ITO, CHENNAI vs. V.GURUNATHAN, CHENNAI

V.G.Rajendran against the Order of the Commissioner of Income Tax (Appeals)-12, Chennai, in dated 22.12.2014 for the AY 2005-06. ITA No.1351/Mds/2015 is an appeal filed by the Revenue, No.134/Mds/2015 is a Cross-Objection filed by the assessee in the Revenue’s appeal No.1351/Mds/2015 in the case of Shri V.Gurunathan, against the Order of the Commissioner of Income Tax (Appeals)-11, Chennai, in ITA No.104/2013-14 dated 12.11.2014 for the AY 2005-06.

Mr. Sailendra Mammidi, CIT, represented on behalf of the Revenue and Mr. T.Banusekar, CA, represented on behalf of the assessee.

It was submitted by the Ld.AR that Shri V.Gurunathan is the father and Shri V.G.Rajendran is the son. Both the assessees are doing real- estate business. As the issues in all the appeals were interconnected, the appeals are being disposed off by this common order.

It was submitted at the time of hearing that the assessee did not wish to press the Cross-Objection No.134/Mds/2015. Consequently, the Cross-Objection filed by the assessee is dismissed as withdrawn.

It was submitted by the Ld.AR that there was a survey on the premises of both the assessees on 09.03.2012. On the basis of the evidences found in the course of the survey, the assessments for the AYs 2005-06 and 2006-07 were re-opened and completed by bringing to tax various peak credits appearing in the various unaccounted bank accounts that the assessees operated. It was a submission that nine unaccounted bank accounts had been found. It was a submission that identical additions had been made in both the hands. It was a submission that for the AY 2006-07, an addition of Rs.2,99,50,700/- had been made in the assessment in the case of Shri V.G.Rajendran vide an order dated 21.03.2014. It was a submission that this was made on the basis of DDIT Investigation, Unit-IV(2), Chennai-34, Report, wherein after analyzing of the bank accounts, the peak credits was worked out to ITA No.661/Mds/2015 ITA No.1212/Mds/2015 & CO No.134/Mds/2015 :- 4 -:

In reply, the Ld.DR submitted that the issues in all the appeals could be restored to the file of the AO with specific directions.

We have considered the rival submissions. As it is noticed that the assessee has filed Assessment Order in the case of Shri V.G.Rajendran for the AY 2006-07, wherein the analysis of the bank accounts found in the course of the survey has been done by the DDIT Investigation and the same has been considered while making the addition of Rs.2,99,57,700/- and it has been claimed by the assessee that the same has reached finality, the issues in all the three appeals being the appeal in the case of Shri V.G. Rajendran in the appeal of the Revenue in the case of Shri V.Gurunathan in ITA No.1351/Mds/2015 and the appeal of the assessee Shri V.Gurunathan in ITA No.1212/Mds/2015 are restored to the file of the AO for re-adjudication after verifying as to whether the addition of Rs.2.99 Cr. includes, the peak credits in respect of the undisclosed bank accounts found in the course of search in the case of Shri V.G.Rajendran and Shri V.Gurunathan, the father and the son.

AO has to verify as to whether the amount of Rs.53,74,548/- added in the hands of Shri V.G.Rajendran is in respect of bank account No.5679 with Karnataka Bank and as to whether the same has been included when computing the peak credits addition of Rs.2.99 Cr. If the same is not included in the addition of Rs.2.99 Cr., the pre-credit in respect of the said bank account is to be added if the same is included, no further addition is to be made. The AO has to verify whether the amount of Rs.75.00 lakhs added is in respect of any of the undisclosed bank account which have been found in the course of search and the peak credits added representing Rs.2.99 Cr. If the answer is ‘YES’, no further addition is called for, if the answer is ‘NO’, then the addition on this account is to be restricted to Rs.7.50 lakhs as confirmed by the assessee in his letter dated 05.10.2012 addressed to the ACIT, Unit-IV(2), Chennai. If the addition of Rs.2.99 Cr. includes the peak credits in respect of the bank accounts considered in the hands of Shri V.Gurunathan then no further addition on the same is liable to be made in the hands of Shri V.Gurunathan. With these directions, the appeals in both the assessees cases are restored to the file of the AO for re-adjudication.

In the result, the appeal filed by the assessee Shri V.G.Rajendran in the Revenue’s appeal in the case of Shri V.Gurunathan in ITA No.1351/Mds/2015 and the assessee’s appeal in the case of Shri V.Gurunathan in ITA No.1212/Mds/2015 stands partly allowed