ACIT, Madurai V. Smt R.D.Manjula, Madurai

ITSSA 188/CHNY/2006

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8657 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-01-2011
• Assessment Year: misc
• Appeal Filed On: 18-09-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained investment; Source of fund; Retrospective amendment; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T. (SS) A. NO. 188/MDS/2006 BLOCK ASSESSMENT YEARS : 1991-92 TO 2000-01 & 2001- 02(PART) THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-II, MADURAI. V. SMT. R.D. MANJULA, L/R OF LATE R.V. DESMUKH, 44, HAKKIM AJMALKHAN ROAD, MADURAI-625 001. (PAN: AIQPM8206L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN, JR.STANDING COUNSEL RESPONDENT BY : SHRI S. SRIDHAR O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II, MADURAI IN ITA NO. 203/2005-06 DAT ED 29-06-2006 FOR THE BLOCK ASSESSMENT PERIOD 1991-92 TO 2000-01 AND 2001-02 (P ART). 2. SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL REPR ESENTED ON BEHALF OF THE REVENUE AND SHRI S. SRIDHAR, ADVOCATE REPRESENTED O N BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) IS OPPOSED TO THE FACTS AND CIRCUMSTANCES OF THE CASE. I.T(SS) A. NO.188/MDS/2006 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN HOLDING THAT SOURCE FOR OPENING CREDIT OF RS.33,930 /- WAS AVAILABLE. 2.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO NOTE THAT THE ESTIMATION MADE BY THE ASSESSING OFFI CER WAS BASED ON ADMISSION OF LOWER PROFIT FOR THE SUBSEQUENT YEAR. 2.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO NOTE THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENC E IN SUPPORT OF HER CLAIM OF PAST SAVINGS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DELETING ADDITION ON AGRICULTURAL INCOME. 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO NOTE THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND THE RECEIPTS & PAYMENTS ACCOUNT FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS ONLY ON AN ESTI MATE BASIS TO SUIT THE CONVENIENCE OF THE ASSESSEE. 3.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO NOTE THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN RESPECT OF THE AGRICULTURAL OPERATION AND AGRICULTURAL INCOME. 3.4 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS FAILED TO APPRECIATE THAT IN THE SCRUTINY ASSESSMEN T FOR ASSESSMENT YEARS 1993-94 & 1994-95 IN THE CASE OF ASSESSEE'S HUSBAND, THE NET AGRICULTURAL INCOME WAS ESTIMATED AT RS.2000/- PER ACRE ONLY. 3.5 THE MADRAS HIGH COURT DECISION IN THE CASE OF M/S. A.R ENTERPRISES 274 ITR 110 RELIED ON BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. 3.6 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO NOTE THAT THE CASE LAWS RELIED ON ARE DISTINGUISHABLE FR OM THE FACTS OF THE ASSESSEE'S CASE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED .IN ALLOWING ASSESSEE'S APPEAL ON RECEIPT FROM THE ESTA TE OF LATE SEETHALAKSHMI AMMAL. 4.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ESTATE ACCOUNT PRODUCED BY THE ASSESSEE TO I.T(SS) A. NO.188/MDS/2006 3 EXPLAIN THE RECEIPT FROM THE ESTATE WAS NOT FOUND A T THE TIME OF SEARCH. 4.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO NOTE THAT NEITHER LATE SEETHALAKSHMI AMMAL NOR THE ESTATE WAS ASSESSED TO TAX DUE TO WHICH CROSS VERIFICATION WAS NOT POSSIBLE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DIRECTING TO RE-WORK LOSS FROM CHOKKIKULAM PROPERTY . 5.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN HOLDING THAT ADDITIONAL INTEREST PAID TO LIC IS ALL OWABLE AND NOT IN THE NATURE OF PENALTY. 5.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO APPRECIATE THAT EVEN THOUGH THE PROPERTY WAS LET OU T ON A LATER DATE THE DEEMED RENT IS TAXABLE. 5.4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO NOTE THAT ADDITIONAL INTEREST WAS CHARGED TOWARDS D ELAY IN PAYMENT AND AMOUNTS TO INTEREST ON INTEREST WHICH IS NOT AL LOWABLE. 5.5 THE LEARNED COMMISSIONER OF' INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT SUPREME COURT'S VERDICT IN THE CASE OF SHEW KISHAN BHATTAR 89 ITR 61 SQUARELY APPLIES TO THE ASSESSEE' S CASE. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DELETING CAPITAL GAINS ON SALE OF AGRICULTURAL L AND. 6.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO APPRECIATE THAT THE LAND WAS NOT UTILISED FOR THE P URPOSE OF AGRICULTURAL AT THE TIME OF SALE. 6.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HIMSELF HAS NOT REPORT ED ANY AGRICULTURAL INCOME FROM THE SAID LAND FROM ASSESSM ENT YEAR 1997- 98 ONWARDS. 6.4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS NOT BROUGHT ANY PROOF IN RESPECT OF CLAIM OF DROUGHT FR OM ASSESSMENT YEAR 1998-99. 6.5 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT AS PER PAGE 4 OF THE AGRE EMENT I.T(SS) A. NO.188/MDS/2006 4 THE ASSESSEE WAS TO SELL THE LAND EITHER IN THE FOR M OF LAND OR IN THE FORM OF PLOTS TO THE PARTIES CONCERNED OR TO THE PARTIES TO BE NOMINATED BY THE BUYER. 7. THE LEARNED CIT(A) ERRED IN HOLDING THAT FOR THO SE YEARS WHERE THE TOTAL INCOME IS BELOW THE TAXABLE LIMIT, THE SA ME CAN NOT BE INCLUDED AS UNDISCLOSED INCOME. 7.2 THE LEARNED, CIT(A) FAILED TO NOTE THAT AS PER CLAUSE (C) OF SEC. 158BB(1) INTRODUCED BY THE FINANCE ACT, 2002, WITH RETROSPECTIVE EFFECT FROM 1/7/1995, THREE CONDITIONS ARE PRESCRIB ED VIZ. ONE - THAT THE ASSESSEE OUGHT TO HAVE MAINTAINED REGULAR BOOKS OF ACCOUNTS; TWO - THAT SUCH BOOKS OUGHT TO HAVE BEEN MAINTAINED AS ON THE DATE OF OR AT THE TIME OF SEARCH; AND THREE - THAT AS PER SUCH BOOKS, THE INCOME AS COMPUTED WAS BELOW THE ON -TAXABLE MAXIMUM LIMIT FOR THE RESPECTIVE YEA R. 7.3 THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THA T THE ASSESSING OFFICER HAD REJECTED THE ASSESSES CONTENTION MAINL Y BECAUSE BOOKS OF ACCOUNTS WERE NOT MAINTAINED BY THE ASSESSEE. 8. THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSES SING OFFICER TO DELETE SURCHARGE LEVIED. 8.2 THE LEARNED CIT(A) FAILED TO NOTE THAT THE AMEN DMENT BY THE FINANCE ACT (2002) IS ONLY CLARIFICATORY IN NATURE AND HENCE CAN NOT BE CONSTRUED THAT IT WOULD HAVE APPLICATION ONLY IN RESPECT OF SEARCHED CONDUCTED ON OR AFTER 1/6/202. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF ASSESSIN G OFFICER RESTORED. 4. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE L EARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE HAS INVOKED THE PR OVISIONS OF RULE 27 OF THE ITAT RULES, 1963 AND IS SUPPORTING THE ORDER OF THE LEARNED CIT(A) ON THE GROUND THAT NO SATISFACTION HAD BEEN RECORDED BEFOR E INITIATING THE PROCEEDINGS UNDER SECTION 158BD IN THE ASSESSEES CASE. IT WAS THE SUBMISSION THAT THE I.T(SS) A. NO.188/MDS/2006 5 ASSESSEE IS THE WIFE OF ONE SHRI R.V. DESHMUKH WHO HAS SINCE EXPIRED. IT WAS IT WAS THE SUBMISSION THAT THERE WAS A SEARCH AND S EIZURE OPERATION IN THE CASE OF SHRI R.V. DESHMUKJH ON 5.1.2001. IT WAS THE SUB MISSION THAT ON THE BASIS OF THE EVIDENCES FOUND IN THE COURSE OF SEARCH THE ASS ESSING OFFICER HAD TREATED THE SAME AS THE UNDISCLOSED INCOME OF THE ASSESSEE AND MADE THE ASSESSMENT. IT WAS THE SUBMISSION THAT THE NOTICE U/S. 158BD HAD B EEN ISSUED ON THE ASSESSEE ON 20-7-2001. IT WAS THE SUBMISSION THAT BEFORE TH E ISSUE OF THE NOTICE U/S 158BD THE REQUISITE SATISFACTION HAD NOT BEEN RECOR DED. CONSEQUENTLY, IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. ASSISTANT COMMISSIONER OF INCOME-TAX, REPORTED I N 289 ITR 341, THE NOTICE ISSUED U/S. 158BD AND THE CONSEQUENTIAL ASSESSMENT WAS LIABLE TO BE HELD TO BE BAD AND VOID AB INITIO. 5. IN REPLY, THE LEARNED STANDING COUNSEL SUBMITTED THAT THE SATISFACTION HAS BEEN RECORDED IN PAGE 2, PARA 3 OF THE ASSESSMENT O RDER WHEREIN IT IS RECORDED AS FOLLOWS : 3. PERUSAL OF THE SEIZED MATERIALS AND THE STATEM ENTS RECORDED FROM THE ASSESSEE AND CONNECTED PERSONS RE VEALED THAT SHRI R V DESHMUK HAD INVESTED THE UNDISCLOSED INCOME IN VARIOUS INVESTMENTS BOTH IN HIS NAME AND IN THE NAME OF HIS WIFE SMT R D MANJULA, THE ASSESSEE. WITH A VIE W TO FIND OUT WHETHER THE ASSESSEE SMT. R D MANJULA HAS INDEP ENDENT SOURCES OF INCOME TO EXPLAIN THE INVESTMENTS IN HER NAME AND TO ASSESSEE THE UNEXPLAINED INVESTMENTS IN HER HANDS, IF I.T(SS) A. NO.188/MDS/2006 6 CALLED FOR, NOTICE U/S 158BD READ WITH SECTION 158B C OF THE ACT WAS ISSUED ON 20-07-2001 REQUESTING TO FILE THE RETURN OF INCOME FOR THE BLOCK PERIOD 1.4.1990 TO 5.1.2001 RE LEVANT FOR THE ASSESSMENT YEARS 91-92 TO 2000-01 AND ASSES SMENT YEAR 2001-02 (PART). HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SEC TION 158BD OF THE INCOME TAX ACT, 1961 READS AS FOLLOWS : 158BD. WHERE THE ASSESSING OFFICER IS SATISFIED TH AT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY AS SETS WERE REQUISITIONED UNDER SECTION 132A, THEN, THE BOOKS O F ACCOUNT, OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL B E HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED UNDER SECTION 158BC AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTE R SHALL APPLY ACCORDINGLY. 7. A PERUSAL OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. ASSISTANT COMMISSIONER OF INCO ME-TAX AND ANOTHER, REFERRED TO SUPRA, SHOWS THAT THE HON'BLE SUPREME C OURT WHILE INTERPRETING THE PROVISIONS OF SECTION 158BD HAS HELD AS FOLLOWS : THE CONDITION PRECEDENT FOR INVOKING A BLOCK ASSES SMENT IS THAT A SEARCH HAS BEEN CONDUCTED UNDER SECTION 132, OR DOC UMENTS OR ASSETS HAVE BEEN REQUISITIONED UNDER SECTION 132A. THE SA ID PROVISION WOULD I.T(SS) A. NO.188/MDS/2006 7 APPLY IN THE CASE OF ANY PERSON IN RESPECT OF WHOM SEARCH HAS BEEN CARRIED OUT UNDER SECTION 132A OR DOCUMENTS OR ASSE TS HAVE BEEN REQUISITIONED UNDER SECTION 132A. SECTION 158BD, H OWEVER, PROVIDES FOR TAKING RECOURSE TO A BLOCK ASSESSMENT IN TERMS OF SECTION 158BC IN RESPECT OF ANY OTHER PERSON, THE CONDITIONS PRECEDE NT WHEREFOR ARE : (I) SATISFACTION MUST BE RECORDED BY THE ASSESSING OFFICER THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THA N THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 O F THE ACT; (II) THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS S EIZED OR REQUISITIONED HAD BEEN HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON; AND (III) THE ASSESSING OFFICER HAS PROCEEDED UNDER SECTION 158BC AGAINST SUCH OTHER PE RSON. THE CONDITIONS PRECEDENT FOR INVOKING THE PROVISIO NS OF SECTION 158BD, THUS, ARE REQUIRED TO BE SATISFIED BEFORE THE PROVI SIONS OF THE SAID CHAPTER ARE APPLIED IN RELATION TO ANY PERSON OTHER THAN THE PERSON WHOSE PREMISES HAD BEEN SEARCHED OR WHOSE DOCUMENTS AND OTHER ASSETS HAD BEEN REQUISITIONED UNDER SECTION 132A OF THE ACT. A PERUSAL OF THE SAID PARA 3 AT PAGE 2 OF THE ASSES SMENT ORDER CLEARLY SHOWS THAT THIS IS NOT THE SATISFACTION THAT IS PRESCRIBED IN THE PROVISIONS OF SECTION158BD. IT REQUIRES THAT THE SATISFACTION IS TO BE RECORDED IN THE FILE OF THE PERSONS SEARCHED AND FROM WHOM THE SEIZED MATERIALS HAVE BEEN FOUND SATISFYING THAT THE SEIZED MATERIAL SO FOUND BELONGS TO THE PERSON ON WHOM NOT ICE U/S. 158BD IS BEING PROPOSED TO BE ISSUED. IN THESE CIRCUMSTANCES, AS THERE IS NO SATISFACTION AS CONTEMPLATED UNDER THE PROVISIONS OF THE STATUTE WH ICH HAS BEEN RECORDED IN THE CASE OF THE ASSESSEE HEREIN, WE ARE OF THE VIEW THA T RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F MANISH MAHESHWARI, REFERRED TO SUPRA, THE NOTICE ISSUED IS BAD IN LAW AND THE CONSEQUENTIAL ASSESSMENT ORDER IS VOID AB INITIO. I.T(SS) A. NO.188/MDS/2006 8 8. IN REGARD TO THE PRAYER OF THE ASSESSEE RAISED I N RESPECT OF THE ISSUE OF THE VALIDITY OF THE NOTICE U/S. 158BD, AS WE HAVE D ISMISSED THE APPEAL OF THE REVENUE BY QUASHING THE ASSESSMENT ON ACCOUNT OF TH E INVALIDITY OF THE NOTICE ISSUED U/S 158BD, WE ARE NOT GOING INTO THE MERITS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 10. THE ORDER WAS PRONOUNCED IN THE COURT ON 28/01/ 2011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 28 TH JANUARY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE