Chicoo Joseph, Cochin V. ITO, Ernakulam

ITA 519/COCH/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69028 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 24-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 24-06-2011
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA; M ANIL KUMAR
• Keywords: Additional evidence; Onus to prove
• Section: 68; 69

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. 519/COCH/2011 ASSESSMENT YEAR : 2006-07 SHRI CHICO JOSEPH, ROSE VILLA, KALATHIPARAMBIL, ALAPPAT CROSS ROAD, KOCHI -682 016. [PAN:AEPPJ 4173C] VS. THE INCOME TAX OFFICER, WARD-2(2), ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI MATHEW JOSEPH, CA REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR AND SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 24/07/2012 DATE OF PRONOUNCEMENT 11/10/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING TH E ORDER DATED 21.01.2011 PASSED BY LD CIT(A)-II, KOCHI CONFIRMING THE ADDITI ON OF RS.23,50,000/- RELATING TO UNEXPLAINED BANK DEPOSITS. THE APPEAL RELATES T O THE ASSESSMENT YEAR 2006- 07. 2. THE FACTS RELATING THERETO ARE SET OUT IN BR IEF. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO EXAMINED BANK ACCOUNT MAINTAINE D BY THE ASSESSEE WITH M/S SYNDICATE BANK AND NOTICED THAT SEVERAL DEPOSIT S AGGREGATING TO RS.36,00,250/- WERE FOUND TO HAVE BEEN MADE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO SOUGHT EXPLANATIONS FROM THE ASSESSEE WITH REGARD TO THE SOURCES OF THESE DEPOSI TS. HE SUBMITTED THAT THE I.T.A. NO.519/COCH/2011 2 ABOVE SAID BANK ACCOUNT WAS OPENED AT THE INSTRUCTI ON OF HIS FATHER, WHO WAS RUNNING A BUSINESS CONCERN BY AVAILING LOAN FROM TH E SAME BANK. THE SAID BUSINESS CONCERN NAMED M/S ROSE JEWELLERS WAS CLOSE D DOWN IN THE YEAR 2000. ACCORDINGLY IT WAS SUBMITTED THAT THE DEPOSITS IN T HE ABOVE SAID ACCOUNT WERE MADE HIS FATHER ONLY. THE EXPLANATIONS GIVEN BY TH E ASSESSEE FOR RS.12,47,250/- WERE ACCEPTED BY THE AO. WITH REGARD TO THE BALANC E AMOUNT OF RS.23,50,000/-, CONSISTING OF TWO DEPOSITS OF RS.20,00,000/- AND RS .3,50,000/-, THE ASSESSEE SUBMITTED THAT HIS FATHER HAS DEPOSITED THESE TWO A MOUNTS OUT OF THE CASH BALANCE AVAILABLE WITH HIS BUSINESS CONCERN, REFERR ED ABOVE. THE ASSESSEE SUBMITTED A BALANCE SHEET AS AT 31.3.1999 PERTAININ G TO M/S ROSE JEWELLERS, WHEREIN CASH BALANCE WAS SHOWN AT RS.40.19 LAKHS. THE AO NOTICED THAT THE ASSESSEE DID NOT FILE THE BALANCE SHEET OF THAT CON CERN AS ON THE DATE OF CLOSING OF THE BUSINESS, WHICH WOULD HAVE SHOWN THE CASH BA LANCE ACTUALLY AVAILABLE AS ON THE DATE OF CLOSING OF BUSINESS. FURTHER THE AS SESSEE DID NOT FURNISH ANY OTHER DOCUMENTARY EVIDENCE. HENCE, HE DID NOT ACC EPT THE EXPLANATIONS GIVEN BY THE ASSESSEE FOR RS.23.50 LAKHS AND ASSESSED THE SAME AS CASH CREDIT U/S 68 OF THE ACT. THE LD CIT(A) ALSO CONFIRMED THE SAID ADDITION AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF ORDER DATED 15.10.2008 PASSED BY THE APPELLATE ASSISTANT COMMIS SIONER, COMMERCIAL TAXES IN THE HANDS OF M/S ROSE JEWELLERS RELATING TO THE FINANCIAL YEAR 1999-2000. BY INVITING OUR ATTENTION TO THE SAID ORDER, THE LD A. R SUBMITTED THAT THE APPELLATE ASSISTANT COMMISSIONER HAS RECORDED THAT THE BUSINE SS WAS CLOSED DOWN ON 6.3.2000 AND ON THAT DATE, THE ASSESSEE HAS SHOWN C LOSING STOCK VALUE AT RS.27,02,489/- IN THE PROFIT AND LOSS ACCOUNT. ACC ORDINGLY, HE SUBMITTED THAT THE FATHER OF ASSESSEE COULD HAVE REALIZED THE MONE Y ON SALE OF THE CLOSING STOCK, REFERRED ABOVE, AND UTILIZED THE SAME FOR MA KING THE IMPUGNED DEPOSITS. HE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE TH E ADDITION U/S 68 OF THE ACT WHICH IS NOT CORRECT. THE LD AR SUBMITTED THAT THE AO COULD INVOKE THE I.T.A. NO.519/COCH/2011 3 PROVISIONS OF SEC. 68 RELATING TO CASH CREDITS ONLY IF THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND CREDITED THE AMOUNT IN THAT BOOKS. BY PLACING RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SUNDAR LAL JAIN VS. CIT (1979)(117 ITR 316), THE LD A.R SU BMITTED THAT THE PROPER SECTION THAT SHOULD HAVE BEEN INVOKED BY THE AO IS SEC. 69 IN RESPECT OF BANK DEPOSITS. 4. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE IMPUGNED DEPOSITS AGGREGATING TO RS.23.50 LAKHS WAS MADE IN THE YEAR 2005. THE D.R FURTHER SUBMITTED THAT THE ASSESSEE COULD FILE A COPY OF BA LANCE SHEET AS AT 31.3.1999 ONLY BEFORE THE AO, WHERE AS THE BUSINESS CONCERN W AS CLOSED IN THE YEAR 2000. THE ASSESSEE COULD NOT FILE THE COPY OF BALANCE SHE ET AS AT THE DATE OF CLOSURE OF BUSINESS TO SUBSTANTIATE THE CLAIM OF AVAILABILITY OF CASH. NOW, BEFORE THE TRIBUNAL, THE ASSESSEE HAS CHANGED HIS STAND AND CL AIMS THAT HIS FATHER WAS HAVING CLOSING STOCK IN HIS BUSINESS CONCERN. MERE EXISTENCE OF CLOSING STOCK CANNOT SUPPORT THE CLAIM OF AVAILABILITY OF CASH FO R MAKING THESE DEPOSITS, THE LD D.R CONTENDED. SHE FURTHER CONTENDED THAT, EVEN IF FOR A MOMENT, IT IS ASSUMED THAT THE ASSESSEE COULD HAVE SOLD THE CLOSING STOCK AVAILABLE AS ON 6.3.2000, THE DETAILS AS TO WHEN IT WAS SOLD, WHETHER THE CASH RE ALIZED THEREON WAS KEPT WITH HIM FROM THE YEAR 2000 ONWARDS IN THE SAME FORM IN ORDER TO DEPOSIT THE SAME INTO THE BANK ACCOUNT OF THE ASSESSEE, THAT TOO AFT ER EXPIRY OF FIVE YEARS, ETC. WERE NOT EXPLAINED. ACCORDINGLY, THE LD D.R SUBMIT TED THAT THE EXPLANATION OF THE ASSESSEE IS LIABLE TO BE REJECTED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. ADMITTEDLY, THE ASSESSEE COULD NOT FURNISH THE BALANCE SHEET OF HIS FATHERS CONCERN AS ON THE DATE OF CLOSURE OF THAT CONCERN. HENCE, THE CL AIM OF AVAILABILITY OF CASH BALANCE OF ABOUT RS.40.00 LAKHS AS ON 31.3.1999 (DU RING THE COURSE OF RUNNING OF BUSINESS) CANNOT, IN OUR VIEW ALSO, EXPLAIN THE SOURCES. IT IS ALSO AN ADMITTED FACT THAT HIS FATHER HAD AVAILED LOAN FROM THE BANK AND HENCE, NO BUSINESS MAN I.T.A. NO.519/COCH/2011 4 WOULD KEEP THE CASH IDLE, WHILE INCURRING HUGE INTE REST BURDEN ON THE BANK LOAN. HENCE, THE SAID EXPLANATION WAS RIGHTLY REJECTED BY THE TAX AUTHORITIES. BEFORE US, THE ASSESSEE HAS CONTENDED THAT THE CLOSING STO CK AVAILABLE WITH HIS FATHER AS ON THE DATE OF CLOSURE OF BUSINESS SHOULD EXPLAIN T HE SOURCES. HOWEVER, AS SUBMITTED BY THE LD D.R, THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE TO SHOW THAT THE SAID CLOSING STOCK WAS ACTUALLY SOLD AND MONEY WAS REALISED. HE ALSO DID NOT FURNISH DETAILS AS TO HOW THE MONEY WAS KEPT BY THE ASSESSEE FOR THE PAST FIVE YEARS AS IT IS, WHEN THERE WAS AN INTEREST BEARING BANK LOAN. THE SAID EXPLANATION OF THE ASSESSEE IS CONTRADICTORY TO THE NORMAL BEHAVIOR OF A PRUDENT BUSINESS MAN. HENCE, IN OUR VIEW ALSO, IT DOES NO T FIT INTO THE LOGIC TO ARGUE THAT THE CLOSING STOCK THAT WAS SHOWN AVAILABLE WIT H THE ASSESSSEES FATHER ABOUT FIVE YEARS BACK COULD EXPLAIN THE SOURCES FOR MAKIN G THE DEPOSITS. HENCE, IN OUR VIEW, THE SAID EXPLANATION OF THE ASSESSEE IS LIABL E TO BE REJECTED ON THE FACE OF IT. 6. THE ASSESSEE HAS TAKEN A LEGAL GROUND THAT T HE AO WAS NOT RIGHT IN INVOKING THE PROVISIONS OF SEC. 68 FOR MAKING THIS ADDITION, INSTEAD OF SEC. 69. IN OUR VIEW, IT MAKES NO DIFFERENCE, SO LONG AS THE AO HAS ASSUMED THE JURISDICTION FOR ASSESSING THE INCOME OF THE ASSESSEE IN LEGALLY PERMITTED MANNER. THE PRIMARY BURDEN OF PROOF IS ALWAYS PLACED UPON THE A SSESSEE TO PROVE A CASH CREDIT OR A BANK DEPOSIT. IF THE ASSESSEE FAILS TO DISCHARGE THE PRIMARY BURDEN OF PROOF SO PLACED UPON HIM, THE AMOUNT REPRESENTED BY THE BANK DEPOSIT OR CASH CREDIT IS ASSESSABLE AS INCOME IN HIS HANDS BY VIRT UE OF LEGAL FICTION PLACED IN SEC. 68/69/69B OF THE ACT. SINCE THERE IS NO DISPUTE TH AT THE AO, IN THE INSTANT CASE, HAS ASSUMED JURISDICTION FOR ASSESSING THE INCOME O F THE ASSESSEE IN A LEGALLY PERMISSIBLE MANNER, IN OUR VIEW, MERE MENTIONING OR INVOKING OF WRONG SECTION FOR ASSESSING A PARTICULAR ITEM OF INCOME MAY NOT V ITIATE THE ASSESSMENT PROCEEDINGS, SO LONG AS THE ASSESSEE HAS FAILED TO DISCHARGE THE BURDEN OF PROOF PLACED UPON HIM. IN THIS REGARD, ONE MAY MAKE GAIN FUL REFERENCE TO DECISION RENDERED BY THE DELHI SPECIAL BENCH, A LARGER BENCH CONSISTING OF FIVE MEMBERS, I.T.A. NO.519/COCH/2011 5 IN THE CASE OF MANOJ AGGARWAL VS. DCIT (2008)(113 I TD 377) FOR AN IDENTICAL QUESTION REFERRED TO IT. FOR THE SAKE OF CONVENIEN CE, THE RELEVANT OBSERVATIONS/DECISION GIVEN BY THE SPECIAL BENCH AT PARA 26 OF ITS ORDER IS EXTRACTED BELOW:- THE ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE BE FORE US WAS THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT A ND THE DEPOSITS WERE FOUND ONLY IN THE ASSESSEES BANK STATEMENT WHICH C ANNOT BE CONSIDERED AS THE BOOKS OF ACCOUNT OF THE ASSESSEE AND, THEREF ORE, S. 68 WAS NOT APPLICABLE. OUR ATTENTION WAS DRAWN TO THE CONFIRMA TION LETTERS PLACED AT PP. 159 AND 160 OF THE PAPER BOOK. WE ARE HOWEVER U NABLE TO ACCEPT THE ARGUMENT. THOUGH S. 68 OF THE ACT MAY NOT BE STRICT LY APPLICABLE SINCE THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT A ND THE BANK STATEMENT CANNOT BE CONSIDERED AS THE ASSESSEES BO OKS OF ACCOUNT, ON THE BASIS OF THE JUDGMENT OF THE SUPREME COURT IN T HE CASE OF A. GOVINDARAJULU MUDALIAR VS. CIT (1958) 34 ITR 807 (S C) , IT IS THE ONUS OF THE ASSESSEE TO EXPLAIN THE CASH RECEIVED BY HIM AN D IF THERE IS NO EXPLANATION OR ACCEPTABLE EVIDENCE TO PROVE THE NAT URE AND SOURCE OF THE RECEIPT, THE AMOUNT MAY BE ADDED AS THE ASSESSEES INCOME ON GENERAL PRINCIPLES AND IT IS NOT NECESSARY TO INVOKE S. 68, NOR IS IT NECESSARY FOR THE IT AUTHORITIES TO POINT OUT THE SOURCE OF THE M ONIES RECEIVED. EVEN IF S. 68 IS NOT APPLICABLE, THE CASH DEPOSIT IN THE BA NK CAN BE ASKED TO BE EXPLAINED BY THE ASSESSEE UNDER S. 69 OR S. 69B OF THE ACT. NO DOUBT THE ASSESSEE HAD TRIED TO FILE ADDITIONAL EVIDENCE BEFO RE THE CIT(A) IN THE FORM OF CONFIRMATION LETTERS AND IT RETURNS BUT THE SE WERE NOT ADMITTED BY THE CIT(A) AND NO REASONS HAVE BEEN SHOWN BEFORE US AS TO WHY THEY SHOULD HAVE BEEN ADMITTED. IN THE ABSENCE OF ANY CL INCHING EVIDENCE TO SHOW THE NATURE AND SOURCE OF THE MONIES DEPOSITED INTO THE BANK ACCOUNT WHICH BELONGS TO THE ASSESSEE, THE AO WAS J USTIFIED IN ADDING THE AMOUNT OF RS. 15 LACS AS THE ASSESSEES UNEXPLAINED INCOME. WE CONFIRM THE ADDITION AND DISMISS THE GROUND. 7. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OUR VIEW, THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCES FOR THE IMPUGNED DEPOSITS AND A CCORDINGLY CONFIRM THE DECISION RENDERED BY LD CIT(A). I.T.A. NO.519/COCH/2011 6 8. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 11-10-2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 11TH OCTOBER, 2013 GJ COPY TO: 1. SHRI CHICO JOSEPH, ROSE VILLA, KALATHIPARAMBIL, ALAPPAT CROSS ROAD, KOCHI -682 016. 2. THE INCOME TAX OFFICER, WARD-2(2), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) ITAT, COCHIN