Shri.K.C.Raghu, Thalassery v. ITO, Kannur

ITA 159/COCH/2013 | 1997-1998
Pronouncement Date: 18-07-2013

Appeal Details

RSA Number 15921914 RSA 2013
Assessee PAN AULPR8948J
Bench Cochin
Appeal Number ITA 159/COCH/2013
Duration Of Justice 3 month(s) 24 day(s)
Appellant Shri.K.C.Raghu, Thalassery
Respondent ITO, Kannur
Appeal Type Income Tax Appeal
Pronouncement Date 18-07-2013
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 18-07-2013
Date Of Final Hearing 03-06-2013
Next Hearing Date 03-06-2013
Assessment Year 1997-1998
Appeal Filed On 25-03-2013
Judgment 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. 159/COCH/2013 ASSESSMENT YEAR : 1997-98 SHRI K.C. RAGHU PROPRIETOR M/S. REHA SAW MILLS KOTTIODI TELLICHERRY-670 691 [PAN:AULPR 8948J] VS. THE INCOME-TAX OFFICER WARD- 1(2) KANNUR. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN SR. ADV. REVENUE BY SMT. SUSAN GEORGE VARGHESE SR. DR DATE OF HEARING 03/06/2013 DATE OF PRONOUNCEMENT 18/07/2013 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19-12-2012 PASSED BY LD CIT(A)-II KOZHIKODE AND IT RELATES TO THE ASSESSMENT YEAR 1997-98. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING THE ADDITION OF CASH CREDITS MADE U/S 68 OF THE ACT. THE APPEAL IS BARRED BY LIMITATION BY 9 DAYS. WE HAVE HEARD BOTH THE PARTIES AND HAVING REGARD TO TH E SUBMISSIONS MADE BY THE ASSESSEE IN THE PETITION WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION WAS COMPLETED IN THE HANDS OF T HE ASSESSEE U/S 143(3) OF THE ACT ORIGINALLY ON 27.3.2002. LATER THE ADMINISTRATIVE COMMISSIONER REVISED THE SAME U/S 263 OF THE ACT AND ACCORDINGLY A FRESH ASSESSMENT ORDER WAS PASSED BY THE AO ON 03.02.2005 WHEREIN HE ADDED CASH CREDITS AGGREGATI NG TO RS.3 10 000/-. THE ASSESSEE CHALLENGED THE SAME BEFORE LD CIT(A) AND THE FIRST APPELLATE AUTHORITY RESTORED THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO GIVE THE OPPORTUNITY OF CROSS I.T.A. NO.159/COCH/2013 2 EXAMINATION OF VARIOUS CREDITORS TO THE ASSESSEE. ACCORDINGLY THE ASSESSING OFFICER PASSED THE CONSEQUENTIAL ORDER ON 22-12-2008 WHERE IN THE AO AGAIN ADDED ALL THE CASH CREDITS AGGREGATING TO RS.3 10 000/-. THE ASS ESSEE AGAIN CARRIED THE MATTER IN APPEAL FILED BEFORE LD CIT(A) WHO GRANTED PARTIAL RELIEF TO THE EXTENT OF RS.1 61 000/-. STILL AGGRIEVED THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS. WE NOTICE THAT THE ADDITION OF RS.3 10 000/- PERTAINS TO 17 CREDITORS AND THE LD C IT(A) HAS GRANTED RELIEF IN RESPECT OF 9 CREDITORS. IN EFFECT ADDITION OF FOLLOWING CRED ITS HAVE BEEN CONFIRMED BY THE LD CIT(A). A. SMT. C. PANJALI 18 000 B. SMT. BABY REENA 18 000 C. SRI P.M.MANOHARAN 18 000 D. SMT. KOYITHU NARAYANI 19 000 E. SRI A.K. CHATHU 18 000 F. SRI SUJATHAN 19 000 G. SRI PREMARAJAN 19 000 H. SRI V.M. PAVITHRAN 18 000 4. WE FIND DETAILED DISCUSSIONS IN RESPECT OF TH E ABOVE CREDITORS IN THE ASSESSMENT ORDER DATED 03-02-2005 PASSED U/S 143(3) R.W.S. 263 OF THE ACT. IN THE IMPUGNED CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER WE NOTICE THAT THE AO HAS CONFIRMED THESE ADDITIONS ON THE GROUND THAT EITHER THERE IS A CONTRADICTION WITH REGARD TO THE YEAR OF REPAYMENT OF THE LOANS OR THE CREDIT ORS WERE NOT PRODUCED FOR VERIFICATION. THE LD COUNSEL STRONGLY PLACED RELIA NCE ON THE CONFIRMATION LETTERS FILED BEFORE THE ASSESSING OFFICER IN THE PROCEEDINGS INI TIATED CONSEQUENT TO THE REVISION ORDER. HE FURTHER SUBMITTED THAT MOST OF THESE AMO UNTS WERE RECEIVED BY THE ASSESSEE IN THE EARLIER YEARS AND HENCE THE TAX AUTHORITIES WERE NOT JUSTIFIED IN ASSESSING THEM DURING THE YEAR UNDER CONSIDERATION. WE NOTICE THA T THE ASSESSEE HAS BROUGHT THESE CASH CREDITS TO EXPLAIN THE SOURCES FOR THE INVESTM ENTS MADE IN HIS BUSINESS CONCERNS DURING THE YEAR UNDER CONSIDERATION. FURTHER THE ASSESSEE APPEARS TO HAVE NOT MAINTAINED ANY BOOKS OF ACCOUNT TO SUBSTANTIATE HIS CLAIM THAT THESE LOANS WERE RECEIVED IN EARLIER YEARS. THE ASSESSING OFFICER W AS CONSTRAINED TO EXAMINE THESE CASH I.T.A. NO.159/COCH/2013 3 CREDITS WHILE EXAMINING THE INVESTMENTS MADE DURING THE YEAR UNDER CONSIDERATION. SINCE THE CLAIM OF RECEIPT OF LOANS IN EARLIER YEA RS WAS NOT SUBSTANTIATED WITH ANY CREDIBLE EVIDENCE IN OUR VIEW THE ASSESSING OFFIC ER WAS JUSTIFIED IN EXAMINING THE LOAN CREDITS DURING THE YEAR UNDER CONSIDERATION. WE SH ALL EXAMINE THE CASH CREDITS LISTED ABOVE VIZ-A-VIS THE CONFIRMATION FILED BY THE CREDI TORS. 5. SMT. C.PANJALI IS THE MOTHER OF THE ASSESSEE AND SHE IS NO MORE AS OF NOW. SHE HAD STATED THAT THE LOAN AMOUNT OF RS.18 000/- WAS GIVEN BY HER OUT OF HER AGRICULTURAL INCOME. SHE HAS CLAIMED THAT THE AGRICULTURAL INCO ME WAS DERIVED FROM 50 CENTS OF LAND OWNED BY HER. WE ALSO NOTICE THAT THE CREDITO R WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER DUE TO HER OLD AGE. UNDER THESE SET OF FACTS IN OUR VIEW THERE IS NO JUSTIFICATION IN SUSPECTING THIS CREDIT. ACCORDIN GLY WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS CREDIT AND DIRECT THE ASSESSING OFFICER TO DELETE THIS ADDITION. 6. SMT. BABY REENA HAS SUBMITTED THAT SHE HAS GIV EN LOAN OF RS.18 000/- OUT OF INCOME DERIVED BY HER FROM TAILORING ACTIVITIES. S HE HAS STATED THAT HER AVERAGE MONTHLY INCOME WAS RS.1 200/-. HENCE IN OUR VIEW THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS OF THIS CREDITOR. HENCE IN OUR VIEW THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. 7. SHRI P.M.MANOHARAN HAS GIVEN A LOAN OF RS.18 000/- TO THE ASSESSEE. HE IS EMPLOYED AS BUS DRIVER ON DAILY WAGES BASIS. THE A O HAS NOTICED THAT THE PARENTS OF THIS CREDITOR ARE RESIDING WITH HIM. FURTHER HE IS MARRIED AND IS HAVING TWO CHILDREN. ACCORDINGLY THE AO HAS DOUBTED ABOUT THE CREDIT WO RTHINESS OF THIS CREDITOR. UNDER THESE SET OF FACTS IN OUR VIEW THE ASSESSING OFFI CER WAS JUSTIFIED IN ASSESSING THIS CREDIT AND ACCORDINGLY WE UPHOLD THE ORDER OF LD CIT(A) I N CONFIRMING THIS ADDITION. 8. SMT. KOYITHU NARAYANI WHO HAS GIVEN A LOAN OF RS.19 000/- TO THE ASSESSEE IS DOING THE BUSINESS OF TRADING IN TAPIOCA BESIDES W ORKING AS A LABOURER. THUS IN OUR VIEW THE CREDIT WORTHINESS OF THIS CREDITOR IS ALS O NOT PROVED BY THE ASSESSEE AND HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDI TION. I.T.A. NO.159/COCH/2013 4 9. SHRI A.K.CHATHU WHO HAS GIVEN A LOAN OF RS.18 000/- IS RUNNING A TEA SHOP AND IS DERIVING AN INCOME OF RS.75/- TO RS.100/- PER DAY. THUS IN OUR VIEW THE CREDIT WORTHINESS OF THIS CREDITOR IS ALSO NOT PROVED BY T HE ASSESSEE AND HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. 10. SHRI SUJATHAN HAS ADVANCED A LOAN OF RS.19 00 0/- TO THE ASSESSEE. IN THE ASSESSMENT ORDER THE AO HAS OBSERVED AS UNDER IN R ESPECT OF THIS CREDIT. 3. C.SUJATHAN - THE SWORN STATEMENT WAS RECORDED ON 02-11-2004. HE IS AN EX-SERVICE MAN RETIRED ON 31.12.2000. HE IS NEPHEW OF THE ASSESSEE. HE HAS STATED THAT HE HAS ADVANCED RS.19 000/- TO THE ASSE SSEE DURING 1996. CONSIDERING THE FACT THAT HE MAY BE CAPABLE OF RAIS ING THIS AMOUNT THIS CREDIT IS ACCEPTED AS GENUINE. HOWEVER THE ASSESSING OFFICER HAS ASSESSED THIS AM OUNT ALSO. IN THE SET ASIDE PROCEEDING ALSO THIS AMOUNT HAS BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSING OFFICER WAS SATISFIED WITH THIS CREDIT IN OUR VIEW THERE IS NO REASON TO ASSESS THE SAME. THERE IS A POSSIBILITY THAT TH IS CASH CREDIT MIGHT HAVE BEEN ASSESSED INADVERTENTLY. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS CREDIT AND DIRECT THE ASSESSING OFFICER TO DEL ETE THE SAME. 11. SHRI T. PREMARAJAN WHO HAS GIVEN A LOAN OF RS.19 000/- IS DERIVING A MONTHLY ALLOWANCE OF RS.1 500/- FROM A CO-OP BANK. THUS I N OUR VIEW THE CREDIT WORTHINESS OF THIS CREDITOR IS ALSO NOT PROVED BY THE ASSESSEE AN D HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDITION. 12. SHRI V.M.PAVITHRAN HAS GIVEN A LOAN OF RS.1 8 000/- TO THE ASSESSEE. IN THE SWORN STATEMENT TAKEN FROM HIM HE HAS STATED THAT HE PAI D THE ABOVE SAID AMOUNT OUT OF HIS NRE ACCOUNT. THE AO EXAMINED THE NRE BANK ACCOUNT O F THE ABOVE PERSON AND NOTICED THAT THERE WAS NO WITHDRAWAL ON THE DATE ME NTIONED BY HIM IN THE SWORN STATEMENT. HENCE THE AO HAS DOUBTED THE VERACITY OF HIS STATEMENT AND ASSESSED THE ABOVE SAID AMOUNT OF RS.18 000/-. HOWEVER THE ASS ESSING OFFICER HAS NOT DENIED THE FACT THAT THE ABOVE SAID CREDITOR HAS MAINTAINED A NRE ACCOUNT. THE AO HAS ALSO I.T.A. NO.159/COCH/2013 5 STATED THAT HE IS RUNNING AN AUTO GARAGE. SHRI PAV ITHRAN HAS STATED THAT HE WAS WORKING IN GULF IN EARLIER YEARS AND HENCE HE COULD OPEN A NRE ACCOUNT. UNDER THESE SET OF FACTS IN OUR VIEW THERE IS NO NECESSITY TO DOUBT THE CREDIT WORTHINESS OF THIS CREDITOR FOR GIVING A LOAN OF RS.18 000/- TO THE AS SESSEE. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) IN RESPECT OF THIS CREDIT AND DI RECT THE ASSESSING OFFICER TO DELETE THE SAME. 13. IN THE RESULT THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 18-07-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 18TH JULY 2013 GJ COPY TO: 1. SHRI K.C. RAGHU PROPRIETOR M/S. REHA SAW MILLS KOTTIODI TELLICHERRY-670 691. 2. THE INCOME-TAX OFFICER WARD-1(2) KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II KOZH IKODE 4.THE COMMISSIONER OF INCOME-TAX KOZHIKODE. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T COCHIN