9911796707
TMI Blog2017 (9) TMI 1864X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the considered opinion that there cannot be any presumption that the assessee has paid 2.38 Crores to Shri Basheer Ahmed. The assessment proceeding being a judicial proceeding, this Tribunal is of the considered opinion that addition has to be made only on the basis of concrete evidence. Presumption and surmise have no role to play in judicial proceeding. Therefore, the addition of 2.38 Crores made by the Assessing Officer as confirmed by the CIT(Appeals) cannot stand for the scrutiny of law. Accordingly, the orders of both the authorities below are set aside and the addition Assessment u/s 153A - date of search and seizure operation conducted u/s 132A - HELD THAT:- Second proviso to Section 153A of the Act clearly says that the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years, is pending on the date of initiation of search under Section 132A of the Act, the same shall stand abated. In this case, the search proceeding, admittedly, took place on 18.11.2011. Therefore, the assessment proceeding pending as on 18.11.2011 shall stand abated in view of second proviso to Section 153A of the Act. Therefore, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has rightly made addition Assessment u/s 153C - Addition towards drawings - HELD THAT:- The provisions of Section 153C of the Act very clearly says that the assessment has to be made on the basis of material found during search operation, only the person other than the searched person. In the case before us, no material was found during the search operation with regard to personal expenses. The Assessing Officer appears to have estimated the expenditure without any material. The Assessing Officer on the basis of presumption found that the assessee was living in a joint family and not made any drawings, therefore, he added a sum of 3 lakhs towards personal expenses. This being an assessment proceeding under Section 153C in the absence of any material found during the search operation with regard to personal expenses, this Tribunal is of the considered opinion that there cannot be any addition. Moreover, when the assessee is found to be in joint family, the drawing of the other members of the family is also to be taken into consideration. In the absence of any material found during search, the addition of 3 lakhs cannot stand in the eye of law. Unexplained payment - AO found th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search operation. As rightly submitted by the Ld. Departmental Representative, it does not absolve the assessee from explaining the source for acquisition of such jewellery. Therefore, the CBDT circular would not come to the rescue of the assessee. The assessee is expected to explain the source for acquisition of jewellery found during the course of search operation. Since proper explanation was not offered, this Tribunal is of the considered opinion that the Assessing Officer has rightly treated 13,67,995/- as unexplained investment of the assessee in gold jewellery, under Section 69A of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Unaccounted purchases made outside the books - CIT(Appeals) found that the assessee himself has taken into account the profit on unaccounted sales while calculating the gross profit, therefore, even the 10% need not be added - HELD THAT:- The assessee has taken himself the profit of unaccounted sales while calculating the gross profit. When the profit on unaccounted sales were taken into account for the purpose of calculating the gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anesan, Judicial Member And Shri A. Mohan Alankamony, Accountant Member Assessees by: Shri S. Sridhar, Advocate Revenue by: Smt. Ruby George, CIT ORDER N.R.S. Ganesan, All the appeals of the assessee and Revenue are directed against the respective orders of the Commissioner of Income Tax (Appeals). Since common issues arise for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order. 2. There was a delay of 4 days in filing the appeal in I.T.A. No.568/Mds/2016 by the Revenue. The Revenue has filed a petition for condonation of delay. We have heard the Ld. D.R. and the Ld.counsel for the assessee. We find that there was sufficient cause for not filing the appeal before the stipulated time. Therefore, we condone the delay and admit the appeal. 3. Let's first take I.T.A. No.216/Mds/2013. 4. Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee is engaged in the business of trading in PVC pipes & fittings and G.I. pipes & fittings in the name and style of Pavender Agency at Erode. According to the Ld. counsel, there was survey operation in the premises of the assessee under Section 133A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that there was survey operation in the premises of the assessee on 17.11.2009. According to the Ld. D.R., during the course of survey operation, incriminating materials were found. The assessee was also examined during the course of survey operation. It was found during the course of survey operation that the assessee is engaged in the business of real estate also. According to the Ld. D.R., the assessee entered into a sale agreement with one Shri Basheet Ahmed, Trichy for purchase of 200 acres and 57 acres respectively. Two receipts were found which were impounded during the course of survey operation. Apart from that, three sale agreements were also found. According to the Ld. D.R., sale agreements dated 27.04.2005 and 11.06.2005 were impounded during the course of survey operation. The sale agreements were for ₹ 2 Crores and ₹ 11 Crores for an area of 7.38 acres and 50 acres of land respectively situated at Senkulam Village, K. Abisekapuram, Trichy. The cash receipt impound discloses the receipt of all the money by Shri Basheer Ahmed apart from balance of ₹ 10,62,00,000/- for the extent of 57.38 acres. According to the Ld. D.R., Shri Basheer Ahmed was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any money as found in the agreement from the assessee. 9. From the orders of the lower authorities it appears that there was civil dispute pending before Principal Sub-Judge, Trichy. Shri Basheer Ahmed appears to have agreed to sell the property after disposal of civil dispute pending before Principal Sub-Judge. Shri Basheer Ahmed agreed during the course of examination that he received ₹ 22,50,000/- directly from the assessee Shri A. Ramalingam. He also explained before the Assessing Officer that the balance of ₹ 31,50,000/- was spent in court cases. The CIT(Appeals) also found that Shri Basheer Ahmed was only power agent of Smt. Ooranbibi. From the order of the CIT(Appeals) it appears that Shri Basheer Ahmed was interrogated by the Assistant Director of Investigation. He stated that he has not received any money as per original agreement impounded during survey operation on 17.11.2009. In fact, the CIT(Appeals) has observed as follows:- "As seen from the receipt impounded as No.3, there is no date mentioned regarding the amounts received by Shri S.I. Basheer Ahmed. The receipt is nil dated. Even during the course of interrogation by the Assistant Director of Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A of the Act clearly says that the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years, is pending on the date of initiation of search under Section 132A of the Act, the same shall stand abated. In this case, the search proceeding, admittedly, took place on 18.11.2011. Therefore, the assessment proceeding pending as on 18.11.2011 shall stand abated in view of second proviso to Section 153A of the Act. Therefore, the assessment order passed by the Assessing Officer under Section 143(3) of the Act cannot stand in the eye of law. In other words, the Assessing Officer has to pass an order under Section 153A or 153C of the Act as the case may be. Hence, the regular assessment passed by the Assessing Officer has to be quashed. Accordingly, the orders of both the authorities below are quashed and the appeal of the assessee in I.T.A. No.217/Mds/2013 stands allowed. 14. Now coming to I.T.A. No.1315/Mds/2016. This appeal relates to assessment year 2006-07. 15. Shri S. Sridhar, the Ld.counsel for the assessee, submitted that admittedly there was search operation in the case of M/s Bharani Pipes & Tubes (P) Ltd. on 18.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2013. In the earlier part of this order, this Tribunal after considering the submissions of the Ld.counsel for the assessee and the Ld. Departmental Representative, has observed as follows at para 10 (supra):- "When Shri Basheer Ahmed denied the fact of receipt of money, it cannot be concluded that the assessee has paid ₹ 2.38 Crores to Shri Basheer Ahmed. As per the observation made by the lower authorities, agreement for sale was for sale of property after disposal of cases pending before Principal Sub-Judge at Trichy. When the matter was pending before the Principal Sub-Judge for adjudication and the power of attorney, who entered into the agreement, claimed that he has not received any money, this Tribunal is of the considered opinion that there cannot be any presumption that the assessee has paid ₹ 2.38 Crores to Shri Basheer Ahmed. The assessment proceeding being a judicial proceeding, this Tribunal is of the considered opinion that addition has to be made only on the basis of concrete evidence. Presumption and surmise have no role to play in judicial proceeding. Therefore, the addition of ₹ 2.38 Crores made by the Assessing Officer as confirmed by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame was not reflected in the accounts of the assessee. The assessee claimed that loans were obtained from relatives. Since the relationship among the relatives from whom the assessee said to have received loan was estranged, he admitted the same for taxation. Even the details of credits were not explained before the Assessing Officer and the CIT(Appeals). Since the assessee admitted the credit balance, which was proportionately added in the hands of the assessee and other three children of the assessee, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 23. The next issue arises for consideration is addition of ₹ 11,89,000/- in respect of loan creditors. 24. Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the Assessing Officer made addition of ₹ 11,89,000/- towards loan creditors without any basis, therefore, it cannot be sustained. According to the Ld. counsel, the assessee claimed before the Assessing Officer that the loans were borrowed from close relatives. Since the relationship was not good, they could not furnish the details before the Assessing Officer. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the Ld. counsel, there cannot be any assessment under Section 153C of the Act. 29. We have heard Smt. Ruby George, the Ld. Departmental Representative also. The provisions of Section 153C of the Act very clearly says that the assessment has to be made on the basis of material found during search operation, only the person other than the searched person. In the case before us, no material was found during the search operation with regard to personal expenses. The Assessing Officer appears to have estimated the expenditure without any material. The Assessing Officer on the basis of presumption found that the assessee was living in a joint family and not made any drawings, therefore, he added a sum of ₹ 3 lakhs towards personal expenses. This being an assessment proceeding under Section 153C of the Act, in the absence of any material found during the search operation with regard to personal expenses, this Tribunal is of the considered opinion that there cannot be any addition. Moreover, when the assessee is found to be in joint family, the drawing of the other members of the family is also to be taken into consideration. In the absence of any material found during se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so, in fact, admitted the receipt of ₹ 30 lakhs and the same were spent on the marriage of their daughters, purchase of plot and repayment of small loans. According to the Ld. D.R., when the recipients of the amount have accepted that they have received ₹ 30 lakhs for partition of family property, the Assessing Officer has rightly rejected the affidavit of the above said sisters and since the same was filed after a long gap of 24 months. According to the Ld. D.R., the CIT(Appeals) has rightly confirmed the addition of ₹ 90 lakhs. 34. We have considered the rival submissions on either side and perused the relevant material available on record. During the course of search operation, a receipt dated 10.06.2010 was found. The assessee claims that the said receipt is not signed and not dated. The fact remains that the receipt was dated 10.06.2010 but it is not signed. A release deed was also executed and registered on 31.05.2010. When the registered release deed discloses a payment of ₹ 10 lakhs and another payment of ₹ 50,000/- totalling to ₹ 10,50,000/-, this Tribunal is of the considered opinion that there cannot be any dispute about the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive also. The Ld. D.R. submitted that in the seized material at page 21, details of the payment made for Karur land purchase are available. This payment of ₹ 1 lakh does not reflect in the details available at page 21 of seized material. Therefore, according to the Ld. D.R., this payment of ₹ 1 lakh made to Shri S.A. Kandasamy is over and above the payment made for Karur land purchase. 39. We have considered the rival submissions on either side and perused the relevant material available on record. The details of payment made for Karur land purchase are available at page 21 of seized material. It is not in dispute that these details do not reflect the payment made to Shri S.A. Kandasamy. When the details contained in the seized material with regard to payment made for Karur land purchase do not reflect the payment made to Shri S.A. Kandasamy, this Tribunal is of the considered opinion that the payment was made over and above the details contained in the seized material for the purchase of Karur land, hence, the same cannot be allowed in the absence of any evidence. Therefore, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. This Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after taking into consideration of the claim of the assessee found that the assessee's wife received 100 sovereigns of gold jewellery during her marriage, has taken 1055.77 gms as unexplained and the same was estimated at ₹ 2689/- per gram and the total investment in gold jewellery was arrived at ₹ 28,38,965/-. After reducing the value of the jewellery declared by the assessee to the extent of ₹ 14,70,970/-, the balance of ₹ 13,67,995/- was taken as income of the assessee. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. 43. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that Revenue authorities found 1710.370 gms of jewellery and it was valued at ₹ 45,99,185/-. After considering the claim of the assessee that the assessee's wife received 100 sovereigns of jewellery at the time of marriage, the Assessing Officer found that the balance jewellery was unexplained. From the order of the Assessing Officer, it appears that the assessee admitted before the Assessing Officer during examination under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the Ld. D.R., since the unaccounted purchase was not formed part of unaccounted sale, a separate addition needs to be made. 48. On the contrary, Shri S. Sridhar, the Ld.counsel for the assessee submitted that the Assessing Officer, after examining the Profit & Loss account and balance sheet of M/s Pandian Traders for the assessment year 2008-09, found that the assessee has suppressed the purchase to the extent of ₹ 35,15,071/- and settled the dues to sundry creditors to the extent of ₹ 35,15,041/- outside the books of account. The Ld.counsel further submitted that the amount of ₹ 35,15,041/- was reduced from the purchase account and from the closing stock account in the Profit & Loss account filed along with return of income for the assessment year 2008-09. The Ld.counsel further submitted that the assessee estimated the unaccounted sales at ₹ 69,42,895/- and also estimated the income and disclosed the same in the cash flow statement for the year ending 31.03.2008. Even though the purchases were not fully disclosed, according to the Ld. counsel, the assessee admitted unaccounted sales in respect of unaccounted purchases, therefore, the income has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Departmental Representative also. It is not in dispute that 744.28 gms of jewellery was found and the same was valued at ₹ 20,26,868/-. The assessee has disclosed unaccounted jewellery to the extent of ₹ 18,42,693/- in the cash flow statement. The balance of ₹ 1,84,175/- was added under Section 69A of the Act. The assessee claimed before the Assessing Officer that a married lady is entitled for 500 gms of gold jewellery. This Tribunal is of the considered opinion that 500 gms of gold jewellery for a married lady as per CBDT circular relates to seizure. It does not absolve the responsibility of the assessee from explaining the source of acquisition. In fact, the Assessing Officer has given relief in respect of gift / Sridhan jewellery received by the assessee's wife during marriage and also most of the gifts said to be received. The relief given by the Assessing Officer was to the extent of ₹ 18,42,693/-. The assessee could not explain the source of acquisition of jewellery to the extent of ₹ 1,84,175/-. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. This Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. counsel, the assessee claims that the expenditure was incurred for development like levelling, filling up the plots, construction of overhead tanks, etc. Rejecting the explanation of the assessee, the Assessing Officer estimated the income of KAS Nagar project at 15% of sale value. The Assessing Officer has also rejected the claim of the assessee for telescoping. According to the Ld. counsel, when the higher income was estimated, the CIT(Appeals) found that additional income is very much available for telescoping, therefore, the CIT(Appeals) has rightly directed the Assessing Officer to telescope the income. 58. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the Assessing Officer made addition of ₹ 30,40,939/- from the profit from KAS Nagar project. The assessee claims that the income to the extent of estimation made by the Assessing Officer, is very much available for making investment or the income from other sources. Therefore, an amount of ₹ 32,40,977/- estimated from the business of real estate has to be telescoped in respect of income under the head "Other Sources" ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
