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P.K. Narayanan Vs. the Assistant Commissioner of - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Cochin
Decided On
Judge
AppellantP.K. Narayanan
RespondentThe Assistant Commissioner of
Excerpt:
1. these three appeals by the assessee are directed against the orders of the cit(appeals)-i, kochi. originally these appeals were decided by this tribunal vide common order dated 28-11-1995. at the instance of the revenue, references were made to the hon'ble high court of kerala and the hon'ble high court disposed off the said references vide common judgment dated 17-9-2004 directing this tribunal to consider these appeals again taking into consideration the decisions of the jurisdictional high court in assessee's own case reported in 229 itr 596 and 238 itr 905. as per the directions of the hon'ble high court these appeals were posted for hearing. the only controversy, which is common in all these appeals, is regarding the inclusion of the income derived from the business of m/s......
Judgment:
1. These three appeals by the assessee are directed against the orders of the CIT(Appeals)-I, Kochi. Originally these appeals were decided by this Tribunal vide common order dated 28-11-1995. At the instance of the revenue, references were made to the Hon'ble High Court of Kerala and the Hon'ble High Court disposed off the said references vide common judgment dated 17-9-2004 directing this Tribunal to consider these appeals again taking into consideration the decisions of the jurisdictional High Court in assessee's own case reported in 229 ITR 596 and 238 ITR 905. As per the directions of the Hon'ble High Court these appeals were posted for hearing. The only controversy, which is common in all these appeals, is regarding the inclusion of the income derived from the business of M/s. Archana Jewellery in the hands of the assessee.

2. Briefly stated facts are as under: The assessee is an abkari contractor and is assessed in the status of Individual. There was a search action under Section 132 of the Income-tax Act, 1961, in the residential premises and business premises of the assessee on 29-01-1982. During the course of search action certain incriminating documents and books of accounts were seized by the search party. Based on the materials recovered in the said search, the Assessing Officer rejected: the income declared in the returns filed by the assesses and completed the assessment for the assessment years 1979-80 and 1980-81.

During the course of search no cash, jewellery or valuable article were found. As far as the assessment year 1979-80 is concerned, the assessee had filed the return of income declaring total income at Rs. 22,940/- from different sources like income from house property, own business in prawn fishing and share of profits in which he was partners. As far as the assessment year 1980-81 is concerned, the assessee had declared the income of Rs. 16,340/-. After the search under Section 132, the Assessing Officer rejected the income declared by the assessee in these two assessment years and made certain additions. The Assessing Officer also made addition in respect of income from M/s. Archana Jewellery on the reason that though the business of M/s. Archana Jewellery was in the name of one Shri A.N. Chellapan Achari, but in fact the real owner of the said business was the assessee. The matter reached by way of appeal to the Tribunal for the assessment year 1979-80 in which it was held that the assessee is the real owner of the business of M/s.

Archana Jewellery and that Shri A.N. Chellapan Achari was only' a name lender. As far as the quantum of appeal for the assessment year 1979-80 is concerned, it is true that reached finality and the said decision was followed by the first appellate authority and the Tribunal up to the assessment year 1985-86. Subsequently the Assessing Officer initiated penalty proceedings for the assessment years 1979-80 and 1980-81 under Section 271(1)(c)of the Income-tax Act, 1961, and levied the penalty. Assessee challenged the levy of penalty before the first appellate authority but the same was confirmed. Assessee challenged the impugned order of the CIT(Appeals) by way of second appeal before this Tribunal and this Tribunal allowed the appeals filed by the assessee and deleted the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act. Though in the quantum appeal the Tribunal was of the view that the assessee was the real owner of M/s. Archana Jewellery and Shri A.N. Chellapan Achari was only the ostensible owner, but as far as the penalty proceedings were concerned, the Tribunal arrived at a different conclusion and the findings of the Tribunal for coming to the different conclusions from that from the quantum of appeal are as under: 18.We have carefully considered this submission. The assessee in the paper book furnished before us has included a copy of the paper book furnished by the revenue before the Tribunal In the quantum appeal, the index of which is contained in page 125 of the paper book, extracted in para. 17 above. A Photostat copy of the letter dated 13-8-1982 from Bank of Cochin Ltd., to the Income-tax Officer, Special Circle, Emakulam, Cochin-16, is found at page 19 and it is as follows: Income-tax assessment of Sri A.N. Chellappan Achari- Your letter PA No. 16014-PROVIDE-0735 dated 7-8-1982- As required vide your letter cited, the following particulars regarding Sri A.N. Chellappan Achari, Archana Jewellery, MG Road, Ernakulam, are furnished below: Mr A.N. Chellappan Achari is the proprietory of M/s. Archana Jewellery, MG Road, Ernakulam. The party has availed an open cash credit facility from us in the name and style of Archana Jewellery.

The account is operated by Mr. A.N. Chellappan Achari, as proprietor.

The account is introduced by Mr. A.C. Mohan, Proprietor, Anupama Jewellery, Ernakulam.

The limit of the open cash credit facility sanctioned is Rs. 2 lakhs which is secured by hypothecation of stock-in-trade and equitable mortgage of real estate. In q978 when the advance was granted, It was also guaranteed by 19 persons namely (1) Mr. P.K. Narayanan, (2) Mr. A.s. Gangadharan, (3) Mr. T.A,. Premanandan, (4) Mr. K.A. Krishna Kumar, (5) Mr. P. Prakash, (6) Mr. K.K. Lokanathan, (7) Mr.

P.K. Kumar, (8) Mr. K.P. Baburajan, (9) Mr. P.T. Sankaranarayanan, (10) Mr. P.O. Dinesan, (11) Mr. C.R. Gopalan, (1-2) Mr. P.K. Sunil, (13) Mr. K.V. Harikrishnan, (14) Mr. K.R. Pushpangadan, (15) Mr.

K.P. Surendranathan, (16) Mrs. Sarojini Krishnan, (17) Mrs.

Bhanumathy Krishnan, (18) Mr. C.K. Valsan, (19) Mr. K.A. Venugopalan.

Also be noted that the present guarantor of the facility, that offered by the bank is Mr. P.K. Narayanan, Polakulath, Edappally, Cochin-24.

From a Photostat copy of another letter dated 20-8-1982 from Dank of Cochin Ltd., to the Income tax Officer, special Circle, Cochin-16, it is seen that the Bank by way of clarification, had stated that "in 1978 when the advance was granted, it was secured by equitable mortgage of real estate in addition to the guarantee of 19 persons as mentioned in our previous letter. Mr. K. Krishnan, Mrs.

Sarojini Krishnan, Thazhatheveetil, Kattoor P.O., Trichur Dt. and P.K. Narayanan, Polakulath, Edappally are the three persons, who offered property as security for the said advance. The property of Mr. & Mrs. T.K. Krishnan that held as a security is already released where it is approximately valued to 3.24 lakhs", (page 20 of the department's paper book = p. 147 of the assessee's paper book). In these communications from the bank, there is no mention that the Account No. CD-14 was opened and operated by the assessee, in the name of or for and on behalf of Archana Jewellery. On the other hand, the evidence is that the loan was granted to Sri Challeppan Achari of Archana Jewellery on the security of certain people. It is only in the statement of points furnished by the departmental representative that there is a mention "that the bank account of the business was originally in the assessee's name" (page 23 = p. 18 of the paper book). However, in a communication to the Inspecting Assistant Commissioner of Income-tax, under a copy to the assessee, there is a remark at para. 10(H) that enquiries showed that the bank account of the business in the Bank of Cochin was originally opened and operated by the assessee and the temporary overdrawals were allowed in the said account against personal guarantee. Neither the Income-tax Officer's order nor Inspecting Assistant Commissioner's order under Section 144B(4) of the I.T. Act, reveals what enquiries were made with the bank of Cochin, with whom they were made and what information was obtained in connection with what account. Only general observations were passed. In these orders there was no reference to the bank account No. CD-14 which is alleged to have been opened and operated by the assessee initially in the name of or on behalf of Archana Jewellery. The result was that the assessee could not effectively frame his defence before the authorities. The mention of this particular bank account No. CD-14 as having been opened and operated by the assessee appears to have been made only at the time of hearing before the Tribunal by the learned departmental representative. ' Copy of the communication from the Bank of Cochin regarding the operation of this particular bank account No. CD-14, if there was any, was not included in the list of papers furnished by the learned departmental representative before the Tribunal in the quantum appeal. However, the Tribunal has accepted the contention of the departmental representative on this issue. We do not find any material for this conclusion from the copies of the departmental paper book furnished at the time of quantum appeal. At this stage of the proceedings also, when the finding of the Tribunal on this is challenged by the assessee's counsel, the learned departmental representative has not furnished before us the material on the basis of which the Tribunal has reached the conclusion that account No. CD-14 was initially opened and operated by the assessee in the name of Archana Jewellery or on behalf of it. In the course of penalty proceedings no opportunity would appear to have been given to the assessee to controvert the above findings recorded. We, therefore, hold that no mileage can be made out of the findings of the Tribunal in the quantum proceedings as regards the opening and operation of the bank account No CD-14 by the assessee in so far as penalty proceedings are concerned. There is force in the contention of Sri Sarangan that there is failure of natural justice on this count.

19. The other circumstances pointed out by the Income-tax Officer and accepted by the Tribunal in the quantum appeal is the recovery of the unsigned lease agreement, a copy of which has been furnished at pages 138 to 141 of the paper book. No doubt, the lease agreement is purported to have been executed on 5-9-1978 by Sri Chellappan Achari residing with Shri P.K. Narayanan, for and on behalf of Shri P.K. Narayanan, aged 46, in favour of Sri A.G. Ramesh. The lease agreement is for the lease of property belonging to Shri Ramesh. It is on stamped paper. It was initialed or signed only by Shri Chellappan Achari. Shri Ramesh had not signed the document. Thus, it is an incomplete document, which has no validity in law. From the observations of the Income-tax Officer in the assessment order, it is seen that Shri Chellappan Achari was residing elsewhere and therefore not with the assessee, but the narration in the lease deed states that he was residing with the assessee. So the contents of the document at the very beginning is contrary to facts. The assessee in the sworn statement made at the time of search, had explained that he wanted to help Shri Chellappan Achari and Shri Ramesh would not lease out the property to him, the lease agreement was initially drafted in the manner in which it was found. This explanation was only rejected without any enquiries being made either with Shri Ramesh or with Shri Chellappan Achari. At any rate this incomplete document does not confer any right on the assessee over the business of Archana Jewellery nor does it have the effect that the jewellery business belonged to the assessee,. At the worst it can only create suspicion. But suspicion however great cannot take the place of proof.

20. Yet another circumstance that was relied on in the assessment proceedings to hold that the ad was the real owner of Archana Jewellery and Shri Chellappan Achari was only a benami was that there were monetary transactions between the assessee and Shri Chellappan Achari. These transactions are found to have been reflected in the books of the assessee. The loans obtained by Shri Chellappan Achari from the assessee and his wife etc., and the repayments thereof are found in the assessment records of Shri Chellappan Achari. In fact, the assessment of Shri Chellappan Achari of Archana Jewellery was made only after Scrutiny and upon depositions made by him before the Income-tax Officer, B-Ward, Ernakulam. Such assessment was made prior to the search. From the records it is seen that Shri Chellappan Achari did not bring any capital of his own but had started the business with heavy borrowings or guarantees from several persons including the assessee and his wife as can be seen from his deposition and also in the assessment records with the Income-tax Officer, B-Ward, Ernakulam.

The assessee had also stated that he, his wife and his firm have assisted Shri Chellappan Achari by granting loans etc., and such transactions are found in the assessment records of Shri Chellappan Achari also. Confirmation letters were also filed before the Income-tax Officer assessing Shri Chellappan Achari and the assessment was completed on that basis. Such being the case, without conducting any further investigation, the learned Income-tax Officer dealing with the case of the assessee, had come to a totally different conclusion on the basis of the same material that were before the officer having jurisdiction over Shri Chellappan Achari.

The only additional materials that were not before the officer assessing Sri Chellappan Achari are: (i) slips containing the details of valuation of stock and certain payments; The first two materials viz. the lease agreement and the papers containing valuation of stock, and payments etc., are not sufficient to point to the benami nature of the transactions. The payments are cheque payments of Archana Jewellery and the payees were not examined to indicate the complicity of the assessee. The books of accounts pertaining to Archana Jewellery were not found with the assessee. Nor the profit and loss account or balance-sheet of Archana Jewellery. The possession of papers relating to stock etc., have been properly explained by the assessee No worthwhile enquiry was made either with Shri Sathyan or Shri Ramesh or with Shri Chellappan Achari or with the parties to whom some payments were alleged to have been made. No cheque book belonging to Archana Jewellery - unused cheque leaves or signed cheque leaves were recovered from the possession of the assessee. No unexplained cash, jewellery, valuable article or thing was seized. It is seen from the records (page 146 of the paper book) that the account with Bank of Cochin was opened with the introduction by Shri A.C. Mohan of Anupama Jewellery. It is-not shown that Shri Mohan is a relative of the assessee. Nor Shri Mohan was examined. The guarantees were given by 19 persons including the assessee's. These 18 persons are not shown to be the assessee's relatives or employees. No enquiry was conducted with such persons. The licence stands in the name of Sri Chellappan Achari, being a goldsmith. The fact that the assessee had given guarantee or offered securities, for , the loans taken by Shri Chellappan Achari or that he had advanced loans to Shri Chellappan Achari can also be viewed as a normal attitude of a friendly person.

Therefore, we hold that even though the addition was sustained in the hands of the assessee with regard to the income from Archana Jewellery, the revenue has not discharged its onus that the business of Archana Jewellery really belonged to the assessee, even if these materials are taken into account cumulatively. For these reasons, we cancel the penalty on the income attributable to Archana Jewellery.

3. While deciding the present appeals, the Tribunal was of the opinion that the decision of the Tribunal in the appeal against the levy of penalty was based on appreciation of all the materials placed before it and submissions made before it, some of which were not available before the Tribunal when it decided the quantum appeal. Tribunal was of the further view that the Assessing Officer had not brought on record any new material or additional material to substantiate his view that the business of M/s. Archana Jewellery belong s to the assessee and not to Shri A.N. Chellapan Achari. Finally Tribunal followed its own decision in the penalty appeals for the assessment years 1979-80 and 80-81 and deleted the addition of income from M/s. Archana Jewellery in the hands of the assessee. At the instance of the revenue references were made to the Hon'ble High Court of Kerala under Section 256(1) of the Income-tax Act, 1961. It was noticed by the Hon'ble High Court that two different views have been taken by the Tribunal, one in the quantum appeal and another in the penalty appeal. It was further brought to the notice of the Hon'ble High Court that at the time when the matter was being dealt with by the Tribunal, references were pending before the Hon'ble High Court against the quantum of appeal and also with regard to the penalty. As far as references in the quantum appeal, the same were disposed off by the Hon'ble High Court vide judgment dated 10-6-1997 reported as P.K. Narayanan v. CIT 229 ITR 596. The Hon'ble High Court was pleased to dispose of the references in the appeals relating to the quantum saying that there are only questions of fact and no question of law arise thereby upholding the view taken by the Tribunal in the appeals elating to the quantum. As far as the references in the appeals relating to the penalty, the same was disposed off by the Hon'ble High Court vide judgment reported in GIT v. P.K. Narayanan 238 ITR 905. In those references it was held that the department has not discharged its burden to bring that there has been intentional suppression. After considering two different decisions in the assessee's own case, the Hon'ble High Court was of the opinion that the matter has to be examined by this Tribunal in the light of the said decisions and hence the Hon'ble High Court remitted...the matters to this Tribunal for fresh decision, in respect the assessment years 1986-87 to 1988-89.

4. We have heard Shri G. Sarangan, learned Counsel for the assessee and Smt. Beena Sarasan, learned departmental representative, for the revenue. The learned Counsel for the assessee as well as learned departmental representative has filed written arguments. We have given our thoughtful consideration to all the facts as well as the written submissions made by the parties. The short issue for our consideration, which is already stated hereinabove, is whether the income from M/s.

Archana Jewellery is assessable in the hands of the assessee. There was a search action in the residential as well as business premises of the assessee and this controversy for the first time arose in the assessment year 1979-80. It is relevant here to refer to the decision of the Hon'ble High Court of Kerala in assessee's own case for the assessment years 1979-80 and 1983-84. As far as the assessment year 1979-80 is concerned it become final since the assessee did not take up the matter under reference to the Hon'ble High Court and the said fact was stated by the assessee, before the Hon'ble High Court. The Tribunal followed the said decision in the assessment years 1980-81, 1981-82, 1982-83 and 1983-84. In respect of the references in the appeals relating to the assessment years 1980-81 and 1983-84 are concerned, the matters were taken up by way of references to the Hon'ble High Court on the issue whether the income from M/s. Archana Jewellery is assessable in the hands of the assessee. The Hon'ble High Court was of the opinion that the question referred for the decision as to whether the income from M/s. Archana Jewellery run by Shri A.N. Chellapan Achari can be assessed in the hands of the assessee which depend upon various primary facts and ultimate inference can be drawn from those primary facts. The Hon'ble High Court upheld the findings of the Tribunal that the business of M/s. Archana Jewellery in fact belongs to the assessee. The Hon'ble High Court further held that all the said questions were question of fact. The observations of the Hon'ble High Court can be stated are as under: As already stated, the Tribunal has found that Sri A.N. Chellappan Achari was a man of straw and that he did not have necessary funds to start a business of the magnitude of Archana Jewellery, that the room for conducting the business was taken by the assessee himself, that the initial ca-ital for the business was furnished by the assessee, his wife and rinse relations and the loans from the hanks were guaranteed by the assessee, his wife and close relations and later by the assessee himself, that the bank accounts were also operated by the assessee in the sense that he has deposited the money in the account of Archana Jewellery and also withdrawn huge amounts from the said accounts. Added to the above, the issue of slips and other documents relating to the transactions of purchase and sale of gold ornaments were also seized from the bed room of the assessee. The presumption under Section 132(4A) was also available to the Department and the burden is on the assessee to show that the slips and other documents seized from the residence of the assessee did not belong to him, which the assessee was not able to discharge properly.

The facts of the case would clearly show that the initial control and management and also the use of the funds for the business are with the assessee and that the assessee is the real owner of the business. Even though the Tribunal has not stated in so many words about the source of the business and also the beneficial enjoyment of the income from the business, the discussion and the findings of the Tribunal will clearly show that the Tribunal had in mind relevant considerations for determining the question as to the ownership of the business of Archana Jewellery and the various facts found by the Tribunal will clearly show that the initial capital, control and enjoyment of the business were with the assessee and it is as a result of the cumulative effect of the various facts found by the Tribunal the Tribunal has ultimately come to the finding that the business belonged to him. It cannot be said that the various materials considered by the Tribunal for arriving at the above finding are inadmissible in evidence or irrelevant materials. The fact that the Tribunal did not consider the holding of licence by Sri. A.N. Chellappan Achari, which is necessary for the conduct of jewellery business will not in any way affect the conclusion reached by the Tribunal. Sri A.N. Chellappan Achari has been introduced only for the purpose of enabling the assessee to start the business of Jewellery in the name of Archana Jewellery, for, under the provisions of the Gold (Control) Act, a licence Is required for the conduct of the said, business and thee assessee did not have a licence for the same. The fact that the business stands in the name of Chellappan Achari and that even the assessments were completed under the Income-tax Act, In respect of Archana Jewellery In the hands of Chellappan Achari ate irrelevant for determining the ownership of business.

In short the Hon'ble High Court affirmed the findings of the Tribunal on the fact that the assessee is the only real owner of M/s. Archana Jewellery and hence the income from M/s. Archana Jewellery should be assessed in the hands of the assessee.

5. As far as the matters relating to the levy of penalty for the, assessment years 1979-80 and 1980-81, at the instance of the revenue, following three questions were referred to the esteemed opinion of the Hon'ble High Court: (1) Whether, on the facts and in the circumstances of the case and also in the light of Explanation 1 to Section 271(1)(c) relied on by the assessing authority, the Tribunal is right in law and fact in casting the burden of proof on the Revenue? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the penalty levied in relation to the alleged income from (a) toddy shop, (b) Shilpy Theatres, (c) Archana Jewellery, and (d) minors' income, by proper application of law of onus and burden of proof and its discharge? (3) Whether, on the facts and in the circumstances of the case, is not the order of the Tribunal vitiated for not considering the case in the. light of Explanation 1 to Section 271(l(c)? As the Tribunal allowed the appeals filed by the assessee and deleted the penalty levied by the Assessing Officer and confirmed by the CIT(Appeals) under Section 271(1)(c) of the Income-tax Act, 1961, the said references were disposed off by the Hon'ble High Court, which is reported as CIT v. P.K. Narayanan 238 ITR 905 - deciding against the revenue upholding the findings of the Tribunal that the revenue has not proved that the business of M/s. Archana Jewellery belongs to the assessee. The relevant observations of the Hon'ble High Court on the issue of the treatment of income from M/s. Archana Jewellery are as under: Then comes the penalty imposed in respect of the income from Archana Jewellery. It is the case of the assessee that his nephew, namely, Sathyan, was an employee of Archana Jewellery, which was owned by Chellappan Achari; that the papers relating to Archana Jewellery were brought by Sathyan with him and that he left them in the bed room of the assessee, which were recovered there from during the search. A lease agreement purporting to have been executed in the name of Shri Chellappan Achari, the assessee and one A.G. Ramesh was recovered from the assessee's premises, besides other papers revealing purchase of 15134.40 grams of gold and certain receipts and disbursement of Rs. 6,11,293.97 by cheques. It is noteworthy that an assessment in regard to the business of Archana Jewellery had been completed by the Income-tax Officer, B Ward, Ernakulam, on September 18,1981. The contention of the assessee was that Chellappan Achari who carried on business of Archana Jewellery, desired to take the premises of Ramesh - a neighbour of the assessee - on rent and that since the latter wavered in relying on the former, the good offices of the assessee was utilized. The assessee contended that he being a neighbour intervened in the matter and got the lease agreement settled. Sathyan, the nephew of the assessee, was not examined by the Revenue. The Tribunal held that no adverse inference could be drawn simply on account of the monetary transactions, the assessee, admittedly, had with Chellappan Achari.

The Tribunal took note of the fact that Chellappan Achari was assessed in respect of Archana Jewellery business and, therefore, the Revenue could not turn around now and say that Chellappan Achari was binomial of the assessee. The licence to run the jewellery business was in the name of Chellappan Achari. No account books relating to this business were seized from the house of the assessee. On these facts, the Tribunal was right that the explanation of the assessee could not be said to be false or mala fide. Nor could it be said that the assessee failed to substantiate his explanation. The Tribunal clearly held that in view of the facts that Chellappan Achari was already assessed in respect of Archana Jewellery business and, therefore, the presumption arising under Section 132(4A) of the Act in favour of the Revenue, stood rebutted.

Since the assessment was already made in this behalf on Chellappan Achari and. since the case of the assessee that the seized documents were brought with him by Sathyan who w3as not examined by the Revenue, remains uncontroverted, the explanation of the assessee cannot be said to be false nor has it been so established by the Revenue; nor can it be said that the assessee was not able to substantiate his explanation, no penalty could be sustained under Explanation 1.

6. The main argument of the learned departmental representative Is that as far as the penalty proceedings are concerned, the Hon'ble High Court in its judgment reported in 230 ITR 905 has confined' itself to the sustainability or otherwise of penalty under Section 271(1)(c) oh the strength of Explanation (1) and therefore the said decision cannot be canvassed to undo the judgment of the Hon'ble High Court In respect of the quantum appeal reported in 229 ITR 596 which has become final. The further argument of the learned departmental representative is that the factual findings of the Hon'ble Tribunal in quantum appeal that Shri A.N. Chellapan Achari was the benamidar of the assessee has become final as the Hon'ble High Court has upheld the finding of the Tribunal in 229 ITR 596 and as the assessee has not challenged the said decision, the same has become final.

7. Per contra, Shri G. Sarangan, learned Senior counsel for the assessee vehemently submitted that if some of the facts were not brought to the notice of the Tribunal when the appeals relating to the quantum were heard, those facts were brought to the notice of the Tribunal at the time of hearing of the appeal relating to the penalty levied under Section 271(1)(c) of the Act. The learned Senior counsel further submitted that each assessment year is independent assessment year and it is well settled that the principles of res judicata is not applicable. The learned Counsel for the assessee relied on the decision of the Apex Court in the case of CIT v. Brij Lal Lohia & Mahabir Prasad Khemka 84 ITR 273(S.C.) and submitted that if the new facts has come to the light of the appellate authority, then the different conclusions can be arrived at from that of the one taken earlier. The learned Senior counsel also referred to the order of the Tribunal in ITA No.401/Coch/88 and 114/Coch/91 relating to the levy of penalty and submitted that the assessee's nephew Shri Satyan was in the employment of M/s. Archana Jewellery and he had entrusted the papers to him which were seized by the search party. He further argued that in spite of clear disclosure of this fact by the assessee, Shri Sathyan, was not examined by the Assessing Officer. He further argued that there were 19 guarantors to Shri A.N. Chellapan Achari when he started his jewellery business and it is not the case of the revenue, that the assessee was the only guarantor to Shri A.N. Chellapan Achary. Moreover, Shri A.N.Chellapan Achari is the neighbour of the assessee and nothing is wrong on the part of the assessee to help him which normally happens in the social relations. Merely because the assessee was the guarantor to Shri A.N. Chellapan Achari that cannot be a conclusive fact to prove that M/s. Archana Jewellery belongs to him and such conclusion itself is very erroneous one. The learned Senior counsel reiterated his arguments which were advanced before this Tribunal in ITA No. 401/Coch/88 and 114/Coch/91.

8. We find force in the argument of Shri G. Sarangan, Learned Senior counsel, for the assessee. From the perusal of the order of this Tribunal in ITA No. 401/Coch/88 and 114/Coch/91 dated 21-9-1993, we find that different facts were brought to the notice of this Tribunal.

More particularly a reference can be made to the letter of the bank of Cochin dated 13-8-1982 which is reproduced at page 22 of the said order. The said letter is sent by the Bank as a reply to the Assessing Officer's query regarding the operation of the bank account relating to M/s. Archana Jewellery. This fact has not considered at all while deciding the quantum appeal. In the said letter, bank has mentioned the names of 19 persons who remained guarantors to Shri A.N. Chellapan Achari. Though the learned departmental representative submitted that the decision of the Hon'ble High Court reported in 238 ITR 905 is confined to Explanation (1) to Section 271(1)(c) but ultimately the Explanation is a rule of evidence and that puts the burden on the assessee to offer a proper explanation in respect of any facts to the computation of the total income to the Assessing Officer. Ultimately it is a fact that by way of explanation which is to be put before the assessing authority whether that fact is correct or not that is to be decided by the assessing authority or the appellate authority. In the appeals relating to the penalty proceedings on the basis of the new facts this Tribunal came to the conclusion that it is not proved that the business of M/s. Archana Jewellery in fact belonged to the assessee. In our opinion the facts, which has been accepted by the Tribunal, as is correct explanation, cannot again be said that for the purpose of quantum appeal those are not the true facts.

9. Another question remains before us is if in the assessment year 1979 80 and subsequent assessment years if it is held that business of M/s.

Archana Jewellery in fact belongs to the assessee, whether the said' decision is binding even if the facts had come to the light subsequently. It is well settled principle that it is open to the assessee to raise different contentions or to repeat the same contentions in the succeeding year without the bar of estoppel or res judicata though in a previous conduct or admission to the form of a piece of evidence to be considered.

10. In the case of CIT v. Brij Lal Lohia & Mahabir Prasad Khemka (supra) the question for the consideration was whether the gifts, which had been held to be none genuine in an earlier year were genuine gifts on the basis of additional evidence, adduced by the assessee and after taking into consideration the decision rendered by the Tribunal in the previous proceedings, the Tribunal came to the conclusion that the gifts in question were genuine gifts. Merely because different view is, taken in the subsequent proceedings, it cannot be said that it was an erroneous view. The Hon'ble Supreme Court held the fact that in the earlier proceedings the Tribunal took a different view that those gift deeds is not a conclusive circumstance, the decision of the Tribunal reached in those proceedings did not operate is res judicata. In our opinion the said principles are equally applicable to the facts of the present appeals. We, therefore, following the reasons stated in the order of this Tribunal in ITA No. 401/Coch/88 and 114/Coch/91 hold that the income from M/s. Archana Jewellery cannot be assessed in the hands of the assessee. we, therefore, set aside the orders of the CIT(Appeals) for the assessment years 1986-87 to 1988-89 and delete the addition made in respect of the income from M/s. Archana Jewellery, in the hands of the assessee.


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