N.Pappi, Salem V. ITO, Salem

ITA 258/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9873 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: G BASKAR
• Section: 263; 144; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. ASSESS MENT YEAR APPELLANT RESPONDENT 780 & 781/MDS/2014 2004-05 MR. A.NATARAJAN 125-3, SANKAGIRI MAIN ROAD, GHANAPADMA AVENUE,NETHIMEDU, SALEM-636 002. PAN: AESPN1974Q INCOME TAX OFFICER, WARD-I(2) 3, GANDHI ROAD, SALEM-636007. 258 & 259/MDS/2014 2004-05 MRS. N.PAPPI, 125/3, SANKAGIRI MAIN ROAD, GHANAPADMA AVENUE, NETHIMEDU SALEM-636 002. PAN:AQUPP4028H INCOME TAX OFFICER, WARD-I(2) 3, GANDHI ROAD, SALEM-636007. / APPELLANT BY : MR. G.BASKAR, ADVOCATE /RESPONDENT BY : MR. P.RADHAKRISHNAN, JCIT /DATE OF HEARING : 12 TH MAY, 2015 /DATE OF PRONOUNCEMENT : 26 TH JUNE, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THESE APPEALS ARE FILED BY THE ASSESSEE MR. A.NATARAJAN AND HIS WIFE SMT. N.PAPPI AGAINST THE O RDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM DAT ED 28.02.2014 & 31.12.2013 RESPECTIVELY FOR THE ASSES SMENT YEAR 2004-05 ARISING OUT OF THE ASSESSMENT ORDERS PASSED UNDER SECTION 144 OF THE ACT. SINCE THE ISSUES INV OLVED IN 2 ITA NO.780 , 781, 258 & 259 /MDS/2014 THESE FOUR APPEALS ARE COMMON, THEY ARE HEARD TOGE THER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEALS OF THE ASSESSEE MR. A.NATARAJAN IN ITA NOS. 780 & 781/MDS/2014 FOR CONSIDERATION. THE FIRST GROUND RAISED BY THE ASSE SSEE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT APPEAL FILED ON 9.4.2009 AS INFRUCTUOUS AS THE EX-PARTE ORDER APPEA LED AGAINST HAD BEEN SET ASIDE BY THE COMMISSIONER UNDE R SECTION 263 OF THE ACT ON 18.3.2009. 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSMENT IN THIS CASE WAS COMPLETED ON 27.12.2006 MAKING VARIOU S ADDITIONS. THIS ASSESSMENT WAS MADE UNDER SECTION 1 44 OF THE ACT AS BEST JUDGEMENT ASSESSMENT. THE ASSESSMEN T ORDER WAS LATER SET ASIDE BY THE COMMISSIONER OF IN COME TAX ON 18.3.2009. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE FILED APPEALS BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS) ON 9.4.2009 AGAINST ADDITIONS/DISALLO WANCES MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT OR DER 3 ITA NO.780 , 781, 258 & 259 /MDS/2014 PASSED UNDER SECTION 144 OF THE ACT. COUNSEL FOR TH E ASSESSEE SUBMITS THAT SINCE THE COMMISSIONER OF INC OME TAX HAD SET ASIDE THE ASSESSMENT UNDER SECTION 263, THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAV E ENTERTAINED THE APPEALS AND HE SHOULD HAVE TREATED THE APPEAL AS INFRUCTUOUS. 4. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT COMMISSIONER OF INCOME TAX HAS NOT SET ASIDE THE EN TIRE ASSESSMENT AND THE ASSESSMENT WAS SET ASIDE ONLY FO R LIMITED PURPOSE OF ARRIVING AT TAXABLE INCOME FROM FINANCING BUSINESS. THUS, THE CONTENTION OF THE ASSESSEE THAT APPEAL FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS BECOME INFRUCTUOUS IS NOT CORRECT. 5. ON HEARING BOTH THE PARTIES AND PERUSING THE ORD ER OF THE COMMISSIONER OF INCOME TAX PASSED UNDER SECTION 263 OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT COMM ISSIONER OF INCOME TAX HAD SET ASIDE THE ASSESSMENT ONLY FOR LIMITED PURPOSE OF ARRIVING AT CORRECT TAXABLE INCOME FROM FINANCING BUSINESS OF THE ASSESSEE. THE COMMISSIONER OF INCO ME TAX 4 ITA NO.780 , 781, 258 & 259 /MDS/2014 HAS NOT SET ASIDE THE ENTIRE ASSESSMENT FOR DOING A FRESH THE ADDITIONS/DISALLOWANCES MADE THEREON. THUS, THE CON TENTION OF THE ASSESSEE THAT APPEAL SHOULD HAVE BEEN TREATE D AS INFRUCTUOUS IS NOT CORRECT. THIS GROUND OF APPEAL I S REJECTED. 6. COMING TO THE MERITS OF THE CASE, I.E. ON VARIOU S DISALLOWANCES / ADDITIONS MADE, THE ASSESSEE HAS RA ISED SEVERAL GROUNDS AS UNDER:- NO EVIDENCE SHOULD HAVE BEEN REQUIRED IN SUPPORT OF NON-TAXABILITY OF A CHEQUE FOR ` 7,70,680/- WRONGLY HELD AS RECEIVED, WHILE THE TRANSACTION WITH SHARE BROKERS HAVE BEEN SEPARATELY CONSIDERED TO ARRIVE AT INCOME. THERE WAS NO CHEQUE FOR THIS AMOUNT AT ALL, AS IT REPRESENTED SETTLEMENT AND AUCTION DEBITED TO ASSESSEES ACCOUNT BY SHARE BROKER. AN UNCASHED CHEQUE FOR ` 1,88,683/- ( ` 9,59,363/- LESS ABOVE SUM OF ` 7,70,680/-) SHOULD NOT HAVE BEEN HELD AS TAXABLE INCOME FOR SAME REASON. ADDITION OF ` 57,84,926/- TOWARDS CLOSING STOCK OF SHARES SHOULD NOT HAVE BEEN CONFIRMED WITHOUT THERE BEING ANY BASIS FOR HAVING ARRIVED AT THIS AMOUNT AND WITHOUT CONSIDERING OPENING STOCK WHILE THERE WAS NO CLOSING STOCK AT ALL ACTUALLY. INCOME ASSESSED IN PRECEDING YEARS AND VERIFIABLE BORROWALS AVAILABLE AS ON 1.4.2003 5 ITA NO.780 , 781, 258 & 259 /MDS/2014 SHOULD HAVE BEEN DEDUCTED FROM OUTGOINGS OF YEAR ENDED 31.3.2004. AS THE TWO REMAND REPORTS HAVE NOT OBJECTED AGAINST THE CORRECTNESS OF THE CONTENTIONS MADE TO REDUCE THE ASSESSED INCOME, THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAVE CONFIRMED MANY OF THE ADDITIONS. 7. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSMENT IN THIS CASE WAS MADE UNDER SECTION 144 OF THE ACT ASS ESSING THE INCOME AT ` 1,14,86,410/- MAKING VARIOUS ADDITIONS/DISALLOWANCES TOWARDS UNACCOUNTED INVEST MENTS, DISALLOWANCE UNDER SECTION 40A(3), UNEXPLAINED DE POSITS, INCOME FROM SHARE TRADING BUSINESS ETC. THE INCOME OF THE ASSESSEE WAS REVISED BY PASSING ORDER UNDER SECTION 154 OF THE ACT ON 24.03.2009 DETERMINING THE INCOME AT ` 64,92,769/-. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) RECOMPUTED THE INCOME OF THE ASSESSEE AT ` 54,86,356/- BY GIVING RELIEF OF ` 14,56,408/- BEING MISTAKE IN CALCULATION OF LOSS AND ON ACCOUNT OF CLOSING BALAN CE. THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6 ITA NO.780 , 781, 258 & 259 /MDS/2014 8. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSMENT WAS COMPLETED UNDER SECTION 144 OF THE ACT WITHOUT GIVI NG SUFFICIENT OPPORTUNITY. THE COMMISSIONER OF INCOME TAX (APPEALS) ENHANCED THE ASSESSMENT BY ASSESSING INCO ME FROM FINANCING BUSINESS AT ` 4.5 LAKHS WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE AND IGNORING THE FACT T HAT THERE WAS MONEY LENDING ACTIVITY DURING THE YEAR. COUNSEL FOR THE ASSESSEE SUBMITS THAT ACCOUNT STATEMENTS WERE OBTAI NED DIRECTLY FROM THE BANK BY THE ASSESSING OFFICER WHI LE FRAMING ASSESSMENT UNDER SECTION 144 AND THEREFORE IT IS NO T CORRECT IN ALLOWING PRIOR WITHDRAWALS SHOWN AGAINST DEPOSI TS ON THE GROUND THAT NO EVIDENCE WAS FURNISHED. COUNSEL SUBM ITS THAT INCOME NOT HAVING BEEN COMPUTED ON THE BASIS OF INC REASE / DECREASE IN CAPITAL, THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THAT COMPUTAT ION MADE IS A REASONED AND LOGICAL ONE. COUNSEL FOR THE ASSESSE E SUBMITS THAT NO EVIDENCE SHOULD HAVE BEEN REQUIRED IN SUPPORT OF NON-TAXABILITY OF A CHEQUE FOR ` 7,70,680/- WRONGLY HELD AS RECEIVED WHILE TRANSACTION WITH SH ARE BROKERS HAVE BEEN SEPARATELY CONSIDERED TO ARRIVE A T THE INCOME. COUNSEL SUBMITS THAT THERE IS NO CHEQUE FO R THIS 7 ITA NO.780 , 781, 258 & 259 /MDS/2014 AMOUNT AT ALL AS IT REPRESENTED SETTLEMENT AND AUCT ION DEBITED TO ASSESSEES ACCOUNT BY SHARE BROKER FOR THE SAME REASON. HE SUBMITS THAT UNCASHED CHEQUE FOR ` 1,88,683/- SHOULD NOT HAVE BEEN HELD AS TAXABLE INCOME. COUNS EL SUBMITS THAT ADDITION OF ` 57,84,926/- TOWARDS CLOSING STOCK OF SHARES SHOULD NOT HAVE BEEN CONFIRMED WITHOUT TH ERE BEING ANY BASIS FOR ARRIVING AT THIS AMOUNT AND WIT HOUT CONSIDERING OPENING STOCK, WHILE THERE WAS NO CLOSI NG STOCK AT ALL. COUNSEL SUBMITS THAT AS TWO REMAND REPORT S HAVE NOT OBJECTED TO REDUCE THE ASSESSED INCOME, THE COMMI SSIONER OF INCOME TAX (APPEALS) SHOULD NOT HAVE BEEN CONFIR MED MANY OF THE ADDITIONS. THEREFORE, HE SUBMITS THAT SINCE THE ASSESSMENT ORDER WAS MADE UNDER SECTION 144 OF THE ACT AND COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT PR OPERLY APPRECIATED THE SUBMISSIONS IN THE REMAND REPORTS, HE PLEADS FOR SETTING ASIDE THE ISSUES TO THE FILE OF ASSESSING OFFICER FOR EXAMINING AFRESH IN THE LIGHT OF THE EV IDENCES AND EXPLANATION FURNISHED BY THE ASSESSEE. 9. COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT IN THE CASE OF SMT. PAPPI, ( IN ITA NOS.258 & 259/MDS/2014 ) WIFE 8 ITA NO.780 , 781, 258 & 259 /MDS/2014 OF THE ASSESSEE MR. A.NATARAJAN, ADDITIONS WERE BA SED ON THE FINDINGS IN THE CASE OF HER HUSBAND MR. A.NATAR AJAN AND THEREFORE ASSESSMENT IN THE CASE OF SMT. N.PAPPI A LSO NEEDS TO BE SET ASIDE AS THE PRESENT CONCLUSIONS AR E BASED ON THE FINDINGS OF THE ASSESSEES HUSBAND CASE. HE FURTHER SUBMITS THAT PENALTY APPEALS MAY ALSO BE GO BACK TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER IS FREE TO LEVY PENALTY AFTER AFRESH PROCEEDINGS. 10. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF LOWER AUTHORITIES. 11. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHO RITIES. IN THIS CASE , ASSESSMENT WAS MADE UNDER SECTION 14 4 OF THE ACT BY THE ASSESSING OFFICER MAKING VARIOUS ADDITIONS/DISALLOWANCES. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) PARTLY ALLOWED THE APPEAL OF THE ASSE SSEE BY RECOMPUTING THE INCOME AT ` 54,84,356/-. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED ` 14,56,408/- BEING MISTAKE IN CALCULATION OF LOSS AS INCOME IN RESPECT OF INSI GHT SHARE BROKERS LTD. ( ` 3,54,690/-), MISTAKEN CALCULATION OF M/S. 9 ITA NO.780 , 781, 258 & 259 /MDS/2014 SHARE KHAN PVT. LTD. AMOUNTING TO ` 6,63,513/- AND FINALLY ON ACCOUNT OF CLOSING BALANCE OF ` 4,69,364/-. ON GOING THROUGH THE ORDERS OF LOWER AUTHORITIES, WE ARE OF THE CONS IDERED VIEW THAT THE ADDITIONS/DISALLOWANCES MADE BY THE ASSESS ING OFFICER HAVE BEEN PARTLY CONFIRMED BY THE COMMISSI ONER OF INCOME TAX (APPEALS) WITHOUT PROPERLY GOING INTO T HE SUBMISSIONS AND MERITS OF THE EXPLANATION OF THE AS SESSEE AND EVIDENCES AVAILABLE ON RECORD. THUS, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CONS IDERING THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY PROVIDING AD EQUATE OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE SHALL PRO VIDE NECESSARY DETAILS AND COOPERATE WITH THE PROCEEDING S FOR COMPLETION OF ASSESSMENT. 12. IN THE CASE OF ASSESSEES WIFE SMT.N.PAPPI THE ADDITIONS MADE AND PENALTY LEVIED BASED ON THE FIN DINGS IN THE CASE OF THE ASSESSEE MR. A.NATARAJAN. SINCE THE ISSUES IN THE CASE OF MR. A.NATARAJAN (IN ITA NOS. 780 & 781/MDS/2014) HAVE BEEN REMITTED TO THE FILE OF TH E ASSESSING OFFICER FOR FRESH CONSIDERATION, WE ARE I NCLINED TO SET ASIDE THE ISSUES IN THE CASE OF SMT. N.PAPPI ( IN ITA 10 ITA NO.780 , 781, 258 & 259 /MDS/2014 NOS.258 & 259/MDS/2014) ALSO TO THE FILE OF THE AS SESSING OFFICER WHO SHALL CONSIDER THE ISSUES AFRESH IN ACC ORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY TO TH E ASSESSEE. PENALTY ORDERS UNDER SECTION 271(1)(C) O F THE ACT IN BOTH THE ASSESSEES CASES ARE ALSO SET ASIDE TO T HE FILE OF THE ASSESSING OFFICER AND THE ASSESSING OFFICER IS FREE TO REDO THE PENALTY PROCEEDINGS AFTER PASSING CONSEQUE NTIAL ORDERS. 13. IN THE RESULT, APPEALS OF THE ASSESSEES ARE PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2015. SD/- SD/- ( ) ( ' $ ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) & / ACCOUNTANT MEMBER $' & / JUDICIAL MEMBER $ /CHENNAI, ) /DATED 26 TH JUNE, 2015 SOMU ',- .- /COPY TO: 1. APPELLANT 2. RESPONDENT 3. / () /CIT(A) 4. / /CIT 5. - ''3 /DR 6. 6 /GF .