Ita/181/2012 Of O.p Ali v. The Commissioner Of Income Tax

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 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 25.11.2011 APPELLANT/S:/APPELLANT/ASSESSEE : O.P ALIALEES INDUSTRIES, CHANDIROOR, ALAPPUZHA DISTRICT. BY ADVS.SRI.P.BALAKRISHNAN (E)SRI.MOHAN PULIKKAL RESPONDENT/S:/RESPONDENT/REVENUE : THE COMMISSIONER OF INCOME TAXKOCHI. 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 J U D G M E N T Vinod Chandran, J. The assessee, proprietor of two concerns, isbefore us raising questions of law as framed in thememorandum, which we find, are only with respect to thecorrectness of the findings of the lower appellateauthorities relating to the additions in respect of twocredits found in the accounts of the two firms of theassessee, both unexplained. The assessee, theproprietor of two concerns, filed two separate returnson behalf of two firms on the very same day. Later, aconsolidated return was filed on which notice wasissued by the Assessing Officer (AO). The un-explainedcredits found in one firm was Rs.18,88,204/- and in theother, Rs.10,21,316/-. These were proposed to be addedback as unexplained credits under Section 68 of theIncome Tax Act, 1961 ('Act' for brevity). 2.The appellant contended that the credits werewith respect to one S.Venkiteswara Rao, Kakinada withwhom he had regular transactions. However, no detailswere produced before the AO and the proposal was confirmed. Before the first appellate authority, theassessee again asserted that the credits were withrespect to S.Venkiteswara Rao and gave the correctaddress of the person. We find that on the basis of theexplanation submitted by the assessee, there was remandreport called for by the first appellate authority morethan once for the purpose of verifying the genuinenessof the transactions as claimed by the assessee. 3.The first remand report of the AO dated12.9.2006 is extracted at page 6 of the order of thefirst appellate authority (Annexure-B). It is seenthat copy of intimation under Section 143(1) of theIncome Tax Officer, Kakinada of having completed theassessment of S.Venkiteswara Rao, copies of profit andloss account and balance sheet as also copy of theledger accounts were transmitted to the AO. The AOfound on verification of the said documents that theclosing balance in the name of Sri.O.P.Ali had a creditbalance of Rs.1,50,000/-. Though there were regulartransactions with O.P.Ali, the assessee herein, theclosing balance was very negligible and far lower than ITA 181/12 that claimed as credits in the accounts of the twofirms in which the assessee was the proprietor. 4.The assessee then sought a right to cross-examine S. Venkiteswara Rao for which a further remandwas made to the AO. The AO's report dated 12.1.2007 isalso extracted in Annexure-B. At that point, theassessee raised a contention that there were otherpersons from whom credit was received by the assessee,which was on behalf of S.Venkiteswara Rao. The twoother persons pointed out by the assessee were oneKrishnakumar and Sathibabu with whom Venkiteswara Raoclaims to have absolutely no connection. It was alsopertinent that the assessee had not been maintainingany accounts in the names of the two persons laterpointed out by the assessee. Again, the remand reportcategorically found that there is no material evidenceto confirm the two sums, which were added on as un-explained credits under Section 68. 5.A further affidavit was filed by the assesseeclaiming that the credits in Venkiteswara Rao'saccounts were not made by the assessee himself throughits State Bank of India account. The assessee then 5.A further affidavit was filed by the assesseeclaiming that the credits in Venkiteswara Rao'saccounts were not made by the assessee himself throughits State Bank of India account. The assessee then ITA 181/12 raised a claim that the other two persons pointed outby the assessee himself are benamies of VenkiteswaraRao. A further remand was made to the AO and a reportobtained dated 19.3.2008. At that point, the assesseeagain submitted that his main account was maintainedonly in State Bank of India. The Manager, SBIsubmitted that the transactions of the year 2000-2001were not immediately available. Copy of the ledgeraccount submitted was only with respect to one accountof the assessee held in the name of M/s.Sabna Sea Foodsone of the firms in which the assessee was the partner.Again, the assessee was found to have not proffered anymaterial evidence to prove that the credits were fromgenuine persons. It was on these findings that thefirst appellate authority rejected the appeal. The Tribunal also considered the issueelaborately. The Tribunal found that though manyopportunities were granted to the assessee, hesingularly failed to substantiate the credits havingbeenmadebythespecifiedpersoni.e.Sri.S.Venkiteswara Rao. The Tribunal also looked intothe facts of the case and found that there is no reasonable explanation offered with respect to the twocredits found in the accounts of the assessee; whichnecessitated additions to be made under Section 68. Weare of the opinion that there is absolutely no questionof law arising from the order of the Tribunal. Thefacts have been elaborately considered by all the lowerauthorities and the conclusion reached that the creditsfound in the two accounts of the two firms were un-explained and warranted additions to the income underSection 68 of the Act, is unassailable. The Income TaxAppeal is rejected finding the only question arising tobe one on facts and not law. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENONJUDGE ITA 181/12 APPELLANT'S EXHIBITS APPENDIX ANNEXURE-ACOPY OF ASSESSMENT ORDER DATED 26.2.2003OF THE ASSESSING OFFICER ANNEXURE-BCOPY OF THE ORDER DATED 30.9.2008 OF THECOMMISSIONER OF INCOME TAX (APPEALS)-IV,KOCHI. ANNEXURE-C COPY OF THE ORDER DATED 25.11.2011 OF THEINCOME TAX APPELLATE TRIBUNAL IN ITANO.994/COCH/2008 //TRUE COPY//