Sri Kempanna Chetty S/O Sri Arasappa Chetty V. The Asst. Commissioner of Income Tax, Circle-8(1)

ITA/365/2011

AI Insights

The case involves Sri Kempanna Chetty, the appellant, who contested the addition of unexplained cash credit to his income as assessed by the Income Tax Department for the year 2004-05. The Assessing Officer had disallowed the cash credit amounting to Rs.40,80,000, which the appellant claimed was an unsecured loan, due to the lack of proper documentation and verification of the creditors' identities and their Permanent Account Numbers (PANs). The Commissioner of Income Tax (Appeals) and subsequently the Tribunal upheld this disallowance, leading to the appellant's appeal to the High Court. The main contention in the High Court was whether the appellant was given a proper opportunity to substantiate the source of the cash credit, which the court found was adequately provided but not utilized effectively by the appellant.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 810232 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 05-06-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: S
• Keywords: Assessment Year 2004-05; Income Tax; Unexplained cash credit; Cash credit disallowance
• Section: 68; 260A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 5TH DAY OF JUNE 2012 PRESENT THE HON'BLE MR. JUSTICE D.V . SHYLENDRA KUMAR AND THE HON'BLE MR. JUSTICE B.MANOHAR ITA Nos.365-366/2011 BETWEEN : SRI KEMPANNA CHETTY S/O SRI ARASAPPA CHETTY AGED ABOUT 56 YEARS, F-1, BHARGAV TOWERS, NO.20,DINNUR MAIN ROAD, BANGALORE – 560 032 … APPELLANT [By Sri S Parthasarathi, Adv.] AND : THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE- 8(1) 5TH FLOOR, R.P . BHAVAN, NRUPATHUNGA ROAD, BANGALORE – 560 001 … RESPONDENT [By Sri K V Aravind, Adv.] THESE APPEALS ARE FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 18.04.2011 PASSED IN ITA NO. 432/BANG/2010 & C.O. NO.34/B/2010 (ARISING OUT OF ITA NO.432/B/10) FOR THE ASSESSMENT YEAR 2004-05 PRAYING TO SET ASIDE THE SAID ORDER OF THE TRIBUNAL AND ETC., THESE APPEALS COMING ON FOR ADMISSION, THIS DAY, SHYLENDRA KUMAR J., DELIVERED THE FOLLOWING: 2 J U D G M E N T The assessee's appeals against the order of the Tribunal insofar as it relates to confirmation of the addition of unexplained cash credit by the Assessing Officer and affirmed by the Commissioner of Income Tax [Appeals] only to the extent of Rs.4,10,000/-. 2. The assessee is an individual and assessment year is 2004-05. In the course of finalization of assessment of the return filed by the assessee, the assessing officer found that the assessee had indicated he had obtained unsecured loan to an extent of Rs.40,80,000/- and had therefore directed the assessee to submit confirmation letters with full address and permanent account number of the creditors. The assessee not having dome before finalization of the assessment, all these amount was disallowed as cash credit and added to the income of the assessee under section 68 of the Income Tax Act, 1961 [for short 'the Act']. 3 3. In the appeal before the Commissioner of Income Tax [Appeals], both the revenue and assessee were in appeal. 4. While revenue's appeal met with part success, insofar as the assessee's appeal relating to adding back of the cash credit amount attributable to persons whose permanent account numbers did not correlate came to be dismissed as the Tribunal found no occasion to vary the order, particularly, with the assessee having failed to convince the assessing authority or first appellate authority about the source of cash credit. 5. The assessee is in further appeals before us under section 260-A of the Act. 6. Notice had been issued to the respondent who is represented by Sri. K V Aravind, learned standing counsel for the respondent. 4 7. We have heard Sri. Parthasarathi, learned counsel for the appellant and Sri. K V Aravind, learned standing counsel for the respondent. 8. Submission of Sri. Parthasarathi, learned counsel for the appellant is that this is more a case of want of proper opportunity to the assessee; that just because permanent account number did not correlate and if there should have been some mistake even on the part of the assessee in furnishing correct permanent account number, if the assessee should have been given an opportunity, the assessee would have provided the proof of the credibility of the creditors and as reflected in the books of accounts; that the Tribunal is in error in simply brushing aside this request of the assessee, more so, in depriving a proper opportunity to the assessee etc. 9. Sri. K V Aravind, learned standing counsel for the respondent, on the other hand, submits that it is only default of the assessee; that the assessee had not filed 5 availed proper opportunities not only before the Assessing Authority but also before the first appellate authority and the Tribunal also which could have been made good along with the memorandum of appeal and saying that it would have been produced only after giving an opportunity is more a case of non utilization of the opportunity and therefore this is not a case of not providing an opportunity etc. 10. We are unable to accept the submission of Sri. Parthasarathi, learned counsel for the appellant that the assessee's interest had suffered for want of proper opportunity. The authorities found that the assessee was unable to make good the source of the cash credit and when the authorities have given relief to substantial extent and disallowance was confined to that part of the claim which was not made good by the assessee and if the Tribunal found no occasion to interfere with this aspect, we do not find any substantial question arising from out of the order of the Tribunal. 6 11. Therefore, these appeals are dismissed. Sd/- JUDGE Sd/- JUDGE AN/- "