Ita/6/2015 Of Smt. O.g.sunil v. The Deputy Commissioner Of Income Tax

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 APPELLATETRIBUNAL,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 SAMEDAY DELIVERED THE FOLLOWING: ITA NO.6/2015 APPENDIX APPELLANT'S ANNEXURES: ANNEXURE-A - TRUE COPY OF THE ORDEROF ASSESSMENT FOR THE YEAR 2002-03ISSUED TO THE APPELLANT ANNEXURE - B - TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAXDATED 19.11.2013 ANNEXURE - C - TRUE COPY OF THE ORDER OF THE INCOME TAX APPELLATETRIBUNAL, COCHIN BENCH DATED8.8.2014 ANNEXURE- D - TRUE COPY OF THE PAPER BOOK-I PRODUCED BY PETITIONER BEFOREITAT ANNEXURE-E- TRUE COPY OF THE PAPER BOOK-II PRODUCED BY PETITIONER BEFOREITAT ANNEXURE-F - TRUE COPY OF THE SNAPSHOT OF THE ISSUES INVOLVED FOR THEYEARS 2002-03 TO 2008-09 ANNEXURE G- TRUE COPY OF THE APPEAL MEMORANDUM FILED BY THE PETITIONERBEFORE 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 15[th] day of February, 2016 COMMON JUDGMENT Antony Dominic, J. Among these appeals, I.T.A.Nos.260, 261 and 262 of 2014 arefiled by Smt.Asha Sunil. The orders of assessment pertaining toassessment years 2006-07, 2008-09 and 2007-08 respectively are underchallenge. I.T.A.Nos.6 to 10, 12 and 24 of 2015 have been filed by ShriO.G.Sunil and the challenge is against the orders of assessment pertainingto assessment years 2002-03 to 2008-09. 2.The parties are husband and wife and issues raised are alsoconnected. Therefore, the Commissioner of Income Tax (Appeals) and theIncome Tax Appellate Tribunal (in short, “the Tribunal”) have considered theappeals together and disposed of the same by a common order. For thatvery reason, these appeals were also heard together and are disposed ofby this common judgment. 3.We heard the counsel for the appellants and the SeniorStanding Counsel for Revenue. I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 2014 2 4.We shall first deal with the appeals filed by Smt.Asha Sunil.I.T.A.No.260 of 2014 pertains to the assessment year 2006-07. The firstissue raised for consideration before the Tribunal was with respect to theaddition of `10,43,815/-. The contention raised was that in the absence ofsearch proceedings/search warrant in the case of the appellant, theassessment under Section 153A of the Income Tax Act was illegal. TheTribunal's order itself shows that after verifying the files of the department,the learned representative of the assessee very fairly conceded before itthat he wassatisfied that there was search in the case of appellant alsoand, therefore, he withdrew the said contention. I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 2014 2 4.We shall first deal with the appeals filed by Smt.Asha Sunil.I.T.A.No.260 of 2014 pertains to the assessment year 2006-07. The firstissue raised for consideration before the Tribunal was with respect to theaddition of `10,43,815/-. The contention raised was that in the absence ofsearch proceedings/search warrant in the case of the appellant, theassessment under Section 153A of the Income Tax Act was illegal. TheTribunal's order itself shows that after verifying the files of the department,the learned representative of the assessee very fairly conceded before itthat he wassatisfied that there was search in the case of appellant alsoand, therefore, he withdrew the said contention. 5.The second issue was with respect to the addition of`3,33,815/- as unexplained credit in the bank account. The contentionraised on behalf of the appellant was that the said deposit was made out ofthe trading receipts from garment business. However, it has beenspecifically found that the net income returned by the assessee from hergarment business was only `58,250/- and that even after availing ofsufficient opportunities, the appellant could not explain the source ofinvestment to the extent of `3,33,815/-. It was therefore that, in theabsence of any material or explanation about the source and means, theTribunal confirmed the addition made by the Assessing Officer treating the I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 2014 deposit in the bank as unexplained investment. 6.The next addition in the assessment order is with regard to theinvestment in property. According to the assessee's representative, theassessee had purchased the property to the extent of `6,30,000/- and thestamp duty and other expenses came to `7,10,000/-. Though the assesseehad purchased the property and made investment as above, the assesseehad no explanation about the source from which she got the funds formaking the investment. It was in such factual circumstances that the entireamount was taken as income of the assessee. Insofar as the assessmentyear 2006-07 is concerned, these were the only issues that were raisedand considered by the Tribunal. 7.Insofar as assessment year 2007-08, which is the subjectmatter of I.T.A.No.262 of 2014, is concerned, the issue raised before theTribunal was with reference to addition of `38,39,969/- towardsunexplained investment in the bank account and profit from sale of land.According to the assessee, the deposits were made in the bank from thesale proceeds of the land. However, the Assessing Officer found that theland itself was purchased only on 07.04.2006, ie., during the assessmentyear under consideration and the investment in the landed property wasalso not explained. The Assessing Officer has also treated the profit on 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 ofland, the details of the transactions and sale were not filed before theAssessing 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. 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 ofland, the details of the transactions and sale were not filed before theAssessing 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. 8.In I.T.A.No.261 of 2014 the assessment order for the year2008-09 is impugned. The sole ground of appeal was with regard toaddition of `6,67,68,547/- on account of unexplained investments and thisalone was the issue raised before us also. The contention raised beforethe Tribunal, which was reiterated before this Court also, was that theappellant's father Shri George Philip is an Air Craft Maintenance Engineerand that from his salary income, he gifted to his daughter, the aforesaidamount. Copy of the bank account statement produced by the assesseeclearly showed that the money was transferred from Singapore to India byway of telegraphic transfer and within a day or two, the same wastransferred to the assessee's account. However, the manner in which themoney was transferred from Singapore to the assessee's father's accountin 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 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 “mighthave” transferred his salary from Singapore. 9. In substance, the contention raised before us was that if at allany addition could be made, it should be only in the hands of theassessee's father and not in the hands of the assessee. Before us, thelearned counsel for the appellant also placed reliance on Section 56(2) ofthe Income Tax Act,1961 (in short,”the Act”), in as much as, the money wasreceived from the father, a lineal ascendant of the assessee. However, thegenuineness of the transaction was considered by the Tribunal and onfacts, the Tribunal has concluded thus in paragraphs 19 and 20 of its order,which read as follows: “19.We have considered the rivalsubmissions on either side and also perused thematerial available on record. The assessee'saccount was credited by T.T. transfer from CityBank. The assessee claims that the assessee'sfather was having an account in City Bank and themoney belongs to assessee's father was gifted tothe assessee. The assessee's father said to beemployed as aircraft maintenance engineer atBahrain and his salary and savings were used fortransfer of funds to the assessee's account. On &260, 261 and 262 of 2014 examination of the assessee's father's bankaccount, it appears, the funds were received by thebank on T.T. transfer. After third or fourth day, thesame amount was transferred to the assessee'saccount. Therefore, this cannot be from savings ofthe assessee's father. If it is out of savings, thereshould be recurring credits and it cannot be a onetime transfer to the bank account of the assessee'sfather. In fact, the assessing officer has observed asfollows with regard to the nature of transaction onpage 7 of the assessment order. &260, 261 and 262 of 2014 examination of the assessee's father's bankaccount, it appears, the funds were received by thebank on T.T. transfer. After third or fourth day, thesame amount was transferred to the assessee'saccount. Therefore, this cannot be from savings ofthe assessee's father. If it is out of savings, thereshould be recurring credits and it cannot be a onetime transfer to the bank account of the assessee'sfather. In fact, the assessing officer has observed asfollows with regard to the nature of transaction onpage 7 of the assessment order. “The examination of the account of ShriGeorge Philip with the City Bank (A/c No.5-0170190467) reveals that the amounts transferred toSmt.Asha Sunil were credited in his accounts only afew days prior to the transfer of those funds to her.Those amounts were credited to his accounts on TTtransfer/Funds transfer. The first three transfers tothe account of Smt.Asha Sunil are of the sameamounts received by him in his account. The furthertransfer to Smt.Asha Sunil's account on 10.10.2207(sic) is Rs.1,13,99,908/- where as the amountcredited to Shri George Philip's account isRs.1,23,37,993.42. Apparently, the whole of themoney received by Shri George Philip has beentransferred to the account of Smt.Asha Sunil. ShriGeorge Philip has acted as an agent of transfer of funds from an unknown person to Smt.Asha Sunil.Shri George Philip's bank account is only a conduitfor transfer of funds from undisclosed/unidentifiedperson to Smt.Asha Sunil. The fact that the credit ofthe above amounts to the account of Shri GeorgePhilip is a suspicious transaction reported by theBank to the Financial Intelligence Unit, Ministry ofFinance points out the doubtful nature of thereceipts.” 20.From this it is obvious that the fundswere transferred to the assessee's father's accountby T.T.transfer and again it was retransferred toassessee's account. Therefore, it is for the assesseeto explain how the assessee's father got the funds.The assessing officer has taken pain in examiningassessee's father. However, he could not give anysatisfactory explanation except by saying that it washis savings and salary. In the absence of anymaterial to show that the assessee's father hassaved so much of money, this Tribunal is of theconsidered opinion that the claim of theassessee/her father that the transfer was fromsavings of her father cannot be accepted. To acceptthe gift, the assessee has to definitely establish thecreditworthiness of her father. The contention of theld. counsel for the assessee is that if the assesseecould not explain the creditworthiness, the addition could be made only in the hands of the assessee'sfather. The case of the department as it appearsfrom the assessment order clearly shows that ShriGeorge Philip acted as an agent for transfer of fundsfrom unknown person to Smt.Asha Sunil. Theassessing officer has also found that the assessee'sfather's bank account is only a conduit for transfer offunds from unidentified person. In the absence ofany material to suggest that the assessee's fatherhas sufficient creditworthiness to credit such a hugemoney to the assessee, this Tribunal is of theconsidered opinion that the CIT(A) has rightlyconfirmed the addition. The onus is on theassessee to prove the creditworthiness of her father,genuineness of the transaction and identity of theparties. In this case, though the assessee claimsthat the funds were transferred from her father'saccount, the creditworthiness is not proved. Merelybecause the funds were transferred from bankingchannel, it will not prove the genuineness of thetransaction as held by the Apex Court in the case ofP.Mohanakala (supra). In view of the above, we donot find any infirmity in the order of the lowerauthority. 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 andthe genuineness of the transaction and on facts, we fully endorse thatconclusion. One is also at a loss to understand why, if her father wasstationed in Bahrain as claimed by the appellant and if he wanted to gift hissalary income earned in that country to his daughter living in India, heshould transfer the amount to Singapore and then to India, instead ofdirectly transferring the amount from Bahrain itself. It was in the aforesaidcircumstances that the Tribunal confirmed the order of the Commissionerof Income Tax (Appeals), upholding the addition. The findings entered intoby the Tribunal are entirely factual and on facts, once the theory of gift byfather is rejected, the question of Section 56(2) of the Act does not arise atall. 10. Insofar as I.T.A.Nos.6 to 10, 12 and 24 of 2015 areconcerned, those appeals pertain to the assessment years 2002-03 to2008-09 and are filed by the assessee Shri O.G.Sunil, the husband of theappellant in the earlier three appeals. Insofar as assessment year 2002-03is concerned, the challenge was against the addition of `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 cheque I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 2014 deposit to the extent of `4,48,828/-. The Tribunal has recorded a findingthat “the ld. representative very fairly submitted that the assessee could notexplain the source for making these deposits”. Despite that, it is seenargued before the Tribunal that the income was from real estate businessand, therefore, only the net amount should be taken and not the grossamount. 11.Insofar as the unexplained credits to the extent of `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 extentof `2,91,600/-, the contention raised was that once the deposit was takenas income, withdrawal should not be taken as income once again. Withreference to the foreign travel expenses, the Assessing Officer has madeaddition of `5,00,000/- and the contention raised was that this expense wasincurred from the withdrawals made from the bank. 12.These factual contentions were considered by the Tribunal,and the Tribunal has made reference to the admitted fact that the assesseewas not maintaining any books of account and that though the assesseehad received huge amounts from various persons, details of such persons I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 201411 12.These factual contentions were considered by the Tribunal,and the Tribunal has made reference to the admitted fact that the assesseewas not maintaining any books of account and that though the assesseehad received huge amounts from various persons, details of such persons I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 201411 were not disclosed to the department. Insofar as the deposit of`19,54,243/-, which was admitted by the assessee is concerned, theTribunal 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 notconsidered by him. Insofar as the amount that has been taken by theAssessing Officer is concerned, the Tribunal has noted that in the absenceof any details with regard to earning of income and the persons from whomthe money was received, the Assessing Officer has rightly treated theentire amount as income. Insofar as the unexplained credit to the extentof `10,77,219/- is concerned, the Tribunal has taken note of the fact thatthe assessee has shown the same as loan from others in the cash flowstatement. However, having regard to the fact that the assessee had notexplained the identity of the persons from whom the loan was allegedlyavailed of, the creditworthiness of his creditors and the genuineness of thetransaction, the Tribunal confirmed the order of the Assessing Officer,taking the aforesaid amount as income of the assessee. 13.The Tribunal has also confirmed the repayment made to theHDFC Bank, as income of the assessee, for the reason that even suchpayment could not be explained by the assessee before the lowerauthorities. Insofar as `2,91,600/- is concerned, the Tribunal agreed with I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 2014 the assessee that the same cannot be added to his income. With respectto `5,00,000/- incurred by the assessee towards foreign travel expenses isconcerned, the Tribunal has held that the source of such expenditure wasneither disclosed before the Assessing Officer nor disclosed in his cashflow statement. It was for that reason the Tribunal confirmed the addition tothe extent of `5,00,000/-. 14.The only other common issue in respect of the assessmentyears 2003-04 to 2008-09 was with respect to addition on account ofunexplained investment. The Tribunal has held that the said issue hadalready been contested in the appeal in relation to the assessment year2002-03, where the Tribunal has ordered deletion of amounts withdrawnfrom the bank. Since facts were identical, similar view was taken withrespect to these assessment years also and accordingly the Tribunal hasordered deletion of addition to the extent of amounts withdrawn from thebank. These issues were dealt with in paragraphs 30 and 31, which readas under: “30.The only issue involved in theremaining appeals in ITA Nos 46 to51/Coch/2014 in the case of Shri O.G.Sunil isaddition on account of unexplained investments.The issue is identical to the issues discussed in “30.The only issue involved in theremaining appeals in ITA Nos 46 to51/Coch/2014 in the case of Shri O.G.Sunil isaddition on account of unexplained investments.The issue is identical to the issues discussed in ITA No.45/Coch/2014 for the assessment year2002-03. While dealing with the appeal forassessment year 2002-03 we have found that outof the total addition made on account ofunexplained investments of Rs.36,67,010 anamount of Rs.2,91,600 has to be deleted as thesame represents withdrawal from bank out of thedeposits in the bank account and the addition ofthe withdrawal would amount to double addition.The facts and circumstances are identical for theassessment years 2003-04 to 2008-09 also.Admittedly, there are deposits in bank account ofthe assessee. The assessee could not file anyexplanation regarding the source of receipt ofmoney except saying that it is from real estatebusiness. In the absence of any details/materialthis Tribunal is of the considered opinion that theentire deposits in bank account shall be treatedas income of the assessee. The assesseehimself has shown the cash credit as suspenseor cash deficit in the cash flow statement as inthe case for the assessment as in the case forthe assessment year 2002-03. Therefore, thereasons given by the Tribunal for the assessmentyear 2002-03 are equally applicable for otheryears under considerations. Accordingly, wefollow the decision already arrived at for the assessment year 2002-03 in these years also.Thus, the addition contested and the addition tobe deleted year-wise for the assessment years2003-04 to 2008-09 on account of withdrawalfrom the bank account out of the deposits madeis illustrated below: Assessment year Addition withdrawal I.T.A.Nos.6, 7, 8, 9, 10, 12 and 24 of 2015 &260, 261 and 262 of 2014 Having heard the counsel on both sides, we are satisfied thatthe aforesaid being the factual background, the findings in Tribunal's orderare entirely factual and these appeals do not give rise to any question oflaw. In the light of the language of Section 260A of the Act, an appeal wouldlie to this Court only on a substantial question of law. Therefore, in theseappeals there is nothing to be considered by this Court in exercise ofjurisdiction under Section 260A of the Act. That apart, the appellants alsodo not have a case that any contention, which was urged by them beforethe Tribunal, was not considered by the Tribunal or that the findings of factarrived at by the Tribunal are perverse to give rise to a question of law forconsideration under Section 260A of the Act. In such circumstances, weare not inclined to entertain these appeals. Accordingly these appeals are dismissed. ANTONY DOMINIC, JUDGE. A. HARIPRASAD, JUDGE.