Principal Commissioner Of Income Tax Central 2 v. Shri. K.c.p.shivaramanno.506, Arase Lodge,Jawajar Bazaar, Karur 639 001Pan:aax Ps 4844 F

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 01.07.2019 CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMand THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Nos.88 to 91 of 2018 Principal Commissioner of Income Tax Central 2, No.108, Mahatma Gandhi Road,Chennai ...Appellant/Appellantin All TC.Appeals -vs- Shri. K.C.P.ShivaramanNo.506, Arase Lodge,Jawajar Bazaar, Karur 639 001PAN:AAX PS 4844 F...Respondent/Respondentin All TC.Appeals Tax Case Appeals under Section 260-A of the Income TaxAct, 1961, are directed against the common order passed by theIncome Tax Appellate Tribunal, Madras “A” Bench, Chennai inI.T.A Nos.1155/Mds/2015 & 1156/Mds/2015 and C.O.Nos.69/Mds/2015& 70/Mds/2015 in I.T.A Nos.1155/Mds/2015 and 1156/Mds/2015respectively dated 20.04.2017 for the assessment year 2008-09and 2009-10. arising against the order passed by theCommissioner of Income Tax (Appeals) Trichy, in ITA.No.78 &79/13-14/CIT (A)/TRY for the assessment year 2008-09 & 2009-10,dated 08.01.2015, ITA.No.04/14-15/CIT(A) for the Assessment Year2008-09, dated 06.02.2015, ITA.No.05/14-15/CIT(A) for theAssessment Year 2009-10, dated 19.02.2015, respectively, arisingagaist the Assessment Order by the Joint Commissioner of IncomeTax, Range-II, Trichy, dated 26.03.2013, 26.03.2013, (AssessmentYear 2008-09, 2009-10) and 28.11.2014 & 28.11.2014 (AssessmentYear 2008-09 & 2009-10) respectively, PAN.No. . For appellant:Mr.T.R.Senthil KumarSenior Standing CounselFor Respondent:Mr.A.S.Sriraman JUDGEMENT [Judgement of the Court was made by T.S.Sivagnanam, J.] These Tax Case Appeals by the assessee, filed underSection 260-A of the Income Tax Act, 1961, ('the Act' forbrevity) are directed against the common order passed by theIncome Tax Appellate Tribunal, Madras “A” Bench, Chennai (Camp:Madurai) in I.T.A Nos.1155 & 1156/Mds/2015 and Cross ObjectionNos.69 & 70/Mds/2015 for the assessment years 2008-09 and 2009-10. 2.The Revenue has raised the following substantialquestions of law for consideration:- "(i) on the facts and the circumstances of thecase, whether the Appellate Tribunal is correct inlaw in dismissing the grounds raised by the Revenue,on the ground that the assessing officer should havestarted computation of income from the returnedincome instead of assessed income as determined inthe original assessment order, when the additionsmade in the original assessment are not the subjectmatter of review order u/s.263 of the Income TaxAct? (ii) Whether the Appellate Tribunal is correctin law in deleting the addition made under Section40(3) of the IT Act, even though the assessee hasnot brought out any specific evidence that his casefalls within any of the exceptions provided in Rule6DD, and to give relief from the rigours of Section40A(3) and to cover extraordinary circumstances? (iii) Whether the ITAT is correct in law indeleting the addition made by the assessing officerwithout any documentary evidence and without givingany opportunity to the Assessing officer to examinefresh evidence produced before the Tribunal ? (iv) Whether the ITAT is correct in law inallowing Cross Objection filed by the assessee onthe ground that the additions made in the originalassessment order cannot be considered again in there-assessment order in pursuant tot he order u/s 264of the I.T.Act, 1961?” 3. We have heard Mr.T.R.Senthil Kumar, learned SeniorStanding counsel for the appellant/Revenue and Mr.A.S.Sriraman,learned counsel for the respondent/assessee. 4. Four appeals have been filed by the Revenue as thereare two appeals relating to the substantive assessments and twochallenging the orders passed in the cross objections. (iv) Whether the ITAT is correct in law inallowing Cross Objection filed by the assessee onthe ground that the additions made in the originalassessment order cannot be considered again in there-assessment order in pursuant tot he order u/s 264of the I.T.Act, 1961?” 3. We have heard Mr.T.R.Senthil Kumar, learned SeniorStanding counsel for the appellant/Revenue and Mr.A.S.Sriraman,learned counsel for the respondent/assessee. 4. Four appeals have been filed by the Revenue as thereare two appeals relating to the substantive assessments and twochallenging the orders passed in the cross objections. 5. The assessee is an individual and engaged in thebusiness of real estate and is running a lodging house. As theassessee did not file his return of income for the assessmentyears under consideration, notice under Section 148 of the Actwas issued, after which, the asseessee filed return of incomefor both the years, which were considered and assessments werecompleted by the Assessing Officer. 6. Aggrieved by such re-assessment, the assessee preferredappeals before the Commissioner of Income Tax (Appeals)-1,Tiruchirapalli in ITA.Nos.78 and 79/13-14/CIT(A)/TRY. In themeanwhile, the Commissioner of Income Tax, Tiruchirapalli issuednotice under Section 263 of the Act stating that for theassessment year 2008-09, the assessee filed a reconciliationstating that a sum of Rs.18,74,70,100/- was credited in thecompany's name and this was not found in the assessee's book ofaccount and the assessee did not give any explanation withdetails of such payment nor confirmation was obtained from thatcompany. Therefore, the Commissioner opined that this amountshould be brought to tax under Section 68 of the Act for theassessement year 2009-10. The Commissioner stated that noexplanation was given by the assessee for the cash deposit ofRs.17,50,85,940/- instead only Rs.3.44 crores. 7. The Commissioner afforded an opportunity of personalhearing to explain as to why the assessment should not bereopened as the same is prejudicial to the interest of revenue.The personal hearing was fixed on 07.08.2014 and on the saiddate the assessee sent a representation requesting foradjournment. The Commissioner did not adjourn the case butopined that no useful purpose would be served in adjourning thematter as the assessee was required to give a reconciliationwith regard to the discrepancies pointed out. Accordingly, orderdated 08.08.2014 was passed under Section 263 of the Act. 8. The appeal, which was filed by the assessee as againstthe re-assessment proceedings in ITA.No.78 and 79/13-14, wasdismissed on 08.01.2015 on the ground that the Commissionerwhile passing the orders under Section 263 of the Act dated08.08.2014 has set aside the entire assessement namely, the re-assessment order and therefore, nothing would survive in theassessee's appeal. 9. The Assessing Officer passed a giving effect to orderdated 28.11.2014 by completing the assessments and making https://hcservices.ecourts.gov.in/hcservices/ certain additions. Aggrieved by the same, the assessee preferredappeals before the Commissioner of Income Tax (Appeals)-1,Tiruchirappalli. The appeals were allowed and the assessee wasgranted full relief under certain heads and partial relief underthe other heads. 9. The Assessing Officer passed a giving effect to orderdated 28.11.2014 by completing the assessments and making https://hcservices.ecourts.gov.in/hcservices/ certain additions. Aggrieved by the same, the assessee preferredappeals before the Commissioner of Income Tax (Appeals)-1,Tiruchirappalli. The appeals were allowed and the assessee wasgranted full relief under certain heads and partial relief underthe other heads. 10. The Revenue filed appeals before the Tribunal in whichcross objections had been filed by the assessee. The Tribunal,in our considered view, rightly took note of the fact that theAssessing Officer started from the income of Rs.1,81,40,652/-originally assessed and made two further additions in the freshassessment pursuant to order under Section 263 of the Act. TheAssessing Officer could not have done so because the originalassessment order was no more in force when the fresh assessmentproceedings pursuant to the order under Section 263 was taken upby the Assessing Officer. Thus, the Tribunal was right inholding that the Assessing Officer could not have started fromthe income of Rs.1,81,40,652/-, originally assessed on26.03.2013, but should have started from the returned income ofRs.87,05,011/-. 11. Taking note of the findings given by the CIT(A), theTribunal commented that the CIT(A) having given a clear findingon the above lines ought not to have adjudicated on theadditions assailed by the assessee which additions emanated fromthe original assessment. We endorse the findings rendered by theTribunal in this regard. The Tribunal was right in holding thatthe CIT(A) should have confined himself to the additions made bythe Assessing Officer in his order dated 28.11.2014 which wasRs.36,500/- under Section 40A(3) and Rs.10,77,188/- for thedeposits made in Karur Vysa Bank. Therefore, the Tribunal heldthat the grounds raised by the revenue in the appeal before it,on the issues other than two additions, do not arise from theassessment order and accordingly rejected the same and dismissedthe appeal. The finding of the Tribunal does not call for anyinterference. 12. The Tribunal next proceeded to consider as to whetherthe additions of Rs.36,500/- under Section 40A(3) was warrantedand after taking note of the factual matrix held that theassessee could demonstrate business expediency which justifiedthe payment made in cash. We find no reasons to dislodge thefactual findings recorded by the Tribunal. 13. With regard to cash deposit of Rs.10,77,188/- made inKarur Vysa Bank, the Tribunal after considering the factualposition affirmed the order passed by the CIT(A) that it wasproceeds of the deposits made by the assessee in the assessmentyear 2005-06 and the assessee had accounted accrued interest ofRs.77,188/- and the assessee did not raise any ground citing violation of Rule 6DD. The revenue has not made out any groundsto interfere with the said findings of the Tribunal. 14. Similar is the matter concerning the assessment year2009-10. In the said order, the Assessing Officer made a freshaddition of a sum of Rs. 76,32,000/- under Section 40A(3) on thecash payment for land purchase. The Tribunal noted that theAssessing Officer committed similar mistake as was done in theassessment year 2008-09 in computing the income of the assesseeand consequently held that the CIT(A) having set aside theoriginal assessment, there was no question of adjudicating uponany of the grounds raised by the assessee relating to theoriginal assessment. After rendering such finding, the Tribunalendorsed the view of the CIT(A) that the disallowance ofRs.76,32,000/- under Section 40(3) of the Act could not havebeen done since they were genuine payments done due to businessexpediency. Accordingly, the appeal filed by the Revenuechallenging the order passed by the CIT(A) for the assessmentyear 2009-10 was also dismissed. 15. For the reasons assigned by the Tribunal whiledismissing the appeals filed by the Revenue for the assessmentyear 2008-09, the cross objections were allowed for theassessment year 2008-09 and allowed for the assessment year2009-10. 16. In the light of the findings recorded by the Tribunal,we hold that the revenue has not made out any ground tointerfere with the orders passed by the Tribunal. For the abovereasons, the appeals filed by the revenue are dismissed and thesubstantial questions of law are answered against the revenue.No costs. Assistant Registrar //True Copy// Sub Assistant Registrar ska/mp To 1.The Income Tax Appellate Tribunal,Madras 'A' Bench, Chennai. 2.The Commissioner of Income Tax (Appeals),Trichy-6200013.The Joint Commissioner of Income Tax,Trichy.+1cc to Mr.S.Sridhar, Advocate, S.R.No.54325+1cc to Mr.T.R.Senthil Kumar, Advocate, S.R.No.54856Tax Case Nos.88 to 91 of 2018 RSK(CO)CS/04/09/2019