ACIT, Tuticorin V. Shri M.Essakki Konar, Tiruchendur

MA 82/CHNY/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6553 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-06-2011
• Assessment Year: misc
• Appeal Filed On: 25-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N DEVANATHAN

Judgement Text

I N THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. M. A. NO. 82/MDS/2011 (IN IT(SS) A NO. 56/MDS/2004) BLOCK PERIOD 01-04-1986 TO 04-10-1996 THE ASSISTANT COMMISSIONER OF INCOME-TAX, TUTICORIN. V. SHRI M. ESSAKKI KONAR, 515, KARUNAKAIAMMAN KOIL STREET, KULASEKARAPATTINAM, TIRUCHENDUR TALUK. (PAN/GIR NO. E-703/CIR.I/TN) (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI N. DEVANATHAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS MISCELLANEOUS APPLICATION IS FILED BY THE REV ENUE AGAINST THE ORDER OF THIS TRIBUNAL IN IT(SS)A NO.56/MDS/2004 DATED 09-09 -2010 FOR THE BLOCK PERIOD 01.04.1986 TO 04.10.1996. 2. SHRI SHAJI P. JACOB SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI N. DEVANATHAN, ADVOCATE REPRESENTED ON BEHALF OF TH E ASSESSEE. 3. THE MISCELLANOUES APPLICATION FILED BY THE REVEN UE READS AS FOLLOWS: THE HON ' BLE IT AT HAS PASSED T H E ABOVE ORDER ON APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER DATED 30 . 3 . 2004 TO GIVE E FFECT TO THE ORDER OF THE ITAT IN I . T . (SS) A NO . 363 ( MDS ) /9 7 DATED 23 . 10.2002 . THE ITAT HA D BY ITS ORDER DATED 23 . 10 . 2002 REMANDED OR SET ASIDE TO THE AO . THE FOLLOW I NG ISSUES : M.A. NO.82/MDS/2011 2 ( I ) THE AMOUNT OF LIABILITY ST A TE BANK OF INDIA OWED BY SHR I . GOPAL WH I CH WAS DISCHARGED BY T HE ASSESSEE . ( PARAGRAP H 1 1 OF THE ORDER OF THE ITAT) (I I ) TO CONSIDER THE SOURCE OF INVESTMENTS BY THE ASSESS EE ' S FAMILY MEMBERS WH I CH SHOU L D BE SHOWN BY THE ASSES S EE AND CASH FLOW FOR EACH OF THE FAM I LY MEMBERS SHOULD BE DRAWN UP . ( PA R AGRAPH 13 OF THE ITA T ' S ORDER ) (III) C H I T CONTRIBUTION BY THE A SSESSEE WHICH WAS C LAIMED BY HIM TO BE RS . 1 , 000 O N LY AS AGAINST RS . 25 , 000 TAKE N BY THE ASSESSING OFFICER . ( PARAGRAPH 1 5 OF THE ORDER O F THE IT AT ) . TH E ASSESSING OFFICER PASSED TH E ORDER DATED 30 . 3. 2004 TO GIVE EFFECT TO T HE ORDE R OF TH E IT AT. HE QUANT I FIED THE LIABILITY TO THE S TATE BANK OF IND I A ON THE BAS I S OF I NFORMATION FURNISHED BY THE BANK . HE ACCEPTED THE CHIT CONTRIBUTION BY THE ASSESSEE AS RS . 1 , 0 00 . HE CONS I DE R ED O N THE BAS I S O F C ASH FLOW STATEMENT , THE SOURCE OF INVESTMENT BY FAM IL Y MEMBERS AND ACCEPTED THE SOURCE I N THE HANDS OF ASSESSE E ' S SONS BUT DID NOT ACCEPT THE CLAIM IN THE CASE O F ASSESSEE ' S WIFE AND MARRIED DAUGHTERS . ON APPEAL, THE HON'BLE ITAT HAS PASSED TH E ORDER DT . 09.10.2010, HOLDING AS FOLLOWS : ( I) TH E U NDISC L OSED I NCO ME F O R A Y . 1 98 7- 88 , 1 990-91 , 1991 - 92 AND 1992- 93 DETERM I NED BY THE A O . BE I NG BE L OW TH E TAXABLE LIM I T CANNOT BE CONS I DERED AS PART O F UN D I SC L OSED INC O M E OF T HE ASSESSEE UN DE R SECT I ON 158BC . (II) AO. CANNOT ASSESS THE I N VESTMENTS O F THE ASSESSEE ' S WIFE AND OTHER FAM IL Y MEMBERS I N HI S HANDS AS THE I SSUE HAS BEEN CONCLUDED BY THE EARL I ER ORDER OF THE IT A T DATED 23 . 10 . 2002 . (III) T HE UNDISCLOSED I NVESTMENT WITH R EGARD TO ADVANCES TO GOPAL AND DISCHARGE OF LI ABIL I T I ES C ANNOT EXCEED THE COST O F THE BU IL D I NG WHICH IS RS . 22 LAKHS . (IV) THE A.O. SHOULD GIVE CREDIT FO R ` 80,000 AS AGRICULTURAL INCOME OF A.Y. 1997- 98. IT IS SUBMITTED THAT THE ORDER OF THE ITAT IS AGAINST THE EARLIER ORDER OF THE ITA T AND THE PRESENT APPLICATION HAS BEEN FILED TO RECTIFY TH E APPARENT CONTRADICTIONS BETWEEN THE EARLIER ORDER OF THE ITAT DATED 23.10.2002 AND THE ORDER DATED 09.09.2010. 1. TH E CL A IM TH A T UN D I SC L OSED I NCOME O F SEVERAL YEA R S SHOU L D N OT BE CO N S IDERED AS P A RT OF T H E UN D I S CLO SE D I NCOM E IN T HE B L OCK ASSESSMENT FO R T HE R EASON TH A T T H E A MOUNT I S BELOW THE T AXAB L E I NCOME HAS N OT BEEN THE SUBJECT O F APPEA L BEFO R E T HE ITAT AG A INST THE ORI G I NA L OR D E R AN D TH E IS S U E WAS N O T SET ASIDE BY T HE IT A T . T HEREFO R E , T HE ASS E SSEE IS PR E CL UDE D FR O M R A I S IN G T HI S I SSUE BEFORE THE ITA T AND T H E IT AT ERRED IN NOT D I S MIS S ING T H E G RO UN D I N LI M I NE . EV E N ASSUM I NG T HAT THE ITA T WAS LEGA LLY C O R RECT IN ENTERTAINING THIS GROUND , SEC T ION 15 8BB (1)(C) W ILL M.A. NO.82/MDS/2011 3 APP LY ON L Y T O C ASES WHE R E TH E INCOME I S BELOW THE T A X ABL E LIMIT O N T HE BASIS OF ENTR I ES RECORDED I N THE BOOKS OF ACCOU NTS AND OTHER D O CUM EN TS M A INT A I NED I N THE N O R MAL COU R SE O N OR BE F O R E T HE D ATE OF S E ARCH OR R EQUIS I TIO N . IN TH E C ASE O F T HE ASSESSEE , THE I NCOME WH I CH I S BROUGH T T O T A X FOR THESE Y EA R S IS NOT THE INC OME DE T E RMI NE D ON T HE BAS I S O F ENTR I ES IN THE BOOKS OF ACCOUNTS OR D O CUM E NTS ( AD MI TTED LY THE ASSESSEE H A S N OT M A I NTA I NED A N Y ACC O UNT S) BUT ON THE BASIS OF THE R E TURN O F I NCOM E F I L ED BY THE ASSESSEE UN DE R SECT I O N 15 8BC . THE UNDISC L OSED I NCOME OF RS . 2 , 41 , 000 RETURNED BY THE ASSESSEE I NCLUDES THE ABOV E A M OUN TS DELETED BY THE ITAT . T H E R EFO R E SECT ION 1 58BB ( 1 )(C) AS WELL AS T HE C AS E LAW RELIED ON BY THE I TAT IS N O T APP LICABLE TO TH E F A CTS O F THE C ASE . T H IRDLY , FOR THE ASSESSMEN T YEAR 1990-91 & 1991 - 92 THE UNDI S CL OSED INC O M E H AS BEE N DE T E RMINED A T RS . 18 , 000 AND RS . 21 , 000 RE S P ECT I VE LY ON ACCOUN T O F A MI STAKE IN C O M PUTAT I O N . IN TH E ORIGINA L ASSESSMENT ORDER A S WE LL AS IN THE ORDER P AS S ED G I V I NG EFFEC T TO IT A T ' S OR DE R , THE A GRICULTURAL I NCOME HAS BE E N MIS TAKE NLY T A K E N AS R S . 1 , 80 , 000 F O R A . Y . 1 990 -91 I NSTEAD O F RS . 1 , 08 , 000 ( 90% OF AGRICU LTU R A L INCOME O F RS . 1 , 20 , 000 R ETUR N ED BY TH E A S SESSEE IN THE CASH FLOW ST A T E MENT FILE D BY HIM) . 2. ITAT ' S ORDER DELETING THE A DD ITION ON ACCOUNT OF SO URCE OF INV E STMENTS BY BEING UNEXPLAINED A ND THERE F ORE , TO B E CONSI DE R ED IN T HE HANDS OF T H E ASSESSE E ON THE BASIS OF P A RAGRAPH 14 OF T H E ORDER OF THE ITAT D A T E D 23 . 10 . 2002 IS ERRONEOUS . IN THE P A RAGRA P H CITED IN THE P RESENT ORDER OF THE THE IT A T , T HE ORI G IN A L OR DE R OF THE ITAT DAT E D 23 . 0 . 2002 SPEAKS ABOUT THE ' ADDITIONS MADE OVER AND ABOVE WHAT WAS DEPICTED IN T HE DOCUMENT ' AND N OT THE ' D EF ICIT I N THE HANDS O F THE ASS E SSEE ' S W IFE AND SON IN RES PE CT OF THEIR I NVESTMENT IN THE PROPERT I ES ' A S STATED IN TH E P R ESE NT ORDER . WITH REGARD TO INVESTMENTS IN THE NAME O F W I FE A N D CHILDR E N , TH E ITAT IN THE E A RLIER ORDER DATED 23 . 10.2002 H A S CL EAR L Y ST ATED A S F OLLOWS : (P A R AG R AP H 13 OF TH E ORDER WHICH IS R EPRODUCED . U IN REGARD TO I N V E S T ME NT IN T HE SHAPE OF AMO U NT ADVAN C ED TO T HE W IFE OF MR . GOPAL BY THE ASSESSEE A ND HIS FAMILY M E M BE RS , TH E SU BM I S SI O N MAD E WITH EMPHASIS THAT THE FAMILY M E M B ERS HAD THEIR OWN S O URC E S OF INC O M E A N D I NVES TM E NT R E M A INING UNEXPL A INED AS MADE BY THE RESPECTIVE F A MILY MEM BE RS SHOULD BE CONSIDERED IN THEIR R ESPECTIVE HANDS . THIS PROPOSITIO N BY THE AS S E S SEE IS Q U IT E RE A SONABLE . H OWEVE R IT IS FOR THE ASSESSEE TO SHOW THE EXTENT OF ADVANCE BY HIM AND HIS FAMILY MEMBE RS . GI V I NG NAMES OF FAMILY MEMBERS AND THE EXTENT OF ADVANCE TO EACH ONE OF TH EM IS NOT SUFFICIENT IN ITSELF. IT WOULD BE NECESSARY TO PLACE ON RECORD THE SOURCE OF INCOME OF THE FAMILY MEMBERS F ROM WHICH ALONE THE ASSESSING OFFICER WOULD BE IN A POS ITION TO COME TO THE CONCLUSION WHETHER THE FAMILY MEMBERS W OULD HAVE BEEN IN A POSITION TO MAKE THE INVESTMENT. IN THE EVENT OF THE INCOME OF FAMILY MEMBERS WAS FOUND TO BE INS UFFICIENT OR AS STATED BY THE ASSESSEE AND THE FAMILY MEMBERS M.A. NO.82/MDS/2011 4 THEMSELVES THAT THE INCOME OF THE FAMILY MEMBERS AS JUST SUFFICIENT TO MEET THEIR PERSONAL EXPENSES, IT WOUL D BE ALL THE MORE NECESSARY FOR THE ASSESSEE TO SHOW THAT THE FA MILY MEMBERS DID HAVE THE FUNDS AND IT WAS AVAILABLE WIT H THEM. ACCEPTING THE PLEA OF THE ASSESSEE ON THE PRINCIPLE THAT INVESTME NTS M AD E BY THE ASSESSEE T H A T R EMA I N UNEXPLAINED ALONE TO BE CONSIDERED IN HIS HAN D S, U NLESS AS OBSERVED A B OVE THE ASSESSEE I S I N A POSITION T O SHOW T H A T THE F A MILY M EMBERS COULD HAVE G ENERATED INCOME WHICH WAS UTILIZED BY THEM IN M A KING IN VESTMENT AND FO R ALL O WING ASSESSEE OPPORTUNITY I N THIS REGARD , WE R EMAN D THIS I S S UE T O THE ASSESS I NG OFF I CER .' FURTHER TH E ITAT H A S CLE A RLY PUT THE RESPONSIBILITY ON THE ASS E SSEE AS CAN B E S EE N FROM THE REM A ININ G PART OF P A R AG RA P H 13 OF THIS ORDER . T HE ITA T HAS ALLOWED TH E A P P E A L BY MI S INT E R PRET I N G A ND W RON G LY A P PLYING P A RAGRAPH 14 OF THE EARLIER ORDER INSTEAD OF PARA G R AP H 13 CIT E D AB OVE . THE ASS E SSEE HAS NOT SUBM I TTED ANY CASH FLOW ST A TEMENT OF HIS W IFE . THE A SS ESS ING OF F IC E R HAS A FT E R ANALYZING THE CASH FLOW STATEMENT S OF ASS E S SEE ' S SON HAS ACC E PTED THE INV E STMENT MADE BY THEM AS THEIR OWN. HE HAS SP E CIFICALLY OBSERVED THAT THE ASS E SSEE ' S WIFE D I D NOT HAVE RESOUR C ES TO MAKE THE ADVANCES . , 3. WITH R EGARD TO THE ITA T ' S ORDER TH A T THE UNDI S CLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF ADVANCES TO GOPAL AND HIS WI F E , LIABILITY OF GOPAL DISCHARGED BY THE ASSESSEE AND I NTEREST ACCRUAL CANNOT EXCEED RS . 22 LAKHS BEING THE CONSIDER A TION FOR THE LODGE , THE I TA T HAS I N THE EARLIER ORDER ACCE P TED IN PRINCIPLE THAT THE A D VANCES MADE BY THE ASSESSEE , INTEREST ACCRU E D THEREON TILL THE DATE OF SALE OF GOWRISHANKAR LOD GE BELONGING TO GOPAL AND THE DISCHAR G E OF LI A BILITY TO BANK BY THE ASS E SSEE SHOULD BE CONSIDERED AS PART OF UNDISCLOSED INCOME . ITA T DELETED TH E INTEREST ACCRU E D AFTER THE DATE OF TRANSFER OF LODGE , BUT HELD THAT INTEREST ACCRUED TILL THE DATE AS WELL AS LIABILITY TO BANK SHOULD BE CONSIDERED. IT ALSO DIRECT E D THE AO. TO OBTAIN INFORM A TI O N FROM THE BANK FOR TH I S PURPOSE . THE ITA T ALSO REMANDED THE ISSUE OF CONTRI B UTION OF F AM ILY MEMBERS FOR THE PURCHASE OF THE LODGE TO THE AG . WITH THE DIRECTION TO THE ASSESSEE TO FURNISH THE D ETAILS OF THE SOURCE . UNDER THE CIRCUMSTANCES , THE ITA T'S VIEW THAT THE TOTAL UNDISCLOSED I NVESTMENT CANNOT EXCEED THE CONSIDERAT I ON OF RS . 22 L A KHS IS NOT IN CONFORMITY WITH THE EARLIER ORDER OF THE ITAT . 4. ITA T ' S ORDER ALLOWING THE ASSESSEE THE CREDIT OF AG RICULTURAL INCOME OF RS . 80 , 000 FOR A Y . 1997-98 IS ALSO C O NTRADICTORY TO THE E A RLIER OR D ER OF TH E ITA T . THE ISSUE OF AGR I CULTURAL INCOME H A S AL S O BEEN CONCLU DE D BY TH E OR DE R OF THE ITAT D A TED 23 . 10 . 2002 . T HE ITAT IN PARA 3 OF THE ORDER NOTED THAT TH E ASS E SSEE HIMSELF HAS STATED I N THE SWORN ST ATEMENT THAT I N THE FOUR Y E A RS PRIOR TO SEARCH H E HAD NO AGR I CULTURAL INCOME AND H IS N E T AGRICULTURAL INCOME WOULD BE RS. 15 , 000. TH E IT A T , IN PARA 6 OF TH E ORDER , HAS OBSERVED THAT ' T HE STATEMEN T IND IC ATE D N O A GRICULTURA L I N C OM E AND THAT THE N E T A GRIC U LTU R A L I NCOME WAS ONLY TO THE EXTENT OF RS . 15 , 000 . AS AGAINST THIS THE ASSESSING OFFI CER HAS B EE N MORE THAN LIBERAL BY ESTIMATING THE I NCOME AT 90 % AS DECLARED BY THE M.A. NO.82/MDS/2011 5 A SS E S SE E . IN F A CT HE WOULD HAVE BEEN J USTIFIED I N RESTRICTING THE INCOME TO RS . 1 5 , 00 0 FOR E A CH O F THESE YEARS . THIS WOULD HAVE RE S ULT E D IN AVAIL AB LE C A SH FLOW FOR MAK I NG T HE I NVE S TMENT EVEN LESS . THEREFORE , IN OUR O P INI O N , IN TH ESE CIRCUMST A NCES THE ASSESSEE I S NOT ENTITL E D FOR ANY FURTHER R E LI E F IN SO F A R AS THE A DD ITION ON ACCOUNT OF AGR I CULTURA L I NCOME FOR THE VARIOU S YEARS . FUR T H E R TH E R E IS NO M A T E RI A L A VA IL A BLE IN SUPPORT O F T HE C LAIM MADE BY THE AS S ESSEE ' S E C O NDLY , TH E GROUNDS OF APPE A L A S LISTED I N T HE I TAT ' S ORDER DA T ED 09.09 . 201 0 DOES N O T R E F E R T O T H I S CL A IM A T AL L . THE GROUND NO . 7 R E F ERS TO N ON - CONSIDERA T ION OF RECE I PT FROM COCONUT F A RM E RS . THIS ISSUE (RS . 4 L AK HS BE I NG ADVANCES FROM COCONUT FARMERS) HAS B EE N CONCLUD E D BY THE E A RL I E R ORDE R O F TH E IT A T D A TED 23 . 10 . 2002 (P A R A GRAPH 7 OF THE ITA T ' S ORD E R) AND THE ITAT SH OU L D H AVE DISMISSED THE GROUND OUTR I GHT . THE ITAT H A S A LL OWE D R E LIEF OF RS . 80 , 00 0 WH I CH THE ASSESSEE HAS NOT A SKED FOR . IN THE C A SH FL OW ST A T E M E NT S , BOTH IN THE ORIGINA L AS WE LL AS R EV I SED THE ASSESSEE H A S NOT CLA I MED ANY A G RICULTUR A L I NCOME FOR THIS YEAR . TH E I S S UE OF AGR I CULTURAL I NCOME OF T HE ASS E SS E E H A S B E E N CONCLUD E D BY THE ORDER O F IT A T DATED 2 3 .1 0 . 2002. AS T HE IT AT ' S ORDE R SUFFERS BAS I C I NFIRMITIES WHICH GOES AGAINST THE O R DE R OF THE ITAT DATE D 23 . 1 0 . 2002 AND BEYOND T HE SCOPE OF T HE ISSUES SET ASIDE BY THE ITAT IN THE O RI G IN A L OR DE R , IT I S S UBMITTED THAT ITA T MAY K I NDLY R E C A LL THE OR DE R D A T E D 09 . 09 . 2010 AND RENDER J U S T I CE I N THI S S EA RC H CASE . IT WAS VEHEMENTLY SUBMITTED BY THE LEARNED DR THAT THE ORDER PASSED BY THE TRIBUNAL IN IT(SS)A NO. 56/MDS/2004 WAS BEYOND THE SCOPE OF THE ISSUES SET ASIDE BY THE TRIBUNAL IN ITS ORIGINAL ORDER IN IT(S S)A NO. 363/MDS/97 DATED 23.10.2002. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THERE WAS NO ERROR IN THE ORDER OF THE TRIBUNAL AS THE ISSUES THAT HAVE BEEN DECIDED BY THE TRIBUNAL WERE IN REGARD TO THE ISSUES WHICH AROSE O UT OF THE ASSESSMENT ORDER DATED 30.03.2004. IT WAS THE FURTHER SUBMISSION TH AT THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE WAS IN THE NATURE OF REVIEW PETITION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE CLEARLY SHOWS THAT IT IS NOT THAT THE TRIBUNAL HAS NOT CONSIDERED THE ISSUES. THE ALLEGATION OF THE R EVENUE IS THAT THE WAY IN M.A. NO.82/MDS/2011 6 WHICH THE TRIBUNAL HAS CONSIDERED AND DECIDED THE I SSUES IS NOT RIGHT. THE REVENUE HAS CHALLENGED THE FINDING OF THE TRIBUNAL IN THE ORDER IN IT(SS) A NO.56/MDS/2004 DATED 09-09-2010. THERE IS NO ALLEGA TION IN THE MISCELLANEOUS APPLICATION THAT THE TRIBUNAL HAS NOT CONSIDERED AN Y EVIDENCES PLACED BEFORE IT. THIS CLEARLY SHOWS THAT THE MISCELLANEOUS APPLICATI ON IS MORE IN THE NATURE OF AN APPEAL AGAINST THE ORDER OF THE TRIBUNAL IN IT(SS) A NO. 56/MDS/2004 DATED 09- 09-2010. THIS CLEARLY IS OUTSIDE THE PURVIEW OF SE CTION 254(2) OF THE INCOME-TAX ACT, 1961. IN THE CIRCUMSTANCES, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE STANDS DISMISSED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 17-06-2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 17 TH JUNE, 2011. H. COPY TO: APPLICANT/AO/CIT (A)/CIT/D.R./GUARD FILE