Mr. M.T. Surendra Babu Alias Suresh Babu, Alappuzha V. ACIT, Kottayam

ITSSA 50/COCH/2006

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8435 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 09-02-2011
• Assessment Year: misc
• Appeal Filed On: 05-06-2006
• Court: TRIBUNAL
• Department Lawyers: S C SONKAR
• Assessee Lawyers: P BALAKRISHNAN
• Keywords: Unexplained investment; Business income; Block assessment
• Section: 143(3); 132; 154

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.(SS)A. NO. 50/COCH/2006 BLOCK PERIOD: AY 1988-89 TO 26/3/1998 SH. M.T. SURENDRA BABU, ALIAS SURESH BABU, MANNURETH HOUSE, KUTTAMPEROOR P.O., VIA MANNAR, ALLEPEY DISTRICT. [PAN: ABSPB 3005B] VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOTTAYAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SH. P. BALAKRISHNAN, AR REVENUE BY SHRI S.C. SONKAR, CIT-DR O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOCHI (CIT(A) FOR SHORT) DATED 14.3.2006, DISPOSING THE ASSESSEES CHALLENGE TO THE ORDER U/S. 154 OF THE I NCOME-TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 28.12.2005 QUA ITS BLOCK ASSESSMENT FOR THE BLOCK PERIOD 1.4.1987 TO 26.3.1998. 2.1 BEFORE WE PROCEED TO DISCUSS THE ISSUES ARISING IN APPEAL, IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND FACTS OF THE CASE. THE ASSES SEE, AN INDIVIDUAL, IS IN THE BUSINESS OF AUTOMOBILES, TRANSPORT, FINANCE, ETC. HE WAS SUBJE CT TO A SEARCH U/S. 132 OF THE ACT ON 26.3.1998, AND ASSESSMENT COMPLETED U/S. 158BC R.W. S. 143(3) OF THE ACT ON 30.3.2000 AT AN INCOME OF ` 11,37,420/- AS AGAINST THE UNDISCLOSED INCOME OF ` 1,15,257/- FOR THE BLOCK PERIOD RETURNED BY THE ASSESSEE ON THE BASIS OF THE CASH FLOW STATEMENT; THE ASSESSEES ACCOUNTS BEING ADMITTEDLY UNRELIABLE, AND MATERIALS IN RELATION TO THE UNACCOUNTED PURCHASES AND SALES HAVING BEEN FOUND IN SEARCH. T HE ASSESSEE APPEALED THERE-AGAINST, RAISING SEVERAL GROUNDS, CONTENDING IN THE MAIN THA T THE DIRECTIONS BY THE JOINT CIT, KOTTAYAM TO THE ASSESSING OFFICER (AO) (OBTAINED BY THE ASSESSEE WITH REFERENCE TO THE IT (S&S)A.NO.50 /COCH/2006 2 DRAFT ASSESSMENT ORDER BY THE AO) HAD NOT BEEN PROP ERLY FOLLOWED BY HIM. THE LD. CIT(A), VIDE HIS ORDER DATED 21.6.2005, ACCEPTED EA CH OF THE ASSESSEES CONTENTIONS ENDORSING, INTER ALIA , THE FOLLOWING DIRECTION BY THE JT. CIT TO THE AO IN RESPECT OF STOCK VALUATION: THE ASSESSING OFFICER IS DIRECTED TO RE-WORK THE ST OCK ON THE BASIS OF THE OPENING STOCK PLUS PURCHASES AND ADJUST THE SALES WITH THE ADMITTED GROSS PROFIT. THE NET FIGURE SO ARRIVED AT MAY BE ADOPTED AS CLOSING STOCK FOR THE YEAR . BY STATING AS UNDER: ` I DIRECT THE ASSESSING OFFICER TO VERIFY THE WORKIN G WITH A VIEW TO EXAMINE WHETHER STOCK WORKED OUT IS AS PER THE DIRECTIONS B Y THE JT. CIT. IF NOT, THE ASSESSING OFFICER WOULD VALUE THE CLOSING STOCK AS PER THE IN STRUCTIONS OF THE JT. CIT. THE AO HAD EARLIER ADOPTED A GROSS PROFIT RATE (G.P .) OF 10% ON THE OUTOF-BOOK SALES FOR DETERMINING THE PROFIT ON SUPPRESSED SALES AS WELL AS FOR VALUATION OF UNACCOUNTED STOCK. 2.2 A REVISED, APPEAL-EFFECT GIVING ORDER TO THE SA ID ORDER BY THE LD. CIT(A) WAS PASSED ON 26.8.2005, DETERMINING THE UNDISCLOSED IN COME FOR THE BLOCK PERIOD AT ` 9,75,581/- . THE ASSESSEE FILED A RECTIFICATION APPLICATION D ATED 21.9.2005, RAISING SIX GROUNDS. THE SAME WAS DISPOSED OF BY THE AO VIDE OR DER U/S. 154 DATED 28.12.2005. THE PRINCIPAL GRIEVANCE WAS THE ADOPTION OF THE CASH-IN -HAND AS AT 31.3.1997 AND 26.3.1998 AT ` 313361/- AND ` 341614/- RESPECTIVELY, AS AGAINST THE LOWER FIGURES `ADOPTED EARLIER, I.E., PER THE ORIGINAL ASSESSMENT ORDER DATED 30.3.2000. THE SAME WAS FOUND NOT ACCEPTABLE BY THE AO AS THE SAME WAS ONLY THE BALANCING FIGURE AR RIVED AT ON THE BASIS OF THE GIVEN CREDIT AND DEBIT ENTRIES, REPRESENTING RESPECTIVELY THE SOURCE/S AND APPLICATIONS/ OF FUNDS. THE OTHER CONTENTION RAISED WHICH WAS NOT ACCEPTED WAS NON-GRANT OF REBATE U/S. 88 IN THE ORIGINAL ORDER, I.E., AT ` 4158/- EACH FOR A.Y. 1995-96 AND 1996-97. THE SAME WAS FOUND NOT ACCEPTABLE AS THE SAID ISSUE DID NOT ARISE OUT OF THE APPELLATE ORDER DATED 21.6.2005. THE OTHER CONTENTIONS RAISED, HOWEVER, STOOD ACCEPT ED . THE MATTER WAS CARRIED BY THE ASSESSEE IN APPEAL, RESULTING IN THE IMPUGNED ORDER . THE CONTENTIONS STOOD NEGATIVED ON THE SAME GROUNDS. THE CASHIN-HAND AS AT THE RELEVA NT DATES WERE, EVEN IN THE FIRST INSTANCE, I.E., AT THE TIME OF THE ORIGINAL ASSESSM ENT, WORKED OUT ON THE BASIS OF THE CASH FLOW STATEMENT PREPARED, SO THAT THERE WAS NO SUBST ANCE IN THE ASSESSEES PLEA OF THE CASH IT (S&S)A.NO.50 /COCH/2006 3 BALANCE BEING RESTRICTED TO THE SAME FIGURE/S; THE MODIFIED FIGURES BEING ONLY CONSEQUENTIAL TO THE CHANGES IN THE OTHER FIGURES O F THE ASSETS AND LIABILITIES COMPRISING THE BALANCE-SHEET, WHICH ARE NOT IN DISPUTE; THE AO FURTHER MODIFYING THE FIGURE OF CASH- IN-HAND AS AT 26/3/1998 TO RS. 3,39,019/- BY CO-OPT ING THE BANK-BALANCE FIGURE OF RS. 2595/- WHICH HAD BEEN LEFT TO BE TAKEN INTO ACCOUNT EARLIER, WITHOUT HOWEVER LEADING TO ANY VARIATION IN THE ASSESSED INCOME; THE TWO BEING INDEPENDENT, FURTHER ENDORSING THE REVENUES CASE, STATING THAT THE CASH-IN-HAND EVEN AS PER THE ASSESSEES BALANCE-SHEET WAS AT RS. 219500/-. FURTHER, THE MATTER OF REBATE U/S. 88 WAS NOT RAISED BEFORE THE CIT(A) IN THE FIRST INSTANCE AND, CONSEQUENTLY, DID NOT FORM PART OF THE APPEAL-EFFECT GIVING ORDER DATED 26.8.2005 PASSED IN PURSUANCE TH EREOF. AGGRIEVED, THE ASSESSEE IS IN APPEAL. 3. BEFORE US, SIMILAR CONTENTIONS WERE RAISED BY BO TH THE SIDES. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD; IN PARTICULAR THE APPEAL-EFFECT GIVING ORDER OF 26.8.2005. 4.1 WE FIRSTLY OBSERVE THAT THE PRINCIPAL GROUND ITSELF DOES NOT ARISE OUT OF THE FIRST APPELLATE ORDER DATED 21.6.2005. IT IS NOT THE ASS ESSEES CONTENTION THAT THE AO, WHILE PASSING THE APPEAL-EFFECT GIVING ORDER (DATED 26.8. 2005) HAD NOT CORRECTLY FOLLOWED THE DIRECTIONS GIVEN BY THE LD. CIT(A) IN THE FIRST INS TANCE. SO, HOWEVER, WE DO FIND THE SOME OBSERVATIONS TO THIS EFFECT BY THE LD. CIT(A) IN TH E IMPUGNED ORDER, ACCEPTING THE ASSESSEES CLAIM THAT THE SAME HAD LEAD TO AN ENHAN CEMENT IN ITS INCOME FOR A.Y. 1997- 98, AND WHICH HAVE NOT BEEN CHALLENGED BY THE REVEN UE. SO HOWEVER, THE RELEVANT QUESTION WOULD BE WHETHER ANY MISTAKE STANDS COMMIT TED BY THE AO IN WORKING OUT THE FIGURE OF INCOME(S) FOR THE RELEVANT YEARS, WHICH W E OBSERVE TO BE A DERIVED, CONSEQUENTIAL FIGURE FOR EACH OF THE YEARS, AND TOW ARD WHICH WE FIND NO SPECIFIC MISTAKE TO HAVE BEEN POINTED OUT. THE ASSESSEE HAS FOUND F AULT WITH THE METHOD OF COMPUTING THE INCOME WITHOUT SHOWING AS TO HOW THE SAME IS ERRONE OUS OR DOES NOT LEAD TO THE DETERMINATION OF THE CORRECT INCOME. WHEN THE FIGUR E OF PURCHASES AND SALES, GROSS PROFIT, AS WELL AS OF ASSETS AND LIABILITIES AS AT THE RELE VANT DATES ARE AVAILABLE, AND NOT IN DISPUTE, IT (S&S)A.NO.50 /COCH/2006 4 THE METHOD FOLLOWED IS JUSTIFIED AND CORRECT. IT M AY PERHAPS BE SOMEWHAT CUMBERSOME, BUT THE MOOT QUESTION IS WHETHER THE SAME CAN BE QU ESTIONED ARITHMETICALLY. THIS IS WHAT IN ESSENCE WOULD, I.E., IF SO, LEAD TO A VALID GRIE VANCE. 4.2 TOWARD THIS, WE HAVE EXAMINED THE SAID WORK ING BY THE AO CLOSELY, TO FIND IT TO BEAR ONE MISTAKE. ONCE IT IS APPRECIATED THAT THE CLOSING STOCK IS NOT A SOURCE OF INCOME AND ARISES ONLY ON ACCOUNT OF UNACCOUNTED STOCK UNS OLD AS AT THE YEAR-END, NO SEPARATE ADDITION FOR THE EXCESS STOCK DETERMINED, I.E., IN COMPARISON TO THE BOOK-STOCK, COULD BE MADE. THE UNSOLD STATUS OF THE STOCK (AS AT THE YEA R-END) COULD NOT BY ITSELF LEAD TO OR BE A GROUND FOR ACCRUAL OR ARISING OR DEEMING OF INCOME SO AS TO MAKE AN ADDITION TO INCOME IN ITS RESPECT. NO DOUBT, A SEPARATE ADDITION IN RE SPECT OF THE SOURCE OF UNACCOUNTED PURCHASES COULD BE MADE, BUT THAT HAS NOT BEEN; THE AO PERHAPS CONSIDERING THE SAME AS BEING ALSO FINANCED FROM THE OPENING CAPITAL, I.E., BESIDES THE ACCOUNTED PURCHASES. THE ONLY `ADDITIONS TO THE RETURNED INCOME, THEREFORE, THAT WOULD ARISE ARE (FIRSTLY) TOWARD THE GROSS PROFIT ON UNACCOUNTED SALES AND (SECONDLY) QUA THE UNEXPLAINED INVESTMENT AS AT THE YEAR-END. E.G., FOR A.Y. 1995-96, THE UNACCOUN TED GROSS PROFIT WOULD BE ` 1282/- ( ` 66,237 ` 64,955), AND THE UNEXPLAINED INVESTMENT WOULD BE ` 60,042/-. FOR A.Y. 1996-97, THE UNACCOUNTED GROSS PROFIT WORKS TO ` 52092 ( ` 1,30,321- ` 78,229), AND THE UNEXPLAINED INVESTMENT AT ` 2,07,146 (THIS IS THE FIGURE THAT RESULTS WHEN INSTEAD OF ASSUMING THE FIGURE OF ` 64,699 ( ` 63,177 ` 2478), ONLY THE FIGURE OF UNACCOUNTED GROSS PROFIT ( ` 52092) IS INCLUDED IN COMPUTING THE TRADING/BUSINES S INCOME FOR THE YEAR). SO, HOWEVER, THIS WOULD NOT IMPACT THE TOTAL INCOME FOR THE YEAR AS THE SAME WOULD GET SUBSUMED IN THE ADDITION THAT THE ARISES ON ACCOUNT OF THE TOTAL EXCESS UNEXPLAINED INVESTMENT AS AT THE YEAR-END. THE ONLY DIFFERENCE WOULD BE THAT WHILE THE UNEXPLAINED STOCK HAS BEEN ASSESSED AS BUSINESS INCOME, THE UNE XPLAINED INVESTMENT IS ASSESSABLE AS INCOME FROM OTHER SOURCES (IN THE ABSENCE OF ANY SPECIFIC FINDING WITH REGARD TO THE HEAD OF INCOME). THE SAME, HOWEVER, IS IRRELEVANT IN THE CONTEXT OF THE PRESENT CASE. WE FIND NO OTHER INFIRMITY IN THE WORKING AS MADE BY T HE AO NOR STANDS SHOWN TO US BY THE ASSESSEE. IT (S&S)A.NO.50 /COCH/2006 5 4.3 COMING BACK TO ITS SPECIFIC GROUNDS, THE FALLAC Y IN THE ASSESSEES ARGUMENT, WHEN IT INSISTS ON THE ADOPTION OF CASH-IN-HAND FIGURE A S DETERMINED ORIGINALLY, IS THAT THE INCOME FOR A.Y. 1997-98, AND THE PERIOD UP TO 26.3. 1998, HAS BEEN WORKED OUT NOT ON THE BASIS OF EXCESS INVESTMENT (AS AT THE END OF THE YE AR OR PERIOD) BUT ON THE BASIS OF THE AVAILABLE CREDIT. INCOME, IT MAY BE EMPHASIZED, COU LD BE ASSESSED EITHER ON THE BASIS OF ACCRUAL OR ARISING OF INCOME, I.E., THE SOURCE (OF FUNDS) BASIS OR, IN THE ALTERNATIVE, ON THE BASIS OF ASSETS, I.E., APPLICATION OF FUNDS. IN FAC T, EITHER BASIS CORROBORATES THE OTHER, AND BY ITSELF FORMS A VALID BASIS - BOTH IN TERMS OF AC COUNTANCY AS WELL AS IN LAW - FOR DETERMINING THE INCOME. THE BALANCING FIGURE, TERME D `CASH-IN-HAND BY THE REVENUE, MAY WELL BE TERMED AS `EXCESS OF LIABILITIES OVER A SSETS OR SIMPLY `DIFFERENCE, TO NO CONSEQUENCE OR EFFECT. HOWEVER, HAVING SAID THAT, THE INFIRMITY IN AOS W ORKING, SPOKEN OF AND OBSERVED EARLIER, WE FIND COMES THE FORE FOR THE TWO PERIODS UNDER REFERENCE, WHILE IT DID NOT FOR THE EARLIER YEARS (UP TO A.Y. 1996-97), WITH REFERE NCE TO WHICH WE HAD EXAMINED THE SAID WORKING. THERE BEING EXCESS OF ASSETS OVER LIABILIT IES AS AT THE CLOSE OF THE YEAR FOR THOSE YEARS, THE ADDITION TO INCOME ON ACCOUNT OF EXCESS PHYSICAL (ACTUAL) STOCK OVER BOOK STOCK, ADDED SEPARATELY, GOT SET-OFF AGAINST THE AD DITION ON ACCOUNT OF THE EXCESS OF ASSETS OVER LIABILITIES (THROUGH INCREASE IN THE LIABILITI ES SIDE), SO THAT IT DID NOT RESULT IN ANY EXCESS DETERMINATION OF INCOME AND, THUS, NO PREJUD ICE STOOD CAUSED TO THE ASSESSEE. FOR A.Y. 1997-98 AND THE BROKEN PERIOD UP TO 26.3.1998, HOWEVER, THERE IS AN EXCESS OF LIABILITIES OVER ASSETS. AS SUCH, THOUGH THE REVEN UES STAND THAT THE CASH-IN-HAND FIGURE IS THE BALANCING FIGURE AND, THUS, NOT NOTIONAL, BU T REPRESENTS THE TANGIBLE FORM OF FUNDS REPRESENTING THE ACTUAL LIABILITIES, INCLUDING CAPI TAL, AS AT THE YEAR-END, IS UNEXCEPTIONAL; THE FIGURE OF CASH-IN-HAND AS DETERMINED NOT LEADIN G TO DETERMINATION OF INCOME FOR THOSE YEARS, THE INFIRMITY AFORESAID IN THE WORKING OF IN COME LEADS TO AN EXCESS COMPUTATION OF INCOME AS ALSO, CONCOMITANTLY, THE CAPITAL, FORMING PART OF THE LIABILITY SIDE OF THE BALANCE-SHEET, RESULTING IN NOTIONAL CASH-IN-HAND T O THAT EXTENT. IN OTHER WORDS, TO THE EXTENT OF INCOME IS DEEMED ON ACCOUNT OF EXCESS STO CK VIS--VIS BOOK STOCK, THERE IS AN EXCESS DETERMINATION OF INCOME FOR A.Y. 1997-98 AND THE BROKEN PERIOD UP TO 26.3.1998, AND THE ASSESSEES GRIEVANCE IS VALID. NEVERTHELESS , THE ASSESSEES ARGUMENT THAT THE INCOME BE COMPUTED ON THE BASIS OF NET WEALTH STATE MENT (NWS) AS AT THE END OF EACH IT (S&S)A.NO.50 /COCH/2006 6 YEAR IS NOT ACCEPTABLE INASMUCH AS THE METHOD FOLLO WED BY THE AO COULD ITSELF BE TERMED AS THE NET WEALTH METHOD, AND, AS FOUND EARLIER, IS A CORRECT METHOD WHEN THE FIGURES OF PURCHASES, SALES, AS WELL AS THE GROSS PROFIT ARE A VAILABLE. THIS IS OF COURSE SUBJECT TO THE INFIRMITY FOUND EARLIER, AND WHICH IS NOT ATTRIBUTA BLE TO THE METHOD, BUT TO ITS APPLICATION. A HANDY EXAMPLE WOULD BE THE FIGURE OF DRAWINGS. WHERE AVAILABLE, AS IN THE INSTANT CASE, THE SAME SHALL HAVE TO BE REDUCED FROM THE CA PITAL, WHICH OTHERWISE WOULD NOT FIND REFLECTION IN THE NET WEALTH STATEMENT. 4.4 THE ASSESSEE HAS RAISED NAY, FILED - THRE E ADDITIONAL GROUNDS, QUESTIONING THE LEGAL VALIDITY OF THE ASSESSMENT OF UNDISCLOSED INC OME, AND THE FACT OF ENHANCEMENT OF INCOME FOR SOME YEARS. THE SAME WERE FIRSTLY NOT PR ESSED AT THE TIME OF HEARING (WHICH WOULD BE REQUIRED TO BE HEARD ON ADMISSION AS WELL) NOR, CONSEQUENTLY, ANY ARGUMENTS ADVANCED IN REPLY BY THE REVENUE. BESIDES, WE ARE U NABLE TO UNDERSTAND AS TO HOW THE SAME ARISE OUT OF S. 154 PROCEEDINGS OR OUT OF THE APPEAL-EFFECT GIVING ORDER, BOTH OF WHICH ARE SEVERELY LIMITED IN SCOPE, EVEN AS THE IS SUES AGITATED STAND FOR MOST PART ANSWERED IN OUR FOREGOING ANALYSIS OF THE ISSUES AR ISING FOR ADJUDICATION AND THE FINDINGS DELIVERED. EQUALLY UNTENABLE, FOR THE REASONS AFORE -MENTIONED, IS THE ASSESSEES ARGUMENT BASED ON THE AMOUNT OF CASH PHYSICALLY FOUND AS AT THE SEARCH DATE ( RS. 3985/-), WHICH WOULD, GIVEN THE COMPUTATION OF INCOME, WHICH HAS B EEN FOUND AS VALID, I.E., EXCEPT TO THE EXTENT AFORE-STATED, AS OF NO MOMENT. ( ALSO REFER PARAS 2.2, 4.1 THRO 4.3 ABOVE ). 4.5 TO SUM UP, WHILE WE APPROVE THE AOS METHOD OF COMPUTING THE INCOME IN PRINCIPLE, WE FIND IT ERRONEOUS TO THE EXTENT THAT THE INCOME FROM THE BUSINESS AND, THUS, THE CAPITAL, INCLUDES THE EXCESS OF STOCK DETERMINE D OVER BOOK STOCK. THE BALANCE-SHEET CARRYING THE ACTUAL STOCK, I.E., AS WORKED OUT ON T HE BASIS OF DIRECTIONS BY THE JT. CIT, WHICH ARE CORRECT (AND EVEN OTHERWISE NOT CHALLENGE D), ANY EXCESS THEREOF (OVER BOOK STOCK) WOULD GET AUTOMATICALLY ABSORBED IN THE EXCE SS OF ASSETS OVER LIABILITIES AS AT THE YEAR-END, IF ANY, AND THEREBY IN THE INCOME DEEMED ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR THE RELEVANT YEAR. THE AO IS, THEREF ORE, DIRECTED TO WORK OUT THE BUSINESS INCOME AS WELL AS THE UNEXPLAINED (DEEMED) INCOME F OR EACH OF THE YEARS ACCORDINGLY. THE PROFIT FROM MANNURETH AUTOMOBILES WOULD BE AS D ISCLOSED PER THE ASSESSEES IT (S&S)A.NO.50 /COCH/2006 7 ACCOUNTS, WHILE THE FIGURES OF OTHER ASSETS AND LIA BILITIES WOULD BE AS ALREADY ADOPTED. WE DECIDE ACCORDINGLY, AND THE ASSESSEES GROUND IS PA RTLY ACCEPTED. 5. THE OTHER GRIEVANCE OF THE ASSESSEE IS THE NON-G RANT OF REBATE U/S. 88 FOR A.YS. 1995-96 AND 1996-97. THE SAME HAS BEEN REJECTED BY THE REVENUE ON THE BASIS THAT IT IS NOT ARISING OUT OF THE IMPUGNED APPELLATE ORDER PAS SED IN THE FIRST INSTANCE (21.6.2005). WE ARE NOT IN AGREEMENT, AND THE ASSESSEES GRIEVAN CE IS JUSTIFIED IN PRINCIPLE. THOUGH IT IS TRUE THAT THE SAME WAS NOT A SUBJECT MATTER OF F IRST APPEAL BY THE ASSESSEE AGAINST THE ORIGINAL ASSESSMENT, IF AND TO THE EXTENT THE SAME EMANATES FROM THE ASSESSMENT AND IS BORNE OUT OF THE RECORD, IT IS A VALID OBJECTION LI ABLE FOR RECTIFICATION U/S. 154, AND WARRANTS BEING CONSIDERED ON ITS OWN MERITS. SO HOW EVER, WE FIND THAT THE ASSESSEE HAS MOVED THE RECTIFICATION APPLICATION ONLY IN SEPTEMB ER, 2005, WHILE THE ASSESSMENT ORDER BEARING THE `MISTAKE APPARENT FROM RECORD, ASSUMIN G SO, STANDS PASSED IN MARCH, 2000. THE ASSESSEES ACTION IS THEREFORE TIME BARRED U/S. 154(7) OF THE ACT. WE DECIDE ACCORDINGLY. 6. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY AL LOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 08TH APRIL, 2011 GJ COPY TO: 1. SH. M.T. SURENDRA BABU, ALIAS SURESH BABU, MANNU RETH HOUSE, KUTTAMPEROOR P.O., VIA MANNAR, ALLEPEY DISTRICT. 2. THE ASSISTANT/ DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE-1, KOTTAYAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, CONCERNED. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSIS TANT REGISTRAR) IT (S&S)A.NO.50 /COCH/2006 8