TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 1029
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....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 Clay Décor Tiles and St Francis Tile Industries on ....
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.... 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 with effect from 01-04-1973. This rule provides that an assessee shall not be entitled to produce before the first appellate authority evidence, whether ora....
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..... 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 assessee is entitled to produce additional evidence. Sub-section (4) preserves the power of the Appellate Assistant Commissioner to make further inquiry as conte....
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....faction 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 case of Union Coal Co. Ltd. v. Commissioner of Income tax reported in 70 ITR 45 (Cal). In this case counsel for the revenue also did not dispute that in certain ci....
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....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 something adverse to the ITO was sought to be done in the course of the appeal by way of augmenting the record, the ITO ought to have been heard and given an opportunity to meet w....
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....h 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 Appellate Assistant Commissioner to make further enquiry or to direct the Income-tax Officer to make further enquiry and to report the result of the same to him. This position has be....
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....te 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 appellate authority decided to examine the facts of the case in depth and adjudicate upon the matter on the basis of evidence and material thus gathered. The learned CIT(A) was empowered to do so u....
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.... 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 in chits. It was further submitted that the profit/loss in respect of own chits was based on the seized materials and accordingly, the total profit/loss in respect of various terminated own chits for t....
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.... 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 profit but under certain compelling circumstances. It was explained that sometimes certain kuries which are announced for commencement may not be fully subscribed and in that event, the assessee firm has to subscribe the unsub....
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....xtent 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 search. The CIT(A) observed that the AO has not verified whether the amount of Rs. 2,04,464/- is disclosed by the assessee in the return of income and made and estimated addition of Rs. 4,08,928/- for AY 2007-08.. The CIT(A) observed that....
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....) 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 was not justified in disallowing a portion of interest claimed on the borrowed funds in the AYs 2002-03 to 20067-07. Accordingly, he deleted the addition of Rs. 10,94,280/- for the AY 2002-03, Rs. 9,06,025/- for the AY 2003-04, Rs. 9,06,025/-....
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....gly, 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 Objections filed by the assessee. Cross Objections Nos 112 to 118/Coch/2013 : 22 The first common ground raised by the assessee in all these cross objections is regarding no search warrant and hence assessment is bad in law. 23 At the time of hearing, th....
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....f 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 business. The AO applied the rate of interest i.e. 20.56% on the balance as on the closing day i.e. 31st March, of every financial year. I find that this method is totally unfair, sinc4 the total advances vary day by day de to sanctioning of the new advances and closure of existing advances. It is the normal practice that if ....
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....r 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 foreman's commission as computed in the assessment for the AY 2008-09 may be sustained. 29.3 In the rejoinder before the CIT(A), the ld AR submitted before the CIT(A) that the working based on which the AO arrived at the figures of foreman's commission receivable was only received by the assessee now along with the copy of remand report....
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.... 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 addition sustained by the CIT(A) is confirmed. Accordingly, the ground taken by the assessee in its Cross Objection is rejected. 31 Next common ground relates to disallowance u/s 40(a)(ia) of the Act. 31.1 Facts of the case are that the AO noticed that for the AY 2007-08, the assessee has paid canvassing commission without deducing tax at sou....
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....rgument 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 penalty proceedings u/s 271(1)(c), of the Act, while delivering the judgment, the Hon'ble High Court observed that outstanding balance in respect of forfeited kuries which have been terminated long back cannot be treated as a liability and shall be assessed as income. The CIT(A) further observed that in the list provided by the AO, he has included kuries which have ....
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....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 pending, the scope of assessment u/s 153A for these assessments years was restricted to the incriminating materials relating to those years found during the course of search. The assessee further submitted that since no incriminating materials relating to these years were found or seized during the course of search, the AO has not jurisdiction to initiate proceedings u/s 153A....
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....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 assessments as on the date of search would hold their base and would not abate. He further observed that the scope of assessment u/s 153 in the case of assessment that are abated and in the case of assessments that have been attained finality as on the date of search, which has been settled by the decision of the Special Bench of the Tribunal in the case of All Cargo Logistics Ltd (supr....
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....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 dispose of the appeals in the light of this Order. In the case of interveners, all the appeals will go back to the respective Division Benches who shall decide their grounds having regard to the facts of those cases and the findings given herein on the disputed issues to the extent the same are found relevant in the cases before them." Accordingly, the ground taken by the revenue in all the appeals is d....
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....f 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 profit and loss account prepared by the AO for the financial year 2007-08, expenditure towards depreciation and interest was not provided. The assessee also furnished detailed working regarding proportionate interest to be allowed while arriving at the net profit for the relevant financial year. The assessee further submitted that a capital receipt viz collection under Swaran Prabha Scheme amounting to Rs. 2,30,656 was treated as direct income in the profit and loss account for the financial year 2....
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....t 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 was 1.14%, 2.08% and 3.35% respectively. Accordingly, considering the totality of the facts and circumstances of the case, and keeping in mind the provisions of sec. 44AF of the I T Act which contains the special provisions for computing profits and gains of retail business, the CIT(A) was of the view that if the net profit rate at 5% on the turnover is adopted, it would meet the ends of justice. Accordingly, the AO was directed to estimate the net income of the assessee's business at 5% for the AYs 200....
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.... 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, therefore, the ground taken by the assessee in its cross objection is dismissed as infructuous. 50 In the result, all the cross objections filed by the assessee in Cross Objections nos. 50 to 56/Coch/2013 are dismissed. ITA NOS. 592 & 593/Coch/2013 ITA Nos.587 to 591/Coch/2013 ITA No.525 to 531/Coch/2013 ITA No. 594 to 600/Coch/2013 ( by the revenue) & CROSS OBJECTIONS NOs. (by the assessee) Cross Objection Nos.121 to 122/Coch/2013 Cross Objection Nos. 119 & 120/Coch2013 Cross Objection Nos. 110 & 111/Coch/2013 Cross Objection Nos. 107 to 1....
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...., 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 nos. 93 to 99/Coch/2013 - CO nos. 72 to 78/Coch/2013 & CO nos. 65 to 71/Coch/2013 (by the assessee) 62. The first common ground in I.T.A Nos. 518 - 524; 631-637; 638-644; 573-579; and 566-572, 580-586 and 612-618/Coch/2013 is with regard to admission of additional evidence by CIT(A) without satisfying the conditions of Rule 46A(1) of Income Tax Rules, 1962. 63. After hearing both the parties, we find that this issue came up for consideration in the Department appeals in I.T.A. Nos. 539 to 545/Coch/2013 in the case of New Kerala Investments and we have discussed the issue in the foregoing paras 8 to 10 and decide the ....
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.... 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 9,20,000 2007-08 11,00,000 90,000 10,10,000 2008-09 12,50,000 1,00,000 11,50,000 65.2 Before the AO, it was submitted by the assessee that he owns 4.38 acres of paddy field and 22.20 acres of other agricultural properties cultivated with coconut, arecanut, nutmeg, plantain etc. Details of the extent of paddy field and other agricultural land cultivated by the assessee and income derived therefrom during the Assessment Years from 2002-03 to 2008-09 are tabulated as under : Assessment Year Paddy field (in acres) Dry land (in acres) Total Agricultural income claimed 2002-03 1.66 12.46 14.12 5,00,000 2003-04 2.15 13.65 15.80 6,00,000 2004-05 4.38 13.66 18.04 7,00,000 2005-06 4.38 13.77 18.15 8,00,000 2006-07 4.38 22.20 26.58 10,00,000 2007-08 4.38 22.20 2....
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....perties 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 from March, 2010 to August 2010 in order to prove that the assessee is carrying out agricultural operations in a large scale subsequent to the search also. The Assessing Officer carried out detailed investigations on the fresh evidences furnished by the assessee. 65.5 In the remand report, the Assessing Officer has stated that the written submissions filed by the assessee along with five paper books in respect of the whole group of individual cases and one paper book in the case of the assessee were verified. According to the AO, these were fresh evidences filed by the assessee before the appellate authority and none of them were filed during the course of assessment proceedings. The AO made detailed investigations made on the fresh evidences placed by the assessee on record. Regarding the agriculture income, the AO has stated that inspector attached to this Circle was deputed to inspect the various agricultural land holdings of the assessee and to verify the genuineness of the....
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....period and hence cannot be accepted as an evidence for the search assessment. Further, the Ld. AR submitted that it was true that the bills enclosed in the paper book relate to post search period and the asssessee himself admitted this fact in the written submissions and these details were furnished only for the purpose of proving the fact that the assessee is basically an agriculturist. According to the Ld. AR, from the remand report, it can be seen that the Assessing Officer has no dispute with the extent of agricultural land owned by the assessee and the agricultural income estimated by the expert authorities from the agricultural holdings. 65.7. On appeal, the CIT(A) observed that the assessee and his family members consisted of his wife and children, claimed that they own 70 acres of paddy field and 47 acres of other agricultural land. He further observed that most of these properties are joint properties which are cultivated together. The assessee further claimed that in addition to the agricultural properties mentioned above, the family owns 26 acres of landed properties which were mainly used for industrial purposes i.e. factory premises and properties used for mining clay....
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....e the properties are located Paddy field (in acres) Income (Rs.) Dry land (in acres) Income (Rs.) Total area (in acres) Total income (Rs.) Aloor 8.58 3,05,700 1.39 1,25,340 9.97 4,341,04 Annallur 5.14 1,50,000 4.59 3,90,000 9.73 5,40,000 Vadakumbhagam 1.07 35,000 7.06 5,95,000 8.13 6,30,000 Kallur Thekkemuri 8.47 3,00,000 - - 8.47 3,00,000 West Chalakkudy 40.24 16,00,000 2.85 2,75,000 43.09 18,75,000 Kallur Vaddakkummuri 6.99 - 13.28 13,00,000 20.27 13,00,000 Irinjalakuda - - .96 95,000 .96 95,000 Thorapalli Agraharam, Hosur (Tamil Nadu) - - 12.05 10,84,950 12.05 10,84,950 Bodichipally Anusohai Kelamangalam, (Tamil Nadu - - 1.45 1,46,500 1.45 1,46,500 Perambra - - .53 55,000 .53 55,000 Illayanayakananphal (Manamadurai, Tamil Nadu) - - 2.64 - 2.64 - Total 70.49 46.80 117.29 65.10. The CIT(A) observed that the AO after verification of the above details and evidences stated in the remand report that the assess....
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....005-06 22,213 47,560 2006-07 21,865 38,600 2007-08 21,288 47,409 2008-09 24,343 50,405 65.12 It was further observed by the CIT(A) that from the working of agricultural income, as certified by the authorities, it can be seen that the average yield per acre from paddy and other crops estimated by the experts are Rs. 37,648/- and Rs. 92,092/- respectively. The CIT(A) found that the concerned Agrl/Village officers have inspected the properties and certified the yield during the F.Y. 2009-10 and the assessments under consideration are from A.Y. 2002-03 to 2008-09. On this issue, the assessee submitted before the CIT(A) that the annual agricultural income per acre as certified by the Government authorities, from paddy fields belonging to the assessee group was Rs. 37,648/- against which the assessee has claimed only Rs. 24,343/- for the A.Y. 2008-09 and in respect of other crops, the annual agricultural income per acre as certified by the Government authorities was Rs. 92,092/- against which the assessee has claimed only Rs. 50,405/- for A.Y. 2008-09. The CIT(A) noticed that the annual agricultural income per acre claimed by the assessee group for the A.Y. 2002-03 to 2008-09....
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.... of agricultural produce/expensed incurred for cultivation etc. has to be borne in mind while concluding the issue. According to the CIT(A) the observation of the Assessing officer in the remand report that it is pertinent to state that the agricultural income claimed to have earned by the assessee is for the assessment year 2010-11 and not for the period under the search assessment period, needs to be considered. 65.14. Regarding the understatement of agricultural income in the original returns of income, the assessees submitted that it was under the wrong advice that if agricultural income was declared in the return, it would be taxed indirectly and tax liability would be more. Regarding the understatement of agricultural income in the statement taken at the time of search, the assessee explained that it was under the fear of being further interrogated about the deployment of agricultural income. Regarding the contention of the Assessing officer that the appellants are not assessees under the Kerala Agrl. Income Tax Act, the Ld. AR pointed out that as per section 3 of The Kerala Agrl. Income Tax Act, 1991, no agricultural income tax is payable by any person other than a company ....
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....ee suggesting agricultural income generated by the assessee in his land. Being so, since the Department have no evidence contrary to the evidence furnished by the assessee; therefore, it is not proper to hold that the assessee has shown other income in the form of agricultural income. Since evidence brought on record suggest that the agricultural income earned by the assessee; therefore, we do not find any reason to interfere with the findings of the CIT(A), which is confirmed as the reasons advanced by the assessee also bonafide for variation in the agricultural income claimed in the original return filed after the search action. Accordingly, this ground in the above Revenue appeals is dismissed. 67 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. 68. The next ground in I.T.A Nos. 518- 524, 631-637, 638-644, 573-579 and 566-572, 580-586 and 612-618/Coch/2013 is with regard to the deletion of disallowance of receipt from sale of trees. 68.1 For the sake ....
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....puted fact disproves the contention of the Assessing officer that the properties owned by the assessee are mostly wet lands which do not yield timbers. Further, the CIT(A) observed that from the report of the Assessing officer, it was clear that he had no dispute with the evidences in the form of tree sale agreements furnished by the assessee in support of his claim regarding receipt from sale of trees. The only issue pointed out by the Assessing officer, according to the CIT(A), was that these evidences were not furnished at the assessment stage. The CIT(A) further observed that the tree sale agreement properly described the name and address of the purchaser, the nature of trees and conditions of sale, schedule of payments and the data-wise receipt of payments by the assessee. The CIT(A) found that evidences furnished by the assessee, in support of his claim, were in order. According to the CIT(A), since the trees sold were naturally and spontaneously grown, no question of taxability of the receipt arises. Accordingly, considering the facts and circumstances of the case, the CIT(A) concluded that the Assessing officer was not correct in disallowing the receipt of Rs. 4,00,000/- fo....
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....e was fresh evidence, which was factually incorrect. According to the Ld. AR, in the remand report, the Assessing Officer has not raised any objection in respect of the explanation offered by the assessee for not including certain fixed deposits in his cash flow statement. 71.5 On appeal, the CIT(A) considered all the fixed deposits which are mentioned by the Assessing Officer in the Assessment Order for each Assessment Year and offered explanation for not including certain deposits in his personal cash flow statements, which are tabulated as under: A.Y. 2007-08 Name of the bank Deposit No. Amount (Rs.) Explanation SCB, Kuruvallaserry 3760 45,000 Shown in the cash flow statement of Asstt. Year 2007-08 " 3762 40,000 " " 4827 45000 " Total 1,30,000 A.Y. 2004-05 Name of the bank Deposit No. Amount (Rs.) Explanation SCB,Vennoor 10367 40,000 Accounted in the books of the firm M/s. New Kerala Investments during the Asstt. Year 2004-05 " 11058 40,000 " " 11059 40000 " Total 1,20,000 A.Y. 2006-07 Name of the bank Deposit No. Amount (Rs.) Explanation SCB,V....
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....d upon the workings and evidences in the form of financial statements of the firm M/s. New Kerala Investments to substantiate his explanation regarding exclusion of certain fixed deposits from the cash flow statements. 71.7 After perusal of the evidences/explanations furnished by the Ld. AR, the CIT(A) observed that deposits appeared to be in order. The CIT(A) also observed that in the remand report, the Assessing Officer has not rebutted the explanation offered by the assessee for not including certain fixed deposits in the cash flow statements. Accordingly, the CIT(A) held that the assessee has taken care of all the unaccounted fixed deposits discovered during the course of search in his personal cash flow statements. Accofdingly, the CIT(A) deleted the addition of Rs. 1,20,000/- for the assessment year 2004-05, Rs. 6,00,000/- for the assessment year 2006-07, Rs. 6,46,276/- for the assessment year 2007-08 and Rs. 2,94,003/- for the assessment year 2008-09 made by the Assessing Officer towards unexplained fixed deposits. Against this, the Revenue is in appeal before us. 72 We have heard both the parties and perused the relevant material on record. Considering the additional evid....
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....t the appellate stage. The assessee only explained that certain investments which were treated as not included in the cash flow statements are in fact reflected in the cash flow statement and further the reason for not including certain investments in the cash flow statements. According to the assessee, from the remand report, it can be seen that the Assessing Officer had no objection with regard to the merit of the explanation furnished by the assessee in respect of the addition towards investments in immovable properties. 74.3. On appeal, the CIT(A) observed that the Assessing Officer prepared a list of year-wise investment in immovable properties made by the assessee as under: Asst. Year Investment in immovable properties (Rs.) 2002-03 4016862 2003-04 1763090 2004-05 348083 2005-06 123672 2006-07 5499178 2007-08 8156865 2008-09 11114790 Total 31017490 74.4. The Assessing Officer further compared the above investments with that admitted as outflow in the cash flow statement of the respective years and treated the difference as unexplained investment as under:- Asst. Year Investment in immovable properties....
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.... Shaju, Benny 39,872 13,291 " 28.02.2003 578/03 50 cents Devassy E.T., Lilly, Jaison, Sabu, Salu, Shaju, Benny 19,600 6,533 " 07.03.2003 644/0367 cents Devassy E.T., Lilly, Jaison, Sabu, Salu, Shaju, Benny 28,000 9,333 " 07.03.2003 645/0366 cents Devassy E.T., Lilly, Jaison, Sabu, Salu, Shaju, Benny 28,000 9,333 " 17,63,090 A.Y. 2004-05 Doc. Date Doc. No. & Extent Name of the Purchaser Total cost including registration (Rs.) Assessee's share (Rs.) Explanation 2003 2273/03 53.625 cents Devassy E.T., Lilly, Shaju & others 22,405 7,468 Accounted in the books of St. Francis Clay Décor Tiles 16.05.2003 1353/03 38.5 cents Devassy E.T., Lilly, Shaju & othres 15,120 5,040 Accounted in the books of M/s. St. Francis Clay Décor Tiles 19.07.2003 2569/033 acre 27.5 cents Devassy E.T. & Joy Mandakan 1,40,021 70,011 Shown in the cash low statement for the assessment year 2004-05 01.09.2003 60 cents Devassy E.T. 2,24,005 2,24,005 Accounted in the books of Saj Cera Colours 08.10.2003 2894/03....
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.... the cash flow statement of E.D. Jaison and E.D. Sabu. Investment of the appellant group is only Rs. 11,75,334/- 13.09.2006 24 cents Devassy E.T. 36,000 36,000 shown in the cash flow statement 26.09.2006 53 cents Devassy E.T. 95,400 95,400 " 02.12.2006 13 cents Devassy E.T. 20,800 20,800 " 02.12.2006 22.8 cents Devassy E.T. 36,400 36,400 " 24.01.2007 3.390 cents Devassy E.T. 25,42,500 25,42,500 As per agreement dated 24.01.2007, Rs. 5,00,000/- was paid as advance for the purchase of this property and the same was accounted in the books of M/s. New Kerala Investments but this deal does not materialize. 81,56,865 A.Y. 2008-09 Doc. Date Doc. No. & Extent Name of the Purchaser 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.....
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....investments in immovable properties in his personal cash flow statements and had not raised any question on the evidences furnished by the assessee in his support. Considering the facts and materials available on record, the CIT(A) was of the view that the additions made by the Assessing officer on account of unexplained investment in immovable properties for the Asst. Years 2002-03 to 2008-09 were unwarranted. Therefore, the CIT(A) deleted the addition of Rs. 40,16,862/- for the assessment year 2002-2003, Rs. 15,87,534/- for the assessment year 2003-04, Rs. 2,73,023/- for the assessment year 2004-05, Rs. 93,385/- for the assessment year 2005-06, Rs. 50,01,595/- for the assessment year 2006-07, Rs. 81,56,865/- for the 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 ....
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....06-07 228000 2005-06 222000 2004-05 216000 2003-04 210000 2002-03 204000 81.1 In respect of the above, the assessee submitted that the drawings furnsihed by the assessee and the concerned family members in their personal cash flow statements are adequate as given below: Asst. Year E.T. DEVASSY E.D. SALU E.D. SABU E.D. BENNY TOTAL 2008-09 96000 69600 37200 37200 240000 2007-08 90000 66000 36000 36000 228000 2006-07 84000 60000 36000 36000 216000 2005-06 78000 54000 36000 36000 204000 2004-05 72000 48000 36000 36000 192000 2003-04 66000 25200 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 e....
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.... low in comparison with drawings estimated by the Assessing Officer. On this issue, the assessee offered an explanation that while estimating drawings for these years the Assessing Officer has not taken into account of the general inflation in the economy year by year. But according to the CIT(A), the assessee has not adduced any evidence to substantiate his arguments for the low drawings admitted for the relevant years. In these circumstances, the CIT(A) was of the view that no interference was required in respect 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 th....
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....was in fact incurred in 1997. According to the Ld. AR if these facts were also taken into account, it can be seen that the cost of construction at R.15,00,000/- admitted in the cash flow statement is fair and reasonable. Therefore, the addition made towards unexplained investments in residential house is unwarranted. 83.6. In the remand report, the Assessing Officer stated that in this respect it has to be stated that in the 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 clea....