THEKKAYIL JABIR,KOZHIKODE V. ACIT,CENTRAL CIRCLE-2, , KOZHIKODE

ITA 1039/COCH/2024

AI Insights

The case involves multiple appeals by different assessees against the orders of the National Faceless Appeal Centre, Delhi, concerning undisclosed income linked to the Malabar Group of concerns. The primary legal issue revolves around the validity of the assessments made under section 143(3) read with section 153C of the Income Tax Act, 1961, which were based on entries found in the books of a third party during a search operation. The assessees contended that their income was incorrectly assessed based on these entries without direct evidence linking them to the undisclosed income. The CIT(A) upheld the AO's decision, leading to the current appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41999 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH SIVANANDAN
• Assessee Lawyers: C.B.M. WARRIER
• Keywords: Search and seizure
• Section: 143(3); 139; 153C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SOUNDARARAJAN K., JM ITA Nos. 1010 to 2012/Coch/2024 Assessment Years: 2013-14 to 2015-16 Pulliyil Zainaba 17/8B, Cholakkal House, Down Hill Malappuram 676519 [PAN: AAJPZ2853R] vs. ACIT, Central Crcle-1 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1074 to 1077/Coch/2024 Assessment Years: 2014-15, 15-16, 17-18-18-19 Abdulla Kekepuram Mohinuddeen Mujassi Palace, Kekepuram Thalangara P.O., Kasaragod 671122 [PAN: ALEPK2423Q] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1078 to 1080/Coch/2024 Assessment Years: 2013-14 to 2015-16 Puliyankadavath Kunjippathu Rayaroth House, Arikulam P.O. Koilandy, Kozhikode 673322 [PAN: BKEPK7214F] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) 2 ITA No. 1010/Coch/2024 Pulliyil Zainaba ITA Nos. 1081 & 1082/Coch/2024 Assessment Years: 2014-15 & 2015-16 Chundanveettil Pazhava Ottayil Mohammed Shanil Pazhava Ottayil House, Valappil House, BP Angadi, Tirur 676102 [PAN: APYPM7315P] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1083 to 1085/Coch/2024 Assessment Years: 2013-14 to 2015-16 Kakkodi Shaji Ashiyana, Kakkodi Kozhikode 673611 [PAN: CBWPS3992J] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1086 to 1088/Coch/2024 Assessment Years: 2013-14 to 2015-16 Padinhar Abbas Sikander Ali Sikander Ali House, K.K. Puram Thalangara P.O. Kasaragod 671122 [PAN: DHBPS0948N] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1092 & 1093/Coch/2024 Assessment Years: 2014-15 & 2015-16 Mohammed Anwar Chemnad Lasyath Noor Mariyam, Paravandukkam P.O. Delijunction, Kalanad, Kasaragod [PAN: ADHPL7227] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) 3 ITA No. 1010/Coch/2024 Pulliyil Zainaba ITA Nos. 1094 to 1096/Coch/2024 Assessment Years: 2014-15, 2015-16 & 2018-19 Pallipuzha Ahamed Abbas W/KSD Sham Manzil, Pallipuzha Pallikkera, Kasaragod 671316 [PAN: AIKPA5958R] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1097 to 1100/Coch/2024 Assessment Years: 2013-14 & 2014-15 Samsuddeen Kuttankavil Zenath Manzil, Kondotty P.O. Malappuram 673630 [PAN: APYPM7315P] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1111 & 1115/Coch/2024 Assessment Year: 2014-15 Muthum Parambath Sabna Edathil House, Karayad P.O. Meppayyur, Kozhikode 673524 [PAN: ADVPA3630Q] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1117 to 1121/Coch/2024 Assessment Years: 2013-14 to 2016-17 & 2018-19 Shareena Poyyeri Edathil House, Karayad Post Meppayyur, Kozhikode 673524 [PAN: BPNPS5144G] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) 4 ITA No. 1010/Coch/2024 Pulliyil Zainaba ITA Nos. 1135 to 1140/Coch/2024 Assessment Years: 2013-14 to 2018-19 Kakkodi Beeran Koya 17/1491-D, 3rd Floor, Malabar Gate Puthiyara P.O., Kozhikode 673004 [PAN: ALJPB9375M] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1141 to 1143/Coch/2024 Assessment Years: 2013-14 to 2015-16 Mujeeb Rahman Maruthiyatt 17/1491-D, 3rd Floor, Malabar Gate Puthiyara P.O., Kozhikode 673004 [PAN:AJCPM7794A] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1144 to 1146/Coch/2024 Assessment Years: 2013-14 to 2015-16 Mahamood Pallipuzha Ahamed PA House, Pallipuzha, Pallikkara Kasaragod 671361 [PAN: AFZPM8830J] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1149 to 1154/Coch/2024 Assessment Years: 2013-14 to 2018-19 Nellullaveetil Abdul Kareem 5/2697-H-3, Malabar Hills Housing Colony. KP Chandran Road Kozhikode 673006 [PAN: AHFPK0128H] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) 5 ITA No. 1010/Coch/2024 Pulliyil Zainaba ITA Nos. 01, 04, 05 & 07/Coch/2025 Assessment Years: 2013-14 to 2016-17 Kunjiperi Haji Jameela Aiswarya, Chulliyode Road P.O. Civil Station, Kozhikode 673020 [PAN: ACNPJ5272A] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 09 & 10/Coch/2025 Assessment Years: 2014-15 & 2015-16 Thachan Poyil Nazeer Hussain Aiswarya, Chulliyode Road P.O. Civil Station, Kozhikode 673020 [PAN: AEYPN7537B] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 29 to 32/Coch/2025 Assessment Years: 2013-14 to 2016-17 Edathil Abdul Jaleel Edathil House, Kuthiravattam P.O. Thondayad, Kozhikode 673016 [PAN: AERPA8183P] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 156 & 157/Coch/2025 Assessment Years: 2013-14 & 2014-15 Siyad Edathil Abdulla Edathil House, Kuthiravattam P.O. Thondayad, Kozhikode 673016 [PAN: ADVPA3630Q] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) 6 ITA No. 1010/Coch/2024 Pulliyil Zainaba ITA Nos. 1089 to 1091/Coch/2024 Assessment Years: 2013-14 to 2015-16 Padinhar Abbas Noushad Ali Sikander Ali Manzil, K.K. Puram PO Thalangara, Kasargod 671122 [PAN: AJSPN3565G] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1033 to 1035/Coch/2024 Assessment Years: 2013-14 to 2015-16 Sajith Chemmikkat Ashiana, Kottooli P.O. Thondayad Kozhikode 673016 [PAN: BNAPS8647H] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA Nos. 1036 & 1037/Coch/2024 Assessment Years: 2014-15 & 2015-16 Kulakkandathil Basheer Kolakkandathil House, Paleri P.O. Kuttiadi, Kozhikode 673508 [PAN: ASVPB5319G] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) ITA No. 1038 /Coch/2024 Assessment Year: 2014-15 Kurungot Ayisha Kaipurath Meethal House, Karayad PO Koilandy, Kozhikode 673524 [PAN: ASLPA1796N] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) 7 ITA No. 1010/Coch/2024 Pulliyil Zainaba ITA Nos. 1039 to 1041/Coch/2024 Assessment Years: 2013-14 to 2015-16 Thekkayil Jabir TK Huse, Kavumthara, Kavil P.O. Naduvannur, Kozhikode 673614 [PAN: AMAPJ0337P] vs. ACIT, Central Circle - 2 Aayakar Bhavan, Mananchira Kozhikode 673001 (Appellant) (Respondent) Appellant by: Shri C.B.M. Warrier, CA Respondent by: Shri Suresh Sivanandan, CIT-DR Smt. Leena Lal, Sr. D.R. Date of Hearing: 13.03.2025 Date of Pronouncement: 14.03.2025 O R D E R Per Bench These appeals filed by different assessees are directed against separate orders of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 25.10.2024. 2. Since identical issues are involved in all these appeals, they are heard together and disposed vide this common order. 3. For the sake of convenience and clarity the facts relevant to the appeal bearing ITA No1117/Coch/2024 for AY 2013-14 in the case of Shareena Payyeri are stated herein. 4. Brief facts of the case are that that appellant is an individual. The return of income for AY 2013-14 was filed on 31.03.20154 8 ITA No. 1010/Coch/2024 Pulliyil Zainaba declaring income of Rs.2,17,980/-. Subsequently, during the course of search and seizure proceedings under the provisions of section 132 of the Income Tax Act, 1961 (the Act) in the case of Malabar Group of concerns, the AO of the said group recorded satisfaction that the assessee received undisclosed income from the said Malabar group of companies in the form of return on investment based on the entries found in the second set of books of account maintained by one Mr. Prajeesh in his hard disk and one Mr. Sameer in his pen drive. Accordingly, based on this information contained in the seized material found in the case of Malabar group of companies, the AO issued a notice u/s. 153C of the Act on 07.05.2021. The appellant also filed return of income in response to the notice issued u/s. 153C disclosing the same income as shown in the original return of income filed u/s. 139 of the Act. 5. Against the said return of income, the assessment was completed by the ACIT, Central Circle-2, Kozhikode (hereinafter called \"the AO\") vide order dated 20.03.2022 passed u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs. 5,35,980/-. While doing so, the AO brought to tax a sum of Rs. 3,18,000/- by holding that the appellant had not shown the income received from Malabar group of concerns. 6. Being aggrieved, an appeal was filed before the CIT(A) contending that there was no evidence to show that the appellant had received income of Rs. 3,18,000/- on investment made with Malabar 9 ITA No. 1010/Coch/2024 Pulliyil Zainaba Group. It is further contended that the appellant has been offering the income on receipt basis and no income can be taxed based on the entries found in the books of third party. It is further contended that in the absence of any conclusive evidence brought on record by the Department, no addition can be made based merely on the entries found in the books of third party. The learned CIT(A), however, dismissed the appeal by confirming the action of the AO. 7. Being aggrieved, the appellant is in appeal before us in the present appeal. 8. It is contended that the CIT(A), without adverting to the grounds of appeal filed by the assessee and the statement of facts, had merely dismissed the appeal and, therefore, the matter may be remanded to the file of the CIT(A). 9. On the other hand, the CIT-DR did not raise any serious objection. 10. We have heard the rival contentions of both the parties and perused the material available on record. From the ground of appeal filed before the CIT(A), it is clear that the appellant laid serious challenge on the very validity of the assessment made u/s. 143(3) r.w.s. 153C of the Act by alleging that without recording satisfaction by the AO of the searched person, and as well as the AO of the appellant, a notice u/s. 153C of the Act was issued. From para 5 of 10 ITA No. 1010/Coch/2024 Pulliyil Zainaba the order of the CIT(A) it is clear that the CIT(A) merely returns finding by observing as under: - 5. The grounds raised by the appellant have been carefully considered. One of the contentions of the appellant is that the assessment made u/s.153C r.w.s. 144 was done without recording satisfaction and the assessment was not supported by any evidence. In this regard, it is observed that as per records, notice u/s.153C was issued after recording due satisfaction by the AO. Hence, this argument of the appellant is not acceptable. Further, the appellant has also contended that the assessment made by the AO was not supported by any evidence. As it can be seen from the assessment order, during the course of the search on MGC of which the appellant is a shareholder, evidence regarding undisclosed dividend/interest payment were found and seized. The particulars of the evidence seized during the course of search is also mentioned in the body of the assessment order. Therefore, this argument of the appellant is also not acceptable.” 11. However, the CIT(A), without referring to the satisfaction note recorded by the AOs of both the searched party as well as the appellant, merely recorded this finding. It must be made clear that the assessment order also is totally silent with regard to recording of satisfaction by the AO as well as the AO of the searched person. Furthermore, what evidence was gathered during the course of search and seizure proceedings in the case of Malabar group of concerns indicate payment of interest on investment made by the appellant, was not made available to the appellant. From reading of the assessment order, it is not clear whether the name of the appellant figured in the seized material. Thus, the CIT(A) also, 11 ITA No. 1010/Coch/2024 Pulliyil Zainaba without adverting to the seized material and discussing the evidence gathered by the AO, merely confirmed the addition. In these circumstances, we are of the considered opinion that the matter requires remand to the file of the CIT(A) for fresh adjudication in accordance with law after affording reasonable opportunity of hearing to the appellant reasonable opportunity of hearing to the appellant. We make it clear that all the contentions made by the assessee are kept open before the CIT(A). 12. In the result, all the appeals filed by the assessees are allowed for statistical purposes. Order pronounced in the open court on 14th March, 2025. Sd/- Sd/- (SOUNDARARAJAN K.) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 14th March, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin "