Tax Case Appeal v. The Principal Commissioner Of Income Tax I

In the High Court of Judicature at Madras Dated : 28.11.2017 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mr.Justice M.SUNDAR Tax Case Appeal No.528 of 2017..Appellant/AppellantVs..Respondent/Respondent The Principal Commissioner of IncomeTax I, No.63, Race Course Road,Coimbatore. Shri.R.Elangovan APPEAL under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal Madras'A' Bench dated 26.10.2016 in ITA No.878/Mds/2016 and againstthe order dated 16.11.2015 in ITA No.524/14-15 by theCommissioner of Income - Tax (Appeals) Chennai and against theorder dated 13.08.2014 in AADPE 184/@ by the Deputy Commissionerof Income - Tax, Central Circle-1, Coimbatore.For Appellant : Mr.T.R.Senthil Kumar Judgment was delivered by T.S.SIVAGNANAM,J This appeal is directed against the order passed by theIncome Tax Appellate Tribunal, Madras 'A' Bench inITA.No.878/Mds/2016 dated 26.10.2016. 2. The above appeal has been filed raising the followingsubstantial questions of law :"i. Whether the Appellate Tribunal isjustified in confirming the finding of theCommissioner of Income Tax (Appeals) thatthere is no on-money paid by the assessee asproved with corroborative evidence, which iscontrary to the statement recorded underSection 132(4) of the Income Tax Act and thesame is not retracted by the respondent -assessee ? and ii. Whether the Income Tax AppellateTribunal erred in confirming the finding ofthe Commissioner of Income Tax (Appeals),which was rendered in violation of Rule 46A,by admitting additional evidence for thefirst time ?" 3. Before we examine the questions raised are substantialquestions of law, it may be necessary to take note of thefollowing facts : 4. The Revenue was on appeal before the Tribunal against thedeletion of addition of Rs.7.02 Crores made by the AssessingOfficer under Section 69B of the Income Tax Act, 1961. A searchwas conducted under Section 132 of the said Act in theassessee's case on 14.12.2012, during which, it was found thatthe assessee purchased M/s.PSP Steels (P) Ltd. for aconsideration of Rs.22 Crores. The assessee was asked to explainthe source of payment of Rs.22 Crores. The assessee explainedthat his company M/s.Sastha Steels (P) Ltd. purchased M/s.PSPSteels (P) Ltd. The purchase included land, building andmachinery belonged to M/s.PSP Steels (P) Ltd. and the landadjacent to the industry, belonged to one Mrs.P.Dhanalakshmi.The registered value of the land and building was Rs.2.5 Croresand the value of the land purchased from the saidMrs.P.Dhanalakshmi was Rs.98 lakhs, which, according to theassessee, were accounted for in the books of accounts ofM/s.Sastha Steels (P) Ltd., for Rs.14.98 Crores. 5. A statement was recorded from the respondent on14.12.2014 wherein he had admitted that a sum of Rs.7.02 Croreswas unaccounted investment in the purchase of M/s.PSP Steels (P)Ltd. During the assessment proceedings, the assessee explainedthat out of the consideration of Rs.22 Crores, the amount ofRs.19 Crores was paid by way of cheques and Rs.3 Crores by wayof cash. However, the Assessing Officer was of the opinion thatthis statement is a retraction of the earlier statement made bythe assessee without corroborative evidence and given after aconsiderable lapse of time, confirmed the addition and concludedthe assessment by passing the order dated 13.8.2014. 5. A statement was recorded from the respondent on14.12.2014 wherein he had admitted that a sum of Rs.7.02 Croreswas unaccounted investment in the purchase of M/s.PSP Steels (P)Ltd. During the assessment proceedings, the assessee explainedthat out of the consideration of Rs.22 Crores, the amount ofRs.19 Crores was paid by way of cheques and Rs.3 Crores by wayof cash. However, the Assessing Officer was of the opinion thatthis statement is a retraction of the earlier statement made bythe assessee without corroborative evidence and given after aconsiderable lapse of time, confirmed the addition and concludedthe assessment by passing the order dated 13.8.2014. 6. The assessee carried the matter on appeal to theCommissioner of Income Tax (Appeals). Before the Commissioner ofIncome Tax (Appeals), the assessee filed detailed writtensubmissions to demonstrate that out of Rs.22 Crores, a sum ofRs.19 Crores was paid through banking channels. The AssessingOfficer appears to have participated in the hearing of theappeal petition as could be seen from the order passed by theCommissioner of Income Tax (Appeals) dated 16.11.2015 whereinthe Assessing Officer also submitted written observations, which have been extracted verbatim in the order passed by theCommissioner of Income Tax (Appeals). After examining theevidence placed before the Commissioner of Income Tax (Appeals),it was concluded that there was no ground for making theaddition of Rs.7.02 Crores and that the same has not beensubstantiated and therefore, it was directed to be deleted. 7. Against the order passed by the Commissioner of IncomeTax (Appeals), the Revenue filed an appeal before the Tribunal.Ultimately, the Tribunal found that the assessee purchasedM/s.PSP Steels (P) Ltd. for Rs.22 Crores, out of which, a sum ofRs.19 Crores was paid through banking channels, which was notdisputed by the Department. Thus, this fact having not beendisputed and controverted and the date-wise payment made by theassessee not being controverted, the appeal filed by the Revenuewas dismissed by the Tribunal, as against which, the Revenue ison further appeal before this Court. 8. The learned Senior Standing Counsel has referred to Rule46A of the Income Tax Rules, 1962 and submits that theCommissioner of Income Tax (Appeals) failed to follow theprocedure stipulated in the said Rule, when additional evidencewas placed before the Commissioner of Income Tax (Appeals),which was not available before the Assessing Officer. 9. We find from the contentions raised before the Tribunalthat the Revenue did not plead that there was violation of Rule46A of the said Rules in the matter of production of additionalevidence before the Commissioner of Income Tax (Appeals). Wehave noticed that the Assessing Officer participated in theappeal proceedings and his observations were also taken note ofby the Commissioner of Income Tax (Appeals). Thus, we find thatthe contention that there has been an infraction of Rule 46A ofthe said Rules was never pleaded by the Revenue either beforethe Commissioner of Income Tax (Appeals) or before the Tribunal.Accordingly, we find that no question of law, much less, anysubstantial question of law arises for consideration in thisappeal. 10. In the result, the above tax case appeal is dismissed. Sd/- Assistant Registrar(CS) //True Copy// rs To 1. The Income Tax Appellate Tribunal Madras 'A' Bench. 2. The Deputy Commissioner of Income Tax, Central Circle-1,Coimbatore.Coimbatore. 3. The Principal Commissioner of Income Tax, Coimbatore. 4. The Commissioner of Income-Tax (Appeals), 46 Mahatma GandhiRoad, Nungambakkam, Chennai. + 1 cc to Mr. T.R. Senthilkumar, Advocate Sr.84532 TCA.No.528 of 2017 SJ(CO) EU(19/12/2017)