PER Dr.O.K.NARAYANAN, VICE-PRESIDENT This is a bunch of seven appeals. All the appeals are filed by the assessee. The relevant assessment years are 2001-02 to 2007-08. These appeals are directed against the - - ITA 640 to 646/14 2 orders passed by the Commissioner of Income-tax(Appeals), Central-I at Chennai, on 31.12.2013. The appeals arise out of the assessments completed under sec.143(3), read with sections 153A and 153C of the Income-tax Act, 1961.
2. There was a search conducted on Sri M. Bhawarilal on 29.8.2006. In the course of said search, materials were seized pertaining to the business carried on by the assessee. In view of that, notices under sec.153A read with sec.153C were issued to the assessee.
3. The assessee filed returns in pursuance of notices for all the seven assessment years under appeal. The income returned by the assessee for all the seven assessment years put together worked out to ` 22,55,215/-. The Assessing Officer did not accept the income returned by the assessee for the reason that the quantum of income returned by the assessee did not compare with the undisclosed income admitted by the assessee, in his hands, at the time of search. A sworn statement was taken from the assessee on 29.8.2006. At that point of time, as answered to question No.11, the assessee has admitted before the authorities that ` 52,73,920/- reflected in - - ITA 640 to 646/14 3 three printouts, related to the details of loans given by the assessee to various parties. The assessee had stated that the said business was a separate one and not disclosed in the income-tax returns filed by him. In fact, the assessee agreed that the said amount of `52,73,920/- was his undisclosed income. He promised to pay tax on the said amount. The assessee had also admitted that the outstanding loans to be recovered from the parties were in the range of ` 25 lakhs to `30 lakhs. He also explained that the rate of interest charged was at 18%.
4. As the income returned and the income earlier admitted by the assessee do not compare, the Assessing Officer added a sum of ` 52,73,921/- and ` 30 lakhs to the income returned by the assessee and determined the total income for all the seven assessment years put together at ` 87,08,136/-. In first appeal, these additions were confirmed. The assessee is aggrieved and, therefore, these second appeals before us.
5. Shri B. Ramakrishnan, the learned chartered accountant appearing for the assessee invited our attention to paragraph 10 - - ITA 640 to 646/14 4 in page 5 of the assessment order for the assessment year 2001-02. The said paragraph reads as below:
10. The assessees submission has been considered. The materials submitted at the fag end of the assessment cannot be scrutinized since the notings in telephone diaries and loose sheets are unstructured and spread over without reference to time-frame. It is a fact that the same names are getting repeated in more than one place and in more than one document. It is also not clear as to how the repayments and interests are ascertained from the said notings.
6. In view of the above observation of the Assessing Officer, it is the submission of the learned chartered accountant that the Assessing Officer could not verify the materials available before him in a systematic and objective manner for paucity of time. It shows that the Assessing Officer could not consider the various objections raised by the assessee in the right perspective. Therefore, it is necessary in the interest of justice, to consider the materials and the explanations offered by the assessee afresh, so as to compute the correct income taxable in the hands of the assessee. It is the case of the - - ITA 640 to 646/14 5 learned counsel that, therefore, these appeals may be remitted back to the Assessing Officer for fresh consideration.
7. Shri Anirudh Rai, the learned Commissioner of Income- tax, appearing for the Revenue, invited our attention to the relevant observation made by the Commissioner of Income- tax(Appeals) in his order. The Commissioner of Income- tax(Appeals) has clearly stated that the additions were not made by the assessing authority exclusively on the basis of the admissions made by the assessee. The admissions made by the assessee are supported by the seized materials. When the admissions made by the assessee straightaway come out from the seized materials, it is not possible to hold that the additions were made without any evidence. Regarding the lack of opportunity for want of time before the Assessing Officer, the Commissioner of Income-tax has observed that opportunities were given to the assessee by the Commissioner of Income- tax(Appeals) and the assessee could not explain the position before him. The learned Commissioner submitted that the arguments advanced by the learned chartered accountant lack conviction. - - ITA 640 to 646/14 6
8. We heard both sides in detail. As evident from the facts narrated in paragraphs above, the issue raised in all these seven appeals is common. The said common issue is regarding the additional income determined by the assessing authority.
9. It is true that the Assessing Officer has mentioned in his assessment order that the materials submitted at the fag end of the assessment cannot be scrutinized for want of time and therefore, the assessment had to be completed on the basis of the admissions made by the assessee, in the course of search. But the materials mentioned by the Assessing Officer in his observation is not the materials seized in the course of search, but only those materials submitted by the assessee at the fag end of the assessment. The Assessing Officer has determined the income on the basis of the admissions made by the assessee in the course of search proceedings. Those admissions are not without any basis. Those admissions were made by the assessee in the light of the questions raised by the search party on the basis of the seized materials. It is with reference to the contents of the seized materials that the assessee had admitted that he had carried out undisclosed - - ITA 640 to 646/14 7 financing business to the extent of ` 52,73,920/- and further he had outstanding balance to be collected from the debtors in the range of ` 25 lakhs to ` 30 lakhs. The amount of ` 52,73,920/- was reflected in three printouts seized in the course of search. When the assessee was confronted with these seized materials, the assessee had stated that this amount related to his undisclosed business. Likewise, the assessee admitted the receivables within the range of ` 25 lakhs to 30 lakhs, when he was shown the details contained in the seized telephone index book containing details of various amounts given to different persons. Therefore, it is to be seen that the additions have been made by the Assessing Officer on the basis of evidences collected in the course of search and so also admitted by the assessee. So, the admission made by the assessee was not an empty formality.
10. The assessee has sought time from the Assessing Officer to go through further materials produced by him. Even though, the Assessing Officer could not pursue those materials for want of time, the Commissioner of Income-tax(Appeals) has given sufficient opportunities to the assessee to explain those - - ITA 640 to 646/14 8 materials before him. The assessee was given opportunities to rebut his admissions; but he could not produce any material before the Commissioner of Income-tax(Appeals) to rebut his earlier admissions. Therefore, it is not possible to hold that the additions have been confirmed by the Commissioner of Income- tax(Appeals), brushing aside the materials submitted by the assessee. When the assessee has not come forward with his explanations, the Commissioner of Income-tax(Appeals) examined the additions in the light of the seized materials and the admissions made by the assessee and found that the quantum assessment made by the Assessing Officer is right and proper.
11. In these circumstances, we are not inclined to remit back the matter to the Assessing Officer for fresh consideration. Regarding the quantum of additions made by the Assessing Officer and confirmed by the Commissioner of Income- tax(Appeals), we find that those additions have been made exactly on the basis of the details collected from the seized materials and supported by the admissions made by the assessee. The additions are accordingly upheld. - - ITA 640 to 646/14 9
12. In result, these appeals filed by the assessee are dismissed. Orders pronounced on Thursday, the 05th of June, 2014 at Chennai. Sd/- Sd/- ( . . ) (... ) (S.S.Godara) (Dr. O.K.Narayanan) ( )/Judicial Member +,/Vice-President (/Chennai, ./Dated, the 05th June, 2014. mpo* 01 21/Copy to:
1. /Appellant
2. /Respondent
3. 3 ()/CIT(A)
4. 3/CIT
5. 1 6/DR