ACIT, Ernakulam V. Shri V S Ramakrishnan, Cochin

ITA 864/COCH/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4312 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2010
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 26-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 14-08-2008
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Assessee Lawyers: S MOHANAN KUTTICKAT
• Keywords: Opportunity of being heard; Assessment record; Documents seized
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI T.R. S00D AND SHRI N.VIJAYAKUMARAN I.T.A.NO.864/COCH/2008 ASSESSMENT YEAR:2004-05 THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRICLE-2, ERNAKULAM. VS. SHRI V.S. RAMAKRISHN AN, PALARIVATTOM, KOCHI-25. PA NO.ABDPR 7315P (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI S.C.SONKAR, CIT., DR RESPONDENT BY SHRI S. MOHANAN KUTTICKAT O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-I,KOCHI, DATED 21-05-2008 . THE RELEVANT ASSESSMENT YEAR IS 2004-05. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A DE ALER IN USED BOTTLES. HE IS DOING THIS BUSINESS IN PARTNE RSHIP WITH THE MEMBERS OF HIS FAMILY. A SEARCH WAS CONDUCTED ON 24- 08-2005 IN HIS OFFICE AND RESIDENTIAL PREMISES. T HE DOCUMENTS SEIZED RELATING TO TITLE DEEDS OF VARIOUS PROPERTIES INCLUDING THE BOOKS OF ACCOUNTS OF HIS B USINESS AND OTHER PAPERS. FOR THIS 153A ASSESSMENT, ASSES SEE FILED THE RETURN OF INCOME CONCEDING A TOTAL INCOME OF ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 2 RS.34,99,339/- AS AGAINST THE ORIGINAL INCOME DECLA RED TO THE TUNE OF RS.31,71,100/-. 3. IN THIS 153A RETURN, THE ASSESSEE DISCLOSED AGRI CULTURAL INCOME AT RS. 1,00,000/- OUT OF 182 CENTS OF AGRIC ULTURAL LAND HELD BY HIM AT PALANIGOUNDENPUDUR PANCHAYATH, NR. COIMBATORE AND 50% SHARE OF AGRICULTURAL INCOME FRO M 81 CENTS OF LAND AT PALANIGOUNDENPUDUR PANCHAYATH, HEL D BY THE ASSESSEE JOINTLY WITH THE MEMBERS OF HIS FAMILY. HOWEVER, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS N OT PROVED THE SOURCE AS AGRICULTURAL INCOME AND NOT EVEN A SI NGLE PAPER WAS FOUND DURING THE COURSE OF SEARCH WHICH SUGGESTED ANY AGRICULTURAL INCOME. TO ADD FURTHER , THE ASSESSEE HAS NOT SHOWN AGRICULTURAL INCOME IN THE O RIGINAL RETURN FILED. THEREFORE, THE ASSESSING OFFICER IN THE ABSENCE OF ANY CREDIBLE EVIDENCE, TREATED THIS AS N ON- AGRICULTURAL INCOME AND ASSESSED TO TAX UNDER THE H EAD INCOME FROM OTHER SOURCES AMOUNTING TO RS.1,40,000/ -. ON APPEAL TO THE CIT(APPEALS), THE LD. CIT(APPEALS) FO UND THAT THE ADDITION MADE UNDER OTHER SOURCES TO BE RESTR ICTED TO RS.50,000/-ONLY IN RESPECT OF AGRICULTURAL INCOME, AGAINST WHICH THE DEPARTMENT IS IN APPEAL AGITATING IT AS GROUND NO.2. ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 3 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDE NTS. IT IS THE BURDEN OF THE ASSESSEE TO PROVE THAT THIS INCOM E IS EXEMPT. IT IS NOT SHOWN IN THE ORIGINAL RETURN FIL ED U/S.139(1). ONLY IN THE RETURN FILED U/S.153A, AS SESSEE HAS DECLARED THE AGRICULTURAL INCOME. THE OWNERSHIP OF THE LAND, NATURE OF THE CORPS RAISED THEREIN, ETC. HAS TO BE PROVED TO TAKE IT UNDER THE HEAD AGRICULTURAL INCO ME, PARTICULARLY WHEN THE SEIZED MATERIALS NEVER SUGGES TED ANY INDICATION THAT ASSESSEE HEAD AGRICULTURAL INCOME. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VI EW THAT THIS ISSUE SHOULD GO BACK TO THE FILE OF THE ASSESS ING OFFICER FOR THE PURPOSE OF INVESTIGATING THE FACT WHETHER T HE ASSESSEE IS HAVING AGRICULTURAL LAND AS CONTENDED A ND ANY AGRICULTURAL OPERATION WAS CARRIED OUT IN THE ALLEG ED LAND AT PALANIGOUNDENPUDUR PANCHAYATH. THE NATURE OF YIEL DING COCONUT PLANTS AND ALSO RELEVANT MATERIALS HAS TO B E INVESTIGATED AND THE BURDEN IS ON THE ASSESSEE TO P ROVE THAT IT IS AGRICULTURAL INCOME WHICH IS EXEMPTED FROM TA X, WHICH CAN BE TAKEN ONLY FOR AGGREGATION OF TAX PURPOSE. THEREFORE, THIS ISSUE IS REEMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH, IN AC CORDANCE ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 4 WITH LAW. THIS GROUND OF APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSES. 5. THE SECOND GROUND IN GROUND NO.2.1 IS REGARDING ALLOWING CREDIT OF RS.40,000/- AS THE SOURCE OF INV ESTMENT WITHOUT APPRECIATING THE FACT THAT M/S. RAJESWARI G LASS WARES HAS NOT CLAIMED THE AGRICULTURAL INCOME IN TH E ORIGINAL RETURN FILED U/S.139. 6. ON THIS ISSUE ALSO, AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT A THOROUGH INVE STIGATION IS NEEDED AS THE REQUIRED MATERIALS ARE NOT AVAILAB LE ON RECORD TO SUGGEST WHETHER THE FIRM M/S.RAJESWARI GL ASS WARES, IN WHICH THE ASSESSEE IS A PARTNER AND IN TH E ASSESSMENT OF THE FIRM WHETHER THIS AMOUNT OF RS.40 ,000/- HAS BEEN ACCEPTED AS AGRICULTURAL INCOME. THAT B EING THE CASE, AS RIGHTLY CONTENDED BY THE LD. CIT., DR, EVE N OTHERWISE THIS CANNOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE, BUT IT CAN BE CONSIDERED IN THE HANDS OF THE FIRM. HENCE, THE ARGUMENT OF THE LD. CIT.,DR, IS QUITE JU STIFIED AND ACCORDINGLY THE ORDER OF THE AUTHORITIES BELOW ARE REVERSED AND THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PROPER ADJUDICATION WHETHER THIS AMOUNT CAN BE REDUCED FROM THE ADDITION MADE UNDER THE HEAD INCO ME ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 5 FROM OTHER SOURCES. THIS IS A POINT FOR INVESTIG ATION AT THE LEVEL OF THE ASSESSING OFFICER. THE ASSESSING OFF ICER MAY AFFORD ADEQUATE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE. IN THE RESULT, THIS GROUND OF THE REVENUE IS ALSO T REATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. THE THIRD GROUND IS ON THE DELETION OF ADDITION OF RS.10,54,800/- UNDER THE HEAD UNDISCLOSED PROFIT EA RNED FROM SALE OF BROKEN BOTTLES, CRATES AND CARTONS ET C. 8. WE HAVE HEARD RIVAL SUBMISSIONS ON THIS ISSUE. THE EXPLANATION OF THE ASSESSEE ON THIS ISSUE WOULD BE THAT THE FIRM M/S. RAJESWARI BOTTLE SUPPLIERS, CHERTHALA AND M/S. RAJESWARI GLASSWARES, ERNAKULAM WERE BUYING USED CA RTONS AND EMPTY CRATES FROM MCDOWELL COMPANY AND THESE PURCHASES ARE BILLED BY THE ASSESSEE TO THESE COMPA NIES. MANY OF THESE CARTONS AND CRATES WERE SOLD AS SCRAP . ALL THESE PURCHASES OF USED CARTONS AND CRATES ARE ACCO UNTED AS COST OF PACKING MATERIALS FOR SALE AND THE UNUSABLE CARTONS AND CRATES ARE SOLD AS SCRAP. IT IS FURTHER EXPLA INED THAT ALL THESE PURCHASES OF USED CARTONS AND CRATES ARE ACCO UNTED AS COST OF PACKING MATERIALS IN THE BOOKS OF ACCOUNTS OF M/S. RAJARAJESWARI BOTOTLE SUPPLIERS AND RAJESWARI GLASS WARES. IT WAS FURTHER CONTENDED THAT THE ALLEGED PROFIT AN D LOSS ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 6 ACCOUNT REFERRED IN THE ASSESSMENT ORDER COULD BE A STATEMENT PREPARED BY THE ACCOUNTANT OF THE FIRM TO ESTABLISH THAT PURCHASE OF USED CARTONS AND CRATES FROM MCDOWELL ARE HIGHLY PROFITABLE COMPARED TO THE COST OF PURCHASE OF THESE ITEMS FROM THE OPEN MARKET. IT W AS FURTHER EXPLAINED BY THE ASSESSEE THAT THE ASSESSEE HAS NOT DONE ANY TRADING ACTIVITY OF USED CARTONS OR CRATES TILL DATE. THE MCDOWELL COMPANY IS A QUITE EXISTING LONG TERM COMPANY AND EVERY SALE FROM THIS COMPANY ARE ACCOUN TED ONLY THROUGH PROPER INVOICES. THE ASSESSING OFFICE R SHOULD HAVE VERIFIED THE STATEMENT OF THE ACCOUNTANT OF MC DOWELL COMPANY TO ESTABLISH THE FACT WHETHER THE MCDOWELL COMPANY HAS SOLD ANY USED CARTONS AND CRATES TO THE ASSESSEE OR TO ANY OF ITS CONCERNS. THEN ONLY THE NON- ACCOUNTING ISSUE WILL COME UP. AS THE STAND OF TH E ASSESSEE IS THAT THE ASSESSEE HAS NOT CARRIED OUT ANY TRADIN G ACTIVITIES IN UNUSED CARTONS AND CRATES AS ALLEGED BY THE DEPARTMENT, IT IS THE DEPARTMENT TO VERIFY WHETHER THE MCDOWELL COMPANY SOLD ANY USED CARTONS TO THE ASSES SEE OR TO ANY OF ITS CONCERNS IS A VERY VITAL ISSUE TO BE DECIDED. THIS IS NOT AVAILABLE IN THE ASSESSMENT RECORDS, WH ICH IS BEFORE US. HENCE, WE ARE OF THE VIEW THAT THIS IS SUE SHOULD ALSO GO BACK TO THE FILE OF THE ASSESSING OFFICER F OR PROPER ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 7 ADJUDICATION. WHILE DOING SO, WE DIS-AGREE WITH TH E FINDINGS OF THE LD. CIT(APPEALS) THAT LOOSE SHEET PAPER FOPU ND SHOWING PROFIT FROM SOME OPERATIONS HAS TO BE DELIB ERATED FURTHER AND IN THE ABSENCE OF ANY CORROBORATIVE EVI DENCE AND DETAILS FROM THE CONCERNED COMPANY, WE ARE UNABLE T O DECIDE THE ISSUE AS SUCH. UNDER THE CIRCUMSTAN CES, WE REVERSE THE FINDINGS OF THE LD. CIT(APPEALS) ON THI S ISSUE AND REMIT THE MATTER BACK TO THE FILE OF THE ASSES SING OFFICER FOR DECISION, IN ACCORDANCE WITH LAW. 9. AS WE HAVE ALREADY REMITTED THE GROUND NO.3 BACK TO THE FILE OF THE ASSESSING OFFICER, GROUND NO.4 WHIC H IS IN RESPECT OF RULE 46A(3) FOR NOT PROVIDING REASONABLE OPPORTUNITY WILL NOT SURVIVE AND IT HAS BECOME ACAD EMIC, AS NOW THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR PROPER ADJUDICATION AFTER AFFORDING REA SONABLE OPPORTUNITY TO THE ASSESSEE. 10. IN THE RESULT, REVENUES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (T.R. SOOD) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 27 TH JULY,2010. PM. ITA NO.864 /COCH/2008 VS RAMAKRISHNAN, KOCHI. 8 COPY FORWARDED TO: 1. THE ACIT, CENTRAL CIRICLE-2, ERNAKULAM. 2. SHRI V.S. RAMAKRISHNAN, PALARIVATTOM, KOCHI-25. 3. CIT(A)-I, KOCHI. 4. CIT, KOCHI. 5. D.R.