DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), CHENNAI, CHENNAI vs. RAJAMANI GOBINATH, DINDIGUL

It is not in dispute that there was no incriminating material whatsoever found from the premises of the assessee. Hence, in absence of any incriminating material unearthed in the course of search, proceedings u/s 153A of the Act were not initiated in the matters of the assessee. The AO however was of the view that, the notebooks seized from the premises of Shri CPA suggested (AY 2014-15) & Others R. Gobinath

:: 3 :: that it contained notings in relation to coal commission which the assessee would receive on behalf of Shri N R Viswanathan [in short ‘NRV’]. The AO is accordingly found to have recorded his satisfaction u/s 153C of the Act that the notings found in the notebooks inter alia contained information which relates to the assessee who received commission on behalf of NRV, and therefore had a bearing on the determination of his total income and thus issued notice(s) u/s 153C of the Act on 04.12.2018. It is seen that, the assessee in response filed his return(s) of income disclosing total income as originally declared u/s 139(1) of the Act. The AO, in the course of assessment, observed that the assessee was a relative of Shri NRV and that Shri NRV was deriving coal commission which was being collected by the assessee on his behalf. The AO, in this regard, referred to the statements of Shri CPA and Shri Sivakumar Singaravelu [in short ‘Shri SSU’] who, according to the AO, had averred that they were handing over cash for Shri NRV through the assessee. The AO in the assessment completed u/s 153C of the Act on 31.12.2018 essentially reproduced the findings and reasoning set out in the income-tax assessments of Shri NRV, wherein the notings found in the notebooks of Shri CPA had been substantively assessed. The AO was of the view that, since the assessee was receiving the coal commission on behalf of Shri NRV, and the bifurcation and explanations as to the sums received by the assessee had not been provided, the amounts which were substantively added in the hands of Shri NRV was taxed on protective basis (AY 2014-15) & Others R. Gobinath

On appeal, the Ld. CIT(A) after considering the submissions of the assessee and the gamut of facts available on record, observed that, the assessee had denied to have dealt with the cash matters of Shri NRV, nor was he ever his PA nor had he ever received any monies from Shri CPA. The Ld. CIT(A) further noted that, the AO had himself concluded that the purported coal commission was being received by Shri CPA and that the assessee had denied such receipts. The Ld. CIT(A) therefore is found to have deleted the protective addition(s) made by the AO. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us. The assessee is noted to have filed the cross objections in support of the order of the Ld. CIT(A).

Heard both the parties. From the facts as culled out above, it is observed that, the entire case of the Revenue rests on the material seized in the course of search conducted from the premises of third parties, Shri CPA and M/s Coastal Energy Private Limited, along with the statements recorded from such searched persons. The case of the Revenue was that, the notings found in the account books of Shri CPA and the loose sheets seized from the premises of M/s Coastal Energy Pvt Ltd actually pertained to Shri NRV and represented coal commission collected on his behalf. The AO, in the matters of the assessee, is found to have simply reproduced the findings recorded in the assessment order(s) of the Shri NRV and concluded that, since the (AY 2014-15) & Others R. Gobinath

We find that, this coordinate Bench in the matters of Shri NRV in to 1324, 1556 & 1597/Chny/2025, has quashed the proceedings initiated against him u/s 153C of the Act for AYs 2014-15 to 2017-18 by order dated 22.01.2026. While doing so, it has been held that, the seized material found from the premises of Shri CPA and M/s Coastal Energy Private Limited read along with the statement(s) of the searched person(s) could not be said to belong / relate / pertain to Shri NRV and that, the notings found in such material could not be alleged to represent coal commission paid to Shri NRV through the assessee. It has also been held in the matters of Shri NRV (supra) that, the satisfaction note(s) recorded by the AO was invalid and unjustified in as much as the material seized from the third parties did not contain any information which could be said to be suggest any receipt of coal commission or that any amounts was being collected by Shri NRV, directly or through the assessee. As observed earlier, the impugned protective assessment(s) stemmed from the substantive assessment(s) framed in the matters of Shri NRV. Having regard to the findings recorded in the matters of Shri NRV (supra) for quashing the notice(s) issued u/s 153C of the Act, as a corollary, the satisfaction recorded in the matters of the assessee and the consequent notice(s) issued u/s 153C of the Act dated 04.12.2018 also (AY 2014-15) & Others R. Gobinath

Our above findings is supported by the fact that, even the search action conducted u/s 132 of the Act upon the assessee on 10.05.2016 did not lead to discovery of any incriminating material which would have even remotely corroborated the case sought to be made out against the assessee by the Revenue. The admitted facts on record reveal that, the assessee was not the PA of Shri NRV in any official capacity and instead he was carrying on his own proprietary business. Merely because the assessee was a distant relative of Shri NRV could not be reason enough to allege that, he was receiving payments on his behalf, particularly when, he had denied having any such transactions in his statement recorded u/s 132(4) of the Act, which has remained unrebutted by the Revenue. Moreover, it was never the Revenue’s case that, the assessee had received any payment(s) in his individual capacity and therefore viewed from any angle, there is no justification to make any protective addition(s) in the hands of the assessee.

For the various reasons set out above, and following the order passed in the matters of Shri NRV (supra), we uphold the order of Ld. CIT(A)

Since the appeals filed by the Revenue have been dismissed above, the cross objection(s) filed by the assessee in support of the order of the Ld. CIT(A) are rendered infructuous and are therefore dismissed.

In the result, all the appeals of the Revenue and the cross objection(s) of the assessee are dismissed.