ACIT, Trichur V. Sri. Inis Varghese, Trichur

ITA 783/COCH/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8777 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 20-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: C B M WARRIER
• Keywords: Unexplained cash credit; Reasonable cause; Condonation of delay
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 783/COCH/2013 ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), RANGE- 2, TRICHUR. VS. SHRI INIS VARGHESE MALIEKKAL, IRENE JEWELLERS, BHIMA BLDG., SOUTH BAZAR, THRISSUR. [PAN: ADUPM 4695E] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) C.O. NO.24/COCH/2014 (ARSG. OUT OF I.T.A. NO. 783/COCH/2013 ASSESSMENT YEAR : 2009-10 SHRI INIS VARGHESE MALIEKKAL, IRENE JEWELLERS, BHIMA BLDG., SOUTH BAZAR, THRISSUR. [PAN: ADUPM 4695E] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), RANGE-2, TRICHUR. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) REVENUE BY SHRI K.K. JOHN, SR. DR ASSESSEE BY SHRI C.B.M. WARRIER, CA DATE OF HEARING 20/01/2015 DATE OF PRONOUNCEMENT 06/02/2015 I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 2 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 24-09-2013 PASSED BY THE CIT(A)-V, KOCHI FOR THE ASSESSMENT YEAR 2009-10. 2. THE REVENUE HAS RAISED THE GROUND WITH REGARD TO NON-ADOPTION OF VALUE OF 30,000 GMS. OF GOLD AT THE AVERAGE RATE AS ON 01/04 /2008 AND 31/03/2009 (I.E. RS.10892/- PER 10 GMS) AS PER THE PROVISION OF SEC. 69A OF THE INCOME TAX ACT. ON THE OTHER HAND, THE ASSESSEE IN C.O. NO. 24/COCH/20 14 HAS RAISED THE GROUND WITH REGARD TO ADOPTION OF VALUE OF 26 KG. OF GOLD JEWEL LERY AT RS.520 PER GRAM AT THE RATE PREVALENT IN THE ASSESSMENT YEAR 2007-08 RS.1,93,44 ,000/-. 3. THERE WAS A DELAY OF 58 DAYS IN FILING THE CROSS OBJECTION BY THE ASSESSEE BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED A PET ITION SEEKING CONDONATION OF DELAY AND ALSO HAS FILED AN AFFIDAVIT EXPLAINING THE REAS ONS FOR DELAY IN FILING THE CROSS OBJECTION BEFORE THE TRIBUNAL WITHIN THE DUE DATE. THE LD. AR SUBMITTED THAT THE APPEAL MEMORANDUM IN FORM NO.36 WAS RECEIVED BY HIM ON 09/12/2013 THE LD. AR SUBMITTED THAT THE CROSS OBJECTION SHOULD HAVE BEEN FILED WITHIN 30 DAYS FROM 09/12/2013 BUT THE APPEAL PAPERS WERE MISPLACED AND AS A RESULT HE OMITTED TO FILE THE MEMORANDUM OF CROSS OBJECTION BEFORE THE BENCH BEFORE THE DUE DATE. I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 3 ACCORDINGLY, THE LD. AR PLEADED THAT THE DELAY MAY BE CONDONED AND THE CROSS OBJECTION MAY BE ACCEPTED AND ADJUDICATED. 4. THE LD. DR HAS NOT RAISED ANY SERIOUS OBJECT ION FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTION BY THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE RECORD. WE FIND THAT THERE EXISTS REASONABLE CAUSE FOR NOT FILING THE CROSS OB JECTION IN TIME AND THE REASONS ADVANCED BY THE ASSESSEE FOR THE DELAY IN FILING TH E CROSS OBJECTION ARE BONA FIDE. BEING SO, WE CONDONE THE DELAY IN FILING THE CROSS OBJECTION BY THE ASSESSEE AND ADMIT THE CROSS OBJECTION FOR ADJUDICATION. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF GOLD JEWELLERY AND A SURVEY UNDER SECTION 133A OF T HE I.T. ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 19-02-2009. D URING THE COURSE OF SURVEY, SEVERAL DOCUMENTS AND BOOKS OF ACCOUNTS WERE IMPOUN DED AND A LETTER WAS FILED BY THE ASSESSEE ON 25-02-2009 FOR OFFERING THE VALUE O F 30 KG OF GOLD WITH REGARD TO WASTAGE OF GOLD ACCUMULATED SINCE 1995 FOR ASSESSME NT IN THE A.Y. 2009-10 AND A SUM OF RS.14,21,492/- BEING THE UNEXPLAINED CREDITO RS AS ON 31-03-2009 AND A SUM OF RS.15,00,000/- BEING THE ADVANCE PAID ON 17-10-2 008 FOR THE PURCHASE OF PROPERTY FOR A.Y. 2009-10. THE ASSESSING OFFICER HAS MADE TH E ADDITION BY TAKING THE VALUATION OF GOLD AS ON 01-04-2008 AND 31-03-2009 FOR PER 10 GRAM FOR 24 CARAT AT RS.10,892/- I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 4 AND HAS TAKEN THE AVERAGE VALUE. THE VALUE OF 30 KG . OF GOLD WAS THUS WORKED OUT AT RS.3,26,76,000/- AND THE ADDITION WAS MADE ACCORDIN GLY BY THE ASSESSING OFFICER. 6. ON APPEAL, THE CIT(A) OBSERVED THAT 26 KG. OF GO LD WAS VALUED IN THE ASSESSMENT YEAR 2007-08 AT THE RATE OF RS. 9300/10 GMS. WHICH IS CALCULATED AS 9300 X 8/10 = RS.7440 (19.2 CARAT). THEREFORE, FOR 26 K G. OF GOLD, THE VALUE COMES TO RS.1,93,44,000/-. HE FURTHER OBSERVED THAT THE ASSE SSEE HAS ALREADY OFFERED FOR TAXATION 2 KG. OF GOLD VALUED AT RS.19,40,000/- IN THE RETURN FILED FOR THE ASSESSMENT YEAR 2009-10. ACCORDINGLY, THE CIT(A) DELETED THE ADDITION TO THE EXTENT OF RS.19,40,000/-. FURTHER, 2 KG OF GOLD RELATING TO ASSESSMENT YEAR 2008-09 AT THE RATE OF RS.871 PER GRAM WAS VALUED AT RS.17,42,000/-. T HUS THE CIT(A) ESTIMATED THE VALUE OF 28 KG OF GOLD AS UNDER: ADDITION TO THE RETURN INCOME ON ACCOUNT OF EXCESS JEWELLERY 26 KG OF GOLD RS.1,93,44,000.00 2 KG. AT RS.871/PER GRAM RS. 17,42,000.00 TOTAL RS.2,10, 86,000.00 7. THUS, THE CIT(A) DELETED THE ADDITION MADE BY T HE ASSESSING OFFICER TO THE EXTENT OF (RS.3,07,36,000 2,10,86,000) RS.96,50,0 00/-. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE IS IN APPEAL BEF ORE US FOR VALUATION OF THE GOLD I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 5 JEWELLERY AT THE HIGHER RATE INSTEAD OF RS.520/PER GM AS THIS IS THE AVERAGE RATE FOR THE LAST 15 YEARS. 8. THE LD. DR SUBMITTED THAT THERE IS NO DISPUTE AB OUT THE QUANTUM OF GOLD JEWELLERY FOUND DURING THE COURSE OF SURVEY. THE O NLY DISPUTE IS REGARDING THE VALUATION OF THE JEWELLERY. THE LD. DR SUBMITTED T HAT THE VALUATION OF GOLD IS TO BE DONE AT THE RATE PREVALENT AT THAT TIME AND NOT AT ANY OTHER RATE. ACCORDING TO THE LD. DR, UNLESS THERE IS GENUINE MATERIAL TO SUGGEST THA T THE IMPUGNED GOLD JEWELLERY WAS ACQUIRED EARLIER TO THIS ASSESSMENT YEAR, THERE IS NO SCOPE TO VALUE THE SAME AT THE RATE APPLICABLE IN THE EARLIER ASSESSMENT YEAR. THE LD. DR SUBMITTED THAT THE GOLD JEWELLERY IS TO BE VALUED AT THE RATE OF RS.10,892/ - PER 10 GMS. AS VALUED BY THE ASSESSING OFFICER. HE RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K.I. PAVUNNY ((1998) 232 ITR 837). THE LD. DR ALSO RELIED ON THE ORDER OF THE CHENNAI A BENCH OF THE TRIBUNAL IN THE CASE O F KAMADHENU JEWELLERS VS. ACIT IN I.T.A. NO. 216/MDS/2010 DATED 12 TH AUGUST, 2011. 9. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE VALUE OF 28 KG OF GOLD JEWELLERY IS TO BE CONSIDERED AT AN AVERAGE RATE OF RS.520 PER GRAM AND THE TOTAL VALUE WORKED OUT TO RS.1,70,78,507/-. THE LD. AR SU BMITTED THAT THERE WAS ACCUMULATION OF 30 KG. OF GOLD OVER A PERIOD OF 15 YEARS AT AN AVERAGE RATE OF 520 GMS. PER YEAR FROM 1995-96 TO 2009-10 AND HENCE THE AVERAGE RATE MAY BE APPLIED. I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 6 ACCORDING TO THE LD. AR, THE VALUATION ADOPTED BY T HE ASSESSING OFFICER AS WELL AS THE CIT(A) IS ON THE HIGHER SIDE. HE FURTHER SUBMITTED THAT EVEN OTHERWISE THE VALUATION OF 26 KG. AT RS.1,93,44,000/- HAS BEEN ACCEPTED BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2007-08 WHICH WAS CONSIDERED AS PRO TECTIVE ASSESSMENT AND IN THE SUBSTANTIVE ASSESSMENT FOR THE ASSESSMENT YEAR 2009 -10, THE SAME VALUE IS TO BE ADOPTED. HOWEVER, THE LD. AR SUBMITTED THAT VALUAT ION OF 26 KG. OF GOLD AT RS.10,892/- FOR 10 GMS. IS ON THE HIGHER SIDE. THE LD AR SUBMITTED THAT THE DEPARTMENT CANNOT ADOPT DIFFERENT VALUE FOR THE SAM E QUANTITY OF GOLD FOR THE ASSESSMENT YEAR 2009-10 AS COMPARED TO ASSESSMENT Y EAR 2007-08. THUS, THE LD. AR TOOK THE PLEA THAT ATLEAST THE RELIEF GIVEN BY T HE CIT(A) MAY NOT BE DISTURBED. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RECORD. IN THIS CASE, THERE IS NO DISPUTE REGARDING QUANTITY OF 30 KG OF GOLD FOUN D DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT. THE DISPUTE IS ONLY WITH REGARD T O VALUATION OF THE GOLD JEWELLERY. IT IS A SETTLED PROPOSITION THAT WHENEVER GOLD ARTICLE S ARE RECOVERED FROM THE ASSESSEE, UNLESS THERE IS COGENT EVIDENCE ADDUCED BY THE ASSE SSEE REGARDING THE DATE ON WHICH IT WAS ACQUIRED, IT SHOULD BE PRESUMED THAT THE ART ICLES BELONGED TO THE ASSESSEE AND WERE OWNED BY HIM AND IT IS ALSO TO BE PRESUMED THA T THE ARTICLES WERE ACQUIRED IN THE YEAR IN QUESTION AND IT REPRESENTED THE CONCEAL ED INCOME OF THE ASSESSEE. THE ASSESSEES COUNSEL SUBMITTED THAT THE GOLD JEWELLER Y WAS ACCUMULATED YEAR AFTER YEAR FOR THE LAST 15 YEARS, THEREFORE THE AVERAGE RATE O F RS.520 PER GRAM IS TO BE CONSIDERED. WITHOUT PREJUDICE TO THIS ARGUMENT, TH E ASSESSEE TOOK THE PLEA THAT THE I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 7 VALUATION OF 26 KG. AT RS.1,93,44,000/- HAS BEEN A CCEPTED BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2007-08 WHICH WAS CONSIDERED AS PRO TECTIVE ASSESSMENT AND IN THE SUBSTANTIVE ASSESSMENT FOR THE ASSESSMENT YEAR 2009 -10, THE SAME VALUE IS TO BE ADOPTED. U/S. 69A OF THE ACT, GOLD JEWELLERY FOUND DURING THE COURSE OF SURVEY IS TO BE VALUED AT THE RATE PREVALENT AT THE TIME OF SURVEY AND NOT AT THE RATE STATED BY THE ASSESSEE. IN THIS CASE, IT IS TO BE DEEMED THAT TH E GOLD JEWELLERY WAS ACQUIRED IN THE YEAR IN QUESTION WHEN THE SURVEY TOOK PLACE. MORE SO, THIS VIEW TAKEN BY THE ASSESSING OFFICER FINDS SUPPORT IN THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K.I. PAVUNNY ((1998) 232 ITR 837) WHEREIN THE SAME RATIO WAS LAID DOWN BY THE COURT. IN VIEW OF THIS, THE JEWELLERY FOUND DURING THE COURSE OF SURVEY IS TO BE VALUED AT THE RATE AS APPLICABLE IN THE ASSES SMENT YEAR UNDER CONSIDERATION. IN OUR OPINION, THE CIT(A) IS NOT JUSTIFIED IN VALUING THE GOLD JEWELLERY AT THE RATE PREVALENT IN THE ASSESSMENT YEAR 2007-08. ACCORDIN GLY, WE REVERSE THE ORDER OF THE CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. ACCORDINGLY, THE REVENUE APPEAL IS ALLOWED ON THIS ISSUE. 11. WITH REGARD TO DELETION OF ADDITION OF VALUE OF 2 KG. GOLD BY THE CIT(A) ON THE REASON THAT THE ASSESSEE HIMSELF HAS OFFERED IT FOR TAXATION IN HIS RETURN OF INCOME AT RS.19,40,000/-, WE ARE OF THE OPINION THAT THE ENTI RE VALUE OF 30 KG. OF GOLD JEWELLERY IS TO BE TAXED IN THIS ASSESSMENT YEAR AT THE PREVA LENT RATE AT THE TIME OF SURVEY AND THEREAFTER, THE VALUE OF GOLD JEWELLERY ALREADY OFF ERED BY THE ASSESSEE FOR TAXATION IN HIS RETURN OF INCOME, IS TO BE REDUCED FROM THE TOT AL VALUE AND ONLY NET BALANCE IS TO I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 8 BE CONSIDERED FOR ADDITION. ADMITTEDLY, IN THIS CAS E, THE ASSESSING OFFICER WORKED OUT THE TOTAL VALUE OF 30 KG. AT RS.3,26,76,000/- AND H E HAS MADE DEDUCTION TOWARDS THE VALUE OF 2 KG OF GOLD AT RS.19,40,000/- WHEN IT WAS ALREADY OFFERED FOR TAXATION BY THE ASSESSEE HIMSELF IN HIS RETURN OF INCOME FILED IN T HIS ASSESSMENT YEAR. THUS, THE ASSESSING OFFICER CONSIDERED THE DIFFERENCE OF RS.3 ,07,36,000/-. BEING SO, IN OUR OPINION, THE CIT(A) IS NOT JUSTIFIED IN MAKING FURT HER DEDUCTION OF RS.19,40,000/- ON THIS COUNT. ACCORDINGLY, WE ARE INCLINED TO REVERS E THE ORDER OF THE CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER ON THIS ISSUE ALSO. ACCORDINGLY. THE REVENUE APPEAL IS ALLOWED ON THIS ISSUE ALSO. 12. SINCE WE HAVE ALLOWED THE REVENUE APPEAL, THE C ROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO.24/COCH/2014 HAS BECOME INFRUCT UOUS AND HENCE, DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN I.T.A. NO. 783/COCH/2013 IS ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESS EE IN C.O. NO. 24/COCH/2014 IS DISMISSED. PRONOUNCED IN THE O PEN COURT ON 06-02-2015 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 6 TH FEBRUARY, 2015 GJ I.T.A. NO.783/COCH/2013 & C.O. NO.24/COCH/2014 9 COPY TO: 1. SHRI INIS VARGHESE MALIEKKAL, IRENE JEWELLERS, B HIMA BLDG., SOUTH BAZAR, THRISSUR. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -2(1), RANGE-2, TRICHUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V,KOCHI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN