R. BHARATHAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS appeal is preferred against the order in ITA 782/Coch/1995, dt. 5th April, 2000. Assessee is an abkari contractor. A search was conducted in his residential and business premises on 15th March, 1985 by IT Department. Materials recovered would indicate that the assessee was carrying on abkari business in Thiruvananthapuram and Kazhakuttam ranges which was not disclosed. Assessee gave a statement to the effect that one Krishna Naidu and Sukumaran were the licencees of the business at Kazhakuttam range. Further it was also stated that the assessee got the business changed in the name of one Prakash after paying an amount of Rs. 6,50,000. The business at Thiruvananthapuram range was bid by Prakash. Assessee was conducting that business on the basis of a power of attorney executed by Prakash. For the asst. yr. 1985 -86 assessee had filed return of income admitting a loss of Rs. 20,91,546. He did not file a return showing the income from the business conducted at Kazhakuttam range. Assessing authority, therefore, computed the income from those ranges at Rs. 19,12,276. Assessee was served with a letter on 11th March, 1988 proposing to add that amount in the final assessment for the year 1985 -86. Assessee did not file any objection to the said proposal. Assessing authority, therefore, proceeded to finalise the assessment on a total income of Rs. 94,53,270 including the income from Kazhakuttam and Thiruvananthapuram ranges which was estimated at Rs. 19,12,270. Aggrieved by the said order, assessee took up the matter in appeal before CIT(A). CIT(A) confirmed the assessments but allowed a reduction of Rs. 7,37,520 in computing the income from business in Thiruvananthapuram and Kazhakuttam ranges taking the sale price of arrack at Rs. 36 per litre as against Rs. 40. Assessee further took up the matter before the Tribunal challenging the fixation of income from business in Kazhakuttam and Thiruvananthapuram ranges. Further he has also raised a plea that without examining Sri Prakash, the ownership to the business cannot be established. Tribunal then set aside the decision of CIT(A), Thiruvananthapuram with regard to the income from Kazhakuttam and Thiruvananthapuram ranges and directed the assessing authorities to examine Sri Prakash and such other persons as may be necessary to decide the issue in accordance with law. Assessing authority passed yet another order on 30th March, 1995 holding that no reduction can be given in respect of that business as Prakash could not be examined in compliance with the directions of the Tribunal. Matter was again taken up by the assessee before CIT(A) who dismissed the same. There was a further appeal to the Tribunal, which was also dismissed. Aggrieved by the same this appeal has been preferred.

(2.) HEARD counsel on either side. This is a case where assessee's residential and business premises were searched under Section 132 of the IT Act and recovered various materials. Statements on oath were recorded from several persons connected with the assessee's business, one of whom was Sri S. Prakash. Prakash had executed two power of attorneys in the name of the assessee. Assessee was running the arrack shops in Thiruvananthapuram and Kazhakuttam ranges under the power of attorney given by Prakash. From the power of attorney it is clear that for the arrack and toddy shops in the above mentioned ranges, Sri Prakash had made the required deposit with the Government out of the funds given by the assessee. Facts also would indicate that shops have not been actually bid by Prakash. Assessee had stated that the licences were originally in the name of one Krishnan Nadar and Sukumaran and that they did not have the financial capacity to run the shops of that range and assessee got the shops transferred in the name of Prakash after paying Rs. 6,50,000. Facts would indicate that money was given by the assessee. Further, it is also submitted that Prakash was his employee only. In fact, assessee was running the shop for many years. This being the factual situation if assessee wanted to establish the same he should have examined Prakash. After saying that Prakash was not available, no evidence was produced by the assessee to show otherwise. That being the factual situation, we find no reason to interfere with the orders passed by the Tribunal and the authorities below.