ACIT, Cochin V. Mini Balaram (C.B. Mini), Trichur

ITSSA 111/COCH/2004

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8122 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 20-07-2011
• Assessment Year: misc
• Appeal Filed On: 10-11-2004
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: A S NARAYANAMOORTHY CAAR
• Keywords: Gift; Cost of acquisition
• Section: 145

Judgement Text

IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 1 IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-2(2), COCHIN. VS. SMT. C.B. MINI (MINI BALRAM), NIRMALYAM, PERINGAVU, THRISSUR-680618. [PAN: ADWPM 2210P] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA, DR ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA-AR DATE OF HEARING 20/7/2011 DATE OF PRONOUNCEMENT 17/08/2011 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCHI (CIT(A) FOR SHOR T) DATED 1.7.2004, AND THE BLOCK PERIOD UNDER REFERENCE IS A.Y.1989-90 TO 28.9.1998, I.E., THE DATE OF SEARCH. 2.1 THE FACTS IN BRIEF ARE THAT THERE WAS SEAR CH AND SEIZURE ACTION BY THE REVENUE AT THE RESIDENTIAL PREMISES OF ONE, SMT. THANKAMANI AM MA, THE ASSESSEES MOTHER, ON 28.9.1998 . THE SAME, AS WELL AS THE POST SEARCH ENQUIRIES, R EVEALED HUGE DEPOSITS IN THE NAME OF THE ASSESSEES TWO MINOR SONS. ACCORDINGLY , PROCEEDINGS UNDER CHAPTER XIV-B OF THE ACT WERE INITIATED AGAINST THE ASSESSEE BY T HE ISSUE OF NOTICE U/S. 158BD ON 05.5.2000. THE SAID DEPOSITS, OR THE INTEREST THER EON, WORKED OUT BY THE ASSESSING I.T.(SS)A. NO. 111/COCH/2004 ASSESSMENT YEAR :1989-90 TO 1999-2000 AND BROKEN PE RIOD UPTO 28.9.1998 IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 2 OFFICER (AO) AT ` 4,22,500/- AND ` 5,26,050/- FOR THE PREVIOUS YEARS RELEVANT TO AY 19 97- 98 AND AY 1998-99 RESPECTIVELY, AS ALSO THE INTERES T FOR THE BROKEN PERIOD, I.E., 1.4.1998 TO 28.9.1998, HOWEVER, DID NOT FIND REFLECTION IN T HE RETURNS FOR THE BLOCK PERIOD FILED BY THE ASSESSEE ON 7.5.2002. 2.2 THE ASSESSEE HAD SOLD 25384 SHARES IN GPP BEVER AGES AND FOODS LTD. ON 06.11.1996 FOR ` 55 LAKHS AS AGAINST THE ACQUISITION COST OF ` 100 EACH. THE SOURCE OF ACQUISITION OF THESE SHARES WAS ON VERIFICATION FOU ND AS EXPLAINED. OUT OF THE SALE PROCEEDS, ` 25 LAKHS WAS INVESTED IN LONG TERM DEPOSITS (WITH T RICHUR DISTRICT COOPERATIVE BANK LTD.), IN THE NAME OF HER TWO MINOR SONS (AT ` 12.5 LAKHS EACH) ON 22.4.1996 BY WAY OF AN EDUCATIONAL GIFT, BESIDES DEPOSITED WITH M/S. CYBELE HERBAL LABORATORIES LTD. THE NON-RETURNING OF THE INTEREST FOR THE BLOCK ASSESSM ENT WAS EXPLAINED AS ON ACCOUNT OF THE RETURNING THE SAME FOR AY 1997-98 AND 1998-99 PER T HE REGULAR RETURNS FOR THE SAID YEARS FILED ON 13.12.1998 AND 31.12.1998 RESPECTIVELY. THE INTEREST FOR THE BROKEN PERIOD, I.E., 1.4.1998 TO 28.9.1998 WAS NOT OFFERED TO TAX ON THE BASIS THAT THE INTEREST IS TO BE WORKED OUT ON ANNUAL BASIS. THE ASSESSEE WAS AT LIBERTY TO RETURN THE INCOME FROM OTHER SOURCES U/S. 145 ON CASH BASIS. THE SAME WAS NOT FOUND ACC EPTABLE BY THE ASSESSING OFFICER (AO) AS THE ASSESSEE HAD ACCOUNTED AND RETURNED THE INTEREST INCOME FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 ON ACCRUAL BASIS. THE RE TURNS FOR THE RELEVANT YEARS WERE FILED ONLY AFTER SEARCH, WHILE THAT FOR AY 1999-00, FILED SUBSEQUENTLY ON 6/8/1999, ALSO DID NOT BEAR THE INTEREST INCOME FOR THE BROKEN PERIOD. ACC ORDINGLY, THE UNDISCLOSED INCOME WAS DETERMINED BY INCLUDING THE FOLLOWING, AS UNDER:- PRINCIPAL ( `) INTEREST( ` ) ASSESSMENT YEAR 1997-98 25,00,000 4,22,500 (FROM 22.4.1996 TO 31.3.1997) ASSESSMENT YEAR 1998-99 29,22,500 5,26,050 (FROM 1.4.1997 TO 31.3.1998) ASSESSMENT YEAR 1999-2000 34,48,550 2,55,098 IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 3 (FROM 1.4.1998 TO 28.9.1998) STATEMENT OF UNDISCLOSED INCOME THE PRINCIPAL AMOUNT AND INTEREST ACCRUED UP TO ` 28,90,875 31.3.1997 FOR A.Y. 1997-98 - ACCRUED INTEREST FOR F.Y. 1997-98 ` 5,14,050 - ACCRUED INTEREST FROM 1.4.1998 TO 28.9.1998 ` 2,55,098 TOTAL ` 36,60,023 2.3.1 IN APPEAL, THE LD. CIT(A) WAS OF THE VIEW T HAT THE ASSESSMENT AS MADE COULD NOT HOLD ON THE GROUND OF JURISDICTION AS WELL AS ON ME RITS. NO MATERIAL WAS FOUND DURING THE SEARCH IN RESPECT OF THE BANK FDRS BY THE ASSESSEE, AS APPARENT FROM THE PANCHANAMA. VIDE SUMMONS DATED 29.1.1999, THE ASSESSEE WAS CALL ED UPON BY THE DDIT(INV.), TRICHUR TO SUBMIT THE DOCUMENTS RELATING TO HER SOURCE/S OF INCOME; BANK PASS BOOK/S; DETAILS OF INVESTMENTS, ETC. THE SAME WERE DULY SUBMITTED, AND ARE IN CONFORMITY WITH THE RETURNS OF INCOME FOR A.Y. 1997-98 AND 1998-99, FURNISHED IN D ECEMBER, 1998. IT IS THUS ONLY THE POST SEARCH ENQUIRIES CONDUCTED BY THE DDIT(INV.), TRICHUR WHICH REVEALED THE DEPOSITS MADE BY THE ASSESSEE. THE ROOT OF THE FINDING OF T HE DEPOSITS (BY THE ASSESSEE) BY THE REVENUE IS, THUS, THE POST SEARCH ENQUIRIES, AND NO T THE SEARCH ITSELF. THE SAME, NO DOUBT, COULD BE CONDUCTED, BUT CANNOT BY ITSELF BECOME THE STARTING OR THE ORIGINATING POINT FOR THE ISSUE OF NOTICE U/S. 158BD. IF THIS RESTRICTIO N IS NOT PLACED, THE SCOPE OF POST SEARCH ENQUIRY AND, CONSEQUENTLY, THAT OF ISSUING NOTICE U /S. 158BD, WOULD GET WIDENED TO AN UNLIMITED EXTENT, AND WHICH CANNOT OR COULD NOT BE THE INTENTION OF THE LEGISLATURE. 2.3.2 SECONDLY, IT CANNOT BE SAID THAT IN REALITY ANY SATISFACTION WAS RECORDED INASMUCH AS NO SATISFACTION NOTE WAS FORWARDED BY THE AO OF THE PERSON SEARCHED, I.E., THE DY. CIT, CENTRAL CIRCLE-2, ERNAKULAM TO THE AO OF THE ASSESS EE (ASSTT. CIT, CIRCLE 2(2), ERNAKULAM. WHAT THE SAID AO HAD IN FACT FORWARDED W AS THE RELEVANT PORTION OF THE APPRAISAL NOTE PREPARED BY THE DDIT(INV.). THE JOB OF THE DDIT IS LIMITED TO CARRYING OUT THE INVESTIGATIONS AND TRANSFER THE MATERIALS F OUND DURING SEARCH, AS WELL THE FINDINGS OF THE POST SEARCH INVESTIGATION CARRIED OUT BY HIM , IN THE FORM OF HIS REPORT, TO THE AO IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 4 CONCERNED. HE HAS NO POWER TO DERIVE SATISFACTION, WHICH HAS TO BE OF THE AO OF THE PERSON SEARCHED ONLY. ACCORDINGLY, THE NOTICE ISSUE D UNDER SECTION 158BD FALLS ON THIS GROUND AS WELL. THIRDLY, THE NOTICE U/S. 158BD WAS ACTUALLY SERVED ONLY IN MARCH 2002, I.E., ABOUT 3 YEARS (WRONGLY STATED IN THE ORDER AS 4 YEARS) AFTER THE SEARCH, AND ALMOST TWO YEARS AFTER ITS ISSUE ON 5.5.2000. PROCE EDINGS U/S. 158BD R/W S. 158BC COULD NOT BE TAKEN UP BY THE AO AT ANY TIME AFTER SEARCH, I.E., AT HIS WHIM AND FANCY. ISSUING NOTICE U/S. 158BD AFTER 4 (3 ) YEARS COULD NOT B E TAKEN AS WITHIN A REASONABLE TIME AND, THUS, STANDS VITIATED. NO DOUBT, THE LAW DOES NOT PROVIDE ANY SPECIFIC TIME LIMIT FOR THE SAME, BUT THAT WOULD NOT IMPLY THAT THE AO GETS UNBRIDLED POWER TO ACT UNJUDICIOUSLY AND ISSUE NOTICE U/S. 158BD AT ANY TIME. INORDINAT E AND UNREASONABLE DELAY IN ISSUING THE NOTICE PUTS A LOT OF STIGMA ON THE VALIDITY OF THE NOTICE. 2.3.3 FURTHER ON, JUST BECAUSE THE RETURNS FOR AYS 1997-98 AND 1998-99 WERE FILED BELATEDLY, WOULD NOT BY ITSELF IMPLY THAT THE INCOM E SO RETURNED BECOMES UNDISCLOSED INCOME. EVEN IF THERE WAS ANY DOUBT, AS TO WHETHER THE INCOME WOULD HAVE BEEN DISCLOSED OR ACTUALLY RETURNED BY THE ASSESSEE, THE BENEFIT OF THE SAME (DOUBT) WOULD GO TO THE ASSESSEE. IN THE FACTS OF THE CASE, THE SUMMON S ISSUED ON 29.1.1999 IS THE ONLY BRIDGE BETWEEN THE SEARCH AND THE ASSESSEE; THE RELEVANT I NFORMATION HAVING BEEN DISCLOSED BY THE REVENUE ONLY IN PURSUANCE THERE-TO. THUS, THERE WAS NO UNDISCLOSED INCOME FOR A.Y. 1997-98 AND AY 1998-99. AS REGARDS A.Y. 1999-2000, THE ASSESSEE HAD DULY APPENDED A FOOTNOTE TO THE RETURN FOR THE YEAR FILED ON 6.8.19 99 IN RESPECT OF DEFERRING THE INTEREST INCOME BY FOLLOWING CASH METHOD OF ACCOUNTING. A D IFFERENT OPINION HELD BY THE AO, I.E., WITH REGARD TO THE REGULAR METHOD OF ACCOUNTI NG FOLLOWED BY THE ASSESSEE, COULD NOT FORM THE BASIS FOR TREATING THE INCOME RETURNED AS UNDISCLOSED INCOME. ON MERITS, AND ON EACH OF THREE LEGAL ASPECTS, HE RELIED EXTENSIVELY ON CASE LAW. AGGRIEVED, THE REVENUE IS IN APPEAL. 3.1 BEFORE US, IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSEE HAD PLACED THE TERM DEPOSITS IN 25 DIFFERENT BRANCHES OF THE THRISSUR D ISTRICT CO-OPERATIVE BANK. FURTHER, IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 5 THERE IS NO REQUIREMENT UNDER THE ACT FOR THE AO OF THE PERSON SEARCHED TO RECORD HIS SATISFACTION IN WRITING. THE SATISFACTION IN THE I NSTANT CASE FLOWS FROM THE SAID FACT (I.E., OF SPREADING OR DISTRIBUTING THE DEPOSITS OVER A NU MBER OF BRANCHES), COUPLED WITH THE FACT THAT THE ASSESSEE HAD NOT, AS ON THE DATE OF S EARCH, FILED HER RETURNS OF INCOME FOR THE SAID YEARS, EVEN AS THE DUE DATE IN FILING OF THE R ETURN U/S. 139(1) THEREFOR HAD EXPIRED SINCE LONG. UNDER THE CIRCUMSTANCES, THE FORWARDING OF THE RELEVANT PORTION OF THE APPRAISAL REPORT FROM THE DDIT (INV.), TRICHUR BY T HE AO CONCERNED ON 13/4/2000 TO THE ASSESSEES AO (AS EVIDENCED BY THE ORDER SHEET ENTR Y RECORDED BY HIM ON 5/5/2000, PRIOR TO THE ISSUE OF NOTICE U/S. 158BD) (COPY ON RECORD) , IS IN SUFFICIENT COMPLIANCE OF THE PROVISIONS OF THE ACT. RELIANCE WAS PLACED BY HER ON THE DECISION IN THE CASE OF CIT VS. PANCHAJANYAM MANAGEMENT AGENCIES AND SERVICES (2011) 239 CTR 424 (KER.). THE ASSESSEES EXPLANATION THAT SHE CAME TO KNOW OF THE SEARCH AT HER MOTHERS RESIDENCE ONLY ON BEING SERVED WITH SUMMONS, MUCH AFTER THE DATE O F SEARCH, IS HARDLY CONVINCING. THE RETURNS FILED BY THE ASSESSEE ARE ONLY AFTER SEARCH , AND CONSEQUENTLY, NO SIGNIFICANCE FOR THE PURPOSE OF THE DISCLOSURE OF INCOME TO THE REVE NUE CAN BE PLACED THEREON. 3.2 THE LD. AR, ON THE OTHER HAND, RELIED ON THE IM PUGNED ORDER. THE ISSUE, IT WAS CONTENDED, IS SQUARELY COVERED BY THE DECISION BY T HE APEX COURT IN THE CASE OF MANISH MAHESWARI VS. ACIT AND ANOTHER (2007) 289 ITR 341 (SC), BESIDES OTHERS, PASSED FOLLOWING IT; THE AO HAVING NOT RECORDED ANY SATISF ACTION. THE NOTICE U/S. 158BD IS VITIATED BY THE DELAY ATTENDING ITS ISSUE, I.E., ON LY IN MARCH 2002, ALMOST 3 YEARS AFTER THE SEARCH. REFERENCE, IN THIS CONTEXT, WAS MADE T O THE DECISION IN THE CASE OF KHANDUBHAI VASANJI DESAI VS. DCIT , 236 ITR 73 (GUJ.). 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS WELL AS THE CASE LAW CITED. 4.1 THE PRINCIPAL ISSUE ARISING IN THE INSTANT C ASE IS THE VALIDITY OF THE NOTICE U/S. 158BD, WHICH HAS BEEN IMPUGNED ON MORE THAN ONE GRO UND. FIRSTLY, FOR THE REASON THAT IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 6 THERE IS NO MATERIAL FOUND DURING THE SEARCH THAT W OULD SUGGEST ANY UNDISCLOSED INCOME AS DEFINED IN THE ACT PER S. 158B(B), WHICH READS A S UNDER:- (B) UNDISCLOSED INCOME INCLUDES ANY MONEY, BULLION, J EWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY I N THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE SUCH MONEY, BULLIO N, JEWELLERY VALUABLE ARTICLE, THING, ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOU LD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THIS ACT, OR ANY EXPENSE, DEDUCTION OR A LLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE. 4.2 THE SAME MAKES NO REFERENCE TO EITHER SEARCH OR REQUISITION. HOWEVER, THAT THE BOOKS OF ACCOUNTS OR OTHER DOCUMENTS OR TRANSACTION S, ETC., REFERRED TO IN THE SECTION, ARE ONLY THAT FOUND AS A RESULT OF SEARCH OR REQUISITIO N IS CLARIFIED BY REFERENCE TO S. 158BA, AUTHORIZING THE AO TO FRAME THE ASSESSMENT OF UNDIS CLOSED INCOME FOR THE BLOCK PERIOD, AND S. 158BB, WHICH PROVIDES FOR COMPUTATION OF UND ISCLOSED INCOME ON THE BASIS OF THE EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION AND SUCH OTHER MATERIALS OR INFORMATION AVAILABLE WITH THE AO AND RELATABLE TO SUCH EVIDENC E. AS SUCH, WITHOUT DOUBT, THE INFORMATION YIELDED ON POST SEARCH ENQUIRIES BY THE INVESTIGATING AGENCY, OR EVEN BY THE AO FOR THAT MATTER, WOULD FALL TO BE COVERED BY THE SCOPE OF THE MATERIALS ON WHICH THE AO CAN PLACE RELIANCE FOR THE PURPOSE. THIS IS FURT HER AMPLY BORNE OUT BY THE WORDS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABL E WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE IN S. 158BB. THERE IS N O AMBIGUITY IN LAW WHICH STANDS SUFFICIENTLY EXPOUNDED, AND THE TWO PROVISIONS, I.E ., S. 158B(B) AND S. 158BB, ARE IN COMPLETE HARMONY. HOWEVER, THE MOOT QUESTION IN THE PRESENT CASE IS: WHAT IS THE EVIDENCE FOUND AS A RESULT OF SEARCH, WHICH WOULD S UGGEST OF ANY UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD ? AS FAR AS WE HAVE BEEN ABLE TO FIND, THE ANSWER IS `NIL. IT WOULD BE, WE MAY ADD, A DIFFERENT MATTER ALTOGETHER IF THE SUMMONS DATED 29.1.1999, IN RESPONSE TO WHICH THE INFORMATION QUA HER FDRS WAS SUBMITTED BY THE ASSESSEE, HAD ARISEN OUT OF SOME EVIDENCE FOUND AS A RESULT OF SEARCH IN RESPECT THEREOF. THE NON RETURNING OF THE CAPITAL GAINS ON THE SALE OF SHARES, AS WELL AS THE INTEREST INCOME IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 7 EARNED ON THE BANK DEPOSITS MADE ON THE INVESTMENT OF THE SALE PROCEEDS, PARKING THEM IN DIFFERENT BRANCHES OF A BANK, WOULD THEN COME NATUR ALLY TO THE AID OF THE REVENUE IN INFERRING THAT THE SAME WOULD NOT HAVE BEEN DISCLOS ED FOR THE PURPOSES OF THE ACT. IN OTHER WORDS, THERE HAS TO BE SOME MATERIAL WITH THE REVENUE, FOUND IN SEARCH OR REQUISITION, THAT WOULD SUGGEST CAPITAL GAINS (ON T HE SALE OF THE SAID SHARES) OR INTEREST INCOME HAVING ARISEN TO THE ASSESSEE DURING THE BLO CK PERIOD. DE HORS THE SAME, THE INFORMATION CALLED FOR THROUGH THE SUMMONS IS JUST THE ROUTINE, REGULAR INFORMATION CALLED FOR BY THE REVENUE. THE SAME COULD AS WELL BE REQUI SITIONED THROUGH RECOURSE TO S. 142. THERE IS NO REFERENCE TO ANY SUCH MATERIAL IN THE A SSESSMENT ORDER. THIS IS PRECISELY WHAT IT SEEKS TO CONVEY, WHEN THE ASSESSEE POSES THE QUE STION THAT AS TO WHY DID NOT THE REVENUE ISSUE NOTICE U/S. 158BD THERE-TO ON 29.1.19 99 ITSELF, I.E., INSTEAD OF ISSUING SUMMONS. WE ARE, CONSEQUENTLY, IN FULL AGREEMENT WI TH THE LD. CIT(A) THAT THE POST SEARCH ENQUIRY BY THE REVENUE, WHICH WE FIND TO BE OPEN-ENDED, AND NOT WITH REFERENCE TO ANY EVIDENCE FOUND IN SEARCH, CANNOT BY ITSELF B E THE ORIGINATING POINT FOR THE ISSUE OF NOTICE U/S. 158BD. THE SAME IS, THUS, BAD IN LAW. 4.3 ON EACH OF THE TWO OTHER LEGAL GROUNDS ON WHICH THE LD. CIT(A) HAS IMPUGNED THE ASSESSMENTS AS LEGALLY INVALID, WE, HOWEVER, ARE NO T IN AGREEMENT WITH HIM. WE SHALL BRIEFLY STATE OUR REASONS, EVEN AS THE SAME WOULD B E OF NO CONSEQUENCE IN VIEW OF OUR DECISION AFORE-STATED. WITH REGARD TO SATISFACTION , THE SAME HAS NOT BEEN CONTESTED BY THE ASSESSEE BEFORE HIM, SO THAT WE OBSERVE ABSENCE OF JURISDICTION. ON MERITS, IT STANDS CLARIFIED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PANCHAJANYAM MANAGEMENT AGENCIES AND SERVICES (SUPRA) THAT THERE IS NO REQUIREMENT IN LAW FOR TH E AO TO RECORD HIS REASONS IN WRITING, AND ITS COMMUN ICATION IS ONLY FOR THE PURPOSE OF TRANSFERRING OF THE FILE TO THE AO OF THE OTHER PER SON. THE DECISION IN THE CASE OF MANISH MAHESWARI VS. ACIT AND ANOTHER (SUPRA) STANDS CONSIDERED BY IN PASSING THE SAID JUDGMENT. FURTHER, SATISFACTION, IT IS WELL SETTLED , HAS ONLY TO BE A PRIMA FACIE ONE, AND WHERE THE SAME EMANATES FROM THE AVAILABLE RECORD, AS IN THE INSTANT CASE, THE SAME WOULD SATISFY THE REQUIREMENT OF LAW. THE SAME, AS AFORE-NOTED (REFER PARA 4.2), IS PATENT IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 8 IN THE FACTS AND CIRCUMSTANCES OF THE CASE (ALSO RE FER PARA 4.5) . REFERENCE IN THIS CONTEXT IS MADE TO THE DECISIONS IN THE CASE OF RUSHIL INDUSTRIES LTD. VS. HARSH PRAKASH , 251 ITR 608 (GUJ) ; PRIYA BLUE INDUSTRIES P. LTD. VS. JOINT CIT , 251 ITR 615 (GUJ.); SUBHAN JAVEED VS. ACIT , 122 ITD 307 (BANG.), ALL OF WHICH STAND RELIED UP ON BY THE ASSESSEE ITSELF (PB PG. 2,21). 4.4 AS REGARDS THE PROCEEDINGS/ASSESSMENT BEING VIT IATED ON ACCOUNT OF DELAY IN ISSUING OF NOTICE U/S. 158BD, WE FIND, AGAIN, THAT THE ISSUE HAS BEEN TAKEN UP BY THE LD. CIT(A) SUO MOTU , I.E., WITHOUT THE ASSESSEE RAISING ANY GROUND OR ADDITIONAL GROUND IN ITS RESPECT BEFORE HIM. FURTHER, THE SAME WAS, ADMITTE DLY, ISSUED ON 5.5.2000, AND NOT IN MARCH, 2002. THE ASSUMPTION OF JURISDICTION IS ON THE BASIS OF THE TRANSFER OF THE RELEVANT RECORD/MATERIALS ON BEING SATISFIED WITH REGARD TO THE ASSESSEES UNDISCLOSED INCOME TO THE ASSESSEES AO, LEADING TO THE ISSUE OF NOTICE U /S. 158BD, AND NOT ITS SERVICE. SECONDLY, THE DELAY IN ITS SERVICE, AS CLARIFIED BY THE REVENUE PER ITS GROUND OF APPEAL (# 3), HAS BEEN ON ACCOUNT OF A CHANGE IN ADDRESS OF T HE ASSESSEE. THE MATTER, IN ANY CASE, WOULD REQUIRE FURTHER INVESTIGATION BEFORE CONCLUDI NG THE ISSUE ON ITS BASIS, AND FOR THE SIMPLE REASON THAT WHY WOULD THE REVENUE NOT SERVE THE NOTICE ALREADY ISSUED BY IT, WHICH WOULD ONLY IN PROGRESSION OF THE ACTION ALREA DY INITIATED BY IT. 4.5 ON THE MERITS OF THE ADDITION TOO, WE ARE UNABL E TO BE IN AGREEMENT WITH THE LD. CIT(A). WHAT WAS, IT MAY BE ASKED, THE PURPOSE OF B REAKING THE FDRS INTO THAT FOR NOMINAL AMOUNTS, IF NOT TO AVOID DEDUCTION OF TAX A T SOURCE AND, CONSEQUENTLY, THE TAX ON THE INTEREST INCOME? IN FACT, THE QUESTION AS REGA RDS THE INFERENCE AS TO WHETHER THE INCOME HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSE D FOR THE PURPOSES OF THE ACT, WHICH IS THE DEFINING CONDITION OF THE UNDISCLOSED INCOME , THOUGH PRIMARILY ONE OF FACT, STANDS CLARIFIED LEGISLATIVELY PER SECTION 158BB, WHICH EN VISAGES DIFFERENT SCENARIOS, INCLUDING WHERE THE DUE DATE FOR FURNISHING THE RETURN OF INC OME HAS EXPIRED AS ON THE DATE OF SEARCH, AND NO RETURN HAS BEEN FILED (BY THAT DATE) , AS IN THE INSTANT CASE FOR A.Y. 1997-98 AND 1998-99,. THE DECISION BY THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS. IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 9 BINOY MATHAI , 311 ITR 226 (KER.) IS ALSO ON THE POINT. WITH RE GARD TO A.Y. 1999-2000, THOUGH THE DUE DATE FOR FURNISHING THE RETURN OF IN COME FOR THE YEAR HAD NOT EXPIRED AS ON THE DATE OF SEARCH (28.9.1998), THE CONDUCT FOR THE IMMEDIATELY PRECEDING YEARS, I.E., NON RETURNING OF INCOME, PARTICULARLY CONSIDERING THAT THE RETURN FOR THE PRECEDING THREE YEARS (I.E., FOR ASSESSMENT YEAR 1994-95 TO 1996-97) WERE FILED IN TIME, AS WELL AS THE DISTRIBUTION OF FDRS WOULD PLACE THE INFERENCE OF T HE SAME BEING UNDISCLOSED INCOME BEYOND ANY DOUBT. THE INCIDENT OF THE SALE OF SHARE S AND OF THE BANK DEPOSIT/S ITSELF HAS COME TO LIGHT ONLY THROUGH THE POST SEARCH ENQUIRIE S. THE ONUS TO SHOW THAT IT ACTUALLY INTENDED TO DISCLOSE THE INCOME, WHICH IS EVEN OTHE RWISE ON THE ASSESSEE (REFER SS. 158BA(3) & 158BB(3)), IS UNDER THESE FACTS AND CIRC UMSTANCES, HEAVY, AND TOWARD WHICH SHE HAS LED NO EVIDENCE EXCEPT FOR MAKING A BALD AS SERTION THAT SHE WAS NOT AWARE OF THE SEARCH, WHICH HAS NO BEARING IN LAW. AND IN RESPECT OF AY 1999-00, OF THE RETURN AS HAVING NOT FALLEN DUE FOR FILING, WHICH, AGAIN, IS OF LITTLE MOMENT IN VIEW OF THE NON RETURNING FOR THE PRECEDING YEARS, AS WELL AS THE P RESCRIPTION OF LAW. FURTHER, EVEN HERE, SHE STATES OF HAVING CHANGED ITS METHOD OF ACCOUNTI NG, WHICH IS UNSUBSTANTIATED, TO CASH METHOD, SO THAT THE INTEREST ACCRUED WOULD NOT FALL DUE FOR ASSESSMENT FOR THE SAID YEAR. WHERE IS THE QUESTION OF CHANGING THE METHOD OF ACC OUNTING WHEN NO REGULAR BOOKS OF ACCOUNT ARE BEING MAINTAINED? THE ISSUE OF THE METH OD OF ACCOUNTING IS EVEN OTHERWISE IRRELEVANT IN THE CONTEXT OF UNDISCLOSED/UNACCOUNTE D INCOME (REFER: CIT V. CHIDAMBARAM CHETTIAR (1971) 80 ITR 467 (SC)). THE LAW, AGAIN, BY CASTI NG A SEPARATE PROVISION FOR SUCH CASES, I.E., WHERE THE RETURN OF INCOME HAS NO T FALLEN DUE AS ON THE DATE OF SEARCH (S. 158 BB(D)) RESOLVED OR NARROWED DOWN THE SCOPE OF T HE CONTROVERSY INTO A VERY NARROW COMPASS, WHILE IN THE PRESENT CASE WE FIND THE FACT S TO BE SELF SPEAKING, AND UNMISTAKABLY IN FAVOUR OF THE INFERENCE OF THE RELEVANT INCOME ( SEE PARA 4.6) AS HAVING NEITHER BEEN NOR INTENDED TO BE DISCLOSED TO THE REVENUE. THE ASSESS EE, THUS, FAILS BOTH IN LAW AS WELL AS ON FACTS. THIS ALSO REMOVES ANY DOUBT WITH REGARD T O THE NON-SATISFACTION IN THE RESPECT BY THE AO OF THE CONCERNED PERSON. WE DECIDE ACCORDING LY. IT (S&S) A NO. 111/COCH/2004 (FROM 1.4.1988 TO 28.9.1998) 10 4.6 LASTLY, WE DO OBSERVE THAT THE AO HAS ALS O ASSESSED THE PRINCIPAL AMOUNT OF THE FDRS ( ` 25 LACS) AS UNDISCLOSED INCOME, WHILE THE ASSESSEE HAS ADMITTEDLY RETURNED ONLY THE INTEREST THEREON PER HER `REGULAR RETURNS. THE ASSESSMENT, AS WELL AS THE APPELLATE ORDER, HOWEVER, IS SILENT ON THIS ASPECT OF THE MAT TER. THE SAME (ASSESSMENT) APPEARS TO BE FOR THE REASON THAT THE SOURCE OF DEPOSITS IS NOT T HE SALE OF THE SHARES, WHICH IS ONLY SUBSEQUENTLY (REFER PARA 2.2). HOWEVER, ALL THIS WO ULD OF NO MOMENT, AS OUR DECISION QUA THE CONFIRMATION OF THE SETTING ASIDE OF THE IMPUGN ED ASSESSMENT BY THE LD. CIT(A), IS NOT BASED ON THE SAID RETURNING OF HER RELEVANT INCOME/ S BY THE ASSESSEE, BUT ON THE BASIS THAT THE BASIC CONDITION FOR THE SAME TO BE CONSIDERED A S `UNDISCLOSED INCOME, AS DEFINED U/S. 158B(B) R/W. S. 158BB, IS NOT SATISFIED. THE RETURN ING OR OTHERWISE BY THE ASSESSEE, OR ITS ASSESSMENT UNDER THE REGULAR PROVISIONS OF THE ACT, IS IN THE FACTS OF THE CASE OF NO RELEVANCE. THE REVENUE, IF AND WHERE SO, HAS TO TAK E RECOURSE TO, AS PRESUMABLY IN THE CASE OF INTEREST INCOME FOR AY 1999-00, THE REGULAR PROVISIONS OF THE ACT. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 17TH AUGUST, 2011 GJ COPY TO: 1. SMT. C.B. MINI (MINI BALRAM), NIRMALYAM, PERIN GAVU, THRISSUR - 680618. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(2 ), COCHIN. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .