Sri.S.Baskar Sait, Trichur V. The DCIT, Trichur

ITA 225/COCH/2018

AI Insights

The case involves Shri S. Bhaskar Sait, who appealed against the orders of the CIT(Appeals), Thrissur, concerning the assessment years 2002-03 and 2003-04. The assessee, engaged in silver refining and other businesses, did not initially file returns for the specified years. Following a notice under section 148 of the Income Tax Act, the assessee filed returns showing losses, which were not accepted by the AO, leading to various disallowances. The CIT(A) provided partial relief, but the assessee contested the remaining disallowances and the handling of the case by the lower authorities. The Tribunal's decision emphasized the need for a thorough examination of the evidence and proper procedural adherence by the AO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115271 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2022
• Assessment Year: 2002-2003
• Appeal Filed On: 13-05-2018
• Other Referred Cases: CIT v. Orissa Corporation 159 ITR 78
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Question of law
• Section: 148; 143(3); 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH : COCHIN BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND Ms. PADMAVATHY S., ACCOUNTANT MEMBER ITA Nos.225 & 226/Coch/2018 Assessment Years : 2002-03 & 2003-04 Shri S. Bhaskar Sait, Aristo Road, Mission Quarters, Thrissur – 680 001. PAN : AKPPS 4457G Vs. The Assistant Commissioner of Income Tax, Circle 2(1), Range 2, Thrissur. APPELLANT RESPONDENT Assessee by : Shri Kittu Nair, Advocate Revenue by : Smt. J M Jamuna Devi, Sr. AR Date of hearing : 14.12.2022 Date of Pronouncement : 02.01.2023 O R D E R Per Padmavathy S, Accountant Member: These two appeals are against the separate orders of the CIT(Appeals), Thrissur dated 19.2.2018 for the AYs 2002-02 & 2003- 04. They were heard together and disposed of by this common order. 2. The assessee is engaged in the business of silver refinery along with other businesses. For both these assessment years, the assessee did not file the return of income. Based on information received from CIB wing of the Department, the assessee was issued a notice u/s. 148 on 31.12.2004. In response to the notice, the assessee filed the return ITA Nos.225 & 226/Coch/2018 Page 2 of 7 of income on 28.6.2005 showing a loss of Rs.1,86,698 for AY 2002-03 and a loss of Rs.1,98,459 for AY 2003-04. The AO during the course of hearing made several additions as per details given below:- Nature of disallowance AY 2002-03 AY 2003-04 Interest expenses 2,57,182 2,08,4656 Disallowance of telephone and mobile 21,501 11,015 Unexplained credits in capital account 186,350 5,00,000 Unexplained credits in capital account of M/s. Aishwarya 7,55,409 Loan credits not proved 28,75,000 Investment in fixed deposits 13,75,000 Loss on sale of car 3,52,820 Unexplained credits in banks 2,48,250 Addition towards capital gain 2,35,378 3,34,504 3. Aggrieved, the assessee filed appeal before the CIT(A). The CIT(A) for AY 2002-03 gave partial relief with regard to the loan credits not proved for an amount of Rs.13,30,000. With regard to other disallowances, the CIT(A) upheld the decision of the AO on the ground that no further evidence was produced. Aggrieved, the assessee is in appeal before the Tribunal. 4. The assessee filed the following common grounds :- A. The order of the assessment to the extent objected to herein is illegal, arbitrary and unauthorized. ITA Nos.225 & 226/Coch/2018 Page 3 of 7 B. The Appellate Authority went wrong in confirming the addition made on loans received from the friends and relatives for starting a new business on the premise that genuineness of the transactions has not been proved. He also proceeds on the premise that in the remand report also, the officer says that it is the responsibility of the assessee to produce them before the assessing officer for examination. In reply to the remand, it was demonstrated that having identified the persons and having produced confirmation letters from them, initial burden was discharged by the appellant and that Revenue had to take matter forward. The appellant had also relied on the ratio of the Judgment of the Honorable Supreme Court reported in 159 ITR 78, to canvass the said proposition. C. The Learned Commissioner ought to have noted that, length of time after which assesses called upon to explain cash credit is also relevant factor in considering whether the evidence produced is satisfactory. D. The documents substantiating their ownership of the property were produced along with confirmation letters long back when the original appeals were filed and was subject matter of remand. Merely because similar word used in the confirmation letter could not be said that creditors are not creditworthy. For these and other grounds and documents to be submitted at the time of hearing, it is humbly prayed that the Tribunal be pleased to allow the appeal. 5. The assessee also filed common additional grounds:- “3. The learned Assessing Officer has failed to afford enough time for the appellant to furnish all the details regarding the loan credits of Rs. 28,75,000/- (para 4.5 of the Assessment Order) and credits in the capital account of Rs. 1,86,350 (para 3.7) and credits of Rs. 7,47,000 (para 4.4). ITA Nos.225 & 226/Coch/2018 Page 4 of 7 4. The impugned assessment u/s 143(3) r.w.s. 147 was completed within a span of 12 days after the issue of the notice u/s 143(2) just stating that, "Since the loan credit has not been proved satisfactorily, these amounts stand unexplained and added" (para 4.3) "total amount credited in the Capital account of the appellant is unexplained. This is added" (para 4.4). 3. Even though a notice u/s 142(1) has been issued for filing the Return of Income the ld. Assessing Officer has not called for these details specifically by issue of notice u/s 142(1) after filing the Return of Income. 4. The ld. Assessing Officer has not given an opportunity to file such details before the assessment was made. 5. It is prayed before the hon. Tribunal that the Assessing Officer may be directed to examine those details now submitted with regard to confirmatory letters as also details of agricultural holdings, extent, crops cultivated etc. 6. The Id. Assessing Officer has failed to allow development expenses including providing roads within the property and making it fit for motoring, when he himself has admitted that the land of 1.75 acres were sold by the appellant in parts. For doing so the appellant had to provide roads for various plots by incurring development expenses. For these and such other grounds that may be urged at the time of hearing the case may be sent back to the Assessing Officer for considering the pieces of evidence submitted above.” 6. The assessee along with additional grounds filed documents with regard to confirmations from loan creditor and other documents in support of the claims disallowed by the AO. The main contention of the ld. AR before us is that the assessee was not given a proper opportunity to substantiate the claim disallowed by the AO. The ld. ITA Nos.225 & 226/Coch/2018 Page 5 of 7 AR also submitted that the AO failed to call for details and examine the true nature of expenses. The ld. AR also submitted that the revisionary proceedings were initiated in the month of March and due to time limit for completion of assessment the AO completed the assessment without calling any details but by simply stating that the assessee did not produce any details. The ld. AR submitted that this could be evidenced from the notice issued u/s. 142(1) which did not call for any details. The CIT(A) while adjudicating had considered only limited issues with regard to unexplained credit in capital accounts and loans wherein he had partly allowed the appeal. The ld. AR submitted that the CIT(A) failed to consider the loan confirmation produced by the assessee and submitted that once the assessee produces the confirmation letters from creditor, the onus is shifted to the revenue and efforts should be made to pursue the creditors. In this regard, the ld. AR relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Orissa Corporation 159 ITR 78. The ld. AR prayed for admission of additional ground for the reason that the CIT(A) did not adjudicate all the issues with regard to the additions made by the AO. 7. The ld. DR relied on the order of lower authorities. 8. We heard the rival submissions and perused the material on record. We notice that the entire premise on which the various additions have been made by the AO is that the assessee could not substantiate the claim. We also notice that the AO did not call for ITA Nos.225 & 226/Coch/2018 Page 6 of 7 evidences and did not verify the details submitted by the assessee. We further notice that the CIT(A) had considered limited issues with regard to the various disallowances made by the AO and has given partial relief to the assessee. In the case relied on by the ld. AR, the Apex Court has held that – “(i) The High Court has no power under S.256(2) of the 1961 Act to call upon the Appellate Tribunal to state a case if there was some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on a re-appreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal. (ii) The conclusion reached by the Tribunal in the instant case, that the assessee had discharged the burden that lay on him could not be said to be unreasonable, or perverse or based on no evidence. If the conclusion is based on some evidence on which it could be arrived at, no question of law as such arises. (iii) The assessee had provided the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that they were income-tax assessees. Their index numbers were in the files of the department. The Revenue apart from issuing notices under 8. 131 of the Act at the instance of the assessees, did not pursue the matter further. It did not examine the source of income of the alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. The assessee, therefore, could not do any further.” 9. From the facts stated above, it is clear that the lower authorities have not examined the details already furnished by the assessee and did not call for any additional information. Given this, we are of the considered view that the issue should go back to the AO for de novo ITA Nos.225 & 226/Coch/2018 Page 7 of 7 examination of various disallowances and additions made. The AO is directed to examine the issues afresh and decide after verification of the details submitted in accordance with law. The assessee is directed to provide the necessary details to substantiate the various claims and coordinate with the proceedings. It is ordered accordingly. 10. In the result, both the appeals are allowed for statistical purposes. Pronounced in the open court on this 2 nd day of January, 2023. Sd/- Sd/- ( N V VASUDEVAN ) ( PADMAVATHY S ) VICE PRESIDENT ACCOUNTANT MEMBER Bangalore, Dated, the 2 nd January, 2023. / Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar, ITAT, Bangalore/Cochin.