Madathil Zainudeein, Malappuram V. ACIT, Calicut

ITSSA 33/COCH/2006

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8137 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-05-2012
• Assessment Year: misc
• Appeal Filed On: 20-04-2006
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Peak credit
• Section: 131; 69; 15

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. 33/COCH/2006 BLOCK PERIOD : 1997-98 TO 2003-04 MADATHIL ZAINUDDIN, MADATHIL HOUSE, KAVANNUR ARECODE, MALAPPURAM. [PAN:AADPZ 1237H] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KOZHIKODE. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI T.N.SEETHARAMAN, ADV. REVENUE BY SHRI K.K. JOHN, SR.DR DATE OF HEARING 08/05/2012 DATE OF PRONOUNCEMENT 22/06/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.01.2006 PASSED BY THE LD. CIT(A)-I, KOCHI AND IT RELATES TO THE BLOCK PERIOD FROM 01-04-1996 TO 23-12-2002. 2. THE ASSESSEE IS ASSAILING THE DECISION OF THE LD . CIT(A) IN CONFIRMING THE ADDITION OF RS. 2,12,15,000/- MADE BY THE ASSESSING OFFICER AND ALSO HIS DECISION IN ENHANCING THE INCOME BY RS. 65.00 LAKHS. 3. THE FACTS RELATING TO THE ABOVE SAID ISSUES ARE STATED IN BRIEF. THE ASSESSEE HEREIN IS NOT REGULARLY ASSESSED TO INCOME TAX. HE HAD FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2000-01 NS 2001-02 DECLARING A TOT AL INCOME OF RS.60,000/- AND RS.72,000/- RESPECTIVELY UNDER THE HEAD INCOME FRO M OTHER SOURCES. THE CHENNAI POLICE RECOVERED A SUM OF RS. 65.00 LAKHS ON 21.12. 2002 FROM A CAR OCCUPIED BY FOUR PERSONS VIZ., SHRI K.K. AZEEZ AND THREE OTHERS. IN THE STATEMENT GIVEN BY SHRI K.K.AZEEZ U/S. 131 OF THE ACT, HE STATED THAT THE C ASH OF RS.65.00 LAKHS BELONGED TO THE I.T.(SS)A.NO. 33/COCH/2006 2 ASSESSEE HEREIN AND FURTHER STATED THAT IT WAS GIVE N TO HIM FOR PURCHASING GOLD BISCUITS. THEREAFTER, THE ASSESSEE HEREIN FILED A LETTER DATE D 02-01-2003 WITH DDIT(INV.), CALICUT WHEREIN HE ADMITTED THAT THE SUM OF RS. 65.00 LAKHS BELONGED TO HIM. IN THAT LETTER, HE ALSO STATED THAT HE HAS GIVEN THE ABOVE AMOUNT F OR PURCHASE OF GOLD BARS FOR THE PURPOSE OF BUSINESS TO BE STARTED BY HIS BROTHER AN D OTHER PERSONS. HE ALSO STATED IN THAT LETTER THAT HE HAD ACTED AS AN AGENT TO TRANSF ERRING FUNDS FROM MUMBAI TO KERALA THROUGH HIS BANK ACCOUNTS MAINTAINED WITH MANJERI C O-OPERATIVE URBAN BANK, DURING THE PERIOD FROM 12-12-2001 TO 06-04-2002. HE FURTHE R SUBMITTED THAT THE PEAK CREDIT OF DEPOSITS APPEARING IN THE SAID BANK ACCOUNTS WAS RS . 50.00 LAKHS. HE ALSO VOLUNTEERED TO OFFER THE SEIZED CASH AS HIS INCOME. 4. THE ASSESSEE WAS SERVED WITH A NOTICE U/S 15 8BC R.W.S. 158BD OF THE ACT. IN RESPONSE THERETO, HE FILED A BLOCK RETURN DECLARING AN UNDISCLOSED INCOME OF RS. 65.00 LAKHS FOR THE BLOCK PERIOD AS UNDER:- ASST. YEAR 1997-98 RS. 1 LAKH 1998-99 RS. 1 LAKH 1999-2000 RS. 2 LAKHS 2000-01 RS. 2 LAKHS 2001-02 RS. 2 LAKHS 2002-03 RS. 50 LAKHS 2003-04 RS. 7 LAKHS ------------------ TOTAL RS. 65 LAKHS ======== 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEPOSITED AN AGGREGATE AMOUNT OF R S. 2,62,15,000/- IN THE HIS BANK ACCOUNTS ON VARIOUS DATES. IT WAS ALSO NOTICED THA T ALL THE DEPOSITS WERE BY WAY OF H.O. ADVICE AND THEY WERE WITHDRAWN IMMEDIATELY O N THE VERY SAME DAY IN CASH. THE ASSESSING OFFICER CALLED FOR THE DETAILS OF DEP OSITS, BUT THE ASSESSEE COULD NOT GIVE THE NAMES AND ADDRESSES OF THE PERSONS FROM WHOM TH E DEPOSITS WERE RECEIVED. THE ASSESSEE SUBMITTED THAT THESE TRANSACTIONS WERE REL ATED TO THE BUSINESS OF PURCHASE AND SALE OF GOLD CARRIED ON BY HIM, BUT HE COULD NO T FURNISH THE NAMES OF EITHER THE BUYERS OR THE SELLERS. HENCE THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE I.T.(SS)A.NO. 33/COCH/2006 3 ASSESSEE THAT THESE TRANSACTIONS REPRESENT BUSINESS TRANSACTIONS. SINCE THE DEPOSITS WERE BY WAY OF H.O. ADVICE, THE AO REJECTED THE A SSESSEES OFFER OF PEAK CREDIT THEREOF AND TREATED THE ENTIRE DEPOSITS OF RS. 2,62 ,15,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAD ALREADY OFFER ED A SUM OF RS. 50.00 LAKHS IN HIS BLOCK RETURN, THE AO ADDED RS.2,12,15,000/- TO THE INCOME DISCLOSED BY THE ASSESSEE. 6. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEF ORE THE LD. CIT(A), WHO CONFIRMED THE ADDITION OF BANK DEPOSITS. THE LD. CIT(A) ISSU ED NOTICE OF ENHANCEMENT TO THE ASSESSEE AS HE TOOK THE VIEW THAT THE CASH OF RS.65 .00 LAKHS SEIZED BY THE POLICE SHOULD BE ASSESSED SEPARATELY, FOR THE REASON THAT THE AGGREGATE INCOME DECLARED IN THE BLOCK RETURN COULD NOT BE CONSIDERED AS A SOURC E FOR THE CASH SEIZED BY THE POLICE. THE LD CIT(A) ALSO POINTED OUT THE CONTRADICTORY ST ANDS TAKEN BY THE ASSESSEE WITH REGARD TO THE DEPOSITS FOUND IN HIS BANK ACCOUNTS, I.E., BEFORE THE DDI HE HAD STATED THAT HE HAS UNDERTAKEN THE ACTIVITY OF TRANSFERRING FUNDS FROM MUMBAI TO KERALA, BUT BEFORE THE AO, HE STATED THAT HE WAS CARRYING ON BU SINESS IN GOLD. FURTHER THE ASSESSEE COULD NOT EXPLAIN ABOUT THE TIME GAP BETWE EN THE LAST WITHDRAWAL MADE FROM THE BANK AND THE CASH SEIZURE. ACCORDINGLY, HE DIR ECTED THAT THE AMOUNT OF RS. 65.00 LAKHS BE ASSESSED AS UNDISCLOSED INCOME IN THE HAND S OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APP EAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRANSACTIONS FOUND IN THE BANK ACCOUNTS CLEARLY SHOW THAT THERE WAS ROTATION OF FUNDS, I.E., THE AMOUNT RECEIVED BY WAY OF H.O. ADVICE WAS IMMEDIATELY WITHDRAWN AND AFTER THE WITHDRAWAL, THERE WAS ANOTHER SET OF DEPOSIT AND WITHDRAWAL AND SO ON. AC CORDINGLY, HE SUBMITTED THAT IT WOULD BE JUSTIFIABLE TO ASSESS ONLY THE PEAK CREDIT S IN THIS KIND OF REPETITIVE TRANSACTIONS, INSTEAD OF ASSESSING THE ENTIRE DEPOS ITS. HE SUBMITTED IT MAY NOT BE CORRECT TO DISREGARD THE WITHDRAWALS. HE FURTHER SU BMITTED THAT ASSESSING THE PEAK CREDIT IS ONE OF THE ACCEPTABLE METHODS OF COMPUTAT ION OF INCOME AND IN SUPPORT OF THE SAME; HE PLACED RELIANCE ON TWO ORDERS PASSED BY TH E TAX SETTLEMENT COMMISSION AND ALSO THE COMMENTARY GIVEN IN THE BOOK OF SAMPATH IY ENGAR, WHICH ARE PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. HE FURTHER SUBMIT TED THAT THE ASSESSEE HAS FILED A I.T.(SS)A.NO. 33/COCH/2006 4 CASH FLOW STATEMENT WHEREIN HE HAS CLEARLY SHOWN AC CUMULATION OF CASH BALANCE OVER THE YEARS (INCLUDING THE PEAK CREDIT OF RS.50.00 LA KHS) AND THE AMOUNT SO ACCUMULATED HAVE BEEN GIVEN TO MR.K.K. AZEEZ FOR PURCHASING GOL D. HE FURTHER SUBMITTED THAT THERE IS NO MATERIAL TO SHOW THAT THE CASH SO ACCUMULATED HAS BEEN SPENT AWAY. HENCE THE TAX AUTHORITIES SHOULD HAVE ACCEPTED THE CLAIM OF T HE ASSESSEE THAT THE AMOUNT OF RS. 65.00 LAKHS SEIZED BY THE POLICE REPRESENTED THE CA SH SO ACCUMULATED BY THE ASSESSEE OVER THE YEARS. HE FURTHER SUBMITTED THAT THE LD. CIT(A) IS NOT CORRECT IN ASSESSING THE AMOUNT OF RS. 65 LAKHS SEPARATELY OVER AND ABOVE TH E INCOME DECLARED BY THE ASSESSEE IN HIS BLOCK RETURN AS THE ASSESSEE COULD EXPLAIN T HE SOURCE THEREOF THROUGH THE CASH FLOW STATEMENT. ACCORDINGLY HE SUBMITTED THAT THE A DDITION OF AGGREGATE OF BANK DEPOSITS AND THE SEPARATE ADDITION OF RS.65.00 LAKH S MADE BY LD CIT(A) SHOULD BE DELETED. 8. ON THE CONTRARY THE LD. DR SUBMITTED THAT THE AS SESSEE HAS TAKEN CONTRADICTORY STANDS WITH REGARD TO THE DEPOSITS MADE IN THE BANK ACCOUNTS. INITIALLY, THE ASSESSEE HAS STATED THAT HE HAS ACTED AS AN AGENT TO TRANSFE R THE FUNDS FROM MUMBAI TO KERALA THROUGH HIS BANK ACCOUNT. LATER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE HAS CHANGED THE STAND AND STATED THAT HE WAS CARRYING O N TRADING IN GOLD BISCUITS. HOWEVER, THE FACT REMAINS THAT THE ASSESSEE HAS FAI LED TO SUBSTANTIATE BOTH THE STANDS WHICH ARE CONTRADICTORY TO EACH OTHER. THE ASSESSE E HAS ALSO FAILED TO FURNISH ANY OF THE DETAILS WITH REGARD TO THE DEPOSITS MADE IN THE BANK ACCOUNTS. IN THESE CIRCUMSTANCES, THE TAX AUTHORITIES HAD NO OTHER OPT ION, BUT TO ASSESS THE ENTIRE DEPOSITS AS THE UNDISCLOSED INCOME OF THE ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT THERE IS NO PROOF WITH THE ASSESSEE TO SHOW THAT THE AMOUNT DECLARED OVER THE YEARS HAS REMAINED WITH HIM IN CASH ONLY, WHICH CAN BE CONSID ERED AS SOURCE FOR THE CASH OF RS.65.00 LAKHS SEIZED BY THE POLICE. 9. IN THE REJOINDER, THE LD. AR SUBMITTED THAT THE VERY FACT THAT THE ASSESSEE DOES NOT POSSESS ASSETS EQUIVALENT TO THE INCOME DETERMI NED AS UNDISCLOSED INCOME SHOWS THAT THE UNDISCLOSED INCOME HAS BEEN DETERMINED UNR EASONABLY. I.T.(SS)A.NO. 33/COCH/2006 5 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE RECORDS. THE FIRST QUESTION THAT NEEDS TO BE ADDRESSED IS WHETHER THE ENTIRE AMOUNT OF DEPOSITS FOUND IN THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE ARE TO BE ASSESSED AS INCOME OR ONLY THE PEAK CREDIT AS CLAIMED BY THE ASSESSEE IS TO BE TAK EN AS INCOME. WE HAVE GONE THROUGH THE BANK ACCOUNTS MAINTAINED BY THE ASSESSE E. WE NOTICE THAT THE DEPOSITS FOUND IN VARIOUS DATES HAVE BEEN CREDITED IN THE BA NK ACCOUNT WITH THE NARRATION H.O. ADVICE, WHICH MEANS THAT THERE WAS TRANSFER OF FUN DS FROM SOME OTHER BRANCH OF THE BANK. WE ALSO NOTICE THAT THE DEPOSITS HAVE BEEN I MMEDIATELY WITHDRAWN BY WAY OF CASH MOSTLY ON THE VERY SAME DAY OR IN SOME CASES W ITHIN COUPLE OF DAYS. LIKE THIS THERE WERE SUCCESSIVE DEPOSITS AND WITHDRAWALS. S INCE THERE IS A DEPOSIT FOLLOWED BY A WITHDRAWAL WHICH IS FOLLOWED BY ANOTHER SET OF DEPO SIT AND WITHDRAWAL, THE POSSIBILITY OF ROTATION OF FUNDS CANNOT BE ALTOGETHER DISCOUNTED W ITH. 11. ONCE WE ACCEPT THE ROTATION OF FUNDS, THE N EXT QUESTION THAT NEEDS TO BE ADDRESSED IS WHETHER THE SAID FUNDS BELONG TO THE A SSESSEE AND WHETHER THE SAME IS AVAILABLE WITH HIM ONCE THE ROTATION OF FUNDS STOPS . FOR ANSWERING THESE QUESTIONS, WE HAVE TO MAKE A REFERENCE TO THE EXPLANATIONS GIVEN BY THE ASSESSEE. AS POINTED OUT BY LD D.R, THE ASSESSEE HAS TAKEN TWO DIFFERENT STANDS WITH REGARD TO THE BANK TRANSACTIONS. BEFORE DDI, THE ASSESSEE HAS STATED THAT HE WAS CARRYING THE ACTIVITY OF TRANSFERRING FUNDS FROM MUMBAI TO KERALA AND THE TR ANSACTIONS FOUND IN THE BANK ACCOUNTS REPRESENTED SUCH KIND OF TRANSFERS. IF TH IS STAND OF THE ASSESSEE IS ACCEPTED FOR A MOMENT TO BE CORRECT, THEN THE ASSESSEE CANNO T CLAIM TO BE THE OWNER OF THE FUNDS SO TRANSACTED IN THE BANK. AT THE BEST, HE W OULD HAVE EARNED CERTAIN COMMISSION FOR CARRYING OUT SUCH CASH TRANSFER ACTIVITY. HOWE VER, IT IS TO BE NOTED THAT THE ASSESSEE HAS ADMITTED AN INCOME OF RS.50.00 LAKHS IN HIS BLO CK RETURN AS PEAK CREDIT OF THE BANK TRANSACTIONS. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CHANGED HIS STAND AND STATED THAT HE WAS CARRYING ON THE BUSINESS OF TRADING IN GOLD BISCUITS AND THE TRANSACTIONS IN ITS BANK ACCOUNT REPRESENTED SUCH T RADING. HOWEVER, AS POINTED OUT BY THE LD. DR, THE ASSESSEE HAS FAILED TO BRING ON REC ORD ANY MATERIAL TO SUBSTANTIATE HIS I.T.(SS)A.NO. 33/COCH/2006 6 CHANGED STAND. IN OUR VIEW, THIS CLAIM OF THE ASSES SEE ALSO DOES NOT APPEAR TO BE TRUE FOR THE FOLLOWING REASONS:- (A) IF THE ASSESSEE HAD REALLY CARRIED ON TRADING IN GOLD BISCUITS, HE COULD HAVE AT LEAST TRIED TO RECONCILE THE QUANTITY DETAILS OF GOLD VIS-A-VIS THE DEPOSITS FOUND IN THE BANK ACCOUNTS. (B) PRESUMING FOR A MOMENT THAT THE DEPOSITS REPRE SENT SALE VALUE OF GOLD, WE NOTICE THAT THE DEPOSITS ARE ALWAYS IN LAKHS THAT T OO IN ROUND FIGURES, WHICH WOULD NOT BE SO IN PRACTICAL SITUATIONS. THERE IS ALSO WIDE VARIATION BETWEEN TWO DEPOSITS, WHICH WOULD NOT BE NORMALLY SO IF THE ASS ESSEE IS CARRYING ON TRADING ACTIVITY. (C) FROM THE COPY OF THE THREE BANK ACCOUNTS PLACE D IN THE PAPER BOOK, WE NOTICE THAT THE ASSESSEE HAS RECEIVED AN AGGREGATE DEPOSIT OF RS. 1.23 CRORES IN THE MONTH OF DECEMBER, 2001. EVEN IF THE INITIAL DE POSIT OF RS. 12 LAKHS EACH (TOTAL RS.24.00 LAKHS) RECEIVED IN ACCOUNT NOS. 34 AND 11804 IS CONSIDERED AS THE CAPITAL OF THE ASSESSEE, IT DOES NOT COMMENSURA TE WITH THE AMOUNT DECLARED BY THE ASSESSEE IN HIS BLOCK RETURN, I.E., UP TO 31 -03-2001. THE ASSESSEE HAS DECLARED ONLY A SUM OF RS. 8.00 LAKHS ONLY AS UNDIS CLOSED INCOME. (D) IN THE MONTH OF DECEMBER, 2001, WE NOTICE DEPO SITS OF RS.25.00 LAKHS AND RS.50.00 LAKHS, BUT THERE AFTER THE DEPOSIT AMOUNT WAS IN THE RANGE OF BELOW TEN LAKHS ONLY UP TO 20-03-2002. THERE AFTER THERE IS A DEPOSIT OF BIG AMOUNT, I.E., RS.24.00 LAKHS ON 23.3.2002. THE LAST DEPOSIT WAS RS.20.00 LAKHS MADE ON 06.4.2002. THE ASSESSEE HAS NOT EXPLAINED THE REAS ONS FOR STOPPING THE ALLEGED GOLD TRADE THEREAFTER. (E) THE TIME GAP BETWEEN 06.4.2002, I.E., THE DATE OF LAST DEPOSIT AND 21.12.2002, I.E., THE DATE OF SEIZURE OF CASH HAS A LSO NOT BEEN EXPLAINED BY THE ASSESSEE. IN VIEW OF THE ABOVE, IT IS HARD TO BELIEVE THAT TH E ASSESSEE WAS CARRYING ON TRADING IN GOLD. THIS FINDING IS REINFORCED BY THE FACT THAT THE ASSESSEE HAS DECLARED A SUM OF RS.8.00 LAKHS ONLY UP TO THE ASSESSMENT YEAR 2001- 02. EVEN IF IT IS ASSUMED FOR A MOMENT THAT THE ASSESSEE COULD HAVE CARRIED ON THE TRADING ACTIVITY BY PURCHASING GOLD ON CREDIT, THEN HE WOULD HAVE GOT ONLY THE MARGIN O N SUCH SALE, WHICH IS USUALLY VERY LOW IN GOLD BAR TRADING. THE ASSESSEE COULD NOT HA VE OBTAINED GOLD ON CREDIT. HAD IT BEEN SO, THE ASSESSEE WOULD HAVE DEPOSITED CASH INI TIALLY IN THE BANK AND THEN TAKEN THE DEMAND DRAFT FOR MAKING PAYMENT TO THE SUPPLIER S, WHICH IS NOT THE CASE HERE. I.T.(SS)A.NO. 33/COCH/2006 7 13. IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO PROPERLY EXPLAIN THE NATURE OF TRANSACTIONS IN T HE BANK. UNDER THESE CIRCUMSTANCES, THE TAX AUTHORITIES HAVE NO OTHER OPTION BUT TO TAX THE DEPOSITS, WHICH STAND UNEXPLAINED. HOWEVER, WE HAVE ALREADY STATED THAT THE POSSIBILITY OF ROTATION OF FUNDS CANNOT BE DISCOUNTED WITH. THE TAX AUTHORITIES, IN OUR VIEW, CANNOT SIMPLY IGNORE THE WITHDRAWALS MADE BY THE ASSESSEE. ACCORDINGLY, WE ARE OF THE VIEW THAT IT WOULD BE JUSTIFIABLE TO ASSESS THE PEAK CREDIT OF DEPOSITS A S THE INCOME OF THE ASSESSEE. SINCE THE PEAK CREDIT AMOUNT OF RS.50.00 LAKHS WORKED OUT BY THE ASSESSEE HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER, WE SET ASIDE THE ISSUE OF DETERMINING THE PEAK CREDIT TO THE FILE OF HE AO WITH THE DIRECTION TO VERIFY T HE PEAK CREDIT WORKINGS AND ASSESS THE CORRECT PEAK CREDIT AS THE INCOME OF THE ASSESSEE. THE ORDER OF LD CIT(A) STANDS MODIFIED TO THE EXTENT DISCUSSED ABOVE. 14. NOW, WE HAVE TO ADDRESS WHETHER THE INCOME D ECLARED BY THE ASSESSEE IN VARIOUS YEARS INCLUDING THE PEAK CREDIT AMOUNT CAN BE TAKEN AS THE SOURCE FOR THE CASH OF RS.65.00 LAKHS SEIZED BY THE POLICE OFFICIAL. WE N OTICE THAT THE ASSESSEE HAS PREPARED THE CASH FLOW STATEMENT, ONLY AFTER FINALISING TH E BLOCK RETURN. IT IS NOT A CASE, WHERE THE ASSESSEE HAS PREPARED THE CASH FLOW STATEMENT A ND OFFERED THE DEFICIT AMOUNT AS HIS INCOME. IN THE CASH FLOW STATEMENT, HE HAS ALS O SHOWN RECEIPT OF RS.3.00 LAKHS IN THE FINANCIAL YEAR 2000-01 AND RS.2.00 LAKHS IN THE FINANCIAL YEAR 2002-03 FROM HIS BROTHER WITH THE NARRATION RECEIPTS FROM BROTHER H USSAIN AS SHARE IN BUSINESS. NEITHER THE ASSESSEE HAS EXPLAINED NOR THE AO HAS Q UESTIONED ABOUT THE NATURE OF BUSINESS MENTIONED IN THE NARRATION. THUS, IN OU R VIEW, ONE CANNOT GIVE MUCH CREDENCE TO THE CASH FLOW STATEMENT PREPARED BY THE ASSESSEE, AS IT IS FOUND TO BE A SELF SERVING ONE AND NOT SUPPORTED BY ANY REGULAR B OOKS OF ACCOUNTS/DOCUMENTS. IT IS ALSO HARD TO BELIEVE THAT THE INCOME OF RS.1.00 LAK H EACH DECLARED IN THE YEARS RELEVANT TO THE ASSESSMENT YEARS 1997-98 AND 1998-99 WERE AV AILABLE WITH THE ASSESSEE ON 21.12.2002, I.E., AFTER A GAP OF SEVERAL YEARS. SI MILAR IS THE CASE WITH THE INCOME OF RS.2.00 LAKHS EACH DECLARED FOR THE YEARS RELEVANT TO THE ASSESSMENT YEARS 1999-2000 TO 2001-02. WITH REGARD TO THE DECLARATION OF PEAK CREDIT AMOUNT OF RS.50.00 LAKHS, WE HAVE TO STATE THAT THE SAID AMOUNT HAS BECOME TAXAB LE DUE TO THE LEGAL FICTION I.T.(SS)A.NO. 33/COCH/2006 8 CONTAINED IN SECTION 68, 69 ETC. DUE TO THE FAILURE OF THE ASSESSEE TO PROPERLY EXPLAIN THE BANK TRANSACTIONS. THERE CANNOT BE ANY DISPUTE THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE TO SHOW THAT THE SAID AMOUNT WAS AVAILABLE WITH HIM AND IT WAS KEPT IDLE FOR MORE THAN NINE MONTHS. IN VIEW OF THE FOREGOING DI SCUSSIONS, WE ARE OF THE VIEW THAT THE INCOME DECLARED BY THE ASSESSEE FOR THE ASSESSM ENT YEARS 1997-98 TO 2002-03 CANNOT BE CONSIDERED AS A SOURCE FOR THE AMOUNT OF RS.65.00 LAKHS SEIZED BY THE POLICE OFFICIALS. 15. HOWEVER, THE AMOUNT OF RS.7.00 LAKHS DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04, I.E., THE YEAR OF SEIZURE, IN OUR VIE W, HAS TO BE GIVEN SET OFF AGAINST THE AMOUNT OF RS.65.00 LAKHS. ACCORDINGLY, WE MODIFY T HE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO GIVE SET OFF OF RS.7.00 LAKHS AND MAKE ADDITION OF RS.58.00 LAKHS ONLY IN THE ASSESSMENT YEAR 2003-04. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. PRONOUNCED ACCORDINGLY O N 22-06-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 22ND JUNE, 2012 GJ COPY TO: 1. MADATHIL ZAINUDDIN, MADATHIL HOUSE, KAVANNUR ARE CODE, MALAPPURAM. 2.THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KOZHIKODE. 3.THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI 4.THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN