ACIT, CHENNAI V. Shri Rakesh Sarin, CHENNAI

ITA 866/CHNY/2011

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4113 (ITAT-CHENNAI)
• Duration Of Justice: 7 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-01-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SRINIVASA RAO
• Assessee Lawyers: K RAVI
• Keywords: Block assessment; Bogus loan; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.864 TO 867/CHNY/2011, 99,100/CHNY/2013 & 15/CHNY/2015 [ [ / ASSESSMENT YEARS: 2004-05 TO 2010-11 THE ACIT, CENTRAL CIRCLE II(1), CHENNAI -34. VS SHRI RAKESH SARIN, NO.5-E, MOOKAMBIGAI COMPLEX, LADY DESIKA ROAD, CHENNAI 600 004. PAN: ADXPR7428R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : DR.SRINIVASA RAO, CIT / RESPONDENT BY : SHRI K.RAVI, ADVOCATE /DATE OF HEARING : 29.01.2019 /DATE OF PRONOUNCEMENT : 12.03.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI, DATED 20.01.2011 IN ITA NOS.325/06-07, 96/07-08, 56/08-09 & 180/09-10 FOR THE ASSESSMENT YEARS 2004-05 TO 2007-08 RESPECTIVELY AND ORDER DATED 31.10.2012 IN ITA NO.269/10-11/A.II & 125/11-12/A-II FOR THE ASSESSMENT YEARS 2008- 09 & 2009-10 RESPECTIVELY AND ORDER DATED 29.09.2014 IN ITA NO. 2 ITA NOS.864 TO 867/CHNY/2011, 99 & 100/CHNY/2013 & 15/CHNY/2015 309/13-14 FOR THE ASSESSMENT YEAR 2010-11, ALL PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED THE SEVERAL IDENTICAL GROUNDS IN HIS APPEALS FOR THE ASSESSMENT YEAR 2004-05 TO 2009-10 HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE LD.AO TOWARDS INTEREST ON ADVANCES & DEPOSITS AMOUNTING TO RS.4,00,34,793/- FOR EACH FOR THE ASSESSMENT YEARS 2004-05 TO 2009-10. 3. THE ASSESSEE HAS RAISED THE FOLLOWING THREE GROUNDS FOR THE ASSESSMENT YEAR 2010-11:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS CORRECT IN STATING THAT THE UNACCOUNTED LOANS / ADVANCES / INVESTMENTS ETC MADE IN THE BLOCK ASSESSMENT CANNOT SURVIVE BASED ON HIS EARLIERORDER. 2. WHETHER THE LEARNED CIT(A) IS CORRECT IN NOT APPRECIATING THE EVIDENCES FOUND DURING THE COURSE OF SEARCH FOR THE UNACCOUNTED ADVANCES AND ALSO IGNORING IN THE CASE OF THE LOAN GIVEN TO M/S. QUEST FILMS OF RS.1,60,00,000/- EVEN THOUGH A LETTER WAS FOUND ADDRESSED TO THE ASSESSEE FOR THE DELAY IN PAYMENT OF INTEREST RECEIVED BY IT. 3. WHETHER THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN RELYING ON THE DECISION OF THE ITAT IN THE APPEAL RELATING TO THE BLOCK ASSESSMENT WHILE ARRIVING AT HIS DECISION WITHOUT CONSIDERING THAT THE HONBLE MADRAS HIGH COURT HAS SET ASIDE THE SAID ORDER OF ITAT AND RESTORED THE APPEAL TO ITAT TO CONSIDER THE ISSUE ON MERITS? 3 ITA NOS.864 TO 867/CHNY/2011, 99 & 100/CHNY/2013 & 15/CHNY/2015 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF FILM FINANCING. A SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 27.03.2003 AND THEREAFTER BLOCK ASSESSMENT WAS COMPLETED U/S.153BC R.W.S.143(3) ON 30.06.2005 FOR THE BLOCK ASSESSMENT YEARS 1997- 1998 TO 2002-03 AND PART OF 2003-04 WHEREIN AMONGST CERTAIN OTHER ADDITIONS, ADDITION WERE ALSO MADE IN THE HANDS OF THE ASSESSEE TOWARDS UNACCOUNTED ADVANCES AND DEPOSITS. THEREAFTER FOR THE SUBSEQUENT ASSESSMENT YEARS FROM 2004-05 TO 2010-11, ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT WHEREIN THE LD.AO MADE ADDITIONS BY ESTIMATING THE INTEREST INCOME ON ADVANCES @ 24% PER ANNUM AND ON DEPOSIT 9% PER ANNUM BECAUSE THE ASSESSEE HAD NOT ACCOUNTED THE SAME IN HIS BOOKS OF ACCOUNTS. ACCORDINGLY THE FOLLOWING ADDITIONS FOR EACH OF THE ASSESSMENT YEAR WERE MADE IN THE HANDS OF THE ASSESSEE:- 'PRONOTES ADVANCES (24% OF RS.5,59, 98,700) RS.1,34,39,688 PRONOTES ADVANCES (24% OF RS.1,97,00,000) RS. 47,28,000 ADVANCES FOUND IN LAP TOP (24% OF RS.98,25,000) RS. 23,58,000 ADVANCES IN THE NAME OF RELATIVES (24% OF RS.6,32,80,053) RS.1,51,87,212 AMOUNT ADVANCED TO QUEST FILMS (24% OF RS.1,60,00,000) RS. 38,40,000 AMOUNT ADVANCED TO VAIDHI SUBRAMANIAM (24% OF RS.1,60,000) RS. 38,400 AMOUNT ADVANCED TO RANADS TOURS AND TRAVELS (24% OF RS.2,00,000) RS. 48,000 AMOUNT ADVANCED TO SHIBI TRAVELS P. LTD (24% OF RS.2,00,995) RS. 43,240 4 ITA NOS.864 TO 867/CHNY/2011, 99 & 100/CHNY/2013 & 15/CHNY/2015 DEPOSITS IN THE NAME OF BHUSAN ARORA (9% OF RS.32,87,751) RS. 2,95,898 FIXED DEPOSITS WITH ANDHRA BANK (9% OF RS.2,70,610) RS. 24,355 FIXED DEPOSITS IN THE NAME OF RELATIVES (9% OF RS.3,00,000) RS. 27,000 ========= TOTAL RS.4,00,34,793 ========== THUS THE LD.AO MADE ADDITION TOWARDS INTEREST ON ADVANCES AND DEPOSITS AGGREGATING TO RS.4,00,34,793/- FOR EACH OF THE ASSESSMENT YEAR 2004-05 TO 2009-10. ON APPEAL THE LD.CIT(A) DELETED THE ADDITION BECAUSE IN THE BLOCK ASSESSMENT U/S.158BC OF THE ACT, THE LD.CIT(A) VIDE ORDER DATED 04.01.2007 IN ITA NO.141/2005-06 HAD DELETED THE ENTIRE ADDITION MADE TOWARDS ADVANCES AND DEPOSITS. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. SINCE THIS BENCH OF THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD.CIT(A) WHO HAD DELETED THE ENTIRE ADDITION WITH RESPECT TO ADVANCES AND DEPOSITS IN THE BLOCK ASSESSMENT PERIOD 1999 2000 TO 2002-03 AND PART OF 2003-04 VIDE ORDER DATED 11/03/2019 IN ITA NO.66/CHNY/2007, THERE IS NO SCOPE FOR ESTIMATING THE INTEREST INCOME TOWARDS SUCH ADVANCES AND DEPOSIT WHICH IS HELD NOT TO BE IN EXISTENCE. THEREFORE WE HEREBY DIRECT THE LD.AO TO 5 ITA NOS.864 TO 867/CHNY/2011, 99 & 100/CHNY/2013 & 15/CHNY/2015 DELETE THE ADDITION MADE BY ESTIMATING THE INTEREST INCOME ON THOSE ADVANCES AND DEPOSITS FOR ALL THE RELEVANT ASSESSMENT YEARS IN APPEAL AND THEREBY CONFIRM THE ORDER OF THE LD.CIT(A) ON THE ISSUE. THUS THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2004-05 TO 2009-10. 6. FOR THE ASSESSMENT YEAR 2010-11, THOUGH THE REVENUE HAS RAISED THREE GROUNDS, THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD.CIT(A) FOR HOLDING THAT UNACCOUNTED LOANS / ADVANCES / INVESTMENTS ETC., MADE IN THE BLOCK ASSESSMENT CANOT NOT SURVIVE BASED ON THE EARLIER ORDER OF THE LD.CIT(A). HOWEVER SINCE THIS BENCH OF THE TRIBUNAL HAS UPHELD THE ORDER OF THE LD.CIT(A) WHO HAD DELETED THE ENTIRE ADDITION WITH RESPECT TO ADVANCES AND DEPOSITS, ETC., MADE IN THE BLOCK ASSESSMENT PERIOD 1999 2000 TO 2002-03 AND PART OF 2003- 04 VIDE ORDER DATED 11/03/2019 IN ITA NO.66/CHNY/2007, THE GROUND RAISED BY THE REVENUE IS DEVOID OF MERITS. 6 ITA NOS.864 TO 867/CHNY/2011, 99 & 100/CHNY/2013 & 15/CHNY/2015 6.1 IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THE 12 TH MARCH, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 12 TH MARCH, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. [ /GF