TaxTMI 
TaxTMI 
2014 (10) TMI 1029
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....hri N.R.S. Ganesan, JM & Chandra Poojari, AM Assessee By: Shri Jose Kappen Revenue By: Shri M Anil Kumar, CIT(DR) ORDER PER BENCH: These appeals by the revenue and the Cross Objections by the assessees directed against the different orders of the CIT-V Kochi and relate to different assessment years. 2 First we will take up the appeals of the revenue in ITA Nos 539 to 545/Coch/2013 in the case of New Kerala Investments: 3 The first common ground in all these appeal is with regard to the admission of fresh/new evidences filed by the assessee before the CIT(A) without satisfying the conditions laid down in Rule 46A(1) of the I T Rules 1962. 4 The brief facts of the case are that the assessee is a partnership firm doing the business of chitty. The assessee filed its original return of income along with audit report u/s 44AB of the Act. There was a search operation at the business premises as well as the residences of its partners on 26th March 2008. There was no search or survey operation conducted in the business premises of the assessee's sister concerns i.e. M/s Edassery Ceramics, ET Decvassy & Sons Edassery Jewellers, St Francis Clay Works, St Francis ....
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....on 30.10.2009; ii) that the Managing Partner of the group was not keeping well during this period. iii) that the accountant of the assessee firm left service during the course of assessment proceedings; iv) that the Auditor of the assessee firm was also not cooperative and not filed the required details before the AO. 7.1 In view of the reasons mentioned above, the CIT(A) admitted the various documents, which are necessary for the purpose of adjudicating the appeal before him and to decide the issue on merit. 8 We have carefully considered the rival submissions. In our opinion, having regard to the provisions relating to the appeals before the first appellate authority, a distinction has to be made between the evidence and material voluntarily furnished by an assessee in support of his appeal and the evidence / material requisitioned from an assessee by the first appellate authority with a view to proper disposal of proceedings before him. In our opinion while the provisions of rule 46A apply to the former, the same have no application to the latter. 8.1. Rule 46A of I.T. Rules has been inserted by the Income-tax (Second Amendment) Rules, 1973 wi....
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....facts and circumstances of the case warrant such an enquiry to be made. Reference in this regard may be made to the judgments in the case of Mohammed (K.) v. Income-tax Officer reported in reported in 107 ITR 808 (Ker); in the case of Sewduttroy Rambullav and Son v. Commissioner of Income-tax reported in 204 ITR 580 (Cal); in the case of Smt. Prabhavati S. Shah v. Commissioner of Income-tax reported in 231 ITR 1 (Bom) and in the case of CIT vs Dalmia Cement Bharat Ltd., reported in 36 Taxman 353 (Del). It, therefore, follows that the matters to be considered by the first appellate authority need not be confined to what was considered by the assessing officer while making the order appealed against. 8.3. The provisions of Rule 46A promulgated with effect from 01-04-1973 were challenged as being ultra vires to the provisions of Sections 250 and 251 of the Act in the case of Smt. Mohinder Kaur v. Central Government 104 ITR 120 (All). After consideration of the provisions of Sections 250 and 251 of the Act as well as Rule 46A of I.T. Rules the High Court arrived at the conclusion in the following words: Sub-rule (1) of the said rule lays down the circumstances in which alone the ass....
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....wn cannot produce any additional evidence not furnished before the assessing officer without meeting he various conditions provided under rule 46A for which satisfaction is to be recorded by the appellate authority in writing and with which the appellate authority is further required to confront the assessing officer and allow him reasonable opportunity to have his say in the matter. In the case of Rai Kumar Srimal v. Commissioner of Income-tax reported in102 ITR 525 (Cal) the Calcutta High Court have clearly held that where the CIT is not acting suo motu in admitting additional evidence, there must be some ground for admitting new evidence. The Calcutta High Court have further observed that in such a case the Tribunal can interfere with the discretion exercised by the first appellate authority in admitting the additional evidence. In the words of the High Court "It is true, as was contended by counsel for the assessee, that the Appellate Assistant Commissioner has very wide powers and in the interests of justice he can make further enquiry and he can admit new ground of appeal. He can also give deductions not claimed by the assessee. As was held by the Calcutta High Court in the c....
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....rule (1) unless the ITO had been allowed a reasonable opportunity to examine the evidence or to cross examine the witness whose evidence was taken on record or to produce any evidence in rebuttal of the additional evidence produced by the assessee. It is, therefore, obvious that the AAC could not have relied on the additional evidence without giving such opportunity to the ITO. The mere fact that notice of hearing of the appeal was given to the ITO would not meet the requirements of the above rule. Even if no such rule was in existence, ends of justice and fair play demand that when an assessee produces additional evidence in his appeal an opportunity is given to the ITO to test the evidence or to counter the effect of the evidence by producing evidence in rebuttal or otherwise. The reason is self evident. It stands to reason to presume that the ITO took his decision not to remain present because he considered it unnecessary to do so in the context of the existing record. He could not have anticipated or reasonably foreseen that the record was going to be augmented by adducing fresh evidence. Besides, he had a right to object to the production of additional evidence. Since somethin....
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.... such as CIT v. Babulal Jain 176 ITR 411 (MP); C. Unnikrishnan v. CIT 233 ITR 485 (Ker); and Ramprasad Sharma v. CIT 119 ITR 867 (All). 25.In the case of Smt. Prabhavati Shah v. CIT 231 ITR 1 (Bom). The Bombay High Court dealt with a case where the assessee sought to produce fresh evidence before the first appellate authority for no good reasons for not having produced the same before the assessing officer. Referring to the provisions of rule 46A the Bombay High Court held that the first appellate authority was justified in not taking on record the fresh evidence sought to be produced before him by the assessee. In the course of the judgment, the High Court closely examined the provisions of Section 250(4) of the Act and the provisions of rule 46A and observed as under: "On a plain reading of rule 46A, it is clear that this rule is intended to put fetters on the right of the appellant to produce before the Appellate Assistant Commissioner any evidence, whether oral or documentary, other than the evidence produced by him during the course of the proceedings before the Income-tax Officer, except in the circumstances set out therein. It does not deal with the powers of the Ap....
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....at the legal position is that the first appellate authority has wide powers over the order of assessment appealed against before him. In the course of exercise of such power the first appellate authority can direct the assessee to produce any evidence, information or material that was not produced before or considered by the assessing officer. The purpose of rule 46A is to place fetters on the rights of an appellant to produce additional evidence before the first appellate authority and not the rights of the first appellate authority to call for production of any fresh evidence or information. This aspect of the provisions of rule 46A is clear from the provisions of Sub-rule (4) of rule 46A itself that nothing contained in rule 46A shall affect the power of first appellate authority to direct the production of any document or examination of any witness to enable him to dispose of the appeal or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the assessing officer. 9. In the instant case the entire additional evidence has come on the record of the first appellate authority because the first appe....
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....m own chity investment. 11.1 Facts of the case are that according to the AO, the assessee firm was subscribing to various kuries conducted by the firm and it was not disclosing the income from own chitty investments in the return of income. During the course of search a document marked as A-21 was seized, which contains the details of large amount of subscription in own chits for the period from 10.2.2003 to 9.2.2008. Accordingly, the AO worked out the year wise investments in own chits based on the seized document for the AY 2004-05 to 2008-09. In respect of the AY 2003-04, the AO estimated the investment in own chits by projecting the figure for two months as per the seized material to the whole year. In respect of AY 2002-03, the AO arrived at the investment in own chits by taking the percentage growth of such investment from the AYs 2003-04 to 2004-05 as the basis of projection. The AO further estimated the profit earned from own chits @ 10%. 11.2 Before the CIT(A), it was submitted that the assessee firm was investing in own chits for business convenience. It was submitted that the AO was not correct in presuming that there will always be profit in respect of investment ....
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....as found for the month of Feb and March 2003. Since these chits were not terminated during the relevant year, the CIT(A) was of the view that the AO has computed the income by projecting the investments found for two months against the whole year and further estimated the income at 10%. In our opinion, there is no need for estimating the income for the AY 2003-04 in view of the fact that the chity reflected in the seized material for the relevant year are not terminated as on 31.3.2003. Therefore, we find that the CIT(A) is justified in deleting the addition of Rs. 3,00,905/ for the AY 2003-04. 12.2 For the AY 2004-05 to 2008-09, a document marked as Annexure A-21, captioned office chitty subscription print -2003 containing the details of subscription of office chitties made by the firm was seized during the course of search. The AO worked out the yea-wise investments in respect of own chits and further estimated profit from the same at 10% on the assumption that usually subscribers invest in chits because it was more profitable than investing in banks or other financial institutions. Accordingly, the ld AR submitted that the investment in own chits are made not with a view of p....
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....gly, he observed that the addition made by the AO on estimate basis towards profit from own chity investment was not justifiable. Being so, the CIT(A) observed that the addition of Rs. 1,39,264/- for the AY 2004-05 and to the extent of Rs. 74,329/- for the AY 2007-08 are to be made and deleted the balance addition of other AYs. 13 After considering the rival submissions, we do not find any infirmity in the findings of the CIT(A), which is confirmed. Accordingly, the ground raised for other AYs also rejected. 14 Next common ground in these appeals relates to the deletion of addition of the income from Kuri late fee. 14.1 Facts of the case are that during the assessment proceedings, the AO found from the cash book for the AY 2007-08, the assessee has collected kuri late fee of Rs. 2,204,464/- for a period of 6 months from Oct 2006 to March 2007. The AO further projected the kuri late fee collected for 6 months to the full year and to other AYs on the assumption that percentage growth of kuri late fee collection was @ 10%. 14.2 On appeal, the CIT(A) observed that no incriminating materials relating to the income from kuri late fee were found/seized during the course of sea....
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....st paid on deposits @ 12% p.a and made addition to the total income in respect of AYs 2002-03 to 2005-06. In respect of AYs 2006-07 to 2008-09, no addition was made on this account since the entire interest paid was disallowed u/s 40(a)(ia) of the Act. 16.1 On appeal, the CIT(A) by relying the order of the Special Bench in the case of All Cargo Logistic Ltd (supra) observed that the addition to the returned income for these in an assessment u/s 153A of the Act can be made only on the basis of incriminating materials discovered during the course of search. He found that the AO has not referred to any seized material while making the disallowance. He further observed that in the remand report also, the AO has not pointed out any seized material relating to the disallowance. Accordingly, he found that the disallowance was made on the basis of presumption and not on the basis of any material relating to the nexus between the borrowed funds and advances to sister concerns during the relevant years. Since there was no material detected or found during the course of search, which even remotely suggest that the advances made to the sister concerns are out of the borrowed funds, the AO w....
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....AO was that it was not clear how the loan amount which should have been received by chqeue in the name of the partner was directly credited in the account of the firm. CIT(A) was in agreement with the explanation offered by the assessee and accordingly, the addition of Rs. 18,185/- made for the AY 2007-08 was deleted. 19 We have considered the rival submissions and relevant material on record. In this case, admittedly, the amount borrowed by the partners was credited to the assessee's firm and the corresponding payment was also made by the assessee including interest payments. According to the AO, the interest was to be borne by the partners and it was wrongly claimed by the assessee firm. However, there is no material to suggest that the partners were derived any benefit out of the loans availed by the assessee firm. In the absence of any material to suggest the benefits derived by the partners in a personal capacity, we are not in a position to accept the claim of the revenue. Accordingly, this ground raised by the revenue is rejected. 20 In the result, all the appeals filed by the revenue in ITA nos 539 to 545/Coch/2013 are dismissed. 21 Now we will take up the Cross Ob....
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.... unfair, since the total advances vary day-by-day due to sanctioning of new advances and closure of existing advances. According to the CIT(A), it is the normal practice that if the day-to-day balances are not available for computing interest income on product method, the average of the opening and closing balance of the financial year has to be considered for computation of interest. According to him, the true income can be estimated only by following average method. Accordingly, he observed that interest income shall be estimated on an average balance of advances. 27 We have considered the rival submissions and perused the relevant material on record. On this issue, the ld AR is not able to controvert the findings of the CIT(A). The CIT(A) has considered the average opening and closing balances of the financial year so as to compute the interest income, which is an accepted method of assessment of income and advances when the day-to-day balances of loan is not available, The findings of the CIT(A) in para 35.3 as under: "35.3 I have considered the arguments of the ld AR as well as the AO and the material available on record. The appellant firm is doing money lending b....
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....ainst Rs. 26,04,095/- as worked out by the AO. The assessee furnished the detailed working in respect of each AYs, which was forwarded to the AO by the CIT(A) for his comments. In the remand report, the AO stated that in respect of the addition, the assessee contended that the total foreman's commission worked out in the assessment for the AY 2002-03 at Rs. 24,36,281/- was not correct, and the correct figure was only Rs. 21,57,875/-. The AO further stated that the assessee has not reconciled the same with reference to the working sheet based on which the addition was made. In respect of the AY 2008-09, the AO reported that the foreman's commission receivable was only Rs. 17,05,250/- as against Rs. 26,04,095/- as computed in the assessment. On examination, the AO found that there was variation in the number of tickets in respect of certain chits as taken by the assessee and the seized documents, which was still explained. The AO further stated that the assessee could not furnish any convincing explanation regarding the heavy fall in the foreman's commission during the relevant year compared to the earlier year. Accordingly, the AO stated in the remand report that the income from for....
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.... are in order. Considering the facts and material, the CIT(A) was of the view that the foreman's commission receivable for the AYs 2002-03 and 2008-09 are Rs. 21,57,720/- and Rs. 23,63,326/- respectively. Accordingly, the CIT(A) sustained the addition on account of undisclosed foreman's commission amounts of Rs. 8,800/- for the AY 2006-07 and Rs. 16,06,951/-( total foreman's commission Rs. 23,63,326/- disclosed in the return of income Rs. 7,56,375/-) for the AY 2008-09 in their findings. 30 We have heard the parties and perused relevant material on record. On this issue, the assessee furnished reconciliation statement with regard to collection of the foreman commission before the CIT(A). The CIT(A), after going through the reconciliation statement observed that the foreman commission receivable for the AY 2002-03 was at Rs. 21,57,720 and for The AY 2008-09, it was Rs. 23,63,326/-. Accordingly, he sustained the addition towards undisclosed foreman commission at Rs. 8,800/- for the AY 2006-07 and Rs. 16,06,951/- for the AY 2008-09. The assessee could not controvert the above findings of the CIT(A). Being so, we are not in a position to disturb the above findings of the CIT(A) and ....
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....that in this case, there are outstanding balances which are receivable from subscribers in respect of all the terminated kuries where credit balance was outstanding as per the balance sheet. According to the ld AR, no income can be recognized in respect of terminated kuries till the entire receivables are realized in full. It was submitted that if the AO's argument that credit balance outstanding in respect of terminated kuries are to be assessed as income is assumed to be correct, then the profit may be arrived at after reducing the receivables as irrecoverable. Accordingly, the assessee provided the detailed working for each AYs and as per the same, income has arisen only in respect of AYs 2007-08 and 2008-09 amounting to Rs. 1,37,192/- and Rs. 13,625/- respectively. 33.3 The CIT(A) forwarded the submissions to the AO for his report and after considering the remand report and other relevant materials, the CIT(A) found that the AO made the addition on the basis of the decision of the Hon'ble jurisdictional High Court in the case of Guruvijaya Kuri Co Ltd., cited supra. The CIT(A) observed that even though the decision was rendered by the Hon'ble High Court in the case of penalt....
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....013 are dismissed. ITA Nos. 532 to 538/Coch/2013(AY 2002-03 to 2008-09 in the case of E T Devassy & sons Edassery Jewellers ( By the revenue) & CROSS OBJECTION No. 50 to 56/Coch/2013 (by the assessee): 36 The first common ground in these appeal is with regard to admission of additional evidence in violation of Rule 46A(1) of the IT Rules 1962. 37 This ground is identical to the ground raised by the revenue in its appeals in ITA Nos. 539 to 543/Coch/2013 in the case of New Kerala Investments which we have discussed in the foregoing paragraph 8 to 10 of this order. As the facts and circumstances are similar to the facts of the case of New Kerala Investments (supra); therefore, following our findings in the case of New Kerala Investments (supra), we dismiss the ground taken by the revenue in the present case also. 38 Next ground in ITA Nos 532, 533, 534 and 535 relates to estimate profit based on seized material. 38.1 The assessee has raised legal issue regarding initiation of proceedings u/s 153A of the AYs 2002-03 to 2005-06. The ld AR submitted that since the assessment for the AYs 2002-03 to 2005-06 were concluded as on the date of search and no proceedings are p....
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....arch shall abate. The ld AR submitted that in respect of AYs 2002-03 to 2005-06, the assessment are completed as on the date of search and the same can be reopen3d only on the basis of specific incriminating documents/transactions/seized assets. The ld AR also submitted that the ITAT in the case of DCIT vs Matha Enterprises in ITA NO. 269 to 275/Coch/2010 has already decided in the above lines and this legal proposition was further confirmed in the case of Best Bakery and Ice Cream Parlour vs ACIT in ITA NBO. 498 and 499/Coch/2010. 39 On appeal, the CIT(A) observed that the second proviso of sec. 153A states that the assessment or reassessment pending on the date of initiation of the search or requisition shall abate and no further action shall be taken thereon and in this case, an assessment shall now be made u/s 153A of the Act. He further observed that the word pending occurring in the second proviso to sec. 153A is significant and it is further qualified by the words 'on the date of initiation of the search'. According to the CIT(A), such assessments which are pending as on the date of search are liable to abate and the assessments which are not pending i.e. completed assess....
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....u/s 153A of the I T Act in respect of the AYs 2002-03 to 2005-06. Aggrieved, the revenue is in appeal before us. 40 After considering the rival submissions and relevant material on record, we do not find any reason to interfere with the findings of the CIT(A), which is confirmed in view of the decision of the Special Bench in the case of All Cargo Logistics Ltd (supra) wherein the Special Bench has observed and held as under: "66. We find that the solitary decision in this case by any High Court is in the case of Container Corpn. of India Ltd. (supra). In this case it has been held that an ICD is not a port but it is an inland port. The case of CFS is similar situated in the sense that both carry out similar functions, i.e., ware housing, customs clearance, and transport of goods from its location to the seaports and vice-versa by railway or by trucks in containers. Thus, the issue is no longer res-integra. Respectfully following this decision, it is held that a CFS is an inland port whose income is entitled to deduction u/s 80-IA(4). Question No. 2 is answered accordingly. 67. Now the matters of the assessee will go before the Division Bench which shall dispos....
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....for the opening stock of gold ornaments i.e. stock as on 1.4.2005 was not properly given in the financial statements. ii) The quantity of gold ornaments as on the date of search as adopted in the assessment for valuation was not correct for the reason that deduction towards weight of stone and quantity of used ornaments are not considered. iii) For valuating new and old gold ornaments, the same rate was adopted in the statement. iv) The value addition of 12% made for making charges while valuation of stock was highly excessive. v) The market rate of gold as taken by the AO on various valuation dates are not correct. Further, 22 ct ornaments are valued at the rate of 24ct gold in the valuation made by the AO. vi) No accepted method of valuation of stock in trade was followed by the AO while valuing closing stock of gold ornaments of various assessment years. The assessee further furnished evidences in support of its arguments regarding the quantity and value of opening stock as on 1.4.2005 and also in respect of the percentage of value addition to be made towards making charges. The assessee further submitted that in respect of the pro....
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....pared by him from the seized records. The CIT(A) found that it was important that the financial statements prepared by the AO are to be re-casted taking into account of errors pointed out by the assessee since it has a great bearing on the adjudication of the issue whether the seized records are fully reliable in the computation of income. 41.5 After considering the submissions and other relevant material, the CIT(A) was of the opinion that the seized books are not correct and complete and it do not reflect the true state of affairs of the assessee firm. Accordingly, he was of the view that a reasonable estimate of net profit was called for that may be earned from such type of business i.e retail trade in jewellery. He observed that in the present case the turnover for each assessment year reported in the seized books are not disputed at any stage of the proceedings. Regarding the net profit rate to be adopted, the assessee submitted that according to Bombay Bullion Association, the licensed dealers margin of profit in retail jewellery business was 3%. The assessee further submitted that the net profit ratio as per the regular accounts for the AYs 2006-07, 2007-08 and 2008-09 wa....
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....t Member was the party of that order; therefore, we are inclined to confirm the order of the CIT(A) on this issue. Accordingly, the ground taken by the revenue on this issue is dismissed. 46 In the result, the appeals filed by the revenue for all these Assessment Years in ITA Nos 532 to 538/Coch/2013 are dismissed. 47 Now, we will take up the Cross Objections filed by the assessee. CROSS OBJECTIONS No. 50 to 56/Coch/2013 48 The first ground is that since there is no search warrant, hence assessment is invalid. 48.1 Identical issue raised in the Cross Objections filed by the assessee in CO nos. 112 to 118/Coch/2013 in the case of New Kerala Investments. While deciding these Cross Objections, we have dismissed the ground taken by the assessee as not pressed. Accordingly, by following the findings in para No. 23 in that case, the ground taken by the assessee in the instant case is also dismissed as not pressed. 49 Next ground in Cos no. 54, 55 & 56/Coch/2013 relates to estimate of profit at 5% which is on higher side. 49.1 The revenue was in appeal before us on this issue. Since we have confirmed the order of the CIT(A) while deciding the revenue appeals, therefor....
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.... Objection is dismissed as infructuous. 59 Next issue in Cross Objection no. 119 & 120/Coch2013, 110- & 111/Coch2013 and 107 & 108/Coch2013 relates to assessment which are concluded and no incriminating materials found and there cannot be abatement. 60 Similar ground was taken before us by the assessee in the case of E T Devassy & Sons in CO nos. 50 to 56/Coch/2013 and we have dismissed the ground taken by the assessee. Accordingly, following the findings in the Cross Objection in the case of E T Devassy & Sons, we dismiss the ground taken by the assessee in the instant case is also. 61 In the result, all the Cross Objections filed by the assessees in Cross Objection Nos.121 to 122/Coch/2013, C.O. Nos. 119 & 120/Coch/2013, C.O. Nos. 110 & 111/Coch/2013 and C.O. Nos. 107 to 109/Coch2013 are dismissed. ITA NO.518 to 524/Coch/2013 - ITA No.613 to 637/Coch/2013 ITA No.638 to 644/Coch/201 - ITA No.573 to 579/Coch/2013 ITA No.566 to 572/Coch/2013 - ITA No. 580 to 586/Coch/2013 & ITA No. 612 TO 618/Coch/2013 (by the revenue ) CROSS OBJECTIONS Nos: CO nos. 57 to 63/Coch/2013 - CO nos.100 to 106/Coch/2013 CO nos. 79 to 85/Coch/2013 - CO nos. 86 to 92/Coch/2013 CO ....
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....amily property of himself, wife and children, in the statement under section 132(4) of the Act. iv) On enquiry by the Assessing Officer, the Agricultural Income Tax Officer. Trichur, who has jurisdiction over the assessee informed that the assessee was not an Agricultural income Tax assessee on the rolls of his office. v) At the time of assessment proceedings, the assessee has not furnished evidences for expenditure incurred on agricultural operations like purchase of fertilizers, payment of wages, etc., and also for the sale of agricultural produce. Accordingly, the Assessing Officer estimated the agricultural income of the assessee and treated the difference as taxable income by placing reliance on the decision of the Pune Benches of the Tribunal in the case of Jaikisan R Agarwal Vs ACIT [(2006) 66 TTJ (Pune) 704] as under: Assessment Year Agricultural income claimed (Rs.) Agricultural income estimated (Rs.) Addition made (Rs.) 2002-03 5,00,000 40,000 4,60,000 2003-04 6,00,000 50,000 5,50,000 2004-05 7,00,000 55,000 6,45,000 2005-06 8,00,000 65,000 7,35,000 2006-07 10,00,000 80,000 9,20,0....
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....of the Panchayat ward stating that the assessee is one of the best agriculturists in the surrounding area and cultivates nearly 70 acres of paddy field and 47 acres of other crops such as coconut, arecanut, pepper etc. In order to prove the quantum of agricultural income earned from various properties, the assessee furnished certificates from the jurisdictional agricultural officers/village officers who have inspected the agriculture properties and verified the crops therein. The certificates issued by the concerned agriculture/village officers under whose jurisdiction the various agricultural properties are located. According to the assessee, copies of the certificates issued by the agricultural/village officers were already filed before the assessing officer except in certain cases where certificates were received after the completion of the assessment. 6.3 The assessee further submitted that the addition to the above properties (117.30 acres), the assessee's family own properties extending to 26.67 acres which were used for industrial purposes. The assessee has produced bills in respect of sale of agricultural produce, purchase of fertilizers, pesticides, etc. for the period fro....
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....d to have earned by the assessee is for the assessment year 2010-11 and not for the period under the search assessment period. Hence, it cannot be accepted as an evidence for the above assessment period." 65.6. In the rejoinder, the Ld. AR also submitted that in the remand report, the Assessing Officer has stated that the Income Tax Inspector has personally visited all the agricultural properties of the assessee and verified all the documents furnished in support of the agricultural income claimed by the assesses. According to the Ld. AR the assessing officer has no dispute with the extent of land (both paddy field and dry land cultivated by the assessee). The assessing officer further stated that he was satisfied with various documents furnished by the Ld. AR in support of his claim for agricultural income. It was submitted that the only issue raised in the remand report was that the additional evidences in the form of bills for the sale of agricultural produce/agricultural expenses furnished by the assessee, which do not relate to search assessment period and hence cannot be accepted as an evidence for the search assessment. Further, the Ld. AR submitted that it was true that ....
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.... 2007-08 53.41 11,37,000 42.46 20,13,000 31,50,000 2008-09 70.49 17,16,000 46.80 23,59,000 40,75,000 In support of the above claim, the Ld. AR furnished the following evidences: i) Certificates issued by the Agricultural/Village Officers having jurisdiction over the area regarding extent, crops grown and estimated income. ii) Certificate from the local Panchayath Member regarding agricultural operations carried out by the assessee. iii) Certificate from the local Panchayath President regarding agricultural operations carried out by the assessee. iv) Certificate from the Member of the Parliamentary constituency regarding agricultural activities of the assessee. v) Copy of bills in respect of sale of agricultural produce for the period from 04.03.2010 to 24.07.2010. vi) Copy of bills in respect of purchase of fertilizers/pesticides during the period from 01.06.2010 to 03.08.2010. 64.9 It was observed by the CIT(A), In this case the assessee and his family members, as per the certificates furnished by the concerned Agricultural/village officers, the assessee derived income from agricultural....
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.... them to be genuine. According to the CIT(A), the only objection raised by the Assessing officer in the remand report was that these bills/vouchers should not be accepted as an evidence for the search assessment period, since the same relate to assessment year 2010-11. 65.11 According to the CIT(A), from the remand report, it was clear that the Assessing officer had no dispute with the extent of agricultural land held by the assessee and his family members during the various assessment years comprised in the search assessment period and the agricultural income estimated by the Agri/Village Officers from these properties. The CIT(A) further observed that in the remand report the Assessing officer has not questioned the merit and the evidentiary value of the various documents/evidences furnished by the assessee in support of his claim for agricultural income. The CIT(A) found that none of the evidences/submissions made by the assessee was rebutted by the Assessing officer in the remand report. From the working provided by the assessee, the CIT(A) observed that the average annual agricultural income per acre claimed by the assessee for the assessment years 2002-03 to 2008-09, which....
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.... 2001-02 25,376 62,074 65.13 The CIT(A) observed that the assessee has claimed nominal income from agriculture per acre for each year in comparison with the extrapolated income worked out as above. The CIT(A) found that the certificates given by the concerned Agrl. Officers/Village Officers are elaborate and prove that the assessees are getting income from the same during the Assessment Years 2002-03 to 2008-09. They also found that the fields were well cultivated year by year which proved that the assessee was doing paddy cultivation for a long period. The Panchayath President and Panchayath Member have certified that the assessee is getting substantial income from the agricultural properties for long time. The CIT(A) observed that the assessees are having large extent of agricultural land and are cultivating the fields continuously. The CIT(A) also found that the estimates given in the certificates are based on proper appreciation of the relevant factors such as nature of crops, number of plants etc. The CIT(A) observed that there being no question about the holdings of agricultural land and crops cultivated, then it cannot be denied that the assessee group were enjoying....
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.... the assessee declared an income of Rs. 15 lakhs as unaccounted income. At the time of filing block return, the assessee retracted and offered Rs. 13,15,000/- which consist of business income of Rs. 10,65,000/- and agrl. income of Rs. 2,50,000/-. In this case, the Tribunal accepted the retraction to Rs. 13,15,000/- but rejected the claim of agrl. income of Rs. 2,50,000/- in the absence of any material evidences to prove the same except the declaration of the assessee. However, in the present case, the CIT(A) observed that the at the time of search, the assessee stated that he was getting Agrl. income from cultivated lands. The dispute is with regard to quantum of agricultural income for which th assessee furnished documentary evidences in the form of certificates from Agrl./Village officers. Thus the CIT(A) observed that the position in the present case was explicitly distinguishable from the factual position in the case of Jaikishan R. Agarwal on which the Assessing officer placed much reliance. Accordingly, the CIT(A) concluded that it would be just and proper to disallow 25% of the declared agricultural income in the returns filed u/s. 153A of the Act for the assessment years un....
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....mitted that since the receipts claimed on account of sale proceeds of trees are properly supported with documentary evidences, the Assessing officer was not justified in disallowing the same. 68.3 In the remand report, the AO stated that the required particulars i.e., inflow in the cash flow statement, details of sale of trees and agreement with purchasers etc. were produced before the appellate authority as fresh evidence which were not produced at the time of assessment proceedings. 68.4. In the rejoinder, the assessee further submitted before the CIT(A) that in respect of his claim regarding receipt from sale of trees, the only objection raised by the Assessing officer is that these evidences were not furnished at the time of assessment proceedings but were filed before the appellate authority. According to the assessee, these evidences were filed before the Assessing officer on 21/12/2009 along with the reply to the pre-assessment notice, but the Assessing officer did not take into account of the same while framing the assessment. According to the Ld. AR, the Assessing officer had no dispute with regard to the merit and evidentiary value of the documents furnished by the ....
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....ere with the order of the CIT(A) and the same is confirmed. This ground of the Revenue is rejected 70 Since the facts and circumstances in other revenue's appeals in ITA Nos 631-637, 638-644, 573-579 and 566-572, 580-586 and 612-618/Coch/2013 are similar; therefore, by applying the above ratio, we are inclined to dismiss the similar ground in these appeals of the revenue also. 71. The next common ground in I.T.A. Nos. 518-524, 631-637, 638-644 and 580-586/Coch/2013 and in ITA No. 566 to 572/Coch/2013 is with regard to deletion of addition towards investments in fixed deposits/Investment in SB A/c. 71.1 For the sake of brevity, we consider the facts as narrated by the CIT(A) in I.T.A. No. 518/Coch/2013. The assessee has not included certain investments in Fixed Deposits totaling to Rs. 10,60,279/- in the cash flow statements as outgoings and hence added the same to the total income as undisclosed investments. 71.2. In respect of the above, the Ld. AR explained before the CIT(A)the reasons for not including certain deposits in the cash flow statements and also stated that the Assessing Officer was not correct in treating certain fixed deposits as unexplained investments i....
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....0,000 " Total 6,00,000 A.Y. 2007-08 Name of the bank Deposit No. Amount (Rs.) Explanation SCB,Vennoor 14736 50,000 Accounted in the books of the firm M/s. New Kerala Investments during the Asstt. Year 2007-08 " 14737 50,000 " " 14736 50,000 Duplication Entry " 14737 50,000 Duplication Entry CSB, Palayamparambu 20070059 3,281 Shown in the cash flow statement of Asst. Year 2007-08 " 20030060 4,375 " " 20030061 3,281 " " 20030062 3,281 " " 20030063 3,417 " " 20030064 25,431 " " 20030065 18,981 " " 20030066 7,774 " " 20060179 1,26,455 " " 20070090 50,000 Accounted in the books of the firm M/s. New Kerala Investments during the Asstt. Year 2007-08 " 20070091 50,000 " " 20070092 50,000 " " 20070093 50,000 ....
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....iated the fixed deposit in the cash flow statement and therefore, the CIT(A) deleted the addition. The CIT(A) was satisfied with the explanation of the assessee regarding the source of fixed deposits. Being so, in the absence of any contrary evidence furnished by the Revenue, we are not in a position to reverse the findings of the CIT(A) and the same is confirmed. Accordingly, this ground in the above Revenue appeals is dismissed. . 73 Since the facts and circumstances in other revenue's appeals in ITA Nos 631-637, 638-644 and 580-586/Coch/2013 and in ITA No. 566 to 572/Coch/2013 are similar; therefore, by applying the above ratio, we are inclined to dismiss the similar ground in these appeals of the revenue also. 74. The next common ground in I.T.A. Nos. 518-524, 631-637,638-644, 566-572 and 612-618/Coch/2013 is in respect of investment in immovable properties. 74.1 For the sake of brevity, we consider the facts as narrated by the CIT(A) in I.T.A. No.518/Coch/2013. The assessee had accounted for investments in immovable properties only to the extent of Rs. 7,73,436/-in the cash flow statements as against Rs. 3,10,17,490/- as worked out by him. The Assessing Officer treate....
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.... 93385 2006-07 54,00,178 497583 5001595 2007-08 81,56,865 - 8156865 2008-09 1,11,14,790 - 11114790 Total 3,10,17,490 7,73,436 30244054 74.5 The assessee also listed out all the investments in immovable properties which are mentioned by the Assessing Officer in the Assessment Order for each Asst. Year and offered explanation for not including certain investments in immovable properties in his personal cash flow statements as under: A.Y. 2002-03 Doc. Date Doc. No. & Extent Name of the Purchaser Total cost including registration (Rs.) Assessee's share (Rs.) Explanation 23.05.2001 1732/01 4.639 cents Devassy E.T. 79,697 79,697 Accounted in the books of M/s. E.T. Devassy & Sons Edassery Jewellers 28.05.2001 1792/01 12.557 cents Devassy E.T. 9,160 9,160 " 15.06.2001(Agreement) 1792/01 12.557 cents Devassy E.T. 23,25,000 23,25,000 As per agreement date 15.06.2001, the appellant paid Rs. 2,00,000/-as advance for the purchase of this property (Accounted in the books of M/s. E.T.Devassy & Sons Edassery Jewellers). This deal did not materialize an ....
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.... 2,24,005 Accounted in the books of Saj Cera Colours 08.10.2003 2894/0334 cents Devassy E.T., Lilly, Shaju and others 13,441 4,480 Accounted in the books of M/s. St. Francis Clay Décor Tiles 20.12.2003 3631/0354 cents Devassy E.T., Lilly, Shaju & others 28,620 9,540 Shown in the unaccounted cash flow statement of M/s. St. Francis Clay Décor Tiles. 09.02.2004 426/0451.5 cents Devassy E.T., Lilly, Shaju and others 44,978 22,489 Accounted in the books of M/s. St. Francis Clay Décor Tiles. 3,43,033 A.Y. 2005-06 Doc. Date Doc. No. & Extent Name of the Purchaser Total cost including registration (Rs.) Assessee's share (Rs.) Explanation 26.06.2004 2588/0450 cents Devassy E.T., Lilly, Shaju, Jaison, Salu, Sabu & Benny 1,32,500 44,167 Shown in the cash flow statement 03.09.2004 25 cents Devassy E.T. 53,005 53,005 Accounted in the books of Saj Cera Colours 40,16,862 A.Y. 2006-07 Doc. Date D....
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....ser Total cost including registration (Rs.) Assessee's share (Rs.) Explanation 24.04.2007 Devassy E.T. 47,125 47,125 Shown in the Cash flow Statement of E.D. Salu. 24.04.2007 311/2 cents Devassy E.T. 55,125 55,125 Shown in the cash flow statement. 24.04.2007 273/4 cents Devassy E.T. 55,000 55,000 " On the various dates in F.Y. 2007-08 Shares of Hotel Lucia Devassy E.T. 8,00,000 8,00,000 Shown in the cash flow statement of E.D. Shaju.. 02.01.2008 36.65 cents 96,75,000 96,75,000 This is not a purchase but sale of property. As per agreement dated 02.01.08, E.T. Devassy agreed to sell 36.65 cents of land to Mr. Antu for Rs. 96,75,000/-. A sum of Rs. 10,00,000/- was received as advance, which is shown in the cash flow statement as inflow. 29.02.2008 Manamadhurai Property Devassy E.T. 4,82,540 4,82,540 Shown in the cash flow statements of E.D. Sabu & E.D. Jaison. 1,11,14,790 74.6 The assessee also furnished the evidences in the paper book to substantiate his explanation regarding ....
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....he assessment year 2007-08 and Rs. 1,11,14,790/- for the assessment year 2008-09. Against this the Revenue is in appeal before us. 75. We have heard both the parties and perused the record. In these cases also, the assessees have furnished evidence before the CIT(A) and explained the investments in the properties in the cash flow statements. The CIT(A) had also called for remand report. After going through the remand report, the CIT(A) has observed that the unexplained investments in immovable properties were accounted for as fixed assets in the regular books of account of the firm in which the assesses were partners and the same cannot be considered as unexplained investment in immovable properties and it is to be excluded and the properties are owned by the assesses which are duly accounted for in the regular books of accounts. Being so, we have no hesitation in confirming the order of the CIT(A). This ground in all the Revenue appeals is rejected. 76 Since the facts and circumstances in other revenue's appeals in ITA Nos 631-637, 638-644; 566 to 572 and 612 to 618/Coch/2013 are similar; therefore, by applying the above ratio, we are inclined to dismiss the similar ground i....
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....200 25200 25200 141600 2002-03 60000 24000 24000 24000 132000 81.2 According to the Ld. AR, from the above table, it can be seen that the drawings admitted by the assessee and his family members for the assessment year 2008-09 and the drawings estimated by the Assessing Officer for this year are the same. According to the assessee, while estimating the drawings of the earlier years, the Assessing Officer did not take into account of the fact that Srhi E.D. Sabu got married only in the assessment year 2007-08 and Shri E.D. Benny got married only in the assessment year 2008-09. Moreover, the elder daughter of Shri E.D. Salu started going to school only during the assessment year 2008-09. The assessee further submitted that, the Assessing Officer also did not consider the fact that the assessee is an agriculturist and is cultivating paddy and other vegetables for household consumption. According to the assessee if these facts are taken into account, it can be seen that the drawings submitted by the Assessing Officer in respect of the Asst. Years 2005-06 to 2008-09 and hence there is no question of any further addition for these years. According to the ass....
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.... of the drawings estimated by the Assessing Officer for the assessment years 2002-03 to 2004-05. Therefore, considering the drawings admitted by the family members, additions to the extent of Rs. 72,000/- (Rs. 2,04,000/- - 1,32,000/-) for the assessment year 2002-03, Rs. 68,400/- (Rs. 2,10,000 - Rs. 1,41,600) for the assessment year 2003-04, Rs. 24,000/- (Rs. 2,16,000 - Rs. 1,92,000) for the assessment year 2004-05 were sustained by the CIT(A). Against this asseessees have raised Cross Objections. 82. We have heard both the parties and perused the record. As seen from the above,, the Assessing Officer estimated very huge drawings. Considering the drawings estimated by the Assessing Officer, the CIT(A) observed that for the assessment year 2005-06 to 2008-09, there is no necessity of any addition as the drawings admitted by the assesses is reasonable as there is drawings by other members of the family namely Lilly, Shju, Jaison, Sabu, Salu and Benny. For the assessment years 2002-03 and 2004-05, the CIT(A) modified drawings and sustained certain additions on this count. In our opinion, the drawings estimated by the CIT(A) is justified and accordingly, the same is confirmed. Being....
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....e cash flow statement filed by the assessee's son Shri E.D.Jaison, as fresh evidence, he had shown Rs. 15,00,000/- as cash out flow equally for the three financial years 2003-04, 2004-05 and 2005-06. 83.7. The Ld. AR further submitted that from the remand report it can be seen that the Assessing Officer has admitted the fact that an investment of Rs. 15,00,000 in residential house was reflected in the cash flow statements of Shri E.D. Jaison. The Ld. AR submitted that it was clear from the remand report that the Assessing Officer has no dispute with the merit and evidentiary value of the additional evidences filed by the assessee in connection with the cost of construction of the residential house. According to the Ld. AR, from the remand report it is also clear that the Assessing Officer had no objection with regard to the explanation offered by the assessee for not including certain expenditure on account of residential house in the cash flow statement of the search assessment period. 83.8. On appeal, the CIT(A) observed that the Assessing Officer has no dispute with the fact that cost of construction of the residence of Shri E.D. Jaison to the extent of Rs. 15 lakhs ....