DCIT, CHENNAI v. Shri V.K.Moidoo Hajee, CHENNAI

ITSSA 112/CHNY/2007 | misc
Pronouncement Date: 22-12-2010 | Result: Dismissed

Appeal Details

RSA Number 11221716 RSA 2007
Assessee PAN AAEPM4124F
Bench Chennai
Appeal Number ITSSA 112/CHNY/2007
Duration Of Justice 3 year(s) 5 month(s) 27 day(s)
Appellant DCIT, CHENNAI
Respondent Shri V.K.Moidoo Hajee, CHENNAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 22-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 22-12-2010
Date Of Final Hearing 08-12-2010
Next Hearing Date 08-12-2010
Assessment Year misc
Appeal Filed On 25-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C BEFORE DR.O.K.NARAYANAN VICE PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER I.T(SS).A. NO.112/MDS/2007 BLOCK ASSESSMENT : 1997-98 TO 2003-04 THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE II (3) CHENNAI-600 034. VS. SHRI V.K.MOIDOO HAJEE 39 WALL TAX ROAD CHENNAI-600 079. PAN - AAEPM 4124 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TAPAS KUMAR DUTTA RESPONDENT BY : SHRI S. RAMESH O R D E R PER DR.O.K.NARAYANAN VICE PRESIDENT THIS IS A BLOCK ASSESSMENT APPEAL. THE APPEAL IS F ILED BY THE REVENUE. IT IS DIRECTED AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME-TAX (APPEALS)-II AT CHENNAI DATED 19.3.20 07. THE IT(SS)A 112/07 :- 2 -: APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) READ WITH SEC.158BC OF THE I.T. ACT 1961. 2. THE ASSESSEE IS THE MANAGING DIRECTOR OF M/S. KE RALA ROADWAYS LIMITED. A SEARCH ACTION WAS CARRIED OUT UNDER SEC.132 ON 22.01.2003 AT THE RESIDENCE OF THE ASSES SEE AS WELL AS IN THE OFFICES OF M/S. KERALA ROADWAYS LTD. IN THE LIGHT OF THE DETAILS COLLECTED IN THE COURSE OF SEARCH THE ASSE SSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE WAS LIABLE T O ANSWER FOR UNDISCLOSED INCOME. ACCORDINGLY NOTICE WAS ISSUED . THE ASSESSEE FILED A RETURN IN FORM 2B DISCLOSING NIL U NDISCLOSED INCOME. THE RETURN WAS NOT ACCEPTABLE TO THE ASSES SING OFFICER. HE MADE FURTHER VERIFICATIONS AND ENQUIRIES AND FIN ALLY COMPLETED THE ASSESSMENT ON A TOTAL UNDISCLOSED INCOME OF ` 2 28 58 423/-. 3. THE DETAILS OF THE UNDISCLOSED INCOME COMPUTED B Y THE ASSESSING AUTHORITY ARE AS FOLLOWS: 1. SUPPRESSION OF LORRY HIRE RECEIPTS (KED 8370 KED 8280 LL 7F 8297 ) ` 5 37 000 2. UNEXPLAINED INVESTMENT IN FINE AND FRESH RESTAURANT ` 4 00 000 IT(SS)A 112/07 :- 3 -: 3. UNEXPLAINED INVESTMENT IN K.R.S. TOWER AND SHOP AT THIKKODI BY MRS. NAFEESA ` 17 00 000 4. UNEXPLAINED INVESTMENT IN ROSE LAND ` 25 000 5. SUPPRESSION OF RENTAL INCOME FROM K.R.S.TOWER THIKKODI ` 2 25 000 6. UNEXPLAINED CASH GIVEN TO ONE SHRI E P SIDDIK ` 50 000 7. UNEXPLAINED INVESTMENT IN LAND AT PAYOLI ` 44 805 8. UNEXPLAINED INVESTMENT IN 86.05 CENT OF LAND AT WEST HILL CALICUT ` 49 04 000 9. UNEXPLAINED EXPENDITURE ON CAPITATION FEE AND TUITION FEE FOR MBBS STUDY OF GRAND SON ` 11 00 000 10. UNEXPLAINED CASH FOUND ON DATE OF SEARCH ` 2 85 000 11. UNEXPLAINED CASH CREDITS DURING THE BLOCK PERIOD ` 1 21 76 000 12. UNEXPLAINED INVESTMENT IN M/S.MALABAR EDUCATIONAL TRUST ` 11 61 618 13. UNEXPLAINED INVESTMENT IN M/S.CITY PARK RESTURANT ` 2 50 000 TOTAL TAXABLE INCOME ` 2 28 58 423 OR ` 2 28 58 420 IT(SS)A 112/07 :- 4 -: 4. THE BLOCK ASSESSMENT WAS TAKEN IN FIRST APPEAL B EFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). THE ASSESSEE HAD RAISED GROUNDS ON EVERY INDIVIDUAL ITEMS OF ADDITIO NS MADE BY THE ASSESSING AUTHORITY. THE COMMISSIONER OF INCOME-TA X (APPEALS) AFTER EXAMINING THE EVIDENCE AND PARTICULARS OF THE CASE IN A DETAILED MANNER CONFIRMED THE FOLLOWING ADDITIONS : SUPPRESSION OF LORRY HIRE RECEIPTS ` 5 37 000/- UNEXPLAINED INVESTMENT IN KRS TOWER MODIFIED TO ` 2 00 000/- AS AGAINST ORIGINAL ADDITION OF ` 17 LAKHS UNEXPLAINED INVESTMENT IN ROSE LAND ` 25 000/- UNEXPLAINED CASH GIVEN TO SHRI E.P.SIDDIK ` 50 000/- UNEXPLAINED INVESTMENT IN LAND AT PAYYOLI ` 44 805/- UNEXPLAINED CASH FOUND AT THE TIME OF SEARCH ` 2 85 000/- 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETED ALL OTHER ADDITIONS ON THE BASIS OF HIS FINDINGS. THE REVENU E IS AGGRIEVED ON THE ISSUE OF THOSE ADDITIONS DELETED BY THE COMM ISSIONER OF INCOME-TAX (APPEALS) AND ON THE ISSUE OF MODIFYING THE ADDITION OF ` 17 LAKHS TO ` 2 LAKHS IN RESPECT OF INVESTMENT IN KRS TOWER. IT(SS)A 112/07 :- 5 -: 6. TO SUMMARIZE FOLLOWING ARE THE ITEMS AGITATED B Y THE REVENUE IN THE PRESENT APPEAL : (I) UNEXPLAINED INVESTMENT IN FINE AND FRESH RESTAURANT ` 4 00 000/- (II) MODIFICATION IN THE INVESTMENT OF KRS TOWER ` 15 00 000/- (III) UNEXPLAINED INVESTMENT IN 86.05 CENTS OF LAND AT WEST HILL CALICUT ` 49 04 000/- (IV) UNEXPLAINED EXPENDITURE ON CAPITATION FEE AND TUITION FEE FOR MBS STUDY OF GRAND-SON ` 11 00 000/- (V) UNEXPLAINED CASH CREDITS ` 1 21 76 000/- (VI) UNEXPLAINED INVESTMENT IN MALABAR EDUCATIONAL TRUST ` 11 61 06 618/- (VII) UNEXPLAINED INVESTMENT IN M/S. CITY PARK RESTAURANT ` 2 50 000/- 7. IN SHORT THE ASSESSEE HAD AGITATED EVERY ADDITI ON BEFORE THE CIT(A) AND NOW THE REVENUE IS AGITATED EVERY RE LIEF GRANTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). 8. IT IS NOT NECESSARY TO REPEAT THE DETAIL ED GROUNDS RAISED BY THE REVENUE ITEM-WISE AS RELEVANT AMOUNTS HAVE ALREADY BEEN EXTRACTED IN THE ABOVE PARAGRAPH. IN ALL THESE IT(SS)A 112/07 :- 6 -: CASES THE CONTENTION OF THE REVENUE IS THAT THE AD DITIONS WERE MADE BY THE ASSESSING AUTHORITY ON THE BASIS OF EVI DENCES COLLECTED IN THE COURSE OF SEARCH AND THE COMMISSIO NER OF INCOME-TAX (APPEALS) ERRED IN GIVING RELIEF IN THE LIGHT OF THE EXPLANATIONS GIVEN BY THE ASSESSEE OVERLOOKING THE EVIDENTIARY VALUE OF SEIZED MATERIALS. 9. WE HEARD SHRI TAPAS KUMAR DUTTA THE LEARNED COMMISSIONER APPEARING FOR THE REVENUE AND SHRI S.R AMESH THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE. 10. AT THE OUTSET ITSELF WE HAVE TO STATE THAT THER E IS NO QUESTION OF LAW INVOLVED IN THE PRESENT APPEAL. ALL THE POI NTS OF DISPUTE RELATED TO THE FACTUAL BACKGROUND SURROUNDING THE A DDITIONS MADE BY THE ASSESSING AUTHORITY. THEREFORE THE ONLY QU ESTION TO BE LOOKED INTO IS WHETHER THE COMMISSIONER OF INCOME- TAX (APPEALS) HAS CONSIDERED THE ISSUES IN A PROPER PERSPECTIVE A ND HAS GIVEN DUE WEIGHTAGE TO THE EVIDENCES RELIED ON BY THE ASS ESSING OFFICER AS WELL AS TO THE CONTENTIONS ADVANCED BY THE ASSES SEE. 11. IN RESPECT OF THE ADDITION OF ` 4 LACS MADE BY THE ASSESSING AUTHORITY ON ACCOUNT OF UNEXPLAINED INVESTMENT IN F INE AND FRESH IT(SS)A 112/07 :- 7 -: RESTAURANT THE COMMISSIONER OF INCOME-TAX (APPEALS ) FINDING IS VERY SPEAKING. IT IS AVAILABLE IN THE LEDGER ACCOU NTS OF M/S. KERALA ROADWAYS THAT A CHEQUE FOR ` 4 LAKHS WAS ISSUED TO THE SAID COMPANY IN FAVOUR OF M/S. FINE AND FRESH RESTA URANT. BY WAY OF ADJUSTMENT THIS AMOUNT WAS DEBITED IN THE CA PITAL ACCOUNT OF THE ASSESSEE. WHEN THE FLOW OF FUND IS CRYSTAL CLEAR IN THE ACCOUNTS MAINTAINED BY THE CONCERNED PARTIES IT IS NOT CORRECT ON THE PART OF THE ASSESSING OFFICER TO TREAT THE SAME AS UNEXPLAINED. THE COMMISSIONER OF INCOME-TAX (APPEA LS) HAS RIGHTLY DELETED THE SAID ADDITION OF ` 4 LAKHS. REGARDING THE MODIFICATION OF ` 17 LAKHS TO A SUM OF ` 2 LAKHS THE ASSESSING OFFICER FOUND THAT THE INVESTMENT WAS MADE IN THE N AME OF MS. NAFEESA WIFE OF THE ASSESSEE AND SHE HAS HER OWN S OURCES TO SUPPORT THE SAID INVESTMENT. MS.NAFEESA HERSELF I S AN ASSESSEE TO INCOME-TAX AND SHE HAS DECLARED RENTAL INCOME FR OM THE PROPERTY IN HER OWN RETURN. WHEN THE DOCUMENTS EST ABLISHED THAT THE SOURCES HAVE COME FROM ASSESSEES WIFE HERSELF AND THE INCOME IS ALSO ENJOYED BY HER THE ASSESSING OFFICE R SHOULD NOT HAVE MADE THE ADDITION IN THE HANDS OF THE ASSESSEE . IF NECESSARY HE SHOULD HAVE GONE TO PROVE THE MATTER IN THE FILE OF IT(SS)A 112/07 :- 8 -: THE ASSESSEES WIFE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN MODIFYI NG THE ADDITION TO ` 2 LAKHS. 12. THE NEXT ADDITION DELETED BY THE COMMISSIONER O F INCOME- TAX (APPEALS) IS ` 2 25 000/- STATED TO BE THE RENTAL INCOME SUPPRESSED BY THE ASSESSEE FROM KRS TOWER. AS STA TED ABOVE WHEN THE AMOUNT HAS ALREADY BEEN REFLECTED IN THE I NCOME STATEMENT OF THE ASSESSEES WIFE THERE IS NO REASO N TO MAKE AN ADDITION IN THE HANDS OF THE ASSESSEE. THE DELETIO N IS JUSTIFIED. THIS ISSUE IS VERY MUCH RELATED TO THE EARLIER QUES TION OF INVESTMENT MADE IN THE NAME OF ASSESSEES WIFE. 13. THE NEXT ADDITION DELETED BY THE COMMISSIONER O F INCOME- TAX (APPEALS) IS ` 49 04 000/-. THE ADDITION WAS MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INVESTMENT IN A PR OPERTY AT WEST HILL CALICUT. THE DETAILS OF THE PURCHASE OF THE SAID LAND HAVE BEEN GIVEN BY THE COMMISSIONER OF INCOME-TAX ( APPEALS) IN PAGE 19 OF HIS ORDER. IN THE LIGHT OF THOSE DETAILS THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THE ASSESSEE WAS NOWHERE IN PICTURE IN RESPECT OF THOSE TRANSACT IONS. THE IT(SS)A 112/07 :- 9 -: PARTIES INVOLVED IN THOSE TRANSACTIONS MRS. SARE ENA ASSESSEES DAUGHTER HER HUSBAND DR.KUNHABDULLAH THEIR CHILDR EN ARE ALL ASSESSED TO TAX ON REGULAR BASIS AND THE PROPERTIES ARE REFLECTED IN THEIR ACCOUNTS. WHEN THESE DOCUMENTARY EVIDENCE S ARE AVAILABLE THE HESITATION OF THE ASSESSING OFFICER TO BELIEVE THE EXPLANATIONS OFFERED BY THE ASSESSEE ALONE COULD NO T BE A GROUND TO MAKE SUCH AN ADDITION. IN MATTERS OF ASSESSMENT BEING A QUASI JUDICIAL PROCEEDING THE ASSESSING OFFICER HA S TO MOVE IN LINE WITH THE EVIDENCES AVAILABLE ON RECORD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT DELETING THE SAID ADDITION. 14. IN RESPECT OF THE ADDITION OF ` 11 LAKHS WITH REFERENCE TO THE MEDICAL EDUCATION OF GRAND SON THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT CAPITATION FEE OF ` 10 LAKHS WAS PAID BY THE ASSESSEE IN FAVOUR OF HIS GRAND SON. THE ASSESSEE HAD EXPLAINED BEFORE T HE ASSESSING AUTHORITY THAT THE DIRECTOR OF THE MEDICAL COLLEGE MR. HABIB RAHMAN IS THE FATHER IN LAW OF MR MOHD. NASLEY COU SIN OF THE GRAND-SON AND THE SEAT WAS GIVEN TO HIM ON FAMILY C ONSIDERATIONS RATHER THAN MONEY CONSIDERATION. THIS IS A PLAUSIB LE EXPLANATION. LIKE-WISE THERE IS NO EVIDENCE TO CONNECT THE ASSE SSEE WITH THE IT(SS)A 112/07 :- 10 - : EXPENSES INCURRED BY HIS GRAND-SON. ACCORDINGLY W E FIND THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) H AS TO BE CONFIRMED ON THIS POINT. 15. THE NEXT ADDITION DELETED BY THE CIT IS A SUM O F ` 1 21 76 000/-. THE ADDITION WAS MADE BY THE ASSES SING AUTHORITY TOWARDS UNEXPLAINED CASH CREDITS. THE RE LEVANT DISCUSSION IS AVAILABLE IN THE ORDER OF THE COMMISS IONER OF INCOME-TAX (APPEALS) IN PAGES 26 TO 31. THE COMMIS SIONER OF INCOME-TAX (APPEALS) HAS CLEARLY ESTABLISHED IN HIS ORDER THAT THESE CREDITS ARE ALREADY REFLECTED IN THE REGULAR ACCOUNTS OF THE ASSESSEE AND THE AMOUNTS WERE NOT COLLECTED FROM A NY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEAR CH. WHEN THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNTS I N THE ORIGINAL COURSE OF BUSINESS AND THESE CREDITS ARE REFLECTED IN THE SAID ACCOUNTS THE VERIFICATION REGARDING THE GENUINENES S OF THOSE CREDITS HAS TO BE MADE IN THE CONTEXT OF A REGULAR ASSESSMENT. SUCH VERIFICATION DOES NOT HAVE A PLACE IN THE BLOC K ASSESSMENT. THE SEIZED MATERIALS DO NOT PROVIDE ANYTHING AGAINS T SUCH CREDITS SO THAT IT COULD BE CONSIDERED IN THE COURSE OF A B LOCK ASSESSMENT. WHAT THE ASSESSING AUTHORITY HAS DONE I S TO MAKE IT(SS)A 112/07 :- 11 - : IMPERMISSIBLE ADDITIONS ONLY FOR THE REASON THAT A SEARCH WAS CONDUCTED AGAINST THE ASSESSEE. THE COMMISSIONER O F INCOME- TAX (APPEALS) HAS RIGHTLY DELETED THE SAID ADDITION . 16. THE NEXT ITEM OF ADDITION IS ` 11 61 618/-. ACCORDING TO THE ASSESSING OFFICER THIS REPRESENTED THE UNEXPLAINED INVESTMENT MADE IN MALABAR EDUCATIONAL TRUST. THE ASSESSEE IS THE MANAGING TRUSTEE OF THE SAID INSTITUTION. WHEN STA TEMENTS WERE OBTAINED FROM THE ASSESSEE IN THE COURSE OF SEARCH CERTAIN QUESTIONS WERE PUT BEFORE HIM IN RESPECT OF THE TRU ST AS WELL. THE ASSESSING OFFICER TREATED THOSE REPLIES AS RELATING TO THE AFFAIRS OF THE ASSESSEE RATHER THAN THE AFFAIRS OF THE TRUST. IN ORDER TO ESTABLISH THIS MIS-CONCEPTION RELIED ON BY THE ASSE SSING OFFICER THE ASSESSEE HAD PRODUCED THE AUDITED STATEMENTS OF THE ACCOUNTS OF THE TRUST. THIS WAS AGAIN EXAMINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THE ACCOUNTS SHOWED THAT NO MONEY WAS DRAWN FROM THE ASSESSEES PERSONA L ACCOUNT; BUT FUNDS DRAWN FROM KERALA ROADWAYS LTD. REFLECTED IN THE BOOKS OF ACCOUNT OF THAT COMPANY. IT IS IN THESE CIRCUMS TANCES THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DELETED TH E SAID ADDITION. WE UPHOLD HIS ORDER ON THIS POINT. IT(SS)A 112/07 :- 12 - : 17. THE LAST ITEM IS THE ADDITION OF ` 2 50 000 ADDED BY THE ASSESSING AUTHORITY AS UNEXPLAINED INVESTMENT IN CI TY PARK RESTAURANT. THE COMMISSIONER OF INCOME-TAX (APPEAL S) HAS EXPLAINED IN HIS ORDER THAT CITY PARK RESTAURANT IS A PARTNERSHIP FIRM AND ASSESSED BEFORE THE INCOME-TAX OFFICER WA RD-II(2) KOZHIKODE AND THE ASSESSEE IS NOT A PARTNER IN THE SAID FIRM. WHEN THE ASSESSEE IS NOT A PARTNER IN THE SAID FIRM AND THERE IS NO AMOUNT REFLECTED IN HIS NAME IN THE ACCOUNTS OF THAT FIRM THERE IS NO REASON TO IMPLICATE THE ASSESSEE THAT FOR AN AMOUNT OF ` 2 50 000/- ONLY ON THE GROUND OF A PRELIMINARY ST ATEMENT GIVEN BY THE ASSESSEE IN THE COURSE OF SEARCH. THE STATE MENT GIVEN BY THE ASSESSEE IN THE COURSE OF SEARCH HAS BEEN PROVE D WRONG BY EXTERNAL DOCUMENTARY EVIDENCE RELATING TO CITY PARK RESTAURANT. THEREFORE WE FIND THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) IS JUSTIFIED IN DELETING THE SAID ADDITION. 18. AFTER EXAMINING EACH AND EVERY ITEM AGITATED BY THE REVENUE IN THIS APPEAL WE FIND THAT EVEN THOUGH TH E COMMISSIONER OF INCOME-TAX (APPEALS) HAS DELETED A NUMBER OF ADDITIONS MADE BY THE ASSESSING AUTHORITY ALL THOS E ADDITIONS IT(SS)A 112/07 :- 13 - : HAVE BEEN DELETED ON THE BASIS OF PROPER DOCUMENTAR Y EVIDENCES IN THE FORM OF REGULAR BOOKS OF ACCOUNT TRUST DEED PARTNERSHIP DEED BANK STATEMENTS PROPERTY DOCUMENTS ETC. EVE N THOUGH ALL THESE EVIDENCES WERE PLACED BEFORE THE ASSESSING AU THORITY THE EXPLANATIONS OF THE ASSESSEE WERE OVERRULED BY HIM. THE COMMISSIONER OF INCOME-TAX (APPEALS) IN HIS TURN E XAMINED THE VERY SAME SET OF DETAILS AND EVIDENCES AND ACCEPTED THE CONTENTIONS OF THE ASSESSEE WHEREVER THE CONTENTION S ARE SUPPORTED BY DOCUMENTARY EVIDENCES. IN THESE CIRCU MSTANCES WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) GIVING PARTIAL RELIEF TO THE ASSESSEE. 19. IN RESULT THIS APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY THE 22 ND OF DECEMBER 2010. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER ( DR.O.K.NARAYANAN) VICE-PRESIDENT CHENNAI : 22 ND DEC. 2010 MPO* COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR