E.Ummer Bava, Malappuram V. ACIT, Tirur

ITA 515/COCH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1054 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 06-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-06-2011
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: R V VISWANATHAN
• Keywords: Gift; Source of fund; Additional evidence; Onus to prove
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A NO. 515/COCH/2011 ASSESSMENT YEAR 2005-06 SHRI E.UMMER BAVA, CONTRACTOR, SAKEENA MANZIL, DOWN HILL, MALAPPURAM-676519. [PAN: ADKPB 9071F] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, TIRUR. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT ) ASSESSEE BY SHRI R.V.VISWANATHAN, CA REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 06/12/2012 DATE OF PRONOUNCEMENT 08/02/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 31.03.2011 PASSED BY LD CIT(A)-II, CALICUT AND IT RELATES TO T HE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITIONS DESCRIBED BELOW:- (A) ADDITION OF CLAIM OF GIFT RECEIPTS - RS.35.00 LAKHS (B) ADDITION TOWARDS UNVERIFIABLE NATURE OF EXPEN SES - RS. 2.00 LAKHS. 3. THE ASSESSEE IS UNDERTAKING CIVIL CONTRACT W ORKS. DURING THE COURSE OF SCRUTINY PROCEEDINGS RELATING TO THE YEAR UNDER CONSIDERATIO N, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED A GIFT TO THE TUNE OF RS.35.00 LAKHS F ROM HIS BROTHER NAMED E. HAMZA BAVA. THOUGH THE ASSESSEE FILED A CONFIRMATION LET TER, YET HE COULD NOT FURNISH DETAILS I.T.A. NO.515/COCH/2011 2 LIKE OCCASION FOR THE GIFT, CREDIT WORTHINESS OF TH E DONOR EXCEPT STATING THAT THE DONOR IS DOING BUSINESS IN BAKERY, DEPARTMENTAL STORE AND RE AL ESTATE AT AL-AIN, UAE. THEREFORE, THE ASSESSING OFFICER ADDED THE ABOVE SAID SUM OF R S.35.00 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. THE AO NOTICED THAT THE PURCHASE OF MATERIALS LIKE SAND, BOULDERS, METALS, JELLIES, SAND ETC. ARE NOT SUPPORTED BY PRO PER BILLS EXCEPT BY BOUGHT NOTES. THE WAGES/LABOUR CHARGES WERE SUPPORTED ONLY BY SEL F MADE VOUCHERS. THE CLOSING WORK IN PROGRESS DECLARED BY THE ASSESSEE WAS FOUND TO BE AN ESTIMATE. HENCE, THE AO OPINED THAT THE INFLATION OF EXPENSES UNDER THESE C IRCUMSTANCES CANNOT BE RULED OUT. ACCORDINGLY, HE MADE A ROUND SUM DISALLOWANCE OF RS .2.00 LAKHS TO COVER UP THE DEFICIENCIES. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A), BUT COULD NOT SUCCEED. HENCE, THE ASSESSEE HAS COM E BEFORE US IN APPEAL. 4. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF PLACED UPON HIM U/S 68 OF THE ACT B Y PROVING THE IDENTITY OF THE DONOR, CREDIT WORTHINESS OF THE DONOR AND GENUINENESS OF T HE TRANSACTIONS. HE SUBMITTED THAT THE DONOR HAS FILED AN AFFIDAVIT, WHICH PROVES THE IDENTITY OF THE DONOR. THE ASSESSEE HAS FURNISHED A CERTIFICATE FROM M/S PALM GENERAL T RADING LLC, WHEREIN IT IS CLEARLY STATED THAT THE DONOR WAS PAID A SUM OF 11 LAKH DIR HAMS, WHICH PROVES THE CREDIT WORTHINESS OF THE DONOR. THE GIFT HAS BEEN RECEIVE D THROUGH BANKING CHANNELS AND HENCE THE GENUINENESS OF THE TRANSACTIONS IS ALSO P ROVED. HE FURTHER SUBMITTED THAT THE LD CIT(A) REFUSED TO ADMIT THE CERTIFICATE OBTA INED FROM M/S PALM GENERAL TRADING LLC ON THE GROUND THAT THE SAME IS NOT ADMISSIBLE U NDER RULE 46A OF IT RULES. HE SUBMITTED THAT THE LD CIT(A) ERRED IN OBSERVING THA T THE ASSESSEE SHOULD HAVE FILED COPIES OF FINANCIAL STATEMENTS OF THE DONOR DULY CE RTIFIED BY THE INDIAN EMBASSY WITHOUT APPRECIATING THE FACT THAT THERE IS NO INCOME TAX, SERVICE TAX ETC. IN UAE. HE FURTHER SUBMITTED THAT THE CASE LAW RELIED UPON BY LD CIT(A ) ARE DISTINGUISHABLE AND DO NOT APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD A.R PLACED RELIANCE ON THE THIRD MEMBER DECISION OF JABALPUR BENCH OF TRIBUNAL IN THE CASE OF DCIT VS. VISHWANATH PRASAD GUPTA REPORTED IN (2011)(52 DTR ( JAB.)(TM)(TRIB.) 346) AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT THERE IS NO REASON TO DISBELIEVE GIFTS RECEIVED BY THE ASSESSEE IF (A) THE GIFT HAS BEEN RECEIVED B Y CHEQUE; (B) THE GIFT HAS BEEN I.T.A. NO.515/COCH/2011 3 DISCLOSED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND (C) THE DONORS HAVE AFFIRMED ABOUT THE GIFT THROUGH THEIR AFFIDAVITS. 5. THE LD D.R SUBMITTED THAT THE IMPUGNED GIFTS HAVE BEEN RECEIVED THROUGH DEMAND DRAFTS AND NOT THROUGH THE BANK ACCOUNT OF T HE DONOR AND HENCE IT CANNOT BE SAID THAT THE GIFTS HAVE BEEN RECEIVED THROUGH THE BANKING CHANNELS. THE LD D.R FURTHER SUBMITTED THAT THE CERTIFICATE GIVEN BY PAL M GENERAL TRADING LLC IS A BALD ONE AND SELF SERVING CERTIFICATE. FURTHER THE NEXUS BE TWEEN THE FUNDS CLAIMED TO HAVE BEEN RECEIVED THE ABOVE SAID CONCERN AND THE GIFTS HAS N OT BEEN ESTABLISHED BY THE DONOR. ACCORDINGLY, THE LD D.R CONTENDED THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THE DONOR AND ALSO THE GENUINENESS OF THE TRANSACTIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE RECORD. THERE SHOULD NOT BE ANY DISPUTE THAT THE INITIAL BURDEN O F PROOF TO PROVE THE CASH CREDIT IS PLACED UPON THE ASSESSEE UNDER THE PROVISIONS OF SE C. 68 OF THE ACT. IF THE ASSESSEE IS ABLE TO DISCHARGE THE SAME, THEN THE BURDEN OF PROO F SHIFTS TO THE ASSESSING OFFICER. IN THIS REGARD, IT WOULD BE APPOSITE HERE TO EXTRACT T HE OBSERVATIONS MADE BY HONBLE DELHI HIGH COURT IN THE CASE OF PREMNATH GOEL AND CO. VS. CIT (2004)(271 ITR 390) BELOW:- SECTION 68 OF THE ACT REQUIRES AN ASSESSEE TO PROV E THE CREDITS APPEARING IN HIS BOOKS OF ACCOUNT, AS TO THE NATURE AND SOURCE OF SU CH AMOUNTS, SO THAT IF THE EXPLANATION FURNISHED IS NOT SATISFACTORY, THE ASSE SSING OFFICER CAN TREAT IT AS THE ASSESSEES INCOME. THE ASSESSEE IS REQUIRED TO PRO VE THREE IMPORTANT CONDITIONS NAMELY, (I) THE IDENTITY OF THE CREDITOR (II) THE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY A ND (III) THE GENUINENESS OF THE TRANSACTION. WHAT EVIDENCE WOULD BE SUFFICIENT TO ESTABLISH THE SAID CONDITIONS OR WHAT MATERIAL WOULD BE RELEVANT IN A PARTICULAR CASE, WO ULD DEPEND ON THE FACTS OF EACH CASE. BASED ON THE ABOVE SAID PRINCIPLE, IF WE ANALYSE TH E FACTS PREVAILING IN THE INSTANT CASE, WE NOTICE THAT THE ASSESSEE HAS FILED A CONFIRMATIO N LETTER FROM THE DONOR, AN AFFIDAVIT FROM THE DONOR AND A CERTIFICATE OBTAINED FROM M/S PALM GENERAL TRADING LLC. FROM I.T.A. NO.515/COCH/2011 4 THE ORDER OF LD CIT(A), WE NOTICE THAT THE ASSESSEE HAS RECEIVED THE IMPUGNED AMOUNT OF RS.35.00 LAKHS AS UNDER:- CHEQUE NO. MONTH/YEAR AMOUNT 2169557 APRIL 2004 5,00,000 2169558 APRIL 2004 5,00,000 2172511 APRIL 2004 5,00,000 2172512 APRIL 2004 5,00,000 111234708 JUNE 2004 10,00, 000 111325337 MARCH 2005 5,00,000 --------------- 35,00,000 ======== THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE HAD RECEIVED SUBSTANTIAL GIFTS FROM THE SAME PERSON IN THE PRECEDING ASSESSMENT YEAR AL SO. BEFORE THE AO, THE ASSESSEE COULD NOT EXPLAIN THE OCCASION FOR RECEIVING THE GI FT. THE AO HAS GIVEN A CATEGORICAL FINDING THAT THE CREDIT WORTHINESS OF THE DONOR WAS NOT PROVED BEFORE HIM. 7. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE HAS FILED A CONFIRMATION LETTER AND THE SAME READS AS UNDER:- I HEREBY CONFIRM THAT I HAVE SENT RS. 35,0 0,000/- (RUPEES THIRTY FIVE LAKHS ONLY) BY DD/CHEQUES, TO MY BROTHER E. UMMER BAVA, DOWN HILL, MALAPPURAM DURING THE YEAR 2004-05. I HAVE BEEN LIVING IN THE GULF FOR OVER 35 YEA RS AND HAVE MY OWN BUSINESS IN THE FORM OF BAKERY, DEPARTMENTAL STORE AND REAL ES TATE. I AM NOT ASSESSED TO INCOMETAX AND DO NOT HAVE A PERMANENT ACCOUNT NUMB ER. I HAVE SENT THE ABOVE AMOUNT TO MY BROTHER OUT OF LOVE AND AFFECTION, BY WAY OF GIFT. 8. DURING THE COURSE OF APPELLATE PROCEEDINGS B EFORE LD CIT(A), THE ASSESSEE HAS FURNISHED A CERTIFICATE OBTAINED FROM M/S PALM GENE RAL TRADING LLC AND THE SAME READS AS UNDER:- THIS IS TO CERTIFY THAT MR. ESSAKANAKATH HAMZA BAV A PARTNER OF PALM GENERALTRADING (LLC) WAS RETIRED ON 31.03.2004. WIT HIN THIS PERIOD HE WAS PAID SUM OF DHS 4,00,000/- (FOUR LAKHS) ON 15.04.0 3, DHS 4,00,000/- (FOUR LAKHS) ON 16.10.03 AND A SUM OF DHS 3,00,000/- (THREE LAK HS) ON 01.03.04 TOWARDS THE INVESTMENT AND SHARE OF PROFITS. THE COMPANY DID NOT HAVE ANY LIABILITY TO HIM. I.T.A. NO.515/COCH/2011 5 IT IS NOTICED THAT THOUGH THE LD CIT(A) HAS STATED THAT THE FRESH EVIDENCE IS NOT ADMISSIBLE AS PER RULE 46A OF THE IT RULES, YET THE LD CIT(A) HAS OBTAINED A REMAND REPORT FROM THE ASSESSING OFFICER, WHICH READS AS U NDER:- 2. AS PER THE ABOVE REFERENCE, AN OPPORTUNITY UN DER RULE 46A WAS GIVEN TO TEST THE EVIDENCE FILED BY THE ASSESSEE WHICH IS A XEROX COPY OF TELEX DATED 3.1.2008 GIVEN BY THE MANAGING DIRECTOR OF M/S. PA LM GENERAL TRADING (LLC) TO THE EFFECT THAT SHRI E. HAMZA BAVA, PARTNER OF THE SAID CONCERN RETIRED ON 31.3.2004 AND WITHIN THIS PERIOD HE WAS PAID 4 LAK HS DIRHAMS ON 15.4.2003, 4 LAKHS DIRHAMS ON 16.10.2003 AND 3 LAKHS DIRHAMS ON 1.3.2004 TOWARDS THE INVESTMENT AND SHARE OF PROFITS AND ALSO TO SUBMIT A REPORT REGARDING THE CREDITWORTHINESS OF THE PERSON IN THE LIGHT OF THE ADDITIONAL EVIDENCE GIVEN. 3. SHRI R.V. VISHWANATHAN, CHARTERED ACCOUNTANT, A UTHORISED REPRESENTATIVE OF THE ASSESSEE WHO ATTENDED THE CASE WAS ASKED TO FU RNISH DETAILED EVIDENCES IN THIS REGARD. IT WAS REITERATED BY HIM THAT THE SU M OF RS. 35 LAKHS CREDITED IN THE CAPITAL ACCOUNT OF THE AS IS THE AMOUNT RECEIVED F ROM HIS OWN BROTHER SHRI E. HAMZA BAVA AND THE REMITTANCES WERE THROUGH BANKIN G CHANNELS FROM UAE AND THAT THE SOURCE OF FUNDS FOR HIS BROTHER STANDS EX PLAINED BY WAY OF CERTIFICATE FROM THE ABOVE MENTIONED COMPANY. IT WAS STATED B Y HIM THAT HE HAS NO OTHER EVIDENCES OTHER THAN WHAT I ALREADY FILED WITH THE DEPTT. 4. THOUGH A SUM OF RS. 356 LAKHS HAS COME TO INDI A TO THE ASSESSEES BANK ACCOUNTS BY WAY OF DEMAND DRAFTS FROM UAE ON VARIO US DATES FROM APRIL 2003 TO NOV. 2003, THIS IS NOT THROUGH THE NRE ACCOUNTS FROM HAMZA BAVA AND THOUGH A CERTIFICATE FROM M/S. PALM GENERAL TRADING (LLC), UAE HAS BEEN FILED WITH REGARD TO EVIDENCES THAT THIS MONEY WAS DEPOSITED IN HIS BANK ACCOUNTS AND FROM THIS BANK ACCOUNT ONLY; DEMAND DRAFT WERE TAKEN WITHIN A REASONABLE TIME, AS GIFT AMOUNT TO HIS BROTHER, SHRI E. UMMER BAVA. IN THE ABSENCE OF FULL AND COMPLETE DETAILS FURNISHED, IT I NOT KNOWN WHETHER SHRI E. H AMZA BAVA HAD ALSO MADE CERTAIN OTHER INVESTMENTS EITHER IN UAE OR ANYWHERE ELSE. IT IS ALSO NOT KNOWN WHETHER SHRI E. HAMZA BAVA HAD GIVEN ANY SIMILAR GI FT TO HIS OTHER CLOSE RELATIVES. IT IS ALSO RELEVANT TO NOTE THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF MOHANAKALA 291 ITR 217,WHEREIN IT WAS HELD THAT RECEIPT OF MONEY THROUGH BANKING CHANNELS WAS NOT A CONCLUSIVE PROO F TO SHOW THE GENUINENESS OF THE TRANSACTION. THEREFORE, SINCE THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED BEYOND DOUBT WITH ALL NECESSARY EVIDEN CES, IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE ASSESSEE REGARDING TH E GIFT RECEIVED FROM HIS BROTHER, SHRI E. HAMZA BAVA. THEREFORE, THE CLAIM OF GIFT OF MONEY TO THE ASSESSEE CANNOT BE ACCEPTED AS CORRECT, BASED ON T HE MATERIALS FILED BY THE ASSESSEE . I.T.A. NO.515/COCH/2011 6 9. NOW LET US EXAMINE AS TO WHETHER THE ASSESSE E HAS DISCHARGED THE BURDEN OF PROOF PLACED UPON HIM. IN HIS LETTER DATED 24.3.20 11, THE ASSESSEE HAS WRITTEN THAT THE DONOR WAS PERSONALLY PRESENT ON 16.3.2011 AT KOCHI IN CONNECTION WITH THE HEARING OF APPEAL AND AN AFFIDAVIT WAS SIGNED BEFORE A NOTARY AT KOCHI. IT IS FURTHER STATED THAT THE AFFIDAVIT HAS BEEN SUBMITTED AFFIRMING THE ABOV E FACTS AND EXPLAINING AS TO WHY THE GIFT WAS NOT PASSED THROUGH HIS BANK ACCOUNT. ON T HE BASIS OF THE AFFIDAVIT STATED ABOVE, IT WAS CONTENDED THAT THE IDENTITY OF THE DO NOR WAS PROVED. HOWEVER, THE COPY OF THE AFFIDAVIT WAS NOT PLACED IN THE PAPER BOOK A ND FURTHER WE DO NOT FIND ANY DISCUSSION ABOUT THE AFFIDAVIT IN THE APPELLATE ORD ER OF LD CIT(A). BE THAT AS IT MAY, WE MAY PRESUME THAT THE ASSESSEE HAS DISCHARGED THE ID ENTITY OF THE DONOR. 10. BOTH THE TAX AUTHORITIES HAVE CONFIRMED THA T THE IMPUGNED GIFT AMOUNTS HAVE BEEN RECEIVED BY WAY OF DEMAND DRAFTS AND NOT THROU GH THE BANK ACCOUNT OF THE DONOR. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE SAID DEMAND DRAFTS WERE TAKEN BY THE DONOR OUT OF HIS OWN FUNDS . HENCE, AS CONTENDED BY THE LD D.R, WE ARE OF THE VIEW THAT THE RECEIPT OF DEMAND DRAFT BY ITSELF SHALL NOT PROVE THE GENUINENESS OF THE TRANSACTIONS, PARTICULARLY IN TH E ABSENCE OF ANY MATERIAL TO ESTABLISH THE NEXUS BETWEEN THE FUNDS OF THE DONOR AND THE DE MAND DRAFTS. HENCE, IN OUR VIEW, THE GENUINENESS OF THE TRANSACTIONS CANNOT BE CONSI DERED TO HAVE BEEN ESTABLISHED. 11. REGARDING CREDIT WORTHINESS OF THE DONOR, WE FULLY AGREE WITH THE OBSERVATIONS MADE BY LD CIT(A) IN PARA 11 OF HIS ORDER, WHICH RE ADS AS UNDER:- 11. TO START WITH, I FIND THAT THE APPELLANT DI D NOT RECEIVE THE GIFT AMOUNTS THROUGH BANKING CHANNEL AS CLAIMED BY THE LEARNED COUNSEL FOR THE APPELLANT IN THE FIRST WRITTEN SUBMISSIONS. THE GIFT AMOUNTS H AVE BEEN RECEIVED BY THE APPELLANT BY WAY OF DDS AND NO NEXUS HAS BEEN ESTABLISHED BETWEEN THE SOURCE OF FUNDS FOR PROCURING THESE DDS BY THE DON OR AND HIS EARNINGS IN THE NRE BANK ACCOUNT. A COPY OF THE BANK ACCOUNT FOR T HE RELEVANT PERIOD OF THE DONOR HAS NOT BEEN PLACED ON RECORD. IT IS SEEN T HAT THE DONOR CLAIMS TO HAVE RECEIVED FUNDS ON RETIREMENT AS UNDER: DATE AMOUNT (IN DIRHAMS) APPROX. EQUIVALENT AMOUNT IN RUPEES 15.04.2003 4 LAKHS RS. 40 LAKHS 16.10.2003 4 LAKHS RS. 40 LAKHS 01.03.2004 4 LAKHS RS. 40 LAKHS I.T.A. NO.515/COCH/2011 7 WHETHER THE ABOVE AMOUNTS RECEIVED WERE APPLIED FOR THE PURPOSE OF MAKING GIFT TO THE APPELLANT, IS NOT ESTABLISHED AS RELEV ANT BANK ACCOUNT HAS NOT BEEN FURNISHED AND NO NEXUS BETWEEN THE RECEIPT OF ABOVE AMOUNTS AND PROCUREMENT OF DDS FOR MAKING GIFTS TO THE APPELLANT HAS BEEN E STABLISHED. NO BALANCE SHEET OR FINANCIAL STATEMENT OR CASH FLOW STATEMENT OF TH E DONOR HAS BEEN PLACED ON RECORD TO INDICATE EXHAUSTIVE RESOURCES OF FUNDS OF THE DONOR AND THE CORRESPONDING INVESTMENTS. IT IS ALSO SEEN THAT TH E ABOVE SUMS ON RETIREMENT WERE RECEIVED BY THE DONOR IN THE PRECEDING FINANCI AL YEAR AND THEREFORE, THERE IS APPARENTLY NO NEXUS BETWEEN THE GIFTS RECEIVED BY T HE APPELLANT THIS YEAR AND THE ABOVE FUNDS. THE ASSESSING OFFICER HAS OBSERVE D THAT THE APPELLANT ALSO CLAIMS TO HAVE RECEIVED SUBSTANTIAL GIFTS IN THE PR ECEDING FINANCIAL YEAR FROM THE SAME DONOR ABOUT WHICH THE APPELLANT IS TOTALLY SIL ENT. IT IS THUS, SEEN THAT THE APPELLANT FAILS TO ESTABLISH ANY NEXUS BETWEEN THE RETIREMENT FUNDS OF DONOR AND GIFTS RECEIVED BY THE APPELLANT. IF THE FUNDS WERE FLOWING FROM INCOME EARNED ABROAD A CORRESPONDING DECLARATION DULY COUNTER SIG NED BY INDIAN EMBASSY IN THE RELEVANT COUNTRY OUGHT TO HAVE BEEN PLACED ON R ECORD ALONG WITH FINANCIAL STATEMENT INDICATING FINANCIAL STATUS OF THE DONOR AND DEPLOYMENT OF INCOME EARNED ABROAD. WE NOTICE THAT THE AUTHENTICITY OF THE CERTIFICATE GIVEN BY THE M/S PALM GENERAL TRADING LLC HAS NOT BEEN ESTABLISHED BY THE ASSESSEE, FOR E XAMPLE, BY PRODUCING THE COPIES OF BOOKS OF ACCOUNT, BANK ACCOUNT, AGREEMENT, OTHER RE CORD ETC. IN THE ABSENCE OF SUPPORTING DOCUMENTS, THE SAID CERTIFICATE CAN ONLY BE CONSIDERED AS A SELF SERVING AND BALD CERTIFICATE. FURTHER THE DONOR HAS FAILED TO ESTABLISH THE NEXUS BETWEEN THE FUNDS, IF ANY, RECEIVED BY HIM FROM M/S PALM GENERAL TRADI NG LLC AND THE IMPUGNED GIFTS. HENCE, IN OUR VIEW ALSO, IT CANNOT BE SAID THAT THE ASSESSEE HAS ESTABLISHED THE CREDIT WORTHINESS OF THE DONOR. 12. THUS, THE ASSESSEE, HAVING FAILED TO ESTABLI SH THE GENUINENESS OF THE TRANSACTIONS AND THE CREDIT WORTHINESS OF THE DONOR, CANNOT BE S AID TO HAVE DISCHARGED THE INITIAL BURDEN OF PROOF PLACED UPON HIM U/S 68 OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN UPHOLDING THE ADDITION OF RS.35.00 LAKHS MADE BY THE ASSESSING OFFICER. 13. THE NEXT ISSUE RELATES TO THE ADDITION OF R S.2.00 LAKHS MADE BY THE ASSESSING OFFICER TO COVER UP THE DEFICIENCIES NOTICED IN THE BOOKS OF ACCOUNT RELATING TO THE I.T.A. NO.515/COCH/2011 8 CONTRACT BUSINESS. THE LD CIT(A) CONFIRMED THE ADD ITION WITH THE FOLLOWING OBSERVATIONS:- 15. I HAVE CAREFULLY CONSIDERED THE REL EVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE INVOLVED. I FIND THAT THOUGH THE APPELLANT DID NOT OFFER ANY CONTRACT RECEIPT DURING THE RELEVANT PREVIOUS YEAR , THE APPELLANT DID CARRY FORWARD WORK IN PROGRESS TO THE TUNE OF R. 1.6 CRO RES AS AGAINST OPENING WORK IN PROGRESS OF RS. 34 LAKHS AND THE APPELLANT DID CLA IM VARIOUS EXPENSES AND ALSO CLAIMED A NET LOSS ON ACCOUNT OF THE BUSINESS ACTI VITIES DURING THE RELEVANT PREVIOUS YEAR. THE CLAIM OF THE APPELLANT ON ACCO UNT OF WAGES/LABOUR ITSELF WAS AROUND RS. 40 LAKHS AND CONSIDERING THE VARIOUS EX PENSES RESULTING IN ACCRETION TO WORK IN PROGRESS, I FIND THAT THE ADDITION OF R S. 2 LAKHS MADE BY THE ASSESSING OFFICER WAS MORE THAN REASONABLE. IT IS ALSO APPA RENT THAT THE WORK IN PROGRESS WAS ONLY AN ESTIMATED ROUND FIGURE WHICH HAS NOT B EEN DISTURBED BY THE ASSESSING OFFICER AND CONSEQUENTIAL BENEFIT HAS AL READY BEEN AVAILED BY THE APPELLANT IN THE SUBSEQUENT ASSESSMENT YEAR. IT W AS ALSO AN ADMITTED POSITION THAT SUBSTANTIAL EXPENSES WERE NOT SUPPORTED BY IN DEPENDENT CROSS VERIFIABLE VOUCHERS AND THEREFORE, THE DISALLOWANCE OUT OF TH E SAME WAS JUSTIFIED FOR THE REASON THAT THE APPELLANT FAILED TO ESTABLISH GENU INENESS OF ALL EXPENSES AND ESTABLISH IDENTITY OF PAYEES. 16. IN VIEW OF THE ABOVE AND CONSIDERING THE TO TALITY OF FACTS IN THIS REGARD, I HOLD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN M AKING THE DISALLOWANCE WHICH WAS ALSO REASONABLE CONSIDERING THE TOTAL CLAIM OF THE APPELLANT. THE CONSEQUENTIAL ADDITION OF RS. 2 LAKHS MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT IS THEREFORE, CONFIRMED. THIS GROUND OF A PPEAL IS ACCORDINGLY REJECTED. BEFORE US, THE ASSESSEE FAILED TO FURNISH ANY MATER IAL OR EXPLANATION TO CONTRADICT THE FINDINGS OF THE TAX AUTHORITIES. ACCORDINGLY, WE D O NOT FIND ANY REASON TO INTERFERE WITH THE DECISION TAKEN BY LD CIT(A) ON THIS ISSUE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 08-02-2013 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 8TH FEBRUARY, 2013 GJ I.T.A. NO.515/COCH/2011 9 COPY TO: 1. SHRI E.UMMER BAVA, CONTRACTOR, SAKEENA MANZIL, DO WN HILL, MALAPPURAM-676519. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, TIRUR. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II,CALI CUT. 4. THE COMMISSIONER OF INCOME-TAX, CALICUT. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. COCHIN