SRI.V..R.SREEKUMAR vs. THE COMMISSIONER OF INCOME TAX
What did the High Court hold?
The High Court held that no question of law arose concerning the addition of Rs. 10,00,000. On facts, the Court found that the assessee had offered absolutely no satisfactory explanation for this amount. The only evidence produced was a letter from the person who executed the POA, merely stating receipt of funds from another party, without any supporting bank details or confirmation from the other party. The Court found no infirmity in the Tribunal's order confirming the addition. The Court answered the question regarding perversity against the assessee and in favour of the Revenue. The issue concerning Rs. 5,91,650 was noted as having been deleted by the Tribunal, and the Court did not delve into it further as no appeal was filed by the Department on that aspect. The operative direction was to dismiss the appeal.
What were the facts?
The assessee, Sri. V.R. Sreekumar, is in appeal before the High Court of Kerala against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated June 22, 2009. The assessment year in question is 1999-2000. During the assessment under Section 143(3), the Assessing Officer (AO) noted a payment of Rs. 10,00,000 by the assessee to one Raja Mukundan for obtaining a Power of Attorney (POA) for a property. The assessee later sold this property and declared capital gains. The AO found the explanation for the Rs. 10,00,000 payment unsatisfactory. The First Appellate Authority (FAA) enhanced the addition to Rs. 15,91,650 based on a report from the AO regarding the actual payment. The ITAT, in its order, deleted the portion of the addition relating to Rs. 5,91,650, finding the explanation regarding drawings from the assessee's wife's and her father's bank accounts acceptable. However, the ITAT confirmed the addition of Rs. 10,00,000.
What were the issues?
1. Whether, in the facts and circumstances of the case, the Tribunal was correct in confirming the addition of Rs. 10,00,000, and is not the finding perverse for reason of non-consideration of relevant facts? (Question of law, turning on Section 143(3) of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that the Tribunal's finding confirming the addition of Rs. 10,00,000 was perverse due to non-consideration of relevant facts. The assessee had produced a letter from Raja Mukundan acknowledging receipt of Rs. 10,00,000 for surrendering rights and possession of the property via POA. The assessee also claimed that the AO was satisfied with the explanation regarding Rs. 5,91,650, which was drawn from the bank accounts of the assessee's wife and her father. Revenue's Contention: The judgment records no specific arguments from the Revenue regarding the Rs. 10,00,000 addition. However, the Revenue's actions (AO's initial finding, FAA's enhanced addition) indicate a dispute over the genuineness and explanation of the payment.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
J U D G M E N T Vinod Chandran, J The assessee is in appeal from the order of the Tribunal raising the following question of law: Whether in the facts and circumstances of the case, the Tribunal was correct in confirming the addition of Rs.10,00,000/- and is not the finding perverse for reason of non-consideration of relevant facts? 2. The assessment of the assessee for the relevant assessment year 1999-2000 was taken up under Section 143(3) of the Income Tax Act, 1961. During the course of assessment it was found that the assessee had paid Rs.10,00,000/- to one Raja Mukundan admittedly for obtaining Power of Attorney with respect to a property. The assessee had also sold the property and had filed returns showing the capital gains. However, there was no explanation as to the amounts invested by the assessee and paid to the said Raja Mukundan.
The assessee produced a letter from Raja Mukundan dated 27.03.2006 that he had received Rs.10,00,000/- from Wariampath Sreekumar and had thus conceded the rights and possession of the property having 50 cents situated in Mannarkad Taluk by virtue of the Power of Attorney. The Assessing Officer found the explanation to be not satisfactory. The First Appellate Authority as per Annexure B order enhanced the addition to Rs.15,91,650/-. This was on account of the Assessing Officer having submitted a report dated 20.08.2007 before the First Appellate Authority as to the information received that the actual payment was of Rs.15,91,650/-.The First Appellate Authority had made the addition after issuing notice to the assessee.
A second appeal to the Tribunal was disposed of by Annexure C Order. The Tribunal noticed the explanation of the assessee that Rs.5,91,650/- is by way of drawings from the bank account of the assessee's wife and her father. The explanation was asserted to be acceptable to the Assessing Officer and the Tribunal hence deleted that portion. We find that the issue with respect to Rs.5,91,650/- as seen from the First Appellate Authorities order was discovered only after Annexure A order. The submission of the assessee that the Assessing Officer was satisfied of the explanation does not arise, since this was not an issue arising at the time of assessment. However we would not go into that since there is no appeal filed by the Department.
On the issue of addition of Rs.10,00,000/- we do not find any question of law arising and on facts it has to be stated that there is absolutely no explanation offered by the assessee. The assessee merely produced a letter of the person who executed the Power of Attorney showing that he had received the amounts from another. There were no bank details or the other party confirmation produced before the Department. In such circumstances, we do not find any infirmity in the order of the Tribunal. We answer the question as to perversity against the assessee and in favour of the Revenue. IT appeal would stand dismissed. No order as to costs. K. Vinod Chandran, Judge Ashok Menon, jma Judge
Appendix — schedule of exhibits
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