A.P.MOHAMED vs. THE INCOME TAX OFFICER,

ITA/184/2010HC KeralaKLHC01026876201017 November 2011Author: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR7 pages
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What were the facts?

This is an appeal by the assessee, A.P. Mohammed, against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, for Assessment Year 2001-02. The Revenue is the respondent. The Assessing Officer (AO) had made an addition of Rs. 1,00,000/- to the assessee's income on account of alleged unexplained cash credit. The Commissioner of Income Tax (Appeals) upheld the addition. The ITAT, in its order dated 29.09.2009, also confirmed the addition, leading to the present appeal before the High Court.

What did the High Court hold?

The High Court held that the Tribunal had not properly appreciated the evidence produced by the assessee. The Tribunal's finding that the lender's bank statement showed a large cash deposit just before the loan was advanced was a matter of concern, but it did not, by itself, negate the genuineness of the loan. The Court noted that the assessee had provided the loan confirmation and other documents. The High Court found that the Tribunal had erred in not giving due weight to the evidence and in confirming the addition solely on the basis of the suspicious nature of the deposit in the lender's bank account. The appeal was allowed, and the addition was deleted.

What were the issues?

1. Whether the Tribunal erred in law in confirming the addition of Rs. 1,00,000/- as unexplained cash credit under Section 68 of the Income Tax Act, 1961, without properly appreciating the evidence produced by the assessee? Assessee's Contention: The assessee argued that the cash credit of Rs. 1,00,000/- represented a loan from Shri K.V. Kunhammed, who was a known businessman and had sufficient financial capacity. The assessee had produced the loan confirmation, bank statement of the lender, and other supporting documents to establish the genuineness of the transaction. The assessee relied on the decision in CIT vs. S.S. Grewal (2007) 293 ITR 345 (P&H) and CIT vs. Smt. P.K. Sarada (2007) 293 ITR 334 (Mad). Revenue's Contention: The Revenue contended that the assessee failed to establish the identity and creditworthiness of the lender and the genuineness of the transaction. The Tribunal had found that the lender's bank statement showed a large cash deposit just before the loan was advanced, raising suspicion.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN THUR AY, THE 17TH DAY OF NOVEMBER 2011/26TH KARTHIKA 1933 ITA.No. 184 of 2010 ( ) ======================= (ITA.562(COCH)/2007 of I.T.A.TRIBUNAL,COCHIN BENCH) APPELLANT/RESPONDENT IN ITA ============================ A.P.MOHAMMED, AMBALAPARAMBIL HOUSE CHOOLAM VAYAL KUNNAMANGALAM CALICUT. BY ADV.DR.K.B.MUHAMED KUTTY (SR.) SRI.K.M.FIROZ RESPONDENT/APPELLANT IN ITA ============================== THE INCOME TAX OFFICER, WARD-2(3), RANGE-2 KOZHIKODE. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX

THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 17-11-2011 , THE COURT ON THE SAME D

The order continues below.

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