Shri M.N.Kunhimohammed, Malappuram v. ACIT(Inv), Calicut

ITSSA 60/COCH/2004 | misc
Pronouncement Date: 09-07-2010

Appeal Details

RSA Number 6021916 RSA 2004
Assessee PAN ADJPN9655L
Bench Cochin
Appeal Number ITSSA 60/COCH/2004
Duration Of Justice 6 year(s) 1 month(s) 5 day(s)
Appellant Shri M.N.Kunhimohammed, Malappuram
Respondent ACIT(Inv), Calicut
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 09-07-2010
Assessment Year misc
Appeal Filed On 03-06-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T(S&S)A.NO.60/COCH/2004 BLOCK PERIOD: 1989 - 90 TO 1999 - 2000 M.N.KUNHIMOHAMMED MALAPPURAM. PA NO.ADJPN 9655L VS. THE ASST. COMMISSIONER OF INCOME-TAX(INV.) CIRCLE-1 DIV.1 CALICUT. (APPELLANT) ( RESPONDENT ) & W.T.A.NOS.138 TO 140/COCH/2004 ASST. YEARS:1997-98 TO 1999-2000 M.N.KUNHIMOHAMMED MALAPPURAM. PA NO.ADJPN 9655L VS. THE ASST. COMMISSIONER OF INCOME-TAX(INV.) CIRCLE-1 DIV.1 CALICUT. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI T.N.SEETHARAMAN ADV. RE VENUE BY S MT. T. PRASANNAKUMARI O R D E R PER N.VIJAYAKUMARAN J.M: ALL THESE APPEALS ARE FILED BY THE ASSESSEE VIZ. SHRI M.N.KUNHIMOHAMMED MALAPPURAM. HENCE WE ARE DIS POSING THESE MATTERS BY THIS COMMON ORDER FOR THE SAKE OF CONVEN IENCE. 2. FIRST WE SHALL TAKE UP THE INCOME-TAX APPEAL IN I.T(S&S)A.NO.60/COCH/2004. THIS APPEAL IS DELAYED BY SIX DAYS. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND TAKING A IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 2 LENIENT VIEW CONSIDERING THE FACT THAT DELAY IS VER Y NEGLIGENT WE ARE OF THE VIEW THAT DELAY HAS TO BE CONDONED. ACCORDINGLY WE CONDONE THE DELAY AND ADMIT THE APP EAL ON THE ROLLS OF THE TRIBUNAL. 3. THIS APPEAL IS FILED AGAINST THE ORDER OF THE L D. CIT(APPEALS)-II CALICUT DATED 08-03-2004. THE F ACTS RELEVANT ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND A PARTNER IN A BAKERY IN RIYADH SAUDI ARABIA. HE IS NOT DOING ANY BUSINESS IN INDIA EXCEPT AS A BROKER OCCASIONALLY IN REAL ESTATE TRANSACTIONS. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE IS NOT MAINTAINING ACCOUNTS. THE RESIDEN TIAL PREMISES OF THE ASSESSEE WAS SEARCHED U/S.132 OF TH E I.T.ACT 1961 ON 22-10-1998 IN RESPONSE TO THE SHOW CAUSE NOTICE U/S.158BC ASSESSEE FILED 2B RETURN ON 06-0 4-2000 DECLARING UNDISCLOSED INCOME OF RS.11 10 000/-. H OWEVER THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON A HIGHER FIGURE BY REJECTING THE EXPLANATIONS AND ON VERIFIC ATIONS OF THE SEIZED MATERIALS INCLUDING THE CASH FLOW STATEM ENT FURNISHED BY THE ASSESSEE IN SUPPORT OF 132(4) STAT EMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDING S WHICH WE WANT TO EMPHASIS AND THE RELEVANT RECORDS. IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 3 4. THE FIRST ISSUE AS PER THE WRITTEN SUBMISSION DA TED 29- 6-2010 FILED BEFORE US WHICH IS MORE CONCISE ON GR OUND WISE AS THE ORIGINAL GROUNDS FILED BY THE ASSESSEE IS EX PLANATORY AND IS NOT REFLECTING THE TRUE ISSUES IS GROUND NO S. 2 TO 5 RELATING TO THE ADDITION UNDER THE HEAD INCOME FROM BROKERAGE ESTIMATED AT RS.50 000/- EACH FOR ASSESSMENT YEARS 1991-92 TO 1993-94 COMPRISED IN THE BLOCK ASSESSMENT. THE BLOCK PERIOD IS FROM 1989-90 TO 1 999- 2000. THE ASSESSING OFFICER ESTIMATED AT RS.50 000 /- EACH AS INCOME FROM BROKERAGE FOR THESE ASSESSMENT YEARS . ADMITTEDLY THERE IS NO EVIDENCE FROM SEARCH MATERIA LS FOR THIS. NO DOCUMENTS OR STATEMENTS WERE FOUND SUGGE STING THE INCOME FROM BROKERAGE. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE BROKERAGE INCOME WAS DECLARED AS AND WHEN IT WAS RECEIVED AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. THEREFORE AN ESTIMATE FOR THESE ASSE SSMENT YEARS 19910-92 TO 1993-94 IS NOT POSSIBLE UNDER THE BLOCK ASSESSMENT IN THE ABSENCE OF ANY MATERIALS. HOWE VER THE AUTHORITIES BELOW WERE OF THE OPINION THAT THE ADMI SSION MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER C ANNOT BE BRUSHED ASIDE AS NOT HAVING ANY CONSEQUENCE. THE ADMISSION REGARDING THE BROKERAGE HAD BEEN MADE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS ON 05-10-2000. IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 4 THEREFORE THE ADMISSION IS A RELEVANT PIECE OF EVI DENCE ACCORDING TO THE DEPARTMENT AND FOR THAT PROPOSITIO N THEY RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NR PAPER BOARD LTD. & OTHERS VS. DCIT - 234 ITR 733 (GUJ.). ON THE OTHER HAND THE LD. D.R. RELIE D ON THE ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT THE APPEAL OF THE ASSESSEE IS TO BE DISMISSED. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THIS ESTIMATE IS MADE WITHOUT ANY SEARCH MATERIAL AND THEREFORE DESERVES TO BE DELETED. THE REASON BEING THE BLOCK ASSESSMENT IS FOR THE UNDISCLOSED INCOME WHIC H SHOULD HAVE BEEN DISCLOSED FOR THE PURPOSE OF THE ACT. T HE UNDISCLOSED INCOME AS DEFINED IN 158B(B). IT CLE ARLY DEFINES THAT THE INCOME WHICH THE ASSESSEE WOULD HA VE BEEN DISCLOSED BEFORE THE DEPARTMENT ALONE CAN BE TERMED AS UNDISCLOSED SO AS TO BRING IT UNDER THE BLOCK ASSES SMENT. IN THIS CASE THE CONTENTION OF THE ASSESSEE IS THA T AS AND WHEN THE ASSESSEE HAS EARNED INCOME FROM BROKERAGE IT WAS OFFERED AND ACCEPTED BY THE DEPARTMENT IN THOSE REL EVANT YEARS AND THE CONTENTION OF THE ASSESSEE HOWEVER WOULD BE PARTICULARLY FOR THE INDIVIDUAL ASSESSMENT YEARS 19 91-92 1992-93 AND 1993-94 THERE IS NO BROKERAGE INCOME A ND ESTIMATED INCOME AT RS.50 000/- EACH AS INCOME FROM IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 5 BROKERAGE FOR THESE ASSESSMENT YEARS COMPRISED IN T HE BLOCK IS WITHOUT ANY MATERIAL AVAILABLE WITH THE DEPARTME NT AS SEARCH MATERIAL. WITHOUT ANY SEARCH MATERIAL AND ONLY ON THE BASIS OF A MERE STATEMENT MADE AT THE TIME OF ASSESSMENT PROCEEDINGS WILL NOT JUSTIFY THE DEPARTM ENT TO ESTIMATE SUCH BROKERAGE AND BROUGHT IT AS UNDISCLOS ED INCOME FOR THAT INDIVIDUAL ASSESSMENT YEARS. TO T HIS PROPOSITION WE RELY ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. JK NARAYANAN - 29 3 ITR 198 AND CIT VS. GK SENIAPPAN -284 ITR 220. IT IS ALSO TO BE A POINT TO BE NOTED THAT WHENEVER THE ASSESSEE R ECEIVED BROKERAGE THE SAME HAS BEEN DECLARED AND THE DEPART MENT HAS BEEN ACCEPTED. HENCE WE ARE OF THE VIEW THAT THIS ADDITION IS NOT JUSTIFIED UNDER THE BLOCK ASSESSMEN T. ACCORDINGLY GROUND NOS. 2 TO 5 IS DECIDED IN FAVOU R OF THE ASSESSEE BY SETTING ASIDE THE ORDERS OF THE AUTHORI TIES BELOW. 6. THE NEXT ISSUE IS IN RESPECT OF PERSONAL EXPENSES ESTIMATED FOR ASSESSMENT YEARS 1989-90 TO 1999-2000 . HERE ALSO THE ESTIMATION MADE BY THE ASSESSING OFFI CER AND CONFIRMED BY THE FIRST APPELLATE AUTHORITY ARE NOT BASED ON ANY EVIDENCE FOUND AS A RESULT OF SEARCH. IT IS A LMOST AKIN TO THE ESTIMATE OF BROKERAGE. THE BLOCK ASSESSMEN T IS ONLY IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 6 FOR THE UNDISCLOSED INCOME TO BE DETERMINED. BLOCK ASSESSMENT AND THE REGULAR ASSESSMENT ARE PARALLEL. THEREFORE WHEN THERE IS NO MATERIAL AVAILABLE FOR JUSTIFYING THE PERSONAL EXPENDITURE ESTIMATION AND A MERE ESTI MATION IS MADE WITHOUT ANY SEIZED MATERIAL SUGGESTING POOR DRAWINGS IN OUR CONSIDERED VIEW THE ADDITION ON TH IS COUNT HAS TO BE DELETED. ACCORDINGLY THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE CLAIM OF THE ASSESSEE I S ALLOWED UNDER THIS HEAD. 7. COMING TO THE CONTENTIOUS ISSUES GROUND NOS. 6 TO 9 I.E. OUT FLOW FOR PURCHASE OF WADAKKENCHERY PROPERTY THE SEIZED MATERIAL WHICH THE ASSESSING OFFICER RELIED IS BJA 20. IT IS A REGISTERED SALE DEED BEARING NOS. 6757 6758 6759 & 6760/1992 DATED 23-12-1992 FOR PURCHASE OF LAND AT WADAKKENCHERY BY ONE FATHIMA AND RAMLA DAUGHTERS O F THE ASSESSEE FOR A TOTAL CONSIDERATION OF RS.3 30 000/- . FOR THE PURPOSE OF REGISTRATION SUCH AS STAMP DUTY AND DOC UMENT CHARGES WAS UNDISPUTEDLY AT RS.35 550/-. BUT THE ASSESSEE OMITTED THIS TRANSACTION IN HIS CASH FLOW STATEMENT . THE ASSESSING OFFICER CALLED FOR EXPLANATION. THE ASSE SSEE EXPLAINED THAT EVENTHOUGH THE DEED WAS EXECUTED TH E ASSESSEE HAD NOT PAID THE CONSIDERATION ON THE GROU ND THAT THERE WAS A PENDING LITIGATION AND POSSESSION OF TH E PROPERTY IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 7 WHICH IS MATERIAL COULD NOT BE ACQUIRED BY THE ASSE SSEE FROM THE OWNERS. AS THE DISPUTE WAS ON THE QUESTION OF HANDING OVER OF POSSESSION FROM ERSTWHILE PARTIES THE ASSE SSEE MOVED THE HONBLE SUB COURT TRICHUR FOR AN INTERIM INJUNCTION AND OTHER RELIEFS COPY OF WHICH IS AVAI LABLE AT PAGES 8 AND 9 OF THE ASSESSEES PAPER BOOK. BESIDE S CONFIRMATION LETTERS FROM THE VENDORS OF THIS PROPE RTY WHICH IS AVAILABLE IN PAGES 10 AND 11 OF THE PAPER BOOK W ILL GO TO SHOW THAT THERE WAS NO HANDING OVER OF POSSESSION E VEN THOUGH THE REGISTERED SALE DEED SPEAKS ABOUT THE SA LE. THE EXPLANATION OFFERED BY THE ASSESSEE FOUND NOT SATIS FACTORY TO THE ASSESSING AUTHORITY AS IN THE DOCUMENT ITSELF T HE PASSING OF CONSIDERATION IS FOUND MENTIONED. 8. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE WOULD SUBMIT THAT EVEN THOUGH THE CONSIDERATION WAS MENTIONED AS PASSED TOGETHER WITH POSSESSION ALSO HANDED OVER THE FACT UM BEING THAT THE CONSIDERATION WAS NOT PAID TO THE VENDORS BY THE ASSESSEE UNLESS POSSESSION IS HANDED OVER TO THE AS SESSEE. THE LD. COUNSEL FURTHER CONTENDED THAT POSSESSION I S A MATERIAL PART OF THE TRANSACTION. EVEN THOUGH THE TILE PASSED BY WAY OF A REGISTERED SALE DEED THE POSSES SION WHICH IS MORE IMPORTANT FOR ENJOYING THE PROPERTY COULD NOT BE ACQUIRED WHICH MADE THE ASSESSEE TO RUSH TO THE COURT IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 8 OF LAW FOR APPROPRIATE RELIEF. UNDER THE CIRCUM STANCES THE LD. COUNSEL FOR THE ASSESSEE WOULD SUBMIT THAT THE CONFIRMATION AS WELL AS THE COURT PROCEEDINGS WILL GO TO SHOW THAT THERE WAS DISPUTE ON THE QUESTION OF POSSESSIO N WHICH PREVENTED THE ASSESSEE FROM PASSING THE CONSIDERATI ON TO THE VENDORS AND IN SUPPORT OF THAT CONTENTION THE CONFIRMATION LETTER BY THE VENDORS ARE AVAILABLE IN THE PAPER BOOK AT PAGES 10 AND 11 WILL SUPPORT THESE CONTENT IONS OF THE ASSESSEE. THEN A QUERY FROM THE BENCH HOWEV ER THE TRANSACTION CHARGES I.E. REGISTRATION AND OTHER INC IDENTAL CHARGES WHICH IS QUALIFIED AS RS.35 550/- BEING STA MP DUTY AND DOCUMENT CHARGES THE LD. COUNSEL POLITELY SUBM ITTED THAT THE ASSESSEE HAS NO OBJECTION FOR ASSESSMENT O F THIS AMOUNT. 9. THE LD. D.R. ON THE OTHER HAND WOULD SUBMIT THAT WHEN THE DOCUMENT ITSELF SPEAKS WHICH IS A REGISTERED D OCUMENT UNDER THE STATUTE THERE CANNOT BE ANY EVIDENCE OVE R-RULING THE RECITAL FOUND IN THE DOCUMENT. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDE NTS. THE ASSESSEE HAS ESTABLISHED THAT THE PROPERTY WAS PURC HASED FOR A CONSIDERATION OF RS.3 30 000/- FOR TITLE AS W ELL AS IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 9 POSSESSION. POSSESSION FOLLOWS TITLE. HOWEVER IN THIS CASE THE TITLE ALONE COULD BE ACQUIRED AND THERE W AS A DISPUTE WITH REGARD TO THE HANDING OVER OF THE POSS ESSION WHICH WAS SUBSTANTIATED BY THE ASSESSEE BY WAY OF A COPY OF THE COURT PROCEEDINGS AS WELL AS THE CONFIRMATIO N LETTER FILED FROM THE VENDORS. THIS WILL GO TO SHOW THAT THE POSSESSION WAS NOT HANDED OVER. HENCE ASSESSEE R ETAINED THE CONSIDERATION TO BE PAID ONLY AT THE TIME OF HA NDING OVER OF THE POSSESSION. THE EXPLANATION OF THE ASSESSE E IS FOUND ACCEPTABLE IN THE EYE OF LAW EVEN THOUGH THE SEIZED DOCUMENT BJA 20 IS A REGISTERED SALE DEED MENTIONIN G ABOUT THE PASSING OF CONSIDERATION AND HANDING OVER OF PO SSESSION. IT IS WELL ESTABLISHED BEYOND DOUBT THAT POSSESSION WAS NOT AT ALL HANDED OVER AT THE TIME OF EXECUTION OF THE SALE DEED. WHEN THAT BEING THE CASE THE EXPLANATION OF THE AS SESSEE THAT POSSESSION WAS NOT HANDED OVER AND HENCE ASSES SEE HAS NOT PAID THE CONSIDERATION AND ACCORDINGLY THIS WAS NOT REFLECTED IN THE CASH FLOW STATEMENT HOLDS GOOD. THE EXPLANATION OF THE ASSESSEE FOUND ACCEPTABLE AND AC CEPTING THE SAME WE SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND ALLOW THE CLAIM OF THE ASSESSEE ON THE GROUND N OS. 6 TO 9. IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 10 11. SO ALSO NO SEPARATE ADJUDICATION IS REQUIRED SO FAR AS THE SEIZED DOCUMENT INVENTORISED AS BJA 4 WHICH IS AVAILABLE IN ASSESSEES PAPER BOOK AT PAGES 6 & 7 W HICH RELATES TO WADAKKANCHERRY PROPERTY WHICH IS A SEPA RATE PROPERTY AND ALSO CHAPPAKKAD AT IRATTAMADA WHICH B ELONGS TO THE ASSESSEES BROTHER MN SAIDALAVI AS PER THE E NTRY IN BJA 4. THE EXPLANATION GIVEN BY THE ASSESSEE TO T HE NOTINGS WHICH IS AVAILABLE IN THE PAPER BOOK AT PA GE NO.37 WHICH IS FOUND IN BJA4. THEREFORE WE ANSWER THA T THIS ADDITION ON ACCOUNT OF INVESTMENT FOR WADAKKENCHERY PROPERTY (IN PALAGHAT DISTRICT) AND IN RESPECT OF O NE MORE WADAKKENCHERY PROPERTY (IN TRICHUR DISTRICT) AND TH E SOURCE FOR THE CONSIDERATION HAVE BEEN AMPLY EXPLAINED BY THE ASSESSEE THAT FOR ONE POSSESSION HAS NOT BEEN HAND ED OVER AND FOR THE OTHER ASSESSEES BROTHER CONTRIBUTED. HENCE ON THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ALLOW GROUND NOS. 6 TO 9 BY SETTING ASIDE THE ORDER S OF THE AUTHORITIES BELOW. 12. GROUND NOS. 10 TO 12 WHICH IS THE SOURCE ON SALE OF GOLD TO THE TUNE OF RS. 20 LAKHS . IT WAS THE EXPLANATION OF THE ASSESSEE THAT 42 GOLD BISCUITS WERE RECEIVED FROM KT MOIDEEN KUTTY BY WAY OF DEPOSIT WITH A CONDITION TH AT THE GOLD BISCUITS MUST BE RETURNED IN THE SAME FORM SA ME IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 11 WEIGHT AND QUALITY TO THE SAID KT MOIDEEN KUTTY AS AND WHEN HE DEMANDS IT. THE LD. COUNSEL HEAVILY RELIED ON THE ENDORSEMENT MADE IN THE PASSPORT OF KT MOIDEEN KUTT Y FOR IMPORT OF THE GOLD BISCUITS WHICH IS AVAILABLE AT PAGES 12 TO 18 OF THE PAPER BOOK. HOWEVER THIS IS AN EXPLANA TION OF THE ASSESSEE FOR THE CREDIT ENTRIES IN THE CASH FLO W CHART OF THE ASSESSEE WHICH IS WORTH MENTIONING IN THE GUIS E OF GOLD SALE WHICH WAS TREATED AS UNEXPLAINED INCOME BY THE AUTHORITIES. THE LD. COUNSEL FURTHER CONTENDED TH AT WHEN THE TRANSACTION IS GENUINE AND IS EVIDENCED BY DOCU MENT THIS ADDITION OF RS.20 LAKHS IS NOT IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 158BB(2) R.W.S.68 OF THE ACT. THE LD. COUNSEL AGAIN TAKING SHELTER UNDER THE PROVISIONS O F SECTION 68 BY INTERPRETING CONTENDED THAT THE AMOUNT CHARGE ABLE AS INCOME UNDER THE PROVISION IS ANY SUM FOUND CREDIT IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YE AR. HE FURTHER WENT ON TO SUBMIT THAT IT IS AN ADMITTED PO SITION THAT THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUN TS. THEREFORE THE AMOUNT IS ADDED AS IT APPEARS IN THE CASH FLOW STATEMENT AND TAKEN AS UNDISCLOSED INCOME. THE CASH FLOW STATEMENT CANNOT BE TAKEN AS BOOKS OF ACCOUNTS . THEREFORE BASED ON THIS IT CANNOT BE TAKEN AS UNDI SCLOSED IN THE BLOCK ASSESSMENT IS THE ARGUMENT OF THE LD. COU NSEL. IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 12 13. THE LD. D.R. ON THE OTHER HAND APPROPRIATELY MET EACH AND EVERY POINT OF THE ARGUMENT MADE BY THE LD. COU NSEL FOR THE ASSESSEE AND MADE OUT A CASE THAT THE ADDITION MADE UNDER THIS HEAD IS WORTH TO BE SUSTAINED. 14. WE HAVE HEARD RIVAL SUBMISSIONS. IT IS THE BU RDEN ON THE ASSESSEE TO PROVE THE SOURCE. THE STORY OF TH E ASSESSEE IS THAT FOR THIS SUM OF RS.20 LAKHS AS INTRODUCED I N THE CASH FLOW STATEMENT IS BY SELLING OF 42 GOLD BISCUITS RE CEIVED FROM ONE KT MOIDEEN KUTTY. IT WAS A GOLD DEPOSIT WITH A CONDITION THAT THE GOLD BISCUIT MUST BE RETURNED IN THE SAME FORM IN THE SAME WEIGHT AND IN THE SAME QUALITY AS AND WHEN HE DEMANDS. IT SEEMS TO BE A NORMAL STORY W HICH IN OUR MIND IS A COOKED UP ONE TO ATTEMPT TO PROVE IT AS THE SOURCE FOR THIS AMOUNT OF RS.20 LAKHS. THIS UN-BELI EVABLE STORY SET OUT BY THE ASSESSEE IS TO BE DISCARDED PA RTICULARLY WHEN THE GOLD CONTROL ACT WAS IN FORCE. WE APPRE CIATE THE LABOUR TOOK BY THE ASSESSING OFFICER IN COMING TO T HE CONCLUSION AND BRINGING THIS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE INDIVIDUAL ASSESSMENT YEAR 1996-97 IT IS THE YEAR IN WHICH SUCH CREDIT APPEARED. THE ASSESSEE TRIED TO PUT THE CART BEFORE THE HORSE UNDER THE GU ISE THAT SECTION 68 IS NOT APPLICABLE. THE ONE POINT WHICH THE ASSESSEE FAILED TO EXPLAIN IS IT IS THE CREDIT INTR ODUCED IN THE IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 13 CASH FLOW CHART OF THE ASSESSEE WHICH INFORMATION O NLY THE ASSESSEE ALONE COULD KNOW AND IT IS UNDER THE GUISE OF GOLD SALE MEANS IT IS FOR THE ASSESSEE TO EXPLAIN HOW TH E GOLD SALE COULD BE ACCEPTED AS A SOURCE FOR THIS INTRODU CTION OF THE CREDIT. ASSESSEE MISERABLY FAILED IN THIS. H ENCE WE AGREE WITH THE REVENUE AUTHORITIES THAT THIS ADDITI ON OF RS. 20 LAKHS AS UNDISCLOSED INCOME IN THE BLOCK ASSESSM ENT IS WITHIN THE AMBIT OF PROVISIONS THE INCOME-TAX ACT A S DEFINED U/S.158B(B) OF THE ACT. THEREFORE WE REJECT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE AND DECIDE THIS ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE DEPARTMEN T. 15. GROUND NOS.13 AND 14 RELATE TO THE INVESTMENT I N SHIFA - AL REBBAH POLY CLINIC. DOCUMENT MARKED AS BJA 7 IS AN UNSIGNED AGREEMENT DATED 14-8-1996 AND BJA 10 IS NO TING IN MDC BANK DIARY. THESE TWO SEIZED DOCUMENTS SUGGES T THAT THE ASSESSEE HAS MADE AN INVESTMENT OF RS.2 LAKH RI YALS WHICH IS CORRESPONDING TO 20 LAKHS INR IN SHIFA - A L REBBAH (BADAR POLY CLINIC) AND A FURTHER SUM OF RS.1 60 000/- AS RENT RECEIVED. THE ASSESSEE EXPL AINED THAT THIS IS AS PER THE AGREEMENT WHICH IS AVAILABL E IN PAGES 25 TO 27 OF THE PAPER BOOK. BUT ACCORDING TO THE ASSESSING OFFICER THIS AGREEMENT DOES NOT RELATE TO ANY PROPE RTY BUT TO A LICENSE TO RUN A HOSPITAL FOR A PERIOD OF FIVE YE ARS. AS PER IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 14 THAT AGREEMENT THE TOTAL INVESTMENT CONTEMPLATED WA S 7 LAKHS RIYALS OF WHICH TOWARDS THEIR SHARE OF INVES TMENT THE ASSESSEE AND ONE NARIKOTTU KUNHI MUHAMMED HAJI HAVE GIVEN 1 LAKH RIYALS. THE ASSESSING OFFICER TOOK T HE WRONG VIEW THAT THE ASSESSEE HIMSELF PAID 2 LAKH RIYALS B UT THE ENTRY AS EVIDENT DATED AUGUST 12 1996 WHICH CLEARLY REEFERS TO THE PAYMENT BY HASSAN HAJI WHO HAPPENED TO BE T HE FIRST PARTNER AND NOT BY THE ASSESSEE WHOSE PROPOSED CONTRIBUTION ALONG WITH NARIKOTTY KUNHI MUHAMMED HA JI WAS 1.75 LAKH RIYALS ONLY OF WHICH ONLY 1 LAKH RIYALS HAVE TO BE PAID. THEREFORE THE LD. COUNSEL WOULD SUBMIT THAT THE ADDITION OF 20 LAKHS INR IS NOT SUPPORTED BY ANY EV IDENCE AND THERE IS NO MATERIAL TO THAT EXTENT EITHER BY B JA7 OR BJA 10. HOWEVER ON A QUERY FROM THE BENCH WHAT ABOUT THE PAYMENT OF 50 000 RIYALS WHICH IS HALF PORTION OF 1 LAKH RIYALS THE LD. COUNSEL FURTHER EXPLAINED THAT BJA 7 WAS ONLY A DRAFT PARTNERSHIP AGREEMENT AND HE HAS NOT INVEST ED ANY MONEY IN THE CLINIC. ON THE OTHER HAND THE LD. D R RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 16. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOT THE CASE THAT THE ASSESSEE HAS INVESTED THE ENTIRE 2 LAKH RIYALS. IT IS EVIDENT BY THE ENTRY DATED 12-8-1996 THAT THE PAYMENT RELAT ED TO IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 15 SOME OTHER PARTNERS AND NOT TO THE ASSESSEE. HOWEV ER SEIZED MATERIAL BJA 7 IS A PARTNERSHIP AGREEMENT W HICH THE ASSESSEE CONTENDS THAT IT IS A DRAFT PARTNERSHIP AG REEMENT WHICH WE DIS-BELIVE. 50 000 RIYALS WHICH COMES TO RS. 5 LAKH INR HAS BEEN EARTHED OUT FROM THE SEIZED MATER IALS. UNDER THE ABOVE CIRCUMSTANCES THE EXPLANATION ON T HIS AMOUNT OF 50000 RIYALS IS NOT SATISFACTORY AND TO T HAT EXTENT WE SUSTAIN THE ADDITION AND THE REMAINING IS ORDERE D TO BE DELETED CONSEQUENCE OF WHICH THE ORDER OF THE AUTH ORITIES BELOW ARE MODIFIED TO THAT EXTENT. 17. AT THE SAME WE WE REJECT THE CONTENTION OF THE LD. COUNSEL THAT THE INDIAN INCOME TAX ACT WILL NOT APP LY IS FAR- FETCHED AS THIS INCOME OF THE ASSESSEE GOVERNS UNDE R THE INCOME-TAX ACT 1961 AND THERE IS NO MATERIAL TO SUG GEST THAT THE INCOME-TAX ACT 1961 IS NOT APPLICABLE TO T HE ABOVE TRANSACTION. WHILE DOING SO THE RENT ADDITION OF RS.1 60 000/- BJA 10 WHICH IS AVAILABLE ON ASSESSE ES PAPER BOOK AT PAGE 19 CLEARLY SPEAKS THAT IT WAS PAID BY HASSAN HAJI AND NOT BY THE ASSESSEE. THIS HAS BEEN AMPLY EXPLAINED WHICH WE FIND SELF-EXPLANATORY. HENCE WE DELETE THE ADDITION OF RS.1 60 000/- UNDER THE HEAD RENT AS PER THE SEIZED MATERIAL PAYMENT IS NOT BY THE ASSESSEE. THE ORDERS OF THE AUTHORITIES BELOW ARE MODIFIED ACCORD INGLY. IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 16 18. THE LAST ISSUE FOR OUR CONSIDERATION IN THIS AP PEAL IS IN RESPECT OF INVESTMENT IN PROPERTY I.E. GROUND NO.1 5. ACCORDING TO THE ASSESSEE HE DID NOT PAY THE CONSI DERATION AMOUNT OF RS.3 92 000/- AS RECORDED IN THE SALE DEE D AND THAT THE RECITAL IS A MERE NOMINAL RECITAL. THE ASSESSEE RELIED ON THE CONFIRMATION LETTER GIVEN BY THE VEND ORS TO THE EFFECT THAT THEY DID NOT RECEIVE THE SUM OF RS.3 92 000/- SINCE LITIGATION IN RESPECT OF THE PROPERTY WAS BEF ORE THE RDO TIRUR AND CIVIL COURT MANJERI (PAGES 30 & 31 O F THE PAPER BOOK). 19. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE HAVE ALREADY DEALT WITH ON SIMILAR POINT IN GROUND NOS. 6 TO 9 IN RESPECT OF WADAKKENCHERRY PROPERTY. HERE THE DOC UMENT WAS REGISTERED IN THE NAME OF THE WIFE AND CHILDREN OF THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE T HAT AS THERE WAS A DISPUTE EVEN THOUGH THE RECITALS OF TH E DOCUMENT MENTIONS PASSING OF CONSIDERATION IN REAL ITY IT WAS NOT SO SINCE LITIGATION IN RESPECT OF THE PROP ERTY WAS PENDING BEFORE VARIOUS AUTHORITIES. UNDER THE ABOV E CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT T HIS ADDITION WILL NOT BE SUSTAINABLE IN THE EYE OF LAW AS THE EXPLANATION OFFERED BY THE ASSESSEE ON THIS POINT I S QUITE IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 17 JUSTIFIED AND PASSING OF CONSIDERATION COULD BE ONL Y AFTER THE LITIGATION AS CONFIRMED BY THE VENDORS IN THEIR CON FIRMATION LETTERS. THE VENDORS SPECIFICALLY CONFIRMED THAT THEY DID NOT RECEIVE THE MONEY SINCE THE LITIGATION IN RESPECT O F THE PROPERTY WAS PENDING. THIS IS THE DIRECT EVIDENC E WHICH WE HAVE TO ACCEPT UNLESS THERE IS SOME OTHER EVIDENCE AVAILABLE TO SUGGEST OTHERWISE. HENCE WE SET ASIDE THE ORD ERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND ALLOW THE GROUN D OF THE ASSESSEE WITH REGARD TO THE INVESTMENT IN TIRURANGA DI PROPERTY WHICH IS THE SUBJECT MATTER OF DISPUTE BEF ORE THE RDO TIRUR AND CIVL COURT MANJERI. HENCE THIS ADD ITION OF RS.4 LAKH IS DELETED. 20. IN THE RESULT THE ASSESSEE SUCCEEDS PARTLY. 21. TURNING TO THE WEALTH-TAX APPEALS FILED BY THE ASSESSEE THE FIRST COMMON ISSUE IS IN RESPECT OF F IXING THE VALUE OF INVESTMENT IN SHIFA AL-RHEEB POLY CLINIC I N SAUDI ARABIA UNDER THE PRESUMPTION AS INVESTMENT IN IMMOV ABLE PROPERTY ON THE BASIS OF RENT CAPITALIZATION METHOD . 22. AS WE HAVE ALREADY HELD IN THE INCOME-TAX PROCE EDINGS THAT 50000 RIYALS I.E. RS. 5 LAKHS WILL BE SUSTAIN ABLE IN THE IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 18 HANDS OF THE ASSESSEE. HENCE THIS WORTH OF RS.5 LA KHS WILL NOT BE AVAILABLE FOR WEALTH-TAX PURPOSE. HENCE T HE COMMON ISSUE OF ARRIVING AT THE VALUE OF INVESTMENT ON THE BASIS OF RENT CAPITALIZATION METHOD IS TO BE DECIDE D IN FAVOUR OF THE ASSESSEE. ACCORDINGLY THE ORDERS OF THE A UTHORITIES BELOW ARE SET ASIDE AND THE CLAIM OF THE ASSESSEE I S ALLOWED. 23. THE OTHER COMMON ISSUE IN THESE APPEALS IS IN R ESPECT OF INCLUSION OF THE VALUE OF SHOP BUILDING AT TIRUR ANGADI WHICH WAS HELD BY THE WIFE OF THE ASSESSEE AND AS E XPLAINED THAT IT IS OUT OF HER OWN FUNDS. AFTER HEARING RI VAL SUBMISSIONS WE ARE OF THE VIEW THAT THIS ISSUE ALSO TO BE DECIDED IN FAVOUR OF THE ASSESSEE ON THE FACT THAT THIS PROPERTY WAS ACQUIRED BY THE WIFE OF THE ASSESSEE O UT OF HER OWN FUNDS HAS BEEN CLEARLY ESTABLISHED. HENCE IT CANNOT BE TAKEN AS THE ASSET ACQUIRED BY THE ASSESSEE AND CONSEQUENTLY FIXING THE VALUE ON RENT CAPITALIZATIO N METHOD. THERE IS NO BASE FOR WEALTH-TAX ASSESSMENT IN THE H ANDS OF THE ASSESSEE. ACCORDINGLY THIS ISSUE IS DECIDED I N FAVOUR OF THEE ASSESSEE AND AGAINST THE REVENUE. 24. WEALTH-TAX APPEALS ARE DECIDED IN FAVOUR OF THE ASSESSEE. IT(SS)A NO. 60 & WTA NOS.138 TO 140/COCH/2004 M.N. KUNHIMOHAMMED 19 24. IN THE RESULT IT(S&S)A NO.60/COCH/2004 IS PART LY ALLOWED WHEREAS WTA NOS. 138 TO 140/COCH/2004 ARE ALLOWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 09 TH JULY 2010. PM. COPY FORWARDED TO: 1. SHRI M.N.KUNHIMOHAMMED MEDUVIL NALAKATH HOUSE NK ROAD TIRURANGADI MALAPPURAM. 2. THE ACIT(INV.) CIRCLE- 1 DIV.1 CALICUT. 3. CIT(A)-II/CWT(A)-II CALICUT. 4. CIT/CWT CALICUT. 5. D.R.