M/s K.P. Chandradasan & Co., Calicut V. ITO, Calicut

ITSSA 35/COCH/2008

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8513 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2012
• Assessment Year: misc
• Appeal Filed On: 21-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: V P MOHANDAS
• Keywords: Block assessment
• Section: 131

Judgement Text

1 ITSSA NO.35/COCH/2008 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T(SS)A NO. 35-COCH-2008 (BLOCK PERIOD 1987-88 TO 1997-98) M/S K.P. CHANDRADASAN & CO VS THE ITO, WD.2(3) PO PANTHEERANKAVE, CALICUT-19 CALICUT PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.P. MOHANDAS RESPONDENT BY : MS. A.S. BINDHU DATE OF HEARING : 05-09-2012 DATE OF PRONOUNCEMENT : 12-10-2012 O R D E R PER N.R.S. GANESAN (JM) BEING AGGRIEVED BY THE ORDER OF THE COMMISSIONER O F INCOME-TAX(A) DATED 18-01-2008, THE TAXPAYER PREFERRED THE APPEAL BEFORE THIS TRIBUNAL FOR THE BLOCK PERIOD 1987-88 TO 1997-98. 2. SHRI V.P. MOHANDAS, THE LD.REPRESENTATIVE FOR TH E TAXPAYER SUBMITTED THAT IN THE COURSE OF ASSESSMENT THE TAXPAYER FILED THE CASH FLOW STATEMENT INDICATING LOAN TAKEN FROM RELATIVES AND FRIENDS. THE TAXPAYER HAS FILED THE CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER. HOWEVER, THE LOWER AUTHORITIES TREATED THE LOAN AS UNDISCLOSED INCOME. ACCORDING TO THE LD.RE PRESENTATIVE, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. IN TH E ABSENCE OF ANY MATERIAL 2 ITSSA NO.35/COCH/2008 FOUND DURING THE COURSE OF SEARCH OPERATION THERE C ANNOT BE ANY UNDISCLOSED INCOME ON THE BASIS OF THE CASH FLOW STATEMENT FILE D BY THE TAXPAYER. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGME NT OF THE MADHYA PRADESH HIGH COURT IN COMMISSIONER OF INCOME-TAX VS M.S. AGA RWAL, HUF (2010) 236 ITR 538 (MP) AND ALSO THE JUDGMENT OF THE DELHI HIGH CO URT IN COMMISSIONER OF INCOME-TAX VS MANOJ JAIN (2006) 287 ITR 285 (DEL). THE LD.REPRESENTATIVE HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF MADRAS HIGH COUR T IN COMMISSIONER OF INCOME-TAX VS G.K. CHENNIAPPAN (2006) 284 IT 220 (MAD ). 3. ON THE CONTRARY, MS. A.S. BINDHU, THE LD.DR SUBM ITTED THAT SEVERAL INCRIMINATING MATERIALS WERE FOUND DURING THE COURS E OF SEARCH OPERATION. THE TAXPAYER HAS MADE INVESTMENTS WHICH WERE FOUND DURI NG THE COURSE OF SEARCH OPERATION. THE TAXPAYER HAS FILED THE CASH FLOW ST ATEMENT IN ORDER TO EXPLAIN THE INVESTMENT. THEREFORE, ACCORDING TO THE LD.REPRESE NTATIVE, IT CANNOT BE SAID THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH O PERATION. IN SPITE OF THE DIRECTIONS OF THIS TRIBUNAL FOR PRODUCING THE COPIE S OF THE SEIZED MATERIAL, THE LD.DR COULD NOT PRODUCE ANY MATERIAL BEFORE THIS TR IBUNAL FOR VERIFICATION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 158BB(1) READS AS FOL LOWS: (1) THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHAL L BE THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD COMPUTED, IN ACCORDANCE WITH THE PR OVISIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESUL T OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE, AS REDUCED BY THE A GGREGATE OF THE TOTAL INCOME, OR AS THE CASE MAY BE, AS INCREASED B Y THE AGGREGATE OF THE LOSSES OF SUCH PREVIOUS YEARS, DETERMINED,- 3 ITSSA NO.35/COCH/2008 IN VIEW OF THE ABOVE PROVISION, THE UNDISCLOSED INC OME FOR THE BLOCK PERIOD SHALL BE COMPUTED ON THE BASIS OF THE EVIDENCE FOUND AS A RESULT OF SEARCH OR SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO THE EVIDENCE FOUND IN THE COURSE OF SE ARCH. THE KERALA HIGH COURT WHILE INTERPRETING THIS PROVISION, MORE PARTICULARL Y THE WORD EVIDENCE, FOUND THAT THE STATEMENT RECORDED U/S 132(4) OF THE ACT I N THE COURSE OF THE SEARCH PROCEEDINGS WOULD FALL WITHIN THE DEFINITION OF EVI DENCE. THEREFORE, THE STATEMENT RECORDED U/S 132(4) IN THE COURSE OF THE SEARCH PROCEEDINGS WOULD ALSO BE THE BASIS FOR BLOCK ASSESSMENT. IN THE CASE BEFORE US, IN SPITE OF DIRECTION OF THE TRIBUNAL, NO SUCH MATERIAL COULD BE PRODUCED BY THE ASSESSING OFFICER. THE COPIES OF THE STATEMENTS FILED BEFORE THIS TRIBUNAL ARE APPARENTLY RECORDED U/S 131 OF THE ACT IN THE COURSE OF THE ASSESSMENT AFTE R THE SEARCH. THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE FIRST APPELLATE A UTHORITY DOES NOT REFER TO ANY SEIZED MATERIAL OR EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION OR RELATABLE TO THE EVIDENCE FOUND DURING THE COURSE O F SEARCH OPERATION. THE LAW IS WELL SETTLED THAT THE BLOCK ASSESSMENT COULD BE MADE ONLY ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N OR THE INFORMATION WHICH IS RELATABLE TO THE EVIDENCE FOUND DURING THE COURSE O F SEARCH OPERATION. THE LOWER AUTHORITIES HAVE NOT REFERRED TO ANY OF THE SEARCH MATERIAL EVEN THOUGH IT APPEARS THAT THERE ARE CERTAIN INCRIMINATING MATERI ALS FOUND WITH REGARD TO THE INVESTMENT. IF THERE ARE INVESTMENTS FOUND IN THE COURSE OF SEARCH AND BY WAY OF EXPLAINING THAT INVESTMENT THE TAXPAYER HAS FILED T HE CASH FLOW STATEMENT, THEN THE CASH FLOW STATEMENT IS RELATABLE TO THE INVESTM ENT FOUND DURING THE COURSE OF SEARCH OPERATION. THEREFORE, THE INFORMATION CONTA INED IN THE CASH FLOW STATEMENT COULD BE THE BASIS FOR MAKING ASSESSMENT. BUT WE HAVE TO EXAMINE WHAT ARE THE MATERIALS FOUND BY THE REVENUE AUTHORI TIES IN THE COURSE OF SEARCH PROCEEDINGS WITH REGARD TO THE INVESTMENTS. IN THE ABSENCE OF ANY MATERIAL 4 ITSSA NO.35/COCH/2008 BEFORE THIS TRIBUNAL, WE ARE OF THE CONSIDERED OPIN ION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGL Y, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE WHIC H IS RAISED BEFORE THIS TRIBUNAL IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICE R. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE IN THE LIGHT OF THE EVIDENCE F OUND DURING THE COURSE OF SEARCH OPERATION OR SUCH INFORMATION WHICH IS RELATABLE TO THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. IT IS MADE CLEAR THAT THE ASSESSING OFFICER SHALL BRING ON RECORD THE ENTIRE EVIDENCE WITH REGARD TO THE IN COME ASSESSED FOR THE BLOCK PERIOD AND THEREAFTER FRAME THE ASSESSMENT IN ACCOR DANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE TAXPAYER. 5. IN THE RESULT, THE APPEAL OF THE TAXPAYER IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH OCTOBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 12 TH OCTOBER, 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