JCIT (i/c), CHENNAI V. V.Sampath, Vellore

ITA 710/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61366 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-07-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 04-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: A MAHESH
• Keywords: Unexplained investment
• Section: 69C; 143(3); 142(1); 153A; 234B; 10B; 131; 69; 132

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NOS. 710, 711, 712, 713, 714, 715 AND 716/MD S/2012 ASSESSMENT YEARS: 2002-03, 03-04, 04-05, 05-06, 06- 07, 07-08 AND 08-09 & C.O. NOS.73, 74, 75, 76, 77, 78 AND 79/MDS/2012 [IN I.T.A. NOS. 710, 711, 712, 713, 714, 715 AND 71 6/MDS/2012] THE JT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE IV (1), 46, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 34. VS. SHRI V. SAMPATH, 15, 14 TH EAST CROSS ROAD, GANDHI NAGAR, VELLORE. [PAN:AARPS1152J] (APPELLANT) (RESPONDENT/CROSS OBJECTOR) REVENUE BY : DR. S. MOHARANA, CIT DR ASSESSEE BY : SHRI A. MAHESH, FCA DATE OF HEARING : 23.07.2012 DATE OF PRONOUNCEMENT : 23.07.2012 ORDER PER BENCH THESE SEVEN APPEALS FILED BY THE REVENUE AND THE SE VEN CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAIN ST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I, CHENNAI DATED 25.01.2012 IN ITA NO. 249 TO 255/09-10 FOR THE ASSESSMENT YEARS 2 002-03 TO 2008-09. DR. S. MOHARANA, CIT DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI A. MAHESH, FCA REPRESENTED ON BEHALF OF THE ASSESSEE. 2. THE FIRST COMMON ISSUE IN THE GROUNDS OF APPEAL S OF THE REVENUE FOR I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 2 ALL THE ASSESSMENT YEARS 2002-03 TO 2008-09 IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE TOWARDS INADEQUATE DRAWINGS. 3. THE FACTS OF THE CASE ARE THAT THERE WAS A SEAR CH UNDER SECTION 132 IN THE PREMISES OF VELLORE INSTITUTE OF TECHNOLOGY ON 06.06.2007 AND AS PART OF THE SEARCH OPERATION, THE RESIDENCE OF THE ASSESSEE , WAS ALSO COVERED UNDER SEARCH. A NOTICE UNDER SECTION 153(A) WAS ISS UED ON 20.10.2008 REQUIRING THE ASSESSEE TO FILE THE RETURNS OF INCOM E FOR THE ASSESSMENT YEARS 2002-03 TO 2007-08. A NOTICE UNDER SECTION 142(1) W AS ISSUED CALLING FOR THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09. T HE ASSESSMENTS WERE COMPLETED UNDER SECTION 153(A) READ WITH SECTION 14 3(3) FOR THE ASSESSMENT YEARS 2002-03 TO 2007-08 AND ASSESSMENT WAS COMPLET ED UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2008-09. WHILE COMPLETING THE ASSESSMENTS, THE ASSESSING OFFICER MADE FOLLOWING A DDITIONS TOWARDS INADEQUATE DRAWINGS: ASSESSMENT YEAR ADDITION MADE 2002-03 ` .80,292/- 2003-04 ` . 1,01,916 / - 2004-05 ` .1,51,668/- 2005-06 ` .1,99,572 / - 2006-07 ` .2,24,472/- 2007-08 ` .2,38,284/- 2008-09 ` .80,292/- 4. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPE ALS) DELETED THE ADDITIONS AGAINST WHICH, THE REVENUE IS IN APPEAL B EFORE US. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 3 5. THE COUNSEL FOR THE REVENUE SUPPORTED THE ORDER S OF THE ASSESSING OFFICER. 6. THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORDE RS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7. THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED AS UNDER: (I) THE APPELLANT, HIS WIFE AND MINOR SON WERE RES IDING AT GANDHI NAGAR IN THE APPELLANTS HOUSE CONSTRUCTED IN A.Y. 2000. THE COS T OF CONSTRUCTION WAS ABOUT ` .31.25 LAKHS. FROM THE ASSESSMENT YEAR 2006-07 TO 2 008-09, THE APPELLANT'S SON WAS AWAY AT BOARDING SCHOOL, EXPENSES FOR WHICH WER E DEBITED SEPARATELY. DURING THIS PERIOD, IT WAS ONLY THE APPELLANT AND HIS WIFE LIVING AT VELLORE. 2. THE ASSESSING OFFICER HAD ACCEPTED THE MONTHLY D RAWINGS OF THE APPELLANT'S BROTHER SHRI V.SEKAR AND HIS WIFE LIVING AT BANGALO RE AT ` .23,750/-. THE COST OF LIVING IN BANGALORE IS HIGHER THAN THAT OF VELLORE. IN VELLORE, IT WOULD ONLY BE HALF OF THAT OF BANGALORE. THE APPELLANT, HIS FATHER AND BROTHER ARE ALL VEGETARIANS AND HENCE EXPENSES WOULD FURTHER BE LESS. FOR SHRI V.SE KAR, THE DRAWINGS ACCEPTED BY THE ASSESSING OFFICER FOR THE A.Y 2008-09 IS ` .23,750/PER MONTH WHEREAS THE APPELLANT HAS ADMITTED ` .22,956/- FOR THE SAME ASSESSMENT YEAR. 3. THE ASSESSING OFFICER HAS BEEN LED BY THE APPEA RANCE OF THE INTERIORS OF THE HOUSE. THE COST AND STYLE OF CONSTRUCTION OF HOUSE CANNOT BE INDICATIVE OF DRAWINGS. FOR A.Y 2008-09, THE ASSESSING OFFICER HAS ESTIMATE D DRAWINGS TO BE ` .45,000/-. THE APPELLANT'S HOUSE HAS BEEN CONSTRUCTED AT A COS T OF ` .31.25 LAKHS. FOR THE APPELLANT'S BROTHER V.SELVAM, WHOSE HOUSE CONSTRUCT ION WAS ESTIMATED BY THE ASSESSING OFFICER AT ABOUT ` .2.15 CRORES, THE DRAWINGS HAVE BEEN ESTIMATED AT O NLY ` .30,000/-. THUS, IT IS CLEAR THAT THERE IS NO BASIS FOR THE ESTIMATION MADE. 4. THE ASSESSING OFFICER HAS INCREASED THE ESTIMAT ION OF DRAWINGS FROM A.Y 2002-03 TO A.Y 2008-09 THREE TIMES. FOR EG. FOR THE A.Y 2002-03, THE ESTIMATED DRAWINGS IS ` .15,000/- AND FOR THE A.Y 2008-09, THE ESTIMATED DR AWINGS IS ` .45,000/-. THERE IS NO RATIONALE BEHIND THIS ESTIMA TION. 6. APART FROM THESE FACTUAL ERRORS, THE APPELLANT ARGUED THAT ON THE LEGAL FRONT SECTION 69C CAN BE INVOKED ONLY IN A CASE WHERE T HERE IS A FINDING OF FACT THAT AN EXPENDITURE HAS BEEN INCURRED, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 4 1. NO MATERIAL WHATSOEVER WAS FOUND AT THE TIME OF SEARCH TO PROVE THAT THE DRAWINGS ESTIMATED BY THE A.O. WAS INCURRED BY THE APPELLANT DURING THE FINANCIAL YEAR RELATING TO A.Y. 2002-03 AS RE QUIRED U/S 69C. 2. NO STATEMENT WAS RECORDED TO ARRIVE AT A FINDIN G THAT APPELLANT HAD INCURRED THE AMOUNT ESTIMATED AS DRAWINGS BY THE A.O. 3. IN THE ABSENCE OF ANY FINDING OF FACT THAT THE APPELLANT HAD INFACT INCURRED THE ESTIMATED EXPENDITURE ON DRAWINGS, DURING THE R ELEVANT FINANCIAL YEARS, THE ADDITION MADE TOWARDS DRAWINGS U/S 69C IS BAD I N LAW. THE APPELLANT RELIED ON THE FOLLOWING DECISIONS: I) CIT VS. LUBTEC INDIA LTD. 311 ITR 175 (DEL); II) CIT VS. C.L. KHALRI 282 ITR 97 (MP); III) PRABHU DAYAL LALLU RAM VS. ITO 63 TTJ 557 (DEL ); IV) M.P. MALLIVAL VS. JCIT 10 SOT 319 (HYD)(TM); V) ITO VS. L.N. MEHTA (HUF) 77 TTJ 63 JODHOPUR); VI) ACIT VS. K.H. DHAMDHERE 19 SOT 201 (COCH); VII) HARAKCHAND P. VORA VS. ACIT 68 TTJ 417 (MUM); VIII) PRADIP C. PATEL VS. DCIT 58 TTJ 409 (AHD); IX) LAKSHMI JEWELLERY VS. ACIT 73 TTJ 981 (MAD); X) OM PRAKASH SHARMA VS. DCIT 4 SOT 369 (JAIPUR); XI) ITO VS. DR. ANAND MEENAWAT 43 TTJ 213 (JAIPUR); XII) MAHAAN FOOD LTD. VS. DCIT 27 DTR (DEL)(TRIB) 1 85. 8. THE COMMISSIONER OF INCOME TAX (APPEALS) CONSID ERING THE SUBMISSIONS OF THE ASSESSEE AND THE REASONS FOR MAK ING THE ADDITION BY THE ASSESSING OFFICER HELD THAT NO MATERIAL EVIDENCE WA S FOUND TO INDICATE ANY SUPPRESSION OF DRAWINGS AND THE DRAWINGS ADMITTED B Y THE ASSESSEE ARE REASONABLE. THE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE AS UNDER: 8. I HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR. THE AO HAS ACCEPTED DRAWINGS OF SHRI V. SEKAR WHO IS LIVING AT BANGALOR E WHEREIN THE COST OF LIVING IS HIGHER. THE LD. ARS CONTENTION THAT THE COST OF LI VING WILL BE LESSER IN VELLORE IS REASONABLE. CALCULATED ACCORDINGLY, THERE WILL BE A MINOR DIFFERENCE BETWEEN WHAT THE APPELLANT HAD ADMITTED AS DRAWINGS VIS-A-VIS WH AT IS ESTIMATED. WHEN THE DRAWINGS ADMITTED BY SHRI G. VISHWANATHAN AND SHRI V. SEKAR, HAVE BEEN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 5 ACCEPTED, THERE CANNOT BE A HIGHER ESTIMATION FOR D RAWINGS FOR THE APPELLANT. THE APPELLANT HAD ALSO SEPARATELY ACCOUNTED FOR OTHER E XPENSES LIKE SCHOOL FEES ETC. ON THE LEGAL FRONT ALSO, THERE IS NO STRONG CASE FOR T HIS ADDITION. ON THE FACTUAL FOOTING, THERE IS NO EVIDENCE FOR THE ADDITIONS MADE AS NO M ATERIAL WAS FOUND TO INDICATE ANY SUPPRESSION OF DRAWINGS. THEREFORE, THESE ADDITIONS MADE U/S 69C TOWARDS DRAWING FOR THE A.YS 2002-03 TO 2008-09 ARE DELETED. 9. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND ORDERS OF LOWER AUTHORITIES. THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT THERE IS NO EVIDENCE ON RECO RD FOR MAKING THESE ADDITIONS. NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO INDICATE ANY SUPPRESSION OF DRAWINGS AND THE DRAWINGS ADMITTED B Y THE ASSESSEE ARE REASONABLE. THEREFORE, WE SEE NO REASON TO INTERFER E WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AS NO EVIDENCE WAS BROUGHT ON RECORD BY THE REVENUE IN SUPPORT OF THE ADDITION MA DE IN THE ASSESSMENT ORDER TOWARDS INADEQUATE DRAWINGS. WE SUSTAIN THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE GROUNDS R AISED BY THE REVENUE ARE REJECTED ON THIS ISSUE FOR ALL THE ASSE SSMENT YEARS. 10. THE NEXT ISSUE IN THE APPEAL OF THE REVENUE IN I.T.A. NO. 715/MDS/2012 FOR THE ASSESSMENT YEAR 2007-08 IS THA T THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSESSI NG OFFICER TO ASSESS INCOME OF ` .2,85,00,000/- UNDER THE HEAD OTHER SOURCES, AS A GAINST THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 69B OF THE ACT. 11. THE ASSESSING OFFICER WHILE COMPLETING THE ASS ESSMENT MADE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 6 ADDITION OF ` .2.85 CRORES AS UNEXPLAINED INVESTMENT UNDER SECTIO N 69B WITH REGARD TO PURCHASE OF PROPERTY AT NO. 56 AND 56A, T HIRUMALAI PILLAI ROAD, CHENNAI. ACCORDING TO THE ASSESSING OFFICER, THE AS SESSEE PAID ` .2.75 CRORES AS CONSIDERATION IN CASH OVER AND ABOVE THE DOCUMENTARY VALUE. THE ASSESSING OFFICER CAME TO SUCH CONCLUSION ON AN INF ERENCE DRAWN BY HIM WITH REGARD TO THE NOTINGS FOUND MENTION IN THE DIA RY IN THE ASSESSEES WIFES NAME. 12. ON APPEAL, THE ASSESSEE CONTENDED BEFORE THE C OMMISSIONER OF INCOME TAX (APPEALS) THAT THERE IS NO FRESH MATERIA L EVIDENCE FOUND IN THE SEARCH THAT THE ASSESSEE PAID THIS AMOUNT OVER AND ABOVE THE DOCUMENTARY VALUE IN PURCHASING THE SAID PROPERTY AND INFACT TH E SELLER OF THE PROPERTY HIMSELF DENIED RECEIPT OF ANY EXCESS MONEY AND THER EFORE, THE SAID AMOUNT CANNOT BE ASSESSED UNDER SECTION 69B, BUT SHOULD BE ASSESSED ONLY UNDER THE HEAD OTHER SOURCES AS OFFERED BY THE ASSESSEE IN ITS RETURN OF INCOME. 13. THE COMMISSIONER OF INCOME TAX (APPEALS), CONS IDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REASONING OF TH E ASSESSING OFFICER IN MAKING THE ADDITION UNDER SECTION 69B HELD AS UNDER : 7. ASSESSMENT OF ` ` ` ` .2,85,00,000/- U/S 69B A.Y. 2007-08 DURING THE COURSE OF SEARCH IN THE RESIDENCE OF THE APPELLANT, THE DIARY AND LAPTOP OF THE APPELLANT'S WIFE WERE PERUSED BY THE OFFICERS. THERE WERE SOME NOTINGS IN THE DIARY AND THE LAPTOP, INDICATING PAYMENTS RE LATING TO THREE PROPERTIES PURCHASED. THERE WAS A DIFFERENCE OF ` .2.85 CRORES BETWEEN THE NOTINGS IN THE DIARY AND LAPTOP AS AGAINST THE REGISTERED VALUE OF THE P ROPERTIES. THIS AMOUNT WAS ADDED U/S 69B. THE APPELLANT IS NOT DISPUTING THE QUANTUM OF ADDITION BUT THE HEAD UNDER WHICH IT IS ASSESSED. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 7 8. THE ID.AR SUBMITTED THAT INITIALLY AT THE COMME NCEMENT OF THE SEARCH, THE APPELLANT HAD STATED THAT ONLY THE REGISTERED VALUE WAS ACTUALLY PAID BY DO. THIS IS CLEAR FROM THE ANSWERS TO QUESTION NOS.1 TO 6 IN TH E SWORN STATEMENT. SUBSEQUENTLY, THE NOTINGS IN THE DIARY WERE FOUND TO BE DEFACED. ON BEING CONFRONTED WITH THIS DEFACEMENT, THE APPELLANT AND HIS WIFE COULD ONLY P OINT OUT TO THE AUTHORIZED OFFICERS THAT ALL THE TIME, THEY WERE IN THE PRESEN CE OF THE AUTHORIZED OFFICERS. IT MUST HAVE BEEN DONE BY SOME EMPLOYEE PLAUSIBLY UNDER THE IMPRESSION THAT HE WAS HELPING THE APPELLANT. HOWEVER, HE WAS FORCED TO AD MIT THE DIFFERENCE BETWEEN THE NOTINGS IN THE DIARY AND THE LAPTOP. SUBSEQUENTLY, THE APPELLANT HAD REFUTED THE PAYMENTS HAVING BEEN ACTUALLY MADE BUT OFFERED THE ADDITIONAL INCOME ONLY TO AVOID LITIGATION AND TO PURCHASE PEACE. 9. THE SELLERS OF THE PROPERTY VIZ. M/S.BOMMIDALA REALTY LIMITED, PAN AABCB9703F WERE QUESTIONED AND. A STATEMENT WAS REC ORDED U/S 131 FROM SHRI BOMMIDALA VENKATA RAJA SRINIVAS, THE CHAIRMAN CUM D IRECTOR OF THE SAID COMPANY ON 25-8-2009 BY THE DOIT. IN RESPONSE TO QUESTION N O.17, SHRI BOMMIDALA VENKATA RAJA SRINIVAS HAD ACTUALLY STATED THAT NO CASH WAS RECEIVED APART FROM THE ACTUAL SALE CONSIDERATION OF ` .2.75 CRORES. 10. THE LD. AR RELIED ON THE FOLLOWING DECISIONS: MADRAS HIGH COURT IN CIT VS.K.BHUVANENDRAN AND OTHE RS- (303 ITR 235 (MAD) IN THIS DECISION, IT HAS BEEN HELD THAT WHEN THE AS SESSEE HAS RETRACTED HIS STATEMENT AND REBUTTED THE SAME WITH EVIDENCE AND THERE IS NO MATERIAL EVIDENCE FOUND, THERE CANNOT BE ANY ASSESSMENT OF SUCH INCOME. MADRAS HIGH COURT IN CIT VS P.V.KALYANASUNDARAM 282 ITR 259(MAD)- IN THIS CASE, IT HAS BEEN HELD THAT EXCESS SALE PRI CE FOR A PROPERTY WILL NOT BE THE BASIS FOR ADDITION SOLELY RELYING ON THE STATEMENT OF THE SELLER. 11. THE ID.AR SUBMITTED THAT THERE HAS BEEN NO FRE SH MATERIAL EVIDENCE FOUND IN THE SEARCH AND THE SELLER HIMSELF HAD DENIED RECEIP T OF EXCESS MONEY. THEREFORE, THE PLEA WAS THAT THIS MONEY CANNOT BE ASSESSED U/S 69B AS HAS BEEN DONE BUT SHOULD RIGHTLY BE ASSESSED ONLY UNDER THE HEAD 'OTHER SOUR CES' AS RETURNED BY THE APPELLANT. 12. I HAVE CONSIDERED THE ARGUMENTS OF THE ID.AR, DECISIONS CITED AS WELL AS THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS A FACT T HAT THERE IS NO FINDING OF ANY INVESTMENTS MADE, BUT THE AO HAD ONLY ASSESSED WHAT HAS BEEN OFFERED BY THE APPELLANT. THE APPELLANT HAD OFFERED A HIGHER AMOUN T WHICH WAS NOT DETECTED BY THE ASSESSING OFFICER. SECTION 69B CAN BE INVOKED ONLY WHEN AN EXCESS OF INVESTMENT IS DETECTED WHICH IS NOT RECORDED IN THE BOOKS OF ACCO UNTS. CONSIDERING THE FACTS AND CIRCUMSTANCES, THE SAID INCOME IS TO BE ASSESSED ON LY UNDER THE HEAD 'OTHER SOURCES' AND NOT U/S 69B AND THE ASSESSING OFFICER: IS DIRECTED ACCORDINGLY. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 8 14. ON GOING THROUGH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), WE DO NOT FIND ANY GOOD REASON TO INTERF ERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AS THE COMMISS IONER OF INCOME TAX (APPEALS) HAS RECORDED THE FINDING OF FACT THAT THE ASSESSING OFFICER HAD ONLY ASSESSED WHATEVER WAS OFFERED BY THE ASSESSEE AND SUCH SUM WAS NOT DETECTED BY THE ASSESSING OFFICER. WE ALSO SEE THAT NO MATERIAL WAS PLACED ON RECORD SUGGESTING THAT THE ASSESSEE HAS MADE PAY MENT OVER AND ABOVE THE DOCUMENTARY VALUE FOR PURCHASE OF THE PROPERTY AS ALLEGED IN THE ASSESSMENT ORDER. IN THE CIRCUMSTANCES, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THA T THE AMOUNTS OFFERED BY THE ASSESSEE VOLUNTARILY IN HIS RETURN OF INCOME SHOULD BE ASSESSED AS INCOME FROM OTHER SOURCES AND NOT BE ASSESSED AS UN EXPLAINED INVESTMENT UNDER SECTION 69B OF THE ACT. THEREFORE, WE REJECT THE GROUNDS OF REVENUE ON THIS ISSUE. 15. THE NEXT ISSUE IN THE GROUNDS OF APPEAL OF THE REVENUE IN I.T.A. NO. 716/MDS/2012 FOR THE ASSESSMENT YEAR 2008-09 IS THA T THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION MADE TOWARDS UNEXPLAINED CASH AMOUNTING TO ` .7,05,000/-. 16. THE ASSESSING OFFICER WHILE COMPLETING THE ASS ESSMENT MADE AN ADDITION OF ` .7,05,000/- REPRESENTING THE AMOUNT OF CASH SEIZED IN THE COURSE OF SEARCH IN THE RESIDENCE OF THE ASSESSEE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 9 17. THE ASSESSEE CONTENDED THAT THE CASH SEIZED RE PRESENTS BALANCE OF CASH AS PER THE BOOKS OF ACCOUNTS. AS PER THE ASSES SEE, THE BALANCE IN THE CASH BOOK AS ON THE DATE OF SEARCH WAS ` .1,03,63,675/-. THEREFORE, THE CASH SEIZED IS OUT OF THE BALANCE REPRESENTING IN THE CA SH BOOK. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND TREATED THE AMOUNT OF ` .7,05,000/- AS UNEXPLAINED CASH WHILE COMPUTING THE INCOME OF THE ASSESSEE. 18. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APP EALS) ACCEPTING THE CONTENTION OF THE ASSESSEE HELD THAT THE CASH SEIZE D IN THE COURSE OF SEARCH AT THE RESIDENCE OF THE ASSESSEE IS OUT OF CASH BAL ANCE AVAILABLE IN THE BOOKS OF ACCOUNT OF M/S. EVERBRIGHT EXPORTS, WHICH IS THE PROPRIETORY CONCERN OF THE ASSESSEE. THE EVERBRIGHT EXPORT HAD BEEN REGULARLY ASSESSED BEFORE THE ASSESSING OFFICER AT VELLORE. I T IS LOCATED AT SATYAMANGALAM ON THE CHENNAI-BANGALORE HIGHWAY AND IN THE PREMISES OF THIS CONCERN, BOOKS WERE MAINTAINED AND WERE ALSO S UBJECTED TO AUDIT UNDER SECTION 44AB. THIS CONCERN EXISTS RIGHT FROM 2004 A ND IT IS NOT AN AFTERTHOUGHT OF THE ASSESSEE LATER TO THE DATE OF S EARCH. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITION OF ` .7,05,000/- MADE UNDER SECTION 69 OF THE ACT. AGAINST THIS ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFO RE US. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 10 19. THE COUNSEL FOR THE REVENUE SUPPORTED THE ORDE R OF THE ASSESSING OFFICER. 20. THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 21. THE COMMISSIONER OF INCOME TAX (APPEALS) CONSI DERING THE SUBMISSIONS OF THE ASSESSEE AND THE REASONS FOR MAK ING THE ADDITION BY THE ASSESSING OFFICER DELETED THE ADDITION HOLDING AS U NDER: 16. I HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR AND THE FACTS AND CIRCUMSTANCES. I AM INCLINED TO ACCEPT HIS ARGUMENT S FOR THE FOLLOWING REASONS: 1. THE PROPRIETORY CONCERN BY NAME EVERBRIGHT EXPO RTS HAS BEEN IN EXISTENCE RIGHT FROM THE YEAR 2004. IT HAS BEEN FIL ING RETURNS BEFORE THE ASSESSING OFFICER AT VELLORE. IT IS NOT AN AFTER-TH OUGHT. 2. THERE WAS SUFFICIENT CASH BALANCE AVAILABLE IN THE BOOKS OF ACCOUNTS RELATING TO EVERBRIGHT EXPORTS, AND THESE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER. 3. AS THE LD. AR SUBMITS, FROM THE DAY OF SEARCH, THE APPELLANT HAS BEEN MAINTAINING THAT THE CASH AVAILABLE WAS OUT OF BANK WITHDRAWALS. THIS EXPLANATION HAS NOT BEEN DISPROVED. 4. THE APPELLANT HAS BEEN RETURNING INCOME THE MAG NITUDE OF WHICH MAKE THE POSSESSION OF ` .7,00,000/- AS IN KEEPING WITH HIS STATUS. 5. EVEN ON THE LEGAL FOOTING, AS PER THE CASES CIT ED IN PARA 1.5 ABOVE, THE AMOUNT CANNOT BE ASSESSED. THEREFORE, THE ADDITION MADE U/S 69A OF ` .7,00,000/- IS HEREBY DIRECTED TO BE DELETED. 22. AS THERE IS NO EVIDENCE ON RECORD TO CONTROVER T THE FINDING OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 11 COMMISSIONER OF INCOME TAX (APPEALS) THAT THERE IS SUFFICIENT CASH BALANCE AVAILABLE IN THE BOOKS OF ACCOUNT OF EVERBRIGHT EXP ORTS, WHICH IS A PROPRIETORY CONCERN OF THE ASSESSEE AND THE BOOKS O F ACCOUNT HAVING NOT BEEN REJECTED BY THE ASSESSING OFFICER, WE SEE NO V ALID REASON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. CROSS OBJECTIONS 23. THE FIRST ISSUE IN THE GROUNDS OF CROSS OBJECT IONS FILED BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN SUSTAINING THE DE- NOVO ASSESSMENT MADE UNDER SECTION 153(A) WITHO UT CONFINING TO THE SEARCH MATERIALS RELATED TO THE YEAR. 24. DURING THE COURSE OF HEARING, THE COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS ISSUE HAS BEEN DECIDED BY THE CO ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HARVEY HEART HOSPITALS LTD. V. ACIT IN I.T.A. NO. 1842/MDS/2008 FOR THE ASSESSMENT YEAR 2005-06 BY OR DER DATED 30.01.2009 AGAINST THE ASSESSEE. RESPECTFULLY FOLLOWING THE OR DER OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HARVEY HEART HOSPITALS LTD. V. ACIT (SUPRA), WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE PROVISIONS OF SECTION 153A TO 1 53C PROVIDE FOR FRESH ASSESSMENTS FOR SIX YEARS PRECEDING THE YEAR OF SEA RCH AND ASSESSMENTS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 12 NEED NOT BE CONFINED TO ISSUES BASED ON THE MATERIA LS FOUND DURING THE COURSE OF SEARCH. 25. THE OTHER ISSUE IN THE CROSS OBJECTIONS OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) OMITTED TO DEC IDE THE GROUND REGARDING DENIAL OF LIABILITY TO INTEREST UNDER SEC TION 234B OF THE ACT. SINCE LEVY OF INTEREST UNDER SECTION 234B IS ONLY CONSEQU ENTIAL, WE DO NOT FIND FORCE IN THE GROUND TAKEN BY THE ASSESSEE. HENCE, T HE GROUNDS OF CROSS OBJECTION ON THIS ISSUE ARE REJECTED. 26. THE OTHER COMMON ISSUE RAISED IN THE CROSS OBJ ECTIONS OF THE ASSESSEE IN C.O. NOS. 78 AND 79/MDS/2012 FOR THE AS SESSMENT YEARS 2007- 08 AND 2008-09 IS THAT THE COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN NOT CONSIDERING THE ADDITIONAL GROUND FOR CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT. 27. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CONSIDERED THE ADDITIO NAL GROUND RAISED BY THE ASSESSEE ON DEDUCTION ALLOWABLE UNDER SECTION 1 0B OF THE ACT. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E COULD NOT FILE THE RETURNS IN TIME DUE TO SEARCH PROCEEDINGS AND THERE FORE, THE ASSESSEE COULD NOT CLAIM THE DEDUCTION UNDER SECTION 10B BY FILING THE RETURNS IN TIME. THE COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE DE CISION OF THE DELHI BENCH I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 13 OF ITAT IN THE CASE OF ACIT VS. DHIR GLOBAL INDUSTR IAL (P) LTD. [43 SOT 640] SUBMITS THAT AS THERE WAS GENUINE AND VALID REASON FOR THE DELAY IN FILING THE RETURNS, IT IS NOT JUSTIFIED IN REJECTING THE ASSES SEES CLAIM FOR DEDUCTION UNDER SECTION 10B. HE SUBMITS THAT IN THE CASE OF G ENUINE HARDSHIP, RELIEF CAN BE GRANTED BY THE APPELLATE AUTHORITY. THE COMM ISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER STATED THAT THE ADDITIONAL G ROUNDS OF APPEAL ARE NOT CONSIDERED AS THE ASSESSEE HAD NOT CLAIMED ANY DEDU CTION AT ALL IN THE RETURN FILED. 28. WHEN THE ASSESSEE IS MAKING A CLAIM FOR THE FI RST TIME BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) IT IS NOT PROP ER AND CORRECT IN REJECTING THE ASSESSEES CLAIM ON THE GROUND THAT T HERE IS NO CLAIM MADE IN THE RETURN OF INCOME WHEN SUCH CLAIM IS OTHERWISE A LLOWABLE. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE [53 ITR 225], THE POWER OF APPELLATE ASSISTANT COMMISSIONER ARE CO-TERMINUS WITH THAT OF THE INCOME TAX OFFICER, HE CAN DO WHAT ITO CAN DO AND DIRECT HIM TO DO WHAT THE ITO FAILED TO DO. THEREFORE, IN OUR VIE W, THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE ENTERTAINED THE CL AIM OF THE ASSESSEE ON MERITS WITHOUT REJECTING THE ADDITIONAL GROUND STAT ING THAT NO CLAIM IS MADE IN THE RETURNS. THEREFORE, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR CONSIDERIN G AFRESH ON MERITS IN ACCORDANCE WITH LAW. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 7 77 710 10 10 10 TO 7 TO 7TO 7 TO 716 1616 16/M/ /M/ /M/ /M/12 & 12 & 12 & 12 & C.O.NOS. C.O.NOS. C.O.NOS. C.O.NOS. 73 7373 73 TO TO TO TO 79 7979 79/M/12 /M/12 /M/12 /M/12 14 29. IN THE RESULT, ALL THE APPEALS OF THE DEPARTME NT IN I.T.A. NOS. 710 TO 716/MDS/2012 AS WELL AS CROSS OBJECTIONS OF THE ASS ESSEE IN C.O. NOS. 73 TO 77/MDS/2012 ARE DISMISSED WHEREAS, C.O. NOS. 78 AND 79/MDS/2012 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 23 RD JULY, 2012 AT CHENNAI. SD/ - SD/ - (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 23.07.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.