ACIT, Kollam V. Sri.A.A.Salam, Kollam

ITA 90/COCH/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73858 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-11-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: IYPE MATHEW
• Keywords: Unexplained investment; Business expenditure; Charitable institution; Proportionate interest; Validity of assessment; Block assessment; Revenue expenditure
• Section: 43B; 153A; 132

Judgement Text

1 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 51 & 52/COCH/2012 (ASSESSMENT YEARS 2004-05 & 2005-06) SHRI A ABDUL SALAM VS DY.CIT, CENT.CIR. M/S A.S. CASHEW EXPORTERS KOLLAM KILLOKOLLOOR, KOLLAM PAN : ALPPS9733G (APPELLANT) (RESPONDENT) I.T.A NO. 97 TO 102/COCH/2012 (ASSESSMENT YEARS 2003-04 & 2005-06 TO 2009-10) A.C.I.T., CENT.CIR VS SHRI A ABDUL SALAM KOLLAM M/S A.S. CASHEW EXPORTERS KILLOKOLLOOR, KOLLAM PAN : ALPPS9733G (APPELLANT) (RESPONDENT) I.T.A. NO.53/COCH/2012 (ASSESSMENT YEAR 2005-06) SHRI A.A. SALAM VS DY.CIT, CENT.CIR M/S SOUTH KERALA CASHEW EXPORTERS KOLLAM KILLIKOLLOOR, KOLLAM PAN : AEKPP1399B (APPELLANT) (RESPONDENT) I.T.A NO. 90 TO 96/COCH/2012 (ASSESSMENT YEARS 2003-04 TO 2009-10) 2 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 A.C.I.T., CENT.CIR VS SHRI A.A. SALAM KOLLAM M/S SOUTH KERALA CASHEW EXPORTERS KILLOKOLLOOR, KOLLAM PAN : AEKPP1399B (APPELLANT) (RESPONDENT) I.T.A. NO.280/COCH/2012 (ASSESSMENT YEAR 2008-09) DY.CIT, CENT.CIR VS S.N. CASHEW INTERNATIONAL (P ) LTD KOLLAM KILLIKOLLOR, KOLLAM PAN : AAKCS7100G ASSESSEE BY : SHRI IYPE MATHEW REVENUE BY : SHRI M ANIL KUMAR, C.I.T. DATE OF HEARING : 13-11-2013 DATE OF PRONOUNCEMENT : 07-02-2014 O R D E R PER N.R.S. GANESAN (JM) ALL THE APPEALS RELATE TO THREE INDEPENDENT ASSESS EES AND BY THE DEPARTMENT. SINCE COMMON ISSUES ARISE FOR CONSIDER ATION IN ALL THE APPEALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. LET US FIRST TAKE THE ASSESSEES APPEAL IN ITA N O.53/COCH/2012 FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF SHRI A.A . SALAM. 3 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 3. THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.6,29,479 U/S 43B OF THE ACT. 4. SHRI IYPE MATHEW, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS.6,29 ,479 ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION TO T HE PROPOSAL. ACCORDING TO THE LD.REPRESENTATIVE, SALES-TAX PAID IN EXCESS OF SALES-TAX COLLECTED WAS DEBITED TO THE PROFIT & LOSS ACCOUNT AND THE SAME WAS CLAIMED AS DEDUCTION. HOWEVER, THIS WAS REJECTED B Y BOTH THE AUTHORITIES BELOW. ACCORDING TO THE LD.REPRESENTATIVE, THE CIT (A) CONFIRMED THE ADDITION ONLY ON THE GROUND THAT THE ASSESSEE FAILE D TO EXPLAIN THE MATTER PROPERLY BEFORE THE ASSESSING OFFICER. ACCORDING T O THE LD.REPRESENTATIVE, IT IS NOT CORRECT TO SAY THAT THE SALES-TAX COLLECTED WAS NOT ROUTED THROUGH PROFIT & LOSS ACCOUNT. ACCORDING TO THE LD.REPRESE NTATIVE, THE SALES-TAX COLLECTED WAS DEBITED TO PROFIT & LOSS ACCOUNT, THE REFORE, THE ENTIRE AMOUNT WAS CLAIMED AS DEDUCTION. 5. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THE ASSESSEE COULD NOT EXPLAIN PROPERLY BEFORE THE ASSE SSING OFFICER EVEN THOUGH ADEQUATE OPPORTUNITY WAS GIVEN AS TO HOW THE SALES-TAX COLLECTED AND PAID WAS ROUTED THROUGH THE PROFIT & LOSS ACCOU NT. ACCORDING TO THE 4 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 LD.DR, THE ASSESSEE CLAIMED AN AMOUNT OF RS.6,29,47 9 WHICH WAS DEBITED IN THE PROFIT & LOSS ACCOUNT AS SALES-TAX PAID. TH E LD.DR SUBMITTED THAT IN THE AUDITORS REPORT IT WAS STATED THAT THE SALES-T AX COLLECTED WAS NOT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE WHICH WAS RIGH TLY CONFIRMED BY THE CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSING OFFICER FOUND THAT THE SALES WERE SHOWN AS NET OF TRADE DISCOUNT. HOW EVER, IN THE AUDIT REPORT IT WAS REMARKED THAT THE SALES-TAX COLLECTED WAS NOT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER F URTHER FOUND THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.6,29,479 IN THE PR OFIT & LOSS ACCOUNT AND CLAIMED THE SAME AS SALES-TAX PAID OVER AND ABO VE SALES-TAX COLLECTED. THE EXPLANATION CALLED FOR BY THE LOWER AUTHORITIES WAS NOT PROPERLY RESPONDED BY THE ASSESSEE. THEREFORE, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN HOW THE PAYMENT WAS MADE OVER AND ABOVE THE TAX COLLECTED MAY NOT PREJUDICE THE INTEREST OF THE REVENUE. ACCORDI NGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DI SALLOWANCE OF RS. 6,29,479 IS REMITTED BACK TO THE FILE OF THE ASSESS ING OFFICER. THE 5 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, IF ANY, WITH REGARD TO THE SALES-TAX COLLECTED AND PAID AND THEREAFTER DECIDE THE SAME IN ACCORDAN CE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. THE ASSESSEE HAS TAKEN ONE MORE GROUND WITH REGA RD TO VALIDITY OF THE BLOCK ASSESSMENT PROCEEDINGS. ACCORDING TO THE LD.REPRESENTATIVE FOR THE ASSESSEE, THE RETURN OF INCOME FOR THE ASSESSME NT YEAR 2005-06 WAS FILED ON 31-10-2005 DECLARING A TOTAL INCOME OF RS. 1,29,54,800. A SEARCH WAS CONDUCTED U/S 132 OF THE ACT IN THE PREMISES OF THE ASSESSEE ON 06- 01-2009. THEREFORE, ACCORDING TO THE LD.REPRESENTA TIVE, THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 CAME T O AN END WHEN THE RETURN WAS PROCESSED AND INTIMATION ISSUED U/S 143( 1) OF THE ACT ON 08-01- 2006. IN OTHER WORDS, THE ASSESSMENT PROCEEDINGS F OR THE ASSESSMENT YEAR 2005-06 WERE NOT PENDING ON THE DATE OF SEARC H; HENCE, UNLESS AND UNTIL THE ASSESSING OFFICER FOUND SOME INCRIMINATIN G MATERIAL, THE PROCEEDINGS CANNOT BE REOPENED. 8. ON THE CONTRARY, THE LD.DR SUBMITTED THAT INCRIM INATING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH OPERATION WH ICH DISCLOSES THE 6 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 INVESTMENT IN QUILON MEDICAL TRUST. THEREFORE, ACC ORDING TO THE LD.DR, THE BLOCK ASSESSMENT PROCEEDINGS HAVE BEEN VALIDLY INIT IATED. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 143(2)(II) CLEARLY SAYS THAT NO NOTICE SHALL BE SERVED ON THE ASSESSEE AFTE R EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RET URN WAS FURNISHED. IN THIS CASE, THE RETURN IN THE REGULAR COURSE WAS FURNISHE D ON 31-10-2005. THEREFORE, NOTICE U/S 143(2) SHALL BE ISSUED ON OR BEFORE 30-09-2006. IN THIS CASE, ADMITTEDLY, NO NOTICE WAS ISSUED U/S 143 (2). IN FACT, THE RETURN WAS PROCESSED U/S 143(1) ON 08-01-2006 AND THE INCO ME RETURNED WAS ACCEPTED. THEREFORE, IT IS OBVIOUS THAT THE ASSESS MENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 CAME TO AN END ON 08-1-2006 WHEN THE INTIMATION WAS ISSUED OR ON 30-09-2006 BY OPERATION OF LAW. THEREFORE, THE ISSUES CONCLUDED BY OPERATION OF LAW CANNOT BE REOPENED IN VIEW OF THE SPECIFIC PROVISIONS CONTAINED IN SECOND PROVISO TO SECTION 153A(1) OF THE ACT. IN RESPECT OF OTHER ISSUES WHICH WERE NOT REACHED FINALITY BY OPERATION OF LAW AND INCRIMINATING MATERIALS WERE F OUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSING AUTHORITY IS AT LIBERTY TO MAKE AN ASSESSMENT U/S 153A OF THE ACT. THE ASSESSEE SPECI FICALLY RAISED THE ISSUE IN GROUND NO.5 BEFORE THE CIT(A). HOWEVER, T HE CIT(A) HAS NOT 7 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 RECORDED ANY FINDING. THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT WHEN THE ASSESSEE RAISED A SPECIFIC ISSUE WHICH GOES TO THE ROOT OF THE MATTER, IT NEEDS TO BE CONSIDERED BY THE LOWER AUTHORITY. THE MAIN ISSUE WITH REGARD TO ADDITION OF RS.6,29,479 WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT FOR THE SAKE OF CONSISTENCY, THE ISSUE WITH REGARD TO VALID ITY OF THE ASSESSMENT ALSO NEEDS TO BE CONSIDERED BY THE ASSESSING OFFICE R. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE I SSUE WITH REGARD TO VALIDITY OF ASSESSMENT PROCEEDINGS IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REC ONSIDER THE ISSUE AFRESH AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH L AW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 10. LET US NOW TAKE THE DEPARTMENTAL APPEALS IN ITA NOS 90 TO 96/COCH/2012 IN THE CASE OF SHRI A.A SALAM. 11. THE FIRST GROUND OF APPEAL GROUND OF APPEALS I S WITH REGARDING TO ADDITION OF PROPORTIONATE INTEREST AND DIVERSION OF INTEREST BEARING FUNDS. 12. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE HAS DEBITED INTEREST PAID ON L OAN AVAILED FROM 8 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 BANKS. THE OUTSTANDING AMOUNT AS ON 31-03-2003 AS PER THE BALANCE- SHEET IS RS.3,01,81,807. THE ASSESSEE DIVERTED NEA RLY RS.11,69,620 FOR INVESTMENT IN SHARES. THE ASSESSEE HAS ALSO GIVEN ADVANCE TO THE RELATIVES TO THE EXTENT OF RS.13,93,930. THEREFORE , THE ASSESSING OFFICER FOUND THAT THE INTEREST BEARING FUNDS WERE DIVERTED FOR NON BUSINESS PURPOSE. ACCORDINGLY, THE PROPORTIONATE INTEREST C LAIMED BY THE ASSESSEE TO THE BANKS WAS DISALLOWED. SIMILARLY FOR THE ASS ESSMENT YEAR 2004-05 THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.9, 43,621. FOR THE ASSESSMENT YEAR 2005-06 AN AMOUNT OF RS.17,10,222 W AS DISALLOWED; AND FOR THE ASSESSMENT YEAR 2006-07 AN AMOUNT OF RS.16, 58,804 WAS DISALLOWED. FOR THE ASSESSMENT YEAR 2007-08 THE AS SESSING OFFICER DISALLOWED A SUM OF RS. 44,67,631 TOWARDS THE PROPO RTIONATE INTEREST ON THE BORROWED FUNDS FOR NON BUSINESS PURPOSE WHEREAS FOR THE ASSESSMENT YEAR 2008-09 THE ASSESSING OFFICER DISALLOWED RS. 9 4,48,537 AND FOR THE ASSESSMENT YEAR 2009-10 THE DISALLOWANCE WAS RS.68, 09,145. ACCORDING TO THE LD.DR, IN VIEW OF THE JUDGMENT OF THE KERALA HIGH COURT IN CIT VS VI BABY & CO 254 ITR 248 THE CLAIM OF THE ASSESSEE CAN NOT BE ALLOWED. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 13. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT FOR THE ASSESSMENT YEAR 200 3-04 AS ON 31-03- 9 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 2003 THE ASSESSEE HAD RS. 49,04,32,057 TOWARDS NON INTEREST BEARING FUNDS. THE LOAN AS ON 31-03-2003 IS ONLY RS. 2,98, 85,592. THEREFORE, THERE WAS INTEREST FREE FUNDS / OWN FUNDS IS AVAILA BLE TO THE EXTENT OF RS.48,85,62,967 OUT OF WHICH THE NON BUSINESS ADVAN CE AND INVESTMENT WAS MADE TO THE EXTENT OF RS.25,63,550. THEREFORE, IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF MUNJAL SA LES CORPORATION VS CIT & ANR (2008) 298 ITR 298 (SC) THE CIT(A) ALLOWED TH E CLAIM OF THE ASSESSEE. 14. SIMILARLY, FOR THE ASSESSMENT YEAR 2004-05 AS O N 31-03-2004 THE ASSESSEE HAD NON INTEREST BARING FUNDS TO THE EXTEN T OF RS. 48,56,76,288; HOWEVER, THE LOAN WAS ONLY TO THE EXTENT OF RS.219 LAKHS. THE NET NON INTEREST BEARING FUNDS WAS TO THE EXTENT OF RS. 48, 56,76,287 OUT OF WHICH THE INVESTMENT AND ADVANCE TO THE EXTENT OF RS. 25, 33,550 ALONE WAS DIVERTED. THEREFORE, WHAT WAS DIVERTED IS NOT THE BORROWED FUNDS, BUT THE ASSESSEES OWN FUNDS. THEREFORE, THE CIT(A) HAS RI GHTLY DELETED THE ADDITION. 15. FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSEE OW NED FUNDS TO THE EXTENT OF RS. 44,10,88,362 AS ON 31-03-2005. HOWEV ER, THE BANK LOAN WAS ONLY TO THE EXTENT OF RS.4,88,17,556. THE DIVE RSION FOR NON BUSINESS 10 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ADVANCES AND INVESTMENT WAS TO THE EXTENT OF RS.37, 83,550. THEREFORE, THE BALANCE FUNDS AVAILABLE WITH THE ASSESSEE IS RS . 43,73,04,812. HENCE, ACCORDING TO THE LD.REPRESENTATIVE, NO PART OF THE BORROWED FUNDS WAS USED FOR NON BUSINESS PURPOSE. 16. FOR THE ASSESSMENT YEAR 2006-07 THE NON INTERES T BEARING FUNDS AS ON 31-03-2006 WAS RS.44,86,03,728. HOWEVER, THERE WAS NO OUTSTANDING BORROWED FUNDS. HENCE, THE ENTIRE AMOUNT OF RS.44, 86,03,728 WAS AVAILABLE WITH THE ASSESSEE AND HENCE, THERE IS NO QUESTION OF ANY DIVERSION OF BORROWED FUNDS ARISE FOR CONSIDERATION . 17. FOR THE ASSESSMENT YEAR 2007-08 THE NON INTERES T BEARING FUNDS AS ON 31-03-2007 WAS RS.44,02,55,604. THE BANK LOAN W AS ONLY TO THE EXTENT OF RS. 1,06,89,389. THEREFORE, THE NET NON INTEREST BEARING FUNDS AVAILABLE WITH THE ASSESSEE WAS RS.42,95,66,215. O UT OF THIS, THE ADVANCE AND INVESTMENT FOR NON BUSINESS PURPOSE IS ONLY RS. 41,57,664. THEREFORE, THERE IS NO QUESTION OF ANY DIVERSION OF BORROWED FUNDS. 18. FOR THE ASSESSMENT YEAR 2008-09 ALSO, ACCORDING TO THE LD.REPRESENTATIVE, THE NON INTEREST BEARING FUNDS A S ON 31-03-2008 WAS RS. 53,19,48,420. HOWEVER, THERE WAS NO BORROWAL OF LO AN AS ON 31-03-2008. 11 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THER E IS NO QUESTION OF ANY DISALLOWANCE OF INTEREST FOR MAKING ADVANCE AND INV ESTMENT FROM THE INTEREST BEARING FUNDS. 19. SIMILARLY FOR THE ASSESSMENT YEAR 2009-10 AS ON 31-03-2009, THE NON INTEREST BEARING FUNDS WAS RS. 55,20,18,758 AND THE BORROWED FUNDS AS ON 31-03-2009 WERE RS. 180 LAKHS. THEREFORE, T HERE IS NO NEXUS BETWEEN THE BORROWED FUNDS AND THE INVESTMENT AND A DVANCE GIVEN BY THE ASSESSEE. ACCORDING TO THE LD.REPRESENTATIVE, THE ADVANCE AND INVESTMENT WAS GIVEN ONLY FROM THE NON INTEREST BEARING FUNDS. THEREFORE, IN VIEW OF THE JUDGMENT OF THE APEX COURT IN MUNJAL SALES CORP ORATION (SUPRA),A THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLEARLY DEMONSTRATED BEFORE THE CIT(A) THAT SUFFICIENT INTE REST FREE / OWN FUNDS WERE AVAILABLE FOR MAKING ADVANCE TO RELATIVES AND INVESTMENT IN SHARES. THE ASSESSEE HAS ALSO FILED COPIES OF THE STATEMENT OF ACCOUNTS IN RESPECT OF RESPECTIVE YEARS TO EXPLAIN THE AVAILABILITY OF NON INTEREST BEARING FUNDS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHE N THE ASSESSEE HAD SUFFICIENT NON INTEREST BEARING FUNDS, ADVANCES MAD E FROM AND OUT OF THE 12 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 NON INTEREST BEARING FUNDS CANNOT BE A REASON TO DI SALLOW INTEREST ON THE BORROWED FUNDS. THE APEX COURT IN THE CASE OF MUNJA L SALES CORPORATION (SUPRA) FOUND THAT WHEN THE ASSESSEE HAS SUFFICIENT OWN FUNDS AND PROFIT, IT CANNOT BE SAID THAT THE BORROWED FUNDS WERE DIVERTE D. IN VIEW OF THE JUDGMENT OF THE APEX COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. FROM THE ORDERS OF THE CIT(A) AND THE MATERIALS FILED BY THE ASSESSEE BEFORE THIS TRIBUNAL, IT IS OBVIOUS THAT NON INTEREST BEARING FUNDS WERE AVAILABLE WITH THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LOWER AUTHORITY. ACCORDINGLY, THE ORDERS OF THE CIT(A) ON THIS ISSUE IS CONFIRMED. 21. FOR THE ASSESSMENT YEAR 2007-08 THE REVENUE HAS RAISED ONE MORE ISSUE WITH REGARD TO ADDITION OF RS.44,67,631 TOWAR DS UNEXPLAINED INVESTMENT IN CONSTRUCTION IN THE CASE OF QUILON ME DICAL TRUST. 22. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS. 44,67,631 TOWARDS UNEXPLAINED INVESTMENT IN THE CONSTRUCTION OF THE BUILDING IN QUILON MEDICAL TRUS T ON PROTECTIVE BASIS. HOWEVER, SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF THE TRUST, QUILON MEDICAL TRUST. THE CIT(A), ON THE BASIS OF HIS ORD ER IN QUILON MEDICAL TRUST DELETED THE ADDITION. ACCORDING TO THE LD.DR , THE DEPARTMENT HAS 13 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ALSO FILED APPEAL AGAINST THE ORDER OF CIT(A) IN TH E CASE OF QUILON MEDICAL TRUST. WE HEARD SHRI IYPE MATHEW, THE LD.REPRESETA TIVE FOR THE ASSESSEE ALSO. 23. THIS TRIBUNAL EXAMINED THE ISSUE IN THE CASE OF QUILON MEDICAL TRUST AND CONFIRMED THE ORDER OF THE CIT(A) WHEREIN HE RE STRICTED THE ADDITION TO THE EXTENT OF RS.2,54,782. THE FINDING OF THE CIT( A) THAT THE ASSESSEE IN THE CASE OF QUILON MEDICAL TRUST HAS RECONCILED THE EXPENDITURE EXCEPT TO AN AMOUNT OF RS.2,54,782 WAS CONFIRMED BY THIS TRIB UNAL BY AN ORDER DATED 31-01-2014. THEREFORE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 24. FOR THE ASSESSMENT YEAR 2008-09 THE REVENUE HAS TAKEN ANOTHER GROUND WITH REGARD TO ADDITION OF RS. 8,19,37,628 T OWARDS UNEXPLAINED INVESTMENT IN THE BUILDING IN QUILON MEDICAL TRUST. 25. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE CIT(A) DELETED THE ADDITION ONLY ON THE GROUND THAT THE ASSESSEE IS EN TITLED FOR EXEMPTION U/S 10(23C)(VI) OF THE ACT. ACCORDING TO THE LD.DR, FO R CLAIMING EXEMPTION U/S 14 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 10(23C)(VI) THE INCOME SHOULD BE GENERATED IN THE C OURSE OF EDUCATIONAL ACTIVITY OR IT SHOULD BE A VOLUNTARY DONATION. THI S FACT WAS NOT EXAMINED IN THE CASE OF QUILON MEDICAL TRUST. THEREFORE, ACCOR DING TO THE LD.DR, THE ADDITION MADE IN THE HANDS OF THE TRUSTEE, THE PRES ENT ASSESSEE, HAS TO BE CONFIRMED. 26. WE HEARD, SHRI IYPE MATHEW, THE LD.REPRESENTATI VE FOR THE ASSESSEE ALSO. ACCORDING TO THE LD.REPRESENTATIVE, THE CONS TRUCTION OF BUILDING WAS MADE BY QUILON MEDICAL TRUST WHICH IS AN INDEPENDEN T ASSESSABLE UNIT. ACCORDING TO THE LD.REPRESENTATIVE, ALL INCOMES OF THE TRUST ARE EXEMPT U/S 10(23C)(VI) OF THE ACT. THEREFORE, THERE IS NO QUE STION OF ANY ADDITION IN THE HANDS OF THE PRESENT ASSESSEE. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE C ASE OF QUILON MEDICAL TRUST, THIS TRIBUNAL FOUND THAT THE TERM ANY INCOM E REFERRED IN SECTION 10(23C) DOES NOT INCLUDE THE MONEY COLLECTED FOR AD MISSION OF THE STUDENTS OVER AND ABOVE THE PRESCRIBED FEE. THIS T RIBUNAL FOUND THAT THE INCOME GENERATED IN THE COURSE OF RUNNING OF THE ED UCATIONAL INSTITUTION, THE INCOME GENERATED FROM THE PROPERTY HELD UNDER T RUST AND ANY VOLUNTARY DONATION OTHER THAN FOR ADMISSION OF THE STUDENTS M AY FALL WITHIN THE TERM 15 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ANY INCOME REFERRED IN SECTION 10(23C) OF THE ACT . HOWEVER, THE CAPITATION FEE FOR ADMISSION OF THE STUDENTS OVER A ND ABOVE THE PRESCRIBED FEES AS EXPLAINED BY THE APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATION & ORS VS STATE OF KARNATAKA & ORS (2002) 8 SCC 481 AND ISLAMIC ACADEMIC EDUCATION VS STATE OF KARNATAKA (2003) 6 S CC 677 MAY NOT FALL WITHIN THE TERM ANY INCOME. THIS TRIBUNAL IN THE CASE OF QUILON MEDICAL TRUST FOUND THAT NO MATERIAL WAS AVAILABLE TO SUGGE ST THAT ANY CAPITATION FEES OR ANY MONEY OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENT WAS COLLECTED BY THE ASSESSEE. THEREFORE, IT WAS FOUND THAT THE ASSESSEE WAS ENTITLED FOR EXEMPTION US 10(23C) OF T HE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) WAS CONFIRMED. IN THE PRES ENT CASE, THE ASSESSING OFFICER HAS MADE ONLY PROTECTIVE ASSESSMENT. WHEN THE ORDER OF CIT(A) WAS CONFIRMED BY THIS TRIBUNAL BY AN ORDER DATED 31 -01-2014, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT A FURTHER ADDITIO N ON PROTECTIVE BASIS IN THE HANDS OF THE TRUSTEE, VIZ. THE PRESENT ASSESSEE CANNOT BE JUSTIFIED. ACCORDINGLY, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 16 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 28. THE REVENUE HAS TAKEN ONE MORE GROUND WITH REGA RD TO ADDITION OF RS.47,25,000 TOWARDS UNACCOUNTED RECEIPT FROM SMT. HAZEENAS QMC ACCOUNT. 29. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS.47,25,000 ON ACCOUNT OF ONE SMT. HA ZEENAS QMC ACCOUNT. A RECEIPT VOUCHER MARKED AS DOCUMENT NO. QMT 110 WAS FOUND IN THE PREMISES OF QUILON MEDICAL TRUST ABOUT SMT. HAZEENAS QMC ACCOUNT. THE ASSESSEE EXPLAINED BEFORE THE ASSESSI NG OFFICER THAT HE HAS NOT RECEIVED ANY MONEY FROM SMT. HAZEENAS QMC ACCO UNT. HOWEVER, THE ASSESSING OFFICER DISBELIEVED THE EXPLANATION O F THE ASSESSEE AND IN VIEW OF THE SEIZED DOCUMENT QMT 110, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HAS RECEIVED RS.47,25, 000. ACCORDING TO THE LD.DR, THE CIT(A) DELETED THE ADDITION ONLY ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY. A CCORDING TO THE LD.DR WHEN THE SEIZED MATERIAL SUGGESTS THE RECEIPT OF MO NEY FROM SMT. HAZEENAS QMC ACCOUNT, THERE IS NO QUESTION OF ANY FURTHER ENQUIRY. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. 30. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DENIED THE REC EIPT OF MONEY AND 17 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 DOUBTED THE GENUINENESS OF QMT 110, THE SEIZED DOCU MENT. THE ASSESSEE DENIED THE RECEIPT OF MONEY IN RESPONSE TO A QUESTIONNAIRE. EVEN IN THE PRE-ASSESSMENT NOTICE THERE IS NO MENTI ON ABOUT THIS AMOUNT. HOWEVER, IN THE ASSESSMENT ORDER, THE ASSESSING OFF ICER MADE ADDITION ON A TOTALLY DIFFERENT GROUND. ACCORDING TO THE LD.RE PRESENTATIVE, THE SO-CALLED PROFESSIONAL RECEIPT SAID TO BE FOUND IN THE QUILON MEDICAL TRUST PREMISES DOES NOT PERTAIN TO THE TRANSACTION MADE BY SMT. HA ZEENA WITH THE ASSESSEE. ACCORDING TO LD.REPRESENTATIVE, THE ASSE SSEE HAS FURNISHED THE NAME AND ADDRESS OF SMT. HAZEENA TO THE ASSESSING O FFICER. IN SPITE OF THAT NO ENQUIRY WAS MADE WITH SMT. HAZEENA. THEREF ORE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING OFFICER FAILED TO MAKE BASIC ENQUIRY EVEN THOUGH THE COMPLETE NAME AND ADDRESS OF MRS. HAZEEN A WAS FURNISHED TO THE ASSESSING OFFICER. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE CIT(A) DELETED THE ADDITION ON THE BASIS OF THE JU DGMENT OF THE KERALA HIGH COURT IN CIT VS LAKSHMI HOSPITAL (2011) 245 CTR 471 (KER). 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REVE NUE CLAIMS THAT A RECEIPT VOUCHER WAS FOUND IN THE PREMISES OF QUILON MEDICAL TRUST WHICH DISCLOSES RECEIPT OF RS.47,25,000 BY THE ASSESSEE F ROM SMT. HAZEENAS QMC ACCOUNT. THE ASSESSEE, HOWEVER, DENIED THE REC EIPT OF MONEY AND 18 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 DOUBTED THE GENUINENESS OF THE RECEIPT. THE ASSESS EE FURNISHED THE NAME AND ADDRESS OF SMT. HAZEENA SO AS TO ENABLE THE DEP ARTMENT TO MAKE NECESSARY ENQUIRIES. IN SPITE OF THAT THE ASSESSIN G OFFICER HAS NOT MADE ANY ENQUIRY. ON IDENTICAL CIRCUMSTANCES, IN THE CA SE OF LAKSHMI HOSPIAL (SUPRA), THE KERALA HIGH COURT CONFIRMED SIMILAR DE LETION MADE BY THE LOWER AUTHORITIES. BY FOLLOWING THE PRINCIPLES LAI D DOWN BY KERALA HIGH COURT IN LAKSHMI HOSPITAL (SUPRA), THE CIT(A) DELET ED THE ADDITION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT( A) HAS FOLLOWED THE PRINCIPLES LAID DOWN BY THE KERALA HIGH COURT IN TH E CASE OF LAKSHMI HOSPITAL (SUPRA). THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY, THE S AME IS CONFIRMED. 32. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. 33. NOW COMING TO ASSESSEES APPEALS IN ITA NOS 51 & 52/COCH/2012 IN THE CASE OF SHRI A ABDUL SALAM, THE FIRST GROUND OF APPEAL IS WITH REGARD TO PAYMENT OF SALES-TAX OVER AND ABOVE THE SALES-TA X COLLECTED. 34. THIS ISSUE IS IDENTICAL TO THE GROUND RAISED BY THE ASSESSEE, SHRI A.A. SALAM IN ITA NO.53/COCH/2012 FOR THE ASSESSMEN T YEAR 2005-06. THIS TRIBUNAL FOUND THAT WHEN THE SALES-TAX COLLECT ED WAS NOT ROUTED 19 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 THROUGH THE PROFIT & LOSS ACCOUNT, THE CLAIM OF THE ASSESSEE THAT HE MADE THE PAYMENT OVER AND ABOVE THE SALES-TAX COLLECTED NEEDS TO BE VERIFIED. ACCORDINGLY, THE ISSUE WAS RESTORED THE FILE OF THE ASSESSING OFFICER TO GIVE ANOTHER OPPORTUNITY OF HEARING TO THE ASSESSEE AND TAKE A DECISION AFRESH IN ACCORDANCE WITH LAW. CONSISTENT WITH THE VIEW A LREADY TAKEN, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT GIVING O NE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN HOW THE PAYMENT WAS MADE OV ER AND ABOVE THE TAX COLLECTED MAY NOT PREJUDICE THE INTEREST OF THE REVENUE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE A ND THE ISSUE OF DISALLOWANCE U/S 43B IS REMITTED BACK TO THE FILE O F THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AF RESH AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, IF ANY, WITH REGAR D TO THE SALES-TAX COLLECTED AND PAID AND THEREAFTER DECIDE THE SAME I N ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE. 35. THE NEXT GROUND OF APPEALS IS WITH REGARD TO VA LIDITY OF THE SEARCH PROCEEDINGS U/S 153A OF THE ACT. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 143(2)(II) CLEARLY SAYS THAT NO NOTICE SHALL BE SERVED ON THE ASSESSEE AFTE R EXPIRY OF SIX MONTHS 20 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RET URN WAS FURNISHED. IN THIS CASE, THE RETURN IN THE REGULAR COURSE WAS FURNISHE D ON 31-10-2005. THEREFORE, NOTICE U/S 143(2) SHALL BE ISSUED ON OR BEFORE 30-09-2006. IN THIS CASE, ADMITTEDLY, NO NOTICE WAS ISSUED U/S 143 (2). IN FACT, THE RETURN WAS PROCESSED U/S 143(1) ON 18-12-2006 AND THE INCO ME RETURNED WAS ACCEPTED. THEREFORE, IT IS OBVIOUS THAT THE ASSESS MENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 CAME TO AN END ON 30-09-200 6 BY OPERATION OF LAW. THEREFORE, THE ISSUES CONCLUDED BY OPERATION OF LAW CANNOT BE REOPENED IN VIEW OF THE SPECIFIC PROVISIONS CONTAIN ED IN SECOND PROVISO TO SECTION 153A(1) OF THE ACT. IN RESPECT OF OTHER IS SUES WHICH WERE NOT REACHED FINALITY BY OPERATION OF LAW AND INCRIMINAT ING MATERIALS WERE FOUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSIN G AUTHORITY IS AT LIBERTY TO MAKE AN ASSESSMENT U/S 153A OF THE ACT. THIS IS SUE WAS SPECIFICALLY RAISED IN GROUND NO.5 BEFORE THE CIT(A). HOWEVER, THE CIT(A) HAS NOT RECORDED ANY FINDING. THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT WHEN THE ASSESSEE RAISED A SPECIFIC ISSUE WHICH GOES TO THE ROOT OF THE MATTER, IT NEEDS TO BE CONSIDERED BY THE LOWER AUTHORITY. THE MAIN ISSUE WITH REGARD TO PAYMENT OF SALES-TAX WAS REMITTED BACK TO THE FI LE OF THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT FOR THE SAKE OF CONSISTENCY, THE ISSUE WITH REGARD TO VALID ITY OF THE ASSESSMENT ALSO NEEDS TO BE CONSIDERED BY THE ASSESSING OFFICE R. ACCORDINGLY, THE 21 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND THE I SSUE WITH REGARD TO VALIDITY OF ASSESSMENT PROCEEDINGS IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REC ONSIDER THE ISSUE AFRESH AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH L AW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 37. FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSEE H AS TAKEN ONE MORE GROUND WITH REGARD TO DISALLOWANCE OF RS.69,15 0. 38. SHRI IYPE MATHEW, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID A SUM OF RS. 69,150 TO T HE BUYER IN ORDER TO COMPENSATE THE LOSS SUFFERED BY HIM ON ACCOUNT OF I NFIRMITY IN THE QUALITY OF GOODS SUPPLIED. THE ASSESSEE CLAIMED IT AS REVE NUE EXPENDITURE. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT IT IS PENAL IN NATURE. ACCORDING TO THE LD.REPRESENTATIV E, COMPENSATING THE BUYER ON ACCOUNT OF INFERIOR QUALITY OF CASHEW KERN EL SUPPLIED BY THE ASSESSEE CANNOT BE INFRACTION OF LAW OR PENAL PAYME NT. AT THE BEST, IT MAY BE A COMPENSATION FOR BREACH OF CONTRACT. WE HEARD SHRI M ANIL KUMAR, THE LD.DR ALSO. 22 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 39. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF T HE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO CLARIFY THE EXAC T NATURE OF TRANSACTION AND HE ALSO FOUND THAT COMPENSATION PAID BY THE ASS ESSEE TO THE BUYER IS PENAL IN NATURE. THIS TRIBUNAL IS UNABLE TO UNDERS TAND HOW COMPENSATION COULD BE PENAL IN NATURE? IN A BUSINESS TRANSACTIO N IF THE SUPPLIER FAILS TO SUPPLY THE REQUISITE QUALITY OF THE MATERIAL IT HAS TO NATURALLY PAY COMPENSATION OR REDUCE THE PRICE OF THE GOODS SUPPL IED. THOUGH THE ASSESSEE CLAIMS THAT IT IS A COMPENSATION FOR INFER IOR QUALITY OF CASHEW KERNEL SUPPLIED WHICH IN SUBSTANCE IS ONLY REDUCTIO N IN THE PRICE OF THE GOODS SUPPLIED, HENCE THERE CANNOT BE ANY INFRACTIO N OF LAW IN PAYMENT OF COMPENSATION TO THE BUYER. IT IS ALSO NOT AGAINST PUBLIC POLICY. THEREFORE, THE PAYMENT OF RS.69,150 CANNOT BE CONSTRUED TO BE PENAL IN NATURE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IT IS A BUSINESS EXPENDITURE IN VIEW OF THE INFERIOR QUALITY OF CASHEW KERNEL SUPPL IED. THEREFORE, THIS HAS TO BE ALLOWED AS REVENUE EXPENDITURE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION FOR RS.69,150 AS REVENUE EXPENDITURE WHIL E GIVING EFFECT TO THIS ORDER. 40. THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 23 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 41. NOW COMING TO THE DEPARTMENTAL APPEALS IN THE C ASE OF SHRI A ABDUL SALAM, ITA NO.97/COCH/.2012 IS THE APPEAL FOR THE A SSESSMENT YEAR 2003- 04. THE FIRST GROUND IN THIS APPEAL IS WITH REGARD TO ADDITION OF RS.10 LAKHS TOWARDS INVESTMENT IN KAMALIYA MEDICAL INSTITUTION ON 22-07-2002. 42. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT AS PER THE SEIZED DOCUMENT MKG-5 (A-29), THE ASSESSEE WAS FOUND TO HA VE PAID AN AMOUNT OF RS.10 LAKHS AS LOAN TO KAMALIYA MEDICAL INSTITUT ION ON 22-07-2002. IN RESPONSE TO A QUERY, THE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT THE PAYMENT OF RS.10 LAKHS WAS PAID TO KAMALIY A MEDICAL INSTITUTION DURING ASSESSMENT YEAR 2005-06 AND NOT DURING THE A SSESSMENT YEAR 2003-04. HOWEVER, THE ASSESSEE COULD NOT PRODUCE AN Y MATERIAL TO SUPPORT THE CLAIM OF THE ASSESSEE. AFTER VERIFYING THE BALANCE-SHEET FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSING OFFICER FOUND THAT A SUM OF RS.10,20,000 WAS FOUND IN THE NAME OF MALA MEDICAL CENTRE PVT LTD. THE SEIZED MATERIAL DISCLOSES THE INVESTMENT IN KAMALIY A MEDICAL INSTITUTION RUN BY IMRAN RAFI MUSLIM EDUCATIONAL CHARITABLE TRU ST. THE RECEIPT IS DATED 22-07-2002. THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.10 LAKHS FOR THE YEAR UNDER CONSIDERATION. HOWE VER, ON APPEAL, THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROVING THE CREDIT. ACC ORDING TO THE LD.DR, THE 24 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 SEIZED MATERIAL SHOWS THE INVESTMENT MADE IN KAMALI A MEDICAL INSTITUTISON ON 22-07-2002. THE BALANCE-SHEET DISCLOSES INVESTM ENT MADE IN MALA MEDICAL CENTRE PVT LTD. THE CIT(A) CONFUSED BETWEE N THE ENTRIES IN RESPECT OF MALA MEDICAL CENTRE PVT LTD AND KAMALIA MEDICAL INSTITUTION. THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION, THE REFORE, HE HAS NOT DISCHARGED HIS OBLIGATION. 43. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER VERIF IED THE BALANCE-SHEET OF THE ASSESSEE AND FOUND THE SAME TO BE CORRECT. THE ASSESSING OFFICER MADE ADDITION ABSOLUTELY UNDER WRONG PREMISES IN RE SPECT OF A LOAN GIVEN TO MALA MEDICAL CENTRE PVT LTD. ACCORDING TO THE L D.REPRESENTATIVE, ONCE THE ASSESSEE DISCHARGED HIS OBLIGATION, THERE CANNO T BE ANY ADDITION IN THE HANDS OF THE PRESENT ASSESSEE. THE LD.REPRESENTATI VE PLACED HIS RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CAS E OF LAXMI HOSPITAL (SUPRA). 44. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING T HE COURSE OF SEARCH OPERATION, DOCUMENT MKG-5 (A-69) WAS SEIZED WHICH I S A COPY OF THE 25 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 RECEIPT ISSUED BY KAMALIA MEDICAL INSTITUTION RUN B Y IMRAN RAFI MUSLIM EDUCATIONAL CHARITABLE TRUST. THE RECEIPT IS DATED 22-07-2002. THE BALANCE-SHEET SAID TO BE FILED BY THE ASSESSEE BEFO RE THE ASSESSING OFFICER DISCLOSES AN INVESTMENT OF RS.10,20,000 IN MALA MED ICAL CENTRE PVT LTD. THEREFORE, PRIMA FACIE IT APPEARS THAT THERE ARE TW O INVESTMENT I.E RS.10 LAKHS IN KAMALIA MEDICAL INSTITUTION AND ANOTHER SU M OF RS.10,20,000 IN THE CASE OF MALA MEDICAL CENTRE PVT LTD. IT IS NOB ODYS CASE THAT BOTH THE INVESTMENTS, VIZ. INVESTMENT IN MALA MEDICAL CENTRE PVT LTD AND THE INVESTMENT IN KAMALIA MEDICAL INSTITUTION ARE DISCL OSED IN THE BALANCE- SHEET. MALA MEDICAL CENTRE PVT LTD AND KAMALIA MED ICAL INSTITUTION ARE DIFFERENT AND INDEPENDENT INSTITUTIONS. THEREFORE, IT IS NOT KNOWN HOW THE ASSESSEE HAS DISCHARGED HIS OBLIGATION IN RESPECT O F INVESTMENT MADE IN KAMALIA MEDICAL INSTITUTION WHICH WAS RUN BY IMRA N RAFI MUSLIM EDUCATIONAL CHARITABLE TRUST. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) MIGHT HAVE MISUNDERSTOOD THE INVEST MENT DISCLOSED IN MALA MEDICAL CENTRE PVT LTD AS INVESTMENT MADE IN K AMALIA MEDICAL INSTITUTION. THEREFORE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE FACTUAL ASPECT NEEDS TO BE CLARIFIED AS TO WHETHER THERE ARE TWO INVESTMENTS OR ONLY ONE INVESTMENT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO VERIFY TH E RECORDS AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW. ACCORDING LY, THE ORDERS OF LOWER 26 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 AUTHORITIES ARE SET ASIDE AND THE ISSUE OF ADDITION OF RS.10 LAKHS IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. THE ASSESSING OFFICER SHALL VERIFY THE MATERIAL AVAILAB LE ON RECORD AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER PROVID ING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. 45. NOW COMING TO THE APPEAL FOR ASSESSMENT YEAR 20 05-06, THE FIRST GROUND OF APPEAL PERTAINS TO DISALLOWANCE OF RS. 17 ,88,926 ON ACCOUNT OF DIVERSION OF INTEREST BEARING FUNDS. 46. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSEE DEBITED INTEREST PAID ON LOAN AVAILED FROM BANKS. THE OUTS TANDING LOAN AMOUNT AS ON 31-03-2005 AS PER THE BALANCE-SHEET IS RS.8,55,3 5,543. THE ASSESSEE DIVERTED NEARLY RS.2,21,50,562 FOR INVESTMENT IN SH ARES AND ADVANCE TO RELATIVES. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE INTEREST BEARING FUNDS WERE DIVERTED FOR NON BUSINESS PURPOSE. ACCO RDINGLY, THE PROPORTIONATE INTEREST CLAIMED BY THE ASSESSEE TO T HE BANKS WAS DISALLOWED. 47. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REP RESENTATIVE FOR THE ASSESSEE SUBMITTED THAT FOR THE ASSESSMENT YEAR 200 5-06 AS ON 31-03- 27 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 2005 THE ASSESSEE HAD RS. 11,54,90,788 AS NON INTE REST BEARING FUNDS. THE LOAN AS ON 31-03-2005 IS ONLY RS.8,55,35,544. THEREFORE, THE NET INTEREST FREE FUNDS / OWN FUNDS AVAILABLE IS TO THE EXTENT OF RS.2,99,55,244 OUT OF WHICH THE NON BUSINESS ADVANCE AND INVESTMEN T WAS TO THE EXTENT OF RS.2,21,50,472. THEREFORE, IN VIEW OF THE JUDGM ENT OF THE APEX COURT IN THE CASE OF MUNJAL SALES CORPORATION VS CIT & ANR ( 2008) 298 ITR 298 (SC) THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. 48. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE CLEARLY DEMONSTRATED BEFORE THE CIT(A) THAT SUFFICIENT INTE REST FREE / OWN FUNDS WERE AVAILABLE FOR MAKING ADVANCE TO RELATIVES AND INVESTMENT IN SHARES. THE ASSESSEE HAS ALSO FILED COPIES OF THE STATEMENT OF ACCOUNTS TO EXPLAIN THE AVAILABILITY OF NON INTEREST BEARING FUNDS. TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE HAS SUFFI CIENT NON INTEREST BEARING FUNDS, ADVANCES MADE FROM AND OUT OF THE NO N INTEREST BEARING FUNDS CANNOT BE A REASON TO DISALLOW INTEREST ON TH E BORROWED FUNDS. THE APEX COURT IN THE CASE OF MUNJAL SALES CORPORATION (SUPRA) FOUND THAT WHEN THE ASSESSEE HAS SUFFICIENT OWN FUNDS AND PROF IT, IT CANNOT BE SAID THAT THE BORROWED FUNDS WERE DIVERTED. IN VIEW OF THE JUDGMENT OF THE APEX COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CIT(A) HAS 28 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 RIGHTLY DELETED THE ADDITION. FROM THE ORDER OF TH E CIT(A) AND THE MATERIALS FILED BY THE ASSESSEE BEFORE THIS TRIBUNAL, IT IS O BVIOUS THAT NON INTEREST BEARING FUNDS WERE AVAILABLE WITH THE ASSESSEE. TH EREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED. 49. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.49,100 BEING UNEXPLAINED DEPOSITS IN SOUTH INDIAN BANK ON 24-07-2004. 50. SHRI M ANIL KUMR, THE LD.DR SUBMITTED THAT DURI NG THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS DEPOSITED AN AMOUNT OF R.49,100 WITH SOUTH INDIAN BANK LTD ON 24-07-2004. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE FIXED DEPOSITS TOTALLING RS. 7,77,822 WITH SOUTH INDIAN BANK WAS DULY ACCOUNTED IN THE BOOKS OF ACCO UNT AND THE INTEREST ACCRUED THEREIN HAS ALSO BEEN CREDITED TO THE PROFI T & LOSS ACCOUNT. HOWEVER, ON VERIFICATION, THE ASSESSING OFFICER FOU ND THAT THE DEPOSIT OF RS.49,100 MADE ON 24-07-2004 WAS NOT REFLECTED. TH EREFORE, IN THE ABSENCE OF ANY FURTHER EXPLANATION REGARDING THE SO URCE OF DEPOSIT OF RS.49,100, THE SAME WAS ASSESSED AS INCOME OF THE A SSESSEE. HOWEVER, ON APPEAL, THE CIT(A) FOUND THAT THE AMOUNT OF RS.4 9,100 IS A REINVESTMENT AND THAT THE MATERIAL WAS FILED BEFORE THE ASSESSING OFFICER 29 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 WHICH WAS NOT CONSIDERED. ACCORDING TO THE LD.DR, THE INVESTMENT OF RS.49,100 WAS NOT REFLECTED IN SOUTH INDIAN BANK AC COUNT, THEREFORE, THE CIT(A) IS NOT CORRECT IN DELETING THE ADDITION. 51. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED A CE RTIFICATE FROM SOUTH INDIAN BANK, KOLLAM BRANCH WHICH CLEARLY SHOWS THAT THE EARLIER AMOUNT SHOWN IN THE FIXED DEPOSIT WAS REINVESTED BY THE AS SESSEE. THE CERTIFICATE ISSUED BY THE BANKER WAS FILED BEFORE THE ASSESSING OFFICER AND THE CIT(A). THE ASSESSING OFFICER HAS NOT CONSIDERED THE SAME. THE ASSESEE HAS ALSO EXPLAINED THAT THE DEPOSIT OF RS.49,100 WAS DISCLOS ED IN THE BALANCE-SHEET UNDER SOUTH INDIAN BANK FIXED DEPOSIT. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. 52. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE DISCLOSED FIXED DEPOSIT OF R.49,100 IN THE BALANCE-SHEET UNDER SOU TH INDIAN BANK FIXED DEPOSIT. AS PER THE CERTIFICATE ISSUED BY THE BANK ERS, IT IS A REDEPOSIT FROM EARLIER ACCOUNT. THEREFORE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THERE FORE, THE SAME IS CONFIRMED. 30 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 53. THE NEXT GROUND PERTAINING INTEREST ON THE FIXE D DEPOSIT OF RS.49,100, THE CLAIM OF THE ASSESSEE IS THAT RS.3,4 37 WAS INCLUDED WHEN THE SAME IS CREDITED BY THE BANK, IN THE TOTAL INCO ME. IN THE ABSENCE OF ANY MATERIAL, THE CIT(A) DELETED THE ADDITION. THI S TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE ORDER OF CIT(A) ON THIS ISSUE IS CONFIRMED. 54. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 55. NOW COMING TO APPEAL FOR ASSESSMENT YEAR 2006-0 7 IN ITA NO.99/COCH/2012 IN THE CASE OF SHRI A ABDUL SALAM T HE FIRST GROUND OF APPEAL IS WITH REGARD TO ADDITION OF RS.18,75,383 B EING UNEXPLAINED DEPOSITS. 56. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS. 18,95,701 ON ACCOUNT OF UNEXPL AINED DEPOSITS. ACCORDING TO THE LD.DR, THE FIXED DEPOSIT IN SOUTH INDIAN BANK WAS NOT EXPLAINED. THE ASSESSING OFFICER FOUND THAT THE SO URCES FOR THE UNEXPLAINED DEPOSIT TO THE EXTENT OF RS.18,95,701 A FTER ADJUSTING THE AMOUNT OF RS.11,44,611 REMAINED TO BE EXPLAINED. A CCORDINGLY, THE SAME 31 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 WAS TREATED AS INCOME OF THE ASSESSEE. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT THE ASSESSEE HAS EX PLAINED THE SOURCE OF INVESTMENT EXCEPT AN AMOUNT OF RS.20,312 MADE IN CA NARA BANK, MARTHANDOM BRANCH ON 11-05-2005. ACCORDINGLY, THE CIT(A) RESTRICTED THE ADDITION TO RS.20,312. ACCORDING TO THE LD.DR, THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION BEFORE THE ASSESSING OFFI CER. 57. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF ENTIRE DEPOSIT BEFORE THE ASSESSING OFFICER. A CONFIRMATO RY LETTER WAS ALSO FILED FROM SOUTH INDIAN BANK. THE CIT(A) FURTHER FOUND T HAT A DEPOSIT OF RS.10,20,000 REFERRED BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER WAS, IN FACT, RENEWED DURING THE YEAR UNDER CONSIDE RATION ON ACCOUNT FBP PROCEEDS. ACCORDING TO THE LD.REPRESENTATIVE, ALL THE FIXED DEPOSITS WERE ROUTED THROUGH THE BOOKS OF ACCOUNT AND THE MATERIA LS WERE FILED BEFORE THE ASSESSING OFFICER. THE FIXED DEPOSIT WAS MADE TO THE EXTENT OF RS.82,22,133 AS SHOWN IN THE BALANCE-SHEET AS ON 31 -03-2006 WHICH INCLUDE THE FIXED DEPOSIT WHICH HAS BEEN RENEWED DU RING THE YEAR TO THE EXTENT OF RS.30,20,000. WHAT REMAINS TO BE EXPLAIN ED IS THE DEPOSIT OF RS.20,312 IN CANARA BANK ON 11-05-2005. THEREFORE, THE CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION TO RS.20,312. 32 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 58. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE TOTA L DEPOSIT IN THE FIXED DEPOSIT IS RS.82,22,133 WHICH INCLUDES A RENEWAL DE POSIT OF RS.30,20,000. THE TOTAL DEPOSIT OF RS.82,22,133 COVERS THE ENTIRE DEPOSITS EXCEPT AN AMOUNT OF RS.20,312 IN CANARA BANK, MARTHANDOM BRAN CH ON 11-05-2005. THEREFORE, THE CIT(A) FOUND THAT THE ASSESEE FAILED TO EXPLAIN THE SOURCE OF RS.20,312. THEREFORE, HE RESTRICTED THE ADDITION O F RS.20,312. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 59. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS. 66,486 TOWARDS ACCRUED INTEREST ON THE UNEXPLAINED DEPOSIT S. 60. WE HEARD THE LD.DR AND THE LD.REPRESENTATIVE FO R THE ASSESSEE. THE DEPOSITS OF RS.82,22,133 WAS FOUND TO BE MADE THROU GH THE BOOKS OF ACCOUNT WHICH INCLUDES THE ADDITION MADE BY THE ASS ESSING OFFICER TO THE EXTENT OF RS. 18,95,701. THEREFORE, THE INTEREST A CCRUED THEREON TO THE EXTENT OF RS.66,486 IS FROM THE FIXED DEPOSIT MADE THROUGH BOOKS OF ACCOUNT. THEREFORE, THERE IS NO QUESTION OF ANY SE PARATE ADDITION. 33 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 61. NOW COMING TO THE APPEAL FOR ASSESSMENT YEAR 20 07-08 IN ITA NO.100/COCH/2012 IN THE CASE OF SHRI ABDUL SALAM, T HE FIRST GROUND OF APPEAL PERTAINS TO DISALLOWANCE ON ACCOUNT OF DIVER SION OF INTEREST BEARING FUNDS FOR NON BUSINESS PURPOSE. 62. WE HAVE HEARD THE LD.DR AND THE LD.REPRESENTATI VE FOR THE ASSESSEE. THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THAT O F APPEAL FOR ASSESSMENT YEAR 2005-06. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DEBITED AN AMOUNT OF RS.74,84,828 TOWARDS INTEREST PAID ON LOA NS AVAILED FROM BANKS. THE LOANS OUTSTANDING AS ON 31-03-2007 WAS RS. 6,52 ,99,217 WHEREAS THE ASSESSEE PAID RS.2,14,56,662 TO SISTER CONCERNS AND FOR NON BUSINESS RELATED INVESTMENTS. NOTICING THIS THE ASSESSING O FFICER DISALLOWED THE PROPORTIONATE INTEREST AMOUNTING TO RS.24,59,439 FR OM THE TOTAL INTEREST PAYMENT OF RS.74,84,828. ON APPEAL, THE CIT(A) FOU ND THAT FOUND THAT THE ASSESSEE HAD WORKING CAPITAL AT RS.4,14,91,421 WHER EAS THE DIVERSION OF FUNDS FOR NON BUSINESS PURPOSE WAS ONLY TO THE EXTE NT OF RS.2,14,56,662 LEAVING A CLEAR BALANCE OF RS.2,00,34,759. ON THE BASIS OF THIS FACTUAL FINDING THE CIT(A) HELD THAT THE INTEREST FREE FUND S FOR NON BUSINESS 34 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 PURPOSE GIVEN BY THE ASSESSEE WAS OUT OF THE INTERE ST BEARING FUNDS AND THEREFORE RELYING ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF MUNJAL SALES CORPORATION (SUPRA) HE DELETED THE DISALLOWAN CE. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FACTUAL FINDING RE CORDED BY THE CIT(A). THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED. 63. THE NEXT GROUND OF APPEAL PERTAINS TO DELETION OF PROTECTIVE ADDITION OF RS.44,67,631 ON ACCOUNT OF 1/4 TH OF THE TOTAL UNEXPLAINED INVESTMENT IN BUILDING CONSTRUCTION IN THE CASE OF M/S QUILON MED ICAL TRUST. 64. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE CIT(A) DELETED THE ADDITION ONLY ON THE GROUND THAT THE ASSESSEE IS EN TITLED FOR EXEMPTION U/S 10(23C)(VI) OF THE ACT. ACCORDING TO THE LD.DR, FO R CLAIMING EXEMPTION U/S 10(23C)(VI) THE INCOME SHOULD BE GENERATED IN THE C OURSE OF ACTIVITY OR IT SHOULD BE A VOLUNTARY DONATION. THIS FACT WAS NOT EXAMINED IN THE CASE OF QUILON MEDFICAL TRUST. THEREFORE, ACCORDING TO THE LD.DR, THE ADDITION MADE IN THE HANDS OF THE TRUSTEE, THE PRESENT ASSES SEE, HAS TO BE CONFIRMED. 65. WE HEARD, SHRI IYPE MATHEW, THE LD.REPRESENTATI VE FOR THE ASSESSEE ALSO. ACCORDING TO THE LD.REPRESENTATIVE, THE CONS TRUCTION WAS MADE IN THE 35 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 HANDS OF QUILON MEDICAL TRUST WHICH IS AN INDEPENDE NT ASSESSABLE UNIT. ACCORDING TO THE LD.REPRESENTATIVE, ALL INCOMES OF THE TRUST ARE EXEMPT U/S 10(23C)(VI) OF THE ACT. THEREFORE, THERE IS NO QUE STION OF ANY ADDITION IN THE HANDS OF THE PRESENT ASSESSEE. 66. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE C ASE OF QUILON MEDICAL TRUST, THIS TRIBUNAL FOUND THAT THE TERM ANY INCOM E REFERRED IN SECTION 10(23C) DOES NOT INCLUDE THE MONEY COLLECTED FOR AD MISSION OF THE STUDENTS OVER AND ABOVE THE PRESCRIBED FEE. THIS T RIBUNAL FOUND THAT THE INCOME GENERATED IN THE COURSE OF RUNNING OF THE ED UCATIONAL INSTITUTION, THE INCOME GENERATED FROM THE PROPERTY HELD UNDER T RUST AND ANY VOLUNTARY DONATION OTHER THAN FOR ADMISSION OF THE STUDENTS M AY FALL WITHIN THE THEM ANY INCOME REFERRED IN SECTION 10(23C) OF THE ACT . HOWEVER, THE CAPITATION FEE FOR ADMISSION OF THE STUDENTS OVER A ND ABOVE THE PRESCRIBED FEES AS EXPLAINED BY THE APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATION & ORS VS STATE OF KARNATAKA & ORS (2002) 8 SCC 481 AND ISLAMIC ACADEMIC EDUCATION VS STATE OF KARNATAKA (2003) 6 S CC 677 MAY NOT FALL WITHIN THE TERM ANY INCOME. THIS TRIBUNAL IN THE CASE OF QUILON MEDICAL TRUST FOUND THAT NO MATERIAL WAS AVAILABLE TO SUGGE ST THAT ANY CAPITATION FEES OR ANY MONEY OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF 36 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 STUDENT WAS COLLECTED BY THE ASSESSEE. THEREFORE, IT WAS FOUND THAT THE ASSESSEE WAS ENTITLED FOR EXEMPTION US 10(23C) OF T HE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) WAS CONFIRMED. IN THE PRES ENT CASE, THE ASSESSING OFFICER HAS MADE ONLY PROTECTIVE ASSESSMENT. WHEN THE ORDER OF CIT(A) WAS CONFIRMED BY THIS TRIBUNAL BY AN ORDER DATED 31 -01-2014, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT A FURTHER ADDITIO N ON PROTECTIVE BASIS IN THE HANDS OF THE TRUSTEE, VIZ. THE PRESENT ASSESSEE CANNOT BE JUSTIFIED. ACCORDINGLY, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 67. THE LAST GROUND OF APPEAL PERTAINS TO DELETION OF ADDITION ON ACCOUNT OF ACCRUED INTEREST ON UNEXPLAINED DEPOSITS AMOUNTI NG TO RS.2,27,800. 68. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT AS PER THE SEIZED MATERIAL IT WAS FOUND THAT THE ASSESSEE MADE DEPOSI T WITH SOUTH INDIAN BANK AND CANARA BANK. THE TOTAL INTEREST ACCRUED O N THE DEPOSIT WORKS OUT TO RS.2,27,800. THIS ACCRUED INTEREST WAS NOT TAKEN AS INCOME. ACCORDING TO THE LD.DR, THE ASSESSEE ADMITTED THAT THE ACCRUED INTEREST ON THE FIXED DEPOSIT WAS OMITTED TO BE INCLUDED IN THE TOTAL INCOME. HOWEVER, THE CIT(A) FOUND THAT THERE IS NO MATERIAL TO SHOW THAT THE ASSESSEE 37 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ADMITTED THAT THE INTEREST WAS OMITTED TO BE INCLUD ED. THE CIT(A), THEREFORE, DELETED THE ADDITION. ACCORDING TO THE LD.DR, WHEN THE ASSESSEE ADMITTED THAT IT WAS NOT INCLUDED DUE TO O MISSION, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. 69. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE NEVER ADMITTED BEFORE THE ASSESSING OFFICER THAT THE INTEREST WAS NOT INCLUDE D DUE TO OMISSION. ACCORDING TO THE LD.REPRESENTATIVE, IN THE PRE-ASSE SSMENT NOTICE ISSUED BY THE ASSESSING OFFICER THERE IS NO MENTION ABOUT THE INTEREST INCOME. ACCORDING TO THE LD.REPRESENTATIVE, THE INTEREST IN COME DISCLOSED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT FAR EXCEEDS T HE INTEREST INCOME ADDED BY THE ASSESSING OFFICER. THEREFORE, THE CIT (A) DELETED THE ADDITION. 70. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE INTE REST SHOWN BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT EXCEEDS THE I NTEREST INCOME ADDED BY THE ASSESSING OFFICER. IN THE ABSENCE OF ANY MA TERIAL TO SHOW THAT THE ASSESSEE ADMITTED FOR ADDITION OF RS.2,27,800 TOWAR DS THE INTEREST, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IT CANNO T BE HELD THAT THE ASSESSEE ADMITTED FOR ADDITION. WHEN THE ASSESSEE DISCLOSED THE INTEREST 38 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 IN THE PROFIT & LOSS ACCOUNT WHICH EXCEEDS THE ADDI TION MADE BY THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THERE IS NO NEED FOR ANY FURTHER ADDITION. THEREFORE, THE CIT( A) HAS RIGHTLY DELETED THE ADDITION. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 71. NOW COMING TO APPEAL FOR ASSESSMENT YEAR 2008-0 9 IN ITA NO.101/COCH/2012 IN THE CASE OF SHRI A ABDUL SALAM, THE FIRST GROUND PERTAINS TO DISALLOWANCE OF PROPORTIONATE INTEREST TO THE EXTENT OF RS. 9,07,527 ON THE FUNDS DIVERTED FOR NON BUSINESS PUR POSE. 72. WE HAVE HEARD THE LD.DR AND THE LD.REPRESENTATI VE FOR THE ASSESSEE. THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THAT O F APPEAL FOR ASSESSMENT YEAR 2007-08. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DEBITED AN AMOUNT OF RS.9,07,527 TOWARDS INTEREST PAID ON LOAN S AVAILED FROM BANKS. THE LOANS OUTSTANDING AS ON 31-03-2008 WAS RS.1,01, 00,265 WHEREAS THE ASSESSEE DIVERTED FUNDS TO THE EXTENT OF RS.4,15,04 ,131 TO SISTER CONCERNS AND NON BUSINESS RELATED INVESTMENTS. NOTICING THI S THE ASSESSING OFFICER DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE AMO UNTING TO RS. 9,07,527. ON APPEAL, THE CIT(A) FOUND THAT FOUND T HAT AS ON 31-03-2008 THE ASSESSEE HAD WORKING CAPITAL AT RS.4,35,75,302 WHEREAS THE DIVERSION 39 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 OF FUNDS FOR NON BUSINESS PURPOSE WAS ONLY TO THE E XTENT OF RS.2,64,14,162 LEAVING A CLEAR BALANCE OF RS.1,71,61,140. ON THE BASIS OF THIS FACTUAL FINDING THE CIT(A) HELD THAT THE INTEREST FREE FUND S FOR NON BUSINESS PURPOSE GIVEN BY THE ASSESSEE WAS NOT OUT OF THE IN TEREST BEARING FUNDS AND THEREFORE RELYING ON THE JUDGMENT OF THE APEX C OURT IN THE CASE OF MUNJAL SALES CORPORATION (SUPRA) HE DELETED THE DIS ALLOWANCE. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FACTUAL FINDIN G RECORDED BY THE CIT(A). ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED. 73. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS. 8,19,37,628 PROTECTIVELY ASSESSED AS 1/4 TH OF THE TOTAL UNEXPLAINED INVESTMENT IN BUILDING CONSTRUCTION IN THE CASE OF M/S QUILON MEDICAL TRUST. 74. WE HEARD THE LD.DR AND THE LD.REPRESENTATIVE FO R THE ASSESSEE. THIS ISSUE HAS BEEN ELABORATELY DISCUSSED IN THE EARLIER PARAGRAPHS OF THIS ORDER. THE SUBSTANTIVE ADDITION HAS BEEN MADE IN T HE HANDS OF THE ASSESSEE QUILON MEDICAL TRUST AND ADDITION IN THE H ANDS OF THE PRESENT ASSESSEE HAS BEEN MADE ON PROTECTIVE BASIS. IN THE CASE OF QUILON MEDICAL TRUST, THIS TRIBUNAL FOUND THAT THE TERM A NY INCOME REFERRED IN SECTION 10(23C) DOES NOT INCLUDE THE MONEY COLLECTE D FOR ADMISSION OF THE STUDENTS OVER AND ABOVE THE PRESCRIBED FEE. THIS T RIBUNAL FOUND THAT THE 40 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 INCOME GENERATED IN THE COURSE OF RUNNING OF THE ED UCATIONAL INSTITUTION, THE INCOME GENERATED FROM THE PROPERTY HELD UNDER T RUST AND ANY VOLUNTARY DONATION OTHER THAN FOR ADMISSION OF THE STUDENTS M AY FALL WITHIN THE THEM ANY INCOME REFERRED IN SECTION 10(23C) OF THE ACT . HOWEVER, THE CAPITATION FEE FOR ADMISSION OF THE STUDENTS OVER A ND ABOVE THE PRESCRIBED FEES AS EXPLAINED BY THE APEX COURT IN THE CASE OF T.M.A. PAI FOUNDATION & ORS VS STATE OF KARNATAKA & ORS (2002) 8 SCC 481 AND ISLAMIC ACADEMIC EDUCATION VS STATE OF KARNATAKA (2003) 6 S CC 677 MAY NOT FALL WITHIN THE TERM ANY INCOME. THIS TRIBUNAL IN THE CASE OF QUILON MEDICAL TRUST FOUND THAT NO MATERIAL WAS AVAILABLE TO SUGGE ST THAT ANY CAPITATION FEES OR ANY MONEY OVER AND ABOVE THE PRESCRIBED FEE FOR ADMISSION OF STUDENT WAS COLLECTED BY THE ASSESSEE. THEREFORE, IT WAS FOUND THAT THE ASSESSEE WAS ENTITLED FOR EXEMPTION US 10(23C) OF T HE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) WAS CONFIRMED. IN THE PRES ENT CASE, THE ASSESSING OFFICER HAS MADE ONLY PROTECTIVE ASSESSMENT. WHEN THE ASSESSMENT MADE IN THE HANDS OF QUILON MEDICAL TRUST WAS CONFI RMED BY CIT(A) AND THE ORDER OF CIT(A) WAS CONFIRMED BY THIS TRIBUNAL BY AN ORDER DATED 31- 01-2014, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT A FURTHER ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE TRUSTEE, VI Z. THE PRESENT ASSESSEE CANNOT BE JUSTIFIED. ACCORDINGLY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THIS TRIBUNAL DO NOT FIND 41 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 75. NOW COMING TO APPEAL FOR ASSESSMENT YEAR 2009-1 0 IN ITA NO.102/COCH/2012 IN THE CASE OF SHRI A ABDUL SALAM THE FIRST ISSUE PERTAINS TO DISALLOWANCE OF PROPORTIONATE INTEREST ON DIVERSION OF FUNDS FOR NON BUSINESS PURPOSE. 76. WE HAVE HEARD THE LD.DR AND THE LD.REPRESENTATI VE FOR THE ASSESSEE. THIS ISSUE HAS BEEN ELABORATELY DISCUSSED IN THE EA RLIER PARAGRAPHS WHILE DEALING WITH THE APPEALS FOR EARLIER ASSESSMENT YEA RS. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DEBITED AN AMOUNT OF RS. 69,844 TOWARDS INTEREST PAID ON LOANS AVAILED FROM BANKS. THE LOA NS OUTSTANDING AS ON 31-03-2008 WAS RS.1,01,00,265 WHEREAS THE ASSESSEE DIVERTED FUNDS TO THE EXTENT OF RS.3,13,81,357 TO SISTER CONCERNS AND FOR NON BUSINESS RELATED INVESTMENTS. NOTICING THIS, THE ASSESSING OFFICER DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE AMOUNTING TO RS.69 ,844. ON APPEAL, THE CIT(A) FOUND THAT FOUND THAT AS ON 31-03-2009 THE A SSESSEE HAD WORKING CAPITAL AT RS.8,44,53,041 WHEREAS THE DIVERSION OF FUNDS FOR NON BUSINESS PURPOSE WAS ONLY TO THE EXTENT OF RS.3,13,81,357 LE AVING A CLEAR BALANCE OF RS.1,03,861 AFTER DEBITING BANK CHARGES AND COMM ISSION, ETC. ON THE 42 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 BASIS OF THIS FACTUAL FINDING THE CIT(A) HELD THAT THE INTEREST FREE FUNDS FOR NON BUSINESS PURPOSE GIVEN BY THE ASSESSEE WAS NOT OUT OF THE INTEREST BEARING FUNDS AND THEREFORE RELYING ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF MUNJAL SALES CORPORATION (SUPRA) HE DEL ETED THE DISALLOWANCE. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FACT UAL FINDING RECORDED BY THE CIT(A). ACCORDINGLY, THE ORDER OF THE CIT(A) O N THIS ISSUE IS CONFIRMED. 77. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.2,27,800 ON ACCOUNT OF ACCRUED INTEREST ON THE UNEXPLAINED D EPOSIT. 78. THIS ISSUE HAS ALSO BEEN DEALT BY US WHILE DEAL ING WITH THE APPEAL FOR ASSESSMENT YEAR 2007-08. THE CASE OF THE ASSES SING OFFICER IS THAT THE ASSESSEE HAS ADMITTED BEFORE HIM THAT DUE TO OMISSI ON, THE ACCRUED INTEREST ON DEPOSITS REMAINED TO BE DISCLOSED. THE ASSESSEE RETRACTS THAT HE HAS MADE ANY SUCH ADMISSION BEFORE THE ASSESSING OFFICER. THE CIT(A), HOWEVER, FOUND THAT THE ADDITION MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF INTEREST EXCEEDS FAR THE ADDITION MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF ACCRUED INTEREST. THIS TRIBUNAL HAS ALREADY FOUND THAT WHEN THE ASSESSEE DISCLOSED THE INTEREST IN THE PROFIT & LOSS ACCOUNT WHICH EXCEEDS THE ADDITION MADE BY THE ASSESSING OFFICER THERE IS NO NEED FOR 43 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ANY FURTHER ADDITION. CONSISTENT WITH THE FINDING S RECORDED, WE UPHOLD THE ORDER OF CIT(A). THE GROUND OF THE REVENUE IS REJE CTED. 79. ALL THE APPEALS FILED BY THE REVENUE IN THE CAS E OF SHRI A ABDUL SALAM ARE DISMISSED. 80. NOW COMING TO APPEAL FILED BY THE REVENUE IN TH E CASE OF M/S S.N. CASHEW INTERNATIONAL (P) LTD IN ITA NO.280/COCH/201 2 FOR THE ASSESSMENT YEAR 2008-09, THE FIRST GROUND OF APPEAL IS WITH RE GARD TO ADDITION OF RS.21,33,500 FROM HAZEERA QMC ACCOUNT. 81. ACCORDING TO THE LD.DR, SHRI M. ANIL KUMAR, THI S RECEIPT FOUND IN THE PREMISES OF QUILON MEDICAL TRUST DISCLOSES UNACCOUN TED RECEIPT BELONGING TO THE SISTER CONCERN OF THE TRUST INCLUDING THE AS SESSEE. THE VOUCHERS WERE PREPARED BY THE EMPLOYEES OF THE ASSESSEE. TH ERE WAS NO EXPLANATION AS TO WHY SELF MADE VOUCHERS WERE PREPA RED. THE ASSESSEE HAS ALSO DOUBTED THE GENUINENESS OF THE VOUCHER FOU ND. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSE E. THE MANAGING TRUSTEE OF QUILON MEDICAL TRUST THROUGH SHRI A.A. S ALAM ADMITTED THAT THE TRANSACTION WAS RELATING TO THE PRESENT ASSESSEE. IN THE ABSENCE OF ANY MATERIAL, ACCORDING TO THE LD.DR, THE ASSESSING OFF ICER MADE ADDITION IN THE 44 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 HANDS OF THE PRESENT ASSESSEE. HOWEVER, THE CIT(A) FOUND THAT THE ASSESSEE HAS FURNISHED THE NAME AND ADDRESS OF MRS. HAZEERA FROM WHOM THE MONEY WAS SAID TO HAVE BEEN RECEIVED. IN THE ABSENCE OF ANY ENQUIRY CARRIED OUT BY THE ASSESSING OFFICER, THE CIT(A) DELETED THE ADDITION ON THE BASIS OF JUDGMENT OF KERALA HIGH CO URT IN THE CASE OF LAKSHMI HOSPITAL (SUPRA). ACCORDING TO THE LD.DR, THE SEIZED DOCUMENT CLEARLY SHOWS RECEIPT OF MONEY FROM SMT. HAZEERA. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. 82. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE SO-CALLED RECEIPT VOUCH ER SAID TO HAVE BEEN FOUND DURING THE COURSE OF SEARCH OPERATION IN THE PREMISES OF QUILON MEDICAL TRUST IS ONLY SELF MADE VOUCHER; IT DOES NO T CONTAIN THE SIGNATURE OF THE RECIPIENT. THE ASSESSEE SPECIFICALLY DENIED THE RECEIPT OF MONEY FROM MRS. HAZEERA. IN ORDER TO FACILITATE THE ENQUI RY AND FIND OUT THE TRUTH, THE ASSESSEE HAS FURNISHED THE NAME AND ADDRESS OF MRS. HAZEERA. HOWEVER, THE ASSESSING OFFICER FAILED TO CONDUCT AN Y ENQUIRY. ACCORDING TO THE LD.REPRESENTATIVE, WHEN THE ASSESSEE DOUBTED TH E SO-CALLED RECEIPT VOUCHER AND DENIED THE RECEIPT OF MONEY, AN ENQUIRY OUGHT TO HAVE BEEN CONDUCTED BY THE ASSESSING OFFICER. THE ASSESSEE, AT THE BEST, CAN PRODUCE THE ADDRESS OF MRS. HAZEERA SO AS TO FACILI TATE THE ENQUIRY. 45 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS DISCHARGED HIS OBLIGATION., AS HAS BEEN FOUND BY THE KERALA HI GH COURT IN THE CASE OF LAKSHMI HOSPITAL (SUPRA), THE CIT(A) HAS RIGHTLY DE LETED HE ADDITION. 83. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REVE NUE FOUND A RECEIPT VOUCHER IN THE PREMISES OF QUILON MEDICAL TRUST DUR ING THE COURSE OF SEARCH OPERATION WHICH DISCLOSES A RECEIPT OF RS.21 ,33,550 BY THE ASSESSEE. ADMITTEDLY, THE RECEIPT WAS NOT SIGNED B Y THE RECIPIENT. THE ASSESSEE SPECIFICALLY DENIED THE RECEIPT OF MONEY. THE ASSESSEE ALSO DOUBTED THE GENUINENESS OF THE VOUCHER. HAVING DEN IED THE RECEIPT OF MONEY AND DOUBTED THE GENUINENESS OF TRANSACTION, T HE ASSESSEE HAS ALSO FURNISHED THE ADDRESS OF MRS. HAZEERA. THEREFORE, AS FOUND BY THE KERALA HIGH COURT IN THE CASE OF LAKSHMI HOSPITAL (SUPRA), THE ASSESSEE DISCHARGED HIS OBLIGATION. IF AT ALL, THE ASSESSIN G OFFICER INTENDED TO RELY UPON THE VOUCHER, SMT. HAZEERA COULD HAVE BEEN EXAM INED TO FIND OUT WHETHER THE MONEY HAS BEEN HANDED OVER BY HER OR NO T? THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 84. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.76,29,450. 46 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 85. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT AS PER THE SEIZED DOCUMENT, THE ASSESSEE WAS FOUND TO HAVE PAID RS.79 ,29,450 TO VARIOUS PERSONS. HOWEVER, THE ABOVE SAID PAYMENTS WERE NOT ACCOUNT IN THE BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE CONTENDED THAT CERTAIN TRANSACTIONS LIKE ALANGAR EARTH SUPPLY, QUILON MED ICAL TRUST, SHREYAS TIN TABLES, ETC. DID NOT TAKE PLACE AT ALL. HOWEVER, T HE ASSESSING OFFICER ON THE BASIS OF THE SEIZED MATERIAL FOUND THAT THE TRANSAC TION, IN FACT, TOOK PLACE. THE SEIZED MATERIAL DISCLOSES THE PAYMENT MADE BY T HE ASSESSEE. THE VOUCHERS DISCLOSE THE PAYMENT MADE BY THE ASSESSEE TO VARIOUS PERSONS. ACCORDINGLY, ON THE BASIS OF THE INCRIMINATING MATE RIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSING OFFICER M ADE ADDITION OF RS. 79,29,450. HOWEVER, ON APPEAL, THE CIT(A) FOUND TH AT THE DEPARTMENT COULD NOT PROVE THE PAYMENT MADE BY THE ASSESSEE AN D IN THE ABSENCE OF PROPER ENQUIRY DELETED THE ADDITION. ACCORDING TO THE LD.DR, THE VOUCHERS FOUND DURING THE COURSE OF SEARCH OPERATION SIGNED BY THE CASHIER OF THE CONCERN DISCLOSES DISBURSEMENT OF THE MONEY. IN RE SPECT OF PAYMENT MADE TO ALANGAR EARTH SUPPLY THREE PERSONS, THE PRO PRIETOR, CASHIER AND PAYEE HAS SIGNED THE VOUCHER. THEREFORE, IT CANNOT BE SAID THAT THE GENUINENESS OF THE PAYMENT WAS NOT PROVED. MOREOVE R, THE ADDRESS AND OTHER DETAILS WERE NOT FURNISHED BY THE ASSESSEE BE FORE THE ASSESSING 47 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 OFFICER. THEREFORE, IT CANNOT BE SAID THAT THE ASS ESSEE HAS DISCHARGED HIS OBLIGATION. 86. ON THE CONTRARY, SHRI IYPE MATHEW, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION ONLY ON THE BASIS OF THE SEIZED DOCUMENT. ACCORDING TO THE LD. REPRESENTATIVE, THE TRANSACTION WAS NOT AT ALL TAKEN PLACE. IF THE MAT TER WAS VERIFIED WITH THE SO-CALLED RECIPIENT OF THE MONEY, IT WOULD CLEARLY REVEAL THAT THE PAYMENT WAS NOT MADE BY THE ASSESSEE AT ALL. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS FURNISHED ALL THE DETAILS INCLUDIN G THE ADDRESS OF THE RECIPIENT. THEREFORE, IT IS FOR THE ASSESSING OFFI CER TO CONDUCT ENQUIRY AND FIND OUT WHETHER THE MONEY HAS ACTUALLY BEEN PAID O R NOT. IN VIEW OF THIS FACTUAL SITUATION, ACCORDING TO THE LD.REPRESENTATI VE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AFTER PLACING RELIANCE ON THE JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF LAKSHMI HOSPITAL (SUPRA). 87. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE REVENUE AUTHORITIES FOUND DURING THE COURSE OF SEARCH OPERA TION THAT PAYMENTS WERE MADE TO 12 CONCERNS TO THE EXTENT OF RS.79,29, 450. THE ASSESSEE CLAIMS THAT THE PAYMENT WITH REGARD TO STEM PEPPER, ALANGAR EARTH SUPPLY, 48 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 QUILON MEDICAL TRUST, MEERAN PROPERTY, NIZAM LTD AN D KERALA STEEL ASSOCIATES DID NOT TAKE PLACE AT ALL. HOWEVER, IN RESPECT OF OTHER FIVE CONCERNS, THE ASSESSEE IS NOT DENYING THE PAYMENT. ONLY IN RESPECT OF SEVEN CONCERNS, THE ASSESSEE IS DENYING THE PAYMENT SAYING THAT THE TRANSACTION DID NOT TAKE PLACE AT ALL. THE ASSESSE E CLAIMS THAT THE ADDRESS OF THE RECIPIENT WAS FURNISHED TO THE ASSESSING OFF ICER; HOWEVER, THE DEPARTMENT CLAIMS THAT THE ADDRESS WAS NOT FURNISHE D. IN VIEW OF THESE CIRCUMSTANCES THAT THE PAYMENTS MADE TO FIVE CONCER NS WERE NOT DISPUTED BY THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT DELETING THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER WILL NOT BE JUSTIFIED AT ALL. THE ASSESSEES CONTENTION THAT IN RESPECT OF SEVEN CONC ERNS, VIZ. STEM PEPPER, ALANGAR EARTH SUPPLY, QUILON MEDICAL TRUST, MEERAN PROPERTY, NIZAM LTD AND KERALA STEEL ASSOCIATES ALONE, THE TRANSACTION DID NOT TAKE PLACE. IN RESPECT OF OTHER FIVE CONCERNS INDIRECTLY THE ASSES EE ADMITS THAT THE TRANSACTION TOOK PLACE. THEREFORE, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT IN VIEW OF THE CLAIM OF THE DEPARTMENT THAT THE ASSESSEE DID NOT FURNISH THE ADDRESS OF THE RECIPIENTS, THE MATT ER NEEDS TO BE VERIFIED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDER OF T HE CIT(A) IS SET ASIDE AND THE ISSUE OF ADDITION OF RS.76,29,450 IS REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL VER IFY THE ENTIRE DETAILS AND ALSO EXAMINE THE RECIPIENTS ON THE BASIS OF THE ADD RESS FURNISHED BY THE 49 ITA NO.51-53/COCH/2012 ITA NO.90-102/COCH/2012 ITA NO.280/COCH/2012 ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDAN CE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 88. IN THE RESULT, ALL THE ASSESSEE APPEALS ARE PA RTLY ALLOWED FOR STATISTICAL PURPOSE AND THE REVENUE APPEALS IN ITA NOS. 90 TO 102/COCH/2012 ARE DISMISSED AND THE REVENUES APPEA L IN ITA NO.280/COCH/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07 TH FEBRUARY, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 07 TH FEBRUARY, 2014 PK/- COPY TO: 1. SHRI A ABDUL SALAM , A.S. CASHEW EXPORTERS, KILL IKOLLOOR, KOLLAM/ SHRI A.A SALAM, M/S SOUTH KERALA CASHEW EXPORTERS, KILLI KOLLOOR, KOLLAM / S.N. CASHEW INTERNATIONAL (P) LTD, KILLIKOLLOOR, KO LLAM 2. THE DY.CIT / A.C.I.T., CENT.CIR. KOLLAM 3. THE COMMISSIONER OF INCOME-TAX (CENTRAL), KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-III, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH