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TMI Blog2023 (10) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... out 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department assailed this order before Hon ble High Court of Madras in TCA No. 686 of 2005 and 2 of 2009 dated 27.03.2012. 2. The Hon ble Court, vide paras-8 to 12 of the order noted that since it was a block assessment, the assessee could file appeal only before Tribunal since there was no provision to file appeal before CIT(A) at relevant point of time. Under these circumstances, Rule 46A could not be pressed in to service. However, as per Rule 29, Tribunal may allow production of additional evidences upon being satisfied subject to the condition that Tribunal should afford sufficient opportunity to the revenue to rebut those additional evidences. Therefore, the objection raised by revenue for admission of additional evidences by Tribunal was dismissed. In paras 14 and 15, the Hon ble Court also noted the nature of documents furnished by the assessee before Tribunal. In para-16, it was held by Hon ble Court that the rebuttal of evidences should have been by Assessing Officer who will be in a better position to verify the genuineness of those documents and he may or may not accept the case of the assessee. It was finally held that by placing reliance solely on the documents fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive appeared on 11-12-2015 and submitted paper-book (explanation with evidences containing 264 pages). Various other submissions and documents were filed from time to time in support of the case and final hearing took place on 23-12- 2015. In para-7, Ld. AO noted as under: - During the course present proceedings on various dates, the assessee and the Authorised representative appeared on various dates discussed above and submitted the paper book containing additional evidence (pages 1 to 316) filed before the Hon ble ITAT attested copy of the charge sheet filed by the DVAC before the Session Court cum Special Judge, Chennai, copy of the order of Special court in case No. 2/2003 both in Tamil version and translated English version, copy of the bail order, copy of the order for release obtained from Special Court (bail for assessment), copy of statement recorded by DVAC, paper book containing explanation with evidences with respect to paper book containing additional evidences (pages 1 to 316) filed before the Hon ble ITAT. The assessee during the course of hearing argued that all the above materials have been furnished in compliance to with the orders of the Hon ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made without application of mind and without appreciating the submissions of the assessee despite specific written submissions in reply to the show cause notice of the AO. 1.3 The 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. 1.4 The impugned assessment order, as admitted in the order itself, is only a repetition and reiteration of the earlier block assessment Order passed in flagrant inconsistency to the proceedings before this Hon'ble Tribunal and is hence liable to be quashed in toto. 1.5 The AO failed to note that the documents filed by the assessee by way of additional evidences were not only to show his sources of agricultural income but also to discharge his burden to rebut the presumption u/s.69 of the Act against the inclusion of others income and investment as his income and investment. The AO having failed to consider those documents and also h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. 3. Gold jewellery Rs. 10,21,946 The AO equally went wrong in treating a sum of Rs. 10,21,946, being the value of gold jewellery found as undisclosed income of the assessee, without considering the explanation offered. 4.Silver Jewellery - Rs. 81,088 Similarly, the AO erred in treating a sum of Rs. 81,088 being the value of silver articles found as undisclosed income of the assessee ignoring the explanation offered. 5.Diamond Jewellery - Rs. 80,000 The AO equally went wrong in treating a sum of Rs. 80,000/- being the value of diamond jewellery found as undisclosed income of the assessee, ignoring the explanation offered. 6.House hold Articles - Rs. 2,50,000 The AO erred in treating the value of household articles found of Rs. 2,50,000/- as undisclosed income of the assessee, ignoring the explanation offered. 7.Investment in cars - Rs. 9, 15,000. 7.1 The AO erred in treating the contessa car bearing Registration number PY-01-B-4422, Trex Jeep bearing registration number - TN- 01-7975, Car bearing registration number TN- 45-D-3333 and Car bearing registration number TN-45-7-5555 as having been acquired by the assessee. 7.2 Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. 13.4 The AO went wrong in treating the interest of Rs.25/- on the savings bank a/c balance of A.G. Chittibabu and Rs.25/- on the savings bank a/c balance of A.A. Govindarajan as the undisclosed income of the assessee. 14. Deposits into Bank alc of P.Krishnan K.Ramakrishnan 14.1 The AO erred in treating a sum of Rs.13,00,100/-, Rs.3,00,000/- and Rs.25,00,000/- in SB A/C No.11547 of P.Krishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yrs:199394, 1994-95, 1995-96 and 1997-98 respectively. 14.2 The AO equally went wrong in treating a sum of Rs.55,368/-, Rs.86,802/and Rs.57,819/- being the interest from SB A/C No.11547 of P.Krishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yrs:1994-95, 1995-96 and 1997-98 respectively. 14.3 The AO erred in treating the sum of Rs.25,00,00/-, (Rs.15,00,000 plus Rs.10,00,000/-) in SB A/C No.11821 of K.Ramakrishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yr:1994-95. 14.4 The AO equally erred in treating the sum of Rs.25,00,00/- in SB A/C No.11821 of K.Ramakrishnan with Bank of Baroda, Kulumani branc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Village by 4 persons Rs. 8,75,150 D. Plot at Anna Nagar, Trichy by K.P.Balakrishnan Poongundrum Rs. 7 ,21,200 E. Land at Vadagaunchi Village by Selvi Kanagavalli 5 others Rs.13,21,470 F. Flat at No.9/4, Nehru Nagar, Adayar by Chittibabu Rs. 9,05,400 G.Purchase of flat No.9/3, Nehru Nagar, Adayar by Malliga Krishnan Rs.6,59,900 Purchase of agricultural land of 1 Acre 80 cents at Kulumani Village by Poongundrum Rs.90,000 Total 18.2 The AO went wrong in estimating and treating various sums as property income from the property at Fern hill, Kodaikanal; property at Bankers Colony, Kumaran Nagar, Tiruchy, and the two flats at Nehru Nagar, Adyar as that of the assessee. 19. Investment in Residential house at Kulumani Nagar Trichy Rs.11,94,000 The AO went wrong in treating the investment in the residential house at Kulumani Nagar Trichy of Rs.11.94,000 as undisclosed income of the assessee: 20. Unexplained investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : A.Yr Amount 1992-93 Rs.41,946 1994-95 Rs.57,217 1995-96 Rs.65,254 23. Election expenses - Rs.3,35,000 The AO went wrong in estimating the election expenses at Rs.40,000/- each in A.Yrs:1990- 91 and 1991-92 and Rs.3,35,000/- in A.Yr:1994-95 and further went wrong in treating it as undisclosed income of the assessee. 24. Family expenses The AO went wrong in fixing the family maintenance expenditure at high figures and further went wrong in treating it as undisclosed income of the assessee; nor had the AO taken into account the withdrawals made from the bank accounts. A.Y: Amount 1987-88 Rs.20,000 1988-89 Rs.25,000 1989-90 Rs.30,000 1990-91 Rs.35,000 1991-92 Rs.50,000 1992-93 Rs.1,00,000 1993-94 Rs.1,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment only the materials seized at the time of search and the materials collected in relation thereto alone could be made use of and not any other materials. The AO went wrong in using all the materials collected by him in the post search enquiry and the materials collected in the course of the assessment proceedings. 29.2 The AO ought to have further seen that it is settled law that in a block assessment there is no room for estimation of income nor can the assessment be made on the basis of probabilities. 29.3 The AO ought to have excluded the income returned / assessed in the returns of income filed prior to search as it is to be treated as disclosed income 29.4 The AO went wrong in ignoring the returns of income and the annexures thereto filed by the appellant and his family members much before the date of search. 30. Income below taxable limit In any event the AO ought to have seen that the total income determined by him for the Assessment years 1988-89, 1989-90 and 1991-92 is less than the taxable limit and cannot therefore be treated as undisclosed income. For these reasons and other reasons that may be adduced at the time of hearing it is prayed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal evidences and repeated the assessment by observing that the assessee did not produce any corroborative evidences in support of the additional evidences. The Ld. AR submitted that the exception taken by Hon ble High Court in the order of the Tribunal was only with reference to the Tribunal considering the additional evidence without having remitted the same to the AO for evaluation. Thus, Ld. AO neither followed the directions relating to verifying the additional evidences nor applied his mind uninfluenced by earlier proceedings in completing the block assessment and therefore, impugned order could not be said to be passed in accordance with the law. 5.2 Another argument of Ld. AR is that since the assessee has been acquitted in criminal proceedings, there remains no case with the department to make the impugned additions. The attention has been drawn to the order of Special Court, which reveal that the prosecution in the said case was largely based on the documents collected by the Income Tax department pursuant to search u/s 132. The enquiry before the Special Court was on the charge of disproportionate wealth as compared to known sources of income on the contention that al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and drafts from the bank itself for paying additional interest to the PSUs. Further, the letter dated 25.03.1994 by the Bank wherein the Bank had acknowledged the receipt of Demand Drafts taken by the Respondent gives an unblurred picture about the capacity of the Respondent in holding the amount in question. Consequently, the conduct of the parties, as is recorded in the criminal proceedings showing the receipt of amount by the broker, the purpose of receipt and the demand drafts taken by the broker at the instance of the bank are sufficient to prove the fact that the Respondent acted as a broker to the Bank and, hence, the additional interest payable to the PSUs could not be held to be his property or income. The Ld. AR thus prayed that considering the findings rendered by Special Court, the additions made of investment and income of third parties ought to be deleted from the income of the assessee. To support the same, Ld. AR also referred to Sec. 33 of Indian Evidence Act. 5.3 With respect to additions where the scrutiny of additional evidences was not required, Ld. AR submitted that the additions made in the first round have been repeated despite the order of Tribunal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. 6.2 The Ld. CIT-DR further submitted that the proceedings of Special Court and Income Tax proceedings are on different footings. Under certain circumstances, the decision of civil court is also binding on criminal court although converse is not true since the standard of proof in civil and criminal case is different. Therefore, the findings rendered therein could not be considered in Income Tax proceedings. 6.3 The argument that the additions made by AO without reference to search material should not be included in his income for the block period is against the provisions of Sec.158BB which clarifies that the bock assessment of undisclosed income is to be based in the evidence found in the search and material or information gathered in the post search investigation. Further, search not only includes the date of search but also various subsequent investigation proceedings like consequential searches, verification of various evidences etc. 6.4 In the background of all these facts, Ld. CIT-DR supported the impugned additions under each head of income and has drawn attention to the findings rendered by Ld.AO on each of the issue. We have duly considered the same. Our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it would appear that though Ld. AO has called for additional evidences as well as requisite details from the assessee, however, the impugned assessment is primarily guided by original assessment framed on 31-07-1997 which is also evident from the fact that income of the assessee has been determined exactly at the same figures in all the assessment orders. In other words, Ld. AO remained unconvinced with the documentary evidences of the assessee and chose to take the same view as taken in original assessment order dated 31-07-1997. 11. It could further be seen that the original assessment order was under challenge before Tribunal vide IT(SS)A No. 193/Mds/97, detailed order dated 14-10-2003 wherein the bench, after considering assessee s submissions, facts on record as well as additional evidences filed by the assessee, reduced the taxable income of Rs. 540.07 Lacs to Rs. 64.98 Lacs which is evident from para 44 of the order as placed on record. The substantive findings on each of the specific issue is contained in paras 33 to 44 of the order. We have carefully perused the same. The addition of cash found at the time of search for Rs. 9.02 Lacs was deleted by Tribunal on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ownership of the deposits and explained the source of such deposits. The addition of deposits held in the other Savings Bank Accounts for Rs. 32.75 Lacs was also deleted since the explanation of the assessee was found to be bona-fide. The addition of deposit of Rs. 12.47 Lacs held in the name of Smt. G. Mallika was deleted since she was having agricultural lands and earning agricultural income. The addition of deposits held in the name of Master Chiranjeevi for Rs. 0.29 Lacs was deleted since he owned certain land. The immoveable properties aggregating to Rs. 92.08 Lacs held in the name of various persons was deleted primarily on the ground that acquisition of the property was already disclosed by those persons to the department. The additions were purely on estimation and the assessee was not provided any opportunity to cross-examine those persons. All the properties were registered against the name of respective parties and all those persons had filed evidences in respect of their agricultural income. The addition of improvement of residential house for Rs. 11.94 was deleted since the reference of property for valuation in search proceedings without any incriminating material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) 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 as under: - Chart showing admission of additional evidences by the Hon ble Tribunal during first round of litigation : Ground No.in present appeal Issue Addition made Rs. Addition Deleted Rs. Sustained/ confirmed Rs. Page No. of PB No.4 Addl evidences considered 2 Cash found during search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and A.G.Chittibabu father-in-law brother in law of assessee 34,34,894 34,34,894 NIL 339-341 YES 14.1 14.2 Deposits in the name of P. Krishnan 53,86,498 53,86,498 NIL 341 342 No 14.3 14.5 Deposits in the name of K. Ramakrishnan 54,93,133 54,93, 133 NIL 342 343 No 15 Credits in the bank account of assessee 3 accounts (ADMK) 32,75,535 32,75,535 NIL 343 344 No 16 Deposits in the name of Mallika Krishnan - wife of assessee 12,47,380 12,47,380 NIL 344 345 YES 17 Deposit in the name of Master Chiranjeevi 29,392 29,392 NIL 345 YES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investment in the name of A.G. Ayyavoo in Bus No.TN 45 X 3565 and the operational income Investment in the name of P. Thangiah in Bus No.TN 45 E 1582 and the operational income Investment in the name of Chandrahasan in Bus No.TN 45 D 0525 and the operational income Investment in the name of Chandrahasan in Bus No. TN 45 C 7857 and the operational income 21 Investment in Sudar Creations 2,00,000 2,00,000 NIL 350 352 NO 22 Children Education expenses 2,13,264 2,13,264 NIL NO 23 Election expenses 4,15,000 4,15,000 24 Family expenses 12,60,000 12,60,000 NO 25 Donation to AIADMK party 10,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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