Sri.V.K. Pamodkumar, Thrissur V. The ITO, Trichur

ITA 243/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8585 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 25-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 17-04-2015
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: P L PORINCHU
• Keywords: Opportunity of being heard; Additional evidence
• Section: 142(1); 68

Judgement Text

ITA NO.243/COCH/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM ITA NO.243/COCH/2015 (ASST YEAR :2007-08) SHRI V.K. PROMOD KUMAR, GOOD MORNING AGENCIES, PADIYUR, IRINJALAKUDA, THRISSUR-680 695. THE INCOME-TAX OFFICER, WARD- 2(3), THRISSUR. ( ASSESSEE APPELLANT) VS (REVENUE -RESPONDENT) PAN NO. AJFPP 7481A] ASSESSEE BY SHRI P.L. PORINCHU, ADV. REVENUE BY SHRI SHANTAM BOSE, CIT(DR) DATE OF HEARING 25/05/2016 DATE OF PRONOUNCEMENT 01/06/2016 ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES FROM THE O RDER OF THE LD. CIT(A)-V DATED 25/02/2014 FOR THE ASSESSMENT YEAR 2007-08 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADD ITION U/S. 68 OF THE ACT AT RS.36,48,480 AND DISALLOWANCES OF EXPENDITURE ON ES TIMATE AT RS.1,80,000 UNDER COMMISSION AND RS.30,000 UNDER TRANSPORTATION CHARGES. 2. THE ACCOUNTS OF THE APPELLANT HAS BEEN AUDITED B Y THE CHARTERED ACCOUNTANT AND IN FORM 3CB IT IS REPORTED THAT THE ACCOUNTS ARE TRUE AND CORRECT. THE COMMISSIONER(APPEALS) WITHOUT APPRECIA TING THE FACT HAS FOUND THAT THE BOOKS ACCOUNT WHICH IS CLAIMED TO HAVE B EEN PRODUCED TANTAMOUNT TO CAMOUFLAGE AND ACTUAL TRANSACTIONS. ITA NO.243/COCH/2015 2 3. THE BOOKS OF ACCOUNT OF THE GOPIKA TRADING CO. FROM WHOM RS.27,68,070 IS RECEIVED, HAS ALSO BEEN AUDITED BY THE CHARTERED ACCOUNTANT AND IN THE REPORT IN FORM 3CB THERE IS NOTHING CONTRARY TO THE CREDITS BROUGHT IN BY THE APPELLANT. HOWEVER THE COMMISSIONER(APPEALS) FAILE D TO APPRECIATE THE FACT THE CREDITS BROUGHT IN BY THE APPELLANT ARE CO NFIRMED BY THE AUDITED ACCOUNTS OF THE CREDITOR. 4. THE CREDITS AVAILED FROM THE BHAVANI ENTERPRISES AT RS.8,80,409 ARE ALSO CONFIRMED BY THE ACCOUNTS MAINTAINED BY THE CREDITO R - THE BHAVANI ENTERPRISES. THE COMMISSIONER(APPEALS) CONFIRMED TH IS ADDITION ALSO WITHOUT APPRECIATING THE RELEVANT FACTS AVAILABLE IN THE MA TTER. 5. THE COMMISSIONER(APPEALS) ERRED IN CONFIRMING TH E DISALLOWANCE OF EXPENDITURE ON ESTIMATE BASIS ESPECIALLY WHEN THE A CCOUNTS ARE AUDITED U/S. 44AB AND NOTHING QUALIFIED FOR DISALLOWANCE IN THE AUDIT REPORT 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER , VARY AND/OR WITHDRAW ANY OR ALL THE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF THE ASSESSING OFFICER ARE REPRODUCED HEREINBELOW: THE COPY OF THE BALANCE SHEET AS AT 31.3.2007 SH OWS AN OPENING BALANCE OF PROPRIETORS CAPITAL AS ON 1.4.2006 AT RS.31,96, 553/-. ADDITION TO CAPITAL ACCOUNT DURING THE YEAR AMOUNTED TO RS.36,48,480/- FOR WHICH NO PROPER EXPLANATION WAS GIVEN. VIDE THIS OFFICE LETTER DATE D 10.12.2009, THE ASSESSEE WAS REQUESTED TO FURNISH DETAILS AN ALSO TO EXPLAIN THE SOURCES OF CAPITAL INTRODUCED. A NOTICE U/S. 142(1) WAS ALSO ISSUED T O THE ASSESSEE FOR COMPLIANCE BY 24.12.2009. ON 23.12.2009 THE ASSESSE E ATTENDED. IT IS ALSO STATED THAT THE DETAILS OF ADDITION TO CAPITAL DURI NG THE YEAR IS GIVEN IN THE LEDGER OF PROPRIETORS CURRENT ACCOUNT. A SUM OF R S.8,80,409/- WAS RECEIVED FROM HIS MOTHER SMT. BHAVANI AMD A SUM OF RS.27,68, 070/- WAS RECEIVED FROM HIS WIFE SMT. GOPIKA. IT WAS EXPLAINED THAT THE CREDIT FROM HIS MOTHER WAS OUT OF THE PROPRIETARY BUSINESS DONE BY HER UNDER THE NAME AND STYLE OF BH AVANI ENTERPRISES, ELAMPALLY, KOTTAYAM. A COPY OF THE LEDGER OF HER B OOKS WAS ALONE FURNISHED. AS PER THIS COPY, THE TOTAL AMOUNTS TRANSFERRED FRO M HER ACCOUNTS TO THE ITA NO.243/COCH/2015 3 ASSESSEE AMOUNTED TO RS.1,01,35,000/- AND THERE WAS ALSO RECEIPT FROM THE ASSESSEE OF RS.92,54,591/-. THE DIFFERENCE OF RS.8, 80,409 IS WHAT IS SHOWN AS CAPITAL INTRODUCTION IN THE ASSESSEES BOOKS. SMT. B HAVANI IS NOT ASSESSED TO INCOME-TAX. IT WAS EXPLAINED THAT THE CREDIT FROM HIS WIFE WA S OUT OF THE PROPRIETARY BUSINESS DONE BY HER UNDER THE NAME AND STYLE OF GO PIKA TRADING COMPANY. A COPY OF THE LEDGER OF HER BOOKS WAS NOT FURNISHED . A SUM OF RS.27,68,070/- IS SHOWN AS RECEIPT FROM HER DURING THIS YEAR. NO BOOKS OF ACCOUNTS OF HER BUSINESS OR ANY EXPLANATION REGARDING HER SOURCES W ERE FURNISHED DESPITE BEING ASKED TO DO SO. AS THE ASSESSEE HAS FAILED TO FURNISH A CONVINCI NG REPLY REGARDING THE SOURCE FROM CREDITS APART FROM NAMING THE PERSONALI TIES INVOLVED, NO DETAILS REGARDING THEIR BUSINESS LIKE BOOKS OF ACCOUNTS, BA NK PASS BOOKS WERE FURNISHED. UNDER THE CIRCUMSTANCES, ESPECIALLY SO AS NO EVIDENCE WERE FURNISHED, I AM CONSTRAINED TO REJECT THE EXPLANATI ON OF THE ASSESSEE THAT FUNDS WERE INFACT ADVANCED BY HIS MOTHER AND WIFE. THEREFORE, THE TOTAL AMOUNT OF RS.36,48,480/- BROUGHT AS ADDITION TO CAP ITAL ACCOUNT IS TREATED AS THE INCOME OF THE ASSESSEE FROM UNEXPLAINED SOURCES AND ADDED TO HIS TOTAL INCOME U/S. 68 OF THE INCOME-TAX ACT. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AS SESSING OFFICER BY OBSERVING AS UNDER:- 1.4 THE OBSERVATIONS OF THE ASSESSING OFFICER IS B ASED ON DETAILED EXAMINATION AND IT HAS BEEN CONCLUDED BEYOND ANY SH ED OF DOUBT THAT THE CREDITS FROM THE TWO PROPRIETARY CONCERNS, RUN BY T HE WIFE AND THE MOTHER OF THE ASSESSEE, LACKS THE CREDIBILITY AS THESE ENTITI ES HAVE NEITHER FILED THE RETURN OF INCOME NOR ANY SALE-TAX RETURN. THIS IS APPAREN TLY, A CASE OF UNVERIFIABLE CREDITS. IN VIEW OF THE CHRONOLOGY OF EVENTS, INCLU DING NON-FILING OF AUDIT REPORT AND INCOME-TAX RETURN WITHIN TIME, NON-CO-OP ERATION AT THE TIME OF ASSESSMENT PROCEEDINGS, NON-FILING OF SALES TAX RET URN OF THE PROPRIETARY CONCERNS RUN BY THE APPELLANTS WIFE AND MOTHER AS WELL AS NON-FILING OF THE IT RETURN OF THESE PROPRIETARY CONCERNS, THE BOOKS OF ACCOUNT WHICH IS CLAIMED TO HAVE BEEN PRODUCED TANTAMOUNTS TO CAMOUFLAGE THE ACTUAL TRANSACTIONS. IN VIEW OF THIS, THE ADDITION MADE B Y THE ASSESSING OFFICER BY HOLDING THAT THE CREDIT LACKS WORTHINESS TO BE ESTA BLISHED FOR ITS SOURCE, AND THE SO-CALLED BOOKS OF ACCOUNT ALSO LACKS CREDIBILI TY FOR SUPPORTING AND SUSTAINING THE VERACITY OF SUCH TRANSACTIONS APPEAR S TO BE CORRECT. IN VIEW OF ITA NO.243/COCH/2015 4 THIS, THE ADDITION MADE BY THE ASSESSING OFFICER IS UPHELD AND THE APPEAL ON THIS GROUND IS DISMISSED. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESS EE PRAYED TO ADMIT THE ADDITIONAL EVIDENCE IN THE FORM OF AUDITED ACCOUNTS OF HIS WIFE, SMT. PREEJA AND HIS MOTHER SMT. BHAVANI WITH RESPECT TO THEIR PROPR IETARY CONCERNS, M/S. GOPIKA TRADING COMPANY AND M/S. BHAVANI ENTERPRISES RESPEC TIVELY. HE SUBMITTED THAT THE BOOKS OF ACCOUNT WERE CALLED FOR BY THE ASSESSI NG OFFICER AND THE SAME WAS SUBMITTED BEFORE BOTH THE AUTHORITIES BELOW BUT NON E OF THE AUTHORITIES BELOW HAVE MENTIONED ABOUT THE BOOKS OF ACCOUNT MAINTAINE D BY THEM. THEREFORE, IT IS VERY ESSENTIAL TO LOOK INTO THE AUDITED ACCOUNTS TO PROVE THE CREDITWORTHINESS OF THE SAID LADIES WITH RESPECT TO THEIR PROPRIETAR Y CONCERNS. 6. THE LD. DR ON THE OTHER HAND DID NOT OBJECT T O THE ADMISSION OF ADDITIONAL EVIDENCE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE FACTS OF THE CASE. WE ADMIT THE ADDITIONAL EVIDENCE SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE INTEREST OF JUSTICE. SINCE THE SAID ACCOUNTS H AVE NOT BEEN EXAMINED BY NONE OF THE AUTHORITIES BELOW, THEREFORE, IT WILL B E IN THE INTEREST OF JUSTICE IF THE ADDITIONAL EVIDENCE SUBMITTED BY THE LD. COUNSEL FO R THE ASSESSEE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE SA ME AND DECIDE THE ISSUE DE NOVO BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.243/COCH/2015 5 ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO A CT UPON THE ISSUE AS DIRECTED HEREINABOVE. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01-0 6/2016 SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 1 ST JUNE,2016 GJ COPY TO: 1. SHRI V.K. PROMOD KUMAR, GOOD MORNING AGENCIES, P ADIYUR, IRINJALAKUDA, THRISSUR-680 695. 2. THE INCOME TAX OFFICER, WARD-2(3), THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, THRISSUR. 5. THE DR/ITAT, COCHIN BENCH. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN ITA NO.243/COCH/2015 6 1.DATE OF DICTATION : 25/05/2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER: 20/05/201 6 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER : 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. PS/PS : 6. DATE ON WHICH THE FILE GOES TO BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO HEAD CLERK: 8. DATE ON WHICH THE FILE GOES TO ASSISTANT REGISTR AR 9. DATE OF DISPATCH OF THE ORDER: