Sri K.S.Saleesh, Thrissur V. DCIT, Trichur

ITA 182/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61524 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-04-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 11-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: A S NARAYANAMURTHY
• Keywords: Income from undisclosed sources
• Section: 153A; 132

Judgement Text

1 ITA NO.180 TO 185/COCH/2010 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. 180, 181, 182, 183, 184 & 185/COCH/2010 (ASSESSMENT YEARS 2001-02, 2002-03, 2004-05, 2005-0 6, 2006-07 & 2007-08) SHRI K.S. SALEESH VS DY.CIT, CENT.CIR. SALEESH WOOD INDUSTRIES THRISSUR PARALAM PO, THRISSUR-680 575 PAN : AKLPS8236P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.S. NARAYANAMURTHY RESPONDENT BY : SHRI S.R. SENAPATI DATE OF HEARING : 02-04-2012 DATE OF PRONOUNCEMENT : 25-05-2012 O R D E R PER N.R.S. GANESAN (JM) ALL THE SIX APPEALS OF THE ASSESSEE ARE ARISING OU T OF THE SEARCH CONDUCTED U/S 132 OF THE INCOME-TAX ACT ON 26-03-2007. THEREFORE , WE HEARD ALL THE APPEALS TOGETHER AND ARE DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. THE SOLE ISSUE FOR ASSESSMENT YEAR 2002-03 AND T HE FIRST GROUND IN ALL OTHER APPEALS FOR ASSESSMENT YEARS 2001-02, 2004-05, 2005 -06, 2006-07 AND 2007-08 PERTAINS TO ADDITION TOWARDS UNACCOUNTED INCOME. 3. SHRI A.S. NARAYANAMURTHY, THE LD.REPRESENTATIVBE FOR THE ASSESSEE SUBMITTED THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEA RCH OPERATION. THEREFORE, THE UNACCOUNTED INCOME COMPUTED BY THE ASSESSING OFFICE R FOR THE BLOCK PERIOD ON THE BASIS 2 ITA NO.180 TO 185/COCH/2010 OF SEARCH OPERATION IS NOT JUSTIFIED. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO SEARCH MATER IAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE LD.REPRESENTATIVE PLACED HIS RELIAN CE ON THE DECISION OF THIS TRIBUNAL IN LMJ INTERNATIONAL VS DY.CIT 14 DTR 540 (CAL). 4. ON THE CONTRARY SHRI S.R. SENAPATI, THE LD.DR SU BMITTED THAT WITH EFFECT FROM 01- 06-2003 THE PROCEDURE FOR COMPUTING THE INCOME IN C ASE OF SEARCH WAS CHANGED. ACCORDING TO THE LD.DR, THE LEGISLATURE HAS INTRODU CED NEW SCHEME FOR THE PURPOSE OF ASSESSING THE INCOME FOR THE SIX YEARS U/ 153A OF T HE ACT. THEREFORE, THE PROVISIONS OF SECTION 158BB(1) IS NOT APPLICABLE FOR THE YEARS UN DER CONSIDERATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. AS RIGHTLY SUBMITTED BY THE LD .DR, THE PROVISIONS OF CHAPTER XIVB ARE NOT APPLICABLE IN RESPECT OF SEARCHES CONDUCTED AFTER 31-05-2003. THIS IS MADE CLEAR BY THE LEGISLATURE BY INTRODUCING SECTION 158BI BY FINANCE ACT, 2003 WITH EFFECT FROM 01- 06-2003. THEREFORE, THE PROVISIONS OF SECTION 158B B WHICH PROVIDES FOR METHOD FOR COMPUTATION OF UNDISCLOSED INCOME FOR THE BLOCK PER IOD IS NOT APPLICABLE IN THE PRESENT CASE SINCE ADMITTEDLY, THE SEARCH WAS CONDUCTED ON 26-03-2007. THEREFORE, THE NEW PROCEDURE THAT PROVIDED BY LEGISLATURE IN SECTION 1 53A WITH EFFECT FROM 01-06-2003 BY FINANCE ACT, 1003 IS APPLICABLE. UNDER THE NEW SCH EME, THE PENDING ASSESSMENT PROCEEDINGS WILL ABATE AND THE ASSESSING OFFICER HA S TO COMPUTE THE INCOME ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH O PERATION AND ALSO THE OTHER MATERIALS AVAILABLE ON RECORD. THERE IS NO RESTRICTION FOR T HE ASSESSING OFFICER TO CONFINE HIMSELF ONLY TO THE SEARCH MATERIAL IN THE NEW SCHEME AS PR OVIDED IN SECTION 153A. A BARE READING OF SECTION 158BB AND 153A WOULD CLEARLY IND ICATE THAT THE LEGISLATURE NEVER INTENDED TO CONFINE TO THE SEARCH MATERIAL WHEN THE ASSESSMENT WAS FRAMED U/S 153A OF THE ACT. THIS LANGUAGE EMPLOYED BY THE LEGISLAT URE IN SECTIONS 153BB AND 153A HAS TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE INC OME U/S 153A OF THE ACT. IN VIEW OF THE ABOVE, THE DECISION OF THE CALCUTTA BENCH OF TH IS TRIBUNAL IN LMJ INTERNATIONAL LTD 3 ITA NO.180 TO 185/COCH/2010 (SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THIS CASE. IN OTHER WORDS, THE ITO OR THE ASSESSING OFFICER HAS TO COMPUTE THE INCOME ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD INCLUDING THE MATERIAL FOUND DURING THE COUR SE OF SEARCH OPERATION. 6. NOW COMING TO THE MERIT OF THE ADDITION, THE CON TENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT AN D THE INCOME WAS OFFERED U/S 44AF OF THE ACT. ACCORDING TO THE LD.COUNSEL, THE BALAN CE IN THE CAPITAL ACCOUNT WAS TAKEN AS UNDISCLOSED INVESTMENT BY THE ASSESSING OFFICER. A CCORDING TO THE LD.REPRESENTATIVE, THE CAPITAL INVESTMENT WAS GENERATED IN THE COURSE OF B USINESS ACTIVITY FOR VARIOUS YEARS. THEREFORE, NO SEPARATE ADDITION IS CALLED FOR. 7. ON THE CONTRARY, SHRI S.R. SENAPATI, THE LD.DR S UBMITTED THAT DURING THE COURSE OF EXAMINATION OF THE ACCOUNTS, THE ASSESSING OFFICER FOUND A CAPITAL OF RS.7,58,334 IN THE TIMBER BUSINESS FOR THE ASSESSMENT YEAR 2001-02. F OR THE ASSESSMENT YEAR 2002-03 THERE WAS AN INCREASE OF RS.1,17,013 TO THE CAPITAL . THE ASSESSEE COULD NOT CONFIRM THE SOURCE FOR INVESTMENT IN THE BUSINESS. THEREFORE, THE ASSESSING OFFICER MADE THE IMPUGNED ADDITIONS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSING OFFI CER FOUND CAPITAL OF RS.7,58,334 FOR THE YEAR UNDER CONSIDERATION. ASSESSEE CLAIMS THAT NO BOOKS OF ACCOUNT WERE MAINTAINED FOR THE EARLIER YEARS AND THE INCOME WAS OFFERED U/S 44AF. NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE INCOME WAS GENERATED OUT OF THE BUSINESS ACTIVITY OF THE EARLIER YEARS. THE ASSESSEE HAS NO T FILED ANY CASH FLOW STATEMENT TO SUGGEST THAT THE INCOME WAS GENERATED DURING THE CO URSE OF BUSINESS ACTIVITY. IN THE ABSENCE OF ANY MATERIAL, THE CAPITAL FOUND TO THE E XTENT OF RS.7,58,334 WAS ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS C ONFIRMED. 4 ITA NO.180 TO 185/COCH/2010 9. THE NEXT GROUND OF APPEAL ONLY FOR ASSESSMENT YE ARS 2001-02, 2004-05, 2005-06, 2006-07 AND 2007-08 IS WITH REGARD TO LOW DRAWINGS FOR PERSONAL / HOUSEHOLD EXPENDITURE. 10. SHRI A.S. NARAYANAMURTHY, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS STAYING WITH HIS MOTHER IN THE ANC ESTRAL HOUSE AND THERE ARE OTHER EARNING MEMBERS IN THE FAMILY WHO ARE ALSO ASSESSED TO INCOME-TAX. IF THE INCOME OF THE OTHER FAMILY MEMBERS IS ALSO CONSIDERED, ACCORD ING TO THE LD.REPRESENTATIVE, THERE WOULD BE NO ADDITION FOR PERSONAL DRAWINGS. 11. ON THE CONTRARY, SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT AFTER THE SEARCH OPERATION THE ASSESSING OFFICER EXAMINED THE ASSESS EE. AFTER CONSIDERING THE HOUSEHOLD EXPENSES AND THE AMENITIES FOUND AT THE RESIDENCE O F THE ASSESSEE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE DRAWINGS DISCLOSED BY THE ASSESSEE TO THE EXTENT SHOWN IN EACH ASSESSMENT YEAR UNDER APPEAL FOR PERSONAL / HOUSEHOLD EXPENDITURE WAS NOT SUFFICIENT. AFTER TAKING INTO CONSIDERATION OF THE LIFE STYLE, THE AMENITIES FOUND IN THE RESIDENCE OF THE ASSESSEE AND THE AMOUNT BORROWED F OR THE PURPOSE OF BUSINESS, THE ASSESSING OFFICER ESTIMATED THE PERSONAL EXPENSES F OR THE ASSESSMENT YEARS 2001-02 & 2002-03 @RS.60,000; FOR THE ASSESSMENT YEAR 2003-04 @ RS.72,000 ; FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 @RS.96,000 AND FOR THE AS SESSMENT YEAR 2006-07 & 2007-08 @ RS.1,20,000 AS AGAINST DRAWINGS SHOWN BY THE ASSE SSEE AT RS.48,491 FOR A.Y. 2001-02, RS.60,000 FOR A.Y. 2002-03, RS.72,000 FOR A.Y. 2003 -04, RS. 78,900 FOR A.Y. 2004-05, RS. 89,000 FOR A.Y. 2005-06, RS.62,400 FOR A.Y. 2006-07 AND RS.81,716 FOR A.Y. 2007-08 RESPECTIVELY. THEREFORE, ACCORDING TO THE LD.DR, T HE ESTIMATION RESORTED TO BY THE ASSESSING OFFICER IS QUITE REASONABLE. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DRAWINGS SHOWN BY THE ASS ESSEE FOR PERSONAL / HOUSEHOLD EXPENDITURE APPEARS TO BE VERY LOW. THE ASSESSING OFFICER THEREFORE ESTIMATED THE 5 ITA NO.180 TO 185/COCH/2010 PROBABLE EXPENDITURE FOR THE HOUSEHOLD AND PERSONAL EXPENDITURE AND ADDED THE DIFFERENCE TO THE TOTAL INCOME. THE ESTIMATION MAD E BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS 2001-02 & 2002-03 @RS.60,000; FOR THE ASSESSMENT YEAR 2003-04 @ RS.72,000 ; FOR THE ASSESSMENT YEARS 2004-05 AND 20 05-06 @RS.96,000 AND FOR THE ASSESSMENT YEAR 2006-07 & 2007-08 @ RS.1,20,000 AS AGAINST DRAWINGS SHOWN BY THE ASSESSEE AT RS.48,491 FOR A.Y. 2001-02, RS.60,000 F OR A.Y. 2002-03, RS.72,000 FOR A.Y. 2003-04, RS. 78,900 FOR A.Y. 2004-05, RS. 89,000 FO R A.Y. 2005-06, RS.62,400 FOR A.Y. 2006-07 AND RS.81,716 FOR A.Y. 2007-08 RESPECTIVELY APPEARS TO BE VERY REASONABLE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 13. IN THE RESULT, ALL THE SIX APPEALS OF THE ASSE SSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MAY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 25 TH MAY, 2012 PK/- COPY TO: 1. K.S. SALEESH, SALEESH WOOD INDUSTRIES, PARALAM PO, TRICHUR-680 575 2. DY.CIT, CENT.CIR, THRISSUR 3. THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH