E.UMMER BAVA vs. THE COMMISSIONER OF INCOME TAX

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE VIJU ABRAHAM MONDAY, THE 13TH DAY OF SEPTEMBER 2021 / 22ND BHADRA, 1943 ITA NO. 73 OF 2020 AGAINST THE ORDER IN ITA 356/2015 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: E.UMMER BAVA AGED 77 YEARS CONTRACTOR,SAKEENA MANZIL, DOWN HILL,MALAPPURAM-676519. BY ADVS. P.RAGHUNATH SRI.PREMJIT NAGENDRAN RESPONDENT/S: THE COMMISSIONER OF INCOME TAX KOZHIKODE. OTHER PRESENT: SC CHRISTOPHER ABRAHAM THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 13.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA No.73/2020 -2- J U D G M E N T S.V.Bhatti,J. Heard Advocates Mr Premjit Nagendran and Mr Christopher Abraham appearing for the parties. 2. E Ummer Bava/Assessee is the appellant. The Commissioner of Income Tax, Kozhikode/Revenue is the respondent. 2.1 The assessee, being aggrieved by the orders which culminated in the final confirmation by the Income Tax Appellate Tribunal [ITAT] in ITA No.356/Coch/2015 dated 01.03.2019, has filed the present appeal. The subject matter of the appeal relates to the issues arising in the return filed for the Assessment Year 2004-05. It is, at the outset, very contextual to advert to the very same controversy and its outcome between the assessee and the Revenue for the Assessment Year 2005-06.

ITA No.73/2020 -3- To appreciate the chronology of events, the details are furnished in the following tabular statement: Sl.No. Assmt. Year & Date CIT (Appeals) ITAT High Court Supreme Court 1 2004-05; 25.11.2008 ITA- 20/R2/CIT/CLT/0 8-09 dt.20.03.2015 ITA 356/Coch/2015 dt.01.03.2019 2 2005-06; 10.12.2007 ITA C-10/R- 3/CLT/CIT(A)- II/07-08 dt.31.03.2011 ITA 515/Coch/2011 dt 08.02.2013 ITA 153/2013 dt 20.05.2016 Civil Appeal 1246/2020 dt . 07.02.2020 3. The assessee during the Assessment Years 2004-05 received Rs.80 lakhs from his brother E Hamza Bava, a Non- Resident Indian, through Demand Drafts. The Assessing Officer treated the receipt from assessee's brother as revenue receipts and determined the tax payable by the assessee on the amount received from his brother. 3.1 Similarly, for the Assessment Year 2005-06, the assessee received Rs.35 lakhs by Demand Draft, cheques, from

ITA No.73/2020 -4- his brother. To appreciate the infirmity or illegality in the order of the Tribunal, a short narrative of the happenings/orders in 2005-06 are adverted to: The assessment order was confirmed by the Commissioner of Income Tax (Appeals); Income Tax Appellate Tribunal (ITAT) and this Court in ITA No.153/2013. The assessee carried the matter in Special Leave to the Supreme Court and in Civil Appeal No.1246/2020, the Supreme Court allowed the appeal of the assessee, thus: “Having heard learned counsel for both the parties and having perused the affidavit dated 15.03.2011 of Shri E Hamza Bava and in particular, paragraph 3 thereof, we are of the view that Rs.35 lakhs that was sent by demand drafts by him to his brother, the assessee before us, as gifts in 2004 and 2005 are genuine, creditworthiness of Shri E Hamza Bava not being in dispute. This being the case, we set aside the judgment of the Kerala High Court dated 20.05.2016 and delete the addition of this sum for the assessment year concerned. The appeal is allowed in the aforesaid terms.”

ITA No.73/2020 -5- 3.2 For the subject Assessment Year 2004-05, the Tribunal followed its decision between the parties in assessee's own case, ITA No.515/Coch/2011 dated 08.02.2013, and dismissed the appeal filed by the assessee. Hence the appeal at the instance of the assessee. 3.3 The substantial questions of law raised are as follows: “A: WHETHER, in the facts and circumstances, the authorities were right in invoking the provisions of Sec. 68 of the Act in respect of the gift received from the appellant's brother? B: WHETHER the authorities below were right indicating that such receipts SHOULD HAVE BEEN THROUGH THE NRE ACCOUNT OF THE DONOR in order to establish a link between the amounts received from the LLC and the gift when the Appellant had received the gifts in the form of Demand Drafts Instruments issued by Foreign Banks and credited to the respective account of the Appellant by negotiation through a Bank in India with whom the Appellant maintains account? C: WHETHER, in view of the fact that [1]: the donor is the brother of the appellant, [2]: admittedly he has received Rs. 110 lakhs from his firm from which retired [as certified by the firm], [3]; the gift of Rs. 80 lakhs was made through Demand

ITA No.73/2020 -6- Drafts, the authorities were right in holding that "the genuineness of the transactions cannot be considered to have been established and that creditworthiness of the donor has not been established"? 4. Advocate Premjit Nagendran contends that the issue, in fact, in both the Assessment Years is one and the same. The objection of the Department resulting in addition of income and the reply of the assessee are considered in separate orders for assessment years, however resulting in the conclusion that the claim of assessee that the transaction is not a revenue receipt from his brother, was negatived by the Tribunal and this Court. The Supreme Court has reversed all the views taken in this behalf by the authorities and the Tribunal. The Tribunal, as a matter of fact, referred to assessee's own case in ITA No.515/Coch/2011, and dismissed the appeal filed by the assessee. The consequence of allowing the appeal of assessee for the Assessment Year 2005-06 would entail same result in the

ITA No.73/2020 -7- subject Assessment Year as well. 5. Mr

Christopher

Abraham

submits

that creditworthiness of assessee's brother was the kernel of the matter. Having regard to the view expressed by the Supreme Court in assessee's own case, both the Assessment Years were moving parallelly, and as Tribunal has referred to its earlier order, the subject appeal is to be considered in the light of the order of the Supreme Court. 6. We appreciate the limited submission and we are satisfied firstly that the circumstances surrounding the controversy in both the assessment years are substantially same and similar. The Tribunal referred to its order in ITA No.515/Coch/2011 and dismissed ITA No.356/Coch/2015 filed for the Assessment Year 2004-05. Consequence of the order of the Supreme Court is that the view taken in respect of the assessee's claim has been accepted by the Supreme Court. By

ITA No.73/2020 -8- following Annexure-F order in Civil Appeal No.1246/2020, the questions are answered in favour of the assessee, against the Revenue. Income Tax Appeal is allowed. No order as to costs. Sd/- S.V.BHATTI JUDGE Sd/- VIJU ABRAHAM JUDGE jjj

ITA No.73/2020 -9- APPENDIX OF ITA 73/2020 PETITIONER ANNEXURE ANNEXURE A COPY OF ASSESSMENT ORDER FOR 2004.05 DT.25.05.2006. ANNEXURE B COPY OF ORDER OF COM.OF IT DT.03.03.2008 U/S 263 ANNEXURE C COPY OF THE ASSMT.ORER U/S 143(3)R/W 263 DT.25.11.2008 FO4 2004.05 ANNEXURE D COPY OF ORDER OF ITA IN ITA NO.515/COCH/2011 DT.08.02.2013 ANNEXURE E COPY OF ORDER OF HIGH COURT OF ITA NO.153/2013 DT.20.05.2013 ANNEXURE F COPY OF ORDER OF SUPREME COURT IN C.A.N0.1246/2020 DT.07.02.2020 ANNEXURE G COPY OF ORDER OF CITA IN ITA 20/R-2/CIT/08.09. DT.20.03.2015 IN APPEAL AGAINST ANN.'C' ORDER FOR 2004.05 ANNEXURE H COPY OF ORDER OF ITAT IN ITA NO.356/COCH/2015 DT.01.034.2019