THE COMMISSIONER OF INCOME TAX-II, vs. V.U. SIDDIQUE

ITA/156/2012HC KeralaKLHC01024078201211 August 2017Author: HONOURABLE MR.JUSTICE ANTONY DOMINIC11 pages
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What were the facts?

These appeals by the Revenue challenge a common order of the Income Tax Appellate Tribunal (ITAT) for assessment years 2006-2007 and 2007-2008. The assessee, V.U. Siddique, operating as V.S. Export & Import, had his assessment proceedings involve issues of commission rates, unexplained cash credit, and undisclosed investment in building construction. During a search under Section 132, the assessee made statements regarding commission rates. The Assessing Officer (AO) and Commissioner of Income Tax (Appeals) (CIT(A)) made additions and adjustments, which were then modified by the ITAT. The dispute centers on the ITAT's findings on these matters, leading to the present appeals by the Revenue.

What did the High Court hold?

The High Court addressed three main issues. Firstly, regarding the commission rate, the Court found the Tribunal factually wrong in stating the assessee claimed Rs. 1000/- per lakh in response to question 16 of the Section 132(4) statement; the assessee had stated a range of Rs. 1000/- to Rs. 2000/- per lakh, and approximately Rs. 1500/- per lakh in response to question 28. The Court held that the CIT(A)'s fixation of Rs. 1500/- per lakh was valid, restoring that finding and setting aside the Tribunal's reduction to Rs. 1000/- per lakh. Secondly, concerning the unexplained cash credit of Rs. 11 lakhs, the Court noted the AO's remand report, based on a loan availed by a non-resident creditor and transferred to the assessee, indicated the credit was explained. The Court found no reason to interfere with the Tribunal's decision in favour of the assessee on this issue, as the assessee had proven the source, creditworthiness, and genuineness. Thirdly, regarding undisclosed investment in building construction, the Court upheld the Tribunal's deletion of the addition. The Tribunal reasoned that since the assessee's books of account were not rejected, the AO could not refer the matter for valuation by the Departmental Valuation Officer. The Court agreed with this view, citing Supreme Court and High Court judgments, and rejected the Revenue's contention based on Section 142A, as the cited judgments held rejection of books was necessary.

What were the issues?

The High Court was asked to decide the following questions of law: 1. **Question 1 (Mixed Law and Fact, concerning Section 132(4)):** Whether the Tribunal was correct in fixing the commission rate at Rs. 1000/- per lakh, despite the assessee's admission of approximately Rs. 1500/- per lakh, rendering the fixation arbitrary and perverse? * **Assessee's Contention:** Not explicitly recorded, but implied by the Tribunal's decision to reduce the rate. * **Revenue's Contention:** The Tribunal's fixation of commission at Rs. 1000/- per lakh was arbitrary and perverse, as the assessee admitted to Rs. 1500/- per lakh. 2. **Question 2 (Law, concerning unexplained cash credit):** Whether the Tribunal was correct in deleting the unexplained cash credit when the assessee failed to prove its genuineness? * **Assessee's Contention:** Not explicitly recorded. * **Revenue's Contention:** The assessee failed to prove the genuineness of the cash credit. 3. **Question 3 (Mixed Law and Fact, concerning burden of proof):** (a) Did the assessee discharge the burden of proof that lay on it? (b) Should not the Tribunal have put the assessee to proof? * **Assessee's Contention:** Not explicitly recorded. * **Revenue's Contention:** The assessee did not discharge its burden of proof, and the Tribunal should have insisted on further proof.

Which sections of the Income-tax Act were involved?

Section 132,Section 132(4),Section 142A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN FRIDAY, THE 11TH DAY OF AUGUST 2017/20TH SRAVANA, 1939 ITA.No. 156 of 2012 ------------------ AGAINST THE ORDER IN ITA 383/2010 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 09-03-2012 APPELLANT/RESPONDENT: ----------------------- THE COMMISSIONER OF INCOME TAX-II, COCHIN.

BY ADVS.SRI.P.K. RAVEENDRA NATHA MENON SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT: ------------------------ V.U. SIDDIQUE V.S.EXPORT & IMPORT, PUTHUPAPPDY, PERUMATTOM, MUVATTUPUZHA-686673. BY ADV. SRI.S.ARUN RAJ THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11-08- 2017, ALONG WITH ITA. 161/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ANTONY DOMINIC & ANU SIVARAMAN, JJ. = = = = = = = = = = = = = = = = = = = = I.T.A.Nos.156 & 161 of 2012 = = = = = = = = = = = = = = = = = = = = Dated this the 11st day of August, 2017 JUDGMENT Antony Dominic, J. 1.These two appeals are filed by the Revenue, challenging the common order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A.Nos.383 of 2010 and 384 of 2

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