V.babu v. The Deputy Commissioner Of Incometax, Non Corporate Range-3, Chennai-34

In the High Court of Judicature at Madras Dated : 23.2.2016 Coram The Honourable Mr.Justice V.RAMASUBRAMANIAN and The Honourable Mr.Justice N.KIRUBAKARAN T.C.A.No.104 of 2016 V.Babu Vs ...Appellant The Deputy Commissioner of IncomeTax, Non Corporate Range-3, Chennai-34. ...Respondent Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order dated 21.8.2015 passed by the IncomeTax Appellate Tribunal, Madras 'C' Bench, for the assessmentyear 2007-08 made in ITA No.296/Mds/2015 as against the orderdated 07/10/2014 on the file of the Commissioner of Income Tax(Appeals-V) for the assessment year 2007-08 in GIR NO/PANAAKPB2530Q and as against the order dated 18/3/2013 on the fileof the Income Tax Department in GI.No/PA.No.AAKPB2530Q for theAssessment year 2007-08. For Appellant : Mr.A.Thiagarajan, SC for Mr.S.Ramesh KumarFor Respondent: Mrs.Hema Muralikrishnan for Mr.T.Ravikumar Judgment was delivered by V.RAMASUBRAMANIAN,J The assessee has come up with the above appeal underSection 260A of the Income Tax Act, 1961 raising the followingsubstantial questions of law:"(i) Whether on the facts andcircumstances of the case, the Tribunal wasright in holding that the Department hasdischarged its burden of proof has on itunder Section 68 of the Income Tax Act,1961, is correct in law, when admittedlythere was no partnership firm by nameM/s.Babu and Associates ? https://hcservices.ecourts.gov.in/hcservices/ (ii) Whether on the facts andcircumstances of the case, when theappellant has proved satisfactorily aboutthe credit of the money and consequentialtransaction with admitted records, can theDepartment be said to have rebutted the same? and (iii) Whether on the facts andcircumstances of the case, the Tribunal wasright in not recording a finding about theexistence or non existence of a partnershipfirm namely M/s.Babu and Associates ofwhich, Mr.C.Karthikeyan claims to be apartner and in which, the appellant was nota partner ?" 2. Heard Mr.A.Thiagarajan, learned Senior Counsel appearingfor the appellant. 3. The appellant/assessee filed return of income on13.11.2007 for the assessment year 2007-2008. The return wasprocessed under Section 143(1). After a survey under Section133A, the case was reopened and a notice under Section 148 wasissued. The assessment was completed on 31.12.2010. 4. The case was again reopened after issuing a notice underSection 148. The assessee contended that the return filed on2.11.2007 may be treated as the return filed in response to thenotice under Section 148 of the Act. 5. However, the Assessing Officer issued a notice on10.8.2012 calling upon the assessee to show cause as to why theamount of Rs.10 crores credited on 9.2.2007 should not be addedas income. The assessee submitted a reply. Thereafter, theAssessing Officer passed an order dated 18.3.2013, making theaddition of Rs.10 crores to the total income. 6. As against the said order, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals), who, by anorder dated 7.10.2014, dismissed the appeal. The assessee fileda further appeal before the Tribunal. The Tribunal found thatthe reopening of assessment was not on a change of opinion andthat therefore, there was no reason to interfere with the orderof the Original and Appellate Authorities. Hence, the presentappeal. 7. As seen from the questions of law raised by theassessee, they revolve around the question of discharge ofburden of proof under Section 68 of the Act. Therefore, it willbe useful to extract Section 68, which reads as follows : https://hcservices.ecourts.gov.in/hcservices/ 6. As against the said order, the assessee filed an appealbefore the Commissioner of Income Tax (Appeals), who, by anorder dated 7.10.2014, dismissed the appeal. The assessee fileda further appeal before the Tribunal. The Tribunal found thatthe reopening of assessment was not on a change of opinion andthat therefore, there was no reason to interfere with the orderof the Original and Appellate Authorities. Hence, the presentappeal. 7. As seen from the questions of law raised by theassessee, they revolve around the question of discharge ofburden of proof under Section 68 of the Act. Therefore, it willbe useful to extract Section 68, which reads as follows : https://hcservices.ecourts.gov.in/hcservices/ "Where any sum is found credited in thebooks of an assessee maintained for anyprevious year and the assessee offers noexplanation about the nature and sourcethereof or the explanation offered by him,is not, in the opinion of the AssessingOfficer, satisfactory, the sum so creditedmay be charged to income-tax as the incomeof the assessee of that previous year." 8. As per Section 68, whenever any sum is found credited inthe books of an assessee maintained for the previous year, theassessee should offer an explanation, about the nature andsource thereof. If he offers no explanation or if theexplanation offered by him is not satisfactory, the sum socredited may be charged to income tax as the income of theassessee of that previous year. 9. In the case on hand, it was found on facts that a sum ofRs.10 crores stood credited. According to the appellant, theappellant's friend by name Mr.R.K.Ilangovan requested for anaccommodation. Therefore, a credit transaction of Rs.10 croreswas entered into on a commission of around Rs.3 lakhs. Once theentries in the books are admitted, the burden of proof shifts onthe assessee. 10. Therefore, we find no substantial question of law thatwould go in favour of the assessee. Accordingly, the tax caseappeal is dismissed. No costs. To1.The Income Tax Appellate Tribunal, Madras 'C' Bench, Chennai. 2.The Deputy Commissioner of Income Tax, Non Corporate Range-3, Ch-34. +1 cc to Mr.S.Ramesh Kumar Advocate sr.11038 +1 cc to Mr.T.Ravikumar Advocate sr.11107