Sri.James Sebastian, Kollam V. ITO, Kollam

ITA 70/COCH/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64920 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 12-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Court: TRIBUNAL
• Department Lawyers: B SAJJIVE
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Income from undisclosed sources; Principle of natural justice; Additional evidence

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. NO. 70/COCH/2012 ASSESSMENT YEAR: 2008-09 SHRI JAMES SEBASTIAN, CHEKKITTATHOPPIL HOUSE, SAKTHIKULANGARA, KOLLAM-691 012. [PAN: ACXPS 6178Q] VS. THE INCOME TAX OFFICER, WARD-2, KOLLAM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI B. SAJJIVE, JR. DR DATE OF HEARING 12/09/2012 DATE OF PRONOUNCEMENT 16/11/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16-12-2011 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELAT ES TO THE ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE PERTAIN TO TH E FOLLOWING ISSUES: (A) ASSESSMENT OF SHORT TERM CAPITAL GAIN OF RS. 8,47,500/-. (B) ADDITION OF UNEXPLAINED DEPOSITS OF R S. 12,10,691/-. (C) REJECTION OF CLAIM OF INSURANCE PREMI UM U/S. 80(C) OF THE ACT. (D) REJECTION OF CLAIM OF TDS OF RS. 24,250/-. DURING THE COURSE OF HEARING, THE LD A.R ADVANCED H IS ARGUMENTS WITH REGARD TO THE FIRST TWO ISSUES ONLY. IN THE WRITTEN ARGUMENTS SU BMITTED BEFORE US ALSO, NO SUBMISSION PERTAINING TO THE REMAINING TWO ISSUES WAS SEEN. A CCORDINGLY, WE DISMISS THE GROUNDS RELATING TO THE ISSUES (C) AND (D) STATED SUPRA. I.T.A. NO.70/COCH/2012 2 3. THE FACTS RELATING TO THE SAID CASE ARE STATED I N BRIEF. THE ASSESSEE IS ENGAGED IN THE FISHING BOAT BUSINESS AND ALSO RUNS A BOAT R EPAIR WORKSHOP AND A ICE PLANT. HE FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION BELATEDLY ON 10-02-2010 DECLARING A TOTAL INCOME OF RS. 1,83,330/-. THE AS SESSING OFFICER COMPLETED THE ASSESSMENT, AS PER THE DIRECTION OF THE ADDL. CIT U /S. 144A OF THE ACT, DETERMINING THE TOTAL INCOME OF RS. 26,37,770/-. THE ASSESSEE CHALL ENGED THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER BEFORE THE LD. CIT(A), BUT CO ULD NOT SUCCEED IN THE APPEAL. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE FIRST ISSUE RELATES TO THE ASSESSMENT OF RS. 8,47,500/- AS SHORT TERM CAPITAL GAIN, AS AGAINST THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN. THE FACTS RELATING THERETO ARE STATED IN BRIEF. THE ASSESSEE SOLD 20. 25 ACRES OF LAND AND A BUILDING FOR A CONSIDERATION OF RS. 19,50,000/- ON 17-04-2007. TH E ASSESSEE HAD PURCHASED THE SAID PROPERTY JOINTLY WITH HIS WIFE ON 08-09-2006 FOR A CONSIDERATION OF RS. 2,25,000/-. HENCE, THE ASSESSING OFFICER DETERMINED THE GAIN AR ISING ON THE SALE OF PROPERTY AS SHORT TERM CAPITAL GAIN, AS THE ASSESSEE OWNED TH E PROPERTY FOR LESS THAN 36 MONTHS. THE AO DETERMINED THE SHORT TERM CAPITAL GAIN AT RS .16,95,000/-. SINCE THE ASSESSEE OWNED ONLY 50% SHARE IN THE PROPERTY, THE AO ASSESS ED 50% OF THEREOF, VIZ. RS. 8,47,500/- IN THE HANDS OF THE ASSESSEE. 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT HE TOOK POSSESSION OF THE ABOVE SAID PROPERTY WAY BACK IN 1981, BY VIRTUE OF SALE AGREEMENT DATED 30-09-1981 AND WAS ENJOYING THE PROPERTY SINCE THAT DATE. SIN CE THE ASSESSEE HAD HELD THE PROPERTY FOR A PERIOD OF MORE THAN 36 MONTHS, THE A SSESSEE CONTENDED THAT THE CAPITAL GAIN ON SALE OF THE SAID PROPERTY SHOULD BE ASSESSE D AS LONG TERM CAPITAL GAIN. THE LD. CIT(A) DID NOT ACCEPT THE SAID PLEA OF THE ASSESSEE AND ACCORDINGLY CONFIRMED THE ASSESSMENT OF RS.8,47,500/- AS SHORT TERM CAPITAL G AIN. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THE COPY OF THE SALE AGREEMENT EXECUTED IN MALAYALAM ALONG WITH COPY OF THE FREE TRANSLATION THEREOF IN ENGLISH. THE LD. COUNSEL FOR THE ASSESSEE FURTHER S UBMITTED THAT THE POSSESSION OF THE I.T.A. NO.70/COCH/2012 3 PROPERTY WAS WITH THE ASSESSEE SINCE 1981 AND THE S AID FACT IS PROVED BY AN AFFIDAVIT FILED BY THE ASSESSEE AS I.A. NO. 2348/200 IN O.S. NO. 612/2000 IN THE MUNSIFFS COURT, KOLLAM, IN WHICH LEGAL PROCEEDING, THE ASSESSEE WAS THE DEFENDANT. HE FURTHER SUBMITTED THE COPY OF LETTER OBTAINED FROM AN ADVOC ATE, SHRI P.JUSTIN EXPLAINING THE BACKGROUND OF THE ABOVE SAID CASE. ACCORDINGLY, HE CONTENDED THAT THE GAIN ARISING FROM THE SALE OF LAND AND BUILDING SHOULD BE ASSESS ED AS LONG TERM CAPITAL GAIN, AS THE ASSESSEE HAD HELD THE PROPERTY FOR MORE THAN 36 MON THS. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSEE IS BRINGING THE NEW DOCUMENTS ON RECORD, WHICH WERE NOT CONSIDERED BY THE TAX AUTHORITIES. 7. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE BEFORE US NEED TO BE EXAMINED AT THE END OF THE ASSESSING OFFICER IN THE LIGHT OF THE CONTENTIONS M ADE BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. ACCORDINGLY, IN THE INTEREST OF NATURAL JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAM E TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ADDITIONAL EVIDENCE S FILED BY THE ASSESSEE BEFORE US AND ALSO ANY OTHER DOCUMENT THAT MAY BE FILED BEFORE HI M AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW, AFTER AFFORDING NECESSARY OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. 8. THE NEXT ISSUE RELATES TO THE ADDITION PERTAININ G TO UNEXPLAINED DEPOSITS MADE IN THE SAVINGS BANK ACCOUNT OF THE ASSESSEE. THE ASSE SSING OFFICER NOTICED THAT THE ASSESSEE HAD DEPOSITED RS. 9,50,000 ON 11-04-2007 A ND RS. 3,60,691/- ON 16-04-2007. THE ASSESSING OFFICER CALLED FOR EXPLANATION WITH R EGARD TO THESE DEPOSITS. THE ASSESSEE EXPLAINED THAT HE HAD WITHDRAWN RS. 5,25,000/- ON 1 2-03-2007 AND THE SAID CASH ALONG WITH FISH AUCTION RECEIPTS WERE DEPOSITED ON 12-03- 2007. THE ASSESSING OFFICER NOTICED THAT THE SUM OF RS. 5,25,000/- WAS RE-DEPOSITED ON THE VERY SAME DAY ON 12-03-2007 AND ACCORDINGLY OPINED THAT THE SAID AMOUNT COULD N OT BE AVAILABLE WITH THE ASSESSEE FOR MAKING DEPOSITS ON 11-04-2007. REGARDING THE C LAIM OF FISH AUCTION RECEIPTS, THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY PROOF. AC CORDINGLY, THE ASSESSING OFFICER TREATED THE ENTIRE AMOUNT OF RS. 9,50,000/- AS THE ASSESSEES INCOME FROM UNEXPLAINED I.T.A. NO.70/COCH/2012 4 SOURCES. REGARDING DEPOSITS OF RS. 3,60,691/- MAD E ON 16-04-2007, THE ASSESSEE DID NOT OFFER ANY EXPLANATION AND HENCE, THE SAID AMOUN T WAS ALSO TREATED AS INCOME FROM UNDISCLOSED SOURCES. THE LD. CIT(A) CONFIRMED BOTH THE ADDITIONS. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ERRED IN OBSERVING THAT THE AMOUNT OF RS. 5,25,000/- WAS RE- DEPOSITED ON THE VERY SAME DAY, I.E., 12-03-2007 WHEN THE SAID AMOUNT WAS WITHDRAWN . ADVERTING OUR ATTENTION TO THE COPY OF THE BANK STATEMENT, WHICH IS PLACED AT PGS. 28-30 OF THE PAPER BOOK FILED BY THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT, IN THE COMPUTERISED BANKING STATEMENT, WITHDRAWAL HAS BEEN ACCOUNTED FI RST AND THE DEPOSIT OF FISH AUCTION RECEIPTS HAS BEEN ACCOUNTED LATER ON THE VERY SAME DAY. THE DEPOSIT OF RS.5,25,000/- WAS NOT BY WAY OF CASH, BUT IT REPRESENTED MATURITY PROCEEDS OF TWO DEPOSITS. ACCORDINGLY HE SUBMITTED THAT THE AO HAS ERRED IN I NTERPRETING THESE TRANSACTIONS. HENCE, THE AMOUNT OF RS.5,25,000/- WITHDRAWN BY THE ASSESSEE ON 12-03-2007 WAS VERY MUCH AVAILABLE WITH THE ASSESSEE FOR MAKING DE POSITS ON 11-04-2007. 10. WITH REGARD TO THE FISH AUCTION RECEIPTS, THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED AS UNDER: 19. THE ASSESSEE CLAIMED IN HIS EXPLANATION THAT FOR MAKING THE DEPOSIT OF RS. 9,50,000/- ON 11.04.2007, HE HAD CASH OF RS. 4,25, 000/- FROM FISH AUCTION RECEIPTS. THIS CLAIM WAS REJECTED BY THE ASSESSIN G OFFICER ON THE GROUND THAT NO DOCUMENTARY PROOF WAS PRODUCED SO AS TO ESTABLISH THE SAID AMOUNTS WERE FISH AUCTION RECEIPTS OF OTHERS. THE ASSESSEE CLAIMED THAT HE WAS MANAGING THE FISH BOATS OWNED BY 1) SHRI JAISHA JAMES, S/O JAMES, 2) JISHA JAMES, D/0 JAMES, AGED 23 YEARS, 3) SHRI SABU FRANCIES, S/O FRANCIES , AGED 40 YEARS AND SMT. SHAILA JAMES, W/O JAMES, AGED 47 YEARS. THE BOATS OF THE ABOVE PERSONS ARE MANAGED UNDER POWER OF ATTORNEY. IT IS EXPLAINED THAT THE AMOUNT COLLECTED FROM AUCTION SALE OF FISH CAUGHT BY THESE BOATS AR E SOLD PERIODICALLY BY THE ASSESSEE WHILE THE AMOUNTS ARE SETTLED ONLY ONCE IN A MONTH WITH THE BOAT OWNERS AND SUCH FUNDS ARE ALWAYS AVAILABLE WITH TH E ASSESSEE FOR SHORT TERM PURPOSES AND FOR UTILIZATION. THE AVERAGE FUNDS H ELD BY THE ASSESSEE FOR EACH BOAT WOULD RANGE BETWEEN RS. 1 LAKH TO RS. 1.5 LAK HS. THESE BOATS GO FOR DEEP SEA FISHING AND RETURNS TO THE SHORE ONCE IN 3 TO 4 DAYS OR AFTER A WEEK. THE ASSESSEE HAS UTILIZED THE FUNDS BELONGING TO THE ABOVE FOUR PERSONS FOR SHORT PERIODS AND FORM OUT OF SUCH FUNDS, THE SUM OF RS. 4,25,000/- WAS DEPOSITED. THIS WAS NOT VERIFIED BY THE ASSESSING OFFICER. I.T.A. NO.70/COCH/2012 5 11. WITH REGARD TO THE DEPOSIT OF RS. 3,60,691/-, T HE LD. COUNSEL SUBMITTED THAT IT REPRESENTS FISH AUCTION RECEIPTS, WHICH HAD BEEN HE LD IN BANK DEPOSITS. IN THIS REGARD, HE FURNISHED A CERTIFICATE OBTAINED FROM THE BANK. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE SAID DEPOSIT WAS MADE FROM THE FUNDS AVAILABLE FROM FISH AUCTION RECEIPTS. ON THE CONTRARY, THE LD. DR STOO D BY THE ORDER OF THE TAX AUTHORITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. FROM THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSE E AS WELL AS THE COPIES OF BANK STATEMENT AND CERTIFICATE OBTAINED FROM THE BANK, W E NOTICE THAT THE ADDITIONS HAVE BEEN MADE WITHOUT PROPERLY APPRAISING THE BANK TRAN SACTIONS. THE VARIOUS SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE DOES NOT FIND PLACE IN THE ASSESSMENT ORDER AND HENCE IT IS NOT KNOWN WHETHER THESE CONTENTIONS AND SUBMISSIONS WERE CONSIDERED BY THE ASSESSING OFFICER. UNDER THESE CIRCUMSTANCE S, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES EXAMINATION DE NOVA AT THE END OF THE ASSE SSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THIS ISSUE AFRESH AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW, AFTER AFFORDING RE ASONABLE OPPORTUNITY TO THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 16-11-20 12. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 16TH NOVEMBER, 2012 GJ COPY TO: 1. SHRI JAMES SEBASTIAN, CHEKKITTATHOPPIL HOUSE, SA KTHIKULANGARA, KOLLAM-691 012. 2. THE INCOME TAX OFFICER, WARD-2, KOLLAM. I.T.A. NO.70/COCH/2012 6 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN