2023 (10) TMI 448 - AT - Income Tax

Block assessment u/s 158BC - third round of appeal - assessee made disclosure of approx. Rs. 77.69 Lacs and agreed to file the necessary return of income. However, in response to notice u/s 158BC, he filed Nil return of income - Tribunal, vide order after considering assessee s submissions as well as additional evidences filed by the assessee, reduced the taxable income - The impugned assessment order is not sustainable in law as the same is not in consonance with the specific directions of the Hon'ble Tribunal while remitting the matter to the assessing authority - whether AO failed to note that the assessee had filed evidences of the state revenue authorities before this Hon'ble Tribunal to show and prove his agriculture income and also the source of investments of other persons whose income and investments were sought to be included as that of the assessee, based on which this Hon'ble Tribunal deleted those additions? - argument that the additions made by AO without reference to search material should not be included in his income for the block period HELD THAT - Upon perusal of order of Tribunal in first round, it could thus be seen that detailed factual findings have been rendered by Tribunal on each of the issue after appreciating the assessee s submissions as well as evidences filed by the assessee before the bench. The same documents were placed by the assessee before Ld. AO in the present proceedings. However, Ld. AO rejected the same and chose to take the same stand as taken in original assessment order. Aggrieved, the assessee is before us with similar arguments and evidences. Under these circumstances, the bench concurs with the findings of Tribunal in first round and considers it fit to adopt the same adjudication in the present proceedings. In other words, the income of the assessee stand reduced as adjudicated by Tribunal in the first round. All the grounds of appeal stand disposed-off accordingly. Our aforesaid adjudication is duly supported by the order of Hon ble Special Court acquitting the assessee and all the other accused persons. The observations of Hon ble Supreme Court in DCIT vs. Jayachandran Others 2018 (4) TMI 1473 - SUPREME COURT duly support the argument of Ld. AR that the findings arrived at by the criminal court could be taken into consideration while deciding the question as to the relationship between the parties to the case. When the findings are arrived by a criminal court on the evidence and the material placed on record then in absence of anything shown to the contrary, there seems to be no reason as to why these duly proved evidence should not be relied upon by the Court. Additionally, it would also be pertinent to note that, in the first round, the additional evidences were not furnished by the assessee with respect to all the impugned issues but the same were confined to only few of the issues only as tabulated by Ld. AR Additional evidences ought to have been confronted to the AO who would be in a better position to appreciate / verify the same. This fact also strongly supports adoption of first round adjudication of the Tribunal by us. Therefore, we direct Ld. AO to determine the total income of the assessee at Rs. 64,98,721/- as per the first round of decision by Tribunal.

Summary

Issues Involved:
1. Admission of Additional Evidence
2. Cash Found During Search
3. Gold Jewellery
4. Silver Jewellery
5. Diamond Jewellery
6. Household Articles
7. Investment in Cars
8. Investment in Firearms
9. Promissory Notes
10. Deposits with Bank of Baroda
11. Deposits in the Name of Paramasivam & Periyakka
12. Deposits in the Name of Selvi Palaniammal
13. Fixed Deposits by A.G. Chittibabu and A.A. Govindrajan
14. Deposits in the Name of P. Krishnan & K. Ramakrishnan
15. Credits in Various Bank Accounts
16. Deposits of Smt. Malliga Krishnan
17. Deposit in the Name of Master Chiranjivi
18. Investment in Immovable Properties
19. Investment in Residential House
20. Unexplained Investment in Buses
21. Investment in Sundar Creations
22. Children Education Expenses
23. Election Expenses
24. Family Expenses
25. Donation to AIADMK Party
26. Payment to Jaya Publications
27. Salary Income
28. Fixation of Agricultural Income
29. Block Assessment Confined to Search Materials
30. Income Below Taxable Limit

Summary of Judgment:

1. Admission of Additional Evidence:
The Hon'ble High Court noted that Rule 46A could not be pressed into service for block assessments and allowed the production of additional evidences under Rule 29, subject to the condition that the Tribunal should afford sufficient opportunity to the revenue to rebut those additional evidences. The Tribunal's order was set aside, and the matter was restored to the AO to consider the additional evidences filed by the assessee and pass a fresh order.

2. Cash Found During Search:
The Tribunal deleted the addition of Rs. 9.02 Lacs on the ground that the cash was well covered with the ostensible sources of agricultural income explained by the assessee, evidenced by certificates issued by concerned village officers.

3. Gold Jewellery:
The Tribunal sustained the addition to the extent of Rs. 4.68 Lacs, valuing 1338.100 grams of gold jewellery, and deleted the rest.

4. Silver Jewellery:
The addition of Rs. 0.81 Lacs was deleted by the Tribunal.

5. Diamond Jewellery:
The addition of Rs. 0.80 Lacs was deleted by the Tribunal.

6. Household Articles:
The Tribunal deleted the addition of Rs. 2.50 Lacs, noting that all the items found in the premises could not be attributed to the assessee's undisclosed income without any discrimination.

7. Investment in Cars:
The Tribunal deleted the addition of Rs. 9.15 Lacs, stating that there was no evidence to prove that the cars and jeep were acquired by the assessee.

8. Investment in Firearms:
The addition was reduced to Rs. 0.68 Lacs after allowing the cost of purchase.

9. Promissory Notes:
The addition of Rs. 10 Lacs was sustained for want of evidence.

10. Deposits with Bank of Baroda:
The Tribunal confirmed the addition of Rs. 49.90 Lacs, noting inconsistencies in the assessee's explanations.

11. Deposits in the Name of Paramasivam & Periyakka:
The addition of Rs. 40 Lacs was deleted as it was considered under the total amount of Rs. 49.90 Lacs.

12. Deposits in the Name of Selvi Palaniammal:
The addition of Rs. 11.33 Lacs was deleted.

13. Fixed Deposits by A.G. Chittibabu and A.A. Govindrajan:
The addition of Rs. 34.34 Lacs was deleted as there was no established nexus with the assessee.

14. Deposits in the Name of P. Krishnan & K. Ramakrishnan:
The additions of Rs. 53.86 Lacs and Rs. 54.93 Lacs were deleted, noting that the deposits were made on mere suspicion.

15. Credits in Various Bank Accounts:
The addition of Rs. 32.75 Lacs was deleted as the explanation was found to be bona fide.

16. Deposits of Smt. Malliga Krishnan:
The addition of Rs. 12.47 Lacs was deleted as she had agricultural lands and income.

17. Deposit in the Name of Master Chiranjivi:
The addition of Rs. 0.29 Lacs was deleted as he owned certain land.

18. Investment in Immovable Properties:
The addition of Rs. 92.08 Lacs was deleted as the properties were registered in the names of respective parties who had filed evidence of their agricultural income.

19. Investment in Residential House:
The addition of Rs. 11.94 Lacs was deleted as the reference to property valuation without incriminating material was not justified.

20. Unexplained Investment in Buses:
The addition of Rs. 60.58 Lacs was deleted as the income was worked out on an estimated basis.

21. Investment in Sundar Creations:
The addition of Rs. 2 Lacs was deleted as there was no proof of the assessee's direct link.

22. Children Education Expenses:
The addition of Rs. 2.13 Lacs was deleted as it was purely on an estimation basis.

23. Election Expenses:
The addition of Rs. 4.15 Lacs was deleted as the payments were made in the status of a politician.

24. Family Expenses:
The addition of Rs. 12.60 Lacs was deleted as it was purely on an estimation basis.

25. Donation to AIADMK Party:
The addition of Rs. 10 Lacs was deleted.

26. Payment to Jaya Publications:
The addition of Rs. 20,000 was deleted.

27. Salary Income:
The addition of Rs. 2.24 Lacs was deleted as this source of income had already been disclosed.

28. Fixation of Agricultural Income:
The AO was directed to give credit for agricultural income earned by the assessee during the relevant assessment years.

29. Block Assessment Confined to Search Materials:
The AO was directed to confine the block assessment to materials seized at the time of search and not any other materials.

30. Income Below Taxable Limit:
The AO was directed to exclude the income determined for the assessment years 1988-89, 1989-90, and 1991-92 as it was less than the taxable limit.

Final Order:
The Tribunal directed the AO to determine the total income of the assessee at Rs. 64,98,721/- as per the first round of decision by the Tribunal. The appeal was partly allowed.