Kumari Sumi Jabbar(Rep by Mrs.Asuma Jabbar), Trivandrum V. The ITO, Trivandrum

CO 47/COCH/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0335 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-02-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Keywords: Unexplained cash credit; Gift
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 466/COCH/2014 & C.O. NO. 47/COCH/2014 ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER, WARD- 1(3), TRIVANDRUM. VS. KUMARI SUMI JABBAR, A.J. HOSPITAL, KAZHAKOOTTAM, THIRUVANANTHAPURAM-695 582. [PAN: AIKPJ 3231C] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SHRI K.K.JOHN, SR.DR ASSESSEE BY NONE-APPLICATION FILED FOR HEARING ON MERIT. DATE OF HEARING 05/02/2015 DATE OF PRONOUNCEMENT 12/02/2015 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 28-08 -2014 PASSED BY THE CIT(A), TRIVANDRUM FOR THE ASSESSMENT YEAR 2008-09. 2. INSPITE OF SERVICE OF HEARING NOTICE, NONE APPEA RED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT LETTER WAS FILED BEFOR E THIS TRIBUNAL. HOWEVER, THE ASSESSEE HAS FILED A LETTER DATED 13-01-2015 RE QUESTING THE TRIBUNAL TO PASS THE ORDER BASED ON MERIT AFTER CONSIDERING THE CROS S OBJECTION. I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 2 3. THE FIRST GROUND RAISED BY THE REVENUE IS WITH R EGARD TO DELETION OF ADDITION OF RS.9 LAKHS OUT OF RS. 10 LAKHS LUMPSUM ADDITION MADE BY THE ASSESSING OFFICER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 08/09/2008 RETURNING INCOME OF RS.2540/-. SUBSEQUENTLY, ASSESSMENT WAS C OMPLETED U/S. 143(3) ON 29/12/2010 DETERMINING THE TOTAL INCOME AT RS.29,76 ,950/- AND LUMP SUM ADDITION OF RS.10,00,000/- WAS MADE SINCE THE ASSES SEE HAD NOT PRODUCED BILLS AND VOUCHERS OR ANY SUPPORTING DOCUMENTS FOR THE EX PENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT FOR VERIFICATION AND ANOTHER ADDIT ION OF RS.19,74,404/- WAS MADE U/S. 68 OF THE I.T. ACT AS THE ASSESSEE AGAIN HAD FAILED TO OFFER EXPLANATION ABOUT THE NATURE AND SOURCE FOR THE CREDITS APPEARI NG IN THE BALANCE SHEET UNDER THE HEAD SUNDRY CREDITORS WHILE RELYING ON THE DECI SION OF THE SUPREME COURT IN THE CASE OF CIT VS. P.MOHANAKALA REPORTED IN 161 TA XMAN 169. 5. BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE IS A MINOR GIRL OF 11 YEARS OLD AND AFTER HER FATHERS DEATH, SHE BELIEVE D THAT HER AUDITOR WOULD BE TAKING CARE OF HER TAX MATTERS AND ONLY AFTER THE A SSESSMENT ORDER WAS RECEIVED, SHE CAME TO KNOW THAT HER REPRESENTATIVE WAS ILL AN D HAD NOT PRESENTED HER CASE PROPERLY. THE ASSESSEE SUBMITTED THAT DUE TO REASO NS BEYOND HER CONTROL, THE I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 3 ASSESSEE AND HER MOTHER, THE LEGAL REPRESENTATIVE O F THE ASSESSEE COULD NOT PRODUCE THE CONFIRMATION LETTERS FROM THE CREDITORS AND ALL THE CLAIMS MADE IN THE RETURN WERE RIGHTLY SUPPORTED BY BILLS AND VOUCHERS . 6. THE CIT(A) FOUND THAT THE EXPENSES DEBITED IN TH E PROFIT AND LOSS ACCOUNT WERE ALL PROPERLY VOUCHED AND THERE WAS NO INSTANCE OF DEFAULT. ACCORDING TO THE CIT(A), THE EXPENSES WERE DULY SUPPORTED BY BIL LS AND VOUCHERS. HENCE, THE CIT(A) WAS OF THE VIEW THAT THE ADDITION SHOULD NOT HAVE BEEN MADE. HOWEVER, CONSIDERING THE LAPSE ON THE PART OF THE ASSESSEE I N RESPONDING TO THE HEARING FIXED ON 27/12/2010 AND ALSO THE CIRCUMSTANCES UNDE R WHICH LUMP SUM ADDITION WAS MADE, THE CIT(A) RESTRICTED THE ADDITION TO RS. 1 LAKH WHICH IS JUST BELOW 0.5% OF THE TOTAL EXPENDITURE DEBITED MINUS DEPRECI ATION TO WHICH THE ASSESSEE IS ENTITLED FOR. IN VIEW OF THE ABOVE, THE ADDITIO N OF RS.10,00,000/- WAS RESTRICTED TO RS.1,00,000/-. AGAINST THIS, THE REV ENUE IS IN APPEAL BEFORE US. THE ASSESSEE FILED CROSS OBJECTION IN C.O. NO.47/CO CH/2014 SUPPORTING THE ORDER OF THE CIT(A) ON THIS ISSUE. 7. THE LD. DR SUBMITTED THAT THE ASSESSEE WAS NOT C OOPERATING WITH THE LOWER AUTHORITIES IN NOT PRODUCING THE REQUISITE DO CUMENTS IN SUPPORT OF THE CLAIM OF THE ASSESSEE. HENCE, THE ASSESSING OFFICE R HAD NO OTHER OPTION BUT TO MAKE ADHOC ADDITION OF RS.10 LAKHS. HOWEVER, THE C IT(A) ADMITTED CERTAIN FRESH EVIDENCE IN THE COURSE OF THE APPELLATE PROCEEDINGS AND WITHOUT CALLING FOR THE I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 4 REMAND REPORT FROM THE ASSESSING OFFICER, HE DECIDE D THE ISSUE AND HENCE, THERE IS VIOLATION OF PROVISIONS OF RULE 46A OF THE I.T. RULES. 8. AFTER HEARING THE LD. DR, IN OUR OPINION, ADMITT EDLY IN THIS CASE, THE ASSESSEE WAS NOT COOPERATING WITH THE ASSESSING OFF ICER INSPITE OF GIVING HEARING OPPORTUNITIES TO THE ASSESSEE ON VARIOUS DATES, NAM ELY, 09/11/2009, 11/06/2010, 29/09/2010 AND 08/11/2010. FINALLY, SU MMONS WAS ISSUED TO THE ASSESSEE VIDE NOTICE DATED 02/12/2010 FOR HER PERSO NAL APPEARANCE BEFORE THE ASSESSING OFFICER ON 10/12/2010. HOWEVER, THERE WA S NEITHER ANY APPEARANCE NOR ANY REPLY FROM THE ASSESSEE. ON 14/12/2010, TH E ASSESSEES AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE ASSESSING OFFICE R AND FILED COPIES OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE PERIOD E NDED 31/03/2008 AND THE ASSESSING OFFICER ASKED FOR VOUCHERS AND BILLS FOR EXPENSES CLAIMED AND BANK STATEMENTS FOR WHICH THE ASSESSEE ASKED FOR TIME. ACCORDINGLY, THE CASE WAS ADJOURNED TO 17/12/2010. ONCE AGAIN ON 17/12/2010, NONE APPEARED BEFORE THE ASSESSING OFFICER ON THAT DATE ALSO. HOWEVER, THE ASSESSEES AUTHORIZED REPRESENTATIVE APPEARED ON 23/12/2010 AND THE ASSES SING OFFICER REQUESTED THE AUTHORIZED REPRESENTATIVE TO FILE CONFIRMATION LETT ERS FROM THE CREDITORS AND THE CASE WAS ADJOURNED TO 27/12/2010. HOWEVER, THERE W AS NO RESPONSE FROM THE ASSESSEE. HENCE, THE ASSESSING OFFICER MADE THE LUM PSUM ADDITION OF RS.10 LAKHS. I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 5 8.1 BEFORE THE CIT(A), THE ASSESSEE PRODUCED LEDGER , CASH BOOK, BANK BOOK AND OTHER REGISTERS ALONG WITH THE BILLS AND VOUCHE RS FOR THE YEAR UNDER CONSIDERATION FOR VERIFICATION. THE CIT(A) RANDOML Y VERIFIED THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT AND FOUND TH AT THEY WERE ALL PROPERLY VOUCHED AND THERE WAS NO INSTANCE OF DEFAULT. ACCO RDING TO THE CIT(A), THE EXPENSES WERE DULY SUPPORTED BY BILLS AND VOUCHERS. AT THE SAME TIME THE CIT(A) SUSTAINED THE ADDITION OF RS.1 LAKH OUT OF T HE TOTAL EXPENDITURE OF RS.10 LAKHS. THIS FINDING OF THE CIT(A) IS CONTRADICTORY IN NATURE. HE SHOULD HAVE PINPOINTED THE EXPENSES WHICH ARE NOT SUPPORTED BY VOUCHERS AND BILLS AND THEN SUSTAIN THE ADDITION TO THE EXTENT OF EXPENDITURE U NSUPPORTED BY BILLS AND VOUCHERS. HENCE, IN OUR OPINION, IT IS PROPER TO R EMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION WITH A DIRECTION TO THE ASSESSEE TO PLACE NECESSARY BILLS AND VOUCHERS IN SUPPORT OF TH E EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. THIS GROUND OF TH E REVENUE AS WELL AS THE CROSS OBJECTION IS ALLOWED FOR STATISTICAL PURPOSES. 9. THE NEXT GROUND IS WITH REGARD TO DELETION OF AD DITION OF RS.19,74,404/- BY INVOKING THE PROVISIONS OF SECTION 68 OF THE I.T . ACT. 10. THE BRIEF FACTS OF THE CASE ARE THAT A SUM OF R S.19,74,404/- WAS SHOWN AS SUNDRY CREDITORS FOR WHICH THE ASSESSING OFFICER CA LLED FOR CONFIRMATION LETTERS I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 6 FROM THE ASSESSEE. HOWEVER, THE ASSESSEE HAVING FA ILED TO FILE THE CONFIRMATION LETTERS WITHIN THE STIPULATED TIME, THE ASSESSING O FFICER INVOKED THE PROVISIONS OF SECTION 68 AND BROUGHT TO TAX THE SAID AMOUNT OF RS .19,74,404/- TREATING THE SAME AS UNEXPLAINED CASH CREDITS. FOR THIS, HE RELI ED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. P. MOHANAKALA REPORTED IN 161 TAXMAN 169. 11. BEFORE THE CIT(A), THE ASSESSEES AUTHORIZED RE PRESENTATIVE STATED THAT THESE SUNDRY CREDITORS WERE NOTHING BUT CONCERNS FR OM WHERE MEDICINES AND CONSUMABLES WERE PURCHASED BY THE ASSESSEE WHO WAS RUNNING A SMALL SIZE HOSPITAL. IT WAS SUBMITTED THAT THEY WERE TRADE CR EDITORS AND THE AMOUNT SHOWN AS OUTSTANDING WAS THE AMOUNT REMAINING PAYABLE AT THE END OF THE YEAR ANDS STILL THEY CONTINUED TO BE THEIR SUPPLIERS OF MEDIC INES, ETC. IT WAS ALSO SUBMITTED THAT DUE TO REASONS BEYOND THEIR CONTROL, THE ASSES SEE COULD NOT PRODUCE THE CONFIRMATION LETTERS FOR VERIFICATION OF THE ASSESS ING OFFICER WITHIN THE STIPULATED TIME. IT WAS SUBMITTED THAT THE PROVISIONS OF SECTI ON 68 CANNOT BE CONSIDERED AGAINST REGULAR TRADE CREDITORS AND THEREBY SHOULD NOT HAVE BEEN INVOKED. 12. BEFORE THE CIT(A), THE ASSESSEES AUTHORIZED RE PRESENTATIVE FURNISHED THE LIST OF ACCOUNT COPIES OF 10 SUNDRY CREDITORS WHOSE OUTSTANDING BALANCE WAS OVER RS.50,000/- FOR VERIFICATION. THE CIT(A) FOUND THA T THE TRANSACTIONS WERE DULY SUPPORTED BY BILLS AND VOUCHERS AND THE PAYMENTS WE RE MADE ONLY BY CHEQUES I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 7 AND WHAT WAS NOT PAID AT THE END OF THE YEAR ALONE WAS SHOWN AS OUTSTANDING WHICH THE ASSESSING OFFICER HAD WRONGLY TREATED AS CASH CREDITS. ACCORDING TO THE CIT(A), SUCH OUTSTANDING BALANCE SHOULD NOT HAV E BEEN CONSIDERED BY THE ASSESSING OFFICER FOR INVOKING THE PROVISIONS OF SE CTION 68. THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER SHOULD HAVE CARRIED OUT ENQUIRY INDEPENDENTLY INSTEAD OF ASKING THE ASSESSEE TO FILE THE CONFIRMATION LET TERS MORE PARTICULARLY WHEN THE ASSESSEE CLAIMED THAT THEY WERE THEIR TRADE CREDITO RS. THE CIT(A) OBSERVED THAT THE DECISION OF THE SUPREME COURT CITED SUPRA IS NO T APPLICABLE TO THE ASSESSEES CASE AS THE SAID DECISION WAS NOT ON TRADE CREDITOR S BUT ON GIFT RECEIVED FROM NRI. ACCORDINGLY, THE CIT(A) HELD THAT THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION U/S. 68 OF THE I.T. ACT AND DEL ETED THE ADDITION OF RS.19,74,404/-. AGAINST THE DELETION OF ADDITION, T HE REVENUE IS IN APPEAL BEFORE US. THE CROSS OBJECTION FILED BY THE ASSESSEE IS I N SUPPORT OF THE ORDER OF THE CIT(A). 13. WE HAVE HEARD THE LD. DR. THE FINDING GIVEN BY THE CIT(A) IS NOT PROPER. THE PROVISIONS OF SEC. 68 ARE ALSO APPLICABLE TO TR ADE CREDITS. WHENEVER ANY CREDIT APPEAR IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE IN THE RELEVANT ASSESSMENT YEAR IT IS INCUMBENT UPON THE ASSESSEE T O PLACE NECESSARY EVIDENCE SO AS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS. BEING SO, WITHOUT SATISFYING T HE ABOVE INGREDIENTS, THE CIT(A) OBSERVED THAT THE PROVISIONS OF SEC. 68 ARE NOT APPLICABLE TO THE TRADE I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 8 CREDITS. IN OUR OPINION, IT IS PROPER TO REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS. WITH THIS OBSERVATION, WE REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. THIS GROUND IN REVENUE APPEAL IS PA RTLY ALLOWED AND THE GROUND IN CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISS ED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES PRONOUNCED IN THE OPEN COURT ON 12-02-2015 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 12TH FEBRUARY, 2015 GJ COPY TO: 1. KUMARI SUMI JABBAR, A.J. HOSPITAL, KAZHAKOOTTAM, THIRUVANANTHAPURAM-695 582. 2. THE INCOME TAX OFFICER, WARD-1(3), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), TRIVAND RUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN I.T.A. NO.466/COCH/2014 & C.O. NO.47/COCH/2014 9