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2016 (12) TMI 552 - ITAT COCHIN

2016 (12) TMI 552 - ITAT COCHIN - TMI - Addition made u/s. 69A - unexplained income - Held that:- From the books of account furnished before the authorities below and which is place on record, it is clear that the assessee had sufficient funds to prove the cash seizure on 29/03/2007 and the same is clearly recorded in the books of account maintained by the assessee. It is for the said reason that the addition made in the hands of Shri Abdul Rasheed and Shri K.A. Sojumon was deleted by the CIT(A) .....

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For The Revenue : Shri A. Dhanaraj, Sr.DR ORDER Per GEORGE GEORGE K., JUDICIAL MEMBER This appeal at the instance of the assessee is directed against the order of the CIT(A)-IV, Kochi dated 03/02/2016. The relevant assessment year is 2007-08.. 2. The grounds raised by the assessee read as follows:- 1. The order of the learned Commissioner of Income Tax(Appeals)-IV, Cochin dated 03/02/2016 in I.T.A. No. C/230/CIT(A)-IV/13-14 dismissing the appeal filed by the appellant for the assessment year 20 .....

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of the I.T. Act, 1961 there is no justification to treat the above amount as unexplained investment of the appellant. 4. The learned Commissioner of Income Tax (Appeals)-IV is in error in holding that the ledger accounts produced before the Assessing Officer lack the credibility. The learned Commissioner of Income Tax (Appeals)-IV ought to have found that the accounts of the appellant is accepted by the Assessing Officer goes to prove that the ledger of the appellant is accepted and there is no .....

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late authority is enclosed separately and the same may be treated as part of this grounds of appeal as well. 7. For the above and other reasons to be urged at the time of hearing it is prayed that the Hon ble Income Tax Appellate Tribunal, Cochin may be pleased to vacate the additions made and render justice to the appellant. 3. Briefly stated the facts of the case are as follows: The assessee, an individual, is a rubber dealer. The Mahe Police seized ₹ 15,51,400/- on 29/03/2007 from Shri .....

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chin for the purpose of purchasing rubber sheets. Since the market condition was not favorable, purchase of rubber sheets could not be effected by Shri Manoj and hence, he retained a sum of ₹ 48,600/- and balance of ₹ 15,51,400/- was returned to be handed over to the assessee. While Shri Abdul Rasheed and Shri K.A.Sojumon were returning from Cochin on 29/03/2007 their vehicle was intercepted and cash amounting to ₹ 15,51,400/- was seized. The seized cash was initially assessed .....

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of ₹ 15,51,400/- has not been properly explained by the assessee which has not been brought to tax. 4.1 On further appeal, the Tribunal upheld the revisionary order passed under section 263 of the Act for the reason that the Assessing Officer has not verified the source of the amount of ₹ 15,51,400/- in the hands of the assessee. With these observations, the Tribunal disposed of the appeal filed by the assessee. 5. Pursuant to CIT s order u/s. 263 of the Act, the assessment was compl .....

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ourney in the evening of the same day to Ernakulam by bus and reached Ernakulam on 28-03-2007 morning. However, as per assessee's letter dated 15-10-2010, he submitted that the cash balance available as per his books of account on 27-03-2007 was ₹ 18,43,146/-. A sum of ₹ 16,00,000/- was taken from above balance and sent through Sri. Abdul Rasheed and Sri. K.A. Sojumon for purchase of Rubber. As per cash book of 2006-07 produced by the assessee, payment of ₹ 16,00,0001- for .....

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rupees 48,600/- retained by Sri. Manoj, Kochi totaling to ₹ 16,00,000/- cannot be accepted as the same cash given by the assessee for the purchase of Rubber Sheet. ₹ 16,00,000/- paid to Sri. Rasheed and Sri. Sojumon by the assessee is not factually correct, it is only a cooked up story. If the assessee's argument that the date of payment of money to Sri. Manoj i.e. 28- 03-2007 is recorded in the books of account, is accepted then the amount of ₹ 48,600/- retained by Sri. Ma .....

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the assessee has not given any satisfactory explanation for retention of ₹ 48,6001- by Sri. Manoj. 10. Also the story of Sri. K.V. Prakashan that he sent ₹ 16,00,000/- for purchase of Rubber cannot be accepted for following reasons. i. Answer to the Queslion No. 9 and 10 in statement recorded on 06- 05-2013, the assessee clearly admitted that while purchasing rubber sheets, usually payments were given through cheque or DO to the institutions, but cash purchase were made from farmers .....

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h purchase. The assessee also stated that he has not made any business with Sri. Manoj before or after 28-03- 2007. But, the amount of ₹ 48,600/- retained by Sri. Manoj is stated to be as the security for the business transaction. From the statement of the assessee it is clear that no business transaction was made between Sri. Manoj and Sri. K.V. Prakashan on 28.3.2007. Therefore, it is clearly establish that Sri. Manoj has received ₹ 16,00,000/- on behalf of Sri. K.V. Prakashan and .....

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s recorded from Sri. Manoj Kumar on 13-03-2009. He stated that Sri. Prakashan is having Rubber trade with them since 2005. But as per Sri. Prakashan's statement, he started his business since April 2006 and the first trade was recorded in his books of account in October 2006. v. Sri. Manoj stated that Sri. Prakashan purchases an average 3 - 4 load of rubber sheets per week (one load is about 16 tones). But none of these purchases are reflected in Prakashan's books of account. vi. It was .....

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iii. Sri. Manoj Kumar has stated that he is working with his father Sri. C.P. Rajagopal, who is a rubber broker at Mattanchery since 1993 as all the transactions should be in the name of his concern or Sri. C.P. Rajagopal, But in the books of account produced by Sri. K.v. Prakashan a sum of ₹ 16,00,000/- shown to be paid to Sri. Manoj and the ledger is also maintained in his name. Had it been a genuine transaction Sri. Manoj's name should not have been entered in the books of account. .....

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The assessee has no satisfactory explanation for the source of fund seized by Mahe Police from Sri. Abdul Rasheed and Sri. K.A. Sojumon which was own up by the assessee. Therefore, considering all the facts and circumstances, the details, explanations and statements available on records and furnished at the time of hearing by the assessee the amount of ₹ 15,51,400/- is treated as assessee's unexplained income and charged to tax. 6. Aggrieved by the addition made u/s. 69A of the Act, th .....

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ial on record. Originally, the assessment was completed against Shri Abdul Rasheed, Shri K.A. Sojumon and the assessee by Deputy Commissioner of Income-tax, Central Circle-2, Kozhikode in the year 2010. The cash seized from Shri Abdul Rasheed and Shri K.A. Sojumon was assessed in their hands. There was no addition in the hands of the assessee on account of the cash that was seized. On appeals filed by Shri Abdul Rasheed and Shri K.A. Sojumon, the addition made was deleted by the CIT(A) on the fi .....

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f the I.T. Act (order dated 22/03/2013). The CIT set aside the order passed against the assessee u/s. 153A of the Act and directed the Assessing Officer to assess ₹ 15,51,400/- seized from Shri Abdul Rasheed and Shri K.A. Sojumon in the hands of the assessee. The relevant finding of the CIT (Central) while passing the order u/s. 263 reads as under:- I have gone through the facts of the case and the objections raised by the assessee. I am of the considered opinion that the source for the se .....

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n para 4 of its order dated 04/10/2013 held as follows: 4………In the present assessee s case even though, the assessee claims that the money belonged to him and it was reflected in the books of account, the assessment order does not reflect the application of mind. There is no reasoning appended in the asst. order. In fact, there is not even any discussion in the asst. order………. . 8.3 Finally it was concluded by the Tribunal as follows:- 8. In view of the .....

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in the assessment order itself. Since the assessing officer has not verified the source for the above amount, this Tribunal is of the considered opinion that the Administrative Commissioner has rightly exercised his jurisdiction u/s. 263 of the Act. Therefore, the impugned order of the Administrative Commissioner is confirmed. 8.4 From the above direction of the Tribunal, it is very clear that the issue that has to be examined is whether the assessee has sufficient source/cash balance to explain .....

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ection 40A(3) of the Act. In the course of original assessment proceedings, the assessee had filed a letter dated 30/09/2010. In para 5 of the said letter, the seized amount of ₹ 15,51,400/- from Shri Abdul Rasheed and Shri K.A. Sojumon was mentioned as being recorded in the regular books of account. The Assessing Officer, after examining the books of account and verifying the ledger, completed the assessment wherein no addition was made on account of cash seized from Shri Abdul Rasheed an .....

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s books of account as on 27/03/2007 was ₹ 18,43,143/-The main source from which this cash balance arose is as under:- Withdrawal from bank account from Axis Bank Ltd. Kannur on 27/03/2007 Rs.800,000 Withdrawal from Axis Bank Ltd. on 19/03/2007 Rs.450,000 Approximate cash balance in books of accounts on 17/03/2007 Rs.500,000 Total Rs.17,50,000 8.6 From the books of account furnished before the authorities below and which is place on record, it is clear that the assessee had sufficient fund .....

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