Sri.V.K.Sudheer, Vatakara V. The iTO, Wd-2(2), Kozhikkode

ITA 466/COCH/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6289 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-02-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAJJIV
• Assessee Lawyers: RAMESH CHERIAN JOHN
• Keywords: Unexplained cash credit; Peak credit; Source of fund; Condonation of delay
• Section: 201; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA N O . 466 /COC H/ 201 8 : ASST.YEAR 2009 - 2010 SRI.V.K.SUDHEER C/O.RAMESH CHERIAN JOHN, ADVOCATE, E - 9, 4 TH FLOOR, METRO PLAZA, MARKET ROAD ERNAKULAM 682 018. PAN : AJPS5183E. VS. THE INCOME TAX OFFICER WARD 2(2) KOZHIKODE. (APPELLANT) (RESPONDENT) APPELLANT BY : SRI. RAMESH CHERIAN JOHN, ADVOCATE RESPONDENT BY : SRI. B.SAJJIV, SR.DR DATE OF HEARING : 23 .09.2020 DATE OF PRONOUNCEMENT : 23 . 09.2020 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS), KOZHIKODE IN APPEAL NO.ITA - 278/ R2/CIT/CLT/2011 - 12 DATED 05.02.2014 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. SRI.RAMESH CHERIAN JOHN, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SRI.B.SAJJIV, LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE. 3. THE APPEAL FILED BY THE A SSESSEE IS DEL AYE D BY 1606 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 05.10.2018, WHEREIN IT IS SUBMITTED THAT THE ASSESSEES 80 YEAR OLD FATHER WAS DOING FINANCE BUSINESS, WHICH HAD GONE INTO LOSS AND THIS HAD RESULTED IN SUBSTANTIAL LITIGATION BEING INITIATED, WHICH ALSO RESULTED IN ATTACHMENT OF VARIOUS PROPERTIES OF THE ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 2 ASSESSEE AND HIS FAMILY. IT IS THE SUBMISSION THAT THE ASSESSEES FATHER WAS ALSO BEDRIDDEN AND THE ASSESSEE AND HIS BROTHER WERE STRUGGLING TO DEFEND VARIOUS SUITS FILED AGAINST THEIR FATHER. CONSE QUENT TO THE LITIGATION, THE ASSESSEE DID NOT HAVE THE SOURCES TO EVEN PAY THE LITIGATION FEES AND THE APPEAL FEES AND IN BETWEEN ALL THESE, THE ASSESSEE HAD FAILED TO FILE HIS APPEAL WITHIN TIME. IT WAS THE PRAYER THAT THE DELAY IN FILING OF THE APPEAL MA Y BE CONDONED AND THE APPEAL DISPOSED OF ON MERITS. IT WAS THE PRAYER THAT NO LOSS WOULD BE CAUSED TO THE REVENUE BY CONDONING THE DELAY AND HEARING THE APPEAL OF THE ASSESSEE ON MERITS. HOWEVER, IF THE DELAY IS NOT CONDONED, SUBSTANTIAL LOSS AND INJUSTICE WOULD BE ON THE ASSESSEE. 4. IN REPLY, THE LEARNED DR SUBMITTED THAT THE ASSESSEE SHOULD HAVE BEEN CAUTIOUS AND JUST BECAUSE SUIT S HAVE BEEN FILED AGAINST HIM AND HIS FAMILY, IT COULD NOT BE A GROUND FOR CONDONING THE DELAY. IT WAS THE SUBMISSION THAT THE DELAY IS SUBSTANTIAL OF MORE THAN FOUR YEARS. IT WAS THE SUBMISSION THAT THE DELAY SHOULD NOT BE CONDONED. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I HAVE PERUSED THE AFFIDAVIT FILED BY THE ASSESSEE FOR THE PURPOSE OF CONDONATION OF DELAY AS ALSO THE COUNTER FILED BY THE REVENUE AND THE REPLY TO THE COUNTER FILED BY THE ASSESSEE. A PERUSAL OF THE AFFIDAVIT AND THE COUNTERS CLEA RLY SHOW THAT THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE VARIOUS FACTS AS MENTIONED BY THE ASSESSEE IN HIS AFFIDAVIT. AS LONG AS THE AFFIDAVIT FILED BY THE ASSESSEE STANDS SUBSTANTIATED, WHICH IN THIS CASE IS CLEARLY SUBSTANTIATED BY VARIOUS ATTACHMENT ORDERS WHICH ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 3 ACCOMPANIED THE AFFIDAVIT, SUCH EVIDENCE MUST BE GIVEN ITS DUE WORTH. FURTHER, IT IS AN ADMITTED FACT THAT THERE ARE SUBSTANTIAL LITIGATION AGAINST THE ASSESSEE AND HIS FATHER AND THERE ARE SUBSTANTIAL ATTACHMENT ORDERS ALSO AGAINST THEM IN RE SPECT OF THEIR IMMOVABLE PROPERTIES. THIS ADMITTEDLY WOULD GIVE GROUND FOR THE ASSESSEE FOR THE CONDONATION OF THE DELAY. IN THESE CIRCUMSTANCES, I FIND THAT THE ASSESSEE HAS GIVEN REASONABLE AND SUBSTANTIATED THE EXPLANATION FOR THE DELAY IN FILING OF THI S APPEAL AND CONSEQUENTLY THE DELAY OF 1606 DAYS IN FILING OF THIS APPEAL STANDS CONDONED AND THE APPEAL OF THE ASSESSEE IS DISPOSED OF ON MERITS. 6. ON MERITS, THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS RAISED GROUNDS A TO K. OUT OF THE SAME, THE AS SESSEE DESIRES TO PRESS ONLY GROUNDS A, C, F, G AND H. NONE OF THE OTHER GROUNDS HAVE BEEN ARGUED. IT WAS SUBMITTED BY THE LEARNED AR THAT THE ASSESSEE WAS DOING BUSINESS IN SPARE PARTS. THE ASSESSEES FATHER WAS DOING BUSINESS IN FINANCE. ON ACCOUNT OF OL D AGE AND ON ACCOUNT OF DETRIMENT IN BUSINESS, THE ASSESSEES FATHER WENT INTO SUBSTANTIAL LOSSES. THE ASSESSEES FATHER WAS UNABLE TO REPAY VARIOUS DEPOSITS RECEIVED BY HIM. CONSEQUENTLY, LITIGATION HAD BEEN INITIATED BY THE DEPOSITORS, WHICH HAD RESULTED IN ATTACHMENTS OF THE IMMOVABLE PROPERTIES OF THE FAMILY, WHICH INCLUDED THE ASSESSEES PROPERTIES. TO HELP THE ASSESSEES FATHER OUT OF THE FINANCIAL DIFFICULTIES, THE ASSESSEE AND HIS BROTHER TOOK VARIOUS CASH LOANS FROM MANAPPURAM FINANCE LIMITED AND SRI GOKULAM CHITS AND FINANCE COMPANY LIMITED AND OTHER INDIVIDUALS . IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 4 TAKEN THESE LOANS BY PLEDGING GOLD. THE LOANS WERE TAKEN IN CASH AND WERE USED FOR REPAYING THE ASSESSEES FATHERS LIABILITY AND WHEN THE ASSESSEE WAS ABLE TO RECOVER FUNDS FROM THE PERSONS WHOM THE ASSESSEES FATHER HAD LENT MONEY THAT WAS ALSO USED FOR REPAYING PART OF THE LOANS. PART OF THE LOANS WAS ALSO FUNDED FROM THE ASSESSEES BUSINESS. IT WAS THE SUBMISSION THAT WHEN THERE WERE SUR PLUS FUNDS AVAILABLE AT ANY POINT IN THE ASSESSEES HANDS, THE SAME WERE DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE . THE LEARNED AR DREW MY ATTENTION TO PAGES 5 TO 27 OF THE PAPER B OOK, WHICH WERE COPIES OF THE STATEMENT OF ACCOUNTS IN RESPECT OF MANAP PURAM FINANCE LIMITED IN RESPECT OF THE GOLD PLEDGED. IT WAS THE SUBMISSION THAT AS AND WHEN THE ASSESSEE HAD THE FUNDS THE GOLD WHICH WERE PLEDGED, WERE TAKEN BACK AND THE SAME WERE A LSO REPLEDGED FOR FURTHER LOANS. THE LEARNED AR DREW MY ATTENTION T O PAG E 28 OF THE PAPER BOOK, WHICH WAS THE COPY OF THE LIFE PLEDGE DETAILS IN RESPECT OF MALAPPURAM FINANCE LTD. HOWEVER, THIS DOES NOT RELATE TO THE RELEVANT ASSESSMENT YEAR BUT RELATES TO THE ASSESSMENT YEAR 2012 - 2013. THE PLEDGE DETAILS FOR THE RELEVANT ASSE SSMENT YEAR WERE SHOWN T O PAGES 29 TO 31, WHICH SHOWS THAT GOLD HAS BEEN PLEDGED ON VARIOUS OCCASIONS AND THE SAME WERE TAKEN BACK AND REPLEDGED. THE LEARNED AR FURTHE R DREW MY ATTENTION T O PAGES 32 TO 39 OF THE PAPER BOOK, WHICH IS THE COPY OF THE MONTHLY LEDGER EXTRACT IN RESPECT OF THE ASSESSEE IN THE BOOKS OF SRI.GOKULAM CHITS AND FINANCE COMPANY LTD. THIS ALSO SHOWS SUBSTANTIAL LOANS BEING TAKEN AND PART REPAYMENT. THE LEARNED AR FURTHER DREW MY ATTENTION TO PAGES 40 TO 60 OF THE PAPER BOOK, WHICH IS THE COPY OF THE BANK ACCOUNT OF THE ASSESSEE WITH ICICI BANK, ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 5 WHEREIN THERE ARE DEPOSITS OF CASH AND CASH WITHDRAWALS AS ALSO CHEQUE TRANSFERS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD TAKEN LOANS ON VARIOUS OCCASIONS TOTALING TO NEARLY RS.91,65,000 DUR ING THE RELEVANT ASSESSMENT YEAR FROM MALAPPURAM FINANCE LIMITED AND THE SAME HAVE ALSO BEEN SETTLED. THE ASSESSEE HAD ALSO TAKEN LOANS OF NEARLY RS.7,90,000 FROM SRI GOKULAM CHITS AND FINANCE COMPANY LIMITED , WHICH WERE ALSO PARTLY SETTLED. IT WAS THE SUB MISSION THAT MANY A TIME, THE ASSESSEE WOULD TAKE LOANS FROM SRI GOKULAM CHITS AND FINANCE COMPANY LIMITED TO SETTLE THE AMOUNT OF MALAPPURAM FINANCE LIMITED AND VICE VERSA WHENEVER THERE WAS SHORTAGE OF FUNDS. IT WAS THE SUBMISSION THAT WHENEVER THERE WAS SURPLUS OF CASH, THE SAME WAS DEPOSITED IN THE BANK ACCOUNT. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NO OTHER SOURCES OF INCOME. IT WAS THE PRAYER THAT THE ADDITION OF RS.34,32,856 MAY BE DELETED INSOFAR AS THE CASH DEPOSITS OF THE BANK ACCOUNT WERE OUT OF THE LOANS TAKEN BY THE ASSESSEE FROM THE FINANCIAL INSTITUTIONS AND FROM OUTSIDERS. THE LEARNED AR FURTHER DREW MY ATTENTION TO GROUND H, WHICH WAS IN RESP ECT OF ADDITION OF RS.7,08,500, WHICH WAS CLAIMED AS LOAN TAKEN FROM ONE SRI. VIJAYAKUMAR. IT WAS THE SUBMISSION THAT THIS AMOUNT OF RS.7,08,500 WAS PART OF THE CASH DEPOSIT OF RS.34,32,856. IT WAS THE PRAYER THAT THE SAME MAY BE DELETED. IT WAS THE SUBMIS SION THAT THE SAID AMOUNT WAS ADDED BECAUSE SRI.VIJAYAKUMAR HAD NOT GIVEN THE CONFIRMATION OF GRANTING THE LOAN. IT WAS THE SUBMISSION THAT AS LITIGATION WAS INITIATED BY SRI.VIJAYAKUMAR AGAINST THE ASSESSEE FOR THE RECOVERY OF THE DUES, SRI.VIJAYAKUMAR HA D NOT GIVEN THE CONFIRMATION. THE LEARNED ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 6 AR DREW MY ATTENTION TO PAGE 22 OF THE APPEAL PAPERS, WHICH WAS THE COPY OF THE ATTACHMENT ISSUED BY THE SUBORDINATE JUDGE, VATAKARA IN SUIT OS - 9 OF 2014 FOR AN AMOUNT OF RS.16,17,000. THE SAID SUIT ATTACHMENT ORDE R IS AGAINST THE ASSESSEES FATHER SRI. KRISHNAN. IT WAS THE SUBMISSION THAT THE AMOUNT OF RS.16,17,000 REPRESENTED THIS LOAN OF RS.7, 0 8 , 5 00 ALONG WITH INTEREST. IT WAS THE PRAYER THAT THIS ADDITION OF RS.7,08,500 MAY BE DELETED IN ENTIRETY. 7. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE ASSESSEE HAS NOT BEEN ABLE TO CO - RELATE THE VARIOUS LOANS TAKEN BY HIM FROM MALAPPURAM FINANCE LIMITED A ND SRI.GOKULAM CHITS AND FINANCE COMPANY LIMITED WITH THE BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT IT IS THE DUTY OF THE ASSESSEE TO SUBSTANTIATE THE ENTRIES OF CASH IN ITS BANK ACCOUNT. IT WAS THE SUBMISSION THAT WHEREVER THE A SSESSEE HAS BEEN ABLE TO CO - RELATE THE LOAN WITH THE CASH DEPOSIT WITH THE BANK ACCOUNT, THE A.O. HAS NOT MADE ANY ADDITION IN RESPECT OF SUCH AMOUNT. IT WAS THE SUBMISSION THAT THE ADDITION AS MADE BY THE A.O. AND AS CONFIRMED BY THE LEARNED CIT(A) WAS LI ABLE TO BE CONFIRMED. IT WAS THE FURTHER SUBMISSION THAT IN RESPECT OF ADDITION OF RS.7,08,500, SRI.VIJAYAKUMAR HAD NOT GIVEN ANY CONFIRMATION LETTER . I T WAS FOR THE ASSESSEE TO PROVE THE LOAN. THE ASSESSEE HAVING NOT PROVED THE CREDITOR NOR THE CREDITS, T HE ADDITION IS LIABLE TO BE CONFIRMED. ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 7 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE PAPERS AND DOCUMENTS FILED. A PERUSAL OF THE STATEMENT OF ACCOUNTS IN RESPECT OF MANAPPURAM FINANCE LIMITED AND SRI.GOKULAM CHITS & FINANCE COMPANY LIMI TED SHOWS THAT THE ASSESSEE HAS BEEN RECEIVING CASH LOANS IN RESPECT OF VARIOUS PLEDGES INCLUDING GOLD JEWELLERY PLEDGES. A PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE SHOWS THAT THE ASSESSEE HAS BEEN DEPOSITING CASH AND WITHDRAWING CASH FROM HIS BANK ACCO UNT. A PERUSAL OF THE BANK ACCOUNT ALSO SHOWS THAT THE DEPOSITS AND THE WITHDRAWALS ARE NOT FAR OFF IN BETWEEN. A PERUSAL OF THE CASH WITHDRAWALS ALSO SHOWS THAT SOME OF THEM DO TALLY WITH THE REPAYMENT OF THE LOANS TAKEN FROM MALAPPURAM FINANCE LIMITED. T HIS BEING SO, I AM OF THE VIEW THAT IT IS NOT APPROPRIATE TO BRING TO TAX ALL THE CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE AS UNEXPLAINED CASH CREDITS. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT IT IS THE PEAK CASH CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE WHICH IS LIABLE TO BE ASSESSED. FURTHER, IN RESPECT OF LOAN TAKEN FROM SRI.VIJAYAKUMAR, A PERUSAL OF THE ATTACHMENT ORDER ISSUED BY SUBORDINATE JUDGE, CLEARLY SHOWS THAT SRI.VIJAYAKUMAR HAS INITIATED PROCEEDINGS AGAINST THE ASSESSEES FATHE R FOR RECOVERY OF THE LOANS GIVEN BY ATTACHMENT OF IMMOVABLE PROPERTIES. THIS BEING SO, I AM OF THE VIEW THAT THE ASSESSEE HAS PROVED THE IDENTITY OF THE CREDITOR, THE GENUINENESS OF THE CREDITS AND ALSO THE CREDITWORTHINESS INSOFAR AS SRI.VIJAYAKUMAR HIMS ELF IS LITIGATING FOR RECOVERY OF THE AMOUNT. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE ADDITION REPRESENTING THE AMOUNT OF RS.7,08,500 REPRESENTING THE LOAN TAKEN FROM SRI.VIJAYAKUMAR CANNOT BE TREATED AS ITA NO . 466 /COCH/ 2018 . SRI . V.K.SUDHEER . 8 UNEXPLAINED CASH CREDIT IN THE HANDS OF TH E ASSESSEE AND CONSEQUENTLY, THE SAME STANDS DELETED. IN RESPECT OF THE BALANCE OF RS.34,32,856 LESS RS.7,08,500 BEING RS.2 7 ,2 4 ,356 REPRESENTING THE CASH DEPOSITS IN THE BANK ACCOUNT, WHICH HAS BEEN TREATED AS UNEXPLAINED CASH CREDIT, THE A.O. IS DIRECTED TO BRING TO TAX THE PEAK CASH CREDIT IN THE BANK ACCOUNT. IT HAS BEEN FAIRLY AGREED BY THE ASSESSEE THAT THERE ARE TWO SEPARATE BANK ACCOUNTS IN WHICH CASH HAS BEEN DEPOSITED AND WITHDRAWN. THE P EA K CREDIT IN RESPECT OF EACH OF THE BANK ACCOUNT IS TO BE CO NSIDERED SEPARATELY AND IS TO BE ADDED SEPARATELY. THE A.O. IS DIRECTED TO COMPUTE THE PEAK CREDIT AND ASSESS THE SAME IN PLACE OF THE TREATING THE ENTIRE CASH DEPOSIT IN THE BANK ACCOUNT AS UNEXPLAINED CASH CREDIT. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF SEPTEMBER, 2020 . SD/ - (GEORGE MATHAN) JUDICIAL MEMBER COCHIN , DATED 23 RD SEPTEMBER , 2020 DEVADAS G* COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - KOZHIKODE. 4. THE PR.CIT, KOZHIKODE . 5. THE DR, ITAT, KOCHI 6. GUARD FILE. ASST.REGISTRAR/ITAT/KOCHI