MR.SEEGLIN JOSE MORAIS OUSEPH,TRIVANDRUM vs. THE ITO, WD-1(3), TRIVANDRUM

This appeal by the assessee is directed against the order of the CIT(A), Trivandrum dated 10/08/2013 and pertains to the assessment year 2009-10.

2. The assessee has raised the following grounds of appeal:

1. The order of the Assessing Officer had been on surmises and without appreciating the facts and particulars of the case. The affidavit of the mother of the appellant and those evidences pertaining to other accrual of deposits should have been taken as correct as stated by the appellant. The Assessing Officer as well as the CIT(A) committed error of law and error in appreciating the facts while passing the impugned order. The aspects as of applicability of section 131 and 245U of the Income Tax Act vis-à-vis order 19 Rule 2 of Civil Procedure Code had been totally neglected by the authorities.

2. The Assessing Officer as well as the CIT(A) ought to have found that the cash credits of Rs.20,18,000/- with ICICI Bank does not constitute taxable income of the Appellant as per section 68 of the Act.

3. The cash receipt from appellant’s friend Prasanth in the said account on 28.05.2008 to a tune of Rs.1,00,000/- ought to have been sustained as a due cash receipt as it represents the return of an old loan provided by the appellant herein and as it is within the permissible limits of cash transactions.

4. The disallowance of deletion to a tune of Rs.5,30,000/- from appellant’s mother had been wrongly declined. When mother herself filed an affidavit dated 24.11.2016 which is an absolutely sustainable evidence substantially under Order 19 Rule 2 of the Code of Civil Procedure, 1908 which is applicable to all civil proceedings, the declining of Rs.5,30,000/- limiting the permissible cash credit to Rs.1,00,000/- was illegal and improper. The transaction between mother and son especially when mother is a retired government employee with financial affluence had been wrongly interdicted by the authorities.

5. The disallowance of deletion of Rs.98,000/- received from the customers who had approached the appellant for booking travel tickets which is clearly evident from the bank statements was incorrect. The details of remittance are clear from the bank records.

6. Wrongful addition of Rs.4,00,000/- from sale of agricultural land. The total sale consideration corresponding to the sale of 20.46 acres of agricultural land evidenced by the agreement dated 20.11.2008 had been wrongly disallowed. The registration of documents as per the land rate fixed by the revenue authorities ought to have been upheld by the First Appellate Authority allowing the receipt of total consideration as stated in agreement for sale sustainable and conclusive as per sec. 91 & 92 of Evidence Act. The agreement for sale and the terms contained therein should have been given due weightage by the authorities. Section 91 of the Indian Evidence Act, 1872 with respect to the agreement for sale and the terms therein should have been duly apprised by the authorities. Likewise non applicability of section 17 of the Registration Act, 1908 albeit to an agreement for sale ought to have been appreciated by the authorities.

7. The Assessing Officer as well as the CIT(A) ought to have given due weightage to affidavits and personal relations between the parties which ought not have been neglected.

8. The CIT(A) ought to have give due chances for adducing evidence to substantiate the basis for the credits as non taxable income. The denial of this opportunity inspite of himself being found as a resident abroad during the relevant time paved way for extreme illegality.

For these and other grounds those will be urged at the time of hearing the appeal may be allowed and the orders of the CIT(A) to the extent the same confirms the addition of Rs.11,28,000/- by the Assessing Officer as per the order dated 19.11.2014 may be set aside in turn setting aside the impugned order of the Assessing Officer in full.

3. The facts of the case are that the Assessing Officer made addition of Rs.20,18,000/- representing the cash deposits made in the bank account of the assessee with ICICI Bank u/s. 68 of the I.T. Act in the absence of source explained for the same.

4. On appeal, the CIT(A) confirmed the following additions in the absence of source explained for the same:

1) The source explained by the assessee cannot be accepted since no cash deposit of Rs.1,00,000/- was made o 28.05.2008 and therefore, the question of receiving money from the said Prasanth does not arise. Hence, the addition was confirmed.

2) The source explained for the cash credit of Rs.1,90,000/- on 29.10.2008 out of gold loan taken by the assessee and his wife comprising of (i) Rs.1,00,000/- taken by him on 23.10.2008 from State Bank of Travancore, Pozhiyoor Branch and (ii) another Rs.90,000/- received from his wife Smt. Clemency J. out of gold loan of Rs.1,00,000/- taken by her from State Bank of Travancore, Pozhiyoor Branch on 23.10.2008 was accepted since both the gold loan which in turn had been given as cash advance was supported by the statement of account issued by the Bank. This apart, the gap of 6 days between date of disbursement of the loan amount and the date of deposit to the assessee’s bank account need be accepted since no documents are available so as to say that the loan amount had been spent by the assessee and the one which was deposited into his account was generated from a different source. Thus, the addition made of Rs.1,90,000/- was deleted.

3) The source for the cash credit of Rs.1,50,000/- on 03.11.2008 and the cash credit of Rs.4,80,000/- on 07.11.208 as gifts received from his mother Mrs. K. Elerdasi, a pensioner from Mining and Geology Department, Government of Kerala cannot be accepted was not accepted as the same was not supported by credible and cogent evidences but by an affidavit filed by her. She seems to have retired in the year 2004 but the cash deposits in the assessee’s account were made in November, 2008. It is not known how the retirement benefit which she received in the year 2004 had not been spent and simply been given to her son as gift after four years. This has not been explained yet. Affidavit alone would not be sufficient enough since the same is not establishing beyond doubt that as to where she had kept the retirement benefit and why the gift was not made by cheque or by any other mode. However, credit was given for a sum of Rs.1,00,000/- towards possible gift he would have received from his mother and accordingly, source for an amount of Rs.1,00,000/- stood explained and for the balance amount of Rs.5,30,000/- for which the source was not explained, addition was confirmed.

4) The cash credit of Rs.2,00,000/- made on 05/12/2008 out of Rs.3,05,000/- received as advance on 20.11.2008 against agreement for sale of 20.46 ares (5.536 cents) of agricultural land jointly owned by him and his wife Mrs. Clemency was also accepted since the same was supported by advance agreement for sale dated 30.11.2008. This apart, the gap of 15 days between the date on which the advance agreement was signed and the date on which the deposit was made to the assessee’s bank account need be accepted since no documents are available so as to say that the amount received in advance had been spent by the assessee and the one which was deposited into his account was generated from a different source. Thus, the addition made of Rs.2,00,000/- was deleted.

5) The assessee’s explanation that the cash credit of Rs.8,00,000/- made on 19.02.2009 was out of the balance consideration received in cash on execution of sale deed on 18.02.2009 in respect of 20.46 ares (50.536 cents) agricultural land sold to Mrs. Remya Brijit residing at Valiyavila, Uchakkada can be considered only to the extent of Rs.4,00,000/-, the actual amount of sale consideration received. As per the translated version of sale deed made available for consideration, it was found that a sum of Rs.4,00,000/- was received by the assessee towards sale of the said agricultural land. In the backdrop, the assessee can have credit only for an amount of Rs.4,00,000/- and therefore, source for the balance amount remained unexplained. Accordingly, the addition made was restricted to Rs.4,00,000/- and thereby, the assessee can have credit for the balance amount of Rs.4,00,000/- to explain the source.

6) Source explained for a sum of Rs.98,000/- as collected from the customers in connection with the business of obtaining air tickets for their travel in India and abroad and deposited on various dates in the bank account with ICICI Bank was not accepted in the absence of documentary evidences relating to the business of air ticketing of the assessee. The above explanation cannot further be accepted as no return of income has even been filed by the assessee. Thus, the addition made to the extent of Rs.98,000/- was confirmed.

4.2 Thus, the CIT(A) restricted the unexplained cash credit which was brought to tax u/s. 68 of the Act to Rs.11,28,000/- since source for the balance amount of Rs. 8,90,000/- was explained.

5. Against this, the assessee is in appeal before us. At the outset, the Ld. AR submitted that the assessee has filed affidavits from the concerned parties who advanced money to the assessee which was not properly examined by the CIT(A) and he has not verified the contents in the affidavits from the parties. Therefore, he pleaded that the issue may be remitted to the file of the CIT(A) for fresh consideration.

6. The Ld. DR relied on the order of the lower authorities.

7. We have heard the rival submissions and perused the material on record. In the present case, the assessee has filed affidavit before the CIT(A) stating that the assessee had no taxable income during the year ended 31.03.2009. The assessment was completed ex parte by the Assessing Officer. In the affidavit filed before the CIT(A), it was stated that none of the notices issued by the Assessing Officer prior to completion of assessment was served on him as he was not in India and the first communication he received from the Income Tax Department was the assessment order dated 19/11/2014 and the demand notice forming part of it.

7.1 Further, the assessee has filed an affidavit dated 17/11/2016 stating as follows:

23.4.2008 35,000.00 27.5.2008 32,000.00 29.5.2008 26,000.00 06.6,2008 16,000.00 06.6.2008 16,500.00 06.6.2008 17,000.00 06.6.2008 17,500.00 06.6.2008 18,000.00 21,8.2008 20,000.00 13.9.2008 12,000.00 13.9.2008 25,000.00 13.9.2008 35,000.00 18.11.2008 15,000.00 01.1.2009 10,000.00 02.1.2009 25,000.00 03,1,2009 12,000.00 22.1,2009 6,100.00 03.2.2009 17,500.00 11,2.2009 2,500.00 12.2,2009 3,500.00 16.2.2009 7,000.00 19.2.2009 49,500.00 03.3.2009 3,500.00 03.3.2009 3,600.00 03,3,2009 16,500-00 03.3.2009 3,400.00 07.3.2009 13,000.00 11.3.2009 3,500.00 11.3.2009 9,000.00 16.3.2009 13,000.00 16.3.2009 11,500.00 19.3.2009 11,500.00 23.3.2009 15,000.00 23.3.2009 7,500.00 Total 8,75,100.00

agreement for sale of 20.46 ares (50.536 cents) of agricultural land jointly owned by me and my wife.

7.2 Further, the assessee has filed affidavit of his mother Smt.K. Elerdasi stating as follows:

“I, K. ELERDASI, aged 66 years, w/o. Ouseph Morais, Retired Govt. Servant, residing at Morais Villa, Kalluvila, Pozhiyoor P.O., Thiruvananthapuram-695 513 do hereby solemnly declare and affirm as under;

I retired from Mining and Geology Department of Government of Kerala in the year 2004.

As all the efforts of my son SEEGLIN JOSE MORAIS OUSEPH to find out an employment after completion of his studies was in vain, he finally decided to start business of helping people in getting tickets mainly for going abroad in which line of business he had some experience, but was doing it in an 9 unorganized manner till the middle of 2008 and for setting up business on a proper way he was running short of funds and I given him Rs.1,50,000/- on 03.11.2008 in cash and another Rs.4,80,000/- on 07.11.2008 in cash.

The above gifts were made out of my accumulated balances from my pension income as well as income by way of small savings interests collected from local women engaged in fish trading by way of interest on loans given to them to help them in their business of fish trading.

I once solemnly declare and affirm that what is stated hereinabove are true and correct to the best of my knowledge, belief and information. “

7.3 From the contents in the above affidavits, it is seen that various parties advanced money to the assessee and the contents therein have not been examined by the CIT(A). In our opinion, it is incumbent upon the CIT(A) to examine the veracity of the statements made in the affidavits. Hence, in the interest of justice, we remit the entire issue in dispute to the file of the CIT(A) for fresh consideration.

The CIT(A) can call for remand report from the Assessing Officer on the issue in dispute and thereafter, the CIT(A) shall give opportunity of hearing to the assessee.

This ground of appeal of the assessee is partly allowed for statistical purposes.