Vidya Muralidharan, CHENNAI V. ACIT, CHENNAI

ITSSA 9/CHNY/2016

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3248 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 21-04-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: R MANIMARAN
• Keywords: Corroborative evidences; Assessment record; Block assessment
• Section: 143(3); 131; 132

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T. (SS) A.NO. 0 9 /MDS/2016 BLOCK ASSESSMENT PERIOD : 1.4.95 TO 31.03.01 & 1.4.01 TO 31.01. 20 02 SMT. VIDYA MURALIDHARAN, L/H OF SHRI A.S. MURALIDHARAN, 7 & 8, GF, SRIVASTSA SREE APTS., 6 TH MAIN ROAD, R.A. PURAM, CHENNAI 600 0 28 . [PAN: A FWPM978 2N ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , NON - CORPORATE RANGE II , C HENNAI 600 0 34 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI R. MANIMARAN , C.A. / RESPONDENT BY : S HRI SHIVA SRINIVAS , J CIT / DATE OF HEARING : 05 . 0 1 .201 7 / DATE OF P RONOUNCEMENT : 03 . 0 4 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 2 , C HENNAI DATED 08 . 0 2 .201 6 RELEVANT TO THE BLOCK ASSESSMENT PERIOD 01.04.1995 TO 31.03.2001 & 01.04.2001 TO 31.01.2002. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER REFUSING TO GRANT FULL RELIEF TO THE APPELLANT BY THE LEARNED COMMISSIONER OF INCOME - TAX - (APPEALS) - 2, CHENNAI (HEREINAF TER REFERRED TO AS 'THE LEARNED CIT ) UNDER APPEAL IS CONTRARY TO LAW, WEIGHT OF EVIDENCE AND THE PROBABILITIES OF THE CASE. I.T. (SS) A. NO . 09 / M/ 1 6 2 2. THE LEARNED CIT HAS NOT AFFORDED SUFFICIENT OPPORTUNITY TO THE APPELLANT TO EXPLAIN ITS CASE. ON ACCOUNT OF THE INADEQUATE OPP ORTUNITY AFFORDED, THE APPELLANT COULD NOT FAIRLY PRESENT ITS CASE BEFORE THE SAID AUTHORITIES BY FURNISHING ADDITIONAL INFORMATION / MATERIAL EVIDENCES WHEREVER REQUIRED. 3. THE LEARNED CIT FAILED TO APPRECIATE THAT ADVANCE RECEIVED IS NOT TAXABLE UNDE R INCOME TAX ACT. 4. THE LEARNED CIT ERRED, DESPITE THE FACT THAT DOCUMENTARY EVIDENCE WAS FURNISHED TO SHOW THAT THE AMOUNT WAS ONLY AN ADVANCE. 5. THE LEARNED CIT HAD NOT APPRECIATED THE FACT THAT AN ADVANCE RECEIVED REMAINS AS LIABILITY TILL IT RE ACHED ITS FINALITY THAT IS LIQUIDATION. 6. THE OBSERVATION OF THE LEARNED CIT THAT THE PAYMENTS TO RAVINDRAN WERE NOT EVIDENCED BY ANY MATERIAL WAS CONTRARY TO THE FACT. WHEREAS BANK HAD CONFIRMED DISBURSEMENTS TO THE TUNE OF RS.16,50,000/ - AND FURTHER THE CORRESPONDENCE BETWEEN MR.SOMARAJAN AND MURALIDHARAN CONFIRMS THE FACT THAT THE AMOUNTS WERE DISBURSED TO RAVINDRAN TO THE TUNE OF RS.25,00,000/ - ON THE INSTRUCTION OF SOMARAJAN. IT IS VERY CLEAR THAT BENEFICIARY WAS RAVINDRAN AND RECIPIENT WAS SOMARAJA N. AGAIN A CHEQUE PAYMENT OF RS.2,00,000/ - TO SOMARAJAN HAD NOT BEEN CONSIDERED. 7. THE LEARNED CIT IGNORED THE SUPPORTING EVIDENCE FILED RELATING TO CRIMINAL PROCEEDINGS INSTITUTED BY MR. ASHOK SACHDEVA. 8. THE LEARNED CIT HAS FAILED TO NOTE THE HON ORABLE ITAT 'A' BENCH IN ITS ORDER (I.T.(S.S)A.NO.29/MDS/200S DATED 14TH SEPTEMBER 2007 HAD CLEARLY SET ASIDE THE ORDER ON THE ISSUE OF LEVY OF SURCHARGE. 9. FOR THE ABOVE AMONG OTHER GROUNDS OF APPEAL THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL OR AT ANY TIME BEFORE THAT, WITH THE LEAVE OF THIS HON'BLE FORUM. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT PASSED U/S. 250(6) OF THE INCOME - TAX ACT, 1961, DT. 8.02.2016 REFUSING TO GRANT FULL RELIEF BE ANNULLED AND RENDER JUSTICE. 2. BRIEF FACTS OF THE CASE ARE THAT THE BLOCK ASSESSMENT WAS ORIGINALLY MADE UNDER SECTION 158BC R.W.S. 143(3) OF THE ACT ON 25.02.2004 CONSEQUENT TO A SEARCH ON 31.1.2002 UNDER SECTION 132 OF THE ACT. IN THE I.T. (SS) A. NO . 09 / M/ 1 6 3 SAID ORDER, THE TOTAL UNDISCLOSED INCOME OF TH E BLOCK PERIOD WAS DETERMINED AT .1,77,15,070/ - . THE ASSESSEE WENT ON APPEAL TO THE LD. CIT(A). VIDE HIS ORDER DATED 18.1.2005, THE LD. CIT(A) DELETED THE ADDITION OF .7,50,000/ - WHICH REPRESENTED COMMISSION RECEIVED BY THE ASSESSEE FROM SHRI ASHOK DHING RA WHICH WAS FOUND TO HAVE BEEN SUBSEQUENTLY REPAID TO SHRI ASHOK DHINGRA. THE ORDER OF THE LD. CIT(A) WAS GIVEN EFFECT TO THE DCIT, CENTRAL CIRCLE IV(L), CHENNAI, ON 8.2.2005. NOT SATISFIED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL B EFORE THE ITAT AND VIDE ITS ORDERS IN IT(SS) A. NO.29/MDS/2005, DATED 14.9.2007, THE TRIBUNAL SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMITTED THE FOLLOWING ISSUES TO THE FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION: (I) CLAIM OF EXPENDITURE IN CONNECTION WITH TRANSACTION WITH ASHOK DHINGRA . 1,50,000 (II) AMOUNT RECEIVED FROM ASHOK SACHDEVA OF AMRITSAR TREATED AS INCOME OF THE ASSESSEE . 1,20,00,000 (III) AMOUNT RECEIVED FROM SHRI BAFNA TREATED AS COMMISSION FOR ARRANGING LOAN FOR ASHOK SAC HDEVA OF AMRITSAR . 2,50,000 2.1 IN THE SECOND ROUND OF LITIGATION, WITH REGARD TO THE CLAIM OF EXPENDITURE IN CONNECTION WITH TRANSACTION WITH ASHOK DHINGRA OF .1,50,000/ - , THE ASSESSING OFFICER DELETED THE ADDITION. FURTHER, THE AR OF THE ASSESSEE A GREED TO TREAT THE AMOUNT OF .2,50,000/ - RECEIVED FROM SHRI BAFNA TREATED AS COMMISSION FOR ARRANGING LOAN FOR ASHOK SACHDEVA OF AMRITSAR AND THUS, THE ASSESSING OFFICER RESTORED THE ADDITION. I.T. (SS) A. NO . 09 / M/ 1 6 4 2.2 AGAINST THE ADDITION TOWARDS THE AMOUNT RECEIVED FROM AS HOK SACHDEVA OF AMRITSAR TREATED AS INCOME OF THE ASSESSEE OF .1.20 CRORES, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS ALLOWED THE AMOUNTS CLAIMS TO BE PAID TO ONE SHRI SESHADRI OF .37,31,000/ - AND ONE SHRI SOMARAJAN OF .35,00,000/ - , AND ALSO ALLOWED THE EXPENDITURE PAID TO MAHARAJA TOURISM OF .5,00,000/ - . AS REGARDS THE CLAIM OF DISBURSEMENTS HAVING BEEN MADE TO ONE SHRI RAVINDRAN @ RAVICHANDRAN, THE ASSESSING OFFICER HAS OBSERVED THAT NO EVIDENCE WAS FURNISHED TO SHOW THAT SHRI RAVINDRAN @ RAVICHANDRAN HAD ANYTHING TO DO WITH THE IMPUGNED TRANSACTION OR THE MOU. MOREOVER, SHRI RAVINDRAN, WAS SHOWN AS A LOAN DEBTOR IN THE ACCOUNTS OF THE ASSESSEE. BASED ON THIS, THE ASSESSING OFFICER HELD THAT IT IS NOT POSSIBLE TO ALLO W THE PAYMENT TO SHRI RAVINDRAN AS THE SET OFF AGAINST THE AMOUNT RECEIVED OF RS. 1,20,00,000/ - . HENCE, THE ASSESSEE'S CLAIM THAT PAYMENTS WERE MADE TO SHRI RAVINDRAN ON BEHALF OF SHRI SOMARAJAN, WAS NOT FOUND TO BE ACCEPTABLE AND ACCORDINGLY, THE ASSESSIN G OFFICER DISALLOWED THE BALANCE AMOUNT OF .42,69,000/ - AS PROFESSIONAL FEE/INCOME IN THE HANDS OF THE ASSESSEE AGAINST THE TOTAL RECEIPT FROM SHRI ASHOK SACHDEVA OF .1.20 CRORES. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE LD. CIT(A) AND CHALLE NGED WITH REGARD TO THE DISALLOWANCE OF .42,69,000/ - AND LEVY OF I.T. (SS) A. NO . 09 / M/ 1 6 5 SURCHARGE @ 2%. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE . 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE SECOND ROUND OF LITIGATION, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE DOCUMENTS, ETC. ALL OWING THE CLAIM OF PAYMENT TO SHRI SESHADRI AND SHRI SOMARAJAN, THE BALANCE AMOUNT OF .42,69,000/ - AGAINST THE ORIGINAL ADDITION OF .1.20 CRORES WAS BROUGHT TO TAX AS PROFESSIONAL FEE/INCOME IN THE HANDS OF ASSESSEE. HOWEVER, AS REGARDS TO PAYMENTS CLAIMED TO HAVE BEEN MADE TO SHRI RAVINDRAN @ RAVICHANDRAN, THE ASSESSING OFFICER HAS OBSER VED THAT EVEN THOUGH THE BANK HAS MENTIONED IN ITS LETTER THAT THERE WAS D ISBURSEMENT TO THE TUNE OF .16,50,000/ - TO RAVINDRAN @ RAVICHANDRAN, THE AR OF THE ASSESSEE COULD NOT FILED ANY EVIDENCE TO SHOW THAT SHRI RAVINDRAN @ RAVICHANDRAN HAD ANYTHING TO D O WITH THE IMPUGNED TRANSACTION OR THE MOU. MOREOVER, SHRI RAVINDRAN WAS SHOWN AS A LOAN DEBTOR IN THE ACCOUNTS OF THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HAS HELD THAT IT IS NOT POSSIBLE TO ALLOW THE PAYMENT TO SHRI RAVINDRAN AS A SET OFF AGAINST T HE AMOUNT RECEIVED OF .1.20 CRORES. ACCORDINGLY, THE BALANCE AMOUNT OF .42,69,000/ - WAS BROUGHT TO TAX. I.T. (SS) A. NO . 09 / M/ 1 6 6 5.1 AFTER EXAMINING THE ASSESSMENT RECORD AND SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT THE BANK HAS MERELY STATED THAT SELF DRAWINGS TO THE TUNE OF .16,50,000/ - ON THE CHEQUES ISSUED BY SHRI ASHOK SACHDEVA WERE ENCASHED BY SHRI RAVINDRAN @ RAVICHANDRAN . FURTHER, IN REPLY TO QUESTION NO. 16 RECORDED UNDER SECTION 131 OF THE ACT ON 17.02.2004 THE ASSESSEE SHRI MURALIDHARAN HAS DEPOSED THAT THE PAYMENT T O SHRI RAVINDRAN WAS INDIRECT EXPENSE TO EMANATE BANK GUARANTEE AND FOR STAMP DUTY CHARGES TO RAISE SUCH GUARANTEE AND THE PAYMENT MADE WAS ONLY .9,00,000/ - AND NOT .25.00 LAKHS. FURTHER, REPLY TO QUESTION NO. 13, THE ASSESSEE HAS DEPOSED THAT THE SAID MONEY HAS BEEN PAID BY CASH OUT OF ADVANCES AND BORROWINGS. MOREOVER, IN THE ACCOUNTS OF THE ASSESSEE, SHRI RAVINDRAN HAS BEEN SHOWN AS A LOAN DEB TOR. DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO, THE AR OF THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHOW THAT SHRI RAVINDRAN @ RAVICHANDRAN HAD ANYTHING TO DO WITH THE IMPUGNED TRANSACTION OR MOU. IN VIEW OF THE ABOVE, THE LD. CIT(A) CONFIRMED T HE ADDITION TO THE EXTENT OF .42,69,000/ - . 5.2 EVEN BEFORE THE TRIBUNAL, THE AR OF THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT SHRI RAVINDRAN @ RAVICHANDRAN HAD ANYTHING TO DO WITH THE IMPUGNED TRANSACTION OR MOU. THUS, WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. I.T. (SS) A. NO . 09 / M/ 1 6 7 6. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO LEVY OF SURCHARGE @ 2%. IN THE SECOND ROUND OF LITIGATION ALSO, THE ASSESSING OFFICER LEVIED SURCHARGE @ 2%, WHICH WAS CONFIRMED BY THE LD. CIT(A). 6.1 THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE IN THE FIRST ROUND OF LITIGATION, THE TRIBUNAL VIDE ORDER DATED 14.09.2007 HAS D ELETE D THE LEVY OF SURCHA R GE BY FOLLOWING TH E SPECIAL BENCH DECISION IN THE CASE OF MERIT ENTERPRISES V. DCIT 101 ITD 1, WHEREIN, THE SPECIAL BENCH ELABORATELY CONSIDERED THE PROVISO TO SECTION 113 OF THE ACT AND VARIOUS CASE LAWS, HELD THAT THE LEVY OF SURCHARGE PRIOR TO INTRODUCTION OF PROVISO TO SECTION 113 W.E.F. 01.06.2002 IS RIDDLED WITH COMPLEXITY TO THE EXTENT OF MAKING IT UNWORKABLE AND IMPOSSIBLE TO HARMONISE AND LEVY OF SURCHARGE FAILS. WITH THE ABOVE SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT A DECISION TAKEN BY THE FINAL FACTS FINDING AUTHORITY CANNOT BE REVIEWED/REVISED BY THE LOWER AUTHORITIES AND PLEADED THAT THE ORDERS OF AUTHORITIES SHOULD BE SET ASIDE. 6.2 ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT EVEN THOUGH THE ORDER OF THE TRIBUNAL IN A PARTICULAR I SSUE HAS BEEN DECIDED, THAT CAN BE REVISED IN VIEW OF THE DECISION OF HIGHER FORUM AND THE EARLIER ORDER OF THE TRIBUNAL CANNOT BE HELD VALID AND PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE SUSTAINED. I.T. (SS) A. NO . 09 / M/ 1 6 8 6.3 WE HAVE CONSIDERED RIVAL SUBMISSIONS AND F IND THAT IN THE FIRST ROUND OF LITIGATION VIDE ORDER DATED 14.09.2007 AT PARA 10.2, THE TRIBUNAL HAS SET SIDE THE ISSUE OF LEVY OF SURCHARGE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE SPECIAL BENCH DECISION IN THE CASE OF MERIT ENTERP RISES V. DCIT (SUPRA). 6.4 THE SEARCH WAS CONDUCTED ON 31. 0 1.2002, WHICH PERTAINS TO ASST. YEAR 2002 - 03. AS PER PROVISO TO SECTION 113 OF THE IT ACT, 1961, 'PROVIDED THAT THE TAX CHARGEABLE UNDER THIS SECTION SHALL BE INCREASED BY A SURCHARGE, IF ANY, L EVIED BY ANY CENTRAL ACT AND APPLICABLE IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH IS INITIATED UNDER SECTION 132 OR THE REQUISITION IS MADE UNDER SECTION 132A.' I N THE CASE OF CIT VS. SURESH N GUPTA (2009) 297 ITR 322 (SC), THE HON BLE SUPREME COURT HAS HELD THAT THE PROVISO TO SECTION 113 IS CLARIFICATORY IN NATURE AND CLARIFIES THAT THE RELEVANT DATE FOR APPLICABILITY OF THE FINANCE ACT WOULD BE THE YEAR IN WHICH THE SEARCH STOOD INITIATED U NDER SECTION 158 BC OF THE ACT . APPLYING THIS RATIO TO THE FACTS OF THE ASSESSEE S CASE, SINCE THE YEAR IN WHICH THE SEARCH STOOD INITIATED WAS FINANCIAL YEAR 2001 - 02 I.E. ASSESSMENT YEAR 2002 - 03, THE ASSESSING OFFICER HAS HELD THAT THE RATE OF S URCHARGE PRESCRIBED VIDE FINANCE ACT 2002 WOULD BE APPLICABLE. THUS, IN THE SECOND ROUND OF LITIGATION, BY PLACING RELIANCE ON THE DECISION IN THE CASE OF CIT VS. SURESH N GUPTA ( SUPRA ) , THE ASSESSING OFFICER HAS LEVIED SURCHARGE AT THE RATE OF 2% AS APPLICABLE TO ASST. YEAR 2002 - 03. I.T. (SS) A. NO . 09 / M/ 1 6 9 6.5 IN THE APPELLATE ORDER, THE LD. CIT(A) HAS OBSERVED THAT SINCE T HE APEX COURT HAVING CATEGORICALLY HELD THAT THE PROVISO INSERTED IN S ECTION 113 BY FINANCE ACT 2002 IS CLARIFICATORY IN NATURE AS IT CLARIFIES THAT THE RELEVANT DATE FOR APPLICABILITY OF THE FINANC E ACT WOULD BE THE YEAR IN WHICH THE SEARCH STOOD INITIATED U NDER SECTION 158BC OF THE ACT , AND HELD THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED S URCHARGE AT THE RATE OF 2% ON THE ASSESSED INCOME. 6.6 IN VIEW OF THE ABOVE FINDINGS OF THE LD. CIT(A), WH ICH IS IN THE LINE OF DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. SURESH N GUPTA (SUPRA), WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7 . IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED ON THE 3 RD APRIL , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 03 . 0 4 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.