Income Tax Officer, Thodupuzha V. Shri Francis Joseph, Thodupuzha

ITA 61/COCH/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68975 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 02-07-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 06-02-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: N UNNIKRISHNAN
• Keywords: Principle of natural justice; Opportunity of cross examination

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. 61 /COCH/2009 ASSESSMENT YEAR : 1997-98 THE INCOME TAX OFFICER, WARD-2, THODUPUZHA, VS. SHRI FRANCIS JOSEPH, VARIAMPARAMBIL HOUSE, PULIYANMALA P.O., KATTAPANA. (REVENUE -APPELLANT) (ASSESSEE -R ESPONDENT) REVENUE BY SMT. S. VIJAYAPRABHA, JR, DR AND SHRI ANIL KUMAR, CIT(DR) ASSESSEE BY SHRI N. UNNIKRISHNAN, CA DATE OF HEARING 02/07/2013 DATE OF PRONOUNCEMENT 20/09/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 28.11.2008 PASSED BY LD CIT(A)-II, KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 1997-98. 2. THE REVENUE IS ASSAILING THE DECISION OF LD CIT( A) IN DELETING THE ASSESSMENT OF BANK DEPOSITS AMOUNT OF RS.10,55,500/- AS INCOME OF THE ASSESSEE. 3. THE FACTS RELATING TO THE SAME ARE STATED IN BRI EF. THE ASSESSEE HEREIN IS BROTHER IN LAW OF SHRI JOSE KURUVINAKUNNEL (HEREINAFTER J. K). THE ASSESSING OFFICER OF SHRI J.K RECEIVED ANONYMOUS INFORMATION ABOUT UNACCOUNTED IN COME EARNED BY SHRI J.K. DURING THE COURSE OF ENQUIRY IN HIS HANDS, THE DDIT (INV.) RECORDED A STATEMENT FROM THE ASSESSEE HEREIN ON 05-09-2002. IT WAS NOTICED THAT THE ASSESSEE HEREIN WAS HAVING A SB ACCOUNT NO. 3075 WITH FEDERAL BANK, POOVARANI BR ANCH. IN THE SWORN STATEMENT, THE ASSESSEE STATED THAT THE SAID BANK ACCOUNT ACTU ALLY BELONG TO SHRI J.K ONLY. HE FURTHER ADMITTED THAT, EXCEPT THE INITIAL TWO DEPOS ITS, ALL OTHER TRANSACTIONS WERE CARRIED I.T.A. NO.61/COCH/2009 2 OUT BY SHRI J.K ONLY. DURING THE COURSE OF ASSESSM ENT PROCEEDING IN THE HANDS OF SHRI J.K, HIS ASSESSING OFFICER MADE FURTHER ENQUIRIES I N THIS REGARD AND CONCLUDED THAT THE ABOVE SAID BANK ACCOUNT BELONGS TO SHRI J.K ONLY. ACCORDINGLY, HE ASSESSED THE DEPOSITS MADE IN THE BANK ACCOUNT DURING THE PERIOD S RELEVANT TO THE ASSESSMENT YEARS 1996-97 TO 1999-2000 IN THE HANDS OF SRI J.K. THE ASSESSING OFFICER OF THE ASSESSEE HEREIN HAS ALSO RE-OPENED THE ASSESSMENT FOR THE AS SESSMENT YEAR 1997-98 AND ASSESSED A SUM OF RS.10,55,500/- IN HIS HANDS IN TH AT YEAR ON THE REASONING THAT THE INITIAL RESPONSIBILITY TO EXPLAIN THE DEPOSITS IS P LACED UPON THE ACCOUNT HOLDER. AGGRIEVED, THE ASSESSEE CHALLENGED THE ASSESSMENT O RDER BY FILING AN APPEAL BEFORE LD. CIT(A). THE FIRST APPELLATE AUTHORITY NOTICED THAT THE SAID BANK ACCOUNT WAS HELD TO BELONG TO SHRI J.K ONLY BY THE LD. CIT(A) BEFORE HI M APPEAL WAS FILED BY SHRI J.K. ACCORDINGLY, THE LD CIT(A) DIRECTED THE ASSESSING O FFICER TO DELETE THE ADDITION OF RS.10,55,500/- MADE IN THE HANDS OF THE ASSESSEE H EREIN. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) , THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THIS BENCH OF THE TRIBUNAL IN THE CASE OF JOSE KURUVINAKUNNEL HAS CON SIDERED THIS ISSUE IN DETAIL IN ITA NO.429-433/COCH/2005 RELATING TO ASSESSMENT YEARS 1 996-97 TO 2000-01 AND THE TRIBUNAL HAS GIVEN A FINDING THAT THE BANK ACCOUNT, REFERRED ABOVE, ACTUALLY BELONGED TO SHRI JOSE KURUVINAKUNNEL ONLY. THE RELEVANT DISCUS SIONS MADE BY THE TRIBUNAL ARE EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE: 10. WE HAVE HEARD THE RIVAL CONTENTIONS ON TH IS ISSUE. THE ADMITTED FACTS ARE THAT THE BANK ACCOUNT MAINTAINED WITH FEDERAL B ANK STANDS IN THE NAME OF SHRI FRANCIS JOSEPH, THE BROTHER IN LAW OF THE ASSE SSEE HEREIN. THE ASSESSEE HEREIN HAS INTRODUCED SHRI FRANCIS JOSEPH TO THE BA NK. ACCORDING TO SHRI FRANCIS JOSEPH, THE SAID BANK ACCOUNT WAS OPERATED BY THE A SSESSEE HEREIN AND THE SAID FACT WAS NOT DENIED BY THE ASSESSEE. ACCORDING TO THE ASSESSEE, HE HAS OPERATED THE BANK ACCOUNT ONLY ON BEHALF OF SHRI FR ANCIS JOSEPH, MEANING THEREBY ALL THE TRANSACTIONS BELONG TO SHRI FRANCIS JOSEPH ONLY. HOWEVER, THE CLAIM OF SHRI FRANCIS JOSEPH IS THAT THE ASSESSEE H EREIN ONLY HAS OPERATED THE BANK ACCOUNT AND ALL THE TRANSACTIONS, EXCEPT THE F IRST TWO TRANSACTIONS, BELONG TO THE PRESENT ASSESSEE ONLY. 10.1 THE DEPARTMENT HAS CONCLUDED THAT THE TRANS ACTIONS MADE IN THE ABOVE SAID BANK ACCOUNT BELONG TO THE ASSESSEE ONLY ON T HE BASIS OF I.T.A. NO.61/COCH/2009 3 (A) SWORN STATEMENT TAKEN BY DDIT (INV) FROM SHRI FRANCIS JOSEPH. (B) LETTER FURNISHED BY SHRI FRANCIS JOSEPH DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CONFIRMING THE STATEMENT ALREADY GIVE N. (C) COPIES OF CHEQUE LEAVES AND PAY-IN-SLIPS COLL ECTED FROM FEDERAL BANK, WHERE FROM IT WAS NOTICED THAT THE ASSESSEE HEREIN HAS O PERATED THE BANK ACCOUNT. 10.2 HOWEVER, ACCORDING TO THE ASSESSEE, THE AO DID NOT PROVIDE OPPORTUNITY OF CROSS EXAMINING SHRI FRANCIS JOSEPH AND HENCE TH ERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, WHICH WOULD VITIATE THE ADDITIO N MADE BY THE AO. THIS APPEARS TO BE MAIN CONTENTION OF THE ASSESSEE. 10.3 IT CANNOT BE DISPUTED THAT UNDER THE INCOM E TAX PROCEEDINGS, STRICT RULE OF EVIDENCE NEED NOT APPLIED, I.E., THE ASSESSING O FFICER CAN PROCEED TO DECIDE AN ISSUE ON THE BASIS OF HUMAN PROBABILITIES AND SURRO UNDING CIRCUMSTANCES. IN THE INSTANT CASE, THE ASSESSEE HEREIN IS CARRYING ON BU SINESS AS ONE OF THE PARTNERS OF M/ MAYOORA BAR. ACCORDING TO THE INFORMATION AV AILABLE WITH THE DEPARTMENT, HE HAS CONSTRUCTED A PALATIAL BUILDING HAVING EN EX TENT OF ABOUT 6000 SQ. FT. AND HAS ALSO PURCHASED ABOUT 165 ACRES OF LAND IN TAMIL NADU. HE IS ALSO ASSESSED TO INCOME TAX. THESE FACTS REVEAL THE CREDIT WORTHINE SS OF THE ASSESSEE. ON THE OTHER HAND, SHRI FRANCIS JOSEPH IS NOT ASSESSED TO INCOME TAX. IN THE SWORN STATEMENT, HE HAS STATED THAT HE WAS OPERATING A TA TA 407 MINI TRUCK ALONG WITH HIS BROTHER FOR TRANSPORTING FRUITS FROM TAMILNADU TO KERALA. FROM THESE FACTS, IT CANNOT BE SAID THAT SHRI FRANCIS JOSEPH WAS A MAN O F MEANS. 10.4 SHRI FRANCIS JOSEPH HAS STATED IN HIS SWORN STATEMENT THAT HE HANDED OVER 60 BLANK SIGNED CHEQUE LEAVES TO THE ASSESSEE HEREIN AND THIS FACT WAS NOT DENIED BY THE ASSESSEE, MEANING THEREBY, THE ASSESS EE HEREIN WAS OPERATING THE BANK ACCOUNT OPENED IN THE NAME OF SHRI FRANCIS JOS EPH. THE SAID FACT WAS ALSO CORROBORATED BY THE AO BY OBTAINING COPIES OF CHEQU ES LEAVES AND PAY IN SLIPS FROM BANK, WHEREIN THE SIGNATURE OF THE PRESENT ASS ESSEE WAS FOUND. HOWEVER, ACCORDING TO THE ASSESSEE, HE HAS OPERATED THE BANK ACCOUNT ON THE INSTRUCTIONS OF SHRI FRANCIS JOSEPH ONLY. 10.5 THE QUESTION THAT ARISES NOW IS WHICH OF THE STATEMENTS CAN BE CONSIDERED TO BE TRUE. WE HAVE ALREADY NOTICED THA T THE ASSESSEE HEREIN IS A MAN OF MEANS, WHEREAS SHRI FRANCIS JOSEPH DID NOT H AVE ENOUGH MEANS. THE ASSESSEE HAS INTRODUCED SHRI FRANCIS JOSEPH TO THE BANK FOR OPENING THE IMPUGNED BANK ACCOUNT. THEREAFTER, HE HAS COLLECTE D 60 LEAVES OF BLANK CHEQUES SIGNED BY SHRI FRANCIS JOSEPH. IT IS ALSO AN ADMITTED FACT THAT SHRI FRANCIS JOSEPH WAS STAYING IN A FAR-AWAY PLACE AND ACCORDINGLY IT WAS SUBMITTED BY THE ASSESSEE THAT HE OBTAINED THE SIGNED CHEQUE LEAVES IN ORDER TO FACILITATE THE OPERATION OF ACCOUNTS ON BEHALF OF SHRI FRANCIS JOSEPH. HOWEVER, THE SAID SUBMISSION DEFIES THE LOGIC FOR MORE THAN ONE REASO N, I.E., (A) THE NECESSITY OF OPENING A BANK ACCOUNT IN A PLACE WHERE SHRI FRANCI S JOSEPH WAS NOT RESIDING/CARRYING ON BUSINESS WAS NOT EXPLAINED AND (B) THE NATURE OF BUSINESS I.T.A. NO.61/COCH/2009 4 TRANSACTIONS ALLEGED TO HAVE BEEN CARRIED OUT BY SH RI FRANCIS JOSEPH, WHICH ENABLED HIM TO MAKE HUGE DEPOSITS AND WITHDRAWALS I N THE SAID BANK ACCOUNT WAS ALSO NOT STATED. THE ASSESSING OFFICER HAS POI NTED OUT THAT THE ASSESSEE, BEING A MAN ENJOYING HIGH STATUS, COULD NOT HAVE AC TED AS A MESSENGER, AS CLAIMED. THE INFERENCE SO DRAWN BY THE AO IS SUPPO RTED BY THE FINANCIAL STATUS OF THE ASSESSEE VIS--VIS THE INVESTMENTS MADE BY H IM. ALL THESE FACTORS SUGGESTS THAT THE ASSESSEE HEREIN ONLY COULD HAVE O PERATED THE BANK ACCOUNT STANDING IN THE NAME OF SHRI FRANCIS JOSEPH BY USIN G HIS OWN FUNDS. THUS, THE SURROUNDING CIRCUMSTANCES, CONDUCT OF THE ASSESSEE AND HUMAN PROBABILITIES, IN OUR VIEW, PROVE THAT THE IMPUGNED BANK ACCOUNT BELO NGS TO THE ASSESSEE HEREIN. HENCE, WE DO NOT HAVE ANY HESITATION TO CONFIRM THE DECISION OF LD CIT(A) ON THIS MATTER. 10.6 THE LD COUNSEL FOR THE ASSESSEE MAINLY BA NKED UPON THE CONTENTION THAT THERE WAS VIOLATION OF PRINCIPLES OF NATURAL JUSTIC E, SINCE THE ASSESSEE WAS NOT ALLOWED TO CROSS EXAMINE SHRI FRANCIS JOSEPH. IT A PPEARS THAT THE ASSESSEE IS MAKING THIS CONTENTION ON THE BELIEF THAT THE DEPOS ITS MADE INTO THE ABOVE SAID BANK ACCOUNT HAVE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE ONLY ON THE STRENGTH OF THE STATEMENT GIVEN BY SHRI FRANCIS JOS EPH. THE CONTENTION OF THE ASSESSEE WOULD FIND MERIT, IF THE TAX AUTHORITIES A SSESSED THE BANK DEPOSITS ONLY ON THE STRENGTH OF THE STATEMENT GIVEN BY HIM. A C AREFUL PERUSAL OF THE RECORD SHOWS THAT THE TAX AUTHORITIES HAVE NOT PLACED RELI ANCE SOLELY ON THE SWORN STATEMENT GIVEN BY SHRI FRANCIS JOSEPH. WE NOTICE THAT THE TAX AUTHORITIES HAVE TAKEN INTO CONSIDERATION THE CONDUCT OF THE ASSESSE E, CAPACITY OF THE ASSESSEE, CAPACITY OF SHRI FRANCIS JOSEPH AND THE SURROUNDING CIRCUMSTANCES ALSO IN DECIDING THIS ISSUE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE QUESTION OF VIOLATION OF NATURAL JUSTICE DOES NOT ARISE BY NOT PROVIDING OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. WE NOTICE THAT THE A O ISSUED SUMMONS TO SHRI FRANCIS JOSEPH MORE THAN ONE TIME, BUT THE SAID PER SON DECLINED TO APPEAR BEFORE THE AO, AS HE WAS SCARED OF THE ASSESSEE. T HUS, IN OUR VIEW, IT CANNOT BE SAID THAT THE AO DID NOT OFFER OPPORTUNITY OF CROSS EXAMINATION, BUT THE EXTERNAL CIRCUMSTANCES BLOCKED THE AO TO PROVIDE SUCH AN OPP ORTUNITY TO THE ASSESSEE. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE, BEING BROTHER IN LAW OF SHRI FRANCIS JOSEPH, COULD NOT PRODUCE HIM BEFORE THE AO TO RETR ACT THE STATEMENTS ALREADY GIVEN BY HIM BEFORE DDIT. ON THE CONTRARY, SHRI FR ANCIS JOSEPH, DESPITE THE ALLEGED THREAT FROM THE ASSESSEE, HAS FIRMLY STOOD BY HIS STATEMENT THAT THE IMPUGNED BANK ACCOUNT BELONGS TO THE ASSESSEE ONLY. ACCORDINGLY, WE ARE OF THE VIEW THAT DECISION OF THE AO MIGHT NOT HAVE CHA NGED, HAD HE DISREGARDED THE SWORN STATEMENT GIVEN BY SHRI FRANCIS JOSEPH. HENCE, THE CROSS EXAMINATION COULD NOT HAVE CHANGED THE POSITION. ACCORDINGLY, IN OUR VIEW, ALL THE CASE LAW RELIED UPON BY THE ASSESSEE SHALL NOT BE APPLICABLE TO THE FACTS OF THE INSTANT CASE. ACCORDINGLY, WE HOLD THAT THE TAX AUTHORITI ES HAVE CORROBORATED THE STATEMENT GIVEN BY SHRI FRANCIS JOSEPH WITH SUFFICI ENT MATERIAL AND SURROUNDING CIRCUMSTANCES. ACCORDINGLY WE HOLD THAT THE TRANSAC TIONS FOUND IN THE BANK ACCOUNT, EXCEPT THE FIRST TWO TRANSACTIONS, BELONG TO THE ASSESSEE ONLY. I.T.A. NO.61/COCH/2009 5 10.7 THE LD COUNSEL ALSO CONTENDED THAT SHRI FR ANCIS JOSEPH HAS ONLY IMPLICATED THE PARTNERSHIP FIRM, I.E., THE DEPOSIT S WERE MADE BY THE ASSESSEE FROM OUT OF THE INCOME RELATING TO THE PARTNERSHIP FIRM. WE HAVE GONE THROUGH THE TRANSLATED COPY OF STATEMENT GIVEN BY SHRI FRA NCIS JOSEPH, WHICH IS PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. WE DO NOT F IND ANY SUCH STATEMENT AS CONTENDED BY LD A.R. ACCORDINGLY WE REJECT SAID C ONTENTIONS. THE LD A.R ALSO CONTENDED THAT THE DEPARTMENT HAS ASSESSED VERY SA ME AMOUNT IN THE HANDS OF SHRI FRANCIS JOSEPH ALSO AND HENCE IT COULD NOT HA VE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE HEREIN. WE DO NOT FIND MERIT IN S AID CONTENTIONS. IT IS WELL SETTLED PROPOSITION OF LAW THAT THE INCOME IS REQU IRED TO BE ASSESSED IN THE HANDS OF RIGHT PERSON. WE HAVE ALREADY HELD THAT THE RI GHT PERSON IS THE ASSESSEE HEREIN. 10.8 IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN CONFIRMING THE ASSESSMENT OF DEPOSITS FOUND IN THE BANK ACCOUNT STANDING IN THE NAME OF SHRI FRANCIS JOSEP H, IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE ASSESSMENT OF DEPOSITS FOUND IN TH E ABOVE SAID BANK ACCOUNT IN THE HANDS OF SHRI JOSE KURUVINAKUNNEL WAS UPHELD BY THE TRIBUNAL. 5. THERE SHOULD NOT BE ANY DISPUTE THAT THE INCOME HAS TO BE ASSESSED IN THE HANDS OF RIGHT PERSON. IN THIS REGARD, USEFUL REFERENCE MAY BE MADE TO THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF ITO VS. CH. ATCHIAH (218 ITR 239)(SC). IN VIEW OF THE FINDING GIVEN BY THE TRIBUNAL IN THE CA SE OF SHRI JOSE KURUVINAKUNNEL, REFERRED ABOVE, WE ARE OF THE VIEW THAT THE LD. CIT (A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ASSESSMENT OF THE A MOUNT STATED ABOVE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 20-09-2 013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 20TH SEPTEMBER, 2013 GJ I.T.A. NO.61/COCH/2009 6 COPY TO: 1. SHRI FRANCIS JOSEPH, VARIAMPARAMBIL HOUSE, PULI YANMALA P.O., KATTAPANA. 2. THE INCOME TAX OFFICER, WARD-2, THODUPUZHA. 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) I.T.A.T, COCHIN