Sri.K.M.Radhakrishnan, Trichur V. The ITO, Thrissur

ITA 180/COCH/2014

• Counselvise Citation: 18021914 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V R GOPAKUMAR
• Assessee Lawyers: C B M WARRIER
• Keywords: Rejection of books of accounts; Opportunity of being heard; Peak credit; Additional evidence; Assessment record
• Section: 68; 144

Judgement Text

ITA NO. 180/COCH/2014 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & GEORGE GEORGE.K , JM ITA NO . 180/COCH/2014 (ASST YEAR 2008 - 09 ) SH K M RADHAKRISHNAN 9/91 KANNOLI HOUSE KURUMPILAVU PO THRISSUR VS THE INCOME TAX OFFICER WARD 2(3), T HRISSUR ( APP LICANT ) (RESPONDENT) PAN NO. AHXPM2501J ASSESSEE BY SH C B M WARRIER REVENUE BY SHRI V R GOPAKUMAR, SR DR DATE OF HEARING 1 ST SEPT 2015 DATE OF PRONOUNCEMENT 9 TH SEPT 2015 OR D ER PER GEORGE GEORGE.K JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 13.1.2014. THE RELEVANT ASSESSMENT YEAR IS 2008 - 09. 2 THE SOLITARY ISSUE FOR OUR CONSIDERATION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 28,49,200/ - AS UNEXPLAINED DEPOS ITS. 3 THE BRIEFLY STATED FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE, AN INDIVIDUAL , FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 18.6.2009 , DECLARING INCOME OF RS. 2,39,590/ - . THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE O F NOTICE U/S 143(2) OF THE I T ACT. IN THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE WAS REQUESTED TO FURNISH THE DETAILS WITH ITA NO. 180/COCH/2014 2 REGARD TO THE DEPOSITS IN THE SAVING BANK ACCOUNTS WITH CATHOLIC SYRIAN BANK AND CANARA BANK AMOUNTING TO RS. 11,28,700/ - AND RS. 17,20,500/ - RESPECTIVELY. THE ASSESSEE AT FIRST , DENIED HAVING ANY SUCH SAVING BANK ACCOUNTS. LATER ON THE ASSESSEE EXPLAINED THAT THE AMOUNTS APPEARING IN HIS SAVING BANK ACCOUNTS ARE THE AMOUNTS RECEIVED FROM THE TEACHERS OF A SCHOOL , WHICH IS JOI NTLY OWNED BY HIS FAMILY MEMBERS. HOWEVER, NO CONFIRMATION FOR THE RECEIPTS OF THESE AMOUNTS WERE FILED. THE ASSESSEE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, STATED VIDE LETTER DATED 9.12.2010 THAT HE WAS A JOINT OWNER OF SWAMI BHOANANDA HIGH SCHOOL, KURUMPILAVU, THRISSUR AND AS A JOINT OWNER , HE WAS ENTRUSTED WITH THE DAY - TO - DAY MAINTENANCE AND CONSTRUCTION WORK OF THE SAID SCHOOL. IT WAS SUBMITTED THAT THE ENTIRE FUNDS RECEIVED FOR AND ON BEHALF OF THE SCHOOL WERE ROUTED THROUGH THE ABOVE TWO B ANK ACCOUNTS. S INCE THERE WA S NO CONFIRMATION WITH REGARD TO THE SOURCE OF THE ABOVE DEPOSITS , THE AO TREATED THE SAME AS UNEXPLAINED DEPOSITS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE . A CCORDINGLY THE ASSESSMENT WAS CONCLUDED BY FIXING THE TOTAL INCOME AT R S. 30,88,790/ - (ORDER DATED 21.12.2010). 4 AGGRIEVED, TH E ASSESSEE FILE AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND RAISED THE FOLLOWING CONTENTIONS BEFORE THE LD CIT(A): IF THE ASSESSMENT MADE U / S. 144 THE ASSESSING O F F I CER SHO ULD HAVE REJECTED THE BOOKS OF ACCOUNTS AND , SUCH A SITUATION , SECTION. 68 UNDER W H I CH THE APPELLANT HAS MADE AN ADDITION WILL HAVE NO APPLICATION . HE HAS CITED CERTAI N CASE LAWS NAMELY , CIT V I S . AGGARWAL ENGINEERING COMPANY[2008] 302 ITR 246 [P & H ] . IF AN Y ADDITION U / S . 68 I S MADE , THE ASSESSING OFF IC ER SHOULD HAVE MADE ONLY THE PEC K CREDI T I NSTEAD , THE ASSESSING OFFICER HAS MADE TOTAL CRED I T SEEN IN THE B ANK PASS BOOK . ~ ITA NO. 180/COCH/2014 3 ACCORDING TO SECTION 10(23C)(IIIAD) OF THE ACT , I NCOME OF A SCHOOL TOTALLY EXEMPT ED . THE ASSESSING OFFICER HAS IGNORED THIS FACT . AS PER SECTION 68 THE ENTRIES SHOULD HAVE BEEN M ADE IN THE BOO KS OF ACCOUNTS OF THE ASSESSEE THE BANK PASS BOOK IS THE COPY OF THE BOOKS OF BANK AND NOT THAT OF THE APPELLANT .' CIT V I S . BAICHAND H . GANDHI 1411TR 67 MAYAWATI V I S . DCIT 002 TAX CORP (A.T)(DEL ). 5 THE ABOVE CONTENTIONS RAISED BY THE ASSESSEE WERE REJECTED BY THE LD CIT(A) BY GIVING THE FOLLOWING REASONS: GOING BY THE FACTS OF THE CASE AS IT HAS BEEN DISCUSSED BY THE ASSESSING OFFICER , THE A RGUMENTS TOKEN BY THE APPEL L ANT , IS UNREALISTIC TO THE FACTS OF THE INSTANT CASE . I T APPEARS THAT THE CITATIONS HAVE BEEN BROUGHT OUT F I RST AND THE GIST OF DECISION HAVE BEEN I MPOSED WITHOUT DIFFERENTIATING AS TO HOW THE FACTS AND CIRCUMSTANCES OF THOSE DE CISION ARE RELEVANT TO THE FACTS OF THE INSTANT CASE. FIRST OF ALL , THE ASSESSMENT HAS NOT BEEN U/S. 144 OF THE ACT. IT IS EVIDENT FROM THE ASSESSMENT RECORD THAT VARIOUS DATES OF HEARING S UCH AS 26.20.2010 , 11.11 . 2010, 29.11 . 2010 & 8.12.2010 IS MENTIONED IN THE ORDER ITSELF, AND IT IS ALSO MENTIONED THAT SHRI . LENIN ITP AND THE APPELLANT SHRI . K . M. RADHAKRISHNAN HIMSELF HAS ATTENDED THE PROCEEDINGS . IT IS ONLY THE LATER PART OF THE ASSESSMENT PROCEEDINGS WHEN THE ASSESSING OFFICER STARTED INSISTING TO FUR NISH THE SOURCES AND THE NATURE O F DEPOSITS IN THE SAVINGS BANK ACCOUNTS OF THE ASSESSEE, MAINTAINED WITH THE TWO D I FFERENT BANKS I . E. CATHOLIC SYRIAN BANK & CANARA B A NK, THE APPELLANT STOPPED ATTENDING T HE PROCEEDINGS AND I N - TURN, SENT A LETTER THAT THE M ONEY WAS RECEIVED FROM THE TEACHERS, OF THE SCHOOL, JOINTLY OWNED BY THE FAMILY MEMBERS . HOWEVER, NO SUCH CONFIRMATIONS FROM TEACHER, FOR HAVING RECEIVED THE AMOUNTS WERE FILED . IN ANY CASE, UNDER THE FACTS AND C I RCU MS TA N CES OF THE INSTANT CASE , IT CANNOT BE SAID THAT THE ASSESSMENT HAS BEEN DONE ON THE BES T JUDGMENT I.E. U / S. 144 OF THE ACT , HENCE, THIS SUBMISSION OF THE APPELLANT IS ILLOGICAL AND FACTUALLY INCORRECT . 2 AT THE COST OF REPETITION, IT IS ONCE AGAIN BROUGHT ON RECORD THAT THE APPELLANT HAS S UBMITTED THEIR ARGUMENT NOTE ON THE BASIS OF JUDICIAL PRONOUNCEMENTS BY THE VARIOUS COURTS AND HAS TRIED TO EXTRAPOLATE THE DECISIONS IN THIS CASE . WHE N THERE IS NOTHING IN THE ASSESSMENT RECORD FOR THE NATURE OF DEPOSITS AND THE SOURCE OF DEPOSITS , THEN H OW THE PEAK CREDIT COULD HAVE BEEN WORKED OUT BY THE ASSESSING OFFICER . IN VIEW OF THE FINDINGS OF THE ASSESS I NG OFFICER , THE EXPLANATION GIVEN BY THE APPELLANT SEEMS TO B E OUT OF PLACE AND NOT APPLICABLE TO THE INSTANT FACT . 3 THE APPELLANT HAS PLEADED T HAT THE INCOME OF THE SCHOOL I S TOTALLY EXEMPT U / S . 1 0(23C)(II I AD) . HOWEVER , THIS PROVISION SAYS THAT ' ANY UNIVERSITY O R OTHER EDUCATIONAL I NSTITUTE EXISTING SO L ELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE OF PROF I T .' THE OTHER EDUCAT I ONAL I NSTITUT I ON I S AN EDUCATIONAL SOCIETY OR A TRUST OR OTHER SIMILAR BOD I ES RUNNING AN EDUCATIONAL I NST I TUTION SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURP O SE OF PROFIT . I N THE INSTANT CASE , IT , I S NOT AN EDUCATIONAL INSTITUTION FALLING UNDER THIS CATEGORY HENCE, THE RE DOES NOT ARISE ANY QUEST I ON OF INCOME EXEMPT U / S. 10(23C)(IIIAD) OF THE ACT . 4 . AS REGARDS , THE ARGUMENT THAT SECTION 68 IS NOT APPLICABLE BECAUSE THE B ANK PASS BOOK DOES NOT CONSTITUTE THE BOOKS OF ACCOUNTS OF THE APP E LLANT, THIS ARGUMENT I S NOT APPLI CABLE TO THE FACTS OF THE CASE THAT THE APPELLANT THEMSELVES ACCEPTED TO HAVE T AKEN THIS MONEY FROM THE TEACHERS, ALTHOUGH, THE SAME COULD NOT BE SUBSTANTIATED AND THE APPELLANT BEING JOINT OWNER OF THE SCHOOL HAS BEEN ENTRUSTED WITH THE WORK OF MAINTENANC E AND CONSTRUCTION OF THE SCHOOL . AS A MATTER OF FACT, THE APPELLANT THEMSE LV ES HAVE SHOWN THE ITA NO. 180/COCH/2014 4 INCOME FROM SUCH ACTIVITIES AND FILED THE RETURN OF INCOME DECLARING THE I NCOME OF RS. 2 , 39,519 / - UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION . IN VIEW OF TH E DE CI S I ONS MADE IN THE FORGOING PARA ' S , I DO NOT FIND ANY INFIRMITY WITH THE ORDER OF THE ASSESS I NG OFF I CER AND HENCE , THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE CONFIRMED . IN THE RESULT , THE APPEAL I S DISMISSED. 6 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US . THE LD COUNSEL FOR THE ASSESSEE FILED A PETITION FOR ADMISSION OF ADDITIONAL EVIDENCE . THE ADDITIONAL EVIDENCE SOUGHT TO ADMITTED WAS CONFIRMATION FROM VARIOUS PERSONS , FROM WHOM IT ALLEGED THAT THE MONEY IS RECEIVED. IT WAS SUBMITTE D THAT THESE PERSONS , WHO HAD GIVEN THE CONFIRMATION , ARE THE TEACHERS I N ASSESSEES SCHOOL AND AMOUNTS RECEIVED WERE SECURITY DEPOSITS OR REFUNDABLE AMOUNT FOR CONSTRUCTION OF A SCHOOL BUILDING. IT WAS FURTHER SUBMITTED THAT S O ME OF THE TEACHERS HAD FILED CASES BEFORE THE MUNSIF F COURT, TRICHUR FOR THE REFUND OF THE AMOUNTS COLLECTED BY ASSESSEE AND MUN SIF F COURT IN VARIOUS ORDERS HAVE DIRECTED THE ASSESSEE TO REFUND THE AMOUNTS. ( THE COPIES OF SOME OF THE SUITS FILED AND DECREE OF THE M UNSIF C OURT ARE PLA CED ON RECORD). THE ASSESSEE ALSO FILED AN AFFIDAVIT IN SUPPORT OF PETITION TO ADMIT THE ADDITIONAL EVIDENCE. 7 THE LD DR HAD GIVEN HIS WRITTEN SUBMISSION WHICH READS AS UNDER: 1. THE ADDITION WAS MADE BY THE AO BECAUSE THE ASSESSEE CO U LD NEITHER EXPLA IN NOR GIVE ANY EVIDENCE TO SUBSTANTIATE THE SOURCE OF THE DEPOSITS IN HIS SAVING BANK ACCOUNT. 2 ) HON. CIT (A) ALSO HAD TAKEN COGNIZANCE OF TH I S FACT I N THE APPELLATE O R DER . 3 ) EVEN DURING THE FIRST APPEL L ATE STAGE , THE ASSESSEE HAD RA I SED GROUNDS ON THE FOL LOWING POINTS ONLY . A ) BANK PASSBOOK I S NOT A BOOK OF ACCOUNT OF THE ASSESSEE AND ADDITION U/S 68 CANNOT BE MADE ON THE BASIS OF SUCH BANK PASSBOOK ENTRIES . ITA NO. 180/COCH/2014 5 B ) ALL THE FUNDS RECEIV ED BY A SCHOOL CO - OWNED BY THE ASSESSEE HAD B EEN ROUTED THROUGH THE SAVINGS BAN K ACCOUNT OF THE ASSESSEE . C ) SECTION 68 DOES NOT WARRANT T HE ASSESSING OFFICER TO BE 'CONVINCED' BUT NEEDS ONLY THAT HE SHOULD BE 'SATISFIED' . 4 ) HON . CIT(APPEALS) HAD ADJUDICATED ON THESE ISSUES AFTER ELABORATELY ANALYS I NG THE FACTS . 5 ) AT NO TIME DUR I NG THE F I RST APPEAL , THE ASSESSEE HAD EVEN CURSOR I LY MENTIONED ABOUT ANY EVIDENCE AVAILABLE W I TH HIM TO SUBSTANTIATE HIS CLAIM THAT THE I MPUGNED AMOUNTS HAD BEEN DEPOS I TS RECEIVED BY HIM FROM SOME TEACHERS OF THE SCHOOL CO - OWNED BY HIM . 6 ) THE ASSESSEE HAS , SUO MOT O , FILED SOME PAPERS CLAIMED AS ADDITIONAL EVIDENCE ' BEFORE THIS HON . TRIBUNAL ON 1/10/2014 . IT IS HUMBLY SUBMITTED THAT THIS ACTION O THE ASSESSEE IS PROCEDURALLY AND LEGALLY INCORRECT SEEING TO STRICT BAN IMPOSED BY RULE 29 OF ITAT RULES ON FILING ADDIT IONAL EVIDENCE BY PARTIES BEFORE THE TRIBUNAL. IN THIS REGARD, THE FOLLOWING SUBMISSIONS ARE ALSO MADE BEFORE YOUR L ORDSHIPS. A) THE ASSESSEE DID NOT SUBM I T ANY OF THESE PAPERS BEFO R E THE ASSESS I NG OFF I CE R OR T H E HON . C I T ( APPEALS ) . B) AS A FOOT NOTE TO THE LI ST OF DEPOS I TS FI LED AS ' ADD I TIONA L EVIDENCE ' , THE ASSESSEE HAS MENTIONED THAT THESE EVIDENCES HAVE BEEN RECE I VED ' NOW ' . C) THE PLEA AT ( B ) ABOVE MAKES I T THAT THE ASSESSEE RECEIVED THIS EVIDENCE AFTER MORE THAN SEVEN YEARS OF DEPOSITING THE MONEY I N HIS SAVINGS BANK ACCOUNT . D) THE SO CLAIMED CONFIRMATIONS FILED BY THE ASSESSEE AS 'ADDITIONAL EVIDENCE' _ DO NOT MENTION AS TO WHEN THEY WERE PREPARED/SIGNED. THE ABSENCE OF THE PAN , DETAILS OF INCOME, COMPOSITE ACCOUNTS OF THE SO - CLAIMED DEPOSITORS A RE VERY CONSPICUOUS AND THE HON. TRIBUNAL MAY KINDLY TAKE COGNIZANCE OF THE SAME . E) THE SO - CLAIMED DEPOSITORS HAVE BEEN LISTED OUT TO HAVE PAID 'SECURITY DEPOSITS ' TO THE SCHOOL BY AMOUNTS RANGING FROM RS . 1,000 TO RS. 2 , 00,000 , ALL OF THESE IN CASH. F) THE ACT OF INTRODUCING THESE DEPOSITORS AFTER 8 YEARS HAS DEPRIVED THE REVENUE OF ITS PRIME RIGHT AND OBLIGATION OF INVESTIGATING THE VERACITY OF THE CLAIM . ITA NO. 180/COCH/2014 6 G) WITHOUT PREJUDICE TO THE PRIME PLEA THAT THE INTRODUCTION OF SOME UNDATED AND UNVERIFIED LETTERS AS ' EVIDENCE ' IS LEGALLY AND PROCEDURALLY INCORRECT, IT IS HUMBLY PLEADED BEFORE THE HON. TRIBUNAL THAT 4 . E ACCEPTANCE OF OF THE ABOVE DEPOSITS IN CASH HAS CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE ACT . UNDER THE ABOVE CIRCUMSTANCES , IT I S HUMBLY PRAYED THAT THE SO - CLAIMED EVIDENCES , NOW PLACED BEFORE THE HON. TRIBUNAL MAY KINDLY BE TREATED AS NON GENUINE AND ALSO AGAINST RULE 29 OF IT A T R ULES 1963 . 8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CASE OF THE ASSESSEE IS THAT HE IS THE JOINT OWNER OF A SCHOOL ALONG WITH OTHER FAMILY MEMBERS AND THE DAY - TO - DAY ACTIVITIES OF THE SCHOOL WERE ENTRUSTED TO HIM. IT IS STATED THAT T HE FUNDS RECEIVED FOR THE SCHOOL WERE ROUTED THROUGH THE ABOVE MENTIONED TWO BAN K ACCOUNTS HELD IN THE NAME OF THE ASSESSEE. IT IS FURTHER CONTENT ED THAT THE AMOUNTS WERE RECEIVED FOR CONSTRUCTION OF THE SCHOOL BUILDING FROM THE NEWLY APPOINTED TEACHERS OF THE SCHOOL. THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE IN THE FORM OF CONF IRMATION FOR THE RECEIPT OF THESE AMOUNTS. THE ASSESSEE STATES THAT THESE AMOUNTS WHICH WERE COLLECTED FROM THE TEACHERS (IN MOST CASES) WERE REFUNDED ON THE BASIS OF THE MUNSIFF COURT ORDER/ DECREE. IT WAS SUBMITTED THAT THIS IS AMPLY PROVES THE SOURCE OF DEPOSITS IN THE ABOVE SAID SAVING BANK ACCOUNTS. 8.1 WE NOTICE BEFORE THE LOWER AUTHORITIES , THIS CASE WAS NOT CONTESTED WITH ALL SERIOUSNESS AND WE DEPRECATE THE ATTITUDE OF THE ASSESSEE. HOWEVER, IN THE INTEREST OF JUSTICE AND SUBSTANTIAL CAUSE, W E ARE OF THE OPINION THAT ONE MORE OPPORTUNITY NEEDS TO BE GRANTED TO THE ASSESSEE TO PROVE HIS CASE AND HENCE, ITA NO. 180/COCH/2014 7 THE ADDITIONAL EVIDENCE THAT HAVE FILED ARE ADMITTED AND THE MATTER IS RESTORED TO THE AO FOR DE - NOVO CONSIDERATION. THE AO SHALL TAKE IN TO A CCOUNT WHETHER THERE IS ANY TRUTH IN ASSESSEES STATEMENT THAT THE AMOUNTS COLLECTED FROM THE TEACHERS , WHICH ARE CLAIMED TO BE THE SOURCE OF DEPOSITS IN THE SAVING BANK ACCOUNTS ARE ACTUALLY REFUNDED BASED ON MUNSIFF COURT ORDER/DECREE. THE ASSESSEE SHAL L NOT SEEK UNNECESSARY ADJOURNMENT AND SHALL COOPERATE WITH THE REVENUE FOR EXPEDIOUS DISPOSAL OF THE CASE. NEEDLESS TO SAY THE AO SHALL GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DISPOSE OF THE MATTER IN ACCORDANCE WITH LAW. 8 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH , DAY OF SEPT 2015 . SD./ - SD/ - ( B P JAIN ) (GEORGE GEORGE .K ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 9 TH , SEPT 2015 RAJ* ITA NO. 180/COCH/2014 8 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN