TaxTMI 
TaxTMI 
2007 (8) TMI 376
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....ing the inclusion of the income derived from the business of M/s. Archana Jewellery in the hands of the assessee. 2. Briefly stated facts are as under: The assessee is an abkari contractor and is assessed in the status of Individual. There was a search action under section 132 of the Income-tax Act, 1961, in the residential premises and business premises of the assessee on 29-1-1982. During the course of search action certain incriminating documents and books of account were seized by the search party. Based on the materials recovered in the said search, the Assessing Officer rejected the income declared in the returns filed by the assessee and completed the assessment for the assessment years 1979-80 and 1980-81. During the course of search no cash, jewellery or valuable article were found. As far as the assessment year 1979-80 is concerned, the assessee had filed the return of income declaring total income at Rs. 22,940 from different sources like income from house property, own business in prawn fishing and share of profits in which he was partner. As far as the assessment year 1980-81 is concerned, the assessee had declared the income of Rs. 16,340. After the search under se....
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....; EKMS/538/82 13th August, 1982. To The Income-tax Officer, Special Circle, Ernakulam, Cochin-682 016. Sir, Income-tax assessment of Sri A.N. Chellappan Achari-Your letter PA No. 16014-PROVIDE-0735, dated 7-8-1982- As required vide your letter cited, the following particulars regarding Sri A.N. Chellappan Achari, Archana Jewellery, MG Road, Ernakulam, are furnished below: Mr. A.N. Chellappan Achari is the proprietor of M/s. Archana Jewellery, MG Road, Ernakulam. The party has availed an open cash credit facility from us in the name and style of Archana Jewellery. The account is operated by Mr. A.N. Chellappan Achari, as proprietor. The accoun....
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....h, Edappally are the three persons, who offered property as security for the said advance. The property of Mr. & Mrs. T.K. Krishnan that held as a security is already released where it is approximately valued to 3.24 lakhs". In these communications from the bank, there is no mention that the Account No. CD-14 was opened and operated by the assessee, in the name of or for and on behalf of Archana Jewellery. On the other hand, the evidence is that the loan was granted to Sri Chellappan Achari of Archana Jewellery on the security of certain people. It is only in the statement of points furnished by the departmental representative that there is a mention "that the bank account of the business was originally in the assessee's name". However, in a communication to the Inspecting Assistant Commissioner of Income-tax, under a copy to the assessee, there is a remark at para 10(ii) that enquiries showed that the bank account of the business in the Bank of Cochin was originally opened and operated by the assessee and the temporary overdrawals were allowed in the said account against personal guarantee. Neither the Income-tax Officer's order nor Inspecting Assistant Commissioner's order under ....
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....t is purported to have been executed on 5-9-1978 by Sri Chellappan Achari residing with Shri P.K. Narayanan, for and on behalf of Shri P.K. Narayanan, aged 46, in favour of Sri A.C. Ramesh. The lease agreement is for the lease of property belonging to Shri Ramesh. It is on stamped paper. It was initialed or signed only by Shri Chellappan Achari. Shri Ramesh had not signed the document. Thus, it is an incomplete document, which has no validity in law. From the observations of the Income-tax Officer in the assessment order, it is seen that Shri Chellappan Achari was residing elsewhere and, therefore, not with the assessee, but the narration in the lease deed states that he was residing with the assessee. So the contents of the document at the very beginning is contrary to facts. The assessee in the sworn statement made at the time of search, had explained that he wanted to help Shri Chellappan Achari and Shri Ramesh would not lease out the property to him, the lease agreement was initially drafted in the manner in which it was found. This explanation was only rejected without any enquiries being made either with Shri Ramesh or with Shri Chellappan Achari. At any rate this incomplete ....
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....tock, and payments etc., are not sufficient to point to the benami nature of the transactions. The payments are cheque payments of Archana Jewellery and the payees were not examined to indicate the complicity of the assessee. The books of account pertaining to Archana Jewellery were not found with the assessee. Nor the profit and loss account or balance-sheet of Archana Jewellery. The possession of papers relating to stock etc., have been properly explained by the assessee. No worthwhile enquiry was made either with Shri Sathyan or Shri Ramesh or with Shri Chellappan Achari or with the parties to whom some payments were alleged to have been made. No cheque book belonging to Archana Jewellery - unused cheque leaves or signed cheque leaves were recovered from the possession of the assessee. No unexplained cash, jewellery, valuable article or thing was seized. It is seen from the records that the account with Bank of Cochin was opened with the introduction by Shri A.C. Mohan of Anupama Jewellery. It is not shown that Shri Mohan is a relative of the assessee. Nor Shri Mohan was examined. The guarantees were given by 19 persons including the assessee. These 18 persons are not shown to b....
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.... to the quantum saying that there are only questions of fact and no question of law arise thereby upholding the view taken by the Tribunal in the appeals relating to the quantum. As far as the references in the appeals relating to the penalty, the same was disposed off by the Hon'ble High Court vide judgment reported in P.K. Narayanan's case. In those references it was held that the department has not discharged its burden to bring that there has been intentional suppression. After considering two different decisions in the assessee's own case, the Hon'ble High Court was of the opinion that the matter has to be examined by this Tribunal in the light of the said decisions and hence the Hon'ble High Court remitted the matters to this Tribunal for fresh decision, in respect the assessment years 1986-87 to 1988-89. 4. We have heard Shri G. Sarangan, learned counsel for the assessee and Smt. Beena Sarasan, learned departmental representative for the revenue. The learned counsel for the assessee as well as learned departmental representative has filed written arguments. We have given our thoughtful consideration to all the facts as well as the written submissions made by the parties. ....
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....from the said accounts. Added to the above, the issue of slips and other documents relating to the transactions of purchase and sale of gold ornaments were also seized from the bed-room of the assessee. The presumption under section 132(4A) was also available to the Department and the burden is on the assessee to show that the slips and other documents seized from the residence of the assessee did not belong to him, which the assessee was not able to discharge properly. The facts of the case would clearly show that the initial control and management and also the use of the funds for the business are with the assessee and that the assessee is the real owner of the business. Even though the Tribunal has not stated in so many words about the source of the business and also the beneficial enjoyment of the income from the business, the discussion and the findings of the Tribunal will clearly show that the Tribunal had in mind relevant considerations for determining the question as to the ownership of the business of Archana Jewellery and the various facts found by the Tribunal will clearly show that the initial capital, control and enjoyment of the business were with assessee and ....
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....Tribunal allowed the appeals filed by the assessee and deleted the penalty levied by the Assessing Officer and confirmed by the CIT (Appeals) under section 271(1)(c) of the Income-tax Act, 1961, the said references were disposed off by the Hon'ble High Court, which is reported in P.K. Narayanan's case deciding against the revenue upholding the findings of the Tribunal that the revenue has not proved that the business of M/s. Archana Jewellery belongs to the assessee. The relevant observations of the Hon'ble High Court on the issue of the treatment of income from M/s. Archana Jewellery are as under: "Then comes the penalty imposed in respect of the income from Archana Jewellery. It is the case of the assessee that his nephew, namely, Sathyan, was an employee of Archana Jewellery which was owned by Chellappan Achari; that the papers relating to Archana Jewellery were brought by Sathyan with him and that he left them in the bed-room of the assessee, which were recovered therefrom during the search. A lease agreement purporting to have been executed in the name of Shri Chellappan Achari, the assessee and one A.G. Ramesh was recovered from the assessee's premises, besides other paper....
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....orted in P.K. Narayanan's case has confined itself to the sustainability or otherwise of penalty under section 271(1)(c) on the strength of Explanation (1) and, therefore, the said decision cannot be canvassed to undo the judgment of the Hon'ble High Court in respect of the quantum appeal reported in P.K. Narayanan's case which has become final. The further argument of the learned Departmental Representative is that the factual findings of the Hon'ble Tribunal in quantum appeal that Shri A.N. Chellappan Achari was the benamidar of the assessee has become final as the Hon'ble High Court has upheld the finding of the Tribunal in P.K. Narayanan's case and as the assessee has not challenged the said decision, the same has become final. 7. Per contra, Shri G. Sarangan, learned senior counsel for the assessee vehemently submitted that if some of the facts were not brought to the notice of the Tribunal when the appeals relating to the quantum were heard, those facts were brought to the notice of the Tribunal at the time of hearing of the appeal relating to the penalty levied under section 271(1)(c) of the Act. The learned senior counsel further submitted that each assessment year is in....
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....i A.N. Chellappan Achari. Though the learned departmental representative submitted that the decision of the Hon'ble High Court reported in P.K. Narayanan's case is confined to Explanation (1) to section 271 (1)(c) but ultimately the Explanation is a rule of evidence and that puts the burden on the assessee to offer a proper explanation in respect of any facts to the computation of the total income to the Assessing Officer. Ultimately it is a fact that by way of explanation which is to be put before the assessing authority whether that fact is correct or not that is to be decided by the assessing authority or the appellate authority. In the appeals relating to the penalty proceedings on the basis of the new facts this Tribunal came to the conclusion that it is not proved that the business of M/s. Archana Jewellery in fact belonged to the assessee. In our opinion the facts, which has been accepted by the Tribunal, as is correct explanation, cannot again be said that for the purpose of quantum appeal those are not the true facts. 9. Another question remains before us is if in the assessment year 1979-80 and subsequent assessment years if it is held that business of M/s. Archana Jew....