ACIT, Calicut V. Shri V. George, Calicut

ITSSA 15/COCH/2006

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8257 (ITAT-COCHIN)
• Duration Of Justice: 5 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2011
• Assessment Year: misc
• Appeal Filed On: 23-02-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATISR
• Assessee Lawyers: C B M WARRIERC A
• Keywords: Gift; Additional evidence; Block assessment; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.(S&S)A.NO.15/COCH/2006 BLOCK PERIOD:1990-91 TO 2000-01 THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, CALICUT. VS. SHRI V. GE ORGE, EXCISE INSPECTOR, 5/410, CONGRESS ROAD, KALPETTA NOTH, WYNAD DIST. PA NO.G-707 (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI S.R.SENAPATI,SR.DR RESPONDENT BY SHRI CBM WARRIER,C.A. O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT RAISI NG THE FOLLOWING GROUNDS: (1) THE ORDER OF THE CIT(APPEALS)-I, COCHIN IS OPPOSED TO LAW, EIGHT OF EVIDENCE AND FACTS OF THE CASE. (2) THE LD. CIT(APPEALS) ERRED IN DELETING THE I NTEREST FROM MONEY LENDING ON THE FINDING THAT ALL THE EVIDENCES ARE IN SUPPORT OF THE CONTENTION THAT THE BUSINESS O MONEY LENDING IS DONE BY THE IT(S&S)A NO. 15/COCH/2006 2 ASSESSEES BROTHER. THE CIT(APPEALS) FAILED TO NOTE THAT PRIMARY EVIDENCE IN THE FORM OF BOOKS OF A/CS IN THE HANDWRITING OF THE ASSESSEE AND HIS WIFE WAS DISCOVERED FROM THE ASSESSEES PREMISES. MOREOVER, NO ADDITIONAL EVIDENCE HAS BEEN PRODUCED EITHER BEFORE THE ASSESSING OFFICER OR THE CIT(APPEALS) TO SUBSTANTIATE THAT THE MONEY LENDING BUSINESS BELONGED TO SHRI MV JOY. (3) THE CIT(APPEALS) HAS ALSO ERRED IN DELETING T HE SURCHARGE ON IT ON THE FINDING THAT THE AMENDMENT TO SEC.113 BROUGHT IN BY A NEW PROVISO, HAS ITS EFFECTS ONLY FROM 1-6-2002. THE CIT(APPEALS) OUGHT TO HAVE SEEN THAT THE AMENDMENT BROUGHT IN FOR LEVY OF SURCHARGE IN BLOCK ASSESSMENTS IS ONLY A CLARIFICATION TO THE EXISTING PROVISION, THEREBY MAKING THE LEGISLATIVE INTENT VERY CLEAR. (4) FOR THESE AND OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE FACTS RELEVANT ARE THAT THE ASSESSEE IS AN I NSPECTOR IN STATE EXCISE DEPARTMENT. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(APPEALS)-I, KOCHI, DATED 2 9-7-2005 FOR THE BOCK PERIOD 1990-91 TO 2000-01. THERE WAS A SEARCH U/S.132 OF THE I.T.ACT IN THE CASE OF M/S. A MRUTHA & BAR AND HOTEL PANCHAMI & BAR AND THE PERSONS ENGAGE D IN IT(S&S)A NO. 15/COCH/2006 3 THE BUSINESS OF RUNNING OF FOREIGN LIQUOR BAR, LODG E AND RESTAURANTS ON 29-7-1999. THE ASSESSEE WAS SUSPEC TED TO BE A BENAMI PARTNER OF HIS BROTHER IN M/S. HOTEL AM RUTHA & BAR, CALICUT. HENCE, SEARCH AT THE RESIDENCE OF TH E ASSESSEE WAS CONDUCTED SIMULTANEOUSLY ON 29-7-1999. DURING THE COURSE OF SEARCH, SEVERAL INCRIMINATING DOCUMENTS R ELATING TO THE ACTUAL INCOME OF M/S. HOTEL AMRUTHA & BAR, WAS FOUND AND SEIZED. THE SEARCH ALSO RESULTED IN SEIZURE O F SEVERAL OTHER DOCUMENTS RELATING TO THE ASSESSEES UNDISCLO SED MONEY LENDING BUSINESS. 3. CONFINING TO THE GROUND, WE PERUSED THE MATERIAL S RELATING TO THE MONEY LENDING BUSINESS ISSUE. THE INITIATION OF PROCEEDINGS U/S.158BC WAS TAKEN. THE FIRST APP ELLATE AUTHORITY DIRECTED THE ASSESSING OFFICER TO INITIAT E THE PROCEEDINGS U/S.158BD AFTER RECORDING THE NECESSARY SATISFACTION. THE ASSESSING OFFICER AFTER RECORDI NG THE NECESSARY SATISFACTION ISSUED NOTICE U/S.158BD. TH E ASSESSEE MADE COMPLIANCE TO THE NOTICE BY FILING TH E RETURN DECLARING NIL UNDISCLOSED INCOME. FURTHER, IN COM PLIANCE TO THEE ASSESSING OFFICERS NOTICE, ASSESSEE FILED REP LY ON 2-5- 2005 AND BEFORE THE ASSESSING OFFICER THE LD. COUNS EL FOR THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS: IT(S&S)A NO. 15/COCH/2006 4 (1) THE MONEY LENDING BUSINESS ABOUT WHICH DOCUMENT IN THE FORM OF A DIARY WAS SEIZED, REALLY BELONGED TO THE ASSESSEES BROTHER SHRI MV JOY. (2) THOUGH THE ENTRIES APPEARING IN THE SEIZED DIARY WERE ADMITTED IN THE HAND WRITINGS OF ASSESSEE AND HIS WIFE, BOTH OF THEM HAD CLARIFIED IN THEIR STATEMENTS ON OATH RECORDED DURING THE COURSE OF SEARCH ITS THAT THESE RELATED TO THE MONEY LENDING BUSINESS CARRIED ON BY SHRI MV JOY. (3) SHRI MV JOY HAD ADMITTED THAT THE MONEY LENDING BUSINESS WAS CARRIED ON BY HIM THROUGH HIS BROTHER, THE ASSESSEE AND SHRI JOY HAD FILED REVISED RETURN FOR ASSESSMENT YEAR 1997-98 (AFTER SEARCH) INCLUDING THEREIN HIS INCOME FROM MONEY LENDING BUSINESS. (4) THE REPLIES RECEIVED FROM THE CLIENTS OF SHRI MV JO Y (SHRI AP UNNIKRISHNAN AND BB ATHULYA GOSH) TO THE EFFECT THAT THE LOANS WERE OBTAINED BY THEM FROM SHRI MV JOY THROUGH THE ASSESSEE WERE NOT CONSIDERED IN THE ORDER U/S.158BC. (5) EVEN AS PER THE CASH FLOW STATEMENTS OF THE MONEY LENDING BUSINESS PREPARED BY THE ASSESSING OFFICER FOR FY 1998-99 (A.Y.1999-2000), THE AMOUNT OF INTEREST RECEIPT WAS RS.97,500 ONLY WHEREAS THE ASSESSING OFFICER HAS WRONGLY TAKEN INTEREST INCOME OF RS.2,88,000/-. IT(S&S)A NO. 15/COCH/2006 5 (6) IN THE ASSESSEES PERSONAL CASH FLOW STATEMENT (FY 1998-99), THE ASSESSEE HAD CLAIMED RECEIPT OF RS.1,50,000/- AS LOAN FROM SHRI CP VARGHESE TOGETHER WITH THE REQUISITE CONFIRMATION. THIS CLAIM WAS APPARENTLY NOT CONSIDERED DESPITE THE FACT THAT THE ORDER U/S.158BC DID NOT INDICATE THAT THE CLAIM WAS REJECTED. (7) THE ASSESSING OFFICER IN THE EARLIER 158BC PROCEEDINGS DID NOT CONSIDER THE ASSESSEES CLAIM IN REGARD TO TUITION INCOME OF WIFE, GIFTS FROM RELATIVES AND FRIENDS AND THE ASSESSEES OBJECTION TO THE ESTIMATION OF PERSONAL AND HOUSEHOLD EXPENSES. HOWEVER, THE ASSESSING OFFICER REJECTED THE OBJECTI ONS OF THE LD. COUNSEL AND HELD THAT MONEY LENDING BUSINESS AB OUT WHICH EVIDENCE WAS SEIZED DURING THE COURSE OF SEAR CH IS TREATED AS ASSESSEES BUSINESS AND DEFICIENCY IN TH E CASH FLOW STATEMENT AND THE INTEREST INCOME ON MONEY LEN DING BUSINESS WILL BE BROUGHT TO TAX AS ASSESSEES UNDIS CLOSED INCOME. 4. ON APPEAL TO THE LD. CIT(APPEALS), THE LD. CIT(A PPEALS) APPRECIATED THE OBJECTIONS RAISED BY THE LD. COUNSE L FOR THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE FIRST ASSESSMENT U/S.158BC WAS SET ASIDE WITH A DIRECTION TO RE- DO THE ASSESSMENT U/S.158BD ACCORDING TO LAW VIDE H IS ORDER IT(S&S)A NO. 15/COCH/2006 6 DATED 10-3-2003. AT THE TIME OF INITIATING THE AS SESSMENT U/S.158, THERE WAS SUFFICIENT INFORMATION WITH THE ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S.158BD AGAINST T HE ASSESSEES YOUNGER BROTHER SHRI M.V.JOY BUT PROCEED ING WAS INITIATED AGAINST THE ASSESSEE. IN THE ASSESSMENT U/S.158BD, NOW IN APPEAL NO FURTHER ENQUIRY WAS CON DUCTED TO FIND OUT THE PERSON RUNNING THE LENDING BUSINESS AND WHO IS CONDUCTING THE BUSINESS. BUT THE SAME FACTS AS MADE IN THE 158BC AASSESSMENT WERE REPEATED. THE ASSESSI NG OFFICER WAS IN THE POSSESSION OF ALL THE EVIDENCE T HAT MR. JOY, YOUNGER BROTHER OF THE ASSESSEE, IS THE REAL P ERSON DOING MONEY LENDING BUSINESS. HENCE, THE LD. CIT( APPEALS) WAS OF THE VIEW THAT THIS ASSESSMENT U/S.158BD WOU LD HAVE BEEN INITIATED AGAINST SHRI M.V. JOY, WHO IS THE BR OTHER OF THE ASSESSEE AND NOT AGAINST THIS ASSESSEE. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE FACTS OF THE CASE INCLUDING THE PAPER BOOK OF THE A SSESSEE. THE LD. SR.D.R. SUPPORTED THE ORDER OF THE ASSESSIN G OFFICE. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESS EE INVITED OUR ATTENTION TO THE AFFIDAVIT OF SHRI JOY DATED 28 -10-1999, WHICH IS AVAILABLE IN THE ASSESSEES PAPER BOOK AT PAGES 42 & 43 WHEREIN THE DEPONENT SHRI MV JOY CONFIRMED THA T THE IT(S&S)A NO. 15/COCH/2006 7 DOCUMENTS FOUND AND SEIZED FROM THE RESIDENTIAL PRE MISES OF HIS BROTHER V.GEORGE WAS PERTAINING TO HIM AND THER E WAS NO COERCION OR INFLUENCE ON HIM TO MAKE SUCH A STATEME NT. HE FURTHER STATED THAT ALL THE PAPERS SEIZED FROM T HE RESIDENCE OF HIS BROTHER RELATED TO HIM AND THE ASS ESSEE IS NOT AT ALL CONNECTED WITH ANY OF THEM. IT IS FURT HER MADE IT CLEAR THAT HE WAS ASSESSED TO INCOME-TAX BY THE ITO ., WARD- 2, ALUVA AND NO PA NO. WAS ALLOTTED TO HIM. THIS AFFIDAVIT IS DULY NOTARIZED AND DATED 28-10-1999. THE LD. COUN SEL FURTHER INVITED OUR ATTENTION TO 132 (4) STATEMENT WHICH IS AVAILABLE IN ASSESSEES PAPER BOOK AT PAGE 19 AND SPECIFICALLY TO QUESTION NO.5 AND ANSWER THEREON. TO QUESTION NO.5, THE ASSESSEE HAS CATEGORICALLY STATE D THAT THE DETAILS OF RECEIPTS AND PAYMENTS RECORDED IN THE DI ARY REPRESENT THE DETAILS OF MONEY LENDING BUSINESS CAR RIED ON BY MY YOUNGER BROTHER SHRI MV JOY. THE DIARY IS W RITTEN BY ME AND MY WIFE. THIS STATEMENT WAS RECORDED ON 29 -7- 1999, I.E. ON THE DATE OF SEARCH. SECTION 158 EMP OWERS THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS ON TH E BASIS OF MATERIALS COLLECTED DURING THE COURSE OF SEARCH AND AFTER RECORDING SATISFACTION. THE ASSESSING OFFICER SHO ULD HAVE CONSIDERED THE ABOVE STATEMENT OF THE ASSESSEE AND THE AFFIDAVIT OF MR. JOY AND INITIATED 158 BD ASSESSMEN T ON SHRI IT(S&S)A NO. 15/COCH/2006 8 JOY. THIS ITSELF WOULD GO TO SHOW THAT THERE IS A N ERROR IN THE ASSESSMENT AND ERROR ON THE PERSON TO BE ASSESS ED. SIMPLY BECAUSE THE ASSESSEE WROTE THE DIARIES ON BE HALF OF THE BUSINESS OF HIS YOUNGER BROTHER, UNDER NO STRET CH OF IMAGINATION THIS INCOME FROM MONEY LENDING BUSINESS COULD BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSE E. FURTHER IN THE CROSS EXAMINATION SHRI MV JOY HAS S TATED THAT HE WAS IN THE MONEY LENDING BUSINESS AT KALPET TA IN THE YEARS 1996-97, 1998 AND 1999 AND FURTHER CLARIFIES IN QUESTION NO.3 THAT HE HAD FILED REVISED RETURN OF I NCOME AND PAID THE TAX FOR THE PROFITS FROM MONEY LENDING BUS INESS. THIS CROSS EXAMINATION IS DATED 26-7-2001. THIS I S A PART OF ASSESSEES PAPER BOOK AND AVAILABLE AT PAGE 41. 132 STATEMENT OF SHRI MV JOY IS AVAILABLE IN ASSESSEES PAPER BOOK AT PAGES 32 TO 38 AND THE ENGLISH TRANSLATION FROM PAGES 39 TO 41 AND THIS CLEARLY SHOWS THE INVESTMEN T PARTICULARS IN THE MONEY LENDING BUSINESS AND THE S TATEMENT OF OATH RECORDED FROM SHRI JOY ON 26-7-2001 WHICH A LSO CLEARLY CORROBORATES THAT HE OWNS THE MONEY LENDING BUSINESS AND HE PAID THE TAX. CONSIDERING THE ABO VE FACTS IN ITS ENTIRETY, WE HAVE NO HESITATION TO HOLD THAT THE ASSESSING OFFICER HAS WRONGLY PROCEEDED ON THIS ASS ESSEE AS THE RIGHT PERSON IS THE YOUNGER BROTHER OF THE ASSE SSEE, SHRI IT(S&S)A NO. 15/COCH/2006 9 MV JOY. UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONFIRM THE FINDINGS OF THE LD. CIT(APPEA LS) ON THIS ISSUE. 6. COMING TO THE ISSUE OF SUR-CHARGE, IT IS CONSEQ UENTIAL IN NATURE AND AS SUCH REQUIRES NO ADJUDICATION. 7. IN THE RESULT, DEPARTMENTAL APPEAL FAILS AND THE SAME IS DISMISSED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 28 TH JUNE,2011. PM. COPY FORWARDED TO: 1. THE ACIT., CENTRAL CIRCLE, CALICUT. 2. SHRI V. GEORGE, EXCISE INSPECTOR, 5/410, CONGRESS R OAD, KALPETTA NOTH, WYNAD DIST. 3. CIT(A)-I, KOCHI. 4. CIT, (CENTRAL),KOCHI. 5. D.R.