M/s Malayil bankers, Trivandrum v. DCIT, Trivandrum

CO 99/COCH/2008 | misc
Pronouncement Date: 29-07-2011

Appeal Details

RSA Number 9921923 RSA 2008
Assessee PAN YEDBY3292D
Bench Cochin
Appeal Number CO 99/COCH/2008
Duration Of Justice 2 year(s) 11 month(s) 1 day(s)
Appellant M/s Malayil bankers, Trivandrum
Respondent DCIT, Trivandrum
Appeal Type Cross Objection
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 29-07-2011
Date Of Final Hearing 15-06-2011
Next Hearing Date 15-06-2011
Assessment Year misc
Appeal Filed On 27-08-2008
Judgment Text
DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 1 IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN JM AND SANJAY AR ORA AM I.T.A. NO.758 & 759 /COCH/2008 & C.O. NOS. 96 & 97/COCH/2008 (BY THE ASSESSEE) ASSESSMENT YEARS: 1995-96 & 1996 -97 THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1) TRIVANDRUM. VS. M/S. MALAYIL BANKERS C/O SHRI GEORGE VARGHESE MALAYIL HOUSE AGRA KUSAVARKAL ROAD NALANCHIRA TRIVANDRUM. [PAN: (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) I.T. (SS) A. NO.5/COCH/2007 BLOCK PERIOD: 1.4.1987 TO 5.9.1997 M/S. MALAYIL BANKERS C/O SHRI GEORGE VARGHESE MALAYIL HOUSE AGRA KUSAVARKAL ROAD NALANCHIRA TRIVANDRUM. [PAN: VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1) TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) I.T.(SS)A. NOS. 20/COCH/2007 53 /COCH/2008 & C.O. NOS. 98 & 99/COCH/2008 (BY THE ASSESSEE) BLOCK PERIOD: 1.4.1987 TO 5.9.1997 THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1) TRIVANDRUM. VS. M/S. MALAYIL BANKERS C/O SHRI GEORGE VARGHESE MALAYIL HOUSE AGRA KUSAVARKAL ROAD NALANCHIRA TRIVANDRUM. [PAN: (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 2 REVENUE BY SHRI S.R.SENAPATI SR. DR ASSESSEE BY SHRI T.M.SREEDHARAN SR.ADV.-AR O R D E R PER BENCH: THESE ARE A SET OF APPEALS AND CROSS OBJECTIONS B Y THE ASSESSEE AND THE REVENUE IN RESPECT OF ASSESSMENTS FRAMED IN PURSUA NCE TO SURVEY AND SEARCH ACTION ON THE ASSESSEE UNDER THE INCOME-TAX ACT 1961 ('THE A CT' HEREINAFTER) BY THE REVENUE. AS THE APPEALS RAISE COMMON ISSUES WITH A COMMON SET OF FACTS THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMON CONSOLIDATED ORDER. 2.1 IT WOULD BE RELEVANT TO AT FIRST TO RECOUNT THE BACKGROUND FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE A PARTNERSHIP FIRM IN TH E BUSINESS OF MONEY LENDING FILED ITS RETURN OF INCOME FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR (A.Y.) 1995-96 AND 1996-97 ON 31.10.1995 AND 30.10.1996 RESPECTIVELY A T A LOSS OF ` 6 48 505/- EACH. THE RETURN FOR THE FIRST YEAR (A.Y. 1995-96) WAS SELECT ED FOR BEING SUBJECT TO THE VERIFICATION PROCEDURE UNDER THE ACT BY SERVING NOTICE U/S. 143( 2) ON 21.8.1996. THE ASSESSEE HOWEVER DID NOT COOPERATE IN THE ENSUING ASSESSMEN T PROCEEDINGS SEEKING ADJOURNMENT EACH TIME ON ONE PRETEXT OR THE OTHER. ACCORDINGLY A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT AT ITS BUSINESS PREMISES (I.E. AT HEAD OFFICE AT TRIVANDRUM AND BRANCH OFFICES AT PEROORKADA AND VATTIYOORKAVU) ON 19.12.1 996. VARIOUS DISCREPANCIES AND ANOMALIES IN ITS ACCOUNTING AND BUSINESS PRACTICES WERE FOUND SUGGESTING UNACCOUNTED BUSINESS AND SYSTEMATIC SUPPRESSION OF RECEIPT/INCO ME VIZ:- A) IN THE PLEDGE REGISTER (IN FORM M); THE ASSESSE E LENDING MONEY PRINCIPALLY ON THE SECURITY OF GOLD THE INTEREST CHARGEABLE WAS SHOWN AT 18% PER ANNUM WHILE IT WAS ACTUALLY CHARGING INTEREST AT THE RATE OF 36% P.A. I.E. WAS ACCOUNTING FOR ONLY 50% OF ITS GROSS RECEIPT BY WAY OF INTEREST ON GOLD LOANS IN I TS REGULAR BOOKS OF ACCOUNTS; B) SERVICE CHARGES COLLECTED AT THE RATE OF ` 3 PER ` 1000 OF LOAN WAS NOT BEING ACCOUNTED FOR; DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 3 C) GOLD LOANS FOR AMOUNTS IN EXCESS OF ` 10 000/- WERE RECORDED IN A SEPARATE REGISTER TERMED UGL (UNACCOUNTED GOLD LOAN); D) THE DEPOSIT REGISTER DID NOT RECORD THE CORRECT NAMES OR EVEN THE ADDRESSES OF THE DEPOSITORS; E) INTEREST WAS BEING PAID TO THE DEPOSITORS WITH OUT DEDUCTION OF TAX AT SOURCE AND ONLY A PORTION OF IT WAS ACCOUNTED; F) FDRS IN BENAMI AND BOGUS NAMES WORTH ABOUT ` 30 LAKHS WITH LORD KRISHNA BANK AND CATHOLIC SYRIAN BANK WERE MADE BY THE ASSESSEE WITH ALL THE ACCOUNTS BEING INTRODUCED BY SHRI GEORGE VARGHESE MANAGING PARTNE R. 2.2 A SWORN STATEMENT OF THE GENERAL MANAGER SHRI ALEX KURIAN WAS RECORDED U/S. 131 OF THE ACT WHEREIN HE STATED THAT THE DEPOSIT RECEIPTS ISSUED WERE WITH THE AUDITOR WHO HOWEVER DENIED THE SAME ON BEING SUBSEQUENTLY QUESTIONED THROUGH SUMMONS U/S. 131 OF THE ACT. LOOKING INTO THE STATE OF MAINTENA NCE OF THE RECORDS WHEREBY EVEN THE IDENTIFICATION OF THE DEPOSITORS WAS NOT POSSIBLE AN AUDIT U/S. 142(2A) OF THE ACT WAS DIRECTED BY THE COMMISSIONER OF INCOME-TAX TRIVAND RUM (CIT FOR SHORT). HOWEVER THE ASSESSEE DID NOT EXTEND COOPERATION TO THE SAID AUDITOR AS WELL. FURTHER THE ASSESSEES RETURN FOR A.Y. 1996-97 WAS ALSO SUBJECT TO SCRUTIN Y BY ISSUANCE OF NOTICE U/S. 143(2) ON 14.7.1997. MEANWHILE THE REVENUE ALSO INITIATED SE ARCH AND SEIZURE PROCEEDINGS U/S. 132 OF THE ACT AT THE ASSESSEES BUSINESS PREMISES AS WELL AS RESIDENTIAL PREMISES OF THE PARTNERS ON 19.8.1997 WHICH CARRIED ON UP TO 5.9. 1997 AND WHICH AGAIN YIELDED FURTHER INCRIMINATING MATERIAL BOTH IN ADDITION TO AND IN CORROBORATION OF THE EARLIER INFORMATION AND MATERIALS AND WAS ACCORDINGLY SEIZED BY THE RE VENUE INCLUDING THE GOLD JEWELLERY PLEDGED WITH THE ASSESSEE. THE ASSESSEE HOWEVER C HALLENGED THE SAID ACTION BEFORE THE HONBLE HIGH COURT. THE SAME WAS ADMITTED BY IT TH OUGH NOT STAYED I.E. AFTER AN INITIAL PERIOD EXTENDING UP TO A FEW MONTHS. DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 4 2.3 IMPENDING THE DISPOSAL OF THE PETITION BY TH E HONBLE HIGH COURT THE AO MINDFUL OF THE NEED TO SAFEGUARD THE REVENUES INTEREST AS TH E ASSESSMENTS WOULD OTHERWISE BECOME BARRED BY TIME FRAMED THE ASSESSMENT FOR AYS 1995- 96 AND 1996-97 VIDE ORDERS U/S. 143(3) DATED 5.2.1998 AND 14.1.1999 RESPECTIVELY E FFECTING PRINCIPALLY THREE ADDITIONS. THE FIRST IS IN RESPECT OF DEPOSITS ACCEPTED U/S. 68 OF THE ACT AS UNPROVED. THE SECOND IS TOWARD DISALLOWANCE OF INTEREST CLAIMED ON THE DEPO SITS I.E. AS DEBITED TO THE P&L ACCOUNT. THE THIRD IS TO COVER THE SUPPRESSION OF INTEREST INCOME ON GOLD LOANS. FOR A.Y. 1995-96 TWO FURTHER ADDITIONS WERE MADE FIRST IN RESPECT OF FDRS OF ` 30 LAKHS THOUGH AT ` 2.08 LAKHS ONLY ALLOWING TELESCOPING BENEFIT AGAIN ST THE ADDITION QUA UNEXPLAINED DEPOSITS AND SUPPRESSED INTEREST INCOME ON GOLD LOA NS. TWO FOR THE AMOUNTS REFLECTED IN THE SAVINGS AND RECURRING DEPOSITS ACCOUNTS ADDED IN THE ABSENCE OF ANY DETAILS. 2.4 ASSESSMENT PROCEEDINGS UNDER CHAPTER XIV-B OF THE ACT WERE ALSO INITIATED BY THE ISSUE OF NOTICE U/S. 158BC ON 01.12.1997 FOR TH E BLOCK PERIOD 1.4.1987 TO 5.9.1997 ALLOWING A TIME PERIOD OF 16 DAYS FOR FURNISHING A RETURN OF UNDISCLOSED INCOME IN FORM 2B I.E. UP TO 17.12.1997. HOWEVER NO RETURN WAS FILED BY THE ASSESSEE BY THAT DATE OR EVEN THEREAFTER. AFTER AFFORDING AMPLE OPPORTUNITY TO THE ASSESSEE THE ASSESSMENT WAS COMPLETED DETERMINING THE UNDISCLOSED INCOME FOR T HE BLOCK PERIOD AT ` 1634.47 LAKHS VIDE ORDER DATED 3.3.1999. THIS WAS SUBSEQUENTLY SE T ASIDE BY THE LD. CIT U/S. 263 OF THE ACT VIDE ORDER DATED 8.9.1999 WITH A DIRECTION TO COMPLETE THE SAME AFRESH AFTER OBTAINING FURTHER ORDERS FROM THE HONBLE JURISDICT IONAL HIGH COURT WHICH WAS SEIZED OF THE MATTER; THE ASSESSMENT HAVING BEEN FRAMED OVERL OOKING THE DIRECTIONS BY THE HONBLE COURT. ACCORDINGLY AFTER SECURING PERMISSION FROM THE HONBLE HIGH COURT PER ORDER DATED 11.1.2002 THE ASSESSMENT WAS COMPLETED AFRES H AT ` 1649.55 LAKHS VIDE ORDER U/S. 144 R/W S. 158BC (C) DATED 26.3.2002. 2.5 THE ASSESSEE APPEALED AGAINST BOTH THE REGULAR ASSESSMENTS (FOR AYS 1995-96 AND 1996-97) AS WELL AS THAT FOR THE BLOCK PERIOD BEFO RE THE COMMISSIONER OF INCOME-TAX (APPEALS)-I TRIVANDRUM (CIT(A) FOR SHORT) EVEN AS THE SAME WAS DELAYED BY 3292 DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 5 DAYS AND 1643 DAYS RESPECTIVELY. THE FIRST APPELLATE AUTHORITY AFTER CONDONING THE DELAY ADJUDICATED THE ASSESSEES APPEALS VIDE ORDERS OF E VEN DATE (12.02.2008) AND 27.11.2006 I.E. QUA THE ASSESSMENTS U/S. 143(3) AND FOR THE BLOCK PERI OD RESPECTIVELY. THE REVENUE IS IN APPEAL AGAINST THE ORDERS ADJUDICATING THE RE GULAR ASSESSMENTS WITH THE ASSESSEE PREFERRING CROSS OBJECTIONS (IN I.T.A. NOS. 758 & 7 59/COCH/2008 & C.O. NOS. 96 & 97/COCH/2008). SIMILARLY BOTH ARE ALSO IN APPEAL AGAINST THE ADJUDICATION OF THE BLOCK ASSESSMENT (VIDE IT(SS) A NOS. 05/COCH/2007 AND 20/ COCH/2007) WITH THE ASSESSEE PREFERRING CO AGAINST THE REVENUES APPEAL (PER C.O . NO. 98/COCH/2008). THE LD. CIT(A) REVISED HIS ORDER BY PASSING A `CORRIGENDUM DATED 18.2.2008. THE REVENUE HAS APPEALED THERE-AGAINST WITH THE ASSESSEE MOVING CR OSS OBJECTION (IN IT(SS)A NO. 53/COCH/2008 AND C.O. NO. 99/COCH/2008). 2.6 IN RESPECT OF THE BLOCK ASSESSMENT THE ASSESSEE SUBMITTED A COPY OF THE PRELIMINARY LIST OF CREDITORS (`PLC HEREINAFTER) C ONTAINING FULL DETAILS OF 1064 CREDITORS FOR AN AGGREGATE DEPOSIT OF ` 1125.54 LAKHS ISSUED BY THE FIRST ADDL. SUB COURT AS PART OF THE INSOLVENCY PROCEEDINGS IN THE APPELLATE PROCEE DINGS. THE SAID LIST BEING COMPILED ON THE BASIS OF VERIFIED CLAIMS ACCEPTED AS GENUINE B Y THE COMPETENT CIVIL COURT THE SAME IT WAS URGED COULD NOT BE DISMISSED AS BOGUS. SECOND LY THE DEPARTMENT WAS ITSELF A RESPONDENT IN THE SAID INSOLVENCY PROCEEDINGS. THE SAME FOUND FAVOUR WITH THE LD. CIT(A) AS THE DEPOSITORS ON THE SAID LIST HAD TO B E TAKEN AS GENUINE AND THERE WAS NO REASON TO CONCLUDE OTHERWISE ESPECIALLY WITHOUT AN ENQUIRY. THE ADDITION IN RESPECT OF UNEXPLAINED DEPOSITS WAS THEREFORE DELETED. WITH REGARD TO THE ADDITION QUA SUPPRESSED INTEREST INCOME ON GOLD LOANS THE SAME STOOD DELET ED ON THE BASIS THAT NO EVIDENCE IN THE FORM OF VOUCHERS OR ENTRY IN THE BOOKS OF ACCOUNTS WAS FOUND DURING THE COURSE OF SURVEY EVIDENCING COLLECTION OF UNACCOUNTED INTERE ST ON MONIES LENT. NO COMPARABLE CASE OF CHARGING INTEREST AT THE RATE OF 36% PER AN NUM WAS CITED OR CONFRONTED. IN FACT THERE IS NO SCOPE FOR BEST JUDGMENT ASSESSMENT AFTE R SEIZING ALL THE ORIGINAL RECORDS. NO PRINCIPLE OF ACCOUNTANCY COULD JUSTIFY THE ASSESSME NT OF THE GROSS PROFIT AS INCOME I.E. WITHOUT ALLOWING THE NORMAL BUSINESS EXPENDITURE. H E ACCORDINGLY DIRECTED FOR TREATING DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 6 THE ASSESSEES BOOKS OF ACCOUNT AS SEIZED AS GENUI NE AND COMPUTING THE INCOME ON THAT BASIS. THE LD. CIT(A) HOWEVER FOUND NO MERIT IN THE ASSESSEES IMPUGNING THE BLOCK ASSESSMENT WHICH WAS FRAMED BY ACCORDING IT THE ST ATUS OF AN ASSOCIATION OF PERSONS (AOP); THE AO HAVING PROVED THE EXISTENCE OF MULTIP LE ENTITIES; UNITY OF MANAGEMENT; INTER-LACING AND INTER-LOCKING OF FUNDS ETC. WITH FULL EVIDENCE. THE ASSESSEE COULD NOT EVEN SHOW THAT THE FIRM WAS A REGISTERED FIRM (UNDE R THE PARTNERSHIP LAW). THE ASSESSEES CHALLENGE TO THE LEVY OF INTEREST U/S. 158BFA(1) WA S ALSO DISMISSED IN THE ABSENCE OF ANY PROVISION PROVIDING FOR APPEAL THERE-AGAINST. AGGRI EVED BOTH THE PARTIES ARE IN APPEAL. 2.7 IN RESPECT OF THE APPEALS AGAINST THE REGULA R ASSESSMENTS IT WAS HELD BY THE LD. CIT(A) THAT IT WAS NOT POSSIBLE TO SUSTAIN THE ADDI TIONS MADE THEREIN I.E. REGULAR ASSESSMENTS BEING ALSO THE SUBJECT MATTER OF THE B LOCK ASSESSMENT. THE ADDITION QUA THE DEPOSITS COULD NOT EVEN OTHERWISE HOLD HAVING BEEN DELETED IN THE BLOCK ASSESSMENT BASED ON THE FINDINGS OF THE CIVIL COURT. HE ACCOR DINGLY DELETED ALL THE ADDITIONS/DISALLOWANCES FOR BOTH THE YEARS (I.E. A YS 1995-96 AND 1996-97). AGGRIEVED THE REVENUE IS IN APPEAL WITH THE ASSESSEE MOVING SUPPORTING COS. 3. BEFORE US THE PRINCIPAL ARGUMENTS REVOLVED ARO UND THE MAINTAINABILITY OF THE REVENUES CHALLENGE AGAINST THE DIRECTION BY THE LD . CIT(A) IN GIVING COGNIZANCE TO THE CREDITORS LIST ISSUED BY THE CIVIL COURT IN THE I NSOLVENCY PROCEEDINGS AND OF WHICH PROCEEDINGS THE REVENUE WAS ITSELF A PART HAVING B EEN IMPLEADED AS A RESPONDENT. THE AO WHOSE POWERS IN THE MATTER OF ASSESSMENT ARE PL ENARY HAD EXAMINED AND BROUGHT OUT THE FACTS IN DETAIL IN THE (BLOCK) ASSESSMENT O RDER ALSO CARRYING OUT RANDOM CHECKS IN RESPECT OF 55 MAJOR DEPOSITORS. THE ASSESSEES CASE HAS BEEN FULLY MET AND IT ALLOWED CREDIT WHEREVER THE VERIFICATION YIELDED SATISFACTO RY RESULTS (AT ` 237.66 LAKHS/REFER PG. 33 OF THE BLOCK ASSESSMENT ORDER) . THE REVENUE WAS NOT A PARTY TO THE PROCEEDINGS IN THE SENSE OF BEING AN INTERESTED PARTY; ITS CLAIM AS A `CREDITOR I.E. QUA THE OUTSTANDING DEMAND TOWARD TAX AND INTEREST UNDER THE ACT BEING FIRSTLY NOT SUBJECT TO SCRUTINY OR CONFIRMATION BY A CIVIL COURT AND SECONDLY SECURE D BY LAW. ALSO THE LIST ACCEPTED BY THE DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 7 LD. CIT(A) WAS NOT BEFORE THE AO AND SECONDLY NOT THE FINAL LIST SO THAT THE CREDIT TO THE ASSESSEE COULD NOT BE ALLOWED ON ITS BASIS. THE ASS ESSEE PLEADS FOR ACCEPTANCE OF THE LIST OF CREDITORS AS APPROVED BY THE CIVIL COURT AS THE RE IS NO SCOPE OF DOUBTING THE GENUINENESS THEREOF. BLOCK ASSESSMENT (1.4.1987 TO 5.9.1997) 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. 4.1 WE SHALL TAKE UP THE APPEALS RELATING TO TH E BLOCK ASSESSMENT FIRST. THE REVENUE HAS CHALLENGED THE CONDONATION OF DELAY WHICH IS F OR 1643 DAYS STATING THAT THE REASONS ADVANCED BY THE ASSESSEE FOR THE SAME (CONDONATION) ARE NOT GENUINE. THE REASONS STATED ARE DISRUPTION OF BUSINESS CONSEQUENT TO SEARCH B EING ACCOMPANIED BY SEIZURE OF RECORDS AND SECURITY IN THE FORM OF GOLD; FREEZING OF BANK ACCOUNTS ETC. THIS WAS FOLLOWED BY CIVIL LITIGATION PURSUANT TO COMPLAINTS BY THE DEP OSITORS WHICH LED TO THE APPOINTMENT OF A RECEIVER BY THE COURT. THE MANAGING PARTNER SH. GEORGE VARGHESE WAS ALSO INCAPACITATED ON ACCOUNT OF ILL-HEALTH. WE FIND THA T THE REASONS STATED ARE TOTALLY UNEVIDENCED AND WITHOUT REFERENCE TO THE TIME PERI OD WHICH IS CRITICAL IN VIEW OF THE TIME LAG INVOLVED (4 YEARS). RATHER WE FIND THE ASSESSEE TO HAVE CONTESTED THE SEARCH ACTION U/S. 132 BEFORE THE HONBLE HIGH COURT CHAL LENGING ITS VALIDITY ALLEGING IT TO BE MALA FIDE AND EVEN OBTAINING STAY (OF THE ASSESSMENT PROCEE DINGS) SO THAT IT WAS VERY ACTIVE AT THE RELEVANT TIME. NO DOUBT THE ASSESSEE WAS AND UNDERSTANDABLY DELUGED WITH PROBLEMS WHICH HAPPENS IN MOST SEARCH CASES BUT T HAT WOULD NOT BY ITSELF EXPLAIN THE DELAY WHICH IS ENORMOUS. THE DELAY THUS CANNOT B E SAID TO BE FULLY EXPLAINED. SO HOWEVER IT CANNOT BE DENIED THAT THE CIVIL LITIGATION FOLLOWING THE SEARCH PROCEEDINGS HAS A MATERIAL IMPACT ON THE ASSESSMENT PARTICULARLY QUA THE DEPOSIT AMOUNT WHICH COMPRISES A SUBSTANTIAL COMPONENT OF THE ASSE SSED INCOME. THE SAME (LITIGATION) AS IT APPEARS CONTINUED EVEN WHILE ITS APPEAL AFT ER DELAYED INSTITUTION WAS PENDING BEFORE THE FIRST APPELLATE AUTHORITY AND IN FACT OUTSTANDS EVEN AT THE TIME OF CONCLUSION THEREOF. AS SUCH THE DEVELOPMENTS SUBSEQUENT TO TH E ASSESSMENT HAVE A SIGNIFICANT BEARING ON THE FACTUAL DETERMINATION OF THE ISSUES ARISING IN AND THE SUBJECT MATTER OF DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 8 ASSESSMENT. NOT CONDONING THE DELAY HOWSOEVER DELI NQUENT THE ASSESSEES CONDUCT IN THE PROCEEDINGS UNDER THE ACT MAY HAVE BEEN WOULD IMPL Y NOT TAKING COGNIZANCE OF THE SAME AND CONSEQUENTLY DENIAL OF JUSTICE. THAT IS THE MATERIALS ON RECORD UP TO THE ASSESSMENT STAGE BEING NOT SUFFICIENT FOR PROPER DE TERMINATION OF THE FACTS THE IMPERATIVE OF JUSTICE DEMANDS COGNIZANCE OF EVENTS SUBSEQUENT THERE-TO AND WHICH IS POSSIBLE ONLY IF THE DELAY IN MOVING THE FIRST APPELLATE AUTHORIT Y BY THE ASSESSEE IS CONDONED SEEKING A REVIEW THROUGH THE APPELLATE PROCEDURE. WE ACCORDI NGLY UPHOLD THE CONDONATION OF THE IMPUGNED DELAY BY THE LD. CIT(A). 4.2 THE APPEAL HAVING BEEN RIGHTLY ADMITTED BY TH E LD. CIT(A) THE FIRST ISSUE AGITATED BY THE ASSESSEE IN SECOND APPEAL RELATES TO THE ASS ESSEE BEING ASSESSED IN THE STATUS OF AN AOP. THE LD. CIT(A) FOUND THE AO TO HAVE PROVED WI TH FULL EVIDENCE THE EXISTENCE OF AN AOP ON THE RELEVANT FACTUAL PARAMETERS VIZ. UNITY OF MANAGEMENT; INTER-LOCKING AND INTER-LACING OF FUNDS; NON-AWARENESS OF THE EXISTEN CE OF SEPARATE FIRMS AMONG THE CLIENTS AND EVEN THE STAFF ETC. THE ASSESSEE WE OBSERVE DOES NOT DISPUTE THE SAME BUT STATES THAT IT HAVING BEEN ASSESSED AS A `FIRM IN REGULAR ASSESSMENT/S IT WAS NOT OPEN FOR THE REVENUE TO ASSESS IT IN A DIFFERENT STATUS IN THE B LOCK ASSESSMENT. THAT IS WHILE THE REVENUES STAND IS PRINCIPALLY FACTUAL THE ASSESSE E HAS RAISED A LEGAL OBJECTION. WE FIND THE ASSESSEE TO HAVE NO BASIS EITHER ON FACTS OR EV EN LEGALLY. ON FACTS THE MATTER STANDS DEALT WITH BY THE AO PER PARAS 10 TO 24 (PGS. 4 TO 12) OF HIS ORDER ISSUING WITH REFERENCE TO THE MATERIAL AND EVIDENCE/S FOUND IN OR AS A RES ULT OF SEARCH FINDINGS QUA THE FOLLOWING HAVING A BEARING IN THE MATTER VIZ. - THE EXISTENCE OF MULTIPLE ENTITIES; - UNITY OF CONTROL; - INTENDMENT OF PARTNERSHIP; - INTER-LOCKING AND INTER-LACING OF FUNDS; - PHYSICAL SURROUNDINGS IN WHICH THE ENTITIES FUNC TION; - RECORDING OF TRANSACTIONS; AND - NON AWARENESS AMONG EMPLOYEES DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 9 THUS SATISFYING THE TESTS LAID DOWN BY THE APEX C OURT IN THE CASE OF PRITHVI INSURANCE CO. VS. CIT 63 ITR 632 (SC). THE ASSESSEE ON ITS PART HAS N OWHERE REFUTED THE SAME WHICH IS WELL-FOUNDED AND EVIDENCED BY SUPPORTING MATERIA L (INCLUDING DOCUMENTS AND SWORN STATEMENTS BY THE KEY PERSONNEL) WHICH IS IN FACT ENORMOUS AND COMPELLING. THE ACCEPTANCE OF DEPOSITS HAS ALL THROUGH BEEN ADMIT TED TO BE ACCEPTED BY THE (COMMON) HEAD OFFICE. IN FACT THE LIST OF 1064 CREDITORS SU BMITTED BY THE ASSESSEE ITSELF IS WITHOUT REFERENCE TO THE DIFFERENT FIRMS (EIGHT) ASSUMED I .E. WHERE-UNDER THE BUSINESS IN THE COMMON NAME OF `MALAYIL BANKERS WAS BEING UNDERTAK EN AND WHICH (MULTIPLE ENTITIES) AS STATED IN THE ASSESSMENT ORDER IS FOR THE REASO N OF CIRCUMVENTION OF CERTAIN REGULATIONS. IN FACT UNDER SUCH IMPUGNING FACTS AND CIRCUMSTANC ES EVEN IF THE FIRMS WERE FOUND TO BE `EVIDENCED BY SEPARATE PARTNERSHIP DEEDS (WHICH WE RE NOT FILED FOR FOUR ENTITIES CONSTITUTED WITH EFFECT FROM 1.4.1996) DULY REGIST ERED THE SAME WOULD BE OF NO MOMENT. QUA THE LEGAL BASIS THE AO ADVANCES THE INCIDENTS OF NON-FURNISHING OF THE REVISED INSTRUMENT OF PARTNERSHIP FOR THE FIRST FOUR ENTITI ES; THE CERTIFIED COPIES OF THE PARTNERSHIP DEEDS FOR THE OTHER FOUR; AND THE NON-COMPLIANCE OF NOTICE U/S. 142(1) AS THE REASONS SO THAT THE PROVISIONS OF S. 184(4)/(5) WOULD APPLY. THE LD. CIT(A) HAS WE FIND TAKEN NOTE OF THE SAME IN-AS-MUCH AS HE OBSERVES THAT THE EVID ENCES CALLED FOR BY THE AO WERE NOT PRODUCED. THE FACTS ARE NOT DISPUTED AND THE LAW I S WELL-SETTLED. ACCORDINGLY WE FIND NO INFIRMITY IN THE REVENUE ASSESSING THE ASSESSEE IN THE STATUS OF AN AOP TREATING THE EIGHT FIRMS AS A SINGLE TAXABLE ENTITY. THE ASSESSEES OB JECTION THAT THIS IS NOT PERMISSIBLE IN VIEW OF IT BEING ASSESSED AS A FIRM IN THE REGULAR ASSESSMENTS OVERLOOKS THE FACT THAT THESE ARE INDEPENDENT PROCEEDINGS AND WHAT IS RELE VANT IS THE VALIDITY OF THE FINDING/S ARRIVED AT THEREIN. THE FACT OF THE REGULAR ASSESSM ENT BEING AS A `FIRM COULD BE A RELEVANT CIRCUMSTANCE BUT NOT AN INHIBITING ONE. WE DECIDE ACCORDINGLY. GROUND NOS. 2 & 3 OF THE ASSESSEES APPEAL (IN IT(SS) A NO. 5/COCH/2007) ; THE FIRST BEING GENERAL IN NATURE WARRANTING NO ADJUDICATION ARE THEREFORE DISMISS ED. DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 10 4.3 GROUND NOS. 5 TO 7 RELATE TO ADDITION QUA DEPOSITS. THE ASSESSEE CLAIMS THAT APART FROM THE PRELIMINARY LIST OF CREDITORS (PLC) ISSUED BY THE INSOLVENCY COURT (FIRST ADDITIONAL SUB COURT) ON 30.8.2006 FOR A TOTAL AMO UNT OF ` 1125.54 LAKHS THERE ARE 7 MORE DEPOSITORS FOR A TOTAL OF ` 7.55 LAKHS NOT INCLUDED IN THE SAID LIST (AS NO. 6 0/2003). IN FACT SUBSEQUENT TO THE APPELLATE ORDER (DATED 2 7.11.2006) THE ASSESSEE FILED A REVISION PETITION BEFORE THE FIRST APPELLATE AUTHORITY STAT ING THAT THOUGH THE AO HAD IN THE APPEAL- EFFECT GIVING ORDER (DATED 31.12.2007) ALLOWED CRE DIT QUA THE PLC I.E. AT ` 1125.54 LAKHS HE HAS NOT ALLOWED ANY CREDIT QUA THE SUBSEQUENT LIST/S APPROVED BY THE SAID COURT. THE LD. CIT(A) WAS ACCORDINGLY PRAYED FOR ISSUING A `CLARIFICATION. VIDE HIS ORDER DATED 18.2.2008 THE LD. CIT(A) FURTHER DIRECTED THE AO TO ALLOW CREDIT IN RESPECT OF THE LIST/S OF CREDITORS AS AND WHEN APPROVED BY THE CIVIL COU RT IN THE INSOLVENCY PROCEEDINGS. AGGRIEVED THE REVENUE IS IN APPEAL CONTENDING THA T IF SO THE AO SHALL HAVE TO MODIFY THE ASSESSMENT ORDER EACH TIME THE COURT APPROVES A LIST OF CREDITORS. CONSEQUENTLY IT IMPUGNS THE SAID DIRECTION AS BEING IN EXCESS OF TH E SCOPE OF THE POWER WITH THE FIRST APPELLATE AUTHORITY U/S. 251(1)(A) OF THE ACT SO T HAT THE SAME IS NOT VALID (IN IT(SS) NO. 53/COCH/2008). THE GROUNDS BEING INTER-CONNECTED W E SHALL TAKE UP THE SAME TOGETHER. 4.4.1 WE PROCEED BY REPRODUCING THE FINAL DIRECTION BY THE LD. CIT(A) PER HIS ORDER DATED 27.11.2006 WHICH READS AS UNDER (PG.4):- I THEREFORE HOLD THAT THE LIST OF DEPOSITORS APPR OVED BY THE CIVIL COURT HAS TO BE TAKEN AS GENUINE AND THERE IS NO REASON TO CONCLUDE OTHER WISE ESPECIALLY WITHOUT ANY ENQUIRY. THE ADDITION OF THE DEPOSITS AS UNEXPLAINED CASH CR EDITS IS NOT CORRECT AS IT IS MADE WITHOUT ANY ENQUIRY AND IS DELETED. THE SAME THOUGH WITHOUT REFERENCE TO ANY SPECIFIC SUM WHEN READ HOLISTICALLY ALONG WITH THE ASSESSEES CASE BEFORE HIM MADE OUT WITH REFERENCE TO THE PLC (DISCUSSED AT PGS. 3 AND 4 OF THE APPELLATE ORDER) IS ONLY IN RELATION THERE-TO. ACCORDINGLY THE AO WAS JUSTIFIED IN RESTRICTING THE CREDIT IN RESPECT OF ADDITION QUA DEPOSITS AT ` 1125.54 LAKHS IN THE APPEAL-EFFECT GIVING ORDER DATED 31.12.2007. THAT BEING THE CASE THE LD. CIT(A) MODIFYING HIS ORDER BY DIRECTING THE AO TO ALLOW CR EDIT QUA LIST/S THAT MAY BE APPROVED DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 11 BY THE COURT SUBSEQUENT TO HIS ORDER OR IN FUTURE IS A REVISION OF HIS ORDER NOT PERMISSIBLE IN LAW. THE REVENUES OBJECTION QUA REVISION OF HIS ORDER BY THE LD. CIT(A) IS VALID A ND UPHELD. 4.4.2 COMING TO THE REVENUES OBJECTION IN RELA TION TO THE DELETION OF ADDITION U/S. 68 AT ` 1125.54 LAKHS I.E. AS PER THE PLC WE ALSO FIND T HE SAME AS MAINTAINABLE IN LAW. AS SOUGHT TO BE EMPHASIZED BY THE LD. DR DURING HEARIN G THE PROCEEDINGS UNDER THE ACT WHICH IS A SEPARATE CODE IN ITSELF ARE INDEPENDENT SO THAT THE FINDINGS BY THE AO U/S. 68 CANNOT BE SUPERSEDED BY THAT BY THE INSOLVENCY COUR T. THAT IS THE TWO ARE INDEPENDENT PROCEEDINGS DIFFERENT IN THEIR SCOPE AND PURVIEW AND NEITHER SITS IN JUDGMENT OVER THE OTHER. PER SEC. 68 THE LAW CASTS A BURDEN ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF ANY CREDIT APPEARING IN ITS BOOKS OF ACCOUNT TO THE SATISFACTION OF THE AO FAILING WHICH THE AO CAN REGARD IT AS THE ASSESSEES INCOME FOR THE RELEVANT YEAR. THE SAME AS EXPLAINED BY THE HIGHER COURTS OF LAW HAS TO BE ME T BY THE ASSESSEE ON THE PARAMETERS OF IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND THIRDLY THE GENUINENESS OF THE CREDIT TRANSACTION AND WHICH AS APPARENT FROM THE DETAIL ED FINDINGS BY THE AO RECORDED AT PARAS 25 TO 42 (PGS. 12 TO 21) OF THE BLOCK ASSESSM ENT ORDER THE ASSESSEE HAS ABYSMALLY FAILED TO. EVEN AS MUCH AS THE IDENTITY OF THE CR EDITORS COULD NOT BE ESTABLISHED WITH THE REVENUE ON THE OTHER HAND ESTABLISHING THAT THE B OOKS OF ACCOUNTS DID NOT REFLECT THE ACTUAL STATE OF AFFAIRS; THERE BEING RATHER AN ADMI SSION (BY THE GENERAL MANAGER SHRI ALEX KURIAN AND THE MANAGING PARTNER SHRI GEORGE V ARGHESE) THAT ALL THE NAMES (OF DEPOSITORS) AS ENTERED ARE NOT REAL AND THAT WHENE VER THERE WAS A SHORTAGE OF FUNDS DEPOSITS IN THE NAMES OF THE PARTNERS OR OTHER BOGU S NAMES WERE ENTERED. IN FACT THE ASSESSEE HAVING ADMITTEDLY DESTROYED ITS COPY OF FD R (DEPOSITS RECEIVED) AND THE ORIGINAL DEPOSIT FORMS BEARING THE SIGNATURE OF TH E DEPOSITORS WHICH ONLY COULD PROVE THE AUTHENTICITY OF THE CLAIM FOR DEPOSITS PARTICU LARLY CONSIDERING THAT THE ASSESSEES BOOKS OF ACCOUNT ARE NOT RELIABLE BEING IN THE CUS TODY OF THE DEPARTMENT ON WHAT BASIS DID THE DEPOSITORS PROVED THEIR DEPOSITS BEFORE THE CIVIL COURT WOULD ITSELF BE VERY RELEVANT AND PERTINENT. HOW ARE THESE SPECIFIC FIN DINGS BASED ON THE MATERIALS FOUND AND DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 12 GATHERED DURING AND AS A RESULT OF SEARCH WHICH HA VE EVEN NOT BEEN CHALLENGED BY THE ASSESSEE STAND SCUTTLED NAY NEGATED ON THE PRODU CTION OF THE PLC ISSUED BY THE CIVIL COURT? THE SAME EVEN AS OBSERVED BY US WHILE DISCUSSING T HE REVENUES CASE QUA THE CONDONATION OF DELAY BY THE FIRST APPELLATE AUTHORI TY IS WITHOUT DOUBT RELEVANT; THE COURT HAVING AS WE OBSERVE ALSO APPOINTED A RECEIVER . AS SUCH THE ONLY NECESSARY IMPLICATION OF THE PRODUCTION OF SUCH A LIST ISSUED BY THE INSOLVENCY COURT ON 30.8.2006 BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY WOULD BE ITS ADMISSION IN (ADDITIONAL) EVIDENCE REQUIRING THE AO TO EXAMINE THE ASSESSEE CASE IN LIGHT THEREOF MAKING SUCH FURTHER ENQUIRIES AND/OR VERIFICATION AS HE DEEMS F IT AND DECIDE ACCORDINGLY . IT IS NOT IT MAY BE CLARIFIED A QUESTION OF CONSIDERING THE LIS T OF CREDITORS APPROVED BY THE CIVIL COURT AS NOT GENUINE; WE HAVING ALREADY OBSERVED THAT NEI THER SITS IN JUDGMENT OVER THE OTHER BUT OF THE SATISFACTION OF THE AO GIVEN THE MANDAT E OF S. 68 AND WHICH COULD ONLY BE ON THE BASIS OF MATERIALS BEFORE HIM. WHY COULD NOT W E WONDER THE EVIDENCE ADDUCED BEFORE THE CIVIL COURT IN THE INSOLVENCY PROCEEDING S BE PRODUCED BEFORE THE AO; THE SAME BEING ALSO ONLY TOWARD PROVING THE DEPOSITS. THERE IS NO SCOPE FOR THE SUBSTITUTI ON OF THE SATISFACTION OF THE AO WHOSE POWERS IN THE MATTER OF ASSESSMENT ARE PLENARY WIT H THAT OF ANY OTHER AUTHORITY. IN FACT THIS IS MORE SO AS THERE IS ALSO A DIFFERENCE IN TH E SCOPE OF THE TWO PROCEEDINGS. TAKE FOR EXAMPLE THE CASE OF A BENAMI CREDITOR; THE MATERIA LS FOUND DURING SEARCH AS WELL AS IN THE POST-SEARCH PROCEEDINGS LEADING TO THE FINDING OF THE ASSESSEE BEING IN POSSESSION OF UNACCOUNTED FUNDS AND ITS RECORDS NOT REVEALING TH E (TRUE OR REAL) IDENTITY OF THE DEPOSITORS. A PETITION BY SUCH A CREDITOR WOULD FIN D ACCEPTANCE BY THE INSOLVENCY COURT WHICH IS NOT CONCERNED IF THE CREDITOR IS A PERSON OF MEANS WHO COULD HAVE IN FACT DEPOSITED THE AMOUNT. THE FINDINGS BY THE AO AT PA RA 42 OF HIS ORDER ARE ALSO VERY RELEVANT IN THIS REGARD. ONLY THREE OF THE SEVEN DEPOSITORS FILING THE O.P. BEFORE THE HONBLE HIGH COURT WERE ON ENQUIRY BY HIM FOUND TO BE GENUINE . IN OTHER WORDS THE FINDINGS BY THE CIVIL COURT THOUGH RELEVANT CANNO T BE CONCLUSIVE OF THE ISSUE OF THE APPLICABILITY OR OTHERWISE OF S. 68 IN A PARTICULAR CASE AND CANNOT BE IN ABROGATION OR DEROGATION OF THE POWER AS WELL AS THE DUTY OF THE AO TO BE SATISFIED IN THE MATTER . DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 13 4.4.3 THE SAID LIST (PLC) WOULD THUS BY I TSELF NOT NEGATE OR SUSPEND THE FICTION OF S. 68 EVEN AS THE AO OUGHT TO IN ARRIVING AT HIS SATISFACTION CONSIDER ALL THE RELEVANT ASPECTS. IN FACT HE; THE ASSESSEE HAVING FURNISH ED TWO LISTS OF 391 CREDITORS AND ONLY RIGHTLY SO DULY CONSIDERED THE SAME RECORDING HIS FINDINGS AT PARA 42 OF THE ASSESSMENT ORDER AND WHICH HAVE NEITHER BEEN ASSAILED OR MET BY THE ASSESSEE NOR SURPRISINGLY TAKEN COGNIZANCE OF BY THE LD. CIT(A). FURTHER TH ERE IS NO REFERENCE TO THE LIST (PLC) VIS--VIS THE ASSESSEES ACCOUNTS SO AS TO MAKE OU T A PRIMA FACIE CASE NOR STANDS FURNISHED BEFORE THE TRIBUNAL SO AS TO FORM A PART OF ITS RECORD EVEN AS ADMITTEDLY THE SAME WAS NEVER FURNISHED BEFORE NOR EXAMINED BY THE AO. UNDER THE GIVEN FACTS AND CIRCUMSTANCES WE THEREFORE ONLY CONSIDER IT FIT AND PROPER TO VACATING THE FINDINGS OF THE LD. CIT(A) RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR CONSIDERATION OF THE ADDITIONAL EVIDENCE ADMITTED B Y THE FIRST APPELLATE AUTHORITY AND ADJUDICATE PER A SPEAKING ORDER AFTER HEARING THE ASSESSEE IN THE MATTER. TOWARD THIS WE MAY ENLIST OUR OBSERVATIONS DEEMED RELEVANT AND W HICH THE AO IS REQUIRED TO TAKE NOTE OF IN HIS ADJUDICATION AS UNDER: A). THE PLC CREDIT FOR WHICH STANDS DIRECTED BY THE LD. CIT(A) IS IN THE INSOLVENCY PROCEEDINGS I.E. FOR THE CREDIT OUTSTANDING IRRE SPECTIVE OF WHETHER THE SAME RELATES TO THE BLOCK PERIOD OR NOT OR WHETHER IT HAS IN FACT BEEN CONSIDERED UNEXPLAINED AND ADDED IN THE BLOCK ASSESSMENT. THE CREDIT IN ITS RESPECT ME RITS APART WOULD BE REQUIRED TO BE VETTED FOR THE SAME AND SUBJECT TO THE RELEVANT CR EDIT HAVING BEEN IN FACT ADDED IN THE BLOCK ASSESSMENT. B). FURTHER IN THIS REGARD WE OBSERVE THAT THE AO HAS ALREADY ALLOWED A CREDIT IN RESPECT OF 41 CREDITORS (AT ` 7671100/-) OUT OF THE LIST/S OF 391 CREDITORS ADDUC ED BY THE ASSESSEE. THEREFORE TO THE EXTENT THE LIST OF 106 4 CREDITORS INCLUDES THE NAMES OF 391 CREDITORS SUBMITTED EARLIER WHICH APPEARS TO BE TH E CASE ALLOWING THE ASSESSEE FULL CREDIT FOR THE TOTAL AMOUNT THEREOF ( ` 1125.54 LAKHS) WOULD AMOUNT TO DUPLICATION AND DOUB LE CREDIT (FOR A MAXIMUM OF ` 76.71 LAKHS). THAT IS THE AO SHALL ENSURE THAT TH ERE IS NO DUPLICATION WHILE ALLOWING ANY RELIEF ON THE BASIS OF ANY LIST APPROVED BY THE CIVIL COURT. C). THIRDLY THE ASSESSEE HAS BEEN FOUND TO BE NOT RECORDING THE DEPOSITS OR EVEN THE DEPOSITS RECORDED AT THE FULL AMOUNT; PLACING A MAR K XX AGAINST THE AMOUNTS TO DENOTE DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 14 THAT THE AMOUNT ACTUALLY RECEIVED IS TEN TIMES THE AMOUNT SHOWN TO BE DEPOSITED. EVIDENTLY THE DEPOSITOR WOULD MAKE THE CLAIM FOR T HE ACTUAL AMOUNT ONLY I.E. AT TEN TIMES HIGHER. UNLESS THE AO HAS ADDED THE ACTUAL AM OUNT OF DEPOSIT U/S. 68 WHICH DOES NOT APPEAR TO BE THE CASE; SEC. 68 BEING BASED ON T HE AMOUNT AS ACTUALLY CREDITED IN THE BOOKS OF ACCOUNT THE CREDIT QUA SUCH DEPOSITS COULD BE ALLOWED ONLY FOR THE AMOUNT RECORDED AND ACTUALLY ADDED U/S. 68 I.E. AT 1/10 TH THEREOF. FURTHER IN THIS REGARD WE FIND THAT THE AO HAS ALSO OBSERVED BOGUS CREDITS. IT CO ULD BE THUS THAT WHILE THE AMOUNT OF DEPOSIT IN THE DEPOSITORS NAME IS AT 1/10 TH THE ACTUAL AMOUNT THE BALANCE 9/10 TH IS REFLECTED IN ASSUMED NAMES. AS SUCH THE AO MAY EXA MINE THIS ASPECT AS WELL EVEN AS THE ONUS TO PROVE THAT THE BOGUS DEPOSITS RELATE TO A PARTICULAR DEPOSIT IS SQUARELY ON THE ASSESSEE. D). FINALLY THE LIST (PLC) IS ADMITTEDLY A PRELIMI NARY LIST. HOW COULD IT MAY BE ASKED THE SAME BE CONSIDERED AS FINAL AND CONSEQUENTLY BEARING THE SEAL OF APPROVAL OF THE CIVIL COURT. IN THIS REGARD WE FIND IT VERY QUEER THAT THE LIST IS NOT FINALISED EVEN AS LATE AS JANUARY 2008 EVEN AS THE TWO LISTS (FOR 391 CREDI TORS) WERE FURNISHED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS IN FEBRUARY 2002 . SURELY THE PROCESS CANNOT BE OPEN-ENDED. ALSO NO SUCH LIST HAS BEEN PLACED ON R ECORD. THE PROCEDURE BEFORE THE INSOLVENCY COURT WOULD CONTAIN ONLY TIME BOUND PROC ESSES. AS SUCH AS WELL AS IN THE INTEREST OF JUSTICE EVEN THOUGH WE HAVE HELD THE R EVISION OF HIS ORDER BY THE LD. CIT(A) AS INVALID AND DIRECTED THE AO TO CONSIDER ONLY THE E VIDENCE FURNISHED BEFORE HIM IN THE APPELLATE PROCEEDINGS WE IN MODIFICATION THEREOF REQUIRE THE AO TO CONSIDER ONLY THE FINAL LIST AS APPROVED BY THE CIVIL COURT . 5. THIS DISPOSES OF THE FOLLOWING APPEALS AND COS AS UNDER:- (1) IT(SS)A NO. 05/COCH/2007 : PARTLY ALLOWED FOR STATISTICAL PURPOSES (2) IT(SS)A NO. 53/COCH/2008 : ALLOWED (3) C.O. NO. 99/COCH/2008 : DISMISSED 6. THE ONLY SURVIVING ISSUE IN THE BLOCK ASSESSMENT IS PER THE REVENUES APPEAL IN IT(SS)A NO. 20/COCH/2007 AND THE CORRESPONDING C.O. BY THE ASSESSEE. THE SAME IS IN RESPECT OF THE DIRECTION BY THE LD. CIT(A) TO REGAR D THE ASSESSEES BOOKS OF ACCOUNTS AS FOUND AND SEIZED DURING THE SEARCH AS GENUINE AND ALLOW THE ASSESSEES CLAIM/S (REFER PARA 3 PAGE 7). DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 15 6.1 WITH REGARD TO THE ADDITIONS AND THE DISALLOWAN CES MADE WE OBSERVE AS UNDER:- - INTEREST ON GOLD LOAN; AND - DISALLOWANCE OF DEPOSIT ON INTEREST. 6.2 THE INTEREST ON GOLD LOAN HAS BEEN WORKED OUT A T THE RATE OF 18% PER ANNUM. THE LD. CIT(A) HAS DELETED THE SAID ADDITION/DISALLOWAN CE ON THE BASIS THAT NO BUSINESSMAN WOULD MAINTAIN BOOKS OF ACCOUNTS SO AS TO MISLEAD T HE REVENUE. THIS IS PARTICULARLY SO AS THE MANIPULATION AS ALLEGED INVOLVED BOOKS MAINTA INED AT THE FRONT OFFICE AND THUS INVOLVED TAKING INTO CONFIDENCE THE ENTIRE STAFF. F URTHER THERE WAS NO QUESTION OF ASSESSMENT OF THE GROSS PROFIT WITHOUT ALLOWING THE NORMAL BUSINESS EXPENDITURE. AGGRIEVED THE REVENUE IS IN APPEAL WITH THE ASSES SEE MOVING A SUPPORTING C.O. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. 7.1 WITH REGARD TO THE ADDITION QUA INTEREST ON GOLD LOANS THE FACT THAT THE ASSESSEE ACCOUNTS FOR THE INTEREST INCOME ON GOLD LOANS AT T HE RATE OF ONLY 50% I.E. AT THE RATE OF 18% PER ANNUM AS AGAINST THE ACTUAL CHARGE AT THE RATE OF 36% PER ANNUM (AS WELL AS NON-ACCOUNTING FOR PROCESSING FEE CHARGED AT THE RA TE OF ` 3 PER ` 1000 WAS IN FACT FOUND DURING THE COURSE OF SURVEY (ON 19.12.1996) PRECEDI NG THE SEARCH ITSELF. THE REGULAR ASSESSMENT ORDERS (FOR AYS 1995-96 AND 1996-97) EVE N BEAR OUT THE MODUS OPERANDI IN ITS RESPECT; THE CASHIER SITTING AT THE COUNTER WRI TING THE ACCOUNTED AND UNACCOUNTED PORTIONS OF THE INTEREST ON A PIECE OF PAPER WHICH WAS IMPOUNDED RECORDING THE INTEREST AT THE RATE OF 18% PER ANNUM ONLY IN THE DAILY STAT EMENT (ANNEXURE 3 4 & 5 TO THE BLOCK ASSESSMENT ORDER). THAT THE ASSESSEE HAS ACCOUNTED FOR INTEREST AT THE RATE OF 18% PER ANNUM IN ITS REGULAR BOOKS OF ACCOUNTS IS SUFFICIEN TLY EVIDENCED AND RATHER NOT DENIED AND TOWARD WHICH THE AO HAS APPENDED AN EXTRACT OF THE PLEDGE REGISTER (FORM M) AS ANNEXURE 4A TO HIS ORDER. IN FACT THESE FINDINGS W ERE PRACTICALLY ESTABLISHED BY THE DEPARTMENT THROUGH A DECOY BY EXTENDING A SMALL LO AN THRO ITS INSPECTOR (ATTACHED TO THE INVESTIGATION WING) WHICH WAS RETURNED BACK AFTER A FEW DAYS CLOSING THE TRANSACTION DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 16 PRIOR TO THE SURVEY. EVEN THE ASSESSEE DOES NOT DE NY THE SAME THOUGH EXPLAINS THE SAME BY STATING THAT IT TAKES A MINIMUM INTEREST FOR ONE MONTH FOR PETTY LOANS. IF SO THE INTEREST CHARGED WOULD STAND RECONCILED WHEN THE SAME IS WOR KED OUT BY RECKONING THE INTEREST AT THE RATE OF 18% PER ANNUM FOR ONE MONTH. IN FACT THE EXPLANATION WOULD ALSO BE BORNE OUT BY ITS BOOKS OF ACCOUNT ITSELF BY EXHIBITING T HE CHARGE OF INTEREST FOR A PERIOD OF ONE MONTH WHERE THE LOAN IS FOR A LESSER TIME PERIOD. N O SUCH RECONCILIATION AND/OR EXPLANATION HAS BEEN MADE OR EVEN ATTEMPTED BY THE ASSESSEE. THE SAID EXPLANATION IS THUS OF NO CONSEQUENCE AND NO MORE THAN A SPECIOU S PLEA I.E. IN THE FACE OF DIRECT AND IMPUGNING EVIDENCE WHICH RATHER DISPROVES ITS CASE . FURTHER ON THE SEARCH ITSELF YIELDED A PLETHORA OF EVIDENCE CONFIRMING THE EARLIER OBSERVATIONS; THE AO DISCUSSING THE SAME AT LENGTH PER PARAS 43 TO 48 (PGS. 21 TO 26) OF HIS ORDER. SHRI T.G.ALEXANDER BRANCH MANAGER (PEE ROORKADA) VIDE HIS SWORN STATEMENT DATED 19.8.1999 DURING SEARCH PROCEEDINGS ADMITTED TO CHARGE OF INTEREST AT THE RATE OF 36% PER ANNUM EVEN AS IT WAS ACCOUNTED FOR IN THE BOOKS ONLY AT THE RATE OF 18% PER ANNUM BESIDES COLLECTING SERVICE CHARGERS AT THE R ATE OF ` 3 PER ` 1000 (OF LOAN). IN FACT THE INTEREST BEING CHARGED PRIOR TO 1992 WAS BY COM POUNDING THE INTEREST ON QUARTERLY BASIS. THE EXCESS CASH IN HAND FOUND IN SURVEY WAS ALSO ADMITTED TO BY HIM AS BEING UNACCOUNTED INTEREST FOR THE DAY I.E. 19.12.1996 WHEREAT AGAIN HE HAD ADMITTED TO EXCESS CHARGE OF INTEREST. THE SAID STATEMENT AS WELL AS OF THE BRANCH CASHIER AND SHRI A. JOHN ANOTHER BRANCH MANAGER (VATTIYOORKAVU) WER E CONFRONTED TO SHRI T.G. ALEXANDER ONE OF THE THREE PERSONS MANAGING THE AF FAIRS TO THE FIRM (ENTITY) AND WHO CONFIRMED THE SAME. SHRI ALEX KURIAN GENERAL MANA GER ALSO CONFIRMED THE SAME PER HIS STATEMENT U/S. 132(4) ON BEING CONFRONTED WITH THE SEIZED MATERIAL (S-30) FURTHER CLARIFYING THAT THE INTEREST WAS CHARGED BY COMPOUN DING IT ON A HALF YEARLY BASIS. THE MODUS OPERANDI FOLLOWED AS THE PRACTICE WAS BEING FOLLOWED ACROS S DIFFERENT BRANCHES I.E. BESIDES THE HEAD OFFICE SO THAT IT WOULD HAV E ACCOUNTING AS WELL AS CUSTODIAL ASPECTS WAS CLARIFIED THROUGH THE STATEMENT OF THE ACCOUNTANT AT THE HEAD OFFICE. WHILE THE INTEREST ACCOUNTED (18% PER ANNUM) WAS KEPT AT THE BRANCH THE EXCESS (UNACCOUNTED) WAS TRANSMITTED TO THE HEAD OFFICE ON A PERIODIC BA SIS ENTERING IT SEPARATELY IN A DAILY DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 17 SHEET (MALAYIL) WHICH WAS FORWARDED TO THE HEAD OF FICE WITH THE CONCERNED (DULY NAMED) STAFF MEMBER. THE CASH WAS BEING TRANSMITTE D PERIODICALLY I.E. AS AND WHEN SOMEBODY CAME FROM THE HEAD OFFICE. THE SEIZED MATE RIAL FROM THE RESIDENCE OF SHRI T.G.ALEXANDER (PND(I) (2) AT PGS. 22 TO 25) ON BEIN G CONFRONTED TO HIM WHICH SHOWED CHARGE OF INTEREST ON THE LOANS TAKEN BY HIS FRIEND S ALSO REVEALED IT TO BE AT THE RATE OF 36% PER ANNUM CONFIRMING THE SAID TRANSACTIONS. I N FACT GOLD LOANS FOR HIGHER AMOUNTS I.E. IN EXCESS OF ` 10 000/- WERE BEING REFLECTED SEPARATELY I.E. TH ERE WAS SUPPRESSION OF THE PRINCIPAL AMOUNT OF MONIES LENT AS WELL. THERE IS MENTION OF OTHER CORROBORATIVE EVIDENCES AS WELL. AS AGAINST ALL THESE UNREBUTTED AND UNCONTROVERTED MATERIALS/EVIDENCES IS THE STATEMENT OF SHRI GEORGE VARGHESE OF CHARGING OF I NTEREST AT THE RATE OF 18% PER ANNUM I.E. AS REFLECTED IN THE BOOKS OF ACCOUNT. THE SAM E UNDER THE CIRCUMSTANCES IS NO MORE THAN A BALD SELF-SERVING STATEMENT. IN FACT THE A SSESSEE ITSELF STATES OF SHRI GEORGE VARGHESE AS HAVING FALLEN MENTALLY ILL CONSEQUENT T O THE SEARCH AND THE DEVELOPMENTS FOLLOWING THE SAME DOES NOT HELP THE ASSESSEES CA SE RATHER IMPUGNS IT FURTHER. 7.2 WITH REGARD TO THE DISALLOWANCE OF INTEREST ON DEPOSITS WE FIND IT TO BE QUA MONIES DIVERTED AND WITHDRAWN BY THE PARTNERS FROM THE BUS INESS AND TOWARD WHICH SUBSTANTIAL DIRECT AS WELL AS CORROBORATIVE EVIDENCES WERE FOUN D DURING THE SURVEY FOLLOWED BY FURTHER MATERIALS IN SEARCH AND WHICH AGAIN REMAIN UNCONTROVERTED. FURTHER THE VALUE OF THE INVESTMENT MADE IN LAND/S WAS ACTUALLY MUCH MO RE THAN THAT DOCUMENTED AS SOUGHT TO BE ESTABLISHED THROUGH THE VARYING PURCHASE PRIC E OF LAND ACQUIRED IN 1995. THE PARTNERS WERE IN FACT KEEPING SEPARATE ACCOUNTS OF THE MONIES DIVERTED/WITHDRAWN BY THEM I.E. FROM THE BUSINESS FOR SETTLEMENT OF TH EIR PERSONAL ACCOUNTS INTER SE . THE SPECIFIC MATERIALS AS DETAILED IN THE ASSESSMENT O RDER WHEREIN THE ISSUE STANDS DISCUSSED IN DETAIL BY THE AO (VIDE PARAS 49 TO 62 PGS. 26 T O 32) ARE AS UNDER:- A) SWORN STATEMENT OF SHRI GEORGE VARGHESE DATED 3 .9.1997. B) SEIZED MATERIAL FROM THE RESIDENCE OF SHRI T.G. ALEXANDER. DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 18 ACCORDINGLY THE DISALLOWANCE FOR INTEREST ON SUCH INVESTMENTS WAS MADE AT THE RATE OF 20%. IT IS NOT CLEAR FROM THE RECORD WHETHER THE ASSESSEE HAD ACTUALLY CLAIMED THE SAME AT THE DISALLOWED RATE OF 20%. THAT APART; THE DISA LLOWANCE COULD ONLY BE FOR THE INTEREST AS CLAIMED BY THE ASSESSEE WE FIND THE REVENUES C ASE AS UNIMPEACHABLE. 7.3 THE ADDITION/S AND/OR DISALLOWANCE/S AS WOU LD BE APPARENT FROM THE FOREGOING NARRATION OF FACTS AND THE RESPECTIVE CASES OF BOTH THE SIDES HAVE BEEN MADE/EFFECTED BASED ON OBJECTIVE MATERIAL AND ON A COGENT BASIS. THE ARGUMENT THAT THE BOOKS OF ACCOUNT ARE TO BE TREATED AS GENUINE IS CLEARLY IN FIRM. THE SAME IT MAY BE CLARIFIED IS A MATTER OF FACT AND NOT OF LAW AS SOUGHT TO BE MADE OUT BY THE LD. CIT(A). IT IS ONLY THE BOOKS OF ACCOUNT THAT STAND THE TEST OF VERIFICATIO N AND OTHER DIRECT OR INDIRECT EVIDENCES IN THE POSSESSION OF THE REVENUE IN RESPECT OF THE BUSINESS AND/OR FINANCIAL TRANSACTIONS OF THE ASSESSEE THAT CAN BE SAID TO REPRESENT ITS TRUE AND CORRECT STATE OF AFFAIRS I.E. WHICH THEY PURPORT TO AND BE CONSIDERED AS VALID EVIDENC E/MATERIAL FOR DETERMINATION OF INCOME. THE PROVISION OF S. 132(4A) DOES NOT HAVE THE EFFECT OF EXCLUDING S. 68 OR OTHERWISE OBVIATE THE NECESSITY TO ESTABLISH BY IND EPENDENT EVIDENCE/S THE GENUINENESS OF THE CREDITS U/S. 68. REFERENCE IN THIS CONTEXT IS M ADE TO THE DECISION IN THE CASE OF PUSHKAR NARAIN SARAF V. CIT 183 ITR 388 (SC). THE PROPOSITION STANDS SINCE A PPROVED BY THE APEX COURT SO THAT THE SAME IS TO BE CONSID ERED AS A PART OF THE SETTLED LAW. COMING BACK TO THE FACTS OF THE PRESENT CASE THE ASSESSEE S RECORDS ON THE OTHER HAND STAND SUFFICIENTLY IMPUGNED FOR ANY SUCH CLAIM I.E. AS BEING MADE BY THE ASSESSEE TO HAVE ANY CREDENCE WHATSOEVER. FURTHER THE ADDITION BEIN G OF THE INTEREST INCOME SUPPRESSED AS WELL AS OF THE INTEREST CHARGED ON DEPOSITS THE SAME WOULD NOT ADMIT OF ANY NORMAL EXPENDITURE THERE-AGAINST. THE BUSINESS EXPENDITURE IN FACT STANDS ALREADY CLAIMED AND ALLOWED IN THE REGULAR ASSESSMENTS SO THAT THE SAI D ARGUMENT IS ALSO WITHOUT MERIT. THE DELETION AS DIRECTED BY THE LD. CIT(A) IS ACCORDIN GLY REVERSED. WE DECIDE ACCORDINGLY. DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 19 7.4 THE DELETION PER THE IMPUGNED ORDER IS CON SPICUOUS BY THE ABSENCE OF ANY DISCUSSION IN THE MATTER AND OSTENSIBLY JUSTIFIED BY A SWEEPING STATEMENT TO THE EFFECT THAT THE BOOKS OF ACCOUNTS ARE CONSIDERED TO BE GEN UINE IN NEGATION OF THE PLETHORA OF EVIDENCE PAINSTAKINGLY COLLECTED BY THE REVENUE DU LY CONFRONTED. THE ADDITION BASED THEREON IS DE HORS THE BOOKS OF ACCOUNT. THE ADDITION HAS A QUANTIFIC ATION ASPECT AS WELL INASMUCH AS THE ASSESSEE ALSO STATES OF HAVING PAID A HIGHER RATE OF INTEREST ON DEPOSITS AND WHICH HAS NOT BEEN CONSIDERED WHILE WOULD NEED TO IF EVIDENCES TO THAT EFFECT AS APPEARS TO BE THE CASE EMANATED FROM THE SEARCH. T HE EVIDENCES BEFORE THE CIVIL COURT WOULD BE ALSO VERY RELEVANT IN THIS REGARD AS THE DEPOSITORS WOULD CLAIM NOT ONLY THEIR DEPOSIT MONEY BUT ALSO INTEREST THEREON WHICH MAY WELL BE BORNE OUT OF SOME MATERIALS VIZ. THE DEPOSIT APPLICATION FORM DEPOSIT RECEIPT ETC. ALL OF WHICH IS CONSPICUOUS BY ITS ABSENCE UP TO NOW. THIS PERHAPS WOULD BE THE ONLY ADJUSTMENT AGAINST THE GROSS INCOME SUPPRESSED. IN THE ABSENCE OF ANY SPEAKING ORDER W E ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE APPELLAT E AUTHORITY FOR FRESH ADJUDICATION AND AFTER HEARING BOTH THE SIDES. THIS WOULD ALSO SERV E AS A FINAL OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEFORE THE REVENUE. THE LD. CIT (A) WHILE DECIDING THE ISSUE SHALL HAVE DUE REGARD FOR ALL SUCH MATERIALS AND EXPLANAT IONS INCLUDING OUR OBSERVATIONS AND FINDINGS WHICH THOUGH WOULD NOT OPERATE TO FETTER HIS LIBERTY IN DECIDING THE SAME ON MERITS IN ACCORDANCE WITH LAW. WE MAY HERE ALSO CLA RIFY ONE MORE ASPECT. THE ADDITION IN REGULAR ASSESSMENT ON THIS GROUND FOR AY 1995-96 T HOUGH CONFIRMED BY US (REFER PARA 14) STANDS TELESCOPED AGAINST OTHER ADDITIONS WHI CH STAND AGAIN REMITTED BACK FOR LACK OF PROPER FACTUAL DETERMINATION (VIDE PARA 15 OF THIS ORDER). AS SUCH IF AND TO THE EXTENT THE SAME ARE CONFIRMED I.E. ON MERITS; THE TELESC OPING BEING IN DISPUTE SO THAT THE SAME WOULD IN ANY CASE OBTAIN THE CREDIT ALLOWED TO THE ASSESSEE IN THE BLOCK ASSESSMENT ON THE PREMISE THAT THE SAME STANDS BROUGHT TO TAX IN THE REGULAR ASSESSMENT WOULD NOT HOLD. THAT IS WHILE THE RELIEF STANDS CORRECTLY ALLOWED BY THE AO IN THE BLOCK ASSESSMENT THE FINAL DECISION MAY OPERATE TO REMOVE THE NECESSARY CONDITION FOR THE SAME SO THAT IT WOULD BECOME MISPLACED. THE LD. CIT(A) SHALL CONSI DER THIS ASPECT OF THE MATTER AS WELL. WE DECIDE ACCORDINGLY. DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 20 8. THE ASSESSEES CO IS TIME BARRED BY 445 DA YS AND FURTHER NOT ACCOMPANIED BY ANY CONDONATION PETITION. THE SAME IS EVEN OTHERWISE ON LY SUPPORTIVE OF THE IMPUGNED ORDER. WE THEREFORE DISMISS THE SAME AS NOT MAINTAINABLE . 9. IN THE RESULT THE REVENUES APPEAL (IN IT(SS)A 20/COCH/2007 IS ALLOWED ON THE AFORESAID TERMS AND THE ASSESSEES C.O.NO. 98/COCH /208 IS DISMISSED. REGULAR ASSESSMENTS (AY 1995-96 & 1996-97) 10. THE FIRST GRIEVANCE OF THE REVENUE AS IN THE CASE OF BLOCK ASSESSMENT IS WITH REGARD TO THE CONDONATION OF DELAY BY THE LD. CIT(A) WHIC H AT 3292 DAYS EACH IS FOR AN EVEN HIGHER PERIOD FOR BOTH THE YEARS UNDER REFERENCE. T HE ASSESSEES CASE WE FIND TO BE ON AN EVEN WEAKER FOOTING I.E. VIS-A-VIS THAT FOR THE B LOCK ASSESSMENT; THE PERIOD OF DELAY ITSELF BEING OVER 9 YEARS AND WHEREIN WE FOUND THE ASSESS EE TO HAVE NOT BEEN ABLE TO EXPLAIN THE DELAY THOUGH NEVERTHELESS FOUND ITS CONDONAT ION JUSTIFIABLE IN VIEW OF THE IMPERATIVE NEED FOR CONSIDERATION OF THE MATERIALS ARISING SUBSEQUENT TO THE ASSESSMENT IN FINALIZING THE SAME (REFER PARA 4.1 OF THIS ORDER). THE SAME CONSIDERATION/S WOULD APPLY WITH EQUAL FORCE IN THE INSTANT CASE/S AS WELL; THE ISSUE/S REQUIRING ADJUDICATION BEING THE SAME. WE THEREFORE FOR THE SAME REASONS AS IN THE CASE OF BLOCK ASSESSMENT CONSIDER THE CONDONATION OF THE INORDINATE DELAY BY THE ASSESSEE IN FILING THE APPEALS BEFORE THE FIRST APPELLATE AUTHORITY AS SUSTAINABLE IN LAW AND CONS EQUENTLY UPHOLD THE SAME DISMISSING THE REVENUES RELEVANT GROUNDS FOR BOTH THE YEARS. 11.1 WE NEXT TAKE UP THE REGULAR ASSESSMENTS F OR A.Y. 1995-96 AND 1996-97. THE ADDITIONS MADE ARE TOWARDS THE FOLLOWING:- A) UNEXPLAINED DEPOSITS; B) INTEREST CLAIMED ON UNEXPLAINED DEPOSITS; C) SUPPRESSED INTEREST INCOME ON GOLD LOANS; DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 21 FOR A.Y. 1995-96 THERE ARE TWO SEPARATE ADDI TIONS AS WELL I.E. QUA FDRS IN BOGUS NAMES (AT ` 30 LAKHS) AND FOR THE AMOUNTS IN THE SAVING AND RE CURRING BANK ACCOUNTS FOR WHICH NO DETAILS STOOD SUBMITTED BY THE ASSESSEE AN D CONSEQUENTLY CONSIDERED UNEXPLAINED. 11.2 WITH REGARD TO THE PRINCIPAL ADDITION I N THE REGULAR ASSESSMENTS I.E. FOR DEPOSITS CONSIDERED UNEXPLAINED AND DEEMED AS INCOME U/S. 68 WE FIND THAT THE AO IN THE BLOCK ASSESSMENT HAS DULY ALLOWED CREDIT FOR THE AMOUNT ASSESSED AND BROUGHT TO TAX IN THE REGULAR ASSESSMENT/S I.E. WHERE AND TO THE EXTENT EXIGIBLE. THE LD. CIT(A) WHILE HOLDING BOTH THE PROCEEDINGS I.E. BLOCK ASSESSMEN T AS WELL AS THE REGULAR ASSESSMENT AS LEGAL HOLDS THAT THE ADDITIONS COULD NOT SUSTAIN; THE DEPOSITS HAVING BEEN APPROVED BY THE CIVIL COURT. HE ACCORDINGLY DELETED THE ENTIRE ADDI TION. AGGRIEVED THE REVENUE IS IN APPEAL(S) WITH THE ASSESSEE FILING CORRESPONDING C .O.(S). 12. WE HAVE HEARD THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE ASSESSEES COS BEAR A MARGINAL DELAY OF 19 DAYS. AS SECTION 5 OF THE LIMITATION ACT 1963 IS NOT APPLICABLE TO THE CROSS OBJECTION(S) WHICH ARE EVE N OTHERWISE ONLY SUPPORTIVE THE SAME ARE DISMISSED AS NOT MAINTAINABLE. 13. WE SHALL TAKE UP EACH OF THE ADJUSTMENT S BY THE AO TO THE ASSESSEES RETURNED INCOME (LOSS) FOR THE YEARS UNDER REFERENCE. THE RE SPECTIVE CASES OF BOTH THE SIDES IN RESPECT OF THE DEPOSITS INFERRED AS UNEXPLAINED IN TERMS OF S. 68 OF THE ACT IS THE SAME I.E. AS FOR THE BLOCK ASSESSMENT. WE HAVE ALREADY DECIDED THE SAME ON THE BASIS OF LAW IN THE MATTER WHICH IS THE SAME I.E. IRRESPECTIVE O F WHETHER APPLIED FOR ASSESSMENT OF DISCLOSED OR UNDISCLOSED INCOME VIDE PARA 4.4OF TH IS ORDER. THE SAME WOULD HOLD VALID FOR THE REGULAR ASSESSMENT/S AS WELL. THE DISALLOWA NCE OF INTEREST ON DEPOSITS IS CONSEQUENTIAL. WE DECIDE ACCORDINGLY. DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 22 14. THE THIRD ADDITION IS OF INTEREST INCOM E SUPPRESSED. THOUGH THE LD. CIT(A) WONDERS AS TO HOW THE AMOUNT OF ADDITION WHICH W E OBSERVE - RATHER SURPRISINGLY - TO BE THE SAME FOR BOTH THE YEARS ( ` 918138/-) HAS BEEN WORKED OUT HE LEAVES THE MATTE R AS IT IS. THE SAME OUGHT TO HAVE BEEN CLARIFIED WITH T HE AO AND IN THE LEAST ADJUDICATED UPON. IN ANY CASE THE SAME ONLY IMPACTS THE QUANTI FICATION ASPECT WHICH STANDS NOT AGITATED BY THE ASSESSEE SO THAT IT SHOULD HAVE NO BEARING ON HIS DECISION. THE GROUND FOR DELETION THEREOF AS STATED IN THE ORDER IS THE SA ME I.E. IT CANNOT BE SUSTAINED IN THE REGULAR ASSESSMENT. WE ARE UNABLE TO AGREE; THE AD DITION HAVING BEEN MADE ONLY ON THE BASIS OF THE EVIDENCES FOUND DRAWING COGENT INFERE NCES THERE-FROM WHICH HAVE NOT BEEN REBUTTED BY THE ASSESSEE IN ANY MANNER SO THAT THE SAME WOULD MERIT CONFIRMATION. REFERENCE IN THIS CONTEXT IS MADE TO PARA 7 OF TH IS ORDER IN CONJUNCTION WITH WHICH ONLY OUR ADJUDICATION HAS TO BE READ. THE QUANTIFICATION HAS NOT BEEN CHALLENGED AND HAS IN ANY CASE ASSUMED FINALITY INASMUCH AS THE TIME LI MIT FOR RECTIFICATION HAS EXPIRED. THE ASSESSEE HAS AS AFORE-NOTED BEEN ALLOWED DUE CRED IT IN ITS RESPECT IN THE BLOCK ASSESSMENT AT THE SAME AMOUNT. WE ARE CONSCIOUS W HILE SO DECIDING OF HAVING RESTORED THE MATTER QUA THIS GROUND IN THE BLOCK ASSESSMENT. THE TWO ARE INDEPENDENT PROCEEDINGS WITH THE ASSESSEE HAVING NOT MADE OUT ANY CASE WITH WE FINDING THE SOLE GROUND FOR THE DELETION AS ADVANCED BY THE LD. CIT( A) AS NOT VALID. ALSO THE ADDITION FOR ONE OF THE YEARS (AY 1995-96) STANDS TELESCOPED AGA INST OTHER ADDITIONS VIS--VIS INVESTMENTS TOWARD WHICH AGAIN THE ASSESSEE HAS NO T FURNISHED ANY EXPLANATION SO THAT THERE IS A TANGIBLE PROOF OF THE RECEIPT OF UNACCOU NTED INCOME I.E. BESIDES THE ADMITTED EXCESS CASH FOUND DURING SURVEY WHICH STANDS ADMIT TED AS ARISING ON ACCOUNT OF CHARGING EXCESS INTEREST. WE ACCORDINGLY CONFIRM THE ADDI TION FOR BOTH THE YEARS. 15.1 WITH REGARD TO THE SEPARATE ADDITIONS FOR A.Y. 1995-96 THE ONLY REASON IN THE IMPUGNED ORDER FOR THE DELETION OF THE SAME IS THAT THE SAME CANNOT BE SUSTAINED IN REGULAR ASSESSMENT. WE HAVE ALREADY FOUND THE SAME AS NOT A VALID BASIS. AS SUCH THE SAME WHERE MADE ON AN OBJECTIVE BASIS WOULD HOLD AS WE FIND IT TO BE IN THE INSTANT DY. CIT CIRCLE 1(1) TRIVANDRUM VS. MALAYIL BANKER S (AND VICE VERSA FOR THE BLOCK PE RIOD 1.4.1987 TO 5.9.97 AND AYS 1995-96 & 1996-97 ) 23 CASE(S). FURTHER THE ADDITION IN RESPECT OF BOGUS FDRS HAS BEEN TELESCOPED BY THE AO TO THE EXTENT OF ` 27.22 LAKHS IN RESPECT OF ADDITIONS U/S. 68 AND INT EREST INCOME SUPPRESSED. 15.2 SO HOWEVER THE LD. CIT(A) HAVING NOT PA SSED A SPEAKING ORDER IN THE MATTER WE ONLY CONSIDER IT FIT AND PROPER UNDER THE CIRCUMST ANCES TO RESTORE THE MATTER BACK TO THE FILE FOR ADJUDICATION ON MERITS AFTER HEARING BOTH THE SIDES ON MERITS. WE DECIDE ACCORDINGLY. 16. IN THE RESULT THE REVENUES APPEALS IN I.T.A. NOS. 758 & 759/COCH/2008 ARE PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL P URPOSES WHILE THE ASSESSEES CROSS OBJECTIONS IN C.O. NOS. 96 & 97/COCH/2008 ARE DISMI SSED AS NOT MAINTAINABLE. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 29TH JULY 2011 GJ COPY TO: 1. M/S. MALAYIL BANKERS C/O SHRI GEORGE VARGHESE MALAYIL HOUSE AGRA KUSAVARKAL ROAD NALANCHIRA TRIVANDRUM. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1( 1) TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE .