Smt.Laila Mathew, Kottayam V. The DCIT, Kottayam

ITA 517/COCH/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3903 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 23-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: T BANUSEKAR
• Keywords: Deemed dividend
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I.T.A. NO. 06/COCH/2017 ASSESSMENT YEAR : 2004 - 05 THE ASSISTANT COMMISSIONER OF INCOME-TAX (CENTRAL), KOTTAYAM. VS. SMT. LAILA MATHEW, KOSAMATTOM HOUSE, MANGANAM P.O., KOTTAYAM-686 018. [PAN:AEDPM 1526Q] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) I.T.A. NO. 517/COCH/2016 ASSESSMENT YEAR : 2008 - 09 SMT. LAILA MATHEW, KOSAMATTOM HOUSE, MANGANAM P.O., KOTTAYAM-686 018. [PAN:AEDPM 1526Q] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX (CENTRAL), KOTTAYAM. ( ASSESSEE-APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SHRI A. DHANARAJ, SR. DR ASSESSEE BY SHRI T. BANUSEKAR, ADV. DATE OF HEARING 14/06 / 201 7 DATE OF PRONOUNCEMENT 07 / 07 / 201 7 I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 2 O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 517/ COCH/2016 PERTAINS TO THE ASSESSMENT YEAR 2008-09 WHEREAS THE APPEAL FILED BY THE REVENUE IN I.T.A. NO. 06/COCH/2017 PERTAINS TO ASSESSMENT YEAR 2004-05. 2. SINCE THE APPEALS PERTAIN TO THE SAME ASSESSEE , THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON AND CONSOLIDATED O RDER. WE SHALL TAKE UP FOR ADJUDICATION REVENUES APPEAL. I.T.A. NO. 06/COCH/2017 (AY 2004-05) (DEPARTMENTS APPEAL) 3. THE GROUNDS RAISED BY THE REVENUE READS AS F OLLOWS: 1. THE LEARNED CIT(A) ERRED IN ALLOWING DRAWINGS O F RS.64,33,800 CLAIMED FROM M/S. KOSAMATTOM ESTATE INVESTMENTS AS SOURCE . 2. OBSERVATION OF THE LEARNED CIT(A) IN PARA 5 OF THE APPELLATE ORDER IS NOT IN CONSONANCE WITH DETAILED FINDING OF ASSESSING OFFIC ER IN PARA 4 OF THE ASSESSMENT ORDER AND THE GENUINENESS OF THE TRANSAC TION WITH M/S. KOSAMATTOM ESTATE INVESTMENTS TO TUNE OF RS.64,33,80 0 IS NOT PROVEN. 3. THE LEARNED CIT(A) OVERLOOKED THAT FINAL ACCOUN TS OF M/S. KOSAMATTTOM ESTATE INVESTMENTS FOR YEAR ENDED 31.03.2014 AND 31. 03.2005 REVEALED VERY LOW INTEREST DEBITED AS OPPOSED TO FIXED DEPOSITS B ASE. IF ACTUAL FDS WERE TAKEN, THEN THE INTEREST OUTGO WOULD HAVE BEEN MUCH HIGHER. IF INTEREST RATES WERE LOW, THE ENTITY WOULD NOT ATTRACT DEPOSITS. T HIS SHOWED THAT M/S. KOSAMATTOM ESTATE INVESTMENTS WAS NOT A GENUINE ENTI TY. I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 3 4. THE LEARNED CIT(A) OVERLOOKED THAT THE ALLEGED F IRM M/S. KOSAMATTOM ESTATE INVESTMENTS HAD NEVER FILED RETURNS OF INCOME ALTHO UGH FIRMS ARE MANDATED TO FILE RETURNS OF INCOME. THIS ENTITY DID NOT EVEN H AVE A PAN. IT WAS FLOATED TO MERELY ACCEPT DEPOSITS SINCE THE MONEY LENDING FIRM M/S. KOSAMATTOM BANKERS COULD NOT ACCEPT DEPOSITS. AS SUCH IDENTITY, CREDI TWORTHINESS AND GENUINENESS OF TRANSACTION IS NOT ESTABLISHED. 3.1 THE BRIEF FACTS IN RELATION TO THE ABOVE GRO UNDS ARE AS FOLLOWS: THE ASSESSEE HAD CLAIMED AS SOURCE A SUM OF RS.64,33,800/- AS DRAWINGS FROM M/S. KOSAMATTOM ESTATE INVESTMENTS. THE ASSESSING O FFICER, AFTER PERUSING THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THE FI RM FILED FOR THE FINANCIAL YEARS 2003- 04 AND 2004-05, DOUBTED THE EXISTENCE OF THE FIRM M /S. KOSAMATTOM ESTATE INVESTMENTS. THE ASSESSING OFFICER THEREFORE DISBEL IEVED THAT AN AMOUNT OF RS.64,33,800/- WAS DRAWN FROM M/S. KOSAMATTOM ESTATE INVESTMENTS. THEREFORE, RS.64,33,800/- WAS ADDED BY THE ASSESSING OFFICER. 3.2 AGGRIEVED BY THE ASSESSMENT, THE ASSESSEE PRE FERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: 6. DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E LEARNED COUNSELS OF THE APPELLANT GAVE THE SAME ARGUMENTS AND EXPLANATIONS, AS WAS GIVEN IN THE CASE OF SHRI MATHEW K. CHERIAN. A SEARCH WAS CARRIED OU T IN THE CASE OF SHRI MATHEW K. CHERIAN. THE APPELLANT, MRS. LAILA MATHE W, IS THE WIFE OF SHRI MATHEW K. CHERIAN. SHRI MATHEW K. CHERIAN IS ENGAG ED IN THE BUSINESS OF PROVIDING GOLD LOAN TO NEEDY PEOPLE. SHRI MATHEW C HERIAN AND MRS. LAILA MATHEW HAD SHOWN WITHDRAWAL FROM M/S. KOSAMATTOM EST ATE INVESTMENTS, WHICH IS A PARTNERSHIP FIRM. SINCE M/S. KOSAMATTOM ESTATE INVESTMENTS DID NOT FILE ITS RETURN OF INCOME, THE ASSESSING OFFICER DE NIED ITS VERY EXISTENCE AND I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 4 TREATED THE WITHDRAWALS MADE BY SHRI MATHEW K. CHER IAN AND MRS. LAILA MATHEW AS UNEXPLAINED AND HENCE THE ADDITION. ON THE OTHER HAND, THE APPELLANT CONTENDED THAT M/ S. KOSAMATTOM ESTATE INVESTMENTS IS A REAL ENTITY AND HAS BEEN MAINTAINI NG BANK ACCOUNTS. IT IS A VALID PARTNERSHIP FIRM AND JUST BECAUSE IT DID NOT FILE ITS RETURN OF INCOME, THE EXISTENCE OF THE FIRM CANNOT BE DENIED. THE TRANSA CTION HAS TAKEN PLACE THROUGH BANKING CHANNELS AND M/S. KOSAMATTAM ESTATE INVESTMENTS HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO PROVE ITS CRE DITWORTHINESS. SINCE THE APPELLANT HAS DISCHARGED ITS ONUS, IT CANNOT BE CON CLUDED THAT MONEY WITHDRAWN BY MRS. LAILA MATHEW FROM M/S. KOSAMATTOM ESTATE INVESTMENT IS NOT EXPLAINED IN THE HANDS OF THE APPELLANT. ON THE FACTS OF THIS CASE, I AGREE WITH THE CON TENTION OF THE APPELLANT. IF AT ALL ANY ACTION WAS REQUIRED TO BE TAKEN, IT COULD B E TAKEN IN THE CASE OF M/S. KOSAMATTOM ESTATE INVESTMENT AND NOT THE APPELLANT. THEREFORE, ADDITION AMOUNTING TO RS.58,65,066/- ON ACCOUNT OF CASH SHOR TAGE U/S. 69C MADE BY THE ASSESSING OFFICER IS HEREBY DELETED. 3.3 REVENUE BEING AGGRIEVED HAS FILED THE PRESENT APPEAL BEFORE TRIBUNAL. THE LD. DR RELIED ON THE GROUNDS RAISED. THE LD. AR ON THE OTHER HAND SUPPORTED THE FINDINGS/CONCLUSIONS OF THE CIT(A). 3.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THE FIRM M/S. KOSAMATTOM ESTATE INVESTMENTS, IS A PARTNE RSHIP FIRM COMPRISING OF ASSESSEE AND HER HUSBAND. THE ASSESSING OFFICER HAS DOUBTED THE EXISTENCE OF THE FIRM AND THEREFORE, WITHDRAWALS TO THE EXTENT OF RS . 64,33,800/- WAS NOT ALLOWED AS SOURCE IN THE CASH FLOW STATEMENT. THE CASH SHORTA GE OF RS.58,65,066/- WAS TREATED AS DEEMED DIVIDEND U/S. 69C. IN THE HANDS OF THE AS SESSEES HUSBAND IN I.T.A. NO. 518/COCH/2016, WE HAVE REMITTED THE ISSUE TO THE FI LE OF THE ASSESSING OFFICER. FOR I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 5 READY REFERENCE, THE FINDINGS OF THE TRIBUNAL IN I. T.A. NO. 518/COCH/2016 IN THE CASE OF ASSESSEES HUSBAND READS AS FOLLOWS: 7.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. ADMITTEDLY, THE DAUGHTERS OF THE ASSESSEE, MS. JILU MATHEW AND MS. MILU MATHEW DOES NOT HAVE INDEPENDENT SOURCE OF INCOME. THE LOA NS THEY HAD ADVANCED TO THE PROPRIETARY CONCERN OF ASSESSEE ARE SAID TO BE AMOUNTS RECEIVED FROM THE FIRM M/S. KOSAMATTOM ESTATE INVESTMENTS, A PARTNERSH IP FIRM COMPRISING OF ASSESSEE AND HIS WIFE AS PARTNERS. THIS FIRM HAS B EEN CLOSED DOWN SINCE 2005. NO RETURN OF INCOME HAS BEEN FILED BY THE FIRM, M/S . KOSAMATTOM ESTATE INVESTMENTS. THE VERY EXISTENCE OF THE FIRM, M/S. KOSAMATTOM ESTATE INVESTMENTS IS DOUBTED. THE ASSESSEE BEING THE MA NAGING PARTNER OF THE FIRM HAS TO PRODUCE POSITIVE PROOF FOR THE EXISTENCE OF THE SAME. THE RECEIPTS OF THE FIRM, M/S. KOSAMATTOM ESTATE INVESTMENTS IS CLAIMED TO BE DEPOSITS RECEIVED FROM VARIOUS PERSONS. THIS HAS NECESSARILY TO BE PR OVED BY THE ASSESSEE WHO IS CLAIMED TO BE THE MANAGING PARTNER OF THE FIRM. SI NCE THERE HAS BEEN NO PROPER EXAMINATION OF THE ISSUE BOTH BY THE ASSESSING OFFI CER AND THE CIT(A), WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE CONSIDERED AFR ESH BY THE ASSESSING OFFICER. THE ASSESSEE SHALL PRODUCE NECESSARY DOCUMENTS TO P ROVE THE EXISTENCE OF THE FIRM, M/S. KOSAMATTOM ESTATE INVESTMENTS AND ALSO TO PROVE THE GENUINENESS OF THE DEPOSITS IT HAS RECEIVED. THE ASSESSING OFFICE R SHALL EXAMINE THE GENUINENESS/EXISTENCE OF THE FIRM M/S. KOSAMATTOM ES TATE INVESTMENTS. IF EXISTENCE OF FIRM IS FOUND GENUINE BY ASSESSING OFF ICER, HE SHALL MAKE A RANDOM CHECK OF THE DEPOSITS CLAIMED TO HAVE BEEN RECEIVED BY THE PARTNERSHIP FIRM M/S. KOSAMATTOM ESTATE INVESTMENTS. FOR THESE EXAMINATION S, THE APPEAL IS RESTORED TO THE FILES OF THE ASSESSING OFFICER. THE ASSESSI NG OFFICER SHALL DISPOSE OF THE MATTER AS EXPEDITIOUSLY AS POSSIBLE, AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 3.5 SINCE THE EXISTENCE OF THE FIRM IS TO BE PROV ED BY THE ASSESSEE AND HER HUSBAND, NECESSARILY THESE WITHDRAWALS OF THE ASSESSEE FROM THE FIRM NEEDS FRESH EXAMINATION BY THE ASSESSING OFFICER. ACCORDINGLY, WE REMIT TH IS ISSUE TO THE FILE OF THE ASSESSEE FOR DE NOVO CONSIDERATION. IN THE RESULT, WE ALLOW THE APPEAL OF THE REVENUE FOR STATISTICAL PURPOSES. IT IS ORDERED ACCORDINGLY. I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 6 3.6 THEREFORE, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. I.T.A. NO. 517/COCH/2016 (AY 2008-09) (ASSESSEES A PPEAL) 4. THE ASSESSEE HAS RAISED EIGHT GROUNDS. HOWEVE R IN THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE CONFINED HIS SUBMI SSIONS ONLY TO GROUND NOS. 6 AND 7. GROUND NOS. 6 AND 7 READ AS FOLLOWS: 6. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEALS ) ERRED IN UPHOLDING THE ADDITION OF REMUNERATION OF RS.2,55,000/- RECEI VED FROM M/S. KOSAMATTOM CHITS & KURIES PVT. LTD. 7. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEALS) FAILED TO APPRECIATE THAT THE SAID SUM WAS ACTUALLY PAYABLE TO THE APPEL LANT IN THE EARLIER YEARS AND WAS ALREADY OFFERED TO TAX IN THE EARLIER YEARS. 4.1 THE BRIEF FACTS IN RELATION TO THESE GROUNDS ARE AS FOLLOWS: IN THE CASH FLOW STATEMENT, THE ASSESSEE H AD SHOWN REMUNERATION FROM M/S. KOSAMATTAM CHITS AND KURRIES PVT. LTD. AMOUNTING TO RS.2,55,000/-. ACCORDING TO THE ASSESSING OFFICER SINCE THIS AMOUNT WAS NOT REFLECT ED IN THE RETURN OF INCOME, THE CLAIM OF THE ASSESSEE CANNOT BE ALLOWED AS A SOURCE IN THE CASH FLOW STATEMENT. ACCORDINGLY, THE AMOUNT OF RS.2,55,000/- WAS BROUGH T TO TAX. 4.2 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFIC ER, IN DISBELIEVING THE SOURCE OF RS.2,55,000/-, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 7 CIT(A) DISMISSED THE CONTENTION RAISED BY THE ASSES SEE AND UPHELD THE ADDITION OF RS.2,55,000/- . 4.3 THE ASSESSEE BEING AGGRIEVED HAS FILED THE PR ESENT APPEAL BEFORE TRIBUNAL. THE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE L OWER AUTHORITIES. THE LD. DR SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND C IT(A). 4.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. IT WAS SUBMITTED THAT THE AMOUNT OF RS.2,55,000/- SHOW N IN THE CASH FLOW STATEMENT WAS ACTUALLY RECEIVED AS REMUNERATION FROM M/S/ KOS AMATTOM CHITS AND KURRIES PVT. LTD. IT WAS CONTENDED THAT THE AMOUNTS WERE ACCOUN TED FOR IN THE PAST YEARS ON ACCRUAL BASIS AND IT WAS DECLARED IN THE RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08. THE ASSESSEE HAS PRO DUCED THE RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08 I N THE P.B. FILED BY HER. IN THE STATEMENT OF INCOME ALONG WITH THE RETURN, THE ASSE SSEE HAD DISCLOSED REMUNERATION FROM M/S. KOSAMATTAM CHITS AND KURRIES PVT. LTD. AT RS.15,000/-, 1,30,000/- AND RS. 1,10,000/- FOR THE ASSESSMENT YEARS 2005-06, 2006-0 7 AND 2007-08 RESPECTIVELY. IT IS NOT CLEAR FROM THE STATEMENT OF INCOME WHETHER THES E AMOUNTS WERE REMUNERATION/SALARY FROM M/S. KOSAMATTOM CHITS & KU RRIES PVT. LTD. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER TO FIND OUT WHETH ER ASSESSEE HAD DISCLOSED THE AMOUNTS OF RS.15,000/-, 1,30000/- AND RS. 1,10,000 /- FOR THE ASSESSMENT YEARS I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 8 2005-06, 2006-07 AND 2007-08 RESPECTIVELY. IF THE ASSESSEE HAD DISCLOSED IN THE RETURNS OF INCOME FILED FOR THE ASSESSMENT YEARS 20 05-06 TO 2007-08, REMUNERATION AGGREGATING TO RS.2,55,000/- FROM M/S. KOSAMATTOM C HITS & KURRIES PVT. LTD., CORRESPONDING AMOUNT OF RS.2,55,000/-, OUGHT TO BE TAKEN AS SOURCE IN THE CASH FLOW STATEMENT. FOR THE LIMITED EXAMINATION OF THE SAI D ISSUE, THE MATTER IS RESTORED TO THE FILES OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL DISPOSE OF THE APPEAL BY AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE. IT IS ORDERED ACCORDINGLY. THE REFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE AND THE DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 07-07-2017. SD/- SD/- (ABRAHAM P. GEORGE) (GEORG E GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: KOCHI DATED: 7 TH JULY, 2017 GJ COPY TO: 1.SMT. LAILA MATHEW, KOSAMATTOM HOUSE, MANGANAM P.O ., KOTTAYAM-686 018. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRA L CIRCLE, KOTTAYAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT EGISTRAR) I.T.A.T., COCHIN I.T.A.NOS.06/COCH/2017 & 517/COCH/2016 9