Ita/110/2009 Of The Commissioner Of Income Tax.tvm v. B.rajashekharannair

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN WEDNESDAY, THE 4TH NOVEMBER 2009 / 13TH KARTHIKA 1931 ITA.No. 110 of 2009() --------------------- ITA.147/2005 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT: -------------------- THE COMMISSIONER OF INCOME TAX, TRIVANDRUM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- B.RAJASHEKHARAN NAIR,THIRUVANANTHAPURAM. BY ADV. SRI.T.M.SREEDHARAN ADV. SRI.V.P.NARAYANAN ADV. SMT.C.K.SHERIN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR &V.K.MOHANAN, JJ. .................................................................... I.T. Appeal No.110 of 2009 ....................................................................Dated this the 4th day of November, 2009. JUDGMENT Ramachandran Nair, J. Question raised in the appeal filed by the Revenue is whether theTribunal was justified in confirming the order of the C.I.T.(Appeal)deleting addition of Rs.5,43,000/- and Rs.4,04,000/- seized from theassessee during search made on 19.12.2002. We have heard StandingCounsel appearing for the appellant and counsel appearing for therespondent-assessee. 2. The assessee was engaged in money lending and was also apartner of two tourist homes, one by name Manacaud Tourist Homeand the other by name Manacaud Tourist Paradise, both inTrivandrum. During search, substantial amount of Rs.22,13,480/- wasrecovered from the assessee. The assessee made a statement thatRs.5,43,000/- was withdrawn from the Manacaud Tourist Home andRs.4,04,000/- was withdrawn from the Manacaud Tourist Paradise.However, simultaneous search was conducted in the premises of these two Tourist Homes and the department noticed that cash balanceavailable in the books of accounts was low to justify the substantialamounts stated to have been withdrawn and retained by the respondent-assessee. Therefore, assessment was completed treating the cash foundat the time of search as unexplained cash assessable under Section 69Aof the Income Tax Act. The Assessing Officer did so by overruling thecontention of the assessee that cash was withdrawn from the twoTourist Homes and retained by him for safe custody. However, inappeal, the C.I.T.(Appeal) accepted the explanation of the assessee andallowed the claim, which was confirmed by the Tribunal against whichthis appeal is filed. 3. We find from the orders of the Tribunal and that of the lowerauthorities that none of the authorities have examined the matter indetail, particularly in view of the contention of the assessee that theamounts were withdrawn from the accounts of the two Tourist Homes. Even if assessee's explanation is accepted, then the income should have been considered for assessment in the hands of the Tourist Homes, ifthese were owned by partnership firms. Since simultaneous search was 3. We find from the orders of the Tribunal and that of the lowerauthorities that none of the authorities have examined the matter indetail, particularly in view of the contention of the assessee that theamounts were withdrawn from the accounts of the two Tourist Homes. Even if assessee's explanation is accepted, then the income should have been considered for assessment in the hands of the Tourist Homes, ifthese were owned by partnership firms. Since simultaneous search was conducted in the premises of these two Tourist Homes, assessmentcould have been made under Section 157(BD) on the firms orproprietors who own the Tourist Home. On the other hand if it isunaccounted income earned by the assessee in the business of runningthe Tourist Home either as it's proprietor or as a dominant partner, thenit is assessable in his hands as unaccounted income because the TouristHomes' accounts on verification did not show any cash balance. Thetheory of safe deposit of huge cash in assessee's house is unbelievablebecause assessee maintains four bank accounts, details of which areavailable in the Tribunal's order. Counsel for the assessee even raised acontention that withdrawals from the accounts of the firm probablymay mean withdrawal from the Bank Accounts of the firm. However,we do not find such a contention is raised by the assessee before any ofthe lower authorities. It is also not on record as to whether assesee haspaid any advance tax during the financial year in which the search wasmade and if so, whether the payment was such as to cover the amountretained by him. In the circumstances, we allow the appeal by settingaside the order of the Tribunal and that of the C.I.T.(Appeal) and restore the matter to the Assessing Officer for revision of assessmentafter considering the case afresh in the light of the observations aboveand after giving opportunity to the assessee. C.N.RAMACHANDRAN NAIRJudge pms V.K.MOHANANJudge