Dismissed

E.Ummer Bava v. the Commissioner of Income Tax, Kozhikode

Kerala HC20 May 2016ITA/13/2015

Case brief

AI extract

What is this about?

The High Court rejected the Income Tax Appellant's challenge against an addition u/s 68 for unexplained credit of `20 lakhs from NRIs. The Court held that since the appellant failed to prove the creditworthiness of the lenders, the initial burden was not discharged, and the Tribunal's decision was upheld.

What did the court decide?

The appeal is dismissed, upholding the addition of `20 lakhs to the assessee's income u/s 68.

E.Ummer Bava Vs the Commissioner of Income Tax, Kozhikode — Income Tax | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU

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FRIDAY, THE 20TH DAY OF MAY 2016/20TH VAISAKHA 1938

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ITA.No. 13 of 2015 ()

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AGAINST THE ORDER/JUDGMENT IN IT 296/COCH/2013 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25-10-2013

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APPELLANT(S)/APPELLANT:

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E.UMMER BAVA CONTRACTOR, SAKEENA MANZIL, DOWN HILL, MALAPPURAM, 676519

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BY ADVS.SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN

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RESPONDENT(S)/RESPONDENT:

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THE COMMISSIONER OF INCOME TAX,

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KOZHIKODE - 673 006.

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R BY SRI.P.K.R.MENON, SC, INCOME TAX R BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX

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THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 20-05-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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APPENDIX IN ITA.13/15

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APPELLANT'S EXHIBITS:

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ANNEXURE A: PHOTOCOPY OF ASSESSMENT ORDER DT.25.11.2010

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ANNEXURE B: PHOTOCOPY OF ORDER OF CIT(A) DT.18.2.201 IN ITA-31/TR/CIT/CLT 2010-11..

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ANNEXURE C: CERTIFIED COPY OF ORDER OF ITAT DT.25.10.2013 IN ITA NO. 296/COCH/2013.

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/TRUE COPY/

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PS TO JUDGE

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ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ.

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I.T.A.No.13 of 2015

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----------------------------------Dated this the 20^th day of May, 2016

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JUDGMENT

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Antony Dominic, J.

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This appeal filed by the assessee in terms of section 260 A of the Income Tax Act calls in question the order passed by the Income Tax Appellate Tribunal, Cochin Bench in ITA.No.296/13. On facts, it is relevant to note that the Assessing Officer noticed that for the assessment year 2008-09, the

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assessee had received a loan of `10 lakhs each from Sri.E.Sameer and Sri.P.M.Mohammed Ali, who were NRIs working in the Middle East. On the ground that the assessee did not prove the requirement of section 68 of the Act, the Assessing Officer added the aforesaid

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`20 lakhs to the income of the assessee. This order was confirmed by the first appellate authority and the Tribunal and it is in this background, this appeal is filed raising the following questions of law for the consideration of this Court:

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a) Whether, in the facts and circumstances of the case, the authorities were right in invoking the provisions of Sec.68 of the Act in respect of the amounts received from

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ITA.13/15

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the appellant's nephew and his Son-in-Law's father when the payments have been sent to the Appellants through normal banking channels, Instruments issued by Foreign Banks and credited to the account of the Appellant by negotiation through a Bank in India where he maintains account?

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b)Whether the Assessing Authority was not required to conduct enquiries regarding the claim of the Appellant that the amount was received as loan when his finding is that the appellant had not proved the credit worthiness and capacity of the creditor fully and beyond doubt, which itself would indicate that the Appellant had discharged the initial burden case on the Appellant?

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c) Whether the authorities erred in applying the principles laid down by the Hon'ble Supreme Court in COMMISSIONER OF INCOME TAX VS. P.MOHANAKALA - [2007] 291 ITR 278 [SC] to the facts of the case?

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d) Whether the authorities should not have found that the decision in Mohanakala [supra] will cover only loans taken in cash and not to receipts as per Cheques/DD as provided by the Act?

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2.We heard learned counsel for the assessee and learned senior standing counsel for the Revenue.

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3.Reading of the order shows that it was the admitted factual position that the assessee had received `10

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ITA.13/15

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lakhs each as loan from the aforesaid two persons who were NRIs working in the Middle East. Though the assessee contended that it was a loan, he could not furnish any document to prove the creditworthiness of the aforesaid two persons. Law is settled that under section 68 of the Income Tax Act, the initial burden is on the assessee to prove the identity of the creditor or the capacity of the creditor to advance money and the genuineness of the transaction. In so far as this case is concerned, the assessee could not produce any material substantiating the creditworthiness of the persons who alleged to have granted him the loan. In such circumstances, we cannot find fault with the decision of the Tribunal upholding the additions made under section 68. According to us, the order of the Tribunal does not give rise to any question of law for the consideration of this Court.

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Appeal fails and is therefore dismissed.

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Sd/ANTONY DOMINIC, Judge.

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Sd/DAMA SESHADRI NAIDU, Judge. kkb.

E.Ummer Bava v. the Commissioner of Income Tax, Kozhikode

Case brief

What is this about?

What did the court decide?

E.Ummer Bava v. the Commissioner of Income Tax, Kozhikode

Case brief

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What did the court decide?

What the court decided

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