The ITO, Alappuzha V. Sri.Sudarsanan, Alappuzha

ITA 388/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86407 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 04-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2014
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: R KRISHNAN
• Keywords: Business income
• Section: 69C; 143(3); 142(1); 133(6); 194C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO.388/COCH/ 2014 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, WARD-4, ALAPPUZHA VS. SHRI SUDARSANAN P.S., COIRLAND EXPORTS, ASRAMAM WARD, AVALOOKUNNU P.O., ALAPPUZHA-688 006. [PAN: AGUPS 866511. (REVENUE-APPELLANT) (ASSESSEE- RESPONDENT) ASS REVENUE BY SHRI K.P. GOPAKUMAR, SR. DR ASSESSEE BY SHRI R. KRISHNAN, CA DATE OF HEARING 05/01/2016 DATE OF PRONOUNCEMENT 08/01/2016 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE ARISES OUT OF THE O RDER OF THE LD. CIT(A)-IV, KOCHI DATED 04-06-2014 FOR THE ASSESSMENT YEAR 2007 -08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX( APPEALS)-I, KOCHI, IN SO FAR AS THE POINTS STATED BELOW ARE CONCERNED, IS OPPOSED TO LAW ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.41,05,467/- HOLDING THAT ONCE TH E ESTIMATED RETURNED I.T.A. NO.388/COCH/2014 2 HAS BEEN ACCEPTED, NO FURTHER DISALLOWANCE U/S. 40( A)(IA) COULD BE MADE. IN FACT, THE ASSESSING OFFICER HAD NOT ESTIMATED TH E INCOME, RATHER SHE HAD ONLY ACCEPTED THE INCOME UNDER THE HEAD BUSINE SS AS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. 3. THE ASSESSING OFFICER HAD MENTIONED IN THE ORD ER THAT THE BOOKS WERE NOT PRODUCED BY THE AS ON THE PLEA THAT THE SAME WE RE LOST. THAT THERE WERE BOOKS OF ACCOUNTS AVAILABLE WITH THE ASSESSEE WAS EVIDENCED BY THE FACT THAT A PROFIT AND LOSS ACCOUNT FOR THE YEAR EN DED 31-03-2007 DULY CERTIFIED BY A CHARTERED ACCOUNTANT HAD BEEN PRODUC ED TO THE BANK AND THEY WERE OBTAINED FROM THE BAN BY THE ASSESSING OF FICER. 4. MOREOVER, IN A LETTER ADDRESSED TO THE ASSESSI NG OFFICER, IT HAS BEEN CERTIFIED BY SHRI JISS MORRIS, CHARTERED ACCOUNTANT , THAT HE HAD EXAMINED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND AFTER VER IFICATION OF THE ACCOUNTS, HE HAD GIVEN HIS AUDIT REPORT. 5. IN THE P&L ACCOUNT, THE NET PROFIT WAS ONLY RS. 2,06,750/- AS AGAINST THE SUM OF RS.4,00,000/- DECLARED BY THE ASSESSEE I N THE RETURN OF INCOME. IN THE ASSESSMENT ORDER, THE OFFICER ADOPT ED THE DECLARED INCOME OF RS.4,00,000/- AND THEN PROCEEDED TO MAKE DISALLOWANCE U/S. 40(A)(IA). THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSING OFFICER DID NOT REJECT THE ACCOUNTS PER SE, BUT ONL Y ACCEPTED THE HIGHER INCOME UNDER THE HEAD BUSINESS OFFERED/ESTIMATED BY THE ASSESSEE HIMSELF. 6. THE LD. CIT(A) HAS FURTHER ERRED IN HOLDING THA T THE ASSESSING OFFICER HAS NOT FURNISHED ANY BREAK-UP OF THE AMOUNT OF PAY MENTS FOR COMMISSION AND BROKERAGE, WHICH COULD HAVE ATTRACTE D THE PROVISION U/S. 194H. WHEN THE ASSESSEE FAILED TO PRODUCE ANY BOOKS OF ACCOUNT ON THE PLEA THAT IT HAD BEEN LOST, THE ONLY OPTION AVAILAB LE BEFORE THE ASSESSING OFFICER WAS TO RELY ON THE FINANCIAL STATEMENTS OBT AINED FROM THE BANK. HENCE, IT WAS FOR THE ASSESSEE TO PROVE THAT HE HAD NOT VIOLATED THE PROVISIONS OF TDS IN RESPECT OF PAYMENTS SUCH AS BR OKERAGE, COMMISSION, TRANSPORT CHARGES ETC. 7. THE LD. CIT(A) HAS ALSO ERRED IN RELYING ON THE DECISION OF HIS PREDECESSOR ON THE APPEAL FILED BY THE ASSESSEE FOR THE AY 2005-06. IN THAT YEAR ALSO, THE ASSESSEE HAD TAKEN A SIMILAR PL EA THAT THE BOOKS OF ACCOUNT HAD BEEN LOST. THE DEPARTMENT HAS FILED SEC OND APPEAL BEFORE THE HONBLE TRIBUNAL AGAINST THE DECISION OF THE CI T(A). 8. THE LD. CIT(A) HAS ALSO ERRED IN DELETING THE A DDITION U/S. 69C OF RS.3,26,380/- HOLDING THAT THE ASSESSEE HAD OFFERED BUSINESS INCOME OF I.T.A. NO.388/COCH/2014 3 RS.4,00,000/- AND ANY PAYMENT WITHIN THIS LIMIT SHO ULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. AN AMOUNT OF RS. 3,26,380/- WAS INCURRED BY THE ASSESSEE FOR LIC PREMIUM, REPAYMENT OF HOUSING LOAN AND INTEREST THEREON. 9. THE LD. CIT(A) OUGHT TO HAVE NOTED THAT THE AVA ILABLE AMOUNT IS ONLY THE ADDITIONAL INCOME OF RS.1,93,250/- (RS.4,00,000 RS.2,06,750/-) PLUS DRAWING OF RS.1,06,750/-. THEREFORE, THE TOTAL AMO UNT AVAILABLE FOR MEETING THE EXPENDITURE IS ONLY RS.3,00,000/-. THE AVAILABILITY WOULD BE EVEN LESS IF THE HOUSEHOLD EXPENDITURE IS ALSO INCL UDED, WHICH THE ASSESSEE HAD QUANTIFIED AT RS.1,20,000/- PER ANNUM AS PER HIS LETTER TO THE ASSESSING OFFICER DATED 24-12-2010. FOR THESE AND OTHER GROUNDS THAT MAY BE ADVANCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE POINTS MAY BE SET ASIDE AND THAT OF THE AO MA Y BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF COIR MATS AND MATTINGS. THE ASSESSEE HAS DECLARED A TOTAL INCOME OF RS.2,02,130/- IN THE RETURN OF INCO ME FILED ON 01.05.2008. NOTICES U/S. 143(2) AND U/S. 142(1) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE WHERE THE ASSESSEE WAS REQUIRED TO PRODUCE THE BALANCE SHEET AS ON 31-03-2007 AND THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31-03-2007 ALONGWITH THE AUDIT REPORT FOR THE SAID PERIOD ALON GWITH THE BOOKS OF ACCOUNT AND OTHER DETAILS. REGARDING THE BOOKS OF ACCOUNT, IT WAS STATED BY THE ASSESSEE THAT THE ACCOUNTS WERE MISPLACED AND THEREFORE, INC OME IN THE IMPUGNED YEAR HAD BEEN ESTIMATED. HE ALSO STATED THAT FOR THE YE AR ENDING 31-03-2005 AND 31- 03-2006 ALSO, THE ACCOUNTS WERE MISPLACED DUE TO WH ICH THE INCOME WAS ESTIMATED. I.T.A. NO.388/COCH/2014 4 4. THE ASSESSING OFFICER, DURING THE ASSESSMENT P ROCEEDINGS FOUND THAT THE ASSESSEE HAS SUBMITTED THE AUDITED ACCOUNTS FOR TH E YEAR ENDING 31-03-2005, 31-03-2006, 31-03-2007 AND 31-03-2008 ALONG WITH TH E AUDIT REPORTS IN FORM 3CB AND 3CD WITH THE STATE BANK OF INDIA, ALAPPUZHA BRANCH WHICH WAS COLLECTED BY THE ASSESSING OFFICER. IT WAS SHOW CAU SED TO THE ASSESSEE THAT THE ASSESSING OFFICER PROPOSED TO ASSESS THE INCOME ON THE BASIS OF THE ACCOUNTS FILED WITH THE STATE BANK OF INDIA, ALAPPUZHA BRANC H AND ACCORDINGLY, CLARIFICATION WAS SOUGHT BY ISSUANCE OF SHOW CAUSE NOTICE BY THE ASSESSING OFFICER FROM THE ASSESSEE THAT WHETHER ANY COMPLAINT AGAINST THE ACC OUNTANT WHO HAS TAKEN AWAY THE ACCOUNTS OF THE ASSESSEE, HAS BEEN FILED A ND IF SO, COPY OF THE COMPLAINT, IF ANY REGISTERED WITH THE DEPARTMENT OF POLICE SHOULD BE FILED. IT WAS ALSO FURTHER REQUESTED TO SEARCH OUT THE BOOKS OF A CCOUNT AND PRODUCE THE SAME FOR VERIFICATION AND IN THE ABSENCE OF THE SAME, TH E INCOME SHALL BE ASSESSED ON THE BASIS OF THE ACCOUNTS AND RECORDS AVAILABLE WIT H THE ASSESSING OFFICER. VIDE LETTER DATED 25 TH AUGUST 2010, THE ASSESSEE SUBMITTED A REPLY WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED HEREINBELOW: THE INCOME FROM BUSINESS HAS BEEN ESTIMATED BY ME IN THE RETURN OF INCOME FILED BECAUSE THERE WAS NO MEANINGFUL BOOKS OF ACCOUNTS FROM WHICH THE EXACT INCOME COULD BE ARRIVED AT. EVEN THESE ACC OUNTS WERE MISPLACED, AS ALREADY POINTED OUT TO YOU. IT IS NOT MY CASE TH AT THE CHARTERED ACCOUNTANT CERTIFIED THE ACCOUNTS WITHOUT ANY BOOKS OF ACCOUNT S. ALL THAT I WAS TRYING TO IMPRESS UPON THE DEPARTMENT WAS THAT THERE WAS NO M EANINGFUL BOOKS OF A ACCOUNTS FROM WHICH THE CORRECT INCOME COULD BE ARR IVED AT WHICH FORCED ME TO ESTIMATE THE INCOME. FURTHER I ALSO UNDERSTAND T HAT ON AN ENQUIRY BY THE DEPARTMENT, THE CHARTERED ACCOUNTANT HAD ALSO CONFI RMED THAT THE AUDIT WAS DONE BY HIM ON THE BOOKS OF ACCOUNTS PRODUCED BEFOR E YOU. I WISH TO BRING TO YOUR KIND ATTENTION THAT I DO NOT HAVE A REGULAR ACCOUNTANT, WHO IS FULL TIME IN-CHARGE OF MY AFFAIRS . LIKE ANY OTHER SMALL AND MEDIUM ENTREPRENEUR, I.T.A. NO.388/COCH/2014 5 I HAD TO DEPEND ON A PART TIME ACCOUNTANT WHO HAVE THE HABIT OF MAINTAINING BOOKS WITH THEM BY COLLECTING THE DETAILS FROM THE BUSINESS PREMISES. THE ACCOUNTANT WAS NOT KEEPING THE ACCOUNTS WELL AND UL TIMATELY DIED RECENTLY. I WAS TRYING MY BEST TO RECOVER MY BOOKS AND OTHER DE TAILS FROM HIM. THERE WOULD HAVE BEEN NO USEFUL PURPOSE SERVED BY FILING ANY COMPLAINT AGAINST THE ACCOUNTANT. EVEN OTHERWISE, HE IS DEAD NOW. THEREFOR E, THERE IS NO COMPLAINT PREFERRED BY ME AGAINST THE ACCOUNTANT BEFORE THE P OLICE. DESPITE MY BEST EFFORTS, I AM UNABLE TO FIND THE BOOKS OF ACCOUNTS EITHER AT THE ACCOUNTANTS PREMISES OR IN MY PREMISES. WHILE I HAVE NO OBJECTION IN YOUR ASSESSING MY INCOME ON THE BASIS OF ACCOUNTS A VAILABLE WITH YOU, IT IS MY HUMBLE PRAYER THAT ONLY THE REAL INCOME SHOULD B E ASSESSED AND ALL BENEFITS THAT ARE TO BE GRANTED TO AN ASSESSEE MAY BE GRANTED TO ME ALSO. I ALSO WISH TO POINT OUT THAT THE PROFIT AS PER THE A CCOUNTS FILED WITH THE BANK IS ONLY RS.2.06 LAKHS, WHEREAS I HAVE ESTIMATED MY INC OME AT RS.4 LAKHS. 5. ON ENQUIRY FROM THE CHARTERED ACCOUNTANT, A LE TTER WAS ISSUED BY THE CHARTERED ACCOUNTANT DATED 06/08/2010, THE CONTENT S OF WHICH ARE REPRODUCED HEREINBELOW: 6. THE CHARTERED ACCOUNTANT WHO HAVE CERTIFIED THE AUDIT REPORT OF THE ACCOUNTS OF THE ASSESSEE BY LETTER DATED 6-08-2010 HAS CERTIFIED THAT I HAVE EXAMINED THE BOOKS OF ACCOUNTS, BALANCE SHEET & PRO FIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31-03-2006, 31-03-2007 AND 31-03-200 8 OF THE ABOVE NAMED SRI P.S. SUDARSANAN WHICH WAS PRODUCED BEFORE ME AN D AFTER VERIFICATION OF THE ACCOUNTS I HAVE GIVEN MY AUDIT REPORT. 6. THE ASSESSING OFFICER FURTHER OBSERVED THAT TH E ASSESSEE HAS KEPT BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEARS 2005-06 TO 2007-0 8 BUT THE ASSESSEE WAS IN PRACTICE OF FILING ONLY THE PROFIT AND LOSS ACCOUNT WITH THE RETURN OF INCOME AS EVIDENT FROM THE BANK RECORD OF THE ASSESSEE. THE A SSESSEE FILED THE PROFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2004-05 AND FO R THE ASSESSMENT YEAR 2008- 09 WITH THE RETURN OF INCOME. DURING THE IMPUGNED YEAR, THE ASSESSEE HAS ESTIMATED THE INCOME AT RS.4 LAKHS IN THE COMPUTATI ON OF INCOME. THE ASSESSEE I.T.A. NO.388/COCH/2014 6 WAS AWARE THAT IF THE BOOKS OF ACCOUNT WERE PRODUCE D BEFORE THE TAX AUTHORITIES, ESCAPEMENT OF INCOME WILL BE DETECTED AND ACCORDING LY, THE ASSESSEE AVOIDED FURNISHING THE BOOKS OF ACCOUNT. THEREFORE, THE ASS ESSING OFFICER PROCEEDED TO ASSESS THE INCOME ON THE BASIS OF AUDITED ACCOUNTS FURNISHED BEFORE THE BANK AUTHORITIES AS THE ASSESSEE HAS CONSENTED FOR THE P ROPOSAL VIDE LETTER DATED NIL FURNISHED BY THE ASSESSEE ON 25 TH AUGUST 2010. 7. A SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE DISALLOWING CERTAIN EXPENSES U/S. 40(A)(IA) OF THE ACT AS THE TAX AT SOURCE HAS NOT BEEN DEDUCTED AS UNDER: 1. FREIGHT AND COOLLY RS.23,44,9 80/- 2. CARRIAGE INWARDS RS. 6,22,1 87/- 3. CARRIAGE OUTWARDS RS. 2,51,51 0/- 4. COMMISSION AND BROKERAGE RS. 8,86,790/- TOTAL RS.4 1,05,467/- THE ASSESSEE WAS ASKED TO SUBMIT THE NAMES AND ADDR ESSES OF THE PERSONS AND EXACT DETAILS TO WHOM THE ABOVE SAID PAYMENTS HAVE BEEN MADE ALONG WITH THE OTHER DETAILS. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE FURNISHED A REPLY ON 25 TH AUGUST 2010 WHICH FOR THE SAKE OF CONVENIENCE IS R EPRODUCED HEREINBELOW: 5.1.) TO THE BEST OF MY KNOWLEDGE, THERE ARE NO PA YMENTS COVERED U/S. 194C, IN A SINGLE SUM EXCEEDING RS.20000/- OR IN AN AGGREGATE EXCEEDING RS.50,000/- WHICH IS THE LIMIT PRESCRIBED FOR THAT YEAR, THE EXPENDITURE ON FREIGHT, CARRIAGE INWARDS AND CARRIAGE OUTWARDS ARE ALL WITHIN THE LIMITS AND GIVEN TO SEVERAL PERSONS BELOW THE MONETARY LIMITS PRESCRIBED, SO MUCH SO, THE PROVISIONS OF SEC. 194C IS NOT ATTRACTED. THERE FORE NO TAX HAS BEEN DEDUCTED FROM THESE PAYMENTS. I.T.A. NO.388/COCH/2014 7 5.2) SIMILAR IS THE CASE WITH REGARD TO COMMISSION OR BROKERAGE PAYMENTS FALLING U/S. 194H, THE TOTAL PAYMENTS REPRESENT THE AGGREGATE AMOUNT OF SEVERAL SMALL PAYMENTS MADE TO VARIOUS PERSONS, TO WHICH THE PROVISIONS OF SECTION 194H DOES NOT APPLY. IN THE ABSENCE OF EXAC T DETAILS, I AM UNABLE TO PRODUCE THE NAME AND ADDRESSES OF THE PERSONS AND O THER DETAILS CALLED FOR BY YOU. 6) YOU HAVE PROPOSED TO DISALLOW THE PAYMENTS UNDER THE HEAD FREIGHT AND COOLLY OF RS.23,44,980/-, CARRIAGE INWARDS RS.6,22, 187/-, CARRIAGE OUTWARDS RS.251,510/-, AND COMMISSION & BROKERAGE RS.8,86,79 0-/- ON THE GROUND THAT TAX HAS NOT BEEN DEDUCTED AT SOURCE. IT IS MY CASE THAT NONE OF THESE PAYMENTS EXCEEDING THE MONETARY LIMITS PRESCRIBED U NDER THE RESPECTIVE SECTIONS. IN ORDER TO FALL WITHIN THE CLUTCHES OF S EC. 40A(IA) OF THE IT ACT, FIRST OF ALL THE DEPARTMENT HAS TO PROVE THAT I HAVE VIOL ATED THE VARIOUS SECTIONS OF REQUIRING TO DEDUCT TAX AT SOURCE. NO DOUBT TRUE, T HIS ASPECT IS UNVERIFIABLE AT THIS POINT OF TIME. SUCH BEING THE CASE, IT IS TOTA LLY UNFAIR ON THE PART OF THE DEPARTMENT TO CONCLUDE THAT I HAVE VIOLATED THE PRO VISIONS OF SEC. 194 AND THEREFORE THE EXPENDITURE HAS TO DISALLOWED. FURTHE R, IT MUST BE APPRECIATED THAT THE RETURN OF INCOME HAS NOT BEEN FILED ON THE BASIS OF THE ACCOUNTS RELIED ON BY YOU. IN FACT, THE INCOME HAS BEEN ESTI MATED IN THE ABSENCE OF BOOKS OF ACCOUNTS. THAT BEING THE CASE, IT IS MY HU MBLE SUBMISSION THAT THE PROVISIONS OF SEC. 40A(IA) WOULD NOT APPLY TO THE F ACTS OF THIS CASE, IN AS MUCH AS, IN A CASE WHERE THE BOOKS OF ACCOUNTS ARE NOT M AINTAINED, IT BECOMES IMPOSSIBLE, BOTH FOR THE ASSESSEE AS WELL AS THE DE PARTMENT TO COME TO THE CONCLUSION THAT THE RELEVANT PROVISIONS HAVE BEEN R EALLY VIOLATED THEREFORE YOUR PROPOSAL TO INVOKE THE PROVISIONS OF SECTION 4 0A(IA) IS LEGALLY INCORRECT AND MAY BE DROPPED. 8. THE ASSESSEES REPLY WAS REJECTED BY THE ASSE SSING OFFICER FOR THE REASON THAT THE ASSESSEE IS INTENTIONALLY AVOIDING FILING OF BOOKS OF ACCOUNTS SINCE HE IS AWARE THAT HE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 194C/194H OF THE ACT. IN THE REPLY GIVEN TO THE ACCOUNTANT, THE ASSE SSEE HAS STATED THAT IT IS NOT THE CASE THAT ANY PAYMENT IS EXCEEDING THE MONETARY LIMIT PRESCRIBED UNDER THE RESPECTIVE SECTIONS AND IT IS FOR THE DEPARTMENT TO PROVE THAT THE ASSESSEE HAS VIOLATED VARIOUS SECTIONS REGARDING TAX DEDUCTION A T SOURCE. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE WITH REGARD TO THE EXPENS ES INCURRED AS STATED ABOVE I.T.A. NO.388/COCH/2014 8 AND THEREFORE, ON THE BASIS OF THE AUDITED ACCOUNTS , THE ASSESSEE HAS FAILED TO PROVE THAT THE EXPENSES ARE OUT OF THE PURVIEW OF S ECTION 194 OF THE ACT. THEREFORE, THE SAME HAS BEEN TREATED TO HAVE BEEN V IOLATED AND ACCORDINGLY, LIABLE FOR DISALLOWANCE OF RS.41,05,467/- U/S. 40( A)(IA) OF THE ACT . ACCORDINGLY, THE ASSESSING OFFICER MADE THE DISALLOWANCE. 9. AS REGARDS THE ADDITION OF RS.3,26,380/-, TH E OBSERVATION VIDE PARA 13 OF THE ASSESSING OFFICERS ORDER IS REPRODUCED HEREINB ELOW FOR THE SAKE OF CONVENIENCE: (4) 13. THE NET PROFIT AS PER P&L A/C FOR THE YEAR ENDING 31-03-2007 IS ONLY RS.206750/-. RS.3500/- HAS BEEN DEBITED TO THE P&L A/C AS DONATION. ASSESSEE HAS ESTIMATED HIS INCOME FROM BUSINESS AT RS.400,000/- AND RETURNED IT. ESTIMATED INCOME FROM BUSINESS BEING H IGHER IT IS ADOPTED AS THE INCOME FROM BUSINESS. 14. THE DRAWINGS FROM THE CAPITAL ACCOUNT DURING T HE ACCOUNTING YEAR IS RS.106750/-. ASSESSEE HAS PAID LIC PREMIUM RS.44236 /-, AND HOUSING LOAN REPAYMENT OF PRINCIPLE AMOUNT OF RS.184288/-. HOUSI NG LOAN INTEREST PAYMENT IS RS.97,856/- DURING THE ACCOUNTING YEAR. TOTAL PAYMENTS ON THESE ITEMS DURING THE YEAR IS RS.326380/-. ASSESSEES DR AWINGS FROM THE CAPITAL IS NOT SUFFICIENT TO CONTRIBUTE TO THESE PAYMENTS. AS SESSEE HAS NOT RETURNED ANY OTHER INCOME. BY NOTICE U/S. 142(1) DATED 25/11 /2010 ASSESSEE WAS REQUIRED TO FURNISH DETAILS OF PERSONAL EXPENSES, CHILDRENS EDUCATION, AMOUNT PAID TO LIC PREMIUM HOUSING LOAN REPAYMENT, VEHICLE EXPENSE AND OTHER EXPENSES INCURRED BY THE ASSESSEE DURING THE RELEVANT PERIOD FOR THE AY 2007-08. THE ASSESSEE HAS NOT FURNISHED THE DETAIL S. THE PERSONAL EXPENSES BY WAY OF LIC PREMIUM, HOUSING LOAN REPAYMENT OF PR INCIPAL AMOUNT AND HOUSING LOAN INTEREST PAYMENT, ARE TREATED AS EXPEN SES MADE BY THE ASSESSEE FROM UNDISCLOSED SOURCES. THEREFORE RS.326 380/- IS ADDED TO THE RETUNED INCOME U/S. 69C UNDER THE HEAD OTHER SOURCE S. I.T.A. NO.388/COCH/2014 9 10. THE LD. CIT(A) DELETED THE DISALLOWANCES MADE BY THE ASSESSING OFFICER AND THE RELEVANT FINDINGS ARE REPRODUCED HEREINBELO W FOR THE SAKE OF CONVENIENCE: 2.3 IT IS SEEN FROM THE SUBMISSIONS FILED BY THE A SSESSEE THAT FOR THE ASST. YEAR 200-4-05, THE ASSESSING OFFICER IN HIS ORDER U/S. 143(3) READ WITH SECTION 147 DATED 27.12.2007 HAS MENTIONED THAT NO OTHER DETAILS ARE AVAILABLE WITH THE ASSESSEE AT PRESENT SINCE SHRI R AJAN WHO WAS THE ACCOUNTANT CUM TAX CONSULTANT OF THE ASSESSEE ABSCO NDED WITH THE BOOKS AND DESPITE THE EFFORTS OF THE ASSESSEE HE HAS NOT BEEN ABLE TO TRACE OUT THE BOOKS SINCE BOOKS OF ACCOUNTS WERE NOT MADE AVAILA BLE., THE NET PROFIT WAS ESTIMATED BY THE ASSESSING OFFICER @ 2.5% OF THE TU RNOVER SHOWN IN THE CC ACCOUNT, MAINTAINED WITH THE STATE BANK OF INDIA, A LAPPUZHA. THE ASSESSEE HAS MENTIONED THAT BOOKS OF ACCOUNTS WERE NOT AVAIL ABLE WITH THEM BUT, THE ASSESSING OFFICER DID RAISE THE QUESTION AS, IF THE BOOKS OF ACCOUNTS WERE NOT AVAILABLE HOW THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT WERE PREPARED AND SUBMITTED TO THE BANK FOR WHICH THE AUDITOR WHO CERTIFIED THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FILED WITH THE BA NK HAD CONFIRMED THAT THE RETURN WAS PREPARED AFTER VERIFYING THE BOOKS OF AC COUNT. 2.4 FOR THE ASST. YEAR 2005-06 IT HAS BEEN MENTION ED BY MY LEARNED PREDECESSOR IN APPEAL ORDER VIDE I.T.A. NO. 31/ALPA /CIT(A)-IV/09-10 DATED 4-6-2013 THAT: THE AR OF THE APPELLANT RELIED ON THE FOLLOWING JU DICIAL DECISIONS: (I) IN MOHAMMED ZUBER QUERESHI VS. CIT-II AND ANOTH ER I.T.A. NO. 61 OF 2007, THE HON HIGH COURT O ALLAHABAD HAS HELD THAT WHERE THE INFORMATION WAS OBTAINED FROM BANK U/S. 133(6) AND NO COGENT RE ASON HAS BEEN ASSIGNED BY THE ASSESSING OFFICE, ADDITION CANNOT BE MADE IN ASSESSMENT. (II) THE GUJARAT HIGH COURT IN CIT RAJKOT-I.T.A. NO . 83 OF 2007 VS. VEERDIP ROLLERS (P) LTD. HAS CONCLUDE THAT ADDITION CANNOT BE MADE ON THE MERE FACT THAT ENHANCED STOCK FIGURE WAS GIVEN TO THE BANK, U NLESS THERE IS A CONCRETE FINDING THAT ENHANCED STOCK REPRESENTED THE ACTUAL AND THERE WAS CONCEALED INCOME. THIS VIEW WAS SUPPORTED IN CIT VS. KHAN SIR OHI STEEL ROLLING MILLS (200 CTR 595). (III) IN ASHOK KUMAR VS. ITO (201 CTR (J&K) 178 IT WAS HELD THAT ADDITION COULD NOT BE MADE ON THE BASIS OF DIFFERENCE BETWEE N CLOSING STOCK DECLARED IN THE TRADING ACCOUNT AND THAT SHOWN TO BANK AS TH E INFLATED VALUE WAS TO AVAIL MORE CREDIT. I.T.A. NO.388/COCH/2014 10 (IV) IN CIT VS. N. SWAMY, 241 ITR 363 (MAD), THE MA DRAS HIGH COURT HELD THAT THE ASSESSEES INCOME IS TO BE ASSESSED BY THE ITO ON THE BASIS OF THE MATERIAL WHICH IS REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT AND ORDINARILY NOT ON THE BASIS OF THE STATEMENT OF THE ASSESSEE GIVEN TO THIRD PARTY EVEN IT BE A BANK. FROM THE COPIES OF BALANCE SHEETS FILED WITH THE BA NKS, IT IS SEEN THAT THERE IS MARGINAL INCREASE IN CAPITAL ONLY AGAINST WHICH CUR RENT YEARS PROFIT IS SEEN CREDITED. THE BALANCE IN CAPITAL ACCOUNT AS ON 31-0 3-2004 IS RS.29,17,488/- AND A CAPITAL RESERVE IN VALUE OF LAND & BUILDING O F RS.25,00,000/-. THE BALANCE IN CAPITAL ACCOUNT AS ON 31-03-2005 IS RS.3 0,14,972/- WITH A CAPITAL RESERVE IN VALUE OF LAND AND BUILDING OF RS.25,00,0 00/-. IN VIEW OF THE ABOVE FACTS ON RECORD THAT THERE IS NO INCREASE IN CAPITA L AND ALSO RESPECTFULLY FOLLOWING THE JUDICIAL DECISIONS IN THE CASE OF CIT VS. N. SWAMY, MADRAS HIGH COURT 241 ITR 363 (MAD.) & ASHOK KUMAR VS. ITO 201 CTR 178 (J&K) AND OTHER DECISIONS CITED ABOVE, I AM OF THE CONSIDERED OPINION THAT THE ADDITION OF RS.52,49,278/- MADE BY THE AO ON THE BASIS OF ST ATEMENTS SUBMITTED TO THE BANK DESERVES TO BE DELETED. 2.5 THE LEARNED CIT(A) HAS DELETED THE ADDITION OF RS.52,49,278/- WHICH WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF STATE MENTS SUBMITTED TO THE BANK. HAVING A CONSISTENT VIEW WITH THOSE HELD BY T HE ASSESSING OFFICER AND BY MY LEARNED PREDECESSOR, IT IS DIFFICULT TO SUSTA IN THE ASSESSING OFFICERS VIEW THAT THE PROFIT AND LOSS ACCOUNT WHICH WAS SUB MITTED TO THE BANK, COULD AT ALL BE RELIED UPON. FURTHER, ONCE THE INCOME HAS BEEN ESTIMATED AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER THE N THE PROVISION OF SECTION 40A(IA) WOULD NOT BE APPLICABLE. THE ASSES SING OFFICER VIDE PARA 13 OF HIS ORDER HAS OBSERVED THAT: THE NET PROFIT AS PER P&L A/C FOR THE YEAR ENDING 31-03-2007 IS ONLY RS.2,06,750/-, RS.3500/- HAS BEEN DEBITED TO THE P& L A/C AS DONATION. ASSESSEE HAS ESTIMATED HIS INCOME FROM BUSINESS AT RS.4,00,000/- AND RETURNED IT. ESTIMATED INCOME FROM BUSINESS BEING HI GHER IT IS ADOPTED AS THE INCOME FROM BUSINESS. IT IS NOW APPARENT THAT OUT OF THE TWO NET PROFITS, ONE SHOWN AS PER PROFIT AND LOSS ACCOUNT AT RS.2,06,750/- AND ANOTHER ESTIM ATED AT RS.4,00,000/-, THE ASSESSING OFFICER HAS ACCEPTED THE HIGHER INCOM E OF RS.4,00,000/-. IT MEANS THAT THE ASSESSING OFFICER HAS ALSO ACCEPTED THE ESTIMATED INCOME RETURNED BY THE ASSESSEE AND ONCE THE ESTIMATED INC OME HAS BEEN ACCEPTED, THERE COULD HAVE BEEN NO FURTHER DISALLOWANCE U/S. 40A(IA) OF THE ACT. OTHERWISE ALSO THE ASSESSING OFFICER HAS NOT FURNIS HED ANY BREAK UP OF THE AMOUNT OF PAYMENTS FOR COMMISSION AND BROKERAGE, WH ICH COULD HAVE I.T.A. NO.388/COCH/2014 11 ATTRACTED THE PROVISION U/S. 194H. SINCE THE PROVIS ION OF 194H IS APPLICABLE TO EACH PAYMENT FOR WANT OF THE PAYMENT DETAIL WHETHER THE SAME COULD BE APPLICABLE OR NOT CANNOT BE DECIDED. THE PROVISIONS OF SECTION 40(A)(IA) COVERS ONLY THOSE PAYMENTS ON WHICH TAX IS DEDUCTIB LE AT SOURCE UNDER CHAPTER XVII B AND SUCH TAX HAS NOT BEEN DEDUCTED O R AFTER DEDUCTION HAS NOT BEEN PAID. IF THE VERY APPLICABILITY OF SECTION 194H HAS NOT BEEN ESTABLISHED THE DISALLOWANCE U/S. 40A(IA) IS NOT SU STAINABLE. IN VIEW OF DISCUSSION MADE IN THE FORGOING PARAS ADDITION OF R S.41,05,467/- AS DISALLOWANCE U/S. 40A(IA) IS DELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED 3.3. AS EXPLAINED BY THE ASSESSEE THAT THE SUM OF RS.4,00,000/- HAS BEEN ESTIMATED AS BUSINESS INCOME, ANY PAYMENT MADE WITH IN THIS LIMIT SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AS TO H AVE BEEN SPENT OUT FROM EXPLAINED SOURCES. IT IS FOUND THAT SINCE THE APPELLANT HAD THE AVAILABILITY OF INCOME, THE EXPENDITURE OF RS.3,26, 380/- INCURRED ON ACCOUNT OF LIC PREMIUM, HOUSING LOAN REPAYMENT ETC. THERE D OES NOT ARISE ANY QUESTION THAT SUCH EXPENSES HAVE BEEN MET OUT OF UN DISCLOSED SOURCES. IN VIEW OF THIS, THE ADDITION MADE BY THE ASSESSING OF FICER IS NOT SUSTAINABLE AND HENCE DELETED. 11. THE LD. DR, AT THE OUTSET, RELIED UPON THE OR DER OF THE ASSESSING OFFICER AND PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A). THE LD. DR ARGUED THAT THE ASSESSEE IS HABITUAL OF NOT PRODUCING THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER SINCE 2004-05 TILL THE IMPUGNED YEAR TO AVO ID ANY DETECTION OF CONCEALMENT OF INCOME. DURING THE ASSESSMENT YEAR 2 004-05 TILL ASSESSMENT YEAR 2006-07, SIMILAR PLEA WAS TAKEN FOR ASSESSMENT PARTICULARLY IN THE ASSESSMENT U/S. 143(3) FOR THE ASSESSMENT YEAR 2004-05 THAT THE ACCOUNTANT OF THE ASSESSEE ABSCONDED WITH THE BOOKS OF ACCOUNT AN D DESPITE EFFORTS OF THE ASSESSEE, HE WAS NOT ABLE TO TRACE OUT THE BOOKS OF ACCOUNT. DURING THE IMPUGNED YEAR, AS IS EVIDENT FROM PARA 3 OF ASSESSI NG OFFICERS ORDER, THE ASSESSEE HAS STATED THAT HE HAS MISPLACED HIS BOOKS OF ACCOUNT WHEREAS IN PARA I.T.A. NO.388/COCH/2014 12 5, THE ASSESSEE STATES THAT NO MEANINGFUL BOOKS OF ACCOUNT HAS BEEN MAINTAINED FROM WHICH CORRECT INCOME COULD BE ARRIVED WHICH FO RCED THE ASSESSEE TO ESTIMATE THE INCOME. IF IT IS SO, HOW THE BOOKS OF ACCOUNT HAD BEEN AUDITED AND AUDITED ACCOUNTS IN THE FORM OF BALANCE SHEET, PROF IT AND LOSS ACCOUNT ALONGWITH AUDIT REPORT HAVE BEEN FILED WITH THE BANK AUTHORIT IES WHICH WERE AVAILABLE WITH THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO STATED THAT HE HAS NO OBJECTION FOR ASSESSING HIS INCOME ON THE BASIS OF THE ACCOUNTS A VAILABLE WITH THE ASSESSING OFFICER AND ONLY REAL INCOME IS TO BE ASSESSED AND ALL THE BENEFITS WHICH ARE AVAILABLE TO AN ASSESSEE SHOULD BE GRANTED TO HIM. HE HAS ALSO STATED THAT AS PER THE PROFIT AND LOSS ACCOUNT FILED WITH THE BANK, PR OFIT IS RS. 2.06 LAKHS WHEREAS THE ASSESSEE HAD ESTIMATED HIS INCOME AT RS.4 LAKHS . AS REGARDS THE BOOKS OF ACCOUNT WHICH HAS BEEN STATED TO BE NOT MEANINGFUL BY THE ASSESSEE, IS A TOTALLY WRONG STATEMENT BY THE ASSESSEE FOR THE REASONS THA T AN ENQUIRY WAS MADE FROM THE CHARTERED ACCOUNTANT/AUDITOR WHO HAS CERTIFIED THE ACCOUNTS AND THE AUDIT REPORT THAT HE HAS EXAMINED THE BOOKS OF ACCOUNT, B ALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31-03-2006 TO 31-0 3-2008 WHICH WERE PRODUCED BEFORE HIM FOR VERIFICATION AND ACCORDINGLY, HE HAS GIVEN THE AUDIT REPORT. FURTHER, THE LD. DR ARGUED THAT SIMPLY STATING THAT NO TRANSACTION ATTRACTS PROVISIONS OF SECTION 194, DOES NOT ABSOLVE THE ASS ESSEE OF THE PROVISIONS OF SECTION 194C/194H OF THE ACT. THE ASSESSEE WILLINGL Y AND KNOWINGLY DID NOT SUBMIT ANY DETAILS WHEREAS HOW COULD HE KNOW THAT T HE EXPENSES INCURRED DO NOT COME UNDER THE PURVIEW OF SECTION 194 OF THE AC T. ALSO HOW COULD HE KNOW I.T.A. NO.388/COCH/2014 13 THAT IN A SINGLE SUM EXCEEDING RS.20,000/- OR IN AN AGGREGATE EXCEEDING RS.50,000/-, NO PAYMENT HAS BEEN MADE. THIS CLEARLY SHOWS THE INTENTION OF THE ASSESSEE THAT HE IS MAINTAINING BOOKS OF ACCOUNT B UT DOES NOT WANT TO PRODUCE THE BOOKS OF ACCOUNT TO AVOID THE DETECTION OF THE ESCAPEMENT OF INCOME. AS REGARDS THE ACCEPTANCE OF THE ESTIMATION OF INCOME BY THE ASSESSING OFFICER, AS STATED IN THE ORDER OF THE LD. CIT(A) IN PARA 2.5, IT WAS ARGUED BY THE LD. DR THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE EST IMATED INCOME, THAT IS WHY ADDITIONS AT RS.41,05,467 AND RS.3,26,380/- HAD BEE N MADE. ACCORDINGLY, THE LD. DR PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A ) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 12. AS REGARDS DISALLOWANCE MADE U/S. 69C AT RS. 3,26,380/- DELETED BY THE LD. CIT(A), THE LD. DR ARGUED THAT R.3,26,380/-HAS BEEN SPENT ON LIC PREMIUM, HOUSING LOAN REPAYMENT ETC. AND IN THE ABSENCE OF A NY DETAILS SUBMITTED FOR PERSONAL EXPENSES, THE LD. CIT(A) CANNOT DELETE THE ADDITION AND ACCORDINGLY PRAYED TO REVERSE THE ORDER OF THE LD. CIT(A) AND R ESTORE THE ORDER OF THE ASSESSING OFFICER. 13. THE LD. AR ON THE OTHER HAND RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A) AND ALSO RELIED UPON THE ORDER OF THE ITAT, COCHIN BENCH IN THE CASE OF THE ASSESSEE IN I .T.A. NO. 579/COCH/2013 DATED 19-09-2014.FOR THE ASSESSMENT YEAR 2005-06. I.T.A. NO.388/COCH/2014 14 14. THE LD. DR, IN THE REJOINDER, ARGUED THAT THE DECISION OF THE ITAT, COCHIN BENCH FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE O F THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE. IN THAT CASE , THE ASSESSING OFFICER COMPARED THE FIGURES DISCLOSED TO THE DEPARTMENT FOR THE ASSESSM ENT YEAR 2005-06 TO THE FIGURES DISCLOSED TO THE DEPARTMENT FOR THE ASSESSM ENT YEAR 2004-05 AND MADE THE ADDITION FINDING THAT THE TRANSACTION OF THE AS SESSEE WITH OTHER PARTIES CANNOT BE REASON FOR MAKING THE ADDITION. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF TE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT THE A SSESSEE HAS SUBMITTED THE AUDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND STOCK STATEMENTS ALONG WITH THE AUDIT REPORT IN FORM NO. 3CB AND 3CD FOR THE YE ARS ENDING , 31-03-2006, 31- 03-2007 AND 31-01-2008 WITH THE STATE BANK OF INDIA , ALAPPUZHA BRANCH. ON ENQUIRY BY THE DEPARTMENT, IT HAS BEEN CERTIFIED BY THE AUDITOR/CHARTERED ACCOUNTANT THAT HE HAS EXAMINED THE BOOKS OF ACCOUN T, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31-03-2006 TO 31-03-2008 WHICH WERE PRODUCED BEFORE HIM AND AFTER VERIFICATION OF THE A CCOUNTS, HE HAS GIVEN HIS AUDIT REPORT. THE ASSESSEE HAS ALSO ADMITTED TO A SSESS THE INCOME ON THE BASIS OF THE ACCOUNTS AVAILABLE WITH THE ASSESSING OFFICE R IS ALSO UNDISPUTED. THEREFORE, THE STATEMENT WAS GIVEN BY THE ASSESSEE INITIALLY THAT HIS BOOKS OF ACCOUNT HAS BEEN MISPLACED VIDE PARA 3 OF THE ASSES SMENT ORDER WHEREAS IN PARA 5 OF THE ASSESSMENT ORDER, HE HAS STATED THAT NO MEANINGFUL BOOKS OF I.T.A. NO.388/COCH/2014 15 ACCOUNT HAS BEEN MAINTAINED FROM WHICH BALANCE SHEE T AND PROFIT AND LOSS ACCOUNT HAVE BEEN DRAWN. ON THE OTHER HAND, THE AUD ITOR HAS CLEARLY CERTIFIED THAT HE HAS VERIFIED THE BOOKS OF ACCOUNT AND NO QU ALIFICATION THEREOF HAS BEEN MADE BY THE AUDITOR IN THE AUDIT REPORT OR ACCOUNTS . IN THIS REGARD, NOTHING HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. AR. 16. AS REGARDS THE STATEMENT OF THE ASSESSEE THAT NONE OF THE PAYMENTS AS STATED HEREINABOVE EXCEED RS.20,000 OR IN AN AGGREG ATE RS.50,000/-, AT THE MOST CAN BE A BALD STATEMENT WITHOUT ANY DOCUMENTAR Y EVIDENCE PLACED ON RECORD. THIS CLEARLY SHOWS THE INTENTION OF THE ASS ESSEE THAT HE IS MAINTAINING BOOKS OF ACCOUNT, MAY BE HE IS NOT WILLING TO PRODU CE THE SAME TO THE TAX AUTHORITIES AS HAS BEEN DONE IN ASSESSMENT YEAR 200 4-05 TILL THE IMPUGNED YEAR. IT IS ALSO UNDISPUTED THAT HE HAD BEEN DECLARING ES TIMATED INCOME SINCE 2004-05 TILL 2008-09. AS RIGHTLY POINTED OUT BY THE LD. DR IN PARA 14 HEREINABOVE THAT THE DECISION OF ITAT FOR ASST. YEAR 2004-05, IS DISTING UISHABLE FROM THE FACTS IN THIS YEAR THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CA SE, REASONABLE PRESUMPTION CAN BE MADE THAT THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNT O N THE BASIS OF WHICH THE BOOKS OF ACCOUNT HAVE BEEN EXAMINED AND AUDITED BY THE CHART ERED ACCOUNTANT/AUDITOR WHO ON ENQUIRY HAS CONFIRMED AND CERTIFIED THE SAME. THERE FORE, IN THE ABSENCE OF ANY DETAILS, A REASONABLE PRESUMPTION HAS TO BE MADE THAT THE ASSE SSEE HAS VIOLATED THE PROVISIONS OF SECTION 194C/194H OF THE ACT AND HAS NOT DEDUCTED T AX AT SOURCE AND THE PAYMENTS ARE COVERED FOR DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. I.T.A. NO.388/COCH/2014 16 17. AS REGARDS ACCEPTANCE OF THE ESTIMATION OF I NCOME, AS STATED BY THE LD. CIT(A), THE ASSESSING OFFICER HAS NOT ACCEPTED THE ESTIMATED INCOME BUT HAS COMPUTED THE INCOME AT RS.46,82,920/-, I.E. HE HAS ADDED RS.41,05,467/- ON ACCOUNT OF DISALLOWANCE MADE U/S. 40A(IA) AND RS.3, 26,380/- U/S. 69C TO THE SAID ESTIMATED INCOME DECLARED BY THE ASSESSEE. THE INC OME ACCEPTED BY THE ASSESSING OFFICER IS RS.46,82,920/- AND NOT RS.4 LA KHS. THEREFORE, THE FINDINGS OF THE LD. CIT(A) THAT ONCE THE ASSESSING OFFICER HAS ACCEPTED THE ESTIMATED INCOME, THEN THE PROVISIONS OF SECTION 40A(IA) CANN OT BE APPLICABLE, IS NOT A CORRECT FINDING. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS NOT SUSTAINABLE ON THE DELETION OF DISALLOWANCE MADE U/S. 40A(IA) OF THE A CT WHICH IS DIRECTED TO BE REVERSED AND THE ORDER OF THE ASSESSING OFFICER IS DIRECTED TO BE RESTORED. THUS THE GROUNDS OF THE REVENUE REGARDING DELETION OF DI SALLOWANCE MADE U/S. 40A(IA) ARE ALLOWED. 18. AS REGARDS DELETION OF DISALLOWANCE U/S. 69C, THE ASSESSEE HAS MADE PAYMENT OF RS.3,26,380/- AGAINST THE ESTIMATED INCO ME OF RS.4,00,000/-. HOWEVER, THE ASSESSEE HAS NOT FURNISHED DETAILS OF PERSONAL EXPENSES, CHILDRENS EDUCATION EXPENSES, VEHICLE EXPENSES AND OTHER EXPE NSES INCURRED FOR THE RELEVANT IMPUGNED YEAR AND AVAILABILITY OF CASH WIT H HIM. IN THE ABSENCE OF THE SAME, A REASONABLE PRESUMPTION HAS TO BE MADE BY TH E ASSESSING OFFICER THAT THE SAID RS.3,26,380/- HAS BEEN INCURRED OUT OF THE UNDISCLOSED SOURCES. THE FINDING OF THE CIT(A) THAT THE ASSESSEE HAS AVAILAB ILITY OF INCOME IS WITHOUT ANY I.T.A. NO.388/COCH/2014 17 BASIS AND WITHOUT ANY COGENT MATERIAL ON RECORD. AC CORDINGLY, THE ORDER OF THE LD. CIT(A) IS DIRECTED TO BE REVERSED AND THAT OF T HE ASSESSING OFFICER IS RESTORED. THUS THE GROUND RAISED BY THE REVENUE WITH RESPECT TO THE DELETION OF ADDITION MADE U/S. 69C OF THE ACT IS ALLOWED 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN I.T.A. NO. 388/COCH/2014 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 08-01-2016. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 8TH JANUARY, 2016 GJ COPY TO: 1. SHRI SUDARSANAN P.S., COIRLAND EXPORTS, ASRAMAM WARD, AVALOOKUNNU P.O., ALAPPUZHA-688 006. 2. THE INCOME TAX OFFICER, WARD-4, ALAPPUZHA. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN I.T.A. NO.388/COCH/2014 18