TMI Blog2017 (9) TMI 1864X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding, this Tribunal is of the considered opinion that addition has to be made only on the basis of concrete evidence. Presumption and surmise have no role to play in judicial proceeding. Therefore, the addition of ₹ 2.38 Crores made by the Assessing Officer as confirmed by the CIT(Appeals) cannot stand for the scrutiny of law. Accordingly, the orders of both the authorities below are set aside and the addition Assessment u/s 153A - date of search and seizure operation conducted u/s 132A - HELD THAT:- Second proviso to Section 153A of the Act clearly says that the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years, is pending on the date of initiation of search under Section 132A of the Act, the same shall stand abated. In this case, the search proceeding, admittedly, took place on 18.11.2011. Therefore, the assessment proceeding pending as on 18.11.2011 shall stand abated in view of second proviso to Section 153A of the Act. Therefore, the assessment order passed by the Assessing Officer under Section 143(3) of the Act cannot stand in the eye of law. In other words, the Assessing Officer has to pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Section 153C of the Act very clearly says that the assessment has to be made on the basis of material found during search operation, only the person other than the searched person. In the case before us, no material was found during the search operation with regard to personal expenses. The Assessing Officer appears to have estimated the expenditure without any material. The Assessing Officer on the basis of presumption found that the assessee was living in a joint family and not made any drawings, therefore, he added a sum of ₹ 3 lakhs towards personal expenses. This being an assessment proceeding under Section 153C in the absence of any material found during the search operation with regard to personal expenses, this Tribunal is of the considered opinion that there cannot be any addition. Moreover, when the assessee is found to be in joint family, the drawing of the other members of the family is also to be taken into consideration. In the absence of any material found during search, the addition of ₹ 3 lakhs cannot stand in the eye of law. Unexplained payment - AO found that the assessee has paid a sum of ₹ 30 lakhs to each of his three sisters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch operation. As rightly submitted by the Ld. Departmental Representative, it does not absolve the assessee from explaining the source for acquisition of such jewellery. Therefore, the CBDT circular would not come to the rescue of the assessee. The assessee is expected to explain the source for acquisition of jewellery found during the course of search operation. Since proper explanation was not offered, this Tribunal is of the considered opinion that the Assessing Officer has rightly treated ₹ 13,67,995/- as unexplained investment of the assessee in gold jewellery, under Section 69A of the Act. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Unaccounted purchases made outside the books - CIT(Appeals) found that the assessee himself has taken into account the profit on unaccounted sales while calculating the gross profit, therefore, even the 10% need not be added - HELD THAT:- The assessee has taken himself the profit of unaccounted sales while calculating the gross profit. When the profit on unaccounted sales were taken into account for the purpose of calculating the gross profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly the same is confirmed. - ITA No. 216 & 217/Mds/2013, 1315 & 1316/Mds/2016, 591/Mds/2016, 590/Mds/2016, 592/Mds/2016, 1443/Mds/2016, 568/Mds/2016 - - - Dated:- 27-9-2017 - Shri N.R.S. Ganesan, Judicial Member And Shri A. Mohan Alankamony, Accountant Member Assessees by: Shri S. Sridhar, Advocate Revenue by: Smt. Ruby George, CIT ORDER N.R.S. Ganesan, All the appeals of the assessee and Revenue are directed against the respective orders of the Commissioner of Income Tax (Appeals). Since common issues arise for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order. 2. There was a delay of 4 days in filing the appeal in I.T.A. No.568/Mds/2016 by the Revenue. The Revenue has filed a petition for condonation of delay. We have heard the Ld. D.R. and the Ld.counsel for the assessee. We find that there was sufficient cause for not filing the appeal before the stipulated time. Therefore, we condone the delay and admit the appeal. 3. Let s first take I.T.A. No.216/Mds/2013. 4. Shri S. Sridhar, the Ld.counsel for the assessee, submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the affidavit before the Assessing Officer cannot be rejected so lightly. Hence, according to the Ld. counsel, the CIT(Appeals) is not justified in confirming the addition of ₹ 2.38 lakhs. 6. On the contrary, Smt. Ruby George, the Ld. Departmental Representative, submitted that there was survey operation in the premises of the assessee on 17.11.2009. According to the Ld. D.R., during the course of survey operation, incriminating materials were found. The assessee was also examined during the course of survey operation. It was found during the course of survey operation that the assessee is engaged in the business of real estate also. According to the Ld. D.R., the assessee entered into a sale agreement with one Shri Basheet Ahmed, Trichy for purchase of 200 acres and 57 acres respectively. Two receipts were found which were impounded during the course of survey operation. Apart from that, three sale agreements were also found. According to the Ld. D.R., sale agreements dated 27.04.2005 and 11.06.2005 were impounded during the course of survey operation. The sale agreements were for ₹ 2 Crores and ₹ 11 Crores for an area of 7.38 acres and 50 acres of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 57.38 acres. During the examination, the assessee claimed before the Revenue authorities that he paid only ₹ 1 Crore. Shri S.I. Basheer Ahmed was also examined. Initially he accepted the receipt. Subsequently, he filed an affidavit during the course of assessment proceeding that he has not received any money as found in the agreement from the assessee. 9. From the orders of the lower authorities it appears that there was civil dispute pending before Principal Sub-Judge, Trichy. Shri Basheer Ahmed appears to have agreed to sell the property after disposal of civil dispute pending before Principal Sub-Judge. Shri Basheer Ahmed agreed during the course of examination that he received ₹ 22,50,000/- directly from the assessee Shri A. Ramalingam. He also explained before the Assessing Officer that the balance of ₹ 31,50,000/- was spent in court cases. The CIT(Appeals) also found that Shri Basheer Ahmed was only power agent of Smt. Ooranbibi. From the order of the CIT(Appeals) it appears that Shri Basheer Ahmed was interrogated by the Assistant Director of Investigation. He stated that he has not received any money as per original agreement impoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Therefore, according to the Ld. counsel, the order passed by the Assessing Officer on 29.12.2011 in a proceeding which stands abated cannot stand in the eye of law. 13. We have heard Smt. Ruby George, the Ld. Departmental Representative also. We have also carefully gone through the provisions of Section 153A of the Act. Second proviso to Section 153A of the Act clearly says that the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years, is pending on the date of initiation of search under Section 132A of the Act, the same shall stand abated. In this case, the search proceeding, admittedly, took place on 18.11.2011. Therefore, the assessment proceeding pending as on 18.11.2011 shall stand abated in view of second proviso to Section 153A of the Act. Therefore, the assessment order passed by the Assessing Officer under Section 143(3) of the Act cannot stand in the eye of law. In other words, the Assessing Officer has to pass an order under Section 153A or 153C of the Act as the case may be. Hence, the regular assessment passed by the Assessing Officer has to be quashed. Accordingly, the orders of both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls in the block period, therefore, the Assessing Officer made addition of ₹ 2.38 Crores in respect of payment made by the assessee as per the original agreement with Shri Basheer Ahmed. 17. We have considered the rival submissions on either side and perused the relevant material available on record. In respect of the same addition, the issue came before this Tribunal in I.T.A. No.216/Mds/2013. In the earlier part of this order, this Tribunal after considering the submissions of the Ld.counsel for the assessee and the Ld. Departmental Representative, has observed as follows at para 10 (supra):- When Shri Basheer Ahmed denied the fact of receipt of money, it cannot be concluded that the assessee has paid ₹ 2.38 Crores to Shri Basheer Ahmed. As per the observation made by the lower authorities, agreement for sale was for sale of property after disposal of cases pending before Principal Sub-Judge at Trichy. When the matter was pending before the Principal Sub-Judge for adjudication and the power of attorney, who entered into the agreement, claimed that he has not received any money, this Tribunal is of the considered opinion that there cannot be any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed by the three sons of the assessee. Therefore, according to the Ld. D.R., the assessee cannot dispute at this stage. 22. We have considered the rival submissions on either side and perused the relevant material available on record. During the course of survey operation on 17.11.2009, there were trade creditors to the extent of ₹ 2,08,76,976/-. The assessee claimed that a sum of ₹ 1,25,71,162/- was settled before hand. However, the same was not reflected in the accounts of the assessee. The assessee claimed that loans were obtained from relatives. Since the relationship among the relatives from whom the assessee said to have received loan was estranged, he admitted the same for taxation. Even the details of credits were not explained before the Assessing Officer and the CIT(Appeals). Since the assessee admitted the credit balance, which was proportionately added in the hands of the assessee and other three children of the assessee, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 23. The next issue arises for consideration is addition of ₹ 11,89,000/- in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was made which was confirmed by the CIT(Appeals). According to the Ld. counsel, since the assessment proceeding was not pending before the Assessing Officer on the date of search, there cannot be any assessment under Section 153C since, as per second proviso to Section 153A of the Act, the assessment proceeding would not stand abated. Therefore, according to the Ld. counsel, the Assessing Officer can pass only one assessment order. In the absence of any material found during the course of search operation, according to the Ld. counsel, there cannot be any assessment under Section 153C of the Act. 29. We have heard Smt. Ruby George, the Ld. Departmental Representative also. The provisions of Section 153C of the Act very clearly says that the assessment has to be made on the basis of material found during search operation, only the person other than the searched person. In the case before us, no material was found during the search operation with regard to personal expenses. The Assessing Officer appears to have estimated the expenditure without any material. The Assessing Officer on the basis of presumption found that the assessee was living in a joint family and not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. On the contrary, Smt. Ruby George, the Ld. Departmental Representative, submitted that a receipt dated 10.06.2010 was found during the course of search operation. The said receipt discloses a payment of ₹ 30 lakhs each to three sisters of the assessee. In fact, the assessee was examined under Section 132(4) of the Act. According to the Ld. D.R., the assessee admitted that he has paid ₹ 30 lakhs to each of his sisters towards partition of family property. The sisters of the assessee were also examined under Section 131 of the Act. They also, in fact, admitted the receipt of ₹ 30 lakhs and the same were spent on the marriage of their daughters, purchase of plot and repayment of small loans. According to the Ld. D.R., when the recipients of the amount have accepted that they have received ₹ 30 lakhs for partition of family property, the Assessing Officer has rightly rejected the affidavit of the above said sisters and since the same was filed after a long gap of 24 months. According to the Ld. D.R., the CIT(Appeals) has rightly confirmed the addition of ₹ 90 lakhs. 34. We have considered the rival submissions on either side and perused the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel, the assessee claimed before the Assessing Officer that the payment was part of payment made for Karur land purchase. The Assessing Officer, however, rejected the explanation of the assessee on the ground that the details of the payment do not contain the payment received by Shri S.A. Kandasamy, therefore, the CIT(Appeals) confirmed the addition. According to the Ld. counsel, this payment of ₹ 1 lakh is part of payment made for land purchase at Karur, therefore, a separate addition is not called for. 38. We have heard Smt. Ruby George, the Ld. Departmental Representative also. The Ld. D.R. submitted that in the seized material at page 21, details of the payment made for Karur land purchase are available. This payment of ₹ 1 lakh does not reflect in the details available at page 21 of seized material. Therefore, according to the Ld. D.R., this payment of ₹ 1 lakh made to Shri S.A. Kandasamy is over and above the payment made for Karur land purchase. 39. We have considered the rival submissions on either side and perused the relevant material available on record. The details of payment made for Karur land purchase are available at page 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Smt. Ruby George, the Ld. Departmental Representative, submitted that during the course of search operation, 1710.370 gms of gold jewellery was found and the same was valued at ₹ 45,99,185/-. The assessee accepted unexplained investment to the extent of ₹ 14,70,970/-. According to the Ld. D.R., the Assessing Officer, however, found that the CBDT circular relied on by the assessee is only for seizure of gold jewellery found during the course of search operation. It does not absolve the assessee from explaining the source for acquisition of such gold jewellery. The Assessing Officer, according to the Ld. D.R., after taking into consideration of the claim of the assessee found that the assessee s wife received 100 sovereigns of gold jewellery during her marriage, has taken 1055.77 gms as unexplained and the same was estimated at ₹ 2689/- per gram and the total investment in gold jewellery was arrived at ₹ 28,38,965/-. After reducing the value of the jewellery declared by the assessee to the extent of ₹ 14,70,970/-, the balance of ₹ 13,67,995/- was taken as income of the assessee. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proprietary concern of the assessee. The Ld. D.R. further submitted that the assessee made unaccounted purchase to the extent of ₹ 35,15,041/- outside the books of account. The unaccounted purchase was not included in the sales shown in the return of income filed by the assessee. In the absence of any evidence to show that the unaccounted purchase has been included in the unaccounted sales of ₹ 69,42,895/-, according to the Ld. D.R., the Assessing Officer has rightly made the addition of entire unaccounted purchases. The CIT(Appeals) found that the addition made by the Assessing Officer amounted to double addition, therefore, he deleted the same. According to the Ld. D.R., since the unaccounted purchase was not formed part of unaccounted sale, a separate addition needs to be made. 48. On the contrary, Shri S. Sridhar, the Ld.counsel for the assessee submitted that the Assessing Officer, after examining the Profit Loss account and balance sheet of M/s Pandian Traders for the assessment year 2008-09, found that the assessee has suppressed the purchase to the extent of ₹ 35,15,071/- and settled the dues to sundry creditors to the extent of ₹ 35,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is addition of ₹ 1,84,175/- towards unexplained jewellery under Section 69A of the Act. 52. Shri S. Sridhar, the Ld.counsel for the assessee, submitted that during the course of search operation, 744.28 gms of jewellery was found and the same was valued at ₹ 20,26,868/-. According to the Ld. counsel, in the cash flow statement, the assessee has declared the purchase of gold jewellery to the extent of ₹ 18,42,693/- The assessee has placed reliance on the CBDT circular and claimed that exemption for the married lady shall be given due credit. According to the Ld. counsel, in view of the CBDT circular, there cannot be any further addition. 53. We have heard Smt. Ruby George, the Ld. Departmental Representative also. It is not in dispute that 744.28 gms of jewellery was found and the same was valued at ₹ 20,26,868/-. The assessee has disclosed unaccounted jewellery to the extent of ₹ 18,42,693/- in the cash flow statement. The balance of ₹ 1,84,175/- was added under Section 69A of the Act. The assessee claimed before the Assessing Officer that a married lady is entitled for 500 gms of gold jewellery. This Tribunal is of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in respect of other income admitted by the assessee in cash flow statement. In fact, the assessee adopted average sale price, therefore, availability of additional income has to be taken into consideration. According to the Ld. counsel, the assessee, in fact, declared income from KAS Nagar project at 10% of the sale value. The assessee declared income of ₹ 11,87,649/- for the assessment year 2008-09 and another income of ₹ 56,59,073/- for the assessment year 2009-10. The Assessing Officer, according to the Ld. counsel, after taking into consideration of the average rate per sq.ft. of the land, found that the total sale value works out to ₹ 8,33,00,500/-. In fact, the assessee admitted only ₹ 6,84,67,226/-. According to the Ld. counsel, the assessee claims that the expenditure was incurred for development like levelling, filling up the plots, construction of overhead tanks, etc. Rejecting the explanation of the assessee, the Assessing Officer estimated the income of KAS Nagar project at 15% of sale value. The Assessing Officer has also rejected the claim of the assessee for telescoping. According to the Ld. counsel, when the higher income was est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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