The ITO, Tirur V. Sri. K. Unnikrishnan, Manjeri

ITA 455/COCH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7555 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 12-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 10-09-2015
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: C B M WARRIER
• Keywords: Business income; Additional evidence

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.455/COCH/ 2015 ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER, WARD-2, TIRUR. VS. SHRI K.UNNIKRISHNAN, U K LOTTERIES, NEW BUS STAND, MANJERI, DIST: MALAPPURAM. [PAN:AAOPU8563E] (REVENUE -APPELLANT) (ASSESSEE-RESPONDENT) I.T.A. NO.416/COCH/ 2015 ASSESSMENT YEAR : 2011-12 SHRI K.UNNIKRISHNAN, U K LOTTERIES, NEW BUS STAND, MANJERI, DIST: MALAPPURAM. [PAN:AAOPU8563E] VS. INCOME TAX OFFICER, WARD-2, TIRUR. (REVENUE -APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SHRI K.P. GOPAKUMAR, SR. DR ASSESSEE BY SHRI C.B.M. WARRIER, CA DATE OF HEARING 12/01/2016 DATE OF PRONOUNCEMENT 22/01/2016 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THESE CROSS APPEALS OF THE REVENUE AND THE ASS ESSEE ARISE FROM THE ORDER OF THE LD. CIT(A), KOZHIKODE DATED 02-06-2015 FOR THE ASSESSMENT YEAR 2011-12. I.T.A. NOS.455 & 416/COCH/2015 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS AGAINST FACTS AND CIRCUMSTANCES OF THE CASE AND AGA INST LAW. 2. WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX(APPEALS) IS RIGHT IN LAW IN DELETING THE ADDITION OF RS.1,45,41,362/- MADE BY THE ASSESSING OFFICER BEING THE COMMISSION RECEIVED ON RETAIL SALES OF LOTTERY TICK ET ON THE BASIS OF BOOKS OF ACCOUNTS WHICH WERE NEVER PRODUCE BEFORE T HE ASSESSING OFFICER AND WITHOUT GIVING OPPORTUNITY TO THE ASSES SING OFFICER TO EXAMINE THEM THEREBY CONTRAVENING THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE ASSESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNT AND THE ASSESSING OFFICER HAS NOT BEEN ALLOWED SUFFICIENT OPPORTUNITY TO VERIFY THE SAME. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT( A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND O F APPEAL: 1. THE APPELLANT IS K. UNNIKRISHNAN, U.K. LOTTERIES , MANJERI, AND IN REGARD TO THE AY 2011-12, THE ASSESSING OFFICER ASS ESSED RS.30,00,000/- TEMPORARY LOAN RECEIVED AS THE INCOME OF THE APPELL ANT AND THE COMMISSIONER OF INCOME TAX(APPEALS) HAS GONE WRONG IN CONFIRMING THE SAME. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GON E WRONG IN OMITTING TO CONSIDER THE EVIDENCE BY WAY OF CONFIRM ATION OF THE AMOUNT BROUGHT IN TO THE BOOKS OF ACCOUNTS. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GON E WRONG IN OMITTING TO CONSIDER THE FACT RS.6,46,000/- IS THE AMOUNT BROUGHT IN TO THE BOOKS OF ACCOUNTS BEFORE THE ASSESSMENT YEAR. I.T.A. NOS.455 & 416/COCH/2015 3 4. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS GO NE WRONG IN NOT CONSIDERING THAT RS.13,00,000/- IS THE AMOUNT BROUG HT IN BY THE APPELLANT FROM THE SOURCES FOR WHICH EVIDENCES ARE PRODUCED. 4. FIRST OF ALL WE SHALL TAKE UP THE APPEAL OF T HE REVENUE IN I.T.A. NO. 455/COCH/2015 AS UNDER: 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A DEALER OF KERALA GOVERNMENT LOTTERIES WHO HAS DECLARED AN INCOME IN THE RETURN OF INCOME AT RS.5,17,480/- AND THE AGRICULTURAL INCOME AT R S.1,50,000/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. A PRE-ASSES SMENT ORDER ALONGWITH A PRE-ASSESSMENT NOTICE WAS SERVED ON THE ASSESSEE AND THE ASSESSEE WAS AFFORDED AN OPPORTUNITY TO FILE HIS OBJECTION. THE ASSESSEE WAS SUBSEQUENTLY ASKED TO GIVE THE BREAK-UP OF WHOLESAL E AND RETAIL SALE OF LOTTERY TICKETS, BUT THE ASSESSEE REPLIED THAT IT I S NOT POSSIBLE TO GIVE SUCH FIGURES. THE ASSESSING OFFICER, ACCORDINGLY, OBSERV ED VIDE PARA 5 OF HIS ORDER THAT THE ASSESSEE FAILED TO PRODUCE THE REQUIRED SA LES BREAK-UP INSPITE OF THE OPPORTUNITIES GIVEN TO HIM. ACCORDINGLY, THE A SSESSING OFFICER CONCLUDED THAT THE RETAIL SALE OF THE LOTTERY TICKETS IS 10% OF THE TOTAL SALES AND THE ASSESSEE HAS RECEIVED ATLEAST 25% OF THE PROFIT ON THE SAID RETAIL SALES AND ACCORDINGLY, WORKED OUT THE NET PROFIT ON THE RETAI L SALES AS UNDER: TOTAL SALES OF LOTTERY TICKETS : RS.58 ,16,54,506 10% OF TOTAL SALES : RS. 5,81,65,450 PROFIT RECEIVED @ 25% FOR : RS. 1,45,41,362 RS.5,81,65,450 I.T.A. NOS.455 & 416/COCH/2015 4 6. THE LD. CIT(A) DELETED THE ADDITION AND HIS FI NDINGS IN PARA 4.2 BEING RELEVANT, ARE REPRODUCED HEREINBELOW: 4.2 THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT BEF ORE ME. THE AUDIT REPORT U/S. 44AB AND FORM 3CD HAVE BEEN DULY SIGNED BY SHRI KMS NAMBOODIRIPAD, CA ON 23/03/2012. I HAVE GONE THROUG H THE AUDITED BOOKS OF ACCOUNT AND BREAKUP OF RETAIL SALES HAS BE EN GIVEN IN THE BOOKS OF ACCOUNT, WHICH IS GIVEN HERE UNDER: DETAILS OF RETAIL SAL ES KERALA TICKET OTHER STATE TOTAL 1. COUNTER- KAILAS BUILDING-A 733,580.00 611,070.00 1,344,650.00 2. COUNTER- VENGARA 185,600.00 171,490.00 357,090.00 3. COUNTER- MALABAR COMPLEX 1,044,600.00 870,250.00 1,914,850.00 4. COUNTER NILAMBUR 593,890.00 661,970.00 1,255,860.00 5. COUNTER MALAPPURAM 512,040.00 394,970.00 907,010.00 GRAND TOTAL 3,069,710.00 2,709,750.00 5,779,460.00 THE ASSESSING OFFICER HAS NOT BOTHERED TO GO THROUG H THE BOOKS OF ACCOUNT. NEITHER THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNT NOR HAS THE ASSESSING OFFICER GIVEN ANY GRO UND ON WHICH THE AUDITED BOOKS CAN BE REJECTED. THE ASSESSEE HAS NOT BEEN GIVEN REASONABLE OPPORTUNITY AND THE ADDITION HAS BEEN MA DE IN A CASUAL MANNER. THE ASSESSING OFFICER HAS IGNORED THE DICTU M THAT AN ESTIMATED ADDITION WHICH REWORKS THE GROSS PROFIT RATIO CAN O NLY BE DONE AFTER REJECTING THE ASSESSEES BOOKS OF ACCOUNTS. THE ADD ITION OF RS.1,45,41,362/- IS DELETED. 7. THE LD. DR ARGUED THAT THE LD. CIT(A) HAS DEC IDED THE ISSUE ON THE BASIS OF BOOKS OF ACCOUNT PRODUCED BEFORE HIM WHICH IN FACT WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER AND NO OPPORT UNITY HAS BEEN GIVEN TO I.T.A. NOS.455 & 416/COCH/2015 5 THE ASSESSING OFFICER BY THE LD. CIT(A), THUS CONTR AVENING THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. ACCORDINGL Y, HE PRAYED TO SET ASIDE THE ORDER OF THE LD. CIT(A). 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE ARGUED THAT THE LD. CIT(A) HAS CONCURRENT JURISDICTION AND THE BOOKS HA VE BEEN EXAMINED BY HIM HAVING CONCURRENT JURISDICTION AND THEREFORE, R ELYING UPON THE ORDER OF THE LD. CIT(A), HE PRAYED TO CONFIRM THE ORDER OF T HE LD. CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HOUGH BOOKS OF ACCOUNT WERE NOT REQUIRED BY THE ASSESSING OFFICER FROM THE ASSESSEE BUT THE DETAILS FROM THE BOOKS OF ACCOUNT WERE REQUIRED BY THE ASSE SSING OFFICER. AS REGARDS SUCH DETAILS WITH REGARD TO THE BREAK-UP OF WHOLESALE AND RETAIL SALES OF LOTTERY TICKETS, THE ASSESSEE HAD SHOWN HI S INABILITY TO PRODUCE SUCH DETAILS VIDE LETTER DATED 10/03/2014 WHICH IS REPRO DUCED IN PARA 4 OF THE ASSESSING OFFICERS ORDER. HOWEVER, THE ASSESSEE HA S BEEN ABLE TO PRODUCE THE AUDITED BOOKS OF ACCOUNT AND BREAK- UP OF THE R ETAIL SALES BEFORE THE LD. CIT(A) . THOUGH THE LD. CIT(A) SHOULD HAVE FOLL OWED RULE 46A OF INCOME TAX RULES, 1962 AND COULD HAVE ASKED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER AFTER ACCEPTING THE ADDITIONA L EVIDENCE BUT THE SAME I.T.A. NOS.455 & 416/COCH/2015 6 HAS NOT BEEN DONE BY THE LD. CIT(A). ACCORDINGLY, THE LD. CIT(A) HAS CONTRAVENED THE PROVISIONS OF RULE 46A OF THE INCOM E TAX RULES, 1962. 10. MOREOVER THE ASSESSEE HAD SUBMITTED THE DETAI LS OF RETAIL SALES OF LOTTERY TICKETS AND ON SUBMISSION OF THE SAME, THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE LD . CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT THE ESTIMATION CAN BE DO NE ONLY AFTER REJECTING THE BOOKS OF ACCOUNT WHEREAS THE ASSESSING OFFICER HAS GIVEN A CLEAR FINDING THAT THE REPLY RECEIVED FROM THE ASSESSEE IS NOT FO UND SATISFACTORY WHICH TANTAMOUNTS TO REJECTION OF THE REPLY AND THE BOOKS OF ACCOUNT, THOUGH IN SPECIFIC, THE ASSESSING OFFICER HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. REGARDING THE ESTIMATION OF INC OME BY THE ASSESSING OFFICER, NO BASIS OF WHATSOEVER KIND HAS BEEN GIVEN BY THE ASSESSING OFFICER AND THE LD. CIT(A) HAS NOT GIVEN HIS FINDINGS ON SU CH ESTIMATION WHICH IS 25% OF 10% OF TOTAL SALES AS RETAIL SALES COMPUTED BY THE ASSESSING OFFICER. ACCORDINGLY, IN THE INTEREST OF JUSTICE, THE MATTER IS SET ASIDE TO THE FILE OF THE LD. CIT(A) WHO WILL ASK FOR THE REMAND REPORT F ROM THE ASSESSING OFFICER AND ACCORDINGLY, GIVE REASONABLE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE WITH REGARD TO THE AUDITED BOOKS OF ACCOUNT, DETAI LS OF WHOLESALE AND RETAIL SALES AND THE ESTIMATION OF INCOME AND DECIDE THE I SSUE DE NOVO, IN VIEW OF OUR DIRECTIONS HEREINABOVE. ACCORDINGLY, ALL THE G ROUNDS OF THE REVENUE ARE I.T.A. NOS.455 & 416/COCH/2015 7 ALLOWED FOR STATISTICAL PURPOSES. THUS THE APPEAL OF THE REVENUE IN I.T.A. NO. 455/COCH/2015 IS ALLOWED FOR STATISTICAL PURPOS ES 11. WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE IN I.T.A. NO.416/COCH/2015. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS RAISED TEMPORARY LOANS FROM DIFFERENT PERSONS AS PE R DETAILS BELOW: 1. FROM KSFE 13,00,000 2. PRADEEP KUMAR, THIRUVALY 2,00,000 3. SHIBU P. VAYIPARAPADI, MANJER 1,50,000 4. SHAJI K. RAMANATTUKARA 2,00,000 5. NARAYANAN K.N VALLIKKAPATTA 1,50,000 6. SREEDHARAN NAIR, KAVANNUR 1,00,000 7. KRISHNAN AREPURATHU MANA PUNAPPALA 4,00,000 8. PADMANABAN MANJERI 1,00,000 9. PROMOD MADATHIL, PUNNAPPALA 4,00,000 TOTAL 30,00,000 THE ASSESSEE HAS NOT PRODUCED ANY ADDRESSES, DATE, MODE OF AVAILING THE LOANS OR PROPER CONFIRMATIONS FOR THE AUTHENTICITY OF SUCH LOANS. ACCORDINGLY, THE SAID AMOUNT OF RS. 30 LAKHS IS ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 12. BEFORE THE LD. CIT(A), THE ASSESSEE HAS FURNI SHED DETAILS OF TEMPORARY LOANS AMOUNTING TO RS. 13 LAKHS ALONGWITH THE CONFI RMATION LETTERS. THE LD . CIT(A), HOWEVER, DID NOT ACCEPT THE SAID CONFIRMATI ONS FOR THE REASONS THAT THESE CONFIRMATIONS WERE NOT PRODUCED BEFORE THE AS SESSING OFFICER AND THEREFORE, CONFIRMED THE ADDITIONS MADE BY THE ASSE SSING OFFICER. I.T.A. NOS.455 & 416/COCH/2015 8 13. THE LD. COUNSEL FOR THE ASSESSEE, SHRI C.B.M. WARRIER ARGUED THAT OUT OF THE SAID RS. 30 LAKHS, RS,6,46,000/- DID NOT REL ATE TO THE LOANS RECEIVED DURING THE YEAR AND THE ASSESSEE HAD ALREADY PRODUC ED CONFIRMATIONS FOR RS.13 LAKHS. IT WAS ARGUED THAT THE ASSESSEE COULD NOT PROCURE THE SAID CONFIRMATIONS DURING THE ASSESSMENT PROCEEDINGS FOR THE REASONS BEYOND HIS CONTROL, WHICH IN FACT WERE RECEIVED DURING THE FIRST APPELLATE PROCEEDINGS. THE LD. CIT(A) SHOULD HAVE ACCEPTED T HE SAME AS ADDITIONAL EVIDENCE AND SHOULD HAVE DECIDED THE ISSUE ACCORDIN GLY 14. THE LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD. CIT(A). 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT THE ASSESSEE HAD NOT PRODUCED LOAN CONFIRMATIONS BEFORE THE ASSESSIN G OFFICER. HOWEVER, THE DETAILS WERE PRODUCED WHICH ARE PART OF THE ASSESSM ENT ORDER AT PARA 4 AT PAGE 3 OF THE ORDER. IT WAS SUBMITTED THAT RS.6,46 ,000/- IS THE AMOUNT BROUGHT IN TO THE BOOKS OF ACCOUNT BEFORE THE START OF THE IMPUGNED YEAR. THE SAME CANNOT BE THE SUBJECT MATTER OF THE ADDITI ON IN THE IMPUGNED YEAR. THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) HAS NOT VERIFIED THE SAME. AS REGARDS CONFIRMATIONS PRODUCED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE LD. CIT(A), IT WAS ARGUED THAT THE SAME COULD NOT BE I.T.A. NOS.455 & 416/COCH/2015 9 PROCURED DURING THE ASSESSMENT PROCEEDINGS AND WERE ONLY PROCURED DURING THE FIRST APPELLATE PROCEEDINGS. IN THE INTEREST O F JUSTICE, THE LD. CIT(A) SHOULD HAVE ACCEPTED THE SAME AS ADDITIONAL EVIDENC E AND AFTER TAKING THE REMAND REPORT FROM THE ASSESSING OFFICER, SHOULD HA VE DECIDED THE ISSUE BUT THE SAME HAS NOT BEEN DONE BY THE LD. CIT(A). THER EFORE, IN THE INTEREST OF JUSTICE, THE ISSUE WITH REGARD TO THE RAISING OF TEMPORARY LOANS AMOUNTING TO RS.30 LAKHS IS SET ASIDE TO THE FILE OF THE LD. CIT(A) WHO WILL ACCEPT THE SAME AS ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I NCOME TAX RULES, 1962 AND DECIDE THE ISSUE AFTER TAKING THE REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSEE IS AT LIBERTY TO PRODUCE FURT HER EVIDENCES OR HIS SUBMISSIONS IN SUPPORT OF HIS CLAIM BEFORE THE LD. CIT(A). ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE SET ASIDE TO THE FI LE OF THE LD. CIT(A) TO DECIDE THE ISSUE DE NOVO IN VIEW OF OUR FINDINGS HE REINABOVE. THUS THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 416/COCH/2015 IS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT THE APPEAL OF THE REVENUE IN I .T.A.455/COCH/2015 AND THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 416/COCH/2 015 ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OP EN COURT ON 22-01-2016. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER I.T.A. NOS.455 & 416/COCH/2015 10 PLACE: KOCHI DATED: 22 ND JANUARY, 2016 GJ COPY TO: 1. SHRI K.UNNIKRISHNAN, U K LOTTERIES, NEW BUS STAN D, MANJERI, DIST: MALAPPURAM. 2. THE INCOME TAX OFFICER, WARD-2, TIRUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN