Shri P.Sathyanarayanan, CHENNAI v. ACIT, CHENNAI

ITA 717/CHNY/2008 | 2000-2001
Pronouncement Date: 21-09-2011 | Result: Allowed

Appeal Details

RSA Number 71721714 RSA 2008
Assessee PAN ABGPS8413E
Bench Chennai
Appeal Number ITA 717/CHNY/2008
Duration Of Justice 3 year(s) 5 month(s) 12 day(s)
Appellant Shri P.Sathyanarayanan, CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 21-09-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2000-2001
Appeal Filed On 09-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O. K. NARAYANAN VICE PRESIDENT AND SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NOS. 717 718 & 719/MDS/2008 ASSESSMENT YEARS : 2000-01 2003-04 & 2004-05 SHRI P. SATHYANARAYANAN NO. 4 & 5 PRAKASAM STREET JANAKI NAGAR VALASARAWAKKAM CHENNAI-600 087. (PAN : ABGPS8413E) V. T HE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-I(3) CHENNAI. I.T.A. NOS. 891 892 893 894 8 95 896 & 897/MDS/2008 ASSESSMENT YEARS : 1999-2000 200 0-01 2001-02 2002-03 2003-04 2004-05 & 2005-06 THE ASSISTANT COMMISSIONER OF V. S HRI P. SATHYANARAYANAN INCOME-TAX NO. 4 & 5 PRAKASAM STREET CENTRAL CIRCLE-I(3) CHENNAI. JANAKI NAGAR VALASARAWAKKAM CHENNAI-600 087. (APPELLANTS) (RESPONDENTS) A N D C.O. NOS. 105 106 107 & 108/MDS/2009 (IN ITA NOS. 891 893 894 & 897/MDS/2009 ASSESSMENT YEARS : 1999-2000 2001-02 2002-03 & 20 05-06 SHRI P. SATHYANARAYANAN V. THE ASSISTANT COMMISSIONER OF NO. 4 & 5 PRAKASAM STREET INCOME-TAX JANAKI NAGAR VALASARAWAKKAM C ENTRAL CIRCLE-I(3) CHENNAI. CHENNAI-600 087. (CROSS OBJECTOR) (RESPONDENT) I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 2 ASSESSEE BY : SHRI N. DEVANATHAN ADVOCATE & SHRI B. S. PURSHOTHAM CA DEPARTMENT BY : SHRI SHAJI P. JACOB SR. DR. DATE OF HEARING : 19-0 9-2011 DATE OF PRONOUNCEMENT : 21-09-2011 O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : ITA NO. 891/MDS/2008 IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO.168/2 006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 1999-2000. C.O. NO. 105/MDS/20 09 IS CROSS OBJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 891/MDS/2008. ITA NO. 892/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO. 169/MDS/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2000-01. ITA NO. 717/MDS/2008 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-I CHENNAI IN ITA NO.169/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2000-2001. ITA NO. 893/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO. 170/MDS/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2001-02. C.O. NO. 106/MDS/2009 IS CROSS OBJECTION FILED BY THE I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 3 ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 893/MDS /2008. ITA NO. 894/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO. 171/MDS/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2002-03. C.O. NO. 107/MDS/2009 IS CROSS OBJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 894/MDS /2008. ITA NO. 895/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO. 172/MDS/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2003-04. ITA NO. 718/MDS/2008 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-I CHENNAI IN APPEAL NO. 172/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEA R 2003-04. ITA NO. 896/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO. 173/MDS/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2004-05. ITA NO. 719/MDS/2008 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-I CHENNAI IN APPEAL NO. 173/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEA R 2004-05. ITA NO. 897/MDS/2008 IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-I CHENNAI IN ITA NO. 174/MDS/2006-07 DATED 07-01-2008 FOR THE ASSESSMENT YEAR 2005-06. C.O. NO. 108/MDS/2009 IS CROSS OBJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 897/MDS /2008. AS ALL THESE APPEALS AND CROSS OBJECTIONS RELATE TO THE SAME ASSESSEE AN D INVOLVE CONNECTED ISSUES ALL I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 4 THE TEN APPEALS AND THE FOUR CROSS OBJECTIONS ARE D ISPOSED OF BY THIS COMMON ORDER. 2. SHRI SHAJI P. JACOB LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI N. DEVANATHAN ADVOCATE ALONG WITH SHRI B.S. P URSHOTHAM CA REPRESENTED ON BEHALF OF THE ASSESSEE. 3. THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE TAKEN UP FOR DISPOSAL FIRST AS THEY CONTAINED LEGAL ISSUES IN REGARD TO THE ASSUMP TION OF JURISDICTION UNDER SECTION 153C OF THE INCOME TAX ACT 1961 (THE ACT FOR SHORT). HOWEVER IN THE COURSE OF ARGUMENTS IT WAS SPECIFICALLY ALLEGED BY THE LEARNED DR THAT THE CROSS OBJECTIONS FILED BY THE ASSESSEE WERE BARRED BY LIM ITATION OF 346 DAYS AND THE ASSESSEE HAS NOT FILED ANY REASON FOR THE DELAY IN FILING THE CROSS OBJECTIONS. THE LEARNED AUTHORISED REPRESENTATIVE REPLIED THAT HE H AD FILED THE AFFIDAVIT PRAYING FOR CONDONATION OF DELAY ALONG WITH THE CROSS OBJECTION S. THE RECORDS OF THE TRIBUNAL WERE VERIFIED AND IT WAS NOTICED THAT NO AFFIDAVIT OR APPLICATION FOR CONDONATION OF THE DELAY HAS BEEN FILED. CONSEQUENTLY THE FOUR C ROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED IN LIMINE. 4. IT WAS FURTHER SUBMITTED BY THE LEARNED AUTHORIS ED REPRESENTATIVE THAT IN THE APPEALS FILED BY THE ASSESSEE IN ITA NOS. 717 718 & 719/MDS/2008 FOR THE ASSESSMENT YEARS 2000-01 2003-04 AND 2004-05 THE A SSESSEE HAS RAISED THE LEGAL ISSUE IN REGARD TO THE JURISDICTION REGARDING THE APPLICABILITY OF THE PROVISIONS OF SECTION 153C OF THE ACT. IT WAS THE SUBMISSION THAT THERE WAS A SEARCH AND I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 5 SEIZURE OPERATION ON THE RESIDENTIAL AND BUSINESS P REMISES OF SHRI T.R. PACHAMUTHU CHAIRMAN VALLIAMMAI SOCIETY AND SRM GR OUP OF EDUCATIONAL INSTITUTIONS ON 12-08-2004. IT WAS THE SUBMISSION THAT THE SAID SHRI T.R. PACHAMUTHU HAS TWO SONS NAMELY SHRI P. RAVI AND S HRI P. SATHYANARAYANAN. IT WAS THE SUBMISSION THAT ON THE BASIS OF THE SEIZED MATERIAL FOUND IN THE COURSE OF THE SEARCH IN THE CASE OF SHRI T.R. PACHAMUTHU THE ASSESSMENTS IN THE CASES OF BOTH SHRI P. RAVI AND THE ASSESSEE HEREIN SHRI P. S ATHYANARAYANAN HAD BEEN COMPLETED. IT WAS THE SUBMISSION THAT NOTICE UNDE R SECTION 153C READ WITH SECTION 153A OF THE ACT WAS ISSUED ON 10-03-2006. THE ASSESSEE HAD FILED HIS RETURN OF INCOME IN RESPONSE TO THE SAID NOTICE U/S 153C READ WITH SECTION 153A ON 31-07-2006 AND THE ASSESSMENTS WERE COMPLETED ON 29-12-2006. IT WAS THE SUBMISSION THAT THE PROVISIONS OF SECTION 153C WERE SIMILAR TO THE PROVISIONS OF SEC. 158BD INSOFAR AS WHERE THE ASSESSING OFFICER I S SATISFIED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BELONGED TO A PERSON OTHER THAN TH E PERSON REFERRED TO IN SECTION153A THEN SUCH BOOKS OF ACCOUNTS..SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTH ER PERSON AND THAT THE ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH O THER. IT WAS THE SUBMISSION THAT IN THE PRESENT CASE THE SATISFACTION HAD NOT B EEN RECORDED IN THE CASE OF SHRI T.R. PACHAMUTHU BEING THE PERSON SEARCHED. IT WAS THE SUBMISSION THAT NO SATISFIACTION HAD ALSO BEEN RECORDED IN THE CASE OF THE PRESENT ASSESSEE AND I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 6 THEREFORE IN VIEW OF THE PRINCIPLES LAID DOWN BY TH E HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI V. ASSISTANT COMMISSIONER OF INCOME-TAX REPORTED IN 289 ITR 341 THE NOTICE ISSUED U/S 153C READ WITH S ECTION 153A WAS LIABLE TO BE HELD AS INVALID AND THE CONSEQUENTIAL ASSESSMENT AN NULLED. 5. IN REPLY THE LEARNED DR DREW OUR ATTENTION TO T HE COPIES OF THE NOTE SHEETS FOR THE PROCEEDINGS INITIATED UNDER SECTION 153C OF THE ACT WHICH ARE SHOWN AT PAGES 11 TO 17 OF THE REVENUES PAPER BOOKS. THE O RDER SHEET NOTINGS ARE IDENTICAL. HOWEVER FOR THE SAKE OF BETTER APPRECI ATION THE SAME FOR ASSESSMENT YEAR 2000-01 IS EXTRACTED HEREIN BELOW : ACTION U/S 153C OF THE INCOME TAX ACT : IN THE COURSE OF THE SEARCH U/S. 132 OF THE INCOME TAX ACT ON 12/08/2004 IN THE CASE OF SRI T.R. PACHAMUTHU (SRM GROUP) AND ALLIED CONCERNS/PERSONS THE FOLLOWING INFORMAT ION HAS BEEN RECEIVED IN RESPECT OF SRI P. SATHYANARAYANA S/O SR I T.R. PACHAMUTHU. RELEVANT MATERIALS HAVE ALSO BEEN SEIZ ED AND THE SAME IS RECEIVED ON TRANSFER FROM THE INVESTIGATION WING. INFORMATION 1. SRI P. SATHYANARAYANA IS THE DIRECTOR OF SRM SY STEMS & SOFTWARE (P) LTD. 2. AS PER SEIZED MATERIALS ANN/SKM/B&D/S-10 (PAGE 40) WHICH REFERS TO HIS BALANCE SHEET AS AT 31/03/2000 THERE ARE UNSECURED LOANS TO THE EXTENT OF ` 47 54 340/- WHICH REMAINS UNEXPLAINED TILL DATE. 3. HE HAS MADE GIFTS AMOUNTING TO ` 15 00 000/- IN AY 2001-02. THE SOURCE REMAINS UNEXPLAINED. 4. IN ADDITION TO THE ABOVE HE HAS MADE SUBSTANTI AL INVESTMENTS IN SRM SYSTEMS & SOFTWARE (P) LTD. SRM RADIANT I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 7 SOFTWARE (P) LTD. SRM HOTELS (P) LTD. AND OTHER SR M CONCERNS. BUT THE SOURCE REMAINS UNEXPLAINED. EVEN THOUGH RECORDING OF REASONS IS NOT A PRE-CONDI TION FOR ACTION U/S 153C OF THE INCOME TAX ACT THE POINTS N OTED ABOVE ARE FOR THE SAKE OF READY REFERENCE AND APPROPRIATE ACTION. THE SEARCH U/S. 132 IN A CASE LEADING TO INFORMATION OF TAX EVASION IN AN ALLIED CASE IS ENOUGH TO INITIATE ACTION U/S. 153C OF THE INCOME TAX ACT IN THE LATTER CASE. ACCORDINGLY ACTION IS INITIATED U/S 153C OF THE IN COME TAX ACT FOR THE AYS 99-2000 TO 2004-05 AND ALL ASSESSMENTS FOR THE ABOVE SAID ASSESSMENT YEARS STAND REOPENED IRRESPEC TIVE OF THE STAGE AT WHICH IT REMAINS. THE ASSESSEE IS REQUEST ED TO FILE FRESH RETURNS OF INCOME FOR THE SAID WITHIN 30 DAYS OF RECEIPT OF THE SAID NOTICES. SD/- 10/3/06 KURUVILLA M GEORGE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-I(3) CHENNAI-34. IN RESPONSE TO 153C NOTICE RETURN FILED ON 31/7/06 . NOTICE U/S 143(2) 142(1) AND QUESTIONNAIRE SIGNED. SD/- 9/X/06 REPLY FILED BY A S AR DT 27/11/06 IS FILED . SHRI G. VASUDEVAN FCA APPEARS. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HA S RECORDED HIS SATISFACTION. IT WAS THE FURTHER SUBMISSION THAT THIS ISSUE HAD BEEN CONSIDERED IN THE CASE OF THE ASSESSEES BROTHER SHRI P. RAVI AND THE ISSUE HAD BEEN HELD IN FAVOUR OF THE REVENUE IN PARA 6B AND PARA 21 OF THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 1513/MDS/2007 DATED 7-08-2009. IT WAS THE SUBMISSION THAT I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 8 AS MENTIONED IN THE GROUNDS OF THE ASSESSEE THE GRO UND THOUGH RAISED BEFORE THE LEARNED CIT(A) HAD NOT BEEN ADJUDICATED BY THE LEAR NED CIT(A) AND AS THE ISSUE HAD NOT BEEN ADJUDICATED BY THE LEARNED CIT(A) THE SAME COULD NOT BE CONSIDERED AS A GROUND BEFORE THE TRIBUNAL. THE LE ARNED DR RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT V. M/S. COVANTA SAMALPATTI OPTING OPERATING PRIVATE LTD. IN TAX CAS E (APPEALS) NO. 1437 OF 2008 DATED 05-09-2008 TO SUPPORT HIS CONTENTION AND IN T HE ABSENCE OF ANY REASONING FOUND IN THE ORDER OF THE LEARNED CIT(A) THE TRIBU NAL CANNOT ENTERTAIN THE APPEAL ON THE ISSUE. HE ALSO RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MALLADI PROJECT MANAGEMENT P. LT D. REPORTED IN 324 ITR 87. 6. IN REPLY THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ISSUE RAISED WAS LEGAL ISSUE AND THE ASSESSEE WAS COMPETE NT TO RAISE A LEGAL ISSUE AT ANY STAGE. IT WAS THE FURTHER SUBMISSION THAT A RE ADING OF THE ORDER SHEET RECORDING OF THE ASSESSING OFFICER IN THE ASSESSEE S CASE CLEARLY SHOWED THAT THERE WAS NO RECORDING OF SATISFACTION EITHER IN THE CASE OF SHRI T.R. PACHAMUTHU OR IN THE CASE OF THE ASSESSEE. IT WAS THE SUBMISSION TH AT THE ORDER SHEET NOTING WAS CLEARLY POINTS NOTED FOR THE SAKE OF READY REFERENC E. IT WAS THE SUBMISSION THAT AS THE REASONS HAD NOT BEEN RECORDED IN VIEW OF TH E DECISION IN THE CASE OF MANISH MAHESHWARI REFERRED TO SUPRA THE NOTICE IS SUE U/S. 153C READ WITH SECTION 153A OF THE ACT WAS LIABLE TO BE TREATED AS BAD IN LAW AND THE CONSEQUENTIAL ASSESSMENT ANNULLED. I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 9 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A P ERUSAL OF THE DECISIONS QUOTED BY THE LEARNED DR IN THE CASE OF M/S. COVANT A SAMALPATTI OPTING OPERATING PRIVATE LTD. REFERRED TO SUPRA AS ALSO I N THE CASE OF MALLADI PROJECT MANAGEMENT P. LTD. REFERRED TO SUPRA CLEARLY SHOW S THAT IN THOSE CASES THE HON'BLE JURISDICTIONAL HIGH COURT WAS DECIDING ON T HE QUESTIONS OF LAW. IT WAS BECAUSE THERE WAS NO FINDING OF THE TRIBUNAL THE HO N'BLE HIGH COURT REFUSED TO ENTERTAIN A QUESTION OF LAW ON THE ISSUE. HERE IT SHOULD BE UNDERSTOOD THAT THE FACTS THEMSELVES BEING NOT AVAILABLE A SUBSTANTIAL QUESTION OF LAW OBVIOUSLY CANNOT BE BROUGHT BEFORE THE HON'BLE HIGH COURT. N O ADJUDICATION OF A GROUND BY THE LEARNED CIT(A) WOULD NOT DISENTITLE THE TRIBUNA L FROM HEARING OR ADJUDICATING UPON SUCH GROUND IF SUCH GROUND IS A PURELY LEGAL I SSUE AND IF NO ADDITIONAL FACTS NEED TO BE VERIFIED. WITHOUT GOING INTO THE CATENA OF DECISIONS OF THE HON'BLE SUPREME COURT WHEREIN IT HAS BEEN CATEGORICALLY HEL D THAT AN ASSESSEE IS ENTITLED TO RAISE A QUESTION OF LAW AS LONG AS NO ADDITIONAL FACTS ARE REQUIRED TO BE ADJUDICATED UPON OR NO ADDITIONAL FACTS ARE REQUIRE D TO BE TAKEN ON RECORD THE LEGAL GROUND RAISED BY THE ASSESSEE IS ADMITTED AND ADJUDICATED UPON BY US. 8. A PERUSAL OF THE ORDER SHEET RECORDING ITSELF A S PLACED BEFORE US BY THE REVENUE WHICH HAS BEEN EXTRACTED ABOVE CLEARLY SHO WS THAT THE ASSESSING OFFICER WHEN HE MADE THE RECORDING WAS CATEGORICAL IN HIS VIEW THAT THE REASONS RECORDED IS NO PRE-CONDITION FOR ACTION UNDER SECTI ON 153C OF THE ACT AND THE POINTS NOTED ABOVE ARE FOR THE SAKE OF READY REFERE NCE AND APPROPRIATE ACTION. I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 10 ONCE THE ASSESSING OFFICER HIMSELF HAS ACCEPTED THA T THE RECORDING OF REASONS IS NOT A PRE-CONDITION FOR ACTION U/S 153C AND HAS ACC EPTED THAT THE POINTS ARE NOTED FOR THE SAKE OF READY REFERENCE AND APPROPRIA TE ACTION OBVIOUSLY CANNOT BE TREATED AS REASONS RECORDED. A READING OF THE PROV ISIONS OF SECTION 153C OF THE ACT CLEARLY SHOWS THAT IT IS IN PARI MATERIA WITH THE PROVISIONS OF SECTION 158BD OF THE ACT. WHILE INTERPRETING THE PROVISIONS OF SECT ION 158BD IN THE CASE OF MANISH MAHESHWARI MORE SPECIFICALLY THE SATISFACTION OF T HE ASSESSING OFFICER THE HON'BLE SUPREME COURT HAS CATEGORICALLY HELD THAT T HE SATISFACTION IS TO BE RECORDED. ADMITTEDLY THE ASSESSING OFFICER IN THE PRESENT CASE IS THE SAME AS THAT OF SHRI T. R. PACHAMUTHU ALSO. THE REVENUE HA S NOT BEEN ABLE TO SHOW ANY RECORDING OF SATISFACTION EITHER IN THE CASE OF SHR I T.R. PACHAMUTHU OR IN THE CASE OF THE PRESENT ASSESSEE AND CONSEQUENTLY IN VIEW OF THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAH ESHWARI REFERRED TO SUPRA THE NOTICE ISSUED UNDER SECTION 153C READ WITH SECT ION 153A OF THE ACT IS LIABLE TO BE HELD AS INVALID AND WE DO SO. THUS THE CONSEQU ENTIAL ASSESSMENT PASSED UNDER SECTION 153C READ WITH SECTION 153A OF THE AC T DATED 29-12-2006 FOR THE ASSESSMENT YEARS 2000-01 2003-04 AND 2004-05 ARE A NNULLED ON ACCOUNT OF THE INVALIDITY OF THE NOTICE UNDER SECTION 153C READ WI TH SECTION 153A OF THE ACT. THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI P. RAVI WOULD HAVE NO BEARING TO THIS DECISION INSOFAR AS THE DEC ISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MANISH MAHESHWARI AS ALSO THE RECORDING OF THE SATISFACTION I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 11 WAS NOT THE ISSUE THEREIN BEFORE THE TRIBUNAL NOR D ISCUSSED IN THIS REGARD. HERE WE MAY ALSO HASTEN TO CLARIFY THAT THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2000-01 2003-04 AND 2004-05 ONLY ARE ANNULLED AS T HIS LEGAL ISSUE WHICH HAS BEEN RAISED IN THE CROSS OBJECTIONS FOR THE ASSESSM ENT YEARS 1999-2000 2001-02 2002-03 AND 2005-06 HAVE BEEN DISMISSED INSOFAR AS THE CROSS OBJECTION ITSELF HAS BEEN DISMISSED ON ACCOUNT OF LIMITATION. CONSE QUENTLY THE APPEALS OF THE ASSESSEE IN ITA NOS. 717 718 AND 719/MDS/2008 STAN D ALLOWED. AS WE HAVE ANNULLED THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2 000-01 2003-04 AND 2004- 05 THE REVENUES APPEALS IN ITA NOS. 892 895 AND 896/MDS/2008 BECOME INFRUCTUOUS AND CONSEQUENTLY THE SAME ARE DISMISSED . 9. IN REGARD TO THE REVENUES APPEALS IN ITA NOS. 8 91 893 894 AND 897/MDS/2008 FOR THE ASSESSMENT YEARS 1999-2000 20 01-02 2002-03 AND 2005- 06 RESPECTIVELY IT WAS THE SUBMISSION THAT IN THE COURSE OF SEARCH OF SHRI T.R. PACHAMUTHU UNSIGNED BALANCE SHEETS IN RELATION TO S HRI P. SATHYANATHAN THE ASSESSEE HEREIN WAS FOUND. WHEN THE ASSESSEE FILE D HIS RETURN OF INCOME IN RESPONSE TO THE NOTICE UNDER SECTION 153C READ WITH SECTION 153A OF THE ACT THE BALANCE SHEET SHOWED DIFFERENT FIGURES INSOFAR AS M ANY OF THE INVESTMENTS WERE NOT REFLECTED IN THE BALANCE SHEET FILED ALONG WITH THE RETURN. CONSEQUENTLY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT H AD MADE ADDITIONS BASICALLY ON THREE GROUNDS NAMELY (I) ON ACCOUNT OF INADEQUA CY OF DRAWINGS (II) ON ACCOUNT OF THE DIFFERENCE BETWEEN THE BALANCE SHEET FILED ALONG WITH THE RETURN I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 12 AND THE BALANCE SHEET FOUND IN THE COURSE OF THE SE ARCH AND (III) ON ACCOUNT OF THE NET PROFESSIONAL RECEIPTS WHICH HAS BEEN DISCLO SED BY THE ASSESSEE BUT FOR WHICH NO RETURN HAD BEEN FILED EARLIER. IT WAS THE SUBMISSION BY THE LEARNED D.R. THAT TAKING INTO CONSIDERATION THE STANDARD OF LIVI NG OF THE ASSESSEE AND HIS STATUS IN THE SOCIETY A CONSERVATIVE ESTIMATION HAD BEEN D ONE AND THE DIFFERENTIAL BROUGHT TO TAX. IT WAS THE SUBMISSION THAT THE AS SESSEE HAD ALSO CLAIMED AGRICULTURAL INCOME WHICH WAS ALSO DISBELIEVED BY T HE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELETED THE ADDITION MADE ON ACCOUNT OF INADEQUACY OF DRAWINGS BY ACCEPTING THE CONTENTI ON OF THE ASSESSEE THAT THE ASSESSEE WAS STAYING IN A JOINT FAMILY AND CONSEQUE NTLY THE DRAWINGS OF ALL THE FAMILY MEMBERS WERE TO BE CONSIDERED. IN REGARD TO THE ISSUE OF AGRICULTURAL INCOME IT WAS THE SUBMISSION THAT THE LEARNED CIT(A ) HAD GRANTED THE ASSESSEE RELIEF OF ` 25 000/-. ON BOTH THE ISSUES THE LEARNED DR VEHEM ENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 10. IN REPLY THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ISSUE IN REGARD TO THE ADDITION ON ACCOUNT OF THE DRAWINGS H AD ALREADY BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. P. EASWARI THE MOTHER OF THE ASSESSEE IN ITA NOS. 1271 TO 1276/MDS/2008 D ATED 22-05-2009 WHEREIN IN PARA 38 OF THE SAID ORDER THE VIEW OF THE LEARNED C IT(A) THAT THE AGGREGATE DRAWINGS OF ALL THE FAMILY MEMBERS WERE TO BE CONSI DERED AND ACCEPTED AND THE ADDITION DELETED. I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 13 11. IN REGARD TO THE ISSUE OF THE AGRICULTURAL INCO ME THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF TH E LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE ISSUE OF AGRICULTURAL INCOME WA S ONLY FOR THE ASSESSMENT YEARS 2000-01 2003-04 AND 2004-05. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE ORDER OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. P. EASWARI REFERRED TO SUPRA CLEARLY SHOWS THAT THIS ISSUE OF INADEQUACY OF DRAW INGS HAD BEEN CONSIDERED AND IT HAS BEEN HELD THAT THE DRAWINGS OF ALL THE FAMIL Y MEMBERS MUST BE CONSIDERED. IT IS ALSO NOTICED THAT IT HAS BEEN ACCEPTED THAT T HE ASSESSEE IS STAYING IN A JOINT FAMILY. ONCE IT IS ACCEPTED THAT THE ASSESSEE IS S TAYING WITH THE JOINT FAMILY OBVIOUSLY THE DRAWINGS OF ALL THE FAMILY MEMBERS WO ULD HAVE TO BE CONSIDERED AND AS IT IS NOTICED THAT THE DRAWINGS OF ALL FAMIL Y MEMBERS PUT TOGETHER ARE MORE THAN THE ESTIMATE MADE BY THE ASSESSING OFFICER WE ARE OF THE VIEW THAT THE DELETION OF THE SAME BY THE LEARNED CIT(A) IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 13. IN REGARD TO THE ISSUE OF THE ADDITION REPRESEN TING AGRICULTURAL INCOME IT IS NOTICED THAT THE SAME RELATES TO THE ASSESSMENT YEA RS 2000-01 2003-04 AND 2004-05. IT IS ALSO NOTICED THAT IN THE EARLIER PO RTION OF THIS ORDER WE HAVE ALREADY QUASHED THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2000-01 2003-04 AND 2004-05. CONSEQUENTLY THIS ISSUE NO MORE CALLS FO R ANY ADJUDICATION. I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 14 14. IN REGARD TO THE ISSUE OF THE ADDITION REPRESEN TING THE DIFFERENCE IN THE BALANCE SHEET FOUND IN THE COURSE OF SEARCH AND THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME IT WAS SUBMITTED BY THE LEARNED DR THAT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 132(4A) READ WITH SE CTION 292C AS THE BALANCE SHEET HAD BEEN FOUND IN THE COURSE OF SEARCH AND THE ASSE SSEE WAS STAYING IN THE JOINT FAMILY IT SHOULD BE PRESUMED THAT THE SEIZED BALANC E SHEETS WERE THE TRUE AND CORRECT BALANCE SHEETS. IT WAS THE SUBMISSION THAT THE BALANCE SHEETS FILED ALONG WITH THE RETURNS WERE DEFECTIVE INSOFAR AS MANY OF THE INVESTMENTS WHICH WERE FOUND IN THE BALANCE SHEETS WHICH WERE FOUND IN THE COURSE OF SEARCH WERE ABSENT IN THE BALANCE SHEETS FILED ALONG WITH THE R ETURNS. IT WAS THE SUBMISSION THAT IT WAS THIS DIFFERENCE THAT THE ASSESSING OFFI CER HAD BROUGHT TO TAX AND NOTHING MORE. IT WAS THE SUBMISSION THAT THE PRESU MPTION THOUGH IS A REBUTTABLE PRESUMPTION. THE PRESUMPTION CAN BE REB UTTED ONLY BY SHOWING DOCUMENTARY EVIDENCE AND NOT BY PLAIN WORD OF MOUTH . IT WAS THE SUBMISSION THAT THE ASSESSEE HAVING NOT DISPROVED THE VERACITY OF THE BALANCE SHEET FOUND IN THE COURSE OF SEARCH THE SAME WAS LIABLE TO BE ACC EPTED AS TRUE AND CORRECT AND THE ADDITIONS MADE ON THAT COUNT SUSTAINED. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELETED THE ADDITION ON THIS COU NT BY HOLDING THAT THE INVESTMENTS SHOWN IN THE BALANCE SHEET SEIZED WERE INVESTMENTS SHOWN AT MARKET VALUE AND THE INVESTMENTS SHOWN IN THE BALAN CE SHEET FILED ALONG WITH THE RETURN SHOWED THE INVESTMENTS AT COST. IT WAS THE SUBMISSION THAT THE LEARNED I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 15 CIT(A) HAD ALSO TAKEN INTO CONSIDERATION THE VDIS D ECLARATION BY THE ASSESSEE ON 31-01-1997 WHEN CONSIDERING THE OPENING BALANCE AND DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE DIF FERENCE IN THE OPENING BALANCE. 15. IN REPLY IT WAS SUBMITTED BY THE LEARNED AUTHOR ISED REPRESENTATIVE THAT THE VDIS DECLARED CLEARLY SHOWED THAT THE ASSESSEE HAD DISCLOSED ` 41 50 000/- AND THE SAME WAS LIABLE TO BE CONSIDERED WHEN COMPUTING THE OPENING BALANCE. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A ). IT WAS THE FURTHER SUBMISSION THAT THE BALANCE SHEETS FOUND IN THE COU RSE OF SEARCH WERE PREPARED BY TAKING INTO ACCOUNT THE MARKET VALUE OF THE INVE STMENTS OF THE ASSESSEE DURING THE RELEVANT PERIOD. IT WAS FURTHER SUBMITTED THAT THE BALANCE SHEETS FILED ALONG WITH THE RETURNS SHOWED THE INVESTMENTS AT THEIR CO ST PRICE WHICH WAS THE FIGURE LIABLE TO BE CONSIDERED FOR THE PURPOSE OF ASSESSME NT. IT WAS SUBMITTED THAT THE ASSESSEE HAVING FILED HIS RETURN IT WAS THE RETURN WHICH WAS FILED ALONG WITH THE BALANCE SHEET WHICH WAS LIABLE TO BE CONSIDERED. I T WAS THE SUBMISSION THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF S MT. P. EASWARI REFERRED TO SUPRA IN PARA 34 OF THE ORDER HAS HELD THAT ONCE T HE REVISED RETURN IS FILED IT EFFACES THE ORIGINAL RETURN. ON A SPECIFIC QUERY F ROM THE BENCH IN REGARD TO THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2000-01 WHICH DID NOT SHOW THE ASSET BEING THE INVESTMENT IN JANAKI NAGAR PROPERTY BEING THE LAND AND BUILDING IT WAS FAIRLY REPLIED BY THE LEARNED AUTHORISED REPRESENTA TIVE THAT IT WAS A MISTAKE I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 16 INSOFAR AS THE INVESTMENT HAD NOT BEEN SHOWN IN THE BALANCE SHEET FILED ALONG WITH THE RETURN. IT WAS THE SUBMISSION THAT ONLY T HE BALANCE SHEET FILED ALONG WITH THE RETURN WAS LIABLE TO BE CONSIDERED. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT T HE OUT SET WHAT IS NOTICED HERE IS THAT THE SEARCH HAD BEEN CONDUCTED ON THE P REMISES OF SHRI T.R. PACHAMUTHU ON 12-08-2004. NOTICE U/S 153C READ WIT H SECTION 153A OF THE ACT HAD BEEN ISSUED ON 10-03-2006 AND AS PER THE REASON S RECORDED WHICH HAVE BEEN EXTRACTED ABOVE THE ASSESSEE WAS TO FILE HIS RETUR N OF INCOME WITHIN 30 DAYS OF THE RECEIPT OF THE NOTICE. THE RETURN HAS BEEN FIL ED ON 31-07-2006 WHICH IS BEYOND THE 30 DAYS TIME SPECIFIED IN THE NOTICE. T HUS THE RETURN FILED BY THE ASSESSEE BECOMES INVALID. WHEN THIS WAS PUT TO THE LEARNED DR BY THE BENCH IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSING OFFICER WAS WELL WITHIN HIS JURISDICTION AND POWERS TO CONDONE THE DELAY IN FIL ING THE RETURN AND TAKE INTO CONSIDERATION THE RETURN FILED. IT WAS THE FURTHER SUBMISSION THAT EVEN ASSUMING THAT THE RETURN IS INVALID ON ACCOUNT OF THE DELAY STILL THE SAME CAN BE CONSIDERED AS INFORMATION FOR THE PURPOSE OF ASSESSMENT. IT W AS THE SUBMISSION THAT IN ANY CASE THE REVENUE WAS INTERESTED IN ASSESSING THE IN COME OF THE ASSESSEE ON THE BASIS OF THE BALANCE SHEET FOUND IN THE COURSE OF S EARCH WHICH IS DEEMED TO BE TRUE AND CORRECT IN VIEW OF THE PRESUMPTION PROVIDE D IN SECTION 132(4A) READ WITH SECTION 292C OF THE ACT. AFTER CONSIDERING THE SUB MISSIONS OF THE LEARNED DR WE ARE IN FULL AGREEMENT WITH HIM THAT IN VIEW OF THE PROVISIONS OF SECTION 132(4A) I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 17 READ WITH SECTION 292C OF THE ACT THE BALANCE SHEE TS WHICH HAVE BEEN FOUND IN THE COURSE OF SEARCH BEING IN THE POSSESSION AND CO NTROL OF THE ASSESSEE WHO WAS STAYING IN THE JOINT FAMILY THE CONTENTS OF SUCH B ALANCE SHEET ARE LIABLE TO BE ACCEPTED AS TRUE AND WE HOLD SO. HOWEVER WE ARE U NABLE TO AGREE WITH THE LEARNED DR THAT THE ASSESSING OFFICER HAS ANY AUTHO RITY OR POWER TO CONDONE THE DELAY IN FILING THE RETURN. THE ASSESSING OFFICER HAVING ISSUED A NOTICE AND SPECIFIED THE TIME FOR FILING THE RETURN IN HIS NOT ICE IN VIEW OF THE PROVISIONS OF SECTION 153A READ WITH SECTION 153C(2) THE RETURN S HALL BE TREATED AS A RETURN REQUIRED TO BE FILED U/S 139 OF THE ACT. THE PROVI SIONS OF SEC. 139(1) SPECIFIED THE TIME LIMIT FOR FILING A REGULAR RETURN MORE SO THE DUE DATE FOR FILING THE RETURN. IT IS THIS DUE DATE AS PROVIDED IN SECTION 139(1) THAT THE ASSESSING OFFICER FIXES WHEN HE ISSUES A NOTICE U/S 153C READ SECTION 153A OF THE ACT. THE PROVISIONS OF SECTION 139(4) WOULD NOT COME TO THE RESCUE OF AN A SSESSEE INSOFAR AS THE TIME LIMIT IS FIXED ON THE BASIS OF THE END OF THE RELEV ANT ASSESSMENT YEAR. THE ASSESSMENT YEAR CANNOT BE TINKERED WITH. CONSEQUE NTLY THERE IS NO PROVISION FOR THE FILING OF A BELATED RETURN. WE MUST ALSO KEEP IN MIND THAT THE PROVISIONS OF SECTION 153A ARE ABSENT IN SECTION 139. EVEN SEC. 1 39(9) WHICH PROVIDES FOR RECTIFICATION OF ANY DEFECT CANNOT COME TO THE RESC UE OF AN ASSESSEE INSOFAR AS A RETURN WHICH IS NOT FILED IN THE TIME SPECIFIED BY THE ASSESSING OFFICER IN THE NOTICE U/S 153A IS NOT A DEFECT. IT MAKES THE RETURN INVA LID. OBVIOUSLY THE INFORMATION AVAILABLE IN THE RETURN WOULD VERY MUCH BE AVAILABL E TO THE ASSESSING OFFICER FOR I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 18 USE IN THE ASSESSMENT. BUT IN THE PRESENT CASE THE ASSESSING OFFICER HAS COMPARED THE BALANCE SHEET FOUND IN THE COURSE OF S EARCH WITH THE BALANCE SHEET FILED ALONG WITH THE BELATED RETURN AND THE DIFFERE NTIAL HAS BEEN BROUGHT TO TAX BY THE ASSESSING OFFICER. AS WE HAVE ALREADY HELD THA T THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE U/S 153C READ WI TH SECTION 153A OF THE ACT IS AN INVALID RETURN AND THE SAME CANNOT BE RESCUED TO BE TREATED AS A VALID RETURN THIS COMPARISON ITSELF WOULD FAIL. ACCEPTING THAT T HE RETURN FILED CAN BE CONSIDERED AS INFORMATION STILL AS THE INVESTMENTS SHOWN IN T HE BALANCE SHEET SEIZED BEING HIGHER NO ADDITION ON THIS COUNT CAN BE MADE BECAU SE THERE IS NO BALANCE SHEET WHICH IS FILED AND WHICH CAN BE CONSIDERED FOR MAKI NG THE ADDITION. TRUE IF THE BALANCE SHEET FOUND IN THE COURSE OF SEARCH DOES NO T BALANCE OR TALLY THEN THE DIFFERENTIAL IN THE SAID BALANCE SHEET WOULD VERY M UCH BE AVAILABLE FOR MAKING AN ADDITION. IN THE CIRCUMSTANCES THE VERY FOUNDATIO N FOR THE COMPARISON BEING THE BALANCE SHEET FILED ALONG WITH RETURN NO MORE SURVI VES FOR THE PURPOSE OF MAKING AN ADDITION. THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. P. EASWARI REFERRED TO BY THE LEARNED DR WOULD HAVE NO APPLICABILITY IN THE PRESENT CASE INSOFAR AS IN THE CASE OF SMT. P. EASWA RI AN ORIGINAL RETURN WAS FILED AND A REVISED RETURN WAS FILED. THIS IS NOT SO IN THE CASE OF THE ASSESSEE. IN THE CIRCUMSTANCES THE ADDITIONS MADE REPRESENTING THE DIFFERENCE BETWEEN THE INVESTMENTS SHOWN IN THE BALANCE SHEET FOUND IN THE COURSE OF SEARCH AND THE BALANCE SHEETS FILED ALONG WITH THE RETURNS STAND D ELETED. AS WE HAVE ALREADY I.T.A. NOS. 717-719 & 891-897/MDS/2008 AND C.O.NOS. 105-108/MDS/2009 19 HELD THAT THE RETURN FILED BY THE ASSESSEE BEYOND T HE TIME PROVIDED BY THE ASSESSING OFFICER IN THE NOTICE U/S. 153C READ WITH SECTION 153A OF THE ACT IS AN INVALID RETURN ALL THE ADDITIONS MADE ON THE BASIS OF THE COMPARISON WITH SUCH INVALID RETURN STAND DELETED. HOWEVER WE MAY HAST EN TO ADD HERE THAT IN VIEW OF THE PROVISO TO SECTION 240 OF THE ACT THE INCOME R ETURNED BY THE ASSESSEE FOR THESE ASSESSMENT YEARS SHALL STAND CONFIRMED. IN TH E CIRCUMSTANCES THE APPEALS FILED BY THE REVENUE IN ITA NOS. 891 893 894 AND 897/MDS/2008 STAND PARTLY ALLOWED. 17. IN THE RESULT THE CROSS OBJECTIONS FILED BY T HE ASSESSEE IN CO NOS. 105 106 107 & 108/MDS/2009 STAND DISMISSED. THE APPEALS FIL ED BY THE ASSESSEE IN ITA NOS. 717 718 & 719/MDS/2008 STAND ALLOWED. THE AP PEALS OF THE REVENUE IN ITA NOS. 892 895 AND 896/MDS/2008 STAND DISMISSED AND THE APPEALS OF THE REVENUE IN ITA NOS. 891 893 894 AND 897/MDS/2008 STAND PARTLY ALLOWED. 18. THE ORDER WAS PRONOUNCED IN THE COURT ON 21/09 /2011. SD/- SD/- (DR. O. K. NARAYANAN) (GEORGE MATHAN) VICE PRESIDENT JUDICIAL MEMBER CHENNAI DATED THE 21 ST SEPTEMBER 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE