DCIT, COIMBATORE vs. N.MUTHUSAMY, COIMBATORE

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ITA 1032/CHNY/2017Status: DisposedITAT Chennai19 October 2017AY 2010-115 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the AO did not refer to or use any of the incriminating materials found during the search to make additions under Section 69B. Therefore, the additions were not sustainable.

What were the facts?

A search was conducted on the assessee's premises, leading to the discovery of unaccounted cash, investments in jewellery and properties, and other unexplained expenditures. The Assessing Officer (AO) made additions under Section 69B based on these findings.

What were the issues?

Whether additions made under Section 69B are valid when the AO does not rely on incriminating materials found during a search. Whether the CIT(A)'s deletion of additions based on lack of incriminating material is correct.

Which sections of the Income-tax Act were involved?

Section 69B,Section 153A,Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN

Hearing: 19.10.2017Pronounced: 19.10.2017

आदेश / O R D E R PER BENCH:

1.

These appeals are filed by the Revenue against the Order of the Commissioner of Income Tax (Appeals)-18, Chennai, in to 82/15-16 dated 09.01.2017 for the AYs 2007-08 to 2011-12.

2.

Mrs.Ruby George, CIT represented on behalf of the Revenue and Mr.S.Sridhar, Adv., represented on behalf of the assessee. & 1030 to 1033/Mds/2017 :- 2 -:

3.

It was submitted by the Ld.DR that there was a search conducted on the premises of the assessee on 19.03.2013. In the course of the search, the following incriminating materials are found as mentioned in Page No.2 of the Assessment Order:

Details of unaccounted income/ Sl.No. Amount unexplained investments 1 Unaccounted cash found in the Rs.52,70,000/- residence of Shri N. Muthusamy @ Bose at No.1, SKV Nagar, Subbian Nagar Extension, KK Pudur, Saibaba Colony, Coimbatore - 641 038 2 Investment in jewellery unearthed Rs.1,36,88,324/- during the course of search and seizure operation weighing 3235.620 Grams of Gold and 78.75 Carats of Diamond 3 Investments made in immovable Rs.10,42,00,000/- properties 4 Income from liaison work Part receipt *Rs 18,56,856/- from M/s.Sreevatsa Real Estates Pvt. Ltd. 5 Unexplained investments and Rs.1,24,40,000/- expenditures Amount paid to Shri Shanmugasundaram, Mysore 6 Unexplained expenditure made: Rs.93,00,000/- Advance paid to Mr.V.M. Ramesh, Coimbatore 7 Unexplained balances in banks Rs.1,93,83,272/- Total Rs.16,61,38,452/-

4.

A notice u/s.153A was issued on the assessee on 09.12.2013.

Returns had been filed by the assessee in response to the notices u/s.153A. The assessment came to be completed u/s.153A r.w.s.143(3) on 31.03.2015, wherein the AO had brought to tax unexplained & 1030 to 1033/Mds/2017 :- 3 -: investments u/s.69B in respect of the investments made by the assessee for each of the assessment year as follows:

Addition made Sl.No. Asst. Year Details of additions (in Rs.) 1 2007-08 13,20,000/- 2 2008-09 6,00,000/- 3 2009-10 unexplained investments u/s.69B 29,24,650/- 4 2010-11 1,23,67,830/- 5 2011-12 49,71,662/-

5.

It was a submission that on appeal, Ld.CIT(A) had allowed the assessee’s claim holding that there was no incriminating materials found during the course of search for the purpose of making the additions. It was a submission that the Ld.CIT(A) had followed the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 287 (Mum) (SB) as also the decision in the case of Jai Steel (India) v. ACIT (2013) 88 DTR (Raj) and also the decision of the jurisdictional bench of the ITAT in the case of ABS Sanjay Vs. ACIT in 1692 & 1693(Mds)/2013.

6.

It was a submission that as incriminating materials had been found in the course of search in the case of the assessee, the additions made by the AO representing the unexplained investments were liable to be sustained and the order of the Ld.CIT(A) be reversed.

7.

In reply, the Ld.AR vehemently supported the order of the Ld.CIT(A). It was a submission that there were no incriminating materials & 1030 to 1033/Mds/2017 :- 4 -:

found in the course of the search which were relatable to the additions made. It was a submission that consequently, the decision relied upon by the assessee before the Ld.CIT(A) directly applied to the assessee’s case and the additions had rightly been deleted by the Ld.CIT(A).

8.

We have considered the rival submissions. A perusal of the Assessment Order clearly shows that in Page No.2 at Para No.2, the AO has extracted the chart of the details as unaccounted income or unexplained investments as found during the course of the search.

However, a perusal of the Assessment Order in Page No.7 at Para No.7 where the AO has made the addition in respect of the unexplained investments by invoking the provisions of Sec.69B shows that the AO has taken the returned total income of the assessee as per the return income filed u/s.153A which is also identical to the return originally filed and has made the addition by taking investments as disclosed in the said return and tracing the source for the same from the sources of income which is disclosed in the return. The AO has not referred to nor taken recourse to any of the incriminating materials for the purpose of making addition u/s.69B of the Act. This being so, clearly no incriminating materials relatable to the additions made are available and consequently, in view of the decision of the Hon’ble Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 287 (Mum) (SB) as also the decision in the case of Jai Steel (India) v. ACIT (2013) 88 DTR (Raj) and also the decision of the Co-ordinate Bench of this Tribunal in the case of & 1030 to 1033/Mds/2017 :- 5 -:

ABS Sanjay Vs. ACIT referred to supra, clearly applied to the facts of the assessee’s case. This being so, the Revenue has not been able to dislodge the findings as has been arrived by the Ld.CIT(A). Respectfully following the decision of the Special Bench of this Tribunal as also the decision of the Hon’ble Rajasthan High Court in the case of Jai Steel (India) v. ACIT, the findings of the Ld.CIT(A) on this issue stands confirmed.

9.

In the result, the appeals filed by the Revenue stands dismissed.

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