TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 372
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....ber For the Assessee : Shri N.V. Balaji, Advocate For the Department : Shri R. Clement RameshKumar, IRS, CIT. ORDER PER BENCH:- First we take up Revenue appeal in ITA No.1241/Chny/2024 and C.O. No.39/Chny/2024 filed by the assessee Shri. Palaniappan Sekar for assessment year 2018-2019 for adjudication. 2. These appeal and cross objection are arising out of the orders of the Commissioner of Income tax (Appeals) - 19, Chennai [hereinafter referred to as the "CIT(A)"] in DIN and Order No: ITBA/APL/S/250/2023-24/1061670083(1) dated 28.02.2024. The assessment was framed by the DCIT, Central Circle-2, Trichy (hereinafter referred to as "AO") for the assessment year 2018-19 u/s. 153Cr.w.s 143(3)of the Income tax Act, 1961 (hereinafter referred to as the "Act"), vide order dated 27.12.2019. 3. The brief facts of the case are that Mr.K.Murugesaninvited few people at Karur to form a group of finance firms to carry on the business of financing/money lending. The Group consists of 77 firms, formed in Oct 2008, with an initial capital of Rs. 90.09 lakhs. The assessee and his family members were partners in all 77 firms. The firms filed their income tax returns regularly. A search operat....
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....he order of assessment passed u/s. 143(3) r.w.s 153C of the Act, the assessee preferred an appeal before the ld.CIT(A)- 19, Chennai, challenging the additions. 8. With reference to the protective addition of Rs. 22,22,50,000/- being contribution of the partners, the main contention of the assessee before the ld.CIT(A) was that the amount was not contributed during the year under appeal. It was only opening balance. The assessee relied on the contents of seized material to support its contention. In the seized material, the amount payable to each partner, the amount of interest shown as arrears and number of months for which the interest was in arrears as at 30.06.2017 was shown. As the number of months as on 30.06.2017 was more than three months, it was assessee's contention that the amount was opening balance as at 01.04.2017 and therefore the same could not be taxed as income of the year under appeal. The ld.CIT(A), first converted the protective addition as substantive addition in the hands of the assessee and thereafter, by accepting the contention of the assessee, held that the amount in question was only opening balance and consequently, directed the AO to delete the additio....
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....grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored''. Although the assessee got the relief in the order passed by the ld.CIT(A), the assessee filed Cross objection as CO No.39/CHNY/2024 against the appeal filed by the Revenue challenging relief given by the ld.CIT(A) in the appeal filed by the assessee against the order passed u/s. 143(3) r.w.s 153C of the Act. 10. The Grounds raised by the assessee in his cross objections are as under: 1. The order of the Hon'ble Commissioner of Income tax (Appeals) is in correct on facts and is in accordance with law. 2. Re: Deletion of addition made u/s. 69A: a. The Hon'ble CIT(A) correctly deleted the addition of Rs. 2,50,00,000/- made under section 69A as it was opening balance. b. The Hon'ble CIT (A) has rightly appreciated that there was ample evidence in the seized material itself to substantiate the fact that the deposits were accepted by the firm prior to 31.03.2017 and therefore no addition could be made in the FY 2017-18 c. The Hon'ble CIT(A) has been correc....
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....nd the consequent statement(s) recorded from Shri. A. Vijayan, Manager of Cholan Auto Finance. The narration in the loose sheet No. 76 revealed about the deposits made by the Partners Capital totaling to Rs. 22,22,50,000/-, more particularly the detailed narration contained therein about the contribution made by each partner. The narration in the loose sheet page No. 62 describes the appellant's name as "KPMSekar" and the amount of contribution described is Rs. 2,50,00,000/. The break up details of how each partner has deposited money are described in the page Nos. 64 to 74 of the bunch of loose sheets. While going through the loose sheet it can be seen that the amount of Rs. 2,50,00,000/- is relating to the Appellant and one Mr P Subramani and Mr. Kumar Trichy. The details described in the loose sheet is reproduced as under: Partner : P. Sekar 30/06/2017 Sl.No Customer Name Deposit Amount Interest From 1 month interest No of months Interest payable 1 P Sekar 1,40,00,000 01.7.2016 30.6.2017 1,75,000 12 21,00,000 2 P. Subramani 60,00,000 01.7.2016 30.6.2017 75,000 12 9,00,000 3 K....
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....eated as allowed, and the A.O. is hereby directed to delete the addition of Rs. 2,50,00,000/- made in the hands of the Appellant as unexplained money u/s. 69A of the Act for the A.Y.2018-19. 13. With reference to the addition made u/s. 69A of the Act, the ld.CIT(A) held as under: "6.4.19 The A.R. during the course of Appellate Proceedings has strongly argued that the provisions of section 69A of the Act will not apply to the facts of the Appellant's case. The undersigned has duly considered the submission and argument advanced by the A.R. in this regard. While going through the assessment order it can be seen that the AO attempted to treat the amount deposited by the Appellant as "unexplained money" as per the provisions of section 69A of the Act. Before going into the merits, it is essential to bring it on record the relevant provision of section 69A of the Act. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation ab....
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....t must be other valuable articles." .......... "The concept of 'other valuable articles' may evolve with the arrival in the market of articles, which can be treated as other valuable articles on satisfying the other tests." 6.4.22 The Gujarat High Court in the aforesaid case of BhagwandasNarayandas has held as under: "... the question is whether the fixed deposit receipts and documents of title relating to an immovable property are the things or articles which can be evaluated in terms of money. Obviously, a document of title relating to an immovable property or even a fixed deposit receipt issued by a bank in favour of a particular person are merely the documents of title which, though possessing much evidentiary value, do not possess any intrinsic market value." .......... "There is nothing in the record to show that the fixed deposit receipts, which are seized in this case, carry any inherent market value with them. They are merely the documents evidencing the debt due to the assessee." 6.4.23 The above cited judicial decisions of the Hon'ble Apex Court goes on to prove that even the fixed deposit receipts found during the course of search cannot partake the charac....
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....before the ld.CIT(A) were only extracted from the books of account which were seized and available with the assessing officer. There is no recasting or reclassification of balances but only an extract prepared from the seized books of account. According to the AR, there was no evidence which is in the nature of fresh evidence submitted by the Assessee during the course of proceedings before the ld.CIT(A) and thus, Rule 46A of the Income Tax Rules, 1962 has no application in the present case. 16. We have heard the learned counsel for the assessee and Revenue at length and perused the paper books and written submissions filed by the assessee and the orders of the lower authorities. It is admitted fact that the additions had been made by the AO based on incriminating material only. Further, we have observed that the financial position extracted / culled out and furnished by the assessee from the incriminating materialsi.e. books of accounts maintained in the software 'foxpro' available and perused by the AO. Therefore, the extract prepared from books seized cannot be regarded as fresh evidence, within the meaning of Rule 46A of the IT. Rules 1962. Further, it is evident that the bala....