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

ITSSA 163/COCH/2005

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8371 (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; Difference of opinion; Block assessment
• 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. 163/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 FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER 20-09-2004 PASSED BY THE LD. CIT(A)-IV, KOCHI CHALLENGING THE CONFIRM ATION OF PENALTY LEVIED U/S 158BFA(2) OF THE ACT. 2. THE APPEAL IS BARRED BY LIMITATION BY 282 DAYS. THE ASSESSEE HAS MOVED PETITIONS 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. I.T.(SS)A. NO. 163 /COCH/2005 2 AT THAT TIME, THE AUTHORISED REPRESENTATIVE WHO WAS HANDLING THE TAX MATTERS ALSO EXPRESSED HIS INABILITY TO HANDLE THE CASES FURTHER . ACCORDINGLY, THE CASES WERE ENTRUSTED TO A CHARTERED ACCOUNTANT AT ALLEPPEY AND THE WORK RELATING THERETO WAS ENTRUSTED 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 THE APPEALS. ACCORDINGLY, IT IS PRAYED THAT THE DELAY MAY BE CONDONED, AS THE DE LAY WAS PURELY UNINTENTIONAL AND DUE TO EXTREME CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. ON THE OTHER HAND, THE LD D.R OBJECTED TO THE REQUEST MADE BY THE ASSE SSEE. 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 FACTS RELATING TO THE ISSUE UNDER CONSIDERAT ION ARE STATED IN BRIEF. THE ASSESSING OFFICER INITIALLY LEVIED THE PENALTY AT R S.11.23 LAKHS ON THE BASIS OF THE ORIGINAL BLOCK ASSESSMENT ORDER. SUBSEQUENTLY, THE PENALTY AMOUNT WAS REDUCED TO RS. 5.86 LAKHS CONSEQUENT TO PASSING OF RECTIFICATION ORDER U/S. 154 OF THE ACT. THE ASSESSEES APPEAL BEFORE THE LD. CIT(A) IN QUANTUM PROCEEDING WAS PARTLY ALLOWED. ACCORDINGLY, THE LD. CIT(A), IN THE APPEAL FILED AGAINST THE PEN ALTY ORDER, DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE PENALTY AMOUNT ACCORDINGL Y. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. I.T.(SS)A. NO. 163 /COCH/2005 3 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS PASSED THE PENALTY ORDER WITHOUT GIVING ANY REASON. HE FURTHER SUBMITTED THAT THE UNDISCLOSED INCOME WAS DETERMINED BY THE ASSESSING OFFICER WITHOUT MAKING REFERENCE TO ANY OF THE SEIZED MATERIAL, WHICH IS AGAINST THE SCHEME OF BLOCK ASSESSMENT PROCEEDING. HE FURTHER SUBMITTED THAT THE UNDISCLO SED INCOME SHOULD BE DETERMINED ONLY ON THE BASIS OF THE SEIZED MATERIALS ACCORDING TO CHAPTER XIV-B OF THE ACT. HE FURTHER SUBMITTED THAT THE UNDISCLOSED INCOME HAS B EEN DETERMINED BY AO ON THE BASIS OF CASH FLOW STATEMENT FILED BY THE ASSESSEE. FURT HER THE AO HAS MADE ESTIMATES WITH REGARD TO THE ON-MONEY PAYMENTS, EXPENSES ETC. ACC ORDINGLY, HE PLEADED THAT THE PENALTY AMOUNT CONFIRMED BY LD CIT(A) BE DELETED. 6. ON THE OTHER HAND, THE LD. DR DREW OUR ATTENTION TO PARA 5 OF THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE VARIOUS REASONS E XPLAINED BY THE ASSESSEE HAS BEEN REJECTED BY THE LD. CIT(A). ACCORDINGLY, THE LD. D R SUBMITTED THAT THE ORDER OF THE LD. CIT(A) IS TO BE UPHELD. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. IT IS A WELL SETTLED PROPOSITION OF LAW THAT THE UNDISCLOSED INCOME UNDE R CHAPTER XIV-B OF THE ACT SHOULD BE DETERMINED ONLY ON THE BASIS OF EVIDENCES FOUND DURING THE COURSE OF SEARCH OR ON THE BASIS OF SUCH OTHER INFORMATION WHICH ARE RELAT ABLE TO SUCH EVIDENCES. THE LD A.R HAS POINTED OUT THAT THE UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE HAS BEEN DETERMINED ON THE BASIS OF THE CASH FLOW STATEMENT AND THE BLOCK RETURN FILED BY THE ASSESSEE. FURTHER IT IS SEEN THAT THE AO HAS ESTIM ATED THE ON MONEY PAYMENT ON PURCHASE OF PROPERTIES AND EXPENSES RELATING TO MAR RIAGE, EDUCATION ETC. FURTHER HE HAS REJECTED CLAIM OF AVAILABILITY OF CASH FROM CER TAIN SOURCES. IN EFFECT, IT IS SEEN THAT THE UNDISCLOSED INCOME HAS BEEN DETERMINED MAINLY O N THE BASIS OF ESTIMATE MADE BY THE AO. 8. IN THE CASH FLOW STATEMENT, THE ASSESSEE HAS SHOWN INTER-SE CASH TRANSACTIONS BETWEEN THE ASSESSEE AND HIS BROTHERS. THE AO DID NOT ALLOW THESE TRANSACTIONS ON THE GROUND THAT THE INTER SE TRANSFERS WERE CLAIMED SO AS TO SUIT THE CONVENIENCE OF THE I.T.(SS)A. NO. 163 /COCH/2005 4 BROTHERS IN ORDER TO EXPLAIN THE INVESTMENTS. THE LD CIT(A), IN PARA 4.2 OF HIS ORDER IN THE QUANTUM APPEAL, HAS TAKEN THE VIEW THAT THE CLA IM OF TRANSFER OF FUNDS BETWEEN THE BROTHERS CANNOT BE REGARDED AS UNREASONABLE AND ACCORDINGLY DIRECTED THE AO TO ALLOW THE CLAIM OF TRANSFER OF FUNDS. IN THE PENAL TY ORDER, THE LD CIT(A), IN PARA 6, HAS REJECTED THE CLAIM OF TRANSFER OF FUNDS BETWEEN THE BROTHERS. THUS, THE ORDER OF LD CIT(A) IN PENALTY APPEAL IS CONTRADICTORY TO HIS DE CISION TAKEN IN QUANTUM APPEAL. 9. FROM THE FOREGOING DISCUSSIONS, IT IS SEEN TH AT THE UNDISCLOSED INCOME HAS BEEN DETERMINED ON ESTIMATED BASIS WITHOUT REFERENCE TO THE SEIZED MATERIAL. FURTHER THE CONTRADICTION IN THE ORDERS PASSED BY LD CIT(A) IS ALSO POINTED OUT IN THE PRECEDING PARAGRAPH. UNDER THESE CIRCUMSTANCES, WE ARE OF TH E VIEW THAT THE PENALTY U/S 158BFA(2) IS NOT SUSCEPTIBLE IN THE FACTS AND CIRCU MSTANCES OF THE INSTANT CASE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 158BFA(2) OF THE ACT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED 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 (ASSIS TANT REGISTRAR) I.T.A.T, COCHIN I.T.(SS)A. NO. 163 /COCH/2005 5