Sri.S.Baskar Sait, Trichur V. The DCIT, Trichur

ITA 356/COCH/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7307 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 16-02-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 23-08-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: DAVIS CHAKKALAKKAL
• Keywords: Unexplained cash credit; Unexplained investment; Validity of assessment; Competent authority
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER I.T.A. NO. 356 /COCH/ 201 6 ASSESSMENT YEAR : 2000 - 01 SHRI S. BASKAR SAIT, PAWAR HOUSE, CHELAKOTTUKARA, THRISSUR. [PAN: AKPPS 4457G] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), RANGE-2, THRISSUR. (ASSESSEE - APPELLANT) (REVENUE - RESPON DENT) ASSESSEE BY SHRI DAVIS CHAKKALAKKAL, A DV. REVENUE BY SHRI A. DHANARAJ , SR. DR DATE OF HEARING 16 / 0 2 / 201 7 DATE OF PRONOUNCEMENT 16 TH / 0 2 /201 7 O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DI RECTED AGAINST THE ORDER OF THE CIT(A), THRISSUR DATED 31/03/2016. THE RELEVANT ASS ESSMENT YEAR IS 2000-01. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS. GROUND NO. 3 WAS NOT PRESSED DURING THE COURSE OF HEARING. HENCE, THE SAME IS DISMISSE D AS NOT PRESSED. THERE IS NO SPECIFIC PRAYER RAISED IN GROUND NO. 4. HENCE, THI S GROUND IS ALSO REJECTED. THE SURVIVING GROUNDS, NAMELY, GROUND NOS. 1 & 2 READ A S FOLLOWS: I.T.A. NO.356/COCH/2016 2 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WEN T WRONG IN AFFIRMING THE ESTIMATION OF PROFIT AT 1% ON THE AMOUNT OF TRA NSACTIONS OF RS.23,07,31,360.00. 2. ASSUMING WITHOUT ADMITTING, THE APPELLANT WAS ENGAG ED IN HAWALA TRANSACTION, IT WAS WRONG ON THE PART OF THE ASSESS ING AUTHORITY IN ESTIMATING 1% OF THE TOTAL TRANSACTION FOUND IN BANK AS INCOME , EVEN WHILE, ADMITTING IN PARA 12.4 OF THE ASSESSMENT ORDER PROFIT OUT OF SU CH ACTIVITIES WAS ESTIMATED AT .25% OF THE AMOUNT TRANSACTED THROUGH THEIR BAN K ACCOUNT, AND PARA 12.8 IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRAR Y, THE AMOUNT STATED TO HAVE BEEN RECEIVED BY SRI. SAIT, CANNOT BE ENTIRELY CONSIDERED AS HIS INCOME. BUT, AS A BUSINESS MAN, HE MIGHT HAVE RECEIVED SOME AMOUNT AS COMMISSION FOR THE SERVICE EXTENDED BY HIM. HAVING REGARD TO CIRCUMSTANCES, ADDITIONS SHOULD HAVE BEEN LIMITED TO .25%. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL. THE RETURN OF INCOME WAS FILED FOR THE ASSESSMENT YEAR 2000-01 DISCLOSING AN INCOME OF RS. 36,390/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 OF THE ACT ON THE BASIS OF INFORMATION REC EIVED FROM THE CIB WING OF THE DEPARTMENT, REGARDING HUGE VOLUME OF BANKING TRANSA CTIONS IN A SUSPICIOUS MANNER FROM MUMBAI TO KERALA AND THE ASSESSEES INV OLVEMENT IN THESE TRANSACTIONS. THE RE-ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S. 147 OF THE I.T. ACT VIDE ORDER DATED 27/12/2006. THE ASSESSIN G OFFICER MADE THE FOLLOWING ADDITIONS: 1)UNEXPLAINED LOAN CREDITS RS.9,50,000/- II)UNEXPLAINED EXPENSES (INTEREST) PAID TO RS.1,51,404/- TRICHUR URBAN COOPERATIVE BANK) III)UNEXPLAINED CREDITS IN CAPITAL ACCOUNT RS. 20,535/- I.T.A. NO.356/COCH/2016 3 IV) UNEXPLAINED DISCREPANCY IN LOAN ACCOUN T RS. 1,10,683/- BALANCE WITH INDIAN BANK ACCOUNT V) UNEXPLAINED LOAN FROM SHRI P.D. RAPPAI RS. 1, 00,000/- VI) ESTIMATED INCOME FROM HAWALA ACTIVITIES RS.23,0 7,314/- RS.36,39,935/- 4. AGGRIEVED BY THE ADDITIONS, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. BEFORE THE CIT(A), THE ASSESS EE HAD RAISED SEVERAL GROUNDS. HOWEVER, HIS CONTENTION WAS CONFINED TO T HE FOLLOWING ISSUES NAMELY, I) VALIDITY OF ASSESSMENT. II) INCOME FROM HAWALA BUSINESS SHOULD BE ESTIMATED AT .25% INSTEAD OF 1% ESTIMATED BY THE ASSESSING OFFICER & III) UNEXPLAINED INVESTMENT SHOULD BE TELESCOPED WITH TH E INCOME OF HAWALA BUSINESS. THE CIT(A) REJECTED THE PLEA OF THE ASSESSEE THAT T HE ASSESSMENT IS NOT VALID. THE CIT(A) HELD THAT THE ASSESSMENT WAS COMPLETED W ITHIN TIME AND HENCE VALID. AS REGARDS INCOME, FROM HAWALA BUSINESS, THE CIT(A) AFFIRMED THE ASSESSING OFFICERS ESTIMATION AT 1% OF TOTAL TRANSACTIONS. THE CIT(A) HOWEVER DIRECTED THE ASSESSING OFFICER TO TELESCOPE THE UNEXPLAINED INVESTMENTS WITH THE HAWALA INCOME ESTIMATED. 5. AGGRIEVED BY THE CIT(A)S ORDER, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. I.T.A. NO.356/COCH/2016 4 6. LD. COUNSEL FOR THE ASSESSEE HAS FILED A BRIEF WRIT TEN SUBMISSION. THE RELEVANT PORTION OF THE WRITTEN SUBMISSION READS AS FOLLOWS: FROM THE FACTS OF THE CASE, IT COULD BE SEEN THAT, THE ASSESSEE WAS UNDER SOME SHADOW SUSPICION INITIALLY AGAINST THE APPELLANT. H IS ALLEGED INVOLVEMENT IN HAWALA TRANSACTIONS WAS INQUIRED. THE ASSESSING OFF ICER FOUND THAT, THE COMPETENT AUTHORITY INCLUDING CBI HAD NOT FOUND HIM GUILTY NOR WAS THERE ANY DIRECT EVIDENCE RELATING TO THE APPELLANT LINKING T O THE HAWALA DEALINGS. THE A.O. HIMSELF RECORDED IN PARA 12.5 OF THE ASSESSMENT ORD ER THAT, THERE ARE NO BANK ACCOUNT OF THE ASSESSEE KNOWN TO THE DEPARTMENT THR OUGH WHICH MONEY HAD BEEN TRANSFERRED IN A SUSPICIOUS MANNER (HAWALA NAT URE). THE ASSESSING OFFICER HOWEVER PROCEEDED CONSIDERING HIM HAVING PLAYED SOME ROLE IN HAWALA TRANSACTIONS, WHICH HE NARRATED IN P ARA 12.5 ITSELF, AND ALSO IN PARA 12.8. ASSUMING WITHOUT ADMITTING THAT, APPELLA NT IS HAVING SOME INVOLVEMENT IN HAWALA TRANSACTIONS, EVEN ACCORDING TO A.O., THE NORMAL PROFIT IN SUCH TRANSACTIONS IS ONLY 0.25. KINDLY REFER TO TH E PARA 12.4 OF THE ASSESSMENT ORDER, WHEREIN THE A.O. STATED THAT PROFIT OUT OF SUCH ACTIVITIES WAS ESTIMATED AT 0.25% OF THE AMOUNT TRANSACTED TO THEIR BANK ACCOUN TS. IN PARA 12.8, THE A.O. RECORDED IN THE ABSENCE OF ANY EVIDENCE TO THE CON TRARY, THE AMOUNTS STATED TO HAVE BEEN RECEIVED BY SRI. SAIT CANNOT BE ENTIRELY CONSIDERED AS HIS INCOME. BUT, AS A BUSINESS MAN, HE MIGHT HAVE RECEIVED SOME AMOU NT AS COMMISSION FOR THE SERVICES EXTENDED BY HIM. IN VIEW OF THE CATEGORICAL FINDING MADE BY THE ASSE SSING AUTHORITY AS ABOVE, HE WILL NOT BE JUSTIFIED IN ESTIMATION 1% AS HIS INCOM E. WHEREAS, HAVING REGARD TO CIRCUMSTANCES, THE ASSESSING AUTHORITY OUGHT TO HAV E LIMITED THE ADDITION TO 0.25%. THE COMMISSIONER OF INCOME TAX (APPEALS) WENT WRONG BEYOND THE PARAMETERS OF THE ASSESSMENT ORDER DESCRIBING HIM AS THE MAIN PERSON IN PARA 11 OF THE APPELLATE ORDER, AND CONFIRMING 1% AS ESTIMATED BY THE A.O. 6.1 THE LD. DR PRESENT WAS DULY HEARD. I.T.A. NO.356/COCH/2016 5 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE IN THE WRITTEN SUB MISSION HAS LIMITED HIS CONTENTION TO THE ISSUE OF ESTIMATION OF INCOME FRO M HAWALA BUSINESS AT .25% INSTEAD OF 1% ESTIMATED BY THE ASSESSING OFFICER. THERE IS NO DOUBT THAT THE ASSESSEE WAS INVOLVED IN HAWALA TRANSACTIONS AND A REASONABLE COMMISSION WAS EARNED BY HIM ON THE HAWALA TRANSACTIONS. THE ASSE SSING OFFICER HAS CLEARLY ESTABLISHED THE ROLE OF THE ASSESSEE IN THE CHAIN O F TRANSACTIONS AND HAS FOUND THAT THE ASSESSEE WAS AN EMPLOYER OF THE FOLLOWING PERSONS WHO ARE INVOLVED IN THE HAWALA BUSINESS. 1. SRI JAISON J. ALAPATT 2. SRI K.V. JOY 3. SRI T. SANJAYAN 4. SRI M. JAYAPRAKASH IN THE NAME OF THE ABOVE PERSONS, SEVERAL BANK ACCO UNTS ARE OPENED AT THE INSTANCE OF THE ASSESSEE. THE ABOVE PERSONS HAVE AD MITTED THAT THEY ARE EMPLOYEES OF THE ASSESSEE AND HAVE DONE HAWALA BUSI NESS AT THE INSTANCE OF THE ASSESSEE. THE ASSESSEES DENIAL OF HAWALA BUSINESS WITHOUT CROSS EXAMINING THE ABOVE SAID PERSONS ONLY SHOWS THE ASSESSEES INVOLV EMENT IN THE TRANSACTIONS. THE ABOVE PERSONS WHO ARE ADMITTEDLY THE EMPLOYEES OF THE ASSESSEE HAVE BEEN ASSESSED TO INCOME AT .25% OF THE RESPECTIVE TRANSA CTIONS UNDERTAKEN BY THEM. WHEN THE ASSESSEE IS THE EMPLOYER, NECESSARILY BETT ER PERCENTAGE OF COMMISSION OUGHT TO HAVE BEEN EARNED BY THE ASSESSEE. MOREOVER , THE CIT(A) HAS DIRECTED I.T.A. NO.356/COCH/2016 6 TELESCOPING OF UNEXPLAINED INVESTMENT WITH THE HAWA LA INCOME ESTIMATED. THEREFORE, THE NET INCOME FROM HAWALA BUSINESS WOUL D BE FAR LESS THAN 1% OF THE TOTAL HAWALA TRANSACTIONS. FOR THE AFORESAID R EASONS, I AM OF THE VIEW THAT NO RELIEF IS TO BE GRANTED TO THE ASSESSEE. THEREF ORE, GROUND NOS. 1 & 2 ARE ALSO REJECTED. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16 TH -02-2017. SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER PLACE: KOCHI DATED: 16 TH FEBRUARY, 2017 GJ COPY TO: 1. SHRI S. BASKAR SAIT, PAWAR HOUSE, CHELAKOTTUKARA , THRISSUR. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), RAN GE-2,THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS),THRISSUR . 4. THE PRINCIPAL COMMISSIONER OF INCOME-TAX,THRISSU R. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRA R) I.T.A.T., COCHIN