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TMI Blog2012 (7) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... e of real estate, recovery of gold biscuits and fixed deposits were all belonging to his wife – Held that:- Entire money had been treated by Revenue as a part of income of the wife of the assessee in her assessment - CIT(Appeals) was justified in placing reliance on the order of Hon’ble Apex Court and in deleting the addition made in the hands of the assessee – In favor of assessee Addition on account of investment made in the name of associated persons - assets belonged to his wife and not to him. However, the A.O. was of the opinion that the fixed deposits in the Punjab National Bank, though claimed as owned by assessee’s wife, was not corroborated and therefore, had to be considered in assessee’s hand – Held that:- In assessee's own case it was held that fixed deposits had to be explained only by the assessee’s wife and not by the assessee. CIT(Appeals) also noted that such additions were made substantially in the hands of the assessee’s wife also - IT(Appeals) was justified in deleting the addition for the impugned assessment year also – In favor of assessee Maintainability of appeal - revisionary proceedings under Section 263 - CIT(Appeals) held the assessment to be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shoes Pvt. Ltd., in addition to being the proprietress of one M/s AVJ Marketing Services and one M/s Tamil Nadu Computer Services. Statement of Smt. Vijaya Inbasagaran was recorded on various dates by the Investigation Wing of the Department. From the replies given by Smt. Vijaya Inbasagaran, the Assessing Officer came to a conclusion that she was not aware of the volume of cash that was claimed to be belonging to the companies found from the residence at the first stage. As per the A.O., she came out with a version that cash represented sale proceeds of scrap leather and shoe uppers of M/s Silver Shoes Pvt. Ltd. only when it was made known that sum of Rs. 29 lakhs was found in the bed room and pooja room. The A.O. was of the opinion that the statement given by Smt. Vijaya Inbasagaran owning up the assets found at the time of search and also explaining that the cash and such assets had come out of drawings made from AVJ Marketing Services, her proprietorship concern, and out of sales of scrap of M/s Silver Shoes Pvt. Ltd., was not believable. Assessee had not filed any return of income voluntarily but, pursuant to a notice issued on 28.12.94 under Section 142(1) of Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, fresh proceedings were initiated against assessee and notice under Section 143(2) of the Act was issued on 14.12.1998. Stand of the assessee once again was that the Department was trying to fasten on him a duty to explain the income of his wife Smt. Vijaya Inbasagaran and he requested the Assessing Officer to ascertain the facts from Smt. Vijaya Inbasagaran. Assessing Officer, after verifying the details given by Smt. Vijaya Inbasagaran, reached a conclusion that cash deposit of Rs. 2 lakhs in the name of Smt. Usha Raghavan was unaccounted income of the assessee. Hence, the total income was recomputed by making a further addition of Rs. 2 lakhs, and fresh order passed under Section 143(3) read with Section 263 of the Act on 31.3.2000. 7. Thereafter, a notice under Section 148 was issued to the assessee for reopening the assessment. As per the A.O., several undisclosed transactions extracted in the sworn statement recorded at the time of search, were omitted in the assessment done under Section 143(3) on 29.3.1996 and also in the subsequent assessment under Section 143(3) read with Section 263 of the Act on 31.3.2000. On account of such re-assessment, the income asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Hon ble jurisdictional High Court had come after filing of appeal before the CIT(Appeals) and a copy of the judgment was also filed. As per the assessee, finding of the Hon ble jurisdictional High Court were relevant for the issues involved in the tax assessment and the jurisdictional High Court had clearly held that none of the assets found at the time of the search, belonged to the assessee. However, CIT(Appeals) refused to consider the appeal on merits and dismissed the appeal of the assessee. Reason given by CIT(Appeals) was that CIT, Central Circle, Chennai, vide his order dated 26.3.98 under Section 263 of the Act, had set aside the original assessment dated 29.3.96. Therefore, as per CIT(Appeals), the order against which appeal was filed by the assessee was no more there and appeal of the assessee had become infructuous. 10. Meanwhile, assessee also moved in appeal before this Tribunal against the order of CIT under Section 263 of the Act for the impugned assessment year. This Tribunal, vide its order dated 22.9.1996 in I.T.A. No. 927/Mds/1998, quashed the revisionary order passed by CIT. Effectively the original order of assessment dated 29.3.96 stood re-instated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggrieved against the order of CIT(Appeals) quashing the order of the A.O. passed on 31.3.2000 under Section 143(3) read with Section 263 of the Act. Revenue is also aggrieved by the order of CIT(Appeals) deleting the additions made by the A.O. in the re-assessment done on 23.3.2002 under Section 143(3) read with Section 147 of the Act. 14. Starting his arguments, assessee in person submitted that a vigilance inquiry was ordered against him by the State Government based on the report given by the Revenue consequent to the search conducted on him under Section 132 of the Act. As per the assessee, at the time of search itself, it was stated by his wife that the assets found in the form of cash, gold biscuits and fixed deposits were all owned by her, and she was a Director in two companies, and also proprietress of one concern. According to assessee, his wife had given a statement under Section 132(4) of the Act, owning up the assets. Further, all these assets were considered in her assessment and she had admitted an income of Rs. 70 lakhs in the statement given before the Investigation Wing. As per the assessee, the two companies in which his wife was a Director, namely, M/s Southe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a criminal proceeding, though it pertained to assessee s own case, was not binding in a tax proceeding. Learned D.R. submitted that principle of preponderance of probability applied in tax cases. According to him, assessee s wife was not able to explain the source of the cash found at the time of search and Assessing Officer had clearly brought out that neither M/s Southern Rims Pvt. Ltd. nor M/s Silver Shoes Pvt. Ltd. in which she was a Director, could have effected any such sales outside the books of accounts as claimed by her. Insofar as additions made in the re-assessment was concerned, learned D.R. submitted that these related to following assets, which were omitted in the original assessment:- (i) Purchase of 54 cents of land at Vanagaram Rs. 1,30,000/- (ii) Advance in M/s Southern Rims (P) Ltd. in the name of Shri Khader Batcha Rs. 1,00,000/- (iii) Investments in R.R. Medi Pharma in the name of daughter Anandi Rs. 30,000/- (iv) Investment in M/s Southern Rims (P) Ltd. in the name of A. Premkumar and Dhandapani Associates Rs. 1,00,000/- (v) Advance for purchase of flat at Mahalingapuram paid by Smt. Vijaya Inbasagaran Rs. 10,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of unaccounted money could be laid in his hands. It is true that when there is point possession between the wife and husband, or father and son and if some of the members of the family are involved in amassing illegal wealth, then unless there is categorical evidence to believe, that this can be read in the hands of the husband or as the case may be, it cannot be fastened on the husband or head of family. It is true that the prosecution in the present case has tried its best to lead the evidence to show that all these moneys belonged to the accused but when the wife has fully owned the entire money and the other wealth earned by her by not showing in the IT return and she has accepted the whole responsibilities, in that case, it is very difficult to segregate that how much of wealth belonged to the husband and how much belonged to the wife. The prosecution has not been able to lead evidence to establish that some of the money could be held in the hands of the accused. In case of joint possession it is very difficult when one of the persons accepted the entire responsibility. The wife of the accused has not been prosecuted and it is only the husband who has been charged being the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n had to prove that a public servant or any other person on his behalf was in possession of pecuniary resources or property disproportionate to his known sources of income for which the accused person cannot satisfactorily account, for the court to reach a presumption that the public servant was guilty of criminal misconduct. The new provision makes possession of such assets itself a substantive offence of criminal misconduct if it is disproportionate to his known sources of income. Thus under the Prevention of Corruption Act, the presumption is that assets in possession of a Government servant belonged to him. It was left to Government servant to rebut such presumption by showing that assets so found were not disproportionate to his known sources of income. Thus the onus cast on an accused under the Prevention of Corruption Act is more onerous than one for an assessee under the Income-tax Act. Procedure under Prevention of Corruption Act cannot be considered on the same footing of a normal criminal proceeding, where the prosecution has to bring in conclusive evidence. In a proceeding of the nature involved here, under Prevention of Corruption Act, presumption is against the accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be faulted. This is for the reason that the revisionary proceedings under Section 263 of the Act of CIT stood quashed by this Tribunal by its order dated 22.9.2006 in I.T.A. No. 927/Mds/1998. Therefore, the consequent order passed by the A.O. to give effect to revisionary proceedings will not survive. CIT(Appeals) was, therefore, absolutely justified in allowing the appeal of the assessee against the assessment done pursuant to revisionary proceedings. 19. This leaves us with the last appeal, which is against deletion of addition of Rs. 18,10,000/- by CIT(Appeals). Such addition was done in the re-assessment done on the assessee under Section 143(3) read with Section 147 of the Act. For deleting this addition, CIT(Appeals) relied on the decision of Hon ble Apex Court in assessee s own case, part of which has been extracted by us at para 16 above. The additions made in such a re-assessment has been spelt out by us at para 15 above. Hon ble Apex Court confirmed the order of Hon ble jurisdictional High Court acquitting and exonerating the assessee. Hon ble Apex Court accepted the plea of the assessee that the money recovered from his house, purchase of real estate, recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the addition for the impugned assessment year also. 26. Appeal of the Revenue for assessment year 1993-94 thus stands dismissed. 27. Now coming to last of the appeal which is filed by the assessee for assessment year 1995-96, its grievance is that CIT(Appeals) held the assessment to be not appealable since such assessment was done in pursuance of the direction of CIT under Section 263 of the Act. 28. Short facts are that the original assessment was set aside by CIT vide his order dated 26.3.98 under Section 263 of the Act, for a reason that certain deposits made in savings bank account in Andhra Bank, Chetpet Branch, by the assessee, in the name of Smt. Usha Raghavan, though found at the time of search, was not considered by the A.O. Therefore, according to the CIT, the assessment was erroneous and prejudicial to the interests of Revenue. Pursuant to order under Section 263 of the Act, proceedings were initiated against assessee for a fresh assessment and in such assessment, an addition of Rs. 4,77,500/- was made considering these to be deposits held in benami by the assessee and a further addition of Rs. 1,90,000/- was also made for interest accrued on such deposits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 143(3) read with Section 263 of the Act or in other words, against the assessment pursuant to revisionary proceedings. CIT(Appeals) refused to consider the appeal on merits for a reason that the order of the A.O. was pursuant to directions of CIT under Section 263 of the Act. No doubt, Hon ble Bombay High Court in the case of Herdillia Chemicals Ltd. (supra) had held that in an appeal against a fresh order passed by ITO for giving effect to a revisionary order or appellate order, only such issues could be agitated which had not obtained finality by virtue of earlier orders in revision or appeal. But, here, if we have a look at the order dated 20.3.2000 of CIT under Section 263 of the Act, finding appearing at para 5 of the said order, reads as under:- 5. On the facts and in the circumstances of the case, and for the substantial reasons set out in my order u/s 263 dated 26.3.1998 extracted above, I invoke the provisions of Section 263 and set aside the assessment order dated 202.1998 for 1995-96 and direct the assessing officer to frame a fresh assessment order after duly considering the cash remittances of Rs. 1,27000, Rs. 1,35,000 and Rs. 2,15,000 made on 11.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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