V.U.Siddique, Muvattupuzha V. ACIT, Ernakulam

ITA 384/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58303 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Source of fund; Valuation report; Capital receipt
• Section: 153A; 132

Judgement Text

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.383 & 384/COCH/2010 (ASSESSMENT YEARS 2006-07 & 2007-08) V.U. SIDDIQUE VS A.C.I.T., CENT.CIR.1 V.S. EXPORT & IMPORT ERNAKULAM PUTHUPAPPDY, MUVATTUPUZHA PAN : AKNPS0382G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MATHEW JOSEPH RESPONDENT BY : SMT. VIJAYAPRABHA DATE OF HEARING : 16-02-2012 DATE OF PRONOUNCEMENT : 09-03-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST TWO INDEPENDENT ORDERS OF THE C.I.T.(A)-I, KOCHI BOTH DATED 10-03-2 010 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. SINCE COMMON ISSUES ARISE FOR CONSIDERATION IN BOTH THE APPEALS WE HEARD THE SAME TOGETHER AND DISPOSE THEM OF BY THIS COMMON ORDER. 2. LET US FIRST TAKE APPEAL FOR ASSESSMENT YEAR 200 6-07. THE FIRST ISSUE ARISES FOR CONSIDERATION IS ADDITION OF RS.24 LAKHS TOWARDS COMMISSION INCOME ON ESTIMATE BASIS. 3. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ESTIMATED INCOME FROM COMMISS ION BUSINESS AT RS.81 LAKHS. HOWEVER, THE COMMISSIONER OF INCOME-TAX(A) REDUCED THE SAME TO RS.24 LAKHS. THE LD.REPRESENTATIVE SUBMITTED THAT FOR ES TIMATING THE COMMISSION EITHER AT RS.81 LAKHS OR AT RS.24 LAKHS NO MATERIAL IS AVA ILABLE BEFORE THE LOWER AUTHORITIES. THE STATEMENT SAID TO BE RECORDED FRO M THE ASSESSEE REFERS TO THE PERIOD DECEMBER, 2006 TO JANUARY, 2007. ACCORDING TO THE LD.REPRESENTATIVE, THE ITA 383 & 384/COCH/2010 2 ASSESSEE IS IN THE SEASONAL BUSINESS AND IT IS FOR 4 TO 5 MONTHS. THAT IS WHY THE ASSESSEE HAS SHOWN RS.2.06 CRORES. HOWEVER, THIS E XPLANATION OF THE ASSESSEE THAT THE BUSINESS IS A SEASONAL ONE WAS IGNORED BY BOTH THE AUTHORITIES BELOW. REFERRING TO THE ORDER OF COMMISSIONER OF INCOME-TA X(A), MORE PARTICULARLY PAGE 4, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN RESPONSE TO QUESTION NO.29, THE ASSESSEE CATEGORICALLY STATED THAT THE B USINESS IS A SEASONAL ONE AND IT IS ONLY FOR FIVE MONTHS. THEREFORE, IN THE ABSE NCE OF ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS CARRIED ON THE BUSINESS IN THE ENT IRE YEAR, THE ESTIMATION OF COMMISSION FOR ENTIRE 12 MONTHS IS TOTALLY UNJUSTIF IED. 4. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR SU BMITTED THAT THERE WAS SEARCH IN THE PREMISES OF THE ASSESSEE. AS A CONSE QUENCE, IN RESPONSE TO NOTICE ISSUED U/S 153A, THE ASSESSEE FILED RETURN O F INCOME DECLARING TOTAL INCOME AT RS. 25,10,590 AND AGRICULTURAL INCOME OF RS.3 LAKHS. DURING THE COURSE OF SEARCH, THE ASSESSEE WAS EXAMINED AND THE ASSESSEE ADMITTED THAT THE PERCENTAGE OF COMMISSION WAS RS.1,500 TO RS.2,0 00. ON THE BASIS OF THE STATEMENT, THE ASSESSING OFFICER ESTIMATED THE COMM ISSION. REFERRING TO THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN HOTE L KUMAR PALACE VS COMMISSIONER OF INCOME-TAX (2006) 283 ITR 110 (P&H) , THE LD.DR SUBMITTED THAT THE INCOME CAN BE ESTIMATED ON THE BASIS OF THE STA TEMENT RECORDED DURING THE COURSE OF SEARCH OPERATION. THE LD.DR HAS ALSO PLA CED RELIANCE ON THE JUDGMENT OF THE P&H HIGH COURT IN M.R. SINGHAL VS A.C.I.T. ( 2007) 290 ITR 162 (P&H) THE LD.DR SUBMITTED THAT WHEN NO EVIDENCE WAS FOUND, DI SALLOWANCE OF EXPENDITURE WAS UPHELD BY THE PUNJAB & HARYANA HIGH COURT. REF ERRING TO THE DECISIONS OF THE DELHI BENCH OF THIS TRIBUNAL IN BANSAL STRIPS P VT LTD VS ASSIST.COMMISSIONER OF INCOME-TAX (2006) 99 ITD 177 (DEL), THE LD.DR S UBMITTED THAT THIS TRIBUNAL UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER O N THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SEARCH OPERATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THER E WAS SEARCH IN THE PREMISES OF ITA 383 & 384/COCH/2010 3 THE ASSESSEE. DURING THE COURSE OF SEARCH OPERATIO N, THE REVENUE AUTHORITIES FOUND SOME INCRIMINATING MATERIAL WHICH IS WRITTEN AS OK-PATTU AND OK- VARAVU. ON EXAMINATION, THE ASSESSEE EXPLAINED BE FORE THE REVENUE AUTHORITIES THAT THE WORDS OK-PATTU AND OK-VARAVU MEANT AMO UNT TAKEN AND GIVEN BY HIM. IN RESPONSE TO QUESTION NO.16 AS REPRODUCED B Y THE ASSESSING OFFICER AT PAGE 2 OF THE ASSESSMENT ORDER, THE ASSESSEE EXPLAI NED THAT THE COMMISSION PERCENTAGE IS RS.1,000 TO RS.2,000 PER RS.1 LAKH. IN RESPONSE TO QUESTION NO.18, THE ASSESSEE EXPLAINED THAT THE BUSINESS IS SEASONAL BUSINESS AND USUALLY DONE FROM DECEMBER TO APRIL. THE ASSESSEE HAS ALSO EXPLAINED THAT IN RESPONSE TO QUESTIONS NO.27 AND 28, THE ASSESSEE RE PLIED THAT TOTAL COLLECTION WAS RS.7.2 CRORES. HOWEVER, DURING THE COURSE OF A SSESSMENT PROCEEDINGS ON POST SEARCH ENQUIRIES THE ASSESSING OFFICER FOUND T HAT THE TURNOVER OUTSIDE THE BOOK WAS ONLY RS.6.17 CRORES AND NOT RS.7.2 CRORES AS EXPLAINED BY THE ASSESSEE DURING THE COURSE OF SEARCH OPERATION. TH E ASSESSING OFFICER HAS TAKEN 33 TRANSACTIONS A DAY AND COMPUTED COMMISSION EARNE D FOR 50 DAYS AT RS.12,35,835 BY ADOPTING COMMISSION RATE OF RS.2,00 0 PER LAKH. THEREAFTER, THE ASSESSING OFFICER ESTIMATED THE COMMISSION FOR THE WHOLE PERIOD, I.E. 365 DAYS. HOWEVER, THE COMMISSIONER OF INCOME-TAX(A) FOUND TH AT THE ASSESSING OFFICER OUGHT TO HAVE ESTIMATED THE COMMISSION INCOME WITH A GRADUAL INCREASE FROM THE BEGINNING OF THE BUSINESS I.E. FROM FINANCIAL YEAR 2005-06 TO THE VOLUME OF THE BUSINESS INDICATED IN THE SEIZED DOCUMENT DURING TH E LAST QUARTER OF FINANCIAL YEAR 2006-07. THE COMMISSIONER OF INCOME-TAX(A) AL SO FOUND FAULT WITH THE ASSESSING OFFICER FOR TAKING THE COMMISSION @RS.2,0 00 PER LAKH INSTEAD OF RS.1,500. ACCORDINGLY, THE COMMISSIONER OF INCOME- TAX(A) BY ADOPTING COMMISSION @ RS.1,500 PER LAKH HAS ESTIMATED THE CO MMISSION INCOME FOR THE PERIOD 01-04-2006 TO 30-06-2006 @ R.3 LAKHS. HOWEVER, THE COMMISSIONER OF INCOME-TAX(A) INCREASED THE COMMISSION BY RS.2 LAKH S IN EACH QUARTER AND FINALLY FOR THE PERIOD 01-01-2007 TO 31-03-2007 THE COMMISSION INCOME WAS ESTIMATED AT RS.17 LAKHS. THEREFORE, BY ADOPTING A DIFFERENT METHOD OF INCREASING THE COMMISSION BY RS.2 LAKHS IN EVERY QU ARTER, THE COMMISSIONER OF INCOME-TAX(A) HAS ESTIMATED THE COMMISSION FOR THE WHOLE YEAR. ITA 383 & 384/COCH/2010 4 6. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF P UNJAB & HARYANA HIGH COURT IN HOTEL KUMAR PALACE (SUPRA). IN THE CASE B EFORE THE PUNJAB & HARYANA HIGH COURT, THE ASSESSEE WAS ENGAGED IN THE BUSINES S OF HOTELIER, CATERING AND GIVING ON HIRE CROCKERY AND FURNITURE. DURING THE COURSE OF SEARCH OPERATION U/S 132 OF THE INCOME-TAX ACT, THE REVENUE AUTHORITIES DETECTED UNDISCLOSED INCOME. DURING THE COURSE OF SEARCH OPERATION, A DIARY WAS FOUND AND THE STATEMENT WAS ALSO RECORDED. THE ASSESSING OFFICER, ON THE BASIS OF THE STATEMENT OF ONE OF THE PARTNERS RECORDED DURING THE COURSE OF SEARCH AND T HE ENTRIES IN THE DIARY SEIZED, ESTIMATED THE INCOME. IN FACT, THE PUNJAB & HARYAN A HIGH COURT HAS OBSERVED AS FOLLOWS, AT PAGE 112 OF THE ITR: WE ARE UNABLE TO PERSUADE OURSELVES TO AGREE WITH LEARNED COUNSEL. FROM A BARE READING OF SECTION 158BB OF T HE ACT, IT IS CLEAR THAT UNDISCLOSED INCOME OF THE BLOCK PERIOD H AS TO BE COMPUTED ON THE BASIS OF THE EVIDENCE FOUND AS A RE SULT OF THE SEARCH OR REQUISITION OF BOOKS OR DOCUMENTS AND SUC H OTHER MATERIALS AS ARE AVAILABLE WITH THE ASSESSING OFFIC ER. THE INCIDENT OF SEARCH IS THE FOUNDATION FOR APPLICABILITY OF CH APTER XIV-B OF THE ACT. IN THE INSTANT CASE, AS NOTICED BY THE COMMIS SIONER, INCOME FROM CATERING BUSINESS WAS ESTIMATED BY THE ASSESSI NG OFFICER, ON THE BASIS OF THE STATEMENT OF THE PARTNER, RECORDED DURING THE COURSE OF SEARCH, AND THE DIARIES SEIZED IN THESE P ROCEEDINGS. THE TRIBUNAL HAS ALSO OBSERVED THAT IN HIS STATEMENT, P ARTNER-RAJ KUMAR ADMITTED THAT INCOME FROM CATERING BUSINESS W AS NOT FULLY RECORDED IN THE BOOKS OF ACCOUNT. THIS FINDING WAS NEVER UNDER CHALLENGE. 7. FROM THE ABOVE OBSERVATION OF THE PUNJAB & HARYA NA HIGH COURT, IT IS OBVIOUS THAT THE SEARCH WAS CONDUCTED U/S 132 OF TH E INCOME-TAX ACT AND THE UNDISCLOSED INCOME WAS COMPUTED U/S 158BB(1) OF THE ACT. IT IS NECESSARY TO KEEP IN MIND THAT THE LEGISLATURE HAS MADE SUBSTANT IAL CHANGE IN THE PROCEDURE FOR COMPUTATION OF UNDISCLOSED INCOME WITH EFFECT F ROM 01-06-2003 BY INTRODUCING SECTIONS 153 TO 153C BY FINANCE ACT, 20 03. SECTION 158BI OF THE ACT CLEARLY SAYS THAT THE PROVISIONS OF CHAPTER XIV B WILL NOT APPLY IN RESPECT OF SEARCH INITIATED U/S 132 OF THE INCOME-TAX ACT AFTE R 31-05-2003. THEREFORE, THE ITA 383 & 384/COCH/2010 5 PROVISIONS OF SECTION 158BB(1) WHICH PROVIDES FOR C OMPUTATION OF INCOME OF UNDISCLOSED INCOME IN RESPECT OF SEARCHES CARRIED O N UPTO 31-05-2003 IS NOT APPLICABLE IN RESPECT OF CASES WHERE SEARCH WAS CAR RIED ON AFTER 01-06-2003. IN OTHER WORDS, THE ASSESSEE WAS COVERED U/S 153A OF T HE ACT. THEREFORE, THE PROVISIONS OF SECTION 158BB ARE NOT APPLICABLE TO T HE CASE ON HAND. SECTION 158BB(1) CLEARLY SAYS THAT UNDISCLOSED INCOME HAS T O BE COMPUTED ON THE BASIS OF THE EVIDENCE FOUND DURING THE COURSE OF SEARCH O PERATION OR INFORMATION RELATABLE TO SUCH EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. THIS LANGUAGE WAS OMITTED BY THE LEGISLATURE IN SECTION 153A. SECTION 153A REQUIRES THE ASSESSING OFFICER TO COMPUTE THE INCOME ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE MATERIAL MAY BE FOUND DUR ING THE COURSE OF SEARCH OPERATION OR IT MAY COME TO THE POSSESSION OF THE A SSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THEREFORE, IT MAY N OT BE NECESSARY FOR THE ASSESSING OFFICER TO CONFINE HIMSELF TO THE MATERIA L FOUND DURING THE COURSE OF SEARCH OPERATION IN A CASE WHERE THE INCOME HAS TO BE COMPUTED U/S 153A OF THE ACT IN RESPECT OF SEARCH OPERATION CARRIED OUT ON A ND FROM 01-06-2003. THE ASSESSING OFFICER CAN VERY WELL COMPUTE THE INCOME ON THE BASIS OF THE STATEMENT RECORDED DURING THE COURSE OF SEARCH OPERATION PROV IDED THE ASSESSEE COULD NOT PROVE THAT THE STATEMENT WAS WRONG BY PRODUCING NEC ESSARY MATERIAL. IN OTHER WORDS, IN THE ABSENCE OF ANY MATERIAL AVAILABLE ON RECORD NOTHING CAN PREVENT THE ASSESSING OFFICER FROM COMPUTING THE INCOME IN A PROCEEDING U/S 153A OF THE ACT ON THE BASIS OF THE STATEMENT RECORDED DURING T HE COURSE OF SEARCH. 8. IN THE CASE BEFORE US, THE REVENUE AUTHORITIES F OUND THAT SOME ACCOUNTS ARE WRITTEN AS OK-PATTU AND OK-VARAVU. THE REV ENUE AUTHORITIES COMPLETELY IGNORED THE EXPLANATION OF THE ASSESSEE IN RESPONSE TO QUESTION NO.18 THAT THE BUSINESS WAS SEASONAL AND USUALLY DONE FROM DECEMBE R TO APRIL. THE ASSESSEE HAS ALSO EXPLAINED THAT THE COLLECTION SHOWN IN THE SEIZED DOCUMENT IS ONLY FOR THAT PERIOD. FOR THE PURPOSE OF CONVENIENCE, WE AR E REPRODUCING QUESTION NO.17 AND ANSWER BELOW: ITA 383 & 384/COCH/2010 6 Q.NO.18 : IS THE ABOVE AMOUNT IS THE COLLECTION F OR 50 DAYS? ANS. : THIS BUSINESS IS A SEASONAL BUSINESS USUAL LY DONE FROM DECEMBER TO APRIL. THIS AMOUNT IS THE AMO UNT FOR THE TRANSACTION DURING THIS PERIOD. IN RESPONSE TO QUESTION NO.16, THE ASSESSEE HAS ANS WERED AS FOLLOWS: Q.NO.16 : WHAT IS THE PERCENTAGE OF COMMISSION? ANS. : RS. 1,000/- TO RS.2,000/- PER RS.ONE LAKH. HOWEVER, IN RESPONSE TO QUESTION 28, THE ASSESSEE S AYS THE COMMISSION WAS APPROXIMATELY RS.1,500/- PER LAKH. FROM THE ABOVE STATEMENT OF THE ASSESSEE IT APPEARS THAT THE ASSESSEE IS RECEIVING COMMISSION F ROM RS.1,000 TO RS.2,000. THE ASSESSING OFFICER ADOPTED RS.2,000 PER LAKH AS COMMISSION WHEREAS THE COMMISSIONER OF INCOME-TAX(A) ADOPTED RS.1,500 AS C OMMISSION. NO OTHER MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT WHA T IS THE ACTUAL COMMISSION RECEIVED BY THE ASSESSEE EXCEPT THREE DIFFERENT VER SIONS OF THE ASSESSEE. IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL, THIS TRIBUNA L IS OF THE OPINION THAT ADOPTING THE COMMISSION @RS.1,000 AS CLAIMED BY THE ASSESSEE IN RESPONSE TO QUESTION NO.16 WOULD MEET THE ENDS OF JUSTICE INSTE AD OF RS.1,500 OR RS.2,000. THE MATTER WOULD ENTIRELY STAND ON A DIFFERENT FOOT ING IN CASE ANY CORROBORATIVE MATERIAL IS AVAILABLE TO SHOW THAT THE ASSESSEE HAS RECEIVED ANY COMMISSION MORE THAN WHAT WAS STATED IN THE STATEMENT. IN THE ABSENCE OF ANY SUCH CORROBORATIVE MATERIAL, THIS TRIBUNAL IS OF THE OPI NION THAT TAKING RS.1,000 PER LAKH AS COMMISSION WOULD BE REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE MATERIAL FOUND DURING THE COURSE OF SEARCH O PERATION SHOWS THE TRANSACTION FROM 01-12-2006 TO 19-01-2007. THERE A RE 33 TRANSACTIONS IN EACH DAY. FOR 50 DAYS FROM 01-12-2006 TO 19-01-2007 THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT ARE SUPPO RTED BY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFICER HAS CORRECTLY ESTIMATED THE TURNOVER OF TRANSACTIONS AT ITA 383 & 384/COCH/2010 7 RS.6,17,91,700 FOR 50 DAYS. BY TAKING THE TRANSACT IONS AS TURNOVER FOR 50 DAYS AT RS.6,17,91,700 THE COMMISSION @RS,.1,000 WOULD COME TO RS.6,17,917. THE TOTAL TURNOVER AS FOUND IN THE SEIZED MATERIAL VKP -132 IS RS.13,01,18,879. THE ASSESSEE WAS ABLE TO EXPLAIN TO THE ASSESSING OFFIC ER TO THE EXTENT OF RS.6,83,90,080. THEREFORE, FOR THE PERIOD OF 5 MON THS FROM DECEMBER TO APRIL, THE TOTAL TURNOVER WAS RS.13,01,18,879. AFTER DEDU CTING THE TURNOVER TO THE EXTENT OF RS.6,83,90,080 WHICH WAS EXPLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE BALANCE RS.6.17,28,799 WAS T AKEN AS NOT DISCLOSED TO THE DEPARTMENT. 10. THE NEXT QUESTION ARISES FOR CONSIDERATION IS W HETHER THE ASSESSEE CARRIED OUT THE TRANSACTION FOR THE WHOLLY YEAR OR ONLY FOR THE PERIOD OF FIVE MONTHS IN A YEAR. THE CLAIM OF THE ASSESSEE IS THAT HIS BUSINE SS AS COMMISSION AGENT FOR TIMBER TRADE IS ONLY SEASONAL AND IT IS FOR A PERIO D OF FIVE MONTHS IN A YEAR. IN FACT, THE ASSESSEE HAS EXPLAINED BEFORE THE ASSESSI NG OFFICER IN RESPONSE TO QUESTION NO.18 AS SUCH. THE QUESTION AND ANSWER WA S ALREADY EXTRACTED IN THE EARLIER PARAGRAPH OF THIS ORDER. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE COMMISSION IN TIMBER TRADE IS A BUSINESS FOR THE EN TIRE YEAR, THE STATEMENT OF THE ASSESSEE THAT IT IS ONLY SEASONAL AND IS DONE ONLY FOR FIVE MONTHS CANNOT BE REJECTED. IN OTHER WORDS, WHEN THE ASSESSING OFFIC ER ACCEPTED THE STATEMENT AND ESTIMATED THE INCOME FOR 50 DAYS, THE CLAIM OF THE ASSESSEE THAT IT IS SEASONAL AND IT WAS DONE ONLY FOR A PERIOD OF FIVE MONTHS CA NNOT BE REJECTED WITHOUT ANY MATERIAL CONTRARY TO THE STATEMENT RECORDED IN THE COURSE OF SEARCH PROCEEDINGS. IN THIS CASE, ADMITTEDLY, NO MATERIAL IS AVAILABLE TO SHOW THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS FOR THE ENTIRE YEAR OR THE BUSINESS OF COMMISSION IN TIMBER TRADE IS A BUSINESS FOR THE WHOLE YEAR. IN THE ABSENCE OF ANY SUCH MATERIAL, THE STATEMENT RECORDED CANNOT BE IGNORED BY THE LOWER AUTHORITIES. THEREFORE, THE ESTIMATION OF INCOME FOR THE ENTIRE YEAR CANNOT BE JUSTIFIED AT ALL. THE MATERIAL AVAILABLE ON RECORD CLEARLY SHOWS THAT THE TURNOVER IS FOR THE ENTIRE FIVE MONTHS PERIOD AND THE SEASONAL TURNOVER IS RS. 13,01,18,879 AND WHAT WAS NOT DISCLOSED IS 50 DAYS TRANSACTIONS COMPRISING O F 33 TRANSACTIONS A DAY WHICH ITA 383 & 384/COCH/2010 8 WAS COMPUTED RIGHTLY BY THE ASSESSING OFFICER AT RS .6,17,91,700. THE COMMISSION @ RS.1,000 PER LAKH ON THE BASIS OF THE STATEMENT MADE BY THE ASSESSEE IN THE ABSENCE OF ANY MATERIAL HAS TO BE A CCEPTED. THEREFORE, THE COMMISSION WOULD COME TO RS.6,17,917. THIS TRIBUNA L IS OF THE OPINION THAT THE AMOUNT OF RS.6,17,917 HAS TO BE TAKEN AS INCOME FRO M COMMISSION BUSINESS FOR THE ASSESSMENT YEAR 2006-07. 11. IN VIEW OF THE ABOVE DISCUSSION, WE ARE UNABLE TO UPHOLD THE ORDER OF THE LOWER AUTHORITY. THEREFORE, THE ORDER OF THE COMMI SSIONER OF INCOME-TAX(A) IS MODIFIED TO THAT EXTENT AND THE ASSESSING OFFICER I S DIRECTED TO TAKE THE INCOME FROM COMMISSION BUSINESS AT RS.6,17,917 FOR THE ASS ESSMENT YEAR 2006-07. 12. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDI TION OF RS. 11 LAKHS AS UNEXPLAINED CASH CREDIT FROM ONE ABOOBAKER, POOTHAY IL. 13. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT ABOOBAKER, POOTHAYIL IS A NON RESIDENT INDIAN AND T HE ASSESSEE USED TO OBTAIN SHORT TERM LOAN TO HONOUR LETTER OF CREDIT COMMITME NT OF THE BANK. ACCORDING TO THE LD.REPRESENTATIVE, ABOOBAKER, POOTHAYIL AVAILED A LOAN AGAINST FIXED DEPOSIT ON 12-08-2005 AND ISSUED A CHEQUE FOR RS.11 LAKHS T O THE ASSESSEE ON THE SAME DAY. THE ASSESSEE HAS ALREADY FILED THE COPY OF THE PASSBOOK AND PASSPORT, TO SHOW THE IDENTITY OF THE CREDITOR, CRE DITWORTHINESS AND GENUINENESS OF THE TRANSACTION. DURING THE APPELLATE PROCEEDIN GS, THE COMMISSIONER OF INCOME-TAX(A) CALLED FOR REMAND REPORT FROM THE ASS ESSING OFFICER. THE ASSESSING OFFICER, AFTER EXAMINING THE EXPLANATION OF THE ASSESSEE FILED A REMAND REPORT BEFORE THE COMMISSIONER OF INCOME-TAX(A) THA T THE ASSESSEE HAS EXPLAINED THE CREDIT SATISFACTORILY. THEREFORE, TH E CREDIT CAN BE CONSIDERED AS EXPLAINED. IN SPITE OF THAT, ACCORDING TO THE LD.R EPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. ITA 383 & 384/COCH/2010 9 14. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT THE ASSESSEE HAS TO PROVE THE IDENTITY OF THE CREDITOR, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. IN THIS CASE, ACCO RDING TO THE LD.DR, THE ASSESSEE HAS NOT ESTABLISHED ANYONE OF THE FACTORS. REFERRING TO THE REMAND REPORT FILED BY THE ASSESSING OFFICER, THE LD.DR SU BMITTED THAT THE REMAND REPORT FILED BY THE ASSESSING OFFICER BEFORE THE COMMISSIO NER OF INCOME-TAX(A) IS NOT BINDING ON THE COMMISSIONER OF INCOME-TAX(A). THER EFORE, COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY CONFIRMED THE ADDITION. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF APPELLAT E PROCEEDINGS, THE COMMISSIONER OF INCOME-TAX(A) CALLED FOR REMAND REP ORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER, AFTER EXAMINING TH E MATERIALS AVAILABLE ON RECORD FOUND THAT THE ASSESSEE AVAILED A LOAN OF RS.11 LAK HS AGAINST DEPOSIT IN ACCOUNT LAD NO.253 OF DHANALAXMI BANK, KUVATTUPUZHA WHICH W AS TRANSFERRED BY THE BANK ON 12-08-2005 AND CREDITED IN THE ACCOUNT NO.D P 15 OF THE CREDITOR ON THE SAME DAY. THE CREDITOR BY CHEQUE NO.2060969 GAVE R S.11 LAKHS ON THE SAME DAY TO THE ASSESSEE. AFTER VERIFICATION OF THIS, T HE ASSESSING OFFICER SUBMITTED THE REMAND REPORT STATING THAT THE CREDIT CAN BE CONSID ERED AS EXPLAINED. HOWEVER, THE COMMISSIONER OF INCOME-TAX(A), AFTER PLACING RE LIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TA X VS P MOHANKALA (2007) 291 ITR 278 (SC) FOUND THAT THE ASSESSEE FAILED TO IDENTIFY THE SOURCE OF FUNDS FOR THE DEPOSIT AGAINST WHICH THE LOAN WAS TAKEN BY THE CREDITOR. ACCORDINGLY THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE ESSENT IAL CONDITION FOR ALLOWING THE CASH CREDIT WAS NOT ESTABLISHED. THE FACT REMAINS IS THAT THERE IS A DEPOSIT WITH DHANALAXMI BANK, KUVATTUPUZHA IN THE NAME OF THE CR EDITOR. THE SOURCE FOR SUCH DEPOSIT HAS TO BE EXPLAINED BY THE CREDITOR AND NOT BY THE ASSESSEE. IF THE CREDITOR COULD NOT EXPLAIN THE SOURCE FOR MAKING SU CH DEPOSIT, THEN IT IS FOR THE REVENUE AUTHORITIES TO EXAMINE FURTHER AND MAKE NEC ESSARY ADDITION IN THE HANDS OF THE CREDITOR. THE FACT REMAINS IS THAT THE CRED ITOR AVAILED A LOAN FROM DHANALAXMI BANK, KUVATTUPUZHA AND GAVE IT TO THE AS SESSEE BY WAY OF A ITA 383 & 384/COCH/2010 10 CHEQUE. THEREFORE, THE SOURCE OF CASH CREDIT AS FA R AS THE ASSESSEE IS CONCERNED, STANDS ESTABLISHED BY THE ASSESSEE. THE ASSESSEE HAS ALSO ESTABLISHED THE IDENTITY OF THE CREDITOR BY PRODUCI NG THE COPY OF THE PASSPORT AND THE BANK STATEMENT. THE CREDITWORTHINESS OF THE CR EDITOR WAS ESTABLISHED BY PROVING THAT THE LOAN WAS OBTAINED BY THE CREDITOR AND IT WAS GIVEN TO THE ASSESSEE. THE VERY SAME LOAN AMOUNT WAS GIVEN TO THE ASSESSEE BY CHEQUE. THEREFORE, THE GENUINENESS ALSO CANNOT BE DOUBTED. 16. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T IN THE CASE OF APEX COURT IN P MOHANAKALA (SUPRA). IN THE CASE BEFORE THE APEX COURT, THE ASSESSEE RECEIVED SEVERAL CREDITS FROM A NON RESIDENT INDIAN . THE DEPARTMENT MADE EXTENSIVE ENQUIRIES AND FOUND THAT ONE INDIVIDUAL H AS GIVEN A LOAN IN TWO OR THREE NAMES. THE DEPARTMENT FOUND THAT ALL THE THREE PER SONS WERE THE SAME PERSON. THE CREDITOR EXPLAINED THAT HIS FATHER WAS A DRIVER WITH THE ASSESSEE AND THEREFORE, HE ADVANCED THE MONEY. HOWEVER, THE REV ENUE REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE AMOUNT HAS COME FROM THREE OR FOUR NAMES AND THE CREDITOR COULD NOT HAVE ADVANCED SUCH FUNDS . THIS WAS ACCEPTED BY THE APEX COURT. IN THE CASE BEFORE US, THE BANK AC COUNT WITH DHANALAXMI BANK, KUVATTUPUZHA STANDS IN THE NAME OF THE CREDITOR. THE DEPOSIT STANDS IN THE NAME OF THE CREDITOR. THE LOAN WAS AVAILED BY THE CREDITOR AND THE AMOUNT RECEIVED AS LOAN WAS GIVEN TO THE ASSESSEE. THEREF ORE, THIS TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE APEX COURT IN THE CASE OF P MOHANAKALA (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE. IN THE ABSENCE OF ANY MATERIAL, THE COMMISSIONER OF INCOME-TAX(A) CANNOT REJECT THE FIN DINGS OF THE ASSESSING OFFICER SO LIGHTLY. THEREFORE, THE ORDER OF THE LOWER AUTH ORITY IS SET ASIDE AND THE ADDITION OF RS.11 LAKHS AS UNEXPLAINED CREDIT IS DELETED. 17. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.3 LAKHS RECEIVED FROM SHRI JOSEPH ALBERT TOWARDS RENT DEPOSIT. ITA 383 & 384/COCH/2010 11 18. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HA D PARTIALLY COMPLETED KACHERITHAZHAM BUILDING. SHRI JOSEPH ALBERT HAS TA KEN ON LEASE ROOM NO.XIII 120B(I) IN THE SAID BUILDING AND HE PAID RS.3 LAKHS AS SECURITY DEPOSIT BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE HAS PRODUCED THE RENT A GREEMENT. THE LD.REPRESENTATIVE, FURTHER SUBMITTED THAT THE RENT RECEIVED FROM SHRI JOSEPH ALBERT WAS INCLUDED IN THE RETURN OF INCOME. THEREFORE, T HE ADVANCE RECEIVED BY THE ASSESSEE CANNOT BE TREATED AS INCOME OF THE ASSESSE E. 19. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE BEFORE THE ASSE SSING OFFICER TO SHOW THAT WHAT WAS RECEIVED IS SECURITY DEPOSIT OR ADVANCE. THEREFORE, THE ASSESSING OFFICER HAS TREATED THE SAME AS INCOME OF THE ASSES SEE. ADMITTEDLY, THE ASESSEE HAS RECEIVED RS.3 LAKHS BY CHEQUE FROM SHRI JOSEPH ALBERT. THE ASSESSEE HAS FILED COPY OF THE LEASE AGREEMENT. THE ASSESSEE HA S ALSO FURNISHED THE COPY OF THE RENT ACCOUNT TO SHOW THE RENT RECEIVED. WHEN T HE ASSESSEE HAS FILED THE COPY OF THE RENTAL AGREEMENT AND THE AMOUNT WAS REC EIVED AS CHEQUE AGAINST SECURITY DEPOSIT, THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IT IS ONLY SECURITY DEPOSIT FOR THE PURPOSE OF LEAS E / RENT OF THE PROPERTY. LEASE OF PROPERTY IS A TRANSFER OF INTEREST IN THE IMMOVABLE PROPERTY. THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE AS ADVANCE / SECURI TY DEPOSIT FOR PARTING WITH IMMOVABLE PROPERTY IS A CAPITAL RECEIPT. THEREFORE , IT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION FOR MAKING ADDITION OF RS.3 LAKHS. ACCORDINGLY THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF RS.3 LAKHS IS DELETED. 20. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.16,19,079 AS UNEXPLAINED INVESTMENT IN THE BUILDING ON THE BASIS OF THE VALUATION REPORT. 21. SHRI MATHEW JOSEPH, THE LD.REPRESENATIVE FOR TH E ASSESSEE SUBMITTED THAT THE CONSTRUCTION OF THE BUILDING WAS DONE BY THE AS SESSEE. THE ASSESSEE IS A ITA 383 & 384/COCH/2010 12 DIRECTOR IN THE CONSTRUCTION COMPANY. THEREFORE, T HE ASSESSEE HAD EXPERIENCE IN THE FIELD OF CONSTRUCTION. THE ASSESSEE CLAIMED 15 % DEDUCTION FOR SELF SUPERVISION. THE DVO VALUED THE BUILDING AT RS.40, 94,461. AT THE TIME OF VALUATION ALSO, THE BUILDING WAS NOT FULLY COMPLETE D. ACCORDING TO THE LD.REPRESENTATIVE, NO INCRIMINATING MATERIAL WAS FO UND DURING THE COURSE OF SEARCH OPERATION. THE ASSESSMENT WAS BASED ON THE BOOKS OF ACCOUNT. THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR CON STRUCTION WERE NOT REJECTED OR THE ASSESSING OFFICER COULD NOT POINT OUT ANY MI STAKE IN THE BOOKS OF ACCOUNT. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE MERE REFERENCE TO THE VALUATION REPORT FOR ESTIMATION OF BUILDING COST IS NOT JUST IFIED. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN S ARGAM CINEMA VS COMMISSIONER OF INCOME-TAX 328 ITR 513 (SC). 22. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT THE ASSESSEE HAS SHOWN THE COST OF CONSTRUCTION AT RS.2 4,75,382. HOWEVER, THE DVO ESTIMATED THE COST OF CONSTRUCTION AT RS.40,94, 461. THE DIFFERENCE OF RS.16,19,079 WAS ADDED AS UNEXPLAINED INVESTMENT IN THE BUILDING. SINCE THERE WAS HUGE VARIATION BETWEEN THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AND THE COST ESTIMATED BY THE DVO, THE LOWER AUTHOR ITY HAS RIGHTLY MADE THE ADDITION. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REVENUE HAS NOT DISPUTED THAT THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT FOR THE P URPOSE OF CONSTRUCTION. WHEN THE ASSESSEE WAS MAINTAINING THE BOOKS OF ACCO UNT IT IS FOR THE ASSESSING OFFICER TO EXAMINE THE BOOKS OF ACCOUNT AND IF THER E IS ANY DIFFICULTY THEN HE MAY REJECT THE BOOKS OF ACCOUNT AND REFER THE PROPERTY FOR VALUATION. IN THE ABSENCE OF ANY DEFECT IN THE BOOKS OF ACCOUNT, IT MAY NOT B E PROPER FOR THE ASSESSING OFFICER TO REFER THE MATTER FOR VALUATION. ITA 383 & 384/COCH/2010 13 24. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF THE APEX COURT IN THE CASE OF SARGAM CINEMA (SUPRA). IN THE CASE BEFORE THE APEX COURT, THE BOOKS OF ACCOUNT WERE NOT REJECTED AND THE TRIBUNAL FOUND TH AT THE ASSESSING AUTHORITY COULD NOT HAVE REFERRED THE MATTER TO THE VALUATION OFFICER WITHOUT HAVING REJECTED THE BOOKS OF ACCOUNT. THE APEX COURT FURTHER FOUND THAT SINCE THE BOOKS OF ACCOUNT WERE NOT REJECTED REFERENCE TO THE DVO WAS MISCONCEIVED. BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE APEX COU RT, THIS TRIBUNAL IS OF THE OPINION THAT THE VERY REFERENCE TO THE DVO WITHOUT REJECTING THE BOOKS OF ACCOUNT IS MISCONCEIVED. THEREFORE, THE ADDITION CANNOT BE MADE ON THE BASIS OF THE VALUATION REPORT OF THE DVO. BY RESPECTFULLY FOLLO WING THE JUDGMENT OF THE APEX COURT IN THE CASE OF SARGAM CINEMA (SUPRA) THE ORDE RS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION OF RS.16,19,079 IS D ELETED. 25. THE NEXT GROUND OF APPEAL IS DISALLOWANCE OF RS .2,25,000 OUT OF THE AGRICULTURAL INCOME DISCLOSED BY THE ASSESSEE. THE ASSESSEE HAS MORE THAN 5 ACRES OF AGRICULTURAL LAND IN HIS POSSESSION INCLUD ING RUBBER PLANTATION. THE ASSESSING OFFICER, WITHOUT ANY APPLICATION OF MIND, REJECTED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE CLAIMED RS.3 LAKHS AS INCOME FROM AGRICULTURAL ACTIVITIES. HOWEVER, T HE ASSESSING OFFICER ESTIMATED THE INCOME ONLY AT RS.75,000 AND REJECTED THE CLAIM TO THE EXTENT OF RS.2,25,000. IN THE ABSENCE OF ANY MATERIAL TO DISPROVE THE CLAI M OF THE ASSESSEE ADDITION TO THE EXTENT OF RS.2,25,000 IS NOT JUSTIFIED. 26. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT MERE LAND HOLDING IS NOT SUFFICIENT TO EARN AGRICULTURAL INCO ME. ACCORDING TO THE LD.DR, THE ASSESSEE HAS TO SHOW THAT THE AGRICULTURAL INCOME W AS EARNED BY CULTIVATING THE LAND. REFERRING TO THE ORDER OF THE ASSESSING OFFI CER AND THE COMMISSIONER OF INCOME-TAX(A), THE LD.DR SUBMITTED THAT THE ASSESSE E CLAIMED BEFORE THE LOWER AUTHORITIES THAT HE REARED COWS AND SOLD MILK WHICH WAS ALSO INCLUDED IN THE AGRICULTURAL INCOME. ACCORDING TO THE LD.DR REARIN G OF COWS AND INCOME FROM SALE OF MILK CANNOT BE CONSIDERED TO BE AGRICULTURA L INCOME. THEREFORE, THE ITA 383 & 384/COCH/2010 14 ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE AGRICUL TURE INCOMER AT RS.75,000 AND DISALLOWED THE BALANCE AMOUNT OF RS.2,25,000. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE. THE ASSESSEE CLAIMS THAT HE OWNS MORE THAN RS.5 ACRES OF AGRICUL TURAL LAND INCLUDING RUBBER PLANTATION. THIS CLAIM OF THE ASSESSEE WAS NOT DIS PUTED BY THE REVENUE. WHEN THE ASSESSEE OWNS RUBBER PLANTATION AND AGRICULTURA L LAND, NATURALLY, SOME AMOUNT OF INCOME GENERATES FROM THAT LAND. HOWEVER , IT IS FOR THE ASSESSEE TO SHOW THE NATURE OF CULTIVATION DONE BY HIM AND HOW MUCH INCOME WAS GENERATED FROM THE AGRICULTURAL OPERATION. AT THE BEST, THE ASSESSEE HAS TO NECESSARILY ESTABLISH THE NATURE OF THE AGRICULTURAL OPERATION AND THE NATURE OF THE CROPS CULTIVATED. IN THE ABSENCE OF ANY MATERIAL, THE AS SESSING OFFICER HAD NO OTHER WAY BUT TO ESTIMATE THE AGRICULTURAL INCOME. HOWEV ER, THIS TRIBUNAL IS OF THE OPINION THAT THE ESTIMATION OF AGRICULTURAL INCOME BY THE ASSESSING OFFICER FROM FIVE ACRES OF LAND AT RS.75,000 IS VERY LOW. BY TA KING INTO CONSIDERATION THAT THE LAND WAS LOCATED IN THE STATE OF KERALA WHERE THE M ONSOON IS GOOD AT ALL TIMES AND THE LAND IN KERALA IS SO FERTILE, THIS TRIBUNAL IS OF THE OPINION THAT THE ESTIMATION OF INCOME AT RS.2 LAKHS FROM 5 ACRES OF LAND WOULD BE REASONABLE. THEREFORE, THE ORDERS OF THE LOWER AUTHORITIES ARE MODIFIED TO THIS EXTENT. THE DISALLOWANCE THUS CONFIRMED IS RS.1 LAKH. 28. NOW COMING TO THE APPEAL FOR ASSESSMENT YEAR 20 07-08, THE FIRST ISSUE ARISES FOR CONSIDERATION IS ESTIMATION COMMISSION I NCOME TO THE EXTENT OF RS.56 LAKHS. 29. WE HAVE HEARD THE LD.REPRESENTATIVE FOR THE ASS ESSEE AND THE LD.DR. THE ASSESSING OFFICER MADE ADDITION OF RS.90 LAKHS ON T HE BASIS OF MATERIAL FOUND FOR 50 DAYS. HOWEVER, ON APPEAL BY THE ASSESSEE, THE C OMMISSIONER OF INCOME- TAX(A) ESTIMATED THE INCOME AT RS.56 LAKHS. THE CO MMISSIONER OF INCOME-TAX(A) FOR THE FIRST QUARTER OF FINANCIAL YEAR 2007-08, I. E. FOR THE PERIOD 01-04-2007 TO 30- 06-2006 FIXED THE INCOME AT RS.11 LAKHS AND AFTER I NCREASING RS.2 LAKHS IN EACH ITA 383 & 384/COCH/2010 15 QUARTER FOR THE PERIOD 01-01-2007 TO 31-03-2007, TH E COMMISSION INCOME WAS ESTIMATED RS.17 LAKHS. ACCORDINGLY, THE TOTAL COMM ISSION WAS ESTIMATED AT RS.56 LAKHS BY THE COMMISSIONER OF INCOME-TAX(A) IN STEAD OF THE INCOME ESTIMATED BY THE ASSESSING OFFICER TO THE EXTENT OF RS.90 LAKHS. FOR THE YEAR UNDER CONSIDERATION THERE IS NO MATERIAL AVAILABLE TO SHOW THE TOTAL RECEIPT OF COMMISSION. NO MATERIAL IS ALSO AVAILABLE TO SHOW THE TOTAL TURNOVER. THEREFORE, WE HAVE TO ESTIMATE THE TURNOVER ON THE BASIS OF TH E MATERIAL AVAILABLE FOR THE ASSESSMENT YEAR 2006-07. FOR THE ASSESSMENT YEAR 2 006-07 THE TOTAL TURNOVER WAS RS.13,01,18,879. THE ASSESSEE ENTERED IN THE B OOKS OF ACCOUNT A TURNOVER TO THE EXENT OF RS.6,83,90,080. FOR THE YEAR UNDER CONSIDERATION, NO SUCH MATERIAL IS AVAILABLE. HOWEVER, THE ASSESSING OFFI CER HAS TAKEN THE TURNOVER WHICH WAS TAKEN FOR ASSESSMENT YEAR 2006-07 AND CON SIDERING THE TRANSACTION FOR 50 DAYS @33 TRANSACTIONS A DAY, THE ASSESSING O FFICER ESTIMATED THE TOTAL COMMISSION FOR THE WHOLE YEAR AT RS.90 LAKHS. AS W E HAVE ALREADY DISCUSSED, THE STATEMENT RECORDED FROM THE ASSESSEE CLEARLY SH OWS THAT IT WAS SEASONAL BUSINESS FOR FIVE MONTHS FROM DECEMBER TO APRIL. T HEREFORE, ESTIMATION OF INCOME FOR THE WHOLE YEAR PER SE IS NOT JUSTIFIED. THE INCOME HAS TO BE ESTIMATED ONLY FOR THE PERIOD OF BUSINESS I.E. FIVE MONTHS, I N THE ABSENCE OF ANY MATERIAL TO JUSTIFY THAT THE ASSESSEE CARRIED ON THE BUSINESS F OR THE WHOLE YEAR. FOR 50 DAYS, THE TURNOVER WAS RS.6,17,91,700. THEREFORE, FOR FI VE MONTHS, I.E. 150 DAYS, THE TURNOVER WOULD BE RS.18,53,75,100. IT IS NOT ANYBO DYS CASE THAT ANY PART OF THE TURNOVER WAS RECORDED IN THE BOOKS OF ACCOUNT FOR T HE YEAR CONSIDERATION. THEREFORE, THE ENTIRE AMOUNT OF RS.18,53,75,100 HAS TO BE TAKEN AS TURNOVER FOR THE YEAR UNDER CONSIDERATION. BY TAKING RS. 1,000 AS COMMISSION PER ONE LAKH, THE TOTAL COMMISSION COMES TO RS. 18,53,751. IN OT HER WORDS, THE COMMISSION FOR THE PERIOD OF FIVE MONTHS, I.E. 150 DAYS WHICH COMES TO RS.18,53,751 HAS TO BE TAKEN AS UNACCOUNTED INCOME FROM COMMISSION BUSI NESS. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE MODIFIED AND TH E ASSESSING OFFICER IS DIRECTED TO TAKE THE COMMISSION INCOME AT RS.18,53,751 FOR T HE YEAR UNDER CONSIDERATION. ITA 383 & 384/COCH/2010 16 30. THE NEXT ISSUE IS WITH REGARD TO DISALLOWANCE O F FOUR CREDITS TO THE EXTENT OF RS.60 LAKHS. 31. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIVED RS.60 LAKHS FROM FOUR PEO PLE. THE DETAILS ARE AS FOLLOWS: SHRI AFSAL P.Y. RS.20,00,000 SHRI ABOOBAKER PUTHAYIL RS.10,00,000 SHRI M.M. ABDULKAREEN RS.10,00,000 SHRI M.K. HAMZA RS.20,00,000 32. WITH REGARD TO SHRI AFSAL P.Y., THE ASSESSEE HA S RECEIVED RS.20 LAKHS BY CHEQUE DATED 13-05-2006 DRAWN ON ICICI BANK, MUVATT UPUZHA AND THE SAID AMOUNT WAS ALSO REFUNDED BY CHEQUE ON THREE OCCASIO NS, THE DETAILS OF WHICH ARE AS UNDER: 13-04-2007 SBT CHEQUE RS. 9,00,000 07-01-2008 UBI CHEQUE RS. 6,50,000 25-03-2009 SBT CHEQUE RS. 4,50,000 ACCORDING TO THE LD.REPRESENTATIVE, AFSAL P.Y. HAS RECEIVED THIS AMOUNT FROM HIS SISTER SMT. SILVY AND BROTHER IN LAW SHRI P.A. ABDU LLA. SHRI ABDULLA HAD A BALANCE OF RS. 27,81,481 IN THE CAPITAL GAIN ACCOUNT MAINTA INED WITH BANK OF BARODA BANGALORE. THE ASSESSEE HAS PRODUCED THE STATEMENT OF ACCOUNT OF BANK OF BARODA BEFORE THE LOWER AUTHORITY. DURING THE REMA ND PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE AMOUNT WAS RECEIVE D FROM THE ACCOUNT OF SHRI P.A. ABDULLA TO THE ASSESSEES ACCOUNT. THE ASSESS ING OFFICER HAS SATISFIED WITH THE GENUINENESS AND THE IDENTITY OF THE CREDITOR AS ALSO THE CREDITWORTHINESS OF THE CREDITOR. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ONLY ON THE GROUND THAT THE ASSESSEE COULD NOT EXPLAIN THE CREDIT OF RS.27,81,481 IN THE ACCOUNT OF SHRI P.A. ABDULLA. ACCORDING TO THE LD. REPRESENTATIVE, RS.27,81,481 ITA 383 & 384/COCH/2010 17 WAS IN THE CAPITAL GAIN ACCOUNT OF P.A. ABDULLA FOR WHICH THE ASSESSEE CANNOT GIVE ANY EXPLANATION. ONCE THE ASSESSEE HAS PROVED THAT THE FUNDS WERE GIVEN BY HIS SISTER SMT. SILVY AND BROTHER IN LAW SHRI P. A. ABDULLA, THE SOURCE OF SHRI P.A. ABDULLA FOR MAKING THE DEPOSIT IN THE CAPITAL ACCOUNT MAINTAINED IN BANK OF BARODA CANNOT BE A REASON FOR DISALLOWING THE CLAIM IN THE HANDS OF THE ASSESSEE. 33. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT THE ASSESSEE HAS NOT EXPLAINED THE DEPOSIT MADE IN THE NAME OF SHRI P.A. ABDULLA TO THE EXTENT OF RS.27,81,841. ACCORDING TO THE LD.DR , MERE FILING OF CONFIRMATION DOES NOT PROVE THE IDENTITY, CAPACITY AND GENUINENE SS OF THE CREDIT. 34. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE REMAND PR OCEEDINGS, THE ASSESSING OFFICER FOUND THAT IN THE BANK ACCOUNT OF SHRI P.A. ABDULLA, PRIOR TO ISSUE OF CHEQUE, AN AMOUNT OF RS.27 LAKHS WAS FOUND CREDITED . SINCE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE FROM WHICH THE CREDIT OF RS.27 LAKHS WAS MADE, THE CLAIM OF THE ASSESSEE WAS DISALLOWED. THE FACT REM AINS IS THAT THE DEPOSIT WAS MADE IN THE NAME OF SHRI P.A. ABDULLA. THEREFORE, THE ASSESSING OFFICER OUGHT TO HAVE SOUGHT THE EXPLANATION OF SHRI P.A. ABDULLA TO ASCERTAIN THE SOURCE OF AMOUNT DEPOSITED. IF THE EXPLANATION WAS NOT SATIS FACTORY, THE ADDITION WAS TO BE MADE IN THE HANDS OF SHRI P.A. ABDULLA. ASKING THE ASSESSEE TO EXPLAIN HOW THE DEPOSIT WAS MADE IN THE ACCOUNT OF SHRI P.A. ABDULL A MAY NOT BE JUSTIFIED AT ALL. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE S FUNDS WERE DEPOSITED IN THE ACCOUNT OF SHRI P.A. ABDULLA. IF THE REVENUE HAS A NY MATERIAL TO SUGGEST THAT THE ASSESSEES FUNDS WERE DEPOSITED EARLIER IN THE ACCO UNT OF SHRI P.A. ABDULLA, THEN THE MATTER WOULD HAVE STOOD ON A DIFFERENT FOOTING. IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THAT THE DEPOSIT WAS MADE EARLI ER MERELY BECAUSE THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF DEPOSIT IN THE ACCOUNT OF SHRI P.A. ABDULLA THAT CANNOT BE A REASON TO DISALLOW THE CLA IM OF THE ASSESSEE THAT THE AMOUNT WAS RECEIVED FROM SHRI P.A. ABDULLA. THE TR ANSACTION CLEARLY SHOWS THAT ITA 383 & 384/COCH/2010 18 THE AMOUNT WAS RECEIVED FROM THE ASSESSEES SISTER AND BROTHER IN LAW, SHRI P.A. ABDULLA AND THEY HAVE SUFFICIENT BANK BALANCES IN T HE ACCOUNT. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE ASSESSEES FUNDS WERE FLOWN TO THE ACCOUNT OF SHRI P.A. ABDULLA, THIS TRIBUNAL IS OF THE OPINION THAT NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY THE ADDITION OF RS. 20 LAKHS IS DELETED. 35. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF RS .10 LAKHS IN RESPECT OF CREDIT APPEARING IN THE NAME OF SHRI M.M. ABDUL KAREEM. 36. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT SHRI M.M. ABDUL KAREEM IS AN NRI AND HE ADVANCED RS .20 LAKHS ON 22-05-2006 FROM HIS WITHDRAWAL FROM NRO ACCOUNT MAINTAINED WIT H SOUTH INDIAN BANK, MUVATTUPUZHA. ON THE SAME DAY THERE WAS A CASH DEP OSIT IN HIS ACCOUNT. ACCORDING TO THE LD.REPRESENTATIVE, THIS WAS OUT OF THE CASH WITHDRAWAL FROM THE NRO OVERDRAFT ACCOUNT WITH SOUTH INDIAN BANK. THE LOWER AUTHORITIES IGNORED THE CASH WITHDRAWN FROM THE NRO OVERDRAFT ACCOUNT. 37. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT ON THE SAME DAY CASH WAS DEPOSITED IN THE ACCOUNT OF THE CREDIT OR. THEREFORE, THE ASSESSING OFFICER FOUND THAT IN ALL PROBABILITY, THE CASH DEP OSIT ON 22-05-2006 IN THE BANK ACCOUNT OF THE CREDITOR MAY BE FROM ASSESSEES OWN FUNDS. 38. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THER E WAS A CASH DEPOSIT ON. 22/05/2006, THE DATE ON WHICH THE CHEQUE WAS ISSUED . THE ASSESSEE CLAIMS THAT THERE WAS A WITHDRAWAL FROM THE NRO OVERDRAFT ACCOU NT OF THE CREDITOR. THIS FACT WAS NOT CONSIDERED BY THE LOWER AUTHORITIES. THERE FORE, THIS TRIBUNAL IS OF THE OPINION THAT THE MATTER NEEDS TO BE EXAMINED AS TO WHETHER THERE WAS ANY WITHDRAWAL FROM NRO OVERDRAFT ACCOUNT FOR THE PURPO SE OF DEPOSIT. SINCE THE REVENUE SPECIFICALLY CLAIMS THAT THE ASSESSEES MON EY WOULD HAVE BEEN DEPOSITED BY SHRI M.M. ABDUL KAREEM FOR THE PURPOSE OF GIVING ADVANCE, THE ITA 383 & 384/COCH/2010 19 MATTER NEEDS TO BE EXAMINED AS TO WHETHER THERE WAS ANY ACTUAL WITHDRAWAL FROM THE NRE OVERDRAFT ACCOUNT AS CLAIMED BY THE ASSESSE E AND WHETHER THE VERY SAME AMOUNT WAS DEPOSITED IN THE ACCOUNT OF SHRI M. M. ABDUL KAREEM. SINCE THE LOWER AUTHORITIES HAVE NOT EXAMINED THIS FACT, THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF ADDITION OF RS.10 LA KHS AS UNEXPLAINED CASH CREDIT FROM SHRI M.M. ABDUL KAREEM IS SET ASIDE TO THE FIL E OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE ISSUE IN ACCORD ANCE WITH LAW AND THEREAFTER DECIDE THE SAME AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 39. THE NEXT ISSUE IS WITH REGARD TO CREDIT OF RS.2 0 LAKHS IN THE NAME OF SHRI M.K.HAMSA. 40. WE HAVE HEARD THE LD.REPRESENTATIVE FOR THE ASS ESSEE AND THE LD.DR. IN THE COURSE OF REMAND PROCEEDINGS, THE ASSESSING OFF ICER FOUND THAT STATE BANK OF INDIA, OTTAPPALAM SANCTIONED A DEMAND LOAN OF RS.61 ,50,000 TO SHRI M.K. HAMSA AGAINST HIS CNR DEPOSIT AND THAT WAS CREDITED IN HIS NRE SB ACCOUNT ON 04-06-2006 FROM THAT ACCOUNT, SHRI M.K. HAMSA ISSU ED CHEQUE TO THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER FOUND T HAT THE CREDIT WAS NOT EXPLAINED. FROM THE MATERIAL AVAILABLE ON RECORD I T APPEARS THAT THE AMOUNT WAS GIVEN BY SHRI M.K. HAMSA FROM THE LOAN SANCTIONED B Y STATE BANK OF INDIA, OTTAPPALAM BRANCH. THE IDENTITY OF THE CREDITOR, C REDITWORTHINESS OF THE CREDIT AND THE GENUINENESS OF THE CREDIT ARE ESTABLISHED B EYOND DOUBT. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE ASESSEES MONEY WA S IN FACT DEPOSITED, WE DO NOT FIND ANY REASON TO DISALLOW THE CLAIM OF THE AS SESSEE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS. 20 LAKHS IN THE NAME OF SHRI M.K. HAMSA. 41. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDI TION OF RS. 10 LAKHS AS UNEXPLAINED CASH CREDIT FROM ONE ABOOBAKER, POOTHAY IL. ITA 383 & 384/COCH/2010 20 42. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT ABOOBAKER, POOTHAYIL IS A NON RESIDENT INDIAN. SHR I ABOOBAKER POOTHAYIL HAS ADVANCED AN AMOUNT OF RS.10 LAKHS BY CHEQUE DRAWN O N DHANALAKSHMI BANK. SINCE THERE WAS A CORRESPONDING CASH DEPOSIT OF RS. 10 LAKHS ON THE IMMEDIATELY PREVIOUS DAY OF THE ADVANCE, THE ASSESSING OFFICER HELD THAT THE MONEY DEPOSITED WAS THE MONEY OF ASSESSEE HIMSELF AND THEREFORE, TH E ADDITION WAS MADE. HOWEVER, THE LD.REPRESENTATIVE EXPLAINED, THAT THE ASSESSING OFFICER IN HIS REMAND REPORT, VIDE PARAGRAPH 2 HAS REPORTED THAT T HE CREDIT COULD BE CONSIDERED AS EXPLAINED AS THE AMOUNT WAS ROUTED THROUGH BANKI NG CHANNELS AND SOURCE WAS FCNR DEPOSIT. THE COMMISSIONER OF INCOME-TAX(A ), IGNORING THE REMAND REPORT FURNISHED BY THE ASSESSING OFFICER, CONFIRME D THE ADDITION, BY PLACING RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE C ASE OF P MOHANAKALA (SUPRA). THE LD. REPRESENTATIVE SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE IMPUGNED ADDITION ARE IDENTICAL TO ASSESSMENT YEAR 2006-07 WHERE A SIMILAR ADDITION OF RS.11 LAKHS IN THE NAME OF SHRI ABOOBAK ER POOTHAYIL HAVE BEEN CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(A) FOR THE VERY SAME REASONS. THE LD.REPRESENTATIVE THEREFORE, SUBMITTED THAT THE DECISION ARRIVED AT THEREIN MAY BE MADE APPLICABLE TO THIS YEAR ALSO. 43. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR S UBMITTED THAT THE ASSESSEE HAS TO PROVE THE IDENTITY OF THE CREDITOR, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. IN THIS CASE, ACCO RDING TO THE LD.DR, THE ASSESSEE HAS NOT ESTABLISHED ANYONE OF THESE FACTOR S. REFERRING TO THE REMAND REPORT FILED BY THE ASSESSING OFFICER, THE LD.DR SU BMITTED THAT THE REMAND REPORT FILED BY THE ASSESSING OFFICER BEFORE THE COMMISSIO NER OF INCOME-TAX(A) IS NOT BINDING ON THE COMMISSIONER OF INCOME-TAX(A). THER EFORE, COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY CONFIRMED THE ADDITION. 44. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF APPELLAT E PROCEEDINGS, THE COMMISSIONER OF INCOME-TAX(A) CALLED FOR REMAND REP ORT FROM THE ASSESSING ITA 383 & 384/COCH/2010 21 OFFICER. THE ASSESSING OFFICER, AFTER EXAMINING TH E MATERIALS AVAILABLE ON RECORD FOUND THAT THE CREDIT COULD BE CONSIDERED AS EXPLAI NED AS THE AMOUNT WAS ROUTED THROUGH BANKING CHANNELS AND SOURCE WAS FCNR DEPOSI T. THE COMMISSIONER OF INCOME-TAX(A) IGNORING THE REMAND REPORT OF THE ASS ESSING OFFICER CONFIRMED THE ADDITION BY PLACING RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF P MOHANAKALA (SUPRA). WE HAVE CONSIDERED THE CASH CR EDIT IN THE NAME OF VERY SAME CREDITOR, SHRI ABOOBAKER, POOTHAYIL AMOUNTING TO RS.11 LAKHS WHILE DEALING WITH THE APPEAL FOR THE ASSESSMENT YEAR 2006-07 ELS EWHERE IN THIS ORDER. THE FACTS AND CIRCUMSTANCES STATED TO BE THE SAME. WE HAVE ALREADY FOUND THAT THE JUDGMENT OF THE APEX COURT IN THE CASE OF P MOHANAK ALA IS NOT APPLICABLE TO THE FACTS OF THE CASE AS THE ASSESSEE IN THE PRESENT CA SE HAS DISCHARGED THE ONUS OF PROVING THE IDENTITY OF THE CREDITOR, CREDITWORTHIN ESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION AND THEREFORE DELETE D THE ADDITION. THEREFORE, CONSISTENT WITH THE VIEW TAKEN FOR THE ASSESSMENT Y EAR 2006-07, ESPECIALLY WHEN THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES O F THE CASE, WE DELETE THE ADDITION OF RS.10 LAKHS MADE AS UNEXPLAINED CASH CR EDIT IN THE NAME OF ABOOBAKER POOTHAYIL. 45. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH THE DAY OF MARCH, 2012 SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 09 TH MARCH , 2012 PK/- COPY TO: 1. SHRI V.U. SIDDIQUE, V.S. EXPORT & IMPORT, PUTHUP PADY, MUVATTUPUZHA 2. THE A.C.I.T, CENT. CIR.1, ERNAKULAM 3. THE CIT(A)-I, KOCHI 4. THE CIT, KOCHI 5. THE DR, ITAT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, COCHIN BENCH