Sri. Manickam Murugan, Bangalore V. ACIT, Bangalore

ITA 577/BANG/2014

• Counselvise Citation: 57721114 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SRINIVASAN
• Keywords: Source of fund
• Section: 131

Judgement Text

ITA.577/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.577/BANG/2014 (ASSESSMENT YEAR : 2008-09) SHRI.MANICKAM MURUGAN, PROP : M/S. BALAMBIGA METAL FINISHERS C-435, 1 ST STAGE, BEHIND POLICE STATION, PEENYA INDUSTRIAL AREA, PEENYA, BANGALORE 560 058 . .APPELLANT PAN : ABJPM9429P V. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE -6(1), BANGALORE ..RESPONDENT ASSESSEE BY : SHRI. SRINIVASAN, CA REVENUE BY : SHRI. KALEEMULLA KHAN, ADDL. CIT HEARD ON : 21.09.2015 PRONOUNCED ON : 30 .09.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE ITS GRIEVANCE IS THAT AN ADDITION OF RS.29,84,072/- MADE BY THE AO WAS SUSTA INED BY THE CIT (A). 02. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN ELEC TROPLATING BUSINESS HAD FILED RETURN OF INCOME DECLARING INCOM E OF RS.48,50,800/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IT ITA.577/BANG/2015 PAGE - 2 WAS NOTED THAT ASSESSEE HAD CASH DEPOSITS OF RS.41, 31,072/- IN AN ACCOUNT WITH INDIAN BANK. WHEN AN EXPLANATION FOR THE SOURCE WAS SOUGHT ASSESSEE SUBMITTED THAT A SUM AGGREGATIN G TO RS.11,40,000/- WAS RECEIVED AS LOANS FROM MR. VALLI NATHAN, MR. JAYAKAR AND MR. T. R. MANI. THE BALANCE SUM, WAS EXPLAINED AS LOAN FROM HIS DAUGHTER WHO WAS IN LONDON. AO WAS O F THE OPINION THAT ASSESSEE, THOUGH HE COULD SHOW SUFFICI ENT EVIDENCE FOR RS.11,50,000/-, WAS UNABLE TO CORROBORATE HIS C LAIM FOR THE LOAN FROM HIS DAUGHTER IN LONDON. AS PER THE AO AS SESSEE COULD NOT ESTABLISH SOURCE FOR RS.29.84 LAKHS OUT OF THE TOTAL DEPOSITS OF RS.41,31,072/- IN INDIAN BANK. HE MADE A DISALLOWA NCE OF RS.29,84,072/- U/S.69 OF THE ACT. 03. IN ITS APPEAL BEFORE THE CIT (A), ARGUMENT OF T HE ASSESSEE WAS THAT HE HAD PRODUCED A LETTER FROM HIS DAUGHTER WHE REIN SHE CLEARLY MENTIONED THAT SHE HAD GIVEN A LOAN OF RS.24,50,000 /- TO HER FATHER. AS PER THE ASSESSEE, SUCH AMOUNTS WERE REC EIVED FROM HIS DAUGHTER DR. KRITHIKA MURUGAN OVER A PERIOD OF TIME . CIT (A) WAS NOT HOWEVER APPRECIATIVE OF THESE CONTENTIONS. ACCORDING TO HIM ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE CREDITS IN THE BANK ACCOUNT HAD COME FROM HIS DAUGH TER. AS PER THE CIT (A), LETTER FROM HIS DAUGHTER FOR HAVING GI VEN LOAN OF ITA.577/BANG/2015 PAGE - 3 RS.24,50,000/- WAS NOT SUFFICIENT TO PROVE THE SOUR CE. LD. CIT (A) OBSERVED THAT MONEY WAS CREDITED IN THE BANK ACCOUN T IN CASH AND IT WAS BEYOND COMMON LOGIC AS TO HOW ASSESSEES DAU GHTER IN LONDON COULD HAVE GIVEN CASH TO THE ASSESSEE. TA KING THIS VIEW OF THE MATTER HE CONFIRMED THE ADDITION OF RS.24,50 ,000/-. 04. NOW BEFORE US, LD. AR SUBMITTED THAT ASSESSEE H AS FILED BEFORE LOWER AUTHORITIES A COPY OF THE CONFIRMATION LETTER WRITTEN BY ASSESSEES DAUGHTER. EVERY DETAIL THAT WAS REQU IRED TO JUSTIFY THE SOURCE WAS MENTIONED THEREIN. IT WAS REJECTED FOR REASONS WHICH WERE NOT LOGICAL. ACCORDING TO HIM, NOBODY V ERIFIED FROM DR. KRITHIKA MURUGAN HOW SHE HAD PAID MONEY TO HER FATHER. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE PATN A HIGH COURT IN THE CASE OF ACIT V. HANUMAN AGARWAL [(1985) 151 ITR 150]. 05. PER CONTRA LD. DR SUBMITTED THAT THE CREDITS IN THE BANK ACCOUNT WERE IN CASH. IT WAS IMPOSSIBLE TO PRESUME THAT ASSESSEE HAD RECEIVED MONEY IN CASH FROM HIS DAUGHTER IN LON DON. 06. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. CONFIRMATION LETTER GIVEN BY DR. KRITHIKA MURUGAN I S REPRODUCED HEREUNDER : ITA.577/BANG/2015 PAGE - 4 ITA.577/BANG/2015 PAGE - 5 07. THERE IS NO DOUBT THAT DR. KRITHIKA MURUGAN HAD SPECIFIED THE SOURCE OF THE MONEY AND ALSO GAVE HER TELEPHONE NUM ER AND E-MAIL ID, IF FURTHER CONFIRMATIONS WERE REQUIRED. AT THIS JUNCT URE IT WILL BE APPROPRIATE TO NOTE THE COMMENTS MADE OF HONBLE JU STICE SUSHIL KUMAR IN THE CASE OF HANUMAL AGARWAL (SUPRA), WHICH READ AS UNDER : SUSHIL KUMAR JHA J.-I AGREE; NONE THE LESS, IN ORDE R TO HIGHLIGHT THE PROVISION OF THE ACT, I FEEL OBLIGED TO MAKE A FEW OBSERVATIONS OF MY OWN. AS MY LEARNED BROTHER HAS ALREADY OBSERVED, THE ASS ESSEE HAD GIVEN THE IDENTITY OF THE CREDITOR AGAINST WHOS E NAME CASH CREDIT WAS SHOWN FOR A SUM OF RS. 41,500. HE H AD ALSO FURNISHED THE G.I.R. NUMBER OF THE CREDITOR AS WELL AS THE CORRECT ADDRESS. THE QUESTION THEN REMAINS IN SUCH CASES AS TO HOW THE CAPACITY TO PROVE THE COMPETENCE OF THE CREDITOR FOR FURNISHING SUCH A LOAN CAN BE DECIDED. THE ANSW ER, TO MY MIND, IS VERY PLAIN AND SIM PLE. THE VERY OBJECT OF S. 131 OF THE ACT IS FOR THAT PURPOSE. IT CAN NEVER BE WITHIN THE EXCLUSIVE KNOWLEDGE OF THE DEBTOR TO KNOW THE SOURC ES OF INCOME OF THE CREDITOR. ONCE HE IS SUPPLIED THE CRE DIT THAT HE WANTS, HE IS SATISFIED. ONCE HE HAS FURNISHED THE T RUE IDENTITY, THE CORRECT ADDRESS, THE CORRECT G.I.R. NUMBER OF T HE CREDITOR, HE FULFILS HIS OBLIGATION UNDER THE ACT. THE QUESTI ON THEN STILL REMAINS WITH REGARD TO THE GENUINENESS OF THE TRANS ACTION AND THE CAPACITY OF THE CREDITOR TO FURNISH THE LOA N CONCERNED. IT IS FOR THAT SPECIFIC PURPOSE THAT S. 131 HAS BEEN ENGRAFTED IN THE ACT. SECTION 131 PROVIDES, INTER A LIA, THAT THE ITO, THE AAC, THE IAC AND THE COMMISSIONER SHALL, F OR THE PURPOSE OF THIS ACT, HAVE THE SAME POWERS AS ARE VE STED IN A COURT UNDER THE CODE OF CIVIL PROCEDURE, 1908, WHEN TRYING A SUIT IN RESPECT OF THE FOLLOWING MATTERS, NAMELY, ( A) DISCOVERY AND INSPECTION, (B) ENFORCING THE ATTENDANCE OF ANY PERSON, INCLUDING ANY OFFICER OF A COMPANY AND EXAMINING HI M ON OATH, (C) COMPELLING THE PRODUCTION OF BOOKS OF ACC OUNT AND OTHER DOCUMENTS., AND (D) ISSUING COMMISSIONS. IT IS BY NOW WELL-SETTLED THAT S. 131 (1)(B) EMPOWE RS BUT DOES NOT OBLIGE THE REVENUE AUTHORITIES CONCERNED TO ADM INISTER OATH. THEREFORE, THE STATEMENTS OF WITNESSES TAKEN WITHOUT ADMINISTRATION OF OATH ARE EQUALLY ADMISSIBLE IN EV IDENCE. ITA.577/BANG/2015 PAGE - 6 WHEN THE EVIDENCE OF SUCH WITNESS IS BEING TAKEN IN THE COURSE OF THE ASSESSMENT PROCEEDING, THE WITNESS HA S NO RIGHT, BUT THE ASSESSEE HAS, TO BE REPRESENTED BY A LAWYER OR OTHER AUTHORISED REPRESENTATIVE. THE ASSESSEE IS NO T SUPPOSED TO KNOW THE CAPACITY OF THE MONEY-LENDER OR THE CAS H CREDITOR. IT IS WITHIN THE EXCLUSIVE DOMAIN OR THE DARK TRUSSES OF THE MINDS OF THE CREDITORS TO KNOW AS TO WHETHER AND HOW THEIR SOURCES OF INCOME ARE ARRIVED. IT IS FOR THAT SPECIFIC PURPOSE THAT S. 131 OF THE ACT HAS BEEN INTRODUCED SO THAT IN CASE OF ANY SUSPICION, THE ITO OR THE AUTHORITIES C ONCERNED MAY EXERCISE THE POWERS OF A CIVIL COURT UNDER S. 1 31 AND CALL UPON THE CREDITOR CONCERNED TO PROVE HIS CAPACITY T O PAY AND THE GENUINENESS OF HIS TRANSACTION. ONCE THE ITO OR THE AUTHORITY CONCERNED IS SATISFIED THAT THE CREDITOR IS NOT TELLING THE TRUTH, IT HAS BEEN LEFT OPEN TO THE ASSESSEE TO DISCHARGE HIS SUBSEQUENT ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION AND THE CAPACITY OF THE CREDITOR TO PAY BY CROSS- EXAMINING HIM. WHERE, THEREFORE, AN ASSESSEE GIVES THE CORRECT NAME, ADDRESS AND THE G.I.R. NUMBER OF THE CREDITOR, AS MY LEARNED BROTHER HAS OBSERVED, BE HAS DISCHARG ED HIS ONUS AND UNLESS A NOTICE IN DUE FORM UNDER S. 131 O F THE ACT IS ISSUED BY THE REVENUE AUTHORITY CONCERNED TO TES T THE VERACITY OR THE GENUINENESS OF THE TRANSACTION OR T HE CAPACITY OF THE CREDITOR TO PAY, THE ASSESSEE HAS TO SUCCEED . 08. WE ARE OF THE OPINION THAT THE ENQUIRY OF THE T YPE THAT WAS WARRANTED, CONSIDERING THE CIRCUMSTANCES, WAS NOT MADE BY THE LOWER AUTHORITIES. MAY BE IT IS TRUE THAT THE DEPO SITS WERE IN CASH. THERE IS A DISTINCT POSSIBILITY THAT CASH MIGHT HAV E BEEN HANDED BY ASSESSEES DAUGHTER WHEN SHE VISITED INDIA TO SEE H ER FATHER. IN THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT THE MATTER REQUIRES A FRESH LOOK BY THE AO. WE REMIT THE MATT ER BACK TO THE AO FOR CONSIDERING IT AFRESH IN ACCORDANCE WITH LAW. ITA.577/BANG/2015 PAGE - 7 09. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH DAY OF S EPTEMBER, 2015. SD/- SD/- (N. V. VASUDEVAN) (ABRAHAM P GEO RGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR