K.M.Sainaba, Muvattupuzha V. ACIT, Ernakulam

ITA 366/COCH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52348 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Keywords: Unexplained cash credit; Gift; Reasonable cause; Condonation of delay

Judgement Text

1 ITA NO.366/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHI BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI SANJAY ARO RA (AM) I.T.A. NO.366/COCH/2010 (ASSESSMENT YEAR 2007-08) K.M. SAINABA VS ASSIST.COMMISSIONER OF INCOME-TA X, V.U.S. TIMBERS CENT.CIR.1, ERNAKULAM PUTHUPPADY, MUVATTUPUZHA PAN : AMXPS7302L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MATHEW JOSEPH RESPONDENT BY: MS VIJAYAPRABHA DATE OF HEARING : 28-11-2011 DATE OF PRONOUNCEMENT: 30-12-2011 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, KOCHI DATED 25-02- 2010 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. THERE IS A DELAY OF 09 DAYS IN FILING THE APPEAL . THE ASSESSEE, IN HER AFFIDAVIT SWORN IN ON 31-05-2010 AFFIRMS THAT THE O RDER OF THE COMMISSIONER OF INCOME-TAX(A) WAS RECEIVED BY THE A SSESSEE ON 23-03- 2010, HOWEVER, THE ACCOUNTANT OF THE ASSESSEE HAS I NADVERTENTLY OMITTED TO FORWARD THE SAME TO THE TAX CONSULTANT FOR PREPARIN G AND FILING THE APPEAL BEFORE THE TRIBUNAL. AND THAT AS SOON AS THE FACT WAS REVEALED, THE ASSESSEE HURRIED AND THE APPEAL WAS FILED ON 31-05-2010. ON THESE GROUNDS, THE ASSESSEE PRAYS FOR CONDONATION OF DELAY IN FILING T HE APPEAL. AFTER HEARING THE PARTIES, WE ARE SATISFIED THAT THE ASSESSEE WAS PREVENTED BY A SUFFICIENT 2 ITA NO.366/COCH/2010 AND REASONABLE CAUSE FROM FILING THE APPEAL WITHIN THE TIME PROVIDED. THEREFORE, WE CONDONE THE DELAY IN FILING THE APPEA L. 3. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADD ITION OF RS.15 LAKHS. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING O FFICER MADE ADDITION OF RS.15 LAKHS TOWARDS UNEXPLAINED CASH CREDIT. ACCOR DING TO THE LD.REPRESENTATIVE, THE ASSESSEE HAS FILED CONFIRMAT ION LETTERS FROM THE LOAN CREDITORS. THOUGH IN SOME OF THE CREDITORS THE CON FIRMATION LETTERS COULD NOT BE FILED, ACCORDING TO THE LD.REPRESENTATIVE, T HE ASSESSEE HAS FILED ALL THE MATERIALS LIKE COPY OF PASSPORT, BANK STATEMENT AND LETTER FROM BANK BEFORE THE COMMISSIONER OF INCOME-TAX(A). THE COMMISSIONE R OF INCOME-TAX(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFIC ER ON THE BASIS OF THE MATERIAL FILED BY THE ASSESSEE. THE ASSESSEE HAS F ILED IN THE PAPER BOOK THE COPY OF THE REMAND REPORT FILED BY THE ASSESSING OF FICER BEFORE THE COMMISSIONER OF INCOME-TAX(A). REFERRING TO THE RE MAND REPORT, THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFI CER, AFTER EXAMINING THE DETAILS AND OTHER MATERIALS FILED BEFORE THE COMMIS SIONER OF INCOME-TAX(A) ADMITTED THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF CREDIT SATISFACTORILY. HOWEVER, THE COMMISSIONER OF INCOME-TAX(A) FAILED T O CONSIDER THIS REMAND REPORT AND CONFIRMED THE ADDITION MADE BY TH E ASSESSING OFFICER. ACCORDING TO THE LD.REPRESENTATIVE, WHEN THE COMMIS SIONER OF INCOME- TAX(A) CALLED FOR THE REMAND REPORT ON THE BASIS OF THE MATERIAL FILED BY THE ASSESSEE, THE ENQUIRY REPORT AND THE FINDINGS RECOR DED BY THE ASSESSING OFFICER HAS TO BE CONSIDERED BY THE COMMISSIONER OF INCOME-TAX(A) WHILE DISPOSING OF THE APPEAL. SINCE THE ASSESSING OFFIC ER, BEING THE RESPONDENT IN THE APPEAL FOUND THAT THE ASSESSEE HAS SATISFACTORI LY EXPLAINED THE CREDIT, THE COMMISSIONER OF INCOME-TAX(A) CANNOT CONFIRM THE AD DITION ON THE BASIS 3 ITA NO.366/COCH/2010 OF THE ASSESSMENT ORDER IGNORING THE REMAND REPORT FILED BY THE ASSESSING OFFICER. 4. ON THE CONTRARY, MS. VIJAYAPRABHA, THE LD.DR SUB MITTED THAT THE ASSESSEE HAS NOT ESTABLISHED THE IDENTITY, CREDITWO RTHINESS AND GENUINENESS OF THE TRANSACTION. REFERRING TO THE ASSESSMENT OR DER, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT FILED CONFIRMATION LETTER FROM ONE OF THE CREDITORS SHRI M.M ABDUL KARIM. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS ESTABLISHED THE GENUINENESS OF THE CREDIT ONLY IN T HE CASE OF SHRI A.S. NARAYANAN NAIR. IN THE CASE OF SHRI M.J. GEORGE, A NOTHER CREDITOR, EVEN THOUGH CONFIRMATION LETTER WAS FILED, HIS CAPACITY TO ADVANCE THE MONEY AND GENUINENESS OF THE TRANSACTION WAS NOT PROVED. THE REFORE, THE ASSESSING OFFICER MADE ADDITION OF RS.35 LAKHS AS UNEXPLAINED CASH CREDIT. 5. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER MADE ADDITION OF RS.36,30,974 AS UNEXPLAINED CASH CREDIT. THE SUBJE CT MATTER OF APPEAL BEFORE THIS TRIBUNAL IS ONLY IN RESPECT OF ADDITION OF RS.15 LAKHS RECEIVED FROM K.M HAMZA. FROM THE ASSESSMENT ORDER IT APPEA RS THAT THE ASSESSING OFFICER MADE ADDITION OF RS.15 LAKHS IN RESPECT OF M.M. ABDUL KARIM. DURING THE APPELLATE PROCEEDINGS BEFORE THE COMMISS IONER OF INCOME- TAX(A) THE ASSESSEE HAS FILED COPY OF PASSPORT, COP Y OF BANK ACCOUNT AND LETTER FROM THE BANK TO SHOW THAT RS.15 LAKHS WAS R ECEIVED FROM SHRI K.M. HAMZA, THROUGH SHRI M.M. ABDUL KARIM. SHRI M.M. AB DUL KARIM, WHO IS CLOSE RELATIVE OF SHRI K.M. HAMZA, HANDED OVER THE CHEQUE TO THE ASSESSEE. HOWEVER, IN THE BOOKS IT WAS WRONGLY MENTIONED THAT THE AMOUNT WAS RECEIVED FROM SHRI M.M. ABDUL KARIM. ON THE BASIS OF THE MATERIAL FILED BY THE ASSESSEE THE COMMISSIONER OF INCOME-TAX(A) B Y ORDER DATED 11-03- 2009 CALLED FOR REMAND REPORT FROM THE ASSESSING OF FICER. THE ASSESSING 4 ITA NO.366/COCH/2010 OFFICER, BY HIS LETTER DATED 22-07-2009 FILED THE R EMAND REPORT IN COMPLIANCE TO THE ORDER OF THE COMMISSIONER OF INCO ME-TAX(A) DATED 11- 03-2009. A COPY OF REMAND REPORT IS PLACED IN THE PAPER BOOK. THE ASSESSING OFFICER, AFTER EXAMINING THE AFFIDAVIT FI LED BY SHRI K.M. HAMZA, LETTER OF STATE BANK OF INDIA, OTTAPPALAM AND OTHER MATERIAL FILED BY THE ASSESSEE FOUND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF CREDIT OF RS.15 LAKHS. THE COMMISSIONER OF INCOME-TAX(A) HOWEVER O BSERVED THAT THE ASSESSEE HAS NOT ESTABLISHED THE CREDIT EITHER DURI NG THE ASSESSMENT PROCEEDINGS NOR DURING THE REMAND PROCEEDINGS. THE FACT THAT THE ASSESSEE HAS FILED THE PASSPORT, BANK ACCOUNT, LETTER OF THE BANK ADDRESSED TO THE ASSESSING OFFICER IS NOT IN DISPUTE. FROM THE REMA ND REPORT, IT IS SEEN THAT IN FACT THE ASSESSING OFFICER, AFTER EXAMINING THE BAN K ACCOUNT AND LETTER OF THE BANK FOUND THAT THE BANK HAD SANCTIONED A LOAN OF R S. 61,50,000 TO SHRI K.M. HAMZA AGAINST HIS FCNR DEPOSITS WHICH WAS CRED ITED TO HIS NRE SB ACCOUNT ON 14-08-2006. FROM THIS NRE SB ACCOUNT, A DEMAND DRAFT OF RS.60 LAKH WAS ISSUED ON THE SAME DAY. AS PER THE COPY OF THE ACCOUNT OF THE SOUTH INDIAN BANK, VYTTILA, AN AMOUNT OF RS.60 LAKHS WAS CREDITED IN THIS ACCOUNT ON 17-08-2006. FROM THIS AMOUNT, AN A MOUNT OF RS.15 LAKHS WAS ADVANCED TO THE ASSESSEE. THE ASSESSEE HAS EST ABLISHED THE CREDIT AND THE ASSESSING OFFICER HAS ALSO BEEN SATISFIED. THE CIT(A) HAS PROCEEDED MAINLY ON THE BASIS OF THE JUDGMENT OF THE APEX COU RT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS P MOHANAKALA (2007) 2 91 ITR 278 (SC) WITHOUT EXAMINING THE FACTS OF THIS CASE. 6. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF T HE APEX COURT IN THE CASE OF SHRI P MOHANAKALA. IN THE CASE BEFORE THE APEX COURT, THE ASSESSEE HAS RECEIVED CREDITS / GIFTS FROM NRI. TH E DONOR CLAIMED THAT HIS FATHER WAS A TAXI DRIVER AND WAS VERY POOR. ONE, S RINIVASAN AND HIS FAMILY WAS SUPPORTING HIM WHEN HE WAS IN INDIA. HE HAS GI VEN GIFT TO THE ASSESSEE 5 ITA NO.366/COCH/2010 OF A HUGE SUM. ON EXAMINATION, THE REVENUE AUTHORI TIES FOUND THAT THERE ARE INCONSISTENCIES IN THE STATEMENTS MADE BY DIFFE RENT PERSONS. IT WAS ALSO NOTICED THAT THE GIFTS WERE RECEIVED FROM ARIAVAN T HOTAN AND SUPROTOMAN. ON FURTHER ENQUIRY IT WAS FOUND THAT BOTH ARIAVAN T HOTTAN AND SUPROTOMAN ARE ONE AND THE SAME PERSON. THE ORIGINAL NAME OF THE DONOR WAS SAMPATHKUMAR. THE ASSESSING OFFICER, AFTER EXAMINA TION FOUND THAT THE SAID SAMPATHKUMAR MIGHT HAVE RECEIVED COMPENSATORY PAYME NT INTER-ALIA GIFT MADE BY HIM. ON THOSE FACTS, THE APEX COURT FOUND THAT THE FINDING RECORDED BY THE ASSESSING OFFICER AND THE TRIBUNAL ARE NOT IMAGINARY AS SOUGHT TO BE CONTENDED. THE DOUBTFUL NATURE OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WERE CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE SHOWED THAT THE TRANSACTIONS WERE N OT REAL ONES. 7. IN THE CASE BEFORE US, THE FACTS ARE ENTIRELY ON DIFFERENT FOOTING. THE ASSESSEE CLAIMED THAT BY MISTAKE HIS ACCOUNTANT ENT ERED THE NAME OF SHRI M.M. ABDUL KARIM, BUT, IN FACT, THE MONEY WAS RECEI VED FROM SHRI K.M. HAMZA. THE COMMISSIONER OF INCOME-TAX(A) CALLED FO R A REMAND REPORT ON THE BASIS OF THE MATERIAL FILED BY THE ASSESSEE. T HE ASSESSING OFFICER, AFTER EXAMINATION FOUND THAT THE ASSESSEE HAS SATISFACTOR ILY EXPLAINED THE CREDIT. NO OTHER MATERIAL WAS AVAILABLE BEFORE THE COMMISSI ONER OF INCOME-TAX(A) TO IGNORE THE FINDING RECORDED BY THE ASSESSING OFF ICER. THE ASSESSING OFFICER, AFTER DETAILED EXAMINATION CAME TO THE CON CLUSION THAT THE ASSESSEE HAS SATISFACTORILY EXPLAINED THE CREDIT. THEREFORE , THE OBSERVATION OF THE COMMISSIONER OF INCOME-TAX(A) THAT THE ASSESSEE HAS NOT FILED ANY CONFIRMATION LETTER BUT GAVE A WRONG NAME OF THE CR EDITOR IS CONTRARY TO THE FACTS ON RECORD. AS OBSERVED EARLIER, AT PARAGRAPH 5 ABOVE, THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS FOUND THAT A SUM OF RS.15 LAKHS WAS ADVANCED TO THE ASSESSEE FROM THE ACCOUNT MAINTAINE D BY THE CREDITOR IN SOUTH INDIAN BANK. THEREFORE, THE COMMISSIONER OF INCOME-TAX(A) IS NOT 6 ITA NO.366/COCH/2010 CORRECT IN SAYING THAT THE ASSESSEE HAS NOT EXPLAIN ED THE CREDIT. THE COMMISSIONER OF INCOME-TAX(A) HAS ALSO DOUBTED THE GENUINENESS OF CREDIT TRANSACTION ON THE BASIS OF NON PROVISION FOR PAYME NT OF INTEREST. IN OUR VIEW, THAT ALONE WITHOUT ANYTHING MORE, CANNOT BE A REASON TO DOUBT THE GENUINENESS OF THE TRANSACTION. THE IDENTITY OF TH E ACTUAL CREDITOR ALSO STANDS CONCLUSIVELY STAND ESTABLISHED IN THE REMAND PROCEEDINGS. 8. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER OF TH E COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE AND THE ADDITION OF RS.1 5 LAKHS IS DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2011 SD/- SD/- (SANJAY ARORA) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER ERNAKULAM, DT : 30 TH DECEMBER, 2011 PK/ COPY FORWARDED TO: 1. K.M. SAINABA, V.U.S. TIMBERS, PUTHUPPADY, MUVATTUPU ZHA 2. ASSIST.COMMISSIONER OF INCOME-TAX, CENT.CIR.1, ERN AKULAM 3. THE COMMISSIONER OF INCOME-TAX(A)-I, KOCHI 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN