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Income Tax Appellate Tribunal, BANGALORE BENCH A, BANGALORE
Before: SHRI. N. V. VASUDEVAN & SHRI. ABRAHAM P. GEORGE
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. V. VASUDEVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER (Assessment Year : 2008-09) Shri.Manickam Murugan, Prop : M/s. Balambiga Metal Finishers C-435, 1st Stage, Behind Police Station, Peenya Industrial Area, Peenya, Bangalore 560 058 ..Appellant PAN : ABJPM9429P v. Asst. Commissioner of Income-tax, Circle -6(1), Bangalore ..Respondent Assessee by : Shri. Srinivasan, CA Revenue by : Shri. Kaleemulla Khan, Addl. CIT Heard on : 21.09.2015 Pronounced on : 30 .09.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by the assessee its grievance is that an addition of Rs.29,84,072/- made by the AO was sustained by the CIT (A).
Facts apropos are that assessee engaged in electroplating business had filed return of income declaring income of Rs.48,50,800/-. During the course of assessment proceedings it ITA.577/Bang/2015 Page - 2
was noted that assessee had cash deposits of Rs.41,31,072/- in an account with Indian Bank. When an explanation for the source was sought assessee submitted that a sum aggregating to Rs.11,40,000/- was received as loans from Mr. Vallinathan, Mr. Jayakar and Mr. T. R. Mani. The balance sum, was explained as loan from his daughter who was in London. AO was of the opinion that assessee, though he could show sufficient evidence for Rs.11,50,000/-, was unable to corroborate his claim for the loan from his daughter in London. As per the AO assessee could not establish source for Rs.29.84 lakhs out of the total deposits of Rs.41,31,072/- in Indian Bank. He made a disallowance of Rs.29,84,072/- u/s.69 of the Act.
In its appeal before the CIT (A), argument of the assessee was that he had produced a letter from his daughter wherein she clearly mentioned that she had given a loan of Rs.24,50,000/- to her father. As per the assessee, such amounts were received from his daughter Dr. Krithika Murugan over a period of time. CIT (A) was not however appreciative of these contentions. According to him assessee could not produce any evidence to show that the credits in the bank account had come from his daughter. As per the CIT (A), letter from his daughter for having given loan of ITA.577/Bang/2015 Page - 3
Rs.24,50,000/- was not sufficient to prove the source. Ld. CIT (A) observed that money was credited in the bank account in cash and it was beyond common logic as to how assessee’s daughter in London could have given cash to the assessee. Taking this view of the matter he confirmed the addition of Rs.24,50,000/-.
Now before us, Ld. AR submitted that assessee has filed before lower authorities a copy of the confirmation letter written by assessee’s daughter. Every detail that was required to justify the source was mentioned therein. It was rejected for reasons which were not logical. According to him, nobody verified from Dr. Krithika Murugan how she had paid money to her father. Reliance was placed on the judgment of Hon’ble Patna High Court in the case of ACIT v. Hanuman Agarwal [(1985) 151 ITR 150].
Per contra Ld. DR submitted that the credits in the bank account were in cash. It was impossible to presume that assessee had received money in cash from his daughter in London.
We have perused the orders and heard the rival contentions. Confirmation letter given by Dr. Krithika Murugan is reproduced hereunder :
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There is no doubt that Dr. Krithika Murugan had specified the source of the money and also gave her telephone numer and e-mail ID, if further confirmations were required. At this juncture it will be appropriate to note the comments made of Hon’ble Justice Sushil Kumar in the case of Hanumal agarwal (supra), which read as under :
SUSHIL KUMAR JHA J.-I agree; none the less, in order to highlight the provision of the Act, I feel obliged to make a few observations of my own. As my learned brother has already observed, the assessee had given the identity of the creditor against whose name cash credit was shown for a sum of Rs. 41,500. He had also furnished the G.I.R. number of the creditor as well as the correct address. The question then remains in such cases as to how the capacity to prove the competence of the creditor for furnishing such a loan can be decided. The answer, to my mind, is very plain and sim ple. The very object of s. 131 of the Act is for that purpose. It can never be within the exclusive knowledge of the debtor to know the sources of income of the creditor. Once he is supplied the credit that he wants, he is satisfied. Once he has furnished the true identity, the correct address, the correct G.I.R. number of the creditor, he fulfils his obligation under the Act. The question then still remains with regard to the genuineness of the transaction and the capacity of the creditor to furnish the loan concerned. It is for that specific purpose that s. 131 has been engrafted in the Act. Section 131 provides, inter alia, that the ITO, the AAC, the IAC and the Commissioner shall, for the purpose of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908, when trying a suit in respect of the following matters, namely, (a) discovery and inspection, (b) enforcing the attendance of any person, including any officer of a company and examining him on oath, (c) compelling the production of books of account and other documents., and (d) issuing commissions. It is by now well-settled that s. 131 (1)(b) empowers but does not oblige the revenue authorities concerned to administer oath. Therefore, the statements of witnesses taken without administration of oath are equally admissible in evidence.
ITA.577/Bang/2015 Page - 6 When the evidence of such witness is being taken in the course of the assessment proceeding, the witness has no right, but the assessee has, to be represented by a lawyer or other authorised representative. The assessee is not supposed to know the capacity of the money-lender or the cash creditor. It is within the exclusive domain or the dark trusses of the minds of the creditors to know as to whether and how their sources of income are arrived. It is for that specific purpose that s. 131 of the Act has been introduced so that in case of any suspicion, the ITO or the authorities concerned may exercise the powers of a civil court under s. 131 and call upon the creditor concerned to prove his capacity to pay and the genuineness of his transaction. Once the ITO or the authority concerned is satisfied that the creditor is not telling the truth, it has been left open to the assessee to discharge his subsequent onus of proving the genuineness of the transaction and the capacity of the creditor to pay by cross- examining him. Where, therefore, an assessee gives the correct name, address and the G.I.R. number of the creditor, as my learned brother has observed, be has discharged his onus and unless a notice in due form under s. 131 of the Act is issued by the revenue authority concerned to test the veracity or the genuineness of the transaction or the capacity of the creditor to pay, the assessee has to succeed.
We are of the opinion that the enquiry of the type that was warranted, considering the circumstances, was not made by the lower authorities. May be it is true that the deposits were in cash. There is a distinct possibility that cash might have been handed by assessee’s daughter when she visited India to see her father. In the circumstances of the case, we are of the opinion that the matter requires a fresh look by the AO. We remit the matter back to the AO for considering it afresh in accordance with law.
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In the result, appeal of the assessee is treated as allowed for statistical purpose.
Order pronounced in the open court on 30th day of September, 2015.