N.S.Palaniammal, Salem V. ACIT, Salem

ITSSA 381/CHNY/1997

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8519 (ITAT-CHENNAI)
• Duration Of Justice: 14 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-11-2012
• Assessment Year: misc
• Appeal Filed On: 26-12-1997
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS
• Assessee Lawyers: G BASKAR
• Keywords: Gift; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T(SS)A.NO. 381/MDS/1997 BLOCK PERIOD : 1.4.1986 TO 19.9.1996 N.S.PALANIAMMAL, W/O P. SENGODAN NO.32, VIJAYARAGHAVACHARIAR ROAD, KOMARASAMYPATTY, SALEM 636 007. PAN AJKPP0958K VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE, SALEM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. BASKAR, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, ADDL. CIT DATE OF HEARING : 07 TH NOVEMBER, 2012 DATE OF PRONOUNCEMENT : 14 TH NOVEMBER, 2012 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS IS A BLOCK ASSESSMENT APPEAL. THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL IS DIRECTED AGAINST THE A SSESSMENT IT(SS)A 381/97 :- 2 -: ORDER DATED 25.11.1997 PASSED UNDER SEC.143(3), REA D WITH SEC.158BD OF THE INCOME-TAX ACT, 1961. 2. THE FIRST GROUND RAISED BY THE ASSESSEE IN THE P RESENT APPEAL IS REGARDING THE VALIDITY OF NOTICE ISSUED U NDER SEC.158BC, READ WITH SEC.158 BD. IT IS THE CASE OF THE ASSESS EE THAT THE REASONS POINTED OUT BY THE ASSESSING OFFICER TO ISS UE NOTICE ARE NOT JUSTIFIED AND NO MATERIALS WERE FOUND IN THE CO URSE OF SEARCH TO IMPLICATE THE ASSESSEE. THEREFORE, THE NOTICE I SSUED TO THE ASSESSEE UNDER SEC.158BD IS INVALID. 3. AS POINTED OUT BY SHRI SHAJI P. JACOB, THE LEARN ED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E, THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. PA NCHAJANYAM MANAGEMENT AGENCIES AND SERVICES (333 ITR 281) HAS HELD THAT SEC.153BD OF THE INCOME-TAX ACT, 1961, IS ONLY AN E NABLING PROVISION TO ASSESS A PERSON OTHER THAN THE PERSONS SEARCHED OR OTHER THAN THE ASSESSEE WHOSE BOOKS OF ACCOUNT AND DOCUMENTS WERE CALLED FOR AND VERIFIED UNDER SEC.132A AND THE RE IS NO MENTION IN SEC.158BD THAT THE ASSESSING OFFICER, BE FORE TRANSFERRING THE FILE TO ANOTHER OFFICER HAVING JU RISDICTION TO ASSESS THE PERSON OTHER THAN THE ASSESSEE PROCEEDED UNDER SEC. 132 OR IT(SS)A 381/97 :- 3 -: 132A, HAS TO RECORD HIS SATISFACTION IN WRITING. T HE COURT HELD THAT THE SAME ASSESSING OFFICER HAVING JURISDICTION OVER THE MANAGING PARTNER AS WELL AS THE FIRM, NEED NOT RECORD REASON S FOR ISSUING NOTICE TO FIRM UNDER SEC.158BD READ WITH SEC.158BC. 4. IN VIEW OF THE ABOVE LEGAL PROPOSITION DECLARED BY THE HONBLE KERALA HIGH COURT, WE ARE NOT INCLINED TO A CCEPT THE CONTENTIONS RAISED BY THE ASSESSEE REGARDING THE VA LIDITY OF NOTICE ISSUED. 5. THE NEXT ISSUE RAISED BY THE ASSESSEE IS THAT TH E ASSESSING OFFICER HAS ERRED IN MAKING AN ADDITION OF ` 58,400/- BEING THE VALUE OF 25 SOVEREIGNS OF JEWELLERY. IT IS THE CAS E OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE THAT THE ADDITIO N WAS BASED ONLY ON THE STATEMENT GIVEN BY THE ASSESSEES DAUGH TER-IN-LAW. THERE WAS NO SEIZED MATERIAL AT ALL. SUCH ADDITION CANNOT BE MADE ONLY FOR THE REASON THAT THE STATEMENT OF CONC ERNED PARTY IS DISBELIEVED BY THE ASSESSING OFFICER. THE LEARNED COUNSEL EXPLAINED THAT 25 SOVEREIGNS OF JEWELLERY WERE GIVE N BY THE ASSESSEE TO HER DAUGHTER-IN-LAW AT THE TIME OF MARR IAGE OF HER SON AND THEREFORE, THERE IS NO CASE OF UNACCOUNTED ACQU ISITION OF GOLD JEWELLERY. IT(SS)A 381/97 :- 4 -: 6. ON GOING THROUGH THE ENTIRE FACTS OF THE CASE, W E FIND THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ONLY ON THE GROUND OF SUSPICION. CONSIDERING THE FINANCIAL ST ATUS OF THE ASSESSEES FAMILY, MAKING GIFTS BY WAY OF JEWELLERY AT THE TIME OF MARRIAGE, IS NOT UNCOMMON AND IN THE ABSENCE OF ANY CONTRADICTORY MATERIALS, THE PLAUSIBLE EXPLANATIONS OFFERED BY THE MEMBERS OF THE FAMILY HAVE TO BE ACCEPTED. THEREFO RE, WE FIND THAT THE ADDITION OF ` 58,400/- AGAINST THE VALUE OF 25 SOVEREIGNS OF JEWELLERY IS NOT JUSTIFIED. IT IS DELETED. 7. THE NEXT ISSUE RELATES TO THE ASSESSABILITY OF C APITAL GAINS OF ` 50,785/- ON SALE OF JEWELLERY. THE FACT IS THAT T HE SALE OF JEWELLERY BY THE ASSESSEE WAS ALREADY SHOWN IN HER RETURNS FOR THE EARLIER ASSESSMENT YEARS, EVEN THOUGH, THE CORR ESPONDING CAPITAL GAINS WERE NOT OFFERED FOR ASSESSMENTS. TH EREFORE, THERE IS NO CASE OF NON DISCLOSURE HERE. AT THE MAXIMUM, THERE COULD BE A CASE OF ESCAPEMENT OF INCOME ONLY. NECESSARY FACTUM OF SALE OF JEWELLERY WAS ALREADY DISCLOSED. THEREFO RE, THIS ADDITION OF ` 50,785/- IS NOT SUSTAINABLE IN LAW. IT IS ACCORDIN GLY, DELETED. IT(SS)A 381/97 :- 5 -: 8. THE THIRD ISSUE RELATES TO THE LOANS RECEIVED FR OM MARIAMMAL OF ` 10,000/- AND RAJAMMAL OF ` 15,000/-. THESE LOANS WERE ALREADY DISCLOSED IN THE RETURN FILED AN D FURTHER, CONFIRMATION LETTERS FROM THE CREDITORS WERE FILED. IN THESE CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR MAKING THESE TWO ADDITIONS. ACCORDINGLY, THE ADDITIONS OF ` 10,000/- AND ` 15,000/- ARE DELETED. 9. THE NEXT TWO ISSUES RELATE TO THE PROPERTY INCOM E FOR THE ASSESSMENT YEARS 1996-97 AND 1997-98. THE ASSESSIN G OFFICER HAS MADE AN ADDITION OF ` 96,703/- FOR THE ASSESSMENT YEAR 1996- 97 AND ` 1,68,060/- FOR THE ASSESSMENT YEAR 1997-98. BOTH THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD NOT FILED HER RETURNS OF INCOME ON THE DATE OF SEARCH. 10. WE CONSIDERED THESE TWO ISSUES. IT IS TRUE THA T THE RETURNS WERE NOT FILED ON THE DAY OF SEARCH BUT THE FACT IS THAT THE ASSESSEE IS REGULARLY ASSESSED TO INCOME-TAX. THE INCOME RELATED TO LETTING OUT OF PROPERTY AND THE RENTAL I NCOME HAS BEEN DISCLOSED REGULARLY BY THE ASSESSEE IN HER RETURNS. THE ASSESSEE HAS ALSO PAID ADVANCE TAX IN THE PREVIOUS YEAR RELE VANT TO THE IT(SS)A 381/97 :- 6 -: IMPUGNED ASSESSMENT YEARS. BEING RENTAL INCOME, TH ERE IS NO SUCH NECESSITY THAT THE ASSESSEE SHOULD MAINTAIN BO OKS OF ACCOUNT. THE RENTS COLLECTED THROUGH CHEQUES ARE D IRECTLY DEPOSITED IN HER BANK ACCOUNT. IN THESE TYPE OF SI TUATIONS, THE BANK STATEMENTS ARE TREATED AS ACCOUNTS OF THE ASSE SSEE. IT MEANS THAT EVEN IF RETURNS WERE FILED BELATEDLY, EN TRIES IN RESPECT OF RECEIPT OF RENTAL INCOME WERE REFLECTED IN THE B ANK PASS BOOK OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THESE TWO AM OUNTS CANNOT BE TREATED AS UNDISCLOSED INCOME. THEREFORE, THE A DDITIONS OF PROPERTY INCOME OF ` 96,703/- AND ` 1,68,060/- ARE DELETED. 11. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 14 TH OF NOVEMBER, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 14 TH NOVEMBER , 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR