Sri.Anees Shareef Kunju, Kollam V. The iTO, Kollam

ITA 680/COCH/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2526 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-03-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 27-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRITUNJAYA SHARMA
• Assessee Lawyers: K M V PANDALAI
• Keywords: Unexplained cash credit; Revision of order; Set aside
• Section: 69C; 143(3); 13; 68; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M ITA NO. 680 /COCH/ 2019 ASSESSMENT YEAR: 20 1 4 - 1 5 SHRI ANEES SHAREEF KUNJU, POOVANGUVILA VEEDU, SADATH NAGAR 69, KALLUMTHAZHAM P.O., KOLLAM - 691 004. PAN: CUXPS 3015A] VS. THE ASSISTANT COMMISSIONER OF INCOME - TAX,CIRCLE - 1, KOLLAM ( ASSESSEE - APPELLANT) (R EVENUE - RESPONDENT) ASSESSEE BY SHRI K.M.V. PANDALAI, ADV. REVENUE BY SHRI MRITUNJAYA SHARMA, SR. DR D ATE OF HEARING 11 /0 3 /2020 DATE OF PRONOUNCEMENT 12 / 0 3 /20 20 O R D E R PER CHANDRA POOJARI, AM: TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI N ST THE ORDER OF THE PR. CIT, TRIVANDRUM PASSED U/S. 263 OF THE I.T. ACT DAT ED 10/01/2019 AND PERTAINS TO THE ASSESSMENT YEAR 2014 - 15. I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 2 2. AT THE OUTSET, THERE WAS A DELAY OF 2 45 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE LD. AR HAS FILED CONDONATION PETITION ACCOMPANIED BY AFFIDAVIT STATING THE REASON FOR THE DELAY IN FILING THE APPEAL. THE LD. AR SUBMITTED THAT THE ORDER OF THE PR. CIT PASSED U/S. 263 OF THE I.T. ACT DATED WAS RECEIVED ON 25 - 01 - 2019. IT WAS SUBMITTED THAT THE HIS I TP R . PRASANNAN PILLAI WHO WAS REPRESENTING HIS CASE WAS SERIOUSLY ILL DUE TO HEART AILMENTS AND HE PASSED AWAY ON 13 - 05 2019. MEANWHILE , IT WAS SUBMITTED THAT THE ASSESSING OFFICER PASSED AN ORDER GIVING EFFECT TO THE SAID ORDER OF THE PR. COMMISSIONER OF INCOME TAX, ON 08 - 04 - 2019 AND THE SAID CONSEQUENTIAL ORDER WAS RECEIVED BY THE ASS ESSEE ON 11 - 04 - 2019. IT WAS SUBMITTED THAT A S THE ITP OF THE ASSESSEE WAS NOT IN A CONDITION TO TAKE NECESSARY ACTION IN THE MATTER , HE APPROACHED ANOTHER ITP, ON WHOSE ADVICE HE FILED THE APPEAL IN TIME BEFORE THE C IT(A) ON 25 - 04 - 2019 AGAINST THE ORDER DATED 08 - 04 - 2019 PASSED BY THE ASSESSING OFFICER. THIS APPEAL AND STAY PETITION WERE LAST POSTED ON 31 - 10 - 2019. ONLY THEN , THE ASSESSEE CAME TO KNOW THAT THE CORRECT REMEDY FOR HIM WAS TO CHALLENGE THE ORDER OF THE PR . CIT PASSED U/SEC.263 OF THE IT ACT D T. 10 - 01 - 2019. THEN , HE APPROACHED HIS AUTHORISED REPRESENTATIVE. THE LD. AR SUBMITTED THAT THERE WAS NO WILLFUL NEGLIGENCE OR LACHES ON THE PART OF THE ASSESSEE AND IN CASE IF THIS DELAY OF 2 45 DAYS IS NOT CONDONED, IT WOULD CAUSE IRREPARABLE HARM AND INJ USTICE TO THE ASSESSEE . HENCE , IT WAS PRAYED THAT THE ABOVE DELAY IS CONDONED AND JUSTICE RENDERED TO TH E ASSESSEE. I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 3 2.1 WE HAVE GONE THROUGH THE CONDONATION PETITION AND ALSO HEARD THE RIVAL SUBMISSIONS . WE FIND THAT THERE IS GOOD AND SUFFICIENT REA SONS FOR FILING THE APPEAL BELATEDLY. ACCORDINGLY, WE CONDONE THE DELAY OF 245 DAYS IN FILING THE APPEAL AND ADMIT THE APPEAL FOR ADJUDICATION. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE, IS A WHOLESALE DEALER OF MATCH BOXES. HE FILED THE RETURN OF INCOME FOR THE ASSESSMENT TEAR 2014 - 15 DECLARING TOTAL INCOME OF RS. 2 , 03,060/ - . TH E CASE WAS SELECTED FOR LIMITED SCRUTINY THROUGH CASS FOR VERIFICATION OF DEPOSITS IN SAVINGS BANK ACCOUNTS OF THE ASSESSEE WHICH WAS FOUND TO BE MORE THAN THE TURNOVER DEC LARED. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE I.T. ACT B Y ADDING RS.1,28,190 / - WITH THE RETURNED INCOME AND THUS ARRIVED AT A TOTAL INCOME AT RS. 3,33,190 / - . 3.1 ON SUBSEQUENT VERIFICATION OF RECORDS, THE PR. CIT FOUND THAT THE ASSESSEE DECLARED TURNOVER FOR THE A.Y.2014 - 15 AT RS.72,82,235 / - . DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2014 - 13 , THE ASSESSEE DEPOSITED RS. 1 ,24,09,845 / - IN VARIOUS SAVINGS BANK ACCOUNTS . D URING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT HE F REQUENTLY WITHDREW CASH FROM ACCOUNT MAINTAINED WITH SBI AND DEPOSITED T HE SAME IN THE ACCOUNT WITH ICIC1 IN ORDER TO AVAIL BUSINESS LOAN FROM ICICI AS PER THEIR INSISTENCE. IT WAS ALSO STATED THAT HIS BROTHERS ALSO GAVE LOANS. BU T SINCE HE COULD NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE HIS INTER - BANK I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 4 TRANSACTIONS OR AB OUT THE LOANS OBTAINED FROM HIS BROTHERS, THE ASSESSING OFFICER TREATED THE EX CESS CASH DEPOSITS OVER THE TURNOVER AMOUNTING TO RS.51,27,610/ - AS HIS DEEMED TURNOVER AND 2.5% OF SUCH DEEMED TURNOVER, BEING RATE OF GROSS PROFIT DECLARED, WAS BROUGHT TO TAX. THE PR. CIT OBSERVED THAT THE ASSESSING OFFICER SHOULD HAVE TREATED THIS AS UNEXPLAINED CASH CREDITS U/S 68 AND CHARGED TO TAX AT A SPECIAL RATE OF 30% AS PER SECT ION 115 BEE OF THE INCOME TAX ACT 1961. SINCE THE ASSESSING OFFICER FAILED TO EXAMINE THE ABOVE ASPECTS WHILE COMPLETING THE ASSESSMENT U/S 143(3), THE PR. CIT TREATED THE ORDER PASSED ON 07/11/2016 A S ERRONEOUS AND PRE JUDICIAL TO THE INTERESTS OF REVENUE. T HEREFORE, HE SET ASIDE THE ORDE R OF THE ASSESSING OFFICER WITH A DIRECTION TO MAKE ADDITION U/S. 68 AND APPLY SPECIAL RATE AS PER SECTION 115BBE OF THE INCOME TAX ACT, 1961. THE PR. CIT ALSO DIRECTED THAT THIS R EVISION U/S 263 IS TO BE DONE AFTER AFFORD ING THE ASSESSES NECESSARY OPPORTUNITY OF BEIN G HEARD. 4. AGGRIEVED BY THE ORDER PASSED U/S. 263 OF THE I.T. ACT BY THE PR. CIT, THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX IS AGAINST FACTS, LAW AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OUGHT TO HAVE FOUND THAT THE AMOUNTS IN QUESTION WERE EITHER THE REMITTANCES RECEIVED BY THE APPELLANT - ASSESSEE FROM HIS RELATIONS ABROAD THROUGH BANK AND/OR TRANSFER OF FUNDS FROM HI S ONE BANK ACC O UNT TO OTHER RESULTING IN DUPLICATION OF CREDITS IN THE APPELLANT'S ACCOUNT. 3. THE IMPUGNED ORDER PASSED BY THE COMMISSIONER IS BEYOND THE SCOPE OF SECTION 263 OF THE IT ACT 1961. I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 5 4. THE APPELLANT WAS PREVENTED FROM FURNISHING THE CONFIRM ATION LETTERS FROM HIS RELATIVES TO THE EFFECT THAT THEY HAD SENT THE AMOUNTS TO THE APPELLANT'S ACCOUNT FROM ABROAD, FOR THE REASON THAT THE APPELLANT WAS NOT PROPERLY ADVISED BY THE ITP WHO WAS REPRESENTING HIM AS THE I TP WAS SUFFERING FROM SERIO U S HEA RT AILMENT DURING THE RELEVANT TIME. 5. THE COMMISSIONER OUGHT TO HAVE FOUND THAT THE APPELLANT HAD NO SUFFICIENT OPPORTUNITY TO PRODUCE THE CONFIRMATION LETTERS DUE TO THE LACK OF PROPER ADVICE FROM HIS TAX CONSULTANT WHO REPRESENTED HIM. 6. THE COMMIS SIONER ERRED IN TREATING THE ENTIRE CASH CREDITS REFLECTED IN HIS BANK ACCOUNTS AS HIS UNDISCLOSED TURNOVER AND INVOKING THE PROVISIONS OF SECTION 115BBE OF THE IT ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE APPELLANT'S EXPLANATION WAS THAT THE FREQUENT TRANSFER OF SAME AMOUNT FROM ONE BANK ACCOUNT TO ANOTHER WAS MADE TO SHOW A HIGHER TURNOVER FOR AVAILING BANK LOAN. THE COMMISSIONER OUGHT TO HAVE ACCEPTED THIS EXPLANATION IN THE CIRCUMSTANCES OF THE CASE. 8 . THE COMMISSIONER ERRED IN ASSE SSING THE TRANSFER CREDITS MADE BY THE APPELLANT FROM HIS ONE BANK ACCOUNT TO ANOTHER ACCOUNT AS CASH DEPOSITS U/SEC.68 OF THE ACT AND CHARGED THE SAME AT SPECIAL RATES AS PER SECTION 115 BBE EVEN THOUGH HE OFFERED SATISFACTORY EXPLANATION FOR SUCH CREDITS AND TRANSFER OF FUNDS. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING IT IS HUMBLY PRAYED THAT THIS T RIBUNAL MAY BE PLEASED TO A LLO W THE APPEAL QUASHING THE IMPUGNED ORDER. 5. THE LD. DR RELIED ON THE ORDER OF THE PR. CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE MAIN CONTENTION OF THE LD. AR IS THAT THE PR. CIT HAS GIVEN A DIRECTION TO THE ASSESSING OFFICER TO MAKE ADDITION U/S. 68 OF THE I.T. ACT AND APPLY SPECIAL RATE OF I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 6 TAX U/S. 115B BE OF THE I.T. ACT. ACCORDING TO HIM, THE PR. CIT PRE - DECIDED THE ISSUE AND THEREAFTER, HE DIRECTED THE ASSESSING OFFICER TO GIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS APPROPRIATE TO GIVE EFFECT TO TH E DIRECTION OF THE PR. CIT A FTER A FAIR OPPORT UNITY OF HEARING IS GIVEN TO THE ASSESSEE. IN OUR OPINION, T HE PROVISIONS OF SECTION 115BBE IS APPLICABLE WITH EFFECT FR O M 01/04/2013. THE ADDITIONS MADE U/S. 68, 68, 69B, 69C AND 69D OF THE I.T. ACT CANNOT BE SET OFF WITH LOSS WITH EFFECT FROM 01/04/201 7. THE DIRECTION OF THE PR. CIT THAT ADDITION U./S. 68 OF THE ACT IS TO BE MADE AT SPECIAL RATE OF 30% IS PROPER IF THE ADDITION MADE U/S. 68 OF THE ACT IS SUSTAINED BY THE ASSESSING OFFICER. F URTHER, IN THI S CAS E , AS RIGHTLY POINTED OUT BY THE LD. AR, THE PR. CIT HAD EXERCISED HIS POWER U/S. 263 OF THE I.T. ACT AND HE HIMSELF DECIDED ABOUT THE APPLICABILITY OF SECTION 68 OF THE ACT . THE REAFTER, HE GAVE DIRECTION TO THE ASSESSING OFFICER TO GIVE OPPORTUNITY OF HEARING TO THE ASSESSEE WHICH IS INAPPROPRI ATE. THE PR. CIT PRE - DECIDED THE ISSUE AND THEREAFTER, DIRECTED THE ASSESSING OFFICER TO GIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE VACATE THIS FINDING OF THE PR. CIT AND REMIT THE ISSUE IN DISPUTE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE HOW THE PROVISIONS OF SECTION 68 OF THE I.T. ACT IS NOT APPLICABLE TO THE ASSESSEES CASE. THE ASSESSING OFFICER HAS TO EXAMINE WHETHER THE PROVISIONS OF SECTION 68 IS APPLICABLE TO THE ASSESSEES CASE OR NOT. IF THE ASSESSEE IS ABLE TO PROVE THE IDENTITY A ND CAPACITY OF THE PARTIES CONCERNED AND THE GENUINENESS OF THE TRANSACTIONS TO THE SATISFACTION OF THE ASSESSING OFFICER, HE SHALL NOT MAKE ADDITION U/S. 68 OF THE ACT. WITH THIS OBSERVATION, WE REMIT THIS ISSUE TO I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 7 THE FILE OF THE ASSESSING OFFICER FOR F RESH CONSIDERATION. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 T H MARCH , 2020 . SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 12 TH MARCH, 2020 GJ COPY TO: 1 . SHRI ANEES SHAREEF KUNJU, POOVANGUVILA VEEDU, SADATH NAGAR 69, KALLUMTHAZHAM P.O., KOLLAM - 691 004. 2 . THE ASSISTANT COMMISSIONER OF IN COME - TAX, CIRCLE - 1, KOLLAM. 3. THE PR. COMMISSIONER OF INCOME - TAX, TRIVANDRUM . 4 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 5 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN I.T.A. NO S . 749/ COC H/ 2019 AND 6 2/COCH/2020 8