ACIT, v. Sri T.O.Aleyas, Thiruvalla

ITA 252/COCH/2002 | 1998-1999
Pronouncement Date: 26-10-2010

Appeal Details

RSA Number 25221914 RSA 2002
Bench Cochin
Appeal Number ITA 252/COCH/2002
Duration Of Justice 8 year(s) 2 month(s) 20 day(s)
Appellant ACIT,
Respondent Sri T.O.Aleyas, Thiruvalla
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2010
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 26-10-2010
Date Of Final Hearing 20-10-2010
Next Hearing Date 20-10-2010
Assessment Year 1998-1999
Appeal Filed On 05-08-2002
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO. 276 /COCH/200 1 & I.T.A.NO.252/COCH/2002 ASS T . YEAR S : 1997 - 98 & 1998 - 98 THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE KOTTAYAM. VS. SHRI T.O. ALEYAS THIRUVALLA. PA NO.46-809-P-5468 (APPELLANT) ( RESPONDENT ) APPELLANT BY DR. BABU JOSEPH SR.DR RESPONDENT BY SHRI R. KRISHNAN CA O R D E R PER N.VIJAYAKUMARAN J.M: BOTH THESE APPEALS ARE BY THE REVENUE FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 AND AROSE OUT OF THE SEPARATE ORDERS OF THE LD. CIT(APPEALS)-I TRIVANDR UM. 2. FIRST WE SHALL DEAL WITH THE APPEAL FOR THE ASSE SSMENT YEAR 1997-98. IN THE ELABORATED GROUNDS OF APPEAL FILED BY THE REVENUE ALONG WITH CONCISE GROUNDS OF APPEAL T HE FIRST ISSUE IS ON THE DENIAL OF OPPORTUNITY OF HEARING TO THE ASSESSING OFFICER. WE HAVE HEARD THE LD. SR. D.R. AND THE LD. COUNSEL FOR THE ASSESSEE AT LENGTH AND CONSIDER ED THEIR ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 2 SUBMISSIONS. IT IS NOT DENIED THAT THERE IS NO FRE SH EVIDENCE HAS BEEN CONSIDERED BY THE LD. CIT(APPEALS). THE FIRST APPELLATE AUTHORITY SAT OVER THE ASSESSMENT ORDER O F THE ASSESSING OFFICER AND DECIDED THE ISSUES BASED ON T HE MATERIALS ALREADY AVAILABLE ON RECORD AND HIS DECIS ION NEVER BASED ON ANY NEW FRESH EVIDENCE THAT REQUIRES NEITH ER A REMAND REPORT NOR AN OPPORTUNITY OF BEING HEARD TO BE AFFORDED TO THE ASSESSING OFFICER. HENCE GROUND NO.2 ON THE ALLEGED DENIAL OF OPPORTUNITY OF HEARING TO THE ASSESSING OFFICER IS REJECTED. 3. COMING TO THE OTHER ISSUE IT IS AGAINST THE DEL ETION OF ADDITION BEING THE UNEXPLAINED INVESTMENT IN THE PU RCHASE OF 29.5 CENTS OF LAND AT ERNAKULAM. THE GRIEVANCE IS THAT THE LD. CIT(APPEALS) OUGHT TO HAVE SEEN THAT THE VENDOR S HAD CONFIRMED BEFORE THE CHIEF ENFORCEMENT OFFICER TRI VANDRUM THE RECEIPT OF RS.1 CRORE AS ADVANCE BY THE CO-OWNE RS OF THE PROPERTY. 3.1 OBJECTING TO THE ABOVE GROUND THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF T.O.ABRAHAM IN ITA .281/COCH/2003 ITANO.251/COCH/ 2002 ITA NO.1104/COCH/2005 AND ITA NO.264/COCH/2003 FO R THE ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 3 ASSESSMENT YEARS 1997-98 1998-99 1999-2000 AND 19 97- 98 DATED 29-01-2010 WHEREIN IT HAS BEEN HELD THAT B ASED ON THE FACTS THEY HAD NOT RECEIVED ANYTHING OVER AND ABOVE IN THE RECORDED CONSIDERATION. THAT IS THE FINDING ARR IVED AT BY THE TRIBUNAL BASED ON THE FACTS AND THIS BEING THE SIMILAR TRANSACTION IN THE CASE OF THIS ASSESSEE SHRI T.O. ALEYAS THE TRIBUNALS DECISION IS CLEARLY APPLICABLE. THEREF ORE THIS GROUND OF APPEAL OF THE REVENUE IS TO BE DISMISSED IS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. 3.2 HAVING CONSIDERED THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THIS ISSUE IS DIRECTLY COVERED BY THE DEC ISION OF THE TRIBUNAL IN THE CASE OF SHRI T.O. ALEYAS. ON SIMILA R AND IDENTICAL SET OF FACTS THE TRIBUNAL DELETED THE AD DITION OF ON MONEY PAYMENT. UNDER THE ABOVE CIRCUMSTANCES WE SEE NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD . CIT(APPEALS) ON THIS ISSUE. 4. TURNING TO THE APPEAL FOR THE ASSESSMENT YEAR 1998- 99 THE FIRST ISSUE IS ON THE DELETION OF ADDITION OF RS.1 LAKH BEING REPAYMENT OF LOAN OUTSTANDING IN THE NAME OF THE ASSESSEE WITH VIJAYA BANK KOZHENCHERRY. WE HAVE H EARD THE LD. SR.D.R. AND THE LD. COUNSEL FOR THE ASSESSE E AT LENGTH ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 4 AND CONSIDERED THEIR SUBMISSIONS CAREFULLY. THIS ADDITION WAS MADE ON ACCOUNT OF REPAYMENT OF LOAN MADE BY TH E ASSESSEE TO VIJAY BANK. THE FACT RELEVANT IS THAT THE PAYMENT WAS MADE ON THE LOAN ACCOUNT OF THE TIPPER LORRY. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS. THE LD. CIT(APPEALS) FOUND THAT THE TIPPER LORRY WHICH WAS ORIGINALLY IN THE NAME OF THE ASSESSEE HAD BEEN ACTUALLY USED BY THE PARTNERSHIP FIRM AND STOOD TRANSFERRED TO THE PARTN ERSHIP FIRM WITH EFFECT FROM 10-05-1996. FURTHER AT THE TIME OF ASSESSMENT PROCEEDINGS OF THE FIRM M/S. T.O. ABRHA M & CO. FOR ASSESSMENT YEAR 1997-98 THIS TIPPER LORRY WAS INCLUDED IN THE LIST OF PLANT AND MACHINERY FOR CLAIMING DEP RECIATION AND DEPRECIATION HAS BEEN ALLOWED. THE AGREEMENT AND THE RC BOOK WERE PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. A PERUSAL OF THE RC BOOK SHOW S THAT THE ASSESSEE WAS THE REGISTERED OWNER OF THE VEHICL E IN QUESTION WHICH MEANS THE TIPPER LORRY WAS INITIALL Y OWNED BY THE ASSESSEE AND THE LORRY HAS BEEN USED BY THE PARTNERSHIP FIRM SINCE THE ASSESSEE HAS NO INDEP ENDENT BUSINESS. THE LORRY ULTIMATELY STOOD TRANSFERRED T O THE PARTNERSHIP FIRM BY VIRTUE OF A SALE DEED DATED 10- 05-1996. THE GENUINENESS OF THE SALE DEED HAS NOT BEEN DOUBT ED BY ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 5 THE ASSESSING OFFICER. IT IS SETTLED LAW THAT ONCE AN ASSET IS SOLD THE LIABILITY ATTACHED TO THE ASSET GET TRANS FERRED ALONG WITH THE ASSET. THAT BEING THE CASE THE LOAN OUT STANDING IN THE NAME OF THE ASSESSEE WITH VIJAY BANK WAS TO BE PAID BY THE PRESENT OWNER OF THE ASSET I.E. THE ASSESSEE B EFORE US. UNDER THE ABOVE CIRCUMSTANCES WE HAVE NO HESITATIO N IN CONFIRMING THE ORDER OF THE LD. CIT(APPEALS) WHO R IGHTLY DELETED THE ADDITION BASED ON FACTS WHICH HAS BEEN ELABORATED IN HIS APPELLATE ORDER. THUS THIS ISS UE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. 6. THE NEXT ISSUE RELATES TO REDUCING THE ADDITION OF RS.6 41 000/- MADE BY THE ASSESSING OFFICER AS UNEX PLAINED INVESTMENT INTRODUCED IN THE ASSESSEES CAPITAL ACC OUNT TO RS.2 23 557/-. WE HAVE CONSIDERED RIVAL SUBMISSIO NS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE AS SESSING OFFICER TREATED THE SUM RS.6 41 000/-AS UNEXPLAINED EXPENDITURE ON THE GROUND THAT FOR EXPLAINING THE O UTFLOW OF RS.17 43 500/- RS.6 41 000/- HAS BEEN SHOWN AS NET DRAWINGS FROM M/S. T.O. ABRAHAM & CO. INFLOW IS SH OWN AS UNDER: NET DRAWINGS FROM ST.MARYS MOTORS RS.10 28 000/- ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 6 NET DRAWINGS FROM TRAVANCORE BANKERS RS. 97 420/- NET DRAWINGS FROM T.O. ABRAHAM & CO. RS. 6 41 000/- THE ASSESSING OFFICER VERIFIED THE EXPLANATION AND FOUND THAT NET DRAWINGS DURING THE YEAR AS PER THE STATEMENT F ILED IS ONLY RS.4 41 000/- AND RS.6 41 000/-. AS PER THE CASH FLOW RS. 2 LAKHS WAS RECEIVED DURING THE PERIOD ENDED 31 -3-1997. THEREFORE IT CANNOT BE CONSIDERED AS HAVING BEEN R ECEIVED DURING THIS YEAR. UNDER THE CIRCUMSTANCES ACCORD ING TO THE ASSESSING OFFICER RS. 2 LAKHS IS NOT EXPLAINED. T HE ASSESSING OFFICER FURTHER OBSERVED THAT THE REMAINI NG CREDIT OF RS.4 41 000/- HAS ALSO TO BE SUPPORTED BY EVIDE NCE. THE EVIDENCE MUST BE EITHER IN THE FORM OF A DRAWIN G ACCOUNT SUPPORTED BY BOOKS OF ACCOUNT OR CORRESPOND ING DEBIT AND CREDIT IN A BANK ACCOUNT. IN THIS VIEW OF THE MATTER THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.6 41 000/- AS UNEXPLAINED AND BROUGHT TO TAX U/S .68 OF THE ACT. ON APPEAL THE LD. CIT(APPEALS) FOUND THAT THE ASSESSING OFFICER DOUBTED THE SOURCES OF INVESTMENT MADE BY THE ASSESSEE BY WAY OF CREDITS IN THE CAPITAL A CCOUNT OF M/S. ST.MARYS MOTORS AND TRAVANCORE BANKERS. THE OUT FLOW TOTAL SHOWN IS RS.17 43 500/- WHICH HAS BEEN ACCEP TED BY THE ASSESSING OFFICER. COMING TO THE INFLOW DETAIL S ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 7 RS.6 41 000/- SHOWN AS NET DRAWINGS FROM M/S. T.O. ABRAHAM & CO. IT IS NOT DISPUTED THAT THE ASSESSE E IS A PARTNER OF M/S. TO ABRAHAM & CO. THE FIRM IN WHICH THE ASSESSEE IS A PARTNER. THE CONTENTION OF THE ASSE SSEE WOULD BE THAT THE CONFIRMATION LETTERS FROM THE MAN AGING PARTNER HAS NOT BEEN FILED AS IT WAS NOT CALLED FO R. THE ASSESSEE IS A WORKING PARTNER OF THE FIRM AND HE HI MSELF WAS COMPETENT TO SIGN A CONFIRMATION LETTER ON BEHALF O F THE FIRM. THE LD. CIT(APPEALS) FOUND THAT THE FIRM HAS EARNE D HUGE PROFIT IN THE ASSESSMENT YEARS 1997-98 AND 1998-99. THE ASSESSEE WHO IS A WORKING PARTNER HAS NOT WITHDRAWN ANY AMOUNT AT ALL FROM THE FIRM FOR HIS PERSONAL NEEDS AND INVESTMENTS. THE CREDITS SHOULD HAVE BEEN ALLOWED AT LEAST TO THE EXTENT OF ASSESSEES SHARE OF PROFIT FROM TH E FIRM. THE FIRMS PROFIT DURING THE ASSESSMENT YEARS 1997- 98 AND 1998-99 STOOD AT RS. 36 49 970/- AND RS.46 98 910/- RESPECTIVELY. THE ASSESSEES SHARE AT 5% IN TH IS PROFITS WILL WORK OUT TO RS.1 82 498 AND RS.2 34 941/- RESP ECTIVELY TOTALING TO THE TOTAL CASH AVAILABILITY OF RS.4 17 443/-. THIS AMOUNT IS TREATED AS CASH AVAILABLE AND EXPLAINED S OURCE OF THE ASSESSEE FOR HIS PERSONAL NEEDS AND INVESTMENTS . ACCEPTING THIS AS EXPLANATION OF SOURCE FOR INVESTM ENTS THE LD. CIT(APPEALS) DELETED THE ADDITION TO THAT EXT ENT IN ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 8 OTHER WORDS OUT OF THE ADDITION OF RS.7 41 000/- M ADE BY THE ASSESSING OFFICER THE LD. CIT(APPEALS) RESTRIC TED THE ADDITION TO THE EXTENT OF RS.2 23 557/-. 7. HAVING CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD WE ARE OF THE VIEW T HAT THE LD. CIT(APPEALS) IS JUSTIFIED IN RESTRICTING THE ADDITI ON TO RS.2 23 557/-. THE PARTNERSHIP FIRM IS FORMED ONL Y TO EARN PROFIT. THE SHARING RATIO IS ACCORDING TO THE SHA RE OF THE PARTNERS IN THE FIRM. THIS IS THE SETTLED PARTNER SHIP LAW AND UNLESS THERE IS OTHERWISE CONTRARY MATERIAL AVAILAB LE THE ASSESSEES 5% SHARE OF PROFITS HAS TO BE GIVEN AND ACCEPTED AS A GENUINE SOURCE IN THE CASH AVAILABILITY. THI S WAS TAKEN CARE OF BY THE LD. CIT(APPEALS) AND ACCORDINGLY HE TREATED TO THE EXTENT OF RS.4 17 443/- AS CASH AVAILABLE AND T O THAT EXTENT ADDITION HAS BEEN DELETED. THIS FINDING OF THE LD. CIT(APPEALS) DESERVES TO BE UPHELD. ORDER ACCORDIN GLY. 8. THE NEXT ISSUE IS IN RESPECT OF DELETION OF AD DITION TOWARDS THE DEFICIENCY IN DRAWINGS FOR THE ASSESSE S PERSONAL EXPENSES. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE EXPLANATION OF THE ASSESSEE THAT HE IS LIVING IN HI S OWN RESIDENCE WITH A VERY SMALL FAMILY OF HAVING TWO CH ILDREN ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 9 WHO ARE STUDYING IN GOVT. AIDED SCHOOL THAT THE WI FE OF THE ASSESSEE IS A QUALIFIED ENGINEER AND A WORKING PART NER OF M/S. TO ABRAHAM & CO. AND DRAWING REMUNERATION OF RS.40 000/- PER ANNUM THE PERSONAL AND HOUSEHOLD EXPENSES OF THE ASSESSEE AT RS.12 000/- PER MONTH ESTIMATED BY THE LD. CIT(APPEALS) IS A REASONABLE E STIMATE. THE ASSESSEE HAS SHOWN IN THE CASH FLOW STATEMENT T OWARDS PERSONAL EXPENSES OF RS. 72 000/-. SALARY INCOME OF ASSESSEES WIFE RS.40 000/-. THAT IS RS.72 000/- PL US. RS.40 000/- = RS. 1 12 000/-. ESTIMATED PERSONAL AND HOUSEHOLD EXPENSES OF THE ASSESSEE IS AT RS.1 44 00 0/- BY THE CIT(APPEALS). IN THIS WAY THE LD. CIT(APPEALS ) SUSTAINED THE ADDITION TO RS.32 000/- TO WHICH WE FIND NO JUSTIFICATION TO INTERFERE. 9. THE LAST ISSUE FOR OUR CONSIDERATION IN THIS APPEAL IS THAT THE LD. CIT(APPEALS) ERRED IN DELETING THE ADD ITION OF RS.4 07 500/- BEING THE UNEXPLAINED INVESTMENTS IN THE PURCHASE OF 29.5 CENTS OF LAND AT ERNAKULAM WITHOUT APPRECIATING THE FACTS OF THE CASE. THE LD. CIT(APP EALS) FOLLOWING THE ORDER FOR ASSESSMENT YEAR 1997-98 DE LETED THIS ADDITION. WE HAVE HEARD RIVAL SUBMISSIONS AN D PERUSED THE MATERIALS AVAILABLE ON RECORD. THE VERY SAME ISSUE HAS ITA NOS.276/COCH/2001 & 252/COCH/2002 SHRI T.O. ALEYAS THIRUVALLA. 10 BEEN CONSIDERED BY US IN PARAGRAPHS 3 TO 3.2 OF THI S ORDER FOR THE ASSESSMENT YEAR 1997-98 AND DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE ON THE VERY SAME SET OF FACTS. HENCE FOR THIS YEAR ALSO WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE. 10. IN THE RESULT THE REVENUES APPEALS FOR THE A BOVE TWO ASSESSMENT YEARS 1997-98 AND 1998-99 ARE DISMISSED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 26 TH OCTOBER 2010. PM. COPY FORWARDED TO: 1. THE ACIT. CENTRAL CIRCLE KOTTAYAM. 2. SHRI T.O. ALEYAS THOTTAHTIL HOUSE RAMANCHIRA THI RUVALLA. 3. CIT(A)-I TRIVANDRUM. 4. CIT CENTRAL CIRCLE KOCHI. 5. D.R.