ACIT, Trichy V. Shri R.Sathyavageeswaran, Trichy

ITSSA 21/CHNY/2010

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2206 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 15-03-2016
• Assessment Year: misc
• Appeal Filed On: 30-08-2010
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Block assessment
• Section: 143(3); 132

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T. (SS) A.NO. 2 1 /MDS/201 0 BLOCK ASSESSMENT PERIOD : 199 6 - 9 7 TO 01 - 02 & 2002 - 03(PART) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I I , TIRUCHIRAPALLI. VS. SHRI R. SATHYAVAGEESWARAN, S - 1, BHAGYA ABODES, 45, THIRUVADI ST., S RIRANGAM, TRICHY 620 006. [PAN: A GRPS0792C ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A.V. SREEKANTH , J CIT / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 17 . 0 3 .201 6 / D ATE OF P RONOUNCEMENT : 10 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), TIRUCHIRAPPALLI DATED 13.05.2010 RELEVANT TO T HE BLOCK ASSESSMENT PERIOD 1996 - 97 TO 2001 - 02 AND 2002 - 03 (PART). THE REVENUE HAS RAISED THE FOLLOWING CONCISE GROUNDS: 1. THE CIT(A) ERRED IN HOLDING THAT THERE IS NO MATERIAL TO SHOW ANY UNDISCLOSED INCOME IN RESPECT OF THE ASSESSEE TO WARRANT ISSUE OF NOTICE U/S 158BD WITHOUT APPRECIATING THE FACT THAT THE DEPOSITION OF THE ASSESSEE BEFORE THE DDIT ON THE DATE OF SURVEY ADMITTING THAT AN AMOUNT OF RS.1,26,982/ - OUT OF HIS INVESTMENTS WAS FROM UNDISCLOSED INCOME, IS THE BASIS FOR THE ASSESSMENT. I.T.(SS)A. NO. 2 1 /M/1 0 2 2. TH E CIT(A) ERRED IN DELETING THE ADDITION OF RS.25,19,550/ - AS UNEXPLAINED CREDIT U/S 68, WHEN THE ASSESSEE HAS FAILED TO PROVE THE CREDITS TO THE SATISFACTION OF THE ASSESSING OFFICER. 3. THE CIT(A) ERRED IN DELETING THE ADDITION OF INCOME RETURNED IN TH E NORMAL COURSE WITHOUT APPRECIATING THE FACTS THAT ON THE DATE OF SURVEY THE ASSESSEE HAS NOT FILED THE REGULAR RETURNS AND THE DUE DATE FOR FILING THE RETURN HAS EXPIRED AND THE ADDITION WAS MADE IN ACCORDANCE WITH THE PROVISION OF 158BB(1)(C)(CA). 2. THE APPEAL OF THE REVENUE IS FOUND TO HAVE BEEN FILED LATE BY THREE DAYS. THE ASSESSING OFFICER HAS FILED AFFIDAVIT FOR CONDONATION OF DELAY. BY PLEADING THE REASONS STATED IN THE AFFIDAVIT, THE LD. DR HAS REQUESTED FOR CONDONING THE DELAY AND TO ADMIT TH E APPEAL FOR HEARING. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT SERIOUSLY OBJECT TO THE SUBMISSIONS OF THE LD. DR. ACCORDINGLY, WE CONDONE THE DELAY OF THREE DAYS IN FILING THE APPEAL AND ADMIT THE APPEAL FOR HEARING. 3 . BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] WAS CARRIED OUT ON 06.12.2001 AT NO. 54 - F, JAFFERSHA STREET, TRICHY IN THE CASE OF M/S. KALYANI COVERING GROUP. SUBSEQUENTLY, A SEARCH WAS ALSO CONDUCTED ON 11.12.2001 IN THE CASE OF M/ S. BHARATHI NAGAR REAL ESTATE, AN AOP FUNCTIONING IN THE SAME PREMISES. DURING TH E COURSE OF SEARCH, AN ACCOUNT BOOK RELATING TO THE TRANSACTIONS FROM 05.06.1996 TO 04.12.2001 WAS FOUND AND SEIZED VIDE ACB/B&D/S/3. VIDE L.F. 101 OF THE SEIZED ACCOUNT BOOK, THE PRESENT ASSESSEE R. SATHYAVAGEESWARAN HAS INVESTED .16,71,814/ - IN HIS CAPITAL ACCOUNT. VIDE ANSWER TO QUESTION NO.1 OF THE STATEMENT RECORDED BEFORE THE DDIT(INV.) ON I.T.(SS)A. NO. 2 1 /M/1 0 3 10.12.2001, THE ASSESSEE HAS DEPOSED THAT HE IS LOOKING AFTER ALL THE MAIN ACTIVIT IES OF THIS REAL ESTATE, ACTUALLY CARRIED ON AS AN AOP BY FIVE MEMBERS INCLUDING HIMSELF. THE ASSESSING OFFICER HAS OBSERVED THAT THE INCOME TAX RETURNS FROM THE ASSESSMENT YEAR 1997 - 98 ONWARDS TO TILL THE DATE OF SEARCH WERE NOT FOUND TO HAVE BEEN FILED B Y THE ASSESSEE SINCE HE WAS CARRYING OUT REAL ESTATE BUSINESS FROM THE ASSESSMENT YEAR 1997 - 98. FURTHER, THE ASSESSING OFFICER HAS NOTICED FROM THE SEIZED ACCOUNT BOOKS THAT THE CREDIT IN THE CAPITAL ACCOUNT WAS .16,71,814/ - . WHEN THE ASSESSEE WAS QUESTIONED ABOUT HIS TRANSACTION IN THE REAL ESTATE, VIDE ANSWER TO QUESTION NO.4 OF THE STATEMENT DATED 11.12.2001 BEFORE THE DDIT(INV.), THE ASSESSEE HAS DEPOSED THAT THE UNDISCLOSED INCOME INVESTED WA S ONLY .1,26,98 2/ - . AS PER THE SEIZED MATERIAL ACB/B&D/S SERIAL NO.3, THE ASSESSEE W AS FOUND TO HAVE BEEN MADE SUBSTANTIAL INVESTMENT IN HIS CAPITAL ACCOUNT IN THE BOOKS OF THE AOP , M/S. BHARATHI NAGAR REAL ESTATE AND ACCORDING TO ASSESSEE'S O WN STATEMENT BEFORE THE DDLT (LNV . ), THIS INVESTMENT WAS OUT OF INCOME FROM UNDISCLOSED SOURCES ALSO, NOTICE UNDER SECTION 158 BD READ WITH SEC TION 158BC OF THE ACT WAS ISSUED TO THE ASSESSEE ON 19.12.2003, CALLING FOR THE RETURN S FOR THE BLOCK PERIOD 01.04.1995 TO 06.12.2001 RELEVANT FOR THE ASSESSMENT YEARS 1996 - 97 TO 2001 - 02 & 2002 - 03(PART) AND SERVED ON THE ASSESSEE ON 23.12.2003. THE BLOCK RETURN IN FORM 2 B WAS, HOWEVER, FILED BY THE ASSESSEE ONLY ON 12.02.2004 ADMITTING UNDISCLOSED INCOME FOR THE BLOCK ASSESSMENT AS ONLY 'NIL'. I.T.(SS)A. NO. 2 1 /M/1 0 4 4 . THEREAFTER, T HE CASE WAS THEN TAKEN UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 13.02.2004. THE ASSESSEE AND HIS AR APPEARED AND FILED CONFIRMATION LETTERS FROM CREDITORS FROM WHOM THE AMOUNTS WERE STATED TO HAVE BEEN BORROWED AND CRED ITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. BHARATHI NAGAR REAL ESTATE. AFTER SCRUTINY OF THE PARTICULARS/CLARIFICATIONS FILED BY THE ASSESSEE AND ALSO AFTER SCRUTINY OF THE STATEMENTS RECORDED FROM THE ALLEGED CREDITORS AND AFTER DISC USSION WITH THE ASSESSEE AND HIS REPRESENTATIVE THE ASSESSMENT WA S COMPLETED UNDER SECTION 158BD R.W.S. 143(3) OF THE ACT BY MAKING VARIOUS ADDITIONS. 5. ON APPEAL, THE LD. CIT(A), AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE AS WELL AS CO NSIDERING VARIOUS DECISIONS, ALLOWED THE APPEAL FILED BY THE ASSESSEE. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR STRONGLY CONTENDED THAT THE ASSESSEE HAS ADMITTED UNDISCLOSED INCOME BEFORE THE DDIT(INV.), WHICH WAS THE BASE AND BECOME A VALID EVIDENCE. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY ISSUED AND SERVED THE NOTICE UNDER 158BD OF THE ACT ON THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. C I T( A). FURTHER, BY RELYING ON THE I.T.(SS)A. NO. 2 1 /M/1 0 5 DECISION IN THE CASE OF MANISH MAHESHWARI V. ACIT & ANOTHER 289 ITR 341 (SC), HE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT RECORDED SATISFACTION AS REQUIRED UNDER SECTION 158BD OF THE ACT 8 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, A SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 11.12.2001 IN THE CASE OF M/S. BHARATHI NAGAR REAL ESTATE, AN AOP, WHEREIN THE ASSESSEE IS ALSO ONE OF T HE MEMBER. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 158 BD READ WITH SEC TION 158BC OF THE ACT TO THE ASSESSEE ON 19.12.2003, CALLING FOR THE RETURN FOR THE BLOCK PERIOD 01.04.1995 TO 06.12.2001 RELEVANT FOR THE ASSESSMENT YEARS 1996 - 97 TO 2001 - 02 & 2002 - 03(PART) . 9. IN THIS CASE, THE SEARCH UNDER SECTION 132 OF THE ACT ON 06.12.2001 WAS UNDERTAKEN AT THE PREMISES OF M/S. BHARATHI NAGAR REAL ESTATE, AN AOP IN WHICH THE ASSESSEE IS ALSO ONE OF THE MEMBER, BUT THE PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE, THOUGH THE ASSESSEE BEING AN INDIVIDU AL AND ONE OF THE MEMBER OF AOP. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND VERIFYING THE ASSESSMENT ORDER OF THE ORIGINALLY SEARCHED PERSON M/S. BHARATHI NAGAR REAL ESTATE, THE LD. CIT(A) HAS O BSERVED AS UNDER: I, THEREFORE, HOLD THAT THERE IS NO MATERIAL TO SHOW ANY UNDISCLOSED INCOME IN RESPECT OF THE APPELLANT TO WARRANT ISSUE OF NOTICE UNDER SECTION I.T.(SS)A. NO. 2 1 /M/1 0 6 158BD AND HENCE THE PROCEEDINGS INITIATED UNDER SECTION 158BD WERE INVALID IN LAW AND THE A SSESSMENT IS ANNULLED. 10. A T THE TIME OF HEARING THE BENCH ASKED THE LD. DR TO PRODUCE COPY OF THE SATISFACTION RECORDED BY THE ASSESSING OFFICER WHILE ISSUING NOTICE TO THE ASSESSEE UNDER SECTION 158BD R.W.S. 158BC OF THE ACT. HOWEVER, THE LD. DR HAS INFORMED THE BENCH THAT SATISFACTION RECORDED BY THE ASSESSING OFFICER WAS NOT TRACEABLE. 1 1 . NO SEARCH WARRANT HAS BEEN ISSUED TO THE ASSESSEE OR NO SEARCH WAS UNDERTAKEN IN THE PREMISES OF THE ASSESSEE. THE SEARCH WAS ACTUALLY TAKEN PLACE IN THE PREMI SES OF M/S. BHARATHI NAGAR REAL ESTATE, WHERE THE ASSESSEE IS THE ONE OF THE MEMBER OF THE AOP. UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER WHO SEIZED OF THE MATER IAL AGAINST THE RAIDED PERSON REACHES SUCH SATISFACTION THAT ANY UNDISCLOSED INCOME BELO NGS TO SUCH OTHER PERSON OVER WHOM HE HAS JURISDICTION, THEN, IN THAT EVENT, HE HAS TO TRANSMIT THE MATERIAL TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND IN SUCH CASES THE ASSESSING OFFICER WHO HAS JURISDICTION WILL PROCEED AGAIN ST SUCH OTHER PERSON BY ISSUING THE REQUISITE NOTICE CONTEMPLAT ED BY SECTION 158BC OF THE ACT. ADMITTEDLY, THE ASSESSING OFFICER FOR BOTH THE SEARCHED PERSON AND THE ASSESSEE WERE SAME, BUT THAT CANNOT CONFER ANY POWER TO THE ASSESSING OFFICER TO SERVE NOT ICE UNDER SECTION 158BD R.W.S. 158BC OF THE ACT WITHOUT RECORDING SATISFACTION. THE RATIO LAY DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. I.T.(SS)A. NO. 2 1 /M/1 0 7 ACIT & ANOTHER (SUPRA) SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT WITHOUT RECORDING SATISFACTION OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OF THE ACT, THE SERVICE OF NOTICE UNDER SECTION 158BD OF THE ACT AND THE PROCEEDINGS INITIATED UNDER SECTION 158BD WERE FOUND TO BE INVALID IN LAW AND ACCORDINGLY, THE LD. CIT(A) HAS RIGHTLY ANNULLED THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 158BD R.W.S 143(3) OF THE ACT. IN FACT, IN THE CONCISE GROUNDS OF APPEAL, THE REVENUE HAS ALSO NOT CHALLENGED THE ORDER OF THE LD. CIT(A) ANNULLING THE ASSESSMENT. 12. ONCE THE ASSESSMENT ORDER PASSED UNDER SECTION 158BD R.W.S. 143(3) OF THE ACT HAS BEEN ANNULLED BY THE LD. CIT(A), ANY ISSUE RAISED IN THE APPEAL IS ME RE ACADEMIC AND REQUIRES NO ADJUDICATION. GROUNDS RAISED AGAINST SUCH ISSUES, WHICH ARE ACADEMIC, REQUIRES NO FURTHER ADJUDICATION. THUS, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 1 3 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDE R PRONOUNCED ON THE 10 TH JUNE , 20 16 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 10 . 0 6 .201 6 VM/ - I.T.(SS)A. NO. 2 1 /M/1 0 8 / COPY TO: 1. / APPELLANT , 2. / RESPOND ENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.