K P Rasheed Ali, Calicut v. DCIT, Calicut

ITSSA 31/COCH/2006 | misc
Pronouncement Date: 20-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 3121916 RSA 2006
Assessee PAN ALPPA9043C
Bench Cochin
Appeal Number ITSSA 31/COCH/2006
Duration Of Justice 3 year(s) 9 month(s) 1 day(s)
Appellant K P Rasheed Ali, Calicut
Respondent DCIT, Calicut
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 20-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 20-01-2010
Assessment Year misc
Appeal Filed On 18-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T. (S&S) A.NO. 30/COCH/2006 BLOCK PERIOD:1 - 4 - 1990 TO 18 - 8 - 2000 K.P.ASIF RAHMAN CALICUT. PA NO.ALPPA 9043C VS. THE DY. COMMISSIONER OF INCOME-TAX CENTRALC IRCLE CALICUT. (APPELLANT) (RESPONDENT) & I.T.(S&S)A.NO.31 /COCH/2006 BLOCK PERIOD:1 - 4 - 1990 TO 18 - 8 - 2000 K.P.RASHIDALI CALICUT. PA NO.ADBPR 3717P VS. THE DY. COMMISSIONER OF INCOME-TAX CENTRALC IRCLE CALICUT. (APPELLANT) (RESPONDENT) ASSESSEES BY SHRI V.P.MOHANDAS ADV. RESPONDENT S BY SHRI A.K.THATTAI CIT DR O R D E R PER N.VIJAYAKUMARAN J.M: BOTH THESE APPEALS ARE FILED BY THE INDIVIDUAL ASSE SSES VIZ. SHRI K.P. ASIF RAHMAN AND SHRI K.P. RASHIDALI CALICUT. IT RELATES TO THE BLOCK ASSESSMENT YEARS 1991-92 TO 20 01-02 RELEVANT TO THE BLOCK PERIOD 01-04-1990 TO 18-08-20 00. IT(S&S)A NOS.30 & 31 /COCH/2006 2 2. AS THE ISSUE BEING THE SAME FOR THE PURPOSE OF DISCUSSION WE WILL TAKE UP THE APPEAL IN IT(S&S)A NO.30/COCH/2006. THE RELEVANT FACTS ARE THAT ON INFORMATION RECEIVED FROM SUB INSPECTOR OF POLICE NALLAM POLICE STATION CALICUT WHO SEIZED CASH OF RS.4 80 000/- FOUND IN THE POSSESSION OF THE ASSESSES WARRANT OF AUTHORIZATION U/S.132A OF THE INCOME-TAX ACT 1961 WAS EXECUTED AND RS.4 80 000/- WAS TAKEN OVER FROM THE POLICE DEPARTMENT ON 18-08-2002. IN RESPONSE TO NOTICE U/S.158BC ASSESSEE FILED BLOCK RETURN ON 22-01-200 1 DECLARING UNDISCLOSED INCOME OF RS.50 000/-. THE ASSESSING OFFICER FOUND THAT THE AMOUNT OF RS.4 80 000/- WHICH THE ASSESSEE SHOULD HAVE BEEN DISCLOSED FROM THE BUSINESS WHO IS DEALING IN THE PURCHASE AND SALE O F FOREIGN GOODS BROUGHT BY NRIS. SO THE ASSESSING OFFICER E STIMATED THE PROFIT AT 10% FOR THE ASSESSMENT YEARS 1998-99 TO 2001- 02 AND WORKED OUT THE NET PROFIT AT RS.3 05 640/- F OR THE ASSESSMENT YEAR 1998-99 RS.3 40 200/- FOR THE ASSE SSMENT YEAR 1999-2000 RS.3 78 000/- FOR THE ASSESSMENT YE AR 2000-01 AND RS.1 57 500/- FOR THE ASSESSMENT YEAR 2001- 02 AND TREATED THE SAME AS UNDISCLOSED INCOME OF TH E ASSESSEE IN THE RESPECTIVE ASSESSMENT YEARS. IT(S&S)A NOS.30 & 31 /COCH/2006 3 2.1 SIMILARLY FROM THE CASH FLOW STATEMENT FURNIS HED BY THE ASSESSEE THE ASSESSING OFFICER FOUND THAT C ERTAIN AMOUNTS WERE CREDITED TO THE SAID STATEMENT WITHOUT ANY BASIS. ACCORDING TO THE ASSESSING OFFICER THOUGH SUFFICIENT OPPORTUNITIES WERE GIVEN ASSESSEE FAILED TO PROVE THE CREDITS. THEREFORE THE ASSESSING OFFICER TREATED THOSE AMOUNTS AS UNPROVED CREDITS AS UNDISCLOSED INCOME O F THE ASSESSEE. FINALLY THE ASSESSING OFFICER COMPUTED THE TOTAL UNDISCLOSED INCOME AT RS.12 95 590/-. 2.2 IN THE CASE OF SHRI K.P.RASHIDALI (IT(S&S)A NO.31/COCH/2006) FACTS OF THE CASE ARE SIMILAR TO THAT OF SHRI K.P.ASIF RAHMAN AND THE ASSESSING OFFICER ON THE VERY SAME BASIS COMPUTED THE TOTAL UNDISCLOSED INCOME AT RS.21 58 720/- (ESTIMATING THE PROFIT AT 10% OF THE SALES FOR THE ASSESSMENT YEARS 1996-97 TO 2001-02 AND UNP ROVED CREDITS). 3. AGGRIEVED THE ASSESSES CARRIED THE MATTER IN APPEAL BEFORE THE CIT(APPEALS) WHO WAS OF THE VIEW THAT O NLY RS.8 55 000/- NOT RECORDED IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS REPRESENT THE UNDISCLOSED INCOME OF THE A SSESSEE IN THE CASE OF K.P.ASIF RAHMAN IN PLACE OF RETURNED UNDISCLOSED INCOME RS. 50 000/- AND RS.13 57 500 IN THE CASE IT(S&S)A NOS.30 & 31 /COCH/2006 4 OF SHRI K.P. RASHIDALI IN PLACE OF RETURNED UNDISCLOSED INCOME OF RS. 80 000/-. HENCE BOTH THE ASSESSES ARE ON APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDE NTS. FIRST WE WILL GO INTO THE FACTUM OF SEIZURE OF CASH OF RS.4 80 000/- FROM THE APPELLANT WHICH WAS TAKEN OV ER FROM THE POLICE DEPARTMENT BY THE REVENUE AUTHORITIES AN D 158 BC PROCEEDINGS INITIATED. AS PER SECTION 158B(B) THE UNDISCLOSED INCOME HAS BEEN DEFINED WHICH INCLUDES ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS WHERE SUCH MONEY BULLION JEWELLERY VALUABLE ARTICLE THING ENTRY IN THE BO OKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THIS AC T. HERE APPLYING THE DEFINITION THE ASSESSEE HAS NOT FILED ANY RETURN AND HE IS NOT AN ASSESSEE SO FAR ON THE FILE OF THE INCOME- TAX DEPARTMENT AND THE CONTENTION OF THE ASSESSEE I S THAT THIS AMOUNT OF RS.4 80 000/- WAS THE RECEIPT OF SAL E PRICE OF FOREIGN GOODS SUCH AS AIR CONDITIONER MOBILE PH ONES SONY TV AND REFRIGERATOR. HOWEVER ASSESSEE HAS NOT IT(S&S)A NOS.30 & 31 /COCH/2006 5 CHOSEN TO FILE THE REGULAR RETURN OF INCOME FOR ANY YEAR. AFTER THE SEARCH FILED THE ABOVE 2B RETURN WHEREBY THE ASSESSES FILED INDIVIDUAL 2B RETURN ADMITTING UNDIS CLOSED INCOME OF RS.50 000/- EACH. THE DEPARTMENT HAS UNEA RTHED THE CASH THAT THE ASSESSEE WOULD HAVE EARNED WHICH THE ASSESSEE WOULD HAVE BEEN OR SHOULD HAVE BEEN DISCLO SED TO THE DEPARTMENT. AFTER HEARING THE LD. COUNSEL FOR THE ASSESSEE WHO VEHEMENTLY SUPPORTED THE STAND OF THE ASSESSEE THAT SOURCE FOR THIS SUM OF RS.4 80 000/- HAS BEEN SATISFACTORILY EXPLAINED AS BY WAY OF CAPITAL OF TH E BUSINESS ASSESSEES INVESTMENT WAS MORE THAN RS.5 LAKHS AND IT WAS MADE UNDER SEVEN HEADS OF THE FOLLOWING; SALE PROCE EDS OF THE GOODS ACCUMULATED SAVINGS AMOUNT RECEIVED FRO M FATHER GOLD LOAN TAKEN FROM SOUTH MALABAR GRAMIN B ANK LOAN TAKEN FROM URBAN BANK IN HIS MOTHERS NAME AM OUNT REMITTED ON VARIOUS OCCASION BY D.D. FROM QATER AND NRE REMITTANCE AS HE WAS ALREADY IN THE ARAB COUNTRIES. THE CONTENTION OF THE ASSESSEE IS NOT SATISFACTORILY PR OVED BEFORE THE AUTHORITIES FOR THE AVAILABILITY OF CAPITAL. IT IS FOR THE ASSESSEE TO PROVE SATISFACTORILY WITH RELEVANT MATE RIALS REGARDING THE AVAILABILITY OF CAPITAL SO AS TO MEET THE EXPLANATION AS A SOURCE FOR POSSESSION OF THE CASH OF RS.4 80 000/-. THIS WAS NOT DULY DISCHARGED BY TH E ASSESSEE WITH RELEVANT MATEERIAL. THEREFORE THE IT(S&S)A NOS.30 & 31 /COCH/2006 6 DEPARTMENT WAS RIGHT IN THEIR WAY TO TREAT THIS AS UNDISCLOSED INCOME DERIVED FROM THE ILLEGAL BUSINES S I.E. BUSINESS OF SELLING FOREIGN GOODS. TO THAT EXTENT RS.4 80 000/- AS SUSTAINED BY THE AUTHORITIES BELOW IS QUITE JUSTIFIED AS IT IS THE UNDISCLOSED INCOME COMES WIT HIN THE DEFINITION OF UNDISCLOSED INCOME WHICH THE ASSESSEE SHOULD HAVE BEEN DISCLOSED FOR THE PURPOSE OF THE ACT. T HEREFORE TO THE EXTENT OF RS.4 80 000/- WE SEE THAT THE ADDI TION MADE BY THE ASSESSING OFFICER ON ESTIMATION OF PROFIT RA TE COMPARING TO THE SALES ESTIMATION FOR THE ASSESSMEN T YEARS 1998-99 TO 2001-02 IS QUITE JUSTIFIED AS IT COMPRIS ED IN THE BLOCK ASSESSMENT PERIOD. 5. COMING TO THE OTHER ADDITIONS WHICH ARE THE ESTI MATED PROFIT OUT OF THE BUSINESS WE AGREE WITH THE CONTE NTION OF THE LD. COUNSEL THAT THERE IS NO MATERIAL TO BRING IT UNDER UNDISCLOSED INCOME. IT IS THE SETTLED LAW THAT TO BRING THE UNDISCLOSED INCOME INTO THE TAXATION NET THERE MUS T BE MATERIALS TO SUGGEST THAT THERE WAS UNDISCLOSED INC OME AVAILABLE WITH THE ASSESSEE WHICH THE ASSESSEE CONC EALED AND HAS NOT BEEN DISCLOSED FOR THE PURPOSE OF THE A CT. THE LAW IS WELL SETTLED THAT THE ADDITION SHOULD BE MAD E AS THE UNDISCLOSED INCOME BASED ON THE SEARCH MATERIALS ON LY. HERE THE DEPARTMENT BY RELYING ON THE STATEMENT RE CORDED IT(S&S)A NOS.30 & 31 /COCH/2006 7 U/S. 132A ON 18-02-2000 AS WELL AS THE CASH FLOW ST ATEMENT GIVEN BY THE ASSESSEE PROCEEDED TO ESTIMATE THE PRO FIT RATE ON SALES WITHOUT ANY MATERIAL AND CAME TO THE CONCL USION THAT THE SUM OF RS.8 55 000/- IN TOTAL HAS NOT BEE N RECORDED IN THE BOOKS OF ACCOUNTS OR OTHER DOCUMENT S. WE ARE UNABLE TO DIGEST THIS LINE OF APPROACH BY TH E DEPARTMENT. FIRST OF ALL THE STATEMENT OF THE AS SESSEE WAS RECORDED DURING THE DURESS. THE STATEMENT MADE DU RING DURESS IS NOT RELEVANT IS THE LAW SETTLED. THEREF ORE THIS STATEMENT CANNOT BE RELIED ON. SECOND THING IS TH AT THE CASH FLOW STATEMENT FURNISHED BY THE ASSESSEE WAS G IVEN MUCH RELIANCE BY THE REVENUE AND THERE IS NO MATERI AL TO BRING IT UNDER THE BLOCK ASSESSMENT AS UNDISCLOSED INCOME. AS HELD BY THE HONBLE MADRAS HIGH COURT IN THE CAS E OF COMMISSIONER OF INCOME-TAX VS. JK NARAYANAN 293 I TR 220 ADDITION TO THE UNDISCLOSED INCOME CAN BE MADE ONLY ON THE BASIS OF SEARCH MATERIALS AND IN THE ABSENCE OF SUCH MATERIALS THERE CANNOT BE ANY ADDITION TO THE UNDI SCLOSED INCOME. RESPECTFULLY FOLLOWING THE ABOVE DECISION WE SEE THAT THE ADDITION OVER AND ABOVE THE CASH FOUND IS NOT AT-ALL JUSTIFIED TO BRING IT UNDER THE DEFINITION OF UNDIS CLOSED INCOME. THEREFORE WE SUSTAIN THE ADDITION OF UNDIS CLOSED INCOME TO THE EXTENT OF RS. 4 80 000/- IN THE CASE OF K.P.ASIF RAHMAN AND RS. 5 00 000/- IN THE CASE OF SHRI IT(S&S)A NOS.30 & 31 /COCH/2006 8 K.P.RASHIDALI WHICH IS THE CASH SEIZED FROM THE AS SESSEES BY WAY OF WARRANT OF AUTHORIZATION U/S.132A OF THE ACT . THEREFORE THIS ALONE CAN BE THE UNDISCLOSED INCOME OF THE ASS ESSES FOR THE RESPECTIVE BLOCK ASSESSMENT. HENCE THE ADDITION IS RESTRICTED TO THAT EXTENT ONLY OF CASH FOUND. UNDER THE ABOVE F ACTS AND CIRCUMSTANCES THE RELIEF CLAIMED IS PARTLY ALLOWED . 6. IN RESULT BOTH THE APPEALS ARE PARTLY ALLOWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMA RAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 20 TH JANUARY 2010. PM. COPY FORWARDED TO: 1. SHRI K.P.ASIF RAHMAN ARAKKAL THODIKA P.O. KALLAI CALICUT. 2. SHRI K.P.RASHIDALI AMINAS P.O.MANKAVE CALICUT-7 . 3. THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRC LE CALICUT. 3. CIT(A)-I KOCHI 4. CIT CENTRAL KOCHI. 5. D.R.