Itta/257/2003 Of Commissioner Of Income Tax v. S.venkata Subbaiah

HON’BLE SRI JUSTICE L. NARASIMHA REDDYANDHON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.257 OF 2003 JUDGMENT:-(Per Hon’ble Sri Justice Challa Kodanda Ram) This appeal is filed by the revenue under Section 260-A of theIncome Tax Act, 1961 (for short, ‘the Act’), questioning the order dated08.01.2002, passed by the Income Tax Appellate Tribunal, HyderabadBench ‘A’, Hyderabad in I.T.(SS)A No.88/Hyd/97. The brief facts of the case are that a check was conductedby the authorities of the Central Excise Department in the Busproceeding from Chennai to Tirupati. The respondent-Assesseewas found with cash of Rs.8,12,500/-. Excise Officials made overthe same to the Income Tax Officials, who in turn conductedsearch under Section 132 of the Act on the person of assessee.The amount of Rs.8,12,500/- was seized under panchanama. Assessee was also carrying a letter addressed by Sri R.R. MohanKumar of M/s. P.R. Rajasekharan and Sons, 348, KattabommanStreet, Virudhnagar, Tamilnadu which is to the effect that theamount belongs to them. In response to the notice issued under Section 158 BC ofthe Act, assessee filed return and the same was processed videorders dated 24.02.1997. The total income of the assessee wasdetermined as Rs.13,46,767/-. Out of that Rs.8,12,500/- wastreated as unexplained cash, and income from other sources. Assessee filed appeal before the Income Tax Appellate Tribunal(for short, ‘the Tribunal’). On analysing the facts on record theTribunal allowed the appeal, directing deletion of sum of Rs.8,12,500/- and processing of Rs.3,68,767/-, which was addedin the assessment proceedings, under Section 143(3) of the Act,instead of Section 158 BC and BD of the Act. It is the contention of Sri S.R.Ashok, learned senior counselfor the revenue that the Tribunal erred in accepting the letter foundalong with the cash as proved without there being any furthersupporting material. He further contended that the Tribunal erredin ignoring the statements recorded by the Assessing Officerduring the seizure. The learned counsel also disputes variousfindings of the fact as recorded by the Tribunal and implores thisCourt to interfere with the orders of the Tribunal. In the above setof facts, the following substantial questions of law said to bearising from the order of the Tribunal, are required to beconsidered: 1.“Whether in the facts and circumstances of the case,the order of the Tribunal is not correct in law or facts andliable to be set aside”the order of the Tribunal is not correct in law or facts andliable to be set aside” 2.“Whether in the facts and circumstances of the case,the Tribunal was correct in law in holding that thestatements recorded during the course of search haveto be ignored?”the Tribunal was correct in law in holding that thestatements recorded during the course of search haveto be ignored?” None appeared for the respondent. At the outset, we may observe that the questions framed bythe appellant are vague and of general nature. The Tribunal in itselaborate order had recorded categorical findings that the amountswhich were seized from the assessee belong to M/s. P.R.Rajasekharan and Sons. The record discloses that the officials ofCentral Excise conducted search at 11.00 a.m on 01.02.1996 andthereafter the assessee was handed over to the Authorities ofIncome Tax Department at Tirupati at 12.00 ‘O’ clock in the midnight. Assessee was kept under detention from 12.00 ‘O’clock to 2.30 a.m i.e., early hours of 02.02.1996. While he was in police custody, the statement under Section 132 of the Act wasrecorded by the Assistant Director of Income Tax (Investigation),Tirupati. None appeared for the respondent. At the outset, we may observe that the questions framed bythe appellant are vague and of general nature. The Tribunal in itselaborate order had recorded categorical findings that the amountswhich were seized from the assessee belong to M/s. P.R.Rajasekharan and Sons. The record discloses that the officials ofCentral Excise conducted search at 11.00 a.m on 01.02.1996 andthereafter the assessee was handed over to the Authorities ofIncome Tax Department at Tirupati at 12.00 ‘O’ clock in the midnight. Assessee was kept under detention from 12.00 ‘O’clock to 2.30 a.m i.e., early hours of 02.02.1996. While he was in police custody, the statement under Section 132 of the Act wasrecorded by the Assistant Director of Income Tax (Investigation),Tirupati. Enquiries were conducted by the Income Tax Authoritiesfrom various sources to verify the veracity of the claims of theassessee that the seized amount was being carried by him, on arequest of R.R. Mohan Kumar. That person was examined by theIncome Tax Authorities at Madras. At about 15.59 hours, M/s.P.R. Rajasekharan and Sons issued a telegram to the assessee,stating that the documentary evidence from Rajnath Agencies being brought and that they are starting immediately. In thestatement recorded at about 12.50 a.m by the Income TaxAuthorities it was asserted by the assessee that he was still in thecustody of the police. A statement from Mr. Mohan Kumar, S/o. Mr. Rajasekharanwas recorded under Section 131 of the Act at Income Tax Office,Chennai on 02.02.1996. On the same day statement wasrecorded from one Mr. M. Chalamaiah, who stated that he hadgiven the cash to Sri S.V.Subbaiah. By analyzing variousstatements recorded during the investigation, the Tribunal came tothe conclusion that the amounts belong to one Mr. M. Chalamaiah and the money was to be delivered to him for and onaccount of M/s. Rajnath Agencies, Chennai who had purchasedgroundnuts through Mr. M. Chalaiamah from M/s.Lakshminarayana Chetty, Jayaram Traders, Mr. K. Chakrapaniand others. As a matter of fact, it was found a sum ofRs.11,28,500/- was withdrawn by Mr. Chalamaiah from Punjab National Bank on 29.01.1996 and certain bearer’s cheques wereissued in favour of M/s. Rajnath Agencies. The Tribunal found asa fact that the seized amounts do not belong to the assessee andthereby there is no occasion to fasten the liability under Section69(A) of the Act on him. In those circumstances, the deletion ofsum of Rs.8,12,500/- from the assessment proceedings wasjustified and the conclusion reached by the Tribunal is onappreciation of facts on record. That does not call for interferenceby this court in any manner without there being any material toupset the findings recorded by the Tribunal. In thosecircumstances, questions as raised in the appeal are required tobe answered in favour of the assessee and against the revenue. The appeal is dismissed accordingly. There shall be noorder as to costs. Miscellaneous Petitions, if any pending in thisappeal, shall also disposed of. _________________________ L. NARASIMHA REDDY Date:11.11.2014Gk ____________________________ CHALLA KODANDA RAM, J HON’BLE SRI JUSTICE L. NARASIMHA REDDYAND HON’BLE SRI JUSTICE CHALLA KODANDA RAM Gk I.T.T.A.No.257 OF 2003 Date:11.11.2014