The ACIT, Ernakulam V. Hotel Plaza, Alappuzha

ITSSA 196/COCH/2005

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0377 (ITAT-COCHIN)
• Duration Of Justice: 9 year(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2014
• Assessment Year: misc
• Appeal Filed On: 18-11-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: MATHEW JOSPEH
• Keywords: Block assessment

Judgement Text

1 IT(SS)A NO.196/COCH/2005 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T(SS)A NO. 196/COCH/2005 (BLOCK PERIOD 01-04-1990 TO 06-05-1999) ACIT, CIR.1(2) VS HOTEL PLAZA ERNAKULAM KALAVOOR, ALLEPPEY PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M ANIL KUMAR, CIT RESPONDENT BY : SHRI MATHEW JOSPEH DATE OF HEARING : 12-11-2014 DATE OF PRONOUNCEMENT : 21-11-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE WAS DISPOSED OF EARLIE R BY AN ORDER DATED 30-11-2011. HOWEVER, THE REVENUE FILED MISCE LLANEOUS APPLICATION IN M.A. NO.139/COCH/2013 ON THE GROUND THAT GROUNDS NO.08 AND 09 WERE NOT DISPOSED OF. ACCORDINGLY, THE APPEAL WAS RESTO RED ON FILE BY AN ORDER DATED 24-01-2014 IN M.A. NO.138 & 139/COCH/2013. A CCORDINGLY, THE APPEAL WAS POSTED FOR HEARING ONLY FOR THE PURPOSE OF DISPOSAL OF GROUNDS 08 & 09. 2 IT(SS)A NO.196/COCH/2005 2. SHRI M. ANIL KUMAR, THE LD.DR SUBMITTED THAT GRO UND NO.08 IS WITH REGARD TO EXCLUSION OF SALE PROCEEDS OF EMPTY BOTTL ES FROM UNDISCLOSED INCOME. REFERRING TO THE ASSESSMENT ORDER, THE LD. DR SUBMITTED THAT THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE DOES NOT SHOW ANY INCOME FROM SALE OF EMPTY BOTTLES. IN THE ASSESSMENT YEAR 1997-98 T HE ASSESSEE HAS AGREED FOR AN ADDITION OF RS.30,000 AGAINST A PROPO SAL OF RS.75,000 ON ACCOUNT OF SALE PROCEEDS OF EMPTY BOTTLES. FOR THE ASSESSMENT YEAR 1998- 99, THE ASSESSING OFFICER ADOPTED THE SAME AT RS.57 ,656 ALSO AS SUGGESTED BY THE ASSESSEE. HOWEVER, FOR THE ASSESS MENT YEAR 1999-2000 THE ASSESSING OFFICER ESTIMATED THE SALE PROCEEDS O F EMPTY BOTTLES AT RS.60,000 BASED ON THE TURNOVER OF LIQUOR. HOWEVER , THE CIT(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING THAT THE SAME IS NOT IN NATURE OF UNDISCLOSED INCOME. 3. ON THE CONTRARY, SHRI MATHEW JOSEPH, THE LD.REPR ESENTATIVE FOR THE ASSESSEE SUBMITTED THAT SINCE THERE WAS NO SALE OF BOTTLES DURING THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 1998-99, T HE SAME WAS NOT DISCLOSED. ACCORDING TO THE LD.REPRESENTATIVE, IN THE ABSENCE OF ANY SALE OF BOTTLES, THERE IS NO QUESTION OF ANY ESTIMATION OF SALE PROCEEDS OF EMPTY BOTTLES. MOREOVER, ACCORDING TO THE LD.DR, THIS IS A BLOCK ASSESSMENT FRAMED U/S 158BC OF THE ACT. THEREFORE, THE ASSESS ING OFFICER HAS TO 3 IT(SS)A NO.196/COCH/2005 CONFINE HIMSELF ONLY TO SEIZED MATERIAL FOUND DURIN G THE COURSE OF SEARCH OPERATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ADDI TIONS ARE MADE ON ESTIMATE BASIS ON THE GROUND THAT THE ASSESSEE HAS NOT DISCLOSED THE SALE PROCEEDS OF THE EMPTY BOTTLES FOR THE ASSESSMENT YE ARS UNDER CONSIDERATION. WHEN THE ASSESSEE CONTENDS THAT NO BOTTLES WERE SOLD AND WHEN NO EVIDENCE WAS FOUND DURING THE COURSE OF SEA RCH OPERATION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE CA NNOT BE ANY ADDITION. ASSESSMENT IS ADMITTEDLY FRAMED U/S 158BC OF THE AC T. THEREFORE, IN VIEW OF THE LANGUAGE EMPLOYED BY THE PARLIAMENT IN SECTI ON 158BB(1) THE ASSESSING OFFICER HAS TO NECESSARILY CONFINE HIMSEL F TO THE EVIDENCE FOUND DURING THE COURSE SEARCH OPERATION. IN THE ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THERE CANNOT BE ANY ADDITION ONLY BECA USE THE ASSESSEE HAS DISCLOSED SALE PROCEEDS IN THE EARLIER ASSESSMENT Y EAR. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. THE SAME IS CONFIRMED. 5. NOW COMING TO GROUND NO.09, SHRI M ANIL KUMAR, T HE LD.DR SUBMITTED THAT THE CIT(A) DIRECTED THE ASSESSING OF FICER TO ALLOW 15% 4 IT(SS)A NO.196/COCH/2005 REDUCTION ON THE UNDISCLOSED INCOME RETURNED BY THE ASSESSEE. ACCORDING TO THE LD.DR, AT THE BEST, THE CIT(A) CAN DELETE TH E ADDITION MADE BY THE ASSESSING OFFICER. THE DELETION MADE BY THE CIT(A) CANNOT GO BELOW THE RETURNED INCOME. THEREFORE, THE DISALLOWANCE OF 15 % MADE BY THE CIT(A) CANNOT BE SUSTAINED. 6. WE HEARD SHRI MATHEW JOSEPH, THE LD.REPRESENTATI VE FOR THE ASSESSEE ALSO. IN RESPECT OF MESS EXPENSES AND THE EXPENDITURE FOR RUNNING BAR CUM RESTAURANT, THE ASSESSING OFFICER D ISALLOWED THE EXPENDITURE AT 75%. HOWEVER, THE CIT(A) RESTRICTED THE SAME TO 15% OF THE PROFIT SHOWN. FINALLY, THE CIT(A) DIRECTED 15% REDUCTION FROM THE UNDISCLOSED INCOME RETURNED BY THE ASSESSEE. AS RI GHTLY SUBMITTED BY THE LD.DR, THE CIT(A) CANNOT REDUCE THE INCOME BELOW TH E RETURNED INCOME. IF THE ASSESSEE CLAIMS THAT THE INCOME WHICH IS NOT OT HERWISE TAXABLE WAS INCLUDED IN THE TOTAL INCOME THEN THE CIT(A) OR OTH ER APPELLATE AUTHORITIES MAY REDUCE THE RETURNED INCOME. FOR EXAMPLE, IF AN AGRICULTURAL INCOME IS TAKEN AS TAXABLE INCOME IN COMPUTING THE TOTAL INCO ME, THEN THE MISTAKE COMMITTED BY THE ASSESSEE IN THE SELF ASSESSMENT BY INCLUDING THE AGRICULTURAL INCOME IN THE TOTAL INCOME CANNOT BE T AKEN ADVANTAGE OF BY THE ASSESSING OFFICER. THEREFORE, IF SUCH AGRICULT URAL INCOME INCLUDED IN THE TOTAL INCOME IS DELETED, THE SAME MAY BE JUSTIFIED EVEN IF THE TAXABLE INCOME GOES BELOW THE RETURNED INCOME. HOWEVER, IN THIS CASE, THAT IS NOT 5 IT(SS)A NO.196/COCH/2005 THE ISSUE. HERE THE ISSUE PERTAINS TO DISALLOWANCE OF EXPENSES. THEREFORE, WHEN THE CIT(A) DIRECTED FOR RESTRICTION OF DISALLOWANCE OF EXPENSES AT 15%, THE TOTAL INCOME THUS COMPUTED WOU LD GO BELOW THE RETURNED INCOME. THEREFORE, WHILE CONFIRMING THE O RDER OF THE CIT(A) RESTRICTING THE DISALLOWANCE OF EXPENSES AT 15%, TH E ASSESSING OFFICER IS DIRECTED TO ADOPT THE RETURNED INCOME IF THE TOTAL INCOME SO COMPUTED AFTER MAKING DISALLOWANCE OF EXPENSES AT 15% IS LESS THAN THE INCOME DISCLOSED BY THE ASSESSEE. TO THAT EXTENT THE ORDER OF THE C IT(A) IS MODIFIED. 7. THE ORDER OF THIS TRIBUNAL DATED 30-11-2011 IN R ESPECT OF OTHER ISSUES SHALL REMAIN AS SUCH. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST NOVEMBER, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 21 ST NOVEMBER, 2014 PK/- COPY TO: 1. THE ACIT, CIR.1(2), ERNAKULAM 2. HOTEL ASHOKA, NEAR BRIDGE, ALLEPPY 3. THE COMMISSIONER OF INCOME-TAX, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH