THE COMMISSIONER OF INCOME TAX vs. M/S.CHEKKATTU CHITTY FUNDS

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 13TH DAY OF NOVEMBER 2018 / 22ND KARTHIKA, 1940 ITA.No. 66 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 79/COCH/1999 OF I.T.A.TRIBUNAL, COCHIN BENCH DATED 25-11-2011 APPELLANT/S: THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.CHEKKATTU CHITTY FUNDS, RAMANCHIRA, THIRUVALLA, PIN-689 101. BY ADVS. SRI.ANIL D. NAIR SMT.NIVEDITA A.KAMATH SRI.J.R.PREM NAVAZ SRI.R.SREEJITH THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 13.11.2018, ALONG WITH ITA.70/2012, ITA.212/2012, ITA.214/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.66/2012 & con.cases ..2.. IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 13TH DAY OF NOVEMBER 2018 / 22ND KARTHIKA, 1940 ITA.No. 70 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 160/COCH/2000 OF I.T.A.TRIBUNAL, COCHIN BENCH DATED 25-11-2011 APPELLANT/S: THE COMMISSIONER OF INCOME TAX KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.CHEKKATTU CHITTY FUNDS RAMANCHIRA, THIRUVALLA-689 101. BY ADVS. SMT.NIVEDITA A.KAMATH SRI.ANIL D. NAIR SRI.J.R.PREM NAVAZ SRI.R.SREEJITH THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 13.11.2018, ALONG WITH ITA.66/2012, ITA.212/2012, ITA.214/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.66/2012 & con.cases ..3.. IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 13TH DAY OF NOVEMBER 2018 / 22ND KARTHIKA, 1940 ITA.No. 212 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 79/COCH/1999 OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/S: M/S CHEKKATTU CHITTY FUNDS, THIRUVALLA GIR NO.FT-1971 BY ADVS. SRI.ANIL D. NAIR SMT.NIVEDITA A.KAMATH SRI.J.R.PREM NAVAZ SRI.R.SREEJITH RESPONDENT/S: THE ASST.COMMISSIONER OF INCOME TAX CIRLCE -I, THIRUVALLA - 689 101. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 13.11.2018, ALONG WITH ITA.70/2012, ITA.66/2012, ITA.214/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.66/2012 & con.cases ..4.. IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY, THE 13TH DAY OF NOVEMBER 2018 / 22ND KARTHIKA, 1940 ITA.No. 214 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 160/COCH/2000 OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/S: M/S. CHEKKATTU CHITTY FUNDS THIRUVALLA, GIR NO.FT-1971. BY ADVS. SRI.ANIL D. NAIR SMT.NIVEDITA A.KAMATH SRI.J.R.PREM NAVAZ SRI.R.SREEJITH RESPONDENT/S: THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, THIRUVALLA-689101. OTHER PRESENT: SRI JOSE JOSEPH SC THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 13.11.2018, ALONG WITH ITA.70/2012, ITA.66/2012, ITA.212/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.66/2012 & con.cases ..5.. K.VINOD CHANDRAN & ASHOK MENON, JJ. -------------------------- I.T.A. Nos. 66, 70, 212 & 214 of 2012 -------------------------- Dated this the 13th day of November, 2018 J U D G M E N T Ashok Menon, J. The four appeals are filed for the assessment years (AY) 1992-93 and 1993-94, two by the assessee and two by the Revenue from the common order of the Tribunal. 2. For the year 1992-93, the assessee having not filed a return of income voluntarily, a notice under Section 148 of the Income Tax Act (for short, “the Act”) was issued, pursuant to which, after some delay, the assessee filed a return showing an adjusted total income of Rs.17,140/-. Similarly, for the year 1993-94, pursuant to a notice issued under Section

I.T.A. No.66/2012 & con.cases ..6.. 142(1) of the Act, the assessee filed a return disclosing an income of Rs.770/-. On 17.08.1992, a search was conducted under Section 132 of the Act in the business premises of the assessee at Thiruvalla. At the time of search, Sri.Alex C. Joseph, the ex-managing partner of the firm, in whose name the authorization was issued, was present in the premises. He was the brother of the present partners. His statement on oath was recorded and certain books of accounts and other documents were seized in addition to unaccounted cash of Rs.2,89,500/- and an imported Benz Car. 3. The assessee had been carrying on a sister-concern by name, M/s Chekkattu Financiers in the very same premises. From the records and all the available information, the assessing officer found that the firm is actually managed by Sri.Alex C. Joseph.

I.T.A. No.66/2012 & con.cases ..7.. Admittedly, the assessee had not been carrying on any chitty business in the subject years and was involved only in the business of selling imported cars brought to the country in the name of Non Resident Indians (NRI). For both the years, the status of the assessee was found to be an Association of Persons. 4. For AY 1992-93, the following additions were made: (i)Cash credits amounting to Rs.1,48,450/- were assessed under Section 68 of the Act as unexplained cash credit. (ii)Rs.7,16,254.95 as unexplained credit balance available in the books of accounts, was added on as income. (iii)The assessee's Cash Book showed a credit of Rs.35,000/- as withdrawal from the account of Sri.Alex C. Joseph, which, however, on verification with the bank, was found to be a cheque paid by clearing to one Hindusthan

I.T.A. No.66/2012 & con.cases ..8.. Engineering Co. This amount was also added on as unexplained cash credit under Section 68 of the Act. (iv)A deposit of Rs.22,000/- on 31.03.1992 and cash withdrawal of Rs.21,750/- as available in the current account maintained by the assessee with the Union Bank of India were found to have been not disclosed in the cash book seized from the assessee's premises. There was hence an addition made of Rs. 22,000/- (v)An expenditure amounting to Rs.7,50,000/- claimed to have been paid in cash was not substantiated and hence, the same was disallowed under Section 40A(3) of the Act. 5. The assessee filed first appeal, in which the validity of the search carried out in the premises of the assessee on a warrant issued in the name of Alex C. Joseph, as also the additions were challenged. The assessee contended that there was an application in the

I.T.A. No.66/2012 & con.cases ..9.. preceding AY, i.e., 1991-92, under Form No.11A for registration of the partnership firm, which had not been declined till date. However, there was no evidence submitted to substantiate the said contention and there being no application in the current year, the claim of the assessee of the status of a partnership firm was declined. 6. On the unexplained cash credit of Rs.1,48,450/-, a remand report was called for from the assessing officer. The addition based on the remand report was confirmed. The other additions of Rs.35,000/-, Rs.22,000/- and Rs.7,16,255/- were also confirmed. The disallowance under Section 40A(3) of Rs.7,50,000/- also stood confirmed. The assessee filed a further appeal before the Tribunal, in which all the grounds taken before the first appellate authority were reiterated. The Tribunal found the status of

I.T.A. No.66/2012 & con.cases ..10.. the assessee to be an Association of Persons being an unregistered firm as held by the assessing

officer.

The

addition

of Rs.1,48,450/- under Section 68 of the Act was confirmed. On the unexplained credit of Rs.7,16,255/-, the Tribunal remanded the issue for fresh consideration to the assessing officer. The addition of Rs.35,000/- was confirmed, but that of Rs.22,000/- was deleted. The deletion was on account of the deponent, Sri.M.K.A.Gerge, having not been allowed

cross-examined.

The dis-allowance under Section 40A(3) of the Act was also set aside. 7. The questions of law arising in the appeal of the assessee for the year 1992-93, as available in the memorandum of appeal, are as follows; “(i)In the facts and circumstances of the case, ought not the Tribunal have held that the search conducted on 17.08.1992 in the

I.T.A. No.66/2012 & con.cases ..11.. partnership firm on the basis of warrant issued in the name of stranger was illegal? (ii)In the facts and circumstances of the case, ought not the Tribunal have held that the addition under Sec.68 of the Act was unwarranted, more so, when it was demonstrated that these were chitty amount received from subscribers? (iii)In the facts and circumstances of the case, ought not the Tribunal have set aside the addition of unexplained cash credit, more so after appreciating other evidence adduced by the appellant.” 8. The Department in their appeal has raised the following questions of law; “1.Whether, on the facts and in the circumstances of the case and in the light of the reasons noted in the assessment order, the Tribunal is right in law and fact in interfering with the addition of Rs.7,50,000/- made under Sec.40A(3) of the Income Tax Act? 2.Whether, on the facts and in the circumstances of the case and also in the light of the evidence found in Annexures A, B and C, the Tribunal is justified in interfering with the addition of Rs.22000/- for the reason stated in order of the ITAT? 3.Whether, on the facts and in the circumstances of the case;- a)did the assessee discharge the burden of proof? b)Should not the assessee be put to proof?

I.T.A. No.66/2012 & con.cases ..12.. 4.The Tribunal is right in law in placing the burden of proof on the Revenue?” 9. Regarding the illegality of the search made under Section 132 of the Act, we are in perfect agreement with the finding of the appellate authority and the Tribunal. The Tribunal has found that it cannot go into the validity of the search proceedings and that, at best, the Tribunal can examine whether there was a warrant of authorisation for conduct of the search. It was rightly concluded that there was a warrant in the name of Sri.Alex C.Joseph, who was physically present at the premises of the firm when the search was conducted. It has also come out in evidence that despite, this person being not shown as a partner of the firm, he was actively involved in the affairs of the firm and continued to manage its affairs. Also the assessee was not registered as a partnership firm and it was assessed as an Association of

I.T.A. No.66/2012 & con.cases ..13.. Persons. That apart, materials were seized from the premises, which would substantiate the allegations made against the firm, so as to proceed against the firm under the provisions of the Act. We find the Tribunal having rightly relied on the judgment of the Hon'ble Supreme Court in Pooran Mal v. Director of Inspection [1974] 93 ITR 505. Even if the search is illegal, the Department could use the material seized against the person from whose custody it was seized. On both counts, we find absolutely no reason to interfere with the findings of the Tribunal with regard to the legality of the search. 10.As regards the additions made under Section 68 of the Act also, the claim of the assessee that the amounts were received as chitty installments is not credible, especially since the assessee in the subject year had not been carrying on chitty business. Further, the

I.T.A. No.66/2012 & con.cases ..14.. identity of persons, who had paid the amounts, were not revealed. The issue has been considered by the Assessing Officer (A.O.), appellate authority and the Tribunal and there is no cause shown for interference by us. The appeal filed by the assessee as I.T.A.No. 212 of 2012 for 1992-93 is, therefore, rejected and the questions of law are answered in favour of the Revenue. 11.As regards the appeals filed by the Department, the challenge is regarding dis- allowance under Section 40A(3) of the Act of Rs.7,50,000/-, which was interfered with by the Tribunal. Rs.7,50,000/- was allegedly paid to one Sri.Balan Pillai by the assessee for purchase of a car brought to India. The A.O. found from the books of accounts, including the ledger produced at the time of hearing, that the income derived from the dealing of vehicle was not commission as claimed by the

I.T.A. No.66/2012 & con.cases ..15.. assessee. The A.O. also found that an amount of Rs.46,785/- was credited to the Profit & Loss Account as commission on vehicle transaction, which includes a sum of Rs.25,000/- relating to the dealings in a car, which had been imported in the name of one Sri.Balan Pillai. The car was sold by the assessee for Rs.18,25,000/-, out of which the value of car included Rs.10,50,000/- paid as customs duty. The learned Standing Counsel appearing for the Department submits that the assessee failed to respond to the letters or at least produce the confirmation from Sri.Balan Pillai regarding cash payment of Rs.7,50,000/- made to him and therefore, it was disallowed under Section 40A(3). 12.That apart, there was also an unexplained deposit of Rs.22,000/- in the current account of the assessee with Union Bank of India, Thiruvalla Branch on 31.03.1992, which

I.T.A. No.66/2012 & con.cases ..16.. remained unexplained. The amount was allegedly deposited by one Sri.M.K.A.George, who had filed an affidavit stating that he had handed over a draft for that amount to the assessee for encashing the same since he did not have an account at Thiruvalla. Thereafter, his statement was recorded by the AD(I), Ernakulam, in which he has withdrawn the statement in the affidavit and stated that the affidavit was actually prepared by Sri.Jose, the brother of Sri.Alex C.Joseph and he has just signed it, without understanding the contents of the affidavit. Subsequently, the statement given by the aforesaid George to the AD(I) was also withdrawn by him and he went back to his earlier version. The Tribunal has held that in view of the statements and the withdrawal of the affidavit, the version of George could not have been relied upon, unless he was subjected to cross-examination by the

I.T.A. No.66/2012 & con.cases ..17.. assessee and therefore, the addition was deleted by the Tribunal. 13.With respect to the dis-allowance under Section 40A(3) of the Act of Rs.7,50,000/-, the same was not a payment made by the assessee. The payment was related to the transaction of sale of imported car by one Shri.Balan Pillai to one Sri.Arun Choksi. The assessee is said to have acted as a middle man. The customs duty was also paid for the imported car as reflected in the accounts of the assessee, on which there was an assumption made that the clearance of the vehicle from the customs authorities had been made by the assessee and hence, the registration of the car should also be in the name of the assessee. However, the registration of the car was made in the name of one Sri.Balan Pillai and the copy of the Registration Certificate was available in the files. The Tribunal then

I.T.A. No.66/2012 & con.cases ..18.. found that since the vehicle was registered in the name of Sri.Balan Pillai and the transfer of the vehicle was also effected in the name of one Sri.Arun Choksi, there was no reason to find the payment of Rs.7,50,000/- as having been made by the assessee. If at all a dis- allowance had to be made under Section 40A(3) of the Act, then necessarily, the same should have been in the name of Sri.Arun Choksi, was the finding. 14.Admittedly, the car was imported to India on transfer of residence (T.R) of a Non-Resident Indian (NRI). There are certain conditions to be complied with on such transfer being effected one of which is the vehicle being continued in the name of the importer for a specific period. It is also not clear as to when the import was made and the transfer was effected in the name of Sri.Arun Choksi. If the import had been made by the NRI, then,

I.T.A. No.66/2012 & con.cases ..19.. necessarily, the customs duty would also have been paid by the NRI itself. There is no explanation as to why the assessee firm paid the customs duty for clearance of the imported car. The assessee's role, hence, cannot be said to be of a mere middle man. There are more details to be looked into as to when the import was made and the transfer was effected based on the Registration Certificate, if at all, issued in the name of Sri.Arun Choksi, who is said to be the purchaser. If the customs duty had been paid by the assessee firm or by the subsequent registered owner, then, necessarily, there is violation of the conditions of import and there could also be a presumption of the import being made by the assessee itself, for the purpose of sale of that car, in the name of the NRI. In such circumstance, the entire price of the car and the customs duty would have been borne by the

I.T.A. No.66/2012 & con.cases ..20.. assessee and on subsequent transfer being made, it would have been on payment by Sri.Arun Choksi to the assessee. Even in such a circumstance, there could not be a dis- allowance made under Section 40A(3) of the Act. The assessing officer having not attempted to view it in that perspective, we do not think that there need be a remand. However if as held by the Tribunal there could not be a dis-allowance under Section 40A(3) of the Act since the payment was not from the assessee to the registered owner of the vehicle; then there is no scope for allowing an expenditure, since that was not an amount received by the assessee from Arun Choksi and then passed on to Balan Pillai. The said amount was merely shown as an expenditure, by virtue of the payment made to Balan Pillai, without explaining the same. We, hence, find the ground of dis-allowance under Section

I.T.A. No.66/2012 & con.cases ..21.. 40A(3) to be improper but still find the dis-allowance to be apt for no explanation of the source of such funds. 15.The next question is with respect to the addition of the unexplained deposit of Rs.22,000/- for the AY 1992-93 in the current account of the assessee with Union Bank of India, Thiruvalla Branch. There is no record of transaction made in the Cash Book seized from the assessee and despite the request of the A.O. to explain the nature and source of the deposit and the purpose of cash withdrawal on the same day of Rs.21,750/-, there has been no explanation forthcoming. The A.O. has, on facts, found that even though in the first instance, Sri.M.K.A.George accepted the fact that he handed over the Demand Draft for Rs.22,000/- to the assessee. But later he stated that the affidavit pertaining to such acceptance was actually prepared and brought

I.T.A. No.66/2012 & con.cases ..22.. to him by Sri.Jose, brother of Sri.Alex C.Joseph, and that he had simply signed it and the contents of that affidavit were denied when he was examined by the AD(I). Consequently, the affidavit was rejected and addition

Rs.22,000/-

was

made. Sri.M.K.A.George had later filed a letter before the A.O. stating that he did not give any statement to the AD(I) voluntarily and that he had handed over the draft and the same was encashed through the bank account of the assessee. The Tribunal has held that without any cross-examination by the assessee in this regard, the statement before the AD(I) cannot be a basis for making such an addition. We agree with that. We answer the said question of law also in favour of the assessee and against the Revenue. 16.The third question is on the very same addition on the onus of proof having been cast

I.T.A. No.66/2012 & con.cases ..23.. on the Department. We do not think that the said

question

arises

since

when Sri.M.K.A.George was examined by the AD(I), there should have been an opportunity to the assessee to cross-examine the said person. The same having been denied, there is violation of principles of natural justice. We do not think that there should be a remand in the issue for reason of the minimal addition, which was set aside by the Tribunal. The appeal of the Department for the year 1992-93 is partially allowed interfering with the order of the Tribunal and sustaining the addition of Rs.7,50,000/- made by the A.O, on grounds stated herein. 17.In the year 1993-94, the very same issue of the validity of search and the additions made under Section 68 of the Act have been raised in the appeal of the assessee. Further in the year 1993-94, receipts of Rs.28,70,000/-,

I.T.A. No.66/2012 & con.cases ..24.. Rs.10,00,000/-, Rs.5,08,867, Rs.10,00,000/- & Rs.5,35,000/- were added on as unaccounted business receipts. An unexplained credit was added rejecting a confirmation letter filed by Sri.M.K.A.George confirming that he has entrusted a jeep for sale to the assessee, which has been sold for Rs.8,75,000/-. The unexplained cash found of Rs.2,89,500/- was seized, which was again assessed in the name of the assessee. Unexplained cash credits amounting to Rs.35,000/- were also made addition under Section 68 of the Act. 18.In the first appeal, as in the other case, there was a remand report called for from the assessing officer. The additions of the business receipts and the cash credit and unexplained credit were confirmed in first appeal except an addition of Rs.10,00,000/-, which was with respect to a transaction of sale of a car from one Sri.O.S.Shaduly to one

I.T.A. No.66/2012 & con.cases ..25.. Sri.L.K.Bagla, which was remanded to the assessing officer. The unexplained cash as also the cash credit and additions made thereon were also confirmed in first appeal. Before the Tribunal, the assessee raised the very same contentions, which were answered by the Tribunal as in the earlier year with respect to the unexplained cash credit and the validity of the search, which are the only questions raised in the appeal by the assessee for the year 1993-94. The question of validity of search, as upheld by the Tribunal, in the earlier years appeal, has found our acceptance. With respect to the unexplained cash credit as in the earlier year, the claim was chitty transaction, which, admittedly, the assessee had not been carrying on in the subject years. Hence, both the questions raised are to be answered against the assessee

I.T.A. No.66/2012 & con.cases ..26.. and in favour of the Revenue. ITA No. 214 of 2012 is, hence, rejected. 19.The Revenue's appeal for 1993-94 raises the following questions: 1.Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in deleting the additions of - i)Rs.28,70,000/- on account of import and sale of car; ii)Rs.30,43,887/- on account of

unaccounted business receipts; iii)Business receipts of Rs.8,75,000/- on account unverifiable and unconfirmed credit on sale of jeep; iv)Rs.2,89,500/- on account of

unexplained cash found and seized during search? 3.Are not the findings of the Tribunal highlighted and challenged in the grounds raised or as grounds raised perverse and against law, logic and human conduct? 4.Whether, on the facts and in the circumstances of the case;- a)did the assessee discharge the burden of proof? b)Should not the assessee be put to proof?” 20.The unaccounted business receipts were totally deleted by the Tribunal. The Tribunal's

I.T.A. No.66/2012 & con.cases ..27.. reasoning was that the transactions were, in fact, those carried out by Sri.Alex C. Joseph, who was not even a partner of the business. Here we have to notice that there was no partnership firm registered as per the Income- tax Act and the assessment was carried out as an AoP. Alex C. Joseph, in whose name the warrant was issued was also present in person in the premises when the search was conducted. It was then found that the identical issue came up for consideration before the Tribunal on import of vehicles from various countries in the name of NRI's, in which Sri.Alex C. Joseph was found involved in the sale of those vehicles within India. Sri.Alex C. Joseph was found to have carried out the transactions by himself in other people's names, who actually merely lend their names for the purpose of import of vehicles. The Tribunal assessed the profits of the transaction in the hands of

I.T.A. No.66/2012 & con.cases ..28.. Sri.Alex C. Joseph, which was confirmed by this Court in ITA No. 92 of 2008. 21.We find that the unaccounted business receipts were all seen accounted in the accounts of Sri.Alex C. Joseph. In such circumstances, we do not find any reason to interfere with the Tribunal's order except with respect to Rs.9,00,000/-, wherein two demand drafts of Rs.9,00,000/- and Rs.6,50,000/- were found to be credited to the accounts of Sri.Alex C. Joseph, out of which an amount of Rs.9,00,000/- was reflected in the accounts of the assessee. The Tribunal's order is interfered with to the limited extent of making an addition of Rs.9,00,000/- being the amounts reflected in the accounts of the assessee with respect to a transaction between Sri.Bagla and Sri.Alex C. Joseph. All the other business proceeds are seen to have been those found in the accounts of Alex C. Joseph.

I.T.A. No.66/2012 & con.cases ..29.. Only on information received of the same being that of the assessee itself the additions were proposed. There was nothing recovered in search to substantiate such information and confirm its veracity. We hence concur with the Tribunal except on the limited addition sustained herein above. 22.On the question of addition of Rs.8,75,000/-, which was said to be received from the sale of a jeep belonging to Sri.M.K.A.George, there is an affidavit proffered of that person, in which he admitted the transaction. But, before the Additional Director (Investigation), he denied the same. Later, again a confirmation letter

was

submitted.

What

assumes significance is the fact that there was no cross-examination permitted of the person when he appeared before the AD(I). Hence, we cannot interfere with the deletion made by the Tribunal on that account.

I.T.A. No.66/2012 & con.cases ..30.. 23.The further contention is with respect to unexplained cash found and seized of Rs.2,89,500/-. The Tribunal found that there was no enquiry carried out to find the actual owners of the cash. Sri.Alex C. Joseph, who was found to have been managing the affairs of the firm, also was present at the time of search and seizure. The specific contention taken up by Sri.Alex C. Joseph was that the cash was withdrawn from the account of the assessee firm. However, the accounts of the assessee firm do not show such a withdrawal having been effected. Whatever withdrawal was effected, it could not have led to the presence of the cash with the specific date slips of the bank, was the clear factual finding. However, there was a duty on the assessee to explain the cash. The assessee cannot merely contend that the cash belonged to Sri.Alex C. Joseph without any confirmation

I.T.A. No.66/2012 & con.cases ..31.. from him; especially when he declined to own up the same in his statement. The cash having been found from the assessee's premises, the assessee has a duty to reveal and substantiate the source, which was not done. In such circumstances, we do not think that the Tribunal was right in deleting the addition of income with respect to the cash recovered from the assessee's premises, which was not accounted by the assessee. We, hence set aside the deletion of the said addition by the Tribunal, restoring that made by the A.O. 24.With respect to the first question, we answer the question partly in favour of the Revenue and partly in favour of the assessee. We sustain the addition of Rs.9,00,000/- on account of the import and sale of car as unaccounted business receipts. We also restore the order of the assessing officer insofar as the addition of cash of Rs.2,89,500/-. The

I.T.A. No.66/2012 & con.cases ..32.. other additions as deleted by the Tribunal are not interfered with by us. We do not find any perversity in the appreciation of the factual aspects. We hence partly allow the appeals of the Department, ITA Nos. 66 of 2012 & 72 of 2012. ITA Nos. 212 of 2012 & 214 of 2012 by the assessee stand rejected. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE Bka/01.03.2019

I.T.A. No.66/2012 & con.cases ..33.. APPENDIX OF ITA 66/2012 PETITIONER'S/S EXHIBITS: ANNEXURE A: TRUE COPY OF THE AFFIDAVIT FILED BY M.K.A.GEORGE DATED 26.02.1997. ANNEXURE B: TRUE COPY OF THE EXAMINATION REPORT OF THE ADDITIONAL DIRECTOR OF INCOME TAX, ERNAKULAM DATED 19.03.1997. ANNEXURE C: TRUE COPY OF THE LETTER WRITTEN BY M.K.A.GEORGE TO THE ASSESSING OFFICER DATED 11.03.1997. ANNEXURE D: TRUE COPY OF THE ASSESSMENT ORDER DATED 29.03.1996. ANNEXURE E: TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 11.01.1999. ANNEXURE F: TRUE COPY OF THE ORDER OF THE TRIBUNAL DATED 25.11.2011.

I.T.A. No.66/2012 & con.cases ..34.. APPENDIX OF ITA 70/2012 PETITIONER'S/S EXHIBITS: ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED 29/03/1996. ANNEXURE A1 TRUE COPY OF THE ASSESSMENT ORDER DATED 27/03/2002. ANNEXURE B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 01/02/2000. ANNEXURE B1 TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 24/02/2005. ANNEXURE C TRUE COPY OF THE ORDER OF THE TRIBUNAL DATED 25/11/2011.

I.T.A. No.66/2012 & con.cases ..35.. APPENDIX OF ITA 212/2012 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF ASSESSMENT ORDER DATED 29.3.1996 FOR THE YEAR 1992-93 ISSUED TO THE APPELLANT ANNEXURE-B TRUE COPY OF THE APPELLATE ORDER DATED 11.1.1999 FOR THE YEAR 1992-93 ANNEXURE-C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL & PHOTOCOPY

I.T.A. No.66/2012 & con.cases ..36.. APPENDIX OF ITA 214/2012 PETITIONER'S/S EXHIBITS: ANNEXURE A TRUE COPY OF ASSESSMENT ORDER DATED 29.3.1996 FOR THE YEAR 1993-94 ISSUED TO THE APPELLANT. ANNEXURE B TRUE COPY FO THE APPELLATE ORDER DATED 1.2.2000 FOR THE YEAR 1993-94. ANNEXURE C TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL.