DCIT, Trichy V. C.Periasamy, Karur

ITA 692/CHNY/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61001 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-04-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 11-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMAT
• Assessee Lawyers: R VENKATESH
• Keywords: Reason to believe
• Section: 133A; 131; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 692/MDS/2009 (ASSESSMENT YEAR : 2000-01) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, TRICHY. (APPELLANT) V. SHRI C. PERIYASAMY, 23D, VIVEKANANDA NAGAR, 11 TH CROSS, SENGUNTHAPURAM, KARUR. PAN : AAIPP4368G (RESPONDENT) APPELLANT BY : DR. YOGESH KAMAT, SR. DR RESPONDENT BY : SHRI R. VENKATESH, CA DATE OF HEARING : 24.04.2012 DATE OF PRONOUNCEMENT : 24.04.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANCE IS THAT LD. CIT(APPEALS) HELD THE ASSESSEE TO BE A PERSON DIFFE RENT FROM THE PERSON ACTUALLY CONSIDERED BY THE A.O. AND RULED THAT ASSE SSEE COULD NOT BE FASTENED WITH LEVY OF TAX. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED RETURN FOR IMPUGNED ASSESSMENT YEAR DECLARING A TOTAL INCOME O F ` 1,20,860/- AND AGRICULTURAL INCOME OF ` 1,20,000/-. IN A SURVEY UNDER SECTION 133A OF 2 I.T.A. NO. 692/MDS/09 INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') CONDUCTED AT THE RESIDENCE AND BUSINESS PREMISES OF ONE SHRI S.M. SAKTHIVEL, A SWO RN STATEMENT WAS RECORDED FROM THE SAID SHRI S.M. SAKTHIVEL. AS PER ASSESSING OFFICER, SHRI S.M. SAKTHIVEL ADMITTED THAT THERE WAS AN INCO ME OF ` 69,09,200/- FROM A SAND QUARRY BUSINESS AT PETTAPALAYAM REACH, WHICH WAS CONDUCTED BY AN AOP. AS PER THE A.O., SHRI S.M. SA KTHIVEL STATED THAT ONE SHRI C. PERIASAMY WAS A PARTNER IN SUCH SAND QU ARRY BUSINESS AND THE SHARE OF SHRI C. PERIASAMY IN THE AOP WAS 12.5% . A NOTEBOOK WAS ALSO IMPOUNDED FROM THE RESIDENCE OF SHRI S.M. SAKT HIVEL AND AS PER THE A.O., THE INCOME FROM PETTAPALAYM REACH SAND QUARRY BUSINESS WAS ` 69,09,200/-. A NOTICE WAS ISSUED TO THE ASSESSEE O N 29.10.2007 PROPOSING TO ASSESS ASSESSEES SHARE FROM THE SAND QUARRY BUSINESS AT PETTAPALAYAM REACH, OF ` 8,63,650/-. SINCE THE AOP WHICH WAS CARRYING ON THE SAND QUARRY BUSINESS AND HAD ALSO P AID THE LEASE AMOUNT OF ` 26,83,533/- , SHARE OF SUCH LICENCE FEE COMING TO ` 3,76,376/- WAS ALSO PROPOSED TO BE CONSIDERED AS AS SESSEES INCOME FROM OTHER SOURCES. ON SUCH PROPOSAL, ASSESSEE OBJ ECTED AND STATED THAT HE WAS NOT HAVING ANY PARTNERSHIP WITH SHRI S. M. SAKTHIVEL. AS PER THE ASSESSEE, HE DID NOT HAVE ANY CONTACT WITH THE SAID PERSON. ASSESSEE ALSO POINTED OUT TO THE ASSESSING OFFICER THAT SHRI S.M. SAKTHIVEL HAD STATED NAME OF THE PERSON AS SHRI C.P . PERIASAMY AND NOT SHRI C. PERIASAMY. HOWEVER, THE A.O. DID NOT ACCE PT THESE OBJECTIONS. 3 I.T.A. NO. 692/MDS/09 ACCORDING TO HIM, ASSESSEE WAS SERVED NOTICE AS A M EMBER OF AN AOP AND THE REASON FOR ISSUE OF NOTICE WAS GIVEN TO THE ASSESSEE. ASSESSEE HAVING NOT FILED OBJECTION TO SUCH NOTICE, HE CANNO T SAY THAT HE WAS NOT THE SAME PERSON AS MENTIONED BY SHRI S.M. SAKTHIVEL IN HIS SWORN STATEMENT. AS PER THE A.O., SHRI S.M. SAKTHIVEL HA D CONFIRMED THAT SHRI PERIASAMY MENTIONED IN THE SWORN STATEMENT WAS NONE OTHER THAN THE ASSESSEE. A.O. ALSO NOTED THAT THE ASSESSING OFFIC ER OF SHRI S.M. SAKTHIVEL WOULD NOT HAVE KNOWN THE ADDRESS OF THE A SSESSEE, UNLESS SHRI S.M. SAKTHIVEL HIMSELF HAD PROVIDED SUCH ADDRE SS. HE, THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE AND MADE AN ADDI TION OF ` 8,63,650/- AND ` 3,76,376/- AND COMPLETED THE ASSESSMENT. 3. IN HIS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT THE NAME MENTIONED BY SHRI S.M. SAKTHIVEL IN HIS STATEMENT WAS SHRI C.P. PERIASAMY. AS PER THE ASSESSEE, SHRI S.M. SAKTHIVEL HAD ALSO FILED AN AFFIDAVIT STATING THAT THE ASSESSEE W AS NOT THE PERSON MENTIONED BY HIM. AS PER THE ASSESSEE, HE WAS NOT A PART OF ANY AOP AND WAS WRONGLY ASSESSED FOR AN INCOME WHICH HE NEV ER EARNED. IT SEEMS, LD. CIT(APPEALS) ALSO OBTAINED A REMAND REPO RT WHEREIN IT WAS STATED BY THE ASSESSING OFFICER THAT THE SWORN STAT EMENT DID NOT CLEARLY SAY AS TO WHETHER SHRI C.P. PERIASAMY AND SHRI C. P ERIASAMY WERE THE SAME OR DIFFERENT PERSONS. LD. CIT(APPEALS) WAS OF THE OPINION THAT ASSESSING OFFICER COULD NOT ESTABLISH THAT ASSESSEE HAD ANY INCOME 4 I.T.A. NO. 692/MDS/09 FROM OR MADE ANY INVESTMENT IN THE SAND QUARRY BUSI NESS. ACCORDING TO HIM, NO ADDITION COULD BE MADE IN ASSESSEES HAND T REATING HIM THE PERSON MENTIONED BY SHRI S.M. SAKTHIVEL. HE, THERE FORE, DELETED THE ADDITIONS MADE IN THIS REGARD. 4. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT SHRI C. PERIASAMY, THE ASSESSEE AND SHRI C.P. PERIASAMY MENTIONED BY SHRI S.M. SAKTHIVEL IN HIS DEPOSITION WERE THE ONE AND THE SAME. AS PER THE LEARNED D.R., THE AOP BUSINESS WAS CARRIED ON IN THE NAME OF K. NALLASIVAM & OTHERS, A ND THE ASSESSEE WAS RECEIVING 12.5% OF THE BUSINESS PROFITS. ACCORDING TO HIM, JUST BECAUSE ONE LETTER IN THE NAME WAS ABSENT, ASSESSEE COULD N OT WRIGGLE OUT OF HIS LIABILITY TO EXPLAIN HIS CONNECTION WITH AOP. 5. PER CONTRA, LEARNED A.R., STRONGLY SUPPORTING TH E ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE REMAND REPORT DATE D 28.11.2008 OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE II, TRICH Y, HAD CLEARLY MENTIONED THAT SHRI S.M. SAKTHIVEL HAD NOT GIVEN AN Y ADDRESS OF SHRI C. PERIASAMY. ACCORDING TO HIM, IT WAS CLEARLY ESTABL ISHED THAT SHRI S.M. SAKTHIVEL MENTIONED ONE SHRI C.P. PERIASAMY AND NOT SHRI C. PERIASAMY. FURTHER ACCORDING TO HIM, REASONS RECOR DED FOR REOPENING THE ASSESSMENT, PLACED AT PAPER-BOOK PAGE 4, HAD NO CONNECTION WITH ASSESSEE WHATSOEVER. LEARNED A.R. SUBMITTED THAT R EVENUE COULD NOT 5 I.T.A. NO. 692/MDS/09 ESTABLISH ANY CONNECTION BETWEEN THE ASSESSEE AND T HE AOP CALLED K. NALLASIVAM & OTHERS. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE QUESTION HERE IS WHETHER ASSESSEE IS SAME AS TH E PERSON MENTIONED BY SHRI S.M. SAKTHIVEL IN HIS SWORN STATE MENT GIVEN BEFORE THE REVENUE. IT IS NOT DISPUTED THAT SHRI S.M. SAK THIVEL MENTIONED THE NAME SHRI C.P. PERIASAMY. IT IS ALSO NOT DISPUTED THAT ASSESSEES NAME IS SHRI C. PERIASAMY. WE ALSO FIND THAT SHRI S.M. SAKTHIVEL NOWHERE GAVE THE ADDRESS OF SHRI C.P. PERIASAMY IN HIS STAT EMENT. IN OUR OPINION, REMAND REPORT OF THE A.O. IS VERY RELEVANT IN THIS REGARD. PARAGRAPHS 3 AND 4 OF THE SAID REMAND REPORT DATED 28.11.2008 OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-II, TRICH Y, IS REPRODUCED HEREUNDER:- 3. THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ASSE SSMENT BEFORE COMMISSIONER OF INCOME TAX (APPEALS) AND FILED AN AF FIDAVIT GIVEN BY SHRI S.M. SAKTHIVEL, NO.311, E.B. COLONY, MOHANUR, NA MAKKAL DISTRICT. ON RECEIPT OF DIRECTIONS FROM COMMISSIONER OF INCOM E TAX (A), THE THEN DCIT ISSUED SUMMONS TO SHRI S.M. SAKTHIVEL AND RECORDED A SWORN STATEMENT U/S 131 OF THE INCOME-TAX ACT ON 10.6.2008 IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE THAT THE ASSESS EE IS NOT THE PERSON STATED TO BE A MEMBER OF THE AOP (NALLASIVAM AND OTHERS). THE GIST OF THE SWORN STATEMENT IS SUBMITTED HEREUN DER. 3.1 SHRI S.M. SAKTHIVEL INTRODUCED HIMSELF AS MANAGE R IN SEETHA MEDICAL STORE AT MOHANUR. WHEN QUESTIONED WHETHER HE WAS A PARTNER IN THE SAND QUARRYING AT MELAPALAYAM DURING 1999-2002, HE STATED THAT HE WAS NOT A PARTNER. AS REGARDS HIS R OLE IN THE SAND QUARRYING BUSINESS, HE STATED SHRI K.K. VEERAPPAN P ROMISED TO GIVE HIM 2.5% SHARE AND THAT AFTER GETTING THE LICENCE IN THE NAME OF SHRI 6 I.T.A. NO. 692/MDS/09 K. NALLASIVAM AND SHRI VEERAPPAN REFUSED TO MAKE HI M A PARTNER AND ASKED HIM TO BE A MANAGER WITH SALARY OF RS.10,000/-. HE HAD NOT RECEIVED ANY SHARE AS PROMISED. 3.2 WHEN QUESTIONED WHETHER HE HAD GIVEN THE ADDRESS OF SHRI C. PERIYASAMY TO THE INCOME-TAX DEPARTMENT, HE STATED H E HAD NOT GIVEN ANY ADDRESS. HE WAS SHOWN THE AFFIDAVIT GIVEN BY H IM ON 15.5.2008 AND ASKED WHETHER HE SIGNED THE AFFIDAVIT, WHO PREP ARED THE AFFIDAVIT AND WHY HE SIGNED THE AFFIDAVIT. IN REPLY HE STATE D HE HAD SIGNED THE AFFIDAVIT. SHRI C. PERIYASAMY APPROACHED ME AND R EQUESTED TO GIVE AN AFFIDAVIT. 3.3 HE WAS ASKED TO EXPLAIN WHO IS THE PERSON SHRI C. P. PERIYASAMY MENTIONED IN STATEMENT, IN THE LIGHT OF HIS AFFIRMA TION IN THE AFFIDAVIT THAT C.P. PERIYASAMY IS NOT THE SAME PERSON, AS SHR I C. PERIYASAMY, 23- D, VIVEKANANDHA NAGAR, 11 TH CROSS, SENGUNTHAPURAM, KARUR. HE REPLIED THAT HE DID NOT KNOW. HE WAS FURTHER QUESTIONED AS TO HOW HE STATED THAT SHRI C.P. PERIYASAMY AND C. PERIYASAMY ARE NOT THE SAME PERSON (WHEN HE DID NOT KNOW SHRI C.P. PERIYASAMY) HE STAT ED SHRI C. PERIYASAMY HAD NOT COME TO THE QUARRY AND HENCE HE HAD GIVEN THE AFFIDAVIT. 4. IN ORDER TO FURTHER CLARIFY THE POSITION, A LETTE R WITH SUMMONS WAS ISSUED TO SHRI K. NALLASIVAM AND SHRI K.K. VEER APPAN, MEMBERS OF THE AOP ON 11.6.2008. THERE WAS NO RESPONSE TO THESE S UMMONS. SHRI S.M. SAKTHIVEL HAD ALSO FILED AN AFFIDAVIT WHI CH READS AS UNDER:- I, MR. S.M. SAKTHIVEL, SON OF SRI MUTHUSAMY GOUNDER RESIDENT OF NO.311, E.B. COLONY, MOHANUR, NAMAKKAL DISTRICT, AGED ABOUT 41 YEARS SOLEMNLY AFFIRM AND DECLARE AS UNDER. 1. A SURVEY U/S. 133A OF THE INCOME TAX ACT WAS CARRIED O UT ON 10.01.2003 IN MY RESIDENCE IN RESPECT OF SAND QUARRY BUSI NESS CARRIED ON BY ME ALONG WITH OTHERS. THE SAND QUARR Y BUSINESS WAS CARRIED OUT AT PETTAPALAYAM REACH, NAMAKKAL DISTRIC T AND THE LICENCE WAS IN THE NAME OF MR. K. NALLASIVAM. 2. DURING THE COURSE OF SURVEY A SWORN STATEMENT WAS R ECORDED AND SUBSEQUENT SURVEY ANOTHER SWORN STATEMENT WAS RECOR DED ON 30.01.2003. 7 I.T.A. NO. 692/MDS/09 3. IN THE SWORN STATEMENT RECORDED ON 30.01.2003, I HAVE ADM ITTED THAT THE SAND QUARRY BUSINESS WAS CARRIED ON JOINTL Y WITH VARIOUS PERSONS WHICH INCLUDE ONE MR. C.P. PERIASAMY WHO IS HAVING 12.5% SHARE OF PROFIT IN THE SAND QUARRY BUSINESS. 4. I ADMIT THAT I HAVE GIVEN THE VARIOUS NAME OF THE P ERSONS AS PARTNERS BASED ON THE INFORMATION RECEIVED FROM MR. K.K. VEERAPPAN (WHO IS ALSO ONE OF THE PARTNERS). 5. I HEREBY AFFIRM THAT THE NAME MR. C.P. PERIASAMY WH ICH I MENTIONED IN THE SWORN STATEMENT IS NOT THE PERSON MR. C. PERIASAMY RESIDENT OF NO.23-D, VIVEKANANDHA NAGAR, 1 1 TH CROSS, SENGUNTHAPURAM, KARUR. BOTH MR. C.P. PERIASAMY AND MR. C. PERIASAMY ARE NOT ONE AND THE SAME. I FURTHER AFFI RM THAT I HAVE NO ACQUAINTANCE WITH MR. C. PERIASAMY OF KARUR IN A NY ASPECT. 7. TWO THINGS ARE CLEAR - SHRI S.M. SAKTHIVEL HAD N OT GIVEN THE ADDRESS OF SHRI C.P. PERIASAMY WHOEVER IT WAS. SEC OND IS THAT REVENUE HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW SHRI C.P. PERIASAMY AND SHRI C. PERIASAMY ARE ONE AND THE SAM E PERSON. NOW, IF WE LOOK AT THE REASONS GIVEN BY THE REVENUE FOR REOPENING ASSESSEES CASE, IT READS AS UNDER:- THERE WAS A SURVEY UNDER SECTION 133 OF THE ACT 1961 CONDUCTED BY THE ADDITIONAL DIRECTOR OF INCOMETAX (I NV) SALEM ON 10.01.2003 IN THE RESIDENCE CUM BUSINESS PREMISES OF SHRI S.M. SAKTHIVEL AT DOOR NO. 311, E.B. COLONY, MOHANUR. IT IS SEEN FROM THE SURVEY REPORT THAT SHRI S.M. SA KTHIVEL ALONG WITH 14 OTHERS CARRIED ON BUSINESS IN SAND QUA RRYING AT PETTAPALAYAM REACH. A SWORN STATEMENT WAS RECORD ED FROM SHRI S.M. SAKTHIVEL ON 30.01.2003 WHILE REPLYING FOR Q.NO.19 & 20 OF HIS SWORN STATEMENT DATED MENTIONED ABOVE SHRI S.M. SAK THIVEL ADMITTED THAT NET INCOME FROM SAND QUARRYING BUSINESS WAS ` 69,09,200/-. THE ABOVE FACT IS SUPPORTED BY NOTINGS MADE IN PAGE 7 OF SVS NOTE BOOK NO.5 (IMPOUNDED). SWORN STATEMENTS WERE ALSO RECORD ED FROM THE FOLLOWING PERSONS ON VARIOUS DATES. 8 I.T.A. NO. 692/MDS/09 1) SHRI K. NALLASIVAM (HE WAS THE LICENSE HOLDER FOR T HE SAND QUARRYING BUSINESS DONE AT PETTAPALAYAM REACH) . 2) SMT V SIVAKAMI W/O SHRI K K VEERAPPAN 3) SHRI A.P. RAMASAMY THEY HAVE ALSO CONFIRMED IN THEIR SWORN STATEMENTS THAT THEY JOINTLY CARRIED ON THE BUSINESS AND NO BOOKS OF ACC OUNTS HAVE BEEN MAINTAINED FOR SAND QUARRYING BUSINESS AT PETTAPALA YAM REACH AND THE INCOME NOTED IN THE IMPOUNDED BOOKS ARE IN AGREEMEN T WITH THE STATEMENT GIVEN BY SHRI S.M. SAKTHIVEL AT THE TIME OF SURVEY PROCEEDINGS. SURVEY REPORTS FURTHER REVEALS THAT L ICENSE FOR THE ABOVE REACH WAS TAKEN IN THE NAME OF SHRI K NALLASI VAM BUT BUSINESS WAS DONE IN ASSOCIATION WITH SHRI S.M. SAKTHIVEL AN D OTHERS. SINCE THE ABOVE FIRM IS NOT EVIDENCED BY AN INSTRUM ENT, THE INCOME OF ` 69,09,200/- IS RIGHTLY ASSESSABLE IN THE STATUS OF A.O.P. THE LICENSE WAS TAKEN IN MAY 1999 AND CARRIED ON THE S AND QUARRYING BUSINESS BY THEM UPTO MAY 2002. SO THE SAID INCOME IS ASSESSABLE FOR THE ASSESSMENT YEARS 2000-01. NO RETURN OF INCOME HAS BEEN FILED SO FAR FOR THE ABOVE YEAR. IN CONSEQUENCE OF THE ABOVE INFORMATION IN POSSESSI ON, THERE IS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED TAXATION. KIND APPROVAL OF THE JCIT IS SOLICITED FOR ISSUANCE OF NOTICE U/S 148. THE REASONS MENTIONED ABOVE HAVE NOTHING IN IT WHIC H COULD EITHER CONNECT SHRI C. PERIASAMY OR SHRI C.P. PERIASAMY WI TH THE AOP. WE ARE UNABLE TO UNDERSTAND HOW THE REVENUE GOT THE AD DRESS OF THE ASSESSEE AND CAME TO A CONCLUSION THAT SHRI C.P. PE RIASAMY MENTIONED BY SHRI S.M. SAKTHIVEL WAS THE SAME AS THE ASSESSEE SHRI C. PERIASAMY. THERE IS NO CASE FOR REVENUE THAT ANYTH ING WAS RECOVERED AT THE TIME OF SURVEY OF THE RESIDENCE OF SHRI S.M. SAKTHIVEL WHICH COULD SHOW THAT THE ADDRESS OF SHRI C.P. PERIASAMY WAS TH E SAME AS THAT OF 9 I.T.A. NO. 692/MDS/09 SHRI C. PERIASAMY. THE FUNDAMENTAL REQUIREMENT FOR TAXING A PERSON IS THAT THE INCOME SHOULD BELONG TO THAT PERSON. UNLE SS THIS CONDITION IS SATISFIED, A PERSON CANNOT BE TAXED, EXCEPT WHERE T HERE IS ANY DEEMING PROVISION. WE ARE OF THE OPINION THAT ASSESSEES C ASE IS NOT FALLING WITHIN ANY SUCH DEEMING PROVISION AND THERE IS NOTH ING ON RECORD TO SHOW THAT THE INCOME BELONGED TO THE ASSESSEE. LD. CIT(APPEALS) RIGHTLY DELETED THE ADDITION. WE DO NOT FIND ANY R EASON TO INTERFERE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 24 TH APRIL, 2012. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 24 TH APRIL, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), TIRUCHIRAPPALLI (4) CIT-I, TIRUCHY (5) D.R. (6) GUARD FILE