Selvi J.Jayalalithaa, CHENNAI v. DCIT, CHENNAI

ITA 1663/CHNY/2008 | 1996-1997
Pronouncement Date: 29-09-2016 | Result: Allowed

Appeal Details

RSA Number 166321714 RSA 2008
Assessee PAN AAFPJ8986K
Bench Chennai
Appeal Number ITA 1663/CHNY/2008
Duration Of Justice 8 year(s) 1 month(s) 24 day(s)
Appellant Selvi J.Jayalalithaa, CHENNAI
Respondent DCIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Date Of Final Hearing 27-07-2016
Next Hearing Date 27-07-2016
Assessment Year 1996-1997
Appeal Filed On 05-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH CHENNAI . ' # . $ & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY JUDICI AL MEMBER ./ I.T.A.NOS.1663 & 1664/MDS/2008 ( / ASSESSMENT YEAR: 1996-97) SELVI J.JAYALALITHAA 36 POES GARDEN CHENNAI-600 086. VS THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-II(2) CHENNAI-34. PAN: AAFPJ8986K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.R.VIJAYARAGHAVAN ADVOCATE /RESPONDENT BY : MR. T.R.SENTHIL KUMAR SR. STANDING COUNSEL /DATE OF HEARING : 27 TH JULY 2016 /DATE OF PRONOUNCEMENT : 29 TH SEPTEMBER 2016 / O R D E R PER A. MOHAN ALANKAMONY AM:- THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGGRIE VED BY THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I CHENNAI BOTH DATED 27.06. 2008 IN ITA NO.96/07-08 PASSED UNDER SECTION 143(3) R.W.S 251 & 250(6) & ITA NO.98/07-08 PASSED UNDER SECTION 143 (3) R.W.S. 147 & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEALS HOWEVER THE CRUXES OF THE ISSUES ARE AS F OLLOWS:- ITA NO.1663/MDS/2008:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF 2 ITA NOS.1663 & 1664/MDS/2008 ` 54 99 000/- MADE BY THE LEARNED ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE INCURRED FOR DECORATION OF MARRIAGE SITE. ITA NO.1664/MDS/2008:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 147 OF THE ACT. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF ` 8 00 141/- MADE BY THE LEARNED ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 69B OF THE ACT AS UNEXPLAINED INVESTMENT IN JEWELLERY. ITA NO.1663/MDS/2008: 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HER RETURN OF INCOME FOR THE ASSES SMENT YEAR 1996-97 ON 18.11.1996 ADMITTING INCOME OF ` 14 57 180/- THE LEARNED ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 30.03 .1999 WHEREIN HE MADE ADDITION OF ` 54 99 000/- BEING UNEXPLAINED EXPENDITURE TOWARDS DECORATION OF MARRIAGE SITE FOR THE WEDDING OF THE ASSESSEES FOSTER SON WHICH WAS SET ASIDE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VI DE HIS 3 ITA NOS.1663 & 1664/MDS/2008 ORDER DATED 29.12.1999 WITH A DIRECTION TO REDO THE ASSESSMENT AFTER NECESSARY INVESTIGATION. SUBSEQUE NTLY THE LEARNED ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 28.03.2002 WHEREIN HE CONFIRMED THE ADDITION OF ` 54 99 000/- AS THE ASSESSEE FAILED TO SUBSTANTIATE THE SOURCE F OR THE EXPENDITURE INCURRED. ON APPEAL THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION OF ` 54 99 000/- MADE BY THE LEARNED ASSESSING OFFICER A GAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 4.1 THE LEARNED ASSESSING OFFICER IN HIS ORIGINAL ASSESSMENT ORDER HAD OBSERVED THAT THE ASSESSEE HAS CONDUCTED THE MARRIAGE FUNCTION OF HER FOSTER SON M R. V.N.SUDHAKARAN IN A GRAND MANNER DETAILED AS BELOW (EXTRACTED FROM THE ORDER OF THE LEARNED ASSESSING OFFICER): THE ASSESSEE HAS CONDUCTED THE MARRIAGE FUNCTION OF HER FOSTER SON VN. SUDHAGARAN IN A GRAND MANNER. ELABORATE AND EXT ENSIVE DECORATIONS WERE MADE TO THE RNARRIAGE SITE AS FOLL OWS: (I) THERE WAS A DOUBLE ARCH NEAR IYAPPAN TEMPLE I.E AT THE ENTRANCE OF THE MARRIAGE SITE. THERE WAS ANOTHER DO UBLE ARCH NEAR THE VIP ENTRANCE. THERE WERE OTHER 3 SINGLE ROAD ARCHES IN THE COMPLEX. IN ALL THERE VV'ERE 2 DOUBLE ARCHES AND 3 SINGLE ROAD ARCHES. (II) THE FRONT SIDE OF THE KALYANAMANDAPAM. OF THE LENGTH OF 750 FT. WAS DECORATED WITH PLYWOOD WALL STRUCTURE OF THE HE IGHT OF 28 FT. IN THE STYLE OF FORTRESS WALL WITH MANDAPAMS AND CA NNONS ATOP. 4 ITA NOS.1663 & 1664/MDS/2008 THE FRONTAGE OF THE WALL WAS DECORATED WITH ATTRACT IVE ART WINDOWS AND ELEPHANT HEADS. THE BOTTOM OF THIS WALL WAS BORDERED IN DECORATIVE TEMPLE PATTERNS. (III) THERE WERE 6 DECORATED ENTRANCES TO THE KAL YANA MANDAPAM (VVIP 1 VIP 1 PARTY FUNCTIONARIES 1 PARTY WORKERS 1 AND GENERAL PUBLIC - 2). THE VVIP ENTRANCE WAS DECORATED WITH AN ORNAMENTAL ARCH (THORANA VAYIL). (IV) IN FRONT OF WIP ENTRANCE AN ARTIFICIAL SPRI NG FOUNTAIN WAS CONSTRUCTED AND DECORATED WITH PLANTS AND LIGHTS. (V) THE PATHWAYS TO THE KALYANA MANDAPAM WE RE FITTED WITH DECORATIVE LAMPS. THE SIDE WALLS WERE DECOR ATED WITH PORTRAITS OF DANCING WOMEN. IN THE MIDDLE OF THE PATHWAY S HUNDREDS OF ELEPHANTS' STATUES ABOUT 3 FT. IN HEIGHT EACH HOLDING A PAPER ROSE GARLAND GREETED THE VISITORS. (VI) THE ENTIRE CEILING OF THE KALYANA MANDAP AM WAS COVERED WITH FALSE CEILING OF CLOTHES DECORATED WITH PAPER FRILLS ETC. THE FRONT PART OF THE KALYANA MANDAPAM COVERING THE VVI P/VIP AREA MEASURING 350 X 100 FT. I.E. 35000 FT. WAS SPECIALLY DECORATED WITH DESIGNS MADE OF CLOTHES IN BEAM BOXES. FU RTHER THIS PORTION OF THE GROUND WAS ENCLOSED WITH DECORATIVE PILL ARS. (VII) SIDES AND FRONTAGE OF VV IP/VIP DINING HALLS AND PUBLIC DINING HALLS WERE ALSO DECORATED WITH PLYWOOD STRUCTURE AND ORNA MENTATION. (VIII) ABOUT 1 0000 TUBE LIGHTS WERE FITTED FOR LIGHTING. (IX) ABOUT 1000 CLOSE CIRCUIT TVS WERE FITTED TO VIEW THE CEREMONY AS THE PANDAL WAS OF GIGANTIC PROPOSITIONS. (X) THE WEDDING PLATFORM WAS DECORATED WITH A STRUCTURE IN THE FORM OF A PALANQUIN AND WAS DECORATED WITH PALACE ART WORK OF RAJASTHAN. THE STRUCTURE WAS FURTHER DECORATED WITH FLOWERS SUCH AS JASMINE. ROSE AND MARIGOLD. (XI) THE ENTIRE FACIA WAS PAINTED IN GOLDEN CO LOUR AND WAS LIT WITH HALOGEN LAMPS. 5 ITA NOS.1663 & 1664/MDS/2008 (XII) OTHER DECORATIONS INCLUDED 20 SCULPTURES OF DIVINIT IES AND LIONS\ ETC. FLOWER WORKS AND ARRANGEMENTS OF DECORA TIVE PLANTS. (XIII) SEATING ARRANGEMENTS WERE MADE ALREADY M ENTIONED 5 SECTIONS AND OVER 1 LAKH CHAIRS WERE PLACED IN THE KALYANA MANDAPAM TO SEAT THE INVITEES . OBVIOUSLY EQUALLY L ARGE NUMBER OF CHAIRS WERE NECESSARY FOR THE DINING HALLS. (XIV) PART OF GROUND AREA OF THE PANDAL COVERING T HE VVIP SECTION OF 10500 SQ.FT (35 X 300) WAS COVERED WITH KORAI MATS . 4.2 TO ASCERTAIN THESE FACTS THE LEARNED ASSESSING OFFICER MADE ENQUIRIES WITH THE FOLLOWING PERSONS IN REGARD TO THE EXPENDITURE INCURRED ON THE MARRIAGE SITE: I) THOTTATHARANI FAMOUS CINE ART DIRECTOR II) A.K.RAMESH KUMAR MANAGER OF MR. THOTTATHARANI III) DEVARAJ CARPENTER IV) MR. RAMKUMAR V) MR. GOPINATH ART DIRECTOR VI) MR. R.M.RAJENDRAN MANAGER VII) MR. K.P.MUTHUSAMY SITE ENGINEER 4.3 THE LEARNED ASSESSING OFFICER BASED ON VARIOUS INVESTIGATIONS SEARCHES ETC. WHICH IS ELABORATELY DISCUSSED IN HIS ORDER MADE THE FOLLOWING OBSERVATIONS WHILE MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE FOR RS. 54 99 000/- U/S69C OF THE ACT. A LETTER WAS RECEIVED FROM KANCHI PANEERSELVAM M.P. & 11 OTHERS INCLUDING 3 LOK SABHA M.PS ON 19.3.1999 WHEREIN IT WAS STATED THAT THEY HAVE 6 ITA NOS.1663 & 1664/MDS/2008 INCURRED A SUM OF RS.57.52 LAKHS TOWARDS DECORATION WORK. THE SOURCE OF THE EXPENDITURE WERE SAID TO BE CONTRIBUTION OF RS.5.00 LAKHS EACH MADE BY THEM FROM THE PARTY SUPPORTERS SPREAD OUT IN THE AREA. THEY HAD ALSO MENTIONED THAT MR.THOTATHARANI(CINE ART DIRECTOR) WAS REQUESTED T O SPARE MR. RAMESH KUMAR FOR SUPERVISING THE WORK. THEY ALSO SUBMITTED THE NAMES & ADDRESSES OF THE PERSONS FROM WHOM THE AMOUNT WAS COLLECTED. HOWEVER SINCE THE ASSESSEE HAD FAILED TO BRING OUT THE DETAILS OF THE EXPENDITURE MADE BY THE PARTY PEOPLE IN THE FIRST INSTANCE AND THE SAME WAS FURNISHED IN THE LAST MINUTE THE EXPENDITURE IS CONSIDERED TO BE MET BY THE ASSESSEE. 5. SUBSEQUENTLY IN THE APPELLATE PROCEEDINGS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SET ASIDE THE ORDER OF THE LEARNED ASSESSING OFFICER WITH A DIRECTION TO M AKE FURTHER NECESSARY INVESTIGATION AND THEREAFTER PASS ORDERS AFRESH. FOLLOWING THE DIRECTIONS OF THE LEARNED COMMISSIONE R OF 7 ITA NOS.1663 & 1664/MDS/2008 INCOME TAX (APPEALS) THE LEARNED ASSESSING OFFICER IN THE SET ASIDE PROCEEDINGS MADE A DETAILED INVESTIGATION AND ONCE AGAIN CONFIRMED THE ADDITION OF RS.54 99 000/- MADE ON ACCOUNT OF EXPENSES INCURRED TOWARDS DECORATION OF MARRIAGE SITE. THE GIST OF THE ORDER IS REPRODUCED HEREIN BE LOW FOR REFERENCE: FOR THE PURPOSE OF COMPLETION OF THE SET-ASIDE AS SESSMENT PROCEEDINGS THE CASE WAS POSTED FOR HEARING ON 14. 08.2001 BY THIS OFFICE LETTER DATED 03.08.2001 GIVING THE ASSESSEE OPPORTUNITY TO SUBSTANTIATE HER CLAIM REGARDING EXP ENSES INCURRED IN RELATION TO THE DECORATION OF THE MARRI AGE SITE. ON 13.08.2001 THE ASSESSEE'S REPRESENTATIVE FILED A LE TTER QUESTIONING THE JURISDICTION OF THIS OFFICE AND REQ UESTING TO TELL THE CORRECT JURISDICTION SO AS TO FILE THE DETAILS CALLED FOR. BY THIS OFFICE LETTER DATED 28.08.2001 IT WAS CLARIFIED TO THE ASSESSEE THAT THE JURISDICTION VEST WITH THIS OFFIC E ONLY AND THE ASSESSEE WAS REQUESTED TO SUBSTANTIATE HER CASE FOR WHICH THE CASE WAS POSTED FOR HEARING ON 06.09.2001 . HOWEVER THE ASSESSEE AGAIN CONTESTED THE JURISDICT ION THROUGH HER REPRESENTATIVE DATED 03.09.2001. BY THIS OFFICE LETTER DATED 25.09.2001 THE. ASSESSEE WAS GIVEN A C OPY OF THE CBDT NOTIFICATION DATED 23.08.2001 BY WHICH IT WAS CLARIFIED THAT THE JURISDICTION OVER THE ASSESSEE CONTINUES TO VEST WITH THIS CIRCLE. THE CASE WAS POSTED FOR HEAR ING ON 01.10.01 05.11.01 27.11.01 11.01.02 AND ON TH ESE DATES THE ASSESSEE'S REPRESENTATIVE ONLY FILED ADJOURNMEN T LETTERS. THE CASE WAS AGAIN POSTED FOR HEARING ON 31.01.02 THERE WAS NO REPRESENTATION ON THAT DATE. THE CASE WAS AG AIN POSTED FOR HEARING ON 15.02.02. SUMMONS U/S. 131. OF THE INCOME TAX ACT DATED 28.01.2002 WAS ISSUED BY THIS OFFICE TO (1) KANCHI PANNEERSELVARN (2) SRI S. MUTHUMANI (3) SRI THANIGAI BABU (4) SRI K. PANDURANGAM TO APPEAR ON 08.02.2002 AND TO PRODUCE THE BOOKS OF ACCOUNTS RECORDS VOUCHERS AND OTHER EVIDENCE RELA TING TO THE EXPENDITURE INCURRED ON THE DECORATION OF THE M ARRIAGE SITE ON THE OCCASION OF THE MARRIAGE OF SRI VN SUDHAGARAN FOSTER SON OF MS. J. JAYALALITHAA. ALL THE FOUR PER SONS REQUESTED FOR ADJOURNMENT. 8 ITA NOS.1663 & 1664/MDS/2008 SUMMONS U/S. 131 OF THE I.T. ACT WERE ISSUED TO TH E I) DDIT (INV) MADURAI TO EXAMINE (1) SHRI SRINIVA SAN & GANDHIRARAJAN II) DDIT(INV)COIMBATORE TO EXAMINE (1) SHRI K.P.RAJ U (III) DDIT (INV) TO EXAMINE (1) PRINCE M.THANG AVEL & (2) T.RATHINAVEL (IV) DDIT (INV) THIRUNELVELI TO EXAMINE (1) SHRI SUNDARAPANDIAN V) ADIT(INV) SALEM TO EXAMINE (1) SHRI K.MUNUS AMY & (2) MR.K.PALANISAMY MEANWHILE THE ASSESSEE'S REPRESENTATIVE FILED LETTE R REQUESTING FOR COPY OF THE LETTERS DATED 19.03.1999 AND 26.03.1999 OF SRI KANCHEE PANEER SELVAM AND 11 OTHERS. COPIES WERE GIVEN TO ASSESSEE'S REPRESENTATIVE. BY THIS OFFICE LETTER DATED 13.02.2002 THE ASSESSEE WAS REQUESTED TO ADDUCE EVIDENCE IN SU PPORT OF HER CLAIM. THE ASSESSEE'S REPRESENTATIVE IN HIS LETTER DATED 1 6.02.2002 STATED AS ALREADY EXPLAINED AT THE TIME OF ORIGINAL ASSESS MENT AND ALSO AT THE APPEAL STAGE THE ASSESSEE DID NOT INCUR ANY EXPENSES FOR THE DECORATION OF MARRIAGE SITE. A S PER THE COPIES OF THE LETTER DATED 19.03.199 AND 25.03.1999 GIVEN BY YOU TO THE ASSESSEE KANCHI PANNERSELVAM AND 'OTHERS HAVE CONVEYED TO YOU DIREC TLY INDICATED THE SOURCES ALSO. IN VIEW OF THEIR CATEGO RICAL STATEMENT READ WITH THE ASSESSEE IS SUBMISSIONS FROM THE BEGINNING WE ARE SURE THAT THE MATTERS ARE CLEAR'. SUMMONS DATED 27.02.02 WERE ISSUED AGAIN TO THE ABOVE REFERRED FOUR PERSONS. THERE WAS NO COMPLIANCE. IT WAS ASCERTAINED THAT THERE WAS NO COMPLIANCE TO THE SUMMONS ISSUED BY THE DDLTS (INV) TO THE CORRESPONDING PERSONS REFERRED ABOVE. BY THIS OFFICE LETTER DATED 07.03.2002 THE ASSESSEE WAS INFORMED A BOUT THE FAILURE OF THE ABOVE PERSONS TO APPEAR IN RESPONSE TO THE S UMMONS. THE ASSESSEE WAS REQUESTED TO PROVE HER CASE BY PRODUCI NG THE ABOVE REFERRED 12 PERSONS FOR MY EXAMINATION ON 14.03.2002 AND 15.03.2002. ON 14.03.2002 MR. G. NARAYANASWAMY SENIOR PARTNER M/S. S. VENKATRAM & CO. APPEARED AND FILED LETTER DATED 14.03.2002 AND VEHEMENTLY ARGUED EMPHASISING THE FOLLOWING POINTS :- 9 ITA NOS.1663 & 1664/MDS/2008 FIRST THE ONUS OF PROVING THAT EXPENDITURE WAS INC URRED LIES SQUARELY ON THE DEPARTMENT PARTICULARLY WHEN THE AS SESSEE CATEGORICALLY DENIES HAVING INCURRED THE EXPENSES. THERE IS NO EVIDENCE. WHATSOEVER. THAT THE ASSESSEE HAS INCURRED THESE EXPENSES NOR HAS THE ASSESSEE EVER A DMITTED HAVING INCURRED THE EXPENDITURE. THEREFORE PRIMA FACIE THE PROVISIONS OF SECTION 6GE ARE NOT APPLICABLE AND THEREFORE ANY ADDITION YOU MAY MAK E IS ONLY THE BASIS OF YOUR OWN GUESS WORK AND WITHOUT ANY EVIDEN CE WHATSOEVER. YOU WOULD APPRECIATE IN LAW THAT NO SUCH ADDITION S HOULD BE MADE'. IT WAS FURTHER REPRESENTED IN THAT LETTER: 'THE ASSESSEE SHOULD NOT BE COMPELLED TO PROVE THE NEGATIVE. YOU HAVE ALREADY ISSUED SUMMONS TO THEM A ND YOU HAVE THE AUTHORITY U/S.131 TO TAKE IT TO LOGICAL CONCLUSION. THE MERE NON APPEARANCE OF THE ABOVE PERSONS ON 14.03.2 002 CANNOT SADDLE THE ASSESSEE WITH ANY FINANCIAL OR OT HER RESPONSIBILITY. MR. VN. SUDHAGARAN HAS STANDING OF HIS OWN AND CONS EQUENTLY A LOT OF FOLLOWERS IN THE POLITICAL CIRCLE. THEREFORE THE ASSESSEE HAS NO LEGAL OR MORAL OBLIGA TION TO PROVE THE SOURCES OF EXPENDITURE INCURRED IN CONNECTION WITH THE MARRIAGE OF SUDHAKARAN. HOWEVER THE ASSESSEE BEING A RESPONSIB LE CITIZEN AND IN AN IMPORTANT GOVERNMENT POSITION WOULD LIKE TO ASSI ST THE DEPARTMENT IN ENABLING IT TO APPRECIATE THE SITUATION LITTLE BETT ER. 12 LEADING PERSONALITIES INCLUDING SIX MEMBERS OF PAR LIAMENT BELONGING TO AIADMK PARTY AS EARLY AS IN MARCH 1999 LE. ABOUT THREE YEARS BACK HAVE CATEGORICALLY EXPLAINED AS TO HOW T HEY HAVE MET THE RELEVANT EXPENDITURE. THEREFORE TO DISBELIEVE WITH OUT ANY BASIS ALL OF THE VERSION AND FASTEN THE ASSESSEE WITH THIS. WITHOUT ANY MATERIAL WHATSOEVER MAY NOT BE FAIR. YOU WOULD ALSO APPRECI ATE THAT THESE 12 PERSONS ARE PROMINENT LEADERS IN THE AIADMK PARTY A ND THEREFORE HAVE PERSONAL OR EMOTIONAL INTEREST IN SPENDING FOR THE MARRIAGE MAY BE TO GAIN A NAME FOR THEMSELVES. THEY HAVE ALSO SET OUT IN DE TAIL AS TO HOW THE EXPENDITURE HAVE BEEN MET. WE WOULD ALSO INVITE YOUR KIND ATTENTION TO THE FAC T THAT THE CONFIRMATORY LETTERS HAVE BEEN WITH YOU FOR OVER 3 YEARS AND THE GENUINENESS OF THE SAME HAS NOT BEEN DISPUT ED. IN ANY CASE WE WOULD ONCE AGAIN REQUEST YOU TO GIV E US 10 ITA NOS.1663 & 1664/MDS/2008 THE SPECIFIC PIECES OF EVIDENCE TO PROVE THAT THE A SSESSEE HAS INCURRED THE EXPENDITURE.' THE FOLLOWING PERSONS WERE PRODUCED FOR EXAMINATION :- 1. MR. KANCHI PANNEERSELVAM - EX. M.P. & EX. M.LA. - ON 14.03.2002. 2. MR. S. MUTHUMANI - EX. M.P. & SECRETARY OF ANNA PERAVAI ON 14.03.2002 3. MR. PRINCE THANGAVEL- EX. M.L.A. & DY. PARTY SECRETARY FOR TRICHY RURAL - ON 15.03.2002. 4. MR. T. TATHINAVEL- EX. M.L.A. & OY. SECRETARY FOR TRICHY CORPORATION . ON 10.03.2002 5. MR. GANDHIRAJAN - EX. DEPUTY SPEAKER OF TAMILNAD U LEGISLATURE - ON 10.03.2002. 6. MR. K. PALANICHAMY - EX. M.L.A. & DY. SECRETARY SALEM NORTH ON 15.03.02 IN SUM AND SUBSTANCE ALL THE ABOVE SIX PERSONS HAV E DEPOSED THAT THE MARRIAGE SITE DECORATION EXPENDITURE WAS INCURR ED BY THEM AND THAT THE ASSESSEE HAD NO ROLE IN IT. THEY HAVE ALSO DEPOSED THAT THEY HAVE COLLECTED MONEY FROM THE PARTY MEMBERS IN THEIR AREA AND HANDED OVER RS.5.00 LAKHS EACH IN CASH TO MR. R AMESH STAFF IN THE AIADMK PARTY OFFICE HEAD QUARTERS CHE NNAI AND THAT THE WORK WAS EXECUTED THROUGH .MR. MUTHUSAMY ENGIN EER AND RAMESH KUMAR MANAGER OF MR. THOTTATHARANI. MR. K. SUNDARAPANDIAN HAS FILED AFFIDAVIT IN THE OF FICE TAPAL ON 15.03.2002. MR. PANDURANGAN MLA AND MR. C. SRINIVA SAN M.P. FILED LETTER IN THE OFFICE TAPAL ON 18.03.2002. MR. THANIGAI BABU FILED AFFIDAVIT ON 20.03.2002. IN THESE AFFIDAVITS AND LETTERS THESE PERSONS HAVE STATED THAT THE EXPENDITURE WAS INCURRED BY THEM AN D THAT THE ASSESSEE HAD NO ROLE IN IT. THEY HAVE STATED THAT T HE WORK WAS EXECUTED BY MR. MUTHUSAMY AND RAMESH KUMAR. THEY HA VE ALSO STATED THAT THEY HAVE COLLECTED RS.5.00 LAKHS EACH FROM VARIOUS PARTY SUPPORTERS FOR THE ABOVE WORK. THE ABOVE SIX PERSONS WHO HAVE APPEARED BEFORE ME DEPOSED THAT THEY HANDED OVER THE COLLECTED CASH TO MR. RAMESH STAFF OF THE AIADMK PARTY HEAD OFFICE AND THAT THE WORK \VAS EXE CUTED THROU.GH MUTHUSAMY ENGINEER (WHOM THEY HAVE MET AT THE PART Y OFFICE). THEY COULD NOT GIVE THE ADDRESSES OF MR. MUTHUSARNY ENGINEER AND 11 ITA NOS.1663 & 1664/MDS/2008 MR. RAMESH. TO VERIFY THE GENUINENESS OF THEIR CLAIM LETTER DA TED 19.03.2002 WAS SENT TO THE ASSESSEE REQUESTING TO PRODUCE MR. RAMESH AND MUTHUSAMY ENGINEER ON 22 03.2002 FOR MY EXAMINATIO N. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE MIS. S V ENKATRAM & CO. FILED LETTER DATED 22.03.2002 STATING - 'WITH REGARD TO MR. MUTHUSAMY THE ASSESSEE UNDERSTANDS THAT HE IS NO MORE AND MR. RAMESH HAS ALREADY LEFT THE SERVICES OF AJADMK H.QRS. ABOUT 2 YEARS BACK. THE ASSESSEE IS TRYING TO FIND OUT HIS PRESENT WHEREABOUTS AND AS SOON AS IT IS KNOWN THIS WILL BE FURNISHED TO YOU. YOU WILL APPRECIATE THAT AS THE ASSESSEE WAS IN NO WAY CONCERNED WITH MR. RAMESH ON THIS DEALING IT WILL BE APPROPRIATE IF YOU ISSUE HIM SUMMONS AS SOON AS THE ADDRESS IS KNOWN.' AFTER GOING THROUGH THE LETTERS DATED 19.03.99 AND 25.03.99 MR. KANCHI PANNEERSELVAM AND 11 OTHERS THE DEPOSITIONS OF THE SIX PERSONS THE AFFIDAVITS AND LETTERS OF 4 OTHER PERS ONS THE ENQUIRIES AND STATEMENTS RECORDED BEFORE THE COMPLE TION OF THE ORIGINAL ASSESSMENT DATED 30.03.1999 AND AFTER CONS IDERING THE REPRESENTATIONS OF THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE IN HIS LETTER DATED 11.0 3.2002 AND THE ARGUMENTS OF MR. NARAYANASWAMY THE SENIOR PARTNER OF M/S S. VENKATRAM & CO. THE ASSESSMENT IS COMPLETED AS UNDER: THE PRINCIPAL CONTENTIONS OF THE AUTHORISED REPRESENTATIVE ARE THAT THE ONUS LIES ON THE DEPART MENT TO SHOW THAT THE EXPENDITURE WAS INCURRED BY THE ASSESSEE A ND THAT THE ASSESSEE HAS NO LEGAL OR MORAL OBLIGATION TO PROVE THE SOURCE OF EXPENDITURE INCURRED IN CONNECTION WITH THE MARRIAG E' OF SUDHAGARAN. FOR THIS ISSUE IT IS RELEVANT TO GO THROUGH THE DE POSITION OF MR. THOTTATHARANI DATED 15.12.95. THE RELEVANT PORTION IS AS FOLLOWS- I HAVE TAKEN UP THE WORK OF DESIGNING THE FRONT ELEVA TION OF THE THATCHED SHED MANDAPAM STAGE AND TWO DIFFERENT TYPE OF ARCHES. SOMEBODY FROM THE CHIEF MINISTER OFFICE CONTACTED ME IN THIS REGARD. WHEN I MET THE FORMER CHIEF MINISTER SHE REQUESTED ME 12 ITA NOS.1663 & 1664/MDS/2008 TO DESIGN AND I AGREED TO DESIGN THE FRONT ELEVATIO N OF THE THATCHED SHED MANDAPAM STAGE AND TWO ARCHES. THE DESIGNS WERE PREPARED BY ME AND SENT THROUGH MY MANAGER AK. RAMESH KUMAR. THERE WAS A SLIGHT ALTERATION SUGGESTED BY HER AND WHICH WAS REDESIGNE D AND SENT THROUGH MR. RAMESH KUMAR AND IT WAS ACCEPTED AND FINALISED BY HER.' THE FACT THAT EMERGES WAS THAT THE ASSESSEE HAS REQUESTED THOTTATHARANI TO DO THE DESIGN AND HAS AL SO APPROVED THE DESIGN GIVEN BY HIM AFTER SOME MODIFICATION. THE DETAILS OF THE EXPENSES INCURRED IN THE EXECUTI ON OF THE DESIGN WERE FOUND AND SEIZED FROM THE PREMISES OF M R. THOTTATHARANI (FILE TITLED MRC NAGAR). THE MANAGER OF THOTTATHARANI HAS DEPOSED THAT THE ACTUAL EXPENDITU RE INCURRED IN THE EXECUTION OF THE DESIGN WERE RECORD ED IN THE ABOVE REFERRED SEIZED MATERIAL AND HAS ALSO STATED 'MR. THOTTATHARANI WAS ASKED TO TAKE UP THIS WORK BY MIS S J. JAYALALITHA. SINCE HE DID NOT TAKE UP THE WORK OF E RECTION HE REQUESTED ME TO SUPERVISE THE ERECTION WORK'. MR. RAMKUMAR FROM THE BRIDE SIDE HAS DEPOSED THAT HE HA S NOT PERSONALLY UNDERTAKEN ANY WORK FOR THE WEDDING AND THE BILLS WERE PAID AS PER ADVISE FROM GROOM SIDE. ALL THESE FACTS CLEARLY INDICATE THAT THE ASSESSEE HAS INCURR ED THE EXPENDITURE. THE ASSESSEE HAS NOT DENIED ANY OF THESE FACTS .. HOWEVER A CLAIM HAS BEEN MADE IN THE AUTHORISED REPRESENTATIVE'S LETTER DATED 19.03.99 THAT THE DECORATION WORK WAS DONE NOT ON THE ASSESSEE'S INSTRUCTION BUT AT THE INSISTENCE OF THE 12 OFFICE BEARERS OF THE AIADMK PARTY WHO HAVE BORNE THE ENTIRE EXPENDIT URE. THUS THE ONUS IS ON THE ASSESSEE TO PROVE AND SUBSTANTIATE THE CLAIM.. IT IS PERTINENT TO NOTE TH AT THE ASSESSEE HAS NOT STATED THAT THE DECORATION WORK WA S UNDERTAKEN BY THE PARTY MEMBERS IN HER REPLY DATED 10.10.1995 TO THE QUESTIONNAIRE DATED 19.09.95 ISS UED BY THE ADIT (INV.) IMMEDIATELY AFTER MARRIAGE. APART FROM THE CLAIM MADE IN THE AUTHORISED REPRESE NTATIVE'S LETTER DATED 19.03.99 KANCHI PANNEERSELVAM AND 11 OTHER PARTY MEMBERS HAVE FILED A LETTER DATED 19.03.99 CLAIMING THAT THE EXPENDITURE ON THE DECORATION OF THE MARRI AGE SITE WAS INCURRED BY THEM. THE RELEVANT PORTION OF THE L ETTER IS AS FOLLOWS: 13 ITA NOS.1663 & 1664/MDS/2008 WE DECIDED TO DO THE DECORATION WORK ON THE FRONT OF THE PANDAL IN A GRAND WAY. WHEN WE APPROACHED THE FORME R CM WITH THIS IDEA SHE AGREED TO OUR DOING THE WORK AS IT WAS OUTSIDE THE SCOPE OF THE WORK DONE BY THE BRIDE 'S SIDE. WE APPROACHED THE FORMER CHIEF MINISTER TO RECOMMEN D TO MR. THOTA DHARANI TO HELP US IN THIS REGARD. AT OUR PERSUASION SHE AGREED TO THE SAME AND CONTACTED MR. THOTA DHARANI WHO THEREAFTER PREPARED A DESIGN. A S THE MATTER WAS CONCERNING THE MARRIAGE OF THE FORMER CH IEF MINSTER'S FAMILY WE SHOWED THE SAME TO HER AND GOT HER APPROVAL. WE ALSO REQUESTED MR. THOTA DNARANI TO SP ARE HIS MANAGER MR. RAMESH KUMAR FOR SUPERVISING THE W ORK AS IT WAS VERY PRESTIGIOUS FOR US. WE HAD ALSO APPO INTED ONE MR. MUTHUSAMY AS THE SITE ENGINEER TO HELP MR. RAMESH KUMAR TO PURCHASE MATERIALS DISBURSE WAGES AND ALSO TO LIASE WITH US. THE TOTAL DECORATION WOR K COSTED US RS.57.52 LAKHS AS DETAILED IN THE ANNEXURE. ORI GINALLY WE COLLECTED A SUM OF RS .. 5.00 LAKHS EACH FROM OU R ARDENT PARTY SUPPORTERS SPREAD OUT IN OUR AREA. AFTER ALL THE ABOVE EXPANSES WERE MET THE BALANCE AMOUNT WAS SPENT BY U S FOR GENERAL PARTY ACTIVITIES. WE REITERATE THAT THE DECORATION WORK IN THE' FRONT OF THE PANDAL AND OTHER AREAS WERE DONE BY US AT OUR INITI ATIVE ONLY AND THE FORMER CHIEF MINISTER HAD NO; ROLE TO PLAY. ANOTHER LETTER PURPORTEDLY WRITTEN BY KANCHI PANNEE RSELVAM AND 11 OTHERS WAS FILED IN THE OFFICE TAPAL ON 26.03.99. THIS LETTER WAS NOT SIGNED BY ANY OF THE 12 PERSONS. THE LIST OF NAMES AND ADDRESS OF THE PERSONS FROM WHOM MONEY WAS COLLECTED BY THE 12 PARTY FUNCTIONARIES W AS ENCLOSED WITH THIS LETTER. OUT OF THE 12 PARTY FUNCTIONARIES 6 OF THEM APPEAR ED AND DEPOSED BEFORE THE UNDERSIGNED ON 14.03.2002 AND 15.03.2002. ANOTHER FOUR OF THEM HAVE FILED AFFIDAVITS/ LETTERS IN THE OFFICE TAPAL. AS ALREADY STATED ALL THE SIX OF THEM HAVE DEPOSED THAT THE EXPENDITURE ON THE DECORATIONS OF THE MARRIAGE SITE WAS INCURRED BY THEM OUT OF FUNDS COLLECTED BY THEM TH EY HAVE DEPOSED THAT THEY HAVE ALREADY GIVEN THE LIST OF TH E NAMES AND ADDRESS OF THE PERSONS FROM WHOM THE AMOUNT WAS COLLECTED. BUT THEY DID NOT HAVE ANY RECORD OR EVID ENCE TO SHOW THAT THE MONEY WAS COLLECTED BY THEM FROM THE PARTY MEMBERS. THEY COULD NOT PRODUCE ANY RECEIPT FOR THE MONEY 14 ITA NOS.1663 & 1664/MDS/2008 SAID TO HAVE BEER. COLLECTED FROM VARIOUS PERSONS. THEY HAVE DEPOSED THAT EACH OF THEM HAVE COLLECTED RS.5.00 LA KHS AND PERSONALLY HANDED OVER THE CASH TO ONE RAMESH STAF F IN THE AIADMK PARTY OFFICE CHENNAI. BUT THEY COULD NOT PR ODUCE ANY EVIDENCE IN THE FORM OF RECEIPT VOUCHERS ANY RE CORD FOR THE CASH HANDED OVER TO MR. RAMESH. THEY HAVE DEPOS ED THAT THE WORK WAS EXECUTED THROUGH MR. RAMESH STAF F AND MUTHUSAMY ENGINEER WHO USED TO DO PARTY WORK. THE Y DID NOT KNOW THE ADDRESS OF MR. RAMESH OR MR. MUTHUSAMY . THEY WERE NOT ABLE TO GIVE SPECIFICATIONS OF THE WO RK (DECORATION) DONE BY THEM. DUE TO LAPSE OF MORE THA N THREE YEARS. THEY WERE NOT ABLE TO GIVE BREAK-UP OF THE EXPENDITURE TOWARDS MATERIAL AND LABOUR. THEY WERE NOT ABLE TO PRODUCE ANY VOUCHER OR INVOICE FOR THE LABOUR EX PENSES AND MATERIAL PROCUREMENTS. THEY HAVE NOT MAINTAINED ANY ACCOUNTS FOR THE EXPENSES INCURRED BUT ON THE BASI S OF THE STATEMENT OF MR. RAMESH THEY HAVE TOLD THAT RS.57. 52 WAS THE EXPENDITURE INCURRED. THEY HAVE DEPOSED THAT TH EY DID NOT INFORM THE PARTY FOR THE AMOUNT COLLECTED FROM THE VARIOUS PERSONS. THOUGH ALL THE SIX PERSONS DEPOSED THAT TH EY HAVE INCURRED THE EXPENDITURE THEIR EVIDENCE LS NOT COR ROBORATED BY ANY CONTEMPORANEOUS RECORD. THE CRUCIAL PERSONS MR. RAMESH AND MR. MUTHUSAMY TO WHOM MONEY WAS SAID TO BE GIVEN AND WHO HAD EXECUTED THE WORK WERE NOT PRODUCED BY THE ASSESSEE SO AS TO DISCHARGE THE ONUS CAST ON HER IN THIS REGARD. THE OTHER CONTENTION OF THE AUTHORISED REPRESENTATI VE THAT MR. SUDHAGARAN HAS STANDING OF HIS OWN AND CON SEQUENTLY A LOT OF FOLLOWERS IN THE POLITICAL CIRCLE IS NOT Q UITE RELEVANT AS IT IS NOT ANYBODY'S CASE THAT MR. SUDHAGARAN HAS INCURRED THE EXPENDITURE. THE PREPONDERANCE OF POSSIBILITIES SUGG ESTS THAT RESPONSIBLE PERSONS LIKE THE ABOVE FUNCTIONARIES WO ULD HAVE RETAINED SOME CONTEMPORANEOUS RECORDS SUCH AS THE N AMES OF THE PERSONS WHO ACTUALLY COLLECTED THE MONEY IF SU CH MONEY HAD ACTUALLY BEEN COLLECTED AND ALSO SOME RECEIPT F OR THEIR DISPOSAL. IF AS CLAIMED THE MONEY WAS ALSO SPENT ON SO CALLED 'PARTY ACTIVITIES' THERE SHOULD HAVE BEEN ENTRIES IN THE BOOKS OF ACCOUNTS OF THE PARTY WHICH EVIDENTLY DO NOT EXIST IN THIS CASE. THUS AS THE DEPOSITIONS OF THE SIX PERSONS ARE NOT CORROBORATED BY ANY INDEPENDENT EVIDENCE THEIR DEPOSITIONS CANN OT BE RELIED UPON. ON THE OTHER HAND THE SEIZED MATERIAL CONTAINING THE DETAILS OF THE EXPENSES FOUND N THE PREMISES OF MR. THOTTATHARANI AND THE DEPOSITIONS OF MR. THOTTATHAR ANI AND 15 ITA NOS.1663 & 1664/MDS/2008 RAMESH KUMAR CLEARLY INDICATE THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE. AS A RESULT THE ASSESSEE'S CLAIM REMAINS UNSUBSTANTIATED. IN THE CIRCUMSTANCES IT IS HELD THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE. AS THE ASSES SEE FAILED TO EXPLAIN THE SOURCE THE SUM OF RS.54.99 LAKHS IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDI TURE. 6. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONCURRED WITH THE VIEW OF THE LEARNED AS SESSING OFFICER AND ACCORDINGLY CONFIRMED HIS ORDER. WHILE DOING SO HE ALSO HELD THAT THE ONUS OF PROVING THE EXPENDITU RE WAS ON THE ASSESSEE AND IT WAS NOT ESTABLISHED THAT THE EX PENDITURE WAS MET BY PARTY FUNCTIONARIES BECAUSE THEY WERE NO T PRODUCED BEFORE THE REVENUE AND THE SITE ENGINEER W HO OVERSAW THE DECORATION WORK OF THE MARRIAGE WAS NO LONGER ALIVE. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER OBSERVED THAT THE ORDER OF THE CHENNAI BENC H OF THE TRIBUNAL IN THE APPELLANTS OWN CASE FOR THE SAME R ELEVANT ASSESSMENT YEAR IN ITA NO.429 & 482 (FOR THE ASSESS MENT YEAR 1995-96 & 1996-97) VIDE ORDER DATED 11 TH JANUARY 2008 IS OF NO CONSEQUENCE BECAUSE THIS PORTION OF THE S ITE DECORATION EXPENDITURE WAS NOT BEFORE THE TRIBUNAL WHILE DECIDING THE ISSUE AND THEREFORE REMAINS TO BE ADJU DICATED. FURTHER IN THAT TRIBUNAL ORDER THE ISSUE DECIDED W AS WITH 16 ITA NOS.1663 & 1664/MDS/2008 RESPECT TO THE ORDER PASSED BY THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) DATED 29.12.2009. 7. BEFORE US THE LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY REITERATED THE SUBMISSIONS MADE BEFORE T HE REVENUE AUTHORITIES ON THE EARLIER OCCASION. HE FU RTHER SUBMITTED THAT THE ASSESSEE HAD GIVEN THE LIST OF 1 2 IMPORTANT PARTY FUNCTIONARIES SUCH AS MEMBER OF PARLIAMENT AN D MEMBER OF LEGISLATIVE ASSEMBLY ETC. WHO HAD COLLEC TED CASH FROM VARIOUS PERSONS TO ORGANIZE THE FUNCTION. IT W AS THEREFORE SUBMITTED THAT THE SOURCE FOR THE SITE DE CORATION EXPENSES WAS PROVED BEYOND DOUBT BECAUSE ALL THOSE PERSONS HAD SUBMITTED THEIR AFFIDAVITS AND FURNISHE D THE PARTICULARS OF THE INDIVIDUALS WHO HAD MADE THE CON TRIBUTION BEFORE THE LD.A.O. IT WAS THEREFORE PLEADED THAT T HE ADDITION OF ` 54 99 000/- MADE ON ACCOUNT OF SITE DECORATION EXPENSES IN THE HANDS OF THE ASSESSEE MAY BE DELETE D. 17 ITA NOS.1663 & 1664/MDS/2008 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE AND REQUESTED THAT THE ADDITIONS MAY BE CON FIRMED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM TH E ORDER OF THE LEARNED ASSESSING OFFICER AND THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IT IS EVIDENT THAT THE REVENUE HAS REJECTED THE AFFIDAVITS GIVEN BY THE 12 INDIVIDUALS WHO ARE DISTINGUISHED PARTY WORKERS AND ELECTED REPRESENTATIVES AS MEMBER OF PARLIAMENT AND MEMBER OF LEGISLATIVE ASSEMBLY. THOUGH THE DETAILS OF ALL THE CONTRIBUTORIES WERE SUBMITTED BEFORE THE REVENUE TH EY FAILED TO ASCERTAIN THE FACTS FROM THOSE INDIVIDUALS AND S IMPLY RECORDED THAT ALL THOSE PERSONS WERE NOT BROUGHT BE FORE THE REVENUE FOR EXAMINATION. IN THE AFFIDAVITS GIVEN BY THE INDIVIDUALS IT IS CLEARLY STATED THAT THEY HAVE CO LLECTED CONTRIBUTIONS FROM VARIOUS PARTY SUPPORTERS TO MEET OUT THE EXPENDITURE OF THE MARRIAGE. THE BRIDE AND BRIDEGR OOM ARE ALSO FROM RESPECTABLE FAMILIES AND ARE AFFLUENT. TH E ONLY 18 ITA NOS.1663 & 1664/MDS/2008 REASON THE ADDITION MADE IN THE HANDS OF THE ASSESS EE IS THAT THE BRIDEGROOM IS SAID TO BE THE FOSTER SON OF THE ASSESSEE. WE QUERIED WITH THE LEARNED AUTHORIZED REPRESENTATI VE WHETHER THE BRIDEGROOM IS THE LEGALLY ADOPTED SON O F THE ASSESSEE FOR WHICH HE CONFIRMED THAT THERE IS NO SU CH LEGAL ADOPTION BY THE ASSESSEE BUT HE IS THE ASSESSEES F RIENDS SISTERS SON. IN THESE CIRCUMSTANCES WE FAIL TO U NDERSTAND AS TO WHY THE ADDITION IS MADE IN THE HANDS OF THE ASS ESSEE. IT IS A NORMAL PRACTICE IN THE STATE OF TAMIL NADU FOR TH E POLITICAL LEADERS TO BE INVOLVED IN THE MARRIAGE FUNCTIONS OF THEIR PARTY WORKERS AND ALSO FEW COMMON MEN. MAY BE THE ASSESSE E HAD SHOWN SPECIAL INTEREST IN THE MARRIAGE OF ONE O F THE IMPORTANT PARTY FUNCTIONARYS / RELATIVE OF THE PAR TY FUNCTIONARY ETC. BUT THAT DOES NOT MEAN THAT THE ASSESSEE WOUL D HAVE HERSELF MET THE EXPENDITURE FOR THE WEDDING. IT IS PERTINENT TO MENTION THAT ONCE THE ASSESSEE FURNISHES THE DETAIL S OF THE INDIVIDUALS WHO HAVE MET THE WEDDING EXPENSES AND I F THE REVENUE REJECTS THE SAME THEN THE ONUS SHIFTS ON T HE REVENUE TO ESTABLISH THAT THE EXPENSES HAVE BEEN ME T BY THE ASSESSEE HERSELF. IN THIS CASE THERE IS NO C ATEGORICAL 19 ITA NOS.1663 & 1664/MDS/2008 FINDING BY THE REVENUE WITH COGENT EVIDENCE TO ESTA BLISH THAT THE ASSESSEE HAS MET THE SITE DECORATION EXPENSES F OR THE WEDDING OF MR. SUDHAKARAN. AT THIS JUNCTURE WE ARE REMINDED ABOUT THE OBSERVATION OF THE HONBLE DELHI HIGH COU RT IN THE CASE OF VINAYA KUMAR MODI VS. CIT REPORTED IN 272 I TR 91 WHEREIN IT WAS POINTED OUT THAT THERE IS A LONG DIS TANCE TO BE TRAVELLED BETWEEN MAY BE AND MUST BE. IN THE PR ESENT CASE BEFORE US THE REVENUE WAS OF THE BELIEF THAT T HE ASSESSEE MIGHT HAVE MET THE EXPENDITURE RELATED T O MR. SUDHAKARANS WEDDING WHICH CANNOT BE ACCEPTED FROM THE EVIDENCE GATHERED BY THE REVENUE. AT THE MOST IT C AN BE ONLY PRESUMED THAT THE ASSESSEE MAY HAVE MET THE EXPENDITURE RELATED TO MR. SUDHAKARANS WEDDING. TH EREFORE WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MAD E BY THE REVENUE TOWARDS THE ASSESSEES SO CALLED FOSTER SON S WEDDING EXPENDITURE VIZ. SITE DECORATION EXPENDITU RE OF RS.54 99 000/- CANNOT BE SUSTAINED. ACCORDINGLY WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF RS.54 99 000/- MADE IN THE HANDS OF THE ASSESSEE. 20 ITA NOS.1663 & 1664/MDS/2008 ITA NO.1664/MDS/2008:- 10.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DURING THE REGULAR ASSESSMENT PROCEEDINGS FOR THE RELEVANT ASS ESSMENT YEAR HAD SUBMITTED A LETTER DATED 10.10.1995 TO THE ADIT. UNIT IV(4) THAT SHE HAD GIFTED ONE DIAMOND NECKLAC E AND ONE PAIR OF EAR STUDS COSTING RS.3.75 LAKHS AND ONE SILK SAREE COSTING RS.19 240/- TO THE BRIDE OF MR. V.N.SUDHAKA RAN AS TRADITIONAL NITCHAYADARTHAM PRESENT. SHE HAD ALSO A FFIRMED THAT SHE HAD NOT INCURRED ANY OTHER EXPENDITURE TOW ARDS THE BETROTHAL FUNCTION. HOWEVER SUBSEQUENTLY IT WAS RE VEALED FROM THE CHARGE SHEET AND ANNEXURE OF DVAC REPORT T HAT THE ASSESSEE HAD PRESENTED GOLD JEWELLERY PLAIN / STUDD ED WITH DIAMONDS WEIGHT 39.22 CARATS OF DIAMONDS AND 777.73 GMS OF GOLD TO SHRI V.N.SUDHAKARAN AND SMT. SATHYALAKSH MI AT THE TIME OF THE BETROTHAL ON 12.6.1995. IN THE DVAC REPORT IT WAS ALSO MENTIONED THAT VALUE OF GOLD PRESENTED WAS RS.2 95 061/- AND THE VALUE OF THE DIAMOND PRESENTE D WAS RS.8 99 320/- AGGREGATING TO RS. 11 94 381/- . SINC E THERE WAS DISCREPANCY OF RS.8 19 381/- THE LEARNED ASSES SING OFFICER REOPENED THE ASSESSMENT AFTER COMPLYING WIT H THE 21 ITA NOS.1663 & 1664/MDS/2008 PROVISIONS OF THE ACT. THEREAFTER BASED ON THE CH ARGE SHEET AND WITHOUT PROVIDING OPPORTUNITY FOR THE ASSESSEE TO CROSS EXAMINING THE DVAC AUTHORITIES MADE ADDITION OF RS.8 00 141/- IN THE HANDS OF THE ASSESSEE BY OBSER VING AS FOLLOWS:- THE ASSESSEE WAS GIVEN A HEARING ON 10.1.03 AND SHE DID NOT APPEAR EITHER IN PERSON OR THROUGH HER REPRESENTATI VE. IF SHE IS REALLY INTERESTED IN ASCERTAINING THE INFORMATION A S TO WHEREFROM THE DEPARTMENT GOT IT SHE SHOULD HAVE EI THER COME IN PERSON OR THROUGH REPRESENTATIVE ON 10.1.03. INS TEAD SHE WAITED TILL 19.3.03 TILL THE ASSESSMENT GETS TIME BARRED AND IN THE LAST MINUTE SHE ASKS FOR OPPORTUNITY TO CROSS-E XAMINE PRETTY WELL KNOWING THAT IT IS NOT POSSIBLE TO GET THE DVA C OFFICIALS AT SUCH SHORT NOTICE. IF THE ASSESSEE ASKS FOR CROSS-E XAMINATION ON 10.1.03 ITSELF WHEN THE CASE WAS POSTED THE DEPART MENT COULD HAVE PROVIDED THE OPPORTUNITY BY SUMMONING THE DVAC AUTHORITIES. SINCE IT IS NOT POSSIBLE NOW TO MAKE A WRITTEN REQUEST TO THE DVAC AUTHORITIES AND ASKING THEM TO BE EXAMINED WITHIN 10 DAYS HER REQUEST IS TREATED AS UNREASONABLE. COMING TO HER REQUEST THAT SHE WANTS TO KNOW THE BASIS OF INFORMATION IT MAY BE MENTIONED HERE THAT DVAC OF THE STATE GOVERNMENT OF TAMIL NADU HAS ALREADY PROVIDED A COP Y OF THE CHARGE-SHEET FILED AGAINST HER WHILE CRIMINAL PROCE EDINGS ARE LAUNCHED AGAINST HER. HENCE PROVIDING A COPY OF TH E INFORMATION AGAIN IS REDUNDANT AND DOES NOT SERVE A NY PURPOSE. IN -VIEW OF THE ABOVE RELYING ON THE INFORM ATION FURNISHED BY THE DIRECTORATE OF VIGILANCE AND ANTI-CORRUPTION OF TAMIL NADU GOVERNMENT THE DIFFERENCE AMOUNT OF RS.8 00 1 41/- IS ADDED AS UNEXPLAINED INVESTMENT. 10.2 ON APPEAL THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSES SING 22 ITA NOS.1663 & 1664/MDS/2008 OFFICER BY FURTHER RECORDING THE REASONS WHICH IS C ONCISED HEREIN BELOW FOR REFERENCE:- I) THE DVAC BEING A CORDIAL AGENCY OF THE STATE GOV T. MUST HAVE FRAMED THE CHARGE SHEET AGAINST THE APPELLANT ON THE BASIS OF SPECIFIC DOCUMENTARY EVIDENCES. II) THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT HAD DISPUTED THE VALUATION OF THE GIFTED JEWELLERY BY THE DVAC BEFORE ANY APPROPRIATE LEGAL FORUM LIKE COURT ETC. III) THE ASSESSEE HAD FAILED TO PRODUCE COPY OF PURCHASE BILLS OF THE GIFTED JEWELLERY ITEMS TO EST ABLISH THE FACT THAT THE INVESTMENT MADE IN PURCHASING THE JEWELLERY EXCEEDED THE AMOUNT DISCLOSED BY THE ASSESSEE. IV) A GOVT. AGENCY LIKE DVAC WILL NOT QUOTE ANY HYPOTHETICAL OR FICTITIOUS FIGURE IN ITS CHARGE SHE ET AND ANNEXURE. THEY WOULD HAVE DONE SO WITH SOME BASIS I N ARRIVING AT THE CONCLUSION THAT THE JEWELLERY GIFTE D IS WORTH RS.11 94 381/-. 23 ITA NOS.1663 & 1664/MDS/2008 10.3 AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE IS NOW IN APPEAL BEFORE US BY RAISING THE GROUND WITH RESP ECT TO REOPENING AND ADDITION OF RS.8 00 141/-. 11. AFTER HEARING BOTH SIDES WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE LEARNED ASSESSING OFFICER REGARDIN G REOPENING OF THE ASSESSMENT BECAUSE SOME FRESH MATE RIALS WERE BEFORE THE REVENUE SUCH AS DVAC REPORT WHICH SHOWED SOME DISCREPANCY IN THE CASE OF THE ASSESSEE DUE TO WHICH THE LEARNED ASSESSING OFFICER INITIATED PROCE EDINGS UNDER SECTION 147 / 148 OF THE ACT. THEREFORE THIS GROUND IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE AS SESSEE. 12. HOWEVER AT THE OUTSET WE FIND THE THAT ENTI RE ADDITION OF RS.8 00 141/- WAS MADE IN THE HANDS OF THE ASSE SSEE ONLY BASED ON THE DVAC REPORT WITHOUT MAKING ANY INDEPENDENT ENQUIRY. THIS ISSUE HAS BEEN RECENTLY D ECIDED BY THE HONBLE JURISDICTIONAL MADRAS HIGH COURT IN THE CASE OF CIT VS. AMMAN STEEL & ALLIED INDUSTRIES VIDE O RDER DATED 24 ITA NOS.1663 & 1664/MDS/2008 10.12.2015 WHEREIN IT IS HELD THAT IN THE ABSENCE OF ANY INDEPENDENT ENQUIRY BY THE ASSESSING OFFICER RELIA NCE CANNOT BE PLACED ON THE DEMAND RAISED BY THE CENTRA L EXCISE DEPARTMENT. THE GIST OF THE DECISION IS REPRODUCED HEREIN BELOW:- 11. WE HAVE CONSIDERED THE FACTS IN ISSUE. HERE IS A CASE WHERE THE ENTIRE ASSESSMENT ORDER IS BASED ON MATERIALS FOUND IN THE SHOW CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPARTMENT. THEREAFTER THE ADJUDICA TION ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE CAME TO BE SET ASIDE BY THE CESTAT AND ON REMAND A DE NOVO ORDER WAS PASSED BY THE COMMISSIONER OF CENTRAL EXCISE RE-DETERMINING THE DEMAND. THE CIT (APPEALS) HAS ORDERED THAT THE SAID AMOUNT SHOULD B E TREATED AS UNACCOUNTED TURNOVER OF THE ASSESSEE FOR THE RELEVANT YEARS AND GROSS PROFIT ON THIS TURNOVER SH OULD BE DETERMINED AND ADDED TO THE INCOME RETURNED. THE PROCEDURE ADOPTED BY THE CIT (APPEALS) AS STATED ABOVE IS THE LOGICALLY CORRECT WAY OF DETERMINATIO N OF THE UNACCOUNTED TURNOVER. THE REASONING OF THE CIT (APPEALS) AND THE COMPUTATION THEREOF BEING LOGICAL LY CORRECT THE DEPARTMENT CANNOT HAVE ANY GRIEVANCE O N THE ORDER PASSED BY THE CIT (APPEALS) WHICH HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL. IN THE ABSENCE OF ANY INDEPENDENT ENQUIRY BY THE ASSESSING OFFICER CONCERNED AS ORDERED BY THE CIT (APPEALS) THE QUESTION OF PLACING RELIANCE ON THE DEMAND MADE BY THE CENTRAL EXCISE DEPARTMENT IN ITS SHOW CAUSE NOTICE WHICH HAS BEEN RE-DETERMINED IN THE FINAL ADJUDICAT ION ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE IN THE DE NOVO PROCEEDINGS DOES NOT ARISE FOR CONSIDERATION. 13. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MAD E BY THE REVENUE IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF 25 ITA NOS.1663 & 1664/MDS/2008 THE ACT DOES NOT DESERVE ANY MERIT BECAUSE OF THE F OLLOWING REASONS:- I) THE ENTIRE ADDITION IS MADE ONLY BASED ON THE DV AC REPORT. II) THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CR OSS EXAMINE AND PROVE THE FACTS OTHERWISE. III) THE ASSESSEE HERSELF HAD RETURNED HER INCOME SHOWING RS.14 57 180/- WHICH SHOWS THAT THE ASSESSE E HAS SUFFICIENT SOURCE FOR MAKING THE GIFT AND FURTH ER THE INCOME ASSESSED AS PER ASSESSMENT ORDER DATED 28.03.2002 WAS RS.82 81 295/-. IV) NEITHER THE DVAC REPORT NOR THE STATEMENT OF DO NEE WAS PRODUCED BEFORE US. V) THE RATIO OF THE DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT MENTIONED HEREIN ABOVE IS SQUARELY IN FAVOUR OF THE ASSESSEE. 14. FOR THE ABOVE STATED REASONS WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF ` 8 00 141/- MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 69B OF THE ACT. 26 ITA NOS.1663 & 1664/MDS/2008 15. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.1663/MDS/2008 IS ALLOWED AND THAT OF ITA NO.1664/MDS/2008 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH SEPTEMBER 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI ( /DATED 29 TH SEPTEMBER 2016 SOMU *+ + /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF