Income Tax Appellate Tribunal - Chennai
Ku. Pa. Krishnan, Trichy vs Acit, Chennai on 27 September, 2023
आयकर अपीलीय अिधकरण "डी" ायपीठ चे ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, CHENNAI माननीय ,ी महावीर िसंह, उपा23 एवं माननीय ,ी मनोज कुमार अ8वाल ,ले खा सद; के सम3।
BEFORE HON'BLE SHRI MAHAVIR SINGH, VP AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./IT(SS)A No.2/Chny/2016 (Block Period:1986-87 to 1996-97 up to 17-07-1996) Shri Ku. Pa. Krishnan ACIT बनाम/ Tamilpannai House, Main Road, Central Circle-2(3), Kulumani, Trichy-639 103. Vs. Chennai.
थायीले खासं ./जीआइआ रसं ./PAN/GIR No.ADJPK-2197-A (अ पीलाथ /Appellant) : ( !थ / Respondent) अपीलाथ कीओरसे / Appellant by : Shri G.Baskar & Shri I.Dinesh (Advocates) - Ld.ARs !थ कीओरसे /Respondent by : Shri A. Sasikumar(CIT) - Ld.DR सु नवाईकीतारीख/Date of Hearing : 24-07-2023 घोषणाकीतारीख/Date of Pronouncement : 27-09-2023 आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member)
1. By way of aforesaid appeal, the assessee assails certain additions made by Ld. Assessing Officer in its order dated 31-12-2015 which has been passed u/s 158BC r.w.s. 143(3) r.w.s. 254 r.w.s. 260A of the Act. This is third round of appeal. Briefly stated, the assessee being resident individual served as Minister of Agriculture in the Government of Tamil Nadu during June, 1991 to April, 1996. The assessee was subjected to search action on 17-07-1996 and an assessment was framed on 31-07- 1997 determining total income of Rs.540.07 Lacs. During the course of 2 search action, statements u/s 132(4) was recorded. The assessee made disclosure of approx. Rs.77.69 Lacs and agreed to file the necessary return of income. However, in response to notice u/s 158BC, he filed 'Nil' return of income. The Tribunal, vide IT(SS)A No.193/Mds/97, detailed order dated 14-10-2003, after considering assessee's submissions as well as additional evidences filed by the assessee, reduced the taxable income of Rs.540.07 Lacs to Rs.64.98 Lacs. The assessee as well as department assailed this order before Hon'ble High Court of Madras in TCA No.686 of 2005 and 2 of 2009 dated 27.03.2012.
2. The Hon'ble Court, vide paras-8 to 12 of the order noted that since it was a block assessment, the assessee could file appeal only before Tribunal since there was no provision to file appeal before CIT(A) at relevant point of time. Under these circumstances, Rule 46A could not be pressed in to service. However, as per Rule 29, Tribunal may allow production of additional evidences upon being satisfied subject to the condition that Tribunal should afford sufficient opportunity to the revenue to rebut those additional evidences. Therefore, the objection raised by revenue for admission of additional evidences by Tribunal was dismissed. In paras 14 and 15, the Hon'ble Court also noted the nature of documents furnished by the assessee before Tribunal. In para-16, it was held by Hon'ble Court that the rebuttal of evidences should have been by Assessing Officer who will be in a better position to verify the genuineness of those documents and he may or may not accept the case of the assessee. It was finally held that by placing reliance solely on the documents filed as additional evidences, the Tribunal confirmed assessment to the extent of Rs.65.52 Lacs and deleted the rest of the 3 assessment. Therefore, Tribunal ought not to have gone into the additional evidences rather it should have remitted the matter to Assessing Officer. Accordingly, the order of the Tribunal was set aside and the matter was restored to Ld. AO to consider the documents filed as additional evidences by the assessee and pass fresh order.
3. Pursuant to the same, another assessment was framed by Ld. AO on 28.03.2013 determining exactly the same income which was again subject matter of challenge before Tribunal vide IT(SS)A No.12/Mds/2013 order dated 19.06.2015. The Tribunal, in para-6 of the order noting the case history, concurred with the submissions of Ld. Counsel for Assessee as well Ld. Spl. Public Prosecutor of the department that Ld. AO did not consider the additional evidences filed by the assessee and therefore, there was clear violation of the direction issued by the High Court. Pursuant to the directions of Hon'ble High Court, AO had no option except to consider the additional evidences filed by the assessee and discuss the same in the assessment order by making a reference in respect of each and every additional evidence filed by the assessee and pass a speaking order. By any stretch of imagination, AO was not expected to ignore the directions of High Court and omit to consider the additional evidences filed by the assessee. Since the directions of High Court were not followed, Tribunal held that the matter was to be reconsidered by AO as directed by Hon'ble High Court. Accordingly, the assessment was set aside and AO was directed to comply with the directions of Hon'ble High Court and complete the assessment proceedings within 6 months from the date of receipt of the order of the Tribunal.
4Present Assessment Proceedings 4.1 Pursuant to the aforesaid order of the Tribunal, another assessment has been framed by Ld. AO on 31-12-2015. As noted in para-6 of the impugned order, Ld. AO issued notices u/s 142(1) and 143(2) calling for requisite details from the assessee. The statement of the assessee was recorded on various occasions starting from 13-11- 2015 onwards. The assessee filed additional evidences in the form of paper-book containing 316 pages. Some more documents were filed on 09-12-2015. The assessee's representative appeared on 11-12-2015 and submitted paper-book (explanation with evidences containing 264 pages). Various other submissions and documents were filed from time to time in support of the case and final hearing took place on 23-12- 2015. In para-7, Ld. AO noted as under: -
During the course present proceedings on various dates, the assessee and the Authorised representative appeared on various dates discussed above and submitted the paper book containing additional evidence (pages 1 to 316) filed before the Hon'ble ITAT - attested copy of the charge sheet filed by the DVAC before the Session Court cum Special Judge, Chennai, copy of the order of Special court in case No.2/2003 both in Tamil version and translated English version, copy of the bail order, copy of the order for release obtained from Special Court (bail for assessment), copy of statement recorded by DVAC, paper book containing explanation with evidences with respect to paper book containing additional evidences (pages 1 to 316) filed before the Hon'ble ITAT. The assessee during the course of hearing argued that all the above materials have been furnished in compliance to with the orders of the Hon'ble High Court and Hon. ITAT dated 27.03.2012 and 19.06.2015 respectively. The assessee pleaded that all these materials have to be considered in the present assessment proceedings, since they were not duly considered in the earlier proceedings which was subjected to appeal also.
4.2 During the course of assessment proceedings, the assessee also submitted proof of agricultural income like Adangal records, Xerox copy of VAO certificates, lease copy etc. with respect to 13 persons and submitted that all these persons had independent sources of income 5 having immoveable property holdings in their individual capacity. Some of them have also filed return of income. The Ld. AO held that since search took place more than 19 years ago, recording of statement from above persons as available would not give full picture, in as much as some individuals are not alive and any attempt to bring the legal heir into the present proceedings would not give clear picture as the impact of putting across the evidence would not be as effective as stated by the individual as and recorded earlier from 1996 onwards. The assessee submitted that its agricultural income was commensurate with the extent of agricultural holding. The agricultural activities were further substantiated by irrefutable evidences like Chitta, Adangal, Patta, VAO receipt and Kist Receipts etc. 4.3 Considering the material on record and other evidences, Ld. AO proceeded to re-frame the assessment. The findings of Ld. AO are contained in paras 9.1 onwards till para-10. Upon perusal of the same, it could be seen that Ld. AO has primarily gone by the findings rendered in first Assessment order dated 31-07-1997 and retained the taxable income exactly at the same figure of Rs.540.07 Lacs as done in assessment order dated 31-07-1997. In other words, the Ld. AO has merely confirmed the assessment order passed on 31-07-1997 and has rejected all the additional evidences as well as submissions made by the assessee. Aggrieved as aforesaid, the assessee is in further appeal before us.
4.4 The grounds of appeal raised by the assessee read as under: -
1.1 The impugned assessment order is not sustainable in law as the same is not in consonance with the specific directions of the Hon'ble Tribunal while remitting the matter to the assessing authority.6
1.2 The impugned assessment order is not sustainable in law as the same has been made without application of mind and without appreciating the submissions of the assessee despite specific written submissions in reply to the show cause notice of the AO. 1.3 The AO failed to note that the assessee had filed evidences of the state revenue authorities before this Hon'ble Tribunal to show and prove his agriculture income and also the source of investments of other persons whose income and investments were sought to be included as that of the assessee, based on which this Hon'ble Tribunal deleted those additions.
1.4 The impugned assessment order, as admitted in the order itself, is only a repetition and reiteration of the earlier block assessment Order passed in flagrant inconsistency to the proceedings before this Hon'ble Tribunal and is hence liable to be quashed in toto. 1.5The AO failed to note that the documents filed by the assessee by way of additional evidences were not only to show his sources of agricultural income but also to discharge his burden to rebut the presumption u/s.69 of the Act against the inclusion of others income and investment as his income and investment. The AO having failed to consider those documents and also having not rejected the same on its genuineness erred in completing the block assessment through the impugned order in a causal manner. 1.6 The AO failed to take into account the submissions of the assessee in relation to the criminal proceedings initiated by the Government of Tamil Nadu through Department of Vigilance and Anti-corruption under the prevention of Corruption Act on the allegation against the assessee and his relatives for accumulation of disproportionate wealth during the period covered by the DV & AC search.
1.7 The AO ought to have seen that the proceedings initiated before the Special Court were mostly based on the documents procured by the search party under the IT Act both at the time of search and subsequent thereafter which were requisitioned by the DV &AC from the IT authorities for being used in the criminal proceedings. 1.8 The AO failed to note that evidences submitted by the assessee were also part of the documents marked before the Special Court and the signatories and the issuing authorities of those documents were examined by the Special Court and those documents were proved as authentic; most of the officials of the IT Department who conducted the search under the IT act were also examined by the Special Court relating to those documents. 1.9 The AO erred in concluding and even rejecting to take into account the evidentiary value of the satisfaction of the Special Court on those evidences. 1.10 While the earlier orders of assessment observed that no evidences were filed by the assessee to establish any agricultural activity by him in respect of and in relation to the additions made and in relation to the inclusion of the income and investments of the third parties as the assessee's income and investment erred in summarily rejecting those evidences in the present proceedings.
1.11 The AO failed to take into account the order of the criminal court in the prosecution initiated by the Department of Vigilance and anti-corruption (DVAC) of the Government of Tamil Nadu and went wrong in ignoring the order of the trial judge in its totality.
2.Cash found at the time of search -Rs.9,02,150 The AO erred in treating the entire cash found of Rs.9,02,150 as the undisclosed income of the assessee, without considering the explanation offered and the evidences let in to prove the agricultural income earned by the assessee.
3. Gold jewellery - Rs.10,21,946 The AO equally went wrong in treating a sum of Rs.10,21,946, being the value of gold jewellery found as undisclosed income of the assessee, without considering the explanation offered.7
4.Silver Jewellery - Rs.81,088 Similarly, the AO erred in treating a sum of Rs.81,088 being the value of silver articles found as undisclosed income of the assessee ignoring the explanation offered.
5.Diamond Jewellery - Rs.80,000 The AO equally went wrong in treating a sum of Rs.80,000/- being the value of diamond jewellery found as undisclosed income of the assessee, ignoring the explanation offered.
6.House hold Articles - Rs.2,50,000 The AO erred in treating the value of household articles found of Rs.2,50,000/- as undisclosed income of the assessee, ignoring the explanation offered.
7.Investment in cars - Rs. 9, 15,000.
7.1The AO erred in treating the contessa car bearing Registration number PY-01-B-4422, Trex Jeep bearing registration number - TN- 01-7975, Car bearing registration number TN-
45-D-3333 and Car bearing registration number TN-45-7-5555 as having been acquired by the assessee.
7.2 Consequently, the AO erred in adding a sum of Rs.9.15,000/- to the income of the assessee, ignoring the explanation offered.
7.3.The AO failed to note that the department has no evidence to prove that the aforesaid cars and Jeep has been acquired by the assessee.
8.Investment in fire-arms - Rs.1,00,000/ The AO erred in treating a sum of Rs.1,00,000/- being the investment in fire arms as undisclosed income of the assessee.
9 Pro-notes issued by Mr.Kaliamurthy - Rs.10,00,000/- The AO went wrong in treating a sum of Rs.10,00,000/- being the amount lent to Mr.Kaliamurthy and his wife by the asssessee's father as the undisclosed income of the assessee.
10. Deposit of Rs.49,90,000/- with Bank of Baroda, Dindigul Branch and interest thereon 10.1 The AO erred in treating a deposit of Rs.49,90,000/- with Bank of Baroda, Dindigul Branch, as the undisclosed income of the assessee for this year. 10.2 The AO equally went wrong in treating the-interest thereon of Rs.3,712/- as undisclosed income of the assessee for the A,Y;1996-97 and Rs.22.358 as undisclosed income of the assessee for the for the A.Y;1997-98,
11. Deposit of Rs .40,00,000 in of Paramasivam &Periyakkal The AO went wrong in treating the deposit of Rs.40,00,000 in of Paramasivam &Periyakkal as undisclosed income of the assessee.
12. Deposits in the name of Palaniammal - Rs.8,12,000 and Rs.3,00,000. The AO erred in treating the sums of Rs.8,12,000/- and Rs.3,00,000/being the deposits in the name of Palaniammal as the undisclosed income of the assessee.
13.Fixed deposits by A.G.Chittibabu and A. A. Govindrajan and interest thereon. 13.1 The AO erred in treating a sum of Rs.13,00,000/- in SB A/C No.11547 Bank of Baroda, Kulumani Branch by A.G.Chittibabu and Rs.12,00,000/- in SB A/C No.1280, Bank of Baroda, Kulumani Branch by A.A. Govindrajan as the undisclosed income of the assessee.
13.2 The AO went wrong in treating the interest on the fixed deposit made by A.G. Chittibabu of Rs.1,47,630/-, Rs.1,33,195/-, Rs.1,81,657 and Rs.20,831 for the A.Ys:1994- 95, 1995-96, 1996-97 and 1997-98 as the undisclosed income of the assessee, 13.3 The AO went wrong in treating the interest on the fixed deposit made by A.A. Govindarajan of Rs.1,36,270/-, Rs.1,27,953/-, Rs.1,67,684 and Rs.19,227 for the A.Ys:1994-95, 1995-96, 1996-97 and 1997-98 as the undisclosed income of the assessee.
813.4 The AO went wrong in treating the interest of Rs.25/- on the savings bank a/c balance of A.G. Chittibabu and Rs.25/- on the savings bank a/c balance of A.A. Govindarajan as the undisclosed income of the assessee.
14. Deposits into Bank alc of P.Krishnan & K.Ramakrishnan 14.1 The AO erred in treating a sum of Rs.13,00,100/-, Rs.3,00,000/- and Rs.25,00,000/- in SB A/C No.11547 of P.Krishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yrs:199394, 1994-95, 1995-96 and 1997-98 respectively. 14.2 The AO equally went wrong in treating a sum of Rs.55,368/-, Rs.86,802/and Rs.57,819/- being the interest from SB A/C No.11547 of P.Krishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yrs:1994-95, 1995-96 and 1997-98 respectively.
14.3 The AO erred in treating the sum of Rs.25,00,00/-, (Rs.15,00,000 plus Rs.10,00,000/-) in SB A/C No.11821 of K.Ramakrishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yr:1994-95. 14.4 The AO equally erred in treating the sum of Rs.25,00,00/- in SB A/C No.11821 of K.Ramakrishnan with Bank of Baroda, Kulumani branch as undisclosed income of the assessee for the A.Yr:1997-98.
14.5 The AO equally went wrong in treating the sums of Rs.31,250/-, Rs.37,687/-, Rs.2,28,020, Rs.1,29,520 and Rs.66,476/- being the interest from Bank of Baroda, Kulumani branch to K.Ramakrishnan as undisclosed income of the asses see. 14.6 The AO in any event went wrong in totally ignoring the withdrawals made from the above said bank accounts.
15. Credits in various bank accounts of the assessee 15.1 The AO went wrong in treating the following sums credited into the following savings Bank Accounts of the assessee as undisclosed income;
Savings Bank Al c No.4 786, Bank of Baroda, Kulumani Branch Rs.12,16,590 Savings Bank A/c No.1280, Bank of Baroda, Kulumani Branch Rs.14,38,914 State Bank of India, Ramalinga Nagar Branch, Trichy A/cNo.09/1625 Rs.5,94 ,330 Bank of Baroda, K.K.Nagar Branch - S.B A/c No.3666 Rs.25,398 Indian Overseas Bank, Secretariat Branch - S.B A/c.No.5999 Rs.7,01,959 15.2 The AO also went wrong in treating the interest earned in respect of these accounts as undisclosed income.
15.3 The AO failed to note that there is no material seized at the time of search or collected in their relation thereto based on which this addition could be made.
16.Deposits of Smt. Malliga Krishnan - Rs .11,84,030 The AO went wrong in treating the credits and the interest thereon aggregating Rs.11,84,030/- into saving Bank Account No,7494 with Bank of Boroda, Kulumani of Smt Mallika Krishnan as undisclosed income of the assessee.
17. Deposit in the name of Master Chiranjivi - Rs.29,392 The AO erred in treating the fixed deposit in the name of Chiranjivi of Rs.20,000/- and the interest thereon aggregating Rs.29.392 as the undisclosed income of the assessee.
18.Investment in immovable properties by various persons and income therefrom. 18.1 The AO went wrong in treating the following investments as that of the assessee:
9A. House property at Fern Hill by 6 people Rs.22,01,037 B. Investment in purchase of Property at Kumaran Nagar Trichy by 3 Rs. 24,34,800 persons C. Land at Manikandam Village by 4 persons Rs. 8,75,150 D. Plot at Anna Nagar, Trichy by K.P.Balakrishnan &Poongundrum Rs. 7 ,21,200 E. Land at Vadagaunchi Village by Selvi Kanagavalli &5 others Rs. 13,21,470 F. Flat at No.9/4, Nehru Nagar, Adayar by Chittibabu Rs. 9,05,400 G.Purchase of flat No.9/3, Nehru Nagar, Adayar by Malliga Krishnan Rs.6,59,900 Purchase of agricultural land of 1 Acre &80 cents at Kulumani Village by Rs.90,000 Poongundrum Total 18.2 The AO went wrong in estimating and treating various sums as property income from the property at Fern hill, Kodaikanal; property at Bankers Colony, Kumaran Nagar, Tiruchy, and the two flats at Nehru Nagar, Adyar as that of the assessee.
19.Investment in Residential house at Kulumani Nagar Trichy Rs.11,94,000 The AO went wrong in treating the investment in the residential house at Kulumani Nagar Trichy of Rs.11.94,000 as undisclosed income of the assessee:
20. Unexplained investment in Buses 20.1 The AO erred in treating the investment in many buses as unexplained investment of the assessee and treating the income therefrom as the unexplained income of the assessee:
20.2 The AO went wrong in estimating huge figures as income from operation of buses and treating it as unexplained income of the assessee:
A.Yr Bus Number Income
estimated
1994-95 TN 45 E 7000 Rs. 81,280
TN 45 D 0525 Rs.8,590
TN 45 7872 Rs.3,35,600
Total Rs.4,25,470
1995-96 TN45 E 7000 Rs.2,79,620
TN45 D 0525 Rs.1,58,500
TN45 0 7857 Rs.3,00,300
Total Rs.7,38,420
1996-97 TN 45 E 7000 Rs.2,79,620
TN 45 D 3565 Rs.1,47,525
TN 45 D 0525 Rs.3,31,760
TN 45 E 1582 Rs.97,230
TN 45 0 7857 Rs.3,90,020
Total Rs.11,97,224
1997-98 TN 45 E 7000 Rs.1,66,960
TN 45 D 3565 Rs.1,47,525
TN 45 D 0525 Rs.1,62,550
TN 45 E 1582 Rs.97,230
10
TN 45 0 7857 Rs.1,31,780
Total Rs.7,06,045
21. Investment in Sundar Creations - Rs.2,00,000 The AO went wrong in treating the investment in Sundar Creations of Rs.2,00,000/- as undisclosed income of the assessee.
Children education expenses - Rs. 2,18,264 The AO went wrong in determining the children education expenses as under in addition to the family maintenance expenditure already estimated by him:
A.Yr Amount
1992-93 Rs.41,946
1994-95 Rs.57,217
1995-96 Rs.65,254
23. Election expenses - Rs.3,35,000
The AO went wrong in estimating the election expenses at Rs.40,000/- each in A.Yrs:1990- 91 and 1991-92 and Rs.3,35,000/- in A.Yr:1994-95 and further went wrong in treating it as undisclosed income of the assessee.
24. Family expenses The AO went wrong in fixing the family maintenance expenditure at high figures and further went wrong in treating it as undisclosed income of the assessee; nor had the AO taken into account the withdrawals made from the bank accounts.
A.Y: Amount
1987-88 Rs.20,000
1988-89 Rs.25,000
1989-90 Rs.30,000
1990-91 Rs.35,000
1991-92 Rs.50,000
1992-93 Rs.1,00,000
1993-94 Rs.1,50,000
1994-95 Rs.2,00,000
1995-96 Rs.2,50,000
1996-97 Rs.3,00,000
1997-98 (upto 17.07.96) Rs.1,00,000
Total Rs.12,60,000
25.Donation to AIADMK party - Rs.10,00,000
The AO went wrong in treating the sum of Rs.10,00,000/- as donation to AIADMK party as undisclosed income of the assessee.
26.Payment made to Jaya Publications - Rs. 20,000 The AO erred in treating a sum of Rs.20,000/- being the payment made to Jaya Publications as undisclosed income of the assessee.
27.Salary income - Rs.2,24,600 The AO went wrong in treating the salary received by the appellant as his undisclosed income ignoring the fact that this source of income had already been disclosed to the department.
A.Y: Amount
11
1992 - 93 Rs.24,600
1993 - 94 Rs.36,000
1994- 95 Rs.41,500
1995 - 96 Rs,53,000
1996 - 97 Rs.59,500
1997- 98 Rs.10,000
Total Rs. 2,24,600
28. Fixation of agricultural income of assessee 28.1 The AO went wrong in either not giving credit for agricultural income earned by the appellant during the assessment years 1987-88, 1988-89 and 1989-90. 28.2 The AO went wrong in observing that no evidence had been let it to prove the earning of agricultural income.
28.3 The AO erred in fixing the agricultural income of the following years at a very low figure;
A.Y: Amount
1991-92 Rs.20,760
1992-93 Rs.24,220
1993-94 Rs.27,680
1994-95 Rs.41,500
1995-96 Rs.34,600
1996-97 Rs.38,060
1997-98 (upto 17.7.96) Rs.17,300
29. Block assessment should be confined to search materials 29.1 The AO failed to note that in the proceedings for block assessment only the materials seized at the time of search and the materials collected in relation thereto alone could be made use of and not any other materials. The AO went wrong in using all the materials collected by him in the post search enquiry and the materials collected in the course of the assessment proceedings.
29.2 The AO ought to have further seen that it is settled law that in a block assessment there is no room for estimation of income nor can the assessment be made on the basis of probabilities.
29.3 The AO ought to have excluded the income returned / assessed in the returns of income filed prior to search as it is to be treated as "disclosed income"
29.4 The AO went wrong in ignoring the returns of income and the annexures thereto filed by the appellant and his family members much before the date of search.
30. Income below taxable limit In any event the AO ought to have seen that the total income determined by him for the Assessment years 1988-89, 1989-90 and 1991-92 is less than the taxable limit and cannot therefore be treated as undisclosed income.
For these reasons and other reasons that may be adduced at the time of hearing it is prayed that the additions made by the AO on the above issues be deleted.12
4.5 The order passed by City Special Court, Chennai in Spl. CC No.2/2003 dated 31.05.2010 in the case of the assessee as well as other 8 accused persons has also been placed on record. The assessee has assailed the present assessment proceedings on the strength of this order by submitting that all the accused persons including the assessee has been acquitted of the charges and therefore, there remain no case for the department to make impugned additions in the hands of the assessee. The final order passed by Hon'ble Court read as under: -
09. Punishment or order: In the result the charges against the first accused under Section 13(3) r/w 13(1)(e) of Prevention of Corruption Act and the Charges against the accused 2 to 9 u/s 109 IPC r/w Section 13(2) r/w 13(1)(e) of Prevention of Corruption Act have not been proved beyond any reasonable doubt through exhibits and evidences and a judgment is delivered by acquitting the first accused from the charges punishable under Section 13(2) r/w 13(1)(e) of Prevention of Corruption Act and the accused 2 to 9 are acquitted from the charges punishable u/s 109 IPC r/w Section 13(2) r/w 13(1)(e) of Prevention of Corruption Act as per provisions of 248(1) Cr. P.C. The 4th accused died during the pendency of this case and hence order is passed holding that the charges against her are terminated.
It is further ordered to destroy the M.O.1 to M.O.33 after the appeal time.
Arguments of Ld. AR 5.1 The assessee has filed detailed written submissions on 28.11.2019. The paper-books containing various documents, submissions, case laws etc. have also been filed before us. The first and foremost argument of Ld. AR is that Ld. AO has failed to look into the additional evidences as filed by the assessee before Tribunal despite specific directions of Hon'ble High Court. The Ld. AR drew attention to the fact that the income of the assessee has been determined exactly at the same figure in all the three assessments as framed by Ld. AO. The Ld. AR submitted that Ld. AO has merely confirmed the additions made 13 in the first block assessment order dated 31.07.1997. For the same, Ld. AR drew attention to the impugned order wherein all the additions have been reconfirmed with similar observations. The Ld. AR stated that Ld. AO has not attempted anything on the additional evidences and repeated the assessment by observing that the assessee did not produce any corroborative evidences in support of the additional evidences. The Ld. AR submitted that the exception taken by Hon'ble High Court in the order of the Tribunal was only with reference to the Tribunal considering the additional evidence without having remitted the same to the AO for evaluation. Thus, Ld. AO neither followed the directions relating to verifying the additional evidences nor applied his mind uninfluenced by earlier proceedings in completing the block assessment and therefore, impugned order could not be said to be passed in accordance with the law.
5.2 Another argument of Ld. AR is that since the assessee has been acquitted in criminal proceedings, there remains no case with the department to make the impugned additions. The attention has been drawn to the order of Special Court, which reveal that the prosecution in the said case was largely based on the documents collected by the Income Tax department pursuant to search u/s 132. The enquiry before the Special Court was on the charge of disproportionate wealth as compared to known sources of income on the contention that all the immoveable properties and income of the other accused persons who happened to the relative of the assessee, belong to assessee only. Therefore, it is well within the authority of the Tribunal to take into consideration the evaluation actually carried out by Special Court and 14 consider the same in respect of additions made in block assessment proceedings. For the same, Ld. AR referred to the observations of Hon'ble Supreme Court in the case of DCIT vs. Jayachandran & Others (406 ITR 1) observing as under: -
12. Further, while considering the claim of the Respondent and the view of the Assessing Officer, how the bank itself had treated the Respondent, is a matter of relevance. At the outset, learned counsel appearing on behalf of the Revenue contended that the proceedings under the Income Tax Act are independent proceedings and the High Court committed a grave error in relying on the findings of the criminal Court. We do not find any force in the contention of the appellant herein as the High Court has not held that the findings of the criminal court are binding on the Revenue authorities. Rather the High Court was of the view that the findings arrived at by the criminal court can be taken into consideration while deciding the question as to the relationship between the parties to the case. When the findings are arrived by a criminal court on the evidence and the material placed on record then in absence of anything shown to the contrary, there seems to be no reason as to why these duly proved evidence should not be relied upon by the Court. The High Court has specifically appraised the findings given by the CBI Court in this regard.
The relationship between the Indian Bank and the Respondent is very much clear by the evidence led during the criminal proceedings. The Executive Director of the Bank has specifically spoken about the role of the Respondent as a broker specifically engaged by the Bank for the purchase of securities and that the Bank has included the interest money too in the consideration paid, for the purpose of taking demand drafts in favour of PSUs. Further, the evidence led by other bank officials points out that the price of securities itself were fixed by the bank authorities and as per their directions the Respondent had purchased the securities at the market price and the differential amount was directed to be used for taking demand drafts from the bank itself for paying additional interest to the PSUs. Further, the letter dated 25.03.1994 by the Bank wherein the Bank had acknowledged the receipt of Demand Drafts taken by the Respondent gives an unblurred picture about the capacity of the Respondent in holding the amount in question. Consequently, the conduct of the parties, as is recorded in the criminal proceedings showing the receipt of amount by the broker, the purpose of receipt and the demand drafts taken by the broker at the instance of the bank are sufficient to prove the fact that the Respondent acted as a broker to the Bank and, hence, the additional interest payable to the PSUs could not be held to be his property or income.
The Ld. AR thus prayed that considering the findings rendered by Special Court, the additions made of investment and income of third parties ought to be deleted from the income of the assessee. To support the same, Ld. AR also referred to Sec.33 of Indian Evidence Act.
155.3 With respect to additions where the scrutiny of additional evidences was not required, Ld. AR submitted that the additions made in the first round have been repeated despite the order of Tribunal on those additions. The Ld. AR submitted that the benefit of first round of Tribunal order ought to be available to the assessee.
5.4 The submissions of the assessee have been summed up in following manner: -
(a) In the background of the AO, who have been directed to evaluate the additional evidences since has expressed the difficulties for the reasons stated and in the dictate of the High Court that the evaluation of such evidences can be done only by the AO and not by the Appellate Tribunal, in the pending appeal the evaluation carried out on these additional evidences before the Special Court may be taken note and relied upon in respect of those additions made, which are referable to those additional evidences.
(b) Inasmuch as the High Court has not interdicted on the judgement of this Hon'ble Tribunal in respect of those editions where the reference to any additional evidence is not involved, the benefit of the judgement of the Hon'ble Tribunal rendered on judicial principles should be made available to me in this appeal.
(c) The principles of law laid down in the matters connected with block assessment is to be applied in the pending appeal in respect of those additions which do not have any reference to search material and even assuming without conceding that there were materials during the search relating to those additions, then, the procedure laid down under chapter XIV-B of the act should be applied for the assessment and the disposal of the appeal thereto to be in accordance with law as directed by the Hon'ble High Court as well as by this Hon'ble Tribunal.
(d) As these submissions made as above are in furtherance and complimentary to the grounds of appeal raised in the appeal by me as well as the Gist of submissions filed before this Hon'ble Tribunal this appeal may be disposed accordingly.
Arguments of Revenue 6.1 The Ld. CIT-DR has also filed detailed written submissions of 52 pages supporting the assessment order. In these submissions, Ld. CIT- DR has submitted that Ld. AO has arrived at conclusion that the documents submitted by the assessee do not have any evidentiary value to support the claim made by the assessee that the cash found was 16 sourced out of agricultural income. The Ld. CIT-DR further submitted that the additional evidences produced before Tribunal were given due consideration while passing the assessment order. 6.2 The Ld. CIT-DR further submitted that the proceedings of Special Court and Income Tax proceedings are on different footings. Under certain circumstances, the decision of civil court is also binding on criminal court although converse is not true since the standard of proof in civil and criminal case is different. Therefore, the findings rendered therein could not be considered in Income Tax proceedings. 6.3 The argument that the additions made by AO without reference to search material should not be included in his income for the block period is against the provisions of Sec.158BB which clarifies that the bock assessment of undisclosed income is to be based in the evidence found in the search and material or information gathered in the post search investigation. Further, search not only includes the date of search but also various subsequent investigation proceedings like consequential searches, verification of various evidences etc. 6.4 In the background of all these facts, Ld. CIT-DR supported the impugned additions under each head of income and has drawn attention to the findings rendered by Ld.AO on each of the issue. We have duly considered the same.
Our findings and Adjudication
7. We have carefully heard the rival submissions, gone through the case records as well as written submissions filed by both the sides. We have also gone through various judicial orders as placed before us including the order of Hon'ble High Court as well as Hon'ble Special 17 Court in the case of the assessee. Our findings and adjudication to the impugned issues would be as given in succeeding paragraphs.
8. From the fact, it emerges that Ld. AO made various additions in the first assessment order passed on 31-07-1997 and determined total income of the assessee at Rs.540.07 Lacs. The Tribunal, vide detailed order dated 14.10.2003, after appreciating the assessee's submissions as well as additional evidences, determined the total income of the assessee at Rs.64.98 Lacs. The copy of the order is on record. Upon further appeals by the assessee as well as revenue, the Hon'ble High Court of Madras, in TCA No.686 of 2005 and 2 of 2009 dated 27.03.2012, held that as per Rule 29, Tribunal may allow production of additional evidences upon being satisfied subject to the condition that Tribunal should afford sufficient opportunity to the revenue to rebut those additional evidences. The rebuttal of evidences should have been by Assessing Officer who would be in a better position to verify the genuineness of those documents. Accordingly, the order of the Tribunal was set aside and the matter was restored to Ld. AO to consider the documents filed as additional evidences by the assessee and pass fresh order.
9. Pursuant to the same, another assessment was framed by Ld. AO on 28.03.2013 determining exactly the same income as determined in order dated 31-07-1997 which was again subject matter of challenge before Tribunal vide IT(SS)A No.12/Mds/2013 order dated 19.06.2015. It was admitted position therein that Ld. AO did not consider the additional evidences filed by the assessee despite specific directions of Hon'ble High Court. Accordingly, the Tribunal held that by not considering the 18 additional evidences, there was clear violation of the direction issued by the Hon'ble High Court. Since the directions of Hon'ble High Court was not followed, the matter was against sent back by Tribunal to Ld. AO for fresh consideration.
10. In the third round, another assessment order has been passed on 31-12-2015. Upon perusal of assessment order, it would appear that though Ld. AO has called for additional evidences as well as requisite details from the assessee, however, the impugned assessment is primarily guided by original assessment framed on 31-07-1997 which is also evident from the fact that income of the assessee has been determined exactly at the same figures in all the assessment orders. In other words, Ld. AO remained unconvinced with the documentary evidences of the assessee and chose to take the same view as taken in original assessment order dated 31-07-1997.
11. It could further be seen that the original assessment order was under challenge before Tribunal vide IT(SS)A No.193/Mds/97, detailed order dated 14-10-2003 wherein the bench, after considering assessee's submissions, facts on record as well as additional evidences filed by the assessee, reduced the taxable income of Rs.540.07 Lacs to Rs.64.98 Lacs which is evident from para 44 of the order as placed on record. The substantive findings on each of the specific issue is contained in paras 33 to 44 of the order. We have carefully perused the same. The addition of cash found at the time of search for Rs.9.02 Lacs was deleted by Tribunal on the ground that cash was well covered with the ostensible sources of agricultural income explained by the assessee at the time of search as well as after search. The assessee was holding substantial 19 agricultural properties giving rise to agricultural income. The same was evidenced by certificates issued by concerned village officers. Therefore, the impugned cash could not be treated as undisclosed income of the assessee. On the issue of Jewellery, the bench sustained addition to the extent of Rs.1338.100 grams valuing at Rs.4.68 Lacs. The addition of Silver Jewellery for Rs.0.81 Lacs and Diamond Jewellery for Rs.0.80 Lacs was deleted. The addition of Household articles and vehicles aggregating to Rs.11.65 Lacs was deleted on the ground that all the things found in the premises of the assessee could not be attributed to the assessee's undisclosed income without any discrimination. The addition of fire-arms for Rs.1.00 Lacs was reduced to Rs.0.68 Lacs after allowing cost of purchase of fire-arms. The addition of blank promissory notes for Rs.10 Lacs was sustained for want of evidences. The addition of deposits held in the name of Shri K. Ramakrishnan for Rs.7.01 Lacs, deposit of Rs.40 Lacs held in the name of Paramasivam and Periyakka as well as deposit held in the name of Selvi Palaniammal for Rs.11.33 Lacs was deleted since the same was considered under total amount of Rs.49.90 Lacs found in the accounts of different persons and AO had treated all those accounts as relating to the assessee. The bench confirmed the addition of Rs.49.90 Lacs on the ground that the assessee took different stands at different points of time by introducing certain persons to the scene. The explanations were self-serving explanations only. The addition of consequential interest of Rs.0.26 Lacs was also confirmed. The addition of deposits held in the name Shri Govindarajan and Shri A.G. Chittibabu for Rs.34.34 Lacs was deleted since AO did not establish real nexus of the assessee with those deposits. Both of them 20 explained the sources available in their hands in the form of agricultural income. The addition of deposits held in the name Shri P. Krishnan for Rs.53.86 Lacs was deleted since the same was found to be made on mere suspicion. The addition of deposits held in the name Shri K. Ramakrishnan for Rs.54.93 Lacs also deleted since that person had positively confirmed the ownership of the deposits and explained the source of such deposits. The addition of deposits held in the other Savings Bank Accounts for Rs.32.75 Lacs was also deleted since the explanation of the assessee was found to be bona-fide. The addition of deposit of Rs.12.47 Lacs held in the name of Smt. G. Mallika was deleted since she was having agricultural lands and earning agricultural income. The addition of deposits held in the name of Master Chiranjeevi for Rs.0.29 Lacs was deleted since he owned certain land. The immoveable properties aggregating to Rs.92.08 Lacs held in the name of various persons was deleted primarily on the ground that acquisition of the property was already disclosed by those persons to the department. The additions were purely on estimation and the assessee was not provided any opportunity to cross-examine those persons. All the properties were registered against the name of respective parties and all those persons had filed evidences in respect of their agricultural income. The addition of improvement of residential house for Rs.11.94 was deleted since the reference of property for valuation in search proceedings without any incriminating material was held to be not justified in law. The income from bus operations for Rs.60.58 Lacs was deleted since the assessee denied any involvement in the operation of the bus services and the income was worked out purely on estimated 21 basis. The addition of Rs.2 Lacs for investment in Sundar Creations was deleted on the ground that AO had nothing to prove that the assessee had direct link with that party. The addition of Rs.2.13 Lacs for education expenses and family expenses for Rs.12.60 Lacs was deleted since the same was purely on estimation basis. The addition of House Property income for Rs.6.79 Lacs was also deleted. The addition of election expenses and donation etc. aggregating to Rs.14.35 Lacs was also deleted since the payments were made by the assessee in the status as politician and the amount was collected from party workers. Finally, the income of Rs.540.07 Lacs as determined by Ld. AO was reduced to Rs.64.98 Lacs as is evident from para 44 of the order as placed on record. We find that in the present proceedings, the impugned order is guided by the original assessment framed by Ld. AO and the assessee is in further appeal before us wherein the assessee relies on same documents as well as evidences filed before Tribunal in the first round.
12. Upon perusal of aforesaid order of Tribunal in first round, it could thus be seen that detailed factual findings have been rendered by Tribunal on each of the issue after appreciating the assessee's submissions as well as evidences filed by the assessee before the bench. The same documents were placed by the assessee before Ld. AO in the present proceedings. However, Ld. AO rejected the same and chose to take the same stand as taken in original assessment order. Aggrieved, the assessee is before us with similar arguments and evidences. Under these circumstances, the bench concurs with the findings of Tribunal in first round and considers it fit to adopt the same adjudication in the present proceedings. In other words, the income of 22 the assessee stand reduced to Rs.64,98,721/- as adjudicated by Tribunal in the first round. All the grounds of appeal stand disposed-off accordingly.
13. Our aforesaid adjudication is duly supported by the order of Hon'ble Special Court acquitting the assessee and all the other accused persons. The observations of Hon'ble Supreme Court in DCIT vs. Jayachandran & Others (supra) duly support the argument of Ld. AR that the findings arrived at by the criminal court could be taken into consideration while deciding the question as to the relationship between the parties to the case. When the findings are arrived by a criminal court on the evidence and the material placed on record then in absence of anything shown to the contrary, there seems to be no reason as to why these duly proved evidence should not be relied upon by the Court. Additionally, it would also be pertinent to note that, in the first round, the additional evidences were not furnished by the assessee with respect to all the impugned issues but the same were confined to only few of the issues only as tabulated by Ld. AR as under: -
Chart showing admission of additional evidences by the Hon'ble Tribunal during first round of litigation:
Ground Issue Addition made Addition Sustained/ Page No. Addl No.in Rs. Deleted Rs. confirmed of PB evidences present Rs. No.4 considered appeal 2 Cash found during NIL 325- 328 Yes 9,02,150 9,02,150 search 3 Gold Jewellery 10,21,946 5,53,611 4,68,335 328-330 No 4 NIL 330 & No Silver Jewellery 81,088 81,088 331 5 NIL 331 & No Diamond Jewellery 80,000 80,000 332 6 NIL 332 & No Household articles 2,50,000 2,50,000 333 7 Investment in cars & NIL 332 & No 9,15,000 9,15,000 Jeep 333 8 Investment in Fire 68,000 333 & No 1,00,000 32,000 arms 334 23 9 10 Promissory Notes 10,00,000 334 & No 10,00,000 NIL for value 335 10 Claim by the No Expl offered was assessee of cash left not considered 49,90,000 & by deceased father 336 & 26,070/-NIL 337
Account in Bank of Baroda, Dindigul in the names of Rajendran, Selvam & 49,90,000 Thangavelu-outsiders No & interest of Rs.26,070/-
11 40,00,000 337-338 No
Deposits in the name In view of
of Paramasivam and confirmation
Periyakka - 40,00,000 of 49.90 lakhs
father & mother of this separate
assessee addition was
deleted
12 Deposit in the name 11,33,814 NIL 338-339 YES
of Selvi Palaniammal 11,33,814
- relative of assessee
13 Fixed Deposits in the
name of AA
Govindarajan and
A.G.Chittibabu - 34,34,894 34,34,894 NIL 339-341 YES
father-in-law &
brother in law of
assessee
14.1 &
Deposits in the name
14.2 53,86,498 53,86,498 NIL 341 & No
of P. Krishnan
342
14.3 -
Deposits in the name
14.5 54,93,133 54,93, 133 NIL 342 & No
of K. Ramakrishnan
343
15
Credits in the bank
account of assessee 32,75,535
32,75,535 NIL 343 & No
3 accounts (ADMK)
344
16 Deposits in the name
of Mallika Krishnan - 12,47,380 NIL 344 & YES
wife of assessee 12,47,380 345
17 Deposit in the name
29,392
of Master Chiranjeevi 29,392 NIL 345 YES
18 Immovable prop in
the name of other
persons
Investment in the
name of Malliga
Krishnan and her
22,01 ,037
minor children 22,01 ,037
Sudarkodi &
Chiranjeevi & 345-348 YES
others in the house
property at Fern-hill,
Kodaikanal
24
Investment in others
name in the house
property at 24,34,800 24,34,800 NIL 345-348 YES
Kumaran Nagar,
Trichy
Investment in others
name in the land at
Manikandam 8,75,150 8,75,150 NIL YES
Panchayat
Investment in others
name in the plots at
Anna Nagar, 7,21,200 7,21,200 NIL YES
Trichy
345-348
Investment in others
name in land at
Vadagaunji 13,21,470 13,21,470 NIL YES
village
Investment in others
name in the flat at
Nehru Nagar, 9,05,400 9,05,400 NIL YES
Adyar
Investment in others
name in flat at Nehru
Nagar, 6,59,900 6,59,900 NIL YES
Adyar
Investment in the
name of others on the
90,000
agricultural 90,000 NIL
land in Wuraiyur
19 Improvement of
residential house at
11,94,000
Kulumani Village by 11,94,000 NIL 348 & No
assessee 349
20 Income from bus
operation
Investment in the
name of Jansi Rani in
Bus No.45E
7000 and the
operational income 60,58,154 NIL 349 YES
Investment in the
name of A.G.
Ayyavoo in Bus
No.TN 45 X 3565 and
the operational 60,58,154
income
Investment in the
name of P. Thangiah
in Bus No.TN
45 E 1582 and the
25
operational income
Investment in the
name of
Chandrahasan in Bus
No.TN 45 D 0525 and
the operational
income
Investment in the
name of
Chandrahasan in Bus
No. TN 45 C 7857
and the operational
income
21 Investment in Sudar 2,00,000 NIL NO
2,00,000
Creations
22 Children Education NO
2,13,264
expenses 2,13,264 NIL
23 Election expenses 4,15,000 4,15,000
24 Family expenses 12,60,000 12,60,000 NO
25 Donation to AIADMK 10,00,000 NIL NO
10,00,000 350 - 352
party
26 Payment to Jaya 20,000 NIL NO
20,000
Publications
27 Salary income 2,24,600 2,24,600 NIL NO
Upon further appeal, the Hon'ble High Court held that additional evidences ought to have been confronted to the AO who would be in a better position to appreciate / verify the same. This fact also strongly supports adoption of first round adjudication of the Tribunal by us. Therefore, we direct Ld. AO to determine the total income of the assessee at Rs.64,98,721/- as per the first round of decision by Tribunal.
14. The appeal stands partly allowed.
Order pronounced on 27th September, 2023.
Sd/- Sd/-
(MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL)
उपा45 / VICE PRESIDENT लेखासद7 / ACCOUNTANT MEMBER
चे9ईChennai; िदनां कDated :27-09-2023
DS
26
आदे शकीNितिलिपअ8े िषत/Copy of the Order forwarded to :
1. अपीलाथ /Appellant 2. !थ /Respondent 3. आयकरआयुA/CIT 4. िवभागीय ितिनिध/DR
5. गाडF फाईल/GF