Babu E Vettor, Cochin V. ACIT, Ernakulam

ITA 808/COCH/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8236 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-02-2010
• Assessment Year: 1990-1991
• Appeal Filed On: 11-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T J VINCENTJR
• Assessee Lawyers: P D VIJAYARAJAN
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO. 808/COCH/2008 ASSESSMENT YEAR: 1990 - 91 BABU E. VETTOR, C/O.M/S.BABU EAPEN & CO., STOCK & SHARE BROKERS, KOCHI-16. PA NO.PT-92271 VS. THE ASSIST. C OMMISSIONER OF INCOME-TAX, CIRCLE-3, DIV.III, ERNAKULAM. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI P.D. VIJAYARAJAN RESPONDENT BY SHRI T.J.VINCENT,JR.DR O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(APPEALS)-III, KOCHI, DATED 28- 03-2008. THE ASSESSMENT YEAR INVOLVED IS 1990-91. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SHARE BROKER. THE ASSESSEE FILED HIS RETURN OF IN COME VOLUNTARILY ON 31-10-1990. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MADE ADDITION OF RS.2,82,674/- AS UNEXPLAINED CASH CREDIT AND A FUR THER SUM OF RS.1,80,725/- ON ACCOUNT OF SALE OF SHARES OF AP OLLO TYRES LTD., SINCE THE ASSESSING OFFICER WAS OF THE VIEW T HAT THE ITA NO. 808/COCH/2008 2 TRANSACTIONS WERE NOT REFLECTED IN THE BOOKS, WHICH RESULTED IN THE DISALLOWANCE OF LOSS INCURRED BY THE ASSESSE E ON THE ALLEGED SELF TRADING SINCE THE TRANSACTION OF 28 TH SETTLEMENT WITH THE STOCK EXCHANGE WERE NOT REFLECTED IN THE B OOKS OF ACCOUNTS. ON APPEAL TO THE CIT(APPEALS), THE FIRS T APPELLATE AUTHORITY CONFIRMED THE ADDITION OF RS.70,729/- BE ING 28 TH SETTLEMENT, RS.67,586/- AND RS.1,78,294/- RESPECTIV ELY SHOWIN IN THE NAME OF SHRI JOSE CHERIAN AND SHRI SO NY JOSEPH, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEF ORE US. 3. THE FIRST ADDITION RELATES TO THE 28 TH SETTLEMENT, I.E. RS.70,729/-. THE ASSESSING OFFICER DISALLOWED THE TRADING LOSS CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS.70 ,729/-ON THE GROUND THAT THE TRANSACTIONS OF 28 TH SETTLEMENT WAS NOT REFLECTED IN THE ASSESSEES BOOKS. THE CIT(APPEAL S) AFTER HIS EARNEST EFFORTS AND OBSERVING THAT THE APPEAL W AS POSTED 14/15 TIMES AND AFTER OBTAINING A REMAND REPORT FRO M THE ASSESSING OFFICER, WHICH WAS CONFRONTED TO THE ASSE SSEE, FOR WHICH THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AN ARGUMENT NOTE, WAS OF THE VIEW THAT THIS LOSS OF RS .70,729/- SHOULD BE CONFIRMED IN VIEW OF THE REMAND REPORT OF THE ASSESSING OFFICER. THE REMAND REPORT OF THE ASSESS ING OFFICER CLEARLY CONFIRMED THAT NO VERIFICATION WAS POSSIBLE DESPITE HIS BEST EFFORTS. UNDER THE ABOVE CIRCUMS TANCES, ITA NO. 808/COCH/2008 3 CONSIDERING THE VIEW THAT THE APPEAL WAS VERY OLD, IT IS ALSO DENIED AND DIS-PROVED BY THE ASSESSEE THAT HIS OWN FURNISHED ACCOUNT CLEARLY SHOWS THAT THE ASSESSEE H AS DONE AT-LEAST CERTAIN PART TRANSACTIONS DURING THE 28 TH SETTLEMENT, CIT(APPEALS) CONFIRMED THE ADDITION MADE BY THE ASS ESSING OFFICER ON THIS COUNT. HOWEVER, ASSESSEE PRODUCED BEFORE US A CERTIFICATE FROM COCHIN STOCK EXCHANGE DATED 1 5-06- 1993 WHICH CERTIFIES THAT THE ASSESSEE WHO IS A MEM BER OF THE STOCK EXCHANGE WITH THE CODE NUMBER ALLOTTED TO HIM UNDER THE NAME AND STYLE BABU EAPEN & CO. WITH CODE NO.09/0120-0 WAS DEBARRED FROM TRADING DUE TO PAY I N ARREARS IN SETTLEMENT NOS. 15 AND 28 OF 1989-90. TAKING SHELTER UNDER THE ABOVE CERTIFICATE, THE LD. COUNSE L FOR THE ASSESSEE WOULD SUBMIT THAT THE ASSESSEE WAS DEBARRE D FROM TRADING. THEREFORE, ADDITION WITH REGARD TO THE 28 TH SETTLEMENT IS NOT JUSTIFIED IS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. WE ARE UNABLE TO ACCEPT THE CONT ENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 3.1 ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE O RDERS OF THE LOWER AUTHORITIES. 3.2 THE ADDITION OF RS.70,729/- HAS BEEN MADE ON TH E GROUND THAT THE ASSESSEE HAS NOT ACCOUNTED CERTAIN TRANSACT- ITA NO. 808/COCH/2008 4 TIONS DONE BY HIM DURING 28 TH SETTLEMENT OF THE COCHIN STOCK EXCHANGE. THE ASSESSEES CLAIM WAS THAT ON ACCOUNT OF SOME DEFAULT, HE WAS DEBARRED FROM TRADING DURIN G THIS 28 TH SETTLEMENT. BUT THE CERTIFICATE OBTAINED FROM TH E COCHIN STOCK EXCHANGE NECESSARILY CONCLUDES THAT TH E ASSESSEE HAD IN FACT DONE TRADING DURING THIS 28 TH SETTLEMENT. THE PHOTO COPY OF THE TRANSACTION REG ARDING 28 TH SETTLEMENT FURNISHED CLEARLY SHOWS THAT HE HAS DON E AT- LEAST CERTAIN PART TRANSACTIONS. THAT BEING THE C ASE, THE ORDER OF THE AUTHORITIES BELOW IS PERFECTLY JUSTIFI ED AND WE SEE NO JUSTIFICATION IN INTERFERING WITH THE ADDITI ON UNDER THE HEAD 28 TH SETTLEMENT TO THE TUNE OF RS.70,729/-. ACCORDINGLY THE PRAYER OF THE ASSESSEE IS NEGATIVED AND THE ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 4. COMING TO THE OTHER ADDITION UNDER THE HEAD JOSE CHERIAN OF RS.67,586/- AS WELL AS SONY JOSEPH TO T HE TUNE OF RS.1,78,294/-, THE LD. COUNSEL FOR THE ASSESSEE WOULD SUBMIT THAT THE CIT(APPEALS) HAS NOT GIVEN CLEAR D ECISIONS ON THESE ADDITIONS. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PRECEDENTS . IN ITA NO. 808/COCH/2008 5 THE REMAND REPORT, THE LD. CIT(APPEALS) DIRECTED TH E ASSESSING OFFICER TO VERIFY THE CORRECTNESS OF THE CREDITS AND ON THE BASIS OF THE DIRECTION, THE ASSESSING OFFICE R ISSUED LETTERS TO THE PARTIES. HOWEVER, THESE LETTERS WE RE RETURNED BY THE POSTAL AUTHORITIES. THE EXPLANATION OF THE ASSESSEE WOULD BE THAT MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE PARTIES, IT IS NOT TO BE CONSIDERED THA T THE CREDIT BALANCES WERE NOT GENUINE. THE EXPLANATION OF THE ASSESSEE FURTHER WOULD BE THAT IT IS NOT POSSIBLE FOR THE AS SESSEE TO KEEP TRACK OF EVERY PERSON WHO HAD DEALINGS WITH TH E ASSESSEE. EVEN IF IT IS ACCEPTED THAT THE TRANSAC TIONS IN THESE TWO ACCOUNTS ACTUALLY RELATE TO THE ASSESSEE, NO ADDITION CAN BE MADE IN HIS HANDS AS THE ULTIMATE R ESULT OF THE TRANSACTIONS IN BOTH ACCOUNTS IS ONLY A LOSS. TO SUPPORT HIS CONTENTION, THE LD. COUNSEL PRODUCED A COPY OF THE LEDGER ACCOUNT FOR THE ACCOUNTING YEAR 1989-90 WHERE THE A CCOUNTS OF SONY JOSEPH RESULTED IN A LOSS OF RS.99,511/- AN D IN THE CASE OF JOSE CHERIAN RESULTED IN A LOSS OF RS.3,873 /-. CONSIDERING THE TIME GAP WHICH WAS MORE THAN 20 YEA RS AT PRESENT AND AS OBSERVED BY THE LD. CIT(APPEALS) THA T IT WAS 15/16 YEARS OF THE CASE AND CONSIDERING THE QUANTUM OF REVENUE INVOLVED AND THE FACT THAT AS PER THE ASSES SEES PAPER BOOK PAGE NO.2 WHICH SHOWS THE ACCOUNTS MAINT AINED ITA NO. 808/COCH/2008 6 WITH RESPECT SONY JOSEPH AND JOSE CHERIAN ULTIMATE LY RESULTED IN LOSS, THERE IS EVERY EVENTUALITY THAT I N THE KIND OF THOSE TRANSACTIONS PARTICULARLY AS ADOPTED BY THE A SSESSEE, THE CREDITORS WILL GIVE INSTRUCTIONS AND THE PROFIT ALONE THEY ARE INTERESTED AND WHEN THE LOSS OCCURRED ON TRADIN G, IT IS VERY DIFFICULT TO PIN-POINT THOSE PERSONS SO AS TO ESTABLISH THE CREDIT ENTRIES IN THE BOOKS KEPT BY THE ASSESSE E WITH RESPECT TO THOSE PERSONS. THE FACT THAT IT RESUL TED IN A LOSS IN TRADING AND AFTER THAT THERE WAS NO TRANSACTION, CLEARLY SHOWS THAT THE ASSESSEE, TO THE BEST OF HIS ABILITY , DISCHARGED THE BURDEN AND GIVEN ADDRESS OF THE TWO CREDITORS ARE AS PER THE BOOK ENTRY IN THE YEAR 198 9, IT IS OBVIOUS THAT THOSE CREDITORS HAD LEFT THE PLACE AND THIS WAS ALSO BROUGHT TO THE NOTICE OF THE DEPARTMENT, WE AR E OF THE CONSIDERED OPINION THAT THERE COULD NOT BE ANY DOUB T UNDER THE GIVEN CIRCUMSTANCES REGARDING THE GENUINE ONLY ON THE GROUND THAT PERSONS COULD NOT BE AVAILABLE AT THE GIVEN ADDRESS. HENCE, UNDER THE ABOVE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CREDITS CANNOT BE TREATED AS UNEX PLAINED CASH ONLY ON THE GROUND THAT THE PARTIES WERE NOT AVAILABLE AT THE GIVEN ADDRESS, WHICH ADDRESS THE ASSESSEE IS HAVING AS PER THE BOOK ENTRY WHICH RELATES TO 1989-90, PAR TICULARLY THOSE PERSONS STOPPED THE DEALINGS WITH THE ASSESSE E FOR ITA NO. 808/COCH/2008 7 MORE THAN 20 YEARS AND THE DIFFICULTY OF THE ASSESS EE TO PRODUCE THEM BEFORE THE ASSESSING OFFICER IS ALSO W ORTHY CONTENTION AS SUBMITTED BY THE LD. COUNSEL AND ACC EPTING THE EXPLANATION AND CONSIDERING THE QUANTUM INVOLVE D, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE ADDITION. THUS, THIS ISSUE IS DECIDED IN FAVOUR O F THEE ASSESSEE. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 11 TH FEBRUARY,2010. PM. COPY FORWARDED TO: 1. BABU E. VETTOR, C/O.M/S.BABU EAPEN & CO., STOCK & SHARE BROKERS, KOCHI-16. 2. THE ACIT., CIRCLE-3, DIV.III, ERNAKULAM. 3. CIT(A)-III, KOCHI 4. CIT, KOCHI 5. D.R. BY ORDER SD/- ASSISTANT REGISTRAR