Smt.K.P.Zeenath, Kannur V. DCIT, Calicut

ITA 32/COCH/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64753 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: VANDANA MENON
• Section: 153A; 132

Judgement Text

1 ITA NO.31 TO 40/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 31 TO 35/COCH/2012 (ASSESSMENT YEARS 2002-03 & 2005-06 TO 2008-09) SMT. K.P. ZEENATH VS THE DY.CIT, CENT.CIR.2 MANNIL HOUSE KOZHIKODE KADAVATHUR ROAD PERINGATHUR, KANNUR DIST 670 675 PAN : AAEPZ2596G (APPELLANT) (RESPONDENT) I.T.A NO. 36 TO 40/COCH/2012 (ASSESSMENT YEARS 2002-03 TO 2005-06 & 2008-09) SHRI M MOHAMMED VS THE DY.CIT, CENT.CIR.2 MANNIL HOUSE KOZHIKODE KADAVATHUR ROAD PERINGATHUR, KANNUR DIST 670 675 PAN : ADXPM2182P (APPELLANT) (RESPONDENT) ASSESSEE BY : MS VANDANA MENON REVENUE BY : MS A.S. BINDHU DATE OF HEARING : 09-08-2012 DATE OF PRONOUNCEMENT : 24-08-2012 O R D E R PER N.R.S. GANESAN (JM) BEING AGGRIEVED BY THE TWO INDEPENDENT ORDERS BOTH DATED 28-11-2011 PASSED BY THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI T HE ABOVE TAXPAYERS HAVE 2 ITA NO.31 TO 40/COCH/2012 FILED THE PRESENT APPEALS. SINCE COMMON ISSUE ARIS ES FOR CONSIDERATION IN ALL THE APPEALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. MS. VANDANA MENON, THE LD.COUNSEL FOR THE TAXPAY ERS SUBMITTED THAT THE TAXPAYER IN ITA NOS 31 TO 35/COCH/2012 IS THE PROPR IETOR OF MRA BAKERY, NADAPURAM. THE TAXPAYER IN ITA NOS 36 TO 40/COCH/2 012 IS THE PROPRIETOR OF MRA BAKERY AT PERINGATHUR. BOTH TAXPAYERS RELATED A S HUSBAND AND WIFE. ACCORDING TO THE LD.COUNSEL THERE WAS A SEARCH IN T HE BUSINESS PREMISES OF THE TAXPAYERS U/S 132 OF THE ACT ON 30-05-2007. PURSUANT TO THE NOTICE ISSUED U/S 153A BOTH TAXPAYERS FILED THEIR RESPECTIVE RETURNS OF INCOME ESTIMATING THE PROFIT FROM THE BAKERY. BOTH TAXPAYERS HAVE ALSO OFFERED A DDITIONAL INCOME FOR TAXATION TO COVER THE EXPENDITURE AND THE INVESTMENT MADE DU RING THE YEARS UNDER CONSIDERATION. ON THE BASIS OF THE STATEMENT RECOR DED FROM THE TAXPAYER IN ITA NOS 36 TO 40/COCH/2012 THE ASSESSING AUTHORITY ESTI MATED THE NET PROFIT RANGING FROM 14.46% TO 21.12% FOR ALL THE YEARS UNDER CONSI DERATION. THE LD.COUNSEL FURTHER SUBMITTED THAT AFTER ESTIMATING THE TOTAL T URNOVER FOR ONE YEAR ON THE BASIS OF THE STATEMENT RECORDED U/S 132(4) OF THE A CT, THE ASSESSING AUTHORITY ESTIMATED THE TOTAL TURNOVER FOR OTHER YEARS AFTER REDUCING 10% FOR EACH OF THE YEAR. THE LD.COUNSEL FURTHER POINTED OUT THAT ORIG INALLY THE ASSESSING AUTHORITY ESTIMATED THE GROSS PROFIT RANGING FROM 14.46% TO 2 1.12%. HOWEVER, THE FIRST APPELLATE AUTHORITY REDUCED THE SAME AND ESTIMATED THE NET PROFIT AT 9.54%. THE LD.COUNSEL FURTHER POINTED OUT THAT NO INCRIMINATIN G MATERIAL WAS FOUND AT THE TIME OF SEARCH. THEREFORE, THERE CANNOT BE ANY UND ISCLOSED INCOME. REFERRING TO THE STATEMENT RECORDED U/S 132(4) OF THE ACT, THE L D.COUNSEL POINTED OUT THAT THE TAXPAYER SHRI M MOHAMMED EXPLAINED THAT THE COUNTER SALES IS ABOUT RS.35,000 AND BULK ORDER IS RS.3,000. APART FROM THIS STATEME NT THERE IS NO OTHER MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT THE TAXPAYERS H AVE ANY UNDISCLOSED INCOME. 3 ITA NO.31 TO 40/COCH/2012 THE LD.COUNSEL FURTHER SUBMITTED THAT NO FURTHER IN VESTMENT WAS FOUND DURING THE COURSE OF SEARCH OPERATION. THE LD.COUNSEL SUB MITTED THAT IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION THERE CANNOT BE ANY ADDITION AS UNDISCLOSED INCOME. THE LD.COUNSEL HAS ALSO SUBMITTED THAT THE TAXPAYERS HAVE FILED THE RETURNS OF INCOME REGULARL Y. THE RETURNS OF INCOME FOR THE ASSESSMENT YEAR 2001-03 WERE FILED ON 27/03/2003 / 10-01-2003, RESPECTIVELY. FOR THE ASSESSMENT YEAR 2008-09 THE R ETURN WAS FILED UNDER NORMAL COURSE ON 06-11-2009 AFTER THE SEARCH. THEREFORE, AC CORDING TO THE LD.COUNSEL, THE ESTIMATION OF TURNOVER AND THE NET PROFIT IS HI GHLY ARBITRARY. 3. ON THE CONTRARY, THE LD.DR, MS. A.S. BINDHU SUBM ITTED THAT THE TAXPAYERS WERE NOT MAINTAINING BOOKS OF ACCOUNT. THE TAXPAYER S ADMITTED IN THE COURSE OF EXAMINATION THAT THERE WAS UNACCOUNTED SALES AT THE COUNTER AND IN BULK ORDER. THE TAXPAYERS THEMSELVES ESTIMATED THE PROFIT AND O FFERED THE SAME FOR TAXATION. THE LD.DR FURTHER POINTED OUT THAT U/S 153A THE INC OME HAS TO BE COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND IT IS NO T NECESSARY TO CONFINE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. THE LD.DR HAS ALSO POINTED OUT THAT THE COMMISSIONER OF INCOME-TAX(A) HAS REST RICTED THE NET PROFIT AT 9.54% WHICH IS VERY LOW. THEREFORE, THE PROFIT ESTIMATED BY THE ASSESSING OFFICER HAS TO BE RESTORED. ON A QUERY FROM THE BENCH WHETHER THE DEPARTMENT HAS FILED ANY APPEAL AGAINST THE ORDERS OF THE FIRST APPELLATE AU THORITY FIXING THE NET PROFIT AT 9.54% THE LD.DR VERY FAIRLY SUBMITTED THAT THE DEPA RTMENT HAS NOT FILED ANY APPEAL AGAINST THE PROFIT RATIO DETERMINED BY THE F IRST APPELLATE AUTHORITY AT 9.54%. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WAS A SEARC H IN THE PREMISES OF THE 4 ITA NO.31 TO 40/COCH/2012 TAXPAYERS. THE TAXPAYERS FILED THE RETURNS OF INCO ME ESTIMATING THE PROFIT. THOUGH THE TAXPAYERS CLAIMED IN THE WRITTEN SUBMISS IONS BEFORE THIS TRIBUNAL THAT THE BOOKS OF ACCOUNT WERE MAINTAINED, THE FACT REMAINS IS THAT THE PROFIT WAS OFFERED FOR TAXATION ON ESTIMATE BASIS FROM BAKE RY BUSINESS. DURING THE COURSE OF EXAMINATION THE TAXPAYER IN ITA NO.36 TO 40/COCH/2012 ADMITTED BEFORE THE TAXING AUTHORITIES THAT THERE WAS UNACCO UNTED SALES. NO DOUBT, UNDER CHAPTER XIVB THE UNDISCLOSED FOR THE BLOCK PERIOD HA S TO BE COMPUTED ON THE BASIS OF THE EVIDENCE FOUND DURING THE COURSE OF SE ARCH OPERATION AND THE INFORMATION WHICH IS RELATABLE TO THE EVIDENCE FOUN D DURING THE COURSE OF SEARCH OPERATION. HOWEVER, THE LEGISLATURE AFTER INTRODUC ING SECTION 153A INTENDED TO COMPUTE THE INCOME ON THE BASIS OF THE MATERIAL AVA ILABLE ON FILE INCLUDING THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. THE LANGUAGE EMPLOYED BY THE LEGISLATURE IN SECTION 153A CLEARLY SHOWS THAT THE PENDING ASSESSMENT PROCEEDINGS SHALL ABATE AND THE TAXING AUTHORITY HA S TO COMPUTE THE INCOME ON THE BASIS OF THE MATERIAL AVAILABLE ON THE RECORD A ND ALSO ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH. HOWEVE R, UNDER CHAPTER XIVB, IN VIEW OF THE LANGUAGE EMPLOYED BY THE LEGISLATURE IN SECTION 158BB(1) THE ASSESSING AUTHORITY HAS TO NECESSARILY CONFINE HIMS ELF TO THE EVIDENCE FOUND IN THE COURSE OF SEARCH OPERATION AND THE MATERIAL REL ATABLE TO THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. ADMITTEDLY THE IMPUGNED ASSESSMENT ORDERS ARE NOT ASSESSMENTS U/S XIVB OF THE ACT. TH EREFORE, THE PROVISIONS OF SECTION 158BB ARE NOT APPLICABLE TO THE FACTS OF TH ESE CASES. IN THE CASES BEFORE THIS TRIBUNAL THE TAXING AUTHORITY HAS TO NECESSARI LY COMPUTE THE INCOME ON THE BASIS OF PROVISIONS OF SECTION 153A OF THE ACT. TH EREFORE, THE ASSESSING AUTHORITY IS NOT DEBARRED FROM CONSIDERING THE MATERIAL OTHER THAN THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. IN OTHER WO RDS, THE TAXING AUTHORITY HAS TO COMPUTE THE TOTAL INCOME ON THE BASIS OF THE EVIDEN CE AVAILABLE ON RECORD 5 ITA NO.31 TO 40/COCH/2012 INCLUDING THE EVIDENCE FOUND DURING THE COURSE OF S EARCH OPERATION. THEREFORE, EVEN THOUGH THERE WAS NO MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSING AUTHORITY HAS TO COMPLETE THE ASSESSM ENT U/S 153A OF THE ACT ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. 5. IN THE CASE BEFORE US THE TAXPAYER IN ITA NO.36 TO 40/COCH/2012 HAS ADMITTED BEFORE THE REVENUE AUTHORITIES REGARDING T HE UNACCOUNTED SALES BOTH AT THE COUNTER AND IN BULK ORDERS. APART FROM THIS, TH E INCOME WAS ALSO OFFERED BY THE TAXPAYERS THEMSELVES ON ESTIMATE BASIS. THEREF ORE, THE TOTAL INCOME AS WELL AS THE PROFIT HAS TO BE ESTIMATED ON THE BASIS OF T HE MATERIAL AVAILABLE ON RECORD. THOUGH THE ASSESSING AUTHORITY ESTIMATED THE PROFIT RANGING FROM 14.46% TO 21.12% THE COMMISSIONER OF INCOME-TAX(A) HAS RESTRIC TED THE SAME TO 9.54% UNIFORMLY FOR ALL THE ASSESSMENT YEARS. THIS TRIBU NAL IS OF THE OPINION THAT IN THE ABSENCE OF ANY OTHER MATERIAL TO ESTIMATE THE TURNO VER AND THE PROFIT RATIO IT HAS TO BE ESTIMATED ON THE BASIS OF THE MATERIAL AVAILA BLE ON RECORD. 6. THE CONTENTION OF THE LD.DR IS THAT THE PROFIT R ATIO ADOPTED BY THE ASSESSING OFFICER AT 20.76% HAS TO BE RESTORED. TH IS TRIBUNAL IS OF THE OPINION THAT IN THE ABSENCE OF ANY APPEAL BY THE REVENUE THE REL IEF GRANTED BY THE FIRST APPELLATE AUTHORITY CANNOT BE DISTURBED. IF THE RE VENUE FEELS THAT THEY ARE AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCO ME-TAX(A) THEY COULD HAVE FILED THE APPEAL AGAINST THE ORDERS OF THE COMMISSI ONER OF INCOME-TAX(A). THE VERY FACT THAT NO APPEAL WAS FILED BY THE REVENUE S HOWS THAT THE REVENUE IS NOT AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOM E-TAX(A) FIXING THE PROFIT RATIO AT 9.54%. THEREFORE, THIS TRIBUNAL IS UNABLE TO ACCEPT THE CONTENTION OF THE LD.DR WITH REGARD TO THE PROFIT RATIO DETERMINED BY THE COMMISSIONER OF INCOME- TAX(A). THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF 6 ITA NO.31 TO 40/COCH/2012 INCOME-TAX(A) HAS FIXED THE PROFIT RATIO AT 9.54% AF TER CONSIDERING THE MATERIAL AVAILABLE ON RECORD. THEREFORE, THIS TRIBUNAL DO N OT FIND ANY INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, ALL THE APPEALS OF THE TAXPAYERS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH AUGUST, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 24 TH AUGUST, 2012 PK/- COPY TO: 1. THE APPELLANTS 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