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TMI Blog2012 (4) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... For Respondent : Mr.V.S.Jayakumar J U D G M E N T P.P.S.JANARTHANA RAJA, J. The Revenue has filed the present appeals against the order of the Income-tax Appellate Tribunal under Section 260A of the Income-tax Act, 1961, raising the following questions of law:- " 1.Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that donations to the tune of Rs.75 lakhs made by the assessee to the All India Anna Dravida Munnetra Kazhagam could not be included in the undisclosed income of the block period ignoring relevant materials like absence of any list of donors at the time of search, the list furnished later on not showing the addresses and identity of the donors and the unreliable nature of the affidavits filed and relying on irrelevant material like the improbability of the assessee having earned such income in the absence of any specific source, without taking into consideration the provisions of section 68, 69 and 69A of the Income Tax Act ? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that a sum of Rs.2.25 lakhs given by Shri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 143(3) of the Act read with Section 158 BC of the Act and determined the undisclosed income at Rs.77,93,730/-. While completing the assessment, the Assessing Officer included a sum of Rs.75,00,000/-, which was advanced by the assessee as donation to the building fund of All India Anna Dravida Munnetra Kazhagam (herinafter called as "AIADMK") as undisclosed income. Further the Assessing Officer also made another addition of Rs.2,25,000/- as unaccounted income and the same was assessed to tax as undisclosed income. Aggrieved by the same, the assessee filed appeal before the Income Tax Appellate Tribunal, who deleted the addition and held that the same was not undisclosed income and allowed the appeal. Aggrieved by the order of the Tribunal, the Revenue filed T.C.(Appeal)No.799/2005 against the order dated 14.10.2004. In respect of Tax case appeal viz., T.C(A).No.1202/2005, it is against the earlier order of the Income Tax Appellate Tribunal dated 01.04.1986 raising the above questions of law. 3. The Standing Counsel appearing for the Revenue vehemently contended that the order passed by the Tribunal is not in accordance with law and it is illegal, wrong and without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Building Fund donation. Therefore, the Tribunal correctly held that in respect of Rs.2.25 lakhs, no opportunity was given to the assessee to cross examine J.A.Richards and there was nothing found in the house of the assessee and merely based on the statement, the Assessing Officer treated the same as undisclosed income. Therefore, the Tribunal correctly held that the same is not undisclosed income. Therefore, the order passed by the Tribunal is in accordance with law and the same should be confirmed. 5. Heard the learned counsel on either side and perused the materials available on record. In the course of raid, certain documents were seized. The said seized documents include three slips from the Head Office of AIADMK of receiving the donation for a sum of Rs.75 lakhs from the assessee towards Building Fund. The details of donation are as follows:- Name of the Donor Receipt No. Date Donation amount 1.Mr.M.Chinnasamy 87 31.12.1993 25 lakhs 2. -do- 187 01.03.1994 25 lakhs 3. -do- 430 01.11.1994 25 lakhs In addition to the above sum of Rs.75 lakhs, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the donation amount collected from the party workers cannot be termed as undisclosed income and in paragraph 13 and 14, it was held as follows:- " From the above, the Assessee was able to establish the source of funds from where it was collected and the destination where it reached. The Assessing Officer was not justified in brushing aside these evidences for the reason that these evidences were filed after search and completion of original assessment and they are not contemporaneous and merely in the nature of self serving documents. Apparently, the sworn statement of the assessee, confirmation letter from AIADMK Party and the affidavits from party workers show that the assessee has received money as donation through the party workers. There is no materials in the hands of Revenue to show that the assessee has collected these donations from sources other than the party workers and also there is no material to show that the assessee has earned this income from any undisclosed source. Therefore, it should be treated that that the donation was collected from the party workers only and the version of the assessee believed to be true and the benefit of doubt has to be given to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence and correctly deleted the addition. The learned counsel appearing for the Revenue has not produced any other evidence to take a contrary view of the Tribunal. It is not a perverse order. We don't find any error or illegality in the order that warrants interference of this Court. Thus, we answer the first question in favour of the assessee and against the Revenue. 6. In respect of the second question, nothing was found at the time of search in the house of the assessee, but the addition was consequence of account entry and the sworn statement given by one J.A.Richards, which was taken from Personal Assistant of the assessee. It is also seen that the respondent/assessee has not given any opportunity to cross examine the evidence. The assessee had also written a letter dated 19.03.2004 to the Assistant Commissioner of Income Tax, Circle II and the same reads as follows:- " I am in receipt of your letter of March 15 2004 enclosing draft assessment order, proposed to be passed in consequence to the orders passed by Hon'ble ITAT, Chennai proposing to assess my undisclosed income at Rs.77,93,730/- for the block assessment years 87-88 to 97-98. The proposed assessment is obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is proceeding may be read as part and parcel of this reply For the above reasons you may reconsider your proposals and pass orders with due consideration for the observations of the Hon'ble Tribunal." From the reading of the above, it is clear that merely on the above sworn statement of J.A.Richards, the Assessing Officer made addition of Rs.2.25 lakhs as undisclosed income and no opportunity was given to cross examine the said J.A.Richards. Unless, there is concrete evidence to show that J.A.Richards has paid such amount, the Assessing Officer cannot treat as undisclosed income. In paragraph 15, the Trbunal has held as follows:- " 15. Regarding the addition of Rs.2.25 lakhs, this addition was resulted on account of entry in the diary of Shri.Dyneswaran, Chairman, TAMIN and on the basis of sworn statement of Mr.J.A.Richards. The receipt was seized from the personal brief case of Dyneswaran. As per the sworn statement of Richards, the seized paper contains details regarding the company quaries and he has handed it over to the Assessee and the denomination was not written by Richards. But as per observation in the assessment order in Page 10, the answer to Question No.7 does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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