Sri. T.O.Aleyas, V. ACIT,

ITSSA 8/COCH/2000

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8555 (ITAT-COCHIN)
• Duration Of Justice: 10 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-02-2011
• Assessment Year: misc
• Appeal Filed On: 09-05-2000
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S C SONKARCIT
• Assessee Lawyers: R KRISNA N
• Keywords: Unexplained investment; Peak credit; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T(S&S)A.NO.08/COCH/2000 BLOCK PERIOD: 1-4-1986 TO 30-4-1996 SHRI T.O. A LI AS, THIRUVALLA. PA NO.AAFPO 8660B VS. THE ASST . COMMISSIONE R OF INCOME-TAX, CENT.CIRCLE, TRIVANDRUM. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI R. KRISNA N ,CA RESPONDENT BY SHRI S.C. SONKAR,CIT .DR O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F THE LD. COMMISSIONER OF INCOME-TAX, CENTRAL-II, CHENNAI , DATED 27-03-2000 PASSED U/S.263 OF THE INCOME-TAX ACT,196 1. 2. ON PERUSAL OF THE RECORD, THE LD. COMMISSIONER FOUND THAT THE BLOCK ASSESSMENT PASSED U/S.143(3) R.W.S.1 58BC BY THE DY.CIT., CENTRAL CIRCLE, TRIVANDRUM, VIDE ORDER DATED 29- 4-1997 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE FOLLOWING REASONS: (I) THE INVESTMENT IN ST.MARYS CORPORATE TOWER BUILDING AT THIRUVALLA WAS VALUED BY THE VALUATION I.T(S&S) A. NO. 08/COCH/2000 T.O. ALIAS, THIRUVALLA. 2 CELL AT RS.29,86,600/- WHEREAS THE ADMITTED INVESTMENT THEREIN WAS TO THE TUNE OF RS.10,06,577/-. THUS, THERE WAS AN UNEXPLAINED INVESTMENT OF RS.19,80,000/- APPROXIMATELY 1/4 TH OF WHICH OUGHT TO HAVE BEEN CONSIDERED IN THE ASSESSEES HANDS FOR 1994-95 AND 1995-96 ON PRORATE BASIS. IN HIS ASSESSMENT, HOWEVER, THE AMOUNT ASSESSED ON THIS SCORE WAS ONLY RS.2 LAKH. (II)(A) IN ARRIVING AT THE UNEXPLAINED INVESTMENT I N BANK ACCOUNT FOR THE ASSESSMENT YEAR 1990-91, SET OFF OF THE PEAK CREDIT ASSESSED FOR THE ASSESSMENT YEAR 1987-88 WAS WRONGLY ALLOWED RESULTING IN ERRONEOUS ASSESSMENT INASMUCH AS RS.1,16,800 APPROX. WAS NOT CONSIDERED. (B)THERE WERE CASH DEPOSITS AND WITHDRAWALS FROM THE ABOVE ACCOUNT DURING THE PERIOD 01-04-1990 TO 01-03-1991. BESIDES CASH WITHDRAWALS, THERE WAS TRANSFER OF FUNDS FROM THIS ACCOUNT TOWARDS EXPENSES AND ALSO THE CREDIT OF OD ACCOUNT NO.2/90 OF M/S. T.O. ABRAHAM & CO., WITH THE SAME BANK. NO ENQUIRY INTO THE SOURCE AND NATURE OF ACQUISITION OF THE FUNDS UTILIZED FOR MAKING CASH DEPOSITS IN EXCESS OVER CASH WITHDRAWALS APPEARED TO HAVE BEEN MADE BY THE ASSESSING OFFICER. THE OMISSION ON THE PART OF THE ASSESSING OFFICER TO CONSIDER THIS ASPECT RESULTED IN ERRONEOUS ASSESSMENT INASMUCH AS RS.5,47,500/- APPROX. BEING 1/3 RD OF THE EXCESS REMITTANCE ATTRIBUTABLE TO THE ASSESSEE, WAS NOT CONSIDERED IN ASSESSMENT. I.T(S&S) A. NO. 08/COCH/2000 T.O. ALIAS, THIRUVALLA. 3 (III) THE ASSESSEE TOGETHER WITH HIS 3 BROTHERS, WA S SEEN TO HAVE REMITTED RS.11,44,000/- ON 04-04- 1995 FOR CLOSING THE TWO LOAN ACCOUNTS WITH VIJAYA BANK, THIRUVALLA WHICH HAD APPARENTLY BEEN UTILIZED FOR CONSTRUCTION OF THE BUILDING ST.MARYS CORPORATE TOWER. THE SOURCE OF THIS AMOUNT WAS NOT EXPLAINED BY THE ASSESSEE. NOR WAS ANY ENQUIRY MADE BY THE ASSESSING OFFICER IN THIS REGARD WHILE DEALING WITH HIS BLOCK ASSESSMENT. AN AMOUNT OF RS.2,86,000/- BEING 1/4 TH OF THE REMITTANCE WAS THUS OMITTED TO BE CONSIDERED FOR 1996-97 FORMING PART OF THE BLOCK PERIOD. ON THIS ASSUMPTION OF JURISDICTION, THE LD. COMMISS IONER BY INVOKING THE PROVISIONS OF SECTION 263, SET ASIDE T HE BLOCK ASSESSMENT ORDER FOR THE RELEVANT PERIOD FROM 1-4-1 986 TO 30-4-1996 WITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE NECESSARY ENQUIRIES, CALL FOR RELEVANT INFORMATION, HEAR THE ASSESSEE AND, AFTER PROPER APPLICATION OF MIND, FRA ME A FRESH ORDER IN ACCORDANCE WITH LAW. THE LD. COMMISSIONE R FURTHER OBSERVED THAT THE ASSESSEE WILL BE FREE TO FURNISH ANY MATERIAL IN SUPPORT OF HIS CLAIM, AND THE ASSESSING OFFICER SHALL CONSIDER THE ASSESSEES EVIDENCE AND PASS A S PEAKING ORDER. THIS DIRECTION OF THE LD. COMMISSIONER IS TH E IMPUGNED ORDER CHALLENGED BY THE ASSESSEE IN THIS A PPEAL. I.T(S&S) A. NO. 08/COCH/2000 T.O. ALIAS, THIRUVALLA. 4 3. WE HAVE HEARD THE LD. COUNSEL FOR THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE FIRST WOULD SUBMIT THA T THE ORIGINAL ORDER IS PASSED BY THE ASSESSING OFFICER W ITH THE PREVIOUS APPROVAL OF THE LD. COMMISSIONER OF INCOME -TAX, CENTRAL-II, CHENNAI. THEREFORE, IT IS CONTENDED TH AT AS THE LD. COMMISSIONER HIMSELF HAS GIVEN APPROVAL, AGAIN 263 CANNOT BE INVOKED. HE FURTHER SUBMITTED THAT THE SUBSEQUENT DEVELOPMENT CANNOT BE CONSIDERED BY THE LD. COMMISSIONER IN HIS 263 ORDER. THE RECORD AVAILABL E AS ON DATE HAS TO BE CONSIDERED. THE LD. COMMISSIONER H AS POINTED OUT THE NON-VERIFICATION. THERE IS NO WHI SPER ABOUT THE PREJUDICE CAUSED TO THE REVENUE. WHEN THE TWI N CONDITIONS ARE ABSENT, AS PER THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT - 243 ITR 83 , THE ASSUMPTION OF JURISDICTION U/S.263 IS NOT JUSTIFIED. FURTHER, THE LD. COUNSEL SUBMITTE D THAT THE BLOCK ASSESSMENT WAS COMPLETED WITHOUT GETTING THE REPORT OF THE DVO. THERE IS A RIDER THAT BLOCK ASSESSMEN T WILL BE REVISED AFTER GETTING THE REPORT OF THE DVO AND THA T WAS REVISED U/S.154. THEREFORE, ALSO THE LD. COUNSEL WOULD SUBMIT THAT ACTION U/S.263 IS NOT JUSTIFIED. THE L D. COUNSEL RELIED ON THE FOLLOWING DECISIONS: I.T(S&S) A. NO. 08/COCH/2000 T.O. ALIAS, THIRUVALLA. 5 A) JEWEL OF INDIA VS. ACIT & ANOTHER -325 ITR 92; B) CIT VS. GREENWORLD CORPORATION314 ITR 81; AND C) B AND A PLANTATION AND INDS. LTD. AND ANOTHER VS. CIT -290 ITR 395. 4. ON THE OTHER HAND, THE LD. CIT., DR WOULD SUBMIT THAT THE APPROVAL BY THE COMMISSIONER AND THE ASSUMPTION OF JURISDICTION U/S.263 ARE TWO DIFFERENT FUNCTIONS BY THE SAME COMMISSIONER BUT BOTH ARE VALID. THERE IS NO BAR IN THE STATUTE AGAINST THE ASSUMPTION OF JURISDICTION U/S. 263. THE ASSESSING OFFICER FAILED TO INVESTIGATE THE FACTS A ND THE REASONS AS GIVEN IN THE COPY OF NOTICE DATED 16-2-2 000 BY THE LD. COMMISSIONER PROPOSING REVISION U/S.263. HENCE, AFTER PROPER OPPORTUNITY TO THE ASSESSEE POINTING O UT THE MISTAKE AND THE ERRONEOUS ORDER OF THE ASSESSING OF FICER WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE , THE ASSUMPTION OF JURISDICTION U/S.263 IS JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRE CEDENCE RELIED UPON. THE FIRST REASON IS THAT THE INVESTM ENT IN ST.MARYS CORPORATE TOWER BUILDING AT THIRUVALLA W AS NOT PROPERLY EXAMINED TO THE NATURE OF UNEXPLAINED INVE STMENT TO THE TUNE OF ERROR: UNDEFINED OFFENDING COMMAND: RUPEE STACK: / INDIAN