Abdul Nazar Azad, Trivandrum V. ACIT, Trivandrum

ITA 559/COCH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4470 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 16-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 26-10-2010
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: V SREEKUMAR ADV
• Keywords: Gross profit estimation; Unexplained cash credit; Sale consideration of property below Jantri Value; Cost of acquisition; Onus to prove; Capital Gains
• Section: 50C; 68

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 559/COCH/2010 ASSESSMENT YEAR:2007-08 SHRI ABDUL NAZAR AZAD, AZAD HOTEL, PROPRIETOR, AZAD RESTAURANT, OVER BRIDGE, TRIVANDRUM-1 [PAN: ACOPA 4918M] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE-RES PONDENT) ASSESSEE BY SHRI V.SREEKUMAR, ADV.-AR REVENUE BY MS. VIJAYAPRABHA, DR O R D E R THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIVANDRUM (`CIT(A) FOR SH ORT) DATED 31.8.2010, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2007-08. THE APPEAL RAISES THREE ISSUES, PER FIVE GROUNDS, WHICH WE SHALL TAKE UP IN SERIATIM. 2. THE FIRST ISSUE, PROJECTED PER GROUND NOS. 2 & 3 OF ITS APPEAL; GROUND NO.1 BEING GENERAL IN NATURE, WARRANTING NO ADJUDICATION, IS I N RESPECT OF ADDITION ON ACCOUNT OF LOW GROSS PROFIT, CONSEQUENT TO THE REJECTION OF ITS BO OK RESULTS. THE ASSESSEE IS AN INDIVIDUAL RUNNING A RESTAURANT (NON-VEGETARIAN) AT TRIVANDRUM . ON EXAMINATION OF THE BOOKS OF ACCOUNTS AND OTHER DETAILS CALLED FOR AND FURNISHED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED SEVERAL DISCREPANCIES. NO DETAILS IN RESPECT OF PURCHASE OF `MUTTON, AT ` 13.30 LAKHS, WHICH CONSTITUTED THE HIGHEST PURCHASE (FOR A SINGLE ITEM), COULD BE FURNISHED. T HE ASSESSEE ALSO COULD NOT FURNISH THE PURCHASE BILLS FROM M/S. A.A. TRADERS, TRIVANDRUM, THE MAIN SUPPLIER, NOR THE QUANTITATIVE DETAILS, I.E., IN RESPECT OF `CHICKEN , THE SECOND MAJOR COMMODITY PURCHASED. THE COPIES OF SOME BILLS PRODUCED REVEALED THEM TO BE NOT SERIALLY NUMBERED. ALSO, THE I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 2 ASSESSEE COULD NOT EXPLAIN ITS METHOD OF BILLING AS WELL AS THE RECORDING OF SALES IN RESPECT OF THE AIR CONDITIONED (AC) PART OF THE RESTAURANT, FOR WHICH A SEPARATE BILL COUNTER WAS MAINTAINED. IN FACT, THE ASSESSEE CONCEDED TO OMISS IONS THEREIN VIDE ITS STATEMENT DATED 18.12.2009. FURTHER, THE BOOKS REVEALED THE DISCLO SED GROSS PROFIT (G.P.) RATE, I.E., AT 24%, TO BE ON THE LOWER SIDE VIS-A-VIS THAT OBTAINI NG IN THE SAID TRADE. THE GP RATE OF ANOTHER SUCH RESTAURANT IN THE LOCALITY, I.E., HOTE L VAYALIL, TRIVANDRUM, DISCLOSED THE G.P. RATE OF 43%. AS SUCH, IT WAS INFERRED THAT THERE WA S A SUPPRESSION IN THE GROSS PROFIT BETWEEN 15% TO 20% AND, ACCORDINGLY, 15% OF THE DIS CLOSED SALES OF ` 85 LAKHS, I.E., ` 12.50 LAKHS, WAS CONSIDERED AS UNDISCLOSED INCOME B Y WAY OF SUPPRESSED TRADING PROFIT. THE SAME WAS CONFIRMED IN APPEAL BY THE LD. CIT(A); HE FINDING THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUPPORT ITS CASE OF ITS ACCOUNTS AS RE FLECTING TRUE AND CORRECT OPERATING RESULTS IN ANY MANNER. AGGRIEVED, THE ASSESSEE IS IN APPEA L. 3.1 BEFORE US, IT WAS SUBMITTED BY THE LD. AR, THE ASSESSEES COUNSEL, THAT THE AO HAD GRIEVOUSLY ERRED WHILE COMPARING THE GROSS PROFIT D ISCLOSED PER ITS ACCOUNTS WITH THAT BY THE ACCOUNTS OF THE COMPARABLE CASE OF HOTEL VAYALI L. ADVERTING TO THE RELEVANT DOCUMENTS (PB PGS. 5-7), IT WAS BROUGHT FORTH THAT WHILE IN ITS CASE THE GROSS PROFIT RATE OF 23.21% (AND NOT 24% AS STATED BY THE AO) TAKES INTO ACCOUNT THE ENTIRE COST OF PRODUCTION, THE `GROSS PROFIT AND, CONSEQUENTLY, I TS RATE, AS REFLECTED FOR THE SAID CASE IS BY RECKONING ONLY THE RAW MATERIAL PURCHASES. FURTH ER, IF THE SAME METHOD IS ADOPTED IN ITS CASE, THE GP RATE WOULD WORK TO OVER 41%, LEADI NG TO MARGINAL DIFFERENCE BETWEEN THE TWO CASES, AND WHICH IS NORMAL, AND COULD NOT LEAD TO AN INFERENCE OF THE REJECTION OF ACCOUNTS. ACCORDINGLY, THE ENTIRE ADDITION IS PRES UMPTUOUS, AND NEEDS TO BE STRUCK DOWN AND, IN ANY CASE, MAY BE DIRECTED FOR REASONABLE AS SESSMENT. 3.2 THE LD. DR, ON THE OTHER HAND, WOULD SUBMIT THA T THE ASSESSEE HAD NOT SUBSTANTIATED ITS PURCHASES AS CLAIMED WITH ANY SOU RCE DOCUMENT, DESPITE ALLOWANCE OF SUFFICIENT OPPORTUNITY BY THE ASSESSING AUTHORITY. THE REJECTION OF ITS ACCOUNTS AND ASSESSMENT OF INCOME UNDER SUCH CIRCUMSTANCES WAS L EGALLY VALID AND MERITS BEING I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 3 UPHELD. WITH REGARD TO THE ESTIMATION, IT WAS SUBM ITTED THAT NO SUCH CONTENTION/S STOOD RAISED BEFORE THE AUTHORITIES BELOW, AND WHICH HAS THEREFORE NOT BEEN FACTUALLY EXAMINED. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 NO DOUBT, THE ASSESSEE HAS NO CASE FOR THE NON REJECTION OF ITS ACCOUNTS; IT FAILING ABYSMALLY IN SUBSTANTIATING ITS CLAIMS WITH EVIDENC E. THE ASSESSEE, EVEN AS OBSERVED BY THE LD. CIT(A), DID NOT PRODUCE EVEN A SINGLE BILL FOR THE PURCHASE OF MUTTON, AND ITS CLAIM OF THE SAME BEING FOR THE REASON OF IT BEING FROM NON-REGISTERED DEALERS WAS ALSO FOUND UNACCEPTABLE BY HIM AS MUTTON IS NOT TAXABLE UNDER THE KERALA VAT. SIMILARLY, CHICKEN PURCHASES, THE SECOND MAJOR ITEM, WERE ALSO NOT ADEQUATELY EVIDENCED, WHILE THE ACCOUNTED PURCHASES ITSELF REVEALED TIME GAPS, I.E. , FOR WHICH THERE WERE NO PURCHASES, AND WHICH IS NOT COMPREHENSIBLE IN VIEW OF THE REGU LAR SALES, AND ALSO NOT FEASIBLE, GIVEN THE LIMITED STOCK THAT THE RESTAURANT COULD CARRY. BESIDES, THE PURCHASES WERE SETTLED IN CASH, AND NO QUANTITATIVE DETAILS IN ITS RESPECT CO ULD BE FURNISHED. THE SUPPRESSION IN SALES IS ALSO ADMITTED. WE, THEREFORE, UPHOLD THE N ON-ACCEPTANCE OF THE ASSESSEES BOOK RESULTS QUA ITS TRADING PROFIT. 4.2 COMING TO THE NEXT ISSUE OF ESTIMATION, THE SAM E, WITHOUT DOUBT, HAS TO BE ON A REASONABLE BASIS, WHILE WE FIND THAT IT STANDS ENHA NCED FROM THE DISCLOSED 23.2% BY 15%. THE MISTAKE IN RECKONING THE DIFFERENCE OBTAINING I N TRADING PROFIT WITH REFERENCE TO THE COMPARABLE CASE AND, BY IMPLICATION, THE EXTENT OF SUPPRESSION THEREIN BY THE ASSESSEE, BY THE AO, IS PATENT, IN-AS-MUCH AS THE BASIS FOR ARRI VING AT THE TWO G.P. RATES, I.E., BY THE ASSESSEE AND THE COMPARABLE CASE, IS CLEARLY DIFFER ENT. THE REVENUES OBJECTION IN THIS REGARD, I.E., OF THE SAME HAVING NOT BEEN EXAMINED BY THE AO, IS NOT MAINTAINABLE, AS THE DOCUMENT WITH REFERENCE TO WHICH THE ASSESSEE STATE S ITS CASE IN THIS REGARD IS THE SAME ON WHICH THE AO HAS HIMSELF RELIED UPON FOR THE PURPOS E. THE SAME SHOWS GP RATE OF 21.37%, EVEN AS STATED BY THE LD. AR, WHEN THE TOTA L COST OF PRODUCTION, INCLUDING THE EXPENSES IS TAKEN INTO ACCOUNT, AND WHICH IS LESS T HAN THAT BY THE ASSESSEE, I.E., AT 23.21%. AT THE SAME TIME, ADMITTEDLY, THE ASSESSEES ACCOUN TS ARE NOT CORRECT AND COMPLETE, AS SUFFICIENTLY EXHIBITED BY THE EXAMINATION CONDUCTED BY THE AO. THE TRADING RESULTS ARE I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 4 NOT RELIABLE, AS THE MAJOR PURCHASES ARE UNPROVED, AND THE OMISSION IN SALES IS ADMITTED BY THE ASSESSEE. ALTHOUGH THE REFERENCE TO THE COM PARABLE CASE (TRADING RESULTS) SHOWS THAT THE MANUFACTURING EXPENSES CLAIMED BY THE ASSE SSEE ARE LOWER THAN THAT OBTAINING IN THE SAID CASE, THE SAME, IN FACT, HAVE NOT BEEN PUT TO ANY VERIFICATION BY THE AO, NOR ANY INFIRMITY CONSEQUENTLY POINTED OUT BY HIM WITH REFE RENCE THERETO. AS SUCH, ALLUDING THERETO, IN SUPPORT OF AN OVERALL FAVOURABLE GP RAT E, BY THE ASSESSEE, SO AS TO PLEAD FOR ACCEPTANCE OF ITS TRADING RESULTS, IS NOT TENABLE. THE TOTAL PURCHASES IN THE ASSESSEES CASE WORK TO 58.83% (REFER ANNEXURE B), AS AGAINST AT 57.05% FOR THE COMPARABLE CASE, LEADING TO A DIFFERENCE OF ABOUT 2%. AS ANY MODIFI CATION HAS NECESSARILY TO BE BASED ON SOME MATERIALS, DRAWING REASONABLE INFERENCE/S THER E-FROM, WE CONSIDER AN ADDITION TO THE TUNE OF 2% AS REASONABLE. ACCORDINGLY, WE DIRE CT FOR THE ADOPTION OF A GP RATE OF 25%, AS AGAINST THE DISCLOSED GP RATE OF 23.21%. FU RTHER, WE ARE CONSCIOUS THAT THE AO HAS ALSO FOUND OMISSION IN THE RECORDING OF SALES F OR THE AC SEGMENT OF THE RESTAURANT; SO, HOWEVER, HE DID NOT PURSUE THE MATTER FURTHER, SO THAT THERE IS NO MATERIAL ON RECORD TOWARD ESTIMATING THE SAME, I.E., THE ACTUAL TURNOV ER. WE ARE, THEREFORE, UNABLE TO DIRECT ANY MODIFICATION QUA THE SAME. WE DECIDE ACCORDINGLY, PARTLY ALLOWING T HE ASSESSEES RELEVANT GROUNDS. 5. THE NEXT AND THE FOURTH GROUND OF THE ASSESSEES APPEAL IS IN RESPECT OF ADDITION IN THE SUM OF ` 22 LAKHS ADDED AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT. THE ASSESSEES CAPITAL ACCOUNT REVEALED A CREDIT OF ` 22 LAKHS, WHICH WAS EXPLAINED BY IT TO BE ON ACCOUNT OF SALE OF LAND, ADMITTING TO A SHORT TE RM CAPITAL GAIN OF ` 589100/-. HOWEVER, AS THE ASSESSEE COULD NOT, DESPITE SUFFICIENT OPPOR TUNITY, FURNISH THE COPY OF THE SALE DEED/S OR THE DETAILS OF THE PURCHASER/S, THE CREDI T WAS CONSIDERED AS UNEXPLAINED, LIABLE FOR ADDITION U/S. 68. THE ASSESSEE COULD NOT PROVE ITS CASE IN ANY MANNER BEFORE THE FIRST APPELLATE AUTHORITY, RESULTING IN THE CONFIRMATION OF THE SAME. 6. BEFORE US, THE ASSESSEE HAS MADE A PETITION FOR PRODUCTION OF ADDITIONAL DOCUMENTS. IT IS SUBMITTED THAT THE INFORMATION FU RNISHED EARLIER BORE FACTUAL ERRORS AS HE WAS DEPENDENT ON HIS ACCOUNTANT, SHRI RAMAN NAIR, A GED 85, WHO WAS SUFFERING FROM I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 5 HEALTH-RELATED PROBLEMS, AND COULD NOT REVEAL THE C ORRECT FACTS DUE TO MEMORY LOSS. THAT HE HAD, IN FACT, SOLD ONLY ONE PROPERTY, BEING 15 C ENTS OF LAND, AN INHERITED PROPERTY AT THIRUMALA VILLAGE, AS AGAINST THE TWO STATED EARLIE R, TO SMT. RAMLA WIFE OF SHRI M.MOHAMMED R/O 5/1299, KOWDIAR GARDENS, TRIVANDRUM, AND RECEIVED AN OSTENSIBLE SALE CONSIDERATION OF ` 7.5 LAKHS, ENCLOSING THE COPY OF THE SALE DEED DATE D MAY 12, 2006, AS WELL AS ITS WRITTEN EXPLANATION (COPY ON RECORD) . THE RECEIPT BY CHEQUE ON THAT DATE IN THE BANK ACCOUNT (WITH FEDERAL BANK, TRIVANDRUM) (N O. SB 10841) IS TOWARD THE SAME. THE PRIOR CREDIT OF ` 7.5 LAKHS, I.E., IN CASH ON 11.5.2006, REPRESENTS T HE AMOUNT RECEIVED IN EXCESS OVER THE DOCUMENTED CONSIDERATION; THE TO TAL SALE CONSIDERATION BEING ` 15 LAKHS. THE THIRD CREDIT FOR ` 7 LAKHS IN ITS BANK ACCOUNT ON 13.5.2006, AGAIN BY CHEQUE, REPRESENTS THE TRANSFER OF FUNDS FROM HIS OTHER BAN K ACCOUNT, I.E., SAVING BANK ACCOUNT NO. 22021064 (OLD NO. 28258) WITH SYNDICATE BANK (R EFER PB PG. 27, ANNEXURE H/30- 31). THE SAID BANK ACCOUNT, BEING ONLY A DISCLOSED ACCOUNT, THE SAME IS ONLY A TRANSFER OF FUNDS FROM ONE BANK ACCOUNT TO ANOTHER AND, THUS, F ULLY EXPLAINED, SO THAT NO CAUSE OF ACTION U/S. 68 WOULD LIE. HE, ACCORDINGLY, PLEADED FOR THE DELETION OF THE IMPUGNED ADDITION AND DIRECTION FOR RE-COMPUTATION OF THE CA PITAL GAINS WITH REFERENCE TO THE SALE CONSIDERATION OF ` 15 LAKHS. ON AN ENQUIRY BY THE BENCH, THAT IF THE ACCOUNT WITH SYNDICATE BANK IS AN ACCOUNTED ONE, AS CONTENDED, I T WOULD ONLY HAVE FOUND REFLECTION IN THE ASSESSEES BOOKS, THE LD. AR COULD NOT FURNISH ANY SATISFACTORY ANSWER. THE LD. DR, ON THE OTHER HAND, WOULD SU BMIT THAT THE ASSESSEES CASE, AS BEING NOW MADE OUT, I.E., BEFORE THE APPELLATE TRIBUNAL, IS IN COMPLETE VARIANCE WITH THAT AS BEFORE THE AUTHORITIES BELOW. WHILE ITS EXPLANATIO N IN THE ASSESSMENT AND APPELLATE PROCEEDINGS WAS WITH RESPECT TO THE SALE OF TWO LAN DS, ADMEASURING 6 CENTS AND 18.15 CENTS RESPECTIVELY, IT NOW CONTENDS OF HAVING ACTUA LLY SOLD ANOTHER LAND MEASURING 15 CENTS. FURTHER, THE COMPUTATION OF THE ADMITTED SHO RT TERM CAPITAL GAINS ( ` 5.89 LAKHS), SHOWS A COST OF ACQUISITION FOR WHICH THERE IS NO B ASIS. AS SUCH, THE EVIDENCE BEING NOW SUBMITTED HAS NO BEARING, SO THAT THE SAME MERITS B EING REJECTED AT THE OUTSET. THE SAME WOULD EVEN OTHERWISE BE SUBJECT TO RULE 29, 30 AND 31 OF THE APPELLATE TRIBUNAL RULES, 1963. I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 6 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 7.1 THE MATTER IS PURELY FACTUAL. HOWEVER, ADMIT TEDLY, THERE HAS BEEN A CHANGE OF EXPLANATION BY THE ASSESSEE BEFORE US, I.E., VIS-- VIS AS BEFORE THE AUTHORITIES BELOW. THE SECOND THING THAT WE OBSERVE, AND SURPRISINGLY AT T HAT, IS THAT WHILE THE CREDIT OF ` 22 LAKHS HAS BEEN ADDED AS UNEXPLAINED CREDIT U/S. 68, NO RE LIEF OR DEDUCTION IN RESPECT OF THE INCOME OF ` 5.89 LAKHS, ARISING THERE-FROM, AND ALREADY ADMITTE D BY THE ASSESSEE AS SHORT TERM CAPITAL GAINS, INCLUDED IN ITS RETURNED INCOME OF ` 13.54 LAKHS, HAS BEEN ALLOWED, SO THAT THERE HAS BEEN A CLEAR OMISSION BY THE REVENUE AUTHORITIES. IT ALSO INCIDENTALLY POINTS TO A COMPLETE LACK OF PROPER REPRESENTATION ON THE ASSESSEES BEHALF BEFORE THE REVENUE AUTHORITIES. AS REGARDS THE ADMISSION OF AD DITIONAL EVIDENCE, WITHOUT DOUBT, THE EXPLANATION BEING NOW ADVANCED IS AT COMPLETE VARIA NCE WITH THAT ADVANCED EARLIER. IT IS ALSO SURPRISING INDEED THAT THE ASSESSEE WAS, EVEN AS ASSEVERATED BY THE LD. DR, UNAWARE OF THE PROPERTY TRANSACTIONS UNDERTAKEN BY HIM, AND AGAINST WHICH HE HAD RECEIVED LAKHS OF RUPEES. AT THE SAME TIME, IT NEEDS TO BE APPREC IATED THAT THE ASSESSEE DOES NOT GAIN IN ANY MANNER BY TAKING A DIFFERENT STAND BEFORE US, A ND STATING `FACTS, WHICH HE KNOWS ARE NOT TRUE OR CAN NOT BE SUBSTANTIATED AS SO. THIS I S AS THE SAME WOULD IN ANY CASE NEED TO BE POSITIVELY ESTABLISHED; THE ONUS TO PROVE ITS EX PLANATION ON FACTS BEING ONLY ON THE ASSESSEE. RATHER, HE RUNS THE RISK OF EXPOSING ANOT HER OF HIS PROPERTY, I.E., APART FROM THE TWO DISCLOSED EARLIER, I.E., WITH REFERENCE TO WHIC H HE HAD HITHERTO SOUGHT TO EXPLAIN HIS CASE, TO THE REVENUE, SO THAT HE HAD ADMITTEDLY THR EE PROPERTIES. THE REVENUES CASE ON THE OTHER HAND AGAINST THE ASSESSEE REMAINS ESSENTI ALLY THE SAME, I.E., ABSENCE OF A SATISFACTORY EXPLANATION. IT CANNOT BE THEREFORE SA ID THAT THE AVERMENTS BEING NOW MADE BY THE ASSESSEE HAVE NO RELATION OR BEARING ON ITS CASE. IF, AS CONTENDED, THE CHEQUE FOR ` 7.50 LAKHS, CREDITED TO HIS BANK ACCOUNT ON 12.5.20 06, IS CONFIRMED TO BE THE SALE PROCEEDS OF THE 15 CENTS OF LAND AT THIRUMALA VILLA GE, AS STATED BEFORE US, IT WOULD AT ONCE ESTABLISH THE ASSESSEES BONA FIDES AS WELL AS THAT HE WAS INDEED MISLED INTO STATING WHAT HE HAD EARLIER. SIMILARLY FOR THE OTHER CHEQUE TRANSACTION FOR ` 7 LAKHS, WHICH IS STATED TO BE A TRANSFER FROM ANOTHER `DISCLOSED BA NK ACCOUNT OF THE ASSESSEE. THE DETAILS BEING NOW FURNISHED, IN EXPLANATION, ARE ONLY TOWAR D THE CREDITS OWNED UP BY THE ASSESSEE, THE TRUTH OR THE ANTECEDENTS QUA WHICH IS NOT SUBJECT TO CHANGE OVER TIME. IF I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 7 ANYTHING, IT ONLY EXHIBITS THE EXTENT OF, AS ALSO N OTED EARLIER, BOTH, IMPROPER ACCOUNTING/BOOK-KEEPING, AS WELL AS REPRESENTATION OF ITS CASE BEFORE THE REVENUE. IT IS ALSO TO BE BORNE IN MIND THAT THE ADDITION, IF SUST AINED, AND WHICH WOULD ONLY BE FOR THE REASON OF IT BEING UNSUBSTANTIATED, HAS PENAL IMPLI CATIONS FOR THE ASSESSEE AS WELL. IT IS THUS IMPERATIVE THAT THE MATTER IS FACTUALLY DETERM INED; TWO OF THE THREE CREDITS COMPRISING THE IMPUGNED CREDIT OF ` 22 LAKHS BEING ONLY BY WAY OF CHEQUE PROCEEDS, SO THAT THEIR ANTECEDENTS COULD BE EASILY ASCERTAINED, WITH THE THIRD BEING STATED TO BE AN ADJUNCT TO ONE OF THEM, AND ON A FIRM AND DEFINITE BASIS. WE, ACCORDINGLY, CONSIDER IT REASONABLE AND JUSTIFIABLE UNDER THE CIRCUMSTANCES TO ALLOW ADMISSION OF THE ASSESSEES ALTERNATIVE FACTUAL CLAIM/S, AS MADE BEFORE US, AS WELL AS THE CONCOMITANT PRODUCTION OF DOCUMENTS BEING RELIED UPON IN SUPPORT. WE ARE GUID ED IN OUR DECISION BOTH BY THE OVERRIDING CONSIDERATION TO PROMOTE THE CAUSE OF JU STICE; THE ASSESSEE HAVING BEEN FOUND TO HAVE NOT BEEN PROPERLY ASSISTED IN PRESENTING IT S CASE, SO THAT IT IS ESSENTIALLY AN EXTENSION OF OPPORTUNITY TO THE ASSESSEE TO PROVE I TS CASE ON FACTS TO THE SATISFACTION, AGAIN, ONLY OF THE ASSESSING AUTHORITY. 7.2 COMING TO THE MERITS, THE EVIDENCE HAVING BEEN FURNISHED BEFORE US FOR THE FIRST TIME, WOULD DEFINITELY WARRANT AN EXAMINATION AND V ERIFICATION AT THE END OF THE ASSESSING AUTHORITY AND CONSEQUENTLY, A REMISSION THERETO. S O, HOWEVER, SOME PRELIMINARY OBSERVATIONS/FINDINGS AT OUR END ARE PERTINENT, AND MAY BE MADE, AS UNDER: A). THERE IS NO REFERENCE TO THE CHEQUE NUMBER IN THE SALE DEED DATED 12.5.2006 (PB PG. 23, 24), SO THAT IT NEEDS TO BE FACTUALLY EXAMINED IF THE CHEQUE PROCEEDS (CHEQUE NO. 743678) CREDITED TO THE ASSESSEES ACCOUNT (WITH FE DERAL BANK) AT ` 7.5 LAKHS ON 12.5.2006 FLOWS FROM THE BANK ACCOUNT OF SMT. R.RAM LA, THE PURCHASER, OR ANOTHER. B). THE ASSESSEE HAD ADMITTEDLY COMPUTED THE CAPIT AL GAINS WITH REFERENCE TO THE ACQUISITION COST OF SOME OTHER LAND, WHILE THE LAND SOLD IS ADMITTEDLY AN INHERITED PROPERTY. AS SUCH, THE SAID FACT WOULD WARRANT REVI SION OF THE COST OF ACQUISITION AS WELL, CONSISTENT WITH THE OBTAINING FACTS AND LAW AS APPL ICABLE. FURTHER, THE COMPUTATION OF THE SAID GAINS MAY ALSO BE IMPACTED BY SECTION 50C OF T HE ACT. I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 8 C). THE ASSESSEE ADMITS OF HAVING RECEIVED AN EXC ESS (OVER THE DOCUMENTED) SALE CONSIDERATION, IN CASH, AT ` 7.5 LAKHS, SO THAT THE ACTUAL SALE CONSIDERATION IS AT ` 15 LAKHS. THE SAID CREDIT/RECEIPT COULD BE CONSIDERED AS A PA RT OF THE SALE CONSIDERATION ONLY WHERE THE SAME IS ADMITTED TO BY THE SELLER, ELSE NOT, IN WHICH CASE IT WOULD BE ONLY A BALD ASSERTION. THERE BEING NOTHING ON RECORD TO SUBSTAN TIATE THIS CLAIM, SO THAT THERE IS ESSENTIALLY NO CHANGE IN THE ASSESSEES CASE QUA THE SAME, WHICH THUS REMAINS UNPROVED. SO, HOWEVER, IF AND TO THE EXTENT THERE IS APPLICAT ION OF S. 50C IN COMPUTING THE SALE CONSIDERATION, THE EXCESS OVER THE DOCUMENTED CONSI DERATION, TO THE EXTENT OF THE SAID CREDIT, COULD BE TELESCOPED AGAINST THIS CREDIT OF ` 7.5 LAKHS; THE ASSESSEE CLAIMING TO HAVE RECEIVED MORE, AND WHICH CORROBORATES WITH THE HIGH ER SALE PRICE IMPUTED U/S. 50C. D). AS REGARDS THE THIRD COMPONENT OF THE IMPUG NED CREDIT OF ` 22 LAKHS, I.E., THE CHEQUE PROCEEDS (OF CHEQUE NO. 729092) CREDITED TO THE ASS ESSEES BANK ACCOUNT ON 13.5.2006 AT ` 7 LAKHS, THE SAME WOULD BE REQUIRED TO BE FACTUALLY VERIFIED. THE ASSESSEES CONTENTION OF IT REPRESENTING THE TRANSFER OF FUNDS FROM THE B ANK ACCOUNT (WITH SYNDICATE BANK) IS NOT COMPREHENSIBLE, EVEN AS OBSERVED BY THE BENCH D URING THE HEARING, TO NO SPECIFIC ANSWER BY THE LD. AR. IF THAT BE SO, THE SAID ACCOU NT WOULD ONLY FORM A PART OF THE ASSESSEES BOOK OF ACCOUNTS. SECONDLY, IN THAT CAS E, WHERE IS THE QUESTION OF THE SAID AMOUNT BEING CREDITED TO THE ASSESSEES CAPITAL ACC OUNT, AND WOULD STAND TO BE CREDITED TO THE SAID (BANK) ACCOUNT. THIRDLY, THE LD. AR COULD NOT SPECIFICALLY ANSWER AS TO THE SOURCE OF THE CREDITS IN ITS SAID (TRANSFEREE) BANK ACCOUNT WITH SYNDICATE BANK; THE CREDITS APPEARING DURING THE PERIOD 6.3.2006 TO 13.5.2006, I.E., FOR WHICH THE ACCOUNT STATEMENT STANDS SUBMITTED BEFORE US, BEING IN CASH, AND AGGR EGATING TO A MERE ` 50,000/-. THE SAME WOULD THUS BE REQUIRED TO BE FACTUALLY EXAMINE D FOR VALIDITY, AND DECIDED ON MERITS. E). THE AO SHALL ALSO ENSURE THAT THERE IS NO DUPL ICATION OF ANY ADDITION I.E., QUA THE IMPUGNED CREDIT OF ` 22 LACS, AS WAS OBSERVED BY US IN THE ASSESSMENT FR AMED TO THE EXTENT OF ` 5.89 LACS (REFER PARA 7.1). 8. ACCORDINGLY, THE ASSESSING OFFICER SHALL DECIDE THE SAME PER A SPEAKING ORDER, ISSUING DEFINITE FINDINGS OF FACT, AND AFTER ALLOWI NG A REASONABLE OPPORTUNITY TO THE ASSESSEE, FAILING WHICH, PARTICULARLY CONSIDERING T HAT THESE ARE ESSENTIALLY TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO STATE ITS CASE, BEIN G NOT ADEQUATELY ASSISTED EARLIER, THE ASSESSING OFFICER WOULD BE FREE TO DRAW ANY INFEREN CES PERMISSIBLE UNDER LAW UNDER THE CIRCUMSTANCES. WE DECIDE ACCORDINGLY. 9. THE LAST AND FIFTH GROUND OF THE ASSESSEES APPE AL WAS NOT PRESSED AT THE TIME OF HEARING AND IS CONSEQUENTLY DISMISSED AS NOT PRESSE D. I.T.A.NO. 559/COCH/2010 (FOR A.Y. 2007-08) 9 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 25TH JULY, 2011 GJ COPY TO: 1. SHRI ABDUL NAZAR AZAD, AZAD HOTEL, PROPRIETOR, A ZAD RESTAURANT, OVER BRIDGE, TRIVANDRUM-1 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(2), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE.