Income Tax Appellate Tribunal - Chennai
Smt. R.Prabha, Chennai vs Acit, Chennai on 13 January, 2017
आयकर अपील य अ धकरण, 'सी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी अ ाहम पी.जॉज%, लेखा सद य केसम(
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
I.T.(SS) A. No.9/Mds/2008
Block Period : 01.04.1986 to 31.03.1996 &
01.04.1996 to 24.09.1996
Smt. S. Prabha, The Assistant Commissioner of
No.11-A, Parameswari Nagar v. Income Tax,
III Street, Adyar, Chennai - 600020. Central Circle II(2),
Chennai.
PAN : AGAPP 0445 L
(अपीलाथ+/Appellant) (-.यथ+/Respondent)
अपीलाथ+ क/ ओर से/Appellant by : Shri K.G. Raghunath, Advocate
-.यथ+ क/ ओर से/Respondent by : Sh. T.R. Senthil Kumar, Sr. Standing
Counsel
सन
ु वाई क/ तार ख/Date of Hearing : 24.11.2016
घोषणा क/ तार ख/Date of Pronouncement : 13.01.2017
आदे श /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Assessing Officer dated 14.12.2007 for the block period 01.04.1986 to 31.03.1996 and 01.04.1996 to 24.09.1996.
2. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that there was a search in the premises of Shri T.V. 2 I.T.(SS) A. No.9/Mds/08 Sundaravadanam, father of the assessee, on 24.09.1996. Consequently, notice under Section 158BC read with Section 158BD of the Income-tax Act, 1961 (in short 'the Act') was issued to the assessee. The Assessing Officer determined the undisclosed income for the block period in the hands of the assessee under Section 158BC of the Act at `12,02,370/-. An appeal was filed before this Tribunal in I.T.(SS) A. No.174/Mds/1998. This Tribunal by an order dated 30.6.2006, set aside the order of the Assessing Officer and directed the Assessing Officer to redo the assessment after affording opportunity to the assessee. Accordingly, the assessment was completed under Section 158BC of the Act. Being aggrieved by the order of the Assessing Officer, the assessee has filed the present appeal before this Tribunal.
3. The first ground of appeal is with regard to jurisdiction of the Assessing Officer in assessing the income under Section 158BD of the Act. According to the Ld. counsel for the assessee, no search was carried out in the name of the assessee, therefore, the assessee is a person other than the searched person. Hence, the assessment has to be made under Section 158BD of the Act. In fact, the assessment was made under Section 158BD of the Act. 3 I.T.(SS) A. No.9/Mds/08 Therefore, the Assessing Officer has to record his satisfaction before issuing notice under Section 158BD of the Act to the assessee. No satisfaction was recorded by the Assessing Officer, therefore, according to the Ld. counsel, in view of judgment of Apex Court in Manish Maheshwari v. ACIT (2007) 289 ITR 341, the Assessing Officer cannot make any assessment in the hands of the assessee. Hence the entire assessment proceedings cannot stand in the eye of law.
4. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that the issue of recording of satisfaction was examined by this Tribunal in the earlier round of litigation and this Tribunal by an order dated 30.06.2006 in I.T.(SS) A. No.174/Mds/1998 found that the Assessing Officer has rightly invoked the jurisdiction after recording satisfaction. An appeal has already been filed by the assessee before the High Court and the same is pending. Therefore, at this stage, the Tribunal cannot go into the issue of jurisdiction. In other words, according to the Ld. Sr. Standing Counsel, the issue of jurisdiction was decided by the co-ordinate Bench of this Tribunal against the assessee, hence, the same cannot be re-examined. 4 I.T.(SS) A. No.9/Mds/08
5. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that in the earlier round of litigation in I.T.(SS) A. No.174/Mds/1998, by an order dated 30.06.2006, this Tribunal examined the issue of jurisdiction and found that the Assessing Officer has validly initiated proceeding under Section 158BD of the Act. Therefore, as rightly submitted by the Ld. Sr. Standing Counsel for the Revenue, the very same issue cannot be re-agitated once again before this Bench of the Tribunal. In other words, the order passed by this Tribunal in I.T.(SS) A. No.174/Mds/1998 dated 30.06.2006 is binding on both the parties. Therefore, this Tribunal is of the considered opinion that the Assessing Officer has rightly invoked the jurisdiction and initiated proceeding under Section 158BD of the Act.
6. Now coming to the merit of the issue raised by the assessee, the first ground of appeal is with regard to addition of `83,490/- towards unexplained cash gift for the assessment year 1992-93. 5 I.T.(SS) A. No.9/Mds/08
7. Shri K.G. Raghunath, Ld.counsel for the assessee, submitted that the assessee received gifts on the occasion of her marriage. According to the Ld. counsel, the marriage of the assessee took place on 18.10.1991. The assessee has furnished details of 206 persons, who had gifted cash to the extent of `1,47,275/-. The details of the gift were furnished to the Assessing Officer. The details filed before the Assessing Officer are available at pages 2 to 5 of the submission filed by the assessee for the assessment year 1992-93, which falls in the block period. The Assessing Officer for the reasons best known to him, accepted 50% of the gift received by the assessee and balance 50% was taken as undisclosed income for the assessment year 1992-93, which falls in the block period. According to the Ld. counsel, many dignitaries attended the marriage of the assessee. The assessee, in fact, submitted the copies of MOI books and other details which contained the names and details of the persons who made the gifts. Therefore, the Assessing Officer is not justified in accepting 50% of gift and disallowing remaining 50%.
8. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel, submitted that the MOI books were in fact 6 I.T.(SS) A. No.9/Mds/08 furnished before the Assessing Officer. Since the Assessing Officer has a doubt about the so-called gift received during the marriage, he disallowed 50% of the same and allowed the remaining 50%. Therefore, according to the Ld. Sr. Standing Counsel, no interference is called for.
9. We have considered the rival submissions on either side and perused the relevant material available on record. The assessment is admittedly made under Section 158BD of the Act. The names and other details are available in the MOI books. It is also not in dispute that no material was found during the course of search operation in respect of the so-called gifts said to be received by the assessee during her marriage. The assessee claimed before the Assessing Officer that out of the gifts received during her marriage, investment was made. This Tribunal is of the considered opinion that when the assessee has filed the details of gift said to be received from various persons during her marriage and the Assessing Officer has accepted 50% of the same without any reason, it is not known why the Assessing Officer disbelieved the remaining 50% of gifts. This Tribunal is of the considered opinion that if the Assessing Officer has any doubt about the receipt of gifts 7 I.T.(SS) A. No.9/Mds/08 during the assessee's marriage, he ought to have disallowed the entire claim instead of restricting it to 50%. The very fact that the Assessing Officer accepted 50% of the gifts shows that the assessee in fact received the gifts. Therefore, there is no justification in restricting to 50%. In view of this, this Tribunal is unable to uphold the order of the Assessing Officer. Accordingly, the order of the Assessing Officer is set aside and the addition of `83,490/- towards unexplained cash gift for the assessment year 1992-93 is deleted.
10. The next issue arises for consideration is with regard to addition of `2,50,000/- for the assessment year 1995-96, towards fixed deposit in MCC Bank.
11. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that there was a fixed deposit in MCC Bank, Tiruvanmiyur Branch in the joint name of the assessee and her husband Dr. Sivakumar. No material was found during the course of search operation regarding this deposit. The fixed deposit was, in fact, made on 28.07.1994. According to the Ld. counsel, the cash gift received during the assessee's wedding was very much available for making investment to the extent of `1,47,275/-. The Ld.counsel 8 I.T.(SS) A. No.9/Mds/08 further submitted that the assessee has also received cash gift from various persons on various occasions like birthday and other social occasions, apart from wedding. The household expenses received from the assessee's husband Dr. Sivakumar was also used for making deposit in the fixed deposit. After taking into consideration of the cash gift received during wedding to the extent of `1,47,275/-, receipt of gift on her son's naming ceremony to the extent of `24,705/-, proceeds of sale of part of her jewellery, which was confirmed by the Assessing Officer by an order dated 29.09.1998 to the extent of `41,458/- and accumulated cash savings from household expenses to the extent of `1,28,000/-, the available cash balance with the assessee was `3,42,165/-, out of which, the assessee has made fixed deposit of `2,50,000/-. Even though the fixed deposit stands in the joint name of the assessee and her husband, the assessee has furnished all the sources of income for making such deposit. The Assessing Officer without considering the claim of the assessee, made addition of `2,50,000/-. This being a block assessment under Section 158BD of the Act, according to the Ld. counsel, in the absence of any material found during the course of search operation, there cannot be any addition. 9 I.T.(SS) A. No.9/Mds/08
12. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that there was a fixed deposit jointly in the name of the assessee and her husband Dr. Sivakumar. In fact, the FD was opened in July, 1994. The Assessing Officer collected details by summoning the Branch Manager of MCC Bank, Tiruvanmiyur Branch, under Section 131 of the Act. In fact, the fixed deposit account was opened on 28.07.1994. On 12.09.1994, a sum of `1 lakh was withdrawn and the balance of `1.5 lakhs was renewed for further period. The accumulated interest along with fixed deposit was credited to the Savings Bank account to the extent of `1,77,822/- on 27.05.1995. The above amount was again invested on 31.05.1995 and 05.06.1995 in the form of four deposits for `1.4 lakhs. The assessee has also taken a loan against the fixed deposit to the extent of `1,61,000/-. Therefore, according to the Ld. Sr. Standing Counsel, the Assessing Officer has rightly found that the assessee could not explain the source of income.
13. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the block assessment was made under Section 158BD of the Act since 10 I.T.(SS) A. No.9/Mds/08 the assessee is the person other than the searched person. We have carefully gone through the provisions of Section 158BB(1) of the Act. Section 158BB(1) of the Act clearly says that the undisclosed income for the block period has to be computed on the basis of the evidence found during the course of search operation and such other materials or information available with the Assessing Officer and relatable to such evidence found during the course of search operation. In the case before us, it is nobody's case that there was any evidence found during the course of search operation. The Assessing Officer got the information about the fixed deposit from the Branch Manager of the bank while examining him under Section 131 of the Act. Therefore, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, there cannot be any addition for the block period under Section 158BD of the Act.
14. Even on merit, as demonstrated by the Ld.counsel for the assessee, the gift received by the assessee in cash during her wedding was available to the extent of `1,47,275/-. The assessee has also demonstrated before the Assessing Officer that she received `24,705/- towards cash gift during her son's naming 11 I.T.(SS) A. No.9/Mds/08 ceremony. The proceeds of sale of jewellery was admitted by the Assessing Officer by an order dated 29.09.1998 to the extent of `41,458/-. The assessee claims that the accumulated savings from the household expenses was to the extent of `1,28,000/-. The total available cash with the assessee for making the investment was `3,42,165/-. The assessee now claims that out of this `3,42,165/-, the fixed deposit of `2,50,000/- was made. It is customary in this part of country to receive gifts during the course of marriage and also naming ceremony and other social occasions. Taking into consideration of the social status of the assessee in the society and the customary practice prevailing in this part of country, this Tribunal is of the considered opinion that the claim of the assessee towards availability of cash to the extent of `3,42,165/- cannot be ruled out. Therefore, the claim of the assessee that the fixed deposit was made to the extent of `2,50,000/- out of available cash of `3,42,165/- cannot be rejected in toto. This Tribunal is of the considered opinion that the assessee might have deposited in the FD out of the cash available with her from the gifts received during her marriage and other social occasions, as stated by the assessee. Therefore, the addition of `2,50,000/- towards fixed deposit in MCC 12 I.T.(SS) A. No.9/Mds/08 Bank is not justified. Accordingly, the order of the Assessing Officer is set aside and the addition of `2,50,000/- is deleted.
15. The next ground of appeal is with regard to addition of `1,78,371/- towards investment in Maruti 1000 car for the assessment year 1996-97.
16. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that no material was found during the course of search operation in respect of purchase of Maruti 1000 car. The Assessing Officer issued a questionnaire on 03.08.1998 calling for certain details about the bank account standing in the name of the assessee and her husband Dr. Sivakumar along with passbook / statement of accounts. In pursuance to this questionnaire, the assessee has furnished copies of the passbook and bank statement. From these copies furnished by the assessee, the Assessing Officer found that two Pay Orders for `1,61,000/- and `1,55,000/- were issued in favour of one Dr. Azeezur Rehman towards purchase of Maruti 1000 car. The Assessing Officer also appears to have examined Dr. Azeezur Rehman on 17.09.1998. The Assessing Officer has also found that the assessee has taken a loan of `1.61 lakhs against the fixed deposit, on 04.09.1995. The 13 I.T.(SS) A. No.9/Mds/08 Assessing Officer ultimately treated the value of the Pay Order to the extent of `1,54,371/- along with cash payment of `24,000/- as undisclosed income. According to the Ld. counsel, the assessee was not involved in the transaction of purchase of car. The car is not an asset of the assessee. No money was paid by the assessee to Dr. Azeezur Rehman. In fact, the transaction was between the assessee's husband and Dr. Azeezur Rehman. Merely because the bank account stands in the joint name of the assessee and her husband, the Assessing Officer made addition in the hands of the assessee. According to the Ld. counsel, the entire transaction was made by the assessee's husband Dr. Sivakumar, therefore, there cannot be any addition in the hands of the assessee.
17. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that the Assessing Officer found that two Pay Orders for `1.61 lakhs and `1.55 lakhs respectively were issued from the bank account in favour of Dr. Azeezur Rehman for purchase of Maruti 1000 car. In response to the questionnaire issued by the Assessing Officer calling upon the assessee to furnish the copies of the bank passbook and statement of account of the assessee and her husband, the assessee has 14 I.T.(SS) A. No.9/Mds/08 furnished copies of her passbook and statement of bank account in MCC Bank, Tiruvanmiyur Branch alone. No details about the bank account of the assessee's husband Dr. Sivakumar was furnished before the Assessing Officer. In the absence of any details, the credit of `1,54,371/- towards purchase of Maruti 1000 car treated as unexplained in the hands of the assessee. Apart from that, the assessee has also made cash payment of `24,000/-. Therefore, the entire consideration on purchase of car was treated as undisclosed investment by the assessee.
18. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that no material was found during the course of search operation in respect of the investment made in the car. The Assessing Officer apparently made the addition since the assessee could not produce the details of the bank account and statement of bank accounts of her husband Dr. Sivakumar. The fact remains that the assessee has filed copies of bank statement of the assessee in MCC Bank, Tiruvanmiyur Branch. We have carefully gone through the provisions of Section 158BB(1) of the Act. For the purpose of making block assessment under Section 158BC or 15 I.T.(SS) A. No.9/Mds/08 158BD of the Act, the Assessing Officer has to confine himself to the material found during the course of search operation or to the information which is relatable to the material found during the course of search operation. In the case before us, it is nobody's case that the Assessing Officer has found any material with regard to investment made in the Maruti car, during the course of search operation. The issue of Pay Orders apparently came to the knowledge of the Assessing Officer as per the details furnished by the Bank Manager when he was summoned by the Assessing Officer. Therefore, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation with regard to investment said to be made in Maruti 1000 car, there cannot be any addition in the block period. Moreover, the assessee claims that she is not concerned with the transaction of purchase of car. Therefore, at the best, the addition may be made in the hands of Dr. Sivakumar, the assessee's husband in the regular assessment. Accordingly, the order of the Assessing Officer is set aside and the addition of `1,78,371/- for the assessment year 1996-97 is deleted.
16 I.T.(SS) A. No.9/Mds/08
19. The next ground of appeal is with regard to addition of `1,81,000/- towards settlement of loan for the assessment year 1996-97.
20. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the assessee availed a loan of `1,61,000/- as against the fixed deposit on 04.09.1995. No material was found during the course of search operation with regard to repayment of loan by the assessee. According to the Ld. counsel, the assessee has received a sum of `1,00,000/- from her husband Dr. Sivakumar. Along with this sum of `1,00,000/-, the assessee has also utilised accumulated savings of `61,000/- for repayment of loan availed from MCC Bank, Tiruvanmiyur Branch. The explanation of the assessee was totally ignored by the Assessing Officer. According to the Ld. counsel, there cannot be any addition in the block assessment in the absence of any material found during the course of search operation. Moreover, according to the Ld. counsel, the assessee had sufficient source for repayment of `1,61,000/- towards loan.
21. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for Revenue, submitted that the assessee has taken loan against the fixed deposit to the extent of `1.7 lakhs on 17 I.T.(SS) A. No.9/Mds/08 08.09.1995. In fact, a sum of `1,75,820/- was credited against four FDs which means that the assessee had squared up the loan taken by paying `1.61 lakhs into the loan account. Therefore, the repayment of loan to the extent of `1.61 lakhs was treated as undisclosed income by the Assessing Officer. Thus, the Assessing Officer has rightly made the addition.
22. We have considered the rival submissions on either side and perused the relevant material available on record. The Assessing Officer on the basis of the statement furnished by the assessee with regard to bank account, found that there was a credit of `1,75,820/- The Assessing Officer also found that the assessee has availed a loan of `1.7 lakhs on 08.09.1995. Therefore, the Assessing Officer presumed that the assessee had squared up the loan by paying `1.61 lakhs into the loan account. It is pertinent to note that this is a block assessment under Section 158BD of the Act. Therefore, the Assessing Officer cannot travel beyond the material found during the course of search operation. In the case before us, no search material was referred by the Assessing Officer in the assessment order. Therefore, this Tribunal is of the considered opinion that there cannot be any addition in the block period to the extent of 18 I.T.(SS) A. No.9/Mds/08 `1,61000/-. Moreover, the assessee explained before the Assessing Officer that she received a sum of `1,00,000/- from her husband Dr. Sivakumar and another sum of `61,000/-, which was accumulated savings of the assessee, was also utilised for repayment of `1,61,000/-. In view of the explanation of the assessee, which was not found to be fault by the Assessing Officer, this Tribunal is of the considered opinion that there cannot be any addition towards undisclosed income of the assessee. Accordingly, the order of the Assessing Officer is set aside and the addition made by the Assessing Officer to the extent of `1,61,000/- towards repayment of loan for the assessment year 1996-97 is deleted.
23. Now coming to the addition of `20,000/- towards fixed deposit for the assessment year 1996-97.
24. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the bank account in MCC Bank is a joint account held by the assessee along with her husband Dr. Sivakumar. The fixed deposit was opened by her husband out of his own funds. In fact, the assessee had no knowledge of transaction or the source of income for making the deposit. Therefore, according to the Ld. counsel, this deposit belongs to Dr. Sivakumar and not to the 19 I.T.(SS) A. No.9/Mds/08 assessee. Moreover, no material was found during the course of search operation, therefore, there cannot be any addition in the block period.
25. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that on perusal of bank account, the Assessing Officer found that the assessee has availed loan of `17,000/- against the fixed deposit of `20,000/- which was, in fact, deposited by cash. Therefore, the Assessing Officer has rightly treated the fixed deposit of `20,000/- as undisclosed investment.
26. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that there was no material found during the course of search operation. For the purpose of making block assessment under Section 158BD of the Act, the Assessing Officer has to confine himself to the material found during the course of search operation in view of the language employed by the Parliament in Section 158BB(1) of the Act. Moreover, the fixed deposit stands in the name of the assessee's husband and not in the name of the assessee. Therefore, it is for the assessee's husband to explain the 20 I.T.(SS) A. No.9/Mds/08 source for making the deposit. Merely because the assessee availed the loan from the bank, there cannot be any addition in the hands of the assessee for the deposit which stands in the name of Dr. Sivakumar, husband of the assessee. Therefore, this Tribunal is unable to uphold the order of the Assessing Officer and the same is set aside. The addition of `20,000/- is deleted.
27. The next issue arises for consideration is with regard to addition of `1,00,000/- towards fixed deposit in Indian Bank for the assessment year 1996-97.
28. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the assessee has withdrawn a sum of `1,00,000/- from MCC Bank, Tiruvanmiyur Branch, on 12.09.1994. This amount was used for making fixed deposit on 05.10.1995. However, the Assessing Officer found that the fixed deposit could not be made on 05.10.1995 with the money withdrawn on 22.08.1995. According to the Ld. counsel, the money withdrawn on 22.08.1995 cannot be used for making deposit on 05.10.1995. In fact, the money withdrawn on 22.08.1995 was utilised to repay the loan availed against the fixed deposit from MCC Bank, Tiruvanmiyur Branch. 21 I.T.(SS) A. No.9/Mds/08 According to the Ld. counsel, the Assessing Officer has simply ignored this explanation of the assessee and made addition.
29. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that the assessee made fixed deposit of `1,00,000/- in Indian Bank, Neelankarai Branch. Admittedly, the assessee has withdrawn `1,00,000/- on 22.08.1995. The Branch Manager was examined by the Assessing Officer under Section 131 of the Act on 03.08.1998. He explained that the fixed deposit of `1,00,000/- was originally opened on 05.10.1995. Therefore, the Assessing Officer found that there cannot be any source for making investment of `1,00,000/- in the fixed deposit on 05.10.1995, therefore, he made the addition.
30. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee has withdrawn a sum of ` 1,00,000/- from MCC Bank, Tiruvanmiyur Branch on 12.09.1994. The deposit was admittedly made on 05.10.1995. Therefore, this Tribunal is of the considered opinion that the assessee would have made investment out of the amount withdrawn on 12.09.1994. Moreover, no material was found during the course of search operation. The entire 22 I.T.(SS) A. No.9/Mds/08 addition was made on the basis of the statement said to be made by the Branch Manager, MCC Bank, Tiruvanmiyur Branch. This Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, there cannot be any addition in the block period. Therefore, this Tribunal is unable to uphold the order of the Assessing Officer. Accordingly, the order of the Assessing Officer is set aside and the addition of `1,00,000/- towards investment in fixed deposit in Indian Bank is deleted.
31. The next ground of appeal is with regard to addition of `50,000/- towards investment in IFCI for the assessment year 1996-
97.
32. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the assessee's husband Dr. Sivakumar made an investment in IFCI from his own source of funds in the name of the assessee as well as her minor son Master Karthik. Therefore, the transaction of investment with IFCI does not belong to the assessee at all. The investment was made in the name of minor son and the assessee by her husband Dr. Sivakumar. Therefore, according to 23 I.T.(SS) A. No.9/Mds/08 the Ld. counsel, this cannot be treated as undisclosed income in the block period.
33. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that the deposit / investment in IFCI stands in the name of the assessee and her minor son Master Karthik. Therefore, it is for the assessee to explain the source of investment. In the absence of any explanation from the assessee, according to the Sr. Standing Counsel, the Assessing Officer has rightly made the addition of `50,000/-.
34. We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the investment in IFCI stands in the name of the assessee and her minor son Master Karthik. The assessee claims that the investment was made by her husband Dr. Sivakumar in her name as well as her minor son's name. No material was found during the course of search operation with regard to investment in IFCI. The addition was made on the information filed by the assessee during the course of assessment. In fact, the Assistant Manager of IFCI Shri Murthy was summoned under Section 131 of the Act. On the basis of the details furnished by the said Shri 24 I.T.(SS) A. No.9/Mds/08 Murthy, it was found that there are two bonds for `25,000/- each, one in the name of the assessee and another in the name of her minor son Master Karthik. The investment appears to be made from the money withdrawn from Indian Bank, Nungambakkam Branch. From the above factual aspect, it appears that no material was found during the course of search operation. This Tribunal is of the considered opinion that since the assessee could explain the source for making the investment, no addition can be made in the block assessment.
35. In view of the limitations provided in Section 158BB(1) of the Act, for the purpose of computing undisclosed income for the block period, the Assessing Officer cannot travel beyond the material found during the course of search operation. In this case, the addition was made on the basis of the statement recorded under Section 131 of the Act from the Assistant Manager, IFCI and the Branch Manager, Indian Bank. No other search material was found during the course of search operation. Therefore, the information provided by the Assistant Manager, IFCI and the Branch Manager, Indian Bank, cannot be the basis for making addition in the block assessment under Section 158BD of the Act. In view of the above 25 I.T.(SS) A. No.9/Mds/08 statutory mandate, for computing the undisclosed income for the block period, this Tribunal is of the considered opinion that in the absence of any search material, there cannot be any addition for the block period. Therefore, this Tribunal is unable to uphold the order of the Assessing Officer and accordingly, the same is set aside and the addition of `50,000/- is deleted.
36. The next ground of appeal arises for consideration is with regard to addition of `29,374/- towards income from other sources, for the assessment year 1996-97.
37. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the assessee has admitted a sum of `22,000/- being bank interest under the head "income from other sources" in the return filed by her. In fact, a sum of `12,134/- was received towards interest from Indian Bank, Neelankarai Branch and another sum of `9,866/- was received from MCC Bank, Tiruvanmiyur Branch. Thus, the total interest received was `22,000/-. Since the accounts are jointly held by the assessee and her husband, a sum of `19,508/- was taken as total income by the assessee's husband Dr. Sivakumar. According to the Ld. counsel, a sum of `29,374/- cannot be considered to be undisclosed income in the hands of the 26 I.T.(SS) A. No.9/Mds/08 assessee. According to the Ld. counsel, a sum of `9,866/- was disclosed by the assessee and the balance of `19,508/- was disclosed in the case of Dr. Sivakumar. Therefore, there cannot be any addition towards interest in the hands of the assessee.
38. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that on perusal of short term deposit ledger, the Assessing Officer found that the assessee received a sum of `3,229/- on 12.09.1994 and another sum of `1,938/-, `1,980/- and `2,190/- respectively on 29.10.1994, 14.12.1994 and 21.02.1995. The assessee has in fact received `9,337/- towards interest. Similarly, the Assessing Officer found that the accrued interest in fixed deposit was `7,822/-. The interest received from the bank was to the extent of `41,508/-. The assessee has admitted only `22,000/-, therefore, the interest of `19,508/- was treated as undisclosed income in the hands of the assessee.
39. We have considered the rival submissions on either side and perused the relevant material available on record. The entire addition was made on the basis of the deposit ledger of the bank. No material was found during the course of search operation, It is 27 I.T.(SS) A. No.9/Mds/08 not in dispute that the assessee has disclosed `22,000/- towards interest under the head "income from other sources". The Assessing Officer found that the total interest received by the assessee was `41,508/-. The assessee claims a sum of `19,508/- was disclosed in the hands of the assessee's husband Dr. Sivakumar. In the absence of any material found during the course of search operation, this Tribunal is of the considered opinion that there cannot be any addition in the block period. Furthermore, It is not in dispute that a sum of `19,508/- was disclosed in the hands of Dr. Sivakumar. The deposit being jointly held by the assessee and her husband, this Tribunal is of the considered opinion that a part of interest has to be treated as income of the assessee's husband. Therefore, the addition made by the Assessing Officer to the extent of `19,508/- is not justified. Accordingly, the order of the Assessing Officer is set aside and the addition made to the extent of `19,508/- is deleted.
40. The next issue arises for consideration is with regard to addition of `45,000/- towards gadgets for the assessment year 1997-98.
28 I.T.(SS) A. No.9/Mds/08
41. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the Revenue authorities found tape-recorder, portable TV and National VCR with remote in the premises of Shri T.V. Sundaravadhanam, the father of the assessee. The assessee being a married daughter, has no control over the premises of the assessee's father. The presumption under Section 134 of the Act may be applicable to the person who is residing in the premises. After the marriage, the assessee is residing in her husband's place, therefore, the electronic gadgets, which were found in the premises of Shri T.V. Sundaravadhanam, the father of the assessee, cannot be treated as undisclosed income of the assessee. Therefore, according to the Ld. counsel, the Assessing Officer is not justified in making any addition.
42. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that during the course of search operation, Shri T.V. Sundaravadhanam admitted that the electronic gadgets belong to the assessee. Since the assessee could not produce any bills and vouchers for the purchase of the electronic gadgets, the addition was made in the hands of the assessee, therefore, the Assessing Officer has made the addition. 29 I.T.(SS) A. No.9/Mds/08
43. We have considered the rival submissions on either side and perused the relevant material available on record. The electronic gadgets were admittedly found in the premises of Shri T.V. Sundaravadhanam, the father of the assessee. The assessee being a married daughter, cannot have any control over the premises of Shri T.V. Sundaravadhanam. Therefore, the presumption is that the electronic gadgets belong to Shri T.V. Sundaravadhanam and not the assessee. If the bills and vouchers could not be produced, it is for the Assessing Officer to make addition in the hands of Shri T.V. Sundaravadhanam and definitely not in the hands of the assessee. Since the assessee is a married daughter of Shri T.V. Sundaravadhanam, this Tribunal is of the considered opinion that making addition with regard to the cost of the electronic gadgets is not justified. In view of the above, this Tribunal is unable to uphold the order of the Assessing Officer and accordingly the same is set aside. Therefore, the addition of `45,000/- made in the hands of the assessee is deleted.
44. Now coming to the addition of `12,134/- for the assessment year 1997-98, Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the assessee has admitted a sum of 30 I.T.(SS) A. No.9/Mds/08 `22,000/- towards bank interest, which comprises `12,134/- from Indian Bank, Neelankarai Branch and the assessee has disclosed interest income in the return of income. Therefore, according to the Ld. counsel, there cannot be any addition for the assessment year 1997-98.
45. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that the Assessing Officer found that the assessee has received `12,134/- towards interest for the assessment year 1997-98. In fact, the total interest received was `41,508/-. The assessee has disclosed `22,000/-. Therefore, the difference of `19,508/- was treated as undisclosed income in the block period.
46. We have considered the rival submissions on either side and perused the relevant material available on record. For the assessment year 1996-97, while considering the interest income, this Tribunal found that a sum of `19,508/- was disclosed in the hands of Dr. Sivakumar, the assessee's husband. The Assessing Officer found that the assessee has received `12,134/- for the assessment year 1997-98. The total interest received by the assessee, including `12,134/- for the block period, was `41,508/-. 31 I.T.(SS) A. No.9/Mds/08 Since the assessee already disclosed a sum of `22,000/- and Dr. Sivakumar, the assessee's husband, has disclosed `19,508/-, this Tribunal is of the considered opinion that there cannot be any further addition towards undisclosed income in respect of interest received from bank deposit. In view of the above, this Tribunal is unable to uphold the order of the Assessing Officer and accordingly the same set aside. The addition of `12,134/- is deleted.
47. The last ground of appeal arises for consideration is with regard to addition of `2,73,000/- towards jewellery, for the assessment year 1997-98.
48. Shri K.G. Raghunath, the Ld.counsel for the assessee, submitted that the assessee received 650 gms of gold jewellery as gift during the occasion of her marriage. The assessee, in fact, filed details of gold received, before the Assessing Officer. The assessee's grandmother had also gifted 300 gms of gold on 18.10.1991 on the occasion of her wedding. According to the Ld. counsel, gifting gold jewellery as Sridhan is very common in this part of country, therefore, the claim of the assessee cannot be brushed aside by the Assessing Officer. According to the Ld. counsel, when the gifts were received during wedding from the 32 I.T.(SS) A. No.9/Mds/08 parents, grandparents and in-laws, it may not be possible to have any record of the gifts said to be received. Moreover, high dignitaries attended the wedding celebration of the assessee. When they gifted gold and cash, recording such gift is impossible. In fact, the assessee has furnished names of the persons from whom gifts were received, before the Assessing Officer. According to the Ld. counsel, the Assessing Officer simply ignored the details furnished by the Assessing Officer. The assessee's son also received gifts of 30 sovereigns of gold jewellery from relatives and friends. The list of the persons, who gifted 30 sovereigns of gold jewellery at the time of birth of the assessee's son, was also filed before the Assessing Officer. In fact, during the occasion of wedding, grandmother gifted 30 sovereigns of gold jewellery, 228 gms of jewellery were received as gift from family members, guests, friends and other high dignitaries. Moreover, the assessee's son received 114 gms of gold jewellery from close relatives. Therefore, according to the Ld. counsel, these jewellery cannot be taken as income of the assessee in the block period.
49. On the contrary, Shri T.R. Senthil Kumar, the Ld. Sr. Standing Counsel for the Revenue, submitted that during the course 33 I.T.(SS) A. No.9/Mds/08 of search operation, 386 gms of gold jewellery were found at the residence of Shri T.V. Sundaravadhanam and also 962 gms were found in the locker of MCC Bank, Tiruvanmiyur Branch, which belong to the assessee and her husband. Some of the persons also filed confirmation letters. In fact, one Shri Khumbamoorthy residing at Koothapar, Trichy, confirmed that he gifted 5 sovereigns of chain to the bride at the time of marriage on 18.10.1991. However, the copies of the MOI book show that the said Shri Khumbamoorthy gifted only 2 sovereigns of chain to the bridegroom. Therefore, there was contradiction between the confirmation letter filed by the above said Shri Khumbamoorthy and the MOI book maintained by the assessee. Therefore, according to the Ld. Sr. Standing Counsel, the Assessing Officer has rightly made an addition of `2,73,000/- for the assessment year 1997-98.
50. The Ld. Sr. Standing Counsel further submitted that the total gift said to be received by the assessee on the occasion of her marriage is 360 gms of jewellery. The claim of the assessee regarding the receipt of 440 gms of jewellery from grandmother of the bridegroom, grandmother of Smt. Praba and in-laws of Smt. Praba was also disallowed by the Assessing Officer in the absence 34 I.T.(SS) A. No.9/Mds/08 of satisfactory explanation. The Assessing Officer himself disallowed 50% of gifts said to be received to the extent of 228 gms out of 448 gms. Therefore, the excess gold jewellery to the extent of 650 gms was treated as unexplained in the hands of the assessee, which was valued at `2,73,000/-. Hence, according to the Ld. Sr. Standing Counsel, no interference is called for.
51. We have considered the rival submissions on either side and perused the relevant material available on record. In view of the contradiction found between the MOI book and confirmation said to be filed by one of the donors, namely, Shri Khumbamoorthy, the Assessing Officer has taken only 50% of the gifts said to be received. It is not in dispute that the assessee received gold jewellery as a gift. It is also a customary practice in this part of country to gift gold jewellery to bride and bridegroom on the occasion of marriage by the relatives and friends. Merely because there was contradiction with regard to jewellery gifted by Shri Khumbamoorthy, being one of the donors, this Tribunal is of the considered opinion that rejecting the claim of the assessee to the extent of 50% is not justified. This Tribunal is of the considered opinion that when the fact of receipt of gift is not in dispute, the 35 I.T.(SS) A. No.9/Mds/08 contradiction between confirmation letter filed by Shri Khumbamoorthy and entry in the MOI book cannot be a reason to reject 50% of the claim of the assessee without any other material. This Tribunal is of the considered opinion that when there is a contradiction between entry in the MOI book and the confirmation letter filed by Shri Khumbamoorthy, the confirmation letter has to be preferred rather than the MOI book maintained by the assessee. The confirmation letter was filed by the donor himself, therefore, that has to be preferred while deciding the quantum of gift said to be made by the donors. Therefore, this Tribunal is unable to uphold the order of the Assessing Officer accordingly the same is set aside and the addition of `2,73,000/- made towards the value of 650 gms of gold jewellery is deleted.
52. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced on 13th January, 2017 at Chennai.
sd/- sd/-
(अ ाहम पी.जॉज%) (एन.आर.एस. गणेशन)
(Abraham P. George) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
th
7दनांक/Dated, the 13 January, 2017.
Kri.
36 I.T.(SS) A. No.9/Mds/08
आदे श क/ - त8ल9प अ:े9षत/Copy to:
1. अपीलाथ+/Appellant
2. -.यथ+/Respondent
3. आयकर आय;
ु त/CIT, Central-II, Chennai-34
4. 9वभागीय - त न ध/DR
5. गाड% फाईल/GF.