Income Tax Appellate Tribunal - Chennai
Rajagounder Rajavel, Tiruchengode vs Ito Ward-5 , Namakkal on 23 October, 2019
आयकर अपील य अ धकरण ,' डी ' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
"D" BENCH, CHENNAI
ी धु वु आर. एल रे डी, या यक सद य एवं, ी एस जयरामनलेखा सद य समक्
BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND
SHRI S. JAYARAMAN, ACCOUNTANT MEMBER
आयकर अपील सं/.I.T.A. Nos. 2013 & 2014/Chny/2019
नधारण वष/Assessment Years : 2013-14 & 2014-15
Shri. Rajagounder Rajavel, The Income Tax Officer,
No. 65b, Okkilipatty Rajapalayam, Vs. Ward -5, Namakkal,
Tiruchengode - 637 209. Erode.
[PAN: AJSPR 2250E]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ' क( ओर से/Appellant by : None
+,यथ' क( ओर से/Respondent by : Mrs R. Anita, JCIT
सुनवाईक(तार ख/Date of Hearing : 23.10.2019
घोषणाक(तार ख/Date of Pronouncement : 27.12.2019
आदे श/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed the above appeals against the order of Commissioner of Income Tax (Appeals), Salem in ITA No. E-12/2016-17 dated 30.04.2019 & 26.04.2019, respectively , for the assessment years 2013-14 & 2014-15 with following grounds of appeal :
:-2-: ITA Nos. 2013 & 2014/Chny/2019 "For the assessment year 2013-14:
1. The order of The Commissioner of Income Tax (Appeals), Salem dated 23.04.2019 in ITA No. E-12/2016-17 for the above assessment year is contrary to law, facts, and in the circumstances of the case.
2. The CIT(Appeals) erred in sustaining the addition made pertaining to the contribution made to another entity invoking section 68 of the Act without assigning proper reasons and justification and further ought to have appreciated that the provisions of Section 68 of the Act had no application to the facts of the present case inasmuch as further ought to have appreciated that there was no credit in the books of the Appellant warranting explanation for the source while on the contrary the contribution made by the Appellant (outflow), was erroneously brought to tax thereby negating the addition made on various grounds.
3. The CIT(Appeals) failed to appreciate that the ex-parte order of the Assessing Officer and the ex-parte impugned order would grossly defy the principles of natural justice and any order passed in violation of the principles of natural justice should be reckoned as nullity in law while vitiating the exparte impugned order and assessment order.
4. The CIT(Appeals) went wrong in solely relying on the statement recorded at the time of survey thereby vitiating the findings recorded at Para 6 of the impugned order
5. The CIT(Appeals) failed to appreciate that in any event having not examined the source for the contribution independently by providing reasonable opportunity, the sustenance of the said addition in the computation of taxable total income was wrong, erroneous, unjustified, incorrect and not sustainable in law.
6. The Appellant craves leave to file additional grounds/arguments at the time of hearing."
For the assessment year 2014-15 :
" 1. The order of The Commissioner of Income Tax (Appeals), Salem dated 26.04.2019 in ITA No. E-12j2016-17 for the above assessment year is contrary to law, facts, and in the circumstances of the case.
:-3-: ITA Nos. 2013 & 2014/Chny/2019
2. The CIT(Appeals) erred in sustaining the addition made pertaining to the contribution made to another entity invoking section 68 of the Act without assigning proper reasons and justification and further ought to have appreciated that the provisions of Section 68 of the Act had no application to the facts of the present case inasmuch as further ought to have appreciated that there was no credit in the books of the Appellant warranting explanation for the source while on the contrary the contribution made by the Appellant (outflow), was erroneously brought to tax thereby negating the addition made on various grounds.
3. The CIT(Appeals) failed to appreciate that the ex-parte order of the Assessing Officer and the ex-parte impugned order would grossly defy the principles of natural justice and any order passed in violation of the principles of natural justice should be reckoned as nullity in law while vitiating the exparte impugned order and assessment order.
4. The CIT(Appeals) went wrong in solely relying on the statement recorded at the time of survey thereby vitiating the findings recorded at Para 6 of the impugned order.
5. The CIT(Appeals) failed to appreciate that in any event having not examined the source for the contribution independently by providing reasonable opportunity, the sustenance of the said addition in the computation of taxable total income was wrong, erroneous, unjustified, incorrect and not sustainable in law.
6. The Appellant craves leave to file additional grounds/arguments at the time of hearing. "
2. None was present for the assessee, though the notices for the hearings were served on the assessee on 28.8.19 which are placed in the record . In the hearing notices, the assessee was also required to cure the defect in the E-challan which was not attested. Since the assessee has not responded, we required the ld DR to present the cases. The ld DR took us through the :-4-: ITA Nos. 2013 & 2014/Chny/2019 orders of the ld CIT(A) and supported them , the relevant portion is extracted as under :
2.1 Relevant portion of the order of the CIT (A) for the assessment year 2013-14 " 5. In view of the unresponsive and recalcitrant attitude of the appellant in not appearing for any of the hearings posted by this office either in person or through his Authorized Representative, I am constrained to finalize the appellate proceedings with the materials available on record, without any further recourse to the appellant.
6. The relevant portion of the Assessment Order u/s 143{3) r.w.s. 144 of the Income Tax Act, 1961 passed on 29.03.2016 is reproduced below:
QUOTE ..................
....................
The assessee filed return of income for assessment year 2013-14 on 06.08.2014 admitting total income at Rs 2,61,980/-. The return was processed u/s 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny. Notice u/s 143(2) of the Income Tax Act, 1961 was issued on 23.09.2015 and served on 26.09.2015.
The case was posted for hearing on various dates. Notices u/s 142(1 of the IT Act was issued. But, the assessee has not complied with any of the notices and not produced books of accounts and other particulars. The chronological issue of the notices and the response of the assessee are as follows:
Sl.No Notice Date of the Service of Remarks
issued u/s. Notice the Notice
1 143(2) 23.09.2015 26.09.2015 Adjournment
letter filed
2 Reposting 29.10.2015 30.10.2015 No Response
letter
3 142(1) 16.11.2015 Not claimed even
after intimation
on 19.11.2015 &
20.11.2015
4 142(1) 10.12.2015 14.12.2015 No Response
:-5-: ITA Nos. 2013 & 2014/Chny/2019
5 131 29.02.2016 02.03.2016 No Response
6 142(1) 04.03.2016 09.03.2016 No Response
All the above tabulated facts clearly establish the obstinate nature of the assessee not to respond to any of the notices and it has totally failed to furnish any the details.
Further, it may be seen from the above table of events that though the assessee was given sufficient and several opportunities to produce the details and to explain the income shown in the return of income filed along with the books of account, it has failed to comply to any of the notices, thereby, it has failed to discharge the onus of proving gross profit, the income as well as the expenditure.
As per the provisions of section 144 of the I.T.Act,
144. Best judgment assessment (1) If any person a. falls to make the return required under sub-section (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub- section (5) of that section, or (b.) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 or fails to comply with a direction issued under subsection (2A) of that section, or
(c) having made a return, falls to comply with all the terms of a notice issued under sub- section (2) of section 143, The Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee[ .. ] on the basis of such assessment:
Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment:
Provided further that it shall-not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has prior to the making of an assessment under this section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.
:-6-: ITA Nos. 2013 & 2014/Chny/2019 In view of the sum and substances, as discussed above, the facts of this case clearly falls within the second proviso to section 144(1) of the IT Act , where, no opportunity by way of show cause notice shall be necessary to be issued as notice u/s 142(1) of the IT Act was issued severally and the assessee does not comply to any of this notice.
As the above mentioned facts are clearly fit into the provisions of section 144 of the IT Act, I am constrained to proceed with the materials available - on hand - in order to complete the assessment proceedings as the case gets time barred on 31.03.2016.
The following facts and figures are found, on verification made after duly considering and examining all the evidences, if any, furnished by the assessee during the course of assessment proceedings, to be unexplained, unproven and untenable claims made in the return of income that are not allowable as per the provisions of IT Act.
All of the above facts and figures are clearly establishing beyond doubt the fact that the assessee has knowingly, wantonly and intentionally suppressed the real business transactions filed before the department and thereby suppressed the real income that has to be subjected to tax. A survey under section 133A was carried out on 12-12-2014 at Vishnu Educational Trust, the 'a' in the capacity as President of Trust has admitted the following under oath under section 131 of the Income Tax Act, 1961. .......................
...........................
UNQUOTE
6. The only issue for adjudication in this case is regarding the action of the Assessing Officer in bringing to tax an amount of Rs,49,50,000/- as undisclosed investment, resulting in a tax demand of Rs. 22,43,690/- solely relying on the statement recorded from the President of the Trust on 12.12.2014.
7. BRIEF FACTS OF THE CASE:
The appellant is an individual doing the business of digging borewells in drought prone areas. Besides this, the main activity of the assessee had been functioning as President in a Charitable Trust in the name and style of VISHNU EDUCATIONAL AND CHARITABLE TRUST which is engaged in running an Educational Institution. A survey u/s. 133A was carried out on 12.12.2014 in the premises of the Trust. During the course of Survey, the appellant being the President of the Trust was asked about the sourves of investments made and also Trustee-wise contribution made to the Trust towards investments. In answer to Question No. 10 and at Sl.No. 1, the name R. Rajavel appears and an investment of Rs. 50,00,000/- is shown against this name. The AO in his order dated 29.03.2016 relied on the statement under oath of the assessee during the course of Survey. The AO stated that an amount of Rs. 49,50,000/- out of Rs. 50 lakhs pertained to :-7-: ITA Nos. 2013 & 2014/Chny/2019 the period from 01.04.2012 to 31.03.2013. As the assessee had not offered this amount of Rs. 49,50,000/- in hi Return of Income filed for the Asst.
Year, the same was assessed as his undisclosed investment and brought to tax accordingly."
2.2 The relevant portion of the order of the CIT(A) for the assessment year 2014-15 is extracted as under:
"6. Further, it is seen from the assessment order that the appellant has not responded to any of the statutory notices issued by the A.O. during the course of assessment proceedings. Apart from seeking adjournment on few occasions, he has not availed any of the opportunities accorded to him to present his case before the A.O. Hence, the assessment was completed u/s 144 of the Act. Before me also the appellant has not produced any materials in support any of his claims. As discussed in the earlier part of this order that the appellant is the President of the trust and he had also admitted in the statement recorded during the course of survey regarding his contribution towards the trust fund. The appellant has not offered this income for taxation for this assessment year. In the absence of any explanation for the sources for these contributions by the appellant, the A.O. has assessed entire amount as the undisclosed investment in the hands of the appellant based on the admission during the course of survey u/s 133A of the I.T. Act, which is supported by the entries in the books found therein.
Hence, I do not find any void reason to interfere with the findings of the A.O. and dismiss all the grounds of the appellant."
3. We heard the submissions of the ld DR and gone through them . It is clear from the above that the assessee, Shri. Rajagounder Rajavel, was the President in a Charitable Trust, Vishnu Educational and Charitable Trust, and was also doing business in putting bore wells in drought areas. A survey was carried out on 12.12.2014 at Vishnu Educational Trust. At that time, the assessee deposed that Rs. 6,90,50,000/- was made as an investment in trust land, building approval etc. The assessee also deposed the list of persons and the :-8-: ITA Nos. 2013 & 2014/Chny/2019 amount contributed by various trustees. Further, the documents inventoried as ANN/MP/BND/F-4, page no.5, revealed that the assessee has made investments to the tune of Rs. 86,50,000/- for the period 01.04.2012 to 31.03.2014. While deposing the sworn statement, Shri, Rajagounder Rajavel admitted Rs.
50,00,000/- as an investment in the trust during the period relevant to assessment year 2013-14. However, the returns filed, the assessee has not admitted the sources for the above investment. During the course of the assessments for the above assessment years, the AO has given a lot of opportunities to the assessee to explain the sources found in the annexure at the time of survey. Since, the assessee did not comply with his notices, the AO added Rs. 50,00,000/- as an undisclosed investments in the assessment made for the assessment year 2013-14 and Rs. 37,00,000/- as an undisclosed investment in the assessment made for the assessment year 2014-15.
Aggrieved against those orders, the assessee filed appeals before the CIT(A). It is clear from the orders of the Ld. CIT(A), supra, that the assessee has not made any efforts to explain the impugned sources and hence the Ld. CIT(A) dismissed those appeals. Though, the assessee filed the above appeals, before us also , he has not filed any documentary evidence to explain the sources of the impugned investments or any document in support of his contentions.
Therefore, we do not find any merit in the above appeals. Further, the assessee has also not rectified the defects mentioned in the hearing notices. On both the grounds, we dismiss the assessee's above appeals.
:-9-: ITA Nos. 2013 & 2014/Chny/2019
4. In the result, the assessee's appeals for the assessment years 2013-14 & 2014-15 are dismissed.
Order pronounced on Friday, the 27th December, 2019 at Chennai.
Sd/- Sd/-
(धु वु आर.एलरे "डी) (एस जयरामन)
(DUVVURU RL REDDY) (S. JAYARAMAN)
$या यकसद%य/JUDICIAL MEMBER लेखासद%य/Accountant Member
चे नई/Chennai,
1दनांक/Dated: 27th December, 2019
JPV
आदे शक(+ त3ल4पअ5े4षत/Copy to:
1. अपीलाथ'/Appellant 2. +,यथ'/Respondent 3. आयकरआय6
ु त) अपील(/CIT(A)
4. आयकरआय6
ु त/CIT 5. 4वभागीय+ त न ध/DR 6. गाड9फाईल/GF