ACIT, CHENNAI v. Shri Venku Sah, Kancheepuram

ITSSA 11/CHNY/2010 | misc
Pronouncement Date: 25-02-2011 | Result: Dismissed

Appeal Details

RSA Number 1121716 RSA 2010
Assessee PAN AADPV9370M
Bench Chennai
Appeal Number ITSSA 11/CHNY/2010
Duration Of Justice 9 month(s) 22 day(s)
Appellant ACIT, CHENNAI
Respondent Shri Venku Sah, Kancheepuram
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 15-02-2011
Date Of Final Hearing 15-02-2011
Next Hearing Date 15-02-2011
Assessment Year misc
Appeal Filed On 03-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE ACCOUNTANT MEMBER] I.T.(SS)A.NO.11/MDS/2010 BLOCK PERIOD ENDED ON 14.9.2000 THE ACIT CENTRAL CIRCLE III(1) CHENNAI VS SHRI VENKU SAH NO.12 KOTTAI KOLLAI SUBBARAYA STREET KANCHEEPURAM [PAN AADPV9370M] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI T. VASUDEVAN O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A)-II CHENNAI DATED 11.1.2010 WHICH EMANA TES FROM THE BLOCK ASSESSMENT ORDER DATED 29.3.2005 PASSED U/S 1 58BC R.W.S 143(3)/263 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT) BY THE ACIT CENTRAL CIRCLE III(1) CHENNAI. THE GROUNDS RAISED IN THIS APPEAL READ AS UNDER: 1.A THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION TOWARDS CHEQUE ISSUED BY M/S AGK SILKS AND SAREES KANCHEEPURAM AMOUNTING TO ` 3 LAKHS AND ADDITION TOWARDS CHEQUES ISSUED BY VARIOUS PERSONS AMOUNTING TO ` 27 00 051. IT(SS)A 11/10 :- 2 -: 1.B THE LEARNED CIT(A) HAS FAILED TO NOTE THAT TH E ASSESSEE HAS NOT RETURNED THE CHEQUES TILL DATE AND THAT THE ASSESSEE HAS NOT EXPLAINED THE REASONS FOR NON-RETURN OF THE CHE QUES WHICH FACT ONLY PROVES THAT THE CHEQUES REPRESENT AMOUNTS ADVANCED FROM UNACCOUNTED SOURCES. 1C. THE LEARNED CIT(A) HAS FAILED TO VERIFY WH ETHER THE CASH PAID FOR THE CHEQUES AMOUNT HAVE BEEN ACCOUNTED FOR BY THE ASSESSEE. 2. THE FACTS APROPOS THE IMPUGNED ISSUE ARE THAT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 14.9.2000. AS A RESULT OF INCRIMINATING DOCUMENT S FOUND DURING THE SEARCH BLOCK ASSESSMENT ORDER WAS FRAMED AT A TOTA L INCOME OF ` 1 15 56 540/-. SUBSEQUENTLY THE LD. CIT CENTRAL CIRCLE III CHENNAI PASSED ORDER U/S 263 OF THE ACT ON 29.3.2004 SETTIN G ASIDE THE BLOCK ASSESSMENT AND DIRECTED THE ASSESSING OFFICER TO R E-DO THE ASSESSMENT AFTER EXAMINING THE FOLLOWING ISSUES: A) THE FIRST ISSUE IS PERTAINING TO CHEQUE ISSUED FOR ` 3 LAKHS DT.5.12.2000 BY M/S.AGK SILKS & SAREES KANCHEEPURAM AND B) THE SECOND ISSUE IS RELATING TO CHEQUES TO TH E TUNE OF ` 29 59 000/- WHICH WERE STATED TO HAVE BEEN RECEIVED AS SECURITIES. 3. IN THE SECOND ROUND THE ASSESSING OFFICER MADE ADD ITION OF ` 3 LAKHS REGARDING THE CHEQUE ISSUE FOR AN AMOUNT OF ` 3 LAKHS ISSUED BY M/S AGK SILKS & SAREES KANCHEEPURAM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A LETTER DATED 29.9.2001 IS SUED BY M/S AGK IT(SS)A 11/10 :- 3 -: SILKS & SAREES WAS FILED WHICH CONFIRM THE ISSUANCE OF CHEQUE. THIS LETTER READS AS UNDER: 'I USED TO ISSUE POST DATED CHEQUES TO VARIOUS SARE E SUPPLIERS .. THESE PERSONS IN TURN USED TO GET THE SAME DISCOUNTED WITH SRI VENKU SAH. AS INSTRUMENTS OF SE CURITY ONLY I ISSUED THE FOLLOWING CHEQUES TO SRI VENKU S AH FOR DISCOUNTING MY POST DATED CHEQUES. I DID NOT ACTUAL LY RECEIVE ANY AMOUNT FROM MR.VENKU SAH. 1. INDIAN OVERSEAS BANK CHEQUE KANCHIPURAM 28-6-200 0 - ` 250000 2. DO- DATED 5.12.2000 - ` 3 00 000 WHEN THIS WAS PUT TO THE ASSESSEE HE STATED THAT HE OFFERED A SUM OF ` 250000 AS HIS UNDISCLOSED INCOME ONLY IN ORDER TO BUY PEACE. HE PLEADED THAT HIS SINCERE ACTION CANNOT BE CONSTRUED THAT THE OTHER CHEQUE FOR ` 3 LAKHS IS ALSO UNDISCLOSED INCOME. HE REQUESTED THAT THE CONFIRMATION LETTER GIVEN BY M/S AGK SILKS MAY BE ACCEPTED. EXCEPT THE ABOVE THE ASSESSEE WAS NOT IN A POSITION TO SHOW THAT NO MONEY WAS OUTSTANDING. TH IS ASPECT WAS LOOKED INTO BY ME. IT IS SEEN THAT THES E CHEQUES ARE PART OF THE SET OF CHEQUES AMOUNTING TO ` 28 LAKHS WHICH CAME TO BE CONSIDERED BY THE CIT IN HIS ORDER U/S 263. THE PECULIAR FEATURE OF THE TWO CHEQUES I N QUESTION WAS THAT WHILE THE REST OF THE CHEQUES ARE SELF- CHEQUES THESE TWO CHEQUES ARE NOT SELF CHEQUES AND FOR THIS REASON THESE TWO CHEQUES STAND OUT OF THE REMA INING CHEQUES. I FIND THAT A SUM OF ` 2.5 LAKHS WAS NOT ACTUALLY OFFERED BY THE ASSESSEE. IF THAT BE SO THE QUESTI ON OF ADDITION DOES NOT ARISE. IN FACT THIS WAS AN ADDIT ION MADE BY THE ASSESSING OFFICER AS SEEN FROM PARA 4.3 OF T HE ORDER U/S 263 OF THE CIT DATED 29.3.2004. THEREFORE TH E ABOVE PLEA OF THE ASSESSEE DOES NOT HOLD ANY MERIT. SINC E THE CHEQUE FOR ` 3 LAKHS DATED 5.12.2000 WAS ALSO NOT A SELF CHEQUE AND WAS ISSUED BY THE SAME PERSON AND OF TH E SAME NATURE AS THE OTHER CHEQUE NAMELY CHEQUE DATE D 28.6.2000 I FIND THAT THE CHEQUE DATED 5.12.2000 FO R ` 3 LAKHS REPRESENT MONEY OUTSTANDING. IT(SS)A 11/10 :- 4 -: 4. IN FIRST APPEAL THE LD. CIT(A) REMANDED THE ISSU E BACK WHEN THE ASSESSEE STATED THAT HE WAS ENGAGED IN THE BUSI NESS OF TRADING IN THE SILK YARN. HE ALSO DID CHEQUE DISCOUNTING BUSI NESS AND HAS BEEN IN THE HABIT OF COLLECTING CHEQUES FROM PARTIES AS SEC URITY TO COVER BUSINESS TRANSACTIONS. DURING THE COURSE OF ASSES SMENT PROCEEDINGS A CONFIRMATION LETTER FROM M/S AGK SILKS WAS FURNIS HED. THIS PARTY HAD DRAWN THE CHEQUE OF ` 3 LAKHS AND WAS FOUND AT THE ASSESSEES PREMISES DURING SEARCH. THE CASE OF THE ASSESSEE W AS THAT WHEN CONFIRMATION FROM THIS PARTY WAS FILED THE ONUS CA ST ON HIM WAS DULY DISCHARGED. IT WAS THE DUTY OF THE ASSESSING OFFIC ER TO FURTHER VERIFY FROM THIS PARTY TO ASCERTAIN THE TRUTH. BUT HE DID NOT BOTHER TO VERIFY THE CORRECTNESS OR OTHERWISE OF THE SUBMISSIONS MAD E BEFORE THE LD. CIT DURING THE COURSE OF REVISIONAL PROCEEDINGS EVE N AS AGAINST HIS DIRECTION. THIS SUBMISSION WHICH WAS IN THE FORM O F A WRITTEN SUBMISSIONW AS SENT TO THE ASSESSING OFFICER FOR SE EKING HIS REMAND REPORT. THE ASSESSING OFFICER WAS DIRECTED TO EXAM INE M/S AGK SILKS IN THE REMAND REPORT. THE ASSESSING OFFICER EXAMIN ED SHRI A.G.KANDASWAMY SAH OF AGK SILKS U/S 131 AND SUBMITT ED HIS REPORT VIDE LETTER DATED 17.9.2009. IN THIS REMAND REPORT IT WAS CATEGORICALLY MENTIONED THAT PROPRIETOR OF M/S AGK SILKS AS GIVEN CONFIRMATION THAT HE HAD GIVEN A CHEQUE FOR ` 3 LAKHS AS A SECURITY AND ALSO EXPLAINED AS IT(SS)A 11/10 :- 5 -: TO WHY HE HAD NOT TAKEN IT BACK EVEN AFTER REPAYING THE MONEY. AFTER CONSIDERING THESE FACTS IN THE LIGHT OF THE REMAND REPORT THE LD. CIT(A) HAS DELETED THIS ADDITION. 5. WE HAVE HEARD THE GRIEVANCE OF THE DEPARTMENT THROU GH THE LD.DR SHRI SHAJI P. JACOB WHO HAS SUPPORTED THE GR OUNDS RAISED IN THIS REGARD. WE HAVE ALSO HEARD THE VERSION OF THE LD.A R APPEARING FOR THE ASSESSEE. AFTER CAREFUL PERUSAL OF THE RECORD WE NOTICE THAT FROM THE VERY BEGINNING STARTING FROM THE TIME OF SEARCH T HEN DURING THE BLOCK ASSESSMENT PROCEEDINGS THE ASSESSEES STAND HAS BE EN CONSISTENT THAT THIS CHEQUE OF ` 3 LAKHS REPRESENTS A SECURITY AND THIS STAND HAS BEEN MAINTAINED DURING 263 PROCEEDINGS WHERE CONFIRMATIO N FROM M/S AGK SILKS ALSO SUPPORTED THE VERSION OF THE ASSESSEE. AGAIN DURING ASSESSMENT PROCEEDINGS WHEN THE PROPRIETOR OF M/S AGK SILKS WAS EXAMINED AGAIN HE HAS CONFIRMED THE STAND TAKEN BY THE ASSESSEE THAT THIS CHEQUE WAS ONLY A SECURITY AND REMAINED W ITH THE ASSESSEE BECAUSE HE COULD NOT COLLECT THE CHEQUE EVEN AFTER REPAYING THE MONEY. THEREFORE IN OUR CONSIDERED OPINION THE F INDING OF THE LD. CIT(A) IS PERFECTLY IN ORDER. NO ADDITION CAN BE M ADE ON THE BASIS OF THIS CHEQUE WHICH HAS BEEN COMPLETELY EXPLAINED BY THE ASSESSEE. IT(SS)A 11/10 :- 6 -: 6. THE SECOND LIMB OF THE GROUND RELATES TO ADDITION O F ` 27 00 051/- WHICH ACCORDING TO THE ASSESSEE REPRES ENTED MONEY ADVANCED FOR WHICH THE CHEQUES HAD BEEN TAKEN AS SE CURITY. THE ASSESSEE FILED COMPLETE LIST OF TRADERS WHO HAD ISS UED THE CHEQUES TO THE WEAVERS TO WHOM MONEY WAS PAID BY THE ASSESSEE. THE ASSESSEE ALSO PRODUCED SHRI M. SEENU SAH PROPRIETOR OF LAKS HMI SILKS AND PARTNER OF M/S SARASWATHI SILKS WHO HAD ISSUED THE CHEQUES TO THE WEAVERS IN THEIR PERSONAL CAPACITY AND THESE WERE D ISCOUNTED THROUGH THE ASSESSEE. IT IS PROVED ON RECORD THAT THE MONE Y WAS PAID BACK TO THE ASSESSEE THOUGH THE CHEQUES WERE PENDING ON THE CUSTODY OF THE ASSESSEE. THE ASSESSEE HAD ALSO PRODUCED SHRI R. G ANDHI SAH AND AFFIDAVIT FROM HIM FURTHER SUPPORTED HIS VERSION. BUT THIS AMOUNT WAS ADDED BY THE ASSESSING OFFICER ON THE PREMISE THAT THERE WAS NO WRITTEN EVIDENCE FOR REPAYMENT OF THIS LOAN. THE A SSESSING OFFICER HAD IGNORED THE CONFIRMATION FURNISHED BY THE ASSESSEE IN THE FORM OF AFFIDAVIT FROM ALL THE PARTIES CONCERNED IN WHICH T HEY HAD ACCEPTED THAT CHEQUES WERE ISSUED AS SECURITY FOR CREDIT TRA NSACTIONS AND EVEN AFTER THESE BUSINESS TRANSACTIONS WERE SETTLED AND REACHED FINALITY THESE CHEQUES WERE NOT COLLECTED BY THEM AND REMAIN ED WITH THE ASSESSEE. THE LD. CIT(A) HAD DIRECTED THE ASSESSI NG OFFICER TO VERIFY THESE SUBMISSIONS WHICH WERE FURNISHED BEFORE HIM B Y THE ASSESSEE IT(SS)A 11/10 :- 7 -: BUT THE ASSESSING OFFICER DID NOT TAKE CARE TO MAKE PROPER VERIFICATION TO FIND OUT THE TRUTH. IN THE SAME MANNER THIS IS SUE WAS ALSO REMANDED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER EXAMINED ALL THE PARTIES TO CONFIRM THE ISSUE OF CHEQUES AS SECURITY. CONSEQUENTLY THE ADDITION WAS DELETED BY THE LD. C IT(A). 7. BEFORE US SIMILAR ARGUMENTS WERE MADE BY BOTH THE PARTIES. WE HAVE FOUND THAT THE ASSESSING OFFICER HAD SUMMON ED THE FOLLOWING PERSONS AND HAVE RECORDED THEIR STATEMENTS : 1. M.S.VARATHA SAH PROP. M.S.VARATHA SAH & SONS 2. M.S. VARATHA SAH PROP. VASANTH SILK PALACE 3. M.S.VARATHA SAH PROP. M.S.VARATHA SAH & CO. 4. A.G.KANDASWAMY SAH PROP. A.G.K.SILK & SAREES 5. S.MUTHU 6. D.A.M.M SEENU SAH PROP. SRI LAKSHMI SILKS 7. D.A.M.M.SEENU SAH MANAGING PARTNER OF D.A.M.M S EENU SAH & BROS 8. D.A.M.M SEENU SAH MANAGING PARTNER OF SRI SARAS WATHI SILKS 8. ALL THESE PARTIES HAVE CONFIRMED THAT THE MONEY WAS REPAID TO THE ASSESSEE ALTHOUGH THE CHEQUES REMAINED IN ASSES SEES POSSESSION. DULY ATTESTED AND VERIFIED SWORN STATEMENTS OF ALL THESE PARTIES IN THE FORM OF AFFIDAVITS HAVE ALSO BEEN PRODUCED AS A CO NTENTION OF THE ASSESSEE. THE ONLY DOUBT OF THE ASSESSING OFFICER WAS THAT WHY THE ASSESSEE HAD KEPT THE CHEQUES EVEN AFTER REPAYMENT OF THE AMOUNT. IN OUR OPINION THE INFERENCE OF THE ASSESSING OFFI CER IS FAR FETCHED AND IT(SS)A 11/10 :- 8 -: THE ONUS CAST ON THE ASSESSEE REGARDING CHEQUES FOU ND DURING SEARCH STANDS DISCHARGED. CONSEQUENTLY WE CONFIRM THE FINDING OF THE LD. CIT(A) ON THIS ISSUE TOO. 9. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 15.2.2011. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 15 TH FEBRUARY 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR