The ITO, Alappuzha V. Sri.Narayanan C.T., Alappuzha

ITA 102/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8612 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 10-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2015
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: C B M WARRIER

Judgement Text

ITA NO.102/COCH/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ITA NO.102/COCH/2015 (ASST YEAR :2009-10 ) THE INCOME TAX OFFICER, WARD-3, ALLEPPEY. SRI NARAYANAN C.T., P/O M/S. C.T. NARAYANAN & CO., GENERAL MERCHANTS & COMMISSION AGENTS, MARKET WARD, ALAPPUZHA-688 001. ( REVENUE APPELLANT) VS (ASSESSEE-RESPONDENT) PAN NO. ABDPT 7306E] ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SHRI K P GOPAKUMAR, SR DR DATE OF HEARING 10/05/2016 DATE OF PRONOUNCEMENT 24/05/2016 ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE REVENUE IS ARISING OUT OF THE OR DER OF THE LD. CIT(A)-V, KOCHI DATED 14/11/2014 FOR THE ASSESSMENT YEAR 2009 -10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS)-IV, KOCHI, IN SO FAR AS THE POINTS STATED BELOW ARE CONCERNED, IS OPPOSED TO LAW ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN DELETING RS.40,00,000/- WHICH WAS ADDED TO TOTAL INCOME ON T HE GROUND THAT THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE SOURC E FOR RS.40,00,000/-INVESTED BY HIM IN M/S. C.T.N. AGRO & COIR PVT. LTD. ITA NO.102/COCH/2015 2 3. THE LD. CIT(A) OUGHT NOT TO HAVE DELETED THE AD DITION BY ACCEPTING AN ENTIRELY DIFFERENT EXPLANATION MADE BY THE ASSESSEE THAT THE AMOUNT OF RS.40,00,000/- REPRESENTED ADVANCE FROM M/S. TWINKL E HOSPITALITY PVT. LTD. AND THAT THE AMOUNT WAS PAID DIRECTLY TO THE BANK BY TH E SAID COMPANY TOWARDS THE ASSESSEES LOAN LIABILITY. THIS EXPLANATION DO ES NOT ANSWER THE GROUND ON WHICH THE ADDITION WAS MADE BY THE ASSESSING OFFICE R. 4. THE LD. CIT(A) OUGHT TO HAVE NOTED THAT THOUGH T HE ASSESSEE CLAIMED THAT RS.40,00,000/- RECEIVED ON 6-1-2009 WAS ADVANCED TO M/S. CTN AGRO & COIR PVT. LTD., THIS PAYMENT IS NOT REFLECTED IN THE CAS H OUT-FLOW SIDE OF THE CASH FLOW STATEMENT SUBMITTED BEFORE THE ASSESSING OFFIC ER. THEREFORE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A SSESSEE ADVANCED THE AMOUNT TO M/S. C.T.N. AGRO & COIR PVT. LTD. FROM A SOURCE WHICH HE DID NOT DECLARE IN THE RETURN OF INCOME, CASH FLOW STATEMEN T AND NET WEALTH STATEMENT. 5. THAT THE ASSESSING OFFICER ACCEPTED THE EXPLANAT ION IN A SIMILAR CASE IN THE CASE OF SHRI N. SURESH KUMAR, ANOTHER SHAREHOLDER/D IRECTOR OF M/S. C.T.N. AGRO & COIR PVT. LTD. IS ALSO NOT A GROUND FOR THE CIT(A ) TO DELETE THE ADDITION IN THE PRESENT CASE. FOR THESE AND OTHER GROUNDS THAT MAY BE ADVANCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE POINTS MAY BE SET ASIDE AND THAT OF THE ASSES SING OFFICER MAY BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER TREATED THE PAYMENT OF RS.40,00,000/- TOWARDS UNSECURED LOANS BY M/S. T WINKLE HOSPITALITY PVT. LTD. AS THE INCOME OF THE ASSESSEE. THE LD. CIT(A) BY ORDE R DATED 14/11/2014 CANCELLED THE ASSESSMENT FOR THE REASON THAT THE LO AN WAS REPAID OUT OF THE PAYMENT RECEIVED FROM M/S. TWINKLE HOSPITALITY PVT. LTD. FOR THE PURCHASE OF SHARES OF M/S. CTN AGRO & COIR PVT. LTD. AS UNDER: CHEQUE NO. 490 051 DT 02/01/2009 (TWINKLE HOSPIT ALITY P L) RS. 20 LAKHS (SBI A/C) ITA NO.102/COCH/2015 3 CHEQUE NO. 914529 DT 02/01/2009 (SRI GAURAV GO ENKA) RS.5 LAKHS (SBI A/C) CHEQUE NO.7575132 DT 02/01/2009 (OM PRAKASH GOE NKA) RS.15 LAKHS (SBI A/C) 4. THE ABOVE AMOUNTS ARE OUT OF THE TOTAL AMOUNT RECEIVED BY SHRI C.T. NARAYANAN FOR THE SHARE TRANSFER, THE ASSESSMENT OF WHICH WAS COMPLETED IN THE ASSESSMENT YEAR 2010-11. THE FOLLOWING ARE THE AMOUNTS RECEIVED BY SRI C.T. NARAYANAN:- BY CHEQUE DT 06/01/2009 RS.20,00,000 (SBI A/C) BY CHEQUE DT 06/01/2009 RS. 5,00,000 (SBI A/C) BY CHEQUE DT 06/01/2009 RS.15,00,000 (SBI A/C) BY CHEQUE DT 26/12/2009 RS.24,50,000 (SBI A/C) BY CHEQUE DT 26/12/2009 RS.6,12,500 (SBI A/ C) BY CHEQUE DT 26/12/2009 RS.18,37,500 ( SBI A/C) BY CHEQUE DT. 15/03/2010 RS.10,00,000 (UBI A/C) BY CHEQUE DT 15/03/2010 RS.7,50,000 (UBI A /C) BY CHEQUE DT 15/03/2010 RS.2,50,000 (UBI A/C) TOTAL RS.1, 09,00,000 5. AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE, THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT FINDINGS OF T HE LD. CIT(A) ARE REPRODUCED HEREINBELOW:- 1.3 IT IS SEEN THAT SUM OF RS.40 LAKHS HAS BEEN A DDED AS ADVANCE RECEIVED FROM UNDISCLOSED SOURCES. IT HAS BEEN EXPLAINED DURING THE COURSE OF APPEAL ITA NO.102/COCH/2015 4 PROCEEDINGS THAT THE SAID AMOUNT WAS GIVEN BY TWINK LE HOSPITALITY PVT. LTD. TO THE ASSESSEE, AS A DIRECTOR OF CTN AGRO & COIR PVT. LTD ., AS ADVANCE, BUT INSTEAD, THE AMOUNT WAS DIRECTLY PAID TO THE BANK AGAINST THE LI ABILITY OF THE ASSESSEE TOWARDS BANK LOAN. IT MEANS, INSTEAD OF ADVANCING THE MONE Y TO THE ASSESSEE, AND THE ASSESSEE PAYS BACK THE LOAN TO THE BANK. THE PURCH ASER OF THE SHARE OF CTN AGRO & COIR PRIVATE LTD., I.E., M/S. TWINKLE HOSPITALITY PVT. LTD. HAS DIRECTLY DISCHARGED THE ASSESSEES LIABILITY TOWARDS THE BANK LOAN, BY PAYI NG THE AMOUNT OF RS.40 LAKHS DIRECTLY TO THE BANK WHICH HAS:- CHEQUE NO.490051 DATED 2-1-2009 (TWINKLE HOSP ITALITY P L) RS.20 LAKHS CHEQUE NO.914529 DATED 2-1-2009 SHRI GAURAV G OENKA RS.5 LAKHS. CHEQUE NO.7575132 DATED 2-1-2009 (OM PRAKAH G OENKA) RS. 15 LAKHS A) IT HAS ALSO BEEN SUBMITTED THAT THE COMPANY M/S . CTN AGRO & COIR PVT. LT5D. IS HAVING SIX DIRECTORS, WHO HAVE SOLD OUT THEIR SHARE S TO M/S. TWINKLE HOSPITALITY PVT. LTD., AND, ALL OF THEM ARE RELATED TO EACH OTHER. T HE LIABILITY TOWARDS BANK LOAN, WORKED OUT PROPORTIONATELY FOR EACH OF SUCH DIRECTO RS, WHILE EFFECTING THE SHARE TRANSFER; WAS DISCHARGED BY THE PURCHASER, BY MAKIN G DIRECT PAYMENT TO THE BANK. B) SHRI N. SURESH KUMAR IS ONE OF SUCH DIRECTOR IN WHOSE CASE, FOR THE ASSESSMENT YEAR 2009-10, ASSESSING OFFICER HAS ACCEPTED THE AS SESSEES CONTENTIONS AND, THE PROPOSAL FOR ADDITION OF RS.40 LAKHS WAS DROPPED. I T HAS BEEN CONTENDED BY THE APPELLANT THAT THE SAME STAND IS EQUALLY APPLICABLE TO THE CASE OF THE ASSESSEE ALSO, HENCE, THE ADDITION MADE IN THE HANDS OF THE ASSESSEE, SHOULD BE CANCELLED. C) I FIND FORCE IN THE CONTENTIONS OF THE ASSESSEE AND AFTER VERIFYING THE SAME FROM RECORDS, IT IS HELD THAT THE SOURCE OF THIS ADVANCE STANDS EXPLAINED. HENCE, THIS CANNOT BE TREATED AS AN ADVANCE FROM UNDISCLOSED SO URCES. THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE AND IT IS DELETED. THE APPEAL ON THIS GROUND IS ALLOWED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. IN THE CASE OF SHRI N. SURESH KUMAR, THE OTHER MEMBER OF T HE FAMILY WHO HAVE ALSO SOLD THE SHARES HAS RECEIVED RS.40,00,000/- BY CHEQUE DA TED 07/01/2009 FEDERAL BANK ITA NO.102/COCH/2015 5 BY CHEQUE NO. 490056. THE ASSESSING OFFICER PROPOS ED THE ASSESSMENT OF RS.40,00,000/- AS THE INCOME. AFTER CONSIDERING THE EXPLANATION THE ASSESSMENT WAS COMPLETED WITHOUT THE ADDITION OF RS.40,00,000/-. THE ORDER OF N.SURESH KUMAR AS ON 29/01/2014 ALONGWITH THE COPY OF THE EXPLANATION WAS GIVEN TO THE ASSESSING OFFICER WHICH IS PLACED ON RECORD. THE SAID AMOUNT WAS GIVEN BY M/S. TWINKLE HOSPITALITY (P) LTD. TO THE ASSESSEE AS A DIRECTOR OF CTN AGRO & COIR PVT. LTD. AS ADVANCE BUT INSTEAD, THE AMOUNT WAS DIRECTLY PAID T O THE BANK AGAINST THE LIABILITY OF THE ASSESSEE TOWARDS BANK LOAN WHICH MEANS THAT INSTEAD OF ADVANCING THE MONEY TO THE ASSESSEE, THE ASSESSEE PAID BACK THE L OAN TO THE BANK. THE PURCHASER OF THE SHARES OF M/S. CTN AGRO & COIR PVT . LTD., I.E., M/S. TWINKLE HOSPITALITY PVT. LTD. HAS DIRECTLY DISCHARGED THE ASSESSEES LI ABILITY TOWARDS THE BANK LOAN BY PAYING THE AMOUNT OF RS.40 LAKHS DIRECTLY TO THE BA NK AS PER THE DETAILS HEREINBELOW:- CHEQUE NO.490051 DATED 2-1-2009 (TWINKLE HOSP ITALITY P L) RS.20 LAKHS CHEQUE NO.914529 DATED 2-1-2009 SHRI GAURAV G OENKA RS.5 LAKHS. CHEQUE NO.7575132 DATED 2-1-2009 (OM PRAKAH G OENKA) RS. 15 LAKHS 7. SHRI N. SURESH KUMAR IS ONE OF SUCH DIRECTO R IN WHOSE CASE FOR THE ASSESSMENT YEAR 2009-10,, THE ASSESSING OFFICER HAD ACCEPTED T HE ASSESSEES CONTENTIONS AND THE PROPOSAL FOR ADDITION OF RS.40 LAKHS WAS DROPPE D AND ACCORDINGLY, IT WAS CONTENDED BY THE ASSESSEE THAT THE SAME STAND IS EQ UALLY APPLICABLE TO THE CASE OF THE ASSESSEE ALSO AND HENCE, THE ADDITION MADE I N THE HANDS OF THE ASSESSEE HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A). ACCORD INGLY, WE FIND FORCE IN THE ITA NO.102/COCH/2015 6 ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE AND TH E FINDING OF THE LD. CIT(A). ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE LD. CIT(A) WHO HAS PASSED A REASONED ORDER ON THIS ISSUE. THUS, ALL THE GROUND S OF THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24. 05.2016 SD/- SD/ - (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 24TH MAY, 2 016 GJ COPY TO: 1. SRI NARAYANAN C.T., P/O M/S. C.T. NARAYANAN & C O., GENERAL MERCHANTS & COMMISSION AGENTS, MARKET WARD, ALAPPUZHA-688 001. 2. THE INCOME TAX OFFICER, WARD-3, ALLEPPEY., 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. THE DR/ITAT, COCHIN BENCH. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN ITA NO.102/COCH/2015 7 1.DATE OF DICTATION : 12/05/2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED 18/05/2016 BEFORE THE DICTATING MEMBER OTHER MEMBER: 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER : 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. PS/PS : 6. DATE ON WHICH THE FILE GOES TO BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO ASSISTANT REGISTR AR 9. DATE OF DISPATCH OF THE ORDER: