DCIT, Ernakulam V. Shri K. K Yousuf, Cochin

ITSSA 49/COCH/2006

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8381 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-09-2012
• Assessment Year: misc
• Appeal Filed On: 31-05-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: R KRISHNA IYER
• Keywords: Unexplained investment; Cost of acquisition; Valuation report
• Section: 132

Judgement Text

1 IT(SS)A NO.46&47,49, 51&52/COCH/2006 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. 46/COCH/2006 (BLOCK PERIOD 01-04-95 TO 19-12-01) THE DY.CIT, CENT.CIR.1 VS SHRI K.K. IQBAL ERNAKULAM M/S UDAYA SOUND PULLEPADY, COCHIN PAN :AAJPI1251N (APPELLANT) (RESPONDENT) I.T(SS)A NO. 51/COCH/2006 (BLOCK PERIOD 01-04-95 TO 19-12-01) SHRI K.K. IQBAL VS THE DY.CIT, CENT.CIR.1 PULLEPADY, COCHIN ERNAKULAM (APPELLANT) (RESPONDENT) I.T(SS)A NO. 49/COCH/2006 (BLOCK PERIOD 01-04-95 TO 19-12-01) THE DY.CIT, CENT.CIR.1 VS SHRI K.K. YOUSUF ERNAKULAM M/S UDAYA SOUND PULLEPADY, COCHIN PAN :AASPY6325N (APPELLANT) (RESPONDENT) I.T(SS)A NO. 52/COCH/2006 (BLOCK PERIOD 01-04-95 TO 19-12-01) SHRI K.K.YOUSUF VS THE DY.CIT, CENT.CIR.1 PULLEPADY, COCHIN ERNAKULAM (APPELLANT) (RESPONDENT) I.T(SS)A NO. 47/COCH/2006 (BLOCK PERIOD 01-04-95 TO 19-12-01) THE DY.CIT, CENT.CIR.1 VS SHRI K.K. SHAMSUDEEN ERNAKULAM M/S UDAYA SOUND PULLEPADY, COCHIN PAN :AQRPS9585K (APPELLANT) (RESPONDENT) 2 IT(SS)A NO.46&47,49, 51&52/COCH/2006 REVENUE BY : MS. A.S. BINDHU ASSESSEE BY : SHRI R KRISHNA IYER DATE OF HEARING : 06-09-2012 DATE OF PRONOUNCEMENT : 14-09-2012 O R D E R PER N.R.S. GANESAN (JM) THESE APPEALS OF THE 3 TAXPAYERS AND THE DEPARTMEN T ARE DIRECTED AGAINST THE INDEPENDENT ORDERS OF THE COMMISSIONER OF INCOM E-TAX(A) FOR THE BLOCK PERIOD 01-04-95 TO 19-12-01. THE ISSUES AGITATED IN AL L THE APPEALS ARE EMANATING FROM THE ASSESSMENT ORDERS PASSED CONSEQUENT TO THE VERY SAME SEARCH CONDUCTED U/S 132 OF THE ACT. THEREFORE, WE HEARD ALL THE APPEALS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. LET US FIRST TAKE THE APPEAL OF THE TAXPAYER IN I TSS 51/COCH/2006. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO TH E ADDITION OF RS. 1,87,152 BEING THE UNEXPLAINED INVESTMENT IN THE RESIDENTIAL BUILD ING. 3. SHRI KRISHNA IYER, THE LD.REPRESENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS.7,50,000. HO WEVER, ON APPEAL THE COMMISSIONER OF INCOME-TAX(A) RESTRICTED THE SAME AT RS.1,87,152. THE LD.REPRESENTATIVE SUBMITTED THAT AS PER THE REGISTE RED VALUERS REPORT, THE TOTAL COST OF THE ENTIRE BUILDING COMES TO RS. 16,57,100. ACCORDING TO THE LD.REPRESENTATIVE, THE VALUATION MADE BY THE LOWER AUTHORITIES IS NOT BASED ON ANY MATERIAL. IN THE ABSENCE OF ANY OTHER REPORT, ACCORDING TO THE LD.REPRESENTATIVE, THE VALUATION REPORT FILED BY TH E TAXPAYER HAS TO BE CONSIDERED. 3 IT(SS)A NO.46&47,49, 51&52/COCH/2006 THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE EN TIRE CONSTRUCTION WAS CARRIED OUT UNDER THE SUPERVISION OF THE TAXPAYER. THEREFO RE, THE COST OF CONSTRUCTION DISCLOSED IN THE CASH FLOW STATEMENT IS VERY REASON ABLE. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE TAXPAYER HAS NOT MAINTAI NED ANY BOOKS OF ACCOUNT FOR CONSTRUCTION. NO MATERIAL WAS FOUND DURING THE COU RSE OF SEARCH OPERATION WITH REGARD TO THE UNEXPLAINED INVESTMENT. IN THE ABSEN CE OF ANY MATERIAL, ACCORDING TO THE LD.REPRESENTATIVE, THE COST OF CONSTRUCTION AS DISCLOSED IN THE CASH FLOW STATEMENT HAS TO BE ACCEPTED. 4. ON THE CONTRARY, SMT. A.S. BINDHU, THE LD.DR SUB MITTED THAT IN THE COURSE OF SEARCH OPERATION IT WAS FOUND THAT THE TAXPAYER HAS PURCHASED LAND AND CONSTRUCTED A THREE STOREYED BUILDING IN WHICH HE W AS STAYING. IN THE STATEMENT RECORDED IN THE COURSE OF SEARCH OPERATION THE TAXP AYER CLARIFIED THAT HE SPENT APPROXIMATELY RS.16 LAKHS FOR THE LAND AND CONSTRUCT ION OF THE BUILDING. THE TAXPAYER HAS ALSO CLARIFIED THAT HE RECEIVED RS.15 LAKHS FROM HIS FATHER IN LAW. THE LD.REPRESENTATIVE FURTHER POINTED OUT THAT THOU GH THE TAXPAYER CLAIMED THAT HE INVESTED RS.16 LAKHS IN LAND AND CONSTRUCTION IT WAS CONTENDED BEFORE THE ASSESSING AUTHORITY THAT RS.16 LAKHS WAS SPENT FOR T HE PORTION OCCUPIED BY THE TAXPAYER. ACCORDING TO THE LD.REPRESENTATIVE, THE TAXPAYERS BROTHER, SHRI K.K. YOUSUF ADMITTED IN HIS OWN STATEMENT THAT 4.25 CENT S OF LAND WAS PURCHASED AND THE CONSTRUCTION WAS COMPLETED IN THE YEAR 2000. T HE TOTAL FLOOR AREA OF THE BUILDING IS ABOUT 454 SQ.MTRS CONSISTING OF THREE F LOORS. THE TAXPAYER EXPLAINED BEFORE THE ASSESSING AUTHORITY THAT HE BORROWED RS. 5 LAKHS FROM KERALA FINANCE CORPORATION AND RS.4 LAKHS FROM SHRI KRISHNA CO-OPERAT IVE BANK AND THE REMAINING AMOUNT OF RS.8 LAKHS WAS FROM HIS BROTHER IN LAW AND ONE NAZIR FROM GURUVAYOOR. FROM THIS EXPLANATION TOWARDS THE SOURC E OF INVESTMENT THE ASSESSING OFFICER OBSERVED THAT IT IS OBVIOUS THAT THE TAXPAYER ALONE HAS INVESTED 4 IT(SS)A NO.46&47,49, 51&52/COCH/2006 RS.16 LAKHS IN THE CONSTRUCTION OF THE BUILDING. TH E TAXPAYER HAS EXPLAINED ONLY RS.8,50,000 IN THE CASH FLOW STATEMENT, THEREFORE, THE BALANCE OF RS.7,50,000 WAS ADDED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE TAXPAYE R IS THAT THE ENTIRE COST OF CONSTRUCTION IS RS.16,57,100. HOWEVER, THE DEPARTM ENT CONTENDS THAT THE COST OF CONSTRUCTION OF THE PORTION OF THE BUILDING WHICH W AS UNDER OCCUPATION OF THE TAXPAYER IS RS.16 LAKHS. THE TAXPAYER HAS FILED THE REGISTERED VALUERS REPORT IN RESPECT OF ENTIRE THREE STOREYED BUILDING. HOWEVER , THE DEPARTMENT HAS NOT CHOSEN TO VALUE THE BUILDING THROUGH THE DVO. ADMI TTEDLY, THE TAXPAYER IS NOT MAINTAINING ANY BOOKS OF ACCOUNT. IT IS NOT IN DISP UTE THAT THE UNDISCLOSED INCOME HAS TO BE COMPUTED ONLY ON THE BASIS OF THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION AND THE INFORMATION WHIC H IS RELATABLE TO THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION. IN TH IS CASE, THE REVENUE AUTHORITIES FOUND THE PURCHASE OF THE LAND AND CONSTRUCTION OF THE BUILDING DURING THE COURSE OF SEARCH OPERATION. THEREFORE, IT IS INCUMBENT UP ON THE TAXPAYER TO EXPLAIN THE COST OF CONSTRUCTION IN THE ASSESSMENT PROCEEDINGS. FROM THE ORDER OF THE ASSESSING AUTHORITY IT APPEARS THAT THE TOTAL AREA OF THE BUILDING IS 4,500 SQ.FT. CONSTRUCTED IN 8.823 CENTS OF LAND. 4.412 CENTS OF LAND IS OWNED BY SHRI K.K. YOUSUF AND 4.411 IS OWNED BY SHRI K.K. IQBAL. BOTH YOUSUF AND IQBAL APPLIED FOR PERMISSION TO CONSTRUCT THE BUILDING JOINTLY AND TH E BUILDING IS CONSTRUCTED AS A SINGLE UNIT WITH A CENTRAL PARTITION. AS PER THE V ALUATION REPORT FILED BEFORE THE LOWER AUTHORITIES, THE VALUER HAS TAKEN INTO CONSIDE RATION THE FLOOR AREA AND FINISHING OF THE FLOOR AND THE COST OF THE MATERIAL S USED AND THEN ESTIMATED THE COST OF CONSTRUCTION AT RS.16,57,000. HOWEVER, THE COMMISSIONER OF INCOME- TAX(A) CONSIDERING THE QUALITY OF CONSTRUCTION ESTI MATED THE COST OF CONSTRUCTION 5 IT(SS)A NO.46&47,49, 51&52/COCH/2006 AT RS.4,000 PER SQ.MTR IN RESPECT OF THE GROUND FLO OR AND FIRST AND SECOND FLOOR WAS ESTIMATED AT RS.4,750 PER SQ.MTR. ACCORDINGLY, THE COMMISSIONER OF INCOME- TAX(A) FIXED THE COST OF CONSTRUCTION AT RS.20,74,3 05 AND THE SHARE OF THE TAXPAYER IN I.T.S.S.51/COCH/2006 WAS WORKED OUT AT R S.10,37,152. FROM THIS, THE AMOUNT SHOWN BY THE TAXPAYER AT RS.8,50,000 WAS TAKE N INTO ACCOUNT AND THE REMAINING AMOUNT OF RS.1,80,152 WAS CONSIDERED FOR ADDITION BY THE COMMISSIONER OF INCOME-TAX(A). IT IS NOT IN DISPUTE THAT THE TOTAL CONSTRUCTED AREA IS 4,500 SQ.FT. IT IS ALSO NOT IN DISPUTE THA T THE TOTAL AREA OF THE LAND IS 8.823 CENTS. BY TAKING INTO CONSTRUCTION THE QUALITY OF M ATERIAL USED IN THE REGISTERED VALUERS REPORT AND THE FLOOR AREA CONSTRUCTED, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY ESTIMATED THE COST OF CONSTRUCTION AT RS. 20,74,305. THIS TRIBUNAL DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A). ACCORDINGLY THE SAME IS CONFIRMED. 6. NOW COMING TO THE APPEAL FILED BY THE REVENUE IN ITSS NO.46/COCH/2006, THE FIRST GROUND OF APPEAL IS WITH REGARD TO DELETI ON OF ADDITION OF RS.27,533 BEING DEFICIENCY FOUND IN CASH BALANCE. 7. WE HAVE HEARD THE LD.DR AND THE LD.REPRESENTATIV E REPRESENTATIVE FOR THE TAXPAYER. THE ASSESSING OFFICER FOUND, AS PER THE SEIZED MATERIAL THAT CASH BALANCE IS RS.,93,707. THE ASSESSING OFFICER HAS N ARRATED THE DETAILS OF THE AMOUNT AT PARAGRAPH 2 OF HIS ORDER. HOWEVER, THE C ASH BALANCE AS PER THE CASH FLOW STATEMENT FILED IS ONLY RS.66,174. SINCE NO E XPLANATION WAS FORTHCOMING THE ASSESSING OFFICER TREATED THE BALANCE OF RS.27,533 AS UNEXPLAINED CASH. THE CONTENTION OF THE LD.REPRESENTATIVE FOR THE TAXPAYE R BEFORE THE COMMISSIONER OF INCOME-TAX(A) WAS THAT OPENING BALANCE AS ON 01-04-199 5 WAS RS.69,811. THEREFORE, THE CASH AND BANK BALANCE DURING THE BLOC K PERIOD IS RS.23,896 WHICH 6 IT(SS)A NO.46&47,49, 51&52/COCH/2006 IS WELL WITHIN THE CASH BALANCE OF RS.66,174 AS PER THE CASH FLOW STATEMENT FILED. IT IS NOT IN DISPUTE THAT THE OPENING BALANCE AS ON 01-04-1995 IN THE BANK ACCOUNT IS RS.69,811. THEREFORE, THE NET INCREASE IN THE C ASH BALANCE IS RS.23,896 WHICH WILL BE WITHIN THE CASH BALANCE OF RS.,66,174. THE REFORE, WE FIND THAT THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY DELETED TH E ADDITION. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF I NCOME-TAX(A). ACCORDINGLY THE SAME IS CONFIRMED. 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DELE TION OF RS.1,34,000. 9. THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER M ADE ADDITION OF RS.1,34,000 BEING THE DEFICIENCY FOUND IN THE INVES TMENT IN BAKERY AND THEREFORE, ADDED THE SAME AS UNDISCLOSED INCOME. ACCORDING TO THE LD.DR, THE TAXPAYERS WIFE INVESTED RS.3,50,000 FOR THE LAND AND FURTHER INVESTMENT OF RS.2 LAKHS WAS MADE ON CONSTRUCTION OF THE BAKERY. AS PER THE CASH FLOW STATEMENT, THE COST OF THE LAND WAS SHOWN AT RS.1,16,000 AND RS.3 LAKHS FOR CONSTRUCTION AND FURNISHING. HOWEVER, THE COMMISSIONER OF INCOME-TAX(A) DELETED T HE ADDITION ON THE BASIS OF THE CONSIDERATION DISCLOSED IN THE SALE DEED. 10. ON THE CONTRARY, SHRI KRISHNA IYER, THE LD.REPRE SENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE COST OF THE LAND IS RS.1,16,000 AS DISCLOSED IN THE SALE DEED. THE ASSESSING OFFICER HAS TAKEN THE COST OF LAND AT RS.3,50,000. ACCORDING TO THE LD.REPRESENTATIVE, THE COST ESTIMATED BY THE ASSESS ING OFFICER IS UNREASONABLE. NO MATERIAL WAS FOUND AT THE TIME OF SEARCH TO SHOW TH AT THE VALUE OF THE LAND IS RS.3,50,000. IN THE ABSENCE OF ANY MATERIAL, ACCOR DING TO THE LD.REPRESENTATIVE, THERE CANNOT BE ANY ADDITION. 7 IT(SS)A NO.46&47,49, 51&52/COCH/2006 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE SALE DEED DIS CLOSES A CONSIDERATION OF RS.1,16,000 AND NO OTHER MATERIAL IS FOUND DURING T HE COURSE OF SEARCH OPERATION. THEREFORE, THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TAKING THE COST OF THE LAND AT RS.3,50,000. THE COST OF CONSTRUCTION WAS DISCLOSE D AT RS.3,00,000. IT APPEARS THAT NO OTHER MATERIAL IS AVAILABLE ON RECORD TO SH OW THAT THE TAXPAYER HAS INVESTED ANY UNACCOUNTED MONEY. NO VALUERS REPORT IS ALSO AVAILABLE ON RECORD. UNDER THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT A DDITION ON PRESUMPTION IS NOT JUSTIFIED. THEREFORE, THIS TRIBUNAL FINDS THAT THE COMMISSIONER OF INCOME- TAX(A) HAS RIGHTLY DELETED THE ADDITION OF RS.1,34, 000. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. THE SAME IS CONFIRMED. 12. THE REVENUE HAS TAKEN ONE MORE GROUND WITH REGAR D TO LEVY OF SURCHARGE. WE HEARD THE LD.DR AND THE LD.REPRESENTATIVE FOR TH E TAXPAYER. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT PROVISO TO SECTION 113 WAS INTRODUCED WITH EFFECT FROM 01-06-2002; THEREFORE, IT IS NOT APP LICABLE IN RESPECT OF SEARCH CONDUCTED ON 19-11-2001. THIS TRIBUNAL FINDS THAT THI S ISSUE WAS CONSIDERED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOM E-TAX VS SURESH N GUPTA 297 ITR 322 (SC) WHEREIN IT WAS HELD THAT SURCHARGE COU LD BE LEVIED EVEN IN RESPECT OF THE PERIOD BEFORE INTRODUCTION OF PROVISO TO SECTIO N 113 OF THE ACT IN VIEW OF THE RESPECTIVE FINANCE ACT PASSED BY THE PARLIAMENT. T HEREFORE, WE ARE UNABLE TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A ) ON THIS ISSUE. ACCORDINGLY, THE ORDER OF THE COMMISSIONER OF INCOM E-TAX(A) WITH REGARD TO LEVY OF SURCHARGE IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 13. IN THE RESULT, TAXPAYERS APPEAL IN ITSS 51/COC H/2006 IS DISMISSED AND THE REVENUES APPEAL IN ITSS 46/COCH/2006 IS PARTLY ALL OWED. 8 IT(SS)A NO.46&47,49, 51&52/COCH/2006 14. NOW COMING TO TAXPAYERS APPEAL IN ITSS 52/COCH /2006 THE ONLY ISSUE FOR CONSIDERATION IS ADDITION OF RS.1,62,152. THIS ISS UE IS AKIN TO THE GROUND RAISED BY THE TAXPAYER SHRI K.K. IQBAL, IN ITSS NO.51/COCH/2006 , WHO IS THE JOINT OWNER OF THE PROPERTY WITH THE TAXPAYER. WHILE DEALING WITH THAT APPEAL, WE HAVE ALREADY TAKEN A VIEW IN FAVOUR OF THE ASSESSEE ELSEWHERE IN THIS ORDER. ON DETAILED ANALYSIS OF THE FACTS OF THE CASE WE FOUND THAT THE COMMISSIONER OF INCOME- TAX(A) HAS RIGHTLY RETAINED AN ADDITION OF RS.1,62, 152 AS AGAINST ADDITION OF RS.7,50,000 MADE BY THE ASSESSING OFFICER. THEREFO RE, FOR THE DETAILED REASONS GIVEN ELSEWHERE IN THIS ORDER WHILE DISPOSING OF TH E APPEAL OF THE JOINT OWNER OF THE PROPERTY IN ITSS 51/COCH/2006 THE ADDITION OF R S.1,62,152 IS CONFIRMED. APPEAL OF THE ASSESSEE IS DISMISSED. 15. COMING TO THE APPEAL OF THE REVENUE IN ITSS 49/ COCH/2006 FILED BY THE REVENUE, THE FIRST GROUND OF APPEAL IS WITH REGARD TO DIRECTION OF THE COMMISSIONER OF INCOME-TAX(A) TO ADOPT RS.5 LAKHS AS THE OPENING AVAILABLE CASH BALANCE AT THE BEGINNING OF THE BLOCK PERIOD. 16. SMT. A.S. BINDHU, THE LD.DR SUBMITTED THAT OUT OF THE OPENING CASH BALANCE AS ON 01-04-1995 RS.2,50,000 WAS THE WITHDRAWAL FROM THE TAXPAYERS BANK ACCOUNT AND THE BALANCE IS THE WITHDRAWAL OF OTHER PERSONS. IN THE ABSENCE OF ANY EVIDENCE FOR WITHDRAWAL OF OTHER PERSONS, THE A SSESSING OFFICER REJECTED THE CASH FLOW STATEMENT. ACCORDINGLY, THE OPENING BALA NCE WAS TAKEN BY THE ASSESSING OFFICER AT RS.2,50,000. ACCORDING TO THE LD.DR, IN THE ABSENCE OF ANY MATERIAL TO SUGGEST THAT THE AMOUNTS WERE WITHDRAWN BY OTHER PERSONS, THE ASSESSING OFFICER HAS RIGHTLY TAKEN THE OPENING BALA NCE AT RS.2,50,000. 9 IT(SS)A NO.46&47,49, 51&52/COCH/2006 17. ON THE CONTRARY, SHRI KRISHNA IYER, THE LD.REPRE SENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE AMOUNTS WERE WITHDRAWN BY THE TA XPAYER AND HIS BROTHER FROM VARIOUS BANK ACCOUNTS IMMEDIATELY BEFORE THE BE GINNING OF THE BLOCK PERIOD. THE DETAILS OF WITHDRAWALS WERE FURNISHED TO THE LOWER AUTHORITY WHICH COMES TO RS.5,94,790. THIS AMOUNT OF RS.5,94,790 I NCLUDES SALE OF GOLD TO BHIMA JEWELLERS TO THE EXTENT OF RS. 59,790. THE COPIES OF THE SALE BILLS FOR THE GOLD AND OTHER DETAILS WERE FURNISHED BEFORE THE LOWER AUTHO RITIES. FROM THE DETAILS FURNISHED BY THE TAXPAYER THE COMMISSIONER OF INCOM E-TAX(A) CAME TO THE CONCLUSION THAT THE DRAWINGS FROM THE TAXPAYERS BA NK ACCOUNT COMES TO RS.3 LAKHS AND NOT RS.2,50,000. ACCORDING TO THE LD.REPR ESENTATIVE, THERE WAS TOTAL WITHDRAWAL OF RS.5,94,790 FROM THE ACCOUNT OF THE T AXPAYER AND HIS BROTHER OUT OF WHICH RS.5 LAKHS WAS TAKEN AS OPENING BALANCE. SI NCE THE ENTIRE FUNDS WERE MANAGED BY THE TAXPAYER, THE DRAWINGS OF HIS BROTHE RS WERE ALSO TAKEN INTO ACCOUNT WHILE PREPARING THE CASH FLOW STATEMENT. T HEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO ADOPT RS.5 LAKHS AS AVAILABLE C ASH BALANCE AS ON THE BEGINNING OF BLOCK PERIOD. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RECORDS. FROM THE MATERIAL AVAILABLE ON RECORD, IT APPEARS T HAT ALL THE FOUR MEMBERS FILED CASH FLOW STATEMENT BEFORE THE ASSESSING OFFICER. THE COMMON CASH FLOW STATEMENT HAS TO BE TAKEN INTO ACCOUNT SINCE THE FUN DS WERE COMMONLY USED FOR CONSTRUCTION OF THE HOUSE. THE COMMISSIONER OF INC OME-TAX(A) FOUND THAT ONCE THE COMMON CASH FLOW STATEMENT IS CONSIDERED THERE IS NO SCOPE FOR ANY DISALLOWANCE WITH REGARD TO OPENING BALANCE. THE C OMMISSIONER OF INCOME- TAX(A) HAS ALSO COME TO THE CONCLUSION THAT THE DRA WINGS OF THE TAXPAYERS FROM THE BANK ACCOUNT ITSELF IS RS.3 LAKHS. HOWEVER, THE ASSESSEE CLAIMS BEFORE THE 10 IT(SS)A NO.46&47,49, 51&52/COCH/2006 ASSESSING OFFICER THAT THE WITHDRAWAL FROM HIS ACCO UNT IS ONLY RS.2,50,000. THEREFORE, IT IS NOT KNOWN HOW THE COMMISSIONER OF I NCOME-TAX(A) CAME TO THE CONCLUSION THAT THE WITHDRAWAL FROM BANK ACCOUNT IS RS.3 LAKHS. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THE MATTER NEEDS TO BE RECONSIDERED AFTER CONSIDERING ALL THE COMMON CA SH FLOW STATEMENTS FILED BY ALL THE TAXPAYERS AND THE DETAILS OF WITHDRAWALS FI LED BY THE TAXPAYERS BEFORE THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF OPENING CASH BALANCE IS REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE AFRESH IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD AND DECIDED THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSES SEE. 19. THE NEXT GROUND OF APPEAL IS WITH REGARD TO THE RETURN OF LOAN TO THE EXTENT OF RS.5,30,000. THE LD.DR SUBMITTED THAT TH ERE IS INFLOW OF RS.5,30,000 FOUND IN THE CASH FLOW STATEMENT AS REFUND FROM FIV E PERSONS, VIZ. MOHAMMED ALI K.I., SHEREENA K.I., HABEEB K.I., SHEREEF K.I. AND MAJE ED. IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE ADVANCE OF FUNDS BY TH E TAXPAYER, THE REFUND SHOWN IN THE CASH FLOW STATEMENT IS REJECTED BY THE ASSES SING OFFICER. IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE THE ADVANCE BY THE TAX PAYER, THE REFUND SHOWN IN THE CASH FLOW STATEMENT IS REJECTED BY THE ASSESSIN G OFFICER. ACCORDING TO THE LD.DR, IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE MONEY WAS ACTUALLY ADVANCED BY THE TAXPAYER, THE CLAIM OF REFUND BY TH E RESPECTIVE PERSON CANNOT BE TAKEN INTO ACCOUNT. 20. ON THE CONTRARY, SHRI KRISHNA IYER, THE LD.REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT MOHAMMED ALI K.I., SHEREENA K.I., HABE EB K.I., SHEREEF K.I. AND MAJEED ARE CLOSE RELATIVES OF THE TAXPAYER AND THEY HAVE TAKEN HAND LOANS FROM 11 IT(SS)A NO.46&47,49, 51&52/COCH/2006 THE TAXPAYER ON VARIOUS OCCASIONS FOR MARRIAGES AND OTHER REQUIREMENTS. ALL THE FIVE PERSONS WERE RETIRED GOVERNMENT EMPLOYEES. TH E HAND LOANS WERE GIVEN BECAUSE OF THEIR CLOSE ASSOCIATION WITH THE TAXPAYE R. WHEN THE TAXPAYER AND HIS BROTHER WERE PLANNING TO PURCHASE THE LAND THEY DEM ANDED THE MONEY BACK FROM THE ABOVE SAID PERSONS. ACCORDINGLY THE SAME WAS REPAID. THE TAXPAYER HAS ALSO FILED A DETAILED REPLY TO THE PROPOSAL MADE BY THE ASSESSING OFFICER ON 13-05- 2005. THEREFORE, ACCORDING TO THE LD.REPRESENTATIV E, THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY FOUND THAT THE CLAIM OF TH E TAXPAYER HAS TO BE ALLOWED SINCE THE SAME FLOWS FROM COMMON CASH FLOW STATEMEN T. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RECORD. ADMITTEDLY, THE TAXPAYER HAS FILED A COMMON CASH FL OW STATEMENT BEFORE THE ASSESSING OFFICER FOR THE BLOCK PERIOD. THE MAIN CO NTENTION OF THE TAXPAYER APPEARS TO BE THAT THE CREDITS FROM THE ABOVE PARTI ES APPEAR IN THE COMMON CASH FLOW STATEMENT. THEREFORE, THE COMMISSIONER OF INC OME-TAX(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO EXAMINE THE CASH FLOW STATEMENT AND IF SATISFIED, TO ALLOW THE SAME. THE COMMISSIONER OF INCOME-TAX(A ) HAS GIVEN DISCRETION TO THE ASSESSING OFFICER THAT IN CASE HE WAS NOT SATIS FIED THE AMOUNT CAN BE ADDED AS UNDISCLOSED INCOME. NO DOUBT, THE COMMISSIONER OF INCOME-TAX(A) HAS NO POWER TO REMAND BACK THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER. HOWEVER, THIS TRIBUNAL IS OF THE OPINION THAT WHEN THE TAXPAYER S PECIFICALLY CLAIMS THAT THE COMMON CASH FLOW STATEMENT REFLECT THE CREDITS, THE SAME HAS TO BE EXAMINED BY THE ASSESSING OFFICER. THEREFORE, IN EXERCISE OF T HE POWERS OF THIS TRIBUNAL U/S 254(1) OF THE ACT, THE ORDERS OF THE LOWER AUTHORIT IES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE ISSUE IN THE LIGHT OF THE COMMON CASH F LOW STATEMENT SAID TO BE FILED 12 IT(SS)A NO.46&47,49, 51&52/COCH/2006 BY THE TAXPAYER AND THEREAFTER DECIDE THE SAME IN A CCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE TAXPAYER. 22. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DIR ECTION OF THE COMMISSIONER OF INCOME-TAX(A) TO EXAMINE THE LOAN OF RS.3,15,000 FROM SHEREEF K.I., MEENA VARGHESE AND SMT. MYMOONATH. 23. THE LD.DR SUBMITTED THAT THE COMMISSIONER OF IN COME-TAX(A) HAS REMANDED BACK THE MATTER TO THE FILE OF THE ASSESSIN G OFFICER ON THE GROUND THAT THE LOANS WERE REFLECTED IN THE COMMON CASH FLOW ST ATEMENT. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) HAS REMITTED BACK THE M ATTER TO THE ASSESSING OFFICER. ACCORDING TO THE LD.DR, THE COMMISSIONER OF INCOME-TAX(A) HAS NO POWER TO REMAND THE MATTER BACK TO THE ASSESSING OFFICER. WE HEARD SHRI KRISHNA IYER, THE LD.REPRESENTATIVE FOR THE TAXPAYER ALSO. 24. NO DOUBT, THE COMMISSIONER OF INCOME-TAX(A) HAS NO POWER TO REMIT BACK THE MATTER TO THE ASSESSING OFFICER. HOWEVER, THE FACT REMAINS IS THAT THE TAXPAYER CLAIMED BEFORE THE LOWER AUTHORITY THAT TH E LOANS REFLECTED IN THE COMMON CASH FLOW STATEMENT FILED BEFORE THE ASSESSI NG AUTHORITY. THEREFORE, THE SAME NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE W ITH REGARD TO THE LOAN OF RS.3,15,000 IS REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE SAME AFRESH IN THE LIGH T ENTRIES FOUND IN THE CASH FLOW STATEMENT FILED BY THE TAXPAYER AND THEREAFTER DECI DE THE SAME IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 13 IT(SS)A NO.46&47,49, 51&52/COCH/2006 25. THE NEXT GROUND OF APPEAL IS WITH REGARD TO THE DELETION OF RS.1,48,000 BEING THE PURCHASE VALUE OF THE IMPORTED GOODS. TH E LD.DR SUBMITTED THAT THE TAXPAYER HAS IMPORTED ELECTRONIC GOODS. THE GOODS WERE DETAINED BY THE CUSTOMS AUTHORITIES. THEREAFTER, THE TAXPAYER HAS CLEARED THE SAME AFTER PAYING ADDITIONAL DUTIES AND PENALTIES. IN ORDER TO MEET THE EXPENDITURE FOR UTILIZING THE DETAINED GOODS THE TAXPAYER HAS INCURRED THE EXPEN DITURE. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE TAXPAYER INCLUDED THE E XPENDITURE RELATING TO FOREIGN TRAVEL, COST OF GOODS, DUTIES, PENALTIES, E TC. IN THE CASH FLOW STATEMENT WHICH WAS ACTUALLY HIGHER THAN THE SALE PROCEEDINGS . THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THERE WAS N O REASON TO TREAT THE SAME AS UNEXPLAINED INVESTMENT. THE COMMISSIONER OF INC OME-TAX(A) FURTHER FOUND THAT THE TAXPAYER HAS ESTABLISHED THAT THE PURCHASE WAS INCLUDED IN THE CASH FLOW STATEMENT. THEREFORE, THE COMMISSIONER OF INCOME-TA X(A) DIRECTED THE DELETION OF THE ADDITION MADE BY THE ASSESSING OFFICER. WE HAVE HEARD THE LD.REPRESENTATIVE FOR THE TAXPAYER ALSO. 26. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RECORD. THE CONSISTENT CLAIM BY THE TAXPAYER BEFORE THE LOW ER AUTHORITY IS THAT THE DUTIES AND PENALTIES FOUND IN THE CASH FLOW STATEMENT IS A CTUALLY HIGHER THAN THE SALE PROCEEDINGS RECORDED. IN VIEW OF THIS CLAIM OF THE TAXPAYER IT HAS TO BE EXAMINED WHETHER THE DUTIES AND PENALTIES ARE INCLUDED IN TH E CASH FLOW STATEMENT SAID TO BE FILED BY THE TAXPAYER. IN THE ABSENCE OF ANY MA TERIAL, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS T O RE-EXAMINE THE ISSUE AND FIND OUT WHETHER THE DUTIES AND PENALTIES PAID BY THE TA XPAYER TO THE CUSTOMS AUTHORITIES WERE INCLUDED IN THE CASH FLOW STATEMEN T OR NOT. ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE OF DUTIES AND PENALTIES 14 IT(SS)A NO.46&47,49, 51&52/COCH/2006 HAS TO BE EXAMINED IN THE LIGHT OF ENTRIES FOUND IN THE CASH FLOW STATEMENT FILED BY THE TAXPAYER. 27. THE NEXT GROUND OF APPEAL IS WITH REGARD TO LEV Y OF SURCHARGE U/S 113 OF THE ACT. 28. WE HEARD THE LD.DR AND THE LD.REPRESENTATIVE FO R THE TAXPAYER. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT PROVISO TO SECTION 113 WAS INTRODUCED WITH EFFECT FROM 01-06-2002; THEREFORE, IT IS NOT APP LICABLE IN RESPECT OF SEARCH CONDUCTED ON 19-11-2001. THIS TRIBUNAL FINDS THAT THI S ISSUE WAS CONSIDERED BY THE APEX COURT IN THE CASE OF COMMISSIONER OF INCOM E-TAX VS SURESH N GUPTA 297 ITR 322 (SC) WHEREIN IT WAS HELD THAT SURCHARGE COU LD BE LEVIED EVEN IN RESPECT OF THE PERIOD BEFORE INTRODUCTION OF PROVISO TO SECTIO N 113 OF THE ACT IN VIEW OF THE RESPECTIVE FINANCE ACT PASSED BY THE PARLIAMENT. T HEREFORE, WE ARE UNABLE TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A ) ON THIS ISSUE. ACCORDINGLY, THE ORDER OF THE COMMISSIONER OF INCOM E-TAX(A) WITH REGARD TO LEVY OF SURCHARGE IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 29. AS A RESULT, THE APPEAL IS TREATED AS ALLOWED. 30. NOW COMING TO THE TAXPAYERS APPEAL IN ITSS 47/ COCH/2006, THE FIRST ISSUE IS OF ADDITION OF RS.2,28,150 TOWARDS COST OF IMMOV ABLE PROPERTY ACQUIRED FOR RAYAS COMMUNICATIONS. 31. THE LD.DR SUBMITTED THAT THE TAXPAYER IS ENGAGE D IN THE BUSINESS OF TOURIST TAXI OPERATION AND RUNNING RAYAS COMMUNICATIONS AS A PROPRIETORY CONCERN. DURING THE COURSE OF SEARCH OPERATION, THE BOOKS OF ACCOUNT AND OTHER 15 IT(SS)A NO.46&47,49, 51&52/COCH/2006 DOCUMENTS WERE FOUND AT THE RESIDENCE OF THE TAXPAY ER AS WELL AS OTHER CONNECTED PLACES. DURING THE COURSE OF SEARCH OPER ATION IT WAS FOUND THAT THE TAXPAYER HAS ACQUIRED FOLLOWING MOVABLE ASSETS FOR HIS PROPRIETORY CONCERN, M/S RAYAS COMMUNICATIONS: 1. PHOTOSTAT MACHINE CANON -1215 (A-4) RS. 20,000 2. PHOTOSTAT MACHINE CANON 1215 (A-4) RS. 20 ,000 3. PHOTOSTAT MACHINE CANON 4050 RS. 30,000 4. FAX MACHINE PANASONIC DIGITAL RS. 10,000 5. COMPUTER MONITOR LG STUDIONIC 452 AND ITS ACCESSORIES (C.M. ROM) RS. 30,000 6. COMPUTER MINITOR LG STUDIONIC 452 AND ITS ACCESSORIES LOC TEE RS. 30,000 7. COMPUTER MINOTOR LG STUDIONIC 452 AND ITS ACCESSORIES (C.D. ROM) RS. 25,000 8. COMPUTER MONITOR SMARTEN 45 ON LOGI TEE - MAX RS. 20,000 9. ZIP PHONE WITH METAZOAN DIALING MACHINE ALONGWITH 3 STD TELEPHONE CONNECTION RS. 20, 000 10.PRINTER DESKJET HEWLETT PAKKARD RS. 5,150 10. P.C. COM 01 BILLING MACHINE RS. 18,000 RS. 2,28,150 THE ONLY CONTENTION OF THE TAXPAYER BEFORE THE ASSE SSING OFFICER WAS THAT THE VALUATION WAS TAKEN ON THE HIGHER SIDE. THE TAXPAYE R ALSO CONTENDED THAT THE MACHINERIES WERE SECOND HAND AND IT WAS PURCHASED A T A LOWER PRICE. ACCORDING TO THE LD.REPRESENTATIVE, THE VALUE OF THE ASSET WA S ADOPTED AS PER THE PURCHASE COST. NO PURCHASE COST WAS SHOWN IN THE CASH FLOW STATEMENT. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) IS NOT JUSTIFIED IN DE LETING THE ADDITION. 16 IT(SS)A NO.46&47,49, 51&52/COCH/2006 32. SHRI R KRISHNA IYER, THE LD.REPRESENTATIVE FOR T HE TAXPAYER SUBMITTED THAT AT THE TIME OF SEARCH THE REVENUE AUTHORITIES TOOK S TOCK OF THE ITEM FOUND IN RAYAS COMMUNICATIONS AND VALUED THE SAME AT RS.2,28 ,150. THE CONTENTION OF THE TAXPAYER THAT THE MACHINERIES WERE SECOND HAND WAS REJECTED. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT AS PER THE CASH FLOW STATEMENT, THE CASH BALANCE IS RS. 4,28,811 WHEREAS ACTUAL CASH BALANCE FOUND IS ONLY RS. 86,122. THEREFORE, THE DEFICIENCY IN THE CASH FLOW STATEMEN T WHILE EXPLAINING THE SAME FOR PURCHASE OF THE ELECTRONIC GOODS WAS FOUND BY T HE REVENUE AUTHORITIES AT THE TIME OF SEARCH. 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY THE TAXPAYER WAS R UNNING A TELEPHONE BOOTH AND INTERNET CAF AS A PROPRIETORSHIP CONCERN IN THE NA ME AND STYLE OF RAYAS COMMUNICATION. THE TAXPAYER HAS PURCHASED CERTAIN ELECTRONIC ACCESSORIES, A PHOTOSTAT MACHINE, FAX MACHINE, ETC. WHICH WAS FOUN D DURING THE COURSE OF SEARCH OPERATION. THE DEPARTMENT VALUED THE SAID M ACHINERY AT RS.2,28,150. HOWEVER, THE TAXPAYER CONTENDED THAT THE VALUE OF T HE SAME IS ONLY RS.1 LAKH SINCE IT WAS PURCHASED AT LOW COST ON SECOND BASIS. THE COMMISSIONER OF INCOME-TAX(A), HOWEVER, FOUND THE VALUATION ADOPTED BY THE ASSESSING OFFICER AS CORRECT. HOWEVER, HE ACCEPTED THE ALTERNATIVE CONT ENTION OF THE TAXPAYER THAT SUFFICIENT CASH BALANCE WAS AVAILABLE FOR PURCHASE OF THE MACHINERY. THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE SHORTAG E OF RS. 3,52,869 WOULD HAVE BEEN USED FOR PURCHASE OF THE MACHINERY. THE REVENUE HAS NOT DISPUTED THE CASH FLOW STATEMENT FILED BY THE TAXPAYER. ADM ITTEDLY, THERE IS A SHORTAGE OF RS. 3,52,869. THEREFORE, EVEN IF THE CASH FLOW STA TEMENT DOES NOT SHOW THE PURCHASE OF MACHINERY VALUING RS.2,28,150 STILL THE TAXPAYER HAS A BETTER CASE 17 IT(SS)A NO.46&47,49, 51&52/COCH/2006 ONCE THE SHORTAGE OF CASH BALANCE OF RS.3,52,869 IS CONSIDERED. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY DELETED TH E ADDITION. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMISSIONER OF I NCOME-TAX(A). ACCORDINGLY THE SAME IS CONFIRMED. 34. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF RS.3,00,730 TOWARDS UNEXPLAINED HOUSEHOLD EXPENSES. 35. WE HEARD THE LD.DR AND THE LD.REPRESENTATIVE FO R THE TAXPAYER. THE ASSESSING AUTHORITY MADE ADDITION OF RS.3,00,730 ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. THE TAXPAYER EXPLAINED THAT THE ESTIMATI ON OF INCOME BY THE ASSESSING OFFICER AT RS.7,000 P.M IS ON THE HIGHER SIDE. THE HOUSEHOLD EXPENSES FOR FIVE MEMBERS ARE PROVIDED BY SHRI K.K. YOUSUF. THE ONLY E VIDENCE FOUND DURING THE COURSE OF SEARCH OPERATION IS A TELEPHONE SET WHICH COSTS ABOUT RS.20,000. OTHER THAN THIS, NO OTHER MATERIAL IS AVAILABLE ON RECORD . IT IS A WELL SETTLED PRINCIPLE OF LAW THAT UNDISCLOSED INCOME FOR THE BLOCK PERIOD HAS TO BE COMPUTED ONLY ON THE BASIS OF THE EVIDENCE FOUND DURING THE COURSE OF SE ARCH OR THE RELATABLE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. IN TH IS CASE, THE ENTIRE ESTIMATION OF HOUSEHOLD EXPENSES WAS MADE WITHOUT ANY IOTA OF EVIDENCE. THEREFORE, THIS TRIBUNAL FINDS THAT THE COMMISSIONER OF INCOME-TAX(A ) HAS RIGHTLY DELETED THE ADDITION. WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE COMMISSIONER OF INCOME-TAX(A). ACCORDINGLY THE SAME IS CONFIRMED. 36. THE NEXT GROUND IS WITH REGARD TO LEVY OF SURCH ARGE. WE HEARD THE LD.DR AND THE LD.REPRESENTATIVE FOR THE TAXPAYER. THE CO MMISSIONER OF INCOME-TAX(A) FOUND THAT PROVISO TO SECTION 113 WAS INTRODUCED WI TH EFFECT FROM 01-06-2002; THEREFORE, IT IS NOT APPLICABLE IN RESPECT OF SEARC H CONDUCTED ON 19-11-2001. THIS 18 IT(SS)A NO.46&47,49, 51&52/COCH/2006 TRIBUNAL FINDS THAT THIS ISSUE WAS CONSIDERED BY TH E APEX COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS SURESH N GUPTA 297 ITR 322 (SC) WHEREIN IT WAS HELD THAT SURCHARGE COULD BE LEVIED EVEN IN RESPECT OF THE PERIOD BEFORE INTRODUCTION OF PROVISO TO SECTION 113 OF THE ACT I N VIEW OF THE RESPECTIVE FINANCE ACT PASSED BY THE PARLIAMENT. THEREFORE, WE ARE UN ABLE TO UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) ON THIS ISSUE. AC CORDINGLY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) WITH REGARD TO LEVY OF SURCHARGE IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 37. AS A RESULT, THE APPEAL IS PARTLY ALLOWED. 38. IN THE RESULT, APPEALS IN ITSS NOS 46 & 47/COCH /2006 ARE PARTLY ALLOWED; ITSS NO.49/COCH/2006 IS ALLOWED; AND ITSS NOS 51 & 52 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH SEPTEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 14 TH SEPTEMBER, 2012 PK/- COPY TO: 1. THE APPELLANTS 2. THE RESPONDENTS 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