TaxTMI 
TaxTMI 
2025 (1) TMI 372
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....hri S.R. Raghunatha, Accountant Member 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 the....
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....021 by adding the said sum, in the hands of the firm M/s.Cholan Auto Finance, protectively. 7. Against the 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....
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....iating that the amount of deposit made by the assessee is out of the unexplained money in his possession during the relevant financial year. 4 For these 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....
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....ts made in the partnership firm. 12. The ld.CIT(A) in his order passed u/s. 250 of the Act dated 28.02.2024 by holding as under: 6.4.15 There is no dispute about the fact that during the course of the search a bunch of loose sheet were found and seized. The AO relied upon the narrations contained in the loose sheets and 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....
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.... view that there exists no need to consider the amount of Rs. 2,50,00,000/- in the hands of the Appellant, either substantively or protectively. In view of this, the addition made by the A.O. in the hands of the Appellant amounting Rs. 2,50,00,000/- as unexplained money as per the provisions of section 69A of the Act is not sustainable. Accordingly, the grounds raised by the Appellant upon this issue are hereby treated 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 ....
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....agwandasNarayandas (supra) that a document of title to immovable property or a fixed deposit receipt would not qualify as other valuable article." ........... "Valuable, therefore, cannot be understood as anything which has any value. The intention of the law-giver in introducing Section 69A was to get at income which has not been reflected in the books of account but found to belong to the assessee. Not only it must belong to the assessee, but it 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 ....
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....d 13.08.2017 read with "Annexure ANN/MP/CAF/ED/SPage1". Further, it was submitted that statements were recorded from Mr.K.Murugesan, few of the other partners of the group and Mr.Sakthivel, Accountant of the group of finance firms. Mr.Sakthivel had also confirmed that the books of account were maintained in FOXPRO server in his sworn statement dated 31.10.2008 in Q.5 and Q6 (pg 91 of the paperbook). The Ld.AR submitted that the summary/abstract of the balance sheet as at 31.03.2017 and 10.08.2017 of all the 77 firms filed 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....