Single judge of Kerala ITA Bench dismissed Income Tax Appellate Tribunals orders in batch of appeals challenging additions for unexplained credits and investments. Court held no substantial question of law arose under Section 260A as findings were factual. Appeals dismissed.
Appeals dismissed as no substantial question of law was made out.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE ANTONY DOMINIC
&
THE HONOURABLE MR. JUSTICE A.HARIPRASAD
MONDAY, THE 15TH DAY OF FEBRUARY 2016/26TH MAGHA, 1937
ITA.No. 6 of 2015 ()
AGAINST THE ORDER IN ITA. NO. 45/COCH/2014 of INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH, COCHIN DATED 08.08.2014
APPELLANT(S)/APPELLANT:
SRI. O.G.SUNIL 13-B, LINK HORIZON, KOCHI.
BY ADVS.SRI.ANIL D. NAIR SRI.SREEJITH R.NAIR SMT.C.S.SULEKHA BEEVI SRI.JOSE JOSEPH (CHEMPLAYIL) KUM.SOUMYA PRAKASH
RESPONDENT(S)/RESPONDENT:
THE DEPUTY COMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, ERNAKULAM.
BY ADVS. SRI P.K.RAVINDRANATHA MENON, SENIOR STANDING COUNSEL FOR
INCOME TAX
SRI.JOSE JOSEPH, STANDING COUNSEL FOR INCOME TAX
THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 15-02-2016, ALONG WITH ITA. NOS.260/2014 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
ITA NO.6/2015
APPENDIX
APPELLANT'S ANNEXURES:
ANNEXURE-A - TRUE COPY OF THE ORDEROF ASSESSMENT FOR THE YEAR 2002-03 ISSUED TO THE APPELLANT
ANNEXURE - B - TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX DATED 19.11.2013
ANNEXURE - C - TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED8.8.2014
ANNEXURE- D - TRUE COPY OF THE PAPER BOOK-I PRODUCED BY PETITIONER BEFORE ITAT
ANNEXURE-E- TRUE COPY OF THE PAPER BOOK-II PRODUCED BY PETITIONER BEFORE ITAT
ANNEXURE-F - TRUE COPY OF THE SNAPSHOT OF THE ISSUES INVOLVED FOR THE YEARS 2002-03 TO 2008-09
ANNEXURE G- TRUE COPY OF THE APPEAL MEMORANDUM FILED BY THE PETITIONER BEFORE THE ITAT FOR THE ASSESSMENT YEAR 2002-03
RESPONDENT'S ANNEXURES: NIL
//TRUE COPY//
ANTONY DOMINIC & A.HARIPRASAD, JJ.
I.T.A.Nos.260, 261 and 262 of 2014 & 6, 7, 8, 9, 10, 12 and 24 of 2015
Dated this the 15th day of February, 2016
COMMON JUDGMENT
Antony Dominic, J.
Among these appeals, I.T.A.Nos.260, 261 and 262 of 2014 are filed by Smt.Asha Sunil. The orders of assessment pertaining to assessment years 2006-07, 2008-09 and 2007-08 respectively are under challenge. I.T.A.Nos.6 to 10, 12 and 24 of 2015 have been filed by Shri O.G.Sunil and the challenge is against the orders of assessment pertaining to assessment years 2002-03 to 2008-09.
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 2
3,33,815/- as unexplained credit in the bank account. The contention raised on behalf of the appellant was that the said deposit was made out of the trading receipts from garment business. However, it has been specifically found that the net income returned by the assessee from her garment business was only 58,250/- and that even after availing of sufficient opportunities, the appellant could not explain the source of investment to the extent of `3,33,815/-. It was therefore that, in the absence of any material or explanation about the source and means, the Tribunal confirmed the addition made by the Assessing Officer treating theI.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 3
deposit in the bank as unexplained investment.
6,30,000/- and the stamp duty and other expenses came to 7,10,000/-. Though the assessee had purchased the property and made investment as above, the assessee had no explanation about the source from which she got the funds for making the investment. It was in such factual circumstances that the entire amount was taken as income of the assessee. Insofar as the assessment year 2006-07 is concerned, these were the only issues that were raised and considered by the Tribunal.I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 4
sale of land to the extent of `5,93,100/- as business profit. However, despite the explanation that the deposits were made from sale proceeds of land, the details of the transactions and sale were not filed before the Assessing Officer. It was in the absence of such details or the explanation, that the Tribunal confirmed the order of the Commissioner of Income Tax (Appeals), upholding the addition.
way of telegraphic transfer and within a day or two, the same was transferred to the assessee's account. However, the manner in which the money was transferred from Singapore to the assessee's father's account in India, could not be explained either before the Tribunal or this Court. Similarly, the role played by Tandon Investment Company, Singapore in this
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 5 transaction is also a mystery and could not be explained even before us. In fact the evasive submission made was that the assessee's father “might have” transferred his salary from Singapore.
“19. We have considered the rival submissions on either side and also perused the material available on record. The assessee's account was credited by T.T. transfer from City Bank. The assessee claims that the assessee's father was having an account in City Bank and the money belongs to assessee's father was gifted to the assessee. The assessee's father said to be employed as aircraft maintenance engineer at Bahrain and his salary and savings were used for transfer of funds to the assessee's account. On
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &
260, 261 and 262 of 2014
6
examination of the assessee's father's bank account, it appears, the funds were received by the bank on T.T. transfer. After third or fourth day, the same amount was transferred to the assessee's account. Therefore, this cannot be from savings of the assessee's father. If it is out of savings, there should be recurring credits and it cannot be a one time transfer to the bank account of the assessee's father. In fact, the assessing officer has observed as follows with regard to the nature of transaction on page 7 of the assessment order.
“The examination of the account of Shri George Philip with the City Bank (A/c No.50170190467) reveals that the amounts transferred to Smt.Asha Sunil were credited in his accounts only a few days prior to the transfer of those funds to her. Those amounts were credited to his accounts on TT transfer/Funds transfer. The first three transfers to the account of Smt.Asha Sunil are of the same amounts received by him in his account. The further transfer to Smt.Asha Sunil's account on 10.10.2207 (sic) is Rs.1,13,99,908/- where as the amount credited to Shri George Philip's account is Rs.1,23,37,993.42. Apparently, the whole of the money received by Shri George Philip has been transferred to the account of Smt.Asha Sunil. Shri George Philip has acted as an agent of transfer of
7
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &
260, 261 and 262 of 2014
funds from an unknown person to Smt.Asha Sunil. Shri George Philip's bank account is only a conduit for transfer of funds from undisclosed/unidentified person to Smt.Asha Sunil. The fact that the credit of the above amounts to the account of Shri George Philip is a suspicious transaction reported by the Bank to the Financial Intelligence Unit, Ministry of Finance points out the doubtful nature of the receipts.”
20. From this it is obvious that the funds were transferred to the assessee's father's account by T.T.transfer and again it was retransferred to assessee's account. Therefore, it is for the assessee to explain how the assessee's father got the funds. The assessing officer has taken pain in examining assessee's father. However, he could not give any satisfactory explanation except by saying that it was his savings and salary. In the absence of any material to show that the assessee's father has saved so much of money, this Tribunal is of the considered opinion that the claim of the assessee/her father that the transfer was from savings of her father cannot be accepted. To accept the gift, the assessee has to definitely establish the creditworthiness of her father. The contention of the ld. counsel for the assessee is that if the assessee could not explain the creditworthiness, the addition
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &
260, 261 and 262 of 2014
8
could be made only in the hands of the assessee's father. The case of the department as it appears from the assessment order clearly shows that Shri George Philip acted as an agent for transfer of funds from unknown person to Smt.Asha Sunil. The assessing officer has also found that the assessee's father's bank account is only a conduit for transfer of funds from unidentified person. In the absence of any material to suggest that the assessee's father has sufficient creditworthiness to credit such a huge money to the assessee, this Tribunal is of the considered opinion that the CIT(A) has rightly confirmed the addition. The onus is on the assessee to prove the creditworthiness of her father, genuineness of the transaction and identity of the parties. In this case, though the assessee claims that the funds were transferred from her father's account, the creditworthiness is not proved. Merely because the funds were transferred from banking channel, it will not prove the genuineness of the transaction as held by the Apex Court in the case of P.Mohanakala (supra). In view of the above, we do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed.”
A reading of the order of the Tribunal shows that on the materials before it, the Tribunal was satisfied that the assessee had not discharged her burden
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 9
by proving the creditworthiness of her father, the identity of the parties and the genuineness of the transaction and on facts, we fully endorse that conclusion. One is also at a loss to understand why, if her father was stationed in Bahrain as claimed by the appellant and if he wanted to gift his salary income earned in that country to his daughter living in India, he should transfer the amount to Singapore and then to India, instead of directly transferring the amount from Bahrain itself. It was in the aforesaid circumstances that the Tribunal confirmed the order of the Commissioner of Income Tax (Appeals), upholding the addition. The findings entered into by the Tribunal are entirely factual and on facts, once the theory of gift by father is rejected, the question of Section 56(2) of the Act does not arise at all.
36,67,010/-. According to the assessee, the Assessing Officer has taken 15,04,891/as unexplained bank deposit. It was pointed out that the total deposit was `19,54,243/- and that the Assessing Officer has failed to take chequeI.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 10
deposit to the extent of `4,48,828/-. The Tribunal has recorded a finding that “the ld. representative very fairly submitted that the assessee could not explain the source for making these deposits”. Despite that, it is seen argued before the Tribunal that the income was from real estate business and, therefore, only the net amount should be taken and not the gross amount.
10,77,219/is concerned, the evasive contention raised was that the unexplained credit “might have” been used for making deposit in the bank account and, therefore, it should not have been taken as income of the assessee. Similarly, with reference to the cash withdrawal from the bank to the extent of 2,91,600/-, the contention raised was that once the deposit was taken as income, withdrawal should not be taken as income once again. With reference to the foreign travel expenses, the Assessing Officer has made addition of `5,00,000/- and the contention raised was that this expense was incurred from the withdrawals made from the bank.I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 11
were not disclosed to the department. Insofar as the deposit of 19,54,243/-, which was admitted by the assessee is concerned, the Tribunal has noted that the Assessing Officer has taken only 15,04,893/and that the cheque payment to the extent of 5,68,316/- was not considered by him. Insofar as the amount that has been taken by the Assessing Officer is concerned, the Tribunal has noted that in the absence of any details with regard to earning of income and the persons from whom the money was received, the Assessing Officer has rightly treated the entire amount as income. Insofar as the unexplained credit to the extent of 10,77,219/- is concerned, the Tribunal has taken note of the fact that the assessee has shown the same as loan from others in the cash flow statement. However, having regard to the fact that the assessee had not explained the identity of the persons from whom the loan was allegedly availed of, the creditworthiness of his creditors and the genuineness of the transaction, the Tribunal confirmed the order of the Assessing Officer, taking the aforesaid amount as income of the assessee.
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 12
the assessee that the same cannot be added to his income. With respect to 5,00,000/- incurred by the assessee towards foreign travel expenses is concerned, the Tribunal has held that the source of such expenditure was neither disclosed before the Assessing Officer nor disclosed in his cash flow statement. It was for that reason the Tribunal confirmed the addition to the extent of 5,00,000/-.
“30. The only issue involved in the remaining appeals in ITA Nos 46 to 51/Coch/2014 in the case of Shri O.G.Sunil is addition on account of unexplained investments. The issue is identical to the issues discussed in
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &
260, 261 and 262 of 2014
13
ITA No.45/Coch/2014 for the assessment year 2002-03. While dealing with the appeal for assessment year 2002-03 we have found that out of the total addition made on account of unexplained investments of Rs.36,67,010 an amount of Rs.2,91,600 has to be deleted as the same represents withdrawal from bank out of the deposits in the bank account and the addition of the withdrawal would amount to double addition. The facts and circumstances are identical for the assessment years 2003-04 to 2008-09 also. Admittedly, there are deposits in bank account of the assessee. The assessee could not file any explanation regarding the source of receipt of money except saying that it is from real estate business. In the absence of any details/material this Tribunal is of the considered opinion that the entire deposits in bank account shall be treated as income of the assessee. The assessee himself has shown the cash credit as suspense or cash deficit in the cash flow statement as in the case for the assessment as in the case for the assessment year 2002-03. Therefore, the reasons given by the Tribunal for the assessment year 2002-03 are equally applicable for other years under considerations. Accordingly, we follow the decision already arrived at for the
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &
260, 261 and 262 of 2014
14
assessment year 2002-03 in these years also. Thus, the addition contested and the addition to be deleted year-wise for the assessment years 2003-04 to 2008-09 on account of withdrawal from the bank account out of the deposits made is illustrated below:
Assessment year Addition withdrawal
from bank
| ---------------- 2003-04 |
- ----------- -- 84,51,269 |
------------- 12,71,120 |
|---|---|---|
| 2004-05 | 96,95,034 | 11,99,600 |
| 2005-06 | 2,31,88,161 | 17,57,196 |
| 2006-07 | 76,07,693 |
27,24,607 |
| 2007-08 | 1,02,65,429 |
12,87,488 |
| 2008-09 | 4,55,14,549 |
47,04,660 |
31. For the detailed reasons given for
the assessment year 2002-03 above, the assessing officer is directed to delete the addition of Rs.12,71,120 for the assessment year 200304; Rs.11,99,600 for the assessment year 200405; Rs.17,57,196 for the assessment year 200506; Rs.27,24,607 for the assessment year 200607; Rs.12,87,488 for the assessment year 200708; and Rs.47,04,660 for the assessment year 2008-09. Other than these amounts, the remaining additions in every assessment year are confirmed.”
I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 & 260, 261 and 262 of 2014 15
Having heard the counsel on both sides, we are satisfied that the aforesaid being the factual background, the findings in Tribunal's order are entirely factual and these appeals do not give rise to any question of law. In the light of the language of Section 260A of the Act, an appeal would lie to this Court only on a substantial question of law. Therefore, in these appeals there is nothing to be considered by this Court in exercise of jurisdiction under Section 260A of the Act. That apart, the appellants also do not have a case that any contention, which was urged by them before the Tribunal, was not considered by the Tribunal or that the findings of fact arrived at by the Tribunal are perverse to give rise to a question of law for consideration under Section 260A of the Act. In such circumstances, we are not inclined to entertain these appeals.
Accordingly these appeals are dismissed.
ANTONY DOMINIC, JUDGE.
A. HARIPRASAD, JUDGE.
cks
3 issues framed by the court
Whether the Tribunal's finding that the assessee failed to prove creditworthiness and genuineness of funds transfers gives rise to a substantial question of law under Section 260A of the Act.
Whether the addition of unexplained investments and credits was legal in the absence ofExplanation of source funds.
Whether the appeals warrant hearing on facts or are solely on substantial questions of law.
Colour shows how this judgement treated each authority
P. MohanakalaReferred¶66
P.Mohanakala (supra)
3 provisions across 1 enactments
Smt. Asha Sunil
Shri O.G. Sunil
Deputy Commissioner of Income Tax Central Circle-2, Ernakulam
ANTONY DOMINIC
A. HARIPRASAD
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court