SRI.PELEXY K. VARGHESE,MUVATTUPUZHA vs. THE DCIT, COCHIN

Per CHANDRA POOJARI, AM:

These appeals filed by the assessee are directed against the common order

passed by the. CIT(A)-IV, Kochi dated 30/03/2016 and pertain to the assessment

years 2006-07 to 2012-13.

and are being disposed of by this common order.

2.1 The assessee has challenged the legal issue of notice issued u/s. 153C of the

Act and various additions made by the Assessing Officer. The CIT(A) upheld the

I.T.A. Nos.270 to 276/Coch/2016 legal issue against the assessee and gave partial relief on the additions made by the

Assessing Officer.

condition required for framing the assessment u/s. 153C of the Act not being

satisfied for the assessment years 2006-07 to 2010-11.

3.1 The facts of the case are that a search u/s. 132 was conducted in the premises

of the assessee’s brother Eldhose Varghese on 02/11/2011, based on the warrant

issued in the name of Shri John Kuriakose, the brother-in-law of the assessee,

where certain documents belonging to the assessee were seized which were

enumerated as under:

(i) Seized document marked as CHN/11/22/RR/A-3 is a copy of purchase deed on a stamp papers of Rs.50,000/- dated 10/12/2007 for purchase of landed property of 1 acre 51 cents in s. Nos.342/1 and 340/3 at Valakam, Muvattapuzha by Mrs. Shainy Pelexy, assessee’s wife.

(ii) Seized document marked as CHN/11/22/RR/A-6 is a purchase deed on stamp papers of Rs.30,000/- dated 03/07/2007 for purchase of 1 acre 101/4 cents at Kalloorkad by the assessee.

3.1 The Assessing Officer issued notice u/s. 153C r.w.s. 153A dated 30/08/2012 by virtue of 2nd proviso to section 153C(1) of the Act, as inserted by the Finance Act,

2012 w.e.f. 01/07/2012, which reads as under:

I.T.A. Nos.270 to 276/Coch/2016 “that the Central Government may by rules made by it and published in the official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessment or re-assessment has abated.”

3.2 In reply to the said notice the assessee stated that the returns of income

already filed be treated as the return filed in response to notice u/s. 153C.

The returns of income for all the assessment years have been filed as below:

A.Y. Date of filing 2006-07 31/03/2007 2007-08 29/02/2009 2008-09 29/02/2008 2009-10 30/09/2009 2010-11 16/09/2010 2011-12 07/03/2012 2012-13 18/09/2013

3.3 The details of the income returned and the income assessed are as under:

A.Y. Returned Assessed income(Rs.) income (Rs.) 2006-07 92,274 2,87,980 2007-08 3,07,830 23,47,450 2008-09 1,35,460 44,66,120 2009-10 4,00,710 76,68,610 2010-11 7,69,907 43,55,030 2011-12 78,06,250 3,58,86,650 2012-13 6,09,810 40,62,000

3.4 It was submitted that regular assessments for these years have acquired

finality and were not pending as on the date of search. It was submitted that the 3

I.T.A. Nos.270 to 276/Coch/2016 issuance of notice u/s. 153C to the assessee was illegal in the absence of detection

of any undisclosed income or assets belonging to the assessee found in the course

of search and the proceedings u/s. 153C were also illegal since the conditions for

initiation of action u/s. 153C were not satisfied. It was submitted that proceedings

u/s..153C is initiated against a person where the "Assessing Officer is satisfied that

any money, bullion, jewellery or other valuable article or thing or books of account

or documents seized or requisitioned belongs or belong to a person other than the

person referred to in section 153A, then the books of account or documents or

assets seized or requisitioned shall be handed over to the Assessing Officer having

jurisdiction over such other person and that Assessing Officer shall proceed against

each such other person and issue such other person notice and assessee or

reassess income of such other person in accordance with the provisions of section

153A." It was submitted that the Assessment Orders passed against the assessee

also does not refer to any undisclosed income of the assessee discovered or as

belonging to the assessee. In the absence of such evidence of undisclosed income

of the appellant, the Assessment Order is illegal and is without jurisdiction.

3.5 In this connection, it was submitted that the appellant is already an assessee

before the Income Tax Officer, Thodupuzha in PA No.ADQPV2015D and is regularly

assessed by that Officer. The particulars of the income tax returns filed for the

Assessment Years 2006-07 to 2012-13 are as under:

I.T.A. Nos.270 to 276/Coch/2016 Asst. Year Date of filing of the return 2006-07 31.05.2007 2007-08 29.02.2009 2008-09 19.12.2008 2009-10 30.11.2009 2010-11 16.09.2010 2011-12 07.03.2012 2012-13 26.01.2014

3.6 It was submitted that as per Sec. 143(2), where a return has been furnished

u/s 139, the Assessing Officer shall, where he has reason to believe that any claim

of loss/exemption/deduction made, in the return is inadmissible, serve on the

assessee notice u/s.143(2), to produce evidence or particulars in support of such

claim. It was submitted that as per the proviso to Clause-(ii) of Sub Sec.(2), no

notice under clause (ii) shall be served on the assessee after the expiry of 6 months

from the end of the Financial Year in which the return is furnished - vide the proviso

added with effect from 01.04.2008. Prior to the above substitution, the period for

issuance of notice was 12 months from the end of the month in which the return is

furnished. Going by the above provisions, the time limit for issuance of notice u/s.

143(2) for the above Assessment Years expired as shown below:-

A.Y Filing of return One year from end of Six months from the month in which the end of the the return is filed Fin. Year

2006-07 31.5.2007 31.5.2008 -

2007-08 29.02.2008 29.02.2009 -

2008-09 19.12.2008 - 30.09.2009

I.T.A. Nos.270 to 276/Coch/2016

2009-10 16.09.2009 - 30.09.2009

2010-11 16.09.2010 - 30.09.2011

3.7 It was submitted that in all the above 5 years, the returns of income had

acquired finality as on the date of search, namely, 02.11.2011 by passage of time

for issuance of notice u/s 143(2). The Ld. AR submitted that the assessments for

2011-12 and 2012-13 were completed in the normal course after the search on

02.11.2011, but the provisions of Sec.153C cannot be applied to these Assessment

Years. It was submitted that the Assessment Orders for these years can be

completed only in the normal course and the additions made in these assessments

were separately challenged on different grounds.

3.8 Since for the assessment years 2006-07 to 2010-11, the assessee had filed

returns of income prior to the date of search which had acquired finality by way of

acceptance of returns u/s 143(1) and since the period of limitation for issuance of

notice u/s 143(2) had expired, it was submitted that there was no pending

assessments which would abate u/s 153A of the Act. As a consequence thereof, as

per the second proviso to Sec.153A, such assessments shall not abate. In other

words, it was submitted that no addition could be made in the assessment by

recourse to Sec.153A.

I.T.A. Nos.270 to 276/Coch/2016 3.9 In the Assessment Order for 2006-07 and remaining years, the Ld. AR

submitted that the documents marked as CHN/11/22/RR-A1 to CHN/11/22/RR-A6

related to purchase of immovable property valued at Rs.5,00,000/- by the

assessee's wife Smt. Shiny Pelexy on 10.12.2007 and another property for

Rs.1,00,000/- by the assessee on 10.12.2007. Such registered documents for

purchase of immovable property found at the time of search cannot by any stretch

of imagination, be regarded as documents disclosing the undisclosed income of the

assessee, in order to confer jurisdiction to invoke Sec.153C. The Assessing Officer

should record his satisfaction that such documents belonged to a person other than

the searched person. In that event, such documents, assets etc. seized or

requisition shall be handed over to the Assessing Officer having jurisdiction over

such other person and that Assessing Officer shall proceed against such other

person and issue notices etc. However, in assessee’s case, none of these statutory

requirements were satisfied.

3.9.1 For the legal proposition that only pending assessments would abate u/s

153A, apart from the statutory provision contained in Sec.153A, the Ld. AR relied on

the following case law:

(i) LMJ International Ltd. vs. Deputy CIT (2008) 119 TTJ (Kol.) 214 (ii) Meghmani Organics Ltd. vs. DCIT(2010) 129 TTJ (Ahd.) 255. (iii) Guruprema Enterprises, Mumbai vs. ACIT (ITAT Mumbai Bench in I.T.A. Nos.255 to 257(Mum.)/2010 in Page at paragraph-15, the issue is decided as under; -

"In view of these decisions of the Co-ordinate Benches, we have to necessarily hold that only the assessments pending before the Assessing Officer for completion shall abate and that under Sec.153A, the issues decided n the assessment cannot be reconsidered and re-adjudicated, 7

I.T.A. Nos.270 to 276/Coch/2016 unless there is some fresh material found during the course of search in relation to such points. As in this case, the undisputed fact is that, there is no incriminating material found or seized in the search, the ground of the assessee has to be accepted by respectfully following the order of the Co- ordinate Bench. Though on the legal issue, we have decided in favour of the assesses, as the case was heard at length on merits we adjudicate the same".

Thus it was submitted that the fresh assessment made by recourse to Sec.153C are

illegal with respect to the Assessment Years 2006-07 to 2010-11 and the additions

made in the fresh Assessment Orders are also not based on any materials

whatsoever found at the time of search. The additions are made on assumptions

and surmises.

3.9.2 On appeal, the CIT(A) observed that there has been a direct linkage

between the documents seized, and the transactions/investments made by the

assessee during the course of search u/s 132, in the premises of Sri Eldhose

Varghese. The CIT(A) rejected the argument of the assessee that the seized

documents should have been examined by the jurisdictional Assessing Officer and

the Assessing Officer should have recorded his suggestion that the documents

belonged to the person other than the searched person. The CIT(A) observed that

the cases were centralised for thorough analysis and consolidated investigation,

with one Officer, in accordance with the provisions of the IT Act and the change in

jurisdiction has not been challenged by the appellant in the past. Rather, it was

observed that the notices issued u/s 153C have been replied by the assessee

requesting that the returns already filed be treated as to have been filed in response

I.T.A. Nos.270 to 276/Coch/2016 to the notices u/s 153C. As regards the satisfaction of the Assessing Officer drawn

before completing the assessment was concerned, the CIT(A) observed that the

same had clearly been mentioned in the assessment order, whereby the nature of

the document seized had been enumerated and the reasons for issuing the notice

u/s 153C had also been mentioned. Regarding time limit for issuing of notice u/s

143(2), the CIT(A) observed that there is nothing in the assessment order which

suggests of any objections raised by the appellant during the assessment

proceedings. The CIT(A) found that the assessee had accepted the suppression of

income, which appeared in the sworn statement recorded during the course of

search on 02.11.2011, that the seized documents CHN/11/22/RR/A-(1) to

CHN/11/22/RR-A6 are documents related to purchase and sale of plot, where a

profit of Rs.5,00,000/-was earned during the A.Y 2008-09, which were not shown in

the return. Further, in response to question No.14, it was found that the assessee

agreed that there happened some mistakes earlier," will file returns showing higher

income of the last two years and correct income will be shown in my return in

future is assured." For the A.Y 2011-12, it was found that the assessee had

returned an income of Rs.78,06,250/-, which in itself was an evidence suggesting

non disclosure of correct and true particulars of income. For the A.Ys 2007-08 and

2008-09, there have been apparent suppression of contract receipts of

Rs.13,59,170/- and Rs.4,61,554/-, which could be brought out by the Assessing

Officer on record only by comparing from the statement of the entity awarding

contract to the assessee. Thus, it was found that there have been direct linkage

between the assessee’s undisclosed income during A.Y 2007-08 and onwards.

I.T.A. Nos.270 to 276/Coch/2016

3.9.3 In the back ground of the factual details in the form of admission in the

sworn statement by the appellant, the seized materials showing unrecorded

business transactions in land and the profit not disclosed, as well as the suppression

of contract receipts gathered from the information submitted by the entity awarding

contract to the assessee, the CIT(A) justified the correctness of issuing the notices

u/s 153C by the Assessing Officer. In view of this, the objections raised on the

legality of the assessment proceedings initiated with the notice u/s 153C were

rejected.

3.9.4 Against this, the assessee is in appeal before us. The Ld. DR relied on the

order of the CIT(A).

3.9.5 We have heard the rival submissions and perused the record. The Ld. AR

submitted that on the date of search, the assessments for these assessment years

were not pending. Consequent to the search in the case of Shri Eldhose Varghese

on 02/11/2011, no incriminating material was found which belonged to the

assessee. Therefore, provisions of section 153C r.w.s. 153A of the Act could not

have been invoked. According to the Ld. AR, the assessee has filed the returns

prior the date of search and the assessments have reached finality either due to the

acceptance of the returns u/s. 143(1) of the Act or on account of period of limitation

to issue notice u/s. 143(2) of the Act, therefore, no assessment could be framed

u/s. 153C of the Act. We find force in the argument of the Ld. AR. The assessment 10

I.T.A. Nos.270 to 276/Coch/2016 or re-assessment proceedings u/s. 153C r.w.s. 153A of the Act arises only when

search has been initiated and conducted. Therefore, such assessment has a vital

link with the initiation and conduct of search. Reading of section 153C r.w.s. 153A

makes it clear that where the Assessing Officer is satisfied that any money, bullion,

jewellery, or other valuable article or thing or books of account or documents seized

in a search u/s. 132 or requisitioned u/s. 132A, belongs or belong to a person other

than the person referred to in section 153A, shall be handed over to the Assessing

Officer having jurisdiction over such other person and issue such person notice and

assess or reassess the income of such other person in accordance with the

provisions of setion 153A. In the present case, the Ld. DR is not able to bring on

record any seized material found during the search so as to imitate proceedings u/s.

153C in the case of the assessee. Since there is no incriminating material found

during the course of search which belonged to the assessee, the Assessing Officer

has no jurisdiction to issue notice u/s. 153C r.w.s. 153A of the I.T. Act. Further, the

Assessing Officer cannot frame assessment u/s. 153C r.w.s. 153A of the Act.

3.9.6 This issue came up for consideration before the jurisdictional High Court in

the case oif CIT vs. Promy Kuriakose (386 ITR 597) (Ker.) wherein it was held as

under:

“10. A comparative analysis of the provisions contained in section 153A and 153C reveal that jurisdiction under section 153C can be invoked by the Assessing Officer only when money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned and it is found that the seized or requisitioned articles belongs, or belong to a person other the person referred to in section 153A. In such a case, the Assessing Officer shall hand over the books of account or documents or assets seized or requisitioned to the Assessing Officer having jurisdiction over 11

I.T.A. Nos.270 to 276/Coch/2016 such other person. Thereupon, it is for the Assessing Officer having jurisdiction to proceed against such other person by issuing notice and complete assessments or reassessments as the case may be, in accordance with section 153A. Therefore, the fundamental jurisdictional requirement for invoking the powers under section 153C is the seizure or requisitioning of books of account or documents or assets which belong to a person other than the person referred to in section 153A. Otherwise, the Assessing Officer has no jurisdiction at all to proceed under section 153C. Therefore, the conclusion of the Tribunal that in the absence of search material, proceedings under section 153C cannot be initiated by the Assessing Officer, which finding is consistent with the precedents referred to by the Tribunal itself, does not spell out any illegality.”

3.9.7 In view of the above, when the original assessments for the assessment year

2006-07 to 2010-11 had already been completed or the time limit to complete the

assessments has lapsed and no incriminating material which belonged to the

assessee has been unearthed during the search operation in the case of Shri

Eldhose Varghese, the assessment made u/s. 153C cannot be framed in the case of

the present assessee. Therefore, the assessments made for the assessment years

2006-07 to 2010-11 are bad in law. Thus, we squash the assessments for the

assessment years 2006-07 to 2010-11.

3.9.8 In the case of assessments for the assessment years 2011-12 and 2012-13,

the assessments are pending for these assessment years. Hence, the Assessing

Officer is within his jurisdiction to frame the assessments u/s. 153C r.w.s. 153A of

the Act. Thus, we uphold the jurisdiction of the Assessing Officer to frame the

assessments for the assessment years 2011-12 and 2012-13.

I.T.A. Nos.270 to 276/Coch/2016 3.9.9. Since we have decided the legal issue of the assessee, we refrain from

going into other grounds of the assessee. The appeals of the assessee in ITA Nos.

270 to 274/Coch/2016 are allowed.

addition made to income u/s. 69C of the Act on account of cash shortage.

4.1 The facts of the case are that for the assessment year 2011-12, the assessee

had received amounts from the following relatives:

Amount from K.P. Varghese (Father) Rs. 20,00,000.00 Amount from Sosamma Varghese (Mother) Rs. 20,00,000.00 Amount from Shiny Pelexy) (Wife) Rs. 30,00,000.00 Amount from Annie Binu (Sister) Rs. 20,00,000.00 Amount from Binumon Varghese Rs. 20,00,000.00 (Brother-in-law) Total Rs.1,10,00,000.00

The Assessing Officer added Rs.1,10,00,000/- as unexplained credits from relatives

and added to the income of the assessee. The assessee explained the source of

R.1,15,00,000/- out of which Rs. 5 lakhs was accepted by the Assessing Officer.

4.2 On appeal, the CIT(A) directed the Assessing Officer to consider a sum of

Rs.25,00,000/- as explained and to re-draw the cash flow statement.

4.3 Against this, the assessee is in appeal before us. With regard to loan of Rs.

20 lakhs received from the father of the assessee, Shri K.O. Varghese, it was stated

I.T.A. Nos.270 to 276/Coch/2016 that his father was a retired Co-op employee. As regards the loan of Rs.20 lakhs

from Smt. Sosamma Varghese, the mother of the assessee, it was stated that she

was a housewife and deals in pineapple. In respect of loan from Shri Eldhose

Varghese, assessee’s brother at Rs.5 lakhs, it was stated that he is the managing

partner of M/s. Whiteline Marketing Associates. With regard to loan of Rs.30 lakhs

from Smt. Shiny Pelexy, wife of the assessee, it was stated that she was an

advocate. With respect to loan of Rs.20 lakhs from Annie Binu, sister of the

assessee, it was stated that she was a staff nurse at UK. Regarding loan from Shri

Binumon Varghese, brother-in-law of the assessee at Rs.20 lakhs, it was stated that

out of the loan of Rs.20 lakhs, the assessee received Rs.2.65 lakhs as money from

the NRE account of Shri Binumon Varghese, and balance sum of Rs.17.35 lakhs as

cash on various dates. It was also stated that out of the cash received, Rs. 2 lakhs

was received directly from Shri Binumon Varghese and the balance of Rs.15.35

lakhs on various dates from his father Shri V.V. Varghese on behalf of him. It was

submitted that all the above mentioned parties had filed returns of income and also

filed confirmation letters.

4.4 We have heard the rival submissions and perused the record. The main

contention of the assessee is that the amounts received from his father, mother,

wife, sister and brother-in-law are supported by confirmation letters. However, the

assessee has filed only confirmation letters which was not supported by

corroborative evidence. In the interest of justice, we remit this issue to the file of

the Assessing Officer with a direction to the assessee to substantiate the capacity of

I.T.A. Nos.270 to 276/Coch/2016 these persons to advance the above amounts to the assessee. This ground of

appeals is partly allowed for statistical purposes.

expenditure written off from tools and equipments at Rs.28,460/-.

5.1 The facts of the case are that the assessee had written off petty tools and

equipments amounting to Rs.28,460/-. According to the Assessing Officer, this

practice is not as per the prevailing provisions of the Act and cannot be allowed.

The Assessing Officer added the petty tools and equipment written off at

Rs.28,460/- to the income of the assessee.

5.2 We have heard the rival submissions and perused the record. The Assessing

Officer had disallowed the expenditure on petty tools and equipments. We find that

the expenditure towards tools and equipments are incurred for carrying on the

business operation of the assessee as a contractor and hence, it is to be treated as

revenue expenditure. Being so, we are inclined to allow this ground of appeal of

the assessee.

with regard to addition on capitalization of scaffoldings purchased by the assessee

at Rs.2,87,652/-.

I.T.A. Nos.270 to 276/Coch/2016 6.1 The facts of the case are that the assessee had purchased scaffold systems for

Rs.17,59,648/-. The Assessing Officer held that the scaffold systems are capital

assets in nature giving the assessee enduring benefit over a period of time and

therefore, the said expenses ought to have been capitalized on which depreciation

is available to the assessee at 15%. Since the expenses on scaffolding system was

during the period between 27/10/2011 and 10/01/2012 which is for less than 180

days, the Assessing Officer allowed depreciation at 7.5% at Rs.1,31,975/- .

6.2 On appeal, the CIT(A) found that the assessee had not furnished the details

regarding nature of scaffoldings, bills for purchases of such scaffoldings and the

annual requirement of such scaffoldings vis-à-vis the quantum of the contract work.

Hence, the CIT(A) confirmed the additions made by the Assessing Officer on this

ground for both the assessment years.

6.3 Against this, the assessee is in appeal before us. The Ld. AR submitted that

the scaffoldings are only rolling stock and replacements of old and worn out

material due to repeated use by fresh purchases. It was submitted that the

scaffoldings are not a fixed asset and the replacement cost is admissible as revenue

expenditure.

6.4 The Ld. DR relied on the order of the lower authorities.

I.T.A. Nos.270 to 276/Coch/2016 6.5 We have heard the rival submissions and perused the record. The assessee is

in the business of contract work. These materials are purchased on regular basis

and the life of these materials is short and worn out by 3 to 4 years. Hence, it

cannot be called a capital expenditure. In our opinion, it is to be treated as revenue

expenditure for both the assessment years. This ground of appeals is allowed.

expenses of Rs.3,00,000/- for AY 2011-12 and Rs. 5,00,000/- for AY 2012-13.

7.1 The facts of the case are that the Assessing Officer made adhoc disallowance

because the purchases were not supported with documentary evidences. Even

before the CIT(A), the assessee had not produced such documents. The only

explanation of the assessee was that the disallowances made by the Assessing

Officer are adhoc and hence, arbitrary and not acceptable. Accordingly, the CIT(A)

confirmed the additions made by the Assessing Officer on this ground for both the

assessment years.

7.2 We have heard the rival submissions and perused the record. These

additions were made by the Assessing Officer on ad hoc basis as the assessee had

not produced the requisite evidences. The assessee is a contractor and it is very

difficult to get 100% vouchers and receipts for the expenses. Taking a lenient view,

we restrict the disallowance to Rs.2 lakhs for each assessment year. Thus, this

ground of appeals of the assessee is partly allowed.

I.T.A. Nos.270 to 276/Coch/2016 8. Ground No. 9 in ITA No. 275/Coch/2016 which relates to disallowance of

Rs.4,11,460/- without restricting the allowance to a part thereof was not pressed

and hence, it is dismissed as not pressed.

at Rs.3,50,000/- and Rs.1,00,000/- from Shri Salim Jacob and Rs.7,79,000/- from

P.K. Kuriakose for AY 2012-13.

9.1 The facts of the case are that the assessee had shown unsecured loans as

follows:

AY 2011-12

(i) P.K. Kuriakose Rs.2,00,000/- (ii) Shibu K. Scaria Rs.1,50,000/- Rs.3,50,000/-

AY 2012-13

(i) Salim Jacob Rs.1,00,000/- (ii) P.K. Kuriakose Rs.7,79,000/- Rs.8,79,000/-

9.2 The Assessing Officer found that the burden of proof cast on the assessee for

explaining the cash in his account as envisaged u/s. 68 of the Act was not

discharged. The assessee had not filed any confirmation letter from the above

persons showing their identity, capacity, creditworthiness and genuineness of the

loan transactions. Therefore, he made an addition of Rs.3,50,000/- u/s. 68 of the

Act. Similarly for assessment year 2012-13, the assessee had received 18

I.T.A. Nos.270 to 276/Coch/2016 Rs.1,00,000/- from Mr. Salim Jacob. Since the assessee had not discharged the

burden of proof cast on him u/s. 68 of the Act, the claim of the assessee that the

sum of Rs.1,00,000/- in the name of Shri Salim Jacob is an unsecured loan was not

accepted by the Assessing Officer and accordingly, he added Rs.1,00,000/- to the

income of the assessee.

9.3 On appeal, the CIT(A) found that the assessee had not produced any evidence

to establish the genuineness of the such credits. Hence, he confirmed the additions

made by the Assessing Officer for both the assessment years.

9.4. Against this, the assessee is in appeal before us. The Ld. AR submitted that

the second addition of Rs.7,79,000/- is the reduced balance in the account of Mr.

Kuriakose as on 31/03/2012. The amount received from Mr. Kuriakose was by way

of deposit of Rs. 8 lakhs in the Federal Bank Ltd. against which a payment by

cheque to Kuriakose from the same account was reduced and the net balance was

Rs.7,79,000/-. Since the above transactions are Bank transactions and supported

by evidence, it was submitted that the Assessing Officer was not justified in treating

the same as cash credits.

9.5 The Ld. DR relied on the order of the lower authorities.

9.6 We have heard the rival submissions and perused the record. The contention

of the ld. AR is that the assessee has filed confirmation letters from the above

parties, however, they were not examined by the lower authorities and prayed that 19

I.T.A. Nos.270 to 276/Coch/2016 one more opportunity may be given to the assessee and the issue may be remitted

to the file of the Assessing Officer for both the assessment years. We find merit in

the plea of the assessee. Accordingly, we remit this issue to the file of the

Assessing Officer to examine the parties once again so as to prove the identity,

capacity, creditworthiness and genuineness of the loan transactions. Thus, this

ground of appeals of the assessee are partly allowed.

regard to levy of interest u/s. 234A, B & C of the Act which is consequential and

mandatory in nature and does not require any specific adjudication. This ground of

appeals of the assessee for both the assessment years are dismissed. Thus, the

appeals of the assessee in ITA Nos. 275&276/Coch/2016 are partly allowed for

statistical purposes.

allowed and the appeals filed by the assessee in ITA Nos. 275 & 276/Coch/2016 are

partly allowed for statistical purposes. Order pronounced in the open Court on this 30th April, 2019

sd/- sd/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: Kochi Dated: 30th April, 2019 GJ Copy to: 20

I.T.A. Nos.270 to 276/Coch/2016 1. Shri Pelexy K. Varghese, Kochukudiyil House, Mekkadambu P.O., Muvattupuzha. 2. The Deputy Commissioner of Income-tax, Circle-1, Ernakulam. 3. The Commissioner of Income-tax(Appeals)-IV, Kochi. 4. The Pr. Commissioner of Income-tax, Kochi. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order

(ASSISTANT REGISTRAR) I.T.A.T., Cochin