ACIT, CHENNAI V. Rajiv Rai, CHENNAI

ITA 3403/CHNY/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9809 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 25-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 19-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SRINIVASA RAO
• Assessee Lawyers: D ANAND
• Keywords: Unexplained cash credit; Search and seizure; Set aside
• Section: 143(3); 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ! ' # , $ #% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3403/CHNY/2016 & '& /ASSESSMENT YEAR: 2012-13 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), CHENNAI. VS. SHRI RAJIV RAI, NO.5, ETHIRAJ LANE, C IN C ROAD, EGMORE, CHENNAI 600 008. [PAN: A AAPR 6191B ] ( () /APPELLANT) ( *+() /RESPONDENT) () , - / APPELLANT BY : SHRI M. SRINIVASA RAO, CIT *+() , - /RESPONDENT BY : SHRI D. ANAND, ADVOCATE . , /$ /DATE OF HEARING : 22.04.2019 01' , /$ / DATE OF PRONOUNCEMENT : 25.04.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-18 , CHENNAI (HEREINAFTER CALLED AS CIT(A)) DATED 27.09.2016 F OR THE ASSESSMENT YEAR 2012-13. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPE AL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS ON FACTS OF THE CASE AND IN LAW. ITA NO.3403/CHNY/2016 (AY: 2012-13) :- 2 -: 2. THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 3,81,00,000/- TOWARDS UNDISCLOSED INCOME FROM UNKNO WN SOURCES OF THE ASSESSEE IN THE ASSESSMENT PASSED FOR THE A.Y 2 012-13. 2.1 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE RE ASONS STATED IN PARA 6 OF THE ASSESSMENT ORDER BY THE AC FOR MAKING THE SAID ADDITION OF RS. 3,81,00,000/- IN THE ASSESSMENT. 2.2 THE LD. CIT(A) HAVING REGARD TO THE REASONS STA TED BY THE AC IN THE ASSESSMENT ORDER, WHICH HAVE NOT BEEN CONTROVER TED BY THE ASSESSEE WITH ANY SUPPORTING DOCUMENTARY EVIDENCE I N THAT REGARD, OUGHT TO HAVE CONFIRMED THE SAID ADDITION OF RS. 3, 81,00,000/-. 2.3 THE ID. CIT(A) WAS NOT JUSTIFIED IN DELETING TH E SAID ADDITION OF RS.3,81,000/- TOWARDS THE CLAIM OF UNSECURED LOANS FROM FRIENDS AND RELATIVES, WITHOUT ASCERTAINING /VERIFYING THE FACT UAL DETAILS IN THAT REGARD FROM THE ASSESSEE. 3. THE LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 1,99,00,000/- MADE UNDER THE HEAD INVESTMENT IN M /S SBQ SHARE CAPITAL MADE BY THE AC IN THE ASSESSMENT ORDER. 3.1 THE LD. CIT(A) OUGHT TO HAVE APPRECIATED, THE R EASONS STATED BY THE AC BEFORE MAKING THE SAID ADDITION OF 1,99,00,0 00/- IN THE ASSESSMENT. 3.2 THE LD. CIT(A) HAVING REGARD TO THE REASONS STA TED BY THE AC IN THE ASSESSMENT ORDER, WHICH HAVE NOT BEEN CONTROVER TED BY THE ASSESSEE WITH ANY SUPPORTING DOCUMENTARY EVIDENCE I N THAT REGARD, OUGHT TO HAVE CONFIRMED THE SAID ADDITION OF RS. 1, 99,00,000/- MADE IN THE ASSESSMENT. 3.3 THE ID. CIT(A) IS NOT JUSTIFIED IN OBSERVING TH AT THE AC HAS NOT ROPED IN ANY INCRIMINATING MATERIAL FACTS DURING TH E COURSE OF SEARCH ON THE BASIS OF WHICH HE HAS MADE SUCH ADDITION, HA VING REGARD TO THE FACTS AND REASONS STATED BY THE AC FOR MAKING S UCH ADDITION IN THE ASSESSMENT. 4. THE LD CIT(A) HAVING RELIED ON THE DECISION OF H ONBLE ITAT (SPECIAL BENCH) MUMBAI IN THE CASE OF AL CARGO GLOB AL LOGISTICS LTD VS DCJT (2012) 137 LTD 287 (MUM) (SB), ERRED IN NOT FOLLOWING THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE O F UT, THRISSUR VS M/S. ST FRANCIS DECOR TILES 385 ITR 624 (2016) AND THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN ITA NO.38/2014 DT 25/07/2014 IN THE CASE OF M/S. CANARA HOUSING DEVELOPMENT COMPANY . 5. THE LD. CIT(A) HAVING RELIED ON THE DECISION OF THE HON'BLE ITAT IN THE CASE OF M/S. ABS SANJAY VS ACIT IN ITA NO.1691 TO 1BY3/MDS/U1J OUGHT TO HAVE APPRECIATED THAT THE SAI D DECISION OF THE HONBLE ITAT HAS NOT REACHED FINALITY, AS APPEA L FILED BY THE REVENUE U/S.260A OF THE IT ACT, 1961 AGAINST THE SA ME IS PENDING. ITA NO.3403/CHNY/2016 (AY: 2012-13) :- 3 -: 6. FOR THIS GROUNDS AND FOR ANY OTHER GROUNDS INCLU DING AMENDMENT THAT MAY BE RAISED DURING THE COURSE OF THE APPEAL PROCEEDINGS, THE ORDER OF LEARNED CIT (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. RELIEF CLAIMED IN APPEAL THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE SET A SIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE RESPONDENT-ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. THE RESPONDENT-AS SESSEE ALSO THE CHAIRMAN OF M/S. SBQ STEELS LTD., AND M/S. RKKR STE ELS LTD., GROUP OF COMPANIES. THERE WAS A SEARCH AND SEIZURE OPERATION S IN THE SAID GROUP OF COMPANIES AS WELL AS THE RESPONDENT-ASSESSEE ON 26.09.2012. CONSEQUENTLY, NOTICES U/S. 153A OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT) WAS ISSUED TO THE RESPONDENT-ASSESSEE CA LLING UPON THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE TO THE SAID NOTICE, THE RESPONDENT-ASSESSEE FILED THE RETURN OF INCOME ON 2 3.12.2013. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPL ETED BY THE ASST. CIT, CENTRAL CIRCLE-2(3), CHENNAI (HEREINAFTER CALL ED AO) VIDE ORDER DATED 31.03.2015 PASSES U/S. 143(3) R/W S. 153A OF THE ACT AT TOTAL INCOME OF RS. 2,54,66,934/- AFTER MAKING THE ADDITI ON ON ACCOUNT OF UNEXPLAINED CASH CREDITS OF RS. 3,81,00,000/- AND U NEXPLAINED INVESTMENTS IN THE SHARE CAPITAL OF M/S. SBQ STEELS LTD. OF RS. 1,99,00,000/-. ITA NO.3403/CHNY/2016 (AY: 2012-13) :- 4 -: 4 BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER HAD DELE TED THE ADDITIONS PLACING RELIANCE ON THE DECISIONS OF SPECIAL BENCH OF THE ITAT, MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. V. DCIT [2012] 137 ITD 287 (MUM) (SB), WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY INC RIMINATING MATERIAL NO ADDITIONS CAN BE MADE IN THE ASSESSMENT MADE PURSUANT TO NOTICE ISSUED U/S. 153A OF THE ACT. BEING AGGRIEVE D BY ABOVE DECISION OF THE ACT THE LD. CIT(A), THE REVENUE IS IN APPEAL BE FORE US IN THE PRESENT APPEAL. 5. IT IS CONTENDED THAT THE LD. CIT(A) OUGHT NOT HA VE APPLIED THE RATIO OF DECISION OF THE SPECIAL BENCH OF ITAT, MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), INASMUCH AS, THE REGULAR ASSESSMENT WAS PENDING IN THE RELEVANT ASSESSMENT Y EAR. ON THE OTHER HAND, THE LD. COUNSEL FOR RESPONDENT-ASSESSEE PLACE D RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THE SEARCH AND SE IZURE ACTION WAS TAKEN PLACE ON 26.09.2012. THE ASSESSMENT PROCEEDINGS FO R THE ASSESSMENT YEAR 2012-13 INDISPUTELY ARE VERY MUCH PENDING DISP OSAL BEFORE THE AO AND THEREFORE, THERE NEED NOT BE ANY NEXUS BETWEEN INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND SEIZURE AC TION AND THE ADDITIONS ITA NO.3403/CHNY/2016 (AY: 2012-13) :- 5 -: MADE IN THE ASSESSMENT AND THE LD. CIT(A) WITHOUT P ROPERLY VERIFYING THE FACTS OF THE CASE MERELY APPLIED THE RATIO OF THE D ECISION OF SPECIAL BENCH OF ITAT, MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA), WHICH DOES NOT CLEARLY APPLICABLE TO THE F ACTS OF THE INSTANT CASE. HENCE, WE REVERSE THE FINDINGS OF THE LD. CIT(A) AN D RESTORE THE MATTER BACK TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATI ON IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 25 TH DAY OF APRIL, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' # ) (INTURI RAMA RAO) $ /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 25 TH APRIL, 2019. EDN, SR. P.S , */34 54'/ /COPY TO: 1. () /APPELLANT 2. *+() /RESPONDENT 3. . 6/ ( )/CIT(A) 4. . 6/ /CIT 5. 47 */ /DR 6. & 8 /GF