Sri. K.V. Prakashan, Kannur V. The DCIT, Calicut

ITA 230/COCH/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4061 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 20-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Unexplained investment; Source of fund
• Section: 40A(3); 143(3); 153A; 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER I.T.A. NO. 230/ COCH/201 6 ASSESSMENT YEAR : 200 7 - 08 SHRI K.V. PRAKAS H AN, KAPPUVA VEETTIL, PROP. PAYYAVOOR TRADING COMPANY, KANNUR-670 633. [PAN:ARIPP 6427D] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, KOZHIKODE. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI A. DHANARAJ, SR.DR DATE OF HEARING 20/ 10 / 201 6 DATE OF PRONOUNCEMENT 01 ST /11/2016 O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, KOCHI DATED 03/02/2016. THE RELEVANT AS SESSMENT YEAR IS 2007-08.. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLL OWS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-IV, COCHIN DATED 03/02/2016 IN I.T.A. NO. C/230/CIT(A)-IV/13-1 4 DISMISSING THE APPEAL FILED BY THE APPELLANT FOR THE ASSESSMENT YEAR 2007 -08 IS INFIRM IN LAW AND CONTRARY TO FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED LOWER AUTHORITIES ERRED IN TREATING THE SUM OF RS.15,51,400/- AS THE APPELLANTS UNEXPLAINED INCOME. I.T.A. NO.230/COCH/2016 2 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-IV OUGHT TOHAVE FOUND THAT THE APPELLANT HAD ACCOUNTED THE SUM OFRS.15,51 ,400/- IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT AND AS THE ASSES SING OFFICER HAS ACCEPTED THE BOOKS OF ACCOUNTS OF THE APPELLANT BY COMPLETIN G THE ASSESSMENT U/S. 143(3) OF THE I.T. ACT, 1961 THERE IS NO JUSTIFICAT ION TO TREAT THE ABOVE AMOUNT AS UNEXPLAINED INVESTMENT OF THE APPELLANT. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-IV IS IN ERROR IN HOLDING THAT THE LEDGER ACCOUNTS PRODUCED BEFORE THE ASSESS ING OFFICER LACK THE CREDIBILITY. THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)-IV OUGHT TO HAVE FOUND THAT THE ACCOUNTS OF THE APPELLANT IS AC CEPTED BY THE ASSESSING OFFICER GOES TO PROVE THAT THE LEDGER OF THE APPELL ANT IS ACCEPTED AND THERE IS NO JUSTIFICATION FOR THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-IV TO HOLD THAT THE LEDGER ACCOUNT LACK CREDIBILITY. 5. THE LEARNED LOWER AUTHORITIES OUGHT TO HAVE FOUN D THAT THE APPELLANT HAD NEVER DENIED TO HAVE GIVEN ANY AMOUNT TO SHRI ABDUL RASHEED AND SHRI SOJUMON. THE LOWER AUTHORITIES HAVE MISCONSTRUED T HE STATEMENT OF THE APPELLANT WITH REGARD TO QUESTION NO. 25 & 28 IN HI S STATEMENT U/S. 131 DATED 26/04/2007. 6. THE GROUNDS OF APPEAL FILED BY THE APPELLANT BEF ORE THE FIRST APPELLATE AUTHORITY IS ENCLOSED SEPARATELY AND THE SAME MAY B E TREATED AS PART OF THIS GROUNDS OF APPEAL AS WELL. 7. FOR THE ABOVE AND OTHER REASONS TO BE URGED AT THE TIME OF HEARING IT IS PRAYED THAT THE HONBLE INCOME TAX APPELLATE TRIBUN AL, COCHIN MAY BE PLEASED TO VACATE THE ADDITIONS MADE AND RENDER JUSTICE TO THE APPELLANT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FO LLOWS: THE ASSESSEE, AN INDIVIDUAL, IS A RUBBER DEALER. THE MAHE POLICE SEIZED RS.15,51,400/- ON 29/03/2007 FROM SHRI ABDUL RASHEE D AND SHRI K.A. SOJUMON. THE POLICE HAD DEPOSITED THE CASH WITH JUDICIAL FIR ST CLASS MAGISTRATE, MAHE. THE CASH WAS REQUISITIONED BY THE ASSISTANT DIRECTOR OF INCOME TAX(INVESTIGATION), KOZHIKODE U/S. 132A OF THE INCOME TAX ACT. SHRI ABD UL RASHEED AND SHRI K.A. I.T.A. NO.230/COCH/2016 3 SOJUMON DEPOSED BEFORE THE MAHE POLICE AND THE INCO ME TAX AUTHORITIES THAT A SUM OF RS.16,00,000/- WAS HANDED OVER TO THEM BY TH E ASSESSEE, SHRI K.V. PRAKASHAN WITH AN INSTRUCTION TO HAND OVER THE SAME TO SHRI MANOJ IN COCHIN FOR THE PURPOSE OF PURCHASING RUBBER SHEETS. SINCE THE MARKET CONDITION WAS NOT FAVORABLE, PURCHASE OF RUBBER SHEETS COULD NOT BE E FFECTED BY SHRI MANOJ AND HENCE, HE RETAINED A SUM OF RS.48,600/- AND BALANCE OF RS.15,51,400/- WAS RETURNED TO BE HANDED OVER TO THE ASSESSEE. WHILE S HRI ABDUL RASHEED AND SHRI K.A.SOJUMON WERE RETURNING FROM COCHIN ON 29/03/200 7 THEIR VEHICLE WAS INTERCEPTED AND CASH AMOUNTING TO RS.15,51,400/- WA S SEIZED. THE SEIZED CASH WAS INITIALLY ASSESSED IN THE HANDS OF SHRI ABDUL R ASHEED AND SHRI K.A. SOJUMON FOR THE ASSESSMENT YEAR 2007-08. HOWEVER, ON APPE AL, THE CIT(A) DELETED THE ADDITION IN THEIR HANDS. 4. THE CIT(CENTRAL), KOCHI PASSED ORDER U/S. 263 OF THE ACT AND SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2007-08 BY HOLDING AS UNDER: I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE OBJECTIONS RAISED BY THE ASSESSEE. I AM OF THE CONSIDERED OPINION THAT THE SOURCE FOR THE SEIZED AMOUNT OF RS.15,51,400/- HAS NOT BEEN PROPERLY EXPL AINED BY THE ASSESSEE WHICH HAS NOT BEEN BROUGHT TO TAX. 4.1 ON FURTHER APPEAL, THE TRIBUNAL UPHELD THE RE VISIONARY ORDER PASSED UNDER SECTION 263 OF THE ACT FOR THE REASON THAT THE ASSE SSING OFFICER HAS NOT VERIFIED I.T.A. NO.230/COCH/2016 4 THE SOURCE OF THE AMOUNT OF RS.15,51,400/- IN THE H ANDS OF THE ASSESSEE. WITH THESE OBSERVATIONS, THE TRIBUNAL DISPOSED OF THE AP PEAL FILED BY THE ASSESSEE. 5. PURSUANT TO CITS ORDER U/S. 263 OF THE ACT, TH E ASSESSMENT WAS COMPLETED BY ADDING A SUM OF RS.15,51,400/- U/S. 69A OF THE A CT. THE RELEVANT FINDING OF THE ASSESSING OFFICER IN MAKING THE ADDITION U/S. 6 9A OF THE ACT READS AS FOLLOWS: 9. THE SUBMISSION OF THE ASSESSEE HAVE BEEN CAREFU LLY CONSIDERED. IT CANNOT BE ACCEPTED FOR THE REASON THAT AS PER THE STATEMEN T RECORDED ON 11-03-2009 SRI. ABDUL RASHEED AND SRI. K.A. SOJUMON DEPOSED TH AT THE CASH SEIZED BY MAHE POLICE ON 29-03-2007 WAS RECEIVED FROM SRI. K. V. PRAKASHAN ON 27-03- 2007 AND THEY STARTED THEIR JOURNEY IN THE EVENING OF THE SAME DAY TO ERNAKULAM BY BUS AND REACHED ERNAKULAM ON 28-03-2007 MORNING. HOWEVER, AS PER ASSESSEE'S LETTER DATED 15-10-2010, HE SUBMI TTED THAT THE CASH BALANCE AVAILABLE AS PER HIS BOOKS OF ACCOUNT ON 27 -03-2007 WAS RS. 18,43,146/-. A SUM OF RS. 16,00,000/- WAS TAKEN FRO M ABOVE BALANCE AND SENT THROUGH SRI. ABDUL RASHEED AND SRI. K.A. SOJUM ON FOR PURCHASE OF RUBBER. AS PER CASH BOOK OF 2006-07 PRODUCED BY THE ASSESSEE, PAYMENT OF RS. 16,00,0001- FOR PURCHASING RUBBER WAS RECORDED ONLY ON 28-03-2007. AS DEPOSED BY THE BOTH PERSONS, THEY GOT THE MONEY ON 27-03-2007 EVENING AND REACHED ERNAKULAM ON 28-03-2007 MORNING. THE SAI D FACT WAS CONFIRMED BY THE ASSESSEE AS PER HIS STATEMENT RECORDED ON 11 -03-2009, IN CONTRARY TO THE SUBMISSION OF THE ASSESSEE ON 26-04-2007 THAT H E HAD NOT GIVEN ANY MONEY TO SRI. ABDUL RASHEED OR SRI. K.A. SOJUMON. T HEREFORE, THE SUM OF RS. 15,51,400/- SEIZED FROM SRI. ABDUL RASHEED AND SRI. K.A. SOJUMON AND SUM OF RUPEES 48,600/-- RETAINED BY SRI. MANOJ, KOCHI T OTALING TO RS. 16,00,000/- CANNOT BE ACCEPTED AS THE SAME CASH GIVEN BY THE AS SESSEE FOR THE PURCHASE OF RUBBER SHEET. RS.16,00,000/- PAID TO SRI. RASHEE D AND SRI. SOJUMON BY THE ASSESSEE IS NOT FACTUALLY CORRECT, IT IS ONLY A COOKED UP STORY. IF THE ASSESSEE'S ARGUMENT THAT THE DATE OF PAYMENT OF MON EY TO SRI. MANOJ I.E. 28- 03-2007 IS RECORDED IN THE BOOKS OF ACCOUNT, IS ACC EPTED THEN THE AMOUNT OF RS. 48,600/- RETAINED BY SRI. MANOJ IS TO BE ENTERE D IN THE BOOKS OF ACCOUNT ON 28-03-2007 AS THE BALANCE IS RETURNED ON THE SAM E DAY. THEREFORE, THE TRANSACTION ENTERED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT IN THE NAME OF SRI. MANOJ ON 28-03-2007 IS PROVED BEYOND DOUBT THA T IT IS ONLY AN ACCOMMODATIVE ENTRY. IT IS PERTINENT TO NOTE THAT T HE ASSESSEE HAS 21/2 YEARS TO PREPARE THE BOOKS OF ACCOUNTS ACCORDING TO THE E VIDENCE MADE AVAILABLE I.T.A. NO.230/COCH/2016 5 AFTER THE SEIZURE OF CASH AND TAKING OVER OF THE SE IZED CASH BY THE DEPARTMENT. MOREOVER THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY EXPLANATION FOR RETENTION OF RS. 48,6001- BY SRI. M ANOJ. 10. ALSO THE STORY OF SRI. K.V. PRAKASHAN THAT HE SENT RS. 16,00,000/-- FOR PURCHASE OF RUBBER CANNOT BE ACCEPTED FOR FOLLOWING REASONS. I. ANSWER TO THE QUESLION NO. 9 AND 10 IN STATEMENT RE CORDED ON 06- 05-2013, THE ASSESSEE CLEARLY ADMITTED THAT WHILE P URCHASING RUBBER SHEETS, USUALLY PAYMENTS WERE GIVEN THROUGH CHEQUE OR DO TO THE INSTITUTIONS, BUT CASH PURCHASE WERE MADE FR OM FARMERS. SOMETIMES CASH PAYMENTS WERE GIVEN TO TRADERS ALSO BUT NEVER EXCEEDS RS. 20,000/-. THEREFORE, RS. 16,00,000/- SA ID TO BE GIVEN TO SRI. MANOJ IS FACTUALLY INCORRECT ACCORDING TO T HE BUSINESS PROCEDURE FOLLOWED BY THE ASSESSEE. II. ANSWER TO QUESTION NO.8 IN STATEMENT RECORDED ON 06 -05-2013, ASSESSEE ADMITTED THAT MAXIMUM PURCHASE FROM A PERS ON OR INSTITUTION PER DAY WAS ABOUT RS.2 LAKHS ONLY. THER EFORE, IT IS UNBELIEVABLE THAT ASSESSEE SENT RS.16,00,000/- FOR ONE DAY'S CASH PURCHASE. THE ASSESSEE ALSO STATED THAT HE HAS NOT MADE ANY BUSINESS WITH SRI. MANOJ BEFORE OR AFTER 28-03- 200 7. BUT, THE AMOUNT OF RS. 48,600/- RETAINED BY SRI. MANOJ IS ST ATED TO BE AS THE SECURITY FOR THE BUSINESS TRANSACTION. FROM THE STA TEMENT OF THE ASSESSEE IT IS CLEAR THAT NO BUSINESS TRANSACTION W AS MADE BETWEEN SRI. MANOJ AND SRI. K.V. PRAKASHAN ON 28.3.2007. TH EREFORE, IT IS CLEARLY ESTABLISH THAT SRI. MANOJ HAS RECEIVED RS. 16,00,000/- ON BEHALF OF SRI. K.V. PRAKASHAN AND HIS COMMISSION WA S RETAINED AND THE BALANCE IS HANDED OVER TO SRI. SOJUMON AND SRI. RASHEED TO GIVE THE SAME TO SRI.K.V.PRAKASHAN WHICH WAS SEIZED BY THE POLICE. III. ASSESSEE IN HIS STATEMENT DATED 26-04-2007 STATED T HAT HE HAS NOT GIVEN ANY MONEY TO SRI. SOJUMON AND SRI. ABDUL RASH EED BUT AN AMOUNT OF RS.48,000/- IS DUE FROM SRI. MANOJ BEING THE ADVANCE GIVEN FOR PURCHASE OF RUBBER. SUBSEQUENTLY HE HAS C HANGED HIS FIRST STAND AND OWN UP THE MONEY AS DISCUSSED IN PARA 3. IV. A STATEMENT WAS RECORDED FROM SRI. MANOJ KUMAR ON 13-03-2009. HE STATED THAT SRI. PRAKASHAN IS HAVING RUBBER TRAD E WITH THEM SINCE 2005. BUT AS PER SRI. PRAKASHAN'S STATEMENT, HE STARTED HIS BUSINESS SINCE APRIL 2006 AND THE FIRST TRADE WAS R ECORDED IN HIS BOOKS OF ACCOUNT IN OCTOBER 2006. I.T.A. NO.230/COCH/2016 6 V. SRI. MANOJ STATED THAT SRI. PRAKASHAN PURCHASES AN AVERAGE 3 - 4 LOAD OF RUBBER SHEETS PER WEEK (ONE LOAD IS ABOUT 1 6 TONES). BUT NONE OF THESE PURCHASES ARE REFLECTED IN PRAKASHAN' S BOOKS OF ACCOUNT. VI. IT WAS EXPLAINED THAT. SRI. MANOJ ACT AS A BROKER, AND THE PAYMENTS WERE MADE DIRECTLY TO THE SELLER BY THE PU RCHASER. BUT ON VERIFICATION OF THE , BOOKS OF ACCOUNTS OF SRI. PRAKASHAN, IT WAS SEEN THAT HE NEVER PURCHASED ANY RUBBER FROM ANY TR ADERS OTHER THAN THAT LOCATED IN PAYYAVOOR AND NEARBY AREAS IN KANNUR DISTRICT. VII. ON PERUSAL OF THE LEDGER AND CASH BOOK OF SRI. PRA KASHAN (PAYYAVOOR TRADING COMPANY), NO BROKERAGE WERE SEEN PAID TO SRI. MANOJ OR HIS CONCERN DURING THE FINANCIAL YEAR 2006-07. VIII. SRI. MANOJ KUMAR HAS STATED THAT HE IS WORKING WIT H HIS FATHER SRI. C.P. RAJAGOPAL, WHO IS A RUBBER BROKER AT MATTANCHE RY SINCE 1993 AS ALL THE TRANSACTIONS SHOULD BE IN THE NAME OF HI S CONCERN OR SRI. C.P. RAJAGOPAL, BUT IN THE BOOKS OF ACCOUNT PRODUCE D BY SRI. K.V. PRAKASHAN A SUM OF RS. 16,00,000/- SHOWN TO BE PAID TO SRI. MANOJ AND THE LEDGER IS ALSO MAINTAINED IN HIS NAME . HAD IT BEEN A GENUINE TRANSACTION SRI. MANOJ'S NAME SHOULD NOT HA VE BEEN ENTERED IN THE BOOKS OF ACCOUNT. THIS MISTAKE WAS C OMMITTED WHEN AN ARTIFICIAL ENTRY WAS TRIED OUT. 9. FROM THE ABOVE I AM OF THE FIRM BELIEF THAT RS . 16,00,000/- IS THE PROCEEDS OF THE UNACCOUNTED TRANSACTION HAD WITH SR I. MANOJ BY THE ASSESSEE FOR THE PREVIOUS YEAR RELEVANT TO THE ASSE SSMENT YEAR 2007-08 AND NOT THE MONEY SAID TO BE SENT FOR PURCHASE OF R UBBER. THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OTHER THAN A MER E ENTRY IN HIS BOOKS OF ACCOUNT TO PROVE THAT THE SEIZED CASH IS THE MON EY RETURNED BY SRI. MANOJ. THE ASSESSEE HAS NO SATISFACTORY EXPLANATION FOR THE SOURCE OF FUND SEIZED BY MAHE POLICE FROM SRI. ABDUL RASHEED AND SRI. K.A. SOJUMON WHICH WAS OWN UP BY THE ASSESSEE. THEREFORE, CONSIDERING ALL THE FACTS AND CIRCUMS TANCES, THE DETAILS, EXPLANATIONS AND STATEMENTS AVAILABLE ON RECORDS AN D FURNISHED AT THE TIME OF HEARING BY THE ASSESSEE THE AMOUNT OF RS 15 ,51,400/- IS TREATED AS ASSESSEE'S UNEXPLAINED INCOME AND CHARGED TO TAX . I.T.A. NO.230/COCH/2016 7 6. AGGRIEVED BY THE ADDITION MADE U/S. 69A OF THE ACT, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) AFTER EXTRACTING THE FINDING OF THE ASSESSING OFFICER AND THE ASSESSEES SUBMISSION DECIDED THE ISSUE AGAINST THE ASSESSEE AND DISMISSED THE APPEAL. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. THE LD. DR PRES ENT WAS DULY HEARD. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. ORIGINALLY, THE ASSESSMENT WAS COMPLETED AGAINST S HRI ABDUL RASHEED, SHRI K.A. SOJUMON AND THE ASSESSEE BY DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, KOZHIKODE IN THE YEAR 2010. THE CASH SEI ZED FROM SHRI ABDUL RASHEED AND SHRI K.A. SOJUMON WAS ASSESSED IN THEIR HANDS. THERE WAS NO ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE CASH TH AT WAS SEIZED. ON APPEALS FILED BY SHRI ABDUL RASHEED AND SHRI K.A. SOJUMON, THE ADDITION MADE WAS DELETED BY THE CIT(A) ON THE FINDING THAT SRI K.V. PRAKASHAN, (THE ASSESSEE IN THIS CASE) HAD SHOWN RS.15,51,400/- UNDER THE HEAD MAHE POLICE UNDER SCHEDULE - C DEPOSITS & ADVANCE, IN THE PROPERTIES AND ASSET SIDE OF THE BALANCE SHEET AS ON 31/03/2007. HE HAS ALSO SHOWN RS. 48,600/- UNDER THE TITLE MANOJ KOCHIN UNDER SCHEDULE ADVANCE PAID TO SUPPL IERS IN THE PROPERTIES AND ASSET SIDE, AS DEPOSED BY HIM BEFORE THE ADIT ON 26 /04/2007 ITSELF. I.T.A. NO.230/COCH/2016 8 8.1 SUBSEQUENTLY, THE CIT(CENTRAL), KOCHI PASSED ORDER UNDER SECTION 263 OF THE I.T. ACT (ORDER DATED 22/03/2013). THE CIT SET ASIDE THE ORDER PASSED AGAINST THE ASSESSEE U/S. 153A OF THE ACT AND DIREC TED THE ASSESSING OFFICER TO ASSESS RS.15,51,400/- SEIZED FROM SHRI ABDUL RASHEE D AND SHRI K.A. SOJUMON IN THE HANDS OF THE ASSESSEE. THE RELEVANT FINDING OF THE CIT (CENTRAL) WHILE PASSING THE ORDER U/S. 263 READS AS UNDER:- I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE OBJECTIONS RAISED BY THE ASSESSEE. I AM OF THE CONSIDERED OPINION THAT THE S OURCE FOR THE SEIZED AMOUNT OF RS.15,51,400/- HAS NOT BEEN PROPERLY EXPL AINED BY THE ASSESSEE WHICH HAS NOT BEEN BROUGHT TO TAX. 8.2 ON FURTHER APPEAL, THE TRIBUNAL UPHELD THE OR DER OF THE COMMISSIONER PASSED U/S. 263 OF THE ACT. HOWEVER, THE TRIBUNAL WAS OF THE VIEW THAT THE ASSESSING OFFICER WHILE COMPLETING THE ORIGINAL ASS ESSMENT AGAINST THE ASSESSEE DID NOT VERIFY THE SOURCE OF THE AMOUNTS SEIZED AND THEREFORE, THE COMMISSIONER HAS RIGHTLY EXERCISED HIS JURISDICTION U/S. 263 OF THE ACT. THE TRIBUNAL IN PARA 4 OF ITS ORDER DATED 04/10/2013 HELD AS FOLLOWS: 4IN THE PRESENT ASSESSEES CASE EVEN THOUGH, TH E ASSESSEE CLAIMS THAT THE MONEY BELONGED TO HIM AND IT WAS REFLECTED IN T HE BOOKS OF ACCOUNT, THE ASSESSMENT ORDER DOES NOT REFLECT THE APPLICATION O F MIND. THERE IS NO REASONING APPENDED IN THE ASST. ORDER. IN FACT, TH ERE IS NOT EVEN ANY DISCUSSION IN THE ASST. ORDER.. I.T.A. NO.230/COCH/2016 9 8.3 FINALLY IT WAS CONCLUDED BY THE TRIBUNAL AS F OLLOWS:- 8. IN VIEW OF THE ABOVE DISCUSSION, THE NON APPLI CATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL AVAILABLE ON RECO RD WITH REGARD TO THE AMOUNT RECOVERED BY THE POLICE AMOUNTS TO AN ERROR WHICH I S PREJUDICIAL TO THE INTEREST OF THE REVENUE. NO DOUBT, THE ADDITION MADE IN THE HANDS OF SHRI ABDUL RASHEED WAS DELETED BY THE CIT(A). BUT THIS FACT H AS TO BE EXAMINED BY THE ASSESSING OFFICER AND WHETHER THE ASSESSEE HAS EXPL AINED THE SOURCE FOR THE ABOVE SAID MONEY OR NOT HAS TO BE VERIFIED AND REAS ONS RECORDED IN THE ASSESSMENT ORDER ITSELF. SINCE THE ASSESSING OFFICE R HAS NOT VERIFIED THE SOURCE FOR THE ABOVE AMOUNT, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE ADMINISTRATIVE COMMISSIONER HAS RIGHTLY EXERCISED H IS JURISDICTION U/S. 263 OF THE ACT. THEREFORE, THE IMPUGNED ORDER OF THE ADMIN ISTRATIVE COMMISSIONER IS CONFIRMED. 8.4 FROM THE ABOVE DIRECTION OF THE TRIBUNAL, IT IS VERY CLEAR THAT THE ISSUE THAT HAS TO BE EXAMINED IS WHETHER THE ASSESSEE HAS SUFF ICIENT SOURCE/CASH BALANCE TO EXPLAIN THE AVAILABILITY OF CASH IN ITS REGULAR BOOKS OF ACCOUNTS AS ON 27/03/2007 TO HAND OVER RS.16,00,000/- TO SHRI ABDU L RASHEED AND SHRI K.A. SOJUMON. THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS. THE RETURN FOR THE ASSESSMENT YEAR 2007-08 BASED ON THE REGULA R BOOKS OF ACCOUNTS WAS FILED IN RESPONSE TO NOTICE U/S. 153A(A) R.W.S. 153 C, DECLARING, TOTAL INCOME OF RS.1,28,850/-. THE ONLY ADDITION MADE IN THE ORIGI NAL ASSESSMENT ORDER COMPLETED VIDE ORDER DATED 31/12/2010 WAS U/S. SECT ION 40A(3) OF THE ACT. IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED A LETTER DATED 30/09/2010. IN PARA 5 OF THE SAID LETTER, TH E SEIZED AMOUNT OF RS.15,51,400/- FROM SHRI ABDUL RASHEED AND SHRI K.A . SOJUMON WAS MENTIONED I.T.A. NO.230/COCH/2016 10 AS BEING RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSESSING OFFICER, AFTER EXAMINING THE BOOKS OF ACCOUNT AND VERIFYING THE LE DGER, COMPLETED THE ASSESSMENT WHEREIN NO ADDITION WAS MADE ON ACCOUNT OF CASH SEIZED FROM SHRI ABDUL RASHEED AND SHRI K.A. SOJUMON. IT WAS ONLY AF TER THE ADDITION OF RS.15,51,400/- WAS DELETED IN THE HANDS OF SHRI ABD UL RASHEED AND SHRI K.A. SOJUMON, THE CIT HAD PASSED ORDER U/S. 263 OF THE ACT DATED 22/03/2013, DIRECTING THE ASSESSING OFFICER TO BRING TO TAX THE SEIZED AMOUNT OF RS.15,51,400/- IN THE HANDS OF THE ASSESSEE. 8.5 THE ACCOUNT COPIES AS PER THE BOOKS OF THE A SSESSEE ARE PLACED ON RECORD FROM PGS. 29 TO 40 OF THE PAPER BOOK FILED BY THE A SSESSEE. THE CASH BALANCE AS PER THE ASSESSEES BOOKS OF ACCOUNT AS ON 27/03/200 7 WAS RS.18,43,143/-THE MAIN SOURCE FROM WHICH THIS CASH BALANCE AROSE IS A S UNDER:- WITHDRAWAL FROM BANK ACCOUNT FROM AXIS BANK LTD. KA NNUR ON 27/03/2007 RS.800,000 WITHDRAWAL FROM AXIS BANK LTD. ON 19/03/2007 RS.450,000 APPROXIMATE CASH BALANCE IN BOOKS OF ACCOUNTS ON 17/03/2007 RS.500,000 TOTAL RS.17,50,000 I.T.A. NO.230/COCH/2016 11 8.6 FROM THE BOOKS OF ACCOUNT FURNISHED BEFORE THE AUTHORITIES BELOW AND WHICH IS PLACE ON RECORD, IT IS CLEAR THAT THE ASSE SSEE HAD SUFFICIENT FUNDS TO PROVE THE CASH SEIZURE ON 29/03/2007 AND THE SAME I S CLEARLY RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IT IS FOR THE SAID REASON THAT THE ADDITION MADE IN THE HANDS OF SHRI ABDUL RASHEED AN D SHRI K.A. SOJUMON WAS DELETED BY THE CIT(A). AS MENTIONED EARLIER, IN TH E ORIGINAL ASSESSMENT, NO ADDITION WAS MADE BY THE ASSESSING OFFICER. THE OR IGINAL ASSESSMENT WAS COMPLETED AFTER EXAMINING THE BOOKS OF ACCOUNT, THE LEDGE COPIES ETC. FROM THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, IT IS CLEAR THAT THE ASSESSEE HAS SUFFICIENT CASH AVAILABILITY AS ON 27/03/2007. THE ASSESSING OFFICER HAD MADE THE ADDITION OF RS.15,51,400/- TAKING INTO ACCOUNT THE FACT THAT NORMALLY ASSESSEE DOES NOT MAKE CASH PURCHASE OF MORE THAN R S.2 LAKHS ETC., WHICH ACCORDING TO ME, IS BESIDES THE POINT, WHEN THE TRI BUNAL IN ITS ORDER DATED 04/10/2013 (I.T.A. NO. 178/COCH/2013) HAD CLEARLY D IRECTED THAT THE ISSUE TO BE EXAMINED IS REGARDING SOURCE OF FUND AVAILABLE WITH THE ASSESSEE. IN OTHER WORDS, THE ONLY ISSUE FOR MY CONSIDERATION IS WITH REGARD TO THE AVAILABILITY OF FUNDS AS ON 27/03/2007, AND WHETHER THE ASSESSEE HA D SUFFICIENT CASH BALANCE FOR HANDING OVER RS.16 LAKHS TO SHRI ABDUL RASHEED AND SHRI K.A. SOJUMON ON 27-03-2007. ON EXAMINATION OF THE COPIES OF BOOKS OF ACCOUNT PRODUCED, THE ASSESSEE HAS SUFFICIENT CASH BALANCES AND LIMITING THE EXAMINATION TO THE SOURCE OF FUNDS, I HAVE NO HESITATION TO HOLD THAT THE ADD ITION OF RS.15,51,400/- IS NOT WARRANTED IN THE FACTS OF THE INSTANT CASE. IT IS O RDERED ACCORDINGLY. I.T.A. NO.230/COCH/2016 12 9. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 01 ST -11-2016 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER PLACE: KOCHI DATED: 01 ST NOVEMBER,S 2016 GJ COPY TO: 1. SHRI K.V. PRAKASHAN, KAPPUVA VEETTIL, PROP. PAYY AVOOR TRADING COMPANY, KANNUR-670 633. S2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2,KOZHIKODE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 4. THE PRINCIPAL COMMISSIONER OF INCOME-TAX, CENTRA L, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR ) I.T.A.T., COCHIN