Smt. T.Jayabharathi, CHENNAI V. DCIT, CHENNAI

ITSSA 5/CHNY/2009

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1695 (ITAT-CHENNAI)
• Duration Of Justice: 7 year(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 04-01-2016
• Assessment Year: misc
• Appeal Filed On: 02-02-2009
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: N DEVANATHAN
• Keywords: Block assessment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.(SS)A.NO.5/MDS/2009 BLOCK PERIOD 1986-87 TO 1996-97 SMT. T. JAYABHARATHI 24, IIIRD CROSS STREET DR. SEETHAPATHY NAGAR VELACHERY CHENNAI 600 042 VS. THE DY. COMMISSIONER O F INCOME-TAX CENTRAL CIRCLE II(1) CHENNAI [PAN ACXPJ 7752 M ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI N DEVANATHAN, ADVOCATE /RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 04 - 01 - 2016 / DATE OF PRONOUNCEMENT : 12 - 0 2 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 29.12.2008 PASSED U/S 158B C OF THE ACT FOR THE BLOCK PERIOD 1986-87 TO 1996-97. 2. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THERE WAS A SEARCH IN THE PREMISES OF THE ASS ESSEE. HOWEVER, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION. THE IT(SS)A NO.5/09 :- 2 -: ASSESSING OFFICER MADE ADDITION OF ` 6,40,000 ONLY ON ESTIMATE BASIS. ACCORDING TO THE LD. COUNSEL, THIS BEING A BLOCK AS SESSMENT U/S 158BC, THE UNDISCLOSED INCOME HAS TO BE COMPUTED ONLY ON T HE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N AND THE INFORMATION WHICH IS RELATABLE TO THE MATERIAL FOUN D DURING THE COURSE OF SEARCH OPERATION. IN THE ABSENCE OF ANY OTHER M ATERIAL, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION FO R THE BLOCK PERIOD. REFERRING TO THE ASSESSMENT ORDER, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE CLAIMED THAT THERE WAS A CREDIT AGGREGATIN G TO ` 26.50 LAKHS AT THE INDIAN BANK, VELACHERY BRANCH. OUT OF THIS, ` 17.50 LAKHS WAS CONSIDERED AS INVESTMENT BY THE ASSESSEE IN THE HO USE PROPERTY AT NO.2 BAGIRATHY AMMAL STREET, T. NAGAR, CHENNAI. TH E ASSESSEE HAS ALSO EXPLAINED BY A LETTER DATED 20.11.1996 THAT TH E SOURCE FOR MAKING INVESTMENT IS FROM AGRICULTURAL INCOME. THE ASSES SEE FURTHER EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE AS SESSEES HUSBAND SHRI SP THAVAMANI WAS HOLDING 6.52 ACRES OF AGRICUL TURAL LAND AND THE AVERAGE INCOME FROM THE SAID LAND IS AROUND ` 30,000/- PER ANNUM. HOWEVER, THE ASSESSING OFFICER ESTIMATED THE AGRICU LTURAL INCOME ONLY AT ` 2 LAKHS AND TREATED THE BALANCE OF ` 6.5 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER MAD E ADDITION OF ` 2 LAKHS WITH REGARD TO AGRICULTURAL INCOME PLACING RE LIANCE ON THE DISCUSSION MADE WITH THE ASSESSEES HUSBAND. ACCO RDING TO THE LD. IT(SS)A NO.5/09 :- 3 -: COUNSEL, THE ASSESSEES HUSBAND CANNOT AGREE FOR MA KING ANY ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESSEE BEING AN INDEPENDENT ASSESSEE, THE ASSESSING OFFICER IS EXPECTED TO EXAM INE THE FACTS OF THE CASE WITH ASSESSEE AND NOT WITH ANYONE ELSE. THER EFORE, THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 5,50,000/- ON THE DEPOSIT MADE WITH THE INDIAN BANK, VELACHERY BRACH, IS NOT JUSTIFIED. THE LD. COUNSEL FURTHER SUBMITTED THAT MOST OF THE CREDITS IN THE BANK ACCOUNT ARE REFUND OF THE SHARE APPLICATION MONEY. THE ASSESSEE CLAIMED ` 2,96,546/- AS REFUND OF SHARE APPLICATION MONEY. REFERRING TO THE COPIES OF THE BANK ACCOUNT, MORE PARTICULARL Y AT PAGE 43 OF THE PAPER BOOK, THE LD. COUNSEL SUBMITTED THAT THE ASS ESSEE DEPOSITED A CHEQUE FOR CLEARANCE TO THE EXTENT OF ` 24,000/-. HOWEVER, THE CHEQUE WAS RETURNED. THE DEPOSITED CHEQUE WAS ENT ERED ON 5.5.1993. THE RETURN OF CHEQUE WAS DEBITED ON 6.5. 1993. THE ASSESSING OFFICER AT HIS CONVENIENCE HAS TAKEN THE DEPOSITED CHEQUE, HOWEVER, OMITTED TO CONSIDER THE RETURN OF CHEQUE O N 6.5.1993. REFERRING TO PAGE 44 OF THE PAPER BOOK, THE LD. COU NSEL SUBMITTED THAT IT IS COPY OF STATEMENT OF ACCOUNT OF INDIAN BANK, VELACHERY BRANCH. THE ASSESSEE HAS DEPOSITED ON 26.5.1993 A SUM OF ` 1004.20. THE ASSESSING OFFICER AT HIS CONVENIENCE HAS TAKEN THE SAME AMOUNT AS ` 1,00,420/-. FROM THE BANK STATEMENT IT IS OBVIOUS THAT WHAT WAS DEPOSITED IS ONLY ` 1004.20 AND NOT ` 1,00,420/-. THIS IS THE REPETITION IT(SS)A NO.5/09 :- 4 -: OF CREDIT CONSIDERED BY THE ASSESSING OFFICER FOR C OMPUTING THE UNDISCLOSED INCOME. THE ASSESSING OFFICER ON ESTIM ATE BASIS GAVE A CREDIT OF ` 1 LAKH. ACCORDING TO THE LD. COUNSEL, THIS BEING A BLOCK ASSESSMENT, THERE IS NO QUESTION OF ESTIMATION. TH E ENTIRE CREDIT FOUND IN THE BANK STATEMENT HAS TO BE CONSIDERED FO R COMPUTING THE UNDISCLOSED INCOME. 3. REFERRING TO THE INVESTMENT MADE ON CAR, THE LD. CO UNSEL SUBMITTED THAT THE ASSESSEE HAS PURCHASED A MOTOR CAR ON 20.5.1994 FOR ` 2.25 LAKHS. THE ASSESSEE HAS ALSO AVAILED A LOAN OF ` 1.30 LAKHS FROM SAKTHI FINANCE, COIMBATORE. THE BALANCE OF ` 95,000/- WAS MADE FROM THE AGRICULTURAL INCOME AND SALARY OF AS SESSEES HUSBAND. IN FACT, NO ADDITION WAS MADE FOR MAKING INVESTMENT IN THE CAR. THE ASSESSING OFFICER COMPUTED THE INVESTMENT MERELY BE CAUSE ` 95,000/- WAS NOT ROUTED THROUGH THE BANK ACCOUNT. ACCORDING TO THE LD. COUNSEL, THERE IS NO MATERIAL AVAILABLE ON RECORD T O SHOW THAT THE ASSESSEE HAS INVESTED ANY UNDISCLOSED INCOME FOR PU RCHASING THE CAR. THE FACT THAT THE ASSESSEES HUSBAND IS HAVING 6.5 ACRES OF AGRICULTURAL LAND AND RECEIVING AGRICULTURAL INCOME IS NOT IN DI SPUTE. THEREFORE, THE PRESUMPTION IS THAT AGRICULTURAL INCOME IS INVESTED FOR PURCHASING THE CAR. THE ASSESSING OFFICER IS NOT JUSTIFIED IN EST IMATING THE UNDISCLOSED INCOME AT ` 5.50 LAKHS. IT(SS)A NO.5/09 :- 5 -: 4. THE ASSESSING OFFICER MADE ANOTHER ADDITION OF ` 45,000/- IN RESPECT OF CREDIT IN THE INDIAN BANK, SAIDAPET BRAN CH. THE ASSESSING OFFICER FOUND THAT A SUM OF ` 35.45 LAKHS WAS CREDITED IN THE BANK ACCOUNT. OUT OF THIS, ` 20 LAKHS WAS TREATED AS UNDISCLOSED INVESTMENT IN M/S TALENT PAPER & BARDS LTD. THE EXPLANATION O F THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER AND WHAT WAS DISP UTED IS ONLY ` 5.45 LAKHS. THE ASSESSEE CLAIMED BEFORE THE LOWER AUTHORITY THAT A SUM OF ` 5 LAKHS WAS TRANSFERRED FROM THE SHORT TERM DEPOSI T MADE ON 20.7.1995. THIS AMOUNT WAS WITHDRAWN FROM THE REMI TTANCE RECEIVED FROM SHRI CHINNIAH BOSE. THEREFORE, THE ASSESSING OFFICER FOUND THAT A SUM OF ` 45,000/- WAS UNDISCLOSED INCOME ON THE GROUND THAT THE EXPLANATION OF THE ASSESSEE TOWARDS AGRICULTURAL I NCOME WAS ALREADY CONSIDERED. THE FACT REMAINS THAT 6.5 ACRES OF AGR ICULTURAL LAND WAS SUBJECTED TO CULTIVATION, THEREFORE, THE INCOME THE REFROM HAS TO BE CONSIDERED WHILE COMPUTING THE UNDISCLOSED INCOME O F THE BLOCK PERIOD. 5. REFERRING TO THE CREDIT FOUND IN INDIAN BANK, USMAN ROAD, T. NAGAR BRANCH, THE LD. COUNSEL SUBMITTED THAT THE EN TIRE DEPOSIT IN THE BANK ACCOUNT WAS ` 1,26,777/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT TWO DEPOSITS OF ` 40,888/- EACH FOUND IN THE BANK ACCOUNT ON 19.12.1995 WAS MADE OUT OF SHORT TE RM DEPOSIT OF ` 40,000/- EACH MADE ON 22.7.1995 WHICH WAS TRANSFERR ED FROM INDIAN IT(SS)A NO.5/09 :- 6 -: BANK, SAIDAPET BRANCH. IN FACT, THE ASSESSING OFFI CER ACCEPTED THE EXPLANATION OF THE ASSESSEE. IN RESPECT OF THE DE POSIT OF ` 40,000/- IN INDIAN BANK, USMAN ROAD, T.NAGAR BRANCH, ON 22.7.19 95 AND ` 5,001/- ON 21.7.1995 THE ASSESSEE CLAIMED THAT THE SAME WERE OUT OF THE SAVINGS FROM SALARY AND AGRICULTURAL INCOME OF HER HUSBAND. 6. THE LD. COUNSEL FURTHER SUBMITTED THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. IN THE ABSE NCE OF ANY SEARCH MATERIAL, ACCORDING TO THE LD. COUNSEL, UNDISCLOSED INCOME CANNOT BE COMPUTED FOR THE BLOCK PERIOD. THE LD. COUNSEL PLA CED HIS RELIANCE ON THE JUDGMENT OF THE DELHI HIGH COURT IN PEPSICO IND IA HOLDINGS P. LTD VS ACIT, 370 ITR 295. THE LD. COUNSEL HAS ALSO PL ACED HIS RELIANCE ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN CIT VS CON TINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD, 374 ITR 645. 7. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DEPART MENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER COMPUTED THE UNDISCLOSED INCOME AT ` 6,40,000/-. THE FIRST ADDITION WAS WITH REGARD TO DEPOSIT MADE IN THE ASSESSEES BANK ACCOUNT IN INDIAN BANK, VELACHERY BRANCH, TO THE EXTENT OF ` 5,50,000/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE DEPOS IT WAS MADE FROM AGRICULTURAL INCOME AND REFUND OF THE SHARE APPLICA TION MONEY. HOWEVER, NO MATERIAL WAS PRODUCED BEFORE THE ASSESS ING OFFICER TO IT(SS)A NO.5/09 :- 7 -: SHOW THAT THE ASSESSEE HAS EARNED ANY AGRICULTURAL INCOME. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAD PURCHASED A MOTOR CAR ON 29.5.1994 FOR ` 2,25,000/- BY AVAILING A LOAN OF ` 1,30,000/- FROM SAKTHI FINANCE, COIMBATORE. THE BA LANCE AMOUNT OF ` 95,000/- WAS MET OUT OF THE SAVINGS FROM AGRICULTU RAL INCOME AND SALARY OF ASSESSEES HUSBAND. THE ASSESSING OFFIC ER HAS NOT MADE ANY ADDITION ON THE INVESTMENT MADE IN THE CAR. HO WEVER, THE ASSESSEE CLARIFIED BEFORE THE ASSESSING OFFICER THA T THE AMOUNT OF ` 95,000/- CREDITED IN THE BANK ACCOUNT DO NOT HAVE A NYTHING TO DO WITH THE INVESTMENT MADE IN THE CAR. THE INVESTMENT OF ` 95,000/- WAS ALREADY ASSESSED BY AN ORDER DATED 28.11.1996. THE REFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT ESTABLISHED THE CLAIM. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED THE UNDISCLOSED INCOME AT ` 6,40,000/-. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE. ORIGINA LLY, THE ASSESSING OFFICER COMPUTED THE UNDISCLOSED INCOME AT ` 56,54,780/-. ON APPEAL BY THE ASSESSEE, THIS TRIBUNAL BY AN ORDER DATED 2 1.8.2004 IN I.T.(SS)A.NO.23/MDS/1996, SET ASIDE THE ORDER OF TH E ASSESSING OFFICER AND REMITTED THE MATTER BACK TO THE FILE OF THE ASS ESSING OFFICER FOR IT(SS)A NO.5/09 :- 8 -: RE-EXAMINATION. CONSEQUENT TO THE DIRECTION OF THI S TRIBUNAL, THE ASSESSING OFFICER DETERMINED THE UNDISCLOSED INCOME AT ` 36,54,777/-. THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HIGH C OURT AGAINST THE ORDER OF THIS TRIBUNAL IN RESPECT OF THE DEPOSIT MA DE IN INDIAN BANK OF ` 13,21,777/-. THE HIGH COURT IN TAX CASE NO.472 OF 2007 REMITTED BACK THE ISSUE TO THE TRIBUNAL TO RECONSIDER THE I SSUE AFRESH. THIS TRIBUNAL, WHILE RECONSIDERING THE MATTER DELETED TH E ADDITION MADE ON ACCOUNT OF INVESTMENT IN THE PROPERTY AT BAGIRATHY AMMAL STREET, T. NAGAR, CHENNAI. 9. THE ISSUE NOW ARISES FOR CONSIDERATION IS DETERMIN ATION OF UNDISCLOSED INCOME AT ` 6,40,000/-. 10. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 158BB(1 ) OF THE ACT. SEC. 158BB(1) CLEARLY SAYS THAT THE UNDISCLOS ED INCOME FOR THE BLOCK PERIOD HAS TO BE COMPUTED ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION AND THE INFOR MATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE O F SEARCH OPERATION. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS NO T PLACED ANY RELIANCE ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE ADDITION WAS MADE ON THE BASIS OF THE EXPLANATI ON OFFERED BY THE ASSESSEE FOR THE DEPOSIT MADE IN THE BANK ACCOUNT. IT IS NOT THE CASE OF THE REVENUE THAT MATERIAL WAS FOUND DURING THE C OURSE OF SEARCH IT(SS)A NO.5/09 :- 9 -: OPERATION WITH REGARD TO DEPOSIT MADE BY THE ASSESS EE IN THE RESPECTIVE BANK ACCOUNTS. IN FACT, THE FIRST ADDIT ION WAS MADE WITH REGARD TO DEPOSIT IN THE INDIAN BANK, VELACHERY BRA NCH, TO THE EXTENT OF ` 5,50,000/-. THE SECOND ADDITION WAS WITH REGARD T O DEPOSIT MADE IN INDIAN BANK, SAIDAPET BRANCH OF ` 45,000/- AND THE THIRD ADDITION WAS MADE WITH REGARD TO DEPOSIT MADE IN INDIAN BANK , USMAN ROAD T. NAGAR BRANCH TO THE EXTENT OF ` 45,001/-. THE ASSESSING OFFICER HAS NOT DISCUSSED ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. HE SIMPLY PROCEEDED AS IF THE DEPOSITS WERE MADE AND THE ASSESSEE COULD NOT EXPLAIN THE SAME. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO INDICATE THAT TH E SEARCH MATERIAL IS AVAILABLE ON RECORD WITH REGARD TO THE DEPOSITS MAD E BY THE ASSESSEE IN THE BANK ACCOUNTS. IN THE ABSENCE OF ANY SEARCH MATERIAL, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT NO ADDIT ION CAN BE MADE FOR THE BLOCK PERIOD. UNDER NORMAL CIRCUMSTANCES, THIS TRIBUNAL WOULD HAVE REMITTED THE MATTER BACK TO THE FILE OF THE AS SESSING OFFICER TO RECONSIDER THE SAME ON THE BASIS OF THE MATERIAL AV AILABLE ON RECORD. IN THIS CASE WE ARE NOT DOING SO SINCE IT IS SECOND ROUND OF LITIGATION. IN THE FIRST ROUND OF LITIGATION, AN OPPORTUNITY WA S GIVEN TO THE ASSESSING OFFICER TO EXAMINE THE MATTER AFRESH AND BRING ALL THE FACTS ON RECORD. INSPITE OF THIS DIRECTION OF THIS TRIBU NAL, THE ASSESSING OFFICER HAS NOT REFERRED ANYTHING ABOUT THE SEARCH MATERIAL IN THE IT(SS)A NO.5/09 :- 10 -: ASSESSMENT ORDER. THEREFORE, THIS TRIBUNAL HAS NO OTHER ALTERNATIVE EXCEPT TO PRESUME THAT NO SEARCH MATERIAL WAS AVAIL ABLE ON RECORD. IN VIEW OF THE SPECIFIC LANGUAGE EMPLOYED BY THE LEGIS LATURE FOR COMPUTATION OF UNDISCLOSED INCOME U/S 158BB(1) OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE A BSENCE OF ANY MATERIAL FOUND DURING THE COURSE SEARCH OPERATION, THERE CANNOT BE ANY ADDITION TOWARDS UNDISCLOSED INCOME FOR THE BL OCK PERIOD. AT THE BEST, THE DEPOSITS MADE IN THE BANK ACCOUNTS MAY BE CONSIDERED IN THE REGULAR ASSESSMENT. IN VIEW OF THE ABOVE DISCU SSION, WE ARE UNABLE TO UPHOLD THE ASSESSMENT ORDER. ACCORDINGLY , THE ADDITION OF ` 6,40,000/- AS UNDISCLOSED INCOME FOR THE BLOCK PERI OD IS DELETED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) / JUDICIAL MEMBER ! / CHENNAI '# / DATED: 12 TH FEBRUARY, 2016 RD #$%&'(' / COPY TO: 1 . / APPELLANT 4. ) / CIT 2. / RESPONDENT 5. '* +%%,- / DR 3. ). / CIT(A) 6. + /01 / GF