VARADARAJAN BASKARAN,COIMBATORE vs. DCIT, CC-2,, COIMBATORE

आयकर अपीलीय अिधकरण ‘ए’’ �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI माननीय �ी मनोज कुमार अ�वाल ,लेखा सद� एवं माननीय �ी मनु कुमार िग�र, �ाियक सद� के सम�। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकरअपील सं./ 2085, 2086, 2087 & 2088/Chny/2024 (िनधा�रणवष� / Assessment Years: 2015-16, 2016-17, 2017-18, 2017-2018 & 2018-2019) Varadarajan Baskaran, Vs. The Deputy Commissioner of Prop:- Shrinidhi Gold Bullion, Income Tax, 1080, 1st floor, SRP Complex, Central Circle-2, Big Bazaar Street, Coimbatore Coimbatore 641 026. [PAN: AFYPB 6208A] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri S. Sridhar, Advocate (Erode) ��यथ� क� ओर से /Respondent by : Shri Nilay Baran Som, IRS, CIT. सुनवाई क� तार�ख/Date of Hearing : 05.11.2024 घोषणा क� तार�ख /Date of Pronouncement : 21.11.2024 आदेश / O R D E R PER BENCH:-

Captioned appeals are filed by the assessee. The appeals in 2085, 2087 & 2088 are arising out of the separate orders of the Commissioner of Income Tax (Appeals)-20, Chennai [In short ‘CIT(A)’] dated 25.05.2024 and 24.05.2024. The assessment were framed u/s.153C of the Income Tax Act, 1961 (in short “the Act”) by the Assistant Commissioner of Income Tax, Central Circle 2, Coimbatore for assessment years 2015-16, 2016-17, 2017-18 and 2018-2019 vide orders dated 30.09.2021 and for assessment year 2017-2018 the assessment was framed by the Income Tax Officer, Non Corporate Ward 1(5), Coimbatore u/s.144 of the Act vide order dated 15.11.2019. Since the additions in all the four appeals in 2085, 2087 & 2088 are identical in nature except in for assessment year 2017-2018, we dispose of the ITA Nos.2084, 2085, 2087 & 2088 in one common order.

2015-2016 as lead case for adjudication wherein main issue is with regard to the lower authorities has not properly considered the specific objection of the assessee while invoking the Section 115BBE of the Act. Our decision on this issue will equally apply to other appeals being 2087 and 2088/CHNY/2024 also.

with regard to addition of Rs.11,00,000/-. During appeal proceedings the appellant has raised one additional ground with respect to validity of proceedings u/s 153C of the Act. During appeal proceedings, the appellant raised contention vide additional ground of appeal that since search is conducted in his case, provisions of section 153C do not apply. Hence assessment made u/s 143(3) rws 153C is invalid. Since this ground questions validity of assessment itself, it is adjudicated first. However, the ld. CIT(A) noted that in this case search is initiated in case of Mathew K Cherian and M/s Kosamattam Finance Ltd as a part of which appellant's residence is also covered u/s 132. Provisions of section 153A are applicable to only those persons in whose case 'search is initiated'. It can be seen from provisions of section 153A, consciously words 'in case of a person where a search is initiated' has been used. In Section 153C, it is mentioned that section 153C is applicable to those persons other than those covered u/s 153A. Therefore, section 153C is applicable to persons whose premises are covered during search though search is not initiated in their case and books/documents pertaining to them are seized. In the present case, as stated above, as a part of search initiated in case of M/s Kosamattam group, appellant's residential premises was also searched, six note books pertaining to unaccounted finance business of appellant were found and seized vide ANN/SM/VBV/B&D/S-1 to 6. Hence provisions of section 153C are applicable to the present case. Consequently, the ld. CIT(A) dismissed the additional ground raised by the assessee.

5. Vide original Ground, the appellant has challenged applicability of tax rate u/s 115BBE to addition made by AO towards unaccounted investment u/s 69 in undisclosed finance business of Rs 11,00,000/-. Further, the ld. CIT(A) noted that that appellant is carrying money lending business has come to the notice of department only during search conducted in his residence based on 6 books containing entries regarding finance business are seized. Further, according to the ld. CIT(A) the appellant has not admitted income on account of unaccounted investment in undisclosed Finance business in return filed u/s 153C. The AO has finalized assessment making addition towards unaccounted investment u/s 69. The assessee submitted before the ld. CIT(A) that the undisclosed income from money lending business has arisen from disclosed source of money lending business only. Ld. CIT(A) observed that Section 69 of the Act covers the instances where the assessee has made investments in the financial year immediately preceding the assessment year and such investments are not recorded in the books of account. The assessee offered no explanation about the nature and source of the investments Hence, the ld. CIT(A) confirmed the action of the ld. Assessing Officer. Aggrieved, assessee preferred an appeal before the Tribunal.

6. Before us, the ld.Counsel pleaded that the ld. AO proceeded hurriedly during Covid-19 situation hence the assessee was not able to prosecute effectively the case before him. Even before the ld.CIT(A), assessee could not laid evidence regarding the source for undisclosed income on account of proper opportunity. Per contra, the ld.DR, Mr. Nilay Baran Som, CIT relied upon the orders of the lower authorities and pleaded for the dismissal of the appeal.

Sl.No Account Number(Bank) Cash deposited Other credits from Total during 01-04-2016 to 31- demonetization 03-2017 period 1 059100050037314(TMB) 242000/- 5408/- 247408/- 2 059150050800047(TMB) 603000/- 615316/- 1218316/- 3 059150050300682(TMB) 228500/- 100784/- 329284/- 4 059201650102164(TMB) 75000/- 75000/- 5 059201650101505(TMB) 464743/- 464743/- The AO issued notice u/s 142(1) of the Act calling for return of income for the year. The Appellant failed to file any return of income. The case was picked up for scrutiny. Show cause notice was issued to appellant to explain source deposits made in bank account along with relevant evidences. The AO after noticing that appellant has failed to respond to show cause notice issued proceeded to make addition of cash deposits made in SPBs Rs 10,73,500/- u/s 69A exparte u/s 144 of the Act. Similarly AO also added remaining cash deposits whose sources of income are not explained as unexplained money u/s 69A Rs.12,61,251/-. Aggrieved, assessee preferred an appeal before the ld. CIT(A).

1. Unaccounted income generated from Goldsmith Tools Business', 2. Unaccounted income from trading in gold bullion and 3. Interest received from unaccounted Finance business. According to the ld. CIT(A) in the returns filed u/s 153C, the appellant has not admitted unaccounted Investment to the tune of Rs 1,87,37,000/- as admitted vide sworn statement. The AO has added respective amounts for relevant assessment years. Now the assessee has requested for telescoping the cash and other deposits in bank accounts for the year with unaccounted investment assessed in his hands for above years. According to the ld. CIT(A) telescoping is available only in such cases, where an earlier addition could be available for a later investment. As per the ld. CIT(A) usually if unexplained income precedes unaccounted investment such income can be considered for telescoping in Unaccounted investment in subsequent year. But in the present case, the appellant is seeking telescoping of previous year's unaccounted investment in subsequent year's unexplained deposit. The amount already invested in business in a particular year obviously will not be available for cash deposits/other deposits made in subsequent year. As per own explanation of appellant undisclosed income generated in the form of interest from unaccounted money lending business is again infused as capital for money lending business. If it true, then undisclosed Income generated for assessment years 2015-16, 2016-17 and during the year 2017-18 won't be available for making cash deposits in subsequent year/later half of year. It is settled law that onus is on assessee to establish that income sought to be taxed by AO is already subjected to tax in order to claim telescoping. However, in the present case, though appellant claimed that unaccounted investment of previous years formed source for cash deposits, no evidence has been filed to show that how amount already invested in money lending business is available for making deposits in bank account. It was contention of appellant that entire interest income received from money lending activity was infused in that business alone, hence interest income is not separately not taxed in hands of appellant. Only Investment in money lending business is taxed. If it is contention of appellant that part of interest income was not introduced back in money lending activity but used for cash deposits, it means that portion of income is not taxed in hands of appellant as part of unaccounted investment. Hence the ld. CIT(A) rejected the telescoping requested by the assessee. Aggrieved, assessee preferred an appeal before the Tribunal.

11. Before us, the ld.Counsel pleaded that the ld. AO proceeded exparte during assessment hence the assessee was not able to prosecute effectively the case before him. The ld. Counsel further argued that the information collected u/s 133(6) has not been provided to the assessee. Even before the ld.CIT(A), assessee could not laid evidence to explain the credits on account of lack of proper opportunity. Per contra, the ld.DR, Mr. Nilay Baran Som, CIT relied upon the orders of the lower authorities and pleaded for the dismissal of the appeal.