Mr.s.manoharan v. The Assistant Commissioner Of Income Tax,Central Circle – Ii,Madurai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 22.12.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMand THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYANT.C.A.Nos.239 to 244 of 2012 Mr.S.Manoharan .. Appellant in all TCAs Versus The Assistant Commissioner of Income Tax,Central Circle – II,Madurai. .. Respondent in all TCAs Prayer in T.C.A.No.239 of 2012:- Tax Case Appeal filed underSection 260A of the Income Tax Act, 1961, against the commonorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai,in I.T.A.No.1495/MDS/2011 dated 08.12.2011 and is filed tochallenge the action of the Income Tax Appellate Tribunal indismissing the appeal mainly relating to the grounds raised tochallenge the sustenance of the addition of Rs.5 Lakhs being theadvance paid towards of purchase of property for and on behalfof Sri Lakshmana Iyer in the computation of taxable total incomeforming part of the assessment framed u/s.143(3) r/w Section153A of the Act relating to the Assessment Year 2002-03. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.190/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No. /CC-II/MDU forthe Assessment year 2002-2003. Prayer in T.C.A.No.240 of 2012:- Tax Case Appeal filed underSection 260A of the Income Tax Act, 1961, against the commonorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai,in I.T.A.No.1496/MDS/2011 dated 08.12.2011 and is filed tochallenge the action of the Income Tax Appellate Tribunal indismissing the appeal mainly relating to the grounds raised tochallenge the sustenance of the addition of Rs.5 Lakhs being theamounts paid for settlement with brothers and sisters foracquiring a property at S.No.4 and W.38, West Masi Street,D.No.196, TS 918/2, Madurai South, Madurai in consequence to theexecution of Partition Deed dated 17.5.2003 and further tochallenge the addition of Rs.17,23,636/- being the suppression in sales arrived at by the Respondent in the computation oftaxable total income forming part of the assessment framed u/s143(3) r/w Section 153A of the Act relating to the AssessmentYear 2004-05. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.191/2009/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No. /CC-II/MDU forthe Assessment year 2004-2005. Prayer in T.C.A.No.241 of 2012:- Tax Case Appeal filed underSection 260A of the Income Tax Act, 1961, against the commonorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai,in I.T.A.No.1497/MDS/2011 dated 08.12.2011 and is filed tochallenge the action of the Income Tax Appellate Tribunal indismissing the appeal mainly relating to the grounds raised tochallenge the sustenance of the addition of Rs.6,66,000/- beingthe amounts reflected in the pronotes, treated as unexplainedinvestment and further, to challenge the addition ofRs.15,86,970/- being the suppression in sales arrived at by theRespondent in the computation of taxable total income formingpart of the assessment framed u/s 143(3) r/w Section 153A of theAct relating to the Assessment Year 2005-06. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.192/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No. /CC-II/MDU forthe Assessment year 2005-2006. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.192/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No. /CC-II/MDU forthe Assessment year 2005-2006. Prayer in T.C.A.No.242 of 2012:- Tax Case Appeal filed underSection 260A of the Income Tax Act, 1961, against the commonorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai,in I.T.A.No.1498/MDS/2011 dated 08.12.2011 and is filed tochallenge the action of the Income Tax Appellate Tribunal indismissing the appeal mainly relating to the grounds raised tochallenge the sustenance of the addition of Rs.1,10,000/- beingthe advance paid towards of purchase of property for and onbehalf of Sri Lakshmana Iyer in the computation of taxable totalincome forming part of the assessment framed u/s.143(3) r/wSection 153A of the Act and further to challenge the addition ofRs.15,37,134/- being the suppression of sales arrived at by therespondent in the computation of taxable total income formingpart of the assessment framed u/s 143(3) r/w Section 153A of theAct relating to the Assessment Year 2006-07. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.193/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No.AIPM1981H/CC-II/MDU forthe Assessment year 2006-2007. Prayer in T.C.A.No.243 of 2012:- Tax Case Appeal filed underSection 260A of the Income Tax Act, 1961, against the commonorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai,in I.T.A.No.1499/MDS/2011 dated 08.12.2011 and is filed tochallenge the action of the Income Tax Appellate Tribunal indismissing the appeal mainly relating to the grounds raised tochallenge the sustenance of various additions including theaddition towards investment in landed property at PoonjeriVillage in the computation of taxable total income forming partof the assessment framed u/s 143(3) r/w Section 153A of the Actand further to challenge the addition of Rs.21,75,091/- beingthe suppression in sales arrived at by the Respondent in thecomputation of taxable total income forming part of theassessment framed u/s 143(3) r/w Section 153A of the Actrelating to the Assessment Year 2007-08. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.194/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No.AIPM1981H/CC-II/MDU forthe Assessment year 2007-2008. Prayer in T.C.A.No.244 of 2012:- Tax Case Appeal filed underSection 260A of the Income Tax Act, 1961, against the commonorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai,in I.T.A.No.1500/MDS/2011 dated 08.12.2011 and is filed tochallenge the action of the Income Tax Appellate Tribunal indismissing the appeal mainly relating to the grounds raised tochallenge the sustenance of the estimated addition ofRs.12,46,235/- being the suppression in sales arrived at by theRespondent in the computation of taxable total income formingpart of the assessment framed u/s 143(3) of the Act relating tothe Assessment Year 2008-09. Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.195/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No.AIPM1981H/CC-II/MDU forthe Assessment year 2008-2009. For Appellant: Mr.K.G.Raghunath [in all TCAs] For Respondent: Ms.V.Pushpa Junior Standing counsel [in all TCAs] COMMON JUDGMENT Appeal filed against the order of the Commissioner of Income-tax(Appeals)-II, Madurai, order dated 23.06.2011 made inITA.No.195/2009-2010 preferred against the order of theAssistant Commissioner of Income Tax, Central Circle-II Madurai,order dated 31.12.2009 made in PAN.No.AIPM1981H/CC-II/MDU forthe Assessment year 2008-2009. For Appellant: Mr.K.G.Raghunath [in all TCAs] For Respondent: Ms.V.Pushpa Junior Standing counsel [in all TCAs] COMMON JUDGMENT [Order of the Court was made by T.S.SIVAGNANAM, J.] These appeals filed by the assessee under Section 260A ofthe Income Tax Act, 1961 ('the Act' for brevity), is directedagainst the common order dated 08.12.2011 passed by the IncomeTax Appellate Tribunal, 'C' Bench, Chennai ('the Tribunal' forbrevity) in I.T.A.No.1495/MDS/2011, I.T.A.No.1496/MDS/2011,I.T.A.No.1497/MDS/2011,I.T.A.No.1498/MDS/2011,I.T.A.No.1499/MDS/2011 and I.T.A.No.1500/MDS/2011 for theAssessment Years 2002-03, 2004-05, 2005-06, 2006-07, 2007-08 and2008-09 respectively. The assesse has raised the followingSubstantial Questions of Law for consideration: “T.C.A.No.239 of 2012: 1. Whether the Appellate Tribunal is correctin Law in sustaining the addition of Rs.5 Lakhsrelating to the transaction entered into for and onbehalf of Shri Lakshmana Iyer in an attempt topurchase the property for him in the computation oftaxable total income forming part of the searchassessment under consideration inspite of lack ofstatutory mandate to make such addition as well asoverlooking the evidence in the form of confirmationletter filed from the said person?2. Whether the Tribunal is correct in law insustaining the action of the Lower Authorities inbringingtotaxthesaidamountasunexplained/unaccounted income of the Appellant hereinwithout cross verification of the facts with theproperty owner as well as with Shri Lakshmana Iyer?3. Whether the Tribunal is correct in law innot considering the said grounds of appeal forming thepart of the statutory Form No.36 for recordingfindings to dispose off the appeal which results inperversity in the order passed by them whileerroneously rejecting the plea for telescoping?” T.C.A.No.240 of 2012: 1. Whether the Appellate Tribunal is correctin Law in sustaining the addition of Rs.5 Lakhs basedon the release/partition deed even though theaffidavits filed by the brothers & sisters of theAppellant highlighted the perversity in the orderpassed by them? 2. Whether the Tribunal is correct in law insustaining the action of the Lower Authorities inbringingtotaxthesaidamountasunexplained/unaccounted income of the Appellant hereinwithout cross verification of the facts with theparties concerned? 3. Whether the Tribunal is correct in law innot considering the said grounds of appeal forming thepart of the statutory Form No.36 for recordingfindings to dispose off the appeal which results inperversity in the order passed by them whileerroneously rejecting the plea for telescoping? 4. Whether the Tribunal is correct in law insustaining the assessment of profit at 15% ofsuppression of sales in the computation of taxabletotal income even though the quantification of thesuppressed of sales and the basis for adopting netprofit at 15% of such quantified suppressed sales werenot supported by materials proving perversity in theirorder?T.C.A.No.241 of 2012: 1. Whether the Appellate Tribunal is correctin Law in sustaining the addition of Rs.6,66,000/-based on the pronotes relatable to the employees ofthe Appellant as unaccounted investment even thoughthere was no evidence for actual flow of fundsunearthed during the course of search and further theexplanation offered in relation to such pronotes forretaining/keeping the employees out of the financialirregularities inasmuch as such employees hadadmittedly dealt with cash sales on a day to daybasis? 1. Whether the Appellate Tribunal is correctin Law in sustaining the addition of Rs.6,66,000/-based on the pronotes relatable to the employees ofthe Appellant as unaccounted investment even thoughthere was no evidence for actual flow of fundsunearthed during the course of search and further theexplanation offered in relation to such pronotes forretaining/keeping the employees out of the financialirregularities inasmuch as such employees hadadmittedly dealt with cash sales on a day to daybasis? 2. Whether the Tribunal is correct in law insustaining the action of the Lower Authorities inbringingtotaxthesaidamountasunexplained/unaccounted investment of the Appellantherein without cross verification of the facts withthe parties concerned? 3. Whether the Tribunal is correct in law innot considering the said grounds of appeal forming thepart of the statutory Form No.36 for recordingfindings to dispose off the appeal which results inperversity in the order passed by them while erroneously rejecting the plea for telescoping? 4. Whether the Tribunal is correct in law insustaining the assessment of profit at 15% ofsuppression of sales in the computation of taxabletotal income even though the quantification of thesuppressed of sales and the basis for adopting netprofit at 15% of such quantified suppressed sales werenot supported by materials proving perversity in theirorder? T.C.A.No.242 of 2012: 1. Whether the Tribunal is correct in law insustaining the assessment of profit at 15% ofsuppression of sales in the computation of taxabletotal income even though the quantification of thesuppressed of sales and the basis for adopting netprofit at 15% of such quantified suppressed sales werenot supported by materials proving perversity in theirorder?T.C.A.No.243 of 2012: 1. Whether the Appellate Tribunal is correctin Law in sustaining the addition of Rs.37,30,000/-being the alleged payment relating to the brokerageand arbitration & eviction charges based on theassumption of facts which led to perversity in theorder passed by them? 2. Whether the Tribunal is correct in law innot considering the said grounds of appeal forming thepart of the statutory Form No.36 for recordingfindings to dispose off the appeal which results inperversity in the order passed by them whileerroneously rejecting the plea for telescoping? 3. Whether the Tribunal is correct in law insustaining the assessment of profit at 15% ofsuppression of sales in the computation of taxabletotal income even though the quantification of thesuppressed of sales and the basis for adopting netprofit at 15% of such quantified suppressed sales werenot supported by materials proving perversity in theirorder?4. Whether the Tribunal is correct in law insustaining the addition of Rs.1,06,000/- towardsdeficit stamp duty in respect of Rameshwaram Street,T.Nagar property acquisition inspite of the fact oflack of seized materials on the said payment out ofunaccounted income? T.C.A.No.244 of 2012:1. Whether the Tribunal is correct in law insustaining the assessment of profit at 15% ofsuppression of sales in the computation of taxabletotal income even though the quantification of thesuppressed of sales and the basis for adopting netprofit at 15% of such quantified suppressed sales werenot supported by materials proving perversity in theirorder?” 2. We have heard Mr.K.G.Raghunath, learned counsel forthe appellant/assessee and Ms.V.Pushpa, learned Junior Standingcounsel for the respondent/Revenue. T.C.A.No.244 of 2012:1. Whether the Tribunal is correct in law insustaining the assessment of profit at 15% ofsuppression of sales in the computation of taxabletotal income even though the quantification of thesuppressed of sales and the basis for adopting netprofit at 15% of such quantified suppressed sales werenot supported by materials proving perversity in theirorder?” 2. We have heard Mr.K.G.Raghunath, learned counsel forthe appellant/assessee and Ms.V.Pushpa, learned Junior Standingcounsel for the respondent/Revenue. 3. It may not be necessary for this Court to decide theSubstantial Questions of Law framed for consideration on accountof certain subsequent developments. The Government of Indiaenacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of2020) to provide for resolution of disputed tax and for mattersconnected therewith or incidental thereto. The Act of theParliament received the assent of the President on 17[th] March2020 and published in the Gazette of India on 17[th] March 2020. 4. In terms of the said Act, the assessee has been givenan option to put an end to the tax disputes, which may bepending at different levels either before the First AppellateAuthority or before the Tribunal or before the High Court orbefore the Hon'ble Supreme Court of India. Under Section 2(j)“disputed tax” has been defined. In terms of Section 3, where adeclarant means a person, who files a declaration under Section4 on or before the last date files a declaration to thedesignated authority in accordance with the provisions ofSection 4 in respect of tax arrears, then, notwithstandinganything contained in the Income Tax Act or any other law forthe time being in force, the amount payable by the declarantshall be determined in terms of Section 3(a-c) thereunder. 5. The First Proviso to Section 3 states that in case,where an Appeal or Writ Petition or Special Leave Petition isfiled by the Income Tax authority on any issue before theAppellate Forum, the amount payable shall be one-half of theamount in the table stipulated in Section 3 calculated on suchissue, in such a manner as may be prescribed. The second provisodeals with the cases, where the matter is before theCommissioner (Appeals) or before the Dispute Resolution Panel.The third proviso deals with cases, where the issue is pendingbefore the Income Tax Appellate Tribunal. The filing of thedeclaration is as per Section 4 of the Act and the particularsto be furnished are also mentioned in the Sub Sections ofSection 4. Section 5 of the Act deals with the time and mannerof the payment and Section 6 deals with Immunity from initiationwhere an Appeal or Writ Petition or Special Leave Petition isfiled by the Income Tax authority on any issue before theAppellate Forum, the amount payable shall be one-half of theamount in the table stipulated in Section 3 calculated on suchissue, in such a manner as may be prescribed. The second provisodeals with the cases, where the matter is before theCommissioner (Appeals) or before the Dispute Resolution Panel.The third proviso deals with cases, where the issue is pendingbefore the Income Tax Appellate Tribunal. The filing of thedeclaration is as per Section 4 of the Act and the particularsto be furnished are also mentioned in the Sub Sections ofSection 4. Section 5 of the Act deals with the time and mannerof the payment and Section 6 deals with Immunity from initiation https://hcservices.ecourts.gov.in/hcservices/ of proceedings in respect of offence and imposition of penaltyin certain cases. Section 9 of the Act deals with cases, wherethe Act 3 of 2020 will not be applicable. 6. We are informed by the learned counsel for theappellant/assessee that the assessee has already filed thedeclaration under Section 4 of the Act. https://hcservices.ecourts.gov.in/hcservices/ of proceedings in respect of offence and imposition of penaltyin certain cases. Section 9 of the Act deals with cases, wherethe Act 3 of 2020 will not be applicable. 6. We are informed by the learned counsel for theappellant/assessee that the assessee has already filed thedeclaration under Section 4 of the Act. 7. In the light of the fact that the assessee has alreadyavailed the benefit under the Act, no useful purpose would beserved in keeping these appeals pending. At the same time,safeguarding the interest of the assessee in the event the orderto be passed by the Department under the Act is not in favour ofthe assessee. Accordingly, all the Tax Case Appeals standdisposed of on the ground that the assessee has already filed adeclaration and the Department shall process the application atthe earliest in accordance with the said Act and communicate thedecision to the assessee at the earliest. As observed, theassessee is given liberty to restore these appeals in the eventthe ultimate decision to be taken on the declaration filed bythe assessee under Section 4 of the said Act is not in favour ofthe assessee. If such a prayer is made, the Registry shallentertain the prayer without insisting upon any application tobe filed for condonation of delay in restoration of the appealsand on such request made by the assessee by filing aMiscellaneous Petition for Restoration, the Registry shall placesuch petition before the Division Bench for orders. 8. With this observation, all the Tax Case Appeals standdisposed of with the aforementioned liberty and Consequently,the Substantial Questions of Law are left open. No costs. -s/d- Assistant Registrar True Copy Sub-Assistant Registrar kakTo1.The Income Tax Appellate Tribunal,'C', Chennai. 2.The Commissioner of Income Tax(Appeals)-II,Madurai 3.The Assistant Commissioner of Income Tax,Central Circle-II, Madurai +1 cc to M/s.M.Swaminathan Advocate sr42834 T.C.A.Nos.239 to 244 of 2012 cp(co)aa17/02/2021