TMI Blog2018 (6) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that the assessee is entitled to disclose the lower income in the subsequent return filed, if he is able to substantiate with reasons as to why he disclosed the lower income. In the present case, the assessee has not given any explanation as to why he is disclosing lower income in the return filed in response to notice issued u/s.153A when compared to the return originally filed by him. This being so, the addition representing the difference between the return originally filed and the return filed in response to the notice u/s.153A of the Act stands confirmed. Undisclosed investment - Held that:- A perusal of the assessment order, as also the reply filed by the assessee extract therein, clearly shows that the transactions have been accepted by the assessee and in fact supported by the agreements. The settlement of the creditors is supported by the cash receipts found in the course of search. This has also not been disputed by the assessee. However, the assessee has been unable to show how or from where he has generated the funds to settle these creditors of M/s.Mars Export, the source for the same and whether taxes have been paid on the same, are also not shown. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In the meantime, the assessee had filed Writ Petitions before the Hon ble Jurisdictional High Court of Madras against a Tax Recovery demand notice issued by the Tax Recovery Officer (TRO) dated 07.05.2018. The Hon ble Jurisdictional High Court of Madras in W.P.No.12569 of 2018 vide its order dated 16.05.2018 has directed the Tribunal to consider the appeal filed by the Petitioner, which is pending on before the Chennai Tribunal along with the Stay Petitions and pass appropriate orders in accordance with law within a period of two weeks from the date of receipt of a copy of this order of the Hon ble Jurisdictional High Court of Madras. Subsequently, on 30.05.2018, the Tribunal was served with a request from the TRO requesting the Tribunal to intimate the status of the Stay Petitions filed by the assessee. 4.1 Here, it must be mentioned that the Counsel for the assessee has submitted before the Hon ble Jurisdictional High Court of Madras in the Writ Petition that for the reasons best known, the ITAT has not taken the appeal along with the stay petitions on file . It must also be mentioned here that there are no Stay Petitions filed by the assessee, which are pending before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent has a period of 30 days for filing the Cross Objections, if any. In the present case, the appeals have been presented on 02.05.2018, the said 60 days would expire only on 02.07.2018. However, on account of submissions made by the assessee before the Hon ble Jurisdictional High Court of Madras, and also directions given by the Jurisdictional High Court to the Tribunal, the appeals of assessee are being disposed off in line with the directions of the Hon ble Jurisdictional High Court of Madras. 5. The facts of the case are that the assessee herein is an individual, who is in the business of real estate, money lending and other sources. There was a search u/s.132 of the Act on the premises of the assessee on 26.02.2015. Consequent to the search, notice u/s.153A of the Act was served on the assessee on 22.07.2015. As per the notice, the return was required to be filed within 15 days from the date of receipt of the notice, i.e. 22.07.2015. Vide subsequent letters, the assessee has sought for various documents/papers, photocopies of seized impounded materials, copies of Panchnama and such other evidences as per record available with the Revenue. The final process of coping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assigning proper reasons and justification. 7. The CIT (Appeals) erred in sustaining the assessment of the loan transaction with Shri N.Venkatraman on reaching irrelevant conclusions while sustaining such sum as undisclosed income in the computation of taxable total income without assigning proper reasons and justification. 8. The CIT (Appeals) erred in sustaining the assessment of the loan transaction with Dr.S.Rameshkumar on reaching irrelevant conclusions while sustaining such sum as undisclosed income in the computation of taxable total income without assigning proper reasons and justification. 9. The CIT (Appeals) erred in sustaining the assessment of the loan transaction with Mr.Ponnappan on reaching irrelevant conclusions while sustaining such sum as undisclosed income in the computation of taxable total income without assigning proper reasons and justification. 10. The CIT (Appeals) erred in sustaining the assessment of the loan transaction with Mr.Thangavel on reaching irrelevant conclusions while sustaining such sum as undisclosed income in the computation of taxable total income without assigning proper reasons and justification. 11. The CIT (Appeals) fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate that the issues raised in the additional grounds of appeal were not adjudicated and ought to have appreciated that the issues on facts as well as legal stand raised therein would go to the root of the jurisdiction of the Assessing Officer in completing the search assessment, thereby grossly violating the principles of legitimate expectation. 21. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 22. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 7. It was submitted by ld.D.R that there are no technical grounds and all the grounds are in respect of additions made in the assessment order. The ld.D.R drew our attention to para-3 at page-5 of the assessment order representing the addition in respect of the rental income. It was a submission that assessee along with his father and mother owned several apartments and individual house in various places in Coimbatore. These houses had been let out on monthly rental basis and the income received in cash by them. In the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the parents after due process of law. 9. The next issue is in respect of unaccounted cash loans for which the ld.D.R brought to our attention to para-4 at page-7 of the assessment order. It was a submission that the seized materials revealed that the assessee had given cash loans to various persons and the same were not accounted for in the assessee s books. It was a submission that show-cause notice has been issued to the assessee. It was a submission that the reply of assessee was also extracted in the assessment order. It was a submission that the loan transactions had been admitted by the assessee in his reply. It was a submission that some of the transactions were by cheque. It was a submission that wherever the payments have been made by the cheque, the same had been accepted. However, where the payments were by cash, as the assessee had not been able to provide the explanation in respect of the source of the cash, the same was treated as the undisclosed income of assessee. It was a submission that none of the seized materials had been disputed by the assessee and the assessee has also given explanations in regard to each of the loan transactions and it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 24.69 crores was paid in cash to the land owners, another ₹ 22 crores was paid in cheque, and the same was out of an amount of ₹ 49 crores received from M/s.Mayflower Inno Realty Private Ltd., and an amount of ₹ 1 crore was returned to M/s.Mayflower Inno Realty Private Ltd. It was a submission that the land sellers were summoned and confronted with difference in the amounts received by them and the amounts mentioned in their name in the loose sheets impounded and they had stated the amounts admitted by them as their own receipts whereas the balance amount has been actually paid by the assessee to the land mediator and various other parties during the process of aggregation of the land was denied. It was a submission that though the assessee has claimed to have received ₹ 49 crores from M/s.Mayflower Inno Realty Private Ltd., the assessee has been unable to prove the receipt of the said amount from M/s.Mayflower Inno Realty Private Ltd., nor the assessee was able to show how he has withdrawn the cash and when he has withdrawn the cash to make the payments of ₹ 24.69 crores. It was a submission that consequently the ld. Assessing Officer had made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the ld. Assessing Officer made addition, which has been confirmed by the Ld.CIT(A). 11.1 We have considered the submissions of the ld.D.R and perused the materials available on record, as also the reply filed by the assessee. A perusal of the reply filed by the assessee at para 6.5 of the assessment order, to show-cause notice issued by the ld. Assessing Office, clearly shows that the assessee has admitted and explained the transaction with M/s.Kangaroo Impex. However, the source for the loans have not been explained by the assessee. This being so, we are of the view that the addition as made by the ld. Assessing Officer and confirmed by the Ld.CIT(A), is on the right footing and does not call for any interference. 12. The next issue is in respect of undisclosed interest income representing the interest on the loans given to M/s.Kangaroo Impex and Kangaroo Fabrics. It was a submission that the assessee has not shown the interest income received from M/s.Kangaroo Impex and Kangaroo Fabrics in his books, but M/s.Kangaroo Impex and Kangaroo Fabrics has accounted the same in its books. Consequently, the same is treated as undisclosed income in the hands of the assessee under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the rental income as undisclosed income based on the findings in para 6.1 of the impugned order without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the relevant facts were completely ignored despite such facts were brought to the notice of the Assessing Officer as well as before him and further ought to have appreciated that the assessment of the rental income in the hands of the Appellant was wrong and incorrect both on facts and in law. 4. The CIT (Appeals) erred in sustaining the assessment of the loan transaction with Shri C.Giridharan on reaching irrelevant conclusions while sustaining such sum as undisclosed income in the computation of taxable total income without assigning proper reasons and justification. 5. The CIT (Appeals) erred in sustaining the assessment of the loan transaction with Shri Ponnappan on reaching irrelevant conclusions whUe sustaining such sum as undisclosed income in the computation of taxable total income without assigning proper reasons and justification. 6. The CIT (Appeals) erred in sustaining the assessment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in adding back ₹ 16,50,00,000 on the consideration of the transaction relating to M/s.Mars Exports as unaccounted investment in the computation of taxable total income without assigning proper reasons and justification. 16. The Ld.CIT(A) went wrong in recording the findings in this regard in para 6.6 of the impugned order without assigning proper reasons and justification. 17. The CIT (Appeals) erred in sustaining the assessment of the differential sum between disclosure made in search and the resultant returned income in the computation of taxable total income without assigning proper reasons and justification. 18. The CIT (Appeals) failed to appreciate that the assessment completed after search was bad in law and in the absence of direct evidence coupled with wrong initiation of the proceedings would vitiate the consequential search assessment on various facets. 19. The CIT (Appeals) failed to appreciate that the issues raised in the additional grounds of appeal were not adjudicated and ought to have appreciated that the issues on facts as well as legal stand raised therein would go to the root of the jurisdiction of the Assessing Officer in completing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2009-10, findings of assessment year 2009-10 applies to this issue for the relevant assessment year 2010-11 as directed in ITA No.1493/CHNY/2018 supra wherein the orders of lower authorities were upheld. 21. The sixth issue is in respect of undisclosed investment relating to M/s.Mars Exports. It was submitted by the ld.D.R that on 12.11.2009, the assessee had entered into a sale deed with the proprietor of M/s.Mars Export in respect of the particular property wherein the assessee had undertaken to settle the total liabilities of M/s.Mars Export towards its creditors amounting to ₹ 11 crores, as also to Karur Vysya Bank loan liability of M/s.Mars Export to ₹ 5.5 crores and the sale deed value of the property was shown at ₹ 3 crores after settling the above said total liabilities. ₹ 11/- crores paid to the creditors of M/s.Mars Export were in cash as evidenced by the cash receipts. It was a submission that in response to the show-cause notice, the assessee had claimed that he had settled the creditors through bank and that the assessee had sold the land purchased from M/s.Mars Export for a sum of ₹ 3 crores, to M/s.Mars Export for a sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 427/16-17 in so far as the issues contested in the present appeal pertaining to the above assessment year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the rental income as undisclosed income based on the findings in para 6.1 of the impugned order without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the relevant facts were completely ignored despite such facts were brought to the notice of the Assessing Officer as well as before him and further ought to have appreciated that the assessment of the rental income in the hands of the Appellant was wrong and incorrect both on facts and in law. 4. The CIT (Appeals) erred in sustaining the addition relating to the transaction of Nanjundapuram land as unaccounted investment in the computation of taxable total income without assigning proper reasons and justification. 5. The CIT (Appeals) failed to appreciate that the presumption of excess cash payments was wholly unjustified and ought to have appreciated that in the absence of direct evidence, the sustenance of the said addition was wrong, erroneous, unjustified, incorre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted investment in Nanjundapuram land, Coimbatore taken in this year is similar to the issue taken in the assessment year 2009-10. In these circumstances, the issue in this appeal must be restored to the file of ld. Assessing Officer for re-adjudication after granting the assessee adequate opportunity of being heard as directed in ITA No.1493/CHNY/2018 supra. 27. The Third issue is related to undisclosed business income. It was submitted by ld.D.R that verification of seized materials revealed that the assessee s erstwhile staff Smt.Dhanalakshmi had swindled money to the extent of ₹ 8.30 crores during various assessment years. When a showcause noticed dated 15.12.2016 was issued to the assessee, assessee had replied that Mrs.Dhanalakshmi was working in M/s.Millenium Motors, which is a unit of Miracle Cars India Pvt. Ltd., and Mrs.Dhanalakshmi had embezzled substantial amounts by manipulating service records of various vehicles. The matter was in Court and the cheating case was filed by the CBI and trial was pending. No amount was recovered by the assessee. The assessee has also stated that in future, if any amount is recovered, the company would undertake to pay, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the notice of the Assessing Officer as well as before him and further ought to have appreciated that the assessment of the rental income in the hands of the Appellant was wrong and incorrect both on facts and in law. 4. The Ld.CIT(A) erred in dismissing the ground relating to the protective addition pertaining to the transaction relating to the erstwhile staff Smt.Dhanalakshmi in para 6.2 in the computation of taxable total income without assigning proper reasons and justification. 5. The Ld.CIT(A) failed to appreciate that the assessment completed after search was bad in law and in the absence of direct evidence coupled with wrong initiation of the proceedings would vitiate the consequential search assessment on various facets. 6. The CIT (Appeals) failed to appreciate that the issues raised in the additional grounds of appeal were not adjudicated and ought to have appreciated that the issues on facts as well as legal stand raised therein would go to the root of the jurisdiction of the Assessing Officer in completing the search assessment, thereby grossly violating the principles of legitimate expectation. 7. The CIT (Appeals) failed to appreciate that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 6.2 in the computation of taxable total income without assigning proper reasons and justification. 5. The CIT (Appeals) erred in sustaining the assessment of the differential sum between disclosure made in search and the resultant returned income in the computation of taxable total income without assigning proper reasons and justification, thereby vitiating the findings in para 6.4 of the impugned order. 6. The Ld.CIT(A) failed to appreciate that the assessment completed after search was bad in law and in the absence of direct evidence coupled with wrong initiation of the proceedings would vitiate the consequential search assessment on various facets. 7. The CIT (Appeals) failed to appreciate that the issues raised in the additional grounds of appeal were not adjudicated and ought to have appreciated that the issues on facts as well as legal stand raised therein would go to the root of the jurisdiction of the Assessing Officer in completing the search assessment, thereby grossly violating the principles of legitimate expectation. 8. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rental income in the hands of the Appellant was wrong and incorrect both on facts and in law. 4. The CIT (Appeals) erred in dismissing the ground relating to the protective addition pertaining to the transaction relating to the erstwhile staff Smt. Dhanalakshmi in para 6.2 in the computation of taxable total income without assigning proper reasons and justification. 5. The CIT (Appeals) erred in sustaining the assessment of unaccounted sales for the reasons stated in para 6.4 of the impugned order in the computation of taxable total income without assigning proper reasons and justification. 6. The CIT (Appeals) failed to appreciate that the explanation offered with regard to the seized material, namely, sale abstract was completely overlooked and brushed aside, thereby vitiating the findings in para 6.4 of the impugned order. 7. The CIT (Appeals) erred in sustaining the assessment of the differential sum between disclosure made in search and the resultant returned income in the computation of taxable total income without assigning proper reasons and justification, thereby vitiating the findings in para 65 of the impugned order. 6. The CIT (Appeals) failed to appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ld. Assessing Officer did not accept the contention and had made addition. 38.1 We have considered the submissions and perused the materials available on record. Admittedly what has been found in the electronic form is an abstract working sheet, No evidence whatsoever supporting this abstract working sheet has been found in the course of search. This being so, we are of the view that no addition on this cound can be made in the hands of the assessee. Further, it is noticed that the said working sheet is in respect of M/s.Arputharaj Associates if at all an addition can be made, it may be considered only in the case of M/s.Arputharaj Associates and that too only in respect of gross profit in respect of such sales. In any case, the assn is not called for in the hands of assessee. 39. The fourth issue is in respect of difference in returned income for which the argument of the ld.D.R are identical to the assessment year 2009-10, findings of assessment year 2009-10 applies to this issue for the relevant assessment year 2011-12 as directed in ITA No.1493/CHNY/2018 supra wherein the addition is confirmed by the Tribunal. 40. In the result, the appeal of assessee in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in completing the search assessment, thereby grossly violating the principles of legitimate expectation. 9. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 10. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 42. The first issue is related to undisclosed business income taken in this year is similar to the issue taken in the assessment year 2011-12. It was submitted by ld.D.R that verification of seized materials revealed that the assessee s erstwhile staff Smt.Dhanalakshmi had swindled money to the extent of ₹ 8.30 crores during various assessment years. In these circumstances, the addition made by the ld. Assessing Officer as well as by the Ld.CIT(A) stands deleted as directed in ITA No.1495/CHNY/2018 supra. 43. The second issue is related to unaccounted investment in Kerala. It was submitted by ld.D.R that in the course of search it was found that the assessee had purchased three properties in Kerala on 4.4.2014 for consideration of ₹ 82.63 crores from Smt.D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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