JOSEPH PRINCE,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

These appeals filed by three different assessees are against

different orders of the Commissioner of Income Tax (Appeals)-I,

Chennai for the above assessment years. Since issues in these

appeals are common in nature, these appeals are combined, heard

together, and disposed of by a common order for the sake of

convenience.

that the Commissioner of Income Tax (Appeals) erred in confirming

the addition made by the Assessing Officer when it was not provided in

u/s.153A of the Act and that there was no incriminating material

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 3 -:

found during the course of search action u/s.132 of the Act. Further, it

was stated by the assessee that the issue is squarely covered by the

order of the Special Bench in the case of All Cargo Global Logistics Ltd

137 ITD 287 (Mum) (SB).

these group on 2.11.2010 and consequent to this, search notice

u/s.153A was issued to the assessees and the assessments were

framed. For better understanding, we herein narrate the basis of

addition herein below:-

Joseph Prince

ITA No.2739/Mds/2014 for the assessment year 2006-07

Total income as per return : 1,01,972/- Add: Income from other sources as discussed : 4,79,301/- ------------- Gross total income : 5,81,273/- -------------

ITA No.2740/Mds/2014 for the assessment year 2007-08

Gross total income as per return : 18,01,604/- Add: Unexplained cash deposit as discussed Above : 2,30,000/- Depreciation as discussed above : 1,87,068/- Short term capital gain (as discussed above) : 9,65,007/- Disallowance u/s.40A(3) : 24,588/- ------------------------- Gross Total Income : 32,08,267/- Less: Deduction u/c VIA as claimed : 1,00,000/- ------------------------- Total income : 31,08,267/- -------------------------

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 4 -:

ITA No.2741/Mds/2014 for the assessment year 2008-09

Gross total income as per return 41,88,425 Add unproved an unexplained gifts 66,195 Disallowance of depreciation 3,34,647 Unexlained cash credit 14,793 4,15,635 Assessed Income 46,04,060 Less Deduction under Chapter VIA 1,00,000 ------------ Taxable income 45,04,060 -----------

Sheeba Prince

ITA No.2742/Mds/2014 for the assessment year 2005-06

Total income (as returned) 93,49,490 Add Income from other sources (claimed to be 1,72,000 Agricultural income) ------------- Total income 95,21,490

Income Tax thereon 28,30,447 Less Rebate u/s.88C 5,000 ------------- Income tax payable 28,25,447 ------------ ITA No.2743/Mds/2014 for the assessment year 2008-09

Total income (as returned u/s153A) 1,23,55,470 Add Addition u/s.68 as discussed above 68,000 Add Undisclosed income as discussed above 30,000 ---------------- Total income 1,24,53,470 ---------------

ITA No.2744/Mds/2014 for the assessment year 2011-12

Total income declared by the assessee 1,34,69,681 Addition u/s.69A 10,63,043 ----------------- Total income 1,45,32,724 -----------------

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 5 -:

Princeson Jose

ITA No.2745/Mds/2014 for the assessment year 2005-06

Total income (as returned) 90,52,420 Add Income from undisclosed sources (as 5,30,000 discussed) -------------- Total Income 95,82,420 --------------

ITA No.2746/Mds/2014 for the assessment year 2006-07

Total income (as returned) 2,02,97,344 Add Income from undisclosed sources (as 46,000 discussed) --------------- Total Income 2,03,43,344 ---------------

ITA No.2747/Mds/2014 for the assessment year 2007-08

Total income (as returned) 5,49,10,923 Add Disallowance made in order u/s.143(3) 1,50,717 Add Income from undisclosed source (as 29,600 discussed) --------------- Total Income 5,50,91,240 --------------

ITA No.2748/Mds/2014 for the assessment year 2008-09

Total income (as returned) 2,06,37,269

Add Income from undisclosed source (as 70,301 discussed) 70,000 --------------- 2,07,77,570 Total Income ---------------

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 6 -:

ITA No.2749/Mds/2014 for the assessment year 2011-12

Total income (as returned) 2,14,48,066

Add Undisclosed income as discussed 20,000 above ---------------- Total Income 2,14,68,066 ---------------

According to the ld. Authorised Representative for assessees additions

made by the Assessing Officer were only on the basis of particulars

disclosed by the assessees in their original returns of income which

were filed before the due date of filing return of income and also

before date of search and there was no incriminating material found

during the search to suggest additions. Further, he submitted that

certain additions in assessment years 2007-08 & 2008-09 were made

in the case of Joseph Prince on the reason that consent was given by

the assessee to make additions in respect of unexplained credit,

deposit into bank account and short term capital gain and disallowance

u/s.40A(3) of the Act and these additions cannot be sustained. Even if

the assessee agreed at the time of assessment, these additions cannot

be legally sustainable. For this proposition, the ld. Authorised

Representative for assessees relied on the judgment of Madras high

court in the case of Mariam Aysha vs. CIT 104 ITR 381 wherein it is

held that consent of the assessee cannot give jurisdiction to Assessing

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 7 -:

Officer and the taxing authorities can act only if there is power under

the statute to do so. He further relied on the order of the co-ordinate

bench in ITA Nos.559,560, 561, 562, 563 & 564/Mds/2014 for the

assessment years 2004-05 to 2009-10 in the case of A.R. Murugadoss

vide order dated 16.06.2014, wherein the Tribunal held that in case

no incriminating material is found on account of search or requisition,

the question of re-assessment of the concluded assessment does not

arise, and the re-assessment of the concluded assessment is permitted

in assessment u/s.153A only if incriminating material are found in the

course of search. The ld. Authorised Representative for assessee

further placed reliance on the order of the co-ordinate bench in ITA

Nos.1065, 1066 and 1067/Mds/2014 and others for the assessment

year 2003-04 to 2005-06 in the case of Rm.K. Viswanatha Pillai & Sons

and others vide order dated 05.02.2015 for the above propositions.

He also relied on the order of Special Bench in the case of All Cargo

Global Logistics Ltd.

reliance on the order of the Commissioner of Income Tax (Appeals)

and submitted that there were excess cash and jewellery found and

the addition was made on this count also in certain assessment years

and re-assessment was framed on the basis of search action when it

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 8 -:

came to notice that certain credits and investments are not properly

explained.

record. There are certain additions made by the Assessing Officer on

the basis of information which was available with the assessing

authorities in the form of earlier returns of income and financial

statement attached thereof. In our opinion, additions could be made

in the case of completed assessments (assessment years which were

not abated) only on the basis of incriminating material found during

the course of search. Admittedly, the Assessing Officer did not found

any incriminating material warranting addition. Being so, we are

inclined to direct the Assessing Officer to make addition only on the

basis of incriminating material if any found during the course of

search. Further, regarding addition on account of cash disclosed by

Sheeba Prince for the assessment year 2011-12, if the said cash

belongs to her family members, addition cannot be made in the hands

of the assessee (Sheena Prince) if it is disclosed in their respective

return of income. Regarding jewellery, we make it clear that if the

assessee has already disclosed jewellery in the regular return of

income, it cannot be considered for addition in assessment completed

u/s.143(3) of the Act r.w.s.153A of the Act. Accordingly, we direct the

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 9 -:

Assessing Officer to pass fresh order in the light of the order of the

Special bench in the case of All Cargo Global Logistics Ltd (cited

supra). With these observations, all these appeals filed by the

assessees are remitted to the Assessing Officer to make addition only

on the basis of seized material found during course of search action in

these cases. Thus, the appeals of the assessees are partly allowed for

statistical purposes.

with regard to levy of penalty u/s.271(1) (c) of the Act.

of M/s. Prince Gem & Jewellery Pvt. Ltd. During the course of

assessment proceedings the Assessing Officer observed that the

assessee’s two minor sons i.e Antony Prince and Joseph Prince claimed

to have received gifts by cash of �2,65,000/- each from one Mr. T.P.

Joseph but when asked to substantiate the gifts with supporting

evidences, the assessee furnished copies of gift deeds devoid of

address of the donor. However, the assessee agreed for the addition

of �5,30,000/- subject to not to initiate penalty proceedings. Since the

assessee did not prove the genuineness of the gift, the same was

added to assessee’s total income and penalty proceedings u/s.271(1)

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 10 -:

(c) of the Act were initiated and levied penalty of �1,61,733/-.

Aggrieved the assessee preferred an appeal before the Commissioner

of Income Tax (Appeals).

confirmed the penalty by observing that the assessee failed to offer

satisfactory explanation before the Assessing Officer with regard to the

gifts amounting to �5,30,000/- supposed to have been received from

one Mr. T.P. Joseph. It was also seen that the assessee could not

substantiate with any cogent evidence to prove the genuineness of

the gifts. Therefore, the conclusion drawn by the Assessing Officer are

based on facts and sound logic. During the appellate proceedings also

the Authorised Representative failed to substantiate with any evidence

with regard to the genuineness of the gifts. In view of the above, the

action of the Assessing Officer is justified in levying the penalty of

�1,61,733/- u/s.271(1) (c) of the Act. As per the provisions of section

271(1) (c), if the Assessing Officer or the Commissioner of Income Tax

or Commissioner of Income Tax (Appeals), in the course of any

proceedings under the Act, is satisfied that any person has either

concealed the particulars of his income or (ii) furnished inaccurate

particulars of such income, he may, in addition to the tax, if any

payable, direct that such person shall pay by way of penalty a sum

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 11 -:

which shall not be less than, but which shall not exceed three times,

the amount of tax sought to be evaded by reason of concealment of

particulars of his income or the furnishing of inaccurate particulars of

such income. The Explanations of 271(1)(c) have been held to be an

integral part of the above section. While considering an appeal against

an order made u/s. 271(1)(c), which is required to be examined is the

record which the Assessing Officer imposing penalty had before him

and if that record can sustain the finding that there has been

concealment, that would be sufficient to sustain the penalty. The

assessee has returned the income at �93,02,420/- (including

agricultural income of �2,50,000/-). However, during the assessment

proceedings, the Assessing Officer has made additions to the tune of

�5,30,000/- to the returned income of �93,02,420/- while doing so,

the Assessing Officer has asked the assessee to furnish the fresh

confirmation from the donor and to prove identity and capacity f the

donor. The assessee has not proved identity and capacity of the donor

with any cogent evidence before the Assessing Officer. As per the

explanation 1 contained in Section 271(1) (c) which is self-contained in

the sense that it treats every difference between the reported and the

assessed income as concealed income. But, at the same time, it

provides the criteria where penalty would be warranted. Penalty was

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 12 -:

leviable for concealment, where an assessee fails to offer any

explanation for the difference or offers an explanation, which was

found to be false. In these cases, penalty can be treated as

mandatory. Against this, the assessee is in appeal before us.

record. In this assessment year, the assessee said to have received

cash of �5,30,000/- as gift in the name of minor sons (i.e �2,65,000/-

each from his sons Joseph Prince and Antony Prince). The assessee

was not able to properly explain the source. The Assessing Officer

stated that the gift has been received by the assessee from a person

who is a close relative to him. According to the Assessing Officer, the

assessee filed a gift deed on the stamp paper of �20/- which was

purchased on 27.05.2006 and this document does not have complete

address of the donor and the gift which was issued in the form of cash

only. The assessee explained that he received the gift from Shri. T.P.

Joseph who is his close relative. After verifying original return of

income, it was clear that there is no incriminating material found in the

course of search. Being so, in our opinion that the assessment cannot

be made u/s.153A of the Act without any incriminating material found

during the course of search and levying of penalty on the basis of

some record which was filed by the assessee is not proper. Being so,

I.T.A.Nos. 2739 to 2749/Mds/2014 :- 13 -:

in our opinion levy of penalty is not justified consequent to assessment u/s.143(3) r.w.s 153A of the Act. Accordingly, the penalty is deleted.

Order pronounced on Thursday, the 25th day of June, 2015, at Chennai.

Sd/- Sd/- (वी. दुगा� राव) (चं� पूजार� ) V. DURGA RAO (CHANDRA POOJARI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य/ ACCOUNTANT MEMBER

चे�नई/Chennai. �दनांक/Dated:25.06.2015. KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2.��यथ�/ Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF.