ACIT, Calicut V. K.N. ABdul Hameed, Kannur

ITA 689/COCH/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1053 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 03-12-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 12-07-2007
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: V MOHANAN
• Keywords: Unexplained cash credit; Search and seizure; Loose papers; Block assessment
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 689/COCH/2007 ASSESSMENT YEAR : 1999-2000 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, CALICUT. VS. K.N. ABDUL HAMEED, JAMEELA MANZIL, PERUMBA,PAYYANNUR, KANNUR. (REVENUE -APPELLANT) (ASSESSEE-R ESPONDENT) REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) ASSESSEE BY SHRI V. MOHANAN, CA DATE OF HEARING 06/12/2012 DATE OF PRONOUNCEMENT 08/02/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16-04-2007 PASSED BY THE LD. CIT(A)-I, KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 1999-2000. 2. THE FOLLOWING THREE ISSUES ARE URGED IN THIS APP EAL: A) ADDITION MADE TOWARDS UNACCOUNTED PAYMENT ON AC QUISITION OF PROPERTY. B) ADDITION MADE TOWARDS UNDISCLOSED EXPENSES. C) ADDITION MADE TOWARDS UNEXPLAINED CASH CREDIT. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS A NON RESIDENT INDIAN. THE ASSESSEE ALONG WITH HIS TWO BROTHERS PU RCHASED 16 CENTS OF LAND AND A BUILDING AT PAYYANUR TOWN FROM A PERSON NAMED DR. Y ESODHA (LATE) BY WAY OF TWO DOCUMENTS REGISTERED FOR 8 CENTS EACH ON 02-07-1998 AND 10-05-1999 FOR AN APPARENT CONSIDERATION OF RS.16.00 LAKHS IN EACH OF THE DOCU MENT. THUS THE AGGREGATE VALUE OF CONSIDERATION PAID FOR 16 CENTS OF LAND WAS DECLARE D AT RS.32.00 LAKHS. THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATIONS AT THE RE SIDENTIAL PREMISES OF THE ASSESSEE ON I.T.A. NO.689/COCH/2007 2 22-03-2005 AS WELL AS IN THE HANDS OF DR. YESODHA, THE SELLER OF PROPERTY IN CONSEQUENCE TO A TAX EVASION PETITION RECEIVED BY T HE DEPARTMENT. ALONG WITH THE PETITION, PHOTO COPIES OF TWO CONSENT LETTERS SIGNE D BY THE SELLER OF PROPERTY, VIZ., DR. YESODHA WERE ATTACHED. FROM THE CONTENTS OF THE CO NSENT LETTERS, IT WAS NOTICED THAT THE ABOVE SAID PROPERTY WAS AGREED TO BE SOLD FOR A CONSIDERATION OF RS.1,01,00,000/-. 4. THE ANALYSIS OF THE BANK ACCOUNTS OF THE ASSES SEE HEREIN AS WELL AS THE SELLER OF THE PROPERTY REVEALED THAT THE CONSIDERATION TO THE TUN E OF RS.60.00 LAKHS WAS ROUTED THROUGH THE BANK ACCOUNTS. THE ASSESSEE ALSO ADMIT TED THE ABOVE SAID SUM OF RS.60.00 LAKHS IN THE CASH FLOW STATEMENT FILED BEF ORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING. HENCE THE ASSESSI NG OFFICER PROPOSED TO ASSESS THE DIFFERENCE BETWEEN RS.101.00 LAKHS AND RS.60.00 LAK HS, I.E., RS.41.00 LAKHS AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. H OWEVER, HE NOTICED THAT THE ASSESSEE HAD PAID A SUM OF RS.10.00 LAKHS ON 05.01. 1998, I.E., IN THE IMMEDIATELY PRECEDING YEAR. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE BALANCE AMOUNT OF RS.31.00 LAKHS DURING THE YEAR UNDER CONSIDERATION, I.E., ASST. YEAR 1999-2000. HOWEVER, THE LD CIT(A) DELETED THE ADDITION BY HOLD ING THE CONSENT LETTERS SIGNED BY THE SELLER CANNOT BE CONSIDERED AS RELIABLE DOCUMEN TS. AGGRIEVED BY HIS ORDER, THE REVENUE IS IN APPEAL BEFORE US. 5. THE QUESTION RELATING TO THE ACTUAL AMOUNT O F SALE CONSIDERATION WAS CONSIDERED IN THE HANDS OF THE SELLER OF PROPERTY, I.E., DR. E. Y ESODHA (ITA NO.690 & 691/COCH/2007) AND THIS BENCH OF THE TRIBUNAL ADJUDICATED THIS ISS UE AS UNDER:- 4. WE SHALL FIRST TAKE UP THE APPEALS OF THE R EVENUE RELATING TO THE ASSESSMENT YEARS 1999-2000 AND 2000-2001. DR. E. YE SHODHA HAD SOLD 16 CENTS OF LAND AND HOUSE IN PAYYANNUR TO A PERSON NAMED SH RI K.N. ABDUL HAMEED AND HIS TWO BROTHERS, WHO WERE NON-RESIDENT INDIANS, IN TWO PARTS, VIZ., 8 CENTS OF LAND WAS SOLD ON 02-07-1998 AND THE REMAINING 8 CEN TS WERE SOLD ON 10-05- 1999. THE SALE CONSIDERATION WAS SHOWN AS RS.16.00 LAKHS IN EACH DOCUMENT AND HENCE THE AGGREGATE SALE CONSIDERATION OF THE E NTIRE AREA OF 16 CENTS WORKED OUT TO RS.32 LAKHS. WE CAN NOTICE THAT THE SALE OF FIRST PART TOOK PLACE IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-2000 AND THE SECOND SALE TOOK PLACE IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2 000-01. I.T.A. NO.689/COCH/2007 3 5. THE DEPARTMENT HAD RECEIVED A TAX EVASION PE TITION, WHEREIN IT WAS STATED THAT THE IMPUGNED PROPERTY OF 16 CENTS OF LAND WAS SOLD BY THE ASSESSEE FOR A CONSIDERATION OF RS.1,01,00,000/- AND IN SUPPORT OF THE SAME TWO PHOTO COPIES OF CONSENT LETTERS SIGNED BY THE ASSESSEE WERE ENCL OSED WITH THE PETITION. THE AO ANALYSED THE ABOVE SAID CONSENT LETTERS WITH THE BANK ACCOUNTS OF THE ASSESSEE; EXAMINED THE WITNESSES AND CAME TO THE CO NCLUSION THAT THE ACTUAL SALE CONSIDERATION WAS ONLY RS.1,01,00,000/- AND NO T RS.32,00,000/- AS DECLARED IN THE CONVEYANCE DEEDS. THE AO DID NOT AGREE WITH THE VALUE OF THE LAND AS ON 01.4.1981 DECLARED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. ACCORDINGLY, THE ASSESSING OFFICER RECOMPUT ED THE LONG TERM CAPITAL GAIN ARISING ON SALE OF 16 CENTS OF LAND IN THE TWO ASSE SSMENT YEARS, VIZ., ASST. YEAR 1999-2000 AND 2000-01. THE LD CIT(A) NOTICED THAT THE SALE CONSIDERATION COULD BE TRACED TO THE BANK ACCOUNTS OF THE ASSESSE E ONLY TO THE EXTENT OF RS.60.00 LAKHS. FURTHER, THE LD CIT(A) TOOK THE VI EW THAT THE PHOTO COPIES OF THE CONSENT LETTERS ARE DUMB DOCUMENTS ON WHICH NO RELIANCE COULD BE PLACED. ACCORDINGLY, HE DIRECTED THE AO TO TAKE THE SALE CO NSIDERATION AS RS.60.00 LAKHS. THE LD CIT(A) ALSO DIRECTED THE ASSESSING OFFICER T O ADOPT THE VALUE AS ON 1.4.1981 AT THE FIGURE DETERMINED BY AN APPROVED VA LUER. AGGRIEVED BY THE ORDER OF LD CIT(A), THE REVENUE HAS PREFERRED APPEA LS BEFORE US FOR THE ABOVE SAID TWO YEARS. THE ASSESSEE HAS ALSO FILED CROS S OBJECTIONS FOR THESE TWO YEARS. 6. BEFORE GOING INTO THE MERITS OF THE ISSUES, WE FEEL IT APPROPRIATE TO ADJUDICATE THE LEGAL ISSUES URGED BY THE ASSESSEE I N HIS CROSS OBJECTION. ACCORDING TO THE ASSESSEE, THE ASSESSING OFFICER WA S WRONG IN RE-OPENING THE ASSESSMENT OF THE ASSESSMENT YEAR 1999-2000, AS IT FALLS BEYOND SIX YEARS PRESCRIBED IN SEC. 153A OF THE ACT, SINCE THE SEARC H WAS CONCLUDED ONLY ON 20- 04-1995. IT MAY BE RECALLED THE SEARCH WAS COMMENC ED IN THE HANDS OF THE ASSESSEE ON 22.3.2005 AND CONTINUED ON 20.4.1995. THE ASSESSING OFFICER HAS RECOGNISED THE SEARCH CONDUCTED ON 22.3.2005 AND HE NCE REOPENED THE ASSESSMENT OF THE ASSESSMENT YEAR 1999-2000. HOWEV ER, IF THE DATE OF 20.4.1995 IS CONSIDERED, THE ASSESSMENT YEAR 1999-2 000 WOULD FALL OUTSIDE THE PURVIEW OF SEC. 153A OF THE ACT. ACCORDING TO THE PROVISIONS OF CLAUSE (B) OF SUB. SEC. (1) OF SEC. 153A OF THE ACT, THE AO SHALL ASSE SS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE A SSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. THERE CANNOT BE ANY DISPUTE THAT THE SEARCH WAS CON DUCTED IN THE HANDS OF THE ASSESSEE ON 22.3.2005. IN THAT CASE, IN OUR VIEW, THE ASSESSING OFFICER WAS RIGHT IN LAW IN REOPENING THE ASSESSMENT OF THE ASSESSMEN T YEAR 1999-2000, AS THAT YEAR FALLS WITHIN THE PERIOD OF SIX ASSESSMENT YEAR S PRECEDING THE ASSESSMENT YEAR 2005-06. THE CONTENTION OF THE ASSESSEE THAT THE DATE ON WHICH THE LAST PANCHANAMA WAS DRAWN SHOULD BE RECOGNISED FOR DETER MINING THE YEARS TO BE COVERED U/S 153A DOES NOT HAVE ANY LEGAL BACKING. AS OBSERVED BY LD CIT(A), THE EXPLANATION RELATING TO THE LAST PANCHANAMA IS SEEN SPECIFIED FOR DETERMINING I.T.A. NO.689/COCH/2007 4 THE TIME LIMIT FOR COMPLETION OF ASSESSMENT U/S 153 A OF THE ACT. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION TAKEN BY LD CIT(A) ON THIS ISSUE. 7. THE NEXT LEGAL ISSUE RELATES TO THE VALIDITY OF THE PROCEEDINGS U/S 153A OF THE ACT, AS THERE WAS NO SEIZURE OF ANY MATERIAL EI THER DURING THE COURSE OF SEARCH OR DURING POST SEARCH ENQUIRIES. ACCORDING TO THE ASSESSEE, IN THE ASSESSMENT PROCEEDINGS CARRIED ON U/S 153A OF THE A CT, THE AO WAS NOT ENTITLED TO RELY UPON MATERIALS WHICH WERE ALREADY AVAILABLE WITH HIM PRIOR TO THE DATE OF SEARCH FOR CARRYING OUT THE SEARCH ASSESSMENTS U/S 153A OF THE ACT. IN THIS REGARD, THE ASSESSEE PLACED RELIANCE ON THE DECISIO N OF KOLKATTA BENCH OF TRIBUNAL IN THE CASE OF LMJ INTERNATIONAL LTD VS. D CIT (2008)(119 TTJ 214). HOWEVER A CAREFUL PERUSAL OF THE PROVISIONS OF SEC. 153A SHOW THAT THE ASSESSMENT PROCEEDINGS UNDER THAT SECTION ARE TRIGG ERED ON CONDUCTING THE SEARCH AFTER 31 ST DAY OF MAY, 2003 AND THE ASSESSMENTS FOR THE ASSES SMENT YEARS SPECIFIED IN THAT SECTION ARE REOPENED BY ISS UING A NOTICE. IN THE CASE OF PROVISIONS OF BLOCK ASSESSMENT CARRIED UNDER CHAPTE R XIV-B, THE ACT SPECIFICALLY PROVIDED THAT THE ASSESSMENTS SHALL BE MADE ON THE BASIS OF INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH, SINCE THE BLOCK ASSESSMENT RAN PARALLEL TO THE REGULAR ASSESSMENTS. HOWEVER, NO S UCH CONDITION HAS BEEN PRESCRIBED IN SEC. 153A OF THE ACT, I.E., IT IS NOT PROVIDED THAT THE ASSESSMENT SHOULD BE BASED UPON SEARCH MATERIALS ONLY. FURTHER THE SAID SECTION DOES NOT CONTEMPLATE TWO PARALLEL ASSESSMENTS, MEANING THERE BY, THE AO SHOULD FRAME ONLY ONE ASSESSMENT FOR EACH OF THE ASSESSMENT YEAR S. IN THAT CASE, IN OUR VIEW, THE AO IS REQUIRED TO COMPUTE THE TOTAL INCOME OF E ACH OF THE ASSESSMENT YEAR AND IN THAT PROCESS, HE IS ENTITLED TO TAKE INTO AC COUNT THE INCOME ALREADY DISCLOSED, THE INCOME FOUND DURING THE COURSE OF SE ARCH AND ANY OTHER INCOME ESCAPING THE ASSESSMENT. UNDER THESE CIRCUMSTANCES , IN OUR VIEW, THE ASSESSING OFFICER WAS ENTITLED TO TAKE INTO ACCOUNT THE MATER IAL ALREADY AVAILABLE WITH HIM FOR THE PURPOSE OF COMPLETING THE ASSESSMENTS U/S 1 53A OF THE ACT. IN THE CASE OF LMJ INTERNATIONAL LTD (SUPRA), THE ASSESSING OFF ICER THEREIN RECONSIDERED THE REGULAR ITEMS OF INCOME ALREADY DISCLOSED BY THE AS SESSEE IN THE ASSESSMENT PROCEEDINGS UNDERTAKEN U/S 153A OF THE ACT. IN THAT CONTEXT, THE TRIBUNAL DELETED THE ADDITIONS RELATING TO REGULAR ITEMS OF INCOME. THE FACTS AVAILABLE IN THE INSTANT CASE BEING DIFFERENT, IN OUR VIEW, THE SAID DECISION IS NOT APPLICABLE HERE. 8. THE ISSUES TO BE CONSIDERED ON MERITS, WHICH ARE COMMON IN THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE:- (A) WHAT WAS THE ACTUAL SALE CONSIDERATION AND (B) WHAT WAS THE VALUE OF THE PROPERTY AS ON 1.4 .1981. AS STATED EARLIER, THE TAX EVASION PETITION RECEIVE D BY THE INVESTIGATION WING OF THE DEPARTMENT WAS ATTACHED WITH PHOTO COPIES OF TW O LETTERS DATED 15.12.1997 AND 05.01.1998. THE SAID TWO LETTERS WERE SIGNED B Y THE ASSESSEE SMT. E. YASHODHA, WHEREIN SHE HAD GIVEN CONSENT TO SELL THE IMPUGNED PROPERTY FOR A CONSIDERATION OF RS.1,01,00,000/-. THE CONSENT LET TER DATED 15.12.1997 WAS WITNESSED BY THE HUSBAND OF THE ASSESSEE NAMED DR. A.V.KARUNAKARAN AND I.T.A. NO.689/COCH/2007 5 ANOTHER PERSON NAMED E.C.MANOHARAN. THE SECOND CONS ENT LETTER WAS WITNESSED BY DR. A.V.KARUNAKARAN ONLY. BOTH THE CON SENT LETTERS WERE PREPARED BY A DOCUMENT WRITER NAMED SRI MADHAVAN. AS PER TH E FIRST CONSENT LETTER, THE ASSESSEE WAS GIVEN 10 CHEQUES OF RS.1.00 LAKH EACH BY THE BUYER SHRI ABDUL HAMEED AND THE ASSESSEE ALSO ENCASHED THE FIRST CHE QUE. IN THE SECOND CONSENT LETTER THE ADVANCE AMOUNT OF RS.10.00 LAKHS WAS MENTIONED. ACCORDING TO THE AO, THE ASSESSEE WAS PAID 9.00 LAKHS IN CASH AND THE 9 CHEQUES OBTAINED EARLIER WERE RETURNED BACK. THE FIRST DOCUMENT CON VEYING 8 CENTS OF LAND WAS REGISTERED ON 02-07-1998 FOR AN APPARENT CONSIDERAT ION OF RS.16.00 LAKHS AND THE SECOND DOCUMENT CONVEYING THE REMAINING 8 CENTS OF LAND FOR AN EQUAL CONSIDERATION WAS REGISTERED ON 10-05-1999. THE AO NOTICED THAT THERE WERE TRANSFER/DEPOSIT OF FUNDS TO THE TUNE OF RS.32.00 L AKHS IN ACCOUNT NO.1094 AND FURTHER A SUM OF RS.28.00 LAKHS WAS ENCASHED THROUG H ANOTHER ACCOUNT NUMBERED 1101. WHEN CONFRONTED WITH THE BANK TRANS ACTIONS, THE ASSESSEE FILED A CASH FLOW STATEMENT, WHEREIN THE AMOUNT RECEIVED FROM SHRI ABDUL HAMEED (PURCHASER) WAS DECLARED AT RS.60.00 LAKHS (RS.32 L AKHS AS PER SALE DEED + RS.28.00 LAKHS EXCESS RECEIVED). BASED ON THE EVID ENCE OF EXCESS OF RECEIPT OF RS.28.00 LAKHS AND ALSO ON THE BASIS OF CONSENT LET TERS REFERRED SUPRA, THE AO CONCLUDED THAT THE ASSESSEE HAS RECEIVED SALE CONSI DERATION TO THE TUNE OF RS. 1,01,00,000/-. HOWEVER, THE LD CIT(A) HELD THAT TH E CONSENT LETTERS ARE DUMB DOCUMENTS AND HENCE HELD THAT THE AO SHOULD NOT PLA CE RELIANCE ON THEM. ACCORDINGLY, THE LD CIT(A) DETERMINED THE SALE CONS IDERATION AT RS.60.00 LAKHS, I.E., TO THE EXTENT OF THE DEPOSITS FOUND IN THE BA NK ACCOUNTS OF THE ASSESSEE. IN THE CASH FLOW STATEMENTS, THE ASSESSEE HAD DECLARED RS.16.00 LAKHS IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 1999 -2000 AND THE REMAINING AMOUNT OF RS.44.00 LAKHS IN THE FINANCIAL YEAR RELE VANT TO THE ASSESSMENT YEAR 2000-01. 9. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND CAREFULLY PERUSED THE RECORD. ACCORDING TO THE ASSESSEE, THE CONSENT LET TERS WERE SIGNED BY THE ASSESSEE ONLY, I.E., THE BUYER OF THE PROPERTY HAS NOT SIGNED THE LETTERS AND HENCE THEY CANNOT BE CONSIDERED AS SALE AGREEMENTS. HOWEVER, THE FACT REMAINS THAT WITNESSES HAVE AVERRED THAT THE CONSEN T LETTERS WERE SIGNED IN THE PRESENCE OF THE BUYER, SHRI ABDUL HAMEED. AS PER T HE CONSENT LETTER DATED 15.12.1997, THE ASSESSEE WAS GIVEN 10 CHEQUES OF RS .1.00 LAKH EACH AND THE ASSESSEE HAS ALSO ENCASHED ONE CHEQUE THROUGH HER B ANK ACCOUNT. THUS, IT IS PROVED THAT THE SAID CONSENT LETTER WAS ACTED UPON BY THE ASSESSEE AND HENCE ITS AUTHENTICITY STANDS ESTABLISHED. IN THE SAID C ONSENT LETTER, THE SALE CONSIDERATION WAS STATED AT RS.1,01,00,000/-. THOU GH THERE WAS ANOTHER CONSENT LETTER DATED 05.01.1998, IT IS STATED THAT THERE IS NO SIGNIFICANT VARIATION BETWEEN THE TWO LETTERS EXCEPT THE DETAILS RELATING TO THE ADVANCE PAYMENTS. 10. THOUGH THE DOCUMENTS WERE REGISTERED FOR AN APPARENT CONSIDERATION OF RS.32.00 LAKHS, THE BANK ACCOUNTS OF THE ASSESSEE P ROVED THAT SHE HAS ACTUALLY RECEIVED A SUM OF RS.60.00 LAKHS. THIS FACT PROVES THAT THE ASSESSEE HAS SUPPRESSED THE ACTUAL SALE CONSIDERATION IN THE REG ISTERED DOCUMENTS. NOW THE I.T.A. NO.689/COCH/2007 6 QUESTION THAT ARISES IS ABOUT THE QUANTUM OF SUPPRE SSION. THE BANK ACCOUNTS COULD REVEAL ONLY THE AMOUNTS RECEIVED BY WAY OF CH EQUES. NORMALLY, NO EVIDENCE IS KEPT WITH REGARD TO THE AMOUNT RECEIVED BY WAY OF CASH. THE AO HAS VERIFIED THE BANK ACCOUNT OF THE PURCHASER AND NOTICED THAT HE HAS WITHDRAWN A SUM OF RS.50.50 LAKHS AFTER THE REGISTR ATION OF THE FIRST DEED ON 05.01.1998. THE SAID WITHDRAWAL IS EQUIVALENT TO T HE SALE PRICE OF REMAINING 8 CENTS OF LAND, WHICH WAS REGISTERED ON 07.05.1999. THUS, IT IS SEEN THAT THE AMOUNT OF SALE CONSIDERATION MENTIONED IN THE CONSE NT LETTERS STAND CORROBORATED WITH THE BANK ACCOUNTS OF THE ASSESSEE AS WELL AS THE WITHDRAWALS MADE FROM THE BANK ACCOUNT OF THE BUYER OF THE PROP ERTY. AS OBSERVED BY THE AO, THE ASSESSEE HAD SHOWN THE SALE CONSIDERATIONS AS RS.16.00 LAKHS IN RESPECT OF THE FIRST DEED AND RS.44.00 LAKHS IN RESPECT OF THE SECOND DEED. THE PARTIES, ON AGREEING TO CONVEY THE PROPERTY IN TWO PARTS, CO ULD NOT HAVE SETTLED FOR DIFFERENT CONSIDERATIONS FOR TWO PARTS OF THE SAME PROPERTY, WHICH WAS DIVIDED EQUALLY. 11 IT IS A WELL SETTLED PROPOSITION OF LAW THAT T HE STRICT RULE OF EVIDENCE SHALL NOT APPLY TO THE INCOME TAX PROCEEDINGS AND THE ISSUES CAN BE DECIDED ON THE BASIS OF PREPONDERANCE OF PROBABILITIES. THE SEQUENCE OF EVENTS NARRATED BY THE ASSESSING OFFICER SHOW THAT THE CONSENT LETTERS CAN NOT BE CONSIDERED AS DUMB DOCUMENTS. THE AO HAS CORROBORATED THEM WITH THE B ANK ACCOUNTS OF THE ASSESSEE AS WELL AS THE BUYER. FURTHER THE DOCUMEN T WRITER WHO DRAFTED THE CONSENT LETTER AND ALSO THE WITNESS TO THE LETTERS HAVE CONFIRMED THEM. THE ASSESSEE HAS ALSO ACTED UPON THE CONSENT LETTER BY ENCASHING A CHEQUE OF RS.1.00 LAKH THAT WAS MENTIONED THEREIN. HENCE, IN OUR VIEW, THE ASSESSING OFFICER WAS JUSTIFIED IN PLACING RELIANCE ON THE CO NSENT LETTERS AND ACCORDINGLY HE WAS JUSTIFIED IN ADOPTING THE SALE CONSIDERATION AS RS.1,01,00,000/-. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE A ND RESTORE THAT OF THE ASSESSING OFFICER. CONSISTENT WITH THE FINDING GIVEN AND VIEW TAKEN IN THE CASE OF DR. E. YESODHA (REFERRED SUPRA), WE HOLD THAT THE PURCHASE CONSIDERATION PAI D FOR PURCHASE OF 16 CENTS LAND SHOULD BE TAKEN AS RS.1,01,00,000/-. THE ORDER OF LD CIT(A) ON THIS ISSUE IS SET ASIDE. 6. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE IMPUGNED PROPERTY OF 16 CENTS WAS PURCHASED BY THE ASSESSEE AND HIS TWO BRO THERS. HE FURTHER SUBMITTED THAT THE DOCUMENT FOR PURCHASE WAS REGISTERED ON TWO DAT ES, I.E., 8 CENTS OF LAND WAS PURCHASED BY THE DOCUMENT REGISTERED ON 02-07-1998 AND REMAINING 8 CENTS WAS PURCHASED BY THE DOCUMENT DATED 10-05-1999. THE FI RST PURCHASE FALLS IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-2000 AND THE S ECOND PURCHASE FALLS IN THE YEAR I.T.A. NO.689/COCH/2007 7 RELEVANT TO THE ASSESSMENT YEAR 2000-2001. THUS TH E IMPUGNED TRANSACTION OF PURCHASE HAS BEEN CARRIED BY THREE PERSONS AND ALSO DURING THE PERIODS FALLING IN TWO ASSESSMENT YEARS. ACCORDINGLY, IT WAS SUBMITTED TH AT THE AO WAS NOT JUSTIFIED IN ASSESSING THE ENTIRE AMOUNT OF UNDISCLOSED INCOME I N THE HANDS OF THE ASSESSEE ALONE AND ALSO IN ONE ASSESSMENT YEAR, I.E., THE ASSESSME NT YEAR 1999-2000. WE FIND FORCE IN THE ARGUMENTS OF THE LD A.R. WE HAVE ALREADY HE LD THAT THE AMOUNT OF PURCHASE CONSIDERATION PAID FOR THE PURCHASE OF 16 CENTS OF LAND WAS RS.1,01,00,000/-. THERE SHOULD NOT BE ANY DISPUTE THAT THE UNDISCLOSED AMOU NT HAS TO BE ASSESSED IN THE HANDS OF THE PERSON WHO MADE THE PAYMENT AND IT HAS TO BE ASSESSED IN THE YEAR IN WHICH THE SAID PAYMENT WAS MADE. THESE ASPECTS REQUIRE VERIF ICATION OF FACTS. APPARENTLY, THE AO DID NOT CARRY OUT THIS EXERCISE. HENCE, THE PRE SENT CONTENTION OF THE ASSESSEE NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER. HO WEVER, WE NOTICE THAT THE LD CIT(A) HAS HELD THAT THE DIFFERENCE AMOUNT HAS TO BE ASSES SED EQUALLY IN THE HANDS OF THE ASSESSEE AND HIS TWO BROTHERS. HOWEVER, THE FACT R EMAINS THAT THE ASSESSEE HIMSELF HAS ALREADY DISCLOSED AN AMOUNT OF RS.60.00 LAKHS I N HIS CASH FLOW STATEMENT. THE LD CIT(A) HAS ALSO DETERMINED THE AMOUNT OF PURCHASE C ONSIDERATION AT RS.60.00 LAKHS. IN THAT CASE, IT WOULD NOT BE CORRECT TO DIRECT THE AS SESSING OFFICER TO ASSESS THE DIFFERENCE AMOUNT OF RS.28.00 LAKHS (RS.60.00 LAKHS LESS APPAR ENT CONSIDERATION RS.32.00 LAKHS) EQUALLY IN THE HANDS OF THREE PERSONS, IN VIEW OF T HE FACT THAT THERE WAS NO ADDITION WITH REGARD TO RS.28.00 LAKHS. ACCORDINGLY, WE SE T ASIDE THE ORDER OF LD CIT(A) ON THIS POINT. THE DISPUTE IS WITH REGARD TO THE AMOUNT OF RS.31.00 LAKHS AND THE AO SHALL DECIDE ABOUT THE YEAR OF ASSESSMENT AS WELL AS THE PERSON/PERSONS TO BE ASSESSED. WE ORDER ACCORDINGLY. 7. THE NEXT ISSUE RELATES TO THE ADDITION OF RS .14.00 LAKHS RELATING TO UNDISCLOSED EXPENSES. THE ASSESSEE FILED A CASH FLOW STATEMENT BEFORE THE ADI DURING THE COURSE OF SEARCH AND FILED ANOTHER CASH FLOW STATEMENT DUR ING THE COURSE OF ASSESSMENT PROCEEDING. THE AO NOTICED THAT THERE WERE DIFFERE NCES BETWEEN THE TWO CASH FLOW STATEMENTS AND THE DETAILS OF DIFFERENCES WERE TABU LATED AS UNDER BY THE ASSESSING OFFICER: I.T.A. NO.689/COCH/2007 8 STATEMENT SEIZED DURING THE COURSE OF SEARCH CASH FLOW FILED ON 21.11.2004 I) EXPENSES INCURRED ON PILGRIMAGE AND CHARITY 2,50,000 50,000 II) LAND DEVELOPMENT AND BUILDING CONSTRN 22,00,000 19,00,000 III) PURCHASE OF TATA SUMO 4,00,000 NIL IV) LOAN REPAYMENT TO WIFE 45,000 NIL V) STOCK OF MATERIALS ON BUILDING 3,00,000 NIL VI) RECEIVABLE 2,00,000 NIL TOTAL 33,95,000 19,50,000 DIFFERENCE = RS.3395000/- (-) RS. 19,50,000/- = RS.14,45,000/- OUT OF THE DIFFERENCE OF RS.14,45,000/-, THE AO ALL OWED DEDUCTION FOR RS.45,000/-, BEING THE AMOUNT SHOWN AS REPAID BY THE ASSESSEE TO HIS WIFE, AS THE SAME WOULD BE AVAILABLE WITH THE FAMILY. WITH REGARD TO THE BALA NCE AMOUNT OF DIFFERENCE, THE ASSESSEE EXPLAINED THAT THE FIRST CASH FLOW STATEME NT WAS PREPARED BY HIS FATHER WITH THE AVAILABLE INFORMATION AND HENCE MISTAKES CREPT IN. IT WAS FURTHER STATED THAT THE ASSESSEE, BEING AN NRI, MET ALL THE OUTGOINGS FROM OUT OF HIS FOREIGN FUNDS AND HENCE THERE IS NO QUESTION OF ANY INCOME ESCAPING ASSESSM ENT IN INDIA. THE AO DID NOT ACCEPT THE SAID EXPLANATIONS AND HENCE TREATED THE DIFFERENCE OF RS.14.00 LAKHS AS THE INCOME OF THE ASSESSEE. 8. THE LD CIT(A) NOTICED THAT THE AO HAS PRESUM ED THAT THE ITEMS OF EXPENSES/OUTGOINGS DECLARED IN THE FIRST CASH FLOW STATEMENT WERE CORRECT WITHOUT MAKING ANY ENQUIRY IN THAT REGARD. THE ASSESSEE CO NTENDED THAT THERE WAS NO PURCHASE OF VEHICLE, NO PILGRIMAGE UNDERTAKEN, NO A DVANCE PAID ETC. AS DECLARED IN THE FIRST CASH FLOW STATEMENT. IN THE ABSENCE OF ANY ENQUIRY ON THESE ASPECTS, THE LD CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE. T HE LD CIT(A) NOTICED THAT THE ASSESSEE HAD DECLARED A SUM OF RS.3.00 LAKHS AS THE VALUE OF STOCK OF MATERIALS AVAILABLE WITH HIM. SINCE THE ASSESSEE WAS CARRYIN G ON CONSTRUCTION ACTIVITIES, THE LD CIT(A) OPINED THAT THE AVAILABILITY OF STOCK OF MAT ERIALS COULD NOT BE RULED OUT. HOWEVER, HE REDUCED THE VALUE OF STOCK AND ESTIMATE D THE SAME AT RS.1.50 LAKHS AND I.T.A. NO.689/COCH/2007 9 SINCE THE ASSESSEE WAS HAVING 1/3 RD SHARE IN THE PROPERTY, HE DIRECTED THE AO TO RESTR ICT THE ADDITION TO RS.50,000/-. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. IT IS NOTICED THAT BOTH THE CASH FLOW STATEMENTS WERE FILED BY OR ON B EHALF OF THE ASSESSEE ONLY. ACCORDING TO THE ASSESSEE, THE FIRST STATEMENT WAS PREPARED BY HIS FATHER AND ON NOTICING THE MISTAKES, THE CORRECTED CASH FLOW STAT EMENT WAS PREPARED AND FILED BEFORE THE AO. AS POINTED OUT BY LD CIT(A), THERE IS NO E VIDENCE TO SHOW THAT THE OUTGOINGS SHOWN IN THE FIRST CASH FLOW STATEMENT WERE CORRECT . THE AO ALSO DID NOT ATTEMPT TO MAKE ANY ENQUIRY TO SUBSTANTIATE THE ENTRIES SHOWN IN THE FIRST CASH FLOW STATEMENT. ACCORDING TO THE ASSESSEE, NO EXPENSE WAS INCURRED ON PILGRIMAGE AND FURTHER THERE WAS NO PURCHASE OF TATA SUMO VEHICLE. ANOTHER IMPO RTANT POINT TO BE NOTED IS HERE ABOUT THE EXPLANATION OF THE ASSESSEE THAT HE, BEIN G AN NRI, THESE EXPENSES, IF ACTUALLY INCURRED, WOULD HAVE BEEN FUNDED FROM OUT OF HIS FO REIGN INCOME. IN THE ABSENCE OF ANY EVIDENCE WITH REGARD TO THESE TWO ITEMS AND FUR THER IN VIEW OF THE POSSIBILITY OF INCURRING THESE EXPENSES, IF ANY, OUT OF THE FOREIG N INCOME OF THE ASSESSEE, IN OUR VIEW, NO ADDITION IS CALLED FOR ON THESE TWO ITEMS. THE EXPENSES INCURRED ON LAND DEVELOPMENT AND BUILDING CONSTRUCTION APPEARS TO HA VE BEEN RECORDED ON ESTIMATED BASIS AND HENCE, IN THE ABSENCE OF ANY EVIDENCE, TH E FIGURES REPORTED IN THE REVISED STATEMENT HAS TO BE ACCEPTED. THE SOURCE FOR REC EIVABLE, IF ANY, WAS EXPLAINED TO BE NRI INCOME. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) ON THESE ITEMS. THE VALUE OF STOCK OF CONSTRUCTION MATERIAL AVAILABLE WITH THE ASSESSEE WAS ALSO ESTIMATED, WHICH WAS REDUCED TO RS.1.50 LAKHS BY TH E LD CIT(A). HOWEVER, THE LD CIT(A) HAS RESTRICTED THE ADDITION TO 1/3 RD OF THE STOCK OF MATERIALS ESTIMATED BY HIM, ON THE REASONING THAT THE ASSESSEE WAS HAVING ONLY ONE THIRD SHARE IN THE PROPERTY. WE HAVE ALREADY STATED THAT THE ADDITION IS REQUIRE D TO BE MADE IN THE HANDS OF THAT PERSON WHO HAS ACTUALLY CONTRIBUTED THE AMOUNT. IN THE EARLIER PARAGRAPHS, WE HAD RESTORED THE MATTER RELATING TO THE DETERMINATION O F SHARE OF ASSESSEE TO THE FILE OF THE AO. IN THE INSTANT CASE, THE ASSESSEE SEEMS TO HAV E DECLARED THE AMOUNT OF STOCK OF MATERIALS IN HIS CASH FLOW STATEMENT. UNDER THESE CIRCUMSTANCES, IT HAS TO BE EXAMINED AS TO WHETHER THE ASSESSEE HAS RECEIVED ANY CONTRIB UTION FROM HIS BROTHERS. I.T.A. NO.689/COCH/2007 10 ACCORDINGLY, IN OUR VIEW, THIS MATTER IS REQUIRED T O BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION. ACCORDINGLY, WE MODIFY THE DECISION TAKEN BY LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER RELATIN G TO THE DETERMINATION OF SHARE OF THE ASSESSEE TO THE FILE OF THE AO WITH THE DIRECTION T O EXAMINE THE SAME AND DECIDE IT IN ACCORDANCE WITH LAW. 10. THE NEXT ISSUE RELATES TO THE ADDITION OF R S.4.00 LAKHS RELATING TO SALE OF OLD BUILDING MATERIALS. IN THE CASH FLOW STATEMENT, TH E ASSESSEE HAD SHOWN CASH RECEIPT OF RS.4.00 LAKHS ON ACCOUNT OF SALE OF OLD BUILDING MA TERIALS. THE AO TOOK THE VIEW THAT THE ASSESSEE COULD NOT HAVE REALISED ANY AMOUNT AS THE SELLER HAD SHOWN THE VALUE OF PROPERTY AT RS.60,000/- IN THE YEAR 1969. THOUGH T HE AO OPINED THAT THE SALVAGE VALUE OF BUILDING MATERIAL WOULD BE MINIMAL, YET HE CHOSE TO ADD THE ENTIRE AMOUNT OF RS.4.00 LAKHS AS UNEXPLAINED CREDIT. THE LD CIT(A) NOTICED THAT THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM OF RECEIPT O F RS.4.00 LAKHS. ACCORDINGLY, HE RESORTED TO ESTIMATE THE SALE PROCEEDS OF OLD BUILD ING MATERIALS AT RS.2.00 LAKHS. THE REMAINING AMOUNT OF RS.2.00 LAKHS WAS SUSTAINED BY LD CIT(A), BUT DIRECTED THE AO TO ASSESS 1/3 RD OF THE SAME IN THE HANDS OF THE ASSESSEE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS. IT IS A FACT THAT THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE TO SUBSTANTIATE THE CLAIM OF RE CEIPT OF RS.4.00 LAKHS ON SALE OF OLD BUILDING MATERIALS. ACCORDING TO THE APPELLANT, TH E BUILDING WAS HAVING AN EXTENT OF 318 SQ. MTS., WITH AN ADDITIONAL SHED. HENCE THE POSSI BILITY OF REALISATION OF SOME AMOUNT CANNOT BE RULED OUT ALTOGETHER. THE LD CIT(A) HAS ESTIMATED THE AMOUNT REALISED ON SALE OF OLD BUILDING MATERIALS AT RS.2.00 LAKHS. O N A CONSPECTUS OF THE MATTER, WE FIND THE ESTIMATE MADE BY THE LD CIT(A) TO BE REASONABLE . THE LD CIT(A) HAD DIRECTED THE AO TO RESTRICT THE ADDITION TO 1/3 RD OF THE ADDITION SUSTAINED BY HIM. WHILE MAKING DISCUSSION ABOUT THE EARLIER TWO ISSUES, WE HAD SET ASIDE THE MATTER OF DETERMINATION OF SHARE OF THE ASSESSEE TO THE FILE OF THE AO, AS IT REQUIRES EXAMINATION AT HIS END. ACCORDINGLY, WE SET ASIDE THIS MATTER TO THE FILE O F THE AO WITH THE DIRECTION TO EXAMINE THE ISSUE OF DETERMINATION OF SHARE OF THE ASSESSEE AND DECIDE THE SAME IN ACCORDANCE WITH THE LAW. THE ORDER OF LD CIT(A) STANDS MODIFI ED ACCORDINGLY. I.T.A. NO.689/COCH/2007 11 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 08-02-2 013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 8TH FEBRUARY 2013 GJ COPY TO: 1. SHRI K.N. ABDUL HAMEED, JAMEELA MANZIL, PERUMBA, PAYYANNUR, KANNUR. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTR AL CIRCLE, CALICUT. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN