SMT P.D.ANURADHA,COIMBATORE vs. ACIT, COIMBATORE

आदेश आदेश /O R D E R आदेश आदेश

PER MAHAVIR SINGH, VP:

:: 2 :: & 103/Chny/2009 28.12.2007. First, we will deal with for the Assessment Year 1993-1994.

The learned Senior Standing Counsel, Shri M. Swaminathan has not raised any objection on the same. The first issue in this appeal of the Assessee is as regards to the order of the CIT(A) confirming the addition made by the Assessing Officer as agricultural income of Rs.90,000/- and treating the same as income from other sources.

For this, the Assessee has raised the following Ground No.2, as under:

“2. The Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in not accepting the agricultural income of Rs.90,000/- admitted by the Assessee as not proved and treating it as taxable income.”

:: 3 :: & 103/Chny/2009 directions were given by the Tribunal in this case also. Hence, the Assessing Officer took up the matter for hearing. The Assessing Officer during the course of the set aside assessment proceedings noted that the Assessee has declared an agricultural income of Rs.90,000/-, whereas the Assessee does not own any agricultural lands. On query from the Assessing Officer, the Assessee replied and submitted a copy of the lease agreement allegedly entered between the Assessee and one Mr. R. Rangasamy Gounder of Vadavalli Village dated 03.11.1982. As per this agreement 3.89 acres of dry land was leased out by the Assessee for a period of ten years for a lease amount of Rs.5,000/- per annum. The Assessing Officer verified the agreement and after conducting an enquiry noted as under:

“Enquires conducted regarding the lease agreement at Sivakasi revealed the following findings:

(i) Stamp paper Sl.No.4381/02.04.1982 not sold by Devandran who expired in 1997. (ii) Signature apparent in the Stamp paper is not that of Devendran as verified and confirmed by his sons, Shri Chandraprakasam and Amarnath. (iii) Stamp paper account Register Pg. No.100 which is available in the file shows that Sl. No. of Stamp papers on 02.04.1982 was 1994 onwards. (iv) Rs.5 denomination of stamp papers were not available on 02.04.192 and after.

:: 4 :: & 103/Chny/2009 The Assessing Officer noted that the lease document is not genuine and moreover the Assessee has not debited this lease rent of Rs.5,000/- to his balance sheet or capital account, which was filed by the Assessee. Even, from the period 31.03.1981 to 31.03.1990, the Assessee has not declared any agriculture income up to 31.03.1986. Hence, the Assessing Officer has treated this as agricultural income declared by the Assessee for an amount of Rs.90,000/- as income from undisclosed sources and brought to tax u/s.68 of the Act.

Aggrieved, the Assessee preferred an appeal before the CIT (Appeals). The CIT(A) also confirmed the action of the Assessing Officer.

:: 5 :: & 103/Chny/2009 u/s.68 of the Act. Hence, we confirm the orders of the lower authorities on this issue of the Assessee and the appeal is dismissed.

per appeal but not proved and added by the Assessing Officer.

Similar addition of Rs.3.08 lakhs of jewellery claimed to have received through WILL but not proved. For this, the Assessee has raised Ground Nos. 3 & 4, as under:

“3. The Commissioner of Income Tax (Appeals) also erred in confirming the action of the Assessing Officer in holding that the credits aggregating Rs.5,52,000/- as per Will is not proved and treating it as taxable income.

4. The Commissioner of Income Tax (Appeals) equally erred in confirming the action of the Assessing Officer in treating a sum of Rs.3,08,000/- being the value of jewels as not proved and treating it as taxable income.”

Leelavathy who expired on 16.11.1990. As per the copy of the WILL filed by the Assessee along with its return of income, the contents of the WILL which were credited to the Assessee’s account were one

:: 6 :: & 103/Chny/2009 month prior to the date of death of Smt. G. Leelavathy as on 16.10.1990. The Assessing Officer noted that the Will is not probated and as per the Will the properties to be shared equally by both the sisters, namely Smt. P.D. Anuradha and the other sister, Smt. Girija, as under:

(a) 352 Soverigns of Gold Ornaments

(b) Fixed Deposits in Banks:

(i) Central Bank …… Rs.24,964 (ii) Catholic Syrian Bank… Rs.26,040 (iii) Catholic Syrian Bank …Rs.24,039 ------------------ Total…….. Rs.75,043 ------------------

(iv) Private loans with different parties with interest accretion Rs.4,00,000/- (v) Properties allotted : (a) House at Door No.9/45, Patel Road, Coimbatore to Smt. Anuradha (b) House at Door No.43, Vivekananda Road, Ramnagar, Coimbatore to Smt. Girija. (vi) Rs.9,50,000/- loan to be recovered from M. Pazhanisamy Gounder to be paid to Smt. Anuradha. Pazhanisamy Gounder is the father of Sr. P. Damodarasamy and father-in-law of Smt. Anuradha.

The Assessing Officer verified the specimen signature of Smt.

G. Leelavathy and stated that the same does not match with the alleged WILL signature and even many of the columns were left blank. The Assessing Officer examined the factum of the WILL and the result of his enquiry is reproduced in the order of the Assessing Officer which reads as under:

:: 7 :: & 103/Chny/2009

“1. Specimen signature of Smt. G. Leelavathy does not match with the alleged WILL signature.

2. Verification of CD 505 – the form prescribed by the bank to make claim in the case of death of the depositor reveals that there was no WILL existing as on the date of their claim. The relevant columns were re-produced here as under:

Interstate leaving behind the within mentioned persons as the only surviving legal heir according to Hindu Law by which law he was governed as the time of his / her death.

Leaving his last will and testament / Codicil/s dated…… Whereof we ……….are the executors.

The Assessee had left the column unfilled as there is no WILL available on the date of submission of death claim application. The column No.7 of the application was also re-produced for further clarity.

Column 7 appears as under:

(a) Has the deceased left any Will / Codicil/s? …..Nil (b) Executors / Beneficiaries in the Will / Codicil/s of the deceased.

Full names and Occupa- Relationship with Age address tion deceased i) ii) Nil iii) iv)

In the same application in Column No.5 also is re- produced as under:

(a) Document in proof of deposit Deposit (Pass Book, Deposit, Receipt, etc) receipt and savings pass

:: 8 :: & 103/Chny/2009 book

(b) Whether documents is in the possession of the claimant ? If Yes” not, why not? Where is it ?

“From the above discussions, it is very clearly proved that the WILL is fabricated by the Assessee to bring in income to the extent of Rs.19,82,000/-. Investigation done by this office had proved the very existence of the WILL documents which is fabricated by the Assessee with a willful intention to evade tax and defraud revenue.”

Accordingly, the Assessing Officer added the credits as per the WILL and jewellery amounting to Rs.5.52 lakhs and Rs.3.08 lakhs respectively to the returned income of the Assessee. The CIT(A) without allowing an opportunity, as claimed by the Assessee dismissed the appeal of the Assessee. The learned Counsel for the Assessee as well as the Senior Standing Counsel for the Assessee, Mr. M. Swaminathan agreed that the issue be decided on merits because of the facts that this being a very old matter which relates to the Assessment Year 1993-1994 and that this is the second round of litigation before the Tribunal. They accepted that whatever may be the result, the matter may be decided on merits.

:: 9 :: & 103/Chny/2009

“5. Details of declaration:

Serial Amount of Assessment If the Income is represented by cash No. Income year(s) to (including bank deposits), jewellery, bullion, declared which the investment in shares, debts due from other income relates persons, commodities or any other assets. Remarks Description Name in which Amount of Assets held

(1) (2) (3) (4) (5) (6) (7) 1. 2,54,150 1980 – 81 Jewellery P.D. Anuradha and 2,54,150 - P. Girija 2. 9,50,000 1989 – 90 Shares P.D. Anuradha 9,50,000 - 3. 4,00,000 1990 – 91 Shares P.D. Anuradha and 4,00,000 - P. Girija TOTAL 16,04,150

:: 10 :: & 103/Chny/2009 including the capital account of Smt. P. Girija in the books of Smt.

P.D. Anuradha reads as under:

“In the books of P.D. Anuradha…..(16.11.1990) Capital Account (Cr.) 12,79,720.00 Jewels (608 Gms.) 1,29,720.00 Loan to M. Palanisamy Gr. 9,50,000.00 Loan to Others 2,00,000.00 (being the amounts & 12,79,720.00 12,79,720.00” jewellery from Late mother Leelavathi being credited)

Pazhanisamy Gounder of Rs.9,50,000/- out of which the CIT(A) restricted an addition of Rs.5.52 lakhs. The learned Counsel for the Assessee stated that once the amount is declared under VDIS and accepted by the Commissioner of Income Tax, no further action is required. The learned Counsel for the Assessee further explained that this VDIS is declared in the hands of the Assessee’s sister, Smt.

P. Girija as legal heirs of her mother, Smt. G. Leelavathy. He stated that neither Smt. P. Girija nor the Assessee, Smt. P.D. Anuradha were the subject matter of search by the Department u/s.132 of the Act. It was stated that only the Assessee’s husband Shri. P.

Damodarasamy was the subject matter of search and not the :: 11 :: & 103/Chny/2009 Assessee. The learned Counsel for the Assessee stated that the Assessing Officer has not at all considered this declaration made by the Assessee’s sister, Smt. P. Girija as legal heirs of her mother, Smt. G. Leelavathy. The learned Counsel for the Assessee also relied on the decision of the Hon’ble Gujarat High Court in the case of Commissioner of Income Tax vs. Purshottamdas P. Patel reported in [2019] 182 DTR (Guj.) 402 and relied on paragraph No.12 as under:

“Thus, both the Tribunal as well as the CIT(A) have recorded concurrent findings of fact that the land was sold to the extent of 37,000 sq. yds. and not 92,500 sq.yds as held by the Assessing Officer. Both the CIT(A) as well as the Tribunal have recorded that the total amount of consideration received by the Assessee together with Shri Udaybhai Bhatt was Rs.2,09,00,000 out of which Rs.1,31,00,000 paid to Shri Babubhai Pothani and that the Assessee and Shri Udaybhai Bhatt had together received Rs.77,00,000 and that the Assessee’s share at 50 percent came to Rs.38,50,000 which had been duly disclosed by him by filing a declaration under the VDIS. 1997 in respect of which, a certificate dated 9th June, 1998 had been issued by the CIT under section 68(2) of the Finance Act, 1997 under the VDIS. Thus, the Tribunal has recorded concurrent findings of the fact to the effect that the Assessee’s share out of the amount received from the land deal came to Rs.38,50,000 which was duly disclosed under the VDIS 1997 and therefore, he was entitled to the credit thereof. The learned Counsel for the Appellant is :: 12 :: & 103/Chny/2009 not in a position to point out any infirmity in the findings of the fact recorded by the Tribunal.

13. One of the contentions raised on behalf of the Revenue was that the search having been carried out on 30th June, 1996 and the declaration under the VDIS 1997 having been made subsequent thereto, the same could not have been accepted as the benefit of the said scheme is not available to the “income” in respect of the previous year in which search under section 132 of the Act was initiated. The said contention does not merit acceptance for the eason that in this case, though the search came to be carried out on 30th June, 1996, the notice under section 158BD r.w.s 158BC of the Act came to be issued subsequent to the declaration having been filed under the VDIS 1997. This Court is therefore in the agreement with the view adopted by the Tribunal and the CIT(A) that once the Certificate under section 68(2) of the Finance Act, 1997 under the VDIS had been issued by the CIT, it was not permissible for the Assessing Officer to go behind such Certificate, but it is required to accept the same. Thus, the Assessee having included the amount of Rs.38,50,000 in the disclosure made under the VDIS 1997 he was rightly given the credit thereof.”

Leelavathy cannot be considered because the Assessee is trying the explain the assets which were the subject matter of search u/s.132

:: 13 :: & 103/Chny/2009 of the Act by the Department. Apart from this, nothing was argued by the learned Counsel for the Assessee or the learned Senior Standing Counsel.

P. Girija or Late Smt. P. Leelavathy which means that no search has at all happened in the case of the Assessee or the VDIS declaration by her sister Smt. P. Girija. The learned Senior Standing Counsel could not place any evidence that search happened in the case of either the Assessee, Smt. P.D. Anuradha or Smt. P. Girija. In the absence of any search warrant, we presume that there is no search that has happened in the case of the Assessee. It means that the Assessee has explained the source of the credit of Rs.5.52 lakhs included in the capital account and the jewellery of Rs.3.08 lakhs as :: 14 :: & 103/Chny/2009 added by the Assessing Officer in the VDIS declaration and paid the taxes.

We accept the plea of the Assessee and as in similar circumstances, the Hon’ble Gujarat High Court in the case of Commissioner of Income Tax vs. Purshottamdas P. Patel (supra) held as under:

“13. One of the contentions raised on behalf of the Revenue was that the search having been carried out on 30th June, 1996 and the declaration under the VDIS 1997 having been made subsequent thereto, the same could not have been accepted as the benefit of the said scheme is not available to the “income” in respect of the previous year in which search under section 132 of the Act was initiated. The said contention does not merit acceptance for the eason that in this case, though the search came to be carried out on 30th June, 1996, the notice under section 158BD r.w.s 158BC of the Act came to be issued subsequent to the declaration having been filed under the VDIS 1997. This Court is therefore in the agreement with the view adopted by the Tribunal and the CIT(A) that once the Certificate under section 68(2) of the Finance Act, 1997 under the VDIS had been issued by the CIT, it was not permissible for the Assessing Officer to go behind such Certificate, but it is required to accept the same. Thus, the Assessee having included the amount of Rs.38,50,000 in the disclosure made under the VDIS 1997 he was rightly given the credit thereof.”

:: 15 :: & 103/Chny/2009 Accordingly, we accept the contention of the Assessee that the amounts declared under VDIS by Smt. P. Girija on behalf of Late Smt. P. Leelavathy explain the sources of these two items. Hence, we reverse the orders of the lower authorities on this issue and allow the appeal of the Assessee on this issue.

Assessee, the only issue is as regards to the order of the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in making an addition of Rs.11.50 lakhs as undisclosed income and treating it as taxable income without providing a reasonable opportunity of being heard and disposing off the appeal in a summary manner and without adverting to the material on record and the submissions made before him. For this, the learned Counsel for the Assessee drew our attention to the additional grounds raised in the appeal of the Assessee which reads as under:

“1. The Commissioner of Income Tax (Appeals) erred in disposing of the appeal in a summary manner and without adverting to the material on record and the submissions made before him.

2. The Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing

:: 16 :: & 103/Chny/2009

Officer in holding that Rs.11,50,000/- is undisclosed income and treating it as taxable income.”

Sl.No. Description Amount [Rs.] [a] Income credited to account 66,000/-

[b] 5,00,000/- Advance received from Shri Mylsamy for the property sold [c] Sale proceeds of jewellery 4,50,000/-

[d] Decrease in Sundry Debtors 2,00,000/- [e] Decrease in Cash in Hand 1,200/- Total 12,17,200/- :: 17 :: & 103/Chny/2009

“6.2 The submissions made by the Appellant in the grounds of appeal at Sl.No.2 to 6. (supra) have been carefully considered and the order of the Assessment for the Assessment Year 1995 – 1996 dated 28.12.2007 perused. Various claims and allegations have been raised and made therein for which the Appellant has not adduced any material evidence to support the claims made inspite of six opportunities of being heard have been afforded to the Appellant in this appeal by the undersigned. In the absence of any material evidence being furnished to establish and prove the claims made by the Appellant in the grounds of appeal at Sl.No.2 to 6. (supra) either for the consideration of the Assessing Officer in the assessment proceedings or before the undersigned in this appeal, the claims remain unsubstantiated and in my considered view are liable to be rejected. In these circumstances, I am constrained to reject / dismiss the grounds of :: 18 :: & 103/Chny/2009 appeal raised at Sl.No.2 to 6 (supra) by the Appellant and consequently uphold in toto the order of assessment for the Assessment Year 1995 – 1996 passed u/s.143(3) read with Section 147 of the Income Tax Act, 1961 on 28.12.2007 in the instant case.”

Aggrieved, the Assessee is now in appeal before the Tribunal.

It is a fact that these jewelleries were actually owned by the mother of the Assessee, Smt. G. Leelavathy from 01.09.1990. Smt. G.

Leelavathy had transferred 352 sovereign of gold ornaments to both

:: 19 :: & 103/Chny/2009 her daughters, i.e. Smt. P.D. Anuradha and Smt. P. Girija by means of a Will executed by her. The share received by Smt. P.D.

Anuradha was 176 sovereign of gold ornaments which were later disposed by her to various retail traders at a given market value.

The workings of the market value for the share of the Assessee, i.e. 176 sovereigns of gold ornaments as per the Wealth Tax Act, 1957 is as under:

Value of Gold ornaments sold during the year 1994 – 1995: Quantity of gold ornaments sold 176 sovereigns i.e.1408 grams

Value of Standard Gold (24 Carats) As on 31.03.1994 Rs.4,598/- per 10 grams Value of standard gold as on Rs.4,680/- per 31.03.1995 10 grams Total Rs.9,278/- Percentage Average Rs.9,278 / 2 Rs.4,639/- = Less : Deduction to be made in Rs.974/- respect of the gold ornaments @ 21% Value of gold ornaments per (22 Rs.3,665/- carats) 10 grams = Total value of gold ornaments Rs.5,16,032 Rs.3,665/- x 140.8 =

However, the Assessee had disclosed the sale proceeds amounting to Rs.4,50,000/- and the balance amount was used for her household purposes. Hence, it is apparently clear that the sources shown by the Assessee is genuine in nature.

:: 20 :: & 103/Chny/2009 had disputed on the sum received from Shri Mylsamy amounting to Rs.5,00,000/-. On enquiry, it is noticed that the source of funds was towards payment made by Shri Mylsamy in respect of the property purchased from the Assessee, Smt. P.D. Anuradha. The break-up as stated by Shri Mylsamy was that a sum of Rs.3,00,000/- was received from his mother on her demise and Rs.1,00,000/- was towards the agricultural income received from M/s. Sakthi Sugars towards sale of sugarcane and Rs.1,00,000/- towards the receipt of the advance amount for the sale of agricultural land. However, it is noticed that the Assessing Officer had categorically rejected the plea. We note that the Assessing Officer had suspected Shri Mylsamy as to why such huge sums of money were kept along with him, i.e. Rs.5,00,000/- in hand without opting to invest the amount in Banks, thereby losing interest income from the Bank. It is a fact that, as Shri Mylsamy had plans to acquire a house property from the Assessee after its construction, he retained such huge sums along with him as declared by him. An agreement in this regard was executed between both parties in the year 1994, between Shri Mylsamy and the Assessee but subsequently both the parties mutually agreed to cancel the agreement and to treat the advance given by Shri Mylsamy as loan given to the Assessee. We also note that, as Shri Mylsamy is in the business of cultivation of sugarcane, he had adequate amount of liquid cash in hand to meet the agricultural expenses arising from time to time.

The Assessee, Smt. P.D. Anuradha had acquired 3.89 acres of agricultural land at Kollegal by way of a lease agreement extended with Late Smt.

Rajammal in the year 1982 and that the Assessee had cultivated on the leased land and was earning regular yearly income from the year 1982 onwards and the agricultural income was included in her annual return of income filed thereafter. Further, it is also noticed that one, Shri. Nataraj Chettiar who is an agriculturist, doing brokerage business on agricultural products during the year of initial acceptance of Rs.1,50,000/- on 15.09.1991 and thereafter Rs.3,30,000/- in the year 1992 and the Assessee had no taxable income, except that of the agricultural income.

Besides, the Assessee has also shown the interest income in her return of income for the Assessment Year 1994 – 1995, 1995 – 1996 and 1996 – 1997 on the outstanding balance due from Mr. Nataraj Chettiar. Hence, there is no ground to treat such sources as undisclosed cash credit and tax the same under Section 68 of the Income Tax Act, 1961. Thus, it is apparently clear that all the sources that were disputed by the Assessing Officer are actually genuine in nature as entered by the Assessee during the year 1994 – 1995 and hence there is no ground to include such sums as undisclosed income under Section 68 of the Income Tax Act, 1961.

Order pronounced in the court on 3rd August, 2022 at Chennai.