ACIT, Calicut V. Sri T.P. Abdulla Partner Yenkey, Calicut

ITA 928/COCH/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4328 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2010
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 03-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2008
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: A S NARAYANAMOORTHY
• Keywords: Source of fund; Onus to prove
• Section: 271(1)(c); 143(3); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL COCHIN BENCH, COC HIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY ARORA , AM I.T.A. NO. 928/COCH./ 2008 ASSESSMENT YEAR : 2005-06 ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, CALICUT. VS. SHRI T.P. ABDULLA, PARTNER: YENKEY ROLLER FLOUR MILLS, CHEROOTY ROAD, CALICUT. [PAN: ADTPT 7429C] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SHRI T.J.VINCENT, DR ASSESSEE BY SHRI A.S.NARAYANAMOORTHY, AR O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCHI (CIT(A) FOR SHORT) DATED 14.8.2008, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2005-06. 2. THE ONLY ISSUE ARISING FOR ADJUDICATION PER THE PRESENT APPEAL IS THE MAINTAINABILITY OF THE ADDITION EFFECTED U/S. 68 OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) IN THE SUM OF RS. 22,20,549/- RECEIVED BY THE ASSESSEE FROM FOUR PERSONS DURING THE RELEVANT PREVIOUS YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER (A.O.), WHILE EXAMINING THE ASSESSEES RETURN IN THE COURSE OF PR OCEEDINGS U/S. 143(3) OF THE ACT, FOUND HIM TO HAVE RECEIVED CASH IN THE FOLLOWING AM OUNTS FROM FOUR PERSONS, AS UNDER, AND WHICH STOOD REFLECTED IN THE CASH FLOW S TATEMENT FOR THE RELEVANT PREVIOUS YEAR: (AMOUNT IN RS.) T.P.UMMER 5,31,819/- T.P.MOHAMMED BASHEER 7,88,73 0/- ITA. NO.928COCH./2008 2 P.MOHAMMED ZAHIR 4,0 0,000/- M.M.UMMER KOYA 5,00 ,000/- THE MODE OF RECEIPT IN ALL THESE CASES, SAVE RS. 2, 88,730/- FROM SHRI T.P.MOHAMMED BASHEER, BEING IN CASH, THE ASSESSEE WAS REQUIRED T O FURNISH THE NECESSARY DETAILS, EVIDENCING THE NATURE AND SOURCE OF THE SAID CREDIT S. THE ASSESSEE, VIDE HIS LETTER DATED 12.11.2007, FURNISHED THE CONFIRMATION LETTER S FROM THE CREDITORS. THE SAME BORE THEIR ADDRESSES, RELATIONSHIP WITH THE ASSESSEE, AN D THE SOURCE OF FUNDS (I.E., IN THEIR HANDS), WHICH IN EACH CASE WERE CONFIRMED TO HAVE B EEN OFFERED AS A PERSONAL LOAN AND/OR ADVANCE TO THE ASSESSEE, EACH OF THE LOANER- CREDITORS BEING A PERSON RELATED TO THE ASSESSEE. WITH REGARD TO THE FUNDS TRANSFERRED , THE AO, IN THE VIEW OF THE ASSESSEE HAVING NOT ADDUCED ANY FURTHER EVIDENCE TO PROVE TH E DATE (TIME), GENUINENESS AND CAPACITY OF THE CREDITORS, INVOKED THE PROVISIONS O F SECTION 68 OF THE ACT, RELYING ON THE DECISION IN THE CASE OF CIT VS. P. MOHANAKALA , 291 ITR 278 (SC), EXTRACTING THE PORTION THEREOF IN THE ASSESSMENT ORDER. IN APPEAL , THE LD. CIT(A), IN VIEW OF THE SAID CONFIRMATION LETTERS, OPINED THAT THE ASSESSEE HAD PROVED THE IDENTITY OF THE CREDITORS, THE GENUINENESS OF THE TRANSACTIONS AND THE CREDITW ORTHINESS OF THE CREDITORS, I.E., AS REQUIRED BY LAW, AND THAT THE AO HAD NOT BROUGHT ON RECORD ANY MATERIAL TO DISBELIEVE THE GENUINENESS OF THE SAME. HE, ACCORDINGLY, DIRE CTED THE DELETION THE IMPUGNED ADDITION. AGGRIEVED, THE REVENUE IS IN APPEAL. 4. BEFORE US, LIKE SUBMISSIONS STOOD RAISED BY EITHER SIDE, EACH RELYING ON THE ORDER OF THE AUTHORITY BELOW AS FAVOURABLE TO IT. THE LD. AR, IN ADDITION, SUBMITTED, BY WAY OF A PAPER-BOOK, THE CONFIRMATION LETTERS DATED 10. 11.2007 FROM EACH OF THE FOUR CREDITORS; FURTHER, RELYING ON THE DECISION IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD ., 159 ITR 78 (SC). THE LD. DR, IN REJOINDER, SUBMI TTED THAT THE CITED DECISION CANNOT BE SAID TO BE APPLICABLE; NONE OF THE CREDIT ORS BEING AN ASSESSEE WITH THE DEPARTMENT, AND NEITHER DOES THE ONUS STANDS DISCHA RGED IN THE PRESENT CASE. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE M ATERIAL ON RECORD, AS WELL AS THE CASE LAW CITED. ITA. NO.928COCH./2008 3 5.1 THE LAW IN THE MATTER IS WELL-SETTLED, AND THE ONUS IN LAW TO PROVE A CREDIT, ON THE PARAMETERS OF IDENTITY, CAPACITY, AND THE GENUI NENESS OF THE TRANSACTION, EACH OF WHICH REPRESENTS A SEPARATE AND DISTINCT REQUIREMEN T, IS SQUARELY ON THE ASSESSEE. ALSO, PRODUCTION OF A CONFIRMATION (LETTER) FROM TH E CREDITOR IS, BY ITSELF, NOT SUFFICIENT TO DISCHARGE THE SAME. 5.2 THE ASSESSEES CASE, AS WE DISCERN FROM THE IMPUGNED ORDER AS WELL AS THE PLEADINGS BEFORE US, IS THAT IT HAVING FURNISHED TH E PRIMARY DETAILS IN THE FORM OF CONFIRMATION CERTIFICATES, DULY SIGNED BY THE CREDI TORS, IT WAS FOR THE AO TO PROCEED FURTHER IN THE MATTER, REQUIRING OF THE ASSESSEE AN Y FURTHER SPECIFIC INFORMATION THAT HE MAY UNDER THE CIRCUMSTANCES WISH TO EXAMINE AND/OR VERIFY, TO ENABLE FORMATION OF AN INFORMED OPINION WITH REGARD TO THE GENUINENESS OF THE SAID CREDITS, INCLUDING THE IDENTITY AND THE CAPACITY OF THE CREDITORS. IN THE PRESENT CASE, THE AO HAS PROCEEDED TO APPLY THE SAME WITHOUT INFORMING HIMSELF OF THE FUL L FACTS OF EACH OF THE FOUR CREDITORS, WHICH ONLY WOULD ENABLE A PROPER APPRECI ATION OF THE MATERIAL, AND THE FORMATION OF AN OBJECTIVE DECISION IN THE MATTER, W HICH IS A SINE QUA NON FOR THE APPLICATION OF THE PROVISION, EVEN AS HELD BY THE A PEX COURT IN THE CASE OF P. MOHANAKALA (SUPRA). THE DISCHARGE OF THE OBLIGATION CAST ON T HE ASSESSEE, SUBSEQUENT TO THE FURNISHING OF THE PRIMARY MATERIAL, CAN ONLY BE CONSIDERED IN RELATION TO THE INFORMATION REQUISITIONED THERE-FROM. IN THE INSTAN T CASE, NO SUCH INFORMATION STANDS SOUGHT BY THE ASSESSING AUTHORITY TOWARD SUBSTANTIA TION OF THE EXPLANATION FURNISHED, FOR IT TO HAVE, OR TO, IN ITS ABSENCE, CONSIDER THE ASSESSEE AS HAVING NOT DISCHARGED THE BURDEN OF PROOF CAST ON IT UNDER THE LAW. IN OTHER WORDS, THE APPLICATION OF LAW CAN ONLY BE IN RELATION TO THE FACTS OF THE CASE, AND T HERE CAN BE NO FIXED OR STANDARD PRESCRIPTION WITH REGARD TO THE EVIDENCE OR MATERIA LS THAT MAY BE REQUIRED TO PROVE A FACT IN A PARTICULAR CASE. 5.3 THE REVENUES CASE, ON THE OTHER HAND, I S THAT THE FORMATION OF OPINION BY THE AO COULD NOT BE IN VACUUM BUT ONLY VIS--VIS AND ON THE BASIS OF THE MATERIALS BEFORE ITA. NO.928COCH./2008 4 HIM, THE BURDEN TO FURNISH WHICH IN LAW IS SQUARELY ON THE ASSESSEE. IT IS NOT, IN VIEW OF THE SAME, FOR THE AO TO SPECIFY THE INFORMATION OR EVIDENCES THAT MAY BE, IN THE FACTS OF THE CASE, LED BY THE ASSESSEE IN SATISFACT ION OF THE BURDEN OF PROOF CAST BY LAW ON IT. APART FROM THE SAID LEGAL INFIRMITY, THE ASS ESSEES STAND IS ALSO DIVORCED OF PRACTICAL CONSIDERATIONS. THE MATTER BEING FACTUAL, IT IS NOT FEASIBLE FOR THE AO TO SPECIFY THE SAID MATERIALS, THE SAME BEING ONLY IN THE KNOW OF THE ASSESSEE. IN OTHER WORDS, THE FACTUAL AND LEGAL CONSIDERATIONS DOVETAI L EACH OTHER IN THE APPLICATION OF S. 68 OF THE ACT, OR THAT THE LAW HAS A SOUND BASIS IN FACTS. AS SUCH, NO CHARGE OF NON- APPLICATION OF MIND WOULD HOLD, WHERE, AS IN THE PR ESENT CASE, THE MATERIALS LED BY THE ASSESSEE DO NOT LEAD TO A POSITIVE SATISFACTION ON THE NATURE AND SOURCE OF THE CREDIT ON THE PARAMETERS OF IDENTITY, CAPACITY AND GENUINENES S OF THE CREDIT. FURTHER, CONCOMITANTLY, IT CANNOT BE SAID THAT THE NON-SATIS FACTION OF THE AO IN THE PRESENT CASE IS NOT REASONABLE AND, THUS, LEGALLY INFIRM, BEING BASED ONLY ON THE MATERIALS FURNISHED BY THE ASSESSEE IN SUBSTANTIATION OF ITS EXPLANATIO N. 5.4 HAVING EXAMINED AND DELINEATED THE RESPECTIVE C ASES OF THE OPPOSING PARTIES, AS WELL AS THE BASIS ON THE IMPUGNED DECISION BY THE F IRST APPELLATE AUTHORITY, WE PROCEED TO RENDER OUR FINDINGS. THE LAW IS CLEAR, AND REQUI RES THE ASSESSEE TO SPECIFICALLY EXPLAIN THE CREDIT(S) TO THE ASSESSING OFFICER/AUTH ORITY, ACTING REASONABLY AND OBJECTIVELY, I.E., AS WOULD INSPIRE THE CONFIDENCE OF A REASONABLE PERSON, I.E., AN IMPARTIAL MAN OF NORMAL PRUDENCE, DULY INFORMED. TH E ASSESSEE HAS NOT BEFORE EITHER AUTHORITY SUBMITTED ANY MATERIAL IN ADDITION TO THE CONFIRMATIONS FROM THE CREDITORS, OR, IN FACT, EVEN OFFERED AT ANY STAGE, I.E., AS WH ERE IT MAY NOT HAVE BEEN ABLE, FOR WANT OF TIME, OR OTHERWISE BEING PREVENTED BY SUFFICIENT CAUSE, TO DO SO, SO THAT ITS CASE NECESSARILY RESTS ON THE SAID CONFIRMATIONS. 5.41 THERE IS NOTHING BROUGHT ON RECORD BY THE ASSESSEE TO EXHIBIT THE GENUINENESS OF THE TRANSACTIONS. THE ENTIRE FUNDS STAND RECEIV ED IN CASH, SO THAT THE TRANSACTION(S) IS COMPLETELY UN-EVIDENCED, EVEN AS THE FUNDS, AS P ER LAW, HAVE NECESSARILY TO BE BROUGHT INTO INDIA THROUGH THE BANKING CHANNEL. THI S IS AS TWO OF THE CREDITORS CLAIM ITA. NO.928COCH./2008 5 TO BE RESIDING OUTSIDE INDIA, REPATRIATING THEIR EA RNINGS TO THE ASSESSEE BY WAY OF LOANS. IT GOES WITHOUT SAYING THAT THE CLAIM OF THE NON-RE SIDENT STATUS IS AGAIN WITHOUT ANY MATERIAL IN SUPPORT. THE CREDIT OF R. 2.89 LAKHS FR OM SHRI T.P. MOHAMMED BASHEER, CLAIMED TO BE A TRANSFER TO THE ASSESSEES BANK ACC OUNT, IS ALSO SANS ANY DETAILS. ALSO, IN THAT CASE, THE SAME COULD NOT FORM PART OF THE A SSESSEES CASH FLOW STATEMENT, WHICH, BY DEFINITION, WOULD ONLY COMPRISE THE RECEI PTS AND PAYMENTS IN CASH. BEING IN CASH, THE MODE AND MANNER OF THE TRANSMISSION OF FU NDS, INCLUDING THE TIME ASPECT, ASSUMES RELEVANCE, WHILE THE SAME REMAINS TOTALLY U NSUBSTANTIATED. ALSO, IN EACH CASE, THE TRANSACTION(S) IS WITHOUT ANY CONSIDERATI ON(S), EVEN IN TERMS OF SECURITY, EVEN AS THE CREDITORS HAVE PARTED WITH THEIR HARD EARNED MONIES. ALSO, THERE IS NO MENTION OF THE PERIOD FOR WHICH THE LOAN/ADVANCE STANDS G IVEN, SO THAT IT IS APPARENTLY FOR AN INDEFINITE PERIOD. FURTHER, NONE OF THE CREDITORS I S AN ASSESSEE WITH THE DEPARTMENT. EACH OF THE CREDITS IS EVEN OTHERWISE HIT BY S. 269 SS OF THE ACT, A FACT OF WHICH THE ASSESSEE, A WEALTHY BUSINESSMAN AND A REGULAR ASSES SEE, WITH ACCESS TO LEGAL ADVICE, WOULD NOT BUT BE AWARE OF, AND WHICH STANDS BROUGHT ON THE STATUTE BOOK ONLY TO PRE- EMPT OR DETER SUCH-LIKE `EXPLANATIONS. 5.42 WITH RESPECT TO THE CREDITWORTHINESS, THER E IS, AGAIN, NO SHRED OF EVIDENCE IN SUPPORT OF THE CAPACITY OF THE CREDITORS. THE MERE CLAIM IN THEIR `CONFIRMATIONS OF IT REPRESENTING THE CURRENT OR PAST INCOME OF THE CRED ITORS IS BY ITSELF OF NO MOMENT, I.E., DE HORS ANY MATERIAL TO EXHIBIT OR SUPPORT THE SAME. IF SO , A CONFIRMATION, WHICH IS ONLY A PART OF THE ASSESSEES EXPLANATION, WOULD BY ITSELF PROVE THE CREDIT AND, THUS, BE SUFFICIENT TO DISCHARGE THE BURDEN OF PROOF UNDER L AW. SECONDLY, IN THAT CASE, THE ISSUE OF GENUINENESS OF THE TRANSACTIONS WILL NOT ARISE A T ALL. IN FACT, IN THE PRESENT CASE, THE CREDITORS ARE OSTENSIBLY RELATED PARTIES, SO THAT T HE CONFIRMATIONS, WHICH ARE EVEN OTHERWISE OF LIMITED EVIDENTIARY VALUE U/S. 68, BEI NG FROM INTERESTED PARTIES, CAN ONLY BE REGARDED WITH CIRCUMSPECTION, AS THEIR NATURE AS A SELF SERVING DOCUMENT CANNOT BE OUSTED (REFER: CIT VS. DURGA PRASAD MORE , 82 ITR 540(SC)). TOWARD THIS ASPECT OF THE TRANSACTIONS, WE FURTHER OBSERVE THAT WHILE THE CONFIRMATION OF SHRI T.P.UMMER SPEAKS OF SALE OF HIS JOINT PROPERTY (IMPLIEDLY, WI TH THE ASSESSEE) AS A SOURCE OF FUNDS, THERE IS NO MENTION OF ANY SALE OF PROPERTY IN THE ASSESSEES RETURN, OR OF, SIMILARLY, THE ITA. NO.928COCH./2008 6 ASSESSEES SHARE OF THE SALE BEING INCLUDED IN HIS CASH FLOW STATEMENT. ALSO, NEEDLESS TO ADD, THE CLAIM IS WITHOUT ANY SUPPORTING DOCUMEN T, AND EVEN DOES NOT CARRY THE BARE DETAILS, AS (SAY) THE DATE AND AMOUNT OF THE S ALE. APART FROM THIS, ALL THE OTHER CONFIRMATIONS, AS ALSO AFOREMENTIONED, ONLY CARRY A GENERALIZED STATEMENT AS TO THE INCOME OF THE CREDITOR BEING THE SOURCE OF THE TRAN SFERRED FUNDS, WITHOUT, OF COURSE, ANY MATERIAL TO BACK THE SAID ASSERTION. 5.43 THE ASSESSEE CONTENDS OF HAVING FURNISHED THE PRIMARY DETAILS THROUGH THE CONFIRMATIONS. WE ARE, AGAIN, CONSTRAINED TO DISAG REE. THE CLAIM IS UNFOUNDED, BOTH IN LAW AND IN FACT. THE LAW, DOES NOT SPEAK OF ANY PRIMARY DETAILS AS SUCH, BUT ONLY OF A REASONABLE EXPLANATION WHICH WOULD ELICIT TH E SATISFACTION OF AN OBJECTIVE, PRUDENT PERSON, ACTING IMPARTIALLY - NOTHING MORE A ND NOTHING LESS. IN FACT, A FACT, OR FACTS IN GENERAL, COULD ONLY BE ESTABLISHED ON THE BASIS OF SOME MATERIALS. IN FACT, THE CONFIRMATIONS NONE OF WHICH BEAR THE NAME OF PLAC E OF THE ISSUE BEING UNATTESTED, EVEN THE CLAIM OF THE IDENTITY, THOUGH NOT DOUBTED BY THE REVENUE, CANNOT BE SAID TO HAVE BEEN PROVED BEYOND DOUBT ON THEIR BASIS (ALONE ). IN VIEW OF THE SAID POSITION, WE FIND THE ASSESSEES CLAIM OF HAVING FURNISHED THE PRIMARY (READ: NECESSARY) DETAILS, SO THAT IT WAS FOR THE REVENUE TO HAVE REQUIRED ANY FU RTHER INFORMATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TOWARD WHICH WE OBSERVE NO OFFER AT ANY STAGE, IS ONLY AN ALIBI , IN THE FACTUAL POSITION OF THE CASE; THE AO SPECI FICALLY ADVERTING TO THE ASSESSEE HAVING NOT FURNISHED ANYTHING MORE THAN THE SAID CO NFIRMATIONS. IT IS ONLY WHERE THE MATERIALS IN SUPPORT OF THE CLAIMS MADE STAND FURNI SHED, THAT THE ASSESSEE CAN VALIDLY CLAIM A DISCHARGE OF THE PRIMARY ONUS ON IT, SO THA T THE AO, IN CASE HE WISHES TO VERIFY ANY OF THOSE, MAY REQUIRE FURTHER INFORMATION, WITH A VIEW TO SATISFYING HIMSELF IN THE MATTER. 5.5 THE REQUIREMENT FOR FURNISHING THE SAID MATE RIALS, WHICH OF COURSE CANNOT BE SPECIFIED BY LAW, AS THE SAME WOULD NECESSARILY DEP END ON THE FACTS AND CIRCUMSTANCES OF EACH CASE, IS INHERENT TO THE ASSE SSEES OBLIGATION TO RENDER A ITA. NO.928COCH./2008 7 SATISFACTORY EXPLANATION, EVEN AS CLARIFIED BY THE APEX COURT IN THE CASE OF P. MOHANAKALA (SUPRA), A RELEVANT EXCERPT FROM WHICH WOULD READ AS UNDER: THE EXPRESSION `THE ASSESSEE OFFERS NO EXPLANATION MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE. THE OPINI ON OF THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFAC TORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE AO IS REQUIRED TO BE FOR MED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. IN FACT, AS FAR BACK AS IN CIT V. MUSSADILAL RAM BHAROSE , 165 ITR 14 (SC), SPEAKING IN THE CONTEXT OF AN EXPLANATION UNDER SEC TION 271(1)(C) OF THE ACT, THE APEX COURT, ENDORSING THE FULL BENCH JUDGEMENT OF THE PA TNA HIGH COURT (IN CIT V. NATHULAL AGARWALA & SONS , 153 ITR 292 (PAT.) (FB)), CLARIFIED THAT THE EXPL ANATION CONTEMPLATED BY THE PROVISION ONLY IMPLIES AN ACCEP TABLE EXPLANATION, I.E., ACCEPTABLE TO THE FACT-FINDING BODY. AND THAT THE BURDEN ON TH E ASSESSEE WOULD NOT STAND DISCHARGED BY ANY FANTASTIC OR UNACCEPTABLE EXPLANA TION. IN OTHER WORDS, SUCH AN EXPLANATION IS OF NO MOMENT, AND NOT AN EXPLANATION IN THE EYES OF LAW. AS SUCH, THE APEX COURT, PER ITS RECENT DECISION IN THE CASE OF P. MOHANAKALA (SUPRA) ONLY REITERATED WHAT WAS ALWAYS THE ACCEPTED POSITION OF LAW IN THE MATTER, AS IT COULD BE NOBODYS CASE THAT PRIOR TO THE SAID DECISION, THERE WAS NO REQUIREMENT U/S. 68 TO RENDER A REASONABLE EXPLANATION, WHICH IS ALL THAT THE LAW P ROVIDES FOR. 5.6 FINALLY, WE MAY ALSO ADDRESS ONE ASPECT O F THE MATTER OF FACT THOUGH NOT DISPUTED BY THE ASSESSEE. THAT IS, WITH REGARD TO T HE MAINTENANCE OF THE BOOKS OF ACCOUNT, AS THE PROVISION OF S. 68 COULD ONLY APPLY IF IT WERE NOT SO. THE ARGUMENT, IF ADVANCED, WOULD BE INVALID IN THE PRESENT CASE, AS THE CASH STANDS INTRODUCED OR ACCOUNTED FOR ONLY TO EXPLAIN THE ADMITTED INVESTME NT(S). THERE IS NO FIXED FORMAT FOR MAINTAINING THE BOOKS OF ACCOUNT, SO THAT WHAT WOUL D BE RELEVANT IN THIS REGARD WHETHER THE SAME SATISFIES THE FUNCTIONAL TEST OF T HE BOOKS OF ACCOUNT, I.E., IS A RECORD OF THE FINANCIAL TRANSACTIONS, OR OTHER TRANSACTION S HAVING A FINANCIAL IMPLICATION, OF THE ASSESSEE, AND WHICH IS SO. FURTHERMORE, THE ARG UMENT IS EVEN OTHERWISE OF NO ITA. NO.928COCH./2008 8 MOMENT, AS, IF THE CASH CREDIT IS CONSIDERED AS NOT REFLECTED IN THE BOOKS OF ACCOUNT, SO WOULD ALSO BE THE INVESTMENT(S), ETC., IT SEEKS TO FINANCE AND THUS EXPLAIN. ALSO, IN THAT CASE, THE PROVISION OF S. 69/69B WOULD GET ATTRACTE D, TO THE SAME EFFECT. REFERENCE, IN THIS CONTEXT BE PROFITABLY DRAWN TO THE DECISIONS I N THE CASE OF CIT V. JAUHARIMAL GOEL , 201 CTR (ALL.) 54; P.V. AJAY NARAYAN V. ITO , 57 TTJ (BANG.) 159. 5.7 THE FIRST APPELLATE AUTHORITY, WHOSE POW ERS ARE CO-TERMINUS WITH THE AO, WE FIND HAS ONLY REPRODUCED THE CONTENTS OF THE FOUR C ONFIRMATION LETTERS (ALMOST VERBATIM) AS `HIS FINDINGS, AND ON THAT BASIS HELD THE ASSESSEE TO HAVE DISCHARGED THE ONUS ON IT U/S. 68. THAT IS, FIRSTLY, HE DID NOT CO NSIDER THE ISSUE AS FACTUALLY INDETERMINATE, FOR HIM TO REQUIRE FURTHER INFORMATI ON FROM THE ASSESSEE, I.E., IN CASE HE WAS OF THE VIEW THAT SUCH A COURSE IS PERMISSIBLE, OR OF IT NOT LEADING TO THE FORMATION OF A POSITIVE SATISFACTION, BUT, RATHER, TO THE CON TRARY, AS LEADING TO ONE, SO THAT THERE WAS UNDER THE CIRCUMSTANCES, SUBSTANTIVE COMPLIANCE WITH THE REQUIREMENTS OF THE LAW BY THE ASSSESSEE AND, ACCORDINGLY, ITS CASE MERITED BEING UPHELD AS SUCH. THE ASSESSEE BEING NOT IN APPEAL OR CRO SS OBJECTION BEFORE US, AND ONLY SUPPORTING THE FINDINGS OF THE LD. CIT(A), ITS CASE WOULD STAND NECESSARILY RESTRICTED TO HAVING FURNISHED THE PRIMARY DETAILS, AND CANNOT BE EXTENDED TO THE SHIFTING OF THE ONUS ON THE AO, I.E., IN CASE HE DID NOT CONSIDER T HE SAME AS ADEQUATE FOR THE PURPOSE OF ARRIVING AT A POSITIVE SATISFACTION IN THE MATTE R. THIS IS AS IN THAT CASE, IT WAS EQUALLY INCUMBENT ON THE LD. CIT(A), WHOSE ORDER IT SUPPORT S IN TOTO , TO HAVE DONE SO; HIS POWERS BEING CO-TERMINUS WITH THAT OF THE AO, SO TH AT HIS ORDER WOULD BE RENDERED LEGALLY AS INFIRM AS THE ASSESSMENT ORDER IT SETS A SIDE THEREBY. IN OTHER WORDS THE ASSESSEES ARGUMENT CANNOT BE EXTENDED TO THE SHIFT ING OF THE ONUS - IN THE FACTS AND CIRCUMSTANCES OF THE CASE - ON THE REVENUE, BEING I NCONSISTENT WITH ITS CASE. REFERENCE IN THIS CONTEXT BE MADE WITH PROFIT TO TH E DECISIONS IN THE CASE OF CIT V. KANPUR COAL SYNDICATE , 53 ITR 225 (SC); KAPURCHAND SRIMAL V. CIT , 131 ITR 451 (SC). WE MAY CLARIFY THAT THE FINDING OF FACT(S) BY THE LD. CIT(A) INDICATING AN IMPROPER APPRECIATION OF THE MATERIALS BEFORE HIM B Y THE AO IS NOT ACCOMPANIED BY ANY REASON(S) FOR THE SAME. FURTHER, HIS ORDER ALSO DOES NOT CONTAIN THE BASIS OF HIS ITA. NO.928COCH./2008 9 FINDING OF THE ASSESSEES EXPLANATION AS REASONABLE AND SATISFACTORY. IT IS ONLY THE SAID REASONS WHICH WOULD INFORM ANY HIGHER APPELLATE AUT HORITY AS TO THE BASIS OF HIS DECISION, ON THE SAME BEING CHALLENGED BEFORE IT, A ND ENABLE IT TO RENDER ITS FINDINGS ON THE SAME. AS ALSO NOTED EARLIER, THE LD. CIT(A) `FINDINGS OF FACT JUST FOLLOW HIS REPHRASING WHAT STANDS WRITTEN IN THE CONFIRMATION LETTERS FURNISHED BY THE ASSESSEE ( ALSO REFER PARA 5.43 ). FINALLY, EVEN AS ARGUED BY THE LD. DR BEFORE US, NONE OF THE CREDITORS BEING AN ASSESSEE, THE DECISION IN THE CASE OF ORISSA CORPORATION PVT. LTD . (SUPRA) WOULD HAVE NO APPLICATION IN THE PRESENT CASE, APART FROM BEIN G DISTINGUISHABLE ON FACTS. 6. IN VIEW OF THE FOREGOING, THE ASSESSEE HAS FAILED T O EXPLAIN THE IMPUGNED CREDITS IN TERMS OF S. 68 OF THE ACT AND, THUS, THE STATUTO RY OBLIGATION CAST ON IT THEREBY IS NOT DISCHARGED. UNDER THE CIRCUMSTANCES, WE, THEREFORE, FIND THE REVENUES CHALLENGE TO THE DELETION OF THE ADDITION U/S. 68 AS LEGALLY MAI NTAINABLE AND CONFIRM THE SAME. WE DECIDE ACCORDINGLY, SETTING ASIDE THE IMPUGNED ORDE R, AND RESTORING THAT OF THE AO. IN DOING SO, WE HAVE RELIED, APART FROM THE DECISION I N THE CASE OF P. MOHANAKALA (SUPRA), THE FOLLOWING OTHER DECISIONS BY THE APEX COURT, AS, REPRESENTING THE TRITE LAW IN THE MATTER: - SUMATI DAYAL VS. CIT , 214 ITR 801 (SC) - CIT V. BIJU PATNAIK , 160 ITR 674 (SC) - ROSHAN DI HATTI V. CIT , 107 ITR 938 (SC) - KALE KHAN MOHAMED HANIF V. CIT , 50 ITR 1 (SC) [AFFIRMING SETH KALE KHAN MOHAMED HANIF V. CIT , 34 ITR 669 (MP)] - SREELEKHA BANERJEE V. CIT , 49 ITR 112 (SC) 7. IN THE RESULT, THE REVENUES APPEAL IS ALLO WED. SD/-- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 07 JULY 2010 ITA. NO.928COCH./2008 10 GJ COPY TO: 1. SHRI T.P. ABDULLA, PARTNER, YENKEY ROLLER FLOUR MILLS, CHEROOTY ROAD, CALICUT. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRA L CIRCLE-2, CALICUT. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, CENTRAL, KOCHI. 5. D.R./I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) ITA. NO.928COCH./2008 11