Smt Shammy Muheyiddin, Paravur V. ACIT, Ernakulam

ITA 531/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58348 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 04-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: C B M WARRIER
• Keywords: Unexplained investment; Gift; Search and seizure; Opportunity of being heard
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 530-535/COCH/2010 ASSESSMENT YEARS : 2003-04 TO 2008-09 SMT. SHAMMY MUHEYIDDIN, HALIF, JUMA MASJID ROAD, PANAYIKULAM, PARAVUR. [PAN: AEMPM 9132R] THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SMT. VIJAYAPRABHA, JR. DR DATE OF HEARING 29/02/2012 DATE OF PRONOUNCEMENT 23/03/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: ALL THESE APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE COMMON ORDER DATED 5-7-2010 PASSED BY THE LD. CIT(A)-I, KOCHI AN D THEY RELATE TO THE ASSESSMENT YEARS 2003-04 TO 2008-09. ALL THESE APPEALS WERE HEARD T OGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE DEPARTMENT CARRIED OUT A SEARCH AND SEIZURE OPERATIONS IN THE HANDS OF THE A SSESSEES HUSBAND NAMED SHRI MUHEYEDDIN ON 26-3-2008. CONSEQUENT TO THE SAID SE ARCH, THE ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS INITIATED U/S. 153C OF THE INCOME TAX ACT FOR THE ASSESSMENT YEARS 2002-03 TO 2008-09. IN THE ASSESSMENT YEARS 2003-0 4 TO 2008-09, THE AO REJECTED THE CLAIM OF AVAILABILITY OF AGRICULTURAL INCOME AND TR EATED THE SAME AS INCOME UNDER THE HEAD OTHER SOURCES. IN ASSESSMENT YEAR 2003-04 AND 2005-06, THE AO ADDED THE ITA NOS. 530-535/COCH/ 2010 2 INVESTMENT MADE IN PURCHASE OF PROPERTIES AS UNEXPL AINED INVESTMENTS. THE ASSESSEE COULD NOT SUCCEED IN HER APPEALS FILED BEFORE LD CI T(A). HENCE, THE PRESENT APPEALS WERE FILED BEFORE US. 3. THE FIRST ISSUE RELATES TO THE ASSESSMENT OF AGR ICULTURAL INCOME DECLARED BY THE ASSESSEE AS INCOME UNDER THE HEAD INCOME FROM OTHE R SOURCES. THE ASSESSEE WAS DECLARING AGRICULTURAL INCOME IN THE RETURNS OF INC OME FILED U/S. 139 OF THE ACT EVERY YEAR. PRIOR TO THE DATE OF SEARCH, THE ASSESSEE H AD FILED HER REGULAR RETURNS OF INCOME UP TO THE ASSESSMENT YEAR 2007-08. THE RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2008-09 WAS FILED SUBSEQUENT TO THE DATE OF SEARCH. THE AS SESSING OFFICER ACCEPTED THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR TH E ASSESSMENT YEAR 2002-03, BUT DID NOT ACCEPT FOR OTHER YEARS ON THE REASON THAT THE ASSES SEE HAS FAILED TO FURNISH ANY EVIDENCE WITH REGARD TO THE TURNOVER OR SALES. ACCORDINGLY, THE ASSESSING OFFICER REJECTED THE AVAILABILITY OF AGRICULTURAL INCOME AND ASSESSED TH E SAME AS INCOME FROM OTHER SOURCES. THE LD. CIT(A) CONFIRMED THIS ADDITION. 4. THE LD. AR ARE SUBMITTED THAT THE ASSESSEE IS HA VING AGRICULTURAL LAND AND WAS DECLARING AGRICULTURAL INCOME REGULARLY IN THE RETU RNS OF INCOME FILED REGULARLY U/S 139 OF THE ACT. THE AO DID NOT DISTURB THE SAID DECLARATI ON IN THE REGULAR ASSESSMENT PROCEEDINGS. DURING THE COURSE OF SEARCH PROCEEDIN G ALSO, NO MATERIAL WAS FOUND TO SUGGEST ABOUT THE NON AVAILABILITY OF AGRICULTURAL INCOME. THE ASSESSING OFFICER, IN FACT, ACCEPTED THE AVAILABILITY OF AGRICULTURAL INCOME FO R THE ASSESSMENT YEAR 2002-03. ACCORDINGLY THE LD A.R CONTENDED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN TAKING A DIFFERENT STAND FOR OTHER YEARS. 5. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE A SSESSING OFFICER WAS FORCED TO REJECT THE CLAIM OF AVAILABILITY OF AGRICULTURAL IN COME AS THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF THE SAME. SHE FURTHER SUBMI TTED THAT THE AGRICULTURAL INCOME CAN BE ESTIMATED IN SUCH CIRCUMSTANCES EVEN IN SEARCH P ROCEEDINGS AND FOR THAT PROPOSITION, ITA NOS. 530-535/COCH/ 2010 3 THE LD. DR RELIED ON THE DECISION OF THE ITAT, AHME DABAD BENCH IN THE CASE OF V.D. VACHHANI (HUF) VS. ACIT, 86 ITD 652. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. IN THE CASE OF V.D. VACHHANI (HUF), THE ASSESSEE THEREIN CLAIME D THE AVAILABILITY OF AGRICULTURAL INCOME IN ORDER TO EXPLAIN THE BANK DEPOSITS FOUND DURING THE COURSE OF SEARCH PROCEEDING. HOWEVER, IN THE INSTANT CASE, THE ASS ESSEE DID NOT CLAIM SO AND HENCE, IN OUR VIEW, THE DEPARTMENT COULD NOT PLACE RELIANCE ON TH E ABOVE SAID CASE LAW. AS SUBMITTED BY THE LD.AR, WE NOTICE THAT THE ASSES SEE HAS BEEN REGULARLY DECLARING AGRICULTURAL INCOME IN HER RETURN OF INCOME. THE F ACT THAT THE ASSESSEE OWNS AGRICULTURAL PROPERTY IS NOT DENIED. IT IS ALSO A FACT THAT THE ASSESSING OFFICER HAS ACCEPTED THE AVAILABILITY OF AGRICULTURAL INCOME FOR THE ASSESSM ENT YEAR 2002-03 IN THE 153A PROCEEDING ITSELF. UP TO THE ASSESSMENT YEAR 2007 -08, THE ASSESSEE HAD DECLARED THE AGRICULTURAL INCOME IN HER RETURN OF INCOME FILED U /S. 139 OF THE ACT PRIOR TO THE DATE OF SEARCH AND THE SAME WAS NOT DISTURBED BY THE ASSESS ING OFFICER. IT IS ALSO THE CONTENTION OF THE ASSESSEE THAT THE DEPARTMENT DID NOT SEIZE A NY MATERIAL TO SUGGEST NON-AVAILABILITY OF THE AGRICULTURAL INCOME. IN THESE CIRCUMSTANCES , WE ARE OF THE VIEW THAT THERE IS NO REASON FOR THE ASSESSING OFFICER TO DISTURB THE AGR ICULTURAL INCOME IN THE ASSESSMENT PROCEEDING CARRIED U/S 153C R.W.S. 153A OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE ASSE SSING OFFICER TO ACCEPT THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AND DELETE THE ADDI TION MADE UNDER INCOME FROM OTHER SOURCES IN RESPECT OF THE SAME. 7. THE NEXT ISSUE RELATES TO THE ADDITION OF RS.35, 000/- MADE FOR THE ASSESSMENT YEAR 2003-04 ON THE GROUND OF UNEXPLAINED INVESTMENT IN THE PURCHASE OF PROPERTY. DURING THE COURSE OF SEARCH, A DOCUMENT BEARING NO. 123/03 DATED 6-1-2003 WAS SEIZED WHICH SHOWED THAT THE ASSESSEE HAD PURCHASED 2.43 ACRES O F LAND FOR RS.2 LAKHS. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS THEREOF. HOWEVER, IT APPEARS THAT THE AO ACCEPTED THE FACT THAT THE ASSESSEE DID NOT MAKE ANY INVESTMENT IN PURSUANCE OF THE ABOVE SAID DOCUMENT AND HENCE HE DID NOT MAKE ANY ADDITION IN RESPECT OF THE SAME. HOWEVER, THE ITA NOS. 530-535/COCH/ 2010 4 ASSESSEE, IN HER LETTER DATED 23-11-2009, STATED TH AT SHE HAD PURCHASED A PLOT OF 5 CENTS FOR A CONSIDERATION OF RS.30,000/- AND INCURRED A FURTH ER SUM OF RS.5000/- TOWARDS STAMP DUTY AND REGISTRATION CHARGES. REGARDING THE SOURC E THEREOF, SHE SUBMITTED THAT THE SAID PROPERTY WAS PURCHASED BY HER FATHER SHRI P.M. MOHA MMED ALI. A CONFIRMATION LETTER DATED 4-12-2009 WAS ALSO FILED FROM HER FATHER. HO WEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE CONFIRMATION LETTER WITH THE OBSERVATION THAT IT IS AN AFTERTHOUGHT ON THE PART OF THE ASSESSEE. ACCORDINGLY, THE AO ADDED THE ABOVE SAID SUM OF RS.35,000/- IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT. THE SAI D ADDITION WAS ALSO CONFIRMED BY THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSU E AND CAREFULLY PERUSED THE RECORD. IT IS AN ADMITTED FACT THAT THE INVESTMENT OF RS.35 ,000/- CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER THROUGH THE LETTER FILED BY THE A SSESSEE VOLUNTARILY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT OUT OF ANY SEIZED MA TERIAL. WE NOTICE THAT THE ASSESSEE HAS ALSO EXPLAINED THE SOURCE THEREOF AS A GIFT FRO M HER FATHER. WE ALSO NOTICE THAT THE ASSESSEE HAS FILED A CONFIRMATION LETTER OBTAINED F ROM HER FATHER. IT IS ALSO NOTICED THAT THE FATHER OF THE ASSESSEE WAS AN NRI WORKING IN DUBAI FOR THE PAST 30 YEARS. HOWEVER, THE ASSESSING OFFICER, WITHOUT VERIFYING THE VERACITY O F THE CONFIRMATION LETTER, HAS ENTERTAINED THE BELIEF THAT IT IS AN AFTERTHOUGHT O N THE PART OF THE ASSESSEE. HOWEVER, THE FACT REMAINS THAT THE ASSESSING OFFICERS FINDING I S NOT BASED ON ANY MATERIAL, BUT PURELY ON SURMISES AND SUSPICIONS. THE AO COULD HAVE MADE FURTHER ENQUIRIES TO ASCERTAIN THE VERACITY OF THE CONFIRMATION LETTER. HOWEVER, IN T HE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE QUANTUM OF THIS INVESTMENT, WE ARE OF THE VIEW THAT THERE IS NO NECESSITY TO DISBELIEVE THE SOURCES EXPLAINED BY TH E ASSESSEE ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIREC T THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.35,000/- MADE IN THE ASSESSMENT YEA R 2003-04. 9. THE NEXT ISSUE RELATES TO THE ADDITION OF RS.4,4 3,700/- MADE IN THE ASSESSMENT YEAR 2005-06 ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PUR CHASE OF PROPERTY. DURING THE COURSE OF SEARCH, A DOCUMENT NO. 3695/04 DATED 29-7 -2004 WAS SEIZED, WHICH REVEALED ITA NOS. 530-535/COCH/ 2010 5 THAT THE ASSESSEE HAD PURCHASED 7/300 TH UNDIVIDED SHARES IN SHOPS NO. 2-8 FOR A CONSIDERATION OF RS.4,43,700/-, AS THE MANAGING PAR TNER OF M/S. S.S. IMPEX. WITH REGARD TO THE SOURCE THEREOF, THE ASSESSEE EXPLAINED THAT THE SAME WAS PURCHASED OUT OF CASH RECEIVED FROM HER MOTHER-IN-LAW. WITH REGARD TO TH E SOURCES OF FUNDS FOR THE MOTHER IN LAW OF THE ASSESSEE, IT WAS STATED THAT SHE HAD SOL D HER PROPERTIES, WHICH WERE LOCATED AT KAKKANAD, DURING THE MONTHS OF JULY, 2003 AND MARCH , 2004 AND USED THE SALE PROCEEDS FOR GIVING MONEY TO THE ASSESSEE. A CONFIRMATION LE TTER WAS ALSO FILED TO THIS EFFECT BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFIC ER DID NOT ACCEPT THE SAID EXPLANATION, AS THE CONFIRMATION LETTER DID NOT MEN TION ABOUT THE DATE OF PAYMENT, NATURE OF PAYMENT, INTEREST DETAILS, INCOME TAX DETAILS OF THE MOTHER-IN-LAW ETC. BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE INCOME TAX DETAILS OF THE MOTHER-IN-LAW OF THE ASSESSEE. HOWEVER, THE LD. CIT(A) CONFIRMED THE ADDITION SINC E THE MOTHER-IN-LAW OF THE ASSESSEE DID NOT FILE THE CASH FLOW STATEMENT AND ALSO DUE T O TIME GAP BETWEEN THE DATE OF SALE OF PROPERTY BY THE MOTHER-IN-LAW AND THE DATE OF PURCH ASE OF THE PROPERTY BY THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE. WE NOTICE THAT THE FACT OF PURCHASE OF IMPUGNED PROPERTY CAME TO THE KNOWLEDGE OF THE AO THROUGH THE SEARCH MATERIAL. WE ALSO NOTICE THAT THE ASSESSEE HAS FIL ED THE INCOME TAX DETAILS OF THE MOTHER- IN-LAW OF THE ASSESSEE NAMED MRS. K.M. JOURIYA, ONL Y BEFORE THE LD. CIT(A). IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS MA DE THE IMPUGNED ADDITION ONLY ON THE GROUND THAT THE CONFIRMATION LETTER OBTAINED FROM T HE MOTHER-IN-LAW OF THE ASSESSEE DID NOT CONTAIN MANY DETAILS. IN OUR VIEW, THE ASSESSI NG OFFICER, INSTEAD OF SUMMARILY REJECTING THE EXPLANATION OF THE ASSESSEE, COULD HA VE CALLED FOR FURTHER DETAILS FROM THE ASSESSEE IN CONNECTION WITH THE CONFIRMATION LETTER FILED IN THIS REGARD. ONE OF THE MAIN OBSERVATIONS OF THE AO WAS THAT THE ASSESSEE HAS FA ILED TO SUBMIT THE INCOME TAX DETAILS OF THE MOTHER IN LAW OF THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE SAID DETAILS BEFORE THE LD CIT(A) AND THE FIRST APPELLATE AUTHORITY DID NOT CONFRONT THE SAME WITH THE AO, BUT PROCEEDED TO CONFIRM THE ADDITION ON A DIFFEREN T REASONING. HENCE, WE ARE OF THE VIEW THAT THE TAX AUTHORITIES HAVE NOT PROPERLY EXA MINED THE EXPLANATION OF THE ASSESSEE IN THIS REGARD AND HENCE THIS ISSUE, IN OUR CONSIDE RED VIEW, REQUIRES RE-EXAMINATION AT THE ITA NOS. 530-535/COCH/ 2010 6 END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFT ER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND IN ALL THE APPEALS AND THE SAID GROUND READS AS UNDER:- THE ASSESSMENT U/S. 153C IS COMPLETED IN MY CASE W ITHOUT SEIZING ANY DOCUMENTS OR EVIDENCE REGARDING UNDISCLOSED INCOME AND HENCE THE ASSESSMENT U/S. 153C IS INVALID AND MAY BE CANCEL LED. WE NOTICE THAT FOR THE ASSESSMENT YEAR 2005-06, THE DEPARTMENT HAS SEIZED A PROPERTY DOCUMENT NO. 3695/04 DATED 29-7-2004 AND HENCE, IN OUR VIEW, THE INITIATION OF ASSESSMENT PROCEEDING U/S 153C R.W.S. SEC. 153A IS PROPER. ACCORDINGLY, WE DISMISS THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2005-06 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEALS OF OTHER YEARS ARE ALLOWED. PRONOUNCED ACCORDINGLY ON 23-03-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 23 MARCH, 2012 GJ COPY TO: 1. SMT. SHAMMY MUHEYIDDIN, HALIF, JUMA MASJID ROAD, PANAYIKULAM, PARAVUR. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE-1, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL KOCHI 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN