Commissioner of Income tax, V. S.Venkata Subbaiah,

ITTA/257/2003

AI Insights

The case revolves around an appeal by the revenue against the decision of the Income Tax Appellate Tribunal, which had allowed the appeal of the assessee, directing the deletion of Rs.8,12,500/- from the assessment. The amount was initially seized by the Income Tax authorities during a search operation under Section 132 of the Income Tax Act, 1961, following its discovery by the Central Excise Department. The Tribunal's decision was based on the finding that the money belonged to M/s. P.R. Rajasekharan and Sons and not the assessee, who was merely a carrier. The revenue challenged the Tribunal's acceptance of the assessee's claims and the supporting documents, arguing that there was insufficient evidence to substantiate these claims.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 718721 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 11-11-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Central Excise Department; Income tax appellate tribunal; Search and seizure; Seizure; Unexplained Cash
• Section: 143(3); 132; 131; 260-A; 158(BC)

Judgement Text

"HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.257 OF 2003 JUDGMENT:- (Per Hon’ble Sri Justice Challa Kodanda Ram) This appeal is filed by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’), questioning the order dated 08.01.2002, passed by the Income Tax Appellate Tribunal, Hyderabad Bench ‘A’, Hyderabad in I.T.(SS)A No.88/Hyd/97. The brief facts of the case are that a check was conducted by the authorities of the Central Excise Department in the Bus proceeding from Chennai to Tirupati. The respondent-Assessee was found with cash of Rs.8,12,500/-. Excise Officials made over the same to the Income Tax Officials, who in turn conducted search under Section 132 of the Act on the person of assessee. The amount of Rs.8,12,500/- was seized under panchanama. Assessee was also carrying a letter addressed by Sri R.R. Mohan Kumar of M/s. P.R. Rajasekharan and Sons, 348, Kattabomman Street, Virudhnagar, Tamilnadu which is to the effect that the amount belongs to them. In response to the notice issued under Section 158 BC of the Act, assessee filed return and the same was processed vide orders dated 24.02.1997. The total income of the assessee was determined as Rs.13,46,767/-. Out of that Rs.8,12,500/- was treated as unexplained cash, and income from other sources. Assessee filed appeal before the Income Tax Appellate Tribunal (for short, ‘the Tribunal’). On analysing the facts on record the Tribunal allowed the appeal, directing deletion of sum of Rs.8,12,500/- and processing of Rs.3,68,767/-, which was added in the assessment proceedings, under Section 143(3) of the Act, instead of Section 158 BC and BD of the Act. It is the contention of Sri S.R.Ashok, learned senior counsel for the revenue that the Tribunal erred in accepting the letter found along with the cash as proved without there being any further supporting material. He further contended that the Tribunal erred in ignoring the statements recorded by the Assessing Officer during the seizure. The learned counsel also disputes various findings of the fact as recorded by the Tribunal and implores this Court to interfere with the orders of the Tribunal. In the above set of facts, the following substantial questions of law said to be arising from the order of the Tribunal, are required to be considered: 1. “Whether in the facts and circumstances of the case, the order of the Tribunal is not correct in law or facts and liable to be set aside” 2. “Whether in the facts and circumstances of the case, the Tribunal was correct in law in holding that the statements recorded during the course of search have to be ignored?” None appeared for the respondent. At the outset, we may observe that the questions framed by the appellant are vague and of general nature. The Tribunal in its elaborate order had recorded categorical findings that the amounts which were seized from the assessee belong to M/s. P.R. Rajasekharan and Sons. The record discloses that the officials of Central Excise conducted search at 11.00 a.m on 01.02.1996 and thereafter the assessee was handed over to the Authorities of Income Tax Department at Tirupati at 12.00 ‘O’ clock in the midnight. Assessee was kept under detention from 12.00 ‘O’ clock to 2.30 a.m i.e., early hours of 02.02.1996. While he was in police custody, the statement under Section 132 of the Act was recorded by the Assistant Director of Income Tax (Investigation), Tirupati. Enquiries were conducted by the Income Tax Authorities from various sources to verify the veracity of the claims of the assessee that the seized amount was being carried by him, on a request of R.R. Mohan Kumar. That person was examined by the Income Tax Authorities at Madras. At about 15.59 hours, M/s. P.R. Rajasekharan and Sons issued a telegram to the assessee, stating that the documentary evidence from Rajnath Agencies being brought and that they are starting immediately. In the statement recorded at about 12.50 a.m by the Income Tax Authorities it was asserted by the assessee that he was still in the custody of the police. A statement from Mr. Mohan Kumar, S/o. Mr. Rajasekharan was recorded under Section 131 of the Act at Income Tax Office, Chennai on 02.02.1996. On the same day statement was recorded from one Mr. M. Chalamaiah, who stated that he had given the cash to Sri S.V.Subbaiah. By analyzing various statements recorded during the investigation, the Tribunal came to the conclusion that the amounts belong to one Mr. M. Chalamaiah and the money was to be delivered to him for and on account of M/s. Rajnath Agencies, Chennai who had purchased groundnuts through Mr. M. Chalaiamah from M/s. Lakshminarayana Chetty, Jayaram Traders, Mr. K. Chakrapani and others. As a matter of fact, it was found a sum of Rs.11,28,500/- was withdrawn by Mr. Chalamaiah from Punjab National Bank on 29.01.1996 and certain bearer’s cheques were issued in favour of M/s. Rajnath Agencies. The Tribunal found as a fact that the seized amounts do not belong to the assessee and thereby there is no occasion to fasten the liability under Section 69(A) of the Act on him. In those circumstances, the deletion of sum of Rs.8,12,500/- from the assessment proceedings was justified and the conclusion reached by the Tribunal is on appreciation of facts on record. That does not call for interference by this court in any manner without there being any material to upset the findings recorded by the Tribunal. In those circumstances, questions as raised in the appeal are required to be answered in favour of the assessee and against the revenue. The appeal is dismissed accordingly. There shall be no order as to costs. Miscellaneous Petitions, if any pending in this appeal, shall also disposed of. _________________________ L. NARASIMHA REDDY ____________________________ CHALLA KODANDA RAM, J Date:11.11.2014 Gk HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.257 OF 2003 Date:11.11.2014 Gk "