Dr. N.C.P. Mohammad, Kannur V. ACIT, Calicut

ITA 847/COCH/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52281 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 14-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 04-08-2008
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Capital asset; Gift; Depreciation; Residential status; Document seized; Source of fund; Question of law; Cost of acquisition; Accommodation entries; Documents seized
• Section: 143(3); 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 846-852/COCH/2008 ASSESSMENT YEAR:2000-01 TO 2006-07 DR. N.C.P. MOHAMMED, REP BY POWER OF ATTORNEY, C.M.SIDDIQUE, SHUHAIBA MANZIL THANA, KANNUR-12. [PAN: AFYPM 6018F] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, CENTRAL CIRCLE, CALICUT (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI T.M.SREEDHARAN, SR.ADV.-AR REVENUE BY SHRI S.R.SENAPATI, SR.DR DATE OF HEARING 14/09/2011 DATE OF PRONOUNCEMENT 16/11/2011 O R D E R PER BENCH: THESE ARE A SET OF APPEALS BY THE ASSESSEE ARISING OUT OF SEPARATE ORDERS OF EVEN DATE (21/5/2008) BY THE COMMISSIONER OF INCOME-TAX (APPE ALS)-I, KOCHI (`CIT(A) FOR SHORT) DISMISSING ITS APPEALS CONTESTING ITS ASSESSMENTS F RAMED U/S. 153C R/W S. 143(3) OF THE INCOME-TAX ACT, 1961 (`THE ACT HEREINAFTER) FOR SE VEN ASSESSMENT YEARS (AYS), BEING AY 2000-01 TO 2006-07. 2. THE BACKGROUND FACTS OF THE CASE, WHICH LED TO T HE IMPUGNED ASSESSMENTS ARE RELEVANT AND, THUS, HEREBY RECOUNTED. THE ASSESSEE, AN INDIVIDUAL, IS A PEDIATRICIAN WORKING AT CRESCENT HOSPITAL, KANNUR. THERE WAS A S EARCH UNDER SECTION 132 OF THE ACT AT, AMONG OTHERS, HIS RESIDENCE ON 20.12.2005, ON T HE BASIS OF A WARRANT OF AUTHORIZATION I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 2 IN THE NAME OF SHRI K.P. AMEER AND HIS WIFE SMT. C. M. SHAKEELA, WHO (THE LATTER) IS THE SISTER OF THE ASSESSES WIFE SMT. SUHAIBA. CERTAIN DOCUMENTS PERTAINING TO THE ASSESSEE WERE FOUND AND SEIZED DURING SEARCH, AND ALSO HIS S TATEMENT RECORDED ON OATH UNDER SECTION 132(4) OF THE ACT. ACCORDINGLY, ASSESSMENTS WERE FRAMED IN THE CASE OF THE ASSESSEE FOR SEVEN (7) ASSESSMENT YEARS, I.E., AY 2 000-2001 TO AY 2006-2007, UNDER SECTION 153C READ WITH SECTION 143 (3) OF THE ACT. BEING UN-SUCCESSFUL IN FIRST APPEAL, THE ASSESSE IS IN SECOND APPEAL FOR ALL THE YEARS BEFOR E THE TRIBUNAL. 3. THE FIRST GRIEVANCE PROJECTED BY THE ASSESSEE IS BY WAY OF ADDITIONAL GROUND/S. THIS IS TO THE EFFECT THAT AS NO MATERIAL SHOWING U NDISCLOSED INCOME RELATING TO THE ASSESSEE WAS FOUND AND SEIZED FROM THE RESIDENCE OF SHRI K.P. AMEER AND HIS WIFE, SMT. SHAKEELA, THE NECESSARY PRE-CONDITION FOR INVOCATIO N OF SECTION 153C IS ABSENT, SO THAT THE ASSESSMENTS AS FRAMED ARE WITHOUT JURISDICTION. THE SAID GROUND/S IS RAISED, CLAIMING IT TO BE PURELY LEGAL WITH ALL THE MATERIAL FACTS B EING ON RECORD, SO THAT IT COULD BE RAISED BEFORE THE TRIBUNAL FOR THE FIRST TIME, AS CLARIFIE D BY THE APEX COURT IN THE CASE OF NTPC V. CIT (1998) 229 ITR 383 (SC). 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. THE ASSESSEES GROUND/S ONLY NEED TO BE STATED TO BE REJECTED. THE SOURCE OF THE SEIZED DOCUMENTS RELATING TO THE ASSESSEE, I.E., WHETHER THE RESIDEN CE OF THE ASSESSEE OR THAT OF THE PERSON SEARCHED, IS IRRELEVANT AS LONG AS INCRIMINATING MA TERIALS ARE SEIZED PURSUANT TO A SEARCH, BEING IN THE CASE OF SH. K. P. AMEER AND HIS WIFE I N THE INSTANT CASE. TWO, THE ASSESSMENT ORDER, EVEN FOR THE FIRST YEAR, I.E., AY 2000-2001, DETAILS EVIDENCES OF THE INCOMES AND INVESTMENTS FOUND DURING SEARCH, WHICH WERE SOUGHT TO BE EXPLAINED BY THE ASSESSEE BY WAY OF A CASH FLOW STATEMENT; THE ASSESSEE NOT HAVI NG MAINTAINED ANY RECORD IN ITS RESPECT. AN AGREEMENT FOR TRANSFER OF HIS 50% SHARE IN THE HOSPITAL BY SHRI SHABEER AHMED TO THE ASSESSEE AT A SUM OF ` 24,00,000/-, AS AGAINST THE DOCUMENTED CONSIDERATIO N OF ` 7,00,000/-, WAS ALSO FOUND. THE ASSESSEES STATEMEN T ON OATH WAS ALSO RECORDED UNDER SECTION 132(4). THESE PRIMARY FACTS ARE NOT DISPUTE D. WHY, ONE MAY ASK, WAS THE CASH FLOW STATEMENT PREPARED AND FILED, IF NOT TO EXPLAI N THE INVESTMENT AND OUTGOINGS I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 3 OTHERWISE NOT REFLECTED OR DISCLOSED. UNDER THE CIR CUMSTANCES, EVEN THE BASIS OF ASSESSEES CLAIM IS NOT CLEAR. IN FACT, EVEN IF THE SE (THE FACTS) WERE IN DISPUTE, IT WOULD AT BEST GIVE RISE TO A MIXED QUESTION OF FACTS AND LAW , SO THAT THE ASSESSEES CLAIM OF IT RAISING A PURE QUESTION OF LAW IS NOT TENABLE. THE DECISIONS IN THE CASE OF ANIL KUMAR BHATIA VS. ASSTT. CIT (REPORTED AT 1 ITR (TRIB.) 484 (DEL.)) AND IN THE CASE OF ANIL P. KHEMANI VS. DY. CIT (I.T.A. NOS. 2855 TO 2860/MUM/2008 DATED 23.2.2010) , RELIED UPON BY THE ASSESSEE, ARE, THEREFORE, CLEARLY NOT APPLIC ABLE IN THE FACTS OF AND CIRCUMSTANCES OF THE PRESENT CASE. 5. WE MAY DEAL WITH THE VARIOUS GROUNDS RA ISED BY THE ASSESSE, I.E., ON MERITS OF THE ADDITIONS SUSTAINED, YEAR-WISE: A.Y. 2000-01 : 6. THE ONLY ADDITION FOR THIS YEAR, I.E., OVER AND ABOVE THE RETURNED INCOME, IS FOR ` 2,65,000/-, AS UNEXPLAINED CASH CREDIT UNDER SECTIO N 68 OF THE ACT. THE ASSESSEE EXPLAINED THE SAME AS THE RETURN BY SH. K.P. AMEER OF THE SAID SUM ADVANCED TO HIM DURING FYS 1997-98 AND 1998-99, SO THAT IT DID NOT REPRESENT A CASH CREDIT IN THE TRUE SENSE OF THE TERM, BUT ONLY THE REALIZATION OF A DE BT/S. HOWEVER, NEITHER THE SAME WAS SUBSTANTIATED WITH ANY EVIDENCE NOR CONFIRMED BY SH . K.P. AMEER. ACCORDINGLY, THE SAME WAS ADDED TO INCOME AND ALSO CONFIRMED IN APPE AL. BEFORE US, THE ASSESSEE DID NOT PRESS THE SAME. THE ASSESSEES APPEAL FOR THIS YEAR IS ACCORDINGLY DISMISSED. A.Y. 2001-2002 : 7. THE ASSESSEE WAS FOUND TO E NOT PROPERLY M AINTAINING BOOKS OF ACCOUNT IN RESPECT OF HIS PROFESSIONAL INCOME AND, FURTHER, MOST OF TH E ASSETS WERE NOT EVEN RECORDED THEREIN. THE ASSESSEE SUBSEQUENTLY INCORPORATED ALL HIS INVE STMENTS AND OUTGOINGS IN HIS ACCOUNTS, AND PREPARED A STATEMENT OF ASSETS AND LIABILITIES FROM 01.04.1999 ONWARDS, AS WELL AS THE CASH FLOW STATEMENT EXPLAINING THEIR ACQUISITION. F OR THE YEAR UNDER REFERENCE, THE I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 4 ACCRETION TO ASSESTS WAS FOUND AT ` 2,13,420/-, INCLUDING PAYMENT OF LIP AT ` 85880/-. DEDUCTING THEREFROM ` 6142/-, I.E., THE SURPLUS AS PER THE ASSESSEES REG ULAR RETURN, THE ASSESSING OFFICER (AO) ADDED THE BALANCE . ` 207278/- AS UNEXPLAINED INVESTMENT/MONEYS UNDER SECTIONS 69/69A/69B OF THE ACT. THOUGH THE AS SESSEE EXPLAINED THE SOURCE AS BY WAY OF GIFTS FROM FRIENDS AND RELATIVES WORKING ABR OAD, HE COULD NOT SUBSTANTIATE THE SAME. IN FACT, THE ASSESSEE HIMSELF ADMITTED TO THE SE GIFTS AS BEING ONLY ACCOMMODATION ENTRIES, I.E., FOR ACCOUNTING PURPOSES, PAID FOR BY THE ASSESSEE IN CASH TO THE FAMILY MEMBERS OF THE DONORS(IN ANSWER TO QUESTION NO.6, A T PAGE 4/PB-II DATED 15/10/2010). WITHOUT DOUBT, THE ASSESSEE HAS NOT BEEN ABLE TO LE AD EVIDENCE WITH REGARD TO THE CAPACITY OF THE CREDITORS OR THE GENUINENESS OF THE TRANSACT IONS. IN FACT, DURING HEARING, THE LD. AR, WHEN QUESTIONED AS TO THE GIFTS AS BEING TOWARD PAY MENT OF LIFE INSURANCE PREMIUM/S OF THE ASSESSEE, CONCEDED TO THE SAME FOR BEING CONSID ERED AS A PART OF THE ASSESSEES INCOME. WE, THEREFORE, CONFIRM THE ADDITIONS. A.Y. 2002-2003 : 8.1 THE ADDITIONS FOR THIS YEAR MAY BE DIVIDED INTO TWO COMPONENTS, I.E., AT ` 2,47,271/- AND ` 4,15,000/-, OR AT AN AGGREGATE OF ` 662271/-. THE FIRST SUM COMPRISES RECEIPT FROM ONE K.K. MUJEEG AND ANOTHER, SH. C.M. SIDDIQUE, AT ` 1,00,000/- EACH, AND AN UNEXPLAINED CREDIT ( ` 47271/-) IN RESPECT FOR LIC HOUSING LOAN (THE SAME BEING CLAIMED AT ` 541121/- BY THE ASSESSEE IN THE CASH FLOW STATEMENT , AS AGAINST AN ACTUAL NET RECEIPT OF ` 493850/-), WHICH WAS AGAIN CONCEDED TO BY THE LD. A .R. DURING THE HEARING. THE SAME IS ACCORDINGLY CONFIRMED. WE DECIDE ACCORDINGLY. 8.2 THE SECOND TRANCHE OF ` 4,15,000/- IS BY WAY OF NRE GIFTS, WHICH ALSO FORM A SUBSTANTIAL PART OF THE ADDITIONS FOR THE SUBSEQUEN T YEARS AND, THUS, LISTED HEREIN-BELOW, SO AS TO BE CONSIDERED TOGETHER AND COMPREHENSIVELY, A S: ( ` .IN LACS) A.Y. GIFT AMOUNT 2002-03 4.15 I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 5 2003-04 7.19 2004-05 9.07 2005-06 4.44 2006-07 7.17 TOTAL 32.02 THE SAID ADDITIONS ARE, THEREFORE, BEING TAKEN UP FOR CONSIDERATION TOGETHER. THE AO STATES THAT NO SATISFACTORY EXPLANATION/EVIDENCE S STOOD FURNISHED, I.E., AS REGARDS THE NATURE OF THE TRANSACTIONS AS WELL AS THE CREDITWOR THINESS OF THE STATED DONORS. FURTHER, THE REMITTANCES DISCLOSED A PATTERN, BEING FROM THE SAM E SET OF PERSONS (I.E. FROM SH.T.ABDUL KHADER, SH.C.P.BEERANKUTTY, SH.C.P.SADIQUE AND SH.C .P. SAJITH) IN A REGULAR MANNER. THE SCHEME OF REMITTANCES, I.E., THEIR SEQUENCE OF RECEIPTS AND WITHDRAWAL, CLEARLY INDICATE THAT THESE WERE ONLY REMITTANCES OF THEIR EARNINGS BY THE CREDITORS FOR THEIR FAMILY MEMBERS IN INDIA. THE ASSESSEE HAD HIMSELF ADMITTED TO THE SAME PER HIS STATEMENT U/S. 132(4) DATED 20.12.2005. THOUGH THE ASSESSEE FILED CONFIRMATIONS THERE-FROM, HE EXPRESSED HIS INABILITY TO GET THE SAME ATTESTED FR OM THE CONSULATE OF THE RESPECTIVE COUNTRIES. ALSO, HE WAS UNABLE TO FURNISH THE DETAI LS OF THEIR EARNINGS AS WELL AS THEIR ASSETS. THE ADDITIONS WERE MADE IN THESE CIRCUMSTAN CES, RELYING ON A HOST OF CASE LAW (REFER TO THE ASSESSMENT ORDER/SEE NOTE 1). IN APPE AL, THE LD. CIT (A) FOUND THE CONFIRMATIONS, WHICH WERE UNDATED, TO BE IN-COMPLET E. IN FACT, THEY DID NOT CONTAIN THE FULL PAYMENT PARTICULARS. AS IT APPEARED; THE CONFI RMATIONS CONTAINING THE SAME TEXT, THE SAME HAD BEEN TYPED BY THE ASSESSEE HIMSELF AFTER O BTAINING THE SIGNATURES OF THE DONORS ON BLANK PAPERS. THE SAME WERE IN ANY CASE IN CONTR ADICTION TO THE ASSESSEES ADMISSION VIDE STATEMENT U/S. 132(4). THE SAME STOOD ACCORDIN GLY CONFIRMED. 8.3 BEFORE US, THE ASSESSEE PRAYED FOR AC CEPTANCE OF ADDITIONAL DOCUMENTS. THE SAME ARE CONFIRMATIONS FROM SOME OF THE CREDITORS, DATED FEBRUARY, MARCH AND NOVEMBER, 2009, TO THE EFFECT THAT THEY HAVE EXTEND ED FINANCIAL ASSISTANCE TO THE ASSESSEE. ALONG WITH ARE THE COPIES OF THE BANK STA TEMENTS AND THEIR PASSPORTS (PAPER- I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 6 BOOK-III DATED 14/3/2011). THE SAME, WE OBSERVE, ST AND FURNISHED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES IN PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT. WE ARE UNABLE TO ACCEDE TO THE ASSESSEES PRAYER FOR A CCEPTANCE OF THE SAME IN EVIDENCE, EXCEPT TO THE EXTENT AS STATED HEREIN-AFTER. THIS I S FOR THE REASON THAT THE ASSESSEE HAS NOT ADVANCED ANY REASON FOR HAVING NOT FURNISHED THE SA ME EARLIER BEFORE THE REVENUE, WHEREAT THE PROCEEDINGS CONTINUED FROM DECEMBER, 20 05 TO MAY, 2008; RATHER, CLEARLY EXPRESSING HIS INABILITY TO MEET THE PERFECTLY JUST IFIED REQUEST OF THE AO OF ADDUCING CONFIRMATIONS, WHICH WERE FROM NRIS, DULY ATTESTED. IN FACT, THE REQUISITIONS BY THE AO REMAIN UNMET EVEN NOW. ALSO, BEING MERE CONFIRMATIO NS, THE SAME IN OUR VIEW DO NOT IN ANY MANNER FURTHER THE ASSESSEES CASE, WHICH WAS F OUND BY THE REVENUE AS DEFICIT PARTICULARLY IN-SO-FAR AS THE CREDITWORTHINESS OF T HE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS IS CONCERNED. [THE LIMITED EXTENT, REF ERRED TO EARLIER, WOULD BE WHERE WE ACTUALLY FIND SO, I.E., IN RELATION TO THE ADVANCES WHICH WE OBSERVE ARE RETURNED BACK TO THE CREDITORS, AND IN FACT ONLY A FEW MONTHS LATER, SO THAT THESE WERE CLEARLY NOT GIFTS. IN FACT, WE OBSERVE THE SAME TO BE SO (RETURNED) IN EA CH CASE, PRIOR TO THE DATE OF SEARCH, THE DETAILS BEING AS UNDER: CREDITOR AMOUNT( `) DATE OF REMARKS RECEIP T REPAYMENT C.PSADIQUE 100000/- 31.01.2005 20.06.2005 PB I (DTD. 19.3.2010/PG.12) C.P.SAJID 100000/- 27.01.2005 10 .06.2005 PB I/PG.21 T.ABDUL QUDIR 75000/- 25.01.2005 31.03 .2005 PB I/PG.29 K.P.AZEEZ 100000/- 12.06.2004 31.03.2005 PB I/PG.37 K.P. AZEEZ 230000/- 01.10.2004 05 .04.2005 PB I/PG.37 PROF.K.P.MAMMOOTY 100000/- 25.12.2004 31.03.2005 PB I/PG.38 M.ABOOTY 300000/- 01.04.2004 22.0 2.2005 PB I/PG.39 I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 7 HOWEVER, A FEW THINGS NEED TO BE CLARIFI ED HERE. FIRST, THE CONFIRMATIONS SPECIFIED ARE NOT IN RESPECT OF `GIFTS, BUT OF `CASH CREDITS , SO THAT THE ADMISSION (BY THE ASSESSEE) SHOULD NOT BE CONSIDERED AS QUA THE RESPECTIVE ADDITIONS. SECOND, THOUGH THE ASSES SEE HAS NOT SPECIFIED ANY REASON FOR HAVING NOT ADDUCED THE SAME EARLIER, WE CONSIDER THAT ASSESSEE HAS MADE A PRIMA FACIE CASE FOR THE DELETION OF THESE SUMS, WHERE ADDED, ON THE BASIS OF HAVING BEEN RETURNED SHORTLY AFTER RECEIPT AND, MOST IMPORTANTLY, PRIOR TO THE DATE OF SEARCH, SO THAT THESE COULD NOT BE CONSIDERED AT PAR WITH THE OTHER CASES. THIRDLY, IT IS NOT CLEAR FROM THE CASH FLOW STATEMENT IF THE AMOUN TS STATED TO HAVE BEEN REPAID HAVE BEEN SO REFLECTED IN THE CASH FLOW STATEMENTS (PB-I I DATED 15.10.2010/PGS.41-43). NEEDLESS TO ADD, THE SAME WOULD STAND TO BE DELETED ONLY IF, UPON VERIFICATION, THE INFORMATION NOW SUBMITTED IS FOUND TRUE AND CORRECT AND CONSISTENT WITH THE MATERIALS AND INFORMATION ON RECORD, BY THE AO PER A SPEAKING ORD ER. FINALLY, WE MAKE IT CLEAR THAT ADMISSION OF EVIDENCE WOULD MEAN JUST THAT, AND NOT HING MORE, AND THAT WE ARE NOT EXPRESSING ANY OPINION ON MERITS, WHICH WOULD ONLY BE BY THE AO AFTER EXAMINING THE ASSESSES CASE ON THE PARAMETERS OF SEC. 68 ON THE BASIS OF THE EXPLANATION FURNISHED, WHICH WOULD NOW STAND TO INCLUDE THE SAID ADMITTED EVIDENCE, AND ANY FURTHER THAT THE ASSSESSEE MAY BE CALLED UPON TO BY THE AO IN SUBSTA NTIATION OF OR IN ADDITION TO THAT HAVING BEEN ADDUCED NOW. 8.4 NEXT WE CONSIDER THE ASSESSEES CASE ON MER ITS. THE REVENUES CASE, WE OBSERVE, IS LARGELY UNCONTROVERTED. THE ASSESSEE ON BEING QUEST IONED IN THIS RESPECT ANSWERS THUS: Q: FROM YOUR BANK A/CS IT IS NOTICED THAT YOUR BROTHE R C.P.BEERANKUTTY AND NEPHEWS SADDIQUE C.P., SAJJID C.P. HAS ADVANCED AMOUNTS BY NRE CHEQUES TO YOU. WHAT IS THE NATURE OF THESE TRANSACTIONS ? A: THESE AMOUNTS ARE GIFTS BY THEM TO ME FOR ACCOUNT ING PURPOSE. BUT, ACTUALLY THESE AMOUNTS HAVE BEEN SENT THROUGH MY BANK ACCOUNT BY M Y BROTHER AND NEPHEWS. MAJOR PORTION OF THE AMOUNTS HAVE BEEN WITHDRAWN BY ME AN D GIVEN TO THEM OR THEIR FAMILY MEMBERS IN CASH SUBSEQUENTLY. I CANNOT ACTUALLY REM EMBER THE EXACT AMOUNTS REPAID. I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 8 THE SAME IS CLEAR, AND LEAVES NO MANNER OF ANY DOU BT AS REGARDS THE GENUINENESS OF THE SO CALLED `GIFTS. THE SAID STATEMENT HAS NO T BEEN RETRACTED BY THE ASSESSEE, AND WHICH AGAIN COULD ONLY BE BY EXHIBITING ANY MISTAKE N BELIEF OF FACT/S AS ATTENDING THE SAME. THE ASSESSEE STATES THAT HE GAVE THE STATEMEN T AS HE WAS MADE TO BELIEVE BY THE REVENUE AUTHORITIES THAT IT WOULD OTHERWISE ATTRACT PENALTY UNDER FERA/FEMA. IS THEREFORE THE ASSESSEE CONFESSING TO HAVE SPOKEN A LIE IN THE FACE OF AN EMINENT THREAT OF BEING VISITED WITH PENALTY ACTION UNDER THE SAID LA W ? THE OFFENCE, IF ANY, UNDER FERA/FEMA WOULD BE IN OPERATING A NON RESIDENT EXTE RNAL (NRE ACCOUNT) EVEN AS THE ASSESSEE BECAME RESIDENT OF INDIA THERE-UNDER AFTER COMING BACK TO INDIA WITH THE INTENTION OF SETTLING HERE. FURTHER, EVEN IF IGNORA NT OF THE SAME, WHICH IS UNUSUAL AS THE BANKS NORMALLY GUIDE THEIR CUSTOMERS IN THE MATTER, THE SAME (OFFENCE) WOULD RELATE TO THE ACCEPTANCE OF THE REMITTANCES, AND NOT WHETHER THESE WERE RECEIVED FOR SELF OR FOR AND ON BEHALF OF THE FAMILY MEMBERS OF THE CREDITORS, W HICH IS THE BONE OF CONTENTION BETWEEN THE ASSESSEE AND THE REVENUE. IT IS MORE TH AN CLEAR THAT THE ASSESSEE UNDERSTOOD THE FULL IMPORT AND PURPORT OF THE QUESTION POSED T O HIM, I.E., THE TRUTH AS REGARDS THE NATURE OF THE TRANSACTIONS OF RECEIPT OF MONEY FROM HIS BROTHER AND NEPHEWS, STATED TO BE WORKING ABROAD. FURTHER, HIS ANSWER CORROBORATES WI TH THE MATERIAL ON RECORD. THE TRANSACTIONS DID NOT REPRESENT SOLITARY OR ISOLATED TRANSACTIONS, BUT SYSTEMATIC AND REGULAR TRANSACTIONS. FOR EXAMPLE, IN THE CASE OF SH.C.P. B EERANKUTTY, A TOTAL OF ` 16.57 LACS HAS BEEN REMITTED OVER A 6 YEAR PERIOD (FROM OCTOBER, 2 000 TO JULY, 2006) IN 37 SEPARATE PAYMENTS. SIMILARLY IS THE CASE FOR THE OTHER TWO C REDITORS, WHERE THE TRANSACTIONS ARE SPREAD OVER FEW YEARS, WITH AN AVERAGE REMITTANCE O F ` 0.32 LACS (14 TRANSACTIONS) AND ` 0.58 LACS (9 TRANSACTIONS). IN FACT, IN THE CASE OF LATTER TWO, THE REMITTANCES STARTED SOON AFTER THEIR GOING ABROAD, AS APPARENT FROM THE STAT EMENT ON THE LENGTH OF THEIR SERVICE ABROAD IN THEIR CONFIRMATION OF FEBRUARY, 2009. FURTHER ON, WE CONSIDER EACH OF THE QUESTIONS POSE D AND INFORMATION CALLED FOR BY THE AO FROM THE ASSESSEE, AND WHICH HE DID NOT ADDU CE, AS RELEVANT, VIZ. THEIR CAPACITY, THEIR EARNINGS, ASSETS ACCUMULATED ABROAD AND IN IN DIA, ETC. IN FACT, WE THINK THAT THE ASSESSEE COULD EASILY ESTABLISH THE TRUTH OF HIS CA SE WITH THE STATEMENT OF THEIR TOTAL EARNINGS, WITH BREAK-UP OF THAT SENT TO INDIA (FOR THEIR FAMILY) AND THAT RETAINED ABROAD. I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 9 ONLY THE BALANCE WOULD BE LEFT FOR BEING GIFTED TO THE ASSESSEE. UNDER THE CIRCUMSTANCES, WE CONSIDER THAT ASSESSEES CASE AS TOTALLY UN-SUBS TANTIATED AND WITHOUT MERIT. RELIANCE FOR THE PURPOSE, APART FROM THE CASE LAW RELIED UPO N BY THE REVENUE, IS ALSO PLACED ON THE DECISION IN THE CASE OF V . KUNHAMBU & SONS V. CIT (1996) 219 ITR 235 (KER.). WE ARE UNABLE TO SEE ANY SCOPE FOR THE APPLICABILITY OF TH E DECISION IN CASE OF SAURASHTRA KUTCH STOCK EXCHANGE LTD. V. CIT (2007) 305 ITR (SC) RELIED UPON BY THE ASSESSEE IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, EVEN AS THE SAID DECISION, THOUGH PLACED ON RECORD BY IT, WAS NOT SPECIFICALLY ARGUED DURING HEARING. FINALLY, BEFORE PARTING WITH THIS ISSUE, WE FIND THAT THE ASSESSEE HAS PREPARED THE CASH FLO W STATEMENT FILED AT PAGE NOS. 41 TO 43 (PB-II) AND PG. 7 (PB-III) CITED OF SOME ARITHMETIC AL MISTAKES. THE SAME ARE ANNEXED AS A PART OF THIS ORDER (ANNEXURE A1 THRO A4). IF, AND TO THE EXTENT, THE AVERMENTS AS TO THE ARITHMETIC MISTAKE IS CORRECT, THE AO SHALL, ON VER IFICATION, ALLOW APPROPRIATE RELIEF TO THE ASSESSEE PER A SPEAKING ORDER. WE DECIDE ACCORDINGL Y. 9. THE NEXT ISSUE IS IN RESPECT OF ADDITION ON ACC OUNT OF UNEXPLAINED CASH CREDITS, WHICH ARE AS UNDER: A.Y. AMOUNT ( ` ) 2004-05 3,25,000/- 2005-06 7,80,000/- THOUGH WE HAVE TABULATED THE CASH LOANS A S RECEIVED FOR EACH YEAR, I.E., IN TOTALITY, WITHOUT DOUBT, THE EXAMINATION OF THE ISSUE ON MERI TS SHALL HAVE TO BE DONE INDIVIDUALLY FOR EACH CREDIT. THE FACTS AND, CONSEQUENTLY, THE R ESPECTIVE CASES OF BOTH THE PARTIES IS THE SAME IN RESPECT OF THE TWO CREDITS COMPRISING THE I MPUGNED SUM OF ` 3.25 LACS FOR AY 2004-2005. THE ASSESSEE OPENED A BANK ACCOUNT WITH VIJAYA BANK, EDAKAD BRANCH, BY DEPOSITING ` 5,00,000/- IN CASH. THE SAME WAS SUBSEQUENTLY WITHD RAWN FOR MAKING PAYMENT FOR THE UN-ACCOUNTED PART OF THE PURCHASE C ONSIDERATION MADE DURING THE PREVIOUS YEAR RELEVANT TO AY 2004-05. THE ASSESSEE EXPLAINED THE CREDITS AS SOURCED FROM TWO INDIVIDUALS, BEING FROM SH.C.P.BEERANKUTTY ( ` 2,00,000/-) AND SH. C.M. SIDDIQUE ( ` 1,25,000/-). THE ASSESSEE COULD NOT FURNISH ANY EVI DENCE TOWARD RECEIPT OF ALL THESE I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 10 SUMS EXCEPT THE CASH ENTRIES IN HIS BOOKS OF ACCOUN TS. CLEARLY, THE SAME WAS NOT CONSIDERED AS ADEQUATE TO DISCHARGE THE ONUS ON THE ASSESSEE U/S. 68, WHICH IS WITH REGARD TO THE IDENTITY AND THE CAPACITY OF THE CREDITOR, A ND THE GENUINENESS OF THE TRANSACTION. LIKEWISE FOR THE RECEIPT OF ` 1,25,000/-, WHICH WAS STATED TO BE A REPAYMENT OF A N AMOUNT ADVANCED EARLIER. THE ASSESSEE WAS NOT MAINTAINING ANY PROPER BOOKS OF ACCOUNTS, WHICH WERE WRITTEN ONLY AFTER DATE OF SEARCH, AND THE CAS H CREDITS ENTERED THEREIN ONLY TO EXPLAIN THE CASH DEPOSIT OF ` 5,00,000/- IN THE BANK ACCOUNT. THE DEPOSIT WAS NOT OBVIOUSLY MEANT TO BE DISCLOSED, AND THE A.O., THUS , BROUGHT THE SAME TO TAX. THE ADDITION STOOD CONFIRMED ON THE SAME BASIS. 10.1 THE PRIMARY FACTS STATED ABOVE ARE NOT IN DISP UTE. EVEN AS MUCH AS MERE CONFIRMATIONS HAVE NOT BEEN FILED IN RESPECT OF THE IMPUGNED TRANSACTIONS, WHICH ARE IN CASH, WITH THE MONEYS BEING DEPOSITED IN A BANK ACC OUNT WHICH WAS NOT DISCLOSED TO THE REVENUE. WE FIND NO MERIT IN THE ASSESSEES CASE. W E DECIDE ACCORDINGLY. 10.2 COMING TO THE NEXT YEAR (AY 2005-06), THE ASSE SSEES CASE IS EQUALLY UNMERITED. THE ASSESSEE PURCHASED 21 CENTS OF LAND NEAR DHANLA KSHMI HOSPITAL DURING THE YEAR AT A DOCUMENTED CONSIDERATION OF ` 15,00,000/-, AS AGAINST THE ACTUAL COST, INCLUDING REGISTRATION CHARGES PAID ON 29.03.2005, OF ` 26,75,000/-. WHILE ` 12,00,000/- OF THE STATED CONSIDERATION WAS PAID BY A CHEQUE DRAWN ON PUNJAB NATIONAL BANK (PNB), THE BALANCE COST WAS INCURRED/PAID IN CASH, WHICH WAS WITHDRAWN AT ` 14,00,000/- FROM SAVINGS BANK ACCOUNT NO.6034 WITH VIJAYA BANK, EDAKKAD BRANCH, A S ` 4,00,000/- ON 22.02.2005 AND ` 10,00,000/- ON 29.03.2005 ITSELF. THE BALANCE IN TH E SAVING BANK ACCOUNT WAS ITSELF GENERATED THROUGH CASH DEPOSITS, SOME OF WHICH WERE IN THE EARLIER YEAR; THE ACCOUNT REFLECTING AN OPENING BALANCE OF ` 5,52,000/-. THE SAME WERE EXPLAINED BY THE ASSESSEE AS CASH LOANS FROM RELATIVES, WHICH WORKED TO ` 7.80 LACS FOR THE YEAR. THE ASSESSEE, HOWEVER, COULD NOT SUBSTANTIATE HIS CLAIM OF THE CA SH LOANS BEING GENUINE WITH ANY EVIDENCE; THE ONLY EVIDENCE ADVANCED BY THE ASSESSE E IN THIS REGARD BEING CASH ENTRIES IN HIS BOOKS OF ACCOUNTS. IN FACT, EVEN THE BOOKS OF A CCOUNT WERE WRITTEN ONLY AFTER THE SEARCH. NOT TO SPEAK OF ANY CREDIBLE EVIDENCE QUA THE GENUINENESS OF THE LOANS, INCLUDING I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 11 THE CAPACITY OF THE SO CALLED CREDITORS, WHO WERE N OT ASSESSES, EVEN CONFIRMATIONS THEREFROM COULD NOT BE ADDUCED; THE RELEVANT BANK A CCOUNT BEING ITSELF UNDISCLOSED. THOUGH THE CONFIRMATIONS WERE FILED BEFORE THE LD. CIT (A), HE DID NOT FIND THE SAME CREDIBLE, STATING OF THEM AS NOT CONTAINING ADEQUAT E AND RELEVANT DETAILS AND, AS IT APPEARED, WERE FABRICATED IN-AS-MUCH AS ANY OF THE SIGNATURES OF THE CREDITORS WERE IN ALL CASES AFFIXED MUCH BELOW THE TEXT. HE, ACCORDINGLY CONFIRMED THE ADDITION. 10.3 THE ASSESSEE BEFORE US HAS NOT MADE HIS CASE IN ANY MANNER, THOUGH IT CLAIMS LACK OF PROPER OPPORTUNITY IN ITS GROUNDS OF APPEAL . THE QUESTION IS WHETHER THE LOANS COULD BE SAID TO BE PROVED, AS THE ASSESSEE CLAIMS, OR NOT, AS THE REVENUE CONTENDS. THE CASH ENTRIES REFLECTING RECEIPT OF MONEY IN THE ASS ESSEES BOOKS OF ACCOUNT, WHICH HE REGARDS AS CONSTITUTING AN EVIDENCE, IS, AS PER THE TRITE LAW, ITSELF AN EVIDENCE AGAINST THE ASSESSSEE, WHO, FIRSTLY, EXPRESSED HIS INABILITY IN FURNISHING ANY FURTHER EVIDENCE. WHY, ONE MAY ASK, IF THE ENTRIES WERE IN REPRESENT GENUI NE TRANSACTIONS? THE AMOUNTS WERE DEPOSITED IN AN UNDISCLOSED BANK ACCOUNT, AND UTILI ZED FOR PAYING THE UNDISCLOSED PART OF THE PURCHASE CONSIDERATION. COULD THE SAME BY ANY S TRETCH OF IMAGINATION BE CONSIDERED AS ACCOUNTED FOR LOANS? WHAT IS THE SOURCE OF FUNDS WITH THE CREDITOR/S? WHAT IS THE PROOF OF THE CREDITORS BEING RESIDENTS ABROAD? HOW WERE T HE FUNDS ARRANGED FROM ABROAD; ` 4,00,000/- HAVING BEEN DEPOSITED ON A SINGLE DAY, I .E., 23.09.2004. THE AUTHORITIES BELOW HAVE RIGHTLY REJECTED WHATEVER LITTLE HAS BEE N FURNISHED IN THE MATTER BY THE ASSESSEE, AND WHICH, IN ANY CASE, CANNOT BY ANY MEA NS BE CONSIDERED AS PROVING THE IMPUGNED CREDITS SATISFACTORILY, I.E., IN TERMS OF MANDATE OF SEC. 68. THE ADDITION FOR BOTH THE YEARS, I.E., AY 2004-2005 AND AY 2005-2006 ARE CONFIRMED. WE DECIDE ACCORDINGLY. 11. THE THIRD ISSUE IS THE ADDITION OF ` 9,00,000/- FOR AY 2006-2007, TOWARD THE UNDISCLOSED PURCHASE CONSIDERATION OF 50% SHARE IN CRESCENT HOSPITAL PAID TO SH. SHABEER AHMED DURING THE YEAR. THE HOSPITAL, WHICH DEVOLVED ON SHRI SHABEER AHMED ON FAMILY PARTITION, WAS PURCHASED TO THE EXTENT OF 50% BY THE ASSESSEE VIDE A REGISTERED AGREEMENT (IN JULY 2005) FOR ` 7,00,000/-. THE SEARCH AT THE ASSESSEES RESIDENCE, HOWEVER, REVEALED AN AGREEMENT DATED 15.07.2005 SPE CIFYING THE CONSIDERATION AT I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 12 ` 24,00,000/- (ANNEXURE-A TO THE ASSESSMENT ORDER), A ND WHICH WAS SEIZED. BOTH THE ASSESSEE AS WELL AS SH. SHABEER AHMED CONFIRMED AGR EEMENT DATED 15.07.2005 VIDE THEIR STATEMENTS RECORDED DURING SEARCH (REFER PAGE 4 OF THE ASSESSMENT ORDER). THE ONLY DIFFERENCE WAS THAT WHILE THE ASSESSEE STATED TO HA VE PAID ` 20,00,000/- (BY 20/12/2005), WITH THE BALANCE ` 4,00,000/- TO BE PAID WITHIN ONE MONTH (FROM 20.12. 2005), THE VENDOR, SH.SHABEER AHMED, STATED TO HAVE RECEIVED THE ENTIR E CONSIDERATION OF ` 24,00,000/-, I.E., ` 7,00,000/- - THE DOCUMENTED CONSIDERATION - BY CHEQ UE, AND THE BALANCE ` 17,00,000/- IN CASH (BEFORE THE DATE OF SEARCH). THE STATEMENT OF ASSETS AND LIABILITIES (AS WELL AS THE CASH FLOW STATEMENT) SUBSEQUENTLY FILED BY THE ASSESSEE, HOWEVER, REFLECTED ` 15,00,000/- AS PAID BY THE END OF RELEVANT YEAR, AND THE BALANCE ` 9,00,000/- AS PAYABLE THEREAT (AS ON 31.03.2006). SUBSEQUENTLY, AFFIDAVITS FROM THE ASSE SSEE AND SH.SHABEER AHMED WERE FILED, AVERRING THAT THE BALANCE UNPAID CONSIDERATI ON OF ` 9,00,000/- WAS CANCELLED, SO THAT THE ACTUAL SALE CONSIDERATION STOOD REDUCED TO ` 15,00,000/- BY WAY OF A FAMILY SETTLEMENT. THE AO CONSIDERED THE `AFFIDAVITS, IN VIEW AND LIG HT OF THE SUBSTANTIVE EVIDENCE BY WAY OF AGREEMENT DATED 15.07.2005, WHICH WAS WITNESSED BY TWO PARTIES, AND THE SWORN STATEMENT OF BOTH THE PURCHASER AND THE VENDOR (SEL LER), AS ONLY AN AFTER THOUGHT WITH NO EVIDENTIARY VALUE. HE ACCORDINGLY REJECTED THE SAME AND DEEMED ` 9,00,000/- AS THE ASSESSEES INCOME UNDER SECTION 69 OF THE ACT. 12. BEFORE US, THE ASSESSEE RELIED ON THE ORDER B Y THE TRIBUNAL IN THE CASE OF SHRI SHABIR AHMED IN I.T.A. NO. 142/COCH/2009 DATED 24.8 .2009/PB-II (PGS. 17 TO 21) CLAIMING THAT THE SALE CONSIDERATION IN THE CASE OF SHRI SHABIR AHMED HAS BEEN ACCEPTED BY THE TRIBUNAL AT ` 15 LAKHS, WHICH IS THE VALUE AT WHICH THE PROPERTY WAS AGREED TO BE SOLD, AND STAMP DUTY PAID. AS SUCH, THE PURCHASE C ONSISDERATION IN THE CASE OF THE ASSESSEE STANDS ALSO CONFIRMED AT ` 15 LAKHS BY THE TRIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, CONTESTED THE SA ME, CONTENDING THAT THERE IS NO FINDING BY THE TRIBUNAL, AND THE CONSIDERATION UNDER TRANSF ER WAS NOT THE SUBJECT MATTER IN ISSUE OR DECIDED BY THE TRIBUNAL IN THE CASE OF SHRI SHABIR AHMED. I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 13 13.1 WE HAVE HEARD THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. WE SHALL FIRST ADVERT TO THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI SHABIR AHMED FOR A.Y. 2006-07 REFERRED TO BY THE ASSESSEE . THIS IS FOR THE SIMP LE REASON THAT THE ISSUE CONCERNS THE MATTER OF FACT, I.E., THE CONSIDERATION FOR THE PUR CHASE (OR SALE) OF 50% SHARE IN THE HOSPITAL, SO THAT IF AND TO THE EXTENT THE TRIBUNAL HAS DECIDED THIS, THE SAME WOULD BE CONSIDERED AS FINAL. THE ONLY EXCEPTION TO THE GEN ERAL STATEMENT WOULD BE WHERE THE SOME RELEVANT EVIDENCE HAD NOT BEEN BROUGHT ON RECO RD AND, THEREFORE, NOT CONSIDERED BY THE TRIBUNAL WHILE IT IS IN THE PRESENT CASE. 13.2 THE RELEVANT FINDINGS OF THE TRIBUNAL AR E AS UNDER: (PGS. 3 TO 5). `4. WE HAVE CONSIDERED THE SUBMISSIONS CAREFULLY. T HE CONCEPT OF INDEXED COST OF ACQUISITION IS UNIQUE TO TAXATION OF LONG TERM CAPI TAL GAINS. INDEXED COST OF ACQUISITION MEANS AN AMOUNT WHICH BEARS TO COST OF ACQUISITION THE SAME PROPORTION AS COST INFLATION INDEX FOR THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSES OR FOR THE YEAR BEGINNING ON THE FIRST DAY OF APRIL,19 81,WHICHEVER IS LATER. SIMILARLY, INDEXED COST OF ANY IMPROVEMENT MEANS AN AMOUNT W HICH BEARS TO THE COST OF IMPROVEMENT THE SAME PROPORTION AS COST INFLATION I NDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION IN DEX FOR THE YEAR IN WHICH THE IMPROVEMENT TO THE ASSET TOOK PLACE. COST INFLATIO N INDEX FOR ANY YEAR MEANS SUCH INDEX AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO 75% OF AVERAGE RISE IN THE CONSUMER PRICE INDEX FOR URBAN NON-MANUAL EMPLOYEES FOR THAT YEAR, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN THIS BEHALF. TH IS CONCEPT ALLOWS A HOLDER OF THE ASSET TO COMPUTE A COST OF ACQUISITION/IMPROVEMENT WHICH IS SUBSTANTIALLY HIGHER THAN WHAT HAS BEEN INCURRED BY HIM. THIS CHANGE HAS BEEN MADE EFFECTIVE FROM THE ASSESSMENT YEAR 1993-94. IN EFFECT WHAT HAPPENS NOW IS THAT WH ILE COMPUTING THE TAXABLE CAPITAL GAINS, THE INDEXED COST OF ACQUISITION AND THE INDE XED COST OF IMPROVEMENT AS WELL AS THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER ARE REDUCED FROM THE FULL VALUE OF THE CONSIDERATION RE CEIVED BY THE PERSON TRANSFERRING THE ASSET. THE INDEXED COST OF ACQUISITION IS ALWAY S HIGHER THAN THE ACTUAL COST INCURRED BY THE ASSESSES AND AS SUCH THE PROVISION OF COMPUTING THE CAPITAL GAINS BY SUBSTITUTING THE ACTUAL COST OF ACQUISITION WITH TH E INDEXED COST OF ACQUISITION WITH THE INDEXED COST OF ACQUISITION RESULTS IN A LOWER GAIN S AND CORRESPONDINGLY A LOWER TAX OUTGO. HENCE IT IS PROVISION WHICH IS BENEFICIAL TO THE ASSESSES. THE COST OF ACQUISITION AND THE COST OF IMPROVEMENT TO THE ASSET ARE TO BE INFLATED TO ARRIVE AT THE INDEXED COST OF ACQUISITION AND INDEXED COST OF IMPROVEMENT S TO THE ASSESSES AND THEN DEDUCT THESE AMOUNTS FROM THE SALE CONSIDERATION TO ARRIVE AT THE LONG TERM CAPITAL GAINS. THE CUT OFF DATE FOR ASSETS HELD FOR THE PURPOSE OF INDEXATION IS TAKEN AS 1.4.1981. TO EXPLAIN FURTHER, FOR THE ASSET ACQUIRED BEFORE THIS DATE, ITS VALUE AS ON 1.4.1981 WILL BE I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 14 TAKEN FOR INDEXATION. THE COST OF IMPROVEMENT AFTER THIS DATE ONLY WILL BE TAKEN INTO ACCOUNT FOR INDEXATION. THAT BEING THE POSITION, TH E SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE IS QUITE JUSTIFIED AS IT IS CLEARLY ES TABLISHED THAT THE GROUND FLOOR OF THE BUILDING WAS CONSTRUCTED IN 1978 BY HIS FATHER DR. ABDUL AZIZ AND WAS USED FOR CONDUCTING HIS PROFESSION OF MEDICAL PRACTICE. IT W AS FURTHER CLAIMED THAT THE FIRST FLOOR OF THE BUILDING WAS CONSTRUCTED IN 1991-92, I .E., BEFORE THE DEATH OF ASSESSEES FATHER ON 17.10.1992. AFTER THE DEMISE OF THE ASSES SEES FATHER, THE ASSESSEE ALONG WITH HIS MOTHER AND 2 SISTERS FORMED A PARTNERSHIP DEED IN THE NAME STYLE OF CRESCENT HOSPITAL SERVICES AND RUN THE HOSPITAL TILL 31.3.20 02. THE DEPRECIATION FOR THE BUILDING WAS NOT CLAIMED BY THE FIRM. THE MARKET VA LUE OF 10 CENTS OF LAND WITH THE FIRST FLOOR OF THE BUILDING AS ON 1.4.1981 ADOPTED BY THE ASSESSEE AT RS. 4 LAKHS AND THE VALUE OF CONSTRUCTION CLAIMED IN 1991-92 AT RS. 7,50,000/- WERE FOUND ACCEPTABLE AS THE ASSESSEES FATHER DEATH WAS ONLY ON 17.10.19 92. THEREFORE, WE FIND THAT THE ASSESSING OFFICERS CONTENTION THAT THE ASSESSEE HA S NOT PRODUCED ANY EVIDENCE TO PROVE THAT THE COST OF CONSTRUCTION DONE BY THE FAT HER OF THE ASSESSEE IS WITHOUT ANY MERITS. UNDER THE ABOVE CIRCUMSTANCES, WE AGREE WIT H THE CONTENTION OF THE ID. COUNSEL FOR THE ASSESSEE AND PARTICULARLY WHEN THE ASSESSING OFFICER HAS ACCEPTED THE COST OF CONSTRUCTION SUBSEQUENTLY DONE IN 2001-02 D ECLARED BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND ALLOW THE CLAIM OF ASSESSEE . IT IS PATENTLY CLEAR THAT THOUGH THE TRIBUNAL HAS SET ASIDE THE ASSESSMENT OF THE CAPITAL GAINS COMPUTED BY ADOPTING THE SALE CONSIDE RATION AT ` 24 LAKHS, AS AGAINST ` 15 LAKHS TAKEN BY THE ASSESSEE-SELLER, THE ISSUE IN TH AT CASE, AND WHICH THEREFORE STANDS DECIDED BY THE TRIBUNAL, WAS TOTALLY DIFFERENT, I.E ., THE COST OF LAND AND BUILDING (IN THE HANDS OF THE SELLER) TO BE SET OFF IN THE COMPUTATI ON OF CAPITAL GAINS, I.E., AT ` 25.91 LAKHS WORKED OUT BY THE ASSESSEE-SELLER OR ` 7 LAKHS ESTIMATED BY THE AO. THE TRIBUNAL EXPLAINED THE CONCEPT OF COST INFLATION INDEX, WHIC H WOULD OPERATE TO INFLATE THE COST TO BE SET OFF TO A FIGURE SUBSTANTIALLY HIGHER THAN TH E ACTUAL COST INCURRED BY THE TRANSFER, SO THAT THE COST OF THE CAPITAL ASSET HAD TO BE TAKEN AT ` 25.91 LAKHS, I.E., AS WORKED OUT BY THE ASSESSEE. THE SALE CONSIDERATION WAS NEVER AN ISSU E BEFORE THE TRIBUNAL AND, CONSEQUENTLY, NOT DECIDED BY THE TRIBUNAL. THIS AGA IN IS ONLY UNDERSTANDABLE AS EVEN ADOPTING THE SALE CONSIDERATION AT ` 24 LAKH WOULD LEAD TO NEGATIVE CAPITAL GAIN, I.E., A LONG TERM CAPITAL LOSS AT ` 1.91 LAKHS, AND, THUS, WAS OF NO CONSEQUENCE, AS TH E SALE/TRANSFER DID NOT ITSELF GIVE RISE TO ANY POSIT IVE INCOME (GAIN) ASSESSABLE UNDER THE ACT. THE ISSUE IS, THEREFORE, OPEN AND CANNOT BE S AID TO HAVE BEEN DECIDED OR ADJUDICATED I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 15 UPON BY THE TRIBUNAL. IN FACT, IF AT ALL, IN-AS-MU CH AS THE TRIBUNAL HAS CONFIRMED THE COST, ADJUSTED FOR 75% OF THE CONSUMER PRICE INFLATION (F OR URBAN NON-MANUAL EMPLOYEES - AND WHICH IS WHAT THE COST OF INFLATION INDEX ESSENTIAL LY IS), AT ` 25.91 LAKHS, THE SAME STRENGTHENS AND REINFORCES THE CASE FOR ` 24 LAKHS AS REPRESENTING THE FAIR VALUE OF THE PROPERTY, AS IT WOULD MEAN THAT THE PRICE OF THE PR OPERTY HAS BEEN PEGGED AT THE RATE WHICH BARELY APPROXIMATES THE COST INCURRED (INCLUD ING ` 6 LAKHS FOR RENOVATION) WHEN ADJUSTED SUBSTANTIALLY FOR THE INFLATION ATTENDING THE PERIOD OF ITS HOLDING BY THE SELLER- TRANSFEROR. 13.3 COMING TO THE FACTS OF THE CASE, THE AGR EEMENT DATED 15.7.2005, STATING THE SALE CONSIDERATION AT ` 24 LAKHS, HAS NOT BEEN RESILED FROM. IN FACT, BOTH THE PARTIES CONFIRMED IT TO BE IN FORCE AND OPERATIVE BETWEEN THEM, AS LA TE AS 23.12.2005, I..E, WHEN SHRI SHABIR AHMED WAS EXAMINED ON OATH U/S. 132(4) OF THE ACT. AS AFORENOTED, THE ONLY DIFFERENCE IS THAT WHILE THE ASSESSEE STATES OF HAVING PAID ON LY ` 20 LAKHS BY 20.12.2005 (THE DATE OF HIS EXAMINATION U/S. 132(4)), THE VENDOR STATES OF HAVING ALREADY RECEIVED THE FULL CONSIDERATION OF ` 24 LAKHS. THERE IS NO WHISPER OF ANY FAMILY DISPUT E IN THE STATEMENT OF EITHER, NOR ANY EVIDENCE TO THAT EFFECT DISCOVERED DURING SEARCH, WHICH COULD NOT BE IF IT WERE TO BE THE CASE. IN FACT, THE PROPERTY STANDS A LREADY REGISTERED IN THE ASSESSEES NAME IN JULY, 2005, SO THAT THE PRESUMPTION, UNLESS THER E IS MATERIAL TO EVIDENCE TO THE CONTRARY, WOULD BE THAT THE ENTIRE CONSIDERATION AS AGREED, S TANDS PASSED BY THAT DATE. EVEN OTHERWISE, THE AMOUNT STATED BY THE ASSESSEE DOES N OT MATCH OR AGREE WITH THE AMOUNT SUBSEQUENTLY STATED TO BE PAYABLE, AND IN DISPUTE, I.E., ` 9 LAKHS. THE DOCUMENTED CONSIDERATION IS ` 7 LAKHS, AND NOT ` 15 LAKHS, WHICH THE ASSESSEE NOW STATES TO BE THE REGISTERED CONSIDERATION, AND ON WHICH THE STAMP DU TY STANDS PAID. IT IS, THEREFORE, CLEAR THAT THE FULL VALUE OF THE CONSIDERATION WAS NEVER INTENDED TO BE DISCLOSED, WITH THE ONLY BASIS FOR THE CONSIDERATION BEING AT ` 15 LAKHS BEING OF IT THE SUM ADMITTEDLY PAID BY THE ASSESSEE UP TO THE DATE OF REGISTRATION; HE HAVING ADMITTEDLY PAID ` 5 LAKHS THEREAFTER (UP TO THE DATE OF SEARCH). THE ONLY MATTER OF DISPUTE , IF AT ALL, COULD BE WHETHER ` 4 LAKHS (OF THE TOTAL VALUE OF ` 24 LAKHS) STOOD PAID BY THE DATE OF SEARCH OR NOT. EVEN QUA THIS, THE ASSESSEE HAS LED NO EVIDENCE. WHY WOULD THE TRANSFE ROR STATE OF HAVING RECEIVED THE I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 16 ENTIRE CONSIDERATION WHEN HE HAS NOT RECEIVED PART OF THE ADMITTED SALE CONSIDERATION. BOTH THE ASSESSEE-TRANSFEREE AND THE SELLER-TRANSFE ROR ARE NOT MAINTAINING REGULAR ACCOUNTS, WITH IT BEING APPARENT THAT THE CONSIDERA TION OVER AND ABOVE ` 7 LAKHS WAS NEVER INTENDED TO BE DISCLOSED, SO THAT IT, EVEN OTHERWIS E, WOULD NOT FORM PART OF THE REGULAR ACCOUNTS OR DISCLSOSED WEALTH. THE ASSESSEE CANNOT BE CONSIDERED AS HAVING DISCHARGED THE ONUS TO ESTABLISH ITS CLAIMS, WHICH ARE CONTRAR Y TO THE MATERIAL ON RECORD, AS WELL AS TO THE DEPOSITIONS BY HIMSELF OR THE SELLER, IN ANY MA NNER. UNDER THE CIRCUMSTANCES, AND ON APPRECIATION OF THE ENTIRETY OF THE FACTS, AND THE MATERIAL ON RECORD, WE FIND NO MERIT WHATSOEVER IN THE ASSESSEES CLAIM/S AND ENDORSE TH E REVNEUES CASE OF THE SAID CONSIDERATION BEING AT ` 24 LAKHS AND THE REVISED STAND BEING ONLY A BALD AS SERTION ASSUMED BY THE ASSESSEE IN COLLUSION WITH THE SELLE R, A CLOSE RELATIVE. IN FACT, THE SAID CLAIM GIVES RISE TO A SERIES OF QUESTIONS, NONE OF THEM STANDS ADDRESSED OR EXPLAINED, AS: WHEN AND HOW DID THE DISPUTE ARISE?; HAS IT ITS GEN ESIS IN THE FACT/S LISTED IN THE AGREEMENT DATED 15.7.2005, OR THAT WHICH CAME TO SU RFACE SUBSEQUENTLY?; HOW IS THE UNDISCLOSED CONSIDERATION RECORDED BETWEEN THE PART IES, WHICH WOULD ONLY BE IN THE PRESENCE OF A THIRD INDEPENDENT PARTY?; HOW WAS THE FAMILY DISPUTE RESOLVED, WHICH WOULD OSTENSIBLY INVOLVE LEGAL RIGHTS?; WHAT IS THE EVIDENCE OF THE EXISTENCE OR NON- EXISTENCE OF THOSE LEGAL RIGHTS? ETC. WE, ACCORDIN GLY, CONFIRM THE ADDITION. 14. IN THE RESULT, THE ASSESSEES APPEALS FOR AY 2000-01 TO AY 2002-03 ARE DISMISSED, AND THAT FOR AY 2003-04 TO AY 2006-07 ARE PARTLY AL LOWED FOR STATISTICAL REASONS. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 16TH NOVEMBER, 2011 GJ ENCL: ANNEXURES A1 TO A4, WHICH FORM AN INTEGRAL PA RT OF THIS ORDER. I.T.A. NOS.846-852 /COCH/2008 (ASSTT. YEARS: 2000-01 TO 2006-07) 17 COPY TO: 1. DR. N.C.P. MOHAMMED, REP BY POWER OF ATTORNEY, C .M.SIDDIQUE, SHUHAIBA MANZIL THANA, KANNUR-12. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, CENTRAL CIRCLE, CALICUT. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . NOTE: 1. CIT VS. P.MOHANAKALA (2007) 291 ITR 278 (SC); SUMATHI DAYAL VS. CIT (SC) (1995) 214 ITR 801 (SC); CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC); JASPAL SINGH V. CIT , 290 ITR 306 (P&H); SAJAN DASS & SONS VS. CIT (2003) 264 ITR 435 (DEL.); LAL CHAND KALRA VS. CIT (1981) 22 CTR 135 (P&H).