Ita/310/2019 Of Shri Joseph Thannikottu Korah v. The Principal Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI FRIDAY, THE 25 DAY OF MARCH 2022 / 4TH CHAITHRA, 1944 ITA NO. 310 OF 2019 ITA 33/2017 OF I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: SHRI JOSEPH THANNIKOTTU KORAHAGED 60 YEARSTHANNIKOTTU HOUSE,TITANIUM NAGAR, KAVANADU.P.O., KOLLAM-691003.BY ADVS.V.P.NARAYANANNISHA JOHNSMT.DIVYA RAVINDRANSRI.R.BHASKARA KRISHNANSRI.T.M.SREEDHARAN (SR.) RESPONDENT/S: THE PRINCIPAL COMMISSIONER OF INCOME TAX,AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003.BY ADV SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON25.03.2022, THE COURT ON THE SAME DAY DELIVERED THEFOLLOWING: -2- S.V.BHATTI& BASANT BALAJI, JJ. - - - - - - - - - - - - - - -- - - -- - - - - - - - - - -- - - - - - - - - Income Tax Appeal No. 310 OF 2019 - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - JUDGMENT(Dated this the 25[th] day of March 2022) Basant BalajiJ., The appellant/assessee is an individual, who isemployed in KMML Ltd., Chavara, Kollam. The assesseefiled return of income for the assessment year 2011-12disclosing an income of Rs.5,77,610/-. The assessment wastaken up for scrutiny under the CASS scheme and noticeunder Section 143(2) of the Income Tax Act was issued.The assessee was asked to explain the source of cashdeposit of Rs.30,00,000/- made in the assessee’s bankaccount with ICICI bank, Kollam on 20.1.2011. Theassessee submitted that the sum represented the salereceipts of land belonging to his wife, Smt. Saly Joseph,who had transferred 76.73 ares of land to one Sri Sajiv -3- Mathai for a total consideration of Rs.3,35,700/-. The assessee produced the sale deed dated 20.1.2011. The caseof the assessee is that though the document value is onlyRs.3,35,700/-, the actual consideration was forRs.31,00,000/- including an advance of Rs.1,00,000/-. Thesale consideration of Rs.30,00,000/- received on 20.1.2011was deposited in the bank account in the assessee’s name.2. A sworn statement was also recorded from theassessee on 16.1.2014. The assessee was directed toproduce evidence regarding the source of income to provethe cash credit of Rs.30,00,000/- deposited in the bank.Though ample opportunity was given to the assessee toprove the correlation between the sale price of the landbelonging to his wife and the sum of Rs.30,00,000/-deposited, the assessee failed to do so. Since the assesseefailed to substantiate the source of income, an assessmentorder was passed on 12.3.2014 whereby he was directed topay a balance tax of Rs.12,29,570/-. 3. The assessee filed appeal before the Commissioner of Income Tax (Appeals) against the assessment order. The appellate authority also concurred with the finding of the Income Tax Officer. The assessee thereafter challenged theorder of the first appellate authority before the Income TaxAppellate Tribunal, Cochin Bench by filingI.T.A.No.33/Coch/2017. The Tribunal, by the impugnedorder, after elaborately considering the submissions madeby the counsel and also verifying the documents, partlyallowed the appeal giving credit of Rs.3,35,700/- disclosedin the sale deed against the cash deposit of Rs.30,00,000/-Aggrieved by the same, this appeal is filed on the followingsubstantial questions of law: (i) Whether on the facts and in the circumstances of the case, did not the Appellate Tribunal err in law insustaining the addition of income of Rs.26,64,300/- fromother source for the Assessment year 2011-12? (ii) Did not the statutory Authorities and the Appellate Tribunal err in law in failing to cross verify with thepurchaser of the immovable property the facts stated inthe sworn statement and in the affidavit of the appellantbefore the first Appellate Authority and the Appellate -5- (i) Whether on the facts and in the circumstances of the case, did not the Appellate Tribunal err in law insustaining the addition of income of Rs.26,64,300/- fromother source for the Assessment year 2011-12? (ii) Did not the statutory Authorities and the Appellate Tribunal err in law in failing to cross verify with thepurchaser of the immovable property the facts stated inthe sworn statement and in the affidavit of the appellantbefore the first Appellate Authority and the Appellate -5- Tribunal as regards the withdrawal of amount from the NRE Bank account by the purchaser and paymentthereof, to the appellant prior to registration of sale deedwith respect to the immovable property considered in theassessment proceedings for a sum of Rs.30 lakhs? (iii) Are not the conclusions arrived at by the AppellateTribunal erroneous and perverse in law, as also arbitraryand unsupported by any evidence or material and on thatground liable to be set aside? (iv) Is not the order and the findings of the Appellate Tribunal in the impugned order in ITA No.33/Coch/2017dated 22.6.2017 for AY-2011-12 erroneous in law andperverse and hence unsustainable? 4.Heard the learned counsel Adv.Nish John for the appellant and the learned standing counsel Shri.Christopher Abraham for the respondent. 5. The learned counsel for the appellant submitted that though the sale deed has shown only Rs.3,35,700/- assales consideration, the sale in fact was for Rs.31 lakhs andone lakh received at the time of agreement andRs.30,00,000/- at the time of sale deed on 20.1.2011. The -6- said amount was deposited in the bank account of the appellant, since the assessee’s wife did not have any bankaccount. The counsel also submitted that to the noticeunder Section 143(2) of the I.T. Act, the appellant hassubmitted a proper reply pointing out that the amountdeposited is sale consideration obtained by his wife Smt.Saly Joseph from Shri Sajeev Mathai and since she hasdischarged her initial burden, the onus has now shifted tothe respondent and the income Tax Officer ought to haveverified the details from the purchaser of the property SriSajeev Mathai to verify that the amount deposited by theassessee’s wife is in fact an amount given by shri.SajeevMathai. 6. The counsel relied on the decision of the High Court of Gauhati reported in Nemi Chand Kothari v.Commissioner of Income Tax [(2003) 185 CTR 0635],to substantiate that “once the assessee discloses the sourcefrom which he has received the loan, the burden underSection 106 of the Evidence Act stands discharged and theonus then shifts to the Assessing officer to show if he wants to treat the loan as the income of the assessee from undisclosed source, the transaction between the assesseeand the creditor is/are not genuine or that the creditor hasno creditworthiness and/or that the money, which has beenreceived by the assessee in the form of loans, actuallybelonged to the assessee himself.” 7. Per contra, the learned counsel for the respondents submitted that the assessee has failed to substantiate theamount of Rs.30,00,000/- was actually the salesconsideration received by his wife by sale of 76.73 ares ofproperty to Shri Sajeev Mathai. Going by the recitals in thesale deed, it can be seen that the value in the document isonly Rs.3,35,700/- and hence the amount of Rs.30,00,000/-cannot be attributed to the sale consideration of theproperty. He also submitted that even after giving repeatedopportunities to substantiate the contention the assesseefailed to prove the said fact to the Assessing Officer withcogent evidence. 8. Though the appellant has filed an affidavit before the Tribunal specifically pointing out that it was the amount received by his wife, which was deposited in the bank, the Tribunal did not accept the same as it was against therecitals in the sale deed. 9. The only contention of the appellant is that the 8. Though the appellant has filed an affidavit before the Tribunal specifically pointing out that it was the amount received by his wife, which was deposited in the bank, the Tribunal did not accept the same as it was against therecitals in the sale deed. 9. The only contention of the appellant is that the amount of Rs.30,00,000/- deposited in the appellant’saccount is the sale value of 76.73 ares of land belonging tothe appellant’s wife which was sold in favour ofShri.Sajeev Mathai. The value shown in the sale deed wasas per the Government rates of the property at the relevantpoint of time. Relevant market value of the property at thattime was Rs.31,00,000/- though the rate fixed by theGovernment was very less than the market value and that isthe reason why the document shows the total considerationof Rs.3,35,700/-. It is relevant to note that the appellant hasnot examined his wife who was the vendor of the propertyand who received the sale consideration of Rs.31,00,000/-before the Assessing Officer to prove the source ofincome. Merely by producing the sale deed which showsthe sale consideration of Rs.3,35,700/- and trying toconnect it with the deposit of Rs.30,00,000/- in the account -9- on the very same day of the same transaction will not discharge the onus from the shoulder of the assessee. Onlyif the assessee discloses the source of income (the entireamount) then only the burden under Section 106 of theEvidence Act stands discharged and the onus then shifts tothe Assessing Officer. In the case on hand, the amountdeposited is Rs.30,00,000/- whereas the document showsonly the value of Rs.3,35,700/- Thus, the appellant thoughdisclosed the source of the cash deposit in the bank, he hasnot discharged the burden of proof on him. Hence thedecision reported by the counsel for the appellant has noapplication. The Tribunal looked into all the aspects andfound that the Assessing Officer as well as the firstappellate authority failed to give credit to the amount ofRs.3,35,700/- which was shown in the sale deed andthereby it was partly allowed reducing the total income asRs.26,64,300/-. 10. On consideration of the entire facts and circumstances of the case, we are of the opinion that thesubstantial questions of law are answered against the -10- appellant. Accordingly, this Income Tax Appeal fails and it isdismissed. sd S.V.BHATTI, JUDGE sd dl/ BASANT BALAJI, JUDGE -11- APPENDIX OF ITA 310/2019