TaxTMI 
TaxTMI 
2016 (7) TMI 1227
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....ed Vijayam Eye Clinic for treating outpatients, and he also performs surgeries in a hospital by name M/s.Sai Nursing Home, Olavakkode. The department conducted search and seizure operation on 5.12.2007. Consequent to that, assessments for the assessment years 2002-03 to 2008- 09 were reopened and completed under section 153A of the Income Tax Act, 1961, whereby, the assessing officer made additions under various heads. In the appeals filed, certain modifications were made by the Commissioner of Income Tax (Appeals). Aggrieved by the appellate orders, the assessee and the Revenue filed appeals before the Tribunal. By the impugned common order, the appeals filed by the Revenue were dismissed, and the assessee's appeals were partly allowed. It is challenging these orders, the Revenue has filed these appeals, and the questions of law raised are mainly regarding the scope of assessment under section 153A of the Act and the correctness of the deletion ordered. 3.We heard the learned senior standing counsel for the Revenue and the learned senior counsel who appeared for the assessee. 4.From the order of the Tribunal, we find that, at the outset, the Tribunal has answered the content....
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.... that the Tribunal without taking any efforts to find out the facts and circumstances involved in the cases on hand has relied on the decision of the Special Bench of the ITAT in All Cargo Logistics Ltd (supra) and has held that there was no need to interfere with the order passed by the Appellate Tribunal. In order to consider the issue, we think it is profitable to extract Section 132 (1) and clause (a) and subsection (4). "132. Search and seizure (1) Where the Director General or Director or the Chief Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that --- (a) any person to whom a summons under subsection (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of Section 131 of this Act, or a notice under subsection (4) of section 22 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of accou....
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....as a disclosure made by giving a statement during the course of search and therefore, the Assessing Officer, by virtue of the power conferred on him under section 153A was competent to issue notice under the said provision and require the assessee firms to furnish the returns as provided thereunder. Neither under section 132 or under section 153A, the phraseology "incriminating" is used by the Parliament. Therefore, any material which was unearthed during search operations or any statement made during the course of search by the assessee is a valuable piece of evidence in order to invoke section 153A of the Income Tax Act, 1961. 19. In order to appreciate the provisions of Section 153A in a proper manner, it is appropriate to extract the said provision, which reads thus: 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 149, section 151 and section 153, in the case of the person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-- (a) issue notice to such person requiring him to furnish within such per....
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....r this section. (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year." 20. On a plain reading of Section 153A, it is clear that once search is initiated under Section 132 or a requisition is made under Section 132A after the 31st day of May 2003, the Assessing Officer is empowered to issue notice to such person requiring him to furnish return of income in respect of each assessment year following within six assessment years referred to in clause (b). It further treats the returns so filed as if such return were a return required to be furnished under Section 139. So that on a reading of Section 153A(1) it is categoric and clear that once a notice is issued and the Assessing Officer has required the assessee to furnish return for a period of six assessment years as contemplated under clause (b) then the assessee has to furnish all details with respect to each assessment year since the same is treated as a return filed under section 139. It is true that as per the first proviso, the Assessing Officer is bound to assess or reassess the total income with ....
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.... any addition for assessment years 2002-03 to 2005-06. Accordingly, we uphold the decision of the Ld CIT(A) in respect of these four years, as the same is in accordance with legal position discussed in the preceding paragraphs". 9. Similarly, in so far the assessment years 2006-07 and 2007-08 are concerned, the Tribunal has found that the assessing officer himself did not make any addition as he did not find any suppression as per his computation. For the assessment year 2008-09, the Tribunal has found that the seized record was applicable for the first 9 months of the financial year and, therefore, set aside the order of the CIT (Appeals) in this regard on the reasoning that: "Accordingly, we are of the view that no addition could be made for the assessment year 2008-09 also, as the department has failed to bring on record any actual suppression of consultation fee on the basis of seized record". According to us, the findings of the Tribunal with respect to the addition towards suppression of consultation fee for the assessment years 2002-03 to 2005-06 and 2008-09 cannot be sustained and the order of the assessing officer has to be restored and we do so. 10. The next issue con....
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.... was concluded by the CIT (Appeals) that the profit of sale of PMMA lenses was Rs. 1800/- per lens in the year relevant to the assessment year 2008-09 and for other years, the profit was reduced by Rs. 50/- per year. He rejected the plea of the assessee that M/s.J.N.Surgicure had started business only in the assessment year 2008-09. Accordingly, the undisclosed income towards surgery also was estimated by the CIT (Appeals). These rival contentions were appreciated by the Tribunal and on facts, the Tribunal came to the following findings: "20. We have heard the rival contentions on this issue. As concluded by Ld CIT(A), the sum total of all evidences gathered during the course of search and also the result of investigations conducted thereafter was that the appellant was making profit on sale of PMMA lenses. There is no dispute with regard to the fact that the assessee has correctly reported the number of surgeries performed by him and it is also an undisputed fact that there was no difference in the surgery fees charged by the assessee. Both the AO as well as Ld CIT(A) has proceeded to compute the profit on sale of PMMA lens by following their own methods. From the observations of....
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.... M/s.J.N. Surgi cure, in our view, they cannot be taken support to draw adverse inferences against the assessee. The AO has also failed to disprove the claim that the lens were supplied to the patients directly by M/s.J.N. Surgicure. Since the books of account maintained by M/s.J.N. Surgi cure also tallied with the amount collected from the patients, in our view, effectively, the AO could not establish that the assessee has actually made any profit on the sale of lenses. The conclusion reached by the AO that the assessee has made profit of Rs. 1800/- per lens is also, in our view, on the basis of surmises and conjectures, as the evidences found during the course of search itself showed that the cost of lens ranges from Rs. 100/- to Rs. 600/-. Hence, the profit, if any, could not be Rs. 1800/- per lens, as worked out by the AO and Ld CIT(A). 23. In our view, the only point which goes against the assessee is the reply given by him to the question no.27 posed to him, wherein he had admitted that there was some profit margin on sale of PMMA lens to the assessee. Similarly, Shri S.M.Ouseph, the proprietor of M/s.J.N. Surgi cure also could not give any convincing explanation with regard....
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.... also quiet common that the businessmen fixes different selling price to different customers. Hence the selling price charged to one customer cannot always be taken as the base for determining the selling price for others. Hence, on a conspectus of the matter, we are of the view that the profit that might have accrued to the assessee on purchase of PMMA lens may be taken at Rs. 600/- per lens (30% of the sales value) and in our view the same would meet the ends of justice. We order accordingly. The PMMA lens used by the assessee in the years relevant to the assessment years 2007-08 and 2008-09 were 1414 lens and 1450 lens respectively. Accordingly, the AO is directed to calculate the profit on the above quantities by applying a rate of Rs. 600/- per lens. The order of Ld CIT(A) stands modified accordingly. " 13. A reading of the above findings of the Tribunal would show that the findings are completely factual and these findings do not give rise to any question of law for the consideration of this Court in an appeal filed under section 260A of the IT Act. That apart, in respect of the assessment years other than 2007-08 and 2008-09, we find that absence of any incriminating materi....
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....er, modified the same and directed the assessing officer to restrict disallowance to 30% of the expenditure claimed. This again is a factual finding and there is no reason to upset the same. 16. The issue that was thereafter considered by the Tribunal is with respect to the assessments of gifts under section 68 of the Act. Admittedly, the assessee had received gifts from his father-in-law, brother-in-law and brother during the years relevant to the assessment years 2002-03 to 2007-08. The assessing officer has disallowed the claim and made addition on the ground that the donors have failed to prove their respective creditworthiness, placing reliance on Commissioner of Income Tax v. C.P.Mohanakala [2007 291 ITR 278]. This addition was confirmed by the CIT (Appeals) also. In so far as this issue is concerned, the relevant findings of the Tribunal contained in paragraphs 33 to 38 are the following: "33. We shall examine the facts prevailing in the instant case. There is no dispute with regard to the identities of the donors and all the donors are close relatives of the assessee herein. In the instant cases, the gifts have not been received in instruments issued by the foreign banks.....
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....ee. Since the donors have made deposits by bringing money from abroad and since the impugned gifts have been made from the balance available with their respective NRE bank accounts, in our view, the creditworthiness of the donors also stand proved. 36. Further, all the donors have confirmed the payment of gifts by giving affidavits/letters. The occasion for making gift has also been stated, i.e, the construction of house by the assessee. There is no dispute that all the donors are close relatives of the assessee. There is no material on record to suggest that the assessee has compensated these donors in lieu of receipt of gifts. All these facts go to establish the genuineness of gift. Though the tax authorities have relied upon host of decisions, all those decisions lay down various principles for accepting the cash credits. In our view, the assessee has discharged the primary burden of proof placed upon him u/s 68 of the Act. 37. Even if an assessee fails to prove the three main ingredients, viz, identify of the creditor, credit worthiness of the creditor and the genuineness of the transactions, the Hon'ble Supreme Court in the case of P.Mohanakala & Ors has held that the as....
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....ate authority. The Tribunal has set aside the additions and remitted the matter to the assessing authority for the reason that it was satisfied that the additions on account of cash deficiencies require re-examination. In so far as this order is concerned, we see no reason to interfere with that finding either. 19. The Tribunal has gone into certain additions made in the assessment year 2005-06. These additions are of Rs. 15,59,880/- relating to interior decoration and Rs. 16.75 lakhs towards the difference in the purchase price of a property in Bangalore. In so far as the addition towards interior decoration is concerned, the Tribunal has remanded the matter to the assessing officer with a direction to examine the claim of the assessee with regard to the theory of gift of Rs. 10 lakhs. However, reading of paragraphs 42 ad 43 of the order of the Tribunal would show that the case of the assessee itself was a contradictory one. Initially the assessee had claimed that he had received a gift from his father-in-law, though his father-in-law had not declared the cost of the item in his cash flow statement. Subsequently, the assessee himself represented that he had included Rs. 10 lakhs ....
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....ichael, but could not be utilized by him as he did not purchase his property. 45. The said explanation was not convincing to the AO and accordingly he made an addition of Rs. 16.50 lakhs as difference in consideration. The Ld CIT(A) also confirmed the said addition. The case of the assessee is that the AO did not find any material to show that the assessee has actually paid Rs. 45.00 lakhs for purchase of Bangalore property." 21. A reading of the findings of the Tribunal shows that the assessee did not have a consistent case that the Tribunal has set aside the order of the fist appellate authority by putting the entire burden of proof on the assessing officer. Secondly, if the case of the assessee was that the property was purchased along with another person as claimed by him, it was for the assessee to have examined that person. Therefore, the interference of the Tribunal on this issue was totally unwarranted. Accordingly, we set aside the order of the Tribunal to the extent it has set aside the addition of Rs. 16.75 lakhs made towards difference in the purchase price of Bangalore property. 22. Thereafter, the Tribunal has proceeded to examine the issues raised in the appeals f....
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.... reliable evidence, i.e., architect's report seized by the department. 50. However, the assessee brought to the notice of Ld CIT(A) that the report prepared by the architect was only an estimate for the proposed construction and not the estimate of cost of actual construction. The assessee highlighted the following observation made by the architect in his report. "Almost 80 lakhs work completed. The balance 90 lakhs considered for personal loan (sd.) 17.11.06" The assessee, by placing reliance on the following case law, further submitted that the Ld CIT(A) was empowered to consider fresh evidences and can also consider the issues not specifically raised before the Ld CIT(A). a) CIT vs. Kashi Nath Chandiwala (2006) (228 ITR 318) (All) b) CIT Vs. Mcmillan & Co (1958) (33 ITR 182) (SC) c) CIT Vs. Shapoorfi Pallonji Mistry (1962) (44 ITR 891) (SC) d) CIT Vs. Kanpur coal syndicate (1964) (53 ITR 225) (Cal) e) CIT Vs. Hardutory Motilal Chamaia (1967) (66 ITR 443) (SC) The assessee further submitted that the report of the architect do not certify that he has inspected the premises. Accordingly he submitted that the report of the DVO has more evidentiary value than that of....
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.... the appellant was seeking to procure a loan from the bank. I therefore, find that the additions made by the Assessing Officer in A.Yrs. 2004-05 to 2006-07 were not sustainable even on the basis of the above seized document which estimates the cost of construction completed up to 17.11.2006 to be only of Rs. 80 lakhs as against over Rs. 1 Crore declared by the Appellant. I, therefore, find that no unaccounted investment can be determined even on the basis of specific seized document relied upon by the Assessing Officer for making the addition. For this reason itself, it was essential to know the actual cost of construction of the appellant's residence. The report of the DVO was an important and crucial document for the purpose and therefore, was required to be considered as an important, vital and reliable piece of evidence to ascertain the truth and impart justice even though the same was not used by the Assessing Officer for making the addition. It was a material fact on record and Appellant was fully aware of the same as his property was inspected and he responded to the proceedings before DVO. The report of the DVO in all fairness, therefore, ought to have been supplied to ....