P.O.Mathew, Kottayam V. ITO, Kottayam

ITA 761/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73925 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2013
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: K I JOHN
• Keywords: Unexplained investment; Principle of natural justice; Onus to prove
• Section: 68

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. 761/COCH/2013 ASSESSMENT YEAR : 2010-11 SHRI P.O. MATHEW, 402,PARASSERIL HOUSE, THELLAKAM, ETTUMANOOR, KOTTAYAM. [PAN:APBPM 5444A] VS. THE INCOME-TAX OFFICER, WARD-3, KOTTAYAM. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT ) ASSESSEE BY SHRI K.I. JOHN, CA REVENUE BY SMT. LATHA V. KUMAR, JR. DR DATE OF HEARING 25/03/2014 DATE OF PRONOUNCEMENT 28/03/2014 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 30- 10-2013 PASSED BY LD CIT(A)-IV, KOCHI AND IT RELATE S TO THE ASSESSMENT YEAR 2010-11. 2. THE ADDITION OF RS.29,84,850/- MADE BY THE ASSES SING OFFICER AS UNEXPLAINED INCOME IN THE HANDS OF THE ASSESSEE, HA VING BEEN CONFIRMED BY THE LD. CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFO RE US. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONS IDERATION DECLARING NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE HUGE TRANSACTION S IN HIS S.B ACCOUNT I.T.A. NO. 761/COCH/2013 2 MAINTAINED WITH SOUTH INDIAN BANK AND ALSO MADE INV ESTMENTS IN BONDS/DEBENTURES OF M/S. MUTHOOT FINANCE LTD. ON T HE BASIS OF INFORMATION AVAILABLE ON RECORD, THE ASSESSING OFFICER COLLATED THE DETAILS OF THE SAME AND AFTER GIVING CREDIT FOR AVAILABLE SOURCES, HE COMPU TED THE UNEXPLAINED INCOME OF THE ASSESSEE AS RS.36,84.850/-. THE RELEVANT WORK INGS ARE TABULATED BY THE AO IN THE ASSESSMENT ORDER. WHEN THE ASSESSING OFFICE R PROPOSED TO ASSESS THE ABOVE SAID AMOUNT AS THE INCOME OF THE ASSESSEE, A REPLY WAS FILED BY THE ASSESSEE WHEREIN HE SUBMITTED THAT HE AVAILED FOLLO WING LOANS BY WAY OF CASH. NAME DATE AMOUNT CASH/CHEQUE P.J. JOSHY 25/06/2009 2,50,000 CASH P.M.THOMAS 1/2/2010 3,00,000 CASH JOJO LUKA 1/2/2010 3,00,000 CASH BALAKRISHNA KAIMAL 24/06/2009 2,00,000 CASH SOLOMON E.M 23/06/2009 2,00,000 CASH P.M.THOMAS 6/6/2009 2,00,000 CASH A.J.VARGHESE 2/6/2010 3,00,000 CASH 4. THE ASSESSING OFFICER ISSUED SUMMONS TO ALL THE ABOVE SAID CREDITORS AND AFTER CARRYING OUT EXAMINATION, HE ACCEPTED THAT TH E FOLLOWING LOANS ARE GENUINE. 1. JOJO LUKA RS. 3,00,000 2. P.P. BALAKRISHNA KAIMAL RS. 2,00,000 3. P.M.THOMAS, POOKKUDIYIL RS . 2,00,000 4. A.J. VARGHESE RS. 1,00,000 TOTAL RS. 8,00,000 HE REJECTED THE LOANS CLAIMED TO HAVE BEEN RECEIVED FROM OTHER PERSONS. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED THE UNE XPLAINED INCOME OF THE ASSESSEE IN THE FOLLOWING MANNER: I.T.A. NO. 761/COCH/2013 3 UNEXEPLAINED INCOME AS PER PRE ASSESSMENT PERIOD RS. 36,84,850/- ADD: AMOUNT ALLOWED BY MISTAKE AS SOURCE BUT PERTAINING TO THE ASSESSMENT YEAR 2011-12 AS DISCUS SED IN PARA. 5 RS. 1,00,000/- RS.37,84,850/ - LESS: LOAN TAKEN TREATED AS GENUINE AS PE R PARA 4 RS. 8,00,000/- BALANCE UNEXPLAINED INCOME RS. 29,84,850/- THE AO ASSESSED THE ABOVE SAID SUM OF RS.29,84,850/ - AS THE INCOME OF THE ASSESSEE. 5. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE LD. CIT(A), BUT THE APPEAL WAS DISMISSED BY LD. CIT(A). AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION UNDER SECTION 68 OF THE ACT WITHO UT REALIZING THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS AND HENCE, T HE ADDITION COULD NOT HAVE BEEN MADE U/S. 68 OF THE ACT. HE FURTHER SUBMITTED THAT THOUGH THE ASSESSING OFFICER HAS EXAMINED THE LOAN CREDITORS BY ISSUING SUMMONS TO THEM, YET HE DID NOT OFFER AN OPPORTUNITY TO THE ASSESSEE TO CONTROV ERT THE SUBMISSIONS MADE BY THE CREDITORS. HE FURTHER SUBMITTED THAT THE ASSES SEE HAD SUFFICIENT SOURCES FOR MOST OF THE INVESTMENTS TABULATED BY THE ASSESSING OFFICER. TO SUPPORT THE SOURCES, THE ASSESSEE ALSO FILED A CASH FLOW STATEM ENT AND ALSO A CERTIFICATE OBTAINED FROM FEDERAL BANK. HOWEVER, THE ASSESSING OFFICER HAS FINALIZED THE ASSESSMENT WITHOUT CONSIDERING THOSE STATEMENTS. H E FURTHER SUBMITTED THAT THE SPOUSE OF THE ASSESSEE IS A GOVERNMENT EMPLOYEE HAV ING SUFFICIENT INCOME AND THE ASSESSEE HAS USED HER FUNDS ALSO FOR MAKING THE IMPUGNED INVESTMENTS. HOWEVER, THIS FACT HAS BEEN IGNORED BY THE AO. ACC ORDINGLY, HE SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER SUFFERS FROM MANY INFIRMITIES AND HENCE, IT REQUIRES FRESH EXAMINATION. I.T.A. NO. 761/COCH/2013 4 7. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS PROVIDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE, WH ICH IS EVIDENT FROM THE NUMBER OF HEARINGS NOTED IN THE ASSESSMENT ORDER. SHE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ASSESSED THE IMPUGNED AMO UNT OF RS.29,84,850/- AS UNEXPLAINED INCOME OF THE ASSESSEE WITHOUT MENTIONI NG ANY PARTICULAR SECTION AND HENCE IT IS WRONG ON THE PART OF THE LD. AR TO PRESUME THAT THE ADDITION HAS BEEN MADE U/S. 68 OF THE ACT. SHE FURTHER SUBMITTE D THAT THE UNEXPLAINED INCOME, PER SE, CAN BE ASSESSED AS THE INCOME OF TH E ASSESSEE UNDER GENERAL PRINCIPLES AND HENCE INVOKING OF WRONG SECTION, IF ANY, WILL NOT VITIATE THE ASSESSMENT. IN THIS REGARD, THE LD. DR PLACED RELI ANCE ON THE FIVE-MEMBER SPECIAL BENCH OF DELHI ITAT IN THE CASE OF MANOJ AG GARWAL VS. DCIT (117 TTJ 147) (DEL) (SB). SHE FURTHER SUBMITTED THAT THE A SSESSEE HAS FILED TO EXPLAIN THE SOURCES FOR MAKING INVESTMENTS. IN RESPECT OF LOANS CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE, THE ASSESSEE HAS FAILED T O PROVE THE CREDITWORTHINESS OF THE CREDITORS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE AO HAS NOTICED THAT THE ASSESSEE HAS MADE SEVERAL I NVESTMENTS IN BANK DEPOSITS, BONDS AND DEBENTURES. IN THE TABULATED S TATEMENT PREPARED BY THE AO, WE NOTICE THAT THE ASSESSING OFFICER HAS GIVEN CREDIT TO THE EXPLAINED SOURCES. HOWEVER, ACCORDING TO THE ASSESSEE, HE IS IN A POSITION TO EXPLAIN SOURCES FOR VARIOUS OTHER ITEMS ALSO. ACCORDING TO THE ASSESSEE, HE HAS FILED A CERTIFICATE OBTAINED FROM M/S FEDERAL BANK AND ALSO A CASH FLOW STATEMENT IN ORDER TO EXPLAIN THE SOURCES. ACCORDING TO THE ASS ESSEE, THE AO HAS SIMPLY NOT CONSIDERED THEM AND HENCE THE ASSESSEE IS PUT TO GR AVE CONSEQUENCES. ACCORDING TO THE ASSESSEE, HIS WIFE IS EMPLOYED AS STAFF NURSE AND SHE HAS GOT ENOUGH INCOME, WHICH HAS BEEN USED BY HIM FOR MAKIN G THE IMPUGNED INVESTMENT. FURTHER ACCORDING TO THE ASSESSEE, THE SWORN STATEMENTS TAKEN BY THE AO FROM THE LOAN CREDITORS WERE NOT PUT TO HIM FOR HIS COMMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HENCE THERE IS VIOLATION OF NATURAL JUSTICE. I.T.A. NO. 761/COCH/2013 5 FURTHER ACCORDING TO THE ASSESSEE, THERE ARE MISTAK ES IN THE QUANTUM OF INVESTMENTS DETERMINED BY THE AO. ACCORDINGLY, IT WAS SUBMITTED THAT THE MATTER REQUIRES FRESH EXAMINATION AT THE END OF THE AO. 9. THERE SHOULD NOT BE ANY DISPUTE THAT THE PRI MARY BURDEN OF PROOF TO EXPLAIN THE CASH CREDIT OR THE SOURCES FOR INVESTME NTS IS PLACED UPON THE ASSESSEE. IN RESPECT OF LOAN TAKEN BY THE ASSESSEE , IT IS HIS PRIMARY DUTY TO PROVE THREE MAIN INGREDIENTS, VIZ., THE IDENTITY OF THE CREDITOR, CREDIT WORTHINESS OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACT IONS. IF THE ASSESSEE FAILS TO PROVE ANY ONE OF THE THREE INGREDIENTS STATED ABOVE , THEN THE ASSESSING OFFICER COULD MAKE ADDITION U/S 68 OF THE ACT. SIMILARLY I N RESPECT OF INVESTMENTS MADE, IT IS THE RESPONSIBILITY OF THE ASSESSEE TO EXPLAIN THE SOURCES TO THE SATISFACTION OF THE ASSESSING OFFICER. 10. LD A.R CONTENDED BEFORE US THAT THE ADDITIO N U/S 68 COULD NOT BE MADE, SINCE THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUN T. IN THE INSTANT CASE, IN OUR VIEW, THE QUESTION WHETHER THE ASSESSEE MAINTAINS B OOKS OF ACCOUNT OR NOT DOES NOT ARISE. IN THE INSTANT CASE, THE ASSESSEE HAS M ADE INVESTMENTS AND THE DETAILS OF INVESTMENTS ARE REFLECTED IN HIS BANK AC COUNTS. HENCE, IT IS THE DUTY OF THE ASSESSEE TO EXPLAIN THE SOURCES FOR THE DEPOSIT S MADE INTO HIS BANK ACCOUNT AND ALSO THE SOURCES FOR THE INVESTMENTS MADE BY HI M. AS HELD BY THE FIVE MEMBERS SPECIAL BENCH OF DELHI TRIBUNAL IN THE CASE OF VINOD AGARWAL (SUPRA), THE UNEXPLAINED INVESTMENTS CAN BE ASSESSED AS THE INCOME OF THE ASSESSEE EVEN UNDER GENERAL PRINCIPLES WHEN THE ASSESSEE FAI LS TO EXPLAIN THE SOURCES. HENCE, WE ARE UNABLE TO AGREE WITH THE CONTENTIONS OF THE ASSESSEE. 11. BEFORE US, THE LD A.R SUBMITTED THAT THE ASS ESSEE WAS NOT GIVEN OPPORTUNITY TO CONTROVERT THE SUBMISSIONS MADE BY T HE CREDITORS. IN OUR VIEW, IN THE INTEREST OF NATURAL JUSTICE, THE ASSESSEE SHOUL D HAVE BEEN GIVEN AN OPPORTUNITY TO CONTROVERT THE SUBMISSIONS MADE BY T HE CREDITORS. FURTHER HE I.T.A. NO. 761/COCH/2013 6 SUBMITTED THAT THE ASSESSEE HAS FURNISHED CERTIFICA TE OBTAINED FROM FEDERAL BANK AND ALSO CASH FLOW STATEMENT. ACCORDING TO LD A.R, THESE TWO IMPORTANT DOCUMENTS WERE NOT CONSIDERED BY THE ASSESSING OFFI CER. IN OUR VIEW, THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE ABOVE SAID DOCUMENTS ALSO BEFORE FINALIZING THE ASSESSMENTS. IN VIEW OF THE ABOVE, IN OUR VIEW, THE ISSUE CONTESTED BEFORE US REQUIRES FRESH EXAMINATION AT T HE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TION TO EXAMINE THE ISSUE AFRESH AFTER AFFORDING NECESSARY OPPORTUNITY TO THE ASSESS EE TO CONTROVERT THE SUBMISSIONS MADE BY THE CREDITORS AND ALSO BY DULY CONSIDERING VARIOUS DOCUMENTS THAT WERE FILED / THAT MAY BE FILED BY TH E ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 2 8-03-2014. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 28TH MARCH, 2014 GJ COPY TO: 1. SHRI P.O. MATHEW, 402, PARASSERIL HOUSE, THELLAK AM, ETTUMANOOR, KOTTAYAM. 2. THE INCOME-TAX OFFICER, WARD-3, KOTTAYAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN