DCIT, Trichur V. Sri.K.P.Yususuf, Trichur

ITA 276/COCH/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8659 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 22-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2012
• Court: TRIBUNAL
• Department Lawyers: SHANTHAM BOSE
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Gift; Residential status; Search and seizure; Onus to prove
• Section: 153A; 68

Judgement Text

I.T.A. NOS.274-279/COCH/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI B P JAIN, AM & GEORGE GEORGE.K, JM I.TA,. NOS.274-279/COCH/2012 (ASST YEARS: 2003-04 TO 2008-09 ) THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, THRISSUR. SHRI K.P.YUSUF, KELATHPARAMBIL HOUSE, MINALUR P.O., THRISSUR-680 581. (REVENUE-APPELLANT) VS (ASSESSEE -RESPONDENT) PAN NO. AAJPY 3448P ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI SHANTHAM BOSE, CIT(DR) DATE OF HEARING 22/03/2016 DATE OF PRONOUNCEMENT 26/04/2016 ORDER PER B P JAIN, AM: THESE SIX APPEALS OF THE REVENUE ARISE FROM THE CONSOLI DATED ORDER OF THE LD. CIT(A)-I, KOCHI DATED 22/08/2012 FOR THE ASSESS MENT YEARS 2003-04 TO 2008-09. 2. THE ISSUES IN ALL THE APPEALS OF THE REVENUE ARE IDENTICAL AND THEREFORE, WE PROCEED TO DECIDE ALL THE APPEALS BY THIS CONSOLIDA TED ORDER. THE REVENUE HAS TAKEN ALMOST IDENTICAL GROUNDS IN ALL THE YEARS AND WE REPRODUCE THE GROUNDS FOR THE ASSESSMENT YEAR 2003-04: 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS)-I, KOCHI IS OPPOSED TO LAW, WEIGHT OF EVIDENCE AND FACTS OF THE CASE. I.T.A. NOS.274-279/COCH/2012 2 2. THE CIT(APPEALS) ERRED IN DELETING THE ADDITION TOWARDS UNCONFIRMED CREDITORS FOR THE AY 2003-04 FOR THE REASON THAT TH E SAME WAS NOT BASED ON ANY SEIZED MATERIALS OR A SUBJECT MATTER OF SEARCH AND SEIZURE FINDINGS. THE CIT(A) FAILED TO NOTICE THAT THE ASSESSMENT IN THIS CASE W AS COMPLETED U/S. 153A OF THE IT ACT THE SCOPE OF WHICH DOES NOT REQUIRE A LE ANING SUPPORT ON THE SEIZED MATERIALS OR THE SUBJECT NEEDS TO BE A SUBJECT MA TTER OF SEARCH AND SEIZURE FINDINGS FOR AN ADJUDICATION. 3. THE CIT(APPEALS) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CREDITS FROM NRI FRIENDS BY R ELYING ON TWO CASE LAWS ONE BY THE HONBLE ITAT, COCHIN BENCH IN THE CASE OF DR . P. SASIKUMAR AND THE OTHER BY THE ITAT HYDERABAD REPORTED IN 42 ITD 558. HOWEVER, THE FACTS OF THESE CASES ARE CLEARLY DISTINGUISHABLE FROM THE PR ESENT CASE. 4. THE CIT(APPEALS) FAILED TO NOTICE THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE COULD NOT EVEN PRODUCE THE BIFURCATION OF THE CREDITORS INDIVIDUAL CONTRIBUTION FROM THE AMOUNT JOINTLY BORROWED FROM 3 PERSONS, VIZ., SHRI UBAID, SHRI JAYAPRAKASH, AND SHRI ABOOBAKER. HENCE THE GE NUINENESS OF THE CREDITS IS NOT ESTABLISHED BY THE ASSESSEE. THIS VIEW IS SUPPO RTED BY VARIOUS JUDICIAL PRONOUNCEMENTS. 5. THE CIT(APPEALS) FAILED TO APPRECIATE THE BARE F ACT THAT IN THIS CASE THAT IT IS NOT A MERE FAILURE WITH THE PROCEDURAL FORMALITY BU T THE VERY EXISTENCE OF TRANSACTIONS IS AT STAKE SINCE ANY GENUINE FOREIGN REMITTANCE SHOULD BE MADE THROUGH BANKING CHANNELS COMMENCE FROM THE REMITTAN CE OF THE SAME INTO A VERITABLE BANK ACCOUNT ABROAD FOR ONWARD TRANSFER A S QUOTED CATEGORICALLY BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 6. THE CASE LAWS RELIED UPON BY THE ASSESSING OFFI CER REPORTED IN 291 ITR 278 (SC) IN THE CASE OF CIT VS. C.P. MOHANAKALA & OTHER S IS SQUARELY APPLICABLE IN THIS CASE. FURTHER, IN THE CASE OF CIT VS. DAULAT R AM RAWATMULL (1973) 87 ITR 349 (SC) THE HONBLE APEX COURT HELD THAT THE ONUS OF E STABLISHING CASH CREDIT CAN BE TREATED AS DISCHARGED BY AN ASSESSEE ONLY WHEN H E IDENTIFIES AND ESTABLISHES THE GENUINENESS OF THE SOURCE AND THE O RIGIN OF FUNDS. THE CIT(APPEALS) FAILED TO NOTICE THAT THE ASSESSEE HAS NOT DISCHARGED THE CREDITWORTHINESS AND CAPACITY OF THE PERSON WHO ADV ANCED LOAN. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING IT IS REQUESTED THAT THE ORDER OF THE CIT(A) MAY BE SET A SIDE AND THAT OF THE ASSESSING OFFICER RESTORED. I.T.A. NOS.274-279/COCH/2012 3 3. IT WAS ARGUED BY THE LD. CIT(DR), SHRI SHANTHA M BOSE THAT THE MAIN GRIEVANCE OF THE REVENUE IS WITH REGARD TO THE DELE TION OF ADDITION ON ACCOUNT OF NRI CREDITS MADE BY THE ASSESSEE RECEIVED FROM A BROAD FROM VARIOUS PERSONS. HE PROCEEDED TO READ THE FACTS OF THE CASE WITH REG ARD TO THE NRI CREDITS FROM THE ORDER OF THE LD. CIT(A) (PGS. 31 TO 49). HE A RGUED THAT THE LD. CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE REPORT OF THE ASSESSIN G OFFICER IN THE PROPER PERSPECTIVE AND ALSO THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. P. MOHANAKALA (291 ITR 278). 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE A SSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) AND ARGUED THAT THE LD. CIT(A) HAS P ASSED A VERY REASONED ORDER AND THE ASSESSEE HAS PLACED ON RECORD ALL THE DOCUM ENTS AS REQUIRED BY THE ASSESSING OFFICER AND ALSO MANY OTHER DOCUMENTS BEF ORE THE LD. CIT(A) WHICH WERE SENT TO THE ASSESSING OFFICER FOR REPORT AND A FTER RECEIVING THE REPORT, THE ASSESSEE HAS GIVEN HIS SUBMISSIONS WHICH IS PART OF THE ORDER OF THE LD. CIT(A). 5. THE FACTS OF THE CASE ARE THAT THE ASSESSEE H AS RECEIVED VARIOUS AMOUNTS FROM ABROAD AS UNDER:- NAME AMOUNT (RS.) ASSESSMENT YEAR UBAID 20,00,000/- 2003-04 UBAID JAYAPRAKASH P.YOUSUF 41,37,800/- 32,85,770/- 1,70,000/- 2004-05 I.T.A. NOS.274-279/COCH/2012 4 C. MOHAMED 38,00,000/- 2005-06 C.MOHAMED UBAID SHIHABUDEEN 65,00,000/- 20,00,000/- 9,03,760/- 2006-07 C. MOHAMED 1,75,66,662/- 2007-08 AS A MATTER OF FACT, THE ASSESSEE SUBMITTED VARIOUS DOCUMENTS BEFORE THE ASSESSING OFFICER WHICH WERE NOT FOUND SATISFACTORY AND THEREFORE, MADE THE ADDITIONS TO THE INCOME OF THE ASSESSEE. AS MENTIO NED HEREINABOVE, THE ASSESSEE SUBMITTED VARIOUS DOCUMENTS WHICH WERE SUB MITTED BEFORE THE ASSESSING OFFICER AS WELL AS MANY OTHER DOCUMENTS B EFORE THE LD. CIT(A) WHICH WERE SENT TO THE ASSESSING OFFICER FOR REPORT AND T HE LD. CIT(A) WAS SATISFIED AND DELETED THE ADDITIONS SO MADE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. AS REGARDS THE AMOUNTS RECEIVED OF RS. 20,00,000/-, RS . 41,37,800/- AND RS.20,00,000/- FROM HIS NRI FRIEND DURING THE ASSES SMENT YEARS 2003-04, 2004-05 AND 2006-07, IT WAS STATED BY THE ASSESSEE THAT THE SE AMOUNTS WERE REMITTED BY SHRI UBAID MARAKKAR TO THE ASSESSEE IN THE NRI ACC OUNT. TO SUPPORT THE SAME, SWORN AFFIDAVIT DULY SIGNED BEFORE THE EMBASSY OFFI CIALS WERE ALSO FILED BY SHRI UBAID MARAKKAR. HE ALSO GAVE THE COPIES OF THE PAS SPORT AND SALARY CERTIFICATE. THE ASSESSEE HAS ALSO PRODUCED COPIES OF TRADE LICE NSE, SALARY CERTIFICATES AND SWORN AFFIDAVITS IN THE CASE OF SHRI UBAID MARAKKAR , M.G. JAYAPRAKASH AND SHRI C.M. MOHAMMED ALONGWITH PASSPORT DETAILS. THE ASS ESSEE HAS ALSO SUBMITTED I.T.A. NOS.274-279/COCH/2012 5 BCI FORMS FOR THE REMITTANCES RECEIVED FROM SHRI UB AID MARAKKAR AND SHRI M.G. JAYAPRAKASH. AS REGARDS SHRI M.G. JAYAPRAKASH, AS S TATED EARLIER, THE ASSESSEE HAD FILED COPY OF PASSPORT AND SWORN AFFIDAVIT BEFO RE THE EMBASSY OFFICIALS AND ALSO COPY OF THE BUSINESS LICENSE. THE MAIN OBJE CTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAS NOT OBTAINED BCI FORMS FR OM SBT AND THE SAME WAS SUBMITTED BEFORE THE LD. CIT(A) WHICH WAS SENT TO T HE ASSESSING OFFICER FOR REPORT. 7. AS REGARDS SHRI C.M. MOHAMMED,, NRI, THE ASSESS EE RECEIVED CREDITS OF RS.38,00,000/- RS.65,00,000/- AND RS.1,75,66,662/- DURING THE ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08. IT WAS SUBMITTED THA T THE ASSESSEE DECIDED TO EXPAND THE BUSINESS OF M/S. T.N. AUTO & GENERAL ENG INEERING COMPANY PVT. LTD. ONE OF HIS NRI FRIEND, SHRI C.M. MOHAMMED AGREED TO PURCHASE SHARES IN THE COMPANY AND ADVANCED RS.38,00,000/- DURING THE ASSE SSMENT YEAR 2005-06, RS.65,00,000/- DURING THE ASSESSMENT YEAR 2006-07 A ND RS.1,75,66,662/- DURING THE ASSESSMENT YEAR 2007-08. HE WAS THE GENERAL MANAGE R OF LULU GROUP AND WAS ALSO DIRECTOR, TECHWIRE DISTRIBUTORS LLC. HE SUBMI TTED THE COPY OF HIS PASSPORT, SWORN AFFIDAVIT BEFORE THE EMBASSY OFFICIALS AND CO PIES OF THE BUSINESS LICENSE SHOWING HIS INTEREST IN THE BUSINESS WHICH SHOWS TH AT HE HAS GOT SUFFICIENT INCOME. I.T.A. NOS.274-279/COCH/2012 6 8. AS REGARDS SHRI P. YUSUF, , PALAKKAL HOUSE, KUTTIPURAM WHO IS ALSO AN NRI AND CO-OWNER OF WEST FORT TOWERS COMMERCIAL COMPLEX, WE ST FORT, JOINTLY OWNED BY THE ASSESSEE, HE HAS ADVANCED RS.1,70,000/- DURING THE ASSESSMENT YEAR 2004- 05 AND RS.2,00,000/- DURING THE ASSESSMENT YEAR 200 8-09. THE ASSESSEE HAS FILED THE CONFIRMATION CERTIFICATE AND ALSO FILED ALONGWI TH THE COPIES OF BANK ACCOUNTS. THE ADVANCE IS GIVEN AND SUPPORTED BY B ANK DETAILS AND SHRI P.YUSUF IS FINANCIALLY SOUND AND COPIES OF THE CONFIRMATION CERTIFICATE ALONG WITH BANK STATEMENT WERE SUBMITTED WHICH CONFIRMED THE ADVANC E. 9. AS REGARDS THE ADVANCE RECEIVED FROM SHRI SH IHABUDHEEN DURING THE ASSESSMENT YEAR 2006-07 AMOUNTING TO RS.9,03,716/-, THE ASSESSEES SON SHRI SHIHABUDHEEN WAS WORKING IN UAE AND HE WAS A NON RE SIDENT AT THE TIME OF REMITTING THE AMOUNT. THE AMOUNT WAS REMITTED TO T HE NRE ACCOUNT OF THE ASSESSEE. THE MAIN CONTENTION THAT SHRI SHIHABUDH EEN IS AGED ONLY 21 CANNOT BE A REASON FOR DISALLOWING THE CLAIM. AGE IS NOT A FACTOR FOR EARNING INCOME. COPY OF THE PASSPORT WAS SUBMITTED BY THE ASSESSEE TO PROVE THE RESIDENTIAL STATUS OF SHRI SHIHABUDHEEN AND CONFIRMATION CERTIF ICATE WAS ALSO ENCLOSED FOR SENDING THE MONEY TO THE ASSESSEE. 10. IT IS ALSO A FACT THAT NOTHING HAS BEEN BROUG HT ON RECORD BY THE REVENUE OR NOTHING HAS BEEN ARGUED BY THE LD. DR THAT ANY OF T HE FUND WHICH WAS I.T.A. NOS.274-279/COCH/2012 7 RECEIVED BY THE ASSESSEE FROM ABROAD HAS BEEN GENER ATED WITHIN INDIA AND EVERY MONEY HAS BEEN RECEIVED FROM ABROAD. 11. AS REGARDS THE CASE LAWS RELIED UPON BY THE A SSESSING OFFICER, THEY HAVE BEEN RIGHTLY DISTINGUISHED BY THE LD. CIT(A) AND AR E NOT APPLICABLE TO THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE. WE HA VE READ ALL THE CASE LAWS VERY CAREFULLY. IN THE CASE OF CIT VS. MOHANAKALA (SUPRA), THE IDENTITY OF THE CREDITOR WAS NOT SATISFACTORILY ESTABLISHED. IN TH AT CASE, THE GENUINENESS OF THE TRANSACTION WAS ALSO NOT ESTABLISHED. MOREOVER, TH E CAPACITY OF THE LENDER WHO ADVANCED MONEY WAS ALSO NOT SATISFACTORILY EXPLAINE D. THEREFORE, ON THE THREE COUNTS, NAMELY, IDENTITY OF THE CREDITOR, GENUINENE SS OF THE TRANSACTIONS AND CAPACITY OF THE CREDITOR TO GIVE FUNDS TO THE RESPO NDENT-ASSESSEE WERE NOT ESTABLISHED. THE TRANSACTIONS IN THE CASE OF MOHA NAKALA (SUPRA) WERE CLAIMED TO BE NRI GIFTS. THE ASSESSEE HAD TAKEN DIFFERENT STANDS AT DIFFERENT LEVELS OF THE ASSESSMENT WHICH HAD ALSO RAISED THE SUSPICION REGA RDING BONA FIDE AND GENUINENESS OF THE TRANSACTIONS. IT IS ON THOSE COUNTS THAT THE ABOVE CASE WAS DECIDED BY THE HONBLE APEX COURT WHEREAS IN THE PR ESENT CASE, THE FACTS ARE ENTIRELY DIFFERENT AND DISTINGUISHABLE FROM THE FAC TS CONSIDERED IN THE CASE OF MOHANAKALA (SUPRA). I.T.A. NOS.274-279/COCH/2012 8 12. IN PARA 8.14 OF THE ORDER OF THE LD. CIT(A), THE FACTS IN THE ASSESSEES CASE ARE CONSIDERED AND DEALT WITH AND THE LD. CIT(A) HA S CLEARLY FOUND THAT ALL THE RECEIPTS ARE CLAIMED TO BE CREDITS FROM THE NRIS. 13. IN THE PRESENT CASE, THE ASSESSEE HAVING PROVE D THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S IN THE CASE OF ALL THE PERSONS FROM WHOM THE ASSESSEE HAS RECEIVED THE AMO UNTS FROM TIME TO TIME IN VARIOUS ASSESSMENT YEARS, WE FIND NO REASON FOR THE ASSESSING OFFICER TO MAKE ANY ADDITION TO THE INCOME OF THE ASSESSEE. ACCORD INGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITIONS SO MADE. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE THE ORDER PAS SED BY THE LD. CIT(A) IN PARAS 8.12 TO 8.17 AT PAGES 44 TO 79. 8.12 ON THE CONFIRMATION LETTERS AND ITS ENCLOSURE S FILED BY SRI C.M. MOHAMED, THE ASSESSING OFFICER IN HIS LETTER DT. 13.8.2012 S UBMITTED, INTER ALIA, THAT AFTER VERIFICATION OF THE ORIGINALS, THE ASSESSING OFFICE R DOES NOT FIND ANY REASON TO DOUBT THE VERACITY OF THE SAME. HOWEVER, THE AO SUB MITTED THAT WHEN THE APPELLANT WAS ASKED TO PRODUCE SRI C.M. MOHAMED FOR EXAMINATION, WHO HAS NOW COME FOR GOOD FROM ABROAD, THE APPELLANT PROMIS ED TO PRODUCE HIM. THEREAFTER, THE APPELLANT REPORTED THAT SHRI C.M. M OHAMED IS SUFFERING FROM CANCER AND IS ADMITTED TO A HOSPITAL, IS IN A CRITI CAL CONDITION AND IS NOT FIT TO TRAVEL. 8.13. HAVING SEEN THE CONFIRMATION LETTERS ETC. FIL ED IN SUPPORT OF THE CREDITS ETC., LET US EXAMINE WHETHER THE CONTENT OF THIS CA SE IS SIMILAR TO THOSE CASES RELIED UPON BY THE ASSESSING OFFICER. IN ALL THOSE CASES, RELIED ON BY THE ASSESSING OFFICER, THE ASSESSEE HAVE CLAIMED TO HAV E RECEIVED DONATIONS. IN THE CASE OF MOHANAKALA & OTHERS, THE ASSESSING OFFI CER WHILE APPRECIATING THE CONTENTS OF THE LETTERS BROUGHT ON RECORD CAME TO T HE CONCLUSION THAT SAMPATHKUMAR HAD OBLIGED IN GIVING GIFTS TO SRINI VASAN AND HIS FAMILY MEMBERS. THE LETTERS ACCORDING TO HIM SUGGESTED THA T SAMPATHKUMAR I.T.A. NOS.274-279/COCH/2012 9 RESERVED HIS RIGHT TO RECEIVE SUITABLE COMPENSATION FROM THE RESPONDENTS- ASSESSEES. IN THE CIRCUMSTANCES, THE ASSESSING OFF ICER CAME TO THE CONCLUSION THAT IN ALL PROBABILITIES SAMPATHKUMAR MAY HAVE REC EIVED COMPENSATORY PAYMENTS IN LIEU OF THE GIFTS MADE BY HIM, THE GIFT S THOUGH APPARENT ARE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS CRED ITED IN THE BOOKS OF THE ASSESSEE AS HIS INCOME ETC. IN SANDEEP KUMAR (HUF) CASE, DURING THE COURSE OF SEARCH PROCEEDINGS, THE KARTA OF THE ASSESSEE-HINDU UNDIVIDED FAMILY COULD NOT EVEN FURNISH THE ADDRESS OF THE DONOR, THE FACT THAT THE BANK PASS BOOK AND CHEQUE BOOKS OF SOME OF THE NRE DONORS WERE FOU ND FROM THE PREMISES OF THE APPELLANT ITSELF SHOWN THAT THOSE ACCOUNTS WERE OPERATED BY THE APPELLANT, AND HIS FAMILY MEMBERS, INCLUDING HIS BR OTHER AND THAT THE APPELLANT WAS IN FACT IN CONTROL AND APPLICATION OF FUNDS, THE APPELLANT HAS NOT BROUGHT OUT ANY CIRCUMSTANCES TO SHOW ANY CLOSE RELATIONSHIP WITH THE SO CALLED DONOR ETC. IN RAJIV THANDON CASE, THE APPEL LANT CLAIMED TO HAVE RECEIVED TWO GIFTS FROM ABROAD BUT THE ALLEGED GIFT S WERE GIVEN TO HIM BY PERSONS WHO WERE NOT RELATED TO HIM IN ANY MANNER A ND THE GIFTS WERE NOT GIVEN TO HIM FOR ANY PARTICULAR REASON EXCEPT BECAU SE THE MONEY TO PURCHASE A HOUSE AND THESE DONORS WANTED TO HELP HI ETC. 8.14. HOWEVER, IN THE APPELLANTS CASE, THE FACTS ARE ABSOLUTELY DIFFERENT AND DISTINGUISHABLE. ALL THE RECEIPTS ARE CLAIMED TO B E CREDITS FROM THE NRIS AND CONFIRMED BY THEM. THE APPELLANT HAS FURNISHED CON FIRMATION LETTERS FROM S/SHRI UBAIDU KUNHI MARAKKAR, V.K. JAYAPRAKASH MG, SHRI K.Y. SHIHABUDEEN, APPELLANTS SON P.YUSUF AND C.M. MOHAMMED ALIAS MOH MMEDKUTTY, SOME OF WHICH WERE SWORNED BEFORE THE ASSISTANT CONSULAR OF FICER OF EMBASSY OF INDIA ETC. AS EXTRACTED ABOVE. OUT OF WHOM, SHRI P. YUSUF IS ASSESSED TO TAX BY THE ASSESSING OFFICER HIMSELF. HE HAS FILED CONFIRMATI ON LETTERS. EVEN IN THAT CASE THE ASSESSING OFFICER REFUSED TO ACCEPT THE CONFIRM ATION LETTER MECHANICALLY. FURTHER, THE APPELLANT HAS FURNISHED COPIES OF BCI (CERTIFICATE OF FOREIGN INWARD REMITTANCE) CERTIFIED BY THE BANK MANAGER FOR THE R ECEIPTS FROM S/SHRI UBAID, JAYAPRKASH, ABOOBACKER DISCLOSING THE NAME AND PLAC E OF RESIDENCE OF REMITTER AND NAME AND ADDRESS OF THE REMITTING BANK ETC. C.M. MOHAMMED ALIAS MOHAMMEDKUTTY ENCLOSED A COPY OF PASSPORT, AF FIDAVIT DT. 11.10.2009, A COPY OF NRE ACCOUNT OF SHRI K.P. YUSUF, AN ENGLISH TRANSLATION OF LICENSE ISSUED BY DEPT. OF ECONOMIC DEVELOPMENT, GOVT. OF DUBAI TO TECHWARE DISTRIBUTION (LLC), FINANCIAL STATEMENTS AS AT 30TH JUNE 2008 AN D 2010 OF TECHWARE DISTRIBUTION (LLC) ETC. THE ASSESSING OFFICER IN HI S LETTER DT. 13,.8.2012 SUBMITTED, INTER ALIA, THAT AFTER VERIFICATION OF THE ORIGINAL S, HE DOES NOT FIND ANY REASON TO DOUBT THE VERACITY OF THE SAME. I.T.A. NOS.274-279/COCH/2012 10 8.15. IT IS NO DOUBT THAT THE ONUS TO ESTABLISH TH E GENUINENESS OF THE CASH CREDIT IS ON THE ASSESSEE. IT DOES NOT MEAN THAT T HE ONUS ALWAYS REMAIN WITH THE ASSESSEE DESPITE ADDUCING CONSIDERABLE EVIDENCE WHICH IS TRUSTWORTHY AND BELIEVABLE. IN SUCH A CASE, THE BURDEN SHIFTS T O THE DEPARTMENT. IN FACT THIS POSITION IN LAW IS EXPLAINED BY THE CALCUTTA H IGH COURT IN 106 ITR 980 IN S.C. GHOSALS CASE. IN THAT CASE, WHILE HOLDING THAT NO PART OF THE CASH CREDIT AMOUNT ADDED TO THE INCOME OF THE ASSESSEE-COMPANY SHOULD BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE, THE TRIBUNAL TO OK INTO CONSIDERATION THE POSITIVE EVIDENCE ADDUCED BY THE ASSESSEE REGARDING (1) THE EXISTENCE OF THE CREDITORS, (2) THE ASSESSMENT FILE NUMBERS OF THE C REDITORS, (3) THE CONFIRMATORY LETTERS OF THE CREDITORS IN SUPPORT OF THE ASSESSEE S CLAIM AND THE BOOKS OF ACCOUNT IN THE CASE OF AT LEAST ONE OF THE CREDITOR S. FURTHER, THE TRIBUNAL ALSO TOOK INTO ACCOUNT, THE FACT THAT THERE WAS NO CONTR ARY EVIDENCE FORTHCOMING FROM THE REVENUE. 8.16 THE ITAT, COCHIN BENCH IN I.T.A. NOS. 251 TO 257/COCH/2011 A.YS 02-03 TO 08-09 & I.T.A. NOS. 268 TO 274/COCH/2011 FOR A.YS 2 002-03 TO 2008-09, IN THE CASE OF THE DCIT CENTRAL CIRCLE, THRISSUR VS. DR. P. SAS IKUMAR IN ITS ORDERS DATED 20.06/2012 HELD UNDER PARA 34 THAT UNDER THE INDIAN TAX LAWS, THE NON RESIDENT EXTERNAL ACCOUNTS ALWAYS ENJOYED A SPECIA L STATUS. ACCORDING TO SEC. 19(4)(II) OF THE INCOME TAX ACT, THE INTEREST EARNED ON NRE ACCOUNT IS EXEMPT. UNDER THE OLD SCHEME OF WEALTH TAX ACT, THE BALANCE OUTSTANDING IN THE NRE ACCOUNT WAS EXEMPT FROM WEALTH TAX. SIMILA RLY, UNDER THE OLD SCHEME OF GIFT TAX ACT, THE GIFTS GIVEN FROM OUT OF NRE AC COUNT WAS EXEMPT FROM THE GIFT TAX. AND FURTHER HELD IN PARA 36 THAT IN OUR VIEW, THE CREDIT WORTHINESS OF THE DONORS ALSO STANDS PROVED. IN THAT CASE, THE H ONBLE ITAT FOUND THAT ALL THE DONORS HAVE CONFIRMED THE PAYMENT OF GIFTS BY G IVING AFFIDAVITS/LETTERS. IN VIEW OF THAT, THE HONBLE ITAT, INTER ALIA, HELD THAT THE ASSESSEE HAS DISCHARGED THE PRIMARY BURDEN OF PROOF PLACED UPON HIM U/S. 68 OF THE ACT. FURTHER IT HELD AS IN NEXT PAGE. 37. EVEN IF AN ASSESSEE FAILS TO PROVE THE THREE M AIN INGREDIENTS, VIZ., IDENTITY OF THE CREDITOR, CREDIT WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTIONS, THE HONBLE SUPREME COURT IN THE CASE OF P. MOHANAKALA & ORS HAS HELD THAT THE ASSESSEE CAN STILL CONTEND THAT T HE CASH CREDITS CANNOT BE TREATED AS HIS INCOME BY BRINGING ON RECORD THE ATT ENDING CIRCUMSTANCES AND OTHER MATERIAL. IN THIS REGARD, WE EXTRACT BELO W THE FOLLOWING OBSERVATIONS MADE BY THE HONBLE APEX COURT IN THE ABOVE CITED CASE:- I.T.A. NOS.274-279/COCH/2012 11 THE AUTHORITIES UPHELD THE OPINION FORMED BY THE A SSESSING OFFICER THAT THE EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSE SSEE DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY TH E SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME N ATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSESSEE. WE HAVE ALREADY EXPLAINED THE PECULIAR CHARACTERIST ICS OF THE NRE BANK ACCOUNTS AND THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT THE DONORS HAVE MADE GIFTS FROM THEIR RESPECTI VE NRE ACCOUNTS. THUS THE MATERIAL AND THE ATTENDING CIRCUMSTANCES HOW TH AT THE ASSESSEE COULD NOT HAVE FUNDED THESE DONORS FOR MAKING THE IMPUGNE D GIFTS TO THE ASSESSEE. 38. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE O F THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE PRIMARY BURDEN OF PROOF PLACED U PON HIM AND THE LD. CIT(A) WAS NOT RIGHT IN LAW IN CONFORMING THE ADDIT IONS PERTAINING TO THE GIFTS. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT( A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITIONS RELAT ING TO THE GIFTS. 8.17. IN THE CASE WHEREIN THE HONBLE ITAT, COCHIN BENCH DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT, THE QUESTION WAS WHETHER N RE GIFTS WAS ASSESSABLE IN THE APPELLANTS CASE, FOR SIMILAR GROUNDS ON COMPLI ANCES. IN THIS CASE IT IS NOT GIFT. ALL THE CREDITORS AND AS WELL AS THE APPELLAN T ARE CLAIMING THAT THE IMPUGNED AMOUNTS ARE CREDITS. THE APPELLANT HAS ADD UCED CONSIDERABLE EVIDENCE, AS EXTRACTED ABOVE, WHICH ARE TRUSTWORTHY AND BELIEVABLE. IN CIVIL MATTERS, IT IS NOT PROOF BEYOND REASONABLE DOUBT WH ICH IS REQUIRED, BUT IS ONLY PREPONDERANCE OF PROBABILITIES WHICH ESTABLISH THE CASE. HERE, THE APPELLANT HAS COMPLIED WITH THE SAME. THE CREDITORS THOUGH NR IS, HAIL FROM THE SAME AREA IN AND AROUND WHICH THE APPELLANT RESIDES AND THE ASSESSING OFFICER AND THE INVESTIGATION OFFICER HAS JURISDICTION/TERRITOR IAL JURISDICTION. THERE WAS A S & S ACTION AT THE APPELLANTS RESIDENTIAL AND BUSINESS PREMISES INCLUDING THE COMPANY IN WHICH HE AND HIS FAMILY MEMBERS WERE SUB STANTIAL OWNERS. THE ASSESSING OFFICER HAS NOT BROUGHT IN ANY INCRIMINAT ING MATERIAL ON RECORD AGAINST THE APPELLANT ON THESE ISSUES. HE HAS NOT T AKEN UP THE CASE THROUGH THE EMBASSY AS WAS HELD IN 42 ITD 558 ITAT HYDERABA D A BENCH. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, AND FOLLOWING THE AB OVE RATIOS INCLUDING THE RATIO LAID DOWN IN THE JURISDICTIONAL ITATS CASE, AS EXTRACTED ABOVE, IT IS HELD THAT THE APPELLANT HAS DISCHARGED HIS ONUS TOWARDS THE CREDITS IN THE NAME OF S/SHRI UBAIDU KUNHI MARAKKAR V.K., JAYAPRAKASH MG, SHRI K.Y. SHIHABUDEEN, I.T.A. NOS.274-279/COCH/2012 12 APPELLANTS SON, P YUSUF AND C.M. MOHAMMED ALIAS MO HAMMEDKUTTY WITHIN THE SCOPE OF SECTION 68 OF THE ACT AND HENCE THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIONS MADE AT RS.20,00,000/-, RS. 75,93,570/-, RS.38,00,000/- RS.20,00,000/- & RS.65,00,000/- & RS.1,75,66,662/- IN ASST. YEARS 2003-04, 2004- 05, 2005-06, 2006-07 & 2007-08, RESPECTIVELY. SIMI LARLY, THE ADDITIONS MADE AT RS.9,03,716/- & RS.2,00,000/- IN A.YS 2006-07 & 200 7-08 TOWARDS THE CREDITS IN THE NAME OF THE APPELLANTS SON AND HIS FRIEND SHRI P.YUSUF ARE ALSO DIRECTED TO BE DELETED. IN THE RESULT, ALL THESE GROUNDS OF AP PEALS ARE ALLOWED. 14. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDIT ION SO MADE AND ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE WITH RESPECT TO TH E CREDITS FROM NRIS ARE DISMISSED. 15. AS REGARDS NRI CREDITS DURING THE ASSESSMENT YEAR 2003-04, THE ASSESSEE HAS RECEIVED CREDITS AS UNDER:- AY NAME AMOUNT IN (RS.) 2003-04 SALAM 7,34,295 SAIDALIKUTTI 2,00,000 ALI 60,000 MOHAMMED ALI, THADATHIL 2,00,000 TOTAL 11,94,295 THE ASSESSING OFFICER MADE THE ADDITIONS SINCE THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS. I.T.A. NOS.274-279/COCH/2012 13 16. THE LD. CIT(A), HOWEVER, DELETED THE SAME AF TER CONSIDERING THE FACTS ON RECORD AND SUBMISSIONS MADE BY THE ASSESSEE FOR THE REASON THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE NOT BASED UPON A NY SEIZED MATERIAL AND NOT THE SUBJECT MATTER OF SEARCH AND SEIZURE FINDIN GS. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE FACTS OF THE CASE. THE ASSESSEE, AS STATED ABOVE, HAS RECEIVED CREDITS FROM FOUR PERSONS AND ALL THESE CREDITS WERE CLOSED DURING THE SUBSEQUENT YEA RS AND ALL THE PARTIES HAVE BEEN SAID TO BE GENUINE PARTIES WHO HAVE SUBMITTED THE CONFIRMATIONS WITH REGARD TO THE SAID CREDITS, EXCEPT ONE PARTY, SHRI MOHAMMED ALI THADATHIL WHO HAD ADVANCED RS.2 LAKHS TOWARDS PURCHASE OF MATERIA L AND THE SALE WAS EFFECTED IN THE SUBSEQUENT YEARS. THE ASSESSEE COU LD NOT PRODUCE CONFIRMATION FOR THE SAME. MOREOVER, THE ADDITION, AS STATED BY THE LD. CIT(A), IS NOT BASED ON THE SEIZED MATERIAL AND IS NOT THE SUBJECT MATTE R OF SEARCH AND SEIZURE FINDINGS AND NO ADDITION, IS THEREFORE, CALLED FOR. ACCORDINGLY, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS SO MADE AND ACCORDING LY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 18. AS REGARDS THE DELETION OF ADDITION OF THE A DVANCE RECEIVED FROM T.N. AUTO ENGINEERING PVT. LTD. AMOUNTING TO RS. 15 LAKHS, TH E ASSESSING OFFICER ADDED THE I.T.A. NOS.274-279/COCH/2012 14 SAME TO THE INCOME OF THE ASSESSEE SINCE NEITHER IN THE BOOKS OF ACCOUNT NOR IN THE RETURN OF INCOME, THERE APPEARS TO BE ANY SUCH ADVANCE. THE EXPLANATION WAS NOT FOUND SATISFACTORY. ACCORDINGLY, THE ASSES SING OFFICER MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. 18. THE LD. CIT(A) DELETED THE SAME AFTER CONSID ERING THE EXPLANATION OF THE ASSESSEE VIDE LETTER DATED 08/12/2011. THE SAID AM OUNT WAS TRANSFERRED FROM AXIS BANK TO A/C NO. 5418 OF M/S. T.N. AUTO & GENE RAL ENGINEERING PVT. LTD. ON 14/02/2005. 19. WE HAVE HEARD THE RIVAL CONTENTION AND PERUS ED THE FACTS OF THE CASE. IT WAS EXPLAINED BEFORE THE LD. CIT(A) THAT M/S. T.N. AUTO & GENERAL ENGINEERING PVT. LTD. HAD WITHDRAWN AN AMOUNT OF RS. 15 LAKHS A ND TRANSFERRED TO K.P. YUSUFS ACCOUNT BY MISTAKE. IT SHOWED MARGIN MONEY IN THE B OOKS OF ACCOUNT OF M/S. T.N. AUTO & GENERAL ENGINEERING PVT. LTD. DURING T HE NEXT YEAR WHEN THIS MISTAKE WAS FOUND OUT THIS WAS DEBITED TO K.P. YUSUF LOAN A CCOUNT AND SINCE IT IS ONLY AN ACCOUNTING MISTAKE AND THEREFORE, NO ADDITION ON TH IS COUNT IS CALLED FOR. THE ASSESSEE HAS ALSO SUBMITTED A COPY OF THE BANK STAT EMENT IN THIS REGARD. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION SO MADE. ACCORDINGLY, THE GRO UND RAISED BY THE REVENUE DURING THE ASSESSMENT YEAR 2006-07 IS DISMISSED. I.T.A. NOS.274-279/COCH/2012 15 20. DURING THE ASSESSMENT YEAR 2006-07, THE AS SESSING OFFICER HAS MADE THE ADDITION OF RS.9,46,000/- BY CHARGING INTEREST AT THE RATE OF 12% ON THE BALANCE AMOUNT OUTSTANDING IN THE LOAN ACCOUNT OF M/S. T.N. AUTO & GENERAL ENGINEERING PVT. LTD. THESE AMOUNTS WERE ADVANCED FROM THE NRI LOAN RECEIVED BY THE ASSESSEE. THE LD. CIT(A) ON APPRECIATING THE EXPLANATION OF THE ASSESSEE, DELETED THE ADDITION SO MADE. 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE FACTS OF THE CASE. IT WAS EXPLAINED THAT SINCE THESE LOANS WERE RECEIVED BY THE ASSESSEE INTEREST FREE, THERE IS NO NEED TO CHARGE INTEREST. IT WAS NOTED BY THE LD. CIT(A) THAT THE ASSESSEE HAD RECEIVED CERTAIN CREDIT FROM M/S. T.N . AUTO & GENERAL ENGINEERING PVT. LTD. DURING JUNE 2006 AND HENCE HIS LOAN CAME DOWN AT RS. 26,36,743/- IN JUNE, 2006. HOWEVER, IT IS NOT CLEAR FROM THE DETA ILS FURNISHED BY THE ASSESSEE THAT WHEN HE RECEIVED BACK THE BALANCE AMOUNT OF R S.26,36,743/- DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2008-09. AC CORDINGLY, THE LD. CIT(A) HAS RIGHTLY RESTRICTED THE INTEREST DISALLOWANCE AT THE RATE OF 12% ON RS.43,57,027 AT RS 5,22,843/-. ACCORDINGLY, ON THE SAME BASIS AT RS. 1,30,710 PLUS 12% ON RS.26,36,743/- AND AT RS.2,37,306/- OUT OF RS.3,68 ,016/-. THE LD. CIT(A) HAS RIGHTLY RESTRICTED THE INTEREST DISALLOWANCE FOR THE ASSESS MENT YEAR 2008-09 AT I.T.A. NOS.274-279/COCH/2012 16 RS.1,58,204/-. ACCORDINGLY, WE FIND NO INFIRMITY I N HIS ORDER. ACCORDINGLY, THIS GROUND RAISED BY THE REVENUE IS DISMISSED. 22. IN THE RESULT, THE APPEALS OF THE REVENUE IN I .T.A. NOS. 274-279/COCH/2012 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON 26 -04-2016 SD/- SD/- ( GEORGE GEORGE.K) (B P JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : COCHIN DATED: 26TH APRIL, 2016 GJ COPY TO: 1. SHRI K.P.YUSUF, KELATHPARAMBIL HOUSE, MINALUR P. O., THRISSUR-680 581. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE,THRISSUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOCHI . 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. DR/ITAT, COCHIN 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN I.T.A. NOS.274-279/COCH/2012 17 1. DATE OF DICTATION : 08/04/2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED 12/04/2016 BEFORE THE DICTATING MEMBER OTHER MEMBER: 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . PS/PS: 26/04/2016 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER : 26/04/2016 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. PS/PS : 26/04/2016 6. DATE ON WHICH THE FILE GOES TO BENCH CLERK: 2 6 /04/2016 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: