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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 ..... and 14th September, 1993. During the said search, cash of Rs. 30 lakhs, 7 nos. of gold biscuits, US $ worth Rs. 33,540/- were found. As per the A.O., some documentary evidence were also seized which reflected fixed deposits in the name of different persons in various branches of Punjab National Bank, Bangalore. During the course of search, wife of the assessee, Smt. Vijaya Inbasagaran, was also present and the said Smt. Vijaya Inbasagaran had owned up all the seized assets. Smt. Vijaya Inbasagaran was a Director in two companies, namely, M/s Southern Rims Pvt. Ltd. and M/s Silver 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 Sil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that his wife owned such assets. In this view of the matter, he proceeded to assess the assessee for the cash seized, value of the gold biscuits and fixed deposits found at the time of search. Original assessment in these lines was completed on 29.3.96. 6. Later, the CIT, Central-I, Chennai, set aside the above assessment, vide his order dated 26.3.1998 for a reason that Assessing Officer had not examined the cash deposits made in the account of one Smt. Usha Raghavan though such cash deposits in the name of Smt. Usha Raghavan were found in the course of search. Consequent to the order of CIT under Section 263 of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee also brought to the notice of CIT(Appeals) that consequent to search by the I.T. authorities, a Departmental inquiry initiated, though dropped, a case was registered against him under the Prevention of Corruption Act. In such case, before the Trial Court, evidence was adduced from the Department and the A.O. had deposed before the Trial Court. As per the assessee, the criminal court had convicted him but Hon'ble jurisdictional High Court, vide its judgment dated 11.7.2001 in criminal appeal No.231 of 2000 had set aside the conviction and sentence passed by a Special Judge. Assessee brought to the notice of CIT(Appeals) that the judgment 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 CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. submitted before CIT(Appeals) that the decisions given in criminal proceedings, though it might be relevant, could not be relied upon in toto. CIT(Appeals) was of the opinion that assessee having been given a clean chit by Hon'ble Apex Court and jurisdictional High Court, could not be fastened with any onus to explain further the assets found at the time of search. He, therefore, deleted the additions made in such re-assessment. 13. Now before us, assessee is aggrieved by the decision of CIT(Appeals), in not considering his appeal against original assessment passed under Section 143(3) of the Act on 29.3.1996. As against this, Revenue is aggrieved 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 263 passed by CIT, setting aside the original assessment, stood already quashed by this Tribunal, and this was also not considered. 15. Per contra, learned D.R. submitted that at the point of time, CIT(Appeals) was deciding the appeal, the original assessment stood set aside by the order of CIT under Section 263 of the Act and therefore, CIT(Appeals) was justified in dismissing the appeal of the assessee. Learned D.R., supporting the appeals of the Revenue, submitted that the addition made in the re-assessment done pursuant to the reopening, was wrongly deleted by CIT(Appeals). According to him, the decision given by Hon'ble Apex Court 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. Insofa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Vijaya Inbasagaran, she had accepted ownership of such assets. Assessee was convicted by the Trial Judge being Special Judge No. 1/XI/Additional Judge, Chennai, vide judgment dated 16.2.2000. But, assessee preferred a criminal appeal before the jurisdictional High Court and Hon'ble jurisdictional High Court exonerated the assessee and quashed the conviction whereafter prosecution had moved in further appeal before Hon'ble Apex Court. Hon'ble Apex Court in the case reported as Dy. Superintendent of Police v. K. Inbasagaran (282 ITR 435) had held as under:- "When the accused has come forward with the plea that all the money which has been recovered from his house and purchase of real estate or the recovery of the gold and other deposits in the bank, all have been owned by his wife, then in that situation how can all these recoveries 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 hus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g would not be binding on tax proceedings, is no doubt very attractive. Criminal proceedings are generally based on conclusive evidence, whereas, in civil proceedings, only preponderance of probability is required to be proved. But, the proceedings against the assessee here was under Prevention of Corruption Act, 1988. Section 13(1)(e) of the Prevention of Corruption Act, 1988, provides that a public servant is guilty of criminal misconduct if he or some person on his behalf is or has at any time during the period when public servant was in office, been in possession of assets disproportionate to his known source of income for which the public servant cannot satisfactorily account. The earlier position as per Prevention of Corruption Act, 1947, prior to the addition of Section 5(1)(e) thereto, by Criminal Law (Amendment) Act, 1964, was different. The prosecution 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g available on record, he took a decision that assessee's appeal did not survive. We are of the opinion that such a revisionary order having been quashed, CIT(Appeals) was duty bound to dispose of the assessee's appeal on merits. Therefore, we have no hesitation to set aside the order dated 13.3.2009 of CIT(Appeals) and remit the matter back to him for consideration afresh. CIT(Appeals) has to pass appropriate order in accordance with law on the appeal of the assessee against assessment done on 29.3.96 under Section 143(3) of the Act on 29.3.96. 18. Now coming to appeals of the Revenue for assessment year 1994-95, insofar as it relates to the order of CIT(Appeals) dated 29.1.2009 quashing the assessment done on the assessee pursuant to revisionary proceedings under Section 263 of the Act, learned D.R. was fair in admitting that the order of CIT(Appeals) could 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not by the assessee. CIT(Appeals) also noted that such additions were made substantially in the hands of the assessee's wife also. He, therefore, deleted the additions made in the assessee's hand. 23. Now before us, learned D.R., strongly assailing the order of CIT(Appeals), submitted that the decision of Hon'ble Apex Court ought not have been relied since the proceedings before ITO were not on the same footing as that of criminal proceedings. 24. Assessee supported the order of CIT(Appeals). 25. We have perused the orders and heard the rival submissions. It has already been held by us at para 19 above that CIT(Appeals) was justified in relying on the judgment of Hon'ble Apex Court in the case of the assessee though it related to a proceeding under Prevention of Corruption Act. In the face of this, we are of the opinion that CIT(Appeals) was justified in deleting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t CIT(Appeals) did not consider his appeal despite jurisdictional High Court's judgment in his favour. According to assessee, just because he had not filed appeal against the revisionary order of CIT, it was not correct to say that an appeal would not lie against the pursuant assessment done. 31. Per contra, learned D.R. submitted that issues which had obtained finality in a revisionary proceeding, could not be re-agitated by way of an appeal against the assessment. For this, reliance was placed on the decision of Hon'ble Bombay High Court in the case of Herdillia Chemicals Ltd. vs. CIT (221 ITR 194). 32. We have perused the orders and heard the rival submissions. There is no dispute that assessee had not filed an appeal against revisionary order under Section 263 of the Act. There is also no dispute that the appeal filed by the assessee before CIT(Appeals) was against the assessment done under 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 dou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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