John George Vettath Alias Mohan Vettath, Cochin V. ACIT, Ernakulam

ITSSA 26/COCH/2005

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8132 (ITAT-COCHIN)
• Duration Of Justice: 7 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-04-2012
• Assessment Year: misc
• Appeal Filed On: 07-02-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Assessee Lawyers: CHANDRASEKHARAN K K
• Keywords: Unexplained expenditure; Block assessment
• Section: 69C; 40A(3); 132

Judgement Text

1 IT(SS)A NO. 26/COCH/2005 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T(SS)A NO. 26/COCH/2005 (BLOCK PERIOD 01-04-1995 TO 04-10-2001) JOHN GEORGE VETTATH VS A.C.I.T., CENT.CIR.1 ALIAS MOHAN VETTATH ERNAKULAM 2079/39, KUNNAMPILLY LANE KOCHI-16 PAN : AANPV8683R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHANDRASEKHARAN K.K RESPONDENT BY : SHRI S.R. SENAPATI DATE OF HEARING : 26-04-2012 DATE OF PRONOUNCEMENT : 22-06-2012 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, KOCHI DATED 29-11-2004 AND PERTAIN S TO BLOCK PERIOD 01-04-1995 TO 04- 10-2001. 2. SHRI CHANDRASEKHARAN K.K, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS A SEARCH U/S 132 OF THE ACT ON 04-10-2001 AT TH E PREMISES OF THE ASSESSEE. THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFI CER MADE ADDITION OF RS.1,20,63,240 WHICH WAS RECEIVED BY THE ASSESSEE AND DISBURSED F OR DEVELOPMENT OF LAND OF THIRD PARTY. ACCORDING TO THE LD.REPRESENTATIVE, THIS AM OUNT BELONGED TO THE THIRD PARTIES AND THE ASSESSEE IS ONLY A REAL ESTATE AGENT. REFERRIN G TO SECTION 69C OF THE ACT, THE LD.REPRESENTATIVE SUBMITTED THAT SECTION 69C REFERS TO UNEXPLAINED EXPENDITURE. 2 IT(SS)A NO. 26/COCH/2005 ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE NE VER SPENT ANY MONEY. THE MONEY RECEIVED FROM THIRD PARTIES WAS DISBURSED ON BEHALF OF HIS EMPLOYER. THEREFORE, THE DISALLOWANCE, IF ANY, SHOULD BE IN THE HANDS OF THE REAL OWNER AND NOT THE EMPLOYEE. THE ASSESSEE, ACCORDING TO THE LD.REPRESENTATIVE, I S THE MIDDLEMAN ONLY TO DISBURSE THE AMOUNT. 3. ON THE CONTRARY, SHRI S.R. SENAPATI, THE LD.REPR ESENTATIVE SUBMITTED THAT THIS IS A BLOCK ASSESSMENT. THE ASSESSEE FILED THE CASH FLOW STATEMENT SHOWING THE RECEIPT AND PAYMENT FOR THE BLOCK PERIOD. AS ON 31-03-1996, TH E ASSESSEE HAS RECEIVED RS.1,20,63,240 FROM COL S.B NAIR FOR LAND DEVELOPME NT. THE ASSESSEE HAS SHOWN RS.97,72,831 AS AMOUNT SPENT FOR LAND DEVELOPMENT. DURING THE ENQUIRY IT WAS FOUND THAT COL S.B. NAIR PAID ONLY RS.8,90,000. IN THE A BSENCE OF ANY MATERIAL TO SHOW THAT COL S.B. NAIR PAID RS.1,20,63,240 THE ASSESSING OFFICER MADE THE ADDITION. EVEN THOUGH THE ASSESSEE CLAIMS THAT THE AMOUNTS WERE RECEIVED THRO UGH CHEQUES, NO DETAILS WERE FURNISHED BEFORE THE LOWER AUTHORITY TO SUBSTANTIAT E THE CLAIM. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE LOWER AUTHORITIES MADE T HE ADDITION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT HE WAS ONLY A MIDDLEMAN AND RECEIVED FUNDS ON BEHALF OF COL S.B. NAIR FOR LAND DEVELOPMENT. THE ASSESSEE COULD NOT PRODUCE THE DETAILS BEFORE THE LOWER AUTHORITIES RE GARDING THE RECEIPT OF MONEY; THEREFORE, THE ADDITION WAS MADE. WHEN THE ASSESSE E CLAIMS THAT THE MONEY WAS RECEIVED FROM COL S.B. NAIR FOR DEVELOPMENT OF LAND AND THE ASSESSEE IS ONLY A MIDDLEMAN, THIS TRIBUNAL FINDS THAT THE MATTER NEED S TO BE THOROUGHLY EXAMINED AS TO HOW THE MONEY WAS RECEIVED FROM COL S.B. NAIR. THE LOWER AUTHORITIES HAVE NOT BROUGHT ON RECORD ANY SEIZED MATERIAL. THE ENTIRE ADDITION APPEARS TO HAVE BEEN MADE ON THE BASIS OF THE CASH FLOW STATEMENT. THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD HAS TO BE COMPUTED ONLY ON THE BASIS OF THE MATERIAL FOUND DU RING THE COURSE OF SEARCH OPERATION OR ANY INFORMATION WHICH IS RELATABLE TO THE MATERI AL FOUND DURING THE COURSE SEARCH 3 IT(SS)A NO. 26/COCH/2005 OPERATION. IN THIS CASE, THE ADDITION WAS MADE ONL Y ON THE BASIS OF THE CASH FLOW STATEMENT AND THE ASSESSEE SPECIFICALLY CLAIMS THAT IT WAS RECEIVED FROM COL S.B. NAIR. IN THESE CIRCUMSTANCES, THIS TRIBUNAL FIND THAT THE MA TTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDERS OF LOWER AUTHORITY ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-CONSIDERATION. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE IN THE LIGHT OF THE MATERIAL THAT MAY BE PRODUCED BY THE ASSESSEE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. THE ASSESSEE HAS ALSO RAISED GROUNDS RELATING TO DISALLOWANCE OF RS.25,48,855 U/S 40A(3) AND ADDITION OF RS.1,10,000 TOWARDS THE LAND PURCHASED BY ASSESEES WIFE AND ADDITION OF RS.4,27,000 TOWARDS PROFIT ON SALE OF L AND. THE ASSESSEE HAS ALSO RAISED GROUNDS TOWARDS ADDITION OF RS.4,25,000 TOWARDS COM MISSION AND RS.6 LAKHS TOWARDS VALUE OF THE VEHICLE AND ADDITION OF RS.19,63,500 F ROM SALE OF MILK, DOGS, ETC. 6. WE HEARD THE LD.COUNSELS FOR THE ASSESSEE AND TH E REVENUE. FROM THE MATERIAL AVAILABLE ON RECORD IT APPEARS THAT THE ASSESSING O FFICER HAS NOT REFERRED TO ANY SEIZED MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICE R HAS SIMPLY MADE ADDITION WITHOUT BRINGING ON RECORD THE ENTIRE SEIZED MATERIAL AVAIL ABLE. IT IS THE OBLIGATION OF THE ASSESSING OFFICER TO BRING ON RECORD THE ENTIRE SEI ZED MATERIAL ON RECORD AND THE ADDITION HAS TO BE MADE WITH REFERENCE TO THE SEIZED MATERIA L AVAILABLE ON RECORD. EVEN THOUGH THE SEIZED MATERIAL IS AVAILABLE ON RECORD, THE ENT IRE SEIZED MATERIAL WAS NOT REFERRED TO BY THE ASSESSING OFFICER FOR MAKING ADDITION. MORE OVER, THE MAIN ADDITION OF RS.1,20,63,240 WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER NEEDS TO BE CONSIDERED IN THE LIG HT OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. ACCORDINGLY, THE ORDER S OF LOWER AUTHORITIES ARE SET ASIDE IN RESPECT OF THE ENTIRE GROUNDS RAISED BY THE ASSESSE E AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL EXAMINE THE SEIZED MATERIAL 4 IT(SS)A NO. 26/COCH/2005 AVAILABLE ON RECORD AND THEREAFTER COMPUTE THE UNDI SCLOSED INCOME ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N OR THE INFORMATION WHICH IS RELATABLE TO THE MATERIAL FOUND DURING THE COURSE O F SEARCH OPERATION. NEEDLESS TO POINT OUT THAT THE ASSESSEE SHALL BE GIVEN SUFFICIENT OPP ORTUNITY OF HEARING BY THE ASSESSING OFFICER. 7. WITH THE ABOVE OBSERVATIONS, THE ISSUES ARE REMI TTED BACK TO THE FILE OF THE ASSESSING OFFICER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND JUNE, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 22 ND JUNE, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH