Sri.N.S. John, Pathanamthitta V. The ITO, Thiruvalla

ITA 71/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8663 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2016
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: P REJINARK
• Keywords: Principle of natural justice; Onus to prove
• Section: 68; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER (SMC) ITA NO.71(COCH)/2016 (ASSESSMENT YEAR : 2006-07) SHRI N.S.JOHN, ENJEYAS SPICES & CHEMICAL OIL LTD., V-KOTTAYAM, PATHANAMTHITTA, PAN NO.AFLPS6412C APPELLANT VS THE INCOME TAX OFFICER, WARD-2, THIURUVALLA RESPONDENT ASSESSEE BY : SHRI P. REJINARK, ADVOCATE REVENUE BY : SHRI K.P.GOPAKUMAR, SR. DR DATE OF HEARING : 18-04-2016 DATE OF PRONOUNCEMENT : 18-04-2016 O R D E R PER SHRI B.R.BASKARAN, AM; THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 11- 12-2015 PASSED BY THE LD. CIT(A), KOTTAYAM FOR THE ASSESSMENT YEAR : 2006-07. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF TH E LD. CIT(A) IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.11,75,0 00/- LAKHS. 3. I HEARD THE PARTIES AND PERUSED THE RECORD. TH E FACTS RELATING TO THE IMPUGNED ADDITION ARE STATED IN BRIEF. THE ASSESSE E IS THE MANAGING DIRECTOR OF A COMPANY NAMED M/S ENJAYES SPICES & CHEMICAL OI L LTD. THE AO RECEIVED 2 ITA NO.71(B)/15 INFORMATION THAT THE ASSESSEE HAD INVESTED A SUM OF RS.18.00 LAKHS IN THE ABOVE SAID COMPANY. HENCE THE AO REOPENED THE ASSE SSMENT OF THE YEAR UNDER CONSIDERATION BY ISSUING NOTICE U/S 148 OF TH E IT ACT, 1961 AND ASKED FOR EXPLANATIONS WITH REGARD TO THE ABOVE SAID INVE STMENT. 4. THE ASSESSEE EXPLAINED THAT THE ABOVE SAID COMPA NY HAD ENGAGED A PERSON NAMED MR. A.L.PRASAD FOR ARRANGING LOAN FROM FOREIGN SOURCES. IN THAT CONNECTION, M/S ENJAYES SPICES & CHEMICAL OIL LTD., PAID A SUM OF RS.6.25 LAKHS TO SHRI A.L. PRASAD AND FURTHER A SUM OF RS.5 .75 LAKHS WAS PAID BY A PERSON NAMED SHRI RUBAN THOMAS, WHO WAS SON IN LAW OF THE ASSESSEE. THUS SHRI A.L. PRASAD WAS PAID A SUM OF RS.12.00 LAKHS I N AGGREGATE. IT WAS CLAIMED THAT SHRI RUBAN THOMAS, WHO IS THE SON IN L AW OF THE ASSESSEE, HAS ADVANCED THE AMOUNT OF RS.5.75 LAKHS TO SHRI A.L. P RASAD ON BEHALF OF THE COMPANY. IT WAS FURTHER SUBMITTED THAT SHRI A.L. P RASAD FAILED TO ARRANGE FOREIGN FUNDS AND HENCE, THE COMPANY DEMANDED BACK THE AMOUNT OFRS.12.00 LAKHS PAID TO HIM. IN THAT CONNECTION, IT WAS CLAI MED THAT CRIMINAL PROCEEDINGS WERE ALSO INITIATED AGAINST MR.A.L.PRAS AD AND FINALLY THE DISPUTE WAS SETTLED OUT OF COURT. IN ACCORDANCE WITH SETTLE MENT, THE ASSESSEE RECEIVED A SUM OF RS.18.00 LAKHS FROM SHRI A.L.PRASAD IN FUL L AND FINAL SETTLEMENT OF AMOUNT DUE FROM HIM. 3 ITA NO.71(B)/15 5. BEFORE THE AO, THE ASSESSEE COULD NOT FURNISH A NY EVIDENCE IN SUPPORT OF RECEIPT OF LOAN FROM HIS SON IN LAW, I.E., SHRI RUBAN THOMAS. IT WAS FURTHER CLAIMED THAT EXCESS AMOUNT OF RS.6.00 LAKHS RECEIVE D FROM MR.A.L.PRASAD REPRESENTS REIMBURSEMENT OF EXPENSES INCURRED BY TH E ASSESSEE AND SHRI RUBAN THOMAS FOR PURSUING THE MATTER OF RECOVERY OF AMOUNT. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THIS SUBMISSION ALSO. HENCE, THE AO ACCEPTED THE CREDIT TO THE EXTENT OF RS.6.75 LAKHS I.E. THE AMOUNT PAID BY THE ABOVE SAID COMPANY AND ACCORDING LY ASSESSED THE BALANCE AMOUNT OF RS.11.75 LAKHS AS INCOME OF THE ASSESSEE. 6. IN THE APPELLATE PROCEEDINGS, HE LD.CIT(A) GRAN TED RELIEF OF RS.3.00 LAKHS, BEING THE ASSESSEES SHARE OF REIMBURSEMENT OF EXPENSES AND CONFIRMED THE BALANCE ADDITION OF RS.8.75 LAKHS. AGGRIEVED, THE ASESSSEE HAS FILED THIS APPEAL BEFORE US. 7. AT THE TIME OF HEARING, THE LD. AR SUBMITTED T HAT THE ASSESSEE HAS FURNISHED A CONFIRMATION LETTER OBTAINED FROM SHRI RUBAN THOMAS IN CONNECTION WITH THE RECEIPT OF LOAN OF RS.5.75 LAKH S FROM HIM. HE FAIRLY ADMITTED THAT THE ASSESSEE COULD NOT PRODUCE DETAIL S RELATING TO CRIMINAL PROCEEDINGS INITIATED AGAINST SHRI A.L.PRASAD. WHEN A SPECIFIC QUESTION WAS 4 ITA NO.71(B)/15 ASKED AS TO HOW THE AMOUNT OF RS.5.75 LAKHS WAS PAI D BY SHRI RUBAN THOMAS, LD. COUNSEL FAIRLY ADMITTED THAT THE SAME WAS PAID BY WAY OF CASH. 8. THE LD. DR IN HIS ARGUMENT POINTED OUT THAT SHRI RUBAN THOMAS IS WORKING IN AUSTRALIA, AND THE ASSESSEE COULD NOT PR OPERLY EXPLAIN AS TO HOW A PERSON WORKING IN AUSTRALIA COULD GIVE FUNDS TO THE TUNE OF RS.5.75 LAKHS BY WAY OF CASH TO A PERSON RESIDING IN HYDERABAD. ACC ORDINGLY, LD. DR SUBMITTED THAT THE EXPLANATION FURNISHED BY THE ASSESSEE DEFI ES LOGIC AND HENCE, THE CLAIM OF RECEIPT OF LOAN OF RS.5.75 LAKHS WAS RIGHT LY REJECTED BY THE AO. 9. THERE SHOULD NOT BE ANY DOUBT THAT THE INIT IAL ONUS TO PROVE CASH CREDITS OR INVESTMENTS IS PLACED UPON THE ASSESSEE U/S 68 / 69 OF THE IT ACT. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT A SUM OF RS.18.00 LAKHS WAS SHOWN AS AMOUNT RECEIVED FROM THE ASSESSEE IN THE A CCOUNT BOOKS OF THE COMPANY CITED ABOVE. HENCE, IT IS THE PRIMARY RESP ONSIBILITY OF THE ASSESSEE TO PROVE THE SOURCES FOR MAKING THE SAID INVESTMENT. IT IS SEEN THAT THE ASSESSEE HAS PROVED SOURCES TO THE TUNE OF RS.6.75 LAKHS AND HENCE THE AO HAS GIVEN RELIEF TO THAT EXTENT. OUT OF THE REMAINING AMOUNT , THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED A LOAN OF RS.5.75 LAKHS BY WAY OF CASH FROM HIS SON-IN-LAW, WHO IS WORKING IN AUSTRALIA. WITH REGARD TO THE SA ID CLAIM, THE ASSESSEE HAS 5 ITA NO.71(B)/15 SIMPLY FILED A CONFIRMATION LETTER. HOWEVER, IT WA S NOT EXPLAINED AS TO HOW A PERSON, WHO IS WORKING IN AUSTRALIA, COULD GIVE AMO UNT BY WAY OF CASH TO A PERSON RESIDING IN HYDERABAD. 10. IT WAS CLAIMED THAT THE ABOVE SAID AMOUNT O F RS.5.75 LAKHS WAS PAID IN THE YEAR 2001. IT WAS FURTHER SUBMITTED TH AT THE ASSESSEE AND THE ABOVE SAID COMPANY HAD TO INITIATE CRIMINAL PROCEED INGS AGAINST SHRI PRASAD FOR RECOVERY OF AMOUNT OF RS.12.00 LAKHS GIVEN TO H IM. THE LD A.R SUBMITTED THAT HE IS NOT IN POSSESSION OF MATERIALS/DOCUMENTS RELATING TO THE CRIMINAL PROCEEDINGS. HE ALSO SUBMITTED THAT THE SAID DOCUM ENTS MAY HELP THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF RECEIPT OF RS .5.75 LAKHS FROM HIS SON-IN- LAW. ACCORDINGLY HE PRAYED THAT THE ASSESSEE BE GI VEN AN OPPORTUNITY TO FURNISH THOSE DOCUMENTS. 11. THE LD D.R, ON THE CONTRARY, STRONGLY OBJ ECTED TO THE SAID REQUEST. HE SUBMITTED THAT THE ASSESSEE HAS NOT GI VEN ANY REASONS FOR NOT SUBMITTING DOCUMENTS RELATING TO CRIMINAL PROCEEDIN GS BEFORE THE TAX AUTHORITIES. 6 ITA NO.71(B)/15 12. HAVING HEARD RIVAL SUBMISSIONS, I AM OF THE VIEW THAT, IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE SHOULD BE PROVIDED WITH ONE MORE OPPORTUNITY TO PROVE THE CLAIM OF RECEIPT OF RS.5.7 5 LAKHS FROM HIS SON-IN LAW, SINCE THE SAME HAS BEEN CLAIMED TO HAVE BEEN RECEIV ED IN 2001. IF IT IS PROVED THAT THE ABOVE SAID AMOUNT WAS RECEIVED IN 2001, TH E SAME CANNOT BE ASSESSED DURING THE YEAR UNDER CONSIDERATION, SINCE WHAT WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION WAS ONLY REFUND OF AMO UNT GIVEN TO SHRI PRASAD. HOWEVER, I MAKE IT CLEAR THAT IT IS THE RESPONSIBIL ITY OF THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF RECEIPT OF LOAN IN THE YE AR 2001. ACCORDING TO LD A.R, THE DOCUMENTS RELATING TO CRIMINAL PROCEEDINGS MAY THROW LIGHT ON THE ABOVE SAID CLAIM. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIR ECTION TO EXAMINE THE SAME AFRESH IN THE LIGHT OF DOCUMENTS THAT MAY BE FURNIS HED BY THE ASSESSEE IN THIS REGARD. I ALSO MAKE IT CLEAR THAT THE ADDITION REL ATING TO RS.5.75 LAKHS SHALL STAND SUSTAINED, IF THE DOCUMENTS RELATING TO CRIMI NAL PROCEEDINGS DID NOT CONTAIN ANYTHING ABOUT THE CLAIM OF RECEIPT OF RS.5 .75 LAKHS BY WAY OF LOAN FROM THE SON-IN-LAW OF THE ASSESSEE. 13. WITH REGARD TO THE REMAINING AMOUNT OF RS.3. 00 LAKHS, THE CLAIM OF THE ASSESSEE IS THAT THE SAME IS REQUIRED TO BE GIVEN T O SHRI RUBAN THOMAS, THE 7 ITA NO.71(B)/15 SON IN LAW OF THE ASSESSEE, I.E., ACCORDING TO THE ASSESSEE, THE SAME REPRESENTS REIMBURSEMENT OF LITIGATION EXPENSES MET BY HIS SON -IN-LAW. I FEEL THAT THIS ISSUE IS CONNECTED WITH THE CLAIM OF RECEIPT OF LOA N OF RS.5.75 LAKHS FROM SON- IN-LAW OF THE ASSESSEE. ACCORDINGLY, I SET ASIDE T HIS ISSUE ALSO TO THE FILE OF THE AO. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 18-04-2016 IN THE PRESENCE OF BOTH THE PARTIES. SD/- (B.R.BASKARAN) ACCOUNTANT MEMBER PLACE : COCHIN D A T E D : 18-04-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3. CIT(A), KOTTAYAM 4. CIT, KOTAYAM 5. DR, ITAT, COCHIN 6. GUARD FILE (ASST. REGISTRAR) I.T.A.T, COCHIN 8 ITA NO.71(B)/15 1. DATE OF DICTATION- 18-04-2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.04.2016 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21-04-2016 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. : 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ON 21 -04- 2016. 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR 8. SIGNATURE ON THE ORDER21-04-2016.. 9. DATE OF DESPATCH OF THE ORDER