Sri.K.P. Manoj Kumar, Kannur V. The DCIT, Kozhikkode

ITA 233/COCH/2020

AI Insights

The case involves an appeal by Shri K.P. Manoj Kumar against the order of the CIT(A)-3, Kochi, which pertained to the assessment year 2011-12. The primary issue was the addition of unexplained investments amounting to Rs. 17.88 lakhs by the Assessing Officer, which was later reduced to Rs. 7.92 lakhs by the CIT(A). The Tribunal examined the circumstances under which cash was allegedly used for investments, including the appellant's claims of cash withdrawals and joint investments with another individual, K.P. Lakshmanan. The Tribunal's decision to reduce the addition was based on the assessment of the appellant's socio-economic status and past withdrawals, although it emphasized that the decision should not be considered a precedent.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 115525 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 31-12-0000
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Satbeer Singh Godara, Judicial Memberand Shri Manoj Kumar Aggarwal, Accountant Member ITA No.233/Coch/2020 (Assessment Year:2011-12) Shri K.P. Manoj Kumar Srihari Nivas, Thonol Line Thalikkavu, Kannur 670002 Vs. DCIT, Central Circle -2 Kozhikode PAN –CIEPK0173Q Appellant Respondent Appellant by: None Respondent by: Smt. J.M. Jamuna Devi, Sr. D.R. Date of Hearing: 09.11.2022 Date of Pronouncement: 27.12.2022 O R D E R Per: Bench This assessee’s appeal for A.Y. 2011-12arises against the CIT(A)-3, Kochi’s order dated 27.01.2020, passed in case No. ITA 236/C/CIT(A)- III/2013-14, involving proceedings under Section 143(3) r.w.s. 153A of the Income Tax Act, 1961 (in short the Act). 2. Case called twice. None appears at assessee's behest. We accordingly proceed ex-parte against him. 3. Coming to the assessee’s sole substantive grievance that the CIT(A) had erred in law and on facts in restricting the Assessing Officer’s action making unexplained investment addition of Rs.17.88 lakhs to 7.92 lakhs only, learned DR invited our attention to the lower appellate discussion in issue as follows: - ITA No. 233/Coch/2020 Shri K.P. Manoj Kumar 2 “6. Inview of the aforesaid grounds of appeal and the written submissions made, the aforesaid appeal for all the relevant assessment years is decided as under:- 6.1 Grounds 1 and 5 are general in nature. Grounds 2 and 4 are relating to the non acceptance of appellant's explanation in view of the decisions cited therein. Round 3 is relating the non adherence to the Circular NO.5 of CBDT dated 20.2.1969. 6.2 The election surveillance team of the District Collector, Kasargode found Sri. K.P. Lakshmanan, Sri K.P. Muaralikrishnan and Driver Sri Prakash carrying Rs.30,00,000/- while travelling in a Car. belonging to Sri K.P. Lakshmanan on 12.04.2011. On further investigation, total investment was found to be Rs 40,00,000/-, out of which the cash of Rs 30,00,0001- was found by the election surveillance team. In his sworn statement, Sri K.P Lakshmanan admitted ownership of Rs 10,00,000/- and the balance Rs 30,00,000/- was owned up by the appellant. 6.3 During the course of assessment proceedings, the appellant explained the loans taken from Canara Bank along with the other withdrawals in cash amounting to total of Rs.23,38,000/- as the source for the investment made. Thus the appellant offered explanation for Rs 23,38,000/- out of investment of Rs 30,00,0001-. The Assessing Officer rejected the explanation. According to the Assessing Officer, the cash withdrawals made and the investment made have no direct linking, there were frequent withdrawals and there is time gap between withdrawals and investment. The Assessing Officer accepted the explanation to the extent of Rs 12,12,000/- being the loan taken from the Canara Bank 15.02.2011 and 18.03.2011 and proceeds from the sale of land as source for giving advance for the purchase of property. The balance Rs 17,88,000/- is held as unexplained and brought to tax. 6.4 During the appellate proceedings, the appellant claimed having opening cash balance of Rs 4,70,000 and thus claimed total explained investment out of his funds as RS.28,08,000/- and also made a claim that even if the opening cash balance was not available with him, since the investment is made jointly by the appellant and K.P Lakshmanan, their joint sources should have been taken into account for the purpose of assessment. The appellant gave the details of joint sources as under; ITA No. 233/Coch/2020 Shri K.P. Manoj Kumar 3 K.P. Lakshanan Rs.15,92,000 The appellant Rs.23,38,000 (excluding opening balance) Total Rs.39,30,000 6.5 The appellant has not made the claim of opening balance during the investigation proceedings after the cash interception by the election surveillance team, during the assessment proceedings. During the appellate proceedings, the appellant has not substantiated the claim of having opening cash balance. 6.6 The explanation regarding the joint sources of cash is not made by the appellant during the investigation proceedings and during the course of assessment proceedings. This claim is made for the first time during the appellate proceedings. Sri K.P. Lakshmanan is also in appeal before this office aggrieved by the additions made by the Assessing Officer. It is seen from the record that the above claim of joint sources was made during the assessment proceedings and the Assessing Officer rejected the same vide paragraph 8 of the assessment order in the case of K.P. Lakshmanan, in view of certain discrepancies found. This claim is not made in the appellate proceedings by Sri K.P Lakshmanan. Hence the claim of joint sources is rejected. 6.7 The main issue in the present case is whether the amounts drawn in cash were available for investment on the date of the agreement on 23.03.2011. The Assessing Officer disbelieved the explanation offered stating that there is no direct linking and time gap. The disbelief is more based on conjectures than on evidences to show how the cash was expended or utilized for other purposes. No evidence of expenditure or utilization of the cash by the appellant is brought on record by the Assessing Officer except Rs 1,30,000/- used to build well in the plot of land of 12 cents. In the absence of any detail of expenses incurred by the assessee except Rs.13,0,000/- in the relevant period, the cash withdrawal could be said to have been reinvested. In the absence of any other evidences, totality of facts of the case and the surrounding circumstances cash withdrawals and cash received from other sources are held as available for the purpose of making investments in the property. 6.8 In view of the above, the cash available and the unexplained investment made by the appellant is arrived at as under; Total investment Rs.30,00,000 Cash available Total claim of cash Rs.23,38,000 Less spent for borewell Rs. 1,30,000 Balance cash available for investment Rs.22,08,000 Balance unexplained investment Rs. 7,92,000 ITA No. 233/Coch/2020 Shri K.P. Manoj Kumar 4 6.9 In the result, the unexplained investment made by the appellant is upheld to the extent of Rs 7,92,000/- as against the addition of Rs 17,88,000/-. 7. In the result, the appeal is partly allowed.” 4. We have given our thoughtful consideration to the Revenue’s vehement contentions and assessee’s pleadings. Learned DR could hardly dispute the clinching fact that we are dealing with an estimated addition where possibility of cash in hand keeping in mind assessee’s socio- economic status as well as past withdrawals could not be altogether ruled out. Faced with this situation, we deem it appropriate that a lump sum addition of Rs.3.5 lakhs out of that in issue of 7.9 lakhs would be just and proper with a rider that the same would not be treated as a precedent. Necessary computation shall follow as per law. 5. Delay of 36 days in filing the instant appeal is condoned as the institution is 06.05.2020 which falls in Covid-19 pandemic outbreak period. 6. This assessee’s appeal is partly allowed in above terms. Dictated and pronounced in the open Court on 27 th December, 2022. Sd/- Sd/- (Manoj Kumar Aggarwal) (Satbeer Singh Godara) Accountant Member Judicial Member Cochin, Dated: 27 th December, 2022 Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) -3, Kochi 4. The Pr. CIT- (Central), Kochi 5. The DR, ITAT, Cochin 6. Guard File By Order //True Copy// Assistant Registrar ITAT, Cochin np ITA No. 233/Coch/2020 Shri K.P. Manoj Kumar 2 S.No. Details Date Initials Designation 1 Draft dictated on 09.11.2022 Sr. PS/PS 2 Draft placed before author 09.11.2022 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement Sr. PS/PS 7 File sent to Bench Clerk Sr. PS/PS 8 Date on which the file goes to Head Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order