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Commissioner of Income Tax Tiruchirapalli Versus Smt. S. Jayalakshmi Ammal Rep. by Shri S. Natarajan L/H of N. Somasundaram

2016 (9) TMI 114 - MADRAS HIGH COURT

Addition with respect to on money payment by the assessee for the purchase of property - addition was made based on the statements recorded during the search from the assessee and his son and seller of the property - Held that:- As for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) o .....

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y exercise of authority conferred. - In the case on hand, statement recorded on 29.12.1999 from the son of the assessee under Section 132(4) of the Act is not corroborated by any material document. Admittedly, Revenue has also not confronted the assessee, with the said statement of his son. If that be the case, it can be safely concluded that, there was no material documentary evidence, to substantiate and corroborate the statement of Mr.Natarajan, son of the assessee. If the assessee makes .....

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ment without there being any corroborative evidence, should not be treated as conclusive evidence against the maker of the statement. - Thus we are of the considered view that the Revenue has not made out a case for reversal of the orders impugned, on the grounds raised, and thus we hold that all the substantial questions of law, are answered in the negative against the Revenue, and in favour of the respondent/assessee. - Tax Case Appeal Nos.488 and 489 of 2016 and C.M.P.No.9944 of 2016 - Da .....

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rs, is the assessee. On 29.12.1999, a search under Section 132 of the Income Tax Act, 1961 was conducted in the residential and business premises of the assessee. Based on the materials collected during search, a notice under Section 158 BC of the Act was issued on 09.03.2000, and receipt of which was acknowledged, by the assessee on 11.03.2000. The assessee filed the return of income for the block assessment, in Form No.2B on 24.04.2000, disclosing 'Nil' income. Block assessment was tak .....

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59,700/- and assessed the same at 60%, under Section 113 of the Income Tax Act, 1961, with an addition of 10%, on the tax, towards surcharge. The Deputy Commissioner of Income Tax (i/c.) Central Circle I, Trichy, the Assessing Officer, arrived at the total tax payable, as ₹ 25,26,180/- Being aggrieved, the assessee filed an appeal in I.T.A.No.270/2001-2002, before the Commissioner of Income Tax (Appeals) Central II, Chennai. The assessee raised 14 grounds. The appellate authority regrouped .....

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of construction of ₹ 83,700/-; (v) Addition of ₹ 3,00,000/- towards inadequate drawings; and (vi) Levy of surcharge of ₹ 2,10,360/- 3. After hearing the parties, on issue No.1 stated supra, vide order dated 05.07.2002 in ITA No.270/2001-2002, the Commissioner of Income Tax (Appeals) Central II, Chennai, substituted a figure of ₹ 5,00,000/-, in the place of ₹ 31,00,000/-, which relates to the assessment in the hands of the appellant, regarding immovable properties s .....

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t 142.016 Kgs and whereas, the stock of articles, as per Stock Register maintained, in the business premises was found at 102.604 Kgs, and that there was an excess of 39.412 Kgs, value of which was estimated at, ₹ 2,90,000/- and in the above said circumstances, the Commissioner of Income Tax (Appeals) treated the same, as undisclosed income. 6. On the fourth issue, regarding the addition towards difference in the cost of construction of ₹ 83,700/-, accepting the contention inter alia .....

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: Further allowance on account of adoption high rates in the valuation report @ 7.5% on ₹ 2,99,700/- ₹ 22,478 Rs.2,54,744 7. The fifth issue relates to addition of ₹ 3,00,000/-, towards inadequate drawings. The appellant family consists of himself, his wife, three sons and two daughters-in-law and two grandchildren. Before the appellate authority, attention has been invited that the appellant had originally offered only ₹ 2,00,000/- in his statement recorded under Section .....

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ards insufficiency in drawing for domestic expenses. 8. As regards the last issue, regarding levy of surcharge of ₹ 2,10,360/-, by observing that in view of the first schedule which clearly imposes surcharge on taxes levied under Section 113, the appellate authority, dismissed the plea of the appellant, on the levy of surcharge. By common order dated 05.07.2002, Commissioner of Income Tax (Appeals) Central II, Chennai, has ordered and granted the reliefs, as stated supra. 9. Aggrieved by t .....

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peals) is not justified, in sustaining addition of ₹ 5,00,000/-. On this aspect, we have given our careful consideration, to the submissions and the material on record. Considering the discussion and reasoning of the Tribunal, we concur with the view of the Tribunal, that there was no material found, during the course of search operation and that the statement recorded from the assessee under Section 132(4) of the Income Tax Act, 1961 on 29.12.1999, has been relied on, by the Assessing Off .....

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1) of the Income Tax Act, 1961, which provides for the method of computation of the undisclosed income, for the block period, and that the Assessing Officer is obligated to compute the undisclosed income for the block period, in accordance with the provisions of the Income Tax Act, 1961, on the basis of the evidence found, as a result of search, or other documents, materials or other information, available with the Assessing Officer, and relatable to such evidence found, during the course of the .....

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on of ₹ 31,00,000/- and thus, dismissed the case of the Revenue. 12. On the aspect of addition of ₹ 5,00,000/-, the Tribunal held that, in the absence of any material found during the course of search operation, and whereas, the power of Commissioner of Income Tax (Appeals) though co-terminus with that of the Assessing Officer, cannot be extended to make any addition, towards the undisclosed income and accordingly, held that the Commissioner of Taxes (Appeals) is not justified, in su .....

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assessee had disclosed the cost of construction at ₹ 2,16,000/- only, and therefore, difference of ₹ 83,700/- has to be treated, as unexplained investment for the block period. On this aspect, the appellate authority has granted relief for ₹ 44,956/-. While considering the addition towards difference in the cost of construction, the Tribunal has noticed that no books of account was found during the course of search. Valuation report has been obtained, after the search. In fact, .....

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has been examined on 29.12.1999, under Section 132 of the Income Tax Act, 1961. As per the statement of the assessee's son, there was payment of ₹ 31,00,000/-, towards purchase of property, and that such payment was made in the presence of his father, namely, the assessee. According to him , a sum of ₹ 31,00,000/- was paid to Shri.Babu, whereas, going through the statement of the assessee said to have been recorded on 03.01.2000, the Tribunal has observed that, if there was any p .....

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l found during the course of search operation, was also of the considered view that statement of Mr.Natarajan, son of the assessee, dated 29.12.1999, not corroborated with any documentary evidence, cannot be relied upon, for making any addition, in the hands of the assessee. 15. Before the Tribunal, Revenue has contended that the Assessing Officer has rightly made an addition of ₹ 86,000/- being the value of 215 grams of gold jewellery, found to be the excess stock, during the course of se .....

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consider, as to how the Commissioner of Income Tax (Appeals), the appellate authority, has addressed this issue, which are detailed, as hereunder. " 4.0 This issue has been dealt with by the Assessing Officer in para 7.1 to 7.5 of the assessment order. During the course of the search in the business premises of the appellant, the stock-in-trade of gold jewellery was inventorised and determined at 12.978 Kgs, whereas the stock of gold jewellery as per the Stock Register was found at 11.054 .....

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gms Correct stock as per register 11054 gms Reconciliation made by the appellant has been accepted by the Assessing Officer, but, then, he has proceeded to assess the value of difference of 215 gms. treating the same, as undisclosed income. Before the appellate authority, the Learned Counsel for the Appellant has submitted that the alleged excess of jewellery of 215 gms., being negligible, explanation given at the time of search that the jewellery belonged to the customers, who had given for rep .....

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the reasoning of the appellate authority, deleting ₹ 86,000/- towards the excess stock of 215 gms gold jewellery cannot be said to be perverse. Further, the Tribunal has found that, in spite of the reconciliation made by the assessee, the Assessing Officer has proceeded to assess the value of the difference of 215 gms gold jewellery, treating the same, as undisclosed income. The Tribunal has categorically held that when the assessee has filed reconciliation statement, there was no need fo .....

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following substantial questions of law: 1. Whether on the facts and circumstances of the case the Tribunal was right in holding that the addition of ₹ 31 lakhs made with respect to on money payment by the assessee for the purchase of property cannot be sustained on the ground the said addition was made based on the statements recorded during the search from the assessee and his son and seller of the property. 2. Whether on the facts and in the circumstances of the case the Tribunal was rig .....

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de on the basis of material seized at the time of search. 4. Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the addition made with respect to difference in stock of gold of 215 grms cannot be sustained on the ground that the said difference was reconciled. 19. While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whethe .....

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