TaxTMI 
TaxTMI 
2010 (1) TMI 686
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....time of search that the amounts represented loans and that no evidence could be filed by the assessee during the course of assessment proceedings to prove his claim. 2. The first addition on cheque amount of Rs. 10 lakhs is in respect of Poorna Tex Trade treated as undisclosed income. The cheque details are given as below: ------------------------------------------------------- Sl. No. Bank Date Cheque No. Amount ------------------------------------------------------- 1. Canara Bank Not mentioned 387696 2,00,000 ------------------------------------------------------- 2. -do- -do- 387697 1,00,000 ------------------------------------------------------- 3. -do- -do- 387695 2,00.....
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....the period, proximate to the time limitation described in the Act. However he contradicts himself by saying that there was no need for serious investigation. The assessee could not furnish even a single piece of evidence in this regard, apart from what had been stated in the deposition. 2.3 The assessee in his reply states that the cheques were only security for supply of goods on the basis of non-mention of drawee's name on cheques. The AO made his conclusions without making any enquiry or cross-verification. The representative also contradicts the 'credit' theory of the AO, which according to him was made on deposition. 3. Regarding another addition of Rs. 5.75 lakhs, the details are as given below: ------------------------------------------- Particulars Amount ------------------------------------------- Sivadurga Exports 1,50,000 ------------------------------------------- Sree Veerabarthira Handloom &....
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....nbsp; 408774 1,00,000 ------------------------------------------------------- Total 3,00,000 ------------------------------------------------------- One Sri Sekar, s/o Arthanari gave deposition on 24th Jan., 2002. He was stated to be assisting his bachelor uncle Sri Veeri Chetty since 1990 engaged in trading textiles. Vide Q/A. 3, he confirms he had borrowed Rs. 1.50 lakhs from Sri M. Nagappa under 'security' and gave 3 cheques of Rs. 1 lakh each to cover principal as well as interest, but he also says that the loan was not repaid. The addition was made for want of details like exact dates of each loan against cheques given/issued/advanced etc. 3.2 The next addition is that of undisclosed income of loans advanced to Sri Amman Tex of Rs. 1 lakh, the details of which are given below: ------------------------------------------------------- Sl. No. Bank  ....
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....do- 20-9-1997 079677 50,000 ------------------------------------------------------- 6. -do- 26-9-1997 079678 50,000 ------------------------------------------------------- 7. Std. Chartered 10-11-1997 186393 40,000 ------------------------------------------------------- 8. -do- 15-11-1997 186394 45,000 ------------------------------------------------------- Total 2,00,000 ------------------------------------------------------- The statement was on similar lines and reasons were also similar to the other loans given as ....
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....p; Under Secretary (Inv. II)" 4. The learned CIT(A) while considering and accepting the plea of the assessee with respect to both the additions has concluded from middle of p. 8 after para 12 to end of para 13 as under: "The facts are that Poorna Tex has received order dt. 29th July, 1996 from M/s Meenu Garments (P) Ltd. for supply of 3,452 mtrs. of fabrics. In turn, Poorna Tex had sub-contracted the order to Sri M.N. Rajendhiran, Vanavasi by order dt. 30th July, 1996 fixing the dates for supply of samples. The samples sent by Sri Rajendhiran were confirmed by Poorna Tex letter dt. 7th Aug., 1996 enclosing 4 undated and unfilled cheques for Rs. 8 lakhs. 13. It. appears that Meenu Garments (P) Ltd., Tiruppur, by letter dt. 14th Aug., 1996 cancelled the order on the basis of non-adherence to time schedule. M/s Poorna Tex requested by their letter dt. 20th Aug., 1996 to Sri M.N. Rajendhiran to return the cheques. As the cheques were not dated and unfilled they were not written in the books of account and also not presented for payment by Sri M.N. Rajendhiran. Between Poorna Tex and Rajendhiran, the cheques were....
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....n on the part of the assessee, and retraction also not within the reasonable time and neither there is any allegation of question as proved by the assessee, so relying upon Bombay Bench decision in Video Master vs. Jt. CIT (2003) 78 TTJ (Mumbai) 264 : (2002) 83 ITD 102 (Mumbai), it was pleaded for reversal of order of the learned CIT(A). Further reliance was placed on CIT vs. G.K. Senniappan (2006) 203 CTR (Mad) 447 : (2006) 284 ITR 220 (Mad). Carpenters Classics (Exim) (P) Ltd. vs. Dy. CIT (2007) 108 TTJ (Bang) 760 : (2008) 299 ITR 124 (Bang)(AT), CIT vs. Micromax Systems (P) Ltd. (2005) 198 CTR (Mad) 578 : (2005) 277 ITR 409 (Mad) and Kashmir Trading Co. vs. Dy. CIT (2006) 206 CTR (Raj) 468 : (2007) 291 ITR 228 (Raj). It was pleaded that since there was moneylending business and in order to protect the money given, blank cheques are normally received to secure the amount and there is clear admission which has not been successfully withdrawn or proved to be erroneous, therefore, the learned CIT(A) was not justified in deleting the addition. It was pleaded for restoring the impugned order. 4.2 The learned counsel for the assessee while relying upon the basis and reasoning as giv....
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.... decision in the case of CIT vs. Suresh N. Gupta (2008) 214 CTR (SC) 274 : (2008) 1 DTR (SC) 354 : (2008) 297 ITR 322 (SC), surcharge can be levied even in the cases where search was conducted prior to 1st June, 2002. Therefore, the order of the learned CIT(A) can be reversed. As such, while following the decision of Hon'ble Supreme Court, we reverse the order of the learned CIT(A) and restore that of the AO with respect to levy of surcharge with the direction that quantum of surcharge would depend upon the assessment to be reframed. The AO shall, accordingly consider the same while passing fresh order. This ground gets accepted. 8. As a result, appeal of the Revenue gets accepted partly for statistical purpose. SHAMIM YAHYA, A.M.: 31st Oct., 2008 9. I have gone through the order of my learned Brother. Despite persuasion, I am enable to agree on one of the issues. This issue relates to deletion of addition of Rs. 5,75,000 by the learned CIT(A). On the issue, the learned. CIT(A) has inter alia relied upon his decision in asses....
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....nts. They have also stated that due to poor financial condition, repayment could not be made. The identity of the creditor and genuineness of transactions have been proved. As it was lent during the course of business, for the purpose of business, it should have either been allowed as deduction under s. 36(2) or under s. 37 of the Act. 5. Considering the aforesaid, the learned CIT(A) directed the AO to delete the addition made on account of undisclosed income. 6. We have heard the rival contentions and perused the relevant records. We find that additions on account of undisclosed income relating to these unencashed cheques were made only on the basis of these cheques. The fact that no income out of this accrued to the assessee as the cheques remained unencashed is apparent from records. The assessee's claim that the undisclosed income of Rs. 2,20,000 to be telescoped against the bad debt accruing in this regard is correct. The Revenue came to know about this undisclosed income only by way of those cheques which could not he encashed due to the poor financial status of the borrower. Hence, the claim of telescoping of the undisclosed income against this unrealized sum cannot be....
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....d be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, AOs should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Yours faithfully Sd/- &....
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....)'s order, the doctrine of stare decisis calls for the same view to be taken in this case. In such circumstances, on this issue, it will not be correct to conclude that the learned CIT(A) has deleted the addition without properly appreciating facts and issue in hand. Nor it can be said that learned CIT(A) has committed an error in not discussing his correspondence with the AO in this regard. The learned CIT(A) has simply referred to the dates of correspondence in para 3 of his order and observed that, "considering all the materials placed before me, I proceed to draft the appellate order". Hence, no adverse inference can be drawn on this account also on this issue. 17. In this regard, I draw support from Hon'ble jurisdictional High Court decision in the case of Lakshmi Vilas Bank Ltd. vs. CIT (2006) 202 CTR (Mad) 560 : (2006) 284 ITR 93 (Mad) which makes it mandatory on our part to follow the Co-ordinate Bench's decision. In this case, it was held that: "Further, we have seen from the order of the Tribunal that for the earlier year, the Tribunal decided the case in favour of the assessee. When the Tribunal decided the case in favour of the assessee on identical facts, it is n....
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....Full Bench of the Tribunal consisting of three or more Members for which there is provision in the IT Act itself." 18. It is further noted that Hon'ble apex Court in the case of Honda Siel Power Products Ltd. vs. CIT (2007) 213 CTR (SC) 425 : (2007) 295 ITR 466 (SC) had reiterated that "rule of precedent" is an important aspect of legal certainty in the rule of law. It was further held in the case of appeal to Tribunal, that failure to consider decision of Co-ordinate Bench cited by assessee is a mistake on record. It is found that Hon'ble apex Court in the case of Sundarjas Kanyalal Bhatija & Ors. vs. Collector (1990) 183 ITR 130 (SC) has held that: "In a multi-Judge Court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. Judicial decorum and legal propriety demand that where a Single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction the matter may be referred to a Larger Bench. It would be sub-version of judicial process not to follow this procedure." 19. Further, in the case of Union of India vs. Paras Laminates....
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....ssessee or the issue requires to be set aside on the file of AO for reconsideration, when the learned counsel for the assessee himself opted that for verification of details and passing of speaking order, it should be restored to the file of AO or the learned CIT(A) as the Bench may consider fit." SHAMIM YAHYA, A.M.: 31st Oct., 2008 As I do not agree with the question framed by my learned Brother, following questions are formulated and referred for nominating Third Member: "(1) Whether the decision of the learned CIT(A) based inter alia on his appellate order in assessee's brother's case emanating out of the same search on identical facts can be said to be an order without appreciating the facts and issue, when the said appellate order was upheld by this Tribunal in an earlier case, to which one of us was a party and the said order was produced before the Tribunal? More so, when Revenue has raised a ground that the order relied by the learned CIT(A) had not become final and appeal was preferred against the same to the Tribuna....
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....e learned Departmental Representative was that the learned AM erred in following the earlier order of the Tribunal in the case of the assessee's brother merely on the ground that the addition in both the cases had resulted from the same search. According to him, the learned JM was justified in not following the earlier order as the names of the creditors in both the cases were different and hence the recoverability of debt. had to be looked into separately in the case of each creditor. Moreover, according to the learned Departmental Representative, the learned counsel of the assessee had accepted the matter to go back for reconsideration. Therefore, the learned Departmental Representative supported the order of the learned JM. 4. The contention of the learned counsel was that he had agreed for setting aside the issue relating to the addition of Rs. 10 lakhs and not for the addition of Rs. 5,75,000. It was submitted that in the course of search the Department found that advances were made by the assessee out of undisclosed income and along with that stale cheques were also found. This proved that the debts had become bad. It was contended that a principle was laid down by the Tri....