Sri.Dilip George Varghese, Trivandrum V. The ITO, Trivandrum

ITA 130/COCH/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3927 (ITAT-COCHIN)
• Duration Of Justice: 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 26-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2017
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: PREETHA S NAIR
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER I.T.A. NO. 130 /COCH/20 1 7 ASSESSMENT YEAR : 2009 - 10 DILIP GEORGE VARGHESE, THALAKOTTE, KURAVANKONAM, TRIVANDRUM-695 003. [PAN: ACWPV2362A] VS. THE I NCOME T AX OFFICER , WARD-1(1),TRIVANDRUM. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY SMT. PREETHA S. NAIR, ADV. REVENUE BY SHRI A. DHANARAJ , SR. DR DATE OF HEARING 25/ 0 4 / 201 7 DATE OF PRONOUNCEMENT 26 TH / 0 4 /201 7 O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE ORDER OF THE CIT(A), TRIVANDRUM DATED 08-02-2017. THE RELEV ANT ASSESSMENT YEAR IS 2009-10. 2. THE SOLITARY ISSUE THAT ARISES FOR MY CONSIDER ATION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ASSESSMENT ORDER WITH R EGARD TO THE ADDITION MADE UNDER SECTION 69A OF THE I.T. ACT. I.T.A. NO.130/COCH/2017 2 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL WHO IS ENGAGED I N THE BUSINESS OF RUBBER MANUFACTURING. FOR THE ASSESSMENT YEAR 2009-10, THE RETURN OF INCOME WAS FILED ON 30/11/2009, DECLARING LOSS OF RS.4,70,270/- AND NET AGRICULTURAL INCOME OF RS.3,85,000/-. THE ASSESSMENT WAS TAKEN UP FOR SCRU TINY BY ISSUANCE OF NOTICE U/S. 143(2) OF THE ACT. IN THE COURSE OF ASSESSMEN T PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD MADE CASH DEPOSITS ON VARIOUS DATES IN THE AXIS BANK ACCOUNT DURING THE YEAR UNDER CONSIDERATION, AMOUNT ING TO RS.15,81,000/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE CAS H DEPOSITS AMOUNTING TO RS.15,81,000/-. IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT THESE DEPOSITS WERE MOSTLY MADE FROM THE WITHDRAWALS OF THE OD A/C MAINTAINED BY THE ASSESSEE WITH INDIAN OVERSEAS BANK (IOB) AND ALSO MARGIN MONEY LOAN RECEIVED FROM THE GOVERNMENT. TH E ASSESSING OFFICER, AFTER EXAMINING THE EXPLANATION OF ASSESSEE, THE BOOKS OF ACCOUNT ETC., HELD THAT THE WITHDRAWALS MADE FROM IOB WERE FOR OTHER PURPOSES A ND CANNOT BE SOURCE FOR CASH DEPOSITS MADE IN AXIS BANK. THE ASSESSING OFF ICER WAS OF THE VIEW THAT EXCEPT FOR A SUM OF RS.1,25,000/- DEPOSITED WITH AX IS BANK ON 14/07/2008, THERE IS NO CO-RELATION WITH THE WITHDRAWALS MADE FROM IN DIAN OVERSEAS BANK. THEREFORE, THE ASSESSING OFFICER, AFTER GIVING CRED IT OF RS.1,25,000/-, THE BALANCE CASH DEPOSITS AMOUNTING TO RS.14,56,000/- ( I.E., 1 5,81,000-1,25,000/-) WAS TREATED AS INCOME ASSESSABLE U/S. 69A OF THE I.T. A CT. I.T.A. NO.130/COCH/2017 3 4. AGGRIEVED BY THE ORDER OF THE ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) C ONFIRMED THE ORDER OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE A SSESSEE. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSE SSEE PREFERRED AN APPEAL TO THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED A DETAILED PAPER BOOK COMPRISING OF 36 PAGES, INTER ALIA, ENCLOSING I.T. RETURN COPIES FOR AY 2009-10 AND 2010-11, CONFIRMATION LETTER FROM M/S. A.N. RUB BERS, FOR SALE OF LATEX AND SCRAP, BANK STATEMENT OF AXIS BANK, INCOME AND EXPE NDITURE STATEMENT OF RUBBER ESTATE FOR THE ASSESSMENT YEARS 2006-07, 2007-08, 2 008-09, THE MARGIN MONEY LOAN TAKEN PROCEEDING, BANK STATEMENT OF THE IOB FO R THE PERIOD 01/01/2007 TO 31/12/2015 ETC. IT WAS SUBMITTED THAT THE ASSESSEE IS HAVING RUBBER ESTATE AND HAD DISCLOSED NET AGRICULTURAL INCOME FOR THE RELEV ANT ASSESSMENT YEAR AMOUNTING TO RS.3,85,000/- WHICH HAS NOT BEEN DISPU TED BY THE ASSESSING OFFICER. EVEN IN THE EARLIER ASSESSMENT YEARS AND IN THE SUBSEQUENT ASSESSMENT YEARS, THE ASSESSEE HAD DISCLOSED AGRICULTURAL INCO ME AND THE FINDING OF THE CIT(A) THAT NO AGRICULTURAL INCOME WAS DISCLOSED B Y THE ASSESSEE IN THE PAST YEARS AND SUBSEQUENT YEARS IS FALSE. TO PROVE THIS , THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN ME THROUGH INCOME AND EXPENDITUR E STATEMENT OF THE RUBBER ESTATE AND THE RETURNS OF INCOME FILED BY ASSESSEE FOR THE SUBSEQUENT YEARS TO SHOW THAT AGRICULTURAL INCOME WAS DISCLOSED IN THE SUBSEQUENT AYS. WITH REGARD TO THE WITHDRAWALS FROM THE INDIAN OVERSEAS BANK AN D ITS REDEPOSITS WITH THE I.T.A. NO.130/COCH/2017 4 AXIS BANK, THE ASSESSEE SUBMITTED THAT EACH OF THE CASH DEPOSITS IN THE AXIS BANK COULD BE CO-RELATED WITH THE WITHDRAWALS FROM THE INDIAN OVERSEAS BANK AND OTHER SOURCE OF INCOME AVAILABLE WITH ASSESSEE. . IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD RECEIVED RS.2,50,000/- FROM D ISTRICT INDUSTRIES CENTRE, TRIVANDRUM AS MARGIN LOAN MONEY FOR SETTING UP AN I NDUSTRY AND THIS AMOUNT WAS ALSO WITHDRAWN AND DEPOSITED IN THE AXIS BANK A CCOUNT OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ADDITION MADE U/S. 69A OF TH E I.T. ACT IS NOT WARRANTED AND THE SAME IS TO BE DELETED. 6. THE LD. DR ON THE OTHER HAND SUBMITTED THAT FO R THE CASH DEPOSITS AMOUNTING TO RS.14,56,000/-, THE ASSESSEE WAS NOT A BLE TO PROVE THE SOURCE AND THE ASSESSING OFFICER HAS RIGHTLY ADDED THE SAM E U/S. 69A OF THE ACT. 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE ASSESSEE HAD MADE CASH DEPOSITS IN AXIS BANK AGGREG ATING TO RS.15,81,000/-. THE AMOUNT AND THE DATE ON WHICH THE CASH DEPOSITS WERE MADE AND THE SOURCE FOR SAME, AS CLAIMED BY THE ASSESSEE ARE DETAILED B ELOW: DATE AMOUNT SOURCE OF FUNDS 03.04.2008 265000 DEPOSIT OUT OF CASH ON HAND 09.04.2008 15000 AGRICULTURAL INCOME 14.07.2008 125000 DEPOSIT OUT OF CASH ON HAND 18.10.2008 101000 AGRICULTURAL INCOME 06.11. 2008 100000 AGRICULTURAL INCOME 09.12.2008 100000 AGRICULTURAL INCOME 05.01.2009 60000 DEPOSIT OUT OF CASH ON HAND I.T.A. NO.130/COCH/2017 5 08.01.2009 230000 MARGIN MONEY LOAN 09.02.2009 275000 DEPOSIT OUT OF CASH ON HAND 26.02.2009 50000 DEPOSIT OUT OF CASH ON HAND 26. 02.2009 30000 DEPOSIT OUT OF CASH ON HAND 04.03.2009 50000 DEPOSIT OUT OF CASH ON HAND 16.03.2009 35000 DEPOSIT OUT OF CASH ON HAND 25.03.2009 135000 AGRICULTURAL INCOME 28.03.2009 10000 DEPOSIT OUT OF CASH ON HAND TOTAL 15,81,000 7.1 OUT OF THE TOTAL DEPOSITS OF RS.15,81,000/-, THE ASSESSING OFFICER HAD GIVEN CREDIT OF RS.1,25,000/- DEPOSITED ON 14/07/2008 AND BALANCE RS.14,56,000/- WAS BROUGHT TO TAX U/S. 69A OF THE ACT. OUT OF THE ABO VE DEPOSITS MADE, THE ASSESSEE HAD CLAIMED THE FOLLOWING CASH DEPOSITS WE RE OUT OF AGRICULTURAL INCOME, WHICH ARE DETAILED BELOW: DATE AMOUNT SOURCE OF FUNDS 09.04.2008 15000 AGRICULTURAL INCOME 18.10.2008 101000 AGRICULTURAL INCOME 06.11.2008 100000 AGRICULTURAL INCOME 09.12.2008 100000 AGRICULTU RAL INCOME 25.03.2009 135000 AGRICULTURAL INCOME TOTAL 4 ,51,000 7.2 THE ASSESSEE HAD FURNISHED INCOME AND EXPENDIT URE STATEMENT OF THE RUBBER ESTATE OWNED BY HIM FOR THE CURRENT YEAR AS W ELL AS FOR THE PRIOR AND SUBSEQUENT YEARS. FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAD ALSO FURNISHED A CONFIRMATION LETTER FROM A.N. RUBBERS W HO HAD PURCHASED RUBBER LATEX AND SCRAP FROM THE ASSESSEE. THE CONFIRMATIO N LETTER IS PLACE AT PAGE 11 OF THE PAPER BOOK WHICH READS AS FOLLOWS: I.T.A. NO.130/COCH/2017 6 TO WHOMSOEVER IT MAY CONCERN THIS IS TO CONFIRM THAT WE HAVE MADE THE FOLLOWING PAYMENTS TO MR. DILIP GEORGE VARGHESE, THALAKKOTTE, KURAVANKONAM, TRIVAND RUM-695 003 AGAINST PURCHASE OF AMMONIATED RUBBER LATEX AND SCR AP RUBBER PURCHASED FROM HIM DURING THE YEAR ENDED 31-03-2009:- SL. NO. DATE AMOUNT 1. 8-APR-2008 15,000 2. 4-OCT-2008 48,000 3. 17-OCT-2008 53,800 4. 28-OCT-2008 58,000 5. 5-NOV-2008 42,650 6. 26-NOV-2008 47,000 7. 8-DEC-2008 56,000 8. 15-JAN-2009 11,000 9. 2-FEB-2009 9,000 10. 3-MAR-2009 63,000 11. 12-MAR-2009 48,000 12. 23-MAR-2009 26,605 TOTAL 4,78,055 FOR A.N. RUBBERS SD/- AUTHORIZED SIGNATORY 7.3 THE ABOVE CONFIRMATION LETTER WAS REJECTED BY THE CIT(A) ONLY FOR THE REASON THAT THE ASSESSEE WAS NOT DISCLOSING ANY AGR ICULTURAL INCOME IN THE PAST AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEARS. THI S CONCLUSION OF THE CIT(A) IS WRONG. IN THE CURRENT YEAR, THE ASSESSEE HAD DISCLO SED NET AGRICULTURAL INCOME OF RS.3,85,000/- . EVEN IN THE SUBSEQUENT ASSESSMENT YE AR, A PERUSAL OF THE RETURN OF INCOME SHOWS THAT THE ASSESSEE HAD DECLARED NET AGRICULTURAL INCOME OF I.T.A. NO.130/COCH/2017 7 RS.3,70,000/-. THE PAYMENTS MADE BY M/S. A.N. RUBBE RS AGGREGATING TO RS.4,78,055/- MATCH WITH THE DEPOSITS MADE BY THE A SSESSEE IN THE AXIS BANK. SINCE THE ASSESSEE HAD DISCLOSED NET AGRICULTURAL I NCOME OF RS.3,85,000/- IN THE CURRENT AY WHICH HAS NOT BEEN DISPUTED BY THE ASSES SING OFFICER, I HAVE NO HESITATION TO HOLD THAT THE CLAIM OF THE ASSESSEE T HAT THE DEPOSITS MADE ON 09/04/2008, 18/10/2008, 06/11/2008, 09/12/2008 AND 25/03/2009 AMOUNTING TO RS.15,000/-, RS.1,01,000/-, 1,00,000/-, RS.1,00,000 /- AND RS.1,35,000/- RESPECTIVELY HAS BEEN PROPERLY EXPLAINED. HENCE I D ELETE THE ADDITION MADE AMOUNTING TO RS.4,51,000/-. IT IS ORDERED ACCORDIN GLY. 7.4 AS FOR THE BALANCE RS.10,05,000/- ADDED U/S. 69A, IT IS CLAIMED THAT THE SOURCE OF FUNDS ARE DEPOSITS MADE OUT OF WITHDRAWAL S FROM THE ASSESSEES OD ACCOUNT AND THE MARGIN LOAN MONEY RECEIVED FROM DIS TRICT INDUSTRIES CENTRE, TRIVANDRUM. IN THE INTEREST OF JUSTICE AND EQUITY, I AM OF THE VIEW THAT ONE MORE OPPORTUNITY NEEDS TO BE GRANTED TO THE ASSESSE E TO EXPLAIN THE SOURCE OF CASH DEPOSITS WITH AXIS BANK. IF THE ASSESSEE IS I N A POSITION TO CO-RELATE THE CASH WITHDRAWALS AND DEPOSITS WITHIN A REASONABLE T IME IN THE AXIS BANK ACCOUNT, CREDIT FOR THE SAME SHALL BE GIVEN. WITH THESE DIRECTIONS, I RESTORE THE ISSUE OF ADDITION OF RS.10,05,000/- TO THE ASSESSIN G OFFICER. THE ASSESSING OFFICER SHALL DISPOSE OF THE MATTER AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE SHALL PRODUC E NECESSARY EVIDENCE AND I.T.A. NO.130/COCH/2017 8 SHALL CO-OPERATE WITH THE ASSESSING OFFICER FOR EXP EDITIOUS DISPOSAL OF THE CASE. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 26 TH -04-2017. SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER PLACE: KOCHI DATED: 26 TH APRIL, 2017 GJ COPY TO: 1. DILIP GEORGE VARGHESE, THALAKOTTE, KURAVANKONAM, TRIVANDRUM-695 003. 2. THE INCOME TAX OFFICER, WARD-1(1), TRIVANDRUM 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), TRIVAND RUM. 4. THE PR. COMMISSIONER OF INCOME-TAX,TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTR AR) I.T.A.T., COC HIN