Ita/1792/2009 Of Edakkandakandy Praveen v. The Income Tax Officer, Ward

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 10TH FEBRUARY 2010 / 21ST MAGHA 1931 ITA.No. 1792 of 2009() ----------------------------- ITA.630/coch/2008 (1998-99) of INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH. .................... APPELLATN/APPELLANT IN ITA (S): -------------------- EDAKKANDAKANDY PRAVEEN,S/O. PRABHAKARN,LAKSHMI NIVAS, KAVUMBHAGAM,THALASSERY , KANNUR. BY DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE BY ADVS. MR.FIROZ K.M. MR.M.SHAJNA RESPONDENT(S): RESPONDENT IN ITA ----------------------- THE INCOME TAX OFFICER, WARD-1(2) KANNUR. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.Ramachandran Nair & P.S.Gopinathan, JJ. ============================================ I.T.A.1792 of 2009 ============================================ Dated this the 10[th] day of February, 2010. JUDGMENT Ramachandran Nair, J. 1.This appeal is filed against the orders of theTribunal confirming the assessment on theTribunal confirming the assessment on the appellant for the assessment years 1998-99. We heard the senior counsel appearing for theappellant assessee and standing counsel for therespondent.appellant assessee and standing counsel for therespondent. 2.Even though senior counsel raised objection against the status adopted as Assocation ofPersons for assessment, we do not find any meritbecause, the appellant, along with five others,was the licensee. The members of the appellantAOP were the licensees, who are entitled to carryon business in the toddy shop. It is seen thatPersons for assessment, we do not find any meritbecause, the appellant, along with five others,was the licensee. The members of the appellantAOP were the licensees, who are entitled to carryon business in the toddy shop. It is seen that the business was in fact carried on by all themembers. In our view, since the members of theAOP carried on business, pursuant to the licenceobtained by them for the 52 toddy shops inThalassery, the assessment in their names as AOPis perfectly justified. The next contention,namely, assessment of income in toddy shopsconfirmed by the Tribunal also does not call forany interference, because, admittedly, assesseedid not keep any books of accounts. The lastground is with regard to the addition ofRs.4,57,520/- under Section 68 for the reasonthat the three creditors in whose name amount wascredited did not prove the transaction asgenuine. The senior counsel appearing for theappellant rightly pointed out that when accountswere rejected and business income estimated, suchincome itself would account for the unexplainedcash, which was shown as the source for the payment of kist amount. Since assessee did notmaintain any books of accounts, obviously he wasgenerating black money and that is what isassessed through estimation. The funds shown ascredit in the name of bogus persons obviouslywere the assessee's own funds and so much so, wedo not find any justification for any additionover the estimated income. We, therefore, allowthe appeal in part by reversing the order of theTribunal and that of the lower authorities bydeleting the addition of Rs.4,57,520/- made underSection 68 of the Act. The order of the Tribunalconfirming the addition under Section 68 wouldstand cancelled. Even though counsel for theassessee pointed out that huge amount of interestis levied on the assessee under Section 234, wefeel that, recourse open to the assessee is tomake application before the Chief Commissionerfor waiver in the light of the circular issued by ITA 1792/09 -:4:-