Anoj Jacob Cheeran, Trichur V. ITO, Trichur

ITA 117/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64755 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEEN
• Assessee Lawyers: C V VARGHESE
• Keywords: Unexplained investment; Principle of natural justice; Peak credit

Judgement Text

1 ITA NO. 117/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 117/COCH/2011 (ASSESSMENT YEAR 2007-08) SHRI ANOJ JACOB CHEERAN VS THE ITO, WD.2(1) 135, NEHRU NAGAR, KURIACHIRA THRISSUR THRISSUR PAN : ABFPC1314F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.V. VARGHESE RESPONDENT BY : SHRI S PRAVEEN DATE OF HEARING : 21-08-2012 DATE OF PRONOUNCEMENT : 24-08-2012 O R D E R BEING AGGRIEVED BY THE ORDER OF COMMISSIONER OF IN COME-TAX(A) DATED 22- 11-2010 FOR THE ASSESSMENT YEAR 2007-08, THE TAXPAYER IS CHALLENGING THE CORRECTNESS OF THE ORDER BEFORE THIS TRIBUNAL. 2. THE ONLY GRIEVANCE OF THE TAXPAYER IS WITH REGAR D TO THE ADDITION OF RS.39,63,940 AS INVESTMENT FROM UNEXPLAINED SOURCES . 3. SHRI C.V. VARGHESE, THE LD.REPRESENTATIVE FOR TH E TAXPAYER SUBMITTED THAT THE TAXPAYER INVESTED IN MUTUAL FUNDS ALONG WITH HI S WIFE. THE ASSESSING AUTHORITY, AFTER RECEIVING INFORMATION FROM ANNUAL INFORMATION RETURN (AIR) 2 ITA NO. 117/COCH/2011 ISSUED NOTICE TO THE TAXPAYER WITHOUT FURNISHING TH E DETAILS RECEIVED FROM THE AIR. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE , THE TAXPAYER HAD NO OCCASION TO OBJECT TO THE INFORMATION SAID TO BE RECEIVED BY THE ASSESSING AUTHORITY FROM AIR. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE TAXPAYER CLAIMED BEFORE THE LOWER AUTHORITIES THAT THE PEAK CREDIT MAY BE CO NSIDERED FOR ADDITION, IF AT ALL ANY ADDITION IS WARRANTED. THE LOWER AUTHORITY REJ ECTED THE CLAIM OF THE TAXPAYER FOR ADDITION OF PEAK CREDIT ON THE GROUND THAT THE T AXPAYER HAS NOT FILED ANY CASH FLOW STATEMENT. THE LD.REPRESENTATIVE SUBMITTED TH AT THE TAXPAYER HAS NO KNOWLEDGE OF AIR, THEREFORE, THE MATTER MAY BE REMAN DED BACK TO THE FILE OF THE ASSESSING AUTHORITY FOR RE-CONSIDERATION AFTER GIVIN G AN OPPORTUNITY TO THE TAXPAYER WITH REGARD TO THE INFORMATION RECEIVED FR OM AIR. THE LD.REPRESENTATIVE FOR THE TAXPAYER HAS PLACED HIS RELIANCE ON THE DEC ISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN SHRI S GANESH VS A.C.I.T. (2011) 5 TAXCORP (A.T.) 24215 (MUM), A COPY OF WHICH IS AVAILABLE AT PAPER BOOK AT PAGE 31 AS ANNEXURE VI. 4. ON THE CONTRARY, SHRI S PRAVEEN, THE LD.DR SUBMI TTED THAT THE TAXPAYER HAS FILED THE RETURN OF INCOME ELECTRONICALLY DISCLOSIN G A TOTAL INCOME OF RS.3,39,620. THE ASSESSING AUTHORITY RECEIVED INFORMATION FROM A IR WITH REGARD TO INVESTMENT OF RS. 50,63,940 IN THE MUTUAL FUND. THE ASSESSING AUTHORITY SPECIFICALLY ASKED FOR SOURCE OF DEPOSIT IN THE BANKS AND THE INVESTMEN T. THE TAXPAYER HAS NOT EXPLAINED THE SOURCE OF INVESTMENT IN THE BANK WHICH RESULTED UNEXPLAINED INVESTMENT IN THE MUTUAL FUNDS TO THE EXTENT OF RS. 39,63,940. THE LD.DR FURTHER POINTED OUT THAT THE ASSESSEE HAS NOT FILED ANY EXP LANATION BEFORE THE ASSESSING AUTHORITY OR BEFORE THE FIRST APPELLATE AUTHORITY T O EXPLAIN THE SOURCE OF INCOME. THE TAXPAYER HAS NOT FILED ANY CASH FLOW STATEMENT TO EXPLAIN THE SPECIFIC SOURCES FOR EACH INVESTMENT MADE IN THE MUTUAL FUND. IN TH E ABSENCE OF ANY MATERIAL THE LOWER AUTHORITY CONFIRMED THE ADDITION MADE BY THE ASSESSING AUTHORITY. THE 3 ITA NO. 117/COCH/2011 ISSUE OF PEAK CREDIT WAS RAISED BY THE TAXPAYER BY W AY OF ADDITIONAL GROUND BEFORE THE LOWER AUTHORITY. THE LOWER AUTHORITY FO UND THAT THE ASSESSEE HAS NOT EXPLAINED THE INVESTMENT IN THE MUTUAL FUND WITH A CASH FLOW STATEMENT. THEREFORE, THE FIRST APPELLATE AUTHORITY HAS RIGHTL Y CONFIRMED THE ADDITION. 5. RIVAL CONTENTIONS WERE CONSIDERED IN THE LIGHT O F THE MATERIAL AVAILABLE ON RECORD. THE FIRST CONTENTION OF THE LD.REPRESENTAT IVE FOR THE TAXPAYER IS THAT THE INFORMATION RECEIVED BY THE ASSESSING AUTHORITY FRO M THE AIR WAS NOT FURNISHED TO THE TAXPAYER, THEREFORE, HE HAD NO OCCASION TO E XPLAIN THE INFORMATION SAID TO BE RECEIVED BY THE ASSESSING AUTHORITY. THE NEXT C ONTENTION OF THE LD.REPRESENTATIVE FOR THE TAXPAYER IS THAT THE CONC EPT OF PEAK CREDIT SHALL BE ACCEPTED. THE PRINCIPLES OF NATURAL JUSTICE REQUIR ES THAT WHENEVER AN INFORMATION IS RECEIVED BY THE TAXING AUTHORITY SUCH INFORMATIO N SHALL BE FURNISHED TO THE TAXPAYER BEFORE PLACING ANY RELIANCE ON SUCH INFORM ATION FOR LEVYING TAX. THE MATTER WOULD BE ENTIRELY DIFFERENT IF THE INFORMATI ON RECEIVED BY THE TAXING AUTHORITY WAS NOT RELIED UPON FOR LEVYING TAX. IN THIS CASE, THE TAXING AUTHORITY CALLED FOR EXPLANATION WITH REGARD TO THE INVESTMEN T IN THE MUTUAL FUND AND THE DETAILS OF BANK ACCOUNTS AFTER RECEIVING INFORMATION FROM AIR. IT IS NOT THE CASE OF THE TAXING AUTHORITY THAT THE COPY OF THE INFORMATI ON RECEIVED FROM AIR WAS FURNISHED TO THE TAXPAYER WHILE CALLING FOR EXPLANA TION WITH REGARD TO THE INVESTMENT MADE IN THE MUTUAL FUND. IN THESE CIRCU MSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COPY OF THE AIR SHA LL BE FURNISHED TO THE TAXPAYER BY THE TAXING AUTHORITY SINCE THE TAXING AUTHORITY HAS PLACED RELIANCE ON SUCH INFORMATION. IN THE CASE BEFORE THIS TRIBUNAL NO M ATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE INFORMATION RECEIVED BY THE AIR WA S FURNISHED TO THE TAXPAYER. THEREFORE, THERE IS A CLEAR VIOLATION OF THE PRINCI PLES OF NATURAL JUSTICE. ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS 4 ITA NO. 117/COCH/2011 REMITTED BACK TO THE FILE OF THE ASSESSING AUTHORITY . THE ASSESSING AUTHORITY SHALL FURNISH A COPY OF THE INFORMATION SAID TO BE RECEIV ED FROM AIR TO THE TAXPAYER AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE TAXPAYER. IT IS MADE CLEAR THAT THIS TRIBUNAL IS NOT EXPRESSING ANY OPINION ON MERIT. THE TAXING AUTHORITY SHALL E XAMINE THE MATERIALS AVAILABLE ON RECORD AND THEREAFTER DECIDE THE ISSUE IN ACCORD ANCE WITH LAW WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE BY THE F IRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER OR BY THIS TRIBUNAL IN THIS ORDER. 6. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE T AXPAYER IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH AUGUST, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 24 TH AUGUST, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH