High Court Of Kerala
CIT vs. B. Rajashekharan Nair
Section 158BC, 158BD
C.N. Ramachandran Nair & V.K. Mohanan, JJ.
IT Appeal No. 110 of 2009
4th November, 2009
Counsel Appeared :
P.K.R. Menon & Jose Joseph, for the Appellant : T.M. Sreedharari, V.P. Narayanan & Smt. C. K. Sherin, for the Respondent
JUDGMENT
C.N. Ramachandran Nair, J. :
The question raised in the appeal filed by the Revenue is whether the Tribunal was justified in confirming the order of the CIT(A) deleting the addition of Rs. 5,43,000 and Rs. 4,04,000 seized from the assessee during search made on 19th Dec., 2002. We have heard standing counsel appearing for the appellant and counsel appearing for the respondent-assessee.
2. The assessee was engaged in money-lending and was also a partner of two tourist homes, one by name Manacaud Tourist Home and the other by name Manacaud Tourist Paradise, both in Trivandrum. During the search, substantial amount of Rs. 22,13,480 was recovered from the assessee. The assessee made a statement that Rs. 5,43,000 was withdrawn from the Manacaud Tourist Home and Rs. 4,04,000 was withdrawn from the Manacaud Tourist Paradise.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that cash balance available in the books of account was low to justify the substantial amounts stated to have been withdrawn and retained by the respondent-assessee. Therefore, assessment was completed treating the cash found at the time of search as unexplained cash assessable under s. 69A of the IT Act. The AO did so by overruling the contention of the assessee that cash was withdrawn from the two tourist homes and retained by him for safe custody. However, in appeal, the CIT(A) accepted the explanation of the assessee and allowed the claim, which was confirmed by the Tribunal against which this appeal is filed.
3. We find from the orders of the Tribunal and that of the lower authorities that none of the authorities have examined the matter in detail, particularly in view of the contention of the assessee that the amounts were withdrawn from the accounts of the two tourist homes. Even if the assessee’s explanation is accepted, then the income should have been considered for assessment in the hands of the tourist homes, if these were owned by partnership firms. Since simultaneous search was conducted in the premises of these two tourist homes, assessment could have been made under s. 158BD on the firms or proprietors who own the tourist home. On the other hand, if it is unaccounted income earned by the assessee in the business of running the tourist home either as its proprietor or as a dominant partner, then it is assessable in his hands as unaccounted income because the tourist homes’ accounts on verification did not show any cash balance. The theory of safe deposit of huge cash in the assessee’s house is unbelievable because the assessee maintains four bank accounts, details of which are available in the Tribunal’s order. Counsel for the assessee even raised a contention that withdrawals from the accounts of the firm probably may mean withdrawal from the bank accounts of the firm. However, we do not find such a contention is raised by the assessee before any of the lower authorities. It is also not on record as to whether the assessee has paid any advance tax during the financial year in which the search was made and if so, whether the payment was such as to cover the amount retained by him. In the circumstances, we allow the appeal by setting aside the order of the Tribunal and that of the CIT(A) and restore the matter to the AO for revision of assessment after considering the case afresh in the light of the observations above and after giving opportunity to the assessee.
[Citation : 329 ITR 123]
