C.D. Boss Proptietor, Thrissur v. ACIT, Thrissur

ITSSA 157/COCH/2005 | misc
Pronouncement Date: 27-10-2010

Appeal Details

RSA Number 15721916 RSA 2005
Assessee PAN ACFPB6596D
Bench Cochin
Appeal Number ITSSA 157/COCH/2005
Duration Of Justice 5 year(s) 2 month(s) 9 day(s)
Appellant C.D. Boss Proptietor, Thrissur
Respondent ACIT, Thrissur
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 27-10-2010
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 27-10-2010
Date Of Final Hearing 01-09-2010
Next Hearing Date 01-09-2010
Assessment Year misc
Appeal Filed On 17-08-2005
Judgment Text
IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN JM AND SANJAY AR ORA AM I.T(SS).A NOS. 157/COCH/ 2005 BLOCK PERIOD: 1.4.1990 TO 12.10.2000 SHRI C.D.BOSE PROPRIETOR CHEMMANNUR FASHION JEWELLERY CHEMMANNUR HOUSE AVENUE ROAD THRISSUR [PAN: ACFPB 6596D] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE THRISSUR. (ASSESSEE -APPELLANT) (REVENUE - RESPONDENT) I.T.(SS)A NOS. 164 & 165/COCH/ 2005 BLOCK PERIOD : 1.4.1990 TO 12.10.2000 THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE THRISSUR. VS. SHRI C.D.BOSE PROPRIETOR CHEMMANNUR F ASHION JEWELLERY CHEMMANNUR HOUSE AVENUE ROAD THRISSUR (REVENUE-APPELLANT) (ASSESSEE -RESPONDENT) OR D E R PER SANJAY ARORA AM: THESE ARE CROSS-APPEALS I.E. BY THE ASSESSEE AND THE REVENUE CONTESTING THE APPELLATE ORDER BY THE COMMISSIONER OF INCOME-TAX ( APPEALS)-I KOCHI (CIT(A) FOR SHORT) DATED 7.6.2005 DISMISSING THE ASSESSEES APP EAL AGAINST ITS ASSESSMENT FOR THE BLOCK PERIOD 1.4.1990 TO 12.10.2000 VIDE ORDER U/S. 158BC R/W S. 143(3) OF THE INCOME-TAX ACT 1961 ('THE ACT' HEREINAFTER) DATED 29.10.2002. THE THIRD APPEAL (IT(SS)A NO. ASSESSEE BY DR. K.B. MOHAMMED KUTTY SR. COUNSEL-AR REVENUE BY SHRI S.C.SONKAR CIT-DR REVENUE BY SHRI S.C.SONKAR CIT-DR ASSESSEE BY DR. K.B.MOHAMMED KUTTY SR. COUNSEL-AR IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 2 164/COCH/2005) IS BY THE REVENUE IMPUGNING THE APPE LLATE ORDER BY THE LD. CIT(A) OF EVEN DATE IN RESPECT OF THE RECTIFICATION ORDER U/S . 154 DATED 22.9.2004 PASSED IN ITS CASE. 2. WE SHALL TAKE UP THE ASSESSEES APPEAL FIRST. TH E SAME RAISES A SINGLE ISSUE I.E. THE CONFIRMATION OF THE NON-ACCEPTANCE OF THE CASH INFL OW AT RS. 13 29 280/- INCLUDED BY THE ASSESSEE IN HIS CASH FLOW STATEMENT PREPARED TO EXP LAIN HIS VARIOUS ASSETS/INVESTMENTS; THE BLOCK ASSESSMENT BEING FRAMED BY THE ASSESSING OFFI CER (A.O.) ON THE NET ACCRETION TO WEALTH METHOD I.E. OVER THE BLOCK PERIOD. 3. THE BACKGROUND FACTS OF THE CASE ARE THAT THE AS SESSEE AN INDIVIDUAL IS IN RETAIL BUSINESS IN GOLD JEWELLERY THROUGH HIS PROPRIETARY CONCERN CHEMMANNUR FASHION JEWELLERY AT PALAKKAD. A SEARCH U/S. 132 OF THE AC T WAS CONDUCTED AT HIS BUSINESS AND RESIDENTIAL PREMISES ON 12.10.2000 AND VARIOUS BOOK S OF ACCOUNTS AND DOCUMENTS SEIZED INCLUDING CASH (RS. 2 LAKHS) AND GOLD JEWELLERY (38 51.95 GMS.). THE SEIZED DOCUMENTS LISTED AS `KPU-AI(5) INCLUDED A LOOSE SHEET SHOWIN G SALES AS ON 11.10.2000 OF 2849.88 GMS. (AT RS. 13 51 827/-) AT PALAKKAD SHOP WHILE T HE BOOKS OF ACCOUNTS REFLECTED SALES AT 90.83 GMS. AT RS. 42 531/- ONLY. THE DOCUMENTS ALS O REVEALED ADMITTED UNACCOUNTED STOCK OF 788.52 GMS. AT THE SHOP AS ON THE DATE OF SEARCH. 4. COMING TO THE SOLE ISSUE UNDER REFERENCE TH E BASIS FOR THE AOS NON-ACCEPTANCE OF THE STATED NATURE AND SOURCE OF THE IMPUGNED CASH ( INFLOW) OF RS. 13.29 LACS WAS THE NON- SUBSTANTIATION OF THE EXPLANATION/S IN RESPECT THER EOF I.E. OF IT REPRESENTING SALE PROCEEDS OF THE DEPOSITS OF GOLD ORNAMENTS BY THE GOLDSMITHS WITH IT AS A PART OF THE CUSTOMARY TRADE PRACTICE. THE SAME STOOD CONFIRMED BY THE LD . CIT(A) ON THE SAME BASIS. IT WAS FURTHER OBSERVED BY HIM THAT A SIMILAR CLAIM MADE IN THE SUM OF RS. 27.69 LAKHS IN THE CASE OF THE ASSESSEES FATHER SHRI C.I. DEVASSIKUT TY PROPRIETOR CHEMMANNUR GOLD SUPER MARKET VADAKARA FOUND NON-ACCEPTANCE BY THE FIRST APPELLATE AUTHORITY VIDE ITS ORDER DATED 5.1.2004. THE FACTS AND CIRCUMSTANCES OF THE CASE BEING THE SAME HE SAW NO REASON TO TAKE A DIFFERENT VIEW EVEN AS HE AGREED AND ENDORSED THE AOS FINDING OF THE ASSESSEE HAVING MADE A FALSE CLAIM. AGGRIEVED THE ASSESSEE IS IN APPEAL. IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 3 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MATTER IS WHOLLY FACTUAL AND WITHOUT DOUBT THE FACTS AND THE CIRCU MSTANCE OF THE CASE AND THAT OBTAINING IN THE CASE OF THE ASSESSEES FATHER SHRI C.I. DEV ASSIKUTTY WHOSE PREMISES WERE ALSO SEARCHED ALONG WITH THE SAME; THE AMOUNT INVOLVED BEING HIGHER AT RS. 27.69 LACS. THIS WAS ALSO THE AGREED POSITION BETWEEN THE PARTIES AT THE TIME OF HEARING WITH THE APPELLANT-ASSESSEE BEING REPRESENTED BY THE SAME CO UNSEL I.E. AS IN THAT CASE RAISING THE SAME CONTENTIONS/ARGUMENTS. THE TRIBUNAL (COCHIN BE NCH) IN THE SAID CASE AFTER A DETAILED EXAMINATION OF THE ENTIRE EVIDENCES RELIED UPON BY THE ASSESSEE UPHELD THE ORDERS OF THE AUTHORITIES BELOW AND CONFIRMED THE A DDITION VIDE ITS ORDER DATED 5.10.2010 (COPY ON RECORD). WE HAVE PERUSED THE ORDER BY THE TRIBUNAL. EACH OF THE ASPECTS RAISED BY THE ASSESSEE AND THE REVENUE INCLUDING THE LEGA L ARGUMENT/S ADVANCED STAND CONSIDERED BY THE TRIBUNAL RENDERING ITS FINDINGS VIDE PARA 4 OF ITS ORDER CONFIRMING THE ORDERS BY THE REVENUE AUTHORITIES. WE HAVE AS SUCH NO HESITATION IN ADOPTING THE FINDINGS BY THE TRIBUNAL IN THAT CASE AND UPHOLDING THE FIND INGS BY THE AUTHORITIES BELOW IN THE PRESENT CASE. THE ASSESSEES SPECIFIC GROUND NO. 3 BEFORE US IS AGAIN ONLY IN RESPECT OF ONE SUCH EVIDENCE WHICH IS ALLEGED TO HAVE NOT BEE N PROPERLY APPRECIATED BY THE REVENUE AUTHORITIES. THE SAME GROUND STOOD ALSO RAISED AND CONSIDERED BY THE TRIBUNAL IN THE CASE OF SHRI C.I.DEVASSIKUTTY VIDE PARA 4.8 OF ITS ORDER . THE MATTER THUS STANDS SQUARELY COVERED BY THE SAID ORDER BY THE TRIBUNAL. WE DECID E ACCORDINGLY DISMISSING THE ASSESSEES GROUNDS OR APPEAL. 6. THE REVENUES APPEAL RAISES A SINGLE ISSUE I.E. QUA THE MAINTAINABILITY OF THE LEVY OF SURCHARGE ON THE TAX ASSESSED IN BLOCK ASSESSMEN T I.E. FOR THE SEARCHES CONDUCTED PRIOR TO 1/6/2002 THE DATE OF AMENDMENT TO S. 113 OF THE ACT. THE SAME STANDS DELETED BY THE LD. CIT(A) ON THE BASIS THAT THE AMENDMENT EFFECTIVE 1/6/2002 TO SECTION 113 OF THE ACT PER FINANCE ACT 2001 WHEREBY THE LEVY OF SURCHARGE STOOD EXTENDED TO ASSESSMENTS U/S. 158BC IS ONLY PROSPECTIVE IN NATU RE AND WOULD THUS NOT BE APPLICABLE IN THE PRESENT CASE; THE BLOCK PERIOD ENDING ON 12. 10.2000. THE MATTER HAS SINCE BEEN CLARIFIED BY THE HONBLE APEX COURT VIDE ITS DECISI ONS IN THE CASE OF CIT V . SURESH N. GUPTA 297 ITR 322 (SC) AND CIT VS. RAJIV BHATARA 310 ITR 105 (SC) HOLDING THE IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 4 PROVISO TO SECTION 113 TO BE CLARIFICATORY AND CURATIVE IN NATURE SO THAT IT WOULD THEREFORE BE APPLICABLE TO ALL ASSESSMENTS MADE UNDER CHAPTER XIV-B AS PER THE RATE SPECIFIED UNDER THE RELEVANT FINANCE ACT I.E. THAT APPLICAB LE TO THE DATE OF SEARCH. THERE IS WE OBSERVE NO DISPUTE WITH REGARD TO THE RATE OF THE S URCHARGE - WHICH IN ANY CASE IS ONLY A MATTER OF RECORD - BUT ONLY WITH REGARD TO ITS APPL ICABILITY OF THE SAID SECTION. THE ISSUE THUS STANDS RESOLVED IN FAVOUR OF THE REVENUE. I.T.A. 164/COCH/2005 (REVENUES APPEAL) 7.1 THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASS ESSEE SUBSEQUENT TO HIS ASSESSMENT UNDER CHAPTER XIV-B OF THE ACT (FOR THE BLOCK PERIO D ENDING 12.10.2000) ON 29.10.2002 MOVED AN APPLICATION U/S. 154 OF THE ACT ON 15.11.2 002 STATING THAT THERE HAD OCCURRED A MISTAKE THEREIN IN-AS-MUCH AS IT STANDS ALLOWED DED UCTION IN COMPUTING HIS NET WEALTH AS ON 12.10.2000 IN RESPECT OF KURI LIABILITY AT RS. 5 07 556/- AS AGAINST THE CORRECT AMOUNT OF RS. 28 27 556/- LEADING TO AN OVER-ASSESSMENT O F HIS CAPITAL AND THUS INCOME FOR THE BLOCK PERIOD BY RS. 23 20 000/-; ALSO FURNISHING T HE BREAKUP OF THE SAID LIABILITY AS UNDER:- (AMOUNT IN RS.) I) SREE GOKULAM CHITS : 23 20 000/- II) OTHERS : 5 07 556/ - 28 27 556/- REFERENCE WAS ALSO PURPORTEDLY MADE TO THE BAL ANCE-SHEET SUBMITTED ALONG WITH THE RETURN OF UNDISCLOSED INCOME WHEREIN THE AMOUN T OF LIABILITY TO SREE GOKULAM CHITS STOOD REFLECTED PER SCHEDULE `B NAMELY `CURRENT ASSETS AND LIABILITIES THERE-TO. THE AO VIDE HIS ORDER U/S. 154 DATED 20.11.2002 FINDIN G THE ASSESSEES CONTENTION AS CORRECT RECTIFIED THE SAID MISTAKE REDUCING THE UNDISCLOSE D INCOME BY THAT AMOUNT TO RS. 17 85 110/- I.E. AS AGAINST RS. 41 05 110/- ASSESSED EARLIER. 7.2 SUBSEQUENTLY HOWEVER IT WAS NOTICED THAT THE VALUE OF THE PORTFOLIO `SUNDRY CREDITORS ADOPTED AT RS. 82 80 482/- CREDIT IN RESPECT OF WHICH STOOD ALREADY ALLOWED IN THE ASSESSMENT OF INCOME AT RS. 41.05 LAKHS VIDE OR DER DATED 29.10.2002 INCLUDED THE IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 5 SUM OF RS. 23 20 000/- DUE TO SREE GOKULAM CHITS (SGC). AS SUCH THE SUB SEQUENT RECTIFICATION ORDER REDUCING THE INCOME BY RS. 23 2 0 000/- WAS A MISTAKEN ONE AND WAS REQUIRED TO BE AMENDED ACCORDINGLY. NOTICE UNDER S . 154(3) WAS ACCORDINGLY ISSUED TO THE ASSESSEE WHO REPLIED VIDE HIS LETTERS DATED 20 .1.2003 (PLACED ON RECORD) AND 25.8.2003 (REFER PB PG. 11 TO 15) . THE GIST OF HIS ARGUMENTS IS AS UNDER:- A) THE LIABILITY FOR RS. 23 20 000/- TO SGC STOOD ADMITTEDLY INCLUDED IN THE SUM OF RS.82 80.482/- CREDIT IN RESPECT OF WHICH STANDS AL LOWED IN THE BLOCK ASSESSMENT; B) HOWEVER LIABILITY FOR RS. 23 71 390/- (FORMING PART OF THE BALANCE-SHEET) STOOD OMITTED TO BE CONSIDERED. THE RESEMBLANCE OF THE S AID FIGURE WITH RS. 23 20 000/- WAS STATED TO BE THE REASON FOR THE EARLIER WRONG CLAIM QUA SREE GOKULAM CHITS. 7.3 THE AO FOUND THAT THE ASSESSEES AFORESTAT ED SECOND CLAIM UNACCEPTABLE. FIRSTLY THE ALLOWANCE OF THE CLAIM IN RESPECT OF LIABILITY TO SREE GOKULAM CHITS FOR RS. 23 20 000/- VIDE ORDER U/S. 154 DATED 20.11.2002 WA S ADMITTEDLY A MISTAKE REQUIRING RECTIFICATION. CONSEQUENTLY THEREFORE THE CLAIM/ S QUA LIABILITY OF RS. 23.71 LAKHS IS ONLY TO BE CONSIDERED AS A FRESH PETITION U/S. 154. THE CLAIM/S WHICH COULD NOT BE ALLOWED FOR THE REASON THAT ALL THE ASSESSEES CLAIMS STOOD DUL Y CONSIDERED WHILE FRAMING HIS ASSESSMENT. IN PURSUANCE TO HIS BALANCE-SHEET AS SUBMITTED BY THE ASSESSEE A STATEMENT OF ASSETS AND LIABILITIES STOOD COMPILED BY THE AO. OBJECTIONS THERETO WERE CALLED FOR FROM THE ASSESSEE WITH IT FILING A RECONCILIATION STATEMENT (WHICH WAS MADE BY THE ASSESSING AUTHORITY A PART OF HIS IMPUGNED ORDER) IN WHICH THE SAID LIABILITY/S DID NOT APPEAR. THOUGH FORMING PART OF THE BALANCE SHEET NO FURTHER INFORMATION OR CONFIRMATION HAD BEEN FILED IN RESPECT THEREOF. EACH OF THE OBJE CTIONS RAISED I.E. QUA DIFFERENT ASSETS AND LIABILITIES WERE CONSIDERED MAKING NECESSARY ADJUSTMENTS WHERE NECESSARY AND ASSESSMENT COMPLETED ON THAT BASIS. THE IMPUGNED LI ABILITIES THEREFORE CANNOT BE TAKEN AS NOT CONSIDERED; RATHER THE ASSESSMENT STANDS MADE AFTER DULY CONSIDERING THE SAME. THERE WAS NO MISTAKE LEAST ONE APPARENT FROM RECORD AND ACCORDINGLY HE RESTORED THE ASSESSEES INCOME TO THE AMOUNT AS ORIGINALLY ASSES SED I.E. RS. 41.05 LAKHS RECTIFYING THE EARLIER MISTAKE IN ALLOWING IT EXCESS CREDIT FO R RS. 23.20 LACS. IN APPEAL THE ASSESSEE FOUND FAVOUR WITH THE LD. CIT(A) ON THE GROUND THAT THE LIABILITIES FOR RS. 23.71 LAKHS IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 6 REPRESENTING DUES TO DIFFERENT AND IDENTIFIED PARTI ES FORMED PART OF THE BALANCE-SHEET SUBMITTED BY THE ASSESSEE. IN FACT TWO OF THEM A T RS. 7.36 LACS AND RS. 3.40 LACS ARE DUES TO SHRI C.I. DEVASSYKUTTY AND SHRI C.D. BOBBY THE ASSESSEES FATHER AND SON RESPECTIVELY AND WHICH SUMS HAVE BEEN INCLUDED IN THEIR BLOCK ASSESSMENTS. AS SUCH THE OMISSION TO CONSIDER THE SAME WAS ONLY A MISTAK E APPARENT FROM RECORD AND ACCORDINGLY DIRECTED FOR ALLOWING CREDIT IN RESPEC T THEREOF. AGGRIEVED THE REVENUE IS IN APPEAL. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE M ATERIAL ON RECORD INCLUDING INTER ALIA THE ASSESSMENT ORDER BOTH THE RECTIFICATION ORDERS THE APPELLATE ORDERS IN QUANTUM AND RECTIFICATION PROCEEDINGS AS WELL AS THE ASSESSEE S PAPER-BOOK. 8.1 THE MATTER IS PURELY FACTUAL. THE ASSESSEE S TOOD ADMITTEDLY ALLOWED CREDIT IN RESPECT OF ITS LIABILITY TO SREE GOKULAM CHITS (AT RS. 23.2 0 LAKHS) PER ITS ASSESSMENT ON 29/10/2002 AND THEREFORE THE RECTIFICATION ORDER DATED 20.11.2002 ALLOWING IT FURTHER CREDIT IN RESPECT THEREOF CLEARLY BORE A MISTAKE TO THAT EXTENT REQUIRING RECTIFICATION. AS SUCH THE SUBSEQUENT DISALLOWANCE THEREOF VIDE THE IMPUGNED ORDER IS CLEARLY IN ORDER AND NEITHER DO WE OBSERVE ANY DIFFERENCE BETWEEN TH E PARTIES WITH REGARD THERETO. 8.2 COMING TO THE ASSESSEES CLAIM FOR HAVING BE EN NOT ALLOWED CREDIT IN RESPECT OF ITS LIABILITIES AGGREGATING TO RS. 23.71 LAKHS (DETAILE D BELOW) IN ITS ASSESSMENT THE ISSUE INVOLVED AS WE SEE IT HAS TWO ASPECTS LEADING TO FOLLOWING THREE QUESTIONS: A). WHETHER THE LIABILITY(S) BEING CLAIMED BORNE OUT OF THE RECORDS?; B). WHETHER THERE HAS BEEN AN OMISSION BY THE ASS ESSING AUTHORITY IN CONSIDERING THE CLAIM/S QUA LIABILITIES UNDER REFERENCE WHI LE FRAMING ITS ASSESSMENT?; AND FINALLY C). WHETHER THE SAID NON-CONSIDERATION IF PROVED COULD BE SAID TO CONSTITUTE A RECTIFIABLE MISTAKE/S? LIABILITIES BEING CLAIMED (AMT. IN RS.) A. LOANS AND BORROWING 12 95 0 90/- B. C.I. DEVASSIKUTTY 7 36 300/- IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 7 C. C.D. BOBBY 3.40 000/- 23 71 390/- 8.3 IN THE INSTANT CASE AS WE SHALL PRESENTLY SEE ONLY THE FIRST OF THE AFORE-STATED QUESTIONS WHICH REPRESENT THE THREE CONDITIONS FOR A VALID CLAIM U/S. 154 IS SATISFIED. TO BEGIN WITH EVEN GRANTING FOR THE SAKE OF ARGUMENT THAT CONDITIONS (A) & (B) ARE SATISFIED I.E. THE CLAIM/S FORMS PART OF THE RECORD BEING T HE BALANCE-SHEET FILED ALONG WITH THE RETURN OF INCOME AND NOT CONSIDERED THE SAME WOUL D ORDINARILY BE A SUBJECT MATTER OF REVISION APPLICATION U/S. 264 OF THE ACT OR APPEAL U/S. 246A OF THE ACT AND NOT A MATTER OF RECTIFICATION. THIS IS AS ACCEPTANCE OF A CLAIM/S IS NOT CONSEQUENTIAL TO ITS PREFERENCE I.E. IS NOT AUTOMATIC AND WOULD REQUIRE BEING PROVED FO R THE SAME TO BE ADMITTED AND THE ASSESSEE ALLOWED RELIEF OR CREDIT IN ITS RESPECT. IT MAY BE THAT THE CLAIM ON CONSIDERATION REMAINS TO BE PROVED OR IS OTHERWISE FOUND INADMISS IBLE. AS SUCH THE ONLY CERTAIN CONSEQUENCE THAT WOULD FOLLOW NON-CONSIDERATION WH ERE PROVED IS A DIRECTION BY THE REVISIONARY AUTHORITY FOR ITS CONSIDERATION EVEN A S WOULD BE THE CASE WHERE THE NON- CONSIDERATION IS PREJUDICIAL TO THE INTEREST OF THE REVENUE OR ITS CONSIDERATION BY THE FIRST APPELLATE AUTHORITY WHOSE POWERS ARE CO-TERMINUS WI TH THAT OF THE ASSESSING AUTHORITY. IT IS ONLY WHERE THE CLAIM IS OF A NATURE WHERE ITS VE RY PREFERENCE IS ITSELF SUFFICIENT FOR THE PURPOSE COULD A VALID CLAIM U/S. 154 IN ITS RESPEC T BE MADE. TAKE THE CASE FOR EXAMPLE OF A CLAIM QUA SALARY OR INTEREST TO (WORKING) PARTNER/S WITH TH E PARTNERSHIP DEED AUTHORIZING THE SAME ON RECORD OR THERE BEING NO C HANGE IN THE CONSTITUTION OF THE FIRM OR THE TERMS OF THE PARTNERSHIP DURING THE YEAR. THE `BOOK PROFIT BEING A MATTER OF RECORD AND THE CLAIM/S HAVING BEEN PRESSED NON-CONSIDERAT ION THEREOF COULD BE SAID TO RESULT IN A `MISTAKE APPARENT FROM RECORD. PUT DIFFERENTLY S UCH CASES WOULD REPRESENT AN EXCEPTION RATHER THAN A RULE. IN FACT IN THE PRESENT CASE THOUGH AN APPEAL STOOD PREFERRED BY THE ASSESSEE AND WAS ON AT THE RELEVANT TIME; BEING FI NALLY HEARD ONLY ON 7/6/2005 AND THE ASSESSEE ONLY AWARE OF ITS MISTAKE IN HAVING MADE A WRONG CLAIM AND FURTHER CLAIMING THE OMISSION AFORESAID YET DID NOT RAISE THIS ISS UE IN ITS APPEAL ON MERITS EVEN AFTER THE AO HAD REJECTED ITS CLAIM U/S. 154. THE ANSWER TO THE THIRD QUESTION (C) WHICH ARISES FOR CONSIDERATION ONLY ON AFFIRMATIVE ANSWERS TO THE FI RST TWO IS IN THE NEGATIVE I.E. THE SAME IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 8 WOULD NOT LEAD TO A RECTIFICATION. WE SHALL HOWEVE R CONSIDER AND ISSUE FINDINGS IN RESPECT OF THE FIRST TWO QUESTIONS AS WELL. 8.4 WE NEXT CONSIDER QUESTIONS (A) & (B) WH ICH FORM THE SUBJECT MATTER OF THE AOS FINDINGS. THE ANSWER TO THE FIRST QUESTION (A) IS CLEARLY IN THE AFFIRMATIVE; THE AO ACCEPTING THE SAME WHEN HE SAYS THAT THESE LIABILIT IES WERE SHOWN IN THE BALANCE-SHEET. THAT BEING THE CASE WE PROCEED TO CONSIDER QUESTIO N (B). THE AO STATES THAT THE SAME STAND DULY CONSIDERED. THE SAME INVOLVES A FACTUA L FINDING. THE LD. CIT(A) HAS NOT ISSUED ANY FINDING IN ITS RESPECT. HE STATES THAT S INCE THE CLAIM/S IS BORNE OUT BY THE RECORD NON-ALLOWANCE OF THE DEDUCTION IN RELATION TO THE SAID LIABILITY/S IS A `MISTAKE WARRANTING RECTIFICATION. IN OTHER WORDS HE PRESUM ES NON-CONSIDERATION (OF THE ASSESSEES CLAIM/S) AND FURTHER TREATS IT TO BE A MISTAKE. A S AFORE-STATED NON-CONSIDERATION WOULD NOT NORMALLY LEAD TO THE FINDING OF A MISTAKE. ON T HE OTHER HAND IT IS A FAILURE OR OMISSION TO GIVE EFFECT TO AN ALREADY CONSIDERED MATTER SO THAT THERE IS NO SCOPE FOR ANY DEBATE THAT WOULD LEAD TO THE INFERENCE OF IT BEING A CASE OF A `MISTAKE APPARENT FROM RECORD RECTIFIABLE U/S. 154. SO HOWEVER WE SHALL RENDER FINDINGS OF FACT; THE MATTER BEING PURELY ONE OF FACT AND NOT CONCLUDE THE MATTER BY STATING THE LAW AND THE FALLACY ATTENDING THE APPROACH OF THE LD. CIT(A). A PERUSAL OF THE RECORD REVEALS THAT A ST ATEMENT OF ASSETS AND LIABILITIES AS ON 12/10/2000 WAS PREPARED BY THE AO ON THE BASIS OF T HE MATERIAL ON RECORD AND COMMUNICATED TO THE ASSESSEE VIDE HIS OFFICE LETTER DATED 23/5/2002 WORKING OUT HIS NET WEALTH AT RS. 60.91 LACS (PB PG. 2 & 3) . THE ASSESSEE RESPONDED VIDE LETTER DATED 19/6/2002 CONVEYING HIS OBJECTIONS TO THE SAID COMP UTATION. ANOTHER LETTER DATED 19/9/2002 WAS ADDRESSED TO THE ASSESSEE CONVEYING T HE REVISED COMPUTATION. THE SAME STOOD RESPONDED TO BY THE ASSESSEE VIDE HIS LETTER DATED 30/9/2002 SUBMITTING A RECONCILIATION STATEMENT I.E. BETWEEN THE PROPOSE D FIGURES AND THAT AS PER HIS BOOKS OF ACCOUNTS WHICH FORMS PART OF THE IMPUGNED RECTIFIC ATION ORDER. THE MATTER WAS DISCUSSED WITH THE ASSESSEES REPRESENTATIVE/S OVER SEVERAL H EARINGS THE LAST OF WHICH WAS ON 21/10/2002 WITH THE ASSESSEE IN FACT ISSUING A NO OBJECTION TO THE PROPOSED COMPUTATION VIDE HIS LETTER DATED 14/10/2002 (REFER PARA 1 & 2 OF THE ASSESSMENT ORDER DTD. IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 9 29/10/2002; PB PG. 11-13) . THE ASSESSEES OBJECTIONS AND THE MANNER OF TH EIR DISPOSAL ALSO FIND MENTION IN THE ASSESSMENT ORDER VIDE PARA 3.1 TO 3.5 THEREOF WITH PARA 3.3 READING AS UNDER:- THE NEXT OBJECTION IS REGARDING SLIGHT VARIATION I N THE VALUE OF THE ASSETS AND LIABILITIES AS PER THE BOOKS OF ACCOUNTS. THIS IS ALSO ACCEPTED THE ONLY AND THE UNMISTAKABLE INFERENCE THAT FOLLOWS THE FOREGOING UNDISPUTED FACTS IS THAT THE COMPUTATION OF THE ASSESSEES NET WEALT H WAS BASED ON THE MATERIALS SUPPLIED BY HIM AS WELL AS THE SEIZED MATERIAL AND FURTHER THE FINAL FIGURE/S (OF THE VARIOUS ASSETS AND LIABILITIES) AS ADOPTED WERE AFTER AMPLE OPPORT UNITY THERETO TO FILE HIS OBJECTIONS AND EXPLANATIONS AND AFTER CONSIDERING THE SAME INCLU DING BY DISCUSSING THE SAME WITH HIS AUTHORIZED REPRESENTATIVE/S AND RATHER AS IT APPE ARS PROPERLY AND ONLY TO THE SATISFACTION OF THE ASSESSEE. AS SUCH IT IS DIFFICULT TO SAY T HAT THERE HAS BEEN AN OMISSION TO CONSIDER THE IMPUGNED LIABILITIES. NON-CONSIDERATION CANNOT BE LIGHTLY INFERRED. FOR A CHARGE OF OMISSION TO LEAD TO A RECTIFIABLE MISTAKE THE SAME MUST BE ESTABLISHED BEYOND DOUBT AND SECONDLY ITS IMPACT CLEAR AND PATENT. IN THE PRESE NT CASE ON THE OTHER HAND WE FIND THERE IS SUFFICIENT MATERIAL TO HOLD OTHERWISE. 8.5 WE MAY CONSIDER THE FACTS OF THE CASE MORE SPECIFICALLY. THE LIABILITY CLAIMED BY THE ASSESSEE IN RESPECT OF `SUNDRY CREDITORS UNDE R WHICH HEAD THE IMPUGNED LIABILITIES WERE REPORTED AS PER HIS BALANCE-SHEET IS AT RS. 8 5 19 751/-. VIDE THE FIRST COMPUTATION DATED 23/5/2002 THE AMOUNT PROPOSED UNDER THIS HEA D WAS AT RS. 84 79 751/- I.E. AFTER EXCLUDING ONE FIGURE OF RS. 40 000/- WHICH REPRESE NTS ONE OF THE FIGURES COMPRISING THE LOANS AND BORROWINGS FROM SEVERAL (SIX) PERSONS FOR AN AGGREGATE SUM OF RS. 12 95 090/-. AS SUCH EVEN AT THAT STAGE THERE WAS A REDUCTION IN THE AMOUNT BEING NOW CLAIMED (ALLEGING AN OMISSION) BY RS. 40 000/-; THE BREAK U P OF THE PROPOSED AMOUNT AND THAT AS PER THE REVISED COMPUTATION DATED 19/9/02 BEING AS UNDER: (AMOUNT. IN RS.) LOANS AND BORROWINGS 12 55 090 - C.I.DEVASSIKUTTY 7 36 300 - C.D.BOBBY 3 40 000 - IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 10 GOLD WORLD SILVER & GOLD INDUSTRIES 42 26 129 42 26 129 L.JAWERCHAND JEWELLERS 19 22 232 14 22 233 SHREE CHINTHAMANI JEWELLERS - 3 12 120 SREE GOKULAM CHITS - 23 20 000 84 79 751 82 80 482 ======= ======= EACH OF THE FIGURES SAVE ONE HAS UNDERGONE A CHAN GE WITH RATHER TWO NEW BEING ADDED. THE CHANGE IN PROFILE ONLY SUGGESTS CONSIDERATION O F THE ASSESSEES CLAIMS. IT CANNOT BE OTHERWISE. EQUALLY IT CANNOT BE SAID THAT THE FIRS T THREE LIABILITIES WERE IGNORED I.E. AFTER HAVING FOUND MENTION IN THE FIRST LIST. THIS IS PA RTICULARLY AS THE SAME STOOD ALSO COMMUNICATED TO THE ASSESSEE PRIOR TO FINALIZATION AND ADOPTED AT THE SUM SO COMMUNICATED WITHOUT RECEIVING ANY ADVERSE COMMENTS . TRUE THE ASSESSMENT ORDER DOES NOT BEAR ANY REFERENCE TO THE FIRST THREE LIAB ILITIES BUT THEN NEITHER DOES IT TO THE LAST TWO WHICH ARE ADDITIONS TO THE FIRST LIST. AS AFOR E-STATED OMISSION CANNOT BE A MATTER OF PRESUMPTION BUT WOULD REQUIRE BEING PROVED. THE A SSESSEE VIDE HIS LETTER DATED 20/1/2003 REFERRING TO HIS EARLIER COMMUNICATION D ATED 19/6/2002 (IN RESPONSE TO PROPOSAL DATED 23/5/2002) STATES OF HIM HAVING THE REBY OBJECTED TO THE NON-CONSIDERATION OF LOAN LIABILITY OF RS. 12 95 090/- UNDER THIS HEA D. THIS IS CONTRARY TO THE FACTS ON RECORD AS THE PROPOSAL DATED 23/5/2002 CLEARLY INCLUDED TH E SAME AT A DIFFERENCE OF RS. 40 000/- I.E. AT RS. 12 55 090/- SO THAT THE ASSESSEE COUL D HAVE VALIDLY OBJECTED ONLY FOR THE REDUCTION OF RS. 40 000/- (WHICH) AND NOT RS. 12 95 090/- AS DONE. AGAIN THE REDUCTION MAY NOT NECESSARILY BE AN OMISSION AND THUS LEAD TO AN INFERENCE OF A `MISTAKE; RATHER IT IS UNLIKELY IT IS SO. THE INFERENCE IF AT ALL IS OF THE LIABILITY UNDER THIS HEAD HAVING BEEN PROPERLY CONSIDERED AND RATHER AGREED TO. THE SECOND HEAD OF LIABILITY UNDER REFER ENCE IS `KURI LIABILITY. THE SAME STOOD CLAIMED AT RS. 19 14 852/- BY THE ASSESSEE PER HIS BALANCE SHEET. IT WAS INITIALLY PROPOSED AT THIS SUM VIDE COMMUNICATION DATED 23/5/2002. TH E REVISED COMPUTATION OF 19/9/2002 PROPOSED THE SAME AT RS. 5 07 556/- AT WHICH AMOUN T THE SAME STANDS FINALLY ADOPTED AND THERE IS NO DISPUTE WITH REGARD THERETO; THE AS SESSEE HAVING ALSO NOT OBJECTED THERETO IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 11 EXPLAINING THE DIFFERENCE AS ON ACCOUNT OF DIVIDEND AND BONUS ADJUSTMENT PER THE RECONCILIATION STATEMENT. AGAIN THE UNMISTAKABLE C ONCLUSION IS ONE OF PROPER CONSIDERATION. THE ANSWER TO THE QUESTION (B) ABOV E IS ALSO ANSWERED IN THE NEGATIVE. 8.6 BEFORE WE CONCLUDE WE MAY ALSO ADVERT TO T HE REASONS THAT MOVED AND FOUND FAVOUR WITH THE LD. CIT(A). EVEN THOUGH AS DISCU SSED HEREINABOVE RECTIFICATION MAY NOT RESULT CONSEQUENTIALLY TO A FINDING OF NON-CONS IDERATION OF A CLAIM/S WE ARE UNABLE TO AGREE WITH THE CHARGE OF NON-CONSIDERATION; THE AO ISSUING DEFINITE FINDINGS TO THE CONTRARY ENCLOSING THE RECONCILIATION STATEMENT FI LED BY THE ASSESSEE AS A PART OF HIS RECTIFICATION ORDER AND WHICH CLEARLY SPECIFIES TH E LIABILITY CLAIMED UNDER THE SAID TWO HEADS. IN FACT THE DIFFERENCE CLAIMED IS SO HU GE I.E. IN RELATION TO THE ASSESSEES CAPITAL ON THE BASIS OF WHICH HE STOOD ASSESSED AND SO STR IKING THAT IT WOULD RAISE SUBSTANTIAL DOUBT AS TO ITS VERACITY AND AUTHENTICITY TO ANY RE ASONABLE MIND. IF ITS CLAIM/S HAD AS CONTENDED TO THAT EXTENT BEEN NOT CONSIDERED THE ONLY CONSEQUENCE WOULD BE A PROPOSED OVER-ASSESSMENT OF HIS NET WEALTH BY THE AO TO THAT EXTENT I.E. IN COMPARISON TO HIS BALANCE-SHEET. THE ASSESSEE ASSUMING AN OMISSION B Y THE AO ON BEING CONVEYED THE PROPOSAL WOULD BE PUT TO NOTICE AND ACCORDINGLY CONVEY THE ERROR TO THE AO. IN THE PRESENT CASE THERE IS NO REFERENCE BY THE ASSESSEE OR THE LD. CIT(A) IN THE IMPUGNED ORDER TO THE ASSESSEES CAPITAL AS PER ITS BALANCE-SHEET AS ON 12/10/2000 EVEN AS THE INITIAL PROPOSED CAPITAL WORKED OUT BY THE AO IS AT RS. 60. 91 LACS (COMMUNICATED VIDE HIS LETTER DATED 23/5/2002) REVISING IT TO RS. 57.23 LACS UPO N CONSIDERATION OF THE ASSESSEES OBJECTIONS AND EXPLANATIONS. WHAT IS THE CAPITAL (NET WEALTH) CLAIMED AS PER HIS BALANCE SHEET? NO ANSWER IS AVAILABLE. IN ANY CASE THE AO PROP OSES THE SAME (NET WEALTH AS ON VALUATION DATE) AT AN EXCESS OF AT LEAST RS. 24 LAC S . THIS IS AS THE REDUCTION UPON REVISION WOULD ALSO BE IN TERMS OF THE ASSESSEES BOOKS OF A CCOUNT. COULD THIS REDUCTION BE WITHOUT REASON AND AN OUTRIGHT OMISSION? EVEN SO EVEN THE ASSESSEE DOES NOT NOTICE THE SAME AND ISSUES A NO OBJECTION AFTER AT LENGTH PR OCEEDINGS INVOLVING HEARING ON SEVERAL DATES AND FURTHER REQUISITION SUBMISSION AND CO NSIDERATION OF OBJECTIONS TO HIS PROPOSED WORKING BY THE AO. WOULD THIS ALL LEAD TO AN INFERENCE OF OMISSION OR IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 12 AGREEMENT? NOT ONLY THAT THE FILES A SPECIFIC GROUND IN RES PECT OF NON-CONSIDERATION OF LIABILITY TO SREE GOKULAM CHITS (GD. # 3) IN ITS AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY WHICH IS NOT WITHDRAWN AND/OR SUBSTITUTED EVEN AS H E BECAME AWARE THAT ITS SAID CLAIM WAS WRONG (AS ADMITTED BY HIM VIDE HIS LETTER DATED 20/1/2003 TO THE AO) EVEN THOUGH THE APPELLATE PROCEEDINGS WERE ON RESULTING IN A F INDING TO THE SAME EFFECT BY THE FIRST APPELLATE AUTHORITY. IN FACT IT IS PERTINENT TO NO TE THAT BOTH THE SAID GROUND (PER APPEAL INSTITUTED ON 26/11/2002) AS WELL AS ITS OBJECTION (VIDE APPLICATION U/S. 154 DATED 15/11/2002) WERE SPECIFIC I.E. OF NON-CONSIDERAT ION OF `KURI LIABILITY TO SREE GOKULAM CHITS FOR RS. 23.20 LACS. THE LIABILITIES BEING NO W CLAIMED ARE TO SEVERAL PERSONS NONE OF WHICH IS A KURI LIABILITY. THE LD. CIT(A) HAS ALSO MENTIONED ABOUT THE IDENTITY OF TWO CREDITORS BEING THE ASSESSEES FATHER AND BROTHER DUES TO WHOM WERE CL AIMED TO HAVE BEEN ASSESSED AS THEIR UNDISCLOSED INCOME FOR THE BLOCK PERIOD BEING SUBJ ECT TO A SIMULTANEOUS SEARCH. IN THIS REGARD; FIRSTLY THE IDENTITY OF THE CREDITORS IS I RRELEVANT; WHAT IS MATERIAL IS WHETHER THERE IS ANY MISTAKE/S APPARENT FROM THE RECORD AND THE LIABILITY MAY WELL BE IN FAVOUR OF ANY OTHER PARTY AS INDEED A SUBSTANTIAL PORTION OF THE CLAIMED SUM IS. SECONDLY THE STATEMENT IS UNSUBSTANTIATED BOTH BEFORE US AS WEL L AS BEFORE THE LOWER AUTHORITIES AS APPARENT FROM THEIR ORDERS AS WELL AS BEFORE US. T HIS BECOMES PARAMOUNT IN VIEW OF THE SPECIFIC FINDINGS BY THE AO. IN FACT OUR ANSWER I N THE NEGATIVE TO QUESTION (B) RENDERS THIS ARGUMENT AS OF NO MOMENT. 8.7 IN SUMMATION THE RECORD SHOWS THAT A DETAI LED EXAMINATION OF THE VARIOUS FIGURES OF ASSETS AND LIABILITIES PRECEDED THEIR ADOPTION I N THE ASSESSMENT AT THE AMOUNTS DONE. TO SAY THEREFORE THAT THERE HAS BEEN AN OMISSION MERITING RECTIFICATION WOULD BE UNWARRANTED IN THE LEAST. WE HAVE ALSO SUBJECT THE ASSESSEES CLAIM/S TO A VALIDATION TEST WHICH IT HAS FAILED. IF AT ALL THERE HAS BEEN AN OMISSION AT THE END OF THE ASSESSEE IN FILING OBJECTIONS AND/OR PROPER EXPLANATION/S IN THE ASSES SMENT PROCEEDINGS. THE ONLY COURSE OPEN TO THE ASSESSEE IF STILL AGGRIEVED WAS AS A FORE-STATED TO PREFER AN APPEAL ON THE MERITS OF THE EXCLUSION AND NOT TO PLEAD A MISTAKE WHICH ALLOWS NO SCOPE FOR TWO VIEWS BUT ONLY ONE UNEQUIVOCAL VIEW UNDER ALL CIRCUMSTA NCES. IT(SS)A.NOS.157 /COCH./2005 & 164 & 165/COCH/2005 13 8.8 IN VIEW OF THE FOREGOING IN OUR CONSIDER ED VIEW THE ASSESSEES CLAIM/S IS WHOLLY WITHOUT MERIT AND STANDS RIGHTLY REJECTED BY THE AO AND THEREFORE WE REVERSE THE FINDINGS OF THE LD. CIT(A) IN THE MATTER RESTORING THAT OF THE AO. WE DECIDE ACCORDINGLY. 9. IN THE RESULT THE ASSESSEES APPEAL IS DISM ISSED AND THE REVENUES APPEALS ARE ALLOWED. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 27TH OCTOBER 2010 GJ COPY TO: 1. SHRI C.D.BOSE PROPRIETOR CHEMMANNUR FASHION JEW ELLERY CHEMMANNUR HOUSE AVENUE ROAD TRICHUR. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL C IRCLE THRISSUR. 3. THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRA L CIRCLE THRISSUR. 4. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I KOCH I. 5. THE COMMISSIONER OF INCOME-TAX CENTRAL KOCHI. 6. D.R. I.T.A.T. COCHIN BENCH COCHIN. 7. GUARD FILE. BY ORDER (ASSISTA NT REGISTRAR)