C.T. Mathew, Athirampuzha V. ACIT, Kottayam

ITSSA 162/COCH/2005

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8370 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-07-2012
• Assessment Year: misc
• Appeal Filed On: 21-09-2005
• Court: TRIBUNAL
• Department Lawyers: LHRS SMT LEELAMMA MATHEW
• Keywords: Rectification of order; Document seized; Difference of opinion; Block assessment; Documents seized
• Section: 154

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. 162 /COCH/2005 BLOCK PERIOD 1988-89 TO 1998-99 AND 19-08-199 8 LATE SHRI C.T.MATHEW, REP. BY L/HRS. SMT. LEELAMMA MATHEW & 3 OTHERS, CHIRAYIL, THOMSON VILLA, M.C.ROAD, 101 JUNCTION, ATHIRAMPUZHA, ETTUMANOOR, KOTTAYAM. [PAN: ABOPT 0392B] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI R.KRISHNAN, CA REVENUE BY SMT. S.VIJAYAPRABHA, JR. DR DATE OF HEARING 04/07/2012 DATE OF PRONOUNCEMENT 10/08/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30.12.2003 PASSED BY THE LD. CIT(A)-IV, KOCHI AND IT RELATES TO THE B LOCK PERIOD ENDING 19.8.1998. 2. THE APPEAL IS BARRED BY LIMITATION BY 554 DAYS. THE ASSESSEE HAS MOVED A PETITION REQUESTING THE BENCH TO CONDONE THE DELAY. IN THE PETITION, IT IS STATED THAT THE ASSESSEE WAS PRIMARILY DEPENDING UPON HIS BROTHER F OR INCOME TAX MATTES AND HE WAS UNDER THE BONA FIDE BELIEF THAT HIS BROTHER WAS PUR SING THE MATTERS IN A PROPER MANNER. IT IS FURTHER SUBMITTED THAT THE BROTHER OF THE ASS ESSEE WAS HANDLING THE TAX MATTERS OF THE ENTIRE GROUP. SUBSEQUENT TO THE SEARCH AND SEIZ URE OPERATIONS AND CONSEQUENT TO THE DEMANDS RAISED, DIFFERENCE OF OPINION AROSE BET WEEN THE ASSESSEE AND HIS BROTHERS. AT THAT TIME, THE AUTHORISED REPRESENTATIVE WHO WAS HANDLING THE TAX MATTERS ALSO I.T.(SS)A. NO. 162 /COCH/2005 2 EXPRESSED HIS INABILITY TO HANDLE THE CASES FURTHER . ACCORDINGLY, THE CASES WERE ENTRUSTED TO A CHARTERED ACCOUNTANT AT ALLEPPEY AND THE ASSESSEE ENTRUSTED THE WORK TO HIS BROTHERS SON. IT TOOK SOME TIME TO COLLECT THE NECESSARY PAPERS AND DOCUMENTS AND THE SAME HAS RESULTED IN THE DELAY IN FILING TH E APPEALS. ACCORDINGLY, IT IS PRAYED THAT THE DELAY MAY BE CONDONED, AS THE DELAY WAS PU RELY UNINTENTIONAL AND DUE TO EXTREME CIRCUMSTANCES BEYOND THE CONTROL OF THE ASS ESSEE. ON THE OTHER HAND, THE LD D.R OBJECTED TO THE REQUEST MADE BY THE ASSESSEE. 3. WE HAVE HEARD THE PARTIES ON THIS ISSUE. FROM T HE PETITION, IT IS SEEN THAT THE TAX MATTERS OF THE ASSESSEE HAVE BEEN HANDLED BY OT HER PEOPLE AND THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THEY WERE HANDLING THE TAX MATTERS IN A TIMELY MANNER. IT WAS ALSO STATED THAT A DIFFERENCE OF OPINION ARO SE BETWEEN THE ASSESSEE AND HIS BROTHERS AND THE ASSESSEE WAS ALSO CONSTRAINED TO C HANGE THE AUTHORISED REPRESENTATIVE. ACCORDINGLY, IT HAS BEEN SUBMITTED THAT IT TOOK SOME TIME TO COLLATE THE PAPERS THAT WERE CALLED FOR BY THE NEW CHARTERED AC COUNTANT. SINCE THE ASSESSEE HAD TO DEPEND ENTIRELY UPON OTHERS COUPLED WITH THE CIR CUMSTANCES EXPLAINED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE WAS PREVENTED BY SUFF ICIENT CAUSE IN FILING THE APPEAL WITHIN THE DUE TIME. ACCORDINGLY, WE CONDONE THE D ELAY AND ADMIT THE APPEALS FOR HEARING. 4. THE GROUNDS NUMBERED AS 1 & 2 THE ISSUE OF A VAILABILITY OF SALARY SAVINGS OF ASSESSEES WIFE TO THE TUNE OF RS.6.00 LAKHS. AT T HE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 3 RELATING TO THE ADDITION OF RS.25,000/- ON ACCOUNT OF ON-MONEY PAYMENT ON PURCHASE OF ONE IMMO VEABLE PROPERTY. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS WITHDRAWN. 5. THE FACTS RELATING TO THE CASE ARE SATED IN BRIE F. THE ASSESSEE IS A PARTNER IN A FIRM VIZ. M/S. THOMSON HARDWARES AND ALSO A DIRECTO R OF M/S. JASS ROLLER FLOUR MILLS (P) LTD. EARLIER, HE WAS WORKING AS A SCHOOL ASSISTANT IN A SCHOOL LOCATED AT MANNAM. HE TOOK VOLUNTARY RETIREMENT FROM THE SCHOOL IN 1993. HOWEVER, DURING THE PERIOD APRIL 1980 TO OCTOBER 1984, HE WENT TO GERMANY. THE DEPA RTMENT CONDUCTED SEARCH AND I.T.(SS)A. NO. 162 /COCH/2005 3 SEIZURE OPERATIONS AT THE RESIDENTIAL PREMISES OF T HE ASSESSEE ON 19-08-1998. IN THE BLOCK ASSESSMENT PROCEEDING, THE AO CALLED FOR THE ASSETS AND LIABILITIES STATEMENT/CASH FLOW STATEMENT FROM THE ASSESSEE. THEN THE ASSESSI NG OFFICER PROCEEDED TO COMPUTE THE UNDISCLOSED INCOME BY TAKING INTO ACCOUNT THE I NCOME RETURNED BY THE ASSESSEE AS WELL AS THE ASSET AND LIABILITIES STATEMENT FURNISH ED BY THE ASSESSEE. THE AO ESTIMATED THE ON-MONEY PAYMENTS ON THE IMMOVABLE PROPERTIES P URCHASED BY THE ASSESSEE AT 25% OF THE DECLARED COST. THE AO ALSO DID NOT ACCE PT CERTAIN LIABILITIES AND SOURCES CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE ASSESSIN G OFFICER FRAMED BLOCK ASSESSMENT IN HIS HANDS DETERMINING THE UNDISCLOSED INCOME AT RS. 18,73,060/-. IN THE ORDER OF THE LD. CIT(A), IT IS STATED THAT THE ASSESSING OFFICER PASSED RECTIFICATION ORDER U/S. 154 OF THE ACT ON 30-09-2001 AND AS PER THAT ORDER, THE UN DISCLOSED INCOME WAS REDUCED TO RS. 9,77,480/-. THE ASSESSEE CHALLENGED THE BLOCK A SSESSMENT ORDER BEFORE THE LD. CIT(A) AND THE SAME WAS PARTLY ALLOWED. STILL AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE ASSESSING OFFICER REJECTED THE CLAIM OF AV AILABILITY OF SALARY SAVINGS OF ASSESSEES WIFE FOR WANT OF SALARY CERTIFICATE. HO WEVER, BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED A CERTIFICATE OBTAINED FROM THE PRINCIPAL OF THE SCHOOL WHERE SHE WAS WORKING. BASED ON HER EARNINGS, THE ASSESSEE C LAIMED SOURCES TO THE TUNE OF R. 6 LAKHS AND WANTED IT TO BE SET OFF AGAINST THE INVES TMENTS. THE LD CIT(A ) NOTICED THAT THE ASSESSEE HAD CLAIMED LESSER AMOUNT IN THIS REGA RD IN THE CASH FLOW STATEMENT FILED DURING THE COURSE OF ASSESSMENT PROCEEDING AND HENC E HE DIRECTED THE ASSESSING OFFICER TO GIVE CREDIT ONLY TO THE EXTENT OF THE AM OUNT ORIGINALLY SHOWN IN THE CASH FLOW STATEMENT. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE BLOCK ASSESSMENT HAS BEEN FINALISED ON THE BASIS OF THE CASH FLOW STATEM ENT FILED BY THE ASSESSEE WITHOUT MAKING ANY REFERENCE TO THE SEIZED DOCUMENTS. WHIL E DETERMINING THE UNDISCLOSED INCOME, THE ASSESSING OFFICER GAVE CREDIT TO THE SO URCES FOR WHICH EVIDENCES WERE AVAILABLE. HE DID NOT ALLOW CREDIT TOWARDS SALARY SAVINGS MADE BY THE ASSESSEES WIFE FOR WANT OF SALARY CERTIFICATE, EVEN THOUGH THE ASS ESSING OFFICER AGREED THAT THE I.T.(SS)A. NO. 162 /COCH/2005 4 ASSESSEES WIFE WAS EMPLOYED. HE FURTHER SUBMITTED THAT THE ASSESSEE A CERTIFICATE FROM THE PRINCIPAL OF THE SCHOOL AND THE SAME WAS P RODUCED BEFORE THE LD. CIT(A). SINCE THE WIFE OF THE ASSESSEE WAS EMPLOYED FOR QUI ET LONGER PERIOD, WHICH WAS PROVED BY THE CERTIFICATE, THE ASSESSEE CLAIMED ENHANCED A MOUNT OF SALARY SAVINGS. HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE ENHANCEMENT OF SO URCES TOWARDS SALARY SAVINGS. THE LD. COUNSEL SUBMITTED THAT THE LD. CIT(A) DID NOT C ONFRONT THE SALARY CERTIFICATE WITH THE ASSESSING OFFICER AND SINCE THE UNDISCLOSED INC OME HAS BEEN DETERMINED ON THE NET ASSET METHOD, THE ASSESSEE SHOULD BE GIVEN AN OPPO RTUNITY TO PROVE THE AVAILABILITY OF SOURCES BEFORE THE ASSESSING OFFICER. ON THE CONTRA RY, THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. AS SUBMITTED BY THE LD. AR, WE NOTICE THAT THE ASSESSI NG OFFICER DID NOT MAKE ANY REFERENCE TO ANY OF THE SEIZED MATERIAL, THOUGH HE HAS STATED THAT SEVERAL DOCUMENTS RELATING TO THE INVESTMENT IN LAND, EXPENSES ON THE EDUCATION OF CHILDREN AND THE MARRIAGE OF HIS DAUGHTER WERE FOUND DURING THE COUR SE OF SEARCH. WE NOTICE THAT THE ASSESSING OFFICER HAS DETERMINED THE UNDISCLOSED IN COME PRIMARILY ON THE BASIS OF BLOCK RETURN AND THE CASH FLOW STATEMENT FILED BY THE ASS ESSEE. WE ALSO NOTICE THAT THE ASSESSEE DOES NOT HAVE GRIEVANCE WITH REGARD TO THE METHOD ADOPTED BY THE ASSESSING OFFICER, EVEN THOUGH NO REFERENCE WAS MADE TO ANY O F THE SEIZED MATERIALS. HENCE, WE DO NOT LIKE TO INTERFERE WITH THE METHOD ADOPTED BY THE AO FOR DETERMINATION OF UNDISCLOSED INCOME. HOWEVER, WE ARE OF THE VIEW TH AT THE AO SHOULD GIVE DEDUCT ALL THE AVAILABLE SOURCES WHILE DETERMINING THE NET INV ESTMENT MADE BY THE ASSESSEE. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E WIFE OF THE ASSESSEE WAS EMPLOYED AS A TEACHER AND THERE IS ALSO NO DISPUTE THAT HER SALARY SAVINGS WAS AVAILABLE WITH THE ASSESSEE FOR MAKING INVESTMENTS. THE ASSESSING OFF ICER PRIMARILY REJECTED THE CLAIM OF AVAILABILITY OF SAID SALARY SAVINGS ONLY FOR WANT O F SALARY CERTIFICATE. WE NOTICE THAT THE ASSESSEE HAS PRODUCED A CERTIFICATE FROM THE PRINCI PAL OF THE SCHOOL BEFORE THE LD. CIT(A) AND CLAIMED ENHANCED AMOUNT TOWARDS SOURCES. HOWEVER, THE FIRST APPELLATE AUTHORITY WITHOUT CONFRONTING THE SAME WITH THE ASS ESSING OFFICER, HAS TAKEN HIS OWN VIEW. SINCE THE SAID CERTIFICATE HAS NOT BEEN EXAM INED BY THE AO, WE ARE OF THE VIEW I.T.(SS)A. NO. 162 /COCH/2005 5 THE SAME IS REQUIRED TO BE EXAMINED AT HIS END. IT IS A FACT THAT THE ASSESSEE DID MAINTAIN REGULAR BOOKS OF ACCOUNT. HENCE THE UNDIS CLOSED INCOME HAS BEEN DETERMINED ON THE BASIS OF INFORMATION COLLATED AND SUBMITTED BY THE ASSESSEE. IN THAT KIND OF SITUATION, THE POSSIBILITY OF OMISSIONS AND ERRORS IN COMPUTING THE CASH FLOW STATEMENT CANNOT BE RULED OUT. ACCORDINGLY, WE ARE OF THE VI EW THAT THE CLAIM OF THE ASSESSEE WITH REGARD TO THE AVAILABILITY OF ENHANCED AMOUNT NEEDS TO BE EXAMINED AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE T HE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO WITH THE DIR ECTION TO EXAMINE THE CLAIM OF THE ASSESSEE TOWARDS SALARY SAVINGS AND TAKE APPROPRIAT E DECISION. NEEDLESS TO MENTION, THE ASSESSEE SHOULD BE GIVEN NECESSARY OPPORTUNITY TO SUBSTANTIATE HIS CLAIM OF AVAILABILITY OF ENHANCE AMOUNT OF SALARY SAVINGS. 9. IN THE RESULT, BOTH THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. PRONOUNCED ACCORDINGLY O N 10-08-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10TH AUGUST, 2012 GJ COPY TO: 1.LATE SHRI C.T.MATHEW, REP. BY L/HRS. SMT. LEELAMM A MATHEW & 3 OTHERS, CHIRAYIL, THOMSON VILLA, M.C.ROAD, 101 JUNCTION, AT HIRAMPUZHA, ETTUMANOOR, KOTTAYAM. 2.THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE- 1, KOTTAYAM. 3.THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCHI . 4.THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN