C Rajan (Late) Rep. by wife & L/H Smt. Rugmini, Palakkad V. Income Tax Officer, Palakkad

ITA 144/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52343 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 19-03-2009
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Deemed to accrue or arise in india; Additional evidence; Initiation of penalty proceedings; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLA TE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NOS. 36, 144 & 145/COCH/2009 ASSESSMENT YEARS: 2001-02 TO 2003-04 C.RAJAN (LATE) REP. BY W/L HEIR, SMT. SMT. E.RUGMINI, PROP. HOTEL RAJAPRASTHAM, MELPATTAMBI, PALAKKAD DIST. [PAN:ACMPR 3317F] VS. THE INCOME TAX OFFICER, WARD-2, PALAKKAD. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI C.R.HARISH, CA-AR REVENUE BY MS. S. VIJAYAPRABHA, JR.DR DATE OF HEARING 18/10/2011 DATE OF PRONOUNCEMENT 30/12/2011 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF THREE APPEALS BY THE ASSESSEE, I.E., FOR THREE CONSECUTIVE YEARS (A.Y.S) BEING 2001-02, 2002-03 AND 2003-04, ARISING OUT OF SEPARATE ORDERS DATED 15- 10-2008 (A.Y. 2001-02) AND 19-12-2008 (A.Y. 2002-03 & 2003-04) BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCHI (CIT (A) FOR SHORT), DISMISSING THE ASSESSEES APPEALS, CONTESTING ITS ASSESSMENTS U/S. 143(3) R.W.S. 148 OF THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER) FOR THE RELEVANT YEARS. 2. THE FACTS AND CIRCUMSTANCES AS WELL AS THE ISSUE S ARISING IN THE APPEALS BEING COMMON, THE SAME WERE HEARD TOGETHER, AND ARE BEING DISPOSED OF VIDE A COMMON, CONSOLIDATED ORDER. THE ASSESSEE, AN INDIVIDUAL, IS A REGULAR ASSESSEE, RETURNING INCOME FROM HOTEL AND LODGE M/S. RAJAPRASTHAM AND `INCOME FROM OTHER SOURCES, INCLUDING I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 2 BANK INTEREST. HE WAS FOUND TO BE, ALONG WITH HIS FAMILY MEMBERS, IN RECEIPT OF NRE GIFTS FROM YEAR TO YEAR. THE CREDITS, DULY REFLECTE D IN THE CASH FLOW STATEMENT PREPARED AND SUBMITTED BY THE ASSESSEE IN EXPLANATION OF THE VARIOUS INVESTMENTS/OUTGOINGS FOR THE PREVIOUS YEARS RELEVANT TO AYS 2001-02 TO 2004-05, WERE ACCORDINGLY EXAMINED. IN FACT, THESE WERE FOR MOST PART AGREED TO FOR BEING ASSESS ED AS INCOME IN THE HANDS OF THE ASSESSEE, HIS WIFE, SMT RUGMINI, HIS SON, SAI RAJES H AND HIS BROTHER, C.RAJEEV, SUBJECT TO NON-INITIATION OF PENALTY PROCEEDINGS. THE RELEVANT FIGURES, AGGREGATING TO ` 81.70 LAKHS, TABULATED FROM THE ASSESSMENT ORDER ITSELF, ARE AS UNDER: (AMOUNT IN ` LAKHS) AY/NAME C.RAJAN E.RUGMINI SAI RAJESH RAJEEV 1999-00 - 2.0 - 9 .0 2000-01 10 - 3.0 14.0 2001-02 18 - 2.5 7.5 2002-03 15 - - - TOTAL: 33 2.0 5.5 3 0.5 THE SAME WERE STATED AS BEING SO OFFERED AS A MEASURE OF COOPERATION, SO THAT IT WOULD NOT IMPLY ANY CONCEALMENT. THE `INCOME ADDE D IN THE PRESENT ASSESSMENTS, AND SUBJECT TO APPELLATE PROCEEDINGS, IS IN ADDITION TO THESE SUMS, WHICH WE FIND CLAIMED AS BORROWED BY THE ASSESSEE. 3.1 WE SHALL BEGIN WITH A.Y. 2001-02. THE ASSESSE ES CASH FLOW STATEMENT FOR THE PREVIOUS YEAR RELEVANT TO A.Y. 2001-02 REFLECTED AN OPENING CASH BALANCE OF ` 10,11,093/- (I.E., AS ON 1/4/2000), WHICH WAS FOUND TO BE IN EX CESS BY ` 10 LAKHS OVER THE AMOUNT OF THE CLOSING CASH BALANCE FOR THE IMMEDIATELY PRECED ING YEAR, I.E., AS AT 31.3.2000, BEING AT ` 11,093/-. THE ASSESSEES EXPLANATION TOWARD THE SOU RCE FOR THE ADMITTED DIFFERENCE IN THE AMOUNT OF CASH BALANCE, WAS AS ON ACCOUNT OF THE AG REED ADDITIONS MADE IN THE HANDS OF HIS SON, SAI RAJESH FOR A.Y.2000-01 ( ` 3 LAKHS) AND HIS WIFE (SMT. E.RUGMINI) FOR A.Y. 1999-2000 ( ` 2 LAKHS). THE AO, ACCEPTING THE SAME, RESTRICTED TH E ADDITION ON THIS ACCOUNT I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 3 TO ` 5 LAKHS, AND WHICH STOOD CONFIRMED IN APPEAL. BEFO RE US, THOUGH THE ASSESSEE HAS RAISED THIS ISSUE BY WAY OF GROUND NO. 2 (FOR A.Y. 2001-02), THE SAME WAS NOT PRESSED DURING HEARING, SO THAT THE SAME MAY ALSO BE CONSID ERED AS AN ADMITTED DISCREPANCY, OR AN AMOUNT OF CASH FOR WHICH THE ASSESSEE HAS ADMITTEDL Y NO EXPLANATION. THE BALANCE CREDITS FOR A.Y. 2001-02 AND FOR THE SUBSEQUENT TWO YEARS, I.E., 2002-03 AND 2003-04, BEING PRIMARILY ON ACCOUNT OF LOANS, WERE CONCURREN TLY FOUND TO HAVE BEEN NOT SATISFACTORILY EXPLAINED BY THE AUTHORITIES BELOW, SO THAT THE ASSESSEE IS IN APPEAL. 3.2 THE BALANCE AMOUNT OF SUCH LOANS/GIFTS FOR T HIS YEAR (AY 2001-02) FOR WHICH ADDITION STANDS MADE, AND IS UNDER APPEAL, IS ` 11.30 LAKHS. THE DETAILS/PARTICULARS FOR ` 10.30 LAKHS APPEAR AT PARA 15 (PG. 10) OF THE ASSE SSMENT ORDER, WHICH, IN FACT, TABULATES SUCH LOANS/GIFTS RECEIVED BY THE ASSESSEE FROM A.Y . 1999-2000 TO 2003-04, AGGREGATING TO ` 48.52 LAKHS, THE YEAR-WISE DETAIL OF WHICH IS AS UN DER: A.Y. AMOU NT (IN ` LAKHS) 1999-2000 2 9.80 2000-2001 5.675 2001-2002 10.30 2002-2003 0.75 2003-2004 2.0 TOTAL 48.5 2 THOUGH THE ASSESSEE FURNISHED THE CONFIR MATIONS FROM THE RESPECTIVE CREDITORS (NUMBERING TO 10) IN RESPECT OF THESE LOANS ( ` 10.30 LAKHS), THE SAME WERE FOUND NOT ACCEPTABLE BY THE AO. FIRSTLY, WHILE THE CONFIRMATI ONS STATED OF THE CREDITS AS `LOANS, THE ASSESSEES CASH FLOW STATEMENT EXHIBITED THE SAME A S `GIFTS. MAJORITY OF THE AMOUNTS WERE TRANSFERRED BY CROSSED CHEQUES, WHILE THE AMOU NT RECEIVED BY THE ASSESSEE IS PER BANK DEMAND DRAFTS. AS SUCH, THERE IS NOTHING TO EX HIBIT THAT IT IS THE CREDITORS WHO PURCHASED THE DEMAND DRAFTS. IN ANY CASE, THE SAID EVIDENCE WAS NOT SUFFICIENT TO PROVE THE RECEIPT OF THE SO-CALLED INTEREST-FREE LOANS, W HICH HAVE NOT BEEN ADMITTEDLY REPAID EVEN AFTER A LONG TIME. THE HONBLE DELHI HIGH COUR T IN THE CASE OF ASST.CIT, CIRCLE- I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 4 31(1) VS. RAJEEV TANDON, DEFENCE COLONY, NEW DELHI, HAD, UNDER SUCH CIRCUMSTANCES, CONFIRMED THE ADDITION OF CASH CREDIT AS UNEXPLAINE D U/S. 68 OF THE ACT. THE BALANCE ` 1 LAKH WAS FOR THE REASON THAT NO CONFIRMATION IN ITS RESPECT HAD BEEN FILED BY THE ASSESSEE, WHO HAD CLAIMED CREDIT FOR ` 11.30 LAKHS IN ITS CASH FLOW STATEMENT. THE ADDITIO N/S STOOD CONFIRMED IN FIRST APPEAL FOR THE SAME REASONS, SO THAT THE ASSESSEE IS IN SECOND APPEAL. THE BACKGROUND FACTS, AS DELINEATED ABOVE, ARE COMM ON FOR ALL THE YEARS. THE AMOUNT INVOLVED FOR THE SUBSEQUENT YEARS, I.E., AT ` 0.75 LAKHS AND ` 1 LAKH FOR A.Y. 2002-03 & AY 2003-04 RESPECTIVELY, IS IN FACT, RATHER, PALTRY IN RELATION TO THAT FOR THE PRECEDING YEARS. THE ADDITIONS HAVING BEEN MADE FOR ALL THE Y EARS, THE ASSESSEE IS IN APPEAL. 4. BEFORE US, THE ASSESSEE SOUGHT TO PLACE ON RECORD A LETTER DATED 28-9-2010 FROM THE BANK TO THE EFFECT THAT IT WAS UNABLE TO F URNISH THE COPY OF THE NRE ACCOUNTS, AS MENTIONED THEREIN, AS THE SAME HAD BECOME OLD RECOR DS, SO THAT THE SAME COULD NOT BE RETRIEVED. THE LD. DR, ON THE OTHER HAND, PLACING RELIANCE ON THE FOLLOWING DECISIONS, WOULD SUBMIT THAT THE SAME COULD NOT BE BROUGHT ON RECORD. FIRSTLY, THE SAME WOULD AMOUNT TO AN `ADDITIONAL EVIDENCE, TOWARD ADMISSIO N OF WHICH NO PLAUSIBLE REASON HAD BEEN ADVANCED BY THE ASSESSEE:- N.B. SURTI FAMILY TRUST VS. CIT (2007) 288 ITR 523 (GUJ.) CIT V. RANJIT KUMAR CHOUDHARY (2007) 288 ITR 179 (GAU.) ROSHAN DI HATTI VS. CIT (1977) 107 ITR 938 (DEL.) (PARAS 29, 30 & 31) IN ANY CASE, THE SAME IS ONLY A DISCLAIMER BY THE B ANKERS OF THE SO-CALLED CREDITORS/DONORS, AND WOULD NOT IN ANY MANNER OPERA TE TO DILUTE THE ONUS OR THE BURDEN OF PROOF ON THE ASSESSEE TO PROVE THE CREDITS SATISFAC TORILY ON EACH OF THE THREE PARAMETERS OF IDENTITY, CREDITWORTHINESS, AND THE GENUINENESS OF THE CREDIT, AND FOR WHICH HE RELIED ON THE FOLLOWING DECISIONS:- ROSHAN DI HATTI V. CIT (SUPRA); CIT V. BIJU PATNAIK (1986) 160 ITR 674 (SC); MALABAR AGRICULTURAL CO. LTD. V. CIT , 229 ITR 548 (KER.); 177 TAXMAN 481 (KER.); SWAMI PREMANANDA ALIAS PREMKUMAR VS. CIT (2009) 221 CTR 667(MAD.); 62 TTJ (CHENNAI) 749. I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 5 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. 5.1 THE LAW ON THE SUBJECT IS TRITE THAT ANY SU M FOUND CREDITED IN THE ASSESSEES BOOKS FOR THE RELEVANT YEAR, HAS TO BE SATISFACTORILY EXP LAINED AS TO THE NATURE AND SOURCE, AND WHICH THE HIGHER COURTS OF LAW HAVE CLARIFIED TO BE ON THE PARAMETERS OF IDENTITY, CAPACITY (OF THE CREDITOR) AND THE GENUINENESS OF THE CREDIT S. THE ONUS TO DISCHARGE THE BURDEN OF PROOF TO ESTABLISH THE CREDIT AS GENUINE IS ON THE ASSESSEE, AND, THE QUESTION WHETHER THE EXPLANATION FURNISHED BY HIM IS IN THE FACTS AND CI RCUMSTANCES OF THE CASE, IS BORNE OUT BY THE MATERIAL ON RECORD, SATISFACTORY OR NOT IS A QU ESTION OF FACT [REFER CIT VS. MOHANAKALA P . (2007) 291 ITR 278 (SC); OCEANIC PRODUCTS EXPORTING CO. VS. CIT , 241 ITR 497 (KER.); AND MALABAR AGRICULTURAL COMPANY LTD. VS. CIT , 229 ITR 548 (KER.)]. 5.2 COMING TO THE FACTS OF THE CASE, WE FIND THAT THE ONLY MATERIAL FURNISHED BY THE ASSESSEE IS THE CONFIRMATIONS FROM THE DONORS/LOANE RS. IN ADDITION, THE ASSESSEE APPARENTLY HAS ADDUCED CERTIFICATES DATED 28-9-2010 , OSTENSIBLY FROM THE BANK (FROM WHICH THE FUNDS STAND TRANSFERRED), TO THE EFFECT T HAT THE COPY OF THE ACCOUNT STATEMENT (FOR F.Y. 2000-01, RELEVANT TO A.Y. 2001-02) CANNOT BE, AS REQUESTED, SUPPLIED, AS THE SAME FORMS PART OF ITS OLD RECORDS. WHEN THE REQUE ST THEREFOR WAS MADE, IS NOT KNOWN, BUT CAN REASONABLY BE CONSIDERED AS HAVING BEEN MA DE A FEW DAYS OR EVEN WITHIN A WEEK OR TWO PRIOR TO THE DATE OF THE CERTIFICATE, WHILE THE ASSESSEES ASSESSMENT, DURING WHICH THE SAID ACCOUNT STATEMENT/S SHOULD HAVE BEEN NORMA LLY FURNISHED IN SUBSTANTIATION OF ITS CASE, AND WHICH WAS COMPLETED (IN FACT, FOR ALL THE YEARS VIDE ORDER U/S. 147 R.W.S. 143(3) DATED 28.12.2007), DURING NOVEMBER AND DECEMBER, 20 07, WITH THE NOTICE U/S. 148, ISSUED AFTER RECORDING THE REASONS IN THIS REGARD I N DECEMBER, 2006. FURTHER, THE APPEALS, AGAIN, FOR ALL THE YEARS, STAND INSTITUTED ON 4-2-2 008, AND THAT WITH THIS TRIBUNAL IN JANUARY/MARCH, 2009, I.E., AFTER COMMUNICATION OF T HE ADVERSE ORDER/S BY THE FIRST APPELLATE AUTHORITY IN OCTOBER/DECEMBER, 2008. IN O THER WORDS, A BASIC DOCUMENT, FOR WHICH THE ASSESSEE WAS ISSUED NOTICE AS FAR BACK AS IN DECEMBER, 2006, IS SOUGHT TO BE SOURCED BY HIM ONLY IN SEPTEMBER, 2010, I.E., ABOUT FOUR YEARS LATER, AND OVER WHICH HE REPRESENTED HIMSELF BEFORE TWO AUTHORITIES, BEFORE BOTH OF WHOM THE ASSESSEE STOOD DULY REPRESENTED. THIS IS PARTICULARLY SO AS IN THE FACT S OF THE CASE THE ASSESSING AUTHORITY HAD I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 6 CLEARLY DRAWN AN ADVERSE INFERENCE IN RESPECT OF TH IS ASPECT OF THE CREDIT. THE DECISIONS IN THE CASE OF N.B. SURTI FAMILY TRUST VS. CIT (SUPRA) AND ROSHAN DI HATTI VS. CIT (1977) 107 ITR 938 (DEL.) (PARAS 29, 30 & 31) ARE SQUARELY APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5.3 IN FACT, IT WOULD NOT BE UNREASONABLE TO PR ESUME THAT THE SAID APPLICATION/REQUEST IS ONLY A RUSE IN AS MUCH AS NO INSTITUTION CAN NORMAL LY BE EXPECTED TO RETAIN RECORDS AFTER NEARLY A DECADE. THE FOREGOING OBSERVATIONS ARE MA DE BY US WITH A VIEW NOT ONLY TO OUST THE ASSESSEES PLEA FOR ADMISSION OF ADDITIONAL EVI DENCE, TOWARD WHICH, IN FACT, NO EVIDENCE HAS BEEN MADE OUT BY THE ASSESSEE HIMSELF, BUT TO DEMONSTRATE THE CAVALIER AND LACKADAISICAL APPROACH ADOPTED BY HIM IN THE MATTER . IT HAS NOT EVEN CLARIFIED IF THE CREDITS WERE LOANS OR GIFTS, EACH OF WHICH WOULD HA VE SEPARATE INCIDENTS RELEVANT THERETO, FOR BEING EXAMINED AND SATISFIED WITH. FOR EXAMPLE, THE CURRENT STATUS AS TO THE OUTSTANDING, AS WELL AS PAYMENT OF INTEREST, ASSUME S RELEVANCE IN THE CASE OF LOANS, WHILE THE RELATIONSHIP AND THE PURPOSE FOR WHICH THE SAME WAS TENDERED WOULD BE WORTH CONSIDERING IN THE CASE OF GIFTS. THAT APART, EVEN AS ARGUED BY THE LD. DR, THE DOCUMENT IS TO NO EFFECT, AS IT COULD NOT OPERATE TO DILUTE THE ONUS STATUTORILY CAST ON THE ASSESSEE TO PROVE THE CREDIT. 5.4 CONTINUING FURTHER, WE FIND THAT THE ASSESS EE AND HIS FAMILY MEMBERS HAVE A HISTORY OF ACCEPTING GIFTS. IN FACT, IT IS NOT C LEAR WHETHER THE IMPUGNED CREDITS REPRESENT GIFTS OR LOANS; THE DIFFERENCE BETWEEN THE TWO BLUR RING IN THE WAKE OF NO STIPULATION AS TO INTEREST AND NON-REPAYMENT (OF BOTH PRINCIPAL AND INTEREST) WIT H THE ADDITIONAL LOANS/CREDITS BEING ASSUMED FROM ESSENTIALLY THE SA ME SET OF PERSONS YEAR TO YEAR (REFER PARA 15, PG. 10 OF THE ASSESSMENT ORDER FOR AY 2001 -02). MOST OF THESE SUMS HAVE RATHER BEEN ADMITTEDLY AGREED TO BE OFFERED TO TAX BY THE ASSESSEE ALONG WITH HIS FAMILY MEMBERS. WHAT, WE MAY ASK, THEREFORE, GOES TO DISTINGUISH TH E IMPUGNED AMOUNTS FROM THE CREDITS AGREED FOR BEING CONSIDERED AS INCOME F OR THE RELEVANT YEARS BY THE ASSESSEE, (EXCEPT AY 2003-04) ? PERHAPS, THE ASSESSEEE COULD NOT FURNISH THE CON FIRMATIONS IN RESPECT OF THOSE CREDITS. CAPACITY, THE REQUIREMENT TO ESTABLISH WHICH, IS A SEPARATE AND I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 7 INDEPENDENT ONE, COULD BE DEMONSTRATED ONLY ON THE BASIS OF AUTHENTICATED DOCUMENTS, AS THEY SAY AUDITED BALANCE SHEET, INCOME STATEMENT, E TC., INDICATING FINANCIAL CAPACITY AS WELL AS THE AMOUNT FOR ADVANCING THE SUMS. AS REGA RDS THE GENUINENESS, THE AUTHORITIES BELOW HAVE FOUND CREDITS AS FAILING THE TEST OF HUM AN PROBABILITY. FURTHER, FOR AY 2002- 03 & 2003-04, FOR WHICH THOUGH THE AMOUNTS INVOLVED ARE NOT SIGNIFICANT, THE AO HAS CLARIFIED THAT THE MODUS OPERANDI INVOLVED IS BY TAKING SMALL AMOUNTS EACH MONTH, WH ICH APPEARS TO BE CASE IN RESPECT OF THE IMPUGNED CREDI TS, DULY EXAMINED BY THE LD. CIT(A), WHOSE FINDINGS HAVE NOT BEEN REBUTTED. THE DECISION BY THE APEX COURT IN THE CASE OF CIT VS. MOHANAKALA P. (SUPRA), RELIED UPON BY BOTH THE AUTHORITIES BELOW , ADVERTING TO ITS EARLIER DECISIONS BY THREE-MEMBER CONSTITUTION IN T HE CASE OF SUMATI DAYAL VS CIT. (1995) 214 ITR 801 (SC) REITERATED THE NEED FOR A S ATISFACTION ON THE BASIS OF THE CONSIDERATION OF THE SURROUNDING CIRCUMSTANCES AND ON APPLYING THE TEST OF HUMAN PROBABILITY, AS WAS DONE IN THAT (LATTER) CASE. TH E SATISFACTION TO BE ARRIVED IS A REAL, POSITIVE ONE, WHICH IS VIEWED FROM THE STANDPOINT O F A REASONABLE EXPLANATION TOWARD BURDEN OF PROOF, RATHER THAN IN A LEGALISTIC MANNER . THE OBSERVATIONS BY THE HONBLE COURT IN THE CASE OF ADDL.CIT VS. C.R. RANGANATHAN CHETTY & ORS. , 153 ITR 456 (MAD.) (AT PG. 466) ARE RELEVANT IN THIS REGARD:- LOOK AT THE WAY THE GIFTS WERE MADE. NOT ONLY WER E THEY MADE TO OTHER PEOPLES CHILDREN, BUT SOME OF THEM WERE MADE TO O THER PEOPLES WIVES. IN ANY PLACE, EXCEPTING IN A TAX COURT, GIFTS TO OTHER PE OPLES WIVES, EVEN IF THEY ARE WIVES OF CO-PARTNERS, WOULD RAISE A HOST OF QUESTIONS AN D NOT A FEW EYE-BROWS, EXCEPTING WHEN THERE IS AN UNDERSTANDING NOD, AH, IT IS ALL FOR THE PURPOSES OF INCOME-TAX. THE ITO SAW THE FACTS WITH A LAYMAN S EYES, WHICH WAS THE CORRECT WAY TO LOOK AT THEM. THE TRIBUNAL FOR THEIR PART, HOWEVER, GOT INVOLVED IN THE CONVOLUTIONS OF THE MITAKSHARA LAW OF GIFTS AND BR OUGHT TO BEAR A DRY AND UNREAL LEGALISTIC APPROACH TO THE APPLICATION OF S. 64, W HICH THE PROVISIONS DOES NOT CALL FOR, IF WE UNDERSTAND KOTHARIS CASE (1963) 49 ITR (SC) 107 ARIGHT. 5.5 THE FACTS ARE ARRAIGNED AGAINST THE ASSESSEE, W HO HAS NOT EVEN SPELT OUT THE RELATIONSHIP WITH THE CREDITORS/DONORS AS WELL AS T HE REASONS FOR NON-REPAYMENT OF THE LOAN ACCEPTED OVER THE YEARS AND EVEN AFTER THE LAP SE OF A CONSIDERABLE TIME OR THE NON- LEVY OF INTEREST THEREON. THERE IS NO MATERIAL ON RECORD TO ESTABLISH THE CAPACITY OF THE I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 8 CREDITORS OR THE GENUINENESS OF THE TRANSACTIONS, W ITH ALL THE AVAILABLE MATERIALS AND CIRCUMSTANCIAL EVIDENCES BEING, RATHER, IMPUGNING. UNDER THE CIRCUMSTANCES, WE HAVE NO HESITATION IN CONFIRMING THE ADDITION U/S. 68 FOR E ACH OF THE YEARS UNDER REFERENCE, BY RECORDING A FINDING THAT THE ASSESSEE HAS ABYSMALLY FAILED TO PROVE THE IMPUGNED CREDITS AS TO THEIR NATURE AND SOURCE. WE DECIDE ACCORDING LY. 6. THE ONLY OTHER ADDITION FOR A.Y. 2002-03 IS FOR ` 25,000/-, MADE BY NON ACCEPTING THE ASSESSEES EXPLANATION OF THE SUM AS BEING SOUR CED BY WAY OF WITHDRAWAL/S FROM THE PARTNERSHIP FIRM M/S. KING WINES, YERCAUD IN WHICH HE WAS A PARTNER. THIS WAS AS THE ASSESSEE COULD NOT SUBSTANTIATE THE EXPLANATION WIT H A COPY OF HIS CAPITAL ACCOUNT IN THE SAID FIRM FOR THE RELEVANT YEAR, WHICH WOULD EXHIBI T THE WITHDRAWAL, OR WITH ANY OTHER MATERIAL. THE ASSESSEE, BEFORE US, RELIED ON THE DECISION IN THE CASE OF HIS BROTHER SHRI C.RAJEEV FOR THE SAME YEAR, WHERE AN ADDITION OF ` 40,000/- WAS MADE ON THE SAME GROUND. THE SAME HAS SINCE BEEN DELETED BY THE TRI BUNAL (COCHIN BENCH) (IN I.T.A. NO. 437/COCH/2009 DATED 18-11-2009/COPY ON RECORD) AS T HE TRIBUNAL FOUND AN ADEQUATE BALANCE IN THE CAPITAL ACCOUNT AS AT THE CLOSE OF T HE IMMEDIATELY PRECEDING YEAR, AS A REASONABLE BASIS FOR ACCEPTING THE ASSESSEES EXPLA NATION TOWARDS THE SAME. THE FACTS AND CIRCUMSTANCES, INCLUDING THE QUANTUM OF AMOUNT INVOLVED, BEING SIMILAR, WE HAVE NO HESITATION IN ACCEPTING THE ASSESSEES CASE. THE A DDITION IS, ACCORDINGLY, DIRECTED FOR DELETION. 7. THE ONLY OTHER GROUND FOR A.Y. 2003-04 IS IN RES PECT OF AN ADDITION, IN THE SUM OF ` 2,50,000/- . THE ASSESSEE DISCLOSED AN INCOME FOR A.Y. 2004-05 BY WAY OF INTEREST ON BANK FDR, WHICH WAS HELD UNDER DEPOSIT WITH THE BAN K ON 3-5-2002. AS THE SAID FDR FOR ` 2.50 LAKHS DID NOT FIND REFLECTION IN THE ASSESSEE S OTHER REGULAR ACCOUNTS OR IN THE CASH FLOW STATEMENT FOR THE RELEVANT YEAR (A.Y. 200 3-04), THE SAME WAS ADDED AS DEEMED INCOME ON ACCOUNT OF AN UNEXPLAINED INVESTMENT. THE SAME STOOD CONFIRMED BY THE FIRST APPELLATE AUTHORITY ON THE BASIS THAT THE ASSESSEE FAILED TO FURNISH ANY SATISFACTORY EXPLANATION FOR THE SAME, I.E., AS BEFORE THE ASSES SING AUTHORITY. THE SAME SITUATION OBTAINS BEFORE US AS WELL. THE TRANSFER OF FUNDS FR OM THE BANK ACCOUNT ON 03/5/2002 FOR I.T.A. NOS.36,144 & 145/COCH/2009 C. RAJAN (LT.) V. ITO, WARD 2, PALAKKAD 9 THE PURPOSE (I.E., FDR) HAVE IN FACT BEEN INCLUDED BY THE ASSESSEE IN HIS CASH FLOW STATEMENT. AS SUCH, EVEN IF THE INVESTMENT IN BANK FDR IS CONSIDERED AS EXPLAINED AS TO ITS SOURCE, I.E., ON THE BASIS OF THE SAID TRANSFER , THE CASH AVAILABLE WITH THE ASSESSEE TO THE CORRESPONDING EXTENT IS NOT. WE, ACCORDINGLY, FIND THE ASSESSEE TO HAVE NO CASE, SO THAT NO INTERFERENCE WITH THE ORDERS OF THE AUTHORITIES BEL OW IS CALLED FOR. WE DECIDE ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEES OR A.Y. 2001-02 (IN I .T.A. NO. 36/COCH/2009 AND FOR A.Y. 2003-04 (IN I.T.A. NO. 145/COCH/2009) ARE DISM ISSED AND THAT FOR A.Y. 2003-04 (IN I.T.A. NO. 144/COCH/2009 IS PARTLY ALLOWED. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 30TH DECEMBER, 2011 GJ COPY TO: 1. C.RAJAN (LATE),REP. BY W/L HEIR, SMT.SMT. E.RUGM INI, CHITTANIPARA HOUSE, PATTAMBI, PALAKKAD. 2. THE INCOME TAX OFFICER, WARD-2, PALAKKAD. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, TRICHUR. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .