DCIT, Erode V. Shri M.Thangamuthu, Erode

ITSSA 93/CHNY/2001

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8743 (ITAT-CHENNAI)
• Duration Of Justice: 9 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-12-2010
• Assessment Year: misc
• Appeal Filed On: 19-07-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN
• Assessee Lawyers: C V RAJAN ITSSA
• Keywords: Block assessment; Retraction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH D BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T(SS).A. NO. 38/MDS/2001 BLOCK ASSESSMENT PERIOD : 1.4.1987 TO 27.11.1997 SHRI M.THANGAMUTHU, 114, M.G.R.STREET, VEERAPPANCHATRAM, ERODE. PAN/GIR NO. T 2777 VS. THE DY. COMMISSIONER OF INCOME TAX, SPL. INVESTIGATION CIRCLE, ERODE. (APPELLANT) (RESPONDENT) I.T(SS).A. NO. 93/MDS/2001 BLOCK ASSESSMENT PERIOD : 1.4.1987 TO 27.11.1997 THE DY. COMMISSIONER OF INCOME TAX, ERODE. VS. SHRI M.THANGAMUTHU, ERODE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E.B.RENGARAJAN RESPONDENT BY : SHRI C.V.RAJAN IT(SS)A 38 & 93/01 :- 2 -: O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THESE TWO BLOCK ASSESSMENT APPEALS ARE CROSS APPEA LS FILED BY THE ASSESSEE AND THE REVENUE. THE APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INC OME-TAX (APPEALS)-XII AT CHENNAI ON 20.3.2001 AND ARISE OUT OF ASSESSMENTS COMPLETED UNDER SEC.158BC(C) OF THE I.T . ACT, 1961. 2. THERE WAS A SEARCH ACTION UNDER SEC.132 IN THE BUSI NESS AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 27.11.1 997. ON THE BASIS OF THE SEARCH DETAILS, THE ASSESSING OFFICER DETERMINED A TOTAL UN-DISCLOSED INCOME OF ` 27,51,640/- AS AGAINST THE UN- DISCLOSED INCOME OF ` 10,79,680/-, DECLARED BY THE ASSESSEE IN HIS BLOCK RETURN. 3. THE BLOCK ASSESSMENT WAS TAKEN IN FIRST APPEAL. TH E COMMISSIONER OF INCOME-TAX (APPEALS) GRANTED MODIFI CATIONS AND SUSTAINED CERTAIN OTHER CONDITIONS. THE ASSESSEE A S WELL AS THE REVENUE ARE AGGRIEVED AND THEREFORE, THESE APPEALS BEFORE US. IT(SS)A 38 & 93/01 :- 3 -: 4. THE GROUNDS RAISED BY THE ASSESSEE IN HIS APPEAL AR E AS FOLLOWS : 2. RETRACTION BY THE ASSESSEE, FROM HIS OWN STATE MENT GIVEN AT THE TIME OF SEARCH, CANNOT BE ACCEPTED UNL ESS THE ASSESSEE IS ABLE TO SUBSTANTIATE THE SAME BY CLINCHING EVIDENCE. 3. WHEN BOTH SRI THANGAVELU AND R. KATIRVEL THEMSE LVES DENY ANY PARTNERSHIP WITH THE ASSESSEE, THE ASSESSE ES CONTENTION THAT AMOUNTS WERE RECEIVED FROM THESE PERSONS TOWARDS PARTNERSHIP CONTRIBUTION CAN ONLY B E AN AFTERTHOUGHT. 4. IN THE ABOVE CIRCUMSTANCES, THE ASSESSING OFFI CER IS JUSTIFIED IN CONCLUDING THAT THE AMOUNTS NOTED AGAI NST THESE PERSONS CAN AT BEST BE REPAYMENT OF LOANS REC EIVED BY THESE PERSONS FROM THE ASSESSEE WHICH WAS NOT DISCLOSED TO THE DEPARTMENT. 5. AMOUNT, CLAIMED TO HAVE BEEN RECEIVED FROM THE PARTNERS OF SRI VENKATACHALAPATHY MANURE MIXING WOR KS IS NOT ACCEPTABLE FOR THE REASONS THAT IN ALL THE S LIPS WHERE SUCH AMOUNTS NOTED, THE NAME OF THE PARTNER IS MENTIONED IN THE PARTICULAR SLIP NO SUCH MENTION IS THERE. 6. FURTHER, THIS PARTICULAR SLIP MENTION ONLY RECE IPT OF ` 2 LAKHS FROM THE ASSESSEE AND NOT BY THE ASSESSEE. IT(SS)A 38 & 93/01 :- 4 -: 7. IN THE ABSENCE OF ANY EVIDENCE TO PROVE THAT TH E PROPERTY WAS OCCUPIED FOR THE BUSINESS OF CO-OWNERS , THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED AND T HE ASSESSING OFFICER IS JUSTIFIED IN ESTIMATING THE IN COME FROM THIS PROPERTY. 5. ON THE OTHER HAND, FOLLOWING ARE THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL : 2. THE C.I.T.(A) OUGHT TO HAVE ALLOWED THE INCOME RETURNED AND ASSESSED VIZ., ` 2,01,760/- IN RESPECT OF ASST. YEAR 1997-98. HE FAILED TO APPRECIATE THAT T HE RETURN OF INCOME WAS FILED WELL WITHIN THE TIME ON 31.03.1 998 AND IN THE CIRCUMSTANCES, BASED ON THE RATIO DECID ENDI REPORTED IN PAGE 151 OF 67 ITD, 69 TTJ 456 AND OTHE R CASES THE SUM OF ` 2,01,760/- OUGHT TO HAVE BEEN DELETED. 3. THE C.I.T.(A) AGAIN FAILED TO CONSIDER A SUM OF ` 1,31,000/- (CORRECT FIGURE IS ` 1,30,000/-) BEING INCOME FROM REAL ESTATE BUSINESS. WHILE DEALING WITH THIS ISSUE, THE CITA) IN PARA 4, 5 ETC., OF HIS ORDER, HAS ALLO WED ONLY A SUM OF ` 11,32,000/- BUT FAILED TO APPLY HIS MIND AND CONSIDER THE SAME ISSUE IN RESPECT OF ASST. YEAR 19 98-99 IN BLOCK PERIOD. HE OUGHT TO HAVE ALLOWED THE SAID SUM ALSO ON THE SAME GROUND. 4. THE CIT(A) ALSO ERRED IN CONFIRMING THE ADDITI ON OF ` 70,000/-, 66,000/- AND 32,373/- AS UNDISCLOSED INC OME OF THE BLOCK PERIOD. THE REASONS GIVEN BY HIM THER EFORE ARE UNSOUND. 5. THE CIT(A) ERRED IN RELYING ON IRRELEVANT MAT ERIAL WHEN FACTUALLY THE FACTS ARE OTHERWISE. THE MERE ADMISSION OF THE APPELLANT IN THE BLOCK RETURN FILE D ON 10.01.1999 OF A SUM OF ` 6,19,900/- AS UNDISCLOSED INCOME FROM REAL ESTATE RELEVANT TO THE EARLIER ASS T. YEARS IT(SS)A 38 & 93/01 :- 5 -: DID NOT LEAD TO THE CONCLUSION THAT THESE SUMS SHOU LD BE TREATED AS UNDISCLOSED INCOME, WHEN ACTUALLY THESE SUMS HAVE BEEN ADMITTED. 6. THE CIT(A) ALSO WENT WRONG IN HOLDING THAT NO N- SEIZURE OF THE REGULAR BOOKS OF ACCOUNTS IN SUPPORT OF INCOME EARNED FROM REAL ESTATE DURING SEARCH OPERAT ION WOULD LEAD TO THE ONLY CONCLUSION THAT THESE SUMS A RE INCOME LIABLE TO BE ASSESSED AS UNDISCLOSED INCOME OF THE BLOCK PERIOD. IT IS RESPECTFULLY SUBMITTED THA T SUSPICION HAS TAKEN THE PLACE OF EVIDENCE AND THIS CANNOT BE A GROUND FOR BRINGING THE ABOVE SUMS TO TAX FOR THE BLOCK PERIOD. 7. THE APPELLANT SUBMITS THAT THE INCOME HAVE BEEN ACCOUNTED FOR IN THE USUAL COURSE OF BUSINESS IN TH E ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE AND UNWILLINGNESS OR INABILITY TO LOOK INTO THE CRUX OF THE MATTER COULD NOT CONVERT THESE AMOUNTS AS UNDISCLOSED INCO ME OF BLOCK PERIOD, ESPECIALLY WHEN THESE SUMS WERE ADMITTED AS INCOME IN THE REGULAR RETURN FILED UNDE R SECTION 139. 6. WE HEARD BOTH SIDES IN DETAIL AND CONSIDERED THE RI VAL CONTENTIONS. 7. IN THE BLOCK RETURN FILED BY THE ASSESSEE, HE HAS O FFERED UNDISCLOSED INCOME OF ` 6,19,900/- TOWARDS REAL ESTATE BROKERAGE. THE ASSESSING OFFICER ENHANCED THE INCOME UNDER THI S HEAD TO ` 17,51,000/-. THIS WAS ONE OF THE ISSUES RAISED BE FORE THE COMMISSIONER OF INCOME-TAX (APPEALS). THE COMMISSI ONER OF INCOME-TAX (APPEALS) EXAMINED THE DETAILS OF THE UN DISCLOSED INCOME FURNISHED BY THE ASSESSEE AGAINST REAL ESTAT E BROKERAGE. IT(SS)A 38 & 93/01 :- 6 -: THE GROSS INCOME SHOWN WAS ` 6,89,900/-. THE ASSESSEE DEDUCTED ` 70,000/- ON THE ABOVE AMOUNT AS THE SAID INCOME WA S ALREADY OFFERED FOR ASSESSMENT YEAR 1998-99. THE D IFFERENCE OF ` 6,19,900/- WAS OFFERED AS UNDISCLOSED INCOME FOR T HE BLOCK YEAR UNDER REAL ESTATE BROKERAGE. THE BASIS OF THE ADDI TION MADE BY THE ASSESSING AUTHORITY AS OBSERVED BY THE COMMISSI ONER OF INCOME-TAX (APPEALS) WAS THE EARLIER ADMISSION MADE BY THE ASSESSEE. THE ASSESSEE HAS MADE AN EARLIER ADMISSI ON OF ` 20 LAKHS AS SUCH UNDISCLOSED INCOME. 8. THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT EVEN THOUGH THERE WAS AN ADMISSION OF ` 20 LAKHS AT THE FIRST INSTANCE, THE ASSESSEE HAS PROVED THAT THE UNDISCLOSED INCOME AGAINST REAL ESTATE BROKERAGE WOULD NOT COME TO THE EXTENT OF AD MISSION MADE BY HIM. AS FAR AS SEIZED MATERIALS ARE CONCERNED, THE ASSESSING OFFICER RELIED ONLY ON THE CONTRIBUTIONS OF ` 6 LAKHS AND ` 3 LAKHS IN THIS REGARD. THERE WAS ANOTHER ENTRY OF ` 2 LAKHS. AS FAR AS THIS AMOUNT IS CONCERNED, THE COMMISSIONER OF INCOM E-TAX (APPEALS) HAS OBSERVED THAT THE ASSESSING OFFICER H IMSELF HAD A SERIOUS DOUBT THAT THE AMOUNTS REPRESENTED REPAYMEN T OF AMOUNTS BORROWED BY THE ASSESSEE. ON THE BASIS OF THESE FACTS, IT(SS)A 38 & 93/01 :- 7 -: THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THERE ARE NO EVIDENCES COLLECTED IN THE COURSE OF SEARCH TO E STIMATE THE REAL ESTATE BROKERAGE INCOME TO THE EXTENT OF ` 17,51,000/- AS DONE BY THE ASSESSING AUTHORITY. THE COMMISSIONER OF INCOME- TAX (APPEALS) FOUND THAT NO EVIDENCES ARE AVAILABLE ON RECORD TO SUPPORT THE EARLIER ADMISSION MADE BY THE ASSESSEE. THEREFORE, ONLY ON THE BASIS OF UNFOUNDED ADMISSION, AN ADDITI ON CANNOT BE MADE BY THE ASSESSING AUTHORITY ON AN ESTIMATE BASI S. 9. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DISCUS SED THE ABOVE ISSUE IN A VERY DETAILED MANNER IN PAGES 2 TO 8 OF HIS ORDER. WE AGREE WITH THE DISCUSSIONS AND FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND AGREE WITH HIM THAT THE ASSESSEE HAS RETURNED THE REAL ESTATE INCOME AT TRIBUTABLE IN HIS HANDS AND BEYOND THAT NO EVIDENCE IS AVAILABLE ON RECORD. IT IS IN THIS CONTEXT THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) HAS DELETED THE ADDITION OF ` 11,32,000/- MADE BY THE ASSESSING OFFICER. WE UPHOLD THE DECISION OF THE COMMISSIONE R OF INCOME- TAX (APPEALS) ON THIS POINT. 10. THE NEXT ITEMS AGITATED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) RELATED TO A S UM OF IT(SS)A 38 & 93/01 :- 8 -: ` 70,000/-, ` 66,000/- AND ` 32,373/-. THESE ADDITIONS WERE MADE TOWARDS REAL ESTATE BROKERAGE, PROFIT ON SALE OF FE RTILIZERS AND PESTICIDES. THE DETAILS WERE FOUND IN THE COURSE O F SEARCH AS RECORDED IN A PERSONAL NOTE BOOK OF THE ASSESSEE. THE ADDITIONS WERE MADE ON THAT BASIS. THE COMMISSIONER OF INCOM E-TAX (APPEALS) CONFIRMED THOSE ADDITIONS. AS THE ADDITI ONS HAVE BEEN MADE ON THE BASIS OF THE NOTINGS FOUND IN THE SEIZE D MATERIAL IN THE COURSE OF SEARCH, WE FIND THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) IS JUSTIFIED IN CONFIRMING THE ABOVE THREE AMOUNTS AS ADDITIONS. 11. THE LAST ITEM CONSIDERED BY THE COMMISSIONER OF INC OME- TAX (APPEALS) IN FIRST APPEAL WAS AN ADDITION OF ` 2,22,563/-. THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS ESTIMATED RENTAL INCOME AT ` 36,000/- FOR ASSESSMENT YEARS 1994-95, 1995-96 AND 1996-97 AND HAS MADE ADD ITIONS ACCORDINGLY. BUT AS RIGHTLY POINTED OUT BY THE COM MISSIONER OF INCOME-TAX (APPEALS), SEARCH HAS NOT DELIVERED ANY MATERIALS TO PROVE THE RECEIPT OF RENTAL INCOME AS ALLEGED BY TH E ASSESSING AUTHORITY. THE COMMISSIONER OF INCOME-TAX (APPEALS ) IS ACCORDINGLY, JUSTIFIED IN DELETING THE SAID ADDITIO N. IT(SS)A 38 & 93/01 :- 9 -: 12. IN FACT, WE HAVE EXAMINED THE DISPUTE CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN HIS ORDER U NDER THREE HEADS. AS ALREADY STATED, IT IS AGAINST THE ABOVE THAT THE ASSESSEE AND THE REVENUE HAVE COME IN APPEAL BEFORE US. 13. WE DO NOT FIND ANY MERIT IN THE GROUNDS RAISED BY T HE ASSESSEE ESPECIALLY ON THE GROUND REGARDING SUSTENA NCE OF ADDITION OF ` 2,01,760/-, STATED IN GROUND NO.2. THE SAID AMOUN T WAS NEVER AGITATED BEFORE THE COMMISSIONER OF INCOM E-TAX (APPEALS) RATHER IT COULD NOT HAVE BEEN AGITATED. THIS IS BECAUSE THE SAID AMOUNT FORMED PART OF UNDISCLOSED INCOME R ETURNED BY THE ASSESSEE HIMSELF. IN RESPECT OF OTHER ADDITION S SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), WE HAVE A LREADY UPHELD HIS ORDER. IN THESE CIRCUMSTANCES, THE APPE AL FILED BY THE ASSESSEE IS LIABLE TO BE DISMISSED. 14. THIS IS THE CASE IN APPEAL FILED BY THE REVENUE ALS O. FIRST OF ALL, THE GROUNDS RAISED ARE TOO GENERAL IN NATURE. FURTHER WE HAVE ALREADY UPHELD THE ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS). IN THESE CIRCUMSTANCES, THE APPEAL FILE D BY THE REVENUE AS WELL IS LIABLE TO BE DISMISSED. IT(SS)A 38 & 93/01 :- 10 - : 15. IN RESULT, THE APPEAL FILED BY THE ASSESSEE AS WELL AS THE APPEAL FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 22 ND OF DECEMBER, 2010. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER ( DR.O.K.NARAYANAN) VICE-PRESIDENT CHENNAI : 22 ND DEC.,2010 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR