Sri.Raghavan Sudeep, Calicut V. The ITO, Calicut

ITA 445/COCH/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7317 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: C B M WARRIER
• Keywords: Unexplained cash credit; Gift; Principle of natural justice; Peak credit; Source of fund; Corroborative evidences
• Section: 68

Judgement Text

ITA NO 445/C/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH (SMC) KOCHI BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO 445/COCH/2016 (ASST YEAR 2007 - 08 ) SHRI RAGHAVAN SU DEEP M/S GOPINATH & CO CHEROOTY ROAD CALICUT 1 VS THE INCOME TAX OFFICER WARD 1(1), KOZ HIKODE ( APPELLANT) (RESPONDENT) PAN NO. APVPS0161E ASSESSEE BY SH C B M WARRIER REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 24 TH JAN 2017 DATE OF PRONOUNCEMENT 24 TH JAN 201 7 ORDER THIS APPEAL, AT THE INSTANCE OF THE ASS ESSEE , IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 13.6.2016. THE RELEVANT ASSESSMENT YEAR IS 2007 - 08. 2 THE GROUNDS RAISED READ AS FOLLOWS: 1. THE APPEL LANT IS SRI, RAGHAVAN SUDEEP, M/ S. GOPINATH & COMPANY, CHEROOTY ROAD, CALICUT - 1 AND IN REGARD TO THE A. Y 20 07 - 08, THE INCOME TAX OFFICER, WARD 1 (1), KOZHIKODE, HAS COMPLETED THE ASSESSMENT WITH A TOTAL INCOME OF RS. 16,51,4301 - AFTER MAKING AN ADDITION OF RS. 15,50,0001 - WHICH IS WRONGLY CONFIRMED BY THE COMMISSIONER OF INCOME TAX ( APPEALS), CALICUT. 2. TH E APPELLANT SUBMITTED THAT THE DETAILS OF SOURCES FOR THE RECEIPT OF RS. 15,50,0001 - AND THE ASSESSING OFFICER WITHOUT CONSIDERING THE EVIDENCE ASSESSED THE AMOUNT AS THE INCOME OF THE APPELLANT. 3. THE COMMISSIONER OF INCOME TAX APPEALS, CALICUT HAS GONE WRONG IN CONFIRMING THE ASSESSMENT WITHOUT VERIFYING THE EVIDENCE. ITA NO 445/C/2016 2 FOR THE ABOVE REASONS AND OTHER ARGUMENTS THOSE MAY BE PUT FORWARD AT THE TIME OF HEARING THE APPELLANT MAY SUBMIT THAT THE ASSESSMENT OF RS. 15,50,0001 - MAY BE CANCELLED. 3 BRIEFLY STA TED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDUAL. HE IS A MANAGING PARTNER OF M/S GOPINATH & CO. THE ASSESSEE DERIVING INTEREST AND REMUNERATION FROM THE SAID PARTNERSHIP FIRM. DURING THE PREVIOUS YEAR RELEVANT TO AY 2007 - 08, IT W AS NOTICED BY TH E ASSESSING OFFICER THAT THERE WERE CASH DEPOSITS IN ASSESSEE S SAVING BANK ACCOUNT WITH CANARA BANK. THE ASSESSEE TRIED TO EXPLAIN THAT CERTAIN CASH DEPOSITS WERE MADE OUT OF GIFTS RECEIVED BY THE ASSESSEE FROM HIS MOTHER. THE ASSESSING O FFICER, HOWEVER, REJECTED THE EXPLANATION FURNISHED BY THE ASSESSEE AND MADE AN ADDITION OF RS. 15,50,000/ - . THE RELEVANT FINDINGS OF THE ASSESSING OFFICER READ AS FOLLOWS : 4. ON FURTHER VERIFICATION OF THE BANK ACCOUNT STATEMENTS IT WAS FOUND THAT THERE WERE CASH CREDITS ON VARIOUS DATES, SOME OF THEM IN CONSECUTIVE DATES IN ASSESSEE'S SAVINGS BANK ACCOUNT WITH CANARA BANK WHICH WERE SUBSEQUENTLY WITHDRAWN AFTER SHORT INTERVALS. AS REGARDS THE AMOUNT OF RS.15.50,000/ - SHOWN AS GIFT RECEIVED FROM HIS MOTHE R EXCEPT FOR THE CONFIRMATION GI V EN NO EVIDENCE TO PROVE THE SOURCE OF FUND WAS FILED. AS PER T HIS OFFICE LETTER - DATED 26 TH NOVEMBER 2009 THE ASSESSEE WAS REQUIRED TO FURNISH COPIES OF HIS MOTHER'S BANK ACCOUNTS AND SUPPORTING EVIDENCE, IF ANY TO PROVE THE SOURCE FOR THE GIFT CLAIME D TO HAVE BEEN MADE BY ASSESSEES MOTHER AND FOR THE CASH DEPOSITS MADE IN THE BANK ACCOUNTS. PROOF FOR HAVING AVAILED A GOLD L OAN OF RS.79 , OOO/ - ,AND DETAILS OF PERSONAL EXPENSES ESTIMATED WAS ALSO REQUIRED TO BE FURNISHED 5 IN REPLY TO THE LETTER DATED 26.11 - 2009 THE ASSESSEE HAS STATED THAT WITHDRAWALS FROM THE BANK AMOUNTING TO RS,18,33,056/ WERE MADE FROM REMITTANCE TO THE BANK ACCOUNT AMOUNT ING TO RS. 17,12,777/ - AND. THE OPENING BALANCE OF RS.17,12 ,577/ - . FURTHER IT WAS STATED THAT THE CASH DEPOSIT A MOUNTING TO RS. 13,90, 000/ - WERE WADE OUT OF THE GIFT RECEIVED FROM MOTHER, EVEN THOUGH IT WAS REPLIE D THAT GI FT IN CASH WAS MADE F ROM PROCEEDS OF PROPERTY SALE AND AGRICULTURAL INCOME, NO EVIDENCE IN RESPECT OF GIFT FROM M OTHER WAS FILED. THE ASSESSEE HA D CLAIMED REC EIPT OF SIMILAR GIFT FROM HIS MOTHER DURING THE YEAR ENDED 31 - 3 - 2006 ALSO WITHOUT SUPPORT ING EVIDENCE AND THE SA ME WAS NOT ACCEPTED IN ASSESSMENT. SINCE THE ASSESSEE HAS FAILED TO PRO D UCE ANY AUTHENTIC EVID ENCE TO PROVE THE SOURCE FOR THE G IFT FROM HIS MOTHER AS CLAIMED BY HIM, THE CONFIRMATION FOR GIFT FROM MOTHER FURNISHED BY THE ASSESSEE HAS NO LEGS TO STAND AND AS ITA NO 445/C/2016 3 SUCH THE SAME IS NOT ACCEPTABLE. IT IS INCREDIBLE THAT THE AMOUNT CLAIMED TO HAVE BEEN REA LIZED BY SALE OF AN IMMOVABLE PROPERTY WAS KEPT BY THE ASSESSEE 'S MOTHER IN CASH AND GIFTED TO HER SON IN - PIECE MEAL ON VARIOUS DATES. THE ASSESSEE'S CLAM REGARDING RECEIPT OF GIFT FROM HIS MOTHER IS ONLY A PLOY ADOPTED BY THE ASSESSEE TO EXPLAIN T HE SOURC E OF DEPOSITS MADE IN HIS BANK ACCOUNT S. IN THE CIRCUMSTANCES THE ENTIRE AMOUNT OF RS. 15,50,000/. CLAIMED AS GI FT RECEIVED FROM ASSESSEE'S MOTHER IS TREATED AS UNEXPLAINED MONEY ASSESSABLE IN THE HANDS OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM OTHER SO URCES' . ACCORDINGLY AN ADDITION OF RS.15,50,OOOF - IS MADE TO THE INCOME RETURNED. 4 AGGRIEVED BY THE ADDITION, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEV ANT FINDINGS OF THE CIT(A) READ AS FOLLOWS: 9. DURING THE APPEAL PROCEEDINGS THE AUTHORIZED REPRESENTATIVE WAS SPECIFICALLY REQUESTED TO FURNISH THE DETAILS OF THE CASH AND REGARDING THE SOURCE FROM WHICH THE APPELLANT'S MOTHER RECEIVED THIS CASH. THE A UTHORIZED REPRESENTATIVE WAS NOT HAVING ANY PARTICULARS REGARDING THE SAME. I F THE APPELLANT'S MOTHER HAD RECEIVED THIS AMOUNT FROM SALE OF ANY PROPERTY, HE COULD HAVE VERY WELL FURNISHED THE COPY OF THE SALE DEED OF THE PROPERTY. INSTEAD OF FURNISHING ANY EVIDENCE, THE AUTHORIZED REPRESENTATIVE TRIED TO MAKE SOME OTHER JUSTIFICATION IN THE WRITTEN SUBMISSION. AS THE WRITTEN SUBMISSION HAD NO RELATION WITH THE STATEMENT OF FACTS AND THE GROUNDS OF APPEAL FILED BY THE APPELLANT ALONG WITH THE APPEAL MEMORAND UM, I AM UNABLE TO CONSIDER SUCH SUBMISSION. 10. IT IS ALSO UNDERSTOOD THAT THE APPELLANT IS THE ONLY SON OF HIS MOTHER, AND AS THE MOTHER IS AGED, ANY SUCH LAND TRANSACTION MUST HAVE BEEN MADE BY THE APPELLANT HIMSELF. SO HE COULD HAVE FURNISHED THE EVI DENCES REGARDING SUCH TRANSACTION. THIS FACT ALSO SHOWS THAT THE CLAIM THAT DEPOSITS MADE IN THE SAVINGS BANK ACCOUNT ARE SOURCED FROM GIFT RECEIVED FROM HIS MOTHER IS NOT GENUINE. THEREFORE, I HEREBY CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER. 5 AGGRIEVED BY THE CIT(A)S ORDER SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. IN FURTHERANCE, IT WAS SUBMITTED THAT IN THE PREVIOUS ASSESSMENT YEAR I.E. AY 2006 - 07, ADDITIONS WERE MADE BY THE ASSESSING OFFICER U/S 68 OF THE I T ACT AMOUNTING TO RS. 24,80,570/ - BEING ITA NO 445/C/2016 4 CASH DEPOSITS MADE IN ASSESSEES BANK ACCOUNT. IT WAS SUBMITTED THAT THE ASSESSEE HA D SOUGHT TO EXPLAIN A PORTION OF THE CASH DEPOSITS AS THE GIFTS RECEIVED FROM ASSESSEES MOTHER. ON FURTHER APPEAL, THE CIT(A) PARTLY ALLOWED THE PLEA OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO BRING TO TAX THE PEAK CREDIT IN THE ASSESSEES BA NK ACCOUNT INSTEAD OF AGGREGATE OF THE TOTAL CASH DEPOSITS MADE IN THE SAID ACCOUNT. IT WAS SUBMITTED THAT SIMILAR VIEW MAY BE TAKEN IN THE RELEVANT ASSESSMENT YEAR ALSO. THE LD DR PRESENT WAS DULY HEAR D . 6 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE SOLITARY ISSUE FOR MY CONSIDERATION IS WHETHER THE CASH DEPOSIT MADE IN THE ASSESSEES BANK ACCOUNT AMOUNTING TO RS. 15,50,000/ - IS TO BE ADDED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT?. THE ASSESSEE HAD SOUGHT TO EXPLA IN THE SOURCE OF THE CASH DEPOSIT AS GIFT RECEIVED FROM HIS MOTHER. IT WAS STATED THAT THE ASSESSEES MOTHER HAD GIFTED THE AMOUNT OUT OF THE SALE PROCEEDS OF AGRICULTURAL LAND. HOWEVER, EXCEPT FOR THE CONFIRMATION PRODUCED FROM THE ASSESSEES MOTHER, NO O T HER EVIDENCE WAS FURNISHED EITHER BEFORE THE ASSESSING OFFICER, CIT(A) OR BEFORE ME . THEREFORE, I HAVE NO OTHER OPTION BUT TO HOLD THAT THE ADDITION MADE U/S 68 OF THE ACT IS CORRECT. 6.1 HOWEVER, I NOTICED THAT FOR THE ASSESSMENT YEAR 2006 - 07, THE CI T(A) HAD SUSTAINED THE ADDITION OF ONLY PEAK CREDIT IN ASSESSEES BANK ACCOUNT , SINCE THERE WAS SUBSTANTIAL WITHDRAWALS AND REDEPOSITS . THE RELEVANT FINDINGS OF THE CIT(A) FOR THE ASSESSMENT YEAR 2006 - 07 READ AS FOLLOWS: ITA NO 445/C/2016 5 10. THE NEXT ARGUMENT OF THE AP PELLANT IS THAT THE AO HAD IGNORED THE FUNDAMENTAL PROCEDURAL ASPECT OF THE ASSESSMENT I.E. TELESCOPE THE CASH CREDIT AND DEBITS TO ARRIVE UNEXPLAINED CREDIT ON THE ASSUMPTION THAT WITHDRAWALS AND REPAYMENTS ARE THE SOURCE FOR THE FRESH CREDITS INTRODUCED THEREAFTER. THEREFORE, THE APPELLANT'S ARGUMENT IS THAT THE PEAK CREDIT COULD BE TREATED AS UNEXPLAINED AND NOT THE AGGREGATE CREDIT. FURTHER THE APPELLANT HAS ARGUED THAT PEAK CREDIT IS RS. 8,26,093/ - THE AO HAS ALSO CONFIRMED THAT IN THE APPELLANT'S BANK ACCOUNT THE PEAK CREDIT AS ON 7.11.2005 WAS RS. 8,26,093/ - . ON GOING THROUGH THE BANK ACCOUNT IS NOTICED THAT THE APPELLANT FREQUENTLY WITHDRAWN AND DEPOSITING CASH AMOUNTS ON DIFFERENT DATES. THE AO HAS ADDED AGGREGATE CREDIT OF RS. 24.80,570/ - BUT THE PEAK CREDIT WAS ONLY RS.8,26,093/ - . AFTER CONSIDERING THE APPELLANT'S ARGUMENT AND IN ORDER TO MEET THE NATURAL JUSTICE IT IS PROPER TO ASSESS THE PEAK CREDIT AMOUNTING TO RS. 8,26,093/ - . THEREFORE, THE TOTAL ADDITION OF RS. 24,80,570/ - OUT OF WHICH RS. 16,54,477/ - IS DELETED AND THE BALANCE OF AMOUNT OF RS. 8,26,093/ - IS CONFIRMED. 6.2 I HAVE PERUSED THE ASSESSEES BANK STATEMENT OF THE ASSESSEE WITH CANARA BANK AND NOTICED THAT THERE WERE FREQUENT CASH WITHDRAWALS . THESE WITHDRAWALS WOULD HAVE BEEN UTILIZED FOR RE - DEPOSITING IN THE ASSESSEES BANK ACCOUNT. THEREFORE, LIKE THE PREVIOUS ASSESSMENT YEAR NAMELY AY 2006 - 07, I AM OF THE VIEW THAT ONLY PEAK CREDIT IN THE ASSESSEE SAVINGS BANK ACCOUNT NEEDS TO BE TAKEN AS UNEXPLAINED CASH DEPOSITS. FOR DETER MINING THE PEAK CREDIT FOR THE RELEVANT ASSESSMENT YEAR, THE MATTER IS REMITTED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL PROCEED TO TAX ONLY THE PEAK CREDIT IN ASSESSEES BANK ACCOUNT. IT IS ORDERED ACCORDINGLY. ITA NO 445/C/2016 6 7 IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JAN 201 7 . SD/ - ( GEORGE GEORGE K) JUDICIAL MEMBER COCHIN: DATED 24 TH JAN 201 7 RAJ* COPY TO: APPELLANT RESPONDENT CIT(A) CIT DR GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN