Philip Anil Cherian, Pathanamthitta v. ACIT, Thiruvalla

ITA 122/COCH/2011 | 2007-2008
Pronouncement Date: 11-10-2013

Appeal Details

RSA Number 12221914 RSA 2011
Assessee PAN ABBPC1071D
Bench Cochin
Appeal Number ITA 122/COCH/2011
Duration Of Justice 2 year(s) 7 month(s) 25 day(s)
Appellant Philip Anil Cherian, Pathanamthitta
Respondent ACIT, Thiruvalla
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 11-10-2013
Date Of Final Hearing 17-07-2013
Next Hearing Date 17-07-2013
Assessment Year 2007-2008
Appeal Filed On 16-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND B.R.BASKAR AN AM I.T.A. NO. 122/COCH/2011 ASSESSMENT YEAR : 2007-08 MR. PHILIP ANIL CHERIAN M/S. BIGFIELD DRUGLINKS PATHANAMTHITA-689 645. [PAN: ABBPC 1071D] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1 THIRUVALLA. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI R. SREENIVASAN CA REVENUE BY SMT. S. VIJAYAPRABHA JR. DR & SHRI M. ANIL KUMAR CIT(DR) DATE OF HEARING 17/07/2013 DATE OF PRONOUNCEMENT 11/10/2013 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 20-12-2010 PASSED BY THE LD. CIT(A)-I TRIVANDRUM AND PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS CHALLENGING THE DECISION RENDERE D BY THE LD. CIT(A) IN RESPECT OF FOLLOWING ISSUES: (A) RESTRICTING THE AGRICULTURAL INCOME TO RS.6 30 000/- AS AGAINST RS.7 59 664/- RETURNED BY THE ASSESSEE. (B) ASSESSMENT OF CREDITS IN THE CAPITAL ACCOUNT A T RS.5 06 000/- (C) ASSESSMENT OF LOANS OF RS.9 21 925/-. (D) CONFIRMATION OF ADDITION OF RS.6 80 000/- RELA TING TO THE TRANSFER MADE FROM LOAN ACCOUNT TO THE CAPITAL ACCOUNT. (E) ASSESSMENT OF DIFFERENCE IN THE BALANCE OF THE PARTIES AT RS.8 27 237/-. I.T.A. NO. 122/COCH/2011 2 (F) CONFIRMATION OF ADDITION OUT OF FOREIGN TRAVE L EXPENSES OF RS.1 50 355/-. (G) DISALLOWANCE OF 1/5 TH OF THE SALES PROMOTION EXPENSES. (H) DISALLOWANCE OF 1/5 TH DEPRECIATION CLAIMED ON VEHICLES. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS AN INDIVIDUAL AND IS CARRYING ON BUSINESS OF RETAIL TRADING IN ME DICINES BY NAME BIGFIELD DRUGLINKS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE YEA R UNDER CONSIDERATION DECLARING A TOTAL INCOME OF RS.5 60 400/-. HOWEVER THE ASSESSI NG OFFICER DETERMINED THE TOTAL INCOME AT RS.45 80 343/- BY MAKING VARIOUS ADDITION S. AGGRIEVED THE ASSESSEE HAS CHALLENGED THE ASSESSMENT ORDER BY FILING THE APPEA L BEFORE THE LD. CIT(A) BUT COULD GET ONLY PARTIAL RELIEF. STILL AGGRIEVED THE ASSESS EE HAS FILED THIS APPEAL BEFORE US. 4. THE FIRST ISSUE RELATES TO DETERMINATION OF AGRI CULTURAL INCOME BY REDUCING THE INCOME RETURNED BY THE ASSESSEE. IN THE RETURN OF INCOME THE ASSESSEE HAD DECLARED THE AGRICULTURAL INCOME AT RS.7 59 664/-. BEFORE T HE ASSESSING OFFICER THE ASSESSEE SUBMITTED THAT HE DERIVED AGRICULTURAL INCOME OUT O F RUBBER ESTATE OWNED BY HIM. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHO WN THE ESTATE INCOME AT RS.12 05 812/- IN HIS CAPITAL ACCOUNT. WHEN QUESTI ONED ABOUT THE DIFFERENCE THE ASSESSEE SUBMITTED THAT THE AGRICULTURAL INCOME DEC LARED IN THE RETURN OF INCOME IS NET OF EXPENSES. THE ASSESSEE FURTHER SUBMITTED THAT HE OWNS 14 ACRES OF LAND AND IN SUPPORT OF THE SAME HE PRODUCED COPIES OF THREE SEP ARATE LAND DOCUMENTS. THE ASSESSING OFFICER NOTICED THAT THE FIRST TWO DOCUME NTS DESCRIBED THE PROPERTY AS AGRICULTURAL PROPERTY WHEREAS THE THIRD DOCUMENT DE SCRIBED THE LAND AS BARREN LAND. FURTHER THIRD LAND HAVING AN EXTENT OF 1.30 ACRES WAS SEEN PURCHASED BY THE ASSESSEE ON 12-04-2007 I.E. AFTER THE END OF THE YEAR UNDE R CONSIDERATION. HENCE THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS HAVING ONLY ABOUT 12.60 ACRES DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY THE ASSESSI NG OFFICER ESTIMATED THE NET INCOME FROM RUBBER ESTATE AT RS.50 000/- PER ACRE AND ACCO RDINGLY DETERMINED THE AGRICULTURAL INCOME AT RS.6 30 000/- AS AGAINST RS.7 59 664/- D ECLARED BY THE ASSESSEE. THE I.T.A. NO. 122/COCH/2011 3 ASSESSING OFFICER ACCORDINGLY ASSESSED THE DIFFER ENCE BETWEEN THE TWO AMOUNTS REFERRED ABOVE I.E. RS. 1 29 664/- AS INCOME OF T HE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED TH AT THE LAND HAVING AN EXTENT OF 1.30 ACRES THOUGH ACQUIRED IN APRIL 2007 YET HE WAS IN POSSESSION OF THE SAME EVEN PRIOR TO MARCH 2007 AND WAS ALSO ENJOYING THE BENE FIT THEREOF. HE FURTHER SUBMITTED THAT THE RUBBER ESTATE WAS LOCATED IN A FERTILE ARE A AT PERUNAD VILLAGE OF PATHANAMTHITTA DISTRICT AND ACCORDINGLY CONTENDED THAT THE INCOME ESTIMATED BY THE ASSESSING OFFICER IS VERY MUCH ON THE LOWER SIDE. THE LD. CIT(A) WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE DI D NOT FURNISH ANY EVIDENCE TO SUPPORT THE SAID CONTENTIONS. ACCORDINGLY THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE US THE LD. AR REITERATED THE CONTENTIONS RAISED BEFORE THE TAX AUTHORITIES. ON THE CONTRARY THE LD. DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURNIS H ANY EVIDENCE IN SUPPORT OF THE CLAIM OF AVAILABILITY OF AGRICULTURAL INCOME TO THE EXTENT DECLARED BY HIM. WE ALSO NOTICE THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE BE FORE THE TAX AUTHORITIES TO SUBSTANTIATE THE CLAIM OF AGRICULTURAL INCOME DECLA RED BY HIM. THE ASSESSEE HAS ALSO NOT FURNISHED ANY EVIDENCE TO SHOW THAT THE LAND PU RCHASED ON 12-04-2007 WAS IN FACT IN HIS POSSESSION PRIOR TO MARCH 2007. UNDER THES E CIRCUMSTANCES WE HAVE NO OTHER OPTION BUT TO CONFIRM THE ORDER OF THE LD. CIT(A) O N THIS ISSUE. 7. THE NEXT FOUR ISSUES VIZ. ASSESSMENT OF RS.5 06 000/- RS.9 21 925/- RS.6 80 000/- AND RS.8 27 237/- ARE CASH CREDIT AS SESSMENTS MADE U/S 68 OF THE ACT. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPOR T OF THESE CASH CREDITS AND HENCE THE AO ASSESSED THEM AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT. LD CIT(A) ALSO CONFIRMED THE SAID ASSESSMENTS ON THE REASONING THA T THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION. I.T.A. NO. 122/COCH/2011 4 8. BEFORE US THE LD COUNSEL SUBMITTED THAT THE ASSESSEE IN FACT FURNISHED BEFORE LD CIT(A) THE COPIES OF CONFIRMATION LETTERS OBTAI NED FROM VARIOUS CREDITORS IN SUPPORT OF THE ABOVE SAID CASH CREDITS. HOWEVER THE FIRST APPELLATE AUTHORITY REFUSED TO CONSIDER THEM AND ALSO DID NOT DISCUSS ANYTHING ABO UT THEM IN HIS ORDER. THE LD A.R SUBMITTED THAT THE ASSESSEE WOULD BE SUBJECTED TO G REAT DIFFICULTIES IF THESE EVIDENCES WERE NOT CONSIDERED. THE LD A.R ALSO FURNISHED BEF ORE US COPIES OF CONFIRMATION LETTERS OBTAINED FROM VARIOUS CREDITORS AND ACCORDINGLY PRA YED THAT THE ISSUES RELATING TO CASH CREDITS MAY BE SET ASIDE TO THE FILE OF THE AO FOR CARRYING OUT NECESSARY EXAMINATION. THE LD D.R ALSO DID NOT OBJECT TO THE PLEA MADE BY THE LD A.R. 9. WE NOTICE THAT THE ASSESSEE HAS FURNISHED CO PIES OF CONFIRMATION LETTERS AND OTHER EVIDENCES IN THE PAPER BOOK FILED BEFORE US. ADMIT TEDLY THE LD CIT(A) DID NOT DISCUSS ABOUT THESE EVIDENCES IN HER ORDER THOUGH IT IS CL AIMED BY LD A.R THAT THESE WERE FURNISHED BEFORE THE FIRST APPELLATE AUTHORITY BUT REFUSED BY HER. THE PURPOSE OF ASSESSMENT OF INCOME IS TO COLLECT CORRECT AMOUNT O F TAX FROM ANY ASSESSEE. ACCORDINGLY WE ARE OF THE VIEW THAT THE DEPARTMENT WILL NOT BE PUT IN DISADVANTAGEOUS POSITION BY GIVING ONE MORE OPPORTUNITY TO THE ASS ESSEE. ON THE CONTRARY IT WOULD PROMOTE THE CAUSE OF JUSTICE. ACCORDINGLY WE ARE OF THE VIEW THAT THE ISSUES RELATING TO THE CASH CREDITS REFERRED ABOVE NEED EXAMINATION AFRESH AT THE END OF THE AO BY DULY CONSIDERING THE EVIDENCES FURNISHED BY THE ASSESSEE . ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) ON ALL THE FOUR ISSUES REFERRED ABOVE AND RESTORE THEM TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THESE ISSUES A FRESH BY DULY CONSIDERING THE EVIDENCES AND INFORMATION THAT MAY BE FURNISHED BY HIM AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 10. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. THE AO DISALLOWED A SUM OF RS.2 94 840/- RELATING TO FOREI GN TRAVEL EXPENSES SINCE THE ASSESSEE DID NOT FURNISH ANY DETAIL TO SHOW THAT TH E SAID TRIP WAS FOR BUSINESS PURPOSES. BEFORE LD CIT(A) THE ASSESSEE SUBMITTED THAT THE F OREIGN TRAVEL EXPENSES WAS ONLY TO THE TUNE OF RS.1 50 355/- AND THE BALANCE AMOUNT OF RS.1 44 485/- REPRESENTS DOMESTIC TRAVELLING EXPENSES INCURRED BY EMPLOYEES AND OTHER S. ACCEPTING THE SAID CONTENTIONS I.T.A. NO. 122/COCH/2011 5 THE LD CIT(A) REDUCED THE DISALLOWANCE TO RS.1 50 3 55/- I.E. TO THE EXTENT OF FOREIGN TRAVEL EXPENSES SINCE THE EXPLANATIONS FURNISHED B Y THE ASSESSEE RELATING TO FOREIGN TRAVEL WAS NOT CONVINCING TO HIM. 11. BEFORE US THE LD A.R SUBMITTED THAT THE ASS ESSEE HAD UNDERTAKEN FOREIGN TRIP TO EUROPE IN ORDER TO EXPLORE EXPORT MARKETS. HOWEVER AS HELD BY LD CIT(A) THIS EXPLANATION APPEARS TO BE A VAGUE STATEMENT. THE A SSESSEE BEING RETAIL TRADER IN MEDICINES HAS NOT SHOWN AS TO HOW THE SAID TRIP IS RELATED TO HIS BUSINESS ACTIVITIES. ACCORDINGLY WE ARE OF THE VIEW THAT THE LD CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE OF FOREIGN TOUR EXPENSES OF RS.1 50 35 5/-. 12. THE NEXT ISSUE RELATES TO THE DISALLOWANCE O F 1/5 TH OF SALES PROMOTION EXPENSES. SINCE THE ASSESSEE DID NOT MAINTAIN PROPER VOUCHERS IN SUPPORT OF SALES PROMOTION EXPENSES THE AO DISALLOWED 1/5 TH OF THE CLAIM AND THE SAME WAS ALSO CONFIRMED BY TH E LD CIT(A). BEFORE US ALSO NO MATERIAL WAS BROUGHT ON RECORD TO CONTRADICT THE FINDINGS GIVEN BY THE AO. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD CIT(A) ON THIS ISSUE. 13. THE LAST ISSUE RELATES TO DISALLOWANCE OF 1/ 5TH OF DEPRECIATION CLAIMED ON VEHICLES TOWARDS PERSONAL USE. THE AO NOTICED THAT THE ASSE SSEE HAD CLAIMED DEPRECIATION ON FOUR MOTOR CARS VIZ. COROLLA GYPSY BOLERO AND S CORPIO. SINCE THE ASSESSEE IS THE PROPRIETOR OF THE BUSINESS CONCERN THE AO HELD THA T THE POSSIBILITY OF USING THESE VEHICLES FOR PERSONAL PURPOSES CANNOT BE RULED OUT. ACCORDINGLY HE ESTIMATED THE PERSONAL USE AT 1/5 TH AND ACCORDINGLY DISALLOWED THE 1/5 TH OF THE DEPRECIATION AMOUNT CLAIMED ON THESE VEHICLES. THE LD CIT(A) ALSO CONF IRMED THE SAME. BEFORE US THE ASSESSEE DID NOT FILE ANY MATERIAL TO SUBSTANTIATE HIS CONTENTION THAT THESE VEHICLES WERE EXCLUSIVELY USED FOR BUSINESS PURPOSES ONLY. BEING THE PROPRIETOR OF THE BUSINESS CONCERN THE POSSIBILITY OF USING THESE VEHICLES FO R PERSONAL PURPOSES CANNOT BE RULED OUT. ACCORDINGLY WE CONFIRM THE ORDER OF LD CIT(A ) ON THIS ISSUE. I.T.A. NO. 122/COCH/2011 6 14. IN THE RESULT THE APPEAL OF THE ASSESSEE I S TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 11-10-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 11TH OCTOBER 2013 GJ COPY TO: 1. MR. PHILIP ANIL CHERIAN M/S. BIGFIELD DRUGLINKS PATHANAMTHITA-689 645. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE -1 THIRUVALLA. 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-I TRIVAN DRUM. 4.THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T COCHIN