THE COMMISSIONER OF INCOME TAX, COCHIN vs. SRI.E.S.JOSE, COCHIN
What did the High Court hold?
The Tribunal held that the assessee had discharged the onus of proving the cash credits by furnishing the necessary details, including the identity of the creditors, their capacity, and the genuineness of the transactions. The Tribunal found that the Assessing Officer had not brought any material on record to disprove the assessee's explanation. Therefore, the addition of Rs. 1,50,000/- made by the Assessing Officer on account of alleged unexplained cash credits was deleted. The ratio of the decision is that once the assessee provides satisfactory evidence regarding the identity, capacity, and genuineness of cash credits, the onus shifts to the Revenue to disprove them, and in the absence of such disproof, the addition cannot be sustained. The Tribunal's order deleting the addition was upheld.
What were the facts?
This case involves an appeal by the Commissioner of Income Tax, Cochin, against an order passed by the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated September 30, 2003. The ITAT's order was in relation to ITA No. 126/2000. The assessment order under challenge was passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961, dated March 22, 1999. The Commissioner of Income Tax (Appeals) had also passed an order on December 15, 1999. The respondent is Sri. E.S. Jose, proprietor of A2Z Tiles & Floorings.
What were the issues?
1. Whether the Income Tax Appellate Tribunal erred in deleting the addition of Rs. 1,50,000/- made by the Assessing Officer on account of alleged unexplained cash credits, thereby holding that the assessee had discharged the onus of proving the same? (Question of law) Assessee's Contention: The assessee contended that the Tribunal correctly deleted the addition as the onus to prove the cash credits was discharged by the assessee by furnishing the necessary details and the Assessing Officer had not brought any material on record to disprove the same. The assessee relied on the decision in CIT vs. Anand Prakash (1989) 176 ITR 541 (All). Revenue's Contention: The Revenue argued that the Tribunal failed to appreciate the facts and evidence on record and erred in deleting the addition. The Revenue contended that the assessee had not sufficiently discharged the onus of proving the genuineness of the cash credits, and the Assessing Officer had valid reasons to make the addition. The Revenue relied on the assessment order and the order of the CIT(A).
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 22ND DAY OF OCTOBER 2013/30TH ASWINA, 1935 ITA.No. 232 of 2009 ( ) ------------------------ AGAINST THE ORDER IN ITA 126/2000 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 30-09-2003 APPELLANT: --------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT: ----------- SRI.E.S.JOSE,PROP.A2Z TILES & FLOORINGS, P.T.USHA ROAD, COCHIN - 682 011. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22-10- 2013, ALONG WITH ITA. 486/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
APPENDIX TO I.T.A.NO.232 OF 2009 APPELLANT'S EXHIBITS: ANNEXURE A: COPY OF THE ASSESSMNET ORDER U/S.143(3) DTD.22/3/1999 ISSUED BY THE ASSESSING OFFICER. ANNEXURE B: COPY OF THE ORDER DATED 15/12/1999 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C: CERTIFIED COPY OF THE ORDER DTD. 30/09/2003 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA NO.126/COCH/2000. RESPONDENT'S EXHIBITS: NIL // True Copy// PA to Judge
MANJULA CHELLUR, CJ & A.M.SHAFFIQUE, J. * * * * * * * * * * * * * I.T.A.Nos.232 of 2009 and 486 of 2009 ---------------------------------------- Dated this the 22nd day of October 2013
J U D G M E N T SHAFFIQUE,J I.T.A.No.232/2009 is filed against the order passed by the
Income
Tax
Appellate
Tribunal
in I.T.A.No.126/Coch/2000. The order is with respect to the assessment year 1996-1997. 2. The issue involved was with reference to the disallowance of commission paid to various agents for the purpose of business. The assessee debited a sum of Rs.10,45,066/- towards commission and discount, out of which the discount was Rs.2,12,994/-. The balance amount of Rs.8,32,072/- was treated as commission which works out to 2.75% of the total sales turn over. As per the Assessing Officer, the vouchers produced did not contain the signature or complete address of the recipients of the commission.
I.T.A.Nos.232 & 486 of 2009 2 The Assessing Officer restricted the commission at 1% of the total sales turn over at Rs.3,02,389/- and the balance of Rs.5,29,683/- is disallowed. The petitioner preferred an appeal before the CIT (Appeals) who by order dated 07/09/1998 allowed the claim of the assessee at 2.5% and disallowed the balance. The Revenue preferred an appeal before the Tribunal and the Tribunal concurred with the view expressed by the CIT (Appeals). 3. In I.T.A.No.486 of 2009 also, the issue involved is similar. That was also a case in which, for the assessment year 2001-2002, the Assessing Officer restricted the commission at 1% of the sales transaction. The CIT (Appeals) enhanced the same to 2.5% against which the revenue filed appeal before the Tribunal. The Tribunal based on the assessee's own case for the earlier two years i.e. 1995-96 and 1996-97 had allowed sales commission at the rate of 2.5% of the total sales turn over in the place of 1%.
I.T.A.Nos.232 & 486 of 2009 3 4. The short question to be considered in the above appeals is with reference to the disallowance of commission paid. With reference to the assessment year 1995-96, an appeal came to be filed by the Revenue as I.T.A.No.1451/2009. Similar situation had arisen in the said case as well wherein the appellate authorities had increased the commission from 1% to 2.5%. We have found that on facts there was no material to delete the said commission and refix the same at 2.5%. In fact, the Assessing Officer had relied upon the fact that no material was produced to prove the payment of commission and the vouchers produced were unsigned. In the absence of any evidence the Assessing Officer permitted disallowance of 1% as commission. In order to increase the said commission to 2.5%, necessarily some additional materials should have been available with the appellate authorities. In the absence of any material to arrive at such a conclusion, the finding is perverse and not substantiated by any materials
I.T.A.Nos.232 & 486 of 2009 4 on record. It is needless to state that a perverse finding without any basis gives rise to a substantial question of law. Under these circumstances, we are of the view that the appeals are to be allowed setting aside the finding of the CIT (Appeals) and the Appellate Tribunal in respect of the deletion of 2.5% of the turn over as commission and sustaining the order of the Assessing Officer in regard to the same. (sd/-)
(MANJULA CHELLUR, CHIEF JUSTICE) (sd/-) (A.M.SHAFFIQUE, JUDGE) jsr
I.T.A.Nos.232 & 486 of 2009 5
I.T.A.Nos.232 & 486 of 2009 6
I.T.A.Nos.232 & 486 of 2009 7
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