Shri.K.C.Raghu, Thalassery V. ITO, Kannur

ITA 159/COCH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2630 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 03-06-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 25-03-2013
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Revision of order
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 159/COCH/2013 ASSESSMENT YEAR : 1997-98 SHRI K.C. RAGHU, PROPRIETOR, M/S. REHA SAW MILLS, KOTTIODI, TELLICHERRY-670 691 [PAN:AULPR 8948J] VS. THE INCOME-TAX OFFICER, WARD- 1(2), KANNUR. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SMT. SUSAN GEORGE VARGHESE, SR. DR DATE OF HEARING 03/06/2013 DATE OF PRONOUNCEMENT 18/07/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19-12-2012 PASSED BY LD CIT(A)-II, KOZHIKODE AND IT RELATES TO THE ASSESSMENT YEAR 1997-98. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING THE ADDITION OF CASH CREDITS MADE U/S 68 OF THE ACT. THE APPEAL IS BARRED BY LIMITATION BY 9 DAYS. WE HAVE HEARD BOTH THE PARTIES AND HAVING REGARD TO TH E SUBMISSIONS MADE BY THE ASSESSEE IN THE PETITION, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION WAS COMPLETED IN THE HANDS OF T HE ASSESSEE U/S 143(3) OF THE ACT ORIGINALLY ON 27.3.2002. LATER THE ADMINISTRATIVE COMMISSIONER REVISED THE SAME U/S 263 OF THE ACT AND ACCORDINGLY, A FRESH ASSESSMENT ORDER WAS PASSED BY THE AO ON 03.02.2005, WHEREIN HE ADDED CASH CREDITS AGGREGATI NG TO RS.3,10,000/-. THE ASSESSEE CHALLENGED THE SAME BEFORE LD CIT(A) AND THE FIRST APPELLATE AUTHORITY RESTORED THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE THE OPPORTUNITY OF CROSS I.T.A. NO.159/COCH/2013 2 EXAMINATION OF VARIOUS CREDITORS TO THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER PASSED THE CONSEQUENTIAL ORDER ON 22-12-2008, WHERE IN THE AO AGAIN ADDED ALL THE CASH CREDITS AGGREGATING TO RS.3,10,000/-. THE ASS ESSEE AGAIN CARRIED THE MATTER IN APPEAL FILED BEFORE LD CIT(A), WHO GRANTED PARTIAL RELIEF TO THE EXTENT OF RS.1,61,000/-. STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS. WE NOTICE THAT THE ADDITION OF RS.3,10,000/- PERTAINS TO 17 CREDITORS AND THE LD C IT(A) HAS GRANTED RELIEF IN RESPECT OF 9 CREDITORS. IN EFFECT, ADDITION OF FOLLOWING CRED ITS HAVE BEEN CONFIRMED BY THE LD CIT(A). A. SMT. C. PANJALI 18,000 B. SMT. BABY REENA 18,000 C. SRI P.M.MANOHARAN 18,000 D. SMT. KOYITHU NARAYANI 19,000 E. SRI A.K. CHATHU 18,000 F. SRI SUJATHAN 19,000 G. SRI PREMARAJAN 19,000 H. SRI V.M. PAVITHRAN 18,000 4. WE FIND DETAILED DISCUSSIONS IN RESPECT OF TH E ABOVE CREDITORS IN THE ASSESSMENT ORDER DATED 03-02-2005 PASSED U/S 143(3) R.W.S. 263 OF THE ACT. IN THE IMPUGNED CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER , WE NOTICE THAT THE AO HAS CONFIRMED THESE ADDITIONS ON THE GROUND THAT EITHER THERE IS A CONTRADICTION WITH REGARD TO THE YEAR OF REPAYMENT OF THE LOANS OR THE CREDIT ORS WERE NOT PRODUCED FOR VERIFICATION. THE LD COUNSEL STRONGLY PLACED RELIA NCE ON THE CONFIRMATION LETTERS FILED BEFORE THE ASSESSING OFFICER IN THE PROCEEDINGS INI TIATED CONSEQUENT TO THE REVISION ORDER. HE FURTHER SUBMITTED THAT MOST OF THESE AMO UNTS WERE RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS AND HENCE THE TAX AUTHORITIES WERE NOT JUSTIFIED IN ASSESSING THEM DURING THE YEAR UNDER CONSIDERATION. WE NOTICE THA T THE ASSESSEE HAS BROUGHT THESE CASH CREDITS TO EXPLAIN THE SOURCES FOR THE INVESTM ENTS MADE IN HIS BUSINESS CONCERNS DURING THE YEAR UNDER CONSIDERATION. FURTHER, THE ASSESSEE APPEARS TO HAVE NOT MAINTAINED ANY BOOKS OF ACCOUNT TO SUBSTANTIATE HIS CLAIM THAT THESE LOANS WERE RECEIVED IN EARLIER YEARS. THE ASSESSING OFFICER W AS CONSTRAINED TO EXAMINE THESE CASH I.T.A. NO.159/COCH/2013 3 CREDITS WHILE EXAMINING THE INVESTMENTS MADE DURING THE YEAR UNDER CONSIDERATION. SINCE, THE CLAIM OF RECEIPT OF LOANS IN EARLIER YEA RS WAS NOT SUBSTANTIATED WITH ANY CREDIBLE EVIDENCE, IN OUR VIEW, THE ASSESSING OFFIC ER WAS JUSTIFIED IN EXAMINING THE LOAN CREDITS DURING THE YEAR UNDER CONSIDERATION. WE SH ALL EXAMINE THE CASH CREDITS LISTED ABOVE VIZ-A-VIS THE CONFIRMATION FILED BY THE CREDI TORS. 5. SMT. C.PANJALI IS THE MOTHER OF THE ASSESSEE AND SHE IS NO MORE AS OF NOW. SHE HAD STATED THAT THE LOAN AMOUNT OF RS.18,000/- WAS GIVEN BY HER OUT OF HER AGRICULTURAL INCOME. SHE HAS CLAIMED THAT THE AGRICULTURAL INCO ME WAS DERIVED FROM 50 CENTS OF LAND OWNED BY HER. WE ALSO NOTICE THAT THE CREDITO R WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER DUE TO HER OLD AGE. UNDER THESE SET OF FACTS, IN OUR VIEW, THERE IS NO JUSTIFICATION IN SUSPECTING THIS CREDIT. ACCORDIN GLY, WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS CREDIT AND DIRECT THE ASSESSING OFFICER TO DELETE THIS ADDITION. 6. SMT. BABY REENA HAS SUBMITTED THAT SHE HAS GIV EN LOAN OF RS.18,000/- OUT OF INCOME DERIVED BY HER FROM TAILORING ACTIVITIES. S HE HAS STATED THAT HER AVERAGE MONTHLY INCOME WAS RS.1,200/-. HENCE, IN OUR VIEW, THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THIS CREDITOR. HENCE, IN OUR VIEW, THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. 7. SHRI P.M.MANOHARAN HAS GIVEN A LOAN OF RS.18 ,000/- TO THE ASSESSEE. HE IS EMPLOYED AS BUS DRIVER ON DAILY WAGES BASIS. THE A O HAS NOTICED THAT THE PARENTS OF THIS CREDITOR ARE RESIDING WITH HIM. FURTHER HE IS MARRIED AND IS HAVING TWO CHILDREN. ACCORDINGLY, THE AO HAS DOUBTED ABOUT THE CREDIT WO RTHINESS OF THIS CREDITOR. UNDER THESE SET OF FACTS, IN OUR VIEW, THE ASSESSING OFFI CER WAS JUSTIFIED IN ASSESSING THIS CREDIT AND ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A) I N CONFIRMING THIS ADDITION. 8. SMT. KOYITHU NARAYANI, WHO HAS GIVEN A LOAN OF RS.19,000/- TO THE ASSESSEE IS DOING THE BUSINESS OF TRADING IN TAPIOCA, BESIDES W ORKING AS A LABOURER. THUS, IN OUR VIEW, THE CREDIT WORTHINESS OF THIS CREDITOR IS ALS O NOT PROVED BY THE ASSESSEE AND HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDI TION. I.T.A. NO.159/COCH/2013 4 9. SHRI A.K.CHATHU, WHO HAS GIVEN A LOAN OF RS.18, 000/- IS RUNNING A TEA SHOP AND IS DERIVING AN INCOME OF RS.75/- TO RS.100/- PER DAY. THUS, IN OUR VIEW, THE CREDIT WORTHINESS OF THIS CREDITOR IS ALSO NOT PROVED BY T HE ASSESSEE AND HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. 10. SHRI SUJATHAN HAS ADVANCED A LOAN OF RS.19,00 0/- TO THE ASSESSEE. IN THE ASSESSMENT ORDER, THE AO HAS OBSERVED AS UNDER IN R ESPECT OF THIS CREDIT. 3. C.SUJATHAN - THE SWORN STATEMENT WAS RECORDED ON 02-11-2004. HE IS AN EX-SERVICE MAN RETIRED ON 31.12.2000. HE IS NEPHEW OF THE ASSESSEE. HE HAS STATED THAT HE HAS ADVANCED RS.19,000/- TO THE ASSE SSEE DURING 1996. CONSIDERING THE FACT THAT HE MAY BE CAPABLE OF RAIS ING THIS AMOUNT, THIS CREDIT IS ACCEPTED AS GENUINE. HOWEVER, THE ASSESSING OFFICER HAS ASSESSED THIS AM OUNT ALSO. IN THE SET ASIDE PROCEEDING ALSO, THIS AMOUNT HAS BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSING OFFICER WAS SATISFIED WITH THIS CREDIT, IN OUR VIEW, THERE IS NO REASON TO ASSESS THE SAME. THERE IS A POSSIBILITY THAT TH IS CASH CREDIT MIGHT HAVE BEEN ASSESSED INADVERTENTLY. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS CREDIT AND DIRECT THE ASSESSING OFFICER TO DEL ETE THE SAME. 11. SHRI T. PREMARAJAN, WHO HAS GIVEN A LOAN OF RS.19,000/-, IS DERIVING A MONTHLY ALLOWANCE OF RS.1,500/- FROM A CO-OP BANK. THUS, I N OUR VIEW, THE CREDIT WORTHINESS OF THIS CREDITOR IS ALSO NOT PROVED BY THE ASSESSEE AN D HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. 12. SHRI V.M.PAVITHRAN HAS GIVEN A LOAN OF RS.1 8,000/- TO THE ASSESSEE. IN THE SWORN STATEMENT TAKEN FROM HIM, HE HAS STATED THAT HE PAI D THE ABOVE SAID AMOUNT OUT OF HIS NRE ACCOUNT. THE AO EXAMINED THE NRE BANK ACCOUNT O F THE ABOVE PERSON AND NOTICED THAT THERE WAS NO WITHDRAWAL ON THE DATE ME NTIONED BY HIM IN THE SWORN STATEMENT. HENCE, THE AO HAS DOUBTED THE VERACITY OF HIS STATEMENT AND ASSESSED THE ABOVE SAID AMOUNT OF RS.18,000/-. HOWEVER, THE ASS ESSING OFFICER HAS NOT DENIED THE FACT THAT THE ABOVE SAID CREDITOR HAS MAINTAINED A NRE ACCOUNT. THE AO HAS ALSO I.T.A. NO.159/COCH/2013 5 STATED THAT HE IS RUNNING AN AUTO GARAGE. SHRI PAV ITHRAN HAS STATED THAT HE WAS WORKING IN GULF IN EARLIER YEARS AND HENCE HE COULD OPEN A NRE ACCOUNT. UNDER THESE SET OF FACTS, IN OUR VIEW, THERE IS NO NECESSITY TO DOUBT THE CREDIT WORTHINESS OF THIS CREDITOR FOR GIVING A LOAN OF RS.18,000/- TO THE AS SESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS CREDIT AND DI RECT THE ASSESSING OFFICER TO DELETE THE SAME. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 18-07-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 18TH JULY, 2013 GJ COPY TO: 1. SHRI K.C. RAGHU, PROPRIETOR, M/S. REHA SAW MILLS , KOTTIODI, TELLICHERRY-670 691. 2. THE INCOME-TAX OFFICER, WARD-1(2), KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOZH IKODE 4.THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN