Rajesh Guptha, Cochin v. DCIT, Ernakulam

ITA 382/COCH/2009 | 2005-2006
Pronouncement Date: 25-07-2011

Appeal Details

RSA Number 38221914 RSA 2009
Bench Cochin
Appeal Number ITA 382/COCH/2009
Duration Of Justice 2 year(s) 1 month(s)
Appellant Rajesh Guptha, Cochin
Respondent DCIT, Ernakulam
Appeal Type Income Tax Appeal
Pronouncement Date 25-07-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 25-07-2011
Date Of Final Hearing 29-06-2011
Next Hearing Date 29-06-2011
Assessment Year 2005-2006
Appeal Filed On 25-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COC HIN BENCH COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN JM & S ANJAY ARORA AM I.T.A. NOS. 380 TO 383/COCH/2009 ASSESSMENT YEARS:2003-04-2006-07 SHRI RAJESH GUPTA R.R. FINANCIAL SERVICES G.RADHABAI BUILDING G.P. ROAD KOCHI-35. [PAN:ADHPGOO25B] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-2 ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY SHRI T.M.SREEDHARAN ADV. REVENUE BY SHRI S.R.SENAPATI SR. DR O R D E R PER N.VIJAYAKUMARAN JM ALL THESE FOUR APPEALS ARE BY THE ASSESSEE. THE A SSESSMENT YEARS INVOLVED ARE 2003-04; 2004-05 2005-06 AND 2006-07. THESE APPEA LS ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. CIT(A)-III KOCHI DATED 22.04.209. 2. THE ASSESSMENT FOR ALL THESE YEARS WERE FRAMED U /S. 153A R/W 143(3) OF THE I.T.ACT. 3. THE FACTS RELEVANT ARE:- THERE WAS A SEARCH AND SEIZURE ACTION CONDUCTED AT THE RESIDENCE AND BUSINESS PREMISES OF THE ASSESSEE ON 28.07.2005. THESE CHA LLENGED ADDITIONS BASED ON THE SEIZED NOTEBOOK WITH THE HEADING 1/8 THE RELEVANT ENTRIES MADE IN PAGES 136 TO 137 IN THAT SEIZURE NOTE BOOK. THIS IS MARKED AS MKG. 4. THE GROUND NO. 5 IN ALL THESE APPEALS PERTAINING TO ADDITION MADE VIDE ORDER U/S. 154 WAS NOT PRESSED DURING HEARING BEFORE US. THE ENDORSEMENT TO THAT EFFECT HAS BEEN ITA.NO.380-383 /COCH/2009 2 MADE BY THE LD. COUNSEL FOR THE ASSESSEE IN THE FA CE OF GROUNDS OF APPEAL ITSELF. HENCE THIS FIFTH GROUND FOR ALL THESE FOUR ASSESSMENT YEA RS UNDER APPEAL ARE DISMISSED AS NOT PRESSED. 5. ONE MORE COMMON ISSUE FOR ALL THE ASSESSMENT YEA RS UNDER APPEAL IS THE ALLEGED INCOME FROM UNACCOUNTED BUSINESS. THIS IS AS BELOW ON ASSESSMENT YEARWISE:- 2003-04 ` 3 53 360/- 2004-05 ` 7 48 090/- 2005-06 ` 11 80 560/- 2006-07 ` 10 99 640/- THIS ISSUE EMANATES FROM GROUND NO. OF THESE ASSESS MENT YEARS UNDER APPEAL. THE LD. AO FOUND THAT THE ASSESSEE IN THE RETURNS FROM A.Y. 2000-01 TO 2005-06 HAS NOT DECLARED ANY INCOME FROM MONEY LENDING BUSINESS. THEREFORE THE INTEREST FROM THE MONEY AVAILABLE FROM THE BHAGYALAKSHMI SCHEME AND THE SOU RCE AVAILABLE AT THE END OF EACH YEAR THE AO WORKED OUT AS UNDER:- F.Y. A.Y. AMOUNT COLLECTED DURING THE YEAR LESS EXPENSES DURING THE YEAR BALANCE AVAILABLE INTEREST ASSESSABLE AVAILABLE FUNDS AT END OF FINANCIAL YEAR 2000-01 2001-02 119000 16000 103000 3225 106225 2001-02 2002-03 347400 52000 295400 40314 441919 2002-03 2003-04 333000 64000 249000 88526 779465 2003-04 2004-05 318600 76000 242600 140009 1162074 2004-05 2005-06 304200 88000 216200 195256 1573530 2005-06 2006-07 194800 64000 130800 166764 1871094 634094 6. THE ASSESSEE WAS CONFRONTED WITH THE ABOVE COMP UTATION. THE ASSESSEE EXPLAINED THAT INTEREST WAS DECLARED FOR A.Y. 2005- 06 AND 2006-07. HOWEVER THE ITA.NO.380-383 /COCH/2009 3 ADMISSION OF THE ASSESSEE WAS THAT THE INCOME DECL ARED INCLUDES INCOME FROM OTHER CHITS SCHEME CONDUCTED BY HIM ALSO. THE ASSESSEE ALSO PL EADED THAT THE EXPENDITURE OF ` 1000/ PER MONTH INCURRED BY HIM AND THE AMOUNT PAID TO TH E SUBSCRIBERS OVER AND ABOVE THEIR CONTRIBUTION IS TO BE ALLOWED AS DEDUCTION AND THE AO WITHOUT HESITATION ALLOWED IT AS DEDUCTION TOWARDS EXPENDITURE. HOWEVER THE LD. AO WAS OF THE FIRM VIEW THAT INTEREST INCOME IS TO BE ASSESSED FOR EACH YEAR AND NOT AT T HE CONCLUSION OF THE SCHEME. THE AO ALSO TAKEN THE UNIT VALUE OF THE SCHEME AT ` 1000/- PER UNIT FOR REJECTING THE CLAIM OF THE ASSESSEE THAT IT IS ` 100/- PER UNIT. AT THIS JUNCTURE WE WANT TO OBSERV E THAT THIS ADOPTION OF ` 1000/- PER UNIT WAS OBJECTED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US OBJECTING THAT THERE IS NO BASIS FOR THIS ADOPTION. TO PROCE ED FURTHER THE LD. AO COMPUTED THE INTEREST INCOME FROM THE BHAGYALAKSHMI SCHEME FOR E ACH YEAR AND BROUGHT IT TO TAX FOR THE A.Y. 2003-04 TO 2006-07. IN OTHER WORDS THE A O FOUND -NIL- INTEREST INCOME FOR THE FIRST TWO YEARS I.E. 2001-02 AND 2002-03 FOR THAT WHOLE YEARS TO BE MADE U/S. 153A. THE ASSESSEE ON APPEAL THIS WAS CONFIRMED BY THE LD. C IT(A). 7. THE LD. CIT(A) BEFORE CONCLUDING BY LETTER DATED 17.12.2008 LISTED OUT THE DISPUTED ISSUES FOR FURTHER VERIFICATION AT THE LEV EL OF AO. HE HAD DISCUSSED THE ISSUE WITH THE CENTRAL CIT KOCHI:- 1. AS PER THE ASSESSMENT ORDER PRIZE MONEY IS ` 7000/- IN THE LAST 12 MONTHS WHEN COLLECTION PER MEMBER PER MONTH ACCORDING TO AO WAS ` 1000/- AND NOT ` 100 AS CLAIMED BY THE ASSESSEE. IN THE CIRCUMSTANCES AS NARRATED BY THE AO SHOULD NOT IT BE MORE THAN ` 7000 FOLLOWING AOS LOGIC? HENCE AO IS DIRECTED TO SUBSTANTIATE HIS CONTENTION BY PROVIDING THE ACCEPTABLE BASIS. 2. IN PAGE 2 OF THE ORDER FOR 2006-07 AO BASED HIS CALCULATION BY MULTIPLYING BY ` 1 LAC BUT ON WHAT BASIS IS NOT EASILY UNDERSTANDABL E. WHAT IS THE CORRECT CODE FOLLOWED BY THE AO AND WHAT IS THE COGENT REASONING FOR ADOP TING THE CODE. IF IT IS BASED ON ICICI BANK STATEMENT THEN AO SHOULD MAKE FROM ICICI BANK ABOUT CORRECTNESS OF THE CLAIM MADE BY HER IN THE ORDER. ITA.NO.380-383 /COCH/2009 4 3. VERIFICATION OF CREDITORS LIKE NAHID CREDITWO RTHINESS OF THE LENDERS SHOULD BE VERIFIED AND FOR WHAT PURPOSE THEY HAVE TAKEN LOANS AND WHAT IS THEIR FINANCIAL STATUS AND CREDITWORTHINESS NEEDED TO BE ASCERTAINED. 4. DETAILS OF THE BHAGYALAKSHMI SCHEME NAMES AN D ADDRESSES OF ALL THE MEMBERS AND ARE THEY TAX PAYERS MAY BE ASCERTAINED. ENQUIR Y WITH REFERENCE TO SOME OF THESE MEMBERS WILL REVEAL WHAT WAS THEIR CONTRIBUTION IN REALITY. 5. IN PAGE 6 OF THE REMAND REPORT AO OBSERVED T HAT FURTHER EVIDENCES FILED DURING APPEAL PROCEEDINGS ARE ALL FABRICATED WITH C ONNIVANCE OF LOAN CREDITORS AND DEBTORS. ON WHAT BASIS SHE HAS COME TO THAT CONCLUS ION. SHE HAS TO RELY ON CONCRETE PROOF BY CONFRONTING THE SO CALLED CREDITORS AS WEL L AS DEBTORS. SHE HAS TO VERIFY AND PROVIDE BASIS FOR HER CONCLUSION AND FOR HER FINAL ASSERTION SO THAT THE SAME CAN BE GIVEN DUE COGNIZANCE IN APPEAL PROCEEDINGS. THE RELEVANT VERIFICATION CONFINED TO THE ISSUE POI NT NO. 4. THIS WAS ANSWERED BY WAY OF REMAND REPORT DATED 25.3.2009 AND THE ASSESSEE WAS ALSO GIVEN OPPORTUNITY IN ACCORDANCE WITH NATURAL JUSTICE AND FINALLY THE LD . CIT(A) CONFIRMED THIS ADDITION UNDER THIS HEAD. 8. THE LD. COUNSEL FOR THE ASSESSEE WOULD CONTEND THAT THE DRAW WAS A SAVING SCHEME CONDUCTED BY THE ASSESSEE FIFTY SEVEN MONTH S PRIOR TO THE SEARCH WHICH WAS CALLED BHAGYALAKSHMI SCHEME. THERE ARE 300 UNITS O F ` 100/- EACH IN THIS SCHEME. UNDER THE SCHEME ANY PERSON COULD BUY ONE OR MORE UNITS. EVERY MONTH THE UNIT HOLDER HAS TO PAY TO THE ASSESSEE ` 100/- FOR EVERY UNIT HELD BY HIM. A DRAW WOULD BE H ELD EVERY MONTH AND FOR THE FIRST 12 MONTHS ONE WINNER WOULD BE GIVEN ` 3000/- AND HE WOULD HAVE TO GO OUT OF THE SCHEME. THE AMOUNT OF WINNINGS IS INCREASED BY ` 1000/- EVERY YEAR. THUS THE PAYMENTS TO THE WINNERS OF EACH UNIT DURIN G FIRST 12 MONTHS WAS ` 3000/- AND IN THE LATER 12 MONTHS WAS ` 7000/-. THE SCHEME WAS FOR 60 MONTHS WHICH GOT EXP IRED IN DECEMBER 2005. AS ON 1.8.2005 ONLY 243 UNITS WERE REMAINING AS 57 MONTHS HAS ELAPSED AND CONSEQUENTLY 57 MEMBERS WERE OUT OF T HE SCHEME. AS ON THE DATE OF SEARCH ITA.NO.380-383 /COCH/2009 5 IN OTHER WORDS THE LIABILITY OF THE ASSESSEE UNDER THIS SCHEME IS ` 14 58 000/- : (243 X 60X100). THE AMOUNT TO BE GIVEN TO 243 SUBSCRIBERS ADDS TO ANOTHER ` 2 43 000/- TOTALLY THE LIABILITY ON THE DATE OF SEARCH COMES AS TOTAL PAYABLE WHICH IS ` 17 01 000/-. 9. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED FURT HER THAT THE ALLEGED INTEREST INCOME FROM UNACCOUNTED BUSINESS THE ASSESSEES CLAIM IS T HAT HIS TRANSACTIONS WERE OF FOUR DIFFERENT TYPES AS RECORDED IN THE SEIZED NOTEBOOK PGS. 136 & 137. 1) EACH LOAN AND BHAGYALAKSHMI DRAW FROM VARIOUS PARTIES. 2) LOAN FROM BANK. 3) EACH LOAN AND CHITTY PAYMENTS. 4) MONTHLY RENT RECEIPT. HOWEVER THE AO HAS NOT ACCEPTED THE DISTINCTION OF THE CODE. THE AO CITED THE ICICI BANK LOAN AND APPLIED THE SAME CODE FOR THE LOAN. 10. THE ASSESSEE FILED CONFIRMATIONS AND EXPLANATI ONS RELATING TO BHAGYALAKSHMI SCHEME. BY WAY OF ASSESSEES PB-II THE ASSESSEE FILED CONFIRMATIONS FROM 22 PARTIES. THEY ALL CONFIRMED THAT THE BHAGYALAKSHMI SCHEME EA CH UNIT FACE VALUE IS ` 100/-. THE LD. CIT(A) ALSO OBTAINED A REMAND REPORT FROM THE A O WHEN THE LD. CIT(A) LISTED OUT THE ISSUES FOR FURTHER VERIFICATION. THE ARGUMENT ON B EHALF OF THE ASSESSEE WOULD BE THAT IN VIEW OF THE CONFIRMATIONS AND EXPLANATIONS THE UNIT VALUE SHOULD BE ACCEPTED AS ` 100/-. BASED ON THE SAME CONFIRMATIONS AND SATISFACTORY EX PLANATIONS THE MULTIPLIER FACTOR FOR LOAN SHOULD BE ACCEPTED AS ` 10 000/- AND NOT ` 1 LAKH AS ADOPTED BY THE AO. THE LD. AO ADOPTED THIS ` 1 LAKH BASED ON THE ENTRY RELATING TO ICICI BANK AN D LIC. THE ASSESSEE CONTENDS THAT ENTRIES WRITTEN ON A SINGLE PAGE BASE D ON CONFIRMATIONS AND EXPLANATIONS HAVE AMPLY ESTABLISHED THAT THE ENTRIES HAVE BEEN W RITTEN USING DIFFERENT MULTIPLIERS. 11. IT WAS FURTHER SUBMITTED THAT THE CONFIRMATION S COULD NOT BE FILED BEFORE THE FINALISATION OF THE ASSESSMENT AND SUBSEQUENTLY THE SE WERE FILED AT THE APPEAL STAGE. THEY HAVE IN FACT COLLECTED CONFIRMATIONS OF ALMOST ALL LOAN RECEIPTS AND PAYMENTS. THE ITA.NO.380-383 /COCH/2009 6 ASSESSEE CLAIMS THAT THE INSPECTORS REPORT IS CON TRARY TO THE TRUTH BEFORE ALL PEOPLE CATEGORICALLY CONFIRMED THE UNIT VALUE OF ` 100/- AND MULTIPLES OF ` 1000/-. THE LD. INSPECTOR HAS NO OTHER MATERIAL EXCEPT THE ONE SEIZ ED. IN THE ABSENCE OF CORROBORATIVE EVIDENCE THE INSPECTOR REPORTS THAT THESE ARE ALL F ABRICATED AND TUTORED BY SOMEBODY. TO ADD IN SUPPORT DURING THE SEARCH AT THE EARLIEST P OINT OF TIME IT WAS EXPLAINED TO THE SEARCH PARTIES THAT EACH LOAN RECEIPT AND BHAGYALAK SHMI SCHEME HAD MULTIPLIER OF ` 10 000/- EACH LOAN AND CHITTY PAYMENT HAD MULTIPLIE R OF ` 10 000/-. LOAN FROM ICICI BANK AND LIC HAD MULTIPLIER OF ` 1 LAKH RENTAL INCOME HAD MULTIPLIER OF ` 100/-. THIS WAS OFFERED AS EXPLANATION DURING THE SEARCH ITSELF. H ENCE IT IS AN AFTERTHOUGHT FABRICATED AND TUTORED AS CONTENDED BY THE DEPARTMENT IS TOTALLY UNJUSTIFIED IS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IT WAS FURTHER ARGUED TH AT THE ENTIRE STORY IS BASED ON PRESUMPTION GUESS WORK AND IMAGINATION OF THE DEPA RTMENT. 12. HENCE THE REJECTION OF THE CLAIM BY THE LD. CIT (A) IS ALSO NOT JUSTIFIED. THE LD. CIT(A) CONSIDERED THE REMAND REPORT THE DEPARTMENT WITH REGARD TO THE REMAND REPORT HAS FAILED TO CONSIDER THE CONFIRMATIONS AND EXPLAN ATIONS FILED. THE LD. CIT(A) WITHOUT PROPER APPRECIATION OF ALL THE EVIDENCE INCLUDING T HE SATISFACTORY EXPLANATION FROM THE ASSESSEE OBSERVED REGARDING FOUR DIFFERENT CODES F OR FOUR TYPES OF TRANSACTIONS THAT THE ASSESSEE HAS NOT SUBMITTED ANY ACCEPTABLE CORROBORA TIVE EVIDENCE. THE LD. CIT(A) ALSO SIDED WITH THE AO WHO WENT BY THE INFORMATION GATHE RED FROM LIC AND ICICI BANK AND ADOPTED THE MULTIPLIER OF ` 1 LAKH FOR ALL THE FOUR CATEGORIES OF TRANSACTIONS. AS POINTED OUT BY THE LD. CIT(A) ALSO IN HIS FINDINGS IT WAS OBSERVED THAT REGARDING THE THREE OTHER TYPES OF TRANSACTIONS THE ADOPTION OF MULTIPLIER I S NOT SUPPORTED BY ANY DIRECT CORROBORATIVE EVIDENCE WITH THE AO. THE LD. COUNSE L THEREFORE VEHEMENTLY ARGUED THAT BEING THE FACTUAL POSITION THE ADOPTION OF MULTIPL IER OF ` 1 LAKH FOR THE OTHER THREE TYPES OF TRANSACTION IS NOT JUSTIFIED AND THE LD. CIT(A) SHOULD HAVE INTERFERED WITH THE FINDING OF THE AO. ON THE CONTRARY THE LD. CIT(A) AGREED W ITH THE AO WHILE CONCLUDING HIS FINDING. THE LD. CIT(A) IS BLOWING HOT AND COLD AN D IT BEING AN ASSESSMENT IN PURSUANCE TO SEARCH THE SEARCH MATERIALS AND POST SEARCH EVI DENCES COLLECTED SHOULD HAVE BEEN WEIGHED WITH CAUTION. THE ADDITIONS BY ADOPTING TH E MULTIPLIER OF ` 1 LAKH FOR THE OTHER THREE TYPES I.E. INCOME FROM INTEREST UNEXPLAINE D CREDITS AND UNEXPLAINED AMOUNT ITA.NO.380-383 /COCH/2009 7 RECEIVED FROM THE UNIT HOLDERS OF BHAGYALAKSHMI SCH EME ARE TOTALLY BASELESS AND WITHOUT ANY CORROBORATIVE EVIDENCE HENCE THEY ARE TO BE ADO PTED WITH ` 10 000 MULTIPLIERS AS SATISFACTORILY EXPLAINED BY THE ASSESSEE THROUGH E XPLANATIONS AND CONFIRMATIONS IS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. TH E LD. COUNSEL ALSO INVITED OUR ATTENTION TO THE OBSERVATION OF THE LD. CIT(A) WHO SIMPLY OBS ERVED THAT THE CIT(A) COULD NOT OFFER COMMENTS AS THE LD. AO INTIMATED THAT NO FRUITFUL P URPOSE WILL BE SERVED AT THIS STAGE OF FURTHER EXAMINATION. THAT BEING THE STATE OF MIND OF THE LD. CIT(A) THEN THAT MADE THE LD. CIT(A) TO SEND A LETTER DATED 17.12.2008 BY WHICH T HE LD. CIT(A) LISTED VITAL FIVE ISSUES FOR FURTHER VERIFICATION AFTER TELEPHONICALLY DISCU SSING IT WITH THE JCIT ONE MORE LETTER IS DATED 03.12.2008 WHICH IS AN EARLIER ONE ARISING RE MAND REPORT. AFTER CHOOSING TO OBTAIN A REMAND REPORT AND THE OBTAINED REMAND REPORT WAS CONFRONTED WITH THE ASSESSEE AND THE ASSESSEE OFFERED SATISFACTORY EXPLANATIONS AND CON FIRMATIONS WERE ALSO AVAILABLE BEFORE THE LD. CIT(A) THE LD. CIT(A) HAVING UNDISPUTED CO -TERMINUS POWER SHOULD HAVE ADJUDICATED THE ISSUE WITH RELEVANCE TO THE MATERIA LS AND THE EXPLANATIONS SO OFFERED. WITHOUT DOING SO HE SIMPLY ACTED ON THE AOS INTIM ATION WHO INTIMATED THAT NO FRUITFUL PURPOSE WILL BE SERVE. THIS IS TOTALLY AGAINST LAW AND UNJUSTIFIED. 13. HENCE THE LD. COUNSEL HUMBLY PRAYED THAT ALL TH E ESTIMATES TAKING THE UNIT VALUE AT ` 1000/- IS TOTALLY BASELESS. THE ASSESSEE EXPLAINE D AND FILED CONFIRMATIONS FROM THE PARTIES THAT THE UNIT VALUE IS ` 100/-. THE ASSESSEES SWORN STATEMENT AT THE TIME OF SEARCH AND IMMEDIATELY AFTER SEARCH WOULD SHOW THAT THE UN IT VALUE IS ONLY ` 100/-. THE ENQUIRY REPORT THE COPY AVAILABLE IN ASSESSEES PB-II PGS. 38 TO 41 ALSO CORROBORATES THE ASSESSEES EXPLANATION. HENCE THE DECISION TO THE CONTRARY IS NOT SUSTAINABLE. 14. THE SAME ARGUMENT OFFERED BY THE LD. COUNSEL FO R ALL THE OTHER THREE YEARS I.E. 2004-05 2005-06 AND 2006-07. FURTHER THE LD. COU NSEL RELIED ON THE DECISION OF ITAT AHMEDABAD REPORTED IN (2010) 4 ITR 670 ON IDENTICAL SET OF FACTS TO SUPPORT THE CONTENTION. 15. THE LD. SR. DR VEHEMENTLY OPPOSED THESE APPEALS . THE LD. SR. DR ARGUED THAT THE DEPARTMENT PROCEEDED WITH THE SEIZED MATERIALS MKG PGS.136 TO 137. THE NOTINGS ITA.NO.380-383 /COCH/2009 8 ALREADY SHOW THAT THE IF THE MULTIPLIER IS ` 100/- THE UNIT VALUE IS ` 1000/- AND NOT ` 100/-. THE SAME PAGE BEARS ENTRY UNDER ICICI AND LIC WHERE IN THE MULTIPLIER IS ` 1 LAKH WHICH IS NOT DENIED BY THE ASSESSEE. IT IS FOR THE ASSES SEE TO OFFER SUFFICIENT SATISFACTORY EXPLANATION ABOUT THE NATURE OF THE ENTRY IN THE SE IZED MATERIAL. THE ASSESSEE COULD NOT OFFER SUFFICIENT SATISFACTORY EXPLANATION. THE ASS ESSEE COULD NOT AVOID ADDITION BASED ON THE SEIZED MATERIALS. IT IS NOT THE CASE THAT THE DEPARTMENT DOES NOT POSSESS ANY SEIZED MATERIAL. THE SR. DR SUBMITTED THAT AS PER SECTION 68 69 AND 69A THESE ADDITIONS ARE MADE IN ACCORDANCE WITH LAW AND THE ASSESSEE APPEA LS ARE DESERVED TO BE DISMISSED IS THE BONE OF CONTENTION OF THE LD. SR. DR. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PRECEDENTS RELIED UPON. 16. THE UNDISCLOSED INCOME IS TO BE BASED ON EVIDE NCE FOUND IN THE SEARCH MATERIAL OR INFORMATION GATHERED IN POST SEARCH INQUIRIES MADE ON THE BASIS OF EVIDENCE FOUND IN THE SEARCH. THE INTERPRETATION OF THE SEIZED DOCUMENTS SHOULD BE MADE WITH REGARD TO THE FACTS AVAILABLE IN THE SEIZED DOCUMENTS AND INQUIRI ES. THE EXPLANATION OFFERED BY THE ASSESSEE WITH REGARD TO THE MATERIAL PARTICULARS S HOULD ALSO BE TAKEN INTO CONSIDERATION. THE LIST OF INVENTORIES ALSO PLAYS A VITAL ROLE. T HE INVENTORIES ARE FOR THE NORMAL LIFE OF A PERSON NECESSARY FOR A PEACEFUL CONVENIENT LIVING. THE INVENTORY OF JEWELLERY IS ALSO BARE MINIMUM REQUIREMENT AND NOT OF AN EXCESS POSSESSION . THE INVENTORIES ARE OF SILVER MATERIALS OF BARE MINIMUM NECESSITY OF THE PERSON O F THE STATUS OF THE ASSESSEE AND THEY ARE NOT TO BE CONSIDERED AS EXCESSIVE. THE JEWELLE RY MOST OF THEM IS OF DAILY WEAR OF ORDINARY WOMEN IN SOCIETY. CASH FOUND ALSO IS OF B ARE MINIMUM AND IT IS REFLECTED IN THE BOOKS OF ACCOUNTS. RATHER IT IS DISCLOSED IN THE B OOKS. THE SEIZED MATERIAL IS MKG-1 NOTEBOOK OF PAGES 136 & 137. THE CONTENTION OF THE ASSESSEE WOULD BE THAT THERE ARE FOUR DIFFERENT CODES USED FOR THE TRANSACTIONS. THE MULTIPLIER FACTOR FOR LOAN TRANSACTIONS SHOULD BE AS ` 10 000/- AND NOT ONE LAKH AS ADOPTED BY THE AO. TH E ONE LAKH MULTIPLIER APPLIES ONLY TO BANK LOAN AND LIC. RENTAL MULTIPLI ER IS ` 1000/- AND IT IS EVIDENT THAT IN COIMBATORE RENT AS A WHOLE IS 65.00 X 1000 = ` 65 000/- ONLY AND IT COULD NOT BE AN IMAGINARY FIGURE OF ` 65 LAKHS AS THAT OF MULTIPLIER ADOPTED. THE LD. AO IMPLIEDLY ITA.NO.380-383 /COCH/2009 9 ACCEPTED THE COIMBATORE FLAT RENT AT ` 65 000/- ONLY WHICH WILL CLEARLY ESTABLISH THAT THE RE ARE DIFFERENT MULTIPLIERS ADOPTED AS IN THE PAGES 1 36 AND 137 OF THE SEIZED MATERIAL. THEY ARE ITEMWISE AND MULTIPLIERWISE SEGREGATED AND DIFF ERENT AND FOUR KINDS OF MULTIPLIERS WERE DEPLOYED FOR THE ITEMWISE TRANSACTIONS. THIS IS EVIDENT FROM THE SEIZED MATERIAL. THAT CANNOT BE BRUSHED ASIDE AS THEY ARE ESTABLISHE D TO THE SATISFACTION AS REQUIRED BY LAW. 17. THE UNIT OF BHAGYALAKSHMI SCHEME IS ` 100/-. TO THAT EXTENT THE ASSESSEES EXPLANATION BY WAY OF CONFIRMATIONS WERE FILED FROM SOME OF THE SUBSCRIBERS. THE REMAND REPORT AND THE ENQUIRY REPORT SUPPORTS THE E XPLANATION SO OFFERED BY THE ASSESSEE. NOTHING CONTRARY HAS BEEN BROUGHT ON RECORD EXCEPT FROM TWO PERSONS WHOSE STATEMENTS WERE VERY CLUMSY AND THEY ARE NOT ABLE TO CERTIFY T HE SAME WITH CREDENCE. HENCE THE MAJORITY CONFIRMATION HAS TO BE TAKEN DISCARDING ON E OR TWO SUBSCRIBERS STATEMENT WHICH IS UNTRUSTWORTHY AND UNRELIABLE. THE DECISION OF T HE AHMEDABAD BENCH RELIED UPON BY THE LD. COUNSEL REPORTED IN (2010) 4 ITR 670 IN THE CASE OF DY. CIT (INVESTIGATION) VS. TULSIBHAI MAVJIBHAI SHANKAR AND VICE- VERSA DIRECTLY FIT INTO THE FACTS OF THE PRESENT APPEALS. THE FACTS WERE ALMOST IDENTICAL. IN OUR H UMBLE VIEW THE ASSESSEE HAS DISCHARGED THE BURDEN AND THE ASSESSEE HAS OFFERED SUFFICIENTLY PLAUSIBLE EXPLANATION WITH REGARD TO THE ENTRIES IN THE SEIZED MATERIAL. THE P OST SEARCH ENQUIRIES ALSO SUPPORTS THAT THERE WERE FOUR DIFFERENT MULTIPLIERS. THE LD. CIT (A) ALSO LISTED OUT ISSUES FOR VERIFICATION AFTER DISCUSSING THE ISSUE WITH THE LD. CENTRAL CIT . THE REMAND REPORTS WERE ALSO OBTAINED. THE ENQUIRY REPORT WAS ALSO AVAILABLE BY WAY OF ASSESSEES PAPER BOOK. THE LD. COUNSELS CONTENTION IS THAT THE REMAND REPORT OF T HE LD. AO ALMOST ACCEPTED THE TRANSACTION AS GENUINE. NO DOUBT CAST ON THE GENUI NENESS OF THE TRANSACTIONS AND THE IDENTITY OF PARTIES NOR THE CAPACITY OF THE SUBSCR IBERS WERE DOUBTED. HENCE WE ARE OF THE VIEW THAT THE ORDER OF THE AUTHORITIES ARE TO B E SET ASIDE AND THE MULTIPLIER FACTOR AS SHOWN BY THE ASSESSEE HAS TO BE ACCEPTED AS OF FOU R DIFFERENT MULTIPLIERS FOR THE (1) LOAN AND BHAGYALAKSHMI DRAW FROM VARIOUS PARTIES (2) LOA N FROM BANK (3) EACH LOAN AND CHITTY PAYMENT AND FINALLY THE MONTHLY RENTAL RECEI VABLES. HENCE WE ALLOW THE GROUNDS OF THE ASSESSEE PERTAINING TO THE MULTIPLIER FACTOR ADOPTION WITH RELEVANCE TO THE ASSESSMENT YEARS UNDER APPEALS. ITA.NO.380-383 /COCH/2009 10 18. ONE MORE SOLITARY ISSUE FOR THE ASSESSMENT YEAR UNDER APPEAL FOR ASSESSMENT YEAR 2006-07 IS REGARDING YET ANOTHER ADDITION OF UNCON FIRMED LOAN TO THE TUNE OF 1 21 07 000/- AND UNEXPLAINED REPAYMENT OF LOAN TO THE EXTENT OF ` 46 93 000/-. 19. THE LD. COUNSEL FOR THE ASSESSEE WOULD SUBMIT THAT IT IS AN ESTIMATED ADDITION ON ACCOUNT OF UNCONFIRMED LOAN AND INVITED OUR ATTENTI ON TO PARA 9 OF THE ASSESSMENT ORDER. THE LD. COUNSEL FURTHER SUBMITTED THAT THIS ESTIMAT E IS ALSO MADE BY RELYING ON THE MULTIPLIER FACTOR ON SEIZED DOCUMENT MKG-I AT PG. 1 36. THE NOTINGS THEREON FROM THE CODE SUCH AS 3.5 2.5 13.0 ETC. WHICH WAS EXPLAINE D BY THE ASSESSEE AT THE INITIAL STAGE I.E. IN THE SWORN STATEMENT AND THROUGH CONFIRMATI ON LETTERS. ON THE OTHER HAND LETTERS PRODUCED BEFORE THE ASSESSING OFFICER AFTER THE REM AND BY THE CIT(APPEAL) AND THE ENQUIRY REPORT SUBMITTED BY THE INCOME TAX INSPECTO R PURSUANT TO THE REMAND WOULD SHOW THAT ALL THE PARTIES HAVE CONFIRMED THE TRANSA CTIONS WHEREIN THEY CORROBORATED THAT THE AMOUNT REPRESENTED BY THE CODE IS ` 10 000/- PER UNIT. HOWEVER THIS WAS REJECTED BY THE AO WHO ADOPTED THE MULTIPLIER FACTOR AS ON 1 LA KH BASIS ON THE BANK LOAN FOR EACH UNIT. ON THE OTHER HAND LETTERS PRODUCED BEFORE T HE ASSESSING OFFICER AFTER THE REMAND BY THE CIT(APPEAL) AND THE ENQUIRY REPORT SUBMITTED BY THE INCOME TAX INSPECTOR PURSUANT TO THE REMAND WOULD SHOW THAT ALL THE PART IES HAVE CONFIRMED THE TRANSACTIONS WHEREIN THEY CORROBORATED THAT THE AMOUNT REPRESENT ED BY THE CODE IS ` 10 000/- PER UNIT ONLY AND NOT AS ` 1 LAKH PER UNIT CONSIDERING THAT THE VALUE OF THE AGGREGATE TRANSACTION IS ONLY ` 12 10 700/-. THE AO ENHANCED IT TO AN ALARMING FIG URE OF ` 1 21 07 000/- . THEREFORE THE LD. COUNSEL WOULD SUBMIT THAT THE MU LTIPLIER FACTOR OF ` 10 000/- IS ONLY THE MULTIPLIER CODE THE AO SHOULD HAVE ADOPTED FOR THIS TRANSACTION. 20. THE SECOND ADDITION OF ` 46 93 000/- IS REFLECTED IN PARA 10 OF THE ASSESSME NT ORDER THE ADDITION IS BASED ON THE ENTRIES CONTAINED IN T HE SEIZED NOTE BOOK MARKED MKG-1 AT PG. 137.. THE LOAN GIVEN IS RECORDED AS 180.13 WHI CH IF CONVERTED AT THE RATE OF MULTIPLIER ` 10 000/- PER UNIT IT COMES TO ` 18 01 300/-. HOWEVER THE AO ADOPTED THE SAME MULTIPLIER AT ` LAKH PER UNIT AS WAS ADOPTED IN THE EARLIER TRANS ACTIONS. BY THIS PROCESS THE ESTIMATION BY THE AO IS OF ALARMING FIGURES WHI CH IS 10 TIMES OF THE ACTUAL AMOUNT. ITA.NO.380-383 /COCH/2009 11 THIS ADDITION IS ON AN ESTIMATE BASIS AND ADDED TO THE INCOME WHICH IS UNJUSTIFIED FIRSTLY ON THE GROUND THAT THE MULTIPLICATION OF THE UNIT B Y ONE LAKH IS TOTALLY ARBITRARY WITHOUT ANY MATERIALS. ON THE OTHER HAND THE LD. SR.DR RE LIED ON THE ORDERS OF THE AUTHORITIES BELOW. 21. THE MULTIPLIER FACTOR FOR THE BANK WHICH IS A L OAN SHOULD ALSO BE TAKEN UNDER THIS HEAD OF LOAN FOR ITS ESTIMATION IS THE ARGUMENT OF THE LD. SR. DR. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SAME DECISION WHICH WE MADE FOR THE EARLIER ISSUE W ILL HOLD GOOD FOR THIS ISSUE ALSO. IT HAS BEEN CLEARLY ESTABLISHED BY THE ASSESSEE THAT T HE FOUR MULTIPLIER CODES HAVE BEEN ADOPTED FOR EACH AND EVERY TRANSACTION THE CONFIRM ATION LETTERS THE SWORN STATEMENT SUPPORTS THE SAME. EXCEPT FOR ONE ISSUE THAT OF T HE BANK LOAN OF ` 1 LAKH PER UNIT AS A MULTIPLIER NO OTHER DOCUMENT IS RELIED UPON BY THE AO FOR ARRIVING AT THE ` 1 LAKH MULTIPLIER FOR THIS TRANSACTION. AS RIGHTLY POINT ED OUT THE SEIZED DOCUMENT WHEREIN THE BANK LOAN HAS BEEN SEPARATELY SHOWN. WITH DIFFERENT MULTIPLIERS. SO ALSO THE MONTHLY RENT MULTIPLIER IS DIFFERENT . THE PER UNIT MULTIPLIER I S DIFFERENT. THE LOAN TRANSACTIONS BOTH THE CREDITORS AND THE DEBTORS TRANSACTIONS ARE ALSO OF ` 10 000 PER UNIT. THIS HAS BEEN CLEARLY ESTABLISHED. FURTHER THE SEIZED DOCUMENTS AS WELL AS THE INVENTORY AS TAKEN CLEARLY SHOW THAT THERE IS NO EXCESS BELONGINGS IN THE POSSESSIO N OF THE ASSESSEE THAN THE NORMAL EXPECTED PERSONS LIVING STANDARD. THE DEPARTMENT HAS NOT UNEARTHED THE ANY UNACCOUNTED PURCHASE OF MOVABLE AND IMMOVABLE PROPE RTY AND THERE IS NO SEIZURE OF ALARMING CASH IN HAND WHICH WILL GO TO SHOW THAT TH E TRANSACTION OF A MULTIPLIER AS EXPFLAINED BY THE ASSESSEE IS SUITABLE AND FIT INT O THE TRANSACTIONS FOR EACH AND EVERY FOUR TRANSACTIONS WHICH THE ASSESSEE HAS SATISFACTORILY EXPLAINED BEFORE US AND WE HAVE NO HESITATION IN ACCEPTING TH SAME. UNDER THE ABOVE F ACTS AND CIRCUMSTANCES THE ORDER OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSE ES APPEAL IS ALLOWED AND ALLOWED ON THI GROUND. 23. COMING TO THE LAST ISSUE WHICH PERTAINS TO THE ADDITION OF ` 5 50 000/- MADE AS PER THE ORDER U/S. 154 DATED 7.7.2008 WE FIND THAT WHE N THE ISSUE WAS RAISED THERE WAS NO ITA.NO.380-383 /COCH/2009 12 ARGUMENT SUPPORTING THE GROUND WHICH REQUIRES TO BE CONSIDERED. FURTHER THE LD. DR ARGUED THAT IN THE ABSENCE OF SATISFACTORY EXPLANAT ION THE ADDITION MADE AS PER ORDER U/S. 154 DATED 7.7.2008 REQUIRES NO INTERFERENCE AND THE RE IS NO JUSTIFICATION TO INTERFERE WITH THAT. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IT WAS ALSO SUBMITTED BY BOTH THE PARTIES THAT THE LD. CIT(A) REMITTED THE ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION. WHEN THERE IS NO GRIEVA NCE PROJECTED BY THE ASSESSEE IN REMITTING THE ISSUE TO THE AO FOR RE-ADJUDICATION I N ACCORDANCE WITH LAW WE RESTRAIN OURSELVES FROM INTERFERING WITH SUCH DIRECTION UNLE SS IT HAS BEEN SPECIFICALLY POINTED OUT AS A GRIEVANCE ON THE PART OF THE ASSESSEE . 25. IN THE RESULT ALL THE ASSESSEES APPEALS ARE PARTLY ALLOWED. SD/- SD/- (SANJAY ARORA) (N. VIJAYAKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER PLACE: ERNAKULAM DATED: 25TH JULY 2011 GJ COPY TO: 1.SHRI RAJESH GUPTA R.R.FINANCIAL SERVICES G.RADH ABAI BUILDING G.P.ROAD KOCHI-35 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL C IRCLE-2 ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-III KOC HI. 4. THE COMMISSIONER OF INCOME-TAX CENTRAL KOCHI 5. D.R./I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. ITA.NO.380-383 /COCH/2009 13 ITA.NO.380-383 /COCH/2009 14