O.P ALI V. THE COMMISSIONER OF INCOME TAX

ITA/181/2012

AI Insights

The case involves O.P Ali Alees Industries, represented by its proprietor, who appealed against the order of the Income Tax Appellate Tribunal, Cochin Bench. The appeal was related to the additions made under Section 68 of the Income Tax Act, 1961, concerning unexplained credits found in the accounts of two firms owned by the assessee. The Tribunal and the lower authorities had repeatedly found that the assessee failed to substantiate the source of the credits, despite multiple opportunities to provide evidence. The High Court of Kerala, after reviewing the facts and the proceedings, concluded that the issues raised were factual in nature and did not involve any substantial question of law.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 755122 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 12-10-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: P BALAKRISHNAN; MOHAN PULIKKAL
• Keywords: Assessment; Income Tax; Remand Report; Unexplained credits
• Section: 143(1); 68

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY ,THE 12TH DAY OF OCTOBER 2018 / 20TH ASWINA, 1940 ITA.No. 181 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 994/COCH/2008 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25.11.2011 APPELLANT/S:/APPELLANT/ASSESSEE : O.P ALI ALEES INDUSTRIES, CHANDIROOR, ALAPPUZHA DISTRICT. BY ADVS. SRI.P.BALAKRISHNAN (E) SRI.MOHAN PULIKKAL RESPONDENT/S:/RESPONDENT/REVENUE : THE COMMISSIONER OF INCOME TAX KOCHI. BY ADVS. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 12.10.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA 181/12 -2- J U D G M E N T Vinod Chandran, J. The assessee, proprietor of two concerns, is before us raising questions of law as framed in the memorandum, which we find, are only with respect to the correctness of the findings of the lower appellate authorities relating to the additions in respect of two credits found in the accounts of the two firms of the assessee, both unexplained. The assessee, the proprietor of two concerns, filed two separate returns on behalf of two firms on the very same day. Later, a consolidated return was filed on which notice was issued by the Assessing Officer (AO). The un-explained credits found in one firm was Rs.18,88,204/- and in the other, Rs.10,21,316/-. These were proposed to be added back as unexplained credits under Section 68 of the Income Tax Act, 1961 ('Act' for brevity). 2. The appellant contended that the credits were with respect to one S.Venkiteswara Rao, Kakinada with whom he had regular transactions. However, no details were produced before the AO and the proposal was ITA 181/12 -3- confirmed. Before the first appellate authority, the assessee again asserted that the credits were with respect to S.Venkiteswara Rao and gave the correct address of the person. We find that on the basis of the explanation submitted by the assessee, there was remand report called for by the first appellate authority more than once for the purpose of verifying the genuineness of the transactions as claimed by the assessee. 3. The first remand report of the AO dated 12.9.2006 is extracted at page 6 of the order of the first appellate authority (Annexure-B). It is seen that copy of intimation under Section 143(1) of the Income Tax Officer, Kakinada of having completed the assessment of S.Venkiteswara Rao, copies of profit and loss account and balance sheet as also copy of the ledger accounts were transmitted to the AO. The AO found on verification of the said documents that the closing balance in the name of Sri.O.P.Ali had a credit balance of Rs.1,50,000/-. Though there were regular transactions with O.P.Ali, the assessee herein, the closing balance was very negligible and far lower than ITA 181/12 -4- that claimed as credits in the accounts of the two firms in which the assessee was the proprietor. 4. The assessee then sought a right to cross- examine S. Venkiteswara Rao for which a further remand was made to the AO. The AO's report dated 12.1.2007 is also extracted in Annexure-B. At that point, the assessee raised a contention that there were other persons from whom credit was received by the assessee, which was on behalf of S.Venkiteswara Rao. The two other persons pointed out by the assessee were one Krishnakumar and Sathibabu with whom Venkiteswara Rao claims to have absolutely no connection. It was also pertinent that the assessee had not been maintaining any accounts in the names of the two persons later pointed out by the assessee. Again, the remand report categorically found that there is no material evidence to confirm the two sums, which were added on as un- explained credits under Section 68. 5. A further affidavit was filed by the assessee claiming that the credits in Venkiteswara Rao's accounts were not made by the assessee himself through its State Bank of India account. The assessee then ITA 181/12 -5- raised a claim that the other two persons pointed out by the assessee himself are benamies of Venkiteswara Rao. A further remand was made to the AO and a report obtained dated 19.3.2008. At that point, the assessee again submitted that his main account was maintained only in State Bank of India. The Manager, SBI submitted that the transactions of the year 2000-2001 were not immediately available. Copy of the ledger account submitted was only with respect to one account of the assessee held in the name of M/s.Sabna Sea Foods one of the firms in which the assessee was the partner. Again, the assessee was found to have not proffered any material evidence to prove that the credits were from genuine persons. It was on these findings that the first appellate authority rejected the appeal. The Tribunal also considered the issue elaborately. The Tribunal found that though many opportunities were granted to the assessee, he singularly failed to substantiate the credits having been made by the specified person i.e. Sri.S.Venkiteswara Rao. The Tribunal also looked into the facts of the case and found that there is no ITA 181/12 -6- reasonable explanation offered with respect to the two credits found in the accounts of the assessee; which necessitated additions to be made under Section 68. We are of the opinion that there is absolutely no question of law arising from the order of the Tribunal. The facts have been elaborately considered by all the lower authorities and the conclusion reached that the credits found in the two accounts of the two firms were un- explained and warranted additions to the income under Section 68 of the Act, is unassailable. The Income Tax Appeal is rejected finding the only question arising to be one on facts and not law. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE ITA 181/12 -7- APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A COPY OF ASSESSMENT ORDER DATED 26.2.2003 OF THE ASSESSING OFFICER ANNEXURE-B COPY OF THE ORDER DATED 30.9.2008 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOCHI. ANNEXURE-C COPY OF THE ORDER DATED 25.11.2011 OF THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO.994/COCH/2008 //TRUE COPY// "