ITO, CHENNAI V. Shri Muralicanthan, CHENNAI

ITA 2199/CHNY/2008

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6487 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-06-2011
• Assessment Year: misc
• Appeal Filed On: 02-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: S NANDA KUMAR
• Keywords: Unexplained investment; Revised return
• Section: 69

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI, J.M. & SHRI. N.S. SAINI, A .M. I.T.A. NOS.2199 AND 2200/MDS/2008 ASSESSMENT YEARS: 1988-89 AND 89-90 THE INCOME TAX OFFICER, MEDIA WARD II, CHENNAI VS . SHRI MURALICAANTHAN, 10, DEVANATHAN STREET, MANDAVELI, CHENNAI 600 028. [G.I. NO.:13700-M] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL ASSESSEE BY : SHRI S. NANDA KUMAR ORDER PER U.B.S. BEDI, J.M. THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAI NST SEPARATE ORDERS PASSED BY THE LD. CIT(A) VI, CHENNAI BOTH DATED 27. 03.2008 RELEVANT TO THE ASSESSMENT YEARS 1988-89 AND 89-90 RESPECTIVELY. 2. THESE APPEALS ARE HEARD TOGETHER, THEREFORE BEI NG DISPOSED OF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 2199/MDS/2008 :A.Y. 1988-89 3. THE DEPARTMENT HAS CHALLENGED THE ORDER OF THE LD. CIT(A) WITH RESPECT TO GIVING DIRECTION TO THE ASSESSING OFFICER TO TAK E COGNIZANCE OF THE REVISED RETURN FILED ON 25.03.1992, BEYOND THE PERMITTED TI ME LIMIT, BECAUSE REVISED RETURN COULD BE FILED WITHIN 2 YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR OR BEFORE COMPLETION OF THE ASSESSMENT, WHICHE VER IS EARLIER. I.T.A. NO I.T.A. NO I.T.A. NO I.T.A. NOS SS S. .. .2199 & 2200 2199 & 2200 2199 & 2200 2199 & 2200/ // /MDS/0 MDS/0 MDS/0 MDS/08 88 8 2 4. FACTS INDICATE THAT THE RETURN OF INCOME ADMITT ING LOSS (-) ` .10,55,712/- WAS FILED ON 29.07.1988, WHICH CAME TO BE REVISED O N 14.02.1991 ADMITTING A LOSS OF (-) ` .1,53,291/-. THE ASSESSEE FURNISHED ANOTHER RETURN ADMITTING LOSS OF (-) ` .8,74,250/- STATED TO BE REVISED RETURN ON 25.03.19 92 AND SINCE TWO YEARS PERIOD HAS EXPIRED ON 31.03.1991, THE ASSESSING OFF ICER DID NOT TAKE COGNIZANCE OF SUCH SECOND SO CALLED REVISED RETURN AGAINST WHICH, THE ASSESSEE PREFERRED APPEAL AND THE LD. CIT(A), WHILE ACCEPTING THE PLEA OF THE ASSESSEE, HAS GIVEN DIRECTION TO THE ASSESSING OFFI CER IN PARA 4.1 OF HIS ORDER, WHICH READS AS UNDER: 4.1 THE APPELLANT HAS STATED THAT HE HAD FILED THE REVISED RETURN ON 25.03.1992 WHICH OUGHT TO HAVE BEEN CONSIDERED B Y THE ASSESSING OFFICER. I FIND THAT THE CONTENTION OF TH E APPELLANT IS CORRECT SINCE HE IS ELIGIBLE TO FILE REVISED RETURN OF INCOME U/S. 139(4) OF THE I.T. ACT BEFORE COMPLETION OF THE ASS ESSMENT. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO TAKE COG NIZANCE OF THE REVISED RETURN FOR ASSESSING TOTAL INCOME OF THE AP PELLANT. 5. AGAINST SUCH ORDER OF THE LD. CIT(A), THE DEPAR TMENT HAS COME UP IN APPEAL AND IT WAS STRONGLY PLEADED THAT THE LD. CIT (A) HAS GROSSLY ERRED IN CONSIDERING THE RETURN FILED ON 25.03.1992 BEING FI LED BEFORE COMPLETION OF THE ASSESSMENT, WHEREAS, THE LAW IN THIS REGARD MANDATE S THAT RETURN OF INCOME COULD BE REVISED ON NOTICING ERROR OR SOME OMISSION IN THE ORIGINAL RETURN WITHIN TWO YEARS FROM THE END OF THE ASSESSMENT YEAR OR CO MPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER, AND IN THIS CASE, 2 YEARS FROM THE END OF THE ASSESSMENT YEAR EXPIRED ON 31.03.1991, SO THE DIREC TION ISSUED BY THE LD. CIT(A) IS ILLEGAL AND UNWARRANTED AND NOT CALLED FO R, WHICH IS LIABLE TO BE I.T.A. NO I.T.A. NO I.T.A. NO I.T.A. NOS SS S. .. .2199 & 2200 2199 & 2200 2199 & 2200 2199 & 2200/ // /MDS/0 MDS/0 MDS/0 MDS/08 88 8 3 REVERSED. IT WAS THUS, PRAYED FOR REVERSING THE ORD ER OF THE LD. CIT(A) IN THIS REGARD. 6. THE LD. COUNSEL FOR THE ASSESSEE DID NOT RAISE ANY OBJECTION AND RATHER CONCEDED THAT SUCH DIRECTION ISSUED BY THE LD. CIT( A) IS NOT CORRECT AND SAME SHOULD BE APPROPRIATELY MODIFIED. 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT THE ASSESSMENT YEAR IN THIS CASE IS 1988- 89 AND TWO YEARS PERIOD EXPIRED ON 31.03.1991, WHEREAS THE RELEVANT RETURN, STATED TO BE REVISED ON 25.03.1992 AND FIRST ORIGINAL RETURN WAS FILED ON 2 9.07.1988. AS PER APPLICABLE PROVISIONS DURING THAT PERIOD, RETURN COULD ONLY BE REVISED ON OR BEFORE 31.03.1991 AND NOT BEYOND THAT DATE EVEN IF THE ASS ESSMENT WAS PENDING. THEREFORE, THE ORDER OF THE LD. CIT(A) IN THIS REGA RD IS NOT LEGALLY CORRECT, AS SUCH WHILE ACCEPTING THE APPEAL OF THE DEPARTMENT, WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN THIS REGARD AND RESTORE THAT OF T HE ASSESSING OFFICER. 8. AS A RESULT THE APPEAL OF THE DEPARTMENT GETS A CCEPTED. ITA NO. 2200/MDS/2008: A.Y.: 1989-90 9. THE DEPARTMENT IN THIS CASE HAS RAISED IN ALL N INE GROUNDS AND GROUND NO. 1 AND 7 TO 9 ARE GENERAL AND PRAYER RESPECTIVEL Y AND NEED NO ADJUDICATION, AND EFFECTIVE GROUNDS NO. 2 TO 6 READS AS UNDER: 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F ` .6,000/- MADE TOWARDS INVESTMENT IN CASH CERTIFICATE OF TNSC BANK FOUND IN THE COURSE OF SEARCH. I.T.A. NO I.T.A. NO I.T.A. NO I.T.A. NOS SS S. .. .2199 & 2200 2199 & 2200 2199 & 2200 2199 & 2200/ // /MDS/0 MDS/0 MDS/0 MDS/08 88 8 4 3. THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F ` .10,25,000/- MADE TOWARDS THE PRO NOTES FOUND IN THE COURSE OF SEARCH . 4. THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F ` . 50,000/- MADE TOWARDS INADEQUATE DRAWING HOLDING THAT ` .58,703/- SHOWN BY THE ASSESSEE IS SUFFICIENT. 5. THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F ` .40,000/- MADE TOWARDS PAYMENT RECEIVED FROM M/S. SRI DEVI & COMPA NY. 6. THE LD. CIT(A) ERRED IN DELETING THE BUSINESS I NCOME ESTIMATED FOR THE YEAR AT ` .1,00,000/- FOR THE REASON THAT THE RESULTANT FIGUR E FOR THE ASSESSMENT YEAR 1988-89 WOULD BE LOSS AFTER GIVING EFFECT TO THE APPELLATE ORDER. 10. AS REGARDS GROUND NO. 2, THE ASSESSING OFFICER MADE THE ADDITION OF ` .6,000/- UNDER SECTION 69 WITH RESPECT TO POSSESSIO N OF CASH CERTIFICATE FROM TNSC BANK HAVING BEEN NOT REFLECTED IN THE BOOKS OF ACCOUNTS AND TREATED AS UNEXPLAINED INVESTMENT AND IN APPEAL, IT WAS SUBMIT TED BY THE ASSESSEE THAT SUCH CASH CERTIFICATE FOUND IN THE PREMISES DURING THE SEARCH OPERATION DO NOT RELATE TO THE ASSESSEE AND NOR HE IS BENEFICIARY. S O, THE ADDITION OF ` .6,000/- AS EXPLAINED IN PARA 7 OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 1990-91 BE DELETED. 11. THE LD. CIT(A), WHILE CONSIDERING AND ACCEPTIN G THE PLEA OF THE ASSESSEE IN THIS REGARD, DELETED THE IMPUGNED ADDITION OF ` .6,000/- AS PER PARA 4.1 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: 4.1 ON PERUSAL OF THE PARA 7 OF ASSESSMENT ORDER F OR THE ASSESSMENT YEAR 1990-91 DATED 26.03.93, IT IS NOTIC ED THAT THE ASSESSING OFFICER HAS TREATED THE SAME AS EXPLAINED . I, THEREFORE, ACCEPT THE CONTENTION OF THE APPELLANT AND DELETE T HE ADDITION OF ` .6,000/-. THE APPELLANT SUCCEEDS ON THIS GROUND. I.T.A. NO I.T.A. NO I.T.A. NO I.T.A. NOS SS S. .. .2199 & 2200 2199 & 2200 2199 & 2200 2199 & 2200/ // /MDS/0 MDS/0 MDS/0 MDS/08 88 8 5 12. THE DEPARTMENT FILED APPEAL WITH REGARD TO DEL ETION OF SUCH ADDITION AND AFTER HEARING BOTH THE SIDES ON THIS ISSUE, WE FIND THAT THE ACTION OF THE LD. CIT(A) IS JUSTIFIED, BECAUSE, THE ASSESSING OFFICER HIMSELF NOTED IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 1990-91 DA TED 26.03.1993 BY TREATING THE SAME AS EXPLAINED AND THE LD. CIT(A) H AS TAKEN COGNIZANCE OF SUCH FINDING OF THE ASSESSING OFFICER AND CONSEQUENT UPO N SUCH ORDER, THE LD. CIT(A) HAS OPINED/DIRECTED TO DELETE THE ADDITION AGAINST WHICH, THE DEPARTMENT COULD NOT PLACED ANY CONTRARY MATERIAL OR EVIDENCE. THERE FORE, WE DO NOT FIND ANY VALID REASON TO INTERFERE IN THE ORDER PASSED BY TH E LD. CIT(A), WHICH IS CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE, ON THIS ISSUE, IS DISMISSED. 13. AS REGARDS GROUND NO. 3, THE CHALLENGE IS WITH REGARD TO DELETION OF ADDITION OF ` . 10,25,000/- TOWARDS PRO-NOTES FOUND IN THE COURSE O F SEARCH. AT THE VERY OUTSET, THE LD. DR SUBMITTED THAT THE DELETION OF ADDITION CHALLENGED IS OF ` .5,50,000/- AND NOT ` .10,25,000/-, BECAUSE, THE ASSESSEE WAS HAVING RUNN ING ACCOUNT WITH M/S. VIJAYA PRODUCTIONS, WHERE THERE W ERE MANY TRANSACTIONS AND IT WAS OBSERVED BY THE LD. CIT(A) THAT THE OUTSTAND ING RECEIVABLE BY THE ASSESSEE IS ` .10,25,000/- AS ON 31.03.1988, SO HE WAS OF THE OPI NION THAT IT IS PROPERLY EXPLAINED AND NO ADDITION IS CALLED FOR AN D THEREFORE, THE ADDITION OF ` .5,50,000/- WAS DELETED, WHICH CAME TO BE CHALLENGE D BY THE DEPARTMENT AND SIMILARLY WITH RESPECT TO OTHER ADDITION MADE BY TH E ASSESSING OFFICER AND DELETED BY THE LD. CIT(A) AS CHALLENGED IN GROUND N O. 4 TO 6, THE LD. DR SUBMITTED THAT DESPITE AMPLE OPPORTUNITY GIVEN TO T HE ASSESSEE, AT THE I.T.A. NO I.T.A. NO I.T.A. NO I.T.A. NOS SS S. .. .2199 & 2200 2199 & 2200 2199 & 2200 2199 & 2200/ // /MDS/0 MDS/0 MDS/0 MDS/08 88 8 6 ASSESSMENT STAGE, NEITHER HE HAS PRODUCED ANY MATER IAL OR EVIDENCE NOR BOOKS OF ACCOUNTS AND APART FROM THAT HE WAS UNABLE TO EX PLAIN THE AMOUNTS BY PRODUCING NECESSARY EVIDENCE AND THIS FACT CAN BE V ERIFIED FROM THE ORDER OF THE ASSESSMENT AND TO THIS PLEA OF THE LD. DR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIRSTLY, THE ASSESSEES ENTIRE BOOKS OF ACCOUNTS HAVE BEEN SEIZED AND ARE WITH THE DEPARTMENT AND SECONDLY, EVERYTHIN G IS EXPLAINABLE WITH REFERENCE TO BOOKS OF ACCOUNT AND MATERIAL AND IF C HANCE IS GIVEN, THE ASSESSEE WILL BE ABLE TO SUBSTANTIATE EVERYTHING BEFORE THE ASSESSING OFFICER ALSO AND TO THIS PLEA OF THE LD. COUNSEL FOR THE ASSESSEE, THE LD. DR DID NOT OBJECT AND SUBMITTED THAT HE HAS NO OBJECTION IN CASE MATTER W ITH REGARD TO THE IMPUGNED ADDITIONS MADE BY THE ASSESSING OFFICER AND DELETED BY THE LD. CIT(A) ARE RESTORED BACK ON THE FILE OF THE ASSESSING OFFICER. 14. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SID ES AND MATERIAL ON RECORD, WE FIND THAT CONSEQUENT UPON THE SEARCH, CERTAIN DO CUMENTS AND MATERIALS WERE SEIZED BY THE DEPARTMENT AND WHEN CONFRONTED D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS NOT COME FORWARD TO S UBSTANTIATE ITS CLAIM OF HAVING ACCOUNTED FOR EVERYTHING BY PRODUCING MATERI AL/EVIDENCE AND NOW, AT THIS STAGE, THE ASSESSEE UNDERTOOK TO PRODUCE ALL T HE MATERIAL AND RELEVANT RECORDS TO EXPLAIN ALL THE POINTS RAISED BY THE ASS ESSING OFFICER BEFORE HIM IF A CHANCE IS GIVEN AND THE LD. DR HAS NOT RAISED ANY O BJECTION TO THIS PLEA OF THE LD. COUNSEL FOR THE ASSESSEE AS SUCH, IN THE INTERE ST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ISSUES IN RELATION TO DELETION OF ADD ITIONS IN GROUND NO. 03 TO 06 I.T.A. NO I.T.A. NO I.T.A. NO I.T.A. NOS SS S. .. .2199 & 2200 2199 & 2200 2199 & 2200 2199 & 2200/ // /MDS/0 MDS/0 MDS/0 MDS/08 88 8 7 AND RESTORE THE MATTER BACK ON THE FILE OF THE ASSE SSING OFFICER WITH THE DIRECTION TO REDECIDE THESE ISSUES AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 15. IN THE RESULT, THE APPEAL OF THE DEPARTMENT GE TS PARTLY ACCEPTED/FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 30.06.2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 30.06.2011 VM/- TO:THE ASSESSEE//A.O./CIT(A)/CIT/D.R.