING RETU RNS INDIVIDUALLY, BEING A PARTNER OF THE PARTNERSHIP FIRM, THE ASSESS EE NOW CLAIMS THAT THE MONEY WOULD BE DRAWN COMMONLY AND DISTRIBU TED AMONG THE BROTHERS TO MEET THE FAMILY EXPENDITURE. IT IS COMMON PRACTICE IN SOUTH INDIAN FAMILIES TO WITHDRAW MONEY FROM BUS INESS CONCERN BY ELDER BROTHER AND THE SAME WOULD BE DISTRIBUTED AMONG THE YOUNGER BROTHERS SO THAT A UNIFORM STATUS CAN BE MA INTAINED IN THE SOCIETY BY ALL THE FAMILY MEMBERS. THE ASSESSEE EX PLAINS THAT THE MONEY WITHDRAWN IN THE EARLIER YEAR, WHICH WAS ACCU MULATED, WAS KEPT IN THE HOUSE OF THE ASSESSEE. THE FACT THAT S HRI K. VISWANATHAN, DIED ON 26.01.2006 IS NOT IN DISPUTE. THEREFORE, THE ASSESSEE HAS TO NATURALLY TAKE CARE OF ALL THE FAMI LY AFFAIRS, INCLUDING THE FAMILIES OF THE BROTHERS. THE ASSESSEE ALSO CL AIMED BEFORE THE AUTHORITIES BELOW THAT THE ELDER BROTHER SHRI K. VI SWANATHAN GAVE A SUM OF ` 1 LAKH EACH FOR THE LAST FOUR ASSESSMENT YEARS. BY TAKING 18 I.T.A. NOS.1762 TO 1765/MDS/14 INTO CONSIDERATION THE STATUS OF THE FAMILY AND BUS INESS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ACCU MULATED DRAWINGS COULD HAVE BEEN AVAILABLE IN THE RESIDENCE OF THE A SSESSEE. IN THE ABSENCE OF ANY ALLEGATION THAT THE ASSESSEE HAS ANY SOURCE OF INCOME OTHER THAN THE BUSINESS OF THE PARTNERSHIP F IRM AND DRAWINGS FROM PARTNERSHIP FIRM, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT MAKING ADDITION OF ` 17 LAKHS IS NOT JUSTIFIED. AS RIGHTLY POINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE, THE ACCUMULATED DRAWINGS BY THE PARTNERS FOR COMMON FAMILY EXPENSES MIGHT HAVE BEEN KEPT AT THE ASSESSEES RESIDENCE FOR DISTRIBUTION TO OTHER BROTHERS OF THE ASSESSEE. AFTER THE DEATH OF SHRI K. VISWANATHAN O N 26.01.2006, THE ASSESSEE IS TAKING CARE OF FAMILY AFFAIRS AND T HEREFORE, THE WITHDRAWAL OF FUNDS HAS TO BE NECESSARILY KEPT AT T HE RESIDENCE OF THE ASSESSEE. THEREFORE, SO LONG AS THERE WAS NO D ISPUTE THAT THE COMMON FAMILY EXPENDITURE WAS MET BY DRAWINGS FROM PARTNERSHIP FIRM, THIS TRIBUNAL DO NOT FIND ANY REASON TO MAKE THE ADDITION OF ` 17 LAKHS IN THE HANDS OF THE ASSESSEE. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY TH E ASSESSING OFFICER. WE ARE UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES 19 I.T.A. NOS.1762 TO 1765/MDS/14 AND ACCORDINGLY THE SAME ARE SET ASIDE AND THE ADDI TION OF ` 17 LAKHS IS DELETED. 23. IN THE RESULT, THE ASSESSEES APPEAL IN I.T.A. NO.1763/MDS/2014 IS PARTLY ALLOWED AND OTHER APPEAL S ARE ALLOWED. ORDER PRONOUNCED ON 1 ST JUNE, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST JUNE, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A), CENTRAL-I, CHENNAI 4. 1 92 /CIT, CENTRAL-I, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.