C.G. Nair Kaithakody Ayiroor, Pathanamthitta V. ACIT, Kottayam

ITSSA 131/COCH/2005

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8156 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 23-04-2012
• Assessment Year: misc
• Appeal Filed On: 16-06-2005
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: A GOPALAKRISHNAN
• Keywords: Source of fund; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.(SS)A NO. 131/COCH/2005 BLOCK PERIOD: 1986-87 TO 1995-96 C.G.NAIR, PRASANTHY, KAITHAKODY, AYIROOR, PATHANAMTHITTA. [PAN:ACCPC 0417A] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI A. GOPALAKRISHNAN, CA REVENUE BY SHRI ABHIMANYU SINGH YADAV, JR. DR DATE OF HEARING 23/04/2012 DATE OF PRONOUNCEMENT 01/06/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.3.2005 PASSED BY THE ASSESSING OFFICER VIZ., DCIT, CIRCLE I, KOTT AYAM WHILE GIVING EFFECT TO THE ORDER DATED 31.10.2003 PASSED BY THE TRIBUNAL IN THE HAND S OF THE ASSESSEE FOR THE BLOCK PERIOD ENDING 29.11.1995. 2. THE ASSESSEE HAS RAISED FOLLOWING ISSUES IN THE GROUNDS NUMBERED AS 1 TO 7 MENTIONED IN THE GROUNDS OF APPEAL. (A) AMOUNT OF RS.15,45,000/- RECEIVED FROM MANJU EN TERPRISES NOT CONSIDERED AS A SOURCE FOR MAKING UNDISCLOSED INVESTMENTS. (B) THE BANK LOANS OF RS.3,00,000/- AND RS.4,90,90 0/- OBTAINED FROM INDIAN OVERSEAS BANK AND FEDERAL BANK RESPECTIVELY NOT CON SIDERED AS SOURCE FOR MAKING UNDISCLOSED INVESTMENTS. I.T.(SS)A. NO. 131 /COCH/2005 2 3. THE GROUNDS NUMBERED AS 8 AND 9 ARE GENERAL IN NATURE THOUGH IT REFERS TO THE CLAIM OF CERTAIN SOURCES OF FUNDS AND INVESTMENTS. HOWEVER, THE LD A.R DID NOT ARGUE ON THOSE GROUNDS AND FURTHER NOTHING WAS MENTIONED IN THE WRITTEN SUBMISSIONS ABOUT THESE GROUNDS. THE GROUNDS ALSO DO NOT REFER TO AN Y PARTICULAR SOURCE OF FUNDS/INVESTMENT. HENCE WE PRESUME THAT THE ASSESS EE IS NOT INTERESTED IN PROSECUTING THESE GROUNDS AND ACCORDINGLY THEY ARE DISMISSED AS NOT ARGUED. 4. BEFORE GOING TO ADDRESS THE ISSUES RAISED BE FORE US, IT IS INTERESTING TO NOTE THE CHEQUERED HISTORY OF THE CASE. CONSEQUENT TO THE S EARCH OPERATIONS CONDUCTED IN THE HANDS OF THE ASSESSEE ON 29.11.1995, THE BLOCK ASSE SSMENT WAS COMPLETED IN HIS HANDS ON 29.11.1996 BY DETERMINING THE UNDISCLOSED INCOME AT RS.67,49,440/-. IN THE DIRECT APPEAL FILED BEFORE THE TRIBUNAL, THE ASSESSEE CONT ESTED VARIOUS ADDITIONS MADE IN THE BLOCK ASSESSMENT. THE TRIBUNAL, VIDE ITS ORDER DAT ED 18-09-1997, SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO REDO THE AS SESSMENT. THEREAFTER, THE AO COMPLETED THE ASSESSMENT ON 15.3.2000 BY DETERMININ G THE UNDISCLOSED INCOME AT RS.81,90,780/-. THE ASSESSEE AGAIN PREFERRED DIREC T APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL PASSED ITS ORDER ON 09 TH MAY 2003. AS THE TRIBUNAL FAILED TO DISPOSE OF CE RTAIN GROUNDS RAISED BY THE ASSESSEE, A MISCELLANEOUS PET ITION WAS MOVED BY HIM SUBSEQUENTLY. THEREAFTER, THE TRIBUNAL PASSED ORDE RS ON THE MISCELLANEOUS PETITION ON 31.10.2003. AFTER RECEIPT OF THE TRIBUNAL ORDER DA TED 31.10.2003, THE AO IMPLEMENTED THE DIRECTIONS OF THE ITAT BY PASSING TWO ORDERS, V IZ., AN ORDER DATED 27.02.2004 GIVING PARTIAL EFFECT OF THE ORDER OF THE TRIBUNAL AND A F INAL ORDER DATED 31.3.2005. AGGRIEVED BY THE FINAL ORDER DATED 31.3.2005, THE ASSESSEE IS IN DIRECT APPEAL BEFORE US. 5. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE AO DID NOT CONSIDER THE AMOUNT OF RS.15,45,000/- RECEIVED FROM M/S MANJU ENTERPRISES A S A SOURCE. THE FACTS RELATING TO THE SAME ARE DISCUSSED IN BRIEF. DURING THE COURSE OF SEARCH, SEVERAL SLIPS RELATING TO THE DEPOSIT OF CHEQUES INTO THE BANK ACCOUNT OF THE CONCERN M/S MANJU ENTERPRISES WERE FOUND. THE AGGREGATE AMOUNT OF THE SAID DEPOSI TS STOOD AT RS.15,45,000/-. THE AO ADDED THE ENTIRE AMOUNT OF RS.15,45,000/- IN THE HANDS OF THE ASSESSEE IN THE ORIGINAL ASSESSMENT ORDER DATED 29.11.1996. I.T.(SS)A. NO. 131 /COCH/2005 3 6. IN THE APPEAL ORIGINALLY FILED BEFORE THE TRIB UNAL, IT WAS CONTESTED THAT THE DEPOSITS AGGREGATING TO RS.15,45,000/- MADE IN THE FEDERAL BANK ACCOUNT (OF M/S MANJU ENTERPRISES) WAS CONSIDERED AS CREDIT IN THE BANK AC COUNT (I.E., AS UNDISCLOSED INVESTMENT), BUT NO CREDIT WAS GIVEN FOR THIS AMOUN T AS A SOURCE AVAILABLE FOR MAKING OTHER INVESTMENTS/OUTGOING. SINCE THE ENTIRE ASSES SMENT ORDER WAS SET ASIDE BY THE TRIBUNAL FOR MAKING FRESH ASSESSMENT, IT APPEARS TH AT THE TRIBUNAL DID NOT DISCUSS ANYTHING ABOUT THIS PLEA. 7. IN THE ASSESSMENT ORDER DATED 15.3.2000, THE AO TREATED RS.15,45,000/- AS UNEXPLAINED DEPOSIT (PAGE 21 OF THE ORDER), BUT TRE ATED THE SAME AS A SOURCE FOR INVESTMENTS AND OUTGOINGS (PAGE 10 OF THE ORDER). THE NET EFFECT IS THAT THERE IS NO ADDITION ON ACCOUNT OF RS.15,45,000/-, (DEPOSIT (-) SOURCE = 0). THUS THE AO HAS TREATED THE ABOVE SAID AMOUNT AS UNDISCLOSED DEPOSI T AND ALSO AS A SOURCE, AS REQUESTED BY THE ASSESSEE BEFORE THE TRIBUNAL IN TH E ORIGINAL APPEAL. 8. AS STATED EARLIER, THE TRIBUNAL DID NOT CONS IDER THIS ISSUE IN ITS ORDER DATED 09-05- 2003. THE TRIBUNAL CONSIDERED THIS ISSUE IN ITS OR DER DATED 31.10.2003 PASSED ON THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE. ON T HAT OCCASION, A FRESH PLEA WAS MADE BEFORE THE TRIBUNAL THAT THE DEPOSITS FOUND IN THE BANK ACCOUNT BELONGING TO M/S MANJU ENTERPRISES CANNOT BE CONSIDERED IN THE HANDS OF TH E ASSESSEE, AS THE SAID CONCERN IS A PARTNERSHIP CONCERN INCORPORATED BY EXECUTING A PAR TNERSHIP DEED AND THE SAID PARTNERSHIP DEED WAS DULY REGISTERED WITH THE SUB-R EGISTRAR, ARANMULLA AS DOCUMENT NO.53/85. SINCE THERE WAS NO DISCUSSION IN THE ASS ESSMENT ORDER LINKING THE ASSESSEE WITH THE DEPOSITS MADE IN THE BANK ACCOUNT BELONGIN G TO THE PARTNERSHIP FIRM, M/S MANJU ENTERPRISES, THE TRIBUNAL THOUGHT IT FIT TO RE MAND THE MATTER TO THE FILE OF THE AO. THE TRIBUNAL ALSO OBSERVED THAT IF THERE IS EVIDENC E TO SHOW THAT THE SAID DEPOSITS WERE MADE BY THE ASSESSEE HIMSELF, THEN IT IS FOR THE AS SESSEE TO EXPLAIN THE SOURCES THERE OF. THE TRIBUNAL ALSO OBSERVED THAT THE AO SHOULD ALSO CONSIDER THE PLEA MADE BY THE ASSESSEE BEFORE THE TRIBUNAL IN THE ORIGINAL APPEAL FILED VIZ., THE DEPOSITS ASSESSED IN I.T.(SS)A. NO. 131 /COCH/2005 4 THE HANDS OF THE ASSESSEE SHOULD BE CONSIDERED AS A SOURCE FOR MAKING INVESTMENTS AND OUTGOINGS. 9. AFTER THE RECEIPT OF THE ORDER OF THE TRIBUN AL DATED 31.10.2003, THE AO PASSED AN ORDER DATED 27.02.2004 GIVING PARTIAL EFFECT TO THE ORDER OF THE TRIBUNAL. IN THAT ORDER ALSO, THE AMOUNT OF RS.15,45,000/- WAS CONSIDERED A S THE UNDISCLOSED DEPOSIT OF THE ASSESSEE AND THE EQUAL AMOUNT WAS TAKEN AS THE SOUR CE FOR MAKING INVESTMENT. THE NET EFFECT IS, AS EXPLAINED IN PARA 7 SUPRA, THAT T HERE IS NO ADDITION ON ACCOUNT OF THESE DEPOSITS. 10. IN THE FINAL ORDER DATED 31.3.2005, WHICH I S ASSAILED BEFORE US, THE AO EXAMINED THE ISSUE OF RS.15,45,000/-. IN THAT ORDER, THE AO HAS EXCLUDED BOTH THE UNEXPLAINED DEPOSITS OF RS.15,45,000/- AS WELL AS THE SOURCE OF RS.15,45,000/- FROM THE COMPUTATION OF UNDISCLOSED INCOME. IN THE EARLIER ORDERS, THE AO HAD INCLUDED THE SAID AMOUNT AS UNDISCLOSED ASSET, BUT TREATED AN EQUAL A MOUNT AS SOURCE. IT CAN BE SEEN THAT THE NET EFFECT WAS NIL ADDITION IN BOTH TYPE S OF COMPUTATION, I.E., WHETHER BOTH THE DEPOSIT AND SOURCES ARE INCLUDED IN THE COMPUTA TION OF UNDISCLOSED INCOME OR EXCLUDED FROM IT. 11. IN THE PROCEEDING BEFORE THE AO WHILE GIVING F INAL EFFECT OF THE ORDER OF ITAT, IT APPEARS THAT THE ASSESSEE HAD MADE AN ATTEMPT TO SU BMIT THAT HE HAS ACTUALLY RECEIVED A SUM OF RS.15,45,000/- FROM THE PARTNERSHIP FIRM M /S MANJU ENTERPRISES. IN OUR VIEW, THIS IS ALSO A NEW PLEA TAKEN FOR THE FIRST TIME BE FORE THE AO, BECAUSE ALL ALONG THE ASSESSEE HAS DISOWNED THE DEPOSITS MADE IN THE BANK ACCOUNT AS BELONGING TO M/S MANJU ENTERPRISES. ALTERNATIVELY, IT WAS PRAYED THA T THE UNDISCLOSED DEPOSIT ASSESSED IN HIS HANDS HAS TO BE TREATED AS A SOURCE AVAILABLE W ITH HIM. NEVERTHELESS, WE NOTICE THAT THE AO HAS CONSIDERED THIS NEW PLEA OF THE ASS ESSEE AND HAS RECORDED A CLEAR FINDING THAT THE ASSESSEE HAS FAILED TO PROVE THE R ECEIPT OF LOAN AMOUNT OF RS.15,45,000/-. AS STATED EARLIER, THE AO DID NOT CONSIDER THE AMOUNT OF RS.15,45,000/- EITHER AS UNEXPLAINED DEPOSIT OR A S OURCE, I.E., THE AO HAS ACCEPTED THE I.T.(SS)A. NO. 131 /COCH/2005 5 ORIGINAL PLEA OF THE ASSESSEE THAT THESE DEPOSITS A CTUALLY BELONG TO M/S MANJU ENTERPRISES. 12. THUS, IT CAN BE SEEN THAT EXCEPT IN THE FIRST ASSESSMENT ORDER PASSED ON 29.11.1996, THE NET EFFECT OF COMPUTATION PERTAININ G TO RS.15,45,000/- WAS THAT THE AMOUNT OF RS.15,45,000/- WAS NEVER CONSIDERED AS TH E UNDISCLOSED INCOME OF THE ASSESSEE. 13. ON THE CONTRARY, THE ASSESSEE HAS TAKEN A N EW PLEA BEFORE THE AO WHILE PASSING THE ASSESSMENT ORDER DATED 31.3.2005 THAT HE HAS TA KEN A LOAN OF RS.15.45.000/- AS LOAN FROM M/S MANJU ENTERPRISES. ON GOING THROUGH T HE DISCUSSIONS MADE BY THE AO ON THIS PLEA, WE FIND THAT THE AO HAS PROPERLY DEALT W ITH THE ISSUE AND RIGHTLY REJECTED THE SAID CLAIM OF THE ASSESSEE. ACCORDINGLY WE DISMISS ALL THE GROUNDS RAISED IN THIS REGARD. 14. THE NEXT ISSUE RELATES TO THE PLEA OF TREA TING THE BANK LOANS AGGREGATING TO RS.7,90,900/- AS SOURCE AVAILABLE WITH THE ASSESSEE . WE NOTICE THAT THE PRESENT APPEAL IS PREFERRED AGAINST THE ASSESSMENT ORDER DATED 31. 3.2005, WHEREIN WE DO NOT FIND ANY DISCUSSION ABOUT THE BANK LOANS OF RS.7,90,900/- RE FERRED SUPRA. IN THE WRITTEN SUBMISSIONS, THE ASSESSEE IS ALL THROUGH MAKING REF ERENCE TO THE ASSESSMENT ORDER DATED 15.3.2000 WITH REGARD TO THESE LOANS. IN OUR CONSIDERED VIEW, THE ASSESSEE SHOULD HAVE RAISED THE GROUNDS RELATING TO THE BANK LOANS WHILE FILING APPEAL AGAINST THE ASSESSMENT ORDER DATE 15.3.2000. HAVING MISSED THE BUS AT THE RELEVANT POINT OF TIME, IN OUR VIEW, THE ASSESSEE CANNOT RAISE THOSE GROUND S IN THE APPEAL PREFERRED AGAINST THE ASSESSMENT ORDER DATED 31.3.2005, WHEREIN THESE BANK LOANS WERE NOT AN ISSUE AT ALL. ACCORDINGLY, WE REJECT THE GROUNDS RELATING T O THE SAME. I.T.(SS)A. NO. 131 /COCH/2005 6 16. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 01-06-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 1 ST JUNE, 2012 GJ COPY TO: 1. C.G.NAIR, PRASANTHY, KAITHAKODY, AYIROOR, PATH ANAMTHITTA. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOTTAYAM. 3. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) ITAT COCHIN