T.C.A.No. 68 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED 03.03.2020 CORAM HONOURABLE MR. JUSTICE M. SATHYANARAYANAN AND HONOURABLE MR. JUSTICE ABDUL QUDDHOSE TCA. No.68 of 2018 N. Tamilselvi Appellant Versus Deputy Commissioner of Income Tax, Central Circle III, Madurai 625002. Respondent PRAYER:- Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal dated 02.11.2017 made in ITA No.I.T.(SS)A. No.01/Mds/2017. For Appellant : Mr. G. Baskar For Respondent : Mr. T. R. Senthil Kumar 1/15 http://www.judis.nic.in T.C.A.No.68 of 2018 JUDGMENT [Judgment of Court was made by M.SATHYANARAYANAN,J.,] Assessee is appellant. perusal of materials placed before this Court in form of typed set of documents and additional typed set of documents would disclose following facts. 2. search under Section 132 of Income Tax Act 1961 [in short IT Act] was conducted in case of husband of appellant / Assessee namely Mr. G. Narambulingam, on 18.01.2000 and during course of search, certain investments in favour of appellant / assessee was found and Block Assessment Proceedings had been initiated against appellant / assessee as well as against her husband viz., Thiru. G. Narambulingam by issuing notice under Section 158BD of IT Act on 31.01.2000 and 31.05.2000 respectively. appellant / assessee has filed her return of Income on 28.02.2002, declaring Nil Income and husband of assessee has also filed his return of income on 31.01.2001. 2/15 http://www.judis.nic.in T.C.A.No.68 of 2018 3. Deputy Commissioner of Income Tax / Assessing Officer, Madurai, after perusal and consideration of relevant materials, computed assessment years / block period of assessment years 1990 to 1991 and 1999-2000 and assessment year 2000-2001, part as follows: 8.7. Smt. Tamil Selvi, his wife, is partner in firm, M/s. Sakthi Wines, and her Capital account balance thereini as on 31.03.97, is shown at Rs.30,000/- only and there are no debits to cover sum of Rs.3 lakhs referred to earlier. It is relevant to note here that in her sworn statement, she has clearly stated that she has no independent sources of income and even at time of hearing, no evidence in this regard is produced. Consequently conclusion to be reached here is that credit of Rs.3 lakhs in name of his wife is not genuine, and requires to be, and is assessed as his income from undisclosed sources for Assessment year 2000-2001. 4. appellant / assessee aggrieved by said Assessment Order dated 29.05.2002, preferred appeal before Commissioner of Income Tax (Appeals) Chennai. It appears that appellant / assessee did not appear before said Appellate Authority on numerous occasions and Appellate Authority, taking note of evidence of case as well as written submissions, has dismissed appeal, vide order dated 08.12.2016. 3/15 http://www.judis.nic.in T.C.A.No.68 of 2018 5. appellant / assessee, challenging legality of said order filed further application before Income Tax Appellate Tribunal (ITAT), Chennai in IT(SS) NO.1 of 2017 and Income Tax Appellate Tribunal, vide impugned order dated 31.08.2017, has partly allowed appeal and aggrieved by said order in rejecting other plea, assessee has filed present appeal. 6. appeal was entertained on 20.03.2018 and following Substantial Questions of Law were raised: i. Whether Income Tax Appellate Tribunal substantially erred in law in confirming addition of undisclosed income of appellant assessee under Section 158 (b) of Income Tax Act, 1961, without taking into consideration total income in previous years, which had not exceeded maximum exemption amount? ii. Whether Income Tax Appellate Tribunal substantially erred in law in confirming additions in respect of price of purchase of site and cost of construction, when same had been added in hands of appellant's husband as total investment for purchase and construction? 4/15 http://www.judis.nic.in T.C.A.No.68 of 2018 iii. Whether learned Tribunal substantially erred in law in confirming addition of amounts invested as capital in M/s.Sakthi Wines, Partnership Firm, when same has already been treated as undisclosed income in hands of firm, M/s.Sakthi Wines? iv. Whether, in facts and circumstances of instant case, it was incumbent upon Income Tax Appellate Tribunal to remand issue of credit worthiness of loan given by appellant to her husband, when same addition in hands of appellant's husband has been remanded to Commissioner of Income Tax (Appeals) by Bench of Co-ordinate strength? 7. learned counsel appearing for appellant / assessee has invited attention of this Court to additional typed set of documents dated 01.12.2017, which pertains to Assessment Order and other related proceedings of her husband namely, Thiru.G.Narambulingam (now changed his name as Mr.Vijay Balaji) and also comparative sheet as to assessment and related proceedings of appellant / assessee as well as her husband and would submit that in respect of certain issues, Income Tax 5/15 http://www.judis.nic.in T.C.A.No.68 of 2018 Appellate Tribunal in order dated 30.04.2008, filed by her husband, has remanded matter to Commissioner of Income Tax(Appeals), Madurai and during course of arguments, it was also brought to knowledge of Income Tax Appellate Tribunal and despite fact, said plea have not been properly considered by Income Tax Appellate Tribunal and prays for remanding matter to Commissioner of Income Tax(Appeals) on said issues. 8. Per contra, learned Standing Counsel appearing for Revenue would submit that admittedly appellant / assessee did not appear before Commissioner of Income Tax(Appeals) on very many occasions and based upon evidence available and written submissions / grounds, Commissioner of Income Tax(Appeals) had dismissed appeals and from impugned order passed by Income Tax Appellate Tribunal, it is not clear whether entire contents of order dated 30.04.2008 passed by Income Tax Appellate Tribunal, with regard to husband of assessee, has been brought to knowledge or not and therefore, plea made by learned counsel appearing for appellant for remanding 6/15 http://www.judis.nic.in T.C.A.No.68 of 2018 matter for limited purpose to Commissioner of Income Tax(Appeals) cannot be termed as Substantial Question of law and he would further add that impugned order, which is subject matter of this appeal, came to be passed on 31.08.2017, whereas, Income Tax Appellate Tribunal has passed order dated 30.04.2008 in respect of her husband. Although when opportunity was available to appellant / assessee to put forth same before Commissioner of Income Tax(Appeals), she has failed to avail same and she deliberately remained absent for very many hearings and as such this Court may not show any indulgence to appellant / assessee and prays for dismissal of this Appeal. 9. This Court has carefully considered arguments advanced by learned counsel appearing for appellant / assessee and learned Standing Counsel appearing for Revenue. 10. Assessing Officer, in paragraph no.5 of order dated 29.05.2002, had dealt with investments relating to purchase of old theatre building along with land appurtenant to it at Ambasamudram 7/15 http://www.judis.nic.in T.C.A.No.68 of 2018 through registered Sale Deed dated 15.07.1996 jointly in name of assessee and her husband viz., Mr.G.Narambulingam, wherein husband of appellant / assessee claimed as to contribution made by appellant /assessee herein to tune of Rs.3,00,000/- as well as demolition of said building and construction of new theatre namely Durga Theatre and contribution of further sum of Rs.2,00,000/- from his wife. 11. In appeal filed by husband of appellant, Income Tax Appellate Tribunal had dealt with said issue in order dated 30.04.2008 at paragraph no.14 and in paragraph no.14.1, Income Tax Appellate Tribunal had remanded matter as to contribution made by appellant / assessee to tune of Rs.3,00,000/- and Rs.2,00,000/- respectively (with total of Rs.5,00,000/-) to Commissioner of Income Tax (Appeals) to give proper order in this regard. 12. As regards case of construction of residential building amounting to sum of Rs.2,50,000/-, in paragraph no.8 of Assessment 8/15 http://www.judis.nic.in T.C.A.No.68 of 2018 Order, though it was observed that said amount has been treated as undisclosed income of husband of appellant, it was observed that no evidence has been furnished to establish agricultural income earned by him and that apart, appellant / assessee does not have any agricultural income on her own and citing said reasons, said amount has been included in her hands as her undisclosed income for assessment year 1992-93. 13. It is submission of learned counsel appearing for appellant / assessee that once it is included and treated as undisclosed income of her husband, it cannot be included as undisclosed income of petitioner herein for Assessment Year 1992-1993 and also prays for remand in respect of said issue also. 14. In original Assessment Order at paragraph no.11, claim of appellant / assessee that she had joined M/s.Sakthi Wines as partner on 02.04.1995 was taken into consideration and it was found that from capital account of M/s.Sakthi Wines, there was no evidence as to drawings 9/15 http://www.judis.nic.in T.C.A.No.68 of 2018 made by appellant / assessee as partner. That apart, Assessing Officer has also recorded finding that assessee does not have any other agricultural income and in absence of any record of investment in her name, all investments have to be included in corresponding assessment years and no set-off will also be made available towards said year. Insofar as husband of assessee is concerned, Commissioner of Income Tax(appeals) in paragraph no.13 of order dated 31.01.2006, had dealt with said issue wherein finding has been recorded that appellant therein namely, Mr.G.Narambulingam, at time of search, admitted that except Smt.Rajam, others are only his benamis, and other partners did not make any capital contribution and even in case of Tmt.Rajam, her husband was only employee of Mr.G.Narambulingam and she acted as benami of him and therefore entire capital contribution in firm of M/s.Durga Wines and M/s.Sakthi Wines has been treated as undisclosed income at hands of Mr.G.Narambulingam. 10/15 http://www.judis.nic.in T.C.A.No.68 of 2018 15. In sum and substance, in light of fact that issue relating to contribution of Rs.3 lakhs and Rs.2 lakhs respectively has been remanded by Income Tax Appellate Tribunal in order dated 30.04.2018 in appeal filed by her husband, in respect of cost of construction of residential building for Rs.2,50,000/- and capital contribution in respect of firms namely, M/s.Durga Wines and M/s.Sakthi Wines, which have been treated as undisclosed income at hands of her husband, this Court may remand appeal in respect of those three issues are concerned. 16. learned standing counsel appearing for Revenue strongly opposed said plea for reason that appellant / assessee has lost opportunity before Commissioner of Income Tax(Appeals) and in light of long passage of time between order of Income Tax Appellate Tribunal dated 30.04.2008 pertaining to husband of assessee and present impugned order dated 31.08.2017, pertaining to appellant / assessee, there is no need or necessity to remand matter. 11/15 http://www.judis.nic.in T.C.A.No.68 of 2018 17. In considered opinion of this Court, plea made by learned counsel appearing for appellant / assessee merits acceptance for reason that admittedly, search and seizure operations were carried out under Section 132 of IT Act in residential premises of husband of appellant viz., Mr.G.Narambulingam on 18.01.2000 and notice under Section 158BD of IT Act were issued to appellant and her husband on 31.05.2000 and 31.01.2020 respectively. No doubt, in appeal filed before Commissioner of Income Tax(Appeals), challenging order of assessment dated 29.05.2002 passed by Assessing Officer, appellant did not appear and based on materials available, Commissioner of Income Tax (Appeals) had dismissed appeal, vide order dated 08.12.2016. However in appeal filed before Income Tax Appellate Tribunal, specific ground as to inclusion of certain income at hands of her husband and remanding of matter had been raised and in fact Income Tax Appellate Tribunal in impugned order dated 31.08.2017 in paragraph no.9 though referred to order of remission passed by Income Tax Appellate Tribunal, as regard her husband, proceeded to dispose of appeal. 12/15 http://www.judis.nic.in T.C.A.No.68 of 2018 18. It is also brought to knowledge of this Court that after order of remission passed by Income Tax Appellate Tribunal, vide order dated 30.04.2008, as to husband of appellant / assessee, proceedings are not yet completed. 19. In considered opinion of this Court, once certain portion of undisclosed income are added to husband and that in respect of certain issues, Income Tax Appellate Tribunal in order dated 30.04.2008, filed by her husband, has remanded matter to Commissioner of Income Tax(Appeals), Madurai and during course of arguments, it was also brought to knowledge of Income Tax Appellate Tribunal, it should have been remanded to Commissioner of Income Tax(Appeals) for adjudication. 20. In result, Substantial Questions of Law raised by appellant / assessee, answered in her favour. 13/15 http://www.judis.nic.in T.C.A.No.68 of 2018 21. In result, present Tax Case Appeal is partly allowed and impugned order of Income Tax Appellate Tribunal dated 31.08.2017, is set aside, insofar as findings given in paragraph nos.7.2, 8, 9.3 and 8 and said issues are remanded to jurisdictional Commissioner of Income Tax(Appeals) for further consideration and adjudication and appellant / assessee is directed to extend their maximum cooperation to jurisdictional Commissioner of Income Tax (Appeals) in this regard and said official may accord priority and give disposal to said appeals as expeditiously as possible. [M.S.N.,J] [A.Q., J] 03.03.2020 sk Internet : Yes/No Index : Yes/No To 1.The Income Tax Appellate Tribunal ''D'' Bench, Chennai. 2.The Commissioner of Income Tax, Chennai. 14/15 http://www.judis.nic.in T.C.A.No.68 of 2018 M.SATHYANARAYANAN, J., AND ABDUL QUDDHOSE, J., sk TCA.No.68 of 2018 03.03.2020 15/15 http://www.judis.nic.in N. Tamilselvi v. Deputy Commissioner of Income-tax, Central Circle-III, Madurai