Periyasamy Anbunathan Vs DCIT (ITAT Chennai)
Protective Additions Set Aside After 153C Assessments Quashed; ITAT Chennai Orders De Novo Examination in Search Case Involving ₹200+ Crore Notings
The Chennai Bench of the ITAT passed a composite order disposing of multiple appeals and cross-objections for AYs 2014-15 to 2017-18 in the case of Periyasamy Anbunathan, arising out of search proceedings under section 132. The appeals involved protective additions exceeding ₹200 crore, alleged unaccounted finance/commission income, investment in property, and cash found during search.
At the outset, the Tribunal noted that the substantive additions had been made in the hands of a third party (Shri N.R. Viswanathan) under section 153C, based on the same seized account books. However, those 153C proceedings against Shri N.R. Viswanathan were quashed by the ITAT for lack of jurisdiction, as the seized material neither belonged to nor related to him. Consequently, the very foundation for deleting the protective additions in the assessee’s case disappeared.
The Tribunal found that both the Assessing Officer and the CIT(A) had dealt with the assessee’s case in a mechanical and non-speaking manner, merely following the assessment orders passed in the case of Shri N.R. Viswanathan without independently examining the seized account books, statements recorded under sections 132(4) and 131, retractions, affidavits and explanations furnished by the assessee.
In these circumstances, the ITAT set aside the orders of the CIT(A) deleting the protective additions and remanded the entire issue back to the Assessing Officer for fresh adjudication de novo. The AO was directed to independently examine the seized materials, statements and evidences, uninfluenced by earlier observations or by the quashed 153C proceedings of the third party, and to pass a reasoned order after granting adequate opportunity to the assessee.
On the assessee’s legal challenges, the Tribunal rejected the plea of limitation, holding that the assessments were validly completed within the extended time under Explanation 1(x) to section 153, owing to references made for exchange of information with foreign authorities. The Tribunal also rejected the challenge to approval under section 153D, holding that such approval is administrative in nature, and that mere absence of elaborate reasoning does not vitiate the assessment in the absence of proof of non-application of mind.
With respect to additions towards unaccounted finance and commission income, the ITAT largely upheld the item-wise findings of the CIT(A) but permitted the assessee to raise a limited plea of telescoping of such additions against undisclosed income already offered under section 153A, remanding this aspect as well for factual verification by the AO.
Overall, the Tribunal emphasized that search assessments cannot be framed or sustained mechanically, particularly where large-scale additions are involved, and restored the matters for fresh, objective and evidence-based consideration. The Revenue’s appeals were partly allowed, the assessee’s appeals were partly allowed for statistical purposes, and several issues were remanded to the AO for de novo adjudication.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
