DCIT, Ernakulam V. Pharama Curies Pvt. Ltd, Thrissur

ITSSA 102/COCH/2004

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7890 (ITAT-COCHIN)
• Duration Of Justice: 7 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2011
• Assessment Year: misc
• Appeal Filed On: 28-10-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: K K CHANDRASEKHARAN
• Keywords: Documents seized

Judgement Text

1 ITSS 102/COCH/2004 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHI BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T(SS)A. NO.102/COCH/2004 (BLOCK PERIOD 01-04-1988 TO 04-08-1998) DY.CIT, CENT.CIR.II VS M/S PHARMA KURIES (P) LTD ERNAKULAM PUTHUR BLDG, ERINJERI ANGADI TRICHUR PAN : NOT AVAILABLE REVENUE BY : SHRI S.R. SENAPATI ASSESSEE BY : SHRI K.K. CHANDRASEKHARAN DATE OF HEARING : 23-11-2011 DATE OF PRONOUNCEMENT: 30-12-2011 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, KOCHI DATED 26-07-2004 AND PERT AINS TO BLOCK PERIOD ENDED 04-08-1998. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DELE TION OF ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 2,15,000 FOR THE ASSESSMENT YEAR 1993-94. 3. SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS.2,15,000 FOR THE ASSESSMENT YEAR 199 3-94 ON THE BASIS OF THE BOOKS OF ACCOUNT SEIZED DURING THE COURSE OF SEARCH OPERA TION. ACCORDING TO THE LD.REPRESENTATIVE, THE EXPENSES RELATING TO RENT, C ONVEYANCE, TRAVELLING AND OFFICE EXPENSES TO THE EXTENT OF RS.2,15,000 WAS FOUND TO BE NOT INCURRED BY THE ASSESSEE. THE CHAIRMAN OF THE ASSESSEE COMPANY HAS ALSO, IN HIS DECLARATION, CONFIRMED THE SAME. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. 2 ITSS 102/COCH/2004 4. ON THE CONTRARY, SHRI K.K. CHANDRASEKHARAN, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY WAS IN CORPORATED ON 18-08-1993. PRIOR TO FORMATION OF THE COMPANY, THE INCOME CANNO T BE ASSESSED IN THE HANDS OF THE ASSESSEE. SINCE THE COMPANY ITSELF WAS FORMED ON 18-08-1993, THE EXPENDITURE INCURRED FOR FORMATION OF THE ASSESSEE WILL FALL IN ASSESSMENT YEAR 1994-95 AND NOT 1993-94. THE LD.REPRESENTATIVE PLA CED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN COMMISSIONER OF INCOM E-TAX VS CITY MILLS DISTRIBUTORS (P) LTD 219 ITR 1 (SC). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OF FICER FOR THE ASSESSMENT YEAR 1993-94 FOUND THAT THE EXPENSES ENTERED IN THE SEIZ ED MATERIAL WITH REGARD TO RENT, CONVEYANCE, TRAVELLING AND OTHER OFFICE EXPENSES WE RE NOT REALLY INCURRED. THEREFORE, TO THAT EXTENT, THERE WAS UNDISCLOSED IN COME IN THE HANDS OF THE ASSESSEE. THE FACTS REMAIN THAT THE ASSESSEE COMPA NY WAS INCORPORATED ON 18-08- 1993. THEREFORE, THE FIRST YEAR OF THE ASSESSMENT OF THE COMPANY IS 1994-95. THE THE INCOME, IF ANY, HAS BEEN EARNED BY THE DIRECTOR S OR OTHER PERSONS WHO PROMOTED THE COMPANY, THEN IT CANNOT BE SAID THAT T HE ASSESSEE COMPANY HAS EARNED THAT INCOME. AS RIGHTLY OBSERVED BY THE COMM ISSIONER OF INCOME-TAX(A), AT THE BEST, IT MAY BE THE INCOME OF THE DIRECTORS AND DEFINITELY, IT CANNOT BE THE INCOME OF THE ASSESSEE COMPANY. WE HAVE ALSO CAREF ULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN COMMISSIONER OF INCOM E-TAX VS CITY MILLS DISTRIBUTORS (P) LTD (SUPRA). THE APEX COURT, AFTE R CONSIDERING VARIOUS JUDGMENTS FOUND THAT A COMPANY BECOMES A LEGAL ENTI TY IN THE EYES OF LAW ONLY WHEN IT IS INCORPORATED. PRIOR TO ITS INCORPORATIO N IT SIMPLY DOES NOT EXIST. THE COMPANY DID NOT EXIST WHEN THE INCOME WITH WHICH WE ARE CONCERNED, AROSE. THEREFORE, THE ASSESSEE COMPANY CANNOT BE ASSESSED IN RESPECT OF THE INCOME WHICH WAS SAID TO BE EARNED BEFORE ITS INCORPORATIO N. IN VIEW OF THIS JUDGMENT OF THE APEX COURT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 3 ITSS 102/COCH/2004 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO SET OFF OF RS.4 LAKHS AND ANOTHER SUM OF RS. 1,41,786 FROM THE ASSESSEES UND ISCLOSED INCOME FOR THE ASSESSMENT YEAR 1995-96. 7. SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT THE ASSESSEE ADMITTED BEFORE THE LOWER AUTHORITIES THAT FUNDS TO THE EXTENT OF R S.4 LAKHS WAS AVAILABLE AS ADVANCE RECEIVED AS ON 02-06-1994 TOWARDS SALE OF T HE PROPERTY AT PERAMANGALAM. OUT OF THE ADDITION OF RS. 8,16,620 MADE BY THE ASS ESSING OFFICER, THE ASSESSING OFFICER HIMSELF DEDUCTED RS. 4,10,000 BEING THE AMO UNT DECLARED UNDER VDIS. OUT OF THE BALANCE AMOUNT OF RS. 4,06,620 THE COMMI SSIONER OF INCOME-TAX(A) ALLOWED DEDUCTION OF RS. 5,41,786. ACCORDING TO TH E LD.DR, THE COMMISSIONER OF INCOME-TAX(A) WITHOUT CALLING FOR THE REMAND REPORT ALLOWED THE CLAIM OF SET OFF OF UNADJUSTED PORTION OF RS.1,41,786 DECLARED UNDER VDIS FOR THE YEAR 1994-95. 8. ON THE CONTRARY, SHRI K.K. CHANDRASEKHARAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT A SUM OF RS.4 LAKHS AND ANO THER SUM OF RS.1,41,786 HAS BEEN SHOWN AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 1995-96 AGAINST THE ADVANCE RECEIVED FROM SHRI E.A. UNNIKRISHNAN ON ACC OUNT OF LAND VALUE AND THE BALANCE AMOUNT DECLARED IN VDIS. THE ASSESSEE RECE IVED RS.4 LAKHS FROM SHRI E.A. UNNIKRISHNAN ON 02-06-1994 TOWARDS SALE OF PER AMANGALAM PROPERTY. SHRI E.A.UNNIKRISHNAN WAS ALSO AN ASSESSEE ON THE FILE O F THE VERY SAME ASSESSING OFFICER. THE ASSESSING OFFICER, AFTER VERIFICATION ACCEPTED THE FACT. THE COMMISSIONER OF INCOME-TAX(A), AFTER CONSIDERING TH E VDIS DECLARATION FOR THE ASSESSMENT YEAR 1995-96 ALLOWED ANOTHER SUM OF RS.1 ,41,986. THEREFORE, ACCORDING TO THE LD.COUNSEL, THERE IS NO INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. 9. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS SEEN FROM THE ORD ER OF THE LOWER AUTHORITIES, THE ASSESSING OFFICER TREATED A SUM OF RS.8,16,620 AS U NDISCLOSED INCOME FOR THE ASSESSMENT YEAR 1995-96. OUT OF THIS RS.8,16,620, A SUM OF RS.4 LAKHS WAS 4 ITSS 102/COCH/2004 RECEIVED BY THE ASSESSEE ON 02-06-1994 AS ADVANCE F OR SALE OF LAND FROM SHRI E.A. UNNIKRISHNAN. FROM THE ORDER OF LOWER AUTHORITY IT APPEARS THAT THE ASSESSEE DECLARED A SUM OF RS.8,60,000 UNDER VDIS. FOR THE ASSESSMENT YEAR 1994-95 THE ASSESSING OFFICER SET OFF AN UNDISCLOSED INCOME AGA INST VDIS DECLARATION TO THE EXTENT OF RS. 3,08,214. SIMILARLY, THE ASSESSING O FFICER SET OFF RS.4,10,000 IN THE ASSESSMENT YEAR 1995-96. THEREFORE, THE TOTAL AMOU NT SET OFF BY THE ASSESSING OFFICER WAS RS. 7,18,214 AS AGAINST THE TOTAL DECLA RATION OF RS.8,60,000. THE ASSESSEE, BY LETTER DATED 13-08-2000 APPEARS TO HAV E REQUESTED TO ALLOW DEDUCTION OF RS.8,60,000 FROM THE RETURNED UNDISCLOSED INCOME OF RS.58 LAKHS. HOWEVER, THE REQUEST OF THE ASSESSEE WAS REJECTED. THE CIT( A), AFTER TAKING INTO CONSIDERATION THE TOTAL DECLARATION OF R.8,60,000 U NDER VDIS AND THE TOTAL AMOUNT SET OFF BY THE ASSESSING OFFICER TO THE EXTENT OF R .7,18,214 ALLOWED THE BALANCE AMOUNT OF RS.1,81,786. THE FACT REMAINS IS THAT TH E ASSESSEE HAS DECLARED UNDER VDIS RS.8,60,000; THEREFORE, TO THAT EXTENT THERE M AY NOT BE ANY UNDISCLOSED INCOME. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSI NG OFFICER HAS SET OFF RS. 7,18,214 IN THE ASSESSMENT YEAR 1994-95 AND RS.95-96. THERE FORE, THE REMAINING AMOUNT OF RS.1,41,786 IS TO BE SET OFF AGAINST THE UNDISCL OSED INCOME. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LOWER AUTHO RITY. ACCORDINGLY, THE SAME IS CONFIRMED. 10. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.3,70,000 ASSESSED AS UNDISCLOSED INCOME BEING INFLATION OF E XPENDITURE ON MINI KURIES. 11. SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT AS PER THE SEIZED DOCUMENT A- 20 THE ASSESSING OFFICER MADE ADDITION OF RS.3,70,0 00 TOWARDS INFLATION OF EXPENDITURE ON MINI KURIES. THE COMMISSIONER OF IN COME-TAX(A), HOWEVER, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT ANY REASONS. 12. ON THE CONTRARY, SHRI K.K. CHANDRASEKHARAN, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOT CORRECT TO SAY TH AT THE ASSESSEE HAS INFLATED EXPENDITURE ON MINI KURIES. ACCORDING TO THE LD.CO UNSEL, THIS AMOUNT OF RS. 5 ITSS 102/COCH/2004 3,70,000 IS A DEPOSIT RECEIVED FROM KURI SUBSCRIBER S. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE, THE TOTAL DEPOSIT RECEIVED FOR TH E ENTIRE BLOCK PERIOD IS RS.27,70,000. THE ASSESSING OFFICER TREATED RS.24 LAKHS OUT OF RS.27,70,000 AS CAPITAL IN NATURE AND RS.3,70,000 AS REVENUE RECEIP T. ACCORDING TO THE LD.REPRESENTATIVE, WHEN THE ADDITION WAS MADE ON TH E BASIS OF THE SEIZED DOCUMENT A-20, THE ENTIRE DOCUMENT HAS TO BE ACCEPTED AS SUC H, THEREFORE, THE DISALLOWANCE OF RS.3,70,000 IS NOT CALLED FOR. 13. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SI DE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS RECORDED THE TOTAL RECEIPT OF RS.27,70,000. OUT OF THIS, THE AS SESSING OFFICER HAS TREATED RS.3,70,000 AS INFLATED EXPENDITURE. THE FACT REMA INS IS THAT THE ENTIRE EXPENDITURE IS ALSO ENTERED IN THE VERY SAME SEIZED MATERIAL A-20. THE ASSESSING OFFICER HAS TO ACCEPT THE SEIZED MATERIAL IN TOTO O R HE HAS TO REJECT THE SAME IN TOTO. THE ASSESSING OFFICER HAS NOT TAKEN THE RECEIPTS AS GENUINE AND REJECTED THE EXPENDITURE AS INFLATED. WHEN THE SAME MATERIAL SH OWS THE RECEIPT AS WELL AS THE EXPENDITURE, THIS TRIBUNAL IS OF THE OPINION THAT T HE SAME DOCUMENT HAS TO BE ACCEPTED AS TRUE OR IT HAS TO BE REJECTED IN ITS EN TIRETY. THEREFORE, WE DO NOT FIND ANY REASON TO COME TO THE CONCLUSION THAT RS.3,70,0 00 WAS AN INFLATED EXPENDITURE. AS RIGHTLY POINTED OUT BY THE LD.REPR ESENTATIVE FOR THE ASSESSEE THE ENTIRE RECEIPT OF RS.31,70,000 HAS TO BE TREATED AS RECEIPT WHICH IS CAPITAL IN NATURE AND THEREFORE, THERE IS NO QUESTION OF ADDIT ION OF RS.3,70,000. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CO MMISSIONER OF INCOME-TAX(A). THE SAME IS UPHELD. 14. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DEL ETION OF ADDITION OF UNDISCLOSED INCOME TO THE EXTENT OF RS.4,32,180 BEI NG THE EXTRA AMOUNT PAID TO PERAMANGALAM PROPERTY ON THE PRESUMPTION THAT THIS AMOUNT MAY BE OUT OF KURI CANVASSING COMMISSION. 6 ITSS 102/COCH/2004 15. SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT TH E ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUMENT A-20 SEI ZED DURING THE COURSE OF SEARCH WHERE ALL THE RECEIPTS ARE ACCOUNTED FOR. T HE LD.DR, THEREFORE, SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX(A) WAS NOT JUST IFIED IN DELETING THE ADDITION. 16. SHRI K.K. CHANDRASEKHARAN, THE LD.COUNSEL FOR T HE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE EXCESS AMOUNT OF RS. 4,32, 180 WAS PAID BY THE ASSESSEE OUT OF THE INCOME RAISED BY INFLATING OF EXPENSES W HICH HAS ALREADY BEEN TREATED AS UNDISCLOSED INCOME BY THE ASSESSING OFFICER. TH E DOCUMENTED PRICE OF THE PERAMANGALAM PROPERTY IS DULY RECORDED IN THE BOOKS OF ACCOUNT WHEREAS THE EXTRA AMOUNT OF RS. 4,32,180 PAID IS NOT RECORDED I N THE BOOKS OF ACCOUNT BUT FOUND IN THE SEIZED DOCUMENT A-20. SINCE THE AMO UNT OF RS.4,32,180 HAS ALREADY BEEN TAKEN INTO CONSIDERATION IN THE UNDISC LOSED INCOME COMPUTED BY THE ASSESSING OFFICER, ANY SEPARATE ADDITION ON ACCOUNT OF THIS WOULD AMOUNT TO DOUBLE ADDITION. THE LD.COUNSEL SUPPORTED THE ORDE R OF THE COMMISSIONER OF INCOME-TAX(A). 17. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SI DE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE EXTRA AMOUNT PAID FOR THE PROPERTY WAS NOT REFLECTE D IN THE REGULAR BOOKS OF ACCOUNT BUT IN THE SEIZED DOCUMENT A-20, THEREFORE, THE TOTAL AMOUNT PAID FOR THE PURPOSE OF PERAMANGALAM PROPERTY WILL BE THE AMOUNT DEBITED IN THE REGULAR BOOKS OF ACCOUNT AS WELL AS EXTRA AMOUNT REFLECTED IN A-20. ACCORDING TO THE CIT(A), THE SOURCE FOR PURCHASE OF THIS LAND WILL B E SUCH AS THE AMOUNT CREDITED IN THE BOOKS AS MONEY OUT OF KURI CANVASSING COMMISSIO N. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) ON FINDING THAT THE K URI CANVASSING COMMISSION HAS ALREADY BEEN CONSIDERED AS UNDISCLOSED INCOME I N THE RETURN FILED BY THE ASSESSEE FOR THE BLOCK PERIOD, WHICH HAS BEEN BROUG HT TO THE NOTICE OF THE ASSESSING OFFICER BY THE ASSESSEE VIDE LETTER DATED 16-08-2000 IN RESPONSE TO HIS LETTER NO.P-1/CC-II, DELETED THE ADDITION. THE FAC T THAT THE KURI CANVASSING COMMISSION HAS ALREADY BEEN DECLARED AS UNDISCLOSED INCOME BY THE ASSESSEE IN 7 ITSS 102/COCH/2004 THE RETURN FILED IN FORM 2B AND THE AMOUNT OF RS. 4 ,32,180 IS UNDISPUTEDLY PRESUMED TO BE GENERATED OUT OF KURI CANVASSING COM MISSION, IN OUR OPINION, ANY FURTHER ADDITION OF THE AMOUNT OF RS.4,32,180 WOULD BE A DOUBLE ADDITION. IN THIS VIEW OF THE MATTER, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A). THEREFORE, WE UPHOLD THE ORDER O F THE COMMISSIONER OF INCOME-TAX(A) ON THIS ISSUE. 18. THE NEXT GROUND PERTAINS TO ADDITION OF RS.9,26 ,978 AND RS.2,89,429 FOR THE ASSESSMENT YEARS 1995-96 AND 1996-97 RESPECTIVE LY ON ACCOUNT OF KURI CANVASSING COMMISSION. 19. SHRI S.R. SENAPATI, THE LD.DR SUBMITTED THAT TH E ASSESSING OFFICER MADE THE ADDITION AS PER THE DETAILS AVAILABLE IN THE SEIZED BOOKS OF ACCOUNT WHEREAS THE COMMISSIONER OF INCOME-TAX(A) DELETED 60% OF THE AD DITION BY HOLDING THAT SINCE THE ASSESSEE HAD DECLARED RS.58 LAKHS AS UNDI SCLOSED INCOME FOR THE BLOCK PERIOD, IT WILL BE REASONABLE TO GIVE SET OFF FOR A T LEAST 60% OF THIS AMOUNT AS PAID OUT OF INCOME DERIVED BY THE ASSESSEE BY WAY OF INF LATING THE EXPENSES WHICH IS ALREADY TAXED. THE LD.DR SUBMITTED THAT SINCE THE ASSESSING OFFICER HAS MADE THE ADDITIONS ON THE BASIS OF THE SPECIFIC ENTRIES IN T HE DOCUMENTS SEIZED, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 20. ON THE CONTRARY, SHRI KK CHANDRASEKHARAN, THE L D.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AS PER THE SEIZED MATERIAL A-20, KURIE CANVASSING COMMISSION WAS PAID FROM 16-05-1994 TO 03-02-1997 A T RS. 23,76,844. HOWEVER, ONLY A SUM OF RS.12,16,407 WAS AVAILABLE A S PER THE SEIZED MATERIAL. THE DIFFERENCE BETWEEN THE EXCESS AMOUNT CREDITED A ND THE AMOUNT PAID IN THE SEIZED DOCUMENT A-20 IS RS. 11,60,436. HOWEVER, TH E COMMISSIONER OF INCOME- TAX(A), AFTER EXAMINING THE BOOKS OF ACCOUNT FOUND THAT THE CANVASSING COMMISSION WAS PAID AT RS.22,01,844 AND NOT RS. 23, 76,844. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) COMPUTED THE DIFFEREN CE AT RS.9,85,437. THE 8 ITSS 102/COCH/2004 COMMISSIONER OF INCOME-TAX(A), AFTER TAKING NOTE OF THE FACT THAT THE ASSESSEE HAS DECLARED UNDISCLOSED INCOME OF RS. 58 LAKHS FOR THE BLOCK PERIOD WITHOUT MENTIONING ANY SPECIFIC HEADS, THEREFORE, BY TAKING A REASONABLE VIEW OF THE MATTER, THE COMMISSIONER OF INCOME-TAX(A) SET ASIDE 60% OF THE AMOUNT PAID BY WAY OF INFLATING THE EXPENSES TOWARDS TRAVELLING. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A ) HAS RIGHTLY ALLOWED RS. 7,29,844. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE PAID KURIE COMMISSION. THE ASSESSEE HAS ALSO ENTERED HE KURIE COMMISSION P AYMENT IN THE BOOKS OF ACCOUNT. HOWEVER, THERE WAS A DIFFERENCE BETWEEN T HE SEIZED MATERIAL AND THE REGULAR BOOKS OF ACCOUNT MAINTAINED. WHEN THE DIFF ERENCE ARISES BETWEEN THE REGULAR BOOKS OF ACCOUNT AND THE SEIZED MATERIAL WI THOUT ANY BASIS, THE COMMISSIONER OF INCOME-TAX(A) HAS TAKEN THE FIGURE IN THE REGULAR BOOKS OF ACCOUNT. THE FUND ACTUALLY AVAILABLE ON THE SEIZED MATERIAL IS RS. 12,16,407. AS WE HAVE ALREADY OBSERVED, THE SEIZED MATERIAL HAS T O BE TAKEN INTO ACCOUNT IN TOTO OR IT HAS TO BE REJECTED IN TOTO. IN THIS CASE, TH E COMMISSIONER OF INCOME-TAX(A), FOR THE PURPOSE OF AVAILABILITY OF FUNDS HAS TAKEN THE ENTRIES IN THE SEIZED MATERIAL;. HOWEVER, IN RESPECT OF PAYMENTS HE HAS T AKEN THE FIGURE FROM THE REGULAR BOOKS OF ACCOUNT. IN OUR OPINION, THE FIGU RE MENTIONED IN THE SEIZED MATERIAL SHOULD BE TAKEN. THEREFORE, THE DIFFERENC E IS RS. 11,60,436 AND NOT RS. 9,85,437. THE EXPENDITURE WITH REGARD TO TRAVELLIN G, INTEREST, DAILY COMMISSION WAS ALSO DELETED WHICH WAS CONFIRMED BY THIS TRIBUN AL IN THE EARLIER PART OF THE ORDER. THEREFORE, THE LOGIC OF THE COMMISSIONER OF INCOME-TAX(A) TO GIVE RELIEF TO THE EXTENT OF 60% KURIE COMMISSION PAID IS NOT C ORRECT. IN OUR OPINION, THE ENTIRE DIFFERENCE OF RS. 11,60,436 HAS TO BE DISALL OWED. ACCORDINGLY, THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE I N RESPECT OF KURIE COMMISSION PAYMENT TO THE EXTENT OF RS. 9,26,978 FOR THE ASSES SMENT YEAR 1995-96 AND RS. 2,89,429 FOR THE ASSESSMENT YEAR 1996-97 AND THE OR DER OF THE ASSESSING OFFICER IS RESTORED ON THIS ISSUE. 9 ITSS 102/COCH/2004 22. THE REVENUE HAS RAISED ONE MORE GROUND WITH REG ARD TO LEVY OF SURCHARGE. SINCE THIS ISSUE BEING A LEGAL ISSUE, AFTER HEARING BOTH THE PARTIES, THE ADDITIONAL GROUND WITH REGARD TO LEVY OF SURCHARGE IS ADMITTED . 23. WE HEARD BOTH PARTIES. NOW IT IS WELL SETTLED IN THE CASE OF SURESH N GUPTA 297 ITR 322 (SC) THAT SURCHARGE IS LEVIABLE U /S 113 OF THE ACT EVEN THOUGH THE SEARCH WAS CONDUCTED PRIOR TO INTRODUCTION OF S ECTION 113 OF THE ACT. IN VIEW OF THE ABOVE, THE ORDER OF THE COMMISSIONER OF INCO ME-TAX(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE SURC HARGE WHILE GIVING EFFECT TO THIS ORDER. 23. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2011 SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ERNAKULAM, DT : 30 TH DECEMBER, 2011 PK/ COPY FORWARDED TO: 1. DY.CIT, CENT.CIR.II, ERANAKULAM 2. M/S PHARMA KURIES (P) LTD, PUTHUR BLDG, ERINJERI AN GADI, TRICHUR 3. THE COMMISSIONER OF INCOME-TAX(A)-I, ERANAKULAM 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, ERANAKULAM 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN