K.J.Thomaskutty, Pathanamthitta V. ACIT, Thiruvalla

ITA 160/COCH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7808 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: T M SREEDHARANSR
• Keywords: Depreciation
• Section: 68; 148; 144

Judgement Text

1 ITA NO. 159 & 160/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.TA NO. 159 & 160/COCH/2011 (ASSESSMENT YEARS : 2002-03 & 2007-08) SHRI K.J. THOMASKUTTY VS A.C.I.T., CIR.1 KANNAMTHANAM HOUSE THIRUVALLA RANNY, PAZHAVANGADI POST PATHANAMTHITTA 689 662 PAN : AEZPK3762J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.M. SREEDHARAN, SR.COUNSEL RESPONDENT BY : SHRI ABHIMANYU SINGH YADAV DATE OF HEARING : 23-04-2012 DATE OF PRONOUNCEMENT : 31-05-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE TWO INDEPENDENT ORDERS OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDR UM FOR THE ASSESSMENT YEARS 2002- 03 AND 2007-08. BOTH THE APPEALS WERE HEARD TOGETH ER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. LET US FIRST TAKE APPEAL ASSESSMENT YEAR 2002-03 IN ITA NO.159/COCH/2011. 3. SHRI T.M. SREEDHARAN, THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE MAIN ISSUE ARISES FOR CONSIDERATION IS ADDITION OF RS.40 LAKHS. ACCORDING TO THE LD.SENIOR COUNSEL, THE ASSESSEE IS RUNNING A GRANITE QUARRY I N THE NAME OF MODERN ROCK MINING INDUSTRIES AT VADASSERIKKARA, KERALA STATE. FOR TH E ASSESSMENT YEAR 2002-03 THE 2 ITA NO. 159 & 160/COCH/2011 ASSEESSEE FILED THE RETURN OF INCOME DECLARING TAXA BLE INCOME AT RS. 1,03,260 AND AGRICULTURAL INCOME OF RS.25,400. THE ASSESSING OF FICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 ON 26-03-2009. THE ASSESSEE FILED THE CONFIRMATION LETTER FROM THE CREDITOR. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING OFFICER MADE THE ADDITION U/S 68 OF THE INCOME-TAX ACT WITHOUT PROVIDING SUFF ICIENT OPPORTUNITY TO THE ASSESSEE. THE LD.SENIOR COUNSEL FURTHER SUBMITTED THAT THE AS SESSING OFFICER FAILED TO ISSUE PRE- ASSESSMENT NOTICE BEFORE PASSING ORDER U/S 144 OF T HE INCOME-TAX ACT. ACCORDING TO THE LD.REPRESENTATIVE, THE ADDITION MADE U/S 68 OF THE INCOME-TAX IS NOT CORRECT AND SUPPORTED BY ANY MATERIALS. THEREFORE, ACCORDING T O THE LD.SENIOR COUNSEL, THE ASSESSEE MAY BE GIVEN OPPORTUNITY TO CONTEST THE CASE BEFORE THE ASSESSING OFFICER. 4. ON THE CONTRARY, SHRI ABHIMANYU SINGH YADAV, THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE INCO ME-TAX ACT AFTER TAKING APPROVAL FROM THE JOINT COMMISSIONER OF INCOME-TAX. EVEN AFTER R ECEIPT OF NOTICE THE ASSESSEE DID NOT FILE THE RETURN OF INCOME. THE ASSESSEE HAS NOT AP PEARED BEFORE THE ASSESSING OFFICER FOR COMPLETING THE ASSESSMENT. THEREFORE, BY TREAT ING THE NOTICE ISSUED U/S 148 AS A NOTICE U/S 144 THE ASSESSING OFFICER COMPLETED THE ASSESSMENT EX PARTE IN THE ABSENCE OF THE ASSESSEE. THEREFORE, ACCORDING TO THE LD.RE PRESENTATIVE, IN THE ABSENCE OF ANY MATERIAL THE ADDITION WAS MADE TO THE EXTENT OF RS. 40 LAKHS U/S 68 OF THE INCOME-TAX ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE RECORD. ADMITTEDLY, THE ASSESSING OFFICER MADE ADD ITION OF RS.40 LAKHS U/S 68 OF THE INCOME-TAX ACT. NO DOUBT, THE ASSESSEE HAS TO PROV E THE IDENTITY OF THE CREDITORS, CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS. THE ASSESSEE ADMITTEDLY HAS NOT FILED THE RETURN OF INCOME AND H AS NOT APPEARED BEFORE THE ASSESSING OFFICER ALSO IN THE COURSE OF ASSESSMENT PROCEEDING S; THEREFORE, THE ASSESSING OFFICER WAS CONSTRAINED TO PASS THE EX PARTE U/S 144 OF THE INCOME-TAX ACT. THE LD.SENIOR COUNSEL NOW CLAIMS THAT THE CONFIRMATION LETTER WAS ALREADY FILED FROM THE CREDITOR AND 3 ITA NO. 159 & 160/COCH/2011 THEREFORE, THE ASSESSEE MAY BE GIVEN ONE MORE OPPOR TUNITY TO CONTEST THE CASE ON MERIT BEFORE THE ASSESSING OFFICER. THE PROCEEDING S BEFORE THE ASSESSING OFFICER ARE JUDICIAL PROCEEDINGS. THE OBJECT BEHIND THE PROCEE DINGS BEFORE THE ASSESSING OFFICER IS TO COMPUTE THE TAXABLE INCOME FOR THE PURPOSE OF LE VY OF TAX UNDER THE INCOME-TAX ACT. THEREFORE, THE ULTIMATE OBJECT IS TO COMPUTE THE TA XABLE INCOME OF THE ASSESSEE. THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME AS REQU IRED BY NOTICE U/S 148 AND HE HAS ALSO NOT APPEARED BEFORE THE ASSESSING OFFICER. TH E FACT REMAINS IS THAT THE ASSESSEE HAS FILED THE CONFIRMATION LETTER FROM THE CREDITOR. I N THE ABSENCE OF OTHER MATERIALS AND DETAILS, THE ASSESSING OFFICER MADE THE ADDITION U/ S 68 OF THE INCOME-TAX ACT. THIS TRIBUNAL IS OF THE OPINION THAT GIVING ONE MORE OPP ORTUNITY TO THE ASSESSEE TO PLACE ALL THE MATERIAL WITH REGARD TO THE CREDIT OF RS.40 LAK HS BEFORE THE ASSESSING OFFICER MAY NOT PREJUDICE THE INTEREST OF THE REVENUE IN ANY WAY. THIS TRIBUNAL IS OF THE OPINION THAT GIVING ONE MORE OPPORTUNITY WOULD DEFINITELY PROMOT E THE CAUSE OF JUSTICE. IT MAY NOT BE THE INTENTION OF THE LEGISLATURE TO LEVY TAX ON CITIZENS ON TECHNICALITIES. GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PLACE THE MATER IAL ON RECORD WOULD DEFINITELY ASSIST THE ASSESSING OFFICER IN COMPUTING THE CORRECT TAXA BLE INCOME AND LEVY TAX THEREON UNDER THE INCOME-TAX ACT. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER B Y GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE LOWER AUT HORITIES WITH REGARD TO THE ADDITION OF RS.40 LAKHS U/S 68 OF THE INCOME-TAX ACT IS SET ASI DE AND THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. IT IS OPEN TO T HE ASSESSEE TO FILE ALL THE MATERIAL / DOCUMENTS BEFORE THE ASSESSING OFFICER. THE ASSESS ING OFFICER SHALL CONSIDER ALL THE DOCUMENTS THAT MAY BE FILED BY THE ASSESSEE AND THE REAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 6. AS A RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 IS ALLOWED FOR STATISTICAL PURPOSE. 4 ITA NO. 159 & 160/COCH/2011 7. NOW COMING TO APPEAL FOR ASSESSMENT YEAR 2007-08 IN ITA NO.160/COCH/2011 THE FIRST GROUND OF APPEAL IS WITH REGARD TO ADDITI ON OF RS.42 LAKHS U/S 68 OF THE ACT. 8. SHRI T.M. SREEDHARAN, THE LD.SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE HAS FILED THE CONFIRMATION LETTERS AND COPY OF THE PHOTO IDENTITY CARD EXCEPT IN RESPECT OF SHRI P.K. ABRAHAM AND SHRI K.T. JOSEPH. ACCORDING TO THE LD.SENIOR COUNS EL, IN RESPECT OF SHRI P.K. ABRAHAM AND SHRI K.T. JOSEPH THE ASSESSEE COULD NOT FILE THE CO NFIRMATION LETTER AND OTHER MATERIAL SINCE THEY BOTH HAVE DIED. ACCORDING TO THE LD.SEN IOR COUNSEL, SHRI P.K. ABRAHAM IS THE FATHER-IN-LAW OF THE ASSESSEE AND SHRI K.T. JOSEPH IS THE FATHER. THE AMOUNTS RECEIVED FROM FATHER AND FATHER-IN-LAW WERE OUT OF NATURAL L OVE AND AFFECTION AND THEREFORE, IT CANNOT BE DOUBTED EVEN IN THE ABSENCE OF ANY CONFIR MATION LETTER. ONE OF THE CREDITORS, LEKHA KANNAMTHANAM IS THE WIFE OF ASSESSEES BROTHE R AND ANOTHER CREDITOR THAMPI KANNAMTHANAM IS THE BROTHER OF THE ASSESSEE. THE C REDITOR, SHRI V.C. ABRAHAM IS ASSESSEES SONS FATHER IN LAW. THEREFORE, THE AMO UNTS WERE RECEIVED FROM CLOSE RELATIVES AND THE CONFIRMATION LETTERS WERE ALSO FI LED IN RESPECT OF THE CREDITOR WHO WAS ALIVE AT THE TIME OF ASSESSMENT PROCEEDINGS. THERE FORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT NO BANK STATEM ENT WAS PRODUCED IS NOT JUSTIFIED. ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONE R OF INCOME-TAX(A) HAS ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN THE ABSENCE OF BANK STATEMENT. ACCORDING TO THE LD.COUNSEL, THIS ISSUE MAY ALSO BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. 9. ON THE CONTRARY, SHRI ABHIMANYU SINGH YADAV, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY BANK STATEMENT OR PROOF TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS. IN THE ABSENCE OF ANY MATERIAL TO E STABLISH THE CREDITWORTHINESS OF THE CREDITORS, ACCORDING TO THE LD.DR, THE ASSESSING OF FICER HAD RIGHTLY MADE THE ADDITION TO THE EXTENT OF RS.42 LAKHS WHICH WERE CONFIRMED BY T HE COMMISSIONER OF INCOME-TAX(A). 5 ITA NO. 159 & 160/COCH/2011 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. THE CREDITORS APPEAR TO BE FAT HER, FATHER-IN-LAW, SONS FATHER-IN-LAW, BROTHERS WIFE. THEREFORE, THEY ARE ALL CLOSE RELA TIVES. THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM ALL THE CREDITORS WHO WER E ALIVE AT THE TIME OF ASSESSMENT PROCEEDINGS. IN RESPECT OF SHRI P.K. ABRAHAM AND S HRI K.T. JOSEPH THE FATHER IN LAW AND FATHER OF THE ASSESSEE, BOTH HAVE EXPIRED DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSEE COULD NOT FILE THE CONFIRMA TION LETTERS FROM THEM. BUT THE FACT REMAINS IS THAT ALL ARE CLOSE RELATIVES. THE ASSES SING OFFICER APPEARS TO HAVE REJECTED THE CLAIM OF THE ASSESSEE MAINLY ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE THE PASS BOOK OF THE CREDITORS OR THE BANK STATEMENTS. THEY MAY BE ONE OF THE DOCUMENTS WHICH MAY ESTABLISH THE CREDITWORTHINESS OF THE CRE DITORS. HOWEVER, THAT ALONE CANNOT ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS. T HERE ARE OTHER MATERIALS WHICH SHOW THE CREDITWORTHINESS OF THE CREDITORS. THE CONFIRM ATION LETTERS FILED BY THE ASSESSEE APPEAR TO BE NOT TAKEN INTO CONSIDERATION BY THE LO WER AUTHORITIES. THE CONFIRMATION LETTERS WERE ALSO NOT REJECTED BY THE LOWER AUTHORI TIES. THIS TRIBUNAL IS OF THE OPINION THAT IN THE ABSENCE OF ANY BANK STATEMENT OR COPY O F THE PASSBOOK THE ASSESSING OFFICER HAS TO CONSIDER THE OTHER MATERIALS AVAILABLE ON RE CORD AND RECORD HIS FINDINGS WHETHER THE ASSESSEE HAS ESTABLISHED IDENTITY OF THE CREDIT ORS, CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION. SINCE THE AVAILABLE DOCUMENTS WERE NOT CONSIDERED, THIS TRIBUNAL IS OF THE OPINION THAT TH E MATTER NEEDS TO BE CONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF LOWE R AUTHORITIES ARE SET ASIDE AND THE ISSUE OF ADDITION OF RS.42 LAKHS U/S 68 OF THE ACT IS REM ITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD. IT IS ALSO OPEN TO THE ASSESSEE TO FILE ANY OTHER MATERIAL WHICH WOULD ESTABLISH THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER SHALL RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF THE MATERIAL THAT MAY BE FURN ISHED BY THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE. 6 ITA NO. 159 & 160/COCH/2011 11. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF DEPRECIATION TO THE EXTENT OF RS. 35,47,118. THE MERE CONTENTION OF TH E LD.SENIOR COUNSEL FOR THE ASSESSEE IS THAT THE ASSESSEE IS USING VEHICLE FOR HIRE. HOWEV ER, THE LD.DEPARTMENTAL REPRESENTATIVE CONTENDS THAT THE VEHICLE WAS NOT USED FOR HIRE BUT IT WAS USED FOR ASSESSEES BUSINESS. SINCE THE MAIN ISSUE OF CASH CREDIT IS REMITTED BAC K TO THE FILE OF THE ASSESSING OFFICER, THIS TRIBUNAL IS OF THE OPINION THAT THIS ISSUE ALS O NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDERS OF LOWER AUTHORITIES ON THIS ISSUE ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE A SSESSING OFFICER. IT IS ALSO OPEN TO THE ASSESSEE TO FILE ANY OTHER MATERIAL WHICH WOULD EST ABLISH THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER SHALL RECONSIDER THE ENTIRE ISSUE IN THE LIGHT OF THE MATERIAL ALREADY AVAILABLE ON RECORD AND THAT MAY BE FURNISHED BY TH E ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST MAY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 31 ST MAY, 2012 PK/- COPY TO: (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH