Commissioner Of Income Tax Chennai v. Jeeva Raja (Died)2. Ilayaraja3. Karthik Raja4. Yuvan Shankar Raja5. Bavadahrani

In the High Court of Judicature at Madras Dated: 17.06.2013 Coram The Honourable Mrs.JUSTICE CHITRA VENKATARAMANandThe Honourable Ms.JUSTICE K.B.K.VASUKI Tax Case (Appeal) No.15 of 2010 Commissioner of Income Tax Chennai .... Appellant/Appellant. Vs. 1. Jeeva Raja (Died)2. Ilayaraja3. Karthik Raja4. Yuvan Shankar Raja5. Bavadahrani.... Respondents(RR 2 to 5 impleaded as legal heirs of R1 by order dated 17.6.2013) APPEAL under Section 260 A of the Income Tax Act against theorder dated 17.07.2009 made in I.T.A.No.2051/Mds/2008 on the file ofthe Income Tax Appellate Tribunal 'C' Bench for the assessment year2005-06 against the Commissioner of Income Tax [Appeals] VI Chennai34 dated 11.6.2008 in ITA.No.209/07-08 and against the order ofIncome Tax Officer, Media Ward I, Chennai dated 28.12.2007 andPAN/GIR No.AAFPJ8047B assessment year 2005-2006. For Appellant : Mr.T.R.Senthil KumarFor Respondents: Mr.G.Ashok Pathy for M/s. Pass Associates (Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) The above Tax Case (Appeal) is filed at the instance of theRevenue against the order of the Income Tax Appellate Tribunal forthe assessment year 2005-06 by raising following substantial questionof law: "Whether on the facts and circumstances of the case, theAppellate Tribunal was right in law in deleting the https://hcservices.ecourts.gov.in/hcservices/ addition made under Section 69B as unexplainedinvestments?" 2. The assessee filed her return of income admitting total incomeof Rs.186/-. The return was processed under Section 143(1) of theIncome Tax Act. The case was selected for scrutiny and notices underSection 143(2) were issued, calling for details. The assesseefurnished the details regarding the deposits and withdrawals from thebank account of City Union Bank, T.Nagar, along with bank statement.It was also found that the assessee was a Partner in Raja MusicalUniversal and Illayaraja Multinational and those firms had noactivity from the previous year relating to the assessment year 2005-06. It also stated that although she was employed by her husband formanaging his office, during 1.4.2004 to 31.3.2005, she was not welland had not received any salary. However, the facts found werecontrary to the assertion. An opportunity was given to the assesseeas well as to the firm for furnishing the assessment details, copy ofconfirmation/account copy, nature of business carried on, nature ofservices rendered by the assessee along with the copy of return filedby the company. However, the same were not furnished by the assesseefor perusal. On going through the details furnished, it was foundthat the assessee had made cash deposits of Rs.18,28,328/- in thebank and had loans and liabilities to the tune of Rs.2,82,84,312/-.On calling for further details on cash deposits, it was found thatthey were not from the account of M/s.Ilayaraja Multinational. Onfurther verification, the Assessing Officer came to the conclusionthat the said sum was assessable as unexplained investment underSection 69 under the head "income from other sources". Further, itwas also found that the assessee had made cash deposits ofRs.24,07,300/- in Hongkong and Shanghai Corporation Ltd. When it waspointed out that the deposits of Rs.60,57,212/- had no correlation tothe interest income of Rs.186/- admitted in the return, theauthorised representative of the assessee agreed that the deposits ofRs.60,57,212/- in various banks be added to the assessee's income.The assessee also wrote a letter dated 24.12.2007 filed on 26.12.2007to this end. Thus, the assessment was completed to include a sum ofRs.60,57,212/- as income from other sources. 3. Aggrieved by the same, the assessee went on appeal before theCommissioner of Income Tax (Appeals) questioning the addition bycontending that the entries in the accounts were properly explained.In the background of this, the Commissioner of Income Tax (Appeals)called for remand report. In the remand report, it was stated thatthe assessee could not provide the details of the parties to whom theamounts were advanced. Even though the assessee was able to provideconfirmation list from the parties along with income tax details andaddresses, yet, in the absence of production of definite evidence,the remand report went against the assessee. On hearing the assesseeand the objections on the remand report, the Commissioner of IncomeTax (Appeals) pointed out that even though the assessee could not explain this at the assessment stage, in the course of appeal, theassessee had explained the same, which was neither rejected by theOfficer nor the Officer had given a report. Thus, the Commissioner ofIncome Tax (Appeals) accepted the plea of the assessee and deletedthe addition made on account of unexplained credits. 4. Aggrieved by the same, the Revenue went on appeal before theIncome Tax Appellate Tribunal. The Tribunal, after referring to theletter written by the assessee offering the deposits in the bank forassessment, recorded its impression as follows:-" From a plain reading of this letter, we caneasily understand that when query after query wasthrown upon the assessee and due to the reasonsmentioned in the letter it was difficult for herto explain as the circumstances were prettybeyond her control, in order to buy peace onlyshe offered the deposits in the banks but with arider that penalty proceedings should not beinitiated. The circumstances under which thisadmission was made and retracted are overtlyclearfromtheassessmentorderitself. ................" 5. The Tribunal further felt that the assessee, under pressureand piquant mental condition, had agreed for the addition. When thiswas explained by the assessee to the Commissioner of Income Tax(Appeals), a remand report was called from the Officer. It furtherpointed out that when the assessee had produced materials regardingthe income tax details of the parties and their addresses, theOfficer did not verify the veracity of the details; however,satisfied of certain evidence at her possession, chose to confirm theassessment. The Tribunal further pointed out that the Officer simplyevaded the reply. The assessee sent the books of accounts andrelevant confirmations of the parties to the Assessing Officer forher comments. In the background of its impression, the Tribunal heldthat when the assessee filed confirmation of the creditors as well asthe complete details of the returns and the primary duty cast on theassessee thus discharged, the Officer should have furtherinvestigated into the materials filed. Thus, the Tribunal presumedthat under pressure of repeated queries raised by the AssessingOfficer, the conditional admission was made by the assessee in herletter, agreeing for the addition. In the circumstances, holding thatthe assessee had fully explained the entries, the Tribunal affirmedthe view of the Commissioner of Income Tax (Appeals) and set asidethe assessment. Aggrieved by the same, the Revenue is on appealbefore this Court. 6. Learned standing counsel appearing for the Revenue took usthrough the assessment order in detail only to point out that everyopportunity was granted by the Assessing Officer to the assessee to 6. Learned standing counsel appearing for the Revenue took usthrough the assessment order in detail only to point out that everyopportunity was granted by the Assessing Officer to the assessee to explain the sources of the investment and the details of the loansand advances found. The detailed discussion and the variousmaterials produced would show that there was no denial of opportunitygiven to the assessee to substantiate her claim on the return ofincome and the investments and the borrowings thereon. Admittedly,when the assessee had no substantive evidence to explain the same,the assessee also filed a letter, offering the said amounts as herincome. Thus, apart from authorised representative agreeing for theassessment to be made on the amount of Rs.60,57,212/- in variousbanks, the assessee also filed a letter dated 24.12.2007, admittingthe said income. When the Officer had also pointed out to thecircumstances under which the claim of the assessee on the saiddeposits were conceded to, if the assessee had chosen to file furthermaterials before the Appellate Authority and asserted the case as tothe reason for admission for addition as not voluntary and gave thedetails regarding persons who had advanced their money, in allfairness to the claim of the Revenue, which had come across suchvoluminous materials, the Commissioner of Income Tax (Appeals) shouldhave remanded the matter for de novo consideration. The least theTribunal could have considered, if it so desired on the statedcircumstances, would be, remanding the assessment for freshconsideration. On the other hand, the assessee having conceded thesame as her income, the order of the Tribunal holding that theacceptance was under compulsion, is wholly not based on materials andperverse. 7. Having gone through the assessment order and the way in whichthe matter had been dealt with by the Appellate Authorities, we aresatisfied that the grounds on which the assessment had been set asidetotally lack material acceptable for any judicial scrutiny. We findthat when the assessee had not explained the source for making thedeposits as well as the loans and liabilities and some of the partieswhose names were given as owing amounts to the assessee had deniedhaving any transaction with the assessee but only with Raja musicUniversal wherein the assessee was the managing partner, the merefiling of details of creditors, per se, would not be a good ground toallow the appeal filed by the assessee. If the Appellate Authorityfelt that on the furnishing of any fresh material, the case demandeda fresh enquiry, the Appellate Authority should have remanded thematter by directing the Assessing Officer to make enquiry on thedocuments filed and pass orders. On the other hand, he rest satisfiedholding that he had gone through the accounts and the confirmationplaced on record. He further observed that even though the assesseecould not explain the investments before the Assessing Officer, shehad explained the same at the time of hearing before the AppellateAuthority. He viewed that the details sent to the Officer were notreplied nor the submission of the appellant was rejected. We do notfind any good reason to accept this line of reasoning to grant therelief. There is hardly any material to show the consideration by thesaid Appellate Authority on the nature of evidence filed other than what was considered by the Officer or even to correct the reasoningof the Officer on the materials produced before him to come to theconclusion that the assessee had explained the investmentssatisfactorily. When we look at the reasoning of the Tribunal as thefinal fact finding body, it is still worse. The Tribunal seems tohave taken sympathy plane to grant the relief to the assessee. Itviewed "when the assessee was heckled with query after query, shemade a conditional surrender vide letter dated 24.12.2007 duringoriginal proceedings. But when she produced the entire evidencesbefore the learned Commissioner (A) and these were sent to AssessingOfficer for his verification and investigation, it can be safelyconcluded that the conditional admission was under pressure ofrepeated queries raised by Assessing Officer". We do not think thatthis line of reasoning merits further discussion. Thus, neither theorder of the Commissioner nor the order of the Tribunal discuss theevidence produced to substantiate the source of investment vis-a-visthe findings of the Officer. Thus with perversity writ large, wehold that the reasoning is without any basis or material evidencedemanding the setting aside of the order of the Tribunal. Althoughby setting aside the order, the assessment could very well beconfirmed, considering the persistent submissions of the learnedcounsel for the assessee that the materials were, in fact, placedbefore the Commissioner, to render justice, we feel that theassessment be restored before the Officer for considering the freshmaterial, if any, produced by the assessee before the Commissionerand pass orders thereon. 8. In the circumstances, we set aside the order of the Tribunaland restore the matter to the files of the Assessing Officer forpassing fresh assessment order after giving opportunity to theassessee to substantiate her stand. In the circumstances, the aboveTax Case (Appeal) is allowed. No costs. Sd/-Asst. Registrar. /true copy/ Sub Asst. Registrar. bg To 1. The Income Tax Appellate Tribunal 'C' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals)-VI Nungambakkam, Chennai-34. Nungambakkam, Chennai-34. 3. The Income Tax Department Officer, Media Ward-I, Chennai. 4. The Asst. Registrar, Income Tax Appellate Tribunal, 'A' Bench,Rajaji Bhavan, Besant Nagar, Chennai.Rajaji Bhavan, Besant Nagar, Chennai. 1 CC To Mr.M.Swaminathan, Advocate SR NO.29337 1 CC To M/s.Pass Associates, Advocate SR NO.29768 T.C.(A) No.15 of 2010 bky[co]gp/26.7