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TMI Blog2025 (5) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal for the assessment years 2012-13 to 2014-15. For the sake of brevity the grounds raised for the A.Y. 2012-13 ITA No.3267/Chny/2024 in the case of Sri. Naina Mohamed Seyadu Abdul Kareem are given below: 1. The order of the Learned Commissioner of Income Tax (Appeals) is contrary to the law, facts and circumstances of the case. 2. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 11,79,456/- as 'unaccounted investments' u/s. 69 of the Act towards deposits made in M/s.Seyad Cotton Mills Limited ("SCML" in Short) during the relevant previous year. 3. For that the Learned Commissioner of Income Tax (Appeals) had erred in making an enhancement of Rs. 93,669/- to the above mentioned addition made by relying upon the Order passed by the Hon'ble Income Tax Settlement Commission dated 06.09.2023 u/s. 245D(4) of the Act in the case of three Directors of SCML (ie) Shri.F.Sadiq, Shri.T.E.S.Naina Mohammed and Shri.F.Seyad Rabbani. 4. Without prejudice to the above, the Learned Commissioner of Income Tax (Appeals) erred in rejecting the alternate plea of the appellant that only the fresh investment made out of the und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fixed deposits were all made by the Directors of the Seyad group and that the deposits appearing in the name of beedi rollers were nothing but unaccounted money of the directors. Thereafter, rejecting the submission of the assessee that they had not invested any amounts in SCML in the name of beedi rollers and had not derived any interest from such deposits, by placing reliance on the statement recorded from Shri.P.K.Meeran Mohideen, the AO had made additions in the underlying Assessment Orders passed u/s. 143(3) r.w.s. 153A of the Act, on the basis of the respective assessee Directors' shareholding pattern in SCML, as 'unaccounted investments' u/s. 69 of the Act in their respective hands for the A.Ys 2012-13 to 2014-15. Aggrieved by such Assessment Orders, the assessee preferred appeals before the CIT(A) - 19, Chennai. With respect to the subject issue included in the Settlement application filed by three Directors of SCML (i.e.) Shri.F.Sadiq, Shri.T.E.S.Naina Mohammed and Shri.F.Seyad Rabbani, the Income Tax Settlement Commission ("ITSC"), vide its Order dated 06.09.2023 passed u/s. 245D(4) of the Act had made an addition of Rs. 51,57,500/- each in their hands at Rs. 12,73,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of search or post-search proceedings. - The assessment was completed u/s. 143(3) of the Act in the case of M/s.Seyad Cotton Mills Ltd. for the AYs 2013-14 & 2014-15 without any addition in this regard and further the AO in Assessment Order relating to A.Y.2011-12 assessed u/s. 143(3) r.w.s. 263 of the Act, had specifically acknowledged that details of depositors along with confirmation letter were furnished to the AO, that these were duly verified and found to be in order at the time of assessment proceedings and no adverse findings were made by the AO. - Further, no incriminating evidence was found to show that the funds from the directors were deposited in the name of beedi rollers apart from relying on assumptions and statement of Shri. P.K.Meeran Mohideen who had also admitted that deposits were also made by beedi rollers. He has clearly bifurcated the amount of deposits pertaining to the assesses and their family members and the amount pertaining to beedi rollers vide response to question no.3 of his sworn statement dated 01.08.2017. The relevant extract of the same is as under: "Q. No.3: Please furnish the details of fixed deposits made by the beedi rolle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific date was mentioned in the KYC form for receipt of deposits and no entry was made in the columns 'FOR OFFICE USE'." a. The additions were made without controverting the above contentions of the assessee. b. With respect to the rejection of the Rectification Petition filed before the ITSC relating to the subject issue, the relevant extract was reproduced as under: "It is observed that the Hon'ble Interim Board has made addition of income pertaining to investment made in the earlier assessment years not covered in the settlement application. It is submitted that the addition of Rs. 4.12 crore of deposits includes the deposits made in the prior years of Rs. 1.4687 crore reflected as opening balance hereunder and thus the same ought not to be added as income while computing the undisclosed investment made for the subject AYs 2012-13 and 2014-15. In lakhs AY Opening balance Investment made during the year Refund Closing balance Incremental year wise closing balance added by IBS A B C D E=B+C-D F 2012-13 146.87 46.40 91.42 101.85 101.85 2013-14 101.85 249.30 55.80 295.35 193.50 2014-15 295.35 165.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the core decision taken on merits in the earlier order. The Interim Board for Settlement (IBS) cannot recall or revisit its own decision on merit and change its considered opinion within the meaning of provisions of Section 245D(6B) of I.T.Act, 1961. For this proposition, reliance is placed upon order of Hon'ble Supreme Court in the case of TS Balaram, ITO versus Volkart Brothers 1971, 82 ITR 50 SC. For these reasons, the rectification petition on the above-mentioned issue is not found maintainable and is hereby rejected." (emphasis supplied) 13. The assessee's had reiterated their contentions enumerated in the rectification petition filed u/s. 245D(6B) of the Act before the ITSC as stated above and considering the detailed submissions, it was humbly prayed to the ld.CIT(A) that the addition, if made, ought to be restricted to Rs. 2.95 crores on an overall basis as against Rs. 4.13 crores as contended by the revenue, which shall tantamount to Rs. 36.97 lakhs in toto in the case of each director, being 1/8th of Rs. 2,95,73,000/- pertaining to the 'Fresh investment made during the year to be offered as undisclosed Income at Rs. 18,56,000/- for the AY 2013-14 and Rs. 18,40,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeran Mohideen, DGM (Accounts), the AO concluded that the fixed deposits were all made by the Directors of the Seyad group and that the deposits appearing in the name of beedi rollers were nothing but unaccounted money of the directors. We find that, the AO rejecting the submission of the assessee that they had not invested any amounts in SCML in the name of beedi rollers and had not derived any interest from such deposits, by placing reliance on the statement recorded from Shri.P.K.Meeran Mohideen, made an additions in the Assessment Orders passed u/s. 143(3) r.w.s. 153A of the Act, on the basis of the respective assessee Directors' shareholding pattern in SCML, as 'unaccounted investments' u/s. 69 of the Act in their respective hands for the A.Ys 2012-13 to 2014-15. 20. Further we note that the subject issue included in the settlement application filed by three Directors of SCML (i.e.) Shri.F.Sadiq, Shri.T.E.S.Naina Mohammed and Shri.F.Seyad Rabbani, the Income Tax Settlement Commission ("ITSC"), vide its order dated 06.09.2023 passed u/s. 245D(4) of the Act had made an addition of Rs. 51,57,500/- each in their hands at Rs. 12,73,125/- Rs. 24,18,750/- and Rs. 14,65,625/- for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2017. The relevant extract of the same is as under: "Q. No. 3 : Please furnish the details of fixed deposits made by the beedi rollers for the above said period. Also furnish the date and mode of such payments such as by cash/ cheque/ RTGS/ Transfer etc? Ans: As I already stated in my earlier reply, out of the total fixed deposits furnished in Annexure-1, only Rs. 30,00,000/- belonged to Shri F Seyad Rabbani and his wife. The rest of the above said deposits were made by beedi rollers...." 25. It is evident upon perusal of Shri.P.K.Meeran Mohideen's sworn statement dated 01.08.2017 in its entirety that he had merely explained the modus operandi of the business functioning and had nowhere stated/admitted that the same pertains to the directors of the company. The AO had relied on thirty party letters without providing an opportunity to the assessee to cross examine the factual veracity of the statement made by the third parties, which is in direct violation of the principles of natural justice. The Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (SC) (supra) held that : "Once the assessee has disputed the correctness of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and relying on the judicial precedents supra, we are of the considered view that the ld.CIT(A) erred in confirming the additions made by the AO in the assessment along with proceedings enhancing the additions made by the Assessing Officer in the assessment. Hence, we are setting aside the order of the Ld.CIT(A) and delete the additions made u/s. 69 of the Act. 29. Since, the facts and circumstances of ITA No.3267/Chny/2024 for A.Y. 2012-13 are identical in the following cases, therefore our adjudication in ITA No. 3267/Chny/2024 for A.Y. 2012-13 is applicable mutatis mutandis to all the following cases: Sl. No. ITA Nos. Assessee Asst. Year 1 ITA No.3268 /Chny/2024 Shri. Naina Mohamed Seyad Abdul Kareem 2013-14 2 ITA No.3272/Chny/2024 Shri. Naina Mohamed Seyad Abdul Kareem 2014-15 3 ITA No.3269/Chny/2024 Shri. Naina Mohamed Seyad Nawaz 2014-15 4 ITA No.3270/Chny/2024 Shri. Naina Mohamed Seyad Nawaz 2012-13 5 ITA No.3271/Chny/2024 Shri. Naina Mohamed Seyad Nawaz 2013-14 6 ITA No.106 /Chny/2025 Shri. TES Fathu Rabbani 2012-13 7 ITA No.107/Chny/2025 Shri. TES Fathu Rabbani 2013-14 8 ITA No.108/Chny/2025 Shri. TES Fathu Rabbani 2014-15 9 ITA No.109 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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