Deputy Commissioner of Income Tax, Thrissur V. Shri K.S. Sethumadhavan, Palakkad

ITA 71/COCH/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64875 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-09-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 12-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: C R HARISH
• Keywords: Unexplained cash credit; Gift
• Section: 69

Judgement Text

1 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 71/COCH/2009 - A.Y. 2002-03 I.T.A NO. 72/COCH/2009 - A.Y. 2003-04 I.T.A NO. 73/COCH/2009 - A.Y. 2004-05 I.T.A NO. 74/COCH/2009 - A.Y. 2005-06 I.T.A NO. 75/COCH/2009 - A.Y. 2006-07 DY.CIT, CENT.CIR. VS SHRI K.S. SETHUMADHAVAN THRISSUR M/S LAND LINKS WEST FORT ROAD, PALAKKAD PAN : AWBPS7845 (APPELLANT) (RESPONDENT) I.T.A NO. 82/COCH/2009 - A.Y. 2002-03 I.T.A NO. 83/COCH/2009 - A.Y. 2003-04 I.T.A NO. 84/COCH/2009 - A.Y. 2004-05 I.T.A NO. 85/COCH/2009 - A.Y. 2005-06 I.T.A NO. 86/COCH/2009 - A.Y. 2006-07 SHRI K.S. SETHUMADHAVAN VS DY.CIT, CENT.CIR WEST FORT ROAD, PALAKKAD THRISSUR (APPELLANT) (RESPONDENT) REVENUE BY : MS. A.S. BINDHU ASSESSEE BY : SHRI C.R. HARISH DATE OF HEARING : 12-09-2012 DATE OF PRONOUNCEMENT : 12-10-2012 2 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 O R D E R PER N.R.S. GANESAN (JM) BOTH THE REVENUE AND THE TAXPAYER HAVE FILED THE A PPEALS AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX(A) FO R THE ASSESSMENT YEARS 2002-03, 2003-04, 2004-05, 2005-06 AND 2006-07. SINCE A LL THE APPEALS ARISE OUT OF THE VERY SAME ORDER OF THE COMMISSIONER OF INCOM E-TAX(A), WE HEARD THEM TOGETHER AND DISPOSE OF BY THIS COMMON ORDER. 2. DURING THE COURSE OF HEARING, THE LD.REPRESENTAT IVE FOR THE REVENUE, MS. A.S. BINDHU AND THE LD.REPRESENTATIVE FOR THE TAXPA YER, SHRI C.R. HARISH SUBMITTED THAT ALL THE ISSUES RAISED IN THESE APPEALS WERE DE CIDED BY THIS TRIBUNAL IN THE CASE OF SHRI K.S. SUDHEER IN ITA NOS 76,77&78/COCH/2 009 AND ITA NOS 87, 88 & 89/COCH/2009 VIDE ORDER DATED 07-09-2012. THEREFORE, BOTH THE REPRESENTATIVES FOR THE REVENUE AND THE TAXPAYER SUBMITTED THAT THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI K.S. SUDHEER MAY BE FOLLOWED. 3. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI K.S. SUDHEER (SUPRA) AND THE MATERIAL AVAILABLE ON RECORD. 4. IN RESPECT OF THE FIRST GROUND OF APPEAL WITH RE GARD TO OPENING CASH BALANCE, THIS TRIBUNAL FOUND THAT THE TAXPAYER DID NOT FURNISH ANY MATERIAL TO SUBSTANTIATE THE CLAIM OF AVAILABILITY OF CASH AS C LAIMED. THEREFORE, THIS TRIBUNAL FOUND THAT IT WOULD BE CORRECT TO PRESUME THAT THE TAXPAYER DID NOT HAVE SUFFICIENT CASH BALANCE AS CLAIMED. ACCORDINGLY TH E OPENING CASH BALANCE AS 3 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 ESTIMATED BY THE TAXING AUTHORITY WAS UPHELD. BOTH THE REPRESENTATIVES FOR THE REVENUE AND THE TAXPAYER HAVE PRAYED FOR FOLLOWING THIS FINDING OF THE TRIBUNAL. ACCORDINGLY, BY FOLLOWING THE ORDER OF THIS TRIBUNA L IN THE CASE OF SHRI K.S. SUDHEER AND FOR THE REASONS STATED THEREIN WE UPHOL D THE FINDING OF THE LOWER AUTHORITY WITH REGARD TO OPENING CASH BALANCE. 5. THE NEXT ISSUE IS WITH REGARD TO GIFT RECEIVED B Y THE TAXPAYER FROM HIS FATHER. FROM THE ORDER OF THE LOWER AUTHORITIES IT APPEARS THAT THE TAXPAYER CLAIMED THAT HE HAS RECEIVED A GIFT OF RS.5 LAKHS FR OM HIS FATHER. THE ASSESSING AUTHORITY HAS REJECTED THE CLAIM OF THE TAXPAYER. ON APPEAL BY THE TAXPAYER, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT THE TAXPAYE RS FATHER WAS A CENTRAL GOVERNMENT EMPLOYEE RETIRED FROM SERVICE. THEREFOR E, THE COMMISSIONER OF INCOME-TAX(A) FOUND THAT WHEN THE SON WAS STARTING A N INDIVIDUAL BUSINESS / VENTURE, THE FATHER WOULD NATURALLY HELP THE SON. HOWEVER, IN HIS SWORN STATEMENT, THE TAXPAYER CLAIMED A GIFT OF ONLY RS.3 ,50,000. THEREFORE, BY PLACING RELIANCE ON THE SWORN STATEMENT RECORDED FROM THE T AXPAYER, THE COMMISSIONER OF INCOME-TAX(A) REJECTED THE CLAIM IN THE CASH FLO W STATEMENT AND DIRECTED THE ASSESSING AUTHORITY TO ACCEPT THE GIFT TO THE EXTEN T OF RS.3,50,000. AFTER EXAMINATION OF THE MATERIAL AVAILABLE ON RECORD WE NOTICE THAT THERE IS NOTHING UNUSUAL IN RECEIVING GIFTS FROM THE PARENTS BY CHIL DREN. WHEN A CHILD STARTS A NEW VENTURE, THE FATHER, WHO HAS RETIRED FROM GOVERNMEN T SERVICE (IN THE INSTANT CASE) WOULD NATURALLY EXTEND HIS HELPING HAND. THE REFORE, THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY FOUND THAT AS STATED BY TH E TAXPAYER IN THE SWORN STATEMENT, A SUM OF RS.3,50,000 MIGHT HAVE BEEN REC EIVED AS GIFT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 4 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DELE TION OF ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS. 7,66,000 FOR THE ASSESSMENT YEAR 2002- 03; RS. 3,26,607 FOR THE ASSESSMENT YEAR 2003-04; AN D RS. 2,78,689 FOR THE ASSESSMENT YEAR 2004-05 BEING THE UNEXPLAINED CASH C REDIT WITH STATE BANK OF INDIA. THE ASSESSING OFFICER MADE THIS ADDITION U/ S 69 OF THE ACT. THE TAXPAYER CLAIMED BEFORE THE COMMISSIONER OF INCOME-TAX(A) THA T THE AMOUNTS WERE DEPOSITED FROM AND OUT OF THE AMOUNTS RECEIVED FROM VARIOUS PERSONS ON WHOSE BEHALF THE TAXPAYER WAS ACTING AS A BROKER. THE AMO UNTS DEPOSITED IN THE BANK WERE WITHDRAWN IMMEDIATELY AND IT WAS PASSED ON TO THE INTENDED PERSON AND NO AMOUNT WAS USED FOR THE TAXPAYERS BUSINESS OR F OR HIS PERSONAL NEEDS. THIS EXPLANATION OF THE TAXPAYER WAS ACCEPTED BY THE COM MISSIONER OF INCOME-TAX(A) AND DELETED THE ADDITION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLAIM OF THE TAXPAYER THAT HE WAS ACTING AS A BROKER AND RECEIVED MONEY ON BEHALF OF OTHER PERSONS HAS TO BE FACTUALLY EXAMINE D BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX(A) HAS ACCEPTED THE EXPLA NATION OF THE TAXPAYER WITHOUT ANY FORMAL VERIFICATION. THEREFORE, THE OR DER OF THE COMMISSIONER OF INCOME-TAX(A) IS SET ASIDE AND THE ISSUE WITH REGARD TO THE ADDITION OF RS. 7,66,000 FOR THE ASSESSMENT YEAR 2002-03; RS. 3,26,6 07 FOR THE ASSESSMENT YEAR 2003-04; AND RS. 2,78,689 FOR THE ASSESSMENT YEAR 20 04-05 BEING THE UNEXPLAINED CASH CREDIT WITH STATE BANK OF INDIA IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-E XAMINE THE ISSUE AFRESH IN THE LIGHT OF EXPLANATION OF THE TAXPAYER AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEA RING TO THE TAXPAYER. 7. THE NEXT ISSUE IS WITH REGARD TO THE ADMINISTRAT IVE EXPENSES. THIS TRIBUNAL HAD AN OCCASION TO ADJUDICATE THIS ISSUE IN THE CAS E OF K.S. SUDHEER (SUPRA). THIS 5 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 TRIBUNAL FOUND THAT DISALLOWANCE OF RS.6,79,750 FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF K.S. SUDHEER IS ON THE HIGHER SIDE AN D THE AMOUNT OF RS.1 LAKH CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(A) IS ON THE LOWER SIDE. ACCORDINGLY THIS TRIBUNAL FOUND THAT THE DISALLOWAN CE OF RS.4 LAKHS FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF K.S. SUDHEER WOULD BE REASONABLE. FOR ALL OTHER YEARS, THE TRIBUNAL CONFIRMED THE ORDER O F THE COMMISSIONER OF INCOME- TAX(A). ACCORDINGLY FOR THE ASSESSMENT YEAR 2006-07 BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI K.S SUDHEER (SUPRA) WE FIND THAT THE DISALLOWANCE OF RS.4 LAKHS WOULD MEET THE ENDS OF JUSTICE. IN RE SPECT OF OTHER YEARS, THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(A) ARE CONFIRMED. AS A RESULT, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A) FOR THE ASSESSMENT YEAR 2006-07 ALONE IS MODIFIED BY RESTRICTING THE DISALLOWANCE TO RS.4 LA KHS. IN RESPECT OF ALL OTHER YEARS, THE ORDERS OF THE COMMISSIONER OF INCOME-TAX( A) ARE CONFIRMED. 8. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE OF EXPENSES. WE FIND THAT THIS ISSUE WAS CONSIDERED IN THE CASE OF SHRI K.S. SUDHEER AND THE ISSUE OF ESTIMATION OF PROFIT AND EXPENSES WAS REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER. BY FOLLOWING THE ORDER OF THIS TRIBUNAL I N THE CASE OF SHRI K.S. SUDHEER AND FOR THE REASONS STATED THEREIN WE REMIT BACK THIS IS SUE TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION IN THE LIGHT OF DECISIO N IN THE CASE OF K.S. SUDHEER (SUPRA) AND IN ACCORDANCE WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE TAXPAYER. 9. THE NEXT ISSUE IS WITH REGARD TO SUPPRESSION OF SALES AND EXCESS CLAIM OF DEVELOPMENT FROM COMMON WEALTH PROJECT. THIS TRIBU NAL WHILE CONSIDERING SIMILAR GROUND WITH REGARD TO PRIVUSALA PROJECT AND CHANDRANAGAR PROJECT FOUND 6 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 THAT THE MATTER NEEDS TO BE RE-EXAMINED IN THE LIGHT OF THE RECONCILIATION STATEMENT THAT MAY BE FILED BY THE TAXPAYER. ACCOR DINGLY, BY FOLLOWING THE ORDER OF THE TRIBUNAL AND FOR THE REASONS STATED THEREIN, THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAM E AFRESH IN THE LIGHT OF DECISION IN THE CASE OF K.S. SUDHEER (SUPRA) AND IN ACCORDANC E WITH LAW AFTER PROVIDING OPPORTUNITY OF HEARING TO THE TAXPAYER. 10. THE NEXT GROUND OF APPEAL IS WITH REGARD TO THE ESTIMATION OF PROFIT FROM THE CONSTRUCTION BUSINESS. THIS ISSUE WAS ALSO EXA MINED BY THIS TRIBUNAL IN THE CASE OF SHRI K.S. SUDHEER (SUPRA). THIS TRIBUNAL FO UND THAT THERE IS NO REASON TO INTERFERE WITH THE ESTIMATION OF PROFIT AT 8% MADE BY THE TAXING AUTHORITY. BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI K.S. SUDHEER (SUPRA) AND FOR THE REASONS STATED THEREIN, WE FIND THAT THE LOWER AUTHORITIES HAVE RIGHTLY ESTIMATED THE PROFIT AT 8%. WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LOWER AUTHORITY. THE ORDER OF COMMISSIONER OF INCOME-TAX( A) IS CONFIRMED ON THIS ISSUE. 11. IN THE RESULT, APPEALS IN ITA NOS 82 TO 86/COC H/2009 ARE DISMISSED AND THE APPEALS IN ITA NOS 71 TO 75.COCH/2009 ARE PARTLY AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH OCTOBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 12 TH OCTOBER, 2012 PK/- 7 ITA NO.71 TO 75/COCH/2009 ITA NO.82 TO 86/COCH/2009 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH