ACIT, Ernakulam V. Rajagopalan K, Cochin

ITSSA 60/COCH/2006

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9319 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-05-2010
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 30-11-2006
• Court: TRIBUNAL
• Department Lawyers: A K THATTAICIT
• Assessee Lawyers: R KRISHNA IYER
• Keywords: Principle of natural justice; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.(S&S)A.NO.60/COCH/2006 BLOCK PERIOD: 01-04-1996 TO 11-06-2002 THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRICLE-1, ERNAKULAM. VS. SHRI RAJAGOPALAN K. KOCHI. PA NO.ABDPR 7296M (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI A.K. THATTAI,CIT.,DR RESPONDENT BY SHRI R. KRISHNA IYER, CA O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL IS FILED BY THE REVENUE. THIS APPEA L IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-I, K OCHI, DATED 18-08-2006. THIS APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S.158BC R.W.S. 158BD & 143(3 ) OF THE I.T.ACT,1961. 2. THE SHORT POINTS FOR OUR CONSIDERATION IS THAT W HETHER THE FIRST APPELLATE AUTHORITY IS JUSTIFIED IN DELET ING THE ADDITION OF RS.2,42,828/- BEING INTEREST INCOME AND DELETING THE ADDITION OF RS.3,50,000/- MADE BY THE ASSESSING OFFICER HOLDING THAT THE ASSESSEE HAS SATISFACTORILY EXPLAI NED THE SOURCE OF FUND. IT(S&S)A NO. 60/COCH/2006 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS THE PROSECUTOR FOR THE INCOME-TAX DEPARTMENT FOR ABOUT FIVE YEARS AND RETIRED FROM REGULAR PRACTICE ON 31-03-20 02. DURING THE COURSE OF SEARCH AT M/S. UNIVERSAL INSTI TUTE OF ADVANCED STUDIES & RESEARCH PVT.LTD., KOCHI, U/S.13 2, A PRINT OUT OF SEIZED CPU FROM THE ROOM OF MR. NAJEE B, EMPLOYEE OF THE COMPANY, IN NALINAM BUILDING, MG RO AD, ERNAKULAM, SHOWED SOME PAYMENTS TO THE ASSESSEE. ACCORDINGLY, NOTICE U/S.158BC R.W.S.158BD WAS SERVE D ON 27-5-2004 AND IN RESPONSE TO THAT, ASSESSEE FILED R ETURN ON 23-06-2004 DECLARING NIL UNDISCLOSED INCOME. HOWE VER, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT FIXING T HE UNDISCLOSED INCOME AT RS.5,92,830/-. 3.1. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OF FICER NOTICIED THAT THE ASSESSEE HAD RECEIVED A TOTAL FRO M OF RS.2,38,000/- FROM M/S. UNIVERSAL INSTITUTE OF ADVA NCED STUDIES & RESEARCH PVT.LTD. THE ASSESSEE EXPLAINED THAT HE HAD ADVANCED AN AMOUNT OF RS.16 LAKHS OUT OF THE SA LE PROCEEDS OF A BUILDING JOINTLY OWNED BY THE ASSESSE E AND HIS WIFE. WHILE MAKING THE PAYMENT, THE ASSESSEE HAD T OLD THE COMPANY THAT HE MAY REQUIRE SOME AMOUNT FOR THE REP AIRS OF HIS RESIDENTIAL BUILDING AND THE COMPANY HAD AGREED TO PAY. ACCORDING TO THE ASSESSEE, HE RECEIVED RS.2,38,000/ - ON IT(S&S)A NO. 60/COCH/2006 3 DEMAND AND IT WAS HIS BELIEF THAT IT WAS OUT THE AM OUNT ADVANCED BUT THE SAID COMPANY TREATED THE PAYMENT A S INTEREST ON THE AMOUNT ADVANCED AND THE ASSESSEE HA D GIVEN VOUCHERS DULY SIGNED WHICH WAS BROUGHT ONE MR. NAJE EB, WHO WAS THE EMPLOYEE OF M/S. UNIVERSAL INSTITUTE OF ADVANCED STUDIES & RESEARCH PVT.LTD. BEFORE THE D DI, THE ASSESSEE HAD STATED THAT HE HAD GIVEN ONLY BLANK VO UCHERS AND NO VOUCHER SPECIFYING THE AMOUNT PAID TO HIM TO WARDS INTEREST ON THE MONEY ADVANCED TO THE COMPANY. ACC ORDING TO THE CIT(APPEALS), BLANK SIGNED VOUCHERS ARE AVAI LABLE ON RECORD. FURTHER, THE ASSESSEE AND HIS WIFE HAD FIL ED RETURN OF INCOME WITHIN THE TIME SPECIFIED BY LAW DECLARIN G THE SAID AMOUNT OF RS.2,38,000/- BEING INTEREST AND PAID THE APPROPRIATE TAX. THE LD. FIRST APPELLATE AUTHORITY WAS OF THE OPINION THAT IN THE INTEREST OF NATURAL JUSTICE, TH E ASSESSEE SHOULD HAVE GIVEN AN OPPORTUNITY TO CROSS EXAMINE M R. NAJEEB TO PROVE HIS CASE. IN VIEW OF THESE FACTS, THE LD. CIT(APPEALS) HELD THAT THERE WAS NO CONCEALMENT OF INCOME. 3.2. WITH REGARD TO THE AMOUNT OF RS.4,828/- BEING TDS, THE CIT(APPEALS) FOUND THAT THIS AMOUNT WAS ADDED TO TH E INCOME OF THE ASSESSEE, AS CONCEALED INCOME, ON TH E BASIS OF THE STATEMENT PREPARED BY THE EMPLOYEE OF THE CO MPANY (I.E. FROM THE EXCEL SHEET). ACCORDING TO THE LD. IT(S&S)A NO. 60/COCH/2006 4 CIT(APPEALS) THE ASSESSING OFFICER FAILED TO PROVE THIS TDS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE. 3.3. THUS, THE CIT(APPEALS) HELD THAT ASSESSEE HAS PROPERLY FILED THE INCOME TAX RETURN BEFORE THE DUE DATE OF RETURN TO BE FILED AND COULD NOT BE MADE LIABLE FOR THE MISTA KES MADE BY THE COMPANY WHICH HAS DEDUCTED THE TDS AMOUNT AN D HENCE PROVISIONS OF SECTION 158BB(1)(D) IS NOT APPL ICABLE AND ORDERED FOR THE DELETION OF ADDITION OF RS.2,42 ,828/- MADE BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME . 4. THE ASSESSING OFFICER HAS MADE ANOTHER ADDITION OF RS.3,50,000/- WHICH WAS PAID BY MR. SIDDIQUE, MANAG ING PARTNER OF M/S. JIYA EXPORTS, BEING UNDISCLOSED INC OME. THE ASSESSEE WAS APPEARING FOR M/S. JIYA EXPORTS IN SEVERAL CHEQUE CASES AMOUNTING TO SEVERAL LAKHS OF RUPEES. THE LD. CIT(APPEALS) NOTICED THAT IN THE SWORN STATEMENT OF MR. SIDDIQUE RECORDED ON 15-2-2006 IT HAS BEEN STATED T HAT THAT THE FIRM M/S. JIYA EXPORTS HAD MANY CHEQUE CASES UN DER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, WHIC H WERE REPRESENTED BY THE ASSESSEE, SOME CASES WERE SETTLE D WITH THE HELP OF ASSESSEE FOR WHICH MONEY WAS DRAWN FROM THE FIRMS ACCOUNT AND HANDED OVER TO THE ASSESSEE FOR SETTLING SUCH CASES, IN THE CASE OF GREENWAYS SHIPPING AGENC IES IT(S&S)A NO. 60/COCH/2006 5 P.LTD. THERE WAS A CHEQUE CASES FOR MORE THAN RS.3, 50,000/- AND FOR SETTLING THIS CASE THROUGH MEDIATION HE HAD HANDED OVER RS.3,50,000/- TO THE ASSESSEE IN AUGUST 2001, BUT IN THE MEANTIME THE APPEAL FILED WAS ALLOWED IN HIS FA VOUR AND INSTEAD OF RETURNING RS.3,50,000/- ASSESSEE REQUEST ED TO ADJUST THIS AMOUNT FOR HIS PERSONAL USE TEMPORARILY TO WHICH HE AGREED. ACCORDING TO THE ASSESSING OFFICER, AS PER THE COPY OF ACCOUNT WITH M/S. JIYA EXPORTS WHICH SHOWN THAT FROM 7-5-2001 TO 25-8-2001 THERE WAS A WITHDRAWAL O F RS.3,85,330/- ON 30 DIFFERENT DATES BUT THE ASSESSE E IN HIS SWORN STATEMENT IT HAS BEEN STATED THAT THE ENTIRE AMOUNT WAS BORROWED IN A SINGLE INSTALLMENT. THEREFORE, THE STATEMENT OF MR. SIDDIQUE IS NOT BELIEVABLE AND ADD ED THIS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE. BE FORE THE LD. CIT(APPEALS), THE CONTENTION OF THE ASSESSEE WA S THAT MR. SIDDIQUE HANDED OVER DIFFERENT AMOUNTS ON DIFFERENT DATES TO THE ASSESSEE FOR SETTLEMENT OF THE CASE WITH M/S. G REENWAYS SHIPPING AGENCIES (P) LTD. TOTALING TO RS.3,50,000/ -. WHEN THE APPEAL WAS ALLOWED, WITH THE PERMISSION OF MR. SIDDIQUE, ASSESSEE USED THE SAID AMOUNT FOR HIS PERSONAL USE. ACCORDING TO THE ASSESSEE, THE ASSESSING OFFICER HA D ADMITTED THAT THE COPY OF ACCOUNT WITH M/S. JIYA EX PORTS FILED BY MR. SIDDIQUE, WHERE HE HAD DRAWN AN AMOUNT OF IT(S&S)A NO. 60/COCH/2006 6 RS.3,85,000/- IN CASH, EXPLAINS THE SOURCE FOR THE PAYMENTS TO THE ASSESSEE. THE ASSESSING OFFICER MIS-INTERP RETED THE SWORN STATEMENT GIVEN BY THE ASSESSEE STATING THAT THE AMOUNT GIVEN WAS A SINGLE PAYMENT, WHICH WAS IN THE SENSE THAT MR. SIDDIQUE HAD AGREED TO ADJUST RS.3,50,000/ - FROM THE AMOUNT GIVEN BY HIM ON DIFFERENT DATES. THE A MOUNT WAS ADJUSTED AS A LUMP SUM FOR A SHORT PERIOD. THE ASSESSEE HAD RETURNED THE AMOUNT OF RS.3,50,000/- T O MR. SIDDIQUE BY CHEQUE NO.157883 DATED 7-8-2004 DRAWN O N OMAN INTERNATIONAL BANK, ERNAKULAM. CONSIDERING T HE FACTS AND THE ARGUMENTS OF THE ASSESSEE, THE LD. CIT(APPE ALS) WAS OF THE VIEW THAT IT IS NOT CORRECT TO CONCLUDE THAT MR. SIDDIQUE HAD DRAWN ONLY RS.3,85,330/- DURING THE RE LEVANT PERIOD AND THEREFORE HE HAD NO CAPACITY TO ADVANCE THE MONEY. THE ASSESSING OFFICER DID NOT INVESTIGATE THE FINANCIAL DEALINGS AND WITHDRAWALS BY THE OTHER PAR TNERS OF THE FIRM. THE ASSESSING OFFICER SHOULD HAVE BEEN NO TED THAT THE PAYMENT OF RS.3,50,000/- FOR SETTLING THE CASE WAS MADE FOR AND ON BEHALF OF THE FIRM AND NOT IN HIS INDIVI DUAL CAPACITY. FURTHER, THE ASSESSING OFFICER NOT EVEN CARED TO FIND THE RETURN OF THE SAID AMOUNT BY WAY OF CHEQUE . THE LD. CIT(APPEALS) FURTHER OPINED THAT THE ASSESSEE H AD PRODUCED THE PERSON WHO HAD ADVANCED MONEY TO THE IT(S&S)A NO. 60/COCH/2006 7 ASSESSEE. MR. SIDDIQUE HAD FILED AN AFFIDAVIT AND PRODUCED ALL BOOKS OF ACCOUNTS OF HIS FIRM AND CONFIRMED THA T HE HAS ALLOWED THE APPELLANT AN AMOUNT OF RS.3,50,000/- FO R SETTLING THE CASE. THE SAID AMOUNT WAS RETURNED BY THE ASSESSEE SUBSEQUENTLY. CONSIDERING THESE FACTS, T HE LD. CIT(APPEALS) DELETED THE ADDITION OF THE AMOUNT OF RS.3,50,000/- ALSO. 5. AGGRIEVED BY THE DELETION OF ADDITION OF THE ABO VE AMOUNTS OF RS.2,42,828/- AND RS.3,50,000/- THE REVE NUE IS IN APPEAL. 6. WE HAVE HEARD SHRI A.K. THATTAI, COMMISSIONER OF INCOME-TAX, DR, APPEARING FOR THE REVENUE, WHO SUPP ORTED THE FINDINGS OF THE ASSESSING OFFICER AND SHRI R. K RISHNA IYER, CHARTERED ACCOUNTANT, APPEARING FOR THE ASSES SEE, WHO SUPPORTED THE ORDER OF THE LD. CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. THE FACTS ARE N OT DISPUTED. THE LD. CIT., DR, SUPPORTED THE FINDINGS OF THEE ASSESSING OFFICER WHEREAS THE LD. COUNSEL FOR THE A SSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(APPEALS) AND URGED US NOT TO INTERFERE WITH HIS FINDINGS, AS HIS CONCLUSI ONS ARE IT(S&S)A NO. 60/COCH/2006 8 BASED ON APPRECIATION OF FACTS AND MATERIALS ON A P ROPER PERSPECTIVE. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW THOROUGHLY AND THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE ADVANCED BEFORE THE LD. CIT(APPEALS) ALSO. WE FIND THAT THE FINDINGS OF THE LD. CIT(APPEALS) IS ON THE BASIS OF APPRECIATION OF FAC TS, WHICH WE HAVE DISCUSSED ABOVE, TO WHICH WE AGREE IN TOTO . ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DIS MISSED. 8. IN THE RESULT, REVENUE FAILS AND ITS APPEAL DISM ISSED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 20 TH MAY,2010. PM. COPY FORWARDED TO: 1. THE ACIT., CENTRAL CIRICLE-1, ERNAKULAM. 2. SHRI RAJAGOPALAN K., NARAYANEEYAM, SRM ROAD, KOCHI- 18. 3. CIT(A)-I, KOCHI. 4. CIT, CENTRAL, KOCHI. 5. D.R.