Tax Recovery Officer (Central), Nashik V. Shri Sanjay Changdeorao Holkar, Nashik

ITA 905/PUN/2012

• Counselvise Citation: 90524514 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.904 TO 906/PN/2012 ASSESSMENT YEARS: 2004-05, 2007-08 & 2008-09 THE TAX RECOVERY OFFICER (CENTRAL), NASHIK . APPELLANT VS. SHRI SANJAY CHANGDEORAO HOLKAR 1, GOVIND APARTMENT, N.D. PATEL ROAD, OPP. TELEPHONE EXCHANGE, NASHIK 1. . RESPONDENT PAN: AACPH5846D APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI ABHAY AVCHAT DATE OF HEARING : 13-01-2015 DATE OF PRONOUNCEMENT : 21-01-2015 ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF APPEALS FILED BY THE REVENUE ARE AGAINST SE PARATE ORDERS OF CIT(A)-I, NASHIK, ALL DATED 17.02.2012 RELATING TO DIFFERENT ASSESSMENT YEARS 2004-05, 2007-08 & 2008-09 PASSED U NDER SECTION 153A R.W.S. 143(3) OF THE INCOME TAX ACT, 1961. 2. ALL THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS AND ISSUES IN ALL THE A PPEALS ARE SIMILAR. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS IN I TA NO.904/PN/2012 TO ADJUDICATE THE ISSUE. ITA NOS.904 TO 906/PN/2012 SHRI SANJAY CHANGDEORAO HOLKAR 2 3. THE REVENUE IN ITA NO.904/PN/2012 HAS RAISED THE FOL LOWING GROUNDS OF APPEAL, WHICH ARE SIMILAR IN OTHER APPEALS ALSO, E XCEPT AMOUNTS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.8.25 LAC S, WHICH WAS MADE ON ACCOUNT OF UNDISCLOSED FDRS FOUND DURING THE SEARCH AND WHICH WAS ADMITTED UNDER SECTION 132(4) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2.50 LACS , WHICH WAS MADE ON ACCOUNT OF INTEREST ON UNDISCLOSED FDRS FOUND DURING THE SEARCH AND WHICH WAS ADMITTED UNDER SECTI ON 132(4) OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) HAS ERRED IN ADMITTING THE EXISTENCE OF HUF, WH EN THE ASSESSEE HAD OBTAINED THE PAN FOR HUF ON 28.03.2008 A ND HAD FILED RETURNS OF INCOME OF THE HUF ON 08.12.2009 I.E. MU CH AFTER THE DATE OF SEARCH ON 12.03.2008. 4. THE ORDER OF THE LEARNED CIT(A)-I, NASHIK MAY BE VACA TED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 4. THE REVENUE IN THE PRESENT SET OF APPEALS IS AGGRIE VED BY THE ORDER OF CIT(A) IN DELETING THE UNDISCLOSED INCOME ASSESSED IN THE HANDS OF THE ASSESSEE FROM YEAR TO YEAR ON ACCOUNT OF FDRS FOUND D URING THE SEARCH, WHICH WERE ADMITTED UNDER SECTION 132(4) OF THE ACT. THE REVENUE IS ALSO AGGRIEVED BY THE DELETION OF ADDITION MADE ON ACCOUN T OF INTEREST ON SUCH UNDISCLOSED FDRS. 5. THE BRIEF FACTS OF THE CASE ARE THAT, BOTH THE BUSINES S AND RESIDENTIAL PREMISES OF THE ASSESSEE WERE SEARCHED UNDER SECTION 132 OF THE ACT ON 12.03.2008, DURING THE COURSE OF SEARCH CARRIE D OUT ON THE PAWAR-HOLKAR GROUP OF CASES AT NASHIK. DURING THE COURS E OF SEARCH, FDRS KEPT WITH MALOJI RAJE CO-OPERATIVE BANK LTD., PHALTA N WERE FOUND AND THE ASSESSEE WAS CONFRONTED TO EXPLAIN THE SOURCE OF INVESTMENT ITA NOS.904 TO 906/PN/2012 SHRI SANJAY CHANGDEORAO HOLKAR 3 MADE IN THE FDRS TO THE EXTENT OF RS.61,54,174/- AND RS .22,66,680/-. IN REPLY, THE ASSESSEE EXPLAINED THAT THE INVESTMENT IN THE FDRS WAS MADE OUT OF HIS AGRICULTURAL INCOME AND INTEREST ON THE SA ME HAD REMAINED TO BE DECLARED. THE ASSESSEE WAS AGAIN CONFRO NTED WITH THE PROVISIONS OF SECTION 132(4) OF THE ACT AND IN REPLY, THE AS SESSEE STATED THAT IN ORDER TO PURCHASE PEACE OF MIND, WE ON BEHALF OF HIMSELF AND HIS FAMILY, OFFERED INCOME OF RS.50 LAKHS AS AN ADDITIONAL INCOME. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE A CT. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING SAME INCOME A S IN THE ORIGINAL RETURN OF INCOME. THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDINGS WAS CONFRONTED AS TO WHY THE ADDITIONAL INCOM E OFFERED DURING THE COURSE OF SEARCH, WAS NOT REFLECTED IN THE RET URN OF INCOME. IN REPLY, THE ASSESSEE STATED THAT THE SAID ASSETS RELATE S TO HIS HUF AND THE INVESTMENT AS WELL AS THE INCOME BELONGS TO HUF. HE ALSO FURNISHED THE COPIES OF RETURNS OF INCOME IN HUF CAPACITY, WHICH WERE FILED ON 08.12.2009 ALONG WITH CASH FLOW STATEMENT SHOWING WORKING O F ADDITIONAL INCOME OF RS.49,68,202/-. THE ASSESSEE HAD OFFERE D INTEREST OF RS.13,43,022/- AND PRINCIPAL INVESTMENT OF RS.36,25,000/-. T HE ASSESSING OFFICER REJECTED THE SAID EXPLANATION OF THE ASS ESSEE THAT THE FDRS WERE GENERATED OUT OF AGRICULTURAL INCOME BELONGING T O THE HUF AND WORKED OUT THE ADDITION IN THE HANDS OF THE ASSESSE E FOR ASSESSMENT YEAR 2004-05 AND SUM OF RS.2,50,000/- WAS ADDED AS INCOM E OF THE ASSESSEE ON ACCOUNT OF INTEREST ON THE FDRS. FURTHER, SINCE THE A SSESSEE HAD SHOWN ADDITIONAL INCOME ON HUF RETURN AT RS.8,25,000/- , THE SAME WAS CONSIDERED IN THE HANDS OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE CIT(A) DELETED THE ADDITION FOLLOWING THE SIMILAR DELETION BEING MADE IN ASSESSMENT YEAR 2002-03. ITA NOS.904 TO 906/PN/2012 SHRI SANJAY CHANGDEORAO HOLKAR 4 7. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER PASSE D BY THE CIT(A). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE TOOK US THROUGH THE FACTS OF THE CASE AND POINTED OUT THAT DU RING THE COURSE OF SEARCH OPERATION, THE ASSESSEE HAD EXPLAINED THAT THE S OURCE OF FDRS WAS THE AGRICULTURAL INCOME AND ALSO POINTED OUT THAT THE INTEREST ON FDRS WAS NOT OFFERED TO TAX. THE ASSESSEE OFFERED RS.50 LAKHS AS AN ADDITIONAL INCOME IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. HOWEVER, NO SUCH DISCLOSURE WAS MADE IN THE RETURN OF INCOME FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE AC T. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE SEARCH ON THE PREMISES OF THE ASSESSEE WAS C ARRIED OUT ON 12.03.2008 AND THE PAN NUMBER OF HUF WAS TAKEN ON 28.03 .2008. FURTHER, THE ASSESSEE CLAIMS THAT IT HAD DECLARED THE SA ID RS.50 LAKHS IN THE HANDS OF HUF, WHICH WAS NOT FILING ANY RETURN OF INCOME TILL THE DATE OF SEARCH. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE ALSO POINTED OUT THAT THOUGH THE CIT(A) HAD DELETED THE SAID ADDITION IN ASSESSMENT YEAR 2002-03, BUT BECAUSE OF THE LOW TAX EFFE CT, NO APPEAL WAS FILED IN THAT YEAR. 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE ON THE OTHER HAND, POINTED OUT THAT THE ISSUE HAS BEEN ELABORA TELY CONSIDERED BY THE CIT(A) IN ASSESSMENT YEAR 2002-03 IN WHICH, THE CI T(A) VIDE PARA 4.3.1 HAD NOTED THAT, THOUGH THE ASSESSING OFFICER HAD RE FUSED TO ACCEPT INTEREST INCOME AND AGRICULTURAL INCOME BELONGED TO HUF, W HO IN THE ASSESSMENT ORDER RELATING TO ASSESSMENT YEAR 2009-10 , HAD ACCEPTED THE AGRICULTURAL INCOME AND INTEREST INCOME IN THE HANDS OF HUF AND THE COPY OF THE ASSESSMENT ORDER WAS FILED ON RECORD. IT W AS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE THAT THE ITA NOS.904 TO 906/PN/2012 SHRI SANJAY CHANGDEORAO HOLKAR 5 SAID INVESTMENT IN FDRS AND INTEREST INCOME WERE DULY D ECLARED FROM YEAR TO YEAR IN THE HANDS OF HUF OF THE ASSESSEE. PURS UANT TO THE SEARCH, THE COPIES OF COMPUTATION OF INCOME FOR THE RELEVA NT ASSESSMENT YEARS WERE PLACED ON RECORD BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. DURING THE COURSE OF SEARCH PROCEEDINGS CARRIED OUT ON 12.03.2008 ON THE PAWAR-HOLKAR GROUP OF CASES AT NASHI, THE PREMISES O F THE ASSESSEE WAS ALSO SEARCHED. THE ASSESSEE WAS FOUND TO BE IN PO SSESSION OF CERTAIN FDRS WITH MALOJI RAJE CO-OPERATIVE BANK LTD., PHALT AN. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH PROCEE DINGS, THE ASSESSEE ADMITTED THAT THE INVESTMENT IN THE SAID FDRS WAS OUT OF THE AGRICULTURAL INCOME OF FAMILY AND THE INTEREST ON THE SAME WAS NOT DECLARED FROM YEAR TO YEAR. HOWEVER, WHEN CONFRONTED WIT H THE PROVISIONS OF SECTION 132(4) OF THE ACT, THE ASSESSEE OFFERED AN ADDITIONAL INCOME OF RS.50 LAKHS TO BE DECLARED ON BEHALF OF HIMSELF AND HIS FAMILY MEMBERS. PURSUANT TO THE SAID DECLARATION, THE ASSESSE E CLAIMS THAT THE SAID SUM OF RS.50 LAKHS WAS OFFERED BY THE ASSESSEE IN TH E HANDS OF HIS HUF AS THE AGRICULTURAL LAND BELONGS TO HIS UNDIVIDED FAMILY AND THE SOURCE OF THE INVESTMENT IN THE FDRS BEING AGRICULTURAL INC OME, THE ADDITIONAL INCOME ON ACCOUNT OF FDRS AND INTEREST THEREON , WAS DECLARED FROM TIME TO TIME IN THE HANDS OF HUF. THE ASSESSEE DID N OT DECLARE ANY ADDITIONAL INCOME IN HIS INDIVIDUAL CAPACITY. THE ASSESSING OFFICE R HOWEVER, WAS OF THE VIEW THAT THE INTEREST INCOME ARISING ON THE FDRS IS TO BE ADDED IN THE HANDS OF THE ASSESSEE AND FURTHER, THE ADDITIONAL INCOME OFFERED IN THE HANDS OF HUF WAS CONSIDERED AS INCOM E OF THE ASSESSEE. THE CIT(A) WHILE DECIDING THE APPEAL FOR ASSESSME NT YEAR 2002-03, AGAINST WHICH, NO APPEAL HAS BEEN FILED BY THE REV ENUE ITA NOS.904 TO 906/PN/2012 SHRI SANJAY CHANGDEORAO HOLKAR 6 BECAUSE OF LOW TAX EFFECT, HAS GIVEN FINDING THAT THE AGRICU LTURAL LAND WAS INHERITED FROM THE FORE-FATHERS OF THE ASSESSEE AND THE A GRICULTURAL INCOME THEREON, WAS DECLARED IN THE HANDS OF HUF. REFEREN CE WAS MADE TO THE REPORT OF ASSESSING OFFICER DATED 30.11.2012 IN WHICH , IT WAS ADMITTED THAT THE ASSESSEE EVEN PRIOR TO THE ACTION UN DER SECTION 132(1) OF THE ACT ON 12.03.2008 HAD DULY DECLARED THE FACT THA T THE AGRICULTURAL INCOME BELONGED TO HUF FOR ASSESSMENT YEARS 2002-03, 20 04-05 TO 2007-08. THE SAID DECLARATION WAS MADE BY THE ASSESSEE BY WAY OF FOOTNOTE TO THE COMPUTATION OF TOTAL INCOME IN INDIVIDUAL CAPACITY FILED FOR ASSESSMENT YEARS 2002-03, 2004-05 TO 2007-08. ADMITTE DLY, THE ASSESSEE HAD FILED THE RETURNS OF SANJAY CHANGDEORAO HO LKAR (HUF) FOR ASSESSMENT YEARS 2003-04 TO 2007-08 AND HAD PAID TAX ES ON TOTAL INCOME COMPRISING OF AGRICULTURAL INCOME AND INTEREST INCOME. THE TOTAL INCOME IN THE CAPTIONED ASSESSMENT YEARS WAS RS.94,14,08 2/- AND TOTAL TAXES OF RS.18,45,799/- WERE PAID BY THE ASSESSEE. WHERE THE SOURCE OF FDRS FOUND DURING THE COURSE OF SEARCH HAD BEEN EXPLAIN ED BY THE ASSESSEE TO BELONG TO HIS HUF AND THE INCOME IN RESPECT THEREOF HAD BEEN DECLARED BY THE ASSESSEE IN RESPECTIVE YEARS AND ON WHICH TAXES HAVE BEEN PAID BY THE ASSESSEE, WE FIND NO MERIT IN THE O RDER OF ASSESSING OFFICER IN INCLUDING THE SAID INVESTMENT IN FDRS AN D INTEREST INCOME ON SUCH FDRS AS INCOME IN THE HANDS OF THE ASSES SEE INDIVIDUAL. THE EXPLANATION OF THE ASSESSEE WHILE RECORDING THE STATE MENT DURING THE COURSE OF SEARCH HAD TO BE SEEN IN ENTIRETY WHERE, THE ASSESSEE HAD ADMITTED THAT THE SOURCE OF FDRS WAS THE AGRICULTURAL INC OME EARNED BY THE ASSESSEE AND HIS FAMILY FROM YEAR TO YEAR. THE AGR ICULTURAL LAND HAVING BEEN INHERITED BY THE ASSESSEE FROM HIS FORE-FATHER S AND BEING ANCESTRAL ASSETS OF HIS HUF AND THE FDRS IN LINE THEREOF, BELONGED TO THE ASSESSEE HUF. FURTHER, THE ASSESSEE IN ANY CASE, HAD DECLARED THE INVESTMENT IN THE SAID FDRS AND THE INTEREST INCOME THER EON IN THE ITA NOS.904 TO 906/PN/2012 SHRI SANJAY CHANGDEORAO HOLKAR 7 HANDS OF HIS HUF AND THERE WAS NO MERIT IN MAKING DOUBLE ADDITION ON ACCOUNT OF SUCH INVESTMENT IN FDRS AND INTEREST INCOME A RISING ON THE SAID FDRS IN THE HANDS OF THE ASSESSEE INDIVIDUAL ONCE AG AIN. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 11. THE FACTS AND ISSUES IN ITA NOS.905 AND 906/PN/2012 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.904/PN/2012 A ND OUR DECISION IN ITA NO.904/PN/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.905 AND 906/PN/2012. 12. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JANUARY, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 21 ST JANUARY, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE