Mohammed Kutty haji, Palakkad V. DCIT, Trichur

ITA 218/COCH/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69128 (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: 2005-2006
• Appeal Filed On: 23-03-2011
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Keywords: Business income; Search and seizure; Valuation report
• Section: 153A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 215-221/COCH/2011 ASSESSMENT YEARS : 2002-03 - 2008-09 SHRI MOHAMMEDKUTTY HAJI, PROP. SAUDI STEELS, MANJALUNGAL, PATTAMBI, PALAKKAD. [PAN: ABEPH 5923L] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, TRICHUR. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI SHAJI POULOSE, CA REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 10/10/2013 DATE OF PRONOUNCEMENT 27/12/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: ALL THESE APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE ORDERS PASSED BY LD CIT(A)-I, KOCHI AND THEY RELATE TO THE ASSESSMENT YEAS 2002-2003 TO 2008-09. THESE APPEALS WERE ORIGINALLY DISPOSED OF BY THIS BENCH OF THE THIS BENCH OF THE TRIBUNAL BY ITS COMMON ORDER DATED 16. 11.2012. SUBSEQUENTLY, THE ASSESSEE FILED MISCELLANEOUS PETITIONS POINTING OUT CERTAIN ERRORS IN THE ORDER PASSED BY THE TRIBUNAL. ON HEARING THE PETITIONS F ILED BY THE ASSESSEE, THE TRIBUNAL FOUND MERIT IN THE PETITIONS AND FURTHER F ELT THAT THE ENTIRE ORDER NEEDS TO BE RECALLED. ACCORDINGLY THE TRIBUNAL, VIDE ITS ORDER DATED 16.11.2012, RECALLED ITS ORDER REFERRED ABOVE. ACCORDINGLY THE SE APPEARS WERE HEARD AGAIN. SINCE IDENTICAL ISSUES ARE URGED IN ALL THESE APPEA LS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. I.T.A. NOS. 215-221/COCH/2011 2 2. THE GROUNDS URGED BY THE ASSESSEE IN THESE APPEA LS GIVE RISE TO THE FOLLOWING ISSUES:- (A) SUPPRESSION OF BUSINESS INCOME ASSESSED IN THE ASSESSMENT YEARS 2002-03 AND 2004-05 TO 2008-09. (B) UNPROVED LOAN CREDITORS ASSESSED IN THE ASSESS MENT YEARS 2002-03 TO 2004- 05. (C) DIFFERENCE IN THE COST OF CONSTRUCTION OF HOUS E ASSESSED IN THE ASSESSMENT YEARS 2006-07 AND 2007-08. (D) DISALLOWANCE OF INTEREST IN THE ASSESSMENT Y EAR 2008-09. 2.1 THE ASSESSEE HAS FILED ADDITIONAL GROUNDS O F APPEAL RAISING FOLLOWING ISSUES:- (A) WHETHER THE ADDITIONS MADE IN THE CONCLUDED ASSESSMENTS RELATING TO THE ASSESSMENT YEARS 2002-03 TO 2005-06 ARE VALI D IN THE ABSENCE OF ANY INCRIMINATING MATERIAL? (B) WHETHER THE ADDITIONS RELATING TO THE DIFFERE NCE IN THE COST OF CONSTRUCTION MADE IN THE ASST. YEARS 2006-07 IS VAL ID IN THE ABSENCE OF ANY INCRIMINATING MATERIAL? (C) WHETHER THE PROFIT ESTIMATED ON THE SUPPRESSE D TURNOVER BY ADOPTING GROSS PROFIT RATE INSTEAD OF NET PROFIT RATE IS COR RECT? (D) WHETHER THE ASSESSING OFFICER WAS CORRECT IN LAW IN CHARGING INTEREST U/S 234B(1) INSTEAD OF CHARGING INTEREST U/S 234B(3 ) OF THE ACT? 3. WE NOTICE FROM THE ORDERS OF THE LD. CIT(A) T HAT THE ASSESSEE DID NOT PRESS THE GROUND RELATING TO DISALLOWANCE OF INTEREST MAD E IN ASSESSMENT YEAR 2008-09 AND ACCORDINGLY THE LD CIT(A) HAD DISMISSED THE SAM E. HOWEVER, WE NOTICE THAT THE ASSESSEE HAS RAISED A GROUND BEFORE US ON THE V ERY SAME ISSUE. SINCE THE ASSESSEE DID NOT PRESS THE GROUND BEFORE THE LD. CI T(A) WITH REGARD TO THE DISALLOWANCE OF INTEREST, IN OUR VIEW, THE ASSESSE E IS NOT ENTITLED TO AGITATE THE I.T.A. NOS. 215-221/COCH/2011 3 SAME AGAIN BEFORE US. ACCORDINGLY, WE DISMISS THE GROUNDS RELATING TO THE ISSUE LISTED AS 2(D) SUPRA. 3.1 THOUGH THE ASSESSING OFFICER HAS DISCUSSED ABOUT THE ADDITION RELATING TO THE INVESTMENT MADE IN K.P. TRADERS IN ASSESSMENT Y EAR 2003-04 AND INCOME FROM FOREIGN CONCERNS IN ASSESSMENT YEAR 2006-07, I T IS SEEN THAT THEY WERE NOT ADDED WHILE COMPUTING THE TOTAL INCOME. 4. THE FACTS RELATING TO THE CASE ARE STATED IN BRIEF. THE ASSESSEE IS CARRYING ON WHOLE SALE AND RETAIL BUSINESS IN BUILDING MATER IALS UNDER THE NAME AND STYLE M/S SAUDI STEELS. THE ASSESSEE WAS SUBJECTED TO S EARCH ON 06.09.2007. CONSEQUENT THERETO, THE AO COMPLETED THE ASSESSMENT S U/S 153A OF THE ACT. IN THE APPEALS FILED BY THE ASSESSEE CHALLENGING THE A DDITIONS MADE IN THE ASSESSMENT ORDERS, THE ASSESSEE GOT PARTIAL RELIEF. STILL AGGRIEVED, THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 5. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED BE FORE US THAT THE IMPUGNED ASSESSMENTS HAVE BEEN FRAMED U/S 153A OF THE ACT, C ONSEQUENT TO THE SEARCH CONDUCTED IN THE HANDS OF THE ASSESSEE ON 06-09-200 7. HE FURTHER SUBMITTED THAT THE SCOPE OF ASSESSMENTS FOR THE ASSESSMENT YE ARS REOPENED U/S 153A IS NOT THE SAME FOR ALL THE YEARS AND THE SAME HAS BEE N EXPLAINED BY THIS BENCH OF THE TRIBUNAL IN ITS ORDER DATED 20.11.2012 IN THE C ASE OF K.P. UMMER IN ITA NOS. 190-196/COCH/2011. THE LD COUNSEL ALSO FURNISHED A COPY OF THE ORDER RELIED UPON BY HIM. WE HAVE GONE THROUGH THE SAID ORDER A ND FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVAT IONS MADE BY THE TRIBUNAL IN THE CASE OF K.P.UMMER (REFERRED SUPRA). 4. BEFORE PROCEEDING TO ADJUDICATE THE ISSUES RAIS ED, WE FEEL IT PERTINENT TO DISCUSS ABOUT THE SCOPE OF ASSESSMENT U/S 153A OF THE ACT, SINCE THE ASSESSING OFFICER HAS FRAMED THE ASSESSME NTS UNDER THAT SECTION CONSEQUENT TO THE SEARCH AND SEIZURE OPERATIONS CON DUCTED IN THE HANDS OF THE ASSESSEE ON 06-09-2007. AS PER THE PROVISIO NS OF SEC. 153A OF THE I.T.A. NOS. 215-221/COCH/2011 4 ACT, THE AO IS REQUIRED TO ASSESS OR REASSESS THE T OTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED . IN THE INSTANT CASE, SINCE THE SEARCH TOOK PLACE ON 06-09-2007, THE AO H AS ISSUED NOTICE U/S 153A OF THE ACT FOR THE ASSESSMENT YEARS 2002-03 TO 2008-09. FURTHER, AS PER THE SECOND PROVISO TO SEC 153A(1), THE ASSES SMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YE AR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED ABOVE PENDI NG ON THE DATE OF INITIATION OF THE SEARCH SHALL ABATE. THUS, THIS P ROVISO BIFURCATES THE SEVEN ASSESSMENT YEARS (YEAR OF SEARCH PLUS SIX EARLIER A SSESSMENT YEARS) INTO TWO CATEGORIES VIZ., CONCLUDED ASSESSMENTS AND P ENDING ASSESSMENTS. ALL THE PENDING ASSESSMENTS SHALL ABATE; MEANING TH EREBY THE ASSESSING OFFICER IS ENTITLED TO EXAMINE ALL THE ASPECTS, VIZ ., THOSE ITEMS WHICH HAVE ALREADY BEEN DISCLOSED TO THE DEPARTMENT PRIOR TO T HE DATE OF SEARCH OR ALREADY BEEN RECORDED IN THE BOOKS OF ACCOUNT PRIOR TO THE DATE OF SEARCH AND ALSO THOSE ITEMS EMANATING FROM THE INCRIMINATI NG MATERIALS SEIZED DURING THE COURSE OF SEARCH ETC. IN THE ASSESSMENT PROCEEDINGS CARRIED OUT U/S 153A OF THE ACT. THE CONCLUDED ASSESSMENTS SHAL L NOT ABATE, EVEN THOUGH SUCH CONCLUDED ASSESSMENTS ARE REOPENED BY O PERATION OF THE PROVISIONS OF SEC. 153A OF THE ACT. IN THAT KIND O F SITUATION, THE QUESTION THAT ARISES IS WHETHER THE LD CIT(A) (SIC. ASSES SING OFFICER) IS ENTITLED TO EXAMINE ALL THE ASPECTS AS NARRATED ABOVE AS IN THE CASE OF PENDING ASSESSMENTS WHICH GOT ABATED. THIS BENCH OF THE TRI BUNAL HAD AN OCCASION TO CONSIDER ABOUT THE SCOPE OF ASSESSMENT IN THE CASE OF CONCLUDED ASSESSMENTS IN THE CASE OF DR. P. SASIKUM AR IN I.T.A. NO.252 TO 257/COCH/2011 AND 368 TO 274/COCH/2011 AND THE TRIB UNAL, VIDE ITS ORDER DATED 29-06-2012, HAS HELD AS UNDER:- THUS, WE NOTICE THAT VARIOUS CO-ORDINATE BENCHES HAVE TAKEN THE VIEW THAT THE COMPLETED ASSESSMENTS SHALL NOT ABATE AND ONLY THE ASSESSMENTS OR REASSESSMENTS RELATING TO ANY OF THE SIX ASSESSMENT YEARS, WHICH ARE PENDING ON THE DATE OF INITIATION OF SEARCH, SHALL ABATE. FURTHER IT HAS BEEN HELD THAT THE COMPLETED ASSESSMENTS, THOUGH AUTOMATICALLY REOPENED AS PER THE PROVISIONS OF SEC.153A, YET THEY CAN BE DISTURBED ONLY IN RESPECT OF THOSE ISSU ES FOR WHICH SOME INCRIMINATING MATERIALS REQUIRING SUCH DISTURBANCE IS UNEARTHED DURING THE COURSE OF SEARCH PROCEEDING. SINCE MAJORITY BE NCHES HAVE TAKEN THE ABOVE SAID VIEW IN A CONSISTENT MANNER, WE ARE ALSO INCLINED TO TAKE THE SAME VIEW DISCUSSED ABOVE. HOWEVER, WE FE EL IT PERTINENT TO EXPRESS THE VIEW THAT IF THE AO FINDS OUT ANY DEFEC T ON ANY ISSUE IN RESPECT OF THE PENDING ASSESSMENTS WHICH GOT ABATE D AND SUCH KIND OF ISSUES ARE ALSO AVAILABLE IN OTHER ASSESSMENTS, WHICH HAVE ALREADY BEEN COMPLETED AND DID NOT ABATE, THEN IN OUR VIEW, THE AO IS ENTITLED TO EXAMINE THOSE ISSUES IN THOSE YEARS ALSO, IN ORD ER TO FIND OUT WHETHER SIMILAR DEFECTS EXIST IN THOSE YEARS OR NOT . IN SUCH A SITUATION, I.T.A. NOS. 215-221/COCH/2011 5 IN OUR VIEW, IT IS NOT NECESSARY TO SATISFY THE CON DITION THAT SOME INCRIMINATING MATERIALS CONCERNING TO THOSE ISSUES SHOULD HAVE NECESSARILY BEEN FOUND OUT IN RESPECT OF THOSE ASS ESSMENT YEARS. 5. THE ABOVE SAID VIEW HAS SINCE BEEN CONFIRME D BY THE MUMBAI SPECIAL BENCH IN THE CASE OF AIR CARGO GLOBAL LOGISTICS VS. DCIT (137 ITD 287). THIS TRIBUNAL AS WELL AS THE SPECIAL BENCH HAS HELD THAT THE ASSESSMENT OF A PARTICULAR ASSESSMENT YEAR SHALL BE DEEMED TO HAVE BEEN CONCLUDED, IF THE NOTICE REQUIRED TO BE ISSUED U/S 143(2) OF THE ACT WAS NOT ISSUED FOR THAT YEAR AND THE TIME LIMIT PRESCRIBED FOR ISSUING THE SAME HAS ALSO EXPIRED AS ON THE DATE OF INITIATION OF SEARCH. 6. BY CONSIDERING THE LEGAL POSITION DISCUSSED ABOVE, WE SHALL FIRST BIFURCATE THE ASSESSMENT YEARS UNDER CONSIDERATION INTO CONC LUDED ASSESSMENTS AND PENDING ASSESSMENTS, SO THAT IT WOULD BE EASY FOR US TO ADJUDICATE THE ISSUES CONTENDED BEFORE US. THERE IS NO DISPUTE WITH REGAR D TO THE FACT THAT THE ASSESSEE HAD FURNISHED RETURNS OF INCOME FOR THE AS SESSMENT YEARS 2002-03 TO 2006-07 PRIOR TO THE DATE OF INITIATION OF SEARCH, I.E. BEFORE 06-09-2007. THE SAID RETURNS HAVE NOT BEEN TAKEN UP FOR SCRUTINY U/S 143 (3) OF THE ACT. WE NOTICE THAT THE TIME LIMIT FOR ISSUING NOTICE U/S 143(2) H AS EXPIRED FOR THE ASSESSMENT YEARS 2002-03 TO 2005-06. FOR THE SAKE OF CONVENIE NCE, WE EXTRACT BELOW THE DETAILS RELATING TO DATE OF FILING OF RETURN AND DU E DATE FOR ISSUE OF NOTICE UNDER SEC. 143(2) OF THE ACT: A.Y. DATE OF FILING OF RETURN DUE DATE FOR ISSUE OF NOTICE U/S. 143(2) 2002-2003 01-01-2003 31-12-2003 2003-2004 25-10-2004 30-09-2004 2004-2005 15-10-2004 30-09-2004 2005-2006 30-10-2005 30-09-2006 2006-07 31-10-2006 SEARCH CONDUCTED ON 06.9.2007, WITHIN THE DUE DATE FOR ISSUING NOTICE U/S 143(2). SINCE THE DUE DATE FOR ISSUING NOTICE U/S. 143(2) O F THE ACT HAS EXPIRED IN RESPECT OF THE ASSESSMENT YEARS 2002-03 TO 2005-06, THE ASS ESSMENTS PERTAINING TO THESE YEARS ARE DEEMED TO HAVE BEEN CONCLUDED AS ON THE DATE OF INITIATION OF I.T.A. NOS. 215-221/COCH/2011 6 SEARCH. HENCE, ACCORDING TO THE DECISION RENDERED BY THE SPECIAL BENCH (REFERRED SUPRA), THE CONCLUDED ASSESSMENTS CAN BE DISTURBED ONLY IF ANY INCRIMINATING MATERIAL RELATING TO THAT YEAR OR REL EVANT TO THE ITEMS OF INCOME DISCLOSED THEREIN IS FOUND DURING THE COURSE OF SEA RCH. IN THE CASE OF DR. P. SASIKUMAR (SUPRA), THIS BENCH OF THE TRIBUNAL HAS A LSO HELD AS UNDER IN RESPECT OF IDENTICAL ISSUES AVAILABLE IN ALL THE YEARS. IF THE AO FINDS OUT ANY DEFECT ON ANY ISSUE IN RES PECT OF THE PENDING ASSESSMENTS WHICH GOT ABATED AND SUCH KIND OF ISSU ES ARE ALSO AVAILABLE IN OTHER ASSESSMENTS, WHICH HAVE ALREADY BEEN COMPL ETED AND DID NOT ABATE, THEN IN OUR VIEW, THE AO IS ENTITLED TO EXAM INE THOSE ISSUES IN THOSE YEARS ALSO, IN ORDER TO FIND OUT WHETHER SIMI LAR DEFECTS EXIST IN THOSE YEARS OR NOT. IN SUCH A SITUATION, IN OUR VIEW, IT IS NOT NECESSARY TO SATISFY THE CONDITION THAT SOME INCRIMINATING MATERIALS CON CERNING TO THOSE ISSUES SHOULD HAVE NECESSARILY BEEN FOUND OUT IN RESPECT O F THOSE ASSESSMENT YEARS. BY TAKING INTO ACCOUNT THE FACTUAL AND LEGAL POSITI ON DISCUSSED IN THE PRECEDING PARAGRAPHS, WE SHALL PROCEED TO EXAMINE THE VARIOUS TYPES OF ADDITIONS MADE BY THE ASSESSING OFFICER. 7. THE FIRST ISSUE RELATES TO THE ADDITION PERT AINING TO SUPPRESSION OF BUSINESS INCOME. DURING THE COURSE OF SEARCH PROCEEDINGS, I T WAS FOUND THAT THE ASSESSEE WAS NOT MAINTAINING REGULAR BOOKS OF ACCOUNTS. IT W AS FURTHER NOTICED THAT THE ASSESSEE WAS PREPARING SALES ESTIMATES THROUGH CO MPUTER BY USING A PASS WORD, WHICH MEANS THAT THE ESTIMATES COULD BE ACCE SSED ONLY THROUGH VALID PASS WORD. IT WAS NOTICED THAT THE SALES BILLS C OULD BE PREPARED WITHOUT USING ANY PASS WORD. DURING THE COURSE OF SEARCH, A SWOR N STATEMENT WAS TAKEN FROM THE EMPLOYEE NAMED SHRI ABDUL RAZAK, WHO WAS IN-CHA RGE OF THE BUSINESS. IN THE SWORN STATEMENT, HE CONFIRMED THAT THERE WAS SU PPRESSION OF PURCHASE AND SALES FIGURES. APPARENTLY, THE SALES ESTIMATE PREP ARED BY USING PASS WORD APPEARED TO BE CORRECT SALES AND THE SALES BILL PRE PARED WITHOUT THE USE OF PASS WORK APPEAR TO BE ACCOUNTED SALES. IT WAS NOTICED T HAT THE ASSESSEE WAS ACCOUNTING FOR ONLY ABOUT 1/4TH OF SALES AND PURCHA SES. SUBSEQUENTLY, THE I.T.A. NOS. 215-221/COCH/2011 7 SWORN STATEMENT GIVEN BY SHRI ABDUL RAZACK WAS CONF RONTED WITH THE ASSESSEE AND HE ALSO AGREED WITH THE STATEMENT GIVEN BY SHRI ABDUL RAZACK. IN THE SWORN STATEMENT, SHRI ABDUL RAZACK HAD ALSO CONFESSED THA T THE HARD DISK OF THE COMPUTER IS FORMATTED AT THE END OF EVERY YEAR. HE NCE THE ACCOUNTS PERTAINING TO THE PERIOD FROM 1.4.2007 TO 06-09-2007 ONLY WAS AVAILABLE IN THE COMPUTER. 7.1 FROM THE PRINT OUT OF THE ACCOUNTS PERTAINING T O THE PERIOD FROM 01-04- 2007 TO 06-09-2007, WHICH WERE NUMBERED AS TCA-18, IT WAS NOTICED THAT THE ACTUAL SALES TURN OVER FOR THIS PERIOD WAS RS.4.80 CRORES WHEREAS THE ASSESSEE HAD ACCOUNTED FOR A TURNOVER OF ONLY RS.1.18 CRORES FOR THIS PERIOD. SIMILARLY, THE ACTUAL PURCHASE FOR THIS PERIOD WAS RS. 4.62 CRORES , BUT ASSESSEE HAD ACCOUNTED FOR ONLY RS.1.16 CRORES. 7.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFI CER. THE ASSESSEE ALSO DID NOT PRODUCE STOCK REGISTER FOR ANY OF THE YEARS UND ER CONSIDERATION. HOWEVER, THE VALUE OF STOCK INVENTORY TAKEN FROM THE COMPUTE R TALLIED WITH THE VALUE OF PHYSICAL STOCK. SINCE THE ASSESSEE HAD INDULGED IN SUPPRESSION OF PURCHASES AND SALES AND SINCE THE ASSESSEE DID NOT FURNISH ANY BO OKS OF ACCOUNTS AND STOCK REGISTER, THE ASSESSING OFFICER REJECTED THE BOOK R ESULTS AND PROCEEDED TO ESTIMATE THE SALES TURNOVER AT FOUR TIMES OF THE RE PORTED OR ACCOUNTED TURNOVER, I.E., THE SUPPRESSED TURNOVER WAS TAKEN AT THREE TI MES OF THE ACCOUNTED TURNOVER. THE ASSESSING OFFICER FURTHER NOTICED TH AT THE GROSS PROFIT DECLARED BY THE ASSESSEE OVER THE YEARS RANGED FROM 2.98% TO 6% . THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAD DECLARED G.P. AT THE RATE OF 6% IN ASSESSMENT YEARS 2006-07 TO 2008-09. ACCORDINGLY, THE ASSESSING OFFICER DETERMINED THE G.P. RATE AT 6% FOR THE ALL THE YEAR S; APPLIED THE SAME ON THE TOTAL TURNOVER AND ACCORDINGLY WORKED OUT THE SUPPR ESSION OF BUSINESS INCOME AS PER THE TABLE GIVEN BELOW: I.T.A. NOS. 215-221/COCH/2011 8 ASSESSMENT YEAR TURNOVER RETURNED RS. SUPPRESSED TURNOVER @ 300% RS. TOTAL TURNOVER RS. GP @ 6% RS. GP RETURNED RS. ADDITION RS. 2002-03 78,48,542 2,35,45,626 3,13,94,168 18,83,650 2,34,335 16,49,315 2003-04 - - - - - - 2004-05 71,44,870 21434610 28579480 17114768 215100 1929868 2005-06 17184727 51554181 68738908 4124334 697066 3 427268 2006-07 9993017 29979051 39972068 2398324 598547 1799777 2007-08 18136032 54408096 72544128 4352647 1094028 3258619 2008-09 30894019 92682057 123576076 7414564 1853800 5560765 THE LD CIT(A) ALSO CONFIRMED THE ADDITIONS MADE IN ASSESSMENT YEARS 2002-03 TO 2007-08. IN ASSESSMENT YEAR 2008-09, THE LD CIT (A) HAS GIVEN MARGINAL REDUCTION, SINCE HE FOUND CERTAIN CALCULATION MISTA KES IN THE AMOUNT OF ADDITION COMPUTED BY THE ASSESSING OFFICER. 7.3 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE SEARCH TEAM HAS FOUND MATERIAL RELATING TO 1.4.2007 TO 6.9.2007. H OWEVER THE AO HAS EXTRAPOLATED THE SAME TO ALL THE YEARS UNDER CONSID ERATION, EVEN THOUGH NO MATERIAL EVIDENCING SUPPRESSION PERTAINING TO THOSE PERIODS WAS FOUND DURING THE COURSE OF SEARCH. HE FURTHER SUBMITTED THE AO SHOU LD NOT HAVE MADE ANY ADDITION ON THIS ACCOUNT IN THE CONCLUDED ASSESSMEN TS IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. HE FURTHER SUBMITTED THAT THE AO HAS PLACED FULL RELIANCE ON THE SEIZED DOCUMENT TCA 18 AND ALSO THE STATEMEN T GIVEN BY THE MANAGER OF THE CONCERN SHRI ABDUL RAZAK TO COME TO THE CONCLUS ION THAT THERE WAS SUPPRESSION OF SALES. HE SUBMITTED THAT THERE ARE CERTAIN INFIRMITIES IN THE STATEMENT GIVEN BY SHRI ABDUL RAZAK, I.E., AS PER T HE STATEMENT OF ABDUL RAZAK, PAGES 1-3 OF TCA 18 CONTAINS ACTUAL SALES FOR THE P ERIOD FROM 1.4.2007 TO 6.9.2007 AND THE PAGES 4 -6 CONTAINS ACCOUNTED SALE S IN THE ABOVE SAID PERIOD. HOWEVER A CLOSE SCRUTINY OF THE SEIZED DOCUMENT WOU LD SHOW THAT THE ACTUAL SALES WERE LESS THAN THE ACCOUNTED SALES ON SOME OF THE DATES. ACCORDINGLY HE CONTENDED THAT THE CONCLUSION REACHED BY THE AO THA T THERE WAS SUPPRESSION OF ABOUT 3/4 TH OF THE ACTUAL SALES IS NOT CORRECT. HE FURTHER SU BMITTED THAT THE AO I.T.A. NOS. 215-221/COCH/2011 9 HAS FURTHER RELIED UPON SEIZED DOCUMENT NO. TCA -11 , WHICH WAS A BILL BOOK. THE TURNOVER SHOWN IN THAT BILL BOOK WAS RS.79,72,9 70/- AND THE TOTAL SALES AS PER SALES LEDGER FOR THE PERIOD FROM 1.4.2005 TO 31 .3.2005 WAS RS.91,85,480/-. HENCE THE TOTAL SALES BY ADDING ABOVE SAID TWO AMOU NTS WORKS OUT TO RS.1,71,58,450/-. THE LD A.R SUBMITTED THAT THE TU RNOVER DISCLOSED BY THE ASSESSEE TO THE SALES TAX DEPARTMENT FOR THE YEAR E NDING 31.3.2005 WAS RS.1,71,84,727/-, WHICH WAS MORE THAN THE FIGURE CO MPUTED ABOVE. ACCORDINGLY, THE LD A.R CONTENDED THAT THERE WAS NO SUPPRESSION OF SALES SHOWN IN THE BILL BOOK (TCA-11) SEIZED FROM THE ASSESSEE. 7.4 THE LD COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE AO HAS ADOPTED THE GROSS PROFIT RATE OF 6% TO ESTIMATE THE INCOME FROM SUPPRESSED TURNOVER. THE LD A.R SUBMITTED THAT THERE IS NO SC OPE FOR SUPPRESSION OF SALES ON CEMENT AND PAINT PURCHASES, SINCE THEY ARE PURCH ASED FROM PUBLIC SECTOR COMPANIES AND OTHER REPUTED COMPANIES. THE LD COUNS EL SUBMITTED THAT THE AO SHOULD HAVE ADOPTED THE NET PROFIT RATE FOR THE PUR POSE OF ESTIMATION. ACCORDING TO LD A.R, THE NET PROFIT RATE DISCLOSED BY THE ASS ESSEE RANGES FROM 0.7% TO 2.8%. 7.5 ON THE OTHER HAND, THE LD D.R SUBMITTED THA T THE AO HAS REJECTED THE BOOKS OF ACCOUNT, SINCE THE ASSESSEE DID NOT PRODUC E THE SAME AND FURTHER THE SEIZED MATERIAL REVEALED THAT THERE WERE LARGE SCAL E SUPPRESSION OF SALES AND PURCHASES. FURTHER THE PATTERN OF SUPPRESSION OF S ALES AND PURCHASES HAVE BEEN CLEARLY ESTABLISHED BY THE FACT THAT THE SALES EST IMATES COULD BE PREPARED THROUGH THE COMPUTER BY USING A PASS WORD AND THE ACTUAL SALES BILLS COULD BE GENERATED WITHOUT THE USE OF THE PASS WORD. FURTHE R THE METHODOLOGY ADOPTED BY THE ASSESSEE HAS BEEN CONFIRMED BY THE MANAGER O F THE CONCERN AND HIS STATEMENT WAS ALSO ACCEPTED BY THE ASSESSEE. THE L D A.R, BY PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL KERALA HI GH COURT IN THE CASE OF CIT VS. HOTEL MERIYA (332 ITR 537) AND ALSO THE DECISION OF HONBLE ANDHRA PRADESH I.T.A. NOS. 215-221/COCH/2011 10 HIGH COURT IN THE CASE OF RAJNIK & CO. VS. ACIT (25 1 ITR 561) SUBMITTED THAT THE ESTIMATION OF INCOME FOR THE WHOLE PERIOD ON THE BA SIS OF INFORMATION AVAILABLE FOR FEW MONTHS FOUND DURING THE COURSE OF SEARCH IS VALID. THE LD D.R FURTHER SUBMITTED THAT THE SWORN STATEMENT FORMS PART OF EV IDENCE REGARDING CONCEALMENT OF INCOME AS PER THE DECISION OF HONBL E KERALA HIGH COURT IN THE CASE OF CIT VS. HOTEL MERIYA (SUPRA). 7.6 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND CAREFULLY PERUSED THE RECORD. IT IS AN ADMITTED FACT THAT THE ASSESS EE WAS INDULGING IN THE PRACTICE OF PREPARING SALES ESTIMATES THROUGH COMPUTERS BY U SING A PASS WORD AND THE ACTUAL SALES BILLS WITHOUT USING THE PASS WORD. IT IS ALSO A FACT THAT THE SEARCH TEAM TOOK PRINT OUTS FROM THE COMPUTER ON THE DATE OF SEARCH AND THE DETAILS OF THE SAME HAVE BEEN IDENTIFIED BY THE MANAGER OF THE CONCERN NAMED SHRI ABDUL RAZAK. AS PER THE CONFIRMATION GIVEN BY HIM, THE PRINT OUTS CONTAINED BOTH THE ACTUAL SALES/PURCHASES AND THE ACCOUNTED SALES/PURC HASES. THUS THE PATTERN ADOPTED BY THE ASSESSEE IN ACCOUNTING THE SALES AND PURCHASES HAS BEEN CONFIRMED BY THE MANAGER OF THE CONCERN. IT WAS AL SO STATED THAT THE HARD DISK OF THE COMPUTER IS FORMATTED AT THE END OF EVERY YE AR, WHICH ONLY GOES TO SHOW THAT THE ASSESSEE HAS BEEN DOING THE SAME TO AVOID DETECTION OF THE IRREGULARITIES COMMITTED BY HIM. IN VIEW OF THE SA ME, THE SEARCH TEAM COULD NOT TAKE PRINT OUTS OF THE EARLIER PERIODS. FURTHER THE SAID FACT ALSO SHOWS THAT THE ASSESSEE MIGHT HAVE ADOPTED SAME PATTER IN THE EARL IER YEARS ALSO. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE DID NOT PRODUCE BOO KS OF ACCOUNTS AND/OR STOCK REGISTER DURING THE COURSE OF ASSESSMENT PROCEEDING S. HENCE, THE AO HAD TO REJECT THE BOOK RESULTS AND RESORT TO ESTIMATION OF INCOME. UNDER THESE SET OF FACTS, IN OUR VIEW, THE ASSESSING OFFICER WAS JUSTI FIED IN ESTIMATING THE TURNOVER FOR ALL THE YEARS UNDER CONSIDERATION, SINCE THE PA TTERN OF SUPPRESSION ADOPTED BY THE ASSESSEE OVER THE YEARS, IN OUR VIEW, STANDS ES TABLISHED. IT HAS BEEN HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F HOTEL MERIYA (SUPRA) AND THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF RA JNIK & CO THAT SUCH KIND OF I.T.A. NOS. 215-221/COCH/2011 11 ESTIMATION BY EXTRAPOLATING THE AVAILABLE DETAILS I S PERMISSIBLE, IF THE PATTERN OF SUPPRESSION IS ADMITTED BY THE ASSESSEE. IN THE IN STANT CASE, THE MANAGER OF THE CONCERN SHRI ABDUL RAZAK HAS EXPLAINED IN DETAI L ABOUT THE METHODOLOGY ADOPTED BY THE ASSESSEE. THE SEIZED DOCUMENT TCA- 18 PERTAINING TO THE PERIOD FROM 1.4.2007 TO 6.9.2007 WAS ALSO PUT TO SHRI ABDU L RAZAK AND HE HAS EXPLAINED ABOUT THE SAME. FROM TCA-18, IT WAS NOTI CED THAT THE ACTUAL AND ACCOUNTED SALES WERE RS.4.80 CRORES AND RS.1.18 CRO RES RESPECTIVELY. SIMILARLY THE ACTUAL AND ACCOUNTED PURCHASES WERE RS.4.62 CRO RES AND RS.1.16 CRORES RESPECTIVELY. THE STATEMENT GIVEN BY SHRI ABDUL RA ZAK WAS CONFRONTED WITH THE ASSESSEE AND THE ASSESSEE HAS ACCEPTED THE CONTENTS OF THE STATEMENT GIVEN BY SHRI ABDUL RAZAK. THUS, IT IS SEEN THAT THE PATTER N OF SUPPRESSION WAS AFFIRMED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE AO , IN OUR VIEW, WAS JUSTIFIED IN ESTIMATING THE TURNOVER FOR ALL THE YEARS UNDER CONSIDERATION AS HELD BY THIS BENCH OF TRIBUNAL IN THE CASE OF K.P. UMMER (SUPRA) . SINCE THE AO HAS REJECTED THE BOOK RESULTS ON THE REASONING THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS, WE REJECT THE CONTENTIONS RAISED BY LD A. R BY PLACING RELIANCE ON THE BOOK RESULTS. ACCORDINGLY, WE REJECT THE ADDITIONA L GROUND URGED BY THE ASSESSEE WHICH IS LISTED AS 2.1(A) ABOVE. 7.7 THE LD COUNSEL SUBMITTED THAT THERE WAS NO S COPE OF SUPPRESSION OF PURCHASES/SALES IN RESPECT OF CEMENTS AND PAINTS, S INCE THEY WERE PURCHASED FROM PSUS AND OTHER REPUTED COMPANIES. HOWEVER, WE NOTICE THAT THE ASSESSEE DID NOT SUBSTANTIATE THIS CLAIM BY PRODUCING THE AC COUNT STATEMENTS FROM THE SUPPLIER COMPANIES AND FURTHER HE HAS NOT SHOWN THA T ALL THE PURCHASES MADE FROM SUCH COMPANIES WERE DULY ACCOUNTED BY HIM. TH E ASSESSEE ALSO DID NOT PRODUCE ANY RECONCILIATION STATEMENT RECONCILING TH E ACCOUNTS OF THOSE COMPANIES WITH THE BOOKS OF ACCOUNTS. IT IS PERTIN ENT TO NOTE THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS FOR ANY OF THE YE ARS BEFORE THE TAX AUTHORITIES. HENCE, WE ARE UNABLE TO RELY ON THE SA ID SUBMISSIONS IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE SAID CLAIM. I.T.A. NOS. 215-221/COCH/2011 12 7.8 THE LD COUNSEL SUBMITTED THAT THE AO HAS ES TIMATED THE INCOME ON SUPPRESSED TURNOVER @ 6% ON THE BASIS OF THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE. ACCORDING TO LD COUNSEL, THE AO SHOULD H AVE ADOPTED THE RATE OF NET PROFIT DECLARED BY THE ASSESSEE INSTEAD OF GROSS PR OFIT RATE. WE ARE UNABLE TO ACCEPT THIS CONTENTION. FIRST OF ALL, THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE AO. SECONDLY, THE AO HAS REJEC TED THE BOOKS OF ACCOUNT AND HENCE THE RESULTS SHOWN IN THE BOOKS, IF ANY, H AS BECOME UNRELIABLE. THIRDLY, THE AO SHOULD HAVE SOME BASIS FOR ESTIMATI NG THE INCOME AND ONLY FOR THAT PURPOSE; THE ASSESSING OFFICER SEEMS TO HAVE C ONSIDERED THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE. FOURTHLY, THE ASSES SEE HAS NOT PRODUCED ANY MATERIAL TO SHOW THAT HE HAD ALSO CONCEALED THE EXP ENDITURE ALSO, WHICH MAY WARRANT ADOPTION OF NET PROFIT RATE. UNDER THESE C IRCUMSTANCES, IN OUR VIEW, THE AO WAS JUSTIFIED IN ESTIMATING THE INCOME @ 6% OF T HE SUPPRESSED TURNOVER. ACCORDINGLY, WE CONFIRM THE ORDER OF LD CIT(A) ON T HIS ISSUE. ACCORDINGLY THE ISSUES LISTED AS 2(A) AND 2.1(C) ABOVE STAND DISPOS ED OF. 8. THE NEXT ISSUE RELATES TO THE CASH CREDITS A DDITION MADE IN ASSESSMENT YEARS 2002-03, 2003-04 AND 2004-05. IN THE EARLIER PARAGRAPHS, WE HAVE NOTICED THAT THE ASSESSMENTS PERTAINING TO THESE TH REE YEARS FALL IN THE CATEGORY OF CONCLUDED ASSESSMENTS. AS PER THE LEGAL POSIT ION DISCUSSED SUPRA, THE ADDITIONS IN THESE THREE YEARS COULD BE MADE ONLY O N THE BASIS OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. A PER USAL OF THE ASSESSMENT ORDER WOULD SHOW THAT THE ASSESSEE HAD DECLARED THE CREDI TORS BALANCES IN THE BALANCE SHEET FILED ALONG WITH THE ORIGINAL RETURNS PRIOR T O THE DATE OF SEARCH. IT IS ALSO A FACT THAT THE DEPARTMENT DID NOT UNEARTH ANY MATERI AL TO CREATE DOUBT ABOUT THE GENUINENESS OF THE CREDITORS. HENCE, IN OUR VIEW, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.24,38,968/-, RS. 28,00,000/- AND RS.23,90,000/- RESPECTIVELY IN ASSESSMENT YEARS 2002-03, 2003-04 A ND 2004-05. I.T.A. NOS. 215-221/COCH/2011 13 8.1 WE NOTICE THAT THE ASSESSING OFFICER HAS GI VEN TELESCOPING BENEFIT OF THE ADDITION RELATING TO INCOME FROM SUPPRESSED TURNOVE R AGAINST THE ADDITION MADE TOWARDS CREDITORS. WE FURTHER NOTICE THAT THE LD C IT(A) HAS DELETED RS.15.00 LAKHS OUT OF CASH CREDIT ADDITION MADE IN ASSESSMEN T YEAR 2002-03. SIMILARLY IN ASSESSMENT YEAR 2004-05, THE LD CIT(A) HAS GRANTED RELIEF OUT OF CASH CREDIT ADDITION TO THE TUNE OF RS.16,55,000/-. FURTHER W E NOTICE THAT THE LD CIT(A) HAS ALSO GIVEN TELESCOPING BENEFIT IN CUMULATIVE MANNE R, I.E., THE LD CIT(A) HAS ALLOWED THE CARRY FORWARD OF THE UNADJUSTED INCOME FROM SUPPRESSED TURNOVER FOR GIVING TELESCOPING BENEFIT IN THE ENSUING YEARS . HOWEVER, SINCE WE HAVE HELD THAT THE CASH CREDIT ADDITION MADE IN ASSESSME NT YEARS 2002-03 TO 2004-05 WOULD NOT SURVIVE, WE FIND IT NOT NECESSARY TO GO I NTO THE ORDERS OF LD CIT(A) ON THIS ISSUE. ACCORDINGLY, WE SET ASIDE THE ORDERS O F LD CIT(A) IN RESPECT OF CASH CREDIT ADDITIONS MADE IN ASSESSMENT YEARS 2002-03 T O 2005-06 AND DIRECT THE AO TO DELETE THE SAME. ACCORDINGLY THE ISSUE LISTED A S 2(B) ABOVE STANDS DISPOSED OF. 9. THE NEXT ISSUE RELATES TO THE ADDITION PERTA INING TO THE DIFFERENCE IN COST OF CONSTRUCTION MADE IN ASSESSMENT YEARS 2006-07 AND 2 007-08. THE AO NOTICED THAT THE ASSESSEE HAS CONSTRUCTED TWO STOREYED RESI DENTIAL BUILDING ADMEASURING ABOUT 4400 SQ. FT. FURTHER THE ASSESSEE HAD ALSO C ONSTRUCTED A STORE ROOM OF ABOUT 500 SQ. FT, BEHIND THE HOUSE. IN THE CASH FL OW STATEMENT, THE ASSESSEE HAD DECLARED THE COST OF CONSTRUCTION AT RS.51.00 L AKHS. DURING THE COURSE OF SEARCH PROCEEDING, THE ASSESSEE HAD ALSO ADMITTED T HAT HE HAD SPENT RS.5.00 LAKHS ON INTERIOR DECORATION. THE AO NOTICED THAT THE ASSESSEE DID NOT DECLARE THE ABOVE SAID SUM OF RS.5.00 LAKHS IN THE CASH FLO W STATEMENT. 9.1 THE AO REFERRED THE MATTER OF VALUATION TO THE VALUATION OFFICER, WHO ESTIMATED THE COST OF CONSTRUCTION AT RS.64.00 LAKH S. THUS THERE WAS A DIFFERENCE OF RS.13.00 LAKHS BETWEEN THE VALUE DETE RMINED BY THE VALUATION OFFICER AND THAT DECLARED BY THE ASSESSEE. THE AO NOTICED THAT THE VALUATION I.T.A. NOS. 215-221/COCH/2011 14 OFFICER DID NOT INCLUDE THE VALUE OF INTERIOR DECOR ATION (RS.5.00 LAKHS), THE COST OF SIX AIR CONDITIONERS (6 X RS.20,000/- = RS.1,20,000 /-). ACCORDINGLY, THE AO ADDED THEM AND THUS DETERMINED THE AMOUNT OF DIFFER ENCE IN COST OF CONSTRUCTION AT RS.19.20 LAKHS (13 + 5 + 1.20) AND ASSESSED THE SAME BY APPORTIONING IT IN THE FOLLOWING MANNER:- ASSESSMENT YEAR 2006-07 RS. 9,00,000/- ASSESSMENT YEAR 2007-08 RS.10,20,000/- THE LD CIT(A) CONFIRMED THE ABOVE SAID ASSESSMENTS , BUT GAVE TELESCOPING BENEFIT AGAINST THE INCOME FROM SUPPRESSED TURNOVER . 9.2 THE LD COUNSEL SUBMITTED THAT THE DEPARTMENT D ID NOT UNEARTH ANY MATERIAL TO SHOW THAT THERE WAS SUPPRESSION IN THE COST OF C ONSTRUCTION DECLARED BY THE ASSESSEE. ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ABHINAV KUMAR MITTAL ( 2013)(351 ITR 20), THE LD A.R CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKI NG ADDITION TOWARDS THE DIFFERENCE IN COST OF CONSTRUCTION IN ASSESSMENT YE ARS 2006-07 AND 2007-08. HE FURTHER SUBMITTED THAT THE DEPARTMENTAL VALUATION O FFICER HAS ESTIMATED THE COST OF CONSTRUCTION BY ADOPTING CPWD RATES. HE SUBMITT ED THAT THE HONBLE KERALA HIGH COURT HAS HELD THAT THE STATE PWD RATES SHOULD BE ADOPTED FOR ESTIMATING COST OF CONSTRUCTION. 9.3 ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSMENTS PERTAINING TO THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE OPEN A SSESSMENTS AND HENCE THE AO IS ENTITLED TO LOOK INTO ANY MATTER AND THER E IS NO REQUIREMENT OF PRESENCE OF ANY INCRIMINATING MATERIAL. THE LD D .R FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION ON THE BASI S OF DEPARTMENT VALUERS REPORT. 9.4 WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISSUE . IN THE PRECEDING PARAGRAPHS, WE HAVE DISCUSSED ABOUT THE SCOPE OF PE NDING ASSESSMENTS. UNDER I.T.A. NOS. 215-221/COCH/2011 15 THE PROVISIONS OF SEC. 153A OF THE ACT, ALL THE PEN DING ASSESSMENTS SHALL ABATE, MEANING THEREBY, THE ASSESSING OFFICER IS ENTITLED TO LOOK INTO ANY MATTER IN THE ASSESSMENT MADE U/S 153A IN RESPECT OF PENDING ASSE SSMENTS OF THE ASSESSMENT YEARS WHICH GOT ABATED. WE HAVE ALSO NOTICED THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF K.P. UMMER (SUPRA) AND THE SPECIAL BENC H OF TRIBUNAL IN THE CASE OF AIR CARGO GLOBAL LOGISTICS (SUPRA) HAVE HELD THAT T HE AO IS ENTITLED TO LOOK INTO ANY MATTER IN RESPECT OF OPEN ASSESSMENTS, I.E., TH E ASSESSMENTS WHICH GOT ABATED AND HENCE THERE IS NO REQUIREMENT THAT THE D EPARTMENT SHOULD HAVE SEIZED ANY INCRIMINATING MATERIAL RELATING TO THOSE YEARS. WE NOTICE THAT THE DECISION RELIED UPON BY THE LD A.R, VIZ., ABHINAV K UMAR MITTAL (SUPRA) PERTAINS TO THE ASSESSMENTS MADE U/S 153C OF THE ACT. IN THE I NSTANT CASE, THE ASSESSMENTS WERE MADE U/S 153A OF THE ACT CONSEQUENT TO THE SEA RCH CONDUCTED IN THE HANDS OF THE ASSESSEE. THERE SHOULD NOT BE ANY DISPUTE T HAT THE SCOPE OF ASSESSMENTS IN THE HANDS OF SEARCHED PERSON AND THE SCOPE OF AS SESSMENTS MADE U/S 153C OF THE ACT IN THE HANDS OF OTHER ARE NOT THE SAME. AC CORDINGLY, IN OUR VIEW, THE ASSESSEE CANNOT DERIVE SUPPORT FROM THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ABHINAV KUMAR MITTAL (SUPRA). WE HAVE ALSO NOTICED THAT THE ASSESSMENT YEARS 2006-07 AND 2007-08 IN THE INSTANT CASE FALL IN THE CATEGORY OF OPEN ASSESSMENTS. HENCE, THE AO CAN LOOK INTO ANY MATTER RELATING TO THESE YEARS, THAT COMES TO HIS NOTICE. ADMITTEDLY, THE A SSESSEE HAS CONSTRUCTED THE RESIDENTIAL PROPERTY DURING THE PERIOD FALLING UNDE R THESE TWO ASSESSMENT YEARS. HENCE, IN OUR VIEW, THE AO WAS VERY MUCH ENTITLED T O EXAMINE THE DETAILS OF COST OF CONSTRUCTION DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSE SSEE THAT THE ADDITION TOWARDS DIFFERENCE IN COST OF CONSTRUCTION WAS MADE WITHOUT ANY INCRIMINATING MATERIAL. ACCORDINGLY, THE ISSUE LISTED AS 2.1(B) IS DISPOSED OF. 9.5 THE LD A.R CONTENDED BEFORE US THAT THE DEP ARTMENTAL VALUATION OFFICER HAS ADOPTED CPWD RATES FOR THE PURPOSE OF ESTIMATIN G THE COST OF CONSTRUCTION. HOWEVER, THE COPY OF VALUATION REPORT WAS NOT PROD UCED BEFORE US BY BOTH THE I.T.A. NOS. 215-221/COCH/2011 16 PARTIES. HENCE, IT IS NOT KNOWN WHETHER THE DEPART MENTAL VALUATION OFFICER HAS ADOPTED CPWD RATES OR STATE PWD RATES FOR THE PURPO SE OF VALUATION OF RESIDENTIAL HOUSE. HOWEVER, IT IS PERTINENT TO NOT E THAT THE HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF CIT VS. HOTEL ALUK KAS (ITA NO.1588 OF 2009 DATED 09-09-2009) AND ALSO IN THE CASE OF CIT VS. M .N. SAIDALAVI (ITA 3 OF 2011 DATED 09-01-2012) HAS HELD THAT THE STATE PWD RATES SHOULD BE ADOPTED FOR THE PURPOSE OF VALUATION. IN THE ABSENCE OF DETAILS, W E ARE UNABLE TO ADDRESS THE CONTENTIONS RAISED BY THE ASSESSEE ON THIS ISSUE. ACCORDINGLY, IN OUR VIEW, THIS ISSUE REQUIRES EXAMINATION AT THE END OF THE ASSESS ING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH BY CONFRONTING THE VALUATION REPORT TO THE ASSESSEE AN D TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. WE MAY NOTE HERE THAT THE LD CIT(A) HAS GRANTED TELESCOPING BENEFIT FOR THIS ADDITION AND SINCE, TH E REVENUE HAS NOT CHALLENGED THE BENEFIT SO GIVEN BY THE LD CIT(A), THE AO IS DI RECTED TO GIVE THE TELESCOPING BENEFIT AGAINST THIS ADDITION, IF ANY, SUSTAINED BY HIM. ACCORDINGLY THE ISSUE LISTED AS 2(C) STANDS DISPOSED OF. 10. THE LAST ISSUE RELATES TO THE CHARGING OF I NTEREST U/S 234B OF THE ACT. ACCORDING TO THE ASSESSEE, THE AO HAS CHARGED INTER EST U/S 234B(1) OF THE ACT. IT IS CONTENDED BY THE ASSESSEE THAT THE INTEREST S HOULD HAVE BEEN CHARGED U/S 234B(3) OF THE ACT. THE LD A.R PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF CIT VS. LAKSHMIKANTHAN (2011)(198 TAXMANN 485) TO SUPPORT THE ABOVE SAID C ONTENTIONS. WE NOTICE THAT THE ASSESSEE IS RAISING THIS GROUND FOR THE FI RST TIME BEFORE US. SINCE IT IS A LEGAL ISSUE, WE ADMIT THE SAME. THERE SHOULD NOT BE ANY DISPUTE THAT THE CHARGING OF INTEREST U/S 234B IS CONSEQUENTIAL AND MANDATORY. THE CLAIM OF THE ASSESSEE PERTAINS TO THE METHOD OF COMPUTATION OF I NTEREST AND THE DECISION OF JURISDICTIONAL HIGH COURT WAS NOT BROUGHT TO THE NO TICE OF THE AO. ACCORDINGLY, WE OF THE VIEW THAT THIS ISSUE NEEDS TO BE EXAMINED AT THE END OF THE ASSESSING I.T.A. NOS. 215-221/COCH/2011 17 OFFICER IN THE LIGHT OF THE DECISION OF JURISDICTIO NAL HIGH COURT, BY CONSIDERING RELEVANT FACTS AVAILABLE ON RECORD. ACCORDINGLY, WE SET ASIDE THIS MATTER IN ALL THE YEARS TO THE FILE OF THE AO FOR FRESH CONSIDERA TION IN ACCORDANCE WITH LAW. ACCORDINGLY, THE ISSUE LISTED AS 2.1(D) ABOVE STAND S DISPOSED OF. 11. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 27-12-2013 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH DECEMBER, 2013 GJ COPY TO: 1. SHRI MOHAMMEDKUTTY HAJI, PROP. SAUDI STEELS, MAN JALUNGAL, PATTAMBI, PALAKKAD. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE, TRICHUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN