Mohammedkutty Hajii, Palakkad V. DCIT, Thrissur

ITA 215/COCH/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69129 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 10-10-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 23-03-2011
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: SHAJI PAULOSE
• Keywords: Valuation report
• Section: 153A; 68; 132

Judgement Text

1 ITA NO.215 TO 221/COCH/2011 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.215 TO 221/COCH/2011 (ASSESSMENT YEARS 2002-03 TO 2008-09) MOHAMMED KUTTY HAJI VS DY.CIT, CENT.CIR PROP SAUDI STEELS THRISSUR MANJALUNGAL, PATTAMBI PALAKKAD DISTRICT PAN : ABEPH5923L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI PAULOSE RESPONDENT BY : SMT. SUSAN GEORGE VARGHESE DATE OF HEARING : 25-10-2012 DATE OF PRONOUNCEMENT : 16-11-2012 O R D E R PER N.R.S. GANESAN (JM) ALL THESE APPEALS OF THE TAXPAYER ARISE OUT OF THE SEARCH CONDUCTED U/S 132 OF THE ACT ON 06-09-2007. THEREFORE, WE HE ARD ALL THE APPEALS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORD ER. 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO SUP PRESSION OF SALES. THIS ISSUE ARISES FOR CONSIDERATION FOR ALL THE ASSESSME NT YEARS UNDER CONSIDERATION EXCEPT ASSESSMENT YEAR 2003-04. 2 ITA NO.215 TO 221/COCH/2011 3. SHRI SHAJI PAULOSE, THE LD.REPRESENTATIVE FOR TH E TAXPAYER SUBMITTED THAT IT IS A TRADE PRACTICE IN THIS LINE OF BUSINES S TO GIVE APPROXIMATE ESTIMATE INITIALLY AT THE REQUEST OF THE CUSTOMER. AFTER SATISFACTION OF THE DESIGNS, SPECIFICATIONS, ESTIMATED PRICE THE CUSTOM ER DECIDES TO PURCHASE THE JEWELLERY. THEREAFTER SALE BILLS ARE ISSUED. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THERE CANNOT BE ANY ADDITION ON THE BASIS OF THE ESTIMATES GIVEN BY THE TAXPAYER TO THE CUSTOMERS. AN ESTIMATE REMAINS TO BE AN ESTIMATE TILL THE CUSTOMER DECIDES TO PURCHAS E THE JEWELLERY. THEREFORE, THERE CANNOT BE ANY ADDITION ON THE BASI S OF THE ESTIMATES ISSUED TO THE CUSTOMERS. 4. ON THE CONTRARY, SMT. SUSAN GEORGE VARGHESE, THE LD.DR SUBMITTED THAT IT IS NOT CORRECT TO SAY THAT THE TAXPAYER IS ISSUING ESTIMATES. IN FACT, THE TAXPAYER IS SELLING THE JEWELLERY ON THE BASIS OF THE ESTIMATE. THE BOOKS OF ACCOUNT SEIZED DURING THE COURSE OF SEARCH OPERA TION DO NOT TALLY WITH MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. THE SEIZED MATERIAL CLEARLY SHOWS THAT THE TAXPAYER IS REGULARLY SUPPRE SSING THE SALES. THE TAXPAYER HAS NOT PRODUCED THE STOCK REGISTER. ONE ABDUL RAZZAK WAS EXAMINED, WHO ADMITTED THAT AT THE TIME OF SALE, TH E TAXPAYER USED TO ISSUE ESTIMATE SLIPS. THIS SUPPRESSION CONTINUED FOR ALL THE YEARS UNDER CONSIDERATION. THE SEIZED MATERIAL TCA-11 CLEARLY SHOWS THAT THE TAXPAYER HAS SUPPRESSED SALES FOR EARLIER YEARS ALSO. THERE FORE, THE LOWER AUTHORITIES HAVE RIGHTLY ESTIMATED THE TURNOVER AND THE PROFIT. 3 ITA NO.215 TO 221/COCH/2011 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MATE RIAL AVAILABLE ON RECORD INCLUDING THE STATEMENT RECORDED AT THE TIME OF SEA RCH CLEARLY SHOWS THAT THERE WAS A SUPPRESSION OF SALES FOR ALL THE ASSES SMENT YEARS UNDER CONSIDERATION. THE IMPUGNED ASSESSMENTS HAVE BEEN FRAMED U/S 153A OF THE ACT. THEREFORE, THE ASSESSING OFFICER CAN VERY WELL PLACE HIS RELIANCE ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION AND ALSO ON SUCH OTHER MATERIAL WHICH ARE AVAILABLE ON RECORD FOR TH E PURPOSE OF COMPUTING THE TAXABLE INCOME. THE RESTRICTION CONTAINED IN S ECTION 158BC TO PLACE RELIANCE ONLY ON THE MATERIAL FOUND DURING THE COUR SE OF SEARCH OPERATION IS NOT APPLICABLE TO ASSESSMENTS FRAMED U/S 153A OF TH E ACT. THE LEGISLATURE EMPOWERED THE ASSESSING AUTHORITY TO PLACE RELIANCE ON ALL THE MATERIALS INCLUDING THE MATERIAL FOUND DURING THE COURSE OF S EARCH OPERATION FOR THE PURPOSE OF COMPUTING THE TAXABLE INCOME. THEREFORE , THE ASSESSING AUTHORITY HAS RIGHTLY ESTIMATED THE TURNOVER AND TH E PROFIT ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORD. THIS TRIBUNAL D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO CASH CREDIT U/S 68 OF THE ACT. THE ONLY CONTENTION OF THE LD.REPRESENTATIVE FOR THE TAXPAYER IS THAT SINCE THE BOOKS OF ACCOUNT WERE REJECTED, THE VERY SAME BOOK CANNOT BE THE BASIS FOR MAKING ADDITION U/S 68 OF THE INCOME- TAX ACT. WE HEARD THE LD.DR ALSO. THE LD.DR SUBMITTED THAT EVEN THOUGH B OOKS OF ACCOUNT WERE REJECTED, THE TAXPAYER IS EXPECTED TO EXPLAIN THE S OURCE OF THE CASH CREDIT AS ENTERED IN THE BOOKS OF ACCOUNT. 4 ITA NO.215 TO 221/COCH/2011 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. THE QUESTION ARISES FOR CONSIDERATION IS THAT WHEN THE BOOKS OF ACCOUNT WERE REJECTED, CAN THERE BE AN ADDITION ON THE BASIS OF THE ENTRY FOUND IN THE BOOK OF ACCOUNT? T HIS ISSUE WAS EXAMINED BY THE APEX COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF VS C.I.T. (1963) 50 ITR 1 (SC). THE APEX COURT FOUND THAT EV EN THOUGH THE BOOKS OF ACCOUNT WERE REJECTED, THE ENTRIES FOUND IN SUCH BO OKS OF ACCOUNT CAN BE A BASIS FOR MAKING ADDITION PROVIDED THE TAXPAYER FAI LS TO EXPLAIN THE IDENTITY OF THE CREDITOR, CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTION. IN THE CASE BEFORE US, THE ONLY CONTENTION OF THE LD.REPRE SENTATIVE FOR THE TAXPAYER IS THAT THERE CANNOT BE ANY ADDITION ON TH E BASIS OF THE BOOKS OF ACCOUNT WHICH WAS REJECTED. IN VIEW OF THE JUDGMEN T OF THE APEX COURT IN THE CASE OF KALE KHAN MOHAMMAD HANIF (SUPRA) WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD.REPRESENTATIVE FOR THE TAX PAYER. ACCORDINGLY THE ADDITION MADE U/S 68 IS CONFIRMED. 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DIFF ERENCE IN COST OF CONSTRUCTION OF THE RESIDENTIAL PREMISES. THIS ISS UE ARISES FOR CONSIDERATION FOR THE ASSESSMENT YEARS 2006-07 & 2007-08. 9. THE ONLY CONTENTION OF THE LD.REPRESENTATIVE FOR THE TAXPAYER IS THAT THE ADDITION WAS MADE ON THE BASIS OF THE VALUATION REPORT WHICH CANNOT BE MADE IN THE SEARCH PROCEEDINGS. THE LD.REPRESENTAT IVE FOR THE TAXPAYER PLACED HIS RELIANCE ON THE DECISION OF THIS TRIBUNA L IN THE CASE OF LATE BHAGWANDAS PUNJABI 11 ITR (TRIB) 216 (AHD) AND SUBM ITTED THAT WHEN THERE 5 ITA NO.215 TO 221/COCH/2011 IS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH OP ERATION, THERE CANNOT BE ANY ADDITION ON THE BASIS OF DVOS REPORT. WE HE ARD THE LD.DR ALSO. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY THE ASSES SMENT PROCEEDINGS WERE INITIATED U/S 153A OF THE ACT. THE LANGUAGE EMPLOY ED BY THE LEGISLATURE IN SECTION 153A CLEARLY SHOWS THAT THE ASSESSING AUTHO RITY CAN VERY WELL PLACE RELIANCE ON THE MATERIAL AVAILABLE ON RECORD INCLUD ING THE SEARCH MATERIAL. THERE IS NO RESTRICTION ON THE PART OF THE ASSESSIN G OFFICER TO PLACE RELIANCE ONLY ON THE MATERIAL FOUND DURING THE COURSE OF SEA RCH OPERATION AS IN THE CASE OF PROCEEDINGS U/S 158BC OF THE ACT. IN CASE OF SECTION 158BC, THE LANGUAGE EMPLOYED BY THE LEGISLATURE IN SECTION 158 BB(1) CLEARLY SHOWS THAT THE ASSESSING AUTHORITY SHALL COMPUTE THE UNDISCLOS ED INCOME ON THE BASIS OF THE EVIDENCE FOUND DURING THE COURSE OF SEARCH O PERATION AND SUCH OTHER INFORMATION WHICH IS RELATABLE TO THE EVIDENCE FOUN D DURING THE COURSE OF SEARCH OPERATION. THE PROVISIONS OF SECTION 158BB( 1) ARE NOT APPLICABLE TO ASSESSMENTS MADE U/S 153A OF THE ACT. THE DECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IN BHAGWANDAS PUNJABI (SUPRA ) WAS IN RESPECT OF PROCEEDINGS U/S 158BC OF THE ACT. THEREFORE, THE D ECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. SINCE THE ASSESSING AUTHORITY IS EMPOWE RED TO FRAME THE ASSESSMENT ON THE BASIS OF ALL THE MATERIALS AVAILA BLE ON RECORD INCLUDING THE SEARCH MATERIAL, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRME D. 6 ITA NO.215 TO 221/COCH/2011 11. THE NEXT ISSUE ARISES FOR CONSIDERATION IN ASSE SSMENT YEAR 2008-09 IS THE DISALLOWANCE OF INTEREST OF RS.3,38,079. FROM THE ORDER OF THE LOWER AUTHORITIES IT APPEARS THAT THE TAXPAYER DID NOT PR ESS THIS GROUND BEFORE COMMISSIONER OF INCOME-TAX(A). THE COMMISSIONER OF INCOME-TAX(A) IN CATEGORICAL TERMS SAYS THAT THE TAXPAYER DID NOT PR ESS THIS GROUND BEFORE HIM. SINCE THE TAXPAYER HAS NOT PRESSED THIS GROUN D BEFORE THE LOWER AUTHORITY, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT HE CANNOT RE- AGITATE THE ISSUE BEFORE THIS TRIBUNAL. IN VIEW OF THE ABOVE, THIS ISSUE IS ALSO DISMISSED. 12. IN THE RESULT, ALL THE APPEALS OF THE TAXPAYER ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH NOVEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 16 TH NOVEMBER, 2012 PK/- 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