G.Vijayalakshmi, Sivakasi V. DCIT Central Circle 2, Madurai

ITA 676/CHNY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7705 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 18-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R SU BRAMANIAN
• Keywords: Income from undisclosed sources; Salary income; Document seized; Documents seized
• Section: 143(2); 153; 153C; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! . , ! ' BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.676/CHNY/2019 ( / ASSESSMENT YEAR: 2012-13) MRS.C. VIJAYALAKSHMI 34G, POOTHAIAMMAL NAGAR, SIVAKASI- 626 123 . VS THE DEPUTY COMMISSIONER INCOME TAX, CENTRAL CIRCLE-2 MADURAI. PAN:ABUPV 1834G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.R.SUBRAMANIAN, ADVOCATE /RESPONDENT BY : MR.ABANI KANTA NAYAK, CIT /DATE OF HEARING : 11.03.2021 /DATE OF PRONOUNCEMENT : 31.03.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST ORDER OF THE LEARNED CIT(A)-19, CHENNAI DATED 18. 01.2019 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL:- 1. LEARNED CIT (A) ERRED IN HOLDING THAT SEIZED D OCUMENT FORMED A BASIS FOR ISSUING NOTICE U/S 153C AND HENC E 153C NOTICE WAS VALIDLY ISSUED WHILE HE HIMSELF ADMITS I N PARA 8 OF HIS ORDER THAT SEIZED DOCUMENT DT.7-6-2011 BELONGS TO YENNARKAY R CHIRANJEEVIRATHINAM, HUSBAND OF APPELLA NT BUT NOT TO THE APPELLANT AND HENCE IN THE ABSENCE OF AN Y SEIZED MATERIAL LINKING THE APPELLANT, ISSUE OR NOTICE U/S 153C AND 2 ITA NO.676/CHNY/2019 ADDITION OF RS.48,48,821 MADE TOWARDS DIFFERENCE I N INTEREST INCOME NOT ADMITTED BY APPELLANT IS INCORRECT AND L EARNED CIT(A) ERRED IN CONFIRMING THIS ADDITION. 2. WITHOUT PREJUDICE TO THE ABOVE AS HELD BY T HE CIT (A), ENTIRE LOAN HAVING BEEN WIPED OUT BY APPELLANT IN AY 11- 12 ITSELF , INTEREST ON LOAN OF ` 50 LAKHS AVAILED BY APPELLANT AND TRANSFERRED TO CO. STANDARD PRESS INDIA P LTD., CANNOT BE ASSESSED IN AY 12-13 ON ACCRUAL BASIS IN THE HANDS OF THE APPELLANT. 3. WITHOUT PREJUDICE TO THE ABOVE THE CO.STA NDARD PRESS INDIA P LTD., HAVING CREDITED THE APPELLANT I NTEREST FOR 4 YEARS AT ONE STROKE TO THE ACCOUNT OR THE APPELLANT ONLY THAT INTEREST WHICH ACCRUES FOR AY 12-13 HAS TO BE BROUG HT TO TAX IN THE HANDS OF THE APPELLANT. 4. EVEN OTHERWISE, IN THE ABSENCE OF ANY SEIZED MAT ERIAL VIDE PARA 11 OF CIT (A) ORDER WHICH BELONGS TO YENNARKAY R CHIRANJEEVIRATHINAM, HUSBAND OF APPELLANT BUT NOT T O THE APPELLANT AND THE APPELLANT NOT BEING A SEARCHED PA RTY] TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) HAVING ALREADY EXPIRED, THE ABOVE ADDITION MADE IN AY 12-13 IS INCORRECT AND CI T (A) ERRED IN REJECTING THE CASE LAWS RELIED ON BY APPEL LANT. FOR THE REASONS STATED ABOVE AND THOSE THAT MAY BE ADDUCED AT THE TIME OR HEARING APPELLANT PRAYS THAT HONBLE ITAT BE PLEASED TO QUASH THE ASSESSMENT MADE U/S 143(3)/153C AND/OR DELETE THE ADDITION OF ` 47,28,820. APPELLANT CRAVES THE LEAVE OF THE ITAT TO FILE ADDI TIONAL GROUNDS AND/OR EVIDENCE IN SUPPORT OF THE GROUNDS O F APPEAL. 3 ITA NO.676/CHNY/2019 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAS DERIVED INCOME FROM SALARY FROM STA NDARD PRESS (INDIA) PVT. LTD, SIVAKASI IN WHICH SHE IS A DIRECT OR, IN ADDITION SHE DERIVED INTEREST INCOME FROM PRANIC HEALING PRO GRAMME. THE ASSESSEE HAS FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 DECLARING TOTAL INCOME OF ` 5,38,464/-. A SEARCH U/S.132 OF THE ACT, WAS CARRIED OUT ON 16.10.2014 IN STANDARD FIRE WORKS GROUP IN CONSEQUENCE THEREOF, NOTICE U /S.153C READ WITH SECTION 153(A) WAS ISSUED TO THE ASSESSE E ON 17.01.2016, FOR WHICH SHE HAD FILED RETURN OF INCOM E ON 30.11.2016 DECLARING TOTAL INCOME AS ADMITTED IN TH E RETURN OF INCOME FILED U/S.139(1) OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER NOTICED THAT AS PER SEIZED DOCUM ENTS IN ANNEXURE NRKRC/LOOSE SHEETS/S/SNO.1(P.79 TO 83), IT WAS NOTICED THAT THE ASSESSEE HAS UNACCOUNTED REPAYMEN T OF LOAN TO INDUS IND BANK, THEREFORE, AFTER CONSIDERING RE LEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKEN NOTE OF MATERIAL FOUND DURING THE COURSE OF SEARCH MADE ADDITION OF ` 56,00,000/- AS UNACCOUNTED INCOME OF THE ASSESSEE T OWARDS REPAYMENT OF LOAN AND INTEREST THEREON. FURTHER, D URING THE 4 ITA NO.676/CHNY/2019 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAS SHOWN TO HAVE RECEIVE D INTEREST INCOME OF ` 59,14,284/-, HOWEVER, OFFERED A SUM OF ` 11,85,464/- IN THE STATEMENT OF TOTAL INCOME. THERE FORE, DIFFERENCE OF ` 47,28,820/- WHICH WAS NOT ADMITTED IN THE RETURN OF INCOME FILED IN RELEVANT YEAR HAS BEEN TREATED A S INCOME AND ADDED BACK TO THE TOTAL INCOME. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE LEARNED CIT(A). BEFORE LEARNED CIT(A), THE ASSESSEE HAS CHALLENGED ISSUE OF NOTI CE U/S.153C READ WITH SECTION 153(A) ON THE GROUND THAT SATIS FACTION AS REQUIRED UNDER LAW WAS NOT RECORDED BY THE ASSESSIN G OFFICER BEFORE ISSUE OF NOTICE AND THUS, WHOLE ASSESSMENT PROCEEDINGS BECOME VITIATED AND LIABLE TO BE QUASH ED. THE ASSESSEE HAS ALSO CHALLENGED ADDITIONS MADE TOWARDS LOAN TAKEN FROM INDUS IND BANK ALONG WITH ESTIMATED INTE REST ON THE GROUND THAT SAID LOAN WAS REPAID ON OR BEFORE 31.0 3.2011 AND HENCE, NO ADDITION CAN BE MADE FOR THE IMPUGNED ASS ESSMENT YEAR ONLY ON THE BASIS OF CLOSURE LETTER ISSUED BY THE BANK. THE ASSESSEE HAS ALSO CHALLENGED ADDITIONS MADE TOWARDS INTEREST INCOME ON THE GROUND THAT ADDITIONS MADE BY THE ASS ESSING 5 ITA NO.676/CHNY/2019 OFFICER IS NOT SUPPORTED BY ANY INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH. THEREFORE, UNLESS THER E IS NEXUS BETWEEN INCRIMINATING MATERIAL AND ESCAPED INCOME, NO ADDITION CAN BE MADE IN THE ASSESSMENT FRAMED U/S.1 53C READ WITH SECTION 153(A), WHERE ASSESSMENT HAS BEEN UNAB ATED AS ON THE DATE OF SEARCH. 5. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKING NOTE O F INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OBSERVED THAT ENTIRE LOAN OF ` 50,00,000/- WAS WIPED OUT ON 17.03.2011 AND THE LOAN ACCOUNT BECAME ZERO AS ON 31.03.2011. THIS FACT IS EVIDENT FROM COPY OF THE S AID BANK ACCOUNT FILED BY THE ASSESSE. THUS, LOAN ACCOUNT CL OSED IN THE FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12 CANNOT BE ADDED FOR THE ASSESSMENT YEAR 2012-13 AND ACCORDINGLY, DELETED ADDITIONS MADE BY THE ASSESSIN G OFFICER TOWARDS LOAN TAKEN FROM INDUS IND BANK AND CONSEQUE NTIAL INTEREST ESTIMATED ON SUCH LOAN. 6. AS REGARDS ADDITIONS TOWARDS INTEREST INCOME, TH E LEARNED CIT(A) OBSERVED THAT INTEREST INCOME ASSESSED IS SU PPORTED BY SEIZED DOCUMENTS IN THE FORM OF LOAN DOCUMENT EXECU TED BY 6 ITA NO.676/CHNY/2019 INDUS IND BANK LTD., SIVAKASI IN FAVOUR OF THE ASSE SSEE AND THUS, THERE IS NO MERIT IN THE ARGUMENTS OF THE ASS ESSEE THAT THERE IS NO INCRIMINATING MATERIAL TO SUPPORT ADDIT IONS MADE BY THE ASSESSING OFFICER. FURTHER, INTEREST INCOME HAS TO BE ASSESSED NOT ON MERCANTILE BASIS, BUT ON RECEIPT BA SIS. SINCE THE ASSESSEE HAS CREDITED INTEREST TO HER CAPITAL ACCOUNT FOR THE IMPUGNED ASSESSMENT YEAR, THE SAME NEEDS TO BE TAXED ON RECEIPT BASIS, ACCORDINGLY, OPINED THERE IS NO ERRO R IN THE FINDINGS RECORDED BY THE ASSESSING OFFICER TO MAKE ADDITION TOWARDS INTEREST INCOME, WHICH WAS CREDITED TO CAPI TAL ACCOUNT OF THE ASSESSEE . AGGRIEVED BY THE ORDER OF THE LEA RNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITIONS M ADE TOWARDS INTEREST INCOME WITHOUT REFERENCE TO ANY INCRIMINAT ING MATERIAL FOUND AS A RESULT OF SEARCH IN THE ASSESSMENTS FRA MED U/S.153C READ WITH SECTION 153(A), WHEN SUCH ASSESS MENT IS UNABATED AS ON THE DATE OF SEARCH. THE AR FURTHER SUBMITTED THAT THE ORIGINAL RETURN OF INCOME WAS FILED ON 19. 02.2013 AND TIME LIMIT FOR ISSUE OF NOTICE U/S.143(2) OF THE AC T WAS EXPIRED ON 30.09.2013. THE SEARCH HAS BEEN CONDUCTED ON 16.10. 2014, 7 ITA NO.676/CHNY/2019 THEREFORE, WHEN THE SEARCH TOOK PLACE ASSESSMENT FO R THE IMPUGNED ASSESSMENT WAS UNABATED. THEREFORE, IN ABS ENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEA RCH, NO ADDITIONS CAN BE MADE IN THE CONCLUDED ASSESSMENT. IN THIS REGARD, HE RELIED ON THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF PCIT VS. MEETA GUTGUTIA (2018) 257 TAXMAN 441 (SC) AND ALSO THE DECISION OF THE ITAT., CHENNA I IN THE CASE OF DCIT VS. SHRI R.P.DHARMALINGAM IN ITA NO.1103/CHNY/2018. 8. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT THERE IS NO MERIT IN THE ARGUMENTS OF THE LEARNED AR FOR THE ASSESSEE THAT ADDITION MADE TOWARDS INTEREST INCOME IS NOT S UPPORTED BY ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SE ARCH, BECAUSE ADDITIONS MADE TOWARDS INTEREST RECEIVED FROM THE C OMPANY IS ON ACCOUNT OF AMOUNT ADVANCED TO THE COMPANY OUT O F LOAN TAKEN FROM INDUS IND BANK AND FURTHER, LOAN TAKEN F ROM INDUS IND BANK WAS UNDISCLOSED TO THE INCOME-TAX DEPARTME NT, WHICH IS EVIDENT FROM MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFORE, THERE IS A LIVE NEXUS BETWEEN INCRIMINAT ING MATERIAL FOUND DURING THE COURSE OF SEARCH AND ADDITIONS MAD E TOWARDS INTEREST INCOME AND HENCE, THE ASSESSING OFFICER WA S RIGHT IN 8 ITA NO.676/CHNY/2019 BRINGING TO TAX INTEREST INCOME ON RECEIPT BASIS A ND FURTHER, SUCH ADDITION IS SUPPORTED BY INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SEARCH. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL S AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. IT IS A WELL SETTLED PRINCIPLES OF LAW BY V ARIOUS DECISIONS OF HIGH COURTS AND THE HONBLE SUPREME COURT, ESPEC IALLY IN THE CASE OF PCIT VS. MEETA GUTGUTIA (SUPRA) THAT UNABATED ASSESSMENTS CANNOT BE DISTURBED OR NO ADDITIONS CAN BE MADE IN CONCLUDED ASSESSMENT, UNLESS THERE IS INCRIMINAT ING MATERIAL FOUND AS A RESULT OF SEARCH WHICH SUGGESTED UNDISCL OSED INCOME FOR RELEVANT ASSESSMENT YEAR. IN THIS CASE, ADMITTEDLY, ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS UNA BATED AS ON THE DATE OF SEARCH, BECAUSE SEARCH WAS CONDUC TED ON 16.10.2014 AND TIME LIMIT FOR ISSUE OF NOTICE U/S.1 43(2) WAS EXPIRED ON 30.09.2013. THEREFORE, WHEN THE ASSESSME NT IS UNABATED OR CONCLUDED ON THE DATE OF SEARCH, NO A DDITION COULD BE MADE IN ABSENCE OF INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. IN THIS LEGAL BACKGROUND, IF YO U EXAMINE THE CLAIM OF THE ASSESSEE THAT ADDITIONS MADE TOWARDS INTEREST RECEIVED IS NOT SUPPORTED BY ANY INCRIMINATING MATE RIAL FOUND 9 ITA NO.676/CHNY/2019 DURING THE COURSE OF SEARCH, WE FIND THAT ARGUMENTS TAKEN BY THE ASSESSEE ARE DEVOID OF MERIT, BECAUSE THE ASSE SSING OFFICER HAS MADE ADDITIONS TOWARDS INTEREST INCOME ON THE BASIS OF DOCUMENT FOUND DURING THE COURSE OF SEARCH MARKED AS ANNEXURE NRKRC/LOOSE SHEETS/S/SNO.1(P.79 TO 83), WH ICH CONTAINS DOCUMENTS RELATED TO UNACCOUNTED REPAYMENT OF LOAN TO INDUS IND BANK. THE SAID LOAN TAKEN FROM INDUS I ND BANK WAS NOT DISCLOSED TO THE INCOME-TAX DEPARTMENT INCLUDIN G REPAYMENT MADE TOWARDS SAID LOAN. ALTHOUGH, ADDITIO NS MADE BY THE ASSESSING OFFICER TOWARDS UNACCOUNTED REPAYM ENT OF LOAN WAS DELETED BY LEARNED CIT(A), BUT FACT REMAI NS THAT DOCUMENTS FOUND DURING THE COURSE OF SEARCH CLEARLY INDICATE THAT SAID LOAN WAS NOT DISCLOSED TO INCOME TAX DEPA RTMENT . FURTHER, OUT OF THE SAID LOAN, THE ASSESSEE HAS ADV ANCED LOAN TO M/S. STANDARD PRESS INDIA PVT. LTD. AND THAT CO MPANY HAS PAID INTEREST FOR FOUR YEARS TO THE ACCOUNT OF THE ASSESSEE IN THE FINANCIAL YEAR 2011-12 RELEVANT TO ASSESSMENT Y EAR 2012- 13. THE ASSESSEE HAS CREDITED INTEREST RECEIVED FRO M COMPANY TO THE CAPITAL ACCOUNT, BUT WAS NOT OFFERED TO TAX. THE ASSESSING OFFICER HAS ASSESSED INTEREST RECEIVED FR OM SAID COMPANY IN THE ASSESSMENT FRAMED U/S.153C R.W.S 153 A ON THE 10 ITA NO.676/CHNY/2019 GROUND THAT INTEREST RECEIVED SHOULD BE ASSESSED TO TAX ON RECEIPT BASIS IRRESPECTIVE OF THE PERIOD FOR WHICH SAID INTEREST PERTAINS TO. 10. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE A SSESSEE IN LIGHT OF FACTS BROUGHT OUT BY THE ASSESSING OFFI CER AND FIND THAT ADDITIONS MADE TOWARDS INTEREST INCOME IS HAVI NG NEXUS WITH INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND MARKED AS ANNEXURE NRKRC/LOOSE SHEETS/S/SNO.1(P .79 TO 83). BUT, WHETHER TOTAL INTEREST RECEIVED FROM THE COMPANY IS RELATED TO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH OR ONLY INTEREST RECEIVED TOWARDS INDUS IND BANK LOAN ACCOUNT IS RELATED TO SAID DOCUMENT HAS TO BE EXAMINED. THE A SSESSEE HAS FILED DETAILS OF INTEREST RECEIVED OF RS 48,48, 820/- OUT OF WHICH A SUM OF ` 36,20,263/- PERTAINS TO LOAN TAKEN FROM SBI AND SAID LOAN WAS DISCLOSED IN THE REGULAR RETURN O F INCOME FILED BY THE ASSESSEE. THEREFORE, INTEREST TO THE EXTENT OF ` 36,20,263/- IS NOT HAVING ANY REFERENCE TO INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE, NO ADDITION COULD BE MADE TO INTEREST RECEIVED TOWARDS LOAN GIV EN OUT OF SBI LOAN. BUT, INSOFAR AS INTEREST RECEIVED TOWARDS INDUS IND 11 ITA NO.676/CHNY/2019 BANK LOAN AMOUNTING TO ` 13,28,557/-, THERE IS A DIRECT NEXUS BETWEEN INCRIMINATING MATERIAL FOUND DURING THE COU RSE OF SEARCH VIDE DOCUMENT IN ANNEXURE NRKRC/LOOSE SHEETS/S/SNO.1(P.79 TO 83) AND INTEREST INCOME ASSE SSED TO TAX FOR THE IMPUGNED ASSESSMENT YEAR. THEREFORE, TO THI S EXTENT, IT CANNOT BE SAID THAT THERE IS NO REFERENCE TO INCRIM INATING MATERIAL FOUND DURING THE COURSE OF SEARCH. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ARGUMENTS TAKEN BY THE ASSESSEE THAT THERE IS NO INCRIMINATING MATERIAL TO SUPPORT ADDITIONS TOWARDS INTEREST IN RESPECT OF INDUS IND BANK LOAN AMOUNTING TO ` 13,28,557/- CANNOT BE ACCEPTED. 11. THEREFORE, CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO TAKEN NOTE OF VARIOUS EVIDENCES FIELD BY THE ASSESSE, WE ARE OF THE CONSIDERED VIEW THAT ADDITIO NS MADE BY THE ASSESSING OFFICER TOWARDS INTEREST INCOME ON AC COUNT OF INTEREST RECEIVED FOR SBI LOAN TO THE EXTENT OF RS. 36,20,263/- CANNOT BE SUSTAINED, BECAUSE SAID ADDITION WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SE ARCH . INSOFAR AS, ADDITIONS MADE TOWARDS INDUS IND BANK LOAN AMOU NTING TO ` 13,28,557/-, THE SAID ADDITION WAS SUPPORTED BY IN CRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND CONSEQUEN TLY, ADDITION 12 ITA NO.676/CHNY/2019 MADE BY THE ASSESSING OFFICER IS IN ACCORDANCE WITH LAW. HENCE, ADDITION MADE TOWARDS INDUS IND BANK LOAN IN TEREST AMOUNTING TO ` 13,28,557 IS SUSTAINED. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2021 SD/- SD/- ( . ) ( . ) (DUVVURU RL REDDY) (G.MANJUNATHA ) ! $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ! /CHENNAI, ' /DATED 31 ST MARCH, 2021 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .