V.Artanari, Salem V. ACIT, Salem

ITA 830/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68852 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DAS GUPTA IRS
• Assessee Lawyers: T VASUDEVAN
• Keywords: Reopening of assessment; Reason to believe
• Section: 143(3); 147; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 830(MDS)/2013 ASSESSMENT YEAR : 2005-06 SHRI V. ARTHANARI, 34-J, NARAYANA NAGAR, SALEM 636 015. PAN : AGRPA 2322 G V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, SALEM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T. VASU DEVAN, ADVOCATE RESPONDENT BY : SHRI S. DAS GUP TA, IRS, JCIT DATE OF HEARING : 27 TH NOVEMBER, 2013 DATE OF PRONOUNCEMENT : 27 TH NOVEMBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO ASSE SSMENT YEAR 2005-06. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) AT SALEM DATED 28.2.2013 AND ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SE CTION 143(3) R/W SECTION 147 OF THE INCOME-TAX ACT, 1961. 2 I.T.A. NO. 830/MDS/13 2. THE ASSESSEE IS ASSESSED TO INCOME-TAX IN THE ST ATUS OF INDIVIDUAL. HE DERIVES SHARE INCOME FROM HOTEL K URINCHI THANGAM. HE ALSO DERIVES INCOME FROM REAL ESTATE B ROKERAGE AND CAPITAL GAINS. THE ASSESSEE FILED RETURN FOR THE I MPUGNED ASSESSMENT YEAR ADMITTING INCOME OF ` 65,600/- AND LONG TERM CAPITAL GAINS OF ` 1,09,887/- THE RETURN WAS INITIALLY PROCESSED UNDER SECTION 143(1). 3. THEREAFTER, A NOTICE UNDER SECTION 148 WAS ISSUE D BY THE ASSESSING AUTHORITY ON 20.11.2006 FOR THE REASON TH AT ASSESSEE WAS MAINTAINING BANK ACCOUNTS WITH LAKSHMI VILAS BANK ( LVB) AT DIFFERENT BRANCHES IN SALEM AND THOSE ACCOUNTS WERE NOT REFLECTED IN THE ACCOUNTS OR RETURNS OF THE ASSESSEE PLACED B EFORE THE DEPARTMENT. IN RESPONSE TO THE SAID NOTICE, THE AS SESSEE REPEATED THE SAME INCOME ORIGINALLY FILED, AND ALSO SOUGHT F OR THE REASONS WHICH MADE THE ASSESSING OFFICER TO REOPEN THE ASSE SSMENT. THE ASSESSING OFFICER FURNISHED THE REASON BEING NON-DI SCLOSURE OF BANK ACCOUNTS MAINTAINED BY THE ASSESSEE IN DIFFERE NT BRANCHES OF LVB AT SALEM. THE ASSESSEE RAISED A NUMBER OF OBJE CTIONS, BOTH LEGAL AND FACTUAL, AGAINST THE REOPENING. ALL THOS E OBJECTIONS WERE OVERRULED BY THE ASSESSING OFFICER AND ASSESSMENT W AS COMPLETED BY ADDING UP THE PEAK AMOUNT OF CREDITS REFLECTED I N THE ACCOUNTS 3 I.T.A. NO. 830/MDS/13 MAINTAINED BY THE ASSESSEE WITH LVB IN TWO CURRENT ACCOUNTS AND IN TWO SB ACCOUNTS. AN INTEREST OF ` 43,553/- WAS ALSO ADDED TOWARDS THE INCOME. THUS, THE ASSESSING OFFICER CO MPLETED THE INCOME ESCAPING ASSESSMENT AFTER MAKING THE ADDITIO N OF ` 45,71,849/-. THE INCOME ESCAPING ASSESSMENT WAS TA KEN IN FIRST APPEAL. THE COMMISSIONER OF INCOME TAX (APPEALS), AFTER CONSIDERING THE WHOLE ISSUE IN A VERY DETAILED MANN ER, DISMISSED THE APPEAL FILED BY THE ASSESSEE THROUGH HIS ORDER DATED 28 TH FEBRUARY, 2013. THE ASSESSEE IS AGGRIEVED AND THER EFORE, THE SECOND APPEAL BEFORE THE TRIBUNAL. 4. THE GROUNDS RAISED BY THE ASSESSEE IN THE PRESEN T APPEAL READ AS BELOW:- (2) THE CIT(A) ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT UNDER SEC. 147 OF THE ACT. (3) THE CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO NON-DISCLOSURE OF MATERIAL FACTS IN SO FAR AS THE BANK ACCOUNT WAS CONCERNED, SINCE IT WAS DISCLOSED IN THE HUF FILE AND HENCE THERE WAS NO REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. (4) THE CIT(A) FURTHER FAILED TO APPRECIATE THAT AS THE BANK ACCOUNT WAS DISCLOSED IN THE HUF FILE, THE BASIS OF ISSUING NOTICE UNDER SEC. 148 AND THE CONSEQUENT PROCEEDINGS CULMINATING IN THE ORDER OF THE OFFICER ARE UNTENABLE IN LAW. 4 I.T.A. NO. 830/MDS/13 (5) THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE RETURNS IN THE HANDS OF THE ARTHANARI (HUF) WAS FILED VOLUNTARILY ON 31.3.07 AND IS MUCH EARLIER TO 19/11/07 WHEN THE ASSESSEE WAS COMMUNICATED THE REASONS RECORDED FOR REOPENING OF ASSESSMENT AND HENCE UPHOLDING THE REOPENING OF ASSESSMENT WAS UNSUSTAINABLE IN LAW. (6) THE CIT(A), IN ANY EVENT, OUGHT TO HAVE CONSIDERED THE CONTENTIONS OF THE ASSESSEE ON THE REOPENING OF ASSESSMENT IN THE PROPER PERSPECTIVE AND HELD THAT THE REOPENING OF ASSESSMENT WAS BAD IN LAW. 5. WE HEARD SHRI T. VASUDEVAN, ADVOCATE, APPEARING FOR THE ASSESSEE AND SHRI S. DAS GUPTA, THE LEARNED JOINT C OMMISSIONER OF INCOME TAX, APPEARING FOR THE REVENUE. 6. THE ARGUMENTS ADVANCED BY THE ASSESSEE ARE VERY MUCH REFLECTED IN THE DETAILED GROUNDS THEMSELVES. THE MAIN POINT THRUSTED UPON BY THE COUNSEL APPEARING FOR THE ASSE SSEE IS THAT THE BANK ACCOUNTS BELONGED TO ASSESSEES HUF AND THE HU F HAS FILED ITS RETURNS REFLECTING ALL THOSE BANK ACCOUNTS AND AS SUCH, THERE IS NO BASIS FOR IMPUTING THOSE BANK ACCOUNTS TO THE IN DIVIDUAL HANDS OF THE ASSESSEE. 7. ON GOING THROUGH THE ENTIRE FACTS OF THE CASE, W E FIND THAT THIS CRUCIAL ARGUMENT ADVANCED BY THE ASSESSEE IS O NLY AN ARGUMENT FOR THE SAKE OF CONVENIENCE AND DOES NOT C ONVEY ANY MEANINGFUL PROPOSITION. IN ASSESSEES CASE, THE NO TICE UNDER 5 I.T.A. NO. 830/MDS/13 SECTION 148 WAS ISSUED ON 20.11.2006. IT IS A PROV EN FACT THAT THE ASSESSEE HAD MAINTAINED ACCOUNTS WITH LVB AT DIFFER ENT BRANCHES IN SALEM AND THOSE BANK ACCOUNTS WERE NOT REFLECTED IN THE ACCOUNTS AND THEY WERE NOT DISCLOSED IN THE RETURNS FILED BEFORE THE ASSESSING AUTHORITY. IT IS ON THE BASIS OF NON-DIS CLOSURE THAT NOTICE UNDER SECTION 148 WAS ISSUED BY THE ASSESSING AUTHO RITY. 8. THE RETURNS WERE FILED BY HUF ON 31 ST MARCH, 2007, WELL AFTER NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 20.11.2006. IT IS VERY INTERESTING TO NOTE THAT TH E HUF HAS FILED RETURNS NOT ONLY FOR THE IMPUGNED ASSESSMENT YEAR 2 005-06, BUT ALSO FOR THE EARLIER YEARS, BEGINNING FROM ASSESSME NT YEAR 2001-02. IN OTHER WORDS, AS BROUGHT OUT BY THE ASSESSING OFF ICER, THE HUF FILED RETURNS IN ONE GO FOR ASSESSMENT YEARS 2001-0 2 TO 2005-06 ON 31.3.2007, ONLY AFTER THE ISSUE OF NOTICE UNDER SEC TION 148 ON 20.11.2006. FROM THE CONDUCT OF THE ASSESSEE AND T HE HUF, IT IS VERY CLEAR THAT THE HUF FILED ITS RETURNS ONLY TO E ASE OUT THE ASSESSEE FROM THE BURDEN OF EXPLAINING UNDISCLOSED BANK ACCOUNTS MAINTAINED WITH LVB AT SALEM. IF NO NOTICE UNDER S ECTION 148 WAS ISSUED, THE HUF WOULD NOT HAVE FILED THE RETURNS IN ONE GO FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06. THIS IS ONLY A PLOY ATTEMPTED BY THE ASSESSEE TO DEFEAT THE NOTICE UNDE R SECTION 148, 6 I.T.A. NO. 830/MDS/13 ISSUED BY THE ASSESSING OFFICER. THIS ARGUMENT A DVANCED BY THE ADVOCATE IS NOT CREDIBLE AND NOT CONNECTED GROUND R AISED BY THE ASSESSEE AS INCREDIBLE. 9. NOW REGARDING THE HUF, IT IS TO BE SEEN THAT NO SUBSTANTIVE ASSET OR INCOME IS REFLECTED IN THE HANDS OF THE HU F. 10. IN FACT, THE GROUNDS AND ISSUES RAISED IN THE P RESENT CASE WERE CONSIDERED BY ITAT, CHENNAI BENCH, IN ASSESSEE 'S OWN CASE IN I.T.A. NOS. 945/MDS/2009, 1458, 1459 & 1460/MDS/ 2009, THROUGH ITS COMMON ORDER DATED 9.7.2010. WHILE DEALING WIT H ASSESSMENT YEARS 2003-04 AND 2004-05, THE TRIBUNAL HAS CONSIDE RED THE ISSUES OF REOPENING OF ASSESSMENTS AS WELL AS THE EXISTENC E OF HUF SO AS TO OWN UP THE UNDISCLOSED BANK ACCOUNTS WITH LVB BR ANCHES AT SALEM. THE TRIBUNAL FOUND THAT THE NOTICE UNDER SE CTION 148 WAS ISSUED PROPERLY AND THEREFORE, THE INCOME ESCAPING ASSESSMENT WAS JUSTIFIED. REGARDING THE HUF, THE TRIBUNAL OBS ERVED THAT THE ONLY RELEVANT DOCUMENT TO SHOW THE EXISTENCE OF HUF WAS A PARTITION DEED DATED 20 TH SEPTEMBER, 1954. A HOUSE PROPERTY HAVING A VALUE OF ` 375/- , WAS GIVEN TO SHRI V. ARTHANARI MUDALIAR ALONGWITH LIABILITY OF ` 590/-. THE TRIBUNAL HAS OBSERVED THAT NO CASH OR BUSINESS ASSETS HAVE BEEN RECEIVED BY THE A SSESSEE FROM THE HUF, AT THE TIME OF PARTITION. THE TRIBUNAL AL SO FOUND THAT IN 7 I.T.A. NO. 830/MDS/13 ADDITION TO A PRONOTE LOAN OF ` 1391, THE FAMILY AT THE TIME OF PARTITION DID NOT HAVE ANY LOAN OR ASSET. IN VIEW OF THESE FACTUAL BACKGROUNDS, THE TRIBUNAL HELD THAT THE ARGUMENT OF THE ASSESSEE THAT THE UNDISCLOSED BANK ACCOUNTS BELONGED TO HUF DID NOT HAVE ANY FORCE AT ALL. BOTH THE ISSUES WERE DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE. IT IS AFTER CONSIDERING THE SAID ORDER OF THE TRIBUNAL THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS DISMISSED THE FIRST APPEAL FILED BY THE ASSESSEE IN THE PRESENT CASE. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE BELATED ARGUMENT OF HUF IS ONLY A CONVENIENT PLOY A TTEMPTED BY THE ASSESSEE TO DEFEAT THE ISSUE OF NOTICE UNDER SECTIO N 148 AND BY ANY STRETCH OF IMAGINATION, IT IS NOT POSSIBLE TO H OLD THAT THOSE UNDISCLOSED BANK ACCOUNTS BELONGED TO THE HUF, WHIC H WAS PARTITIONED WAY BACK IN 1954. IT IS EQUALLY TRUE T HAT ASSESSEE HAS NOT DISCLOSED ANY OF THESE ACCOUNTS. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHOLD THE INCOME ESC APING ASSESSMENT ORDER CHALLENGED IN THIS APPEAL. THE OR DER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONFIRM ED. 12. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 8 I.T.A. NO. 830/MDS/13 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 27 TH OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 27 TH NOVEMBER, 2013. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT, SALEM 4. CIT(A), SA LEM 5. DR 6. GF.