Income Tax Appellate Tribunal - Chennai
Nadessan Sivapragasam, Chennai vs Acit Central 3(1), Chennai on 4 November, 2022
आयकर अपील य अ धकरण, 'सी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'C' BENCH, CHENNAI
ी वी. दग
ु ा राव, या यक सद य एवं ी जी. मंजुनाथ, लेखा सद य के सम
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER
AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER
Misc. Application No. 110/ Chn y/2022
[In I T A No. 11 2 / Ch n y/ 20 2 1]
( नधारणवष / Assessment Year: 20 15-16)
Mr. Nadessan Sivapragasam, Vs The Assistant Commissioner of
10, Achi Illam, 1st Cross Street, Income Tax,
De Silva Road, Mylapore, Central Circle -3(1),
Chennai - 600 004. Chennai.
PAN : ABQP N-717 0-H
( ाथक /Petitioner) ( यथ /Respondent)
ाथक क ओरसे/ Petitioner by : Mr. Rakesh Joshi, CA
यथ क ओरसे/Respondent by : Mr. P. Sajit Kumar, JCIT
सुनवाई क तार ख/D at e of he ar ing : 04.11.2022
घोषणा क तार ख /Da t e of P r on o u nc em en t : 04.11.2022
आदे श / O R D E R
PER G. MANJUNATHA, AM:
The assessee has filed present Miscellaneous Application u/s. 254(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") against the order of the Tribunal dated 27.07.2022 in ITA Nos. 112 to 114/Chny/2021, relevant to assessment years 2015-16 to 2017-18.
2. The assessee had narrated facts and mistakes stated to be apparent on record from the order of the Tribunal dated 27.07.2022 and :-2-: MA No: 110/Chny/2022 relevant contents of the Miscellaneous Application filed by the assessee are reproduced as under:
1) The aforesaid appeal was heard on 05.07.2022 together with ITA No. 113-114/CHNY/2021. The appeal of the assessee was disposed off vide consolidated order dated 27/07/2022 by the Hon'ble Bench which was received by the appellant on 27/07/2022.
2) The fact of the case is that during the year under consideration the Ld. Assessing Officer has made the addition of Rs.4,27,00,000/- on account of alleged Unaccounted income and Rs.1,65,90,000/- on account of alleged Unaccounted cash receipt on the basis of seized documents. The Ld. CIT(A) sustained the said addition against which the assessee preferred an appeal before the Hon'ble ITAT.
3) Before the Hon'ble IT AT, the appellant has raised the ground of appeal (GOA) that the addition made by the Ld. AO is on the basis of dumb documents found during the course of search proceedings. Without prejudice to the above, the assessee also raised the additional ground vide letter dated 06.12.2021, which was also part of the revised Form 36 filed on 26.04.2022, through this additional GOA assessee asked the benefit of telescoping of the receipts and payments as indicated in the seized material.
4) During the course of the hearing, the Authorized representative (AR) of the appellant argued the case that the addition cannot be made since the documents on which basis addition was made by the Ld. AO was dumb documents and the documents resulted in an addition of Rs. 1.65 crores neither belonging to him nor was seized from his premises. The AR has also made an alternative argument that if at all the seized document is to be relied upon, then addition can be sustained only peak credit basis as the subsequent credit can be reasonably attributed to a pre-
existing fund as recorded in the seized document and benefit of telescoping is to be allowed to the appellant.
5) The Hon'ble Bench accepted the alternative argument of the AR for the addition of Rs. 4.27 crore and sustained the addition on the basis of the peak theory as per the finding given in para 9 of the ITAT order.
6) However, while adjudicating ground No. 15 related to the addition of Rs.1.65 crore, the Hon'ble Bench has neither accepted this alternate plea nor given any finding rejecting the said plea and the addition of Rs.1.65 crore was Confirmed by the Bench. Since there is a specific ground taken by the assessee to grant the benefit of telescoping, therefore, the appellant submits that income worked out on the basis of two sets of seized paper could be overlapping with each other so the addition sustained in the first year should be available for telescoping on subsequent year.
7) Since documents/plea available on record has not been considered, therefore, a mistake apparent from the record has crept in. It is, therefore, submitted that the order may kindly be rectified U/s 254(2) of the Act to that extent.
:-3-: MA No: 110/Chny/2022
8) The applicant hereby declares that no miscellaneous application U/s 254(2) of the Income Tax Act, 1961 was filed earlier before the Hon'ble Bench against this order."
3. The Ld. Counsel for the assessee referring to para 6 of Miscellaneous Application filed by the assessee submitted that, although the assessee has made an alternate plea in respect of addition made by the AO towards cash receipts of Rs. 1.65 crores for giving telescoping benefit for subsequent assessment years, in case the addition is sustained for the impugned assessment year, but the Tribunal neither accepted alternate plea nor given any finding rejecting the said plea of the assessee and thus, such error constitutes mistake apparent on record which needs to be rectified u/s. 254(2) of the Act.
4. The ld. Sr. DR, submitted that there is no mistake in the order of the Tribunal on the issue of alternate plea of the assessee, because the additions made by the AO towards cash receipts is not a subject matter of peak credit and thus, the Tribunal has rightly not accepted alternate plea of the assessee and thus, Miscellaneous Application filed by the assessee should be rejected.
5. We have heard both the parties and considered relevant contents of Miscellaneous Application filed by the assessee and we find that in para 21 :-4-: MA No: 110/Chny/2022 of the Tribunal order dated 27.07.2022, the Tribunal has sustained additions made by the AO towards cash receipts recorded in seized material on the ground that, the assessee could not explain the nature and source of cash receipts. However, on alternate plea of the assessee that in case addition is sustained, then addition can be sustained only on peak credit basis, as the subsequent credit can be reasonably attributed to a pre-existing fund as recorded in the seized document and benefit of telescoping is to be allowed to the appellant, we find that once addition is sustained towards cash receipts on the ground that it constitutes income of the assessee, then obviously said income is available for the benefit of telescoping either in the same financial year or in the subsequent financial year. Therefore, we are of the considered view, there is a merit in alternate plea of the ld. Counsel for the assessee, that additions sustained towards cash receipts should be on peak credit basis and further said cash credit is to be treated as pre-existing fund as recorded in the seized documents and available for benefit of telescoping. Therefore, we are of the considered view that there is a mistake in the order of the Tribunal as much as in not adjudicating alternate plea of the assessee and thus, we modify the findings of the Tribunal in para 21 of the order dated 27.07.2022 and in addition to the findings already given, we add following findings:
" In so far as alternate plea of the assessee regarding applying peak credit theory and treating the pre-existing funds available for benefit of :-5-: MA No: 110/Chny/2022 telescoping either in the same financial year and or during subsequent financial year, we find that once any cash credits is treated as income of the assessee then, obviously said income constitutes pre-existing fund of the assessee and further, the same is available for telescoping against any assets either in the same financial year or in the subsequent financial year.
Therefore, we are of the considered view that the AO is directed to treat the additions made towards cash receipts received from certain persons as recorded in seized documents as income of the assessee which is available for telescoping benefit either in the impugned assessment year or in subsequent assessment years."
6. Thus, we allow Miscellaneous Application filed by the assesse in light of our observations given herein above in para 5 of this order.
Order pronounced in the open court on 04th November, 2022 Sd/- Sd/-
(वी. दगु ा राव) (जी. मंजुनाथ)
(V.Durga Rao) (G.Manjunatha)
या यक सद य /Judicial Member लेखा सद य / Accountant Member
चे नई/Chennai,
दनांक/Dated : 04th November, 2022
JPV
आदे श क त ल प अ े षत/Copy to:
1. Appellant 2. Respondent 3.आयकर आयु त (अपील)/CIT(A)
4. आयकर आयु त/CIT 5. वभागीय त न ध/DR 6. गाड फाईल/GF