DCIT, Ernakulam V. Sri.P.P.Sunny, Ernakulam

ITA 563/COCH/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7652 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 22-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2013
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR; SHANTHAM BOSE
• Assessee Lawyers: K P PAULSON
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset; Gift; Business income; Depreciation; Business expenditure; Document seized; Charitable institution; Source of fund; Deemed to accrue or arise in india; Cost of acquisition; Difference of opinion; Valuation report; Documents seized; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 44AD; 143(3); 153A; 234B; 68; 139

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.549 TO 555/COCH/ 2013 ASSESSMENT YEAR : 2004-05-2010-11 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. VS. SMT. SEENA SUNNY, SUNNY DIAMONDS (P) LTD. RAJAJI ROAD, ERNAKULAM. [PAN:AJAPS 0718C] (REVENUE -APPELLANT) (ASSESSE -RESPONDENT) C.O. NOS. 34&35/COCH/2014 (ARSG. OUT OF I.T.A. NO.549 TO 555/COCH/ 2013) ASSESSMENT YEARS : 2004-05 & 2005-06 SMT. SEENA SUNNY, SUNNY DIAMONDS (P) LTD. RAJAJI ROAD, ERNAKULAM. [PAN:AJAPS 0718C] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) I.T.A. NOS.562 TO 564/COCH/ 2013 ASSESSMENT YEARS : 2008-09-2010-11 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. VS. SHRI P.P. SUNNY, SUNNY DIAMONDS (P) LTD. RAJAJI ROAD, ERNAKULAM. [PAN:AJAPS 0718C] (REVENUE -APPELLANT) (ASSESSE -RESPONDENT) REVENUE BY SHRI SHANTHAM BOSE, CIT(DR) & SHRI K.P. GOPAKUMAR, SR. DR ASSESSEE BY SHRI K.P. PAULSON, FCA DATE OF HEARING 22/12/2015 DATE OF PRONOUNCEMENT 05/01/2016 I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 2 O R D E R PER BENCH: THESE TEN APPEALS OF THE REVENUE AND TWO CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ARISING FROM THE CONSOLIDATED ORDER OF LD. CIT(A)-I, KOCHI DATED 24- 06-2013 FOR THE ASSESSMENT YEARS 2004-05 TO 2010-11 IN THE CASE OF SMT. SEENA SUNNY AND THE CONSOLIDATED ORDER OF LD. CIT(A)-I, K OCHI DATED 05-06-2013 IN THE CASE OF SHRI P.P. SUNNY . 2. SINCE THE ISSUES IN ALL THE APPEALS ARE ALMOST IDENTICAL AND THEREFORE, ALL THE APPEALS ARE TAKEN UP BY THIS CONSOLIDATED ORDER. 3. WE SHALL FIRST TAKE UP THE APPEALS OF THE REVEN UE IN THE CASE OF SMT. SEENA SUNNY IN I.T.A. NOS. 549-555/COCH/2013 FOR THE ASS ESSMENT YEAR 2004-05 AS UNDER: I.T.A. 549/COCH/2013 : AY 2004-05 4 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW, WEIG HT OF EVIDENCE AND FACTS OF THE CASE. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.46,33,094/- AS UNEXPLAINED CREDITS U /S. 68 WITHOUT PROPERLY SYNCHRONIZING THE CONFIRMATIONS FILED PRIO R TO SEARCH AND AFTER SEARCH. THE CIT(A)S DECISION IS WITHOUT PROP ERLY APPRECIATING THE FACTS OF THE CASE AND MERELY BASED ON A ROUTINE EVIDENCE AS ALSO WITHOUT DISCHARGE OF PRIMARY BURDEN BY THE ASS ESSEE. A MERE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 3 TRANSFER THROUGH BANKING CHANNEL WILL NOT SUFFICE T O PROVE THE CREDITWORTHINESS OF THE DONOR AND THE GENUINENESS O F THE TRANSACTION. (291 ITR 278(SC) IN THE CASE OF CIT VS . V.P. MOHANAKALA). 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N OF RS.22,00,000/- WITHOUT PROPERLY APPRECIATING THE FA CTUAL EVIDENCES BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL, EVIDENCING THAT M/S. VAI BHAV JEWELLERS IS TAKEN OVER BY VIBHAV ENTERPRISES (P) LTD., AS CL AIMED BY HER. THE CIT(A)S REASONING TO DELETE THE ADDITION THAT VAIB HAV JEWELLERS HAD CREDITED THE AMOUNT IN THEIR P&L ACCOUNT IN THE SUBSEQUENT YEAR IS MISPLACED AND LACKS JUSTIFICATION. 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF EXPENDITURE ON BENZ CAR WITHOUT PROPERLY APPRECIATING THE FACTS BROUGHT ON RECORD B Y THE ASSESSING OFFICER. 4. THE LEARNED CIT(A) ERRED IN GIVING 10% RELIEF O UT OF THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CO NSTRUCTION OF COMMERCIAL BUILDING WITHOUT APPRECIATING THE VALUAT ION REPORT OF THE DEPARTMENT VALUATION OFFICER AS ALSO FACTS BROU GHT ON RECORD BY THE ASSESSING OFFICER IN THIS REGARD. THE CIT(A)S DECISION DESERVES TO BE SET ASIDE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE ABOVE GROUNDS OF APPEAL. 5. AS REGARDS GROUND NO. 1, THE BRIEF FACTS AS E MANATING FROM THE ORDER OF THE ASSESSING OFFICER ARE REPRODUCED HEREI NBELOW: I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 4 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO FILE A CASH FLOW STATEMENT FOR THE YEAR. I N THE CASH FLOW STATEMENT, THE ASSESSEE HAS SHOWN VARIOUS GIFTS REC EIVED IN THE PREVIOUS YEAR AS SOURCES FOR CASH. 3.1 THE ASSESSEE CLAIMS TO HAVE RECEIVED A GIFT OF RS.2,25,000 FROM MR. K.K. JOSE IN THE PREVIOUS YEAR. AS PER THE CON FIRMATION FILED, THE ASSESSEE IS THE NIECE OF THE DONOR AND THE DONOR IS EMPLOYED IN SAUDI ARABIA. HE CLAIMS TO HAVE ADVANCED THE AMOUNT THROUGH CHEQUES FROM NRE ACCOUNTS IN INDIA. 3.2 IN ORDER TO TREAT A LOAN GIFT AS GENUINE, THE I DENTITY AND CREDITWORTHINESS OF THE DONOR MUST BE ESTABLISHED A ND THE TRANSACTION MUST BE PROVED AS GENUINE. IN THIS CASE THE CREDITWORTHINESS OF THE DONOR IS NOT ESTABLISHED. A LSO, JUST BECAUSE THE TRANSACTION HAS OCCURRED THROUGH BANKING CHANNE L DOES NOT MEAN THAT THE GIFT IS GENUINE. THE RELATION BETWEEN THE ASSESSEE AND THE DONOR IS NOT CLEAR. IT DEFIES REASON THAT A NY ONE SHOULD GIVE SUCH LARGE SUMS OF MONEY TO THE ASSESSEE WITHOUT CO NSIDERATION. THE OCCASION FOR THE GIFT IS ALSO NOT CLEAR. IN THE CONFIRMATION LETTER GIVEN BY THE DONOR, IT IS STATED THAT GIFT WAS GIVE N OUT OF LOVE AND AFFECTION. IN THE SUBMISSION DATED 27.12.2011, THE ASSESSEE HAS ARGUED THAT GIFT WAS GIVEN IN CONNECTION WITH THE P ROPOSED STARTING OF A NEW RETAIL SHOWROOM. THE VERSIONS ARE CONTRADI CTORY. UNDER THE CIRCUMSTANCES, THE GIFT IS NOT TREATED AS GENUINE, IT IS TREATED AS AN UNEXPLAINED CREDIT U/S. 68 OF THE INCOME TAX ACT. 3.3 SIMILARLY THE ASSESSEE HAS CLAIMED A GIFT OF R S.1,50,000/- FROM P.K. PAULY. IT IS STATED THAT THE AMOUNT WAS RECEIV ED BY WAY OF CHEQUE. THE SOURCE OF THE DOOR IS STATED TO BE EARN ING FROM ABROAD AND IT STATED THAT THE DONOR IS THE COUSIN OF THE A SSESSEE. IN THE SUBMISSION, DATED 27.12.2011, THE OCCASION FOR THE GIFT IS IDENTIFIED AS THE PROPOSED OPENING OF A NEW RETAIL SHOP BY TH E ASSESSEE. IN THIS CASE THE CREDITWORTHINESS OF THE DONOR IS NOT ESTABLISHED. IT IS STATED THAT HE IS THE MANAGER OF A JOY ALUKKAS SHOP IN DUBAI. BUT IT DEFIES PROBABILITY THAT ANY ONE SHOULD GIFT LARGE S UMS TO THE ASSESSEE. (A DISTANT RELATIVE). HENCE THE GENUINENE SS OF THE TRANSACTION IS NOT ESTABLISHED. THIS CLAIM IS ALSO TREATED AS AN UNEXPLAINED CREDIT U/S. 68 OF THE INCOME TAX ACT 3.4 IN THE PREVIOUS YEAR, THE ASSESSEE HAS CLAIME D A HUGE CASH GIFT OF RS.39,65,000 FROM ONE SAJU PAYYAPALLI. THE LOAN IS STATED TO HAVE BEEN RECEIVED FROM THE DONORS NRE A/C. WITH AX IS BANK. IN THE SUBMISSION OF THE ASSESSEE, THE SOURCE OF THE CREDI TOR IS MENTIONED I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 5 AS UNDER: HE IS THE MANAGING DIRECTOR OF INDO GERM AN CONSULTANCY SERVICES LTD AND CMD OF OTHER TWO GROUP COMPANIES. SINCE THE DONOR DOES NOT FILE ANY INCOME TAX RETURN IN INDIA, HIS CREDITWORTHINESS IS NOT CLEAR. THE RELATIONSHIP OF THE ASSESSEE WITH THE CREDITOR AND THE OCCASION FOR THE GIFT ARE NOT EVIDENT. IT DEFIES LOGIC THAT ANYONE WOULD GIVE SUCH A HUGE SUM OF MON EY WITHOUT ANY CONSIDERATION. IN THE SUBMISSION OF THE ASSESSE E DATED 27.12.2011, THE OCCASION FOR THE GIFT IS STATED TO BE THE PROPOSED OPENING OF A NEW SHOW ROOM BY THE ASSESSEE. HOWEVER THE CONFIRMATION LETTER FROM THE CREDITOR/DONOR FILED D URING PROCEEDINGS U/S. 143(3) FOR A.Y. 2004-05, STATES THAT THE DONOR STAYED WITH THE ASSESSEES FAMILY AND THEY WERE SATISFIED WITH THE HOSPITALITY AND A HENCE A CASH GIFT OF RS.46,00,000 WAS BEING GIVEN. FURTHER IT IS STATED THAT OUT OF THE PROPOSED GIFT OF 46LAKHS, 39 .65 LAKHS WAS GIVEN IN THE PREVIOUS YEAR. THERE ARE CONTRADICTION S BETWEEN THE CLAIMS OF THE ASSESSEE AND THE PURPORTED DONOR. IT DEFIES LOGIC THAT ANYONE WHO IS NOT A CLOSE RELATIVE WOULD GIVE SUCH A HUGE SUM OF MONEY AS GIFT, NO MATTER THE OCCASION. FURTHER A CA SUAL LOOK AT THE BANK STATEMENT OF THE DONOR WITH AXIS BANK REVEALS THAT VIRTUALLY THE ONLY TRANSACTION HAPPENING IN THE BANK ACCOUNT BETW EEN 30.06.2003 AND 31.03.2004 IS THE CREDITING OF MONEY IN THIS AC COUNT AND TRANSFERRING THE SAME TO SEENA SUNNY. THIS RAISES D OUBTS ABOUT THE GENUINENESS OF THE TRANSACTION. IT COULD BE THAT TH E ILLEGAL FUNDS OF THE ASSESSEE ARE ROUTED BACK THROUGH ILLEGAL CHANNE LS. THE TRANSACTION CANNOT BE TREATED AS GENUINE. HENCE THI S IS TREATED AS UNEXPLAINED CASH CREDIT AS PER SECTION 68 OF THE IT ACT. 3.5 THE ASSESSEE HAS CLAIMED LOAN OF RS.2,93,094 F ROM MRS. MOLLY ANTONY. THE CREDITOR IS STATED TO BE WORKING IN THE USA AND A RELATIVE OF THE ASSESSEE. IN THE CONFIRMATION THE S OURCE OF THE CREDITOR TO MAKE THE LOAN IS NOT MENTIONED. THE IDE NTITY AND CREDITWORTHINESS OF THE DONOR ARE NOT ESTABLISHED. THE GENUINENESS OF THE TRANSACTION IS ALSO NOT ESTABLISHED. AGAIN T HE AMOUNT CLAIMED TO HAVE BEEN ADVANCED RS.2,93,094 IS NOT A ROUND FI GURE WHICH IS USUALLY THE CASE IN THE CASE OF LOANS. IN THIS CAS E, THE AMOUNT PAID APPEARS TO BE THE SETTLEMENT OF SOME PURPOSE. UNDE R THE CIRCUMSTANCES, THIS AMOUNT IS TREATED AS AN UNEXPLA INED CASH CREDIT. 6. THE LD. CIT(A) DELETED THE ADDITIONS AND IT IS PERTINENT TO REPRODUCE THE ORDER OF THE LD. CIT(A) IN PARA 10 OF HIS ORDER AS UNDER: I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 6 10. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. THE ORIGINAL RETURN OF INCOME FILED BY THE APPELLANT U/S. 139 WAS SCRUTINIZED BY THE DCIT, CENTRAL CIRCLE-2, ERNAKULAM AND THE ASSESSMENT WAS COMPLETED AS PER ORDER DATED 26.5.2005. THE APPELLANT HAS PRODUCED CONFIRM ATIONS LETTERS AND FULL DETAILS OF THE CREDITS BEFORE THE ASSESSIN G OFFICER DURING SCRUTINY ASSESSMENTS MADE U/S. 143(3). THIS POSITIO N HAS BEEN CLEARLY MENTIONED IN THE ABOVE CITED ASSESSMENT ORD ER. AS SUBMITTED BY THE APPELLANT, NO REFERENCE IS MADE TO THE ASSESSMENT ORDER ISSUED U/S. 153A WITH REGARD TO ANY INCRIMINA TING DOCUMENTS RELEVANT FOR THE CURRENT ASSESSMENT YEAR. HENCE, I AM OF THE OPINION THAT DECISIONS OF THE HONBLE MUMBAI SPECIA L BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (2012) 147 TTJ (MUMBAI) (SB) 513 : (201 2) 18 ITR (TRIB.) 106 (MUMBAI) (SB) IS SQUARELY APPLICABLE IN THIS ASST. YEAR. MOREOVER, A BARE PERUSAL OF THE ASSESSMENT ORDER IS SUED BY THE ASSESSING OFFICER U/S. 153A SHOWS THAT THE AMOUNT C LAIMED BY THE ASSESSEE CAME TO HER THROUGH BANKING CHANNEL. IT I S EVIDENT FROM THE CONFIRMATION LETTERS THAT ALL AMOUNTS WERE GIVE N BY RELATIVES OF THE ASSESSEE AND NOT BY STRANGERS. IT IS ALSO AN A DMITTED FACT THAT ALL SUCH RELATIVES ARE RESIDING IN FOREIGN COUNTRIE S FOR SO MANY YEARS AND HAVING SUFFICIENT SOURCE OF INCOME. IT IS A WE LL ESTABLISHED POSITION OF LAW THAT IN THE CASE OF CASH CREDITS; A N ASSESSEE WAS REQUIRED TO PROVE THE IDENTITY OF THE CREDITOR, THE CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION WHICH I FIND SATISFIED IN THIS CASE. HENCE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.46,33,094/- FOR AMOUNT RECEIVED FROM RELATIVES. IN ACCORDANCE WITH THE ABOVE OBSERVATIONS, THEREFORE, SECOND AND THIRD GROUND OF APPEAL IS ALLOWED. 7. THE LD. DR, SHRI SHANTHAM BOSE, CIT(DR) ARGUED THAT MERE TRANSFER THROUGH BANKING CHANNEL WILL NOT SUFFICE T O PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . HE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 8. THE LD. AR ON THE OTHER HAND RELIED UPON THE S UBMISSIONS MADE BEFORE THE AO AND THE LD. CIT(A) AND THE ORDER OF T HE LD. CIT(A) AND INVITED OUR ATTENTION TO PARA 1 IN PG. 1 OF THE AS SESSING OFFICERS ORDER I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 7 THAT THE ASSESSEE FILED THE RETURN OF INCOME IN RES PONSE TO NOTICE U/S. 153A OF THE ACT ON 26-09-2011 SHOWING TOTAL INCOME OF RS.8,46,540/- MAKING NO CHANGE FROM THE RETURN FILED U/S. 139(1) ON 29/10/2004 . HE SUBMITTED AND ARGUED THAT NO INCRIMINATING MATER IAL HAS BEEN FOUND DURING THE COURSE OF SEARCH. HE ARGUED THAT ASSESS MENTS U/S. 153A SHALL BE WITH REFERENCE TO THE VALUABLE ARTICLES OR THINGS FOUND OR DOCUMENTS SEIZED RELATING TO THE ASSESSMENT YEAR IN THE COURSE OF SEARCH, WHICH ARE NOT DISCLOSED IN THE ORIGINAL ASS ESSMENT. WHERE PROCESSING U/S. 143(3) STOOD COMPLETED, FOR RETURNS FILED IN DUE COURSE BEFORE SEARCH, AND NO MATERIAL IS FOUND IN SEARCH T HEREAFTER, NO ADDITION CAN BE MADE U/S. 153A. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COU RT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. VS. ITO (1977) 10 6 ITR 1 IN WHICH AT PAGE 10, IT HAS BEEN HELD THAT THERE MUST BE A P OINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI JUDICIAL CONTROVERSIES AS I T MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 9. HE FURTHER ARGUED THAT THE RETURN PROCESSED U/S. 143(1) HAS BEEN SCRUTINIZED U/S. 143(3) VIDE ORDER DATED 26-05-2005 ACCEPTING THE INCOME DECLARED BY THE ASSESSEE. THEREFORE, IN THE ABSENCE OF ANY I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 8 SEIZED MATERIAL, NO ADDITION IS WARRANTED. HE SUBMI TTED THAT IT IS CHANGE OF OPINION WHICH IS NOT A VALID REASON FOR RE-ASSES SMENT. HE FURTHER REFERRED TO THE ORIGINAL ASSESSMENT ORDER U/S. 143( 3) DATED 26-05-2005 WHERE NECESSARY OBSERVATION HAS BEEN MADE BY THE A SSESSING OFFICER. ON SCRUTINY OF ASSESSEES PERSONAL BALANCE SHEET, IT IS NOTICED THAT ASSESSEE HAS RECEIVED SUBSTANTIAL FOREIGN GIFTS. CO NFIRMATION LETTERS IN RESPECT OF THE PARTIES WHO HAVE GIVEN THE GIFTS AND FULL DETAILS OF THE RECEIPTS THEREOF HAS BEEN COLLECTED AND ARE AVA ILABLE ON RECORD. FROM THE ABOVE OBSERVATION IT IS CLEAR THAT THE ASS ESSING OFFICER HAS APPLIED HIS MIND ON THE EVIDENCE SUBMITTED IN SUPPO RT OF THE GIFTS RECEIVED AND ACCORDINGLY, NO ADDITION WAS MADE IN T HE ORIGINAL ASSESSMENT. 10. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE ITAT, MUMBAI, SPECIAL BENCH IN THE CASE OF ALL CARG O GLOBAL LOGISTICS LTD. VS. DCIT REPORTED IN (2012) 147 TTJ (MUMBAI) ( SB) 513/137 ITD 287. PARA 58 OF THE ORDER OF THE SPECIAL BENCH OF THE ITAT, MUMBAI WHICH IS READ AS UNDER: A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S. 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S. 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 9 MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUN D IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINA L ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. THE LD. COUNSEL FOR THE ASSESSEE FURTHER ARGUED THA T NO ADDITION IS WARRANTED IN A CASE WHERE IDENTITY AND CAPACITY OF THE DONOR AND GENUINENESS OF THE TRANSACTION ARE PROVED WITH CONV INCING EVIDENCES. THE LD. COUNSEL FOR THE ASSESSEE HAS PRODUCED VARIO US DOCUMENTS WHICH HAVE BEEN LISTED AT PAGES 6 & 7 OF THE LD. CI T(A)S ORDER WITH RESPECT TO EACH DONOR/CREDITOR. ACCORDINGLY, HE PRA YED TO CONFIRM THE ORDER OF THE LD. CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE AT THE OUTSET, THE UNDISPUTED FACTS IN THE PR ESENT CASE ARE THAT THE RETURN FILED BY THE ASSESSEE U/S. 139(1) HAS BE EN SCRUTINIZED U/S. 143(3) BY THE ASSESSING OFFICER VIDE ORDER DATED 26 -05-2005. WHEREIN ADDITIONS HAVE BEEN MADE WITH REGARD TO THE SAID GI FTS. THE ASSESSING OFFICER HIMSELF IN THE ORDER U/S. 143(3) DATED 26-0 5-2005 HAS MENTIONED THAT THE ASSESSEE HAS RECEIVED SUBSTANTIA L FOREIGN GIFTS AND THE CONFIRMATION LETTERS IN RESPECT OF THE SAID PAR TIES WHO HAVE GIVEN THE GIFTS AND FULL DETAILS OF THE RECEIPTS THEREOF HAS BEEN COLLECTED AND ARE AVAILABLE ON RECORD. IT IS ALSO UNDISPUTED THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH ON THE ASSESSEE. IT IS ALSO UNDISPUTED THAT THE ASSESSEE HAS PRODUCED A COPY OF THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 10 PASSPORT, THE DETAILS OF THE NRI DONOR WORKING IN F OREIGN COUNTRY ALONG WITH EVIDENCE OF SALARY CERTIFICATE, CONFIRMATION L ETTER, BANK STATEMENT ETC. AND THE RELATIONSHIP WITH THE DONEE AND THIS I S A MATTER OF RECORD. THEREFORE, IN VIEW OF THE DECISION OF THE SPECIAL B ENCH OF ITAT, MUMBAI IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUP RA) THAT ASSESSMENT U/S. 153A CAN BE MADE ON THE BASIS OF INCRIMINATIN G MATERIAL FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND UNDISCLOSED INCOME DISCOVERED IN THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSEE HAS PRODUCED ALL THE DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) WHICH HAS BEEN SCRUTINIZED AND NO ADDITION WITH SPECIFIC REFERENCE TO SUCH FOREIGN GIFTS/LOANS HAVE BEEN MADE BY THE ASSESSING OFFICER . THEREFORE, OUTRIGHTLY NO ADDITION IS CALLED FOR BY THE ASSESSI NG OFFICER IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE ITAT, MUMBAI I N THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). 12. MOREOVER, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. (SUPRA) T HAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE . MOREOVER, THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND NO DEFECT IN THE SAME HAS BEEN POINTED OUT. SIMPLY MENTIONING BY THE ASSESSING OFFICER THAT THE RELATI ONSHIP BETWEEN THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 11 ASSESSEE AND THE DONOR IS NOT CLEAR AND THE DECISIO N OF PROBABILITY IN SUCH CIRCUMSTANCES CANNOT BE GIVEN AGAINST THE ASSE SSEE. THE ARGUMENT OF THE LD. DR THAT MERE TRANSFER THROUGH B ANKING CHANNEL WILL NOT SUFFICE TO PROVE THE CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTION, WILL NOT HELP THE REVENUE IN VIEW OF T HE REASONING AND OUR FINDINGS GIVEN HEREINABOVE. IN THE CIRCUMSTANCES A ND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION SO MADE. THUS, GROUND NO. 1 OF THE REVENUE IS DISMISSED. 13. AS REGARDS GROUND NO. 2, THE BRIEF FACTS OF T HE CASE AS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER AT PAGE 3 O F HIS ORDER ARE REPRODUCED HEREINBELOW: 4. IN THE PREVIOUS YEAR, THE ASSESSEE SHOWS IN THE BALANCE SHEET A LIABILITY OF RS.22,00,000 BEING ADVANCE RECEIVED FR OM VAIBHAV JEWELLERS. IN THE SUCCEEDING YEAR, THE ASSESSEE SH OWS AS SALE OF RS.22,00,139 TO ONE VAIBHAV EMPIRE (P) LTD. WHEN T HIS ISSUE WAS RAISED WITH THE ASSESSEE, THE ASSESSEE SUBMITTED A COPY OF THE PROCEEDINGS OF THE REGISTRAR OF COMPANIES, HYDERAB AD (11.06.2003) SHOWING THE CHANGE OF NAME FROM HOTEL ANANTH (P) LT D. TO VAIBHAV EMPIRE (P) LTD. THUS THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION ABOUT VAIBHAV JEWELLERS WHO IS SHOWN AS A CREDITO R AS ON 31.03.2004. ALSO THERE IS NOTHING ON RECORD TO INDI CATE THAT VAIBHAV JEWELLERS IS ACTUALLY VAIBHAV EMPIRE (P) LTD. HENCE THE LIABILITY CLAIMED TOWARDS VAIBHAV JEWELLERY IS A NON EXISTEN T LIABILITY. THIS RESULTS IN AN ADDITION OF RS.22,00,000. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 12 14. THE LD. CIT(A) DELETED THE ADDITION AND IT IS PERTINENT TO REPRODUCE THE FINDINGS OF THE LD. CIT(A) AS UNDER: 12. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. AS PER THE S CHEDULE ATTACHED TO THE AUDITED BALANCE SHEET AS AT 31/03/2004 SUBMITTE D ALONG WITH THE RETURN OF INCOME FILED U/S. 139, AN ADVANCE OF RS. 22,00,000/- IS SHWN AS RECEIVED FROM M/S. VAIBHAV JEWELLERS. IT IS SUBM ITTED BY THE APPELLANT THAT THE FRIM VAIBHAV JEWELLERS WAS TA KEN OVER BY THE COMPANY VAIBHAV EMPIRE PRIVATE LIMITED AND THAT AS PER ACCOUNT STATEMENT, THE SAID ADVANCE HAS BEEN SQUARED UP IN THE NEXT FINANCIAL YEAR AGAINST THE SALES INVOICE FOR RS.22,00,139/- D ATED 10-07-2004 RAISED AGAINST M/S. VAIBHAV EMPIRES (P) LIMITED AND THIS POSITION IS CONFIRMED BY THE ASSESSING OFFICER IN THE ASSESSMEN T ORDER U/S. 153A. AS THE ENTIRE ADVANCE IS CREDITED IN THE PROFIT AND LOSS ACCOUNT AS SALES FOR THE IMMEDIATELY SUCCEEDING YEAR, THE ADVA NCE RECEIVED CANNOT BE CONSIDERED AS A NON-EXISTENT LIABILITY. H ENCE, THE ADDITION OF RS.22,00,000/- MADE BY THE ASSESSING OFFICER ON THI S GROUND IS DIRECTED TO BE DELETED AND ACCORDINGLY, THE FOURTH GROUND OF APPEAL IS ALLOWED. 15. THE LD. DR RELIED UPON THE ORDER OF THE ASSESS ING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT ADVANCE OF RS.22,00,000/- RECEIVED AGAINST SALES FROM M/S. VAIBHAV JEWELLERS, VISHAKHAPATTANAM THROUGH ACCOUNT PAYEE CHEQUES WAS REFLECTED IN THE BOOKS OF ACCOUNT FOR THE IMPUGNED PREVIOUS YEAR PRODUCED BEFORE THE ASSE SSING OFFICER. THIS LIABILITY WAS EXISTING AS SUCH IN THE BALANCE SHEET SUBMITTED AND SCRUTINIZED BY THE ASSESSING OFFICER DURING ORIGINA L ASSESSMENT U/S. 143(3) AND NO ADVERSE INFERENCE WAS DRAWN AT THAT STAGE. I N THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING COURSE OF SEARC H, MERE CHANGE OF OPINION IS NOT A VALID REASON FOR MAKING THIS UNWAR RANTED ADDITION. INITIALLY I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 13 THE PARTY WAS A FIRM NAMELY VAIBHAV JEWELLERS AND WAS TAKEN OVER BY THE COMPANY M/S. VAIBHAV EMPIRE PRIVATE LIMITED AND HENCE, THE NAME OF THE PURCHASE ADVANCE WAS SHOWN IN THE BALANCE SHEET AS ON 31.3.2004 AS VAIBHAV JEWELLERS, VISHAKHAPATTANAM AND THE NAME OF PURCHASER IN THE SUBSEQUENT YEAR WAS SHOWN AS VAIBHAV EMPIRE PRIVAT E LIMITED, VISHAKHAPATTANAM. SALE TRANSACTION WITH THIS PARTY WAS REFLECTED IN THE BOOKS OF ACCOUNT FOR THE SUBSEQUENT ASST. YEAR 2005 -06 PRODUCED BEFORE THE ASSESSING OFFICER AND THE ACCOUNT CONFIRMATION FROM THIS PARTY WAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. THE LD. CO UNSEL FOR THE ASSESSEE ARGUED THAT AS THE SALE IS ALREADY CREDITED IN THE PROFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2005-06, THE ADDITION OF RS.22, 00,000/- CLEARLY AMOUNTS TO DUPLICATION IN ASSESSMENT. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT THE ADVANCE RECEIPT OF RS.22,00,000/- HAS BEEN REFLECTED IN THE BALANCE SHEET AS ON 31.03.2004 SUBMITTED ALONG WITH THE RETURN OF INCOM E FILED U/S. 139 OF THE ACT. THE SAID ADVANCE HAS BEEN DECLARED TO HAVE BEE N RECEIVED FROM VAIBHAV JEWELLERS. IN THE ORIGINAL ASSESSMENT U/S. 143(3) VIDE ORDER DATED 26-05-2005, NO ADVERSE INFERENCE HAS BEEN DRAWN WIT H RESPECT TO THE SAID ADVANCE. THE SAID VAIBHAV JEWELLERS WAS TAKEN OVER BY THE COMPANY VAIBHAV EMPIRE (P) LIMITED AND AS PER THE COPY OF AC COUNTS SUBMITTED, THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 14 SAID ADVANCE HAS BEEN SQUARED UP IN THE NEXT FINANC IAL YEAR AGAINST THE SALES OF RS. 22,00,139/- DATED 10-07-2004 RAISED AG AINST M/S. VAIBHAV EMPIRE (P) LIMITED WHICH POSITIN HAS BEEN CONFIRMED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER U/S. 153A OF THE AC T. AS THE ENTIRE ADVANCE HAS ALREADY BEEN CREDITED IN THE PROFIT AND LOSS ACCOUNT IN THE FORM OF SALES IN THE IMMEDIATELY SUCCEEDING YEAR, I .E., FOR THE ASSESSMENT YEAR 2005-06, THEREFORE, THE IMPUGNED ADDITION WILL TANTAMOUNT TO DOUBLE TAXATION WHICH WILL BE HELD TO BE ILLEGAL. ACCORDI NGLY, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING SUCH ADDITION AND WE FIN D NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS PASSED A VERY REASONED OR DER. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 17. AS REGARDS GROUND NO. 3, THE BRIEF FACTS AS E MANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PARA 5 OF HIS ORDER ARE REPRODUCE HEREINBELOW: 5. IN THE PREVIOUS YEAR, THE ASSESSEE INTRODUCED A NEW ASSET VIZ. BENZ CAR INTO THE BLOCK OF ASSETS. THE ACTUAL COST OF TH IS ASSET IS RS.35,84,751 AND THE ASSESSEE HAS CLAIMED DEPRECIAT ION OF RS.7,16,950. IN THE PREVIOUS YEAR, THE TURNOVER OF THE BUSINESS WAS ONLY RS.82,31,454. SO THE ASSET IS OUT OF PROPORTI ON TO THE SCALE OF THE BUSINESS. A PROPOSAL WAS GIVEN TO WITHDRAW THE DEPR ECIATION CLAIMED ON THE ASSET. 5.1 THE ASSESSEE SUBMITTED AS UNDER: I AM ENGAGED IN DIAMOND BUSINESS, MOST OF MY CUSTOMERS ARE JEWELERS AND HIG H FLYING PEOPLE IN SOCIETY. DURING THE CURRENT ASSESSMENT YEAR, I WAS SUPPLYING DIAMONDS AS PER THE ORDERS OF THE JEWELERS. I WAS USING MY C AR FOR THE SUPPLY OF DIAMONDS TO VARIOUS SHOWROOMS. IT IS A WELL-ACCEPTE D FACT THAT THE CREDIBILITY AND STATUS OF THE DEALER WILL BE COUNTE D BY THE CUSTOMERS ON THE APPEARANCE AND INFRASTRUCTURE OF THE SUPPLIER. THE BENZ CAR IS USED NOT ONLY FOR THE SECURE SUPPLY OF DIAMONDS BUT ALSO TO ACQUIRE THE TRUST I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 15 AND CONFIDENCE OF THE CUSTOMERS. THE SIZE OF THE B USINESS SHOULD ALSO BE ANALYZED ON THE BASIS OF THE TURNOVER. WE HAVE A CHIEVED TURNOVER OF 84.34 LAKHS DURING THE CURRENT YEAR AND 3.44 CRORES DURING THE NEXT ASSESSMENT YEAR. I WAS USING MY OLD LANCER CAR FOR PERSONAL USE AND I HAVE NOT CLAIMED ANY DEPRECIATION OR EXPENSES OF TH E LANCER CAR DURING THE CURRENT YEAR. KINDLY NOTE THAT THE ABOVE CAR I S PURCHASED OUT OF HDFC CAR LOAN AND THE SAME IS REFLECTED IN MY BALAN CE SHEET. MY GROSS TOTAL INCOME DECLARED DURING THE CURRENT YEAR IS 8. 56 LAKHS. 5.2 GIVEN THE SIZE OF THE BUSINESS, THE INVESTMENT DEFIES LOGIC. FURTHER BEING A PROPRIETARY CONCERN, THE ASSET WILL INVARIA BLY BE PUT TO PERSONAL USE. HENCE THE CLAIM OF THE ASSESSEE THAT THE ASSET IS PURELY BUSINESS DOES NOT APPEAR CORRECT. HAVING CONSIDERED THE REP LY OF THE ASSESSEE, 50% OF THE DEPRECIATION CLAIMED (RS.7,16,950) ON CA R AND ALSO 50% OF THE INTEREST CLAIMED ON CAR LOAN (RS.1,24,731) IS D ISALLOWED. THIS INVOLVES ADDITION OF RS.4,20,840.. 18. THE CIT(A) DELETED THE ADDITION VIDE PARA 14 OF HIS ORDER WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED HEREINBELOW: 14. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. CONSIDERING THE SIZE AND NATURE OF BUSINESS OF THE ASSESSEE, CAR EXPENDITURE SEEMS TO BE EXCESSIVE HAVING REGARD TO THE BUSINESS NEEDS OF THE ASSESSEE AND TH E BENEFIT DERIVED BY THE APPELLANT OR ACCRUING TO IT FROM THIS EXPENDITU RE. HOWEVER, 50% DISALLOWANCE IS HIGHLY UNREASONABLE. HENCE, THE ASS ESSING OFFICER IS DIRECTED TO SUSTAIN THE ADDITION ON ACCOUNT OF CAR EXPENSES TO THE EXTENT OF 15% RS.1,26,252 AND TO DELETE THE BALANCE ADDITION OF RS.2,94,588 (4,20,840-1,26,252). ACCORDINGLY, FIFTH GROUND OF APPEAL IS PARTLY ALLOWED. 19. THE LD. DR RELIED UPON THE ORDER OF THE ASSE SSING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET ARGU ED THAT NO INCRIMINATING MATERIAL HAS BEEN SEIZED DURING THE COURSE OF SEARC H AND IT WILL TANTAMOUNT TO CHANGE OF OPINION WHICH IS NOT VALID REASON FOR REASSESSMENT. HE ARGUED THAT THE ASSESSEE HAS GONE FOR A NEW BENZ CA R AND FULL DETAILS OF I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 16 THE PURCHASE THEREOF AND THE SOURCE OF FUNDS HAVE B EEN EXPLAINED AND AVAILABLE ON RECORD. FROM THE ABOVE STATEMENT, IT I S CLEAR THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND ON THE CLAIM OF DEPRECIATION AND INTEREST ON VEHICLE LOAN AND NO ADDITION WAS MADE I N THE ORIGINAL ASSESSMENT U/S. 143(3). HENCE, NO ADDITION IS CALL ED FOR ON ACCOUNT OF THE CAR EXPENSES OF THE ASSESSEE WHICH HAS BEEN ALREADY ALLOWED BY THE ASSESSING OFFICER IN ORIGINAL ASSESSMENT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ARGUMENT OF THE ASSESSING OFFICE R THAT THE ASSET IS OUT OF PROPORTION TO THE SCALE OF THE BUSINESS IS NOT S USTAINABLE FOR THE FOLLOWING REASONS. THE ASSESSEE WAS ENGAGED IN DI AMOND BUSINESS. MOST OF HER CUSTOMERS ARE JEWELERS AND HIGH FLYING PEOPL E IN THE SOCIETY. DURING THE CURRENT ASSESSMENT YEAR, SHE WAS SUPPLYING DIAM ONDS AS PER THE ORDERS OF THE JEWELERS. SHE WAS USING HER BENZ CAR FOR THE SUPPLY OF DIAMONDS TO VARIOUS SHOWROOMS. IT IS A WELL ACCEPTE D FACT THAT THE CREDIBILITY AND STATUS OF THE DEALER WILL BE COUNTE D BY THE CUSTOMERS ON THE APPEARANCE AND INFRASTRUCTURE OF THE SUPPLIER. BENZ CAR IS USED NOT ONLY TO ACQUIRE THE TRUST AND CONFIDENCE OF THE CUSTOMERS B UT ALSO FOR THE SECURED SUPPLY OF DIAMONDS. THE SIZE OF THE BUSINESS SHOULD ALSO BE ANALYSED ON THE BASIS OF THE TURNOVER AND THE ASSESSEE HAS ACHI EVED A TURNOVER OF RS.84.31 LAKHS DURING THE CURRENT ASSESSMENT YEAR A ND RS.3.44 CRORES DURING THE NEXT YEAR. MOREOVER, THE ASSESSEE WAS US ING HER OLD LANCER CAR FOR PERSONAL USE AND SHE HAS NOT CLAIMED ANY DEPREC IATION OR EXPENSES OF I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 17 THE LANCER CAR DURING THE CURRENT ASSESSMENT YEAR. HENCE, NO DISALLOWANCE IS WARRANTED ON ACCOUNT OF CAR EXPENSES. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE UNDISPUTED FACT IN THE PRESENT CASE ARE T HAT THE ASSESSEE IS HAVING BENZ CAR FOR WHICH FULL DETAILS OF PURCHASE THEREOF AND THE SOURCE OF FUNDS HAVE BEEN EXPLAINED AND ARE AVAILABLE ON RECO RD. IN THE ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT, THE REASONING GI VEN BY THE AO FOR ADDITION WAS MAINLY THAT THE ASSET IS OUT OF PROPOR TION TO THE SCALE OF BUSINESS AND TO THIS EFFECT, THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN DIAMOND BUSINESS AND MOST OF HER CUSTOME RS ARE JEWELERS AND HIGH FLYING PEOPLE IN THE SOCIETY AND SHE HAS BEEN SUPPLYING DIAMONDS AS PER THE ORDERS OF THE JEWELLERS BY USING HER BENZ C AR FOR THE SUPPLY OF DIAMONDS TO VARIOUS SHOWROOMS. THE SAID CAR WAS USE D ONLY TO ACQUIRE THE TRUST AND CONFIDENCE OF THE CUSTOMERS AND ALSO FOR THE SECURED SUPPLY OF DIAMONDS. IT WAS ALSO SUBMITTED THAT THE TURNOVER D URING THE CURRENT ASSESSMENT YEAR WAS RS.84.31 LAKHS WHEREAS IN THE F OLLOWING YEAR, IT WAS RS.3.44 CRORES. THE ASSESSEE WAS USING FOR PERSONA L USE HER OLD LANCER CAR FOR WHICH NO CLAIM OF DEPRECIATION OR EXPENSES HAD BEEN MADE DURING THE IMPUGNED YEAR. HOWEVER, THE PERSONAL ELEMENT IN THE USE OF CAR CANNOT BE RULED OUT. IN THE CIRCUMSTANCES AND FACT S OF THE CASE, THE LD. CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER T O SUSTAIN THE ADDITION ON ACCOUNT OF CAR EXPENSES TO THE EXTENT OF 15% AND HA S RIGHTLY DIRECTED TO I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 18 DELETE THE BALANCE IMPUGNED ADDITION. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND HIS ORDER HAS BEEN FOUND TO BE A REASONED ORDER. THUS GROUND NO. 3 OF THE REVENUE IS DISMISS ED. 21. AS REGARDS GROUND NO. 4, THE BRIEF FACTS OF T HE CASE AS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PARA 6 O F HIS ORDER WHICH IS REPRODUCED HEREINBELOW: 6. IN THE CASH FLOW STATEMENT THE ASSESSEE SHOWS I NVESTMENT IN THE CONSTRUCTION OF A COMMERCIAL BUILDING AT ANGAMALY ( SUNNY SIDE BUILDING) AT RS.29,97,000. THIS BUILDING WAS CONSTR UCTED IN TWO PHASES: PHASE I (2003-06) AND PHASE II (2008-11). THIS MATT ER WAS REFERRED TO THE VALUATION CELL. AS PER THE REPORT OF THE VALUAT ION OFFICER (REPORT 45/1422), THE COST OF THE PHASE I IS 46,45,000 AND THAT OF PHASE 2 IS RS.1,59,12,000. THE DETAILS ARE ARRANGED IN TABULAR FORM AS UNDER. FINANCIAL YEAR PHASE ACCOUNTED INVESTMENT AS PER VALUATION REPORT SHORT ACCOUNTED SHORT ACCOUNTED YEAR WISE OPENING 1 2,00,000 46,45,000 13,32,500 2003-04 1 29,97.000 12,04,580 2004-05 1 25,000 9,993 2005-06 1 0 0 2006-07 1 90,500 35,977 TOTAL PHASE1 33,12,500 2008-09 2 1,00,787 1,59,12,000 9,75,620 6,536 2009-10 2 1,17,03,487 7,60,983 2010-11 2 31,32,106 1,95,124 TOTAL PHASETWO 1,49,36,380 I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 19 6.1 A COPY OF THE VALUATION REPORT WAS GIVEN TO THE ASSESSEES AR ON 27/12/2011. HAVING CONSIDERED THE REPLY OF THE ASSE SSEE, THE SHORTFALL NOTICED IS TREATED AS THE UNEXPLAINED INVESTMENT OF THE ASSESSEE FOR THE YEAR. THIS INVOLVES AN ADDITION OF RS.12,04,580. 22. THE LD. CIT(A) DELETED THE ADDITION TO THE E XTENT OF 10% BEING THE VALUATION DIFFERENCE AND RETAINED THE BALANCE ADDIT ION. IT IS PERTINENT TO REPRODUCE HIS ORDER IN PARA 17 AS UNDER: 17. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED I FIND THAT THE D VO HAS ADOPTED THE PLINTH AREA RATES NOTIFIED BY THE CPWD. THOUGH THE LD. AR ARGUED THAT VALUATION AS PER CPWD RATES CANNOT BE ADOPTED, VALU ATION REPORT BASED ON STATE PWD RATES WAS ALSO NOT SUBMITTED. THE TOTA L VALUE DECLARED BY THE ASSESSEE FOR THE FIRST PHASE OF CONSTRUCTION IS RS.33,12,500/-. VALUE AS PER REPORT OF DVO FOR THE FIRST PHASE IS RS. 46, 45,000/-. THERE IS A VALUATION DIFFERENCE OF RS.13,32,500/- FOR THE YEAR S 2003-04 TO 2006-07, DURING THE FIRST PHASE OF CONSTRUCTION. ACCORDINGLY , THE VARIATION BETWEEN THE DECLARED VALUE AND THE VALUE AS PER THE REPORT OF DVO IS 28.68%. RESPECTFULLY FOLLOWING THE JUDICIAL DECISIONS IN HO NEST GROUP OF HOTELS (P) LTD. VS. COMMISSIONER OF INCOME TAX (HIGH COURT OF JAMMU & KASHMIR (2002) 177 CTR (J&K) 232 : (2002) 123 TAXMAN 464 (J &K) AND COMMISSIONER OF INCOME TAX, FARIDABAD VS SMT. VIMAL CHAWLA CHARITABLE TRUST, APPEAL NO. 94 OF 2010, ORDER DATED 19 MAY 20 10 (2010-TMI- 77011-PUNJAB & HARYANA HIGH COURT), WHEREIN IT HAS BEEN HELD THAT VALUATION REPORT IS ONLY AN ESTIMATE COST OF CONS TRUCTION, WHICH IS BASED ON CERTAIN PARAMETERS, A DIFFERENCE IN VALUATION OF ABOUT 10% IS TO BE CONSIDERED REASONABLE AND MAY BE IGNORED. ACCORDING LY, VALUATION DIFFERENCE TO THE EXTENT OF RS.4,64,500/- MAY BE IG NORED AND THE BALANCE ADDITION FOR THE FIRST PHASE RS.8,68,000/- (13,32,5 00 4,64,500), IS TO BE SUSTAINED. HENCE, SUSTAINED ADDITION PROPORTIONATE FOR THE CURRENT ASSESSMENT YEAR WILL BE RS.7,85,445 (8,68,000 X 29. 97/33.12) AND THE BALANCE ADDITION RS.4,19,135 (12,04,580 7,85,445) IS TO BE DELETED. ACCORDINGLY, SIXTH GROUND OF APPEAL IS PARTLY ALLOW ED. 23. THE LD. DR RELIED ON THE ORDER OF THE ASSESSI NG OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSION S MADE BEFORE THE LD. CIT(A). I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 20 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE ASSESSEE HAS NOT SUBMITTED THE PWD RATES AND THE VALUATION DIFFERENC E AS PER THE REPORT OF THE DVO COMES AT 28.68%. IN VIEW OF THE DECISIONS OF TH E HONBLE HIGH COURT OF JAMMU & KASHMIR AND HONBLE HIGH COURT OF PUNJAB & HARYANA, THE DVOS REPORT IS AN ESTIMATE ONLY WHICH IS BASED ON CERTAI N PARAMETERS BUT A DIFFERENCE IN VALUATION OF ABOUT 10% HAS TO BE CONS IDERED AS REASONABLE AND CAN BE IGNORED. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE LD. CIT(A) HAS RIGHTLY IGNORED 10% OF THE VALUATION DIFFERENCE AND ACCORDINGLY, HAS DELETED RS.4,64,500/- AND RETAINED RS.8,68,000/-. ACCORDIN GLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IN FACT IS A REAS ONED ORDER. THUS GROUND NO. 4 OF THE REVENUE IS DISMISSED. THUS THE APPEAL OF THE REVENUE IN I.T.A. NO. 549/COCH/2013 IS DISMISSED. C.O. NO. 34/COCH/2014 : AY 2004-05 25. THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN C.O. NOS.34&35/COCH/2014 ARE DELAYED BY 285 DAYS FOR WHICH THE ASSESSEE HAS FILED A CONDONATION PETITION ALONGWITH THE AFFIDAVIT ON PERUSAL OF THE CONDONATION PETITION. WE FIND SUFFICIENT CAUSE FOR THE DELAY IN FILING THE CROSS OBJECTIONS IN C.O. NOS. 34&35/COCH/2014 BY 285 DAYS AND ACCORDINGLY, THE SA ME IS CONDONED IN BOTH THE CROSS OBJECTIONS. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 21 26. THE ASSESSEE HAS RAISED CROSS OBJECTION IN C .O. NO. 34/COCH/2014 ARISING OUT OF I.T.A. NO. 549/COCH/2013. THE ASSES SEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTIONS:- 1. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER OUGHT TO HAVE REALIZED THAT AY 20 04-05 IS A COMPLETED ASSESSMENT AND HENCE IN ASSESSMENT U/S. 153A, THE A DDITIONS HAS TO BE BASED ONLY ON INCRIMINATING MATERIAL FOUND IN THE C OURSE OF SEARCH. RELIANCE IS PLACED ON CIT VS. MURLI AGRO PRODUCTS L IMITED (BOMBAY HIGH COURT (NAGPUR BENCH) IN I.T.A. NO. 36/2009 ORDER DA TED 29-10-2010 (PAGE.3..). SEQUENCE OF COMPLETED ASSESSMENT IS E NCLOSED (PAGE.4). 2. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE ASSESSING OFFICER IS RIGHT IN MAKING THE IMPUGN ED ADDITIONS U/S. 153A, WHEN THE ASSESSMENT FOR THE AY 2004-05 IS A COMPLET ED ASSESSMENT (AND SO, SHALL NOT ABATE) AND PARTICULARLY, WHEN NO DOCU MENT (INCRIMINATING OR OTHERWISE) RELATING TO THE ASSESSMENT YEAR 2005-06 IS OBTAINED FROM THE PREMISES OF THE ASSESSEE WHO WAS SEARCHED U/S. 132. 3. FOR THESE AND OTHER GROUNDS AND DOCUMENTS TO B E SUBMITTED AT THE TIME OF HEARING AND IT IS HUMBLY PRAYED THAT THE TR IBUNAL BE PLEASED TO ALLOW THE APPEAL. 27. ON A PERUSAL OF THE GROUNDS OF CROSS OBJECTI ONS, IT IS EVIDENT THAT THEY ARE SUPPORTIVE IN NATURE WHICH IS A MATTER OF FACT. THE LD. CIT(A) HAS ALREADY ALLOWED RELIEF AND THERE IS NOTHING LEFT AS GRIEVANCE OF THE ASSESSEE BEFORE US. ACCORDINGLY, THE SAME IS HELD TO BE INFR UCTUOUS AND IS DISMISSED. THUS CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO. 34/COCH/2014 IS DISMISSED. I.T.A. NO. 550/COCH/2013 : AY 2005-06 I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 22 28. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADD ITION ON ACCOUNT OF UNEXPLAINED CREDITS U/S. 68 WITHOUT PROPERLY SYNCHR ONIZING THE CONFIRMATIONS FILED PRIOR TO SEARCH AND AFTER SEARC H. THE CIT(A)S DECISION IS WITHOUT PROPERLY APPRECIATING THE FACTS OF THE C ASE AND MERELY BASED ON A ROUTINE EVIDENCE AS ALSO WITHOUT DISCHARGE OF PRI MARY BURDEN BY THE ASSESSEE. A MERE TRANSFER THROUGH BANKING CHANNEL W ILL NOT SUFFICE TO PROVE THE CREDITWORTHINESS OF THE DONOR AND THE GEN UINENESS OF THE TRANSACTION. (291 ITR 278(SC) IN THE CASE OF CIT VS . V.P. MOHANAKALA). 2. THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF SHORTFALL IN EXPORTS TO THE EXTENT OF RS .88,31,207/-. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT THE ADDIT ION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUMENTS SIZED D URING THE COURSE OF SEARCH. THE CIT(A)S DECISION IS WITHOUT AFFIRMING THE FACTUAL POSITION IN THIS REGARD AND DESERVES TO BE SET ASIDE. 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF EXPENDITURE ON BENZ CAR WI THOUT PROPERLY APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. 4. THE CIT(A)S DECISION TO DELETE THE ADDITION MAD E ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF COMMERCIA L BUILDING BASED ON DVOS REPORT ON THE REASONING THAT THERE ARE FAULTS /ERROR IN THE DVOS REPORT IS UNILATERAL AND WITHOUT GIVING THE ASSESSI NG OFFICER AN OPPORTUNITY TO EXPLAIN THE SAME. THE CIT(A) ERRED IN VIOLATING THE PROVISIONS OF RULE 46A OF THE IT RULES IN ACCEPTING FRESH DETAILS/DOCU MENTS FILED BY THE ASSESSEE WHICH WERE NOT PRODUCED BEFORE THE ASSESSI NG OFFICER. THE CASE LAW REPORTED IN 288 ITR 179 (2007) IN THE CASE OF R ANJIT KUMAR CHOWDHARY (GAUH) IS SQUARELY APPLICABLE IN THIS CAS E. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE ABOVE GROUNDS OF APPEAL. 29. AS REGARDS GROUND NO. 1, THE BRIEF FACTS AS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PARAS 3 AND 3.1 ARE REPROD UCED HEREINBELOW: I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 23 3. IN THE COURSE O ASSESSMENT PROCEEDINGS, THE ASS ESSEE WAS ASKED TO FILE A CASH FLOW STATEMENT FOR THE YEAR. IN THE CAS H FLOW STATEMENT, THE ASSESSEE HAS CLAIMED AS SOURCE, GIFT FROM P.P. BENN Y AMOUNTING TO RS.5,37,350/. THE DONOR IS STATED TO BE AND NRI AND BROTHER-IN-LAW OF THE ASSESSEE. THE AMOUNT IS RECEIVED THROUGH BANKING CH ANNELS. THE OCCASION FOR THE GIFT IS DESCRIBED AS UNDER: I WAS DOING WH OLESALE BUSINESS AT CHALAKUDY AND I INFORMED MY BROTHER-IN-LAW ABOUT MY AMBITION TO OPEN A NEW RETAIL SHOP AT ERNAKULAM. AS HE WAS ONE MY DEARE ST WELL WISHER, RS.5,37,350 WAS GIVEN TO ME. 3.1 IN ORDER TO TREAT A LOAN/GIFT AS GENUINE, THE I DENTITY AND CREDITWORTHINESS OF THE DONOR MUST BE ESTABLISHED A ND THE TRANSACTION MUST BE PROVED AS GENUINE. IN THIS CASE THE CREDITW ORTHINESS OF THE DONOR IS NOT ESTABLISHED. ALSO, JUST BECAUSE THE TRANSACT ION HAS OCCURRED THROUGH BANKING CHANNEL DOES NOT MEAN THAT THE GIFT IS GENU INE. THE RELATION BETWEEN THE ASSESSEE AND THE DONOR IS NOT CLEAR. IT DEFIES REASON THAT ANY ONE SHOULD GIVE SUCH LARGE SUMS OF MONEY TO THE ASS ESSEE WITHOUT CONSIDERATION. THE OCCASION FOR THE GIFT IS ALSO NO T CLEAR. IN THE CONFIRMATION LETTER GIVEN BY THE DONOR, IT IS STATE D THAT GIFT WAS GIVEN OUT OF LOVE AND AFFECTION. IN THE SUBMISSION DATED 2 7.12.2011, THE ASSESSEE HAS ARGUED THAT GIFT WAS GIVEN IN CONNECTION WITH T HE PROPOSED STARTING OF ANEW RETAIL SHOWROOM. THE VERSIONS ARE CONTRADICTOR Y. UNDER THE CIRCUMSTANCES, THE GIFT IS NOT TREATED AS GENUINE. IT IS TREATED AS AN UNEXPLAINED CREDIT U/S. 68 OF THE INCOME TAX ACT. A GAIN THE AMOUNT CLAIMED TO HAVE BEEN ADVANCED IS NOT A ROUND FIGURE , WHICH IS USUALLY THE CASE IN THE CASE OF LOANS/GIFTS. IN THIS CASE, THE AMOUNT PAID APPEARS TO BE THE SETTLEMENT OF SOME PURCHASE. UNDER THE CIRCU MSTANCES, THIS AMOUNT IS TREATED AS AN UNEXPLAINED CASH CREDIT. 30. THE LD. CIT(A) DELETED THE ADDITION AND HIS F INDING IN PARA 24 IS REPRODUCED HEREINBELOW: 24. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. PERUSAL OF THE A SSESSMENT ORDER ISSUED BY THE AO U/S. 153A SHOWS THAT THE AMOUNT CLAIMED B Y THE ASSESSEE CAME TO HER THROUGH BANKING CHANNEL. IT IS EVIDENT FROM THE CONFIRMATION LETTER THAT THE AMOUNT WAS GIVEN BY MR. P.P. BENNY, THE HUSBANDS BROTHER OF THE ASSESSEE AND NOT BY STRANGER. IT IS ALSO AN ADMITTED FACT THAT ALL SUCH RELATIVES ARE RESIDING IN FOREIGN COUNTRIES FO R SO MANY YEARS AND HAVING SUFFICIENT SOURCE OF INCOME. IT IS A WELL ES TABLISHED POSITION OF LAW THAT IN THE CASE OF CASH CREDITS; AN ASSESSEE WAS R EQUIRED TO PROVE THE IDENTITY OF THE CREDITOR, THE CAPACITY OF THE CREDI TOR AND GENUINENESS OF I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 24 THE TRANSACTION, WHICH I FIND SATISFIED IN THIS CAS E. HENCE, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.5,37,350/- FO R AMOUNT RECEIVED FROM RELATIVES. IN ACCORDANCE WITH THE ABOVE OBSERVATION S, THEREFORE, SECOND GROUND OF APPEAL IS ALLOWED. 31. THE LD. DR RELIED UPON THE ORDER OF THE LD. C IT(A) WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSION S MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A) AND HIS ARGU MENTS ARE SIMILAR AS IN I.T.A. NO.549/COCH/2013 FOR THE ASSESSMENT YEAR 200 4-05. 32. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSE D THE FACTS OF THE CASE. THE ISSUE IN THE PRESENT CASE IS IDENTICAL TO THE I SSUE IN THE REVENUES APPEAL IN I.T.A. NO. 549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 AS IN GROUND NO. 1 IN THE SAID YEAR. ACCORDINGLY, OUR ORDER THE REIN SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THE ASSESSEE HAS RECEIVED THE GIFT FROM HER HUSBANDS BROTHER AND NOT BY A STRANGER AND NO INCR IMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH. THE ASSESSE E HAS SUBMITTED THE CONFIRMATION LETTER, COPY OF BANK STATEMENT AND HAS RECEIVED THE GIFT FROM THE NRI WORKING IN DUBAI AS ACCOUNTANT AS EVIDENCED BY THE SALARY CERTIFICATE AND THE AMOUNT WAS RECEIVED THROUGH PROPER BANKING CHANNEL. THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND THE G ENUINENESS OF THE TRANSACTION WHICH ARE THE ESSENTIAL INGREDIENTS U/S . 68 OF THE ACT UNDER WHICH THE ASSESSING OFFICER HAD MADE THE ADDITION. IN T HE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF T HE LD. CIT(A) WHO HAS RIGHTLY I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 25 DELETED THE ADDITION SO MADE BY THE ASSESSING OFFIC ER. THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. 33. AS REGARDS GROUND NO. 2, THE BRIEF FACTS AS EM ANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PGS. 2 & 3 ARE REPRODUCED HEREINBELOW: 4. DURING THE PREVIOUS YEAR, THE ASSESSEE SHOWS EX PORT SALES OF RS.2,26,66,815. HOWEVER AS PER SEIZED DOCUMENT, CHN 09 19 AZ PAGE 1, IN THE PREVIOUS YEAR, EXPORT SALES TO ATLAS JEWE LLERY AMOUNTED TO RS.3,80,35,517 AND THE SALES RETURN WAS RS.65,35,49 4. SO THE NET EXPORT IS RS.3,14,99,022. THERE IS A SHORTFALL IN T HE EXPORTS ACCOUNTED AMOUNTING TO RS.88,32,207. 4.1 THE SEIZED DOCUMENT IS A RECONCILIATION STATEME NT BETWEEN ATLAS (THE PURCHASER) AND JOSE P. ANTONY, THE ASSESSEES REPRESENTATIVE IN DUBAI. WHEN THIS ISSUE WAS RAISED WITH THE ASSESSEE , THE ASSESSEE REPLIED AS UNDER: CHN 09 19 AZ IS THE ACCOUNT STATEMENT ISSUED BY M/ S. ATLAS JEWELLERY UAE TO MR. JOSE ANTONY, AL RAMADHA JEWELLERY SMITH P O BOX NO.17206 AJAMAN UAE. MR JOSE P. ANTONY IS DOING GOLD JEWELLER Y BUSINESS IN UAE FOR MORE THAN 10 YEARS AND I WAS ADVISED BY HIM TO SUPPLY DIAMOND JEWELLERY TO ATLAS JEWELLERY UAE. INITIALLY I EXPORT ED DIAMOND JEWELLERY TO M/S. AL RAMADHA JEWELLERY SMITH AS PER OUR INVOI CE NN.SD/EX/01 DATED 28.04.2004. WE HAVE EXPORTED ONLY DIAMOND JEW ELLERY. WHEREAS AS PER THE SALE INVOICES MENTIONED IN THE ABOVE STA TEMENTS, IT IS CLEAR THAT THE SAID STATEMENT INCLUDES GOLD JEWELLERY SOL D BY AL RAMADHA JEWELLERY SMITH ALSO. COPIES OF THE INVOICES FROM A L RAMADHA JEWELLERY SMITH TO M/S. ATLAS JEWELLERY ARE ALSO ENCLOSED FOR YOUR KIND PERUSAL. HENCE THE STATEMENT REFERRED TO ABOVE INCLUDES OUR DIAMOND JEWELLERY SALES AND GOLD JEWELLERY SALES OF AL RAMADHA JEWELL ERY SMITH. THE STATEMENT IS ALSO MARKED TO ME AS SUNNYS COPY ONLY BECAUSE MY TURNOVER IS ALSO INCLUDED IN THE STATEMENT. 4.2 THE ARGUMENT OF THE ASSESSEE IS DIFFICULT TO AC CEPT. IN THE SEIZED DOCUMENT CHN 09 19 AZ 1, THERE IS NO MENTION OF AL RAMADHA JEWELLERY SMITH. IT ONLY TALKS ABOUT CONSIGNMENTS AND SALES R ETURNS. ALSO THE PARTICULARS OF THE CONSIGNMENT (WHETHER DIAMOND, OR GOLD JEWELLERY) ARE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 26 NOT MENTIONED. IT IS ALSO SIGNIFICANT THAT THE AMOU NT HAS BEEN COMPUTED IN INDIAN RUPEES, WHICH SHOULD NOT BE THE CASE IF I T PERTAINS TO SOME ENTITY IN DUBAI (I.E., AL RAMADHA JEWELLERY SMITH). FURTHER IN THE DOCUMENT, AN AMOUNT OF RS.6,00,000 IS DETERMINED AS THE INTEREST PAYABLE TO THE ASSESSEE FOR THE DELAY IN PAYMENT. A LL THESE SUGGEST THAT THE DOCUMENT ACTUALLY RELATES TO THE ASSESSEE AND I NDICATES THE ACTUAL EXPORTS EFFECTED BY THE ASSESSEE. THE EXPORT SHORT RETURNED BY THE ASSESSEE (RS.88,32,207) IS TREATED AS THE SUPPRESSE D INCOME OF THE ASSESSEE. 34. THE LD. CIT(A) DELETED THE ADDITION AND THE RELEVANT PARA OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED HEREINBELOW: 27. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. PERUSAL OF THE SEIZED MATERIAL REVEALS THAT CHN 09 19 AZ IS SEEN PREPARED BY M/S. ATLAS JEWELLERY, UAE. AS MENTIONED IN THE ASSESSMENT ORDER, THE SEIZED MATER IAL MAINLY TALKS ABOUT CONSIGNMENTS AND SALES RETURNS. THE APPELLANT HAS S UBMITTED THAT THEY HAVE EXPORTED ONLY DIAMOND JEWELLERY TO M/S. ATLAS JEWELLERY THROUGH M/S. AL RAMADHA JEWELLERY SMITH, WHEREAS THE SAID SEIZE D STATEMENT ALSO INCLUDES GOLD JEWELLERY SOLD BY M/S. AL RAMADHA JEW ELLERY SMITH, UAE TO M/S. ASTLAS JEWELLERY, UAE. THE APPELLANT HAS ALSO S UBMITTED THAT CONFIRMATION LETTER ISSUED BY M/S ATLAS JEWELLERY W AS SUBMITTED BEFORE THE AO, ALONG WITH THE RELEVANT INVOICES CORRESPONDING TO THE TRANSACTIONS IN THE SEIZED MATERIAL. HENCE I AM OF THE OPINION THAT THE CONFIRMATION OF M/S. ATLAS JEWELLERY AND SUPPORTING INVOICES ARE MO RE RELIABLE THAN THE MERE STATEMENT PREPARED BY THEM WITHOUT MENTIONING DETAILS OF QUANTITY AND OTHER RELEVANT PARTICULARS. I HAVE GONE THROUGH THE CONFIRMATION LETTER GIVEN BY M/S. ATLAS JEWELLERY, P.O. BOX NO 1533, DU BAI DATED 25 TH NOVEMBER, 2011, WHICH IS REPRODUCED AS UNDER:- 1. WE HEREBY CONFIRM THAT WE HAVE PURCHASED DIAMON D AND GOLD JEWELLERY FROM M/S. SUNNY DIAMONDS, CHALAKUDY AND M /S. RAMADHA JEWELLERY SMITH P.). BOX NO.17206, AJMAN, UAE DURING THE FINANCIAL YEAR 2004-05 AS PER DETAILS GIVEN BELOW:- SL. NO. DATE INVOICE NO. AMOUNT (AED) 1. 01-MAY-04 ATLS/01/2004-05 AED 1018205.00 2. 04-JUN-04 ATLS/02/2004-05Q AED 13800.00 I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 27 3. 23-JUN-04 SD/EX/2/2004-05 US $ 79280.49 4. 22-JUL-04 SD/EX/3/2004-05 US $ 159324.00 5. 23-JUL-04 ATLS/03/2004-05 AED 50525.00 6. 13-AUG-04 SD/EX/4/2004-05 US $ 89496.37 7. 13-AUG-04 ATLS/034/2004-05 AED 39092.00 8. 24-AUG-04 SD/EX/5/2004-05 US$ 50586.81 9. 24-AUG-04 ATLS/05/2004-05 AED 254640.00 10. 03-SEP-04 ATLS/06/2004-05 AED 25225.00 11. 01-OCT-04 ATLS/07/2004-05 AED 301951.00 2. THIS CONFIRMATION IS ISSUED AS PER THE REQUEST O F M/S. SUNNY DIAMONDS, CHALAKUDY TO PRODUCE BEFORE THE INCOME TAX AUTHORIT IES. AS THE EXPORT TURNOVER OF THE APPELLANT IS SEEN RECONCILED WITH THE THIRD PARTY CONFIRMATION LETTER ISSUED BY M/S. ATLAS JEWE LLERY, P.O. BOX NO. 1533, DUBAI, SUPPORTED WITH INVOICES, I AM OF THE OPINION THAT THERE IS NO SCOPE FOR PRESUMPTIONS AND ASSUMPTIONS ACCORDINGLY, THE ADDITION OF RS.88,32,207/- IS DELETED. THEREFORE THIRD GROUND O F APPEAL IS ALLOWED. 35. THE LD. DR RELIED UPON THE ORDER OF THE AO WHE REAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSIONS MADE BEFOR E THE LD. CIT(A) AND ORDER OF THE LD. CIT(A) AND HIS ARGUMENTS ARE SIMIL AR AS IN I.T.A. NO.549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05. 36. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT AS PER THE ASSESSMENT ORDER, THE SEIZED MATERIAL MAINLY TALKS ABOUT CONSI GNMENTS AND SALES RETURNS. THE ASSESSEE HAS SUBMITTED THE EXPLANATION THAT THE Y HAVE EXPORTED ONLY DIAMOND JEWELLERY TO M/S. ATLLAS JEWELLERY THROUGH M/S. AL RAMADHA JEWELLERY SMITH, WHEREAS THE SAID SEIZED STATEMENT ALSO INCLU DES GOLD JEWELLERY SOLD BY M/S. AL RAMADHA JEWELLERY SMITH, UAE TO M/S. ATLAS J EWELLERY UAE. THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 28 ASSESSEE HAS ALSO SUBMITTED THAT THE CONFIRMATION L ETTER ISSUED BY M/S. ATLAS JEWELLERY WAS SUBMITTED BEFORE THE ASSESSING OFFICE R ALONGWITH THE RELEVANT INVOICES CORRESPONDING TO THE TRANSACTIONS IN THE S EIZED MATERIAL. THE CONFIRMATION LETTER OF ATLAS JEWELLERY HAD BEEN REP RODUCED HEREINABOVE AND ACCORDINGLY, ONCE THE EXPORT TURNOVER OF THE ASSESS EE IS RECONCILED WITH THE THIRD PARTY CONFIRMATION LETTER, THERE IS NO SCOPE FOR PRESUMPTIONS AND ASSUMPTIONS AS MADE BY THE ASSESSING OFFICER. IN TH E CIRCUMSTANCES AND FACTS OF THE CASE, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE FIND NO INFIRMITY IN HIS ORDER WHICH IS A QUITE REASONED ON E. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 37. AS REGARDS GROUND NO. 3, THE ASSESSING OFFI CER RESTRICTED THE ADDITION ON THE AMOUNT OF DEPRECIATION TO 50% ON THE BASIS O F HIS ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2004-05 AND MADE THE ADDITI ON OF RS.2,86,825/-. THE LD. CIT(A) RESTRICTED THE SAME TO 15% BASED ON HIS DECISION FOR THE ASSESSMENT YEAR 2004-05. 38. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. SINCE THE ISSUE IS IDENTICAL AS IN REVENUES APPEAL IN I.T.A. NO. 549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05, DECI DED BY US HEREINABOVE AND ACCORDINGLY, OUR ORDER HEREINABOVE SHALL BE IDE NTICALLY APPLICABLE IN THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 29 PRESENT CASE. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THE IMPUGNED YEAR. THUS GROUND NO. 3 OF THE REV ENUE IS DISMISSED. 39. REGARDING GROUND NO. 4, THE BRIEF FACTS AS EM ANATING IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES AP PEAL IN I.T.A. NO.549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 DE CIDED BY US HEREINABOVE WHEREIN THE ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED BY US WHERE THE VALUATION DIFFERENCE TO THE EXTENT OF 10% WAS IGNORED. IN THE PRESENT CASE ALSO, THE LD. CIT(A) IGNORED THE DIFFE RENCE BEING LESS THAN 10% IN THE VALUATION AND ACCORDINGLY, DELETED THE WHOLE ADDITION OF RS.3,04,544/- ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION SO MADE. IN VIEW OF OUR FINDINGS IN REVENUES APPEAL IN I.T.A. NO. 549/COCH/2013 FOR TH E ASSESSMENT YEAR 2004- 05 DECIDED BY US HEREINABOVE, GROUND NO. 4 OF THE REVENUE IS DISMISSED. THUS THE APPEAL OF THE REVENUE IN I.T.A. NO.550/COC H/2013 IS DISMISSED. C.O. NO. 35/COCH/2014 : AY 2005-06 40. THE ASSESSEE HAS ALSO RAISED CROSS OBJECTION IN C.O. NO. 35/COCH/2014 ARISING OUT OF I.T.A. NO. 550/COCH/2013. THE ASSES SEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTIONS:- 1. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER OUGHT TO HAVE REALIZED THAT AY 20 05-06 IS A COMPLETED I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 30 ASSESSMENT AND HENCE IN ASSESSMENT U/S. 153A, THE A DDITIONS HAS TO BE BASED ONLY ON INCRIMINATING MATERIAL FOUND IN THE C OURSE OF SEARCH. RELIANCE IS PLACED ON CIT VS. MURLI AGRO PRODUCTS L IMITED (BOMBAY HIGH COURT (NAGPUR BENCH) IN I.T.A. NO. 36/2009 ORDER DA TED 29-10-2010 (PAGE.3..). SEQUENCE OF COMPLETED ASSESSMENT IS E NCLOSED (PAGE.4). 2. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE ASSESSING OFFICER IS RIGHT IN MAKING THE IMPUGN ED ADDITIONS U/S. 153A, WHEN THE ASSESSMENT FOR THE AY 2005-06 IS A COMPLET ED ASSESSMENT (AND SO, SHALL NOT ABATE) AND PARTICULARLY, WHEN NO DOCU MENT (INCRIMINATING OR OTHERWISE) RELATING TO THE ASSESSMENT YEAR 2005-06 IS OBTAINED FROM THE PREMISES OF THE ASSESSEE WHO WAS SEARCHED U/S. 132. 3. FOR THESE AND OTHER GROUNDS AND DOCUMENTS TO B E SUBMITTED AT THE TIME OF HEARING AND IT IS HUMBLY PRAYED THAT THE TR IBUNAL BE PLEASED TO ALLOW THE APPEAL. 41. ON A PERUSAL OF THE GROUNDS OF CROSS OBJECTI ONS, IT IS EVIDENT THAT THEY ARE SUPPORTIVE IN NATURE WHICH IS A MATTER OF ACT. THE LD. CIT(A) HAS ALREADY ALLOWED RELIEF AND THERE IS NOTHING LEFT AS GRIEVAN CE OF THE ASSESSEE BEFORE US. ACCORDINGLY, THE SAME IS HELD TO BE INFRUCTUOUS AND IS DISMISSED. THUS CROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO. 35/COCH /2014 IS DISMISSED. I.T.A. NO. 551/COCH/2013 : AY 2006-07 42. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE CIT(A) IS ERRED IN DELETING THE ADDITION ON ACCOUNT OF CAPITAL EXPENSES. THE LEARNED CIT(A)S DECISION IS WITHOUT APPRECIATING THE FACTS OF THE ISSUE. 2. THE CIT(A)S DECISION IN RESTRICTING THE ADDITIO N ON ACCOUNT OF CONSTRUCTION EXPENSES IS WITHOUT PROPERLY APPRECIAT ING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE DEPARTME NT VALUATION OFFICERS REPORT. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 31 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISA LLOWANCE OF DEPRECIATION ON BUILDING TO 10% AS AGAINST 50% MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE FACTS AS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE CIT(A)S DECISION DESERV ES TO BE VACATED AND THAT OF THE ASSESSING OFFICER RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY OF THE ABOVE GROUNDS OF APPEAL. 43. AS REGARDS GROUND NO. 1, THE BRIEF FACTS AS E MANATING FROM THE ORDER OF THE ASSESSING OFFICER ARE REPRODUCED HEREINBELOW: 4. IN THE PREVIOUS YEAR, THE ASSESSEE STARTED RETA IL BUSINESS. AS PART OF THIS A NEW SHOWROOM WAS STARTED AT RAJAJI ROAD, ERNA KULAM. THE ASSESSEE HAS DEBITED RS.409,678 TOWARDS INAUGURATIO N EXPENSES AND 58,73,118 TOWARDS ADVERTISEMENTS. THESE EXPENSES AR E CAPITAL EXPENSES IS AN ALLOWABLE EXPENSE AS PER THE DECISION IN (199 5) 214 ITR 54 (KER.). THE HIGH COURT OF KERALA IN COMMISSIONER OF INCOME TAX VS. ALUMINIUM INDUSTRIES LTD. HELD THAT INAUGURATION EXPENSES OF A NEW UNIT ARE TO BE ALLOWED AS BUSINESS EXPENSES. 4.2 I HAVE CONSIDERED THE REPLY OF THE ASSESSEE AN D ALSO THE CASE LAW CITED. HOWEVER THE CASE LAW CAN BE CLEARLY DISTINGU ISHED FROM THE FACTS OF THIS CASE. IN THE CASE CITED, WHAT IS AT ISSUE IS T HE EXPENSES INCURRED ON THE INAUGURATION OF A NEW UNIT OF AN EXISTING BUSIN ESS. HOWEVER IN THIS CASE THE ASSESSEE HAS STARTED AN ENTIRELY NEW BUSIN ESS (I.E., RETAIL TRADING OF DIAMOND ORNAMENTS). HENCE THE INAUGURATION EXPEN SES AND INITIAL ADVERTISEMENT EXPENSES NEED TO BE CAPITALIZED. 44. THE LD. CIT(A) HAS DELETED THE ADDITIONS VIDE PARA 47 AND 48 OF HIS ORDER WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUC ED HEREINBELOW: I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS A ND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. IT IS EVIDENT FROM TH E ASSESSMENT ORDERS THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DIAMOND TRADING FOR THE LAST FEW YEARS. INITIALLY, THE ASSESSEE WAS INTO THE WHO LESALE TRADING AND IN LATER YEARS, BUSINESS WAS EXPANDED BY OPENING RETAIL SHOP . IN BOMBAY STEAM NAVIGATION CO. PRIVATE LTD. V. CIT (1965) 56 ITR 52 (SC), EXPLAINED THE NATURE OF REVENUE INCURRED FOR THE PURPOSE OF BUSIN ESS AS FOLLOWS (AT PAGE 59) WHETHER A PARTICULAR EXPENDITURE IS REVENUE EX PENDITURE INCURRED FOR I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 32 THE PURPOSE OF BUSINESS MUST BE DETERMINED ON A CON SIDERATION OF ALL THE FACTS AND CIRCUMSTANCES, AND BY THE APPLICATION OF PRINCIPLES OF COMMERCIAL TRADING. THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT OF BUSINESS NECESSITY OR EXPEDIENCY. IF THE OUTGOING OR EXPENDI TURE IS SO RELATED TO THE CARRYING ON OR CONDUCT OF THE BUSINESS, THAT IT MAY BE REGARDED AS AN INTEGRAL PART OF THE PROFIT-EARNING PROCESS AND NOT FOR ACQUISITION OF AN ASSET OR A RIGHT OF A PERMANENT CHARACTER, THE POSSESSION OF WHICH IS A CONDITION OF THE CARRYING ON OF THE BUSINESS, THE EXPENDITURE MAY BE REGARDED AS REVENUE EXPENDITURE. IT IS NOW AN ACCEPTED PROPOSI TION THAT THE EXPENDITURE LAID OUT WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WOULD INCLUDE THE COST OF ADVERTISEMENT. THE LD. AR ALSO SUBMITTED THAT THE ANXIETY TO INVITE PERSONS WHO ARE HOLDING IMPORTANT AND POWERFUL POSITIONS TO INAUGURATE A PROJECT WHETHER IT IS A NEW ONE OR EXPANSION OF AN EXISTING ONE IS WIDELY PREVALENT. THE REASON APPARENTLY IS T HAT WHEN A V.I.P. TAKES PART IN A FUNCTION THE MEDIA ARE INCLINED TO GIVE T HE NEWS ITEM A PLACE OF IMPORTANCE WHETHER IT BE IN THE NEWSPAPERS OR OTHER MEDIA LIKE TELEVISION, AIR, ETC., AND IT CERTAINLY HELPS IN BUILDING UP TH E CORPORATE IMAGE. THE IMPORTANCE OF ADVERTISING IN THIS RESPECT IS DEALT WITH IN THE BOOK ADVERTISING MANAGEMENT CONCEPTS AND CASES BY MANE NDRA MOHAN AT PAGE 320 AS FOLLOWS: ADVERTISING CAN PLAY A MAJOR ROLE IN SUPPORTING THE SALES OF PRODUCTS. EQUALLY IMPORTANT IS THE IMAGE OF THE COMPANY, WHICH CAN BE CREATED AND MAINTAINED BY INDUSTRIAL ADVERTISEME NTS. WHEN A COMPANY STARTS A BUSINESS OR INTRODUCES A NEW PRODUCT, IT M AY HAVE SOME SIGNIFICANT POINTS OF DIFFERENCE FROM OTHER COMPANIES OR PRODUC TS. IN ORDER TO GAIN RECOGNITION THE COMPANY HAS TO MANAGE THE FLOW OF I NFORMATION ABOUT ITSELF AND ITS PRODUCTS. CORPORATE IMAGE COMPRISES THE KNO WLEDGE, FEELINGS, IDEAS AND BELIEFS ASSOCIATED WITH A COMPANYS ACTIVITIES. PEOPLE FORM A MENTAL IMAGE OF A COMPANY, EITHER DIRECTLY AS IN A CUSTOME R-SELLER RELATIONSHIP OR INDIRECTLY THROUGH ADVERTISEMENTS. PRODUCT ADVERTIS ING HAS AN IMPORTANT EFFECT ON THE CORPORATE IMAGE, INDUSTRIAL PRODUCTS MAY NOT NECESSARILY DIFFER WIDELY IN PRODUCT PERFORMANCE CHARACTERISTICS. OTHE R FACTORS, WHICH ENTER INTO A POTENTIAL CUSTOMERS PERCEPTUAL MAP OF WHAT KIND OF COMPANY IT IS TO DO BUSINESS WITH, CAN HELP IN FINALIZING THE SALE. A FAVOURABLE CORPORATE IMAGE CAN ALSO BE OF ADVANTAGE IN DEALING WITH DIST RIBUTORS, EMPLOYEES, COMPETITORS, SUPPLIERS, THE GOVERNMENT AND, ALSO FI NANCIAL CIRCLES. 48. RESPECTFULLY FOLLOWING THE DECISIONS IN COMMIS SIONER OF INCOME TAX V. ALUMINUM INDUSTRIES LTD. (1995) 214 ITR 541 (KER.), HIGH COURT OF KERALA AND BOMBAY STEAM NAVIGATION CO. PRIVATE LTD. V. CIT (1965) 56 ITR 52 (SC), I AM OF THE OPINION THAT THE INAUGURAT ION EXPENSES AND ADVERTISEMENT EXPENDITURE INCURRED BY THE ASSESSEE IS A REVENUE EXPENDITURE ALLOWABLE AS BUSINESS EXPENDITURE. ACCO RDINGLY, THE ADDITIONS OF INAUGURATION EXPENSES RS.4,09,678 AND ADVERTISEMENT EXPENSES RS.58,73,118/- ARE DELETED. THIS GROUND OF APPEAL I S ALLOWED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 33 45. THE LD. DR RELIED UPON THE ORDER OF THE ASSES SING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMIS SIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). 46. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF DIAMOND FOR THE LAST FEW YEARS. THE ASSESSEE WAS INTO THE BUSINESS OF WHOLESALE TRADING AND IN LATER YEARS, T HE BUSINESS WAS EXPANDED BY OPENING RETAIL SHOP. IT IS ALSO SUBMITTED THAT THE ASSESSEE HAS NOT ACQUIRED ANY ASSET OF ANY PERMANENT CHARACTER, THE POSSESSION OF WHICH IS A CONDITION OF THE CARRYING ON OF THE BUSINESS OF THE ASSESSEE. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BOMBAY STEAM NAVIG ATION CO. PRIVATE LTD. (SUPRA) , THE SAID EXPENDITURE IS HELD TO BE A REVE NUE EXPENDITURE. IT IS ALSO UNDISPUTED THAT THE EXPENDITURE HAS BEEN LAID OUT W HOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WHICH INCLUDES COST OF ADVE RTISEMENT AS WELL. THE EXPENSES ON ADVERTISEMENT IN MEDIA IS OF WIDE IMPOR TANCE WHICH HELP IN BUILDING UP CORPORATE IMAGE AND THE IMAGE IN THE WI DE VARIETY OF CUSTOMERS. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, AND IN VIEW OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT MENTIONED HEREINABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY CONSIDE RED THE EXPENSES INCURRED I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 34 ON ADVERTISEMENT AS BUSINESS EXPENSES WHOLLY AND EX CLUSIVELY USED FOR THE PURPOSE OF BUSINESS AND HAS TREATED THE SAME AS REV ENUE EXPENDITURE INSTEAD OF CAPITAL EXPENDITURE AS TREATED BY THE AS SESSING OFFICER. THUS, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AN D ACCORDINGLY, GROUND NO. 1 OF THE REVENUE IS DISMISSED. 47. AS REGARDS GROUND NO. 2, THE FACTS IN THE PRES ENT CASE ARE IDENTICAL TO THE FACTS AS IN REVENUE APPEAL IN I.T.A. NO. 549 /COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 DECIDED BY US HEREINABOVE. THE CIT(A) IN THAT CASE RESTRICTED THE ADDITION TO THE DIFFERENCE IN VALUAT ION TO 10%. IN THE PRESENT CASE, IT WAS LESS THAN 10% AND ACCORDINGLY, ADDITIO N OF RS.89,889/- ON ACCOUNT OF VALUATION DIFFERENCE WAS RIGHTLY DELETED BY THE LD. CIT(A) FOLLOWING HIS DECISION FOR THE ASSESSMENT YEARS 200 4-05 AND 2005-06. THE SUSTAINED ADDITION ON ACCOUNT OF VALUATION DIFFEREN CE OF 10% IN SHOP BUILDING AT RAJAJI ROAD FOR THE IMPUGNED ASSESSMENT YEAR WIL L BE RS.42,96,260/- AND BALANCE ADDITION WHICH IS TO BE DELETED SHALL BE AT RS.32,95,292/- WHICH IN FACT HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A). T HUS IN VIEW OF THE FINDINGS AND OUR ORDER IN I.T.A. NO. 549/COCH/2013 FOR THE A SSESSMENT YEAR 2004-05 (SUPRA), GROUND NO.2 OF THE REVENUE IS DISMISSED. 48. AS REGARDS GROUND NO.3, THE BRIEF FACTS ARE TH AT THE ASSESSING OFFICER MADE DISALLOWANCE OF DEPRECIATION AT RS.6,51,777/-. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 35 49. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE AT 10% OF RS.11,16,092/- AT RS.1,11,609/- AND DELETED THE BALANCE ADDITION OF R S.5,40,168/- VIDE PARA 51 OF HIS ORDER. THE RELEVANT PARA IS REPRODUCED HERE INBELOW FOR THE SAKE OF CONVENIENCE: 51. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. AS PER VALUATION REPORT IT IS EVIDENT THAT THE BUILDING IS SIX STORIED CONSISTING OF BASEMENT TO 4 TH FLOOR. AS STATED IN THE ASSESSMENT ORDER, THE STATEMENT OF SHRI P.P. SU NNY, HUSBAND OF THE ASSESSEE AND APPARENTLY THE KEY PERSONAL INVOLVED I N RUNNING THE BUSINESS THAT THEY ARE RESIDING IN 3 RD AND 4 TH FLOOR OF THE BUILDING IS UNAMBIGUOUS. IT IS OBVIOUS THAT THE ASSET IS NOT USED ENTIRELY FOR BUSINESS. THERE IS ALSO SOME MERIT IN THE ARGUMENT OF HT APPELLANT THAT THE SE FLOORS WERE USED AS GUEST HOUSE OF THE BUSINESS. THE APPELLANT HAS SAVE D MONEY ON ACCOUNT OF DAILY CONVEYANCE EXPENSES FROM CHALAKUDY TO ERNAK ULAM, WHICH IS ALSO AN ALLOWABLE EXPENSE UNDER THE PROVISIONS OF INCOME -TAX ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF TH E OPINION THAT DISALLOWANCE OF 10% OF DEPRECIATION OF THE BUILDING IS FAIR ENOUGH. ACCORDINGLY, DISALLOWANCE OF RS.1,11,609/- (10% OF 11,16,092/-) IS SUSTAINED AND THE BALANCE RS.5,40,168/- (6,51,777 1,11,609) IS DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 50. THE LD. DR RELIED UPON THE ORDER OF THE ASSESS ING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMIS SIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). THE LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS RESIDING WITH HER F AMILY AT CHALAKUDY TILL DECEMBER, 2006. THE HUSBAND OF THE ASSESSEE MR. P.P . SUNNY HAS STATED IN HIS SWORN STATEMENT THAT THEY WERE RESIDING AT 3 RD AND 4 TH FLOOR OF SUNNY DIAMONDS BUILDING, RAJAJI ROAD, ERNAKULAM SINCE 2006 . THERE IS NO AMBIGUITY IN THE STATEMENT GIVEN BY SHRI P.P. SUNNY AS WRONGL Y PERCEIVED BY THE ASSESSING OFFICER. IN ONE STATEMENT HE SAYS WE WER E RESIDING AT CHALAKUDY I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 36 TILL DECEMBER, 2006 (VIDE PAGE 4 OF THE ASST. ORDE R 2 ND PARA LAST LINE). IN ANOTHER STATEMENT HE SAYS SINCE 2006 WE ARE RESIDI NG AT 3 RD AND 4 TH FLOOR OF SUNNY DIAMONDS BUILDING AT RAJAJI ROAD. IF THE ST ATEMENTS ARE PUT TOGETHER, IT CAN BE REASONABLY PRESUMED THAT, TILL DECEMBER, 2006 THEY WERE RESIDING AT CHALAKUDY AND SINCE DECEMBER, 2006, THEY ARE RESIDI NG AT RAJAJI ROAD, ERNAKULAM. SO IT IS VERY CLEAR THAT DURING THE PREV IOUS YEAR ENDED 31.3.2006, RELEVANT TO THE ASSESSMENT YEAR 2006-07, THE ASSESS EES FAMILY WAS NOT USING THE GUEST HOUSE AT RAJAJI ROAD FOR THEIR RESIDENCE. HENCE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO PART OF DEPRECIA TION OF BUILDING ENTIRELY USED FOR BUSINESS SHOULD BE DISALLOWED. THE LD. AR FURTHER SUBMITTED THAT THE FINDING OF THE ASSESSING OFFICER THAT THE HALF OF THE BUILDING IS USED FOR RESIDENTIAL PURPOSES IS FACTUALLY INCORRECT. THE SH OP BUILDING AT RAJAJI ROAD, ERNAKULAM IS HAVING 6 FLOORS (BASEMENT, GROUND, FIRS T, SECOND, THIRD & FOURTH FLOORS). SINCE DECEMBER, 2006, THE ASSESSEE WAS RESIDING IN THIRD AND FOURTH FLOORS OF THE BUILDING. THESE TWO FLOORS WER E ALSO USED AS A GUEST HOUSE OF THE BUSINESS. REGULAR CUSTOMERS/SUPPLIERS WERE ALSO ACCOMMODATED IN THESE FLOORS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DEPRECIATION HAS BEEN CHARGED ON BUILDING AT RS.11,16,092/-. THO UGH THE BUSINESS WAS INAUGURATED ON 9 TH JANUARY, 2006, THE BUILDING WAS PUT TO USE FOR FUR NISHING WORK THROUGHOUT THE YEAR. HENCE DEPRECIATION AT FUL L RATE IS AVAILABLE FOR OPENING WDV. THE ASSESSING OFFICER HAS DISALLOWED 5 0% OF DEPRECIATION FOR PERSONAL USE WITHOUT CONSIDERING THE FACT THAT THE ENTIRE FOUR OUT OF SIX FLOORS I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 37 WERE EXCLUSIVELY USED FOR BUSINESS PURPOSES. ONLY 1 /3 RD OF THE BUILDING WAS USED FOR ACCOMMODATION OF GUESTS AND RESIDENTIAL US E, AND THAT TOO, ONLY FROM DECEMBER, 2006, AFTER THE END OF THE PREVIOUS YEAR ENDING ON 31 ST MARCH, 2006. 51. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. AS PER THE VALUATION REPORT, THE BUILDING IS SIX ST ORIED CONSISTING OF BASEMENT TO 4 TH FLOOR AND THERE IS NO DISPUTE THAT THEY ARE RESIDI NG IN 3 RD AND 4 TH FLOOR OF THE BUILDING. THE ASSET IS NOT ENTIRELY USED FOR TH E PURPOSE OF BUSINESS AND THEREFORE, THE ARGUMENT MADE BEFORE THE LD. CIT(A) AND BEFORE US HAS MERIT. THE PERSONAL ELEMENT, HOWEVER, CANNOT BE RULED OUT AND THEREFORE, DISALLOWANCE AT THE RATE OF 10% ON ACCOUNT OF DEPRE CIATION IS QUITE FAIR WHICH HAS BEEN RIGHTLY MADE BY THE LD. CIT(A) AND ACCORDI NGLY, WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. THUS GROUND NO. 4 OF THE R EVENUE IS DISMISSED. ACCORDINGLY, THE APPEAL OF THE REVENUE IN I.T.A. NO . 551/COCH/2013 IS DISMISSED. I.T.A. 552/COCH/2013 : A.Y. 2007-08 52. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE DVOS REPORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. THE DECISION OF THE CIT(A) DESERVES TO BE SET ASIDE. 2. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISA LLOWANCE OF DEPRECIATION ON BUILDING TO 10% AS AGAINST 50% MADE BY THE ASSES SING OFFICER WITHOUT PROPERLY APPRECIATING THE FACTS AS BROUGHT ON RECOR D BY THE ASSESSING I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 38 OFFICER. THE CIT(A)S DECISION DESERVES TO BE VACAT ED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF EXPENDITURE ON BENZ CAR WI THOUT PROPERLY APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. THE CIT(A)S DECISION DESERVES TO BE SET ASIDE. 4. THE LEARNED CIT(A) IS NOT JUSTIFIED IN THE DELET ING THE GROSS PROFIT ADDITION OF RS.33,75,563/- WITHOUT PROPERLY APPRECI ATING THE REASONS BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE FACT THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF DATA FROM THE SEIZED COMPUTER. THE DECISION OF THE CIT(A) IN THIS REGARDS DESERVED TO BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED . 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE ABOVE GROUNDS OF APPEAL. 53. AS REGARDS GROUND NO. 1, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO. 549 /COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 WHERE THE ADDITION WAS REST RICTED TO 10% OF THE DIFFERENCE IN VALUATION. IN THE IMPUGNED YEAR ALSO, THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.7,85,445/- AND AFTER DELETING TH E ADDITION OF RS.4,19,135/-. ACCORDINGLY, OUR ORDER IN REVENUES APPEAL IN I.T.A . NO. 549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 (SUPRA) SHALL BE IDENTI CALLY APPLICABLE IN THE PRESENT CASE. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD CIT(A) AND THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. 54. AS REGARDS GROUND NO.2 , THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO. 551 /COCH/2013 AND I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 39 ACCORDINGLY, OUR ORDER THEREIN SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT APPEAL. HENCE GROUND NO. 2 OF THE REVENUE IS DISMIS SED. 55. AS REGARDS GROUND NO. 3, THE FACTS IN THE PRES ENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO.549/ COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 AND THEREFORE OUR ORDER HER EINABOVE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE AND ACCO RDINGLY, GROUND NO. 3 OF THE REVENUE IS DISMISSED. 56. AS REGARDS GROUND NO. 4, THE BRIEF FACTS AS EM ANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PARAS 9 TO 9.4 ARE REPRODU CED HEREINBELOW FOR THE SAKE OF CONVENIENCE: 9. IN THE PREVIOUS YEAR, THE ASSESSEES BUSINESS S HOWS A GROSS PROFIT OF RS.36.4% ON SALE OF RS.9,38,20,225. IN THE SEIZED COMPUTER MARKED CHN 19-09/RSK/B-1(78), THERE IS A FOLDER NAMED AS COMPU-1 AND FILED NAMED SOLD ITEM VALUATION.XIS. THIS SHOWS THE PU RCHASE RATE FOR EACH ITEM AND ALSO CORRESPONDING SALE PRICE. THE ITEMS C AN BE DISTINGUISHED BY THE BAR CODE. 9.1 FOR INSTANCE, ITEM NO. 8100025 IS A TOP AS PE R THE DOCUMENT IN SALE PRICE IS 55,600 WHEREAS IN THE NEXT PAGE OF TH E EXCEL DOCUMENT ITS COST IS WORKED OUT AS RS.30,378. THE GROSS PROFIT R ATIO ON SALE OF THIS ITEM IS 45.36%. SIMILARLY THE NEXT ITEM IS BAR CODE ITEM NO 81000045 IS A SH PENDANT. AS PER THE DOCUMENT ITS COST IS RS.53 ,505 AND THE SALE PRICE IS RS.68,610. THE GP RATE UPON SALE OF THIS I TEM IS 22.01%. IN THE ANNEXURE TO THIS ORDER I HAVE COMPILED THE COST AND SALE PRICE OF 84 ITEMS FROM THE DOCUMENT MENTIONED. SINCE THE DOCUME NT IN QUESTION IS A LENGTHY COMPILATION, IT IS NOT POSSIBLE TO ARRIVE AT THE GP RATE OF EACH AND EVERY ITEM MENTIONED THEREIN, IT IS SEEN THAT T HE AVERAGE GP AS PER THIS LIST IS 41.66%. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 40 9.2 WHEN THE PROPOSAL WAS GIVEN TO THE ASSESSEE, TH E ASSESSEE SUBMITTED AS UNDER: THE BASIS OF PREPARATION OF THE STATEMENT ENCLOSU RE (REFERRED TO IN PAGE 2 QUESTION 7 YOUR NOTICE NO. DCIT/CENTRAL CIRC LE 1, KOCHI/2011-12 DATED 21.12.2011 (SERVED ON 23.12.2011), IS NOT SPE CIFIED IN THE SAID NOTICE. KINDLY CLARIFY FROM WHICH FILE AND FROM WHI CH COMPUTER THE ABOVE STATEMENT IS AVAILABLE. IF THIS IS A STATEMENT PREPARED AT YOUR END FROM TH E EXCEL FILE NAMED SOLD ITEM VALUATION.XIS, WHICH IS NOW AVAILABLE I N THE SEIZED COMPUTER, WE WOULD LIKE TO SUBMIT THE FOLLOWING FOR YOUR KIND CONSIDERATION:- 1) SAP SOFTWARE SYSTEM FOR ACCOUNTING WAS INTRODUCE D IN THE MONTH OF OCTOBER, 2009. HENCE SAP WAS NOT A RELIABLE WORKING SOFTWARE ON THE DATE OF SEARCH. 2) THE ORIGINAL FILE SOLD ITEM LIST.XIS CONTAIN O NLY ONE SHEET GENERATED FROM SAP SOFTWARE. 3) AS PER THE SWORN STATEMENT OF MR. SURESH CHERIAN , ACCOUNTANT ON THE DATE OF SEARCH, IT IS CLEAR THAT THE ACCOUNTS OF TH E BUSINESS WERE MAINTAINED IN TALLY SOFTWARE TILL SEPTEMBER,2009 AN D TALLY BACK UP OF THE ACCOUNTS TILL DATE IS ALREADY AVAILABLE IN THE SEIZ ED COMPUTER. 4) AS A PART OF THE TESTING OF NEW CUSTOMIZED SAP A CCOUNTING SOFTWARE, THE STAFF OF THE SOFTWARE VENDOR M/S. NORTECH INFON ET PRIVATE LIMITED HAS ENTERED TEST DATA IN OUR COMPUTER SYSTEMS. THE Y HAVE GENERATED CERTAIN REPORTS FROM SAP TO DEMONSTRATE THE FEATURE S AVAILABLE IN SAP. 5) THE SAID EXCEL FILE SOLD ITEM VALUATION.XIS NO W CONTAINS FOUR SHEETS. I) THE FIRST SHEET (SOLD ITEM LIST) IS ONE SUCH SHEET GENERATED FROM SAP. II) THE SECOND SHEET (ALLOCATION) SOLD ITEM LIST SORTED ACCORDING TO SALE PRICE APPEARS TO BE A WORKING OF THE INVESTIGATION OFFICERS IN THE COURSE OF SEARCH. IT APPEARS TO BE CREATED BY SORTING THE TABLE IN THE FIRST SHEET BY DIAMOND QUANTITY IN CARROT IN ASCENDING ORDER. THE FACT THAT THE TABLE WAS CREATED AT THE TIME OF SEARCH CAN BE PROVED BY THE FOLLOWING:- THIS SHEET IS CREATED BY APPLYING FORMULAS. THERE W ILL NOT BE ANY FORMULA WHEN DATA IS EXPORTED FROM SAP TO EXCEL. FURTHER, THE FOLLOWING COLUMNS ARE ALSO SEEN ADDED IN THE SECOND SHEET ALLOCATED CT (CARROT) QUANTITY IN HAND BATCH QUANTITY PURPOSE COST I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 41 THE PURCHASE RATE APPEARS TO BE TAKEN FROM TALLY DA TA BASE. HOWEVER, THE FOLLOWING DEFECTS HAVE CREPT IN ADOPTING THE PU RCHASE ROLES:- THE DATA WAS FIRST SORTED ON RATE OF DIAMOND PER CA RROT BASIS IGNORING THE NUMBER OF DIAMONDS INVOLVED AND THE SORTED RATE PER CARROT IS DIRECTLY APPLIED TO THE DIAMONDS, WHICH IS NOT ON A ONE TO ONE BASIS AS THE QUANTITY INVOLVED IS IGNORED. FOR EXAMPLE:- ONE DIAMOND OF 0.09CARROT IS SHOWN AT A COST OF RS. 10,373.71 PER CARROT, TOTALING TO 933.63 FOR ONE DIAMOND OF 0.09 CARROT (REFER EXCEL FILE CELL NO.233, P.Q AND W OF SHEET 2 ALLOCATION). AT THE SAME TIME 14 DIAMONDS TOTALING TO 0.14 CARRO T IS SHOWN AT A COST OF RS.10,373.71 PER CARROT TOTALING TO RS.1452.31 ( REFER EXCEL FILE CELL NO. 236 P.Q. AND W OF SHEET 2 ALLOCATION). BOTH ARE TAK EN AT THE SAME RATE. HENCE, THE COST OF 9 DIAMONDS TOTALING TO 0.09 CARR OT ALSO COMES 933.61 (1452.31X9/14) HENCE AS PER THE ABOVE WORKINGS, THE COST OF ONE DI AMOND OF 0.09 CARROT AND 9 DIAMONDS TOTALING TO 0.09 CARROT ARE TAKEN AT THE SAME RATE, WHICH IS NOT TRUE IN DIAMOND TRADE. FURTHER, THE COLOUR AND CLARITY OF DIAMONDS ARE ALS O NOT CONSIDERED IN THE PURCHASE COST ADOPTED IN THE ABOVE SHEET. WE HUMBLY SUBMIT THAT THE PRICE OF THE DIAMOND WILL DEPEND ON THE SIZE, CLARITY AND COLOUR. (III) THE THIRD SHEET (GOLD VALUATION) ALSO DOES NO T APPEAR TO BE GENERATED FROM THE SAP SYSTEM. THIS ALSO APPEARS TO BE A WORKING OF THE INVESTIGATING OFFICERS IN THE COURSE OF SEARCH, AS IS EVIDENT FROM THE PRESENCE OF FORMULAS IN THE CREATION OF THE SOLD TA BLE. (IV) THE FOURTH SHEET (VALUATION SHEET) ALSO DOES N OT APPEAR TO BE GENERATED FROM THE SAP SYSTEM IN AS MUCH AS FORMULA S ARE ADOPTED FOR CREATING THE FILE. SAP DOES NOT CONTAIN THE PURCHAS E VALUE WHICH IS SHOWN IN THE FOURTH SHEET. THIS ALSO APPEARS TO BE A WORKING OF INVESTIGATING OFFICERS IN THE COURSE OF SEARCH. SHE ET FOUR APPEARS TO BE THE SUMMARY OF SHEET 2 AND SHEET 3. HENCE THE ERROR IN ARRIVING AT THE PURCHASE RATE PE R CARROT WITHOUT CONSIDERING THE SIZE, COLOUR AND CLARITY OF THE DIA MOND HAS RESULTED IN ARRIVING AT THE ALLEGED WRONG G.P. A. OUR ENTIRE PURCHASES ARE SUPPORTED BY THIRD PARTY P URCHASE BILLS WHICH MAY KINDLY BE VERIFIED TO ARRIVE AT THE PURCH ASE COST. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 42 B. WE ALSO SUBMIT THAT THE EXCEL FILE SOLD ITEM VALUA TION.XIS WAS NOT CONFRONTED TO THE PROPRIETOR OR TO ANY OTHER PERSON DURING THE COURSE OF SEARCH OR DURING THE INVESTIGATION PROCEEDINGS T O PROVE THE GENUINENESS OF THE SAME. C. HENCE, THE STATEMENT PREPARED BY YOU BASED ON THE ABOVE WORKING. IS NOT AT ALL RELIABLE. KINDLY ACCEPT OUR BOOKS OF ACCOUNTS MAINTAINED IN TALLY SOFTWARE, WHICH IS ALREADY SEIZED BY YOU D URING HER COURSE OF SEARCH. 9.3 THERE IS NOTHING ON RECORD TO ACCEPT THE CLAIM OF THE ASSESSEE THT DOCUMENT WAS PREPARED BY INVESTIGATION OFFICIALS. T HE DATA IS FROM THE COMPUTER OF THE SEIZED DURING SEARCH. IT IS IMPORTA NT TO NOTE THAT THERE IS ONE TO ONE MATCHING OF THE COST AND SALE PRICE O F ITEMS IN TERMS OF THE BAR CODE NUMBER. HENCE THE CLAIMS OF THE ASSESSEE D OES NOT APPLY. 9.4 IT IS SEEN THAT THE AVERAGE GROSS PROFIT ON SA LE OF THE ITEMS IS 41.66%. THE GROSS PROFIT DISCLOSED IS 36.4%. THERE IS VAST VARIATION BETWEEN GP FROM ITEM TO ITEM. ALSO FROM THE LIST IT CAN BE SEEN PROFIT RATE IS LOW ON SMALLER ITEMS AND LARGER ON BIGGER I TEMS. IN VIEW OF THE SAME, THE GROSS PROFIT IS ADOPTED AT 49% ON SALE ON A CONSERVATIVE BASIS. THIS INVOLVES AN ADDITION OF RS.33,75,563/-. THE LD. CIT(A) VIDE PARAS 63& 64 OF HIS ORDER DELE TED THE ADDITION WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED HER EINBELOW. IV. THERE WAS ONLY ONE SHEET CALLED SOLD ITEM LIS T IN THE FILE SOLD ITEM VALUATION.XIS, WHEN IT WAS GENERATED FROM SAP. SECO ND, THIRD AND FOURTH SHEETS ARE APPEARS TO BE A WORKING OF INVESTIGATION OFFICERS WITHOUT CONSIDERING THE SIZE, COLOUR, CUT AND CLARITY OF DI AMONDS. ONLY SALES PRICE IS AVAILABLE FROM THE FIRST SHEET CALLED SOLD ITEM LIST AND COST IS SEEN WORKED OUT IN THE OTHER SHEETS WITHOUT CONSIDERING THE SIZE, COLOUR, CUT AND CLARITY OF DIAMONDS. THE APPELLANT ALSO SUBMITS THAT IF THIS MODE OF VALUATION IS ADOPTED, IT WILL LEAD TO THE ABSURD EV ALUATION THAT 10 DIAMONDS TOTALING TO THE WEIGHT OF KOHINOOR DIAMON D AND THE ORIGINAL KOHINOOR DIAMOND HAVE THE SAME PRICE, AS WEIGHT O F BOTH ARE THE SAME. HENCE THE FINDING OF ASSESSING OFFICER IN PAR A 9.3 THAT THERE IS ONE TO ONE MATCHING OF THE COST AND SALE PRICE OF T HE ITEMS OF THE BAR CODE NUMBER HAS NO RELEVANCE. V. CORRECT AND COMPLETE BOOKS OF ACCOUNTS ARE MAINT AINED IN TALLY SOFTWARE, WHICH IS ALREADY SEIZED DURING THE COURSE OF SEARCH, WHICH SHOULD HAVE BEEN ADOPTED FOR ASSESSMENT. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 43 VI. AUDITED BOOKS OF ACCOUNTS ARE NOT SEEN REJECTED . THE PROFITS COULD NOT BE ESTIMATED WITHOUT REJECTING THE BOOKS OF ACC OUNTS AS HELD BY VARIOUS COURTS AS UNDER:- 1. MADNANI CONSTRUCTION CORPORATION (P) LTD. VS. CI T (2008) 206 ITR 45(GAU) 2. CIT VS. RAJNI KANT DAVE (2006) 281 ITR 0006 (AL L). 3. ASHOKA REFRACTORS PVT. LTD. VS. CIT (2005) 279 I TR 0457 (CAL) 4. JUGGILAL KAMLAPAT UDYOG LTD. VS. CIT (2005) 278 ITR 0052 (CAL) 64. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE G.P. DECLARED BY THE APPELLANT AT 36.45 IS FAIR ENOUGH. BOOKS OF ACCOUNTS ARE NOT SEEN REJECTED. DURING THE YEAR, NO SUPPRESSION OF SALES OR PURCHASES IS SEEN DETECTED DURING THE COURSE OF SEARCH. NO DEFECTS IN BOOKS OF ACCOUNT ARE POINTED OUT IN THE ASSESSMENT ORDER. MOST OF THE ARGUMENTS OF THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ARE NOT REASONABLY REBUTTED. RELIABILITY OF THE WORKING OF GROSS PROFIT COULD NO T BE SATISFACTORILY ESTABLISHED FOR REASONS DISCUSSED IN PARA REFERRED ABOVE. HENCE, THE ESTIMATED ADDITION ON ACCOUNT OF GROSS PROFIT RS.33 ,75,363 IS DELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 57. THE LD. DR RELIED ON THE ORDER OF THE ASSESSI NG OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). THE LD. COU NSEL FOR THE ASSESSEE POINTED OUT THAT THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED BY THE ASSESSING OFFICER. NO ESTIMATION OF GROSS PROFIT C AN BE MADE ON SUCH COUNT ALONE. THE LD. COUNSEL FOR THE ASSESSEE WENT THROUG H THE WRITTEN SUBMISSIONS REPRODUCED IN THE ORDER OF THE LD. CIT( A) ON WHICH HE HAS PLACED STRONG RELIANCE. 58. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE ASSESSING OFFICER IN THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 44 ASSESSMENT ORDER NOWHERE HAS REJECTED THE BOOKS OF ACCOUNT. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE, THE ESTIMATION OF GROSS PROFIT SHOULD NOT BE TREATED ON CONJECTURES AND SURMISES AND NO ADDI TION SHOULD BE MADE ON THIS COUNT ALONE. THE UNDISPUTED FACT IN THE PRESEN T CASE ARE THAT THE PURCHASE AND SALES ARE VOUCHED AND NO DEFECT HAS BE EN POINTED OUT AND NO INCRIMINATING MATERIAL TO THAT EFFECT HAS BEEN SEIZ ED OR FOUND DURING THE COURSE OF SEARCH AND THEREFORE, PURCHASE AND SALES ARE CORRECTLY DECLARED BY THE ASSESSEE. THE FILE NAMES AS SOLD ITEM VALUATIO N.XIS WAS NOT CONFRONTED TO THE ASSESSEE OR TO ANY OTHER PERSON OF THE ASSES SEE DURING THE COURSE OF SEARCH OR INVESTIGATION PROCEEDINGS INSPITE OF A SP ECIFIC REQUEST MADE BEFORE THE ASSESSING OFFICER TO VERIFY DATE AND TIME OF CR EATION/MODIFICATION OF THE SAID EXCEL FILE. THERE WAS ONLY ONE SHEET CALLED SOLD ITEM LIST IN THE FILE SOLD ITEM VALUATION.XIS WHEN IT WAS GENERATED FRO M SAP. SECOND, THIRD AND FOURTH SHEETS APPEAR TO BE WORKING OF INVESTIGATION OFFICERS WITHOUT CONSIDERING THE SIZE, COLOUR, CUT AND CLARITY OF DI AMONDS. ONLY SALES PRICE IS AVAILABLE FROM THE FIRST SHEET CALLED SOLD ITEM LI ST AND COST IS SEEN WORKED OUT IN THE OTHER SHEETS WITHOUT CONSIDERING THE SIZ E, COLOUR, CUT AND CLARITY OF DIAMONDS. IT WAS ALSO SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT IF THIS MODE OF VALUATION IS ADOPTED, IT WILL LEAD TO ABSURD EVALUATION THAT 10 DIAMONDS TOTALLING TO THE WEIGHT OF KOHINOOR DIAMO ND HAVE THE SAME PRICE, AS WEIGHT OF BOTH ARE THE SAME. THEREFORE, THERE IS NO ONE TO ONE MATCHING OF THE COST AND SALE PRICE OF THE ITEMS OF THE BAR CODE NUMBER WHICH HAS NO I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 45 RELEVANCE. IN THE CIRCUMSTANCES AND FACTS OF THE CA SE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS A QUITE REASON ED ONE AND ACCORDINGLY, GROUND NO. 4 OF THE REVENUE IS DISMISSED. THUS APP EAL OF THE REVENUE IN I.T.A. NO. 552/COCH/2013 IS DISMISSED. I.T.A. 553/COCH/2013 : A.Y. 2008-09 59. THE REVENUE HAS RAISED THE FOLLOWING GROUND S OF APPEAL:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE DVOS REPORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. THE DECISION OF THE CIT(A) DESERVES TO BE SET ASIDE. 2. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISA LLOWANCE OF DEPRECIATION ON BUILDING TO 10% AS AGAINST 50% MADE BY THE ASSES SING OFFICER WITHOUT PROPERLY APPRECIATING THE FACTS AS BROUGHT ON RECOR D BY THE ASSESSING OFFICER. THE CIT(A)S DECISION DESERVES TO BE VACAT ED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF EXPENDITURE ON BENZ CAR WI THOUT PROPERLY APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. THE CIT(A)S DECISION DESERVES TO BE SET ASIDE. 4. THE LEARNED CIT(A) IS NOT JUSTIFIED IN THE DELET ING THE GROSS PROFIT ADDITION OF RS.33,75,563/- WITHOUT PROPERLY APPRECI ATING THE REASONS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE ASS ESSING OFFICER HAD MADE THIS ADDITION ON THE BASIS OF DATA FROM THE SE IZED COMPUTER. THE DECISION OF THE CIT(A) IN THIS REGARDS DESERVED TO BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED. 5. THE LEARNED CIT(A)S DECISION TO DELETE THE ADDI TION OF RS.20,00,000/- ON ACCOUNT OF EXCESS MONEY RECEIVED ON SALE OF LAND OVER THE DOCUMENTED VALUE IS NOT JUSTIFIED. THE CIT(A)S DEC ISION IN THIS REGARD IS WITHOUT PROPERLY APPRECIATING THE STATEMENT RECORDE D FROM THE BUYER AND CORRELATION OF FACTS BROUGHT ON RECORD BY THE ASSES SING OFFICER ON RECORD. THE CIT(A)S DECISION DESERVES TO BE REVERSED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 46 6. THE LEARNED CIT(A) ERRED IN DECIDING THAT SECTI ON 153A IS REVISED ASSESSMENTS AND SO MUCH SO, INTEREST COULD BE DEMAN DED ONLY FOR THE PERIOD MENTIONED IN SECTION 234B(3) OF THE IT ACT B Y FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT(C) VS. B. LAKSHMIKANTHAN VIDE I.T.A. NOS. 20 & 41 DATED 20 .1.2011. THIS DECISION HAS NOT BEEN ACCEPTED BY THE DEPARTMENT BU T NOT CONTESTED FURTHER ON TECHNICAL GROUND OF MONETARY LIMITATION PRESCRIBED FOR FILING FURTHER APPEAL. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE ABOVE GROUNDS OF APPEAL. 60. AS REGARDS GROUND NO. 1, THE FACTS IN THE PRES ENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO. 549 /COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 WHERE THE ADDITION ON ACCOU NT OF DIFFERENCE IN VALUATION TO THE EXTENT OF 10% WAS MADE. ACCORDING LY, OUR ORDER THEREIN SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE . THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. 61. AS REGARDS GROUND NO. 2, THE FACTS IN THE PRE SENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO. 552 /COCH/2013 FOR THE ASSESSMENT YEAR 2007-08 DECIDED BY US HEREINABOVE. ACCORDINGLY, OUR ORDER HEREINABOVE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 62. AS REGARDS GROUND NO. 3, THE FACTS IN THE PRE SENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO. 549 /COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 AND ACCORDINGLY, OUR ORDER HEREINABOVE IN I.T.A. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 47 NO. 549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 S HALL BE IDENTICALLY APPLICABLE IN THE IMPUGNED YEAR. THUS GROUND NO. 3 OF THE REVENUE IS DISMISSED. 63. AS REGARDS GROUND NO. 4, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO.552/ COCH/2013 FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ADDITION OF RS. 33,75,563/- HAD BEEN MADE WHEREAS IN THE PRESENT CASE THE ADDITION WAS M ADE FOR RS.52,29,682/-. THE FACTS REMAINING THE SAME, OUR ORDER HEREINABOVE IN I.T.A. NO. 552/COCH/2013 FOR THE ASSESSMENT YEAR 2007-08 SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE AND ACCORDINGLY, GRO UND NO. 4 OF THE REVENUE IS DISMISSED. 64. AS REGARDS GROUND NO. 5, THE BRIEF FACTS AS EM ANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PARAS 7 TO 7.3 ARE REPRODU CED HEREIN BELOW: 7. IN THE PREVIOUS YEAR THE ASSESSEE AND HER HUSBA ND SHRI P.P. SUNNY SOLD 86 CENTS OF LAND AT NEDUMBASSERY TO SIMON VARGHESE FOR A DOCUMENTED CONSIDERATION OF RS.45 LAKHS. THIS PROPERTY WAS PUR CHASED ON4.10.2006 FOR A CONSIDERATION OF RS.20,00,000. (RS.22,41,,000 INC LUSIVE OF STAMP DUTY AND DOCUMENTATION CHARGES), IN THE RETURN OF INCOME FILED THE ASSESSEE HAS DISCLOSED SHORT TERM CAPITAL AIN OF RS.7,59,000 FORM THE DEAL (SALE CONSIDERATION RS.30,00,000 COST RS.22,41,000 =7,59 ,000. BALANCE SALE CONSIDERATION IS DECLARED IN THE HANDS OF P.P. SUNN Y). 7.1 HOWEVER THE ASSESSEE HAS NOT CONSIDERED THE ON MONEY RECEIPT OF RS.40,00,000 IN THE DEAL, IN THE STATEMENT GIVEN BY SHRI SIMON VARGHESE U/S. 131(A SEARCH WAS CONDUCTED IN THE CASE OF SIMO N VARGHESE ALSO). THE BUYER HAS ADMITTED PAYING EXTRA CONSIDERATION. THE RELEVANT PART OF THE STATEMENT OF SHRI SIMON VARGHESE IS QUOTED BELOW:A PART FROM THE 45 I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 48 LAKHS, AS PER THE DIRECTION OF SHRI P.P. SUNNY, I G AVE A DONATION OF RS.40 LAKHS TO AMALA HOSPITAL TOWARDS THE PRICE OF THIS P ROPERTY. THIS IS ALSO REFLECTED IN THE CASH FLOW STATEMENT FILED BY SHRI SIMON VARGHESE IN THE COURSE OF ASSESSMENT PROCEEDINGS IN HIS CASE. A COP Y OF THE CASH FLOW STATEMENT IS PLACED ON FILE. ALSO IN THE COURSE OF SEARCH A COPY OF A CHEQUE ISSUED BY SHRI P.P. SUNNY TO SIMON VARGHESE FOR RS. 40,00,000 DATED 26.03.2008 WAS FOUND. IT IS OBVIOUS SINCE THE AMOUN T RECEIVED FROM P.P. SUNNY WAS TRANSFERRED TO AMALA CANCER CENTRE AND IN TURN, SHRI SIMON VARGHESE SETTLED THE DUES TO MR.P.P. SUNNY IN CASH. IT IS THEREFORE CLEAR THAT THERE WAS AN ON MONEY RECEIPT OF RS.40,00,000 IN THE DEAL. 7.2 WHEN A PROPOSAL WAS GIVEN TO TAX THE EXTRA CONS IDERATION, THE ASSESSEE REPLIED AS UNDER: THE ACTUAL POSITION IS AS UNDER: MR. SIMON VARGHE SE HAS GIVEN RS.25 LAKHS TO US AS PER CHEQUE NO.391323 DATED 11.10.07 DRAWN ON CSB CHALAKUDY. THIS AMOUNT WAS DEPOSITED IN OUR HDFC BA NK ACCOUNT NO.4021.14. COPY OF THE BANK STATEMENT IS ENCLOSED. THIS AMOUNT WAS REPAID BY US AS PER CHEQUE NO. 205775 DATED 29.03.0 8 DRAWN ON DLB SB 145,01.1972. COPY OF THE BANK STATEMENT ENCLOSED. O N 16.02.08, MR. SIMON VARGHESE HAS GIVEN RS.40 LAKHS AS LOAN AS PER CHEQUE NO.922118 DRAWN ON SBI CHALAKUDY WHICH WAS DEPOSITED IN OUR D LB A/C NO. 1.03.1320. COPY OF THE BANK STATEMENT IS ENCLOSED. THIS AMOUNT HAS BEEN REPAID AS PER CHEQUE NO. 210235 DRAWN ON HDFC BANK A/C NO. 4021.14. ALL THE TRANSACTIONS ARE REFLECTED IN OUR BOOKS AND DIS CLOSED IN BANK STATEMENTS. HENCE OPPORTUNITY TO CROSS EXAMINE MR. SIMON VARGHESE TO PROVE THAT HIS STATEMENT IS BASELESS. WITHOUT PREJU DICE TO THE ABOVE I HUMBLY SUBMIT THAT ANY PAYMENT TO AMALA HOSPITAL IS ELIGIBLE FOR WEIGHTED DEDUCTION OF ONE AND ONE FOURTH TIMES U/S. 35(1)(II ) OF THE IT ACT. IF WE DIRECTLY PAY THIS AMOUNT TO AMALA HOSPITAL WE COULD HAVE SAVED MORE TAX. MOREOVER MR. SIMON VARGHESE IS AN ADVISORY MEMBER O F THE AMALA HOSPITAL THAT BEING THE FACTUAL POSITION, WE FAIL T O UNDERSTAND THE SANCTITY OF HIS STATEMENT THAT HE HAS MADE A DONATION ON OUR BEHALF. 7.3 THE GIST OF THE ARGUMENT OF THE ASSESSEE IS THA T RS.40,00,000 PAID BY THE ASSESSEE TO MR. SIMON VARGHESE WAS ONLY REPAYME NT OF A LOAN RECEIVED FOR THE SAME AMOUNT ON 16.02.2008. THIS CLAIM DOES NOT APPEAR CONVINCING FOR THE FOLLOWING REASONS: THE LAND WAS SOLD TO MR. SIMON VARGHESE ON 18.02.2008. IT IS ON THIS VERY DATE THA T RS.40,00.000/- IS SEEN CREDITED IN THE JOINT A/C OF SHRI P.P. SUNNY AND SM T. SEENA SUNNY. OBVIOUSLY WHEN LAND IS SOLD MR. SIMON VARGHESE OWES MONEY TO THE SELLERS AND NOT OTHERWISE. THE AMOUNT CREDITED IN THE JOINT ACCOUNT IS SEEN WITHDRAWN THAT DAY ITSELF. ACCORDING TO THE ASSESSE E THEY (MR. P.P. SUNNY AND SMT. SEENA SUNNY) REPAID MR. SIMON VARGHESE THE SUM OF RS.40,00,000 ON 26.03.08 VIDE CHEQUE ISSUED FROM HD FC BANK. IT IS NOT I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 49 CLEAR WHY THE ASSESSEE WOULD AVAIL A LOAN FROM MR. SIMON VARGHESE FOR JUST ONE MONTH. IT IS ALSO TO BE NOTED THAT A COPY OF THE CHEQUE WAS RECOVERED DURING SEARCH AND IN THE CHEQUE IT IS CLE ARLY WRITTEN, TRANSFERRED TO AMALA HOSPITAL AS DONATION. THE AS SESSEE HAS NO EXPLANATION FOR THIS. FURTHER IN THE COURSE OF SEAR CH IN THE CASE OF SHRI SIMON VARGHESE, A DOCUMENT WAS FOUND WHERE THE MR. VARGHESE HAS VALUED THE VARIOUS PROPERTIES THAT HE OWNS. INCIDEN TALLY, THE PROPERTY PURCHASED FROM MR. P.P. SUNNY AND SMT. SEENA SUNNY IS VALUED AT RS.11 CRORES. THIS MAY E AN EXAGGERATION. HOWEVER THIS DO ES INDICATE THAT THE PROPERTY IS A PREMIUM PROPERTY COMMANDING A HUGE MA RKET PRICE. IT APPEARS THAT THE ACTUAL PRICE WAS NOT SHOWN IN THE SALE DEED, BUT WAS TRANSFERRED THROUGH OTHER MEANS. THE PREPONDERANCE OF PROBABILITY SUGGESTS ON MONEY PAYMENT OF RS.40,00,000. HALF OF THIS ASSESSED IN THE HANDS OF THE ASSESSEE AND THE OTHER HALF IN THE HAN DS OF SHRI P.P. SUNNY. 65. THE LD. CIT(A) DELETED THE ADDITION VIDE PARA 76 WHICH IS REPRODUCED HEREINBELOW: 76. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. ON PERUSAL OF TH E ASSESSMENT ORDER, IT IS SEEN THAT THE ADDITION IS MADE SOLELY ON THE BASIS OF SWORN STATEMENT OF SHRI SIMON VARGHESE, WHICH IS QUOTED BELOW:- APART FROM THE 45 LAKHS, AS PER THE DIRECTION OF S HRI P.P. SUNNY, I GAVE DONATION OF RS.40 LAKHS TO AMALA HOSPITAL TOWARDS T HE PRICE OF THIS PROPERTY. AS DISCUSSED IN PARA 10(I) ABOVE, THE APPELLANT HAS POINTED OUT CERTAIN CONTRADICTIONS IN THE SWORN STATEMENT OF SHRI SIMON VARGHESE. ON PERUSAL OF THE ASSESSMENT ORDER, SWORN STATEMENT AND SUPPOR TING CASH FLOW STATEMENT FILED BY SHRI SIMON VARGHESE, IT IS EVIDE NT THAT THE CASH FLOW STATEMENT SUBMITTED BY SHRI SIMON VARGHESE IS NOT S UPPORTING HIS SWORN STATEMENT. FOR EXAMPLE: AS PER PAGE 7 OF THE SWORN STATEMENT, LAST PARAGRAPH, MR. SIMON VARGHESE HAS STATED AS FOLLOWS :- ON 29.3.2008, SHRI SUNNY HAS DEPOSITED RS.25 LAKHS IN MY ACCOUNT. THIS WAS A TEMPORARY LOAN FOR GIVING TO AMALA HOSPITAL. THE ABOVE STATEMENT IS CONTRADICTORY TO THE CASH FL OW STATEMENT FILED BY HIM (VIDE PAGE 5 OF CASH FLOW STATEMENT) WHERE IN I T IS MENTIONED THAT I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 50 LOAN AMOUNT RECEIVED BACK FROM SUNNY ON 29.3.2008 FOR LOAN GIVEN ON 21/10/2007 BY TRANSFER HDFC CHALAKUDY. REFERRING TO CH NO. 210235 DATED 26.03.2008 FOR RS. 40,00,000/-, ASSESSING OFFICER HAS STATED IN PARA 7.3 OF PAGE 6 OF THE ORDER THAT A COPY OF THIS CHEQUE WAS RECOVERED DURING SEARCH, IN THE CHEQUE IT IS CLEARLY WRITTEN TRANSFERRED TO AMALA HOSPITAL AS DONATION. IT IS NOT SEEN CONSIDERED BY THE ASSESSING OFFICER THE FACT THAT THE SAME CHEQUE IS AN ACCOUNT PAYEE CHEQUE OF THE APPELLANT TO THE LENDER MR. SIMON VARGHESE, ISSUED FROM A DISCLOSED BANK ACCOUN T. IT IS ALSO NOT SEEN CONSIDERED BY THE ASSESSING OFFICER THE FACT THAT T HIS IS REPAYMENT OF THE LOAN OF RS.40,00,000/- RECEIVED BY THE APPELLANT ON 16.02.2008 FROM MR. SIMON VARGHESE BY ACCOUNT PAYEE CHEQUE. ASSESSING O FFICER HAS ALSO NOT STATED HOW THIS REPAYMENT OF LOAN BY THE APPELLANT TO THE LENDER MR. SIMON VARGHESE, BECOME AN ON MONEY RECEIPT IN THE HANDS O F THE APPELLANT. MOREOVER, THE AMOUNT IN DISPUTE IS RS.40,00,000/-, AS PER THE CASH FLOW STATEMENT OF SHRI SIMON VARGHESE. IT IS STATED AS AMOUNT TO CORPUS FUND OF AMALA CANCER HOSPITAL FROM HDFC CHALAKUDY(VIDE PAGE 5 OF CASH FLOW STATEMENT) ASSESSING OFFICER HAS ALSO FAILED TO EST ABLISH WHAT IS THE BENEFIT DERIVED BY THE ASSESSEE ON ACCOUNT OF THE PAYMENT O F DONATION MADE BY SHRI SIMON VARGHESE TO AMALA CANCER HOSPITAL. THOUGH SPECIFIC REQUEST HAS BEEN MADE, NO OPPORTUNI TY WAS SEEN GIVEN TO THE ASSESSEE FOR CROSS EXAMINE SHRI SIMON VARGHES E. THE ASSESSEE FURTHER SUBMITTED THAT WHEN AN EX PARTE STATEMENT I S RECORDED AT THE BACK OF THE ASSESSEE, WITHOUT AFFORDING AN OPPORTUNITY T O CROSS EXAMINE THE WITNESS, THE STATEMENT CANNOT BE MADE USE OF IN FRA MING AN ASSESSMENT. IN THIS REGARD, THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KALRA GLUE FACTORY VS. SALES TAX TRIBUNAL (1987) 167 ITR 498 SC AD KISHANCHAND CHELLARAM VS. CIT (1980) 125 ITR 713 SC. IT IS ALSO PERTINENT TO NOTE THAT DONATION TO AMALA CANCER HOSPITAL IS ELIGIBLE FOR WEIGHTED DEDUCTION AT ONE AND ONE FOUR TH TIMES U/S. 35(1)(II) OF THE INCOME TAX ACT. THE LD. AR OF THE APPELLANT HAS SUBMITTED THAT THE DOCUMENTARY EVIDENCE FOR THIS ARGUMENT WAS SUBMITTE D BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE ISSU E, I AM OF THE OPINION THAT THE IMPUGNED DONATION OF RS.40,00,000/- IS MAD E BY SHRI SIMON VARGHESE DIRECTLY TO THE CORPUS FUND OF AMALA CANCE R HOSPITAL FROM HIS HDFC BANK ACCOUNT, CHALAKUDY AND THE BENEFIT DERIVE D BY THE ASSESSEE ON I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 51 ACCOUNT OF THE SAID DONATION GIVEN BY SHRI SIMON VA RGHESE TO AMALA CANCER HOSPITAL IS NOT PROVED WITH CONVINCING EVIDE NCES. ACCORDINGLY, THE ADDITION OF RS.20,00,000/- IS DELETED. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 66. THE LD. DR RELIED UPON THE ORDER OF THE ASSES SING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMIS SIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). 67. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE ADDITION HAS BEEN SOLELY MADE ON THE BASIS OF S WORN STATEMENT OF SHRI SIMON VARGHESE WHICH HAS BEEN REPRODUCED HEREINABOV E. FROM THE SAID STATEMENT AND THE PERUSAL OF THE RECORD, IT IS EVID ENT THAT THE CASH FLOW STATEMENT SUBMITTED BY SHRI SIMON VARGHESE IS NOT S UPPORTING HIS SWORN STATEMENT. HOWEVER, THE ASSESSING OFFICER HAS NOT STATED HOW THIS REPAYMENT OF LOAN BY THE ASSESSEE TO THE ASSESSING OFFICER TO THE LENDER SHRI SIMON VARGHESE BECOMES AN ON MONEY RECEIPT IN THE H ANDS OF THE ASSESSEE. THE ASSESSING OFFICER HAS FAILED TO ESTABLISH WHAT IS THE BENEFIT DERIVED BY THE ASSESSEE ON ACCOUNT OF THE PAYMENT OF DONATION MADE BY SHRI SIMON VARGHESE TO AMALA CANCER HOSPITAL. DONATION TO AMAL A CANCER HOSPITAL IS ELIGIBLE FOR DEDUCTION AT ONE AND ONE FOURTH TIMES U/S. 35(1) (II) OF THE INCOME TAX ACT. THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED ALL THE DOCUMENTARY EVIDENCES BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS WHICH IN FACT HAS BEEN IGNORED BY THE A SSESSING OFFICER. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 52 MOREOVER, INSPITE OF A SPECIFIC REQUEST MADE TO THE ASSESSING OFFICER, NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE FOR CROS S EXAMINING MR. SIMON VARGHESE. THEREFORE, ANY EX PARTE STATEMENT RECORD ED AT THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE IN FRA MING AN ASSESSMENT, MADE BY ASSESSING OFFICER AS HAS BEEN HELD BY THE H ONBLE SUPREME COURT IN THE CASE OF KALRA GLUE FACTORY (SUPRA) AND KISHANCH AND CHELLARAM (SUPRA). IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE DONATI ON OF RS.40 LAKHS IS DIRECTLY MADE BY MR. SIMON VARGHESE TO THE CORPUS F UND OF AMALA CANCER HOSPITAL FROM HIS HDFC BANK ACCOUNT AND NO BENEFIT HAVING BEEN DERIVED BY THE ASSESSEE BY SUCH DONATION OF MR. SIMON VARGHESE TO AMALA CANCER HOSPITAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION SO MADE. THUS GROUND NO. 5 OF THE REVENUE IS DISMISSED. 68. AS REGARDS GROUND NO. 6, THE BRIEF FACTS OF T HE PRESENT CASE ARE THAT THE ASSESSING OFFICER LEVIED INTEREST U/S. 234A AND 234 B(3) OF THE ACT. 69. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A SSESSING OFFICER IN LEVYING INTEREST U/S. 234A OF THE ACT SINCE THE SAME WAS MA NDATORY AND THERE WAS NO DISCRETION AVAILABLE WITH THE ASSESSING OFFICER. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 53 70. AS REGARDS LEVY OF INTEREST U/S. 234B, THE LD. CIT(A) OBSERVED THAT SECTION 153A IS A REVISED ASSESSMENT SO MUCH SO INT EREST WOULD BE DEMANDED ONLY FOR THE PERIOD MENTIONED IN SECTION 2 34B(3) OF THE ACT AND ACCORDINGLY, THE ASSESSING OFFICER WAS DIRECTED TO RECOMPUTE THE INTEREST AND THUS ALLOWED PART OF THE GROUND RAISED BY THE ASSE SSEE. 71. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. WE CONCUR WITH THE VIEW OF THE LD. CIT(A) AS REGARD S THE LEVY OF INTEREST UNDER SECTION 234A WHICH IS MANDATORY. 72. AS REGARDS LEVY OF INTEREST U/S. 234B OF THE ACT, THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT SECTION 153A IS A REVISED ASS ESSMENT AND INTEREST COULD BE DEMANDED ONLY FOR THE PERIOD MENTIONED IN SECTIO N 234B(3) OF THE ACT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF CIT(CENTRAL) VS. B. LAKSHMIKANTHAN IN I.T.A. NOS. 20&41 AS PER ORDER DATED 20-01-2011 WHICH READS AS UNDER: AFTER HEARING BOTH SIDES, WE FEEL THERE IS NO SUBS TANCE IN THE CONTENTION RAISED BY THE REVENUE THAT IN A RE-ASSESSMENT COMPL ETED U/S. 153A INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF ADVANC E TAX IS PAYABLE U/S. 234B(3) MERELY BECAUSE THE SAID RE-ASSESSMENT U/S. 153A IS COMPLETED BY ACCEPTING THE RETURN FILED U/S. 143(1) OF THE ACT. INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF ADVANCE TAX IS PAYABLE U/S. 234 B FOR DIFFERENT PERIODS UNDER SUB-SECTIONS (1) AND (3) OF THE SAID SECTION. IN ALL CASES OF REGULAR ASSESSMENTS COMPLETED U/S. 143(1) INTEREST IS TO BE CHARGED FOR THE PERIODS PROVIDED U/S. 234B91) OF THE ACT. FURTHER, IF THE FIRST ASSESSMENT ITSELF IS INCOME ESCAPING ASSESSMENT MADE U/S. 147 OR U/S. 153A, THEN I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 54 SUCH ASSESSMENT WILL BE TREATED AS REGULAR ASSESSME NT AND INTEREST FOR NON-PAYMENT OR SHORT-PAYMENT OF ADVANCE TAX IN SUCH CASES WILL BE PAYABLE UNDER SECTION 234B91) OF THE ACT. HOWEVER, WHEN AN ORIGINAL ASSESSMENT COMPLETED U/S. 143 IS REVISED EITHER U/S . 147 OR U/S. 153A, THEN INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF A DVANCE TAX IS PAYABLE ONLY FOR THE PERIOD MENTIONED IN SECTION 234B(3) OF THE ACT, WHICH PROVIDES FOR INTEREST FROM THE DATE OF COMPLETION OF REGULAR ASSESSMENT U/S. 143(1) TILL THE DATE OF COMPLETION OF REASSESSMENT OR RE-C OMPUTATION U/S. 147 OR U/S. 153A OF THE ACT. IN OUR VIEW, FOR THE PURPOSE OF LEVY OF INTEREST U/S. 234B(3), IT IS IMMATERIAL WHETHER RE-COMPUTATION OR RE-ASSESSMENT U/S. 147 OR U/S. 153A IS MADE BY ACCEPTING THE REVISED R ETURN FILED AND BY PROCESSING THE SAME U/S. 143(1) OR WHETHER REASSESS MENT IS MADE BY REJECTING SUCH RETURNS AND BY DETERMINING THE INCOM E. THE FACT THAT THE PROCEDURE FOR CALLING FOR RETURN AND ASSESSMENT AFT ER SEARCH OR REQUISITION U/S. 153A IS THE SAME AS PROVIDED U/S. 139 DOES NOT MEAN THAT A REASSESSMENT COMPLETED UNDER THE SAID PROVISION IS A REGULAR ASSESSMENT OR ORIGINAL ASSESSMENT. ON THE OTHER HAND, WHATEVER BE THE PROCEDURE ADOPTED FOR ASSESSING ESCAPED INCOME OR UNDISCLOSED INCOME PURSUANT TO SEARCH OR REQUISITION, SUCH ASSESSMENT WILL ALWAYS BE A RE-ASSESSMENT OR RE-COMPUTATION U/S. 153A, AND UNLESS IT IS A FIRST ASSESSMENT, THAT COULD BE TREATED AS THE REGULAR ASSESSMENT IN TERMS OF EXPLA NATION (2) TO SECTION 234B91), THEN INTEREST CAN BE CHARGED ONLY U/S. 234 B(3) OF THE ACT. IN THIS CASE, THE ORIGINAL RETURNS WERE PROCESSED U/S. 143(1) OF THE ACT AND THE PROCEEDINGS SO COMPLETED WERE ISSUED TO THE ASS ESSEE. IT IS ONLY THEREAFTER THE DEPARTMENT CONDUCTED SEARCH AND MADE REVISED ASSESSMENTS U/S. 153A OF THE ACT THOUGH BY ACCEPTIN G RETURNS OF UNDISCLOSED INCOME FILED AND BY ISSUING PROCEEDINGS U/S. 143(1) READ WITH SECTION 153A ARE REVISED ASSESSMENTS AND SO MUCH SO , INTEREST COULD BE DEMANDED FOR THE PERIOD MENTIONED IN SECTION 234B(3 ) OF THE ACT AS HELD BY THE TRIBUNAL. IN THIS VIEW OF THE MATTER, WE UPH OLD THE ORDER OF THE TRIBUNAL AND DISMISS THE DEPARTMENT APPEALS FOR BOT H THE YEARS. 73. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. C IT(A) WHO HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO LEVY INTEREST AS HEREINABOVE. ACCORDINGLY, GROUND NO. 6 OF THE REVENUE IS DISMISSED. THUS APPE AL OF THE REVENUE IN I.T.A. NO.553/COCH/2013 IS DISMISSED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 55 I.T.A. 554/COCH/2013 : A.Y. 2009-10 74. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFF ICER WITHOUT PROPERLY APPRECIATING THE DVOS REPORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. THE DECISION OF THE CIT(A) DESERVES TO BE SET ASIDE. 2. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISA LLOWANCE OF DEPRECIATION ON BUILDING TO 10% AS AGAINST 50% MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE FACTS AS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE CIT(A)S DECISION DESERV ES TO BE VACATED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF EXPENDITURE ON BENZ CAR WI THOUT PROPERLY APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. THE CIT(A)S DECISION DESERVES TO BE SET ASIDE. 4. THE LEARNED CIT(A)IS NOT JUSTIFIED IN THE DELET ING THE GROSS PROFIT ADDITION OF RS.33,75,563/- WITHOUT PROPERLY APPRECI ATING THE REASONS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE ASS ESSING OFFICER HAD MADE THIS ADDITION ON THE BASIS OF DATA FROM THE SE IZED COMPUTER. THE DECISION OF THE CIT(A) IN THIS REGARDS DESERVED TO BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY OF THE ABOVE GROUNDS OF APPEAL. . 75. AS REGARDS GROUND NO. 1, THE FACTS ARE IDENT ICAL TO THE FACTS IN REVENUES APPEAL IN I.T.A. NO.549/COCH/2913 FOR THE ASSESSMENT YEAR 2004- 05 AND ACCORDINGLY, OUR ORDER HEREINABOVE SHALL BE IDENTICALLY APPLICABLE IN THE IMPUGNED YEAR. THUS GROUND NO. 1 OF THE REVENUE IS DISMISSED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 56 76. AS REGARDS GROUND NO. 2, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN REVENUES APPEAL IN I.T.A. NO. 552/COC H/2013 FOR THE ASSESSMENT YEAR 2007-08 AND ACCORDINGLY, OUR ORDER HEREINABOVE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 77. AS REGARDS GROUND NO.3, THE FACTS IN THE PRES ENT CASE ARE IDENTICAL TO THE FACTS IN I.T.A. NO.549/COCH/2013 FOR THE ASSESS MENT YEAR 2004-05 AND ACCORDINGLY, OUR ORDER HEREINABOVE SHALL BE IDENTIC ALLY APPLICABLE IN THIS CASE. THUS GROUND NO. 3 OF THE REVENUE IS DISMISSED. 78. AS REGARDS GROUND NO. 4, THE FACTS IN THE PRE SENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO. 552 /COCH/2013 FOR THE ASSESSMENT YEAR 2007-08 HEREINABOVE WHERE THE ADDIT ION ON ACCOUNT OF GROSS PROFIT WAS RS.33,75,563/- AS AGAINST RS.71,62 ,205 IN THE IMPUGNED YEAR. ACCORDINGLY, OUR ORDER HEREINABOVE IN I.T.A. NO.552/COCH/2013 SHALL BE IDENTICALLY APPLICABLE TO THE ADDITION OF RS.71,62, 205/- MADE IN THE IMPUGNED YEAR. ACCORDINGLY, GROUND NO. 4 OF THE REVENUE IS D ISMISSED. THUS THE APPEAL OF THE REVENUE IN I.T.A. NO. 554/COCH/2013 IS DISMI SSED. I.T.A. NO. 555/COCH/2013 : A.Y. 2010-11 79. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 57 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE DVOS REPORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISA LLOWANCE OF DEPRECIATION ON BUILDING TO 10% AS AGAINST 50% MADE BY THE ASSES SING OFFICER WITHOUT PROPERLY APPRECIATING THE FACTS AS BROUGHT ON RECOR D BY THE ASSESSING OFFICER. 3. THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER OUT OF EXPENDITURE ON BENZ CAR WI THOUT PROPERLY APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASS ESSING OFFICER. 5. THE CIT(A) ERRED IN DELETING ADDITION MADE ON AC COUNT OF SALE OF SHOP ROOMS WITHOUT APPRECIATING THE FACTS BROUGHT ON REC ORD ON CORRELATION OF THE SEIZED DOCUMENTS AND THE SALE AGREEMENT AS ALSO THE OTHER ASPECTS POINTED OUT REGARDING LAND SALE PREMIUM NOT SHOWN I N THE RETURN OF INCOME. 6. THE LEARNED CIT(A) IS NOT JUSTIFIED IN DELETING THE UNDISCLOSED BUSINESS INCOME FROM SALE OF BUILDING. THE CIT(A)S DECISION IS BY WRONGLY TAKING INTO CONSIDERATION THE ASSESSEES CLAIM OF LOAN TAK EN TOWARDS CONSTRUCTION OF THE BUILDING AND INTEREST PAID THEREON WITHOUT B EING ABLE TO CORELATE THE SAME WITH CONSTRUCTION OF THE BUILDING. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE ABOVE GROUNDS OF APPEAL. 80. AS REGARDS GROUND NO. 1, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL FOR THE ASSESSMEN T YEAR 2004-05 IN I.T.A. NO.549/COCH/2013 AND ACCORDINGLY, OUR ORDER HEREINA BOVE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS G ROUND NO. 1 OF THE REVENUE IS DISMISSED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 58 81. AS REGARDS GROUND NO. 2, THE FACTS OF THE CAS E ARE IDENTICAL TO THE FACTS IN REVENUES APPEAL IN I.T.A. NO.552/COCH/2013 FOR THE ASSESSMENT YEAR 2007-08 AND OUR ORDER HEREINABOVE SHALL BE IDENTICA LLY APPLICABLE IN THE PRESENT CASE. THUS GROUND NO. 2 OF THE REVENUE IS D ISMISSED. 82. AS REGARDS GROUND NO. 3, THE FACTS IN THE PRE SENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO.549/ COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 AND ACCORDINGLY, OUR ORDER HEREINABOVE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS GR OUND NO. 3 OF THE REVENUE IS DISMISSED. 83. AS REGARDS GROUND NO. 4, THE FACTS IN THE PRES ENT CASE ARE IDENTICAL TO THE FACTS IN THE REVENUES APPEAL IN I.T.A. NO.552/ COCH/2013 FOR THE ASSESSMENT YEAR 2007-08 WHEREIN THE ADDITION OF THE G.P. WAS MADE AT RS.33,75,563/- AS AGAINST RS.71,07,824/- MADE DURIN G THE IMPUGNED YEAR. ACCORDINGLY, OUR ORDER HEREINABOVE IS IDENTICALLY A PPLICABLE FOR THE ADDITION OF RS.71,07,824/-. THUS GROUND NO.4 OF THE REVENUE IS DISMISSED. 84. AS REGARDS GROUND NO 5, THE BRIEF FACTS OF TH E CASE AS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER IN PAGES 5&6 ARE REPRODUCED HEREINBELOW:- - I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 59 7. IN THE RETURN OF INCOME FILED, THE ASSESSEE HAS COMPUTED CAPITAL GAINS ARISING FROM THE SALE OF SHOP ROOMS AT THE CO MMERCIAL BUILDING AT CHALAKUDY CALLED SUNNY SIDE BUILDING. THIS BUILDI NG WAS REFERRED FOR VALUATION AND AS PER THE VALUATION REPORT; THE TOTA L AREA IS 11,128 SQ. FEET. ALSO AS PER THE VALUATION REPORT THE CONSTRUC TION WAS COMPLETED ONLY IN MARCH 2011. AS PER THE DETAILS FURNISHED BY THE ASSESSEE, THE CONSTRUCTION WAS COMPLETED IN A.Y. 2008-09, IT FOLL OWS THAT ONLY SHORT- TERM CAPITAL GAIN ARISES FROM THE SALE OF SHOP ROOM S AND NOT LONG-TERM CAPITAL GAIN AS COMPUTED BY THE ASSESSEE. AS PER TH E VALUATION REPORT, THE TOTAL COST IS RS.56,55,100. 7.1 IN THE PREVIOUS YEAR, THE ASSESSEE SOLD A SHOP ROOM DESIGNATED AS G76 HAVING AREA 210 SQ. FEET TO MR. JOSE VATTALI. A S PER THE SALE DEED DATED 15.09.2009, THE CONSIDERATION IS RS.1,99,600/ - HOWEVER AS PER THE AGREEMENT SEIZED AND MARKED AS CHN 1909 AZ A(2) 1-4 , THE ACTUAL CONSIDERATION IS RS.11,55,000 @ RS.5,500 PER SQ. FE ET). FURTHER CONFIRMATION FOR THE ON MONEY RECEIPT IS SEIZED DOC UMENT CHN 1909 AZ A(1) 28, WHICH IS A FLOOR PLAN OF THE BUILDING. EACH ROOM IS INDICATED AND ALSO INDICATED IS THE SQ. FEET RATE. THIS DOCUMENT ALSO SHOWS RATE OF RS.6,000 PER SQ. FEET. ACCORDINGLY THE CONSIDERATIO N RECEIVED IS ADOPTED AT RS.11,55,000. 7.2 IN THE PREVIOUS YEAR, THE ASSESSEE SOLD A SHOP ROOM HAVING AREA 300 SQ. FEET TO MR. LEWIS. AS PER THE SALE DEED DAT ED 14.07.2009, THE CONSIDERATION IS RS.2,00,000. HOWEVER, AS PER SEIZE D DOCUMENT CHN 1909 AZ A(1) 28, THE CONSIDERATION IS @ THE RATE OF 6000 PER SQ. FEET. THIS DOCUMENT AS DISCUSSED EARLIER IS A FLOOR PLAN OF THE BUILDING. IN THIS DOCUMENT EACH ROOM IS INDICATED AND ALSO INDICATED IS THE RATE OF THE ROOM PER SQ. FEET. ACCORDINGLY FOR A 300 SQ. FEET R OOM, THE CONSIDERATION IS RS.18,00,000. THIS HAS TO BE ADOPTED AS THE ACTU AL CONSIDERATION RECEIVED. 7.3 THE ASSESSEE SOLD ANOTHER ROOM IN THE BUILDING TO MR. THOMAS MADATHUMPADY. AS PER THE SALE DEED DATED 04.07.2009 , CONSIDERATION IS RS.40,000 FOR A SHOP HAVING AREA 73 SQ. FEET. HOWEV ER AS PER SEIZED DOCUMENT CHN 1909 AZ A(1) 28, THE LOWEST RATE IS RS .3000 PER SQ. FEET. SO THE CONSIDERATION IS WORKED OUT AT RS.2,19,000 A S AGAINST RS.40,000 DECLARED. 7.4 SO THE TOTAL AREA SOLD IN THE PREVIOUS YEAR I S RS.583 SQ. FEET (THREE SHOPS COMBINED). THE PROPORTIONATE COST FOR THE ROO MS SOLD IS RS.2,96,272. SO THE SHORT TERM CAPITAL GAINS FROM T HE SALE OF ROOMS IS RS 28,78,000 (RS.31,74,000 RS.2,96.272). I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 60 7.5 WHEN A PROPOSAL WAS GIVEN TO ASSESS THE EXTRA CONSIDERATION RECEIVED FROM THE SALE OF SHOP ROOMS, THE ASSESSEE SUBMITTED AS UNDER: I HAVE DISCLOSED RS.8,04,000/- AS EXTRA AMOUNT REC EIVED BY ME DURING THE COURSE OF THE ABOVE SALES. I HUMBLY SUBMIT THAT MY HUSBAND MR. P.P. SUNNY IS DEALING WITH ALL THESE SALES REFERRED TO IN YOUR NOTICE. I HAVE ACCOUNTED AND DISCLOSED WHATEVER MONEY RECEIVE D BY ME ON ACCOUNT OF THESE TRANSACTIONS. I UNDERSTAND THAT MY HUSBAND MR. P.P. SUNNY HAS ALSO DISCLOSED EXTRA AMOUNT RECEIVED BY H IM OUT OF THESE TRANSACTIONS. HE HAS DISCLOSED RS.97,96,000 AS ADDI TIONAL INCOME WHICH INCLUDES EXTRA AMOUNT RECEIVED ON ACCOUNT OF THESE TRANSACTIONS ALSO. KINDLY TELESCOPE WHATEVER EXTRA AMOUNT RECEIVED AND DISCLOSED BY HIM ON ACCOUNT OF THESE TRANSACTION. 7.6 THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED. THE ASSESSEE DOES NOT DISPUTE THE RECEIPT OF EXTRA CONSIDERATION. THE AMOUNT RETURNED BY THE ASSESSEE UNDER OTHER SOURCES (RS.8,04,000) IS N OT RELATED TO THE SHOP ROOM SALES. THE RETURN OF INCOME WAS FILED PRI OR TO THE NOTICE AND THE ASSESSEE HAS NOT IDENTIFIED ITS SOURCE IN THE R ETURN. TO RELATE THE AMOUNT RETURNED UNDER OTHER SOURCES TO THE SHOP ROO M SALES IS JUST AN AFTERTHOUGHT. HENCE IT IS NOT ACCEPTED. SIMILARLY T HE CLAIM OF THE ASSESSEE THAT ADDITIONAL AMOUNT DISCLOSED BY SHRI P .P. SUNNY SHOULD BE TELESCOPED AGAINST THE EXTRA CONSIDERATION RECEIVED BY THE ASSESSEE IS NOT VALID. BOTH ARE SEPARATE ASSESSES AND THERE CAN NOT BE ANY TELESCOPING OF THE INCOME OF TWO SEPARATE ASSESSES. THE LD. CIT(A) DELETED THE ADDITION SO MADE BY TH E ASSESSING OFFICER. IT IS PERTINENT TO REPRODUCE THE ORDER OF THE LD. CIT(A) IN PARA 92 HEREINBELOW: 92 I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. PERUSAL OF ASSES SMENT ORDER AND COMPUTATION STATEMENT OF TOTAL INCOME FURNISHED BY THE APPELLANT, IT IS EVIDENT THAT THE APPELLANT HAS DISCLOSED RS.8,04,00 0/- UNDER INCOME FROM OTHER SOURCES. THE APPELLANT ALSO SUBMIT THAT COMPUTATION STATEMENT FILED IN SUPPORT OF IT RETURNS FILED BY T HE ASSESSEE CLEARLY SHOWS THAT THE AMOUNT OF RS.8,08,000/- IS PREMIUM R ECEIVED ON ROOM SALES. IN THE ABSENCE OF ANY FUNDING IN THE ASSESSM ENT ORDER THAT THE SAID AMOUNT IS THE INCOME FROM ANY OTHER SOURCES, T HE SUBMISSIONS OF THE APPELLANT CANNOT BE REJECTED. HENCE, I AM OF TH E VIEW THAT THE INCOME DISCLOSED UNDER OTHER SOURCES RS.8,08,000/- SHALL BE SET OFF AGAINST THE EXTRA AMOUNT ARRIVED AT BY THE ASSESSIN G OFFICER. SECONDLY, WITH REGARD TO THE DISCLOSURE OF INCOME BY SHRI P.P . SUNNY, THE HUSBAND I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 61 OF THE ASSESSEE, IT IS EVIDENT FROM HIS ASSESSMENT ORDER THAT HE HAS DISCLOSED RS.97,96,000/- DURING THE YEAR. IT IS AL SO PERTINENT TO NOTE THAT THE BUSINESS OF THE APPELLANT IS MANAGED BY HE R HUSBAND THIS POSITION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. AS STATED IN PARA 7.1 IN PAGE 5 OF THE ORDER, ONE OF THE BASIS FOR ESTIMATION OF EXTRA CONSIDERATION IS A SE IZED DOCUMENT CHN 1909 AZ (1) 28, WHICH IS A FLOOR PLAN OF THE BUILD ING. EACH ROOM IS INDICATED AND ALSO INDICATED IS THE SQ. FT. RATE. T HE APPELLANT HAS STATED IN HER SWORN STATEMENT ON THE DATE OF SEARCH THAT S HE IS NOT AWARE OF THE SHOP ROOM SALES AT SUNNY SIDE BUILDING, CHALAKU DY. ALL THE SALE DEALINGS WERE DONE BY HER HUSBAND MR. P.P. SUNNY. IN THESE CIRCUMSTANCES, IT IS NOT CLEAR THAT WHO HAS RECEIVE D THE EXTRA MONEY O ACCOUNT OF SALE OF ROOMS. HENCE, ISSUE INVOLVED IS NOT TELESCOPING OF INCOME RATHER IT RELATES TO ASSESSMENT OF EXTRA CON SIDERATION SINCE SHRI P.P. SUNNY, THE HUSBAND OF THE APPELLANT HAS ALREAD Y DISCLOSED OTHER INCOME RS.97,96,000/-. FURTHER, THE AR OF THE APPE LLANT IS TRYING TO PLACE ON RECORD THE PAYMENT OF RS.97,96,000/- FOR E XTRA MONEY PAYMENT FOR PURCHASE OF PROPERTY FROM MR. SIVARAMAN AT KALO OR ALSO COMPRISES OF THE ALLEGED ON MONEY RECEIPTS FROM THE SALE OF SHOP ROOMS AT CHALAKUDY. THEREFORE NO SEPARATE ADDITION IS WARRA NTED AGAIN IN THE HANDS OF THE APPELLANT SINCE THE BUSINESS TRANSACTI ONS ARE DEALT BY MR.P. P. SUNNY, THE HUSBAND OF THE APPELLANT. THE EXPLANA TION GIVEN BY THE AR OF THE APPELLANT AND ALSO THE FACT REMAINS THAT MR. P.P. SUNNY HAD ALREADY DISCLOSED A SUM OF RS.97,96,000/- WHICH INC LUDES ON ACCOUNT RECEIPT OF EXTRA PREMIUM FOR THE SALE OF THE PROPER TY AS MENTIONED ABOVE. SO, I AM OF THE CONSIDERED OPINION THAT FURT HER ADDITION IN THE HANDS OF THE APPELLANT FOR THE SAME DEFAULT IS NOT WARRANTED AD HENCE I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.26,38,051/- (RS.26,78,000 2,39,949). HENCE, THIS GROUND OF AP PEAL IS ALLOWED. 85. THE LD. DR RELIED UPON THE ORDER OF THE ASSE SSING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMIS SIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE COMPUTATION STATE MENT FILED IN SUPPORT OF IT RETURN FILED BY THE ASSESSEE CLEARLY SHOWS THAT THE AMOUNT RS.8,08,000/- IS PREMIUM RECEIVED ON ROOM SALES. HENCE, THE ARGUM ENT OF THE ASSESSING OFFICER THAT THE DECLARATION OF THE ASSESSEE IS AN AFTERTHOUGHT IS NOT I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 62 RELEVANT. IN THE ASSESSMENT ORDER OF SHRI P.P. SUN NY FOR THE ASSESSMENT YEAR 2010-11, IT IS MENTIONED THAT HE HAS DECLARED A AMOUNT OF RS.97,96,000/- UNDER OTHER INCOME. AS PER PARA 7.1 IN PAGE 4 OF THE ASSESSMENT ORDER OF THE APPELLANT FOR THE ASST. YEA R 2006-07, ASSESSING OFFICER HAS STATED THAT SHRI P.P. SUNNY, THE HUSBAN D OF THE ASSESSEE IS APPARENTLY THE KEY PERSON INVOLVED IN RUNNING THE B USINESS AND HIS STATEMENT IS USED IN THE ASSESSMENT OF THE APPELLAN T. IT WAS ALSO SUBMITTED THAT THE APPELLANT HAS STATED IN HER SWORN STATEMEN T ON THE DATE OF SEARCH THAT SHE IS NOT AWARE OF THE SHOP ROOM SALES AT SUN NY SIDE BUILDING CHALAKUDY. ALL THE SALE DEALINGS WERE DONE BY HER HUSBAND MR. P.P. SUNNY. HENCE, ANY PREMIUM RECEIVED BY HIM SHOULD NOT BE AS SESSED IN THE HANDS OF THE APPELLANT. AS STATED IN PARA 7.1 IN PAGE 5 OF THE ORDER, ONE OF THE BASIS FOR ESTIMATION OF EXTRA CONSIDERATION IS A SE IZED DOCUMENT CHN 1909 AZ A(1) 288, WHICH IS A FLOOR PLAN OF THE BUILDING. EACH ROOM IS INDICATED AND ALSO INDICATED IS THE SQ. FT RATE. THE APPELLAN T HAS STATED IN HER SWORN STATEMENT ON THE DATE OF SEARCH THAT SHE IS NOT AWA RE OF THE SHOP ROOM SALES AT SUNNY SIDE BUILDING CHALAKUDY. ALL THE SA LE DEALINGS WERE DONE BY HER HUSBAND MR. P.P. SUNNY. SHRI P.P. SUNNY, THE HU SBAND OF THE APPELLANT HAS ALREADY DISCLOSED OTHER INCOME RS.97,96,000/- . HENCE, IT IS PRAYED THAT THE ESTIMATED EXTRA INCOME ALREADY ASSESSED IN THE HANDS OF THE HUSBAND OF THE APPELLANT ASSESSMENT YEAR BE DELETED . I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 63 86. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE HAS DISCLOSED RS.8,04,000/- UNDER THE HEAD OTHER SOURCES WHICH IS PREMIUM RECEIPT OF ROOM SALES. THERE IS NO FINDING IN THE ASSESSMENT O RDER WITH REGARD TO THE SAID AMOUNT AND ACCORDINGLY, THE SUBMISSION OF THE ASSESSEE CANNOT BE REJECTED. THEREFORE, THE INCOME FROM OTHER SOURCES AMOUNTING TO RS.8,08,000/- IS REQUIRED TO BE SET OFF AGAINST THE EXTRA AMOUNT ARRIVED AT BY THE ASSESSING OFFICER. THERE IS NO DISPUTE TO TH E FACT THAT THE HUSBAND OF THE ASSESSEE SHRI P.P. SUNNY HAS DISCLOSED RS.97 ,96,000/- DURING THE YEAR. IT IS ALSO CLEAR THAT THE BUSINSS OF THE ASSE SSEE IS MANAGED BY HER HUSBAND WHICH POSITION HAS BEEN ACCEPTED BY THE ASS ESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS STATE D IN HER SWORN STATEMENT ON THE DATE OF SEARCH THAT SHE IS NOT AWA RE OF THE SHOP ROOM SALES AT SUNNY SIDE BUILDING, CHALAKUDY AND ALL THE SALE DEALINGS WERE DONE BY HER HUSBAND, SHRI P.P. SUNNY. THE ISSUE INVOLVED IS NOT TELESCOPING OF INCOME RATHER IT RELATES TO THE ASSESSMENT OF EXTRA CONSIDERATION. THE EXTRA CONSIDERATION , IF ANY, HAS BEEN RECEIVED BY THE AS SESSEES HUSBAND SHRI P.P. SUNNY WHICH HAS ALREADY BEEN DECLARED AS OTHER INCOME AMOUNTING TO RS.97,96,000/- WHICH COMPRISES OF THE ALLEGED ON MO NEY RECEIPT FROM THE SALE OF SHOP ROOMS AT CHALAKUDY AND THEREFORE NO SE PARATE ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. SINCE BUSI NESS TRANSACTIONS ARE DEALT WITH BY MR. P.P. SUNNY, THE HUSBAND OF THE AS SESSEE, IN THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 64 CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INF IRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION SO MADE. 87. AS REGARDS GROUND NO. 6, THE BRIEF FACTS AS E MANATING FROM THE ORDER OF THE ASSESSING OFFICER ARE REPRODUCED HEREINBELOW :- 8. IN THE PREVIOUS YEAR, THE ASSESSEE SOLD A PORTI ON OF THE BUILDING AT KUTTIKAD TO PARIYARAM MULTIPURPOSE SOCIETY FOR A CONSIDERATION OF RS.15,62,225. THIS IS DISCLOSED IN THE CASH FLOW ST ATEMENT. HOWEVER, THE ASSESSEE HAS NOT RETURNED ANY CAPITAL GAIN/BUSINESS INCOME FROM THIS TRANSACTION. 8.1 WHEN THIS ISSUE WAS TAKEN UP, THE ASSESSEE REPL IED AS UNDER: THE BUILDING OF KUTTIKKAD IS CONSTRUCTED ON LAND PURCHA SED AS PER DOCUMENT NO. 1969 DATED 21.03.2005 (RS.2,50,560). HENCE THE COST OF THE LAND AND BUILDING COMES TO RS.11,43,600. INTEREST ON DHA NALAXMI BANK LOAN ACCOUNT COMES TO RS.15,89,296. AS THE CAPITAL LOSS OF RS.27.071IS NOT MATERIAL, IT IS NOT CLAIMED IN THE RETURN. 8.2 THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED. T HE SALE CONSIDERATION IS NOT IN DISPUTE. AS PER THE SEIZED DOCUMENT CHN 109 09 RSK B 1/42/PAGE 1, THE TOTAL COST OF THE BUILDING I S RS.8,93,000. THIS WAS COMMUNICATED TO THE ASSESSEE VIDE NOTICE DATED 19.11.2011. THE ASSESSEE DID NOT TECHNICALLY OBJECT TO THE DOCUMENT . THE COST OF LAND AS PER THE SUBMISSION OF THE ASSESSEE IS RS.2,50,560. SO THE TOTAL PROFIT FROM THE DEAL IS RS.4,18,665. (RS.15,62,225 8,93, 000 2,50,560). THE CLAIM OF THE ASSESSEE THAT INTEREST ON DHANALAXMI B ANK TERM LOAN SHOULD BE ALLOWED AS EXPENSE IS ALSO NOT VALID. THIS LOAN IS NOT RELATABLE IN ANY WAY TO THE CONSTRUCTION OF THE BUILDING. THE ASSES SEE HAS NOT FURNISHED ANY PROOF IN SUPPORT OF THE CLAIM EITHER. THE GAINS RECEIVED IS TREATED AS THE BUSINESS INCOME OF THE ASSESSEE AS THE ASSET WA S NEVER MEANT TO BE USED AS A CAPITAL ASSET.OOMENT YEAR DDEPOSIT 88. THE LD. CIT(A) CONFIRMED THE ADDITION TO THE E XTENT OF RS.1,44,211/- AND DELETED THE ADDITION OF RS.2,74,454/- VIDE PARA 95 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW: I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 65 95. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACT S AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. PERUSAL OF ASSES SMENT ORDER, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS RELIED ON TH E CASH FLOW STATEMENT FILED BY THE APPELLANT. HENCE, INTEREST ON LOAN REF LECTED IN THE CASH FLOW STATEMENT SUPPORTED BY THE BANK STATEMENTS SHOULD A LSO BE CONSIDERED BY THE ASSESSING OFFICER. HOWEVER, THE INTEREST CLA IM OF THE APPELLANT IS NOT SEEN COMMENSURATE WITH THE COST OF BUILDING. TO TAL COST OF THE BUILDING IS RS.11,43,560/- (8.93,000 + 2,50,560). H ENCE, THE ALLOWABLE INTEREST IS ESTIMATED FOR A PERIOD OF TWO YEARS AT RS.2,74,454/-. ACCORDINGLY THE ADDITION IS CONFIRMED TO THE EXTENT OF RS.1,44,211 (4,18,665 2,74,454/-). BALANCE ADDITION RS.2,74,4 54/- IS TO BE DELETED. HENCE, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 89. THE LD. DR RELIED UPON THE ORDER OF THE ASSESS ING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMIS SIONS MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). 90. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. WE CONCUR WITH THE VIEW OF THE LD. CIT(A) THAT THE ASS ESSING OFFICER HAS RELIED UPON THE CASH FLOW STATEMENT FILED BY THE ASSESSEE AND ACCORDINGLY, INTEREST ON LOAN REFLECTED IN THE CASH FLOW STATEMENT IS SUP PORTED BY THE BANK STATEMENTS WHICH IN FACT SHOULD HAVE BEEN CONSIDERE D BY THE ASSESSING OFFICER. HOWEVER, THE INTEREST CLAIM OF THE ASSESSE E IS NOT SEEN TO COMMENSURATE WITH THE COST OF THE BUILDING AND THER EFORE, ESTIMATION OF INTEREST FOR A PERIOD OF TWO YEARS HAS TO BE MADE W HICH IN FACT HAS BEEN MADE AT RS.2,74,454/- AND THE SAME HAS BEEN DELETED BY THE LD. CIT(A) AND HAS RIGHTLY SUSTAINED THE ADDITION OF RS.1,44,2 11/- . IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INF IRMITY IN THE ORDER OF THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 66 LD. CIT(A) AND ACCORDINGLY, GROUND NO. 6 OF THE REV ENUE IS DISMISSED. THUS THE APPEAL OF THE REVENUE IN I.T.A. NO.555/COCH/201 3 IS DISMISSED. 91. NOW WE SHALL TAKE UP THE REVENUE APPEALS IN THE CASE OF SHRI P.P. SUNNY IN I.T.A. NOS. 562 TO 564/COCH/2013 . I.T.A. NO. 562/COCH/2013 : A.Y. 2008-09 92. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A)S DECISION TO DELETE THE ADDITION OF HALF OF THE RS.40 LAKHS AS T HE EXCESS MONEY RECEIVED ON SALE OF LAND IS NOT JUSTIFIED. THE DECISION OF THE CIT(A) IS AGAINST THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE CIT (A) WHILE HOLDING THAT THE STATEMENT OF BUYER IS CONTRADICTORY HAS NOT CORRECT LY EVALUATED THE FINDINGS OF THE ASSESSING OFFICER IN THIS REGARD DERIVED FROM T HE ASSESSMENT ORDER. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE DEPARTMENT VALUATION OFFICERS REP ORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. THE DECISION OF THE CIT(A) DESERVE S TO BE SET ASIDE. 3. THE CIT(A)S DECISION TO APPLY SECTION 44AD TO M AKING CHARGES IS ARBITRARY AND WITHOUT ANY BASIS. THE CIT(A) ON HIS OWN HAD AP PLIED SECTION 44AD OF THE IT ACT TO MAKING CHARGES WITHOUT ANY OPTION FROM TH E ASSESSEE AT ANY STAGE. THE DECISION OF THE CIT(A) IN THIS REGARD IS LEGALL Y NOT TENABLE AND DESERVES TO BE VACATED. 4. THE LEARNED CIT(A) ERRED IN DECIDING THAT SECTIO N 153A IS REVISED ASSESSMENTS AND SO MUCH SO, INTEREST COULD BE DEMAN DED ONLY FOR THE PERIOD MENTIONED IN SECTION 234B(3) OF THE IT ACT BY FOLLO WING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T(C) VS. B. LAKSHMIKANTHAN VIDE ITA NOS. 21 &41 DATED 20-01-2011. THIS DECISIO N HAS NOT BEEN ACCEPTED BY THE DEPARTMENT BUT NOT CONTESTED FURTHER ON TECH NICAL GROUND OF MONETARY LIMITATION PRESCRIBED FOR FILING FURTHER APPEAL. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE ABOVE GROUNDS OF APPEAL. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 67 93. AS REGARDS GROUND NO. 1, THE FACTS ARE IDENT ICAL TO THE FACTS IN THE CASE OF SMT. SEENA SUNNY FOR THE ASSESSMENT YEAR 2008-09 IN I.T.A. NO. 553/COCH/2013 FOR THE ASSESSMENT YEAR 2008-09 DECIDED BY US HEREI NABOVE AND ACCORDINGLY, OUR ORDER IN THE CASE OF SMT. SEENA SUNNY IN I.T.A. NO. 553/COCH/2013 FOR THE ASSESSMENT YEAR 2008-09 SHALL BE IDENTICALLY APPLIC ABLE IN THE PRESENT CASE. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE IS DISMISS ED. 94. AS REGARDS GROUND NO. 2, THE FACTS IN THE PRE SENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SMT. SEENA SUNNY IN I.T.A. NO. 549/COCH/2013 FOR THE ASSESSMENT YEAR 2004-05 IN I.T.A. NO.549/COCH/2013 DECIDED BY US HEREINABOVE AND ACCORDINGLY, OUR ORDER THEREIN IN THE CASE OF S MT. SEENA SUNNY IN I.T.A. NO.549/COCH/2013 SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 95. AS REGARDS GROUND NO. 3, THE BRIEF FACTS AS PER THE ASSESSING OFFICERS ORDER IN PARA 5 ARE REPRODUCED HEREINBELOW: 5. IN THE PREVIOUS YEAR THE ASSESSEE HAS SHOWN RS. 47,835/- AS MAKING CHARGES OF DIAMOND JEWELLERY (UNDER THE HEAD, OTH ER SOURCES). THIS IS ARRIVED AT AS UNDER: MAKING CHARGES FROM SUNNY DIA MONDS 8,03,835 LESS MAKING EXPENSES RS.7,56,001. VIDE NOTICE DATED 19.0 1.2011, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF INCOME AND EXPE NSES AND THE PROOF FOR EXPENSES. IN THE REPLY FURNISHED THE ASSESSEE SUBMI TTED AS UNDER: MAKING PAID TO GOLD SMITHS OF RS.7,55,550 HAVE BEEN CLAIME D AS EXPENSES AGAINST MAKING INCOME. ALL PAYMENTS TO SMITHS ARE SUPPORTED WITH PROPER VOUCHERS. THE ASSESSEE HAS HOWEVER NOT SUBMITTED ANY DETAILS. NOT EVEN THE LEDGER ACCOUNT OF THE HEAD HAS BEEN FURNISHED. UNDER THE C IRCUMSTANCES, THE I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 68 GENUINENESS OF THE CLAIM CANNOT BE VERIFIED. THEREF ORE, OF THE EXPENSES CLAIMED IS DISALLOWED. THIS INVOLVES AN ADDITION OF RS.1,88,887. 96. THE LD. CIT(A) RESTRICTED THE ADDITION AT 8% OF RRS.8,03,835/-, I.E., AT RS.64,307/- WHERE THE ASSESSEE HAD DECLARED RS.47,8 35/- AND ACCORDINGLY, CONFIRMED THE ADDITION OF RS.16,472/- AND DELETED T HE ADDITION OF RS.1,72,415/- VIDE PARA 17 OF HIS ORDER. THE RELEVANT PARA 17 OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE: 17. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. THE APPELLANT ARGUES THAT THE ASSESSMENT IS TO BE COMPLETED AS PER SECTION 44AD OF THE ACT IN THE ABSENCE OFPROPER VOUCHERS. SECTION 44AD READS AS FOLLOWS: 44AD (1)NOTWITHSTANDING ANYTHING TO THE CONTRARY CO NTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ELIGIBLE ASSESSEE ENGAGED IN AN ELIGIBLE BUSINESS, A SUM EQUAL TO EIGHT PER CENT OF THE TOTAL TURNOVER O R GROSS RECEIPTS OF THE ASSESSEE IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BU SINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM CLAIMED TO HAVE BEEN EARNED BY THE ELIGIBLE ASSESSEE, SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS. (2) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS OF SECTIONS 30 TO 38 SHALL, FOR THE PURPOSE OF SUB-SECTION (1), BE DEEMED TO HA VE BEEN ALREADY GIVEN FULL EFFECT TO AND NO FURTHER DEDUCTION UNDER THOSE SECTIONS SHALL BE ALLOWED: . (B) ELIGIBLE BUSINESS MEANS,- (I) ANY BUSINESS EXCEPT THE BUSINESS OF PLYING, HIR ING OR LEASING GOODS CARRIAGES REFERRED TO IN SECTION 44AE; AND (II) WHOSE TOTAL TURNOVER OR GROSS RECEIPTS IN THE PREVIOUS YEAR DOES NOT EXCEED AN AMOUNT OF (FORTY LAKH RUPEES) THE APPELLANT IS DOING MAKING OF DIAMOND JEWELLERY. OBVIOUSLY, MAKING OF DIAMOND IS AN ELIGIBLE BUSINESS COVERED UNDER SECTI ON 44AD. AS HIS TURNOVER/GROSS RECEIPTS OT EXCEEDING RS.40 LAKHS, S ECTION 44AD IS VERY MUCH APPLICABLE TO THE APPELLANT, IRRESPECTIVE OF THE HE AD OF INCOME DECLARED IN THE IT RETURN. ACCORDINGLY, HIS DEEMED INCOME UNDER THE HEAD SHOULD BE RS. 64,307/- (8% OF RS.8,03,835). THE APPELLANT HAS DEC LARED ONLY RS.47,835. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 69 HENCE THE ADDITION OFRS.16,472/- (64,307 47,835) IS CONFIRMED. BALANCE RS.1,72,415 (1,88,887 16,472) IS DELETED. THIS GR OUND OF APPEAL IS PARTLY ALLOWED. 97. THE LD. DR RELIED UPON THE ORDER OF THE AS SESSING OFFICER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE SUBMISSION S MADE BEFORE THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A). 98. WE HAVE HEARD THE RIVAL CONTENTIONS AND PE RUSED THE FACTS OF THE CASE. FROM THE READING OF SECTION 44AB, IT IS EVIDENT THA T THE SAID SECTION APPLIES IN THE IMPUGNED YEAR WHERE THE TOTAL TURN GROSS RECEIPTS I N THE PREVIOUS YEAR DOES NOT EXCEED AN AMOUNT OF RS.40 LAKHS. IN THE PRESENT CA SE, THE GROSS RECEIPTS IS LESS THAN RS.40 LAKHS AND THEREFORE, COMES UNDER THE DEF INITION OF ELIGIBLE BUSINESS. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD. CIT(A) WHO HAS RIGHTLY RESTRICTED THE ADDITION TO 8% OF THE GROSS RECEIPTS AND HAS CONFIRMED THE BALANCE OF THE ADDITION MADE BY THE ASSESSING OFFIC ER. THE ORDER OF THE LD. CIT(A) IS A REASONED ORDER. THUS GROUND NO. 3 OF TH E REVENUE IS DISMISSED. 99. AS REGARDS GROUND NO. 4, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SMT. SEENA SUNNY IN I.T.A. 553 /COCH/2013 FOR THE ASSESSMENT YEAR 2008-09 DECIDED BY US HEREINABOVE A ND OUR ORDER THEREIN IN I.T.A. NO.553/COCH/2013 IN THE CASE OF SMT. SEENA S UNNY SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS GROUND NO. 4 O F THE REVENUE IS DISMISSED. ACCORDINGLY, THE APPEAL OF THE REVENUE IN I.T.A. NO . 562/COCH/2013 IS DISMISSED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 70 I.T.A. NO. 563/COCH/2013 : A.Y. 2009-10 100. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE DEPARTMENT VALUATION OFFICERS REPORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. THE DECISION OF THE CIT(A) DESERVES TO BE SET ASIDE . 2. THE CIT(A)S DECISION TO APPLY SECTION 44AD TO M AKING CHARGES IS ARBITRARY AND WITHOUT ANY BASIS. THE CIT(A) ON HIS OWN HAD APPLIE D SECTION 44AD OF THE IT ACT TO MAKING CHARGES WITHOUT ANY OPTION FROM THE ASSES SEE AT ANY STAGE. THE DECISION OF THE CIT(A) IN THIS REGARD IS LEGALLY NO T TENABLE AND DESERVES TO BE VACATED. 3. THE LEARNED CIT(A) ERRED IN DECIDING THAT SECTIO N 153A IS REVISED ASSESSMENTS AND SO MUCH SO, INTEREST COULD BE DEMAN DED ONLY FOR THE PERIOD MENTIONED IN SECTION 234B(3) OF THE IT ACT BY FOLLO WING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T(C) VS. B. LAKSHMIKANTHAN VIDE ITA NOS. 21 &41 DATED 20-01-2011. THIS DECISIO N HAS NOT BEEN ACCEPTED BY THE DEPARTMENT BUT NOT CONTESTED FURTHER ON TECHNIC AL GROUND OF MONETARY LIMITATION PRESCRIBED FOR FILING FURTHER APPEAL. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE ABOVE GROUNDS OF APPEAL. 101. AS REGARDS GROUND NO.1, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SMT. SEENA SUNNY FOR THE ASSES SMENT YEAR 2004-05 IN I.T.A. NO.549/COCH/2013 DECIDED BY US HEREINABOVE AND ACCO RDINGLY, OUR ORDER THEREIN IN I.T.A. NO. 549/COCH/2013 IN THE CASE OF SMT. SE ENA SUNNY SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. ACCORDINGLY, GROUN D NO. 1 OF THE REVENUE IS DISMISSED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 71 102. AS REGARDS GROUND NO 2, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE ASSESSEES OWN CASE IN GROUND NO. 3 IN I.T.A. NO. 562/COCH/2013 FOR THE ASSESSMENT YEAR 2008-09 DECIDED BY US HEREI NABOVE AND ACCORDINGLY, OUR ORDER THEREIN IN I.T.A. NO. 562/COCH/2013 IN ASSES SEES OWN CASE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. ACCORD INGLY, GROUND NO. 2 OF THE REVENUE IS DISMISSED. 103. AS REGARDS GROUND NO. 3, THE FACTS IN THE PRE SENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SMT. SEENA SUNNY IN I.T.A. 553 /COCH/2013 FOR THE ASSESSMENT YEAR 2008-09 DECIDED BY US HEREINABOVE A ND OUR ORDER THEREIN IN I.T.A. NO.553/COCH/2013 IN THE CASE OF SMT. SEENA S UNNY SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. THUS GROUND NO. 4 O F THE REVENUE IS DISMISSED. ACCORDINGLY, THE APPEAL OF THE REVENUE IN I.T.A. NO . 563/COCH/2013 IS DISMISSED. I.T.A. NO. 564/COCH/2013 : A.Y. 2010-11 104. THE REVENUE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE DEPARTMENT VALUATION OFFICERS REP ORT AND BOOKS OF ACCOUNTS OF THE ASSESSEE. THE DECISION OF THE CIT(A) DESERVE S TO BE SET ASIDE. 2. THE CIT(A)S DECISION TO APPLY SECTION 44AD TO MAKING CHARGES IS ARBITRARY AND WITHOUT ANY BASIS. THE CIT(A) ON HIS OWN HAD AP PLIED SECTION 44AD OF THE IT ACT TO MAKING CHARGES WITHOUT ANY OPTION FROM TH E ASSESSEE AT ANY STAGE. THE DECISION OF THE CIT(A) IN THIS REGARD IS LEGALL Y NOT TENABLE AND DESERVES TO BE VACATED. I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 72 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE ABOVE GROUNDS OF APPEAL. 105. AS REGARDS GROUND NO.1, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SMT. SEENA SUNNY FOR THE ASSES SMENT YEAR 2004-05 IN I.T.A. NO.549/COCH/2013 DECIDED BY US HEREINABOVE AND ACCO RDINGLY, OUR ORDER THEREIN IN I.T.A. NO. 549/COCH/2013 IN THE CASE OF SMT. SE ENA SUNNY SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. ACCORDINGLY, GROUN D NO. 1 OF THE REVENUE IS DISMISSED. 106. AS REGARDS GROUND NO.2, THE FACTS IN THE PR ESENT CASE ARE IDENTICAL TO THE FACTS IN THE ASSESSEES OWN CASE IN GROUND NO. 3 IN I.T.A. NO. 562/COCH/2013 FOR THE ASSESSMENT YEAR 2008-09 DECIDED BY US HEREINABO VE AND ACCORDINGLY, OUR ORDER THEREIN IN I.T.A. NO. 562/COCH/2013 IN ASSES SEES OWN CASE SHALL BE IDENTICALLY APPLICABLE IN THE PRESENT CASE. ACCORD INGLY, GROUND NO. 2 OF THE REVENUE IS DISMISSED. THUS APPEAL OF THE REVENUE IN I.T.A. NO. 564/COCH/2013 IS DISMISSED. 107. IN THE RESULT, THE APPEALS FILED BY THE REVE NUE IN I.T.A. NOS.549 TO 555/COCH/2013 IN THE CASE OF SENNA SUNNY AND THE CR OSS OBJECTIONS FILED BY THE ASSESSEE IN C.O. NOS. 34&35/COCH/2014 ARE DISMISSED AND THE APPEALS FILED BY I.T.A. NO.549-555/COCH/2013 & C.O. NOS. 34&35/COCH/2014 & I.T.A. NOS. 562-564/COCH/2013 73 THE REVENUE IN THE CASE OF P.P. SUNNY IN I.T.A. NOS . 562-564/COCH/2013 ARE S.DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05-01-2016. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 05TH JANUARY, 2016 GJ COPY TO: 1. SMT. SEENA SUNNY, SUNNY DIAMONDS (P) LTD., RAJAJ I ROAD, ERNAKULAM. 2. SHRI P.P. SUNNY, SUNNY DIAMONDS (P) LTD., RAJAJ I ROAD, ERNAKULAM. 3. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, ERNAKULAM. 4. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI . 5. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 6. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN