ACIT, CHENNAI V. Shri K.Inbasagaran, CHENNAI

ITA 953/CHNY/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61174 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-05-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 16-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SIBENDU MOHRANA
• Assessee Lawyers: K INBASAGARAN
• Keywords: Income from undisclosed sources; Salary income; Opportunity of being heard; Source of fund
• Section: 143(3); 142(1); 147; 148; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 814 & 815/MDS/2009 (ASSESSMENT YEARS : 1994-95 & 1995-96) SHRI K. INBASAGARAN, NO.2, 10 TH STREET, T-62, ANNANAGAR, CHENNAI - 600 040. PAN : AAAPI1333C (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS RANGE XIII, CHENNAI - 600 034 . (RESPONDENT) I.T.A. NOS. 952, 953 & 627/MDS/2009 (ASSESSMENT YEARS : 1993-94 & 1994-95) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - XIII, CHENNAI - 600 034 . (APPELLANT) V. SHRI K. INBASAGARAN, NO.2, 10 TH STREET, T-62, ANNANAGAR, CHENNAI - 600 040. (RESPONDENT) APPELLANT BY : SHRI SIBENDU MOHRANA, CIT - DR RESPONDENT BY : SHRI K. INBASAGARAN (ASS ESSEE) DATE OF HEARING : 01.05.2012 DATE OF PRONOUNCEMENT : 31.05.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : OF THE ABOVE APPEALS, I.T.A. NOS. 814/MDS/2009, 953/MDS/2009 AND 627/MDS/2009 PERTAIN TO ASSESSMENT YEAR 1994- I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 2 95, WHEREAS, I.T.A. NOS. 952/MDS/2009 AND 815/MDS/2 009 PERTAIN TO ASSESSMENT YEARS 1993-94 AND 1995-96 RESPECTIVELY. 2. APPEALS FOR ASSESSMENT YEAR 1994-95 ARE TAKEN UP FIRST FOR DISPOSAL. OUT OF THE THREE APPEALS FOR ASSESSMENT YEAR 1994-95, TWO ARE BY THE REVENUE AND ONE BY THE ASSESSEE. ASSESS EES APPEAL IN I.T.A. NO. 814/MDS/2009 GIVES THE FACTS OF THE CASE IN A LUCID MANNER AND HENCE THIS IS CONSIDERED FIRST. 4. ASSESSEE WAS AN IAS OFFICER AND WAS THE HEALTH S ECRETARY OF GOVERNMENT OF TAMIL NADU DURING THE RELEVANT PREVIO US YEAR. THERE WAS A SEARCH AT THE RESIDENCE OF THE ASSESSEE ON 13 TH AND 14 TH SEPTEMBER, 1993. DURING THE SAID SEARCH, CASH OF ` 30 LAKHS, 7 NOS. OF GOLD BISCUITS, US $ WORTH ` 33,540/- WERE FOUND. AS PER THE A.O., SOME DOCUMENTARY EVIDENCE WERE ALSO SEIZED WHICH RE FLECTED FIXED DEPOSITS IN THE NAME OF DIFFERENT PERSONS IN VARIOU S BRANCHES OF PUNJAB NATIONAL BANK, BANGALORE. DURING THE COURSE OF SEARCH, WIFE OF THE ASSESSEE, SMT. VIJAYA INBASAGARAN, WAS ALSO PRESENT AND THE SAID SMT. VIJAYA INBASAGARAN HAD OWNED UP ALL THE S EIZED ASSETS. SMT. VIJAYA INBASAGARAN WAS A DIRECTOR IN TWO COMPA NIES, NAMELY, M/S SOUTHERN RIMS PVT. LTD. AND M/S SILVER SHOES PV T. LTD., IN ADDITION TO BEING THE PROPRIETRESS OF ONE M/S AVJ M ARKETING SERVICES I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 3 AND ONE M/S TAMIL NADU COMPUTER SERVICES. STATEMEN T OF SMT. VIJAYA INBASAGARAN WAS RECORDED ON VARIOUS DATES BY THE INVESTIGATION WING OF THE DEPARTMENT. FROM THE REP LIES GIVEN BY SMT. VIJAYA INBASAGARAN, THE ASSESSING OFFICER CAME TO A CONCLUSION THAT SHE WAS NOT AWARE OF THE VOLUME OF CASH THAT WAS CL AIMED TO BE BELONGING TO THE COMPANIES FOUND FROM THE RESIDENCE AT THE FIRST STAGE. AS PER THE A.O., SHE CAME OUT WITH A VERSIO N THAT CASH REPRESENTED SALE PROCEEDS OF SCRAP LEATHER AND SHOE UPPERS OF M/S SILVER SHOES PVT. LTD. ONLY WHEN IT WAS MADE KNOWN THAT SUM OF ` 29 LAKHS WAS FOUND IN THE BED ROOM AND POOJA ROOM. TH E A.O. WAS OF THE OPINION THAT THE STATEMENT GIVEN BY SMT. VIJAYA INBASAGARAN OWNING UP THE ASSETS FOUND AT THE TIME OF SEARCH AN D ALSO EXPLAINING THAT THE CASH AND SUCH ASSETS HAD COME OUT OF DRAWI NGS MADE FROM AVJ MARKETING SERVICES, HER PROPRIETORSHIP CONCERN, AND OUT OF SALES OF SCRAP OF M/S SILVER SHOES PVT. LTD., WAS NOT BEL IEVABLE. ASSESSEE HAD NOT FILED ANY RETURN OF INCOME VOLUNTARILY BUT, PURSUANT TO A NOTICE ISSUED ON 28.12.94 UNDER SECTION 142(1) OF INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT'), AFTER THE SEARCH, A RETURN WAS FI LED ON 30.8.1995. SUCH RETURN OF THE ASSESSEE REFLECTED SALARY INCOME , INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES ` 1,06,747/-, ` 26,047/- AND ` 5,481/- RESPECTIVELY. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 4 5. CONSEQUENT TO THE PROCEEDINGS UNDER SECTION 132 OF THE ACT, IT SEEMS VIGILANCE PROCEEDINGS WERE ALSO INITIATED BY THE STATE GOVERNMENT AGAINST THE ASSESSEE. HOWEVER, THE GOVE RNMENT, BASED ON AN INQUIRY REPORT FROM THE INQUIRY AUTHORI TY APPOINTED BY IT, DROPPED THE DISCIPLINARY ACTIONS INITIALLY. ASSESS ING OFFICER MADE ELABORATE VERIFICATIONS OF THE CLAIM OF SCRAP SALES BY M/S SILVER SHOES PVT. LTD. AND BASED ON SUCH VERIFICATIONS, CAME TO A CONCLUSION THAT THE FIGURE OF SCRAP SALES SHOWN BY M/S SILVER SHOES PVT. LTD. WAS BEYOND IMAGINATION AND TOO HUGE VIS--VIS THEIR REG ULAR TURNOVER. SIMILAR CLAIM OF SALE OF RIMS, OUTSIDE THE BOOKS OF M/S SOUTHERN RIMS PVT. LTD. IN WHICH ALSO WIFE OF THE ASSESSEE WAS A DIRECTOR, WAS ALSO REJECTED. EXPLANATION OF THE ASSESSEE REGARDING 7 GOLD BISCUITS WAS THAT THESE WERE ACQUIRED BY HIS WIFE SMT. VIJAYA IN BASAGARAN AND FOR THIS, ASSESSEE HAD FILED CUSTOMS CLEARANCE RECEIPTS OF FOUR PERSONS. HOWEVER, AS PER THE A.O., SUCH CLEARANCE GIVEN BY C USTOMS AUTHORITY SHOWED THAT THE PAYMENTS WERE BY WAY OF CASH AND EX PLANATION OF THE ASSESSEE COULD NOT BE ACCEPTED. INSOFAR AS FIX ED DEPOSITS FOUND AT THE TIME OF SEARCH WERE CONCERNED, EXPLANATION O F WIFE OF THE ASSESSEE WAS THAT IT BELONGED TO HER AND CAME OUT O F AFORESAID SALE PROCEEDS OF M/S SILVER SHOES PVT. LTD. AND M/S SOUT HERN RIMS PVT. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 5 LTD. AND THIS WAS ALSO REJECTED. IN OTHER WORDS, C ONCLUSION OF THE ASSESSING OFFICER WAS THAT ALL THESE ASSETS BELONGE D TO ASSESSEE AND HE DID NOT ACCEPT THE VERSION OF THE ASSESSEE T HAT HIS WIFE OWNED SUCH ASSETS. IN THIS VIEW OF THE MATTER, HE PROCEE DED TO ASSESS THE ASSESSEE FOR THE CASH SEIZED, VALUE OF THE GOLD BIS CUITS AND FIXED DEPOSITS FOUND AT THE TIME OF SEARCH. ORIGINAL ASS ESSMENT IN THESE LINES WAS COMPLETED ON 29.3.96. 6. LATER, THE CIT, CENTRAL-I, CHENNAI, SET ASIDE TH E ABOVE ASSESSMENT, VIDE HIS ORDER DATED 26.3.1998 FOR A RE ASON THAT ASSESSING OFFICER HAD NOT EXAMINED THE CASH DEPOSIT S MADE IN THE ACCOUNT OF ONE SMT. USHA RAGHAVAN THOUGH SUCH CASH DEPOSITS IN THE NAME OF SMT. USHA RAGHAVAN WERE FOUND IN THE CO URSE OF SEARCH. CONSEQUENT TO THE ORDER OF CIT UNDER SECTI ON 263 OF THE ACT, FRESH PROCEEDINGS WERE INITIATED AGAINST ASSESSEE A ND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 14.12.1998. STAND OF THE ASSESSEE ONCE AGAIN WAS THAT THE DEPARTMENT WAS TRY ING TO FASTEN ON HIM A DUTY TO EXPLAIN THE INCOME OF HIS WIFE SMT. V IJAYA INBASAGARAN AND HE REQUESTED THE ASSESSING OFFICER TO ASCERTAIN THE FACTS FROM SMT. VIJAYA INBASAGARAN. ASSESSING OFFICER, AFTER VERIFYING THE DETAILS GIVEN BY SMT. VIJAYA INBASAGARAN, REACHED A CONCLUSION THAT I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 6 CASH DEPOSIT OF ` 2 LAKHS IN THE NAME OF SMT. USHA RAGHAVAN WAS UNACCOUNTED INCOME OF THE ASSESSEE. HENCE, THE TOT AL INCOME WAS RECOMPUTED BY MAKING A FURTHER ADDITION OF ` 2 LAKHS, AND FRESH ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 263 O F THE ACT ON 31.3.2000. 7. THEREAFTER, A NOTICE UNDER SECTION 148 WAS ISSUE D TO THE ASSESSEE FOR REOPENING THE ASSESSMENT. AS PER THE A.O., SEVERAL UNDISCLOSED TRANSACTIONS EXTRACTED IN THE SWORN STA TEMENT RECORDED AT THE TIME OF SEARCH, WERE OMITTED IN THE ASSESSME NT DONE UNDER SECTION 143(3) ON 29.3.1996 AND ALSO IN THE SUBSEQU ENT ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 263 OF THE A CT ON 31.3.2000. ON ACCOUNT OF SUCH RE-ASSESSMENT, THE INCOME ASSESS ED WENT UP TO ` 66,39,275/- FROM ` 48,29,275/- ORIGINALLY CONSIDERED. THE ADDITION WAS ON ACCOUNT OF ALLEGED NON-CONSIDERATION OF CERT AIN ASSETS DISCLOSED IN THE STATEMENT GIVEN UNDER SECTION 132( 4) OF THE ACT. IN SUCH RE-ASSESSMENT, THE A.O. SPECIFICALLY NOTED THA T ALL THE ADDITIONS, WHICH WERE CONSIDERED IN THE HANDS OF THE ASSESSEE, WERE BEING DONE ON A SUBSTANTIVE BASIS AND THE SAME ADDITIONS WERE ALSO BEING DONE ON A PROTECTIVE BASIS IN THE HANDS OF THE ASSE SSEES WIFE FOR ASSESSMENT YEARS 1993-94 AND 1994-95, SINCE ASSESSE ES WIFE SMT. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 7 VIJAYA INBASAGARAN HAD OFFERED ` 70 LAKHS IN THE SWORN STATEMENT GIVEN BY HER DURING THE SEARCH ACTION AND ALSO OWNE D UP THE ASSETS. 8. THUS, THE PROCEEDINGS OF THE DEPARTMENT PURSUANT TO THE SEARCH, HAD RESULTED IN AN ORIGINAL ORDER OF ASSESS MENT UNDER SECTION 143(3) PASSED ON 29.3.1996, WHICH WAS SUBJECTED TO A REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT RESULTING IN A CONSEQUENT ORDER DATED 31.3.2000 UNDER SECTION 143(3) READ WIT H SECTION 263 OF THE ACT. SUBSEQUENTLY, THIS WAS SUBJECTED TO A RE- ASSESSMENT PROCEEDING BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AND THE RE-ASSESSMENT ORDER WAS PASSED ON 23.2.2002 UNDER S ECTION 143(3) READ WITH SECTION 147 OF THE ACT. 9. AGAINST THE ORDER DATED 29.3.1996 PASSED UNDER S ECTION 143(3) OF THE ACT, ASSESSEE MOVED IN APPEAL BEFORE CIT(APP EALS) AND SUCH APPEAL WAS FILED ON 30.4.1996. THE APPEAL REMAINED PENDING WITH THE CIT(APPEALS) FOR 12 YEARS, 9 MONTHS AND 12 DAYS . THOUGH THIS WAS NOTED BY CIT(APPEALS) IN HIS ORDER DATED 12.3.2 009, REASON FOR THE LONG DELAY IN DISPOSING OF THE APPEAL HAS NOT B EEN MENTIONED. ARGUMENT OF THE ASSESSEE ONCE AGAIN WAS THAT NONE O F THE ASSETS BELONGED TO HIM BUT WAS OWNED BY HIS WIFE. ASSESSE E ALSO BROUGHT TO THE NOTICE OF CIT(APPEALS) THAT CONSEQUENT TO SE ARCH BY THE I.T. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 8 AUTHORITIES, A DEPARTMENTAL INQUIRY INITIATED, THOU GH DROPPED, A CASE WAS REGISTERED AGAINST HIM UNDER THE PREVENTION OF CORRUPTION ACT. IN SUCH CASE, BEFORE THE TRIAL COURT, EVIDENCE WAS ADDUCED FROM THE DEPARTMENT AND THE A.O. HAD DEPOSED BEFORE THE TRIA L COURT. AS PER THE ASSESSEE, THE CRIMINAL COURT HAD CONVICTED HIM BUT HONBLE JURISDICTIONAL HIGH COURT, VIDE ITS JUDGMENT DATED 11.7.2001 IN CRIMINAL APPEAL NO.231 OF 2000 HAD SET ASIDE THE CO NVICTION AND SENTENCE PASSED BY A SPECIAL JUDGE. ASSESSEE BROUG HT TO THE NOTICE OF CIT(APPEALS) THAT THE JUDGMENT OF HONBLE JURISD ICTIONAL HIGH COURT HAD COME AFTER FILING OF APPEAL BEFORE THE CIT(APPE ALS) AND A COPY OF THE JUDGMENT WAS ALSO FILED. AS PER THE ASSESSEE, FINDING OF THE HONBLE JURISDICTIONAL HIGH COURT WERE RELEVANT FOR THE ISSUES INVOLVED IN THE TAX ASSESSMENT AND THE JURISDICTIONAL HIGH C OURT HAD CLEARLY HELD THAT NONE OF THE ASSETS FOUND AT THE TIME OF T HE SEARCH, BELONGED TO THE ASSESSEE. HOWEVER, CIT(APPEALS) REFUSED T O CONSIDER THE APPEAL ON MERITS AND DISMISSED THE APPEAL OF THE AS SESSEE. REASON GIVEN BY CIT(APPEALS) WAS THAT CIT, CENTRAL CIRCLE , CHENNAI, VIDE HIS ORDER DATED 26.3.98 UNDER SECTION 263 OF THE AC T, HAD SET ASIDE THE ORIGINAL ASSESSMENT DATED 29.3.96. THEREFORE, AS PER CIT(APPEALS), THE ORDER AGAINST WHICH APPEAL WAS FI LED BY THE I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 9 ASSESSEE WAS NO MORE THERE AND APPEAL OF THE ASSESS EE HAD BECOME INFRUCTUOUS. 10. MEANWHILE, ASSESSEE ALSO MOVED IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE ORDER OF CIT UNDER SECTION 263 OF THE A CT FOR THE IMPUGNED ASSESSMENT YEAR. THIS TRIBUNAL, VIDE ITS ORDER DATED 22.9.1996 IN I.T.A. NO. 927/MDS/1998, QUASHED THE R EVISIONARY ORDER PASSED BY CIT. EFFECTIVELY THE ORIGINAL ORDER OF A SSESSMENT DATED 29.3.96 STOOD RE-INSTATED. 11. ASSESSEE HAD ALSO FILED AN APPEAL BEFORE CIT(AP PEALS) AGAINST ORDER DATED 31.3.2000 OF A.O. PASSED UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT AND ASSESSEE IN SUCH APPEAL BROUGHT TO THE NOTICE OF THE CIT(APPEALS) THAT THE ORDER UNDER SEC TION 263 OF THE CIT, CENTRAL-I, CHENNAI, STOOD QUASHED BY THIS TRIB UNAL. SINCE THE ORDER UNDER SECTION 263 OF THE ACT STOOD QUASHED, C IT(APPEALS) HELD THAT ASSESSMENT DONE PURSUANT TO SUCH A REVISIONARY ORDER WOULD NOT SURVIVE. HE, ACCORDINGLY, ANNULLED THE ORDER DATED 31.3.2000 OF THE A.O. PASSED UNDER SECTION 143(3) READ ALONG WITH SE CTION 263 OF THE ACT. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 10 12. ASSESSEE ALSO MOVED IN APPEAL AGAINST THE ORDER DATED 23.2.2002 PASSED BY THE ASSESSING OFFICER UNDER SEC TION 143(3) READ WITH SECTION 147 OF THE ACT. IN SUCH APPEAL, ASSESSEE BROUGHT TO THE NOTICE OF CIT(APPEALS) THAT HONBLE APEX COU RT ON THE APPEAL OF THE GOVERNMENT AGAINST THE ACQUITTAL OF THE ASSE SSEE BY THE HONBLE JURISDICTIONAL HIGH COURT, HAD HELD THAT AS SESSEE HAD EXPLAINED THE ACCOUNTS AND THE MONEY WHICH WAS RECO VERED FROM HIS HOUSE DID NOT BELONG TO HIM BUT BELONGED TO HIS WIF E. A COPY OF THE ORDER OF HONBLE APEX COURT REPORTED IN 282 ITR 435 WAS ALSO FILED. CIT(APPEALS) BROUGHT THIS TO THE NOTICE OF THE ASSE SSING OFFICER AND CALLED FOR HIS OPINION. THE A.O. WAS OF THE OPINIO N THAT THE FINDINGS GIVEN BY JURISDICTIONAL HIGH COURT AND APEX COURT W ERE IN A CRIMINAL PROCEEDING AND WOULD NOT BE RELEVANT IN TAX MATTERS . AS PER THE A.O., PROCEEDINGS UNDER INCOME-TAX ACT WERE BASED O N THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY AND EVIDENCE ACT DI D NOT DIRECTLY APPLY. ON THE OTHER HAND, RELYING ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF J.S. PARKAR V. V. PALEKAR AND OTHERS (94 ITR 616, THE A.O. SUBMITTED BEFORE CIT(APPEALS) THAT TH E DECISIONS GIVEN IN CRIMINAL PROCEEDINGS, THOUGH IT MIGHT BE RELEVAN T, COULD NOT BE RELIED UPON IN TOTO. CIT(APPEALS) WAS OF THE OPINI ON THAT ASSESSEE HAVING BEEN GIVEN A CLEAN CHIT BY HONBLE APEX COUR T AND I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 11 JURISDICTIONAL HIGH COURT, COULD NOT BE FASTENED WI TH ANY ONUS TO EXPLAIN FURTHER THE ASSETS FOUND AT THE TIME OF SEA RCH. HE, THEREFORE, DELETED THE ADDITIONS MADE IN SUCH RE-ASSESSMENT. 13. NOW BEFORE US, ASSESSEE IS AGGRIEVED BY THE DEC ISION OF CIT(APPEALS), IN NOT CONSIDERING HIS APPEAL AGAINST ORIGINAL ASSESSMENT PASSED UNDER SECTION 143(3) OF THE ACT O N 29.3.1996. AS AGAINST THIS, REVENUE IS AGGRIEVED AGAINST THE O RDER OF CIT(APPEALS) QUASHING THE ORDER OF THE A.O. PASSED ON 31.3.2000 UNDER SECTION 143(3) READ WITH SECTION 263 OF THE A CT. REVENUE IS ALSO AGGRIEVED BY THE ORDER OF CIT(APPEALS) DELETIN G THE ADDITIONS MADE BY THE A.O. IN THE RE-ASSESSMENT DONE ON 23.3. 2002 UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 14. STARTING HIS ARGUMENTS, ASSESSEE IN PERSON SUBM ITTED THAT A VIGILANCE INQUIRY WAS ORDERED AGAINST HIM BY THE ST ATE GOVERNMENT BASED ON THE REPORT GIVEN BY THE REVENUE CONSEQUENT TO THE SEARCH CONDUCTED ON HIM UNDER SECTION 132 OF THE ACT. AS PER THE ASSESSEE, AT THE TIME OF SEARCH ITSELF, IT WAS STAT ED BY HIS WIFE THAT THE ASSETS FOUND IN THE FORM OF CASH, GOLD BISCUITS AND FIXED DEPOSITS WERE ALL OWNED BY HER, AND SHE WAS A DIRECTOR IN TW O COMPANIES, AND ALSO PROPRIETRESS OF ONE CONCERN. ACCORDING TO ASS ESSEE, HIS WIFE I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 12 HAD GIVEN A STATEMENT UNDER SECTION 132(4) OF THE A CT, OWNING UP THE ASSETS. FURTHER, ALL THESE ASSETS WERE CONSIDERED IN HER ASSESSMENT AND SHE HAD ADMITTED AN INCOME OF ` 70 LAKHS IN THE STATEMENT GIVEN BEFORE THE INVESTIGATION WING. AS PER THE ASSESSEE , THE TWO COMPANIES IN WHICH HIS WIFE WAS A DIRECTOR, NAMELY, M/S SOUTHERN RIMS PVT. LTD. AND M/S SILVER SHOES PVT. LTD., HAD IN THEIR RESPECTIVE RETURNS OF INCOME, DECLARED SALES OF SCRAP AS WELL AS SALE OF RIMS, WHICH WERE NOT ACCOUNTED. CRUX OF THE CONTENTION O F THE ASSESSEE WAS THAT THOUGH HE WAS INITIALLY CONVICTED BY THE T RIAL COURT IN A CASE CHARGED UNDER PREVENTION OF CORRUPTION ACT, THE JUR ISDICTIONAL HIGH COURT IN A CRIMINAL APPEAL HAD ACQUITTED HIM AND EX ONERATED HIM FROM ALL THE CHARGES. ACCORDING TO HIM, ORDER OF T HE HONBLE JURISDICTIONAL HIGH COURT WAS CONFIRMED BY THE HON BLE APEX COURT AND SUCH DECISION OF HONBLE APEX COURT, UNDER ARTI CLE 141 OF THE CONSTITUTION WAS BINDING ON ALL LOWER AUTHORITIES. IT WAS A FINDING REGARDING POSSESSION OF THE ASSETS, WHICH WAS CONCL USIVELY HELD BY THE HIGHER COURTS TO BE OF HIS WIFE AND THE REVENUE HAD ALSO PROTECTIVELY AT LEAST CONSIDERED SUCH AMOUNTS IN HE R ASSESSMENT. THIS BEING THE POSITION, ACCORDING TO ASSESSEE, NO LIABILITY COULD BE FASTENED ON HIM FOR ANY INCOME REPRESENTING SUCH AS SETS WHICH ALL BELONGED TO HIS WIFE, WHICH WAS EXPLAINED AND RETUR NED BY HER. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 13 THOUGH THE DECISIONS GIVEN BY HONBLE JURISDICTIONA L HIGH COURT AND HONBLE APEX COURT WERE IN A CRIMINAL PROCEEDING, A CCORDING TO ASSESSEE, THE FINDING OF A FACT THAT POSSESSION OF THE ASSETS WERE THAT OF HIS WIFE, WILL MUTATIS MUTANDIS APPLY IN CIVIL P ROCEEDINGS AS WELL. IT COULD NOT BE THAT THE SAME ASSETS COULD BE POSSESSE D BY TWO PERSONS AT THE SAME TIME UNLESS JOINT OWNERSHIP WAS PROVED. DESPITE THERE BEING NO JOINT OWNERSHIP PROVED, AND DESPITE THE CLEAR FINDINGS OF THE HONBLE APEX COURT, WHICH WAS BROUG HT TO THE NOTICE OF CIT(APPEALS), HE FAILED TO ACCEPT THE APPEAL OF THE ASSESSEE. ACCORDING TO HIM, IT WAS BROUGHT TO THE NOTICE OF C IT(APPEALS) THAT THE ORDER UNDER SECTION 263 PASSED BY CIT, SETTING ASID E THE ORIGINAL ASSESSMENT, STOOD ALREADY QUASHED BY THIS TRIBUNAL, AND THIS WAS ALSO NOT CONSIDERED. 15. PER CONTRA, LEARNED D.R. SUBMITTED THAT AT THE POINT OF TIME, CIT(APPEALS) WAS DECIDING THE APPEAL, THE ORIGINAL ASSESSMENT STOOD SET ASIDE BY THE ORDER OF CIT UNDER SECTION 263 OF THE ACT AND THEREFORE, CIT(APPEALS) WAS JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE. LEARNED D.R., SUPPORTING THE APPEALS OF THE REVENUE, SUBMITTED THAT THE ADDITION MADE IN THE RE-ASSESSME NT DONE PURSUANT TO THE REOPENING, WAS WRONGLY DELETED BY CIT(APPEAL S). ACCORDING TO I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 14 HIM, THE DECISION GIVEN BY HONBLE APEX COURT IN A CRIMINAL PROCEEDING, THOUGH IT PERTAINED TO ASSESSEES OWN C ASE, WAS NOT BINDING IN A TAX PROCEEDING. LEARNED D.R. SUBMITTE D THAT PRINCIPLE OF PREPONDERANCE OF PROBABILITY APPLIED IN TAX CASES. ACCORDING TO HIM, ASSESSEES WIFE WAS NOT ABLE TO EXPLAIN THE SOURCE OF THE CASH FOUND AT THE TIME OF SEARCH AND ASSESSING OFFICER HAD CLE ARLY BROUGHT OUT THAT NEITHER M/S SOUTHERN RIMS PVT. LTD. NOR M/S SI LVER SHOES PVT. LTD. IN WHICH SHE WAS A DIRECTOR, COULD HAVE EFFECT ED ANY SUCH SALES OUTSIDE THE BOOKS OF ACCOUNTS AS CLAIMED BY HER. I NSOFAR AS ADDITIONS MADE IN THE RE-ASSESSMENT WAS CONCERNED, LEARNED D. R. SUBMITTED THAT THESE RELATED TO FOLLOWING ASSETS, WHICH WERE OMITTED IN THE ORIGINAL ASSESSMENT:- (I) PURCHASE OF 54 CENTS OF LAND AT VANAGARAM ` 1,30,000/ - (II) ADVANCE IN M/S SOUTHERN RIMS (P) LTD. IN THE NAME OF SHRI KHADER BATCHA ` 1,00,000/- (III) INVESTMENTS IN R.R. MEDI PHARMA IN THE NAME OF DAUGHTER ANANDI ` 30,000/- (IV) INVESTMENT IN M/S SOUTHERN RIMS (P) LTD. IN THE NAME OF A. PREMKUMAR AND DHANDAPANI ASSOCIATES ` 1,00,000/- (V) ADVANCE FOR PURCHASE OF FLAT AT MAHALINGAPURAM PAID BY SMT. VIJAYA INBASAGARAN ` 10,00,000/- (VI) A DVANCE IN AVJ MARKETING SERVICES IN DIFFERENT NAMES ` 4,00,000/- (VII) LOAN IN CASH TO M/S SILVER SHOES (P) LTD., FOR PURCHASE OF MACHINERY ` 2,50,000/- ` 18,10,000/ - I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 15 ACCORDING TO LEARNED D.R., NONE OF THESE ITEMS WERE CONSIDERED BY HONBLE JURISDICTIONAL HIGH COURT OR HONBLE APEX C OURT, HENCE ASSESSEE COULD NOT TAKE REFUGE UNDER THE SAID ORDER S. LEARNED D.R., THEREFORE, SUBMITTED THAT THE DELETION OF ADD ITION OF ` 18,10,000/- WAS NOT WARRANTED. INSOFAR AS ITS APPE AL AGAINST THE ORDER OF CIT(APPEALS) QUASHING THE ASSESSMENT DONE PURSUANT TO REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE AC T, LEARNED D.R. FAIRLY ADMITTED THAT THE ORDER UNDER SECTION 263 OF THE ACT HAVING BEEN QUASHED BY THIS TRIBUNAL, CIT(APPEALS) COULD N OT BE FAULTED THE RULING IN FAVOUR OF ASSESSEE. 16. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IT IS TRUE THAT THERE WAS A PROCEEDING UNDER SECTIO N 132 OF THE ACT AND CONSEQUENT TO SUCH PROCEEDING, CASE UNDER PREVE NTION OF CORRUPTION ACT WAS FILED AGAINST ASSESSEE. IT IS A LSO AN ADMITTED POSITION THAT IN SUCH CASE BEFORE TRIAL COURT, THE ASSESSING OFFICER HAD DEPOSED IN SUPPORT OF THE PROSECUTION. CASH OF ` 30 LAKHS, 7 GOLD BISCUITS VALUED ` 4,91,000/-, US $ WORTH ` 33,540/- AND FIXED DEPOSITS TOTALLING TO ` 10 LAKHS WERE FOUND. ADMITTEDLY, NONE OF THE FIXED DEPOSITS WERE IN THE NAME OF THE ASSESSEE. A RGUMENT OF THE ASSESSEE ALL ALONG WAS THAT THESE WERE ALL OWNED BY HIS WIFE SMT. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 16 VIJAYA INBASAGARAN AND IN THE STATEMENT RECORDED FR OM SMT. VIJAYA INBASAGARAN, SHE HAD ACCEPTED OWNERSHIP OF SUCH ASS ETS. ASSESSEE WAS CONVICTED BY THE TRIAL JUDGE BEING SPECIAL JUDG E NO. 1/XI/ADDITIONAL JUDGE, CHENNAI, VIDE JUDGMENT DATED 16.2.2000. BUT, ASSESSEE PREFERRED A CRIMINAL APPEAL BEFORE THE JUR ISDICTIONAL HIGH COURT AND HONBLE JURISDICTIONAL HIGH COURT EXONERA TED THE ASSESSEE AND QUASHED THE CONVICTION WHEREAFTER PROSECUTION H AD MOVED IN FURTHER APPEAL BEFORE HONBLE APEX COURT. HONBLE APEX COURT IN THE CASE REPORTED AS DY. SUPERINTENDENT OF POLICE V. K. INBASAGARAN (282 ITR 435) HAD HELD AS UNDER:- WHEN THE ACCUSED HAS COME FORWARD WITH THE PLEA THA T ALL THE MONEY WHICH HAS BEEN RECOVERED FROM HIS HOUSE A ND PURCHASE OF REAL ESTATE OR THE RECOVERY OF THE GOLD AND OTHER DEPOSITS IN THE BANK, ALL HAVE BEEN OWNED BY HIS WI FE, THEN IN THAT SITUATION HOW CAN ALL THESE RECOVERIES OF UNACCOUNT ED MONEY COULD BE LAID IN HIS HANDS. IT IS TRUE THAT WHEN T HERE IS POINT POSSESSION BETWEEN THE WIFE AND HUSBAND, OR FATHER AND SON AND IF SOME OF THE MEMBERS OF THE FAMILY ARE INVOLVED I N AMASSING ILLEGAL WEALTH, THEN UNLESS THERE IS CATEGORICAL EV IDENCE TO BELIEVE, THAT THIS CAN BE READ IN THE HANDS OF THE HUSBAND OR AS THE CASE MAY BE, IT CANNOT BE FASTENED ON THE HUSBA ND OR HEAD OF FAMILY. IT IS TRUE THAT THE PROSECUTION IN THE PRE SENT CASE HAS TRIED ITS BEST TO LEAD THE EVIDENCE TO SHOW THAT AL L THESE MONEYS BELONGED TO THE ACCUSED BUT WHEN THE WIFE HAS FULLY OWNED THE ENTIRE MONEY AND THE OTHER WEALTH EARNED BY HER BY NOT SHOWING IN THE IT RETURN AND SHE HAS ACCEPTED THE WHOLE RES PONSIBILITIES, IN THAT CASE, IT IS VERY DIFFICULT TO SEGREGATE THA T HOW MUCH OF WEALTH BELONGED TO THE HUSBAND AND HOW MUCH BELONGE D TO THE WIFE. THE PROSECUTION HAS NOT BEEN ABLE TO LEAD EV IDENCE TO ESTABLISH THAT SOME OF THE MONEY COULD BE HELD IN T HE HANDS OF I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 17 THE ACCUSED. IN CASE OF JOINT POSSESSION IT IS VER Y DIFFICULT WHEN ONE OF THE PERSONS ACCEPTED THE ENTIRE RESPONSIBILI TY. THE WIFE OF THE ACCUSED HAS NOT BEEN PROSECUTED AND IT IS ON LY THE HUSBAND WHO HAS BEEN CHARGED BEING THE PUBLIC SERVA NT. IN VIEW OF THE EXPLANATION GIVEN BY THE HUSBAND AND WHEN IT HAS BEEN SUBSTANTIATED BY THE EVIDENCE OF THE WIFE, THE OTHE R WITNESSES WHO HAVE BEEN PRODUCED ON BEHALF OF THE ACCUSED COU PLED WITH THE FACT THAT THE ENTIRE MONEY HAS BEEN TREATED IN THE HANDS OF THE WIFE AND SHE HAS OWNED IT AND SHE HAS BEEN ASSE SSED BY THE IT DEPARTMENT, IT WILL NOT BE PROPER TO HOLD THE AC CUSED GUILTY UNDER THE PREVENTION OF CORRUPTION ACT AS HIS EXPLA NATION APPEARS TO BE PLAUSIBLE AND JUSTIFIABLE. THE BURDE N IS ON THE ACCUSED TO OFFER PLAUSIBLE EXPLANATION AND IN THE P RESENT CASE, HE HAS SATISFACTORILY EXPLAINED THAT THE WHOLE MONEY W HICH HAS BEEN RECOVERED FROM HIS HOUSE DOES NOT BELONG TO HIM AND IT BELONGED TO HIS WIFE. THEREFORE, HE HAS SATISFACTORILY ACCO UNTED FOR THE RECOVERY OF THE UNACCOUNTED MONEY. SINCE THE PREMI SES IN QUESTION WAS JOINTLY SHARED BY THE WIFE AND THE HUS BAND AND THE WIFE HAVING ACCEPTED THE ENTIRE RECOVERY AT HER HAN D, IT WILL NOT BE PROPER TO HOLD HUSBAND GUILTY. THEREFORE, IN TH ESE CIRCUMSTANCES, THE VIEW TAKEN BY THE HIGH COURT APP EARS TO BE JUSTIFIED AND THERE ARE NO COMPELLING CIRCUMSTANCES TO REVERSE THE ORDER OF ACQUITTAL. IN OUR OPINION, THE FINDING OF HONBLE APEX COURT I S CLEAR IN THAT ASSESSEE HAD SATISFACTORILY EXPLAINED THE WHOLE OF THE MONEY RECOVERED TO BE BELONGING TO HIS WIFE. HONBLE APE X COURT HAS ALSO NOTED THAT ASSESSEE HAD SATISFACTORILY ACCOUNTED FO R RECOVERY OF UNACCOUNTED MONEY. THE ARGUMENT OF THE LEARNED D.R . THAT DECISION GIVEN IN A CRIMINAL PROCEEDING WOULD NOT BE BINDING ON TAX PROCEEDINGS, IS NO DOUBT VERY ATTRACTIVE. CRIMINAL PROCEEDINGS ARE GENERALLY BASED ON CONCLUSIVE EVIDENCE, WHEREAS, IN CIVIL I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 18 PROCEEDINGS, ONLY PREPONDERANCE OF PROBABILITY IS R EQUIRED TO BE PROVED. BUT, THE PROCEEDINGS AGAINST THE ASSESSEE HERE WAS UNDER PREVENTION OF CORRUPTION ACT, 1988. SECTION 13(1)( E) OF THE PREVENTION OF CORRUPTION ACT, 1988, PROVIDES THAT A PUBLIC SERVANT IS GUILTY OF CRIMINAL MISCONDUCT IF HE OR SOME PERSON ON HIS BEHALF IS OR HAS AT ANY TIME DURING THE PERIOD WHEN PUBLIC SERVA NT WAS IN OFFICE, BEEN IN POSSESSION OF ASSETS DISPROPORTIONATE TO HI S KNOWN SOURCE OF INCOME FOR WHICH THE PUBLIC SERVANT CANNOT SATISFAC TORILY ACCOUNT. THE EARLIER POSITION AS PER PREVENTION OF CORRUPTIO N ACT, 1947, PRIOR TO THE ADDITION OF SECTION 5(1)(E) THERETO, BY CRIMINA L LAW (AMENDMENT) ACT, 1964, WAS DIFFERENT. THE PROSECUTION HAD TO P ROVE THAT A PUBLIC SERVANT OR ANY OTHER PERSON ON HIS BEHALF WAS IN PO SSESSION OF PECUNIARY RESOURCES OR PROPERTY DISPROPORTIONATE TO HIS KNOWN SOURCES OF INCOME FOR WHICH THE ACCUSED PERSON CANN OT SATISFACTORILY ACCOUNT, FOR THE COURT TO REACH A PRESUMPTION THAT THE PUBLIC SERVANT WAS GUILTY OF CRIMINAL MISCONDUCT. THE NEW PROVISI ON MAKES POSSESSION OF SUCH ASSETS ITSELF A SUBSTANTIVE OFFE NCE OF CRIMINAL MISCONDUCT IF IT IS DISPROPORTIONATE TO HIS KNOWN S OURCES OF INCOME. THUS UNDER THE PREVENTION OF CORRUPTION ACT, THE PR ESUMPTION IS THAT ASSETS IN POSSESSION OF A GOVERNMENT SERVANT BELONG ED TO HIM. IT WAS LEFT TO GOVERNMENT SERVANT TO REBUT SUCH PRESUM PTION BY I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 19 SHOWING THAT ASSETS SO FOUND WERE NOT DISPROPORTION ATE TO HIS KNOWN SOURCES OF INCOME. THUS THE ONUS CAST ON AN ACCUSE D UNDER THE PREVENTION OF CORRUPTION ACT IS MORE ONEROUS THAN O NE FOR AN ASSESSEE UNDER THE INCOME-TAX ACT. PROCEDURE UNDER PREVENTION OF CORRUPTION ACT CANNOT BE CONSIDERED ON THE SAME FOO TING OF A NORMAL CRIMINAL PROCEEDING, WHERE THE PROSECUTION HAS TO B RING IN CONCLUSIVE EVIDENCE. IN A PROCEEDING OF THE NATURE INVOLVED H ERE, UNDER PREVENTION OF CORRUPTION ACT, PRESUMPTION IS AGAINS T THE ACCUSED AND IT HAS TO BE REBUTTED. THE FINDING OF HONBLE APEX COURT IS THAT ASSESSEE HAD SATISFACTORILY EXPLAINED THE MONEY TO BE BELONGING TO HIS WIFE AND THUS HAD DISCHARGED THE BURDEN OF REBU TTING THE PRESUMPTION THAT WENT AGAINST HIM. HENCE, IN OUR O PINION, THE FINDING OF HONBLE APEX COURT WHICH HAS BEEN GIVEN IN A PRO CEEDING WHERE ASSESSEE WAS CHARGED UNDER PREVENTION OF CORRUPTION ACT, HAS GREAT VALUE AND SIGNIFICANCE AND APPROPRIATE WEIGHTAGE HA S TO BE GIVEN TO SUCH FINDING, EVEN IN A PROCEEDING UNDER INCOME-TAX ACT. 17. BE THAT AS IT MAY, HERE IN THE APPEAL OF THE AS SESSEE AGAINST ORIGINAL ASSESSMENT DONE UNDER SECTION 143(3) OF TH E ACT, CIT(APPEALS) HAD REFUSED TO CONSIDER THE MERITS FOR A REASON THAT SUCH ASSESSMENT STOOD SET ASIDE BY CIT IN A REVISIO NARY PROCEEDINGS I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 20 UNDER SECTION 263 OF THE ACT. BUT, THE POSITION TH AT COMES OUT IS THAT THE SAID REVISIONARY PROCEEDING UNDER SECTION 263 O F THE ACT STOOD QUASHED BY THIS TRIBUNAL VIDE ITS ORDER DATED 22.9. 2006 IN I.T.A. NO. 927/MDS/1998. AS PER THE ASSESSEE, THIS ORDER WAS ALREADY AVAILABLE WITH CIT(APPEALS) WHEN HE WAS CONSIDERING APPEAL OF THE ASSESSEE. THE ORDER OF CIT(APPEALS) WAS PASSED ON 13.3.2009 A ND THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT THE ORDER OF THIS TRIBUNAL QUASHING THE ORDER UNDER SECTION 263 OF THE ACT WAS ALREADY AVAILABLE ON RECORD, IS TRUE. WE ARE OF THE OPINION THAT CIT(AP PEALS) FELL IN GROSS ERROR IN NOT CONSIDERING THE ORDER OF THIS TRIBUNAL QUASHING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. DESPITE SUCH ORDER BEING AVAILABLE ON RECORD, HE TOOK A DECISION THAT ASSESS EES APPEAL DID NOT SURVIVE. WE ARE OF THE OPINION THAT SUCH A REVISIO NARY ORDER HAVING BEEN QUASHED, CIT(APPEALS) WAS DUTY BOUND TO DISPOS E OF THE ASSESSEES APPEAL ON MERITS. THEREFORE, WE HAVE NO HESITATION TO SET ASIDE THE ORDER DATED 13.3.2009 OF CIT(APPEALS) AND REMIT THE MATTER BACK TO HIM FOR CONSIDERATION AFRESH. CIT(APPEALS) HAS TO PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW ON THE APP EAL OF THE ASSESSEE AGAINST ASSESSMENT DONE ON 29.3.96 UNDER S ECTION 143(3) OF THE ACT ON 29.3.96. I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 21 18. NOW COMING TO APPEALS OF THE REVENUE FOR ASSESS MENT YEAR 1994-95, INSOFAR AS IT RELATES TO THE ORDER OF CIT( APPEALS) DATED 29.1.2009 QUASHING THE ASSESSMENT DONE ON THE ASSES SEE PURSUANT TO REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT, LEARNED D.R. WAS FAIR IN ADMITTING THAT THE ORDER OF CIT(APPEALS ) COULD NOT BE FAULTED. THIS IS FOR THE REASON THAT THE REVISIONA RY PROCEEDINGS UNDER SECTION 263 OF THE ACT OF CIT STOOD QUASHED BY THIS TRIBUNAL BY ITS ORDER DATED 22.9.2006 IN I.T.A. NO. 927/MDS/1998. THEREFORE, THE CONSEQUENT ORDER PASSED BY THE A.O. TO GIVE EFFECT TO REVISIONARY PROCEEDINGS WILL NOT SURVIVE. CIT(APPEALS) WAS, TH EREFORE, ABSOLUTELY JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE AG AINST THE ASSESSMENT DONE PURSUANT TO REVISIONARY PROCEEDINGS . 19. THIS LEAVES US WITH THE LAST APPEAL, WHICH IS A GAINST DELETION OF ADDITION OF ` 18,10,000/- BY CIT(APPEALS). SUCH ADDITION WAS DO NE IN THE RE-ASSESSMENT DONE ON THE ASSESSEE UNDER SECTIO N 143(3) READ WITH SECTION 147 OF THE ACT. FOR DELETING THIS ADD ITION, CIT(APPEALS) RELIED ON THE DECISION OF HONBLE APEX COURT IN ASS ESSEES OWN CASE, PART OF WHICH HAS BEEN EXTRACTED BY US AT PARA 16 A BOVE. THE ADDITIONS MADE IN SUCH A RE-ASSESSMENT HAS BEEN SPE LT OUT BY US AT PARA 15 ABOVE. HONBLE APEX COURT CONFIRMED THE OR DER OF HONBLE I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 22 JURISDICTIONAL HIGH COURT ACQUITTING AND EXONERATIN G THE ASSESSEE. HONBLE APEX COURT ACCEPTED THE PLEA OF THE ASSESSE E THAT THE MONEY RECOVERED FROM HIS HOUSE, PURCHASE OF REAL ES TATE, RECOVERY OF GOLD BISCUITS AND FIXED DEPOSITS WERE ALL BELONGING TO HIS WIFE. HONBLE APEX COURT ALSO NOTED THAT THE ENTIRE MONEY HAD BEEN TREATED BY REVENUE AS A PART OF INCOME OF THE WIFE OF THE ASSESSEE IN HER ASSESSMENT. IN VIEW OF THIS, WE ARE OF THE OP INION THAT CIT(APPEALS) WAS JUSTIFIED IN PLACING RELIANCE ON T HE ORDER OF HONBLE APEX COURT AND IN DELETING THE ADDITION MADE IN THE HANDS OF THE ASSESSEE. WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF CIT(APPEALS). 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES, WHEREAS, APPEALS OF THE REVENUE, FOR ASSE SSMENT YEAR 1994-95 STAND DISMISSED. 21. NOW WE TAKE UP APPEAL OF THE REVENUE FOR ASSESS MENT YEAR 1993-94. 22. GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT CIT(APPEALS) DELETED AN ADDITION OF ` 8,00,000/- CONSIDERED BY THE A.O. AS INVESTMENT MADE IN THE NAME OF ASSOCIATED PERSONS. AS PER THE I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 23 REVENUE, CIT(APPEALS) RELIED ON THE DECISION OF HON BLE APEX COURT WHEN THE DEPARTMENT WAS NOT A PARTY TO SUCH PROCEED INGS. EXPLANATION OF THE ASSESSEE WAS THAT THE ASSETS BEL ONGED TO HIS WIFE AND NOT TO HIM. HOWEVER, THE A.O. WAS OF THE OPINI ON THAT THE FIXED DEPOSITS IN THE PUNJAB NATIONAL BANK, THOUGH CLAIME D AS OWNED BY ASSESSEES WIFE, WAS NOT CORROBORATED AND THEREFORE , HAD TO BE CONSIDERED IN ASSESSEES HAND. CIT(APPEALS) HAD RE LIED ON THE DECISION OF HONBLE APEX COURT IN ASSESSEE'S OWN CA SE MENTIONED SUPRA, AND WAS OF THE OPINION THAT THE FIXED DEPOSI TS HAD TO BE EXPLAINED ONLY BY THE ASSESSEES WIFE AND NOT BY TH E ASSESSEE. CIT(APPEALS) ALSO NOTED THAT SUCH ADDITIONS WERE MA DE SUBSTANTIALLY IN THE HANDS OF THE ASSESSEES WIFE ALSO. HE, THER EFORE, DELETED THE ADDITIONS MADE IN THE ASSESSEES HAND. 23. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT THE DECISION OF HONBL E APEX COURT OUGHT NOT HAVE BEEN RELIED SINCE THE PROCEEDINGS BE FORE ITO WERE NOT ON THE SAME FOOTING AS THAT OF CRIMINAL PROCEED INGS. 24. ASSESSEE SUPPORTED THE ORDER OF CIT(APPEALS). I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 24 25. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IT HAS ALREADY BEEN HELD BY US AT PARA 19 ABOVE THA T CIT(APPEALS) WAS JUSTIFIED IN RELYING ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF THE ASSESSEE THOUGH IT RELATED TO A PROCEED ING UNDER PREVENTION OF CORRUPTION ACT. IN THE FACE OF THIS, WE ARE OF THE OPINION THAT CIT(APPEALS) WAS JUSTIFIED IN DELETING THE ADD ITION FOR THE IMPUGNED ASSESSMENT YEAR ALSO. 26. APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 1993- 94 THUS STANDS DISMISSED. 27. NOW COMING TO LAST OF THE APPEAL WHICH IS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1995-96, ITS GRIEVANCE IS THAT CIT(APPEALS) HELD THE ASSESSMENT TO BE NOT APPEALABLE SINCE SUCH ASSE SSMENT WAS DONE IN PURSUANCE OF THE DIRECTION OF CIT UNDER SEC TION 263 OF THE ACT. 28. SHORT FACTS ARE THAT THE ORIGINAL ASSESSMENT WA S SET ASIDE BY CIT VIDE HIS ORDER DATED 26.3.98 UNDER SECTION 263 OF THE ACT, FOR A REASON THAT CERTAIN DEPOSITS MADE IN SAVINGS BANK A CCOUNT IN ANDHRA BANK, CHETPET BRANCH, BY THE ASSESSEE, IN THE NAME OF SMT. USHA RAGHAVAN, THOUGH FOUND AT THE TIME OF SEARCH, WAS N OT CONSIDERED BY I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 25 THE A.O. THEREFORE, ACCORDING TO THE CIT, THE ASSE SSMENT WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. PURSUANT TO ORDER UNDER SECTION 263 OF THE ACT, PROCEEDINGS WER E INITIATED AGAINST ASSESSEE FOR A FRESH ASSESSMENT AND IN SUCH ASSESSMENT, AN ADDITION OF ` 4,77,500/- WAS MADE CONSIDERING THESE TO BE DEPOSI TS HELD IN BENAMI BY THE ASSESSEE AND A FURTHER ADDITI ON OF ` 1,90,000/- WAS ALSO MADE FOR INTEREST ACCRUED ON SUCH DEPOSITS . 29. APPEAL WAS FILED BY THE ASSESSEE BEFORE CIT(APP EALS) AGAINST SUCH AN ASSESSMENT. ARGUMENT OF THE ASSESSEE WAS T HAT HONBLE JURISDICTIONAL HIGH COURT IN ITS JUDGMENT DATED 11. 7.2001 IN CRIMINAL APPEAL (NO. 231 OF 2000) FILED BY THE ASSESSEE HAD HELD THAT ASSESSEE HAD NO CONNECTION WITH THE FIXED DEPOSITS. AS PER THE ASSESSEE, IT WAS OBSERVED BY HONBLE JURISDICTIONAL HIGH COURT THAT THE PERSONS, IN WHOSE NAME THE DEPOSIT STOOD, MIGHT HAVE BEEN BENAMI OF THE COMPANY OR THE ASSESSEES WIFE, BUT C ERTAINLY NOT BENAMI OF THE ASSESSEE. HOWEVER, CIT(APPEALS) REFU SED TO CONSIDER THE APPEAL OF THE ASSESSEE ON MERITS AND THE REASON S GIVEN BY HIM WERE AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A ND RIVAL SUBMISSIONS. THE ASSESSING OFFICER HAS PASSE D THE IMPUGNED ASSESSMENT ORDER AS PER THE DIRECTIONS GIV EN BY THE COMMISSIONER OF INCOME TAX U/S. 263 OF THE I.T. AC T DATED I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 26 20.06.2000. SINCE THE DIRECTIONS U/S. 263 OF THE I.T. ACT IS A CLEAR BINDING ON THE ASSESSING OFFICER, I HOLD THE VIEW THAT THE BEST FORUM TO HEAR TO THE APPEAL IS THE HONBLE ITA T. AS PER SEC. 246A, THE APPEALABLE ORDERS BEFORE THE CIT(APP EALS) DOES NOT FIND A PLACE IN THE ORDER PASSED U/S. 263. HEN CE, THE APPEAL FILED BEFORE THE CIT(APPEALS) IS FOUND TO BE INFRUC TUOUS AND FOR ALL STATISTICAL PURPOSES THE APPEAL IS DISMISSED. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 30. NOW BEFORE US, ASSESSEE APPEARING IN PERSON, ST RONGLY ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT CIT(APPEALS) DID NOT CONSIDER HIS APPEAL DESPITE JURISDICTIONAL HIGH COURTS JUDGMENT IN HIS FAVOUR. ACCORDING TO ASSESSEE, JUST BECAUSE HE HAD NOT FILED APPEAL AGAINST THE REVISIONARY ORDER OF CIT, IT WAS NOT CORRECT TO SAY THAT AN APPEAL WOULD NOT LIE AGAINST THE PURSUANT A SSESSMENT DONE. 31. PER CONTRA, LEARNED D.R. SUBMITTED THAT ISSUES WHICH HAD OBTAINED FINALITY IN A REVISIONARY PROCEEDING, COUL D NOT BE RE-AGITATED BY WAY OF AN APPEAL AGAINST THE ASSESSMENT. FOR TH IS, RELIANCE WAS PLACED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HERDILLIA CHEMICALS LTD. VS. CIT ( 221 ITR 194). 32. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT ASSESSEE HAD NOT FILED AN APPEAL AGAINST REVISIONARY ORDER UNDER SECTION 263 OF THE ACT. THE RE IS ALSO NO DISPUTE THAT THE APPEAL FILED BY THE ASSESSEE BEFOR E CIT(APPEALS) I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 27 WAS AGAINST THE ASSESSMENT DONE UNDER SECTION 143(3 ) READ WITH SECTION 263 OF THE ACT OR IN OTHER WORDS, AGAINST T HE ASSESSMENT PURSUANT TO REVISIONARY PROCEEDINGS. CIT(APPEALS) REFUSED TO CONSIDER THE APPEAL ON MERITS FOR A REASON THAT THE ORDER OF THE A.O. WAS PURSUANT TO DIRECTIONS OF CIT UNDER SECTION 263 OF THE ACT. NO DOUBT, HONBLE BOMBAY HIGH COURT IN THE CASE OF HERDILLIA CHEMICALS LTD. (SUPRA) HAD HELD THAT IN AN APPEAL AGAINST A F RESH ORDER PASSED BY ITO FOR GIVING EFFECT TO A REVISIONARY ORDER OR APPELLATE ORDER, ONLY SUCH ISSUES COULD BE AGITATED WHICH HAD NOT OBTAINE D FINALITY BY VIRTUE OF EARLIER ORDERS IN REVISION OR APPEAL. BUT, HERE , IF WE HAVE A LOOK AT THE ORDER DATED 20.3.2000 OF CIT UNDER SECTION 263 OF THE ACT, FINDING APPEARING AT PARA 5 OF THE SAID ORDER, READ S AS UNDER:- 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND FOR THE SUBSTANTIAL REASONS SET OUT IN MY ORDER U/S 263 DATED 26.3.1998 EXTRACTED ABOVE, I INVOKE THE PROVISIONS OF SECTION 263 AND SET ASIDE THE ASSESSM ENT ORDER DATED 202.1998 FOR 1995-96 AND DIRECT THE ASSESSING OFFICER TO FRAME A FRESH ASSESSMENT ORDER AFTER DULY CONSIDERING THE CASH REMITTANCES OF ` 1,27000, ` 1,35,000 AND ` 2,15,000 MADE ON 11.8.1994, 17.8.199 4 AND 12.9.1994 RESPECTIVELY INTO SAVINGS BANK ACCOUNT NO .108 WITH ANDHRA BANK, CHETPET BRANCH IN THE NAME OF SMT . USHA RAGHAVAN. THE ASSESSEE WILL BE FREE TO FURNIS H BEFORE THE ASSESSING OFFICER HIS EXPLANATION AND AN Y EVIDENCE HE WOULD LIKE TO RELY ON IN THIS REGARD. THE ASSESSING OFFICER SHALL MAKE A FRESH ASSESSMENT IN I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 28 ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE REASO NABLE OPPORTUNITY OF BEING HEARD. ASSESSMENT FOR 1995-96 IS SET ASIDE. THE CIT HAS REQUESTED THE A.O. TO MAKE A FRESH ASSE SSMENT IN ACCORDANCE WITH LAW. ASSESSING OFFICER WAS DIRECTE D TO FRAME A FRESH ASSESSMENT AFTER DULY CONSIDERING EXPLANATION OF TH E ASSESSEE. THUS, IT CANNOT BE SAID THAT ANY FINALITY HAS BEEN REACHED BY VIRTUE OF THE ORDER OF THE CIT WITH REGARD TO THE ITEMS MENTI ONED BY HIM IN THE SAID ORDER. HE HAD SIMPLY REQUESTED THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER. WHEN IN A REVISIONARY ORDE R UNDER SECTION 263 OF THE ACT, CIT DID NOT SET ASIDE THE ASSESSMEN T AS SUCH, BUT MERELY OBSERVED THAT THE AMOUNTS SHOULD BE CONSIDER ED BY HIM AFTER TAKING AN EVIDENCE FROM THE ASSESSEE, WE CANNOT SAY THAT FRESH ORDER PASSED BY THE ASSESSING AUTHORITY PURSUANT TO REVIS IONARY PROCEEDINGS, WAS AN ORDER PASSED FOR GIVING EFFECT TO THE DIRECTIONS OF THE REVISIONING AUTHORITY PER SE. IT WAS ONLY AN O RDER PASSED IN COMPLIANCE OF THE DIRECTIONS OF CIT AND IN OUR OPIN ION, AGAINST SUCH AN ORDER, APPEAL WAS MAINTAINABLE BEFORE CIT(APPEAL S). FOR TAKING THIS VIEW, WE ARE FORTIFIED BY THE DECISION OF MUMB AI BENCH OF THIS TRIBUNAL IN THE CASE OF SADHURAM PATEL & SONS V. IT O (120 ITD 291). WE ARE, THEREFORE, OF THE OPINION THAT CIT(APPEALS) FELL IN ERROR IN NOT I.T.A. NOS. 814, 815, 952, 953 & 627/MDS/09 29 CONSIDERING THE APPEAL ON MERITS. WE, THEREFORE, S ET ASIDE THE ORDER OF CIT(APPEALS) AND REMIT THE APPEAL BACK TO HIM FO R CONSIDERATION AFRESH IN ACCORDANCE WITH LAW AND ALSO DIRECT HIM T O DULY CONSIDER THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AND HONBLE APEX COURT IN ASSESSEE'S OWN CASE. 33. APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 1995 -96 IS ALLOWED FOR STATISTICAL PURPOSES. 34. TO SUMMARISE THE RESULT, APPEALS FILED BY THE A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES, WHEREAS, APPEALS FILED BY THE REVENUE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 31 ST OF MAY, 2012. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 31 ST MAY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-IV, CHENNAI-34 (4) CIT, CENTRAL CIRCLE-I, CHENNAI-34 (5) CIT-X, CHENNAI-34 (6) D.R. (7) GUARD FILE