PRINCIPAL COMMISSIONER OF IN vs. SMT.B.SUMATHI

TCA.Nos.278, 254, 255 and 222 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.08.2022 CORAM

THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.Nos. 222, 254, 255 & 278, of 2019 Principal Commissioner of Income Tax, Central 2, No.108, Mahatma Gandhi Road, Chennai. .. Appellant in all appeals Versus B. Sumathi .. Respondent in TCA.No.222 of 2019 Shri.V.Dhivaharan .. Respondent in TCA.Nos.254, 255 and 278 of 2019 Prayer in TCA.Nos.222 and 278 of 2019: Tax Case Appeals filed under Section 260 A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras “D” Bench, dated 28.4.2017 passed in ITA.Nos.38/Mds/2007 and 61/Mds/2002. Prayer in TCA.Nos.254 and 255 of 2019: Tax Case Appeals filed under Section 27A of the Wealth Tax Act, against the order of the Income Tax Appellate Tribunal Madras “D” Bench, dated 28.4.2017 passed in 1/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 WTA.Nos.60 and 61/Mds/2005. For Appellant in all appeals : Mr.S.Rajesh for Mr.Karthik Ranganathan Standing Counsel

For Respondents in all appeals: Mr. R. Janakiraman COMMON JUDGMENT (Judgment of the Court was delivered by R. MAHADEVAN, J.) These Tax Case Appeals have been filed by the appellant / revenue, questioning the correctness of the order dated 28.4.2017 passed by the Income Tax Appellate Tribunal Madras “D” Bench, in respective ITA.No.38/ Mds/ 2007, ITA.No.61/Mds/2002, WTA.Nos.60 and 61/Mds/2005 for the respective assessment years 1987-88 to 1997-98, 1996-97, 1997-98, 1987-88 to 1997-98 on the following substantial questions of law; TCA.No.222 of 2019: ' 1. Whether the Appellate Tribunal is correct in law in deleting the additions made by the Assessing Officer for the block period on the ground that no addition towards undisclosed income can be made without seized incriminating material to support such addition, when the 2/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 assessee never filed Return of Income? 2. Whether the Tribunal is correct in law deleting the addition made towards unexplained investment in jewellery of 4307 grams and diamonds of 48.61 carats, valued of Rs.43,47,000/- found in the locker No.133 of City union Bank, Mannargudi, while holding in the case of Sri.V.Divakaran, wherein this amount was taxed on substantive basis, that this amount is taxable in the case of Smt. Sumathy only? 3. Whether the Tribunal is correct in law deleting the addition made towards unexplained investment in jewellery of 4307 grams and diamonds of 48.61 Carats, valued of Rs.43,47,000/- found in the locker No.133 of City Union Bank, Mannargudi both in the case of this assessee, wherein the amount was taxed on protective basis and in the case of Sri.V.Divakaran, in whose case the same amount was taxed on substantive basis and thereby excluding the unexplained investment from the taxation purview of chapter XIV-B of the Income Tax Act, 1961? 4. Whether the Tribunal is correct in law in holding that the addition is not sustainable in the case of Smt.B.Sumathi on the ground that satisfaction cannot be recorded by the assessing officer while initiating proceedings u/s.158BD against the assessee as the assessing officer himself is satisfied C.No.422/20/PCIT(C)- 3/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 2/2017-18 that the jewellery belongs to Shri.V.Dhivakaran, whereas the Hon'ble ITAT, the last fact finding authority, itself upheld in the order No.IT(SS)A No.61/Mds/2002, that the jewellery belongs to Smt.B.Sumathi and is to be taxable in the hands of Smt.B.Sumathi only and as such should have upheld the addition made in the case of Smt.B.Sumathi?” TCA.No.254 & 255 of 2019: “Whether the Appellate Tribunal is correct in law in setting aside wealth tax assessment and all the issues are remitted back to the file of the Assessing Officer since the Income Tax Returns are already setaside by the Tribunal in assessee's own case?” TCA.No.278 of 2019: “1.Whether the Tribunal is correct in law giving relief of accepting the submission that the jewellery found in the residence of the assessee, to the extent of 1042 grams for whose source no evidence was found, belongs to others and on the presumption that the excess jewellery would have received by the other and on the presumption that the excess jewellery would have received by the others on the occasion for marriage as stridharan? 2. Whether the order of the Tribunal wherein relief was given to the extent of 1042 grams valuing Rs.4,57,021/- 4/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 without material evidence and only based on presumption, is not preserve in law as well as on facts? 3. Whether the Tribunal is right in law in holding that the jewellery of 4307 grams and diamonds of 48.61 Carats, valuing totally to Rs.43,47,182/-, found in locker no.133 of City Union Bank, Mannargudi is assessable only in the hands of Smt.Sumathi, ignoring the facts that the presumption provision of section of the Income Tax Act and the financial ability of Smt.B.Sumathi? 4. Whether the Tribunal is right in law in holding that the silver articles weighing 12247 grams valued at Rs.89,966 were received by the assessee's wife and mother at the time of their marriage from their parents, without any supporting evidence and only on presumption? 5. Whether the Tribunal is right in law in deleting the addition of Rs.4 lakhs made on account of possession of the white goods such as TV, Fridge, VCR and Maruti Car, which were found in the possession at the time of search and whose source could not be explained by the assessee with documentary evidence? 6. Whether the Tribunal is right in law in deleting the addition made of Rs.34,672/- towards unexplained cash by ignoring the fact that as per the provision of Section, there is a presumption that the cash belongs to the assessee and the explanation, if any with respect to source of such cash 5/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 has to be explained with evidence by the assessee? 7. Whether the Tribunal is right in law deleting the addition of Rs.10 lakhs made in the hands of assessee on purchase basis towards deposit made in the name of Ms.Subashree Bhaskaran, which was made based on the statement of deposit holder? 8. Whether the Tribunal is right in law in deleting the addition of Rs.42,37,323/- made in the hands of the assessee as undisclosed income, on protective basis, being on money payment made by the assessee towards purchase of land by the Company M/s.TCV Engineering Pvt. Ltd. in which the assessee is a major share holder? 9. Whether the Tribunal is right in law in directing the Department to treat certain credits as contract receipts, as claimed by the assessee, and to apply the provision of Sec.44AD of the Act, without verifying the genuineness at the claim that the receipts claimed by the assessee are really attributable to contract work? 10. Whether the Tribunal is right in law in deleting the addition made towards undisclosed investment in land and buildings amounting to 3.99 lakhs on the ground that no material was found during the investment came to the knowledge of the Revenue in proceedings initiated only in consequence to search operation? 11. Whether the Tribunal is right in law in deleting 6/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 addition made towards unexplained cash credits of Rs.40,000/- in the books of M/s. Sengamala Thayar Educational Trust, on the ground that the same has to be taxed u/s.68 in the hands of trust not in the hands of assessee, by ignoring the fact that the relevant material was found in the course search of the assessee and the presumption u/s is upon the assessee and failure to explain the same leads to taxation in his hands only? 12. Whether the Tribunal is right in law in deleting addition made of Rs.1,50,000/- towards unexplained expenditure, on the presumption that the assessee might have invested these funds out of his contract income and agriculture income, by ignoring the fact that there is material evidence for incurring of such expenditure as required u/s.158BB(1) and the legal presumption 132(4A) is that the said expenditure was incurred by the and failure to explain the same leads to taxability of the said expenditure u/s.69C in the hands of assessee only? 13. Whether the Tribunal is right in law in deleting addition made toward unexplained cash credit of Rs.52,400/- in the books of M/s.Jai Hind Works, on the ground that the same has to be taxed u/s.68 in the hands of that concern only and not in the hands of assessee, by ignoring the fact that the relevant material was found in the course of search of the assessee and the presumption u/s is 7/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 upon the assessee and failure to explain the same leads to taxation in the hands of assessee only? 14. Whether the Tribunal is right in law in deleting addition made towards unexplained cash credits of Rs.5,45,453/- towards credit founds in the seized material in the conclusion that there is no basis for the assessing officer to treat such credits belong to the assessee, by ignoring the facts that the relevant material was found in the course search of the assessee and the presumption u/s is upon the assessee and failure to explain the same leads to taxation, in the hands of assessee only? 15. Whether the Tribunal is right in law in deleting addition made of Rs.2,46,036/- towards unexplained expenditure incurred towards registration by ignoring the fact that the legal presumption 132 (4A) is that the said expenditure was incurred by the assessee and failure to explain the same leads to taxability of the said expenditure in the hands of assessee only. 16. Whether the Tribunal is right in law in deleting addition of Rs.3,00,000/- made towards unexplained investment in purchase of vehicle, by ignoring the fact that the legal presumption is that the said investment in vehicle was made by the assessee and failure to explain the same with evidence leads to taxability of the said amount of investment in the hands of assessee only? 8/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 17. Whether the Tribunal is right in law in deleting addition of Rs.6,00,000/- made towards unexplained investment in purchase of 2 lorries and consequential attributable income thereon of Rs.3,39,439/- by ignoring the fact that the legal presumption 132(4A) is that the said investment in said lorries was made by the assessee and failure to explain the same with evidence leads to taxability of the said amount of investment in the hands of assessee only? 18. Whether the Tribunal is right in law in deleting the addition made towards failure of the assessee to prove the source of capital introduced in the film of Rs.1,12,500/- on the ground that there is material that the assessee contributed to the capital of Film M/s.Jai Hind Works in the name of the other partners, by ignoring the fact that the addition was made based on the statement of assessee wife Smt. Hemalatha? 19. Whether the Tribunal is right in law in deleting the addition made towards commission from M/s.TCV Engineering Pvt. Ltd. Income of Rs.10,00,000/- on the ground that the same was not received by the assessee and therefore, not taxable on the cash basis system of accounting being followed by the assessee, by ignoring the 9/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 fact that the assessee had not maintained any books of accounts to apply any particular system of accounting and commission income is taxable during this block period on accrue basis?

Index : Yes / No To 1. Principal Commissioner of Income Tax, Central 2, No.108, Mahatma Gandhi Road, Chennai. 2. The Income Tax Appellate Tribunal Madras “D” Bench, Chennai. 3. The Deputy commissioner of Wealth Tax, Central Circle II (4), Chennai – 600 034. 4. The Assistant Commissioner of Income Tax, Central Circle II (4), Chennai – 600 034. 5. The Deputy Commissioner of Income Tax, Central Circle II (4), Chennai – 600 034. 11/12 https://www.mhc.tn.gov.in/judis TCA.Nos.278, 254, 255 and 222 of 2019 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr T.C.A.Nos. 222, 254, 255 & 278 of 2019 04.08.2022 12/12 https://www.mhc.tn.gov.in/judis