V.Baskaran, CHENNAI V. DCIT, CHENNAI

ITSSA 28/CHNY/2009

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2523 (ITAT-CHENNAI)
• Duration Of Justice: 7 year(s) 3 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 11-08-2016
• Assessment Year: misc
• Appeal Filed On: 28-07-2009
• Court: TRIBUNAL
• Department Lawyers: T R SENTHIL KUMAR SR
• Assessee Lawyers: K RAVI
• Keywords: Opportunity of being heard; Block assessment; Documents seized
• Section: 143(3); 142(1); 132; 144

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I . T. (SS) A. NO. 28/MDS/2009 BLOCK ASSESSMENT PERIOD : 1987 - 88 TO 1997 - 98 UPTO 24.09.1996 SHRI V. BASKARAN, 3/334, SINGARAVELAR STREET, CHINNA NEELANGARAI, CHENNAI 600 041. [PAN: A EIPB9978G ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, C ENTRAL CIRCLE II(4), CHENNAI 34. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI K. RAVI, ADVOCATE / RESPONDENT BY : SHRI T.R.SENTHILKUMAR, SR. STANDING COUNSEL / DATE OF HEARING : 1 1 . 08 .201 6 / DATE OF P RONOUNCEMENT : 28 . 1 0.2016 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE DEPUTY COMMI SSIONER OF INCOME TAX , CENTRAL CIRCLE II (4), CHENNAI DATED 1 5 . 0 6 .20 09 FOR THE RELEVANT BLOCK ASSESSMENT PERIOD 1987 - 88 TO 1997 - 98 & UPTO 24.09.1996 . IN THE APPEAL OF THE ASSESSEE, THE VERY FIRST GROUND RAISED BY THE ASSESSEE IS THAT WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD AND NOT TAKING COGNIZANCE OF THE LETTE R FILED ON BEHALF OF THE ASSESSEE, THE ASSESSING OFFICER HAS ERRED IN COMPLETING THE ASSESSMENT AND DETERMINING THE UNDISCLOSED INCOME AT .9,60,84,250 / - ON THE FOLLOWING ISSUES : (1) INVALID INITIATION OF THE BLOCK ASSESSMENT (2) ADDITIONS, NOT ARISING FROM MATERIALS FOUND AS A RESULT OF SEARCH I.T. (SS) A. NO . 28/M/09 2 (3) MATERIALS COLLECTED UNDER SECTION 132A NOT TO BE USED IN BLOCK ASSESSMENT FOR ACTION UNDER SEC TION 132 (4) DEPOSIT IN THE NAME OF ASSESSEE'S WIFE (5) INTEREST EARNED ON DEPOSIT (6) SILVERWARES (7) MARRIAGE EXPENSES (8) PERSONAL EXPENSES (9) ADVANCE TAX PAYMENTS (10) FOREIGN TRIPS (11) BANK DEPOSITS (12) INVESTMENT IN HIMALAYA CHIT FUNDS (1 3) ADDITIONS MADE BASED ON MATERIALS COLLECTED FROM EG, GENERALLY (14) PAYMENT MADE ABROAD ON BEHALF OF MS J. JAY TV P. LTD FOR (15) TRANSPONDER HIRE (16) PAYMENTS MADE TO RIMSAT AND SUBIC BAY. (17) PURCHASE OF EQUIPMENTS ABROAD (18) PAYMENT MADE IN M ALAYSIAN RINGETS (19) PAYMENT MADE TO INTERSPUTNIK AND SINGAPORE T ELECO M (20) PURCHASE OF LEXUS CAR (21) CREDIT FOR RETURN OF UNDISCLOSED INCOME (22) TAX PAID NOT CONSIDERED 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS THE MANAGING DIRECTOR OF M/S. J. JAY T.V. P. LTD. THERE WAS A SEARCH IN THE ASSESSEE S PREMISES UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] ON 24.09.1996. PRIOR TO THE SEARCH, THE ENFORCEMENT DIRECTORATE HAS CONDUCTED A SEARCH ON THE PREMISES OF THE ASSESSEE ON 21.09. 1 995 AND SUBSEQUENTLY HE WAS ARRESTED UNDER COFEPOSA ON 23.09.96. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT THE ASSESSEE HA S INCOMES WHICH WERE NOT DISCLOSED TO THE DEPARTMENT. THEREFORE, THE ASSESSING OFFICER HAS ISSUED A NOTICE UNDER SECTION 158BC OF THE ACT BASED ON THE COMMUNICATION RECEIVED FROM THE OFFICER OF THE INVESTIGATION WING ADDRESSED TO THE COMMISSIONER CENTRAL - 11, CHENNAI, ON 23.12.1996 TO THE ASSESSEE AND WAS DULY SERVED ON HIM ON 28.12.1996, THROUGH THE SUPERINTENDENT OF CENTR AL PRISON, PALAYAMKOTTAI, I.T. (SS) A. NO . 28/M/09 3 SINCE THE ASSESSEE WAS A R EMAND PRISONER AT THAT TIME REQUIRING THE ASSESSEE TO FILE A RETURN OF INCOME IN FORM NO. 2B WITHIN 16 DAYS OF RECEIPT OF NOTICE. LATER, A NOTICE U NDER SECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 11.08.1997, FOR WHICH THE ASSESSEE HAD FILED A REPLY ON 26.08.1997. LATER THE ASSESSEE WAS SUMMONED AND SWORN STATEMENT WAS RECORDED ON 26.08.1997, 09.09.1997 AND 10.09.1997. 2.1 THE ASSESSEE FILED A RETURN OF INCOME IN FORM NO.2B ON 15.09.1997 JUST FIVE DAYS BEFORE THE LIMITATION FOR COMPLETING THE ASSESSMENT, ADMITTING INCOME OF . 18,04,100 / - . THE RETURN ITSELF WAS NOT ONLY BEREFT OF BASIC INFORMATION WHICH ARE ENVISAGED UNDER THE STATUTE AS WELL AS THE FORMAT OF THE RETURN, SUCH AS BREAK - UP OF TH E TOTAL UNDISCLOSED INCOME ASSESSMENT YEAR/PREVIOUS YEAR WISE, HEAD OF INCOME ( P ART III OF THE RETURN), NATURE OF INCOME ETC. BUT ALSO THE TAX PAYABLE THAT HAS BEEN WORKED OUT AT .9,52,460/ - , WAS ALSO NOT PAID. IN THE CIRCUMSTANCES, AFTER CONSIDER ING THE FACTS AND E VIDENCES AVAILABLE ON RECORD , THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT FOR THE BLOCK PERIOD ON 30.09.1997 UNDER SECTION 144 R.W.S 1 58BC OF THE ACT, BY DETERMINING THE TOTAL UNDISCLOSED INCOME AT .9,60,84,250/ - . 2.2 THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. THE ITAT DISMISSED THE APPEAL BY AN ORDER DATED 07.08.1998 ON THE GROUND OF NON PAYMENT OF TAX ON THE ADMITTED INCOME. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE HON BLE HIGH COURT OF MADRAS AF TER PAYING THE DUE TAXES. IN THE ORDER D A T ED 29.04.2004, THE HON'BLE HIGH COURT DIRECTED THE I.T. (SS) A. NO . 28/M/09 4 ITAT TO TAKE THE APPEAL BACK TO ITS FILE AND DISPOSE OF THE APPEAL WITHIN A PERIOD OF FOUR MONTHS FROM THE DATE OF RECEIPT OF THE ORDER. 2.3 AFTER CONSIDERING AL L THE FACTS OF THE CASE, THE ITAT IN ITS ORDER DATED 27.09.2004 SET ASIDE THE ORDER AND DIRECTED TO REDO THE ASSESSMENT WITH THE FOLLOWING DIRECTIONS: (I) THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE SUFFICIENT O PPORTUNITY OF BEING HEARD (II) THE A SS ESSING O FFICER SHALL ALLOW FULL INSPECTION OF THE RECORDS AND P ROVIDE COMPLETE COPIES OF DOCUMENTS THAT WERE RECEIVED FROM THE ENFORCEMENT DIRECTORATE (ED) AND USED AGAINST THE ASSESSEE. 2 . 4 FOLLOWING THE DIRECTIONS OF THE ITAT, THE ASSESSING OFFICER GAV E SEVERAL OPPORTUNITIES TO THE ASSESSEE FOR HEARING ON 23.9.2005, 18.10.2005, 15.12.2005, 22.12.2005, 13.1.2006, 27.1.2006 & 13.2.2006. ALSO COPIES OF DOCUMENTS SEIZED BY THE ENFORCEMENT DIRECTORATE WERE PROVIDED TO THE ASSESSEE ALONGWITH THIS OFFICE LETT ER DATED 03.01.2006. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE AUTHORISED REPRESENTATIVE AND FACTS AVAILABLE ON RECORD, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT FOR THE BLOCK PERIOD ON 30.3.2006 UNDER SECTION 143(3) R.W.S. 158 BC R . W . S . 254 OF THE ACT . 2.5 THE ASSESSEE WENT ON APPEAL AGAINST THE ORDER DATED 30.03.2006 BEFORE THE TRIBUNAL. IN THE SECOND ROUND OF LITIGATION, VIDE ITS ORDER DATED 14 .12.2007 I N IT (SS)A NO. 90/ MDS / 2006, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO DO AFRESH AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE. I.T. (SS) A. NO . 28/M/09 5 2.6 FOLLOWING THE DIRECTIONS OF THE TRIBUNAL , THE ASSESSING OFFICER POSTED THE CASE FOR HEARING ON 14.03.200 8 , 07.10.2008, 14.11.2008, 27.11.2008, 1 5.12.2008, VIDE HIS NOTICES ISSUED ON 03.03. 2008, 16.09.2008, 03.11.2008, 19.11.2008, 05.12.2008. THE ASSESSEE DID NOT APPEAR EITHER PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE FOR HEARINGS AND ALSO DID NOT FILE ANY LETTER . ON 29.12.2008, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FILED A LE TTER STATING THAT THE ASSESSEE FILED AN APPEAL IN TCA NO. 1790 OF 2008 BEFORE THE HON'BLE MADRAS HIGH COURT AGAINST THE ORDER OF THE ITAT IN ITA(SS)A NO. 90 / MDS/2006 DT. 14.12.2007 AND THAT THE HON'BLE MADRAS HIGH COURT HAD GRANTED INTERIM STAY TILL 02.02. 2009 TO COMPLETE THE ASSESSMENT AND A COPY OF THE ORDER WAS ALSO ENCLOSED WITH THE LETTER. ACCORDINGLY, THE ASSESSMENT PROCEEDINGS WERE KEPT IN ABEYANCE TILL THAT DATE. 2.7 VIDE LETTER D A T ED 02.03.2009, THE ASSESSEE WAS ASKED TO INTIMATE AS TO WHETHER A NY FURTHER STAY HA S BEEN GRANTED BY THE HON'BLE HIGH COURT AS THE PENDING ASSESSMENT HA S TO BE COMPLETED ON OR BEFORE 02.04.2009. SHRI K.V. DHANAPALAN, ADVOCATE, HIGH COURT, CHENNAI, VIDE LETTER DT. 11.03.2009, ON BEHALF OF THE ASSESSEE, STATED THAT IN VIE W OF THE PREVAILING SITUATION IN THE HON'BLE HIGH COURT, MADRA S ( ADVOCATES' BOYCOTT), IT MAY NOT BE POSSIBLE TO LIST THE SAID CASE FOR WANT OF DIVISION BENCH WHICH GRANTED STAY AND ADJOURN FOR FURTHER HEARING AND REQUESTED THAT THE ASSESSMENT PROCEEDINGS MAY BE KEPT PENDING UNTIL FURTHER ORDERS FROM HON'BLE HIGH COURT, MADRAS. 2.8 SINCE NO FURTHER STAY HA S BEEN GRANTED BY THE HON'BIE HIGH COURT, MADRAS BEYOND 02.02.2009, THE CASE WAS POSTED FOR HEARING ON 27.03.2009 I.T. (SS) A. NO . 28/M/09 6 VIDE LETTER D ATED 23.3.2009. THE ASSES SEE, VIDE LETTER DT. 30.03.2009 INTIMATED THAT T H E MATTER WAS LIKELY TO COME UP BEFORE THE HONBLE HI G H COURT OF MADRAS ON 31.03.2009. SUBSE Q UENTL Y, THE STA Y WAS EXTENDED FOR A FURTHER PERIOD TILL 0 3.04.2009 AND FINALLY CAME UP FOR HEARING ON 17.04.2009. TH E HON'BLE HIGH COUR T ON THAT DAY MODIFIED THE EXISTING STAY ORDER BY WHICH THE ASSESSING OFFICER WAS ALLOWED TO PROCEED TO PASS THE A SSESSMENT ORDER IN ACCORDANCE WITH LAW BUT THE GIVING EFFECT OF SUCH ORDER WAS STAYED TILL THE DISPOSAL OF THE TAX CASE AP PEAL. 2.9 ACCORDINGLY, THE ASSESSMENT PROCEEDINGS WERE AGAIN TAKEN UP AND THE ASSESSING OFFICER POSTED THE CASE FOR HEARING ON 15.05.2009 VIDE NOTICE D A T ED 30.04.2009 BY INFORMING THAT ALL THE COPIES OF DOCUMENTS SEIZED BY THE ENFORCEMENT DIRECTORATE HA S ALREADY BEEN FORWARDED TO HIM ON 03.01.2006, AND HE MAY EITHER PERSONALLY OR THROUGH AUTHORIZED REPRES ENTA TI VE MAKE ANY SUBMISSIONS OR PRODUCE EVIDENCE IN SUPPORT OF CLAIMS MADE. THERE WAS NO RESPONSE FROM THE ASSESSEE. THE CASE WAS AGAIN POSTED FOR HEARI NG ON 27.05.2009 VIDE NOTICE D A T ED 19.05.2009, BUT AGAIN THERE WAS NO RESPONSE FROM THE ASSESSEE. ON 27.05.2009, A LETTER WAS RECEIVED FRO M SHRI K. RAVI OF RAVI & CO., INTIMATING THAT THE ASSESSEE HAD TRAVEL L ED OUT OF COUNTRY AND THA T HE WAS NOT EMPOWERED TO REPRESENT THE ASSESSEE AND IT WAS REQUESTED THAT THE CASE MAY B E REPOSTED FOR HEARING AFTER 05.06.200 9 . AS THERE WAS NO COMMUNICATION FROM THE ASSESSEE AND AS SHRI RAVI WA S NOT AUTHORIZED TO REPRESENT THE ASSESSEE, THE ASSESSING OFFICER REFUSED TO TAKE COGNIZANCE OF THE LETTER FILED BY SHRI RAVI . THE ASSESSING OFFICER WAS OF THE OPINION THAT I.T. (SS) A. NO . 28/M/09 7 ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY TO REPRESENT HIS CASE AND SINCE T HE ASSESSEE HAS CHOSEN TO BE SILENT AND UNRESPONSIVE , HE PRESUMED THAT THE ASSESSEE HAS NO FURTHER SUBMISSIONS T O MAKE NOR ANY NEW EVIDENCE TO BE PLACED FOR CONSIDERATION, AND HENCE, HE HAS COMPLETE D THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 158BC R.W.S. 254 OF THE ACT ON 15.06.2009 BY ASSESSING TOTAL UNDISCLOSED INCOME OF THE ASSESSEE AT .9,60,84,250/ - . 3. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY REFERRING TO THE GROUNDS OF APPEAL FILED BY THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE HAS MAINLY CONTENDED THAT WITHOUT ASSIGNING ANY REASON FOR NOT TAKING COGNIZANCE TO THE LETT ER FILED BY SHRI K. RAVI OF RAVI & CO. BEFORE THE ASSESSING OFFICER REQUESTING HIM TO REPOST THE HEARING OF THE CASE AFTER 05.06.2009 , THE ASSESSING OFFICER SUO MOTO PASSED THE ASSESSMENT ORDER WITHOUT GIVING SUITABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND PLEADED THAT THE MATTER MAY BE REMITTED BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO GIVE SUFFICIENT OPPORTUNITIES OF HEARING TO THE ASSESSEE AND THEREAFTER PASS THE ASSESSMENT ORDER. 4. ON THE OTHER HAND, THE LD. DR HAS STRONGLY OBJECTED TO TH E SUBMISSIONS OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIES OF HEARING AT VARIOUS STAGES AND NO NEW FACTS EMERGED OR FILED BEFORE THE ASSESSING OFFICER TO COUNTER THE FINDINGS IN THE ASSESSMENT MADE EARLIER. I.T. (SS) A. NO . 28/M/09 8 5. WE HA VE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT IT IS NOT AUTHENTICALLY STATED AS TO WHETHER THE NOTICE FOR POSTING OF THE CASE FOR HEARING HA S BEEN DULY SERVED ON THE ASSESSEE OR NOT. IN THE ASSESSMENT ORDER, NOTICE DATE AND DATE OF HEARING HAS BEEN MENTIONED. IN FURTHERANCE TO THE ABOVE, AT PARA 8 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MENTIONED THAT ASSESSMENT PROCEEDINGS WERE AG AIN TAKEN UP AND THE CASE WAS POSTED FOR HEARING ON 15.05.2009 VIDE NOTICE DATED 30.04.2009. IT WAS ALSO MENTIONED THAT THE ASSESSEE WAS ALSO INFORMED THAT ALL THE COPIES OF DOCUMENTS SEIZED BY THE ENFORCEMENT DIRECTORATE HAD ALREADY BEEN FORWARDED TO HIM ON 03.01.2006 AND HE MAY EITHER PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE MAKE ANY SUBMISSIONS OR PRODUCE EVIDENCE IN SUPPORT OF CLAIMS MADE. THERE WAS NO RESPONSE FROM THE ASSESSEE. HOWEVER, IT WAS NOT MENTIONED AS TO WHETHER THE SAID NOTICE HAS BE EN DULY SERVED ON THE ASSESSEE OR NOT. THE ASSESSING OFFICER HAS SIMPLY STATED IN PARA 9 OF HIS ORDER THAT ON THE DATE OF HEARING ON 27.05.2009, A LETTER WAS RECEIVED FROM SHRI K. RAVI OF RAVI & CO., INTIMATING THAT THE ASSESSEE HAD TRAVELLED OUT OF COU NTRY AND REQUESTED FOR REPOSTING THE HEARING AFTER 05.06.2009 WITHOUT BRINGING THE CONTENTS OF THE LETTER ON RECORD AND ASSIGNING REASONS FOR NOT ENTERTAINING THE SAID ADJOURNMENT LETTER. 6. ON PERUSAL OF THE ORDER OF THE TRIBUNAL DATED 14.12.2007 IN I. T.(SS)A. NO.90/MDS/2006, SHRI K. RAVI OF RAVI & CO HAS BEEN REPRESENTED ON BEHALF OF THE ASSESSEE BEFORE THE TRIBUNAL. WHEN THE ASSESSEE HAD BEEN TRAVELLED OUT I.T. (SS) A. NO . 28/M/09 9 OF THE COUNTRY AND NOT AVAILABLE TO REPRESENT HIS CASE BEFORE THE ASSESSING OFFICER, THE INTIMAT ION OF HIS AVAILABILITY REQUIRED TO BE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER, SHRI K. RAVI OF RAVI & CO. HAS FILED A LETTER OF INTIMATION ABOUT THE AVAILABILITY OF THE ASSESSEE . FOR ONE REASON OR OTHER, IF THE ASSESSEE WA S NOT AVAILABLE EVEN TO AU THORISE SOMEBODY TO REPRESENT, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER WAS NOT CORRECT TO REJECT THE INTIMATION LETTER FILED BY SHRI RAVI ON THE GROUND THAT HE WAS NOT AUTHORIZED TO DO SO. UNDER THESE FACTS AND CIRCUMSTANCES AND TO MEET THE ENDS OF JUSTICE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY OF HEARING TO REPRESENT HIS CASE BEFORE THE ASSESSING OFFICER. THUS, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO GIVE ONE MOR E OPPORTUNITY OF HEARING AND THEREAFTER THE ASSESSING OFFICER IS DUTY BOUND TO COMPLETE THE ASSESSMENT IN CONFORMITY WITH EARLIER DIRECTIONS OF THE TRIBUNAL IN I.T.(SS)A. NO . 90/MDS/2006 DATED 14.12.2007 AT PARAS 19 & 20 AS WELL AS BY FOLLOWING THE RATIO L AID DOWN IN THE CASE OF CIT V. R.M. PATEL (HUF) 298 ITR 274(MAD) . THE ASSESSEE IS ALSO DIRECTED TO COOPERATIVE WITH THE DEPARTMENT FOR COMPLETING THE ASSESSMENT. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORD ER PRONOUNCED ON THE 28 TH OCTOBER , 20 16 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 28 . 1 0 .201 6 VM/ - I.T. (SS) A. NO . 28/M/09 10 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.