DCIT, Thrissur V. Chinnasons Jewellers, Palakkad

ITA 1127/COCH/2005

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61487 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 14-11-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: JOSE POTTOKKARAN
• Keywords: Block assessment

Judgement Text

1 ITA NO.1127/COCH/2005 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO.1127/COCH/2005 (ASSESSMENT YEAR 2002-03) DY.CIT, CENT.CIR VS M/S CHINNAN SONS JEWELLERS THRISSUR G.B. ROAD, PALAKKAD PAN : AABFC7593F (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. S VIJAYAPRABHA RESPONDENT BY : SHRI JOSE POTTOKKARAN DATE OF HEARING : 18-04-2012 DATE OF PRONOUNCEMENT : 08-06-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, KOCHI DATED 01-08-2005 AND PERTAIN S TO ASSESSMENT YEAR 2002-03. 2. SMT. S VIJAYAPRABHA, THE LD.DR SUBMITTED THAT TH E ASSESSEE IS A PARTNERSHIP FIRM IN THE BUSINESS OF GOLD JEWELLERY. THE ASSESSING O FFICER MADE ADDITION OF RS. 2,77,05,104 TOWARDS PURCHASE OF GOLD FROM PARTNERS, CREDITED IN THE NAME OF PARTNER SHRI M.C. JACOB AND INTEREST TO THE FAMILY MEMBERS OF THE PARTNERS. THE COMMISSIONER OF INCOME- TAX(A), HOWEVER, DELETED THE ADDITION MADE BY THE A SSESSING OFFICER FOR THE REASONS STATED BY HIM IN HIS ORDER IN THE APPEAL FILED BY T HE ASSESSEE AGAINST BLOCK ASSESSMENT. THE LD.DR SUBMITTED THAT THE VERY SAME AMOUNT WAS A DDED IN THE BLOCK ASSESSMENT IN THE CASE OF THE ASSESSEE. ACCORDING TO THE LD.DR, MERE FILING OF RETURN OF INCOME BY THE 2 ITA NO.1127/COCH/2005 RESPECTIVE PARTNERS AND PAYMENT OF TAX DOES NOT PRO VE THE SOURCE OF PURCHASE OF JEWELLERY AND GIVING CREDIT TO THE FIRM. 3. ON THE CONTRARY, SHRI JOSE POTTOKKARAN, THE LD.R EPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE PARTNERS HAVE PAID TAXES AFTER D ISCLOSING SUFFICIENT INCOME IN THE REGULAR COURSE BY FILING RETURNS. ONCE THE DEPARTM ENT ACCEPTED THE RETURNS FILED BY THE PARTNERS IN THE REGULAR COURSE THEY CANNOT NOW CONT END THAT THE ASSESSEE HAD NO SOURCE OF INCOME. REFERRING TO THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 IN ITA NO.396/COCH/2006 DAT ED 16-01-2008, THE LD.REPRESENTATIVE SUBMITTED THAT ON IDENTICAL CIRCU MSTANCES, FOR THE ASSESSMENT YEAR 2002-03, THIS TRIBUNAL CONFIRMED AN IDENTICAL ORDER OF THE COMMISSIONER OF INCOME- TAX(A) HOLDING THAT WHEN THERE WAS A SPEAKING NEXUS BETWEEN THE SOURCE AND APPLICATION OF MONEY, THERE CANNOT BE ANY ADDITION. ACCORDING TO THE LD.REPRESENTATIVE, THERE WAS NEXUS BETWEEN INCOME OFFERED BY THE PARTN ERS IN THE INDIVIDUAL ASSESSMENT AND THE VALUE OF THE GOLD BROUGHT IN BY THEM TO THE PARTNERSHIP FIRM. THERE WAS A NEXUS BETWEEN THE CREDIT REFLECTED IN THE ACCOUNTS OF THE PARTNERS AND IN THE BOOKS OF ACCOUNT OF THE FIRM AND THE RESPECTIVE INCOME ASSESSED IN T HE INDIVIDUAL HANDS OF THE PARTNERS. IN VIEW OF THIS DECISION OF THE CO-ORDINATE BENCH O F THIS TRIBUNAL, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A ) HAS RIGHTLY DELETED THE ADDITION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICE R MADE ADDITION WITH REGARD TO THE PURCHASE OF GOLD FROM THE PARTNERS AND CASH CREDIT FROM ONE OF THE PARTNERS, SHRI M.C. JACOB AND INTEREST PAID TO THE FAMILY MEMBERS TO TH E EXTENT OF RS.55,894. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE PARTNE RS HAVE FILED REGULAR RETURNS OF INCOME DISCLOSING SUFFICIENT INCOME. ONCE THE AVAI LABILITY OF THE INCOME IN THE HANDS OF THE RESPECTIVE PARTNERS WAS DISCLOSED TO THE DEPART MENT IN THE REGULAR COURSE BY FILING RETURN OF INCOME, THE REVENUE CANNOT NOW CONTEND TH AT THE PARTNERS HAD NO SOURCE TO PURCHASE THE GOLD JEWELLERY AND TO GIVE ADVANCE. A S RIGHTLY OBSERVED BY THIS TRIBUNAL IN 3 ITA NO.1127/COCH/2005 THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200 3-04, THERE WAS A SPEAKING NEXUS BETWEEN THE INCOME OFFERED BY THE PARTNER IN THE IN DIVIDUAL ASSESSMENT AND THE VALUE BROUGHT IN TO THE PARTNERSHIP FIRM. WHEN THERE WAS A NEXUS BETWEEN THE SOURCE AND APPLICATION OF MONEY, THERE CANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE. IN VIEW OF THE DECISION OF THE CO-ORDINATE BENCH OF TH IS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04, THIS TRIBUNAL FIND S THAT THE COMMISSIONER OF INCOME- TAX(A) HAS RIGHTLY DELETED THE ADDITION. 5. NOW COMING TO THE INTEREST PAID TO THE FAMILY ME MBERS OF THE PARTNERS TO THE EXTENT OF RS.55,894, THE COMMISSIONER OF INCOME-TAX (A) FOUND THAT THE FAMILY MEMBERS TO WHOM INTEREST WAS PAID RETURNED THE SAID INTERES T INCOME IN THE REGULAR RETURNS OF INCOME FILED BY THE PARTNER WHICH WERE ACCEPTED BY THE DEPARTMENT. ONCE THE INTEREST PAID BY THE ASSESSEE FIRM WAS DISCLOSED TO THE DEPA RTMENT IN REGULAR COURSE, THERE IS NO QUESTION OF ANY DISALLOWANCE. IT IS ALSO PERTINENT TO NOTE THAT THE ADDITION MADE IN THE HANDS OF THE FAMILY MEMBERS WAS ALSO DELETED BY THE COMMISSIONER OF INCOME-TAX(A) WHICH WAS CONFIRMED BY THIS TRIBUNAL. WHEN THE ADD ITION MADE IN THE HANDS OF THE FAMILY MEMBERS WAS DELETED, THERE CANNOT BE ANY DIS ALLOWANCE TOWARDS THE PAYMENT OF INTEREST. 6. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRME D. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH JUNE, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 08 TH JUNE, 2012 PK/- 4 ITA NO.1127/COCH/2005 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH