ACIT, CHENNAI V. Shri K.V. Mohandas, CHENNAI

ITA 3073/CHNY/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5930 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 02-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SRI SHANMUGA PRIYA
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Unexplained cash credit; Search and seizure; Opportunity of being heard; Principle of natural justice
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3073/CHNY/2016 ( ( /ASSESSMENT YEAR: 2011-12 THE ASST. COMMISSIONER OF- INCOME TAX, NON-CORPORATE CIRCLE-11, 1 ST FLOOR, KANNAMMAI BUILDING, 611, ANNA SALAI, CHENNAI-600 006. VS. SHRI K.V.MOHANDAS, CHOICE ELECTRICALS, NO.45/12, S.M.PLAZA, ARMENIAN STREET, CHENNAI-600 001. [PAN: AAFPM 2628 D ] ( + /APPELLANT) ( ,-+ /RESPONDENT) DEPARTMENT BY : MS.SRI SHANMUGA PRIYA, JCIT ASSESSEE BY : MR.V.S.JAYA KUMAR, ADV. / /DATE OF HEARING : 11.12.2018 / /DATE OF PRONOUNCEMENT : 21.01.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-18 , CHENNAI, DATED 21.06.2016, FOR THE AY 2011-12. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPE AL: ITA NO.3073/CHNY/2016 :- 2 -: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO FA CTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF CREDITS IN THE CAPITAL ACCOUNT TO THE EXTENT OF RS.1,32,65,000/- MADE BY THE ASSESSING OFF ICER WHICH HAS NOT BEEN PROPERLY EXPLAINED BY THE ASSESSEE. 2.2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON MADE BY THE ASSESSING OFFICER ON MONEY RECEIVED ON SALE OF PLOTS TO THE EXTENT OF RS .14,92,628/- WHICH HAS BEEN MADE ON THE BASIS OF THE SEIZED MATERIALS. 2.3 THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE BY THE ASSESSING OFFICER ON THE INVESTMENT MADE IN INDUS FOUNDATION TO THE EXTENT O F RS.30,00,000/- WHICH HAS NOT BEEN PROPERLY PROVED WITH EVIDENCE BY THE ASSESSEE. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASID E AND THAT OF THE ASSESSING OFFICER RESTORED. 3. BRIEFLY, THE FACTS OF THE CASE ARE AS UNDER: THE RESPONDENT-ASSESSEE IS AN INDIVIDUAL ENGAGED I N THE BUSINESS OF DEVELOPMENT AND PLOTTING OF LAND. THE SEARCH AND S EIZURE OPERATIONS UNDER THE PROVISIONS OF SEC.132 OF THE INCOME TAX A CT, 1961 WERE CONDUCTED IN THE PREMISES OF ONE SHRI MURALIDHARAN & OTHERS ON 15.03.2011. CONSEQUENT TO THE SEARCH AND SEIZURE P ROCEEDINGS, CERTAIN MATERIALS PERTAINING TO THE RESPONDENT-ASSESSEE WER E STATED TO BE FOUND, BASED ON THIS INFORMATION, THE AO HAD ISSUED A NOTI CE DATED 12.03.2013 U/S.148 OF THE ACT PROPOSING TO RE-ASSESS THE TOTAL INCOME OF THE RESPONDENT-ASSESSEE. IN RESPONSE TO THE SAID NOTIC E, THE RESPONDENT- ASSESSEE HAD FILED A LETTER DATED 26.03.2013 STATIN G THAT THE RETURN OF INCOME FILED ON 27.09.2011 BE TREATED AS A RETURN O F INCOME IN RESPONSE TO NOTICE U/S.148. SUBSEQUENTLY, SEVERAL NOTICES U /S.143(2) AND 142(1) WERE ISSUED CALLING UPON THE ASSESSEE TO FURNISH CE RTAIN DETAILS AS PER THE QUESTIONNAIRE ISSUED. HOWEVER, IT IS STATED THAT T HE RESPONDENT-ASSESSEE NEVER RESPONDED TO THIS NOTICES AND CONSEQUENTLY, T HE AO HAS PROCEEDED ITA NO.3073/CHNY/2016 :- 3 -: WITH PASSING EXPARTE ASSESSMENT ORDER. WHILE DOING SO, THE ADDITIONS WERE MADE ON ACCOUNT OF RECEIPT ON MONEY IN RESPECT OF THE SALE OF PLOTS AT TIRUTTANI IN THE PROJECT PADMAVATHI NAGAR DEVE LOPED BY THE RESPONDENT-ASSESSEE ALONG WITH MURALIDHARAN & OTHER S AND ALSO ADDITION ON ACCOUNT OF UNEXPLAINED CREDITS OF RS.62,65,000/- AND THE ADDITION ON ACCOUNT OF UNEXPLAINED DEPOSIT IN IDBI ACCOUNT OF R S.25,00,000/- AND UNEXPLAINED DEPOSIT IN HDFC ACCOUNT OF RS.45,00,000 /- AND ADDITION ON ACCOUNT OF CREDIT ENTRY IN THE NAME OF INDUS FOUNDA TION OF RS.30,00,000/- , ETC., WERE MADE. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BE FORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER HAD DELETED THE ADDITION OF RS.1,32,65,000/- BEING THE UNEXPLAINED CREDIT IN THE CAPITAL ACCOUNT AND THE UNEXPLAINED CASH DEPOSITS IN IDBI & HDFC BANKS BY HOLDING THAT THE CREDITS CAME BY WAY OF CHEQUES AND ALSO DELETED THE ADDITION OF RS. 30,00,000/- BY HOLDING THAT NO ADDITION WAS CALLED FOR SINCE THE CREDIT W AS MADE ONLY BY PASSING THE JOURNAL ENTRY. 5. BEING AGGRIEVED, BY RELIEF GRANTED BY THE LD.CIT (A), THE REVENUE IS BEFORE US IN THE PRESENT APPEAL. 6. LD.DR CONTENDED THAT THE LD.CIT(A) WAS NOT JUSTI FIED IN GRANTING THE RELIEF AS THE RESPONDENT-ASSESSEE HAD NOT FILED ANY INFORMATION EXPLAINING THE SOURCE OF THE CREDITS AND DEPOSITS, ETC. IT W AS FURTHER ARGUED THAT THE ITA NO.3073/CHNY/2016 :- 4 -: LD.CIT(A) OUGHT NOT HAVE GRANTED RELIEF TO THE ASSE SSEE WITHOUT HEARING THE AO. 7. ON THE OTHER HAND, LD.COUNSEL SUPPORTED THE ORDE RS OF THE LD.CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FROM THE PERUSAL OF THE ASSESSM ENT ORDER, IT IS CLEAR THAT THE ASSESSEE HAD NOT COOPERATED WITH THE AO TO COMPLETE THE ASSESSMENT PROCEEDINGS BY FILING THE INFORMATION HA S CALLED FOR BY THE ASSESSING OFFICER. THE AO HAD RECORDED A FINDING T HAT DESPITE ISSUE OF SEVERAL NOTICES, THE ASSESSEE HAD CHOSEN NOT TO RES POND. IN THESE CIRCUMSTANCES, THE AO WAS COMPELLED TO COMPLETE THE ASSESSMENT PROCEEDINGS EXPARTE BY INVOKING THE PROVISIONS OF S EC.144 OF INCOME TAX ACT, 1961. EVEN DURING THE COURSE OF PROCEEDINGS BE FORE THE LD.CIT(A), IT IS NOT THE CASE OF THE RESPONDENT-ASSESSEE THAT HE WAS PREVENTED FROM CAUSING APPEARANCE BEFORE THE AO ON ACCOUNT OF FACT ORS WHICH ARE BEYOND HIS CONTROL NOR WAS ANY ATTEMPT MADE BY THE RESPOND ENT-ASSESSEE TO PROVE THE EXISTENCE OF THE CIRCUMSTANCES BECAUSE OF WHICH HE COULD NOT FURNISH THE INFORMATION CALLED FOR BY THE AO. THE LD.CIT(A) WITHOUT CALLING FOR THE REMAND REPORT FROM THE AO ON THE INFORMATIO N FILED BY THE RESPONDENT-ASSESSEE, HE HAD COME TO CONCLUSION THAT THE ADDITIONS WERE NOT JUSTIFIED. THERE IS NOTHING ON RECORD TO SAY TH AT THE RESPONDENT- ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF RULE 4 6A OF THE INCOME TAX ITA NO.3073/CHNY/2016 :- 5 -: RULES. FURTHER, FROM THE ORDER OF THE LD.CIT(A), I T IS MANIFEST THAT THE LD.CIT(A) HAD NOT DISCUSSED ANY EVIDENCE WHICH ENAB LED HIM TO COME TO THE CONCLUSION THAT THE ADDITIONS WERE NOT JUSTIFIE D. HE SIMPLY CONCLUDED THAT THE CREDITS IN THE BANKS CAME BY WAY OF CLEARI NG CHEQUES. THERE IS NOT EVEN A WHISPER AS TO THE SOURCE OF THESE CREDIT S. THUS, THE LD.CIT(A) DELETED THE ADDITION BY PASSING A CRYPTIC ORDER IN UTTER DISREGARD PRINCIPLE, OF NATURAL JUSTICE AND THEREFORE, THE ORDER OF THE LD.CIT(A) CANNOT BE SUSTAINED. HENCE, WE REMIT THE ISSUE BACK TO THE F ILE OF THE CIT(A) TO ADJUDICATE ISSUES AFRESH IN APPEAL IN ACCORDANCE WI TH LAW AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE RESPONDENT-ASS ESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. ORDER PRONOUNCED ON THE 21 ST JANUARY, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 21 ST JANUARY, 2019. TLN / ,45 65 /COPY TO: 1. + /APPELLANT 4. 7 /CIT 2. ,-+ /RESPONDENT 5. 5 , /DR 3. 7 ( ) /CIT(A) 6. ( /GF