The ACIT, Kottayam V. Sri.Mathew K. Cherian, Kottayam

ITA 518/COCH/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 0046 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained cash credit; Source of fund; Additional evidence; Corroborative evidences; Deemed dividend
• Section: 69C; 143(3); 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, C OCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I.T.A. NOS. 513-516/COCH/20 16 ASSESSMENT YEARS : 2004 - 05, 2005 - 06, 2007 - 08 & 2010 - 11 SHRI MATHEW K. CHERIAN, KOSAMATTOM HOUSE, MANGANAM P.O., KOTTAYAM-686 018. [PAN: ABUPC 1286H] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KOTTAYAM. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) I.T.A. NOS. 518 & 519/COCH/2016 ASSESSMENT YEARS : 2004 - 05 & 2005 - 06 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE, KOTTAYAM. VS. SHRI MATHEW K. CHERIAN, KOSAMATTAM HOUSE, MANGANAM P.O., KOTTAYAM-686 018. [PAN: ABUPC 1286H] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) ASSESSEE BY SHRI T. BANUSEKAR, ADV. REVENUE BY SHRI A. DHANARAJ, SR. DR DATE OF HEARING 14 /06/2017 DATE OF PRONOUNCEMENT 07 /0 7 /2017 2 I.T.A. NO. 513-516 518-519/COCH/2016 & O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THESE FOUR APPEALS AT THE INSTANCE OF THE ASS ESSEE AND TWO APPEALS BY DEPARTMENT ARE DIRECTED AGAINST VARIOUS ORDERS OF CIT(A). 2. THE DETAILS OF ASSESSEES APPEALS, DEPARTMENT S APPEALS, THE RELEVANT ASSESSMENT YEARS ARE AS FOLLOWS: ASSESSEE APPEAL DEPARTMENT APPEAL I.T.A. NO. AY I.T.A. NO. AY 513/C/2016 2004-05 518/C/2016 2004-05 514/C/2016 2005-06 519/C/2016 2005-06 515/C/2016 2007-08 516/C/2016 2010-11 3. WE SHALL FIRST TAKE UP FOR ADJUDICATION THE ASSESSEES APPEAL. I.T.A. NO. 513/COCH/2016 : (A.Y. 2004-05) (ASSESSEE S APPEAL) THERE ARE SEVEN GROUNDS RAISED BY THE ASSES SEE IN THIS APPEAL. OUT OF SEVEN GROUNDS, THE LD. COUNSEL FOR THE ASSESSEE SHRI T. B ANUSEKAR DID NOT PRESS GROUND NOS. 1,2,3, 5 AND 7, HENCE, THESE GROUNDS ARE DISMI SSED AS NOT PRESSED. THE REMAINING GROUNDS NAMELY GROUND NOS. 4 AND 6 READ A S FOLLOWS: 3 I.T.A. NO. 513-516 518-519/COCH/2016 & 4. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN UPHOLDING THE ADDITION MADE U/S. 68 OF THE INCOME TAX ACT, 1961 T O THE EXTENT OF RS.1,19,10,346/- BEING UNSECURED LOANS RECEIVED BY THE APPELLANT IN HIS PROPRIETARY BUSINESS M/S. KOSAMATTAM BANKERS. 6. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN UPHOLDING THE ADDITION MADE U/S. 69C OF THE INCOME TAX ACT 1961 T O THE EXTENT OF RS.2,50,93,189/- BEING LOAN FROM FRIENDS AND RELATI VES. GROUND NO. 4: 3.1 THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 2,51,45,882/- U/S. 68 OF THE I.T. ACT VIDE PARA 4 OF THE ASSESSMENT ORDER. ON F URTHER APPEAL TO THE FIRST APPELLATE AUTHORITY, OUT OF THE TOTAL ADDITION OF RS.2,51,45, 882/- U/S. 68 OF THE I.T. ACT, THE CIT(A) DELETED THE ADDITION OF RS.1,32,35,536/- AND BALANCE RS.1,19,10,346/- WAS CONFIRMED BY THE CIT(A). THE RELEVANT FINDING OF T HE CIT(A) AT PAGE 14 OF THE IMPUGNED ORDER IN CONFIRMING THE ADDITION OF RS.1,1 9,10,346/-, READS AS FOLLOWS: APART FROM RS.1,32,35,536/- CLAIMED TO HAVE BEEN R ECEIVED FROM DAUGHTERS MS. JILU MATHEW AND MS. MILU MATHEW, AN AMOUNT OF RS.1, 19,10,346/- WAS CLAIMED TO HAVE BEEN RECEIVED FROM OTHERS. IN THIS REGARD, TH E APPELLANT CONTENDED THAT THESE AMOUNTS ALSO HAVE BEEN RECEIVED THROUGH BANKI NG CHANNELS AND, THEREFORE, THE SAME NEEDS TO BE TREATED AS GENUINE. I HAVE GO NE THROUGH THE ENTIRE DETAILS SUBMITTED BY THE APPELLANT. THERE IS NO DOUBT THAT THESE AMOUNTS HAVE BEEN RECEIVED THROUGH BANK ACCOUNT BY THE APPELLANT. BU T THE APPELLANT ALSO NEEDS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THES E LOAN CREDITORS. THE APPELLANT HAS SUBMITTED NAMES AND ADDRESSES OF THE DEPOSITORS . I HAVE PERUSED THE LIST. THE APPELLANT HAS NEITHER FURNISHED THE PERMANENT A CCOUNT NUMBER (PAN) NOR COMPLETE ADDRESSES. THIS DOES NOT SERVE ANY PURPOS E. NEITHER THE IDENTITY NOR CREDITWORTHINESS GETS ESTABLISHED. IT IS THE MOST BASIC ONUS ON PART OF THE ASSESSEE AND, THEREFORE, THE AMOUNT OF RS.1,19,10,3 46/- SHOWN AS CREDIT IN THE 4 I.T.A. NO. 513-516 518-519/COCH/2016 & ACCOUNT OF THE APPELLANT REMAINS UNEXPLAINED AND TH E ADDITION IS, THEREFORE, CONFIRMED. 3.2 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASS ESSEE RAISED THE ABOVE ISSUE BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE RE ITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. 3.3 THE LD. DR ON THE OTHER HAND SUPPORTED THE O RDERS OF THE ASSESSING OFFICER AND THE CIT(A). 3.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. THE ASSESSEE HAD CLAIMED THAT IT HAD RECEIVED LOANS FRO M FRIENDS AND RELATIVES AGGREGATING TO RS.1,19,10,346/-. THE ASSESSEE WITH REFERENCE T O THE LOAN AMOUNTS OF RS.1,19,10,246/- HAD ONLY SUBMITTED THE NAMES OF TH E LOAN CREDITORS. THE COMPLETE ADDRESSES OF THE LOAN CREDITORS WERE NOT GIVEN. NO CONFIRMATIONS OR PAN NOS. OF THE LOAN CREDITORS WERE MADE AVAILABLE BY THE ASSESSEE. THEREFORE, THE PRIMARY ONUS CAST ON THE ASSESSEE HAS NOT BEEN DISCHARGED BY HIM. HE NCE, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE. IN THE RESULT, GROUND NO. 4 R AISED IN I.T.A. NO. 513/COCH/2016 IS REJECTED. 5 I.T.A. NO. 513-516 518-519/COCH/2016 & GROUND NO. 6: 3.5 THE ASSESSEE WAS ENGAGED IN THE MONEY LENDIN G BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DIREC TED THE ASSESSEE TO PREPARE A CASH FLOW STATEMENT IN ORDER TO UNDERSTAND THE SOUR CE OF INVESTMENT AND THE OUTGOINGS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH CERTAIN SOURCE OF FUNDS, HENCE, HE TREATED THE CORRESPONDING EXPENDITURE AS UNEXPLA INED EXPENDITURE U/S. 69C OF THE ACT. THE DETAILS OF THE SOURCE DISBELIEVED BY THE ASSESSING OFFICER ARE AS UNDER: OPENING BALANCE RS. 13,00,000/- DRAWINGS FROM M/S. KOSAMATTAM ESTATE INVESTMENTS RS.2,79,83,950/- LOAN FROM OTHERS RS.2,50,93,189.50 3.6 THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE ASSESSMENT, PREFERRED AN APPEAL TO THE CIT(A). THE CIT(A) CONFIRMED THE ADD ITION U/S. 69C OF THE ACT OF RS.2,50,93,189/-, BEING LOANS RECEIVED FROM FRIENDS AND RELATIVES. THE RELEVANT FINDING OF THE CIT(A) IS AS FOLLOWS: THE APPELLANT CLAIMED TO HAVE RECEIVED LOANS FROM RELATIVES AND FRIENDS AND OTHERS FORAN AMOUNT OF RS.2,50,93,189/-. IN THIS RESPECT, THE APPELLANT HAS FURNISHED ONLY THE NAMES AND SKETCHY ADDRESSES OF THE DEPOSITORS, WHICH DOES NOT EVEN ESTABLISH THE IDENTITY OF CREDITWORTHINESS OF THE LOAN CREDIT OR. THE LAW REQUIRES THE ASSESSEE TO REASONABLY ESTABLISH OR EXPLAIN THE IDENTITY OF THE LOAN CREDITOR. THE LAW REQUIRES THE ASSESSEE TO REASONABLY ESTABLISH OR EXPLAIN THE IDENTITY OF THE LOAN CREDITOR, CREDITWORTHINESS OF THE SAID CREDITOR AND GENUINENE SS OF THE TRANSACTION. NOW, THE LAW IS SETTLED ON THIS ISSUE IN THE LIGHT OF VARIOU S JUDICIAL PRONOUNCEMENTS BY THE HIGHER COURTS OF ADJUDICATURE. I HAVE GONE THROUGH THE NAMES AND ADDRESSES OF 6 I.T.A. NO. 513-516 518-519/COCH/2016 & LOAN CREDITORS, PROVIDED BY THE APPELLANT DURING TH E COURSE OF APPELLATE PROCEEDINGS. IT IS A LONG LIST AND ADDRESSES ARE SU CH, WHICH IS NOT SUFFICIENT TO BE ABLE TO REACH AND CONTACT THE PERSON. THE APPELLAN T IS ENGAGED IN THE BUSINESS OF PROVIDING GOLD LOAN TO NEEDY PERSONS. IT IS CLEAR T HAT THE APPELLANT HAS NOT FOLLOWED THE KYC NORMS. IF THE LOAN TAKEN WERE GENUINE, THE APPELLANT, AT LEAST, COULD HAVE OBTAINED PERMANENT ACCOUNT NUMBERS (PAN) FROM ITS D EPOSITORS AND WOULD HAVE MAINTAINED THEIR ADDRESSES, SO THAT THEY COULD BE R EACHED, WHEN REQUIRED. IN VIEW OF THESE FACTS, IN MY OPINION, THE APPELLANT HAS NO T BEEN ABLE TO REASONABLY DISCHARGE ITS PRIMARY ONUS OF ESTABLISHING THE IDEN TITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. ADDITION TO THE EX TENT OF RS.2,50,93,189/-, THEREFORE, IS CONFIRMED. 3.7 THE ASSESSEE BEING AGGRIEVED HAS RAISED THE A BOVE ISSUE IN APPEAL BEFORE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE REITERA TED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 3.8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED FROM FRIENDS AND RELATIVES LOANS AGGREGATING TO RS.2,50,93,189/-. ADDRESSES OF THE LOAN CREDITORS GIVEN BY ASSESSEE ARE INCOMPLETE. THERE ARE NO CONFIRMATIONS OF LOANS BY THE LOAN CRE DITORS. NO PAN NOS. OF THE PERSONS FROM WHOM THE ASSESSEE HAD RECEIVED THESE L OANS ARE FURNISHED. EVEN BEFORE TRIBUNAL, NO DETAILS HAVE BEEN FILED BY THE ASSESSE E TO DISPEL THE FINDING OF THE CIT(A). HENCE WE CONFIRM THE ORDER OF THE CIT(A) A S CORRECT AND IN ACCORDANCE WITH LAW. THEREFORE, GROUND NO. 6 IS REJECTED. 7 I.T.A. NO. 513-516 518-519/COCH/2016 & 3.9 IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IN I.T.A NO. 513/COCH/2016 IS DISMISSED. I.T.A. NO. 514/COCH/2016 (A.Y. 2005-06) (ASSESSEES APPEAL) 4. IN THIS APPEAL, FIVE GROUNDS ARE RAISED. GRO UND NOS. 1,2,3 & 5 WERE NOT PRESSED BY LEARNED AR, HENCE THE SAME ARE DISMISSED AS NOT PRESSED. THE SURVIVING SOLITARY GROUND, NAMELY GROUND NO. 4 READS AS FOLLOWS: 4. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN HOLDING THE ADDITION OF A SUM OF RS.32,21,600/- BEING LOANS REC EIVED BY THE APPELLANT FROM FRIENDS AND RELATIVES. 4.1 THE CIT(A) HAD SUSTAINED THE ADDITION OF RS.3 2,21,000/- BY OBSERVING AS UNDER: IT CAN BE SEEN FROM THE SUBMISSIONS OF THE APPELLA NT THAT OUT OF THE TOTAL AMOUNT OF RS.77,71,600/-AN AMOUNT OF RS.45,50,000/- WAS WI THDRAWN FROM M/S. KOSAMATTAM ESTATE INVESTMENTS AND RS.32,21,000/- HAS BEEN RECEIVED FROM FRIENDS AND RELATIVES. IN THE ASSESSMENT ORDER, THE ASSESS ING OFFICER HAS MENTIONED THAT ENTIRE AMOUNT OF RS.77,71,600/- WAS WITHDRAWN FROM M/S. KOSAMATTAM ESTATE INVESTMENT, WHICH IS FACTUALLY INCORRECT. AS ALREA DY DECIDED BY ME IN THE DETAILED ORDER PASSED FOR AY 2004-05, THE AMOUNT WITHDRAWN F ROM M/S. KOSAMATTAM ESTATE INVESTMENT AMOUNTING TO RS.45,50,000/- STANDS EXPLA INED. AS FAR AS LOAN FROM FRIENDS AND RELATIVES AMOUNTING TO RS.32,21,000/-, THE APPELLANT HAS NOT BEEN ABLE TO DISCHARGE HIS PRIMARY ONUS. THE APPELLANT HAS G IVEN NAMES AND ADDRESSES OF THE LOAN CREDITORS AND IN ABSENCE OF OTHER DETAILS LIKE PERMANENT ACCOUNT NUMBER, NEITHER THE IDENTITY NOR THE CREDITWORTHINESS OF SU CH CREDITORS IS PROVED AND THEREFORE, THE AMOUNT OF CASH CREDIT OF RS.32,21,60 0/- REMAINS UNEXPLAINED. 8 I.T.A. NO. 513-516 518-519/COCH/2016 & THUS, ON THIS ISSUE, ADDITION OF RS.45,50,000/- IS DELETED AND ADDITION OF RS.32,21,600/- IS CONFIRMED. 4.2 AGGRIEVED BY THE ORDER OF THE CIT(A), THE AS SESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE AMOUNTS WERE RECEIVED THROUGH BANKING CHANNELS AND HENCE, N O ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. THE LD. DR ON THE OTHER HAN D SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 4.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. THE CIT(A) HAS CATEGORICALLY FOUND THAT THE AMOUNTS REC EIVED FROM THE FRIENDS AND RELATIVES AGGREGATING TO RS.32,21,000/- IS NOT PROV ED BY THE ASSESSEE. THE CIT(A) HAS STATED THAT ASSESSEE HAS NOT BEEN FURNISHING TH E COMPLETE ADDRESSES OF THE LOAN CREDITORS. IN THE ABSENCE OF FULL ADDRESSES NOR PAN NOS. OF THE LOAN CREDITORS, THE DEPARTMENT WAS UNABLE TO VERIFY THE GENUINENESS OF THE TRANSACTIONS. THIS CATEGORIC FINDING OF THE CIT(A) HAS NOT BEEN CHALLENGED BY TH E ASSESSEE BY PLACING ANY CONTRA EVIDENCE. THEREFORE, WE CONFIRM THE ORDER OF THE CI T(A) AND REJECT GROUND NO. 4 OF THE ASSESSEE. 4.4 IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IN I.T.A. NO. 514/COCH/2016 IS DISMISSED. 9 I.T.A. NO. 513-516 518-519/COCH/2016 & I.T.A. NO. 515 (A.Y. : 2007-08) (ASSESSEES APPEAL) 5. IN THIS APPEAL, THE ASSESSEE HAS RAISED FIVE GROUNDS. GROUND NOS. 1,2,3 AND 5 WERE NOT PRESSED IN THE GROUNDS OF APPEAL BY THE LD . COUNSEL FOR THE ASSESSEE. HENCE THE SAME ARE DISMISSED AS NOT PRESSED. THE SOLITAR Y GROUND NAMELY, GROUND NO. FOUR READS AS FOLLOWS: 4. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN UPHOLDING THE ADDITION OF RS.60,00,000/- BEING LOAN FROM FRIENDS AND RELATIVES. 5.1 THE CIT(A) HAD CONFIRMED THE ADDITION OF RS. 60 LAKHS. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: 6.3 THE ASSESSING OFFICER HAS MADE A DISALLOWANCE OF RS.60,00,000/- STATING THAT THE SOURCE HAS NOT BEEN EXPLAINED. THE APPELLANT H AS GIVEN THE NAMES AND ADDRESSES OF THE CREDITORS. HOWEVER, IN MY OPINION , GIVING THE NAMES AND ADDRESSES ALONE ARE NOT SUFFICIENT TO PROVE THE IDE NTITY, CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. THE APPELLANT HAS FAILED TO PRODUCE EVEN THE PERMANENT ACCOUNT NUMBERS OF THESE CREDITO RS AND, THEREFORE, THE ASSESSEE HAS FAILED TO DISCHARGE ITS PRIMARY ONUS. THE ADDITION OF RS.60,00,000/- IS HEREBY CONFIRMED. 5.2 AGGRIEVED THE ASSESSEE HAS FILED THE PRESEN T APPEAL BEFORE THE TRIBUNAL. 5.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ASSESSEE HAD FAILED TO PRODUCE COMPLETE ADDRESSES A ND PERMANENT ACCOUNT NOS. OF THE LOAN CREDITORS. THUS THE PRIMARY ONUS CAST ON THE ASSESSEE HAS NOT BEEN 10 I.T.A. NO. 513-516 518-519/COCH/2016 & DISCHARGED IN THIS CASE. HENCE WE CONFIRM THE ORDER OF THE CIT(A) AND REJECT GROUND NO. 4 RAISED IN THE APPEAL. 5.4 IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN I.T.A. NO.515/COCH/2016 IS DISMISSED. I.T.A. NO. 516/COCH/2016 :(A.Y. 2010-11) (ASSESSEE S APPEAL) 6. IN THIS APPEAL, EIGHT GROUNDS ARE RAISED. ON LY GROUND NOS. 4 TO 7 WERE ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. GROUND NOS. 4 TO 7 READ AS FOLLOWS: 4. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEAL S) ERRED IN UPHOLDING THE TREATMENT OF RS.32,15,055/- BEING AMOUNT DRAWN FROM M/S. KOSAMATTAM FINANCE PRIVATE LIMITED AS DEEMED DIVIDEND. 5. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEALS) FAILED TO APPRECIATE THAT THE PROVISIONS OF SECTION 2(22)(E) ARE NOT INVOCABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEALS) FAILED TO APPRECIATE THAT THE SAID DRAWINGS WERE DULY REFLECTED IN THE BOOKS OF A CCOUNT. 7. FOR THAT THE COMMISSIONER OF INCOME TAX(APPEALS ) ERRED IN UPHOLDING THE ADDITION OF A SUM OF RS.1,91,00,000/- BEING LOANS R ECEIVED BY THE APPELLANT FROM FRIENDS AND RELATIVES. GROUND NO. 4,5 & 6: 6.1 THE BRIEF FACTS OF THE CASE ARE THAT DURING T HE COURSE OF SEARCH ON 20/01/2010, IT WAS NOTICED THAT THERE WAS CASH SHORTAGE IN THE PVT. LTD. COMPANY NAMELY M/S. 11 I.T.A. NO. 513-516 518-519/COCH/2016 & KOSAMATTOM FINANCE LTD. IT WAS EXPLAINED BY THE AS SESSEE WHO IS THE MD OF M/S. KOSAMATTOM FINANCE PVT. LTD. THAT HE HAD WITHDRAWN THE AMOUNTS FROM M/S. KOSAMATTOM FINANCE PVT. LTD. THE ASSESSEE WAS DIR ECTED TO EXPLAIN AS TO WHY THE AMOUNT WITHDRAWN FROM M/S. KOSAMATTOM FINANCE PVT. LTD. TO THE EXTENT OF RS.32,15,055/- SHOULD NOT BE TREATED AS DEEMED DIVI DEND. NO EXPLANATION WAS FURNISHED BY THE ASSESSEE, HENCE THE AMOUNT WITHDRA WN BY THE ASSESSEE FROM KOSAMATTOM FINANCE LTD. TO THE EXTENT OF RS.32,15,0 55/- WAS TREATED AS DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. 6.2 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFIC ER, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A ) CONFIRMED THE ADDITION MADE U/S. 2(22)(E) OF THE ACT. THE RELEVANT FINDING OF THE C IT(A) READS AS FOLLOWS: THIS GROUND OF APPEAL OF THE APPELLANT RELATES TO ADDITION OF RS.32,15,055/- U/S. 2(22)(E) AS DEEMED DIVIDEND. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT WITHDREW AN AMOUNT OF RS.32,15,055/- FROM M/S. KOSAMATTAM FINANCE PVT. LTD. WHEREIN HE IS THE MAJORITY SHARE HOLDER AND THE MANAGING DIRECTOR. THE ASSESSING OFFICER INVOKED THE PROVIS ION OF SECTION 2(22)(E) AND MADE THE ADDITION. DURING THE COURSE OF APPELLATE P ROCEEDINGS, THE APPELLANT DID NOT SAY ANYTHING. I FIND THE CONCLUSION DRAWN BY THE ASSESSING OFFICER AS CORRECT AND THE ADDITION IS CONFIRMED. THESE GROUN DS OF APPEAL OF THE APPELLANT ARE DISMISSED. 6.3 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASS ESSEE HAS PREFERRED THE PRESENT APPEAL ON THIS ISSUE BEFORE THE TRIBUNAL. THE LD. C OUNSEL FOR THE ASSESSEE REITERATED 12 I.T.A. NO. 513-516 518-519/COCH/2016 & THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORIT IES. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 6.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. IN THE STATEMENT RECORDED U/S. 132(4) OF THE ACT, THE ASSESSEE IN ANSWER TO QUESTION NO. 10, HAS STATED THAT THE AMOUNT OF RS.32,15,055/ - HAS BEEN WITHDRAWN BY THE ASSESSEE FROM THE COMPANY, M/S. KOSAMATTOM FINANCE PVT. LTD. FOR THE PERSONAL PURPOSE. THIS CLEARLY SHOWS THAT THE CLAIM OF THE ASSESSEE THAT HE HAD KEPT THE MONEY OF M/S. KOSAMATTOM FINANCE PVT. LTD. IN SAFE CUSTODY IS NOT A VALID EXPLANATION. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW T HAT THE ASSESSING OFFICER HAS CORRECTLY ADDED THE AMOUNT O F RS.32,15,055/- U/S. 2(22)(E) OF THE ACT. IT IS ORDERED ACCORDINGLY. GROUND NOS. 4 ,5 & 6 ARE REJECTED. GROUND NO. 7 6.5 IT IS CLAIMED BY THE ASSESSEE THAT AN AMOUNT OF RS.1,91,00,000/- WAS RAISED AS LOAN FROM FRIENDS AND RELATIVES OF THE ASSESSEE. T HE ASSESSING OFFICER ADDED THE SAME U/S. 68 OF I.T. ACT. THE CIT(A) CONFIRMED THE ADDITION MADE U/S. 68 OF THE ACT BY OBSERVING AS UNDER: THIS GROUND OF APPEAL OF THE APPELLANT RELATES TO ADDITION AMOUNTING TO RS.1,91,00,000/- ON ACCOUNT OF LOAN FROM FRIENDS AN D RELATIVES. THE APPELLANT 13 I.T.A. NO. 513-516 518-519/COCH/2016 & FURNISHED NAMES AND ADDRESSES ONLY AND FAILED TO DI SCHARGE ITS PRIMARY ONUS OF PROVING THE IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF TRANSACTION. I HAVE DECIDED THIS ISSUE IN EARLIER YEARS, THROUGH A DETA ILED ORDER AGAINST THE APPELLANT. SINCE THE FACTS ARE IDENTICAL IN THIS YEAR ALSO, TH E ADDITION IS CONFIRMED AND THESE GROUNDS OF APPEAL ARE DISMISSED. 6.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE COULD NOT PRODUCE ANY MATERIAL TO SHOW THAT THESE AMOUNTS CLAIMED TO HAVE BEEN RECEIVED FROM FRIENDS AND RELATIVES ARE GENUINE TRANSACTIONS. THEREFORE, WE CONFIRM THE ORDER OF T HE CIT(A). HENCE, GROUND NO. 7 RAISED IN THE APPEAL FILED BY THE ASSESSEE IS DISMI SSED. 6.7 IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IN I.T.A. NO. 516/COCH/2016 IS DISMISSED. 7. WE NOW TAKE UP FOR ADJUDICATION REVENUES A PPEAL. I.T.A. NO. 518/COCH/2016 : (A.Y. 2004-05) (DEPARTME NTS APPEAL) THE GROUNDS RAISED IN THIS APPEAL READS AS FOLLOWS: 1. THE LEARNED CIT(A) ERRED IN REVERSING THE ADDITI ON U/S. 68 OF RS.1,32,35,536/- BEING LOANS RECEIVED BY PROPRIETA RY BUSINESS FROM THE TWO DAUGHTERS OF THE ASSESSEE, SMT. MILU MATHEW AND SMT . JILU MATHEW. 14 I.T.A. NO. 513-516 518-519/COCH/2016 & 2. THE LEARNED CIT(A) DID NOT APPRECIATE THAT THE TWO CREDITORS DID NOT HAVE ANY SOURCE OF INCOME OF THEIR OWN. 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE CREDITORS HAD RECEIVED THE AMOUNT FROM M/S. KOSAMATTOM ESTATE INVESTMENT. THE CIT(A) OVERLOOKED THAT THE FIRM M/S. KOSAMATTOM ESTATE INVESTMENTS HA D NEVER FILED THE RETURNS OF INCOME ALTHOUGH FIRMS ARE MANDATED TO FILE RETU RN OF INCOME. THIS ENTITY DID NOT EVEN HAVE A PAN. IT WAS FLOATED TO MERELY TO ACCEPT DEPOSITS AS SUCH ANY FUNDS RECEIVED FROM THIS ENTRY IS NOTHING BUT ASSESSEES OWN RE-ROUTED MONEY. AS SUCH IDENTITY, CREDITWORTHINESS AND GEN UINENESS OF TRANSACTIONS IS NOT ESTABLISHED. 7.1 BRIEFLY STATED THE FACTS OF THE ISSUE RAISED ARE AS FOLLOWS: THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSMENT U/S. 143(3) READ WITH SECTION 153A OF THE I.T. ACT, HAD MADE AN ADDITION AMOUNTING TO RS.2,51,45,882/- U/S. 68 OF THE ACT. THE OBSERVATION OF THE ASSESSI NG OFFICER IN MAKING THE ADDITION OF RS.2,51,45,882/- READS AS FOLLOWS: 6. IN THE PROPRIETARY BUSINESS, M/S. KOSAMATTOM BA NKERS, THERE IS AN UNSECURED LOAN OF RS.2,51,45,882/-. THIS INCLUDES LOANS FROM DAUGHTERS MS. JILU MATHEW AND MS. MILU MATHEW TOTALING TO RS.1,32,35,536/-. VIDE NOTICE DATED 1.12.2011 THE ASSESSEE WAS ASKED TO EXPLAIN THE IDENTITY AND CRED IT WORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION. HOWEVER, T HE ASSESSEE FAILED TO PRODUCE ANY SUPPORTING EVIDENCE FOR THE UNSECURED LOANS. I N THE SUBMISSION DATED 16.12.2011 IT WAS ARGUED RS.2.5 CRORES ADVANCED BY THE CREDITORS IS FROM LOAN FUNDS RAISED BY MS. JILU MATHEW AND MS. MILU MATHEW AND THEIR CONFIRMATION LETTERS ARE ATTACHED. HOWEVER, NO SUCH LETTER WAS PRODUCED . IT IS VERY APPARENT THAT THE ASSESSEE HAS NO EXPLANATION FOR THE AMOUNTS CLAIMED AS UNSECURED LOANS. HENCE, THE SAME IS TREATED AS UNEXPLAINED CREDIT U/S. 68 O F THE I.T. ACT, 1961. THIS IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 15 I.T.A. NO. 513-516 518-519/COCH/2016 & 7.2 AGGRIEVED BY THE ORDER OF THE ASSESSMENT, THE ASSES SEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) DELETED T HE ADDITION OF RS.1,32,35,536/-, BEING THE AMOUNTS RECEIVED FROM THE ASSESSEES DAUG HTERS, MS. JILU MATHEW AND MS. MILU MATHEW. THE RELEVANT FINDING OF THE CIT(A) IN DELETING THE ADDITION OF RS.1,32,35,536/- READS AS FOLLOWS:- 7.8 I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUB MISSION OF THE APPELLANT, CONTENTS OF THE REMAND REPORT AND DETAILS AND DOCUM ENTS AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS MADE ADDITION OF RS.2,51, 45,882/- U/S. 68 AS PER PARA 6 OF THE ASSESSMENT ORDER. THE APPELLANT OPER ATED A PROPRIETARY CONCERN IN THE NAME OF M/S. KOSAMATTOM BANKERS AND HAD SHOW N UNSECURED LOANS AMOUNTING TO RS.2,51,45,882/- OUT OF THE ABOVE RS. 1,32,35,536/- WAS CLAIMED TO HAVE BEEN RECEIVED FROM APPELLANTS DAUGHTER MS. JILU MATHEW AND MS. MILU MATHEW. BALANCE WAS CLAIMED TO HAVE BEEN RECEIVED FROM OTHER FRIENDS AND RELATIVES. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CLAIM AND EXPLANATION OF THE APPELLANT AND TREATED ENTIRE AMO UNT OF RS.2,51,45,882/- AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME TO THE T OTAL INCOME OF THE APPELLANT U/S. 68 OF THE I.T. ACT, 1961. THE LEARN ED COUNSEL OF THE APPELLANT ARGUED THAT THE ADDITION MADE U/S. 68 IS NOT IN ACC ORDANCE WITH THE PROVISIONS OF LAW, AS ENTIRE LOAN HAS BEEN RECEIVED THROUGH BA NKING CHANNELS AND, THEREFORE, GENUINENESS OF THESE LOANS CANNOT BE DOU BTED. I HAVE GONE THROUGH ENTIRE DETAILS SUBMITTED BY THE APPELLANT, DURING T HE COURSE OF APPELLATE PROCEEDINGS. IN CASES OF CREDITS APPEARING IN THE ACCOUNTS OF THE ASSESSEE VARIOUS COUNTS OF ADJUDICATIVE HAVE DECIDED THE ISS UE AND THE SAME ARE NOW SETTLED. ACCORDING TO THESE DECISIONS, PRIMARY ONUS OF PROVIDING THESE THINGS ARE ON THE ASSESSEE I.E. (I) IDENTITY OF THE CREDIT OR, (II) CREDITWORTHINESS OF THE CREDITOR, (III) GENUINENESS OF THE TRANSACTION. ON CE THE ASSESSEE DISCHARGES ITS ONUS, THE BURDEN SHIFTS ON THE ASSESSING OFFICER TO PROVE ANYTHING OTHERWISE. IN THE INSTANCE CASE, ENTIRE LOAN CAN BE DIVIDED IN T WO PARTS, I.E. LOAN FROM 16 I.T.A. NO. 513-516 518-519/COCH/2016 & DAUGHTERS MS. JILU & MS. MILU MATHEW; AND (II) OTHE RS. THESE TWO ARE DISCUSSED SEPARATELY AS UNDER: (I) CLAIM OF LOAN FROM MS. MILU AND MS. JILU MATHEW THE IDENTITY OF MS. MILU AND MS. JILU MATHEW IS ESTABLISHED AS BOTH OF THEM ARE DAUGHTERS OF THE APPELLANT. THE TRANSACTION OF LOAN HAS TAKEN PLACE THROUGH BANKING CHANNELS AND THEREFORE, GENUINENESS OF THE SAME CAN ALSO, NOT BE DOUBTED. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED CREDITWORTHINESS OF MS. MILU AND MS. JILU MATHEW. T HE ASSESSING OFFICER HELD THAT THE DAUGHTERS OF THE APPELLANT DID NOT HAVE AN Y INDEPENDENT SOURCE OF INCOME AND THEY WERE FULLY DEPENDENT ON THEIR FATHE R. ON THE OTHER HAND, THE APPELLANT CONTENDED THAT MS. MILU AND MS. JILU MATH EW OBTAINED LOAN FROM ANOTHER FIRM, M/S. KOSAMATTOM ESTATE INVESTMENTS, TH ROUGH BANKING CHANNELS AND SAME AMOUNTS WERE ADVANCED TO THE APPELLANT AS LOAN. M/S. KOSAMATTOM ESTATE INVESTMENT WAS CLAIMED TO BE A PARTNERSHIP FI RM, HAVING THE APPELLANT AND HIS WIFE AS PARTNERS. THIS FIRM WAS PURPORTEDL Y CLOSED IN 2005. THIS FIRM, ADMITTEDLY NEVER FILED RETURN OF INCOME. THE APPEL LANT ALSO SUBMITTED COPY OF BANK ACCOUNT OF M/S. KOSAMATTOM ESTATE INVESTMENT AN D TO EXPLAIN THE SOURCE OF FUNDS, LIST OF DEPOSITORS, WHO DEPOSITED MONEY I N M/S. KOSAMATTOM ESTATE INVESTMENT WAS ALSO SUBMITTED. SINCE M/S. KOSAMATT OM ESTATE INVESTMENT DID NOT FILE RETURN OF INCOME, THE ASSESSING OFFICER TR EATED THE SOURCE OF RS.1,32,35,536/- AS UNEXPLAINED CASH CREDITS U/S. 6 8 IN THE HANDS OF THE APPELLANT. ON THE SET OF THESE FACTS, DISCUSSED ABOVE, IN MY O PINION, THE CREDITWORTHINESS OF MS. JILU AND MS. MILU MATHEW IS EXPLAINED AND ESTABLISHED. THEY HAVE DEMONSTRATED THAT MONEY HAS BEEN RECEIVED FROM KOSAMATTOM ESTATE INVESTMENT THROUGH BANKING CHANNELS AND THE S AME HAVE BEEN ADVANCED TO THE APPELLANT IN THE FORM OF LOAN. THE FACT THAT KOSAMATTOM ESTATE INVESTMENT HAS NOT FILED RETURN OF INCOME CAN NOT BE USED AGAINST THE APPELLANT. IF AT ALL ANY ACTION NEEDS TO BE TAKEN, IT SHOULD BE TAKEN AGAINST KOSAMATTOM ESTATE INVESTMENT, AS THIS IS THE ONE WHO HAS NOT FILED RETURN OF INCOME. THUS, IN VIEW OF THESE FACTS, I FIND THAT A LL THE THREE CONDITIONS, I.E. ESTABLISHING IDENTITY OF THE CREDITOR, ESTABLISHING GENUINENESS OF THE TRANSACTION AND ESTABLISHING CREDITWORTHINESS OF THE CREDITOR, IN RESPECT OF MS. JILU AND MS. MILU MATHEW IS ESTABLISHED AND, THEREFORE, LOAN AMO UNTING TO RS.1,32,35,536/- CANNOT BE TREATED AS UNEXPLAINED IN THE HANDS OF TH E APPELLANT AND ADDITION U/S. 68 FOR THIS AMOUNT NEEDS TO BE DELETED. 17 I.T.A. NO. 513-516 518-519/COCH/2016 & 7.3 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). 7.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D 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 LOANS TH EY HAD ADVANCED TO THE PROPRIETARY CONCERN OF ASSESSEE ARE SAID TO BE AMOU NTS RECEIVED FROM THE FIRM M/S. KOSAMATTOM ESTATE INVESTMENTS, A PARTNERSHIP FIRM CO MPRISING OF ASSESSEE AND HIS WIFE AS PARTNERS. THIS FIRM HAS BEEN CLOSED DOWN S INCE 2005. NO RETURN OF INCOME HAS BEEN FILED BY THE FIRM, M/S. KOSAMATTOM ESTATE I NVESTMENTS. THE VERY EXISTENCE OF THE FIRM, M/S. KOSAMATTOM ESTATE INVESTMENTS IS D OUBTED. THE ASSESSEE BEING THE MANAGING PARTNER OF THE FIRM HAS TO PRODUCE POS ITIVE PROOF FOR THE EXISTENCE OF THE SAME. THE RECEIPTS OF THE FIRM, M/S. KOSAMATTO M ESTATE INVESTMENTS IS CLAIMED TO BE DEPOSITS RECEIVED FROM VARIOUS PERSONS. THIS HAS NECESSARILY TO BE PROVED BY THE ASSESSEE WHO IS CLAIMED TO BE THE MANAGING PARTNER OF THE FIRM. SINCE THERE HAS BEEN NO PROPER EXAMINATION OF THE ISSUE BOTH BY THE ASSESSING OFFICER AND THE CIT(A), WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE CONSIDERED AFRESH BY THE ASSESSING OFFICER. THE ASSESSEE SHALL PRODUCE NECE SSARY DOCUMENTS TO PROVE THE EXISTENCE OF THE FIRM, M/S. KOSAMATTOM ESTATE INVEST MENTS AND ALSO TO PROVE THE GENUINENESS OF THE DEPOSITS IT HAD RECEIVED. THE A SSESSING OFFICER SHALL EXAMINE THE 18 I.T.A. NO. 513-516 518-519/COCH/2016 & GENUINENESS/EXISTENCE OF THE FIRM M/S. KOSAMATTOM ES TATE INVESTMENTS. IF EXISTENCE OF FIRM IS FOUND GENUINE BY ASSESSING OFFICER, HE S HALL MAKE A RANDOM CHECK OF THE DEPOSITS CLAIMED TO HAVE BEEN RECEIVED BY THE PARTN ERSHIP FIRM M/S. KOSAMATTOM ESTATE INVESTMENTS. FOR THESE EXAMINATIONS, THE APPE AL IS RESTORED TO THE FILES OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DIS POSE OF THE MATTER AS EXPEDITIOUSLY AS POSSIBLE, AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 7.5 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN I.T.A. NO. 518/COCH/2016 IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 519/COCH/2016 (AY 2005-06) (DEPARTMENTS APPEAL) 8. THE GROUND RAISED BY THE REVENUE READS AS FOLL OWS: 1. THE LEARNED CIT(A) ERRED IN ALLOWING AS SOURCE RS.3.08 CRORES BEING DRAWINGS FROM M/S. KOSAMATTOM CHITTY FUNDS, A CONCE RN IN WHICH ASSESSEE IS A PARTNER, WHEN THE FINAL ACCOUNTS FILED DURING THE A SSESSMENT PROCEEDINGS SHOWED A DRAWING OF ONLY RS.2.25 CRORES FROM THE CO NCERN. 2. THE LEARNED CIT(A) ALSO OVERLOOKED THE REMAND R EPORT OF THE ASSESSING OFFICER WHICH REITERATED THE POSITION TAKEN IN THE ASSESSMENT ORDER. 3. THE RECONCILIATION STATEMENT FILED BY THE ASSESS EE IS VAGUE AND UNACCEPTABLE AND THE LEARNED CIT(A) OUGHT NOT HAVE ACCEPTED THE SAME. 19 I.T.A. NO. 513-516 518-519/COCH/2016 & 8.1 THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE HAD CLAIMED WITHDRAWAL OF RS. 3.80 CRORES FROM M/S. KOSAMATTOM CHIT FUNDS FOR EXPLAINING THE SOURCE OF INVESTMENT IN THE CASH FLOW STATEMENT. THE ASSESSING OFFICER NOTICED THAT THE DRAWINGS FROM M/ S. KOSAMATTOM CHIT FUNDS IS ONLY RS.2.25 CRORES INSTEAD OF RS.3.80 CRORES CLAIMED B Y ASSESSEE. THEREFORE DIFFERENCE OF RS.1,55,54,000/- WAS SOUGHT TO BE TAXED. IT WAS SUBMITTED THAT THE OPENING BALANCE OF THE CURRENT ACCOUNT OF THE ASSESSEE, PLU S THE DRAWING ADJUSTED THROUGH JOURNAL ENTRIES NOT IDENTIFIABLE IN FINAL ACCOUNT, WOULD MAKE UP FOR THE DIFFERENCE OF RS.1,55,54,000/-. THE ASSESSING OFFICER HOWEVER RE JECTED THE CONTENTIONS RAISED BY THE ASSESSEE AND RESTRICTED THE WITHDRAWALS IN THE CASH FLOW STATEMENT TO RS.2,25,06,044/- INSTEAD OF RS.3.8 CRORES. THE REL EVANT OBSERVATION OF THE ASSESSING OFFICER READS AS FOLLOWS: 6. THE ASSESSEE HAS CLAIMED DRAWINGS OF RS.3.80 CR ORES FROM M/S. KOSAMATTOM CHIT FUNDS, HOWEVER, THE AMOUNT REFLECTED IN THE FI NAL ACCOUNTS OF THIS CONCERN IS RS.2.25 CRORES ONLY. THE REPRESENTATIVE OF THE ASSESSEE ARGUED THAT THE OPENING BALANCE OF THE CURRENT ACCOUNT OF THE PARTN ERS WAS RS.13,06,770/- AS REPORTED IN THE BALANCE SHEET AS ON 31.03.2004. IT WAS ARGUED THAT DURING APRIL 2004, VARIOUS CASH PAYMENTS MADE BY MR. MATHEW CHER IAN WERE ENTERED THROUGH JOURNAL ENTRIES AMOUNTING TO RS.1,55,54,000 . THIS COMBINED WITH RS.2.25 CRORES SHOWN IN THE CURRENT ACCOUNT WOULD CONSTITUTE RS.3.8 CRORES AS SHOWN IN THE CASH FLOW STATEMENT. 6.1 THE CLAIM OF THE ASSESSEE IS DIFFICULT TO ACC EPT IF DRAWINGS ARE MADE IT SHOULD REFLECT IN THE ACCOUNTS. SINCE THIS IS NOT REFLECTED THE CLAIM IS REJECTED. DRAWINGS FROM M/S. KOSAMATTOM CHITTY FUNDS IS RESTR ICTED TO RS.2,25,06,044/-. 20 I.T.A. NO. 513-516 518-519/COCH/2016 & 8.2 AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) DELETED THE ADDITION OF RS.1,55,54,000/-. 8.3 THE REVENUE BEING AGGRIEVED HAS FILED THE PR ESENT APPEAL BEFORE TRIBUNAL. THE LD. DR RELIED ON THE GROUNDS RAISED . THE LD. AR O N THE OTHER HAND RELIED ON THE FINDINGS/CONCLUSIONS OF THE CIT(A). 8.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF THE A SSESSEE TO THE EXTENT OF RS.1,55,54,346/- FOR THE REASON THAT THE DRAWING OF ASSESSEE FROM M/S. KOSAMATTOM CHIT FUNDS SHOWED A FIGURE OF RS.2.25 CRORES, INSTE AD OF RS.3.8 CRORES AS CLAIMED BY ASSESSEE. IN THIS CONTEXT, WE NOTICE THAT THE ASSES SING OFFICER HAS FAILED TO APPRECIATE THAT THE DIFFERENCE IS DRAWING ADJUSTED THRO UGH JOURNAL ENTRIES NOT IDENTIFIABLE IN THE FINAL ACCOUNT. THE RECONCILIATION OF THE SAME W AS FURNISHED BEFORE THE CIT(A) BY FILING PETITION FOR ADDITIONAL EVIDENCE. THE CIT(A ) CALLED FOR A REMAND REPORT AND AFTER PERUSAL OF THE REMAND REPORT, DELETED THE ADDITION OF RS.1,55,54,346/-. THE CIT(A) TOOK NOTE OF THE RECONCILIATION STATEMENT AND CAME TO A CATEGORIC FINDING THAT THE WITHDRAWALS FROM M/S. KOSAMATTOM CHIT FUNDS WERE TO THE EXTENT OF RS.3.8 CRORES AND NOT RS.2.25 CRORES AS CLAIMED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS : 21 I.T.A. NO. 513-516 518-519/COCH/2016 & NOW REGARDING DRAWING FROM M/S. KOSAMATTOM CHIT FU NDS AMOUNTING TO RS.1,55,54,000/-, THE AO DISALLOWED THE DIFFERENCE BETWEEN BOOKS OF ACCOUNTS OF THE APPELLANT AND M/S. KOSAMATTOM CHIT FUNDS SHO WED THE SAME AT RS.2.25 CRORES. THE APPELLANT CONTENDED THAT THE DIFFERENC E AROSE BECAUSE OF JOURNAL ENTRIES PASSED, WHICH WERE NOT IDENTIFIABLE IN THE FINAL ACCOUNTS. THE APPELLANT FURNISHED A RECONCILIATION STATEMENT. A REMAND REPO RT WAS CALLED FOR AND THE AO REPORTED AS UNDER: DRAWINGS FROM M/S. KOSAMATTOM CHITTY FUNDS : THE ASSESSEE HAS ALREADY FILED THE COPY OF THE SCHEDULE SHOWING THE PARTNERS CURRENT ACCOUNT IN THE BALANCE SHEET AS ON 31.03.2005 OF M/S. KOSAMATTOM CHITTY FUND. NOW THE ASSESSEE HAS COME U P WITH A RECONCILIATION SHOWING TOWARDS DRAWING AND NOT ACCOUNTED OF RS.1 ,12,74,673/-. FURTHER CLAIMS THAT THE AMOUNTS ARE REPRESENTING THE CASH P AYMENTS MADE BY THE ASSESSEE DURING THE YEAR 2004-05. THIS CLEARLY CON TRADICTING THE BALANCE SHEET OF M/S. KOSAMATTOM CHITTY FUNDS AND THE RECONCILIAT ION IS ONLY, A RE-WORKING TO INTRODUCE ASSESSEES OWN UNEXPLAINED MONEY INTO ACC OUNTED PORTION. THE ASSESSEE HAS NO EVIDENCE TO PROVE THE SOURCE OF FUN D OTHER THAN RECONCILIATION. THUS, THE ASSESSEES CLAIM IS AGAINST THE FACTS AND NEEDS TO BE REJECTED. FROM THE PLAIN READING OF THE REMAND REPORT, IT IS CLEAR THAT THE ASSESSING OFFICER DID NOT CONSIDER THE RECONCILIATION STATEME NT SUBMITTED BY THE ASSESSEE. IF WE LOOK AT THE RECONCILIATION STATEMENT, IT IS S EEN THAT THE DIFFERENCE IS ARISING OUT OF OPENING AND CLOSING BALANCES: CURRENT A/C 01.04.2004 : RS.1,42,47,576 (DR) 31.03.2004 RS. 13,06 ,770 (DR) TOTAL RS.1,55 ,54,346 THE APPELLANT CONTENDED THAT THE DIFFERENCE REPR ESENTS DRAWINGS ADJUSTED THROUGH JOURNAL ENTRIES AND THE SAME ARE SUPPORTED BY BANK ACCOUNT ENTRIES. FURTHER, CONSIDERING THE FACT THAT THE OPENING B ALANCE AS ON 01.04.2004 IS TAKEN AT LESSER AMOUNT THAN THE CLOSING BALANCE AS ON 31.03.2004, WHICH ONLY REDUCES THE CASH BALANCE OF THE ASSESSEE AND, THERE FORE, ADDITION OF THIS LOSS CANNOT BE MADE IN VIEW OF THIS FACT, EVEN RECONCIL IATION STATEMENT IS NOT ACCEPTABLE, ADDITION OF THIS AMOUNT CANNOT BE MADE. THIS ADDITION OF RS.1,55,54,346/- IS HEREBY DELETED. 22 I.T.A. NO. 513-516 518-519/COCH/2016 & 8.5 THE ABOVE CATEGORIC FINDING OF THE CIT(A) HAS NOT BEEN DISPUTED BY THE REVENUE BY PLACING ANY CONTRA MATERIAL BEFORE US. IN THE L IGHT OF THE RECONCILIATION STATEMENT FILED BY THE ASSESSEE WHICH HAS BEEN CATEGORICALLY FOUND BY THE CIT(A) AS CORRECT, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CI T(A). IT IS ORDERED ACCORDINGLY. 8.6 IN THE RESULT THE APPEAL FILED BY THE REVENU E FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED. 9. IN ESSENCE I) THE APPEALS FILED BY THE ASSESSEE IN I.T.A. NOS . 513 TO 516/COCH/2016 ARE DISMISSED II) THE APPEAL FILED BY THE REVENUE IN I.T.A. NO.518/COCH/2016 IS ALLOWED FOR STATISTICAL PURPOSE S AND III) THE APPEAL FILED BY THE REVENUE IN I.T.A. NO.519/COCH/2016 IS DISMISSED. PRONOUNCED IN THE O PEN COURT ON 07 - 07-2017. SD/- SD/- (ABRAHAM P. GEORGE) (GEOR GE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: KOCHI DATED: 07 JULY, 2017 GJ COPY TO: 23 I.T.A. NO. 513-516 518-519/COCH/2016 & 1. SHRI MATHEW K. CHERIAN, KOSAMATTOM HOUSE, MANGAN AM P.O., KOTTAYAM-686 018. 3. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL C IRCLE, KOTTAYAM. 4. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 5. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 6. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 7. GUARD FILE. BY ORDER (ASSISTANT EGISTRAR) I.T.A.T., COCHIN