TMI Blog2022 (3) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner in the parliamentary election and that the amount was earned by him in his real estate business suggesting corrupt practice in the parliamentary election either by the petitioner or his party. The record indicate that Mr.S.Srinivasan has no documents to substantiate that he was a man of sufficient means and that the money was either earned by him from his real estate business or was given to him by the party sponsoring the petitioner to contest the election and that the former had given cash to him to corrupt the voters and indulge in corrupt electoral practice. The presumption under Section 132(4A)(i) and Section 292C of the IT Act, 1961 that the books of account, the documents, money, bullion or other valuable article or thing are or is found in the possession or control any person is a rebuttable presumption. Such a presumption under Section 132 (4A)(i) and Section 292C of the IT Act, 1961 can be drawn against Mr.Damodaran and Mrs.Vimala Damodaran from whose premises seizure of the cash was effected. Since preponderance of probability indicate that the seized cash was an undisclosed income of the petitioner and was kept at the residence of Mr.Damodaran and Mrs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 144A of the IT Act as non speaking or suffering from non application of mind. Instead of defending himself in the Show Cause Notice proceedings, the petitioner attempted to divert the attention to prolong the longevity of the litigation both before the respondents and now before this Court. It was unwarranted. Considering the fact that the petitioner has enjoyed a temporary repreive during the pendency of these writ petitions, the recovery proceedings shall be kept in abeyance for a period of 60 days from the date of receipt of a copy of this order, provided the petitioner files such statutory appeal against the impugned assessment order dated 27.09.2021, within the time stipulated herein and an application under Section 220(6) of the Income Tax Act, 1961 before the second respondent herein. The second respondent shall endeavour to dispose the same preferably within 60 days from the date of receipt of a copy of this order. - W.P.Nos.21027 & 21854 of 2021 and W.M.P.Nos.23032 & 23035 of 2020 - - - Dated:- 25-2-2022 - HONOURABLE MR. JUSTICE C. SARAVANAN For Petitioner (in both the W.Ps.) Senior : Mr. P.S. Raman Counsel for Mr. R. Sivaraman For Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner. (iv) In view of the detailed background narrated as above, it is prayed that the Hon'ble Additional Commissioner of Income-Tax, Central Range-1, Chennai may be pleased to consider this petition judicially and render justice. 4. Learned Senior Counsel for the petitioner submits that the aforesaid petition was disposed in a peremptory manner without any discussion by the first respondent accepting the views in the Show Cause Notice issued by the second respondent on 08.09.2021 and the views expressed by the Investigating Officer. 5. Learned Senior Counsel submits that the first respondent Additional Commissioner of Income Tax abdicated his function under Section 144A of the IT Act, 1961 while passing the impugned order dated 25.09.2021, which has been challenged/impugned in W.P.No.21027 of 2021. 6. It is submitted that before disposing the petition under Section 144A of the IT Act, the Officer concerned exercising jurisdiction under Section 144A of the IT Act was required to apply his mind independently. However, the said Officer has rejected the application on suspicions, conjectures and surmises based on the report of Jurisdictional Investigatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.S.Srinivasan who claimed to be the owner of the money. 13. Learned Senior Counsel further submits that in view of the abolition of the Settlement Commission in the Finance Act, 2021 with effect from 01.02.2021, the case was not taken up for hearing and therefore Mr. S.Srinivasan filed W.P.No.5463 of 2021. It is submitted that the said writ petition along with a batch of writ petitions came up for admission before this Court on 05.03.2021 and the said Writ Petition is pending as on date. 14. Learned Senior Counsel for the petitioner incidentally submits that the Central Board of Direct Taxes has now issued a clarification to the effect that the applications filed before the Settlement Commission to settle the case before 30.09.2021 will be entertained and heard by the Settlement Commission and therefore in the light of the admission of Mr. S. Srinivasan that the amount recovered from the premises of Mr. Damodaran and Smt. Vimala cannot be treated as the amount of the petitioner merely because the statements were obtained on 01.04.2019 from Mr. Damodaran. It is therefore submitted that the impugned order passed under Section 144A of the IT Act is unsustainable. 15. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that cash of ₹ 11.50 crores was found in packets marked as Alangayam, Pallikonda, etc., with marking of Municipal Wards falling under Vellore Parliamentary Constituency and containing details of number of men and women voters, therein, from the residence of Shri. Damodaran and Smt.Vimala, karigiri Road, Pallikuppam Railway Gate, Katpadi. Since, you were the contesting candidate for Vellore Parliamentary Constituency, please explain as to how the packets indicating that the cash meant for distribution in Vellore constituency was found in the residence of Shri.Damodaran and Smt.Vimala. 4. Please explain your relationship with Shri.Poonjolai Srinivasan, who claimed in the course of his sworn statement dated 01.04.2019 that he had kept cash of ₹ 11.50 crores for distribution to voters in Vellore Parliamentary constituency, to secure the success of the DMK candidate in the Parliamentary election, 2019, and you were the DMK candidate. 22. It is submitted that it is only thereafter a Show Cause Notice was issued on 08.09.2021 to which the petitioner has replied and thereafter filed a petition under Section 144A of the IT Act, 1961 on 25.09.2021. 23. Learned St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act, 1961. 32. The first respondent Additional Commissioner has passed the impugned order dated 25.09.2021 and disposed the application filed by the petitioner under Section 144A of the IT Act, 1961. The second respondent has thereafter, proceeded to the pass the impugned assessment order dated 27.09.2021. There is no discussion in the order dated 25.09.2021. It merely reproduces the content of the petitioner's application filed under Section 144A of the IT Act, 1961 and report of the Investigating Officer. The impugned order dated 25.09.2021 passed by the first respondent Additional Commissioner filed under Section 144A of the IT Act, 1961 however, directs the second respondent to pass orders in accordance with law. 33. Therefore, the issue is to be considered in these writ petitions is, whether the first respondent was bound to necessarily give direction to the second respondent under Section 144A of the IT Act,1961, as was prayed by the petitioner in the application and whether the order passed under Section 144A of the IT Act, 1961 suffers from any vices of nonapplication of mind. 34. Section 144A of the IT Act, 1961 deals with the power of Joint Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re inserted in the IT Act, 1961 by the Taxation Laws (Amendment) Act, 1975. They were inserted pursuant to the recommendations of the Wanchoo Committee. The recommendations which lead to the incorporation of Section 144A are as follows: We recommend that the law should authorise the Inspecting Assistant Commissioner to call for the records of a case on his own motion or on a reference by the Income-tax Officer or a petition made by the assessee before the assessment is finalised and issue such directions as he considers fit in the circumstances of the case for completion of the assessment. The directions given will be legally binding on the Income-tax Officer. The law should provide for an opportunity to the assessee of being heard by the Inspecting Assistant Commissioner before any directions prejudicial to him are issued. 39. Board Circular No.197, dated April 17, 1976, clarified the scope and effect of Section 144A and 144B of the IT Act, 1961. The Calcutta High Court in Arrah Sasaram Light Railway Co. Ltd. v. Commissioner of Income-Tax, [(1993) 204 ITR 807] at Page 819, has extracted in Para 24, the Board Circular No.197, dated April 17, 1976. Para 24 from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case are concerned, ₹ 11.49 crores in cash was recovered on 01.04.2019 from the house of Mr.Damodaran and Mrs.Vimala Damodaran in packet with markings such as Alangayam, Pallikonda etc. with the marking of the Municipal Wards, falling under the Vellore Parliamentary Constituency from where the petitioner was contesting. 42. The brother of Mrs.Vimala Damodaran namely, Mr.S.Srinivasan came forward and gave a voluntary statement dated 01.04.2019 and stated that the cash belonged to him for distribution to the Voters in the Vellore Parliamentary constituency to secure victory of the petitioner in the parliamentary election and that the amount was earned by him in his real estate business suggesting corrupt practice in the parliamentary election either by the petitioner or his party. 43. However, the record indicate that Mr.S.Srinivasan has no documents to substantiate that he was a man of sufficient means and that the money was either earned by him from his real estate business or was given to him by the party sponsoring the petitioner to contest the election and that the former had given cash to him to corrupt the voters and indulge in corrupt electoral practice. 44. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tened on the petitioner under the IT Act, 1961 can to be shifted on Mr.S.Srinivasan. Merely, because Mr.S.Srinivasan has filed application to settle case before the the Settlement Commission, by declaring the seized cash to his cash is of no relevance. 52. The subsequent engineering of an application of settling the dispute before the settlement commission by Mr.S.Srinivasan appears to be a mere ploy, ruse to divert attention. It was filed to detract the assessment proceedings. The application under Section 144A of the IT Act itself appears to be an afterthought. Instead of giving attention to the show cause notice and participating in the adjudication, the petitioner appears to have been illadvised to venture out in filing the above application. 53. Further, the cash was not found under the control and the possession of the said Mr.S.Srinivasan. It was found in the residence of Mr.Damodaran and Mrs.Vimala Damodaran with packet markings as Alangayam, Pallikonda etc. with the marking of the Municipal Wards, falling under the Vellore Parliamentary Constituency from where the petitioner was contesting. The presumption under Sections 132(4A) and 292C of the IT Act though a rebutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a huge cash, on account of factors highlighted supra. It would also be pertinent to note that cash of ₹ 11,48,51,800/- (₹ 10,48,52,800/- in 200 rupee denomination and remaining ₹ 99,99,000/- in denominations of 500 and 2000 rupees) was found in packets marked as Alangayam, Pallikonda, etc., with marking of Municipal wards falling under Vellore Parliamentary constituency and containing details of number of men and women voters, therein. This also reveals that the cash belongs to the assessee, Shri. D.M.Kathir Anand, who was the DMK (Dravida Munnetra Kazhagam party candidate for the 2019 Vellore Parliamentary constituency. 4.5. Further, it was also noticed during the course of enquiry with Canara Bank currency chest Manager (statement of whom was furnished to Shri. D.M.Kathir Anand, on his A.R. s requisition) and few other Canara Bank Branch Managers that ₹ 11,50,00,000/- was converted into 200 rupee denominations by Shri. Poonjolai Srinivasan from Canara Bank but only ₹ 10,48,52,800/- was found in 200 rupee denomination during the search on 01.04.2019 from the residence of Smt. Vimala and Shri. Damodaran. Thus, as against cash converted into 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong to such person. 4.7.1. On objection marked as (a) hereinabove, Shri. S.Srinivasan has explicitly stated that he was a DMK representative and he wanted to ensure victory of his party s candidate. However, he did not have the wherewithal to possess cash of ₹ 12,49,99,000/-. This aspect coupled with the fact that papers pertaining to Duraimurugan Educational Trust (of which the assessee is the Chairman) were found along with the cash and the voters details relating to the Vellore Parliamentary constituency indicate that the cash belongs to Shri. D.M.Kathir Anand only and Shri. S.Srinivasan is only a name lender. 4.7.2. On objection (b), no logical reason has been given by the assessee to explain as how the materials pertaining to Duraimurugan Educational Trust were found alongwith the cash at the residence of Damodaran. Also, the assessee was the DMK candidate for the 2019 Vellore Parliamentary constituency. Hence, at the time of election, the cash found alongwith the Trust papers (of which the assessee is the Chairman) indicate that the cash belongs only to the assessee and not to Shri. S.Srinivasan. 4.7.3. As regards objection (c), it may be noted that secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 27.9.2021 passed by the second respondent within a period of 30 days from the date of receipt of this order. If an such an appeal is filed by the petitioner within such time, the Appellate Commissioner shall pass orders on merits and in accordance with law. 62. The Appellate Commissioner shall pass orders in the proposed appeal to be filed by the petitioner on merits and in accordance with law without getting influenced with the observations in this order. The observation in this order is not intended to influence the appellate Commissioner. He shall pass orders on merits on the proposed appeal. 63. Considering the fact that the petitioner has enjoyed a temporary repreive during the pendency of these writ petitions, the recovery proceedings shall be kept in abeyance for a period of 60 days from the date of receipt of a copy of this order, provided the petitioner files such statutory appeal against the impugned assessment order dated 27.09.2021, within the time stipulated herein and an application under Section 220(6) of the Income Tax Act, 1961 before the second respondent herein. The second respondent shall endeavour to dispose the same preferably within 60 days fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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